Iowa Amends Provisions Regarding Mortgage Releases

The state of Iowa has amended several of its provisions relating to mortgage releases. These provisions take effect on July 1, 2018.

Major changes to the provisions include:

• Striking subsection 535B.11, subsection 5, Code 2018, which addressed requirements concerning the execution and delivery of a release after payoff for licensees and mortgagees who service mortgages on residential real estate located in Iowa;
• Amending the provision regarding written instruments acknowledging satisfaction by requiring that a mortgagee, or someone acting on the mortgagee’s behalf, “acknowledge satisfaction of” a paid off mortgage “within thirty days of payment in full;”
• Stipulating that if a “mortgage secures a revolving line of credit, future advances, or other future obligations,” the mortgagee is not required to file a satisfaction unless the mortgagor makes a written request to the mortgagee that the mortgage be released—in which case, the mortgagee must file a release within thirty days after payment in full or such written request is made, whichever occurs later;
• Imposing a mortgagee penalty of $500 plus reasonable attorney fees for failure to discharge a mortgage upon full performance of the mortgage’s conditions, as set forth in section 655.1;
• Removing a section which allowed non-resident defendants in a suit for damages for failure to discharge a mortgage upon full performance to maintain the action upon the expiration of thirty days after the conditions of the mortgage have been performed, without such previous request or tender;
• Increasing mortgagees’ penalties for failing to file a satisfaction within thirty days of receiving a written request from $100 plus reasonable attorney fees to $500 plus reasonable attorney fees; and
• Adding a new section which limits liability for “failure to discharge” penalties with regard to mortgagees that: (1) have established reasonable procedures to achieve compliance with their obligations under 655.3; (2) have complied with their reasonable procedures in good faith; and (3) were unable to comply with their obligations because of circumstances beyond their control.

The provisions, as amended, are available here.