LANSING – The Michigan House of Representatives today passed a plan proposed by State Representative Jeff Mayes (D-Bay City) that will crack down on mortgage fraud, which will help reduce the number of homes that end up in foreclosure.
"We must attack the foreclosure epidemic from every possible angle to protect more families from losing their homes," Mayes said. "As home values have fallen, there is more pressure on appraisers to inflate the worth of a home. This plan will guard against that happening, and give appraisers legal backing to guard against reprisals from unscrupulous mortgage lenders."
Mayes' plan would prohibit the practice of coercing an appraiser in order to receive a predetermined appraisal, prohibit an appraiser from developing and communicating an appraisal set by a client in order to receive a predetermined appraised value, and revise criminal penalties and civil fines for violations of acts regulating mortgages and brokers, lenders, and mortgage servicers. Violators would face a maximum fine of $15,000 and up to three years in prison. The plan now heads to the Senate for final approval.
"The current real estate market has left many mortgage lenders in a pinch, leading otherwise honest people to turn up the pressure on appraisers for an inflated appraisal," Mayes said. "This is working against homeowners, many of whom have found themselves upside-down on their mortgages and unable to hold on to their homes. To help stop the foreclosure epidemic, we must make sure that everyone is acting in good faith and give people in the real estate industry the tools to do so."