Kansas 2023-2024 Regular Session

Kansas Senate Bill SB495 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	Session of 2024
2	2	SENATE BILL No. 495
3	3	By Committee on Financial Institutions and Insurance
4	4	2-9
5	5	AN ACT concerning financial institutions; relating to the Kansas mortgage
6	6	business act; uniform consumer credit code; pertaining to certain
7	7	definitions, terms and conditions contained therein; modifying
8	8	consumer loan finance charges and repayment terms; record
9	9	requirements; credit card surcharge; definition of earnings and days;
10	10	increasing the threshold for certain consumer loans and leases;
11	11	origination fees for non-real estate transactions; clarifying license
12	12	requirements to make supervised loans; exempting supervised loan
13	13	license form filing notifications; transferring mortgage provisions
14	14	contained in the Kansas consumer credit code to the Kansas mortgage
15	15	business act; clarifying entities exempt for licensing; amending K.S.A.
16	16	9-2201, 9-2202, 9-2203, 9-2208, 9-2209, 9-2212, 9-2216, 9-2216a, 9-
17	17	2220, 16-207, 16-207d, 16a-1-101, 16a-1-102, 16a-1-103, 16a-1-104,
18	18	16a-1-107, 16a-1-108, 16a-1-109, 16a-1-201, 16a-1-202, 16a-1-301,
19	19	16a-2-103, 16a-2-104, 16a-2-201, 16a-2-202, 16a-2-301, 16a-2-302,
20	20	16a-2-303, 16a-2-304, 16a-2-308, 16a-2-309, 16a-2-310, 16a-2-401,
21	21	16a-2-402, 16a-2-403, 16a-2-404, 16a-2-501, 16a-2-502, 16a-2-504,
22	22	16a-2-505, 16a-2-506, 16a-2-507, 16a-2-508, 16a-2-510, 16a-3-201,
23	23	16a-3-202, 16a-3-203, 16a-3-204, 16a-3-205, 16a-3-206, 16a-3-208,
24	24	16a-3-209, 16a-3-301, 16a-3-302, 16a-3-303, 16a-3-304, 16a-3-305,
25	25	16a-3-306, 16a-3-307, 16a-3-308, 16a-3-309, 16a-3-402, 16a-3-403,
26	26	16a-3-404, 16a-3-405, 16a-4-102, 16a-4-104, 16a-4-105, 16a-4-106,
27	27	16a-4-107, 16a-4-108, 16a-4-109, 16a-4-110, 16a-4-111, 16a-4-112,
28	28	16a-4-201, 16a-4-202, 16a-4-203, 16a-4-301, 16a-4-304, 16a-5-103,
29	29	16a-5-107, 16a-5-108, 16a-5-111, 16a-5-201, 16a-5-203, 16a-5-301,
30	30	16a-6-104, 16a-6-105, 16a-6-106, 16a-6-108, 16a-6-109, 16a-6-110,
31	31	16a-6-111, 16a-6-112, 16a-6-113, 16a-6-115, 16a-6-201, 16a-6-202,
32	32	16a-6-203, 16a-6-401, 16a-6-403 and 40-1209 and repealing the
33	33	existing sections; also repealing K.S.A. 16a-1-303, 16a-2-101, 16a-2-
34	34	102, 16a-2-303a, 16a-2-307, 16a-3-101, 16a-3-102, 16a-3-203a, 16a-3-
35	35	207, 16a-3-308a, 16a-4-101, 16a-4-103, 16a-5-101, 16a-5-102, 16a-5-
36	36	110, 16a-5-112, 16a-6-101, 16a-6-102, 16a-6-117, 16a-6-402, 16a-6-
37	37	404, 16a-6-405, 16a-6-406, 16a-6-407, 16a-6-408, 16a-6-409, 16a-6-
38	38	410, 16a-6-414, 16a-9-101 and 16a-9-102.
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75	75	Be it enacted by the Legislature of the State of Kansas:
76	76	New Section 1. (a) Calendar days shall be used in computing any
77	77	period of time. The day of the act, event or default from which the
78	78	designated period of time begins to run shall not be included in such
79	79	computation. Saturdays, Sundays and legal holidays shall be included in
80	80	such computation. If the last day of the period so computed is a Saturday,
81	81	Sunday or a legal holiday, the period shall run until the end of the next day
82	82	that is not a Saturday, Sunday or a legal holiday. "Legal holiday" shall
83	83	include any day designated as a holiday by the federal reserve bank.
84	84	(b) This section shall be a part of and supplemental to the Kansas
85	85	mortgage business act.
86	86	New Sec. 2. (a) Any writing or signature required by this act may be
87	87	provided or executed in an electronic form under K.S.A. 16-1601 et seq.,
88	88	and amendments thereto.
89	89	(b) If the consumer agrees in writing to the use of electronic methods
90	90	instead of United States mail, any requirement under this act to mail a
91	91	document may be satisfied by sending the document by electronic
92	92	methods. When a document is sent by electronic methods, the time of
93	93	sending and receipt is defined by K.S.A. 16-1615, and amendments
94	94	thereto.
95	95	(c) This section shall be a part of and supplemental to the Kansas
96	96	mortgage business act.
97	97	New Sec. 3. (a) Sections 3 through 14, and amendments thereto, shall
98	98	apply only to covered transactions, as defined in K.S.A. 9-2201, and
99	99	amendments thereto.
100	100	(b) K.S.A. 9-2203 through 9-2209, and amendments thereto, shall
101	101	apply to licensed mortgage companies, as defined in K.S.A. 9-2201, and
102	102	amendments thereto.
103	103	(c) This section shall be a part of and supplemental to the Kansas
104	104	mortgage business act.
105	105	New Sec. 4. (a) A mortgage company shall not make a covered
106	106	transaction with an interest in land as security with an amount financed of
107	107	$5,000 or less in which the annual percentage rate of the loan exceeds the
108	108	code mortgage rate. A security interest taken in violation of this section
109	109	shall be void.
110	110	(b) This section shall be a part of and supplemental to the Kansas
111	111	mortgage business act.
112	112	New Sec. 5. (a) A consumer shall not waive or agree to forego rights
113	113	or benefits under sections 3 through 14, and amendments thereto, relating
114	114	to covered transactions except as follows:
115	115	(1) The following may be settled by agreement if disputed in good
116	116	faith. Any claim:
117	117	(A) By a consumer against a mortgage company for any violation of
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161	161	sections 3 through 14, and amendments thereto, including for a civil
162	162	penalty; or
163	163	(B) against a consumer for default or for breach of a duty imposed by
164	164	sections 3 through 14, and amendments thereto.
165	165	(2) A claim against a consumer shall be settled for less value than the
166	166	amount claimed.
167	167	(3) A settlement in which the consumer waives or agrees to forego
168	168	rights or benefits under sections 3 through 14, and amendments thereto, is
169	169	invalid if the court, as a matter of law, finds the settlement to have been
170	170	unconscionable at the time it was made. The competence of the consumer,
171	171	any deception or coercion practiced upon the consumer, the nature and
172	172	extent of the legal advice received by the consumer and the value of the
173	173	consideration are relevant to the issue of unconscionability.
174	174	(b) A consumer may not authorize any person to confess judgment on
175	175	a claim arising out of a covered transaction. An authorization in violation
176	176	of this section shall be void.
177	177	(c) This section shall be a part of and supplemental to the Kansas
178	178	mortgage business act.
179	179	New Sec. 6. (a) Except as otherwise provided in sections 3 through
180	180	14, and amendments thereto, if a mortgage company has violated any
181	181	provision of sections 3 through 14, and amendments thereto, relating to
182	182	covered transactions, the consumer shall have a cause of action to recover
183	183	from the mortgage company or person liable to the consumer actual
184	184	damages and except for a class action, a penalty in an amount determined
185	185	by the court not less than $750 but not more than $7,500.
186	186	(b) An action under this section based on closed-end covered
187	187	transaction violations shall be brought within one year of the last
188	188	scheduled payment due date stated in the agreement. An action under this
189	189	section based on open-end covered transaction violations shall be brought
190	190	within two years from the date of occurrence.
191	191	(c) If a person has violated K.S.A. 9-2203(a), and amendments
192	192	thereto, in originating a covered transaction, such covered transaction shall
193	193	be void. The consumer shall not be obligated to pay the amount financed
194	194	or the finance charge and such consumer shall have a right to recover any
195	195	finance charge paid from either the person violating this act or from the
196	196	consumer's mortgage servicer.
197	197	(d) A consumer shall not be obligated to pay a charge on a covered
198	198	transaction in excess of that allowed by sections 3 through 14, and
199	199	amendments thereto. A consumer shall have a right of refund for twice the
200	200	excess charges from the person who made the excess charge or from the
201	201	consumer's mortgage servicer. A consumer may request a refund payment
202	202	check or application to the outstanding obligation. Following a reasonable
203	203	time after demand, if the request is refused, the consumer may recover
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247	247	twice the excess charge from the person liable or the mortgage company
248	248	and, except for a class action, an amount determined by the court not less
249	249	than $750 but not more than $7,500.
250	250	(e) A mortgage company shall have no penalty liability as discussed
251	251	in this section if within 60 days after discovering the error the mortgage
252	252	company corrects the error through refund or adjustment and notifies the
253	253	consumer of the error. This waiver shall not apply if an action has already
254	254	been instituted or the consumer has provided written notice of the
255	255	violation. If the violation is a prohibited agreement, providing a corrected
256	256	copy of the writing containing the error shall be sufficient notification and
257	257	correction.
258	258	(f) If the mortgage company establishes, by a preponderance of
259	259	evidence, that a violation is unintentional or the result of a bona fide error
260	260	of law or fact notwithstanding the maintenance of procedures reasonably
261	261	adopted to avoid any such violation or error, no liability is imposed under
262	262	this section.
263	263	(g) A mortgage company who in good faith complies with a written
264	264	administrative guidance document shall not be subject to any penalties
265	265	under this section for any act done or omitted in conformity with such
266	266	written administrative guidance document.
267	267	(h) Except as otherwise provided, no violation of the provisions of
268	268	sections 3 through 14, and amendments thereto, shall impair rights on a
269	269	debt.
270	270	(i) The mortgage company shall reimburse the consumer's reasonable
271	271	attorney fees and cost of the action if the proceeding finds that the
272	272	mortgage company has violated any provision of sections 3 through 14,
273	273	and amendments thereto. Reasonable attorney fees shall be determined by
274	274	the value of the time expended by the attorney and not by the amount of
275	275	the recovery on behalf of the consumer.
276	276	(j) This section shall not apply to attorneys or collection agencies that
277	277	did not purchase the mortgage loan.
278	278	(k) This section shall be a part of and supplemental to the Kansas
279	279	mortgage business act.
280	280	New Sec. 7. (a) The consumer may prepay in full the unpaid balance
281	281	of a covered transaction at any time without penalty.
282	282	(b) This section shall be a part of and supplemental to the Kansas
283	283	mortgage business act.
284	284	New Sec. 8. (a) The periodic finance charge for a covered transaction
285	285	shall not exceed 18% per annum, subject to the limitations on prepaid
286	286	finance charges set forth in this subsection. This subsection shall not apply
287	287	to a:
288	288	(1) Loan secured by a first mortgage that constitutes a covered
289	289	transaction by virtue of the loan-to-value ratio that exceeds 100% at the
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333	333	time the loan is made; or
334	334	(2) covered transaction where the finance charge is governed by
335	335	K.S.A. 16-207(e)(4), and amendments thereto.
336	336	(b) If a loan secured by a first mortgage constitutes a covered
337	337	transaction by virtue of the loan-to-value ratio exceeding 100% at the time
338	338	the loan is made, then the periodic finance charge for the loan shall not
339	339	exceed that authorized pursuant to K.S.A. 16-207(a), and amendments
340	340	thereto, but the loan is subject to the limitations on prepaid finance charges
341	341	set forth in this section. Such prepaid finance charges may be charged in
342	342	addition to the finance charges permitted under K.S.A. 16-207(a), and
343	343	amendments thereto.
344	344	(c) This section shall not be construed to limit or restrict the manner
345	345	of calculating the finance charge, whether by way of add-on, discount or
346	346	otherwise, provided the rate and the amount of the finance charge does not
347	347	exceed that permitted by this section.
348	348	(d) Prepaid finance charges on covered transactions shall be limited
349	349	to an amount not to exceed 8% of the amount financed, provided that the
350	350	aggregate amount of prepaid finance charges payable to the mortgage
351	351	company or any person related to such company does not exceed 5% of
352	352	the amount financed. Prepaid finance charges permitted under this
353	353	subsection shall be in addition to finance charges permitted under
354	354	subsection (a). Prepaid finance charges permitted under this subsection
355	355	shall be fully earned when paid and such prepaid finance charges shall be
356	356	nonrefundable unless the parties agree otherwise in writing.
357	357	(e) The finance charge limitations in subsection (a) shall not apply to
358	358	a covered transaction for which the finance charge is governed pursuant to
359	359	K.S.A. 16-207(e)(4), and amendments thereto.
360	360	(f) If, within 12 months after the date of the original covered
361	361	transaction, a mortgage company or a person related to such company
362	362	refinances a covered transaction, with respect to which a prepaid finance
363	363	charge was payable to the same person then the aggregate amount of
364	364	prepaid finance charges payable to the mortgage company or any person
365	365	related to such company with respect to the new covered transaction shall
366	366	not exceed 5% of the additional amount financed.
367	367	(g) For purposes of this section, "additional amount financed" means
368	368	the difference between:
369	369	(1) The amount financed for the new covered transaction, less the
370	370	amount of all closing costs incurred in connection with the new covered
371	371	transaction that are not included in the prepaid finance charges for the new
372	372	covered transaction; and
373	373	(2) the unpaid principal balance of the original covered transaction.
374	374	(h) This section shall be a part of and supplemental to the Kansas
375	375	mortgage business act.
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419	419	New Sec. 9. (a) In addition to the finance charge permitted by
420	420	sections 3 through 14, and amendments thereto, for covered transactions, a
421	421	mortgage company may contract for and receive the following additional
422	422	charges for such covered transactions:
423	423	(1) Closing costs incurred in connection with the covered transaction
424	424	that are not included in the prepaid finance charges for the covered
425	425	transaction;
426	426	(2) late fees permitted pursuant to section 10, and amendments
427	427	thereto;
428	428	(3) charges for other benefits, including insurance, conferred on the
429	429	consumer if the benefits are of value to the consumer, and if:
430	430	(A) The charges are reasonable in relation to the benefits;
431	431	(B) the benefits are of a type that is not for credit and are excluded as
432	432	permissible additional charges from the finance charge by rules and
433	433	regulations adopted by the commissioner; or
434	434	(4) a service charge for an insufficient payment method not to exceed
435	435	$30 subject to the limitations contained in this subsection.
436	436	(A) Notice shall be given to a consumer providing an insufficient
437	437	payment method either by:
438	438	(i) United States first class mail addressed to the consumer's last
439	439	known address; or
440	440	(ii) a clear notice of the insufficient payment method charge on the
441	441	consumer's regular monthly statement.
442	442	(B) If the consumer does not pay the amount of the insufficient
443	443	payment plus the service charge to the payee within 14 days from the
444	444	giving of notice, the payee may add the service charge to the outstanding
445	445	balance of such indebtedness of the consumer to draw interest at the
446	446	contract rate applicable to such indebtedness.
447	447	(b) With respect to an open-end covered transaction, a mortgage
448	448	company may charge the following fees in an amount not to exceed that
449	449	agreed to by the consumer:
450	450	(1) Fees on a monthly or annual basis;
451	451	(2) over-limit fees; and
452	452	(3) cash advance fees.
453	453	(c) The fees permitted under subsection (b) are in addition to any
454	454	finance charges or any additional charges permitted by sections 3 through
455	455	14.
456	456	(d) A mortgage company may charge a borrower up to $5 per
457	457	payment when the borrower makes a single installment payment through
458	458	electronic methods for a covered transaction, including by authorizing the
459	459	mortgage company, verbally or in writing, to initiate the payment, subject
460	460	to the following limitations. No charge shall be assessed:
461	461	(1) If a late fee is assessed on the same installment; or
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505	505	(2) where the consumer has agreed in writing to make all scheduled
506	506	payments through the use of electronic methods.
507	507	(e) This section shall be a part of and supplemental to the Kansas
508	508	mortgage business act.
509	509	New Sec. 10. (a) The parties to a covered transaction may contract for
510	510	a late fee on any installment not paid in full within 10 calendar days after
511	511	its scheduled or deferred due date in an amount not to exceed 5% of the
512	512	unpaid amount of the installment or $25, whichever is less.
513	513	(b) As an alternative to the late fee set forth in subsection (a), the
514	514	parties to a covered transaction may contract for a late fee not to exceed
515	515	$10 on any installment not paid in full within 10 calendar days after its
516	516	scheduled or deferred due date, except that if the scheduled payment
517	517	amount is $25 or less, the maximum late fee shall be $5.
518	518	(c) A late fee may be assessed only once on an installment regardless
519	519	of the length of time such installment remains in default. A late fee may be
520	520	collected at the time it is assessed or at any time thereafter.
521	521	(d) No late fee may be assessed when such a fee or charge is
522	522	attributable solely to the failure of the consumer to pay a late fee on an
523	523	earlier installment and the payment is otherwise a periodic payment
524	524	received on the due date or within 10 calendar days after its scheduled or
525	525	deferred installment due date.
526	526	(e) This section shall be a part of and supplemental to the Kansas
527	527	mortgage business act.
528	528	New Sec. 11. (a) A covered transaction shall not provide for the
529	529	negative amortization of principal or a balloon payment when the loan-to-
530	530	value ratio at the time such covered transaction was made exceeds 100%
531	531	or when the annual percentage rate of the loan exceeds the code mortgage
532	532	rate unless such covered transaction is open-end, incurred to acquire or
533	533	construct the consumer's principal residence or a reverse mortgage.
534	534	(b) This section shall be a part of and supplemental to the Kansas
535	535	mortgage business act.
536	536	New Sec. 12. (a) The provisions of this section shall not apply to a
537	537	mortgage company that is exempt pursuant to K.S.A. 9-2202(a), and
538	538	amendments thereto.
539	539	(b) Before making a covered transaction, a mortgage company shall
540	540	obtain the appraised value of the real estate to be encumbered. If, based
541	541	upon the appraisal, the loan-to-value ratio of the covered transaction
542	542	exceeds 100%, then the mortgage company shall deliver to the consumer
543	543	not less than three days before the loan is made a:
544	544	(1) Free copy of the appraisal; and
545	545	(2) written notice regarding high loan-to-value mortgages and the
546	546	availability of consumer credit counseling.
547	547	(c) If within three days after receiving the notice, the consumer elects
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591	591	not to enter into the covered transaction, then the mortgage company shall
592	592	promptly refund to the consumer any application fees or other amounts
593	593	paid by the consumer to such mortgage company except for the following:
594	594	(1) Bona fide out-of-pocket costs incurred before the consumer
595	595	elected not to enter into the covered transaction, provided that such costs
596	596	were paid or are payable to unrelated persons; and
597	597	(2) a bona fide appraisal fee paid or payable to the mortgage company
598	598	or a related person.
599	599	(d) This section shall be a part of and supplemental to the Kansas
600	600	mortgage business act.
601	601	New Sec. 13. (a) An agreement of the parties to a covered transaction
602	602	with respect to default on the part of the consumer shall be enforceable
603	603	only to the extent that the:
604	604	(1) Consumer fails to make a payment as required by agreement; or
605	605	(2) (A) prospect of payment, performance or realization of collateral
606	606	is significantly impaired.
607	607	(B) For purposes of this paragraph, the burden of establishing the
608	608	prospect of significant impairment shall be on the mortgage company.
609	609	(b) The provisions of this section shall be a part of and supplemental
610	610	to the Kansas mortgage business act.
611	611	New Sec. 14. (a) After a consumer has been in default for 10 days for
612	612	failure to make a required payment in a covered transaction payable in
613	613	installments, a mortgage company may give the consumer the notice
614	614	described in this section.
615	615	(1) A mortgage company provides notice to the consumer under this
616	616	section when the mortgage company delivers the notice to the consumer or
617	617	delivers or mails the notice to the consumer's residence.
618	618	(2) The notice shall be in writing and shall conspicuously state:
619	619	(A) The name, address and telephone number of the mortgage
620	620	company to which payment is to be made;
621	621	(B) a brief description of the covered transaction;
622	622	(C) the consumer's right to cure the default;
623	623	(D) the amount of payment and date by which payment must be made
624	624	to cure the default; and
625	625	(E) the consumer's possible liability for the reasonable costs of
626	626	collection including, but not limited to, court costs, either attorney fees or
627	627	collection agency fees, and any other information required by the
628	628	commissioner as set forth by rules and regulations or by administrative
629	629	interpretation.
630	630	(b) With respect to a covered transaction payable in installments, after
631	631	a default consisting only of the consumer's failure to make a required
632	632	payment, a mortgage company may neither accelerate maturity of the
633	633	unpaid balance of the obligation or take possession of collateral as a result
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677	677	of such default until 20 days after a notice of the consumer's right to cure
678	678	is given. Within 20 days after the notice is given, the consumer may cure
679	679	all defaults resulting from a failure to make the required payment by
680	680	tendering the amount of all unpaid sums due at the time of the tender,
681	681	without acceleration, plus any unpaid late fees. Such cure restores the
682	682	consumer to the consumer's rights under the agreement as though the
683	683	defaults had not occurred.
684	684	(c) With respect to defaults on the same obligation after a mortgage
685	685	company has once given a notice of the consumer's right to cure, this
686	686	section shall confer on the consumer no right to cure and imposes no
687	687	limitation on the mortgage company's right to proceed against the
688	688	consumer or the collateral.
689	689	(d) Unless the consumer voluntarily surrenders the collateral to the
690	690	mortgage company, the mortgage company may take possession of the
691	691	collateral without judicial process only if possession can be taken without
692	692	entry into a dwelling and without the use of force or other breach of the
693	693	peace.
694	694	(e) Nothing in this section shall be construed to prohibit a consumer
695	695	from voluntarily surrendering the collateral of the covered transaction and
696	696	shall not prohibit the mortgage company from thereafter enforcing the
697	697	mortgage company's security interest in the collateral at any time after
698	698	surrender.
699	699	(f) This section shall be a part of the and supplemental to the Kansas
700	700	mortgage business act.
701	701	New Sec. 15. (1) The following shall be exempt from the supervised
702	702	loan licensing requirements of this act:
703	703	(a) a supervised financial organization;
704	704	(b) the federal deposit insurance corporation acting in its corporate
705	705	capacity or as receiver; or
706	706	(c) an attorney who is forwarded contracts for collection.
707	707	(2) This section shall be a part of and supplemental to the Kansas
708	708	consumer credit code.
709	709	New Sec. 16. (1) Any writing or signature required by this act may be
710	710	provided or executed using an electronic format pursuant to K.S.A. 16-
711	711	1601 et seq., and amendments thereto.
712	712	(2) If a consumer agrees in writing to the use of an electronic format
713	713	instead of United States mail to send a document, any requirement under
714	714	this act to use United States mail to send a document may be satisfied by
715	715	sending the document by such electronic format. When a document is sent
716	716	using an electronic format, the time of sending and receipt is defined
717	717	pursuant to K.S.A. 16-1615, and amendments thereto.
718	718	(3) This section shall be a part of and supplemental to the Kansas
719	719	consumer credit code.
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763	763	Sec. 17. K.S.A. 9-2201 is hereby amended to read as follows: 9-2201.
764	764	As used in this act:
765	765	(a) "Act" means the Kansas mortgage business act.
766	766	(b) "Amount financed" means the net amount of credit provided to the
767	767	consumer or on the consumer's behalf. The amount financed shall be
768	768	calculated as provided in rules and regulations adopted by the
769	769	commissioner pursuant to K.S.A. 9-2209, and amendments thereto.
770	770	(c) "Annual percentage rate" shall have the same meaning, be
771	771	interpreted in the same manner and be calculated using the same
772	772	methodology as prescribed by 15 U.S.C. § 1606.
773	773	(d) "Appraised value" means, with respect to any real estate at any
774	774	time:
775	775	(1) The total appraised value of the real estate, as reflected in the
776	776	most recent records of the tax assessor of the county in which the real
777	777	estate is located;
778	778	(2) the fair market value of the real estate, as reflected in a written
779	779	appraisal of the real estate performed by a Kansas licensed or certified
780	780	appraiser within the past 12 months; or
781	781	(3) in the case of a nonpurchase-money real estate transaction, the
782	782	estimated market value as determined through a method acceptable to the
783	783	commissioner. In determining the acceptability of the method, the
784	784	commissioner shall consider the reliability and impartiality of the method
785	785	under the circumstances. The commissioner may consider industry
786	786	standards or customs. A method shall not be acceptable if the resulting
787	787	value is predetermined or when the fee to be paid to the method provider
788	788	is contingent upon the property valuation reached or upon the
789	789	consequences resulting from the property valuation reached.
790	790	(e) "Balloon payment" means any required payment that is more than
791	791	twice as large as the average of all earlier scheduled payments.
792	792	(f) "Branch office" means a place of business, other than a principal
793	793	place of business, where the mortgage company maintains a physical
794	794	location for the purpose of conducting mortgage business with the public.
795	795	(g) "Closed-end covered transaction" means the same as in 12 C.F.R.
796	796	1026.2(a)(10).
797	797	(h) "Closing costs" means:
798	798	(1) The actual fees paid to a public official or agency of the state or
799	799	federal government for filing, recording or releasing any instrument
800	800	relating to the debt; and
801	801	(2) bona fide and reasonable expenses incurred by the mortgage
802	802	company in connection with the making, closing, disbursing, extending,
803	803	readjusting or renewing the debt that are payable to third parties not
804	804	related to the mortgage company. Reasonable fees for an appraisal made
805	805	by the mortgage company or related party are permissible.
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848	848	43 SB 495 11
849	849	(i) (1) "Code mortgage rate" means the greater of:
850	850	(A) 12%; or
851	851	(B) the sum of:
852	852	(i) The required net yield published by the federal national mortgage
853	853	association for 60-day mandatory delivery whole-loan commitments for
854	854	30-year fixed-rate mortgages with actual remittance on the first day for
855	855	which the required net yield was published in the previous month; and
856	856	(ii) 5%.
857	857	(2) If the reference rate referred to in clause (i)(1)(B)(i) is
858	858	discontinued, becomes impractical to use, or is otherwise not readily
859	859	ascertainable for any reason, the commissioner may designate a
860	860	comparable replacement reference rate and, upon publishing notice of the
861	861	same, such replacement reference rate shall become the reference rate
862	862	referred to in subparagraph (h)(1)(A). The secretary of state shall publish
863	863	notice of the code mortgage rate not later than the second issue of the
864	864	Kansas register published each month.
865	865	(b)(j) "Commissioner" means the state bank commissioner or
866	866	designee, who shall be the deputy commissioner of the consumer and
867	867	mortgage lending division of the office of the state bank commissioner.
868	868	(k) "Consumer" means an individual to whom credit is offered or
869	869	granted under this act.
870	870	(l) "Covered transaction" means a mortgage loan that:
871	871	(1) Is a subordinate mortgage;
872	872	(2) has a loan-to-value ratio at the time when made that exceeds
873	873	100%, except for any loan guaranteed by a federal government agency of
874	874	the United States; or
875	875	(3) in the case of section 11, and amendments thereto, the annual
876	876	percentage rate of the loan exceeds the code mortgage rate.
877	877	(m) "Finance charge" means all charges payable directly or
878	878	indirectly by the consumer and imposed directly or indirectly by the
879	879	mortgage company as an incident to or as a condition of the extension of
880	880	credit. The finance charge shall be calculated as provided in rules and
881	881	regulations adopted by the commissioner pursuant to KSA 9-2209, and
882	882	amendments thereto.
883	883	(c)(n) "Individual" means a human being.
884	884	(o) "Insufficient payment method" means any instrument as defined
885	885	in K.S.A. 84-3-104, and amendments thereto, drawn on any financial
886	886	institution for the payment of money and delivered in payment, in whole or
887	887	in part, of preexisting indebtedness of the drawer or maker, which is
888	888	refused payment by the drawee because the drawer or maker does not
889	889	have sufficient funds in or credits with the drawee to pay the amount of the
890	890	instrument upon presentation.
891	891	(p) "Installment" means a periodic payment required or permitted by
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935	935	agreement in connection with a covered transaction.
936	936	(d)(q) "License" means a license issued by the commissioner to
937	937	engage in mortgage business as a mortgage company.
938	938	(r) "Licensed mortgage company" means a mortgage company that
939	939	has been licensed as required by this act.
940	940	(e)(s) "Licensee" means a person who is licensed by the
941	941	commissioner as a mortgage company.
942	942	(f)(t) "Loan originator" means an individual:
943	943	(1) Who engages in mortgage business on behalf of a single mortgage
944	944	company;
945	945	(2) whose conduct of mortgage business is the responsibility of the
946	946	licensee;
947	947	(3) who takes a residential mortgage loan application or offers or
948	948	negotiates terms of a residential mortgage loan for compensation or gain or
949	949	in the expectation of compensation or gain; and
950	950	(4) whose job responsibilities include contact with borrowers during
951	951	the loan origination process, which can include soliciting, negotiating,
952	952	acquiring, arranging or making mortgage loans for others, obtaining
953	953	personal or financial information, assisting with the preparation of
954	954	mortgage loan applications or other documents, quoting loan rates or terms
955	955	or providing required disclosures. It does not include any individual
956	956	engaged solely as a loan processor or underwriter.
957	957	(g)(u) "Loan processor or underwriter" means an individual who
958	958	performs clerical or support duties as an employee at the direction and
959	959	subject to the supervision and instruction of a person registered or exempt
960	960	from registration under this act.
961	961	(1) For purposes of this subsection, the term "clerical or support
962	962	duties" may include subsequent to the receipt of a mortgage loan
963	963	application:
964	964	(A) The receipt, collection, distribution and analysis of information
965	965	common for the processing or underwriting of a residential mortgage loan;
966	966	and
967	967	(B) communicating with a consumer to obtain the information
968	968	necessary for the processing or underwriting of a loan, to the extent that
969	969	such communication does not include offering or negotiating loan rates or
970	970	terms or counseling consumers about residential mortgage loan rates or
971	971	terms.
972	972	(2) An individual engaging solely in loan processor or underwriter
973	973	activities shall not represent to the public, through advertising or other
974	974	means of communicating or providing information including the use of
975	975	business cards, stationery, brochures, signs, rate lists or other promotional
976	976	items, that such individual can or will perform any of the activities of a
977	977	loan originator.
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1020	1020	43 SB 495 13
1021	1021	(v) "Loan-to-value ratio" means a fraction expressed as a percentage
1022	1022	at any time:
1023	1023	(1) The numerator of which is the aggregate unpaid principal
1024	1024	balance of all loans secured by a mortgage; and
1025	1025	(2) the denominator of which is the appraised value of the real estate.
1026	1026	(h)(w) "Mortgage business" means engaging in, or holding out to the
1027	1027	public as willing to engage in, for compensation or gain, or in the
1028	1028	expectation of compensation or gain, directly or indirectly, the business of
1029	1029	making, originating, servicing, soliciting, placing, negotiating, acquiring,
1030	1030	selling, arranging for others, or holding the rights to or offering to solicit,
1031	1031	place, negotiate, acquire, sell or arrange for others, mortgage loans in the
1032	1032	primary market.
1033	1033	(i)(x) "Mortgage company" means a person engaged in mortgage
1034	1034	business.
1035	1035	(j)(y) "Mortgage loan" means a loan or agreement to extend credit
1036	1036	made to one or more individuals persons which is secured by a first or
1037	1037	subordinate mortgage, deed of trust, contract for deed or other similar
1038	1038	instrument or document representing a security interest or lien, except as
1039	1039	provided for in K.S.A. 60-1101 through 60-1110, and amendments thereto,
1040	1040	upon any lot intended for residential purposes or a one-to-four family
1041	1041	dwelling as defined in 15 U.S.C. § 1602(w), located in this state, occupied
1042	1042	or intended to be occupied for residential purposes by the owner, including
1043	1043	the renewal or refinancing of any such loan.
1044	1044	(k)(z) "Mortgage loan application" means the submission of a
1045	1045	consumer's financial information, including, but not limited to, the
1046	1046	consumer's name, income and social security number, to obtain a credit
1047	1047	report, the property address, an estimate of the value of the property and
1048	1048	the mortgage loan amount sought for the purpose of obtaining an extension
1049	1049	of credit.
1050	1050	(l)(aa) "Mortgage servicer" means any person engaged in mortgage
1051	1051	servicing.
1052	1052	(m)(bb) "Mortgage servicing" means collecting payment, remitting
1053	1053	payment for another or the right to collect or remit payment of any of the
1054	1054	following: Principal; interest; tax; insurance; or other payment under a
1055	1055	mortgage loan.
1056	1056	(n)(cc) "Nationwide mortgage licensing system and registry" means a
1057	1057	mortgage licensing system developed and maintained by the conference of
1058	1058	state bank supervisors and the American association of residential
1059	1059	mortgage regulators for the licensing and registration of mortgage loan
1060	1060	originators.
1061	1061	(o)(dd) "Not-for-profit" means a business entity that is granted tax
1062	1062	exempt status by the internal revenue service.
1063	1063	(ee) "Open-end covered transaction" means a covered transaction in
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1107	1107	which a mortgage company:
1108	1108	(1) Reasonably contemplates repeated transactions;
1109	1109	(2) may impose a finance charge from time to time on an outstanding
1110	1110	unpaid balance; and
1111	1111	(3) extends an amount of credit to the consumer during the term of
1112	1112	the mortgage loan, up to any set limit, that is generally made available to
1113	1113	the extent that any outstanding balance is repaid.
1114	1114	(p)(ff) "Person" means any individual, sole proprietorship,
1115	1115	corporation, partnership, trust, association, joint venture, pool syndicate,
1116	1116	unincorporated organization or other form of entity, however organized.
1117	1117	(gg) "Prepaid finance charge" means any finance charge paid
1118	1118	separately before or at consummation of a transaction or withheld from
1119	1119	the proceeds of the credit at any time.
1120	1120	(hh) "Principal" of a mortgage loan means the total of the amount
1121	1121	financed and the prepaid finance charges, except that prepaid finance
1122	1122	charges are not added to the amount financed to the extent such prepaid
1123	1123	finance charges are paid separately by the consumer.
1124	1124	(q)(ii) "Primary market" means the market wherein mortgage
1125	1125	business is conducted including activities conducted by any person who
1126	1126	assumes or accepts any mortgage business responsibilities of the original
1127	1127	parties to the transaction.
1128	1128	(r)(jj) "Principal place of business" means a place of business where
1129	1129	mortgage business is conducted, which has been designated by a licensee
1130	1130	as the primary headquarters from which all mortgage business and
1131	1131	administrative activities are managed and directed.
1132	1132	(s)(kk) "Promotional items" means pens, pencils, hats and other such
1133	1133	novelty items.
1134	1134	(t)(ll) "Registrant" means any individual who holds a valid
1135	1135	registration to conduct mortgage business in this state as a loan originator
1136	1136	on behalf of a licensed mortgage company.
1137	1137	(mm) "Related" with respect to a person means:
1138	1138	(1) A person directly or indirectly controlling, controlled by or under
1139	1139	common control of another person;
1140	1140	(2) an officer or director employed by the person performing similar
1141	1141	functions with another person;
1142	1142	(3) a relative by blood, adoption or marriage of a person within the
1143	1143	fourth degree of relationship; or
1144	1144	(4) an individual who shares the same home with such person.
1145	1145	(u)(nn) "Remote location" means a location other than the principal
1146	1146	place of business or a branch office where a licensed mortgage company's
1147	1147	employee or independent contractor is authorized by such company to
1148	1148	engage in mortgage business. A remote location is not considered a branch
1149	1149	office.
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1193	1193	(v)(oo) "Unique identifier" means a number or other identifier
1194	1194	assigned by protocols established by the nationwide mortgage licensing
1195	1195	system and registry.
