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Second Regular Session of the 124th General Assembly (2026)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2025 Regular Session of the General Assembly.
SENATE ENROLLED ACT No. 169
AN ACT to amend the Indiana Code concerning trade regulation.
Be it enacted by the General Assembly of the State of Indiana:
SECTION 1. IC 4-6-3-3, AS AMENDED BY P.L.100-2025,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 3. (a) If the attorney general has reasonable cause
to believe that a person may be in possession, custody, or control of
documentary material, or may have knowledge of a fact that is relevant
to an investigation conducted to determine if a person is or has been
engaged in a violation of IC 4-6-9, IC 4-6-10, IC 13-14-10,
IC 13-14-12, IC 13-24-2, IC 13-30-4, IC 13-30-5, IC 13-30-8,
IC 16-21-15, IC 23-7-8, IC 24-1-2, IC 24-5-0.5, IC 24-5-7, IC 24-5-8,
IC 24-9, IC 25-1-7, IC 27-1-37-8, IC 32-34-1.5, IC 37-5, or any other
statute enforced by the attorney general or is or has been engaged in a
criminal violation of IC 13, only the attorney general may issue in
writing, and cause to be served upon the person or the person's
representative or agent, an investigative demand that requires that the
person served do any combination of the following:
(1) Produce the documentary material for inspection and copying
or reproduction.
(2) Answer under oath and in writing written interrogatories.
(3) Appear and testify under oath before the attorney general or
the attorney general's duly authorized representative.
(b) The office of the attorney general may consult with the Indiana
department of health in the review of an application for a certificate of
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public advantage under IC 16-21-15.
SECTION 2. IC 4-6-12-2, AS AMENDED BY P.L.52-2017,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 2. The attorney general shall establish a
homeowner protection unit to enforce IC 24-9 IC 37-5 and to carry out
this chapter.
SECTION 3. IC 4-6-12-3, AS AMENDED BY P.L.52-2017,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 3. (a) The unit shall do the following:
(1) Investigate deceptive acts in connection with mortgage
lending.
(2) Investigate violations of IC 24-9. IC 37-5.
(3) Institute appropriate administrative and civil actions to
redress:
(A) deceptive acts in connection with mortgage lending; and
(B) violations of IC 24-5-0.5 and IC 24-9. IC 37-5.
(4) Cooperate with federal, state, and local law enforcement
agencies in the investigation of the following:
(A) Deceptive acts in connection with mortgage lending.
(B) Criminal violations involving deceptive acts in connection
with mortgage lending.
(C) Violations of IC 24-5-0.5 and IC 24-9. IC 37-5.
(D) Violations of:
(i) the federal Truth in Lending Act (15 U.S.C. 1601 et
seq.);
(ii) the Real Estate Settlement Procedures Act (12 U.S.C.
2601 et seq.); and
(iii) any other federal laws or regulations concerning
mortgage lending.
To the extent authorized by federal law, the unit may enforce
compliance with the federal statutes or regulations described
in this clause or refer suspected violations of the statutes or
regulations to the appropriate federal regulatory agencies.
(5) Enforce violations of IC 32-25.5-3 by homeowners
associations.
(b) The attorney general shall adopt rules under IC 4-22-2 to the
extent necessary to organize the unit.
SECTION 4. IC 4-6-12-5 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 5. The attorney general may file
complaints with any of the entities listed in section 4 of this chapter to
carry out this chapter and IC 24-9. IC 37-5.
SECTION 5. IC 4-6-12-9, AS AMENDED BY P.L.52-2017,
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SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 9. (a) The homeowner protection unit account
within the general fund is established to support the operations of the
unit. The account is administered by the attorney general.
(b) The homeowner protection unit account consists of the
following:
(1) Fees collected under IC 24-9-9. IC 37-5-9.
(2) Fees distributed to the account under IC 33-34-8-3,
IC 33-37-7-2(a), and IC 33-37-7-8(a).
(c) The expenses of administering the homeowner protection unit
account shall be paid from money in the account.
(d) The treasurer of state shall invest the money in the homeowner
protection unit account not currently needed to meet the obligations of
the account in the same manner as other public money may be invested.
(e) Money in the homeowner protection unit account at the end of
a state fiscal year does not revert to the state general fund.
SECTION 6. IC 4-21.5-3-6, AS AMENDED BY P.L.222-2025,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 6. (a) Notice shall be given under this section
concerning the following:
(1) A safety order under IC 22-8-1.1.
(2) Any order that:
(A) imposes a sanction on a person or terminates a legal right,
duty, privilege, immunity, or other legal interest of a person;
(B) is not described in section 4 or 5 of this chapter or
IC 4-21.5-4; and
(C) by statute becomes effective without a proceeding under
this chapter if there is no request for a review of the order
within a specified period after the order is issued or served.
(3) A notice of program reimbursement or equivalent
determination or other notice regarding a hospital's
reimbursement issued by the office of Medicaid policy and
planning or by a contractor of the office of Medicaid policy and
planning regarding a hospital's year end cost settlement.
(4) A determination of audit findings or an equivalent
determination by the office of Medicaid policy and planning or by
a contractor of the office of Medicaid policy and planning arising
from a Medicaid postpayment or concurrent audit of a hospital's
Medicaid claims.
(5) A license suspension or revocation under:
(A) IC 24-4.4-2; IC 37-1-3;
(B) IC 24-4.5-3; IC 37-2-4;
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(C) IC 28-1-29;
(D) IC 28-7-5;
(E) IC 28-8-4.1;
(F) IC 28-8-5; or
(G) IC 28-8-6.
(6) An order issued by the secretary or the secretary's designee
against providers regulated by the office of the secretary, the
division of aging or the bureau of disabilities services and not
licensed by the Indiana department of health under IC 16-27 or
IC 16-28.
(b) When an agency issues an order described by subsection (a), the
agency shall give notice to the following persons:
(1) Each person to whom the order is specifically directed.
(2) Each person to whom a law requires notice to be given.
A person who is entitled to notice under this subsection is not a party
to any proceeding resulting from the grant of a petition for review
under section 7 of this chapter unless the person is designated as a
party in the record of the proceeding.
(c) The notice must include the following:
(1) A brief description of the order.
(2) A brief explanation of the available procedures and the time
limit for seeking administrative review of the order under section
7 of this chapter.
(3) Any other information required by law.
(d) An order described in subsection (a) is effective fifteen (15) days
after the order is served, unless a statute other than this article specifies
a different date or the agency specifies a later date in its order. This
subsection does not preclude an agency from issuing, under
IC 4-21.5-4, an emergency or other temporary order concerning the
subject of an order described in subsection (a).
(e) If a petition for review of an order described in subsection (a) is
filed within the period set by section 7 of this chapter and a petition for
stay of effectiveness of the order is filed by a party or another person
who has a pending petition for intervention in the proceeding, an
administrative law judge shall, as soon as practicable, conduct a
preliminary hearing to determine whether the order should be stayed in
whole or in part. The burden of proof in the preliminary hearing is on
the person seeking the stay. The administrative law judge may stay the
order in whole or in part. The order concerning the stay may be issued
after an order described in subsection (a) becomes effective. The
resulting order concerning the stay shall be served on the parties and
any person who has a pending petition for intervention in the
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proceeding. It must include a statement of the facts and law on which
it is based.
SECTION 7. IC 4-22-2.3-6, AS AMENDED BY P.L.93-2024,
SECTION 20, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 6. The following apply to the department of
financial institutions:
(1) The department of financial institutions shall adopt rules
under the interim rule procedures in IC 4-22-2-37.2 announcing:
(A) sixty (60) days before January 1 of each odd-numbered
year in which dollar amounts under IC 24-4.5 IC 37-2
(Uniform Consumer Credit Code) are to change, the changes
in dollar amounts required by IC 24-4.5-1-106(2);
IC 37-2-1-5(b);
(B) promptly after the changes occur, changes in the Index
required by IC 24-4.5-1-106(3), IC 37-2-1-5(c), including,
when applicable, the numerical equivalent of the Reference
Base Index under a revised Reference Base Index and the
designation or title of any index superseding the Index;
(C) the adjustments required under IC 24-9-2-8 IC 37-5-2-8
concerning high cost home loans; and
(D) the adjustments required under IC 34-55-10-2 (bankruptcy
exemptions; limitations) or IC 34-55-10-2.5.
A rule described in this subdivision expires not later than January
of the next odd-numbered year after the department of financial
institutions is required to issue the rule.
(2) The department of financial institutions may adopt a rule
under the interim rule procedures in IC 4-22-2-37.2 for a rule
permitted under IC 24-4.4-1-101 IC 37-1-1-1 (licensing system
for creditors and mortgage loan originators) or IC 24-4.5 IC 37-2
(Uniform Consumer Credit Code) if the department of financial
institutions declares an emergency. A rule described in this
subdivision expires not later than two (2) years after the rule is
effective.
(3) The department of financial institutions may adopt a rule
described in IC 34-55-10-2 (bankruptcy exemptions; limitations)
or IC 34-55-10-2.5 in conformity with the procedures in
IC 4-22-2-23 through IC 4-22-2-36 or the interim rule procedures
in IC 4-22-2-37.2. A rule described in this subdivision adopted
under IC 4-22-2-37.2 expires not later than two (2) years after the
rule is accepted for filing by the publisher of the Indiana Register.
A rule described in this section may be continued in another interim
rule only if the governor determines under IC 4-22-2-37.2(c) that the
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policy options available to the agency are so limited that use of the
additional notice, comment, and review procedures in IC 4-22-2-23
through IC 4-22-2-36 would provide no benefit to persons regulated or
otherwise affected by the rule.
SECTION 8. IC 5-27-3-3 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 3. (a) A governmental body may:
(1) if the governmental body obtains the consent of each
governmental body that is directly affected by the transaction,
recognize the net amount remitted by the provider company as
payment in full of an amount due the governmental entity for a
service, a tax, a license, a permit, a fee, information, or any other
amount due the governmental body that was paid by an electronic
payment; or
(2) collect a sum for the vendor transaction charge, discount fee,
or any other charge from the person who makes an electronic
payment.
A fee under subdivision (2) may be collected as an enhanced service
fee by a governmental body. The fee is a permitted additional charge
under IC 24-4.5-3-202. IC 37-2-4-5.
(b) A governmental body may pay a service charge or fee in
connection with its agreement with the provider company.
SECTION 9. IC 6-1.1-23-10 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 10. (a) If a judgment
entered under section 9 of this chapter is not paid, the county treasurer
may notify the delinquent taxpayer by certified mail that a judgment
has been entered against him the taxpayer and that the treasurer is
going to file a praecipe for execution. If the judgment is not paid within
ten (10) days after the date the notice is given, the county treasurer
shall file the praecipe for execution. If this notice is not given, an
execution upon the judgment is invalid.
(b) If a judgment has been entered against a taxpayer under section
9 of this chapter, the county treasurer may obtain a court order
restraining the taxpayer from transacting business in the county.
However, the restraining order may be dissolved if the court believes
that dissolution of the restraining order will make collection of the
judgment more likely.
(c) If a judgment against a taxpayer under section 9 of this chapter
has not been satisfied within sixty (60) days after the judgment is
entered, the county treasurer may do the following without judicial
proceedings:
(1) Levy upon property of the taxpayer that is held by a financial
institution. The county treasurer shall make a levy in the same
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manner as the department of state revenue under IC 6-8.1-8-8. A
financial institution that receives a claim under this subdivision
shall transfer to the county treasurer property of the taxpayer that
is held by the financial institution. However, if the value of the
taxpayer's property held by the financial institution is greater than
the amount of the judgment, the financial institution shall transfer
property of the taxpayer in an amount equal to the amount of the
judgment.
(2) Garnish the accrued earnings and wages of the taxpayer by
giving notice to the taxpayer's employer. An employer who
receives a notice under this subdivision shall garnish the accrued
earnings and wages of the taxpayer in an amount equal to the full
amount subject to garnishment under IC 24-4.5-5-105.
IC 37-2-6-4. The employer:
(A) shall remit the amount garnished under this subdivision to
the county treasurer; and
(B) is entitled to a fee equal to the amount of the fee that may
be collected under IC 24-4.5-5-105(5) IC 37-2-6-4 in a
garnishment action. However, the taxpayer shall pay the entire
fee collected under this clause.
(3) Withhold the amount of the judgment in full or in part from
any payment that:
(A) is due to the taxpayer from the county; and
(B) requires the signature of the county treasurer.
(d) The treasurer of a county may use any combination of remedies
provided under this section to collect the following:
(1) Delinquent taxes.
(2) Expenses incurred under IC 6-1.1-23-7(a)(1) through
IC 6-1.1-23-7(a)(6).
(e) A county treasurer that incurs attorney's fee expenses for legal
services not related to formal judicial proceedings shall petition a
circuit or superior court in the county for approval to pay the expenses.
The court may conduct a hearing on the petition and may authorize the
auditor of the county to issue a warrant for the amount of the
reasonable expenses. The county treasurer shall pay the warrant
without an appropriation for the disbursement.
SECTION 10. IC 6-6-5.1-21, AS AMENDED BY P.L.9-2024,
SECTION 203, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 21. (a) The bureau, in the
administration and collection of the tax imposed by this chapter, may
use the services and facilities of:
(1) license branches operated under IC 9-14.1;
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(2) full service providers (as defined in IC 9-14.1-1-2); and
(3) partial services providers (as defined in IC 9-14.1-1-3);
in the bureau's administration of the state motor vehicle registration
laws in the manner and to the extent the bureau considers necessary
and proper to implement and effectuate the administration and
collection of the excise tax imposed by this chapter.
(b) The bureau may impose a service charge of one dollar and
seventy cents ($1.70) for each excise tax collection made under this
chapter. The service charge shall be deposited in the bureau of motor
vehicles commission fund.
(c) The bureau shall report the excise taxes collected on at least a
weekly basis to the county auditor of the county to which the
collections are due.
(d) If the excise tax imposed by this chapter is collected by the
department of state revenue, the money collected shall be deposited in
the state general fund to the credit of the appropriate county and
reported to the bureau on the first working day following the week of
collection. Except as provided in subsection (e), money collected by the
department that represents interest or a penalty shall be retained by the
department and used to pay the department's costs of enforcing this
chapter.
(e) This subsection applies only to interest or a penalty collected by
the department of state revenue from a person that:
(1) fails to properly register a recreational vehicle as required by
IC 9-18 (before its expiration) or IC 9-18.1 and pay the tax due
under this chapter; and
(2) during any time after the date by which the recreational
vehicle was required to be registered under IC 9-18 (before its
expiration) or IC 9-18.1 displays on the recreational vehicle a
license plate issued by another state.
The total amount collected by the department of state revenue that
represents interest or a penalty, minus a reasonable amount determined
by the department to represent its administrative expenses, shall be
deposited in the state general fund to the credit of the county in which
the person resides. The amount shall be reported to the bureau on the
first working day following the week of collection.
(f) The bureau may contract with a bank card or credit card vendor
for acceptance of bank cards or credit cards. However, if a bank card
or credit card vendor charges a vendor transaction charge or discount
fee, whether billed to the bureau or charged directly to the bureau's
account, the bureau shall collect from a person using the card an
official fee that may not exceed the highest transaction charge or
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discount fee charged to the bureau by bank card or credit card vendors
during the most recent collection period. The fee may be collected
regardless of retail merchant agreements between the bank card and
credit card vendors that may prohibit such a fee. The fee is a permitted
additional charge under IC 24-4.5-3-202. IC 37-2-4-5.
(g) On or before April 1 of each year, the bureau shall provide to the
state comptroller the amount of taxes collected under this chapter for
each county for the preceding year.
(h) On or before May 10 and November 10 of each year, the state
comptroller shall distribute to each county one-half (1/2) of:
(1) the amount of delinquent taxes; and
(2) any interest or penalty described in subsection (e);
that have been credited to the county under subsection (c). There is
appropriated from the state general fund the amount necessary to make
the distributions required by this subsection. The county auditor shall
apportion and distribute the delinquent tax distributions to the taxing
units in the county at the same time and in the same manner as excise
taxes are apportioned and distributed under section 22 of this chapter.
(i) The insurance commissioner shall prescribe the form of the
bonds or crime insurance policies required by this section.
SECTION 11. IC 6-8.1-8-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 1. (a) A person may
make a tax payment:
(1) in cash;
(2) by bank draft;
(3) by check;
(4) by cashier's check;
(5) by money order;
(6) by credit card, debit card, charge card, or similar method; or
(7) if approved by the department, by an electronic fund transfer
(as defined in IC 4-8.1-2-7).
However, if a tax liability payment is made by bank draft, check,
cashier's check, or money order, the liability is not finally discharged
and the person has not paid the tax until the draft, check, or money
order has been honored by the institution on which it is drawn. If the
payment is made by credit card, debit card, charge card, or similar
method, the liability is not finally discharged and the person has not
paid the tax until the department receives payment or credit from the
institution responsible for making the payment or credit. The
department may contract with a bank or credit card vendor for
acceptance of bank or credit cards. However, if there is a vendor
transaction charge or discount fee, whether billed to the department or
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charged directly to the department's account, the department or credit
card vendor may collect from the person using the bank or credit card
a fee that may not exceed the highest transaction charge or discount fee
charged to the department by the bank or credit card vendor during the
most recent collection period. This fee may be collected regardless of
any agreement between the bank and a credit card vendor or regardless
of any internal policy of the credit card vendor that may prohibit this
type of fee. The fee is a permitted additional charge under
IC 24-4.5-3-202. IC 37-2-4-5.
(b) The department shall issue a receipt for a tax payment that is
made with currency.
SECTION 12. IC 6-8.1-8-8, AS AMENDED BY P.L.99-2011,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 8. After a tax warrant becomes a judgment under
section 2 of this chapter, a tax warrant is returned uncollected to the
department under section 3 of this chapter, or the taxpayer does not pay
the amount demanded under section 2(b) of this chapter and the
taxpayer has taken an action under section 2(n) of this chapter to
foreclose the lien, the department may take any of the following actions
without judicial proceedings.
(1) The department may levy upon the property of the taxpayer
that is held by a financial institution by sending a claim to the
financial institution. Upon receipt of a claim under this
subdivision, the financial institution shall surrender to the
department the taxpayer's property. If the taxpayer's property
exceeds the amount owed to the state by the taxpayer, the
financial institution shall surrender the taxpayer's property in an
amount equal to the amount owed. After receiving the
department's notice of levy, the financial institution is required to
place a sixty (60) day hold on or restriction on the withdrawal of
funds the taxpayer has on deposit or subsequently deposits, in an
amount not to exceed the amount owed.
(2) The department may garnish the accrued earnings and wages
of a taxpayer by sending a notice to the taxpayer's employer. Upon
receipt of a notice under this subdivision, an employer shall
garnish the accrued earnings and wages of the taxpayer in an
amount equal to the full amount that is subject to garnishment
under IC 24-4.5-5. IC 37-2-6. The amount garnished shall be
remitted to the department. The employer is entitled to a fee in an
amount equal to the fee allowed under IC 24-4.5-5-105(5).
IC 37-2-6-4(e). However, the fee shall be borne entirely by the
taxpayer.
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(3) The department may levy upon and sell property and may:
(A) take immediate possession of the property and store it in
a secure place; or
(B) leave the property in the custody of the taxpayer;
until the day of the sale. The department shall provide notice of
the sale in one (1) newspaper, as provided in IC 5-3-1-2. If the
property is left in the custody of the taxpayer, the department may
require the taxpayer to provide a joint and several delivery bond,
in an amount and with a surety acceptable to the department. At
any time before the sale, any owner or part owner of the property
may redeem the property from the judgment by paying the
department the amount of the judgment. The proceeds of the sale
shall be applied first to the collection expenses and second to the
payment of the delinquent taxes and penalties. Any balance
remaining shall be paid to the taxpayer.
SECTION 13. IC 7.1-3-1-13.5, AS ADDED BY P.L.153-2015,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 13.5. (a) As used in this section, "credit card"
means a:
(1) credit card;
(2) debit card;
(3) charge card; or
(4) stored value card.
(b) The commission shall accept a payment to the commission for
any purpose by any of the following financial instruments:
(1) Cash.
(2) Certified check.
(3) Cashier's check.
(4) Check drawn on the bank deposit of a business.
(5) Valid postal money order of the United States.
(6) Bank draft.
(7) Money order.
(8) Bank card or credit card.
(9) Electronic funds transfer.
(10) Any other financial instrument authorized by the
commission.
(c) If there is a charge to the commission for the use of a financial
instrument, the commission may collect a sum equal to the amount of
the charge from the person who uses the financial instrument.
(d) A procedure authorized for a particular type of payment must be
uniformly applied to all payments of the same type.
(e) The commission may contract with a bank card or credit card
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vendor for acceptance of bank cards or credit cards. However, if there
is a vendor transaction charge or discount fee, whether billed to the
commission or charged directly to the commission's account, the
commission may collect from the person using the card:
(1) an official fee that may not exceed the transaction charge or
discount fee charged to the commission by bank or credit card
vendors; or
(2) a reasonable convenience fee:
(A) that may not exceed three dollars ($3); and
(B) that must be uniform regardless of the bank card or credit
card used.
The fees described in subdivisions (1) and (2) may be collected
regardless of retail merchant agreements between the bank and credit
card vendors that may prohibit such fees. These fees are permitted
additional charges under IC 24-4.5-3-202. IC 37-2-4-5.
(f) The commission may pay any applicable bank card or credit card
service charge associated with the use of a bank card or credit card
under this section.
SECTION 14. IC 22-2-6-2, AS AMENDED BY P.L.147-2019,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 2. (a) Any assignment of the wages of an
employee is valid only if all of the following conditions are satisfied:
(1) The assignment is:
(A) in writing;
(B) signed by the employee personally;
(C) by its terms revocable at any time by the employee upon
written notice to the employer; and
(D) agreed to in writing by the employer.
(2) An executed copy of the assignment is delivered to the
employer within ten (10) days after its execution.
(3) The assignment is made for a purpose described in subsection
(b).
(b) A wage assignment under this section may be made for the
purpose of paying any of the following:
(1) Premium on a policy of insurance obtained for the employee
by the employer.
(2) Pledge or contribution of the employee to a charitable or
nonprofit organization.
(3) Purchase price of bonds or securities, issued or guaranteed by
the United States.
(4) Purchase price of shares of stock, or fractional interests in
shares of stock, of the employing company, or of a company
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owning the majority of the issued and outstanding stock of the
employing company, whether purchased from such company, in
the open market or otherwise. However, if such shares are to be
purchased on installments pursuant to a written purchase
agreement, the employee has the right under the purchase
agreement at any time before completing purchase of such shares
to cancel said agreement and to have repaid promptly the amount
of all installment payments which theretofore have been made.
(5) Dues to become owing by the employee to a labor
organization of which the employee is a member.
(6) Purchase price of merchandise, goods, or food offered by the
employer and sold to the employee, for the employee's benefit,
use, or consumption, at the written request of the employee.
(7) Amount of a loan made to the employee by the employer and
evidenced by a written instrument executed by the employee
subject to the amount limits set forth in section 4(c) of this
chapter.
(8) Contributions, assessments, or dues of the employee to a
hospital service or a surgical or medical expense plan or to an
employees' association, trust, or plan existing for the purpose of
paying pensions or other benefits to said employee or to others
designated by the employee.
(9) Payment to any credit union, nonprofit organizations, or
associations of employees of such employer organized under any
law of this state or of the United States.
(10) Payment to any person or organization regulated under the
Uniform Consumer Credit Code (IC 24-4.5) (IC 37-2) or IC 37-3
(small loans) for deposit or credit to the employee's account by
electronic transfer or as otherwise designated by the employee.
(11) Premiums on policies of insurance and annuities purchased
by the employee on the employee's life.
(12) The purchase price of shares or fractional interest in shares
in one (1) or more mutual funds.
(13) A judgment owed by the employee if the payment:
(A) is made in accordance with an agreement between the
employee and the creditor; and
(B) is not a garnishment under IC 34-25-3.
(14) The purchase, rental, or use of uniforms, shirts, pants, or
other job-related job related clothing at an amount not to exceed
the direct cost paid by an employer to an external vendor for those
items.
(15) The purchase of equipment or tools necessary to fulfill the
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duties of employment at an amount not to exceed the direct cost
paid by an employer to an external vendor for those items.
(16) Reimbursement for education or employee skills training.
However, a wage assignment may not be made if the education or
employee skills training benefits were provided, in whole or in
part, through an economic development incentive from any
federal, state, or local program.
(17) An advance for:
(A) payroll; or
(B) vacation;
pay.
(18) The employee's drug education and addiction treatment
services under IC 12-23-23.
(c) The interest rate charged on amounts loaned or advanced to an
employee and repaid under subsection (b) may not exceed the bank
prime loan interest rate as reported by the Board of Governors of the
Federal Reserve System or any successor rate, plus four percent (4%).
(d) The total amount of wages subject to assignment under
subsection (b)(14) and (b)(15) may not exceed the lesser of:
(1) two thousand five hundred dollars ($2,500) per year; or
(2) five percent (5%) of the employee's weekly disposable
earnings (as defined in IC 24-4.5-5-105(1)(a)). IC 37-2-6-4(a)(1).
(e) Except as provided under 29 CFR Parts 1910, 1915, 1917, 1918,
and 1926, an employee shall not be charged or subject to a wage
assignment under subsection (b)(14) or (b)(15) for protective
equipment including personal protective equipment identified under 29
CFR Parts 1910, 1915, 1917, 1918, and 1926.
SECTION 15. IC 22-4-13.3-4, AS AMENDED BY P.L.66-2018,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 4. (a) An employer that receives a notice to
withhold income under section 3 of this chapter shall do the following:
(1) Verify the individual's employment to the department.
(2) Withhold from the income due to the individual each pay
period an amount:
(A) determined in accordance with; and
(B) subject to the limitations of and priority established by;
IC 24-4.5-5-105 IC 37-2-6-4 in the same manner as a
garnishment. An income withholding under this chapter is not an
assignment of wages under IC 22-2-6.
(3) Begin withholding the amount determined under subdivision
(2) from the individual's income beginning with the first pay
period that occurs not later than fourteen (14) days after the date
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the employer receives the notice sent under section 3 of this
chapter.
(4) Remit the amount withheld under subdivision (2) to the
department by check or electronic payment (as defined by
IC 5-27-2-3) not later than seven (7) days after the date of each
regularly scheduled pay day.
(5) Continue withholding under this section until:
(A) the department notifies the employer to discontinue the
withholding; or
(B) the full amount required to be paid to the department has
been paid, as indicated by a written statement to the employer
from the department.
(6) Notify the department, if the individual subject to withholding
terminates employment, including the individual's last known
address and the name of any new employer, if known.
(b) An employer that is required to withhold income under
subsection (a)(2) may collect a fee equal to twelve dollars ($12). If the
employer chooses to impose a fee, the fee shall be allocated as follows:
(1) Fifty percent (50%) of the fee shall be paid by the individual
subject to withholding, and that amount is deductible by the
employer from the individual's disposable earnings (as defined in
IC 24-4.5-5-105(1)(a)). IC 37-2-6-4(a)(1)).
(2) Fifty percent (50%) of the fee shall be paid by the department.
The fee may be collected only once by an employer for each notice
provided by the department under section 3 of this chapter. The
employer may collect the entire fee from one (1) or more of the initial
withholdings from the individual's disposable earnings, or alternatively,
the employer may collect the fee ratably over the number of pay
periods for which the withholdings from the individual's disposable
earnings are required. If an employer chooses to collect a fee under this
subsection, the employer shall notify the department in the manner and
form prescribed by the department, and the amount to be withheld must
be reduced, if necessary, to avoid exceeding the maximum amount
permitted to be deducted under IC 24-4.5-5-105(3). IC 37-2-6-4(c). A
fee collected under this subsection is not an assignment of wages under
IC 22-2-6.
