Iowa

The relevant statutes are the Iowa Consumer Credit Code, §§537.1101 et seq. ("IA-UCCC") and Iowa Code Ann. §§507B.5, 515F.5A (“IA-INS”).

A. Actions lender may take: IA-UCCC §537.2506 - If a lender has to pay for collateral insurance required in a non-purchase money mortgage loan agreement subject to IA-MLA, the lender may add the amounts paid for that insurance to the loan amount.

B. Notices required:

(1) IA-UCCC §537.2506(1) - After advancing funds to obtain any insurance required in a non-purchase money mortgage loan agreement subject to IA-MLA, the lender must give the borrower a written statement describing the sums advanced, any charges with respect to that amount, any revised payment schedule, and the kind of insurance paid for by the lender (including a description of the type and amount of coverages).

(2) IA-INS §515F.5A(2) - The Insurance Commissioner may adopt rules to protect consumers from abusive practices in forced placement or collateral insurance. Those rules may include notice requirements, to assure that borrowers have an opportunity to exercise reasonable choice in the placement of a collateral insurance policy. Note: As of February 13, 2002, the Insurance Commissioner had not adopted rules regarding any required notices related to forced placement or collateral insurance.

C. Coverage required: No express statutory provision.

D. Charges permitted:

(1) IA-INS §515F.5A -

(i). The Insurance Commissioner must review all collateral insurance forms and rates to assure that the rates are not excessive in comparison to the benefits provided.

(ii). In addition, the Insurance Commissioner may adopt rules to protect consumers from abusive practices in forced placement or collateral insurance. Those rules may include prohibitions or limitations on a lender's ability to receive a sales commission or other fee resulting from the forced placement of insurance. Note: As of February 13, 2002, the Insurance Commissioner had not adopted rules that specifically prohibit or limit the sales commissions or other fees related to the forced placement of insurance.

(2) IA-INS §507B.5(1)(c),(2) - Lenders may not directly or indirectly require that any borrower pay a separate charge in connection with the handling of any insurance policy required as security for a loan on real estate, or pay a separate charge to substitute the insurance policy of one insurer for that of another. This limitation does not include the interest which may be charged on premium advancements made in accordance with the security instrument.

E. Finance charge allowed on lender's payment: IA-UCCC §537.2506(2) - For non-purchase money mortgage loan agreements subject to the IA-UCCC, the lender may impose the finance charge previously disclosed to the borrower on the sums advanced. For revolving loan accounts subject to the IA-UCCC, a supervised lender may add the amount of an advance to the unpaid balance and impose a finance charge up to the amount permitted for supervised loans (IA-UCCC §537.2402).

Click here to view relevant Iowa Code and Regulations.