This morning's Rocky featured a big article about a stringent effort by the new chief of the Colorado Division of Real Estate, Erin Toll, to yank the licenses and prosecute, if necessary, of appraisers who phony up the value when submitting the appraisal to lenders.  She says she's currently investigating one where the appraiser "has inflated more than a dozen appraisals."  One case she cites gave a value $100,000 over what it should have been.

And then we ask why Colorado has the highest foreclosure rate in the nation?

There are more causes than the article would suggest, but certainly overinflated appraisals is one.

Earlier this year my dependable Tennessee lender notified me that she had stopped using the appraiser I had suggested she use, and couldn't tell me why.  I have to wonder this morning, did my appraiser inflate the value of one of my client's homes?

The problem is that if other appraisers (and real estate agents) use one of these overinflated homes as a comparable in trying to establish market value, that value will also be inflated, causing buyers to pay a hyperinflated price for the home they're buying..  Then when the house needs to be appraised for refinancing, or value needs to be established when a homeowner needs to sell, the danger is they'll instantly lose whatever equity they thought they had.

Overinflated value caused by greedy appraisers causes a domino effect.  Apparently Ms. Toll thinks that there's more of a problem in Colorado than meets the eye.  Stay tuned for developments on this newly emerging issue.

"A Lakewood real estate agent has been sentenced to 49 months in federal prison after pleading guilty in March to wire fraud and money laundering that involved arranging more than 100 fraudulent loans and mortgages for illegal immigrants and other unqualified home buyers, officials said Thursday." Article in the Rocky Mountain News Friday, June 9, 2006.

Colorado just passed a law requiring mortgage lenders to register with the state and get a criminal background check because of episodes like the above.  Up till January 2007 Colorado will have been one of only two states where mortgage professionals have not been regulated.  As a result we've seen a lot of so called mortgage professionals go to jail in the last few years.

If you're thinking about buying a home in Denver PLEASE give me a call (303-587-3509) so I can refer you to a tested, honest, competent lender.  I refer my clients only to the best.  You DON'T want to get cheated when you're involved in what is normally the biggest money transaction of your life.

As an Exclusive Buyer's Agent I back the referrals I make with my own reputation.  I owe you, the buyer, a fiduciary relationship where I treat your interests higher than anybody else including my own.

Now I've heard it all.  The three CREDIT BUREAU reporting services, TransUnion, Experian and Equifax (though TransUnion wouldn't confirm it, according to Kenneth R. Harney, nationally syndicated real estate writer) are selling your information from your credit report the moment you've applied for a mortgage elsewhere.  They're compling what they call overnight "trigger" lists.  Some big loan providers are paying big bucks -- up to $30K plus a MONTH -- to be notified the next day that you've applied for a mortgage.  They use these "leads" to call you the next day, then try to convince you that you should go with them instead of the lender you've just applied with.  Read the whole article here.

A local mortgage broker called me the other day and asked if I was interested in hearing more about 40 year mortgages.  Of course, I already knew about them, but didn't think they made a lot of sense for buyers, even if it made high-priced housing more affordable for cash-strapped buyers.  But he said that he'd written a number of them lately, and they could help buyers buy a home who otherwise couldn't afford to.

So when today's article from Broderick Perkins, writer for Realty Times, appeared in my inbox, I took another look.  I still think they're not a panacea for buying homes in the 21st century, but there are times when certain homebuyers might take a look to see if the longer-term mortgage might not be a good match for their particular circumstances.

Take a look at today's article in Realty Times.