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AN ACT relating to the regulation of the mortgage loan industry. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 286.8-010 is amended to read as follows: 3
As used in this subtitle, unless the context otherwise requires: 4
(1) "Affiliate" means any person who directly or indirectly through one (1) or more 5
intermediaries, controls, [or ]is controlled by, or is under common control with 6
another person; 7
(2) "Alternate work location": 8
(a) Means a physical location, other than the principal office or a branch, at 9
which the employees of a licensee are authorized by the licensee to remotely 10
engage in the mortgage lending process; and 11
(b) May include a physical location, other than the principal office or a branch, 12
where an employee: 13
1. Completes mortgage-related activities if the location is not maintained 14
or utilized for the purpose of conducting in-person mortgage lending 15
business; and 16
2. Meets in person at the convenience of the borrower on an infrequent 17
or as-needed basis in order to complete the mortgage lending process 18
if the location is not the employee's home["Department" means the 19
Department of Financial Institutions]; 20
(3) ["Commissioner" means the commissioner of the department; 21
(4) ]"Applicant" means a person filing an application or renewal application for a 22
license, registration, or claim of exemption under this subtitle; 23
(4)[(5)] "Borrower" means any person that seeks, applies for, or obtains a mortgage 24
loan; 25
(5)[(6)] "Branch" or "branches": 26
(a) Means any location, other than the mortgage loan company's or mortgage loan 27 UNOFFICIAL COPY 22 RS HB 643/GA
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broker's principal office[location], where the mortgage loan company, 1
mortgage loan broker, or its employees maintain a physical presence for the 2
purpose of conducting business in the mortgage lending process, including the 3
servicing of mortgage loans; and 4
(b) Shall not include an alternate work location; 5
(6)[(7)] (a) "Classroom" means a physical classroom environment in which teachers 6
and participants are physically present for the teaching of a course. 7
(b) Courses taught through Internet, mail, or correspondence classes shall not be 8
considered to be courses taught in a classroom; 9
[(8) "Clerical or support duties" means administrative functions such as gathering 10
information, requesting information, word processing, sending correspondence, or 11
assembling files, and may include: 12
(a) The receipt, collection, distribution, and analysis of information common for 13
the processing or underwriting of a residential mortgage loan; or 14
(b) Any communication with a borrower to obtain the information necessary for 15
the processing or underwriting of a loan, to the extent that such 16
communication does not include taking a residential mortgage loan 17
application, assisting a borrower or prospective borrower with the preparation 18
of documents necessary to obtain a mortgage loan, offering or negotiating loan 19
rates or terms, or counseling consumers about residential mortgage loan rates 20
or terms;] 21
(7)[(9)] "Control" means the power, directly or indirectly, to direct the management or 22
policies of a company, whether through ownership of securities, by contract, or 23
otherwise; 24
[(10) "Control records" means all records relating to the operation of a branch that are 25
necessary to exercise control and supervision over the branch;] 26
(8)[(11)] "Criminal syndicate" means five (5) or more persons collaborating to promote 27 UNOFFICIAL COPY 22 RS HB 643/GA
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or engage in any pattern of residential mortgage fraud on a continuing basis; 1
(9)[(12)] "Depository institution" means a depository institution as defined in the 2
Federal Deposit Insurance Act, 12 U.S.C. sec. 1813(c), and amendments thereto, 3
and includes any credit union; 4
(10)[(13)] "Employ or use" means to employ, utilize, or contract with a person or the 5
person's employees for the purpose of participating in the mortgage lending process, 6
including the servicing of mortgage loans; 7
(11)[(14)] "Immediate family member" means a spouse, child, sibling, parent, 8
grandparent, or grandchild; 9
(12)[(15)] "Licensee" means a person to whom a license has been issued; 10
(13)[(16)] "Managing principal" means a natural person who: 11
(a) Meets the requirements of KRS 286.8-032(6); and[ who] 12
(b) Agrees to actively participate in and be primarily responsible for the 13
operations of a licensed mortgage loan broker; 14
(14)[(17)] "Mortgage lending process": 15
(a) Means the process through which a person seeks or obtains a mortgage loan; 16
and[, including] 17
(b) Includes the solicitation, application, origination, negotiation of terms, 18
processing, underwriting, signing, closing, and funding of a mortgage loan and 19
the services provided incident to a mortgage loan, including the appraisal of 20
the residential real property[. Documents involved in the mortgage lending 21
process include but are not limited to: 22
(a) Uniform residential loan applications or other loan applications; 23
(b) Appraisal reports; 24
(c) Settlement statements; 25
(d) Supporting personal documentation for loan applications, including: 26
1. Form W-2 or other earnings or income statements; 27 UNOFFICIAL COPY 22 RS HB 643/GA
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2. Verifications of rent, income, and employment; 1
3. Bank statements; 2
4. Tax returns; and 3
5. Payroll stubs; 4
(e) Any required mortgage-related disclosures; and 5
(f) Any other document required as a part of, or necessary to, the mortgage 6
lending process]; 7
(15)[(18)] "Mortgage loan" means any loan primarily for personal, family, or household 8
use that is secured by a mortgage, deed of trust, or other equivalent consensual 9
security interest on residential real property or any loan primarily for personal, 10
family, or household use that is secured by collateral that has a mortgage lien 11
interest in residential real property; 12
(16)[(19)] "Mortgage loan broker" means any person who for compensation or gain, or in 13
the expectation of compensation or other gain, received directly or indirectly, serves 14
as an agent for any borrower in an attempt to obtain a mortgage loan, or holds 15
oneself out as being able to do so; 16
(17)[(20)] "Mortgage loan company" means any person who directly or indirectly: 17
(a) Makes, purchases, or sells mortgage loans, or holds oneself out as being able 18
to do so; or 19
(b) Services mortgage loans, or holds oneself out as being able to do so; 20
(18)[(21)] "Mortgage loan originator" means a natural person who: 21
(a) 1. Is employed by a licensee; 22
2. Receives[, in exchange for] compensation or gain, or expects to 23
receive[ in the expectation of] compensation or gain; and[:] 24
3.[(a)] Performs any one (1) or more of the following acts in the 25
mortgage lending process: 26
a.[1.] Solicits, places, negotiates, or offers to make a mortgage 27 UNOFFICIAL COPY 22 RS HB 643/GA
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loan; 1
b.[2.] Assists a borrower or prospective borrower with the 2
preparation of documents necessary to obtain a mortgage 3
loan; 4
c.[3.] Explains, recommends, discusses, negotiates, or quotes rates, 5
terms, and conditions of a mortgage loan with a borrower or 6
prospective borrower, whether or not the borrower or 7
prospective borrower makes or completes an application; 8
d.[4.] Explains any term or aspect of any disclosure or agreement 9
given at or after the time a mortgage loan application is 10
received; or 11
e.[5.] Takes a residential mortgage loan application; or 12
(b) Is an independent contractor engaging in the mortgage lending process 13
as a mortgage loan processor; 14
(19) (a)[(22)] "Mortgage loan processor" means a natural person who performs only 15
clerical or support duties at the direction of and subject to the supervision and 16
instruction of a mortgage loan originator. 17
(b) As used in this subsection, "clerical or support duties" means 18
administrative functions such as gathering information, requesting 19
information, word processing, sending correspondence, or assembling files, 20
and may include: 21
1. The receipt, collection, distribution, and analysis of information 22
common for the processing or underwriting of a residential mortgage 23
loan; or 24
2. Any communication with a borrower to obtain the information 25
necessary for the processing or underwriting of a loan, to the extent 26
that the communication does not include: 27 UNOFFICIAL COPY 22 RS HB 643/GA
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a. Taking a residential mortgage loan application; 1
b. Assisting a borrower or prospective borrower with the 2
preparation of documents necessary to obtain a mortgage loan; 3
c. Offering or negotiating loan rates or terms; or 4
d. Counseling consumers about residential mortgage loan rates or 5
terms; 6
(20)[(23)] "Nationwide Multistate[Mortgage] Licensing System and Registry" means a 7
mortgage licensing system developed and maintained by the Conference of State 8
Bank Supervisors and the American Association of Residential Mortgage 9
Regulators; 10
(21)[(24)] "Originate" means to solicit, place, negotiate, offer to make, or broker a 11
mortgage loan; 12
(22)[(25)] "Pattern of residential mortgage fraud" means residential mortgage fraud that 13
involves two (2) or more mortgage loans that have the same or similar intents, 14
