16a-3-207.   Consumer loans secured by certain realestate mortgages; appraisals and notice.(1) The provisions of this section apply only to aconsumer loan which is secured by a first mortgage or a second mortgage on theconsumer's principal residence. The provisions of this section do not applyto a lender who is a supervised financial organization.

      (2)     Before making a loan subject to this section, a lender shallobtain theappraised value of the real estate to be encumbered. The appraisal evidencingthe appraised value shall be retained by the lender and preserved in accordancewith the recordkeeping requirements set forth in K.S.A. 16a-2-304, andamendments thereto.

      (3)   If, based upon the appraisal, the loan to value ratio of the loan exceeds100%, then the lender shall deliver to the consumer:

      (a)   A free copy of the appraisal; and

      (b)   a written notice regarding high loan-to-value mortgages andtheavailability of consumer credit counseling. The administrator may adopt rulesand regulations regarding the form of the notice to be delivered to theconsumer and the names, addresses and telephone numbers of selected consumercreditcounseling providers.

      (4)   The notice referred to in subsection (3)shall be given to the consumernot less than three days before the loan is made. The noticemust be retained bythe lender and preserved in accordance with the record-keeping requirements setforth in K.S.A. 16a-2-304, and amendments thereto.

      (5)   If, within three days afterreceiving the notice, the consumer elects notto enter into the loan transaction, then the lender must promptly refund to theconsumer any application fees or other amounts paid by the consumer to thelender. However, the lender is not required to refund any bona fideout-of-pocket costs incurred by the lender before the consumer elected not toenter into the loan transaction, provided that such costs were paid or arepayable to a person or persons not related to the lender. Notwithstanding theprovisions of this subsection, a bona fide appraisal fee paid or payable to apersonrelated to the lender need not be refunded to the consumer.

      (6)   This section shall be supplemental to and a part of theuniform consumercredit code.

      History:   L. 1999, ch. 107, § 1;L. 2000, ch. 64, § 2; July 1.