Chairman's Letter, May 2010, Updates: Legislative

Legislative Update

FYI, here is the latest legislative update for 2010.  The General Assembly adjourned on May 12, 2010.  It was an extremely active session for us and I want to publically thank Fran Coleman for a great job as our Lobbyist this year.  Her wise counsel and hard work, especially on HB10-1141 led to some great outcomes for CMLA and our industry.  Thanks Fran!!  Thanks also to all of the members of the Legislative and Regulatory Affairs Committee (who are listed at the end of this update), especially to Mike Rosser, Bart Bartholomew, Larry Castle and Brad Groves who testified before committees of the House and Senate in support or opposition as the case may be on the bills included in this report. 
 


For those of you who want to download or review the bills listed here, see the next to the last paragraph of this e-mail for instructions on how to download the latest version of the bills from the General Assembly’s web site.  I have attached the final version of HB 10-1141 incorporating all of the amendments introduced in the Senate. 
  
 


Bills we Supported:


HB 10-1007 CONCERNING AN ADJUSTMENT OF FEES CHARGED BY A COUNTY CLERK AND RECORDER FOR FILING A DOCUMENT WITH THE COUNTY
Sponsors: Judd/Brophy

CMLA Position: Support 

Bill Summary:  This bill will standardize recording fees across Colorado Counties.  We joined LTAC, the Bar Association and CAR in support of this bill. 

Background:  Standardizing Recording Fees will help to eliminate disclosure errors and the resultant associated expenses under the new RESPA rules, it will also add clarity to the process of submitting the correct recording fees for documents like releases of deeds of trust, where submission of incorrect recording fees has lead to significant delays in the process while incorrect fees were returned and resubmitted.

Bill Status:    Passed the House and Senate;  signed by Governor on 4-5-10.  Effective Date is July 1, 2010. 
  


HB 10-1133  CONCERNING AMENDMENTS TO THE “COLORADO FORECLOSURE PROTECTION ACT”

Sponsors:  Massey/TBD

CMLA Position:  Support

Bill Summary:  This bill as originally introduced removes “equity purchasers” from the scope of the Foreclosure Protection Act but leaves all of its requirements in place regarding Foreclosure Consultants.  It also defines disclosure requirements for “Short Sales”. 

Background:  CAR and the AG’s office worked on this bill in an attempt to clarify the provisions of the Foreclosure Protection Act as it applies to equity purchasers (who remain covered )and short sales.  The idea is to clarify the circumstances when equity purchasers are covered by the Act and to address the growing problem of short sale flippers negotiating to buy a property at a short sale, simultaneously selling it to a new purchaser at a much higher price, closing the transactions one immediately after the other, and using the proceeds of the “new purchase” transaction” to fund the short sale transaction.  Flippers in these situations are pulling as much as $30,000 to $50,000 out of the transaction, taking no risk, and leaving the original lender and property seller with a large loss and potential deficiency judgment.  CMLA participated in the stakeholder group and helped to refine the definition of a “subsequent purchaser”, insuring that in such instances where there is a subsequent purchaser involved,  both the original short sale lender and the new “subsequent purchaser’s” lender along with the new buyer and original seller are notified of both transactions prior to the new loan closing.

Bill Status:  The bill was amended on the floor of the House incorporating some of our thoughts on the definition of “subsequent purchasers).  It passed out of the House and was further amended in the Senate continuing to refine the definition of “Subsequent Purchaser” (which again, we were consulted on by the AG’s office).  Last Update:  Passed 3rd reading in the Senate on March 25th, was concurred on in the House on 3/31/10 and is off to the Governor for signature. 
  


HB 10-1141  CONCERNING A REQUIREMENT FOR MORTGAGE COMPANIES TO BE REGISTERED BY THE DIVISION OF REAL ESTATE

Sponsors:  Carroll T./Tochtrop

CMLA Position:  Support 

Bill Summary:  This bill provides for registration of Mortgage Companies (which will allow Colorado mortgage companies the ability to obtain their unique identifiers from the NMLS&R as mandated by Fannie and Freddie) and regulation by the DRE of three specific areas:  Unlicensed Mortgage Loan Originator Activity, Record Retention and Advertising Standards.  The bill also establishes a Board of Mortgage Loan Originators (much like the Real Estate Commission) to govern the rule making, policy making and disciplinary actions of the Division of Real Estate, sets forth a requirement for investigations to be conducted in private (from the public) until such time as a disciplinary finding is issued (at which point it would become public record), and extends the deadlines for Mortgage Loan Originators to obtain their unique identifiers from the NMLS&R to December 31, 2010.

