KRS 286.8-020: Exemptions.

(1) The following mortgage loan companies and mortgage loan brokers shall be subject

to KRS 286.8-046, 286.8-180, 286.8-220(1), and subsections (12), (13), and (14) of

this section, but shall be exempt from all other provisions of this subtitle:

(a) Any person duly licensed, chartered, and otherwise subject to regular

examination at least once every two (2) years by a state or federal financial

institution regulatory agency under the laws of this state or any other state or

the United States as a bank, bank hol ding company, trust company, credit

union, savings and loan association, savings and loan association holding

company, service corporation subsidiary of a savings and loan association,

insurance company, real estate investment trust as defined in 26 U.S.C. sec.

856, an institution of the farm credit system organized under the Farm Credit

Act of 1971 as amended, or any wholly owned subsidiary of any such person

if the subsidiary is subject to regular examination at least once every two (2)

years by a state or federal financial institution regulatory agency;

(b) Any natural person who makes a mortgage loan secured by a dwelling that

served as the natural person's residence, unless the natural person is

compensated in connection with that transaction by a mortgage loan company,

mortgage loan broker, or other mortgage loan originator, or by an agent of

such company, broker, or other originator;

(c) Any natural person who makes a mortgage loan to an immediate family

member of the natural person unless the natural person is compensated in

connection with that transaction by a mortgage loan company, mortgage loan

broker, or other mortgage loan originator, or by an agent of such company,

broker, or other originator;

(d) Any person other than a natural person, includin g any affiliate of that person,

that makes in the aggregate no more than four (4) mortgage loans within a

calendar year with its own funds and secured by residential real property

owned by the person making the mortgage loan, provided that the mortgage

loan is made without the intent to resell the mortgage loan, and provided that

the person does not hold itself out to the public as being primarily in the

mortgage loan business;

(e) The United States of America; the Commonwealth of Kentucky; any other

state, district, territory, commonwealth, or possession of the United States of

America; any city, county, or other political subdivision; and any agency,

division, or corporate instrumentality of any of the foregoing;

(f) The Federal National Mortgage Association (FNMA), the Federal Home Loan

Mortgage Corporation (FHLMC), and the Government National Mortgage

Association (GNMA);

(g) Any mortgage loan company or mortgage loan broker making or brokering a

mortgage loan involving housing initially transferred by cer tificate of title

under KRS Chapter 186A;

(h) A consumer loan company licensed under Subtitle 4 of this chapter whose

primary business is originating consumer loans as provided under Subtitle 4

of this chapter or any wholly owned subsidiary of such a consu mer loan

company, except that they shall be subject to the prohibited acts of KRS

286.8-220(2)(e) and (f) and 286.8-110(4); and

(i) A nonprofit organization that is recognized as tax -exempt under 26 U.S.C.

sec. 501(c)(3) and authorized to do business in th is Commonwealth, and that

has affordable housing as a primary purpose in its operations.

(2) The following shall be exempt from the licensing provisions of this subtitle and the

examination provisions of KRS 286.8 -170 and 286.8 -180, unless it appears on

grounds satisfactory to the commissioner that an examination is necessary, but shall

otherwise be subject to all other provisions of this subtitle:

(a) A mortgage loan company or mortgage loan broker approved and regulated

by the United States Department of Housing and Urban Development to

perform business in this Commonwealth; and

(b) Any branch of a mortgage loan company or mortgage loan broker listed in

paragraph (a) of this subsection, provided the branch is approved and

regulated by the United States Department of Housing and Urban

Development to perform business in this Commonwealth.

(3) Any no nprofit organization, mortgage loan company, mortgage loan broker, or

branch thereof relying upon an exemption under subsection (1)(i) or (2)(a) or (b) of

this section shall file with the commissioner a written application for a claim of

exemption. The commissioner shall approve an application for an exemption that is

timely filed and meets the requirements of this subtitle. The period of exemption

shall be from January 1 through December 31, and the exemption shall expire on

December 31 of the same calenda r year. Every person granted an exemption under

this section shall file a written application for a new exemption on an annual basis.

The application shall be received by the commissioner on or before December 31 of

the same calendar year. A written application for a partial-year exemption shall also

expire on December 31 of the same calendar year that the written application for an

exemption is granted.

