DEPARTMENT OF REGULATORY AGENCIES
DIVISION OF REAL ESTATE
MORTGAGE LOAN ORIGINATORS AND MORTGAGE COMPANIES
4 CCR 725-3

NOTICE OF PROPOSED PERMANENT RULEMAKING HEARING
September 18, 2013

CHAPTER 5:	PROFESSIONAL STANDARDS

Pursuant to and in compliance with Title 12, Article 61 and Title 24, Article 4, C.R.S. as amended, notice of proposed rulemaking is hereby given, including notice to the Attorney General of the State of Colorado and to all persons who have requested to be advised of the intention of the Colorado Board of Mortgage Loan Originators (the “Board”) to promulgate rules, or to amend, repeal or repeal and re-enact the present rules of the Board.

STATEMENT OF BASIS

The statutory basis for the rules titled Rules of the Board of Mortgage Loan Originators is Part 9 of Title 12, Article 61, Colorado Revised Statutes, as amended.  

STATEMENT OF PURPOSE

The purpose of this rule is to effectuate the legislative directive to promulgate necessary and appropriate rules in conformity with the state statutes of the Mortgage Loan Originator Licensing and Mortgage Company Registration Act.

SPECIFIC PURPOSE OF THIS RULEMAKING

The purpose of this rule is to amend or repeal existing rules with respect to professional standards and ensure that mortgage loan originators and mortgage companies are familiar with all current regulations

Proposed New, Amended and Repealed Rules

[Deleted material shown struck through, new material shown ALL CAPS. Rules, or portions of rules, which are unaffected are reproduced.  Readers are advised to obtain a copy of the complete rules of the Board at www.dora.state.co.us/real-estate/.

CHAPTER 5:	PROFESSIONAL STANDARDS

5.3        LOAN MODIFIER LICENSURE 

A.	INDIVIDUALS, NOT OTHERWISE EXEMPT FROM PART 9, WHO DIRECTLY OR INDIRECTLY TAKE RESIDENTIAL LOAN MODIFICATION APPLICATIONS OR WHO NEGOTIATE, OFFER, OR ATTEMPT TO NEGOTIATE OR OFFER LOAN MODIFICATIONS ARE REQUIRED TO BE LICENSED AS A COLORADO MORTGAGE LOAN ORIGINATOR. 

B.	ALL INDIVIDUALS REQUIRED TO BE LICENSED SHALL COMPLY WITH ALL OTHER PROVISIONS OF THE COLORADO MORTGAGE LOAN ORIGINATOR LICENSING ACT AND ALL BOARD RULES.

    5.4    REQUIRED USE OF A LOAN MODIFICATION CONTRACT 

A.	INDIVIDUALS TAKING LOAN MODIFICATION APPLICATIONS OR OFFERING OR NEGOTIATING LOAN MODIFICATIONS ARE REQUIRED TO USE A LOAN MODIFICATION CONTRACT WHICH COMPLIES WITH THE MORTGAGE LOAN ORIGINATOR LICENSING ACT AND THE FORECLOSURE PROTECTION ACT.

B.	THE BOARD HAS CREATED THE COLORADO LOAN MODIFICATION SERVICES CONTRACT TO ENSURE COMPLIANCE WITH THE AFOREMENTIONED LAWS.  THIS CONTRACT MAY BE FOUND ON THE DIVISION OF REAL ESTATE’S WEBSITE.  LOAN MODIFIERS SHALL USE THIS FORM OR AN ALTERNATE FORM, IF SUCH ALTERNATE FORM CLEARLY INCLUDES ALL INFORMATION REQUIRED ON THE SUGGESTED FORM, AS DETERMINED BY THE BOARD.

C.	THE COLORADO LOAN MODIFICATION SERVICES CONTRACT PRESCRIBED BY THIS RULE SHALL BE COMPLETED AT TIME OF APPLICATION.

5.5	THE REQUIREMENTS SET FORTH IN RULES 5.3 AND 5.4 SHALL NOT APPLY TO:

A.	EMPLOYEES OF HUD APPROVED HOUSING COUNSELING AGENCIES WHO ARE PROVIDING ADVICE OR GENERAL INFORMATION ON LOAN MODIFICATIONS IN AN ANCILLARY MANNER RELATING TO THEIR GENERAL HOUSING COUNSELING SERVICES OR DUTIES.

