Senate File 2302 - Introduced SENATE FILE BY COMMITTEE ON COMMERCE (SUCCESSOR TO SSB 3104) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act specifying a duty of agency applicable to licensed 2 mortgage brokers and making penalties applicable. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5345SV 82 5 rn/nh/5 PAG LIN 1 1 Section 1. NEW SECTION. 535B.18 DUTY OF AGENCY. 1 2 1. A licensee or individual registrant acting in the 1 3 capacity of a mortgage broker pursuant to section 535B.1, 1 4 subsection 5, shall be considered to have created an agency 1 5 relationship with the borrower in all cases and shall perform 1 6 all of the following duties: 1 7 a. Act in good faith toward borrowers and place the 1 8 borrower's interest ahead of the interest of any other party, 1 9 including the interest of the licensee or individual 1 10 registrant. 1 11 b. Not accept, give, or charge any undisclosed 1 12 compensation or realize any undisclosed remuneration, either 1 13 through direct or indirect means, that inures to the benefit 1 14 of the licensee or individual registrant on an expenditure 1 15 made for the borrower. 1 16 c. Carry out all lawful instructions provided or issued by 1 17 the borrower. 1 18 d. Disclose to a borrower all material facts of which the 1 19 licensee or individual registrant has knowledge which might 1 20 reasonably affect the borrower's rights, interests, or ability 1 21 to receive the borrower's intended benefit from the mortgage 1 22 loan, but not facts which are reasonably susceptible to the 1 23 knowledge of the borrower. 1 24 e. Use reasonable care in the performance of duties. 1 25 f. Account to the borrower for all the borrower's money 1 26 and property received as agent. 1 27 2. a. This section shall not be construed to prohibit a 1 28 licensee or individual registrant from contracting for or 1 29 collecting a fee for services rendered which was disclosed and 1 30 agreed to by the borrower in advance of the provision of such 1 31 services. 1 32 b. This section shall not be construed as requiring a 1 33 licensee or individual registrant to obtain a loan for the 1 34 borrower containing terms or conditions not available in the 1 35 usual course of business to the licensee or individual 2 1 registrant, or to obtain a loan for the borrower from a 2 2 mortgage lender with whom the licensee or individual 2 3 registrant does not have a business relationship. 2 4 EXPLANATION 2 5 This bill confers upon licensed mortgage brokers and 2 6 individual registrants a duty of agency. 2 7 The bill provides that a licensee or individual registrant 2 8 acting in the capacity of a mortgage broker pursuant to Code 2 9 section 535B.1, subsection 5, shall be considered to have 2 10 created an agency relationship with a borrower in all cases. 2 11 The bill specifies duties a licensee or individual registrant 2 12 shall perform pursuant to the agency relationship, including 2 13 acting in a borrower's best interest and in good faith, and 2 14 not accepting, giving, or charging any undisclosed 2 15 compensation or realizing any undisclosed remuneration that 2 16 inures to the licensee's or individual registrant's benefit on 2 17 an expenditure made for the borrower. Additional duties 2 18 include carrying out all lawful instructions provided or 2 19 issued by a borrower, disclosing all material facts of which 2 20 the licensee or individual registrant has knowledge which 2 21 might reasonably affect a borrower's rights, interests, or 2 22 ability to receive the intended benefit from the mortgage 2 23 loan, but not facts which are reasonably susceptible to the 2 24 knowledge of a borrower, using reasonable care in the 2 25 performance of duties, and accounting for all the borrower's 2 26 money and property received as agent. 2 27 The bill states that the duty of agency shall not be 2 28 construed to prohibit a licensee or individual registrant from 2 29 contracting for or collecting a fee for services rendered 2 30 which was disclosed and agreed to by the borrower in advance 2 31 of the provision of the services, and shall also not be 2 32 construed to require a licensee or individual registrant to 2 33 obtain a loan for the borrower containing terms or conditions 2 34 not available to the licensee or individual registrant in the 2 35 usual course of business, or to obtain a loan for the borrower 3 1 from a mortgage lender with whom the licensee or individual 3 2 registrant does not have a business relationship. 3 3 A violation of the bill's provisions subjects a licensee to 3 4 the disciplinary provisions of Code chapter 535B, including 3 5 license suspension and revocation, and imposition of civil 3 6 penalties in an amount not to exceed $5,000 per violation. 3 7 LSB 5345SV 82 3 8 rn/nh/5