Senate File 541 - Introduced
SENATE FILE
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO SF 313)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to consumer protection in specified home loans.
2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. NEW SECTION. 714C.1 DEFINITIONS.
1 2 As used in this chapter, unless the context otherwise
1 3 requires:
1 4 1. "Consumer home loan" means a loan, including a home
1 5 equity line of credit as defined in section 535.10, in which
1 6 the borrower is a natural person, the loan proceeds are to be
1 7 used primarily for personal, family, or household purposes,
1 8 and the loan is secured by a mortgage or deed of trust upon
1 9 residential real property as defined in section 535B.1.
1 10 Consumer home loan includes a loan used to purchase
1 11 residential real property and a refinancing of an existing
1 12 consumer home loan, but specifically excludes reverse mortgage
1 13 transactions.
1 14 2. "Lender" means a person who makes a loan.
1 15 3. "Mortgage banker" means the same as defined in section
1 16 535B.1, and includes natural persons required to be registered
1 17 under section 535B.4A.
1 18 4. "Mortgage broker" means the same as defined in section
1 19 535B.1, and includes natural persons required to be registered
1 20 under section 535B.4A.
1 21 5. "Person" means the same as defined in section 535B.1.
1 22 6. "Reverse mortgage transaction" means a loan for a
1 23 definite or indefinite term secured by a first mortgage or
1 24 first deed of trust on the principal residence of the
1 25 mortgagor located in Iowa, the proceeds of which are disbursed
1 26 to the mortgagor in one or more lump sums, or in equal or
1 27 unequal installments, either directly by the lender or the
1 28 lender's agent, and that requires no repayment until a future
1 29 time, upon the earliest occurrence of one or more events
1 30 specified in the reverse mortgage loan contract such as the
1 31 sale of the property or the death of the borrower.
1 32 Sec. 2. NEW SECTION. 714C.2 CONSUMER PROTECTIONS IN
1 33 CERTAIN HOME LOANS.
1 34 In any consumer home loan, a lender, mortgage banker, or
1 35 mortgage broker, shall not:
2 1 1. Recommend or encourage default on an existing loan or
2 2 other debt prior to and in connection with the closing or
2 3 planned closing of a consumer home loan that refinances all or
2 4 any portion of such existing loan or debt.
2 5 2. Knowingly misrepresent to a borrower the borrower's
2 6 credit rating or credit status.
2 7 3. Knowingly misrepresent, inflate, or fabricate, or
2 8 encourage a borrower to misrepresent, inflate, or fabricate,
2 9 the source or amount of a borrower's actual income or assets
2 10 in the application or underwriting process of a consumer home
2 11 loan.
2 12 4. Knowingly misrepresent or conceal material facts or
2 13 make false promises likely to influence, persuade, or induce a
2 14 borrower to enter into a consumer home loan.
2 15 5. Fail to disburse funds in accordance with a written
2 16 commitment or agreement to make a consumer home loan.
2 17 6. Knowingly engage in any transaction, practice, or
2 18 course of business in connection with a consumer home loan
2 19 that is not in good faith or that constitutes a fraud upon any
2 20 person.
2 21 Sec. 3. NEW SECTION. 714C.3 WAIVER PROHIBITED.
2 22 The terms of this chapter cannot be waived or modified by
2 23 contract or otherwise.
2 24 Sec. 4. NEW SECTION. 714C.4 EXEMPTION.
2 25 The provisions of this chapter shall not apply to federally
2 26 insured depository institutions.
2 27 Sec. 5. NEW SECTION. 714C.5 REMEDIES.
2 28 1. A violation of this chapter is an unlawful practice
2 29 pursuant to section 714.16, subsection 2, paragraph "a".
2 30 2. A borrower who suffers damage or injury as the result
2 31 of a practice which violates this chapter may bring an action
2 32 at law to recover actual damages. The court may order such
2 33 equitable relief as it deems necessary to protect the public
2 34 from further violations, including temporary and permanent
2 35 injunctive relief. In an action in which it is found that a
3 1 person has violated this chapter, the court shall award to the
3 2 borrower the costs of the action and to the borrower's
3 3 attorneys their reasonable fees. Reasonable attorney fees
3 4 shall be determined by the value of the time reasonably
3 5 expended by the attorney including but not limited to
3 6 consideration of the following factors:
3 7 a. The time and labor required.
