Erin Toll: Unlicensed mortgage brokers hurt consumers


Last Friday, I blogged about how a lawyer for a mortgage broker disagreed who lost the first round in a legal battle to prevent the Colorado Division of Real Estate subpoenaing his mortgage broker’s bank records.

Erin Toll, the head of the real estate division, said that the court decision was not only a victory for her office, but for consumers. She wanted to look at bank records of mortgage broker Daniel Gordon and Acclaim Mortgage to see if money was being distributed to unlicensed brokers.

Wayne Vaden, Gordon’s attorney, argued that was an invasion of privacy.  He said Gordon had not yet decided whether to appeal.

When I spoke to Vaden Friday afternoon, he said he didn’t see how Toll’s actions would help consumers, as nothing had been alleged that consumers had been hurt.  He noted that if you are caught driving without a license, the remedy is to get a license.

Toll, today, told me she couldn’t disagree with Vaden more.

“Frankly, he is so misinformed  I am appalled,” Toll said. “For example, would you want to have an architect design your house who is not licensed to be an architect? Do you want to be defended in court by a lawyer who is not licensed to be a lawyer? Do you want to have a heart transplant from a doctor who is not licensed? Maybe that metaphor is a little extreme. But certainly when you are making the biggest purchase of your life, your house,  I  think you want to make sure that person is licensed when you are trying to achieve the American Dream.”

She also said she doesn’t buy the argument that the matter shouldn’t be over-blown if it it just involves a license.

“It is a big deal and it a serious crime…I get so worked up by the suggestion that it does not hurt consumers  if you are using unlicensed brokers,” she said. “If it is know big deal to get a license, than why aren’t people just going out and getting licenses.?”

One reason people do not become licensed is because “it is not an easy test,” to pass to be a licensed broker, with about 80 percent of the people passing it. Also, others might have  lost other professional licenses or have been committed of a crime that keeps them from being licensed.

Toll also said that the division could find millions of dollars of fraudulent deals, during the course of an investigation.

"We are talking potentially about millions of dollars when you consider the amount of loans being originated," Toll said. "We see people coming into our offices crying because they were told they qualified for a loan, and finding six months later that the interest rate has skyrocketed. They were sold a mortgage with a low, teaser rate and had no idea is six months they wouldn’t be able to afford their loan, because it wasn’t disclosed properly to them. He (Vaden) has no ideas of what kind of rip offs we see."

Vaden suggested to me that at least make the banks searches very focused, such as on dollar amounts or time periods.

“We talked about that,” Toll said, but came to the conclusion in practice that it does not work.

For example, if the division asked to look at transactions at $5,000 or more, a person for a nominal fund could easily create a “phony” company that would pay unlicensed people less than that amount. “They could pay people $4,999 and we would never know about it,” Toll said.

Toll does not think her ability to search bank records would preclude anyone from entering the mortgage brokerage business.

“There is no god-given right to be a mortgage broker,” Toll told me. “No one is born with the right to be a mortgage broker. You give up certain rights when you choose some professions. When I chose to be a lawyer, I gave up a lot of rights. I was finger-printed and they did a criminal background check on me before I was licensed as a lawyer. If you don’t want to deal with such things, choose a profession that does not require you to be licensed.

I asked Vadem if he thought Toll was on a "fishing expedition," as I had heard that from other mortgage brokers and lawyers representing them.

“I don’t have time to go fishing,” Toll said. “I’d love to learn to fly fish, but I don’t have the time.”

She said she launches investigations based on complaints from consumers and competitors.

“You might have a licensed mortgage broker who is good as his job who follows all of the rules making $150,000,” Toll said. “He sees a guy down the street taking short cuts like using unlicensed brokers, making $250,000. So yes, you bet I’m going to listen to competitors who bring these kind of things to our attention.”

Contact John Rebchook at or 303-945-6865.

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for, covering commercial real estate for the Internet publication.

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