Nondepository institutions are under the jurisdiction of the Nondepository Institutions Division of the Kentucky Department of Financial Institutions (DFI). Nondepository institutions regulated by DFI include:
- Consumer loan companies
- Industrial loan companies
- Mortgage loan companies
- Mortgage loan brokers
- Mortgage loan originators and processors
- Check cashers/deferred deposit companies/payday lenders
- Title pledge lenders
- Money transmitters
Through its Compliance and Consumer Protection branches, the Nondepository Institutions Division examines companies, licenses and registers entities and individuals, and investigates complaints and suspicious activity. The division also provides educational materials and outreach to protect consumers from financial fraud.
The Compliance Branch regulates mortgage loan companies and mortgage loan brokers licensed by DFI. Mortgage examinations are conducted on an 18- to 24-month cycle. The primary purpose of the examination is to ensure that these businesses comply with state laws that apply to mortgage lending found in KRS 286.8 and with federal laws and regulations such as the Real Estate Settlement Procedures Act (RESPA) and Regulation Z (Truth-in-Lending).
The examination includes a review of loan documents and a sampling of loan files to ensure that customers are charged only fees allowed by statute and contract. Loan logs are checked for sufficient detail and accuracy, and other records are reviewed to ensure they are maintained according to state and federal guidelines.
DFI's efficient and effective mortgage examination program has been recognized by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) for meeting the rigorous standards of examination excellence. DFI became the third state mortgage regulator to achieve accreditation in 2010. The grant of accreditation signifies that the agency has demonstrated conformance with the highest standards of mortgage supervision and regulation. For more information, visit CSBS.
Consumer loan companies, industrial loan companies, check cashing/deferred deposit companies and money transmitters are all licensed by DFI through the Compliance Branch and are subject to annual examinations to ensure they are adhering to the statutes that apply to their industries, KRS 286.4
, KRS 286.7
, KRS 286.9
and KRS 286.11
Consumer Protection Branch
The Consumer Protection Branch handles consumer complaints on regulated industries (such as mortgage lenders, payday lenders, banks and credit unions) and investigates complaints and issues that arise during examination. The branch may identify, investigate and prosecute those companies and individuals who are perpetrating financial crimes and unethical behavior against Kentucky citizens.