B.	EMPLOYEES OF MORTGAGE LOAN SERVICING COMPANIES OPERATING ON BEHALF OF THE BORROWERS’ MORTGAGE LENDERS. 

C.	LICENSED REAL ESTATE BROKERS ENGAGED IN LICENSED ACTIVITIES WHEN PERFORMING SERVICES WITHIN THE ABOVE DEFINED SHORT SALE TRANSACTIONS DO NOT NEED TO MAINTAIN A LICENSE AS A MORTGAGE LOAN ORIGINATOR. IF A REAL ESTATE BROKER ENGAGES IN THE ACTIVITIES OF PROVIDING LOAN MODIFICATION SERVICES (THOSE NOT INCLUDED IN THE ACTIVITIES OF SHORT SALES) AS DEFINED ABOVE, LOAN MODIFICATION SERVICES ARE DEFINED AS OUTSIDE THE SCOPE OF LICENSED REAL ESTATE BROKER ACTIVITIES AND THEREFORE, SEPARATE LICENSURE AS A MORTGAGE LOAN ORIGINATOR IS REQUIRED.

D.	AN ATTORNEY, AS SET FORTH IN SECTION 12-61-904(1)(D), C.R.S.,  WHO RENDERS SERVICES IN THE COURSE OF PRACTICE, WHO IS LICENSED IN COLORADO, AND WHO IS NOT PRIMARILY ENGAGED IN THE BUSINESS OF NEGOTIATING RESIDENTIAL MORTGAGE LOANS OR LOAN MODIFICATIONS IS NOT REQUIRED TO BE LICENSED AS A MORTGAGE LOAN ORIGINATOR, BUT IS REQUIRED TO COMPLY WITH ALL NON-LICENSING PROVISIONS OF CURRENT MORTGAGE LOAN ORIGINATOR LAW SET FORTH IN SECTIONS 12-61-901 THROUGH 12-61-915, C.R.S. 

5.6	REASONABLE INQUIRY 

A.	A MORTGAGE LOAN ORIGINATOR SHALL ONLY RECOMMEND APPROPRIATE PRODUCTS AFTER REASONABLE INQUIRY HAS BEEN MADE IN ORDER TO UNDERSTAND BORROWER’S CURRENT AND PROSPECTIVE FINANCIAL STATUS.

B.	REASONABLE INQUIRY REQUIRES THE MORTGAGE LOAN ORIGINATOR TO INTERVIEW AND DISCUSS CURRENT AND PROSPECTIVE INCOME, INCLUDING THE INCOME’S SOURCE AND LIKELY CONTINUANCE, WITH BORROWERS, AND MAY NOT REQUIRE THE MORTGAGE LOAN ORIGINATOR TO VERIFY SUCH INCOME.

C.	A MORTGAGE LOAN ORIGINATOR HAS A DUTY TO RECOMMEND MORTGAGE PRODUCTS BASED ON THE INFORMATION PROVIDED BY THE BORROWER.  

D.	A MORTGAGE LOAN ORIGINATOR SHALL BE DEEMED IN COMPLIANCE WITH THIS RULE AND COLORADO LAW, § 12-61-904.5(1)(B), C.R.S., CONCERNING REASONABLE INQUIRY, UPON INTERVIEWING AND DISCUSSING, WITH ALL APPLICABLE BORROWERS, ALL SECTIONS CONTAINED IN THE UNIFORM RESIDENTIAL LOAN APPLICATION AND UPON COMPLETION OF A TANGIBLE NET BENEFIT DISCLOSURE.  THE TANGIBLE NET BENEFIT DISCLOSURE IS POSTED ON THE DIVISION OF REAL ESTATE’S WEBSITE.

5.7	TANGIBLE NET BENEFIT 
		
THE REASONABLE, TANGIBLE NET BENEFIT STANDARD IN § 12-61-904.5(1)(A), C.R.S., IS INHERENTLY DEPENDENT UPON THE TOTALITY OF FACTS AND CIRCUMSTANCES RELATING TO A SPECIFIC TRANSACTION.  WHILE THE REFINANCING OF CERTAIN HOME LOANS MAY CLEARLY PROVIDE A REASONABLE, TANGIBLE NET BENEFIT, OTHERS MAY REQUIRE CLOSER SCRUTINY OR CONSIDERATION TO DETERMINE WHETHER A PARTICULAR LOAN PROVIDES THE REQUISITE BENEFIT TO THE BORROWER.

