Mortgage brokers voiced support Tuesday for a state agency’s push to regulate their profession.
Still, some were skeptical about whether regulation would protect consumers from bad loans.
“I think it’s a great idea,” said Nicole Snow, a mortgage broker in Denver. “There are a lot of people who get into the mortgage industry who don’t necessarily belong. One bad apple ruins the whole bunch.”
Susan Writer, a broker with Mortgage Writer Inc., supports registering mortgage brokers but says the profession shouldn’t be regulated by the state’s Division of Real Estate, as was proposed.
“Mortgage people are totally different from real-estate people,” Writer said. “I don’t see the correlation between putting them together.”
Instead, she said, a separate division should be created to oversee mortgage brokers, who act as intermediaries between consumers and lenders during mortgage transactions.
According to Friday’s recommendation by the Colorado Department of Regulatory Agencies, mortgage brokers would have to submit to criminal- and regulatory-history background checks and post $100,000 bonds beginning next year.
It would be a Class 1 misdemeanor to work as a mortgage broker without being registered. The regulatory agency is charged with protecting professions including plumbers and hairdressers.
The measure is expected to go before the legislature in January.
Colorado and Alaska are the only states that don’t regulate mortgage brokers.
While Snow agrees that mortgage brokers should be registered with the state, she has some concerns over posting the $100,000 bond. Colorado would be one of only a handful of states with bonds that high.
“On one hand, there are some really good loan officers who may not have the money,” she said. “On the other, it’s good for them to have something to lose.”
“They’re trying to do the right thing by putting legislation in place,” said Dieter Brunner, president of LoanTactics.com, a California consumer-advocacy group that helps consumers determine whether they’re working with reputable title insurers, appraisers and mortgage brokers. “But there are always loopholes.”
Regardless, oversight of the industry is long overdue, said Jeff Harmes, a real-estate agent with Re/Max Horizons Group in Broomfield. Without regulation, no one is accountable for loans gone bad, he said.
“If we would just go ahead and license people, it would make it cut-and-dried,” he said. “We want them licensed so they have liability.”
But because mortgage companies donate heavily to politicians, Harmes is skeptical that legislators will pass the measure.
Two state trade groups that represent mortgage brokers have opposite views. The Colorado Association of Mortgage Brokers, which requested the evaluation under the state’s sunrise statute, contends that requiring registration would help prevent fraud. But the Colorado Mortgage Lenders Association says registration would do little or nothing to deter fraud.
Staff writer Margaret Jackson can be reached at 303-820-1473 or mjackson@ denverpost.com.
