Colorado Enacts Bills to Combat Mortgage Fraud, Foreclosures
|June 4, 2007|
Colorado Gov. Bill Ritter has signed five bills into law that are intended to address mortgage fraud and foreclosures.
Most of the bills are focused on the conduct of mortgage brokers, who will also be required to obtain licenses from the state. Colorado lawmakers, with the approval of the governor, are also requiring title insurance companies to help pay for increased oversight of the industry.
"Colorado has one of the highest foreclosure and mortgage-fraud rates in the country," Ritter said in a statement accompanying his approval of the bills. "We're on pace to log another 37,000 foreclosures this year, which was up about 30 percent from 2006, and that was up 30 percent from 2005. Those are just staggering numbers."
SB 203 requires that mortgage brokers meet minimum training, testing and continuing education requirements in order to obtain licenses, which are good for three years. Colorado had previously required mortgage brokers to register but imposed less-stringent requirements. Mortgage brokers who were registered with the state on or before Jan. 1, 2008, will be able to convert their registrations to licenses by satisfying the additional requirements. The bill also prohibits 24 specific activities, including misrepresentation, fraud and conflict of interest.
HB 1322 requires mortgage brokers to act for the benefit of the borrower, including making reasonable inquiry into the borrower's financial situation and using best efforts to obtain a loan that takes into consideration the borrower's situation.
SB 85 prohibits mortgage brokers from attempting to influence real estate appraisers through coercion, intimidation or compensation. SB 85 does not bar mortgage brokers from requesting that an appraiser "consider additional, appropriate property information," or "provide further detail, substantiation, or explanation for the appraiser's value conclusion."
SB 216 imposes "good faith and fair dealing" requirements on mortgage brokers, which prohibit them from urging borrowers to accept loans that are not suitable for their circumstances, and require them to make efforts to match them with a mortgage that takes their financial circumstances into account.
SB 249 requires title insurance companies to pay an annual fee to fund increased investigation of the industry and enforcement of laws governing it. The bill directs the Division of Insurance to provide annual reports on the title insurance industry to lawmakers, and post statistical reports on its Web site detailing consumer complaints, enforcement actions and market trends.
Copyright 2007 Inman News