A.	WHEN DETERMINING REASONABLE, TANGIBLE NET BENEFIT, THERE ARE MANY CONSIDERATIONS A MORTGAGE LOAN ORIGINATOR SHALL TAKE INTO ACCOUNT AND DISCUSS WITH PROSPECTIVE BORROWERS.  IF APPLICABLE, THE REQUIRED CONSIDERATIONS FOR A MORTGAGE LOAN ORIGINATOR DETERMINING THE REQUISITE BENEFIT SHALL INCLUDE, BUT ARE NOT LIMITED TO: 

1.	LOWER PAYMENTS;

2.	CONDENSED AMORTIZATION SCHEDULE;

3.	DEBT CONSOLIDATION;

4.	CASH OUT;

5.	AVOIDING FORECLOSURE;

6.	NEGATIVE AMORTIZATION;

7.	BALLOON PAYMENTS;

8.	VARIABLE RATES;

9.	INTEREST ONLY OPTIONS;

10.	PREPAYMENT PENALTIES; AND

11.	HYBRID MORTGAGE PRODUCTS.

B.	THE PURPOSE OR REASON FOR A PURCHASE OR REFINANCE TRANSACTION SHALL BE IDENTIFIED BY THE BORROWER.  A MORTGAGE LOAN ORIGINATOR SHALL REQUIRE THAT ALL BORROWERS DESCRIBE, IN WRITING, THE REASONS THEY ARE SEEKING A MORTGAGE LOAN, A LOAN MODIFICATION OR TO REFINANCE AN EXISTING MORTGAGE LOAN. 

1.	IT IS THE RESPONSIBILITY OF THE MORTGAGE LOAN ORIGINATOR TO ENSURE THIS INFORMATION IS ACQUIRED AND ACCURATELY DOCUMENTED.

2.	PURSUANT TO § 12-61-904.5(1), C.R.S., A MORTGAGE LOAN ORIGINATOR MAY NOT HAVE DEMONSTRATED A DUTY OF GOOD FAITH AND FAIR DEALING IN ALL COMMUNICATIONS AND TRANSACTIONS WITH A BORROWER IF IT IS DETERMINED THAT A MORTGAGE LOAN ORIGINATOR COMPLETED THE REQUIRED PURPOSE OR REASON FOR A PURCHASE, LOAN MODIFICATION OR REFINANCE TRANSACTION WITHOUT CONSULTING THE BORROWER.

5.8	TANGIBLE NET BENEFIT DISCLOSURE FORM

THE BOARD DEVELOPED A DISCLOSURE FORM REGARDING REASONABLE, TANGIBLE NET BENEFIT.  ALTERNATE DISCLOSURES ARE ACCEPTABLE IF THEY INCLUDE ALL INFORMATION REQUIRED ON THE SUGGESTED FORM, AS DETERMINED BY THE BOARD.

A.	AT THE TIME OF COMPLETING A LOAN APPLICATION THE MORTGAGE LOAN ORIGINATOR SHALL COMPLETE A TANGIBLE NET BENEFIT DISCLOSURE WITH THE BORROWER(S).

B.	THE TANGIBLE NET BENEFIT DISCLOSURE SHALL ALSO BE COMPLETED WITH THE BORROWER(S) PRIOR TO THE BORROWER(S) SIGNING LOAN CLOSING DOCUMENTS IF THE REASONABLE, TANGIBLE NET BENEFIT HAS CHANGED.

C.	TANGIBLE NET BENEFIT DISCLOSURES SHALL BE SIGNED BY BOTH THE MORTGAGE LOAN ORIGINATOR AND THE BORROWERS.

D.	A MORTGAGE LOAN ORIGINATOR SHALL PROVIDE COPIES OF COMPLETED DISCLOSURE FORMS TO ALL BORROWERS WITHIN THREE (3) BUSINESS DAYS OF COMPLETION.  FURTHERMORE, THE MORTGAGE LOAN ORIGINATOR MUST BE ABLE TO PROVIDE PROOF TO THE BOARD OR AN AUTHORIZED REPRESENTATIVE OF THE BOARD THAT THE DISCLOSURE FORMS DEFINED IN THIS RULE WERE IN FACT PROVIDED TO THE BORROWER WITHIN THREE (3) BUSINESS DAYS OF COMPLETION.

5.9	MORTGAGE LOAN ORIGINATOR AND MORTGAGE COMPANY DUTY TO RESPOND AND PROVIDE REQUESTED DOCUMENTS FOR INVESTIGATIONS

A.	PERSONS REQUIRED TO BE LICENSED OR MORTGAGE COMPANIES REQUIRED TO BE REGISTERED PURSUANT TO §§ 12-61-903 AND 12-61-903.1, C.R.S., SHALL PROVIDE THE BOARD OR THE BOARD’S REPRESENTATIVE WITH ALL INFORMATION REQUIRED BY THIS RULE.  

