H.F. _____ Section 1. Section 535B.11, subsection 5, Code 2016, is 1 amended by striking the subsection. 2 Sec. 2. Section 655.1, Code 2016, is amended to read as 3 follows: 4 655.1 Written instrument acknowledging satisfaction. 5 1. When the amount due on a mortgage is paid off, the 6 mortgagee, the mortgagee’s personal representative or assignee, 7 the mortgage servicer, or those legally acting for the 8 mortgagee, and in case of payment of a school fund mortgage , 9 the county auditor, must shall, within thirty days of payment 10 in full, acknowledge satisfaction thereof by execution of 11 an a proper instrument of satisfaction which is in writing, 12 referring refers to the mortgage, and is duly acknowledged 13 and recorded. For purposes of this section, an instrument of 14 satisfaction executed by a person other than the mortgagee, 15 if the mortgagee is an individual, or other than a qualified 16 officer of the mortgagee, if the mortgagee is an entity, is not 17 proper if the authority of the person executing the instrument 18 does not appear of record in relation to the mortgage or the 19 property that is the subject of the mortgage in the county 20 where the mortgage is recorded. 21 2. For purposes of this chapter, “mortgage servicer” means 22 a person, other than the mortgagee, to whom the mortgagee 23 instructs the mortgagor or mortgagor’s successor in interest to 24 send payments on a loan secured by the mortgage. 25 Sec. 3. NEW SECTION . 655.2 Written demand for satisfaction. 26 1. At any time after payment in full of the mortgage, the 27 owner of the property subject to the mortgage, or the owner’s 28 legal representative or agent, may personally serve upon the 29 current mortgage holder of record a demand for the mortgage 30 holder to record a proper instrument of satisfaction of the 31 mortgage holder’s interest in the mortgage. The demand must 32 include a description of the mortgage to be satisfied and must 33 include any specific requirements necessary for the mortgage to 34 be satisfied. 35 -1- LSB 5693YC (2) 86 jh/sc 1/ 5

H.F. _____ 2. In addition to any other manner permitted by law for 1 personal service, the demand may be served as follows: 2 a. By certified mail, return receipt requested, on a natural 3 person who is a resident in the state or on the registered 4 agent in Iowa of a person authorized to transact business in 5 Iowa. 6 b. In the manner provided in section 490.1510, subsection 7 3, on a person who is a nonresident and does not have a current 8 certificate of authority to transact business in Iowa. 9 c. A notice of intent to execute and record a certificate of 10 release sent to the mortgagee or mortgage servicer by the title 11 guaranty division of the Iowa finance authority under section 12 16.92. 13 3. If notice is served under subsection 2, paragraph “a” or 14 “b” , the notice is effective at the earliest of the date the 15 mortgage holder receives the certified mail, the date shown on 16 the return receipt, if signed on behalf of the mortgage holder, 17 or five days after its deposit in the United States mail, as 18 evidenced by the postmark, if mailed postpaid and correctly 19 addressed. If notice is served under subsection 2, paragraph 20 “c” , notice is effective under any of the circumstances 21 described in section 16.92, subsection 3, paragraph “d” . 22 Sec. 4. Section 655.3, Code 2016, is amended to read as 23 follows: 24 655.3 Penalty for failure to discharge. 25 1. If a mortgagee, or a mortgagee’s personal representative 26 or assignee, or mortgage servicer, upon full performance of 27 the conditions of the mortgage, fails to discharge record the 28 satisfaction of such mortgage within in accordance with section 29 655.1 by the later of ten days after service of a notice is 30 effective under section 655.2 or thirty days after a request 31 for discharge payment in full of the mortgage , the mortgagee is 32 liable to the mortgagor and the mortgagor’s heirs or assigns, 33 for a damage award that is an amount equal to the greater of 34 the sum of all actual damages caused by such the failure, 35 -2- LSB 5693YC (2) 86 jh/sc 2/ 5