SECTION 16. IC 22-4-13.3-7, AS AMENDED BY P.L.93-2024,
SECTION 156, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 7. (a) An employer that complies
with a notice described in section 3 of this chapter that is regular on its
face is not liable in any civil action for any conduct taken in
compliance with the notice.
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(b) An employer that complies with a notice described in section 3
of this chapter is discharged from liability to an employee for the part
of the employee's income that was withheld in compliance with the
notice.
(c) If a court issues an order to stay a withholding of income, the
department is not liable in any civil action to an individual who is the
subject of the income withholding for amounts withheld from the
individual's income before the stay becomes effective.
(d) Administrative income withholdings issued under this chapter
are subject to the limitations set forth in IC 24-4.5-5-105. IC 37-2-6-4.
A withholding under this chapter is not an assignment of wages under
IC 22-2-6.
(e) The department may adopt rules under IC 4-22-2 to carry out the
department's responsibilities under this chapter.
SECTION 17. IC 22-9-1-3, AS AMENDED BY P.L.213-2016,
SECTION 27, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 3. As used in this chapter:
(a) "Person" means one (1) or more individuals, partnerships,
associations, organizations, limited liability companies, corporations,
labor organizations, cooperatives, legal representatives, trustees,
trustees in bankruptcy, receivers, and other organized groups of
persons.
(b) "Commission" means the civil rights commission created under
section 4 of this chapter.
(c) "Director" means the director of the civil rights commission.
(d) "Deputy director" means the deputy director of the civil rights
commission.
(e) "Commission attorney" means the deputy attorney general, such
assistants of the attorney general as may be assigned to the
commission, or such other attorney as may be engaged by the
commission.
(f) "Consent agreement" means a formal agreement entered into in
lieu of adjudication.
(g) "Affirmative action" means those acts that the commission
determines necessary to assure compliance with the Indiana civil rights
law.
(h) "Employer" means the state or any political or civil subdivision
thereof and any person employing six (6) or more persons within the
state, except that the term "employer" does not include:
(1) any nonprofit corporation or association organized exclusively
for fraternal or religious purposes;
(2) any school, educational, or charitable religious institution
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owned or conducted by or affiliated with a church or religious
institution; or
(3) any exclusively social club, corporation, or association that is
not organized for profit.
(i) "Employee" means any person employed by another for wages or
salary. However, the term does not include any individual employed:
(1) by the individual's parents, spouse, or child; or
(2) in the domestic service of any person.
(j) "Labor organization" means any organization that exists for the
purpose in whole or in part of collective bargaining or of dealing with
employers concerning grievances, terms, or conditions of employment
or for other mutual aid or protection in relation to employment.
(k) "Employment agency" means any person undertaking with or
without compensation to procure, recruit, refer, or place employees.
(l) "Discriminatory practice" means:
(1) the exclusion of a person from equal opportunities because of
race, religion, color, sex, disability, national origin, ancestry, or
status as a veteran;
(2) a system that excludes persons from equal opportunities
because of race, religion, color, sex, disability, national origin,
ancestry, or status as a veteran;
(3) the promotion of racial segregation or separation in any
manner, including but not limited to the inducing of or the
attempting to induce for profit any person to sell or rent any
dwelling by representations regarding the entry or prospective
entry in the neighborhood of a person or persons of a particular
race, religion, color, sex, disability, national origin, or ancestry;
(4) a violation of IC 22-9-5 that occurs after July 25, 1992, and is
committed by a covered entity (as defined in IC 22-9-5-4);
(5) the performance of an abortion solely because of the race,
color, sex, disability, national origin, or ancestry of the fetus; or
(6) a violation of any of the following statutes protecting the right
of conscience regarding abortion:
(A) IC 16-34-1-4.
(B) IC 16-34-1-5.
(C) IC 16-34-1-6.
Every discriminatory practice relating to the acquisition or sale of real
estate, education, public accommodations, employment, or the
extending of credit (as defined in IC 24-4.5-1-301.5) IC 37-2-2-14)
shall be considered unlawful unless it is specifically exempted by this
chapter.
(m) "Public accommodation" means any establishment that caters
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or offers its services or facilities or goods to the general public.
(n) "Complainant" means:
(1) any individual charging on the individual's own behalf to have
been personally aggrieved by a discriminatory practice; or
(2) the director or deputy director of the commission charging that
a discriminatory practice was committed against a person (other
than the director or deputy director) or a class of people, in order
to vindicate the public policy of the state (as defined in section 2
of this chapter).
(o) "Complaint" means any written grievance that is:
(1) sufficiently complete and filed by a complainant with the
commission; or
(2) filed by a complainant as a civil action in the circuit or
superior court having jurisdiction in the county in which the
alleged discriminatory practice occurred.
The original of any complaint filed under subdivision (1) shall be
signed and verified by the complainant.
(p) "Sufficiently complete" refers to a complaint that includes:
(1) the full name and address of the complainant;
(2) the name and address of the respondent against whom the
complaint is made;
(3) the alleged discriminatory practice and a statement of
particulars thereof;
(4) the date or dates and places of the alleged discriminatory
practice and if the alleged discriminatory practice is of a
continuing nature the dates between which continuing acts of
discrimination are alleged to have occurred; and
(5) a statement as to any other action, civil or criminal, instituted
in any other form based upon the same grievance alleged in the
complaint, together with a statement as to the status or disposition
of the other action.
No complaint shall be valid unless filed within one hundred eighty
(180) days from the date of the occurrence of the alleged
discriminatory practice.
(q) "Sex" as it applies to segregation or separation in this chapter
applies to all types of employment, education, public accommodations,
and housing. However:
(1) it shall not be a discriminatory practice to maintain separate
restrooms;
(2) it shall not be an unlawful employment practice for an
employer to hire and employ employees, for an employment
agency to classify or refer for employment any individual, for a
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labor organization to classify its membership or to classify or refer
for employment any individual, or for an employer, labor
organization, or joint labor management committee controlling
apprenticeship or other training or retraining programs to admit
or employ any other individual in any program on the basis of sex
in those certain instances where sex is a bona fide occupational
qualification reasonably necessary to the normal operation of that
particular business or enterprise; and
(3) it shall not be a discriminatory practice for a private or
religious educational institution to continue to maintain and
enforce a policy of admitting students of one (1) sex only.
(r) "Disabled" or "disability" means the physical or mental condition
of a person that constitutes a substantial disability. In reference to
employment under this chapter, "disabled or disability" also means the
physical or mental condition of a person that constitutes a substantial
disability unrelated to the person's ability to engage in a particular
occupation.
(s) "Veteran" means:
(1) a veteran of the armed forces of the United States;
(2) a member of the Indiana National Guard; or
(3) a member of a reserve component.
SECTION 18. IC 23-0.5-9-58, AS ADDED BY P.L.118-2017,
SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 58. The secretary of state may accept payment of
the correct filing fee by credit card, debit card, charge card, or similar
method. However, if the filing fee is paid by credit card, debit card,
charge card, or similar method, the liability is not finally discharged
until the secretary of state receives payment or credit from the
institution responsible for making the payment or credit. The secretary
of state may contract with a bank or credit card vendor for acceptance
of bank or credit cards. However, if there is a vendor transaction charge
or discount fee, whether billed to the secretary of state or charged
directly to the secretary of state's account, the secretary of state or the
credit card vendor may collect from the person using the bank or credit
card a fee that may not exceed the highest transaction charge or
discount fee charged to the secretary of state by the bank or credit card
vendor during the most recent collection period. This fee may be
collected regardless of any agreement between the bank and a credit
card vendor or regardless of any internal policy of the credit card
vendor that may prohibit this type of fee. The fee is a permitted
additional charge under IC 24-4.5-3-202. IC 37-2-4-5.
SECTION 19. IC 23-2.5-1-14, AS ADDED BY P.L.175-2019,
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SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 14. (a) "Loan broker" means a person who, in
return for consideration from any source:
(1) procures;
(2) attempts to procure; or
(3) assists in procuring;
a residential mortgage loan from a third party, regardless of whether the
person seeking the loan obtains the loan.
(b) The term "loan broker" does not include:
(1) a supervised financial organization (as defined in
IC 26-1-4-102.5), including a bank, savings bank, trust company,
savings association, or credit union;
(2) another financial institution that is:
(A) regulated by an agency of the United States or a state; and
(B) regularly actively engaged in the business of:
(i) making consumer loans that are not secured by real
estate; or
(ii) taking assignment of consumer sales contracts that are
not secured by real estate;
(3) an insurance company;
(4) a person arranging financing for the sale of the person's
product; or
(5) a creditor that is licensed under IC 24-4.4-2-402. IC 37-1-3-5.
SECTION 20. IC 23-2.5-8-3, AS ADDED BY P.L.175-2019,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 3. (a) If a transaction for which a loan broker has
charged a fee is rescinded by a person under the federal Truth in
Lending Act (15 U.S.C. 1601-1667e) within twenty (20) calendar days
after the date on which a notice of the rescission is delivered to the
creditor, the loan broker shall return to the person any consideration
received by the loan broker other than bona fide third party fees.
(b) For purposes of calculating the period during which a person
may avoid a contract under IC 24-5-10-8 or IC 24-4.5-2-502,
IC 37-2-3-28, a contract with a loan broker is considered to be a sale
of services that occurs on the date on which the person signs the
written contract required by section 1 of this chapter.
SECTION 21. IC 23-2.5-11-16, AS ADDED BY P.L.175-2019,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 16. In the securities division's investigative,
examination, and regulatory activities related to licensees under this
article, the securities division may cooperate with the Indiana
department of financial institutions in the regulation of a licensee that
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conducts:
(1) business under this article; and
(2) business that requires licensure under IC 24-4.4. IC 37-1.
SECTION 22. IC 24-4.4 IS REPEALED [EFFECTIVE JULY 1,
2026]. (First Lien Mortgage Lending).
SECTION 23. IC 24-4.5 IS REPEALED [EFFECTIVE JULY 1,
2026]. (Uniform Consumer Credit Code).
SECTION 24. IC 24-4.6-1-103, AS AMENDED BY P.L.86-2018,
SECTION 196, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 103. Interest at the rate of eight
percent (8%) per annum shall be allowed:
(a) From the date of settlement on money due on any instrument in
writing which does not specify a rate of interest and which is not
covered by IC 24-4.5 IC 37-2 or this article;
(b) And from the date an itemized bill shall have been rendered and
payment demanded on an account stated, account closed or for money
had and received for the use of another and retained without the other
person's consent.
SECTION 25. IC 24-4.7-1-1, AS AMENDED BY P.L.242-2019,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 1. This article does not apply to any of the
following:
(1) A telephone call made in response to an express request of the
person called.
(2) A telephone call made primarily in connection with an
existing debt or contract for which payment or performance has
not been completed at the time of the call.
(3) A telephone call made on behalf of a charitable organization
that is exempt from federal income taxation under Section 501 of
the Internal Revenue Code, but only if all of the following apply:
(A) The telephone call is made by a volunteer or an employee
of the charitable organization.
(B) The telephone solicitor who makes the telephone call
immediately discloses all of the following information upon
making contact with the consumer:
(i) The solicitor's true first and last name.
(ii) The name, address, and telephone number of the
charitable organization.
(4) A telephone call made by an individual licensed under
IC 25-34.1 if:
(A) the sale of goods or services is not completed; and
(B) the payment or authorization of payment is not required;
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until after a face to face sales presentation by the seller.
(5) A telephone call made by an individual licensed under
IC 27-1-15.6 or IC 27-1-15.8 when the individual is soliciting an
application for insurance or negotiating a policy of insurance on
behalf of an insurer (as defined in IC 27-1-2-3).
(6) A telephone call soliciting the sale of a newspaper of general
circulation, but only if the telephone call is made by a volunteer
or an employee of the newspaper.
(7) Any telephone call made to a consumer by a communications
service provider (as defined in IC 8-1-32.5-4) that:
(A) offers broadband Internet service; and
(B) has an established business relationship (as defined in 47
CFR 64.1200) with the consumer.
(8) Any telephone call made to a consumer by:
(A) a financial institution organized or reorganized under the
laws of any state or the United States; or
(B) a person licensed by the department of financial
institutions under IC 24-4.4, IC 24-4.5, IC 37-1, IC 37-2, or
750 IAC 9;
that has an established business relationship (as defined in 47
CFR 64.1200) with the consumer.
SECTION 26. IC 24-4.9-2-6, AS ADDED BY P.L.125-2006,
SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 6. "Financial institution" means a financial
institution as defined in:
(1) IC 28-1-1-3, other than a consumer finance institution licensed
to make supervised or regulated loans under IC 24-4.5; IC 37-2;
or
(2) 15 U.S.C. 6809(3).
SECTION 27. IC 24-5-0.5-3, AS AMENDED BY P.L.104-2024,
SECTION 42, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 3. (a) A supplier may not commit an unfair,
abusive, or deceptive act, omission, or practice in connection with a
consumer transaction. Such an act, omission, or practice by a supplier
is a violation of this chapter whether it occurs before, during, or after
the transaction. An act, omission, or practice prohibited by this section
includes both implicit and explicit misrepresentations.
(b) Without limiting the scope of subsection (a), the following acts,
and the following representations as to the subject matter of a
consumer transaction, made orally, in writing, or by electronic
communication, by a supplier, are deceptive acts:
(1) That such subject of a consumer transaction has sponsorship,
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approval, performance, characteristics, accessories, uses, or
benefits it does not have which the supplier knows or should
reasonably know it does not have.
(2) That such subject of a consumer transaction is of a particular
standard, quality, grade, style, or model, if it is not and if the
supplier knows or should reasonably know that it is not.
(3) That such subject of a consumer transaction is new or unused,
if it is not and if the supplier knows or should reasonably know
that it is not.
(4) That such subject of a consumer transaction will be supplied
to the public in greater quantity than the supplier intends or
reasonably expects.
(5) That replacement or repair constituting the subject of a
consumer transaction is needed, if it is not and if the supplier
knows or should reasonably know that it is not.
(6) That a specific price advantage exists as to such subject of a
consumer transaction, if it does not and if the supplier knows or
should reasonably know that it does not.
(7) That the supplier has a sponsorship, approval, or affiliation in
such consumer transaction the supplier does not have, and which
the supplier knows or should reasonably know that the supplier
does not have.
(8) That such consumer transaction involves or does not involve
a warranty, a disclaimer of warranties, or other rights, remedies,
or obligations, if the representation is false and if the supplier
knows or should reasonably know that the representation is false.
(9) That the consumer will receive a rebate, discount, or other
benefit as an inducement for entering into a sale or lease in return
for giving the supplier the names of prospective consumers or
otherwise helping the supplier to enter into other consumer
transactions, if earning the benefit, rebate, or discount is
contingent upon the occurrence of an event subsequent to the time
the consumer agrees to the purchase or lease.
(10) That the supplier is able to deliver or complete the subject of
the consumer transaction within a stated period of time, when the
supplier knows or should reasonably know the supplier could not.
If no time period has been stated by the supplier, there is a
presumption that the supplier has represented that the supplier
will deliver or complete the subject of the consumer transaction
within a reasonable time, according to the course of dealing or the
usage of the trade.
(11) That the consumer will be able to purchase the subject of the
SEA 169 — Concur
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consumer transaction as advertised by the supplier, if the supplier
does not intend to sell it.
(12) That the replacement or repair constituting the subject of a
consumer transaction can be made by the supplier for the estimate
the supplier gives a customer for the replacement or repair, if the
specified work is completed and:
(A) the cost exceeds the estimate by an amount equal to or
greater than ten percent (10%) of the estimate;
(B) the supplier did not obtain written permission from the
customer to authorize the supplier to complete the work even
if the cost would exceed the amounts specified in clause (A);
(C) the total cost for services and parts for a single transaction
is more than seven hundred fifty dollars ($750); and
(D) the supplier knew or reasonably should have known that
the cost would exceed the estimate in the amounts specified in
clause (A).
(13) That the replacement or repair constituting the subject of a
consumer transaction is needed, and that the supplier disposes of
the part repaired or replaced earlier than seventy-two (72) hours
after both:
(A) the customer has been notified that the work has been
completed; and
(B) the part repaired or replaced has been made available for
examination upon the request of the customer.
(14) Engaging in the replacement or repair of the subject of a
consumer transaction if the consumer has not authorized the
replacement or repair, and if the supplier knows or should
reasonably know that it is not authorized.
(15) The act of misrepresenting the geographic location of the
supplier by listing an alternate business name or an assumed
business name (as described in IC 23-0.5-3-4) in a local telephone
directory if:
(A) the name misrepresents the supplier's geographic location;
(B) the listing fails to identify the locality and state of the
supplier's business;
(C) calls to the local telephone number are routinely forwarded
or otherwise transferred to a supplier's business location that
is outside the calling area covered by the local telephone
directory; and
(D) the supplier's business location is located in a county that
is not contiguous to a county in the calling area covered by the
local telephone directory.
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(16) The act of listing an alternate business name or assumed
business name (as described in IC 23-0.5-3-4) in a directory
assistance data base if:
(A) the name misrepresents the supplier's geographic location;
(B) calls to the local telephone number are routinely forwarded
or otherwise transferred to a supplier's business location that
is outside the local calling area; and
(C) the supplier's business location is located in a county that
is not contiguous to a county in the local calling area.
(17) The violation by a supplier of IC 24-3-4 concerning
cigarettes for import or export.
(18) The act of a supplier in knowingly selling or reselling a
product to a consumer if the product has been recalled, whether
by the order of a court or a regulatory body, or voluntarily by the
manufacturer, distributor, or retailer, unless the product has been
repaired or modified to correct the defect that was the subject of
the recall.
(19) The violation by a supplier of 47 U.S.C. 227, including any
rules or regulations issued under 47 U.S.C. 227.
(20) The violation by a supplier of the federal Fair Debt
Collection Practices Act (15 U.S.C. 1692 et seq.), including any
rules or regulations issued under the federal Fair Debt Collection
Practices Act (15 U.S.C. 1692 et seq.).
(21) A violation of IC 24-5-7 (concerning health spa services), as
set forth in IC 24-5-7-17.
(22) A violation of IC 24-5-8 (concerning business opportunity
transactions), as set forth in IC 24-5-8-20.
(23) A violation of IC 24-5-10 (concerning home consumer
transactions), as set forth in IC 24-5-10-18.
(24) A violation of IC 24-5-11 (concerning real property
improvement contracts), as set forth in IC 24-5-11-14.
(25) A violation of IC 24-5-12 (concerning telephone
solicitations), as set forth in IC 24-5-12-23.
(26) A violation of IC 24-5-13.5 (concerning buyback motor
vehicles), as set forth in IC 24-5-13.5-14.
(27) A violation of IC 24-5-14 (concerning automatic
dialing-announcing devices), as set forth in IC 24-5-14-13.
(28) A violation of IC 24-5-15 (concerning credit services
organizations), as set forth in IC 24-5-15-11.
(29) A violation of IC 24-5-16 (concerning unlawful motor
vehicle subleasing), as set forth in IC 24-5-16-18.
(30) A violation of IC 24-5-17 (concerning environmental
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marketing claims), as set forth in IC 24-5-17-14.
(31) A violation of IC 24-5-19 (concerning deceptive commercial
solicitation), as set forth in IC 24-5-19-11.
(32) A violation of IC 24-5-21 (concerning prescription drug
discount cards), as set forth in IC 24-5-21-7.
(33) A violation of IC 24-5-23.5-7 (concerning real estate
appraisals), as set forth in IC 24-5-23.5-9.
(34) A violation of IC 24-5-26 (concerning identity theft), as set
forth in IC 24-5-26-3.
(35) A violation of IC 24-5.5 IC 37-4 (concerning mortgage
rescue fraud), as set forth in IC 24-5.5-6-1. IC 37-4-5-1.
(36) A violation of IC 24-8 (concerning promotional gifts and
contests), as set forth in IC 24-8-6-3.
(37) A violation of IC 21-18.5-6 (concerning representations
made by a postsecondary credit bearing proprietary educational
institution), as set forth in IC 21-18.5-6-22.5.
(38) A violation of IC 24-5-15.5 (concerning collection actions of
a plaintiff debt buyer), as set forth in IC 24-5-15.5-6.
(39) A violation of IC 24-14 (concerning towing services), as set
forth in IC 24-14-10-1.
(40) A violation of IC 24-5-14.5 (concerning misleading or
inaccurate caller identification information), as set forth in
IC 24-5-14.5-12.
(41) A violation of IC 24-5-27 (concerning intrastate inmate
calling services), as set forth in IC 24-5-27-27.
(42) A violation of IC 15-21 (concerning sales of dogs by retail
pet stores), as set forth in IC 15-21-7-4.
(43) A violation of IC 24-4-23 (concerning the security of
information collected and transmitted by an adult oriented website
operator), as set forth in IC 24-4-23-14.
(c) Any representations on or within a product or its packaging or
in advertising or promotional materials which would constitute a
deceptive act shall be the deceptive act both of the supplier who places
such representation thereon or therein, or who authored such materials,
and such other suppliers who shall state orally or in writing that such
representation is true if such other supplier shall know or have reason
to know that such representation was false.
(d) If a supplier shows by a preponderance of the evidence that an
act resulted from a bona fide error notwithstanding the maintenance of
procedures reasonably adopted to avoid the error, such act shall not be
deceptive within the meaning of this chapter.
(e) It shall be a defense to any action brought under this chapter that
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the representation constituting an alleged deceptive act was one made
in good faith by the supplier without knowledge of its falsity and in
reliance upon the oral or written representations of the manufacturer,
the person from whom the supplier acquired the product, any testing
organization, or any other person provided that the source thereof is
disclosed to the consumer.
(f) For purposes of subsection (b)(12), a supplier that provides
estimates before performing repair or replacement work for a customer
shall give the customer a written estimate itemizing as closely as
possible the price for labor and parts necessary for the specific job
before commencing the work.
(g) For purposes of subsection (b)(15) and (b)(16), a telephone
company or other provider of a telephone directory or directory
assistance service or its officer or agent is immune from liability for
publishing the listing of an alternate business name or assumed
business name of a supplier in its directory or directory assistance data
base unless the telephone company or other provider of a telephone
directory or directory assistance service is the same person as the
supplier who has committed the deceptive act.
(h) For purposes of subsection (b)(18), it is an affirmative defense
to any action brought under this chapter that the product has been
altered by a person other than the defendant to render the product
completely incapable of serving its original purpose.
SECTION 28. IC 24-5-15-7, AS AMENDED BY P.L.209-2007,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 7. (a) Except as provided in subsection (d), a
contract between a consumer and a credit services organization
concerning the purchase of the services of the credit services
organization must be in writing, be dated and signed by both the
consumer and the credit services organization, and include all of the
following:
(1) A statement in at least 10 point boldface type in immediate
proximity to the space reserved for the signature of the buyer that
reads:
"You, the buyer, may cancel this contract at any time before
midnight of the third business day after the date of the transaction. See
the attached notice of cancellation form for an explanation of this
right.".
(2) The terms and conditions of payment, including the total
amount of all payments to be made by the buyer to the credit services
organization or to another person.
(3) A complete and detailed description of the services to be
SEA 169 — Concur
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performed and the results to be achieved by the credit services
organization for or on behalf of the buyer, including all guarantees and
all promises of full or partial refunds and a list of the adverse
information appearing on the consumer's credit report that the credit
services organization expects to have modified and the estimated date
by which each modification will occur.
(4) The principal business address of the credit services
organization and the name and address of the credit services
organization's agent in Indiana authorized to receive service of process.
(b) A contract shall be accompanied by two (2) copies of a form
captioned "NOTICE OF CANCELLATION" attached to the contract
and that contains the following statement in at least 10 point boldface
type:
NOTICE OF CANCELLATION
You may cancel this contract, without any penalty or obligation, at any
time before midnight of the third business day after the date the
contract is signed.
If you cancel, any payment made by you under this contract will be
returned within ten days following receipt by the seller of your
cancellation notice, or any other written notice, to
_____________________________________________________
(name of seller)
_____________________________________________________
(address of seller)
(place of business)
not later than midnight __________________________________
(date)
"I hereby cancel this transaction". _________________________
(date)
_____________________________________________________
(buyer's signature)
(c) A credit services organization shall give a copy of the completed
contract and all other documents required by the credit services
organization to the buyer at the time the contract and the documents are
signed.
(d) If a contract is subject to this chapter and to IC 24-5.5,
IC 24-5.5-4, IC 37-4, IC 37-4-3 applies to the contract.
SECTION 29. IC 24-5-23.5-3, AS ADDED BY P.L.52-2009,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 3. (a) As used in this chapter, "creditor" means a
person:
(1) that regularly engages in Indiana in the extension of mortgage
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loans that are subject to a credit service charge or loan finance
charge, as applicable, or are payable by written agreement in more
than four (4) installments (not including a down payment); and
(2) to whom the obligation arising from a mortgage loan is
initially payable, either on the face of the note or contract, or by
agreement if there is not a note or contract.
(b) The term does not include a person described in:
(1) IC 24-9-2-6(a)(2) IC 37-5-2-6(a)(2) if the person described in
IC 24-9-2-6(a)(2) IC 37-5-2-6-6(a)(2) is not the person extending
the credit in the transaction; or
(2) IC 24-9-2-6(b). IC 37-5-2-6(b).
SECTION 30. IC 24-5-23.5-4, AS AMENDED BY P.L.13-2013,
SECTION 66, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 4. (a) As used in this chapter, "mortgage loan"
means a loan in which a mortgage (or another equivalent consensual
security interest) that constitutes a lien is created or retained against an
interest in real property in Indiana.
(b) The term includes the following:
(1) A home loan subject to IC 24-9. IC 37-5.
(2) A loan described in IC 24-9-1-1, IC 37-5-1-1, to the extent
allowed under federal law.
(3) A first lien mortgage transaction (as defined in
IC 24-4.4-1-301) IC 37-1-2) subject to IC 24-4.4. IC 37-1.
(4) A consumer credit sale subject to IC 24-4.5-2 IC 37-2-3 in
which a mortgage (or another equivalent consensual security
interest) that constitutes a lien is created or retained against an
interest in real property in Indiana.
(5) A consumer loan subject to IC 24-4.5-3 IC 37-2-4 in which a
mortgage (or another equivalent consensual security interest) that
constitutes a lien is created or retained against an interest in real
property in Indiana.
(6) A loan in which a mortgage (or another equivalent consensual
security interest) that constitutes a lien is created or retained
against land:
(A) that is located in Indiana;
(B) upon which there is a dwelling that is not or will not be
used by the borrower primarily for personal, family, or
household purposes; and
(C) that is classified as residential for property tax purposes.
The term includes a loan that is secured by land in Indiana upon
which there is a dwelling that is purchased by or through the
borrower for investment or other business purposes.
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(c) The term does not include a land contract.
SECTION 31. IC 24-5-23.6-1, AS ADDED BY P.L.115-2010,
SECTION 20, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 1. (a) As used in this chapter, "creditor" means:
(1) a person:
(A) that engages in Indiana in the extension of mortgages that
are subject to a credit service charge or loan finance charge, as
applicable, or are payable by written agreement in more than
four (4) installments (not including a down payment); and
(B) to whom the obligation arising from a mortgage is initially
payable, either on the face of the note or contract, or by
agreement if there is not a note or contract; or
(2) a person who brokers a mortgage, including a person who:
(A) directly or indirectly solicits, processes, places, or
negotiates mortgages for others;
(B) offers to solicit, process, place, or negotiate mortgages for
others; or
(C) closes mortgages that may be in the person's own name
with funds provided by others and that are thereafter assigned
to the person providing funding for the mortgages.
(b) The term does not include a person described in IC 24-9-2-6(b).
IC 37-5-2-6(b).
SECTION 32. IC 24-5-23.6-7, AS AMENDED BY P.L.89-2011,
SECTION 22, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 7. (a) As used in this chapter, "mortgage" means
a sale or loan, or the refinancing or consolidation of a sale or loan, in
which a first mortgage deed of (or another equivalent consensual
security interest) that constitutes a first lien, is created or retained
against land that is located in Indiana and upon which there is a
dwelling that is or will be used by the debtor primarily for personal,
family, or household purposes.
