Bill Text: IA HF2324 | 2013-2014 | 85th General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: A bill for an act relating to consumer lending transactions by modifying provisions applicable to certain loan charges and modifying designated monetary limits specified in the consumer credit code, and including applicability provisions. Effective 7-1-14.
Spectrum: Committee Bill
Status: (Passed) 2014-03-26 - Signed by Governor. H.J. 602. [HF2324 Detail]
Download: Iowa-2013-HF2324-Introduced.html
Bill Title: A bill for an act relating to consumer lending transactions by modifying provisions applicable to certain loan charges and modifying designated monetary limits specified in the consumer credit code, and including applicability provisions. Effective 7-1-14.
Spectrum: Committee Bill
Status: (Passed) 2014-03-26 - Signed by Governor. H.J. 602. [HF2324 Detail]
Download: Iowa-2013-HF2324-Introduced.html
House
File
2324
-
Introduced
HOUSE
FILE
2324
BY
COMMITTEE
ON
COMMERCE
(SUCCESSOR
TO
HSB
623)
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.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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5560HV
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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
makes
a
loan
in
which
26
the
points
and
fees
the
borrower
is
charged
by
all
lenders
in
27
connection
with
the
loan
does
not
exceed
the
amounts
specified
28
in
12
C.F.R.
§1026.43(e)(3),
the
loan
shall
not
be
subject
to
29
the
provisions
of
subsection
2,
paragraphs
“a”
,
“b”
,
and
“d”
,
or
30
subsection
3.
31
NEW
SUBSECTION
.
1B.
This
section
shall
not
be
construed
to
32
change
the
prohibition
against
the
sale
of
title
insurance
or
33
sale
of
insurance
against
loss
or
damage
by
reason
of
defective
34
title
or
encumbrances
as
provided
in
section
515.48,
subsection
35
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10.
1
Sec.
5.
Section
535.8,
subsection
2,
paragraph
b,
2
subparagraph
(4),
Code
2014,
is
amended
by
striking
the
3
subparagraph.
4
Sec.
6.
Section
535.8,
subsection
6,
Code
2014,
is
amended
5
to
read
as
follows:
6
6.
a.
The
provisions
of
this
section
shall
not
apply
to
7
any
loan
which
is
subject
to
the
provisions
of
section
636.46
,
8
nor
shall
it
apply
to
origination
fees,
administrative
fees,
9
commitment
fees
or
similar
charges
paid
by
one
lender
to
10
another
lender
if
these
fees
are
not
ultimately
paid
either
11
directly
or
indirectly
by
the
borrower
who
occupies
or
will
12
occupy
the
dwelling
or
by
the
seller
of
the
dwelling.
13
b.
A
lender
shall
not
use
an
appraisal
for
any
purpose
14
in
connection
with
making
a
loan
under
this
section
if
the
15
appraisal
is
performed
by
a
person
who
is
employed
by
or
16
affiliated
with
any
person
receiving
a
commission
or
fee
17
from
the
seller
of
the
property.
If
a
lender
violates
this
18
paragraph
subsection
the
borrower
is
entitled
to
recover
19
any
actual
damages
plus
the
costs
paid
by
the
borrower,
20
plus
attorney
fees
incurred
in
an
action
necessary
to
effect
21
recovery.
22
Sec.
7.
Section
535.10,
subsection
3,
paragraph
a,
Code
23
2014,
is
amended
to
read
as
follows:
24
a.
A
lender
may
collect
in
connection
with
establishing
25
or
renewing
a
home
equity
line
of
credit
the
costs
listed
26
in
section
535.8,
subsection
2
,
paragraph
paragraphs
“a”
or
27
“b”
,
charges
for
insurance
as
described
in
section
537.2501,
28
subsection
2
,
and
a
loan
processing
fee
as
agreed
between
29
the
borrower
and
the
lender,
and
annually
may
collect
an
30
account
maintenance
fee
of
not
more
than
fifteen
dollars.