results, accomplices, victims, or methods of commission or otherwise are 15
interrelated by distinguishing characteristics; 16
[(26) "Person" means a natural person, or any type or form of corporation, company, 17
partnership, proprietorship, or association;] 18
(23)[(27)] "Physical location" means any location where the mortgage lending process, 19
including the servicing of mortgage loans, is conducted; 20
(24)[(28)] "Record" means any books of account or other books, papers, journals, 21
ledgers, statements, instruments, documents, files, messages, writings, 22
correspondence, or other internal data or information, made or received in the 23
regular course of business or otherwise, regardless of the mode in which it is 24
recorded; 25
(25)[(29)] "Registrant" means a person to whom a registration has been issued; 26
(26)[(30)] "Residential mortgage loan application" means the submission of a borrower's 27 UNOFFICIAL COPY 22 RS HB 643/GA
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financial information in anticipation of a credit decision, whether written or 1
computer-generated, relating to a mortgage loan; 2
(27)[(31)] "Residential real property" means a dwelling as defined in the Federal Truth in 3
Lending Act, 15 U.S.C. sec. 1602(w)[(v)], or any real property upon which is 4
constructed or intended to be constructed a dwelling as so defined; 5
(28)[(32)] "Service" or "servicing" means: 6
(a) Receiving any scheduled periodic mortgage loan payments from a borrower, 7
including amounts for escrow accounts or other fees or obligations related to 8
the mortgage loan, and making or crediting the payments to the mortgage loan 9
account, owner of the loan, or a third party assigned to receive said payments; 10
(b) Maintaining accountings of principal, interest, and other accounts associated 11
with the servicing of mortgage loans and responding to borrower inquiries 12
regarding the status of these loans or accounts; 13
(c) Initiating, supervising, or conducting foreclosure proceedings and property 14
dispositions in the case of default, except "service" or "servicing"[this] shall 15
not include licensed attorneys representing clients in such matters; or 16
(d) In the case of a home equity conversion mortgage or reverse mortgage, 17
making payments to the borrower; 18
(29)[(33)] "Takes a residential mortgage loan application" or "taking a residential 19
mortgage loan application" means: 20
(a) Recording the borrower's application information in any form for use in a 21
credit decision; or 22
(b) Receiving the borrower's application information in any form for use in a 23
credit decision; 24
(30)[(34)] "Transact business in Kentucky" or "transacting business in Kentucky" means 25
to participate in any meaningful way in the mortgage lending process, including the 26
servicing of mortgage loans, with respect to any residential real property located in 27 UNOFFICIAL COPY 22 RS HB 643/GA
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Kentucky; 1
(31)[(35)] "Unique identifier" means a number or other identifier assigned by protocols 2
established by the Nationwide Multistate[Mortgage] Licensing System and 3
Registry; and 4
(32)[(36)] "Wholly owned subsidiary" means a subsidiary that is entirely owned or 5
controlled by another person. 6
Section 2. KRS 286.8-034 is amended to read as follows: 7
(1) (a) An applicant for a license under this subtitle shall provide the commissioner 8
with a check[separate checks] payable to the Kentucky State Treasurer for five 9
thousand dollars ($5,000).[: 10
(a) An investigation fee of three hundred dollars ($300) for the principal office 11
and one hundred fifty dollars ($150) for each branch office; and] 12
(b) The fee required under paragraph (a) of this subsection shall cover the 13
application fee and the licensing fee for all licensed locations, including any 14
changes of address[A license fee of four hundred fifty dollars ($450) for the 15
principal office and two hundred fifty dollars ($250) for each branch 16
originating mortgages on residential real properties located in Kentucky if the 17
applicant applies for a license on or between November 1 and June 30 of the 18
following calendar year or of one hundred fifty dollars ($150) for the principal 19
office and one hundred dollars ($100) for each branch if the applicant applies 20
for a license on or between July 1 and October 31 of the same calendar year]. 21
(2) (a) A license issued between January 1 and September 30[October 31] of the 22
same calendar year shall expire on December 31 of the same calendar year. 23
(b) A license issued between October[November] 1 and December 31 of the same 24
calendar year shall expire on December 31 of the following calendar year. 25
(3) A license may be renewed by submitting the following:[paying] 26
(a) 1. An[the] annual assessment[renewal license] fee.[ which is three hundred 27 UNOFFICIAL COPY 22 RS HB 643/GA
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fifty dollars ($350) for the principal office and two hundred fifty dollars 1
($250) for each branch originating mortgages on residential real 2
properties located in Kentucky,] 3
2. Subject to subparagraph 3. of this paragraph, the annual assessment 4
fee required under subparagraph 1. of this paragraph shall: 5
a. Be based on the volume of loans originated and the volume of 6
loans serviced for residential real property located in Kentucky 7
during the twelve (12) month period ending on September 30; 8
b. Be determined by applying a factor of one hundred twenty-five 9
ten-thousandths percent (0.0125%) to the volume of loans 10
originated and the volume of loans serviced in Kentucky; and 11
c. Cover: 12
i. The renewal fee for the principal office and any branches; 13
and 14
ii. Any examination-related costs incurred by the department. 15
3. The annual assessment fee shall not be: 16
a. Less than one thousand five hundred dollars ($1,500); or 17
b. More than fifteen thousand dollars ($15,000); 18
(b) An annual report of condition[submitting] to the Nationwide 19
Multistate[Mortgage] Licensing System and Registry[ an annual report of 20
condition], which shall be in such form and contain such information as the 21
Nationwide Multistate[Mortgage] Licensing System and Registry may 22
require;[,] and [submitting] 23
(c) [To the commissioner ]Any other information required by the commissioner. 24
(4) (a) The commissioner shall, by administrative regulation or order, adjust the 25
fees in subsections (1) and (3)(a) of this section every two (2) years. 26
(b) An adjustment under paragraph (a) of this subsection shall be calculated 27 UNOFFICIAL COPY 22 RS HB 643/GA
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based on the percent change in the nonseasonally adjusted annual average 1
Consumer Price Index for all Urban Consumers (CPI-U), U.S. City 2
Average, All Items, as published by the United States Bureau of Labor 3
Statistics. 4
(5) The commissioner shall not approve the renewal of a mortgage loan broker's license 5
if the commissioner has not received the information on physical location as 6
required in KRS 286.8-032(8). 7
(6)[(4)] (a) The renewal application, fees, and any required information shall be 8
received by the commissioner on or before November 30 prior to the 9
December 31 expiration date. 10
(b) The commissioner may reinstate a[the] license within thirty-one (31) days of 11
the expiration of the license if the licensee pays the assessment[filing] fee and 12
a reinstatement fee of five hundred dollars ($500)[two hundred fifty dollars 13
($250)]. 14
(c) A license shall not be reinstated when the renewal application, fees, or any 15
required information is received on or after February 1 of the following year 16
that the renewal application was due. 17
Section 3. KRS 286.8-036 is amended to read as follows: 18
(1) As used in this section: 19
(a) "Documents": 20
1. Means documents involved in the mortgage lending process; and 21
2. Includes but is not limited to: 22
a. Uniform residential loan applications or other loan applications; 23
b. Appraisal reports; 24
c. Settlement statements; 25
d. Supporting personal documentation for loan applications, 26
including: 27 UNOFFICIAL COPY 22 RS HB 643/GA
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i. Form W-2 or other earnings or income statements; 1
ii. Verifications of rent, income, and employment; 2
iii. Bank statements; 3
iv. Tax returns; and 4
v. Payroll stubs; 5
e. Any required mortgage-related disclosures; and 6
f. Any other document required as a part of, or necessary to, the 7
mortgage lending process; and 8
(b) "Employee" shall include a mortgage loan originator engaged as an 9
independent contractor. 10
(2) Each license issued under this subtitle shall state the: 11
(a) Address or addresses at which business is to be conducted;[, the] 12
(b) Name of the licensee;[,] and[ the] 13
(c) Date and place of its incorporation, if applicable. 14
(3)[(2)] A license may not be transferred or assigned without the prior written 15
approval of the commissioner. 16
(4)[(3)] No licensee shall transact the business provided for by this subtitle under any 17
other name or maintain an office at any location other than a licensed location or 18
an alternate work location[that designated in the license]. 19
(5)[(4)] Every licensed mortgage loan company or mortgage loan broker shall notify 20
the commissioner, in writing, within ten (10) days of the closing of any licensed 21
office or registered Kentucky branch. 22
(6) (a) A licensee may permit employees to engage in the mortgage lending process 23
at an alternate work location if: 24