(b) The term includes any of the following that meets the conditions
set forth in subsection (a):
(1) A home loan subject to IC 24-9. IC 37-5.
(2) A loan described in IC 24-9-1-1, IC 37-5-1-1, to the extent
allowed under federal law.
(3) A first lien mortgage transaction (as defined in
IC 24-4.4-1-301) IC 37-1-2) subject to IC 24-4.4. IC 37-1.
(c) The term does not include a land contract (as defined in
IC 24-4.4-1-301(36)). IC 37-1-2-21).
SECTION 33. IC 24-5-24-3, AS ADDED BY P.L.104-2007,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
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31
JULY 1, 2026]: Sec. 3. (a) As used in this chapter, "consumer reporting
agency" means any person that, for monetary fees or dues, or on a
cooperative nonprofit basis, regularly engages in whole or in part in the
practice of assembling or evaluating information concerning a
consumer's credit or other information for the purpose of furnishing a
consumer report to another person.
(b) The term does not include an entity designated as a
commercially reasonable private consumer credit reporting entity under
IC 24-4.5-7-404(5). IC 37-3-3-8(e).
SECTION 34. IC 24-5.5 IS REPEALED [EFFECTIVE JULY 1,
2026]. (Mortgage Rescue Protection Fraud).
SECTION 35. IC 24-7-1-2, AS AMENDED BY P.L.159-2017,
SECTION 20, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 2. Except as provided in this article, the
provisions of:
(1) the Consumer Credit Protection Act (15 U.S.C. 1601 et seq.)
and regulations adopted under that act;
(2) IC 24-4.5; IC 37-2;
(3) IC 26-1-1-201(37);
(4) IC 26-1-2 concerning the creation of a security interest in
property;
(5) IC 26-1-9.1; and
(6) rules adopted under the statutes described in subdivisions (2)
through (5);
do not apply to a rental purchase agreement.
SECTION 36. IC 24-7-1-5, AS AMENDED BY P.L.176-2019,
SECTION 28, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 5. (a) Rental purchase agreements involving:
(1) motor vehicles (as defined in IC 9-13-2-105(a)), including:
(A) component parts (as defined in IC 9-13-2-34);
(B) major component parts (as defined in IC 9-13-2-95); and
(C) any other parts (as defined in IC 9-13-2-122) other than:
(i) wheels;
(ii) rims; and
(iii) tires;
necessary to operate a motor vehicle;
(2) other titled property; or
(3) live domestic animals (as defined in IC 34-30-30-1);
are prohibited under this article.
(b) If the director determines that a transaction described in
IC 24-7-2-9(a) involves the application of subterfuge for the purpose
of avoiding the application of the Uniform Consumer Credit Code
SEA 169 — Concur
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(IC 24-4.5), (IC 37-2), the director may treat the transaction as a
disguised consumer credit sale that is subject to IC 24-4.5. IC 37-2. A
determination by the director under this subsection:
(1) must be in writing;
(2) shall be delivered to all parties in the transaction; and
(3) is subject to IC 4-21.5-3.
SECTION 37. IC 24-7-1-7, AS ADDED BY P.L.89-2011,
SECTION 23, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 7. This article does not apply to the rental
purchase of a dwelling (as defined in IC 24-4.4-1-301(11)),
IC 37-1-2-15), regardless of whether the dwelling is assessed as real
or personal property for property tax purposes.
SECTION 38. IC 24-7-2-2 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 2. "Department" has the
meaning set forth in IC 24-4.5-6-103. IC 37-2-2-15.7.
SECTION 39. IC 24-7-2-2.5, AS ADDED BY P.L.159-2017,
SECTION 21, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 2.5. "Consumer Credit Protection Act" has the
meaning set forth in IC 24-4.5-1-302. IC 37-2-2-11.
SECTION 40. IC 24-7-6-4 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 4. (a) IC 24-4.5-5-105
and IC 24-4.5-5-106 IC 37-2-6-4 and IC 37-2-6-5 apply to
garnishments related to a rental purchase agreement.
(b) With respect to a debt arising from a rental purchase agreement,
regardless of where made, the lessor may not attach unpaid earnings of
the debtor by garnishment proceedings or other similar proceedings
before the entry of a judgment in an action against the lessee arising
from a rental purchase agreement.
SECTION 41. IC 24-7-7-1, AS AMENDED BY P.L.93-2024,
SECTION 175, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 1. (a) The department shall enforce
this article. To carry out this responsibility, the department may do the
following:
(1) Receive and act on complaints, take action designed to obtain
voluntary compliance with this article, or commence proceedings
on the department's own initiative.
(2) Issue and enforce administrative orders under IC 4-21.5.
(3) Counsel persons and groups on their rights and duties under
this article.
(4) Establish programs for the education of consumers with
respect to rental purchase agreement practices and problems.
(5) Make studies appropriate to effectuate the purposes and
SEA 169 — Concur
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policies of this article and make the results available to the public.
(6) Adopt rules under IC 4-22-2 to carry out this article.
(7) Maintain more than one (1) office within Indiana.
(8) Bring a civil action to restrain a person from violating this
article and for other appropriate relief, and exercise the same
enforcement powers provided under IC 24-4.5-6-108.
IC 37-2-7-9.
(9) Require a lessor to refund to the lessee any overcharges
resulting from the lessor's noncompliance with:
(A) the terms of a rental purchase agreement; or
(B) this article, or any order or rule issued or adopted by the
department under this article.
(b) If the department determines, after notice and an opportunity to
be heard, that a person has violated this article, or any order or rule
issued or adopted by the department under this article, the department
may, in addition to or instead of all other remedies available under this
section, impose upon the person a civil penalty not greater than ten
thousand dollars ($10,000) per violation.
SECTION 42. IC 24-9 IS REPEALED [EFFECTIVE JULY 1,
2026]. (Home Loan Practices).
SECTION 43. IC 24-10-2-1, AS ADDED BY P.L.121-2011,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 1. (a) The consumer protection assistance fund is
established for the purpose of compensating qualifying individuals who
submit qualifying claims to the office. The fund shall be administered
by the office.
(b) The fund consists of:
(1) appropriations made to the fund by the general assembly;
(2) grants, gifts, and donations intended for deposit in the fund;
and
(3) at the discretion of the office, money recovered or received by
the office for consumer protection purposes if use of the money
is not otherwise restricted.
(c) Money in the fund may be used to make payments to qualifying
individuals who file qualifying claims with the office in connection
with a case involving a violation by one (1) or more other persons of
any of the following statutes, including rules adopted under the
authority of the following statutes:
(1) IC 24-4.7 (concerning telephone solicitation of consumers) if
the case concerns a violation involving telephone solicitations
made in connection with any practice or transaction governed by
a statute described in subdivisions (2) through (4).
SEA 169 — Concur
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(2) IC 24-5-15 (concerning credit services organizations).
(3) IC 24-5.5 IC 37-4 (concerning mortgage rescue fraud).
(4) IC 24-9 IC 37-5 (concerning home loan practices).
(d) The expenses of administering the fund shall be paid from
money in the fund.
(e) The treasurer of state shall invest the money in the fund not
currently needed to meet the obligations of the fund in the same
manner as other public money may be invested. Interest that accrues
from these investments shall be deposited in the fund.
(f) Money in the fund at the end of a state fiscal year does not revert
to the state general fund.
SECTION 44. IC 24-12-5-1, AS AMENDED BY P.L.176-2019,
SECTION 41, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 1. (a) The department of financial institutions may
enforce this article.
(b) With respect to CPAP transactions and CPAP providers, the
department has all powers of administration, investigation, and
enforcement set forth in:
(1) IC 24-4.5-6; IC 37-2-7; and
(2) IC 28-11-4;
including the authority to levy a civil penalty.
SECTION 45. IC 25-11-1-2, AS AMENDED BY P.L.159-2017,
SECTION 24, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 2. The term "collection agency" does not include
the following:
(a) Attorney at law.
(b) Persons regularly employed on a regular wage or salary in the
capacity of credit men or in a similar capacity except as an
independent contractor.
(c) Banks, trust departments, fiduciaries, and financial
institutions, licensees under IC 24-4.4 and IC 24-4.5; IC 37-1 and
IC 37-2, and licensees under IC 28-5-1.
(d) Licensed real estate brokers.
(e) Employees of licensees under this chapter.
(f) Any person, firm, partnership, limited liability company, or
corporation engaged in any business enterprise in the state whose
primary object, business, or pursuit is not the collection of claims,
as the term is defined by this chapter.
(g) Any electric, gas, water, or telephone public utility and its
respective employees, agents, representative agents,
representatives, and individual contractors.
(h) Any express company regulated under IC 8-2.1 or IC 8-3.
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SECTION 46. IC 25-34.1-6-2.5, AS AMENDED BY P.L.114-2010,
SECTION 23, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 2.5. (a) A violation of:
(1) IC 24-5-15; or
(2) IC 24-5.5; IC 37-4;
by a person licensed or required to be licensed under this article is a
violation of this article.
(b) A person who commits a violation described in subsection (a)
commits a Class A infraction and is subject to:
(1) the enforcement procedures described in section 2 of this
chapter; and
(2) any sanction that may be imposed by the commission under
IC 25-1-11-12.
SECTION 47. IC 26-1-1-108.1, AS AMENDED BY P.L.177-2019,
SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 108.1. (a) The secretary of state may provide that
a document required to be filed under this article with the secretary of
state may be filed by electronic transmission meeting the requirements
established by the secretary of state.
(b) The secretary of state may accept payment of a filing fee for a
document filed by electronic transmission by credit card, debit card,
charge card, or similar method. However, if the filing fee is paid by
credit card, debit card, charge card, or similar method, the liability is
not finally discharged until the secretary of state receives payment or
credit from the institution responsible for making the payment or credit.
(c) The secretary of state may contract with a bank or credit card
vendor for acceptance of bank or credit cards. However, if there is a
vendor transaction charge or discount fee, whether billed to the
secretary of state or charged directly to the secretary of state's account,
the secretary of state or the credit card vendor may collect from the
person using the bank or credit card a fee that may not exceed the
highest transaction charge or discount fee charged to the secretary of
state by the bank or credit card vendor during the most recent
collection period. The fee may be collected regardless of any
agreement between the bank and a credit card vendor or regardless of
any internal policy of the credit card vendor that may prohibit this type
of fee. The fee is a permitted additional charge under IC 24-4.5-3-202.
IC 37-2-4-5.
SECTION 48. IC 26-1-12-103, AS ADDED BY P.L.199-2023,
SECTION 90, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 103. (a) If there is a conflict between this chapter
and IC 26-1-9.1, IC 26-1-9.1 governs.
SEA 169 — Concur
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(b) A transaction subject to this chapter is subject to:
(1) any applicable rule of law that establishes a different rule for
consumers; and
(2) any:
(A) other statute or regulation that regulates the rates, charges,
agreements, and practices for loans, credit sales, or other
extensions of credit, including IC 24-4.5; IC 37-2 and
IC 37-3; and
(B) consumer protection statute or regulation.
SECTION 49. IC 26-2-7-2, AS AMENDED BY P.L.217-2007,
SECTION 31, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 2. (a) As used in this chapter, "financial
institution" refers to a financial institution (as defined in IC 28-1-1-3).
(b) The term does not include a person licensed under IC 24-4.5.
IC 37-2 or IC 37-3.
SECTION 50. IC 26-2-9-2 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 2. As used in this
chapter, "creditor" means:
(1) a bank, a savings bank, a trust company, a savings association,
a credit union, an industrial loan and investment company, or any
other financial institution regulated by any agency of the United
States or any state, including a consumer finance institution
licensed to make supervised or regulated loans under IC 24-4.5;
IC 37-2 or IC 37-3;
(2) a person authorized to sell and service loans for the Federal
National Mortgage Association or the Federal Home Loan
Mortgage Corporation, issue securities backed by the Government
National Mortgage Association, make loans insured by the United
States Department of Housing and Urban Development, make
loans guaranteed by the United States Department of Veterans
Affairs, or act as a correspondent of loans insured by the United
States Department of Housing and Urban Development or
guaranteed by the United States Department of Veterans Affairs;
or
(3) an insurance company or its affiliates that extend credit under
a credit agreement with a debtor.
SECTION 51. IC 27-1-31-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 1. (a) Except as
provided in subsection (b), this chapter applies to all lines of
commercial property and casualty insurance.
(b) This chapter:
(1) does not apply to the cancellation or nonrenewal of
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automobile insurance policies, as restricted under IC 27-7-6; and
(2) does not affect requirements applying to:
(A) the cancellation of medical malpractice insurance policies
under IC 34-18-13-4 (or IC 27-12-13-4 before its repeal); or
(B) the cancellation of property or liability insurance by a
creditor under IC 24-4.5-4-304. IC 37-2-5-17.
SECTION 52. IC 27-7-3-22, AS AMENDED BY P.L.236-2025,
SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 22. (a) In a residential real estate transaction
described in subsection (f) in which:
(1) a title policy is issued by a company or title insurance
producer on behalf of a company; and
(2) the company or title insurance producer will also act as a
settlement or closing agent;
the company or title insurance producer shall issue a closing protection
letter to the lender, borrower, buyer, and seller of the property. A
company authorized to do business under section 3 of this chapter shall
charge a fee approved under subsection (e) to each party receiving the
benefit of a closing protection letter.
(b) In a nonresidential real estate transaction in which:
(1) a title policy is issued by a company or title insurance
producer on behalf of a company; and
(2) the company or title insurance producer will also act as a
settlement or closing agent;
the company or title insurance producer may issue a closing protection
letter to the lender, borrower, buyer, and seller of the property on
request.
(c) A closing protection letter issued under this section must
indemnify the party to which the closing protection letter is issued
against any loss of settlement funds (under the terms and conditions of
the closing protection letter) that results from the following acts of the
company or title insurance producer that issues the closing protection
letter:
(1) Theft or misappropriation of settlement funds in connection
with a transaction in which the title policy is issued, only to the
extent that the theft or misappropriation relates to the:
(A) status of title to; or
(B) validity, enforceability, and priority of the lien of the
mortgage on;
the party's interest in land.
(2) Failure to comply with the written closing instructions agreed
to by the company or title insurance producer acting as the
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settlement agent, only to the extent that the failure relates to the:
(A) status of title to; or
(B) validity, enforceability, and priority of the lien of the
mortgage on;
the party's interest in land.
(d) The issuance of a closing protection letter under this section in
contemplation of or in conjunction with the issuance of a title insurance
policy is part of the business of title insurance for purposes of section
3 of this chapter.
(e) The amount of the fee that a company authorized to do business
under section 3 of this chapter charges to each party receiving the
benefits of a closing protection letter:
(1) must be submitted to and approved by the commissioner under
IC 27-1-22-28; and
(2) is not subject to an agreement requiring a division of fees or
premiums collected on behalf of the company.
(f) Subsection (a) applies to the following transactions:
(1) A mortgage transaction (as defined in IC 24-9-3-7(a))
IC 37-5-3-7(a)) that:
(A) is:
(i) a first lien purchase money mortgage transaction; or
(ii) a refinancing transaction; and
(B) is closed by a closing agent after December 31, 2009.
(2) A real estate transaction (as defined in IC 24-9-3-7(b))
IC 37-5-3-7(b)) that:
(A) does not involve a mortgage transaction described in
subdivision (1); and
(B) is closed by a closing agent (as defined in
IC 6-1.1-12-43(a)(2)) after December 31, 2011.
SECTION 53. IC 28-1-1-3, AS AMENDED BY P.L.137-2014,
SECTION 22, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 3. Unless a different meaning is required by the
context, the following definitions apply throughout this article:
(1) "Financial institution" means any bank, trust company,
corporate fiduciary, savings association, credit union, savings
bank, bank of discount and deposit, or industrial loan and
investment company organized or reorganized under the laws of
this state, and includes licensees under IC 24-4.4, IC 24-4.5,
IC 37-1, IC 37-2, and 750 IAC 9.
(2) "Bank" or "bank or trust company" means a financial
institution organized or reorganized as a bank, bank of discount
and deposit, or trust company under the laws of this state with the
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express power to receive and accept deposits of money subject to
withdrawal by check, and possessing such other rights and powers
granted by the provisions of this article in express terms or by
implication. The term "bank" or "bank or trust company" does not
include a savings association, credit union, or industrial loan and
investment company.
(3) "Domestic corporation" means a corporation formed under the
laws of this state, and "foreign corporation" means every other
corporation.
(4) "Articles of incorporation" includes both the original articles
of incorporation and any and all amendments thereto, except
where the original articles of incorporation only are expressly
referred to, and includes articles of merger and consolidation, and,
in the case of corporations organized before July 1, 1933, articles
of reorganization, and all amendments thereto.
(5) "Incorporator" means one (1) of the signers of the original
articles of incorporation.
(6) "Subscriber" means one who subscribes for shares of stock in
a financial institution.
(7) "Shareholder" means one who is a holder of record of shares
of stock in a financial institution.
(8) "Capital stock" means the aggregate amount of the par value
of all shares of capital stock.
(9) "Capital" means the aggregate amount paid in on the shares of
capital stock of a financial institution issued and outstanding.
(10) "Capital and surplus" or "unimpaired capital and unimpaired
surplus" has the meaning set forth in 12 CFR 32.2.
(11) "Assets" includes all of the property and rights of every kind
of a financial institution, and the term "fixed assets" means such
assets as are not intended to be sold or disposed of in the ordinary
course of business.
(12) "Principal office" means that office maintained by the
financial institution in this state, the address of which is required
by the provisions of this article to be kept on file in the office of
the secretary of state.
(13) "Subscription" means any written agreement or undertaking,
accepted by a financial institution, for the purchase of shares of
capital stock in the financial institution.
(14) "Department" means the department of financial institutions.
(15) "Member" means a member of the department of financial
institutions.
(16) "Branch" means any office, agency, mobile unit, messenger
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service, or other place of business at which deposits are received,
checks paid, or money lent. The term does not include:
(A) the principal office of a bank;
(B) the principal office of an affiliate;
(C) a branch of an affiliate;
(D) an automated teller machine;
(E) a night depository;
(F) a temporary facility authorized in IC 28-2-13-22.5;
(G) a loan production office;
(H) a deposit production office; or
(I) other service delivery mechanisms not considered by the
director to be a branch.
(17) "Subsidiary" means any foreign or domestic corporation or
limited liability company in which the parent bank, savings bank,
savings association, or industrial loan and investment company
had at least eighty percent (80%) ownership before July 1, 1999,
or is formed or acquired in accordance with IC 28-13-16 after
June 30, 1999.
(18) "Savings bank" means a financial institution that:
(A) was organized, reorganized, or operating under IC 28-6
(before its repeal) before January 1, 1993;
(B) is formed as the result of a conversion under:
(i) IC 28-1-21.7;
(ii) IC 28-1-21.8;
(iii) IC 28-1-21.9; or
(iv) IC 28-1-30; or
(C) is incorporated under IC 28-12.
(19) "Corporate fiduciary" means a financial institution whose
primary business purpose is to engage in the trust business (as
defined in IC 28-14-1-8) and the execution and administration of
fiduciary accounts as a nondepository trust company incorporated
under Indiana law.
SECTION 54. IC 28-1-2-6.5, AS AMENDED BY P.L.176-2019,
SECTION 54, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 6.5. (a) A financial institution (as defined in
IC 28-1-1-3(1)), except for a licensee under IC 24-4.4, IC 24-4.5,
IC 37-1, IC 37-2, or 750 IAC 9, shall comply with the following:
(1) The Bank Secrecy Act (31 U.S.C. 5311 et seq.).
(2) The USA Patriot Act of 2001 (P.L. 107-56).
(3) Any regulations, policies, or reporting requirements
established by the Financial Crimes Enforcement Network of the
United States Department of the Treasury.
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(4) Subchapter II of Chapter 53 of Title 31 of the United States
Code, including 31 U.S.C. 5318(l), and 31 CFR Chapter X,
including 31 CFR 1020.220.
(5) Any other state or federal money laundering statutes or
regulations that apply to a financial institution (as defined in
IC 28-1-1-3(1)) other than a licensee under IC 24-4.4, IC 24-4.5,
IC 37-1, IC 37-2, or 750 IAC 9.
(b) The department shall do the following:
(1) To the extent authorized or required by state law, investigate
potential violations of, and enforce compliance with, state money
laundering statutes or regulations.
(2) Investigate potential violations of federal money laundering
statutes or regulations and, to the extent authorized or required by
federal law:
(A) enforce compliance with the federal statutes or
regulations; or
(B) refer suspected violations of the federal statutes or
regulations to the appropriate federal regulatory agencies.
SECTION 55. IC 28-1-2-30, AS AMENDED BY P.L.222-2025,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 30. (a) As used in this section, "financial
institution" means any bank, trust company, corporate fiduciary,
savings association, credit union, savings bank, bank of discount and
deposit, or industrial loan and investment company organized or
reorganized under the laws of this state, and includes licensees and
registrants under IC 24-4.4, IC 24-4.5, IC 24-7, IC 24-12, IC 28-1-29,
IC 28-7-5, IC 28-8-4.1, IC 28-8-5, IC 28-8-6, IC 37-1, IC 37-2, and
750 IAC 9.
(b) Except as otherwise provided, a member of the department or
the director or deputy, assistant, or any other person having access to
any such information may not disclose to any person, other than
officially to the department, by the report made to it, or to the board of
directors, partners, or owners, or in compliance with the order of a
court, the names of the depositors or shareholders in any financial
institution, or the amount of money on deposit in any financial
institution at any time in favor of any depositor, or any other
information concerning the affairs of any such financial institution.
SECTION 56. IC 28-1-2-30.5, AS AMENDED BY P.L.35-2010,
SECTION 98, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 30.5. (a) This section applies to the following:
(1) Any:
(A) financial institution;
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(B) person required to file notification with the department
under IC 24-4.5-6-202; IC 37-2-7-25;
(C) person subject to IC 24-7; or
(D) other person subject to regulation by the department.
(2) Any person licensed or required to be licensed under
IC 24-4.4 or IC 24-4.5. IC 37-1 or IC 37-2.
(b) As used in this section, "customer", with respect to a person
described in subsection (a), means an individual consumer, or the
individual's legal representative, who obtains or has obtained from the
person a financial:
(1) product; or
(2) service;
that is to be used primarily for personal, family, or household purposes.
The term does not include an affiliate of the person.
(c) As used in this section, "personal information" includes any of
the following:
(1) An individual's first and last names or first initial and last
name.
(2) Any of the following data elements:
(A) A Social Security number.
(B) A driver's license number.
(C) A state identification card number.
(D) A credit card number.
(E) A financial account number or debit card number.
(3) With respect to an individual, any of the following:
(A) Address.
(B) Telephone number.
(C) Information concerning the individual's:
(i) income or other compensation;
(ii) credit history;
(iii) credit score;
(iv) assets;
(v) liabilities; or
(vi) employment history.
(d) As used in this section, personal information is "encrypted" if
the personal information:
(1) has been transformed through the use of an algorithmic
process into a form in which there is a low probability of
assigning meaning without use of a confidential process or key;
or
(2) is secured by another method that renders the personal
information unreadable or unusable.
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(e) As used in this section, personal information is "redacted" if the
personal information has been altered or truncated so that not more
than the last four (4) digits of:
(1) a Social Security number;
(2) a driver's license number;
(3) a state identification number; or
(4) an account number;
are accessible as part of the personal information.
(f) As used in this section, "personal records" means any records
that:
(1) are maintained, whether as a paper record or in an electronic
or a computerized form, by a person to whom this section applies;
and
(2) contain the unencrypted, unredacted personal information of
one (1) or more customers or potential customers.
(g) A person to whom this section applies shall keep and handle
personal records in a manner that:
(1) reasonably safeguards the personal records from destruction,
theft, or other loss; and
(2) protects the personal records from misuse.
(h) If a breach of the security of any personal records occurs, the
person maintaining the records is subject to the disclosure requirements
under IC 24-4.9-3, unless the person is exempt from the disclosure
requirements under IC 24-4.9-3-4.
(i) A person to whom this section applies may not dispose of
personal records without first:
(1) shredding, incinerating, or mutilating the personal records; or
(2) erasing or otherwise rendering illegible or unusable the
personal information contained in the records.
(j) If a person to whom this section applies ceases doing business,
the person shall, as part of the winding up of the business, safeguard
any personal records maintained by the person in accordance with this
section until such time as the person is entitled or required to destroy
the records under:
(1) applicable law; or
(2) the person's own records maintenance policies.
(k) A person to whom this section applies shall provide at the
person's cost any records that the director considers relevant or material
to an examination, investigation, or other matter under consideration
by the department.
SECTION 57. IC 28-1-3.1-2, AS AMENDED BY P.L.176-2019,
SECTION 55, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
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JULY 1, 2026]: Sec. 2. (a) The department may take possession of the
business and property of any financial institution except a creditor
licensed to make supervised or regulated loans under IC 24-4.5,
IC 37-2, whenever it appears to the department that the financial
institution:
(1) is insolvent or in imminent danger of insolvency;
(2) is in an unsafe or unsound condition;
(3) has refused to pay its deposits or obligations in accordance
with the terms under which those deposits or obligations were
incurred;
(4) has refused to submit its records and affairs for inspection or
examination by the department or federal authorities;
(5) has violated any court order, statute, rule, or regulation of the
department or its articles of incorporation and that continued
control of its own affairs threatens injury to the public, the
financial community, its depositors, or other creditors;
(6) requests through its board of directors that the department take
possession for the benefit of depositors, other creditors,
shareholders, or other persons;
(7) has an impairment of its capital (the capital of a bank or trust
company shall, for the purpose of this subdivision, be considered
to be unimpaired so long as the sound value of its assets over and
above its liabilities, exclusive of liabilities for capital notes,
debentures, and capital stock, as determined by the department,
equals or exceeds the minimum capital or capital stock required
by the department for a bank or trust company);
(8) has neglected or refused, for a period of thirty (30) days, to
comply with the terms of a duly issued order of the department,
essential to preserve the solvency of the financial institution;
(9) has failed to pay the fees charged by the department under
IC 28-11-3-5 after due notice of the amount of the fee has been
given;
(10) has breached a fiduciary duty under IC 30-4-3-6; or
(11) has violated IC 30-4-3-7 in a way that has caused or may
cause harm to fiduciary accounts.
(b) When the department makes a determination to take possession
of the business and property of a financial institution under subsection
(a), the department shall:
(1) make a finding to that effect and enter that finding on the
records of the proceedings of the department; and
(2) cause a certified copy of the finding to be served on the
president or other executive officer actively in charge of the
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financial institution and demand possession of the business,
property, and records of the financial institution from the officer.
The financial institution shall immediately surrender the
possession to the department.
(c) The department or its receiver is not required to become the
owner of any property to fulfill the liquidation requirements of this
chapter.
SECTION 58. IC 28-2-17-23 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 23. (a) An out-of-state
state bank that establishes and maintains one (1) or more branches in
Indiana under this chapter may conduct at the branch or branches only
those activities that are expressly authorized under the laws of Indiana
for Indiana state banks.
(b) An Indiana state bank may conduct any activities at any branch
located outside Indiana that are permissible for a bank organized or
reorganized by the host state in which the branch is located. However,
if Indiana law specifically prohibits an activity that is permitted by the
host state, the department may by order waive the prohibition if the
department determines that the involvement of out-of-state branches of
Indiana state banks in the particular activities conducted in the host
state would not threaten the safety or soundness of banks. This section
does not authorize a bank located in Indiana to engage in an activity in
Indiana that has been waived under this provision.
(c) An out-of-state bank that has acquired a branch in Indiana under
this chapter may establish or acquire additional branches in Indiana to
the same extent that any Indiana bank may establish or acquire a
branch in Indiana under applicable federal and Indiana law.
