Printable Format16a-2-301. (UCCC) Authority to make or service supervised loans. (1) Unless a person is exempt from licensing pursuant to K.S.A. 2024 Supp. 16a-2-311, and amendments thereto, such person shall not engage in the business of:
(a) Making supervised loans; or
(b) taking assignments of and directly or indirectly, including through the use of supervised loans servicing contracts or otherwise, and either:
(i) Undertaking collection of payments from debtors arising from supervised loans; or
(ii) enforcing rights against debtors arising from supervised loans.
(2) If any person is engaged in the business of subsection (1)(b), such person shall promptly apply for a license and may for three months collect and enforce without such license, provided such person's application has not been denied.
History: L. 1973, ch. 85, § 18; L. 1980, ch. 76, § 6; L. 1985, ch. 83, § 1; L. 1988, ch. 85, § 5; L. 2009, ch. 29, § 16; L. 2024, ch. 6, § 42; January 1, 2025.
KANSAS COMMENT, 2010
1. Supervised lenders include supervised financial organizations (see K.S.A. 16a-1-301(44)). Because supervised financial organizations are already subject to supervision by other agencies, the U3C does not require them to obtain a license in order to make supervised loans. Moreover, under the doctrine of federal preemption, federally-chartered supervised financial organizations cannot be required to obtain a license from the administrator for any purpose. For a general discussion of the preemption doctrine, see Fidelity Federal Savings & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982). In Tokarz v. Frontier Federal Savings & Loan Ass'n, 656 P.2d 1089 (Wash. App. 1983), the court held that federal savings and loan associations were exempt from state consumer protection laws. The same rule has been applied to federal credit unions. See Brown v. Austin Area Teachers Federal Credit Union, 588 S.W.2d 629 (Tex. Civ. App. 1979).
In an effort to keep a level playing field for state-chartered financial institutions, Congress extended "most favored lender" protection to all federally-insured, state-chartered financial institutions as a part of the interest rate deregulation legislation it adopted in the early 1980s. See 12 U.S.C. § 1785(g) (for federally-insured credit unions) and 12 U.S.C. § 1831d (for other federally-insured depository institutions). Thus, state-chartered supervised financial organizations that are federally-insured may make supervised loans in Kansas without first obtaining a supervised lender's license. See May 4, 1987 letter from Rita M. D'Agostino to Jim Maag, distributed by the Kansas Banker's Association as Legislative Bulletin 14-87. See also Kan. A.G. Op. 81-158 and Kan. A.G. Op. 81-210.
2. Supervised financial organizations may generally "export" to Kansas the interest rates and related charges permitted by their home states as a matter of federal law and they do not need to obtain a supervised lender's license to make supervised loans in Kansas.
3. Legislation adopted in 2009 clarifies that a person taking assignment of supervised loans but using independent contractors to either collect on such loans or to enforce the assignees' rights arising from such loans is required to have a supervised lender license. See also Independent Financial, Inc. v. Wanna, 39 Kan.App.2d 733, 186 P.3d 196 (2008). If an unlicensed assignee not previously engaged in Kansas is in the business of making collections or enforcing rights under the paper as assigned undertakes collection or enforcement of rights, subsections (1)(b) and (c) give the assignee a three-month grace period in which to operate before obtaining a license.
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, 87 (1980).
"New Kansas Usury Laws and Interest Rate Regulation," Robert G. Martin, 20 W.L.J. 572 (1981).
"History & Overview of the Uniform Consumer Credit Code," Ryan E. Hodge, J.K.T.L.A. Vol. XXVI, No. 3, 8 (2003).
Attorney General's Opinions:
Finance charge for consumer loans; supervised lenders. 79-286.
Supervised financial organization. 80-80.
Supervised lenders; examination of national banks. 80-94.
Supervised lender fees. 80-236.
Definitions; supervised lender; supervised financial organization. 84-11.
Real party in interest when creditor sells or assigns a debt to a collection agency versus when creditor places a debt with a collection agency. 2012-11.
CASE ANNOTATIONS
1. Unless creditor meets requirements hereunder, there is no authority to make supervised loans. United Kansas Bank & Trust Co. v. Rixner, 4 Kan. App. 2d 662, 666, 667, 610 P.2d 116 (1980).
2. Federal constitution's supremacy clause prohibits requiring licensure of FDIC under UCCC; legislature's 1985 amendment mere recognition thereof. Thompson v. Federal Deposit Ins. Corp., 241 Kan. 328, 736 P.2d 914 (1987).
3. Assignee of second mortgages could enforce challenged note allegedly in violation of KUCCC (K.S.A. 16a-5-101 et seq.). Pilcher v. Direct Equity Lending, 189 F. Supp. 2d 1198, 1206 (2002).
4. Unlicensed assignee of a supervised loan has no authority to collect loan or enforce its terms. Independent Financial, Inc. v. Wanna, 39 Kan. App. 2d 733, 734-740, 186 P.3d 196 (2008).