Code of Colorado Regulations
700 - Department of Regulatory Agencies
725 - Division of Real Estate
4 CCR 725-3 - MORTGAGE LOAN ORIGINATORS AND MORTGAGE COMPANIES
Chapter 5 - PROFESSIONAL STANDARDS

Universal Citation: 700 CO Code Regs 5

Current through Register Vol. 47, No. 17, September 10, 2024

5.1. Advertising

Any Advertisement of a residential mortgage loan product or Rate offered by a Mortgage Loan Originator, or Mortgage Company must conform to the following requirements:

A. An Advertisement must be made only for such products and terms as are actually available at the time they are offered and, if their availability is subject to any material requirements or limitations, the Advertisement must specify those requirements or limitations;

B. The Advertisement must contain the following, each of which must be clearly and conspicuously included in the Advertisement;
1. At least one (1) responsible party. The responsible party must be a Mortgage Loan Originator or a Mortgage Company. The responsible party must include their registration number that is approved on the NMLS;

2. The name of the Mortgage Company; and

3. The business phone number of the responsible party.

C. The Advertisement must not appear to be offered by a government agency, a quasi-government agency or the perspective borrower's current lender and/or loan servicer;

D. An Advertisement must not make or omit any statement the result of which would be to present a misleading or deceptive impression to consumers;

E. An Advertisement must otherwise comply with all applicable state and federal disclosure requirements;

F. Advertisements must incorporate applicable provisions of the final Interagency Guidance on Nontraditional Mortgage Product Risks ("Interagency Guidance") released on September 29, 2006, incorporated by reference in compliance with section 24-4-103 (12.5), C.R.S., and does not include any later amendments or editions of the final guidance. A certified copy of the Interagency Guidance is readily available for public inspection at the 0ffice of the Board of Mortgage Loan Originators at 1560 Broadway, Suite 925, Denver, Colorado. The Interagency Guidance released by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift supervision, and the National Credit Union Administration can be examined at the internet website of the federal register (volume 71, number 192, page 58609-58618) at www.federalregister.gov. Reference copies of the federal register publications may also be found at the Colorado Supreme Court, located at 101 w. Colfax, Denver, Colorado 80202 or by telephone at (303) 837-3720; and

G. The responsible party must retain copies of all Advertisements for a period of four (4) years, and provide said copies for inspection by an authorized representative of the Board upon request.

5.2. The Requirements Set Forth in Subsection B. of Rule 5.1. will Not Apply to:

A. Any Advertisement which indirectly promotes a Consumer Credit transaction and which contains only the name of the Mortgage Company, the name and title of the Mortgage Loan Originator, the contact information for the Mortgage Company or the Mortgage Loan Originator, a Mortgage Company's logo, or any license or registration numbers, such as the inscription on a coffee mug, pen, pencil, youth league jersey, sign, business card, or other promotional item; or

B. Any rate sheet, pricing sheet, or similar proprietary information provided to real estate brokers, builders, and other commercial entities that is not intended for distribution to consumers.

5.3. Loan Modifier Licensure

A. Individuals, not otherwise exempt from Part 7, who directly or indirectly take residential Loan Modification applications or who negotiate, offer, or attempt to negotiate or offer Loan Modifications are required to be licensed as a Mortgage Loan Originator.

B. Mortgage Loan Originators must comply with the Practice Act and these Rules.

5.4. Required Use of a Loan Modification Contract

A. Mortgage Loan Originators taking Loan Modification applications or offering or negotiating Loan Modifications are required to use a loan modification contract which complies with the Practice Act and the Foreclosure Protection Act.

B. The Board has created the Colorado Loan Modification Services Contract to ensure compliance with the aforementioned laws. This contract may be found on the Division's website. Loan Modifiers must use this form or an alternate form, if such alternate form clearly includes all information required on the suggested form, as determined by the Board.

C. The Colorado Loan Modification Services contract as set forth in this Rule must be completed at time of Application.

5.5. The Requirements Set Forth in Rules 5.3 . and 5.4 . will Not Apply to:

A. Employees of HUD Approved Housing Counseling Agencies who are providing advice or general information on Loan Modifications in an ancillary manner relating to their general housing counseling services or duties.

B. Employees of mortgage loan servicing companies operating on behalf of the borrowers' mortgage lenders.

C. Licensed real estate brokers engaged in real estate brokerage services within the defined Short Sale transactions do not need to maintain a license as a Mortgage Loan Originator. If a real estate broker engages in the activities of providing Loan Modification services, separate licensure as a Mortgage Loan Originator is required.

D. An attorney, pursuant to section 12-10-709(1)(c), C.R.S., who renders services in the course of practice, who is licensed in Colorado, and who is not primarily engaged in the business of negotiating residential mortgage loans or Loan Modifications is not required to be licensed as a Mortgage Loan Originator.