(d) With the prior approval of the department, an Indiana state bank
that has acquired a branch or branches in a state other than Indiana
through an interstate merger transaction may establish or acquire
additional branches in the host state to the same extent that a host state
state bank may establish or acquire a branch in the host state under the
applicable host state law and federal law. An Indiana state bank
desiring to establish one (1) or more branches under this section must
file a written application with the director. The application must be in
the form and must contain the information prescribed by the director.
The department may approve or disapprove the application. Before the
department approves the application, the bank must demonstrate to the
satisfaction of the department that:
(1) the applicant state bank will have adequate capital, sound
management, and adequate future earnings prospects after the
establishment of the branch; and
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(2) the establishment of the proposed branch will not violate the
laws of the host state.
(e) The investigation of the department relative to any application
as required by this section shall be conducted without a public hearing.
(f) The branch or branches of an out-of-state bank that are
established and maintained in Indiana under this chapter shall be
subject to the provisions and fees of IC 24-4.5 IC 37-2 to the same
extent as a bank located in Indiana.
SECTION 59. IC 28-2-18-24 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 24. (a) An out-of-state
state bank that establishes and maintains one (1) or more branches in
Indiana under this chapter may conduct at the branch or branches only
those activities that are expressly authorized under the laws of Indiana
for Indiana state banks.
(b) An Indiana state bank may conduct any activities at any branch
located outside Indiana that are permissible for a bank organized or
reorganized by the host state in which the branch is located. However,
if Indiana law specifically prohibits an activity that is permitted by the
host state, the department may by order waive the prohibition if the
department determines that the involvement of out-of-state branches of
Indiana state banks in the particular activities conducted in the host
state would not threaten the safety or soundness of banks. This section
does not authorize a bank located in Indiana to engage in an activity in
Indiana that has been waived under this provision.
(c) An out-of-state bank that has established or acquired a branch or
branches in Indiana under this chapter may establish or acquire
additional branches in Indiana to the same extent that any Indiana bank
may establish or acquire a branch in Indiana under applicable federal
and state law.
(d) The branch or branches of an out-of-state bank that are
established and maintained in Indiana under this chapter shall be
subject to the provisions and fees of IC 24-4.5 IC 37-2 to the same
extent as a bank located in Indiana.
SECTION 60. IC 28-5-1-6, AS AMENDED BY P.L.217-2007,
SECTION 55, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 6. (a) Every company may exercise all the powers
conferred upon domestic corporations by IC 23-1 but only to the extent
that those powers may be necessary, convenient, or expedient to
accomplish the purposes for which it is organized. Subject to the
restrictions and limitations contained in this chapter, every company
may exercise the following powers:
(1) To issue, negotiate, and sell its secured or unsecured
SEA 169 — Concur
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certificates of investment or indebtedness, subject to subdivision
(16), upon terms and conditions, in any form, and payable at times
that are not inconsistent with this chapter and, subject to
subsection (c), bearing a rate of interest approved by the
department.
(2) To make, purchase, discount, or otherwise acquire extensions
of credit under IC 24-4.5. IC 37-2.
(3) To lend money without security or upon the security of
comakers, personal endorsement, or the mortgage of real or
personal property or the mortgage or pledge of bailment leases or
rentals due and to become due thereunder and other choses in
action, and to contract for interest, discount, fees, charges, or
other consideration fixed or permitted by any laws of Indiana
concerning interest, discount, or usury.
(4) To discount, purchase, or otherwise acquire notes, bills of
exchange, acceptances, bailment leases, and the property covered
thereby or the rentals due or to become due thereunder or other
choses in action and, subject to such restrictions the department
imposes, to become owner or lessor of personal or real property
acquired upon the request and for the use of a customer, and to
incur additional obligations incident to becoming an owner or
lessor of the property. The liability of a lessee under the lease
does not constitute an obligation (as defined in section 8 of this
chapter).
(5) To purchase or construct buildings and hold legal title to them,
to be leased for public purposes to municipal corporations or
other public authorities having resources sufficient to make
payment of all rentals as they become due. Each lease agreement
shall provide that upon expiration, the lessee shall become owner
of the building.
(6) To invest in bonds, notes, or certificates which are:
(A) the direct or indirect obligations of the United States or of
the state;
(B) obligations of mutual funds or financial institutions if the
obligations represent a participation in a fund invested in, or
are secured by, direct or indirect obligations of the United
States owned by the mutual fund or financial institution;
(C) the direct obligations of a civil or school county, township,
city, town, other taxing district, or municipality of Indiana;
(D) a special taxing district in Indiana;
(E) issued by or in the name of:
(i) the trustees of Indiana University;
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(ii) the trustees of Purdue University;
(iii) the trustees of Ball State University;
(iv) the trustees of Indiana State University; or
(v) the Indiana finance authority;
(F) issued by or in the name of any municipality of Indiana and
payable from the revenues to be derived from the operation of
facilities for the production or distribution of water, electricity,
gas, or from the operation of sewage works; or
(G) the obligations of any Indiana toll road commission, public
library, or schoolhouse holding corporation first mortgage
bonds;
which district, municipality, taxing unit, or corporation is not then
in default in the payment of either principal or interest on any of
its funded obligations and has not so defaulted for a period of
more than six (6) months within the five (5) year period
immediately preceding the purchase of the securities.
(7) To invest in bonds, notes, or debentures rated in one (1) of the
first four (4) classifications established by one (1) or more
standard rating services specified by the department that satisfy
requirements of marketability prescribed periodically by the
department that are the obligations of a person, a firm, a limited
liability company, a corporation, a state, a territory, an insular
possession of the United States, or a county, township, town, city,
taxing district, or municipality thereof which is not then in default
in the payment of either principal or interest on any of its funded
obligations and has not so defaulted within the five (5) year
period immediately preceding the purchase of the securities and
other investment securities prescribed by the department by rule.
As used in this section, the term "investment securities" means
marketable obligations evidencing indebtedness of a person, firm,
limited liability company, or corporation in the form of bonds,
notes, or debentures commonly known as "investment securities"
and the definition of the term "investment securities" prescribed
by the department by rule. Except as is otherwise provided in this
chapter or otherwise permitted by law, nothing contained in this
subdivision authorizes the purchase by an industrial loan and
investment company of shares of stock or other securities, unless
the purchase is necessary to prevent loss under a debt previously
contracted in good faith and stocks or other securities so
purchased or acquired shall, within six (6) months from the time
of its purchase, be sold or disposed of at public or private sale,
unless otherwise ordered by the department.
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(8) To invest in bonds or debentures issued under and by the
authority of the Federal Home Loan Bank Act (12 U.S.C. 1421
through 1429), or of the Home Owners' Loan Act (12 U.S.C. 1461
through 1468), or obligations issued by or for farm credit banks,
and banks for cooperatives under the Farm Credit Act of 1971 (12
U.S.C. 2001 through 2279aa-14).
(9) To invest in insured shares of an insured savings association
organized under the laws of Indiana, and in insured shares of an
insured federal savings association whose principal place of
business is located in Indiana; and in certificates of indebtedness
or investment of an industrial loan and investment company
organized under the laws of Indiana. However, not more than
twenty percent (20%) of the resources of the company may be
invested in the insured shares of any such association nor more
than ten percent (10%) of the company's capital and surplus in
such certificates of industrial loan and investment companies.
(10) To make loans and advances of credit and purchases of
obligations representing loans and advances of credit as are
eligible for insurance by the federal housing administrator, and to
obtain insurance from the administrator.
(11) To make loans secured by mortgage on real property or
leasehold if:
(A) the mortgage is insured by the federal housing
administrator; or
(B) the company makes a commitment to insure and to obtain
insurance from the administrator, if the mortgage is not
insured by the federal housing administrator.
(12) To purchase, invest in, and dispose of notes or bonds secured
by mortgage or trust deed insured by the federal housing
administrator or debentures issued by the federal housing
administrator, or bonds or other securities insured by national
mortgage associations.
(13) To discount, purchase, or otherwise acquire charge accounts,
and drafts and bills of exchange evidencing charge accounts and
to impose and collect monthly service charges and maintenance
charges on charge accounts, drafts, or bills of exchange which are
owned or acquired in amounts agreed upon between the company
and the obligor, or obligors, on charge accounts, drafts, and bills
of exchange.
(14) To purchase or otherwise acquire property, real or personal,
tangible or intangible, in which the company has a security
interest to secure a debt owing to the company contracted in good
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faith or the purchase or acquisition of which property is
considered expedient to prevent loss from a debt owing to the
company contracted in good faith, and for such purpose to engage
in any lawful business considered necessary or expedient by the
company to preserve, protect, or make saleable the property.
Property thus purchased or acquired shall be sold and disposed of
within two (2) years, or a longer period permitted by the
department, after the purchase or acquisition.
(15) To act as trustee of a trust created in the United States and
forming part of a stock bonus, pension, or profit sharing plan that
is qualified for tax treatment under Section 401(d) of the Internal
Revenue Code, and to act as trustee or custodian of an individual
retirement account within the meaning of Section 408 of the
Internal Revenue Code, if the funds of that trust or account are
only invested in certificates of investment or indebtedness of the
company or in obligations or securities issued by that company.
All funds held under this subdivision in a fiduciary capacity may
be commingled by the company for appropriate investment
purposes. However, individual records shall be kept by the
fiduciary for each participant and shall show in proper detail all
transactions engaged in under the authority of this subdivision.
(16) To do anything necessary and appropriate to obtain or
maintain federal deposit insurance under the Federal Deposit
Insurance Corporation Act (12 U.S.C. 1811 through 1833e) or
insurance under any other federal or Indiana law providing
insurance for certificates of investment or indebtedness issued by
a company. A company that obtains and maintains federal deposit
insurance is not required to obtain approval from the department
concerning the rate of interest payable on, or the form, the terms,
or the conditions of the certificates of investment or indebtedness,
and the company may exercise all of the powers that are conferred
upon institutions maintaining federal deposit insurance that are
not in conflict with Indiana law.
(17) To become a member of a federal home loan bank and
acquire, own, pledge, sell, assign, or otherwise dispose of shares
of the capital stock of a federal home loan bank.
(18) To borrow money and procure advances from a federal home
loan bank and to transfer, assign to, and pledge with the federal
home loan bank any of the bonds, notes, contracts, mortgages,
securities, or other property of the company held or acquired as
security for the payment of the loans and advances.
(19) To possess and exercise all rights, powers, and privileges
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conferred upon and do and perform all acts and things required of
members or shareholders of a federal home loan bank, or by the
provisions of 12 U.S.C. 1421 through 1449.
(20) Subject to section 6.3 of this chapter, to exercise the rights
and privileges (as defined in section 6.3(a) of this chapter) that
are or may be granted to national banks domiciled in Indiana.
(b) No law of this state prescribing the nature, amount, or form of
security or requiring security upon which loans or advances of credit
may be made, or prescribing or limiting interest rates upon loans or
advances of credit, or prescribing or limiting the period for which loans
or advances of credit may be made, applies to loans, advances of credit,
or purchases made pursuant to subsection (a)(10), (a)(11), or (a)(12).
(c) If any national or state chartered bank or savings association is
not limited by law with regard to the rate of interest payable on any
type or category of checking account, savings account, or deposit,
certificate of deposit, membership share, or other account, then
industrial loan and investment companies are similarly not limited with
regard to the interest payable on certificates of investment or
indebtedness.
SECTION 61. IC 28-7-1-17, AS AMENDED BY P.L.54-2021,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 17. (a) Every loan application shall be submitted
on a form approved by the credit union. Loans may be disbursed upon
written approval by a majority of the credit committee or a loan officer.
If the credit committee or loan officer fails to approve an application
for a loan, the applicant may appeal to the board of directors, if such
appeal is authorized by the bylaws.
(b) Loans to members may be made only under the following terms
and conditions:
(1) All loans shall be evidenced by notes signed by the borrowing
member.
(2) Except as otherwise provided in this section, the terms of any
loan to a member with a maturity of more than six (6) months
shall provide for principal and interest payments that will
amortize the obligation in full within the terms of the loan
contract. If the income of the borrowing member is seasonal, the
terms of the loan contract may provide for seasonal amortization.
(3) Loans may be made upon the security of improved or
unimproved real estate. Except as otherwise specified in this
section, such loans must be secured by a first lien upon real estate
prior to all other liens, except for taxes and assessments not
delinquent, and may be made with repayment terms other than as
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provided in subdivision (2). The credit union loan folder for all
real estate mortgage loans shall include the following:
(A) The loan application.
(B) The mortgage instrument.
(C) The note.
(D) The disclosure statement.
(E) The documentation of property insurance.
(F) For the real estate for which the loan is made:
(i) a written appraisal; or
(ii) a written estimate of market value;
consistent with the appraisal standards and transaction value
limitations set forth in the appraisal regulations of the National
Credit Union Administration (12 CFR 722).
(4) Subject to the limitations of subdivision (3), variable rate
mortgage loans and rollover mortgage loans may be made under
the same limitations and rights provided state chartered savings
associations under IC 28-1-21.5 (before its repeal) or IC 28-15 or
federal credit unions.
(5) As used in this subdivision, "originating lender" means the
participating lender with which the member contracts. A credit
union may participate with other state and federal depository
financial institutions (as defined in IC 28-1-1-6) or credit union
service organizations in making loans to credit union members
and may sell a participating interest in any of its loans under
written participation loan policies established by the board of
directors. However, the credit union may not sell more than ninety
percent (90%) of the principal of participating loans outstanding
at the time of sale. A participating credit union that is not the
originating lender may participate only in loans made to the credit
union's own members or to members of another participating state
or federal credit union. A master participation agreement must be
properly executed. The agreement must include provisions for
identifying, either through documents incorporated by reference
or directly in the agreement, the participation loan or loans before
the sale of the loans.
(6) As an alternative to making any loan authorized by and under
the conditions set forth in subdivisions (1) through (5), a credit
union may make any of the following:
(A) Any loan that may be made by a federal credit union.
However, IC 24-4.5 IC 37-2 applies to any loan that is:
(i) made under this clause; and
(ii) within the scope of IC 24-4.5. IC 37-2.
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Any provision of federal law that is in conflict with IC 24-4.5
IC 37-2 does not apply to a loan made under this clause.
(B) Subject to subdivision (3), any alternative mortgage loan
(as defined in IC 28-15-11-2) that may be made by a savings
association (as defined in IC 28-15-1-11) under IC 28-15-11.
A loan made under this clause by a credit union is subject to
the same terms, conditions, exceptions, and limitations that
apply to an alternative mortgage loan made by a savings
association under IC 28-15-11.
(7) A credit union may make a loan under either:
(A) subdivisions (2) through (5); or
(B) subdivision (6);
but not both. A credit union shall make an initial determination as
to whether to make a loan under subdivisions (2) through (5) or
under subdivision (6). If the credit union determines that a loan or
category of loans is to be made under subdivision (6), the written
loan policies of the credit union must include that determination.
A credit union may not combine the terms and conditions that
apply to a loan made under subdivisions (2) through (5) with the
terms and conditions that apply to a loan made under subdivision
(6) to make a loan not expressly described and authorized either
under subdivisions (2) through (5) or under subdivision (6).
(c) Nothing in this section prevents any credit union from taking an
indemnifying or second mortgage on real estate as additional security.
SECTION 62. IC 28-7-5-21, AS AMENDED BY P.L.159-2017,
SECTION 41, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 21. (a) The pawnbroker shall, at the time of
making a loan, deliver to the pledger or the pledger's agent a
memorandum or ticket on which shall be legibly written or printed the
following information:
(1) The name of the pledger.
(2) The name of the pawnbroker and the place where the pledge
is made.
(3) The article or articles pledged, and a description of the
articles. However, if multiple articles of a similar nature that do
not contain an identification or serial number (such as precious
metals, gemstones, musical recordings, video recordings, books,
or hand tools) are delivered together in one (1) transaction, the
description of the articles is adequate if the description contains
the quantity of the articles delivered and a physical description of
the type of articles delivered, including any other unique
identifying marks, numbers, names, letters, or special features.
SEA 169 — Concur
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(4) The amount of the loan.
(5) The date of the transaction.
(6) The serial number of the loan.
(7) The sum of the interest as provided in section 28 of this
chapter and the charge as provided in section 28.5 of this chapter
stated as an annual percentage rate computed in accordance with
the Consumer Credit Protection Act (as defined in
IC 24-4.5-1-302) IC 37-2-2-11) and with regulations adopted
under that act.
(8) The amount of interest.
(9) The amount of charge and principal due at maturity.
(10) A copy of sections 28, 28.5, and 30 of this chapter.
(11) The date of birth of the pledger.
(12) The type of government issued identification used to verify
the identity of the pledger, together with the name of the
governmental agency that issued the identification, and the
identification number present on the government issued
identification.
(13) The last date on which the pledged article or articles may be
redeemed before the article or articles may be sold if the loan is
not redeemed, renewed, or extended. The language setting forth
the information described in this subdivision must be in 14 point
boldface type.
(14) A statement that:
(A) notifies the pledger that the pawnbroking transaction is
regulated by the department; and
(B) includes a toll free telephone number for the department.
(b) A pawnbroker may insert in such ticket any other terms and
conditions not inconsistent with this chapter. However, nothing
appearing on a pawn ticket shall relieve the pawnbroker of the
obligations to exercise reasonable care in the safekeeping of articles
pledged with the pawnbroker.
SECTION 63. IC 28-7-5-28 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 28. (a) The maximum
rate of interest charged by pawnbrokers shall be the same as the
maximum loan finance charge for supervised lenders under
IC 24-4.5-3-508(2). IC 37-2-4-35(b). For purposes of this subsection:
(1) the term of a loan commences on the date on which the loan
is made;
(2) differences in lengths of months are disregarded; and
(3) each day is counted as one-thirtieth (1/30) of a month.
The minimum term of a loan made by a pawnbroker is one (1) month.
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However, on loans paid in full within the first month, the pawnbroker
may charge one (1) month's interest.
(b) Interest shall not be deducted in advance, neither shall the
pawnbroker induce or permit any borrower to split up or divide any
loan or loans for the purpose of evading any provisions of this chapter.
(c) If a pawnbroker charges or receives interest in excess of that
provided in this section, or makes any charges not authorized by this
chapter, the pawnbroker shall forfeit principal and interest and return
the pledge upon demand of the pledger and surrender of the pawn
ticket without the principal or interest. If such excessive or
unauthorized charges have been paid by the pledger, the pledger may
recover the same, including the principal if paid, in a civil action
against the pawnbroker.
SECTION 64. IC 28-8-6-201, AS ADDED BY P.L.222-2025,
SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 201. The following definitions apply throughout
this chapter:
(1) "Consumer" means an individual who:
(A) resides in Indiana, as may be determined by a provider on
the basis of the:
(i) mailing address; or
(ii) state of residence;
provided by the individual; or
(B) requests proceeds in Indiana, as may be determined by a
provider by using any legal, readily available commercial
means to determine the location from which the individual
requests proceeds.
(2) "Consumer directed wage access services" means the business
by a provider of delivering to a consumer access to earned but
unpaid income based on:
(A) the consumer's representations of; and
(B) the provider's reasonable determination of;
the consumer's earned but unpaid income.
(3) "Control" means any of the following:
(A) The power to vote, directly or indirectly, at least
twenty-five percent (25%) of the outstanding voting shares or
voting interests of a licensee or of a person in control of a
licensee.
(B) The power to elect or appoint a majority of key individuals
or executive officers, managers, directors, trustees, or other
persons exercising managerial authority of a person in control
of a licensee.
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(C) The power to exercise, directly or indirectly, a controlling
influence over the management or policies of a licensee or of
a person in control of a licensee. For purposes of this clause,
a person is presumed to exercise a controlling influence if the
person holds the power to vote, directly or indirectly, at least
ten percent (10%) of the outstanding voting shares or voting
interests of a licensee or of a person in control of a licensee,
subject to the person's right to rebut the presumption if the
person is a passive investor.
For purposes of this subdivision, the percentage of a person
controlled by any other person is determined by aggregating the
other person's interest with the interest of any other immediate
family member of that person, including the person's spouse,
parents, children, siblings, mothers-in-law and fathers-in-law,
sons-in-law and daughters-in-law, and any other person who
shares the person's home.
(4) "Department" refers to the members of the department of
financial institutions.
(5) "Director" refers to the director of the department appointed
under IC 28-11-2-1.
(6) "Earned but unpaid income", with respect to a consumer,
means salary, wages, compensation, or other income that:
(A) the consumer represents, and a provider reasonably
determines, has been earned by, or has accrued to the benefit
of, the consumer in exchange for the consumer's provision of
services to an employer or on behalf of an employer, including
the provision of services by the consumer:
(i) on an hourly, project based, piecework, or other basis;
and
(ii) regardless of whether the consumer is an employee of
the employer or acts as an independent contractor with
respect to the employer; but
(B) has not, at the time of payment of proceeds to the
consumer by the provider, been paid to the consumer by the
employer.
(7) "Earned wage access services" includes the following:
(A) Consumer directed wage access services.
(B) Employer integrated wage access services.
The term does not include a small loan.
(8) "Employer" means a person that employs a consumer or that
is contractually obligated to pay a consumer earned but unpaid
income. The term does not include:
SEA 169 — Concur
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(A) a customer of the person; or
(B) any other person whose obligation to make a payment of
salary, wages, compensation, or other income to a consumer is
not based on the provision of services by the consumer for or
on behalf of that person.
(9) "Employer integrated wage access services" means the
business by a provider of delivering to a consumer access to
earned but unpaid income on the basis of:
(A) employment;
(B) income; or
(C) attendance;
data obtained directly or indirectly from an employer.
(10) "Federally insured depository financial institution" means:
(A) a bank;
(B) a credit union;
(C) a savings and loan association;
(D) a trust company;
(E) a corporate fiduciary;
(F) a savings association;
(G) a savings bank;
(H) an industrial bank; or
(I) an industrial loan company;
that is organized under the law of the United States or any state of
the United States and that has federally or privately insured
deposits as permitted by state or federal law.
(11) "Fee" includes the following, however denominated:
(A) An amount charged by a provider for:
(i) expedited delivery; or
(ii) other delivery;
of proceeds to a consumer.
(B) A subscription or membership fee imposed by a provider
for a bona fide group of services that include earned wage
access services.
(C) An amount that:
(i) is paid by an employer to a provider on a consumer's
behalf; and
(ii) entitles the consumer to receive proceeds at reduced or
no cost to the consumer.
The term does not include a voluntary tip, gratuity, or donation
paid to a provider.
(12) "Individual" means a natural person.
(13) "Key individual" means an individual ultimately responsible
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for establishing or directing policies and procedures of a licensee,
such as an executive officer, manager, director, or trustee.
(14) "Licensee" means a person licensed under this chapter.
(15) "NMLSR" means the Nationwide Multistate Licensing
System and Registry:
(A) developed by the Conference of State Bank Supervisors
and the American Association of Residential Mortgage
Regulators; and
(B) owned and operated by the State Regulatory Registry,
LLC, or by any successor or affiliated entity;
for the licensing and registry of persons in financial services
industries.
(16) "Outstanding proceeds" means proceeds that:
(A) have been paid to a consumer by a provider; and
(B) have not yet been repaid to the provider.
(17) "Passive investor" means a person that:
(A) does not have the power to elect a majority of key
individuals or executive officers, managers, directors, trustees,
or other persons exercising managerial authority over a person
in control of a licensee;
(B) is not employed by and does not have any managerial
duties with respect to the licensee or a person in control of the
licensee;
(C) does not have the power to exercise, directly or indirectly,
a controlling influence over the management or policies of the
licensee or a person in control of the licensee; and
(D) either:
(i) attests to as facts the characteristics of passivity set forth
in clauses (A) through (C), in a form and by a medium
prescribed by the director; or
(ii) commits to the characteristics of passivity set forth in
clauses (A) through (C) in a written document.
(18) "Person" means any individual, general partnership, limited
partnership, limited liability company, corporation, trust,
association, joint stock corporation, or other corporate entity, as
so identified by the director.
(19) "Proceeds" means a payment that:
(A) is made to a consumer by a provider; and
(B) is based on earned but unpaid income.
(20) "Provider" means a person in the business of offering and
providing earned wage access services to consumers. The term
does not include the following:
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(A) A service provider that is not contractually obligated to
fund proceeds delivered as part of the earned wage access
services, such as a payroll service provider that verifies a
consumer's available earnings.
(B) An employer that offers a portion of salary, wages,
compensation, or other income directly to its employees or
independent contractors before the normally scheduled pay
date.
(C) An entity that offers or provides earned wage access
services and reports a consumer's payment or nonpayment of
either outstanding proceeds of the earned wage access services
or fees, voluntary tips, gratuities, or other donations in
connection with the earned wage access services to a
consumer reporting agency (as defined in the Federal Fair
Credit Reporting Act (15 U.S.C. 1681 et seq.)).
(21) "Small loan" has the meaning set forth in IC 24-4.5-7-104.
IC 37-3-2-10.
SECTION 65. IC 28-8-6-503, AS ADDED BY P.L.222-2025,
SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 503. (a) The department shall receive and act on
all applications for licenses to offer or provide earned wage access
services. Applications must be made as prescribed by the director. If,
at any time, the information or record contained in:
(1) an application filed under this section; or
(2) a renewal application filed under section 506 of this chapter;
is or becomes inaccurate or incomplete in a material respect, the
applicant shall promptly file a correcting amendment with the
department.
(b) A license may not be issued unless the department finds that the
professional training and experience, financial responsibility, character,
and fitness of:
(1) the applicant;
(2) each executive officer, director, or manager of the applicant,
or any other individual having a similar status or performing a
similar function for the applicant; and
(3) if known, each person directly or indirectly owning of record
or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the applicant;
are such as to warrant belief that the business will be operated honestly
and fairly.
(c) The director is entitled to request evidence of compliance with
this section at:
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(1) the time of application;
(2) the time of renewal of a license; or
(3) any other time considered necessary by the director.
(d) Evidence of compliance with this section must include:
(1) criminal background checks, as described in section 504 of
this chapter, including a national criminal history background
check (as defined in IC 10-13-3-12) by the Federal Bureau of
Investigation, for any individual described in subsection (b);
(2) credit histories as described in section 504 of this chapter;
(3) surety bond requirements as described in section 505 of this
chapter;
(4) a review of licensure actions in Indiana and in other states;
and
(5) other background checks considered necessary by the director.
(e) For purposes of this section and in order to reduce the points of
contact that the director has to maintain under this section, the director
may use the NMLSR as a channeling agent for requesting and
distributing information to and from any source as directed by the
director.
(f) The department may deny an application under this section if the
director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(g) Upon written request, an applicant is entitled to a hearing, in the
manner provided in IC 4-21.5, on the question of the qualifications of
the applicant for a license.
(h) An applicant shall pay the following fees at the time designated
by the department:
(1) An initial license fee as established by the department under
IC 28-11-3-5, which shall not exceed two thousand five hundred
dollars ($2,500). Until the department establishes an initial
license fee under IC 28-11-3-5, the initial license fee shall be one
thousand five hundred dollars ($1,500).
(2) Examination fees as established by the department under
IC 28-11-3-5, which shall not exceed one hundred dollars ($100)
per hour. Until the department establishes an examination fee
schedule under IC 28-11-3-5 that is applicable to an applicant
under this chapter, the examination fee schedule shall be the fee
schedule applicable to persons licensed under IC 24-4.5-7.
IC 37-3.
(3) An annual renewal fee as established by the department under
IC 28-11-3-5, which shall not exceed two thousand five hundred
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dollars ($2,500). Until the department establishes an annual
renewal fee under IC 28-11-3-5, the annual renewal fee shall be
one thousand five hundred dollars ($1,500).
(i) A fee as established by the department under IC 28-11-3-5 may
be charged for each day a fee under subsection (h)(2) or (h)(3) is
delinquent. The fee described in this subsection shall not exceed fifty
dollars ($50) per day.
