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Special thanks to our
Lunch Sponsor: Greg Grandchamp IndyMac Bank 4600 S Syracuse, 9th Floor Denver, CO 80237 303-682-9281 greg.grandchamp@indymacbank.com www.indymac.com | ||||
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Summary of
Priority Legislation The first regular session of the 66th Colorado General Assembly ended on May 4, 2007, three days prior to the statutory required ending of the session which was to be May 9, 2007. It was the first session in over forty years where the state Senate, House of Representatives and Governor's office were all three controlled by the Democratic party, and there were almost 30 first year legislators of the 100 elected officials that represent Colorado. Four significant pieces of legislation passed during the 2007 session in Colorado that will impact mortgage brokers. In general, SB 07-085 deals with the relationship between mortgage brokers and real estate appraisers, SB 07-203 changes the current mortgage broker registration system to a licensing system, SB 07-216 deals with the marketing of nontraditional mortgage products to people for whom those products may be unsuitable, and HB 07-1322 deals with fraud, prohibited acts and the relationship of mortgage brokers to their customers. All four bills passed the legislature in the final days of the session and will be acted upon by the Governor in 30 days or less. He may either sign the bills into law, they can become law without his signature or he may veto the bills. Below is a description of the key points of each bill. SB 07-085 - Veiga (D-Denver), Massey (R- Poncha Springs) CONCERNING ADDITIONAL CONSUMER ROTECTIONS RELATING TO REAL ESTATE TRANSACTIONS Short Title: Protect Consumer Real Estate Transaction The Division of Real Estate in the Department of Regulatory Agencies is responsible for registering mortgage brokers. This bill addresses the relationship between mortgage brokers and real estate appraisers and modifies the powers and duties of the director of the Division of Real Estate. Mortgage brokers are prohibited from trying to influence the independent judgment of a real estate appraiser through coercion, intimidation, or compensation. If the director has reason to believe that a broker is trying to influence an appraisal he or she must initiate an investigation. The bill adds "influencing a real estate appraiser" to the Consumer Protection Act (CPA) as a deceptive trade practice. This classification allows the Office of the Attorney General to pursue a civil enforcement action. The bill also stipulates that influencing a real estate appraiser can be pursued as a criminal enforcement action. If a criminal action is filed, the person violating the act would be guilty of class 1 misdemeanor upon conviction of a first offense. Second and subsequent convictions are class 6 felonies. The powers and duties of the director addressed by the bill are as follows:
SB 07-203 - Groff (D-Denver), Marshall (D- Denver) CONCERNING THE REGULATION OF PERSONS PARTICIPATING IN MORTGAGE LOAN TRANSACTIONS, AND, IN CONNECTION THEREWITH, REQUIRING MORTGAGE BROKERS TO BE LICENSED AND SPECIFYING PROHIBITED ACTS AND GROUNDS FOR DISCIPLINE OF LICENSEES. Short Title: Mortgage Broker Licensing Currently, under the Mortgage Broker Registration Act, regulatory oversight of mortgage brokers is limited to requiring that some mortgage brokers be registered with the Department of Regulatory Agencies, Division of Real Estate (DRE). Mortgage brokers who practice without valid registration are committing a class 1 misdemeanor. Additionally, the director of the DRE may suspend a mortgage broker's license under certain circumstances. The bill, as amended in the House Business Affairs and Labor Committee, changes the name of the act to the Mortgage Broker Licensing Act, requires state licensure instead of registration, requires the DRE to regulate the professional behavior of mortgage brokers, and makes conforming amendments. Mortgage Broker Licensing Requirements. Unless exempted under state law or operating under a temporary license, on and after January 1, 2008, any person who brokers mortgage loans must have a mortgage broker license. A mortgage broker registered under current law is required to be licensed upon registration expiration. Every active mortgage broker must also have an errors and omissions insurance policy. A mortgage broker who is also an attorney complies with this requirement if the mortgage broker/attorney has malpractice insurance with coverage for errors and omissions. The director of the DRE will determine the conditions of errors and omission coverage, including minimum coverage limits, permissible deductibles, and authorized exemptions. Persons currently brokering mortgage loans under a Federal Housing Administration (FHA) registration exemption will now require a mortgage broker license. Finally, the registration fee is changed to a licensing fee and the fee cap of $200 is removed. Mortgage Broker Training, Testing, and Continuing Education. Within three (3) years of