WHAT ACTIVITIES REQUIRE LICENSING IN IOWA?

LENDING / SERVICING
In the State of Iowa lending authority is required: 1) to make or service more than three loans in a calendar year that are secured by a first lien on owner occupied residential real property located in Iowa [535B.1(4)]; or 2) to make or service a supervised loan [537.2301(2)].

A supervised loan [537.1301(43)] is a consumer loan [537.1301(14)] in which the rate of finance charge exceeds two points above the monthly average ten-year constant maturity interest rate of U.S. government notes and bonds [535.2(3)]. In general, a consumer loan is a loan made to a person (not an organization) in which the amount financed is $25,000 or less; that is incurred primarily for a personal, family, or household purpose. However, a debt which is secured by a first lien on real property and which is incurred primarily for the purpose of acquiring that real property, or refinancing a contract for deed to that real property is not a consumer loan [537.1301(14.b.2)].

LENDING AUTHORITY IS NOT REQUIRED TO MAKE OR SERVICE JUNIOR LIEN LOANS IF THE AMOUNT FINANCED EXCEEDS $25,000. However, Iowa Code §535B.4 prohibits a person from using the title "mortgage banker" without first obtaining a license. In addition Iowa Code §535B.8, states that a person who advertises or holds themselves out as a mortgage banker in this state without a license is guilty of a class "D" Felony.

THEREFORE, WHILE A LICENSE IS NOT REQUIRED TO MAKE OR SERVICE JUNIOR LIEN LOANS TO IOWA RESIDENTS IF THE AMOUNT FINANCED EXCEEDS $25,000, THE LENDER MAY NOT ADVERTISE THAT IT IS OR USE THE TITLE OF "MORTGAGE BANKER" WITHOUT HAVING FIRST OBTAINED A LICENSE.

BROKERING
Unless authorized to be a lender or licensed as a mortgage broker in this state [535C.2(4)], a loan broker shall not directly or indirectly solicit, receive, or accept from a borrower consideration of any type including a payment, fee, pay-per-call charge, or deposit, which is assessed prior to the closing of a loan [535C.2A & 535C.2(1)].

A mortgage broker is defined as "a person who arranges or negotiates, or attempts to arrange or negotiate, at least four first mortgage loans or commitments for four or more such loans on residential real property located in this state in a calendar year."[535B.1(5)]

A MORTGAGE BROKER LICENSE IS NOT REQUIRED TO BROKER JUNIOR LIEN LOANS OF ANY SIZE. However, Iowa Code §535B.4 prohibits a person from using the title "mortgage banker" or "mortgage broker" without first obtaining a license. In addition Iowa Code §535B.8, states that a person who advertises or holds themselves out as a mortgage banker or mortgage broker in this state without a license is guilty of a class "D" Felony.

THEREFORE, WHILE A LICENSE IS NOT REQUIRED TO BROKER 3 OR LESS FIRST MORTGAGE LOANS (IN A CALENDAR YEAR), NOR IS A LICENSE REQUIRED TO BROKER JUNIOR LIEN LOANS, THE BROKER MAY NOT ADVERTISE THAT HE IS, OR HOLD HIMSELF OUT AS BEING A "MORTGAGE BANKER" OR "MORTGAGE BROKER", OR USE THE TITLE OF "MORTGAGE BANKER" OR "MORTGAGE BROKER" WITHOUT HAVING FIRST OBTAINED A LICENSE.