Kansas Revises Provisions Regarding Mortgage Interest Rates
by Zachary Pearlstein, Esq.
Kansas has recently made several revisions that relate to mortgage interest rates, effective July 1, 2013.
The revised bill includes the following provisions:
• The parties to any promissory note or similar instrument (i.e. bill or bond) may stipulate the amount of interest at a rate not to exceed 15% annually (unless otherwise authorized by law).
• This interest rate restriction applies primarily loans made for personal, family, or household purposes.
o These loans may also be subject to certain provisions of the Uniform Consumer Credit Code, if they are, for example, high LTV first mortgage loans. Such loans may have additional restrictions, such as limitations on prepaid finance charges, mandatory appraisals, certain required disclosures, restrictions on balloon payments and negative amortization, limitations on late fees, mandatory default notices, and cure rights.
• This interest rate restriction does not apply to:
o A business or agricultural loan (any loan that is not made primarily for personal, family or household purposes).
o Loans made pursuant to a qualified plan under section 401 of the internal revenue code.
o A note secured by a real estate mortgage where the note permits adjustment of the rate, terms, or amortization schedule.
• Any person that contracts for a greater than authorized interest rate shall forfeit all interest in excess of the authorized amount. They shall also forfeit a sum of money to be deducted from the amount of principle and lawful interest, equal to the amount of interest contracted for in excess of the authorized amount.
• In the case of a home loan mortgage, prepayment penalties are prohibited where prepayment is made more than 6 months after the note date.
• The fees that a lender may collect from the borrower include fees for filing, recording, or releasing any instrument, as well as any reasonable expenses paid by the lender relating to the making, closing, disbursing, extending, readjusting, or renewing of the loan.
About the Author:
Zachary is Associate Counsel and Regulatory Compliance Specialist at Bankers Advisory, Inc. He is a graduate of Brandeis University and earned his Juris Doctor at Suffolk University Law School. He is admitted to the Massachusetts Bar Association.
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
Comments are closed.