1.	FAILURE TO PROVIDE ALL INFORMATION REQUESTED BY THE BOARD OR AN AUTHORIZED REPRESENTATIVE OF THE BOARD WITHIN A TIMELINE ESTABLISHED BY THE BOARD, OR AUTHORIZED REPRESENTATIVE OF THE BOARD, SHALL BE GROUNDS FOR DISCIPLINARY ACTION AND GROUNDS FOR THE IMPOSITION OF FINES UNLESS THE BOARD, OR AUTHORIZED REPRESENTATIVE OF THE BOARD, HAS GRANTED AN EXTENSION OF TIME FOR THE RESPONSE.  

a.	THE MORTGAGE LOAN ORIGINATOR AND MORTGAGE COMPANY MAY ASK FOR AN EXTENSION OF TIME TO COMPLY IF:

i.	THE REQUEST IS DONE SO IN WRITING; AND

ii.	THE REQUEST IS RECEIVED BY THE BOARD OR AUTHORIZED REPRESENTATIVE OF THE BOARD PRIOR TO THE EXPIRATION DATE DEFINED IN THE NOTIFICATION LETTER SENT BY THE BOARD OR AUTHORIZED REPRESENTATIVE OF THE BOARD

b.	ANY AND ALL EXTENSIONS GRANTED ARE DONE SO AT THE DISCRETION OF THE BOARD OR AN AUTHORIZED REPRESENTATIVE OF THE BOARD.

2.	FAILURE TO PROVIDE ALL REQUESTED INFORMATION SHALL BE GROUNDS FOR DISCIPLINARY ACTION AND GROUNDS FOR THE IMPOSITION OF FINES REGARDLESS OF WHETHER THE UNDERLYING COMPLAINT RESULTS IN FURTHER INVESTIGATION OR SUBSEQUENT ACTION BY THE BOARD.

B.	THE RESPONSE FROM THE PERSON SHALL CONTAIN THE FOLLOWING:

1.	IF REQUESTED IN THE NOTIFICATION LETTER, THE MORTGAGE LOAN ORIGINATOR SHALL PROVIDE A COMPLETE AND SPECIFIC ANSWER TO THE FACTUAL RECITATIONS, ALLEGATIONS OR AVERMENTS MADE IN THE COMPLAINT FILED AGAINST THE LICENSEE, WHETHER MADE BY A MEMBER OF THE PUBLIC OR ON THE BOARD’S OWN MOTION OR BY AN AUTHORIZED REPRESENTATIVE OF THE BOARD;

2.	THE MORTGAGE LOAN ORIGINATOR SHALL PROVIDE A COMPLETE AND SPECIFIC RESPONSE TO ALL QUESTIONS, ALLEGATIONS OR AVERMENTS PRESENTED IN THE NOTIFICATION LETTER; AND

3.	ANY AND ALL DOCUMENTS OR RECORDS REQUESTED IN THE NOTIFICATION LETTER.

C.	MORTGAGE COMPANIES SHALL MAINTAIN ANY AND ALL DOCUMENTS COLLECTED, GATHERED AND PROVIDED FOR THE PURPOSE OF NEGOTIATING AND ORIGINATING RESIDENTIAL MORTGAGE LOANS FOR A PERIOD OF FOUR YEARS.  ADDITIONALLY, MORTGAGE COMPANIES SHALL MAINTAIN ANY AND ALL DOCUMENTS USED FOR THE PURPOSE OF SOLICITING OR MARKETING BORROWERS THAT WERE DIRECTED, MADE OR CAUSED TO BE MADE BY THE MORTGAGE COMPANY.  THESE DOCUMENTS INCLUDE BUT ARE NOT LIMITED TO:

1.	ALL UNIFORM RESIDENTIAL LOAN APPLICATIONS (FORM 1003);

2.	ALL REQUIRED STATE AND FEDERAL DISCLOSURES;

3.	ASSET STATEMENTS;
	
4.	INCOME DOCUMENTATION;

5.	VERIFICATION OF EMPLOYMENT;

6.	VERIFICATION OF DEPOSIT;

7.	LENDER SUBMISSION FORMS;

8.	ADVERTISEMENTS;

9.	FLYERS;

10.	HUD-1 SETTLEMENT STATEMENTS;

11.	UNIFORM UNDERWRITING AND TRANSMITTAL SUMMARY(FORM 1008); AND

12.	CREDIT REPORT. 

D.	THE MORTGAGE LOAN ORIGINATOR SHALL MAINTAIN ANY AND ALL DOCUMENTS USED FOR THE PURPOSE OF SOLICITING OR MARKETING BORROWERS THAT WERE DIRECTED, MADE OR CAUSED TO BE MADE BY THE MORTGAGE LOAN ORIGINATOR.

