§ 12-10-713 — Disciplinary actions - grounds - procedures - rules

(1) The board,
upon its own motion, may, or upon the complaint in writing of any person, shall,
investigate the activities of any mortgage loan originator. The board has the power
to impose an administrative fine in accordance with section 12-10-711, deny a
license, censure a licensee, place the licensee on probation and set the terms of
probation, order restitution, order the payment of actual damages, or suspend or
revoke a license when the board finds that the licensee or applicant has performed,
is performing, or is attempting to perform any of the following acts:

(a) Knowingly making any misrepresentation or knowingly making use of any
false or misleading advertising;

(b) Making any promise that influences, persuades, or induces another
person to detrimentally rely on the promise when the licensee could not or did not
intend to keep the promise;

(c) Knowingly misrepresenting or making false promises through agents,
salespersons, advertising, or otherwise;

(d) Violating any provision of the Colorado Consumer Protection Act,
article 1 of title 6, and, if the licensee has been assessed a civil or criminal penalty
or been subject to an injunction under the act, the board shall revoke the licensee's
license;

(e) Acting for more than one party in a transaction without disclosing any
actual or potential conflict of interest or without disclosing to all parties any
fiduciary obligation or other legal obligation of the mortgage loan originator to any
party;

(f) Representing or attempting to represent a mortgage loan originator other
than the licensee's principal or employer without the express knowledge and
consent of that principal or employer;

(g) In the case of a licensee in the employ of another mortgage loan
originator, failing to place, as soon after receipt as is practicably possible, in the
custody of that licensed mortgage loan originator-employer any deposit money or
other money or fund entrusted to the employee by any person dealing with the
employee as the representative of that licensed mortgage loan originator-employer;

(h) Failing to account for or to remit, within a reasonable time, any money
coming into his or her possession that belongs to others, whether acting as a
mortgage loan originator, real estate broker, salesperson, or otherwise, and failing
to keep records relative to the money, which records shall contain such information
as may be prescribed by the rules of the board relative thereto and shall be subject
to audit by the board;

(i) Converting funds of others, diverting funds of others without proper
authorization, commingling funds of others with the licensee's own funds, or failing
to keep the funds of others in an escrow or a trustee account with a bank or
recognized depository in this state, which account may be any type of checking,
demand, passbook, or statement account insured by an agency of the United States
government, and to keep records relative to the deposit that contain such
information as may be prescribed by the rules of the board relative thereto, which
records shall be subject to audit by the board;

(j) Failing to provide the parties to a residential mortgage loan transaction
with such information as may be prescribed by the rules of the board;

(k) Unless an employee of a duly registered mortgage company, failing to
maintain possession, for future use or inspection by an authorized representative of
the board, for a period of four years, of the documents or records prescribed by the
rules of the board or to produce the documents or records upon reasonable request
by the board or by an authorized representative of the board;

(l) Paying a commission or valuable consideration for performing any of the
functions of a mortgage loan originator, as described in this part 7, to any person
who is not licensed under this part 7 or is not registered in compliance with the
federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008, 12
U.S.C. sec. 5101 et seq., as amended;

(m) Disregarding or violating any provision of this part 7 or any rule adopted
by the board pursuant to this part 7; violating any lawful orders of the board; or
aiding and abetting a violation of any rule, order of the board, or provision of this
part 7;

(n) Conviction of, entering a plea of guilty to, or entering a plea of nolo
contendere to any crime in article 3 of title 18, parts 1 to 4 of article 4 of title 18,
article 5 of title 18, part 3 of article 8 of title 18, article 15 of title 18, article 17 of
title 18, or any other like crime under Colorado law, federal law, or the laws of other
states. A certified copy of the judgment of a court of competent jurisdiction of a
conviction or other official record indicating that a plea was entered shall be
conclusive evidence of the conviction or plea in any hearing under this part 7.

(o) Violating or aiding and abetting in the violation of the Colorado or federal
fair housing laws;

(p) Failing to immediately notify the board in writing of a conviction, plea, or
violation pursuant to subsection (1)(n) or (1)(o) of this section;

(q) Having demonstrated unworthiness or incompetency to act as a
mortgage loan originator by conducting business in such a manner as to endanger
the interest of the public;

(r) Procuring, or attempting to procure, a mortgage loan originator's license
or renewing, reinstating, or reactivating, or attempting to renew, reinstate, or
reactivate, a mortgage loan originator's license by fraud, misrepresentation, or
deceit or by making a material misstatement of fact in an application for the
license;

(s) Claiming, arranging for, or taking any secret or undisclosed amount of
compensation, commission, or profit or failing to reveal to the licensee's principal or
employer the full amount of the licensee's compensation, commission, or profit in
connection with any acts for which a license is required under this part 7;

(t) Exercising an option to purchase in any agreement authorizing or
employing a licensee to sell, buy, or exchange real estate for compensation or
commission except when the licensee, prior to or coincident with election to
exercise the option to purchase, reveals in writing to the licensee's principal or
employer the full amount of the licensee's profit and obtains the written consent of
the principal or employer approving the amount of the profit;

(u) Fraud, misrepresentation, deceit, or conversion of trust funds that results
in the payment of any claim pursuant to this part 7 or that results in the entry of a
civil judgment for damages;

(v) Any other conduct, whether of the same or a different character than
specified in this subsection (1), that evinces a lack of good faith and fair dealing;

(w) Having had a mortgage loan originator's license suspended or revoked in
any jurisdiction or having had any disciplinary action taken against the mortgage
loan originator in any other jurisdiction. A certified copy of the order of disciplinary
action shall be prima facie evidence of the disciplinary action.

