CHAPTER 714E
FORECLOSURE CONSULTANTS

Referred to in §331.307, 364.22, 701.1

  
     
714E.1  Definitions.
  As used in this chapter, unless the context otherwise requires:
  1.  “Business day” means any calendar day except Saturday, Sunday, or a public holiday including a holiday observed on a Monday.
  2.  “Contract” means an agreement, or a term in an agreement, between a foreclosure consultant and an owner for the rendition of a service.
  3.  a.  “Foreclosure consultant” means a person who, directly or indirectly, makes a solicitation, representation, or offer to an owner to perform for compensation or who, for compensation, performs a service which the person in any manner represents will do any of the following:
  (1)  Stop or postpone a foreclosure, foreclosure sale, forfeiture, sheriff’s sale, or tax sale.
  (2)  Obtain a forbearance, modification, or repayment plan for a beneficiary or mortgagee.
  (3)  Assist the owner to exercise the right of redemption, cure the mortgage default, cure the real estate contract default, or redeem the property from a tax sale.
  (4)  Obtain an extension of the period within which the owner may reinstate the owner’s obligation.
  (5)  Obtain a waiver of an acceleration clause contained in a promissory note or contract secured by a mortgage on a residence in foreclosure or contained in the mortgage.
  (6)  Assist the owner in foreclosure, foreclosure sale, forfeiture, sheriff’s sale, tax sale, or loan default to obtain a loan or advance of funds.
  (7)  Avoid or ameliorate the impairment of the owner’s credit resulting from the recording of a notice of default or the conduct of a foreclosure sale or a forfeiture of a real estate contract.
  (8)  Save the owner’s residence from foreclosure, foreclosure sale, forfeiture, sheriff’s sale, or tax sale.
  (9)  Negotiate or obtain a mortgage loan or real estate contract modification, forbearance, repayment plan, or other loss mitigation for the consumer.
  b.  “Foreclosure consultant” does not include any of the following:
  (1)  A person licensed to practice law in this state when the person renders service in the course of the person’s practice as an attorney at law.
  (2)  A person licensed to engage in the business of debt management under chapter 533A, when the person is engaged in the business of debt management.
  (3)  A person licensed as a real estate broker or salesperson under chapter 543B, when the person engages in acts whose performance requires licensure under that chapter unless the person is engaged in offering services designed to, or purportedly designed to, enable the owner to retain possession of the residence in foreclosure.
  (4)  A person licensed as an accountant under chapter 542 when the person is acting in any capacity for which the person is licensed under those provisions.
  (5)  A person or the person’s authorized agent acting under the express authority or written approval of the United States department of housing and urban development or other department or agency of the United States or this state to provide services.
  (6)  A person who holds or is owed an obligation secured by a lien on a residence in foreclosure when the person performs services in connection with the obligation or lien if the obligation or lien did not arise as the result of or as part of a proposed foreclosure reconveyance.
  (7)  A person or entity doing business under any law of this state, or of the United States, relating to banks, trust companies, savings and loan associations, industrial loan and thrift companies, regulated lenders, credit unions, insurance companies, or a mortgagee approved by the United States department of housing and urban development, and a subsidiary or affiliate of these persons or entities, and an agent or employee of these persons or entities while engaged in the business of such persons or entities.
  (8)  A person licensed as a mortgage broker or mortgage banker pursuant to chapter 535B, when acting under the authority of that license.
  (9)  A person registered as a mortgage broker or mortgage banker or originator pursuant to chapter 535B, when acting under the authority of that registration.
  (10)  A nonprofit agency or organization that offers counseling or advice to an owner of a residence in foreclosure or loan default if the nonprofit agency or organization does not contract for services with for-profit lenders or foreclosure purchasers.
  (11)  A judgment creditor of the owner, to the extent that the judgment creditor’s claim accrued prior to the personal service of the foreclosure notice required by section 654.2D, but excluding a person who purchased the claim after such personal service.
  (12)  A foreclosure purchaser as defined in section 714F.1.
  4.  “Foreclosure reconveyance” means a transaction involving all of the following:
  a.  The transfer of title to real property by an owner during a foreclosure proceeding, forfeiture proceeding, or tax sale, either by transfer of interest from the owner or by creation of a mortgage or other lien or encumbrance during the foreclosure, forfeiture, or tax sale process that allows the acquirer to obtain title to the property by redeeming the property as a junior lienholder.
  b.  The subsequent conveyance, or promise of a subsequent conveyance, of an interest back to the owner by the acquirer or a person acting in participation with the acquirer that allows the owner to possess either the residence in foreclosure or any other real property, which interest includes but is not limited to an interest in a contract for deed, purchase agreement, option to purchase, or lease.
  5.  “Owner” means the record owner or holder of an equitable interest through contract of the residence in foreclosure at the time the notice of pendency was recorded, or at the time the default notice was served.
  6.  “Person” means the same as defined in section 4.1.
  7.  “Residence in foreclosure” or “affected residence” means residential real property consisting of one to four family dwelling units, one of which the owner occupies as the owner’s principal place of residence, where a delinquency or default on any loan payment or debt is secured by or attached to the residential real property including but not limited to contract for deed payments, real estate contracts, or real estate taxes.
  8.  “Service” includes but is not limited to any of the following:
  a.  Debt, budget, or financial counseling of any type.
  b.  Receiving money for the purpose of distributing the money to creditors in payment or partial payment of an obligation secured by a lien on a residence in foreclosure.
  c.  Contacting creditors on behalf of an owner of a residence in foreclosure.
  d.  Arranging or attempting to arrange for an extension of the period within which the owner of a residence in foreclosure, forfeiture, or tax sale may cure the owner’s default and reinstate the owner’s obligation.
  e.  Arranging or attempting to arrange for a delay or postponement of the time of sale of the residence in foreclosure, forfeiture, or tax sale.
  f.  Advising the filing of a document or assisting in any manner in the preparation of a document for filing with a bankruptcy court.
  g.  Giving advice, explanation, or instruction to an owner of a residence in foreclosure, forfeiture, or tax sale which in any manner relates to the cure of a default in or the reinstatement of an obligation secured by a lien on the affected residence, the full satisfaction of that obligation, or the postponement or avoidance of a sale or loss of the affected residence, pursuant to a power of sale contained in a mortgage.
2008 Acts, ch 1125, §1, 19; 2009 Acts, ch 133, §179

