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Form a Business

Mortgage Loan Companies and Brokers

KRS tit. XXV, ch. 286, subtit. 8
in effect

KRS 286.8-010 Definitions for subtitle

286.8-010. Definitions for subtitle As used in this subtitle, unless the context otherwise requires: (1) "Affiliate" means any person who directly or indirectly through one (1) or more intermediaries, controls, is controlled by, or is under common control with another person; (2) "Alternate work location": (a) Means a physical location, other than the principal office or a branch, at which the employees of a licensee are authorized by the licensee to remotely engage in the mortgage lending process; and (b) May include a physical location, other than the principal office or a branch, where an employee: 1. Completes mortgage-related activities if the location is not maintained or utilized for the purpose of conducting in-person mortgage lending business; and 2. Meets in person at the convenience of the borrower on an infrequent or as-needed basis in order to complete the mortgage lending process if the location is not the employee's home; (3) "Applicant" means a person filing an application or renewal application for a license, registration, or claim of exemption under this subtitle; (4) "Borrower" means any person that seeks, applies for, or obtains a mortgage loan; (5) "Branch" or "branches": (a) Means any location, other than the mortgage loan company's or mortgage loan broker's principal office, where the mortgage loan company, mortgage loan broker, or its employees maintain a physical presence for the purpose of conducting business in the mortgage lending process, including the servicing of mortgage loans; and (b) Shall not include an alternate work location; (6) (a) "Classroom" means a physical classroom environment in which teachers and participants are physically present for the teaching of a course. (b) Courses taught through Internet, mail, or correspondence classes shall not be considered to be courses taught in a classroom; (7) "Control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise; (8) "Criminal syndicate" means five (5) or more persons collaborating to promote or engage in any pattern of residential mortgage fraud on a continuing basis; (9) "Depository institution" means a depository institution as defined in the Federal Deposit Insurance Act, 12 U.S.C. sec. 1813(c), and amendments thereto, and includes any credit union; (10) "Employ or use" means to employ, utilize, or contract with a person or the person's employees for the purpose of participating in the mortgage lending process, including the servicing of mortgage loans; (11) "Immediate family member" means a spouse, child, sibling, parent, grandparent, or grandchild; (12) "Licensee" means a person to whom a license has been issued; (13) "Managing principal" means a natural person who: (a) Meets the requirements of KRS 286.8-032(6); and (b) Agrees to actively participate in and be primarily responsible for the operations of a licensed mortgage loan broker; (14) "Mortgage lending process": (a) Means the process through which a person seeks or obtains a mortgage loan; and (b) Includes the solicitation, application, origination, negotiation of terms, processing, underwriting, signing, closing, and funding of a mortgage loan and the services provided incident to a mortgage loan, including the appraisal of the residential real property; (15) "Mortgage loan" means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on residential real property or any loan primarily for personal, family, or household use that is secured by collateral that has a mortgage lien interest in residential real property; (16) "Mortgage loan broker" means any person who for compensation or gain, or in the expectation of compensation or other gain, received directly or indirectly, serves as an agent for any borrower in an attempt to obtain a mortgage loan, or holds oneself out as being able to do so; (17) "Mortgage loan company" means any person who directly or indirectly: (a) Makes, purchases, or sells mortgage loans, or holds oneself out as being able to do so; or (b) Services mortgage loans, or holds oneself out as being able to do so; (18) "Mortgage loan originator" means a natural person who: (a) 1. Is employed by a licensee; 2. Receives compensation or gain, or expects to receive compensation or gain; and 3. Performs any one (1) or more of the following acts in the mortgage lending process: a. Solicits, places, negotiates, or offers to make a mortgage loan; b. Assists a borrower or prospective borrower with the preparation of documents necessary to obtain a mortgage loan; c. Explains, recommends, discusses, negotiates, or quotes rates, terms, and conditions of a mortgage loan with a borrower or prospective borrower, whether or not the borrower or prospective borrower makes or completes an application; d. Explains any term or aspect of any disclosure or agreement given at or after the time a mortgage loan application is received; or e. Takes a residential mortgage loan application; or (b) Is an independent contractor engaging in the mortgage lending process as a mortgage loan processor; (19) (a) "Mortgage loan processor" means a natural person who performs only clerical or support duties at the direction of and subject to the supervision and instruction of a mortgage loan originator. (b) As used in this subsection, "clerical or support duties" means administrative functions such as gathering information, requesting information, word processing, sending correspondence, or assembling files, and may include: 1. The receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; or 2. Any communication with a borrower to obtain the information necessary for the processing or underwriting of a loan, to the extent that the communication does not include: a. Taking a residential mortgage loan application; b. Assisting a borrower or prospective borrower with the preparation of documents necessary to obtain a mortgage loan; c. Offering or negotiating loan rates or terms; or d. Counseling consumers about residential mortgage loan rates or terms; (20) "Nationwide Multistate Licensing System and Registry" means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators; (21) "Originate" means to solicit, place, negotiate, offer to make, or broker a mortgage loan; (22) "Pattern of residential mortgage fraud" means residential mortgage fraud that involves two (2) or more mortgage loans that have the same or similar intents, results, accomplices, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics; (23) "Physical location" means any location where the mortgage lending process, including the servicing of mortgage loans, is conducted; (24) "Record" means any books of account or other books, papers, journals, ledgers, statements, instruments, documents, files, messages, writings, correspondence, or other internal data or information, made or received in the regular course of business or otherwise, regardless of the mode in which it is recorded; (25) "Registrant" means a person to whom a registration has been issued; (26) "Residential mortgage loan application" means the submission of a borrower's financial information in anticipation of a credit decision, whether written or computer-generated, relating to a mortgage loan; (27) "Residential real property" means a dwelling as defined in the Federal Truth in Lending Act, 15 U.S.C. sec. 1602(w), or any real property upon which is constructed or intended to be constructed a dwelling as so defined; (28) "Service" or "servicing" means: (a) Receiving any scheduled periodic mortgage loan payments from a borrower, including amounts for escrow accounts or other fees or obligations related to the mortgage loan, and making or crediting the payments to the mortgage loan account, owner of the loan, or a third party assigned to receive said payments; (b) Maintaining accountings of principal, interest, and other accounts associated with the servicing of mortgage loans and responding to borrower inquiries regarding the status of these loans or accounts; (c) Initiating, supervising, or conducting foreclosure proceedings and property dispositions in the case of default, except "service" or "servicing" shall not include licensed attorneys representing clients in such matters; or (d) In the case of a home equity conversion mortgage or reverse mortgage, making payments to the borrower; (29) "Takes a residential mortgage loan application" or "taking a residential mortgage loan application" means: (a) Recording the borrower's application information in any form for use in a credit decision; or (b) Receiving the borrower's application information in any form for use in a credit decision; (30) "Transact business in Kentucky" or "transacting business in Kentucky" means to participate in any meaningful way in the mortgage lending process, including the servicing of mortgage loans, with respect to any residential real property located in Kentucky; (31) "Unique identifier" means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System and Registry; and (32) "Wholly owned subsidiary" means a subsidiary that is entirely owned or controlled by another person. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 1, effective July 14, 2022. -- Amended 2016 Ky. Acts ch. 129, sec. 1, effective July 15, 2016. -- Amended 2010 Ky. Acts ch. 24, sec. 761, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 1, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 4, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 1, effective July 12, 2006. -- Amended 2003 Ky. Acts ch. 64, sec. 1, effective June 24, 2003. -- Amended 1998 Ky. Acts ch. 197, sec. 1, effective July 15, 1998. -- Amended 1986 Ky. Acts ch. 461, sec. 1, effective July 15, 1986. -- Amended 1984 Ky. Acts ch. 388, sec. 13, effective July 13, 1984. -- Created 1980 Ky. Acts ch. 365, sec. 2, effective July 15, 1980. Formerly codified as KRS 294.010. Legislative Research Commission Note (6/25/2009). For the sake of clarity, the Reviser of Statutes has made a correction to the language of subsection (34) of this statute to enclose in quotation marks both "transact business in Kentucky" and "transacting business in Kentucky" because those terms are used separately in this subtitle. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286.

KRS 286.8-012 Administrative hearing request

286.8-012. Administrative hearing request Any party aggrieved by any decision of the commissioner under the provisions of KRS 286.8-020 or 286.8-100 may request an administrative hearing which shall be conducted in accordance with KRS Chapter 13B. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 762, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 27, effective June 25, 2009. -- Created 1996 Ky. Acts ch. 318, sec. 225, effective July 15, 1996. Formerly codified as KRS 294.012. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-020 Exemptions

286.8-020. Exemptions (1) The following mortgage loan companies and mortgage loan brokers shall be subject to KRS 286.8-046, 286.8-180, 286.8-220(1), and subsections (12), (13), and (14) of this section, but shall be exempt from all other provisions of this subtitle: (a) Any person duly licensed, chartered, and otherwise subject to regular examination at least once every two (2) years by a state or federal financial institution regulatory agency under the laws of this state or any other state or the United States as a bank, bank holding company, trust company, credit union, savings and loan association, savings and loan association holding company, service corporation subsidiary of a savings and loan association, insurance company, real estate investment trust as defined in 26 U.S.C. sec. 856, an institution of the farm credit system organized under the Farm Credit Act of 1971 as amended, or any wholly owned subsidiary of any such person if the subsidiary is subject to regular examination at least once every two (2) years by a state or federal financial institution regulatory agency; (b) Any natural person who makes a mortgage loan secured by a dwelling that served as the natural person's residence, unless the natural person is compensated in connection with that transaction by a mortgage loan company, mortgage loan broker, or other mortgage loan originator, or by an agent of such company, broker, or other originator; (c) Any natural person who makes a mortgage loan to an immediate family member of the natural person unless the natural person is compensated in connection with that transaction by a mortgage loan company, mortgage loan broker, or other mortgage loan originator, or by an agent of such company, broker, or other originator; (d) Any person other than a natural person, including any affiliate of that person, that makes in the aggregate no more than four (4) mortgage loans within a calendar year with its own funds and secured by residential real property owned by the person making the mortgage loan, provided that the mortgage loan is made without the intent to resell the mortgage loan, and provided that the person does not hold itself out to the public as being primarily in the mortgage loan business; (e) The United States of America; the Commonwealth of Kentucky; any other state, district, territory, commonwealth, or possession of the United States of America; any city, county, or other political subdivision; and any agency, division, or corporate instrumentality of any of the foregoing; (f) The Federal National Mortgage Associati on (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), and the Government National Mortgage Association (GNMA); (g) Any mortgage loan company or mortgage loan broker making or brokering a mortgage loan involving housing initially transferred by cer tificate of title under KRS Chapter 186A; (h) A consumer loan company licensed under Subtitle 4 of this chapter whose primary business is originating consumer loans as provided under Subtitle 4 of this chapter or any wholly owned subsidiary of such a consumer loan company, except that they shall be subject to the prohibited acts of KRS 286.8-220(2)(e) and (f) and 286.8-110(4); and (i) A nonprofit organization that is recognized as tax-exempt under 26 U.S.C. sec. 501(c)(3) and authorized to do business in this Commonwealth, and that has affordable housing as a primary purpose in its operations. (2) The following shall be exempt from the licensing provisions of this subtitle and the examination provisions of KRS 286.8-170 and 286.8-180, unless it appears on grounds satisfactory to the commissioner that an examination is necessary, but shall otherwise be subject to all other provisions of this subtitle: (a) A mortgage loan company or mortgage loan broker approved and regulated by the United States Department of Housing and Urban Development to perform business in this Commonwealth; and (b) Any branch of a mortgage loan company or mortgage loan broker listed in paragraph (a) of this subsection, provided the branch is approved and regulated by the United States Department of Housing and Urban Development to perform business in this Commonwealth. (3) Any nonprofit organization, mortgage loan company, mortgage loan broker, or branch thereof relying upon an exemption under subsection (1)(i) or (2)(a) or (b) of this section shall file with the commissioner a written application for a claim of exemption. The commissioner shall approve an application for an exemption that is timely filed and meets the requirements of this subtitle. The period of exemption shall be from January 1 through December 31, and the exemption shall expire on December 31 of the same calendar year. Every person granted an exemption under this section shall file a written application for a new exemption on an annual basis. The application shall be received by the commissioner on or before December 31 of the same calendar year. A written application for a partial-year exemption shall also expire on December 31 of the same calendar year that the written application for an exemption is granted. (4) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon an exemption under subsection (2)(a) or (b) of this section shall fund or broker a minimum of twelve (12) Federal Housing Administration-insured loans on Kentucky residential real properties each year in order to maintain its exemption. (5) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon an exemption under subsection (2)(a) or (b) of this section who ceases to be approved or regulated by the United States Department of Housing and Urban Development shall notify the commissioner, in writing, within ten (10) days after it ceases to be approved or regulated. (6) Any person listed in subsection (1)(a), (b), (c), (d), (e), (f), (g), or (h) of this section shall not be required to file with the commissioner a claim of exemption. (7) (a) Any natural person making a loan under subsection (10) of this section shall make the following disclosure, on a separate sheet of paper in minimum eighteen (18) point type, to the borrower: DISCLOSURE (Name and address of lender) is not licensed or regulated by the Kentucky Department of Financial Institutions. (Name of lender) is making this mortgage loan with his or her own funds, for the person's own investment, without intent to resell the mortgage loan. (The phone number and address of the Kentucky Department of Financial Institutions.) (b) A copy of the disclosure, signed by the borrower, shall be maintained by the natural person for a period not to exceed three (3) years after the date the mortgage loan is paid in full. (8) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon an exemption under subsection (2)(a) or (b) of this section shall provide a list of funded or brokered Federal Housing Administration-insured loans from December 1 of the previous calendar year to November 30 of the current calendar year to the commissioner by December 31 of each year on a form prescribed by the commissioner. (9) Any mortgage loan company, mortgage loan broker, or branch thereof applying for an exemption under subsection (2)(a) or (b) of this section shall not be approved for an exemption under subsection (2)(a) or (b) of this section unless the mortgage loan company, mortgage loan broker, or branch thereof has: (a) Held a mortgage loan company or mortgage loan broker license or registration for five (5) consecutive years prior to the filing of the application for an exemption under this section with the commissioner; or (b) Been approved and regulated by the United States Housing and Urban Development to conduct business in the mortgage lending process for five (5) consecutive years prior to the filing of the application for an exemption under this section with the commissioner. (10) Any natural person not exempted in subsection (1)(b) or (c) of this section who makes a mortgage loan with his or her own funds for the person's investment without the intent to resell the mortgage loan shall be exempt from the provisions of this subtitle except for the following: (a) Examination provisions of KRS 286.8-170 and 286.8-180 when it appears on grounds satisfactory to the commissioner that an examination is necessary; (b) Disclosure requirements of subsection (7) of this section; (c) Any investigation and enforcement provisions of this subtitle including KRS 286.8-170(7), and KRS 286.8-046, 286.8-090, 286.8-190, and 286.8-990; (d) Prohibited acts under KRS 286.8-125 and 286.8-220; and (e) Registration and regulatory requirements of KRS 286.8-255. (11) No person shall hold both a claim of exemption and a license granted under this subtitle. (12) Notwithstanding any provisions to the contrary set forth in this subtitle, every mortgage loan company and mortgage loan broker shall make available and grant access to the commissioner or an examiner of the commissioner the records in its possession or control that are subject to the provisions of this subtitle. (13) Notwithstanding any provisions to the contrary set forth in this subtitle, no mortgage loan company or mortgage loan broker shall impede the commissioner or an examiner of the commissioner from interviewing any person regarding any potential violations of this subtitle. (14) Notwithstanding any provisions to the contrary set forth in this subtitle, every mortgage loan company and mortgage loan broker that employs or utilizes the direct services of a mortgage loan originator subject to the registration and regulatory requirements of KRS 286.8-255 shall complete and timely submit to the Nationwide Multistate Licensing System and Registry an annual report of condition, which shall be in such form and contain such information as the Nationwide Multistate Licensing System and Registry may require, along with any other information which may be required by the commissioner. Effective: July 15, 2024 History: Amended 2024 Ky. Acts ch. 152, sec. 39, effective July 15, 2024. -- Amended 2022 Ky. Acts ch. 125, sec. 14, effective July 14, 2022. -- Amended 2012 Ky. Acts ch. 95, sec. 2, effective July 12, 2012. -- Amended 2010 Ky. Acts ch. 24, sec. 763, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 2, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 5, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 2, effective July 12, 2006. -- Amended 2003 Ky. Acts ch. 64, sec. 2, ef fective June 24, 2003. -- Amended 2001 Ky. Acts ch. 98, sec. 1, effective June 21, 2001. -- Amended 1998 Ky. Acts ch. 197, sec. 2, effective July 15, 1998. -- Amended 1994 Ky. Acts ch. 165, sec. 23, effective July 15, 1994; and ch. 377, sec. 2, effective J uly 15, 1994. -- Amended 1986 Ky. Acts ch. 461, sec. 2, effective July 15, 1986. -- Amended 1982 Ky. Acts ch. 276, sec. 1, effective July 15, 1982. -- Created 1980 Ky. Acts ch. 365, sec. 3, effective July 15, 1980. Formerly codified as KRS 294.020. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286. In addition, KRS references have been adjusted to conform with the renumbering.

