KRS 360.150: Manufactured home financing.

(1) As used in this section, unless the context otherwise requires:

(a) "Lender" means a person regularly engaged in the business of selling or

financing manufactured homes:

1. Who is an arranger of credit; or

2. Who regularly extends consumer credit that is s ubject to a finance

charge or is payable by written agreement in more than four (4)

installments (not including a down payment) and to whom the obligation

is initially payable, either on the face of the note or contract, or by

agreement when there is no note or contract;

(b) "Interest" means finance charge expressed as an annual percentage rate. The

finance charge is the cost of consumer credit as a dollar amount. It includes

any charge payable directly or indirectly by the lender as an incident to or a

condition of the extension of credit;

(c) "Manufactured home" means a moveable dwelling unit, designed and

constructed for permanent occupancy by a single family, which dwelling

contains permanent eating, cooking, sleeping, and sanitary facilities; or a

prefabricated dwelling that is manufactured in two (2) or more modules at a

location other than a homesite and which is designed to be used as a residence

when the modules are transported to the homesite, and the modules are joined

together and installed on a p ermanent foundation system. The term includes

the plumbing, heating, air conditioning, and electrical systems contained in the

structure; and

(d) "Manufactured home financing transaction" shall include both the credit sale

of a manufactured home and a dire ct loan used to finance the purchase of a

manufactured home.

(2) A manufactured home financing transaction may provide for a fixed rate of interest

payable in substantially equal successive installments over a fixed term, or may

provide that the rate of in terest may be adjusted at certain regular intervals. In this

latter event, the manufactured home financing transaction shall be subject to the

provisions in this section.

(3) Adjustments in the interest rate charged must be based on changes in a specific

index, as set forth in the financing agreement. The index may be only:

(a) The monthly average yield on United States Treasury securities adjusted to a

constant maturity of five (5) years; or

(b) An index approved by the Federal Home Loan Bank Board or by the Office of

the Comptroller of the Currency, Department of the Treasury, for adjustable or

variable interest rates on residential mortgage loans.

(4) The rate of interest shall not increase or decrease during the six (6) month period

beginning with the date of execution of the financing agreement, and at least six (6)

months shall elapse between changes.

(5) Adjustments, either up or down, to the rate of interest on each adjustment date shall,

for the initial adjustment, be equal to the difference between the index value in

effect on the first day of the second calendar month preceding the adjustment date

and the value in effect on the first day of the month in which the financing

agreement is executed. For adjustments aft er the initial adjustment, adjustments

shall be equal to the difference between the index value in effect on the first day of

the second month preceding the adjustment date and the index value in effect on the

first day of the second month preceding the da te of the immediately preceding rate

adjustment.

(6) Where the stated regular interval between rate adjustments is six (6) months, an

adjustment to the interest rate may not result in a rate of interest which is more than

one (1) percentage point greater o r less than the interest rate in effect prior to such

adjustment. If the stated regular interval between rate adjustments exceeds six (6)

months, then the maximum adjustment either up or down shall be one (1)

percentage point multiplied by the number of wh ole consecutive six (6) month

periods in the interval between rate adjustments.

(7) Any increase in the rate of interest permitted by this section shall be optional with

the creditor. Decreases in the rate of interest shall be mandatory whenever the total

decrease in the index value equals or exceeds one -quarter (1/4) of one (1)

percentage point.

(8) If the creditor agrees to impose limitations on interest rate changes that are more

restrictive than the limitations specified in this section, then such limit ations shall

apply to both increases and decreases.

(9) Any changes in the index which are not reflected in a rate adjustment may, by

agreement of the parties, be carried over to subsequent rate adjustment periods, and

be implemented to the extent not offset by opposite movement in the index.

(10) By agreement of the parties, adjustments to the rate of interest may result in changes

in the amount of regular installment payments due under the financing agreement,

or in changes in the term of the financing ag reement, or in a combination of such

changes in amount and term. Adjustments to the amount of installment payments

may be made less frequently than adjustments to the interest rate.

(11) For all manufactured home financing transactions under this section, the creditor

shall comply with all applicable requirements and disclosures pursuant to Part I of

the Consumer Protection Act (Truth -In-Lending Act), 15 U.S.C. secs. 1601 et seq.,

as amended, and as implemented by Regulation Z promulgated by the Board of

Governors of the Federal Reserve System.

(12) The creditor shall send written notification of any rate adjustment, by first class

mail, postage prepaid, at least one (1) month before the date that the new rate of

interest shall take effect.

(13) Notwithstanding any of the requirements and limitations set forth by subsections (3)

through (12) of this section, the parties may agree on any terms or provisions in the

manufactured housing financing agreement as may be authorized or permitted in

any program for residential mortgage loans by the Federal Home Loan Bank Board

or by the Office of the Comptroller of the Currency, Department of the Treasury, or

any other federal department, agency or board. In such event, the creditor shall

comply with all applicable limi tations, requirements and disclosures of the agency

that relate thereto.