HF 263 – Consumer loan exemption from fee if applicant denied
HF 263 is designed to provide clarifying language to the Iowa Consumer Credit Code. Code section 537.2501 lists permissible fees that banks and credit unions may charge on consumer loans, and those fees are excluded from the finance charge, which is capped at 21 percent. Current law allows a financial institution to charge an application fee on loans for less than $3,000 with terms less than a year. The fee is limited to 10 percent of the amount loaned or $30, whichever is less.
A southeast Iowa credit union is starting a “payday loan alternative” program for these “small dollar” loans and does not want to charge the application fee to applicants who are denied. The legislation gives financial institutions flexibility to waive the fee if clearly stated in the application, and the waiver is applied to any individual denied a loan. The Attorney General’s office has provided guidance to clarify that credit unions and banks can charge this fee only to those approved for the loan and still have it excluded from the finance charge. The bill passed the House on a 94-0 vote.
HF 305 – Enhance Iowa Board
HF 305 (SF 322) is an Iowa Economic Development Authority (IEDA) proposal. It increases the term of voting members on the Enhance Iowa Board from two years to three years; and provides a transition from the current two-year, staggered terms to three-year, staggered terms. The bill directs the Board, rather than the IEDA, to adopt rules to administer the programs established in Code Chapter 15F. It also eliminates the requirement that the Board, at the beginning of each fiscal year, allocate $100,000 from the Community Attraction and Tourism fund to market projects receiving money from the fund. HF 305 by the Economic Growth Committee passed the House on a 99-0 vote.