In December, the Kentucky Department of Financial Institutions issued a memorandum interpreting the Mortgage Licensing and Regulation Act (Ky. Rev. Stat. Ch. 286.8) as requiring master servicers and sub servicers to be licensed as mortgage loan companies, unless otherwise exempt, if the loans being serviced are secured by residential real property located in Kentucky.

The memorandum defines a “master servicer” as “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.” The memorandum distinguishes a sub servicer as not owning “the right to perform servicing, but perform[ing] servicing on behalf of a master servicer, generally premised upon duties enumerated in a contract between the sub servicer and master servicer.”