The Supreme Court handed down it's decision on May 1, 2017 and it has implications that will rock the home lending industry. Even though the court has not ruled that the city is an aggrieved party, it has granted the city of Miami to sue on behalf it's citizens if they have been harmed by predatory lending. After several court cases, this one finally landed in the Supreme court. Giving local governments the standing to sue lenders on behalf of their citizens will be a legal nightmare for lenders according to Wells Fargo and Bank of America, who were defendants in the suit. 

This case was the result of the City of Miami accusing the banks of charging higher fees and rates to minority borrowers. The were accused of violating the Fair Housing Act which prohibits lenders for discriminating against applicants based on their race. The Supreme court ruled that the City of Miami was harmed by a reduced tax base and increased costs. The lender allege that the increased legal exposure will result in higher costs for all borrowers. 

FACT SHEET: Making Homeownership More Accessible and Sustainable

When President Obama took office, our housing market was in free-fall, and rising unemployment and plunging house prices posed numerous challenges for families and the broader economy.  The President took immediate action to stabilize the housing market and protect the middle class.  These steps helped millions of middle class families stay in their homes, save money on their mortgages, and turn their communities around.

Today, the housing market is on firmer footing. Rising home values have brought millions of families out from being underwater, new foreclosures are at the lowest levels since 2006, and home sales have substantially increased.  The President’s push for tough enforcement against past abuses and strong new consumer protections have helped curb irresponsible lending and have given responsible Americans more confidence and security in their most substantial investment. And the Consumer Financial Protection Bureau has pioneered new, streamlined mortgage forms to make simpler and easier for families to buy a house.

Still, there’s more work to do: too many creditworthy families who can afford—and want to purchase—a home are shut out of homeownership opportunities due to today’s tight lending market.

That is why today, the President announced a major new step that his Administration is taking to make mortgages more affordable and accessible for creditworthy families. The Federal Housing Administration (FHA) will reduce annual mortgage insurance premiums by 0.5 percentage point from 1.35 percent to 0.85 percent. For the typical first-time homebuyer, this reduction will translate into a $900 reduction in their annual mortgage payment. Existing homeowners who refinance into an FHA mortgage will see similar reductions to their mortgage payments as well. In total, this action will help millions of families save billions of dollars in mortgage payments in the coming years, helping to support the housing market recovery. The new premium level is fully consistent with the FHA’s commitment to continue strengthening its financial health through growing reserves. At the same time, full documentation and continued strong underwriting means lending will remain prudent and sustainable – benefitting both homeowners and FHA.

This step is part of the President’s broader effort to expand responsible lending to creditworthy borrowers and increase access to sustainable rental housing for families not ready or wanting to buy a home. In the coming months the Administration will be taking additional steps to cut red tape and clarify lending standards to build on the measures announced today. And the Administration will continue to urge bipartisan progress in Congress to pass comprehensive housing finance reform legislation that will secure a stable and resilient housing finance system – one that will ensure broad access to mortgages at affordable rates and better serve future generations. 

 Making Homeownership More Accessible and Sustainable

Ø  Reduce FHA Premiums to Help Make Mortgages More Affordable:

Ø  FHA is reducing annual FHA mortgage insurance premiums by 0.5 percentage point from 1.35 percent to 0.85 percent, an average savings of $900 annually for new borrowers.

Ø  Lowered premiums will help more than 800,000 homeowners save on their monthly mortgage costs and enable up to 250,000 new homebuyers to purchase a home.

Ø  These steps will help support home sales, lower housing expenses for affected households, and help bring more balance to the housing market. 

Ø  Build on Successful Policies that Have Helped Lead the Housing Recovery:

Ø  Today’s action builds on the successful steps the Administration started taking immediately after the President took office – actions that helped create today’s strong recovery in housing.

Ø  The Administration’s mortgage modifications, private modifications, and other federal mortgage assistance have helped over 8 million borrowers, more than twice the number of foreclosure completions; more than 3 million borrowers have saved money through refinancing; and the Administration has invested billions in neighborhood stabilization and anti-blight initiatives.

