Colorado § 5-20-205 - Cosigner release - definition.

§ 5-20-205. Cosigner release - definition.

(1) A creditor shall not impose any restriction that permanently bars a private education credit borrower from qualifying for cosigner release, including restricting the number of times a private education credit borrower may apply for cosigner release.

(2) A creditor shall not impose any negative consequences on a private education credit borrower or cosigner during the sixty days following the issuance of the notice required pursuant to section 5-20-204 (3) or until the creditor makes a final determination about a private education credit borrower's cosigner release application, whichever occurs later. As used in this subsection (2), "negative consequences" includes the imposition of additional eligibility criteria, negative credit reporting, lost eligibility for cosigner release, late fees, interest capitalization, or other financial injury.

(3) For any private education credit obligation issued on or after June 29, 2021, a creditor shall not require proof of more than twelve consecutive, on-time payments as part of the criteria for cosigner release. A private education credit borrower who has paid the equivalent of twelve months of principal and interest payments within any twelve-month period is deemed to have satisfied the consecutive, on-time payment requirement even if the private education credit borrower has not made payments monthly during the twelve-month period. If a private education credit borrower or cosigner requests a change in terms that restarts the count of consecutive, on-time payments required for cosigner release, the creditor shall notify the private education credit borrower and cosigner in writing of the impact of the change and provide the private education credit borrower or cosigner the right to withdraw or reverse the request to avoid that impact.

(4) A private education credit borrower may request an appeal of a creditor's determination to deny a request for cosigner release, and the creditor shall permit the private education credit borrower to submit additional documentation evidencing the private education credit borrower's ability, willingness, and stability to meet the payment obligations. The private education credit borrower may request that another employee of the creditor review the cosigner release determination.

(5) A creditor shall establish and maintain a comprehensive record management system reasonably designed to ensure the accuracy, integrity, and completeness of information about cosigner release applications and to ensure compliance with applicable state and federal laws, including the federal "Equal Credit Opportunity Act", 15 U.S.C. sec. 1691 et seq., as amended, and the federal "Fair Credit Reporting Act", 15 U.S.C. sec. 1681 et seq., as amended. This system must include the number of cosigner release applications received, the approval and denial rate, and the primary reasons for any denial.

Source: L. 2021: Entire part added, (SB 21-057), ch. 378, p. 2521, § 5, effective June 29. L. 2023: Entire section amended, (SB 23-248), ch. 360, p. 2159, § 20, effective August 7.