1.Definitions. For purposes of this section, unless the context otherwise requires:
a.“Lender” means a person who makes or originates a loan; a person who is identified as
a lender on the loan documents; a person who arranges, negotiates, or brokers a loan; and
a person who provides any goods or services as an incident to or as a condition required for
the making or closing of the loan. “Lender” does not include a licensed attorney admitted to
practice in this state acting solely as an incident to the practice of law.
b.“Loan” means a loan of money which is wholly or in part to be used for the purpose
of purchasing real property which is a single-family or two-family dwelling occupied or to
be occupied by the borrower. A loan includes the refinancing of a contract of sale, and the
refi
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1. Definitions. For purposes of this section, unless the context otherwise requires:
a. “Lender” means a person who makes or originates a loan; a person who is identified as
a lender on the loan documents; a person who arranges, negotiates, or brokers a loan; and
a person who provides any goods or services as an incident to or as a condition required for
the making or closing of the loan. “Lender” does not include a licensed attorney admitted to
practice in this state acting solely as an incident to the practice of law.
b. “Loan” means a loan of money which is wholly or in part to be used for the purpose
of purchasing real property which is a single-family or two-family dwelling occupied or to
be occupied by the borrower. A loan includes the refinancing of a contract of sale, and the
refinancing of a prior loan, whether or not the borrower also was the borrower under the
prior loan, and the assumption of a prior loan.
c. “Pointsandfees”meansthefeesandchargesthatareincludedinthedefinitionofpoints
and fees in 12 C.F.R. §1026.32(b)(1).
2. If a lender that is a financial institution as defined in section 537.1301 makes a loan
in which the points and fees the borrower is charged by all lenders in connection with the
loan do not exceed the amounts specified in 12 C.F.R. §1026.43(e)(3), the loan shall not be
subject to the provisions of subsection 4, paragraphs “a”, “b”, and “d”, or subsection 5. If a
lender that is a mortgage banker licensed under section 535B.5 or registered under section
535B.3 makes a loan in which the points and fees the borrower is charged by all lenders in
connection with the loan do not exceed the amounts specified in 12 C.F.R. §1026.43(e)(3),
the loan shall not be subject to the provisions of subsection 4, paragraph “a”, or subsection
5. This subsection applies to the financial institution lender that originates the loan and to
subsequent purchasers of the loan originated by the financial institution.
3. This section shall not be construed to change the prohibition against the sale of
title insurance or sale of insurance against loss or damage by reason of defective title or
encumbrances as provided in section 515.48, subsection 10.
4. a. A borrower may be charged by a lender, in connection with a loan made pursuant
to a written agreement executed by the borrower on or after July 1, 1983, or in connection
with a loan made pursuant to a written commitment by the lender mailed or delivered to the
borrower on or after that date, a loan origination or processing fee, a broker fee, or both,
which together do not exceed two percent of an amount which is equal to the loan principal;
except that to the extent of an assumption by a new borrower of the obligation to make
payments under a prior loan, or to the extent that the loan principal is used to refinance a
prior loan between the same borrower and the same lender, the borrower may be charged
by a lender a loan origination or processing fee, a broker fee, or both, which together do
not exceed an amount which is a reasonable estimate of the expenses of processing the loan
assumption or refinancing but which does not exceed one percent of the unpaid balance of
the loan that is assumed or refinanced. In addition, a borrower may be charged by a lender,
in contemplation of or in connection with a loan, a commitment fee, closing fee, or both,
that is agreed to in writing by the lender and the borrower. A loan fee paid by a borrower
to a lender under this paragraph is compensation to the lender solely for the use of money,
notwithstandinganyprovisionoftheagreementtothecontrary. However, aloanfeecollected
under this paragraph shall be disregarded for purposes of determining the maximum charge
permitted by section 535.2 or 535.9, subsection 2. A lender is prohibited from charging a
borrower in connection with a loan a loan origination or processing fee, broker fee, closing
fee, commitment fee, or similar charge other than expressly authorized by this paragraph or
a payment reduction fee authorized by subsection 5.
b. (1) A borrower may be charged by a lender in connection with a loan any of the
following costs which are incurred by the lender in connection with the loan and which are
disclosed to the borrower:
(a) Credit reports.
(b) Appraisal fees paid to a third party, or when the appraisal is performed by the lender,
a fee which is a reasonable estimate of the expense incurred by the lender in performing the
appraisal.
(c) Attorney’s opinions.
(d) Abstracting fees paid to a third party, or when the abstracting is performed by
the lender, a fee which is a reasonable estimate of the expense incurred by the lender in
performing the abstracting.
(e) County recorder’s fees.
(f) Inspection fees.
(g) Mortgage guarantee insurance charge.
(h) Surveying of property.
(i) Termite inspection.
(j) ThecostofatitleguarantyissuedbytheIowafinanceauthoritypursuanttochapter16.
(k) A bona fide and reasonable settlement or closing fee which is paid to a third party to
settle or close the loan.
(2) The lender shall not charge the borrower for the cost of revenue stamps or real estate
commissions which are paid by the seller.