3 8 b. The novelty and difficulty of the issues in the case.
3 9 c. The skills required to perform the legal services
3 10 properly.
3 11 d. The preclusion of other employment by the attorney due
3 12 to the attorney's acceptance of the case.
3 13 e. The customary fee.
3 14 f. Whether the fee is fixed or contingent.
3 15 g. The time limitations imposed by the client or the
3 16 circumstances of the case.
3 17 h. The amount of money involved in the case and the
3 18 results obtained.
3 19 i. The experience, reputation, and ability of the
3 20 attorney.
3 21 j. The undesirability of the case.
3 22 k. The nature and length of the professional relationship
3 23 between the attorney and the client.
3 24 l. Damage awards in similar cases.
3 25 3. In order to recover damages, a claim under this section
3 26 shall be proved by a preponderance of the evidence.
3 27 4. If the finder of fact finds that a prohibited practice
3 28 in violation of this chapter constitutes willful and wanton
3 29 disregard for the rights or safety of another, in addition to
3 30 an award of actual damages, statutory damages up to three
3 31 times the amount of actual damages may be awarded to a
3 32 prevailing borrower.
3 33 5. This section shall not affect a borrower's right to
3 34 seek relief under any other theory of law.
3 35 Sec. 6. NEW SECTION. 714C.6 APPLICABILITY OF OTHER LAW.
4 1 This chapter establishes specific consumer protections in
4 2 consumer home loans that are in addition to other consumer
4 3 protections that may be otherwise available under state or
4 4 federal law.
4 5 Sec. 7. NEW SECTION. 535B.12A APPLICABILITY OF OTHER
4 6 LAW.
4 7 A violation of chapter 714C is a violation of this chapter.
4 8 Sec. 8. NEW SECTION. 536.19A APPLICABILITY OF OTHER LAW.
4 9 A violation of chapter 714C is a violation of this chapter.
4 10 Sec. 9. NEW SECTION. 536A.27A APPLICABILITY OF OTHER
4 11 LAW.
4 12 A violation of chapter 714C is a violation of this chapter.
4 13 EXPLANATION
4 14 This bill establishes consumer protection measures in
4 15 relation to specified home loans, and establishes additional
4 16 related requirements applicable to mortgage bankers and
4 17 mortgage brokers.
4 18 The bill places restrictions on a mortgage banker or
4 19 mortgage broker relating to a consumer home loan transaction,
4 20 which the bill specifies includes certain home equity lines of
4 21 credit, and both a loan used to purchase residential real
4 22 property and a refinancing of an existing consumer home loan
4 23 but specifically excludes reverse mortgage transactions. The
4 24 bill provides that a mortgage broker or banker shall not
4 25 recommend or encourage default on an existing loan or other
4 26 debt prior to and in connection with the closing or planned
4 27 closing of a consumer home loan that refinances all or any
4 28 portion of such existing loan or debt; knowingly misrepresent
4 29 to a borrower the borrower's credit rating or credit status;
4 30 knowingly misrepresent, inflate, or fabricate, or encourage a
4 31 borrower to misrepresent, inflate, or fabricate, the source or
4 32 amount of a borrower's actual income or assets in the
4 33 application or underwriting process of a consumer home loan;
4 34 knowingly misrepresent or conceal material facts or make false
4 35 promises likely to influence, persuade, or induce a borrower
5 1 to enter into a consumer home loan; fail to disburse funds in
5 2 accordance with a written commitment or agreement to make a
5 3 consumer home loan; or knowingly engage in any transaction,
5 4 practice, or course of business in connection with a consumer
5 5 home loan that is not in good faith or that constitutes a
5 6 fraud upon any person.
5 7 The bill contains additional conforming changes to the
5 8 Code, includes the bill's provisions within the scope of the
5 9 consumer fraud provisions of Code section 714.16 and other
5 10 related Code chapters, and provides several factors to be
5 11 utilized in the determination of reasonable attorney fees.
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