House Study Bill 674 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON PETERSEN) A BILL FOR An Act eliminating specified mortgage loan disclosure statement 1 filing requirements applicable to financial institutions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 6185HC (3) 83 rn/nh

H.F. _____ Section 1. Section 535A.1, Code 2009, is amended to read as 1 follows: 2 535A.1 Definitions. 3 For purposes of this chapter, unless the context otherwise 4 requires: 5 1. “Financial institution” means any bank, credit union, 6 insurance company, mortgage banking company or savings and loan 7 association, industrial loan company, or like institution or 8 any other person who makes mortgage loans and which operates or 9 has a place of business in this state. “Financial institution” 10 does not include an individual who makes less than five 11 mortgage loans a year. 12 2. “Mortgage loan” means a loan for the purchase, 13 construction, improvement , or rehabilitation of residential 14 property containing or to contain four or fewer family dwelling 15 units in which the property is used as security for the loan. 16 3. “Mortgage loan disclosure statement” means the statement 17 required by the federal Home Mortgage Disclosure Act, 12 U.S.C. 18 § 2801 to 2809. 19 4. 3. “Red-lining” means the practice by which a financial 20 institution may designate certain areas as unsuitable for the 21 making of mortgage loans and reject applications for mortgage 22 loans or vary the terms of a mortgage loan upon property within 23 that area because of the prevailing income, racial , or ethnic 24 characteristics of the area, or because of the age of the 25 structures in the area. 26 5. “Reporting financial institution” means a financial 27 institution which is required to file a mortgage loan 28 disclosure statement. 29 6. 4. “Vary the terms of a mortgage loan” includes , but is 30 not limited to the following: 31 a. Requiring a greater than average down payment than is 32 usual for the particular type of mortgage loan involved. 33 b. Requiring a shorter period of amortization than is usual 34 for the particular type of mortgage loan involved. 35 -1- LSB 6185HC (3) 83 rn/nh 1/ 3

H.F. _____ c. Charging a higher interest rate or higher loan 1 origination fees than is usual for the particular type of 2 mortgage loan involved. 3 d. An unreasonable underappraisal of real estate or item of 4 property offered as security. 5 Sec. 2. Section 535A.2, Code 2009, is amended to read as 6 follows: 7 535A.2 Discriminatory —— real estate mortgages. 8 1. It is a discriminatory practice for any financial 9 institution accepting mortgage loan applications to engage in 10 the practice of red-lining as defined in section 535A.1. 11 2. This section shall be administered and enforced by the 12 following agencies: 13 a. The superintendent of banking or the superintendent’s 14 designee in regard to banks, persons licensed under chapter 15 536A, and mortgage banking companies. 16 b. The superintendent of savings and loan associations or 17 the superintendent’s designee in regard to savings and loan 18 associations pursuant to chapter 534. 19 c. The commissioner of insurance or the commissioner’s 20 designee pursuant to chapter 505 in regard to all insurance 21 companies. 22 d. The superintendent of credit unions or the 23 superintendent’s designee in regard to all credit unions. 24 Sec. 3. Section 535A.6, Code 2009, is amended to read as 25 follows: 26 535A.6 Action for damages. 27 1. Any person who has been aggrieved as a result of a 28 violation of sections 535A.1 to 535A.9 may bring an action 29 in the district court of the county in which the violation 30 occurred or in the county where the financial institution 31 involved is located. 32 2. Upon a finding that a financial institution has committed 33 a violation of either section 535A.2 , 535A.4 , or 535A.9 the 34 court may award actual damages, court costs , and attorney fees. 35 -2- LSB 6185HC (3) 83 rn/nh 2/ 3

H.F. _____ Sec. 4. Section 535A.7, Code 2009, is amended to read as 1 follows: 2 535A.7 Criminal penalty. 3 Any person who knowingly engages in a practice which 4 violates the provisions of section 535A.2 , 535A.4 or 535A.9 is 5 guilty of a serious misdemeanor. 6 Sec. 5. REPEAL. Sections 535A.4 and 535A.5, Code 2009, are 7 repealed. 8 EXPLANATION 9 This bill repeals a provision in Code chapter 535A, relating 10 to prohibiting the practice of red-lining in mortgage lending, 11 which requires a reporting financial institution to file a copy 12 of its federally required mortgage loan disclosure statement 13 with the Iowa finance authority by March 31 following the 14 calendar year covered by the statement. 15 The bill makes conforming changes as necessary to other 16 sections of the Code chapter, and repeals Code section 535A.5, 17 relating to responsibility for administration of specified Code 18 sections, and reinserts it in a modified form in Code section 19 535A.2 to which it remains applicable. 20 The bill also deletes definitions of reporting financial 21 institution and mortgage loan disclosure statement currently 22 contained in the Code chapter. 23 -3- LSB 6185HC (3) 83 rn/nh 3/ 3