1. The licensee has written policies and procedures for supervision of 25
employees working from alternate work locations; 26
2. Access to the licensee's computer systems and customer information is 27 UNOFFICIAL COPY 22 RS HB 643/GA
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in accordance with the licensee's comprehensive written information 1
technology security plan; 2
3. Employees are not permitted to conduct in-person customer activities 3
at the alternate work location except as provided in subsection (2)(b)2. 4
of Section 1 of this Act; 5
4. The licensee ensures that no physical or electronic documents are 6
maintained at the alternate work location; and 7
5. No signage or advertising of the licensee or the mortgage loan 8
originator is displayed at any alternate work location. 9
Section 4. KRS 286.8-295 is amended to read as follows: 10
(1) As used in this section, "employee" shall include a mortgage loan originator 11
engaged as an independent contractor. 12
(2) (a) Every mortgage loan company and mortgage loan broker shall exercise proper 13
supervision and control over the operations, employees, and affairs of its 14
company. 15
(b) A mortgage loan company or mortgage loan broker shall supervise and 16
control all employees acting as a mortgage loan originator on behalf of the 17
mortgage loan company or mortgage loan broker[ not directly utilize the 18
services of a mortgage loan originator engaging in any of the activities set 19
forth in KRS 286.8-010(21)(a), unless that mortgage loan originator is under 20
the supervision and control of that company as an employee]. 21
(3) A licensee that allows employees to engage in the mortgage lending process from 22
an alternate work location shall: 23
(a) Exercise proper supervision and control over the employees; 24
(b) Have written policies and procedures in place that ensure a safe, secure 25
system for the mortgage lending process; 26
(c) Oversee compliance, and require all employees to comply, with the policies 27 UNOFFICIAL COPY 22 RS HB 643/GA
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and procedures referenced in paragraph (b) of this subsection; 1
(d) Employ appropriate risk-based monitoring and oversight processes; 2
(e) Ensure that: 3
1. Customer interactions and communications about consumer accounts 4
are in compliance with federal and state information security 5
requirements, including applicable provisions of: 6
a. The Gramm-Leach-Bliley Act of 1999, Pub. L. No. 106-102, as 7
amended; and 8
b. The Federal Trade Commission's Safeguards Rule, set forth in 9
16 C.F.R. Part 314; 10
2. Any employee that engages in the mortgage lending process at an 11
alternate work location accesses the company's secure systems, 12
including a cloud-based system, directly from any out-of-office device 13
via a virtual private network (VPN) or a comparable system that 14
ensures secure connectivity and requires passwords or other forms of 15
authentication to access; 16
3. Appropriate security updates, patches, or other alterations to the 17
security of all devices used at an alternate work location are installed 18
and maintained; 19
4. Any employee that engages in the mortgage lending process at an 20
alternate work location agrees to comply with the licensee's processes 21
established under paragraph (d) of this subsection; and 22
5. The Nationwide Multistate Licensing System and Registry record of a 23
mortgage loan originator that works from an alternate work location 24
designates a properly licensed location as the mortgage loan 25
originator's official work station; 26
(f) Have the ability to: 27 UNOFFICIAL COPY 22 RS HB 643/GA
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1. Remotely lock or erase company-related contents of any device; or 1
2. Otherwise remotely limit all access to the company's secure systems; 2
and 3
(g) At least annually: 4
1. Certify that all employees engaged in the mortgage lending process at 5
alternate work locations meet the appropriate standards and 6
safeguards to continue engaging in the mortgage lending process 7
from the alternate work locations; and 8
2. Review each alternate work location and provide proof of the 9
documented review to the department upon request. 10
(4) Notwithstanding any provision to the contrary, nothing in this section shall prohibit 11
mortgage loan companies from utilizing the services of a mortgage loan broker and 12
its employees. 13
Section 5. KRS 286.8-160 is amended to read as follows: 14
(1) Every mortgage loan company and mortgage loan broker shall make and keep such 15
accounts, correspondence, memoranda, papers, books, data, and other records used 16
in the mortgage lending process: 17
(a) As the commissioner prescribes;[,] or 18
(b) That are required by federal law. 19
(2) (a) Except as provided in paragraph (b) of this subsection, the records governed 20
under[in] this subtitle shall be preserved for such time as the commissioner 21
may by regulation[rule] or order require, not to exceed a period of five (5) 22
years after a mortgage loan application is completed, whether approved or 23
rejected, or on mortgage loans paid in full, whichever is longer. 24
(b) Records shall be held for longer than five (5) years where federal law 25
prescribes or supersedes this section. 26
(3) Records required to be preserved under this subtitle: 27 UNOFFICIAL COPY 22 RS HB 643/GA
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(a) May be kept in an electronic retrievable format, or other similar form of 1
medium, that is readily accessible to examination, investigation, and 2
inspection by the commissioner; and 3
(b) Shall not be maintained at any alternate work location. 4
(4) Every mortgage loan company and mortgage loan broker shall file financial reports 5
as the commissioner prescribes. 6
(5) If the information contained in any document filed with the commissioner is or 7
becomes inaccurate or incomplete in any material respect, the person who filed the 8
document shall promptly file a correcting amendment. 9
(6) Any person who ceases operating as a mortgage loan company or mortgage loan 10
broker under the provisions of this subtitle shall, prior to the discontinuance of 11
business in the residential mortgage lending process, notify the commissioner of the 12
physical location where the records required to be kept under this subtitle will be 13
preserved. The records shall be made accessible to the commissioner upon five (5) 14
business days' written notice. 15
(7) (a) Any person who ceases operating as a mortgage loan company or mortgage 16
loan broker under the provisions of this subtitle shall designate a custodian of 17
records and notify the commissioner of the name, physical address, electronic 18
mail address, and telephone number of the custodian of records. 19
(b) The custodian of records shall preserve all records required under this subtitle 20
and allow the commissioner access to the records for examination and 21
investigation upon demand. 22
(8) Records may be maintained by a mortgage loan company or mortgage loan broker at 23
a location other than within this Commonwealth, so long as they are made 24
accessible to the commissioner upon five (5) business days' written notice. 25
(9) The commissioner may approve a written request for the destruction of records 26
required to be preserved under this subtitle prior to the minimum retention period 27 UNOFFICIAL COPY 22 RS HB 643/GA
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described in subsection (2) of this section. 1
Section 6. KRS 286.8-170 is amended to read as follows: 2
(1) As used in this section, "control records" means all records relating to the 3
operation of a branch that are necessary to exercise control and supervision over 4
the branch. 5
(2) (a) Every mortgage loan company and mortgage loan broker shall keep at its 6
principal office correct and complete records of its business transactions, 7
books of accounts, and minutes of proceedings of its directors, principals, or 8
partners. 9
(b) Complete records of all business transactions at the principal office shall be 10
maintained at the principal office. 11
(c) Each branch[ office] shall: 12
1. Keep detailed records of all transactions at the[such] branch;[ office] 13
and[ shall] 14
2. Furnish full control records to the principal office. 15
(d) 1. Any record of a mortgage loan company's or mortgage loan broker's 16
business transactions, book of accounts, or minutes of proceedings of 17
its directors, principals, or partners generated prior to the company's 18
or broker's previous examination may be stored at a third-party secure 19
storage facility. 20
2. The mortgage loan company or mortgage loan broker, as applicable, 21
shall: 22
a. Notify the commissioner, in writing, thirty (30) days prior to 23
engaging with any third-party secure storage facility; and 24
b. Receive approval from the commissioner for use of the third-25
party secure storage facility. 26
(3)[(2)] No mortgage loan company or mortgage loan broker by any system of 27 UNOFFICIAL COPY 22 RS HB 643/GA
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accounting or any device of bookkeeping shall, either directly or indirectly, enter 1
any of its assets upon its books in the name of any person, partnership, association, 2
or corporation[,] or under any title, designation, or value that is not thoroughly 3
descriptive of any assets. 4
(4)[(3)] The affairs of every mortgage loan company, mortgage loan broker, and 5
mortgage loan originator, and the records required to be maintained by KRS 286.8-6
