[As Further Amended by Senate Committee of the Whole]
          
Session of 1999
         
Substitute for SENATE BILL No. 301
         
By Committee on Financial Institutions and Insurance
         
3-16
         
10             AN  ACT relating to consumer credit; concerning the uniform consumer
11             credit code; amending K.S.A. 16-207, 16a-1-108, 16a-1-201, 16a-2-
12             103, 16a-2-302, 16a-2-303, 16a-2-307, 16a-2-401, 16a-2-402, 16a-2-
13             403, [16a-2-404,] 16a-2-510, 16a-3-301, 16a-3-304, 16a-4-301, 16a-
14             4-112, 16a-5-203, 16a-5-301, 16a-6-104, 16a-6-105, 16a-6-106,
15             16a-6-108, 16a-6-117 and 16a-6-202 and K.S.A. 1998 Supp. 16a-1-301,
16             16a-2-201, 16a-2-202, 16a-2-501 and 16a-2-502 and repealing the ex-
17             isting sections; also repealing K.S.A. 16a-2-305, 16a-2-306, 16a-5-302,
18             16a-6-107 and 16a-6-204 and K.S.A. 1998 Supp. 16a-2-401a.
19      
20       Be it enacted by the Legislature of the State of Kansas:
21             New Section  1. (1) The provisions of this section apply only to a
22       consumer loan which is secured by a first mortgage or a second mortgage
23       on the consumer's principal residence. The provisions of this section do
24       not apply to a lender who is a supervised financial organization.
25             (2) Before making a loan subject to this section, a lender shall obtain
26       the appraised value of the real estate to be encumbered. The appraisal
27       evidencing the appraised value shall be retained by the lender and pre-
28       served in accordance with the record-keeping requirements set forth in
29       K.S.A. 16a-2-304, and amendments thereto.
30             (3) If, based on the appraisal, the loan-to-value ratio of the loan ex-
31       ceeds 100%, then the lender shall deliver to the consumer:
32             (a) A free copy of the appraisal; and
33             (b) a written notice regarding high loan-to-value mortgages and the
34       availability of consumer credit counseling. The administrator may adopt
35       rules and regulations regarding the form of the notice to be delivered to
36       the consumer and the names, addresses and telephone numbers of se-
37       lected consumer credit counseling providers.
38             (4) The notice referred to in subsection (3) shall be given to the con-
39       sumer not less than five days before the loan is made. The notice must
40       be retained by the lender and preserved in accordance with the record-
41       keeping requirements set forth in K.S.A. 16a-2-304, and amendments
42       thereto.
43             (5) If, within five days after receiving the notice, the consumer elects

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  1       not to enter into the loan transaction, then the lender must promptly
  2       refund to the consumer any application fees or other amounts paid by
  3       the consumer to the lender. However, the lender is not required to refund
  4       any bona fide out-of-pocket costs incurred by the lender before the con-
  5       sumer elected not to enter into the loan transaction, provided that such
  6       costs were paid or are payable to a person or persons not related to the
  7       lender. Notwithstanding the provisions of this subsection, a bona fide
  8       appraisal fee paid or payable to a person related to the lender need not
  9       be refunded to the consumer.
10             (6) This section shall be supplemental to and a part of the uniform
11       consumer credit code.
12             New Sec.  2. (1) A supervised lender shall not, directly or indirectly,
13       make a false, misleading or deceptive advertisement regarding loans or
14       the availability of loans.
15             (2) A supervised lender shall not advertise any size of loan, security
16       required for a loan, rate of charge or other conditions of lending except
17       with the full intent of making loans at those rates, or lower rates, and
18       under those conditions or conditions more favorable to the consumer, to
19       loan applicants who meet the standards or qualifications prescribed by
20       the supervised lender.
21             (3) This section shall be supplemental to and a part of the uniform
22       consumer credit code.
23             New Sec.  3. (1) A loan subject to this section may not provide for
24       the negative amortization of principal or a balloon payment. A loan pay-
25       ment is not a balloon payment if the amount of the payment is less than
26       twice the amount of any other payment.
27             (2) Subsection (1) applies to a consumer loan which (a) is secured by
28       a first mortgage or a second mortgage on the consumer's principal resi-
29       dence and with respect to which [(a)] the loan-to-value ratio exceeds
30       100% at the time the loan is made or (b) the annual percentage rate
31       exceeds the code mortgage rate. Notwithstanding the foregoing, subsec-
32       tion (1) does not apply to a loan pursuant to open end credit; a purchase-
33       money loan incurred to acquire or construct the consumer's principal
34       residence; or a reverse mortgage transaction.
35             (3) The creditor must disburse the proceeds of a consumer loan se-
36       cured by a first mortgage or a second mortgage upon the satisfaction of
37       all conditions to the disbursement and the expiration of all applicable
38       rescission, cooling-off or other waiting periods required by law, unless
39       the parties otherwise agree in writing.
40             (4) This section shall be supplemental to and a part of the uniform
41       consumer credit code.
42             New Sec.  4. (1) A creditor shall credit a payment to the consumer's
43       account on the date of receipt, except when a delay in crediting does not

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  1       result in a finance charge or other charge.
  2             (2) Notwithstanding subsection (1), if a creditor specifies, in a writing
  3       delivered to the consumer, reasonable requirements for the consumer to
  4       follow in making payments, but accepts a payment that does not conform
  5       to those requirements, then the creditor shall credit the payment within
  6       five days after receipt.
  7             (3) This section shall be supplemental to and a part of the uniform
  8       consumer credit code.
  9             Sec.  5. K.S.A. 16-207 is hereby amended to read as follows: 16-207.
10       (a) Subject to the following provision, the parties to any bond, bill, prom-
11       issory note or other instrument of writing for the payment or forbearance
12       of money may stipulate therein for interest receivable upon the amount
13       of such bond, bill, note or other instrument of writing, at a rate not to
14       exceed 15% per annum unless otherwise specifically authorized by law.
15             (b) The maximum rate of interest per annum for notes secured by all
16       real estate mortgages and contracts for deed to real estate executed on
17       or after the effective date of this act shall be at an amount equal to 11/2
18       percentage points above the yield of thirty-year fixed rate conventional
19       home mortgages committed for delivery within 61 to 90 days accepted
20       under the federal home loan mortgage corporation's daily offerings for
21       sale on the last day on which commitments for such mortgages were
22       received in the preceding month unless otherwise specifically authorized
23       by law. Such interest rate shall be computed for each calendar month and
24       be effective on the first day thereof. The secretary of state shall publish
25       notice of such maximum interest rate not later than the second issue of
26       the Kansas register published each month. The initial rate of interest upon
27       any conventional loan evidenced by a note secured by a real estate mort-
28       gage shall not exceed the rate quoted in the application executed by the
29       borrower on the day on which application for such conventional loan is
30       made. The interest rate limitation set forth in this subsection applies to
31       all first mortgage loans and contracts for deed to real estate, unless the
32       parties agree in writing to make the transaction subject to the uniform
33       consumer credit code, K.S.A. 16a-1-101 to 16a-9-102, and amendments
34       thereto. The interest rate limitation set forth in this subsection does not
35       apply to a second mortgage loan governed by the uniform consumer credit
36       code, K.S.A. 16a-1-101 to 16a-9-102, and amendments thereto, unless the
37       lender and the borrower agree in writing that the interest rate for the
38       loan is to be governed by this subsection. The maximum rate of interest
39       per annum for notes secured by real estate mortgages and contracts for
40       deed to real estate governed by this subsection shall be at an amount equal
41       to 11/2 percentage points above the yield of thirty-year fixed rate conven-
42       tional home mortgages committed for delivery within 61 to 90 days ac-
43       cepted under the federal home loan mortgage corporation's daily offerings

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  1       for sale on the last day on which commitments for such mortgages were
  2       received in the preceding month unless otherwise specifically authorized
  3       by law. Such interest rate shall be computed for each calendar month and
  4       be effective on the first day thereof. The secretary of state shall publish
  5       notice of such maximum interest rate not later than the second issue of
  6       the Kansas register published each month.
  7             (c) No penalty shall be assessed against any party for prepayment of
  8       any home loan evidenced by a note secured by a real estate mortgage
  9       where such prepayment is made more than six months after execution of
10       such note.
11             (d) The lender may collect from the borrower: (1) The actual fees
12       paid a public official or agency of the state, or federal government, for
13       filing, recording or releasing any instrument relating to a loan subject to
14       the provisions of this section; and
15             (2) reasonable expenses incurred by the lender in connection with
16       the making, closing, disbursing, extending, readjusting or renewing of
17       loans subject to the provisions of this section.
18             (e) Any person so contracting for a greater rate of interest than that
19       authorized by this section shall forfeit all interest so contracted for in
20       excess of the amount authorized under this section; and in addition
21       thereto shall forfeit a sum of money, to be deducted from the amount
22       due for principal and lawful interest, equal to the amount of interest
23       contracted for in excess of the amount authorized by this section and such
24       amounts may be set up as a defense or counterclaim in any action to
25       enforce the collection of such obligation and the borrower shall also re-
26       cover a reasonable attorney fee.
27             (f) The interest rates prescribed in subsections (a) and (b) of this
28       section shall not apply to a business or agricultural loan. For the purpose
29       of this section unless a loan is made primarily for personal, family or
30       household purposes, the loan shall be considered a business or agricul-
31       tural loan. For the purpose of this subsection, a business or agricultural
32       loan shall include credit sales and notes secured by contracts for deed to
33       real estate.
34             (g) Loans made by a qualified plan, as defined in section 401 of the
35       internal revenue code, to an individual participant in such plan or to a
36       member of the family of such individual participant, are not subject to
37       the interest rates prescribed in subsections (a) and (b) of this section.
38             (h) The interest rates prescribed in subsections (a) and (b) of this
39       section shall not apply to a note secured by a real estate mortgage or a
40       contract for deed to real estate where the note or contract for deed per-
41       mits adjustment of the interest rate, the term of the loan or the amorti-
42       zation schedule.
43             (i) A first mortgage loan incurred for personal, family or household

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  1       purposes may be subject to certain provisions of the uniform consumer
  2       credit code, K.S.A. 16a-1-101 to 16a-9-102, and amendments thereto, as
  3       follows:
  4             (1)  Certain high loan-to-value first mortgage loans are subject to the
  5       provisions of the uniform consumer credit code, other than its usury pro-
  6       visions. Examples of provisions of the uniform consumer credit code ap-
  7       plicable to high loan-to-value first mortgage loans include, but are not
  8       limited to: Limitations on prepaid finance charges; mandatory appraisals;
  9       required disclosures; restrictions on balloon payments and negative am-
10       ortization; limitations on late fees and collection costs; and mandatory
11       default notices and cure rights.
12             (2) Certain high interest rate first mortgage loans are subject to cer-
13       tain provisions of the uniform consumer credit code, including, without
14       limitation, provisions which impose restrictions on balloon payments and
15       negative amortization.
16             (3) If the parties to a first mortgage loan agree in writing to make the
17       transaction subject to the uniform consumer credit code, than all appli-
18       cable provisions of the uniform consumer credit code, including its usury
19       provisions, apply to the loan.
20             This subsection is for informational purposes only and does not limit
21       or expand the scope of the uniform consumer credit code.
22             (j) Subsections (c), (d) and (e) of this section do not apply to a first
23       mortgage loan if (1) the parties agree in writing to make the transaction
24       subject to the uniform consumer credit code, K.S.A. 16a-1-101 to 16a-9-
25       102, and amendments thereto, or (2) the loan is a high loan-to-value first
26       mortgage loan subject to any provision of the uniform consumer credit
27       code. In the case of a loan described in subparts (1) or (2) of the preceding
28       sentence, the applicable provisions of the uniform consumer credit code
29       shall govern the loan in lieu of subsections (c), (d) and (e) of this section.
30             Sec.  6. K.S.A. 16a-1-108 is hereby amended to read as follows: 16a-
31       1-108. (1) K.S.A. 16a-1-101 through 16a-9-102, and amendments thereto,
32       prescribes maximum charges for all creditors, except lessors and those
33       excluded (section K.S.A. 16a-1-202, and amendments thereto), extending
34       consumer credit including consumer credit sales (subsection (10) of sec-
35       tion (14) of K.S.A. 16a-1-301, and amendments thereto) and consumer
36       loans (subsection (13) of section (17) of K.S.A. 16a-1-301, and amend-
37       ments thereto), and displaces existing limitations on the powers of those
38       creditors based on maximum charges.
39             (2) With respect to sellers of goods or services, small loan companies,
40       licensed lenders, consumer and sales finance companies, industrial banks
41       and loan companies, and commercial banks and trust companies, this act
42       displaces existing limitations on their powers based solely on amount or
43       duration of credit.