5.6. Reasonable Inquiry

A. A Mortgage Loan Originator will only recommend appropriate products after reasonable inquiry has been made in order to understand the borrower's current and prospective financial status.

B. Reasonable inquiry requires the Mortgage Loan Originator to review and analyze the information submitted by the borrower(s) regarding their current and prospective income, including the income's source and likely continuance and may not require the Mortgage Loan Originator to verify such income.

C. A Mortgage Loan Originator has a duty to recommend mortgage products based on the information provided by the borrower.

D. A Mortgage Loan Originator will be deemed in compliance with section 12-10-710(1)(b), C.R.S. and this Rule, concerning reasonable inquiry, upon reviewing and analyzing all sections contained in the Uniform Residential Loan Application and upon completion of the Tangible Net Benefit Disclosure. The Tangible Net Benefit Disclosure is posted on the Division's website.

5.7. Tangible Net Benefit

The reasonable, tangible net benefit standard pursuant to 12-10-710(1)(a), C.R.S., is inherently dependent upon the totality of facts and circumstances relating to a specific transaction. While the refinancing of certain home loans may clearly provide a reasonable, tangible net benefit, others may require closer scrutiny, or consideration to determine whether a particular loan provides the requisite benefit to the borrower.

A. When determining reasonable, tangible net benefit, there are many considerations a Mortgage Loan Originator must take into account in their analysis. If applicable, the required considerations for a Mortgage Loan Originator determining the requisite benefit must include, but are not limited to:
1. Lower payments;

2. Condensed amortization schedule;

3. Debt consolidation;

4. Cash out;

5. Avoiding foreclosure;

6. Negative amortization;

7. Balloon payments;

8. Variable rates;

9. Interest only options;

10. Prepayment penalties; and

11. Hybrid mortgage products.

B. The purpose for a purchase or refinance transaction will be identified by the borrower. A Mortgage Loan Originator will require that all borrowers describe, in writing, the reasons they are seeking a mortgage loan, a Loan Modification or to refinance an existing mortgage loan.
1. It is the responsibility of the Mortgage Loan Originator to ensure this information is acquired and accurately documented.

2. Pursuant to section 12-10-710(1), C.R.S., a Mortgage Loan Originator may not have demonstrated a duty of good faith and fair dealing in all communications and transactions with a borrower if it is determined that a Mortgage Loan Originator completed the required purpose for a purchase, Loan Modification or refinance transaction without analyzing the borrower's specific circumstances.

5.8. Tangible Net Benefit Disclosure Form

The Board developed a disclosure form regarding reasonable, tangible net benefit. Alternate disclosures are acceptable if they include all information required on the suggested form, as determined by the Board.

A. The Tangible Net Benefit Disclosure Form must be disclosed within three (3) Business Days after receipt of a loan Application.

B. The Tangible Net Benefit Disclosure will also be completed prior to or at the closing if the reasonable, tangible net benefit has changed.

C. The Tangible Net Benefit Disclosure must be signed by both the Mortgage Loan Originator and the borrower(s).

D. Mortgage Loan Originator must be able to provide proof to the Board or an authorized representative of the Board that the disclosure forms as set forth in this Rule were provided to the borrower within three (3) Business Days after receipt of a loan Application or prior to or at closing if any subsequent changes to any loan terms requiring re-disclosure.

5.9. Mortgage Loan Originator and Mortgage Company Duty to Respond and Provide Requested Documents for Investigations

A. Mortgage Loan Originators and Mortgage Companies must provide the Board or the Board's authorized representative with all information required by this Rule.
1. Mortgage Loan Originators and Mortgage Companies will receive written notification and a copy of the complaint from the Board or an authorized representative of the Board that an investigation has been initiated. All requested information must be submitted in accordance with the timeline established in the notification letter. An extension of time may be requested.
a. The Mortgage Loan Originator and Mortgage Company may request an extension of time to comply if:
i. The request is reasonable and in writing; and

ii. The request is received by the Board or authorized representative of the Board prior to the expiration date as set forth in the notification letter sent by the Board or authorized representative of the Board.

b. Any and all extensions granted are at the discretion of the Board or an authorized representative of the Board.

2. Failure to provide all requested information will be grounds for disciplinary action regardless of whether the underlying complaint results in further investigation or subsequent action by the Board.

