HSB 202 (LSB 2099YC (2) 88)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON CARLSON)

A BILL FOR

An Act relating to evidence of title by state banks for certain loans.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 524.905, subsection 1, Code 2019, is amended to read as follows:
   1.  Rules for loans.  A state bank may make permanent loans, construction loans, or combined construction and permanent loans, secured by liens on real property, as authorized by rules adopted by the superintendent under chapter 17A.
   a.  The rules shall include provisions as necessary to ensure the safety and soundness of these loans, and to ensure full and fair disclosure to borrowers of the effects of provisions in agreements for these loans, including provisions permitting change or adjustment of any terms of a loan, provisions permitting, requiring, or prohibiting repayment of a loan on a basis other than of equal periodic installments of interest plus principal over a fixed term, provisions imposing penalties for the borrower’s noncompliance with requirements of a loan agreement, or provisions allowing or requiring a borrower to choose from alternative courses of action at any time during the effectiveness of a loan agreement.
   b.  The rules shall provide that state banks, when loaning for the purposes of acquisition or refinance of acquisition when a new mortgage, deed of trust, or other similar instrument is filed, may evidence title with any of the following:
   (1)  A written legal opinion prepared by an attorney admitted to practice law in the state where the real property is located.
   (2)  A title guaranty certificate issued by the title guaranty division of the Iowa finance authority.
   (3)  A commercial title insurance policy describing any liens and insuring title to the real property and the validity and enforceability of the mortgage, deed of trust, or other similar instrument as a lien on the real property.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill provides that the Iowa superintendent of banking shall adopt rules allowing state banks, when loaning for the purposes of acquisition or refinance of acquisition when a new mortgage, deed, or other similar instrument is filed, to evidence title with a written legal opinion from an attorney admitted to practice law in the state where the property is located, a title guaranty certificate issued by the title guaranty division of the Iowa finance authority, or a commercial title insurance policy insuring title to the property and the validity of the new instrument as a lien on the property.