Purposes; rules of construction
Sec. 102. (1) This article shall be liberally construed and applied to promote its underlying purposes and policies.
(2) The underlying purposes and policies of this article are:
(a) to permit and encourage the development of fair and economically sound first lien mortgage lending practices; and
(b) to conform the regulation of first lien mortgage lending practices to applicable state and federal laws, rules, regulations, policies, and guidance.
(3) A reference to a requirement imposed by this article includes reference to a related rule of the department adopted under this article.
(4) A reference to a federal law in this article is a reference to the law as in effect December 31, 2012.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010, SEC.5; P.L.89-2011, SEC.1; P.L.27-2012, SEC.3; P.L.216-2013, SEC.1.
Unified coverage of subject matter; construction against implied repeal
Sec. 103. This article:
(1) is a general act intended as a unified coverage of its subject matter; and
(2) any part of this article may not be considered to be impliedly repealed by subsequent legislation if such construction can
reasonably be avoided.
As added by P.L.145-2008, SEC.20.
Sec. 104. The provisions of this article are severable, so that if:
(1) any provisions of this article; or
(2) the application of this article to any person or circumstances;
is held invalid, the invalidity does not affect other provisions or applications of this article that can be given effect without the invalid provision or application.
As added by P.L.145-2008, SEC.20.
Application; nonresident debtor
Sec. 201. (1) Except as provided in subsection (2), this article applies to a first lien mortgage transaction:
(a) that is secured by an interest in:
(i) a dwelling; or
(ii) residential real estate upon which a dwelling is constructed or intended to be constructed;
in Indiana; and
(b) the closing for which takes place after December 31, 2008.
(2) This article does not apply to a first lien mortgage transaction if:
(a) the debtor is not a resident of Indiana at the time the transaction is entered into; and
(b) the laws of the debtor's state of residence require that the transaction be made under the laws of the state of the debtor's residence.
As added by P.L.145-2008, SEC.20. Amended by P.L.1-2009, SEC.134; P.L.89-2011, SEC.2.
Exempt transactions and persons
Sec. 202. (a) As used in this section, "balloon payment", with respect to a mortgage transaction, means any payment:
(1) that the creditor requires the debtor to make at any time during the term of the mortgage;
(2) that represents the entire amount of the outstanding balance with respect to the mortgage; and
(3) the entire amount of which is due as of a specified date or at the end of a specified period;
if the aggregate amount of the minimum periodic payments required under the mortgage would not fully amortize the outstanding balance by the specified date or at the end of the specified period. The term does not include a payment required by a creditor under a due-on-sale clause (as defined in 12 U.S.C. 1701j-3(a)) or a payment required by a creditor under a provision in the mortgage that permits
the creditor to accelerate the debt upon the debtor's default or failure
to abide by the material terms of the mortgage.
(b) This article does not apply to the following:
(1) Extensions of credit to government or governmental agencies or instrumentalities.
(2) A first lien mortgage transaction in which the debt is incurred primarily for a purpose other than a personal, family, or household purpose.
(3) An extension of credit primarily for a business, a commercial, or an agricultural purpose.
(4) Except for IC 24-4.4-2-401(2), IC 24-4.4-2-402.3, IC 24-4.4-2-405(4), and IC 24-4.4-2-405(5), a first lien mortgage transaction made:
(a) in compliance with the requirements of; and
(b) by a community development corporation (as defined in IC 4-4-28-2) acting as a subrecipient of funds from;
the Indiana housing and community development authority established by IC 5-20-1-3.
(5) Except for IC 24-4.4-2-401(2), IC 24-4.4-2-402.3, IC 24-4.4-2-405(4), and IC 24-4.4-2-405(5), a first lien mortgage transaction made by an entity that exclusively uses funds provided by the United States Department of Housing and Urban Development under Title 1 of the federal Housing and Community Development Act of 1974, Public Law 93-383, as amended (42 U.S.C. 5301 et seq.).
(6) An extension of credit originated by:
(a) a depository institution;
(b) subsidiaries that are:
(i) owned and controlled by a depository institution; and
(ii) regulated by a federal banking agency; or
(c) an institution regulated by the Farm Credit Administration.
(7) Except for IC 24-4.4-2-401(2), IC 24-4.4-2-402.3, IC 24-4.4-2-405(4), and IC 24-4.4-2-405(5), a credit union service organization that is majority owned, directly or indirectly, by one (1) or more credit unions.
(8) A first lien mortgage transaction originated by a registered mortgage loan originator, when acting for an entity described in subsection (6). However, a privately insured state chartered credit union shall comply with the system of mortgage loan originator registration developed by the Federal Financial Institutions Examinations Council under Section 1507 of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE).
(9) An individual who offers or negotiates terms of a mortgage transaction with or on behalf of an immediate family member of the individual.
(10) An individual who offers or negotiates terms of a mortgage transaction secured by a dwelling that served as the individual's residence.
(15) A bona fide nonprofit organization (as defined in section 301(37) of this chapter) if the following criteria are satisfied:
(a) For each calendar year that the organization seeks the exemption provided by this subdivision, the organization certifies, not later than December 31 of the preceding calendar year and on a form prescribed by the director and accompanied by such documentation as required by the director, that the organization is a bona fide nonprofit organization (as defined in section 301(37) of this chapter).
(b) The director determines that the organization originates only mortgage transactions that are favorable to the debtor. For purposes of this clause, a mortgage transaction is favorable to the debtor if the director determines that the terms of the mortgage transaction are consistent with terms of mortgage transactions made in a public or charitable context, rather than in a commercial context.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010, SEC.6; P.L.89-2011, SEC.3; P.L.9-2011, SEC.1; P.L.6-2012, SEC.164; P.L.27-2012, SEC.4; P.L.13-2013, SEC.65.
Persons also engaging in loan brokerage business; applicability of loan broker statutes; examination by department; cooperation with securities division
Sec. 202.5. (1) If a person licensed or required to be licensed under this article also engages in the loan brokerage business, the person's loan brokerage business is subject to the following sections of the Indiana Code and any rules adopted to implement these sections:
(a) IC 23-2-5-9.
(b) IC 23-2-5-9.1.
(c) IC 23-2-5-15.
(d) IC 23-2-5-16.
(e) IC 23-2-5-17.
(f) IC 23-2-5-18.
(g) IC 23-2-5-18.5.
(h) IC 23-2-5-20.
(i) IC 23-2-5-23, except for IC 23-2-5-23(2)(B).
(j) IC 23-2-5-24.
(2) Loan broker business transactions engaged in by persons licensed or required to be licensed under this article are subject to examination by the department and to the examination fees described in IC 24-4.4-2-402(7)(c). The department may cooperate with the securities division of the office of the secretary of state in the department's examination of loan broker business transactions and may use the securities division's examiners to conduct examinations.
As added by P.L.35-2010, SEC.7.
(Repealed by P.L.35-2010, SEC.209.)
Entities that also conduct loan broker business; regulatory cooperation with securities commissioner
Sec. 204. In the department's examination and regulatory activities related to licensees under this article, the department may cooperate with the Indiana securities commissioner in the regulation of entities that, in addition to conducting business regulated under this article, also conduct a loan brokerage business subject to IC 23-2-5.
As added by P.L.35-2010, SEC.8.
Sec. 301. In addition to definitions appearing in subsequent chapters of this article, the following definitions apply throughout this article:
(1) "Affiliate", with respect to any person subject to this article, means a person that, directly or indirectly, through one (1) or more intermediaries:
(b) is controlled by; or
(c) is under common control with;
the person subject to this article.
(2) "Agreement" means the bargain of the parties in fact as found in the parties' language or by implication from other circumstances, including course of dealing or usage of trade or course of performance.
(3) "Agricultural products" includes agricultural products, horticultural products, viticultural products, dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, any products raised or produced on farms, and any products processed or manufactured from products raised or produced on farms.