     
714E.2  Foreclosure consultant contract.
  1.  A foreclosure consultant contract must be in writing and must fully disclose the exact nature of the foreclosure consultant’s services and the total amount and terms of compensation.
  2.  The following notice, printed in at least fourteen point boldface type and completed with the name of the foreclosure consultant, must be printed immediately above the notice of cancellation statement required pursuant to section 714E.3:
NOTICE REQUIRED BY IOWA LAW

................................ (name) or anyone working for

................................ (name) CANNOT:

  (1)  Take any money from you or ask you for money until ........................ (name) has completely finished doing everything ........................ (name) said ........................ (name) would do; and

  (2)  Ask you to sign or have you sign any lien, mortgage, or real estate contract.
  3.  The contract must be written in the same language as principally used by the foreclosure consultant to describe the foreclosure consultant’s services and to negotiate the contract with the consumer. The contract must be dated and signed by the owner, and must contain in immediate proximity to the space reserved in the contract for the owner’s signature, a conspicuous statement in a size equal to at least ten point boldface type, as follows:
  You, the owner, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.
  4.  The foreclosure consultant shall provide the owner immediately upon execution of the contract with a copy of the contract along with the notice of cancellation required in section 714E.3.
  5.  The three business days during which the owner may cancel the contract shall not begin to run until the foreclosure consultant has complied with this section and with section 714E.3.
2008 Acts, ch 1125, §2, 19; 2008 Acts, ch 1191, §133
Referred to in §714E.3, 714E.8, 714E.9

     
714E.3  Cancellation of foreclosure consultant contract.
  1.  In addition to any other right under law to rescind a contract, an owner has the right to cancel such a contract until midnight of the third business day after the day on which the owner signs a contract which complies with section 714E.2.
  2.  Cancellation occurs when the owner gives written notice of cancellation to the foreclosure consultant at the address specified in the contract.
  3.  Notice of cancellation, if given by mail, is effective when deposited in the mail properly addressed with postage prepaid.
  4.  Notice of cancellation given by the owner need not take the particular form as provided in the contract and, however expressed, is effective if the notice of cancellation indicates the intention of the owner not to be bound by the contract.
  5.  The notice of cancellation must contain, and the contract must contain on the first page, in a type size no smaller than that generally used in the body of the document, all of the following:
  a.  The real name and physical address of the foreclosure consultant to which the notice of cancellation is to be mailed or otherwise delivered. A post office box does not constitute a physical address. A post office box may be designated for delivery by mail only if it is accompanied by a physical address at which the notice could be delivered by a method other than mail. An electronic mail address may be included, in addition to the physical address.
  b.  The date the owner signed the contract.
  6.  Cancellation occurs when the owner delivers, by any means, written notice of cancellation to the address specified in the contract. If cancellation is mailed, delivery is effective upon mailing. If electronically mailed, cancellation is effective upon transmission. The contract must be accompanied by a completed form in duplicate, captioned “notice of cancellation”, which must be attached to the contract, must be easily detachable, and must contain in at least ten point type the following statement written in the same language as used in the contract:
NOTICE OF CANCELLATION

....................

 (enter date of transaction)

  You may cancel this transaction, without any penalty or obligation, within three business days from the above date.

  To cancel this transaction, you may use any of the following methods:  (1) mail or otherwise deliver a signed and dated copy of this cancellation notice, or any other written notice of cancellation; or (2) e-mail a notice of cancellation to ................................ (name of foreclosure consultant) at ............................................ (physical address of foreclosure consultant’s place of business) ................................ (e-mail address of foreclosure consultant’s place of business)

  Not later than midnight of .................... (date).