31
Fees
collected
under
this
subsection
shall
be
disregarded
32
for
purposes
of
determining
the
maximum
charge
permitted
by
33
subsection
4
.
34
Sec.
8.
Section
536.1,
Code
2014,
is
amended
to
read
as
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follows:
1
536.1
Title
——
license
required.
2
1.
This
chapter
may
be
referred
to
as
the
“Iowa
Regulated
3
Loan
Act”.
4
2.
With
respect
to
a
loan
other
than
a
consumer
loan,
a
5
person
shall
not
engage
in
the
business
of
making
loans
of
6
money,
credit,
goods,
or
things
in
action
in
the
amount
or
of
7
the
value
of
twenty-five
thousand
dollars
the
threshold
amount
8
or
less
and
charge,
contract
for,
or
receive
on
the
loan
a
9
greater
rate
of
interest
or
consideration
for
the
loan
than
10
the
lender
would
be
permitted
by
law
to
charge
if
the
lender
11
were
not
a
licensee
under
this
chapter
except
as
authorized
by
12
this
chapter
and
without
first
obtaining
a
license
from
the
13
superintendent
of
banking.
14
3.
With
respect
to
a
consumer
loan,
a
person
required
by
15
section
537.2301
to
have
a
license
shall
not
engage
in
the
16
business
of
making
loans
of
money,
credit,
goods
or
things
17
in
action
in
the
amount
or
value
of
twenty-five
thousand
18
dollars
the
threshold
amount
or
less
and
charge,
contract
19
for,
or
receive
on
the
loan
a
greater
rate
of
interest
or
20
consideration
for
the
loan
than
the
lender
would
be
permitted
21
by
law
to
charge
if
the
lender
were
not
a
licensee
under
this
22
chapter
,
except
as
authorized
by
this
chapter
and
without
first
23
obtaining
a
license
from
the
superintendent.
24
4.
A
person
who
enters
into
less
than
ten
supervised
loans
25
per
year
in
this
state
and
who
neither
has
an
office
physically
26
located
in
this
state
nor
engages
in
face-to-face
solicitation
27
in
this
state
may
contract
for
and
receive
the
rate
of
interest
28
permitted
in
this
chapter
for
licensees
under
this
chapter
.
A
29
“consumer
loan”
means
the
same
as
defined
in
section
537.1301
.
30
5.
For
the
purposes
of
this
section,
“threshold
amount”
31
means
the
same
as
defined
in
section
537.1301.
32
Sec.
9.
Section
536.13,
subsection
5,
Code
2014,
is
amended
33
to
read
as
follows:
34
5.
A
licensee
under
this
chapter
may
lend
any
sum
of
money
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2324
not
exceeding
twenty-five
thousand
dollars
the
threshold
amount
1
as
defined
in
section
537.1301
in
amount
and
may
charge,
2
contract
for,
and
receive
on
the
loan
interest
or
charges
at
3
a
rate
not
exceeding
the
maximum
rate
of
interest
or
charges
4
determined
and
fixed
by
the
superintendent
under
authority
of
5
this
section
or
pursuant
to
subsection
7
for
those
amounts
in
6
excess
of
ten
thousand
dollars.
7
Sec.
10.
Section
536.15,
Code
2014,
is
amended
to
read
as
8
follows:
9
536.15
Limitation
on
principal
amount
over
twenty-five
10
thousand
dollars
.
11
A
licensee
shall
not
directly
or
indirectly
charge,
contract
12
for,
or
receive
any
interest
or
consideration
greater
than
the
13
lender
would
be
permitted
by
law
to
charge
if
the
lender
were
14
not
a
licensee
upon
the
loan,
use,
or
forbearance
of
money,
15
goods,
or
things
in
action,
or
upon
the
loan,
use,
or
sale
16
of
credit,
of
the
amount
or
value
of
more
than
twenty-five
17
thousand
dollars
the
threshold
amount
.
