HB 106 (BR 368) - T. Thompson
AN ACT relating to mortgages.
Amend KRS 286.8-010 to create definitions for compliance with the federal S.A.F.E. Mortgage Licensing Act of 2008; amend KRS 286.8-020 to establish new requirements for mortgage loan companies and mortgage loan brokers; create a new section of Subtitle 8 of KRS Chapter 286 to establish requirements for mortgage loan originators and mortgage loan processors; amend KRS 286.8-030 to prohibit transaction of business in Kentucky as a mortgage loan company or mortgage loan broker without the licensing required by Subtitle 8 of KRS Chapter 286 unless specifically exempted; provide that each solicitation, attempt, or closed loan constitutes a separate violation, require that the unique identifier appear clearly on the mortgage loan application and on solicitations or advertisements and prohibit representations on a mortgage loan application that are inconsistent with this subsection; amend KRS 286.8-032 to exempt a mortgage loan company from the requirement that the company have a funding source of a minimum of $1 million dollars if the company certifies that it shall not purchase or make loans secured by mortgages on residential property in Kentucky so long as the company's license is in effect and the company maintains a net worth in excess of $100,000; clarify that an applicant for a mortgage loan broker license who has held a broker's license for at least one year within the last five years is exempt from the educational training course requirement; require that the application for a mortgage loan broker and mortgage loan company license shall include a physical location of a mortgage lending business that is a street address and not a post office box and revise the proof of residence requirements; amend KRS 286.8-034 to require submission of a license renewal to the Nationwide Mortgage Licensing System and Registry with an annual report of condition on a form prescribed by the Nationwide Mortgage Licensing System and Registry in addition to submission to the executive director; amend KRS 286.8-044 to require that notice of entry of any order by the executive director relating to the suspension or denial of a license, registration, or claim of exemption be in writing and served personally or by certified mail, authorize a hearing upon written request by the affected person, and authorize the executive director to enter a final order if a written request is not received within 20 days of service, as defined; amend KRS 286.8-046 to authorize the executive director to order any affirmative actions such as restitution or refund deemed necessary against any person who violates any provision of Subtitle 8 of KRS Chapter 286 or any administrative regulation promulgated thereunder or any order issued by the executive director; amend KRS 286.8-060 to amend the bond requirements; amend KRS 286.8-100 to prohibit transacting business, either directly or indirectly, without filing the required application; amend KRS 286.8-150 to substitute a licensee or registrant for a mortgage loan company for purposes of classifying documents as confidential to protect the licensee or registrant, including documents obtained from the Nationwide Mortgage Licensing System and Registry, and authorize the executive director to determine the time period the documents may be classified as confidential and recognize that any material obtained from the Nationwide Mortgage Licensing System and Registry is subject to the provisions of Section 1512 of the S.A.F.E. Mortgage Licensing Act; amend KRS 286.8-170 to require every mortgage loan company and mortgage loan broker to maintain correct and complete records of its business transactions at its principal office; add mortgage loan originator and mortgage loan processor to the records retention and records access requirements; authorize the executive director to exchange information with the Nationwide Mortgage Licensing System and Registry; require every mortgage loan originator and mortgage loan processor to make available records relating to the originator or processor's operations to the executive director or designated examiner; specify reports the executive director may require of any person subject to Subtitle 8 of KRS Chapter 286; prohibit a mortgage loan company, loan broker, originator, or processor from impeding the executive director or a designated examiner from interviewing specified persons; authorize the executive director to control access to documents and records of a licensee or person under examination or investigation, subject to court order or consent of the executive director, but the licensee or owner of the documents shall have necessary access to the documents unless the executive director has reasonable grounds to believe the documents are at risk of alteration or destruction; prohibit knowingly withholding, damaging, changing, destroying or hiding paperwork which is subject to investigation or examination; authorize the executive director to retain necessary professionals to conduct examinations or investigations, enter into agreements or relationships with government officials or regulatory associations to improve efficiency in the regulatory process and engage analytical systems, methods, or software necessary to an examination or investigation; provide that this section is effective whether the person claims to act within the licensing or registration law of Kentucky or claims to act without authority; amend KRS 286.8-190 to conform; amend KRS 286.8-220 to make it unlawful to obtain property by fraud or misrepresentations, to fail to make required disclosures or to fail to comply with state and federal laws applicable to transacting business in Kentucky, and to comply with the provisions of Subtitle 8 of KRS Chapter 286, unless specifically exempted; amend KRS 286.8-225 to establish the "Mortgage Fraud Prosecution Fund" as a trust and revolving fund in the State Treasury and establish the sources of and uses for the Fund; amend KRS 286.8-227 to conform; amend KRS 286.8-240 to provide that KRS 286.8-010 to 286.8-285 may be cited as the "Mortgage Licensing and Regulation Act"; amend KRS 286.8-255 to provide that no natural person shall transact business directly or indirectly as a mortgage loan originator or processor without a current certificate of registration and compliance with all