1196	1196	Sec. 18. K.S.A. 9-2202 is hereby amended to read as follows: 9-2202.
1197	1197	The following are exempt from the licensing requirements of this act:
1198	1198	(a) Any bank, savings bank, trust company, savings and loan
1199	1199	association, building and loan association, industrial loan company or
1200	1200	credit union organized, chartered or authorized under the laws of the
1201	1201	United States or of any state which is authorized to make loans and to
1202	1202	receive deposits;
1203	1203	(b) any entity directly or indirectly regulated by an agency of the
1204	1204	United States or of any state which is a subsidiary of any entity listed in
1205	1205	subsection (a) if 25% or more of such entity's common stock is directly
1206	1206	owned by any entity listed in subsection (a);
1207	1207	(c) the United States of America, the state of Kansas, any other state,
1208	1208	or any agency or instrumentality of any governmental entity;
1209	1209	(d) any individual who with their own funds for their own investment
1210	1210	makes a purchase money mortgage or finances the sale of their own
1211	1211	property, except that any individual who enters into more than five such
1212	1212	investments or sales in any twelve-month period shall be subject to all
1213	1213	provisions of this act; and
1214	1214	(e) not-for-profit entities that provide mortgage loans in conjunction
1215	1215	with a mission of building or rehabilitating affordable homes to low-
1216	1216	income consumers; and
1217	1217	(f) business entities with no employees when a related, licensed
1218	1218	mortgage company acts as a proxy for the entity by conducting all
1219	1219	mortgage business on behalf of the entity and by including all such
1220	1220	mortgage business in the proxy's reports to the commissioner, but the
1221	1221	entity and the proxy are jointly and severally liable for violations of this
1222	1222	act by the proxy.
1223	1223	Sec. 19. K.S.A. 9-2203 is hereby amended to read as follows: 9-2203.
1224	1224	(a) Mortgage business shall only be conducted in this state by entities that
1225	1225	are exempt from licensure pursuant to K.S.A. 9-2202, and amendments
1226	1226	thereto, or a licensed mortgage company. A licensee shall be responsible
1227	1227	for all mortgage business conducted on such licensee's behalf by any
1228	1228	person, including loan originators, employees or independent contractors.
1229	1229	(b) Mortgage business involving loan origination shall only be
1230	1230	conducted in this state by an individual who has first been registered with
1231	1231	the commissioner as a loan originator as required by this act and maintains
1232	1232	a valid unique identifier issued by the nationwide mortgage licensing
1233	1233	system and registry, if operational at the time of registration.
1234	1234	(c) A registrant shall only engage in mortgage business on behalf of
1235	1235	one licensed mortgage company.
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1279	1279	(d) Mortgage business may be conducted at a remote location, if:
1280	1280	(1) The licensed mortgage company's employees or independent
1281	1281	contractors do not meet with the public at a personal residence;
1282	1282	(2) no physical business records are maintained at the remote
1283	1283	location;
1284	1284	(3) the licensed mortgage company has written policies and
1285	1285	procedures for working at a remote location and such company supervises
1286	1286	and enforces such policies and procedures;
1287	1287	(4) the licensed mortgage company maintains the computer system
1288	1288	and customer information in accordance with the company's information
1289	1289	technology security plan and all state and federal laws;
1290	1290	(5) any device used to engage in mortgage business has appropriate
1291	1291	security, encryption and device management controls to ensure the security
1292	1292	and confidentiality of customer information as required by rules and
1293	1293	regulations adopted by the commissioner;
1294	1294	(6) the licensed mortgage company's employees or independent
1295	1295	contractors take reasonable precautions to protect confidential information
1296	1296	in accordance with state and federal laws; and
1297	1297	(7) the licensed mortgage company annually reviews and certifies
1298	1298	that the employees or independent contractors engaged in mortgage
1299	1299	business at remote locations meet the requirements of this section. Upon
1300	1300	request, a licensee shall provide written documentation of such licensee's
1301	1301	review to the commissioner.
1302	1302	(e) Nothing under this act shall require a licensee to obtain any other
1303	1303	license under any other act for the sole purpose of conducting non-
1304	1304	depository mortgage business.
1305	1305	(f) Any person who willfully or knowingly violates any of the
1306	1306	provisions of this act, any rule and regulation adopted or order issued
1307	1307	under this act commits a severity level 7 nonperson felony. A second or
1308	1308	subsequent conviction of this act, regardless of its location on the
1309	1309	sentencing grid block, shall have a presumptive sentence of imprisonment.
1310	1310	(g) No prosecution for any crime under this act may be commenced
1311	1311	more than five years after the alleged violation. A prosecution is
1312	1312	commenced when a complaint or information is filed, or an indictment
1313	1313	returned, and a warrant thereon is delivered to the sheriff or other officer
1314	1314	for execution, except that no prosecution shall be deemed to have been
1315	1315	commenced if the warrant so issued is not executed without unreasonable
1316	1316	delay.
1317	1317	(h) Nothing in this act limits the power of the state to punish any
1318	1318	person for any conduct which constitutes a crime by statute.
1319	1319	Sec. 20. K.S.A. 9-2208 is hereby amended to read as follows: 9-2208.
1320	1320	(a) Each licensee shall make available evidence of licensure in a way that
1321	1321	reasonably assures recognition by consumers and members of the general
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1365	1365	public.
1366	1366	(b) Prior to entering into any contract for the provision of services or
1367	1367	prior to the licensee receiving any compensation or promise of
1368	1368	compensation for a mortgage loan the licensee shall acquire from the
1369	1369	consumer a signed acknowledgment containing such information as the
1370	1370	commissioner may prescribe by rule and regulation. The signed
1371	1371	acknowledgment shall be retained by the licensee and a copy shall be
1372	1372	provided to the consumerThe licensee shall provide each consumer a
1373	1373	notice, containing such information as the commissioner may prescribe by
1374	1374	rules and regulations, before the earliest of the following, as applicable:
1375	1375	(1) The time of entering into any contract with a consumer for the
1376	1376	provision of services for a mortgage loan;
1377	1377	(2) the time of receiving any compensation or promise of
1378	1378	compensation from or on behalf of a consumer for a mortgage loan; or
1379	1379	(3) 15 days after accepting a transfer of mortgage servicing.
1380	1380	(c) All solicitations and published advertisements concerning
1381	1381	mortgage business directed at Kansas residents, including those on the
1382	1382	internet or by other electronic means, shall contain the name and license
1383	1383	number or unique identifier of the licensee on record with the
1384	1384	commissioner. Each licensee shall maintain a record of all solicitations or
1385	1385	advertisements for a period of 36 months. For the purpose of this
1386	1386	subsection, "advertising" does not include business cards or promotional
1387	1387	items.
1388	1388	(d) No solicitation or advertisement shall contain false, misleading or
1389	1389	deceptive information, or indicate or imply that the interest rates or
1390	1390	charges stated are "recommended," "approved," "set" or "established" by
1391	1391	the state of Kansas.
1392	1392	(e) No licensee or registrant shall conduct mortgage business in this
1393	1393	state using any name other than the name or names stated on their license
1394	1394	or registration.
1395	1395	Sec. 21. K.S.A. 9-2209 is hereby amended to read as follows: 9-2209.
1396	1396	(a) The commissioner may exercise the following powers:
1397	1397	(1) Adopt rules and regulations as necessary to carry out the intent
1398	1398	and purpose of this act and to implement the requirements of applicable
1399	1399	federal law;
1400	1400	(2) make investigations and examinations of the licensee's or
1401	1401	registrant's operations, books and records as the commissioner deems
1402	1402	necessary for the protection of the public and control access to any
1403	1403	documents and records of the licensee or registrant under examination or
1404	1404	investigation;
1405	1405	(3) charge reasonable costs of investigation, examination and
1406	1406	administration of this act, to be paid by the applicant, licensee or
1407	1407	registrant. The commissioner shall establish such fees in such amounts as
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1451	1451	the commissioner may determine to be sufficient to meet the budget
1452	1452	requirements of the commissioner for each fiscal year. Charges for
1453	1453	administration of this act shall be based on the licensee's loan volume;
1454	1454	(4) order any licensee or registrant to cease any activity or practice
1455	1455	that the commissioner deems to be deceptive, dishonest, violative of state
1456	1456	or federal law or unduly harmful to the interests of the public;
1457	1457	(5) exchange any information regarding the administration of this act
1458	1458	with any agency of the United States or any state that regulates the
1459	1459	licensee or registrant or administers statutes, rules and regulations or
1460	1460	programs related to mortgage business and to enter into information
1461	1461	sharing arrangements with other governmental agencies or associations
1462	1462	representing governmental agencies that are deemed necessary or
1463	1463	beneficial to the administration of this act;
1464	1464	(6) disclose to any person or entity that an applicant's, licensee's or
1465	1465	registrant's application, license or registration has been denied, suspended,
1466	1466	revoked or refused renewal;
1467	1467	(7) require or permit any person to file a written statement, under oath
1468	1468	or otherwise as the commissioner may direct, setting forth all the facts and
1469	1469	circumstances concerning any apparent violation of this act, or any rule
1470	1470	and regulation promulgated thereunder or any order issued pursuant to this
1471	1471	act;
1472	1472	(8) receive, as a condition in settlement of any investigation or
1473	1473	examination, a payment designated for consumer education to be
1474	1474	expended for such purpose as directed by the commissioner;
1475	1475	(9) require that any applicant, registrant, licensee or other person
1476	1476	successfully passes a standardized examination designed to establish such
1477	1477	person's knowledge of mortgage business transactions and all applicable
1478	1478	state and federal law. Such examinations shall be created and administered
1479	1479	by the commissioner or the commissioner's designee, and may be made a
1480	1480	condition of application approval or application renewal;
1481	1481	(10) require that any applicant, licensee, registrant or other person
1482	1482	complete a minimum number of prelicensing education hours and
1483	1483	complete continuing education hours on an annual basis. Prelicensing and
1484	1484	continuing education courses shall be approved by the commissioner, or
1485	1485	the commissioner's designee, and may be made a condition of application
1486	1486	approval and renewal;
1487	1487	(11) require fingerprinting of any applicant, registrant, licensee,
1488	1488	members thereof if a copartnership or association, or officers and directors
1489	1489	thereof if a corporation, or any agent acting on their behalf, or other person
1490	1490	as deemed appropriate by the commissioner. The commissioner or the
1491	1491	commissioner's designee, may submit such fingerprints to the Kansas
1492	1492	bureau of investigation, federal bureau of investigation or other law
1493	1493	enforcement agency for the purposes of verifying the identity of such
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1537	1537	persons and obtaining records of their criminal arrests and convictions. For
1538	1538	the purposes of this section and in order to reduce the points of contact that
1539	1539	the federal bureau of investigation may have to maintain with the
1540	1540	individual states, the commissioner may use the nationwide mortgage
1541	1541	licensing system and registry as a channeling agent for requesting
1542	1542	information from and distributing information to the department of justice
1543	1543	or any governmental agency;
1544	1544	(12) refer such evidence as may be available concerning any violation
1545	1545	of this act or of any rule and regulation or order hereunder to the attorney
1546	1546	general, or in consultation with the attorney general to the proper county or
1547	1547	district attorney, who may in such prosecutor's discretion, with or without
1548	1548	such a referral, institute the appropriate criminal proceedings under the
1549	1549	laws of this state;
1550	1550	(13) issue and apply to enforce subpoenas in this state at the request
1551	1551	of a comparable official of another state if the activities constituting an
1552	1552	alleged violation for which the information is sought would be a violation
1553	1553	of the Kansas mortgage business act if the activities had occurred in this
1554	1554	state;
1555	1555	(14) use the nationwide mortgage licensing system and registry as a
1556	1556	channeling agent for requesting and distributing any information regarding
1557	1557	loan originator registration or mortgage company licensing to and from
1558	1558	any source so directed by the commissioner;
1559	1559	(15) establish relationships or contracts with the nationwide mortgage
1560	1560	licensing system and registry or other entities to collect and maintain
1561	1561	records and process transaction fees or other fees related to applicants,
1562	1562	licensees, registrants or other persons subject to this act and to take such
1563	1563	other actions as may be reasonably necessary to participate in the
1564	1564	nationwide mortgage licensing system and registry. The commissioner
1565	1565	shall regularly report violations of law, as well as enforcement actions and
1566	1566	other relevant information to the nationwide mortgage licensing system
1567	1567	and registry;
1568	1568	(16) require any licensee or registrant to file reports with the
1569	1569	nationwide mortgage licensing system and registry in the form prescribed
1570	1570	by the commissioner or the commissioner's designee;
1571	1571	(17) receive and act on complaints, take action designed to obtain
1572	1572	voluntary compliance with the provisions of the Kansas mortgage business
1573	1573	act or commence proceedings on the commissioner's own initiative;
1574	1574	(18) provide guidance to persons and groups on their rights and duties
1575	1575	under the Kansas mortgage business act;
1576	1576	(19) enter into any informal agreement with any mortgage company
1577	1577	for a plan of action to address violations of law. The adoption of an
1578	1578	informal agreement authorized by this paragraph shall not be subject to the
1579	1579	provisions of K.S.A. 77-501 et seq., and amendments thereto, or K.S.A.
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1623	1623	77-601 et seq., and amendments thereto. Any informal agreement
1624	1624	authorized by this paragraph shall not be considered an order or other
1625	1625	agency action, and shall be considered confidential examination material
1626	1626	pursuant to K.S.A. 9-2217, and amendments thereto. All such examination
1627	1627	material shall also be confidential by law and privileged, shall not be
1628	1628	subject to the open records act, K.S.A. 45-215 et seq., and amendments
1629	1629	thereto, shall not be subject to subpoena and shall not be subject to
1630	1630	discovery or admissible in evidence in any private civil action; and
1631	1631	(20) issue, amend and revoke written administrative guidance
1632	1632	documents in accordance with the applicable provisions of the Kansas
1633	1633	administrative procedure act rules and regulations filing act.
1634	1634	(b) For the purpose of any examination, investigation or proceeding
1635	1635	under this act, the commissioner or any officer designated by the
1636	1636	commissioner may administer oaths and affirmations, subpoena witnesses,
1637	1637	compel such witnesses' attendance, adduce evidence and require the
1638	1638	production of any matter that is relevant to the examination or
1639	1639	investigation, including the existence, description, nature, custody,
1640	1640	condition and location of any books, documents or other tangible things
1641	1641	and the identity and location of persons having knowledge of relevant
1642	1642	facts, or any other matter reasonably calculated to lead to the discovery of
1643	1643	relevant information or items.
1644	1644	(c) In case of contumacy by, or refusal to obey a subpoena issued to
1645	1645	any person, any court of competent jurisdiction, upon application by the
1646	1646	commissioner, may issue to that person an order requiring the person to
1647	1647	appear before the commissioner, or the officer designated by the
1648	1648	commissioner, there, to produce documentary evidence if so ordered or to
1649	1649	give evidence touching the matter under investigation or in question. Any
1650	1650	failure to obey the order of the court may be punished by the court as a
1651	1651	contempt of court.
1652	1652	(d) No person is excused from attending and testifying or from
1653	1653	producing any document or record before the commissioner or in
1654	1654	obedience to the subpoena of the commissioner or any officer designated
1655	1655	by the commissioner or in any proceeding instituted by the commissioner,
1656	1656	on the ground that the testimony or evidence, documentary or otherwise,
1657	1657	required of the person may tend to incriminate the person or subject the
1658	1658	person to a penalty or forfeiture. No individual may be prosecuted or
1659	1659	subjected to any penalty or forfeiture for or on account of any transaction,
1660	1660	matter or thing concerning which such person is compelled, after claiming
1661	1661	privilege against self-incrimination, to testify or produce evidence,
1662	1662	documentary or otherwise, except that the individual so testifying shall not
1663	1663	be exempt from prosecution and punishment for perjury committed in so
1664	1664	testifying.
1665	1665	(e) Except for refund of an excess charge, no liability is imposed
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1708	1708	43 SB 495 21
1709	1709	under the Kansas mortgage business act for an act done or omitted in
1710	1710	conformity with a rule and regulation or written administrative
1711	1711	interpretation guidance document of the commissioner in effect at the time
1712	1712	of the act or omission, notwithstanding that after the act or omission, the
1713	1713	rule and regulation or written administrative interpretation may be
1714	1714	determined by judicial or other authority to be invalid for any reason.
1715	1715	(f) The grant of powers to the commissioner in this article does not
1716	1716	affect remedies available to consumers under K.S.A. 9-2201 et seq., and
1717	1717	amendments thereto, or under other principles of law or equity.
1718	1718	Sec. 22. K.S.A. 9-2212 is hereby amended to read as follows: 9-2212.
1719	1719	No person required to be licensed or registered under this act shall directly
1720	1720	or indirectly:
1721	1721	(a) Pay compensation to, contract with or employ in any manner, any
1722	1722	person engaged in mortgage business who is not properly licensed or
1723	1723	registered, unless such person meets the requirements of is exempt
1724	1724	pursuant to K.S.A. 9-2202, and amendments thereto;
1725	1725	(b) without the prior written approval of the commissioner employ
1726	1726	any person who has:
1727	1727	(1) Had a license or registration denied, revoked, suspended or
1728	1728	refused renewal; or
1729	1729	(2) been convicted of any crime involving fraud, dishonesty or deceit;
1730	1730	(c) delay closing of a mortgage loan for the purpose of increasing
1731	1731	interest, costs, fees or charges payable by the borrower;
1732	1732	(d) misrepresent the material facts or make false promises intended to
1733	1733	influence, persuade or induce an applicant for a mortgage loan or
1734	1734	mortgagee to take a mortgage loan or cause or contribute to
1735	1735	misrepresentation by any person acting on behalf of the person required to
1736	1736	be licensed or registered;
1737	1737	(e) misrepresent to or conceal from an applicant for a mortgage loan a
1738	1738	mortgagor or a lender, material facts, terms or conditions of a transaction
1739	1739	to which the person required to be licensed or registered is a party;
1740	1740	(f) engage in any transaction, practice or business conduct that is not
1741	1741	in good faith, or that operates a fraud upon any person in connection with
1742	1742	conducting mortgage business;
1743	1743	(g) receive compensation for rendering mortgage business services
1744	1744	where the licensee or registrant has otherwise acted as a real estate broker
1745	1745	or agent in connection with the sale of the real estate which secures the
1746	1746	mortgage transaction unless the person required to be licensed or
1747	1747	registered has provided written disclosure to the person from whom
1748	1748	compensation is collected that the person is receiving compensation both
1749	1749	for mortgage business services and for real estate broker or agent services;
1750	1750	(h) engage in any fraudulent residential mortgage brokerage or
1751	1751	underwriting practices;
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1795	1795	(i) advertise, display, distribute, broadcast or televise, or cause or
1796	1796	permit to be advertised, displayed, distributed, broadcast or televised, in
1797	1797	any manner, any false, misleading or deceptive statement or representation
1798	1798	with regard to rates, terms or conditions for a mortgage loan;
1799	1799	(j) fail to disburse the proceeds of a mortgage loan upon the
1800	1800	satisfaction of all conditions to the disbursement and the expiration of all
1801	1801	applicable rescission, cooling-off or other waiting periods required by
1802	1802	law, unless the parties otherwise agree in writing;
1803	1803	(k) record a mortgage if moneys are not available for the immediate
1804	1804	disbursal to the mortgagor unless, before that recording, the person
1805	1805	required to be licensed or registered informs the mortgagor in writing of a
1806	1806	definite date by which payment shall be made and obtains the mortgagor's
1807	1807	written permission for the delay;
1808	1808	(k)(l) transfer, assign or attempt to transfer or assign, a license or
1809	1809	registration to any other person, or assist or aide and abet any person who
1810	1810	does not hold a valid license or registration under this act in engaging in
1811	1811	the conduct of mortgage business who is not properly licensed or
1812	1812	registered, unless such person is exempt under K.S.A. 9-2202, and
1813	1813	amendments thereto;
1814	1814	(l)(m) solicit or enter into a contract with a borrower that provides in
1815	1815	substance that the person required to be licensed or registered may earn a
1816	1816	fee or commission through best efforts to obtain a loan even though no
1817	1817	loan is actually obtained for the borrower;
1818	1818	(m)(n) solicit, advertise or enter into a contract for specific interest
1819	1819	rates, points or other financing terms unless the terms are actually
1820	1820	available at the time of soliciting, advertising or contracting;
1821	1821	(n)(o) make any payment, threat or promise, to any person for the
1822	1822	purposes of influencing the independent judgment of the person in
1823	1823	connection with a residential mortgage loan or make any payment, threat
1824	1824	or promise, to any appraiser of a property, for the purposes of influencing
1825	1825	the independent judgment of the appraiser with respect to the value of the
1826	1826	property or engage in any activity that would constitute a violation of
1827	1827	K.S.A. 58-2344, and amendments thereto; or
1828	1828	(o)(p) fail to comply with this act or rules and regulations
1829	1829	promulgated under this act or fail to comply with any other state or federal
1830	1830	law, including the rules and regulations thereunder, applicable to any
1831	1831	business authorized or conducted under this act.
1832	1832	Sec. 23. K.S.A. 9-2216 is hereby amended to read as follows: 9-2216.
1833	1833	(a) A licensee shall keep copies of all documents or correspondence
1834	1834	received or prepared by the licensee or registrant in connection with a loan
1835	1835	or loan application and those records and documents required by the
1836	1836	commissioner by rules and regulations adopted pursuant to K.S.A. 9-2209,
1837	1837	and amendments thereto, for such time frames as are specified in the rules
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1880	1880	43 SB 495 23
1881	1881	and regulations. If the loan is not serviced by a licensee, the retention
1882	1882	period commences on the date the loan is closed or, if the loan is not
1883	1883	closed, the date of the loan application. If the loan is serviced by a
1884	1884	licensee, the retention period commences on the date the loan is paid in
1885	1885	full or the date the licensee ceases to service the loan.
1886	1886	(b) All books, records and any other documents held by the licensee
1887	1887	shall be made available for examination and inspection by the
1888	1888	commissioner or the commissioner's designee. Certified copies of all
1889	1889	records not kept within this state shall be delivered to the commissioner
1890	1890	within three business days of the date such documents are requested.
1891	1891	(c) Each licensee shall maintain the following information:
1892	1892	(1) The name, address and telephone number of each loan applicant;
1893	1893	(2) the type of loan applied for and the date of the application; and
1894	1894	(3) the disposition of each loan application, including the date of loan
1895	1895	funding, loan denial, withdrawal and, name of lender if applicable and,
1896	1896	name of loan originator and any compensation or other fees received by
1897	1897	the loan originator.
1898	1898	(d) Each licensee shall establish, maintain and enforce written
1899	1899	policies and procedures regarding security of records which are reasonably
1900	1900	designed to prevent the misuse of a consumer's personal or financial
1901	1901	information.
1902	1902	(e) Before ceasing to conduct or discontinuing business, a licensee
1903	1903	shall arrange for and be responsible for the preservation of the books and
1904	1904	records required to be maintained and preserved under this act and
1905	1905	applicable regulations for the remainder of each period specified.
1906	1906	(f) Any records required to be retained may be maintained and
1907	1907	preserved by noneraseable, nonalterable electronic imaging or by
1908	1908	photograph on film. If the records are produced or reproduced by
1909	1909	photographic film, electronic imaging or computer storage medium the
1910	1910	licensee shall meet the following criteria:
1911	1911	(1) Arrange the records and index the films, electronic image or
1912	1912	computer storage media to permit immediate location of any particular
1913	1913	record;
1914	1914	(2) be ready at all times to promptly provide a facsimile enlargement
1915	1915	of film, a computer printout or a copy of the electronic images or computer
1916	1916	storage medium that the commissioner may request; and
1917	1917	(3) with respect to electronic images and records stored on computer
1918	1918	storage medium, maintain procedures for maintenance and preservation of,
1919	1919	and access to, records in order to reasonably safeguard these records from
1920	1920	loss, alteration or destruction.
1921	1921	(g) No person required to be licensed or registered under this act
1922	1922	shall:
1923	1923	(1) Alter, destroy, shred, mutilate, conceal, cover up or falsify any
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1966	1966	43 SB 495 24
1967	1967	record with the intent to impede, obstruct or influence any investigation by
1968	1968	the commissioner or the commissioner's designee; or
1969	1969	(2) alter, destroy, shred, mutilate or conceal a record with the intent to
1970	1970	impair the object's integrity or availability for use in a proceeding before
1971	1971	the commissioner or a proceeding brought by the commissioner.
1972	1972	Sec. 24. K.S.A. 9-2216a is hereby amended to read as follows: 9-
1973	1973	2216a. (a) Each licensee shall annually, on or before April 1, file a written
1974	1974	report with the commissioner containing the information that the
1975	1975	commissioner may reasonably require concerning the licensee's business
1976	1976	and operations during the preceding calendar year. The report shall be
1977	1977	made in the form prescribed by the commissioner, which may include
1978	1978	reports filed with the nationwide mortgage licensing system and registry.
1979	1979	Any licensee who fails to file the report required by this section with the
1980	1980	commissioner by April 1 shall be subject to a late penalty of $100 for each
1981	1981	day after April 1 the report is delinquent, but in no event shall the
1982	1982	aggregate of late penalties exceed $5,000. The commissioner may relieve
1983	1983	any licensee from the payment of any penalty, in whole or in part, for good
1984	1984	cause. The commissioner may apply any funds received from late penalties
1985	1985	under this section to a consumer education fund, to be expended for such
1986	1986	purpose as directed by the commissioner. The filing of the annual written
1987	1987	report required under this section shall satisfy any other reports required of
1988	1988	a licensee under this act.
1989	1989	(b) Information contained in the annual report shall be confidential
1990	1990	and may be published only in composite form. The provisions of this
1991	1991	subsection providing for the confidentiality of public records shall expire
1992	1992	on July 1, 2030, unless the legislature reviews and reenacts such
1993	1993	provisions in accordance with K.S.A. 45-229, and amendments thereto,
1994	1994	prior to July 1, 2030.
1995	1995	Sec. 25. K.S.A. 9-2220 is hereby amended to read as follows: 9-2220.
1996	1996	(a) The provisions of K.S.A. 9-2201 through 9-2220 et seq., and
1997	1997	amendments thereto, and K.S.A. 9-2216a sections 1 through 14, and
1998	1998	amendments thereto, shall be known and may be cited as the Kansas
1999	1999	mortgage business act.
2000	2000	(b) If any provision of this act or its application to any person or
2001	2001	circumstance is held invalid, the remainder of the act or the application of
2002	2002	the provision to other persons or circumstances is not affected.
2003	2003	Sec. 26. K.S.A. 16-207 is hereby amended to read as follows: 16-207.
2004	2004	(a) Subject to the following provision, the parties to any bond, bill,
2005	2005	promissory note or other instrument of writing for the payment or
2006	2006	forbearance of money may stipulate therein for interest receivable upon
2007	2007	the amount of such bond, bill, note or other instrument of writing, at a rate
2008	2008	not to exceed 15% per annum unless otherwise specifically authorized by
2009	2009	law.
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2052	2052	43 SB 495 25
2053	2053	(b) No penalty shall be assessed against any party for prepayment of
2054	2054	any home loan evidenced by a note secured by a real estate mortgage
2055	2055	where such prepayment is made more than six months after execution of
2056	2056	such note.
2057	2057	(c) The lender may collect from the borrower:
2058	2058	(1) The actual fees paid a public official or agency of the state, or
2059	2059	federal government, for filing, recording or releasing any instrument
2060	2060	relating to a loan subject to the provisions of this section; and
2061	2061	(2) reasonable expenses incurred by the lender in connection with the
2062	2062	making, closing, disbursing, extending, readjusting or renewing of loans
2063	2063	subject to the provisions of this section.
2064	2064	(d) Any person so contracting for a greater rate of interest than that
2065	2065	authorized by this section shall forfeit all interest so contracted for in
2066	2066	excess of the amount authorized under this section; and in addition thereto
2067	2067	shall forfeit a sum of money, to be deducted from the amount due for
2068	2068	principal and lawful interest, equal to the amount of interest contracted for
2069	2069	in excess of the amount authorized by this section and such amounts may
2070	2070	be set up as a defense or counterclaim in any action to enforce the
2071	2071	collection of such obligation and the borrower shall also recover a
2072	2072	reasonable attorney fee.
2073	2073	(e) The interest rates prescribed in subsection (a) shall not apply to a
2074	2074	business or agricultural loan. For the purpose of this section unless a loan
2075	2075	is made primarily for personal, family or household purposes, the loan
2076	2076	shall be considered a business or agricultural loan. For the purpose of this
2077	2077	subsection, a business or agricultural loan shall include credit sales and
2078	2078	notes secured by contracts for deed to real estateSubsection (a) shall not
2079	2079	apply to:
2080	2080	(1) A covered transaction subject to the usury provisions of the
2081	2081	Kansas mortgage business act, K.S.A. 9-2201 et seq., and amendments
2082	2082	thereto;
2083	2083	(2) a consumer credit transaction subject to the usury provisions of
2084	2084	the uniform consumer credit code, K.S.A. 16a-1-101 et seq., and
2085	2085	amendments thereto;
2086	2086	(3) loans made by a qualified plan, as defined by the internal revenue
2087	2087	code, to an individual participant in such plan or to a member of the
2088	2088	family of such individual participant;
2089	2089	(4) a note secured by a real estate mortgage or a contract for deed to
2090	2090	real estate when the note or contract for deed permits adjustment of the
2091	2091	interest rate, the term of the loan or the amortization schedule; or
2092	2092	(5) a business or agricultural transaction. For the purpose of this
2093	2093	section, a "business or agricultural transaction" means a loan, including a
2094	2094	note secured by a contract for deed to real estate or a credit sale, which is
2095	2095	made primarily for purposes other than personal, family or household
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2138	2138	43 SB 495 26
2139	2139	purposes.
2140	2140	(f) Loans made by a qualified plan, as defined in section 401 of the
2141	2141	internal revenue code, to an individual participant in such plan or to a
2142	2142	member of the family of such individual participant, are not subject to the
2143	2143	interest rates prescribed in subsection (a).
2144	2144	(g) The interest rates prescribed in subsection (a) shall not apply to a
2145	2145	note secured by a real estate mortgage or a contract for deed to real estate
2146	2146	where the note or contract for deed permits adjustment of the interest rate,
2147	2147	the term of the loan or the amortization schedule.
2148	2148	(h) A first mortgage loan incurred for personal, family or household
2149	2149	purposes may be subject to certain provisions of the uniform consumer
2150	2150	credit code, K.S.A. 16a-1-101 to 16a-9-102, and amendments thereto, as
2151	2151	follows:
2152	2152	(1) Certain high loan-to-value first mortgage loans are subject to the
2153	2153	provisions of the uniform consumer credit code, other than its usury
2154	2154	provisions. Examples of provisions of the uniform consumer credit code
2155	2155	applicable to high loan-to-value first mortgage loans include, but are not
2156	2156	limited to: Limitations on prepaid finance charges; mandatory appraisals;
2157	2157	required disclosures; restrictions on balloon payments and negative
2158	2158	amortization; limitations on late fees and collection costs; and mandatory
2159	2159	default notices and cure rights.
2160	2160	(2) Certain high interest rate first mortgage loans are subject to
2161	2161	certain provisions of the uniform consumer credit code, including, without
2162	2162	limitation, provisions which impose restrictions on balloon payments and
2163	2163	negative amortization.
2164	2164	(3) If the parties to a first mortgage loan agree in writing to make the
2165	2165	transaction subject to the uniform consumer credit code, than* all
2166	2166	applicable provisions of the uniform consumer credit code, including its
2167	2167	usury provisions, apply to the loan.
2168	2168	This subsection is for informational purposes only and does not limit or
2169	2169	expand the scope of the uniform consumer credit code.
2170	2170	(i) Subsections (b), (c) and (d) do not apply to a first mortgage loan
2171	2171	if:
2172	2172	(1) The parties agree in writing to make the transaction subject to the
2173	2173	uniform consumer credit code, K.S.A. 16a-1-101 to 16a-9-102, and
2174	2174	amendments thereto; or
2175	2175	(2) the loan is a high loan-to-value first mortgage loan subject to any
2176	2176	provision of the uniform consumer credit code.
2177	2177	In the case of a loan described in paragraphs (1) or (2), the applicable
2178	2178	provisions of the uniform consumer credit code shall govern the loan in
2179	2179	lieu of subsections (b), (c) and (d)Subsections (b), (c) and (d) shall not
2180	2180	apply to:
2181	2181	(1) A covered transaction under the Kansas mortgage business act,
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2224	2224	43 SB 495 27
2225	2225	K.S.A. 9-2201 et seq., and amendments thereto; or
2226	2226	(2) a consumer credit transaction under the uniform consumer credit
2227	2227	code, K.S.A. 16a-1-101 et seq., and amendments thereto.
2228	2228	Sec. 27. K.S.A. 16-207d is hereby amended to read as follows: 16-
2229	2229	207d. The state bank commissioner, consumer credit commissioner,
2230	2230	savings and loan commissioner and credit union administrator shall jointly
2231	2231	adopt rules and regulations for the purpose of governing loans made
2232	2232	primarily for personal, family or household purposes and made under the
2233	2233	provisions of subsection (h) of K.S.A. 16-207(e)(4), and any amendments
2234	2234	thereto, and subsection (8) of K.S.A. 16a-2-401, and any amendments
2235	2235	thereto. Such rules and regulations shall be published in only one place in
2236	2236	the Kansas administrative regulations as directed by the state rules and
2237	2237	regulations board.
2238	2238	Sec. 28. K.S.A. 16a-1-101 is hereby amended to read as follows: 16a-
2239	2239	1-101. K.S.A. 16a-1-101 through 16a-9-102 et seq., and amendments
2240	2240	thereto, shall be known and may be cited as the uniform consumer credit
2241	2241	code.
2242	2242	Sec. 29. K.S.A. 16a-1-102 is hereby amended to read as follows: 16a-
2243	2243	1-102. (1) K.S.A. 16a-1-101 through 16a-9-102 et seq., and amendments
2244	2244	thereto, shall be liberally construed and applied to promote its underlying
2245	2245	purposes and policies.
2246	2246	(2) The underlying purposes and policies of this act are:
2247	2247	(a) To simplify, clarify and modernize the law governing retail
2248	2248	installment sales, consumer credit and consumer loans consumer credit
2249	2249	transactions;
2250	2250	(b) to provide rate ceilings to assure an adequate supply of credit to
2251	2251	consumers;
2252	2252	(c) to further consumer understanding of the terms of credit
2253	2253	transactions and to foster competition among suppliers of consumer credit
2254	2254	so that consumers may obtain credit at reasonable cost;
2255	2255	(d) to protect consumer buyers, lessees, and borrowers consumers
2256	2256	against unfair practices by some suppliers of consumer credit, having due
2257	2257	regard for the interests of legitimate and scrupulous creditors; and
2258	2258	(e)(c) to permit and encourage the development of fair and
2259	2259	economically facilitate sound consumer credit practices; and
2260	2260	(f) to make uniform the law, including administrative rules and
2261	2261	regulations, among the various jurisdictions.
2262	2262	(3) A reference to a requirement imposed by K.S.A. 16a-1-101
2263	2263	through 16a-9-102 et seq., and amendments thereto, includes reference to a
2264	2264	related rule and regulation of adopted by the administrator adopted
2265	2265	pursuant to this act.
2266	2266	Sec. 30. K.S.A. 16a-1-103 is hereby amended to read as follows: 16a-
2267	2267	1-103. Unless displaced by the particular provisions of The uniform
2268	2268	1
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2311	2311	consumer credit code, K.S.A. 16a-1-101 through 16a-9-102 et seq., and
2312	2312	amendments thereto, takes precedence in consumer credit transactions, the
2313	2313	uniform commercial code and the principles of law and equity, including
2314	2314	the law relative to capacity to contract, principal and agent, estoppel,
2315	2315	fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other
2316	2316	validating or invalidating cause supplement its provisions.
