DEPARTMENT OF REGULATORY AGENCIES

DIVISION OF REAL ESTATE

MORTGAGE BROKERS

PERMANENT RULE

4CCR 725 -3

1-4-1 MORTGAGE BROKER LICENSING EDUCATION

Section 1.	Authority
Section 2.	Scope and Purpose
Section 3.	Applicability
Section 4. 	Mortgage Broker Licensing Education Rules
Section 5. 	Effective Date

Section 1. 	Authority

The Director of the Division of Real Estate adopts the following permanent rule entitled, 1-4-1 Mortgage Broker Licensing Education, according to her authority as found in §§  12-61-910.3, and 24-4-103, C.R.S.

Section 2.	Scope and Purpose

Pursuant to § 12-61-903(3)(a), mortgage brokers must complete no less than nine hours of fundamental mortgage lending coursework and satisfactorily complete a corresponding written examination.  The Director shall approve the fundamental mortgage lending coursework and the written examination. 

The purpose of this rule is to clarify the education requirements for licensed mortgage brokers.  The purpose is also to ensure compliance with education standards.  It is vital to consumer protection and to competent mortgage broker practice that mortgage brokers understand applicable State and Federal Law.

Section 3.	Applicability

This rule applies to each individual mortgage broker applicant and each individual mortgage broker who currently maintains a mortgage broker license through the Colorado Division of Real Estate.

Section 4. 	Mortgage Broker Licensing Education Rules.

(1) - Applicant and Licensee Education Requirements
All mortgage brokers who currently maintain a Colorado mortgage broker’s license must complete 40 hours of licensing education and pass a two-part licensing examination by January 1, 2009.  

On or after January 1, 2009, each individual applicant for initial licensing as a mortgage broker must complete, within the three years immediately preceding the date of the application, 40 hours of licensing education and pass a two-part exam prior to applying for a mortgage broker license.  

(2) – Certificate of Completion
Mortgage broker applicants and licensees must receive a certification of completion from their education provider evidencing the successful completion of the respective licensing education coursework before scheduling the exam. 

Mortgage broker applicants and licensees must ensure that their education provider files a certification of completion with the examination provider establishing the successful completion of the respective licensing education coursework before scheduling the exam. The education provider must file the certificate of completion with the approved examination provider electronically or in such manner as prescribed by the Director.
  
(3) – Licensing Education Passing Score
The mortgage broker licensing examination consists of two parts.  The two parts include Federal and State Law and Mortgage Lending Basics. Applicants for licensure must receive a score of at least 70 percent to pass the Federal and State Law portion of the exam and a 70 percent or higher score to pass the Mortgage Lending Basics portion of the exam. If the applicant fails one of the two parts, the applicant may reschedule with the examination provider to retake only the portion of the exam that the applicant failed. In no event will the Director accept a passing score for licensure beyond one year from the date of the passing score.

(4) – Qualifying Schools 
Mortgage broker applicants and licensees must receive the required 40 hours of licensing education, approved by the Director, from any accredited degree-granting college or university or any private occupational school that has a certificate of approval from the Division of Private Occupational Schools in accordance with the provisions of article 59 of title 12, Colorado Revised Statutes.  

(5) – Forty Hour Licensing Education Requirement
Mortgage broker applicants and licensees must successfully complete the required forty hours of licensing education through classroom instruction or an equivalent distant learning course offered in a manner as prescribed by the Director.  Pursuant to the requirements in Part 1 of this rule, the following licensing education must be successfully completed prior to taking the examination and applying for a license:
(a)	A minimum of  19.5 hours in Federal and State Law
(b)	A minimum of  16 hours in Mortgage 101
(c)	A minimum of  4.5 hours in Business and Trade Practices

(6) – Exemption Qualifications
As prescribed by the Director or person(s) authorized by the Director, qualifying mortgage broker applicants who meet the following criteria are exempt from having to complete the Mortgage Broker 101 and the Business and Trade Practice portion of the education coursework and respective examination.  

To qualify for the exemption, mortgage brokers must meet all five requirements:
1)	Currently maintain a Colorado mortgage broker license.
2)	Maintain a membership with a mortgage broker association approved for exemption by the Division of Real Estate.
3)	Maintain a mortgage broker association designation that is current and in good standing. 
4)	Provide the association’s letter of certification to the education course provider prior to completing coursework. 
5)	Provide the association’s letter of certification to an independent testing service contracted with by the Director, prior to taking the Federal and State Law exam.

Those who meet the criteria for exemption must complete the Federal and State Law portion of the licensing coursework and pass the Federal and State Law portion of the exam with a score of 70 percent or higher.

(7) – Authority to Audit Education Provider
The Director or persons, contractors or organizations authorized by the Director, may audit courses and may request from each education provider and schools offering the approved mortgage broker courses pursuant to requirements in part 5 of this rule, all related instructional materials, student attendance records and other information that may be necessary for an audit.  The purpose of the audit is to ensure that education providers and schools adhere to the approved course of study, offer course material and instructions consistent with acceptable education standards and instruct in such a manner that the desired learning objectives are met.  Failure to comply with this rule may result in the withdrawal of course approval.

(8) - Penalties
Individuals who violate this rule shall be subject to disciplinary action pursuant to § 12-61-905, C.R.S. Disciplinary action includes, but is not limited to:

a.	Revocation;
b.	Refusal to renew a license
c.	Fines; and
d.	Denial of license
e.	Restitution for any financial loss

Section 5.	Effective Date

This permanent rule shall be effective August 30, 2008.