“There are stringent requirements for collecting up-front fees,” writes Marcia Waters, director of the state’s Division of Real Estate, “and it would never be acceptable for a mortgage loan originator to charge more for the goods and services than the actual cost charged by the third-party provider.”
The allegations get worse.
“Furthermore, license law prohibits a mortgage loan originator from collecting a fee, commission, or any compensation in connection with a residential loan unless a borrower actually obtains a loan from a lender on the terms and conditions agreed to by the borrower and mortgage loan originator,” Waters continues.
The Division of Real Estate, which is a part of the Department of Regulatory Agencies, received complaints from Colorado homebuyers alleging Gerald (Jerry) Montgomery, owner of Forum Mortgage, charged clients up-front fees to lock into mortgages that were not refunded – or only partially refunded – when the deal fell through.
These fees were not required by the lenders and, once collected, were used by Montgomery for business and personal matters.
The alleged violations charged against the originator are unworthiness and incompetence, co-mingling of funds, false or deceptive rate terms, and receiving a fee when a loan was not obtained.
Along with potentially losing his license, Montgomery is facing a fine of up to $10,000 and $15,821 in restitution.
Denver state regulators have unanimously voted to suspend the license of a mortgage originator who charged clients excessive fees.