Colorado Governor Bill Ritter is certainly making a name for himself as a tough proponent of mortgage lending standards — given the extreme rate of foreclosures in his state, I can’t say I blame him, either. Case in point: he signed a bevy of consumer protection laws into effect this past week. Here’s the full press release on each of them. Perhaps the most interesting to me is HB 1322, summarized below:
HB 1322, Measures to Prevent Mortgage Fraud (Marshall/Groff) Expands the current regimen of registration for mortgage brokers by regulating the behavior of mortgage brokers and others involved in residential real estate transactions. Brokers must act for the benefit of the borrower, including making reasonable inquiry into the borrower’s financial situation and using best efforts to obtain a loan that takes into consideration the borrower’s situation. [emphasis added]
I’m not sure what sort of teeth this law has, but it sure flies in the face of the mortgage broker lobby’s current stance. Remember Chris Holbert, president of the Colorado Mortgage Lenders Association? A few weeks back, Holbert famously admitted to what would now be considered a crime:
â€œThe mortgage broker does not represent the borrower,â€? says Chris Holbert, president of the Colorado Mortgage Lenders Association. â€œWe sell access to money.â€? [emphasis added]
That sound you hear is the mortgage broker lobby scrambling to change its tune.