  I hereby cancel this transaction.

....................

 (date)

........................................

 (owner’s signature)
  7.  The three business days during which the owner may cancel the contract shall not begin to run until the foreclosure consultant has complied with the requirements of this section and with section 714E.2.
2008 Acts, ch 1125, §3, 19
Referred to in §714E.2, 714E.8, 714E.9

     
714E.4  Violations.
  It is a violation of this chapter for a foreclosure consultant to do any of the following:
  1.  Claim, demand, charge, collect, or receive compensation until after the foreclosure consultant has fully performed each and every service the foreclosure consultant contracted to perform or represented the foreclosure consultant would perform.
  2.  Claim, demand, charge, collect, or receive a fee, interest, or other compensation for any reason which exceeds eight percent per annum of the amount of any loan which the foreclosure consultant may make to the owner. Such a loan must not, as provided in subsection 3, be secured by the residence in foreclosure or any other real or personal property.
  3.  Take a wage assignment, a lien of any type on real or personal property, or other security to secure the payment of compensation. Any such security is void and unenforceable.
  4.  Receive consideration from any third party in connection with services rendered to an owner unless the consideration is first fully disclosed to the owner.
  5.  Acquire an interest, directly or indirectly, or by means of a subsidiary or affiliate in a residence in foreclosure from an owner with whom the foreclosure consultant has contracted.
  6.  Take a power of attorney from an owner for any purpose, except to inspect documents as provided by law.
  7.  Induce or attempt to induce an owner to enter into a contract which does not comply in all respects with the requirements of this chapter.
  8.  Claim, demand, charge, collect, or receive a fee, interest, or other compensation for promising to negotiate a mortgage loan or real estate contract modification, forbearance, repayment plan, or other loss mitigation for the consumer and fail to successfully negotiate such a modification, forbearance, repayment plan, or other loss mitigation.
  9.  Prohibit the borrower from contacting any lender, servicer, government entity, attorney, counselor, individual, or company that may seek to help the consumer. Any such provision is void and unenforceable.
2008 Acts, ch 1125, §4, 19; 2009 Acts, ch 133, §180
Referred to in §714E.6, 714E.7, 714E.8, 714E.9

     
714E.5  Waiver not allowed.
  A waiver by an owner of the provisions of this chapter is void and unenforceable as contrary to public policy. An attempt by a foreclosure consultant to induce an owner to waive the owner’s rights is a violation of this chapter.
2008 Acts, ch 1125, §5, 19
Referred to in §714E.8, 714E.9

     
714E.6  Remedies.
  1.  A violation of this chapter is an unlawful practice pursuant to section 714.16, and all remedies of section 714.16 are available for such an action. A private cause of action brought under this chapter by an owner is in the public interest. An owner may bring an action against a foreclosure consultant for a violation of this chapter. If the court finds that the foreclosure consultant violated this chapter, the court shall award the owner actual damages, appropriate equitable relief, and the costs of the action, and shall award reasonable fees to the owner’s attorney.
  2.  The rights and remedies provided in subsection 1 are cumulative to, and not a limitation of, any other rights and remedies provided by law. Any action brought by a person other than the attorney general pursuant to this section must be commenced within four years from the date of the alleged violation.
  3.  The court may award exemplary damages up to one and one-half times the compensation, fees, and interest charged by the foreclosure consultant if the court finds that the foreclosure consultant violated the provisions of section 714E.4, subsection 1, 2, or 4, and the foreclosure consultant acted in bad faith.
  4.  Notwithstanding any other provision of this section, an action shall not be brought on the basis of a violation of this chapter, except by an owner against whom the violation was committed or by the attorney general. This limitation does not apply to administrative action by either the attorney general or the superintendent of the banking division of the department of commerce.
2008 Acts, ch 1125, §6, 19
Referred to in §714E.8

     
714E.7  Criminal penalty.
  A person who commits any violation described in section 714E.4 commits a serious misdemeanor. Prosecution or conviction for a violation described in section 714E.4 shall not bar prosecution or conviction for any other offenses. These penalties are cumulative to any other remedies or penalties provided.
2008 Acts, ch 1125, §7, 19
Referred to in §714E.8

     
714E.8  Provisions severable.
  If any provision of sections 714E.2 through 714E.7 and 714E.9 or the application of any of these provisions to any person or circumstance is held to be unconstitutional and void, the remainder of sections 714E.2 through 714E.7 and 714E.9 remains valid.
2008 Acts, ch 1125, §8, 19

     
714E.9  Arbitration prohibited.
  A provision in a contract which attempts or purports to require arbitration of a dispute arising under sections 714E.2 through 714E.5 is void at the option of the owner.
2008 Acts, ch 1125, §9, 19
Referred to in §714E.8