(4) "Agricultural purpose" means a purpose related to the production, harvest, exhibition, marketing, transportation, processing, or manufacture of agricultural products by a natural person who cultivates, plants, propagates, or nurtures the agricultural products.
(5) "Consumer credit sale" is a sale of goods, services, or an interest in land in which:
(a) credit is granted by a person who engages as a seller in credit transactions of the same kind;
(b) the buyer is a person other than an organization;
(c) the goods, services, or interest in land are purchased primarily for a personal, family, or household purpose;
(d) either the debt is payable in installments or a credit service charge is made; and
(e) with respect to a sale of goods or services, either:
gain, regularly engages in taking a mortgage transaction
application or in offering or negotiating the terms of a mortgage
transaction that either is made under this article or under
IC 24-4.5 or is made by an employee of a person licensed or
exempt from licensing under this article or under IC 24-4.5,
while the employee is engaging in the loan brokerage business.
The term does not include the following:
(a) An individual engaged solely as a loan processor or underwriter as long as the individual works exclusively as an employee of a person licensed or exempt from licensing under this article.
(b) Unless the person or entity is compensated by:
(i) a creditor;
(ii) a loan broker;
(iii) another mortgage loan originator; or
(iv) any agent of a creditor, a loan broker, or another mortgage loan originator described in items (i) through (iii);
a person or entity that performs only real estate brokerage activities and is licensed or registered in accordance with applicable state law.
(c) A person solely involved in extensions of credit relating to timeshare plans (as defined in 11 U.S.C. 101(53D)).
(22) "Mortgage servicer" means the last person to whom a mortgagor or the mortgagor's successor in interest has been instructed by a mortgagee to send payments on a loan secured by a mortgage.
(23) "Mortgage transaction" means:
(a) a consumer loan; or
(b) a consumer credit sale;
that is or will be used by the debtor primarily for personal, family, or household purposes and that is secured by a mortgage or a land contract (or another consensual security interest equivalent to a mortgage or a land contract) on a dwelling or on residential real estate upon which a dwelling is constructed or intended to be constructed.
(24) "Nationwide Mortgage Licensing System and Registry" or "NMLSR" means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of creditors and mortgage loan originators.
(25) "Nontraditional mortgage product" means any mortgage product other than a thirty (30) year fixed rate mortgage.
(26) "Organization" means a corporation, a government or government subdivision, an agency, a trust, an estate, a partnership, a limited liability company, a cooperative, an association, a joint venture, an unincorporated organization, or any other entity, however organized.
(27) "Payable in installments", with respect to a debt or an
obligation, means that payment is required or permitted by
written agreement to be made in more than four (4) installments
not including a down payment.
(28) "Person" includes an individual or an organization.
(29) "Principal" of a mortgage transaction means the total of:
(a) the net amount paid to, receivable by, or paid or payable for the account of the debtor; and
(b) to the extent that payment is deferred, amounts actually paid or to be paid by the creditor for registration, certificate of title, or license fees if not included in clause (a).
(30) "Real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including the following:
(a) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property.
(b) Bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property.
(c) Negotiating, on behalf of any party, any part of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with providing financing with respect to the sale, purchase, lease, rental, or exchange of real property).
(d) Engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law.
(e) Offering to engage in any activity, or act in any capacity, described in this subsection.
(31) "Registered mortgage loan originator" means any individual who:
(a) meets the definition of mortgage loan originator and is an employee of:
(i) a depository institution;
(ii) a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency; or
(iii) an institution regulated by the Farm Credit Administration; and
(b) is registered with, and maintains a unique identifier through, the NMLSR.
(32) "Residential real estate" means any real property that is located in Indiana and on which there is located or intended to be constructed a dwelling.
(33) "Revolving first lien mortgage transaction" means a first lien mortgage transaction in which:
(a) the creditor permits the debtor to obtain advances from time to time;
(b) the unpaid balances of principal, finance charges, and other appropriate charges are debited to an account; and
(c) the debtor has the privilege of paying the balances in installments.