2317	2317	Sec. 31. K.S.A. 16a-1-104 is hereby amended to read as follows: 16a-
2318	2318	1-104. K.S.A. 16a-1-101 through 16a-9-102 et seq., and amendments
2319	2319	thereto, being a general act intended as a unified coverage of its subject
2320	2320	matter, no part of it shall be deemed to be impliedly implicitly repealed by
2321	2321	subsequent legislation if such construction can reasonably be avoided.
2322	2322	Sec. 32. K.S.A. 16a-1-107 is hereby amended to read as follows: 16a-
2323	2323	1-107. (1) Except as otherwise provided in K.S.A. 16a-1-101 through 16a-
2324	2324	9-102 et seq., and amendments thereto, a consumer may not waive or
2325	2325	agree to forego rights or benefits under such sections of this act.
2326	2326	(2) A claim by a consumer against a creditor for an excess charge,
2327	2327	other any violation of K.S.A. 16a-1-101 through 16a-9-102 et seq., and
2328	2328	amendments thereto, or civil penalty, or a claim against a consumer for
2329	2329	default or breach of a duty imposed by such sections of this act, if disputed
2330	2330	in good faith, may be settled by agreement.
2331	2331	(3) A claim, whether or not disputed, against a consumer may be
2332	2332	settled for less value than the amount claimed.
2333	2333	(4) A settlement in which the consumer waives or agrees to forego
2334	2334	rights or benefits under K.S.A. 16a-1-101 through 16a-9-102 et seq., and
2335	2335	amendments thereto, is invalid if the court as a matter of law finds the
2336	2336	settlement to have been unconscionable at the time it was made. The
2337	2337	competence of the consumer, any deception or coercion practiced upon
2338	2338	him the consumer, the nature and extent of the legal advice received by
2339	2339	him the consumer, and the value of the consideration are relevant to the
2340	2340	issue of unconscionability.
2341	2341	Sec. 33. K.S.A. 16a-1-108 is hereby amended to read as follows: 16a-
2342	2342	1-108. (1) K.S.A. 16a-1-101 through 16a-9-102 et seq., and amendments
2343	2343	thereto, prescribes maximum charges for all creditors, except lessors and
2344	2344	those excluded ( by K.S.A. 16a-1-202, and amendments thereto),
2345	2345	extending extends consumer credit including consumer credit sales
2346	2346	(,subsection (14) of K.S.A. 16a-1-301, and amendments thereto) and
2347	2347	consumer loans (,subsection (17) of K.S.A. 16a-1-301, and amendments
2348	2348	thereto), and displaces existing limitations on the powers of those creditors
2349	2349	based on maximum charges.
2350	2350	(2) With respect to sellers of goods or services, small loan companies,
2351	2351	licensed lenders, consumer and sales finance companies, industrial banks
2352	2352	and, loan companies, and commercial banks and trust companies, this act
2353	2353	displaces existing limitations on their powers based solely on amount or
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2397	2397	duration of credit.
2398	2398	(3) Except as provided in subsection (1) and in the article on effective
2399	2399	date and repealer (article 9), K.S.A. 16a-1-101 through 16a-9-102 et seq.,
2400	2400	and amendments thereto, does not displace limitations on powers of credit
2401	2401	unions, savings banks, savings and loan associations, or other thrift
2402	2402	institutions whether organized for the profit of shareholders or as mutual
2403	2403	organizations.
2404	2404	(4) Except as provided in subsections (1) and (2) and in the article on
2405	2405	effective date and repealer (article 9), K.S.A. 16a-1-101 through 16a-9-102
2406	2406	et seq., and amendments thereto, does not displace:
2407	2407	(a) Limitations on powers of supervised financial organizations
2408	2408	(subsection (44) of K.S.A. 16a-1-301, and amendments thereto) with
2409	2409	respect to the amount of a loan to a single borrower, the ratio of a loan to
2410	2410	the value of collateral, the duration of a loan secured by an interest in land,
2411	2411	or other similar restrictions designed to protect deposits,; or
2412	2412	(b) limitations on powers an organization is authorized to exercise
2413	2413	under the laws of this state or the United States.
2414	2414	Sec. 34. K.S.A. 16a-1-109 is hereby amended to read as follows: 16a-
2415	2415	1-109. The parties to a sale, lease, or loan or modification thereof, which
2416	2416	that is not a consumer credit transaction may agree in a writing signed by
2417	2417	the parties that the transaction is subject to the provisions of K.S.A. 16a-1-
2418	2418	101 through 16a-9-102 applying to consumer credit transactions et seq.,
2419	2419	and amendments thereto. If the parties so agree, the transaction is a
2420	2420	consumer credit transaction for the purposes of K.S.A. 16a-1-101 through
2421	2421	16a-9-102 et seq., and amendments thereto.
2422	2422	Sec. 35. K.S.A. 16a-1-201 is hereby amended to read as follows: 16a-
2423	2423	1-201. (1) Except as otherwise provided in this section, K.S.A. 16a-1-101
2424	2424	through 16a-9-102 et seq., and amendments thereto, apply to consumer
2425	2425	credit transactions made in this state Kansas. For purposes of such sections
2426	2426	of this act, a consumer credit transaction is made in this state Kansas if:
2427	2427	(a) A signed writing written agreement executed by electronic or
2428	2428	physical signature evidencing the obligation or offer of the consumer is
2429	2429	received by the creditor in this state from a consumer in Kansas; or
2430	2430	(b) the creditor induces the consumer who is a resident of this state
2431	2431	Kansas to enter into the transaction by solicitation in this state Kansas by
2432	2432	any means, including, but not limited to: Mail, telephone, radio, television,
2433	2433	electronic mail, internet or any other electronic means.
2434	2434	(2) Except as provided in subsection (5), a consumer credit
2435	2435	transaction made in a state outside of Kansas to a person who was not a
2436	2436	resident of Kansas when the sale, lease, loan or modification was made is
2437	2437	valid and enforceable in Kansas according to its terms to the extent that it
2438	2438	is valid and enforceable under the laws of the state applicable to the
2439	2439	transaction.
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2483	2483	(3) Notwithstanding other provisions of this section, except as
2484	2484	provided in subsection (5), K.S.A. 16a-1-101 et seq., and amendments
2485	2485	thereto, do not apply if the consumer is not a resident of Kansas at the
2486	2486	time of a consumer credit transaction and the parties have agreed that the
2487	2487	law of the consumer's residence applies.
2488	2488	(4) With respect to consumer credit transactions entered into pursuant
2489	2489	to open end open-end credit (subsection (31) of K.S.A. 16a-1-301, and
2490	2490	amendments thereto), this act applies shall apply if the consumer's
2491	2491	communication or indication of intention to establish the arrangement
2492	2492	agreement is received by the creditor in this state conducting business in
2493	2493	Kansas. If no communication or indication of intention is given by the
2494	2494	consumer before the first transaction, this act applies if the creditor's
2495	2495	communication notifying the consumer of the privilege of using the
2496	2496	arrangement is mailed or personally delivered in this state open-end credit
2497	2497	is provided to the consumer in Kansas.
2498	2498	(3)(5) The part on addressing limitations on creditors' remedies (part
2499	2499	1) of the article on remedies and penalties (article 5) applies to actions or
2500	2500	other proceedings brought in this state to enforce rights arising from
2501	2501	consumer credit sales, consumer leases, or consumer loans, transactions or
2502	2502	extortionate extensions of credit, wherever made.
2503	2503	(4) A consumer credit transaction made in another state to a person
2504	2504	who is a resident of this state at the time of the transaction is valid and
2505	2505	enforceable in this state to the extent that it is valid and enforceable under
2506	2506	the laws of the state applicable to the transaction, but the following
2507	2507	provisions apply as though the transaction occurred in this state:
2508	2508	(a) A creditor may not collect charges through actions or other
2509	2509	proceedings in excess of those permitted by the article on finance charges
2510	2510	and related provisions (article 2); and
2511	2511	(b) a creditor may not enforce rights against the consumer with
2512	2512	respect to the provisions of agreements which violate the provisions on
2513	2513	limitations on agreements and practices (part 3) and limitations on
2514	2514	consumer's liability (part 4) of the article on regulation of agreements and
2515	2515	practices (article 3).
2516	2516	(5) Except as provided in subsection (3), a consumer credit
2517	2517	transaction made in another state to a person who was not a resident of this
2518	2518	state when the sale, lease, loan, or modification was made is valid and
2519	2519	enforceable in this state according to its terms to the extent that it is valid
2520	2520	and enforceable under the laws of the state applicable to the transaction.
2521	2521	(6) For the purposes of K.S.A. 16a-1-101 through 16a-9-102 et seq.,
2522	2522	and amendments thereto, the residence of a consumer is the address given
2523	2523	provided by the consumer as the consumer's residence in any writing
2524	2524	written agreement signed by the consumer in connection with a consumer
2525	2525	credit transaction. Until the consumer notifies the creditor of a new or
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2569	2569	different address, the given address is provided by the consumer shall be
2570	2570	presumed to be unchanged.
2571	2571	(7) Notwithstanding other provisions of this section:
2572	2572	(a) Except as provided in subsection (3), K.S.A. 16a-1-101 through
2573	2573	16a-9-102, and amendments thereto, do not apply if the consumer is not a
2574	2574	resident of this state at the time of a credit transaction and the parties have
2575	2575	agreed that the law of the consumer's residence applies; and
2576	2576	(b) K.S.A. 16a-1-101 through 16a-9-102, and amendments thereto,
2577	2577	apply if the consumer is a resident of this state at the time of a credit
2578	2578	transaction and the parties have agreed that the law of the consumer's
2579	2579	residence applies.
2580	2580	(8)(7) Except as provided in subsection (7) (3), the following
2581	2581	agreements by a buyer, lessee, or debtor are invalid with respect to a
2582	2582	consumer credit transaction to which K.S.A. 16a-1-101 through 16a-9-102
2583	2583	et seq., and amendments thereto, apply:
2584	2584	(a) That the law of another state shall apply;
2585	2585	(b) that the consumer consents to the jurisdiction of another state; and
2586	2586	(c) that fixes venue.
2587	2587	(9) The following provisions of this act specify the applicable law
2588	2588	governing certain cases:
2589	2589	(a) Applicability (K.S.A. 16a-6-102, and amendments thereto) of the
2590	2590	part on powers and functions of administrator (part 1) of the article on
2591	2591	administration (article 6); and
2592	2592	(b) applicability (K.S.A. 16a-6-201, and amendments thereto) of the
2593	2593	part on notification and fees (part 2) of the article on administration
2594	2594	(article 6).
2595	2595	(10) With respect to a consumer credit sale or consumer loan to
2596	2596	which K.S.A. 16a-1-101 through 16a-9-102, and amendments thereto,
2597	2597	does not otherwise apply by reason of the foregoing provisions of this
2598	2598	section, if, pursuant to a solicitation relating to a consumer credit sale or
2599	2599	loan received in this state, a person who is a resident of this state sends a
2600	2600	signed writing evidencing the obligation or offer of the person to a creditor
2601	2601	in another state, and the person receives the goods or services purchased or
2602	2602	the cash proceeds of the loan in this state:
2603	2603	(a) The creditor may not contract for or receive charges exceeding
2604	2604	those permitted by this code, and such charges as do exceed those
2605	2605	permitted are excess charges for purposes of subsections (3) and (4) of
2606	2606	K.S.A. 16a-5-201 and 16a-6-113, and amendments thereto, and such
2607	2607	sections shall apply as though the consumer credit sale or consumer loan
2608	2608	were made in this state; and
2609	2609	(b) the part on powers and functions of administrator (part 1) of the
2610	2610	article on administration (article 6) shall apply as though the consumer
2611	2611	credit sale or consumer loan were made in this state.
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2655	2655	Sec. 36. K.S.A. 16a-1-202 is hereby amended to read as follows: 16a-
2656	2656	1-202. K.S.A. 16a-1-101 through 16a-6-414 do not apply to:
2657	2657	(1) Extensions of credit to government or governmental agencies or
2658	2658	instrumentalities;
2659	2659	(2) except as otherwise provided in the article on insurance (article 4),
2660	2660	the sale of insurance by an insurer if the insured is not obligated to pay
2661	2661	installments of the premium and the insurance may terminate or be
2662	2662	cancelled after nonpayment of an installment of the premium, except as
2663	2663	otherwise provided in article 4 of chapter 40 of the Kansas Statutes
2664	2664	Annotated, and amendments thereto;
2665	2665	(3) transactions under public utility or common carrier tariffs if a
2666	2666	subdivision or agency of this state or of the United States regulates the
2667	2667	charges for the services involved, the charges for delayed payment, and
2668	2668	any discount allowed for early payment;
2669	2669	(4) except with respect to disclosure, pawnbrokers licensed and
2670	2670	regulated pursuant to statutes of this state, except with respect to
2671	2671	disclosure;
2672	2672	(5) transactions covered by the Kansas insurance premium finance
2673	2673	company act. (, K.S.A. 40-2601 to 40-2613) et seq., and amendments
2674	2674	thereto.
2675	2675	Sec. 37. K.S.A. 16a-1-301 is hereby amended to read as follows: 16a-
2676	2676	1-301. In addition to definitions appearing in subsequent articles,As used
2677	2677	in K.S.A. 16a-1-101 through 16a-9-102 et seq., and amendments thereto:
2678	2678	(1) "Actuarial method" means the method of allocating payments
2679	2679	made on a debt between the principal and the finance charge pursuant to
2680	2680	which a payment is applied, assuming no delinquency charges late fees or
2681	2681	other additional charges are then due, first to the accumulated finance
2682	2682	charge and then to the unpaid principal balance. When a finance charge is
2683	2683	calculated in accordance with the actuarial method, the contract rate is
2684	2684	applied to the unpaid principal balance for the number of days the
2685	2685	principal balance is unpaid. At the end of each computational period, or
2686	2686	fractional computational period, the unpaid principal balance is increased
2687	2687	by the amount of the finance charge earned during that period and is
2688	2688	decreased by the total payment, if any, made during the period after the
2689	2689	deduction of any delinquency charges late fees or other additional charges
2690	2690	due during the period.
2691	2691	(2) "Administrator" means the deputy commissioner of the consumer
2692	2692	and mortgage lending division appointed by the bank commissioner
2693	2693	pursuant to K.S.A. 75-3135, and amendments thereto.
2694	2694	(3) "Agent" means a person authorized through express or implied
2695	2695	authority to act on behalf of a licensee or applicant.
2696	2696	(4) "Agreement" means the bargain of the parties in fact as found in
2697	2697	their language or by implication from other circumstances including
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2740	2740	43 SB 495 33
2741	2741	course of dealing or usage of trade or course of performance.
2742	2742	(4)(5) "Amount financed" means the net amount of credit provided to
2743	2743	the consumer or on the consumer's behalf. The amount financed shall be
2744	2744	calculated as provided in rules and regulations adopted by the
2745	2745	administrator pursuant to K.S.A. 16a-6-117, and amendments thereto.
2746	2746	(5)(6) "Annual percentage rate" means the finance charge expressed
2747	2747	as a yearly rate, as calculated in accordance with the actuarial method. The
2748	2748	annual percentage rate shall be calculated as provided in rules and
2749	2749	regulations adopted by the administrator pursuant to K.S.A. 16a-6-117,
2750	2750	and amendments thereto same and shall be interpreted in the same manner
2751	2751	and be calculated using the same methodology as prescribed in 15 U.S.C.
2752	2752	§ 1606.
2753	2753	(6) "Appraised value" means, with respect to any real estate at any
2754	2754	time:(a) The total appraised value of the real estate, as reflected in the
2755	2755	most recent records of the tax assessor of the county in which the real
2756	2756	estate is located;(b) the fair market value of the real estate, as reflected in
2757	2757	a written appraisal of the real estate performed by a Kansas licensed or
2758	2758	certified appraiser within the past 12 months; or(c) in the case of a
2759	2759	nonpurchase money real estate transaction, the estimated market value as
2760	2760	determined through an automated valuation model acceptable to the
2761	2761	administrator. As used in this paragraph (c), "automated valuation model"
2762	2762	means an automated system that is used to derive a property value through
2763	2763	the use of publicly available property records and various analytic
2764	2764	methodologies such as comparable sales prices, home characteristics and
2765	2765	historical home price appreciations. Automated valuation models must be
2766	2766	validated by an independent credit rating agency. An automated valuation
2767	2767	model provider shall not accept a property valuation assignment when the
2768	2768	assignment itself is contingent upon the automated valuation model
2769	2769	provider reporting a predetermined property valuation, or when the fee to
2770	2770	be paid to the automated valuation model provider is contingent upon the
2771	2771	property valuation reached or upon the consequences resulting from the
2772	2772	property valuation assignment.
2773	2773	(7) "Applicant" means a person who applies to become licensed
2774	2774	pursuant to K.S.A. 16a-2-302, and amendments thereto.
2775	2775	(8) "Assignment" means the act by which one person transfers to
2776	2776	another person or causes to vest in that other person, any kind of property
2777	2777	or valuable interests and includes any temporary or permanent transfer of
2778	2778	servicing rights in the property or valuable interest.
2779	2779	(9) "Balloon payment" means any scheduled payment that is more
2780	2780	than twice as large as the average of earlier scheduled payments.
2781	2781	(7)(10) "Billing cycle" means the time interval between periodic
2782	2782	billing statement dates same and shall be interpreted in the same manner
2783	2783	as prescribed in 12 C.F.R. 1026.2(a)(4).
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2826	2826	43 SB 495 34
2827	2827	(8)(11) "Cash price" of goods, services, or an interest in land means
2828	2828	the price at which they are offered for sale by the seller to cash buyers in
2829	2829	the ordinary course of business and may include:
2830	2830	(a) The cash price of accessories or services related to the sale, such
2831	2831	as delivery, installation, alterations, modifications, and improvements,; and
2832	2832	(b) taxes to the extent imposed on a cash sale of the goods, services,
2833	2833	or interest in land. The cash price stated by the seller to the buyer in a
2834	2834	disclosure statement is presumed to be the cash price.
2835	2835	(9)(12) "Closed endClosed-end credit" means a consumer loan or a
2836	2836	consumer credit sale which is not incurred pursuant to open end credit the
2837	2837	same and shall be interpreted in the same manner as prescribed in 12
2838	2838	C.F.R. 1026.2(a)(10).
2839	2839	(10)(13) "Closing costs" with respect to a debt secured by an interest
2840	2840	in land includes:
2841	2841	(a) The actual fees paid a public official or agency of the state or
2842	2842	federal government, for filing, recording or releasing any instrument
2843	2843	relating to the debt; and
2844	2844	(b) bona fide and reasonable expenses incurred by the lender in
2845	2845	connection with the making, closing, disbursing, extending, readjusting or
2846	2846	renewing the debt which are payable to third parties not related to the
2847	2847	lender, except that reasonable fees for an appraisal made by the lender or
2848	2848	related party are permissible.
2849	2849	(11) "Code mortgage rate" means the greater of:
2850	2850	(a) 12%; or
2851	2851	(b) the sum of:
2852	2852	(i) The yield on 30-year fixed rate conventional home mortgage loans
2853	2853	committed for delivery within 61 to 90 days accepted under the federal
2854	2854	home loan mortgage corporation's or any successor's daily offerings for
2855	2855	sale on the last day on which commitments for such mortgages were
2856	2856	received in the previous month; and
2857	2857	(ii) 5%.
2858	2858	If the reference rate referred to in subparagraph (i) of paragraph (b) is
2859	2859	discontinued, becomes impractical to use, or is otherwise not readily
2860	2860	ascertainable for any reason, the administrator may designate a
2861	2861	comparable replacement reference rate and, upon publishing notice of the
2862	2862	same, such replacement reference rate shall become the reference rate
2863	2863	referred to in subparagraph (i) of paragraph (b). The secretary of state shall
2864	2864	publish notice of the code mortgage rate not later than the second issue of
2865	2865	the Kansas register published each month.
2866	2866	(12)(14) "Conspicuous" means a term or clause is conspicuous when
2867	2867	it that is so written that so a reasonable person against whom it is to
2868	2868	operate ought to have noticed it. Whether a term or clause is conspicuous
2869	2869	or not is for decision by the trier of fact.
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2912	2912	43 SB 495 35
2913	2913	(13)(15) "Consumer" means the buyer, lessee, or debtor to whom
2914	2914	credit is offered or granted in a consumer credit transaction.
2915	2915	(16) "Consumer credit filer" means a person who is required to file a
2916	2916	notice with the administrator pursuant to K.S.A. 16a-6-201 et seq., and
2917	2917	amendments thereto.
2918	2918	(17) "Consumer credit insurance" means insurance, other than
2919	2919	insurance on property, by which the satisfaction of debt in whole or in part
2920	2920	is a benefit provided, but does not include insurance that:
2921	2921	(a) Is provided in relation to a consumer credit transaction in which
2922	2922	a payment is scheduled more than 15 years after the extension of credit;
2923	2923	(b) is issued as an isolated transaction on the part of the insurer not
2924	2924	related to an agreement or plan for insuring consumers of the creditor; or
2925	2925	(c) indemnifies the creditor against loss due to the consumer's
2926	2926	default.
2927	2927	(14)(18) "Consumer credit sale" means:
2928	2928	(a) Except as provided in paragraph (b), a "consumer credit sale" is a
2929	2929	sale of goods, or services, or an interest in land in which:
2930	2930	(i) Credit is granted either by a seller who regularly engages as a
2931	2931	seller in credit transactions of the same kind or pursuant to a credit card
2932	2932	other than a lender credit card;
2933	2933	(ii) the buyer is a person other than an organization;
2934	2934	(iii) the goods, or services, or interest in land are purchased primarily
2935	2935	for a personal, family or household purpose;
2936	2936	(iv) either the debt is by written agreement payable in more than four
2937	2937	installments or a finance charge is made; and
2938	2938	(v) with respect to a sale of goods or services, the amount financed
2939	2939	does not exceed $25,000 the threshold amount.
2940	2940	(b) A "consumer credit sale" does not include:
2941	2941	(i) A sale in which the seller allows the buyer to purchase goods or
2942	2942	services pursuant to a lender credit card; or
2943	2943	(ii) a sale of an interest in land, unless the parties agree in writing to
2944	2944	make the transaction subject to the uniform consumer credit code.
2945	2945	(15)(19) "Consumer credit transaction" means a consumer credit sale,
2946	2946	consumer lease, or consumer loan or a modification thereof including a
2947	2947	refinancing, consolidation, or deferral.
2948	2948	(16)(20) "Consumer lease" means a lease of goods:
2949	2949	(a) WhichThat a lessor regularly engaged in the business of leasing
2950	2950	makes to a person, other than an organization, who takes under the lease
2951	2951	primarily for a personal, family or household purpose;
2952	2952	(b) in which the amount payable under the lease does not exceed
2953	2953	$25,000 the threshold amount;
2954	2954	(c) whichthat is for a term exceeding four months; and
2955	2955	(d) whichthat is not made pursuant to a lender credit card.
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2998	2998	43 SB 495 36
2999	2999	(17)(21) "Consumer loan":
3000	3000	(a) Except as provided in paragraph (b), a "consumer loan" is a loan
3001	3001	made by a person regularly engaged in the business of making loans in
3002	3002	which:
3003	3003	(i) The debtor is a person other than an organization;
3004	3004	(ii) the debt is incurred primarily for a personal, family or household
3005	3005	purpose;
3006	3006	(iii) either the debt is payable by written agreement in more than four
3007	3007	installments or a finance charge is made; and
3008	3008	(iv) either the amount financed does not exceed $25,000 or the debt is
3009	3009	secured by an interest in land the threshold amount.
3010	3010	(b) Unless the loan is made subject to the uniform consumer credit
3011	3011	code by written agreement, a "consumer loan" does not include:
3012	3012	(i) A loan secured by a first mortgage unless:; or
3013	3013	(A) The loan-to-value ratio of the loan at the time when made
3014	3014	exceeds 100%; or
3015	3015	(B) in the case of subsection (1) of K.S.A. 16a-3-308a, and
3016	3016	amendments thereto, the annual percentage rate of the loan exceeds the
3017	3017	code mortgage rate; or
3018	3018	(ii) a loan made by a qualified plan, as defined in section 401 of the
3019	3019	internal revenue code, to an individual participant in such plan or to a
3020	3020	member of the family of such individual participant.
3021	3021	(18)(22) "Credit" means the right granted by a creditor to a debtor to
3022	3022	defer payment of debt or to incur debt and defer its payment.
3023	3023	(19)(23) "Credit card" means any card, plate or other single credit
3024	3024	device that may be used from time to time to obtain credit. Since this
3025	3025	involves the possibility of repeated use of a single device, checks and
3026	3026	similar instruments that can be used only once to obtain a single credit
3027	3027	extension are not credit cards.
3028	3028	(20)(24) "Creditor" means a person who regularly extends engages,
3029	3029	directly or indirectly in extending credit in a consumer credit transaction
3030	3030	which is payable by a written agreement in more than four installments or
3031	3031	for which the payment of a finance charge is or may be required and is the
3032	3032	person to whom the debt arising from the consumer credit transaction is
3033	3033	initially payable on the face of the evidence of indebtedness or, if there is
3034	3034	no such evidence of indebtedness, by written agreement or, except as
3035	3035	otherwise provided, an assignee of a creditor's right to payment. The term
3036	3036	assignee does not in itself impose on an assignee any obligation of its
3037	3037	assignor. In the case of credit extended pursuant to a credit card, the
3038	3038	creditor is the card issuer and not another person honoring the credit card.
3039	3039	(25) "Director" means a member of a licensee's or applicant's board
3040	3040	of directors.
3041	3041	(21)(26) "Earnings" means compensation paid or payable to an
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3084	3084	43 SB 495 37
3085	3085	individual or for such individual's account for personal services rendered
3086	3086	or to be rendered by such individual, whether denominated as wages,
3087	3087	salary, commission, bonus, or otherwise, and includes periodic payments
3088	3088	pursuant to a pension, retirement, or disability program.
3089	3089	(22)(27) "Finance charge" means all charges payable directly or
3090	3090	indirectly by the consumer and imposed directly or indirectly by the
3091	3091	creditor as an incident to or as a condition of the extension of credit. The
3092	3092	finance charge shall be calculated as provided in rules and regulations
3093	3093	adopted by the administrator pursuant to K.S.A. 16a-6-117 16a-6-104, and
3094	3094	amendments thereto.
3095	3095	(23) "First mortgage" means a first priority mortgage lien or similar
3096	3096	real property security interest.
3097	3097	(24)(28) "Goods" includes goods not in existence at the time the
3098	3098	transaction is entered into and merchandise certificates, but excludes
3099	3099	money, chattel paper, documents of title, and instruments.
3100	3100	(29) "Installment" means a periodic payment required or permitted
3101	3101	by agreement in connection with a consumer credit transaction.
3102	3102	(25)(30) Except as otherwise provided, "Lender" includes an assignee
3103	3103	of the lender's right to payment but use of the term does not in itself
3104	3104	impose on an assignee any obligation of the lender with respect to events
3105	3105	occurring before the assignment.
3106	3106	(26)(31) "Lender credit card" means a credit card issued by a
3107	3107	supervised lender.
3108	3108	(32) "License" means the authorization allowing a person to make
3109	3109	supervised loans pursuant to the provisions on authority to make
3110	3110	supervised loans.
3111	3111	(33) "Licensee" means a person that is licensed by the administrator to
3112	3112	engage in supervised loan activity.
3113	3113	(34) "Licensing" includes the administrator's process respecting the
3114	3114	grant, denial, revocation, suspension, annulment, withdrawal or
3115	3115	amendment of a license.
3116	3116	(27) "Loan":
3117	3117	(35) (a) "Loan": Except as provided in paragraph (b), a "loan"
3118	3118	includes:
3119	3119	(i) The creation of debt by the lender's payment of or agreement to
3120	3120	pay money to the debtor or to a third party for the account of the debtor;
3121	3121	(ii) the creation of debt either pursuant to a lender credit card or by a
3122	3122	cash advance to a debtor pursuant to a credit card other than a lender credit
3123	3123	card;
3124	3124	(iii) the creation of debt by a credit to an account with the lender upon
3125	3125	which the debtor is entitled to draw immediately; and
3126	3126	(iv) the forbearance of debt arising from a loan.
3127	3127	(b) A "loan" does not include the payment or agreement to pay money
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3170	3170	43 SB 495 38
3171	3171	to a third party for the account of a debtor if the debt of the debtor arises
3172	3172	from a sale or lease and results from use of either a credit card issued by a
3173	3173	person primarily in the business of selling or leasing goods or services or
3174	3174	any other credit card which may be used for the purchase of goods or
3175	3175	services and which is not a lender credit card.
3176	3176	(28) "Loan-to-value ratio", at any time for any loan secured by an
3177	3177	interest in real estate, means a fraction expressed as a percentage:
3178	3178	(a) The numerator of which is the aggregate unpaid principal balance
3179	3179	of all loans secured by a first mortgage or a second mortgage encumbering
3180	3180	the real estate at such time; and
3181	3181	(b) the denominator of which is the appraised value of the real estate.
3182	3182	(36) "Member" means, for the following business organizations:
3183	3183	(a) A co-partnership, a limited or general partner;
3184	3184	(b) an association that is a corporation, an owner;
3185	3185	(c) an association that is a member-managed limited liability
3186	3186	company, the named managing partner; and
3187	3187	(d) an association that is a limited liability company managed by
3188	3188	elected or appointed managers, all elected or appointed managers.
3189	3189	(29)(37) "Merchandise certificate" means a writing or electronic
3190	3190	instrument issued by a seller not redeemable in cash and usable in its face
3191	3191	amount in lieu of cash in exchange for goods or services.
3192	3192	(38) "Nationwide mortgage licensing system and registry" means a
3193	3193	mortgage licensing system developed and maintained by the conference of
3194	3194	state bank supervisors and the American association of residential
3195	3195	mortgage regulators for the licensing and registration of licensed
3196	3196	mortgage loan originators and other financial service providers.
3197	3197	(39) "Officer" means a person who participates or has the authority
3198	3198	to participate, other than in the capacity of a director, in major
3199	3199	policymaking functions of the licensee or applicant, whether or not the
3200	3200	person has an official title, including the chief executive officer, chief
3201	3201	financial officer, chief operations officer, chief legal officer, chief credit
3202	3202	officer, chief compliance officer and every vice president.
3203	3203	(30)(40) "Official fees" means:
3204	3204	(a) Fees and charges Taxes and fees prescribed by law which that
3205	3205	actually are or will be paid to public officials for determining the existence
3206	3206	of or for perfecting, releasing, or satisfying a security interest related to a
3207	3207	consumer credit sale, consumer lease, or consumer loan transaction; or
3208	3208	(b) premiums payable for insurance in lieu of perfecting a security
3209	3209	interest otherwise required by the creditor in connection with the sale,
3210	3210	lease, or loan, if the premium does not exceed the fees and charges
3211	3211	described in paragraph (a) which would otherwise be payable.
3212	3212	(31)(41) "Open end Open-end credit" means an arrangement pursuant
3213	3213	to which:
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3256	3256	43 SB 495 39
3257	3257	(a) A creditor may permit a consumer, from time to time, to purchase
3258	3258	goods or services on credit from the creditor or pursuant to a credit card, or
3259	3259	to obtain loans from the creditor or pursuant to a credit card;
3260	3260	(b) the unpaid balance of amounts financed and the finance and other
3261	3261	appropriate charges are debited to an account;
3262	3262	(c) the finance charge, if made, is computed on the outstanding
3263	3263	unpaid balances of the consumer's account from time to time; and
3264	3264	(d) the consumer has the privilege of paying the balances in
3265	3265	installments.
3266	3266	(32)(42) "Organization" means a corporation, limited liability
3267	3267	company, government or governmental subdivision or agency, trust, estate,
3268	3268	partnership, cooperative or, association or any other legally recognized
3269	3269	business entity.
3270	3270	(33)(43) "Person" includes a natural person or an individual, and an
3271	3271	organization.
3272	3272	(34)(44) (a) "Person related to" with respect to an individual means:
3273	3273	(i) The spouse of the individual,;
3274	3274	(ii) a brother, brother-in-law, sister, sister-in-law of the individual,;
3275	3275	(iii) an ancestor or lineal descendant of the individual or the
3276	3276	individual's spouse, and; or
3277	3277	(iv) any other relative, by blood, adoption or marriage, of the
3278	3278	individual or such individual's spouse who shares the same home with the
3279	3279	individual.
3280	3280	(b) "Person related to" with respect to an organization means:
3281	3281	(i) A person directly or indirectly controlling, controlled by or under
3282	3282	common control with the organization,;
3283	3283	(ii) an officer or director of the organization or a person performing
3284	3284	similar functions with respect to the organization or to a person related to
3285	3285	the organization,;
3286	3286	(iii) the spouse of a person related to the organization, and; or
3287	3287	(iv) a relative by blood, adoption or marriage of a person related to
3288	3288	the organization who shares the same home with such person.
3289	3289	(35)(45) "Prepaid finance charge" means any finance charge paid
3290	3290	separately in cash or by check before or at consummation of a transaction,
3291	3291	or withheld from the proceeds of the credit at any time. Prepaid finance
3292	3292	charges shall be calculated as provided in rules and regulations adopted by
3293	3293	the administrator pursuant to K.S.A. 16a-6-117, and amendments thereto.
3294	3294	(36) "Presumed" or "presumption" means that the trier of fact must
3295	3295	find the existence of the fact presumed unless and until evidence is
3296	3296	introduced which would support a finding of its nonexistence.
3297	3297	(37)(46) "Principal" means the total of the amount financed and the
3298	3298	prepaid finance charges, except that prepaid finance charges are not added
3299	3299	to the amount financed to the extent such prepaid finance charges are paid
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3342	3342	43 SB 495 40
3343	3343	separately in cash or by check by the consumer. The administrator may
3344	3344	adopt rules and regulations regarding the determination or calculation of
3345	3345	the principal or the principal balance pursuant to K.S.A. 16a-6-117, and
3346	3346	amendments thereto.
3347	3347	(47) "Regularly engaged" means a person that extends credit directly
3348	3348	or through assignment more than 25 times in any state during the
3349	3349	preceding calendar year.
3350	3350	(38)(48) "Sale of goods" includes any agreement in the form of a
3351	3351	bailment or lease of goods if the bailee or lessee agrees to pay as
3352	3352	compensation for use a sum substantially equivalent to or in excess of the
3353	3353	aggregate value of the goods involved and it is agreed that the bailee or
3354	3354	lessee will become, or for no other or a nominal consideration has the
3355	3355	option to become, the owner of the goods upon full compliance with such
3356	3356	bailee's or lessee's obligations under the agreements.
3357	3357	(39) "Sale of an interest in land" includes a lease in which the lessee
3358	3358	has an option to purchase the interest and all or a substantial part of the
3359	3359	rental or other payments previously made by the lessee are applied to the
3360	3360	purchase price.
3361	3361	(40)(49) "Sale of services" means furnishing or agreeing to furnish
3362	3362	services and includes making arrangements to have services furnished by
3363	3363	another.
3364	3364	(41) "Second mortgage" means a second or other subordinate priority
3365	3365	mortgage lien or similar real property security interest.
3366	3366	(42)(50) "Seller": Except as otherwise provided, "seller" includes an
3367	3367	assignee of the seller's right to payment but use of the term does not in
3368	3368	itself impose on an assignee any obligation of the seller with respect to
3369	3369	events occurring before the assignment.
3370	3370	(43)(51) "Services" includes:
3371	3371	(a) Work, labor, and other personal services,;
3372	3372	(b) privileges with respect to transportation, hotel and restaurant
3373	3373	accommodations, education, entertainment, recreation, physical culture,
3374	3374	hospital accommodations, funerals, cemetery accommodations, and the
3375	3375	like,; and
3376	3376	(c) insurance.
3377	3377	(44)(52) "Supervised financial organization" means a person, other
3378	3378	than an insurance company or other organization primarily engaged in an
3379	3379	insurance business:
3380	3380	(a) Organized, chartered, or holding an authorization certificate under
3381	3381	the laws of any state or of the United States which authorize the person to
3382	3382	make loans and to receive deposits, including a savings, share, certificate
3383	3383	or deposit account; and
3384	3384	(b) subject to supervision by an official or agency of such state or of
3385	3385	the United States.
