DEPARTMENT OF REGULATORY AGENCIES

DIVISION OF REAL ESTATE

MORTGAGE LOAN ORIGINATORS

4CCR 725-3

1-1-5 PRELIMINARY ADVISORY OPINIONS

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 Director of the Colorado Division of Real Estate to promulgate rules.

Section 1. 	Authority
Section 2.	Scope and Purpose
Section 3. 	Applicability
Section 4. 	1-1-5 Preliminary Advisory Opinions 

Section 1. 	Authority

The statutory basis for this rule, entitled 1-1-5 Preliminary Advisory Opinions, is § 12-61-910.3, C.R.S.

The notice proposes to add rule 1-1-5.  The rule establishes a preliminary advisory opinion process for individuals concerned about how existing license laws may apply to their circumstances.

Section 2.	Scope and Purpose

In 2006, Colorado was one of two states, the other being Alaska, that had no regulatory oversight regarding mortgage brokers.  In 2006, the Colorado General Assembly acted and passed House Bill 06-1161.  In 2007, due to the state of the real estate market and the foreclosure crisis, the Colorado General Assembly enacted and passed House Bill 07-1322, Senate Bill 07-216, Senate Bill 07-085, and Senate Bill 07-203.  In 2008, Congress passed the Housing and Economic Recovery Act of 2008.  The Housing and Economic Recovery Act of 2008 contained the S.A.F.E. Act, which established minimum national licensing standards for mortgage loan originators and mandated states to adopt such provisions.  As a result, in 2009 the Colorado General Assembly acted and passed House Bill 09-1085 to ensure compliance with the S.A.F.E. Act.  

While Colorado was one of the last states to establish regulatory oversight of mortgage brokers, the registration and licensing laws have seen significant changes.  The investment of time, energy and resources have increased with each passing bill.  As a result, the purpose of this rule is to define a preliminary advisory process where potential applicants may have their specific circumstances reviewed by the Director or an authorized representative of the Director and be provided an opinion regarding whether or not they are likely to receive a license approval or a license denial.  In doing so, potential applicants will be able to receive guidance prior to acquiring and paying for the requisite errors and omissions insurance, surety bond, finger prints for submission, completion of required educational courses and passage of the appropriate test.  The purpose of this preliminary advisory rule is to define a preliminary advisory opinion process for prospective licensees.

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.	1-1-5 Preliminary Advisory Opinions

1.	Potential applicants for a state license or a registration through the Nationwide Mortgage Licensing System and Registry (the “NMLS&R”) may submit information in order for the Director or an authorized representative of the Director to reasonably ascertain the likelihood of license or registration approval through a defined preliminary advisory opinion process.

2.	Potential applicants may request a preliminary advisory opinion for any of the following reasons:

a.	If the individual has been convicted, plead guilty or nolo contendere to any crime under Colorado law, federal law, District of Columbia law, or under the laws of any other states or territories, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, Virgin Islands and the Northern Mariana Islands;

b.	If the individual has been enjoined in the immediately preceding five (5) years under the laws of this or any other state, District of Columbia or any other territories, Puerto Rico, Guam, American Samoa, the Trust of the Pacific Islands, Virgin Islands and the Northern Mariana Islands from in engaging in deceptive conduct relating to the origination of a mortgage loan;

c.	If the individual has had other professional licenses, certifications or registrations issued by Colorado, the District of Columbia, any other states or territories, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, Virgin Islands and the Northern Mariana Islands revoked or suspended for fraud, theft, deceit, material misrepresentations or the breach of a fiduciary duty and such suspension or revocation denied authorization to practices as: a mortgage loan originator or similar license; real estate broker; real estate appraiser; an insurance producer; an attorney; a securities broker-dealer; a securities sales representative; an investment advisor; or an investment advisor representative; or

d.	If the individual has been assessed a civil or criminal penalty for violating any provision of the Colorado Consumer Protection Act.

3.	Individuals requesting a preliminary advisory opinion shall complete the Preliminary Advisory Worksheet posted on the Division of Real Estate website found at http://www.dora.state.co.us/real-estate/mortgage/MBForms.htm.  Additionally, individuals requesting a preliminary advisory opinion shall pay a fee identical to the license application fee for applicants as prescribed by the Director.  Such fee will be applied as the license application fee if the individual chooses to apply.

4.	Individuals requesting a preliminary advisory opinion shall submit all corresponding, or relevant documents related to any conduct or actions described in Section 4, subsection 2 of this rule.  Incomplete requests will not be processed.  The Director or an authorized representative of the Director may, at any time, request additional information regarding the preliminary advisory opinion request.  Such corresponding, relevant or related documents may include, but are not limited to:

a.	Police officer reports;

b.	Dispositions documents;

c.	Court documents;

d.	Original charges documents;

e.	Stipulated agreements; or

f.	Final Agency Orders. 

5.	Additionally, individuals requesting a preliminary advisory opinion shall submit a written and signed personal explanation and detailed account of the facts and circumstances.

6.	Any preliminary advisory opinion shall not be binding on the Director or limit the Director’s authority to investigate a future formal application for licensure. 

7.	An individual seeking a preliminary advisory opinion under this rule is not an applicant for licensure and the issuance of an unfavorable opinion shall not prevent such individual from making application for licensure pursuant to the Mortgage Loan Originator Licensing Act.

8.	The Director or an authorized representative of the Director will provide a favorable or an unfavorable opinion.