President Obama signed the bill to extend the home buying credit, which should continue to help our real estate market. First time home buyers can still get up to $8000 if they get a property under contract by next April 30th. The tax credit program now gives a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. For more info about the law, and for answers to frequently asked questions, go to http://www.FederalHousingTaxCredit.com

The mortgage industry has received considerable blame for the current economic collapse. Lenders made loans to people who were not qualified, on properties with inflated values, and with terms that were arguably unconscionable. It added insult to injury when these subprime loans were packaged and sold as securities, and these mortgage backed securities were sold at inflated values. Many borrowers were unable to make their payments resulting in many foreclosures, with the properties foreclosed losing their own value and dragging down the value of nearby homes with them.

Until recently in Colorado, there were no prerequisites to being a mortgage broker. "A mortgage broker is an individual who negotiates, originates, or offers or attempts to negotiate or originate for a borrower, and for a commission or other thing of value, a loan to be consummated and funded by a mortgage lender."[i] Colorado required registration of mortgage brokers in 2007, and on January 1, 2008, the Mortgage Broker Licensing Act became effective in Colorado. Mortgage brokers now must complete courses and pass a state exam in order to be licensed. The exam includes two parts - a Federal, State and Consumer Protection Laws portion and a Mortgage Lending Basics and Ethics portion. Each mortgage broker also must post a $25,000 surety bond, carry errors and omission insurance, and submit fingerprints for a criminal background check.

The Colorado Division of Real Estate is responsible for enforcement of the new Mortgage Broker Licensing Act. "Mortgage brokers doing business in the State of Colorado will be held to the highest ethical standards the law allows,.." said Erin Toll, Director of the Colorado Division of Real Estate. Of the 9323 mortgage brokers who had registered with the state by December 31, 2008, fewer than 3000 completed all of the requirements for licensure at the end of last year. The Colorado Division of Real Estate passed an emergency rule to allow extensions for individuals who were unable to complete the course and examination requirements before the end of the year, and the Division received hundreds of applications for extensions.  

The stricter requirements for licensure of mortgage brokers may result in many leaving the industry. It may surprise some to hear that the higher standards is what attracted me to the field. In getting my mortgage broker license, I decided to bring my honest, professional work ethic to an industry that needs more trustworthy people. I am the owner and managing broker of Porter House Realty, an independent real estate company in Denver. What sets me apart from most other real estate brokers is the fact that I was an attorney in Denver prior to being a real estate broker. I was motivated to get my mortgage broker license because of the course and testing requirements.

 

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[i] Colorado Real Estate Commission definition.

[ii] Taken from Rebchook on Real Estate in the Rocky Mountain News on 3/31/2008