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3425	3425	40
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3427	3427	42
3428	3428	43 SB 495 41
3429	3429	(45)(53) "Supervised lender" means a person authorized to make or
3430	3430	take assignments of supervised loans, either under a license issued by the
3431	3431	administrator (K.S.A. 16a-2-301 and amendments thereto) or as a
3432	3432	supervised financial organization (subsection (44) of K.S.A. 16a-1-301
3433	3433	and amendments thereto).
3434	3434	(46)(54) "Supervised loan" means a consumer loan, including a loan
3435	3435	made pursuant to open end open-end credit, with respect to which the
3436	3436	annual percentage rate exceeds 12%.
3437	3437	(55) "Threshold amount" means an amount equal to at least $69,500
3438	3438	as of July 1, 2024, and adjusted effective January 1 of each subsequent
3439	3439	year by any annual percentage increase in the consumer price index for
3440	3440	urban wage earners and clerical workers that was in effect on June 1 of
3441	3441	the preceding year. Any increase or decrease in the threshold amount shall
3442	3442	be rounded up or down to the nearest increment of $100. If the consumer
3443	3443	price index for urban wage earners and clerical workers in effect on June
3444	3444	1 does not increase from the consumer price index for urban wage earners
3445	3445	and clerical workers in effect on June 1 of the preceding year, the
3446	3446	threshold amount effective the following January 1 through December 31
3447	3447	shall not change from the preceding year.
3448	3448	(47)(56) "Written agreement" means an agreement such as a
3449	3449	promissory note, contract or lease that is evidence of or relates to the
3450	3450	indebtedness. A letter that merely confirms an oral agreement does not
3451	3451	constitute a written agreement for purposes of this subsection unless
3452	3452	signed by the person against whom enforcement is sought.
3453	3453	(48)(57) "Written administrative interpretation" means any written
3454	3454	communication from the consumer credit commissioner which is the
3455	3455	official interpretation as so stated in said written communication by the
3456	3456	consumer credit commissioner of administrator regarding the Kansas
3457	3457	uniform consumer credit code and rules and regulations pertaining thereto.
3458	3458	Sec. 38. K.S.A. 16a-2-103 is hereby amended to read as follows: 16a-
3459	3459	2-103. (1) The provisions of this section shall apply to all consumer loans
3460	3460	and all consumer credit sales.
3461	3461	(2) The finance charge on a consumer loan or consumer credit sale
3462	3462	shall be computed in accordance with the actuarial method using either the
3463	3463	365
3464	3464	/365 method or, if the consumer agrees in writing, the
3465	3465	360
3466	3466	/360 method:
3467	3467	(a) The
3468	3468	365
3469	3469	/365 method means a method of calculating the finance
3470	3470	charge whereby the contract rate is divided by 365 and the resulting daily
3471	3471	rate is multiplied by the outstanding principal amount and the actual
3472	3472	number of days in the computational period.
3473	3473	(b) The
3474	3474	360
3475	3475	/360 method means a method of calculating the finance
3476	3476	charge whereby the contract rate is divided by 360 and the resulting daily
3477	3477	rate is multiplied by the outstanding principal amount and the number of
3478	3478	assumed days in the computational period. For the purposes of this
3479	3479	1
3480	3480	2
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3520	3520	42
3521	3521	43 SB 495 42
3522	3522	subsection, a creditor may assume that a month has 30 days, regardless of
3523	3523	the actual number of days in the month.
3524	3524	(c) If the documentation evidencing a consumer credit contract is
3525	3525	silent regarding whether the
3526	3526	365
3527	3527	/365 method or the
3528	3528	360
3529	3529	/360 method applies, then
3530	3530	the
3531	3531	365
3532	3532	/365 method shall apply.
3533	3533	(3) In addition to the methods listed under subsection 2, the
3534	3534	computation of finance charges on a consumer loan secured by a first or
3535	3535	second lien real estate mortgage may be computed using the following
3536	3536	amortization method: The contract rate is divided by 360 and the resulting
3537	3537	rate is multiplied by the outstanding principal amount and 30 assumed
3538	3538	days between scheduled due dates. For the purposes of this subsection, a
3539	3539	creditor shall assume there are 30 days in the computational period,
3540	3540	regardless of the actual number of days between due dates.
3541	3541	(4) The finance charge on a consumer loan or consumer credit sale
3542	3542	may not be computed in accordance with the
3543	3543	365
3544	3544	/360 method, whereby the
3545	3545	contract rate is divided by 360 and the resulting daily rate is multiplied by
3546	3546	the outstanding principal amount and the actual number of days in the
3547	3547	computational period.
3548	3548	(5)(4) Creditors may ignore the effect of a leap year in computing the
3549	3549	finance charge.
3550	3550	(6)(5) (a) Except for any portion of a loan made pursuant to a lender
3551	3551	credit card which does not represent a cash advance, interest or other
3552	3552	periodic finance charges on a consumer loan may accrue only on that
3553	3553	portion of the principal which has been disbursed to or for the benefit of
3554	3554	the consumer.
3555	3555	(b) On a consumer credit sale, interest or other periodic finance
3556	3556	charges may accrue only on that portion of the principal which relates to
3557	3557	goods, services or an interest in land, as the case may be, which has or
3558	3558	services that have been shipped, delivered, furnished or otherwise made
3559	3559	available to or for the benefit of the consumer or has have been disbursed
3560	3560	to or for the benefit of the consumer.
3561	3561	(7) Subsection (2) does not apply to a consumer credit sale the
3562	3562	finance charge for which is computed in accordance with subsection (5) of
3563	3563	K.S.A. 16a-2-201, and amendments thereto.
3564	3564	(8) Notwithstanding any other provisions of this act, the finance
3565	3565	charges on consumer loans or consumer credit sales originating prior to
3566	3566	January 1, 1994, which computed such finance charges on a precomputed
3567	3567	basis, shall be subject to the conditions, limitations and restrictions
3568	3568	contained in the uniform consumer credit code as in effect on December
3569	3569	31, 1993, as such code relates to precomputed finance charges.
3570	3570	(9) This section shall be supplemental to and a part of the uniform
3571	3571	consumer credit code.
3572	3572	Sec. 39. K.S.A. 16a-2-104 is hereby amended to read as follows: 16a-
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3615	3615	43 SB 495 43
3616	3616	2-104. (1) A creditor shall credit a payment to the consumer's account on
3617	3617	the date of receipt, except when a delay in crediting does not result in a
3618	3618	finance charge or other charge.
3619	3619	(2) Notwithstanding subsection (1), if a creditor specifies, in a writing
3620	3620	delivered to the consumer, reasonable requirements for the consumer to
3621	3621	follow in making payments, but accepts a payment that does not conform
3622	3622	to those requirements, then the creditor shall credit the payment within
3623	3623	five days after receipt.
3624	3624	(3) This section shall be supplemental to and a part of the uniform
3625	3625	consumer credit code.
3626	3626	Sec. 40. K.S.A. 16a-2-201 is hereby amended to read as follows: 16a-
3627	3627	2-201. (1) This section applies only to a closed end closed-end consumer
3628	3628	credit sale.
3629	3629	(2) A seller may charge a finance charge at any rate agreed to by the
3630	3630	parties, subject, however, to the limitations on prepaid finance charges set
3631	3631	forth in subsection (3).
3632	3632	(3) A seller may charge a prepaid finance charge:
3633	3633	(a) For a consumer credit sale secured by a security interest in a
3634	3634	manufactured home as defined by 42 U.S.C. § 5402(6), in an amount not
3635	3635	to exceed 5% of the amount financed for the sole purpose of reducing the
3636	3636	interest rate of the consumer credit sale; or
3637	3637	(b) For any other consumer credit sale, an amount not to exceed the
3638	3638	lesser of 2% of the amount financed or $100 $300.
3639	3639	(c)(b) A prepaid finance charge permitted under this subsection is in
3640	3640	addition to finance charges permitted under subsection (2). A prepaid
3641	3641	finance charge permitted under this subsection is fully earned when paid
3642	3642	and is nonrefundable, unless the parties agree otherwise in writing.
3643	3643	(4) If the sale is precomputed:
3644	3644	(a) The finance charge may be calculated on the assumption that all
3645	3645	scheduled payments will be made when due, and the fact that payments are
3646	3646	made either before or after the due date does not affect the amount of
3647	3647	finance charge which the creditor may charge or receive; and
3648	3648	(b) the effect of prepayment is governed by subsection (5).
3649	3649	(5) Rebate upon prepayment:
3650	3650	(a) Except as provided for in this section, upon prepayment in full of
3651	3651	a precomputed consumer credit transaction, the creditor shall rebate to the
3652	3652	consumer an amount not less than the amount of rebate provided in
3653	3653	subsection (b), paragraph (1), or redetermine the earned finance charge as
3654	3654	provided in subsection (b), paragraph (2), and rebate any other unearned
3655	3655	charges including charges for insurance. The rebate for charges for
3656	3656	insurance shall be as prescribed by statute, rules and regulations and
3657	3657	administrative interpretations by the administrator. If the rebate otherwise
3658	3658	required is less than $1, no rebate need be made.
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3660	3660	2
3661	3661	3
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3700	3700	42
3701	3701	43 SB 495 44
3702	3702	(b) The amount of rebate and redetermined earned finance charge
3703	3703	shall be as follows:
3704	3704	(1) The amount of rebate shall be determined by applying, according
3705	3705	to the actuarial method, the rate of finance charge which was required to
3706	3706	be disclosed in the transaction:
3707	3707	(i) Where no deferral charges have been made in a transaction, to the
3708	3708	unpaid balances for the actual time remaining as originally scheduled for
3709	3709	the period following prepayment; and
3710	3710	(ii) where deferral charges have been made in a transaction, to the
3711	3711	unpaid balances for the actual time remaining as extended by deferral for
3712	3712	the period following prepayment.
3713	3713	The time remaining for the period following prepayment shall be either
3714	3714	the full days following prepayment; or both the full days, counting the date
3715	3715	of prepayment, between the prepayment date and the end of the
3716	3716	computational period in which the prepayment occurs, and the full
3717	3717	computational periods following the date of prepayment to the scheduled
3718	3718	due date of the final installment of the transaction.
3719	3719	(2) The redetermined earned finance charge shall be determined by
3720	3720	applying, according to the actuarial method, the rate of finance charge
3721	3721	which was required to be disclosed in the transaction to the actual unpaid
3722	3722	balances of the amount financed for the actual time the unpaid balances
3723	3723	were outstanding as of the date of prepayment. Any delinquency or
3724	3724	deferral charges collected before the date of prepayment do not become a
3725	3725	part of the total finance charge for purposes of rebating unearned charges.
3726	3726	(c) Upon prepayment, but not otherwise, of a consumer credit
3727	3727	transaction whether or not precomputed, other than a consumer lease, a
3728	3728	consumer rental purchase agreement, or a transaction pursuant to open end
3729	3729	credit:
3730	3730	(1) If the prepayment is in full, the creditor may collect or retain a
3731	3731	minimum charge not exceeding $5 in a transaction which had an amount
3732	3732	financed of $75 or less, or not exceeding $7.50 and in a transaction which
3733	3733	had an amount financed of more than $75, if the finance charge earned at
3734	3734	the time of prepayment is less than the minimum allowed pursuant to this
3735	3735	subsection.
3736	3736	(2) If the prepayment is in part, the creditor may not collect or retain
3737	3737	a minimum finance charge.
3738	3738	(d) For the purposes of this section, the following defined terms
3739	3739	apply:
3740	3740	(1) "Computational period" means the interval between scheduled
3741	3741	due dates of installments under the transaction if the intervals are
3742	3742	substantially equal or, if the intervals are not substantially equal, one
3743	3743	month if the smallest interval between the scheduled due dates of
3744	3744	installments under the transaction is one month or more, and otherwise one
3745	3745	1
3746	3746	2
3747	3747	3
3748	3748	4
3749	3749	5
3750	3750	6
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3787	3787	43 SB 495 45
3788	3788	week.
3789	3789	(2) The "interval" between specified dates means the interval between
3790	3790	them including one or the other but not both of them. If the interval
3791	3791	between the date of the transaction and the due date of the first scheduled
3792	3792	installment does not exceed one month by more than fifteen days when the
3793	3793	computational period is one month, or eleven days when the computational
3794	3794	period is one week, the interval may be considered by the creditor as one
3795	3795	computational period.
3796	3796	(e) This section does not preclude the collection or retention by the
3797	3797	creditor of delinquency charges.
3798	3798	(f) If the maturity is accelerated by any reason and judgment is
3799	3799	obtained, the consumer is entitled to the same rebate as if payment had
3800	3800	been made on the date maturity is accelerated.
3801	3801	(g) Upon prepayment in full of a precomputed consumer credit
3802	3802	transaction by the proceeds of consumer credit insurance, the consumer or
3803	3803	the consumer's estate is entitled to the same rebate as though the consumer
3804	3804	had prepaid the agreement on the date the proceeds of the insurance are
3805	3805	paid to the creditor, but no later than ten business days after satisfactory
3806	3806	proof of loss is furnished to the creditor.
3807	3807	(6) This section does not apply to a sale of an interest in land.
3808	3808	Subsection (11) of K.S.A. 16a-2-401, and amendments thereto, governs
3809	3809	the limitations on finance charges for a contract for deed to real estate
3810	3810	where the parties agree in writing to make the transaction subject to the
3811	3811	uniform consumer credit code.
3812	3812	Sec. 41. K.S.A. 16a-2-202 is hereby amended to read as follows: 16a-
3813	3813	2-202. (1) This section shall apply only to open-end consumer credit sales.
3814	3814	(2) With respect to a consumer credit sale made pursuant to open end
3815	3815	credit, A seller may charge a finance charge at any rate agreed to by the
3816	3816	parties.
3817	3817	(2)(3) A charge may be made in each billing cycle which is a
3818	3818	percentage of an amount no greater than:
3819	3819	(a) The average daily balance of the account, which is the sum of the
3820	3820	actual amounts outstanding each day during the billing cycle divided by
3821	3821	the number of days in the cycle; or
3822	3822	(b) the unpaid balance of the account on the last day of the billing
3823	3823	cycle.
3824	3824	(3)(4) If the billing cycle is monthly, the charges may not exceed
3825	3825	1
3826	3826	/12
3827	3827	of the annual rate agreed to by the consumer. If the billing cycle is not
3828	3828	monthly, the maximum charge is that percentage which bears the same
3829	3829	relation to the applicable monthly percentage as the number of days in the
3830	3830	billing cycle bears to 30. For purposes of this subsection, a variation of not
3831	3831	more than four days from month to month is "the last day of the billing
3832	3832	cycle."
3833	3833	1
3834	3834	2
3835	3835	3
3836	3836	4
3837	3837	5
3838	3838	6
3839	3839	7
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3875	3875	43 SB 495 46
3876	3876	(4)(5) For any period in which a finance charge is due, the parties
3877	3877	may agree in writing on a minimum amount.
3878	3878	(5) This section does not apply to a sale of an interest in land.
3879	3879	Subsection (11) of K.S.A. 16a-2-401, and amendments thereto, governs
3880	3880	the limitations on finance charges for a contract for deed to real estate
3881	3881	where the parties agree in writing to make the transaction subject to the
3882	3882	uniform consumer credit code.
3883	3883	Sec. 42. K.S.A. 16a-2-301 is hereby amended to read as follows: 16a-
3884	3884	2-301. (1) Unless a person is a supervised financial organization; or has
3885	3885	first obtained a license from the administrator authorizing such person to
3886	3886	make supervised loans; or is the federal deposit insurance corporation
3887	3887	acting in its corporate capacity or as receiver exempt from licensing
3888	3888	pursuant to section 16, and amendments thereto, such person shall not
3889	3889	engage in the business of:
3890	3890	(a) Making supervised loans; or
3891	3891	(b) taking assignments of and directly or indirectly, including through
3892	3892	the use of supervised loans servicing contracts or otherwise, and either:
3893	3893	(i) Undertaking collection of payments from debtors arising from
3894	3894	supervised loans, but such person may collect for three months without a
3895	3895	license if the person promptly applies for a license and such person's
3896	3896	application has not been denied; or
3897	3897	(c)(ii) taking assignments of and directly or indirectly, including
3898	3898	through the use of servicing contracts or otherwise, enforcing rights
3899	3899	against debtors arising from supervised loans, but such person may enforce
3900	3900	for three months without a license if the person promptly applies for a
3901	3901	license and such person's application has not been denied.
3902	3902	(2) Residential mortgage loan origination shall only be conducted in
3903	3903	this state by an individual who has first been registered with the
3904	3904	administrator as a residential mortgage loan originator and maintains a
3905	3905	valid unique identifier issued by the nationwide mortgage licensing system
3906	3906	and registry if operational at the time of registration.
3907	3907	(a) Residential mortgage loan origination shall only be conducted at
3908	3908	or from a supervised lender and a registrant shall only engage in
3909	3909	residential mortgage loan origination on behalf of one supervised lender.
3910	3910	(b) A supervised lender shall be responsible for all mortgage loan
3911	3911	origination conducted on their behalf by residential mortgage loan
3912	3912	originators or other employees.
3913	3913	(3) Nothing in this section shall be construed to require the licensing
3914	3914	of an attorney who is forwarded contracts for collection If any person is
3915	3915	engaged in the business of subsection (1)(b), such person shall promptly
3916	3916	apply for a license and may for three months collect and enforce without
3917	3917	such license, provided such person's application has not been denied.
3918	3918	Sec. 43. K.S.A. 16a-2-302 is hereby amended to read as follows: 16a-
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3961	3961	43 SB 495 47
3962	3962	2-302. (1) (a) The administrator shall receive and act on all applications
3963	3963	for licenses to make supervised loans and all applications for residential
3964	3964	mortgage loan originator registrations under this act. Applications shall be
3965	3965	filed. Any person required to be licensed pursuant to this act shall submit
3966	3966	an application in the manner prescribed by the administrator and that shall
3967	3967	contain the information the administrator may require by rule and
3968	3968	regulation to make an evaluation of the financial responsibility, character
3969	3969	and fitness of the applicant.
3970	3970	(b) Submitted with each application shall be a nonrefundable
3971	3971	application fee. Application, license and registration fees shall be in such
3972	3972	amounts as are established pursuant to subsection (5) of K.S.A. 16a-6-
3973	3973	104(5), and amendments thereto. A license shall become effective as of the
3974	3974	date specified in writing by the administrator. The license year shall be the
3975	3975	calendar year and the license shall expire on December 31 of the year
3976	3976	unless the license is renewed pursuant to subsection (1)(d). Each license
3977	3977	shall be nonrefundable nontransferable and nonassignable, and shall
3978	3978	remain in force until it has expired, is surrendered, suspended or revoked.
3979	3979	(c) The administrator shall remit all moneys received under K.S.A.
3980	3980	16a-1-101 to 16a-6-414, inclusive, and amendments thereto, to the state
3981	3981	treasurer in accordance with the provisions of K.S.A. 75-4215, and
3982	3982	amendments thereto. Upon receipt of each such remittance, the state
3983	3983	treasurer shall deposit the entire amount in the state treasury. Of each
3984	3984	deposit 10% shall be credited to the state general fund and the balance
3985	3985	shall be credited to the bank commissioner fee fund. All expenditures from
3986	3986	such fund shall be made in accordance with appropriation acts upon
3987	3987	warrants of the director of accounts and reports issued pursuant to
3988	3988	vouchers approved by the administrator or by a person or persons
3989	3989	designated by the administrator.The administrator shall consider an
3990	3990	application for a license abandoned if the applicant fails to complete the
3991	3991	application within 60 days after the administrator provides the applicant
3992	3992	with written notice of the incomplete application. An applicant whose
3993	3993	application is abandoned under this section may reapply to obtain a
3994	3994	license and shall pay the fee set forth in subsection (1) upon such
3995	3995	application. If an application is considered abandoned pursuant to K.S.A.
3996	3996	16a-2-302, and amendments thereto, an applicant may make a written
3997	3997	request for a hearing. The administrator shall conduct a hearing in
3998	3998	accordance with the Kansas administrative procedure act.
3999	3999	(d) Every licensee and registrant shall, on or before the first day of
4000	4000	January, pay to the administrator the license or registration fee prescribed
4001	4001	under this subsection (1) for each license or registration held for the
4002	4002	succeeding license year. Failure to pay the fee within the time prescribed
4003	4003	shall automatically revoke the license or registration. A license shall be
4004	4004	renewed annually for the subsequent year by filing with the administrator,
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4047	4047	43 SB 495 48
4048	4048	on or before December 1 of the current year, a renewal application
4049	4049	accompanied with the fee prescribed under subsection (1) for each license.
4050	4050	Such application shall be filed in the form and manner prescribed by the
4051	4051	administrator and shall contain such information that the administrator
4052	4052	requires to determine the existence of any material changes from the
4053	4053	information contained in the applicant's original license application or
4054	4054	prior renewal application. A late fee may be assessed if a renewal
4055	4055	application is filed after December 1.
4056	4056	(e) Each renewal application shall be accompanied by a
4057	4057	nonrefundable fee that shall be established by rules and regulations
4058	4058	pursuant to K.S.A. 16a-6-104, and amendments thereto.
4059	4059	(f) There is hereby established a reinstatement period. Licensees may
4060	4060	submit a complete renewal application through the last day of February
4061	4061	each year. If approved, there will be no lapse in license coverage. An
4062	4062	application for renewal or reinstatement received after the last day of
4063	4063	February shall be treated as an original application and shall be subject
4064	4064	to all reporting and fees associated therewith.
4065	4065	(2) No license or registration shall be issued unless the administrator,
4066	4066	upon investigation, finds that the financial responsibility, character and
4067	4067	fitness of the applicant, and of the members thereof if the applicant is a
4068	4068	copartnership or association and of the officers and directors thereof, if the
4069	4069	applicant is a corporation, are such as to warrant belief that the business
4070	4070	will be operated applicant or licensee shall operate honestly and fairly
4071	4071	within the purposes of this act. The administrator shall not base a
4072	4072	registration denial solely on the applicant's credit score. An applicant
4073	4073	meets the minimum standard of financial responsibility for engaging in the
4074	4074	business of making supervised loans, under subsection (1) of K.S.A. 16a-
4075	4075	2-301(1), and amendments thereto, only if:
4076	4076	(a) The applicant has filed with the administrator a proper surety
4077	4077	bond of at least $100,000 which has been approved by the administrator.
4078	4078	The bond must provide within its terms that the bond shall not expire for
4079	4079	two years after the date of the surrender, revocation or expiration of the
4080	4080	subject license, whichever shall first occur. The required surety bond may
4081	4081	not be canceled by the licensee without providing the administrator at least
4082	4082	30 days' prior written notice, provided that such cancellation shall not
4083	4083	affect the surety's liability for violations of the uniform consumer credit
4084	4084	code occurring prior to the effective date of cancellation and principal and
4085	4085	surety shall be and remain liable for a period of two years from the date of
4086	4086	any action or inaction of the principal that gives rise to a claim under the
4087	4087	bond; and
4088	4088	(b) the applicant provides evidence in a form and manner prescribed
4089	4089	by the administrator that establishes the applicant will maintain a
4090	4090	satisfactory minimum net worth, as determined by the administrator, to
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4133	4133	43 SB 495 49
4134	4134	engage in credit transactions of the nature proposed by the applicant. Such
4135	4135	net worth requirements shall be established by the administrator pursuant
4136	4136	to rule and regulation and shall not exceed $500,000 for each applicant or
4137	4137	licensee.
4138	4138	(3)(a) The administrator may deny any application or renewal for a
4139	4139	supervised loan license or a residential mortgage loan originator
4140	4140	registration, if the administrator finds:
4141	4141	(a) There is a refusal to furnish information required by the
4142	4142	administrator within a reasonable time as fixed by the administrator; orA
4143	4143	licensee shall provide written notice to the administrator within 10
4144	4144	business days of the occurrence of any of the following events:
4145	4145	(1) The closing or relocation of any place of business;
4146	4146	(2) a change in the licensee's name or legal entity status; or
4147	4147	(3) the addition or loss of any owner, officer, member or director.
4148	4148	(b) any of the factors stated as grounds for denial, revocation or
4149	4149	suspension of a license in K.S.A. 16a-2-303 or K.S.A. 16a-2-303a, and
4150	4150	amendments thereto The administrator may request additional information
4151	4151	concerning any written notice received pursuant to subsection (a) and
4152	4152	charge a reasonable fee for any action required by the administrator as a
4153	4153	result of such notice and additional information.
4154	4154	(4) Upon written request the applicant is entitled to a hearing on the
4155	4155	question of license qualifications if: (a) The administrator has notified the
4156	4156	applicant in writing that the application has been denied; or (b) the
4157	4157	administrator has not issued a license within 60 days after the application
4158	4158	for the license was filed. A request for a hearing may not be made more
4159	4159	than 15 days after the administrator has mailed a writing to the applicant
4160	4160	notifying the applicant that the application has been denied and stating in
4161	4161	substance the administrator's findings supporting denial of the application.
4162	4162	(5) The administrator shall adopt rules and regulations regarding
4163	4163	whether a licensee shall be required to obtain a single license for each
4164	4164	place of business or whether a licensee may obtain a master license for all
4165	4165	of its places of business, and in so doing the administrator may
4166	4166	differentiate between licensees located in this state and licensees located
4167	4167	elsewhere. Each license shall remain in full force and effect until
4168	4168	surrendered, suspended or revoked.
4169	4169	(6) No licensee shall change the location of any place of business
4170	4170	without giving the administrator at least 15 days prior written notice.
4171	4171	(7)(4) A licensee may conduct the business of making loans for
4172	4172	personal, family or household purposes only at or from any place of
4173	4173	business for which the licensee holds a license and not under any other
4174	4174	name than that in the license. Loans made pursuant to a lender credit card
4175	4175	do not violate this subsection.
4176	4176	(5) All solicitations and published advertisements concerning
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4219	4219	43 SB 495 50
4220	4220	consumer credit transactions directed at Kansas residents, including those
4221	4221	on the internet or by other electronic means, shall contain the name and
4222	4222	license number or unique identifier of the licensee on record with the
4223	4223	administrator. Each licensee shall maintain a record of all solicitations or
4224	4224	advertisements for a period of 36 months. As used in this subsection,
4225	4225	"advertising" excludes business cards or promotional items, including, but
4226	4226	not limited to, pens, pencils, hats and other such novelty items.
4227	4227	(6) The administrator shall remit all moneys received under K.S.A.
4228	4228	16a-1-101 et seq., and amendments thereto, to the state treasurer in
4229	4229	accordance with the provisions of K.S.A. 75-4215, and amendments
4230	4230	thereto. Upon receipt of each such remittance, the state treasurer shall
4231	4231	deposit the entire amount in the state treasury. Of each such deposit, 10%
4232	4232	shall be credited to the state general fund and the balance shall be
4233	4233	credited to the bank commissioner fee fund. All expenditures from such
4234	4234	fund shall be made in accordance with appropriation acts upon warrants
4235	4235	of the director of accounts and reports issued pursuant to vouchers
4236	4236	approved by the administrator or the administrator's designee. Late fees
4237	4237	paid under this section may be designated by the administrator for
4238	4238	consumer education.
4239	4239	Sec. 44. K.S.A. 16a-2-303 is hereby amended to read as follows: 16a-
4240	4240	2-303. (1) The administrator may deny, an application or renewal or
4241	4241	revoke or suspend the a supervised loan license of a supervised lender if
4242	4242	the administrator finds, after notice and opportunity for a hearing
4243	4243	conducted in accordance with the provisions of the Kansas administrative
4244	4244	procedure act, that:
4245	4245	(a) The applicant or licensee has repeatedly or willfully violated the
4246	4246	provisions of K.S.A. 16a-1-101 through 16a-9-102 et seq., and
4247	4247	amendments thereto, or any rule and regulation rules and regulations,
4248	4248	order or administrative interpretation lawfully made pursuant to such
4249	4249	sections of this act;
4250	4250	(b) the applicant or licensee has failed to file and maintain the surety
4251	4251	bond or net worth required in K.S.A. 16a-2-302, and amendments thereto
4252	4252	facts or conditions exist that would clearly have justified the administrator
4253	4253	in refusing to grant a license had such facts or conditions been known to
4254	4254	exist at the time the application for the license was made;
4255	4255	(c) the applicant or licensee is insolvent;
4256	4256	(d) the applicant or licensee has filed with the administrator any
4257	4257	document or statement falsely representing or omitting a material fact;
4258	4258	(e)(d) the applicant, licensee, members thereof if of a copartnership or
4259	4259	association, or officers and directors thereof if of a corporation have been
4260	4260	convicted of a felony crime or any crime involving fraud, dishonesty or
4261	4261	deceit or the applicant or licensee knowingly or repeatedly contracts with
4262	4262	or employs persons to directly engage in lending activities who have been
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4305	4305	43 SB 495 51
4306	4306	convicted of a felony crime or any crime involving fraud, dishonesty or
4307	4307	deceit;
4308	4308	(e) the applicant or licensee has engaged in deceptive business
4309	4309	practices;
4310	4310	(f) the applicant or licensee fails to keep and maintain sufficient
4311	4311	records to permit an audit satisfactorily disclosing to the administrator the
4312	4312	applicant or licensee's compliance with the provision of this act;
4313	4313	(g) the applicant or licensee has been the subject of any disciplinary
4314	4314	action by this or any other state or federal agency;
4315	4315	(h)(g) a final judgment has been entered against the applicant or
4316	4316	licensee in a civil action and the administrator finds the conduct on which
4317	4317	the judgment is based indicates that it would be contrary to the public
4318	4318	interest to permit such person to be licensed;
4319	4319	(h) the applicant or licensee has failed to keep and maintain
4320	4320	sufficient records to permit an audit satisfactorily disclosing to the
4321	4321	administrator the applicant or licensee's compliance with the provisions of
4322	4322	this act; or
4323	4323	(i) the applicant or licensee has engaged in deceptive business
4324	4324	practices; or the applicant or licensee has failed to file and maintain the
4325	4325	surety bond or net worth required in K.S.A. 16a-2-302, and amendments
4326	4326	thereto.
4327	4327	(j) facts or conditions exist which would clearly have justified the
4328	4328	administrator in refusing to grant a license had these facts or conditions
4329	4329	been known to exist at the time the application for the license was made.
4330	4330	(2) Upon written request, the applicant or licensee is entitled to a
4331	4331	hearing in accordance with the Kansas administrative procedure act,
4332	4332	K.S.A. 77-501 et seq., and amendments thereto, if the administrator denies
4333	4333	an application, fails to issue a new license within 60 days of receipt of a
4334	4334	complete application, revokes a license, suspends a license or fails to issue
4335	4335	a renewal within 30 days after receipt of a complete application.
4336	4336	(2)(3) Any person holding a license to make supervised loans may
4337	4337	surrender the license by notifying the administrator in writing of its
4338	4338	surrender, but this surrender shall not affect such person's liability for acts
4339	4339	previously committed.
4340	4340	(3)(4) No revocation, suspension, or relinquishment of a license shall
4341	4341	impair or affect the obligation of any preexisting lawful contract between
4342	4342	the licensee and any debtor.
4343	4343	(4)(5) None of the following actions shall deprive the administrator of
4344	4344	any jurisdiction or right to institute or proceed with any disciplinary
4345	4345	proceeding against such licensee, to render a decision suspending,
4346	4346	revoking or refusing to renew such license, or to establish and make a
4347	4347	record of the facts of any violation of law for any lawful purpose:
4348	4348	(a) The imposition of an administrative penalty under this section;
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4391	4391	43 SB 495 52
4392	4392	(b) the lapse or suspension of any license issued under this act by
4393	4393	operation of law;
4394	4394	(c) the licensee's failure to renew any license issued under this act; or
4395	4395	(d) the licensee's voluntary surrender of any license issued under this
4396	4396	act.
4397	4397	(5)(6) The administrator may reinstate a license, terminate a
4398	4398	suspension, or grant a new license to a person whose license has been
4399	4399	revoked or suspended if no fact or condition then exists which clearly
4400	4400	would have justified the administrator in refusing to grant a license.
4401	4401	Sec. 45. K.S.A. 16a-2-304 is hereby amended to read as follows: 16a-
4402	4402	2-304. (1) Every licensee and any assignee or servicer of a consumer credit
4403	4403	transaction and every person required to file notification consumer credit
4404	4404	filer shall maintain records in conformity with generally accepted
4405	4405	accounting principles and practices in a manner that will enable the
4406	4406	administrator and, in the case of a supervised financial organization its
4407	4407	supervisory official or agency, to determine whether the licensee, assignee,
4408	4408	servicer or person required to file notification consumer credit filer is
4409	4409	complying with the provisions of K.S.A. 16a-1-101 through 16a-9-102 et
4410	4410	seq., and amendments thereto. The record keeping system of a licensee,
4411	4411	assignee, servicer or person required to file notification consumer credit
4412	4412	filer shall be sufficient if the licensee, assignee, servicer or any person
4413	4413	required to file notification consumer credit filer makes the required
4414	4414	information reasonably available. The records need not be kept in the place
4415	4415	of business where supervised loans are made, if the administrator or
4416	4416	supervisory official or agency is given free access to the records wherever
4417	4417	located. Every licensee and any assignee or servicer of a consumer credit
4418	4418	transaction and every person required to file notification every consumer
4419	4419	credit filer shall provide the administrator with the name, address,
4420	4420	telephone number, email address, contact person and any other reasonable
4421	4421	information regarding the location and availability of current records of a
4422	4422	consumer credit transaction. The records pertaining to any loan shall be
4423	4423	kept for the minimum time frames established by the administrator
4424	4424	pursuant to rules and regulations.
4425	4425	(2) Every licensee and any assignee or servicer of a consumer credit
4426	4426	transaction, and every person required to file notification consumer credit
4427	4427	filer shall establish, maintain and enforce written policies and procedures
4428	4428	regarding security of records which are reasonably designed to prevent the
4429	4429	misuse of a consumer's personal or financial information.
4430	4430	(3) Before ceasing to conduct or discontinuing business, a licensee,
4431	4431	assignee, servicer or person required to file notification consumer credit
4432	4432	filer shall arrange for and be responsible for the preservation of the books
4433	4433	and records required to be maintained and preserved under this act and
4434	4434	applicable rules and regulations for the remainder of each period specified.
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4478	4478	(4) Any All books, records and any other documents required to be
4479	4479	retained may be maintained and preserved by noneraseable, nonalterable
4480	4480	electronic imaging or by photograph on film in a photographic,
4481	4481	reproduced or electronic format. If the records are produced or reproduced
4482	4482	by photographic film, electronic imaging or computer storage medium
4483	4483	photographed, reproduced or retained in an electronic format, the
4484	4484	licensee, assignee or person required to file notification consumer credit
4485	4485	filer shall meet the following criteria:
4486	4486	(a) Arrange the records and index the films, electronic image or
4487	4487	computer storage media to permit immediate location of any particular
4488	4488	record;
4489	4489	(b) be ready at all times to promptly provide a facsimile enlargement
4490	4490	of film, a computer printout or a copy of the electronic images or computer
4491	4491	storage medium that the administrator may request; and
4492	4492	(c)(b) with respect to electronic images and records stored on
4493	4493	computer storage medium, maintain procedures for maintenance and
4494	4494	preservation of, and access to, records in order to reasonably safeguard
4495	4495	these records from loss, alteration or destruction; and
4496	4496	(c) all books, records and any other documents shall be made
4497	4497	available for examination and inspection by the administrator or the
4498	4498	administrator's designee. All records shall be delivered to the
4499	4499	administrator within three business days of the date such documents are
4500	4500	requested.
4501	4501	(5) In lieu of retention of the original records, any such photograph
4502	4502	or reproduction shall have the same force and effect as the original thereof
4503	4503	and be admitted in evidence equally with the original.
4504	4504	(6) On or before April 15 of each year every licensee shall file with
4505	4505	the administrator and, in the case of a supervised financial organization
4506	4506	with its supervisory official or agency, a composite annual report in the
4507	4507	form prescribed by the administrator relating to all loans made by such
4508	4508	licensee. The administrator shall consult with comparable officials in other
4509	4509	states for the purpose of making the kinds of information required in
4510	4510	annual reports uniform among the states. Information contained in annual
4511	4511	reports shall be confidential and may be published only in composite form.
