Number
070561
Version
Substitute 2
Reference
Sponsor
ALD. D’AMATO, MURPHY, BAUMAN
Title
Substitute resolution supporting introduction and passage of state legislation to require licensure and certification of property appraisers.
Analysis
The City has experienced a marked increase in the number of residential property foreclosures over the last 2 years. Similar increases have been experienced nationally and statewide and are attributed to a large increase in subprime and other risky loan arrangements including interest-only loans recently issued to persons who do not qualify for more conventional loans. Many of these loans are known as adjustable rate mortgages (ARMs) that begin with low interest rates that later balloon, often at 3 or 5-year intervals.
According to legal advocates, one of the factors contributing to the increase in foreclosures affecting the City of Milwaukee involves property appraisals that inaccurately or fraudulently establish values that are higher than actual property values. This often results in loan amounts that exceed the actual equity and value of the property.
The State of Wisconsin does not currently require that property appraisers be either certified or licensed, and the State does not require lenders to use certified or licensed appraisers. The practice of “bundling” loans and selling them in large blocks to out-of-state firms results in holders of overdue obligations who have no connection with the original loan transaction within the State. In the event that a loan transaction was made through fraudulent, unreasonable or predatory practices, the State, Milwaukee County and the City may have little recourse. Furthermore, the borrower is generally at a disadvantage.
The resulting foreclosures have a variety of adverse impacts on city government as well as the general public including lost assessed values, increased expenditures to monitor ‘board-ups,’ increased crime and increased fire risks.
This resolution d...
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