(x) Engaging in any unfair or deceptive practice toward any person;

(y) Obtaining property by fraud or misrepresentation;

(z) Soliciting or entering into a contract with a borrower that provides, in
substance, that the mortgage loan originator may earn a fee or commission through
the mortgage loan originator's best efforts to obtain a loan even though no loan is
actually obtained for the borrower;

(aa) Soliciting, advertising, or entering into a contract for specific interest
rates, points, or other financing terms unless the terms are actually available at the
time of the solicitation, advertisement, or contract;

(bb) Failing to make a disclosure to a loan applicant or a noninstitutional
investor as required by section 12-10-725 and any other applicable state or federal
law;

(cc) Making, in any manner, any false or deceptive statement or
representation with regard to the rates, points, or other financing terms or
conditions for a residential mortgage loan or engaging in bait and switch
advertising;

(dd) Negligently making any false statement or knowingly and willfully
omitting a material fact in connection with any reports filed by a mortgage loan
originator or in connection with any investigation conducted by the division;

(ee) In any advertising of residential mortgage loans or any other applicable
mortgage loan originator activities covered by the following federal acts, failing to
comply with any requirement of the Truth in Lending Act, 15 U.S.C. sec. 1601 and
Regulation Z, 12 CFR 226 and 12 CFR 1026; the Real Estate Settlement Procedures
Act of 1974, 12 U.S.C. sec. 2601 and Regulation X, 12 CFR 1024 et seq.; the Equal
Credit Opportunity Act, 15 U.S.C. sec. 1691 and Regulation B, 12 CFR 202.9, 202.11,
and 202.12 and 12 CFR 1002; Title V, Subtitle A of the Financial Services
Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act, 15 U.S.C.
secs. 6801 to 6809, and the federal trade commission's privacy rules, 16 CFR 313
and 314, mandated by the Gramm-Leach-Bliley Act; the Home Mortgage
Disclosure Act of 1975, 12 U.S.C. sec. 2801 et seq. and Regulation C, home
mortgage disclosure, 12 CFR 203 and 12 CFR 1003; the Federal Trade Commission
Act of 1914, 15 U.S.C. sec. 45 (a) and 16 CFR 233; and the Telemarketing and
Consumer Fraud and Abuse Prevention Act, 15 U.S.C. secs. 6101 to 6108, and the
federal trade commission's telemarketing sales rule, 16 CFR 310, as amended. The
board may adopt rules requiring mortgage loan originators to comply with other
applicable state and federal statutes and regulations.

(ff) Failing to pay a third-party provider, no later than thirty days after the
recording of the loan closing documents or ninety days after completion of the
third-party service, whichever comes first, unless otherwise agreed or unless the
third-party service provider has been notified in writing that a bona fide dispute
exists regarding the performance or quality of the third-party service; or

(gg) Collecting, charging, attempting to collect or charge, or using or
proposing any agreement purporting to collect or charge any fee prohibited by
section 12-10-725 or 12-10-726.

(2) Upon request of the board, when any mortgage loan originator is a party
to any suit or proceeding, either civil or criminal, arising out of any transaction
involving a residential mortgage loan and the mortgage loan originator participated
in the transaction in his or her capacity as a licensed mortgage loan originator, the
mortgage loan originator shall supply to the board a copy of the complaint,
indictment, information, or other initiating pleading and the answer filed, if any, and
advise the board of the disposition of the case and of the nature and amount of any
judgment, verdict, finding, or sentence that may be made, entered, or imposed
therein.

(3) This part 7 shall not be construed to relieve any person from civil liability
or criminal prosecution under the laws of this state.

(4) Complaints of record in the office of the board and board investigations,
including board investigative files, are closed to public inspection. Stipulations and
final agency orders are public record and subject to sections 24-72-203 and 24-72-204.

(5) When a complaint or an investigation discloses an instance of misconduct
that, in the opinion of the board, does not warrant formal action by the board but
that should not be dismissed as being without merit, the board may send a letter of
admonition by certified mail, return receipt requested, to the licensee against whom
a complaint was made and a copy of the letter of admonition to the person making
the complaint, but the letter shall advise the licensee that the licensee has the right
to request in writing, within twenty days after proven receipt, that formal
disciplinary proceedings be initiated to adjudicate the propriety of the conduct
upon which the letter of admonition is based. If the request is timely made, the
letter of admonition shall be deemed vacated, and the matter shall be processed by
means of formal disciplinary proceedings.

(6) All administrative fines collected pursuant to this section shall be
transmitted to the state treasurer, who shall credit them to the division of real
estate cash fund created in section 12-10-215.

(7) (a) The board shall not consider an application for licensure from an
individual whose license has been revoked until two years after the date of
revocation.

(b) If an individual's license was suspended or revoked due to conduct that
resulted in financial loss to another person, no new license shall be granted, nor
shall a suspended license be reinstated, until full restitution has been made to the
person suffering the financial loss. The amount of restitution shall include interest,
reasonable attorney fees, and costs of any suit or other proceeding undertaken in
an effort to recover the loss.

(8) When the board or the division becomes aware of facts or circumstances
that fall within the jurisdiction of a criminal justice or other law enforcement
authority upon investigation of the activities of a licensee, the board or division
shall, in addition to the exercise of its authority under this part 7, refer and transmit
the information, which may include originals or copies of documents and materials,
to one or more criminal justice or other law enforcement authorities for
investigation and prosecution as authorized by law.

Legislative History

Source: L. 2019: Entire title R&RE with relocations, (HB 19-1172), ch. 136, p. 703, � 1, effective October 1.