DEPARTMENT OF REGULATORY AGENCIES

DIVISION OF REAL ESTATE

MORTGAGE BROKERS

4CCR 725-3

1-3-1 ERRORS AND OMISSIONS INSURANCE FOR MORTGAGE BROKERS

Section 1.	Authority
Section 2. 	Scope and Purpose
Section 3.	Applicability
Section 4. 	Rules Regarding Errors and Omissions Insurance for Mortgage Brokers
Section 5.	Enforcement
Section 6. 	Effective Date

Section 1. 	Authority

The Director of the Division of Real Estate adopts the following emergency rule entitled, Errors and Omissions Insurance for Mortgage Brokers, according to her authority as found in § 12-61-910.3, C.R.S.

The notice proposes to add rule 1-3-1.  The rule establishes errors and omissions coverage for mortgage brokers.

Section 2.	Scope and Purpose

Section 12-61-903.5, C.R.S. requires the Director to determine the terms and conditions of coverage required, including the minimum limits of coverage, the permissible deductible and permissible exemptions.  The purpose of this rule is to define the requisite errors and omissions coverage.

Section 3.	Applicability

This rule applies to all mortgage brokers as that term is defined in § 12-61-902(5), C.R.S.  and includes those persons who broker a mortgage, offer to broker a mortgage, act as a mortgage broker, or offer to act as a mortgage broker.  

Section 4.	Rules Regarding Errors and Omissions Insurance for Mortgage Brokers

1.	Mortgage brokers, at a minimum, shall acquire and maintain the following terms of coverage:

a.	The contract and policy are in conformance with all relevant Colorado statutory requirements.

b.	Coverage includes all acts for which a mortgage broker license is required, except those illegal, fraudulent or other acts which are normally excluded from such coverage.

c.	Coverage shall encompass all types of transactions conducted by the mortgage broker. 

d.	Coverage is for not less than $100,000.00 for each licensed individual per covered claim, with an annual aggregate limit of not less than $300,000.00 per licensed individual.

e.	Coverage contains a deductible no greater than $10,000.00.

2.	This rule does not prohibit the use of group policies that may be administered by associations or companies for the benefit of volume discounts.  While this rule allows group policies, each individual required to be licensed must acquire and maintain the coverage defined in this rule on an individual basis and shall present proof of such coverage to the Director or authorized representative of the Director upon request.

1.	The Director has created the Mortgage Broker Licensing Update Form to ensure this information is clearly and concisely disclosed.  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.  Mortgage brokers shall use this form to ensure all information defined in this rule is current.  

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

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

2.	Additionally, mortgage brokers 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 brokers may update all information without any fees or costs associated with such action.

3.	For information regarding errors and omissions insurance providers, visit the Division of Real Estate’s website at http://www.dora.state.co.us/real-estate/index.htm. 

4.	Applicants for licensure, renewal and reinstatement shall comply with this rule and § 12-61-903.5, C.R.S. in a manner prescribed by the Director.  Any licensee who so fails to obtain errors and omissions coverage or 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.

Section 6.	Effective Date

This emergency rule is effective April 1, 2008.