S.F. _____ Section 1. Section 535B.11, subsection 5, Code 2015, is 1 amended by striking the subsection. 2 Sec. 2. Section 655.1, Code 2015, 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 record holder of the mortgage a demand for the record 30 holder to record a proper instrument of satisfaction of the 31 record holder’s interest in the mortgage. The demand must 32 include a description of the mortgage to be satisfied, and 33 include any specific requirements necessary for the mortgage to 34 be satisfied. 35 -1- LSB 2578XC (1) 86 jh/sc 1/ 5

S.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 Iowa registered 4 agent of a person authorized to do business in Iowa. 5 b. In the manner provided in section 490.1510, subsection 6 3, on a person who is a nonresident and does not have a current 7 certificate of authority to transact business in Iowa. 8 c. A notice of intent to execute and record a certificate of 9 release sent to the mortgagee or mortgage servicer by the title 10 guaranty division of the Iowa finance authority under section 11 16.92. 12 3. If notice is served under subsection 2, paragraph “a” or 13 “b” , the notice is effective at the earliest of the date the 14 record holder receives the certified mail, the date shown on 15 the return receipt, if signed on behalf of the record holder, 16 and five days after its deposit in the United States mail, as 17 evidenced by the postmark, if mailed postpaid and correctly 18 addressed. If notice is served under subsection 2, paragraph 19 “c” , notice is effective under any of the circumstances 20 described in section 16.92, subsection 3, paragraph “d” . 21 Sec. 4. Section 655.3, Code 2015, is amended to read as 22 follows: 23 655.3 Penalty for failure to discharge. 24 1. If a mortgagee, or a mortgagee’s personal representative 25 or assignee, or mortgage servicer, upon full performance of 26 the conditions of the mortgage, fails to discharge record the 27 satisfaction of such mortgage within in accordance with section 28 655.1 by the later of ten days after service of a notice is 29 effective under section 655.2 or thirty days after a request 30 for discharge payment in full of the mortgage , the mortgagee is 31 liable to the mortgagor and the mortgagor’s heirs or assigns, 32 for a damage award that is an amount equal to the greater of 33 the sum of all actual damages caused by such the failure, 34 including reasonable attorney fees and expert witness fees, 35 -2- LSB 2578XC (1) 86 jh/sc 2/ 5

S.F. _____ if any, to obtain such discharge, reasonable attorney fees to 1 collect the amounts due the mortgagor or the mortgagor’s heirs, 2 assigns, or grantees under this section, and court costs or the 3 minimum damage award, as defined in subsection 2, in effect at 4 the commencement of an action to collect such damages, plus 5 court courts . A claim for such damages a damage award may be 6 asserted in an action for discharge of the mortgage. If the 7 defendant is not a resident of this state, such action may 8 be maintained upon the expiration of thirty days after the 9 conditions of the mortgage have been performed, without such 10 previous request or tender. 11 2. a. The minimum damage award for the period beginning 12 July 1, 2015, and ending June 30, 2020, is seven hundred 13 dollars. 14 b. For each subsequent five-year period, if the consumer 15 price index for all urban consumers published by the United 16 States bureau of labor statistics in June of the most recently 17 ended five-year period has increased over the consumer price 18 index for all urban consumers in June of the fifth year of the 19 five-year period immediately preceding the most recently ended 20 five-year period, the minimum damage award amount will increase 21 by the same ratio that the consumer price index increased 22 over those time periods. If the consumer price index did not 23 increase over those time periods, the minimum damage award 24 amount will remain the same as for the most recently ended 25 five-year period. 26 c. If the United States bureau of labor statistics ceases 27 to publish the consumer price index for all urban consumers, 28 the calculation in paragraph “b” shall be based on the increase 29 in inflation over the most recently ended five-year period, 30 as measured by a nationally recognized index of changes in 31 inflation selected by the state treasurer and published in the 32 Iowa administrative bulletin. 33 EXPLANATION 34 The inclusion of this explanation does not constitute agreement with 35 -3- LSB 2578XC (1) 86 jh/sc 3/ 5

S.F. _____ the explanation’s substance by the members of the general assembly. 1 This bill relates to requirements of written instruments 2 of release or satisfaction of mortgages and the penalties for 3 failure of mortgagees or mortgage servicers to timely deliver 4 releases of mortgages. 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 that 20 such an instrument of satisfaction must be recorded within 21 30 days after receipt of payment in full and extends the 22 requirement to a mortgage servicer. The bill defines “mortgage 23 servicer” as a person, other than the mortgagee, to whom the 24 mortgagee instructs the mortgagor or mortgagor’s successor in 25 interest to send payments on a loan secured by the mortgage. 26 The bill provides if the mortgagee is an entity, the authority 27 of the person executing the instrument of satisfaction must 28 appear of record in relation to the mortgage or the property in 29 the county where the mortgage is recorded. 30 The bill also provides that after payment of the mortgage in 31 full, the owner of the property may serve the current record 32 holder of the mortgage and demand the recording of a proper 33 instrument of satisfaction. If the record holder of the 34 mortgage fails to record the written instrument of satisfaction 35 -4- LSB 2578XC (1) 86 jh/sc 4/ 5

S.F. _____ by the later of 10 days after the mortgagor has served notice 1 of a demand for the recordation of the written instrument of 2 satisfaction and 30 days after payment in full, the mortgagee 3 is liable. Damages are the greater of (a) all actual damages 4 caused by the failure to record the written instrument of 5 satisfaction, including reasonable attorney fees and expert 6 witness fees necessary to obtain the discharge, reasonable 7 attorney fees to collect the damages, and court costs and (b) 8 a minimum damage award plus court costs. The minimum damage 9 award amount from July 1, 2015, to June 30, 2020, is $700. The 10 bill provides for a calculation of the minimum damage award 11 amount for each five-year period after the initial five-year 12 period. For each subsequent five-year period, if the consumer 13 price index for all urban consumers has increased in the 14 five-year period, the minimum damage award amount will increase 15 by the same ratio that the consumer price index increased. If 16 the consumer price index did not increase, the minimum damage 17 award amount will remain the same as for the most recently 18 ended five-year period. 19 -5- LSB 2578XC (1) 86 jh/sc 5/ 5