Printable Format16a-2-302. (UCCC) License to make supervised loans; registration for residential mortgage loan originator fees. (1) (a) The administrator shall receive and act on all applications for licenses to make supervised loans and all applications for residential mortgage loan originator registrations under this act. Applications shall be filed in the manner prescribed by the administrator and shall contain the information the administrator may require by rule and regulation to make an evaluation of the financial responsibility, character and fitness of the applicant.
(b) Submitted with each application shall be a nonrefundable application fee. Application, license and registration fees shall be in such amounts as are established pursuant to subsection (5) of K.S.A. 16a-6-104, and amendments thereto. The license year shall be the calendar year. Each license shall be nonrefundable and nonassignable, and shall remain in force until surrendered, suspended or revoked.
(c) The administrator shall remit all moneys received under K.S.A. 16a-1-101 to 16a-6-414, inclusive, and amendments thereto, to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury. Of each deposit 10% shall be credited to the state general fund and the balance shall be credited to the bank commissioner fee fund. All expenditures from such fund shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the administrator or by a person or persons designated by the administrator.
(d) Every licensee and registrant shall, on or before the first day of January, pay to the administrator the license or registration fee prescribed under this subsection (1) for each license or registration held for the succeeding license year. Failure to pay the fee within the time prescribed shall automatically revoke the license or registration.
(2) No license or registration shall be issued unless the administrator, upon investigation, finds that the financial responsibility, character and fitness of the applicant, and of the members thereof if the applicant is a copartnership or association and of the officers and directors thereof, if the applicant is a corporation, are such as to warrant belief that the business will be operated honestly and fairly within the purposes of this act. The administrator shall not base a registration denial solely on the applicant's credit score. An applicant meets the minimum standard of financial responsibility for engaging in the business of making supervised loans, under subsection (1) of K.S.A. 16a-2-301, and amendments thereto, only if:
(a) The applicant has filed with the administrator a proper surety bond of at least $100,000 which has been approved by the administrator. The bond must provide within its terms that the bond shall not expire for two years after the date of the surrender, revocation or expiration of the subject license, whichever shall first occur. The required surety bond may not be canceled by the licensee without providing the administrator at least 30 days' prior written notice, provided that such cancellation shall not affect the surety's liability for violations of the uniform consumer credit code occurring prior to the effective date of cancellation and principal and surety shall be and remain liable for a period of two years from the date of any action or inaction of the principal that gives rise to a claim under the bond; and
(b) the applicant provides evidence in a form and manner prescribed by the administrator that establishes the applicant will maintain a satisfactory minimum net worth, as determined by the administrator, to engage in credit transactions of the nature proposed by the applicant. Such net worth requirements shall be established by the administrator pursuant to rule and regulation and shall not exceed $500,000 for each applicant or licensee.
(3) The administrator may deny any application or renewal for a supervised loan license or a residential mortgage loan originator registration, if the administrator finds:
(a) There is a refusal to furnish information required by the administrator within a reasonable time as fixed by the administrator; or
(b) any of the factors stated as grounds for denial, revocation or suspension of a license in K.S.A. 16a-2-303 or K.S.A. 2022 Supp. 16a-2-303a, and amendments thereto.
(4) Upon written request the applicant is entitled to a hearing on the question of license qualifications if: (a) The administrator has notified the applicant in writing that the application has been denied; or (b) the administrator has not issued a license within 60 days after the application for the license was filed. A request for a hearing may not be made more than 15 days after the administrator has mailed a writing to the applicant notifying the applicant that the application has been denied and stating in substance the administrator's findings supporting denial of the application.
(5) The administrator shall adopt rules and regulations regarding whether a licensee shall be required to obtain a single license for each place of business or whether a licensee may obtain a master license for all of its places of business, and in so doing the administrator may differentiate between licensees located in this state and licensees located elsewhere. Each license shall remain in full force and effect until surrendered, suspended or revoked.
(6) No licensee shall change the location of any place of business without giving the administrator at least 15 days prior written notice.
(7) A licensee may conduct the business of making loans for personal, family or household purposes only at or from any place of business for which the licensee holds a license and not under any other name than that in the license. Loans made pursuant to a lender credit card do not violate this subsection.
History: L. 1973, ch. 85, § 19; L. 1976, ch. 98, § 1; L. 1981, ch. 95, § 1; L. 1999, ch. 107, § 12; L. 1999, ch. 166, § 9; L. 2000, ch. 27, § 2; L. 2001, ch. 5, § 57; L. 2005, ch. 144, § 9; L. 2009, ch. 29, § 17; L. 2011, ch. 53, § 5; July 1.