KRS 286.8-030 Transaction of business prohibited without license -- Effect of issuance of license -- Unique identifier

286.8-030. Transaction of business prohibited without license -- Effect of issuance of license -- Unique identifier (1) (a) It is unlawful for any person to transact business in Kentucky, either directly or indirectly, as a mortgage loan company or mortgage loan broker if the mortgage loan company or mortgage loan broker is not licensed in accordance with the requirements of this subtitle, unless that person is exempt under KRS 286.8-020 and, if required by KRS 286.8-020(3) has timely filed a completed application for a claim of exemption, and the filed application for a claim of exemption has been approved by the commissioner. (b) It is unlawful for any natural person to make a loan under KRS 286.8-020(10) without making the disclosure required by KRS 286.8-020(7). (c) It is unlawful for any natural person to transact business in Kentucky, either directly or indirectly, as a mortgage loan originator, unless otherwise exempted, if the mortgage loan originator is not registered in accordance with KRS 286.8-255. (d) It is unlawful for any mortgage loan company or mortgage loan broker to employ or use a mortgage loan originator if the mortgage loan originator is not registered in accordance with KRS 286.8-255 or otherwise exempted. (e) It is unlawful for any mortgage loan company to employ or use, with or without compensation, a mortgage loan broker if the mortgage loan broker is not licensed in accordance with the requirements of this subtitle unless that person is exempt under KRS 286.8-020 and, if required by KRS 286.8-020(3), has timely filed a completed application for a claim of exemption, and the filed application for a claim of exemption has been approved by the commissioner. (2) Neither the fact that a license or registration has been issued nor the fact that any person, business, or company is effectively registered or licensed, constitutes a finding by the commissioner that any document filed under this subtitle is true, complete, and not misleading. Nor does such fact directly or indirectly imply approval of the registrant or licensee by the commissioner or the Commonwealth of Kentucky. It is unlawful to make or cause to be made to any prospective customer or client any representation inconsistent with this subsection. (3) Any mortgage loan company or mortgage loan broker who willfully transacts business in Kentucky in violation of subsection (1) of this section shall have no right to collect, receive, or retain any interest or charges whatsoever on a loan contract, but the unpaid principal of the loan shall be paid in full. (4) Each solicited, attempted, or closed loan shall constitute a separate violation of this section. (5) The unique identifier, name, and signature of any person originating a mortgage loan shall be clearly shown on the mortgage loan application. It shall be unlawful to make or cause to be made any representations on a mortgage loan application that are inconsistent with this subsection. The unique identifier shall also be displayed on solicitations or advertisements, including business cards or Web sites, of all persons holding themselves out as being able to originate mortgage loans in Kentucky, and any other document as established by rule, regulation, or order of the commissioner. Effective: July 15, 2016 History: Amended 2016 Ky. Acts ch. 129, sec. 2, effective July 15, 2016. -- Amended 2010 Ky. Acts ch. 24, sec. 764, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 4, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 6, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 11, effective July 12, 2006. -- Amended 2003 Ky. Acts ch. 64, sec. 3, effective June 24, 2003. -- Amended 2001 Ky. Acts ch. 98, sec. 2, effective June 21, 2001. -- Amended 1986 Ky. Acts ch. 461, sec. 3, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 4, effective July 15, 1980. Formerly codified as KRS 294.030. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286. In addition, KRS references have been adjusted to conform with the renumbering.

KRS 286.8-032 Application for license

286.8-032. Application for license (1) A license as a mortgage loan company or a mortgage loan broker may be obtained by filing a written application with the commissioner. The commissioner may require the electronic filing of the application and fees with the State Regulatory Registry, LLC, or its successor organization; its parent, affiliate, or operating subsidiary; or other agencies or authorities, as part of the nationwide mortgage licensing system, and consistent with the intent found in KRS 286.8-285. (2) The application shall: (a) Be sworn to; (b) State the name of the applicant and each of the applicant's affiliates and operating subsidiaries engaged in business as a mortgage loan company or a mortgage loan broker; (c) State the name under which the applicant will conduct business in Kentucky; (d) State the physical address of the applicant's principal office and branch or branches; (e) List the name, residence, and business address of each person having an interest in the business as principal, partner, officer, trustee, and director, specifying the capacity and title of each; (f) Indicate the general plan and character of the business; (g) Contain a corporate surety bond or other instrument as prescribed by KRS 286.8-060; (h) If applying for a mortgage loan broker license, contain a compiled financial statement of the applicant; or, if applying for a mortgage loan company license, contain a reviewed or audited financial statement of the applicant prepared by a licensed or certified public accountant; (i) Include payment of the required fees; and (j) Include such other information as the commissioner determines necessary. (3) No mortgage loan company license may be granted unless the applicant: (a) Has and maintains, so long as the license is in effect, a minimum, documented funding source of one million dollars ($1,000,000); (b) Has a net worth in excess of one million dollars ($1,000,000); or (c) Has and maintains a net worth in excess of one hundred thousand dollars ($100,000) and certifies to the commissioner that the company will not make or purchase loans secured by mortgages on residential real property located in Kentucky so long as the license is in effect. (4) A license issued to a mortgage loan company or a mortgage loan broker shall entitle all officers and employees of the person, if a corporation, and all members, partners, trustees, and employees, if an association, partnership, natural person, or trust, to engage in the mortgage loan business pursuant to this subtitle, subject to the applicable requirements of this subtitle. (5) If a licensee desires to establish a branch, the licensee shall file an application with the commissioner that includes the physical location and telephone number of the branch, the name of the prospective manager, the anticipated opening date, and any other information requested by the commissioner. (6) Each applicant for a mortgage loan broker license shall have at least one (1) managing principal at all times. This managing principal shall provide the commissioner sufficient proof of a minimum of two (2) years' experience working in the mortgage industry. The commissioner shall determine from the application whether an applicant has sufficient experience to meet this requirement. Each mortgage loan broker shall obtain written approval from the commissioner prior to a change of managing principal. (7) All applicants for a mortgage loan broker license shall have successfully completed an educational training course, approved by the department, of not less than thirty (30) classroom hours' duration. Applicants who have held a mortgage loan broker license for at least one (1) year in the past five (5) years shall be exempt from this requirement. This section shall not apply to renewals of existing licenses. Approval of an applicant for a mortgage loan broker license under this subsection shall be conditioned on the applicant establishing that the district, state, or territory from which the applicant applies, resides, or performs the primary portion of his or her mortgage business has rules, regulations, or other provisions which by reciprocity or comity are at least equivalent to this subsection. (8) The application for a mortgage loan broker and mortgage loan company license shall state: (a) The address of the physical location where the business is to be located in compliance with KRS 286.8-250 and whether such location is a residence. The physical location where the mortgage lending process is conducted shall have a street address. A post office box or similar designation shall not meet the requirements of this subsection. The physical location shall be accessible to the general public as a place of business, unless the physical location is a residence and proof of residence has been submitted as required by this section. Photographs of the exterior, interior, and exterior sign of each location shall accompany the application. If the physical location is not a residence and is leased, the lease shall be for a minimum term of one (1) year. A copy of the lease and the names of all employees conducting business under the lease shall accompany the application. If the physical location is a residence, proof that the location is a residence, in a form as required by the commissioner, shall accompany the application. Proof of residence shall confirm that the residence is owned or leased by the mortgage loan broker, mortgage loan company, or its employees or owners and that the residence is the main residence of any such persons. Proof of physical location shall include proof that local zoning requirements are satisfied. (b) A mortgage loan company or mortgage loan broker shall notify the commissioner of a change in the location or name of its business or the addition of any branch or branches in writing at least ten (10) days prior to the change. (9) On or after January 1, 2009, every mortgage loan company and mortgage loan broker shall maintain an agent for service of process in the Commonwealth. The name, address, telephone number, and electronic mail address of the agent for service of process shall be filed with the application. The commissioner shall be notified in writing at least five (5) days prior to any change in the status of an agent for service of process. (10) The commissioner may deem an application abandoned when an applicant fails to provide or respond to a request for additional information. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 765, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 5, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 7, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 3, effective July 12, 2006. -- Amended 2003 Ky. Acts ch. 64, sec. 4, effective June 24, 2003. -- Amended 1998 Ky. Acts ch. 197, sec. 3, effective July 15, 1998. -- Created 1986 Ky. Acts ch. 461, sec. 4, effective July 15, 1986. Formerly codified as KRS 294.032. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38 required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286. In addition, KRS references have been adjusted to conform with the renumbering.

KRS 286.8-034 Issuance and renewal of license -- Fees

286.8-034. Issuance and renewal of license -- Fees (1) (a) In addition to any fee required under subsection (8) of this section, an applicant for a license under this subtitle shall provide the commissioner with a check payable to the Kentucky State Treasurer in the following amount: 1. For a mortgage loan company license applicant, two thousand five hundred dollars ($2,500); or 2. For a mortgage loan broker license applicant, one thousand dollars ($1,000). (b) The fee required under paragraph (a) of this subsection shall cover the application fee and the licensing fee for all licensed locations, including any changes of address. (2) (a) A license issued between January 1 and September 30 of the same calendar year shall expire on December 31 of the same calendar year. (b) A license issued between October 1 and December 31 of the same calendar year shall expire on December 31 of the following calendar year. (3) A license may be renewed by submitting the following: (a) An annual assessment fee as set forth in subsection (4) of this section; (b) An annual report of condition to the Nationwide Multistate Licensing System and Registry, which shall be in such form and contain such information as the Nationwide Multistate Licensing System and Registry may require; and (c) Any other information required by the commissioner. (4) (a) 1. Subject to subparagraph 2. of this paragraph, the annual assessment fee for a mortgage loan company shall be: a. Based on the volume of loans funded and the volume of loans serviced for residential real property located in Kentucky during the twelve (12) month period ending on September 30; and b. Determined by applying a factor of one hundredths percent (0.01%) to the volume of loans funded and the volume of loans serviced in Kentucky. 2. The annual assessment fee for a mo rtgage loan company shall not be: a. Less than one thousand dollars ($1,000); or b. More than fifteen thousand dollars ($15,000). (b) The annual assessment fee for a mortgage loan broker shall be one thousand dollars ($1,000). (c) The annual assessment fee paid by a mortgage loan company or mortgage loan broker under this subsection shall cover: 1. The renewal fee for the principal office and any branches; and 2. Any examination-related costs incurred by the department. (5) (a) The commissioner shall, by administrative regulation or order, adjust the fees in subsections (1) and (4) of this section every two (2) years. (b) An adjustment under paragraph (a) of this subsection shall be calculated based on the percent change in the nonseasonally adjusted annual average Consumer Price Index for all Urban Consumers (CPI-U), U.S. City Average, All Items, as published by the United States Bureau of Labor Statistics. (6) The commissioner shall not approve the renewal of a mortgage loan broker's license if the commissioner has not received the information on physical location as required in KRS 286.8-032(8). (7) (a) The renewal application, fees, and any required information shall be received by the commissioner on or before November 30 prior to the December 31 expiration date. (b) The commissioner may reinstate a license within thirty-one (31) days of the expiration of the license if the licensee pays: 1. The annual assessment fee; and 2. A reinstatement fee of five hundred dollars ($500). (c) A license shall not be reinstated when the renewal application, fees, or any required information is received on or after February 1 of the following year that the renewal application was due. (8) Except as provided in subsection (7)(b) of this section, if an applicant for a license under this subtitle has surrendered a license or allowed a license to expire within ninety (90) days before submitting the application, the applicant shall, in addition to any other fee required under this section, pay any annual assessment fees that remained unpaid at the time the license was surrendered or expired. Effective: July 15, 2024 History: Amended 2024 Ky. Acts ch. 152, sec. 42, effective July 15, 2024. -- Amended 2022 Ky. Acts ch. 125, sec. 2, effective July 14, 2022. -- Amended 2016 Ky. Acts ch. 129, sec. 3, effective July 15, 2016. -- Amended 2010 Ky. Acts ch. 24, sec. 766, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 6, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 8, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 12, effective July 12, 2006. -- Amended 2003 Ky. Acts ch. 64, sec. 5, effective June 24, 2003. -- Amended 1998 Ky. Acts ch. 197, sec. 4, effective July 15, 1998. -- Amended 1994 Ky. Acts ch. 377, sec. 1, effective July 15, 1994. -- Created 1986 Ky. Acts ch. 461, sec. 5, effective July 15, 1986. Formerly codified as KRS 294.034. Legislative Research Commission Note (4/24/2008). A manifest clerical or typographical error in subsection (3) of this statute has been corrected in codification by the Reviser of Statutes under the authority of KRS 7.136(1)(h). Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286. In addition, a KRS reference has been adjusted to conform with the renumbering.