4512	4512	(6)(7) No person required to be licensed or file notification a licensee
4513	4513	or a consumer credit filer or an assignee or servicer of a consumer credit
4514	4514	transaction under this act shall:
4515	4515	(a) alter, destroy, shred, mutilate, conceal, cover up or falsify any
4516	4516	record with the intent to impede, obstruct or influence any investigation by
4517	4517	the administrator or the administrator's designee; or
4518	4518	(b) alter, destroy, shred, mutilate or conceal a record with the intent to
4519	4519	impair the object's integrity or availability for use in a proceeding before
4520	4520	the administrator or a proceeding brought by the administrator or any
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4563	4563	43 SB 495 54
4564	4564	proceeding brought by or before the administrator.
4565	4565	Sec. 46. K.S.A. 16a-2-308 is hereby amended to read as follows: 16a-
4566	4566	2-308. If consumer loans in which the finance charge exceeds twelve
4567	4567	percent (12%), not made pursuant to open end credit or lender credit cards
4568	4568	issued by a licensed lender, and in which the amount financed is one
4569	4569	thousand dollars ($1,000) or less are payable in installments, they shall be
4570	4570	scheduled to be payable in substantially equal installments at substantially
4571	4571	equal periodic intervals except to the extent that the schedule of payments
4572	4572	is adjusted to the seasonal or irregular income of the debtor, and
4573	4573	(a) over a period of not more than thirty-seven (37) calendar months
4574	4574	if the amount financed is more than three hundred dollars ($300), or
4575	4575	(b) over a period of not more than twenty-five (25) calendar months
4576	4576	if the amount financed is three hundred dollars ($300) or less. The debtor's
4577	4577	schedule of payments may be extended to a longer repayment period
4578	4578	subsequent to the execution of the loan agreement pursuant to K.S.A. 16a-
4579	4579	2-502 or 16a-2-503, and amendments thereto. The default of the borrower
4580	4580	shall not be considered as having extended the loan beyond the prescribed
4581	4581	time limits Supervised loans not made pursuant to open-end credit or
4582	4582	lender credit cards issued by a supervised lender and in which the amount
4583	4583	financed is $1,000 or less and the principal of which is payable in more
4584	4584	than a single payment must be scheduled to be payable in substantially
4585	4585	equal installments at equal periodic intervals except to the extent that the
4586	4586	schedule of payments is adjusted to the seasonal or irregular income of
4587	4587	the debtor and over a period of not more than 25 months.
4588	4588	Sec. 47. K.S.A. 16a-2-309 is hereby amended to read as follows: 16a-
4589	4589	2-309. A licensee may conduct the business of making loans under K.S.A.
4590	4590	16a-1-101 through 16a-9-102 et seq., and amendments thereto, within any
4591	4591	office, room or place of business in which any other business is solicited or
4592	4592	engaged in, or in association or conjunction therewith, unless the
4593	4593	commissioner shall find, after a hearing, administrator finds that the other
4594	4594	business is of such nature that such conduct tends to conceal evasion of
4595	4595	such portion a violation of this act or of the rules and regulations made
4596	4596	thereunder and shall order such licensee in writing to desist from such
4597	4597	conduct.
4598	4598	Sec. 48. K.S.A. 16a-2-310 is hereby amended to read as follows: 16a-
4599	4599	2-310. (1) No person required to be licensed or registered required to be a
4600	4600	consumer credit filer under this act shall directly or indirectly:
4601	4601	(a) Delay closing of a loan for the purpose of increasing interest,
4602	4602	costs, fees or charges payable by the borrower;
4603	4603	(b) misrepresent the material facts or make false promises intended to
4604	4604	influence, persuade or induce a consumer to enter into a loan;
4605	4605	(c) misrepresent to or conceal from an applicant for a loan, a
4606	4606	mortgagor guarantor or a lender, material facts, terms or conditions of a
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4649	4649	43 SB 495 55
4650	4650	transaction to which the person required to be licensed or registered
4651	4651	required to be a consumer credit filer is a party;
4652	4652	(d) engage in any transaction, practice or business conduct that is not
4653	4653	in good faith or that operates a fraud upon any person in connection with
4654	4654	the making of or purchase or sale of any loan any consumer credit
4655	4655	transaction;
4656	4656	(e) receive compensation for making a residential mortgage loan
4657	4657	where the licensee or registrant has otherwise acted as a real estate broker
4658	4658	or agent in connection with the sale of the real estate which secures the
4659	4659	mortgage transaction unless the person required to be licensed or
4660	4660	registered has provided written disclosure to the person from whom
4661	4661	compensation is collected that the person is receiving compensation both
4662	4662	for making the loan and for real estate broker or agent services;
4663	4663	(f) engage in any fraudulent lending or underwriting practices;
4664	4664	(g) advertise, display, distribute, broadcast or televise, or cause or
4665	4665	permit to be advertised, displayed, distributed, broadcast or televised, in
4666	4666	any manner, any false, misleading or deceptive statement or representation
4667	4667	with regard to rates, terms or conditions for a loan;
4668	4668	(h) record a mortgage if moneys are not available for immediate
4669	4669	disbursal to the mortgagor unless, before that recording, the person
4670	4670	required to be licensed or registered informs the mortgagor in writing of a
4671	4671	definite date by which payment shall be made and obtains the mortgagor's
4672	4672	written permission for the delay;
4673	4673	(i)(e) transfer, assign or attempt to transfer or assign, a license or
4674	4674	registration to any other person, or assist or aide aid and abet any person
4675	4675	who does not hold a valid license or registration under this act in engaging
4676	4676	in the conduct of mortgage business requiring a license;
4677	4677	(j)(f) solicit or enter into a contract with a borrower that provides in
4678	4678	substance that the person required to be licensed or registered required to
4679	4679	be a consumer credit filer may earn a fee or commission through best
4680	4680	efforts to obtain a loan even though no loan is actually obtained for the
4681	4681	borrower; or
4682	4682	(k) solicit, advertise or enter into a contract for specific interest rates,
4683	4683	points or other financing terms unless the terms are actually available at
4684	4684	the time of soliciting, advertising or contracting;
4685	4685	(l) make any payment, threat or promise to any person for the
4686	4686	purposes of influencing the independent judgment of the person in
4687	4687	connection with a residential mortgage loan, or make any payment, threat
4688	4688	or promise to any appraiser of a property, for the purposes of influencing
4689	4689	the independent judgment of the appraiser with respect to the value of the
4690	4690	property or engage in any activity that would constitute a violation of
4691	4691	K.S.A. 58-2344, and amendments thereto; or
4692	4692	(m)(g) fail to comply with the uniform consumer credit code, or rules
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4735	4735	43 SB 495 56
4736	4736	and regulations promulgated thereunder, or fail to comply with any other
4737	4737	state or federal law, including the rules and regulations promulgated
4738	4738	thereunder, applicable to any business authorized or conducted under the
4739	4739	uniform consumer credit code.
4740	4740	(2) This section shall be part of and supplemental to the uniform
4741	4741	consumer credit code.
4742	4742	Sec. 49. K.S.A. 16a-2-401 is hereby amended to read as follows: 16a-
4743	4743	2-401. (1) For any consumer loan incurred pursuant to open end open-end
4744	4744	credit, including, without limitation, a loan pursuant to a lender credit card,
4745	4745	a lender may charge a finance charge at any rate agreed to by the parties,
4746	4746	subject, however, to the limitations on prepaid finance charges set forth in
4747	4747	subsection (6) (4). This subsection does not apply to a consumer loan
4748	4748	secured by a first mortgage or a second mortgage.
4749	4749	(2) For any consumer loan incurred pursuant to closed end closed-
4750	4750	end credit, a lender may charge a periodic finance charge, calculated
4751	4751	accordingly to the actuarial method, not to exceed: (a) 36% per annum on
4752	4752	the portion of the unpaid balance which is $860 or less, and (b) 21% per
4753	4753	annum on the portion of the unpaid balance which exceeds $860, subject,
4754	4754	however to the limitations on prepaid finance charges set forth in
4755	4755	subsection (6). This subsection does not apply to a consumer loan secured
4756	4756	by a first mortgage or a second mortgage.
4757	4757	(3) For any consumer loan secured by a second mortgage or a
4758	4758	consumer loan secured by an interest in a manufactured home as defined
4759	4759	by 42 U.S.C. § 5402(6), a lender may charge a periodic finance charge,
4760	4760	calculated according to the actuarial method, not to exceed 18% per
4761	4761	annum, subject, however to the limitations on prepaid finance charges set
4762	4762	forth in subsection (6). This subsection does not apply if the lender and the
4763	4763	consumer agree in writing that the finance charge for the loan is governed
4764	4764	by K.S.A. 16-207(b), and amendments thereto.
4765	4765	(4) If the parties to a consumer loan secured by a first mortgage or a
4766	4766	consumer loan secured by an interest in a manufactured home as defined
4767	4767	by 42 U.S.C. § 5402(6) agree in writing to make the transaction subject to
4768	4768	the uniform consumer credit code, then the periodic finance charge for the
4769	4769	loan, calculated according to the actuarial method, may not exceed 18%
4770	4770	per annum, subject, however to the limitations on prepaid finance charges
4771	4771	set forth in subsection (6).
4772	4772	(5)(3) This section does not limit or restrict the manner of calculating
4773	4773	the finance charge, whether by way of add-on, discount or otherwise, so
4774	4774	long as the rate and the amount of the finance charge does not exceed that
4775	4775	permitted by this section.
4776	4776	(6)(4) Prepaid finance charges on consumer loans are limited as
4777	4777	follows:
4778	4778	(a) For a consumer loan secured by a first mortgage or a second
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4821	4821	43 SB 495 57
4822	4822	mortgage, or a consumer loan secured by an interest in a manufactured
4823	4823	home as defined by 42 U.S.C. § 5402(6), prepaid finance charges in an
4824	4824	amount not to exceed 8% of the amount financed may be charged,
4825	4825	provided that the aggregate amount of prepaid finance charges payable to
4826	4826	the lender or any person related to the lender do not exceed 5% of the
4827	4827	amount financed; and
4828	4828	(b) for any other consumer loan, prepaid finance charges in to an
4829	4829	amount not to exceed the lesser of 2% of the amount financed or $100 may
4830	4830	be charged $300.
4831	4831	Prepaid finance charges permitted under this subsection are in addition
4832	4832	to finance charges permitted under subsection (1), (2), (3) and (4) (2), as
4833	4833	applicable. Prepaid finance charges permitted under this subsection are
4834	4834	fully earned when paid and are non-refundable, unless the parties agree
4835	4835	otherwise in writing.
4836	4836	(7) The finance charge limitations in subsections (3) and (4) do not
4837	4837	apply to a consumer loan the finance charge for which is governed by
4838	4838	subsection (h) of K.S.A. 16-207, and amendments thereto.
4839	4839	(8) If a loan secured by a first mortgage constitutes a "consumer loan"
4840	4840	under subsection (17) of K.S.A. 16a-1-301, and amendments thereto, by
4841	4841	virtue of the loan-to-value ratio exceeding 100% at the time the loan is
4842	4842	made, then the periodic finance charge for the loan shall not exceed that
4843	4843	authorized by subsection (b) of K.S.A. 16-207, and amendments thereto,
4844	4844	but the loan is subject to the limitations on prepaid finance charges set
4845	4845	forth in paragraph (a) of subsection (6), which prepaid finance charges
4846	4846	may be charged in addition to the finance charges permitted under
4847	4847	subsection (b) of K.S.A. 16-207, and amendments thereto.
4848	4848	(9)(5) If, within 12 months after the date of the original loan, a lender
4849	4849	or a person related to the lender refinances a loan with respect to which a
4850	4850	prepaid finance charge was payable to the same lender pursuant to
4851	4851	subsection (6) (4), then the following apply:
4852	4852	(a) If a prepaid finance charge with respect to the original loan was
4853	4853	payable to the lender pursuant to paragraph (a) of subsection (6), then the
4854	4854	aggregate amount of prepaid finance charges payable to the lender or any
4855	4855	person related to the lender with respect to the new loan may not exceed
4856	4856	5% of the additional amount financed.
4857	4857	(b) If a prepaid finance charge with respect to the original loan was
4858	4858	payable to the lender pursuant to paragraph (b) of subsection (6) (4), then
4859	4859	the aggregate amount of prepaid finance charges payable to the lender or
4860	4860	any person related to the lender with respect to the new loan may not
4861	4861	exceed the lesser of 2% of the additional amount financed or $100 $300.
4862	4862	(c)(b) For purposes of this subsection, "additional amount financed"
4863	4863	means the difference between:
4864	4864	(i) The amount financed for the new loan, less the amount of all
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4907	4907	43 SB 495 58
4908	4908	closing costs incurred in connection with the new loan which are not
4909	4909	included in the prepaid finance charges for the new loan; and
4910	4910	(ii) the unpaid principal balance of the original loan.
4911	4911	(10)(6) For any period in which a finance charge is due on a
4912	4912	consumer loan pursuant to open end open-end credit, the parties may agree
4913	4913	on a minimum amount.
4914	4914	(11) If the parties to a contract for deed to real estate agree in writing
4915	4915	to make the transaction subject to the uniform consumer credit code, then
4916	4916	the transaction is subject to the same limitations as set forth in subsections
4917	4917	(4) and (6) for a consumer loan secured by a first mortgage.
4918	4918	(12)(7) This section does not apply to a payday loan governed by
4919	4919	K.S.A. 16a-2-404, and amendments thereto.
4920	4920	Sec. 50. K.S.A. 16a-2-402 is hereby amended to read as follows: 16a-
4921	4921	2-402. (1) This section applies only to consumer loans pursuant to open
4922	4922	end open-end credit.
4923	4923	(2) A charge may be made in each billing cycle which is a percentage
4924	4924	of an amount no greater than:
4925	4925	(a) The average daily balance of the account, which is the sum of the
4926	4926	actual amounts outstanding each day during the billing cycle divided by
4927	4927	the number of days in the cycle; or
4928	4928	(b) the unpaid balance of the account on the last day of the billing
4929	4929	cycle.
4930	4930	(3) If the billing cycle is monthly, the charge may not exceed
4931	4931	1
4932	4932	/12 of
4933	4933	the annual rate agreed to by the consumer. If the billing cycle is not
4934	4934	monthly, the maximum charge is that percentage which bears the same
4935	4935	relation to the applicable monthly percentage as the number of days in the
4936	4936	billing cycle bears to 30. For the purposes of this section, a variation of not
4937	4937	more than four days from month to month is "the last day of the billing
4938	4938	cycle."
4939	4939	Sec. 51. K.S.A. 16a-2-403 is hereby amended to read as follows: 16a-
4940	4940	2-403. No seller or lessor person or retailer doing business in any sales,
4941	4941	service or lease transaction or any credit or debit card issuer with a
4942	4942	customer may impose a surcharge on a card holder customer who elects to
4943	4943	use a credit or debit card in lieu of payment by cash, check or similar
4944	4944	means. A surcharge is any additional amount imposed at the time of the
4945	4945	sales or lease transaction by the merchant, seller or lessor that increases the
4946	4946	charge to the buyer or lessee for the privilege of using a credit or debit
4947	4947	card as payment unless such person or retailer discloses the amount of
4948	4948	such a surcharge though a clear and conspicuous notice to the customer at
4949	4949	the point of entry or the point of sale and in advance of such transaction.
4950	4950	Sec. 52. K.S.A. 16a-2-404 is hereby amended to read as follows: 16a-
4951	4951	2-404. (1) On consumer loan transactions in which cash is advanced:
4952	4952	(a) With a short term,
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4995	4995	43 SB 495 59
4996	4996	(b) a single payment repayment is anticipated, and
4997	4997	(c) such cash advance is equal to or less than $500, a licensed or
4998	4998	supervised lender may charge an amount not to exceed 15% of the amount
4999	4999	of the cash advance.
5000	5000	(2) The minimum term of any loan under this section shall be 7 days
5001	5001	and the maximum term of any loan made under this section shall be 30
5002	5002	days.
5003	5003	(3) A lender and related interest shall not have more than two loans
5004	5004	made under this section outstanding to the same borrower at any one time
5005	5005	and shall not make more than three loans to any one borrower within a 30
5006	5006	calendar day period. Each lender shall maintain a journal of loan
5007	5007	transactions for each borrower which shall include at least the following
5008	5008	information:
5009	5009	(a) Name, address and telephone number of each borrower; and
5010	5010	(b) date made and due date of each loan.
5011	5011	(4) Each loan agreement made under this section shall contain the
5012	5012	following notice in at least 10 point bold face type: NOTICE TO
5013	5013	BORROWER: KANSAS LAW PROHIBITS THIS LENDER AND
5014	5014	THEIR RELATED INTEREST FROM HAVING MORE THAN TWO
5015	5015	LOANS OUTSTANDING TO YOU AT ANY ONE TIME. A LENDER
5016	5016	CANNOT DIVIDE THE AMOUNT YOU WANT TO BORROW INTO
5017	5017	MULTIPLE LOANS IN ORDER TO INCREASE THE FEES YOU PAY.
5018	5018	Prior to consummation of the loan transaction, the lender must:
5019	5019	(a) Provide the notice set forth in this subsection in both English and
5020	5020	Spanish; and
5021	5021	(b) obtain the borrower's signature or initials next to the English
5022	5022	version of the notice or, if the borrower advises the lender that the
5023	5023	borrower is more proficient in Spanish than in English, then next to the
5024	5024	Spanish version of the notice.
5025	5025	(5) The contract rate of any loan made under this section shall not be
5026	5026	more than 3% per month of the loan proceeds after the maturity date. No
5027	5027	insurance charges or any other charges of any nature whatsoever shall be
5028	5028	permitted, except as stated in subsection (7), including any charges for
5029	5029	cashing the loan proceeds if they are given in check form.
5030	5030	(6) Any loan made under this section shall not be repaid by proceeds
5031	5031	of another loan made under this section by the same lender or related
5032	5032	interest. The proceeds from any loan made under this section shall not be
5033	5033	applied to any other loan from the same lender or related interest.
5034	5034	(7) A consumer who is unable to repay a payday loan as
5035	5035	contemplated under this section when due may elect once every 12 months
5036	5036	to repay the payday loan by means of an extended payment plan. The 12-
5037	5037	month period shall be measured from the date that the consumer pays in
5038	5038	full an extended payment plan with the lender until the date that the
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5081	5081	43 SB 495 60
5082	5082	consumer enters another extended payment plan with the lender.
5083	5083	(a) To request an extended payment plan, the consumer shall request
5084	5084	the plan before close of business on the last business day before the due
5085	5085	date of the outstanding payday loan and sign an amendment to the
5086	5086	original agreement which memorializes the plan terms.
5087	5087	(b) The extended payment plan terms shall allow the consumer to
5088	5088	repay the outstanding payday loan including any fee due in at least four
5089	5089	substantially equal installments. Each plan installment shall be due on or
5090	5090	after a date on which the consumer receives regular income, or, if the
5091	5091	consumer has no regular income, due dates shall be a minimum of two
5092	5092	weeks between installments. The consumer may prepay an extended
5093	5093	payment plan in full at any time without penalty. As long as the consumer
5094	5094	complies with the terms of the extended payment plan, the plan shall be at
5095	5095	no additional cost to the consumer and the lender shall not charge the
5096	5096	consumer any interest or additional fees during the term of the extended
5097	5097	payment plan. The lender may, with each payment under the plan by the
5098	5098	consumer, provide for the return of the consumer's prior held check and
5099	5099	require a new check for the remaining balance under the plan.
5100	5100	(c) If the consumer fails to pay any extended payment plan
5101	5101	installment when due, the consumer shall be in default of the payment plan
5102	5102	and the lender may immediately accelerate payment on the remaining
5103	5103	balance and take action to collect all amounts due.
5104	5104	(d) No additional payday loan shall be made to the consumer under
5105	5105	this section during an extended payment plan.
5106	5106	(e) Lenders shall prominently display the availability of extended
5107	5107	payment plans where loans are made and shall disclose the availability of
5108	5108	extended payment plans in payday loan agreements.
5109	5109	(8) On a consumer loan transaction in which cash is advanced in
5110	5110	exchange for a personal check, one return check charge may be charged if
5111	5111	the check is deemed insufficient as defined in paragraph (e) of subsection
5112	5112	(1) of K.S.A. 16a-2-501(1)(e), and amendments thereto. Upon receipt of
5113	5113	the check from the consumer, the lender shall immediately stamp the back
5114	5114	of the check with an endorsement that states: "Negotiated as part of a loan
5115	5115	made under K.S.A. 16a-2-404. Holder takes subject to claims and defenses
5116	5116	of maker. No criminal prosecution."
5117	5117	(8)(9) In determining whether a consumer loan transaction made
5118	5118	under the provisions of this section is unconscionable conduct under
5119	5119	K.S.A. 16a-5-108, and amendments thereto, consideration shall be given,
5120	5120	among other factors, to:
5121	5121	(a) The ability of the borrower to repay within the terms of the loan
5122	5122	made under this section; or
5123	5123	(b) the original request of the borrower for amount and term of the
5124	5124	loan are within the limitations under this section.
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5167	5167	43 SB 495 61
5168	5168	(9)(10) A consumer may rescind any consumer loan transaction made
5169	5169	under the provisions of this section without cost not later than the end of
5170	5170	the business day immediately following the day on which the loan
5171	5171	transaction was made. To rescind the loan transaction:
5172	5172	(a) A consumer shall inform the lender that the consumer wants to
5173	5173	rescind the loan transaction;
5174	5174	(b) the consumer shall return the cash amount of the principal of the
5175	5175	loan transaction to the lender; and
5176	5176	(c) the lender shall return any fees that have been collected in
5177	5177	association with the loan.
5178	5178	(10)(11) A person shall not commit or cause to be committed any of
5179	5179	the following acts or practices in connection with a consumer loan
5180	5180	transaction subject to the provisions of this section:
5181	5181	(a) Use any device or agreement that would have the effect of
5182	5182	charging or collecting more fees, charges or interest, or which that results
5183	5183	in more fees, charges, or interest being paid by the consumer, than allowed
5184	5184	by the provisions of this section, including, but not limited to:
5185	5185	(i) Entering into a different type of transaction with the consumer;
5186	5186	(ii) entering into a sales/leaseback or rebate arrangement;
5187	5187	(iii) catalog sales; or
5188	5188	(iv) entering into any other transaction with the consumer or any
5189	5189	other person that is designed to evade the applicability of this section;
5190	5190	(b) use, or threaten to use the criminal process in any state to collect
5191	5191	on the loan;
5192	5192	(c) sell any other product of any kind in connection with the making
5193	5193	or collecting of the loan;
5194	5194	(d) include any of the following provisions in a loan document:
5195	5195	(i) A hold harmless clause;
5196	5196	(ii) a confession of judgment clause;
5197	5197	(iii) a provision in which the consumer agrees not to assert a claim or
5198	5198	defense arising out of the contract.
5199	5199	(11)(12) As used in this section, "related interest" shall have the same
5200	5200	meaning as "person related to" in K.S.A. 16a-1-301, and amendments
5201	5201	thereto.
5202	5202	(12)(13) Any person who facilitates, enables or acts as a conduit or
5203	5203	agent for any third party who enters into a consumer loan transaction with
5204	5204	the characteristics set out in paragraphs (a) and (b) of subsection (1)
5205	5205	subsections (1)(a) and (1)(b) shall be required to obtain a supervised loan
5206	5206	license pursuant to K.S.A. 16a-2-301, and amendments thereto, regardless
5207	5207	of whether the third party may be exempt from licensure provisions of the
5208	5208	Kansas uniform consumer credit code.
5209	5209	(13)(14) Notwithstanding that a person may be exempted by virtue of
5210	5210	federal law from the interest rate, finance charge and licensure provisions
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5253	5253	43 SB 495 62
5254	5254	of the Kansas uniform consumer credit code, all other provisions of the
5255	5255	code shall apply to both the person and the loan transaction.
5256	5256	(14)(15) This section shall be supplemental to and a part of the
5257	5257	uniform consumer credit code.
5258	5258	Sec. 53. K.S.A. 16a-2-501 is hereby amended to read as follows: 16a-
5259	5259	2-501. (1) In addition to the finance charge permitted by the parts of this
5260	5260	article on maximum finance charges for consumer credit sales and
5261	5261	consumer loans (parts 2 and 4), a creditor may contract for and receive the
5262	5262	following additional charges in connection with a consumer credit
5263	5263	transaction:
5264	5264	(a) Official fees and taxes;
5265	5265	(b) charges for insurance as described in subsection (2);
5266	5266	(c) delinquency charges late fees permitted under K.S.A. 16a-2-502,
5267	5267	and amendments thereto, and service charges for insufficient checks
5268	5268	payment methods permitted under paragraph (e);
5269	5269	(d) charges for other benefits, including insurance, conferred on the
5270	5270	consumer, if the benefits are of value to the consumer and if the charges
5271	5271	are reasonable in relation to the benefits, are of a type which is not for
5272	5272	credit, and are excluded as permissible additional charges from the finance
5273	5273	charge by rules and regulations adopted by the administrator;
5274	5274	(e) a service charge for an insufficient check as defined and
5275	5275	authorized by payment method, not to exceed $30, subject to the
5276	5276	limitations contained in this subsection:
5277	5277	(i) For the purposes of this subsection, "insufficient check payment
5278	5278	method" means any check, order or draft instrument as defined in K.S.A.
5279	5279	84-3-104, and amendments thereto, drawn on any bank, credit union,
5280	5280	savings and loan association, or other financial institution for the payment
5281	5281	of money and delivered in payment, in whole or in part, of preexisting
5282	5282	indebtedness of the drawer or maker, which is refused payment by the
5283	5283	drawee because the drawer or maker does not have sufficient funds in or
5284	5284	credits with the drawee to pay the amount of the check, order or draft
5285	5285	instrument upon presentation, provided that. Any check, order or draft
5286	5286	which payment instrument that is postdated or delivered to a payee who
5287	5287	has knowledge at the time of delivery that the drawer or maker did not
5288	5288	have sufficient funds in or credits with the drawee to pay the amount of the
5289	5289	check, draft or order upon presentation shall not be deemed an insufficient
5290	5290	check payment instrument.
5291	5291	(ii) "Written notice" shall be presumed to have been given a drawer or
5292	5292	maker of an insufficient check when notice is sent by first class mail
5293	5293	addressed to the person to be given notice of such person's address as it
5294	5294	appears on the insufficient check or to such person's last known address or
5295	5295	notice provided on a regular monthly statement provides clear notice of the
5296	5296	insufficient check charge being assessed "Notice" shall be given to a
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5339	5339	43 SB 495 63
5340	5340	consumer providing an insufficient payment method by one of the
5341	5341	following methods:
5342	5342	(1) First class mail addressed to the consumer's last known address;
5343	5343	or
5344	5344	(2) a clear notice of the insufficient payment method charge on the
5345	5345	consumer's regular monthly statement.
5346	5346	(iii) When an insufficient check has been given to a payee, the payee
5347	5347	may charge and collect a $10 insufficient check service charge from the
5348	5348	drawer or maker, subject to limitations contained in this subsection or, if a
5349	5349	larger amount is provided within the contract, the larger amount, if the
5350	5350	payee has given the drawer or maker oral or written notice of demand that
5351	5351	the amount of the insufficient check plus the insufficient check service
5352	5352	charge be paid to the payee within 14 days from the giving of notice. In no
5353	5353	event shall the amount of such insufficient check service charge exceed
5354	5354	$30.
5355	5355	(iv) If the drawer or maker of an insufficient check consumer does
5356	5356	not pay the amount of the insufficient check payment plus the insufficient
5357	5357	check service charge provided for in subsection (iii) to the payee within 14
5358	5358	days from the giving of notice as provided in subsection (iii), the payee
5359	5359	may add the insufficient check service charge to the outstanding balance of
5360	5360	the preexisting indebtedness of the drawer or maker consumer to draw
5361	5361	interest at the contract rate applicable to the preexisting indebtedness.
5362	5362	(v)(f) Notwithstanding the provisions of subparagraph (iii) subsection
5363	5363	(e), if an insufficient check payment method has been given to a creditor
5364	5364	under a lender credit card, the creditor may charge a service charge for the
5365	5365	insufficient check payment method in an amount not to exceed the amount
5366	5366	agreed to by the drawer or maker.
5367	5367	(2) An additional charge may be made for insurance written in
5368	5368	connectionExcept as otherwise provided for in this act, a creditor may
5369	5369	agree to provide insurance and may contract for and receive an additional
5370	5370	charge for insurance written in connection with the transaction, including
5371	5371	vendor's single interest insurance with respect to which the insurer has no
5372	5372	right of subrogation against the consumer but excluding other insurance
5373	5373	protecting the creditor against the consumer's default or other credit loss:
5374	5374	(a) With respect to insurance against loss of or damage to property, or
5375	5375	against liability, if the creditor furnishes a clear and specific statement in
5376	5376	writing to the consumer setting forth the cost of the insurance if obtained
5377	5377	from or through the creditor and stating that the consumer may choose the
5378	5378	person through whom the insurance is to be obtained; and
5379	5379	(b) with respect to consumer credit insurance providing life, accident
5380	5380	and health, or loss of employment coverage, if the insurance coverage is
5381	5381	not a factor in the approval by the creditor of the extension of credit, and
5382	5382	this fact is clearly disclosed in writing to the consumer, and if, in order to
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5425	5425	43 SB 495 64
5426	5426	obtain the insurance in connection with the extension of credit, the
5427	5427	consumer gives specific affirmative written indication of the consumer's
5428	5428	desire to do so after written disclosure to the consumer of the cost thereof;
5429	5429	(c) a creditor need not make a separate charge for insurance
5430	5430	provided or required by such creditor. This act does not authorize the
5431	5431	issuance of any insurance prohibited under any statute, or rule thereunder,
5432	5432	governing the business of insurance; and
5433	5433	(d) the excess amount of a charge for insurance provided for in
5434	5434	agreements in violation of this act is an excess charge for the purposes of
5435	5435	this act.
5436	5436	(3) With respect to a consumer loan or a consumer credit sale in
5437	5437	either case pursuant to open end open-end credit, a creditor may charge the
5438	5438	following fees in an amount not to exceed that agreed to by the consumer:
5439	5439	(a) Fees on a monthly or annual basis;
5440	5440	(b) over-limit fees; and
5441	5441	(c) cash advance fees. The fees permitted under this subsection are in
5442	5442	addition to any finance charges, additional charges or other charges
5443	5443	permitted by the uniform consumer credit code.
5444	5444	(4) A charge not exceeding $5 per payment, if the borrower makes a
5445	5445	single installment payment by authorizing a creditor, verbally or in
5446	5446	writing, to write a check or process a payment through use of the
5447	5447	automated clearing house procedures on the borrower's checking account,
5448	5448	make a payment through electronic methods subject to the following
5449	5449	limitations:
5450	5450	(A)(a) No charge shall be assessed if the creditor also collects a
5451	5451	delinquency late fee on the same installment; and
5452	5452	(B)(b) no charge shall be assessed where the consumer has agreed in
5453	5453	writing with the creditor to make all scheduled payments through the use
5454	5454	of the automated clearing house procedures electronic methods.
5455	5455	Sec. 54. K.S.A. 16a-2-502 is hereby amended to read as follows: 16a-
5456	5456	2-502. (1) The parties to a consumer credit transaction may contract for a
5457	5457	delinquency charge late fee on any installment not paid in full within 10
5458	5458	calendar days after its scheduled or deferred due date in an amount not
5459	5459	exceeding 5% of the unpaid amount of the installment or $25, whichever is
5460	5460	less.
5461	5461	(2) As an alternative to the delinquency charge late fee set forth in
5462	5462	subsection (1), the parties to a consumer credit transaction may contract
5463	5463	for a delinquency charge late fee not to exceed $10 on any installment not
5464	5464	paid in full within 10 calendar days after its scheduled or deferred due
5465	5465	date, except that if the scheduled payment amount is $25 or less, the
5466	5466	maximum delinquency charge late fee shall be $5.
5467	5467	(3) A delinquency charge late fee may be collected only once on an
5468	5468	installment however long it remains in default. A delinquency charge late
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5512	5512	fee may be collected at the time it accrues is assessed or at any time
5513	5513	thereafter.
5514	5514	(4) No delinquency charge may be collected on an installment which
5515	5515	is paid in full within 10 days after its scheduled or deferred installment due
5516	5516	date even though an earlier maturing installment or a delinquency charge
5517	5517	on an earlier installment may not have been paid in full No late fee may be
5518	5518	assessed when such a fee or charge is attributable solely to failure of the
5519	5519	consumer to pay a late fee on an earlier installment and the payment is
5520	5520	otherwise a periodic payment received on the due date, or within 10
5521	5521	calendar days after its scheduled or deferred installment due date.
5522	5522	(5) For delinquency charge purposes, a payment made prior to the
5523	5523	due date of the next installment payment shall be applied to the previous
5524	5524	installment. For all other purposes, payments are applied to installments in
5525	5525	the order in which they fall due.
5526	5526	(6) Notwithstanding subsections (1), (2), (4) and (5) (4), the parties to
5527	5527	a lender credit card agreement may contract for a delinquency charge late
5528	5528	fee in an amount agreed to by the consumer and may impose such charge
5529	5529	on any installment not paid in full on the next business day following the
5530	5530	scheduled due date of the delinquent late payment.
5531	5531	(7)(6) Notwithstanding subsections (1), (2), (4), (5) and (6) (4), no
5532	5532	delinquency charge late fee may be collected on a lender credit card
5533	5533	installment which is paid in full on the next business day following the
5534	5534	scheduled or deferred due date even though an earlier maturing installment
5535	5535	or a delinquency charge late fee on an earlier installment may not have
5536	5536	been paid in full.
5537	5537	Sec. 55. K.S.A. 16a-2-504 is hereby amended to read as
5538	5538	follows: 16a-2-504. With respect to a consumer credit transaction, the
5539	5539	creditor may by agreement with the consumer refinance the unpaid
5540	5540	balance and may contract for and receive a finance charge based on the
5541	5541	amount financed resulting from the refinancing at a rate not exceeding that
5542	5542	permitted by the provisions on finance charge for consumer credit sales
5543	5543	other than open end credit (section 16a-2-201) if a consumer credit sale is
5544	5544	refinanced, or for consumer loans (subsections (1) or (2) of section 16a-2-
5545	5545	401, whichever is appropriate) if a consumer loan is refinanced, including
5546	5546	any accrued charges. For the purpose of determining the finance charge
5547	5547	permitted, the amount financed resulting from the refinancing refinanced
5548	5548	shall be comprised of the total of the unpaid balance and the accrued
5549	5549	charges on the date of the refinancing.
5550	5550	Sec. 56. K.S.A. 16a-2-505 is hereby amended to read as follows: 16a-
5551	5551	2-505. (1) If a consumer owes an unpaid balance to a creditor with respect
5552	5552	to a consumer credit transaction and becomes obligated on another
5553	5553	consumer credit transaction with the same creditor, the parties may agree
5554	5554	to a consolidation resulting in a single schedule of payments. The parties
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5598	5598	may agree to add the unpaid amount of the amount financed and accrued
5599	5599	charges on the date of consolidation to the amount financed with respect to
5600	5600	the subsequent consumer credit transaction.
5601	5601	The creditor may contract for and receive a finance charge as provided
5602	5602	in subsection (2) based on the aggregate amount financed resulting from
5603	5603	the consolidation.
5604	5604	(2) If the debts consolidated arise exclusively from consumer credit
5605	5605	sales the transaction is a consolidation with respect to as a consumer credit
5606	5606	sale and the amount of the finance charge is governed by the provisions on
5607	5607	finance charge for consumer credit sales other than open end open-end
5608	5608	credit (section 16a-2-201). If the debts consolidated include a debt arising
5609	5609	from a consumer loan, the transaction is a consolidation with respect to as
5610	5610	a consumer loan and the amount of the finance charge is governed by the
5611	5611	provisions on finance charge charges for consumer loans (subsection (1)
5612	5612	or (2) of section 16a-2-401), as appropriate.
