[THIS PAGE NOT FOR PUBLICATION IN THE CODE OF COLORADO REGULATIONS]
DEPARTMENT OF REGULATORY AGENCIES
DIVISION OF REAL ESTATE
MORTGAGE LOAN ORIGINATORS AND MORTGAGE COMPANIES
4 CCR 725-3

CHAPTER 1:	DEFINITIONS

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 Colorado Board of Mortgage Loan Originators (the “Board”) to promulgate rules, or to amend, repeal or repeal and re-enact the present rules of the Board.

STATEMENT OF BASIS

The statutory basis for the rules titled Rules of the Board of Mortgage Loan Originators is Part 9 of Title 12, Article 61, Colorado Revised Statutes, as amended.  

STATEMENT OF PURPOSE

The purpose of this rule is to effectuate the legislative directive to promulgate necessary and appropriate rules in conformity with the state statutes of the mortgage loan originator licensing and mortgage company registration act.

SPECIFIC PURPOSE OF THIS RULEMAKING

The purpose of this rule is to define terms pertaining to the practices of mortgage loan originators and mortgage companies.  

CHAPTER 1:  DEFINITIONS
1.1	Definitions Pertaining To Licensure
	
Bona Fide Nonprofit Organization:  An Organization that Complies with the Following Criteria:
A.	Has the status of a tax-exempt organization under Section 501(C)(3) of the Internal Revenue Code of 1986, incorporated by reference  in compliance with Section 24-4-103(12.5), C.R.S. and does not include later amendments or editions of the Code.  A certified copy of the Code is readily available for public inspection at the Offices of the Board of Mortgage Loan Originators at 1560 Broadway, Suite 925, Denver, Colorado.  The Internal Revenue Code of 1986 may be examined at the internet website of the Internal Revenue Service at www.irs.gov.  The Internal Revenue Service may also be contacted at 1999 Broadway, Denver, Colorado 80202 or by telephone at (303) 446-1675;  
B.	Promotes affordable housing or provides homeownership education, or similar services;
C.	Conducts its activities in a manner that serves public and charitable purposes, rather than commercial purposes;
D.	Receives funding and revenue and charges fees in a manner that does not incentivize it or its employees to act other than in the best interests of its clients;
E.	Compensates its employees in a manner that does not incentivize employees to act other than in the best interests of its clients; and 
F.	Provides or identifies for the borrower residential mortgage loans with terms favorable to the borrower and comparable to mortgage loans and housing assistance provided under the government housing assistance programs.

An organization claiming bona fide nonprofit status will be subject to examination by the board of mortgage loan originators upon receipt of a complaint against the organization.  The purpose of the examination will be to determine whether the organization is exempt from licensure as a bona fide nonprofit organization.

Employee:  an individual whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person, and whose compensation for federal income tax purposes is reported, or required to be reported, on a W-2 form issued by the controlling person.

Housing Finance Agency:  any authority that is chartered by the State of Colorado to help meet the affordable housing needs of the residents of Colorado; is supervised directly or indirectly by the state government; is subject to audit and review by the State of Colorado; and whose activities make it eligible to be a member of the national council of state housing agencies.

Independent Contractor:  an individual who performs his or her duties other than at the direction of and subject to the supervision and instruction of an individual who is licensed by the Board or is not required to be licensed based on one of the following:
A.	The individual is lawfully registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry, and who is an employee of:
1.	A depository institution;
2.	A subsidiary that is:
a.	Owned and controlled by a depository institution; and
b.	Regulated by a Federal banking agency; or
3.	An institution regulated by the Farm Credit Administration; or
B.	An individual who is an employee of a federal, state, or local government agency or housing finance agency and who acts as a loan originator only pursuant to his or her official duties as an employee of a federal, state, or local government agency or housing finance agency; or
C.	An employee of a bona fide nonprofit organization who acts as a loan originator only with respect to his or her work duties to the bona fide nonprofit organization, and who acts as a loan originator only with respect to residential mortgage loans with terms that are favorable to the borrower.

Offering or Negotiating Terms of a Residential Mortgage Loan:  to present for consideration to a borrower or prospective borrower particular residential mortgage loan terms, or to communicate directly or indirectly with a borrower, or prospective borrower for the purpose of reaching a mutual understanding about prospective residential mortgage loan terms.  An individual’s generic referral to or recommendation of a particular lender, in and of itself, is not offering or negotiating the terms of a residential mortgage loan.

Residential Mortgage Loan Application:  a request, in any form, for an offer (or a response to a solicitation of an offer) of residential mortgage loan terms, and the information about the borrower or prospective borrower that is customary and necessary in a decision on whether to make such an offer.  

Taking a Residential Mortgage Loan Application: the receipt of a residential mortgage loan application by an individual for the purpose of facilitating a decision whether to extend an offer of residential mortgage loan terms to a borrower or prospective borrower, whether the application is received directly or indirectly from the borrower or prospective borrower.  An individual’s generic referral to or recommendation of a particular lender, in and of itself, is not taking a residential loan application.