Fines soar under Toll

Erin Toll claims her constitutional rights have been violated.

Fines and penalties collected at the real estate division are up 2,470% since Erin Tolll took over in 2006.

The Colorado Division of Real Estate in the first four months of the year collected a record amount of money in fines and penalties.

Through April 29, the divisions collected $303,772.65 in fines and penalties from the industries it regulates, according to information obtained by InsideRealEstateNews.com, through a Colorado Open Records Act request. The division oversees real estate brokers, mortgage brokers, appraisers and conservation easements

Erin Toll, the embattled director of the division, has been on a paid leave since mid-March. She was placed on leave following an investigation of American Home Funding that records show was launched on March 2,the day after Toll had a public dispute with Sen. Ted Harvey, R-Highlands Ranch, an employees of the Greenwood Village-based mortgage company.

Gag order keeps Toll from commenting

Toll is fighting a gag order from her boss, Barbara Kelley, the chief of the Department of Regulatory Agencies from speaking in detail to the media. Her attorney, William Finger of Evergreen, declined to discuss the record amount of fines and penalties collected in 2010. Few observers think that Toll will be returning to her position at the division.

Since being hired as the director in September 2006, Toll prided herself as aggressively weeding out the bad actors in the real estate industry. While welcomed during the heyday of real estate scams and rising foreclosures, some people in real estate believe that she has been unfair to many in a complicated industry, acting as the judge, jury and executioner, and that she was more interested in punishing people than educating them about increasingly complicated industries. In any case, that will change with a new law that will create a board to oversee the discipline of mortgage brokers. Real estate brokers and appraisers already are disciplined by boards.

Fines skyrocketed

One thing that is undisputed is that the amount of money collected in fines and penalties skyrocketed with Toll at the helm.

“I think that (Toll) gets credit for putting the whole thing in place, and launching it and getting it up and running,” said Mike Rosser, a retired mortgage banker who currently serves on the board of a state housing task force. While Rosser said he doesn’t now if Toll will remain in her job, he thinks even if she leaves, the aggressive fine-collecting will continue.

“The system is in place and it will just need to be maintained,” he said. The increased collections, “is probably reflective of what is going on. I wouldn’t read too much into it. It’s what you would expect, so it’s not too surprising. ”

In 2006, the division only collected $11,790 in fines. In other words, in the first four months of his year, the division collected 2,470 percent more than it did in 2006. Mortgage brokers were first required to register with the division and undergo background checks in 2006, and in 2007, they were licensed for the first time. In 2006, was the heyday of subprime and so-called “liar loans,” that at the time were contributing to rising foreclosure rates. Now, most of the foreclosure increases are due to a bad economy, more than bad loan products.

This year’s collections already are 17.9 percent higher than in 2009, and 15.8 percent higher than the previous record of $269,524 collected in 2008. One reason that the division may be collecting more is that it has adopted what is known as the “Expedited Settlement Process,” or ESP, which, allows those fined to agree to pay, without going through other agencies first, such as the attorney general’s office. No one from the DORA returned a call for a comment.

Fines generate revenues, as industry dwindles

Rosser said that in large part, the division requires the collection of fines and penalties to operate, because as people leave the various real estate professions, the division collects less in dues from members.

“I think they are what is called a “self-funded” agency, so I guess at one level they have to collect more in fines, because they do not receive enough from their licensing fees,” Rosser said.

This year, the division has a $5.9 million budget, 3.7 percent higher than the $5.65 million in 2009, and almost 57 percent than the $3.7 million in 2006. So far this year, the fines and penalties account for about 5.2 percent of the entire budget. In 2006, they accounted for only 0.31 percent of the budget.

Toll is the highest person at the division, earning $9,579 a month, or $114,948 a year. The next highest paid person makes $7,837 monthly, or $94,044.