[As Amended by Senate Committee of the Whole]
         

         
As Amended by Senate Committee
         

          Session of 1998
                   
SENATE BILL No. 490
         
By Committee on Financial Institutions and Insurance
         
1-22
          12             AN ACT concerning finance charges on consumer credit sales; amending
13             K.S.A. 16a-2-401 and K.S.A. 1997 Supp. 16a-1-301, 16a-2-201 and
14             16a-2-202 and repealing the existing sections.
15            
16       Be it enacted by the Legislature of the State of Kansas:
17           Section 1. K.S.A. 1997 Supp. 16a-1-301 is hereby amended to read
18       as follows: 16a-1-301. In addition to definitions appearing in subsequent
19       articles, in K.S.A. 16a-1-101 through 16a-9-102, and amendments thereto:
20           (1) ``Actuarial method'' means the method, defined by rules and reg-
21       ulations adopted by the administrator, of allocating payments made on a
22       debt between the amount financed and the finance charge pursuant to
23       which a payment is applied first to the accumulated finance charge and
24       the balance is applied to the unpaid amount financed.
25           (2) ``Administrator'' means the consumer credit commissioner ap-
26       pointed pursuant to K.S.A. 16-403, and amendments thereto.
27           (3) ``Agreement'' means the bargain of the parties in fact as found in
28       their language or by implication from other circumstances including
29       course of dealing or usage of trade or course of performance.
30           (4) ``Amount financed'' means the total of the following items:
31           (a) In the case of a sale, the cash price of the goods, services, or
32       interest in land, less the amount of any down payment whether made in
33       cash or in property traded in, and the amount actually paid or to be paid
34       by the seller pursuant to an agreement with the buyer to discharge a
35       security interest in, a lien on, or a debt with respect to property traded
36       in;
37           (b) in the case of a loan, the net amount paid to, receivable by, or
38       paid or payable for the account of the debtor, plus the amount of any
39       discount excluded from the finance charge (paragraph (b) of subsection
40       (18) of K.S.A. 16a-1-301); and
41           (c) in the case of a sale or loan, to the extent that payment is deferred
42       and the amount is not otherwise included and is authorized and disclosed
43       to the customer:

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  1           (i) Amounts actually paid or to be paid by the creditor for registration,
  2       certificate of title, or license fees, and
  3           (ii) permitted additional charges (K.S.A. 16a-2-501).
  4           (5) ``Billing cycle'' means the time interval between periodic billing
  5       statement dates.
  6           (6) ``Cash price'' of goods, services, or an interest in land means the
  7       price at which they are offered for sale by the seller to cash buyers in the
  8       ordinary course of business and may include (a) the cash price of acces-
  9       sories or services related to the sale, such as delivery, installation, alter-
10       ations, modifications, and improvements, and (b) taxes to the extent im-
11       posed on a cash sale of the goods, services, or interest in land. The cash
12       price stated by the seller to the buyer in a disclosure statement is pre-
13       sumed to be the cash price.
14           (7) ``Closing costs'' with respect to a debt secured by an interest in
15       land includes:
16           (a) The actual fees paid a public official or agency of the state or
17       federal government, for filing, recording or releasing any instrument re-
18       lating to the debt; and
19           (b) reasonable expenses incurred by the lender in connection with
20       the making, closing, disbursing, extending, readjusting or renewing the
21       debt which are payable to third parties not related to the lender, except
22       that reasonable fees for an appraisal made by the lender or related party
23       are permissible.
24           (8) ``Conspicuous'': A term or clause is conspicuous when it is so
25       written that a reasonable person against whom it is to operate ought to
26       have noticed it. Whether a term or clause is conspicuous or not is for
27       decision by the trier of fact.
28           (9) ``Consumer'' means the buyer, lessee, or debtor to whom credit
29       is granted in a consumer credit transaction.
30           (10) ``Consumer credit sale'':
31           (a) Except as provided in paragraph (b), a ``consumer credit sale'' is
32       a sale of goods, services, or an interest in land in which:
33           (i) Credit is granted either by a seller who regularly engages as a seller
34       in credit transactions of the same kind or pursuant to a credit card other
35       than a lender credit card,
36           (ii) the buyer is a person other than an organization,
37           (iii) the goods, services, or interest in land are purchased primarily
38       for a personal, family or household purpose,
39           (iv) either the debt is by written agreement payable in installments
40       or a finance charge is made, and
41           (v) with respect to a sale of goods or services, the amount financed
42       does not exceed $25,000.
43           (b) A ``consumer credit sale'' does not include:

