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Mortgage lender rules gather some support
By JEFF TUCKER
THE PUEBLO CHIEFTAIN
Local reaction to the Colorado Association of Mortgage Brokers'
proposal to regulate the mortgage industry is generally positive.
This week, the mortgage brokers submitted a proposal to the state
Department of Regulatory Agencies that would require brokers to
register with the state, submit to background checks and pay a $100,000
surety bond, all in an effort to curb mortgage fraud.
The Pueblo Association of Realtors backs the mortgage brokers' measure,
saying the statewide Realtors association has been pushing for some
kind of regulation for years.
"Most mortgage brokers are really good and really responsible," said
Jim Hadley, president of the Pueblo Realtors association.
However, "Some tend to charge more than they should and others promise
buyers to get the job done but never do," Hadley said.
Hadley said regulation could help weed out unscrupulous brokers and
others who may not be cut out for the business. "We've just seen a
flurry of new people get into the business," Hadley said.
The proposal will likely go before the state Legislature in January.
Judy Folda, co-owner of Premiere Mortgage in Pueblo, said she hadn't
reviewed the specific proposal, but she thinks some form of regulation
is probably good for the industry.
"Generally, I don't usually look for more government oversight, but in
this case I think it's due," Folda said.
Fonda pointed out that Colorado is one of just two states that don't
have some type of regulatory oversight for the mortgage business.
"I think it will help," Folda said. "Obviously, people who get licensed
can't just open up a shop."
However, the $100,000 bond, if applied to every individual mortgage
broker, may be too steep, Folda said. Others in the real estate
industry applauded the move.
Ivor Hill, a real estate appraiser, said the proposal goes further than
he anticipated and is a good start to curbing what he sees as
widespread mortgage fraud in Colorado, including Southeastern Colorado.
Hill is organizing a conference on mortgage fraud expected to draw at
least 300 people and as many as 500 from throughout the country to the
Union Depot next month.
"(The proposal) goes long way to solving some of these problems and I
think it's a good step forward," Hill said.
In the proposal, the Colorado Association of Mortgage Brokers lists 18
different cases of fraud in Colorado - including two cases in Pueblo
County and one in Crowley County - as evidence for the need for some
kind of regulation.
The association admits that many frauds require the cooperation of
others in the transaction, but in nearly every case a mortgage broker
is involved.
Hill said he isn't naive enough to believe that regulation of the
industry will solve all of the problems, but believes it's a good first
step.
"The very fact that they are calling for registration is encouraging
and now they've got the backing of the Colorado Association of Mortgage
Brokers," Hill said. "I think it's a very, very good sign and a case
where people are saying 'enough is enough' and are doing something
about it."
The Colorado Association of Mortgage Brokers submitted a plan last week
to regulate the industry in Colorado, one of just two states with no
such requirements on the books.
The association made the case for regulation based on a variety of
different scams that occur here as well as in just about every other
state in the Union.
The association believes that regulation may curb some of the frauds
occurring in the state and possibly save consumers, lenders and others
in real estate hundreds of thousands of dollars - if not millions -
every year.
The association lists five different scams in its proposal to the state.
Ivor Hill, a local real estate appraiser who has helped in the
investigation of many mortgage scams in the state, said just about
every one of them has occurred in Southeastern Colorado.
The association has said that many scams depend on others involved in
the process, but in almost every case a mortgage broker is also
involved.
Brokers are basically intermediaries between a lender and a borrower,
and in most cases the loan brokered is a home loan, arguably the most
important investment any one person can make.
The association has proposed that mortgage brokers register with the
state, submit themselves to background and criminal checks and put up a
$100,000 surety bond.
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