Colorado to charge nonbank mortgage servicers annual fee under new law

A new Colorado law will require nonbank mortgage servicers to sign up with the administrator of the state’s Uniform Consumer Credit Code and pay an ongoing fee starting next year.

“The Act, among other things...requires mortgage servicers to pay the administrator an initial notification fee within 30 days after commencing servicing activities in Colorado,” Weiner, Brodsky & Kider noted in an Oct. 1 report posted on JD Supra. “Thereafter, mortgage servicers will be required to pay an annual notification fee on or before Jan. 31 of each year.”

Servicers will likely be charged estimated initial and annual renewal fees of $1,010 each, according to a fiscal report on the legislation issued by the state. The amount is set based on an analysis of the costs involved in implementation, the state Department of Law’s cash fund balance and the estimated number of regulated entities (125). Nonbank mortgage servicers also could potentially face fines if the state attorney general or district attorneys were to pursue actions related to deceptive trade practices.

The Colorado Nonbank Mortgage Servicers Act, which goes into effect on Jan. 31, 2022, also calls for non-depositories in the business to submit annual reports to the administrator. In addition, companies must retain records for four years on mortgages after a final payment, servicing rights transfer and or assignment of the loan, whichever comes first.

Colorado at one point was one of the few remaining jurisdictions to lack explicit registration or licensure for nonbank mortgage servicers. The practice is expected to be even more consistent with the Conference of State Bank Supervisors’ recent addition of model prudential standards.