Iowa Attorney General Tom Miller is asking lawmakers to approve a package of proposals he says will help cut abuse among lenders who pray on people with limited income or poor credit. Miller says his proposals are based on laws that worked in North Carolina and Ohio, and includes a provision against what’s called "flipping."
Miller says someone goes in and gets a loan for a home mortgage and then six to nine months later the company comes back and talks them into a new loan with a new set of charges, that’s flipping. Miller says his proposal would require some sort of benefit to the consumer in the new loan. Miller says there are several other tactics used to get people into loans that seem to have more benefit for the lenders, and he wants to stop them.
Miller says the lender wouldn’t be able to advertise terms that aren’t really available. He says there’s also a problem with loan companies overstating a person’s income to get the person into a loan they can’t afford. Miller says the package would end contract terms that make borrowers responsible for loan origination costs even if the loan does not close.
Miller also wants to establish a lending fraud prosecution fund by charging everyone who gets a mortgage in Iowa. Miller says there would be a "very small fee on each mortgage" so his office would have the resources to fight loan fraud. The superintendent of the Iowa Banking Division, Tom Gronstal, joined Miller in backing the proposed legislation.
Grontsal says "fair and equal access to credit is very important to the state." Gronstal says home ownership is very important to Iowa families and his office wants to see the transactions surrounding home ownership conducted in the best possible way. Miller says this legislation would partner well with the car title loan reform that’s making it’s way through the legislature.