5613	5613	(3) If a consumer owes an unpaid balance to a creditor with respect to
5614	5614	a consumer credit transaction arising out of a consumer credit sale, and
5615	5615	becomes obligated on another consumer credit transaction arising out of
5616	5616	another consumer credit sale by the same seller, the parties may agree to a
5617	5617	consolidation resulting in a single schedule of payments either pursuant to
5618	5618	subsection (1) or by adding together the unpaid balances with respect to
5619	5619	the two sales.
5620	5620	Sec. 57. K.S.A. 16a-2-506 is hereby amended to read as follows: 16a-
5621	5621	2-506. (1) If the agreement with respect to a consumer credit transaction
5622	5622	contains covenants by the consumer to perform certain duties pertaining to
5623	5623	insuring or preserving collateral and the creditor pursuant to the agreement
5624	5624	pays for performance of the duties on behalf of the consumer, he may, after
5625	5625	giving prior notification and giving the buyer reasonable opportunity to
5626	5626	perform, add the amounts paid to the debt If a consumer credit transaction
5627	5627	agreement requires a consumer to insure or preserve the collateral and the
5628	5628	consumer fails to do so, after providing the consumer prior notification
5629	5629	and a reasonable opportunity to perform, the creditor may pay for the
5630	5630	performance of insuring or preserving the collateral on the consumer's
5631	5631	behalf and may add the payment to the unpaid debt balance. Within a
5632	5632	reasonable time after advancing any sums, he the creditor shall state to the
5633	5633	buyer in writing the amount of the sums advanced, any charges with
5634	5634	respect to this amount, and any revised payment schedule and, if the duties
5635	5635	of the consumer performed by the creditor pertain to insurance, a brief
5636	5636	description of the insurance paid for by the creditor including the type and
5637	5637	amount of coverages. No further information need be given.
5638	5638	(2) A finance charge may be made for sums advanced pursuant to
5639	5639	subsection (1) at a rate not exceeding to exceed the rate stated to the
5640	5640	consumer pursuant to law in a disclosure statement, except that with
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5683	5683	43 SB 495 67
5684	5684	respect to open end open-end credit the amount of the advance may be
5685	5685	added to the unpaid balance of the debt and the creditor may make a
5686	5686	finance charge not exceeding that permitted by the appropriate provisions
5687	5687	on finance charge for consumer credit sales pursuant to open end open-end
5688	5688	credit (section 16a-2-202) or for consumer loans (subsection (1) or (2) of
5689	5689	section 16a-2-401), whichever is appropriate.
5690	5690	Sec. 58. K.S.A. 16a-2-507 is hereby amended to read as follows: 16a-
5691	5691	2-507. (1)(a) With respect to a consumer credit transaction, the agreement
5692	5692	may provide for the payment by the debtor of reasonable costs of
5693	5693	collection paid to outside parties, including, but not limited to, court costs,
5694	5694	attorney fees and collection agency fees, except that such costs of
5695	5695	collection shall not:
5696	5696	(1)(A) May not Include costs that were incurred by a salaried
5697	5697	employee of the creditor or its assignee;
5698	5698	(2)(B) may not include the recovery of both attorney fees and
5699	5699	collection agency fees; and or
5700	5700	(3)(C) shall not be in excess of 15% of the unpaid debt after default.
5701	5701	(2) A provision in violation of this section is subsection shall be
5702	5702	unenforceable.
5703	5703	(b) Reasonable collection costs and attorney fees pursuant to
5704	5704	subsection (a) shall be considered separate from reasonable expenses
5705	5705	incurred on realizing a security interest pursuant to K.S.A. 16a-3-402, and
5706	5706	amendments thereto.
5707	5707	Sec. 59. K.S.A. 16a-2-508 is hereby amended to read as follows: 16a-
5708	5708	2-508. The parties may agree to add the unpaid balance of a consumer
5709	5709	credit transaction not made pursuant to open end open-end credit to the
5710	5710	consumer's open end open-end credit account with the creditor. The unpaid
5711	5711	balance so added is shall be an amount equal to the amount financed
5712	5712	determined according to the provisions on finance charge on refinancing
5713	5713	(section 16a-2-504).
5714	5714	Sec. 60. K.S.A. 16a-2-510 is hereby amended to read as follows: 16a-
5715	5715	2-510. (1) Upon prepayment in full, but not upon a refinancing (K.S.A.
5716	5716	16a-2-504, and amendments thereto), of a consumer credit transaction
5717	5717	other than one pursuant to open end open-end credit, the creditor may
5718	5718	collect or retain a minimum charge of $5 in a transaction which had an
5719	5719	amount financed of $75 or less, or $7.50 in a transaction which had an
5720	5720	amount financed of more than $75 $10, if the minimum charge was
5721	5721	contracted for and the finance charge earned at the time of prepayment is
5722	5722	less than the minimum charge contracted for. In those instances where the
5723	5723	amounts financed are under or over $75 and If the finance charge is less
5724	5724	than the minimum provided therefor, then the finance charge so contracted
5725	5725	may be retained as the minimum finance charge.
5726	5726	(2) If the maturity is accelerated for any reason and judgment is
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5769	5769	43 SB 495 68
5770	5770	obtained, the judgment shall be taken in accordance with the provisions of
5771	5771	K.S.A. 16-205, and amendments thereto.
5772	5772	(3) Upon prepayment in full of a consumer credit contract by
5773	5773	proceeds of consumer credit insurance, K.S.A. 16a-4-103, and
5774	5774	amendments thereto, the consumer or the consumer's estate is shall be
5775	5775	entitled to the same rebate as though the consumer had prepaid the
5776	5776	agreement on the date the proceeds of the insurance are paid to the
5777	5777	creditor, but no later than 10 business days after satisfactory proof of loss
5778	5778	is furnished to the creditor.
5779	5779	Sec. 61. K.S.A. 16a-3-201 is hereby amended to read as follows: 16a-
5780	5780	3-201. A lessor shall disclose to the consumer the information required by
5781	5781	rules and regulations adopted by the administrator pursuant to K.S.A. 16a-
5782	5782	6-117 16a-6-104, and amendments thereto.
5783	5783	Sec. 62. K.S.A. 16a-3-202 is hereby amended to read as follows: 16a-
5784	5784	3-202. (1) A written agreement which that requires or provides for the
5785	5785	signature of the consumer and which that evidences a consumer credit
5786	5786	transaction loan or consumer credit sale other than one pursuant to open
5787	5787	end open-end credit shall contain a clear, conspicuous, and printed notice
5788	5788	to the consumer that he such consumer should not sign the agreement
5789	5789	before reading it, and that he such consumer is entitled to a copy of the
5790	5790	agreement and to may prepay the unpaid balance at any time without
5791	5791	penalty. The following notice if clearly and conspicuously printed
5792	5792	complies with this section subsection:
5793	5793	NOTICE TO CONSUMER: 1. Do not sign this agreement before you
5794	5794	read it. 2. You are entitled to a copy of this agreement. 3. You may prepay
5795	5795	the unpaid balance at any time without penalty.
5796	5796	(2) A written agreement that requires or provides for the signature of
5797	5797	the consumer and that evidences a consumer lease shall contain a clear,
5798	5798	conspicuous and printed notice to the consumer that such consumer
5799	5799	should not sign the agreement before reading it and that such consumer is
5800	5800	entitled to a copy of the agreement. The following notice if clearly and
5801	5801	conspicuously printed complies with this subsection:
5802	5802	NOTICE TO CONSUMER: 1. Do not sign this agreement before you
5803	5803	read it. 2. You are entitled to a copy of this agreement.
5804	5804	Sec. 63. K.S.A. 16a-3-203 is hereby amended to read as follows: 16a-
5805	5805	3-203. (1) The consumer is authorized to pay the original creditor until he
5806	5806	receives notification of assignment of rights to payment pursuant to a
5807	5807	consumer credit transaction and that payment is to be made to the
5808	5808	assignee. A notification which does not reasonably identify the rights
5809	5809	assigned is ineffective. If requested by the consumer, the assignee must
5810	5810	seasonably furnish provide reasonable proof that the assignment has been
5811	5811	made and unless he does so or the consumer may pay the original creditor.
5812	5812	(2) If the payment is received by the assignor of a consumer credit
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5855	5855	43 SB 495 69
5856	5856	contract for the benefit of the assignee, the date of payment shall be
5857	5857	deemed to be the day payment is received by the assignor.
5858	5858	Sec. 64. K.S.A. 16a-3-204 is hereby amended to read as follows: 16a-
5859	5859	3-204. (1) If a creditor makes a change in the terms of an open end open-
5860	5860	end credit account without complying with this section any additional cost
5861	5861	or charge to the consumer resulting from the change is an excess charge
5862	5862	and subject to the remedies available to consumers (section 16a-5-201)
5863	5863	and to the administrator (section 16a-6-113).
5864	5864	(2) A creditor may change the terms, including the finance charge, of
5865	5865	an open end open-end credit account whether or not the change is
5866	5866	authorized by prior agreement. Except as provided in subsection (3), the
5867	5867	lender creditor shall give to the consumer written notice of any change at
5868	5868	least 30 days before the effective date of the change.
5869	5869	(3) The notice specified in subsection (2) is not required if:
5870	5870	(a) The consumer elects to pay an amount designated on a billing
5871	5871	statement as including a new charge for a benefit offered to the consumer
5872	5872	when the benefit and charge constitute the change in terms and when the
5873	5873	billing statement also states the amount payable if the new charge is
5874	5874	excluded;
5875	5875	(b) the change involves no significant cost to the consumer; or
5876	5876	(c) the change applies only to debts incurred after a date specified in a
5877	5877	notice of the change.
5878	5878	(4) The notice provided for in this section is given to the consumer
5879	5879	when mailed to the consumer at the address used by the creditor for
5880	5880	sending periodic billing statements.
5881	5881	Sec. 65. K.S.A. 16a-3-205 is hereby amended to read as follows: 16a-
5882	5882	3-205. (1) The creditor shall deliver or mail to the consumer, without
5883	5883	request, a written receipt for each payment by coin or currency on an
5884	5884	obligation pursuant to a consumer credit transaction. A periodic statement
5885	5885	showing a payment received by mail complies or electronic methods shall
5886	5886	comply with this subsection.
5887	5887	(2) Upon written request of the consumer, the person to whom an
5888	5888	obligation is owed pursuant to a consumer credit transaction, other than
5889	5889	one pursuant to open end open-end credit, shall provide a written
5890	5890	statement of the dates and amounts of payments made within the past 15
5891	5891	months and the amount required to pay the debt in full. The statement shall
5892	5892	be provided without charge.
5893	5893	(3) After a consumer has fulfilled all obligations with respect to a
5894	5894	consumer credit transaction, other than one pursuant to open end open-end
5895	5895	credit, the person to whom the obligation was owed shall upon request of
5896	5896	the consumer, deliver or mail to the consumer written evidence
5897	5897	acknowledging payment in full of all obligations with respect to the
5898	5898	transaction.
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5941	5941	43 SB 495 70
5942	5942	Sec. 66. K.S.A. 16a-3-206 is hereby amended to read as follows: 16a-
5943	5943	3-206. A creditor shall disclose to the consumer the information required
5944	5944	by the rules and regulations adopted by the administrator pursuant to
5945	5945	K.S.A. 16a-6-117 16a-6-104, and amendments thereto.
5946	5946	Sec. 67. K.S.A. 16a-3-208 is hereby amended to read as follows: 16a-
5947	5947	3-208. (1) A supervised lender shall not No person shall make, directly or
5948	5948	indirectly, make a false, misleading or deceptive advertisement regarding
5949	5949	loans or the availability of loans.
5950	5950	(2) A supervised lender shall not No person shall advertise any size
5951	5951	of loan the size of any loan, security required for a loan, rate of charge or
5952	5952	other conditions of lending except with the full intent of making loans at
5953	5953	those rates, or lower rates, and under those conditions or conditions more
5954	5954	favorable to the consumer, to loan applicants who meet the standards or
5955	5955	qualifications prescribed by the supervised lender.
5956	5956	(3) This section shall be supplemental to and a part of the uniform
5957	5957	consumer credit code.
5958	5958	Sec. 68. K.S.A. 16a-3-209 is hereby amended to read as follows: 16a-
5959	5959	3-209. (a) Unless otherwise specifically stated, for the purposes of K.S.A.
5960	5960	16a-1-101 through 16a-9-102 et seq., and amendments thereto, in
5961	5961	computing any period of time, calendar days shall be used. The day of the
5962	5962	act, event or default from which the designated period of time begins to
5963	5963	run shall not be included. Saturdays, Sundays and legal holidays are
5964	5964	included, unless the last day of the period so computed is a Saturday,
5965	5965	Sunday or a legal holiday, in which event the period runs until the end of
5966	5966	the next day which is not a Saturday, Sunday or a legal holiday. "Legal
5967	5967	holiday" includes any day designated as a holiday by the Federal Reserve
5968	5968	Bank.
5969	5969	(b) This section shall be part of and supplemental to the uniform
5970	5970	consumer credit code.
5971	5971	Sec. 69. K.S.A. 16a-3-301 is hereby amended to read as follows: 16a-
5972	5972	3-301. (1) With respect to a consumer credit sale, a seller may take a
5973	5973	security interest in the property sold. In addition, a seller may take a
5974	5974	security interest in goods upon which services are performed or in which
5975	5975	goods sold are installed or to which they are annexed, or in land to which
5976	5976	the goods are affixed or which is maintained, repaired or improved as a
5977	5977	result of the sale of the goods or services, if in the case of a security
5978	5978	interest in land the debt secured is $3,000 or more, or, in the case of a
5979	5979	security interest in goods the debt secured is $900 or more. Except as
5980	5980	provided with respect to cross-collateral (K.S.A. 16a-3-302, and
5981	5981	amendments thereto) cross-collateral, a seller may not otherwise take a
5982	5982	security interest in property of the buyer to secure the debt arising from a
5983	5983	consumer credit sale.
5984	5984	(2) With respect to a consumer lease, a lessor may not take a security
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6027	6027	43 SB 495 71
6028	6028	interest in property of the lessee to secure the debt amount payable arising
6029	6029	from the lease.
6030	6030	(3) A security interest taken in violation of this section is shall be
6031	6031	void.
6032	6032	Sec. 70. K.S.A. 16a-3-302 is hereby amended to read as follows: 16a-
6033	6033	3-302. (1) In addition to contracting for a security interest pursuant to the
6034	6034	provisions on security in sales or leases (section 16a-3-301), a seller in a
6035	6035	consumer credit sale may secure the debt arising from the sale by
6036	6036	contracting for a security interest in other property if as a result of a prior
6037	6037	sale the seller has an existing security interest in the other property. The
6038	6038	seller may also contract for a security interest in the property sold in the
6039	6039	subsequent sale as security for the previous debt.
6040	6040	(2) If the seller contracts for a security interest in other property
6041	6041	pursuant to this section, the rate of credit service finance charge thereafter
6042	6042	on the aggregate unpaid balances so secured may not exceed that permitted
6043	6043	if the balances so secured were consolidated pursuant to the provisions on
6044	6044	consolidation involving a refinancing (subsection (1) of section 16a-2-
6045	6045	505). The seller has shall have a reasonable time after so contracting to
6046	6046	make any adjustments required by this section. "Seller" in this section does
6047	6047	not include an assignee not related to the original seller.
6048	6048	Sec. 71. K.S.A. 16a-3-303 is hereby amended to read as follows: 16a-
6049	6049	3-303. (1) If debts arising from two or more consumer credit sales, other
6050	6050	than sales pursuant to open end open-end credit, are secured by cross-
6051	6051	collateral (section 16a-3-302) or consolidated into one debt payable on a
6052	6052	single schedule of payments, and the debt is secured by security interests
6053	6053	taken with respect to one or more of the sales, payments received by the
6054	6054	seller after the taking of the cross-collateral or the consolidation are
6055	6055	deemed, for the purpose of determining the amount of the debt secured by
6056	6056	the various security interests, to have been first applied to the payment of
6057	6057	the debts arising from the sales first made. To the extent debts are paid
6058	6058	according to this section, security interests in items of property shall
6059	6059	terminate as the debts debt originally incurred with respect to each item is
6060	6060	paid.
6061	6061	(2) Payments received by the seller upon an open end open-end credit
6062	6062	account are deemed, for the purpose of determining the amount of the debt
6063	6063	secured by the various security interests, to have been applied first to the
6064	6064	payment of finance charges in the order of their entry to the account and
6065	6065	then to the payment of debts in the order in which the entries to the
6066	6066	account showing the debts were made.
6067	6067	(3) If the debts consolidated arose from two or more sales made on
6068	6068	the same day, payments received by the seller are deemed, for the purpose
6069	6069	of determining the amount of the debt secured by the various security
6070	6070	interests, to have been applied first to the payment of the smallest debt.
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6113	6113	43 SB 495 72
6114	6114	Sec. 72. K.S.A. 16a-3-304 is hereby amended to read as follows: 16a-
6115	6115	3-304. (1) A creditor may not No creditor may engage in a pattern or
6116	6116	practice of using multiple agreements to obtain a higher finance charge
6117	6117	than would otherwise be permitted by the provisions of the article on
6118	6118	finance charges and related provisions (article 2) K.S.A. 16a-1-101 et seq.,
6119	6119	and amendments thereto.
6120	6120	(2) The excess amount of finance charge provided for in this section
6121	6121	is an excess charge for the purposes of the provisions on rights of parties
6122	6122	(K.S.A. 16a-5-201, and amendments thereto) and the provisions on civil
6123	6123	actions by administrator (K.S.A. 16a-6-113, and amendments thereto) the
6124	6124	administrator.
6125	6125	Sec. 73. K.S.A. 16a-3-305 is hereby amended to read as follows: 16a-
6126	6126	3-305. (1) A creditor may not No creditor may take an assignment of
6127	6127	earnings of the consumer for payment or as security for payment of a debt
6128	6128	arising out of a consumer credit transaction. An assignment of earnings in
6129	6129	violation of this section is unenforceable by the assignee of the earnings
6130	6130	and revocable by the consumer. This section does not prohibit an employee
6131	6131	from authorizing deductions from his such employee's earnings if the
6132	6132	authorization is revocable.
6133	6133	(2) A sale of unpaid earnings made in consideration of the payment of
6134	6134	money to or for the account of the seller of the earnings is deemed to be a
6135	6135	loan to him the consumer secured by an assignment of earnings.
6136	6136	Sec. 74. K.S.A. 16a-3-306 is hereby amended to read as follows: 16a-
6137	6137	3-306. A consumer may notNo consumer or any other person acting on
6138	6138	the consumer's behalf may authorize any person to confess judgment on a
6139	6139	claim arising out of a consumer credit transaction. An authorization in
6140	6140	violation of this section is shall be void.
6141	6141	Sec. 75. K.S.A. 16a-3-307 is hereby amended to read as follows: 16a-
6142	6142	3-307. With respect to a consumer credit sale or consumer lease, the
6143	6143	creditor may not take a negotiable instrument other than a currently dated
6144	6144	check shall only accept currently dated negotiable instruments as evidence
6145	6145	of the obligation of the buyer or lessee. For purposes of this section, a
6146	6146	creditor shall not make the consumer credit sale contract or consumer
6147	6147	lease contract a negotiable instrument.
6148	6148	Sec. 76. K.S.A. 16a-3-308 is hereby amended to read as follows: 16a-
6149	6149	3-308. With respect toIn a consumer credit transaction with a balloon
6150	6150	payment, other than one pursuant to open end credit if any scheduled
6151	6151	payment is more than twice as large as the average of earlier scheduled
6152	6152	payments open-end credit, the consumer has shall have the right to
6153	6153	refinance the amount of that payment at the time it is due without penalty.
6154	6154	The terms of the refinancing shall be no less favorable to the consumer
6155	6155	than the terms of the original transaction. These provisions do The
6156	6156	provisions of this section shall not apply to the extent that the payment
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6199	6199	43 SB 495 73
6200	6200	schedule is adjusted to the seasonal or irregular income of the consumer or
6201	6201	to a note secured by a real estate mortgage.
6202	6202	Sec. 77. K.S.A. 16a-3-309 is hereby amended to read as follows: 16a-
6203	6203	3-309. With respect to a consumer credit sale or consumer lease the seller
6204	6204	or lessor may not give or offer to give a rebate or discount or otherwise
6205	6205	pay or offer to pay value to the buyer or lessee as an inducement for a sale
6206	6206	or lease in consideration of his giving to the seller or lessor the names of
6207	6207	prospective purchasers or lessees, or otherwise aiding the seller or lessor in
6208	6208	making a sale or lease to another person, if the earning of the rebate,
6209	6209	discount or other value is contingent upon the occurrence of an event
6210	6210	subsequent to the time the buyer or lessee agrees to buy or lease. If a buyer
6211	6211	or lessee is induced by a violation of this section to enter into a consumer
6212	6212	credit sale or consumer lease, the agreement is unenforceable by the seller
6213	6213	or lessor and the buyer or lessee, at his option, may rescind the agreement
6214	6214	or retain the goods delivered and the benefit of any services performed,
6215	6215	without any obligation to pay for them (1) (a) In a consumer credit sale,
6216	6216	no seller shall offer or give a rebate, discount or otherwise pay value to
6217	6217	the buyer in consideration of the buyer giving the seller the names of third
6218	6218	parties, or otherwise assist the seller in making a sale to a third party
6219	6219	when the earning of the rebate, discount or other value is contingent upon
6220	6220	an event subsequent to the time of the sale.
6221	6221	(b) In a consumer lease, no lessor shall offer or give a rebate,
6222	6222	discount or otherwise pay value to the lessee in consideration of the lessee
6223	6223	giving to the lessor the names of third parties, or otherwise aiding the
6224	6224	lessor in leasing to a third party when the earning of the rebate, discount
6225	6225	or other value is contingent upon an event subsequent to the time of the
6226	6226	lease.
6227	6227	(2) If a buyer or lessee is induced by a violation of this section to enter
6228	6228	into a consumer credit sale or consumer lease, the agreement shall be
6229	6229	unenforceable by the seller or lessor and the buyer or lessee, at the
6230	6230	buyer's or lessee's option, may rescind the agreement or retain the goods
6231	6231	delivered and the benefit of any services performed, without any
6232	6232	obligation to pay for them.
6233	6233	Sec. 78. K.S.A. 16a-3-402 is hereby amended to read as follows: 16a-
6234	6234	3-402. Except for reasonable expenses incurred in realizing on a security
6235	6235	interest, the agreement with respect to a consumer credit transaction may
6236	6236	not provide for any charges as a result of default by the consumer other
6237	6237	than those authorized by K.S.A. 16a-1-101 through 16a-9-102 et seq., and
6238	6238	amendments thereto. A provision in violation of this section is shall be
6239	6239	unenforceable.
6240	6240	Sec. 79. K.S.A. 16a-3-403 is hereby amended to read as follows: 16a-
6241	6241	3-403. (1) If the issuer of a credit card, other than a lender credit card, is
6242	6242	the seller or lessor or a person related to the seller or lessor, or if the seller
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6285	6285	43 SB 495 74
6286	6286	or lessor is licensed, franchised, or permitted by the issuer to do business
6287	6287	under the business name or trade name or designation of the issuer, the
6288	6288	issuer is subject to all claims and defenses of a buyer or lessee against the
6289	6289	seller or lessor arising out of a sale or lease of goods or services pursuant
6290	6290	to the credit card.
6291	6291	(2) The issuer of a lender credit card is not subject to the claims and
6292	6292	defenses of a buyer or lessee arising out of a sale or lease of goods or
6293	6293	services pursuant to a lender credit card except where a home solicitation
6294	6294	sale is involved. For purposes of this section, a "home solicitation sale"
6295	6295	means a sale to a consumer of goods (other than equipment used in a
6296	6296	business) or services, in which the seller or a person acting for the seller
6297	6297	engages in a personal solicitation (other than by telephone or mail) of the
6298	6298	sale at a residence of the buyer. It does not include a sale made pursuant to
6299	6299	prior negotiations between the parties at a business establishment at a fixed
6300	6300	location where goods or services are offered or exhibited for sale.
6301	6301	(3) Claims or defenses of a buyer or lessee against a seller or lessor in
6302	6302	connection with a home solicitation sale may be asserted against the issuer
6303	6303	of the lender credit card only:
6304	6304	(a) If the buyer or lessee has attempted in good faith to obtain
6305	6305	reasonable satisfaction from the seller or lessor with respect to claims or
6306	6306	defenses, and
6307	6307	(b) to the extent of the amount owing to the issuer with respect to the
6308	6308	sale or lease at the time the issuer has notice of the claims or defenses.
6309	6309	Notice of the claims or defenses may be given prior to the attempt
6310	6310	specified in paragraph (a). The notice, which may generally state the
6311	6311	claims or defenses, must shall be in writing but may be and sent to either
6312	6312	the seller (or lessor), the lessor or to the issuer.
6313	6313	(4) For the purpose of determining the amount owing to the issuer
6314	6314	with respect to a sale or lease under a credit card, payments received upon
6315	6315	the account are deemed to have been first applied to the payment of
6316	6316	finance charges in the order of their entry to the account and then to the
6317	6317	payment of debts in the order in which the entries of the debts are made to
6318	6318	the account.
6319	6319	(5) An agreement may not provide for greater rights for an issuer of a
6320	6320	credit card than this section permits.
6321	6321	Sec. 80. K.S.A. 16a-3-404 is hereby amended to read as follows: 16a-
6322	6322	3-404. (1) An assignee of the rights of the seller or lessor under a
6323	6323	consumer credit sale or consumer lease is subject to all claims and
6324	6324	defenses of the buyer or lessee against the seller or lessor arising out of the
6325	6325	sale or lease, notwithstanding that:
6326	6326	(a) There is an agreement to the contrary; or
6327	6327	(b) the assignee is a holder in due course of a negotiable instrument
6328	6328	issued in violation of the provisions prohibiting certain negotiable
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6371	6371	43 SB 495 75
6372	6372	instruments (section 16a-3-307).
6373	6373	(2) Claims or defenses of a buyer or lessee specified in subsection (1)
6374	6374	may be asserted against the assignee only:
6375	6375	(a) If the buyer or lessee has attempted in good faith to obtain
6376	6376	reasonable satisfaction from the seller or lessor with respect to claims or
6377	6377	defenses;
6378	6378	(b) if the buyer or lessee, when requested in writing to do so by the
6379	6379	seller, lessor or the assignee, has given notice in writing to the seller or
6380	6380	lessee and the assignee stating the claims or defenses;
6381	6381	(c) to the extent of the amount owing to the assignee with respect to
6382	6382	the sale or lease at the time the assignee has notice of such claims or
6383	6383	defenses. Such notice, generally stating the claims or defenses, must shall
6384	6384	be in writing and shall be sent to the seller (or lessor), and to the assignee
6385	6385	if the buyer or lessee has received written notice of the name and address
6386	6386	of the assignee; and
6387	6387	(d) as a matter of defense to or setoff against claims by the assignee
6388	6388	except that the buyer or lessee shall not be prohibited from bringing an
6389	6389	action to rescind an obligation against which it has a defense or setoff.
6390	6390	(3) For the purpose of determining the amount owing to the assignee
6391	6391	with respect to the sale or lease:
6392	6392	(a) Payments received by the assignee after the consolidation of two
6393	6393	or more consumer credit sales, other than pursuant to open end open-end
6394	6394	credit, are deemed to have been first applied to the payment of the sales
6395	6395	first made; if the sales consolidated arose from sales made on the same
6396	6396	day, payments are deemed to have been first applied to the smaller or
6397	6397	smallest sale or sales;
6398	6398	(b) payments received upon an open end open-end credit account are
6399	6399	deemed to have been first applied to the payment of finance charges in the
6400	6400	order of their entry to the account and then to the payment of debts in the
6401	6401	order in which the entries of the debts are made to the account.
6402	6402	(4) Any action by an assignee or the original seller or lessor who has
6403	6403	repurchased an obligation under subsection (5) to enforce an obligation, or
6404	6404	any action by a buyer or lessee to rescind, or any request to repurchase the
6405	6405	obligation, shall be brought within one year from the date of receipt of the
6406	6406	notice of the claim or defense, or default in payment, whichever is later.
6407	6407	(5) If a claim or defense of a buyer or lessee against a seller or lessor
6408	6408	is asserted against an assignee, the assignee may, regardless of any existing
6409	6409	agreement to the contrary, require the seller or lessor to repurchase the
6410	6410	obligation for an amount equal to the price for which the obligation was
6411	6411	assigned, plus that portion of the finance charge earned by the assignee,
6412	6412	minus payments previously made to the assignee by the buyer or lessee. In
6413	6413	any action by the buyer or lessee to rescind an obligation held by the
6414	6414	assignee, the seller or lessor shall have the right to intervene and any party
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6457	6457	43 SB 495 76
6458	6458	may join as a defendant any manufacturer or other person who is or may
6459	6459	be liable to another party. If the action to rescind is brought against the
6460	6460	seller or lessor, such seller or lessor shall have the right to join as a
6461	6461	defendant any manufacturer or other person who is or may be liable to
6462	6462	such seller or lessor.
6463	6463	(6) An agreement may not provide greater rights for an assignee than
6464	6464	this section permits.
6465	6465	Sec. 81. K.S.A. 16a-3-405 is hereby amended to read as follows: 16a-
6466	6466	3-405. (1) A lender, other than the issuer of a lender credit card, who, with
6467	6467	respect to a particular transaction, makes a consumer loan for the purpose
6468	6468	of enabling a consumer to buy or lease from a particular seller or lessee
6469	6469	goods or services is subject to all claims and defenses of the consumer
6470	6470	against the seller or lessor arising from that sale or lease of the goods and
6471	6471	services if:
6472	6472	(a) The lender knows that the seller or lessor arranged, for a
6473	6473	commission, brokerage, or referral fee, for the extension of credit by the
6474	6474	lender;
6475	6475	(b) the lender is a person related to the seller or lessor unless the
6476	6476	relationship is remote or is not a factor in the transaction;
6477	6477	(c) the seller or lessor guarantees the loan or otherwise assumes the
6478	6478	risk or loss by the lender upon the loan;
6479	6479	(d) the lender directly supplies the seller or lessor with the contract
6480	6480	document used by the consumer to evidence the loan, and the seller or
6481	6481	lessor significantly participates in the preparation of the document; or
6482	6482	(e) the loan is conditioned upon the consumer's purchase or lease of
6483	6483	the goods or services from the particular seller or lessor, but the lender's
6484	6484	payment of proceeds of the loan to the seller or lessor does not in itself
6485	6485	establish that the loan was so conditioned.
6486	6486	(2) Claims or defenses of a buyer or lessee specified in subsection (1)
6487	6487	may be asserted against the lender only:
6488	6488	(a) If the buyer or lessee has attempted in good faith to obtain
6489	6489	reasonable satisfaction from the seller or lessor with respect to the claims
6490	6490	or defenses;
6491	6491	(b) if the buyer or lessee, when requested in writing to do so by the
6492	6492	seller, lessor or the lender, has given notice in writing to the seller or lessee
6493	6493	and the lender stating the claims or defenses,;
6494	6494	(c) to the extent of the amount owing to the lender with respect to the
6495	6495	sale or lease at the time the lender has notice of the claims or defenses.
6496	6496	Such notice, generally stating the claims or defenses, must shall be in
6497	6497	writing and shall be sent to the seller (or lessor), and to the lender if the
6498	6498	buyer or lessee has received written notice of the name and address of the
6499	6499	lender; and
6500	6500	(d) as a matter of defense to or setoff against claims by the lender
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6543	6543	43 SB 495 77
6544	6544	except that the buyer or lessee shall not be prohibited from bringing an
6545	6545	action to rescind an obligation against which it has a defense or setoff.
6546	6546	(3) For the purpose of determining the amount owing to the lender
6547	6547	with respect to the sale or lease:
6548	6548	(a) Payments received by the lender after the consolidation of two or
6549	6549	more consumer loans, other than pursuant to open end open-end credit, are
6550	6550	deemed to have been first applied to the payment of the loans first made; if
6551	6551	the loans consolidated arose from loans made on the same day, payments
6552	6552	are deemed to have been first applied to the smaller or smallest loan or
6553	6553	loans; and
6554	6554	(b) payments received upon an open end open-end credit account are
6555	6555	deemed to have been first applied to the payment of finance charges in the
6556	6556	order of their entry to the account and then to the payment of debts in the
6557	6557	order in which the entries of the debts are made to the account.
6558	6558	(4) An agreement may not provide greater rights for a lender than this
6559	6559	section permits.
6560	6560	(5) Notwithstanding any of the foregoing, the participation of the
6561	6561	lender or lessor in any of the arrangements between seller and buyer to
6562	6562	insure the perfection of the lender or lessor's security interest shall not in
6563	6563	itself establish a relationship described and controlled by subsection (1).
6564	6564	Sec. 82. K.S.A. 16a-4-102 is hereby amended to read as follows: 16a-
6565	6565	4-102. (1) Except as provided in subsection (2), this article applies to
6566	6566	insurance provided or to be provided in relation to a consumer credit
6567	6567	transaction.
6568	6568	(2) The provision on cancellation by a creditor (section 16a-4-304)
6569	6569	applies to loans the primary purpose of which is the financing of
6570	6570	insurance. No other provision of this article applies to insurance so
6571	6571	financed.
6572	6572	Sec. 83. K.S.A. 16a-4-104 is hereby amended to read as follows: 16a-
6573	6573	4-104. (1) Except as otherwise provided in this article and subject to the
6574	6574	provisions on additional charges (section 16a-2-501) and maximum
6575	6575	finance charges (parts 2 and 4 of article 2), a creditor may agree to provide
6576	6576	insurance, and may contract for and receive a charge for insurance separate
6577	6577	from and in addition to other charges. A creditor need not make a separate
6578	6578	charge for insurance provided or required by him. This act does not
6579	6579	authorize the issuance of any insurance prohibited under any statute, or
6580	6580	rule thereunder, governing the business of insurance.
6581	6581	(2) The excess amount of a charge for insurance provided for in
6582	6582	agreements in violation of this article is an excess charge for the purposes
6583	6583	of the provisions of the article on remedies and penalties (article 5) as to
6584	6584	effect of violations on rights of parties (section 16a-5-201) and of the
6585	6585	provisions of the article on administration (article 6) as to civil actions by
6586	6586	the administrator (section 16a-6-113).
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6629	6629	43 SB 495 78
6630	6630	Sec. 84. K.S.A. 16a-4-105 is hereby amended to read as follows: 16a-
6631	6631	4-105. If a creditor agrees with a consumer to provide insurance:
6632	6632	(1) The insurance shall be evidenced by an individual policy or
6633	6633	certificate of insurance delivered to the consumer, or sent to him at his
6634	6634	address as stated by him, within thirty (30) such consumer at such
6635	6635	consumer's address, as provided, within 30 days after the term of the
6636	6636	insurance commences under the agreement between the creditor and
6637	6637	consumer; or
6638	6638	(2) the creditor shall promptly notify the consumer of any failure or
6639	6639	delay in providing the insurance.
6640	6640	Sec. 85. K.S.A. 16a-4-106 is hereby amended to read as follows: 16a-
6641	6641	4-106. (1) In applying the provisions of this act on unconscionability
6642	6642	(sections 16a-5-108 and 16a-6-111) to a separate charge for insurance,
6643	6643	consideration shall be given, among other factors, to:
6644	6644	(a) Potential benefits to the consumer including the satisfaction of his
6645	6645	obligations;
6646	6646	(b) the creditor's need for the protection provided by the insurance;
6647	6647	and
6648	6648	(c) the relation between the amount and terms of credit granted and
6649	6649	the insurance benefits provided.
6650	6650	(2) If consumer credit insurance otherwise complies with this article
6651	6651	and other applicable law, then neither the amount nor, the term of the
6652	6652	insurance nor the amount of a charge therefor of the insurance is
6653	6653	unconscionable.