applying for a mortgage broker license, a mortgage broker applicant must have completed a mortgage lending fundamentals course that includes at least nine (9) hours of instruction and a written examination approved by the director of the DRE. As a condition of license renewal, the director may require a mortgage broker to complete nine (9) hours of continuing education every three (3) years. The director may contract with an independent testing service to develop, administer, and grade the written examinations and to develop, review, and approve continuing education courses. The contract may give the independent testing service the authority to recover from applicants costs incurred for providing testing and continuing education services. Mortgage Broker Prohibitions. The bill lists 24 prohibited mortgage broker activities. The director of the DRE may assess an administrative fine, censure, temporarily suspend, or permanently revoke a mortgage broker for any violations. The director must revoke a mortgage broker license for any violation of the Colorado Consumer Protection Act (CCPA). Generally, the act prohibits mortgage brokers from:
All proceedings involving mortgage broker disciplinary actions or license denial may be conducted by the director or before an administrative law judge. The director or an administrative law judge may issue a subpoena compelling witness testimony and the production of records. Loan Originator Requirements. All documents related to a loan agreement must be provided to the borrower at least one (1) business day prior to the closing date. No blank spaces in the loan agreement are permitted. If the transaction involves residential real property, earnest money paid to the seller will not be refunded unless the seller knew that a loan document contained a material omission, misstatement, or defect. State Revenue Registration Fees. The bill eliminates the current exemption for mortgage brokers operating under the authority of the FHA. The DRE is required to set the registration fee at an amount to cover direct and indirect expenditures associated with regulating mortgage brokers. The current fee is $200 and the fiscal note estimates that the fee will be reduced to $172 in FY 2007-08. Therefore, the addition of an estimated 9,600 mortgage brokers will generate an additional $979,200 in FY 2007-08. Since registrations are valid for a three (3) years, no additional fee revenue is anticipated until FY 2010-11. Consequently, FY 2007-08 fee revenue will be used to fund SB 07- 203 for three (3) fiscal years. State Expenditures State Expenditures are expected to be $801,509 all to be paid from the moneys coming into the "Mortgage Broker Licensing Cash Fund." SB 07-216 - Veiga (D-Denver), Marshall (D- Denver) CONCERNING ADDITIONAL CONSUMER PROTECTIONS IN RESIDENTIAL MORTGAGE LOAN TRANSACTIONS. Short Title: Mortgage Loan Fraud Acts Practices SB07-216, as amended by the Senate Appropriations Committee, adds a deceptive trade practice to the Colorado Consumer Protection Act (CCPA). Mortgage brokers have a duty to act in good faith and fair dealing in all communications and transactions with a borrower or they violate the CCPA. To fulfill this obligation, brokers must not influence a borrower into a loan that does not benefit the borrower, provide credit based predominantly on the value of consumer credit, or provide a loan that the consumer is not likely to repay. SB07-216 requires the Banking Board and the Division of Real Estate (DRE), both in the Department of Regulatory Agencies, to adopt rules for the marketing of non-traditional mortgages. The rules must incorporate the suggestions of the "Interagency Guidance on Nontraditional Mortgage Product Risks" issued by the federal Department of the Treasury. As amended in the Senate, the bill allows the Director of the DRE to adopt rules to define "a reasonable, tangible net benefit to the borrower." Language in Section 12-61-904.5 "Broker's relationship to the borrower-rules" was also amended to mirror the language in HB 07-1322. Finally, the bill removes the $200 cap on mortgage broker registration fees. The appropriations for this bill total $705,783 and will be covered by various cash funds including the "Mortgage Broker Registration Cash Fund." HB 07-1322 - Marshall (D-Denver), Groff (D- Denver) CONCERNING MEASURES TO PREVENT MORTGAGE FRAUD, AND, IN CONNECTION THEREWITH, EXTENDING THE PROHIBITION AGAINST CERTAIN ACTS TO INCLUDE MORTGAGE LENDERS, MORTGAGE LOAN APPLICANTS, REAL ESTATE BROKERS, REAL ESTATE AGENTS, REAL ESTATE APPRAISERS, AND CLOSING AGENTS; PROHIBITING CERTAIN PRACTICES; AND CHANGING THE MENTAL STATE REQUIRED TO BE PROVEN AS AN ELEMENT OF A VIOLATION. Short Title: Mortgage Fraud Prevention Act Currently, under the Mortgage Broker Registration Act, regulatory oversight of mortgage brokers is limited to requiring brokers to be registered with the Department of Regulatory Agencies, Division of Real Estate (DRE). Mortgage brokers who practice without valid registration are committing a class 1 misdemeanor. Additionally, the director of the DRE may