New Kentucky Licensing Requirements for Mortgage Servicers

March 1, 2017Articles
Starting March 1, 2017, the Kentucky Department of Financial Institutions will require “master servicers” as well as “sub servicers”, not exempt under KRS 286.8-020, to be licensed as mortgage companies under the Kentucky Mortgage Licensing and Regulation Act.  The Department considers a “master servicer” to be any entity or individual that owns the right to perform servicing of a mortgage loan. A master servicer typically reserves the legal right to either perform the servicing itself or to do so through a sub servicer.  Thus, this interpretation includes a servicer that has the right to service loans in Kentucky but does so indirectly through a sub servicer.   A “sub servicer” is an entity that does not own the right to perform servicing, but performs servicing on behalf of a master servicer, generally premised upon duties enumerated in a contract between the sub servicer and master servicer.  The Department has indicated that servicers that are HUD-exempt entities and non-profit entities that fall within the KRS 286.8-020 exemption must still file an application with the Department in order to verify their exempt status. If you would like more information, please contact Sarah Mattingly at (859) 425-1096.