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  1             (3) Except as provided in subsection (1) and in the article on effective
  2       date and repealer (article 9), K.S.A. 16a-1-101 through 16a-9-102, and
  3       amendments thereto, does not displace limitations on powers of credit
  4       unions, savings banks, savings and loan associations, or other thrift insti-
  5       tutions whether organized for the profit of shareholders or as mutual
  6       organizations.
  7             (4) Except as provided in subsections (1) and (2) and in the article
  8       on effective date and repealer (article 9), K.S.A. 16a-1-101 through 16a-
  9       9-102, and amendments thereto, does not displace:
10             (a) Limitations on powers of supervised financial organizations (sub-
11       section (38) of section (44) of K.S.A. 16a-1-301, and amendments thereto)
12       with respect to the amount of a loan to a single borrower, the ratio of a
13       loan to the value of collateral, the duration of a loan secured by an interest
14       in land, or other similar restrictions designed to protect deposits, or
15             (b) limitations on powers an organization is authorized to exercise
16       under the laws of this state or the United States.
17             Sec.  7. K.S.A. 16a-1-201 is hereby amended to read as follows: 16a-
18       1-201. (1) Except as otherwise provided in this section, K.S.A. 16a-1-101
19       through 16a-9-102, and amendments thereto, apply to consumer credit
20       transactions made in this state. For purposes of such sections of this act,
21       a consumer credit transaction is made in this state if:
22             (a) A signed writing evidencing the obligation or offer of the con-
23       sumer is received by the creditor in this state; or
24             (b) the creditor induces the consumer who is a resident of this state
25       to enter into the transaction by face-to-face solicitation in this state by
26       any means, including but not limited to: Mail, telephone, radio, television
27       or any other electronic means.
28             (2) With respect to consumer credit transactions entered into pur-
29       suant to open end credit (subsection (26) (31) of K.S.A. 16a-1-301, and
30       amendments thereto), this act applies if the consumer's communication
31       or indication of intention to establish the arrangement is received by the
32       creditor in this state. If no communication or indication of intention is
33       given by the consumer before the first transaction, this act applies if the
34       creditor's communication notifying the consumer of the privilege of using
35       the arrangement is mailed or personally delivered in this state.
36             (3) The part on limitations on creditors' remedies (part 1) of the ar-
37       ticle on remedies and penalties (article 5) applies to actions or other
38       proceedings brought in this state to enforce rights arising from consumer
39       credit sales, consumer leases, or consumer loans, or extortionate exten-
40       sions of credit, wherever made.
41             (4) A consumer credit transaction made in another state to a person
42       who is a resident of this state at the time of the transaction is valid and
43       enforceable in this state to the extent that it is valid and enforceable under

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  1       the laws of the state applicable to the transaction, but the following pro-
  2       visions apply as though the transaction occurred in this state:
  3             (a) A creditor may not collect charges through actions or other pro-
  4       ceedings in excess of those permitted by the article on finance charges
  5       and related provisions (article 2); and
  6             (b) a creditor may not enforce rights against the consumer with re-
  7       spect to the provisions of agreements which violate the provisions on
  8       limitations on agreements and practices (part 3) and limitations on con-
  9       sumer's liability (part 4) of the article on regulation of agreements and
10       practices (article 3).
11             (5) Except as provided in subsection (3), a consumer credit transac-
12       tion made in another state to a person who was not a resident of this state
13       when the sale, lease, loan, or modification was made is valid and enforce-
14       able in this state according to its terms to the extent that it is valid and
15       enforceable under the laws of the state applicable to the transaction.
16             (6) For the purposes of K.S.A. 16a-1-101 through 16a-9-102, and
17       amendments thereto, the residence of a consumer is the address given
18       by the consumer as the consumer's residence in any writing signed by
19       the consumer in connection with a credit transaction. Until the consumer
20       notifies the creditor of a new or different address, the given address is
21       presumed to be unchanged.
22             (7) Notwithstanding other provisions of this section:
23             (a) Except as provided in subsection (3), K.S.A. 16a-1-101 through
24       16a-9-102, and amendments thereto, do not apply if the consumer is not
25       a resident of this state at the time of a credit transaction and the parties
26       have agreed that the law of the consumer's residence applies; and
27             (b) K.S.A. 16a-1-101 through 16a-9-102, and amendments thereto,
28       apply if the consumer is a resident of this state at the time of a credit
29       transaction and the parties have agreed that the law of the consumer's
30       residence applies.
31             (8) Except as provided in subsection (7) the following agreements by
32       a buyer, lessee, or debtor are invalid with respect to consumer credit
33       transaction to which K.S.A. 16a-1-101 through 16a-9-102, and amend-
34       ments thereto, apply:
35             (a) That the law of another state shall apply;
36             (b) that the consumer consents to the jurisdiction of another state;
37       and
38             (c) that fixes venue.
39             (9) The following provisions of this act specify the applicable law gov-
40       erning certain cases:
41             (a) Applicability (K.S.A. 16a-6-102, and amendments thereto) of the
42       part on powers and functions of administrator (part 1) of the article on
43       administration (article 6); and

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  1             (b) applicability (K.S.A. 16a-6-201, and amendments thereto) of the
  2       part on notification and fees (part 2) of the article on administration (ar-
  3       ticle 6).
  4             (10) With respect to a consumer credit sale or consumer loan to
  5       which K.S.A. 16a-1-101 through 16a-9-102, and amendments thereto,
  6       does not otherwise apply by reason of the foregoing provisions of this
  7       section, if, pursuant to a solicitation relating to a consumer credit sale or
  8       loan received in this state, a person who is a resident of this state sends
  9       a signed writing evidencing the obligation or offer of the person to a
10       creditor in another state, and the person receives the goods or services
11       purchased or the cash proceeds of the loan in this state:
12             (a) The creditor may not contract for or receive charges exceeding
13       those permitted by this code, and such charges as do exceed those per-
14       mitted are excess charges for purposes of subsections (3) and (4) of K.S.A.
15       16a-5-201(3) and (4) and 16a-6-113, and amendments thereto, and such
16       sections shall apply as though the consumer credit sale or consumer loan
17       were made in this state; and
18             (b) the part on powers and functions of administrator (part 1) of the
19       article on administration (article 6) shall apply as though the consumer
20       credit sale or consumer loan were made in this state.
21             Sec.  8. K.S.A. 1998 Supp. 16a-1-301 is hereby amended to read as
22       follows: 16a-1-301. In addition to definitions appearing in subsequent
23       articles, in K.S.A. 16a-1-101 through 16a-9-102, and amendments thereto:
24             (1) "Actuarial method" means the method, defined by rules and reg-
25       ulations adopted by the administrator, of allocating payments made on a
26       debt between the amount financed principal and the finance charge pur-
27       suant to which a payment is applied, assuming no delinquency charges or
28       other additional charges are then due, first to the accumulated finance
29       charge and the balance is applied [then] to the unpaid amount financed
30       principal balance. When a finance charge is calculated in accordance with
31       the actuarial method, the contract rate is applied to the unpaid principal
32       balance for the number of days the principal balance is unpaid. At the
33       end of each computational period, or fractional computational period, the
34       unpaid principal balance is increased by the amount of the finance charge
35       earned during that period and is decreased by the total payment, if any,
36       made during the period after the deduction of any delinquency charges
37       or other additional charges due during the period.
38             (2) "Administrator" means the consumer credit commissioner ap-
39       pointed pursuant to K.S.A. 16-403, and amendments thereto.
40             (3) "Agreement" means the bargain of the parties in fact as found in
41       their language or by implication from other circumstances including
42       course of dealing or usage of trade or course of performance.
43             (4) "Amount financed" means the total of the following items:

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  1             (a) In the case of a sale, the cash price of the goods, services, or
  2       interest in land, less the amount of any down payment whether made in
  3       cash or in property traded in, and the amount actually paid or to be paid
  4       by the seller pursuant to an agreement with the buyer to discharge a
  5       security interest in, a lien on, or a debt with respect to property traded
  6       in;
  7             (b) in the case of a loan, the net amount paid to, receivable by, or
  8       paid or payable for the account of the debtor, plus the amount of any
  9       discount excluded from the finance charge (paragraph (b) of subsection
10       (18) of K.S.A. 16a-1-301); and
11             (c) in the case of a sale or loan, to the extent that payment is deferred
12       and the amount is not otherwise included and is authorized and disclosed
13       to the customer:
14             (i) Amounts actually paid or to be paid by the creditor for registration,
15       certificate of title, or license fees, and
16             (ii) permitted additional charges ( K.S.A. 16a-2-501). net amount of
17       credit provided to the consumer or on the consumer's behalf. The amount
18       financed shall be calculated as provided in rules and regulations adopted
19       by the administrator pursuant to K.S.A. 16a-6-117, and amendments
20       thereto.
21             (5) "Annual percentage rate" means the finance charge expressed as
22       a yearly rate, as calculated in accordance with the actuarial method. The
23       annual percentage rate shall be calculated as provided in rules and reg-
24       ulations adopted by the administrator pursuant to K.S.A. 16a-6-117, and
25       amendments thereto.
26             (6) "Appraised value" means, with respect to any real estate at any
27       time, the greater of:
28             (a) The total appraised value of the real estate, as reflected in the most
29       recent records of the tax assessor of the county in which the real estate is
30       located; or
31             (b) the fair market value of the real estate, as reflected in a written
32       appraisal of the real estate performed by a Kansas licensed or certified
33       appraiser within the past 12 months.
34             (5) (7) "Billing cycle" means the time interval between periodic bill-
35       ing statement dates.
36             (6) (8) "Cash price" of goods, services, or an interest in land means
37       the price at which they are offered for sale by the seller to cash buyers
38       in the ordinary course of business and may include (a) the cash price of
39       accessories or services related to the sale, such as delivery, installation,
40       alterations, modifications, and improvements, and (b) taxes to the extent
41       imposed on a cash sale of the goods, services, or interest in land. The
42       cash price stated by the seller to the buyer in a disclosure statement is
43       presumed to be the cash price.

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  1             (9) "Closed end credit" means a consumer loan or a consumer credit
  2       sale which is not incurred pursuant to open end credit.
  3             (7) (10) "Closing costs" with respect to a debt secured by an interest
  4       in land includes:
  5             (a) The actual fees paid a public official or agency of the state or
  6       federal government, for filing, recording or releasing any instrument re-
  7       lating to the debt; and
  8             (b) bona fide and reasonable expenses not included in the origination
  9       fee or payable to an assignee incurred by the lender in connection with
10       the making, closing, disbursing, extending, readjusting or renewing the
11       debt which are payable to third parties not related to the lender, except
12       that reasonable f fees for an appraisal made by the lender or related party
13       are permissible.
14             (11) "Code mortgage rate" means the greater of:
15             (a) 12%; or
16             (b) the sum of:
17             (i) The yield on 30-year fixed rate conventional home mortgage loans
18       committed for delivery within 31 to 90 days accepted under the federal
19       home loan mortgage corporation's or any successor's daily offerings for
20       sale on the last day on which commitments for such mortgages were re-
21       ceived in the previous month; and
22             (ii) 5%.
23             If the reference rate referred to in subparagraph (i) of paragraph (b)
24       is discontinued, becomes impractical to use, or is otherwise not readily
25       ascertainable for any reason, the administrator may designate a compa-
26       rable replacement reference rate and, upon publishing notice of the same,
27       such replacement reference rate shall become the reference rate referred
28       to in subparagraph (i) of paragraph (b). The secretary of state shall pub-
29       lish notice of the code mortgage rate not later than the second issue of the
30       Kansas register published each month.
31             (8) (12) "Conspicuous": A means a term or clause is conspicuous
32       when it is so written that a reasonable person against whom it is to operate
33       ought to have noticed it. Whether a term or clause is conspicuous or not
34       is for decision by the trier of fact.
35             (9) (13) "Consumer" means the buyer, lessee, or debtor to whom
36       credit is granted in a consumer credit transaction.
37             (10) (14) "Consumer credit sale":
38             (a) Except as provided in paragraph (b), a "consumer credit sale" is
39       a sale of goods, services, or an interest in land in which:
40             (i) Credit is granted either by a seller who regularly engages as a seller
41       in credit transactions of the same kind or pursuant to a credit card other
42       than a lender credit card,
43             (ii) the buyer is a person other than an organization,

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  1             (iii) the goods, services, or interest in land are purchased primarily
  2       for a personal, family or household purpose,
  3             (iv) either the debt is by written agreement payable in more than four
  4       installments or a finance charge is made, and
  5             (v) with respect to a sale of goods or services, the amount financed
  6       does not exceed $25,000.
  7             (b) A "consumer credit sale" does not include:
  8             (i) A sale in which the seller allows the buyer to purchase goods or
  9       services pursuant to a lender credit card; or
10             (ii) unless the sale is made subject to K.S.A. 16a-1-101 through 16a-9-
11       102, and amendments thereto, by agreement ( K.S.A. 16a-1-109), a sale
12       of an interest in land, other than sales governed by subsection (10)(b)(iii)
13       of this section, if the finance charge does not exceed 12% per year cal-
14       culated according to the actuarial method on the unpaid balances of the
15       amount financed on the assumption that the debt will be paid according
16       to the agreed terms and will not be paid before the end of the agreed
17       term; or
18             (iii) a sale by contract for deed of real estate the interest rate of which
19       is governed by subsection (b) or (h) of K.S.A. 16-207, and amendments
20       thereto a sale of an interest in land, unless the parties agree in writing to
21       make the transaction subject to the uniform consumer credit code.
22             (11) (15) "Consumer credit transaction" means a consumer credit
23       sale, consumer lease, or consumer loan or a modification thereof includ-
24       ing a refinancing, consolidation, or deferral.
25             (12) (16) "Consumer lease" means a lease of goods:
26             (a) Which a lessor regularly engaged in the business of leasing makes
27       to a person, other than an organization, who takes under the lease pri-
28       marily for a personal, family or household purpose;
29             (b) in which the amount payable under the lease does not exceed
30       $25,000;
31             (c) which is for a term exceeding four months; and
32             (d) which is not made pursuant to a lender credit card.
33             (13) (17) "Consumer loan":
34             (a) Except as provided in paragraph (b), a "consumer loan" is a loan
35       made by a person regularly engaged in the business of making loans in
36       which:
37             (i) The debtor is a person other than an organization;
38             (ii) the debt is incurred primarily for a personal, family or household
39       purpose;
40             (iii) either the debt is payable in by written agreement in more than
41       four installments or a finance charge is made; and
42             (iv) either the amount financed does not exceed $25,000 or the debt
43       is secured by an interest in land.

