In addition to being a regulatory agency, the OSBC is also an advocate for Kansas state-chartered banks. So, I’m pleased to announce a permanent regulation amendment to K.A.R. 17-11-18 that was published May 12, 2022, in Issue 19 of the 2022 Kansas Register. This amendment is effective May 27, 2022, and makes the following changes:
- The threshold amount requiring banks to maintain complete and current credit information on each borrower for non-adequately secured loans is raised to $250,000, from the current $100,000.
- Real estate mortgage loans where repayment is not supported by a government guarantee or insured through a private insurance company have several changes:
- The threshold for a written verification of a lien search of the records of the county Register of Deed’s office for purchase-money real estate mortgage loans now applies to all loans less than $250,000.
- The threshold for purchase-money real estate loans requiring a title insurance policy is also raised to $250,000;
- The threshold is increased from $50,000 to $250,000 for all real estate mortgage loans that require an attorney’s written opinion or title insurance.
- Banks now have three options regarding lien filing and/or protection for non-purchase money real estate loans less than $250,000. Those options are:
- An attorney’s written title opinion establishing lien priority
- A title insurance policy insuring the bank’s lien, and
- An insurance policy fully insuring the bank against loss of mortgage priority.
We believe that this regulatory change increasing the thresholds to higher amounts will benefit Kansans as a whole. While still ensuring state-chartered banks are not subject to a significant safety and soundness risk, we are allowing more options to state-chartered banks and Kansas citizens to protect the bank’s interest in the property subject to a real-estate mortgage loan. Our agency recognizes that a state-chartered bank or a debtor may want to acquire an attorney’s written title opinion or a title insurance policy for loans less than $250,000 when it is not required by this regulation.