160 , shall be[are] subject at any time or from time to time to such periodic, special, 7
or other examinations by the commissioner[executive director] or an examiner of 8
the commissioner within or without this state and with or without notice to the 9
person being examined, as the commissioner deems necessary or appropriate in the 10
public interest. All records of the person being examined shall be subject to the 11
commissioner's inspection. 12
(5)[(4)] The examiner shall: 13
(a) Make a thorough examination into the condition, workings, and affairs of the 14
person being examined; and 15
(b) Report, as he or she may find, to the commissioner any: 16
1. Violation of law ;[or any] 17
2. Unauthorized unsafe practices; or[ any] 18
3. Failure to keep and have correct any required books and records[ as he 19
or she may find to the commissioner]. 20
(6)[(5)] [A mortgage loan company or mortgage loan broker shall pay a fee for each 21
such examination of its operations or employees based on fair compensation for 22
time and actual expense. ]For the purpose of avoiding unnecessary duplication of 23
examinations, the commissioner, insofar as he or she deems it practicable in 24
administering this section, may: 25
(a) Cooperate and exchange information with: 26
1. Any agency of the state or federal government;[,] 27 UNOFFICIAL COPY 22 RS HB 643/GA
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2. Other states;[,] 1
3. The Nationwide Multistate[Mortgage] Licensing System and 2
Registry;[,] or 3
4. The federal National Mortgage Association, Government National 4
Mortgage Association, and Federal Home Loan Mortgage 5
Corporation;[,] and[ may ] 6
(b) Accept [such ]examinations from the entities described in paragraph (a) of 7
this subsection, in whole or in part, in lieu of an examination by the 8
commissioner. 9
(7)[(6)] The commissioner or the commissioner's examiners or designated 10
representative shall have access to all records of a mortgage loan company, 11
mortgage loan broker, and mortgage loan originator which relate to their business, 12
and records kept by any officers, agents, or employees, relating to or upon which 13
any record of its business is kept. 14
(8)[(7)] (a) A mortgage loan originator shall make available and grant access to the 15
commissioner, or an examiner of the commissioner, the records relating to its 16
operations. 17
(b) A mortgage loan company or mortgage loan broker shall make available and 18
grant access to all records of its current and former employees and contractors 19
relating to its operations. 20
(9)[(8)] Any person subject to this subtitle shall make or compile reports or prepare 21
other information as directed by the commissioner or an examiner of the 22
commissioner to include: 23
(a) Accounting compilations; 24
(b) Information lists and data concerning loan transactions in a format prescribed 25
by the commissioner or an examiner of the commissioner; and 26
(c) Such other information deemed necessary to carry out the purposes of this 27 UNOFFICIAL COPY 22 RS HB 643/GA
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section. 1
(10)[(9)] No mortgage loan company, mortgage loan broker, or mortgage loan 2
originator shall impede the commissioner or an examiner of the commissioner from 3
interviewing its officers, principals, members, employees, independent contractors, 4
agents, or customers. 5
(11)[(10)] (a) In making any examination or investigation authorized by this subtitle, 6
the commissioner may control access to any documents and records of the 7
licensee or person under examination or investigation. 8
(b) The commissioner may take possession of the documents and records, or 9
place a person in exclusive charge of the documents and records in the place 10
where they are usually kept. 11
(c) During the period of control under this subsection, no individual or person 12
shall remove or attempt to remove any of the documents and records except 13
pursuant to a court order or with the consent of the commissioner. 14
(d) Unless the commissioner has reasonable grounds to believe the documents or 15
records of the licensee have been, or are at risk of being, altered or destroyed 16
for purposes of concealing a violation of this subtitle, the licensee or owner of 17
the documents and records shall have access to the documents or records as 18
necessary to conduct its ordinary business affairs. 19
(12)[(11)] No[It shall be unlawful for any] person subject to investigation or examination 20
under this subtitle shall[to] knowingly withhold, abstract, alter, remove, mutilate, 21
destroy, or secrete any books, records, or other information. 22
(13)[(12)] In order to carry out the purposes of this subtitle, the commissioner may: 23
(a) Retain attorneys, accountants, or other professionals and specialists as 24
examiners, auditors, or investigators to conduct or assist in the conduct of 25
examinations or investigations; 26
(b) Enter into agreements or relationships with other government officials or 27 UNOFFICIAL COPY 22 RS HB 643/GA
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regulatory associations in order to improve efficiencies and reduce regulatory 1
burden by sharing resources, standardized or uniform methods or procedures, 2
and documents, records, information, or evidence obtained under this subtitle; 3
and 4
(c) Use, hire, contract, or employ public or privately available analytical systems, 5
methods, or software to examine or investigate the persons subject to this 6
subtitle. 7
(14)[(13)] The authority of this section shall remain in effect[,] whether a person acts, or 8
claims to act, under any licensing or registration law of this subtitle, or acts, or 9
claims to act, without such authority. 10
Section 7. KRS 286.8-100 is amended to read as follows: 11
(1) No licensee shall establish or maintain a branch transacting business in Kentucky, 12
either directly or indirectly, without: 13
(a) Filing the application as described in KRS 286.8-032(5); and 14
(b) Receiving prior written approval of the commissioner. 15
(2) Each application for approval of the establishment and maintenance of a branch 16
shall state: 17
(a) The physical address of the proposed location;[,] 18
(b) The functions to be performed;[,] and 19
(c) Other information the commissioner may require if different from that 20
contained in the original application for a license or registration. 21
(3) Each application under this section shall be sworn to by the applicant[ and 22
accompanied by the appropriate fee as set out in KRS 286.8-034(1)(b)]. 23
(4) Upon the receipt[ by the commissioner] of an application[ and the required fee], if 24
the commissioner[he] finds that the applicant is otherwise in compliance with the 25
provisions of this subtitle, the commissioner[he] shall approve the application. 26
(5) The commissioner may deem an application abandoned and subject to KRS 286.8-27 UNOFFICIAL COPY 22 RS HB 643/GA
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090 when: 1
(a) The application is received incomplete; and 2
(b) The applicant fails to: 3
1. Provide any required information[ or fee] under this subtitle; or [fails to] 4
2. Respond to a request by the commissioner for further information. 5
Section 8. KRS 286.8-140 is amended to read as follows: 6
(1) The commissioner shall exercise general supervision and control over mortgage 7
loan companies and mortgage loan brokers doing business in the Commonwealth of 8
Kentucky. 9
(2) In addition to the other duties imposed upon him or her by law, the powers and 10
duties of the commissioner shall be[are]: 11
(a) 1.[(1)] To promulgate[prescribe] such [rules,] administrative regulations, 12
[and] forms, and[ to promulgate such] orders as are deemed to be 13
necessary and appropriate to accomplish the basic purposes of and the 14
provisions contained within this subtitle. 15
2. The commissioner may from time to time make, amend, and rescind 16
such administrative regulations[rules], forms, and orders, including 17
regulations[rules] and forms governing applications, registration, 18
reports, and loan disclosure statements[,] and defining any terms, 19
whether or not used in this subtitle, insofar as the definitions are not 20
inconsistent with the provisions of this subtitle. 21
3. For the purpose of administrative regulations[rules] and forms, the 22
commissioner may classify loans, persons, and matters within his or her 23
jurisdiction[,] and prescribe different requirements for different classes. 24
4. An administrative regulation[No rule], form, or order may not be made, 25
amended, or rescinded unless the commissioner finds that the action is 26
necessary or appropriate in the public interest and consistent with the 27 UNOFFICIAL COPY 22 RS HB 643/GA
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purposes fairly intended by the policy and provisions of this subtitle. 1
5. In promulgating administrative regulations[prescribing rules] and 2
forms, the commissioner may cooperate with other state and federal 3
agencies with a view to achieving maximum uniformity in the form and 4
content of applications, reports, and loan disclosure statements 5
whenever practical; 6
(b)[(2)] To conduct such investigations as may be necessary to determine 7
whether any person has engaged in or is about to engage in any act, practice, 8
or course of conduct constituting a violation of any provision of this subtitle; 9
(c)[(3)] To conduct such examinations, investigations, and hearings, in addition 10
to those specifically provided for by law, as may be necessary and proper for 11
