Date: 02/15/2006

Final
BILL SUMMARY for HB06-1161

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Votes: View--> Action Taken:
Move to strike the words "sixty-two thousand" and
Moved amendment L.004. [An amendment to L.004 was
Moved to refer House Bill 06-1161, as amended, to
Representative M. Carroll discussed a possible ame		PASS
Pass Without Objection
PASS
TIE



10:49 AM -- House Bill 06-1161

Representatives Vigil and Massey, prime sponsors, explained that House Bill 1161 would establish regulatory requirements for mortgage brokers. The bill would define the responsibilities and requirements of both the Department of Regulatory Agencies (DORA), Division of Real Estate, and mortgage brokers. Additionally, the bill creates the Mortgage Broker Registration Cash Fund to collect fee revenue. Representatives Vigil and Massey responded to questions from the committee.

10:57 AM -- Chris Holbert, representing the Colorado Mortgage Lenders Association, testified in opposition to the bill. He stated that regulation of mortgage brokers would cause customer service issues and mortgage fraud committed by loan originators. Mr. Holbert added that some fraud harms consumers, but all fraud hurts mortgage lenders. He feels the bill does not address the customer service or fraud issues.

11:04 AM -- Brian Tobias, representing DORA, testified in support of the bill. He talked about the sunrise review that was completed on mortgage brokers last year. A copy of the 2005 sunrise review that can be found at: http://www.dora.state.co.us/opr/archive/2005MortgageBrokersReport.pdf. Mr. Tobias went through the recommendations in the sunrise review and mentioned that the review did recommend the regulation of mortgage brokers. Mr. Tobias responded to questions pertaining to out of state lenders. Mr. Tobias stated that mortgage brokers, not mortgage lenders, were looked at in the sunrise review. Mr. Tobias was asked if there are currently any legal barriers to entry into the mortgage broker profession. Mr. Tobias stated there are none. The committee asked how many complaints are filed are against mortgage brokers compared to the number of mortgage brokers there are in the state. Representative Vigil stated that there is no data on how many mortgage brokers there are in Colorado.

11:21 AM -- Bart Bartholomew, representing the Colorado Association of Mortgage Brokers, testified in support of the bill. He stated that in Colorado, complaints against mortgage brokers have tripled. Mr. Bartholomew responded to an earlier question about what other states have done. He stated that Utah was ranked in the top five for mortgage fraud when they passed legislation including background checks. Following the passage of the legislation, Utah dropped in rank to 16.

11:25 AM -- Gary Broaddus, Colorado Association of Mortgage Brokers, testified in support of the bill. He stated that the problem is that there is no law in Colorado that prohibits a convicted criminal from working as a mortgage broker. He gave some examples of mortgage brokers who immediately returned to their job after being convicted of crimes.

11:29 AM -- Sunny Banka, representing the Colorado Association of Realtors, testified in support of the bill. She stated that the lack of regulation of mortgage brokers has been a problem for a long time. Ms. Banka discussed the personal information a person must give a mortgage broker, and the problems that can occur if that broker is a convicted criminal. She stated that if mortgage brokers are not regulated, it will remain an open door for identification theft.

11:34 AM

Ms. Banka and Representative Vigil responded to a question from the committee about why the transaction moves forward even though there is a bad feeling about the mortgage broker.

11:38 AM -- Jim Spray, mortgage broker and banker in Colorado, representing the Colorado Association of Mortgage Borkers, testified in support of the bill. He stated the backbone of the bill is the fingerprint check.

11:39 AM -- Terry Jones, representing a group of Real Estate Lenders in Colorado, testified on the bill. He stated a concern the group has is there is already financial responsibility in their industry under the Federal Housing Administration. Therefore, he supports the exemption in amendment L.004 that exempts FHA approved lenders (Attachment A). There was committee discussion about the $62,500 bond being too high. Mr. Jones agreed. Representatives Vigil and Massey clarified where the number came from and stated it could be lowered to $25,000.


BILL:HB06-1161
TIME: 11:53:22 AM
MOVED:Paccione
MOTION:Moved amendment L.004. [An amendment to L.004 was offered and passed- see following vote sheet.] (Attachment A). The motion passed without objection.
SECONDED:Coleman
VOTE
Balmer
Borodkin
Butcher
Carroll M.
Coleman
Knoedler
Liston
McCluskey
Paccione
Penry
Welker
Cerbo
Marshall
Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:HB06-1161
TIME: 11:55:08 AM
MOVED:McCluskey
MOTION:Move to strike the words "sixty-two thousand" and substitute the words "twenty-five thousand" on page 3, line 2, of amendment L.004. The motion passed on a 9-4 vote.
SECONDED:Coleman
VOTE
Balmer
Yes
Borodkin
Yes
Butcher
No
Carroll M.
No
Coleman
Yes
Knoedler
Yes
Liston
No
McCluskey
Yes
Paccione
Yes
Penry
Yes
Welker
Yes
Cerbo
Yes
Marshall
No
Not Final YES: 9 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: PASS


11:59 AM

Representative M. Carroll discussed a possible amendment to page 3, lines 18 to 22, of amendment L.004. The amendment would add the tracking of referrals that are made to other complaint agencies. There was committee discussion on the implementation and cost of the proposed amendment. Representatives Vigil, Massey, and M. Carroll decided to work on the amendment together at a later time. Representative M. Carroll withdrew her amendment.
BILL:HB06-1161
TIME: 12:02:17 PM
MOVED:Coleman
MOTION:Moved to refer House Bill 06-1161, as amended, to the Committee on Finance. The motion passed 12-1.
SECONDED:Paccione
VOTE
Balmer
No
Borodkin
Yes
Butcher
Yes
Carroll M.
Yes
Coleman
Yes
Knoedler
Yes
Liston
Yes
McCluskey
Yes
Paccione
Yes
Penry
Yes
Welker
Yes
Cerbo
Yes
Marshall
Yes
Final YES: 12 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS