House File 2218 - Introduced
HOUSE FILE
BY JOCHUM, WESSEL=KROESCHELL,
MASCHER, WINCKLER, and
LENSING
(COMPANION TO LSB 5766SS
BY BOLKCOM)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to consumer loans, including providing for a
2 maximum finance charge and certain reporting requirements for
3 loans secured by a certificate of title to a motor vehicle,
4 providing for an increase in fees for supervised loans, and
5 making penalties applicable.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
7 TLSB 5766HH 81
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PAG LIN
1 1 Section 1. Section 536.2, unnumbered paragraph 1, Code
1 2 2005, is amended to read as follows:
1 3 Application for such license shall be in writing, under
1 4 oath, and in the form prescribed by the superintendent, and
1 5 shall contain the name and the address (both, both of the
1 6 residence and place of business) business, of the applicant,
1 7 and if the applicant is a copartnership or association, of
1 8 every member thereof, and if a corporation, of each officer
1 9 and director thereof; also the county and municipality with
1 10 street and number, if any, of the place where the business of
1 11 making loans under the provisions of this chapter is to be
1 12 conducted and such further relevant information as the
1 13 superintendent may require. Such applicant at the time of
1 14 making such application shall pay to the superintendent the
1 15 sum of fifty one hundred dollars if the liquid assets of the
1 16 applicant are not in excess of twenty thousand dollars, and
1 17 the sum of one hundred fifty dollars if the liquid assets of
1 18 the applicant are in excess of twenty thousand dollars, as a
1 19 fee for investigating the application and the additional sum
1 20 of one hundred twenty=five seventy=five dollars if the liquid
1 21 assets of the applicant are not in excess of twenty thousand
1 22 dollars, and two three hundred fifty dollars if the liquid
1 23 assets of the applicant are in excess of twenty thousand
1 24 dollars, as an annual license fee.
1 25 Sec. 2. Section 536.16, subsection 1, Code 2005, is
1 26 amended to read as follows:
1 27 1. Section 536.2 to the extent it requires payment of an
1 28 annual license fee in excess of two three hundred fifty
1 29 dollars and requires a person to prove the person has any
1 30 dollar amount of liquid assets or the use of any dollar amount
1 31 in the conduct of the person's business at the licensed place
1 32 of business.
1 33 Sec. 3. Section 537.2401, subsection 1, Code 2005, is
1 34 amended to read as follows:
1 35 1. Except as provided with respect to a finance charge for
2 1 loans pursuant to open end credit under section 537.2402 and
2 2 loans secured by a certificate of title to a motor vehicle
2 3 under section 537.2403, a lender may contract for and receive
2 4 a finance charge not exceeding the maximum charge permitted by
2 5 the laws of this state or of the United States for similar
2 6 lenders, and, in addition, with respect to a consumer loan, a
2 7 supervised financial organization or a mortgage lender may
2 8 contract for and receive a finance charge, calculated
2 9 according to the actuarial method, not exceeding twenty=one
2 10 percent per year on the unpaid balance of the amount financed.
2 11 This Except as provided in section 537.2403, this subsection
2 12 does not prohibit a lender from contracting for and receiving
2 13 a finance charge exceeding twenty=one percent per year on the
2 14 unpaid balance of the amount financed on consumer loans if
2 15 authorized by other provisions of the law.
2 16 Sec. 4. Section 537.2402, subsection 1, Code 2005, is
2 17 amended to read as follows:
2 18 1. If authorized to make supervised loans, a creditor may
2 19 contract for and receive a finance charge without limitation
2 20 as to amount or rate with respect to a loan pursuant to open=
2 21 end credit as permitted in this section, except as provided in
2 22 section 537.2403.
2 23 Sec. 5. NEW SECTION. 537.2403 FINANCE CHARGE AND
2 24 REPORTING REQUIREMENTS FOR CONSUMER LOANS SECURED BY A MOTOR
2 25 VEHICLE.
