Kansas Statutes § 9-2226 Effect of violations on rights of parties; cause of action by consumer; correction of error by mortgage company; reimbursement of fees and costs.

9-2226. Effect of violations on rights of parties; cause of action by consumer; correction of error by mortgage company; reimbursement of fees and costs. (a) Except as otherwise provided in K.S.A. 2025 Supp. 9-2223 through 9-2234, and amendments thereto, if a mortgage company has violated any provision of K.S.A. 2025 Supp. 9-2223 through 9-2234, and amendments thereto, relating to covered transactions, the consumer shall have a cause of action to recover from the mortgage company or person liable to the consumer actual damages and except for a class action, a penalty in an amount determined by the court not less than $750 but not more than $7,500. (b) An action under this section based on closed-end covered transaction violations shall be brought within one year of the last scheduled payment due date stated in the agreement. An action under this section based on open-end covered transaction violations shall be brought within two years from the date of occurrence. (c) If a person has violated K.S.A. 9-2203(a), and amendments thereto, in originating a covered transaction, such covered transaction shall be void. The consumer shall not be obligated to pay the amount financed or the finance charge and such consumer shall have a right to recover any finance charge paid from either the person violating this act or from the consumer's mortgage servicer. (d) A consumer shall not be obligated to pay a charge on a covered transaction in excess of that allowed by K.S.A. 2025 Supp. 9-2223 through 9-2234, and amendments thereto. A consumer shall have a right of refund for twice the excess charges from the person who made the excess charge or from the consumer's mortgage servicer. A consumer may request a refund payment check or application to the outstanding obligation. Following a reasonable time after demand, if the request is refused, the consumer may recover twice the excess charge from the person liable or the mortgage company and, except for a class action, an amount determined by the court not less than $750 but not more than $7,500. (e) A mortgage company shall have no penalty liability as discussed in this section if within 60 days after discovering the error the mortgage company corrects the error through refund or adjustment and notifies the consumer of the error. This waiver shall not apply if an action has already been instituted or the consumer has provided written notice of the violation. If the violation is a prohibited agreement, providing a corrected copy of the writing containing the error shall be sufficient notification and correction. (f) If the mortgage company establishes, by a preponderance of evidence, that a violation is unintentional or the result of a bona fide error of law or fact notwithstanding the maintenance of procedures reasonably adopted to avoid any such violation or error, no liability is imposed under this section. (g) A mortgage company who in good faith complies with a written administrative guidance document shall not be subject to any penalties under this section for any act done or omitted in conformity with such written administrative guidance document. (h) Except as otherwise provided, no violation of the provisions of K.S.A. 2025 Supp. 9-2223 through 9-2234, and amendments thereto, shall impair rights on a debt. (i) The mortgage company shall reimburse the consumer's reasonable attorney fees and cost of the action if the proceeding finds that the mortgage company has violated any provision of K.S.A. 2025 Supp. 9-2223 through 9-2234, and amendments thereto. Reasonable attorney fees shall be determined by the value of the time expended by the attorney and not by the amount of the recovery on behalf of the consumer. (j) This section shall not apply to attorneys or collection agencies that did not purchase the mortgage loan. (k) This section shall be a part of and supplemental to the Kansas mortgage business act. History: L. 2024, ch. 6, § 6; January 1, 2025.