H.F. 328 Section 1. Section 524.211, subsection 3, Code 2011, is 1 amended to read as follows: 2 3. The superintendent, general counsel, examiners, and 3 other employees of the banking division, who have credit 4 relations with a person or entity licensed or registered 5 pursuant to chapter 535B , 535D, or 536C , are prohibited from 6 participating in decisions, oversight, and official review 7 of matters concerning the regulation of the licensee or 8 registrant. 9 Sec. 2. Section 524.212, subsection 2, Code 2011, is amended 10 to read as follows: 11 2. The superintendent may receive documents, materials, 12 or other information, including otherwise confidential and 13 privileged documents, materials, or other information, from 14 other local, state, federal, and international regulatory 15 agencies, the conference of state bank supervisors and its 16 affiliates or subsidiaries, the American association of 17 mortgage regulators and its affiliates or subsidiaries, and 18 the national association of consumer credit administrators 19 and its affiliates or subsidiaries, and shall maintain as 20 confidential and privileged any such document, material, or 21 other information received with notice or the understanding 22 that it is confidential or privileged under the laws of the 23 jurisdiction that is the source of the document, material, or 24 other information. With respect to documents, materials, or 25 other information that is shared or stored electronically, 26 the superintendent is authorized to take any necessary steps 27 to ensure the division’s information technology systems 28 comply with the information technology security requirements 29 established by any of the regulatory agencies or associations 30 of state regulatory agencies described in this section. 31 Sec. 3. Section 524.904, subsection 5, Code 2011, is amended 32 to read as follows: 33 5. a. A state bank may grant loans and extensions of credit 34 to a corporate borrowing group in an amount not to exceed 35 -1- LSB 1246HV (2) 84 rn/sc 1/ 8

H.F. 328 twenty-five percent of the state bank’s aggregate capital if 1 all loans and extensions of credit to any one borrower within 2 a corporate borrowing group conform to subsection 2 or 3 , and 3 the financial strength, assets, guarantee, or endorsement of 4 any one corporate borrowing group member is not relied upon 5 as a basis for loans and extensions of credit to any other 6 corporate borrowing group member. A state bank may grant loans 7 and extensions of credit to a corporate borrowing group in an 8 amount not to exceed thirty-five percent of aggregate capital 9 if all loans and extensions of credit to any one borrower 10 within a corporate borrowing group conform to subsection 2, 11 3 , or 4, and the financial strength, assets, guarantee, or 12 endorsement of any one corporate borrowing group member is not 13 relied upon as a basis for loans and extensions of credit to 14 any other corporate borrowing group member. A corporate group 15 includes a person and all corporations in which the person 16 owns or controls fifty percent or more of the shares entitled 17 to vote. While not to be construed as an endorsement of the 18 quality of any loan or extension of credit, the superintendent 19 may authorize a state bank to grant loans and extensions of 20 credit to a borrowing group in an amount not to exceed fifty 21 percent of aggregate capital if all loans and extensions of 22 credit to any one borrower within a borrowing group conform 23 to subsection 2 or 3, and the financial strength, assets, 24 guarantee, or endorsement of any one borrowing group member is 25 not relied upon as a basis for loans and extensions of credit 26 to any other borrowing group member. 27 b. For the purposes of this subsection, a borrowing 28 group includes a person and any legal entity, including but 29 not limited to corporations, limited liability companies, 30 partnerships, trusts, and associations where the following 31 exist: 32 (1) The interests of a group of more than one borrower, 33 or any combination of the members of the group, are so 34 interrelated that they should be considered a unit for the 35 -2- LSB 1246HV (2) 84 rn/sc 2/ 8