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  1             (b) Unless the loan is made subject to K.S.A. 16a-1-101 through 16a-
  2       9-102, and amendments thereto, by agreement ( K.S.A. 16a-1-109) the
  3       uniform consumer credit code by written agreement, a "consumer loan"
  4       does not include:
  5             (i) A loan secured by a first real estate mortgage unless:
  6             (A) The loan-to-value ratio of the loan at the time when made exceeds
  7       100%; or
  8             (B) in the case of subsection (1) of section 3 of this act and amend-
  9       ments thereto, the annual percentage rate of the loan exceeds the code
10       mortgage rate; or
11             (ii) a loan secured by a second or other subordinate mortgage if the
12       second or other subordinate mortgage is granted to the same lender as
13       the first mortgage; or
14             (iii) a loan made by a qualified plan, as defined in section 401 of the
15       internal revenue code, to an individual participant in such plan or to a
16       member of the family of such individual participant.
17             (14) (18) "Credit" means the right granted by a creditor to a debtor
18       to defer payment of debt or to incur debt and defer its payment.
19             (15) (19) "Credit card" means any card, plate or other single credit
20       device that may be used from time to time to obtain credit. Since this
21       involves the possibility of repeated use of a single device, checks and
22       similar instruments that can be used only once to obtain a single credit
23       extension are not credit cards.
24             (16) (20) "Creditor" means a person who regularly extends credit in
25       a consumer credit transaction which is payable by a written agreement in
26       more than four installments or for which the payment of a finance charge
27       is or may be required and is the person to whom the debt arising from
28       the consumer credit transaction is initially payable on the face of the
29       evidence of indebtedness or, if there is no such evidence of indebtedness,
30       by written agreement. In the case of credit extended pursuant to a credit
31       card, the creditor is the card issuer and not another person honoring the
32       credit card.
33             (17) (21) "Earnings" means compensation paid or payable to an in-
34       dividual or for such individual's account for personal services rendered
35       or to be rendered by such individual, whether denominated as wages,
36       salary, commission, bonus, or otherwise, and includes periodic payments
37       pursuant to a pension, retirement, or disability program.
38             (18) (22) "Finance charge":
39             (a) "Finance charge" means the sum of:
40             (i) All charges payable directly or indirectly by the consumer and
41       imposed directly or indirectly by the creditor as an incident to or as a
42       condition of the extension of credit, including any of the following types
43       of charges which are applicable; interest or any amount payable under a

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  1       point, discount or other system of charges, however denominated; time
  2       price differential, service, carrying or other charge, however denomi-
  3       nated; premium or other charge for any guarantee or insurance protecting
  4       the creditor against the consumer's default or other credit loss; and
  5             (ii) charges incurred for investigating the collateral or credit-worthi-
  6       ness of the consumer.
  7             (b) The term does not include:
  8             (i) Charges as a result of default, additional charges (K.S.A. 16a-2-
  9       501) or delinquency charges (K.S.A. 16a-2-502), or
10             (ii) if a lender makes a loan to a debtor by purchasing or satisfying
11       obligations of the debtor pursuant to a lender credit card and the purchase
12       or satisfaction is made at less than the face amount of the obligation, the
13       discount, or
14             (iii) closing costs as defined in K.S.A. 16a-1-301(7), and amendments
15       thereto "Finance charge" means all charges payable directly or indirectly
16       by the consumer and imposed directly or indirectly by the creditor as an
17       incident to or as a condition of the extension of credit. The finance charge
18       shall be calculated as provided in rules and regulations adopted by the
19       administrator pursuant to K.S.A. 16a-6-117, and amendments thereto.
20             (23) "First mortgage" means a first priority mortgage lien or similar
21       real property security interest.
22             (19) (24) "Goods" includes goods not in existence at the time the
23       transaction is entered into and merchandise certificates, but excludes
24       money, chattel paper, documents of title, and instruments.
25             (20) (25) Except as otherwise provided, "lender" includes an assignee
26       of the lender's right to payment but use of the term does not in itself
27       impose on an assignee any obligation of the lender with respect to events
28       occurring before the assignment.
29             (21) "Interest bearing" means the finance charge on a consumer
30       credit transaction is computed on the unpaid principal balances by the
31       actuarial method.
32             (22) (26) "Lender credit card" means a credit card issued by a su-
33       pervised lender.
34             (23) (27) "Loan":
35             (a) Except as provided in paragraph (b), a "loan" includes:
36             (i) The creation of debt by the lender's payment of or agreement to
37       pay money to the debtor or to a third party for the account of the debtor;
38             (ii) the creation of debt either pursuant to a lender credit card or by
39       a cash advance to a debtor pursuant to a credit card other than a lender
40       credit card;
41             (iii) the creation of debt by a credit to an account with the lender
42       upon which the debtor is entitled to draw immediately; and
43             (iv) the forbearance of debt arising from a loan.

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  1             (b) A "loan" does not include the payment or agreement to pay
  2       money to a third party for the account of a debtor if the debt of the
  3       debtor arises from a sale or lease and results from use of either a credit
  4       card issued by a person primarily in the business of selling or leasing
  5       goods or services or any other credit card which may be used for the
  6       purchase of goods or services and which is not a lender credit card.
  7             (28) "Loan-to-value ratio", at any time for any loan secured by an
  8       interest in real estate, means a fraction expressed as a percentage:
  9             (a) The numerator of which is the aggregate unpaid principal balance
10       of all loans secured by a first mortgage or a second mortgage encumbering
11       the real estate at such time; and
12             (b) the denominator of which is the appraised value of the real estate.
13             (24) (29) "Merchandise certificate" means a writing issued by a seller
14       not redeemable in cash and usable in its face amount in lieu of cash in
15       exchange for goods or services.
16             (25) (30) "Official fees" means:
17             (a) Fees and charges prescribed by law which actually are or will be
18       paid to public officials for determining the existence of or for perfecting,
19       releasing, or satisfying a security interest related to a consumer credit
20       sale, consumer lease, or consumer loan; or
21             (b) premiums payable for insurance in lieu of perfecting a security
22       interest otherwise required by the creditor in connection with the sale,
23       lease, or loan, if the premium does not exceed the fees and charges de-
24       scribed in paragraph (a) which would otherwise be payable.
25             (26) (31) "Open end credit" means an arrangement pursuant to
26       which:
27             (a) A creditor may permit a consumer, from time to time, to purchase
28       goods or services on credit from the creditor or pursuant to a credit card,
29       or to obtain loans from the creditor or pursuant to a credit card;
30             (b) the unpaid balance of amounts financed and the finance and other
31       appropriate charges are debited to an account;
32             (c) the finance charge, if made, is computed on the outstanding un-
33       paid balances of the consumer's account from time to time; and
34             (d) the consumer has the privilege of paying the balances in
35       installments.
36             (27) (32) "Organization" means a corporation, limited liability com-
37       pany, government or governmental subdivision or agency, trust, estate,
38       partnership, cooperative, or association.
39             (28) "Origination fee" means a fee associated with the making, clos-
40       ing or disbursing of a consumer credit transaction by a lender or assignee
41       of the lender which is intended to compensate the lender or assignee of
42       the lender for all costs incurred in making, closing or disbursing a con-
43       sumer credit transaction, exclusive of: Closing costs defined in K.S.A. 16a-

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  1       1-301(7) and amendments thereto, interest rate reduction charges paid
  2       by the consumer at closing and broker fees paid to third parties not re-
  3       lated to the lender or assignee of the lender.
  4             (29) "Payable in installments" means that payment is required or per-
  5       mitted by agreement to be made in (a) two or more periodic payments,
  6       excluding a down payment, with respect to a debt arising from a consumer
  7       credit sale pursuant to which a finance charge is made, (b) four or more
  8       periodic payments, excluding a down payment, with respect to a debt
  9       arising from a consumer credit sale pursuant to which no finance charge
10       is made, or (c) two or more periodic payments with respect to a debt
11       arising from a consumer loan. If any periodic payment other than the
12       down payment under an agreement requiring or permitting two or more
13       periodic payments is more than twice the amount of any other periodic
14       payment, excluding the down payment, the consumer credit transaction
15       is "payable in installments."
16             (30) (33) "Person" includes a natural person or an individual, and an
17       organization.
18             (31) (34) (a) "Person related to" with respect to an individual means
19       (a) (i) the spouse of the individual, (b) (ii) a brother, brother-in-law, sister,
20       sister-in-law of the individual, (c) (iii) an ancestor or lineal descendant of
21       the individual or the individual's spouse, and (d) (iv) any other relative,
22       by blood, adoption or marriage, of the individual or such individual's
23       spouse who shares the same home with the individual.
24             (b) "Person related to" with respect to an organization means (a) (i)
25       a person directly or indirectly controlling, controlled by or under common
26       control with the organization, (b) (ii) an officer or director of the organ-
27       ization or a person performing similar functions with respect to the or-
28       ganization or to a person related to the organization, (c) (iii) the spouse
29       of a person related to the organization, and (d) (iv) a relative by blood,
30       adoption or marriage of a person related to the organization who shares
31       the same home with such person.
32             (35) "Prepaid finance charge" means any finance charge paid sepa-
33       rately in cash or by check before or at consummation of a transaction, or
34       withheld from the proceeds of the credit at any time. Prepaid finance
35       charges shall be calculated as provided in rules and regulations adopted
36       by the administrator pursuant to K.S.A. 16a-6-117, and amendments
37       thereto.
38             (32) (36) "Presumed" or "presumption" means that the trier of fact
39       must find the existence of the fact presumed unless and until evidence is
40       introduced which would support a finding of its nonexistence.
41             (33) (37) "Principal" means the total of the amount financed and the
42       prepaid finance charges as authorized by subsection (9) of K.S.A. 16a-2-
43       401, and amendments thereto, except that prepaid finance charges are

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  1       not added to the amount financed to the extent such prepaid finance
  2       charges are paid separately in cash or by check by the consumer. The
  3       administrator may adopt rules and regulations regarding the determi-
  4       nation or calculation of the principal or the principal balance pursuant
  5       to K.S.A. 16a-6-117, and amendments thereto.
  6             (34) (38) "Sale of goods" includes any agreement in the form of a
  7       bailment or lease of goods if the bailee or lessee agrees to pay as com-
  8       pensation for use a sum substantially equivalent to or in excess of the
  9       aggregate value of the goods involved and it is agreed that the bailee or
10       lessee will become, or for no other or a nominal consideration has the
11       option to become, the owner of the goods upon full compliance with such
12       bailee's or lessee's obligations under the agreements.
13             (35) (39) "Sale of an interest in land" includes a lease in which the
14       lessee has an option to purchase the interest and all or a substantial part
15       of the rental or other payments previously made by the lessee are applied
16       to the purchase price.
17             (36) (40) "Sale of services" means furnishing or agreeing to furnish
18       services and includes making arrangements to have services furnished by
19       another.
20             (41) "Second mortgage" means a second or other subordinate priority
21       mortgage lien or similar real property security interest.
22             (37) (42) "Seller": Except as otherwise provided, "seller" includes an
23       assignee of the seller's right to payment but use of the term does not in
24       itself impose on an assignee any obligation of the seller with respect to
25       events occurring before the assignment.
26             (38) (43) "Services" includes (a) work, labor, and other personal serv-
27       ices, (b) privileges with respect to transportation, hotel and restaurant
28       accommodations, education, entertainment, recreation, physical culture,
29       hospital accommodations, funerals, cemetery accommodations, and the
30       like, and (c) insurance.
31             (39) (44) "Supervised financial organization" means a person, other
32       than an insurance company or other organization primarily engaged in an
33       insurance business:
34             (a) Organized, chartered, or holding an authorization certificate un-
35       der the laws of this any state or of the United States which authorize the
36       person to make loans and to receive deposits, including a savings, share,
37       certificate or deposit account; and
38             (b) subject to supervision by an official or agency of this such state
39       or of the United States.
40             (40) (45) "Supervised lender" means a person authorized to make or
41       take assignments of supervised loans, either under a license issued by the
42       administrator (K.S.A. 16a-2-301 and amendments thereto) or as a super-
43       vised financial organization (subsection (44) of K.S.A. 16a-1-301(39) and

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  1       amendments thereto).
  2             (41) (46) "Supervised loan" means a consumer loan, including a loan
  3       made pursuant to open end credit, in which the rate of the finance charge,
  4       calculated according to the actuarial method, exceeds 12% per year with
  5       respect to which the annual percentage rate exceeds 12%.
  6             (42) (47) "Written agreement" means an agreement such as a prom-
  7       issory note, contract or lease that is evidence of or relates to the indebt-
  8       edness. A letter that merely confirms an oral agreement does not consti-
  9       tute a written agreement for purposes of this subsection unless signed by
10       the person against whom enforcement is sought.
11             (43) (48) "Written administrative interpretation" means any written
12       communication from the consumer credit commissioner which is the of-
13       ficial interpretation as so stated in said written communication by the
14       consumer credit commissioner of the Kansas uniform consumer credit
15       code and rules and regulations pertaining thereto.
16             Sec.  9. K.S.A. 16a-2-103 is hereby amended to read as follows: 16a-
17       2-103. On and after January 1, 1994, (a) The finance charges on consumer
18       loans and consumer credit sales originated on and after January 1, 1994,
19       shall be computed on the unpaid principal balances by the actuarial
20       method (1) This section applies to all consumer loans and all consumer
21       credit sales.
22             (2) The finance charge on a consumer loan or consumer credit sale
23       shall be computed in accordance with the actuarial method using either
24       the 365/365 method or, if the consumer agrees in writing, the 360/360
25       method:
26             (a) The 365/365 method means a method of calculating the finance
27       charge whereby the annual rate is divided by 365 and the resulting daily
28       rate is multiplied by the outstanding principal amount and the actual
29       number of days in the computational period.
30             (b) The 360/360 method means a method of calculating the finance
31       charge whereby the annual rate is divided by 360 and the resulting daily
32       rate is multiplied by the outstanding principal amount and the number
33       of assumed days in the computational period. [For the purposes of this
34       subsection, a creditor may assume that a month has 30 days, re-
35       gardless of the actual number of days in the month.]
36             If the documentation evidencing a consumer credit contract is silent
37       regarding whether the 365/365 method or the 360/360 method applies,
38       then the 365/365 method shall apply.
39             (3) The finance charge on a consumer loan or consumer credit sale
40       may not be computed in accordance with the 365/360 method, whereby
41       the annual rate is divided by 360 and the resulting daily rate is multiplied
42       by the outstanding principal amount and the actual number of days in
43       the computational period.

