A state Senate committee Friday approved a bill calling for the creation of an oversight board to discipline mortgage brokers, removing the power from the director of the state’s Division of Real Estate.
House Bill 1141 passed the Senate Appropriations Committee 6-0. Sen. Ted Harvey, R-Highlands Ranch, abstained from voting under Rule 17 (c), which requires any senator having a personal interest in a pending bill to not vote on it. Harvey is a mortgage broker with American Home Funding.
The bill initially focused on the licensing of mortgage brokers, but an amendment was added to create the board, stripping the director of the Division of Real Estate of the power to investigate and discipline mortgage brokers.
The bill goes to the full Senate.
Giving the director complete authority to oversee mortgage brokers cleaned up an industry widely blamed for the rash of foreclosures plaguing the state, said Terry Jones, chairman of the legislative and regulatory affairs committee for the Colorado Mortgage Lenders Association. Now, though, the organization supports giving a board oversight.
“We think that a board will allow the lending community in Colorado to assist the Division of Real Estate in interpreting a very complex industry,” Jones said. “We think the board will be a real asset to the division in terms of the rulemaking they do and the enforcement.”
Bill Kidwell of Impact Mortgage Management Advocacy & Advisory Group said his organization supports a peer-review board but doesn’t think a board should control all regulations.
“We just don’t believe that management by committee is the best way to achieve efficient operations,” he said.
Current director Erin Toll, who was placed on paid administrative leave last month, has operated for two years as the sole decision-maker in the investigation and discipline of mortgage brokers.
Under the amendments to House Bill 1141, those powers would be split between a new five-person board and Barbara Kelley, executive director of the Department of Regulatory Affairs (DORA) and Toll’s boss.
DORA officials declined to comment on the bill.
The changes come after Toll’s public announcement that Harvey and his employer were under investigation. Shortly afterward, Toll was put on paid leave while an investigation into her conduct is ongoing.
Toll later filed a whistle-blower complaint against Kelley.
DORA and the attorney general’s office have since said Harvey is not under investigation, but they have declined to comment on his employer.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