Ø  Today, the housing market continues to strengthen: house prices are up nearly 30 percent from crisis lows; 10 million fewer borrowers are underwater with homes worth less than their mortgages; and new foreclosures are at a 9-year low.

Ø  The President continues to strongly support long-term housing finance reform through legislation that requires private capital to take the risks and rewards in mortgage lending while preserving broad and affordable access for all creditworthy families.

Ø  Preserve Sound Underwriting and Strong Consumer Protections:

Ø  FHA will continue to preserve sound underwriting standards with full documentation requirements and a prudent evaluation of a borrower’s ability to sustain payments.

Ø  CFPB and others will continue to monitor and enforce important consumer protections that helped eliminate the worst lending practices of the past so that mortgages are underwritten in a more sustainable manner. 

Ø  Continue to Strengthen FHA’s Financial Health:

Ø  Even after today’s reduction, FHA annual mortgage insurance premiums will remain at 0.85 percent, higher than historic norms.

Ø  Even with this reduction, FHA is projected to add $7 to $10 billion annually in new capital reserves – in part due to improved risk management and credit policies – and maintain a positive financial trajectory for the Mutual Mortgage Insurance (MMI) Fund.

Reduce FHA Premiums to Help Make Mortgages More Affordable

·         FHA is reducing annual FHA mortgage insurance premiums by 0.5 percentage points from 1.35 percent to 0.85 percent. This reduction in premiums will produce an average savings of $900 annually for all new FHA borrowers.

·         More than 800,000 FHA borrowers are projected to take advantage of these lower rates in the first year, saving millions of dollars in total.

·         Lowered premiums will create opportunities for 250,000 new homeowners to purchase a home over the next three years. In recent years, many aspiring homeowners have been waiting on the sidelines before buying a new home. By making mortgages more affordable and helping create further confidence among those wanting to buy a home, the FHA premium reduction will help hundreds of thousands of additional families own a home for the first time.

·         The new home buying activity and benefits of the cost savings to borrowers will help further strengthen the housing market. An increase in first-time homebuyers and more affordable mortgages will help spur more residential construction and help create new jobs in the housing sector.

Preserve Sound Underwriting and Strong Consumer Protections

·         FHA will preserve sound underwriting standards with full documentation requirements and a prudent evaluation of a borrower’s ability to sustain payments. Today’s lending standards are not only tighter than the pre-crisis period, but also much tighter than historical norms. Since 2009 FHA has instituted a credit score floor and required manual underwriting for higher-risk borrowers. Continued access will only be extended to borrowers who can sustain their payments on a well-underwritten and fully documented mortgage.

·         The Consumer Financial Protection Bureau (CFPB) and others continue to develop and implement important consumer protections that helped eliminate the worst lending practices of the past so that mortgages are underwritten in a more sustainable manner.  These improvements came because the President fought for and signed into law the strongest consumer protections in history.  The Wall Street Reform and Consumer Protection Act tasked the CFPB with protecting families making financial decisions. The first-ever independent consumer watchdog, the CFPB protects middle class families by making it safer and simpler to apply for a mortgage and know that it is sustainable.  To this end, the CFPB has done the following:

o   Required lenders to evaluate a borrower’s ability to repay their loan, so homeownership can once again help families build long-term wealth.

o   Prohibited lenders from paying bonuses for putting borrowers into more expensive loans.

o   Created rules to ensure borrowers understand their loans and receive timely and useful information about their monthly payments and any upcoming changes to their loan.

o   Set additional protections for those borrowers who are offered riskier, higher-cost mortgages.

o   Established a consumer help hotline that has already addressed more than [175,000] complaints and helps keep CFPB informed of new problems facing families so it can better address new challenges.

o   Required servicers to make good faith efforts to contact delinquent borrowers and inform them of their options to avoid foreclosure as well as ensure certain other borrower protections are followed. 

