SESSION OF 2022
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2268
As Amended by House Committee on Financial
Institutions and Rural Development

Brief*
HB 2268, as amended, would enact the Kansas Rural
Home Loan Guarantee Act (Act). The provisions of the Act
would be administered by the Kansas Housing Resources
Corporation (KHRC), and loan transactions eligible for a
guarantee would include the construction or renovation of a
single-family home in a rural county. The total amount of
loans guaranteed under the Act would be limited to $2.0
million. Further details of this loan guarantee program follow.

Definitions
The bill would establish definitions for these terms under
the Act:
● “Financial institution” would mean any bank, trust
company, savings bank, credit union, savings and
loan association, or any other lending institution
that is approved by the KHRC;
● “Loan” would mean a transaction with a financial
institution to provide financing for the construction
or renovation of a single-family home in a rural
county;
● “Rural county” would mean any county in Kansas
with a population of less than 10,000, as certified to
____________________
*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.kslegislature.org
 the Secretary of State on July 1 of the preceding
year.
Loan Guarantees Against Risk of Default for Rural
Housing Loans; State Housing Trust Fund;
Administration of the Act
The bill would authorize the KHRC to enter into
agreements with financial institutions to provide loan
guarantees against risk of default for rural housing loans, as
provided in this act. The bill would include a provision specific
to the filing of a claim related to a payment for loan guarantee
under the State Housing Trust Fund (Fund).
In addition, the bill would require eligible financial
institutions to apply all usual lending standards to determine
the creditworthiness of eligible borrowers. The financial
institution originating the loan would be responsible for
monitoring the loan, and in the case of default, working with
the borrower to obtain collateral. The bill would specify the
financial institution would be in the first position, and the State
in the second position, to recover on the loan.
The KHRC would be required to administer provisions
and the Act and to adopt rules and regulations for the Act’s
implementation, including the development of an application
process. The loan guarantee agreement for this program
would be required to include reporting requirements and
financial standards that are appropriate for the type of loan for
the borrower. The KHRC would be permitted to impose fees
and charges, as necessary, to recover administrative costs.

Loan Agreements, Backing by the Fund; Appraised Value
The bill would provide that each agreement entered into
by the KHRC to guarantee against default on a loan
transaction must be backed by the Fund and must receive
prior approval by the KHRC or its designee.

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 The bill would specify eligible costs for the loan
transactions subject to the Act, including:
● Land and building purchases;
● Renovation and new construction costs;
● Equipment and installation costs;
● Predevelopment costs that may be capitalized;
● Financing;
● Capitalized interest during construction; and
● Consultant fees that do not include staff costs.
The bill would provide that the portion of the loan
guaranteed by the KHRC must be for the amount of the loan
that exceeds 80 percent of the appraised value of the home.
The bill would further provide that no loan amount above 125
percent of the appraised value of the home could be
guaranteed by the KHRC.
The bill would specify that the total amount of loans
guaranteed by the KHRC could not exceed $2.0 million. The
bill would include provisions relating to the fees and charges
received by the KHRC under the Act. Each receipt would be
deposited to the credit of the Fund.

Reporting to the Legislature
The bill would also require the KHRC, beginning with the
2023 Legislative Session, to annually prepare a report of
activity related to the Act that will include new loans, loan
repayment status, and other relevant information regarding
these activities. The report would be required to be submitted
at the beginning of each regular session to the House
Committee on Appropriations or the appropriate budget
committee and the Senate Committee on Ways and Means or
the appropriate subcommittee.


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Background
The bill was introduced by the House Committee on
Financial Institutions and Rural Development at the request of
Representative Kelly, who stated this request was being
made on behalf of Representative Waymaster.

House Committee on Financial Institutions and Rural
Development
In the House Committee hearing on February 17, 2021,
representatives of the Heartland Credit Union Association
(HCUA) and the Kansas Bankers Association (KBA) provided
proponent testimony. Written-only proponent testimony was
submitted by Representative Waymaster and a
representative of the Kansas Association of Realtors.
Proponents generally stated the bill would address one of the
rural housing challenges. An example of this challenge was
provided, noting for individuals either building or extensively
renovating an existing single-family home, the costs far
exceed the final appraisal, making it nearly impossible to
obtain a residential mortgage. The HCUA and KBA
representatives indicated the loan guarantee program would
provide a helpful tool and resource for some borrowers.
No other testimony was provided.
On February 7, 2022, the House Committee received an
update on the bill and presentations were provided on rural
housing topics. Presenters included representatives from the
KBA, Kansas Corn Growers Association and Kansas Farm
Bureau, KHRC, the Kansas State Treasurer, Northwest
Kansas Economic Innovation Center (EICI), and Sunflower
Electric Power Corporation.
The representative from the Kansas Corn Growers
Association and Kansas Farm Bureau presented an
amendment to the bill during the presentation. The
amendment would:
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 ● Replace the State Treasurer with the KHRC as the
administrator of the Act;
● Modify the guarantee amount specified for a
certain portion of loans with moneys from the State
Housing Trust Fund;
● Establish a limit on the total amount of such loan
guarantees at $2.0 million (the bill, as introduced,
would have required the guarantees and Act
administration to be funded subject to
Appropriations and moneys receipted to a new
fund); and
● Require fees and charges imposed by KHRC and
other moneys received by KHRC to be remitted
and credited to the Fund.
On February 16, 2022, the House Committee amended
the bill to incorporate the above-described changes proposed
by the representative from the Kansas Corn Growers
Association and Kansas Farm Bureau.

Fiscal Information
The fiscal note prepared by the Division of the Budget
on the bill, as introduced, detailed administrative expenses for
the Office of the State Treasurer and the costs to the State of
Kansas if insufficient funds were available to pay for a loan
guarantee (the bill, as introduced, would have limited the
Act’s financing to available appropriations). A fiscal note was
not available on the bill as amended by the House
Committee.
Financial institutions; Kansas Rural Home Loan Guarantee Act; Kansas Housing
Resource Corporation; State Housing Trust Fund; rural housing


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