Board set up to regulate Colo. mortgage lenders
Associated Press Writer
DENVER – The Colorado Senate approved an amendment to a mortgage regulation bill Friday that would strip Division of Real Estate Director Erin Toll of her authority to regulate mortgage lenders and replace it with a board to be appointed by the governor.
The Senate also approved an amendment that would keep complaints against mortgage brokers secret unless they are sanctioned for violating state regulations.
Sen. Mark Scheffel, a Republican from Parker, said it was an issue of fairness within the division because real estate agents and appraisers are both regulated by boards.
Scheffel said he proposed the changes after talking with mortgage brokers about complaints they were being treated unfairly. He said it had nothing to do with disputes between Toll and lawmakers over her tight regulation of the industry.
“No one could come up with a good reason why mortgage lenders were treated differently,” Scheffel said.
Under the bill given initial approval Friday, Gov. Bill Ritter would appoint all seven members of the board, including five from the mortgage lending industry and two public representatives not affiliated with the industry.
The board would have the authority to make rules, investigate complaints and discipline members. Any appeals would be heard by an administrative law judge.
Under the current system, Toll conducts investigations and decides penalties.
Division spokesman Chris Lines said the division will follow the lawmakers’ instructions.
Toll became a target of criticism last week after she disclosed that American Home Funding, which employs state Sen. Ted Harvey as a broker, was under investigation for allegedly misleading consumers with advertising flyers that look like official tax documents.
An accompanying letter told recipients that Federal Housing Administration records indicate they have good credit that could make them eligible for FHA programs and that American Home Funding is approved by the U.S. Department of Housing and Urban Development to handle applications.
The division said Harvey was not the target of the investigation.
Derrick Strauss, president of the company, did not return a phone call seeking comment.
Jay Garten, director of the Colorado Mortgage Lenders Association, which represents 200 companies and 4,000 mortgage lenders, said a board is better than having one person regulate the industry.
“We feel it’s important we have a jury of our peers judging our performance,” he said.