Continue to Strengthen FHA’s Financial Health

·         Even after today’s reduction, FHA annual mortgage insurance premiums will be at 0.85 percent, above the historic norms of roughly 0.55 percent. Upfront premiums and the life-of-loan MIP structure will remain unchanged. This robust premium structure will more than cover the related estimated credit losses posed to the insurance fund from newly originated loans, continuing to strengthen the Fund and protect taxpayers.

·         This reduction will continue to allow FHA to maintain a positive financial trajectory for the Mutual Mortgage Insurance (MMI) Fund. FHA is projected to add $7-$10 billion annually in new capital reserves each year, as a result of improved risk management and a stronger housing market.

·         FHA’s Office of Risk Management will continue to monitor and ensure effective credit risk management and loss mitigation. The Office will highlight changes that would strengthen credit policies and reduce losses on claims, ensuring that financial reserves will continue to grow.

·         Build on Successful Policies that Have Helped Lead the Housing Recovery

·         The President’s housing policies have helped the housing recovery continue to strengthen. Helped by the Administration’s programs, the housing market is turning around. Homebuilding has more than doubled since crisis lows, spurring job growth in construction and other housing-related sectors. Meanwhile, strengthening home prices have brought millions of families out from being underwater and put hundreds of billions of dollars in wealth back in the pockets of America’s middle class.

o   Year over year home prices have risen for 32 straight months, and are up nearly 30 percent since crisis lows. Rising prices have brought nearly 10 million families out from being underwater since the beginning of 2012, cutting the number of homeowners who are underwater—with homes worth less than their mortgages—by nearly 80 percent.

o   Housing wealth is growing again, with owners’ equity up more than $4 trillion since hitting a low at the beginning of 2009.

o   Homebuilding continues to come back, leading to an upswing in construction jobs. The annual rate of housing starts has recently been more than double its April 2009 low of 478,000, while the number of residential construction jobs continues to rebound.

o   Existing single-family home sales have increased as much as 50 percent from their crisis low and are close to historical norms of about 5.0 million units.

o   The number of mortgages more than 90 days delinquent has decreased by more than 50 percent to under 2 million loans, the lowest level since 2008.

·         The recovery has been driven by Administration actions to stabilize and heal our housing market. Within a month of taking office, the President launched a series of housing initiatives to help millions of homeowners stay in their homes or transition into sustainable housing opportunities. This relief was provided through a combination of direct assistance and through setting important industry standards and templates that transformed the way the industry responded to the crisis. Among other important actions, the Administration:

o   Launched mortgage modification initiatives that have led to more than 8 million homeowners getting government or private sector relief– twice as many as those who went through foreclosure during the last six years. The Home Affordable Modification Program (HAMP) has helped over 1.4 million borrowers through permanent loan modifications.  Combined with 2.5 million Federal Housing Administration (FHA) homeowner interventions and the 4.2 million helped through private lender programs largely modeled after the HAMP template, more than 8 million homeowners have been helped.

o   Worked with regulators to create refinancing opportunities for millions of underwater borrowers through the Home Affordable Refinancing Program (HARP), with more than 3.2 million families helped through September 2014, and helped additional borrowers refinance underwater mortgages through FHA’s Short Refinance Program.

o   Established the Hardest Hit Fund (HHF) and committed $7.6 billion in resources to states to develop locally-tailored programs that reduce blight and assist struggling homeowners in their communities, helping over 200,000 borrowers with programs that reduce principal or help them bridge unemployment.

o   Allocated $7 billion through HUD’s Neighborhood Stabilization Program (NSP) to address foreclosed and abandoned homes in thousands of neighborhoods.  NSP is projected to support close to 90,000 jobs and treat over 100,000 properties – including those with affordable rental and homeownership units – creating a positive ripple effect throughout communities. 

o   Negotiated the National Mortgage Servicing Settlement with 49 state Attorneys General to hold banks accountable and assist struggling homeowners. The Settlement has provided over 600,000 homeowners more than $50 billion in committed relief.

o   In FY 2014, the Department of Justice filed more than 150 mortgage fraud cases, and obtained convictions of more than 600 defendants. The Department's mortgage fraud efforts in that same period also resulted in recoveries of more than $3 billion.

o   Other key efforts included launching an Office of Housing Counseling at HUD that has assisted more than 9 million families, and rehousing or providing assistance to remain housed to 1.3 million homeless or at-risk Americans – including veterans – through the Homeless Prevention and Rapid Rehousing Program (HPRP). In the last four years, veteran homelessness is down 33 percent nationwide, and unsheltered veteran homelessness has been reduced by 43 percent.