the efficient administration of this subtitle; and 12
(d) 1.[(4)] At the commissioner's discretion, to require filings and fees 13
required under this subtitle to be electronically filed with: 14
a. The State Regulatory Registry, LLC, or its successor 15
organization;[;] 16
b. The State Regulatory Registry, LLC's[its] parent, affiliate, or 17
operating subsidiary;[;] or 18
c. Other agencies or authorities that are part of the Nationwide 19
Multistate[mortgage] Licensing System and Registry;[,] or 20
d. Other agencies or authorities consistent with the intent of KRS 21
286.8-285. 22
2. The commissioner may accept uniform mortgage examinations or other 23
procedures designed to implement a uniform national mortgage 24
regulatory system or facilitate common practices and procedures among 25
the states. 26
Section 9. KRS 286.8-150 is amended to read as follows: 27 UNOFFICIAL COPY 22 RS HB 643/GA
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(1) (a) Except as otherwise provided by law, applications for registration or renewals 1
and[,] all papers, documents, reports, and other written instruments filed with 2
the commissioner under this subtitle, or obtained pursuant to an examination 3
by the department, shall be[Department of Financial Institutions are] open to 4
public inspection, except that the commissioner pursuant to the provisions of 5
KRS Chapter 61 may classify as confidential or withhold from public 6
inspection, for such time as he or she considers necessary, any information 7
which, in his or her judgment, the public welfare or the welfare of any licensee 8
or registrant or its customers requires to be so withheld. 9
(b) All investigations and information contained therein shall not be public until 10
such time as the commissioner makes all or part of the investigation public or 11
the investigation is closed. 12
(2) The commissioner may classify as confidential certain records and information 13
obtained by the department[Department of Financial Institutions] when such 14
matters are obtained from the Nationwide Multistate[Mortgage] Licensing System 15
and Registry or from a governmental agency. 16
(3) The commissioner may classify as confidential and prohibit the disclosure of any 17
request for documents or records submitted pursuant to KRS 286.8-180, for such 18
time as deemed necessary if, in the commissioner's judgment, the disclosure of said 19
request for documents or records may: 20
(a) Impede or interfere with an ongoing investigation conducted pursuant to KRS 21
286.8-140; or[ may] 22
(b) Cause the destruction or secretion of documents by the targeted party. 23
(4) Notwithstanding any provision to the contrary in this subtitle or in KRS Chapter 61, 24
any information, documents, or material provided to or obtained from the 25
Nationwide Multistate[Mortgage] Licensing System and Registry shall be subject to 26
the confidentiality requirements set forth in Section 1512 of the S.A.F.E. Mortgage 27 UNOFFICIAL COPY 22 RS HB 643/GA
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Licensing Act, 12 U.S.C. sec. 5111[Pub. L. No. 110-289], and amendments thereto. 1
Section 10. KRS 286.8-220 is amended to read as follows: 2
(1) No person[It] shall [be unlawful for any person to ]make or cause to be made, in 3
any document filed with the commissioner, a governmental agency, the Nationwide 4
Multistate[Mortgage] Licensing System and Registry, or in any proceeding under 5
this subtitle, any statement that is, at the time and in light of the circumstances 6
under which it is made, false or misleading in any material respect, including an 7
omission of a material fact. 8
(2) No person[It] shall[ be unlawful for any person], in connection with a transaction 9
involving the mortgage lending process, or in connection with the operation of a 10
mortgage loan business or the management or servicing of mortgage loans, directly 11
or indirectly: 12
(a) [To ]Employ a device, scheme, or artifice to defraud; 13
(b) [To ]Engage in any act, practice, or course of business that operates or would 14
operate as a fraud or deceit upon any person; 15
(c) [To ]Fail to disburse funds in accordance with a loan commitment; 16
(d) [To ]Delay closing of any mortgage loan for the purpose of increasing interest, 17
costs, fees, or charges payable by the borrower; 18
(e) Upon receipt of a customer's written request, [to ]delay beyond five (5) 19
business days the issuance of a written loan payoff amount or to delay beyond 20
ten (10) business days the issuance of a payment history; 21
(f) [To ]Charge a fee for the issuance of an initial written loan payoff amount or 22
payment history for each calendar quarter as set out in paragraph (e) of this 23
subsection; 24
(g) [To ]Obtain property by fraud or misrepresentation; 25
(h) [To ]Fail to make disclosures as required by this subtitle or any other 26
applicable state or federal law, including regulations thereunder; or 27 UNOFFICIAL COPY 22 RS HB 643/GA
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(i) [To ]Fail to comply with state or federal laws, including the rules and 1
regulations thereunder, that are applicable to transacting business in Kentucky. 2
(3) Unless exempted by KRS 286.8-020(1), no person[it ]shall [be unlawful for any 3
person to ]transact business in Kentucky unless it complies with the provisions of 4
this subtitle. 5
(4) No person[It] shall [be unlawful for any person to ]use prescreened trigger lead 6
information derived from a consumer report to solicit a consumer who has applied 7
for a mortgage loan with another mortgage loan company or mortgage loan broker, 8
when the person: 9
(a) Fails to state in the initial solicitation that the person is not affiliated with the 10
mortgage loan company or mortgage loan broker with which the consumer 11
initially applied; 12
(b) Fails in the initial solicitation to conform to state and federal law relating to 13
prescreened solicitations using consumer reports, including the requirement to 14
make a firm offer of credit to the consumer; 15
(c) Uses information regarding consumers who have opted out of the prescreened 16
offers of credit or who have placed their contact information on the state or 17
federal do-not-call registry; or 18
(d) Solicits a consumer with an offer of certain rates, terms, and costs with the 19
knowledge that the rates, terms, or costs will be subsequently changed to the 20
detriment of the consumer. 21
Section 11. KRS 286.8-255 is amended to read as follows: 22
(1) (a) No natural person shall transact business in Kentucky, either directly or 23
indirectly, as a mortgage loan originator unless such mortgage loan originator: 24
1. Is registered with the department;[,] 25
2. Complies with all applicable requirements of this subtitle;[,] and 26
3. Maintains a valid unique identifier issued by the Nationwide 27 UNOFFICIAL COPY 22 RS HB 643/GA
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Multistate[Mortgage] Licensing System and Registry. 1
(b) The department shall maintain a database of all mortgage loan originators 2
originating mortgage loans on residential real property in Kentucky. 3
(2) The application for registration shall: 4
(a) Be on a form prescribed by the commissioner; 5
(b) Be accompanied by a registration fee in the amount of fifty dollars ($50), 6
which shall be used solely by the department to establish and maintain a 7
database of all mortgage loan originators and any excess funds shall be 8
retained by the department and shall not lapse to the general fund; and 9
(c) Contain such information as the commissioner deems necessary to carry out 10
the purposes of this subtitle. 11
(3) (a) Applications for initial registrations of mortgage loan originators shall be 12
accompanied by satisfactory evidence that the applicant has successfully 13
completed twenty (20) hours of prelicensing education courses related directly 14
to the mortgage lending process, as approved and designated by the 15
commissioner. 16
(b) For the purposes of paragraph (a) of this subsection:[,] 17
1. The prelicensing education courses approved and designated by the 18
commissioner shall: 19
a. Meet the minimum requirements set forth in Section 1505(c) of the 20
S.A.F.E. Mortgage Licensing Act, 12 U.S.C. sec. 5104(c)[Pub. L. 21
No. 110-289], and amendments thereto;[,] and[ shall] 22
b. Be reviewed[,] and approved by the Nationwide 23
Multistate[Mortgage] Licensing System and Registry; and[.] 24
2. [(c) For the purposes of paragraph (a) of this subsection, ]The 25
commissioner may accept as credit towards the completion of the 26
prelicensing education requirements in this state, the completion of 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
prelicensing education requirements in any other state so long as the 1
education has met the requirements set forth in[ paragraphs (a) and (b) 2
of] this subsection. 3
(4) (a) Applications for renewals of registration by registered mortgage loan 4
originators shall be accompanied by satisfactory evidence that the individual 5
has successfully met the continuing education requirements of KRS 286.8-260 6
and by payment of a renewal fee in the amount of fifty dollars ($50). 7
(b) The renewal fee shall be used solely by the department to establish and 8
maintain a database of all mortgage loan originators and any excess funds 9
shall be retained by the department and shall not lapse to the general fund. 10
(5) (a) A registration issued between January 1 and October 31 of the same calendar 11
year shall expire on December 31 of the same calendar year. 12
(b) A registration issued between November 1 and December 31 of the same 13
