DEPARTMENT OF REGULATORY AGENCIES
DIVISION OF REAL ESTATE
MORTGAGE LOAN ORIGINATORS AND MORTGAGE COMPANIES
4 CCR 725-3

NOTICE OF PROPOSED PERMANENT RULEMAKING HEARING
January 18, 2017

CHAPTER 5:	PROFESSIONAL STANDARDS

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 amend or repeal existing rules with respect to professional standards and ensure that mortgage loan originators and mortgage companies are familiar with all current regulations

Proposed New, Amended and Repealed Rules

[Deleted material shown struck through, new material shown ALL CAPS. Rules, or portions of rules, which are unaffected are reproduced.  Readers are advised to obtain a copy of the complete rules of the Board at www.dora.state.co.us/real-estate/.

CHAPTER 5:	PROFESSIONAL STANDARDS

5.11	Mortgage Loan Originator Contracts
	All contracts between a mortgage loan originator and a borrower shall be in writing and shall contain the entire agreement of the parties. Section 12-61-913(1), C.R.S. does not require a contract between a mortgage loan originator and a borrower. Rather, that if a contract does exist; such contract shall be in writing. [REPEALED]

5.12	Mortgage Loan Originator Agreements
	A mortgage loan originator shall have a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public. A mortgage loan originator is compliant with this rule and § 12-61-913(2), C.R.S., SECTIONS 12-61-905.5(y) AND (bb), C.R.S., if they adhere to one of the following requirements:
A.	They individually have a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public;
B.	They are an officer, partner, member, exclusive agent, or employee of a company that has a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public;
C.	They are acting as an independent contractor and maintain a contractual agreement with a company that has a written correspondent or loan originator agreement with a lender before any solicitation of, or contracting with, any member of the public; or
D.	They are an employee of a lender before any solicitation of, or contracting with, any member of the public.

5.13	Mortgage Loan Originator Disclosures
		Section 12-61-914(1), C.R.S., requires that specific disclosures, set forth in § 12-61-914(2), C.R.S., be disclosed within three (3) business days after receipt of a loan application. [REPEALED]

5.14	Fees, Costs, and COLORADO SPECIFIC Lock-in Disclosure requirements under Section 12-61-914(1)(b) and Section 38-40-102, C.R.S.
	A.	Pursuant to the disclosure requirements set forth in Section 12-61-914, and Section 38-40-102, C.R.S., mortgage loan originators must fully comply with all provisions of the TILA-RESPA Integrated Disclosure Rule, must disclose all fees and costs required in the TILA-RESPA Integrated Disclosure Rule, and must utilize the appropriate forms in the TILA-RESPA Integrated Disclosure Rule. Full compliance with the provisions of the TILA-RESPA Integrated Disclosure Rule satisfies the disclosure requirements set forth in Section 12-61-914, and Section 38-40-102, C.R.S.
	B.	For any mortgage loan application or transaction that is exempt from the TILA-RESPA Integrated Disclosure Rule, mortgage loan originators must disclose the following:
	1.	The Truth-in-Lending Disclosure;
	2.	A form that itemizes the disclosure of all third-party fees and costs and must include a mortgage loan originator and borrower signature and dates in which the disclosure was completed and signed. (information commonly found in the pre-2010 HUD Good Faith Estimate Disclosure form); and
	3.	The Colorado Lock-in Disclosure.
	C.	When applicable, the disclosures set forth in Rule 5.14(B) must be made within three (3) business days after receipt of a loan application, entering into a lock-in agreement, or if the annual percentage rate increases more than 1/8 of one (1) percentage point from an earlier disclosure.
A.	THE COLORADO LOCK-IN DISCLOSURE FORM MUST BE USED FOR ALL TRANSACTIONS NOT UNDER THE AUTHORITY OF THE TILA-RESPA INTEGRATED DISCLOSURE RULE AND FOR WHICH THE APPLICABLE GFE, HUD-1 AND TRUTH-IN-LENDING DISCLOSURES ARE USED. 
B.	THE COLORADO LOCK-IN DISCLOSURE FORM MUST BE DISCLOSED:
1.	   WITHIN THREE (3) BUSINESS DAYS AFTER RECEIPT OF A LOAN APPLICATION AND IF APPLICABLE, CONTAIN THE FOLLOWING INFORMATION:
a.	THE COST, TERMS, DURATION AND CONDITIONS OF THE LOCK-IN AGREEMENT;
b.	WHETHER  A LOCK-IN AGREEMENT HAS BEEN ENTERED;
c.	WHETHER  THE LOCK-IN AGREEMENT IS GUARANTEED BY THE MORTGAGE LOAN ORIGINATOR; AND
d.	 DISCLOSURE MUST BE MADE IF A LOCK-IN AGREEMENT HAS NOT BEEN ENTERED AND THAT THE INTEREST RATE AND TERMS ARE SUBJECT TO CHANGE.
2.	   IF, AFTER THE INITIAL WRITTEN DISCLOSURE IS PROVIDED, A MORTGAGE LOAN ORIGINATOR ENTERS INTO A LOCK-IN AGREEMENT, WITHIN THREE (3) BUSINESS DAYS THEREAFTER AND PRIOR TO THE BORROWER SIGNING LOAN CLOSING DOCUMENTS.
3.	   IF, AFTER A MORTGAGE LOAN ORIGINATOR ENTERS INTO A LOCK-IN AGREEMENT, THE ANNUAL PERCENTAGE RATE INCREASES FROM THE ANNUAL PERCENTAGE RATE DISCLOSED EARLIER BY MORE THAN 1/8 OF ONE (1) PERCENTAGE POINT, WITHIN THREE (3) BUSINESS DAYS OF SUCH CHANGE AND PRIOR TO THE BORROWER SIGNING LOAN CLOSING DOCUMENTS.
4.	   IF, AFTER THE MORTGAGE LOAN ORIGINATOR ENTERS INTO A LOCK-IN AGREEMENT, THERE IS A CHANGE TO ANY OF THE INFORMATION PROVIDED ON THE LOCK-IN DISCLOSURE FORM, INCLUDING BUT NOT LIMITED TO A LOCK-IN EXTENSION.
C.	THE COLORADO LOCK-IN DISCLOSURE FORM OR ALTERNATE FORM SHALL BE USED WHEN DISCLOSING THE SECURED RATE OF INTEREST FOR THE PROSPECTIVE BORROWER OR DISCLOSING THAT THE INTEREST RATE IS NOT SECURED AND IS SUBJECT TO CHANGE.

