How to Get a Mortgage Loan Originator License in Colorado
Want to act as a mortgage loan originator in Colorado? According to the Colorado Revised Statutes (CRS) Title 12, Article 61, Part 9, anyone who wants to originate or offer to originate a mortgage in the state must be licensed at the Colorado Department of Regulatory Agencies, Division of Real Estate.
To get licensed, applicants will need to comply with several pre-licensing requirements, such as to pass qualifying mortgage loan originator license courses. Applicants will also need to obtain a mortgage loan originator bond.
Read more about the full licensing process below!
General Licensing Requirements
To become licensed as a mortgage loan originator (MLO) in Colorado, you must complete a number of licensing requirements before you can finally submit your application to the Division of Real Estate.
MLO licenses are issued by the Division on a yearly basis and expire on December 31. To retain your license, you must apply for its renewal between November 1 and December 31 of every year. You must also renew your NMLS registration, insurance, and surety bond in that period if you wish to remain licensed.
In a nutshell, here are the requirements you must complete in order to get licensed:
- Submit a set of fingerprints to the Colorado Bureau Investigation for a criminal background check
- Register at the Nationwide Mortgage Licensing System (NMLS)
- Complete an additional criminal background check and credit report authorization in the NMLS once you’ve registered
- Complete the mortgage loan originator qualifying education courses (and comply with continuing education requirements on a yearly basis, to maintain your license)
- Pass the SAFE Mortgage Loan Originator Test
- Obtain the necessary insurance and surety bond
- Apply for your license through the eLicensing online portal of the Division of Real Estate
Of the above, the education courses and test, as well as the insurance and bond requirements require further detail.
Education and Insurance Requirements
To pass the qualifying education requirement, applicants must pass a total of 20 hours of licensing education, approved by the NMLS. Such education must include several hours of federal law, ethics, “non-traditional” mortgage lending education, state-specific education content, and a number of general electives. After this, applicants may apply to pass the MLO test. Without passing this test, you cannot get licensed!
The insurance required by applicants for an MLO license is an “errors and omissions insurance” (E&O). The minimum coverage of this insurance for an individual policy has to be $100,000.00, and the minimum annual aggregate limit – $300,000.00. There are different limits for groups of less than 20 licensees and for groups of more than 20 licensees.
When applying for their license, applicants must also submit a $25,000 surety bond to the NMLS. See below for more about the cost of this bond and what its purpose is.
The fees for applying for this license are as follows:
- The application fee at the Division of Real Estate is $25 (the renewal fee is $13 if you renew on time)
- The initial processing fee at the NMLS is $30
- The credit report and background check through the NMLS cost $15 and $36.25
- The state criminal background check costs $39.50
- Test enrollment fees vary depending on the type of test you are taking
- Total fees: $145.75 + enrollment fees + bond premium
Surety Bond Requirement
The surety bond requirement is central to the MLO licensing process in Colorado. The bond’s purpose is to protect clients of mortgage loan originators from “fraud, forgery, criminal impersonation or fraudulent impersonation”. It is also intended to guarantee that MLOs will comply with the provisions of the Colorado Mortgage Loan Originator Licensing Act and those of the Colorado Revised Statutes (Title 12, Article 61, Part 9).
If a mortgage loan originator is found to have breached the conditions of the bond by engaging in any of the above, a claim can be filed against their bond. Such claims are intended to provide compensation up to the full bond amount to any person or persons who have suffered losses or damages or a result of such actions.
According to the CRS, though, compensation under the bond agreement may only be extended by the surety after a final determination on the matter has been made by a court with jurisdiction.
Even though the bond amount is $25,000, applicants for a bond need to pay a significantly lower sum to get bonded. The cost of your bond is a fraction of the full bond amount. It is determined by the surety when you apply.
The surety reviews your personal credit score and other personal financials in order to set a rate for your bond. Typically, the higher your credit score, the more reliable a surety will consider you, and the lower your bond rate will be. For applicants with perfect credit scores, the cost of their bond can be as low as .5% to 1.25% of the full bond amount. For applicants with slightly lower credit, rates may vary between .75%-1.5%.
If you want to know how much exactly you will need to pay for your mortgage loan originator bond, complete our bond application form and we will provide you with a free quote. Call us at 877.514.5146 if you have any additional questions about this bond!