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  1           (i) A sale in which the seller allows the buyer to purchase goods or
  2       services pursuant to a lender credit card; or
  3           (ii) unless the sale is made subject to K.S.A. 16a-1-101 through 16a-9-
  4       102, and amendments thereto, by agreement (K.S.A. 16a-1-109), a sale
  5       of an interest in land, other than sales governed by subsection (10)(b)(iii)
  6       of this section, if the finance charge does not exceed 12% per year cal-
  7       culated according to the actuarial method on the unpaid balances of the
  8       amount financed on the assumption that the debt will be paid according
  9       to the agreed terms and will not be paid before the end of the agreed
10       term; or
11           (iii) a sale by contract for deed of real estate the interest rate of which
12       is governed by subsection (b) or (h) of K.S.A. 16-207, and amendments
13       thereto.
14           (11) ``Consumer credit transaction'' means a consumer credit sale,
15       consumer lease, or consumer loan or a modification thereof including a
16       refinancing, consolidation, or deferral.
17           (12) ``Consumer lease'' means a lease of goods:
18           (a) Which a lessor regularly engaged in the business of leasing makes
19       to a person, other than an organization, who takes under the lease pri-
20       marily for a personal, family or household purpose;
21           (b) in which the amount payable under the lease does not exceed
22       $25,000;
23           (c) which is for a term exceeding four months; and
24           (d) which is not made pursuant to a lender credit card.
25           (13) ``Consumer loan'':
26           (a) Except as provided in paragraph (b), a ``consumer loan'' is a loan
27       made by a person regularly engaged in the business of making loans in
28       which:
29           (i) The debtor is a person other than an organization;
30           (ii) the debt is incurred primarily for a personal, family or household
31       purpose;
32           (iii) either the debt is payable in installments or a finance charge is
33       made; and
34           (iv) either the amount financed does not exceed $25,000 or the debt
35       is secured by an interest in land.
36           (b) Unless the loan is made subject to K.S.A. 16a-1-101 through 16a-
37       9-102, and amendments thereto, by agreement (K.S.A. 16a-1-109), a
38       ``consumer loan'' does not include:
39           (i) A loan secured by a first real estate mortgage; or
40           (ii) a loan secured by a second or other subordinate mortgage if the
41       second or other subordinate mortgage is granted to the same lender as
42       the first mortgage; or
43           (iii) a loan made by a qualified plan, as defined in section 401 of the

