How to Prevent an Epidemic of Foreclosures
With Colorado leading the country in mortgage foreclosures for most of 2006, lawmakers in the state are looking for ways to curb practices that leave home owners in financial ruin and neighborhoods in the grip of blight. Lawmakers in other states are looking for solutions to their foreclosure problems, too.
Experts are suggesting a number of steps to authorities to address the factors that lead to foreclosures. Among them:
- Restrict risky loans, especially 100 percent loans that are based on stated income rather than pay stubs.
- Restrict deceptive and confusing advertising for loans. Particularly egregious are loans that tout rates “as low as 1 percent for fixed loans,” with the details in fine print explaining that these are one-month teaser rates.
- Look at appraisers. Appraisers pushing for a valuation to meet a mortgage broker’s demand are a problem in some cases.
- License and train mortgage brokers, and bar brokers with fraud and felony convictions from the business.
- Educate buyers and assist them before they end up in foreclosure.
Source: The Denver Post, Greg Griffin, David Olinger, Aldo Svaldi, and Jeff Roberts (12/31/06)