House File 2324 - Reprinted HOUSE FILE 2324 BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 623) (As Amended and Passed by the House March 4, 2014 ) A BILL FOR An Act relating to consumer lending transactions by modifying 1 provisions applicable to certain loan charges and modifying 2 designated monetary limits specified in the consumer credit 3 code, and including applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 HF 2324 (2) 85 rn/sc/md
H.F. 2324 Section 1. Section 535.2, subsection 2, paragraph a, 1 subparagraph (2), Code 2014, is amended to read as follows: 2 (2) A person borrowing money or obtaining credit in an 3 amount which exceeds twenty-five thousand dollars the threshold 4 amount as defined in section 537.1301 , exclusive of interest, 5 for the purpose of constructing improvements on real property, 6 whether or not the real property is owned by the person. 7 Sec. 2. Section 535.2, subsection 2, paragraph a, 8 subparagraph (5), Code 2014, is amended to read as follows: 9 (5) A person borrowing money or obtaining credit for 10 business or agricultural purposes, or a person borrowing money 11 or obtaining credit in an amount which exceeds twenty-five 12 thousand dollars the threshold amount, as defined in section 13 537.1301, for personal, family, or household purposes. As 14 used in this paragraph, “agricultural purpose” means as defined 15 in section 535.13 , and “business purpose” includes but is not 16 limited to a commercial, service, or industrial enterprise 17 carried on for profit and an investment activity. 18 Sec. 3. Section 535.8, subsection 1, Code 2014, is amended 19 by adding the following new paragraph: 20 NEW PARAGRAPH . c. “Points and fees” means the fees and 21 charges that are included in the definition of points and fees 22 in 12 C.F.R. §1026.32(b)(1). 23 Sec. 4. Section 535.8, Code 2014, is amended by adding the 24 following new subsections: 25 NEW SUBSECTION . 1A. If a lender that is a financial 26 institution as defined in section 537.1301 makes a loan in 27 which the points and fees the borrower is charged by all 28 lenders in connection with the loan does not exceed the amounts 29 specified in 12 C.F.R. §1026.43(e)(3), the loan shall not be 30 subject to the provisions of subsection 2, paragraphs “a” , 31 “b” , and “d” , or subsection 3. This subsection applies to the 32 financial institution lender that originates the loan and to 33 subsequent purchasers of the loan originated by the financial 34 institution. 35 -1- HF 2324 (2) 85 rn/sc/md 1/ 6
H.F. 2324 NEW SUBSECTION . 1B. This section shall not be construed to 1 change the prohibition against the sale of title insurance or 2 sale of insurance against loss or damage by reason of defective 3 title or encumbrances as provided in section 515.48, subsection 4 10. 5 Sec. 5. Section 535.8, subsection 2, paragraph b, 6 subparagraph (4), Code 2014, is amended by striking the 7 subparagraph. 8 Sec. 6. Section 535.8, subsection 6, Code 2014, is amended 9 to read as follows: 10 6. a. The provisions of this section shall not apply to 11 any loan which is subject to the provisions of section 636.46 , 12 nor shall it apply to origination fees, administrative fees, 13 commitment fees or similar charges paid by one lender to 14 another lender if these fees are not ultimately paid either 15 directly or indirectly by the borrower who occupies or will 16 occupy the dwelling or by the seller of the dwelling. 17 b. A lender shall not use an appraisal for any purpose 18 in connection with making a loan under this section if the 19 appraisal is performed by a person who is employed by or 20 affiliated with any person receiving a commission or fee 21 from the seller of the property. If a lender violates this 22 paragraph subsection the borrower is entitled to recover 23 any actual damages plus the costs paid by the borrower, 24 plus attorney fees incurred in an action necessary to effect 25 recovery. 26 Sec. 7. Section 535.10, subsection 3, paragraph a, Code 27 2014, is amended to read as follows: 28 a. A lender may collect in connection with establishing 29 or renewing a home equity line of credit the costs listed 30 in section 535.8, subsection 2 , paragraph paragraphs “a” or 31 “b” , charges for insurance as described in section 537.2501, 32 subsection 2 , and a loan processing fee as agreed between 33 the borrower and the lender, and annually may collect an 34 account maintenance fee of not more than fifteen dollars. 35 -2- HF 2324 (2) 85 rn/sc/md 2/ 6
