REVOKED 11-4-99
Memo MRM97-1
Date: September 16, 1997
Issue: What constitutes "holding out to the public as willing to engage in...five or more mortgage loans in a calendar year."
The Kansas statute which addresses this issue is K.S.A. 9-2201(b), which states:
"Mortgage business" means engaging in, or holding out to the public as willing to engage in, for compensation or gain, or in the expectation of compensation or gain, directly or indirectly, the business of making, originating, servicing, soliciting, placing, negotiating, acquiring, selling, or arranging for others, or offering to solicit, place, negotiate, acquire, sell or arrange for others, five or more mortgage loans in a calendar year.
For purposes of this memo, the term 'entity' includes any individual, sole proprietorship, partnership, corporation, association or any form of entity, however organized.
If an entity actually participates in any of the enumerated activities regarding five or more Kansas residential first mortgages in a calendar year, clearly the entity is "engaging" in mortgage business as defined by the statute. This entity must be registered.
Which practices constitute "holding out to the public as willing to engage" in the mortgage business is less clear. The following examples attempt to provide guidance on this issue.
First, an entity advertises in Kansas with the intent of earning income from entering into an agreement or accepting an application related to a first mortgage on Kansas residential property. However, for whatever reason, the entity has not participated in five loans on Kansas property. This activity requires registration with this office. The advertising activity in combination with the entity's willingness to accept a fee for participating in Kansas mortgage business indicates that the entity is "holding out to the public as willing to engage in...five or more mortgage loans in a calendar year."
Second, an entity advertises through a forum that may be accessible to Kansas residents, such as the Internet, newspaper, and television, but the entity categorically refuses any business related to Kansas property. This activity does not require registration with this office. In other words, even though the entity's advertising may reach Kansas residents, the entity's refusal, under any circumstances, to conduct business related to Kansas real estate negates any determination they are engaged in the mortgage business in Kansas.
