As Recommended by Senate Committee on
Financial Institutions and Insurance

Senate Sub. for HB 2247 would remove and relocate
mortgage-related provisions from the Kansas Uniform
Consumer Credit Code (UCCC or Code) to the Kansas
Mortgage Business Act (KMBA), add law supplemental to the
KMBA and to the UCCC, amend contract rate law, and make
several amendments to the UCCC.
The bill would take effect and be in force from and after
January 1, 2025, and its publication in the statute book.

Kansas Mortgage Business Act (Chapter 9, Article 22)

Kansas Mortgage Business Act—Mortgage Provisions
from the Uniform Consumer Credit Code (New
Sections 1-14)
The bill would incorporate mortgage business provisions
from the UCCC, which would apply only to covered
transactions as defined in the KMBA (KSA 9-2201) and
further specify continuing provisions of the KMBA (e.g.,
mortgage business licensure and compliance, authority of the
State Bank Commissioner [Commissioner]) would apply to
licensed mortgage companies.

*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
Provisions Applicable to Covered Transactions under the
KMBA (New Sections 3-14)
Under the bill (as referenced in new sections 3-14 and
amendment to KSA 9-2201, section 17), a “covered
transaction” would mean a mortgage loan that:
● Is a subordinate mortgage;
● Has a loan-to-value ratio at the time when made
that exceeds 100 percent, except for any loan
guaranteed by a federal government agency of the
United States; or
● In the case of certain covered transactions
(outlined in section 11), when the annual
percentage rate (APR) of the loan exceeds the
Code mortgage rate.
Among the provisions transferred from the UCCC, the
bill would provide that:
● A mortgage company could not make a covered
transaction with an interest in land as security with
an amount financed of $5,000 or less in which the
APR exceeds the mortgage rate; any security
interest taken in violation of this section shall be
void (New Section 4).
● A consumer could not waive or agree to forego
rights or benefits relating to covered transactions
(as specified in sections 3-14) except for the
following claims, which could be settled by
agreement if disputed in good faith:
○ By a consumer against a mortgage company
for any violation of the bill’s covered
transactions provisions (sections 3-14); or

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○ Against a consumer for default or for breach
of a duty imposed by the covered transactions
provisions (sections 3-14) [New Section 5].
● If a mortgage company, except as otherwise
provided in the new provisions (sections 3-14), has
violated any provisions pertaining to covered
transactions, the consumer shall have a cause of
action to recover from the mortgage company or
person liable to the consumer actual damages and,
except for a class action, a penalty in an amount
determined by the court of between $750 and
$7,500. The bill would provide further criteria
regarding consideration of actions, including the
timing to bring an action, a consumer’s obligation
to pay the amount financed or a charge, penalty
liability when a mortgage company corrects an
error, and a mortgage company’s compliance with
a written administrative document (New Section 6).
● The consumer could prepay in full the unpaid
balance of a covered transaction at any time
without penalty (New Section 7).
● The periodic finance charge for a covered
transaction would not exceed 18 percent per
annum, subject to the limitations provided. The
periodic finance charge provisions would not apply
○ Loans secured by a first mortgage that
constitute a covered transaction by virtue of
the loan-to-value ratio that exceeds 100
percent at the time the loan is made; or
○ Covered transactions where the finance
charge is governed by a contract rate
provision added to KSA 16-207 by this bill,
pertaining to a note secured by a real estate
mortgage or a contract for deed.

