A measure that would make it a crime to coerce a home appraiser or falsify a real-estate appraisal gained traction in the state Senate on Tuesday.
“It is on track and looking good for passage,” said state Sen. Jennifer Veiga, D-Denver, who is sponsoring the measure along with state Rep. Tom Massey, R-Poncha Springs
The Senate Business, Labor and Technology Committee unanimously moved SB07-85 to Senate Appropriations, which will review costs, the bulk of which are tied to funds needed to add prison beds, Veiga said.
The bill would make pressuring an appraiser or falsifying an appraisal a serious misdemeanor, with repeat offenses treated as felonies.
Appraisers who falsify their work risk losing their licenses and face fines under current rules, said Geoff Hier, a spokesman with the Colorado Department of Regulatory Affairs.
Prison time for appraisers is rare, and those who try to pressure or bribe an appraiser face no sanctions, he said.
The bill comes out of the state’s Foreclosure Prevention Task Force and has strong support from Colorado Attorney General John Suthers, who argues that stricter penalties are needed to stem the state’s rising number of home foreclosures.
The Denver Post analyzed the foreclosure wave last year in a 10-part series, “Foreclosing on the American Dream.” Mortgage fraud and overinflated appraisals are considered key culprits in a surge in foreclosures along the Front Range.
Corrupted appraisals can artificially boost home values in an area, causing buyers to pay more for their properties than what the market can support and leaving them vulnerable to foreclosure when they try to sell or refinance.
Arvada mortgage broker Jim Spray said he was initially concerned the bill would target only mortgage professionals. But he was assured the bill will cover real-estate agents, as well as buyers and sellers.
State Sen. Peter Groff, D-Denver, and state Rep. Rosemary Marshall, D-Denver, are working on a separate bill, yet to be introduced, that would give homeowners some added protections, said Nickki Floyd, Groff’s legislative assistant.
Among the likely components:
Some licensing standards for mortgage brokers and other loan originators.
Greater capacity in the attorney general’s office to prosecute loan fraud, and restitution for victims of predatory loans.
“Equity protection” for home owners foreclosed on after years of making mortgage payments.
A possible 48-hour “cooling- off period” for people to review home-loan documents before signing them.
Staff writer David Olinger contributed to this report.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