KRS 286.8-036 Rules concerning use of license -- Alternate work location

286.8-036. Rules concerning use of license -- Alternate work location (1) As used in this section: (a) "Documents": 1. Means documents involved in the mortgage lending process; and 2. Includes but is not limited to: a. Uniform residential loan applications or other loan applications; b. Appraisal reports; c. Settlement statements; d. Supporting personal documentation for loan applications, including: i. Form W-2 or other earnings or income statements; ii. Verifications of rent, income, and employment; iii. Bank statements; iv. Tax returns; and v. Payroll stubs; e. Any required mortgage-related disclosures; and f. Any other document required as a part of, or necessary to, the mortgage lending process; and (b) "Employee" shall include a mortgage loan originator engaged as an independent contractor. (2) Each license issued under this subtitle shall state the: (a) Address or addresses at which business is to be conducted; (b) Name of the licensee; and (c) Date and place of its incorporation, if applicable. (3) A license may not be transferred or assigned without the prior written approval of the commissioner. (4) No licensee shall transact the business provided for by this subtitle under any other name or maintain an office at any location other than a licensed location or an alternate work location. (5) Every licensed mortgage loan company or mortgage loan broker shall notify the commissioner, in writing, within ten (10) days of the closing of any licensed office or registered Kentucky branch. (6) A licensee may permit employees to engage in the mortgage lending process at an alternate work location if: (a) The licensee has written policies and procedures for supervision of employees working from alternate work locations; (b) Access to the licensee's computer systems and customer information is in accordance with the licensee's comprehensive written information technology security plan; (c) Employees are not permitted to conduct in -person customer activities at the alternate work location except as provided in KRS 286.8-010(2)(b)2.; (d) The licensee ensures that no physical or electronic documents are maintained at the alternate work location; and (e) No signage or advertising of the licensee or the mortgage loan originator is displayed at any alternate work location. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 3, effective July 14, 2022. -- Amended 2016 Ky. Acts ch. 129, sec. 11, effective July 15, 2016. -- Amended 2010 Ky. Acts ch. 24, sec. 767, effective July 15, 2010. -- Amended 1998 Ky. Acts ch. 197, sec. 5, effective July 15, 1998. -- Created 1986 Ky. Acts ch. 461, sec. 6, effective July 15, 1986. Formerly codified as KRS 294.036. Legislative Research Commission Note (7/14/2022). Under the authority of KRS 7.136(1), the format of subsection (6) of this statute was changed in order to correct a formatting error that occurred in 2022 Ky. Acts ch. 125, sec. 3. The words in the text were not changed. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-044 Notice of order in writing -- Administrative complaint -- Service -- Hearing

286.8-044. Notice of order in writing -- Administrative complaint -- Service -- Hearing (1) Notice of entry of any order of suspension or denial of a license, registration, or claim of exemption to any applicant, registrant, or licensee shall be given in writing and served personally or sent by certified mail to the last known address of the person affected. The affected person, upon timely written request to the commissioner, shall be entitled to a hearing in accordance with the provisions of KRS Chapter 13B; but if no written request is received within twenty (20) days of service of the notice, the commissioner shall enter a final order suspending or denying the license or registration. (2) The commissioner may file an administrative complaint against any person if it appears on grounds satisfactory to the commissioner that a potential or actual violation of this subtitle has been committed and when the person may be subject to the penalties of KRS 286.8-046, 286.8-090, and 286.8-990. The commissioner shall serve the administrative complaint by certified mail or personal delivery to the last known address of the person named in the complaint. The person named in the administrative complaint shall be entitled to a hearing, but only upon timely receipt of a written answer and request for a hearing within twenty (20) days of the service or hand delivery of the administrative complaint. If timely requested, an administrative hearing shall be held in accordance with the provisions of KRS Chapter 13B. If a written answer and request for hearing are not made within twenty (20) days of service or delivery of the complaint, the commissioner shall enter a final order granting the relief requested in the complaint. (3) Service by certified mail shall be complete upon the earlier of the following: (a) The date on which the person receives the mail; (b) The date on which the agency receives the return receipt; or (c) The date on which the agency receives notice that the mail has been returned undelivered. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 768, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 7, effective June 25, 2009. -- Created 2008 Ky. Acts ch. 175, sec. 24, effective April 24, 2008.

KRS 286.8-046 Civil penalty for violation of subtitle, administrative regulation, or order -- Order for restitution, refund, recovery of expenses

286.8-046. Civil penalty for violation of subtitle, administrative regulation, or order -- Order for restitution, refund, recovery of expenses (1) The commissioner may levy a civil penalty against any person who violates any provision of or any administrative regulation promulgated under this subtitle or order issued by the commissioner under this subtitle. The civil penalty shall be not less than one thousand dollars ($1,000) nor more than twenty-five thousand dollars ($25,000) per violation, plus the state's costs and expenses for the examination, investigation, and prosecution of the matter, including reasonable attorney's fees and court costs. (2) The commissioner may order restitution, refund, recovery of expenses, or direct such other affirmative action as the commissioner deems necessary against any person who violates any order issued by the commissioner or any provision of, or administrative regulation promulgated under, this subtitle. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 769, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 8, effective June 25, 2009. -- Created 2008 Ky. Acts ch. 175, sec. 25, effective April 24, 2008.

KRS 286.8-048 Emergency orders by commissioner -- Grounds -- Hearing -- Period order to remain in effect

286.8-048. Emergency orders by commissioner -- Grounds -- Hearing -- Period order to remain in effect (1) The commissioner may enter an emergency order suspending, limiting, or restricting the license, claim of exemption, or registration of any mortgage loan broker, mortgage loan company, or mortgage loan originator without notice or hearing if it appears upon grounds satisfactory to the commissioner that the mortgage loan broker, mortgage loan company, or mortgage loan originator has engaged or is engaging in unsafe, unsound, and illegal practices that pose an imminent threat to the public interest. (2) One (1) or more of the following circumstances shall be considered sufficient grounds for an emergency order under this section if it appears on grounds satisfactory to the commissioner that: (a) The mortgage loan broker, mortgage loan company, or mortgage loan originator does not meet or has failed to comply with more than one (1) of the requirements of this subtitle and the violations appear to be willful; (b) The mortgage loan broker or mortgage loan company is in such financial condition that it cannot continue in business with safety to its customers; (c) The mortgage loan broker, mortgage loan company, or mortgage loan originator has been indicted, charged with, or found guilty of any act involving fraud, deception, theft, or breach of trust, or is the subject of an administrative cease-and-desist order or similar order, or of a permanent or temporary injunction currently in effect entered by any court or agency of competent jurisdiction; (d) The mortgage loan broker, mortgage loan company, or mortgage loan originator has made any misrepresentations or false statements to, or concealed any essential or material fact from, any person in the course of doing business in the mortgage lending process, or has engaged in any course of business that has worked or tended to work a fraud or deceit upon any person or would so operate; (e) The mortgage loan broker, mortgage loan company, or mortgage loan originator has made or caused to be made to the commissioner any false representation of material fact, has refused to permit an examination, or has refused or failed, within a reasonable time, to furnish any information or make any report that may have been requested or required by the commissioner; (f) The mortgage loan broker, mortgage loan company, or mortgage loan originator has had any license, registration, or claim of exemption related to the financial services industry denied, suspended, or revoked under the laws of this state or any other state of the United States, or has surrendered or terminated any license, registration, or claim of exemption issued by this state or any other jurisdiction under threat of administrative action; or (g) The surety bond required under KRS 286.8-060 has terminated, expired, or no longer remains in effect. (3) An emergency order issued under this section becomes effective when signed by the commissioner. The emergency order shall be delivered by personal delivery or certified mail to the last known address of the party or parties. The order shall be deemed served upon delivery or upon return of the order. (4) A party aggrieved by an emergency order issued by the commissioner under this section may request an emergency hearing. The request for hearing shall be filed with the commissioner within twenty (20) days of service of the emergency order. (5) Upon receipt of a written request for emergency hearing, the commissioner shall conduct an emergency hearing as required under KRS 13B.125, within ten (10) working days from the date of receipt of the request for hearing, unless the parties agree otherwise. (6) An emergency order issued under this section shall remain in effect until it is withdrawn or superseded by an order of the commissioner or until it is terminated by a court order. Effective: July 15, 2016 History: Amended 2016 Ky. Acts ch. 129, sec. 4, effective July 15, 2016. -- Amended 2010 Ky. Acts ch. 24, sec. 770, effective July 15, 2010. -- Created 2008 Ky. Acts ch. 175, sec. 30, effective April 24, 2008.

KRS 286.8-060 Surety bonds required -- Uses of bonds -- New or supplemental bonds

286.8-060. Surety bonds required -- Uses of bonds -- New or supplemental bonds (1) Except as otherwise provided in this section, each mortgage loan company, mortgage loan broker, and mortgage loan originator shall post or be covered by a surety bond for the entire licensure or registration period in an amount prescribed by the commissioner, but in no event shall the bond be less than two hundred fifty thousand dollars ($250,000) for mortgage loan companies and fifty thousand dollars ($50,000) for mortgage loan brokers. (2) Every bond shall provide for suit thereon by any person who has a cause of action under this subtitle. The total liability of the surety, to all persons, cumulative or otherwise, shall not exceed the amount specified in the bond. (3) The bond shall be in a form prescribed by the commissioner and shall be made payable to the commissioner. The terms of the bond shall provide that it may not be terminated without thirty (30) days prior written notice to the commissioner. (4) Every bond shall be available for the recovery of expenses, fines, restitution, and fees levied by the commissioner under this subtitle, and for losses or damages that have been incurred by any borrower or consumer as a result of the registrant's or licensee's failure to comply with the requirements of this subtitle. (5) Every bond shall provide that no suit shall be maintained to enforce any liability on the bond unless brought within three (3) years after the act upon which it is based. (6) If the commissioner or the commissioner's representative shall at any time reasonably determine that the bond or securities aforesaid are insecure, deficient in amount, or exhausted in whole or part, he may by written order require the filing of a new or supplemental bond or the deposit of new or additional securities in order to secure compliance with this subtitle, the order to be complied with within thirty (30) days following service thereof upon the registrant or licensee. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 771, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 9, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 21, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 4, effective July 12, 2006. -- Amended 1998 Ky. Acts ch. 197, sec. 6, effective July 15, 1998. -- Amended 1994 Ky. Acts ch. 377, sec. 4, effective July 15, 1994. -- Amended 1986 Ky. Acts ch. 461, sec. 7, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 7, effective July 15, 1980. Formerly codified as KRS 294.060. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286.

KRS 286.8-070 Company name

286.8-070. Company name (1) The use of the words "certified" or "licensed" or any form thereof separately or in any combination thereof with other words or syllables, is prohibited as part of the name of a mortgage loan company or a mortgage loan broker. No license of a proposed mortgage loan company or a mortgage loan broker having the same name as a corporation authorized to do business under the laws of this state or a name so nearly resembling it as to be calculated to deceive shall be issued by the commissioner. (2) No person, unless lawfully authorized to do business in this state under the provisions of this subtitle, and actually engaged in carrying on a mortgage loan or loan broker business, shall do business under any name or title which contains the terms "mortgage company," "mortgage loan company," "mortgage loan broker," "loan broker," "financial broker," or any combination employing the words "mortgage," "loan," or "broker," with one (1) or more of the words "association," "institution," "society," "company," "corporation," or words of similar import, or use any name or represent in any manner which indicates or reasonably implies that his or its business is that of a mortgage loan company or mortgage loan broker as defined by KRS 286.8-010. (3) A mortgage loan company or mortgage loan broker required to have a license under this subtitle shall not use the words "bank," "trust," "national," or "federal," or any form thereof separately or in combination thereof with other words or syllables as a part of its name or to otherwise identify itself. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 772, effective July 15, 2010. -- Amended 1998 Ky. Acts ch. 197, sec. 7, effective July 15, 1998. -- Amended 1986 Ky. Acts ch. 461, sec. 8, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 8, effective July 15, 1980. Formerly codified as KRS 294.070. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code. Legislative Research Commission Note. The word "licensed" has been substituted for "registered" and the word "license" has been substituted for "registration certificate" in subsection (1) in order to be consistent with other changes made by Acts 1986, ch. 461.

