DEPARTMENT OF REGULATORY AGENCIES

DIVISION OF REAL ESTATE

MORTGAGE LOAN ORIGINATORS

4CCR 725-3

3-1-2 MORTGAGE LOAN ORIGINATOR AND MORTGAGE COMPANY DUTIES TO RESPOND AND PROVIDE REQUESTED DOCUMENTS FOR INVESTIGATIONS

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 Colorado Attorney General, and to all persons who have requested to be advised of the intention of the Board of Mortgage Loan Originators to promulgate rules.

Section 1.	Authority
Section 2.	Scope and Purpose
Section 3. 	Definitions
Section 4.	Applicability
Section 5.	3-1-2 Mortgage Loan Originator and Mortgage Company Duties to Respond and Provide Requested Documents for Investigations
Section 6. 	Enforcement

Section 1.	Authority

The statutory basis for this rule, entitled 3-1-2 Mortgage Loan Originator and Mortgage Company Duties to Respond and Provide Requested Documents for Investigations, is section 12-61-910.3, C.R.S.

This notice proposes to update rule 3-1-2.  The rule establishes that mortgage loan originators and mortgage companies have a duty to respond to and provide requested documentation for investigations conducted by the Board of Mortgage Loan Originators.

Section 2.	Scope and Purpose

Section 12-61-905(7)(b), C.R.S., states that the Board of Mortgage Loan Originators may, and, upon the complaint in writing of any person, shall, investigate the activities of any licensee or any individual who assumes to act in such capacity within the state.  Section 12-61-905.5(1)(k), C.R.S., requires mortgage loan originators to maintain possession of the documents prescribed by the rules of the Board, for a period of four (4) years, for the future use or inspection by an authorized representative of the Board. .  Section 12-61-905.1(1)(b), C.R.S., requires mortgage companies to maintain possession of the documents or records prescribed by the rules of the Board, for a period of four (4) years, for the future use or inspection by an authorized representative of the Board.  The purpose of this regulation is to define what documents should be retained for a period of four years and to require mortgage loan originators and mortgage companies to provide a written response and all requested documents to the Board or an authorized representative of the Board.  Additionally, this regulation prescribes the time period in which all persons and entities shall respond to Board inquiries, including, but not limited to, document and information requests during investigations of complaints or any other investigation conducted for the purpose of determining compliance with the Mortgage Loan Originator Licensing and Mortgage Company Registration Act. 

Section 3. 	Definitions

1.	“Secure environment” means a system which implements the controlled storage and use of information.

Section 4.	Applicability

This rule applies to all persons required to be licensed or registered pursuant to sections 12-61-902 and 12-61-903, C.R.S. 

Section 5.	3-1-2 Mortgage Loan Originator and Mortgage Company Duties to Respond and Provide Requested Documents for Investigations

1.	Persons required to be licensed or registered pursuant to sections 12-61-902 and 12-61-903, C.R.S., shall provide the Board or the Board’s representative with all information required by this rule.  

a.	Failure to provide all information requested by the Board or an authorized representative of the Board within a timeline established by the Board, or authorized representative of the Board, shall be grounds for disciplinary action and grounds for the imposition of fines unless the Board, or authorized representative of the Board, has granted an extension of time for the response.  

i.	Mortgage loan originators and mortgage companies may ask for an extension of time to comply if:

1.	The request is done so in writing; and

2.	The request is received by the Board or an authorized representative of the Board prior to the expiration date defined in the notification letter sent by the Board or an authorized representative of the Board.

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

b.	Failure to provide all requested information shall be grounds for disciplinary action and grounds for the imposition of fines regardless of whether the underlying complaint results in further investigation or subsequent action by the Board.

2.	The response from the person shall contain the following:

a.	If requested in the notification letter, the mortgage loan originator shall provide a complete and specific answer to the factual recitations, allegations or averments made in the complaint filed against the licensee, whether made by a member of the public, on the Board’s own motion, or by an authorized representative of the Board;

b.	The mortgage loan originator shall provide a complete and specific response to all questions, allegations, or averments presented in the notification letter; and

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

3.	Mortgage companies shall 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 shall 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:

a.	All uniform residential loan applications (Form 1003);

b.	All required state and federal disclosures;

c.	Asset statements;

d.	Income documentation;

e.	Verification of employment;

f.	Verification of deposit;

g.	Lender submission forms;

h.	Advertisements;

i.	Flyers;

j.	HUD-1 Settlement Statements;

k.	Uniform Underwriting and Transmittal Summary (Form 1008); and

l.	Credit report. 

4.	All mortgage loan originators shall 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.  

5.	All documents required in this rule shall be kept in a secure environment.  Electronic storage is acceptable as long as the information is accessible and kept in a secure environment. 

Section 6. 	Enforcement

1.	Noncompliance with this rule, whether defined or reasonably implied in the rule, may result in the imposition of any of the sanctions allowable under Colorado law, including, but not limited to:

a.	Revocation;

b.	Refusal to renew a license or registration;

c.	Imposition of fines; and 

d.	Restitution for any financial loss.