calendar year shall expire on December 31 of the following calendar year. 14
(c) Any registration that has expired may be reinstated by the commissioner upon 15
payment of the annual renewal[registration] fee, and a reinstatement fee of 16
two hundred fifty dollars ($250), within thirty (30) days of the expiration of 17
the registration. 18
(6) All mortgage loan originators subject to the registration requirements of this section 19
shall also be subject to and comply with all applicable provisions of this subtitle. 20
(7) (a) The commissioner shall require, as part of an application or renewal 21
application filed under this subtitle, including but not limited to 22
applications or renewals for mortgage loan originators, the submission of: 23
1. Background records checks, including but not limited to checks for state, 24
federal, and international criminal histories, civil or administrative 25
records, and any other information as deemed necessary to comply with 26
the minimum requirements set forth in Section 1505 of the S.A.F.E. 27 UNOFFICIAL COPY 22 RS HB 643/GA
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Mortgage Licensing Act, 12 U.S.C. sec. 5104[Pub. L. No. 110-289], and 1
amendments thereto; and[, as well as the submission of ] 2
2. An independent credit report obtained from a consumer reporting agency 3
described in the Fair Credit Reporting Act, 15 U.S.C. sec. 1681a[, as 4
part of an application or renewal application filed under this subtitle, 5
including but not limited to applications or renewals for mortgage loan 6
originators]. 7
(b) The cost of the background [and] records checks[,] and credit report shall be 8
borne by the applicant. 9
(8) No mortgage loan originator shall be granted or shall be entitled to maintain a 10
registration unless he or she satisfies the following minimum standards for 11
registration: 12
(a) The applicant has never had a loan originator's license or registration revoked 13
in any governmental jurisdiction, except revocations that have been formally 14
vacated or set aside shall not be deemed a revocation for the purposes of this 15
section; 16
(b) The applicant has not been convicted of, pled guilty to, or pled nolo 17
contendere to a felony in any domestic, foreign, or military court: 18
1. During the seven (7) year period preceding the date of the application for 19
registration or renewal of registration; or 20
2. At any time preceding such date of application for registration or 21
renewal of registration, if such felony involved an act of fraud or 22
dishonesty, a breach of trust, or money laundering; 23
(c) The applicant has demonstrated financial responsibility, character, and general 24
fitness such as to command the confidence of the community and to warrant a 25
determination that the loan originator will operate honestly, fairly, lawfully, 26
and efficiently within the purposes of the subtitle; 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
(d) The applicant has completed the prelicensing education requirement set forth 1
in subsection (3) of this section; 2
(e) The applicant has passed a qualified written test which satisfies the minimum 3
requirements set forth in Section 1505(d) of the S.A.F.E. Mortgage Licensing 4
Act, 12 U.S.C. sec. 5104(d)[Pub. L. No. 110-289], and amendments thereto; 5
and 6
(f) The applicant holds or is covered by a surety bond which satisfies the 7
minimum requirements set forth in KRS 286.8-060. 8
(9) (a) A mortgage loan processor shall not be required to maintain a registration, but 9
the processor's supervising mortgage loan company or mortgage loan broker 10
shall be required to: 11
1. Provide the mortgage loan processor with the continuing education 12
required under KRS 286.8-260; and[, as well as] 13
2. Prior to hiring an applicant as a processor, perform an employee 14
background check in accordance with uniform standards established by 15
the commissioner.[ prior to hiring an applicant as a processor, and ] 16
(b) A mortgage loan company or mortgage loan broker shall provide proof of 17
compliance with this subsection[section] to the commissioner upon demand, 18
demonstrating that: 19
1.[(a)] The applicant has not been convicted of, pled guilty to, or pled 20
nolo contendere to a felony in any domestic, foreign, or military court: 21
a.[1.] During the seven (7) year period preceding the date of the 22
application; or 23
b.[2.] At any time preceding the date of application, if the felony 24
involved an act of fraud or dishonesty, a breach of trust, or money 25
laundering; and 26
2.[(b)] The applicant has demonstrated financial responsibility, character, 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
and general fitness sufficient to command the confidence of the 1
community and to warrant a determination that the loan processor will 2
operate honestly, fairly, lawfully, and efficiently within the purposes of 3
this subtitle. 4
(10) No mortgage loan originator shall be granted a registration renewal[ of registration] 5
unless he or she satisfies the following minimum standards for renewal[ of 6
registration]: 7
(a) The applicant has met and continues to meet the minimum standards set forth 8
in subsection (8) of this section; and 9
(b) The applicant has satisfied the annual continuing education requirements set 10
forth in KRS 286.8-260. 11
(11) (a) The registration of any mortgage loan originator that fails to comply with the 12
minimum standards for registration renewal set forth in this section shall 13
expire and shall promptly be deemed surrendered to the commissioner without 14
demand. 15
(b) The commissioner may adopt procedures and requirements for the 16
reinstatement of expired registrations consistent with the standards established 17
by the Nationwide Multistate[Mortgage] Licensing System and Registry. 18
(12) Mortgage loan originators engaging in any of the activities set forth in KRS 286.8-19
010(18)(a)[(21)(a)] shall provide loan origination services to not more than one (1) 20
mortgage loan company or mortgage loan broker at a time. 21
Section 12. KRS 286.8-260 is amended to read as follows: 22
(1) (a) Any person required to be registered under this subtitle shall complete at least 23
eight (8) hours of continuing professional education on an annual basis that is 24
approved and designated by the commissioner. 25
(b) A minimum of one (1) hour of continuing professional education each year 26
shall be instruction on the requirements of this subtitle,[ or ]KRS 360.100, or 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
a combination of both. 1
(2) For the purposes of subsection (1) of this section:[,] 2
(a) The continuing professional education courses approved and designated by the 3
commissioner shall: 4
1. Meet the minimum requirements set forth in Section 1505(b) of the 5
S.A.F.E. Mortgage Licensing Act, 12 U.S.C. sec. 5104(b)[Pub. L. No. 6
110-289], and amendments thereto; and[. The education courses 7
approved and designated by the commissioner shall also ] 8
2. Unless the Nationwide Multistate Licensing System and Registry 9
provides otherwise, be reviewed and approved by the Nationwide 10
Multistate[Mortgage] Licensing System and Registry; and[ unless the 11
Nationwide Mortgage Licensing System and Registry provides 12
otherwise.] 13
(b) [(3) For the purposes of subsection (1) of this section, ]The commissioner 14
may accept as credit towards the completion of the continuing professional 15
education requirements in this state, the completion of continuing professional 16
education requirements in any other state so long as the education has met the 17
requirements set forth in this subsection and subsection[subsections] (1) [and 18
(2)] of this section. 19
(3) (a)[(4)] For good cause shown, the commissioner may grant an extension during 20
which the continuing professional education requirements[requirement] of 21
this section may be completed, but the extension may not exceed thirty (30) 22
days. 23
(b) What constitutes good cause for the extension of time rests within the 24
discretion of the commissioner. 25
(4)[(5)] The registration of any mortgage loan originator that fails to comply with the 26
continuing professional education requirements of this section and who has not 27 UNOFFICIAL COPY 22 RS HB 643/GA
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been granted an extension of time to comply in accordance with subsection (3)[(4)] 1
of this section shall: 2
(a) Expire; and[ shall ] 3
(b) Promptly be deemed surrendered to the commissioner without demand. 4
Section 13. KRS 286.8-285 is amended to read as follows: 5
(1) (a) In addition to other duties imposed upon the commissioner in this subtitle, the 6
commissioner shall be authorized to: 7
1. Participate in the [establishment and implementation of the ]Nationwide 8
Multistate[ Mortgage] Licensing System and Registry; and[ to] 9
2. Implement and comply with the minimum requirements set forth in the 10
S.A.F.E. Mortgage Licensing Act, 12 U.S.C. sec. 5101 et seq., as 11
amended[Pub. L. No. 110-289, and amendments thereto]. 12
(b) For such purpose, the commissioner is authorized to waive or modify, in 13
whole or in part, by regulation[rule] or by order, any or all of the 14
requirements of this subtitle and to establish new requirements as reasonably 15
necessary to carry out the purpose of this section. 16
(c) The commissioner shall have authority to establish relationships or contracts 17
with other governmental agencies, the Nationwide Multistate[Mortgage] 18
Licensing System and Registry, or entities affiliated with the system that are 19
