New Legislation Changes KY HUD Exemption
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KENTUCKY
Companies Filing a Claim of Exemption (HUD and Nonprofit Exemptions) |
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1. HUD and nonprofit exemptions will expire annually on Dec. 31, and must be renewed prior to that date pursuant to KRS 286.8-020(3).
2. Each location operating under a HUD exemption must fund/broker 12 FHA-insured loans on Kentucky
3. Any mortgage loan company, mortgage loan broker or branch thereof must have held a license or been approved and regulated by HUD for five consecutive years prior to filing an application for exemption pursuant to KRS 286.8-020(9)(a) and KRS 286.8-020(9)(b).
4. HUD-exempt and nonprofit-exempt entities are now subject to the following provisions of KRS 286.8:
a. Examination provisions of KRS 286.8-170 and KRS 286.8-180 when it appears on grounds satisfactory to the executive director that an examination is necessary.
b. Any investigation and enforcement provisions of KRS 286.8.
c. Prohibited acts under KRS 286.8-220 and the Mortgage Fraud Act (KRS 286.8-990).
d. Any mortgage loan originator or mortgage loan processor who is an employee of the above referenced HUD- or nonprofit-exempt entity shall be registered pursuant to KRS 286.8-255 and KRS 286.8-260.
5. Holding both a claim of a HUD exemption and a license is now prohibited pursuant to KRS 286.8-020(11).
6. The expense to the consumer that an originating lender or broker can receive is capped at $2,000 or 4 percent of the total loan amount, whichever is greater.
The total loan amount is the amount financed minus the net income. Service released premiums that are listed on the HUD-1 at closing are included in the net income calculation. Premiums that are realized after closing are not considered net income for the purposes of this calculation. The amount financed is the face amount of the note, which includes the fees.
The following charges are to be included: all fees, income or compensation of any kind collected, received or charged by the person originating the loan, including but not limited to origination fees, broker fees, lender fees, discount points if retained by the originating person as income, processing fees, administrative fees, document preparation fees, yield spread premiums, servicing release premiums and financial counseling fees. The following charges are not to be included: interest on the mortgage loan itself or fees paid to compensate unaffiliated third parties.
Any fees passed on to third parties shall be contracted at rates that are in the best interest of the borrower. Sham arrangements shall be considered in violation of KRS 286.8.
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