H.F. 2324 Fees collected under this subsection shall be disregarded 1 for purposes of determining the maximum charge permitted by 2 subsection 4 . 3 Sec. 8. Section 536.1, Code 2014, is amended to read as 4 follows: 5 536.1 Title —— license required. 6 1. This chapter may be referred to as the “Iowa Regulated 7 Loan Act”. 8 2. With respect to a loan other than a consumer loan, a 9 person shall not engage in the business of making loans of 10 money, credit, goods, or things in action in the amount or of 11 the value of twenty-five thousand dollars the threshold amount 12 or less and charge, contract for, or receive on the loan a 13 greater rate of interest or consideration for the loan than 14 the lender would be permitted by law to charge if the lender 15 were not a licensee under this chapter except as authorized by 16 this chapter and without first obtaining a license from the 17 superintendent of banking. 18 3. With respect to a consumer loan, a person required by 19 section 537.2301 to have a license shall not engage in the 20 business of making loans of money, credit, goods or things 21 in action in the amount or value of twenty-five thousand 22 dollars the threshold amount or less and charge, contract 23 for, or receive on the loan a greater rate of interest or 24 consideration for the loan than the lender would be permitted 25 by law to charge if the lender were not a licensee under this 26 chapter , except as authorized by this chapter and without first 27 obtaining a license from the superintendent. 28 4. A person who enters into less than ten supervised loans 29 per year in this state and who neither has an office physically 30 located in this state nor engages in face-to-face solicitation 31 in this state may contract for and receive the rate of interest 32 permitted in this chapter for licensees under this chapter . A 33 “consumer loan” means the same as defined in section 537.1301 . 34 5. For the purposes of this section, “threshold amount” 35 -3- HF 2324 (2) 85 rn/sc/md 3/ 6
H.F. 2324 means the same as defined in section 537.1301. 1 Sec. 9. Section 536.13, subsection 5, Code 2014, is amended 2 to read as follows: 3 5. A licensee under this chapter may lend any sum of money 4 not exceeding twenty-five thousand dollars the threshold amount 5 as defined in section 537.1301 in amount and may charge, 6 contract for, and receive on the loan interest or charges at 7 a rate not exceeding the maximum rate of interest or charges 8 determined and fixed by the superintendent under authority of 9 this section or pursuant to subsection 7 for those amounts in 10 excess of ten thousand dollars. 11 Sec. 10. Section 536.15, Code 2014, is amended to read as 12 follows: 13 536.15 Limitation on principal amount over twenty-five 14 thousand dollars . 15 A licensee shall not directly or indirectly charge, contract 16 for, or receive any interest or consideration greater than the 17 lender would be permitted by law to charge if the lender were 18 not a licensee upon the loan, use, or forbearance of money, 19 goods, or things in action, or upon the loan, use, or sale 20 of credit, of the amount or value of more than twenty-five 21 thousand dollars the threshold amount . This section also 22 applies to a licensee who permits a person, as borrower or as 23 endorser, guarantor, or surety for a borrower, or otherwise, 24 to owe directly or contingently or both to the licensee at 25 any time the sum of more than twenty-five thousand dollars 26 the threshold amount for principal. For the purposes of this 27 section, “threshold amount” means the same as defined in section 28 537.1301. 29 Sec. 11. Section 537.1301, subsection 13, paragraph a, 30 subparagraph (5), Code 2014, is amended to read as follows: 31 (5) With respect to a sale of goods or services, the amount 32 financed does not exceed twenty-five thousand dollars the 33 threshold amount . 34 Sec. 12. Section 537.1301, subsection 14, paragraph a, 35 -4- HF 2324 (2) 85 rn/sc/md 4/ 6