Background:  The CMLA Legislative and Regulatory Affairs Committee had the opportunity to work with the Director of the Division of Real Estate to help craft this bill.  We had extensive input in the process which resulted in a bill that is limited and specific to the issues of concern.  The bill creates the registration structure to allow Colorado Mortgage Companies to obtain NMLS&R unique identifiers, thus complying with Fannie Mae and Freddie Mac rules.  Without the ability to obtain a unique identifier from the NMLS&R, companies lacking  a unique identifier would have found their loans unsaleable to Fannie Mae or Freddie Mac.  The bill also transfers document retention  requirements to registered companies and removes the document retention requirement from their employee Mortgage Loan Originators, thus conforming Colorado Statue more closely with Gramm, Leach, Bliley.  The bill also addresses sanctions for companies that employ unlicensed Mortgage Loan Originators as well as outlining the requirement for verifying licenses at the time of hire and prohibiting the continued employment of a licensee as a Mortgage Loan Originator once the licensee has allowed a license to expire or had their license revoked and the company has been notified of such expiration or revocation.  The bill makes companies responsible for any advertising created by the company that does not comply with Colorado Law, rules and regulation.  Finally, the bill  contains a provision that clarifies that a company‘s registration is not automatically in jeopardy if an Individual Mortgage Loan Originator employee does not comply with the Colorado Mortgage Loan Originator Licensing and Mortgage Company Registration Act.  

Bill Status:  The bill passed the House, was heavily amended in the Senate, was concurred on back in the House and is off to the Governor for Signature. 
  


HB 10-1240  CONCERNING THE FORECLOSURE DEFERMENT PROCESS FOR RESIDENTIAL PROPERTIES

Sponsors:  Ferrandino/Carroll

CMLA Position:  Support 

Bill Summary:  This is Representative Ferrandino’s bill to clean up the problems from last year’s HB 09-1276 which established the Foreclosure Deferment process in Colorado Statue.  The bill assigned  authority to the Division of Housing, but was subsequently amended to provide that the Division of Housing will issue guidelines rather than rule making.  Apparently it was felt that guidelines would be sufficient to resolve the problems in the aftermath of HB 09-1276 and that the formal rulemaking process was too lengthy and cumbersome to address the problems in a speedy manner. 

Background:  Last year the General Assembly passed HB 09-1276 which established a foreclosure deferment process in Colorado.  CMLA opposed the bill, but the bill passed despite our opposition.  Last year’s bill did not assign rule making authority to any agency of the state.  The result has been a rash of problems experienced by everyone involved with the process and no practical way to resolve the issues that have arisen.  HB 10-1240 assigns authority to the Division of Housing to issue guidelines which will allow the Division of Housing to address the myriad issues surrounding the deferment process.

Bill Status:  Passed out of committee unanimously (CMLA testified) with amendment.   Last Update:  Passed the House, Passed the Senate 3/26/10 as amended, went back to the House because of amendments, Rep. Ferrandino concurred with amendments on 4/1/10 and it was signed by the Governor on May 5, 2010. 
  


HB 10-1249  CONCERNING EXPEDITED RESIDENTIAL FORECLOSURE SALES

Sponsors:  Labuda and Primavera/Johnston 

CMLA Position:  Support

Bill Summary:  This bill is from the Governor’s Office and permits the acceleration of the foreclosure process  for abandoned residential property.

Background:  There is a growing awareness that vacant and abandoned properties are a problem and a blight on neighborhoods, HOAs, Cities and Counties throughout Colorado.  Accelerating the foreclosure process to get those vacant and abandoned properties in the hands of the lender so that they can be maintained and sold to an end user more quickly is an idea that resonates not only here in Colorado but nationally as well (The MBA followed this bill throughout the session as well and we helped to  keep them up to speed on its progress).  This bill is a landmark piece of legislation nationally and just as Colorado has led the way with the Colorado Foreclosure Hotline, we are once again in the National Spotlight on how to deal more effectively with abandoned properties. 