E.	ALL DOCUMENTS REQUIRED IN THIS RULE SHALL BE KEPT IN A SAFE AND SECURE MANNER.  ELECTRONIC STORAGE IS ACCEPTABLE AS LONG AS THE INFORMATION IS ACCESSIBLE AND KEPT IN A SAFE AND SECURE MANNER. 

5.10	MORTGAGE LOAN ORIGINATORS MAINTAINING CURRENT CONTACT INFORMATION AND ALL INFORMATION REQUIRED FOR LICENSING

A.	INDIVIDUALS REQUIRED TO BE LICENSED AS A STATE LICENSED LOAN ORIGINATOR SHALL MAINTAIN ALL CURRENT CONTACT INFORMATION AND ALL INFORMATION REQUIRED FOR LICENSING, IN A MANNER ACCEPTABLE TO THE BOARD, INCLUDING ON THE DIVISION OF REAL ESTATE DATABASE AND ON THE NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY.  FAILURE TO MAINTAIN THE INFORMATION IDENTIFIED IN THIS RULE SHALL BE GROUNDS FOR DISCIPLINARY ACTION.

B.	CONTACT INFORMATION SHALL INCLUDE, BUT IS NOT LIMITED TO:

1.	E-MAIL ADDRESS;

2.	LEGAL FIRST, MIDDLE AND LAST NAMES;

3.	PHYSICAL HOME ADDRESS;

4.	HOME PHONE NUMBER;

5.	BUSINESS ADDRESS; 

6.	BUSINESS PHONE NUMBER; AND

7.	BUSINESS NAME.

C.	INFORMATION REQUIRED FOR LICENSING INCLUDES, BUT IS NOT LIMITED  TO:

1.	SURETY BOND COMPANY;

2.	SURETY BOND NUMBER; 

3.	SURETY BOND EFFECTIVE DATE;

4.	ERRORS AND OMISSIONS INSURANCE PROVIDER;

5.	ERRORS AND OMISSIONS POLICY NUMBER;

6.	ERRORS AND OMISSIONS EFFECTIVE AND EXPIRATION DATE; AND

7.	CONVICTIONS, PLEAS OF GUILT OR NOLO CONTENDERE FOR ALL CRIMES.

D.	INDIVIDUALS REQUIRED TO BE LICENSED AS A STATE LICENSED LOAN ORIGINATOR SHALL UPDATE THE BOARD WITHIN THIRTY (30) DAYS OF ANY CHANGES TO THE INFORMATION DEFINED IN THIS RULE ON BOTH THE DIVISION OF REAL ESTATE DATABASE AND ON THE NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY.

5.11	MORTGAGE LOAN ORIGINATOR CONTRACTS

ALL CONTRACTS BETWEEN A MORTGAGE LOAN ORIGINATOR AND A BORROWER SHALL BE IN WRITING AND SHALL CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES.  SECTION 12-61-913(1), C.R.S. DOES NOT REQUIRE A CONTRACT BETWEEN A MORTGAGE LOAN ORIGINATOR AND A BORROWER.  RATHER, THAT IF A CONTRACT DOES EXIST; SUCH CONTRACT SHALL BE IN WRITING.

5.12	MORTGAGE LOAN ORIGINATOR AGREEMENTS

A MORTGAGE LOAN ORIGINATOR SHALL HAVE A WRITTEN CORRESPONDENT OR LOAN ORIGINATOR AGREEMENT WITH A LENDER BEFORE ANY SOLICITATION OF, OR CONTRACTING WITH, ANY MEMBER OF THE PUBLIC.  A MORTGAGE LOAN ORIGINATOR IS COMPLIANT WITH THIS RULE AND § 12-61-913(2), C.R.S., IF THEY ADHERE TO ONE OF THE FOLLOWING REQUIREMENTS:

A.	THEY INDIVIDUALLY HAVE A WRITTEN CORRESPONDENT OR LOAN ORIGINATOR AGREEMENT WITH A LENDER BEFORE ANY SOLICITATION OF, OR CONTRACTING WITH, ANY MEMBER OF THE PUBLIC;

B.	THEY ARE AN OFFICER, PARTNER, MEMBER, EXCLUSIVE AGENT, OR EMPLOYEE OF A COMPANY THAT HAS A WRITTEN CORRESPONDENT OR LOAN ORIGINATOR AGREEMENT WITH A LENDER BEFORE ANY SOLICITATION OF, OR CONTRACTING WITH, ANY MEMBER OF THE PUBLIC; 

