Colorado Board of Mortgage Originators to Inactivate LO’s not NMLS approved by January 31, 2011

Within a few weeks we should get updated figures on the number of licensed mortgage originators in Colorado.  This notice from the Colorado Division of Real Estate showed up in my inbox a few days ago and indicates that by January 31st, we will have an updated data set on how many mortgage originators are left in business:

In the December 15, 2010 meeting of the Board of Mortgage Loan Originators, it was decided that all active licenses issued through the Colorado Division of Real Estate will be INACTIVATED on January 31, 2011 for all individuals that do not maintain an approved and active registration through the NMLS.

On … Colorado Board of Mortgage Originators

Colorado has traditionally been friendly to business interests. As it relates to mortgage regulation, Colorado was one of the last in the union to accept any type of regulation. Notably, the mortgage industry was effective at keeping government out. The problem was that a housing environment without enforcement or oversight enabled greedy & unethical actors to emerge.

The idea of a Mortgage Originator Board was a concept we pushed for in 2006 when I was serving as President of the Colorado Association of Mortgage Brokers and licensing was finally getting passed. At the time, we felt it made more sense for Colorado to adopt a model similar to what the Real Estate & Appraisal industries already had in place. However, state leaders like Rosemary Marshall didn’t agree with our sentiment and rejected our attempts to consider this idea. It’s ironic that Rosemary Marshall now finds herself with a seat on the new board.

With the departure of Erin Toll, a new Board of Mortgage Originators is taking the reins and responsibility to adopt & enforce rules based on the law. In my opinion, Colorado has lost the opportunity to continue a unique test in mortgage enforcement. Our “director model” was beginning to produce results, effectively cracking down on mortgage fraud & deceptive trade practices.

I haven’t paid much attention to state politics lately. In the mid-2000’s I spent a significant amount of time fighting for registration and licensing at the state level. It was back in the heyday of the fraudsters, the option ARM’s, the lunacy. I came away from my time on the hill disillusioned and indifferent.

The pace of change was glacial. The kind of people that played in the capitol seemed to enjoy wasting time in unnecessary meetings, stroking each other with meaningless awards, and conspiring to out-maneuver each other in a game where the real players weren’t even present. It was a turn-off.

My Jaded Expectations Going Forward:

Ironically, I’ve flip-flopped on my opinion of boards. I think that boards are incapable of avoiding nepotism and thus ineffective at applying equitable enforcement of the rules. My suspicion is cronyism will rise, enforcement will fall. Wake me when something interesting happens.