This
section
also
18
applies
to
a
licensee
who
permits
a
person,
as
borrower
or
as
19
endorser,
guarantor,
or
surety
for
a
borrower,
or
otherwise,
20
to
owe
directly
or
contingently
or
both
to
the
licensee
at
21
any
time
the
sum
of
more
than
twenty-five
thousand
dollars
22
the
threshold
amount
for
principal.
For
the
purposes
of
this
23
section,
“threshold
amount”
means
the
same
as
defined
in
section
24
537.1301.
25
Sec.
11.
Section
537.1301,
subsection
13,
paragraph
a,
26
subparagraph
(5),
Code
2014,
is
amended
to
read
as
follows:
27
(5)
With
respect
to
a
sale
of
goods
or
services,
the
amount
28
financed
does
not
exceed
twenty-five
thousand
dollars
the
29
threshold
amount
.
30
Sec.
12.
Section
537.1301,
subsection
14,
paragraph
a,
31
subparagraph
(4),
Code
2014,
is
amended
to
read
as
follows:
32
(4)
The
amount
payable
under
the
lease
does
not
exceed
33
twenty-five
thousand
dollars
the
threshold
amount
.
34
Sec.
13.
Section
537.1301,
subsection
15,
paragraph
a,
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2324
subparagraph
(5),
Code
2014,
is
amended
to
read
as
follows:
1
(5)
The
amount
financed
does
not
exceed
twenty-five
2
thousand
dollars
the
threshold
amount
.
3
Sec.
14.
Section
537.1301,
subsection
15,
paragraph
b,
4
subparagraph
(2),
Code
2014,
is
amended
to
read
as
follows:
5
(2)
A
debt
which
is
secured
by
a
first
lien
on
real
property
6
and
which
is
incurred
primarily
for
the
purpose
of
acquiring
7
that
real
property,
or
refinancing
a
contract
for
deed
to
that
8
real
property,
or
constructing
on
that
real
property
a
building
9
containing
one
or
more
dwelling
units
.
10
Sec.
15.
Section
537.1301,
subsection
21,
paragraph
b,
Code
11
2014,
is
amended
by
adding
the
following
new
subparagraph:
12
NEW
SUBPARAGRAPH
.
(5)
An
initial
charge
imposed
by
a
13
financial
institution
for
returning
an
item
presented
against
14
non-sufficient
funds
or
for
paying
an
item
that
overdraws
15
an
account.
For
the
purposes
of
this
subparagraph,
“item”
16
includes
any
form
of
authorization
or
order
for
withdrawal
of
17
funds
from
an
account
such
as
a
check,
automated
teller
machine
18
card,
debit
card,
automated
clearinghouse
or
other
means.
19
Sec.
16.
Section
537.1301,
Code
2014,
is
amended
by
adding
20
the
following
new
subsection:
21
NEW
SUBSECTION
.
21A.
“Financial
institution”
means
and
22
includes
any
bank
incorporated
under
the
provisions
of
any
23
state
or
federal
law,
any
savings
and
loan
association
or
24
savings
bank
incorporated
under
the
provisions
of
state
or
25
federal
law,
or
any
credit
union
organized
under
the
provisions
26
of
any
state
or
federal
law.
27
Sec.
17.
Section
537.1301,
Code
2014,
is
amended
by
adding
28
the
following
new
subsection:
29
NEW
SUBSECTION
.
46.
“Threshold
amount”
means
the
threshold
30
amount,
as
determined
by
12
C.F.R.
§226.3(b),
in
effect
during
31
the
period
the
consumer
credit
transaction
was
entered
into.
32
Sec.
18.
Section
537.2501,
subsection
1,
paragraph
e,
Code
33
2014,
is
amended
by
adding
the
following
new
subparagraph:
34
NEW
SUBPARAGRAPH
.
(5)
Fees
or
charges
listed
in
section
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535.8,
subsection
2,
paragraphs
“a”
and
“b”
.
1
Sec.
19.