KRS 286.8-075 Change of control

286.8-075. Change of control (1) As used in this section, "change of control" means: (a) A transfer of voting stock which results in giving a person, directly or indirectly, the power to direct the management and policy of a mortgage loan company or mortgage loan broker; or (b) A transfer of at least ten percent (10%) of the outstanding voting stock of a mortgage loan company or a mortgage loan broker. (2) A transfer of voting stock of a mortgage loan company or mortgage loan broker which constitutes a change of control shall be approved in writing by the commissioner, prior to the transfer. (3) The owner, president, chief executive officer or a partner shall apply to the commissioner for approval of a transfer of voting stock in his mortgage loan company or mortgage loan broker which constitutes a change of control. The application must contain information which shows that the requirements of this subtitle for obtaining a license will be satisfied after the change of control. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 773, effective July 15, 2010. -- Amended 1998 Ky. Acts ch. 197, sec. 8, effective July 15, 1998. -- Created 1986 Ky. Acts ch. 461, sec. 9, effective July 15, 1986. Formerly codified as KRS 294.075. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-080 Factors for use by commissioner in determining approval or disapproval of application

286.8-080. Factors for use by commissioner in determining approval or disapproval of application Upon receipt of the application the commissioner shall first determine whether or not it complies with the provisions of this subtitle and, if the commissioner so finds, he or she shall then inquire into the advisability of approving the application by determining whether the applicant demonstrates such financial responsibility, financial condition, and business expertise, character and general fitness to reasonably warrant the belief that the applicant's business will be conducted honestly, fairly and efficiently and in such a way as to justify public confidence. The commissioner may investigate and consider the qualifications of officers and directors or principals of an applicant in determining whether this qualification has been met. If the commissioner finds that the applicant meets all the above requirements, he shall approve the application. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 774, effective July 15, 2010. -- Amended 1986 Ky. Acts ch. 461, sec. 10, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 9, effective July 15, 1980. Formerly codified as KRS 294.080. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-090 Denial, suspension, or revocation of license -- Jurisdiction of Franklin Circuit Court

286.8-090. Denial, suspension, or revocation of license -- Jurisdiction of Franklin Circuit Court (1) The commissioner may suspend; revoke; place on probation; condition; refuse to issue or renew a license, registration, or exemption; or accept surrender of a license, registration, or exemption in lieu of revocation or suspension; or issue a cease and desist order if the commissioner finds that the person, applicant, licensee, or registrant: (a) Does not meet, no longer meets, or has failed to comply with the requirements of this subtitle; (b) Is unfit through lack of financial responsibility or experience to conduct the business of a mortgage loan company or mortgage loan broker, as the case may be; (c) Does not conduct his business in accordance with the law or the method of business includes or would include activities which are illegal where performed; (d) Collects interest at a usurious rate; (e) Is in such financial condition that he cannot continue in business with safety to his customers; (f) Is guilty of fraud in connection with any transaction governed by this subtitle, or is the subject of an administrative cease and desist order or similar order, or a permanent or temporary injunction of any court of competent jurisdiction entered under any other federal or state act; (g) Has made any misrepresentations or false statements to, or concealed any essential or material fact from, any person in the mortgage lending process, or has engaged in a course of business that has worked or tended to work a fraud upon any person or would so operate; (h) Has made or caused to be made to the commissioner any false representation of material fact or has suppressed or withheld from the commissioner any information that the person possesses and which, if submitted to the commissioner, would have rendered the person ineligible to be licensed, registered, or exempted from licensing or registration under this subtitle; (i) Has failed to account to persons interest for all funds received for the escrow account required under KRS 286.8-130; (j) Has refused to permit an examination or investigation by the commissioner of his books and affairs or has refused or failed, within a reasonable time, to furnish any information or make any report that may be required by the commissioner under the provisions of this subtitle; (k) Has been convicted of any misdemeanor of which an essential element is fraud, breach of trust, or dishonesty, or any felony, or has pending against him any felony charge; (l) Has had any license, registration, or claim of exemption related to the financial services industry denied, suspended, or revoked under the laws of this state or any other state of the United States, or has surrendered or terminated any license, registration, or claim of exemption issued by this state or any other jurisdiction under threat of administrative action; (m) Has employed or contracted with a person who has failed to register or has had a license or registration denied, revoked, or suspended in this Commonwealth or another state; (n) Has demonstrated incompetence or untrustworthiness to act as a licensee or registrant or to continue a claim of exemption granted by application under this subtitle; (o) Has failed to pay any required fee under this subtitle; (p) Has abandoned an application by failing to provide the commissioner any information required under this subtitle, or requested by the commissioner, to complete an application; (q) Has influenced, or attempted to influence through coercion, extortion, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with a mortgage loan; (r) Has failed to comply with an administrative or court order imposing child support obligations; (s) Has failed to pay state income taxes or to comply with any administrative or court order directing the payment of state income tax; (t) Has improperly used notes or other resources to complete an examination for a license or registration; (u) Has violated any provision of KRS 360.100; or (v) Has violated any provision of this subtitle, administrative regulation promulgated hereunder, or order issued by the commissioner. (2) Any person whose license, registration, or claim of exemption has been denied, suspended, revoked, or surrendered in lieu of revocation or suspension under this section is prohibited from participating in any business activity of a registrant or licensee under this subtitle and from engaging in any business activity on the premises where a licensee or registrant under this subtitle is conducting its business. (3) The commissioner shall execute a written order whenever a license, registration, or claim of exemption issued pursuant to this subtitle is suspended or revoked. The commissioner shall serve the written order upon the licensee, registrant, or person claiming the exemption. The written order shall be sent by certified mail, return receipt requested, postage prepaid, to the last known principal business address of such licensee, registrant, or person claiming the exemption, as set forth in the records of the commissioner. The written order shall be deemed to have been received by the licensee, registrant, or person claiming the exemption three (3) business days following the mailing thereof. (4) Any person who continues to participate in any business activity covered by this subtitle after such person's license, registration, or claim of exemption has been revoked, suspended, or denied shall be subject to the penalties in this section, KRS 286.8-046, and KRS 286.8-990 and shall be in violation of KRS 367.170. (5) Any person who has had a license, registration, or claim of exemption denied by the commissioner shall not be eligible to apply for a license, registration, or claim of exemption under this subtitle until after expiration of one (1) year from the date of denial. (6) Any person who has had a license, registration, or claim of exemption revoked by the commissioner shall not be eligible to apply for a license, registration, or claim of exemption under this subtitle until after expiration of three (3) years from the date of revocation. A person whose license, registration, or claim of exemption has been revoked twice shall be deemed permanently revoked and shall not again be eligible for a license, registration, or claim of exemption under this subtitle. (7) The provisions of this section shall be in addition to any other penalties or remedies available, including the penalties of KRS 286.8-046. (8) The commissioner may notify the Department of Revenue which may institute an action in the name of the Commonwealth of Kentucky in the Franklin Circuit Court, or any court of competent jurisdiction, for the recovery of any civil penalty, fine, cost, or fee assessed or levied under this subtitle. (9) The commissioner may file a complaint in the Franklin Circuit Court, or any court of competent jurisdiction, for a temporary restraining order or injunction, against any person, where the commissioner has reason to believe from evidence satisfactory to the commissioner that such person has violated, or is about to violate, a provision in this subtitle, for the purpose of restraining and enjoining such person from continuing or engaging in the violation or doing any act in furtherance thereof. The court shall have jurisdiction over the proceeding and shall have the power to enter an order or judgment awarding preliminary or final injunctive relief that is proper. Any person who violates a temporary restraining order or injunction issued by the court entered as a result of a violation of this subtitle shall be held in contempt of court. (10) The surrender or expiration of a license, registration, or exemption shall not affect the licensee's civil or criminal liability for acts committed prior to the surrender or expiration. No revocation, suspension, refusal to renew, surrender, or expiration of any license, registration, or exemption shall impair or affect the obligation of any preexisting lawful contract between the licensee and the borrower. The surrender or expiration of a license, registration, or exemption shall not affect a proceeding to suspend or revoke a license or registration. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 775, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 175, sec. 9, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 5, effective July 12, 2006, effective July 12, 2006. -- Amended 1998 Ky. Acts ch. 197, sec. 9, effective July 15, 1998. -- Amended 1986 Ky. Acts ch. 461, sec. 11, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 10, effective July 15, 1980. Formerly codified as KRS 294.090. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286. In addition, KRS references have been adjusted to conform with the renumbering.

KRS 286.8-100 Branch offices

286.8-100. Branch offices (1) No licensee shall establish or maintain a branch transacting business in Kentucky, either directly or indirectly, without: (a) Filing the application as described in KRS 286.8-032(5); and (b) Receiving prior written approval of the commissioner. (2) Each application for approval of the establishment and maintenance of a branch shall state: (a) The physical address of the proposed location; (b) The functions to be performed; and (c) Other information the commissioner may require if different from that contained in the original application for a license or registration. (3) Each application under this section shall be sworn to by the applicant. (4) Upon the receipt of an application, if the commissioner finds that the applicant is otherwise in compliance with the provisions of this subtitle, the commissioner shall approve the application. (5) The commissioner may deem an application abandoned and subject to KRS 286.8- 090 when: (a) The application is received incomplete; and (b) The applicant fails to: 1. Provide any required information under this subtitle; or 2. Respond to a request by the commissioner for further information. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 7, effective July 14, 2022. -- Amended 2010 Ky. Acts ch. 24, sec. 776, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 10, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 10, effective April 24, 2008. -- Amended 1998 Ky. Acts ch. 197, sec. 10, effective July 15, 1998. -- Amended 1992 Ky. Acts ch. 77, sec. 8, effective July 14, 1992. -- Amended 1986 Ky. Acts ch. 461, sec. 12, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 11, effective July 15, 1980. Formerly codified as KRS 294.100. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-110 Rates -- Mortgage required as evidence of real estate loan -- Delinquency charges -- Attorneys' fees -- Charges made part of note -- Limits on prepayment penalties

286.8-110. Rates -- Mortgage required as evidence of real estate loan -- Delinquency charges -- Attorneys' fees -- Charges made part of note -- Limits on prepayment penalties (1) Mortgage loan companies are prohibited from making loans and mortgage loan brokers are prohibited from brokering loans in violation of KRS 360.100 and are prohibited from making or brokering such loans at a rate or rates in excess of those provided by KRS 360.010 and 360.025 or other applicable usury statutes. (2) Every real estate loan shall be secured by a mortgage or other instrument constituting a lien upon the real estate securing the loan, according to any lawful or well-recognized practice that is best suited to the transaction. Any such instrument, constituting a lien, is herein termed a "mortgage." All such mortgages shall be recorded in accordance with the law of this Commonwealth. (3) Delinquency charges may be made for each installment more than ten (10) days in arrears, and only one (1) delinquency charge shall be made on any one (1) installment. No delinquency charge shall be made unless disclosed as required under subsection (2) of this section. In addition to such delinquency charges, attorneys' fees not exceeding fifteen percent (15%) of the unpaid balance shall be taxed as costs and court costs may be collected, provided that the note is referred to an attorney not a salaried employee of the holder for collection. (4) Any charges to be assessed against the borrower in the event a loan is paid prior to maturity shall be prominently displayed and made part of the note and the loan closing statement regarding the method of computation of any rebate. No prepayment penalty shall be assessed against the borrower following the third anniversary date of the mortgage or sixty (60) days prior to the date of the first interest rate reset, whichever is less. No prepayment penalty shall exceed three percent (3%) for the first year, two percent (2%) for the second year, and one percent (1%) for the third year of the outstanding balance of the loan; but in no event shall a prepayment penalty be assessed against a borrower refinancing with the mortgage loan company that funded the mortgage. Effective: April 24, 2008 History: Amended 2008 Ky. Acts ch. 175, sec. 11, effective April 24, 2008. -- Amended 1998 Ky. Acts ch. 197, sec. 11, effective July 15, 1998. -- Amended 1986 Ky. Acts ch. 461, sec. 13, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 12, effective July 15, 1980. Formerly codified as KRS 294.110. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286.

KRS 286.8-120 Fees and charges in addition to interest -- Letters of commitment -- Failure to fulfill terms constitutes default

286.8-120. Fees and charges in addition to interest -- Letters of commitment -- Failure to fulfill terms constitutes default (1) Every mortgage loan company may require borrowers to pay all necessary and reasonable expenses incurred in connection with the making, closing, disbursing, extending, readjusting, or renewing of loans. Without limiting the generality of the foregoing, such expenses may include appraisal, attorneys' fees, abstract, recording and registration fees, title examination, title insurance, mortgage insurance, credit report, survey, drawing of papers, origination fees, loan closing costs, and taxes or charges imposed upon or in connection with the making and reporting of any mortgage. (2) Every mortgage loan company also may require the borrowers to pay the cost of all other necessary and incidental services rendered by the mortgage loan company or by others in connection with loans in reasonable amounts. Without limiting the generality of the foregoing, such costs may include the cost of services of inspectors, engineers, and architects. (3) Such initial charges as described in subsections (1) and (2) of this section may be collected by the mortgage loan company from the borrower and paid to any person rendering such services, or paid directly by the borrower. (4) In lieu of such initial charges to cover such expenses and costs as described in subsections (1) and (2) of this section, a mortgage loan company may make a reasonable charge, part or all of which may be retained by the mortgage loan company which renders such service, or part or all of which may be paid to others who render such services. (5) The fees and charges authorized by this section shall be in addition to interest authorized by law, and shall not be deemed to be a part of the interest collected or agreed to be paid on such loans within the meaning of any law of this Commonwealth which limits the rate of interest which may be exacted in any transaction. (6) No person shall receive any fee or other compensation of any kind in connection with procuring any loan, except for services actually rendered as above provided, and in no event shall a mortgage loan company or mortgage loan broker require the payment of a fee greater than one hundred dollars ($100) as a condition to submitting a loan application unless the commissioner shall otherwise prescribe by rule. (7) All "letters of commitment," or any other contracts or agreements between prospective borrowers and a mortgage loan company or a loan broker, where the borrowers employ services, for a fee or commission, to obtain a loan commitment or funding from a lending institution shall indicate the terms and conditions thereof, including a full and detailed description of the services the broker or company undertakes to perform, a specific statement of the circumstances in which the broker or company will be entitled to obtain or retain consideration and the period that such agreement shall remain in effect. (8) Failure on the part of any party, with the exception of the borrower, to fulfill the terms of any loan commitment, letter of commitment, agreement, or contract for the loan of money within the time and on such terms specified therein, or the failure to make a bona fide effort to secure a loan after receiving a fee for such service, shall constitute default by the mortgage loan company and any other person so in default; and any person damaged by such default may sue at law or equity for damages, reasonable attorneys' fees and interest at the legal rate of interest under KRS 360.010. Every cause of action for damages under this subsection survives the death of any person who might have been a plaintiff or defendant. No person may sue under this subsection more than five (5) years after any act constituting default. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 777, effective July 15, 2010. -- Amended 1998 Ky. Acts ch. 197, sec. 12, effective July 15, 1998. -- Amended 1986 Ky. Acts ch. 461, sec. 15, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 13, effective July 15, 1980. Formerly codified as KRS 294.120. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286.

