The Division of Real Estate in Colorado has been doing quite a bit of work on legislative changes and requirements for the State of Colorado’s mortgage professionals.
The addition of 2 more restrictions have been put in place for when you are applying for a mortgage with a professional who is licensed in the state of Colorado. The one added on 12/04/2007 was the net tangible benefit and reasonable inquiry requirement.
What this means is that we are required to only offer a mortgage to you that has a net tangible benefit to you. Meaning that there has to be a requisite benefit to you the borrower. This can include things like: Lower payments, Condensed Ammortization, Debt Consolidation, Lower Rates, Fixing your mortgage rate, Avoiding foreclsoure, Negative Ammortization, and Purchasing a home to name a few. The state requires that you fill out a Net Tangible benefit when you are applying for a mortgage, and also at the closing table when you are signing at the title company. There are specific questions that you will answer by initialing next to the statement.
You can also expect that if you are doing a low (no income verification) document loan that the mortgage professional is going to inquire about your ability to repay the loan. They have the requirement to at least inquire about your current income, and the probability of your continued income potential. What this means is you are seeing the evolution of the mortgage market wanting to require everyone to verify as much as possible about your ability to pay for the mortgage you take out. Although it doesn’t require the mortgage professional to verify your actual documentation.
Also, there is a new Colorado Lock Disclosure to ensure you are going to receive the rate and terms you are agreeing to when you sign the loan application. The Banker/Broker you are working with should be able to show you a lock confirmation from their particular investor on your home loan. The lock confirmation will include your name, address, type of mortgage program, loan amount, RATE, rate lock date, and lock expiration date. This will allow you to know when your loan rate was locked and when it will expire. Typically as a mortgage banker, we need to lock your rate up to 10 days after your loan will fund. This will allow your mortgage servicing to be transferred to the end lender and ensure they have all the proper documentation for your loan.
The newest requirement (from 12/17) is to eliminate the ability for there to be a prepayment penalty that is longer then the initial teaser rate you would have on a sub-prime mortgage. However, there are very few lenders even lending in this arena these days. A few of them are popping back up but there are few soluable sub-prime mortgage companies in business.
The most up to date information on the requirements for the mortgage professionals you interact with in Colorado can be found at http://www.dora.state.co.us/real-estate/index.htm.
If you have questions about who you are working with, make sure they are listed as a licensed mortgage professional in Colorado and not listed as a denied mortgage broker. If you don’t see the individual on either of those lists you may want to see if they are exempt before taking action.
Of course, if you are uncertain of who you are working with and don’t feel like they are servicing your needs first, let us know! We will make sure you are getting options and an education during your home buying or refinancing process.