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  1       internal revenue code, to an individual participant in such plan or to a
  2       member of the family of such individual participant.
  3           (14) ``Credit'' means the right granted by a creditor to a debtor to
  4       defer payment of debt or to incur debt and defer its payment.
  5           (15) ``Credit card'' means any card, plate or other single credit device
  6       that may be used from time to time to obtain credit. Since this involves
  7       the possibility of repeated use of a single device, checks and similar in-
  8       struments that can be used only once to obtain a single credit extension
  9       are not credit cards.
10           (16) ``Creditor'' means a person who regularly extends credit in a
11       consumer credit transaction which is payable by a written agreement in
12       more than four installments or for which the payment of a finance charge
13       is or may be required and is the person to whom the debt arising from
14       the consumer credit transaction is initially payable on the face of the
15       evidence of indebtedness or, if there is no such evidence of indebtedness,
16       by written agreement. In the case of credit extended pursuant to a credit
17       card, the creditor is the card issuer and not another person honoring the
18       credit card.
19           (17) ``Earnings'' means compensation paid or payable to an individual
20       or for such individual's account for personal services rendered or to be
21       rendered by such individual, whether denominated as wages, salary, com-
22       mission, bonus, or otherwise, and includes periodic payments pursuant
23       to a pension, retirement, or disability program.
24           (18) ``Finance charge'':
25           (a) ``Finance charge'' means the sum of:
26           (i) All charges payable directly or indirectly by the consumer and
27       imposed directly or indirectly by the creditor as an incident to or as a
28       condition of the extension of credit, including any of the following types
29       of charges which are applicable; interest or any amount payable under a
30       point, discount or other system of charges, however denominated; time
31       price differential, service, carrying or other charge, however denomi-
32       nated; premium or other charge for any guarantee or insurance protecting
33       the creditor against the consumer's default or other credit loss; and
34           (ii) charges incurred for investigating the collateral or credit-worthi-
35       ness of the consumer.
36           (b) The term does not include:
37           (i) Charges as a result of default, additional charges (K.S.A. 16a-2-
38       501) or delinquency charges (K.S.A. 16a-2-502), or
39           (ii) if a lender makes a loan to a debtor by purchasing or satisfying
40       obligations of the debtor pursuant to a lender credit card and the purchase
41       or satisfaction is made at less than the face amount of the obligation, the
42       discount, or
43           (iii) closing costs as defined in K.S.A. 16a-1-301(7), and amendments

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  1       thereto.
  2           (19) ``Goods'' includes goods not in existence at the time the trans-
  3       action is entered into and merchandise certificates, but excludes money,
  4       chattel paper, documents of title, and instruments.
  5           (20) Except as otherwise provided, ``lender'' includes an assignee of
  6       the lender's right to payment but use of the term does not in itself impose
  7       on an assignee any obligation of the lender with respect to events occur-
  8       ring before the assignment.
  9           (21) ``Interest bearing'' means the finance charge on a consumer
10       credit transaction is computed on the unpaid principal balances by the
11       actuarial method.
12           (22) ``Lender credit card'' means a credit card issued by a supervised
13       lender.
14           (23) ``Loan'':
15           (a) Except as provided in paragraph (b), a ``loan'' includes:
16           (i) The creation of debt by the lender's payment of or agreement to
17       pay money to the debtor or to a third party for the account of the debtor;
18           (ii) the creation of debt either pursuant to a lender credit card or by
19       a cash advance to a debtor pursuant to a credit card other than a lender
20       credit card;
21           (iii) the creation of debt by a credit to an account with the lender
22       upon which the debtor is entitled to draw immediately; and
23           (iv) the forbearance of debt arising from a loan.
24           (b) A ``loan'' does not include the payment or agreement to pay
25       money to a third party for the account of a debtor if the debt of the
26       debtor arises from a sale or lease and results from use of either a credit
27       card issued by a person primarily in the business of selling or leasing
28       goods or services or any other credit card which may be used for the
29       purchase of goods or services and which is not a lender credit card.
30           (24) ``Merchandise certificate'' means a writing issued by a seller not
31       redeemable in cash and usable in its face amount in lieu of cash in
32       exchange for goods or services.
33           (25) ``Official fees'' means:
34           (a) Fees and charges prescribed by law which actually are or will be
35       paid to public officials for determining the existence of or for perfecting,
36       releasing, or satisfying a security interest related to a consumer credit
37       sale, consumer lease, or consumer loan; or
38           (b) premiums payable for insurance in lieu of perfecting a security
39       interest otherwise required by the creditor in connection with the sale,
40       lease, or loan, if the premium does not exceed the fees and charges de-
41       scribed in paragraph (a) which would otherwise be payable.
42           (26) ``Open end credit'' means an arrangement pursuant to which:
43           (a) A creditor may permit a consumer, from time to time, to purchase

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  1       goods or services on credit from the creditor or pursuant to a credit card,
  2       or to obtain loans from the creditor or pursuant to a credit card;
  3           (b) the unpaid balance of amounts financed and the finance and other
  4       appropriate charges are debited to an account;
  5           (c) the finance charge, if made, is computed on the outstanding un-
  6       paid balances of the consumer's account from time to time; and
  7           (d) the consumer has the privilege of paying the balances in install-
  8       ments.
  9           (27) ``Organization'' means a corporation, government or govern-
10       mental subdivision or agency, trust, estate, partnership, cooperative, or
11       association.
12           (28) ``Payable in installments'' means that payment is required or per-
13       mitted by agreement to be made in (a) two or more periodic payments,
14       excluding a down payment, with respect to a debt arising from a consumer
15       credit sale pursuant to which a finance charge is made, (b) four or more
16       periodic payments, excluding a down payment, with respect to a debt
17       arising from a consumer credit sale pursuant to which no finance charge
18       is made, or (c) two or more periodic payments with respect to a debt
19       arising from a consumer loan. If any periodic payment other than the
20       down payment under an agreement requiring or permitting two or more
21       periodic payments is more than twice the amount of any other periodic
22       payment, excluding the down payment, the consumer credit transaction
23       is ``payable in installments.''
24           (29) ``Person'' includes a natural person or an individual, and an or-
25       ganization.
26           (30) ``Person related to'' with respect to an individual means (a) the
27       spouse of the individual, (b) a brother, brother-in-law, sister, sister-in-law
28       of the individual, (c) an ancestor or lineal descendant of the individual or
29       the individual's spouse, and (d) any other relative, by blood, adoption or
30       marriage, of the individual or such individual's spouse who shares the
31       same home with the individual. ``Person related to'' with respect to an
32       organization means (a) a person directly or indirectly controlling, con-
33       trolled by or under common control with the organization, (b) an officer
34       or director of the organization or a person performing similar functions
35       with respect to the organization or to a person related to the organization,
36       (c) the spouse of a person related to the organization, and (d) a relative
37       by blood, adoption or marriage of a person related to the organization
38       who shares the same home with such person.
39           (31) ``Presumed'' or ``presumption'' means that the trier of fact must
40       find the existence of the fact presumed unless and until evidence is in-
41       troduced which would support a finding of its nonexistence.
42           (32) ``Principal'' means the total of the amount financed and the pre-
43       paid finance charges as authorized by subsection (9) of K.S.A. 16a-2-401,

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  1       and amendments thereto.
  2           (33) ``Sale of goods'' includes any agreement in the form of a bailment
  3       or lease of goods if the bailee or lessee agrees to pay as compensation for
  4       use a sum substantially equivalent to or in excess of the aggregate value
  5       of the goods involved and it is agreed that the bailee or lessee will become,
  6       or for no other or a nominal consideration has the option to become, the
  7       owner of the goods upon full compliance with such bailee's or lessee's
  8       obligations under the agreements.
  9           (34) ``Sale of an interest in land'' includes a lease in which the lessee
10       has an option to purchase the interest and all or a substantial part of the
11       rental or other payments previously made by the lessee are applied to the
12       purchase price.
13           (35) ``Sale of services'' means furnishing or agreeing to furnish serv-
14       ices and includes making arrangements to have services furnished by an-
15       other.
16           (36) ``Seller'': Except as otherwise provided, ``seller'' includes an as-
17       signee of the seller's right to payment but use of the term does not in
18       itself impose on an assignee any obligation of the seller with respect to
19       events occurring before the assignment.
20           (37) ``Services'' includes (a) work, labor, and other personal services,
21       (b) privileges with respect to transportation, hotel and restaurant accom-
22       modations, education, entertainment, recreation, physical culture, hos-
23       pital accommodations, funerals, cemetery accommodations, and the like,
24       and (c) insurance.
25           (38) ``Supervised financial organization'' means a person, other than
26       an insurance company or other organization primarily engaged in an in-
27       surance business:
28           (a) Organized, chartered, or holding an authorization certificate un-
29       der the laws of this state or of the United States which authorize the
30       person to make loans and to receive deposits, including a savings, share,
31       certificate or deposit account; and
32           (b) subject to supervision by an official or agency of this state or of
33       the United States.
34           (39) ``Supervised lender'' means a person authorized to make or take
35       assignments of supervised loans, either under a license issued by the ad-
36       ministrator (K.S.A. 16a-2-301) or as a supervised financial organization
37       (K.S.A. 16a-1-301 (38)).
38           (40) ``Supervised loan'' means a consumer loan, including a loan made
39       pursuant to open end credit, in which the rate of the finance charge,
40       calculated according to the actuarial method, exceeds 12% per year.
41           (41) ``Written agreement'' means an agreement such as a promissory
42       note, contract or lease that is evidence of the indebtedness. A letter that
43       merely confirms an oral agreement does not constitute a written agree-

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  1       ment for purposes of this subsection.
  2           (42) ``Written administrative interpretation'' means any written com-
  3       munication from the consumer credit commissioner which is the official
  4       interpretation as so stated in said written communication by the consumer
  5       credit commissioner of the Kansas uniform consumer credit code and
  6       rules and regulations pertaining thereto.
  7           (43) ``Vehicle'' means every device in, upon or by which any person
  8       or property is or may be transported or drawn upon a public highway,
  9       except devices moved by human power, used exclusively upon stationary
10       rails or tracks or is intended solely for lawn care or snow removal.
11           (44) ``Motor vehicle'' means every vehicle, other than a motorized
12       bicycle or a motorized wheelchair, which is self-propelled.
13           Sec. 2. K.S.A. 1997 Supp. 16a-2-201 is hereby amended to read as
14       follows: 16a-2-201. (1) With respect to a consumer credit sale, other than
15       a sale pursuant to open end credit, a seller may contract for and receive
16       a finance charge not exceeding that permitted by this section.
17           (2) The finance charge, calculated according to the actuarial method,
18       may not exceed the equivalent of the following:
19           The total of:
20           (a) Twenty-one percent per year on that part of the unpaid balance
21       of the amount financed which is $1,000 or less;
22           (b) fourteen and forty-five hundredths percent per year on that part
23       of the unpaid balance of the amount financed which is more than $1,000.
24           (2) With respect to a consumer credit sale other than open end
25       credit not involving the sale of a motor vehicle, the seller may con-
26       tract for and receive a finance charge not exceeding that agreed to
27       by the consumer.
28           (3) This section does not limit or restrict the manner of calculating
29       the finance charge whether by way of add-on, discount, or otherwise, so
30       long as the rate of the finance charge does not exceed that permitted by
31       this section.
32           (4) For the purposes of this section, the term of a sale agreement
33       commences with the date the credit is granted or, if goods are delivered
34       or services performed 10 days or more after that date, with the date of
35       commencement of delivery or performance.
36           (5) Subject to classifications and differentiations the seller may rea-
37       sonably establish, the seller may make the same finance charge on all
38       amounts financed within a specified range. A finance charge so made
39       does not violate subsection (2) if:
40           (a) When applied to the median amount within each range, it does
41       not exceed the maximum permitted by subsection (2); and
42           (b) when applied to the lowest amount within each range, it does not
43       produce a rate of finance charge exceeding the rate calculated according