(j) Except in a transaction approved under section 601 of this
chapter, a license issued under this section is not assignable or
transferable.
(k) If the department of state revenue notifies the department that a
person is on the most recent tax warrant list, the department shall not
issue or renew the person's license until:
(1) the person provides to the department a statement from the
department of state revenue that the person's tax warrant has been
satisfied; or
(2) the department receives a notice from the commissioner of the
department of state revenue under IC 6-8.1-8-2(k).
SECTION 66. IC 28-8-6-801, AS ADDED BY P.L.222-2025,
SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 801. A provider required to be licensed under this
chapter shall do the following:
(1) Develop and implement policies and procedures to:
(A) respond to questions raised by consumers; and
(B) address complaints from consumers;
in an expedient manner.
(2) Whenever the provider offers a consumer the option to receive
proceeds for a fee or solicits a tip, gratuity, or other donation:
(A) offer that consumer at least one (1) reasonable option to
obtain proceeds at no cost;
(B) clearly explain to the consumer how to elect each no cost
option offered;
(C) ensure that any no cost option offered is clearly displayed
and is in the same:
(i) color;
(ii) font;
(iii) font size; and
(iv) general location;
as any option to obtain proceeds that has a fee associated with
it;
(D) ensure that any option to obtain proceeds that has a fee
associated with the delivery of the proceeds is not the default
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option;
(E) ensure that if a consumer elects to not pay a tip, gratuity,
or other donation, any fee amount charged to the consumer as
part of an earned wage access services transaction is not
increased because of the consumer's decision to not pay a tip,
gratuity, or other donation; and
(F) ensure that, if a consumer elects a no cost option, initiate
the delivery of the proceeds to the consumer not later than one
(1) business day after the consumer initiates an earned wage
access services transaction with the provider.
(3) Before entering into an agreement with a consumer to provide
earned wage access services, do both of the following:
(A) Inform the consumer of the consumer's rights under the
agreement.
(B) Fully and clearly disclose all fees associated with the
earned wage access services to be provided.
(4) Inform the consumer of the fact of or obtain the consent of the
consumer to any material changes to the terms and conditions of
the earned wage access services before implementing those
changes for that consumer.
(5) Allow the consumer to cancel use of the provider's earned
wage access services:
(A) at any time; and
(B) without incurring a cancellation fee imposed by the
provider.
(6) Comply with all applicable local, state, and federal privacy
and information security laws.
(7) If the provider solicits, charges, or receives a tip, gratuity, or
other donation from a consumer:
(A) clearly and conspicuously disclose to the consumer
immediately before each transaction that a tip, gratuity, or
other donation:
(i) is voluntary; and
(ii) may be in the amount of zero dollars ($0); and
(B) clearly and conspicuously disclose in the provider's service
contract with the consumer that tips, gratuities, or other
donations are voluntary and that the offering of earned wage
access services, including:
(i) the amount of proceeds that a consumer is eligible to
request;
(ii) the frequency with which proceeds are provided to a
consumer; and
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(iii) the level or cost of any service provided to the consumer
in connection with an earned wage access services
transaction;
is not contingent on whether the consumer pays any tip,
gratuity, or other donation, or on the amount of the tip,
gratuity, or other donation.
(8) Provide proceeds to a consumer by any means mutually
agreed upon by the provider and the consumer.
(9) If the provider seeks repayment of outstanding proceeds or the
payment of fees or other amounts owed (including voluntary tips,
gratuities, or other donations) in connection with earned wage
access services provided under this chapter from a consumer's
deposit account, including by means of electronic funds transfer,
the provider must do the following:
(A) Comply with applicable provisions of the federal
Electronic Funds Transfer Act (15 U.S.C. 1693 et seq.).
(B) Reimburse the consumer for the full amount of any
overdraft or nonsufficient funds fees that are imposed on the
consumer by the consumer's depository financial institution if
the overdraft or nonsufficient funds fees resulted from the
provider's attempt to seek payment of any outstanding
proceeds, fees, or other amounts (including voluntary tips,
gratuities, or other donations) under this chapter:
(i) on a date before; or
(ii) in an incorrect amount from;
the date or amount disclosed to the consumer. However, a
provider is not subject to the requirements of this clause with
respect to the payment of any outstanding proceeds, fees, or
other amounts incurred by a consumer through fraudulent or
other unlawful means.
(10) Ensure that the provider's software application does not do
any of the following:
(A) Subject a user of the software application to unsolicited
electronic mail advertisements or surveys, if the user has
elected to not receive electronic mail advertisements or
surveys, as required by 15 U.S.C. 7701-7713.
(B) Subject a user of the software application to unsolicited
electronic advertisements or surveys, based on the individual
user's:
(i) use of the provider's software application;
(ii) location; or
(iii) behavior;
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if the user has elected to not receive the electronic
advertisements or surveys.
(C) Display an unsolicited electronic notification to a user of
the software application unless the user has elected to receive
electronic notifications.
(D) Access a user's location, except for purposes of verifying
that a user is located in Indiana at the time the user creates an
account with the provider, unless the user has authorized the
provider's software application to access the user's location.
(11) Ensure that any data that the provider receives under
subdivision (10) is not sold or shared, except as follows:
(A) In connection with a law enforcement investigation or
legal proceeding.
(B) As necessary to provide earned wage access services to the
user.
(C) The user authorizes the provider to sell or share the data.
(12) Sell consumer data to a lender (as defined in
IC 24-4.5-7-111) IC 37-3-2-5) licensed under IC 24-4.5-7.
IC 37-3.
(13) Share consumer data with a lender (as defined in
IC 24-4.5-7-111) IC 37-3-2-5) licensed under IC 24-4.5-7.
IC 37-3.
SECTION 67. IC 28-8-6-802, AS ADDED BY P.L.222-2025,
SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 802. A provider required to be licensed under this
chapter shall not do any of the following:
(1) Share with an employer a portion of any:
(A) fees; or
(B) voluntary tips, gratuities, or other donations;
received from or charged to a consumer for earned wage access
services.
(2) Use a consumer's credit score from a consumer report (as
defined in IC 24-5-24-2) to determine:
(A) a consumer's eligibility for earned wage access services;
(B) the amount of proceeds that a consumer is eligible to
request or receive in an earned wage access services
transaction; or
(C) the frequency with which proceeds may be provided to a
consumer through earned wage access services transactions.
(3) Accept payment of outstanding proceeds, fees, or voluntary
tips, gratuities, or other donations by means of a credit card (as
defined in IC 24-5-27.5-3).
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(4) Charge or collect a late fee, a deferral fee, interest, or any
other charge or penalty for a consumer's failure to pay outstanding
proceeds, fees, or voluntary tips, gratuities, or other donations.
(5) Compel or attempt to compel a consumer to pay to the
provider any outstanding proceeds, fees, or voluntary tips,
gratuities, or other donations through any of the following means:
(A) The use of unsolicited outbound telephone calls to the
consumer.
(B) A suit against the consumer in a court of competent
jurisdiction.
(C) The use of a third party to pursue collection from the
consumer on the provider's behalf.
(D) The sale of outstanding amounts to a third party collector
or debt buyer for collection from the consumer.
However, this subdivision does not preclude a provider from
using any of the means set forth in clauses (A) through (D) to
pursue payment of outstanding amounts incurred by a consumer
through fraudulent or other unlawful means, or from pursuing any
available remedies against an employer for breach of the
employer's contractual obligations to the provider.
(6) If the provider solicits, charges, or receives a tip, gratuity, or
other donation from a consumer:
(A) mislead or deceive consumers about the voluntary nature
of the tips, gratuities, or donations;
(B) represent that tips, gratuities, or donations will benefit any
specific individuals; or
(C) suggest a default tip, gratuity, or other donation amount
greater than zero dollars ($0).
(7) If the provider also offers small loans to consumers under
IC 24-4.5-7: IC 37-3:
(A) provide proceeds to a consumer who has a small loan
outstanding from that provider, as verified by the provider in
accordance with IC 24-4.5-7-404(4); IC 37-3-3-8(d); or
(B) make a small loan to a consumer who has outstanding
proceeds from that provider.
SECTION 68. IC 28-11-1-3, AS AMENDED BY P.L.222-2025,
SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 3. (a) The ultimate authority for and the powers,
duties, management, and control of the department are vested in the
following seven (7) members:
(1) The director of the department, who serves as an ex officio,
voting member.
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(2) The following six (6) members appointed by the governor as
follows:
(A) Three (3) members must have practical experience at the
executive level of a:
(i) state chartered bank;
(ii) state chartered savings association; or
(iii) state chartered savings bank.
(B) One (1) member must have practical experience at the
executive level as a:
(i) lender licensed under IC 24-4.5; IC 37-2;
(ii) mortgage lender licensed under IC 24-4.4; IC 37-1;
(iii) registrant under IC 24-7;
(iv) licensee under IC 28-1-29;
(v) licensee under IC 28-7-5;
(vi) licensee under IC 28-8-4.1;
(vii) licensee under IC 28-8-5; or
(viii) licensee under IC 28-8-6.
(C) One (1) member must have practical experience at the
executive level of a state chartered credit union.
(D) One (1) member must be appointed with due regard for the
consumer, agricultural, industrial, and commercial interests of
Indiana.
(b) Not more than three (3) members appointed by the governor
under subsection (a)(2) after June 30, 2006, may be affiliated with the
same political party.
SECTION 69. IC 28-11-1-13.5, AS ADDED BY P.L.90-2008,
SECTION 67, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 13.5. (a) The department may accept payment of
any of the following by credit card, debit card, charge card, or similar
method:
(1) A fee established by the department under IC 28-11-3-5.
(2) A penalty assessed by the department under this title or
IC 24-4.5. IC 37-2.
(3) A fee assessed:
(A) in connection with the director's designation of an
automated central licensing system and repository under
IC 24-4.5-3-503(10); IC 37-2-4-26(j); and
(B) for:
(i) processing applications and renewals for licenses under
IC 24-4.5-3; IC 37-2-4; or
(ii) performing other services that the director determines
are necessary for the orderly administration of the
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department's licensing system under IC 24-4.5-3. IC 37-2-4.
(b) If a fee or penalty described in subsection (a) is paid by credit
card, debit card, charge card, or similar method, the liability is not
finally discharged until the department receives payment or credit from
the institution responsible for making the payment or credit.
(c) The department may contract with a bank or credit card vendor
for acceptance of bank or credit cards. If there is a vendor transaction
charge or discount fee, whether billed to the department or charged
directly to the department's account, the department or the bank or
credit card vendor may collect from the person using the bank or credit
card a uniform fee that is determined by the department.
SECTION 70. IC 28-15-11-18, AS AMENDED BY P.L.27-2012,
SECTION 116, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 18. (a) Subsections (b) and (c)
apply to alternative mortgage loans and to similar loans authorized
under federal law or regulations for a federal savings association.
(b) Any Indiana laws prohibiting:
(1) the compounding of interest;
(2) capitalizing interest because contracted loan repayments
create negative amortization; or
(3) paying interest on interest;
do not apply. For purposes of the application of IC 24-4.5-3 IC 37-2-4
to a loan described in subsection (a), "principal" (as defined in
IC 24-4.5-3-107(3)) IC 37-2-2-40.5) includes interest unpaid and
added to principal because the contracted repayments under the loan
do not cover the entire interest due at any time.
(c) The lien of the loan provided by the mortgage and the loan
documents:
(1) includes all advances or additions to principal of either
principal or interest that are made in accordance with the terms of
the loan documents; and
(2) is superior to any lien on the property created after the date the
mortgage securing the loan is recorded, other than taxes and
special property or taxing district assessments.
SECTION 71. IC 30-4-8-2, AS ADDED BY P.L.221-2019,
SECTION 9, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 2. Unless the context requires otherwise, the
following definitions apply throughout this chapter:
(1) "Claim" means a right to payment, regardless of whether the
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, immature, disputed, undisputed, legal,
equitable, secured, or unsecured.
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(2) "Creditor" means a person who has a claim against the
transferor.
(3) "Debt" means liability on a claim.
(4) "Disposition" means a transfer, conveyance, or assignment of
property, including a change in the legal ownership of property
that occurs when a trustee is substituted for another trustee or
when at least one (1) trustee is added. The term also includes the
exercise of a power that causes a transfer of property to a trustee.
However, the term does not include the release or relinquishment
of an interest in property that, until the release or relinquishment,
was the subject of a qualified disposition.
(5) "Investment decision" means the retention, purchase, sale,
exchange, tender, or other transaction affecting the ownership of
or rights in an investment.
(6) "Legacy trust" means an irrevocable trust established under
section 3 of this chapter.
(7) "Lender" means a company or entity that extends credit,
including but not limited to a financial institution (as defined by
IC 28-1-1-3(1)), a company or entity that extends credit under
IC 24-4.4 or IC 24-4.5, IC 37-1 or IC 37-2, or the successors and
assigns of the company or entity.
(8) "Person" means an individual at least eighteen (18) years of
age, a corporation, a trust, a limited liability company, a limited
liability partnership, a partnership, a governmental entity, the
state, or a political subdivision of the state.
(9) "Property" means real property, personal property, or an
interest in real or personal property.
(10) "Qualified affidavit" means a sworn affidavit executed under
section 5 of this chapter.
(11) "Qualified disposition" means a disposition by a transferor to
a legacy trust.
(12) "Qualified trustee" means a person qualified to serve as the
trustee of a legacy trust under section 6 of this chapter.
(13) "Transferor" means a person who as:
(A) an owner of property;
(B) a holder of a power of appointment that authorizes the
holder to appoint in favor of the holder, the holder's creditors,
the holder's estate, or the creditors of the holder's estate; or
(C) a trustee;
directly or indirectly makes a disposition or causes a disposition
to be made.
(14) "Trust director" means a person given authority by the terms
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of a legacy trust to direct, consent to, or disapprove actual or
proposed investment decisions, distribution decisions, or other
decisions related to property in a legacy trust.
SECTION 72. IC 31-16-15-25, AS AMENDED BY P.L.103-2007,
SECTION 40, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 25. (a) An income payor that:
(1) discharges from employment an obligor;
(2) refuses to employ an obligor;
(3) takes disciplinary action against an obligor employed by the
income payor; or
(4) otherwise discriminates against an obligor;
because of the existence of an income withholding order or the
obligations imposed upon the income payor by the income withholding
order, is subject to a penalty not to exceed five thousand dollars
($5,000) payable to the state and recoverable in a civil action. An
obligor or the Title IV-D agency may bring an action to enforce a
penalty under this subsection.
(b) The collection of money under this section does not affect:
(1) the obligor's right to damages under IC 24-4.5-5-202;
IC 37-2-6-9; or
(2) any other legal remedy available to the obligor;
because of discharge from employment, refusal of employment, or
disciplinary action.
SECTION 73. IC 32-28-15-1, AS ADDED BY P.L.62-2024,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 1. (a) Except as otherwise provided in this
chapter, this chapter does not apply to a residential real estate service
agreement entered into before March 15, 2024.
(b) This chapter does not apply to any of the following:
(1) A home warranty or similar product that covers the cost of
maintenance of a major home system, such as:
(A) a plumbing system;
(B) a heating, cooling, and ventilation system; or
(C) electrical wiring;
for a fixed period.
(2) An insurance contract.
(3) An option to purchase residential real estate or a right of
refusal to purchase residential real estate.
(4) A declaration that is created in the formation of:
(A) an association of co-owners (as defined in IC 32-25-2-2)
for a condominium (as defined in IC 32-25-2-7); or
(B) a homeowners association (as defined in IC 32-25.5-2-4);
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including any amendment to the declaration.
(5) A maintenance or repair agreement entered into by:
(A) an association of co-owners (as defined in IC 32-25-2-2)
for a condominium (as defined in IC 32-25-2-7); or
(B) a homeowners association (as defined in IC 32-25.5-2-4).
(6) A mortgage loan or a commitment to make or receive a
mortgage loan.
(7) A security agreement under IC 26-1 concerning the sale or
rental of personal property or fixtures.
(8) Providers of:
(A) utility services, including water, sewer, gas, or electric
service; or
(B) communications service (as defined in IC 8-1-32.5-3).
(9) A land contract (as defined in IC 24-9-2-9.5). IC 37-5-2-9.5).
(10) An attorney's lien authorized by IC 33-43-4.
(11) A statutory lien authorized by this article, including:
(A) the lien of a broker company (as defined in
IC 32-28-12.5-0.5) upon commercial real estate under
IC 32-28-12.5-5; or
(B) a mechanic's or materialman's lien under IC 32-28-3.
SECTION 74. IC 32-30-10.5-5, AS AMENDED BY P.L.6-2012,
SECTION 211, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 5. (a) As used in this chapter,
"mortgage" means:
(1) a loan; or
(2) 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 another
equivalent consensual security interest) that constitutes a first lien on
a dwelling or on residential real estate upon which a dwelling is
constructed or intended to be constructed.
(b) The term does not include a land contract (as defined in
IC 24-4.4-1-301(36)) IC 37-1-2-21 or similar agreement in which the
debtor does not possess a deed.
SECTION 75. IC 34-7-4-2, AS AMENDED BY THE TECHNICAL
CORRECTIONS BILL OF THE 2026 GENERAL ASSEMBLY, IS
AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2026]:
Sec. 2. Statutes outside IC 34 providing causes of action or procedures
include the following:
(1) IC 4-21.5-5 (Judicial review of administrative agency actions).
(2) IC 22-3-4 (Worker's compensation administration and
procedures).
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(3) IC 22-4-17 (Unemployment compensation system, employee's
claims for benefits).
(4) IC 22-4-32 (Unemployment compensation system, employer's
appeal process).
(5) IC 22-9 (Civil rights actions).
(6) IC 22-9.5 (Fair housing).
(6) IC 24-9 (7) IC 37-5 (Home loans).
(7) (8) IC 31-14 (Paternity).
(8) (9) IC 31-15 (Dissolution of marriage and legal separation).
(9) (10) IC 31-16 (Support of children and other dependents).
(10) (11) IC 31-17 (Custody and parenting time).
(11) (12) IC 31-19 (Adoption).
(12) (13) IC 32-27-2, IC 32-30-1, IC 32-30-2, IC 32-30-4,
IC 32-30-9, IC 32-30-10, IC 32-30-12, IC 32-30-13, and
IC 32-30-14 (Real property).
(13) (14) IC 33-43-4 (Attorney liens).
SECTION 76. IC 34-30-2.1-354 IS REPEALED [EFFECTIVE
JULY 1, 2026]. Sec. 354. IC 24-4.4-3-103 (Concerning actions in
conformity with a rule, written notice, written opinion, written
interpretation, or written directive of the department of financial
institutions under first lien mortgage lending law).
SECTION 77. IC 34-30-2.1-355 IS REPEALED [EFFECTIVE
JULY 1, 2026]. Sec. 355. IC 24-4.5-6-104 (Concerning actions in
conformity with a rule, written notice, written opinion, written
interpretation, or written directive of the department of financial
institutions under the Uniform Consumer Credit Code).
SECTION 78. IC 34-30-2.1-604 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 604. IC 37-1-4-2 (Concerning
actions in conformity with a rule, written notice, written opinion,
written interpretation, or written directive of the department of
financial institutions under first lien mortgage lending law).
SECTION 79. IC 34-30-2.1-605 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 605. IC 37-2-7-3 (Concerning
actions in conformity with a rule, written notice, written opinion,
written interpretation, or written directive of the department of
financial institutions under the Uniform Consumer Credit Code).
SECTION 80. IC 34-31-2-6 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 6. IC 24-4.5-5-203
IC 37-2-6-10 (Concerning creditors for errors made under the Uniform
Consumer Credit code).
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SECTION 81. IC 34-55-8-7, AS AMENDED BY P.L.78-2014,
SECTION 22, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 7. (a) Except as provided in subsection (b), after
a hearing of which the judgment debtor has been notified, the court
may order:
(1) any property, income, or profits of the judgment debtor not
exempt from execution or process, in the hands either of the
judgment debtor or of any other person; or
(2) any debt due to the judgment debtor;
to be applied to the satisfaction of the judgment and forbid transfers of
property and choses in action.
(b) If the judgment debtor has failed to comply with an agreed order
in the action, after a hearing of which the judgment debtor has been
notified, the court shall order:
(1) any property, income, or profits of the judgment debtor not
exempt from execution or process, in the hands either of the
judgment debtor or of any other person; or
(2) any debt due to the judgment debtor;
to be applied to the satisfaction of the judgment and forbid transfers of
property and choses in action.
(c) The judge shall order that:
(1) the judgment or execution is a continuing lien upon the
income or profits of the judgment debtor in the hands either of the
judgment debtor or any other person, governmental officer, or
corporation from the date the order is served upon the person,
governmental officer, or corporation indebted to the judgment
debtor to the extent that the lien, together with all similar liens, is
permitted under IC 24-4.5-5-105; IC 37-2-6-4; and
(2) the court may enforce all orders and decrees in the premises,
by attachment or otherwise.
(d) A court in an action for proceedings supplementary to execution
shall issue an order directing a depository financial institution (as
defined in IC 28-9-2) to place a hold on a deposit account in which the
judgment debtor has an interest, either individually or jointly with
another person, whenever the conditions prescribed under
IC 28-9-3-4(d)(1) through IC 28-9-3-4(d)(3) are met. An order issued
under this subsection:
(1) is subject to the limitations as to duration of the restriction and
the amount to be restricted as specified under IC 28-9-4-2; and
(2) may be terminated or modified to reflect valid exemptions of
a depositor that the court has considered.
(e) If an order for the placing of a hold on a deposit account is
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issued under subsection (d), a person whose deposit account is affected
may request a hearing from the court on the matter of:
(1) the person's right to claim certain funds in the person's deposit
account as exempt from garnishment; and
(2) whether the hold should be removed by the court.
(f) If a court receives a request for a hearing under subsection (e),
the court shall hold a hearing on the matter within five (5) days
(excluding Saturdays, Sundays, and legal holidays) after the court
receives the request.
(g) If a person whose deposit account is affected by the order issued
under subsection (d) files an affidavit with the court stating that the
funds in the account are exempt from garnishment, the court may issue
an order releasing the hold on the account without first conducting a
hearing.
(h) If a court has issued a garnishment order to a third party and the
garnishment order no longer applies to the third party due to a change
in circumstances, the court may cancel the garnishment order and issue
a new garnishment order to an appropriate third party, if all of the
following conditions are met:
(1) The court has issued a garnishment order under subsection (a)
or (b) with respect to a judgment debtor's income or profits in the
hands of a third party.
(2) The judgment constitutes a continuing lien under subsection
(c).
(3) Due to a change in circumstances, including a change of
employment, the judgment debtor's income or profits are in the
hands of a new third party not named in the garnishment order.
(4) The judgment creditor files a petition:
(A) notifying the court of the matters described in subdivisions
(1) through (3); and
(B) informing the court of the name, address, and other
relevant information concerning the new third party holding
the judgment debtor's income and profits.
A court may issue a new garnishment order under this subsection
without holding a hearing.
SECTION 82. IC 34-57-2-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 1. (a) A written
agreement to submit to arbitration is valid, and enforceable, an existing
controversy or a controversy thereafter arising is valid and enforceable,
except upon such grounds as exist at law or in equity for the revocation
of any contract. If the parties to such an agreement stipulate in writing,
the agreement may be enforced by designated third persons, who shall
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in such instances have the same rights as a party under this chapter.
This chapter also applies to arbitration agreement between employers
and employees or between their respective representatives (unless
otherwise provided in the agreement).
(b) This chapter specifically exempts from its coverage all consumer
leases, sales, and loan contracts, as these terms are defined in the
Uniform Consumer Credit Code (IC 24-4.5). (IC 37-2).
SECTION 83. IC 35-38-1-18, AS AMENDED BY P.L.156-2007,
SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 18. (a) Except as provided in subsection (b),
whenever the court imposes a fine, it shall conduct a hearing to
determine whether the convicted person is indigent. If the person is not
indigent, the court shall order:
(1) that the person pay the entire amount at the time sentence is
pronounced;
(2) that the person pay the entire amount at some later date;
(3) that the person pay specified parts at designated intervals; or
(4) at the request of the person, commitment of the person to the
county jail for a period of time set by the court in lieu of a fine. If
the court orders a person committed to jail under this subdivision,
the person's total confinement for the crime that resulted in the
conviction must not exceed the maximum term of imprisonment
prescribed for the crime under IC 35-50-2 or IC 35-50-3.
(b) A court may impose a fine and suspend payment of all or part of
the fine until the convicted person has completed all or part of the
sentence. If the court suspends payment of the fine, the court shall
conduct a hearing at the time the fine is due to determine whether the
convicted person is indigent. If the convicted person is not indigent, the
court shall order the convicted person to pay the fine:
(1) at the time the fine is due; or
(2) in a manner set forth in subsection (a)(2) through (a)(4).
(c) If a court suspends payment of a fine under subsection (b), the
court retains jurisdiction over the convicted person until the convicted
person has paid the entire amount of the fine.
(d) Upon any default in the payment of the fine:
(1) an attorney representing the county may bring an action on a
debt for the unpaid amount;
(2) the court may direct that the person, if the person is not
indigent, be committed to the county jail and credited toward
payment at the rate of twenty dollars ($20) for each twenty-four
(24) hour period the person is confined, until the amount paid
plus the amount credited equals the entire amount due; or
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(3) the court may institute contempt proceedings or order the
convicted person's wages, salary, and other income garnished in
accordance with IC 24-4.5-5-105 IC 37-2-6-4 to enforce the
court's order for payment of the fine.
SECTION 84. IC 35-45-7-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 1. As used in this
chapter:
"Loan" means any transaction described in section 3 of this chapter,
whether or not the transaction is in the form of a loan as defined in
IC 24-4.5-3-106, IC 37-2-2-27.5, and without regard to whether the
person making the loan is regularly engaged in making consumer loans,
consumer credit sales, or consumer leases.
"Principal" includes the monetary value of property which has been
loaned from one (1) person to another person.
"Rate" means the monetary value of the consideration received per
annum or due per annum, calculated according to the actuarial method
on the unpaid balance of the principal.
SECTION 85. IC 35-45-7-2, AS AMENDED BY P.L.158-2013,
SECTION 536, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 2. A person who, in exchange for
the loan of any property, knowingly or intentionally receives or
contracts to receive from another person any consideration, at a rate
greater than two (2) times the rate specified in IC 24-4.5-3-508(2)(a)(i),
IC 37-2-4-35(b)(1)(A), commits loansharking, a Level 6 felony.
However, loansharking is a Level 5 felony if force or the threat of force
is used to collect or to attempt to collect any of the property loaned or
any of the consideration for the loan.
SECTION 86. IC 35-45-7-3, AS AMENDED BY P.L.35-2010,
SECTION 208, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2026]: Sec. 3. (a) This chapter applies only:
(1) to consumer loans, consumer related loans, consumer credit
sales, consumer related sales, and consumer leases, as those terms
are defined in IC 24-4.5, IC 37-2, subject to adjustment, where
applicable, of the dollar amounts set forth in those definitions
under IC 24-4.5-1-106; IC 37-2-1-5;
(2) to any loan primarily secured by an interest in land or sale of
an interest in land that is a mortgage transaction (as defined in
IC 24-4.5-1-301.5) IC 37-2-2-32) if the transaction is otherwise
a consumer loan or consumer credit sale; and
(3) to any other loan transaction or extension of credit, regardless
of the amount of the principal of the loan or extension of credit,
if unlawful force or the threat of force is used to collect or to
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attempt to collect any of the property loaned or any of the
consideration for the loan or extension of credit in question.
(b) This chapter applies regardless of whether the contract is made
directly or indirectly, and whether the receipt of the consideration is
received or is due to be received before or after the maturity date of the
loan.