·         Continue to cut red tape so responsible families can get a mortgage. While progress has been made, there are still millions of families with strong enough credit profiles to qualify for a mortgage but who are nonetheless being denied loans by lenders. The Administration will not tolerate a return to shoddy underwriting or unsustainable mortgage lending, but believes there are too many middle-class families with good credit by historical standards who remain shut out in today’s tight market and deserve a chance to buy their own home. HUD and independent agencies like the Federal Housing Finance Agency (FHFA) are working with stakeholders to clarify put-back and indemnification policies and enhance lender understanding of these policies to encourage originators to extend lending to all creditworthy families.

·         Lay the foundation of a stronger housing finance system for middle class families and economic stability. The President believes it is time to turn the page on the flaws of the past and build a new sustainable housing finance system that will provide a path to secure homeownership for responsible middle class families. The President continues to support long-term reform centered on several core principles: require more private capital in the system; end the failed Fannie/Freddie duopoly business model in order to improve system stability and better protect taxpayers; ensure broad access for all creditworthy families to sustainable products like the 30-year fixed rate mortgage in good times and bad; and help ensure sustainable rental options are widely available. As in the past, the President stands ready to work with members of Congress in both parties to enact commonsense housing finance legislation based on these core principles.

Strengthen access to affordable rental housing. The President has consistently supported policies to expand access to affordable rental housing for families who are not ready for, or who do not want to own their own home. Important efforts have included pushing for greater funding for affordable housing such as through programs like the Housing Trust and Capital Magnet Funds, protecting the affordable rental housing market during the economic crisis through HUD’s Tax Credit Assistance Program and Treasury’s Credit Exchange Program, and the launch of a Treasury program that partnered with state and local housing finance agencies to enable the development and rehabilitation of 40,000 affordable rental units. Recently, HUD and Treasury successfully rolled-out another partnership to help state and local housing agencies finance affordable rental housing at significantly lower interest rates, starting with the rebuilding of a 1,100 apartment complex after Superstorm Sandy in Queens, NY. More broadly, the Administration will continue its push for expanding support for affordable rental housing, and reducing barriers to housing development that increase housing costs and prevent working families from accessing jobs

The Wells Fargo 'state of the mortgage industry' came out this week which is a perennial analysis of the mortgage industry. WF analysts Greg Reiter, Mark Fontanilla, Randy Ahlgren, and Maria Mascia came out with "The 7 housing predictions for 2015" and one of those predictions seems to take dead aim at OCWEN when they say, "Probes into the non-bank servicing sector highlighted the fact that  the legacy space is highly exposed to non-bank servicers." Wells Fargo seems to be saying that the use of their competitor is likely to end with regulators levying big fines and delaying foreclosures for what  has been described as horrible servicing tactics by many in the industry.

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Ocwen just settled for $150 Million to the New York Department of Financial Services. This comes after the other 49 states via the states attorney generals, along with the CFPB have levied up to $2.1 billion in their 'enforcement action' for deceptive practices in foreclosing on homes. Ocwen has been inflating fees, taking shortcuts, forging documents, and just generally being terrible people when it comes to servicing mortgages that are delinquent. The CFPB officially made this statement, "Ocwen is charged with engaging in unfair and deceptive acts or practices in violation of the federal Consumer Financial Protection Act and state laws. Ocwen’s unlawful conduct has resulted in injury to consumers who have had home loans serviced by Ocwen, Litton , and Homeward. The harm includes payment of improper fees and charges, unreasonable delays and expenses to obtain loss mitigation relief, and improper denial of loss mitigation relief."