Bill Status:  Passed the House and Senate and was signed by the Governor on April 29,2010. 
 


SB 10-077  CONCERNING THE REGULATION OF APPRAISAL MANAGEMENT COMPANIES

Sponsors:  Heath/Ferrandino

CMLA Position:  Support as Amended

Bill Summary:  This bill would have given the Division of Real Estate regulatory authority over Appraisal Management Companies (AMCs)

Background:  With the advent of the HVCC, AMCs have grown by leaps and bounds.  This bill established a company registration process for AMCs operating in Colorado and would have given the DRE regulatory authority over AMCs.  Through our efforts, Mortgage Companies that have or operate appraisal panels within their company structure would have been exempt from this bill. 

Bill Status:  CMLA  joined with the Appraisers and CAR to testify in support of the bill.  3/5/10 Update:  Amendment L.006 was introduced.  This is the amendment that we had significant input on as did the Colorado Bankers Association.  All of our input was included and the Amendment exempted Mortgage Companies from the Bill.  The Banks had objected to AMC’s being regulated by the appraisal board and wanted a Director based model adopted.  Director Toll had accommodated this request in the amendment.  That change however was of considerable concern to Senators Harvey, Mitchell and Sheffel.  After much discussion, the bill was laid over again and no vote was taken.  Fran subsequently determined that the bill would likely be postponed indefinitely by Senator Heath (the sponsor) with concurrence by the Division of Real Estate.   
Last Update:  Postponed Indefinitely on 3/11/10.  (Dead). 
  
  
  


Bills we Opposed:


HB 10-1118  CONCERNING THE REGULATION OF DISTRESSED REAL PROPERTY BY A BOARD OF COUNTY COMMISSIONERS

Sponsors:  Kerr J./Hudak

CMLA Position:  Oppose 

Bill Summary:  This bill gives the 59 counties who are not Home Rule Counties the power to adopt ordinances regulating distressed real property. 
Background:  This bill addresses many of the same concerns as HB 10-1249.  We supported 1249 and opposed 1118, because 1118 would permit an additional 59 potentially different approaches to the problem of abandoned or distressed properties.  We felt that 1249 was the more practical and pragmatic solution here. 

Bill Status:  The bill passed the House and Senate despite our opposition.  During the process of testifying on the bill, in working with the sponsors, we were able to get an amendment added that defined the time that the bill would become applicable to a lender would be at the time the lender takes possession of the property after foreclosure, not during the process of foreclosure as the bill was originally structured.  The bill passed the House and the Senate and has been sent to the Governor for Signature. 
 


HB 10-1151 CONCERNING THE DISCLOSURE IN CONNECTION WITH THE SALE OF RESIDENTIAL REAL PROPERTY OF ITS PROXIMITY TO AN AIRPORT

Sponsors:  Swalm/Williams

CMLA Position:  Oppose

Bill Summary:  This bill requires the seller of residential real property located within 5 miles of an airport, airpark, or military airfield, to disclose such location to the property purchaser. 

Background:  This bill could have imposed some liability on individual Mortgage Loan Originators had the seller of a property covered by the bill failed to properly disclose to the purchaser that a property was within the 5 mile zone.

Bill Status:  Fran worked with other Lobbyists to kill the bill.  The bill died in committee. 
 


SB 10-045  CONCERNING INCREASING THE RIGHTS OF HOMEOWNERS, AND, IN CONNECTION THEREWITH, ENACTING THE “HOMEOWNER PROTECTION ACT OF 2010”

Sponsors:  Morse/Kerr A.

CMLA Position:  Oppose

Bill Summary:  This bill extends certain periods during the foreclosure process and requires mandatory mediation before foreclosure can proceed.
Background:  This bill flew in the face of HB 10-1249 and would have only exacerbated the foreclosure problem in Colorado.  If it had passed it would have usurped the successful Foreclosure HotLine program by inserting a more expensive mediator (Current Foreclosure HotLine statistics show an approximately $60 cost per successful resolution vs. $250 to $450 for a Mediator based process) into a unique public private partnership process that clearly is working.  Further, it was clear from stakeholder meetings that we participated in, that there were advocates of Mandatory Mediation (a Colorado Cramdown) at work in the supporters of this bill. 

