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) 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;
(e) The Federal National Mortgage Association (FNMA), the Federal Home Loan
Mortgage Corporation (FHLMC), and the Government National Mortgage
Association (GNMA);
(f) Any mortgage loan company or mortgage loan broker making or brokering a
mortgage loan involving housing initially transferred by certificate of title
under KRS Chapter 186A;
(g) A consumer loan or finance company or an industrial loan company licensed
under Subtitle 4 or 7 of this chapter whose primary business is originating
consumer or industrial loans as provided under Subtitle 4 or 7 of this chapter
or any wholly owned subsidiary of such a consumer loan or finance company
or an industrial 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
(h)
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)(h) 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 Department of Housing and Urban Development shall
notify the commissioner, in writing, within ten (10) days after it ceases to be
regulated by the United States Department of Housing and Urban Development.
(6) Any person listed in subsection (1)(a), (b), (c), (d), (e), (f), or (g) 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(6), 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 Mortgage Licensing System and Registry an annual report of condition,
which shall be in such form and contain such information as the Nationwide
Mortgage Licensing System and Registry may require, along with any other
information which may be required by the commissioner.
Effective: July 15, 2010
History: 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, effective 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 July 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.
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