Memo MRM99-1
To: All Mortgage Business Registrants
RE: Kansas Mortgage Business Act Revisions
Date: April 16, 1999
The Kansas Mortgage Business Act, K.S.A. 9-2201 et seq. has been amended by 1999 Senate Bill 241. Changes in the law went into effect April 8, 1999. The following information summarizes these changes and their affect on individuals and companies currently registered with this office. This memo highlights the major changes in the law; therefore it is extremely important to review the statutes for additional requirements. In addition to Senate Bill 241, two administrative regulations were implemented as of April 9, 1999. A copy of the statutes and regulations are enclosed.
A. New Registration Requirements
New registration requirements affect both new and existing registrants. Certificates will no longer be renewed annually; instead they will be renewed each odd-numbered year (i.e. - 1999, 2001, 2003, etc). Renewal applications will be mailed at least 60 days prior to the expiration of current certificates. However, timely submission of renewal application materials is the responsibility of the registrant.
Application fees have been revised. A schedule of fees can be found at K.A.R. 17-24-2.
Section 10 contains new bonding and net worth requirements which apply to all registrants. Current registrants must comply with this requirement at the time of their next renewal. These requirements vary depending on whether or not the registrant maintains a "bona fide office" pursuant to K.S.A. 9-2201(a). Surety bonds must be prepared in a specific format. Approved forms will be mailed with renewal applications to all registrants.
B. General Requirements Effective Immediately
Section 8, subsection b, requires registrants to obtain a signed acknowledgment from their customers containing information as provided in K.A.R. 17-24-1. The required disclosure is the same, but the actual language used in the disclosure has been placed in regulation format.
Section 11 prohibits registrants from doing business with any entity or individual that is not properly registered, unless the entity falls within one of the exemptions listed in K.S.A. 9-2202. The Office of the State Bank Commissioner's homepage contains a list of all approved registrants which can be searched by name, city, or state. The homepage address is http://www.osbckansas.org
Section 14 requires registrants to provide written notice to this office within 10 business days if their main office or any Kansas branch office opens, moves, or closes; or in the event of a name change or change in legal entity status; or if there is an additional officer, partner, or director.
Sections 13 and 15 contain various record keeping requirements related to the operation of business and this office's examination of those documents. These provisions clarify the registrant's responsibility with regard to documents obtained from consumers and establishes record retention requirements.
Section 3 establishes criminal penalties with the possibility of imprisonment for one year and a $5000 fine for engaging in mortgage business activities without first being properly registered. Section 17 clarifies our ability to issue Cease and Desist orders and provides an additional option of levying fines up to $5000 per incident for any violation of the Act. Section 18 permits this office to seek a court ordered injunction or restraining order against any company or individual who violates the provisions of the Kansas Mortgage Business Act.
C. Requirements Enforced June 1, 1999 (Grace Period)
As stated above, Senate Bill 241 became effective April 8, 1999. However, all current registrants will receive a grace period until June 1, 1999 in order to comply with the following provisions contained in Sections 8 and 12:
Section 8, subsection c, requires registrants to identify themselves as Kansas Mortgage Registrants in all advertising and solicitations directed to Kansas residents. The disclosure should include the registrant's certificate number. An example of the approved disclosure is as follows: "Kansas Mortgage Registrant 99-101".
Section 12 requires each registrant to establish an escrow account in a financial institution which has a main or branch office in Kansas. Any money received from a consumer must be deposited in that account within three business days. Please read Section 12 for related additional requirements.
Please feel free to contact this office with questions concerning this or any other matter. Our normal office hours are 8 a.m. to 5 p.m. central time, Monday through Friday.
Office of the State Bank Commissioner
700 SW Jackson Street, Suite 300
Topeka, Kansas 66603-3714
phone (785) 296-2266
fax (785) 296-0168