H.F. _____ including reasonable attorney fees and expert witness fees, 1 if any, to obtain such discharge, reasonable attorney fees to 2 collect the amounts due the mortgagor or the mortgagor’s heirs, 3 assigns, or grantees under this section, and court costs or the 4 minimum damage award, as defined in subsection 2, in effect at 5 the commencement of an action to collect such damages, plus 6 court courts . A claim for such damages a damage award may be 7 asserted in an action for discharge of the mortgage. If the 8 defendant is not a resident of this state, such action may 9 be maintained upon the expiration of thirty days after the 10 conditions of the mortgage have been performed, without such 11 previous request or tender. 12 2. a. The minimum damage award for the period beginning 13 July 1, 2016, and ending June 30, 2021, is seven hundred 14 dollars. 15 b. For each subsequent five-year period, if the consumer 16 price index for all urban consumers published by the United 17 States bureau of labor statistics in June of the most recently 18 ended five-year period has increased over the consumer price 19 index for all urban consumers in June of the fifth year of the 20 five-year period immediately preceding the most recently ended 21 five-year period, the minimum damage award amount will increase 22 by the same ratio that the consumer price index increased 23 over those time periods. If the consumer price index did not 24 increase over those time periods, the minimum damage award 25 amount will remain the same as for the most recently ended 26 five-year period. 27 c. If the United States bureau of labor statistics ceases 28 to publish the consumer price index for all urban consumers, 29 the calculation in paragraph “b” shall be based on the increase 30 in inflation over the most recently ended five-year period, 31 as measured by a nationally recognized index of changes in 32 inflation selected by the state treasurer and published in the 33 Iowa administrative bulletin. 34 EXPLANATION 35 -3- LSB 5693YC (2) 86 jh/sc 3/ 5

H.F. _____ The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 This bill relates to the requirements for the timely filing 3 of releases or satisfactions of mortgages and the remedies for 4 the failure to do so. 5 The bill strikes Code section 535B.11, subsection 5. 6 Code section 535B.11, subsection 5, requires a licensee or 7 other mortgagee who services mortgages on residential real 8 estate to execute and deliver a release after payoff and 9 within 45 days after receipt of payment. If the licensee or 10 mortgagee fails to do so within 15 days, the mortgagor may 11 notify the superintendent of the division of banking of the 12 department of commerce. If the licensee or mortgagee fails 13 to make the release and deliver it to the superintendent, the 14 superintendent may assess a penalty not to exceed $50 for each 15 day of delinquency after the 15 days. 16 Under current Code section 655.1, when the amount due on a 17 mortgage is paid off, the mortgagee or the mortgagee’s personal 18 representative must acknowledge satisfaction by execution of 19 an instrument, which is duly recorded. The bill requires 20 that such an instrument of satisfaction must be recorded 21 within 30 days after receipt of payment in full and extends 22 the requirement to a mortgage servicer. The bill defines 23 “mortgage servicer” as a person, other than the mortgagee, 24 to whom the mortgagee instructs the mortgagor or mortgagor’s 25 successor in interest to send payments on a loan secured by 26 the mortgage. The bill provides that if the mortgagee is an 27 entity, the authority of the person executing the instrument of 28 satisfaction must appear of record in relation to the mortgage 29 or the property that is the subject of the mortgage in the 30 county where the mortgage is recorded. 31 The bill also provides that after payment of the mortgage 32 in full, the owner of the property may serve the current 33 mortgage holder of record and demand the recording of a proper 34 instrument of satisfaction. If the mortgage holder fails to 35 -4- LSB 5693YC (2) 86 jh/sc 4/ 5

H.F. _____ record the written instrument of satisfaction by the later 1 of 10 days after the mortgagor has served notice of a demand 2 for the recordation of the written instrument of satisfaction 3 or 30 days after payment in full, the mortgagee is liable. 4 Damages are the greater of (a) all actual damages caused by 5 the failure to record the written instrument of satisfaction, 6 including reasonable attorney fees and expert witness fees 7 necessary to obtain the discharge, reasonable attorney fees to 8 collect the damages, and court costs or (b) a minimum damage 9 award plus court costs. The minimum damage award amount from 10 July 1, 2016, to June 30, 2021, is $700. The bill provides 11 for a calculation of the minimum damage award amount for each 12 five-year period after the initial five-year period based on 13 increases in the consumer price index for all urban consumers 14 over periods of time specified in the bill. If the consumer 15 price index does not increase over those specified periods of 16 time, the minimum damage award amount will remain the same as 17 for the most recently ended five-year period. 18 -5- LSB 5693YC (2) 86 jh/sc 5/ 5