Colorado is one of only two states in the country that doesn’t regulate the mortgage industry. That means even a convicted felon could handle your home loan.
Over the past year we’ve shown you several examples of homeowners facing situations that seemed too bizarre to be true, but they were. One deputy attorney general told us, in Colorado the mortgage industry is like life in the wild west. Many homeowners we’ve talked to share the same type of story Bruce Fanning of Manitou Springs tells. Mortgage loans sold to a company that turns out to have an unsatisfactory rating with the Better Business Bureau.
Two years ago Fanning sent in 5 months worth of mortgage payments, all at once, because he was heading out of the country for half a year. After he was gone, his mortgage company sent the checks back. So then his loan payments were overdue. We found many other homeowners who owed outlandish interest and penalties for similar problems, and paper trails of confusing numbers, even claims of foreclosures.
The Colorado Attorney General’s Office is aware of the nightmares, but “mortgage lenders are largely unregulated in Colorado,” according to Deputy Attorney General Garth Lucero. “The Attorney General’s Office believes that some reasonable level of regulation of mortgage lenders is a good idea.”
So does Gary Broaddus from the Colorado Association of Mortgage Brokers. Colorado and Wyoming are the only two states in the country that don’t require any form of licensing for brokers, lenders or loan originators. “Right now in Colorado, if you are convicted of fraud, you can still legally practice, and we want to stop that.”
But the Colorado Mortgage Lenders Association isn’t sure that would make a big difference. There are federal laws offering consumer protection, but there’s a lack of enforcement. Many homeowners say they couldn’t get a response from the company, or the response they did get didn’t seem to make any sense. In that case, experts say you need to get a third party involved.