§ 714F.8 — Prohibited practices

Iowa § 714F.8

• Jurisdiction: Iowa
• Title XVI: CRIMINAL LAW AND PROCEDURE
• Ch. 714F: FORECLOSURE RECONVEYANCES

Text

A foreclosure purchaser shall not do any of the following:
1. Enter into, or attempt to enter into, a foreclosure reconveyance with a foreclosed
homeowner unless all of the following apply:
a. Theforeclosurepurchaserverifiesandcandemonstratethattheforeclosedhomeowner
has a reasonable ability to pay for the subsequent conveyance of an interest back to the
foreclosed homeowner. In the case of a lease with an option to purchase, payment ability
also includes the reasonable ability to make the lease payments and purchase the property
within the term of the option to purchase. A rebuttable presumption arises that a foreclosed
homeowner is reasonably able to pay for the subsequent conveyance if the foreclosed
homeowner’s payments for primary housing expenses and regular principal and interest
payments on other personal debt, on a monthly basis, do not exceed sixty percent of the
foreclosed homeowner’s monthly gross income. For the purposes of this section, “primary
housing expenses” means the sum of payments for regular principal, interest, rent, utilities,
hazard insurance, real estate taxes, and association dues. A rebuttable presumption arises
that the foreclosure purchaser has not verified reasonable payment ability if the foreclosure
purchaser has not obtained documents other than a statement by the foreclosed homeowner
of assets, liabilities, and income.
b. The foreclosure purchaser and the foreclosed homeowner complete a closing for any
foreclosure reconveyance in which the foreclosure purchaser obtains a deed or mortgage
from a foreclosed homeowner. For purposes of this section, “closing” means an in-person
meeting to complete final documents incident to the sale of the real property or the creation
of a mortgage on the real property conducted by a closing agent, who is not employed by
or an affiliate of the foreclosure purchaser, or employed by such an affiliate, and who does
not have a business or personal relationship with the foreclosure purchaser other than the
provision of real estate settlement services.
c. The foreclosure purchaser obtains the written consent of the foreclosed homeowner to
a grant by the foreclosure purchaser of any interest in the property during such times as the
foreclosed homeowner maintains any interest in the property.
d. The foreclosure purchaser complies with the requirements for disclosure, loan terms,
and conduct in the federal Home Ownership Equity Protection Act, 15 U.S.C. §1639, for any
foreclosure reconveyance in which the foreclosed homeowner obtains a vendee interest in a
contract for deed, regardless of whether the terms of the contract for deed meet the annual
percentage rate or points and fees requirements for a covered loan in 12 C.F.R. §226.32(a)
and (b).
2. Enter into a foreclosure reconveyance unless the foreclosure purchaser notifies all
existing mortgage lien holders of the foreclosure purchaser’s intent to accept conveyance
of any interest in the property from the foreclosed homeowner, and fully complies with all
terms and conditions contained in the mortgage lien documents including but not limited to
due-on-sale provisions or meeting all qualification requirements for assuming the repayment
of the mortgage.
3. Fail to do any of the following:
a. Ensure that title to the subject dwelling has been reconveyed to the foreclosed
homeowner.
b. (1) Make a payment to the foreclosed homeowner such that the foreclosed homeowner
hasreceivedconsiderationinanamountofatleasteighty-twopercentofthefairmarketvalue
of the property, as the property was when the foreclosed homeowner vacated the property,
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within ninety days of either the eviction or voluntary relinquishment of possession of the
property by the foreclosed homeowner. The foreclosure purchaser shall make a detailed
accounting of the basis for the payment amount, or a detailed accounting of the reasons for
failure to make a payment, including providing written documentation of expenses, within
this ninety-day period. The accounting shall be on a form prescribed by the attorney general,
inconsultationwiththesuperintendentofthebankingdivisionofthedepartmentofinsurance
and financial services without being subject to the rulemaking procedures of chapter 17A.
(2) For purposes of this paragraph “b”, all of the following shall apply:
(a) A rebuttable presumption arises that an appraisal by a person licensed or certified by
an agency of the federal government or this state to appraise real estate constitutes the fair
market value of the property.
(b) The time for determining the fair market value amount shall be determined in the