KRS 286.8-125 Limitation on total net income of loan originator -- Definitions for section

286.8-125. Limitation on total net income of loan originator -- Definitions for section (1) (a) Except as provided in paragraph (b) of this subsection, it shall be unlawful for any licensee or person holding a claim of exemption to originate a loan secured by a mortgage on residential real property in Kentucky if the total net income generated by the licensee or person exceeds the greater of the following: 1. Two thousand dollars ($2,000); or 2. Four percent (4%) of the total loan amount. (b) Paragraph (a) of this subsection shall not apply to a loan for which the total points and fees on the loan do not exceed the threshold set forth in 12 C.F.R. sec. 1026.43(e)(3), as amended. (2) As used in this section, unless the context requires otherwise: (a) "Total loan amount" means the amount financed in the mortgage loan less the total net income generated by the: 1. Originating licensee or person; or 2. Affiliate of the originating licensee or person; and (b) "Total net income": 1. Means any and all fees, income, or compensation of any kind collected, received, or charged by: a. The licensee or person holding a claim of exemption; or b. An affiliate of the licensee or person holding a claim of exemption; 2. Includes but is not limited to origination fees, broker fees, lender fees and discount points if retained by the originating licensee or person as income, processing fees, administrative fees, document preparation fees, yield spread premiums, servicing release premiums, and financi al counseling fees; and 3. Does not include: a. Interest on the mortgage loan itself; or b. Fees paid to compensate unaffiliated third parties. Effective: July 15, 2026 History: Amended 2026 Ky. Acts ch. 57, sec. 1, effective July 15, 2026. -- Created 2008 Ky. Acts ch. 175, sec. 26, effective April 24, 2008. Legislative Research Commission Note (7/15/2026). 2026 Ky. Acts ch. 57, sec. 2, provides that the amendments to this statute in that Act apply to contracts entered into on or after July 15, 2026.

KRS 286.8-130 Escrow account -- Interest -- Accounting

286.8-130. Escrow account -- Interest -- Accounting (1) All moneys paid to the mortgage loan company for payment of taxes or insurance premiums on property which secures any loan made or serviced by the mortgage loan company shall be deposited in an account which is insured by the Federal Deposit Insurance Corporation or any other account acceptable to the Federal National Mortgage Association or the United States Department of Housing and Urban Development or the Government National Mortgage Association or the United States Department of Veterans Affairs and kept separate, distinct, and apart from funds that belong to the mortgage loan company. The funds, when deposited, shall be designated as an "escrow account" or under some other appropriate name indicating that the funds are not the funds of the mortgage loan company. (2) Any interest earned on funds deposited into an escrow account under subsection (1) shall belong to the borrower and shall be applied to the expenses to be paid from the account. (3) The mortgage loan company shall, upon reasonable notice, account to any debtor whose property secures a loan made by the mortgage company for any funds which that person has paid to the mortgage loan company for the payment of taxes or insurance premiums on the property in question. (4) The mortgage loan company shall, upon reasonable notice, account to the commissioner for all funds in the company's escrow account. (5) Escrow account funds shall not be subject to execution or attachment on any claim against the mortgage company. It shall be unlawful for any mortgage company to knowingly keep or cause to be kept any funds or money in any bank under the heading of "escrow account" or any other name designating the funds or money belonging to the debtors of the mortgage loan company, except actual funds paid to the mortgage loan company for the payment of taxes and insurance premiums on property securing loans made or serviced by the company. (6) Payments to the debtor's escrow account shall be promptly and properly credited. All escrowed taxes, insurance, and other items shall be paid in a timely fashion and not later than the statutory or contractual deadline applicable thereto. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 778, effective July 15, 2010. -- Amended 1992 Ky. Acts ch. 77, sec. 9, effective July 14, 1992. -- Created 1980 Ky. Acts ch. 365, sec. 14, effective July 15, 1980. Formerly codified as KRS 294.130. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286.

KRS 286.8-140 Powers of commissioner

286.8-140. Powers of commissioner (1) The commissioner shall exercise general supervision and control over mortgage loan companies and mortgage loan brokers doing business in the Commonwealth of Kentucky. (2) In addition to the other duties imposed upon him or her by law, the powers and duties of the commissioner shall be: (a) 1. To promulgate such administrative regulations, forms, and orders as are deemed to be necessary and appropriate to accomplish the basic purposes of and the provisions contained within this subtitle. 2. The commissioner may from time to time make, amend, and rescind such administrative regulations, forms, and orders, including regulations and forms governing applications, registration, reports, and loan disclosure statements and defining any terms, whether or not used in this subtitle, insofar as the definitions are not inconsistent with the provisions of this subtitle. 3. For the purpose of administrative regulations and forms, the commissioner may classify loans, persons, and matters within his or her jurisdiction and prescribe different requirements for different classes. 4. An administrative regulation, form, or order may not be made, amended, or rescinded unless the commissioner finds that the action is necessary or appropriate in the public interest and consistent with the purposes fairly intended by the policy and provisions of this subtitle. 5. In promulgating administrative regulations and forms, the commissioner may cooperate with other state and federal agencies with a view to achieving maximum uniformity in the form and content of applications, reports, and loan disclosure statements whenever practical; (b) To conduct such investigations as may be necessary to determine whether any person has engaged in or is about to engage in any act, practice, or course of conduct constituting a violation of any provision of this subtitle; (c) To conduct such examinations, investigations, and hearings, in addition to those specifically provided for by law, as may be necessary and proper for the efficient administration of this subtitle; and (d) 1. At the commissioner's discretion, to require filings and fees required under this subtitle to be electronically filed with: a. The State Regulatory Registry, LLC, or its successor organization; b. The State Regulatory Registry, LLC's parent, affiliate, or operating subsidiary; c. Other agencies or authorities that are part of the Nationwide Multistate Licensing System and Registry; or d. Other agencies or authorities consistent with the intent of KRS 286.8-285. 2. The commissioner may accept uniform mortgage examinations or other procedures designed to implement a uniform national mortgage regulatory system or facilitate common practices and procedures among the states. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 8, effective July 14, 2022. -- Amended 2010 Ky. Acts ch. 24, sec. 779, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 175, sec. 12, effective April 24, 2008. -- Amended 1986 Ky. Acts ch. 461, sec. 16, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 15, effective July 15, 1980. Formerly codified as KRS 294.140. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-150 Records filed with commissioner open to public inspection -- Exception

286.8-150. Records filed with commissioner open to public inspection -- Exception (1) (a) Except as otherwise provided by law, applications for registration or renewals and all papers, documents, reports, and other written instruments filed with the commissioner under this subtitle, or obtained pursuant to an examination by the department, shall be open to public inspection, except that the commissioner pursuant to the provisions of KRS Chapter 61 may classify as confidential or withhold from public inspection, for such time as he or she considers necessary, any information which, in his or her judgment, the public welfare or the welfare of any licensee or registrant or its customers requires to be so withheld. (b) All investigations and information contained therein shall not be public until such time as the commissioner makes all or part of the investigation public or the investigation is closed. (2) The commissioner may classify as confidential certain records and information obtained by the department when such matters are obtained from the Nationwide Multistate Licensing System and Registry or from a governmental agency. (3) The commissioner may classify as confidential and prohibit the disclosure of any request for documents or records submitted pursuant to KRS 286.8-180, for such time as deemed necessary if, in the commissioner's judgment, the disclosure of said request for documents or records may: (a) Impede or interfere with an ongoing investigation conducted pursuant to KRS 286.8-140; or (b) Cause the destruction or secretion of documents by the targeted party. (4) Notwithstanding any provision to the contrary in this subtitle or in KRS Chapter 61, any information, documents, or material provided to or obtained from the Nationwide Multistate Licensing System and Registry shall be subject to the confidentiality requirements set forth in Section 1512 of the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. sec. 5111, and amendments thereto. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 9, effective July 14, 2022. -- Amended 2010 Ky. Acts ch. 24, sec. 780, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 11, effective June 25, 2009. -- Created 1980 Ky. Acts ch. 365, sec. 16, effective July 15, 1980. Formerly codified as KRS 294.150. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-160 Records to be kept by company -- Filing of financial report and correcting amendment -- Requirements if business discontinued -- Location of records -- Request for destruction of records

286.8-160. Records to be kept by company -- Filing of financial report and correcting amendment -- Requirements if business discontinued -- Location of records -- Request for destruction of records (1) Every mortgage loan company and mortgage loan broker shall make and keep such accounts, correspondence, memoranda, papers, books, data, and other records used in the mortgage lending process: (a) As the commissioner prescribes; or (b) That are required by federal law. (2) (a) Except as provided in paragraph (b) of this subsection, the records governed under this subtitle shall be preserved for such time as the commissioner may by regulation or order require, not to exceed a period of five (5) years after a mortgage loan application is completed, whether approved or rejected, or on mortgage loans paid in full, whichever is longer. (b) Records shall be held for longer than five (5) years where federal law prescribes or supersedes this section. (3) Records required to be preserved under this subtitle: (a) May be kept in an electronic retrievable format, or other similar form of medium, that is readily accessible to examination, investigation, and inspection by the commissioner; and (b) Shall not be maintained at any alternate work location. (4) Every mortgage loan company and mortgage loan broker shall file financial reports as the commissioner prescribes. (5) If the information contained in any document filed with the commissioner is or becomes inaccurate or incomplete in any material respect, the person who filed the document shall promptly file a correcting amendment. (6) Any person who ceases operating as a mortgage loan company or mortgage loan broker under the provisions of this subtitle shall, prior to the discontinuance of business in the residential mortgage lending process, notify the commissioner of the physical location where the records required to be kept under this subtitle will be preserved. The records shall be made accessible to the commissioner upon five (5) business days' written notice. (7) (a) Any person who ceases operating as a mortgage loan company or mortgage loan broker under the provisions of this subtitle shall designate a custodian of records and notify the commissioner of the name, physical address, electronic mail address, and telephone number of the custodian of records. (b) The custodian of records shall preserve all records required under this subtitle and allow the commissioner access to the records for examination and investigation upon demand. (8) Records may be maintained by a mortgage loan company or mortgage loan broker at a location other than within this Commonwealth, so long as they are made accessible to the commissioner upon five (5) business days' written notice. (9) The commissioner may approve a written request for the destruction of records required to be preserved under this subtitle prior to the minimum retention period described in subsection (2) of this section. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 5, effective July 14, 2022. -- Amended 2010 Ky. Acts ch. 24, sec. 781, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 175, sec. 13, effective April 24, 2008. -- Amended 1998 Ky. Acts ch. 197, sec. 13, effective July 15, 1998. -- Amended 1986 Ky. Acts ch. 461, sec. 17, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 17, effective July 15, 1980. Formerly codified as KRS 294.160. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286.

KRS 286.8-170 Places where records required to be kept -- Examination by commissioner -- Fee -- Access to records -- Reports

286.8-170. Places where records required to be kept -- Examination by commissioner -- Fee -- Access to records -- Reports (1) As used in this section, "control records" means all records relating to the operation of a branch that are necessary to exercise control and supervision over the branch. (2) (a) Every mortgage loan company and mortgage loan broker shall keep at its principal office correct and complete records of its business transactions, books of accounts, and minutes of proceedings of its directors, principals, or partners. (b) Complete records of all business transactions at the principal office shall be maintained at the principal office. (c) Each branch shall: 1. Keep detailed records of all transactions at the branch; and 2. Furnish full control records to the principal office. (d) 1. Any record of a mortgage loan company's or mortgage loan broker's business transactions, book of accounts, or minutes of proceedings of its directors, principals, or partners generated prior to the company's or broker's previous examination may be stored at a third-party secure storage facility. 2. The mortgage loan company or mortgage loan broker, as applicable, shall: a. Notify the commissioner, in writing, thirty (30) days prior to engaging with any third-party secure storage facility; and b. Receive approval from the commissioner for use of the third-party secure storage facility. (3) No mortgage loan company or mortgage loan broker by any system of accounting or any device of bookkeeping shall, either directly or indirectly, enter any of its assets upon its books in the name of any person, partnership, association, or corporation or under any title, designation, or value that is not thoroughly descriptive of any assets. (4) The affairs of every mortgage loan company, mortgage loan broker, and mortgage loan originator, and the records required to be maintained by KRS 286.8-160, shall be subject at any time or from time to time to such periodic, special, or other examinations by the commissioner or an examiner of the commissioner within or without this state and with or without notice to the person being examined, as the commissioner deems necessary or appropriate in the public interest. All records of the person being examined shall be subject to the commissioner's inspection. (5) The examiner shall: (a) Make a thorough examination into the condition, workings, and affairs of the person being examined; and (b) Report, as he or she may find, to the commissioner any: 1. Violation of law; 2. Unauthorized unsafe practices; or 3. Failure to keep and have correct any required books and records. (6) For the purpose of avoiding unnecessary duplication of examinations, the commissioner, insofar as he or she deems it practicable in administering this section, may: (a) Cooperate and exchange information with: 1. Any agency of the state or federal government; 2. Other states; 3. The Nationwide Multistate Licensing System and Registry; or 4. The federal National Mortgage Association, Government National Mortgage Association, and Federal Home Loan Mortgage Corporation; and (b) Accept examinations from the entities described in paragraph (a) of this subsection, in whole or in part, in lieu of an examination by the commissioner. (7) The commissioner or the commissioner's examiners or designated representative shall have access to all records of a mortgage loan company, mortgage loan broker, and mortgage loan originator which relate to their business, and records kept by any officers, agents, or employees, relating to or upon which any record of its business is kept. (8) (a) A mortgage loan originator shall make available and grant access to the commissioner, or an examiner of the commissioner, the records relating to its operations. (b) A mortgage loan company or mortgage loan broker shall make available and grant access to all records of its current and former employees and contractors relating to its operations. (9) Any person subject to this subtitle shall make or compile reports or prepare other information as directed by the commissioner or an examiner of the commissioner to include: (a) Accounting compilations; (b) Information lists and data concerning loan transactions in a format prescribed by the commissioner or an examiner of the commissioner; and (c) Such other information deemed necessary to carry out the purposes of this section. (10) No mortgage loan company, mortgage loan broker, or mortgage loan originator shall impede the commissioner or an examiner of the commissioner from interviewing its officers, principals, members, employees, independent contractors, agents, or customers. (11) (a) In making any examination or investigation authorized by this subtitle, the commissioner may control access to any documents and records of the licensee or person under examination or investigation. (b) The commissioner may take possession of the documents and records, or place a person in exclusive charge of the documents and records in the place where they are usually kept. (c) During the period of control under this subsection, no individual or person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. (d) Unless the commissioner has reasonable grounds to believe the documents or records of the licensee have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of this subtitle, the licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs. (12) No person subject to investigation or examination under this subtitle shall knowingly withhold, abstract, alter, remove, mutilate, destroy, or secrete any books, records, or other information. (13) In order to carry out the purposes of this subtitle, the commissioner may: (a) Retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations; (b) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained under this subtitle; and (c) Use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine or investigate the persons subject to this subtitle. (14) The authority of this section shall remain in effect whether a person acts, or claims to act, under any licensing or registration law of this subtitle, or acts, or claims to act, without such authority. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 6, effective July 14, 2022. -- Amended 2016 Ky. Acts ch. 129, sec. 6, effective July 15, 2016. -- Amended 2010 Ky. Acts ch. 24, sec. 782, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 12, effective June 25, 2009. -- Amended 1998 Ky. Acts ch. 197, sec. 14, effective July 15, 1998. -- Amended 1986 Ky. Acts ch. 461, sec. 18, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 18, effective July 15, 1980. Formerly codified as KRS 294.170. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-175 Confidentiality of examination reports and information -- Exceptions -- Prima facie evidence