applicable provisions of Subtitle 8 of KRS Chapter 286 and maintenance of a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry; authorize the executive director to require information deemed necessary in an application for registration; increase from 12 to 20 hours of pre-licensing education courses required for initial registration for mortgage loan originators and processors and specify that the pre-licensing education courses be approved and designated by the executive director and shall meet the requirements of Section 1505(c) of the S.A.F.E. Mortgage Licensing Act and shall be reviewed and approved by the Nationwide Mortgage Licensing System and Registry; authorize acceptance of pre-licensing education from any other states that meet the Kentucky requirements; delete the provision for a temporary certificate of registration; authorize the executive director to require background records checks necessary to comply with the minimum requirements of Section 1505 of the S.A.F.E. Mortgage Licensing Act and to require submission of an independent credit report with an initial application or renewal application; establish the minimum standards for registration for a mortgage loan originator or processor; establish the minimum standards for renewal of registration for a mortgage loan originator or processor; require mortgage loan originators to provide loan origination services to no more than one mortgage loan company or mortgage loan broker at a time; amend KRS 286.8-260 to establish new continuing professional education requirements to meet the minimum requirements of Section 1505(b) of the S.A.F.E. Mortgage Licensing Act; amend KRS 286.8-285 to authorize the executive director to participate in the establishment and implementation of the Nationwide Mortgage Licensing System and Registry, to implement and comply with the S.A.F.E. Mortgage Licensing Act, establish relationships or contracts with other governmental agencies, the Nationwide Mortgage Licensing System and Registry or affiliated entities as needed; authorize the executive director to establish interim procedures to implement the transition to the registration of new applicants and the renewal of previously registered persons; provide that the executive director may use the Nationwide Mortgage Licensing System and Registry as an agent for purposes of receiving, requesting, and distributing information; require the executive director to establish a process for challenging information submitted by the executive director to, and entered into, the Nationwide Mortgage Licensing System and Registry; require the executive director to request audited financial reports annually from the Nationwide Mortgage Licensing System and Registry; require the executive director to annually request any nonconfidential protocols or reports for security and safeguarding personal information; require the executive director to annually request from the Nationwide Mortgage Licensing System and Registry specified statistical information relating to examinations taken by applicants for registration as a loan originator; require the executive director to report to the General Assembly when requested any information received from the Nationwide Mortgage Licensing System and Registry relating to audited financial reports, nonconfidential protocols or reports, and statistical information relating to loan originator licensing examinations; require the executive director to report violations of Subtitle 8 of KRS Chapter 286 to the Nationwide Mortgage Licensing System and Registry; create a new section of Subtitle 8 of KRS Chapter 286 to require every mortgage loan company and mortgage loan broker to exercise proper supervision and control over its operations and personnel and prohibit using the services of a mortgage loan originator who is not an employee under the supervision and control of the company, and provide this does not prohibit using the services of a mortgage loan broker and its employees; create a new section of Subtitle 8 of KRS Chapter 286 to establish severability of the provisions of this Act; amend KRS 286.2-100 to conform and to add "bank holding company", "savings and loan association holding company" and wholly owned subsidiary" of the named entities to the definition of "financial institution"; amend KRS 286.2-670 to conform by deleting the various foreign financial institutions listed as not doing business in this state and to substitute "a foreign financial institution"; amend KRS 286.2-680 to conform; create a new section of Subtitle 2 of KRS Chapter 286 to authorize the executive director to levy a civil penalty of not less than $1000 nor more than $5000, plus costs, on any person who violates any provision of Subtitle 2 of KRS Chapter 286; amend KRS 286.012 to conform; repeal KRS 286.8-040, 286.8-042, 286.8-200 and 286.230.
HB 106 - AMENDMENTS
HCS - Retain original provisions; make technical corrections; amend KRS 286.8-032 to require mortgage loan company license applicants to have and maintain a net worth of $100,000 if the company certifies to the executive director that the company will not make or purchase loans secured by mortgages on residential real property; exempt from registration and regulation employees of a subsidiary of a depository institution which is regulated by specified federal agencies and institutions and the Farm Credit Administration; and, delete alternative mechanisms for the required corporate surety bonds.
SCS - Retain original provisions of the bill except delete requirement that a subsidiary is subject to examination at least once every two years.
(Prefiled by the sponsor(s).)
Jan 6-introduced in House
Jan 7-to Banking & Insurance (H)
Feb 4-reported favorably, 1st reading, to Calendar with Committee Substitute
Feb 5-2nd reading, to Rules; posted for passage in the Regular Orders of the Day for Friday, February 6, 2009
Feb 6-3rd reading; passed 81-15 with Committee Substitute
Feb 9-received in Senate
Feb 23-to Banking & Insurance (S)
Mar 9-reported favorably, 1st reading, to Calendar with Committee Substitute
Mar 10-2nd reading, to Rules
Mar 26-posted for passage in the Consent Orders of the Day for Thursday, March 26, 2009; 3rd reading; Committee Substitute withdrawn; passed 38-0; received in House; enrolled, signed by each presiding officer; delivered to Governor
Mar 27-signed by Governor (Acts ch. 104)