Kansas Passes a Law Allowing Mortgage Lenders to Operate Remotely Permanently

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Kansas governor Laura Kelly is likely to approve a bill passed by the state legislature to permit licensed mortgage officers to work remotely, rather than run operations from a physical office.

With many people shifting to remote working, a regulation was adjusted temporarily during the COVID-19 pandemic that required mortgage officers to operate from a brick-and-mortar location. Because of public outcry over the rule’s relaxation, legislation (HB 2568) was introduced amending the Kansas Mortgage Business Act to permit out-of-office mortgage loans permanently.

The legislature sailed through the House by 118 to 3 on February 23, 2022, and through Senate by 38 to 1 on March 23, 2022. The Office of the State Bank Commissioner (OSBC) was instrumental in coming up with the bill together with other sector stakeholders.

Earlier this month, Jim Payne, OSBC assistant deputy director of examinations, told the Senate Committee on Financial Institutions and Insurance that the introduction of remote working was an essential strategy in offering essential mortgage services. Payne said it would equally ensure mortgage officers and clients are safe. He added that remote working was instrumental to the sector’s positive performance during the pandemic despite the unpredictable lending demand witnessed at the time.

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During the pandemic, several states, such as Kansas, collaborated with various mortgage firms to permit remote working as an acceptable business model. It is vital to note that HB 2568 seeks to organize the written rules offered by OSBC to permit remote working with acceptable safety precautions and restrictions.

Overland Park-based Zillow Home Loans testified to support the bill, as did the Mortgage Bankers Association and Rocket Mortgage. Currently, Zillow Home Loans has around 55 licensed loan officers in Kansas.

Zillow Group government relations and public affairs senior manager Luke Bell said that tech and client expectations have changed over time, and the evolution accelerated because of the pandemic. Bell explained that within the HB 2568 provisions, the OSBC has moved to simplify and modernize mortgage business regulations.

Various home mortgage lenders working in Wichita didn’t voice any opposition. According to Credit Union of America VP for real estate lending Ernest Warren Jnr, CUA supports the legislation. It is confident in the capability to make a decision benefiting mortgage lenders.

Sierra Pacific Mortgage’s regional manager for the Midwest, Brian McGinley, said that he will have supported the bill although he refers to himself as a “brick-and-mortar guy.” He, however, stated that accountability would be crucial for new mortgage lenders entering the markets.

The OSBC also stated that the law would greatly clarify the regulatory structure by eliminating the obligation for lenders to require separate branch licenses for all their locations. After the pandemic, a need has emerged to rationalize the regulatory setting and promote an efficient and versatile mortgage sector. Branch licensing regulations have remained unchanged before remote lending and online brokering changes.

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Payne concluded that since KMBA needed mortgage firm licensees to follow its provisions, a single license would be adequate to give OSBC the licensing structure required to perform its duties.

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