2 26 1. A lender shall not contract for or receive a finance
2 27 charge exceeding twenty=one percent per year on the unpaid
2 28 balance of the amount financed for a loan of money secured by
2 29 a certificate of title to a motor vehicle used for personal,
2 30 family, or household purposes except as authorized under
2 31 chapter 536A. A consumer who is charged a finance charge in
2 32 excess of the limitation in this section may seek any remedies
2 33 available pursuant to this chapter for an excess charge.
2 34 2. It shall be a violation of this section and an unlawful
2 35 practice under section 714.16 to attempt to avoid application
3 1 of this section by structuring a loan of money secured by a
3 2 certificate of title to a motor vehicle as a sale, sale and
3 3 repurchase, sale and lease, pawn, rental purchase, lease, or
3 4 other type of transaction with the intent to avoid application
3 5 of this section or any other applicable provision of this
3 6 chapter.
3 7 3. The superintendent of banking shall annually collect,
3 8 and each lender providing loans secured by a certificate of
3 9 title to a motor vehicle shall provide, information regarding
3 10 at least all of the following:
3 11 a. The total number of loans secured by a certificate of
3 12 title to a motor vehicle by the lender.
3 13 b. The total monetary amount of loans secured by a
3 14 certificate of title to a motor vehicle at each location
3 15 providing such loans.
3 16 c. Affiliate relationships, if any, of each lender
3 17 providing loans secured by a certificate of title to a motor
3 18 vehicle with any financial institutions.
3 19 d. The age, ethnicity, and annual income of each consumer
3 20 of a loan secured by a certificate of title to a motor
3 21 vehicle.
3 22 e. The total number of motor vehicles repossessed as a
3 23 result of a loan secured by a certificate of title to a motor
3 24 vehicle.
3 25 EXPLANATION
3 26 This bill relates to consumer loans including loans secured
3 27 by a certificate of title to a motor vehicle and supervised
3 28 loans.
3 29 The bill increases the application and license fees by $50
3 30 for a license to provide supervised loans under Code chapter
3 31 536. Under current law, loans secured by a certificate of
3 32 title to a motor vehicle are regulated as supervised loans
3 33 under Code chapter 536, and lenders must be licensed under
3 34 Code chapter 536 to provide loans secured by a certificate of
3 35 title to a motor vehicle.
4 1 The bill prohibits a lender from contracting for or
4 2 receiving a finance charge which exceeds 21 percent per year
4 3 on the unpaid balance of a loan for money which is secured by
4 4 a certificate of title to a motor vehicle. The remedies under
4 5 Code chapter 537 for excess charges are available to consumers
4 6 who are charged a finance charge in excess of 21 percent per
4 7 year for such a consumer loan. The bill provides that an
4 8 attempt to avoid application of the maximum finance charge on
4 9 a loan secured by a certificate of title to a motor vehicle by
4 10 structuring the transaction as a sale, sale and repurchase,
4 11 sale and lease, pawn, rental purchase, or lease with the
4 12 intent to avoid the maximum finance charge shall be considered
4 13 a violation of the maximum finance charge and shall be
4 14 considered a consumer fraud subject to civil penalties and
4 15 enforcement pursuant to Code section 714.16.
4 16 Under current law, a consumer is not obligated to pay an
4 17 excess charge and is entitled to a refund of any excess charge
4 18 paid. If a consumer entitled to a refund is refused the
4 19 refund, the consumer may recover from the creditor or other
4 20 person liable in a civil action the excess charge and a
4 21 penalty of not less than $100 or more than $1,000. Under
4 22 current law, a person who willfully and knowingly makes an
4 23 excess charge is guilty of a serious misdemeanor. A serious
4 24 misdemeanor is punishable by confinement for no more than one
4 25 year and a fine of at least $250 but not more than $1,500.
4 26 The bill provides for certain reporting requirements by
4 27 lenders who provide loans secured by a certificate of title to
4 28 a motor vehicle. The superintendent of banking shall annually
4 29 collect information regarding the number of loans secured, the
4 30 total monetary amount of such loans at each location,
4 31 affiliate relationships of the lender to financial
4 32 institutions, certain demographic information of consumers of
4 33 such loans, and the total number of motor vehicles repossessed
4 34 as a result of such loans.
4 35 LSB 5766HH 81
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