Kentucky is giving entities that merely hold the rights to service residential mortgage loans just over two months to obtain a license, unless they can provide exemption documentation.

On December 22, 2016, the Kentucky Department of Financial Institutions issued a Memorandum stating that it will require “master servicers,” as well as “subservicers,” to be licensed as mortgage companies under the Kentucky Mortgage Licensing and Regulation Act.

The Act requires a person to obtain a mortgage company license if (among other activities) it “directly or indirectly . . . services mortgage loans, or holds oneself out as being able to do so.” According to the Department’s recent Memorandum, a “master servicer” is any entity or individual that owns the right to perform servicing of a mortgage loan. The Department notes that a master servicer typically reserves the legal right to either perform the servicing itself or to do so through a subservicer. Since the Department concludes that a master servicer both holds itself out as being able to service loans and indirectly services them though a subservicer, a master servicer falls within the scope of the licensing requirement, unless an exemption applies.
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It’s fall, Halloween is over, and the scary clowns (other than those vying for political office) will recede into the forests next to small communities.  Now it’s time to look forward.  Many, we hear tell, cannot do so with joy as they plan for Thanksgiving and the year-end holidays.  Rather, there is a sense of dread and foreboding as mortgage companies, money transmitters, and collection agencies, among others, begin the annual license renewal process through the NMLS.  Before too many deficiencies start haunting your NMLS Account Records, the Consumer Financial Services practice group at Mayer Brown wishes to offer you some cheer to keep your spirits up and 12 terrific tips (indeed, huuuuuge ideas) to help you slog through renewals and minimize deficiencies.
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