16-207.   Contract rate; penaltiesfor prepayment of certain loans, recording fees; contracting for interestin excess of limitation, penalties, attorney fees; loans excluded.(a) Subject to the following provision, the parties to any bond, bill,promissory note or other instrument of writing for the payment orforbearance of money may stipulate therein for interest receivable uponthe amount of such bond, bill, note or other instrument of writing, at arate not to exceed 15% per annum unless otherwisespecifically authorized by law.

      (b)   The interest ratelimitation set forth in this subsection applies to all first mortgage loansand contracts for deed to real estate, unless the parties agree in writing tomake the transaction subject to the uniform consumer credit code, K.S.A.16a-1-101 to 16a-9-102, and amendments thereto. The interest rate limitationset forth in this subsection does not apply to a second mortgage loan governedby the uniform consumer credit code, K.S.A. 16a-1-101 to 16a-9-102, andamendments thereto, unless the lender and the borrower agree in writing thatthe interest rate for the loan is to be governed by this subsection. Themaximum rate of interest per annum for notes secured by real estate mortgagesand contracts for deed to real estate governed by this subsection shall be atan amount equal to 1 1/2 percentage points above the yield of thirty-yearfixed rate conventional home mortgages committed for delivery within 61 to 90days accepted under the federal home loan mortgage corporation's dailyofferings for sale on the last day on which commitments for such mortgages werereceived in the preceding month unless otherwise specifically authorized bylaw. Such interest rate shall be computed for each calendar month and beeffective on the first day thereof. The secretary of state shall publish noticeof such maximum interest rate not later than the second issue of the Kansasregister published each month.

      (c)   No penalty shall be assessed against any party for prepayment of anyhome loan evidenced by a note secured by a real estate mortgage where suchprepayment is made more than six months after execution of such note.

      (d)   The lender may collect from the borrower: (1) The actual fees paida public official or agency of the state, or federal government, for filing,recording or releasing any instrument relating to a loan subject to theprovisions of this section; and

      (2)   reasonable expenses incurred by the lender in connection with themaking, closing, disbursing, extending, readjusting or renewing of loanssubject to the provisions of this section.

      (e)   Any person so contracting for a greater rate of interest thanthat authorized by this section shall forfeit all interest so contractedfor in excess of the amount authorized under this section; and inaddition thereto shall forfeit a sum of money, to be deducted from theamount due for principal and lawful interest, equal to the amount ofinterest contracted for in excess of the amount authorized by thissection and such amounts may be set up as a defense or counterclaim inany action to enforce the collection of such obligation and the borrowershall also recover a reasonable attorney fee.

      (f)   The interest rates prescribed in subsections (a)and (b) of this sectionshall not apply to a business or agricultural loan. For the purpose ofthis section unless a loan is made primarily for personal, family or householdpurposes, the loan shall be considered a business or agricultural loan.For the purpose of this subsection, a business or agricultural loan shallinclude credit sales and notes secured by contracts for deed to realestate.

      (g)   Loans made by a qualified plan, as defined in section401 of the internal revenue code, to an individual participant in such planor to a member of the family of such individual participant, are not subjectto the interestrates prescribed in subsections (a) and (b) of this section.

      (h)   The interest rates prescribed in subsections (a) and (b) of thissectionshall not apply to a note secured by a realestate mortgage or a contractfor deed to real estate where the note or contract for deed permits adjustmentof the interest rate, the term of the loan or the amortization schedule.

      (i)   A first mortgage loan incurred for personal, family or householdpurposes may be subject to certain provisions of the uniform consumer creditcode, K.S.A. 16a-1-101 to 16a-9-102, and amendments thereto, as follows:

      (1)   Certain high loan-to-value first mortgage loans are subject to theprovisions of the uniform consumer credit code, other than its usuryprovisions.Examples of provisions of the uniform consumer credit code applicable to highloan-to-value first mortgage loans include, but are not limited to: Limitationson prepaid finance charges; mandatory appraisals; required disclosures;restrictions on balloon payments and negative amortization; limitations on latefees and collection costs; and mandatory default notices and cure rights.

      (2)   Certain high interest rate first mortgage loans are subject to certainprovisions of the uniform consumer credit code, including, without limitation,provisions which impose restrictions on balloon payments and negativeamortization.

      (3)   If the parties to a first mortgage loan agree in writing to make thetransaction subject to the uniform consumer credit code, than all applicableprovisions of the uniform consumer credit code, including its usury provisions,apply to the loan.

      This subsection is for informational purposes only and does not limit or expandthe scope of the uniform consumer credit code.

      (j)   Subsections (c), (d) and (e) of this section do not apply to a firstmortgage loan if (1) the parties agree in writing to make the transactionsubject to the uniform consumer credit code, K.S.A. 16a-1-101 to 16a-9-102, andamendments thereto, or (2) the loan is a high loan-to-value first mortgage loansubject to any provision of the uniform consumer credit code. In the case of aloan described in subparts (1) or (2) of the preceding sentence, the applicableprovisions of the uniform consumer credit code shall govern the loan in lieu ofsubsections (c), (d) and (e) of this section.

      History:   L. 1969, ch. 112, § 36; L. 1973, ch. 85, § 132; L.1975, ch. 125, § 1; L. 1978, ch. 72, § 1; L. 1980, ch. 75, § 1; L.1980, ch. 76, § 2; L. 1981, ch. 88, § 1; L. 1982, ch. 89, § 1;L. 1983, ch. 74, § 1;L. 1999, ch. 107, § 5; July 1.