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  1             (4) Creditors may ignore the effect of a leap year in computing the
  2       finance charge.
  3             (5) (a) Except for any portion of a loan made pursuant to a lender
  4       credit card which does not represent a cash advance, interest or other
  5       periodic finance charges on a consumer loan may accrue only on that
  6       portion of the principal which has been disbursed to or for the benefit of
  7       the consumer.
  8             (b) On a consumer credit sale, interest or other periodic finance
  9       charges may accrue only on that portion of the principal which relates to
10       goods, services or an interest in land, as the case may be, which has been
11       shipped, delivered, furnished or otherwise made available to or for the
12       benefit of the consumer or has been disbursed to or for the benefit of the
13       consumer.
14             (6) Subsection (2) does not apply to a consumer credit sale the finance
15       charge for which is computed in accordance with subsection (5) of K.S.A.
16       16a-2-201, and amendments thereto.
17             (b) (7) Notwithstanding any other provisions of this act, the finance
18       charges on consumer loans or consumer credit sales originating prior to
19       January 1, 1994, which computed such finance charges on a precomputed
20       basis, shall be subject to the conditions, limitations and restrictions con-
21       tained in the uniform consumer credit code as in effect on December 31,
22       1993, as such code relates to precomputed finance charges.
23             (c) (8) This section shall be supplemental to and a part of the uniform
24       consumer credit code.
25             Sec.  10. K.S.A. 1998 Supp. 16a-2-201 is hereby amended to read as
26       follows: 16a-2-201. (1) With respect to a This section applies only to a
27       closed end consumer credit sale, other than a sale pursuant to open end
28       credit, a seller may contract for and receive a finance charge not exceed-
29       ing that permitted by this section.
30             (2) The finance charge, calculated according to the actuarial method,
31       may not exceed the equivalent of the following:
32             The total of:
33             (a) Twenty-one percent per year on that part of the unpaid balance
34       of the amount financed which is $1,000 or less;
35             (b) fourteen and forty-five hundredths percent per year on that part
36       of the unpaid balance of the amount financed which is more than $1,000.
37             (3) This section does not limit or restrict the manner of calculating
38       the finance charge whether by way of add-on, discount, or otherwise, so
39       long as the rate of the finance charge does not exceed that permitted by
40       this section. If the sale is precomputed:
41             (a) The finance charge may be calculated on the assumption that all
42       scheduled payments will be made when due, and the fact that payments
43       are made either before or after the due date does not affect the amount

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  1       of finance charge which the creditor may charge or receive; and
  2             (b) the effect of prepayment is governed by the provision on rebate
  3       upon prepayment.
  4             (4) For the purposes of this section, the term of a sale agreement
  5       commences with the date the credit is granted or, if goods are delivered
  6       or services performed 10 days or more after that date, with the date of
  7       commencement of delivery or performance.
  8             (5) Subject to classifications and differentiations the seller may rea-
  9       sonably establish, the seller may make the same finance charge on all
10       amounts financed within a specified range. A finance charge so made
11       does not violate subsection (2) if:
12             (a) When applied to the median amount within each range, it does
13       not exceed the maximum permitted by subsection (2); and
14             (b) when applied to the lowest amount within each range, it does not
15       produce a rate of finance charge exceeding the rate calculated according
16       to paragraph (a) by more than 8% of the rate calculated according to
17       paragraph (a).
18             (6) Notwithstanding subsection (2), the seller may contract for and
19       receive a minimum finance charge of not more than $5 when the amount
20       financed does not exceed $75, or not more than $7.50 when the amount
21       financed exceeds $75.
22             (7) Notwithstanding any other provision of this section, with respect
23       to a consumer credit sale other than open end credit, the seller may
24       contract for and receive a finance charge not exceeding that agreed to by
25       the consumer.
26             (8) (2) A seller may charge a finance charge at any rate agreed to by
27       the parties, subject, however, to the limitations on prepaid finance charges
28       set forth in subsection (3).
29             (3) A seller may charge a prepaid finance charge not to exceed the
30       lesser of:
31             (a) Two percent of the amount financed; or
32             (b) one hundred dollars. A prepaid finance charge permitted under
33       this subsection is fully earned when paid and is nonrefundable, unless the
34       parties agree otherwise in writing.
35             (4) If the sale is precomputed:
36             (a) The finance charge may be calculated on the assumption that all
37       scheduled payments will be made when due, and the fact that payments
38       are made either before or after the due date does not affect the amount
39       of finance charge which the creditor may charge or receive; and
40             (b) the effect of prepayment is governed by subsection (5).
41             (5) Rebate upon prepayment:
42             (a) Except as provided for in this section, upon prepayment in full of
43       a precomputed consumer credit transaction, the creditor shall rebate to

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  1       the consumer an amount not less than the amount of rebate provided in
  2       subsection (b), paragraph (1), or redetermine the earned finance charge
  3       as provided in subsection (b), paragraph (2), and rebate any other un-
  4       earned charges including charges for insurance. The rebate for charges
  5       for insurance shall be as prescribed by statute, rules and regulations and
  6       administrative interpretations by the administrator. If the rebate other-
  7       wise required is less than $1, no rebate need be made.
  8             (b) The amount of rebate and redetermined earned finance charge
  9       shall be as follows:
10             (1) The amount of rebate shall be determined by applying, according
11       to the actuarial method, the rate of finance charge which was required to
12       be disclosed in the transaction:
13             (i) Where no deferral charges have been made in a transaction, to
14       the unpaid balances for the actual time remaining as originally scheduled
15       for the period following prepayment; and
16             (ii) where deferral charges have been made in a transaction, to the
17       unpaid balances for the actual time remaining as extended by deferral for
18       the period following prepayment.
19             The time remaining for the period following prepayment shall be either
20       the full days following prepayment; or both the full days, counting the
21       date of prepayment, between the prepayment date and the end of the
22       computational period in which the prepayment occurs, and the full com-
23       putational periods following the date of prepayment to the scheduled due
24       date of the final installment of the transaction.
25             (2) The redetermined earned finance charge shall be determined by
26       applying, according to the actuarial method, the rate of finance charge
27       which was required to be disclosed in the transaction to the actual unpaid
28       balances of the amount financed for the actual time the unpaid balances
29       were outstanding as of the date of prepayment. Any delinquency or de-
30       ferral charges collected before the date of prepayment do not become a
31       part of the total finance charge for purposes of rebating unearned charges.
32             (c) Upon prepayment, but not otherwise, of a consumer credit trans-
33       action whether or not precomputed, other than a consumer lease, a con-
34       sumer rental purchase agreement, or a transaction pursuant to open end
35       credit:
36             (1) If the prepayment is in full, the creditor may collect or retain a
37       minimum charge not exceeding $5 in a transaction which had an amount
38       financed of $75 or less, or not exceeding $7.50 and in a transaction which
39       had an amount financed of more than $75, if the finance charge earned
40       at the time of prepayment is less than the minimum allowed pursuant to
41       this subsection.
42             (2) If the prepayment is in part, the creditor may not collect or retain
43       a minimum finance charge.

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  1             (d) For the purposes of this section, the following defined terms
  2       apply:
  3             (1) "Computational period" means the interval between scheduled
  4       due dates of installments under the transaction if the intervals are sub-
  5       stantially equal or, if the intervals are not substantially equal, one month
  6       if the smallest interval between the scheduled due dates of installments
  7       under the transaction is one month or more, and otherwise one week.
  8             (2) The "interval" between specified dates means the interval be-
  9       tween them including one or the other but not both of them. If the
10       interval between the date of the transaction and the due date of the first
11       scheduled installment does not exceed one month by more than fifteen
12       days when the computational period is one month, or eleven days when
13       the computational period is one week, the interval may be considered by
14       the creditor as one computational period.
15             (e) This section does not preclude the collection or retention by the
16       creditor of delinquency charges.
17             (f) If the maturity is accelerated by any reason and judgment is ob-
18       tained, the consumer is entitled to the same rebate as if payment had
19       been made on the date maturity is accelerated.
20             (g) Upon prepayment in full of a precomputed consumer credit trans-
21       action by the proceeds of consumer credit insurance, the consumer or
22       the consumer's estate is entitled to the same rebate as though the con-
23       sumer had prepaid the agreement on the date the proceeds of the insur-
24       ance are paid to the creditor, but no later than ten business days after
25       satisfactory proof of loss is furnished to the creditor.
26             (6) This section does not apply to a sale of an interest in land. Sub-
27       section (10) [(11)] of K.S.A. 16a-2-401, and amendments thereto, governs
28       the limitations on finance charges for a contract for deed to real estate
29       where the parties agree in writing to make the transaction subject to the
30       uniform consumer credit code.
31             Sec.  11. K.S.A. 1998 Supp. 16a-2-202 is hereby amended to read as
32       follows: 16a-2-202. (1) With respect to a consumer credit sale made pur-
33       suant to open end credit, the parties to the sale may contract for the
34       payment by the buyer of a finance charge not exceeding that permitted
35       in this section a seller may charge a finance charge at any rate agreed to
36       by the parties.
37             (2) A charge may be made in each billing cycle which is a percentage
38       of an amount no greater than:
39             (a) The average daily balance of the account, which is the sum of the
40       actual amounts outstanding each day during the billing cycle divided by
41       the number of days in the cycle;
42             (b) the unpaid balance of the account on the last day of the billing
43       cycle; or

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  1             (c) the median amount within a specified range within which the
  2       average daily balance of the account or the unpaid balance of the account
  3       on the last day of the billing cycle is included. A charge may be made
  4       pursuant to this paragraph only if the seller, subject to classifications and
  5       differentiations the seller may reasonably establish, makes the same
  6       charge on all balances within the specified range and if the percentage
  7       when applied to the median amount within the range does not produce
  8       a charge exceeding the charge resulting from applying that percentage to
  9       the lowest amount within the range by more than 8% of the charge on
10       the median amount.
11             (3) With respect to a consumer credit sale made pursuant to open
12       end credit, the parties may contract for and the seller or holder may
13       receive a finance charge in an amount not exceeding the rate or rates
14       specified in the agreement governing the account.
15             (4) Notwithstanding subsection (3), if there is an unpaid balance on
16       the date as of which the credit service charge is applied, the seller may
17       contract for and receive a charge not exceeding $.50 if the billing cycle
18       is monthly or longer, or the pro rata part of $.50 which bears the same
19       relation to $.50 as the number of days in the billing cycle bears to 30 if
20       the billing cycle is shorter than monthly.
21             (3) If the billing cycle is monthly, the charges may not exceed 1/12 of
22       the annual rate agreed to by the consumer. If the billing cycle is not
23       monthly, the maximum charge is that percentage which bears the same
24       relation to the applicable monthly percentage as the number of days in
25       the billing cycle bears to 30. For purposes of this subsection, a variation
26       of not more than four days from month to month is "the last day of the
27       billing cycle."
28             (4) For any period in which a finance charge is due, the parties may
29       agree on a minimum amount.
30             (5) This section does not apply to a sale of an interest in land. Sub-
31       section (11) of K.S.A. 16a-2-401, and amendments thereto, governs the
32       limitations on finance charges for a contract for deed to real estate where
33       the parties agree in writing to make the transaction subject to the uniform
34       consumer credit code.
35             Sec.  12. K.S.A. 16a-2-302 is hereby amended to read as follows: 16a-
36       2-302. (1)  (a) The administrator shall receive and act on all applications
37       for licenses to make supervised loans under this act. Applications shall be
38       filed in the manner prescribed by the administrator and shall contain the
39       information the administrator may require by rule and regulation to make
40       an evaluation of the financial responsibility, character and fitness of the
41       applicant. Each place of business operated under K.S.A. 16a-1-101 to 16a-
42       9-102, inclusive, and acts amendatory thereof, shall have and properly
43       display therein, a nontransferable and nonassignable license. Application

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  1       for a license shall be on a form prescribed and furnished by the
  2       commissioner.
  3             (b) Submitted with each application shall be an investigation fee and
  4       a license fee application fee. Investigation Application and license fees
  5       shall be in such amounts as are established pursuant to subsection (6) (5)
  6       of K.S.A. 16a-6-104, and amendments thereto. The license fee shall be
  7       returned to the applicant if the application is denied. The license year
  8       shall be the calendar year and the license fee for any period less than six
  9       months shall be an amount as established pursuant to subsection (6) of
10       K.S.A. 16a-6-104. Each license shall remain in force until surrendered,
11       suspended or revoked.
12             (c) The administrator shall remit all moneys received under K.S.A.
13       16a-1-101 to 16a-6-414, inclusive, and acts amendatory thereof and
14       amendments thereto, to the state treasurer at least monthly. Upon receipt
15       of any such remittance the state treasurer shall deposit the entire amount
16       thereof in the state treasury. Of each deposit 20% shall be credited to the
17       state general fund and the balance shall be credited to the consumer
18       credit fee fund. All expenditures from such fund shall be made in ac-
19       cordance with appropriation acts upon warrants of the director of ac-
20       counts and reports issued pursuant to vouchers approved by the admin-
21       istrator or by a person or persons designated by the administrator.
22             The 20% credit to the state general fund required by this subsection
23       (c) is to reimburse the state general fund for accounting, auditing, budg-
24       eting, legal, payroll, personnel and purchasing services, and any and all
25       other state governmental services, which are performed on behalf of the
26       administrator by other state agencies which receive appropriations from
27       the state general fund to provide such services. Nothing in this subsection
28       (c) shall be deemed to authorize remittances to be made less frequently
29       than is authorized under K.S.A. 75-4215, and amendments thereto.
30             (d) Every licensee shall, on or before the first day of January, pay to
31       the administrator the license fee prescribed under this subsection (1) for
32       each license held for the succeeding license year. Failure to pay the li-
33       cense fee within the time prescribed shall automatically revoke the
34       license.
35             (2) No license shall be issued unless the administrator, upon inves-
36       tigation, finds that the financial responsibility, character and fitness of the
37       applicant, and of the members thereof if the applicant is a copartnership
38       or association and of the officers and directors thereof, if the applicant is
39       a corporation, are such as to warrant belief that the business will be op-
40       erated honestly and fairly within the purposes of this act. An applicant
41       meets the minimum standard of financial responsibility for engaging in
42       the business of making supervised loans, under subsection (1) of K.S.A.
43       16a-2-301, and amendments thereto, if the applicant has available for op-