5.17 Compensation disclosure requirements as defined in Section 12-61-914(2)(c), C.R.S., must be disclosed pursuant to the MLO Compensation Rule. Full compliance with the provisions of the MLO Compensation Rule satisfies the disclosure requirements set forth in Section 12-61-914(2)(c), C.R.S. [REPEALED]

	5.21	Individuals who originate a mortgage or act as a mortgage loan originator are required to keep records of the disclosures, set forth in SECTIONS 12-61-914(2)(1)(a) AND (b), C.R.S., and these rules, for a period of five years, for the purposes of inspection by the Board or authorized representative of the Board.
A.	All documents shall be kept in a safe and secure manner. Electronic storage is acceptable as long as the information is accessible and kept in a safe and secure manner.
B.	The company for whom the mortgage loan originator is an officer, partner, contractor, independent contractor, member, exclusive agent or an employee may provide the requested documents to the Board. However, the mortgage loan originator is responsible for compliance with the Board’s request and is subject to disciplinary action if the company fails or refuses to provide the requested documentation.
C.	The mortgage loan originator must be able to provide proof to the Board or an authorized representative of the Board that the disclosure forms defined in this rule were in fact provided to the borrower within three (3) business days after receipt of a loan application or any subsequent changes to any loan terms requiring re-disclosure.

5.23	IMMEDIATE NOTIFICATION OF A CONVICTION, PLEA, OR VIOLATION REQUIRED 

PURSUANT TO SECTIONS 12-61-905 AND 12-61-905.5, C.R.S., A MORTGAGE LOAN ORIGINATOR SHALL MAKE WRITTEN NOTIFICATION TO THE BOARD OF MORTGAGE LOAN ORIGINATORS WITHIN THIRTY (30) CALENDAR DAYS OF ANY OF THE FOLLOWING: 

A.	A PLEA OF GUILTY, A PLEA OF NOLO CONTENDERE OR A CONVICTION OF ANY FELONY OR MISDEMEANOR OFFENSE  UNDER COLORADO LAW, FEDERAL LAW, OR THE LAWS OF OTHER STATES, EXCLUDING MISDEMEANOR TRAFFIC OFFENSES OR PETTY OFFENSES;
B.	A VIOLATION, OR AIDING AND ABETTING  A VIOLATION, OF THE COLORADO OR FEDERAL FAIR HOUSING LAWS;
C.	REVOCATION OR SUSPENSION OF ANY LICENSE, REGISTRATION, OR CERTIFICATION ISSUED BY COLORADO OR ANOTHER STATE BECAUSE OF FRAUD, DECEIT, MATERIAL MISREPRESENTATION, THEFT, OR BREACH OF A FIDUCIARY DUTY; AND 
D.	A REVOCTION, SUSPENSION, OR ANY OTHER DISCIPLINARY ACTION TAKEN AGAINST A MORTGAGE LOAN ORIGINATOR’S LICENSE IN ANY JURISDICTION.

A hearing on the above subject matter will be held on Wednesday, January 18, 2017, at the Colorado Division of Real Estate, 1560 Broadway, Suite 110-D, Denver, Colorado 80202 beginning at 9:00 a.m. 

Any interested person may participate in the rule making through submission of written data, views and arguments to the Division of Real Estate.  Persons are requested to submit data, views and arguments to the Division of Real Estate in writing no less than ten (10) days prior to the hearing date and time set forth above. However, all data, views and arguments submitted prior to or at the rulemaking hearing or prior to the closure of the rulemaking record (if different from the date and time of hearing), shall be considered.

Please be advised that the rule being considered is subject to further changes and modifications after public comment and formal hearing.