DEPARTMENT OF REGULATORY AGENCIES

DIVISION OF REAL ESTATE

MORTGAGE BROKERS

EMERGENCY RULE

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 and 24-4-103(6), C.R.S.

Section 2.	Scope and Purpose

The Colorado Division of Real Estate finds that immediate adoption of this rule is imperatively necessary for the preservation of public health, safety or welfare and that compliance with the rulemaking requirements of § 24-4-103, C.R.S., applicable to non-emergency rules, would be contrary to the public interest.

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.  Additionally, the Director, Erin Toll, has met with the Insurance Commissioner, Marcy Morrison, to ensure that errors and omissions policies and rates can be reviewed and processed in an expedited manner.  This shall not be construed as normal practice for the Division of Insurance.  The Insurance Commissioner has agreed to expedite the requisite errors and omissions policies to further protect the Colorado consumer, allow mortgage brokers the ability to fulfill the required insurance coverage and allow carriers sufficient time to provide information on required errors and omissions coverage to interested mortgage brokers.

Without the immediate adoption of this emergency rule, the public’s interest is not served.  Wherefore, the Director, pursuant to § 24-4-103(6), C.R.S. has an obvious and stated need to adopt this rule.

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.

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 March 26, 2008.