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  1       eration of that business assets of at least $25,000 for each license issued
  2       by this or any other state only if the applicant has filed with the admin-
  3       istrator a proper surety bond of at least $100,000 which has been ap-
  4       proved by the administrator. The required surety bond may not be can-
  5       celed by the licensee without providing the administrator at least 30 days'
  6       prior written notice and must provide within its terms that the bond shall
  7       not expire for two years after the date of the surrender, revocation or
  8       expiration of the subject license, whichever shall first occur.
  9             (3) The administrator may deny any application or renewal for a
10       supervised loan license if the administrator finds:
11             (a) There is a refusal to furnish information required by the admin-
12       istrator within a reasonable time as fixed by the administrator; or
13             (b) any of the factors stated in K.S.A. 16a-2-303, and amendments
14       thereto, as grounds for denial, revocation or suspension of a license.
15             (3) (4) Upon written request the applicant is entitled to a hearing on
16       the question of license qualifications if (a) the: (a) The administrator has
17       notified the applicant in writing that the application has been denied,; or
18       (b) the administrator has not issued a license within 60 days after the
19       application for the license was filed. A request for a hearing may not be
20       made more than 15 days after the administrator has mailed a writing to
21       the applicant notifying the applicant that the application has been denied
22       and stating in substance the administrator's findings supporting denial of
23       the application.
24             (4) The administrator shall issue additional licenses to the same li-
25       censee upon compliance with all the provisions of K.S.A. 16a-1-101 to
26       16a-9-102, inclusive, and acts amendatory thereof, governing issuance of
27       a single license. A separate license shall be required for each place of
28       business. Each license shall remain in full force and effect until surren-
29       dered, suspended or revoked.
30             (5) The administrator shall adopt rules and regulations regarding
31       whether a licensee shall be required to obtain a single license for each
32       place of business or whether a licensee may obtain a master license for all
33       of its places of business, and in so doing the administrator may differen-
34       tiate between licensees located in this state and licensees located else-
35       where. Each license shall remain in full force and effect until surrendered,
36       suspended or revoked.
37             (5) (6) No licensee shall change the location of any place of business
38       without giving the administrator at least 15 days prior written notice.
39             (6) (7) A licensee may conduct the business of making supervised
40       loans only at or from any place of business for which the licensee holds
41       a license and not under any other name than that in the license. Loans
42       made pursuant to a lender credit card do not violate this subsection.
43             Sec.  13. K.S.A. 16a-2-303 is hereby amended to read as follows: 16a-

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25

  1       2-303. (1) The administrator shall conduct a hearing before suspending
  2       or revoking a license to make supervised loans. Suspension of a license
  3       shall be for a period not in excess of six months. The administrator shall
  4       may deny, revoke or suspend the license of a supervised lender if the
  5       administrator finds that:
  6             (a) The applicant or licensee has repeatedly and or willfully violated
  7       the provisions of K.S.A. 16a-1-101 through 16a-9-102 and amendments
  8       thereto or any rule or order and regulation, order or administrative in-
  9       terpretation lawfully made pursuant to such sections of this act; or
10             (b) the applicant or licensee has failed to file and maintain the surety
11       bond required in K.S.A. 16a-6-104, and amendments thereto;
12             (c) the applicant or licensee is insolvent;
13             (d) the applicant or licensee has filed with the administrator any doc-
14       ument or statement containing any false representation of a material fact
15       or omitting to state a material fact;
16             (e) the applicant, licensee, members thereof if a copartnership or as-
17       sociation, or officers and directors thereof if a corporation have been con-
18       victed of any crime involving fraud or deceit;
19             (f) the applicant or licensee fails to keep and maintain sufficient re-
20       cords to permit an audit satisfactorily disclosing to the administrator the
21       applicant or licensee's compliance with the provision of this act;
22             (g) the applicant or licensee has been the subject of any disciplinary
23       action by this or any other state or federal agency;
24             (h) a final judgment has been entered against the applicant or licensee
25       in a civil action and the administrator finds the conduct on which the
26       judgment is based indicates that it would be contrary to the public interest
27       to permit such person to be licensed;
28             (i) the applicant or licensee has engaged in deceptive business prac-
29       tices; or
30             (j) facts or conditions exist which would clearly have justified the ad-
31       ministrator in refusing to grant a license had these facts or conditions
32       been known to exist at the time the application for the license was made.
33             (2) No revocation or suspension of a license is lawful unless prior to
34       institution of proceedings by the administrator notice is given to the li-
35       censee of the facts or conduct which warrant the intended action, and
36       the licensee is given an opportunity to show compliance with all lawful
37       requirements for retention of the license.
38             (3) If the administrator finds that probable cause for revocation of a
39       license exists and that enforcement of the provisions of K.S.A. 16a-1-101
40       through 16a-9-102, and amendments thereto, requires immediate sus-
41       pension of the license pending investigation, the administrator may, after
42       an emergency adjudicative proceeding in accordance with the provisions
43       of K.S.A. 77-536 and amendments thereto, enter an order suspending the

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  1       license for not more than 30 days.
  2             (4) Any person holding a license to make supervised loans may relin-
  3       quish surrender the license by notifying the administrator in writing of
  4       its relinquishment surrender, but this relinquishment surrender shall not
  5       affect such person's liability for acts previously committed.
  6             (5) (3) No revocation, suspension, or relinquishment of a license shall
  7       impair or affect the obligation of any preexisting lawful contract between
  8       the licensee and any debtor.
  9             (6) (4) The administrator may reinstate a license, terminate a sus-
10       pension, or grant a new license to a person whose license has been re-
11       voked or suspended if no fact or condition then exists which clearly would
12       have justified the administrator in refusing to grant a license.
13             Sec.  14. K.S.A. 16a-2-307 is hereby amended to read as follows: 16a-
14       2-307. With respect to a consumer loan in which the finance charge ex-
15       ceeds twelve percent (12%) 12% and the amount financed is one thou-
16       sand dollars ($1,000) $3,000 or less, a lender may not contract for an
17       interest in land as security. A security interest taken in violation of this
18       section is void.
19             Sec.  15. K.S.A. 16a-2-401 is hereby amended to read as follows: 16a-
20       2-401. (1) With respect to a consumer loan, including a loan pursuant to
21       open end credit, a lender may contract for and receive a finance charge,
22       calculated according to the actuarial method, not exceeding 18% per year
23       on the unpaid balance of the amount financed not exceeding $1,000 and
24       14.45% per year on that portion of the unpaid balance in excess of $1,000.
25             (2) As an alternative to the rates set forth in subsection (1), with
26       respect to a supervised loan made under a license issued by the admin-
27       istrator, including a loan pursuant to open end credit, a supervised lender
28       may contract for and receive a finance charge, calculated according to the
29       actuarial method, not exceeding the equivalent of the greater of either of
30       the following:
31             The total of: (a) Thirty-six percent per year on that part of the unpaid
32       balance of the amount financed which is $300 or less; and
33             (b) twenty-one percent per year on that part of the unpaid balance
34       of the amount financed which is more than $300, but does not exceed
35       $1,000; and
36             (c) fourteen and forty-five hundredths percent per year on that por-
37       tion of the unpaid balance of the amount financed which is more than
38       $1,000; or
39             (d) eighteen percent per year on the unpaid balance of the amount
40       financed.
41             (3) This section does not limit or restrict the manner of calculating
42       the finance charge, whether by way of add-on, discount, or otherwise, so
43       long as the rate of the finance charge does not exceed that permitted by

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  1       this section. The finance charge may be contracted for and earned at the
  2       single annual percentage rate that would earn the same finance charge
  3       as the graduated rates when the debt is paid according to the agreed
  4       terms and the calculations are made according to the actuarial method.
  5             (4) The term of a loan for the purposes of this section commences
  6       on the date the loan is made.
  7             (5) Subject to classifications and differentiations the lender may rea-
  8       sonably establish, the lender may make the same finance charge on all
  9       amounts financed within a specified range. A finance charge so made
10       does not violate subsections (1) and (2) if:
11             (a) When applied to the median amount within each range, it does
12       not exceed the maximum amount permitted in subsections (1) and (2);
13       and
14             (b) when applied to the lowest amount within each range, it does not
15       produce a rate of finance charge exceeding the rate calculated according
16       to paragraph (a) by more than 8% of the rate calculated according to
17       paragraph (a).
18             (6) Notwithstanding subsections (1) and (2), a lender may contract
19       for and receive a minimum finance charge of not more than $5 when the
20       amount financed does not exceed $75, or not more than $7.50 when the
21       amount financed exceeds $75.
22             (7) This section shall not apply to a loan secured by an interest in
23       land the interest rate of which is governed by subsection (b) of K.S.A. 16-
24       207, and amendments thereto, unless made subject hereto by agreement.
25             (8) Except for paragraph (a) of subsection 9, this section shall not
26       apply to a loan secured by an interest in land subordinate to a prior
27       mortgage and held by a lender other than the lender of the first mortgage,
28       the interest rate of which is governed by subsection (b) or (h) of K.S.A.
29       16-207, and amendments thereto, unless made subject hereto by
30       agreement.
31             (9)  (a) In addition to the applicable finance charge or rate of interest
32       prescribed by law, a supervised lender may contract for and receive a
33       nonrefundable origination fee not to exceed 3% of the amount financed
34       on any consumer loan secured by an interest in land, which fee shall be
35       a nonrefundable, prepaid finance charge.
36             (b) In addition to the applicable finance charge permitted for con-
37       sumer credit sales other than sales by way of open end credit or for
38       consumer loans not secured by an interest in land, a creditor may contract
39       for and receive, in connection with any such sale or loan, a nonrefundable
40       origination fee in an amount not to exceed the lesser of 2% of the amount
41       financed or $100, which fee shall be a nonrefundable, prepaid finance
42       charge. For any consumer loan incurred pursuant to open end credit,
43       including, without limitation, a loan pursuant to a lender credit card, a

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  1       lender may charge a finance charge at any rate agreed to by the parties,
  2       subject, however, to the limitations on prepaid finance charges set forth
  3       in subsection (6). This subsection does not apply to a consumer loan se-
  4       cured by a first mortgage or a second mortgage.
  5             (2) For any consumer loan incurred pursuant to closed end credit, a
  6       lender may charge a periodic finance charge, calculated accordingly to
  7       the actuarial method, not to exceed[: (a) 36% per annum on any such
  8       loan in an amount of $860 or less, and (b)] 21% per annum [on any
  9       such loan in an amount which exceeds $860], subject, however to the
10       limitations on prepaid finance charges set forth in subsection (6). This
11       subsection does not apply to a consumer loan secured by a first mortgage
12       or a second mortgage.
13             (3) For any consumer loan secured by a second mortgage, a lender
14       may charge a periodic finance charge, calculated according to the actu-
15       arial method, not to exceed 18% per annum, subject, however to the lim-
16       itations on prepaid finance charges set forth in subsection (6). This sub-
17       section does not apply if the lender and the consumer agree in writing
18       that the finance charge for the loan is governed by K.S.A. 16-207(b), and
19       amendments thereto.
20             (4) If the parties to a consumer loan secured by a first mortgage agree
21       in writing to make the transaction subject to the uniform consumer credit
22       code, then the periodic finance charge for the loan, calculated according
23       to the actuarial method, may not exceed 18% per annum, subject, however
24       to the limitations on prepaid finance charges set forth in subsection (6).
25             (5) This section does not limit or restrict the manner of calculating
26       the finance charge, whether by way of add-on, discount or otherwise, so
27       long as the rate and the amount of the finance charge does not exceed
28       that permitted by this section.
29             (6) Prepaid finance charges on consumer loans are limited as follows:
30             (a) For a consumer loan secured by a first mortgage or a second mort-
31       gage, prepaid finance charges in an amount not to exceed 8% of the
32       amount financed may be charged, provided that the aggregate amount of
33       prepaid finance charges payable to the lender or any person related to
34       the lender do not exceed 5% of the amount financed; and
35             (b) for any other consumer loan, prepaid finance charges in an
36       amount not to exceed the lesser of 2% of the amount financed or $100
37       may be charged.
38             Prepaid finance charges permitted under this subsection are in addition
39       to finance charges permitted under subsection (1), (2), (3) and (4), as
40       applicable. Prepaid finance charges permitted under this subsection are
41       fully earned when paid and are non-refundable, unless the parties agree
42       otherwise in writing.
43             (7) The finance charge limitations in subsections (3) and (4) do not

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  1       apply to a consumer loan the finance charge for which is governed by
  2       subsection (h) of K.S.A. 16-207, and amendments thereto.
  3             (8) If a loan secured by a first mortgage constitutes a "consumer loan"
  4       under subsection (17) of K.S.A. 16a-1-301, and amendments thereto, by
  5       virtue of the loan-to-value ratio exceeding 100% at the time the loan is
  6       made, then the periodic finance charge for the loan shall not exceed that
  7       authorized by subsection (b) of K.S.A. 16-207, and amendments thereto,
  8       but the loan is subject to the limitations on prepaid finance charges set
  9       forth in paragraph (a) of subsection (6), which prepaid finance charges
10       may be charged in addition to the finance charges permitted under sub-
11       section (b) of K.S.A. 16-207, and amendments thereto.
12             (9) If, within 12 months after the date of the original loan, a lender
13       or a person related to the lender refinances a loan with respect to which
14       a prepaid finance charge was payable to the same lender pursuant to
15       subsection (6), then the following apply:
16             (a) If a prepaid finance charge with respect to the original loan was
17       payable to the lender pursuant to subparagraph [paragraph] (a) of sub-
18       section (6), then the aggregate amount of prepaid finance charges payable
19       to the lender or any person related to the lender with respect to the new
20       loan may not exceed 5% of the additional amount financed.
21             (b) If a prepaid finance charge with respect to the original loan was
22       payable to the lender pursuant to subparagraph [paragraph] (b) of sub-
23       section (6), then the aggregate amount of prepaid finance charges payable
24       to the lender or any person related to the lender with respect to the new
25       loan may not exceed the lesser of 2% of the additional amount financed
26       or $100.
27             (c) For purposes of this subsection, "additional amount financed"
28       means the difference between: (i) The amount financed for the new loan,
29       less the amount of all closing costs incurred in connection with the new
30       loan which are not included in the prepaid finance charges for the new
31       loan; and (ii) the unpaid principal balance of the original loan.
32             (10) For any period in which a finance charge is due on a consumer
33       loan pursuant to open end credit, the parties may agree on a minimum
34       amount.
35             (11) If the parties to a contract for deed to real estate agree in writing
36       to make the transaction subject to the uniform consumer credit code, then
37       the transaction is subject to the same limitations as set forth in subsections
38       (4) and (6) for a consumer loan secured by a first mortgage.
39             (12) This section does not apply to a payday loan [governed by
40       K.S.A. 16a-2-404, and amendments thereto].
41             Sec.  16. K.S.A. 16a-2-402 is hereby amended to read as follows: 16a-
42       2-402. (1) With respect to loans made pursuant to a lender credit card,
43       the parties may contract for the payment by the consumer of a finance

