Mortgage License Transition - FAQs

Future Supervised Loan Activities by KMBA Mortgage Company:

Q: Does your office interpret Kansas Senate Bill 369 to allow a Kansas Mortgage Company Licensee to conduct business with respect to Supervised Loans, secured by residential real property, without additionally having to obtain a Kansas Supervised Loan License?

A: Thank you for your below inquiry regarding Kansas Senate Bill 369. Current licensees under the Kansas Uniform Consumer Credit Code ("UCCC"), K.S.A. 16a-1-101 et seq. that conduct mortgage business, termed "supervised loan licensees," will be required to transition to the KMBA license. An NMLS license transition is open from 7/1/2016 - 8/31/2016. You may access more history of the bill by searching Senate Bill 369 at www.kslegislature.org.

For Mortgage Companies ONLY: After transition is requested, the supervised loan license may be surrendered if the entity does not engage in non-mortgage consumer credit business. No dual-license setup is contemplated by SB 369 for companies engaged solely in mortgage business. The mortgage company license under the Kansas Mortgage Business Act ("KMBA") (K.S.A. 9‐2201 et seq.) will be the only license required for mortgage business in Kansas, regardless of the lien position, loan-to-value ratio or APR of the underlying mortgage loans. The existence of certain characteristics may invoke consumer protections under the Kansas Uniform Consumer Credit Code ("UCCC"), K.S.A. 16a-1-101 et seq., but engaging in "mortgage business" (K.S.A. 9-2201(j)) with respect to those loans will no longer will require any UCCC licensing in light of K.S.A. 9-2203(d). Further details are available here.

For Dual-Licensed Mortgage and Consumer Credit Companies: Companies engaged in consumer, non-mortgage credit activities after July 1, 2016 should retain the Kansas Supervised Loan License. After the transition period, companies engaged in both mortgage and non-mortgage credit activities should hold two separate licenses to do so. Further details are available here.



Q: Will such transitioned licensees, which would hold a Mortgage Company License but would no longer hold a Supervised Lender License, still be permitted to engage in licensable activity with respect to supervised loans?

A: If the supervised loans are not secured by real-estate or real property, then no. The company must retain its supervised loan license to engage in supervised loans that are non-mortgage, consumer credit transactions (i.e. not secured by real-estate).

Future UCCC Credit Notification Filing by a KMBA Mortgage Company:

Q: Notification Filing - Must the company continue filing a credit notification pursuant to K.S.A. 16a-6-201 et seq.?

A: Regarding future credit notification filings after the 7/1/2016 supervised loan license transition, per the pending KMBA changes at K.S.A. 9-2216a, the annual report filing shall satisfy any other reports/filings due by a mortgage company licensee, such as the credit notification filing. However, dual-licensees must continue filing the credit notification for any non-mortgage credit transactions. Further guidance on this matter will be sent to current credit notification filers engaging in mortgage business prior to the next credit notification renewal period (April, 2017).

Excerpt from page 9 of SB 369:

Sec. 11. K.S.A. 2015 Supp. 9-2216a is hereby amended to read as follows: 9-2216a. (a) Each licensee shall maintain a journal of mortgage transactions at the licensee's principal place of business, which shall include at least the following information:(1) Name, address and telephone number of each loan applicant;(2) type of loan applied for and date of application; and(3) disposition of each loan application, indicating date of loan funding, loan denial, withdrawal and name of lender if applicable and name of loan originator and any compensation or other fees received by the loan originator. (b) Each licensee shall annually, on or before April 1, file a written report with the commissioner containing the information that the commissioner may reasonably require concerning the licensee's business and operations during the preceding calendar year. The report shall be made in the form prescribed by the commissioner, which may include reports filed with the nationwide mortgage licensing system and registry. Any licensee who fails to file the report required by this section with the commissioner by April 1 shall be subject to a late penalty of $100 for each day after April 1 the report is delinquent, but in no event shall the aggregate of late penalties exceed $5,000. The commissioner may relieve any licensee from the payment of any penalty, in whole or in part, for good cause. The filing of the annual written report required under this section shall satisfy any other reports required of a licensee under this act.

(Emphasis added.)

Future Annual Reports due from a KMBA Mortgage Company:

Q: Will the current Kansas annual report be replaced in full by the mortgage call report ("MCR") on NMLS, thereby, alleviating the requirement to provide a separate state report?

A: Regarding future Kansas annual reports, the mortgage call report ("MCR") may satisfy future state reporting requirements in part or in full. Further details have not yet been determined by the Kansas Office of the State Bank Commissioner. However, any full replacement of the current state annual report will depend on MCR inclusion of state-specific mortgage servicing activities, specifically. Further guidance on this matter will be sent to all active licensees at a later date.

Order of Transition Requests

Q: Will my surrender request be processed after my transition request? Will there be any potential lapse in licensure due to processing lag?

A: The Mortgage Company License transition request items will be processed prior to any Supervised Loan License surrender requests; therefore, you may safely request surrender after having requested transition. There will be no lapse in licensure during this transition period. In addition, please request transition for main company licenses prior to branch transition requests. We are unable to process branch transition requests without a main company license in place.

Transition Timing

Q: When is the latest I should request transition?

A: The transition period is open from 7/1/2016 - 8/31/2016; however, the sooner your transition request is made, the sooner our staff may process the request. Earlier transitions will allow our staff time to review, request any clarifications, address other licensing issues, and to answer your questions as soon as possible.

Surety Bonds

Q: My company only does mortgage business and will surrender its supervised loan license. Does my company need to obtain a separate surety bond?

A: There is no need to obtain another surety bond when transitioning into the Mortgage Company License and surrendering your Supervised Loan License. The same bond form is used for both license types. The required bond amount will not increase under the new license. Current mortgage bond requirements are listed under K.A.R. 17-24-6 on our website.


Q: My company does both mortgage business and consumer lending (non-mortgage) and will retain its supervised loan license. Does my company need to obtain a separate surety bond?

A: Yes. A separate bond is required for each license by statute. However, the bond amount currently held under the UCCC may decrease if your company makes mortgage loans or has multiple branch offices licensed. Please see K.A.R. 75-6-31 - Bond requirements on our website for details. KAR 75-6-31 states in part: "(a) Each applicant for a supervised loan license shall submit a bond in the following amounts: … (2) for all other applicants, $100,000.00 for the first licensed place of business, plus an additional $25,000.00 for each additional licensed place of business."

Control Persons' Records in NMLS

Q: Will control persons be required to re-attest to their NMLS records or provide background check information during transition?

A: No. Control persons will not need to authorize new background investigations (credit reports, CBCs, etc.) and will not be required to re-attest to any MU2 record due to transition. Each new license will be issued using the existing NMLS information regarding control persons.

Fees

Q: Are there any fees to transition?

A: No. There is no transition fee charged to the company or branch from either the OSBC or NMLS. If you are prompted to pay any fees, then please review the appropriate checklist again to ensure the proper steps were taken.

NEW Branch Applications from 7/1 - 8/31/2016

Q: If my company still holds a supervised loan license but will soon transition, should I apply for a Mortgage Company Branch License for a new office location?

A: Yes. If your company happens to submit a new branch license application during this time, outside this transition process, please first submit your Mortgage Company transition request. Then, request a Mortgage Company Branch License via the NMLS. This way, you will bypass the unnecessary task of transitioning another branch license by 8/31/2016.