DIVISION OF REAL ESTATE

MORTGAGE BROKERS

EMERGENCY 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 1.      Authority

The Director of the Division of Real Estate adopts the following emergency rule entitled, 1-4-1 Mortgage Broker Licensing Education, 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 Director 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.

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.

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 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 70 percent to pass the Federal and State Law portion of the exam and a 70 percent 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. 

(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 minimum of  19.5 hours in Federal and State Law
  • A minimum of  16 hours in Mortgage 101
  • 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:

• • Currently maintain a Colorado mortgage broker license.
  • Maintain a membership with a mortgage broker association approved for exemption by the Division of Real Estate.
  • Maintain a mortgage broker association designation that is current and in good standing.
  • Provide the association’s letter of certification to the education course provider prior to completing coursework.
  • Provide the association’s letter of certification to PSI prior to taking the exam.

Those who meet the criteria for exemption must complete the Federal and State Law portion of the licensing coursework and the Federal and State Law portion of the exam.

(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:

• • • Revocation;
    • Refusal to renew a license
    • Fines; and
    • Restitution for any financial loss

Section 5.      Effective Date

This emergency rule shall be effective May 2, 2008.

Elizabeth Warren attempting to explain why Student should pay less interest on loans.

How to Use a Mortgage Calculator to Calculate Interest Only Payments

10 year treasury yield has rebounded to 2.61% beginning May 5th after Ukraine situation stabilizes. Mortgage rates tick up ever so slightly.   

It is recommended to lock.

Mortgage lenders offer ARMS, or 'Adjustable Rate Mortgages' to help enable home buyers and owners find an acceptable loan product to meet their needs. The vast majority of mortgages are fixed rate loans such as 30 year and 15 year mortgages. But in certain situations an ARM offers many advantages under certain conditions. The first advantage is that ARMS offer lower rates, usually 1% less than the prevailing 30 year fixed rate. This can save a substantial amount of money every month. Arms are fixed for a certain period of time. ARMS usually have terms of 3,5,7, and 10 year fixed periods. All ARMS are a 30 year term so the term is 30 but the rate can change AND THAT MEANS YOUR PAYMENT CAN GO UP.

Example:

5/1 Arm- The "5" designates how long the ARM is fixed. The "1" designates how much the rate can change every year AFTER the initial fixed term of 5 years.

But there is a very important question you should ask your lender and that is how much the rate can move on the first adjustment, this is the adjustment that happens after 5 year initial fixed period is up. Most of the time, if the ARM is an agency product the maximum first adjustment is 5%. So if you bought a home using a 5/1 ARM at 3.5% and the day after you bought your home rates went to 10% for 6 years, the your rate would still be 3.5% for five years, but on the 6th year your rate would go to 8.5% because this is your first adjustment and rates can move up to 5% on the first adjustment. Let's say in year 7 the prevailing rates went to 1% and stayed there for a decade. Then you loan would only 'fall" 2% per year since the adjustment cap is 2% per year,

Terminology you should know and understand before you accept an ARM mortgage:

"Start Rate" This is the initial fixed period of your loan, in this case 5 years.

"First adjustment" This is the first adjustment after the start rate expires and usually has a cap of 5%

"Annual adjustment" This is the adjust that happens every after the initial period and first adjustment. This is usually capped at 2% per year up or down.

"Index" This is always tied to the LIBOR or T-Bill. Beware of any ARM that uses a different index. It's probably a set up for a really disastrous loan.

"Margin" The margin is added to the index to calculate your "fully indexed rate"

"Fully Indexed rate" is Index rate + Margin rate and rounded to the nearest 1/8th. 

"Adjustment date" The calculation above happens on an adjustment date agreed upon in the note. Usually your anniversary date.

"Lifetime CAP" This is the rate that your rate can never exceed.

To find out almost an INDEX RATE TO CALCULATE ARM RATES you can find that on Checkrates.com  

The FHA has some pretty flexible guidelines for allowing two concurrent FHA loans. Many people use the FHA mortgage for it's very liberal down payment requirement of 3.5%. Though they will allow it, you must meet certain criteria and have one of the reason below to do it. Hud has issued the following guidelines:  

• Increase in family size – There must be an increase in family size in which their current house can’t support the new family member(s). You will have to prove the increase. Also, you must have 25 percent equity in your current home or pay it down to 75% LTV (loan-to-value).  An FHA approved appraiser must be used to determine such new value.
• Relocation – If the borrower is relocating and it is established that they aren’t in reasonable distance from their current property. Keeping in mind that reasonable can be defined differently from any lender.

Note – If that borrower(s) returns back to the same area, they are not required to re-establish residency in that property in order to have another FHA insured mortgage.