B. The response from the Mortgage Loan Originator must contain the following:
1. The Mortgage Loan Originator must provide a complete and specific answer to the factual recitations, allegations, or averments made in the complaint filed against the Mortgage Loan Originator, whether made by a member of the public or on the Board's own motion or by an authorized representative of the Board;

2. The Mortgage Loan Originator must provide a complete and specific response to all questions, allegations, or averments presented in the notification letter; and

3. Any and all documents or records requested in the notification letter.

C. Mortgage Companies must maintain any and all documents collected, gathered and provided for the purpose of negotiating and originating residential mortgage loans for a period of four (4) years. Additionally, Mortgage Companies must maintain any and all documents used for the purpose of soliciting or marketing borrowers that were directed, made or caused to be made by the Mortgage Company. These documents include, but are not limited to:
1. All Uniform Residential Loan Applications (form 1003);

2. All required state and federal disclosures;

3. Asset statements;

4. Income documentation;

5. Verification of employment;

6. Verification of deposit;

7. Lender submission forms;

8. Advertisements;

9. Flyers;

10. Settlement statements;

11. Uniform underwriting and transmittal summary (form 1008); and

12. Credit report.

D. The Mortgage Loan Originator must maintain any and all documents used for the purpose of soliciting or marketing borrowers that were directed, made or caused to be made by the Mortgage Loan Originator.

E. All documents required in this Rule must be kept in a Safe and Secure Manner. Electronic storage is acceptable as long as the information is accessible.

5.10. Mortgage Loan Originators Maintaining Current Contact Information and All Information Required for Licensing

A. Mortgage Loan Originators must maintain all current contact information and all information required for licensing, in a manner acceptable to the Board, including the two (2) databases described subsection A. of Rule 4.1 . Failure to maintain the information identified in this Rule will be grounds for disciplinary action.

B. Contact information must include, but is not limited to:
1. E-mail address;

2. Legal first, middle and last names;

3. Physical home address;

4. Home phone number;

5. Business address;

6. Business phone number; and

7. Business name.

C. Information required for licensing includes, but is not limited to:
1. Surety bond company;

2. Surety bond number;

3. Surety bond effective date;

4. Errors and omissions insurance provider;

5. Errors and omissions policy number;

6. Errors and omissions effective and expiration date; and

7. Convictions, pleas of guilt or nolo contendere for all crimes.

D. Mortgage Loan Originators must update the Board within thirty (30) calendar days of any changes to the information as set forth in this Rule on both databases described in subsection A. of Rule 4.1.

5.11. REPEALED (Effective March 17, 2017)

5.12. Mortgage Loan Originator Agreements

A Mortgage Loan Originator must 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 sections 12-10-713(1)(x) and (aa), C.R.S. and this Rule, if they adhere to one (1) 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 Mortgage 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. REPEALED (Effective March 17, 2017)

5.14. Colorado Lock-in Disclosure requirements under section 12-10-725(2), C.R.S.

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 must be used when disclosing the secured Rate of interest for the prospective borrower or disclosing that the Rate of interest is not secured and is subject to change.

5.15. REPEALED (Effective October 3, 2015)

5.16. REPEALED (Effective October 3, 2015)

5.17. REPEALED (Effective March 17, 2017)

5.18. REPEALED (Effective October 3, 2015)

5.19. REPEALED (Effective October 3, 2015)

5.20. REPEALED (Effective October 3, 2015)

5.21. Mortgage Loan Originators are required to keep records of the disclosures pursuant to sections 12-10-725(1) and (2), C.R.S., and these Rules, for a period of four (4) years, for the purposes of inspection by the Board or authorized representative of the Board.

A. All documents must be kept in a Safe and Secure Manner. Electronic storage is acceptable as long as the information is accessible.

B. The Mortgage 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 Mortgage 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 as set forth 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.

5.22. Dual Status Disclosure

The Board prohibits individuals from acting as a Mortgage Loan Originator and a real estate broker, on the same transaction, unless they comply with the requirements set forth in this Rule.

A. Dual status is a material fact to real estate transactions and must be disclosed to the borrower(s).

B. The Board has created the Colorado Dual Status Disclosure form to ensure this information is clearly and concisely disclosed. This disclosure may be found on the Division's website. A Mortgage Loan Originator must use this form or an alternate form, if such alternate form clearly includes all information required on the suggested form, as determined by the Board.

C. The Colorado Dual Status Disclosure form must be completed, disclosed, and provided to the borrower within three (3) Business Days after receipt of a loan Application.

D. Mortgage Loan Originators must maintain the disclosure form as set forth in this Rule for a period of four (4) years.

E. The Mortgage Loan Originator must be able to provide proof to the Board or an authorized representative of the Board that the disclosure forms as set forth in this Rule were 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 12-10-711 and 12-10-713, C.R.S., a Mortgage Loan Originator must make written notification to the Board through the online services portal found on the Division's website 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 jurisdiction because of fraud, deceit, material misrepresentation, theft, or breach of a fiduciary duty; and

D. A revocation, suspension, or any other disciplinary action taken against a Mortgage Loan Originator's license in any jurisdiction.

Disclaimer: These regulations may not be the most recent version. Colorado may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.