H.F. 328 purpose of applying the lending limit limitations of this 1 section. For the purposes of this subparagraph, interrelated 2 borrowers include but are not limited to borrowers having 3 separate operations that cannot exist without the other, 4 borrowers sharing collateral, borrowers commingling assets, 5 borrowers sharing operational proceeds, or borrowers for whom 6 there is a common source of repayment for the borrowers’ loans. 7 (2) One or more persons owns or controls fifty percent or 8 more of the voting securities or membership interests of the 9 borrowing entity or a member of the group. 10 (3) One or more persons controls, in any manner, the 11 election of a majority of the directors, managers, trustees, 12 or other persons exercising similar functions of the borrowing 13 entity or a member of the group. 14 (4) One or more persons has the power to vote fifty percent 15 or more of any class of voting securities or membership 16 interests of the borrowing entity or a member of the group. 17 c. To demonstrate compliance with this subsection, a 18 bank shall maintain in its files, at a minimum, all of the 19 following: 20 (1) Documentation demonstrating the current ownership of 21 the borrowing entity. 22 (2) Documentation identifying the persons who have voting 23 rights in the borrowing entity. 24 (3) Documentation identifying the board of directors and 25 senior management of the borrowing entity. 26 (4) The bank’s assessment of the borrowing entity’s means 27 of servicing the loan or extension of credit, including 28 specific reasons in support of that assessment. The assessment 29 shall include an analysis of the borrowing entity’s financial 30 history, its present and projected economic and financial 31 performance, and the significance of any financial support 32 provided to the borrowing entity by members of the borrowing 33 group and third parties. 34 Sec. 4. Section 524.904, subsection 7, Code 2011, is amended 35 -3- LSB 1246HV (2) 84 rn/sc 3/ 8

H.F. 328 by adding the following new paragraph: 1 NEW PARAGRAPH . m. A renewal or restructuring of a loan as 2 a new loan or extension of credit following the exercise by 3 a state bank of reasonable efforts, consistent with safe and 4 sound banking practices, to bring the loan into conformance 5 with the lending limit, unless new funds are advanced by the 6 bank to the borrower or unless a new borrower replaces the 7 original borrower or unless the superintendent determines that 8 the renewal or restructuring was undertaken as a means to evade 9 the bank’s lending limit. 10 Sec. 5. Section 524.1201, subsection 4, Code 2011, is 11 amended by striking the subsection. 12 Sec. 6. Section 535B.4, Code 2011, is amended by adding the 13 following new subsection: 14 NEW SUBSECTION . 8A. A licensee may not establish branch 15 locations outside of the United States. 16 Sec. 7. Section 535B.6, Code 2011, is amended to read as 17 follows: 18 535B.6 Licensing of foreign corporation certain corporations . 19 1. An applicant that is a foreign corporation incorporated 20 under the laws of another state in the United States must be 21 authorized to do business in this state. A foreign corporation 22 Such a corporation shall file with the license application both 23 of the following: 24 1. a. An irrevocable consent, duly acknowledged, that 25 suits and actions may be commenced against that licensee in the 26 courts of this state by service of process in the usual manner 27 provided for by the statutes and court rules of this state. 28 2. b. Proof of authorization to do business in this state. 29 2. Businesses that are incorporated outside of the United 30 States are not eligible for a license. 31 Sec. 8. Section 535D.4, subsection 1, Code 2011, is amended 32 to read as follows: 33 1. On or after January 1, 2010, an individual shall not 34 engage in the business of a mortgage loan originator with 35 -4- LSB 1246HV (2) 84 rn/sc 4/ 8

H.F. 328 respect to any dwelling or residential real estate located in 1 this state without first obtaining and maintaining annually 2 a license under this chapter . Each licensed mortgage loan 3 originator must register with and maintain a valid unique 4 identifier issued by the nationwide mortgage licensing system 5 and registry. 6 Sec. 9. NEW SECTION . 535D.23 Reports of condition required 7 —— exceptions. 8 Each mortgage loan originator licensee shall submit 9 reports of condition to the nationwide mortgage licensing 10 system and registry unless the mortgage loan originator’s 11 activity is included in a report submitted by the mortgage 12 loan originator’s employer in accordance with section 535B.11, 13 subsection 3, section 535B.18, or section 536A.14, subsection 14 2. The reports shall be in such form and shall contain such 15 information as the nationwide mortgage licensing system and 16 registry may require. 17 Sec. 10. EFFECTIVE UPON ENACTMENT. The section of this Act 18 amending section 524.904 takes effect upon enactment. 19 EXPLANATION 20 This bill makes several changes in connection with banking 21 and mortgage regulation by the division of banking of the 22 department of commerce. 23 The bill provides that the superintendent of banking 24 is authorized to ensure that the division’s information 25 technology systems comply with information technology 26 security requirements established by any regulatory agency or 27 association of regulatory agencies specified in Code section 28 524.212. 29 The bill makes changes regarding provisions relating to 30 a state bank granting loans and extensions of credit to a 31 corporate group. The bill provides that, while not to be 32 construed as an endorsement of the quality of any loan or 33 extension of credit, the superintendent may authorize a state 34 bank to grant loans and extensions of credit to a corporate 35 -5- LSB 1246HV (2) 84 rn/sc 5/ 8