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  1       charge not exceeding that permitted in this section This section applies
  2       only to consumer loans pursuant to open end credit.
  3             (2) A charge may be made in each billing cycle which is a percentage
  4       of an amount no greater than:
  5             (a) The average daily balance of the account, which is the sum of the
  6       actual amounts outstanding each day during the billing cycle divided by
  7       the number of days in the cycle;
  8             (b) the unpaid balance of the account on the last day of the billing
  9       cycle; or
10             (c) the median amount within a specified range within which the
11       unpaid balance of the account on the last day of the billing cycle is in-
12       cluded. A charge may be made pursuant to this paragraph only if the
13       lender, subject to classifications and differentiations he may reasonably
14       establish, makes the same charge on all balances within the specified
15       range and if the percentage when applied to the median amount within
16       the range does not produce a charge exceeding the charge resulting from
17       applying that percentage to the lowest amount within the range by more
18       than eight percent (8%) of the charge on the median amount.
19             (3) If the billing cycle is monthly, the charge may not exceed one
20       twelfth (1/12) 1/12 of the maximum annual rates permitted by section 16a-
21       2-401 annual rate agreed to by the consumer. If the billing cycle is not
22       monthly, the maximum charge is that percentage which bears the same
23       relation to the applicable monthly percentage as the number of days in
24       the billing cycle bears to thirty (30) 30. For the purposes of this section,
25       a variation of not more than four (4) days from month to month is "the
26       last day of the billing cycle."
27             (4) Notwithstanding the other provisions of this section, if there is an
28       unpaid balance on the date as of which the finance charge is applied, the
29       lender or issuer may contract for and receive a charge not exceeding fifty
30       cents (50) if the billing cycle is monthly or longer, or the pro rata part of
31       fifty cents as the number of days in the billing cycle bears to thirty (30)
32       days if the billing cycle is shorter than monthly.
33             Sec.  17. K.S.A. 16a-2-403 is hereby amended to read as follows: 16a-
34       2-403. No seller or lessor in any sales or lease transaction or any company
35       issuing credit cards card issuer may impose a surcharge on a card holder
36       who elects to use a credit card in lieu of payment by cash, check or similar
37       means. A surcharge is any additional amount imposed at the time of the
38       sales or lease transaction by the merchant, seller or lessor that increases
39       the charge to the buyer or lessee for the privilege of using a credit card.
40             Sec.  18. K.S.A. 1998 Supp. 16a-2-501 is hereby amended to read as
41       follows: 16a-2-501. (1) In addition to the finance charge permitted by the
42       parts of this article on maximum finance charges for consumer credit sales
43       and consumer loans (parts 2 and 4), a creditor may contract for and re-

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  1       ceive the following additional charges in connection with a consumer
  2       credit transaction:
  3             (a) Official fees and taxes;
  4             (b) charges for insurance as described in subsection (2);
  5             (c) annual fees, not to exceed $50 annually, payable in advance or
  6       monthly fees, delinquency charges, insufficient check charges as provided
  7       in paragraph (e) of this subsection, over-limit fees and cash advance fees
  8       for the privilege of using an open end credit account delinquency charges
  9       permitted under K.S.A. 16a-2-502, and amendments thereto, and service
10       charges for insufficient checks permitted under paragraph (e);
11             (d) charges for other benefits, including insurance, conferred on the
12       consumer, if the benefits are of value to the consumer and if the charges
13       are reasonable in relation to the benefits, are of a type which is not for
14       credit, and are excluded as permissible additional charges from the fi-
15       nance charge by rules and regulations adopted by the administrator;
16             (e) a service charge for an insufficient check as defined and author-
17       ized by this subsection:
18             (i) For the purposes of this subsection, "insufficient check" means
19       any check, order or draft drawn on any bank, credit union, savings and
20       loan association, or other financial institution for the payment of money
21       and delivered in payment, in whole or in part, of preexisting indebtedness
22       of the drawer or maker, which is refused payment by the drawee because
23       the drawer or maker does not have sufficient funds in or credits with the
24       drawee to pay the amount of the check, order or draft upon presentation,
25       provided that any check, order or draft which is postdated or delivered
26       to a payee who has knowledge at the time of delivery that the drawer or
27       maker did not have sufficient funds in or credits with the drawee to pay
28       the amount of the check, draft or order upon presentation shall not be
29       deemed an insufficient check.
30             (ii) "Written notice" shall be presumed to have been given a drawer
31       or maker of an insufficient check when notice is sent by restricted mail
32       as defined by K.S.A. 60-103, and amendments thereto, addressed to the
33       person to be given notice of such person's address as it appears on the
34       insufficient check or to such person's last known address.
35             (iii) When an insufficient check has been given to a payee, the payee
36       may charge and collect a $10 insufficient check service charge from the
37       drawer or maker, subject to limitations contained in this subsection or, if
38       a larger amount is posted conspicuously provided within the contract, the
39       larger amount, if the payee has given the drawer or maker oral or written
40       notice of demand that the amount of the insufficient check plus the in-
41       sufficient check service charge be paid to the payee within 14 days from
42       the giving of notice. In no event shall the amount of such insufficient
43       check service charge exceed $30.

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  1             (iv) If the drawer or maker of an insufficient check does not pay the
  2       amount of the insufficient check plus the insufficient check service charge
  3       provided for in subsection (iii) to the payee within 14 days from the giving
  4       of notice as provided in subsection (iii), the payee may add the insufficient
  5       check service charge to the outstanding balance of the preexisting in-
  6       debtedness of the drawer or maker to draw interest at the contract rate
  7       applicable to the preexisting indebtedness.
  8             (v) Notwithstanding the provisions of subparagraph (iii), if an insuf-
  9       ficient check has been given to a creditor under a lender credit card, the
10       creditor may charge a service charge for the insufficient check in an
11       amount not to exceed the amount agreed to by the drawer or maker.
12             (2) An additional charge may be made for insurance written in con-
13       nection with the transaction, including vendor's single interest insurance
14       with respect to which the insurer has no right of subrogation against the
15       consumer but excluding other insurance protecting the creditor against
16       the consumer's default or other credit loss:
17             (a) With respect to insurance against loss of or damage to property,
18       or against liability, if the creditor furnishes a clear and specific statement
19       in writing to the consumer setting forth the cost of the insurance if ob-
20       tained from or through the creditor and stating that the consumer may
21       choose the person through whom the insurance is to be obtained; and
22             (b) with respect to consumer credit insurance providing life, accident
23       and health, or loss of employment coverage, if the insurance coverage is
24       not a factor in the approval by the creditor of the extension of credit, and
25       this fact is clearly disclosed in writing to the consumer, and if, in order
26       to obtain the insurance in connection with the extension of credit, the
27       consumer gives specific affirmative written indication of the consumer's
28       desire to do so after written disclosure to the consumer of the cost thereof.
29             (3) With respect to a consumer loan or a consumer credit sale in either
30       case pursuant to open end credit, a creditor may charge the following fees
31       in an amount not to exceed that agreed to by the consumer:
32             (a) Fees on a monthly or annual basis;
33             (b) over-limit fees; and
34             (c) cash advance fees. The fees permitted under this subsection are in
35       addition to any finance charges, additional charges or other charges per-
36       mitted by the uniform consumer credit code.
37             Sec.  19. K.S.A. 1998 Supp. 16a-2-502 is hereby amended to read as
38       follows: 16a-2-502. (1) The parties to a consumer credit transaction may
39       contract for a delinquency charge on any installment not paid in full
40       within 10 days after its scheduled or deferred due date in an amount not
41       exceeding 5% of the unpaid amount of the installment or $25, whichever
42       is less.
43             (2) As an alternative to the delinquency charge set forth in subsection

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  1       (1), the parties to a consumer credit transaction may contract for a delin-
  2       quency charge not to exceed $10 on any installment not paid in full within
  3       10 days after its scheduled or deferred due date, except that if the sched-
  4       uled payment amount is $25 or less, the maximum delinquency charge
  5       shall be $5.
  6             (3) A delinquency charge under subsection (2) may be collected only
  7       once on an installment however long it remains in default. A delinquency
  8       charge may be collected at the time it accrues or at any time thereafter.
  9             (4) No delinquency charge may be collected on an installment which
10       is paid in full within 10 days after its scheduled or deferred installment
11       due date even though an earlier maturing installment or a delinquency
12       charge on an earlier installment may not have been paid in full.
13             (5) For delinquency charge purposes, a payment made prior to the
14       due date of the next installment payment shall be applied to the previous
15       installment. For all other purposes, payments are applied to installments
16       in the order in which they fall due.
17             (6) Notwithstanding subsections (1), (2), (4) and (5), the parties to a
18       lender credit card agreement may contract for a delinquency charge in
19       an amount agreed to by the consumer and may impose such charge on
20       any installment not paid in full on the next business day following the
21       scheduled due date of the delinquent payment.
22             (7) Notwithstanding subsections (1), (2), (4), (5) and (6), no delin-
23       quency charge may be collected on a lender credit card installment which
24       is paid in full on the next business day following the scheduled or deferred
25       due date even though an earlier maturing installment or a delinquency
26       charge on an earlier installment may not have been paid in full.
27             [Sec.  20. K.S.A. 16a-2-404 is hereby amended to read as fol-
28       lows: 16a-2-404. (1) On consumer loan transactions in which cash
29       is advanced:
30             [(a) With a short term,
31             [(b) a single payment repayment is anticipated, and
32             [(c) such cash advance is equal to or less than the maximum
33       amount of the first tier used in the blended alternative rate in paragraph
34       (a) of subsection (2) of K.S.A. 16a-2-401, and amendments thereto, and
35       adjusted in K.S.A. 16a-2-401a, and amendments thereto $860, a licensed
36       or supervised lender may charge in lieu of the loan finance charges
37       specified in K.S.A. 16a-2-401, and amendments thereto, the follow-
38       ing amounts:
39             [(i) On any amount up to and including $50, a charge of $5.50
40       may be added;
41             [(ii) on amounts in excess of $50, but not more than $100, a
42       charge may be added equal to 10% of the loan proceeds plus a $5
43       administrative fee;

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  1             [(iii) on amounts in excess of $100, but not more than $250 a
  2       charge may be added equal to 7% of the loan proceeds with a min-
  3       imum of $10 plus a $5 administrative fee;
  4             [(iv) for amounts in excess of $250 and not greater than the
  5       maximum defined in this section, a charge may be added equal to
  6       6% of the loan proceeds with a minimum of $17.50 plus a $5 ad-
  7       ministrative fee.
  8             [(2) The maximum term of any loan made under this section
  9       shall be 30 days.
10             [(3) The contract rate of any loan made under this section shall
11       not be more than 3% per month of the loan proceeds after the ma-
12       turity date. No insurance charges or any other charges of any na-
13       ture whatsoever shall be permitted, except as stated in subsection
14       (6) (5), including any charges for cashing the loan proceeds if they
15       are given in check form.
16             [(4) Any loan made under this section shall not be repaid by
17       proceeds of another loan made under this section by the same lender
18       or related interest. The proceeds from any loan made under this
19       section shall not be applied to any other loan from the same lender
20       or related interest.
21             [(5) On a consumer loan transaction in which cash is advanced
22       in exchange for a personal check, a return check charge may be
23       charged if the check is deemed insufficient as defined in paragraph
24       (e) of subsection 2 (1) of K.S.A. 16a-2-501, and amendments thereto.
25             [(6) In determining whether a consumer loan transaction made
26       under the provisions of this section is unconscionable conduct un-
27       der K.S.A. 16a-5-108, and amendments thereto, consideration shall
28       be given, among other factors, to:
29             [(a) The ability of the borrower to repay within the terms of the
30       loan made under this section; or
31             [(b) the original request of the borrower for amount and term
32       of the loan are within the limitations under this section.
33             [(7) This section shall be supplemental to and a part of the uni-
34       form consumer credit code.]
35             Sec.  20 [21]. K.S.A. 16a-2-510 is hereby amended to read as follows:
36       16a-2-510. (1) Upon prepayment in full, but not upon a refinancing
37       (section 16a-2-504 K.S.A. 16a-2-504, and amendments thereto), of a con-
38       sumer credit transaction other than one pursuant to open end credit, the
39       creditor may collect or retain a minimum charge of $5 in a transaction
40       which had an amount financed of $75 or less, or $7.50 in a transaction
41       which had an amount financed of more than $75, if the minimum charge
42       was contracted for and the finance charge earned at the time of prepay-
43       ment is less than the minimum charge contracted for. In those instances

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  1       where the amounts financed are under or over $75 and the finance charge
  2       is less than the minimum provided therefor, then the finance charge so
  3       contracted may be retained as the minimum finance charge.
  4             (2) If the maturity is accelerated for any reason and judgment is ob-
  5       tained, the judgment shall be taken in accordance with the provisions of
  6       K.S.A. 16-205, and amendments thereto.
  7             (3) Upon prepayment in full of a consumer credit contract by pro-
  8       ceeds of consumer credit insurance, K.S.A. 16a-4-103, and amendments
  9       thereto, the consumer or the consumer's estate is entitled to the same
10       rebate as though the consumer had prepaid the agreement on the date
11       the proceeds of the insurance are paid to the creditor, but no later than
12       10 business days after satisfactory proof of loss is furnished to the creditor.
13             Sec.  21 [22]. K.S.A. 16a-3-301 is hereby amended to read as follows:
14       16a-3-301. (1) With respect to a consumer credit sale, a seller may take
15       a security interest in the property sold. In addition, a seller may take a
16       security interest in goods upon which services are performed or in which
17       goods sold are installed or to which they are annexed, or in land to which
18       the goods are affixed or which is maintained, repaired or improved as a
19       result of the sale of the goods or services, if in the case of a security
20       interest in land the debt secured is $1,000 $3,000 or more, or, in the case
21       of a security interest in goods the debt secured is $300 $900 or more.
22       Except as provided with respect to cross-collateral (section 16a-3-302
23       K.S.A. 16a-3-302, and amendments thereto) a seller may not otherwise
24       take a security interest in property of the buyer to secure the debt arising
25       from a consumer credit sale.
26             (2) With respect to a consumer lease, a lessor may not take a security
27       interest in property of the lessee to secure the debt arising from the lease.
28             (3) A security interest taken in violation of this section is void.
29             Sec.  22 [23]. K.S.A. 16a-3-304 is hereby amended to read as follows:
30       16a-3-304. (1) A creditor may not use multiple agreements with intent to
31       obtain a higher finance charge than would otherwise be permitted by the
32       provisions of the article on finance charges and related provisions (article
33       2).
34             (2) With respect to a supervised loan, a lender uses multiple agree-
35       ments if, with intent to obtain a higher finance charge than would oth-
36       erwise be permitted, said lender allows any person to become obligated
37       in any way under more than one loan agreement with the lender or with
38       a person related to the lender.
39             (3) The excess amount of finance charge provided for in this section
40       is an excess charge for the purposes of the provisions on rights of parties
41       (section 16a-5-201 K.S.A. 16a-5-201, and amendments thereto) and the
42       provisions on civil actions by administrator (section 16a-6-113 K.S.A. 16a-
43       6-113, and amendments thereto).

