On June 30, 2021, the Kansas Office of the State Bank Commissioner (OSBC) guidance that allows licensees, registrants, and their employees who work remotely from their residence or a company location during the COVID-19 pandemic is set to expire.
This temporary guidance was issued with the intent to offer licensees and registrants the ability to take precautions deemed necessary to avoid the risk of exposure or transmission of COVID-19. Kansas Governor Laura Kelly issued a state of disaster emergency proclamation for the state of Kansas that is set to expire on June 15, 2021.
Mortgage Companies
New Guidance for Mortgage Loan Originators and Loan Processors
The OSBC reviewed its policy requiring loan originators to reside within a reasonable commuting distance and work from a physical office of their employing mortgage company. The Kansas Mortgage Business Act (KMBA) does not expressly require loan originators or loan processors to work in the mortgage company’s offices. Given the recent dynamics in the workplace relating to the COVID-19 pandemic and a general shift in the workplace to remote offices, the OSBC has re-evaluated its policy and is modifying this former interpretation. Loan originators and loan processors are supervised by the mortgage company, which exercises full responsibility and liability for its employees. The OSBC’s licensing/registration process of the mortgage company and loan originators provides oversight by our state agency, reducing any concern about misconduct. In conclusion, both loan originators and loan processors may conduct their work under the KMBA at remote offices (as defined in full guidance document linked below). Mortgage companies should be mindful of the OSBC best practices offered for remote workers, as security of information will always be a necessary component of remote work. Best practices include, but are not limited to, the following:
· Computers and devices that leave the office should include at-rest encryption.
· Steps should be taken to minimize the remote use of paper records with confidential information and proper destruction/disposal of paper documents must be employed.
· Connectivity to the main office or sensitive systems should be encrypted in transit by use of a virtual private network (VPN) or similar technology.· Activity should be conducted in a private home environment, avoiding public areas such as coffee shops or libraries.
Mortgage companies will be responsible and liable for any breaches of security and should consult their Information Technology Department or other technology or security expert to ensure that their records are secure and safe.
This guidance document will expire on July 1, 2022. OSBC will introduce legislation in the 2022 legislative session to codify this guidance document into Kansas law. Should the legislation not pass, OSBC will re-evaluate the law and guidance to determine future application of these principles.
Branch Locations Other than Remote Offices
This guidance does not address mortgage branch locations that are not remote offices. A remote office means an employee working at his or her home on behalf of the mortgage company. Any mortgage business that is conducted at a location other than a remote office should be properly licensed as a branch location effective July 1, 2021.
Supervised Loan Licensees and Credit Notification Filers
New Guidance for Supervised Loan Licensees and Credit Notification Filers
The Kansas Uniform Consumer Credit Code (UCCC) does not expressly require employees of Supervised Loan Licensees or Credit Notification Filers to work in the company’s office or place of business. Kansas law requires only that the Supervised Loan Licensee conduct business “at or from” a licensed place of business. Employees are managed by the Supervised Loan Licensee or Credit Notification Filer, which is responsible and liable for its employees, whether they work in the office or remotely. Remote work by employees does not interfere with the OSBC’s ability to access and examine records, given the requirements for record-keeping stated above. In conclusion, employees of Supervised Loan Licensees and Credit Notification Filers under the UCCC may conduct their work from a remote office (as defined in full guidance document linked below). Aside from remote offices, physical places of business where a Supervised Loan Licensee conducts business should continue to hold a license, and physical places of business where a Credit Notification Filer conducts business should continue to be reported annually.
Supervised Loan Licensees and Credit Notification Filers should be mindful of the OSBC best practices offered for remote workers, as security of information will always be a necessary component of remote work. Best practices include, but are not limited to, the following:
· Computers and devices that are utilized for remote work should include at-rest encryption.
· Steps should be taken to minimize the remote use of paper records with confidential information and proper destruction/disposal of paper documents must be employed.
· Connectivity to the main office or sensitive systems should be encrypted in transit by use of a virtual private network (VPN) or similar technology.
· Activity should be conducted in a private home environment, avoiding public areas such as coffee shops or libraries.
Supervised Loan Licensees and Credit Notification Filers will be responsible and liable for any breaches of security and should consult their Information Technology Department or other technology or security expert to ensure that their records are secure and safe.
This guidance document will expire on July 1, 2022, at which time the OSBC will re-evaluate this document to determine future application of these principles.
Supervised Loan Branch Locations Other than Remote Offices
This guidance does not address branch locations of Supervised Loan Licensees that are not remote offices. A remote office means an employee working at his or her home on behalf of the company. Any Kansas related supervised loan activity from a location other than a remote office should be properly licensed as a branch location effective July 1, 2021.