H.F. 328 group in an amount not to exceed 50 percent of aggregate 1 capital if all loans and extensions of credit to any one 2 borrower within a corporate group conform to an applicable 3 percentage of capital limitations and the financial strength, 4 assets, guarantee, or endorsement of any one corporate group 5 member is not relied upon as a basis for loans and extensions 6 of credit to any other corporate group member. 7 The bill modifies the definition of a corporate group for 8 purposes of applying group bank lending limits and replaces 9 references to “corporate” group with “borrowing” group. The 10 bill states that a borrowing group includes a person and any 11 legal entity, including but not limited to corporations, 12 limited liability companies, partnerships, trusts, and 13 associations. The bill specifies that a borrowing group shall 14 include the interests of a group of more than one borrower, 15 or any combination of the members of the group, which are 16 so interrelated, as defined in the bill, that they should be 17 considered a unit for the purpose of applying the lending 18 limits; one or more persons owning or controlling 50 percent 19 or more of the voting securities or membership interests 20 of the borrowing entity or a member of the group; one or 21 more persons controlling, in any manner, the election of a 22 majority of the directors, managers, trustees, or other persons 23 exercising similar functions of the borrowing entity or a 24 member of the group; or one or more persons having the power 25 to vote 50 percent or more of any class of voting securities 26 or membership interests of the borrowing entity or a member 27 of the group. The bill states that required documentation to 28 demonstrate compliance with borrowing group bank lending limits 29 includes, at a minimum, demonstrating the current ownership 30 of the borrowing entity, identifying the persons who have 31 voting rights in the borrowing entity, identifying the board 32 of directors and senior management of the borrowing entity, 33 and the bank’s assessment of the borrowing entity’s means of 34 servicing the loan or extension of credit including specific 35 -6- LSB 1246HV (2) 84 rn/sc 6/ 8

H.F. 328 reasons in support of that assessment. 1 The bill deletes a provision which states that a bank shall 2 not operate a loan production office or deposit production 3 office in Iowa unless either the bank has received approval 4 from the superintendent or the bank operated the loan 5 production office or deposit production office prior to July 6 1, 2006. 7 The bill includes in the list of exemptions from a bank’s 8 lending limit a renewal or restructuring of a loan as a new 9 loan or extension of credit if efforts had been made to bring 10 the loan into conformance with the lending limit, unless as 11 part of the renewal or restructuring new funds are advanced 12 by the bank to the borrower or a new borrower replaces the 13 original borrower or the superintendent determines that a 14 renewal or restructuring was undertaken as a means to evade the 15 bank’s lending limit. This provision of the bill takes effect 16 upon enactment. 17 The bill provides that a mortgage banker or mortgage broker 18 licensed under Code chapter 535B may not establish branch 19 locations outside of the United States, specifies that an 20 applicant incorporated under the laws of another state in the 21 United States must be authorized to do business in Iowa, and 22 specifies that businesses that are incorporated outside of the 23 United States are not eligible for licensure. 24 The bill adds persons or entities licensed under Code 25 chapter 535D, the mortgage licensing act, to provisions 26 prohibiting the superintendent, general counsel, examiners, 27 and other employees of the banking division, if engaged in 28 credit relations with the person or entity, from participating 29 in specified regulatory actions over the person or entity. 30 The bill provides that an individual shall not engage in 31 the business of a mortgage loan originator with respect 32 to any dwelling or residential real estate located in this 33 state without obtaining and maintaining a license under Code 34 chapter 535D. This provision had previously been restricted 35 -7- LSB 1246HV (2) 84 rn/sc 7/ 8

H.F. 328 to “residential real estate”. The bill establishes a new 1 requirement that each mortgage loan originator licensee under 2 the Code chapter shall submit to the nationwide mortgage 3 licensing system and registry reports of condition required by 4 the system and registry, unless the mortgage loan originator’s 5 activity is included in a mortgage call report submitted by 6 the originator’s employer in accordance with specified Code 7 sections. 8 -8- LSB 1246HV (2) 84 rn/sc 8/ 8