12 Jan Kentucky and Oregon Regulatory Update
The Kentucky Department of Financial Institutions (“DFI”) recently issued a memorandum dated December 22, 2016 regarding licensing requirements for servicers. The Oregon Department of Consumer and Business Services (“Department”) recently amended its rules regarding pre-licensing education for mortgage loan originator licensing, effective January 1, 2017.
Kentucky DFI Memorandum
The DFI will require both “master servicers” and “sub-servicers” who are not otherwise exempt to obtain licensure as a mortgage loan company if the loans being serviced are secured by residential real property located in Kentucky.
A master servicer is any entity or individual that owns the right to perform servicing of a mortgage loan. A master servicer typically reserves the legal right to either perform the servicing itself or to do so through a sub-servicer.
A sub-servicer does not own the right to perform servicing, but performs servicing on behalf of a master servicer, generally premised upon duties enumerated in a contract between the sub-servicer and master servicer.
Having considered the applicable law, the DFI is of the opinion that a master servicer is a mortgage loan company because it both holds itself out as being able to service loans and it indirectly services loans through a sub-servicer. A sub-servicer is also a mortgage loan company because it actually performs the servicing of the loan
Master servicers and sub-servicers with loans secured by residential real property located in Kentucky must be licensed by March 1, 2017 unless they can document, in writing, that they are specifically exempt from license pursuant to Kentucky law.
Oregon Rules 441-880-0310
An applicant for a mortgage loan originator license must complete a minimum of 20 hours of pre-licensing education courses approved by the Nationwide Multistate Licensing System and Registry (“NMLS”) before submitting an application to obtain a mortgage loan originator’s license.
Such pre-licensing education will expire if three years pass without receiving licensure or registration as a mortgage loan originator in any jurisdiction, or if licensure or registration is surrendered, not renewed, allowed to lapse or through other actions or inaction which results in an applicant lacking a valid license or registration in any jurisdiction for three years or longer.
If pre-licensing education expires, an applicant must retake the pre-licensing education course prior to submitting an application for a mortgage loan originator license.