The Colorado House has passed legislation that will significantly increase the penalties for those appraisers who engage in appraisal fraud.
House Bill 1183 makes appraisal fraud a Class 1 misdemeanor punishable by up to 18 months in county jail and a fine of up to $5,000 for a first offender. A second conviction would be a Class 5 felony, punishable by up to three years in prison and a $100,000 fine.
Currently, first-time violators face a Class 3 misdemeanor with a jail term of up to six months and a $750 fine. A second conviction triggers the Class 1 penalties.
In 2007, Colorado also passed a law that prohibited brokers and lenders from pressuring appraisers. So, it’s not as though Colorado is focusing soley on appraisers. States are clearly fed up with this mortgage mess, and I suspect we are going to continue to see states increase the penalties for mortgage fraud.