C.	THEY ARE ACTING AS AN INDEPENDENT CONTRACTOR AND MAINTAIN A CONTRACTUAL AGREEMENT WITH A COMPANY THAT HAS A WRITTEN CORRESPONDENT OR LOAN ORIGINATOR AGREEMENT WITH A LENDER BEFORE ANY SOLICITATION OF, OR CONTRACTING WITH, ANY MEMBER OF THE PUBLIC; OR

D.	THEY ARE AN EMPLOYEE OF A LENDER BEFORE ANY SOLICITATION OF, OR CONTRACTING WITH, ANY MEMBER OF THE PUBLIC.

5.13	MORTGAGE LOAN ORIGINATOR DISCLOSURES

PURSUANT TO 12-61-914(1), C.R.S., REQUIRES THAT SPECIFIC DISCLOSURES, SET FORTH IN § 12-61-914(2), C.R.S., BE DISCLOSED WITHIN THREE (3) BUSINESS DAYS AFTER RECEIPT OF A LOAN APPLICATION OR ANY MONEYS FROM A BORROWER.

5.14	DISCLOSURE REQUIREMENTS (INFORMATION COMMONLY FOUND IN THE TRUTH IN LENDING DISCLOSURE FORM) AS DEFINED IN SECTION 12-61-914(2)(A), C.R.S., SHALL BE DISCLOSED:

A.	WITHIN THREE (3) BUSINESS DAYS AFTER RECEIPT OF A LOAN APPLICATION OR ANY MONEYS FROM A BORROWER;

B.	IF, AFTER THE INITIAL WRITTEN DISCLOSURE IS PROVIDED, A MORTGAGE LOAN ORIGINATOR ENTERS INTO A LOCK-IN AGREEMENT, WITHIN THREE (3) BUSINESS DAYS THEREAFTER AND PRIOR TO THE BORROWER SIGNING LOAN CLOSING DOCUMENTS; AND

C.	IF, AFTER A MORTGAGE LOAN ORIGINATOR ENTERS INTO A LOCK-IN AGREEMENT, THE ANNUAL PERCENTAGE RATE INCREASES FROM THE ANNUAL PERCENTAGE RATE DISCLOSED EARLIER BY MORE THAN 1/8 OF ONE (1) PERCENTAGE POINT, WITHIN THREE (3) BUSINESS DAYS OF SUCH CHANGE AND PRIOR TO THE BORROWER SIGNING LOAN CLOSING DOCUMENTS.

THE TRUTH IN LENDING DISCLOSURE FORM IS AN ACCEPTABLE MANNER IN WHICH TO DISCLOSE THE REQUIREMENTS SET FORTH IN THIS RULE.

5.15	DISCLOSURE REQUIREMENTS (INFORMATION COMMONLY FOUND IN THE PRE-2010 HUD GOOD FAITH ESTIMATE DISCLOSURE FORM) AS DEFINED IN SECTION 12-61-914(2)(B), C.R.S., SHALL BE DISCLOSED IN THE MANNER SET FORTH IN RULE 5.14, SECTIONS (A) THROUGH (C); AND

	THE MORTGAGE LOAN ORIGINATOR MUST CREATE AND IMPLEMENT A FORM THAT ITEMIZES THE DISCLOSURE OF ALL THIRD-PARTY FEES AND COSTS.  THE DISCLOSURE SHALL INCLUDE MORTGAGE LOAN ORIGINATOR AND BORROWER SIGNATURES AND DATES IN WHICH THE DISCLOSURE WAS COMPLETED AND SIGNED.

5.16	A MORTGAGE LOAN ORIGINATOR SHALL NOT CHARGE ANY FEE THAT INURES TO THE BENEFIT OF THE MORTGAGE LOAN ORIGINATOR AND THE MORTGAGE COMPANY FOR WHICH THEY ARE AN OFFICER, PARTNER, MEMBER, EXCLUSIVE AGENT, CONTRACTOR, INDEPENDENT CONTRACTOR OR EMPLOYEE IF SUCH FEE EXCEEDS THE FEE DISCLOSED ON THE PREVIOUS WRITTEN DISCLOSURE UNLESS:

A.	THE NEED TO CHARGE THE FEE WAS NOT REASONABLY FORESEEABLE AT THE TIME THE WRITTEN DISCLOSURE WAS PROVIDED; AND

B.	THE MORTGAGE LOAN ORIGINATOR HAS PROVIDED TO THE BORROWER, NO LESS THAN (3) THREE BUSINESS DAYS AND PRIOR TO THE SIGNING OF THE LOAN CLOSING DOCUMENTS, A CLEAR AND WRITTEN EXPLANATION OF THE FEE AND THE REASON FOR CHARGING A FEE EXCEEDING THAT WHICH WAS PREVIOUSLY DISCLOSED.

