The Mortgage Brokers Registration Act, regulating Colorado mortgage brokers through background checks and formal registrations, was signed into law by Colorado Gov. Bill Owens Friday.
The bill also requires posting of a $25,000 surety bond, and people who have been convicted of fraud in the past five years will be denied licenses.
Failure to register will be a misdemeanor, and each mortgage brokered by an unregistered person will be a separate violation.
“We hope this measure will reduce mortgage fraud and identity theft in Colorado,” said Bart Bartholomew, past president of the Colorado Association of Mortgage Brokers, who has been lobbying for the bill for years. The majority of other states have regulated brokers for some time.
The bill, H.B. 1161, was introduced by Democratic Rep. Valentin “Val” J. Vigil of Colorado. He said “a huge increase” in mortgage fraud was one of the factors that motivated him to introduce a bill regulating mortgage brokers.
The Colorado Association of Mortgage Lenders, however, has reportedly said regulating mortgage brokers will do little to stop mortgage fraud.