(3) A lender shall not charge the borrower any costs other than expressly permitted by
this paragraph “b”. However, additional costs incurred in connection with a loan under this
paragraph “b”, if bona fide and reasonable, may be collected by a state-chartered financial
institution licensed under chapter 524 or 533, to the extent permitted under applicable
federal law as determined by the office of the comptroller of the currency of the United
States department of treasury, the national credit union administration, or the office of thrift
supervision of the United States department of treasury. Such costs shall apply only to the
same type of state-chartered entity as the federally chartered entity affected and shall apply
to and may be collected by an insurer organized under chapter 508 or 515, or otherwise
authorized to conduct the business of insurance in this state.
c. If the purpose of the loan is to enable the borrower to purchase a single-family or
two-family dwelling, for the borrower’s residence, any provision of a loan agreement which
prohibits the borrower from transferring the borrower’s interest in the property to a third
party for use by the third party as the third party’s residence, or any provision which requires
or permits the lender to make a change in the interest rate, the repayment schedule or the
term of the loan as a result of a transfer by the borrower of the borrower’s interest in the
property to a third party for use by the third party as the third party’s residence shall not
be enforceable except as provided in the following sentence. If the lender on reasonable
grounds believes that its security interest or the likelihood of repayment is impaired, based
solely on criteria which is not more restrictive than that used to evaluate a new mortgage
loan application, the lender may accelerate the loan, or to offset any such impairment, may
adjust the interest rate, the repayment schedule or the term of the loan. A provision of a loan
agreement which violates this paragraph is void.
d. If a lender collects a fee or charge which is prohibited by paragraph “a” or “b” of this
subsectionorwhichexceedstheamountpermittedbyparagraph“a”or“b”ofthissubsection,
the person from whom the fee was collected has the right to recover the unlawful fee or
charge or the unlawful portion of the fee or charge, plus attorney fees and costs incurred in
any action necessary to effect recovery.
e. (1) Notwithstanding section 628.3 when a foreclosure of a mortgage on real property
results from the enforcement of a due-on-sale clause, the mortgagor may redeem the real
property at any time within eighteen months from the day of sale under the levy, and the
mortgagor shall, in the meantime, be entitled to the possession thereof; and for the first
fifteen months thereafter such right of redemption is exclusive. Any real property redeemed
by the debtor shall thereafter be free and clear from any liability for any unpaid portion of
the judgment under which the real property was sold. The right of redemption established
by this paragraph is not subject to waiver by the mortgagor and the period of redemption
established by this paragraph shall not be reduced. The times for redemption by creditors
provided in sections 628.5, 628.15, and 628.16 shall be extended to sixteen months in
any case in which the mortgagor’s period for redemption is extended by this paragraph.
This paragraph does not apply to foreclosure of a mortgage if for any reason other than
enforcement of a due-on-sale clause. As used in this paragraph, “due-on-sale clause”
means any type of covenant which gives the mortgagee the right to demand payment of the
outstanding balance or a major part thereof upon a transfer by the mortgagor to a third party
of an interest of the mortgagor in property covered by the mortgage. This paragraph applies
to any foreclosure occurring on or after May 10, 1980. However, this paragraph does not
apply if the lender establishes, based on reasonable criteria which are not more restrictive
than those used to evaluate new mortgage-loan applications, that the security interest or the
likelihood of repayment is impaired as a result of the transfer of interest.
(2) This lettered paragraph applies only to a mortgage given in connection with a loan as
defined in subsection 1 of this section.
5. A lender who offers to make a loan with only those fees authorized by subsection 4
may also offer in exchange for the payment of an interest reduction fee to make a loan on
all of the same terms except at a lower interest rate and with the lower payments resulting
from the lower interest rate. Prior to accepting an application for a loan which includes
a payment reduction fee, the lender shall provide the potential borrower with a written
disclosure describing in plain language the specific terms which the loan would have both
with the payment reduction fee and without it. This disclosure shall include a good faith
example showing the amount of the payment reduction fee and the reduction in payments
which would result from the payment of this fee in a typical loan transaction. A payment
reduction fee which complies with this subsection may be collected in connection with a
loan in addition to the fees authorized by subsection 4.
6. A lender shall not, as a condition of making a loan as defined in this section, require
the borrower to place money, or to place property other than that which is given as security
for the loan, on deposit with or in the possession or control of the lender or some other
person if the effect is to increase the yield to the lender with respect to that loan; provided
that this subsection shall not prohibit a lender from requiring the borrower to deposit money
withoutinterestwiththelenderinanescrowaccountforthepaymentofinsurancepremiums,
property taxes and special assessments payable by the borrower to third persons. Any lender
who requires an escrow account shall not violate the provisions of section 507B.5, subsection
1, paragraph “a”.
7. Ifanylenderreceivesinteresteitherinamannerorinanamountwhichisprohibitedby
subsection 6 of this section, the borrower shall have the right to recover all amounts collected
or earned by the lender, whether or not from the borrower, in violation of this section, plus
attorney fees, plus court costs incurred in any action necessary to effect such recovery.
8. A lender shall not use an appraisal for any purpose in connection with making a loan
under this section if the appraisal is performed by a person who is employed by or affiliated
with any person receiving a commission or fee from the seller of the property. If a lender
violates this subsection the borrower is entitled to recover any actual damages plus the costs
paid by the borrower, plus attorney fees incurred in an action necessary to effect recovery.