5.17	COMPENSATION DISCLOSURE REQUIREMENTS AS DEFINED IN SECTION 12-61-914(2)(C), C.R.S., SHALL BE DISCLOSED PURSUANT TO PROVISIONS AND TIMELINES DEFINED IN APPLICABLE FEDERAL LAWS OR ACCORDING TO ANY REGULATION ADOPTED BY THE CONSUMER FINANCIAL PROTECTION BUREAU.

5.18	LOCK-IN DISCLOSURE REQUIREMENTS AS DEFINED IN SECTION 12-61-914(2)(D), C.R.S., SHALL BE DISCLOSED:

A.	WITHIN THREE (3) BUSINESS DAYS AFTER RECEIPT OF A LOAN APPLICATION OR ANY MONEYS FROM A BORROWER;

B.	IF, AFTER THE INITIAL WRITTEN DISCLOSURE IS PROVIDED, A MORTGAGE LOAN ORIGINATOR ENTERS INTO A LOCK-IN AGREEMENT, WITHIN THREE (3) BUSINESS DAYS THEREAFTER AND PRIOR TO THE BORROWER SIGNING LOAN CLOSING DOCUMENTS, THE MORTGAGE LOAN ORIGINATOR SHALL DELIVER OR SEND BY FIRST-CLASS MAIL TO THE BORROWER, THE WRITTEN LOCK-IN DISCLOSURE.

C.	IF, AFTER A MORTGAGE LOAN ORIGINATOR ENTERS INTO A LOCK-IN AGREEMENT, THE ANNUAL PERCENTAGE RATE INCREASES FROM THE ANNUAL PERCENTAGE RATE DISCLOSED EARLIER BY MORE THAN 1/8 OF ONE (1) PERCENTAGE POINT, WITHIN THREE (3) BUSINESS DAYS OF SUCH CHANGE AND PRIOR TO THE BORROWER SIGNING LOAN CLOSING DOCUMENTS; AND

D.	IF, AFTER THE MORTGAGE LOAN ORIGINATOR ENTERS INTO A LOCK-IN AGREEMENT, THERE IS A CHANGE TO ANY OF THE INFORMATION PROVIDED ON THE LOCK-IN DISCLOSURE FORM, INCLUDING BUT NOT LIMITED TO A LOCK-IN EXTENSION.

5.19	THE BOARD HAS CREATED THE COLORADO LOCK-IN DISCLOSURE FORM TO ENSURE THIS INFORMATION IS CLEARLY AND CONCISELY DISCLOSED.  THIS DISCLOSURE MAY BE FOUND ON THE DIVISION OF REAL ESTATE’S WEBSITE. A MORTGAGE LOAN ORIGINATOR MAY USE AN ALTERNATE FORM IF THE ALTERNATE FORM CLEARLY INCLUDES ALL INFORMATION REQUIRED ON THE COLORADO LOCK-IN DISCLOSURE FORM, AS DETERMINED BY THE BOARD.

5.20	THE COLORADO LOCK-IN DISCLOSURE FORM OR ALTERNATE FORM SHALL BE USED WHEN DISCLOSING THE SECURED RATE OF INTEREST FOR THE PERSPECTIVE BORROWER OR DISCLOSING THAT THE INTEREST RATE IS NOT SECURED AND IS SUBJECT TO CHANGE.

A.	THE MORTGAGE LOAN ORIGINATOR SHALL DISCLOSE THE AMOUNT OF THE TEASER RATE, PAYMENT RATE OR INTEREST RATE AND ALSO DISCLOSE THE TYPE OF RATE.  EXAMPLES OF THE TYPE OF RATE INCLUDE, BUT ARE NOT LIMITED TO:

1.	TEASER RATE;

2.	PAYMENT RATE; OR 

3.	INTEREST RATE.

B.	WHEN DISCLOSING THE PAYMENT TYPE, MORTGAGE LOAN ORIGINATORS SHALL DEFINE IF THE PAYMENT TYPE IS A NEGATIVE AMORTIZATION PAYMENT; INTEREST ONLY PAYMENT OR PRINCIPAL AND INTEREST PAYMENT.

5.21	INDIVIDUALS WHO ORIGINATE A MORTGAGE OR ACT AS A MORTGAGE LOAN ORIGINATOR ARE REQUIRED TO KEEP RECORDS OF THE DISCLOSURES, SET FORTH IN 12-61-914(2), C.R.S., FOR A PERIOD OF FOUR YEARS, FOR THE PURPOSES OF INSPECTION BY THE BOARD OR AUTHORIZED REPRESENTATIVE OF THE BOARD.