Section
537.2507,
Code
2014,
is
amended
to
read
as
2
follows:
3
537.2507
Attorney
fee.
4
With
respect
to
a
consumer
credit
transaction,
the
agreement
5
may
not
provide
for
the
payment
by
the
consumer
of
attorney
6
fees.
However,
in
a
consumer
credit
transaction
with
an
amount
7
financed
exceeding
twenty-five
thousand
dollars
secured
by
an
8
interest
in
land,
the
agreement
may
provide
for
the
payment
9
by
the
consumer
of
reasonable
attorney
fees.
A
provision
in
10
violation
of
this
subsection
section
is
unenforceable.
11
Sec.
20.
Section
537.3604,
subsection
8,
paragraph
e,
Code
12
2014,
is
amended
to
read
as
follows:
13
e.
The
amount
payable
under
the
consumer
rental
purchase
14
agreement
does
not
exceed
twenty-five
thousand
dollars
the
15
threshold
amount
.
16
Sec.
21.
Section
537.6201,
subsection
2,
Code
2014,
is
17
amended
to
read
as
follows:
18
2.
Debt
collectors,
as
defined
in
section
537.7102,
19
subsection
5
,
to
whose
acts,
practices,
or
conduct
this
20
chapter
applies
pursuant
to
section
537.1201
if
the
total
debt
21
collected
by
a
debt
collector
in
the
preceding
calendar
year
22
exceeds
twenty-five
thousand
dollars
the
threshold
amount
,
or
23
if
not,
if
the
total
debt
collected
during
the
current
calendar
24
year
exceeds
twenty-five
thousand
dollars,
but
this
part
does
25
not
apply
to
those
licensed,
certified,
or
otherwise
authorized
26
to
engage
in
business
under
chapter
524
,
533
,
536
,
or
536A
.
27
EXPLANATION
28
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
29
the
explanation’s
substance
by
the
members
of
the
general
assembly.
30
This
bill
makes
changes
related
to
consumer
lending
31
transactions
by
modifying
provisions
applicable
to
residential
32
real
estate
loan
charges
and
monetary
limits
specified
in
the
33
consumer
credit
code.
34
The
bill
modifies
several
provisions
contained
in
Code
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section
535.8,
relating
to
loan
charge
limitations
applicable
1
to
loans
of
money
which
are
wholly
or
in
part
to
be
used
for
the
2
purpose
of
purchasing
real
property
that
is
a
single-family
or
3
two-family
dwelling
occupied
or
to
be
occupied
by
the
borrower.
4
The
bill
defines
“points
and
fees”
by
referencing
an
existing
5
definition
in
the
Code
of
Federal
Regulations
relating
to
the
6
Truth
in
Lending
Act.
The
bill
provides
that
if
a
lender
makes
7
a
loan
in
which
the
points
and
fees
charged
by
all
lenders
in
8
connection
with
the
loan
does
not
exceed
amounts
specified
in
a
9
referenced
section
of
the
Code
of
Federal
Regulations,
the
loan
10
will
not
be
subject
to
the
monetary
limits
on
loan
origination
11
or
processing
fees
and
broker
fees,
the
limits
on
the
types
of
12
permissible
lender
charges,
and
relating
to
payment
of
interest
13
reduction
fees
in
exchange
for
a
lower
rate
of
interest.
The
14
bill
transfers
a
provision
in
Code
section
535.8,
subsection
15
2,
relating
to
the
prohibition
against
the
sale
of
title
16
insurance
or
sale
of
insurance
against
loss
or
damage
by
reason
17
of
defective
title
or
encumbrances
to
Code
section
535.8,
new
18
subsection
1B.
19
The
bill
modifies
monetary
limits
applicable
to
certain
20
consumer
credit
transactions
specified
in
Code
chapter
537.
21
Currently,
the
definitions
of
consumer
credit
sale,
consumer
22
lease,
consumer
loan,
and
consumer
rental
purchase
agreement,
23
provide
that
the
amount
financed
or
payable
shall
not
exceed
24
$25,000.