H.F. 2324 subparagraph (4), Code 2014, is amended to read as follows: 1 (4) The amount payable under the lease does not exceed 2 twenty-five thousand dollars the threshold amount . 3 Sec. 13. Section 537.1301, subsection 15, paragraph a, 4 subparagraph (5), Code 2014, is amended to read as follows: 5 (5) The amount financed does not exceed twenty-five 6 thousand dollars the threshold amount . 7 Sec. 14. Section 537.1301, subsection 15, paragraph b, 8 subparagraph (2), Code 2014, is amended to read as follows: 9 (2) A debt which is secured by a first lien on real property 10 and which is incurred primarily for the purpose of acquiring 11 that real property, or refinancing a contract for deed to that 12 real property, or constructing on that real property a building 13 containing one or more dwelling units . 14 Sec. 15. Section 537.1301, subsection 21, paragraph b, Code 15 2014, is amended by adding the following new subparagraph: 16 NEW SUBPARAGRAPH . (5) An initial charge imposed by a 17 financial institution for returning an item presented against 18 non-sufficient funds or for paying an item that overdraws 19 an account. For the purposes of this subparagraph, “item” 20 includes any form of authorization or order for withdrawal of 21 funds from an account such as a check, automated teller machine 22 card, debit card, automated clearinghouse or other means. 23 Sec. 16. Section 537.1301, Code 2014, is amended by adding 24 the following new subsection: 25 NEW SUBSECTION . 21A. “Financial institution” means and 26 includes any bank incorporated under the provisions of any 27 state or federal law, any savings and loan association or 28 savings bank incorporated under the provisions of state or 29 federal law, or any credit union organized under the provisions 30 of any state or federal law. 31 Sec. 17. Section 537.1301, Code 2014, is amended by adding 32 the following new subsection: 33 NEW SUBSECTION . 46. “Threshold amount” means the threshold 34 amount, as determined by 12 C.F.R. §226.3(b), in effect during 35 -5- HF 2324 (2) 85 rn/sc/md 5/ 6
H.F. 2324 the period the consumer credit transaction was entered into. 1 Sec. 18. Section 537.2501, subsection 1, paragraph e, Code 2 2014, is amended by adding the following new subparagraph: 3 NEW SUBPARAGRAPH . (5) Fees or charges listed in section 4 535.8, subsection 2, paragraphs “a” and “b” . 5 Sec. 19. Section 537.2507, Code 2014, is amended to read as 6 follows: 7 537.2507 Attorney fee. 8 With respect to a consumer credit transaction, the agreement 9 may not provide for the payment by the consumer of attorney 10 fees. However, in a consumer credit transaction with an amount 11 financed exceeding twenty-five thousand dollars secured by an 12 interest in land, the agreement may provide for the payment 13 by the consumer of reasonable attorney fees. A provision in 14 violation of this subsection section is unenforceable. 15 Sec. 20. Section 537.3604, subsection 8, paragraph e, Code 16 2014, is amended to read as follows: 17 e. The amount payable under the consumer rental purchase 18 agreement does not exceed twenty-five thousand dollars the 19 threshold amount . 20 Sec. 21. Section 537.6201, subsection 2, Code 2014, is 21 amended to read as follows: 22 2. Debt collectors, as defined in section 537.7102, 23 subsection 5 , to whose acts, practices, or conduct this 24 chapter applies pursuant to section 537.1201 if the total debt 25 collected by a debt collector in the preceding calendar year 26 exceeds twenty-five thousand dollars the threshold amount , or 27 if not, if the total debt collected during the current calendar 28 year exceeds twenty-five thousand dollars, but this part does 29 not apply to those licensed, certified, or otherwise authorized 30 to engage in business under chapter 524 , 533 , 536 , or 536A . 31 Sec. 22. APPLICABILITY. Section 537.1301, subsection 21, 32 paragraph b, subparagraph (5), as enacted by this Act, applies 33 to charges assessed by a financial institution on or after July 34 1, 2014. 35 -6- HF 2324 (2) 85 rn/sc/md 6/ 6