foreclosure reconveyance contract as either at the time of the execution of the foreclosure
reconveyance contract or at resale. If the contract states that the fair market value shall
be determined at the time of resale, the fair market value shall be the resale price if it is
sold within sixty days of the eviction or voluntary relinquishment of the property by the
foreclosed homeowner. If the contract states that the fair market value shall be determined
at the time of resale, and the resale is not completed within sixty days of the eviction or
voluntary relinquishment of the property by the foreclosed homeowner, the fair market
value shall be determined by an appraisal conducted within one hundred eighty days of
the eviction or voluntary relinquishment of the property by the foreclosed homeowner and
payment, if required, shall be made to the foreclosed homeowner, but the fair market value
shall be recalculated as the resale price on resale and an additional payment amount, if
appropriate, based on the resale price, shall be made to the foreclosed homeowner within
fifteen days of resale, and a detailed accounting of the basis for the payment amount, or a
detailed accounting of the reasons for failure to make additional payment, shall be made
within fifteen days of resale, including providing written documentation of expenses. The
accounting shall be on a form prescribed by the attorney general, in consultation with the
superintendent of the banking division of the department of insurance and financial services,
without being subject to the rulemaking procedures of chapter 17A.
(c) “Consideration” means any payment or thing of value provided to the foreclosed
homeowner, including payment of unpaid rent or contract for deed payments owed by
the foreclosed homeowner prior to the date of eviction or voluntary relinquishment of
the property, reasonable costs paid to third parties necessary to complete the foreclosure
reconveyance transaction, payment of money to satisfy a debt or legal obligation of the
foreclosed homeowner that creates a lien against the affected residence, or the payment of
reasonable cost of repairs for damage to the dwelling caused by the foreclosed homeowner;
or a payment of a penalty imposed by a court for the filing of a frivolous claim under section
714F.9, subsection 6, but “consideration” shall not include amounts imputed as a down
payment or fee to the foreclosure purchaser, or a person acting in participation with the
foreclosure purchaser, incident to a contract for deed, lease, or option to purchase entered
into as part of the foreclosure reconveyance, except for reasonable costs paid to third parties
necessary to complete the foreclosure reconveyance.
4. Enter into repurchase or lease terms as part of the subsequent conveyance that are
unfair or commercially unreasonable, or engage in any other unfair conduct.
5. Represent, directly or indirectly, any of the following:
a. The foreclosure purchaser is acting as an advisor or a consultant, or in any other
manner represents that the foreclosure purchaser is acting on behalf of the foreclosed
homeowner.
b. The foreclosure purchaser has a qualification, certification, or licensure that the
foreclosure purchaser does not have, or that the foreclosure purchaser is not a member of a
licensed profession if that is untrue.
c. The foreclosure purchaser is assisting the foreclosed homeowner to “save the house”
or a substantially similar phrase.
d. The foreclosure purchaser is assisting the foreclosed homeowner in preventing a
§714F.8, FORECLOSURE RECONVEYANCES 6
completed foreclosure, forfeiture, or tax sale if the result of the transaction is that the
foreclosed homeowner will not complete a redemption of the property.
6. Make any other statements, directly or by implication, or engage in any other conduct
that is false, deceptive, or misleading, or that has the likelihood to cause confusion or
misunderstanding, including but not limited to statements regarding the value of the
residence in foreclosure, the amount of proceeds the foreclosed homeowner will receive after
a foreclosure sale, any contract term, or the foreclosed homeowner’s rights or obligations
incident to or arising out of the foreclosure reconveyance.
7. Do any of the following until the time during which the foreclosed homeowner may
cancel the transaction has fully elapsed:
a. Accept from a foreclosed homeowner an execution of, or induce a foreclosed
homeowner to execute, an instrument of conveyance of any interest in the residence in
foreclosure.
b. Record with the county recorder or file with the registrar of titles any document
including but not limited to an instrument of conveyance, signed by the foreclosed
homeowner.
c. Transfer or encumber or purport to transfer or encumber any interest in the residence
in foreclosure to any third party.