6654	6654	Sec. 86. K.S.A. 16a-4-107 is hereby amended to read as follows: 16a-
6655	6655	4-107. (1) Except as provided in subsection (2), if a creditor contracts for
6656	6656	or receives a separate charge for insurance, the amount charged to the
6657	6657	consumer for the insurance may not exceed the premium to be charged by
6658	6658	the insurer, as computed at the time the charge to the consumer is
6659	6659	determined, conforming to any rate filings required by law and made by
6660	6660	the insurer with the commissioner of insurance.
6661	6661	(2) A creditor who provides consumer credit insurance in relation to
6662	6662	open end open-end credit may calculate the charge to the consumer in each
6663	6663	billing cycle by applying the current premium rate to the unpaid balance of
6664	6664	debt in the same manner as is permitted with respect to finance charges by
6665	6665	the provisions on finance charges for consumer credit sales pursuant to
6666	6666	open end open-end credit (section 16a-2-202).
6667	6667	Sec. 87. K.S.A. 16a-4-108 is hereby amended to read as follows: 16a-
6668	6668	4-108. (1) Upon prepayment in full of a consumer credit sale or consumer
6669	6669	loan by the proceeds of consumer credit insurance, the consumer or his
6670	6670	such consumer's estate is entitled to a refund of any portion of a separate
6671	6671	charge for insurance which by reason or prepayment is retained by the
6672	6672	creditor or returned to him by the insurer unless the charge was computed
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6715	6715	43 SB 495 79
6716	6716	from time to time on the basis of the balances of the consumer's account.
6717	6717	(2) This article does not require a creditor to grant a refund or credit
6718	6718	to the consumer if all refunds and credits due to him under this article
6719	6719	amount to less than one dollar ($1) $5, and except as provided in
6720	6720	subsection (1) does not require the creditor to account to the consumer for
6721	6721	any portion of a separate charge for insurance because:
6722	6722	(a) The insurance is terminated by performance of the insurer's
6723	6723	obligation;
6724	6724	(b) the creditor pays or accounts for premiums to the insurer in
6725	6725	amounts and at times determined by the agreement between them; or
6726	6726	(c) the creditor receives directly or indirectly under any policy of
6727	6727	insurance a gain or advantage not prohibited by law.
6728	6728	(3) Except as provided in subsection (2), the creditor shall promptly
6729	6729	make or cause to be made an appropriate refund or credit to the consumer
6730	6730	with respect to for any separate charge made to him such consumer for
6731	6731	insurance if:
6732	6732	(a) The insurance is not provided or is provided for a shorter term
6733	6733	than that for which the charge to the consumer for insurance was
6734	6734	computed; or
6735	6735	(b) the insurance terminates prior to the end of the term for which it
6736	6736	was written because of prepayment in full or otherwise.
6737	6737	(4) A refund or credit required by subsection (3) is appropriate as to
6738	6738	amount if it is computed according to a method prescribed or approved by
6739	6739	the commissioner of insurance or a formula filed by the insurer with the
6740	6740	commissioner of insurance at least thirty (30) 30 days before the
6741	6741	consumer's right to a refund or credit becomes determinable, unless the
6742	6742	method or formula is employed after the commissioner of insurance
6743	6743	notifies the insurer that he disapproves it it was not approved.
6744	6744	Sec. 88. K.S.A. 16a-4-109 is hereby amended to read as follows: 16a-
6745	6745	4-109. If a creditor requires insurance, the consumer shall have the option
6746	6746	of providing the required insurance through an existing policy of insurance
6747	6747	owned or controlled by the consumer, or through a policy to be obtained
6748	6748	and paid for by the consumer, but the creditor may for reasonable cause
6749	6749	decline the insurance provided by the consumer. The creditor shall provide
6750	6750	the consumer with a written notice on the loan agreement or other
6751	6751	instrument fully informing the consumer of the option authorized by this
6752	6752	section.
6753	6753	Sec. 89. K.S.A. 16a-4-110 is hereby amended to read as follows: 16a-
6754	6754	4-110. (1) A creditor may not contract for or receive a separate charge for
6755	6755	insurance in connection with a refinancing (section 16a-2-504) or a
6756	6756	consolidation (section 16a-2-505), unless:
6757	6757	(a) The consumer agrees at or before the time of refinancing or
6758	6758	consolidation that the charge may be made;
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6801	6801	43 SB 495 80
6802	6802	(b) the consumer is or is to be provided with insurance for an amount
6803	6803	or a term, or insurance of a kind, in addition to that to which he said
6804	6804	consumer would have been entitled had there been no refinancing or
6805	6805	consolidation;
6806	6806	(c) the consumer receives a refund or credit on account of any
6807	6807	unexpired term of existing insurance in the amount that would be required
6808	6808	if the insurance were terminated (section 16a-4-108); and
6809	6809	(d) the charge does not exceed the amount permitted by this article
6810	6810	(section 16a-4-107).
6811	6811	(2) A creditor may not contract for or receive a separate charge for
6812	6812	insurance which duplicates insurance with respect to which the creditor
6813	6813	has previously contracted for or received a separate charge.
6814	6814	Sec. 90. K.S.A. 16a-4-111 is hereby amended to read as follows: 16a-
6815	6815	4-111. The administrator and the commissioner of insurance are authorized
6816	6816	and directed to consult and assist one another in maintaining compliance
6817	6817	with this article. They may jointly pursue investigations, prosecute suits,
6818	6818	and take other official action, as may seem to them appropriate, if either of
6819	6819	them is otherwise empowered to take the action. If the administrator is
6820	6820	informed of a violation or suspected violation by an insurer of this article,
6821	6821	or of the insurance laws, rules, and regulations of this state, he the
6822	6822	administrator shall advise the commissioner of insurance of the
6823	6823	circumstances.
6824	6824	Sec. 91. K.S.A. 16a-4-112 is hereby amended to read as follows: 16a-
6825	6825	4-112. (1) To the extent that the commissioner's responsibility under this
6826	6826	article requires, the commissioner of insurance shall issue rules with
6827	6827	respect to adopt rules and regulations pursuant to this act regarding
6828	6828	insurers, and with respect to refunds (K.S.A. 16a-4-108, and amendments
6829	6829	thereto), forms, schedules of premium rates and charges (K.S.A. 16a-4-
6830	6830	203, and amendments thereto), and, the commissioner's approval or
6831	6831	disapproval thereof of such rules and regulations adopted and, in case of
6832	6832	violation, may make an order for compliance.
6833	6833	(2) Each provision on administrative procedures and judicial review
6834	6834	of the article on administration (article 6) which that applies to and
6835	6835	governs administrative action taken by the administrator also applies to
6836	6836	and governs all administrative action taken by the commissioner of
6837	6837	insurance pursuant to this section.
6838	6838	Sec. 92. K.S.A. 16a-4-201 is hereby amended to read as follows: 16a-
6839	6839	4-201. (1) Consumer credit insurance provided by a creditor may be
6840	6840	subject to the furnishing of evidence of insurability satisfactory to the
6841	6841	insurer. Whether or not such evidence is required, the term of the insurance
6842	6842	shall commence no later than when the consumer becomes obligated to the
6843	6843	creditor or when the consumer applies for the insurance, whichever is later,
6844	6844	except as follows:
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6887	6887	43 SB 495 81
6888	6888	(a) If any required evidence of insurability is not furnished until more
6889	6889	than thirty (30) days after the term would otherwise commence, the term
6890	6890	may commence on the date when the insurer determines the evidence to be
6891	6891	satisfactory; or
6892	6892	(b) if the creditor provides insurance not previously provided
6893	6893	covering debts previously created, the term may commence on the
6894	6894	effective date of the policy.
6895	6895	(2) The originally scheduled term of the insurance shall extend at
6896	6896	least until the due date of the last scheduled payment of the debt except as
6897	6897	follows:
6898	6898	(a) If the insurance relates to an open end open-end credit account,
6899	6899	the term need extend only until the payment of the debt under the account
6900	6900	and may be sooner terminated after at least thirty (30) 30 days' notice to
6901	6901	the consumer; or
6902	6902	(b) if the consumer is advised in writing that the insurance will be
6903	6903	written for a specified shorter time, the term need extend only until the end
6904	6904	of the specified time.
6905	6905	(3) The term of the insurance shall not extend more than fifteen (15)
6906	6906	15 days after the originally scheduled due date of the last scheduled
6907	6907	payment of the debt unless it is extended without additional cost to the
6908	6908	consumer or as an incident to a deferral, refinancing, or consolidation.
6909	6909	Sec. 93. K.S.A. 16a-4-202 is hereby amended to read as follows: 16a-
6910	6910	4-202. (1) Except as provided in subsection (2):
6911	6911	(a) In the case of consumer credit insurance providing life coverage,
6912	6912	the amount of insurance may not initially exceed the debt and, if the debt
6913	6913	is payable in installments, may not at any time exceed the greater of the
6914	6914	scheduled or actual amount of the debt; or
6915	6915	(b) in the case of any other consumer credit insurance, the total
6916	6916	amount of periodic benefits payable may not exceed the total of scheduled
6917	6917	unpaid installments of the debt, and the amount of any periodic benefit
6918	6918	may not exceed the original amount of debt divided by the number of
6919	6919	periodic installments in which it is payable.
6920	6920	(2) If consumer credit insurance is provided in connection with an
6921	6921	open end open-end credit account, the amounts payable as insurance
6922	6922	benefits may be reasonably commensurate with the amount of debt as it
6923	6923	exists from time to time. If consumer credit insurance is provided in
6924	6924	connection with a commitment to grant credit in the future, the amounts
6925	6925	payable as insurance benefits may be reasonably commensurate with the
6926	6926	total from time to time of the amount of debt and the amount of the
6927	6927	commitment.
6928	6928	Sec. 94. K.S.A. 16a-4-203 is hereby amended to read as follows: 16a-
6929	6929	4-203. (1) A creditor may not use a form or a schedule of premium rates or
6930	6930	charges, the filing of which is required by this section, if the commissioner
6931	6931	1
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6973	6973	43 SB 495 82
6974	6974	of insurance has disapproved the form or schedule and has notified the
6975	6975	insurer of his such disapproval. A creditor may not use a form or schedule
6976	6976	unless:
6977	6977	(a) The form or schedule has been on file with the commissioner of
6978	6978	insurance for thirty (30) days, or has earlier been approved by him was
6979	6979	approved by the commissioner prior to such creditor's use; and
6980	6980	(b) the insurer has complied with this section with respect to the
6981	6981	insurance.
6982	6982	(2) Except as provided in subsection (3), all policies, certificates of
6983	6983	insurance, notices of proposed insurance, applications for insurance,
6984	6984	endorsements and riders relating to consumer credit insurance delivered or
6985	6985	issued for delivery in this state, and the schedules of premium rates or
6986	6986	charges pertaining thereto, shall be filed by the insurer with the
6987	6987	commissioner of insurance. Within thirty (30) 30 days after the filing of
6988	6988	any form or schedule, he the commissioner shall disapprove it if the
6989	6989	premium rates or charges are unreasonable in relation to the benefits
6990	6990	provided under the form, or if the form contains provisions which that are
6991	6991	unjust, unfair, inequitable, or deceptive, or encourage misrepresentation of
6992	6992	the coverage, or are contrary to any provision of the insurance code or of
6993	6993	any rule or regulation promulgated thereunder.
6994	6994	(3) If a group policy has been delivered in another state, the forms to
6995	6995	be filed by the insurer with the commissioner of insurance are the group
6996	6996	certificates and notices of proposed insurance. He The commissioner shall
6997	6997	approve them if:
6998	6998	(a) TheySuch group certificates and notices of proposed insurance
6999	6999	provide the information that would be required if the group policy were
7000	7000	delivered in this state; and
7001	7001	(b) the applicable premium rates or charges do not exceed those
7002	7002	established by his rules or regulations.
7003	7003	Sec. 95. K.S.A. 16a-4-301 is hereby amended to read as follows: 16a-
7004	7004	4-301. (1) A creditor may not contract for or receive a separate charge for
7005	7005	insurance against loss of or damage to property unless:
7006	7006	(a) The insurance covers a substantial risk of loss of or damage to
7007	7007	property related to the credit transaction;
7008	7008	(b) the amount, terms, and conditions of the insurance are reasonable
7009	7009	in relation to the character and value of the property insured or to be
7010	7010	insured; and
7011	7011	(c) the term of the insurance is reasonable in relation to the terms of
7012	7012	credit.
7013	7013	(2) The term of the insurance is reasonable if it is customary and does
7014	7014	not extend substantially beyond a scheduled maturity.
7015	7015	(3) A creditor may not contract for or receive a separate charge for
7016	7016	insurance against loss of or damage to property unless property is
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7056	7056	40
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7058	7058	42
7059	7059	43 SB 495 83
7060	7060	purchased pursuant to a credit card or in a transaction pursuant to open end
7061	7061	open-end credit, or unless the amount financed exclusive of charges for the
7062	7062	insurance is $900 or more, and the value of the property is $900 or more.
7063	7063	Sec. 96. K.S.A. 16a-4-304 is hereby amended to read as follows: 16a-
7064	7064	4-304. A creditor shall not request cancellation of a policy of property or
7065	7065	liability insurance except after the consumer's default or in accordance
7066	7066	with a written authorization by the consumer, and in either case the
7067	7067	cancellation does shall not take effect until written notice is delivered to
7068	7068	the consumer or mailed to him at his address as stated by him such
7069	7069	consumer at the address provided. The notice shall state that the policy
7070	7070	may be cancelled on a date not less than ten (10) 10 days after the notice is
7071	7071	delivered, or, if the notice is mailed, not less than thirteen (13) 13 days
7072	7072	after it is mailed.
7073	7073	Sec. 97. K.S.A. 16a-5-103 is hereby amended to read as follows: 16a-
7074	7074	5-103. (1) This section applies to a deficiency on a consumer credit sale of
7075	7075	goods or services and on a consumer loan in which the lender is subject to
7076	7076	defenses arising from sales (K.S.A. 16a-3-405, and amendments thereto); a
7077	7077	consumer is not liable for a deficiency unless the creditor has disposed of
7078	7078	the goods in good faith and in a commercially reasonable manner.
7079	7079	(2) If the seller repossesses or voluntarily accepts surrender of goods
7080	7080	which were the subject of the sale and in which he the seller has a security
7081	7081	interest, the buyer is not personally liable to the seller for the unpaid
7082	7082	balance of the debt arising from the sale of a commercial unit of goods of
7083	7083	which the cash sale price was $1,000 or less, and the seller is not obligated
7084	7084	to resell the collateral unless the buyer has paid 60% or more of the cash
7085	7085	price and has not signed after default a statement renouncing his such
7086	7086	buyer's rights in the collateral.
7087	7087	(3) If the seller repossesses or voluntarily accepts surrender of goods
7088	7088	which were not the subject of the sale but in which the seller has a security
7089	7089	interest to secure a debt arising from a sale of goods or services or a
7090	7090	combined sale of goods and services and the cash price of the sale was
7091	7091	$1,000 or less, the buyer is not personally liable to the seller for the unpaid
7092	7092	balance of the debt arising from the sale, and the seller's duty to dispose of
7093	7093	the collateral is governed by the provisions on disposition of collateral
7094	7094	(K.S.A. 84-9-610, and amendments thereto) of the uniform commercial
7095	7095	code.
7096	7096	(4) If the lender takes possession or voluntarily accepts surrender of
7097	7097	goods in which he such lender has a security interest to secure a debt
7098	7098	arising from a consumer loan in which the lender is subject to defenses
7099	7099	arising from sales (K.S.A. 16a-3-405, and amendments thereto), and the
7100	7100	net proceeds of the loan paid to or for the benefit of the debtor were
7101	7101	$1,000 or less, the debtor is not personally liable to the lender for the
7102	7102	unpaid balance of the debt arising from the loan and the lender's duty to
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7144	7144	42
7145	7145	43 SB 495 84
7146	7146	dispose of the collateral is governed by the provisions on disposition of
7147	7147	collateral (K.S.A. 84-9-610, and amendments thereto) of the uniform
7148	7148	commercial code.
7149	7149	(5) For the purpose of determining the unpaid balance of consolidated
7150	7150	debts or debts pursuant to open end open-end credit, the allocation of
7151	7151	payments to a debt shall be determined in the same manner as provided for
7152	7152	determining the amount of debt secured by various security interests ( by
7153	7153	K.S.A. 16a-3-303, and amendments thereto).
7154	7154	(6) The consumer may be liable in damages to the creditor if the
7155	7155	consumer has wrongfully damaged the collateral or if, after default and
7156	7156	demand, the consumer has wrongfully failed to make the collateral
7157	7157	available to the creditor.
7158	7158	(7) If the creditor elects to bring brings an action against the
7159	7159	consumer for a debt arising from a consumer credit sale of goods or
7160	7160	services or from a consumer loan in which the lender is subject to defenses
7161	7161	arising from sales (K.S.A. 16a-3-405, and amendments thereto), when
7162	7162	under this section the creditor would not be entitled to a deficiency
7163	7163	judgment if the creditor took possession of the collateral, and obtains
7164	7164	judgment:
7165	7165	(a) The creditor may not take possession of the collateral, and
7166	7166	(b) the collateral is not subject to levy or sale on execution or similar
7167	7167	proceedings pursuant to the judgment.
7168	7168	Sec. 98. K.S.A. 16a-5-107 is hereby amended to read as follows: 16a-
7169	7169	5-107. (1) If it is the understanding of the creditor and the consumer at the
7170	7170	time an extension of credit is made that delay in making repayment or
7171	7171	failure to make repayment could result in the use of violence or other
7172	7172	criminal means to cause harm to the person, reputation, or property of any
7173	7173	person, the repayment of the extension of credit is unenforceable through
7174	7174	civil judicial processes against the consumer.
7175	7175	(2) If it is shown that an extension of credit was made at an annual
7176	7176	rate exceeding thirty-six percent (36%) 36% calculated according to the
7177	7177	actuarial method and that the creditor then had a reputation for the use or
7178	7178	threat of use of violence or other criminal means to cause harm to the
7179	7179	person, reputation, or property of any person to collect extensions of credit
7180	7180	or to punish the nonrepayment thereof, there is prima facie evidence that
7181	7181	the extension of credit was unenforceable under subsection (1).
7182	7182	Sec. 99. K.S.A. 16a-5-108 is hereby amended to read as follows: 16a-
7183	7183	5-108. (1) The unconscionability of an act or practice is a question for the
7184	7184	trier of fact.
7185	7185	(2) With respect to a consumer credit transaction, if the trier of fact
7186	7186	finds:
7187	7187	(a) The agreement to have been was unconscionable at the time it was
7188	7188	made, or to have been was induced by unconscionable conduct, the court
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7190	7190	2
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7230	7230	42
7231	7231	43 SB 495 85
7232	7232	may refuse to enforce the agreement; or
7233	7233	(b) any clause of the agreement to have been was unconscionable at
7234	7234	the time it was made, the court may refuse to enforce the agreement, or
7235	7235	may enforce the remainder of the agreement without the unconscionable
7236	7236	clause, or may so limit the application of any unconscionable clause as to
7237	7237	avoid any unconscionable result.
7238	7238	(2)(3) If it is claimed or appears to the trier of fact that the agreement
7239	7239	or any clause thereof may be unconscionable the parties shall be afforded a
7240	7240	reasonable opportunity to present evidence as to its setting, purpose, and
7241	7241	effect to aid the court in making the determination.
7242	7242	(3)(4) For the purpose of this section, A charge or practice expressly
7243	7243	permitted by this act is not shall not be unconscionable.
7244	7244	Sec. 100. K.S.A. 16a-5-111 is hereby amended to read as follows:
7245	7245	16a-5-111. (1) This section applies to consumer credit transactions After a
7246	7246	consumer has been in default for 10 days for failure to make a required
7247	7247	payment in a consumer credit transaction payable in installments, a
7248	7248	creditor may give the consumer the notice described in this section. A
7249	7249	creditor gives notice to the consumer under this section when the creditor
7250	7250	delivers the notice to the consumer or delivers or mails the notice to the
7251	7251	address of the consumer's residence.
7252	7252	(2) The notice shall be in writing and shall conspicuously state the
7253	7253	following: The name, address and telephone number of the creditor to
7254	7254	which payment is to be made, a brief description of the credit transaction,
7255	7255	the consumer's right to cure the default, the amount of payment and date
7256	7256	by which payment must be made to cure the default, and the consumer's
7257	7257	possible liability for the reasonable costs of collection, including, but not
7258	7258	limited to, court costs, either attorney fees or collection agency fees and
7259	7259	any other information required by the administrator as set forth by rules
7260	7260	and regulations or by administrative interpretation.
7261	7261	(3) Except as provided in subsection (3)With respect to a consumer
7262	7262	credit transaction payable in installments, after a default consisting only of
7263	7263	the consumer's failure to make a required payment in a consumer credit
7264	7264	transaction payable in installments, a creditor may neither accelerate
7265	7265	maturity of the unpaid balance of the obligation nor take possession of
7266	7266	collateral because of that default until 20 days after a notice of the
7267	7267	consumer's right to cure (K.S.A. 16a-5-110, and amendments thereto) is
7268	7268	given. Until 20 days after the notice is given, the consumer may cure all
7269	7269	defaults consisting of a failure to make the required payment by tendering
7270	7270	the amount of all unpaid sums due at the time of the tender, without
7271	7271	acceleration, plus any unpaid delinquency charges late fees. Cure restores
7272	7272	shall restore the consumer to the consumer's rights under the agreement as
7273	7273	though the defaults had not occurred.
7274	7274	(3)(4) With respect to defaults on the same obligation after a creditor
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7316	7316	42
7317	7317	43 SB 495 86
7318	7318	has once given a notice of consumer's right to cure (K.S.A. 16a-5-110, and
7319	7319	amendments thereto), this section gives the consumer no right to cure and
7320	7320	imposes no limitation on the creditor's right to proceed against the
7321	7321	consumer or the collateral.
7322	7322	(5) Unless the consumer voluntarily surrenders the collateral to the
7323	7323	creditor, the creditor may take possession of the collateral without judicial
7324	7324	process only if possession can be taken without entry into a dwelling and
7325	7325	without the use of force or other breach of the peace.
7326	7326	(6) Nothing in this section shall prohibit a consumer from voluntarily
7327	7327	surrendering the collateral of the consumer credit transaction and shall
7328	7328	not prohibit the creditor from thereafter enforcing the creditor's security
7329	7329	interest in the collateral at any time after surrender.
7330	7330	Sec. 101. K.S.A. 16a-5-201 is hereby amended to read as follows:
7331	7331	16a-5-201. (1) If a creditor has violated the provisions of this act applying
7332	7332	to collection of excess charges or enforcement of rights (subsection (4) of
7333	7333	section 16a-1-201), restrictions on interests in land as security (section
7334	7334	16a-2-307), limitations on the schedule of payments or loan terms for
7335	7335	supervised loans (section 16a-2-308), attorney's fees (section 16a-2-507),
7336	7336	security in sales and leases (section 16a-3-301), assignments of earnings
7337	7337	(section 16a-3-305), authorizations to confess judgment (section 16a-3-
7338	7338	306), certain negotiable instruments prohibited (section 16a-3-307),
7339	7339	assignees subject to defenses (section 16a-3-404), credit card issuer
7340	7340	subject to defenses (section 16a-3-403), or limitations on default charges
7341	7341	(section 16a-3-402), the consumer has a cause of action to may recover
7342	7342	actual damages and in addition a right in an action other than except for a
7343	7343	class action to recover from the person violating such provisions of this act
7344	7344	a penalty in an amount determined by the court not less than $100 nor
7345	7345	more than $1,000. With respect to violations arising from sales or loans
7346	7346	made pursuant to open end open-end credit, no action pursuant to this
7347	7347	subsection may be brought more than two years after the violations
7348	7348	occurred. With respect to violations arising from other consumer
7349	7349	transactions, no action pursuant to this subsection may be brought more
7350	7350	than one year after the due date of the last scheduled payment of the
7351	7351	agreement.
7352	7352	(2) If a creditor has violated the provisions of this act applying to
7353	7353	authority to make supervised loans (section 16a-2-301), the loan is void
7354	7354	and the consumer is not obligated to pay either the amount financed or
7355	7355	finance charge. If the consumer has paid any part of the amount financed
7356	7356	or of the finance charge, the consumer has a right to recover the payment
7357	7357	from the person violating this act or from an assignee of that person's
7358	7358	rights who undertakes direct or indirect collection of payments or
7359	7359	enforcement of rights arising from the debt including, but not limited to,
7360	7360	loans described in K.S.A. 16a-2-301(1), and amendments thereto. With
7361	7361	1
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7400	7400	40
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7402	7402	42
7403	7403	43 SB 495 87
7404	7404	respect to violations arising from loans made pursuant to open end open-
7405	7405	end credit, no action pursuant to this subsection may be brought more than
7406	7406	two years after the violation occurred. With respect to violations arising
7407	7407	from other loans, no action pursuant to this subsection may be brought
7408	7408	more than one year after the due date of the last scheduled payment of the
7409	7409	agreement pursuant to which the charge was paid. Persons subject to the
7410	7410	penalties in this subsection shall not include attorneys or collection
7411	7411	agencies who that do not purchase a consumer obligation.
7412	7412	(3) A consumer is not obligated to pay a charge in excess of that
7413	7413	allowed by this act, and if the consumer has paid an excess charge the
7414	7414	consumer has a right to a refund of twice the excess charge. A refund may
7415	7415	be made by reducing the consumer's obligation by twice the amount of the
7416	7416	excess charge. If the consumer has paid an amount in excess of the lawful
7417	7417	obligation under the agreement, the consumer may recover twice the
7418	7418	excess amount from the person who made the excess charge or from an
7419	7419	assignee of that person's rights who undertakes direct or indirect collection
7420	7420	of payments from or enforcement of rights against debtors arising from the
7421	7421	debt including, but not limited to, loans described in K.S.A. 16a-2-301(1),
7422	7422	and amendments thereto. Persons subject to the penalties in this subsection
7423	7423	shall not include attorneys or collection agencies who do not purchase a
7424	7424	consumer obligation.
7425	7425	(4) If a creditor has contracted for or received a charge in excess of
7426	7426	that allowed by this act, or if a consumer is entitled to a refund and a
7427	7427	person liable to the consumer refuses to make a refund within a reasonable
7428	7428	time after demand, the consumer may recover from the creditor or the
7429	7429	person liable in an action other than except for a class action a penalty in
7430	7430	an amount determined by the court not less than $100 or more than $1,000.
7431	7431	With respect to excess charges arising from sales or loans made pursuant
7432	7432	to open end open-end credit, no action pursuant to this subsection may be
7433	7433	brought more than two years after the time the excess charge was made.
7434	7434	With respect to excess charges arising from other consumer credit
7435	7435	transactions, no action pursuant to this subsection may be brought more
7436	7436	than one year after the due date of the last scheduled payment of the
7437	7437	agreement pursuant to which the charge was made. Persons subject to the
7438	7438	penalties in this subsection shall not include attorneys or collection
7439	7439	agencies who do not purchase a consumer obligation.
7440	7440	(5) Except as otherwise provided, no violation of the provisions of
7441	7441	K.S.A. 16a-1-101 through 16a-9-102 et seq., and amendments thereto,
7442	7442	impairs rights on a debt.
7443	7443	(6) A creditor has no liability for a penalty under subsection (1) or
7444	7444	subsection (4) if within 15 days after discovering an error, and prior to the
7445	7445	institution of an action under this section or the receipt of written notice of
7446	7446	the error, the creditor notifies the person concerned of the error and
7447	7447	1
7448	7448	2
7449	7449	3
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7479	7479	33
7480	7480	34
7481	7481	35
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7483	7483	37
7484	7484	38
7485	7485	39
7486	7486	40
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7488	7488	42
7489	7489	43 SB 495 88
7490	7490	corrects the error. If the violation consists of a prohibited agreement,
7491	7491	giving the consumer a corrected copy of the writing containing the error is
7492	7492	sufficient notification and correction. If the violation consists of an excess
7493	7493	charge, correction shall be made by an adjustment or refund.
7494	7494	(7) If the creditor establishes by a preponderance of evidence that a
7495	7495	violation is unintentional or the result of a bona fide error of law or fact
7496	7496	notwithstanding the maintenance of procedures reasonably adapted to
7497	7497	avoid any such violation or error, no liability is imposed under subsections
7498	7498	(1), (2), and (3), the validity of the transaction is not affected, and no
7499	7499	liability is imposed under subsection (4) except for refusal to make a
7500	7500	refund.
7501	7501	(8) In an action in which it is found that a creditor has violated any
7502	7502	provision of K.S.A. 16a-1-101 through 16a-9-102 et seq., and amendments
7503	7503	thereto, the court shall award to the consumer the costs of the action and to
7504	7504	the consumer's attorneys their reasonable fees. Reasonable attorney's fees
7505	7505	shall be determined by the value of the time reasonably expended by the
7506	7506	attorney and not by the amount of the recovery on behalf of the consumer.
7507	7507	(9) A creditor who in good faith complies with a written
7508	7508	administrative interpretation shall not be subject to any penalties under this
7509	7509	section for any act done or omitted in conformity with such written
7510	7510	administrative interpretation.
7511	7511	Sec. 102. K.S.A. 16a-5-203 is hereby amended to read as follows:
7512	7512	16a-5-203. (1) Except as otherwise provided in this section, a creditor
7513	7513	who, in violation of the provisions of the rules and regulations adopted by
7514	7514	the administrator pursuant to K.S.A. 16a-6-117, and amendments thereto,
7515	7515	fails to disclose information to a person entitled to the information under
7516	7516	the provisions of K.S.A. 16a-1-101 through 16a-9-102 et seq., and
7517	7517	amendments thereto, or under rules and regulations adopted by the
7518	7518	administrator is liable to that person in an amount equal to the sum of:
7519	7519	(a) Twice the amount of the finance charge in connection with the
7520	7520	transaction, but the liability pursuant to this paragraph shall be not less
7521	7521	than $200 or more than $2,000; and
7522	7522	(b) in the case of a successful action to enforce the liability under
7523	7523	paragraph (a), the costs of the action together with reasonable attorney's
7524	7524	fees as determined by the court.
7525	7525	(2) A creditor has no liability under this section if within 15 days after
7526	7526	discovering an error, and prior to the institution of an action under this
7527	7527	section or the receipt of written notice of the error, the creditor notifies the
7528	7528	person concerned of the error and makes whatever adjustments in the
7529	7529	appropriate account are necessary to assure that the person will not be
7530	7530	required to pay a credit service charge or loan finance charge in excess of
7531	7531	the amount or percentage rate actually disclosed.
7532	7532	(3) A creditor may not be held liable in any action brought under this
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7576	7576	section for a violation of the provisions of K.S.A. 16a-1-101 through 16a-
7577	7577	9-102 et seq., and amendments thereto, if the creditor shows by a
7578	7578	preponderance of evidence that the violation was not intentional and
7579	7579	resulted from a bona fide error notwithstanding the maintenance of
7580	7580	procedures reasonably adapted to avoid the error.
7581	7581	(4) Any action which may be brought under this section against the
7582	7582	original creditor in any credit transaction involving a security interest in
7583	7583	land may be maintained against any subsequent assignee of the original
7584	7584	creditor where the assignee, its subsidiaries, or affiliates were in a
7585	7585	continuing business relationship with the original creditor either at the
7586	7586	time the credit was extended or at the time of the assignment, unless the
7587	7587	assignment was involuntary, or the assignee shows by a preponderance of
7588	7588	evidence that it did not have reasonable grounds to believe that the original
7589	7589	creditor was engaged in violations of this act and that it maintained
7590	7590	procedures reasonably adapted to apprise it of the existence of the
7591	7591	violations.
7592	7592	(5) No action pursuant to this section may be brought more than one
7593	7593	year after the date of the occurrence of the violation.
7594	7594	(6) The liability of the creditor under this section is in lieu of and not
7595	7595	in addition to the creditor's liability under the federal truth in lending act;
7596	7596	no action with respect to the same violation may be maintained pursuant to
7597	7597	both this section and the federal truth in lending act.
7598	7598	Sec. 103. K.S.A. 16a-5-301 is hereby amended to read as follows:
7599	7599	16a-5-301. (1) It is unlawful for any person to violate any of the provisions
7600	7600	of this act, any rule and regulation adopted or order issued under this act. A
7601	7601	conviction for an intentional violation is a class A nonperson misdemeanor.
7602	7602	A second or subsequent conviction of this subsection is severity level 7
7603	7603	nonperson felony. No person may be imprisoned for the violation of this
7604	7604	section if such person proves that such person had no knowledge of the
7605	7605	rule and regulation or order.
7606	7606	(2) The criminal liability of a person under this section is in lieu of
7607	7607	and not in addition to the creditor's criminal liability under the federal truth
7608	7608	in lending act. No prosecution of a person with respect to the same
7609	7609	violation may be maintained pursuant to both this section and the federal
7610	7610	truth in lending act.
7611	7611	(3) A person, other than a supervised financial organization or an
7612	7612	attorney or collection agency who does not purchase the credit obligation,
7613	7613	who willfully engages in the business of entering into consumer credit
7614	7614	transactions, or of taking assignments of rights against consumers arising
7615	7615	therefrom and undertakes direct or indirect collection of payments or
7616	7616	enforcement of these rights, without complying with the provisions of this
7617	7617	act concerning notification (K.S.A. 16a-6-202, and amendments thereto)
7618	7618	or payment of fees (K.S.A. 16a-6-203, and amendments thereto), is guilty
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7662	7662	of a class A misdemeanor and upon conviction thereof shall be punished in
7663	7663	the manner provided by law.
7664	7664	Sec. 104. K.S.A. 16a-6-104 is hereby amended to read as follows:
7665	7665	16a-6-104. This act shall be administered by the consumer credit
7666	7666	commissioner of Kansas* who is also referred to as the administrator.
7667	7667	(1) In addition to other powers granted by this act, the administrator
7668	7668	within the limitations provided by law may:
7669	7669	(a) Receive and act on complaints, take action designed to obtain
7670	7670	voluntary compliance with the provisions of K.S.A. 16a-1-101 to 16a-9-
7671	7671	102, inclusive et seq., and amendments thereto, or commence proceedings
7672	7672	on the administrator's own initiative;
7673	7673	(b) counselprovide guidance to persons and groups on their rights and
7674	7674	duties under K.S.A. 16a-1-101 to 16a-9-102, inclusive et seq., and
7675	7675	amendments thereto;
7676	7676	(c) establish or support programs for the education of consumers with
7677	7677	respect to credit practices and problems and:
7678	7678	(A) As a condition in settlements of investigations or examinations,
7679	7679	the administrator may receive require a payment designated for consumer
7680	7680	education to be expended as directed by the administrator for such
7681	7681	purpose; and
7682	7682	(B) the administrator may fund consumer education programs from
7683	7683	operating funds in an amount up to 1% of operating funds.
7684	7684	(d) make studies appropriate to effectuate the purposes and policies of
7685	7685	K.S.A. 16a-1-101 to 16a-9-102, inclusive et seq., and amendments thereto;
7686	7686	(e) adopt, amend and revoke rules and regulations to carry out the
7687	7687	specific provisions of K.S.A. 16a-1-101 to 16a-9-102, inclusive et seq.,
7688	7688	and amendments thereto, and to implement the requirements of the secure
7689	7689	and fair enforcement for mortgage licensing act of 2008 (P.L. 110-289);
7690	7690	(f) issue, amend and revoke written administrative interpretations.
