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

NOTICE OF PROPOSED PERMANENT RULEMAKING HEARING
November 20, 2013

1-2-2 SURETY BOND REQUIREMENTS FOR MORTGAGE LOAN ORIGINATORS

Section 1.	Authority
Section 2. 	Scope and Purpose
Section 3.	Applicability
Section 4. 	1-2-2 Surety Bond Requirements for Mortgage Loan Originators
Section 5.	Enforcement

Section 1. 	Authority

The Board of Mortgage Loan Originators updates the following permanent rule entitled, 1-2-2 Surety Bond Requirements for Mortgage Loan Originators, according to the authority prescribed in §§ 12-61-907 and 910.3, C.R.S.

The notice proposes to update rule 1-2-2.  The rule establishes surety bond requirements for mortgage loan originators.

Section 2.	Scope and Purpose

The purpose of this rule is to define the surety bond requirements for mortgage loan originators or any other individual required to be licensed pursuant to § 12-61-902 and § 12-61-903, C.R.S.

Section 3.	Applicability

This rule applies to all individuals required to be licensed pursuant to § 12-61-902 and § 12-61-903, C.R.S. 

Section 4.	1-2-2 Surety Bond Requirements for Mortgage Loan Originators

1.	Mortgage loan originators are deemed compliant with the surety bond requirement if their surety bond meets the requirements defined in one of the following three options:

a.	Option 1 - Mortgage loan originators, at a minimum, may acquire and maintain an individual surety bond if:

i.	The surety bond is in the amount of $25,000.00;

ii.	The surety bond is in conformance with all relevant Colorado statutory requirements;

iii.	The surety bond is exclusive to covering acts contemplated under current Colorado mortgage loan originator licensing laws;

iv.	The surety bond is not applicable to any conduct or transactions outside the jurisdiction of the Board of Mortgage Loan Originators (the “Board”); and

v.	The surety bond is identical to the individual surety bond form developed and approved by the Board.  Acceptable surety bond forms may be found on the Division of Real Estate website at http://www.dora.state.co.us/real-estate/applications/mortgagebroker/index.htm 

b.	Option 2 – Mortgage loan originators who are employees or exclusive agents for companies with less than 20 individuals who are required to be licensed pursuant to current Colorado mortgage loan originator licensing laws and who do not work for more than one company, may, at a minimum, operate under their company’s surety bond if the surety bond meets the following criteria:

i.	The surety bond is in the amount of $100,000.00;

ii.	The surety bond is in conformance with all relevant Colorado statutory requirements;

iii.	The surety bond is exclusive to covering acts of all of the company’s W-2 employees or exclusive agents contemplated under current Colorado mortgage loan originator licensing laws; and

iv.	The surety bond is identical to the company surety bond form developed and approved by the Board.  Acceptable surety bond forms may be found on the Division of Real Estate website at http://www.dora.state.co.us/real-estate/applications/mortgagebroker/index.htm

c.	Option 3 – Mortgage loan originators who are W-2 employees or exclusive agents for companies with 20 or more individuals who are required to be licensed pursuant current Colorado mortgage loan originator licensing laws and who do not work for more than one company, may, at a minimum, operate under a company’s surety bond if the surety bond meets the following criteria:

i.	The surety bond is in the amount of $200,000.00;

ii.	The surety bond is in conformance with all relevant Colorado statutory requirements;

iii.	The surety bond is exclusive to covering acts of all of the company’s W-2 employees contemplated under current Colorado mortgage loan originator licensing laws; and

iv.	The surety bond is identical to the company surety bond form developed and approved by the Board.  Acceptable surety bond forms may be found on the Division of Real Estate website at http://www.dora.state.co.us/real-estate/applications/mortgagebroker/index.htm

2.	Regarding company surety bonds, the company shall provide the Board or an authorized representative of the Board with any and all requested surety bonds relevant to this rule or current mortgage loan originator license laws and shall verify and provide adequate proof regarding the timeline of employment for each individual operating under such company policy.  Failure on the part of the company to provide such information shall result in non-compliance regarding the surety bond requirement for individual licensees operating under such company bond.

3.	Mortgage loan originators shall use the Mortgage Loan Originator Licensing Update Form to ensure surety bond information is clearly and concisely disclosed and that all information required by this rule is current.  This form may be found on the Division of Real Estate’s website at http://www.dora.state.co.us/real-estate/mortgage/MBForms.htm.

a.	Mortgage loan originators shall forward this form by mail or personal delivery to the following address:

i.	Division of Real Estate – Attn: Mortgage Loan Originator Licensing Department
1560 Broadway, Suite 925
Denver, CO. 80202

4.	Additionally, mortgage loan originators may update all of the information required in this rule electronically.  They may access their information through the following website: https://eservices.psiexams.com/index_login.jsp.  After entering their password and username, mortgage loan originators may update all information without any fees or costs associated with such action.

5.	Applicants for licensure, renewal, and reinstatement shall comply with this rule and §§ 12-61-903 and 907, C.R.S., in a manner prescribed by the Board.  Any licensee who so fails to obtain and maintain a surety bond in accordance with this rule or fails to provide proof of continuous coverage shall be subject to disciplinary action.

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] 

A hearing on the above subject matter will be held on Wednesday, November 20, 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.