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- The bill would also specify that prepaid
finance charges on covered transactions
shall be limited to an amount not to
exceed 8 percent of the amount
financed, provided that the aggregate
amount of prepaid finance charges
payable to the mortgage company does
not exceed 5 percent.
- The bill would further specify when the
finance charge limitations would not
apply to a covered transaction for which
the finance charge is governed under
KSA 16-207 (New Section 8).
● In addition to the finance charge permitted in
provisions pertaining to covered transactions
(sections 3-14), a mortgage company would be
permitted to contract for and receive additional
charges (e.g., closing costs that are not included in
the prepaid finance charge; permitted late fees;
and charges for other benefits, including insurance)
(New Section 9).
● The parties to a covered transaction would be
permitted to contract for a late fee on any
installment not paid in full within 10 calendar days
after its scheduled or deferred due date in an
amount not to exceed 5 percent of the unpaid
amount of the installment or $25, whichever is less.
The bill would permit an alternative to this late fee,
by allowing the parties to contract for a late fee not
to exceed $10 on any unpaid installment after its
scheduled or deferred due date, except that if the
scheduled payment is $25 or less, the maximum
late fee would be $5 (New Section 10).
● A covered transaction could not provide for the
negative amortization of principal or a balloon
payment when the loan-to-value ratio at the time
such covered transaction was made exceeds 100
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percent or when the loan’s APR exceeds the Code
mortgage rate unless this covered transaction is
open-end, incurred to acquire or construct the
consumer’s principal residence, or a reverse
mortgage (New Section 11).
● A mortgage company, before making a covered
transaction, would be required to obtain the
appraised value of the real estate to be
encumbered; the bill would provide notice
requirements for mortgage companies when the
loan-to-value ratio exceeds 100 percent (New
Section 12).
● An agreement of the parties to a covered
transaction with respect to default on the part of the
consumer would be enforceable only under certain
circumstances, including when the consumer fails
to make a payment as required by the agreement
(New Section 13).
● After a consumer has been in default for 10 days
for failure to make a required payment in a covered
transaction (payable in installments), a mortgage
company could give the consumer written notice.
Such notice would include a brief description of the
covered transaction, the consumer’s right to cure
the default, and the consumer’s possible liability for
the reasonable costs of collection (New Section
Computation of Time; Submission of Writing or Signature in
Electronic Format (New Sections 1-2)
The bill would provide that calendar days must be used
in computing any period of time and include Saturdays,
Sundays, and legal holidays in that computation. The bill
would specify that any writing or signature required by this act
may be provided or executed in an electronic form. The bill
would provide that if the consumer agrees to use of electronic
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methods instead of U.S. mail, any requirement to mail a
document may be satisfied by sending the document by
electronic methods.

Kansas Mortgage Business Act—Amendments (Sections
The bill would amend nine statutes within the KMBA as
● Mortgage business; definitions. Add definitions
relating to mortgage business from the UCCC
(Section 17).
● Exempt from licensure. Add a licensure
exemption for business entities with no employees
when a related, licensed mortgage company acts
as a proxy for the entity and includes such
mortgage business in the proxy’s report to the
Commissioner (Section 18).
● License required to conduct mortgage
business; registration for a loan originator. Add
“entities that are exempt from licensure” to those
parties authorized to conduct mortgage business in
Kansas (Section 19).
● License; display; signed acknowledgment;
advertising or solicitation disclosure. Remove
language pertaining to signed acknowledgments
and require a licensee to provide each consumer a
notice, containing information the Commissioner
may prescribe by rules and regulations, by the time
the earliest of three events occurs: entering a
contract, receiving compensation from a consumer,
or accepting a transfer of mortgage servicing
(Section 20).

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● State Bank Commissioner; powers and duties.
Update provisions regarding administrative
guidance documents to reference the Rules and
Regulations Filing Act and state that the grant of
powers to the Commissioner in this article does not
affect remedies available to consumers under the
KMBA or under other principles of law or equity
(Section 21).
● Prohibited acts for persons licensed or
registered under Act. Add a prohibition on
persons required to be licensed or registered
stating that no such person should fail to disburse
the proceeds of a mortgage loan upon the
satisfaction of all conditions to the disbursement
and the expiration of all applicable rescission,
cooling-off, or other waiting period required by law,
unless the parties otherwise agree in writing
(Section 22).
● Retention of records; time period; inspection,
security, preservation of records. Make only
technical changes (Section 23).
● Annual written report; penalty; information
confidential. Add a provision to allow the
Commissioner to apply any funds received from
late penalties to a consumer education fund, to be
expended as directed by the Commissioner. The
bill would also add a provision regarding expiration
of public records confidentiality that would expire
on July 1, 2030, unless the Legislature reviews and
reenacts these provisions (Section 24).
● Citation of act; severability. Amend the citation of
the KMBA to include sections 1-14 of this bill
(Section 25).