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  1             Sec.  23 [24]. K.S.A. 16a-4-301 is hereby amended to read as follows:
  2       16a-4-301. (1) A creditor may not contract for or receive a separate charge
  3       for insurance against loss of or damage to property unless
  4             (a) the insurance covers a substantial risk of loss of or damage to
  5       property related to the credit transaction;
  6             (b) the amount, terms, and conditions of the insurance are reasonable
  7       in relation to the character and value of the property insured or to be
  8       insured; and
  9             (c) the term of the insurance is reasonable in relation to the terms of
10       credit.
11             (2) The term of the insurance is reasonable if it is customary and does
12       not extend substantially beyond a scheduled maturity.
13             (3) A creditor may not contract for or receive a separate charge for
14       insurance against loss of or damage to property unless property is pur-
15       chased pursuant to a credit card or in a transaction pursuant to open end
16       credit, or unless the amount financed exclusive of charges for the insur-
17       ance is three hundred dollars ($300) $900 or more, and the value of the
18       property is three hundred dollars ($300) $900 or more.
19             Sec.  24 [25]. K.S.A. 16a-4-112 is hereby amended to read as follows:
20       16a-4-112. (1) To the extent that his the commissioner's responsibility
21       under this article requires, the commissioner of insurance shall issue rules
22       with respect to insurers, and with respect to refunds (section 16a-4-108
23       K.S.A. 16a-4-108, and amendments thereto), forms, schedules of pre-
24       mium rates and charges (section 16a-4-203 K.S.A. 16a-4-203, and amend-
25       ments thereto), and his the commissioner's approval or disapproval thereof
26       and, in case of violation, may make an order for compliance.
27             (2) Each provision of the part on administrative procedures and ju-
28       dicial review (part 4) of the article on administration (article 6) which
29       applies to and governs administrative action taken by the administrator
30       also applies to and governs all administrative action taken by the com-
31       missioner of insurance pursuant to this section.
32             Sec.  25 [26]. K.S.A. 16a-5-203 is hereby amended to read as follows:
33       16a-5-203. (1) Except as otherwise provided in this section, a creditor
34       who, in violation of the provisions of the rules and regulations adopted
35       by the administrator pursuant to K.S.A. 16a-6-117, and amendments
36       thereto, fails to disclose information to a person entitled to the informa-
37       tion under the provisions of K.S.A. 16a-1-101 through 16a-9-102, and
38       amendments thereto, is liable to that person in an amount equal to the
39       sum of:
40             (a) Twice the amount of the finance charge in connection with the
41       transaction, but the liability pursuant to this paragraph shall be not less
42       than $100 $200 or more than $1,000 $2,000; and
43             (b) in the case of a successful action to enforce the liability under

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  1       paragraph (a), the costs of the action together with reasonable attorney's
  2       fees as determined by the court.
  3             (2) A creditor has no liability under this section if within 15 days after
  4       discovering an error, and prior to the institution of an action under this
  5       section or the receipt of written notice of the error, the creditor notifies
  6       the person concerned of the error and makes whatever adjustments in
  7       the appropriate account are necessary to assure that the person will not
  8       be required to pay a credit service charge or loan finance charge in excess
  9       of the amount or percentage rate actually disclosed.
10             (3) A creditor may not be held liable in any action brought under this
11       section for a violation of the provisions of K.S.A. 16a-1-101 through 16a-
12       9-102, and amendments thereto, if the creditor shows by a preponderance
13       of evidence that the violation was not intentional and resulted from a
14       bona fide error notwithstanding the maintenance of procedures reason-
15       ably adapted to avoid the error.
16             (4) Any action which may be brought under this section against the
17       original creditor in any credit transaction involving a security interest in
18       land may be maintained against any subsequent assignee of the original
19       creditor where the assignee, its subsidiaries, or affiliates were in a contin-
20       uing business relationship with the original creditor either at the time the
21       credit was extended or at the time of the assignment, unless the assign-
22       ment was involuntary, or the assignee shows by a preponderance of evi-
23       dence that it did not have reasonable grounds to believe that the original
24       creditor was engaged in violations of this act and that it maintained pro-
25       cedures reasonably adapted to apprise it of the existence of the violations.
26             (5) No action pursuant to this section may be brought more than one
27       year after the date of the occurrence of the violation.
28             (6) In this section, creditor includes a person who in the ordinary
29       course of business regularly extends credit.
30             (7) The liability of the creditor under this section is in lieu of and not
31       in addition to the creditor's liability under the federal truth in lending
32       act; no action with respect to the same violation may be maintained pur-
33       suant to both this section and the federal truth in lending act.
34             Sec.  26 [27]. K.S.A. 16a-5-301 is hereby amended to read as follows:
35       16a-5-301. (1) A supervised lender who willfully makes charges in excess
36       of those permitted by the provisions of the article on finance charges and
37       related provisions (article 2) applying to supervised loans (part 4) is guilty
38       of a class A misdemeanor and upon conviction thereof shall be punished
39       in the manner provided by law It is unlawful for any person to violate
40       any of the provisions of this act, any rule and regulation adopted or order
41       issued under this act. A conviction for an intentional violation is a class
42       A nonperson misdemeanor. A second or subsequent conviction of this
43       subsection is severity level 7 nonperson felony. No person may be im-

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  1       prisoned for the violation of this section if such person proves that such
  2       person had no knowledge of the rule and regulation or order.
  3             (2) A person, other than a supervised financial organization, who will-
  4       fully engages in the business of making supervised loans without a license
  5       in violation of the provisions of this act applying to authority to make
  6       supervised loans (section 16a-2-301) is guilty of a class A misdemeanor
  7       and upon conviction thereof shall be punished in the manner provided
  8       by law The criminal liability of a person under this section is in lieu of
  9       and not in addition to the creditor's criminal liability under the federal
10       truth in lending act. No prosecution of a person with respect to the same
11       violation may be maintained pursuant to both this section and the federal
12       truth in lending act.
13             (3) A person, other than a supervised financial organization or an
14       attorney or collection agency who does not purchase the credit obligation,
15       who willfully engages in the business of entering into consumer credit
16       transactions, or of taking assignments of rights against consumers arising
17       therefrom and undertakes direct collection of payments or enforcement
18       of these rights, without complying with the provisions of this act con-
19       cerning notification (section 16a-6-202 K.S.A. 16a-6-202, and amend-
20       ments thereto) or payment of fees (section 16a-6-203 K.S.A. 16a-6-203,
21       and amendments thereto), is guilty of a class A misdemeanor and upon
22       conviction thereof shall be punished in the manner provided by law.
23             Sec.  27 [28]. K.S.A. 16a-6-104 is hereby amended to read as fol-
24       lows: 16a-6-104. This act shall be administered by the consumer credit
25       commissioner of Kansas who is also referred to as the administrator. (1)
26       In addition to other powers granted by this act, the administrator within
27       the limitations provided by law may:
28             (a) Receive and act on complaints, take action designed to obtain
29       voluntary compliance with the provisions of K.S.A. 16a-1-101 to 16a-9-
30       102, inclusive, and amendments thereto, or commence proceedings on
31       the administrator's own initiative;
32             (b) counsel persons and groups on their rights and duties under
33       K.S.A. 16a-1-101 to 16a-9-102, inclusive, and amendments thereto;
34             (c) establish programs for the education of consumers with respect
35       to credit practices and problems and as a condition in settlements of
36       investigations or examinations, the administrator may receive a payment
37       designated for consumer education to be expended as directed by the
38       administrator for such purpose;
39             (d) make studies appropriate to effectuate the purposes and policies
40       of K.S.A. 16a-1-101 to 16a-9-102, inclusive, and amendments thereto, and
41       make the results available to the public;
42             (e) adopt, amend and revoke rules and regulations to carry out the
43       specific provisions of K.S.A. 16a-1-101 to 16a-9-102, inclusive, and

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  1       amendments thereto;
  2             (f) issue, amend and revoke written administrative interpretations.
  3       Such written administrative interpretations shall be approved by the at-
  4       torney general and published in the Kansas register within 15 days of
  5       issuance. The administrator shall annually publish all written administra-
  6       tive interpretations in effect;
  7             (g) maintain offices within this state; and
  8             (h) appoint any necessary attorneys, hearing examiners, clerks, and
  9       other employees and agents and fix their compensation, and authorize
10       attorneys appointed under this section to appear for and represent the
11       administrator in court.;
12             (i) examine periodically at intervals the administrator deems appro-
13       priate the loans, business and records of every licensee except licensees
14       which are supervised financial organizations. The official or agency re-
15       sponsible for the supervision of each supervised financial organization
16       shall examine the loans, business and records of each such organization
17       in the manner and periodically at intervals prescribed by the administra-
18       tor. In addition, for the purpose of discovering violations of K.S.A. 16a-
19       1-101 through 16a-9-102, and amendments thereto, or securing infor-
20       mation lawfully required, the administrator or the official or agency to
21       whose supervision the organization is subject to K.S.A. 16a-6-105, and
22       amendments thereto, may at any time investigate the loans, business and
23       records of any supervised lender. For examination purposes the admin-
24       istrator shall have free and reasonable access to the offices, places of busi-
25       ness and records of the lender; and
26             (j) refer such evidence as may be available concerning violations of
27       this act or of any rule and regulation or order to the attorney general or
28       the proper county or district attorney, who may in the prosecutor's dis-
29       cretion, with or without such a reference, institute the appropriate crim-
30       inal proceedings under this act. Upon receipt of such reference, the at-
31       torney general or the county attorney or district attorney may request
32       that a duly employed attorney of the administrator prosecute or assist in
33       the prosecution of such violation on behalf of the state. Upon approval of
34       the administrator, such employee shall be appointed special prosecutor
35       for the attorney general or the county attorney or district attorney to serve
36       without compensation from the attorney general or the county attorney
37       or district attorney. Such special prosecutor shall have all the powers and
38       duties prescribed by law for assistant attorneys general or assistant county
39       or district attorneys, and such other powers and duties as are lawfully
40       delegated to such special prosecutors by the attorney general or the county
41       attorney or district attorney.
42             (2) The administrator shall enforce the rules and regulations adopted
43       pursuant to K.S.A. 16a-6-117, and amendments thereto, with respect to

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  1       all creditors except those described below, whose compliance shall be
  2       enforced by their appropriate supervisory authorities as follows:
  3             (a) In the case of national banks, by the comptroller of the currency;
  4             (b) in the case of state banks, by the Kansas banking commissioner;
  5             (c) in the case of federally chartered savings and loan associations, by
  6       the federal home loan bank board, acting directly or through the federal
  7       savings and loan insurance corporation;
  8             (d) in the case of state chartered savings and loan associations, by the
  9       Kansas savings and loan commissioner;
10             (e) in the case of federally chartered credit unions, by the adminis-
11       trator of the national credit union administration;
12             (f) in the case of state chartered credit unions, by the Kansas credit
13       union administrator;
14             (g) in the case of common carriers subject to the federal acts to reg-
15       ulate commerce, 49 USC §  1 et seq., by the interstate commerce
16       commission;
17             (h) in the case of intrastate public utilities or common carriers, by the
18       Kansas corporation commission;
19             (i) in the case of any air carrier or foreign air carrier subject to the
20       federal aviation act of 1958, by the civil aeronautics board; and
21             (j) with respect to any activities subject to the packer and stockyards
22       act of 1921, by the secretary of agriculture provisions of this act and the
23       rules and regulations and interpretations adopted thereunder with respect
24       to a creditor, unless the creditor's compliance is regulated exclusively or
25       primarily by another state or federal agency.
26             (3) To keep the administrator's rules and regulations in harmony with
27       the rules of administrators in other jurisdictions which enact the revised
28       uniform consumer credit code, the administrator, so far as is consistent
29       with the purposes, policies and provisions of K.S.A. 16a-1-101 to 16a-9-
30       102, inclusive, and amendments thereto, shall may:
31             (a) Before adopting, amending and revoking rules and regulations,
32       advise and consult with administrators in other jurisdictions which enact
33       the uniform consumer credit code; and
34             (b) in adopting, amending and revoking rules and regulations, take
35       into consideration the rules of administrators in other jurisdictions which
36       enact the revised uniform consumer credit code.
37             (4) Except for refund of an excess charge, no liability is imposed un-
38       der K.S.A. 16a-1-101 to 16a-9-102, inclusive, and amendments thereto,
39       for an act done or omitted in conformity with a rule and regulation or
40       written administrative interpretation of the administrator in effect at the
41       time of the act or omission notwithstanding that after the act or omission
42       the rule and regulation or written administrative interpretation may be
43       amended or revoked or be determined by judicial or other authority to