7691	7691	Such written administrative interpretations shall be approved by the
7692	7692	attorney general and published in the Kansas register within 15 days of
7693	7693	issuance. The administrator shall annually publish all written
7694	7694	administrative interpretations in effect;
7695	7695	(g) maintain offices within this state; and
7696	7696	(h) appoint any necessary attorneys, hearing examiners, clerks, and
7697	7697	other employees and agents and fix their set such employees'
7698	7698	compensation, and authorize attorneys appointed under this section to
7699	7699	appear for and represent the administrator in court;
7700	7700	(i) examine periodically at intervals the administrator deems
7701	7701	appropriate the loans, business and records of every licensee, registrant or
7702	7702	person filing notification pursuant to K.S.A. 16a-6-201 through 16a-6-203,
7703	7703	and amendments thereto or consumer credit filer, except licensees which
7704	7704	that are supervised financial organizations. The official or agency
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7747	7747	43 SB 495 91
7748	7748	responsible for the supervision of each supervised financial organization
7749	7749	shall examine the loans, business and records of each such organization in
7750	7750	the manner and periodically at intervals prescribed by the administrator. In
7751	7751	addition, for the purpose of discovering violations of K.S.A. 16a-1-101
7752	7752	through 16a-9-102 et seq., and amendments thereto, or securing
7753	7753	information lawfully required, the administrator or the official or agency to
7754	7754	whose supervision the organization is subject to K.S.A. 16a-6-105, and
7755	7755	amendments thereto, may at any time investigate the loans, business and
7756	7756	records of any supervised lender. For examination purposes the
7757	7757	administrator shall have free and reasonable access to the offices, places of
7758	7758	business and records of the lender, registrant or person filing notification
7759	7759	licensee or consumer credit filer and the administrator may control access
7760	7760	to any documents and records of a licensee, registrant or person filing
7761	7761	notification under examination or consumer credit filer;
7762	7762	(j) refer such evidence as may be available concerning violations of
7763	7763	this act or of any rule and regulation or order to the attorney general or in
7764	7764	consultation with the attorney general to the proper county or district
7765	7765	attorney, who may in the prosecutor's discretion, with or without such a
7766	7766	reference referral, institute the appropriate criminal proceedings under this
7767	7767	act. Upon receipt of such reference, the attorney general or the county
7768	7768	attorney or district attorney may request that a duly employed attorney of
7769	7769	the administrator prosecute or assist in the prosecution of such violation on
7770	7770	behalf of the state. Upon approval of the administrator, such employee
7771	7771	shall be appointed special prosecutor for the attorney general or the county
7772	7772	attorney or district attorney to serve without compensation from the
7773	7773	attorney general or the county attorney or district attorney. Such special
7774	7774	prosecutor shall have all the powers and duties prescribed by law for
7775	7775	assistant attorneys general or assistant county or district attorneys, and
7776	7776	such other powers and duties as are lawfully delegated to such special
7777	7777	prosecutors by the attorney general or the county attorney or district
7778	7778	attorney the laws of this state;
7779	7779	(k) if deemed necessary by the administrator, require fingerprinting of
7780	7780	any applicant, licensee, owners or members thereof if a copartnership or
7781	7781	association, or officers and directors thereof if a corporation, or any agent
7782	7782	or other person acting on their behalf. The administrator, or the
7783	7783	administrator's designee, may shall submit such fingerprints to the Kansas
7784	7784	bureau of investigation, federal bureau of investigation, or other law
7785	7785	enforcement agency for the purposes of verifying the identity of such
7786	7786	persons and obtaining records of their criminal arrests and convictions. For
7787	7787	purposes of this section and in order to reduce the points of contact which
7788	7788	the federal bureau of investigation may have to maintain with the
7789	7789	individual states, the administrator may use the nationwide mortgage
7790	7790	licensing system and registry as a channeling agent for requesting
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7834	7834	information from and distributing information to the department of justice
7835	7835	or any governmental agency;
7836	7836	(l) exchange information regarding the administration of this act with
7837	7837	any agency of the United States or any state which regulates the licensee,
7838	7838	registrant or person required to file notification, or consumer credit filer
7839	7839	who administers statutes, rules and regulations or other programs related to
7840	7840	consumer credit and to enter into information sharing arrangements with
7841	7841	other governmental agencies or associations representing governmental
7842	7842	agencies which are deemed necessary or beneficial to the administration of
7843	7843	this act;
7844	7844	(m) require that any applicant, licensee, registrant or other person
7845	7845	complete a minimum number of prelicensing education hours and
7846	7846	complete continuing education hours on an annual basis. Prelicensing and
7847	7847	continuing education courses shall be approved by the administrator or the
7848	7848	administrator's designee and may be made a condition of the application
7849	7849	approval and renewal;
7850	7850	(n) require that any applicant, licensee, registrant or other person
7851	7851	successfully pass a standardized examination designed to establish such
7852	7852	person's knowledge of residential mortgage loan origination transactions
7853	7853	and all applicable state and federal law. Such examinations shall be created
7854	7854	and administered by the administrator or the administrator's designee and
7855	7855	may be made a condition of application approval;
7856	7856	(o) use the nationwide mortgage licensing system and registry as a
7857	7857	channeling agent for requesting and distributing any information regarding
7858	7858	residential mortgage loan originator registration or supervised lender
7859	7859	licensing to and from any source so directed by the administrator;
7860	7860	(p)(n) establish relationships or contracts with the nationwide
7861	7861	mortgage licensing system and registry or other entities to collect and
7862	7862	maintain records and process transaction fees or other fees related to
7863	7863	applicants, licensees, registrants or other persons subject to the act and to
7864	7864	take such other actions as may be reasonably necessary to participate in
7865	7865	the nationwide mortgage licensing system and registry. The administrator
7866	7866	shall regularly report violations of law, as well as enforcement actions and
7867	7867	other relevant information, to the nationwide mortgage licensing system
7868	7868	and registry, and make publicly available the proposed budget, fees, and
7869	7869	audited financial statements of the nationwide mortgage licensing system
7870	7870	and registry as may be prepared by the nationwide mortgage licensing
7871	7871	system and registry and provided to the administrator;
7872	7872	(q) require that any residential mortgage loan originator applicant,
7873	7873	registrant or other person successfully pass a standardized examination
7874	7874	designed to establish such person's knowledge of mortgage transactions
7875	7875	and all applicable state and federal law. Such examinations shall be created
7876	7876	and administered by the administrator or the administrator's designee, and
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7920	7920	may be made a condition of application approval or application renewal;
7921	7921	(r) require that any mortgage loan originator applicant, registrant or
7922	7922	other person complete a minimum number of prelicensing education hours
7923	7923	and complete continuing education hours on an annual or biannual basis.
7924	7924	Prelicensing and continuing education courses shall be approved by the
7925	7925	administrator or the administrator's designee and may be made a condition
7926	7926	of application approval and renewal; and
7927	7927	(s)(o) require any licensee or registrant to file reports with the
7928	7928	nationwide mortgage licensing system and registry in the form prescribed
7929	7929	by the administrator or the administrator's designee.
7930	7930	(2) The administrator shall enforce the provisions of this act and the
7931	7931	rules and regulations and interpretations adopted thereunder with respect
7932	7932	to a creditor, unless the creditor's compliance is regulated exclusively or
7933	7933	primarily by another state or federal agency.
7934	7934	(3) To keep the administrator's rules and regulations in harmony with
7935	7935	the rules of administrators in other jurisdictions which enact the revised
7936	7936	uniform consumer credit code, the administrator, so far as is consistent
7937	7937	with the purposes, policies and provisions of K.S.A. 16a-1-101 to 16a-9-
7938	7938	102, inclusive et seq., and amendments thereto, may:
7939	7939	(a) Before adopting, amending and revoking rules and regulations,
7940	7940	advise and consult with administrators in other jurisdictions which enact
7941	7941	the uniform consumer credit code; and
7942	7942	(b) in adopting, amending and revoking rules and regulations, take
7943	7943	into consideration the rules of administrators in other jurisdictions which
7944	7944	enact the revised uniform consumer credit code.
7945	7945	(4) Except for refund of an excess charge, no liability is imposed
7946	7946	under K.S.A. 16a-1-101 to 16a-9-102, inclusive et seq., and amendments
7947	7947	thereto, for an act done or omitted in conformity with a rule and regulation
7948	7948	or written administrative interpretation of the administrator in effect at the
7949	7949	time of the act or omission notwithstanding that after the act or omission
7950	7950	the rule and regulation or written administrative interpretation may be
7951	7951	determined by judicial or other authority to be invalid for any reason.
7952	7952	(5) The administrator prior to December 1 of each year shall establish
7953	7953	such fees as are authorized under the provisions of K.S.A. 16a-1-101 to
7954	7954	16a-9-102, inclusive et seq., and amendments thereto, for the ensuing
7955	7955	calendar year in such amounts as the administrator may determine to be
7956	7956	sufficient to meet the budget requirements of the administrator for each
7957	7957	fiscal year.
7958	7958	Sec. 105. K.S.A. 16a-6-105 is hereby amended to read as follows:
7959	7959	16a-6-105. (1) With respect to supervised financial organizations, the
7960	7960	powers of examination and investigation (K.S.A. 16a-2-305 and K.S.A.
7961	7961	16a-6-106, and amendments thereto) and administrative enforcement
7962	7962	(K.S.A. 16a-6-108, and amendments thereto) shall be exercised by the
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8005	8005	43 SB 495 94
8006	8006	official or agency to whose supervision the organization is subject. Should
8007	8007	a supervised financial organization become licensed hereunder, a report of
8008	8008	that portion of each examination made by the supervisory official or
8009	8009	agency of such organization relating to compliance with the provisions of
8010	8010	chapter 16a of the Kansas Statutes Annotated, and amendments thereto,
8011	8011	shall be filed with the administrator. All other powers of the administrator
8012	8012	under this act may be exercised by the administrator with respect to a
8013	8013	supervised financial organization except that compliance with truth in
8014	8014	lending shall be governed as set forth in subsection (2) of K.S.A. 16a-6-
8015	8015	104(2), and amendments thereto.
8016	8016	(2) If the administrator receives a complaint or other information
8017	8017	concerning noncompliance with this act by a supervised financial
8018	8018	organization, the administrator shall inform the official or agency having
8019	8019	supervisory authority over the organization concerned. The administrator
8020	8020	may request information about supervised financial organizations from the
8021	8021	officials or agencies supervising them. If such officials or agencies have
8022	8022	cause to believe the licensee license of any supervised financial
8023	8023	organization subject to their supervision is subject to suspension or
8024	8024	revocation for any reason stated in K.S.A. 16a-2-303, and amendments
8025	8025	thereto, such official or agency shall notify the administrator and assist the
8026	8026	administrator in the enforcement of this act.
8027	8027	(3) The administrator and any official or agency of this state having
8028	8028	supervisory authority over a supervised financial organization are
8029	8029	authorized and directed to consult and assist one another in maintaining
8030	8030	compliance with the provisions of K.S.A. 16a-1-101 through 16a-9-102 et
8031	8031	seq., and amendments thereto. They may jointly pursue investigations,
8032	8032	prosecute suits, and take other official action, as they deem appropriate, if
8033	8033	either of them otherwise is empowered to take the action.
8034	8034	Sec. 106. K.S.A. 16a-6-106 is hereby amended to read as follows:
8035	8035	16a-6-106. (1) The administrator may:
8036	8036	(a) Conduct public or private examinations or investigations within or
8037	8037	outside of this state as necessary to determine whether any license should
8038	8038	be granted, denied or revoked or whether any person has violated or is
8039	8039	about to violate any provision of this act or any rule and regulation,
8040	8040	administrative interpretation, or order hereunder, or to aid in the
8041	8041	enforcement of this act or in the prescribing of forms or adoption of rules
8042	8042	and regulations; and
8043	8043	(b) require or permit any person to file a statement in writing, under
8044	8044	oath or otherwise as the administrator determines, of all the facts and
8045	8045	circumstances concerning any violation of this act or any rule and
8046	8046	regulation, administrative interpretation or order hereunder.
8047	8047	(2) All examination material shall be confidential by law and
8048	8048	privileged and shall not be subject to the open records act, subpoena and
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8092	8092	discovery or admissible in evidence in any private civil action. The
8093	8093	provisions of this subsection providing for the confidentiality of public
8094	8094	records shall expire on July 1, 2029, unless the legislature reviews and
8095	8095	reenacts such provisions in accordance with K.S.A. 45-229, and
8096	8096	amendments thereto, prior to July 1, 2029.
8097	8097	(3) For the purpose of any examination, investigation or proceeding
8098	8098	under this act, the administrator or any officer designated by the
8099	8099	administrator may administer oaths and affirmations, subpoena witnesses,
8100	8100	compel such witnesses' attendance, adduce evidence and require the
8101	8101	production of any matter which is relevant to the examination or
8102	8102	investigation, including the existence, description, nature, custody,
8103	8103	condition and location of any books, documents or other tangible things
8104	8104	and the identity and location of persons having knowledge of relevant
8105	8105	facts, or any other matter reasonably calculated to lead to the discovery of
8106	8106	relevant information or items.
8107	8107	(3)(4) In case of contumacy by, or refusal to obey a subpoena issued
8108	8108	to any person, any court of competent jurisdiction, upon application by the
8109	8109	administrator, may issue to that person an order requiring the person to
8110	8110	appear before the administrator, or the officer designated by the
8111	8111	administrator, there, to produce documentary evidence if so ordered or to
8112	8112	give evidence touching the matter under investigation or in question. Any
8113	8113	failure to obey the order of the court may be punished by the court as a
8114	8114	contempt of court.
8115	8115	(4)(5) No person is excused from attending and testifying or from
8116	8116	producing any document or record before the administrator or in
8117	8117	obedience to the subpoena of the administrator or any officer designated
8118	8118	by the the administrator or in any proceeding instituted by the
8119	8119	administrator, on the ground that the testimony or evidence (documentary
8120	8120	or otherwise) required of the person may tend to incriminate the person or
8121	8121	subject the person to a penalty or forfeiture. No individual may be
8122	8122	prosecuted or subjected to any penalty or forfeiture for or on account of
8123	8123	any transaction, matter or thing concerning which such person is
8124	8124	compelled, after claiming privilege against self-incrimination, to testify or
8125	8125	produce evidence (documentary or otherwise), except that the individual
8126	8126	so testifying shall not be exempt from prosecution and punishment for
8127	8127	perjury committed in so testifying.
8128	8128	(5)(6) The administrator may issue and apply to enforce subpoenas in
8129	8129	this state at the request of a consumer code administrator of another state if
8130	8130	the activities constituting an alleged violation for which the information is
8131	8131	sought would be a violation of the Kansas consumer credit code if the
8132	8132	activities had occurred in this state.
8133	8133	(6)(7) If the person's records are located outside this state, the person
8134	8134	shall either make them available to the administrator at a convenient
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8178	8178	location within this state or, at the administrator's discretion, pay the
8179	8179	reasonable and necessary expenses for the administrator or such
8180	8180	administrator's representative to examine them at the place where they are
8181	8181	maintained. The administrator may designate representatives, including
8182	8182	comparable officials of the state in which the records are located, to
8183	8183	inspect the records on the administrator's behalf.
8184	8184	(7)(8) The administrator may charge as costs of investigation or
8185	8185	examination all reasonable expenses, including a per diem and actual
8186	8186	travel and lodging expenses to be paid by the party or parties under
8187	8187	investigation or examination. The administrator may maintain an action in
8188	8188	any court to recover such costs.
8189	8189	(9) The administrator may enter into an informal agreement at any
8190	8190	time with a person to resolve a matter arising under this act, rules and
8191	8191	regulations adopted pursuant thereto or an order issued pursuant to this
8192	8192	act. The adoption of an informal agreement authorized by this subsection
8193	8193	shall not be subject to the provisions of K.S.A. 77-501 et seq. or 77-601 et
8194	8194	seq., and amendments thereto. Any informal agreement authorized by this
8195	8195	subsection shall not be considered an order or other agency action and
8196	8196	shall be considered confidential examination material.
8197	8197	Sec. 107. K.S.A. 16a-6-108 is hereby amended to read as follows:
8198	8198	16a-6-108. (1) If the administrator determines after notice and opportunity
8199	8199	for a hearing that any person has engaged, is engaging or is about to
8200	8200	engage in any act or practice constituting a violation of any provision of
8201	8201	this act or any rule and regulation, order or administrative interpretation
8202	8202	hereunder, including, but not limited to, refusal or failure to provide
8203	8203	information requested by the administrator, the administrator by order may
8204	8204	require that such person cease and desist from the unlawful act or practice
8205	8205	and take such affirmative action as in the judgment of the administrator
8206	8206	will carry out the purposes of this act.
8207	8207	(2) If the administrator makes written findings of fact that the public
8208	8208	interest will be irreparably harmed by delay in issuing an order under
8209	8209	subsection (1), the administrator may issue an emergency cease and desist
8210	8210	order. Such order shall be subject to the same procedures as an emergency
8211	8211	order issued under K.S.A. 77-536, and amendments thereto. Upon the
8212	8212	entry of such an order the administrator shall promptly notify the person
8213	8213	subject to the order that it has been entered, of the reasons and that upon
8214	8214	written request the matter will be set for a hearing which shall be
8215	8215	conducted in accordance with the provisions of the Kansas administrative
8216	8216	procedure act. If no hearing is requested and none is ordered by the
8217	8217	administrator, the order will remain in effect until it is modified or vacated
8218	8218	by the administrator. If a hearing is requested or ordered, the administrator,
8219	8219	after notice of and opportunity for hearing to the person subject to the
8220	8220	order, shall by written findings of fact and conclusion of law vacate,
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8264	8264	modify or make permanent the order.
8265	8265	(3) If the administrator reasonably believes that a person has violated
8266	8266	this act or a rule and regulation, order or administrative interpretation of
8267	8267	the administrator under this act, the administrator, in addition to any
8268	8268	specific power granted under this act, after notice and hearing in an
8269	8269	administrative proceeding, unless the right to notice and hearing is waived
8270	8270	by the person against whom the sanction is imposed, may require any or
8271	8271	all of the following:
8272	8272	(a) Censure the person if the person is licensed under this act;
8273	8273	(b) issue an order against an applicant, licensed person, residential
8274	8274	mortgage loan originator registrant supervised loan licensee, consumer
8275	8275	credit filer or other person who knowingly violates this act or a rule and
8276	8276	regulation, order or administrative interpretation of the administrator under
8277	8277	this act, including, but not limited to, refusal or failure to provide
8278	8278	information requested by the administrator, imposing a civil penalty up to
8279	8279	a maximum of $5,000 for each violation. If any person is found to have
8280	8280	knowingly or willfully violated any provision of this act, and such
8281	8281	violation is committed against elder or disabled persons, as defined in
8282	8282	K.S.A. 50-676, and amendments thereto, in addition to any civil penalty
8283	8283	otherwise provided by law, the administrator may impose an additional
8284	8284	penalty not to exceed $5,000 for each such violation;
8285	8285	(c) revoke or suspend the person's license or registration or bar the
8286	8286	person from subsequently applying for a license or registration under this
8287	8287	act; or
8288	8288	(d) issue an order requiring the person to pay restitution for any loss
8289	8289	arising from the violation or requiring the person to disgorge any profits
8290	8290	arising from the violation. Such order may include the assessment of
8291	8291	interest not to exceed 8% per annum from the date of the violation.
8292	8292	(4) Any person aggrieved by a final order of the administrator may
8293	8293	obtain a review of the order in accordance with the provisions of the
8294	8294	Kansas judicial review act.
8295	8295	Sec. 108. K.S.A. 16a-6-109 is hereby amended to read as follows:
8296	8296	16a-6-109. If it is claimed that a person has engaged in conduct subject to
8297	8297	an order by the administrator (section 16a-6-108) or by a court (sections
8298	8298	16a-6-110 through 16a-6-112), the administrator may accept an assurance
8299	8299	in writing that the person will not engage in the conduct in the future. If a
8300	8300	person giving an assurance of discontinuance fails to comply with its
8301	8301	terms, the assurance is evidence that prior to the assurance he engaged in
8302	8302	the conduct described in the assurance Failure to abide by the assurance
8303	8303	of discontinuance shall be evidence that the person engaged in the prior
8304	8304	conduct described in the assurance.
8305	8305	Sec. 109. K.S.A. 16a-6-110 is hereby amended to read as follows:
8306	8306	16a-6-110. The administrator may bring a civil action to restrain a person
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8350	8350	from violating the provisions of K.S.A. 16a-1-101 through 16a-9-102 et
8351	8351	seq., and amendments thereto, or any rules or regulations adopted
8352	8352	thereunder and for other appropriate relief.
8353	8353	Sec. 110. K.S.A. 16a-6-111 is hereby amended to read as follows:
8354	8354	16a-6-111. (1) The administrator may bring a civil action to restrain a
8355	8355	creditor or a person acting in his on such creditor's or person's behalf from
8356	8356	engaging in a course of:
8357	8357	(a) Making or enforcing unconscionable terms or provisions of
8358	8358	consumer credit transactions; or
8359	8359	(b) fraudulent or unconscionable conduct in inducing consumers to
8360	8360	enter into consumer credit transactions.
8361	8361	(2) In an action brought pursuant to this section the court may grant
8362	8362	relief only if the trier of the fact finds that the:
8363	8363	(a) That the Respondent has made unconscionable agreements or has
8364	8364	engaged or is likely to engage in a course of fraudulent or unconscionable
8365	8365	conduct;
8366	8366	(b) that the agreements or conduct of the respondent has caused or is
8367	8367	likely to cause injury to consumers; and
8368	8368	(c) that the respondent has been able to cause or will be able to cause
8369	8369	the injury primarily because the transactions involved are credit
8370	8370	transactions.
8371	8371	(3) In applying this section, consideration shall be given to each of
8372	8372	the following factors, among others:
8373	8373	(a) Belief by the creditor at the time consumer credit transactions are
8374	8374	entered into that there was no reasonable probability of payment in full of
8375	8375	the obligation by the consumer;
8376	8376	(b) in the case of consumer credit sales or consumer leases,
8377	8377	knowledge by the seller or lessor at the time of the sale or lease of the
8378	8378	inability of the buyer or lessee to receive substantial benefits from the
8379	8379	property or services sold or leased;
8380	8380	(c) in the case of consumer credit sales or consumer leases, gross
8381	8381	disparity between the price of the property or services sold or leased and
8382	8382	the value of the property or services measured by the price at which
8383	8383	similar property or services are readily obtainable in credit transactions by
8384	8384	like buyers or lessees;
8385	8385	(d) the fact that the creditor contracted for or received separate
8386	8386	charges for insurance with respect to consumer credit sales or consumer
8387	8387	loans with the effect of making the sales or loans, considered as a whole,
8388	8388	unconscionable; and
8389	8389	(e) the fact that the respondent has knowingly taken advantage of the
8390	8390	inability of the consumer reasonably to protect his such consumer's
8391	8391	interests by reason of physical or mental infirmities, ignorance, illiteracy
8392	8392	or, inability to understand the language of the agreement, or similar
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8436	8436	factors.
8437	8437	(4) In an action brought pursuant to this section, a charge or practice
8438	8438	expressly permitted by this act is not in itself unconscionable.
8439	8439	Sec. 111. K.S.A. 16a-6-112 is hereby amended to read as follows:
8440	8440	16a-6-112. With respect to an action brought to enjoin violations of K.S.A.
8441	8441	16a-1-101 through 16a-9-102 (section 16a-6-110) et seq., and amendments
8442	8442	thereto, or unconscionable agreements or fraudulent or unconscionable
8443	8443	conduct (section 16a-6-111), the administrator may apply to petition the
8444	8444	court for appropriate temporary relief against a respondent, pending final
8445	8445	determination of proceedings. If the court finds after a hearing held upon
8446	8446	notice to the respondent that there is reasonable cause to believe that the
8447	8447	respondent is engaging in or is likely to engage in conduct sought to be
8448	8448	restrained, it may grant any temporary relief or restraining order it deems
8449	8449	appropriate.
8450	8450	Sec. 112. K.S.A. 16a-6-113 is hereby amended to read as follows:
8451	8451	16a-6-113. (1) After demand, the administrator may bring a civil action
8452	8452	against a creditor for all amounts of money, other than penalties, which a
8453	8453	consumer or class of consumers has a right to recover explicitly granted by
8454	8454	the provisions of K.S.A. 16a-1-101 through 16a-9-102 to recover et seq.,
8455	8455	and amendments thereto. The court shall order amounts recovered or
8456	8456	recoverable under this subsection paid to each consumer or set off against
8457	8457	his such consumer's obligation. A consumer's action, other than a class
8458	8458	action, takes precedence over a prior or subsequent action by the
8459	8459	administrator with respect to the claim of that consumer. A consumer's
8460	8460	class action takes precedence over a subsequent action by the
8461	8461	administrator with respect to claims common to both actions but
8462	8462	intervention by the administrator is authorized. An administrator's action
8463	8463	on behalf of a class of consumers takes precedence over a consumer's
8464	8464	subsequent class action with respect to claims common to both actions.
8465	8465	When an action takes precedence over another action under this
8466	8466	subsection, to the extent appropriate the other action may be stayed while
8467	8467	the precedent preceding action is pending and dismissed if the precedent
8468	8468	preceding action is dismissed with prejudice or results in a final judgment
8469	8469	granting or denying the claim asserted in the precedent preceding action.
8470	8470	(2) The administrator may bring a civil action against a creditor or a
8471	8471	person acting in his on such creditor's or person's behalf to recover a civil
8472	8472	penalty for willfully violating this act, and if the court finds that the
8473	8473	defendant has engaged in a course of repeated and willful violations of this
8474	8474	act, it may assess a civil penalty of no more than five thousand dollars
8475	8475	($5,000) $5,000 per violation. Any civil action under this subsection shall
8476	8476	be brought within two (2) years following the violation.
8477	8477	Sec. 113. K.S.A. 16a-6-115 is hereby amended to read as follows:
8478	8478	16a-6-115. The grant of powers to the administrator in this article does not
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8522	8522	affect remedies available to consumers under K.S.A. 16a-1-101 through
8523	8523	16a-9-102 et seq., and amendments thereto, or under other principles of
8524	8524	law or equity.
8525	8525	Sec. 114. K.S.A. 16a-6-201 is hereby amended to read as follows:
8526	8526	16a-6-201. (1) This part applies to a any creditor engaged in this state in
8527	8527	entering into consumer credit transactions and to any person who takes
8528	8528	accepts assignments of and undertakes collection of payments from or
8529	8529	takes assignments of and enforces rights against debtors arising from these
8530	8530	transactions.
8531	8531	(2) This part subsection shall not apply to:
8532	8532	(a) Supervised financial organizations (K.S.A. 16a-1-301, and
8533	8533	amendments thereto); or
8534	8534	(b) supervised loan licensees or those required to be licensed unless
8535	8535	the entity:
8536	8536	(i) Enters into consumer credit sales or consumer leases;
8537	8537	(ii) assigns or accepts assignments of consumer credit sales or
8538	8538	consumer leases; or
8539	8539	(iii) . Nothing in this section shall be construed to require the
8540	8540	payment of any fees required by this article by attorneys or collection
8541	8541	agencies who that receive the same payment for collection purposes.
8542	8542	Sec. 115. K.S.A. 16a-6-202 is hereby amended to read as follows:
8543	8543	16a-6-202. (1) Persons subject to this partAny person subject to K.S.A.
8544	8544	16a-6-201, and amendments thereto, shall file notification notice with the
8545	8545	administrator within 30 days after commencing business in this state, and,
8546	8546	thereafter, in accordance with rules and regulations adopted by the
8547	8547	administrator.
8548	8548	(2) If information in a notification filing becomes inaccurate after
8549	8549	filing, the person filing the notification consumer credit filer shall file a
8550	8550	corrected or an amended notification in such form and at such time filing
8551	8551	as prescribed by rules and regulations adopted by the administrator.
8552	8552	Sec. 116. K.S.A. 16a-6-203 is hereby amended to read as follows:
8553	8553	16a-6-203. (1) A person required to file notificationconsumer credit filer
8554	8554	shall on or before April 30 August 31 of each year pay to the administrator
8555	8555	an annual fee in an amount established pursuant to subsection (5) of
8556	8556	K.S.A. 16a-6-104(5), and amendments thereto, for each business location
8557	8557	for that year.
8558	8558	(2) Persons required to file notificationConsumer credit filers who are
8559	8559	sellers, lessors or lenders shall pay an additional fee at the time and in the
8560	8560	manner stated in subsection (1), in an amount established pursuant to
8561	8561	subsection (5) of K.S.A. 16a-6-104(5), and amendments thereto, for each
8562	8562	$100,000, or part thereof, of the average unpaid balances, including unpaid
8563	8563	scheduled periodic payments under consumer leases, arising from
8564	8564	consumer credit transactions entered into in this state and held on the last
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8607	8607	43 SB 495 101
8608	8608	day of each calendar month during the preceding calendar year and held
8609	8609	either by the seller, lessor or lender, or by the immediate or a remote
8610	8610	assignee who has not filed notification. The unpaid balances of assigned
8611	8611	obligations held by an assignee who has not filed notification are
8612	8612	presumed to be the unpaid balances of the assigned obligations at the time
8613	8613	of their assignment by the seller, lessor or lender.
8614	8614	(3) Persons required to file notificationConsumer credit filers who are
8615	8615	assignees shall pay an additional fee at the time and in the manner stated in
8616	8616	subsection (1), in an amount established pursuant to subsection (5) of
8617	8617	K.S.A. 16a-6-104(5), and amendments thereto, for each $100,000, or part
8618	8618	thereof, of the average unpaid balances, including unpaid scheduled
8619	8619	periodic payments payable by lessees, arising from consumer credit
8620	8620	transactions entered into in this state taken by assignment and held on the
8621	8621	last day of each calendar month during the preceding calendar year.
8622	8622	Sec. 117. K.S.A. 16a-6-401 is hereby amended to read as follows:
8623	8623	16a-6-401. This part applies to the administrator, prescribes the procedures
8624	8624	to be observed by him the administrator in exercising his such powers
8625	8625	under K.S.A. 16a-1-101 through 16a-9-102 et seq., and amendments
8626	8626	thereto, and supplements the provisions of the part on powers and
8627	8627	functions of the administrator (part 1) of this article and of the part on
8628	8628	supervised lenders (part 3) of the article on finance charges and related
8629	8629	provisions (article 2) under K.S.A. 16a-1-101 et seq., and amendments
8630	8630	thereto. Subject to specific provisions found in K.S.A. 16a-1-101 et seq.,
8631	8631	and amendments thereto, the exercise of powers by the administrator shall
8632	8632	be subject to the adoption of rules and regulations pursuant to K.S.A. 77-
8633	8633	401 et seq., and amendments thereto, the Kansas administrative procedure
8634	8634	act, K.S.A. 77-501 et seq., and amendments thereto, and the Kansas
8635	8635	judicial review act, K.S.A. 77-601 et seq., and amendments thereto.
8636	8636	Sec. 118. K.S.A. 16a-6-403 is hereby amended to read as follows:
8637	8637	16a-6-403. (1) In addition to other rule-making requirements imposed by
8638	8638	law, the administrator may:
8639	8639	(a) Adopt as a rule a description of the organization of the
8640	8640	administrator's office, stating the general course and method of the
8641	8641	operations of the office and the methods whereby the public may obtain
8642	8642	information or make submissions or requests;
8643	8643	(b) adopt rules of practice setting forth the nature and requirements of
8644	8644	all formal and informal procedures available, including a description of all
8645	8645	forms and instructions used by the administrator or by the office;
8646	8646	(c) make available for public inspection all rules and all other written
8647	8647	statements of policy or interpretations formulated, adopted or used by the
8648	8648	administrator; and
8649	8649	(d) make available for public inspection all final orders, decisions and
8650	8650	opinions.
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8693	8693	43 SB 495 102
8694	8694	(2) No rule, order or decision of the administrator is valid or effective
8695	8695	against any person or party, nor may it be invoked by the administrator for
8696	8696	any purpose, until it has been made available for public inspection as
8697	8697	herein required. This provision is not applicable in favor of any person or
8698	8698	party who has actual knowledge thereof.
8699	8699	Sec. 119. K.S.A. 40-1209 is hereby amended to read as follows: 40-
8700	8700	1209. Any director, officer or member of any such company, or any other
8701	8701	person, may advance to such company any sum or sums of money
8702	8702	necessary for the purposes of its business or to enable it to comply with
8703	8703	any of the requirements of the laws of this state, and such moneys and
8704	8704	such interest thereon as may have been agreed upon, not exceeding an
8705	8705	amount equal to 1
8706	8706	1
8707	8707	/2 percentage points below the maximum rate of interest
8708	8708	prescribed by subsection (b) of K.S.A. 16-207(a), and amendments
8709	8709	thereto, for real estate transactions. The rate of interest to be applied to any
8710	8710	specific certificate of indebtedness shall be calculated using the most
8711	8711	immediate prior month's usury rate published by the secretary of state in
8712	8712	the Kansas register. The sum or sums of money advanced pursuant to this
8713	8713	authorization and any interest thereon shall be payable only out of the
8714	8714	surplus remaining after providing for all reserves and other liabilities, and
8715	8715	shall not otherwise be a liability or claim against the company or any of its
8716	8716	assets. No commission or promotion expenses shall be paid in connection
8717	8717	with the advance of any such money to the company, and the amount of
8718	8718	such advance shall be reported in each annual statement. Provided,
8719	8719	however, Such certificates of indebtedness shall not be issued nor retired
8720	8720	and no interest thereon shall be paid without the approval of the
8721	8721	commissioner of insurance who must be satisfied that all requirements of
8722	8722	the law have been met.
8723	8723	Sec. 120. K.S.A. 9-2201, 9-2202, 9-2203, 9-2208, 9-2209, 9-2212, 9-
8724	8724	2216, 9-2216a, 9-2220, 16-207, 16-207d, 16a-1-101, 16a-1-102, 16a-1-
8725	8725	103, 16a-1-104, 16a-1-107, 16a-1-108, 16a-1-109, 16a-1-201, 16a-1-202,
8726	8726	16a-1-301, 16a-1-303, 16a-2-101, 16a-2-102, 16a-2-103, 16a-2-103, 16a-
8727	8727	2-104, 16a-2-201, 16a-2-202, 16a-2-301, 16a-2-302, 16a-2-303, 16a-2-
8728	8728	303a, 16a-2-304, 16a-2-307, 16a-2-308, 16a-2-309, 16a-2-310, 16a-2-401,
8729	8729	16a-2-402, 16a-2-403, 16a-2-404, 16a-2-501, 16a-2-502, 16a-2-504, 16a-
8730	8730	2-505, 16a-2-506, 16a-2-507, 16a-2-508, 16a-2-510, 16a-3-101, 16a-3-
8731	8731	102, 16a-3-201, 16a-3-202, 16a-3-203, 16a-3-203a, 16a-3-204, 16a-3-205,
8732	8732	16a-3-206, 16a-3-207, 16a-3-208, 16a-3-209, 16a-3-301, 16a-3-302, 16a-
8733	8733	3-303, 16a-3-304, 16a-3-305, 16a-3-306, 16a-3-307, 16a-3-308, 16a-3-
8734	8734	308a, 16a-3-309, 16a-3-402, 16a-3-403, 16a-3-404, 16a-3-405, 16a-4-101,
8735	8735	16a-4-102, 16a-4-103, 16a-4-104, 16a-4-105, 16a-4-106, 16a-4-107, 16a-
8736	8736	4-108, 16a-4-109, 16a-4-110, 16a-4-111, 16a-4-112, 16a-4-201, 16a-4-
8737	8737	202, 16a-4-203, 16a-4-301, 16a-4-304, 16a-5-101, 16a-5-102, 16a-5-103,
8738	8738	16a-5-107, 16a-5-108, 16a-5-110, 16a-5-111, 16a-5-112, 16a-5-201, 16a-
8739	8739	1
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8781	8781	43 SB 495 103
8782	8782	5-203, 16a-5-301, 16a-6-101, 16a-6-102, 16a-6-104, 16a-6-105, 16a-6-
8783	8783	106, 16a-6-108, 16a-6-109, 16a-6-110, 16a-6-111, 16a-6-112, 16a-6-113,
8784	8784	16a-6-115, 16a-6-117, 16a-6-201, 16a-6-202, 16a-6-203, 16a-6-401, 16a-
8785	8785	6-402, 16a-6-403, 16a-6-404, 16a-6-405, 16a-6-406, 16a-6-407, 16a-6-
8786	8786	408, 16a-6-409, 16a-6-410, 16a-6-414, 16a-9-101, 16a-9-102 and 40-1209
8787	8787	are hereby repealed.
8788	8788	Sec. 121. This act shall take effect and be in force from and after
8789	8789	January 1, 2025, and its publication in the statute book.
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