SECTION 87. IC 35-52-24-21 IS REPEALED [EFFECTIVE JULY
1, 2026]. Sec. 21. IC 24-4.5-5-301 defines a crime concerning the
Uniform Consumer Credit Code.
SECTION 88. IC 35-52-24-22 IS REPEALED [EFFECTIVE JULY
1, 2026]. Sec. 22. IC 24-4.5-5-302 defines a crime concerning the
Uniform Consumer Credit Code.
SECTION 89. IC 35-52-24-31 IS REPEALED [EFFECTIVE JULY
1, 2026]. Sec. 31. IC 24-5.5-6-1 defines a crime concerning mortgage
rescue protection fraud.
SECTION 90. IC 35-52-24-39 IS REPEALED [EFFECTIVE JULY
1, 2026]. Sec. 39. IC 24-9-8-1 defines a crime concerning home loan
practices.
SECTION 91. IC 35-52-37 IS ADDED TO THE INDIANA CODE
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]:
Chapter 37. IC 37 Criminal Statutes
Sec. 1. IC 37-2-6-13 defines a crime concerning the Uniform
Consumer Credit Code.
Sec. 2. IC 37-2-6-14 defines a crime concerning the Uniform
Consumer Credit Code.
Sec. 3. IC 37-4-5-1 defines a crime concerning mortgage rescue
protection fraud.
Sec. 4. IC 37-5-8-1 defines a crime concerning home loan
practices.
SECTION 92. IC 36-1-8-11, AS AMENDED BY P.L.105-2013,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 11. (a) This section does not apply to a county
treasurer governed by IC 36-2-10-23.
(b) As used in this section, "credit card" means a:
(1) credit card;
(2) debit card;
(3) charge card; or
(4) stored value card.
(c) A payment to a political subdivision or a municipally owned
utility for any purpose may be made by any of the following financial
instruments that the fiscal body of the political subdivision or the board
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of the municipally owned utility authorizes for use:
(1) Cash.
(2) Check.
(3) Bank draft.
(4) Money order.
(5) Bank card or credit card.
(6) Electronic funds transfer.
(7) Any other financial instrument authorized by the fiscal body.
(d) If there is a charge to the political subdivision or municipally
owned utility for the use of a financial instrument, the political
subdivision or municipally owned utility may collect a sum equal to the
amount of the charge from the person who uses the financial
instrument.
(e) If authorized by the fiscal body of the political subdivision or the
board of the municipally owned utility, the political subdivision or
municipally owned utility may accept payments under this section with
a bank card or credit card under the procedures set forth in this section.
However, the procedure authorized for a particular type of payment
must be uniformly applied to all payments of the same type.
(f) The political subdivision or municipally owned utility may
contract with a bank card or credit card vendor for acceptance of bank
cards or credit cards. However, if there is a vendor transaction charge
or discount fee, whether billed to the political subdivision or
municipally owned utility or charged directly to the political
subdivision's or municipally owned utility's account, the political
subdivision or municipally owned utility may collect from the person
using the card either or both of the following:
(1) An official fee that may not exceed the transaction charge or
discount fee charged to the political subdivision or municipally
owned utility by bank or credit card vendors.
(2) A reasonable convenience fee:
(A) that may not exceed three dollars ($3); and
(B) that must be uniform regardless of the bank card or credit
card used.
The fees described in subdivisions (1) and (2) may be collected
regardless of retail merchant agreements between the bank and credit
card vendors that may prohibit such fees. These fees are permitted
additional charges under IC 24-4.5-3-202. IC 37-2-4-5.
(g) The political subdivision or municipally owned utility may pay
any applicable bank card or credit card service charge associated with
the use of a bank card or credit card under this subsection.
(h) The authorization of the fiscal body of the political subdivision
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is not required by the bureau of motor vehicles or the bureau of motor
vehicles commission to use electronic funds transfer or other financial
instruments to transfer funds to the political subdivision.
SECTION 93. IC 36-2-7-10, AS AMENDED BY P.L.181-2025,
SECTION 13, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 10. (a) The following definitions apply to this
section:
(1) "Copy" means:
(A) transcribing or duplicating a document by handwriting,
photocopy, xerography, or duplicating machine;
(B) duplicating electronically stored data onto a disk, tape,
drum, or any other means of electronic data storage; or
(C) reproducing a document by any other means.
(2) "Mortgage" means a transfer of rights to real property, in a
form substantially similar to that set forth in IC 32-29-1-5, with or
without warranty from the grantor. The term does not include:
(A) a mortgage modification;
(B) a mortgage assignment;
(C) a mortgage release; or
(D) a mortgage assumption.
(3) "Multiple transaction document" means a document
containing two (2) or more transactions of the same type.
(4) "Record" or "recording" means the act of placing a document
into the official records of the county recorder and includes the
functions of filing and filing for record.
(b) The county recorder shall charge and collect the fees prescribed
by this section for recording, filing, copying, and other services the
recorder renders, and shall pay them into the county treasury at the end
of each calendar month. The fees prescribed and collected under this
section supersede all other recording fees required by law to be charged
for services rendered by the county recorder.
(c) The county recorder shall charge the following:
(1) Twenty-five dollars ($25) for recording any deed or other
instrument, other than a mortgage.
(2) Fifty-five dollars ($55) for recording any mortgage.
(3) For pages larger than eight and one-half (8 1/2) inches by
fourteen (14) inches twenty-five dollars ($25) for the first page
and five dollars ($5) for each additional page of any document the
recorder records, if the pages are larger than eight and one-half (8
1/2) inches by fourteen (14) inches.
(4) If the county recorder has elected to attest to the release,
partial release, or assignment of any mortgage, judgment, lien, or
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oil and gas lease contained on a multiple transaction document,
the fee for each transaction after the first is seven dollars ($7) plus
the amount provided in subdivision (1).
(5) For furnishing copies of records, the fee for each copy is:
(A) one dollar ($1) per page that is not larger than eleven (11)
inches by seventeen (17) inches; and
(B) five dollars ($5) per page that is larger than eleven (11)
inches by seventeen (17) inches.
(6) Five dollars ($5) for acknowledging or certifying to a
document.
(7) A fee in an amount authorized by an ordinance adopted by the
county legislative body for duplicating a computer tape, a
computer disk, an optical disk, microfilm, or similar media. This
fee may not cover making a handwritten copy or a photocopy or
using xerography or a duplicating machine.
(8) Twenty-five dollars ($25) per parcel for recording the release
of a lien or liens of a political subdivision for a property sold or
transferred under IC 6-1.1-24-6.1 or IC 36-1-11, regardless of the
number of liens held by the political subdivision. This fee applies
to each political subdivision with a lien or liens on a parcel. In
addition to the fee under this subdivision, if a county fiscal body
adopts a fee under section 10.7 of this chapter, the county
recorder may charge the fee under section 10.7 of this chapter for
each document recorded by a political subdivision under this
subdivision.
(9) This subdivision applies in a county only if at least one (1)
unit in the county has established an affordable housing fund
under IC 5-20-5-15.5 and the county fiscal body adopts an
ordinance authorizing the fee described in this subdivision. An
ordinance adopted under this subdivision may authorize the
county recorder to charge a fee of ten dollars ($10) for each
document the recorder records.
(10) This subdivision applies in a county containing a
consolidated city that has established a housing trust fund under
IC 36-7-15.1-35.5(e). This subdivision does not apply if the
county fiscal body adopts a fee under section 10.7 of this chapter.
The county fiscal body may adopt an ordinance authorizing the
fee described in this subdivision. An ordinance adopted under this
subdivision may authorize the county recorder to charge a fee of:
(A) two dollars and fifty cents ($2.50) for the first page; and
(B) one dollar ($1) for each additional page;
of each document the recorder records.
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(d) This subsection does not apply in a county containing a
consolidated city. Section 10.5 of this chapter applies to the deposit of
fees collected under subsection (c)(1) and (c)(8) in a county containing
a consolidated city. The county recorder shall deposit the fees collected
under subsection (c)(1) and (c)(8) as follows:
(1) Eight dollars ($8) in the county general fund.
(2) Five dollars ($5) in the county surveyor's corner perpetuation
fund for use as provided under IC 21-47-3-3 or IC 36-2-12-11(e).
(3) Ten dollars ($10) in the county recorder's records perpetuation
fund established under subsection (g).
(4) One dollar ($1) in the county identification security protection
fund established under IC 36-2-7.5-11.
(5) One dollar ($1) in the county elected officials training fund
under IC 36-2-7-19.
(e) This subsection does not apply in a county containing a
consolidated city. Section 10.5 of this chapter applies to the deposit of
fees collected under subsection (c)(2) in a county containing a
consolidated city. The county recorder shall deposit the fees collected
under subsection (c)(2) as follows:
(1) Thirty-four dollars ($34) in the county general fund.
(2) Five dollars ($5) in the county surveyor's corner perpetuation
fund for use as provided under IC 21-47-3-3 or IC 36-2-12-11(e).
(3) Eleven dollars and fifty cents ($11.50) in the county recorder's
records perpetuation fund established under subsection (g).
(4) Two dollars and fifty cents ($2.50) with the county treasurer
to be distributed in accordance with IC 24-9-9-3 IC 37-5-9-2 and
IC 24-9-9-4. IC 37-5-9-3.
(5) One dollar ($1) in the county identification security protection
fund established under IC 36-2-7.5-11.
(6) One dollar ($1) in the county elected officials training fund
under IC 36-2-7-19.
(f) This subsection applies to all counties. A county recorder shall
deposit fees collected under subsection (c)(3), (c)(4), (c)(5), (c)(6), and
(c)(7) in the county recorder's records perpetuation fund established
under subsection (g).
(g) The county treasurer shall establish a county recorder's records
perpetuation fund. The fund consists of all fees collected under this
section for deposit in the fund and amounts transferred to the fund from
the county identification security protection fund under IC 36-2-7.5-11.
Except as provided in section 10.2 of this chapter, the county recorder
may use any money in this fund without appropriation for:
(1) the preservation of records; and
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(2) the improvement of record keeping systems and equipment;
within the control of the county recorder. Money from the fund may not
be deposited or transferred into the county general fund and does not
revert to the county general fund at the end of a fiscal year.
(h) The county recorder shall post the fees set forth in subsection (c)
in a prominent place within the county recorder's office where the fee
schedule will be readily accessible to the public.
(i) The county recorder may not charge or collect any fee for:
(1) recording an official bond of a public officer, a deputy, an
appointee, or an employee; or
(2) performing any service under any of the following:
(A) IC 6-1.1-22-2(c).
(B) IC 8-23-7.
(C) IC 8-23-23.
(D) IC 10-17-2-3.
(E) IC 10-17-3-2.
(F) IC 12-14-13.
(G) IC 12-14-16.
(j) The state and its agencies and instrumentalities are required to
pay the recording fees and charges that this section prescribes.
(k) This subsection applies to a county other than a county
containing a consolidated city. The county treasurer shall distribute
money collected by the county recorder under subsection (c)(9) as
follows:
(1) Sixty percent (60%) of the money collected by the county
recorder under subsection (c)(9) shall be distributed to the units
in the county that have established an affordable housing fund
under IC 5-20-5-15.5 for deposit in the fund. The amount to be
distributed to a unit is the amount available for distribution
multiplied by a fraction. The numerator of the fraction is the
population of the unit. The denominator of the fraction is the
population of all units in the county that have established an
affordable housing fund. The population to be used for a county
that establishes an affordable housing fund is the population of
the county outside any city or town that has established an
affordable housing fund.
(2) Forty percent (40%) of the money collected by the county
recorder under subsection (c)(9) shall be distributed to the
treasurer of state for deposit in the affordable housing and
community development fund established under IC 5-20-4-7 for
the purposes of the fund.
Money shall be distributed under this subsection before the sixteenth
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day of the month following the month in which the money is collected
from the county recorder.
(l) This subsection applies to a county described in subsection
(c)(10). The county treasurer shall distribute money collected by the
county recorder under subsection (c)(10) as follows:
(1) Sixty percent (60%) of the money collected by the county
recorder under subsection (c)(10) shall be deposited in the
housing trust fund established under IC 36-7-15.1-35.5(e) for the
purposes of the fund.
(2) Forty percent (40%) of the money collected by the county
recorder under subsection (c)(10) shall be distributed to the
treasurer of state for deposit in the affordable housing and
community development fund established under IC 5-20-4-7 for
the purposes of the fund.
Money shall be distributed under this subsection before the sixteenth
day of the month following the month in which the money is collected
from the county recorder.
(m) The county recorder may also include a cross-reference or
multiple cross-references identified in a document for recording under
this section. For cross-references not otherwise required by statute or
county ordinance, the person submitting the document for recording
shall clearly identify on the front page of the instrument the specific
cross-reference or cross-references to be included with the recorded
documents.
SECTION 94. IC 36-2-7-10.5, AS AMENDED BY P.L.181-2025,
SECTION 16, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 10.5. (a) This section applies only in a county
containing a consolidated city.
(b) The county recorder shall deposit the fees collected under
section 10(c)(1) and 10(c)(8) of this chapter as follows:
(1) Nine dollars ($9) in the county general fund.
(2) Five dollars ($5) in the county surveyor's corner perpetuation
fund for use as provided under IC 21-47-3-3 or IC 36-2-12-11(e).
(3) Ten dollars ($10) in the county recorder's records perpetuation
fund established under section 10(g) of this chapter.
(4) Fifty cents ($0.50) in the county identification security
protection fund established under IC 36-2-7.5-11.
(5) Fifty cents ($0.50) in the county elected officials training fund
under IC 36-2-7-19.
(c) The county recorder shall deposit the fees collected under
section 10(c)(2) of this chapter as follows:
(1) Thirty-five dollars ($35) in the county general fund.
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(2) Five dollars ($5) in the county surveyor's corner perpetuation
fund for use as provided under IC 21-47-3-3 or IC 36-2-12-11(e).
(3) Eleven dollars and fifty cents ($11.50) in the county recorder's
records perpetuation fund established under section 10(g) of this
chapter.
(4) Two dollars and fifty cents ($2.50) with the county treasurer
to be distributed in accordance with IC 24-9-9-3 IC 37-5-9-2 and
IC 24-9-9-4. IC 37-5-9-3.
(5) Fifty cents ($0.50) in the county identification security
protection fund established under IC 36-2-7.5-11.
(6) Fifty cents ($0.50) in the county elected officials training fund
under IC 36-2-7-19.
SECTION 95. IC 36-2-10-23 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2026]: Sec. 23. (a) Notwithstanding
any other law, payments to the treasurer for any purpose, including
property tax payments, may be made by any of the following financial
instruments that the treasurer authorizes for use:
(1) Cash.
(2) Check.
(3) Bank draft.
(4) Money order.
(5) Bank card or credit card.
(6) Electronic funds transfer.
(7) Any other financial instrument authorized by the treasurer.
(b) If there is a charge to the treasurer for the use of a financial
instrument other than a bank card or credit card, the treasurer shall
collect a sum equal to the amount of the charge from the person who
uses the financial instrument.
(c) A treasurer may contract with a bank card or credit card vendor
for acceptance of bank or credit cards. However, if there is a vendor
transaction charge or discount fee, whether billed to the treasurer or
charged directly to the treasurer's account, the treasurer shall collect
from the person using the card an official fee that may not exceed the
highest transaction charge or discount fee charged to the treasurer by
bank or credit card vendors during the most recent collection period.
This fee may be collected regardless of retail merchant agreements
between the bank and credit card vendors that may prohibit such a fee.
The fee is a permitted additional charge under IC 24-4.5-3-202.
IC 37-2-4-5.
(d) Notwithstanding subsection (a), the authorization of the treasurer
is not required for the bureau of motor vehicles or the bureau of motor
vehicles commission to use electronic funds transfer or other financial
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instruments to transfer funds to the county treasurer.
SECTION 96. IC 36-2-11-27, AS ADDED BY P.L.171-2006,
SECTION 23, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2026]: Sec. 27. (a) A payment to the county recorder for any
purpose may be made by any of the following financial instruments that
the county recorder authorizes to use:
(1) Cash.
(2) Check.
(3) Bank draft.
(4) Money order.
(5) Bank card or credit card.
(6) Electronic funds transfer.
(7) Any other financial instrument authorized by the county
recorder.
(b) If there is a charge to the county recorder for the use of a
financial instrument other than a bank card or credit card, the county
recorder shall collect a sum equal to the amount of the charge from the
person who uses the financial instrument.
(c) The county recorder may contract with a bank card or credit card
vendor for acceptance of bank cards or credit cards. A payment made
under this chapter does not finally discharge the person's liability, and
the person has not paid the liability until the county recorder receives
payment or credit from the institution responsible for making the
payment or credit. Subject to subsection (e), if there is a vendor
transaction card or discount fee, whether billed to the county recorder
or charged directly to the county recorder's account, the county
recorder shall collect a fee from the person using the bank card or
credit card. The fee is a permitted charge under IC 24-4.5-3-202.
IC 37-2-4-5.
(d) Subject to subsection (e), the county recorder may contract with
a payment processing company, which may collect a transaction fee
from the person using the bank card or credit card.
(e) The county recorder shall collect and deposit in the appropriate
fund an amount not less than the amount the county recorder would
collect and deposit if the county recorder received payment by a means
other than a bank card or credit card.
(f) Funds described in subsection (c) may be used without
appropriation to pay the transaction charge or discount fee charged by
the bank or credit card vendor.
SECTION 97. IC 37 IS ADDED TO THE INDIANA CODE AS A
NEW TITLE TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2026]:
TITLE 37. CONSUMER LENDING
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ARTICLE 1. FIRST LIEN MORTGAGE LENDING
Chapter 1. General Provisions
Sec. 0.1. This article must be construed as a recodification of
prior law. The enactment of this article by SEA 169-2026 does not
affect the substantive operation and effect of the prior law.
Sec. 0.3. A contract entered into in accordance with IC 24-4.4
(before its repeal) is considered a contract entered into in
accordance with this article.
Sec. 0.5. Any document, website, or business communication
created in accordance with IC 24-4.4 (before its repeal) is
considered a document, website, or business communication
created in accordance with this article.
Sec. 0.7. (a) A reference in a statute or rule to a statute that is
repealed and replaced in the same or a different form in the
recodification act of the 2026 regular session of the general
assembly is treated after the effective date of the new provision as
a reference to the new provision.
(b) A citation reference in the recodification act of the 2026
regular session of the general assembly to another provision of the
recodification act of the 2026 regular session of the general
assembly is treated as including a reference to the provision of the
first lien mortgage lending law that is substantively equivalent to
the provision of the recodification act of the 2026 regular session
of the general assembly that is referred to by the citation reference.
Sec. 1. Notwithstanding any other provision of this article or
IC 37-2, the department may adopt rules under IC 4-22-2, to
remain effective until codified in the Indiana Code, in order to
provide for a system of licensing creditors and mortgage loan
originators that meets the requirements of:
(1) the Secure and Fair Enforcement for Mortgage Licensing
Act of 2008 (H.R. 3221 Title V) and the interpretations of that
Act issued by the Secretary of Housing and Urban
Development and the Consumer Financial Protection Bureau;
and
(2) the subsequent amendment of the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 by the
Economic Growth, Regulatory Relief, and Consumer
Protection Act (P.L. 115-174, 132 Stat. 1296).
Sec. 2. (a) This article shall be liberally construed and applied
to promote the following purposes and policies:
(1) To permit and encourage the development of fair and
economically sound first lien mortgage lending practices.
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(2) To conform the regulation of first lien mortgage lending
practices to applicable state and federal laws, rules,
regulations, policies, and guidance.
(b) A reference to a requirement imposed by this article includes
reference to a related rule of the department adopted under this
article.
(c) A reference to a federal law in this article is a reference to
the law as in effect December 31, 2024.
Sec. 3. This article is a general statute intended as a unified
coverage of its subject matter. No part of this article may be
considered to be impliedly repealed by subsequent legislation if
such construction can reasonably be avoided.
Sec. 4. 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.
Sec. 5. (a) Except as provided in subsection (b), this article
applies to a first lien mortgage transaction:
(1) that is secured by an interest in:
(A) a dwelling; or
(B) residential real estate upon which a dwelling is
constructed or intended to be constructed;
in Indiana; and
(2) the closing for which takes place after June 30, 2026.
(b) This article does not apply to a first lien mortgage
transaction if:
(1) the debtor is not a resident of Indiana at the time the
transaction is entered into; and
(2) 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.
Sec. 6. 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.
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(4) Except for IC 37-1-3-4(b), IC 37-1-3-8, IC 37-1-3-19(d),
and IC 37-1-3-19(e), 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 37-1-3-4(b), IC 37-1-3-8, IC 37-1-3-19(d),
and IC 37-1-3-19(e), 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 the following:
(A) A depository institution.
(B) Subsidiaries that are not licensed under this article and
that are:
(i) owned and controlled by a depository institution; and
(ii) regulated by a federal banking agency.
(C) An institution regulated by the Farm Credit
Administration.
(7) Except for IC 37-1-3-4(b), IC 37-1-3-8, IC 37-1-3-19(d),
and IC 37-1-3-19(e), a credit union service organization that
is majority owned, directly or indirectly, by one (1) or more
credit unions.
(8) A person that does not engage as a creditor in first lien
mortgage transactions in Indiana. However, a person may
voluntarily register with the department for the purpose of
sponsoring employees who are licensed as mortgage loan
originators under this article and 750 IAC 9-3, and who are
engaged solely as third party loan processors or underwriters,
if the person does the following:
(A) Assumes responsibility for and reasonably supervises
the activities of all licensed mortgage loan originators
sponsored by the person.
(B) Registers with and maintains a valid unique identifier
issued by the NMLSR as required by IC 37-1-3-4(b),
maintains a surety bond in accordance with IC 37-1-3-8,
submits to the NMLSR reports of condition in accordance
with IC 37-1-3-19(d) (subject to IC 37-1-3-9), and files
financial statements with the department in accordance
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with IC 37-1-3-19(e).
(C) Cooperates with the department, and provides access
to records and documents, as required by the department
in carrying out examinations of the activities of the
licensed mortgage loan originators sponsored by the
person, as described in IC 37-1-3-19(a).
(D) Agrees to comply with all law, rules, directives, and
orders in connection with the activities of the licensed
mortgage loan originators sponsored by the person, as the
director determines necessary to ensure compliance with
the federal Secure and Fair Enforcement for Mortgage
Licensing Act of 2008 (12 U.S.C. 5101 et seq.) and with
Indiana law.
(9) A first lien mortgage transaction originated by a
registered mortgage loan originator, when acting for an entity
described in subdivision (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).
(10) An individual who offers or negotiates terms of a
mortgage transaction with or on behalf of an immediate
family member of the individual.
(11) An individual who offers or negotiates terms of a
mortgage transaction secured by a dwelling that served as the
individual's residence.
(12) Unless the attorney is compensated by:
(A) a lender;
(B) a mortgage broker;
(C) another mortgage loan originator; or
(D) any agent of the lender, mortgage broker, or other
mortgage loan originator described in clauses (A) through
(C);
a licensed attorney who negotiates the terms of a mortgage
transaction on behalf of a client as an ancillary matter to the
attorney's representation of the client.
(13) The United States, any state or local government, or any
agency or instrumentality of any governmental entity,
including United States government sponsored enterprises.
(14) A person in whose name a tablefunded transaction is
closed. However, the exemption provided by this subdivision
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does not apply if:
(A) the transaction:
(i) is secured by a dwelling that is a mobile home, a
manufactured home, or a trailer; and
(ii) is not also secured by an interest in land; and
(B) the person in whose name the transaction is closed sells
the dwelling to the debtor through a retail installment
contract or other similar transaction.
(15) A bona fide nonprofit organization not operating in a
commercial context, as determined by the director, if the
following criteria are satisfied:
(A) Subject to clause (B), the organization originates only
one (1) or both of the following types of mortgage
transactions:
(i) Zero (0) interest first lien mortgage transactions.
(ii) Zero (0) interest subordinate lien mortgage
transactions.
(B) The organization does not require, under the terms of
the mortgage or otherwise, balloon payments with respect
to the mortgage transactions described in clause (A).
(C) The organization is exempt from federal income
taxation under Section 501(c)(3) of the Internal Revenue
Code.
(D) The organization's primary purpose is to serve the
public by helping low income individuals and families
build, repair, and purchase housing.
(E) The organization uses only:
(i) unpaid volunteers; or
(ii) employees whose compensation is not based on the
number or size of any mortgage transactions that the
employees originate;
to originate the mortgage transactions described in clause
(A).
(F) The organization does not charge loan origination fees
in connection with the mortgage transactions described in
clause (A).
(16) A bona fide nonprofit organization 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
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and accompanied by such documentation as required by
the director, that the organization is a bona fide nonprofit
organization.
(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.
Sec. 7. (a) If a person licensed or required to be licensed by the
department to engage in mortgage transactions also engages in
activities of a loan broker described in IC 23-2.5, the activities of
a loan broker are subject to the following sections of the Indiana
Code and any rules adopted to implement these sections:
(1) IC 23-2.5-8-1, except for IC 23-2.5-8-1(b)(2).
(2) IC 23-2.5-8-2.
(3) IC 23-2.5-11-15(b) and IC 23-2.5-11-15(c).
(4) IC 23-2.5-11-17.
(5) IC 23-2.5-8-3.
(6) IC 23-2.5-8-4 through IC 23-2.5-8-9.
(7) IC 23-2.5-8-10.
(8) IC 23-2.5-10-1.
(9) IC 23-2.5-9-1.
(10) IC 23-2.5-11-16.
(b) Loan broker business transactions engaged in by persons
licensed or required to be licensed by the department to engage in
mortgage transactions are subject to examination by the
department and to the examination fees described in
IC 37-1-3-5(h)(3). 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.
Sec. 8. 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 activities of a loan broker
subject to IC 23-2.5.
Sec. 9. A licensee may carry on other business at a location
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where the licensee engages in first lien mortgage transactions
unless the licensee carries on other business for the purpose of
evasion or violation of this article.
Chapter 2. Definitions
Sec. 1. The definitions set forth in this chapter apply throughout
this article.
Sec. 2. "Affiliate", with respect to any person subject to this
article, means a person that, directly or indirectly, through one (1)
or more intermediaries:
(1) controls;
(2) is controlled by; or
(3) is under common control with;
the person subject to this article.
Sec. 3. "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.
Sec. 4. "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.
Sec. 5. "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.
Sec. 6. "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
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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.
Sec. 7. "Bona fide nonprofit organization" means an
organization that does the following, as determined by the director,
under criteria established by the director:
(1) Maintains tax exempt status under Section 501(c)(3) of the
Internal Revenue Code.
(2) Promotes affordable housing or provides home ownership
education or similar services.
(3) Conducts the organization's activities in a manner that
serves public or charitable purposes.
(4) Receives funding and revenue and charges fees in a
manner that does not encourage the organization or the
organization's employees to act other than in the best interests
of the organization's clients.
(5) Compensates the organization's employees in a manner
that does not encourage employees to act other than in the
best interests of the organization's clients.
(6) Provides to, or identifies for, debtors mortgage
transactions with terms that are favorable to the debtor (as
described in IC 37-1-1-6(16)) and comparable to mortgage
transactions and housing assistance provided under
government housing assistance programs.
(7) Maintains certification by the United States Department
of Housing and Urban Development or employs counselors
who are certified by the Indiana housing and community
development authority.
Sec. 8. "Civil court" means any court in Indiana having
jurisdiction of civil cases.
Sec. 9. "Consumer credit sale" is a sale of goods, services, or an
interest in land in which:
(1) credit is granted by a person who engages as a seller in
credit transactions of the same kind;
(2) the buyer is a person other than an organization;
(3) the goods, services, or interest in land are purchased
primarily for a personal, family, or household purpose;
(4) either the debt is payable in installments or a credit service
charge is made; and
(5) with respect to a sale of goods or services, either:
(A) the amount of credit extended, the written credit limit,
or the initial advance does not exceed the exempt threshold
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amount, as adjusted in accordance with the annual
adjustment of the exempt threshold amount, specified in
Regulation Z (12 CFR 226.3 or 12 CFR 1026.3(b), as
applicable); or
(B) the debt is secured by personal property used or
expected to be used as the principal dwelling of the buyer.
