A Colorado-based mortgage originator has agreed to pay $31,000 in fines and give up his license in 19 states to settle allegations that he had someone else take his required education classes.
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the federal SAFE Act) requires that originators complete 20 hours of approved pre-licensing education, and that state-licensed originators complete eight hours of continuing education courses annually.
Regulators said they were tipped early last year that Patrick Terrance Donlon, who had pending license applications in two additional states, was not the person who took 22 pre-licensing courses and three continuing education courses he claimed credit for.
Donlon — who disputed the allegations and entered into the settlement to avoid the “time, expense, and uncertainty” of contesting them in court — can reapply in two years for a mortgage loan originator license in Colorado and Florida, but is permanently barred from originating loans in the 19 other states that were part of the settlement.
More than 400 mortgage loan originators agreed to surrender their licenses for at least three months and pay $1.2 million in fines in a similar case in 2022, after a biometric ID verification tool, BioSig-ID, determined that they had skirted their annual continuing education requirements.
In that case, Carlsbad, California-based Real Estate Educational Services (REES) allegedly provided false certificates to some clients and took courses on behalf of others. The owners of the business agreed to pay $75,000 in fines in a separate settlement that imposed a lifetime ban on REES providing mortgage lending-related education.
Since 2017, regulators have required mortgage loan originators completing online self-study courses to validate their identity using BioSig-ID, a multi-factor authentication tool.
In 2024, an investigation by the Conference of State Bank Supervisors (CSBS) determined that 14 loan originators associated with the same company failed to provide the required identification when taking 175 continuing education courses online. All were required to retake the courses.
A CSBS spokesperson told Inman that the investigation of Donlon was not triggered by BioSig-ID, but declined to provide specifics.
The Nationwide Multistate Licensing System (NMLS) Mortgage Testing and Education Board conducted the investigation, and state financial agencies in Arkansas, Colorado, Florida, Iowa, Kansas, and Texas led the settlement, CSBS said in a press release.
Donlon cannot be a qualified individual or control person of any financial services entity registered with NMLS for two years, and has been removed from those roles with Trusted American Mortgage LLC.
Centennial, Colorado-based Trusted American Mortgage is licensed in 18 states and sponsors 10 mortgage loan originators, according to NMLS records. The company did not respond to Inman’s requests for comment.
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