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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 Association (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
certificate of title under KRS Chapter 186A;
(h) A consumer loan or finance company or an industrial loan company
licensed under Subtitle 4 or 7 of this chapter whose primary business is
(2)
(3)
(4)
(5)
(6)
(7)
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
(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.
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.
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.
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.
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.
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.
(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 12, 2012
History: 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,
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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