DEPARTMENT OF REGULATORY AGENCIES

DIVISION OF REAL ESTATE

MORTGAGE LOAN ORIGINATORS

4CCR 725-3

5-1-1 MORTGAGE LOAN ORIGINATOR CONTRACTS

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 Board of Mortgage Loan Originators to promulgate rules.

Section 1.	Authority
Section 2.	Scope and Purpose
Section 3.	Applicability
Section 4.	5-1-1 Mortgage Loan Originator Contracts
Section 5.	Enforcement

Section 1.	Authority

The statutory basis for this rule, entitled Mortgage Loan Originator Contracts, is § 12-61-910.3, C.R.S.

The notice proposes to update rule 5-1-1.  The rule defines the requirement for mortgage loan originators to have contracts with borrowers and with mortgage lenders.

Section 2.	Scope and Purpose

Section 12-61-913, C.R.S., requires contracts between a mortgage loan originator and a borrower to be in writing and to contain the entire agreement of the parties.  This section also requires mortgage loan originators to have a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public.  The purpose of this regulation is to define compliance with the contractual requirements.

Section 3.	Applicability

This rule applies to mortgage loan originators as that term is defined in § 12-61-902(6), C.R.S. and includes those 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.  This rule applies to all individuals required to be licensed pursuant to §§ 12-61-902 and 12-61-903, C.R.S. 

Section 4.	5-1-1 Mortgage Loan Originator Contracts

1.	Section 12-61-913(1), C.R.S. states that every contract between a mortgage loan originator and a borrower shall be in writing and shall contain the entire agreement of the parties.

a.	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.

2.	Section 12-61-913(2), C.R.S., states 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 originators are compliant with § 12-61-913(2), C.R.S. if they adhere to one of the following requirements:

i.	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;

ii.	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; 

iii.	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

iv.	They are an employee of a lender before any solicitation of, or contracting with, any member of the public.

Section 5.	Enforcement

1.	Noncompliance with this rule, whether defined or reasonably implied in the rule, may result in the imposition of any of the sanctions allowable under Colorado law, including, but not limited to:

a.	Revocation;

b.	Refusal to renew a license;

c.	Imposition of fines; and 

d.	Restitution for any financial loss. [REPEALED]