Sec. 10. "Credit" means the right granted by a creditor to a
debtor to defer payment of debt or to incur debt and defer its
payment.
Sec. 11. "Creditor" means a person:
(1) that regularly engages in the extension of first lien
mortgage transactions that are subject to a credit service
charge or loan finance charge, as applicable, or are payable
by written agreement in more than four (4) installments (not
including a down payment); and
(2) to which the obligation is initially payable, either on the
face of the note or contract, or by agreement if there is not a
note or contract.
The term does not include a person described in section 39 of this
chapter in a tablefunded transaction. A creditor may be an
individual, a limited liability company, a sole proprietorship, a
partnership, a trust, a joint venture, a corporation, an
unincorporated organization, or other form of entity, however
organized.
Sec. 12. "Department" refers to the department of financial
institutions.
Sec. 13. "Depository institution" has the meaning set forth in
the Federal Deposit Insurance Act (12 U.S.C. 1813(c)) and includes
any credit union.
Sec. 14. "Director" refers to the director of the department of
financial institutions or the director's designee.
Sec. 15. "Dwelling" means a residential structure that contains
one (1) to four (4) units, regardless of whether the structure is
attached to real property. The term includes an individual:
(1) condominium unit;
(2) cooperative unit;
(3) mobile home; or
(4) trailer;
that is used as a residence.
Sec. 16. "Employee" means an individual who is paid wages or
other compensation by an employer required under federal income
tax law to file Form W-2 on behalf of the individual.
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Sec. 17. "Federal banking agencies" means the Board of
Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Office of Thrift Supervision, the
National Credit Union Administration, and the Federal Deposit
Insurance Corporation.
Sec. 18. "First lien mortgage transaction" means:
(1) a consumer loan; or
(2) 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) that constitutes a first lien on a
dwelling or on residential real estate upon which a dwelling is
constructed or intended to be constructed.
Sec. 19. "Immediate family member" means a spouse, child,
sibling, parent, grandparent, or grandchild. The term includes
stepparents, stepchildren, stepsiblings, and adoptive relationships.
Sec. 20. "Individual" means a natural person.
Sec. 21. "Land contract" means a contract for the sale of real
estate in which the seller of the real estate retains legal title to the
real estate until the total contract price is paid by the buyer.
Sec. 22. "Licensee" means a person licensed to engage in
mortgage transactions as a creditor.
Sec. 23. "Loan" includes:
(1) the creation of debt by:
(A) the creditor's payment of or agreement to pay money
to the debtor or to a third party for the account of the
debtor; or
(B) the extension of credit by a person who engages as a
seller in credit transactions primarily secured by an
interest in land;
(2) the creation of debt by a credit to an account with the
creditor upon which the debtor is entitled to draw
immediately; and
(3) the forbearance of debt arising from a loan.
Sec. 24. "Loan brokerage business" means any activity in which
a person, in return for any consideration from any source,
procures, attempts to procure, or assists in procuring, a mortgage
transaction from a third party or any other person, whether or not
the person seeking the mortgage transaction actually obtains the
mortgage transaction.
Sec. 25. "Loan processor or underwriter" means an individual
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who performs clerical or support duties as an employee at the
direction of, and subject to the supervision and instruction of, a
person licensed to engage in mortgage transactions or a person
exempt from licensing. For purposes of this section, the term
"clerical or support duties" may include, after the receipt of an
application, the following:
(1) The receipt, collection, distribution, and analysis of
information common for the processing or underwriting of a
mortgage transaction.
(2) The communication with a consumer to obtain the
information necessary for the processing or underwriting of
a loan, to the extent that the communication does not include:
(A) offering or negotiating loan rates or terms; or
(B) counseling consumers about mortgage transaction
rates or terms.
The term does not include an individual who is an employee of a
person that is not engaged in mortgage transactions as a creditor
if that person is permitted to voluntarily register with the
department to sponsor the individual under IC 37-1-1-6(8) to
engage solely in the activities described in this subdivision.
Sec. 26. "Mortgage loan originator" means an individual who,
for compensation or gain, or in the expectation of compensation or
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 37-2
is made by an employee of a person licensed to engage in mortgage
transactions or by an employee of a person that is exempt from
licensing, while the employee is engaging in the loan brokerage
business. The term does not include the following:
(1) An individual engaged solely as a loan processor or
underwriter as long as the individual works exclusively as an
employee of a person licensed to engage in mortgage
transactions or as an employee of a person exempt from
licensing. However, the term includes an individual who is
licensed as a mortgage loan originator under this article and
750 IAC 9-3 and who is an employee of a person that is not
engaged in mortgage transactions as a creditor if that person
voluntarily registers with the department to sponsor the
individual under IC 37-1-1-6(8) to engage solely as a third
party processor or underwriter.
(2) Unless the person or entity is compensated by:
(A) a creditor;
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(B) a loan broker;
(C) another mortgage loan originator; or
(D) any agent of a creditor, a loan broker, or another
mortgage loan originator described in clauses (A) through
(C);
a person or entity that performs only real estate brokerage
activities and is licensed or registered in accordance with
applicable state law.
(3) A person solely involved in extensions of credit relating to
timeshare plans (as defined in 11 U.S.C. 101(53D)).
Sec. 27. "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.
Sec. 28. "Mortgage transaction" means:
(1) a consumer loan; or
(2) 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.
Sec. 29. "Nationwide Multistate Licensing System and Registry"
(or "Nationwide Mortgage Licensing System and Registry" or
"NMLSR") means a multistate licensing system owned and
operated by the State Regulatory Registry, LLC, or by any
successor or affiliated entity, for the licensing and registration of
creditors, mortgage loan originators, and other persons in the
mortgage or financial services industries. The term includes any
other name or acronym that may be assigned to the system by the
State Regulatory Registry, LLC, or by any successor or affiliated
entity.
Sec. 30. "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.
Sec. 31. "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.
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Sec. 32. "Person" includes an individual or an organization.
Sec. 33. "Principal" of a mortgage transaction means the total
of:
(1) the net amount paid to, receivable by, or paid or payable
for the account of the debtor; and
(2) 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 subdivision (1).
Sec. 34. "Real estate brokerage activity" means any activity that
involves offering or providing real estate brokerage services to the
public, including the following:
(1) Acting as a real estate agent or real estate broker for a
buyer, seller, lessor, or lessee of real property.
(2) Bringing together parties interested in the sale, purchase,
lease, rental, or exchange of real property.
(3) 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).
(4) 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.
(5) Offering to engage in any activity, or act in any capacity,
described in this subsection.
Sec. 35. "Registered mortgage loan originator" means any
individual who:
(1) meets the definition of mortgage loan originator and is an
employee of:
(A) a depository institution;
(B) a subsidiary that is owned and controlled by a
depository institution and regulated by a federal banking
agency; or
(C) an institution regulated by the Farm Credit
Administration; and
(2) is registered with, and maintains a unique identifier
through, the NMLSR.
Sec. 36. "Regularly engaged", with respect to a person who
extends or originates first lien mortgage transactions, refers to a
person who:
(1) extended or originated more than five (5) first lien
mortgage transactions in the preceding calendar year; or
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(2) extends or originates, or will extend or originate, more
than five (5) first lien mortgage transactions in the current
calendar year if the person did not extend or originate more
than five (5) first lien mortgage transactions in the preceding
calendar year.
Sec. 37. "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.
Sec. 38. "Revolving first lien mortgage transaction" means a
first lien mortgage transaction in which:
(1) the creditor permits the debtor to obtain advances from
time to time;
(2) the unpaid balances of principal, finance charges, and
other appropriate charges are debited to an account; and
(3) the debtor has the privilege of paying the balances in
installments.
Sec. 39. "Tablefunded" means a transaction in which:
(1) a person closes a first lien mortgage transaction in the
person's own name as a mortgagee with funds provided by
one (1) or more other persons; and
(2) the transaction is assigned, not later than one (1) business
day after the funding of the transaction, to the mortgage
creditor providing the funding.
Sec. 40. "Unique identifier" means a number or other identifier
assigned by protocols established by the NMLSR.
Chapter 3. Miscellaneous Provisions
Sec. 1. (a) A creditor or mortgage servicer shall provide, in
writing, an accurate payoff amount for a first lien mortgage
transaction to the debtor not later than seven (7) business days
(excluding legal public holidays, Saturdays, and Sundays) after the
creditor or mortgage servicer receives the debtor's written request
for the accurate payoff amount. A payoff statement provided by a
creditor or mortgage servicer under this subsection must show the
date the statement was prepared and itemize the unpaid principal
balance and each fee, charge, or other sum included within the
payoff amount. A creditor or mortgage servicer who fails to
provide an accurate payoff amount is liable for:
(1) one hundred dollars ($100) if an accurate payoff amount
is not provided by the creditor or mortgage servicer not later
than seven (7) business days (excluding legal public holidays,
Saturdays, and Sundays) after the creditor or mortgage
servicer receives the debtor's first written request; and
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(2) the greater of:
(A) one hundred dollars ($100); or
(B) the loan finance charge that accrues on the first lien
mortgage transaction from the date the creditor or
mortgage servicer receives the first written request until
the date on which the accurate payoff amount is provided;
if an accurate payoff amount is not provided by the creditor
or mortgage servicer not later than seven (7) business days
(excluding legal public holidays, Saturdays, and Sundays)
after the creditor or mortgage servicer receives the debtor's
second written request, and the creditor or mortgage servicer
fails to comply with subdivision (1).
(b) This subsection applies to a first lien mortgage transaction,
or the refinancing or consolidation of a first lien mortgage
transaction, that:
(1) is closed after June 30, 2009; and
(2) has an interest rate that is subject to change at one (1) or
more times during the term of the first lien mortgage
transaction.
A creditor in a transaction to which this subsection applies may not
contract for and may not charge the debtor a prepayment fee or
penalty.
(c) This subsection applies to a first lien mortgage transaction
with respect to which any installment or minimum payment due is
delinquent for at least sixty (60) days. The creditor, servicer, or the
creditor's agent shall acknowledge a written offer made in
connection with a proposed short sale not later than five (5)
business days (excluding legal public holidays, Saturdays, and
Sundays) after the date of the offer if the offer complies with the
requirements for a qualified written request set forth in 12 U.S.C.
2605(e)(1)(B). The creditor, servicer, or creditor's agent is required
to acknowledge a written offer made in connection with a proposed
short sale from a third party acting on behalf of the debtor only if
the debtor has provided written authorization for the creditor,
servicer, or creditor's agent to do so. Not later than thirty (30)
business days (excluding legal public holidays, Saturdays, and
Sundays) after receipt of an offer under this subsection, the
creditor, servicer, or creditor's agent shall respond to the offer
with an acceptance or a rejection of the offer. The thirty (30) day
period described in this subsection may be extended for not more
than fifteen (15) business days (excluding legal public holidays,
Saturdays, and Sundays) if, before the end of the thirty (30) day
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period, the creditor, the servicer, or the creditor's agent notifies the
debtor of the extension and the reason the extension is needed.
Payment accepted by a creditor, servicer, or creditor's agent in
connection with a short sale constitutes payment in full satisfaction
of the first lien mortgage transaction unless the creditor, servicer,
or creditor's agent obtains:
(1) the following statement: "The debtor remains liable for
any amount still owed under the first lien mortgage
transaction."; or
(2) a statement substantially similar to the statement set forth
in subdivision (1);
acknowledged by the initials or signature of the debtor, on or
before the date on which the short sale payment is accepted. As
used in this subsection, "short sale" means a transaction in which
the property that is the subject of a first lien mortgage transaction
is sold for an amount that is less than the amount of the debtor's
outstanding obligation under the first lien mortgage transaction.
A creditor or mortgage servicer that fails to respond to an offer
within the time prescribed by this subsection is liable in accordance
with 12 U.S.C. 2605(f) in any action brought under that section.
(d) This section is not intended to provide the owner of real
estate subject to the issuance of process under a judgment or
decree of foreclosure any protection or defense against a deficiency
judgment for purposes of the borrower protections from liability
that must be disclosed under 12 CFR 1026.38(p)(3) on the form
required by 12 CFR 1026.38 ("Closing Disclosures" form under
the Amendments to the 2013 Integrated Mortgage Disclosures Rule
Under the Real Estate Settlement Procedures Act (Regulation X)
and the Truth In Lending Act (Regulation Z) and the 2013 Loan
Originator Rule Under the Truth in Lending Act (Regulation Z)).
Sec. 2. (a) Except as provided in subsection (b), the creditor
shall comply with disclosure requirements applicable to first lien
mortgage transactions in the Consumer Credit Protection Act (15
U.S.C. 1601 et seq.).
(b) Disclosures are not required if the transaction is exempt
from the Consumer Credit Protection Act (15 U.S.C. 1601 et seq.).
Sec. 3. (a) A violation of a state or federal law, regulation, or
rule applicable to first lien mortgage transactions is a violation of
this article.
(b) The department may enforce penalty provisions set forth in
15 U.S.C. 1640 for violations of disclosure requirements applicable
to first lien mortgage transactions.
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Sec. 4. (a) Unless a person subject to this article has first
obtained a mortgage license from the department and annually
maintains the license, the person shall not engage in Indiana as a
creditor in first lien mortgage transactions. A separate mortgage
license is required for each legal entity that engages in Indiana as
a creditor in first lien mortgage transactions. However, a separate
mortgage license is not required for each branch of a legal entity
licensed by the department.
(b) Each:
(1) creditor licensed by the department to engage in mortgage
transactions; and
(2) person exempt from licensing that:
(A) employs a licensed mortgage loan originator; or
(B) sponsors a licensed mortgage loan originator as
permitted by IC 37-1-1-6(8) or by 750 IAC 9;
shall register with and maintain a valid unique identifier issued by
the NMLSR. Each licensed mortgage loan originator must be
employed by, or sponsored as permitted by IC 37-1-1-6(8) or by
750 IAC 9, and associated with, a licensed creditor (or a person
exempt from licensing) that is registered with the NMLSR.
(c) An individual engaging solely in loan processor or
underwriter activities shall not represent to the public, through
advertising or other means of communicating or providing
information, including the use of business cards, stationery,
brochures, signs, rate lists, or other promotional items, that the
individual can or will perform any of the activities of a mortgage
loan originator. An individual who:
(1) is licensed as a mortgage loan originator under this article
and 750 IAC 9-3; and
(2) is sponsored by a person, as permitted by IC 37-1-1-6(8),
to engage solely as a third party loan processor or
underwriter;
is subject to the prohibition set forth in this subsection with respect
to the individual's engagement under the sponsorship.
(d) An applicant for a mortgage license must apply for the
license in the form prescribed by the director. Each form:
(1) must contain content as set forth by rule, instruction, or
procedure of the director; and
(2) may be changed or updated as necessary by the director to
carry out the purposes of this article.
(e) To fulfill the purposes of this article, the director may
establish relationships or contracts with the NMLSR or other
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entities designated by the NMLSR to:
(1) collect and maintain records; and
(2) process transaction fees or other fees related to licensees
or other persons subject to this article.
(f) For the purpose of participating in the NMLSR, the director
or the department may:
(1) waive or modify, in whole or in part, by rule or order, any
of the requirements of this article; and
(2) establish new requirements as reasonably necessary to
participate in the NMLSR.
Sec. 5. (a) The department shall receive and act on all
applications for licenses to engage in first lien mortgage
transactions. Applications must be made as prescribed by the
director. If, at any time, the information or record contained in:
(1) an application filed under this section; or
(2) a renewal application filed under section 10 of this
chapter;
is or becomes inaccurate or incomplete in a material respect, the
applicant shall promptly file a correcting amendment with the
department.
(b) A license may not be issued unless the department finds that
the professional training and experience, financial responsibility,
character, and fitness of:
(1) the applicant and any significant affiliate of the applicant;
(2) each executive officer, director, or manager of the
applicant, or any other individual having a similar status or
performing a similar function for the applicant; and
(3) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
are such as to warrant belief that the business will be operated
honestly and fairly within the purposes of this article.
(c) The director is entitled to request evidence of compliance
with this section at:
(1) the time of application;
(2) the time of renewal of a license; or
(3) any other time considered necessary by the director.
(d) Evidence of compliance with this section must include:
(1) criminal background checks, as described in section 6 of
this chapter, including a national criminal history background
check (as defined in IC 10-13-3-12) by the Federal Bureau of
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Investigation, for any individual described in subsection (b);
(2) credit histories as described in section 7 of this chapter;
(3) surety bond requirements as described in section 8 of this
chapter;
(4) a review of licensure actions in Indiana and in other states;
and
(5) other background checks considered necessary by the
director.
(e) For purposes of this section and in order to reduce the points
of contact that the director has to maintain for purposes of this
section, the director may use the NMLSR as a channeling agent for
requesting and distributing information to and from any source as
directed by the director.
(f) The department may deny an application under this section
if the director of the department determines that the application
was submitted for the benefit of, or on behalf of, a person who does
not qualify for a license.
(g) Upon written request, the applicant is entitled to a hearing
on the question of the qualifications of the applicant for a license
in the manner provided in IC 4-21.5.
(h) The applicant shall pay the following fees at the time
designated by the department:
(1) An initial license fee as established by the department
under IC 28-11-3-5.
(2) An annual renewal fee as established by the department
under IC 28-11-3-5.
(3) Examination fees as established by the department under
IC 28-11-3-5.
(i) A fee as established by the department under IC 28-11-3-5
may be charged for each day a fee under subsection (h)(2) or (h)(3)
is delinquent.
(j) Except in a transaction approved under section 20 of this
chapter, a license issued under this section is not assignable or
transferable.
(k) If the department of state revenue notifies the department
that a person is on the most recent tax warrant list, the department
shall not issue or renew the person's license until:
(1) the person provides to the department a statement from
the department of state revenue that the person's tax warrant
has been satisfied; or
(2) the department receives a notice from the commissioner of
the department of state revenue under IC 6-8.1-8-2(k).
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Sec. 6. (a) When the director requests a national criminal
history background check under section 5(d)(1) of this chapter for
an individual described in section 5(b) of this chapter, the director
shall require the individual to submit fingerprints to the
department, state police department, or NMLSR, as directed, at
the time evidence of compliance is requested under section 5(c) of
this chapter. The individual to whom the request is made shall pay
any fees or costs associated with processing and evaluating the
fingerprints and the national criminal history background check.
The national criminal history background check may be used by
the director to determine the individual's compliance with this
section. The director or the department may not release the results
of the national criminal history background check to any private
entity.
(b) For purposes of this section and in order to reduce the points
of contact that the Federal Bureau of Investigation may have to
maintain for purposes of this section, the director may use the
NMLSR as a channeling agent for requesting information from
and distributing information to the United States Department of
Justice or any governmental agency.
Sec. 7. (a) If the director requests a credit report for an
individual described in section 5(b) of this chapter, the individual
to whom the request is made shall pay any fees or costs associated
with procuring the report.
(b) The individual must submit personal history and experience
information in a form prescribed by the NMLSR, including the
submission of authorization for the NMLSR or the director to
obtain an independent credit report obtained from a consumer
reporting agency described in Section 603(p) of the Fair Credit
Reporting Act (15 U.S.C. 1681a(p)).
(c) The director may consider one (1) or more of the following
when determining if an individual has demonstrated financial
responsibility:
(1) Bankruptcies filed within the last ten (10) years.
(2) Current outstanding judgments, except judgments solely
as a result of medical expenses.
(3) Current outstanding tax liens or other government liens or
filings.
(4) Foreclosures within the past three (3) years.
(5) A pattern of serious delinquent accounts within the past
three (3) years.
Sec. 8. (a) Each:
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(1) creditor; and
(2) person that is exempt (either under this article or under
IC 37-2) from licensing and that:
(A) employs a licensed mortgage loan originator; or
(B) sponsors a licensed mortgage loan originator as
permitted by IC 37-1-1-6(8) or by 750 IAC 9;
must be covered by a surety bond in accordance with this section.
(b) A surety bond must:
(1) provide coverage for:
(A) a creditor; or
(B) a person that is exempt from licensing and that
employs a licensed mortgage loan originator, or that
sponsors a licensed mortgage loan originator as permitted
by IC 37-1-1-6(8) or by 750 IAC 9;
in an amount as prescribed in subsection (d);
(2) be in a form prescribed by the director;
(3) be in effect:
(A) during the term of the creditor's license; or
(B) at any time during which the person exempt from
licensing employs a licensed mortgage loan originator or
sponsors a licensed mortgage loan originator as permitted
by IC 37-1-1-6(8) or by 750 IAC 9;
as applicable;
(4) subject to subsection (c), remain in effect during the two
(2) years after:
(A) the license of the creditor is surrendered or
terminated; or
(B) the person exempt from licensing ceases to employ a
licensed mortgage loan originator, or ceases to sponsor a
licensed mortgage loan originator as permitted by
IC 37-1-1-6(8) or by 750 IAC 9, or to offer financial
services to individuals in Indiana, whichever is later;
as applicable;
(5) be payable to the department for the benefit of:
(A) the state; and
(B) individuals who reside in Indiana when they agree to
receive financial services from the creditor or the person
exempt from licensing, as applicable;
(6) be issued by a bonding, surety, or insurance company
authorized to do business in Indiana and rated at least "A-"
by at least one (1) nationally recognized investment rating
service; and
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(7) have payment conditioned upon:
(A) the creditor's or any of the creditor's licensed
mortgage loan originators'; or
(B) the exempt person's or any of the exempt person's
licensed mortgage loan originators';
noncompliance with or violation of this chapter, 750 IAC 9, or
other federal or state laws or regulations applicable to
mortgage lending.
(c) The director may adopt rules or guidance documents with
respect to the requirements for a surety bond as necessary to
accomplish the purposes of this article. Upon written request from:
(1) a creditor described in subsection (a)(1); or
(2) an exempt person described in subsection (a)(2);
the director may, at the discretion of the director, waive or shorten
the two (2) year period set forth in subsection (b)(4) during which
a surety bond required by this section must remain in effect after
the occurrence of an event described in subsection (b)(4)(A) or
(b)(4)(B), as applicable.
(d) The penal sum of the surety bond shall be maintained in an
amount that reflects the dollar amount of mortgage transactions
originated as determined by the director. If the principal amount
of a surety bond required under this section is reduced by payment
of a claim or judgment, the creditor or exempt person for whom
the bond is issued shall immediately notify the director of the
reduction and, not later than thirty (30) days after notice by the
director, file a new or an additional surety bond in an amount set
by the director. The amount of the new or additional bond set by
the director must be at least the amount of the bond before
payment of the claim or judgment.
(e) If for any reason a surety terminates a bond issued under
this section, the creditor or the exempt person shall immediately
notify the department and file a new surety bond in an amount
determined by the director.
(f) Cancellation of a surety bond issued under this section does
not affect any liability incurred or accrued during the period when
the surety bond was in effect.
(g) The director may obtain satisfaction from a surety bond
issued under this section if the director incurs expenses, issues a
final order, or recovers a final judgment under this chapter.
(h) Notices required under this section must be made in writing
and submitted through the NMLSR or any other electronic
registration system that may be approved by the director.
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Sec. 9. (a) Subject to subsection (f), the director shall designate
the NMLSR to serve as the sole entity responsible for:
(1) processing applications and renewals for mortgage
licenses;
(2) issuing unique identifiers for licensees and persons exempt
from licensing that employ or sponsor a licensed mortgage
loan originator under this article; and
(3) performing other services that the director determines are
necessary for the orderly administration of the department's
mortgage licensing system.
(b) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director may
regularly report significant or recurring violations of this article
to the NMLSR.
(c) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director may report
complaints received regarding mortgage licensees to the NMLSR.
(d) The director may report publicly adjudicated licensure
actions against a licensee to the NMLSR.
(e) The director shall establish a process in which licensees may
challenge information reported to the NMLSR by the department.
(f) The director's authority to designate the NMLSR under
subsection (a) is subject to the following:
(1) Information stored in the NMLSR is subject to the
confidentiality provisions of IC 5-14-3 and IC 28-1-2-30. A
person may not:
(A) obtain information from the NMLSR, unless the
person is authorized to do so by statute;
(B) initiate any civil action based on information obtained
from the NMLSR if the information is not otherwise
available to the person under any other state law; or
(C) initiate any civil action based on information obtained
from the NMLSR if the person could not have initiated the
action based on information otherwise available to the
person under any other state law.
(2) Documents, materials, and other forms of information in
the control or possession of the NMLSR that are confidential
under IC 28-1-2-30 and that are:
(A) furnished by the director, the director's designee, or a
licensee; or
(B) otherwise obtained by the NMLSR;
are confidential and privileged by law and are not subject to
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inspection under IC 5-14-3, subject to subpoena, subject to
discovery, or admissible in evidence in any civil action.
However, the director may use the documents, materials, or
other information available to the director in furtherance of
any action brought in connection with the director's duties
under this article.
(3) Disclosure of documents, materials, and information:
(A) to the director; or
(B) by the director;
under this subsection does not result in a waiver of any
applicable privilege or claim of confidentiality with respect to
the documents, materials, or information.
(4) Information provided to the NMLSR is subject to
IC 4-1-11.
(5) This subsection does not limit or impair a person's right
to:
(A) obtain information;
(B) use information as evidence in a civil action or
proceeding; or
(C) use information to initiate a civil action or proceeding;
if the information may be obtained from the director or the
director's designee under any law.
(6) Except as otherwise provided in the federal Housing and
Economic Recovery Act of 2008 (Public Law 110-289, Section
1512), the requirements under any federal law or IC 5-14-3
regarding the privacy or confidentiality of any information or
material provided to the NMLSR, and any privilege arising
under federal or state law, including the rules of any federal
or state court, with respect to the information or material,
continue to apply to the information or material after the
information or material has been disclosed to the NMLSR.
The information and material may be shared with all state
and federal regulatory officials with mortgage industry
oversight authority without the loss of privilege or the loss of
confidentiality protections provided by federal law or
IC 5-14-3.
(7) For purposes of this section, the director may enter
agreements or sharing arrangements with other governmental
agencies, the Conference of State Bank Supervisors, the
American Association of Residential Mortgage Regulators, or
other associations representing governmental agencies, as
established by rule or order of the director.
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(8) Information or material that is subject to a privilege or
confidentiality under subdivision (6) is not subject to:
(A) disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or
an agency of the federal government or the respective
state; or
(B) subpoena, discovery, or admission into evidence in any
private civil action or administrative process, unless with
respect to any privilege held by the NMLSR with respect
to the information or material, the person to whom the
information or material pertains waives, in whole or in
part, in the discretion of the person, that privilege.
(9) Any provision of IC 5-14-3 that concerns the disclosure of:
(A) confidential supervisory information; or
(B) any information or material described in subdivision
(6);
and that is inconsistent with subdivision (6) is superseded by
this section.
(10) This section does not apply with respect to information or
material that concerns the employment history of, and
publicly adjudicated disciplinary and enforcement actions
against, a person described in section 5(b) of this chapter and
that is included in the NMLSR for access by the public.
(11) The director may require a licensee required to submit
information to the NMLSR to pay a processing fee considered
reasonable by the director. In determining whether an
NMLSR processing fee is reasonable, the director shall:
(A) require review of; and
(B) make available;
the audited financial statements of the NMLSR.
(g) Notwithstanding any other provision of law, any:
(1) application, renewal, or other form or document that:
(A) relates to mortgage licenses issued by the department;
and
(B) is made or produced in an electronic format;
(2) document filed as an electronic record in a multistate
automated repository established and operated for the
licensing or registration of mortgage lenders, brokers, or loan
originators; or
(3) electronic record filed through the NMLSR;
is considered a valid original document when reproduced in paper
form by the department.
