Brief⁽¹⁾

S.B. 462, as amended, concerns permissible fees and charges that can be charged and collected under the Uniform Consumer Credit Code. The bill would define the term "loan origination fee" to specifically include in the fee costs incurred by the lender in making, closing, or disbursing a consumer credit transaction. Further, the definition would specifically exempt from inclusion in a loan origination fee, closing costs, interest rate reduction charges paid by the consumer, and broker fees paid to third parties not related to the lender or assignee of the lender.

The bill also would strike from the Code the provision prohibiting licensees authorized to make supervised loans from selling or leasing goods in the same location from which loans are made.

Senate Committee amendments were technical.

The House Committee amendment modifies a recordkeeping and reporting section of the Code. The amendment requires an assignee or servicer of a consumer credit transaction, as well as the licensee, to keep records, make reports, and provide information to the administrator--the Consumer Credit Commissioner.

Background

S.B. 462 was recommended by the Consumer Credit Commissioner who explained that some out-of-state mortgage companies have been including in a loan origination fee charges not anticipated by the Commissioner or the Legislature at the time the Code was amended to permit such a fee. Upon the advice of the Attorney General, the bill was requested to clarify what charges may be assessed and collected, as well as those that would be prohibited. Additionally, the conferee supported striking the prohibition against making sales from locations licensed to make loans. He noted that, with the repeal of interest rates on consumer credit sales in 1997, the prohibition was no longer necessary.

The House Committee amendment was proposed by the Commissioner, who said his office has difficulty obtaining needed information as loans are assigned or given over to services.

The bill was supported by the Kansas Association of Financial Services whose representative suggested the technical amendment to the bill.

According to the fiscal note prepared on S.B. 462, the bill will have no fiscal effect.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext-bill.html.