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Lawmakers try to curb mortgage fraud

House, Senate groups study ways to reduce problem

John Rebchook, Rocky Mountain News

Published January 23, 2007 at midnight

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A need to better educate consumers getting mortgages, more data on why there are a record number of foreclosures sweeping Colorado, and how to balance new laws to combat mortgage fraud and avoid unintended consequences were among the themes during a half-day hearing on foreclosure at the State Capitol on Monday.

Sen. Jennifer Veiga, D-Denver, and Rep. Rosemary Marshall, D-Denver, co-chaired the hearing at a joint House Business Affairs and Labor and Senate Business, Labor and Technology committee meeting that drew about 65 people in a packed room in the basement of the Capitol.

While the committees were gathering information on how to best write laws to tackle the growing problem, mortgage banker Jim Spray, a longtime advocate of putting what he calls the "bad actors" in his field out of business, made a couple of suggestions for new legislation.

"We need to bar pre-payment penalties on loans, which would allow people in trouble to more easily get out of the properties," by allowing them to refinance, Spray said. "And we need to equalize the mortgage registration act by eliminating the exemptions of FHA- approved brokers."

The committee heard from a variety of public, private and nonprofit leaders.

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