286.8-175. Confidentiality of examination reports and information -- Exceptions -- Prima facie evidence (1) Reports of examination, and correspondence that relates to the report of examination, of a mortgage loan company or mortgage loan broker shall be considered confidential information. No officer or director of a mortgage loan company or mortgage loan broker, employee of the department, or employee of a state or federal regulatory authority shall release any information contained in the examination, except when: (a) Required in a proper legal proceeding in which a subpoena and protective order insuring confidentiality has been issued by a court of competent jurisdiction; or (b) The information is referred to an appropriate prosecuting attorney for possible criminal proceedings. (2) The department may furnish to and exchange information and reports with officials and examiners of other properly authorized state or federal regulatory authorities. (3) Every official report concerning a mortgage loan company or mortgage loan broker, and every report of examination, shall be prima facie evidence of the facts therein stated for all purposes in any action in which the department, mortgage loan company, or mortgage loan broker is a party. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 783, effective July 15, 2010. -- Created 1998 Ky. Acts ch. 197, sec. 16, effective July 15, 1998. Formerly codified as KRS 294.175. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286.

KRS 286.8-180 Conduct of examination -- Cost of investigation or hearing

286.8-180. Conduct of examination -- Cost of investigation or hearing (1) In the conduct of any examination, investigation, or hearing, the commissioner or an officer designated by the commissioner may compel the attendance of any person or obtain any documents by subpoenas; administer oaths or affirmations in the examination of the directors, officers, agents, employees of any mortgage loan company, or mortgage loan broker or any other person concerning the business and conduct of affairs or any person subject to the provisions of this subtitle, and in connection therewith may require and compel the production of any books, records, papers, or other documents relevant to the inquiry. (2) In the contumacy by, or refusal to obey a subpoena issued to, any person, Franklin Circuit Court, upon application by the commissioner, may issue to the person an order requiring him or her to appear before the commissioner, or the officer designated by the commissioner, there to produce documentary evidence if so ordered or to give evidence touching the matter under investigation or in question. Failure to obey the order of the court may be punished by the court as a contempt of court. (3) The cost of any investigation or hearing conducted under KRS 286.8-190 may be assessed to and collected from the mortgage loan company or mortgage loan broker in question by the commissioner. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 784, effective July 15, 2010. -- Amended 1992 Ky. Acts ch. 77, sec. 10, effective July 14, 1992. -- Created 1980 Ky. Acts ch. 365, sec. 19, effective July 15, 1980. Formerly codified as KRS 294.180. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-190 Grounds for investigation -- Action commissioner may take after investigation

286.8-190. Grounds for investigation -- Action commissioner may take after investigation (1) The commissioner may investigate either upon complaint or otherwise when it appears that any person is conducting business in an unsafe and injurious manner or otherwise is in violation of this subtitle, or any rule or order hereunder, or when it appears that any person is engaging in the mortgage loan business without being licensed or registered, or legally exempted from licensing or registration, under the provisions of this subtitle. (2) If it appears to the commissioner upon sufficient grounds or evidence satisfactory to the commissioner that any person has engaged in or is about to engage in any practice in violation of this subtitle or any rule or order hereunder, or that person's mortgage loan business affairs are in an unsafe condition, the commissioner may: (a) Order the person to cease and desist from the acts or practices by a formal written order delivered to the person stating any alleged violation. The order shall specify the effective date thereof, and notice of entry shall be served personally or sent by certified mail to the last known address of the person affected. The person, upon written application, shall be entitled to a hearing; but if a written application for a hearing is not timely received by the commissioner within twenty (20) days after the certified mailing or personal delivery of the order, it shall be made final and shall remain in effect until withdrawn by the commissioner or terminated by a court order; and (b) Apply directly to Franklin Circuit Court, or any court of competent jurisdiction, to enjoin any acts or practices in violation of this subtitle and to enforce compliance with this subtitle or any rule or order hereunder. Upon proper showing, a permanent or temporary injunction, restraining order, or writ of mandamus shall be granted and a receiver or conservator may be appointed for the defendant or the defendant's assets. The commissioner shall not be required to post a bond. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 785, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 13, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 14, effective April 24, 2008. -- Amended 1992 Ky. Acts ch. 77, sec. 11, effective July 14, 1992. -- Created 1980 Ky. Acts ch. 365, sec. 20, effective July 15, 1980. Formerly codified as KRS 294.190. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-210 Judicial review

286.8-210. Judicial review Any person aggrieved by final order of the commissioner may obtain a review of the order in Franklin Circuit Court, by filing in court, within sixty (60) days after the entry of the order, a written petition praying that the order be modified or set aside in whole or in part. A copy of the petition shall be forthwith served upon the commissioner, and thereupon the commissioner shall certify and file in court a copy of the filing, testimony, and other evidence upon which the order was entered. When these have been filed, the court has exclusive jurisdiction to affirm, modify, enforce or set aside the order in whole or in part. No objection to the order may be considered by the court unless it was urged before the commissioner or there were reasonable grounds for failure to do so. The findings of the commissioner as to the facts, if supported by substantial evidence, are conclusive. If either party applies to the court for leave to adduce additional evidence, and shows to the satisfaction of the court that the additional evidence is material and that there were reasonable grounds for failure to adduce the evidence in the hearing before the commissioner the court may order the additional evidence to be taken before the commissioner and to be adduced upon the hearing in such manner and upon such conditions as the court may consider proper. The commissioner may modify his or her findings as to the facts, by reason of additional evidence so taken, and the commissioner shall file any modified or new findings, which if supported by substantial evidence shall be conclusive. The commencement of proceedings under this section does not, unless specifically ordered by the court, operate as a stay of the commissioner's order. An appeal may be taken from the judgment of the Franklin Circuit Court upon any such appeal to the court of appeals on the same terms and conditions as an appeal is taken in civil actions. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 786, effective July 15, 2010. -- Created 1980 Ky. Acts ch. 365, sec. 22, effective July 15, 1980. Formerly codified as KRS 294.210. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286.

KRS 286.8-220 Prohibited acts

286.8-220. Prohibited acts (1) No person shall make or cause to be made, in any document filed with the commissioner, a governmental agency, the Nationwide Multistate Licensing System and Registry, or in any proceeding under this subtitle, any statement that is, at the time and in light of the circumstances under which it is made, false or misleading in any material respect, including an omission of a material fact. (2) No person shall, in connection with a transaction involving the mortgage lending process, or in connection with the operation of a mortgage loan business or the management or servicing of mortgage loans, directly or indirectly: (a) Employ a device, scheme, or artifice to defraud; (b) Engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person; (c) Fail to disburse funds in accordance with a loan commitment; (d) Delay closing of any mortgage loan for the purpose of increasing interest, costs, fees, or charges payable by the borrower; (e) Upon receipt of a customer's written request, delay beyond five (5) business days the issuance of a written loan payoff amount or to delay beyond ten (10) business days the issuance of a payment history; (f) Charge a fee for the issuance of an initial written loan payoff amount or payment history for each calendar quarter as set out in paragraph (e) of this subsection; (g) Obtain property by fraud or misrepresentation; (h) Fail to make disclosures as required by this subtitle or any other applicable state or federal law, including regulations thereunder; or (i) Fail to comply with state or federal laws, including the rules and regulations thereunder, that are applicable to transacting business in Kentucky. (3) Unless exempted by KRS 286.8-020(1), no person shall transact business in Kentucky unless it complies with the provisions of this subtitle. (4) No person shall use prescreened trigger lead information derived from a consumer report to solicit a consumer who has applied for a mortgage loan with another mortgage loan company or mortgage loan broker, when the person: (a) Fails to state in the initial solicitation that the person is not affiliated with the mortgage loan company or mortgage loan broker with which the consumer initially applied; (b) Fails in the initial solicitation to conform to state and federal law relating to prescreened solicitations using consumer reports, including the requirement to make a firm offer of credit to the consumer; (c) Uses information regarding consumers who have opted out of the prescreened offers of credit or who have placed their contact information on the state or federal do-not-call registry; or (d) Solicits a consumer with an offer of certain rates, terms, and costs with the knowledge that the rates, terms, or costs will be subsequently changed to the detriment of the consumer. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 10, effective July 14, 2022. -- Amended 2010 Ky. Acts ch. 24, sec. 787, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 14, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 15, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 6, effective July 12, 2006. -- Amended 2001 Ky. Acts ch. 98, sec. 3, effective June 21, 2001. -- Amended 1998 Ky. Acts ch. 197, sec. 15, effective July 15, 1998. -- Amended 1994 Ky. Acts ch. 377, sec. 3, effective July 15, 1994. -- Amended 1986 Ky. Acts ch. 461, sec. 19, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 23, effective July 15, 1980. Formerly codified as KRS 294.220. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286. In addition, KRS references have been adjusted to conform with the renumbering. Legislative Research Commission Note. As of January 1, 1989, KRS ch. 271A. becomes KRS ch. 271B. Therefore, the reference in subdivision (3)(a) of this section to KRS ch. 271A has been changed to KRS ch. 271B.

KRS 286.8-225 Mortgage fraud prosecution fund -- Funding -- Expenditures

286.8-225. Mortgage fraud prosecution fund -- Funding -- Expenditures There is hereby created in the State Treasury a trust and revolving fund designated as the "mortgage fraud prosecution fund." All civil penalties or contributions directed by the commissioner to be transmitted to the mortgage fraud prosecution fund shall be deposited into the fund. Expenditures from the fund may be used for the investigation and criminal prosecution of fraudulent activities within the residential mortgage lending process, training related to prevention, detection, and investigation of mortgage fraud, and consumer education related to mortgage fraud. Only the commissioner of the Department of Financial Institutions or the commissioner's designee may authorize expenditures from the account. The money deposited in the fund is hereby appropriated for the uses set forth in this section. Notwithstanding KRS 45.229, any money remaining in the fund at the close of any fiscal year shall not lapse but shall be carried forward to the next fiscal year. The fund may also receive additional state appropriations, gifts, grants, contributions, and federal funds. All interest earned on money in the fund shall be credited to the fund. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 788, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 15, effective June 25, 2009. -- Created 2008 Ky. Acts ch. 175, sec. 22, effective April 24, 2008.

KRS 286.8-227 Collection of civil penalties to be deposited in mortgage fraud prosecution fund -- Distribution -- Administrative regulations

286.8-227. Collection of civil penalties to be deposited in mortgage fraud prosecution fund -- Distribution -- Administrative regulations The commissioner is authorized through the collection of civil penalties or contributions to retain the funds collected for the purpose of depositing the funds into the mortgage fraud prosecution fund created in KRS 286.8-225. The funds shall be transmitted monthly to the State Treasurer, who shall deposit the funds into the mortgage fraud prosecution fund created in KRS 286.8-225. The commissioner of the Department of Financial Institutions is responsible for the distribution of the funds in the mortgage fraud prosecution fund and shall, in consultation with the Attorney General and local prosecutors, develop administrative regulations for the use of these funds. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 789, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 16, effective June 25, 2009. -- Created 2008 Ky. Acts ch. 175, sec. 23, effective April 24, 2008. Legislative Research Commission Note (6/25/2009). Under the authority of KRS 7.136(1)(h), manifest clerical or typographical errors occurring in 2009 Ky. Acts ch. 104, sec. 16, have been corrected during codification. The "fund" referenced in Section 16 should be the "mortgage fraud prosecution fund" as established in 2009 Ky. Acts ch. 104, sec. 15. and the word "lending" has been deleted in 2009 Ky. Acts ch. 104, sec. 16, to reflect the correct name of the fund. Legislative Research Commission Note (4/24/2008). A manifest clerical or typographical error in the first sentence of this statute has been corrected in codification by the Reviser of Statutes under the authority of KRS 7.136(1)(h).

