Separating Some Of The Chaff From The Rest Of The Chaff

Colorado's new mortgage broker licensing law has already kept some questionable characters out of a profession where a good man (or woman) is sometimes hard to find. According to a recent story in The Rocky Mountain News, Colorado's Director of Real Estate Erin Toll (whose battles with title insurers as Insurance Commissioner were previously profiled here) has, like Melanie Griffith's character in the movie "Working Girl," a bod for sin but a head for business (or "bidness" as we like to say in The Lone Star State).

One person pleaded guilty to criminally negligent homicide.

Another committed lewd and lascivious acts in the presence of a child. Another is a burglar and thief and is being sued by the office of the attorney general for alleged violations of the Colorado Consumer Protection Act.

What they have in common was a desire to be licensed as mortgage brokers in Colorado.

These criminals were among 73 people who have had their request denied or have been disciplined by the Colorado Division of Real Estate since Gov. Bill Ritter signed a law last year licensing brokers for the first time.

The law went into effect Jan. 1.

Erin Toll, the director of the real estate division, believes the actions will help reduce the record foreclosures in the state and save consumers millions of dollars.

"What this means is that we are doing our job of protecting consumers," Toll said.

"We're left to imagine where we would be in terms of foreclosures if we didn't have so many bad actors in the mortgage business in the first place," Toll said.

"Now that we're getting bad actors off the street, it is bound to mean that foreclosures will not grow as fast as they were," she said.

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"I do think it's fair to say we have spared millions of dollars in potential fraud," Toll said.

Just think how many more millions you would have saved if you'd licensed legislators!

However severe the crackdown on scofflaws might seem, it's not as if you have to be fresh out of the seminary to get a broker's license in Colorful Colorado.

Still, the vast majority of people who have applied for licenses have received them.

As of early March, there were 9,146 licensed brokers in the state.

"We have about another 680 in the pipeline, so we are almost at 10,000," Toll said.

At the rate they're grinding out mortgage brokers, they'll soon be pressing attorneys as the fastest growing license to steal.

The benefits of licensing are difficult to quantify, but some observers are giving it a shot anyway.

Zachary Urban, who runs the Colorado Foreclosure Hotline (1-877-601-HOPE) and who also sits on the real estate division's board, said the biggest benefit of the licensing can't be measured.

"What I think licensing is doing is making a much larger number of folks make the conscious effort not to even begin the process" because they know they won't meet minimum standards.

Not all of those who have been denied a license are merely going to fade into the sunset, return to robbing banks, or run for Congress. Some are engaging in a favorite American pastime: civil litigation.

Senate Bill 203, which created the Mortgage Broker Licensing Act, among other things, prohibits brokers from engaging in 24 specific activities, including misrepresentation, fraud, conflicts of interest and obligations to consumers.

It does not prohibit a convicted murderer, for example, from becoming a mortgage broker. Several of the convicted felons are challenging their denial of a license by Toll, but none of the cases has been resolved yet.

"Murder may not fit exactly as fraud, but under common law, I think if we asked the (murder) victim's family, we might find that the victim may have been lured or deceived before they were dragged into the bushes and killed," Toll said.

"It's sort of a gray area, and we've decided to err on the side of the consumer. After all, mortgage brokers often go into people's homes."

If Osama bin-Laden eventually gets flushed out of Pakistan, it's nice to know that there will be a plaintiff's attorney willing to take up his cause and take on fascists like Erin Toll who are blatantly exercising their "homicide-o-phobia" in an attempt to deny murderers the right to earn an honest buck as a Colorado mortgage broker. After all, even a Holy Warrior has to make a living.