suspend a mortgage broker's license under certain circumstances. The bill expands the Mortgage Broker Registration Act by regulating the professional behavior of mortgage brokers and other parties involved in real estate transactions. Colorado Consumer Protection Act - Deceptive Trade Practices. A mortgage broker engages in deceptive trade practices in violation of the Colorado Consumer Protection Act if he or she does not act primarily for the benefit of a borrower or does not attempt to understand the borrower's financial status prior to recommending, brokering, or originating a loan. Prohibitions for Mortgage Brokers, Real Property Owners, and Financial Institutions. In addition to prohibiting deceptive trade practices, the bill prohibits mortgage brokers, owners of real property, and financial institutions from:
Several changes were made to the bill in the House:
The appropriations for this bill include revenues of $1,920,000 and expenditures of $495,561 to be paid from the "Mortgage Broker Registration Cash Fund." | ||
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CAMB Convention & Expo September 12-14, 2007 The Curtis Hotel & Colorado Convention Center 5 CE Classes (28 CEU's) 9 Workshops 150-200 Exhibitors Industry Speakers: Rachel Dollar (Mortgage Fraud Blog author) Erin Toll (Director of the Colorado Division of Real Estate) Tucker Hart Adams (Colorado's own Economic Forecaster) The eduational sessions and workshops will be held at The Curtis Hotel and the Expo will be held at the Colorado Convention Center. Watch your mail for
more information or check our Web site: www.camb.org | ||
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"How Toastmasters
Can Help You" Your success in business is based on how effective you are. Through participation in the Toastmasters program, people from all backgrounds learn to effectively speak, conduct meetings, manage a department or business, lead, delegate and motivate." Are you interested in
joining a CAMB Toastmasters Group? Please contact Kylie at the CAMB office,
303-991-2240. | ||
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Mark your calendars
for Thursday, July 19, 2007. Start practicing your poker face and we'll see you at the Crystal Rose, 9755 E. Hampden Avenue, Denver. Get ready for the BEST Broker Poker event ever brought to you by CAMB! A huge thank you
to our sponsors:
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NAMB partners with
DECA to offer student internships. NAMB's initial goal between now and the first half of the new school year, is to introduce 500 students nation- wide to the world of the mortgage broker. For our part, CAMB would like to introduce high school students to possible careers in the mortgage industry. Specifically, CAMB needs volunteers who are interested in providing a position for part-time, paid high school interns on an ongoing basis. Local mortgage brokers should register their interest in participating in the program with Madison Ayers. As prospective students are identified, they will be matched by zip codes within respective school districts, to the extent possible. See the CAMB web site for more information. | ||
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We are happy to
announce our Silver Level Industry Partner: Anthony Eddols Silver Hill Financial 3773 Cherry Creek Drive North, Ste. 410 Denver, CO 80209 303-316-2228 anthonyeddols@silverhillfinancial.com www.silverhillf inancial.com | ||
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CAMB is run by a
dedicated group of volunteers. Here is the 2007 Board of
Directors: Bill Kidwell -
President president@camb.org Doug Braden, CCMB - President-Elect president-elect@camb.org Rod Cameron, CCMB - Vice-President vice-president@camb.org Jason Berman, CCMB - Past-President past-president@camb.org Tiffany Hughes - Treasurer treasurer@camb.org Patrick Driscoll - Secretary secretary@camb.org Directors: Shelley Ervin Tony Hernandez Richard Kim Ruth Lee Tom Veitch | ||
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Wellshire
Inn 3333 S. Colorado Blvd. Denver, CO 80222 303-759-2480 Directions: From the North: Take I-25 south to Colorado Blvd. (exit #204) Continue south (right) located on the northwest corner of Colorado Blvd and Hampden Ave From the South: Take I-25 north to Hampden Avenue/US Hwy 285 (exit #201) Turn west (left) on Hampden Ave Turn north (right) at Colorado Blvd., located on the northwest corner of Colorado Blvd and Hampden Ave | ||
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CAMB is happy to announce a new lunch pass program. Buy 5 lunch passes and get the 6th for free. Register Now. (Some restrictions apply, more information.) CAMB's monthly luncheons are held the 2nd Tuesday of every month at the Wellshire Inn, 3333 S. Colorado Blvd. (Colorado and Hampden Ave). | ||
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Membership with CAMB brings many benefits.
Colorado Association of Mortgage Brokers email: info@camb.org
phone: 303-991-2240
web: http://camb.org |
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