Ocwen started in 1988 as "Newco" spelled backwards. It's Still run by it's founder, William Erbey, who has sparked this company off the guardrails more than a few times and has attracted a lot of regulator attention. The talented Erbey positioned Ocwen to capitalize massively from the financial crisis. The servicing rights obtained by Ocwen are a 'who's who' of failed sub-prime and Alt-A mortgage lenders. IndyMac, Lehman, Aurora Bank, Citi, Genworth, Ally, and the list goes on. Ocwen is in the business of cleaning up these messes as cheaply as possible. The critics will say that this is where the problem begins because cutting costs has meant that 60% of Ocwen's staff is based overseas and they offer little, if any, help to homeowners. A look at the structure of Ocwen may provide insight as to why they may not be helping homeowners.  

Ocwen claims they help homeowners and helping homeowners is a good business practice for Ocwen since they are paid to service loans and if a home goes to foreclosure, Ocwen would lose servicing revenue from the customer. But the states attorney General's are not buying it and neither is the CFPB. Evidently Ocwen has figured out a way to make more money by foreclosing because they opened a division called Altisource that many regulators said was a direct conflict of interest to Ocwen's customers and their lender clients. Ocwen responded to this by moving Altisource HQ to Luxemborg and providing greater separation from it's parent for the illusory sake of avoiding regulators scrutiny. However, the appearance of self-dealing remains. Altisource conveniently provides asset management, property preservation, property inspection, property valuation, etc. to be paid for by Ocwen customers who find themselves in default and the lenders who invested in their loans. It's win-win for Ocwen, but regulators don't like this arrangement very much.

It seems Wells Fargo is at least mildly amused by Ocwen to make note of non-bank servicers in their 2015 predictions. Ocwen probably enjoys some advantage that Wells Fargo envies. And Ocwen will likely remain a non-bank servicer since their last attempt at being a real bank resulted in the FDIC ordering them to sell their deposits and cease and desist in 2005. Perhaps Wells may be looking to buy servicing rights from Ocwen. This mention by Wells definitely has some raised some curiosity in the mortgage industry.

Minimum Borrower Contribution Requirement from Borrower’s Own Funds

If the borrower receives a gift from a relative or domestic partner who has lived with the borrower for the last 12 months, or from a fiancé or fiancée, the gift is considered the borrower’s own funds and may be used to satisfy the minimum borrower contribution requirement as long as both individuals will use the home being purchased as their

principal residence.

Documentation Requirements

Gifts must be evidenced by a letter signed by the donor, called a gift letter. The gift letter must:

• specify the dollar amount of the gift;

• specify the date the funds were transferred;

• include the donor’s statement that no repayment is expected; and

• indicate the donor’s name, address, telephone number, and relationship to the borrower.

When a gift from a relative or domestic partner is being pooled with the borrower’s funds to

make up the required minimum cash down payment, the following items must also be included:

 • A certification from the donor stating that he or she has lived with the borrower for the past 12 months and will continue to do so in the new residence.

• Documents that demonstrate a history of borrower and donor shared residency. The donor’s address must be the same as the borrower’s address. Examples include but are not limited to a copy of a driver’s license, a bill, or a bank statement.

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Many first time home buyers don’t realize the power they have when shopping around for a mortgage. Mortgage lending is a highly competitive industry, even in times of housing market downturns. Hey, if a lender doesn’t get you the mortgage, the company doesn’t get that interest payment every month. Believe it or not, you’re in the driver’s seat when it comes to mortgage loan shopping. You’re the individual that lenders are looking for. So you have choices.

Golden rule: When mortgage shopping, there’s no deal you can’t walk away from. Again, you can always walk out the door and go to lender number two or three. Even in times of tight money and credit crunches, you have choices, options and power. Get a good faith estimate from your lender. Choose reputable lenders. And then remember,  this is a business deal so go with the best deal offered.