• Vacating a jointly owned property – A borrower my leave a property and be eligible for another FHA loan if the co-borrower is to stay in the same property that is being vacated.

A good example of this is because of a divorce and that the vacating spouse needs to buy a new home.

• Non-Occupying co-borrower – If someone previousily co-signed for a family member or relative while using a FHA loan.  This type of FHA loan is called a non-occupant co-borrower loan. This borrower would still be eligible to purchase their own home using a FHA mortgage.

If you do not meet at least one of these criteria, it will not be approved by your lender because the FHA will not insure the loan. Contact your mortgage lender to find an acceptable alternative. For instance, you may qualify for a VA mortgage or a conforming mortgage with 3% down. There will be a lot of weight given to how long the original home has been owned and moving must make sense to the underwriter. Additionally, if it appears to the underwriter that the loan is being used to build a rental home portfolio, the mortgage will likely be denied.

Many people believe a mortgage is the same thing as a loan and that isn't quite true. A mortgage is the document that provides security for the loan. A loan is made using a promissory note and in that document it allows for a deed of trust to be created which turns the property into collateral for the loan. So when you close on a mortgage you will typically sign two forms. The first one is a promissory note and the second one is called a deed of trust. The deed of trust is also called a "mortgage" and it is usually filed in the county where the property is located to let everyone know that someone else (usually a bank) has a security interest in the property.

SBA 504 program

The SBA or Small Business Administration 504 program is typically meant for the small businesses that contribute to the development of the community. The loans are granted for major fixed assets like building or land and they are directed towards the development of infrastructure and other facilities in a community. The small businesses can avail this loan though CDC or Certified development Company which is a non-profit organization directed towards the development of economy of a particular region. The CDC work with SBA and private sector lenders to finance the small businesses. The overall idea is to bring about a viable change in economically weaker sectors by granting loans at a fixed rate. 

SBA 504 program is especially meant for the businesses owned by women, veteran, retired person, rural businessmen, minorities and other designated businesses who operate in the sectors that are economically backward. There are about 270 CDCs working in the whole United States with each CDC being assigned to work in a specific geographical region. A typical SBA loan proceeds like this – the private sector being the major lender granting up to 50% of the total project cost. CDC providing 40% of the project cost guaranteed by 100% debentures of SBA and finally the remaining 10% has to be contributed by the entrepreneur of the small businesses.  The loan is granted for a long term and the interests are charged at a fixed rate and the loan assets are held as collateral.

SBA 504 loan program eligibility

There are certain eligibility criteria to be fulfilled before you qualify for a CDC loan.

They are as follows:

·       The businessman or woman must be a citizen of the United States and the business must operate in the territory of United States.

·       The business has a net worth of less than $15 million dollar and a net income of less than $5 million after paying taxes in the preceding two years.

·       The bigger businesses are not eligible for the loan and also such individual businesses that have the resources to meet the total cost of the project would not be granted the loan. It must be realized that the loan proceeds are especially meant for the economically backward sectors of the community and small businesses that are unable to meet the cost of a particular project individually.

·       The businesses must operate for profits so that the cost of the loan can be met up by the businesses within stipulated time. To operate for the profits you have to have a feasible business plan. Before submitting your proposal you must carefully pan about the project which must be endowed with the twin aspect that it would generate money for the business as well as contribute to the overall development of the community as a whole.

·       The personal history of the businessmen are also taken into consideration so as to ascertain whether they want to run a clean business, whether they are paying all their taxes and above all have an ethical integrity and willingness to repay the loan in time.

It is widely known that the SBA 504 loan project is meant for the overall development of individuals and the community as a whole.The small businesses can avail this loan though CDC or Certified development Company which is a non-profit organization directed towards the development of economy of a particular region. The CDC work with SBA and private sector lenders to finance the small businesses. The overall idea is to bring about a viable change in economically weaker sectors by granting loans at a fixed rate. Most SBA loans are granted through a community bank which do a very good job at walking a small business through the process. Many larger banks such as Bank of America or Wells Fargo also make SBA loans. 

SBA 504 program is especially meant for the businesses owned by women, veteran, retired person, rural businessmen, minorities and other designated businesses who operate in the sectors that are economically backward. There are about 270 CDCs working in the whole United States with each CDC being assigned to work in a specific geographical region. A typical SBA loan proceeds like this – the private sector being the major lender granting up to 50% of the total project cost. CDC providing 40% of the project cost guaranteed by 100% debentures of SBA and finally the remaining 10% has to be contributed by the entrepreneur of the small businesses.  The loan is granted for a long term and the interests are charged at a fixed rate and the loan assets are held as collateral.

Remember that the SBA 504 loan project is meant for the overall development of individuals and the community as a whole. The best way to consult with an SBA lender in your community is to search for one at Checkrates.com