Suthers Announces Legislation To Shield Homeowners

DENVER – Colorado Attorney General John Suthers today announced four priority bills to be introduced during the 2009 legislative session. The bills target “foreclosure rescue” firms, lift age-old civil penalty limits, and increase the penalties for appraisal fraud and water pollution.

House Bill 1109 – Expanding the Colorado Foreclosure Protection Act

Sponsored by Senator Jennifer Veiga (D-Denver) and Representative Kevin Priola (R-Henderson), HB-1109 will expand the protections of the Colorado Foreclosure Protection Act to distressed homeowners who are not yet in foreclosure. The Act, which was championed by Attorney General Suthers and won legislative approval in 2006, prevents foreclosure consultants from charging an upfront fee, created standards for written contracts, and prevents consultants from acquiring any interest in a property on which they have been hired to consult.

Since the bill’s passage, the Attorney General’s Office has reached Cease & Desist agreements with 17 companies that had refused to abide by the terms of the Act. However, a growing number of unscrupulous consultants have circumvented the law by approaching homeowners before foreclosure proceedings are initiated. HB-1109 will close the loophole by extending the Act’s protections to any homeowner who is delinquent or in default on their mortgage.

Senate Bill 054 – Civil penalties no longer “The Cost of Doing Business”

Sponsored by Senator Mark Scheffel (R-Parker) and Representative Andy Kerr (D-Lakewood), SB-054 will eliminate the maximum civil penalty that can be incurred for violations of the Colorado Consumer Protection Act. The bill will also raise the maximum penalty for antitrust violations from $100,000 to $250,000.

In today’s electronic marketplace, it has become far easier and much more cost-effective for fraudulent advertising to reach hundreds of thousands, if not millions, of Colorado consumers through e-mail, text messaging, and the Internet. Currently, businesses that violate the Consumer Protection Act can be charged only $100,000 “for any related series of violations,” regardless how many consumers are affected. Unfortunately, several dishonest firms have come to view the current penalty as simply, “the cost of doing business.”

Colorado is currently the only state in the nation with such a restrictive cap on penalties. Should SB-054 become law, courts would have discretion to charge up to $2,000 per violation, with no cap on the total fine.

Not yet introduced:

Increasing penalties for fraudulent appraisals

Sponsored by Senator Mary Hodge (D-Brighton) and Representative Glenn Vaad (R-Mead), the proposed legislation will significantly increase the criminal penalties for knowingly appraising a piece of property far from its actual value. Under the original statute, appraisers who broke the law could escape with as little as a $50 fine on their first offence. Attorney General Suthers would like to increase the minimum penalty to six months imprisonment, a $500 fine, or both, which was previously the minimum penalty for second offenses.

Under the proposed legislation, second offenders could be convicted of a Class 5 felony, punishable by a maximum $100,000 penalty and three year prison term.

Criminal charges for water pollution

Brought by Senator Ted Harvey (R-Highlands Ranch) and Representative Beth McCann (D-Denver), the proposed bill will allow prosecutors to pursue felony criminal charges when pollutants are dumped into state waters. Currently, dumping pollutants in water is punished less harshly than if the same pollutants were dumped on land. If passed, the bill will reconcile the penalties.

The curious difference between the penalties for land pollution and water pollution owes itself to rules governing how crimes can be charged: individuals cannot be charged under a broad statute – in this case the Hazardous Waste Act – when a narrower statute is more applicable. The proposed bill will provide courts with a legislative directive suggesting that water dumping can be charged civilly under the narrow offence and also criminally under the Hazardous Waste Act.

Individuals who violate the Hazardous Waste Act “intentionally” can receive up to six years in prison, while those who do so “negligently” can face up to three years. Under current law, dumping in waterways can only be punished with fines.

House Bill 1109 (pdf)

Senate Bill 054 (pdf)


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