necessary to carry out the purpose of this section. 20
[(d) The commissioner may establish interim procedures to promote and establish 21
an orderly and efficient transition for the registration, review, and acceptance 22
of new applications. The commissioner may also establish interim procedures 23
and expedited review and registration procedures for previously registered 24
individuals.] 25
(d)[(e)] The commissioner may use the Nationwide Multistate[Mortgage] 26
Licensing System and Registry as an agent for receiving, requesting, and 27 UNOFFICIAL COPY 22 RS HB 643/GA
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distributing information to and from any source so directed by the 1
commissioner. 2
(2) The commissioner shall establish a process whereby licensees may challenge 3
information entered into the Nationwide Multistate[Mortgage] Licensing System 4
and Registry by the commissioner. 5
(3) The commissioner shall annually request audited financial reports, including 6
inquiring as to the budget and fees collected, both proposed and actual, from the 7
Nationwide Multistate[Mortgage] Licensing System and Registry. 8
(4) The commissioner shall annually request any nonconfidential protocols or reports 9
for the security and safeguarding of personal information maintained by the 10
Nationwide Multistate[Mortgage] Licensing System and Registry, including the 11
following: 12
(a) Inquiring as to whether the system has implemented and complied with the 13
data security guidelines set forth in the Gramm-Leach-Bliley Act, 15 U.S.C. 14
sec. 6801; 15
(b) Inquiring as to the results of any nonconfidential periodic data protection 16
audits that the system may conduct; and 17
(c) Inquiring as to whether any security breaches have occurred resulting in the 18
substantial likelihood that personal information may be misused or stolen. 19
(5) The commissioner shall annually request from the Nationwide Multistate 20
[Mortgage] Licensing System and Registry the following statistical information, if 21
available, relating to the examinations taken by applicants seeking registration as a 22
loan originator in Kentucky during the preceding calendar year: 23
(a) The total number of tested individuals, along with any relevant demographic 24
information available such as race, ethnicity, or gender; 25
(b) The total number of individuals who received a passing score on the 26
examination, along with any relevant demographic information available such 27 UNOFFICIAL COPY 22 RS HB 643/GA
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as race, ethnicity, or gender; 1
(c) The total number of individuals who did not receive a passing score on the 2
examination, along with any relevant demographic information available such 3
as race, ethnicity, or gender; and 4
(d) All mean, average, or scaled scoring data. 5
(6) When requested by the General Assembly, the commissioner shall review and 6
report to the General Assembly the content of any information received from the 7
Nationwide Multistate[Mortgage] Licensing System and Registry pursuant to 8
subsection (3), (4), or (5) of this section. 9
(7) Notwithstanding any provision to the contrary in this subtitle or in KRS Chapter 61, 10
the commissioner shall regularly report violations of this subtitle, as well as 11
enforcement actions and other relevant information, to the Nationwide Multistate 12
[Mortgage] Licensing System and Registry. 13
Section 14. KRS 286.8-020 is amended to read as follows: 14
(1) The following mortgage loan companies and mortgage loan brokers shall be subject 15
to KRS 286.8-046, 286.8-180, 286.8-220(1), and subsections (12), (13), and (14) of 16
this section, but shall be exempt from all other provisions of this subtitle: 17
(a) Any person duly licensed, chartered, and otherwise subject to regular 18
examination at least once every two (2) years by a state or federal financial 19
institution regulatory agency under the laws of this state or any other state or 20
the United States as a bank, bank holding company, trust company, credit 21
union, savings and loan association, savings and loan association holding 22
company, service corporation subsidiary of a savings and loan association, 23
insurance company, real estate investment trust as defined in 26 U.S.C. sec. 24
856, an institution of the farm credit system organized under the Farm Credit 25
Act of 1971 as amended, or any wholly owned subsidiary of any such person 26
if the subsidiary is subject to regular examination at least once every two (2) 27 UNOFFICIAL COPY 22 RS HB 643/GA
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years by a state or federal financial institution regulatory agency; 1
(b) Any natural person who makes a mortgage loan secured by a dwelling that 2
served as the natural person's residence, unless the natural person is 3
compensated in connection with that transaction by a mortgage loan company, 4
mortgage loan broker, or other mortgage loan originator, or by an agent of 5
such company, broker, or other originator; 6
(c) Any natural person who makes a mortgage loan to an immediate family 7
member of the natural person unless the natural person is compensated in 8
connection with that transaction by a mortgage loan company, mortgage loan 9
broker, or other mortgage loan originator, or by an agent of such company, 10
broker, or other originator; 11
(d) Any person other than a natural person, including any affiliate of that person, 12
that makes in the aggregate no more than four (4) mortgage loans within a 13
calendar year with its own funds and secured by residential real property 14
owned by the person making the mortgage loan, provided that the mortgage 15
loan is made without the intent to resell the mortgage loan, and provided that 16
the person does not hold itself out to the public as being primarily in the 17
mortgage loan business; 18
(e) The United States of America; the Commonwealth of Kentucky; any other 19
state, district, territory, commonwealth, or possession of the United States of 20
America; any city, county, or other political subdivision; and any agency, 21
division, or corporate instrumentality of any of the foregoing; 22
(f) The Federal National Mortgage Association (FNMA), the Federal Home Loan 23
Mortgage Corporation (FHLMC), and the Government National Mortgage 24
Association (GNMA); 25
(g) Any mortgage loan company or mortgage loan broker making or brokering a 26
mortgage loan involving housing initially transferred by certificate of title 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
under KRS Chapter 186A; 1
(h) A consumer loan or finance company or an industrial loan company licensed 2
under Subtitle 4 or 7 of this chapter whose primary business is originating 3
consumer or industrial loans as provided under Subtitle 4 or 7 of this chapter 4
or any wholly owned subsidiary of such a consumer loan or finance company 5
or an industrial loan company, except that they shall be subject to the 6
prohibited acts of KRS 286.8-220(2)(e) and (f) and 286.8-110(4); and 7
(i) A nonprofit organization that is recognized as tax-exempt under 26 U.S.C. 8
sec. 501(c)(3) and authorized to do business in this Commonwealth, and that 9
has affordable housing as a primary purpose in its operations. 10
(2) The following shall be exempt from the licensing provisions of this subtitle and the 11
examination provisions of KRS 286.8-170 and 286.8-180, unless it appears on 12
grounds satisfactory to the commissioner that an examination is necessary, but shall 13
otherwise be subject to all other provisions of this subtitle: 14
(a) A mortgage loan company or mortgage loan broker approved and regulated by 15
the United States Department of Housing and Urban Development to perform 16
business in this Commonwealth; and 17
(b) Any branch of a mortgage loan company or mortgage loan broker listed in 18
paragraph (a) of this subsection, provided the branch is approved and 19
regulated by the United States Department of Housing and Urban 20
Development to perform business in this Commonwealth. 21
(3) Any nonprofit organization, mortgage loan company, mortgage loan broker, or 22
branch thereof relying upon an exemption under subsection (1)(i) or (2)(a) or (b) of 23
this section shall file with the commissioner a written application for a claim of 24
exemption. The commissioner shall approve an application for an exemption that is 25
timely filed and meets the requirements of this subtitle. The period of exemption 26
shall be from January 1 through December 31, and the exemption shall expire on 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
December 31 of the same calendar year. Every person granted an exemption under 1
this section shall file a written application for a new exemption on an annual basis. 2
The application shall be received by the commissioner on or before December 31 of 3
the same calendar year. A written application for a partial-year exemption shall also 4
expire on December 31 of the same calendar year that the written application for an 5
exemption is granted. 6
(4) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon 7
an exemption under subsection (2)(a) or (b) of this section shall fund or broker a 8
minimum of twelve (12) Federal Housing Administration-insured loans on 9
Kentucky residential real properties each year in order to maintain its exemption. 10
(5) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon 11
an exemption under subsection (2)(a) or (b) of this section who ceases to be 12
approved or regulated by the Department of Housing and Urban Development shall 13
