Brief ⁽¹⁾

HB 2481, as amended, concerns mortgage bankers and amends the Kansas Mortgage Business Act. The bill:

• Requires licensees under the act to maintain a journal of mortgage transactions and report annually on a form prescribed by the Commissioner information concerning the licensee's business operations.
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• Amends the definition section of the act to, among other things: clarify the definition of "Bona fide office" as an applicant's or licensee's principal place of business, identifying whether the office is leased or owned, and assuring that all books, records, and documents are accessible through that office; and to add new definitions, including "Loan originator" as an individual, registered as required by the Commissioner, who engages in the mortgage business on behalf of a single mortgage company, is licensed by the Commissioner, and makes direct contact with borrowers during the loan origination process.
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• Adds an exemption for any individual who, with their own funds for their own investment, makes five or fewer sales or investments in any 12-month period.
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• Requires mortgage business and mortgage business involving loan origination activities in this state to be conducted at or from a mortgage company licensed by the Commissioner, and makes licensees responsible for all mortgage business conducted on their behalf by registered loan originators or other employees.
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• Provides that all solicitations and published advertisements directed to Kansans concerning mortgage business, including those on the Internet, must contain the words: "Kansas licensed mortgage company." Records of solicitations must be kept for a period of 25 months.
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• Authorizes the Commissioner: to require that any applicant, registrant, licensee, or other person successfully pass a standardized examination designed to establish such person's knowledge of mortgage business transactions; and to require continuing education hours as a condition of application approval or application renewal.
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• Increases for licensees who maintain a bona fide office, the amount of the surety bond required from $25,000 to $50,000; deletes a letter of credit as acceptable surety; and removes the requirement to maintain a certain amount of liquid assets and proof of a certain net worth.
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• Establishes a number of new prohibited practices for persons licensed under the act, including delaying closings, misrepresenting or concealing material facts, making false promises, engaging in fraudulent practices, engaging in transactions not in good faith, or using false, misleading, or deceptive advertisements.
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• Makes other technical amendments that clarify the licensure nature of the act as opposed to registration of persons engaged in mortgage business in Kansas.
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The Senate Committee amendment reinstates the exemption from licensure for subsidiaries or affiliates of certain financial entities.

Background

HB 2481, as amended, was requested by the Deputy Commissioner for Consumer Mortgage Lending who explained that the bill will enhance the protections for consumers without creating unnecessary burden for the industry.

The bill is supported by the Kansas Association of Mortgage Brokers.

The fiscal note prepared by the Division of the Budget indicates passage of the bill will have some negligible fiscal effect to licensees in the areas of bonding changes and licensing fees.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi