CHAPTER 28 HOUSE BILL No. 2675 (Amended by Chapter 159) An Act amending the uniform consumer credit code; relating to the sale of manufactured
homes; amending K.S.A. 1999 Supp. 16a-2-201 and 16a-2-401 and repealing the existing
sections.
Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 1999 Supp. 16a-2-201 is hereby amended to read
as follows: 16a-2-201. (1) This section applies only to a closed end con-
sumer credit sale.

      (2) A seller may charge a finance charge at any rate agreed to by the
parties, subject, however, to the limitations on prepaid finance charges
set forth in subsection (3).

      (3) A seller may charge a prepaid finance charge not to exceed the
lesser of:

      (a) Two percent of the amount financed; or

      (b) one hundred dollars. A prepaid finance charge permitted under
this subsection is fully earned when paid and is nonrefundable, unless the
parties agree otherwise in writing.

      A seller may charge a prepaid finance charge:

      (a) For a consumer credit sale secured by a security interest in a
manufactured home as defined by 42 U.S.C. 5402(6), in an amount not
to exceed 5% of the amount financed for the sole purpose of reducing the
interest rate of the consumer credit sale; or

      (b) for any other consumer credit sale, an amount not to exceed the
lesser of 2% of the amount financed or $100.

      (c) A prepaid finance charge permitted under this subsection is in
addition to finance charges permitted under subsection (2). A prepaid
finance charge permitted under this subsection is fully earned when paid
and is nonrefundable, unless the parties agree otherwise in writing.

      (4) If the sale is precomputed:

      (a) The finance charge may be calculated on the assumption that all
scheduled payments will be made when due, and the fact that payments
are made either before or after the due date does not affect the amount
of finance charge which the creditor may charge or receive; and

      (b) the effect of prepayment is governed by subsection (5).

      (5) Rebate upon prepayment:

      (a) Except as provided for in this section, upon prepayment in full of
a precomputed consumer credit transaction, the creditor shall rebate to
the consumer an amount not less than the amount of rebate provided in
subsection (b), paragraph (1), or redetermine the earned finance charge
as provided in subsection (b), paragraph (2), and rebate any other un-
earned charges including charges for insurance. The rebate for charges
for insurance shall be as prescribed by statute, rules and regulations and
administrative interpretations by the administrator. If the rebate other-
wise required is less than $1, no rebate need be made.

      (b) The amount of rebate and redetermined earned finance charge
shall be as follows:

      (1) The amount of rebate shall be determined by applying, according
to the actuarial method, the rate of finance charge which was required to
be disclosed in the transaction:

      (i) Where no deferral charges have been made in a transaction, to
the unpaid balances for the actual time remaining as originally scheduled
for the period following prepayment; and

      (ii) where deferral charges have been made in a transaction, to the
unpaid balances for the actual time remaining as extended by deferral for
the period following prepayment.

      The time remaining for the period following prepayment shall be either
the full days following prepayment; or both the full days, counting the
date of prepayment, between the prepayment date and the end of the
computational period in which the prepayment occurs, and the full com-
putational periods following the date of prepayment to the scheduled due
date of the final installment of the transaction.

      (2) The redetermined earned finance charge shall be determined by
applying, according to the actuarial method, the rate of finance charge
which was required to be disclosed in the transaction to the actual unpaid
balances of the amount financed for the actual time the unpaid balances
were outstanding as of the date of prepayment. Any delinquency or de-
ferral charges collected before the date of prepayment do not become a
part of the total finance charge for purposes of rebating unearned charges.

      (c) Upon prepayment, but not otherwise, of a consumer credit trans-
action whether or not precomputed, other than a consumer lease, a con-
sumer rental purchase agreement, or a transaction pursuant to open end
credit:

      (1) If the prepayment is in full, the creditor may collect or retain a
minimum charge not exceeding $5 in a transaction which had an amount
financed of $75 or less, or not exceeding $7.50 and in a transaction which
had an amount financed of more than $75, if the finance charge earned
at the time of prepayment is less than the minimum allowed pursuant to
this subsection.

      (2) If the prepayment is in part, the creditor may not collect or retain
a minimum finance charge.

      (d) For the purposes of this section, the following defined terms ap-
ply:

      (1) ``Computational period'' means the interval between scheduled
due dates of installments under the transaction if the intervals are sub-
stantially equal or, if the intervals are not substantially equal, one month
if the smallest interval between the scheduled due dates of installments
under the transaction is one month or more, and otherwise one week.

      (2) The ``interval'' between specified dates means the interval be-
tween them including one or the other but not both of them. If the
interval between the date of the transaction and the due date of the first
scheduled installment does not exceed one month by more than fifteen
days when the computational period is one month, or eleven days when
the computational period is one week, the interval may be considered by
the creditor as one computational period.

      (e) This section does not preclude the collection or retention by the
creditor of delinquency charges.

      (f) If the maturity is accelerated by any reason and judgment is ob-
tained, the consumer is entitled to the same rebate as if payment had
been made on the date maturity is accelerated.

      (g) Upon prepayment in full of a precomputed consumer credit trans-
action by the proceeds of consumer credit insurance, the consumer or
the consumer's estate is entitled to the same rebate as though the con-
sumer had prepaid the agreement on the date the proceeds of the insur-
ance are paid to the creditor, but no later than ten business days after
satisfactory proof of loss is furnished to the creditor.

      (6) This section does not apply to a sale of an interest in land. Sub-
section (11) of K.S.A. 16a-2-401, and amendments thereto, governs the
limitations on finance charges for a contract for deed to real estate where
the parties agree in writing to make the transaction subject to the uniform
consumer credit code.

      Sec.  2. K.S.A. 1999 Supp. 16a-2-401 is hereby amended to read as
follows: 16a-2-401. (1) For any consumer loan incurred pursuant to open
end credit, including, without limitation, a loan pursuant to a lender credit
card, a lender may charge a finance charge at any rate agreed to by the
parties, subject, however, to the limitations on prepaid finance charges
set forth in subsection (6). This subsection does not apply to a consumer
loan secured by a first mortgage or a second mortgage.

      (2) For any consumer loan incurred pursuant to closed end credit, a
lender may charge a periodic finance charge, calculated accordingly to
the actuarial method, not to exceed: (a) 36% per annum on any such loan
in an amount of $860 or less, and (b) 21% per annum on any such loan
in an amount which exceeds $860, subject, however to the limitations on
prepaid finance charges set forth in subsection (6). This subsection does
not apply to a consumer loan secured by a first mortgage or a second
mortgage.

      (3) For any consumer loan secured by a second mortgage or a con-
sumer loan secured by an interest in a manufactured home as defined by
42 U.S.C. 5402(6), a lender may charge a periodic finance charge, cal-
culated according to the actuarial method, not to exceed 18% per annum,
subject, however to the limitations on prepaid finance charges set forth
in subsection (6). This subsection does not apply if the lender and the
consumer agree in writing that the finance charge for the loan is governed
by K.S.A. 16-207(b), and amendments thereto.

      (4) If the parties to a consumer loan secured by a first mortgage or
a consumer loan secured by an interest in a manufactured home as defined
by 42 U.S.C. 5402(6) agree in writing to make the transaction subject to
the uniform consumer credit code, then the periodic finance charge for
the loan, calculated according to the actuarial method, may not exceed
18% per annum, subject, however to the limitations on prepaid finance
charges set forth in subsection (6).

      (5) This section does not limit or restrict the manner of calculating
the finance charge, whether by way of add-on, discount or otherwise, so
long as the rate and the amount of the finance charge does not exceed
that permitted by this section.

      (6) Prepaid finance charges on consumer loans are limited as follows:

      (a) For a consumer loan secured by a first mortgage or a second
mortgage, or a consumer loan secured by an interest in a manufactured
home as defined by 42 U.S.C. 5402(6), prepaid finance charges in an
amount not to exceed 8% of the amount financed may be charged, pro-
vided that the aggregate amount of prepaid finance charges payable to
the lender or any person related to the lender do not exceed 5% of the
amount financed; and

      (b) for any other consumer loan, prepaid finance charges in an
amount not to exceed the lesser of 2% of the amount financed or $100
may be charged.

      Prepaid finance charges permitted under this subsection are in addition
to finance charges permitted under subsection (1), (2), (3) and (4), as
applicable. Prepaid finance charges permitted under this subsection are
fully earned when paid and are non-refundable, unless the parties agree
otherwise in writing.

      (7) The finance charge limitations in subsections (3) and (4) do not
apply to a consumer loan the finance charge for which is governed by
subsection (h) of K.S.A. 16-207, and amendments thereto.

      (8) If a loan secured by a first mortgage constitutes a ``consumer loan''
under subsection (17) of K.S.A. 16a-1-301, and amendments thereto, by
virtue of the loan-to-value ratio exceeding 100% at the time the loan is
made, then the periodic finance charge for the loan shall not exceed that
authorized by subsection (b) of K.S.A. 16-207, and amendments thereto,
but the loan is subject to the limitations on prepaid finance charges set
forth in paragraph (a) of subsection (6), which prepaid finance charges
may be charged in addition to the finance charges permitted under sub-
section (b) of K.S.A. 16-207, and amendments thereto.

      (9) If, within 12 months after the date of the original loan, a lender
or a person related to the lender refinances a loan with respect to which
a prepaid finance charge was payable to the same lender pursuant to
subsection (6), then the following apply:

      (a) If a prepaid finance charge with respect to the original loan was
payable to the lender pursuant to paragraph (a) of subsection (6), then
the aggregate amount of prepaid finance charges payable to the lender
or any person related to the lender with respect to the new loan may not
exceed 5% of the additional amount financed.

      (b) If a prepaid finance charge with respect to the original loan was
payable to the lender pursuant to paragraph (b) of subsection (6), then
the aggregate amount of prepaid finance charges payable to the lender
or any person related to the lender with respect to the new loan may not
exceed the lesser of 2% of the additional amount financed or $100.

      (c) For purposes of this subsection, ``additional amount financed''
means the difference between: (i) The amount financed for the new loan,
less the amount of all closing costs incurred in connection with the new
loan which are not included in the prepaid finance charges for the new
loan; and (ii) the unpaid principal balance of the original loan.

      (10) For any period in which a finance charge is due on a consumer
loan pursuant to open end credit, the parties may agree on a minimum
amount.

      (11) If the parties to a contract for deed to real estate agree in writing
to make the transaction subject to the uniform consumer credit code,
then the transaction is subject to the same limitations as set forth in
subsections (4) and (6) for a consumer loan secured by a first mortgage.

      (12) This section does not apply to a payday loan governed by K.S.A.
16a-2-404, and amendments thereto. 
Sec.  3. K.S.A. 1999 Supp. 16a-2-201 and 16a-2-401 are hereby re-
pealed.
 Sec.  4. This act shall take effect and be in force from and after its
publication in the statute book.

Approved March 22, 2000.
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