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41

  1       be invalid for any reason.
  2             (5) The administrator shall report annually on or before January 1 to
  3       the governor and legislature on the operation of the administrator's office,
  4       on the use of consumer credit in the state, and on the problems of persons
  5       of small means obtaining credit from persons regularly engaged in ex-
  6       tending sales or loan credit. For the purpose of making the report, the
  7       administrator is authorized to conduct research and make appropriate
  8       studies. The report shall include a description of the examination and
  9       investigation procedures and policies of the administrator's office, a state-
10       ment of policies followed in deciding whether to investigate or examine
11       the offices of credit suppliers subject to the Provisions of K.S.A. 16a-1-
12       101 to 16a-9-102, inclusive, and amendments thereto, a statement of the
13       number and percentages of offices which are periodically investigated or
14       examined, a statement of the types of consumer credit problems of both
15       creditors and consumers which have come to the attention of the admin-
16       istrator through the administrator's examinations and investigations and
17       the disposition of them under existing law, a statement of the extent to
18       which the rules and regulations of the administrator pursuant to K.S.A.
19       16a-1-101 to 16a-9-102, inclusive, and amendments thereto, are not in
20       harmony with the rules of administrators in other jurisdictions which en-
21       act the revised uniform consumer credit code and the reasons for such
22       variations, and a general statement of the activities of the administrator's
23       office and of others to promote the purposes of such sections of this act.
24       The report shall not identify the creditors against whom action is taken
25       by the administrator.
26             (6) The administrator prior to December 1 of each year shall establish
27       such fees as are authorized under the provisions of K.S.A. 16a-1-101 to
28       16a-9-102, inclusive, and amendments thereto, for the ensuing calendar
29       year in such amounts as the administrator may determine to be sufficient
30       to meet the budget requirements of the administrator for each fiscal year.
31             Sec.  28 [29]. K.S.A. 16a-6-105 is hereby amended to read as follows:
32       16a-6-105. (1) With respect to supervised financial organizations, the
33       powers of examination and investigation (sections 16a-2-305 and 16a-6-
34       106 K.S.A. 16a-2-305 and K.S.A. 16a-6-106, and amendments thereto)
35       and administrative enforcement (section 16a-6-108 K.S.A. 16a-6-108, and
36       amendments thereto) shall be exercised by the official or agency to whose
37       supervision the organization is subject. Should a supervised financial or-
38       ganization become licensed hereunder, a report of that portion of each
39       examination made by the supervisory official or agency of such organi-
40       zation relating to compliance with the provisions of chapter 16a of the
41       Kansas Statutes Annotated shall be filed with the administrator. All other
42       powers of the administrator under this act may be exercised by the ad-
43       ministrator with respect to a supervised financial organization except that

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  1       compliance with truth in lending shall be governed as set forth in sub-
  2       section (2) of K.S.A. 16a-6-104, and amendments thereto.
  3             (2) If the administrator receives a complaint or other information
  4       concerning noncompliance with this act by a supervised financial organ-
  5       ization, the administrator shall inform the official or agency having su-
  6       pervisory authority over the organization concerned. The administrator
  7       may request information about supervised financial organizations from
  8       the officials or agencies supervising them. If such officials or agencies
  9       have cause to believe the licensee of any supervised financial organization
10       subject to their supervision is subject to suspension or revocation for any
11       reason stated in K.S.A. 16a-2-302 K.S.A. 16a-2-303, and amendments
12       thereto, such official or agency shall notify the administrator and assist
13       the administrator in the enforcement of this act.
14             (3) The administrator and any official or agency of this state having
15       supervisory authority over a supervised financial organization are author-
16       ized and directed to consult and assist one another in maintaining com-
17       pliance with the provisions of K.S.A. 16a-1-101 through 16a-9-102, and
18       amendments thereto. They may jointly pursue investigations, prosecute
19       suits, and take other official action, as they deem appropriate, if either of
20       them otherwise is empowered to take the action.
21             Sec.  29 [30]. K.S.A. 16a-6-106 is hereby amended to read as follows:
22       16a-6-106. (1) If the administrator has cause to believe that a person has
23       engaged in an act which is subject to action by the administrator, he may
24       make an investigation to determine if the act has been committed, and,
25       to the extent necessary for this purpose, may administer oaths or affir-
26       mations, and, upon his own motion or upon request of any party, may
27       subpoena witnesses, compel their attendance, adduce evidence, and re-
28       quire the production of any matter which is relevant to the investigation,
29       including the existence, description, nature, custody, condition, and lo-
30       cation of any books, documents, or other tangible things and the identity
31       and location of persons having knowledge of relevant facts, or any other
32       matter reasonably calculated to lead to the discovery of admissible
33       evidence.
34             (2) If the person's records are located outside this state, the person
35       at his option shall either make them available to the administrator at a
36       convenient location within this state or pay the reasonable and necessary
37       expenses for the administrator or his representative to examine them at
38       the place where they are maintained. The administrator may designate
39       representatives, including comparable officials of the state in which the
40       records are located, to inspect them on his behalf.
41             (3) Upon failure without lawful excuse to obey a subpoena or to give
42       testimony and upon reasonable notice to all persons affected thereby, the
43       administrator may apply to the district court for an order compelling

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  1       compliance.
  2             (4) The administrator shall not make public the name or identity of
  3       a person whose acts or conduct he investigates pursuant to this section
  4       or the facts disclosed in the investigation, but this subsection does not
  5       apply to disclosures in actions or enforcement proceedings pursuant to
  6       K.S.A. 16a-1-101 through 16a-9-102.
  7             (5) If an investigation or examination by the administrator shall dis-
  8       close that any person has violated the provisions of this act other than as
  9       a result of a bona fide error, the cost of such investigation or examination
10       shall be borne by the person investigated or examined and the adminis-
11       trator may maintain an action in any court to recover such cost.  The
12       administrator may:
13             (a) Conduct public or private examinations or investigations within
14       or outside of this state as necessary to determine whether any license
15       should be granted, denied or revoked or whether any person has violated
16       or is about to violate any provision of this act or any rule and regulation,
17       administrative interpretation, or order hereunder, or to aid in the en-
18       forcement of this act or in the prescribing of forms or adoption of rules
19       and regulations;
20             (b) require or permit any person to file a statement in writing, under
21       oath or otherwise as the administrator determines, of all the facts and
22       circumstances concerning any violation of this act or any rule and regu-
23       lation, administrative interpretation or order hereunder.
24             (2) For the purpose of any examination, investigation or proceeding
25       under this act, the administrator or any officer designated by the admin-
26       istrator may administer oaths and affirmations, subpoena witnesses, com-
27       pel such witnesses' attendance, adduce evidence and require the produc-
28       tion of any matter which is relevant to the examination or investigation,
29       including the existence, description, nature, custody, condition and loca-
30       tion of any books, documents or other tangible things and the identity
31       and location of persons having knowledge of relevant facts, or any other
32       matter reasonably calculated to lead to the discovery of relevant infor-
33       mation or items.
34             (3) In case of contumacy by, or refusal to obey a subpoena issued to
35       any person, any court of competent jurisdiction, upon application by the
36       administrator, may issue to that person an order requiring the person to
37       appear before the administrator, or the officer designated by the admin-
38       istrator, there, to produce documentary evidence if so ordered or to give
39       evidence touching the matter under investigation or in question. Any fail-
40       ure to obey the order of the court may be punished by the court as a
41       contempt of court.
42             (4) No person is excused from attending and testifying or from pro-
43       ducing any document or record before the administrator or in obedience

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  1       to the subpoena of the administrator or any officer designated by the the
  2       administrator or in any proceeding instituted by the administrator, on
  3       the ground that the testimony or evidence (documentary or otherwise)
  4       required of the person may tend to incriminate the person or subject the
  5       person to a penalty or forfeiture. No individual may be prosecuted or
  6       subjected to any penalty or forfeiture for or on account of any transaction,
  7       matter or thing concerning which such person is compelled, after claiming
  8       privilege against self-incrimination, to testify or produce evidence (doc-
  9       umentary or otherwise), except that the individual so testifying shall not
10       be exempt from prosecution and punishment for perjury committed in so
11       testifying.
12             (5) The administrator may issue and apply to enforce subpoenas in
13       this state at the request of a consumer code administrator of another state
14       if the activities constituting an alleged violation for which the information
15       is sought would be a violation of the Kansas consumer credit code if the
16       activities had occurred in this state.
17             (6) If the person's records are located outside this state, the person
18       shall either make them available to the administrator at a convenient
19       location within this state or, at the administrator's discretion, pay the
20       reasonable and necessary expenses for the administrator or such admin-
21       istrator's representative to examine them at the place where they are
22       maintained. The administrator may designate representatives, including
23       comparable officials of the state in which the records are located, to in-
24       spect the records on the administrator's behalf.
25             (7) The administrator may charge as costs of investigation or exami-
26       nation all reasonable expenses, including a per diem and actual travel and
27       lodging expenses to be paid by the party or parties under investigation or
28       examination. The administrator may maintain an action in any court to
29       recover such costs.
30             Sec.  30 [31]. K.S.A. 16a-6-108 is hereby amended to read as follows:
31       16a-6-108. (a) After notice and hearing the administrator may order a
32       creditor or a person acting in a creditor's behalf to cease and desist from
33       engaging in violations of this act.
34             (b) With respect to unconscionable agreements or fraudulent or un-
35       conscionable conduct by the respondent, the administrator may not issue
36       an order pursuant to this section but may bring a civil action for an in-
37       junction (K.S.A. 16a-6-111 and amendments thereto).
38             (1) If the administrator determines after notice and opportunity for
39       a hearing that any person has engaged, is engaging or is about to engage
40       in any act or practice constituting a violation of any provision of this act
41       or any rule and regulation, order or administrative interpretation here-
42       under, the administrator by order may require that such person cease and
43       desist from the unlawful act or practice and take such affirmative action

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  1       as in the judgment of the administrator will carry out the purposes of this
  2       act.
  3             (2) If the administrator makes written findings of fact that the public
  4       interest will be irreparably harmed by delay in issuing an order under
  5       subsection (1), the administrator may issue an emergency cease and desist
  6       order. Such order shall be subject to the same procedures as an emergency
  7       order issued under K.S.A. 77-536, and amendments thereto. Upon the
  8       entry of such an order the administrator shall promptly notify the person
  9       subject to the order that it has been entered, of the reasons and that upon
10       written request the matter will be set for a hearing which shall be con-
11       ducted in accordance with the provisions of the Kansas administrative
12       procedure act. If no hearing is requested and none is ordered by the
13       administrator, the order will remain in effect until it is modified or vacated
14       by the administrator. If a hearing is requested or ordered, the adminis-
15       trator, after notice of and opportunity for hearing to the person subject
16       to the order, shall by written findings of fact and conclusion of law vacate,
17       modify or make permanent the order.
18             (3) If the administrator reasonably believes that a person has violated
19       this act or a rule and regulation, order or administrative interpretation
20       of the administrator under this act, the administrator, in addition to any
21       specific power granted under this act, after notice and hearing in an ad-
22       ministrative proceeding, unless the right to notice and hearing is waived
23       by the person against whom the sanction is imposed, may:
24             (a) Censure the person if the person is licensed under this act;
25             (b) issue an order against an applicant, licensed person or other per-
26       son who knowingly violates this act or a rule and regulation, order or
27       administrative interpretation of the administrator under this act, impos-
28       ing a civil penalty up to a maximum of $5,000 for each violation; or
29             (c) revoke or suspend the person's license or bar the person from
30       subsequently applying for a license under this act.
31             (4) Any person aggrieved by a final order of the administrator may
32       obtain a review of the order in accordance with the provisions of the act
33       for judicial review and civil enforcement of agency actions.
34             Sec.  31 [32]. K.S.A. 16a-6-117 is hereby amended to read as follows:
35       16a-6-117. The administrator shall adopt rules and regulations necessary
36       to carry out the provisions of K.S.A. 16a-3-201, 16a-3-206, 16a-5-203 and
37       16a-5-302, and amendments thereto, which are not less restrictive than
38       title I of the consumer protection act (public law 90-321; 82 stat. 146), as
39       amended, and any regulations issued pursuant to such act and terms of
40       the uniform consumer credit code which are consistent with or no less
41       restrictive than the truth-in-lending act, which is contained in title I of
42       the consumer protection act, 15 U.S.C. 1601 et seq. and regulation Z, 12
43       C.F.R. 226 et seq., as amended.

Sub. SB 301--Am. by SCW

46

  1             Sec.  32 [33]. K.S.A. 16a-6-202 is hereby amended to read as follows:
  2       16a-6-202. (1) Persons subject to this part shall file notification with the
  3       administrator within 30 days after commencing business in this state, and,
  4       thereafter, on or before January 31 of each year. The notification shall
  5       state:
  6             (a) Name of the person;
  7             (b) name in which business is transacted if different from (a);
  8             (c) address of principal office, which may be outside this state;
  9             (d) address of all offices or retail stores, if any, in this state at which
10       consumer credit transactions are entered into, or in the case of a person
11       taking assignments of obligations, the offices or places of business within
12       this state at which business is transacted;
13             (e) if consumer credit transactions are entered into otherwise than at
14       an office or retail store in this state, a brief description of the manner in
15       which they are entered into;
16             (f) address of designated agent upon whom service of process may
17       be made in this state; and
18             (g) whether supervised loans are made in accordance with rules and
19       regulations adopted by the administrator.
20             (2) If information in a notification becomes inaccurate after filing, no
21       further notification is required until the following January 31 the person
22       filing the notification shall file a corrected or amended notification in such
23       form and at such time as prescribed by rules and regulations adopted by
24       the administrator. 
25       Sec.  33 [34]. K.S.A. 16-207, 16a-1-108, 16a-1-201, 16a-2-103, 16a-
26       2-302, 16a-2-303, 16a-2-305, 16a-2-306, 16a-2-307, 16a-2-401, 16a-2-402,
27       16a-2-403, [16a-2-404,] 16a-2-510, 16a-3-301, 16a-3-304, 16a-4-301,
28       16a-4-112, 16a-5-203, 16a-5-301, 16a-5-302, 16a-6-104, 16a-6-105, 16a-
29       6-106, 16a-6-107, 16a-6-108, 16a-6-117, 16a-6-202 and 16a-6-204 and
30       K.S.A. 1998 Supp. 16a-1-301, 16a-2-201, 16a-2-202, 16a-2-401a, 16a-2-
31       501 and 16a-2-502 are hereby repealed.
32        Sec.  34 [35]. This act shall take effect and be in force from and after
33       its publication in the statute book.