KRS 286.8-240 Short title

286.8-240. Short title KRS 286.8-010 to 286.8-285 shall be known and may be cited as the "Mortgage Licensing and Regulation Act." Effective: June 25, 2009 History: Amended 2009 Ky. Acts ch. 104, sec. 17, effective June 25, 2009. -- Amended 1986 Ky. Acts ch. 461, sec. 20, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 365, sec. 1, effective July 15, 1980. Formerly codified as KRS 294.240. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.

KRS 286.8-250 Mortgage loan brokers to maintain physical location

286.8-250. Mortgage loan brokers to maintain physical location Each mortgage loan broker licensed under this subtitle shall maintain a physical location. Effective: July 15, 2016 History: Amended 2016 Ky. Acts ch. 129, sec. 7, effective July 15, 2016. -- Amended 2008 Ky. Acts ch. 175, sec. 16, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 13, effective July 12, 2006. -- Created 2003 Ky. Acts ch. 64, sec. 15, effective June 24, 2003. Formerly codified as KRS 294.250. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286. In addition, a KRS reference has been adjusted to conform with the renumbering.

KRS 286.8-255 Registration with department required for mortgage loan originator -- Renewals -- Continuing education requirement -- Background checks -- Originators subject to other laws -- Minimum standards for registration -- Mortgage loan processors not required to register -- Continuing education and standards for processors -- Renewal of originator registration -- Limitation of

286.8-255. Registration with department required for mortgage loan originator -- Renewals -- Continuing education requirement -- Background checks -- Originators subject to other laws -- Minimum standards for registration -- Mortgage loan processors not required to register -- Continuing education and standards for processors -- Renewal of originator registration -- Limitation of loan origination services. (1) (a) No natural person shall transact business in Kentucky, either directly or indirectly, as a mortgage loan originator unless such mortgage loan originator: 1. Is registered with the department; 2. Complies with all applicable requirements of this subtitle; and 3. Maintains a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry. (b) The department shall maintain a database of all mortgage loan originators originating mortgage loans on residential real property in Kentucky. (2) The application for registration shall: (a) Be on a form prescribed by the commissioner; (b) Be accompanied by a registration fee in the amount of fifty dollars ($50), which shall be used solely by the department to establish and maintain a database of all mortgage loan originators and any excess funds shall be retained by the department and shall not lapse to the general fund; and (c) Contain such information as the commissioner deems necessary to carry out the purposes of this subtitle. (3) (a) Applications for initial registrations of mortgage loan originators shall be accompanied by satisfactory evidence that the applicant has successfully completed twenty (20) hours of prelicensing education courses related directly to the mortgage lending process, as approved and designated by the commissioner. (b) For the purposes of paragraph (a) of this subsection: 1. The prelicensing education courses approved and designated by the commissioner shall: a. Meet the minimum requirements set forth in Section 1505(c) of the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. sec. 5104(c), and amendments thereto; and b. Be reviewed and approved by the Nationwide Multistate Licensing System and Registry; and 2. The commissioner may accept as credit towards the completion of the prelicensing education requirements in this state, the completion of prelicensing education requirements in any other state so long as the education has met the requirements set forth in this subsection. (4) (a) Applications for renewals of registration by registered mortgage loan originators shall be accompanied by satisfactory evidence that the individual has successfully met the continuing education requirements of KRS 286.8-260 and by payment of a renewal fee in the amount of fifty dollars ($50). (b) The renewal fee shall be used solely by the department to establish and maintain a database of all mortgage loan originators and any excess funds shall be retained by the department and shall not lapse to the general fund. (5) (a) A registration issued between January 1 and October 31 of the same calendar year shall expire on December 31 of the same calendar year. (b) A registration issued between November 1 and December 31 of the same calendar year shall expire on December 31 of the following calendar year. (c) Any registration that has expired may be reinstated by the commissioner upon payment of the annual renewal fee, and a reinstatement fee of two hundred fifty dollars ($250), within thirty (30) days of the expiration of the registration. (6) All mortgage loan originators subject to the registration requirements of this section shall also be subject to and comply with all applicable provisions of this subtitle. (7) (a) The commissioner shall require, as part of an application or renewal application filed under this subtitle, including but not limited to applications or renewals for mortgage loan originators, the submission of: 1. Background records checks, including but not limited to checks for state, federal, and international criminal histories, civil or administrative records, and any other information as deemed necessary to comply with the minimum requirements set forth in Section 1505 of the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. sec. 5104, and amendments thereto; and 2. An independent credit report obtained from a consumer reporting agency described in the Fair Credit Reporting Act, 15 U.S.C. sec. 1681a. (b) The cost of the background records checks and credit report shall be borne by the applicant. (8) No mortgage loan originator shall be granted or shall be entitled to maintain a registration unless he or she satisfies the following minimum standards for registration: (a) The applicant has never had a loan originator's license or registration revoked in any governmental jurisdiction, except revocations that have been formally vacated or set aside shall not be deemed a revocation for the purposes of this section; (b) The applicant has not been convicted of, pled guilty to, or pled nolo contendere to a felony in any domestic, foreign, or military court: 1. During the seven (7) year period preceding the date of the application for registration or renewal of registration; or 2. At any time preceding such date of application for registration or renewal of registration, if such felony involved an act of fraud or dishonesty, a breach of trust, or money laundering; (c) The applicant has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the loan originator will operate honestly, fairly, lawfully, and efficiently within the purposes of the subtitle; (d) The applicant has completed the prelicensing education requirement set forth in subsection (3) of this section; (e) The applicant has passed a qualified written test which satisfies the minimum requirements set forth in Section 1505(d) of the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. sec. 5104(d), and amendments thereto; and (f) The applicant holds or is covered by a surety bond which satisfies the minimum requirements set forth in KRS 286.8-060. (9) (a) A mortgage loan processor shall not be required to maintain a registration, but the processor's supervising mortgage loan company or mortgage loan broker shall be required to: 1. Provide the mortgage loan processor with the continuing education required under KRS 286.8-260; and 2. Prior to hiring an applicant as a processor, perform an employee background check in accordance with uniform standards established by the commissioner. (b) A mortgage loan company or mortgage loan broker shall provide proof of compliance with this subsection to the commissioner upon demand, demonstrating that: 1. The applicant has not been convicted of, pled guilty to, or pled nolo contendere to a felony in any domestic, foreign, or military court: a. During the seven (7) year period preceding the date of the application; or b. At any time preceding the date of application, if the felony involved an act of fraud or dishonesty, a breach of trust, or money laundering; and 2. The applicant has demonstrated financial responsibility, character, and general fitness sufficient to command the confidence of the community and to warrant a determination that the loan processor will operate honestly, fairly, lawfully, and efficiently within the purposes of this subtitle. (10) No mortgage loan originator shall be granted a registration renewal unless he or she satisfies the following minimum standards for renewal: (a) The applicant has met and continues to meet the minimum standards set forth in subsection (8) of this section; and (b) The applicant has satisfied the annual continuing education requirements set forth in KRS 286.8-260. (11) (a) The registration of any mortgage loan originator that fails to comply with the minimum standards for registration renewal set forth in this section shall expire and shall promptly be deemed surrendered to the commissioner without demand. (b) The commissioner may adopt procedures and requirements for the reinstatement of expired registrations consistent with the standards established by the Nationwide Multistate Licensing System and Registry. (12) Mortgage loan originators engaging in any of the activities set forth in KRS 286.8- 010(18)(a) shall provide loan origination services to not more than one (1) mortgage loan company or mortgage loan broker at a time. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 11, effective July 14, 2022. -- Amended 2016 Ky. Acts ch. 129, sec. 8, effective July 15, 2016. -- Amended 2010 Ky. Acts ch. 24, sec. 790, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 18, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 17, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 7, effective July 12, 2006. -- Created 2003 Ky. Acts ch. 64, sec. 6, effective June 24, 2003. Formerly codified as KRS 294.255. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286. In addition, KRS references have been adjusted to conform with the renumbering.

KRS 286.8-256 Certain mortgage loan processors not to claim ability to act as mortgage loan originators

286.8-256. Certain mortgage loan processors not to claim ability to act as mortgage loan originators A mortgage loan processor who is not registered or otherwise authorized to act as a mortgage loan originator shall not represent to the public or to individual consumers that he or she can, or is willing to, perform any of the activities of a mortgage loan originator. Effective: July 15, 2016 History: Created 2016 Ky. Acts ch. 129, sec. 5, effective July 15, 2016.

KRS 286.8-260 Continuing professional education required for persons registered under subtitle -- Termination and surrender of registration for failure to comply

286.8-260. Continuing professional education required for persons registered under subtitle -- Termination and surrender of registration for failure to comply (1) (a) Any person required to be registered under this subtitle shall complete at least eight (8) hours of continuing professional education on an annual basis that is approved and designated by the commissioner. (b) A minimum of one (1) hour of continuing professional education each year shall be instruction on the requirements of this subtitle, KRS 360.100, or a combination of both. (2) For the purposes of subsection (1) of this section: (a) The continuing professional education courses approved and designated by the commissioner shall: 1. Meet the minimum requirements set forth in Section 1505(b) of the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. sec. 5104(b), and amendments thereto; and 2. Unless the Nationwide Multistate Licensing System and Registry provides otherwise, be reviewed and approved by the Nationwide Multistate Licensing System and Registry; and (b) The commissioner may accept as credit towards the completion of the continuing professional education requirements in this state, the completion of continuing professional education requirements in any other state so long as the education has met the requirements set forth in this subsection and subsection (1) of this section. (3) (a) For good cause shown, the commissioner may grant an extension during which the continuing professional education requirements of this section may be completed, but the extension may not exceed thirty (30) days. (b) What constitutes good cause for the extension of time rests within the discretion of the commissioner. (4) The registration of any mortgage loan originator that fails to comply with the continuing professional education requirements of this section and who has not been granted an extension of time to comply in accordance with subsection (3) of this section shall: (a) Expire; and (b) Promptly be deemed surrendered to the commissioner without demand. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 12, effective July 14, 2022. -- Amended 2016 Ky. Acts ch. 129, sec. 9, effective July 15, 2016. -- Amended 2010 Ky. Acts ch. 24, sec. 791, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 19, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 175, sec. 18, effective April 24, 2008. -- Amended 2006 Ky. Acts ch. 218, sec. 8, effective July 12, 2006. -- Created 2003 Ky. Acts ch. 64, sec. 7, effective June 24, 2003. Formerly codified as KRS 294.260. Legislative Research Commission Note (7/12/2006). This section was amended in 2006 Ky. Acts ch. 218. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has changed the number of this section and codified it as a section of KRS Chapter 286. In addition a KRS reference has been adjusted to conform with the renumbering.

KRS 286.8-270 Duties of mortgage loan broker -- Advanced disclosure of fee required

286.8-270. Duties of mortgage loan broker -- Advanced disclosure of fee required (1) A mortgage loan broker shall comply with the following duties: (a) A mortgage loan broker shall exercise good faith and fair dealing, shall act in the best interest of the borrower, and shall not compromise a borrower's right or interest in favor of another's right or interest; (b) A mortgage loan broker shall disclose to borrowers all material facts of which the mortgage loan broker has knowledge that might reasonably affect the borrower's rights, interests, or ability to receive the borrower's intended benefit from the residential mortgage loan; and (c) A mortgage loan broker shall provide a written accounting to a borrower for all the borrower's money and property received by the broker. (2) Nothing in this section shall prohibit a mortgage loan broker from contracting for or collecting a fee for services rendered from the borrower or lender if the fee has been properly disclosed to the borrower in advance of providing of such services. Effective: April 24, 2008 History: Amended 2008 Ky. Acts ch. 175, sec. 19, effective April 24, 2008. -- Created 2003 Ky. Acts ch. 64, sec. 9, effective June 24, 2003. Formerly codified as KRS 294.270. Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286.

KRS 286.8-275 Reporting of violations of subtitle -- Duties of commissioner -- No waiver of privilege or claim of confidentiality

286.8-275. Reporting of violations of subtitle -- Duties of commissioner -- No waiver of privilege or claim of confidentiality (1) Any person having knowledge or believing that a violation of this subtitle or any other illegal act or practice is being or has been committed may provide the commissioner a report of information pertinent to his or her knowledge or belief and any additional relevant information the commissioner may request. (2) Documents, materials, or other information in the possession or control of the commissioner that is provided according to this section shall be confidential by law, privileged, and shall not be subject to the Kentucky Open Records Act, KRS 61.872 to 61.884. These documents, materials, or other information shall not be subject to subpoena, and shall not be subject to discovery or admissible as evidence in any civil action unless, after written notice to the commissioner and a hearing, a court of competent jurisdiction determines the commissioner would not be unduly prejudiced. (3) Neither the commissioner nor any person who received documents, materials, or other information while acting under the authority of the commissioner shall be permitted or required to testify in any civil action concerning any confidential documents, materials, or other information subject to subsection (2) of this section. (4) In order to assist in the performance of the commissioner's duties, the commissioner may: (a) Use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as part of the commissioner's official duties; (b) Share the documents, materials, or other information, including confidential and privileged documents, materials, or other information subject to subsections (2) and (3) of this section, with other state, federal, and international law enforcement authorities or the Conference of State Bank Supervisors or its affiliate if the recipient agrees to maintain the confidentiality and privileged status of the documents, materials, and other information; and (c) Enter into agreements governing the sharing and use of information including the furtherance of any regulatory or legal action brought as part of the recipient's official duties. (5) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in subsection (4) of this section. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 792, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 175, sec. 34, effective April 24, 2008. -- Created 2006 Ky. Acts ch. 218, sec. 9, effective July 12, 2006. Legislative Research Commission Note (7/12/2006). This section was created in 2006 Ky. Acts ch. 218 as a new section of KRS Chapter 294. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has codified this section as a new section of KRS Chapter 286.

KRS 286.8-280 Limitation of liability

286.8-280. Limitation of liability (1) In the absence of malice, fraud, or negligence, a person shall not be subject to civil liability for libel, slander, or any other relevant tort by virtue of filing reports or furnishing other information required by this subtitle or requested by the commissioner. (2) This section shall not abrogate or modify any common law or statutory privileges or immunity enjoyed by any person. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 793, effective July 15, 2010. -- Created 2006 Ky. Acts ch. 218, sec. 10, effective July 12, 2006. Legislative Research Commission Note (7/12/2006). This section was created in 2006 Ky. Acts ch. 218 as a new section of KRS Chapter 294. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has codified this section as a new section of KRS Chapter 286.