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Contracts and Promises; Interest and Charges
(Chapter 16, Article 2)

Applicability to KMBA and UCCC (Sections 26 and 27)
The bill would also update language in statutes
pertaining to contracts and promises, and not in the KMBA or
UCCC, to clarify and incorporate provisions pertaining to
mortgage business (KMBA) and consumer credit (UCCC).
Contract Rate; Interest (Section 26)
The bill would add these loans and transactions to
current provisions in which the prescribed interest receivable
limitation of 15 percent does not apply (KSA 16-207):
● A covered transaction subject to usury provisions
of the KMBA;
● A consumer credit transaction subject to usury
provisions of the UCCC;
● Loans made by a qualified plan to an individual
participant in such plan or to a member of the
family of such individual participant;
● A note secured by a real estate mortgage or a
contract for deed for real estate when the note or
contract for deed permits adjustment of the interest
rate, the term of the loan, or the amortization
schedule; or
● A business or agricultural transaction.
Rules and Regulations; Loans Secured by Real Estate
(Section 27)
The bill would remove the rulemaking authority assigned
to the Consumer Credit Commissioner and the Savings and
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Loan Commissioner (the State Bank Commissioner and
Credit Union Administrator would retain authorization to jointly
adopt rules and regulations governing certain loans) [KSA 16-
Uniform Consumer Credit Code
(Chapter 16a, Articles 1-9)
Uniform Consumer Credit Code—Supervised Loan
Licensing Exemption; Submission of Writing or
Signature in Electronic Format (New Sections 15-16)
The bill would exempt the following from the supervised
loan licensing requirements of the UCCC:
● A supervised financial organization;
● The Federal Deposit Insurance Corporation acting
in its corporate capacity or as receiver; or
● An attorney who is forwarded contracts for
The bill would also specify that any writing or signature
required by this act may be provided or executed in an
electronic form. The bill would provide that if the consumer
agrees to use of electronic methods instead of U.S. mail, any
requirement to mail a document may be satisfied by sending
the document by electronic methods.

Uniform Consumer Credit Code—Amendments (Sections
The UCCC comprises the following articles (articles 7-8
are reserved):
● Article 1: General Provisions and Definitions;
● Article 2: Finance Charges and Related Provisions;
● Article 3: Regulation of Agreements and Practices;

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● Article 4: Insurance;
● Article 5: Remedies and Penalties;
● Article 6: Administration; and
● Article 9: Effective Date and Repealer.
[Note: Several amendments to the UCCC are technical
in nature. This supplemental note will review only substantive
changes to the UCCC.]
Article 1: General Provisions and Definitions (Sections 28-37)
The bill would amend Article 1 provisions as follows.
Short title, construction, general provisions (Part 1).
The bill would update the UCCC citation and state the UCCC
takes precedence in consumer credit transactions, the
Uniform Commercial Code, and other specified principles of
law and equity.
Scope and jurisdiction (Part 2). The bill would update
language pertaining to a written agreement to include
electronic or physical signature. The bill would also add a
condition to the list of activities constituting a consumer credit
transaction made in Kansas to include:
● Excepting certain limitations for creditors’
remedies, a consumer credit transaction made in a
state outside of Kansas to a person who was not a
resident of Kansas when the sale, lease, loan, or
modification was made is valid and enforceable in
Kansas according to its terms to the extent that it is
valid and enforceable under the laws of the state
applicable to the transaction.
○ The bill would further state that the UCCC’s
oversight of the consumer credit transaction
would not apply if the consumer is not a
resident of Kansas at the time of the

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transaction and the parties have agreed that
the law of the consumer’s residence applies.
Definitions (Part 3). The bill would add or modify
several definitions. In addition, definitions relating to
mortgage business would be removed from this section. The
new definition of “threshold amount” would mean:
● An amount equal to at least $69,500 as of July 1,
2024, and adjusted effective January 1 of each
subsequent year by an annual percentage increase
in the Consumer Price Index for Urban Wage
Earners and Clerical Workers [CPI-W] that was
effective on June 1 of the preceding year. [Note:
This threshold amount mirrors the current dollar
threshold and annual percentage increase using
the CPI-W provided for in the Truth in Lending Act
(Regulation Z).]
Article 2: Finance Charges and Related Provisions (Sections
The bill would amend Article 2 provisions as follows:
General provisions. The bill would remove the
prescribed finance charge computation for consumer loans
secured by a first or second lien real estate mortgage, which
may be computed using a specified amortization method (the
contract rate is divided by 360 and the resulting rate is then
multiplied by the outstanding principal amount and 30
assumed days between scheduled due dates).
Consumer credi