Colorado clarifies who needs to be licensed as a mortgage broker

Colorado has found it necessary to clarify whom it is requiring to license as a mortgage broker. Although the definition of a mortgage broker seems clear, the Department of Real Estate just issued new regulations specifying who the licensing statute and regulation covers. And one category that does not seem to fit the definition now requires licensing.

All loan officers who “broker a mortgage, offer to broker a mortgage, act as a mortgage broker, or offer to act as a mortgage broker” must be licensed. I think most of the industry already knew that. What seems to be new and different is that supervisors who directly supervise loan officers must also be licensed. The Department of Real Estate also explained that administrative and clerical personnel do not need a mortgage broker license. If your processors only collect and distribute information about applicants, they do not require licensing. If they talk to borrowers about loan terms and rate or offer any kind of advice about loan terms and rates, then they cross the line and fall within the definition of mortgage broker.

When in doubt, either get the license for your employees or make sure their actions and speech do not extend to advice of any kind.

Starting Your New Business (Part II)

Before you even open your doors, you must have a marketing plan in place. This requires you to sit down and assess your competition and decide how you will be different from your competitors. Are you going to specialize in one segment of the population? Are you going to specialize in only a few products? How will you find your customers? What will be the budget for your marketing and how will it be spent? The more you write down about the research you have done and the specific plans you have for the first year, first three year and first five years of operations, the more likely your chances are that you will succeed. The climate for new mortgage companies is very difficult right now. All over the country existing mortgage businesses are shutting down. You must have a strategy for getting new business.

You must also plan for how loans will be processed and closed once you or your loan officers bring the new business in the door. Will this function be done in-house or will it be outsourced? Do you have the knowledge to do everything yourself in order to keep costs down? Do you know which software to buy? Do you have a source for credit reports, appraisers, relationships with title companies, and real estate lawyers? It is imperative that you do your research before you start your business. Otherwise, you will be throwing your money away as you learn on the fly.

When you have done your research, set up your systems and your license has been approved, you are ready to open for business. Good luck and I hope you reach your goals.