DEPARTMENT OF REGULATORY AGENCIES

DIVISION OF REAL ESTATE

MORTGAGE BROKERS

EMERGENCY RULE

4CCR 725 -3

MORTGAGE BROKER EDUCATION EXTENSION AND TESTING MODIFICATIONS

Section 1.	Authority
Section 2.	Scope and Purpose
Section 3.	Applicability
Section 4. 	Rules Regarding Mortgage Broker Education Extension and Testing Modifications
Section 5. 	Effective Date

Section 1. 	Authority

The Director of the Division of Real Estate adopts the following emergency rule entitled, Mortgage Broker Education Extension and Testing Modifications, according to her authority as found in §§ 12-61-903(10), 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.

In June of 2007, Governor Bill Ritter Jr. signed four (4) mortgage broker bills into law.  Included in these four (4) bills was Senate Bill 07-203.  This law effectively changed the regulatory framework for mortgage brokers from registration to licensing and, among other things, added education and testing requirements.  In September of 2007, the Director appointed a 10 person Mortgage Broker Education Task Force.  The education task force began meeting immediately in order to assist the Director in the development and creation of the education and testing requirements.  As a result, the Director ensured that education and testing were available for mortgage brokers beginning April 1, 2008.  The Director provided the mortgage broker industry nine (9) months to complete the requisite education and pass the test.  

Unfortunately, many mortgage brokers have failed to comply with the education and written examination requirements.  As a result, this has created a tremendous administrative burden on the Division of Real Estate.  Accordingly, the Director adopts the following rule which increases the passing percentage rate for the written examination from 70% to 75%, defines strict retesting standards and establishes an extension process requiring payment of an administrative fee of $100.00. The following rule also duly notifies mortgage brokers that failure to comply with the education and written examination requirements and failing to apply for and complete the extension process will, at a minimum, result in an increase of such mortgage brokers’ license renewal fees by $500.00 due to the related increased administrative burden.

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. 	Rules Regarding A Mortgage Broker Education Extension and Testing Modifications.

1.	All mortgage brokers who obtain a Colorado mortgage broker license prior to January 1, 2009 must complete the 40 hours of licensing education and pass a two-part written licensing examination by January 1, 2009.  Individuals who fail to comply with this requirement may file for an extension.  Mortgage brokers requesting an education extension shall:

a.	Complete the education extension form created by the Director of the Division of Real Estate.  This form may be found on the Division of Real Estate’s website at http://www.dora.state.co.us/real-estate/mortgage/MBForms.htm;

b.	Pay a $100.00 extension fee by money order or a cashier check;

c.	Request that the Director inactivate their mortgage broker license if they fail to pass the written examination in accordance with this rule by March 31, 2009, such inactive status remaining in effect until passage of the mortgage broker examination and subsequent request for activation; and

d.	Provide the Director with an original copy of the requisite surety bond, with the accompanying power of attorney and proof of the requisite errors and omissions insurance.

2.	Individuals who fail to pass the requisite written examination by January 1, 2009 and who fail to comply with the extension process defined in this rule are subject to all forms of discipline authorized by the Mortgage Broker Licensing Act.  Additionally, the license renewal, reinstatement or reactivation fees for such individuals will automatically be increased by $500.00, due to the related increase in administrative burden. 

3.	The mortgage broker written licensing examination consists of two parts.  The two parts include the Federal, State and Consumer Protection Laws portion and the Mortgage Lending Basics and Ethics portion. On and after January 1, 2009, an individual shall not be considered to have passed the written test unless the individual achieves a test score of not less than seventy-five (75) percent correct answers on both the Federal and State Law portion of the exam and 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 they failed. In no event is a passing score accepted beyond one year (365 days) from the date of the passing score.

4.	Retesting Standards.  On and after January 1, 2009, any individual may retake a test three (3) consecutive times with each consecutive taking occurring at least 30 days after the preceding test.  After failing three (3) consecutive tests, an individual shall wait at least six (6) months before taking the test again.  

5.	In  Rule 1-4-1, entitled Mortgage Broker Licensing Education, The Director authorized equivalent distant or distance learning courses.  This shall not be construed to include home or correspondent education.  Rather, equivalent distant or distance learning courses shall only include online courses that ensure through security features and functionality that an individual has spent the same amount of time on the online course as they would in a traditional classroom setting.

Section 4. 	Enforcement

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:

a.	Revocation;
b.	Refusal to renew a license;
c.	Denial of a license application;
d.	Fines; and
e.	Restitution for any financial loss

Section 5.	Effective Date

This emergency rule shall be effective December 1, 2008.