A.	ALL DOCUMENTS SHALL BE KEPT IN A SAFE AND SECURE MANNER.  ELECTRONIC STORAGE IS ACCEPTABLE AS LONG AS THE INFORMATION IS ACCESSIBLE AND KEPT IN A SAFE AND SECURE MANNER. 

B.	THE COMPANY FOR WHOM THE MORTGAGE LOAN ORIGINATOR IS AN OFFICER, PARTNER, CONTRACTOR, INDEPENDENT CONTRACTOR, MEMBER, EXCLUSIVE AGENT OR AN EMPLOYEE MAY PROVIDE THE REQUESTED DOCUMENTS TO THE BOARD.  HOWEVER, THE MORTGAGE LOAN ORIGINATOR IS RESPONSIBLE FOR COMPLIANCE WITH THE BOARD’S REQUEST AND IS SUBJECT TO DISCIPLINARY ACTION IF THE COMPANY FAILS OR REFUSES TO PROVIDE THE REQUESTED DOCUMENTATION.  

C.	THE MORTGAGE LOAN ORIGINATOR MUST BE ABLE TO PROVIDE PROOF TO THE BOARD OR AN AUTHORIZED REPRESENTATIVE OF THE BOARD THAT THE DISCLOSURE FORMS DEFINED IN THIS RULE WERE IN FACT PROVIDED TO THE BORROWER WITHIN THREE (3) BUSINESS DAYS OF COMPLETION.

5.22	DUAL STATUS DISCLOSURE

THE BOARD PROHIBITS INDIVIDUALS FROM ACTING AS A MORTGAGE LOAN ORIGINATOR AND A REAL ESTATE BROKER, ON THE SAME TRANSACTION, UNLESS THEY COMPLY WITH THE REQUIREMENTS SET FORTH IN THIS RULE.

A.	DUAL STATUS IS A MATERIAL FACT TO REAL ESTATE TRANSACTIONS AND SHALL BE DISCLOSED TO THE BORROWER(S). 

B.	THE BOARD HAS CREATED THE COLORADO DUAL STATUS DISCLOSURE FORM TO ENSURE THIS INFORMATION IS CLEARLY AND CONCISELY DISCLOSED.  THIS DISCLOSURE MAY BE FOUND ON THE DIVISION OF REAL ESTATE’S WEBSITE.  A MORTGAGE LOAN ORIGINATOR SHALL USE THIS FORM OR AN ALTERNATE FORM, IF SUCH ALTERNATE FORM CLEARLY INCLUDES ALL INFORMATION REQUIRED ON THE SUGGESTED FORM, AS DETERMINED BY THE BOARD.

C.	THE COLORADO DUAL STATUS DISCLOSURE FORM SHALL BE COMPLETED, DISCLOSED, AND PROVIDED TO THE BORROWER WITHIN THREE (3) BUSINESS DAYS AFTER RECEIPT OF A LOAN APPLICATION OR ANY MONEYS FROM A BORROWER.

D.	PERSONS WHO ORIGINATE A MORTGAGE, OFFER TO ORIGINATE A MORTGAGE, ACT AS A MORTGAGE LOAN ORIGINATOR, OR OFFER TO ACT AS A MORTGAGE LOAN ORIGINATOR SHALL MAINTAIN THE DISCLOSURE FORM DEFINED BY THIS RULE FOR A PERIOD OF FOUR YEARS.

E.	THE MORTGAGE LOAN ORIGINATOR MUST BE ABLE TO PROVIDE PROOF TO THE BOARD OR AN AUTHORIZED REPRESENTATIVE OF THE BOARD THAT THE DISCLOSURE FORMS DEFINED IN THIS RULE WERE IN FACT PROVIDED TO THE BORROWER WITHIN THREE (3) BUSINESS DAYS OF COMPLETION.

A hearing on the above subject matter will be held on Wednesday, September 18, 2013, at the Colorado Division of Real Estate, 1560 Broadway, Suite 1250-C, Denver, Colorado 80202 beginning at 9:00 a.m. 

Any interested person may participate in the rule making through submission of written data, views and arguments to the Division of Real Estate.  Persons are requested to submit data, views and arguments to the Division of Real Estate in writing no less than ten (10) days prior to the hearing date and time set forth above. However, all data, views and arguments submitted prior to or at the rulemaking hearing or prior to the closure of the rulemaking record (if different from the date and time of hearing), shall be considered.

Please be advised that the rule being considered is subject to further changes and modifications after public comment and formal hearing.