The DenPost today reported that criminal charfes were filed against a guy acting as a lawyer who was not a lawyer.
Technically, right now in Colorado it is illegal to pretend to be a mortgage broker, ie, to operate without a license.
But in the recent brouhaha about potentially altering Colorado’s oversight of mortgage brokers, two proposals stand out.
First, that the oversight could be in the form of a “Board” instead of a single person, the Director of the Divsion of Real Estate, currently Erin Toll . I have not seen any compelling data to suggest that a Board would be better. There is, however, convincing data to show that Board’s are more expensive and move more slowly, so unless it can be shown to be better in some way, it seems like a bad trade.
The other is that the proposed board be dominated by licesned mortgage brokers and investigations be secret. Now, it’s easy to see why already licensed brokers would want to make sure no unlicensed or otherwise unauthorized individuals attempt to act as brokers. But exactly how is it helpful to anyone other than the investigated broker to make investigations secret?
Since 2006 when Colorado adopted legislation that required mortgage brokers to register (modified in 2007 to require licensing) I am aware of no criminal prosecutions for originating without a license. Though I am aware of several investigations for same by the Division.
Attorney general Suthers did go after some operators for advertising and other violations, but it was more in the form of a cease and desist than an indictment or prosecution.
This is a good illustration of exactly how state regulation can be more effective consumer protections than federal. Not that mortgage brokers are disproportionately responsible for foreclosures, or even more expensive loans*, but it’s one piece of a large puzzle.
The markets with best consumer protections on foreclosure have those protections because they have suitably strict state rules. (more on that later in a separate diary). And this is frequently reflected in how loan originators are licensed and supervised.
BTW – I have heard no significant complaint about how Erin Toll was operating the office that wouldn’t fit into the broader category of “we don’t need no regulation.”
As for “fake lawyers” I usually assume that when someone else makes the claim for someone, it’s just a mistake.
*in fact, brokers tend to originate cheaper loans than banks and other “traditional sources” see The Mortgage Professor and other sources
This should be brought up to the people around Colorado.
when I write up the states with best foreclosure rules for homeowners.
I was speaking with Ed Kahn of the CCLP on this topic at the beginning of the week.
Foreclosure (and bankruptcy laws) vary so widely across states it is shocking. It is hard to balance the rights of consumer debtors with the rights of creditors and the interest of the state in having markets that can clear excess inventory.
Homeowner loses job (still the most common reason for foreclosure- by far).
Servicer iniates foreclosure.
Trustee auctions property for less than the balance due.
In some states- the foreclosing party is prohibited from attempting to collect anything else from the foreclosed homeowner – they got the pledged collateral, they’re done.
In some states, the foreclosing party can get a deficiency judgement and chase the foreclosed homeowner just as any other debt collection. And in some of these states there are complicated timing and other considerations in order to attempt to collect the deficiency.
The incentives for the lender and the homeowner distort the market, not to mention the misperceptions which almost always negatively impact the homeowner.
The lender can file a Complaint for the deficiency. If more than $15,000 (and it usually is by the time attorney fees, penalties, and other costs are added in), it goes to district court and almost always judgment entered since there not much in the way of a defense.
In Colorado, district court judgments are good for 20 years, and can be renewed for another 20 years. So basically you’re screwed, you have to file bankruptcy to get it dismissed in your lifetime.
You are correct, state law concerning this varies widely.