Bill Text: IA HF2324 | 2013-2014 | 85th General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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-Amended.html

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