Bill Status:  We were involved in three stakeholder meetings, met with the sponsor and the attorney behind the concept of the bill.  In concert with virtually every other trade association involved with Real Estate or Real Estate Lending we were instrumental in the final decision by the bill sponsor not to move forward with the bill this session. 
 


SB 10-127 CONCERNING A LIMITATION ON A LENDER’S ABILITY TO COLLECT AGAINST A DEBTOR’S PERSONAL LIABILITY WHEN THE LOAN IS SECURED BY COLLATERAL

Sponsors:  Cadman/Frangas

CMLA Position:  Oppose

Bill Summary:  This bill prohibits a creditor from attempting to collect its debt from a debtor unless the lender has first attempted to collect its debt from the collateral and the proceeds from the collateral are insufficient to fully repay the sum of the outstanding loan balance and collection costs.

Background:  This bill was introduced at the behest of the Homebuilders.  It would have required a lender to proceed first against the collateral, and only then, if a deficiency still remained, proceed against the borrowers personal liability.  Once again, Fran worked to kill the bill in committee in concert with other lender advocacy groups.

Bill Status:  The bill died in committee. 
  
  
Bills on which we were Neutral or had a Monitor Position: 
 


HB 10-1056  CONCERNING THE DISPOSAL OF BUSINESS RECORDS CONTAINING PERSONAL IDENTIFYING INFORMATION

Sponsors:  Frangas/Carroll M.

CMLA Position:  Neutral with CMLA offered Amendment limiting fines to $25,000 per incident

Bill Summary:  This bill requires the proper disposal of records containing personal identification information i.e. SSNs, account numbers etc.
Bill Status:   The bill died in committee on February 25th and is “deemed lost” 
  


HB 10-1084  CONCERNING MEASURES TO ENCOURAGE THE VOLUNTARY CLEANUP OF UNOCCUPIED REAL PROPERTY

Sponsors:  Acree/Mitchell

CMLA Position: Monitor

Bill Summary:  This bill would allow interested parties to enter onto a property to clean up debris, weeds & other items that make a property unsightly without violating trespassing laws.

Bill Status:  This bill died in committee 
 


SB 10-093  CONCERNING THE ORDERLY RESOLUTION OF CLAIMS IN FORECLOSURES INVOLVING JUNIOR LIENS

Sponsors:  Lundberg/DelGrosso

CMLA Position:  Monitor

Bill Summary:  This bill is designed to prevent the purchase of junior liens (most likely held by Homeowner Associations) at the foreclosure sale by persons trying to improve their position in attempting to acquire the property.

Bill Status:  The bill died in committee 3/17/2010. 
  
 


The Legislative and Regulatory Affairs Committee with the help of CMLA’s Lobbyist Fran Coleman reviewed many other bills of the 649 introduced in the session but did not feel that they rose to the level of concern to our industry to warrant being included on this list.  We followed the bills on this list closely and testified in front of committees when appropriate, working with the sponsors and other industry groups to advocate CMLA’s positions. 
  


To download the final version of any of the bills above (or for that matter, any bill before the General Assembly this year) go to the General Assembly’s home page at http://www.leg.state.co.us/.  From there underneath the titles  “ House Current Regular Session” or “Senate Current Regular Session” depending on which body’s bill you are looking for, click on the subheading “Bills”.   That displays the Bill Numbers and Titles in numerical order.  Click on the links in the “Bill Number” column and that will take you to the latest version of the bills (I stick with the “pdf” links) and you can download or review the bills online.   Please note, the bills pages display 50 bills at a time, if you are looking for a bill, make sure it is in the range of bills being displayed, otherwise change the range in the dropdown box and click “go” to change the range of bills being displayed, then scroll down to your bill. 
  


The Legislative and Regulatory Affairs Committee is comprised of the following individuals:  Bart Bartholomew, Brad Groves, Fran Coleman, Stacey Harding, Jim Lewis, John Carson, Terry Jones, Jay Garten, Julie Piepho, Larry Castle, Mike Rosser, Pete Lansing, Ralph Wieleba, Shannon VanSickler, and Wade Warthen.  Thanks to you all for a job Well Done! 
 


Terry Jones, CML
Chairman, Legislative and Regulatory Affairs Committee
Colorado Mortgage Lenders Association

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