Senate File 2152 - Introduced
SENATE FILE
BY BOLKCOM, CONNOLLY, BEAL, STEWART,
RAGAN, DANIELSON, HATCH, DVORSKY,
SENG, HANCOCK, DEARDEN, WOOD,
SCHOENJAHN, FRAISE, COURTNEY,
QUIRMBACH, GRONSTAL, KIBBIE, and
BLACK
Passed Senate, Date Passed House, 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 5766SS 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 5766SS 81
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