And remember this, even if you’ve never owned a home before. Once you own the home you can still shop around for a better deal – a no closing costs deal at a lower rate, or switch your low-rate ARM to a 30-year fixed and enjoy the peace of mind a fixed rate mortgage offers.

Mortgages available now are much more challenging, compared with 68,000 this time last year, the report, out today, claims.

The survey says this is because banks and building societies respond to the credit crunch by avoiding "higher risk" mortgages, particularly those that fix rates over a longer term, or require deposits of less than 10 per cent.

The most dramatic decline has been seen in the fixed-rate market, where a staggering 38,000 deals have vanished in the past year, shrinking the market by 82 per cent.

The tracker market has also been hit hard, with a 56 per cent fall. The "five-year" tracker has seen the biggest decline, with just 26 deals now, compared to 131 six months ago.

Tracy Collins, of the Guild of Independent Mortgage Advisers, said her clients are "panicking" and trying to renegotiate their mortgages even as the deals on offer get worse.

She said: "Clients are phoning up wanting to book a rate even when their redemption periods might not be up until the end of September. They want a deal in place now so they know what they will be paying."

Les Jacobs, the chairman of Mortgage Monitor, said more consumers were turning to services such as theirs to find the best deals possible.

He added: "We know that the number of mortgage deals available is on a dramatic decline, but there are still some good deals out there.

"It's a matter of being quick and taking advantage of those deals while you can."

The Royal Institution of Chartered Surveyors also warned at the weekend that UK house prices could fall at least 40 per cent this year as would-be buyers struggle to find a mortgage.



Consumer spending could slump by 8 per cent compared with a year ago, it added, also predicting house prices will fall 5 per cent this year, a more modest decline than some forecasts.

How to Obtain the Lowest Jumbo Rate

You can save a lot of money by finding the lowest Jumbo Rate. A small difference in your Jumbo rate, even 1/8 % can save hundreds of dollars each month. To search for the lowest jumbo rate, it is helpful to know how they are priced. Proper structuring and preparation of your mortgage and knowing how the banks price their loans will help you find the lowest rate.

1. A larger down payment equals a lower Rate –Sure you can find a 10% down Jumbo Program because many banks offer them, but do not expect a great rate if all you you are willing to put down is 10%. The normal down payment is 20% down but the best rate goes to the borrower with 25% or more down. Consider putting more down.  
2. Learn your credit score –  Now is not the time to find out your ex-spouse is still using your credit to open accounts. It is imperative to know your score 90 days before you mortgage shop. The three credit bureaus are Trans Union, Experian, and Equifax.  Each of these companies will score your credit independently and the mortgage company will use the “mid-score” of the three. Make sure you review each one for errors because one mistake can reduce your score by 50-100 points making you not eligible for a jumbo mortgage or not qualified for their best rates costing you thousands. You can obtain copies of these reports at http://annualcreditreport.com for free once per year.Banks like Chase only offer the best rate to those borrowers with a credit score of 780, those under 780 have a higher rate. Credit scores are crucial.
3. Find a Jumbo lender and track the rates- Most loan officers will gladly quote a rate and then call you when rates have reached the target you are looking for. If the prevailing rate is 4.5% and you would consider a refinance when the rates are at 4%, the loan officer will call you on the day the rate is available and you can refinance.
4. ARM loans can work wonders for the right person – ARM loans can have a fixed period and are usually at least 1% lower than comparable 30 year fixed rate mortgages. This can save thousands per year. ARMS have a fixed rate period of 3, 5, 7 or 10 years and then they adjust monthly after the fixed period is over. ARMS have caps on how much they can increase of 2% per year and 5% lifetime cap over the start rate. If you know you aren't going to stay in the home beyond a certain time period, or better yet, if you will be able to pay off the loan early then this might be the way to go.

Check jumbo rates and stay current – Mortgage rates change with the market and can change several times per day. Make Checkrates.com the place for you to track jumbo rates.

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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.