House Study Bill 578 HOUSE FILE BY (PROPOSED COMMITTEE ON COMMERCE, REGULATION AND LABOR BILL BY CHAIRPERSON JENKINS) Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to the prepayment of agricultural loans secured 2 by a real estate mortgage. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5641YC 81 5 kk/je/5 PAG LIN 1 1 Section 1. Section 535.9, subsection 1, Code 2005, is 1 2 amended to read as follows: 1 3 1. As used in this section, "loan" means a loan of money 1 4 which is wholly or in part to be used for the purpose of 1 5 purchasing real property which is a single=family or a two= 1 6 family dwelling occupied or to be occupied by the borrower, or 1 7 which is payable over a term of five years or less for the 1 8 purpose of purchasing agricultural land. "Loan" includes the 1 9 refinancing of a contract of sale, and the refinancing of a 1 10 prior loan, whether or not the borrower also was the borrower 1 11 under the prior loan, and the assumption of a prior loan. 1 12 EXPLANATION 1 13 This bill relates to the prepayment of loans secured by 1 14 real estate mortgages for the purchase of agricultural land. 1 15 Code section 535.9 prohibits mortgage lenders from receiving 1 16 additional interest other than due under the terms of the loan 1 17 agreement and from imposing penalties for prepayment of a loan 1 18 earlier than required by the loan agreement. The bill 1 19 restricts the definition of "loan" with regard to the purchase 1 20 of agricultural land to agricultural loans payable over a term 1 21 of five years or less so that loans to purchase agricultural 1 22 land which are payable for a term of more than five years may 1 23 have additional interest or penalties imposed for prepayment 1 24 of the loan. 1 25 LSB 5641YC 81 1 26 kk:nh/je/5