KANSAS COMMENT, 2000
1. This section is related to the provisions on maximum finance charges (parts 2 and 4 of article 2) and disclosure (part 2 of article 3). A major purpose of the U3C is to facilitate entry into the cash loan field so that the resultant rate competition fostered by disclosure will generally reduce rates. A secondary purpose is to reduce the likelihood of establishing localized monopolies in the granting of cash credit. Such monopolies tend to increase rates charged. To these ends, this section adopts a test of “financial responsibility, character and fitness” rather than a test of “convenience and advantage” often used in the small loan laws of other states. The “convenience and advantage” test has been deliberately rejected because such tests have historically tended to restrict competition. Other provisions of the U3C are also designed to promote greater freedom of entry and increased competition. For example, open end credit may be offered in connection with credit sales, consumer loans and supervised loans. In addition, no type of credit grantor is limited by the U3C in the amount of credit that may be extended (although the amount of credit extended may affect the rate of finance charges that may be imposed under K.S.A. 16a-2-401(2) and 16a-2-404(1)(c) and may subject the creditor to restrictions regarding high loan-to-value loans under K.S.A. 16a-3-207 and 16a-3-308a. Competition is also encouraged by the absence of any licensing requirements in consumer credit sales and in consumer loans not made by supervised lenders.
2. Bonding is an important part of “financial responsibility”, and substantial bonding requirements for supervised lenders were added in subsection (2) by legislation adopted in 1999. Additional guidance on these requirements can be found in K.A.R. 75-6-31.
3. If increased competition should cause the development of undesirable credit practices, those practices are subject to controls by the administrator’s powers to revoke or suspend a license (K.S.A. 16a-2-303), and by the other powers of the administrator (article 6) as well as the provisions on remedies and penalties available to aggrieved consumers (article 5).
4. Under subsections (5), (6) and (7), licensees may be required to obtain a license for each place of business and may do business only at licensed locations. See K.A.R. 75-6-30. Under K.A.R. 75-6-30, as amended through July 14, 2000, a licensee must obtain a license for each place of business. A “place of business” is defined as any location where the licensee either (1) regularly makes supervised loans to Kansas consumers, or (2) regularly accepts payments on loans to Kansas consumers that the licensee has taken assignment of for direct collection. A “place of business” also includes any location in Kansas where the licensee places an automated loan machine. K.A.R. 75-6-30(c). A lender credit card issuer does not conduct business within the meaning of this section at the place where a third person honors the card. This rule, however, does not apply to supervised financial organizations. Their authority to open new offices at which they may receive deposits and make loans is found not in the U3C but in the statutes otherwise governing those organizations.
5. Annual fees are required of all licensees and all persons required to file notification under K.S.A. 16a-6-203. This includes all persons making consumer credit sales, consumer leases or consumer loans and certain persons taking assignments of and undertaking direct collection of payments from or enforcement of rights against debtors arising from such sales, leases or loans. Supervised financial organizations are exempt from these requirements. See K.S.A. 16a-6-201.
6. Legislation adopted in 2000 amended subsection (1)(b) to provide that licenses are nonassignable, and that license application fees are nonrefundable.
KANSAS COMMENT, 2010
1. This section adopts a test of “financial responsibility, character and fitness.” Bonding and maintaining a minimum net worth are important parts of “financial responsibility.” Additional guidance on these requirements can be found in K.A.R. 75-6-31.
2. If increased competition should cause the development of undesirable credit practices, those practices are subject to controls by the administrator’s powers to revoke or suspend a license (K.S.A. 16a-2-303), and by the other powers of the administrator (article 6) as well as the provisions on remedies and penalties available to aggrieved consumers (article 5).
3. Under subsections (5), (6) and (7), licensees may be required to obtain a license for each place of business and may do business only at licensed locations. See K.A.R. 75-6-30. A “place of business” includes any location in Kansas where the licensee places an automated loan machine. K.A.R. 75-6-30(c). A lender credit card issuer does not conduct business within the meaning of this section at the place where a third person honors the card. This rule, however, does not apply to supervised financial organizations. Their authority to open new offices at which they may receive deposits and make loans is found not in the U3C but in the statutes otherwise governing those organizations.
4. Annual fees are required of all licensees and all persons required to file notification. See K.S.A. 16a-6-201 through 16a-6-203. This includes all persons making consumer credit sales, consumer leases or consumer loans and persons taking assignments of and undertaking collection of payments from or enforcement of rights against debtors arising from such sales, leases or loans. Supervised financial organizations are exempt from these requirements.
Law Review and Bar Journal References:
“Interest Rates in Kansas: The Decline and Fall of Ezekiel,” Barkley Clark, 49 J.B.A.K. 81, 86 (1980).
Attorney General’s Opinions:
Supervised financial organization. 80-80.
Supervised lender fees. 80-236.
Investment certificates of investment companies; standards of operation; permissible loans. 81-239.
Authority of legislature to transfer money from special revenue funds into state general fund. 2002-45.
CASE ANNOTATIONS
1. Unlicensed assignee of a supervised loan has no authority to collect loan or enforce its terms. Independent Financial, Inc. v. Wanna, 39 K.A.2d 733, 739, 186 P.3d 196 (2008).
2. Cited; Kansas regulation of payday loans over internet held not to violate dormant commerce clause. Quik Payday, Inc. v. Stork, 549 F.3d 1302, 1304 (2008).