KRS 286.8-285 Participation in Nationwide Multistate Licensing System and Registry -- Duties -- Reporting

286.8-285. Participation in Nationwide Multistate Licensing System and Registry -- Duties -- Reporting (1) (a) In addition to other duties imposed upon the commissioner in this subtitle, the commissioner shall be authorized to: 1. Participate in the Nationwide Multistate Licensing System and Registry; and 2. Implement and comply with the minimum requirements set forth in the S.A.F.E. Mortgage Licensing Act, 12 U.S.C. sec. 5101 et seq., as amended. (b) For such purpose, the commissioner is authorized to waive or modify, in whole or in part, by regulation or by order, any or all of the requirements of this subtitle and to establish new requirements as reasonably necessary to carry out the purpose of this section. (c) The commissioner shall have authority to establish relationships or contracts with other governmental agencies, the Nationwide Multistate Licensing System and Registry, or entities affiliated with the system that are necessary to carry out the purpose of this section. (d) The commissioner may use the Nationwide Multistate Licensing System and Registry as an agent for receiving, requesting, and distributing information to and from any source so directed by the commissioner. (2) The commissioner shall establish a process whereby licensees may challenge information entered into the Nationwide Multistate Licensing System and Registry by the commissioner. (3) The commissioner shall annually request audited financial reports, including inquiring as to the budget and fees collected, both proposed and actual, from the Nationwide Multistate Licensing System and Registry. (4) The commissioner shall annually request any nonconfidential protocols or reports for the security and safeguarding of personal information maintained by the Nationwide Multistate Licensing System and Registry, including the following: (a) Inquiring as to whether the system has implemented and complied with the data security guidelines set forth in the Gramm-Leach-Bliley Act, 15 U.S.C. sec. 6801; (b) Inquiring as to the results of any nonconfidential periodic data protection audits that the system may conduct; and (c) Inquiring as to whether any security breaches have occurred resulting in the substantial likelihood that personal information may be misused or stolen. (5) The commissioner shall annually request from the Nationwide Multistate Licensing System and Registry the following statistical information, if available, relating to the examinations taken by applicants seeking registration as a loan originator in Kentucky during the preceding calendar year: (a) The total number of tested individuals, along with any relevant demographic information available such as race, ethnicity, or gender; (b) The total number of individuals who received a passing score on the examination, along with any relevant demographic information available such as race, ethnicity, or gender; (c) The total number of individuals who did not receive a passing score on the examination, along with any relevant demographic information available such as race, ethnicity, or gender; and (d) All mean, average, or scaled scoring data. (6) When requested by the General Assembly, the commissioner shall review and report to the General Assembly the content of any information received from the Nationwide Multistate Licensing System and Registry pursuant to subsection (3), (4), or (5) of this section. (7) Notwithstanding any provision to the contrary in this subtitle or in KRS Chapter 61, the commissioner shall regularly report violations of this subtitle, as well as enforcement actions and other relevant information, to the Nationwide Multistate Licensing System and Registry. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 13, effective July 14, 2022. -- Amended 2010 Ky. Acts ch. 24, sec. 794, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 104, sec. 20, effective June 25, 2009. -- Amended 2007 Ky. Acts ch. 85, sec. 291, effective June 26, 2007. -- Created 2006 Ky. Acts ch. 218, sec. 14, effective July 12, 2006. Legislative Research Commission Note (7/12/2006). This section was created in 2006 Ky. Acts ch. 218 as a new section of KRS Chapter 294. In that same session, 2006 Ky. Acts ch. 247, sec. 38, required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the "Kentucky Financial Services Code." Therefore, the Statute Reviser, acting under KRS 7.136(1), has codified this section as a new section of KRS Chapter 286. In addition, a KRS reference has been adjusted to conform with the renumbering. Legislative Research Commission Note (7/12/2006). By the authority of KRS 7.136(1) the Statute Reviser has further divided this section into subsections and paragraphs.

KRS 286.8-290 Certain mortgage loan originators exempt from specified requirements of subtitle -- Commissioner's access to records

286.8-290. Certain mortgage loan originators exempt from specified requirements of subtitle -- Commissioner's access to records (1) The following mortgage loan originators shall be subject to subsections (2) and (3) of this section, but shall be exempt from the registration and regulatory requirements of KRS 286.8-255: (a) An individual employed by the following institutions and acting on behalf of such institutions: 1. A depository institution; 2. A subsidiary that is: a. Owned and controlled by a depository institution; and b. Regulated by the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration, or the Federal Deposit Insurance Corporation; or 3. An institution regulated by the Farm Credit Administration; (b) A licensed attorney who negotiates the terms of a mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a mortgage loan company, mortgage loan broker, or other mortgage loan originator, or by an agent of such company, broker, or other originator; (c) A natural person who originates a mortgage loan on behalf of an immediate family member of the natural person unless the natural person is compensated in connection with that transaction by a mortgage loan company, mortgage loan broker, or other mortgage loan originator, or by an agent of such company, broker, or other originator; (d) A natural person who originates a mortgage loan secured by a dwelling that served as the natural person's residence unless the natural person is compensated in connection with that transaction by a mortgage loan company, mortgage loan broker, or other mortgage loan originator, or by an agent of such company, broker, or other originator; (e) Any natural person, including all entities owned in whole or part by that natural person, that make no more than four (4) loans each calendar year; and (f) A person who originates a mortgage loan secured by a dwelling; and 1. Who is exempted by an order of the commissioner; and 2. Whose exemption would not be contrary to the registration requirements of the S.A.F.E. Mortgage Licensing Act, Pub. L. No. 110-289, and amendments thereto. (2) Notwithstanding any provisions to the contrary set forth in this subtitle, no mortgage loan originator shall impede the commissioner or an examiner of the commissioner from interviewing any person regarding any potential violations of this subtitle. (3) Notwithstanding any provisions to the contrary set forth in this subtitle, every mortgage loan originator shall make available and grant access to the commissioner or an examiner of the commissioner the records in the originator's or processor's possession or control that are subject to the provisions of this subtitle. Effective: July 15, 2016 History: Amended 2016 Ky. Acts ch. 129, sec. 10, effective July 15, 2016. -- Amended 2012 Ky. Acts ch. 95, sec. 3, effective July 12, 2012. -- Amended 2011 Ky. Acts ch. 71, sec. 1, effective June 8, 2011. -- Amended 2010 Ky. Acts ch. 24, sec. 795, effective July 15, 2010. -- Created 2009 Ky. Acts ch. 104, sec. 3, effective June 25, 2009.

KRS 286.8-295 Mortgage loan company and mortgage loan broker to exercise control over operations, employees, and company affairs -- Requirements for alternate work location

286.8-295. Mortgage loan company and mortgage loan broker to exercise control over operations, employees, and company affairs -- Requirements for alternate work location (1) As used in this section, "employee" shall include a mortgage loan originator engaged as an independent contractor. (2) (a) Every mortgage loan company and mortgage loan broker shall exercise proper supervision and control over the operations, employees, and affairs of its company. (b) A mortgage loan company or mortgage loan broker shall supervise and control all employees acting as a mortgage loan originator on behalf of the mortgage loan company or mortgage loan broker. (3) A licensee that allows employees to engage in the mortgage lending process from an alternate work location shall: (a) Exercise proper supervision and control over the employees; (b) Have written policies and procedures in place that ensure a safe, secure system for the mortgage lending process; (c) Oversee compliance, and require all employees to comply, with the policies and procedures referenced in paragraph (b) of this subsection; (d) Employ appropriate risk-based monitoring and oversight processes; (e) Ensure that: 1. Customer interactions and communications about consumer accounts are in compliance with federal and state information security requirements, including applicable provisions of: a. The Gramm-Leach-Bliley Act of 1999, Pub. L. No. 106-102, as amended; and b. The Federal Trade Commission's Safeguards Rule, set forth in 16 C.F.R. pt. 314; 2. Any employee that engages in the mortgage lending process at an alternate work location accesses the company's secure systems, including a cloud-based system, directly from any out-of-office device via a virtual private network (VPN) or a comparable system that ensures secure connectivity and requires passwords or other forms of authentication to access; 3. Appropriate security updates, patches, or other alterations to the security of all devices used at an alternate work location are installed and maintained; 4. Any employee that engages in the mortgage lending process at an alternate work location agrees to comply with the licensee's processes established under paragraph (d) of this subsection; and 5. The Nationwide Multistate Licensing System and Registry record of a mortgage loan originator that works from an alternate work location designates a properly licensed location as the mortgage loan originator's official work station; (f) Have the ability to: 1. Remotely lock or erase company-related contents of any device; or 2. Otherwise remotely limit all access to the company's secure systems; and (g) At least annually: 1. Certify that all employees engaged in the mortgage lending process at alternate work locations meet the appropriate standards and safeguards to continue engaging in the mortgage lending process from the alternate work locations; and 2. Review each alternate work location and provide proof of the documented review to the department upon request. (4) Notwithstanding any provision to the contrary, nothing in this section shall prohibit mortgage loan companies from utilizing the services of a mortgage loan broker and its employees. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 125, sec. 4, effective July 14, 2022. -- Created 2009 Ky. Acts ch. 104, sec. 21, effective June 25, 2009.

KRS 286.8-300 Severability of subtitle's provisions

286.8-300. Severability of subtitle's provisions If any provision of this subtitle or its application to any person or circumstance is held invalid, the remainder of the subtitle and the application of the provision to other persons or circumstances shall not be affected. Effective: June 25, 2009 History: Created 2009 Ky. Acts ch. 104, sec. 22, effective June 25, 2009.

KRS 286.8-990 Kentucky Residential Mortgage Fraud Act -- Provisions -- Criminal proceedings -- Penalties

286.8-990. Kentucky Residential Mortgage Fraud Act -- Provisions -- Criminal proceedings -- Penalties (1) This section shall be known and cited as the "Kentucky Residential Mortgage Fraud Act." (2) A person is guilty of residential mortgage fraud when, with the intent to defraud, that person does any of the following in connection with the mortgage lending process: (a) Employs a device, scheme, or artifice to defraud; (b) Engages in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person; (c) Fails to disburse funds in accordance with a loan commitment; (d) Knowingly makes or attempts to make any material misstatement, misrepresentation, or omission within the mortgage lending process with the intention that a mortgage lender, mortgage broker, borrower, or any other person or entity involved in the mortgage lending process relies on it; (e) Knowingly uses or facilitates or attempts to use any misstatement, misrepresentation, or omission within the mortgage lending process with the intention that a mortgage lender, borrower, or any other person or entity involved in the mortgage lending process relies on it; (f) Receives or attempts to receive proceeds or any other funds in connection with a residential mortgage closing that the person knew, or should have known, resulted from a violation of paragraph (a), (b), (c), (d), or (e) of this subsection; (g) Knowingly causes to be filed with the commissioner or in any proceeding under this subtitle any document that is, at the time and in the light of the circumstances under which it is made, false or misleading in any material respect; or (h) Conspires or solicits another to violate any of the provisions of this subsection. (3) It shall be sufficient in any prosecution under this section for residential mortgage fraud to show that the party accused acted with the intent to deceive or defraud. It shall be unnecessary to show that any particular person or entity was harmed financially in the transaction or that the person or entity to whom the deliberate misstatement, misrepresentation, or omission was made relied upon the misstatement, misrepresentation, or omission. (4) In any criminal proceeding brought under this section, the crime shall be construed to have been committed: (a) In the county in which the residential real property for which a mortgage loan is being sought is located; (b) In any county in which any act was performed in furtherance of the violation; (c) In any county in which any person alleged to have violated this section had control or possession of any proceeds of the violation; (d) If a closing occurred, in any county in which the closing occurred; or (e) In any county in which a document containing a deliberate misstatement, misrepresentation, or omission is filed with the official registrar of deeds or with the Division of Motor Vehicles. (5) Upon referral by the commissioner, the Kentucky Real Estate Commission, the Attorney General, the Kentucky Board of Appraisers, or other parties; or upon its own investigation of available evidence concerning any violation of this subtitle; the proper Commonwealth's attorney or district attorney may institute the appropriate criminal proceedings under this section. (6) Unless the conduct is prohibited by some other provision of law providing for greater punishment, a violation of this section involving a mortgage loan is a Class D felony for the first or second offense and a Class C felony for each subsequent offense. (7) (a) All real and personal property of every kind used or intended for use in the course of, derived from, or realized through a violation of this section shall be subject to forfeiture to the Commonwealth. However, the forfeiture of any real or personal property shall be subordinate to any security interest in the property taken by a lender in good faith as collateral for the extension of credit and recorded as provided by law, and no real or personal property shall be forfeited under this section against an owner who made a bona fide purchase of the property without knowledge of a violation of this section. (b) In addition to the provisions of paragraph (a) of this subsection, courts may order restitution to any person who has suffered a financial loss due to violation of this section. (8) In the absence of fraud, bad faith, or malice, a person shall not be subject to an action for civil liability for filing reports or furnishing other information regarding suspected residential mortgage fraud to a regulatory or law enforcement agency. (9) Nothing in this subtitle shall limit the powers of the state to punish any person for any conduct that constitutes a crime. (10) The court may assess a fine of not less than one thousand dollars ($1,000) nor more than five thousand dollars ($5,000,) against any person who is convicted of violating any provision of this section. (11) Any person who knowingly engages in the business of residential mortgage lending regulated by this subtitle without first securing a license or registration therefore shall be guilty of a Class A misdemeanor. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 796, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 175, sec. 20, effective April 24, 2008. -- Amended 1998 Ky. Acts ch. 197, sec. 17, effective July 15, 1998. -- Amended 1994 Ky. Acts ch. 377, sec. 5, effective July 15, 1994. – Amended 1992 Ky. Acts ch. 77, sec. 13, effective July 14, 1992. -- Created 1980 Ky. Acts ch. 365, sec. 24, effective July 15, 1980. Formerly codified as KRS 294.990 Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS references within this statute have been adjusted to conform with the 2006 renumbering of that code.
Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=38641Fetched: 10/20/2026

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