(4) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon

an exemption under s ubsection (2)(a) or (b) of this section shall fund or broker a

minimum of twelve (12) Federal Housing Administration -insured loans on

Kentucky residential real properties each year in order to maintain its exemption.

(5) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon

an exemption under subsection (2)(a) or (b) of this section who ceases to be

approved or regulated by the United States Department of Housing and Urban

Development shall notify the commissioner, in writing, with in ten (10) days after it

ceases to be approved or regulated.

(6) Any person listed in subsection (1)(a), (b), (c), (d), (e), (f), (g), or (h) of this section

shall not be required to file with the commissioner a claim of exemption.

(7) (a) Any natural per son making a loan under subsection (10) of this section shall

make the following disclosure, on a separate sheet of paper in minimum

eighteen (18) point type, to the borrower:

DISCLOSURE

(Name and address of lender) is not licensed or regulated by the Ke ntucky

Department of Financial Institutions.

(Name of lender) is making this mortgage loan with his or her own funds, for

the person's own investment, without intent to resell the mortgage loan.

(The phone number and address of the Kentucky Department of Financial

Institutions.)

(b) A copy of the disclosure, signed by the borrower, shall be maintained by the

natural person for a period not to exceed three (3) years after the date the

mortgage loan is paid in full.

(8) Any mortgage loan company, mortgage loan broker, or branch thereof relying upon

an exemption under subsection (2)(a) or (b) of this section shall provide a list of

funded or brokered Federal Housing Administration -insured loans from December

1 of the previous calendar year to November 30 of t he current calendar year to the

commissioner by December 31 of each year on a form prescribed by the

commissioner.

(9) Any mortgage loan company, mortgage loan broker, or branch thereof applying for

an exemption under subsection (2)(a) or (b) of this section shall not be approved for

an exemption under subsection (2)(a) or (b) of this section unless the mortgage loan

company, mortgage loan broker, or branch thereof has:

(a) Held a mortgage loan company or mortgage loan broker license or registration

for fiv e (5) consecutive years prior to the filing of the application for an

exemption under this section with the commissioner; or

(b) Been approved and regulated by the United States Housing and Urban

Development to conduct business in the mortgage lending proc ess for five (5)

consecutive years prior to the filing of the application for an exemption under

this section with the commissioner.

(10) Any natural person not exempted in subsection (1)(b) or (c) of this section who

makes a mortgage loan with his or her own funds for the person's investment

without the intent to resell the mortgage loan shall be exempt from the provisions of

this subtitle except for the following:

(a) Examination provisions of KRS 286.8 -170 and 286.8-180 when it appears on

grounds satisfactory to the commissioner that an examination is necessary;

(b) Disclosure requirements of subsection (7) of this section;

(c) Any investigation and enforcement provisions of this subtitle including KRS

286.8-170(7), and KRS 286.8-046, 286.8-090, 286.8-190, and 286.8-990;

(d) Prohibited acts under KRS 286.8-125 and 286.8-220; and

(e) Registration and regulatory requirements of KRS 286.8-255.

(11) No person shall hold both a claim of exemption and a license granted under this

subtitle.

(12) Notwithstanding a ny provisions to the contrary set forth in this subtitle, every

mortgage loan company and mortgage loan broker shall make available and grant

access to the commissioner or an examiner of the commissioner the records in its

possession or control that are subject to the provisions of this subtitle.

(13) Notwithstanding any provisions to the contrary set forth in this subtitle, no

mortgage loan company or mortgage loan broker shall impede the commissioner or

an examiner of the commissioner from interviewing an y person regarding any

potential violations of this subtitle.

(14) Notwithstanding any provisions to the contrary set forth in this subtitle, every

mortgage loan company and mortgage loan broker that employs or utilizes the

direct services of a mortgage lo an originator subject to the registration and

regulatory requirements of KRS 286.8 -255 shall complete and timely submit to the

Nationwide Multistate Licensing System and Registry an annual report of

condition, which shall be in such form and contain such i nformation as the

Nationwide Multistate Licensing System and Registry may require, along with any

other information which may be required by the commissioner.