notify the commissioner, in writing, within ten (10) days after it ceases to be 14
regulated by the United States Department of Housing and Urban Development. 15
(6) Any person listed in subsection (1)(a), (b), (c), (d), (e), (f), (g), or (h) of this section 16
shall not be required to file with the commissioner a claim of exemption. 17
(7) (a) Any natural person making a loan under subsection (10) of this section shall 18
make the following disclosure, on a separate sheet of paper in minimum 19
eighteen (18) point type, to the borrower: 20
DISCLOSURE 21
(Name and address of lender) is not licensed or regulated by the Kentucky 22
Department of Financial Institutions. 23
(Name of lender) is making this mortgage loan with his or her own funds, for 24
the person's own investment, without intent to resell the mortgage loan. 25
(The phone number and address of the Kentucky Department of Financial 26
Institutions.) 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
(b) A copy of the disclosure, signed by the borrower, shall be maintained by the 1
natural person for a period not to exceed three (3) years after the date the 2
mortgage loan is paid in full. 3
(8) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon 4
an exemption under subsection (2)(a) or (b) of this section shall provide a list of 5
funded or brokered Federal Housing Administration-insured loans from December 1 6
of the previous calendar year to November 30 of the current calendar year to the 7
commissioner by December 31 of each year on a form prescribed by the 8
commissioner. 9
(9) Any mortgage loan company, mortgage loan broker, or branch thereof applying for 10
an exemption under subsection (2)(a) or (b) of this section shall not be approved for 11
an exemption under subsection (2)(a) or (b) of this section unless the mortgage loan 12
company, mortgage loan broker, or branch thereof has: 13
(a) Held a mortgage loan company or mortgage loan broker license or registration 14
for five (5) consecutive years prior to the filing of the application for an 15
exemption under this section with the commissioner; or 16
(b) Been approved and regulated by the United States Housing and Urban 17
Development to conduct business in the mortgage lending process for five (5) 18
consecutive years prior to the filing of the application for an exemption under 19
this section with the commissioner. 20
(10) Any natural person not exempted in subsection (1)(b) or (c) of this section who 21
makes a mortgage loan with his or her own funds for the person's investment 22
without the intent to resell the mortgage loan shall be exempt from the provisions of 23
this subtitle except for the following: 24
(a) Examination provisions of KRS 286.8-170 and 286.8-180 when it appears on 25
grounds satisfactory to the commissioner that an examination is necessary; 26
(b) Disclosure requirements of subsection (7) of this section; 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
(c) Any investigation and enforcement provisions of this subtitle including KRS 1
286.8-170(7)[(6)], and KRS 286.8-046, 286.8-090, 286.8-190, and 286.8-990; 2
(d) Prohibited acts under KRS 286.8-125 and 286.8-220; and 3
(e) Registration and regulatory requirements of KRS 286.8-255. 4
(11) No person shall hold both a claim of exemption and a license granted under this 5
subtitle. 6
(12) Notwithstanding any provisions to the contrary set forth in this subtitle, every 7
mortgage loan company and mortgage loan broker shall make available and grant 8
access to the commissioner or an examiner of the commissioner the records in its 9
possession or control that are subject to the provisions of this subtitle. 10
(13) Notwithstanding any provisions to the contrary set forth in this subtitle, no 11
mortgage loan company or mortgage loan broker shall impede the commissioner or 12
an examiner of the commissioner from interviewing any person regarding any 13
potential violations of this subtitle. 14
(14) Notwithstanding any provisions to the contrary set forth in this subtitle, every 15
mortgage loan company and mortgage loan broker that employs or utilizes the direct 16
services of a mortgage loan originator subject to the registration and regulatory 17
requirements of KRS 286.8-255 shall complete and timely submit to the 18
Nationwide Mortgage Licensing System and Registry an annual report of condition, 19
which shall be in such form and contain such information as the Nationwide 20
Mortgage Licensing System and Registry may require, along with any other 21
information which may be required by the commissioner. 22
Section 15. KRS 355.9-408 is amended to read as follows: 23
(1) Except as otherwise provided in subsection (2) of this section, a term in a 24
promissory note or in an agreement between an account debtor and a debtor which 25
relates to a health-care-insurance receivable or a general intangible, including a 26
contract, permit, license, or franchise, and which term prohibits, restricts, or 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
requires the consent of the person obligated on the promissory note or the account 1
debtor to, the assignment or transfer of, or creation, attachment, or perfection of a 2
security interest in, the promissory note, health-care-insurance receivable, or general 3
intangible, is ineffective to the extent that the term: 4
(a) Would impair the creation, attachment, or perfection of a security interest; or 5
(b) Provides that the assignment or transfer or the creation, attachment, or 6
perfection of the security interest may give rise to a default, breach, right of 7
recoupment, claim, defense, termination, right of termination, or remedy 8
under the promissory note, health-care-insurance receivable, or general 9
intangible. 10
(2) Subsection (1) of this section applies to a security interest in a payment intangible 11
or promissory note only if the security interest arises out of a sale of the payment 12
intangible or promissory note, other than a sale pursuant to a disposition under KRS 13
355.9-610 or an acceptance of collateral under KRS 355.9-620. 14
(3) A rule of law, statute, or regulation that prohibits, restricts, or requires the consent 15
of a government, governmental body or official, person obligated on a promissory 16
note, or account debtor to the assignment or transfer of, or creation of a security 17
interest in, a promissory note, health-care-insurance receivable, or general 18
intangible, including a contract, permit, license, or franchise between an account 19
debtor and a debtor, is ineffective to the extent that the rule of law, statute, or 20
regulation: 21
(a) Would impair the creation, attachment, or perfection of a security interest; or 22
(b) Provides that the assignment or transfer or the creation, attachment, or 23
perfection of the security interest may give rise to a default, breach, right of 24
recoupment, claim, defense, termination, right of termination, or remedy 25
under the promissory note, health-care-insurance receivable, or general 26
intangible. 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
(4) To the extent that a term in a promissory note or in an agreement between an 1
account debtor and a debtor which relates to a health-care-insurance receivable or 2
general intangible or a rule of law, statute, or regulation described in subsection (3) 3
of this section would be effective under law other than this article but is ineffective 4
under subsection (1) or (3) of this section, the creation, attachment, or perfection of 5
a security interest in the promissory note, health-care-insurance receivable, or 6
general intangible: 7
(a) Is not enforceable against the person obligated on the promissory note or the 8
account debtor; 9
(b) Does not impose a duty or obligation on the person obligated on the 10
promissory note or the account debtor; 11
(c) Does not require the person obligated on the promissory note or the account 12
debtor to recognize the security interest, pay or render performance to the 13
secured party, or accept payment or performance from the secured party; 14
(d) Does not entitle the secured party to use or assign the debtor's rights under the 15
promissory note, health-care-insurance receivable, or general intangible, 16
including any related information or materials furnished to the debtor in the 17
transaction giving rise to the promissory note, health-care-insurance 18
receivable, or general intangible; 19
(e) Does not entitle the secured party to use, assign, possess, or have access to any 20
trade secrets or confidential information of the person obligated on the 21
promissory note or the account debtor; and 22
(f) Does not entitle the secured party to enforce the security interest in the 23
promissory note, health-care-insurance receivable, or general intangible. 24
(5) This section prevails over any inconsistent provisions of the following statutes and 25
any administrative regulations based on those statutes: KRS 56.230(2), 138.320(3), 26
138.665(4), 138.720(5), 139.250, 154A.400(3), 190.047(1), 190.070(2)(c), 27 UNOFFICIAL COPY 22 RS HB 643/GA
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HB064310.100 - 2080 - XXXX GA
217B.535(2), 228.070(2), 230.300(11), 234.330(10), 243.630(2), 260.815, 286.4-1
460(2), 292.320(2)(b), 286.8-036(3)[(2)], 304.3-410(2)(f), 304.3-520(5), 333.080, 2
350.135(1), 365.430(27), and 286.9-070(2). 3
(6) Subsection (3) of this section does not apply to the following statutes and to 4
administrative regulations promulgated under the authority of those statutes: KRS 5
304.2-260, KRS 304.24-420, Subtitle 33 of KRS Chapter 304, and Subtitle 37 of 6
KRS Chapter 304. 7