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  1       to paragraph (a) by more than 8% of the rate calculated according to
  2       paragraph (a).
  3           (6) Notwithstanding subsection (2), the seller may contract for and
  4       receive a minimum finance charge of not more than $5 when the amount
  5       financed does not exceed $75, or not more than $7.50 when the amount
  6       financed exceeds $75.
  7           (7) Notwithstanding any other provision of this section, with respect
  8       to a consumer credit sale other than open end credit not involving the
  9       sale of a motor vehicle, the seller may contract for and receive a finance
10       charge not exceeding that agreed to by the consumer.
11           (8) As an alternative to the rates set forth in subsection (2), the seller
12       may contract for and receive a finance charge not exceeding 18% per year
13       on the unpaid balances of the amount financed.
14           Sec. 3. K.S.A. 1997 Supp. 16a-2-202 is hereby amended to read as
15       follows: 16a-2-202. (1) With respect to a consumer credit sale made pur-
16       suant to open end credit, the parties to the sale may contract for the
17       payment by the buyer of a finance charge not exceeding that permitted
18       in this section.
19           (2) A charge may be made in each billing cycle which is a percentage
20       of an amount no greater than:
21           (a) The average daily balance of the account, which is the sum of the
22       actual amounts outstanding each day during the billing cycle divided by
23       the number of days in the cycle;
24           (b) the unpaid balance of the account on the last day of the billing
25       cycle; or
26           (c) the median amount within a specified range within which the
27       average daily balance of the account or the unpaid balance of the account
28       on the last day of the billing cycle is included. A charge may be made
29       pursuant to this paragraph only if the seller, subject to classifications and
30       differentiations the seller may reasonably establish, makes the same
31       charge on all balances within the specified range and if the percentage
32       when applied to the median amount within the range does not produce
33       a charge exceeding the charge resulting from applying that percentage to
34       the lowest amount within the range by more than 8% of the charge on
35       the median amount.
36           (3) With respect to a consumer credit sale made pursuant to
37       open end credit, not involving the sale of a motor vehicle, which is
38       governed under K.S.A. 16a-2-401 and amendments thereto, the par-
39       ties may contract for and the seller or holder may receive a finance
40       charge in an amount not exceeding the rate or rates specified in the
41       agreement governing the account.
42           (3) With respect to a consumer credit sale made pursuant to open
43       end credit, the parties may contract for and the seller or holder may

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  1       receive a finance charge in an amount not exceeding the rate or rates
  2       specified in the agreement governing the account. If the billing cycle is
  3       monthly, the charge may not exceed 1.75% of that part of the amount
  4       pursuant to subsection (2) which is $1,000 or less and 1.2% on that part
  5       of this amount which is more than $1,000. If the billing cycle is not
  6       monthly, the maximum charge is that percentage which bears the same
  7       relation to the applicable monthly percentage as the number of days in
  8       the billing cycle bears to 30. For the purposes of this section, a variation
  9       of not more than four days from month to month is ``the last day of the
10       billing cycle.''
11           (4) Notwithstanding subsection (3) subsections (3) or (5), if there is
12       an unpaid balance on the date as of which the credit service charge is
13       applied, the seller may contract for and receive a charge not exceeding
14       $.50 if the billing cycle is monthly or longer, or the pro rata part of $.50
15       which bears the same relation to $.50 as the number of days in the billing
16       cycle bears to 30 if the billing cycle is shorter than monthly.
17           (5) Notwithstanding any other provision of this section, with respect
18       to a consumer credit sale pursuant to open end credit not involving the
19       sale of a motor vehicle, the parties may contract for and the seller or
20       holder may receive a finance charge in an amount not exceeding the rate
21       or rates specified in the agreement governing the account.
22           (6) As an alternative to the rates set forth in subsection (3), the parties
23       to the sale may contract for and the seller may receive a finance charge
24       not exceeding 18% per year on the amount determined pursuant to sub-
25       section (2).
26        Sec. 4. K.S.A. 16a-2-401 is hereby amended to read as follows:
27       16a-2-401. (1) With respect to a consumer loan and a consumer credit
28       sale involving a motor vehicle, including a loan pursuant to open end
29       credit, a lender may contract for and receive a finance charge, cal-
30       culated according to the actuarial method, not exceeding 18% per
31       year on the unpaid balance of the amount financed not exceeding $1,000
32       and 14.45% per year on that portion of the unpaid balance in excess of
33       $1,000 t exceeding 18% per year on the unpaid balance of the
34       amount financed].
35           (2) As an alternative to the rates set forth in subsection (1), with
36       respect to a supervised loan and consumer credit sale involving a motor
37       vehicle made under a license issued by the administrator, including
38       a loan pursuant to open end credit, a supervised lender may con-
39       tract for and receive a finance charge, calculated according to the
40       actuarial method, not exceeding the equivalent of the greater of
41       either of the following:
42           The total of: (a) Thirty-six percent per year on that part of the
43       unpaid balance of the amount financed which is $300 or less; and

