Colorado Division of Real Estate Adopts New Mortgage Loan Originator Rules
The Colorado Division of Real Estate recently adopted new rules relating to the business practices and licensing of mortgage loan originators. Among other items, the new rules (i) establish minimum surety bond requirements for licensees (Rule 1-2-2), (ii) set forth when the Division may inactivate a license (Rule 1-5-1), (iii) explain how and when a temporary license may be issued (Rule 1-1-2), (iv) clarify a licensee’s duties in connection with an investigation by the Division (Rule 3-1-2), (v) require that a licensee’s contact information and all other information required for licensing be kept current (Rule 3-1-3), (vi) identify disclosures to be provided by licensees to borrowers (Rule 5-1-2), (vii) set forth requirements applicable to transactions containing specific prepayment penalty terms (Rule 3-1-4), (viii) define compliance with the requirement that licensees maintain contracts with borrowers and mortgage lenders (Rule 5-1-1), and (ix) establish guidelines for licensee advertising (Rule 8-1-1). Additionally, Rule 3-1-1 explains how a licensee must comply with the “reasonable inquiry” and “net tangible benefit” requirements associated with the licensee’s duty of good faith and fair dealing in all communications and transactions with borrowers. Finally, Rule 1-2-1 repeals the surety bond requirement for mortgage brokers. Certain rules become effective August 30, 2009, while others become effective September 30, 2009.