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Home mortgage originator Patrick Terrence Donlon has agreed to pay a $31,000 fine and surrender his license in 19 states to resolve allegations that he forced others to complete required education courses. The settlement bars Donlon from making loans in those 19 states, but he could reapply for licenses in Colorado and Florida in two years. The National Multi-State Licensing System Mortgage Examination and Education Board and state agencies in six states led the investigation and settlement. The lawsuit highlights continued regulatory enforcement of the SAFE Act’s education requirements, including the use of BioSig-ID, a biometric identification tool mandated since 2017.
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The settlement resolves allegations that others took prelicensure and continuing education courses that the Colorado-based loan officer claimed credit for.
A Colorado-based mortgage originator has agreed to pay a $31,000 fine and surrender his license in 19 states to resolve allegations that he forced others to take compulsory education classes.
The safe and fair enforcement of the Mortgage Licensing Act of 2008 (the federal SAFE Act) requires originators to complete 20 hours of approved prelicensure education and state-licensed originators to complete 8 hours of continuing education courses per year.
Regulators said they were informed early last year that Patrick Terrence Donlon, whose license applications were pending in two additional states, was not the person who took the 22 prelicensure courses and three continuing education courses for which he claimed credit.
Mr. Donlon disputed the allegations and reached a settlement to avoid the “time, expense and uncertainty” of going to court, but although he can reapply for a mortgage originator license in Colorado and Florida within two years, he is permanently barred from originating loans in the other 19 states covered by the settlement.
More than 400 mortgage originators in a similar case in 2022 agreed to surrender their licenses for at least three months and pay $1.2 million in fines because they were found to be circumventing annual continuing education requirements by the biometric ID verification tool BioSig-ID.
In the case, Carlsbad, Calif.-based Real Estate Education Services (REES) allegedly provided false certifications to some customers and took courses on behalf of others. In a separate settlement, the managers agreed to pay a $75,000 fine and a permanent ban on REES, which provides mortgage-related education.
Since 2017, regulators have required mortgage originators who complete online self-study courses to verify their identity using BioSig-ID, a multi-factor authentication tool.
In 2024, an investigation by the Conference of State Bank Supervisors (CSBS) found that 14 loan originators affiliated with the same company failed to provide the required identification to take 175 continuing education courses online. Everyone had to retake the course.
A CSBS spokesperson told Inman that the Donlon investigation was not prompted by BioSig-ID, but did not provide further details.
The National Multistate Licensing System (NMLS) Mortgage Examination and Education Committee conducted the investigation, and state financial institutions in Arkansas, Colorado, Florida, Iowa, Kansas, and Texas led the settlement, CSBS said in a press release.
Donlon was disqualified from being a qualified individual or administrator of a financial services entity registered with NMLS for two years and was removed from those roles at Trusted American Mortgage LLC.
Trusted American Mortgage, based in Centennial, Colo., is licensed in 18 states and sponsors 10 mortgage loan originators, according to NMLS records. The company did not respond to Inman’s request for comment.
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