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  1           (b) twenty-one percent per year on that part of the unpaid bal-
  2       ance of the amount financed which is more than $300, but does not
  3       exceed $1,000; and
  4           (c) fourteen and forty-five hundredths percent per year on that
  5       portion of the unpaid balance of the amount financed which is more
  6       than $1,000; or
  7           (d) eighteen percent per year on the unpaid balance of the
  8       amount financed.
  9           (3) This section does not limit or restrict the manner of calcu-
10       lating the finance charge, whether by way of add-on, discount, or
11       otherwise, so long as the rate of the finance charge does not exceed
12       that permitted by this section. The finance charge may be con-
13       tracted for and earned at the single annual percentage rate that
14       would earn the same finance charge as the graduated rates when
15       the debt is paid according to the agreed terms and the calculations
16       are made according to the actuarial method.
17           (4) The term of a loan or consumer credit sale involving a motor
18       vehicle for the purposes of this section commences on the date the
19       loan or consumer credit sale is made.
20           (5) Subject to classifications and differentiations the lender may
21       reasonably establish, the lender may make the same finance charge
22       on all amounts financed within a specified range. A finance charge
23       so made does not violate subsections (1) and (2) if:
24           (a) When applied to the median amount within each range, it
25       does not exceed the maximum amount permitted in subsections (1)
26       and (2); and
27           (b) when applied to the lowest amount within each range, it does
28       not produce a rate of finance charge exceeding the rate calculated
29       according to paragraph (a) by more than 8% of the rate calculated
30       according to paragraph (a).
31           (6) Notwithstanding subsections (1) and (2), a lender may con-
32       tract for and receive a minimum finance charge of not more than
33       $5 when the amount financed does not exceed $75, or not more than
34       $7.50 when the amount financed exceeds $75.
35           (7) This section shall not apply to a loan secured by an interest
36       in land the interest rate of which is governed by subsection (b) of
37       K.S.A. 16-207, and amendments thereto, unless made subject hereto
38       by agreement.
39           (8) Except for paragraph (a) of subsection 9, this section shall
40       not apply to a loan secured by an interest in land subordinate to a
41       prior mortgage and held by a lender other than the lender of the
42       first mortgage, the interest rate of which is governed by subsection
43       (b) or (h) of K.S.A. 16-207, and amendments thereto, unless made

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  1       subject hereto by agreement.
  2           (9) (a) In addition to the applicable finance charge or rate of
  3       interest prescribed by law, a supervised lender may contract for
  4       and receive a nonrefundable origination fee not to exceed 3% of the
  5       amount financed on any consumer loan secured by an interest in
  6       land, which fee shall be a nonrefundable, prepaid finance charge.
  7           (b) In addition to the applicable finance charge permitted for
  8       consumer credit sales other than sales by way of open end credit or
  9       for consumer loans not secured by an interest in land, a creditor
10       may contract for and receive, in connection with any such sale or
11       loan, a nonrefundable origination fee in an amount not to exceed
12       the lesser of 2% of the amount financed or $100, which fee shall be
13       a nonrefundable, prepaid finance charge.
14           Sec. 4 5. K.S.A. 16a-2-401 and K.S.A. 1997 Supp. 16a-1-301, 16a-
15       2-201 and 16a-2-202 are hereby repealed.
16           Sec. 5 6. This act shall take effect and be in force from and after its
17       publication in the statute book.
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