The
bill
deletes
references
to
this
monetary
amount,
25
and
provides
instead
that
the
amount
financed
or
payable
shall
26
not
exceed
a
“threshold
amount”.
The
term
“threshold
amount”
27
is
defined
in
the
bill
as
the
applicable
threshold
amount
in
28
effect
during
the
period
a
consumer
credit
transaction
was
29
entered
into,
as
determined
pursuant
to
a
provision
of
the
30
federal
Truth
in
Lending
Act
relating
to
the
calculation
of
a
31
threshold
amount
in
connection
with
extensions
of
credit
which
32
are
exempt
from
regulation
under
the
federal
Act.
A
similar
33
change
is
made
regarding
the
applicability
of
notification
and
34
fee
provisions
in
the
Code
chapter
to
debt
collectors.
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The
bill
deletes
similar
references
to
the
monetary
amount
1
of
$25,000,
and
substitutes
the
term
“threshold
amount”,
with
2
reference
to
determining
rates
of
interest
in
connection
3
with
borrowing
money
or
obtaining
credit
for
the
purpose
of
4
constructing
improvements
on
real
property,
for
business
or
5
agricultural
purposes,
or
for
personal,
family,
or
household
6
purposes.
The
term
“threshold
amount”
is
also
substituted
for
7
the
monetary
amount
of
$25,000
with
respect
to
regulated
loan
8
licensing
and
lending
requirements
imposed
pursuant
to
Code
9
chapter
536.
10
The
bill
provides
that
a
lender
in
a
home
equity
line
of
11
credit
transaction
may
impose
loan
origination
or
processing
12
fees
or
broker
fees
authorized
for
single-family
or
two-family
13
real
property
loans
in
Code
section
535.8.
The
bill
also
14
authorizes
these
fees,
and
additional
costs
in
connection
with
15
originating
a
loan,
to
be
charged
in
connection
with
consumer
16
credit
transactions
involving
a
debt
secured
by
an
interest
in
17
land.
18
Currently,
the
definition
of
“consumer
loan”
in
Code
chapter
19
537
does
not
include
a
debt
that
is
secured
by
a
first
lien
on
20
real
property
and
that
is
incurred
primarily
for
the
purpose
of
21
acquiring
that
real
property
or
refinancing
a
contract
for
deed
22
to
that
real
property
or
constructing
on
that
real
property
23
a
building
containing
one
or
more
dwelling
units.
The
bill
24
modifies
this
provision
to
state
that
a
consumer
loan
does
25
not
include
a
debt
that
is
secured
by
a
first
lien
on
real
26
property.
27
The
bill
provides,
with
reference
to
the
definition
28
of
“finance
charge”
contained
in
Code
chapter
537,
that
a
29
“finance
charge”
does
not
include
an
initial
charge
imposed
30
by
a
financial
institution
for
returning
an
item
presented
31
against
non-sufficient
funds
or
for
paying
an
item
that
32
overdraws
an
account.
For
the
purposes
of
this
subparagraph,
33
the
bill
defines
“item”
to
include
any
form
of
authorization
34
or
order
for
withdrawal
of
funds
from
an
account
such
as
a
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check,
automated
teller
machine
card,
debit
card,
automated
1
clearing
house
or
other
means.
The
bill
defines
a
“financial
2
institution”
in
the
Code
chapter
to
mean
and
include
any
bank
3
incorporated
under
the
provisions
of
any
state
or
federal
law,
4
any
savings
and
loan
association
or
savings
bank
incorporated
5
under
the
provisions
of
state
or
federal
law,
or
any
credit
6
union
organized
under
the
provisions
of
any
state
or
federal
7
law.
8
The
bill
further
provides
that
in
connection
with
a
consumer
9
credit
transaction,
reasonable
attorney
fees
may
be
charged
10
when
the
amount
financed
exceeds
$25,000
secured
by
an
interest
11
in
land.
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