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On July 15, 2020 the Colorado Board of Mortgage Loan Originators (“Board”) held a rule-making hearing to update and adopt rules for mortgage loan originators and mortgage companies based upon the mandatory rule review required by Senate Bill 14-063 (Mandatory Review of State Agency Rules). The Division of Real Estate (“Division”) initiated the rule review on behalf of the Board to assess the continuing need for, appropriateness and cost effectiveness of the administrative rules. It also assessed whether the rules should be continued in their current form, amended or repealed. The rule review process included stakeholder and public participation and input, including the use of a mortgage industry task force to consider that input with regard to the existing regulations. The task force included the following individuals and groups:
- Colorado Mortgage Lenders Association (CMLA) – Represented by Cary Whitaker;
- Colorado Association of Mortgage Professionals (CoAMP) – Represented by Jayne Bail;
- Rocky Mountain Home Association – Represented by Janie Taylor;
- Impact Mortgage Management Advocacy and Advisory Group (IMMAAG) – Represented by Bill Kidwell;
- Bruce Jordan - Mortgage Loan Originator;
- Calvin Evans - Mortgage Compliance Officer;
- Frank Giuliano - Mortgage Loan Originator;
- Kim Woodcock - Mortgage Compliance Officer;
- Cheryl Branuschwiger - Mortgage Loan Originator; and
- Division staff members from the licensing, investigations, and education sections.
The adoption of the rules is the culmination of these collaborative efforts, resulting in rules that have been updated to consider mortgage loan originators holding licenses in other jurisdictions, reconcile with NMLS processes and procedures, and ensure consistent disclosure and record retention timelines. The proposed rules have been written in plain language and are easier to use and understand. Additionally, the proposed rules provide a clearer roadmap of the licensing and enforcement requirements of the Mortgage Loan Originator Licensing and Mortgage Company Registration Act. These rules are effective beginning January 1, 2021.
Although the rules are not effective until the beginning of the year, the Board and the Division wanted to provide adequate notification to ensure everyone has sufficient time to acquaint themselves with the newly adopted rules.
Summary
Chapter 1. Definitions
Chapter 1 was reorganized by deleting outdated or unused defined terms from the Chapter and adding new terms to aid individuals in navigating the Board’s administrative rules.
Chapter 2. Requirements for Licensure
Chapter 2 was reorganized and the licensure requirements are now systematically arranged by activity. The Chapter specifies the education, examination, and insurance requirements for licensure. As well as the licensing protocol for both the Division and the NMLS.
Chapter 3. Continuing Education Requirements
Chapter 3 sets forth the continuing education requirements for Mortgage Loan Originators.
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Rule 3.1. Continuing Education Requirements for Mortgage Loan Originators will begin after issuance of the initial license: The rule was amended to remove the requirement of completing 1 hour of Colorado specific education as part of the 8 hours of annual continuing education requirements.
Chapter 4. Renewal, Reinstatement, Re-Application or License Status
Chapter 4 sets forth the requirements and processes for licensing renewal, reinstatement, re-application and license status (active & inactive). The rules were updated to reconcile Colorado’s requirements and processes with mortgage loan originators holding a license in other jurisdictions.
Chapter 5. Professional Standards
Chapter 5 sets forth the professional standards for mortgage loan originators. The rules were updated to ensure consistent disclosure and record retention timelines. As well as updated language to contemplate different origination business models.
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Rule 5.6. Reasonable Inquiry: The rule was amended and changes the level of review in determining reasonable inquiry from “interviewing and discussing” to “reviewing and analyzing” all sections contained in the Uniform Residential Loan Application and upon completion of the Tangible Net Benefit Disclosure.
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5.8. Tangible Net Benefit Disclosure Form: The rule was amended and updates the timeline for providing the Tangible Net Benefit Disclosure Form. The Form must now be disclosed within three business days after receipt of a loan application. The current rule required the form be completed at the time of loan application.
Chapter 6. Board Review of Initial Decisions and Exceptions
Chapter 6 sets forth the requirements for the review of initial decisions by the Board and the procedures for filing exceptions. These are standard rules amongst the Division’s other programs. The rules were modified to aid pro se litigants in understanding the exceptions process.
Chapter 7. Declaratory Orders
Chapter 7 sets forth the requirements and procedures to petition the Board for a declaratory order. Declaratory orders are standard rules amongst the Division’s other programs and are needed to be compliant with the Administrative Procedure Act.
Chapter 8. Nationwide Mortgage Multistate Licensing System and Registry (“NMLS”)
Chapter 8 sets forth the requirements and procedures to challenge information entered into the NMLS by the Division and the procedures for submitting call reports to the NMLS.
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