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Sec. 10. (a) A mortgage license issued by the department must
be renewed through the NMLSR not later than December 31 of
each calendar year. The minimum standards for license renewal
for a creditor include the following:
(1) The creditor has continued to meet the surety bond
requirement under section 8 of this chapter.
(2) The creditor has filed the creditor's call report in a
manner that satisfies section 19(d) of this chapter.
(3) The creditor has paid all required fees for renewal of the
license.
(4) The creditor and individuals described in section 5(b) of
this chapter have certified to the department that they
continue to meet all the standards for licensing contained in
section 5 of this chapter.
(5) The creditor has provided in the creditor's renewal
application:
(A) any information describing material changes in the
information contained in the creditor's original application
for licensure, or in any previous application, including any
previous renewal application; and
(B) any other information the director requires in order to
evaluate the renewal of the license.
(b) A license issued by the department authorizing a person to
engage in first lien mortgage transactions as a creditor under this
article may be revoked or suspended by the department if the
person fails to:
(1) file any renewal form required by the department; or
(2) pay any license renewal fee described under section 5 of
this chapter;
not later than sixty (60) days after the due date.
(c) A person whose license is revoked or suspended under this
section may do either of the following:
(1) Pay all delinquent fees and apply for reinstatement of the
license.
(2) Appeal the revocation or suspension to the department for
an administrative review under IC 4-21.5-3. Pending the
decision resulting from the hearing under IC 4-21.5-3
concerning the license revocation or suspension, the license
remains in force.
(d) If, at any time, the information or record contained in:
(1) an original application for licensure filed under section 5
of this chapter; or
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(2) a renewal application filed under this section;
is or becomes inaccurate or incomplete in a material respect, the
applicant shall promptly file a correcting amendment with the
department.
Sec. 11. (a) The department may issue to a person licensed as a
creditor to engage in first lien mortgage transactions an order to
show cause why the person's license should not be revoked or
suspended for a period determined by the department.
(b) An order issued under subsection (a) must:
(1) include:
(A) a statement of the place, date, and time for a meeting
with the department, which date may not be less than ten
(10) days from the date of the order;
(B) a description of the action contemplated by the
department; and
(C) a statement of the facts or conduct supporting the
issuance of the order; and
(2) be accompanied by a notice stating that the licensee is
entitled to:
(A) a reasonable opportunity to be heard; and
(B) show the licensee's compliance with all lawful
requirements for retention of the license;
at the meeting described in subdivision (1)(A).
(c) After the meeting described in subsection (b)(1)(A), the
department may revoke or suspend the license if the department
finds that:
(1) the licensee has repeatedly and willfully violated:
(A) this article or any applicable rule, order, or guidance
document adopted or issued by the department; or
(B) any other state or federal law, regulation, or rule
applicable to first lien mortgage transactions;
(2) the licensee does not meet the licensing qualifications
contained in section 5 of this chapter;
(3) the licensee obtained the license for the benefit of, or on
behalf of, another person;
(4) the licensee knowingly or intentionally made material
misrepresentations to, or concealed material information
from, the department; or
(5) facts or conditions exist that, had they existed at the time
the licensee applied for the license, would have been grounds
for the department to deny the issuance of the license.
(d) Whenever the department revokes or suspends a license, the
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department shall enter an order to that effect and notify the
licensee of:
(1) the revocation or suspension;
(2) if a suspension has been ordered, the duration of the
suspension;
(3) the procedure for appealing the revocation or suspension
under IC 4-21.5-3-6; and
(4) any other terms and conditions that apply to the
revocation or suspension.
Not later than five (5) days after the entry of the order, the
department shall deliver to the licensee a copy of the order and the
findings supporting the order.
(e) Any person holding a license as a creditor to engage in first
lien mortgage transactions may relinquish the license by notifying
the department in writing of the relinquishment. However, a
relinquishment under this subsection does not affect the person's
liability for acts previously committed and coming within the scope
of this article.
(f) If the director determines it to be in the public interest, the
director may pursue revocation of a license of a licensee that has
relinquished the license under subsection (e).
(g) If a person's license is revoked, suspended, or relinquished,
the revocation, suspension, or relinquishment does not impair or
affect any obligation owed by any person under any preexisting
lawful contract.
(h) If the director has just cause to believe an emergency exists
from which it is necessary to protect the interests of the public, the
director may proceed with the revocation of a license through an
emergency or another temporary order under IC 4-21.5-4.
Sec. 12. (a) If the director determines that a current or former
director, an officer, or a manager of a creditor:
(1) has committed a violation of a statute, a rule, a final cease
and desist order, any condition imposed in writing by the
director in connection with the granting of any application or
other request by the creditor, or any written agreement
between the creditor and the director or the department;
(2) has committed fraudulent or unconscionable conduct; or
(3) has been convicted of a felony under the laws of Indiana or
any other jurisdiction;
the director, subject to subsection (b), may issue and serve upon
the officer, director, or manager a notice of the director's intent to
issue an order removing the person from the person's office or
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employment, an order prohibiting any participation by the person
in the conduct of the affairs of any creditor, or an order both
removing the person and prohibiting the person's participation.
(b) A violation, practice, or breach specified in subsection (a) is
subject to the authority of the director under subsections (a) and
(c) if the director finds any of the following:
(1) The interests of the creditor's customers could be seriously
prejudiced by reason of the violation or practice.
(2) The violation, practice, or breach involves an act of fraud,
dishonesty, theft, breach of trust, money laundering, or the
wrongful taking of property on the part of the officer,
director, or manager involved.
(3) The violation, practice, or breach demonstrates a willful
or continuing disregard by the officer, director, or manager
for state and federal laws and regulations, and for the
consumer protections contained in this article.
(c) A person who has been convicted of a felony under the laws
of Indiana or any other jurisdiction may not serve as an officer, a
director, or a manager of a creditor, or serve in any similar
capacity, unless the person obtains the written consent of the
director.
(d) A creditor that willfully permits a person to serve the
creditor in violation of subsection (c) is subject to a civil penalty of
five hundred dollars ($500) for each day the violation continues.
(e) A creditor shall give the department written notice of the
resignation, discharge, or termination of an employee, independent
contractor, or agent against whom allegations were made that
accused the employee, independent contractor, or agent of:
(1) violating this article or other laws, regulations, rules, or
industry standards of conduct applicable to first lien
mortgage transactions; or
(2) fraud, dishonesty, theft, breach of trust, money
laundering, or the wrongful taking of property.
The creditor shall provide the department the notice required
under this subsection not later than thirty (30) days after the
effective date of the resignation, discharge, or termination.
Sec. 13. (a) A notice issued under this chapter must:
(1) be in writing;
(2) contain a statement of the facts constituting the alleged
practice, violation, or breach;
(3) state the facts alleged in support of the violation, practice,
or breach;
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(4) state the director's intention to enter an order under
section 15(a) of this chapter;
(5) be delivered to the board of directors of the creditor;
(6) be delivered to the officer, director, or manager
concerned;
(7) specify the procedures that must be followed to initiate a
hearing to contest the facts alleged; and
(8) if the director suspends or prohibits an officer, a director,
or a manager of the creditor from participating in the affairs
of the creditor, as described in subsection (e), include a
statement of the suspension or prohibition.
(b) If a hearing is requested not later than ten (10) days after
service of the written notice, the department shall hold a hearing
concerning the alleged practice, violation, or breach. The hearing
shall be held not later than forty-five (45) days after receipt of the
request. The department, based on the evidence presented at the
hearing, shall enter a final order under section 15 of this chapter.
(c) If no hearing is requested within the time specified in
subsection (b), the director may proceed to issue a final order
under section 15 of this chapter on the basis of the facts set forth in
the written notice.
(d) An officer, a director, or a manager who is removed from a
position under a removal order that has become final may not
participate in the conduct of the affairs of any mortgage licensee
without the approval of the director.
(e) The director may, for the protection of the creditor or the
interests of its customers, suspend from office or prohibit from
participation in the affairs of the creditor an officer, a director, or
a manager of a creditor who is the subject of a written notice
served by the director under section 12(a) of this chapter. A
suspension or prohibition under this subsection becomes effective
upon service of the notice under section 12(a) of this chapter.
Unless stayed by a court in a proceeding authorized by subsection
(f), the suspension or prohibition remains in effect pending
completion of the proceedings related to the notice served under
section 12(a) of this chapter and until the effective date of an order
entered by the department under subsection (b) or the director
under subsection (c). Copies of the notice shall also be served upon
the creditor or affiliate of which the person is an officer, a director,
or a manager.
(f) Not more than fifteen (15) days after an officer, a director, or
a manager has been suspended from office or prohibited from
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participation in the conduct of the affairs of the creditor or affiliate
under subsection (e), the officer, director, or manager may apply
to a court having jurisdiction for a stay of the suspension or
prohibition pending completion of the proceedings related to the
written notice served under section 12(a) of this chapter, and the
court may stay the suspension or prohibition.
(g) The department shall maintain an official record of a
proceeding under this chapter.
Sec. 14. If the director enters into a consent to a final order
under section 15 of this chapter with a creditor, a director, an
officer, or a manager, the director is not required to issue and
serve a notice of charges upon the creditor, director, officer, or
manager under section 12 of this chapter. A consent agreement
may be negotiated and entered into before or after the issuance of
a notice of charges. The director shall provide a copy of the consent
order to the board of directors of the creditor.
Sec. 15. (a) If, after a hearing described in section 13(b) of this
chapter, the department finds that the conditions specified in
section 12 of this chapter have been established, the department
may issue a final order. If a hearing is not requested within the
time specified in section 13(b) of this chapter, the director may
issue a final order on the basis of the facts set forth in the written
notice served under section 12(a) of this chapter.
(b) Unless the director has entered into a consent agreement
described in section 14 of this chapter, a final order must include
separately stated findings of fact and conclusions of law for all
aspects of the order.
(c) In a final order under this section, the department or the
director, as appropriate, may order one (1) or more of the
following with respect to an officer, a director, or a manager of a
creditor:
(1) The removal of the officer, director, or manager from the
person's office, position, or employment.
(2) A prohibition against any participation by the officer,
director, or manager in the conduct of the affairs of any
creditor.
(3) If the subject of the order is an officer or a director of a
creditor, and subject to section 17 of this chapter, the
imposition of a civil penalty not to exceed fifteen thousand
dollars ($15,000) for each practice, violation, or act that:
(A) is described in section 12 of this chapter; and
(B) is found to exist by the department or the director.
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(d) A final order shall be issued in writing not later than ninety
(90) days after conclusion of a hearing held under section 13(b) of
this chapter, unless this period is waived or extended with the
written consent of all parties or for good cause shown.
(e) If the officer, director, or manager does not appear
individually or by an authorized representative at a hearing held
under section 13(b) of this chapter, the officer, director, or
manager is considered to have consented to the issuance of a final
order.
(f) The remedies provided in this chapter are in addition to
other remedies contained in this article.
Sec. 16. (a) A final order issued under this chapter is effective on
the eleventh day after service of the order. However, a final order
issued upon consent under section 14 of this chapter is effective at
the time specified in the order.
(b) A final order remains effective and enforceable as provided
in the order.
(c) The department or a reviewing court may stay, modify, or
vacate a final order.
Sec. 17. (a) The director or the department, as appropriate, shall
consider the following factors in determining the amount of a civil
penalty that should be assessed against a director or an officer in
a final order issued under section 15(c)(3) of this chapter:
(1) The appropriateness of the civil penalty with respect to the
financial resources and good faith of the individual charged.
(2) The gravity of the practice, violation, or act.
(3) The history of previous practices, violations, or acts.
(4) The economic benefit derived by the individual from the
practice, violation, or act.
(5) Other factors that justice requires.
(b) A creditor may not indemnify a director or an officer for a
civil penalty imposed in a final order under section 15(c)(3) of this
chapter.
(c) Civil penalties shall be deposited in the financial institutions
fund established by IC 28-11-2-9.
Sec. 18. The director may enforce any of the following by
applying for appropriate relief to a court having jurisdiction:
(1) An order issued under this chapter.
(2) A written agreement entered into by the department or the
director and any director, officer, or employee of a creditor.
(3) Any condition imposed in writing by the department or the
director on any director, officer, or employee of a creditor.
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Sec. 19. (a) Every licensee shall maintain records in a manner
that will enable the department to determine whether the licensee
is complying with this article. The record keeping system of a
licensee is sufficient if the licensee makes the required information
reasonably available. The department shall determine the
sufficiency of the records and whether the licensee has made the
required information reasonably available. The department shall
be given free access to the records wherever the records are
located. Records concerning any first lien mortgage transaction
shall be retained for two (2) years after the making of the final
entry relating to the transaction, but in the case of a revolving first
lien mortgage transaction, the two (2) years required under this
subsection is measured from the date of each entry relating to the
transaction. A person that voluntarily registers with the
department under IC 37-1-1-6(8) for the purpose of sponsoring
licensed mortgage loan originators shall:
(1) cooperate with the department; and
(2) provide access to records and documents;
as required by the department in carrying out examinations of the
activities of the licensed mortgage loan originators sponsored by
the person.
(b) The unique identifier of any person originating a mortgage
transaction must be clearly shown on all mortgage transaction
application forms and any other documents as required by the
director.
(c) Every licensee shall use automated examination and
regulatory software designated by the director, including third
party software. Use of the software consistent with guidance and
policies issued by the director is not a violation of IC 28-1-2-30.
(d) Each:
(1) creditor licensed to engage in mortgage transactions by the
department; and
(2) person that is exempt from licensing and that:
(A) employs one (1) or more licensed mortgage loan
originators; or
(B) sponsors one (1) or more licensed mortgage loan
originators as permitted by IC 37-1-1-6(8) or by 750
IAC 9;
shall submit to the NMLSR reports of condition, which must be in
a form and must contain information as required by the NMLSR.
(e) Each:
(1) creditor licensed by the department to engage in mortgage
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transactions; and
(2) person that is exempt from licensing and that:
(A) employs one (1) or more licensed mortgage loan
originators; or
(B) sponsors one (1) or more licensed mortgage loan
originators as permitted by IC 37-1-1-6(8) or by 750
IAC 9;
shall file with the department additional financial statements
relating to all first lien mortgage transactions originated by the
licensed creditor or the exempt person as required by the
department, but not more frequently than annually, in the form
prescribed by the department.
(f) A licensed creditor shall file notification with the department
if the licensee:
(1) has a change in name, address, or any of its principals;
(2) opens a new branch, closes an existing branch, or relocates
an existing branch;
(3) files for bankruptcy or reorganization; or
(4) is subject to revocation or suspension proceedings by a
state or governmental authority with regard to the licensed
creditor's activities;
not later than thirty (30) days after the date of the event described
in this subsection.
(g) A licensee shall file notification with the department if the
licensee or any director, executive officer, or manager of the
licensee has been convicted of a felony under the laws of Indiana or
any other jurisdiction. The licensee shall file the notification
required by this subsection not later than thirty (30) days after the
date of the event described in this subsection.
(h) A licensee shall file notification with the department if the
licensee or any director, executive officer, or manager of the
licensee has had the person's authority to do business in the
securities, commodities, banking, financial services, insurance, real
estate, or real estate appraisal industry revoked or suspended by
Indiana or by any other state, federal, or foreign governmental
agency or self-regulatory organization. The licensee shall file the
notification required by this subsection not later than thirty (30)
days after the date of the event described in this subsection.
Sec. 20. (a) As used in this section, "control" means possession
of the power directly or indirectly to:
(1) direct or cause the direction of the management or policies
of a creditor, whether through the beneficial ownership of
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voting securities, by contract, or otherwise; or
(2) vote at least twenty-five percent (25%) of the voting
securities of a creditor, whether the voting rights are derived
through the beneficial ownership of voting securities, by
contract, or otherwise.
(b) An organization or an individual acting directly, indirectly,
or through or in concert with one (1) or more other organizations
or individuals may not acquire control of any creditor unless the
department has received and approved an application for change
in control. The department has not more than one hundred twenty
(120) days after receipt of an application to issue a notice
approving the proposed change in control. The application must
contain the name and address of the organization, individual, or
individuals who propose to acquire control and any other
information required by the director.
(c) The period for approval under subsection (b) may be
extended:
(1) in the discretion of the director for an additional thirty
(30) days; and
(2) not more than two (2) additional times for not more than
forty-five (45) days each time if:
(A) the director determines that the organization,
individual, or individuals who propose to acquire control
have not submitted substantial evidence of the
qualifications described in subsection (d);
(B) the director determines that any material information
submitted is substantially inaccurate; or
(C) the director has been unable to complete the
investigation of the organization, individual, or individuals
who propose to acquire control because of any delay
caused by or the inadequate cooperation of the
organization, individual, or individuals.
(d) The department shall issue a notice approving the
application only after it is satisfied that both of the following apply:
(1) The organization, individual, or individuals who propose
to acquire control are qualified by competence, experience,
character, and financial responsibility to control and operate
the creditor in a legal and proper manner.
(2) The interests of the owners and creditors of the creditor
and the interests of the public generally will not be
jeopardized by the proposed change in control.
(e) The director may determine, in the director's discretion, that
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subsection (b) does not apply to a transaction if the director
determines that the direct or beneficial ownership of the creditor
will not change as a result of the transaction.
(f) The president or other chief executive officer of a creditor
shall report to the director any transfer or sale of securities of the
creditor that results in direct or indirect ownership by a holder or
an affiliated group of holders of at least ten percent (10%) of the
outstanding securities of the creditor. The report required by this
subsection must be made not later than ten (10) days after the
transfer of the securities on the books of the creditor.
(g) Depending on the circumstances of the transaction, the
director may reserve the right to require the organization,
individual, or individuals who propose to acquire control of a
creditor licensed by the department to engage in mortgage
transactions, to apply for a new license under section 4 of this
chapter, instead of acquiring control of the licensee under this
section.
Sec. 21. A creditor in a first lien mortgage transaction shall
comply with IC 6-1.1-12-43, to the extent applicable.
Sec. 22. (a) A violation by a creditor in a first lien mortgage
transaction of Section 125 of the Consumer Credit Protection Act
(15 U.S.C. 1635) (concerning a debtor's right to rescind a
transaction) constitutes a violation of this article. A creditor may
not accrue interest during the period when a first lien mortgage
transaction may be rescinded under Section 125 of the Consumer
Credit Protection Act (15 U.S.C. 1635).
(b) A creditor must make available for disbursement the
proceeds of a transaction subject to subsection (a) on the later of:
(1) the date the creditor is reasonably satisfied that the debtor
has not rescinded the transaction; or
(2) the first business day after the expiration of the rescission
period under subsection (a).
Sec. 23. A creditor in a first lien mortgage transaction that:
(1) qualifies as a home equity conversion mortgage under the
Federal Housing Administration's program; or
(2) otherwise constitutes a reverse mortgage;
shall provide the debtor with a pamphlet that is approved by the
department and that describes the availability of reverse mortgage
counseling services provided by housing counselors approved by
the Secretary of the United States Department of Housing and
Urban Development, as provided in 24 CFR 206.41(a). The debtor
must receive the counseling described in this section and present
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the creditor with the certificate described in 24 CFR 206.41(c)
before the creditor may make a first lien mortgage transaction
described in this section to the debtor.
Chapter 4. Administration
Sec. 1. This chapter applies to a person that engages as a
creditor in first lien mortgage transactions in Indiana. The
authority of this chapter remains in effect, whether a licensee,
individual, or person subject to this article acts or claims to act
under any licensing or registration law of Indiana or claims to act
without such authority.
Sec. 2. (a) In addition to other powers granted by this article,
the department within the limitations provided by law may:
(1) receive and act on complaints, take action designed to
obtain voluntary compliance with this article, or commence
proceedings on the department's own initiative;
(2) counsel persons and groups on their rights and duties
under this article;
(3) establish programs for the education of consumers with
respect to credit practices and problems;
(4) make studies appropriate to effectuate the purposes and
policies of this article and make the results available to the
public;
(5) adopt, amend, and repeal rules, orders, policies, and forms
to carry out the provisions of this article;
(6) maintain more than one (1) office within Indiana; and
(7) appoint any necessary attorneys, hearing examiners,
clerks, and other employees and agents and fix their
compensation, and authorize attorneys appointed under this
section to appear for and represent the department in court.
(b) Liability may not be imposed under this article for an act
done or omitted in conformity with a rule, written notice, written
opinion, written interpretation, or written directive of the
department notwithstanding the fact that after the act is done or
omitted the rule, written notice, written opinion, written
interpretation, or written directive may be:
(1) amended or repealed; or
(2) determined by judicial or other authority to be invalid;
for any reason.
Sec. 3. (a) In administering this article and in order to determine
whether the provisions of this article are being complied with by
persons engaging in acts subject to this article, the department may
examine the records of persons and may make investigations of
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persons as may be necessary to determine compliance. Records
subject to examination under this section include the following:
(1) Training, operating, and policy manuals.
(2) Minutes of:
(A) management meetings; and
(B) other meetings.
(3) Financial records, credit files, and data bases.
(4) Other records that the department determines are
necessary to perform its investigation or examination.
The department may also administer oaths or affirmations,
subpoena witnesses, and compel the attendance of witnesses,
including officers, principals, mortgage loan originators,
employees, independent contractors, agents, and customers of
licensees, and other individuals or persons subject to this article.
The department may also adduce evidence and require the
production of any matter that is relevant to an investigation. The
department shall determine the sufficiency of the records
maintained and whether the person has made the required
information reasonably available. The records concerning any
transaction subject to this article shall be retained for two (2) years
after the making of the final entry relating to the first lien
mortgage transaction, but in the case of a revolving first lien
mortgage transaction the two (2) year period is measured from the
date of each entry.
(b) The department's examination and investigatory authority
under this article includes the following:
(1) The authority to require a creditor to refund overcharges
resulting from the creditor's noncompliance with the terms of
a first lien mortgage transaction.
(2) The authority to require a creditor to comply with the
penalty provisions set forth in IC 37-1-3-1.
(3) The authority to investigate complaints filed with the
department by debtors.
(c) The department shall be given free access to the records
wherever the records are located. In making any examination or
investigation authorized by this article, the director may control
access to any documents and records of the licensee or person
under examination or investigation. The director may take
possession of the documents and records or place a person in
exclusive charge of the documents and records in the place where
the documents are usually kept. During the period of control, a
licensee or person may not remove or attempt to remove any of the
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documents and records except under a court order or with the
consent of the director. Unless the director has reasonable grounds
to believe the documents or records of the licensee or person have
been, or are, at risk of being altered or destroyed for purposes of
concealing a violation of this article, the licensee or person shall
have access to the documents or records as necessary to conduct
the licensee's or person's ordinary business affairs. If the person's
records are located outside Indiana, the records shall be made
available to the department at a convenient location within
Indiana, or the person shall pay the reasonable and necessary
expenses for the department or the department's representative to
examine the records where they are maintained. The department
may designate comparable officials of the state in which the
records are located to inspect the records on behalf of the
department.
(d) Upon a person's failure without lawful excuse to obey a
subpoena or to give testimony and upon reasonable notice by the
department to all affected persons, the department may apply to
any civil court with jurisdiction for an order compelling
compliance.
(e) The department shall not make public:
(1) the name or identity of a person whose acts or conduct the
department investigates under this section; or
(2) the facts discovered in the investigation.
However, this subsection does not apply to civil actions or
enforcement proceedings under this article.
(f) To discover violations of this article or to secure information
necessary for the enforcement of this article, the department may
investigate any:
(1) licensee; or
(2) person that the department suspects to be operating:
(A) without a license, when a license is required under this
article; or
(B) otherwise in violation of this article.
The department has all investigatory and enforcement authority
under this article that the department has under IC 28-11 with
respect to financial institutions. If the department conducts an
investigation under this section, the licensee or other person
investigated shall pay all reasonably incurred costs of the
investigation in accordance with the fee schedule adopted under
IC 28-11-3-5. Any costs required to be paid under this section shall
be paid not later than sixty (60) days after the person being
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assessed the costs receives a notice from the department of the
costs assessed. The department may impose a fee, in an amount
fixed by the department under IC 28-11-3-5, for each day the
assessed costs are not paid, beginning on the first day after the
sixty (60) day period described in this subsection.
(g) If a creditor contracts with an outside vendor to provide a
service that would otherwise be undertaken internally by the
creditor and be subject to the department's routine examination
procedures, the person that provides the service to the creditor
shall, at the request of the director, submit to an examination by
the department. If the director determines that an examination
under this subsection is necessary or desirable, the examination
may be made at the expense of the person to be examined. If the
person to be examined under this subsection refuses to permit the
examination to be made, the director may order any creditor that
is licensed by the department to engage in mortgage transactions
and that receives services from the person refusing the
examination to:
(1) discontinue receiving one (1) or more services from the
person; or
(2) otherwise cease conducting business with the person.
Sec. 4. To carry out the purposes of this article, the director
may:
(1) retain attorneys, accountants, or other professionals and
specialists as examiners, auditors, or investigators to conduct
or assist in the conduct of examinations or investigations;
(2) enter into agreements or relationships with other
government officials or regulatory associations in order to
improve efficiencies and reduce regulatory burden by
sharing:
(A) resources;
(B) standardized or uniform methods or procedures; and
(C) documents, records, information, or evidence obtained
under this section;
(3) use, hire, contract, or employ public or privately available
analytical systems, methods, or software to examine or
investigate a licensee, an individual, or a person subject to this
article;
(4) accept and rely on examination or investigation reports
made by other government officials within or outside Indiana;
and
(5) accept audit reports made by an independent certified
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public accountant for the licensee, individual, or person
subject to this article in the course of that part of the
examination covering the same general subject matter as the
audit and may incorporate the audit report in the report of
the examination, report of investigation, or other writing of
the director.
Sec. 5. It is a violation of this article for a person or individual
subject to this article to:
(1) directly or indirectly employ any scheme, device, or
artifice to defraud or mislead borrowers or lenders or to
defraud any person;
(2) engage in any unfair or deceptive practice toward any
person;
(3) obtain property by fraud or misrepresentation;
(4) solicit or enter into a contract with a borrower that
provides in substance that the person or individual subject to
this article may earn a fee or commission through "best
efforts" to obtain a loan even though no loan is actually
obtained for the borrower;
(5) solicit, advertise, or enter into a contract for specific
interest rates, points, or other financing terms unless the
terms are actually available at the time of soliciting,
advertising, or contracting;
(6) conduct any business covered by this article without
holding a valid license as required under this article, or assist
or aid and abet any person in the conduct of business under
this article without a valid license as required under this
article;
(7) fail to make disclosures as required by this article or
regulation adopted under this article and any other applicable
state or federal law regulation;
(8) fail to comply with this article or rules adopted under this
article, or fail to comply with any other state or federal law,
rule, or regulation, applicable to any business authorized or
conducted under this article;
(9) make, in any manner, any false or deceptive statement or
representation, with regard to the rates, points, or other
financing terms or conditions for a mortgage transaction, or
engage in bait and switch advertising;
(10) negligently make any false statement or knowingly and
willfully make any omission of material fact in connection
with any information or reports filed with a governmental
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agency or the NMLSR or in connection with any investigation
conducted by the director or another governmental agency;
(11) make any payment, threat, or promise, directly or
indirectly, to any person for the purposes of influencing the
independent judgment of the person in connection with a
mortgage transaction, or make any payment, threat, or
promise, directly or indirectly, to any appraiser of a property,
for the purposes of influencing the independent judgment of
the appraiser with respect to the value of the property;
(12) collect, charge, attempt to collect or charge, or use or
propose any agreement purporting to collect or charge any
fee prohibited by this article;
(13) cause or require a borrower to obtain property insurance
coverage in an amount that exceeds the replacement cost of
the improvements as established by the property insurer;
(14) fail to account truthfully for money belonging to a party
to a mortgage transaction; or
(15) knowingly withhold, abstract, remove, mutilate, destroy,
or secrete any books, records, computer records, or other
information subject to examination under this article.
Sec. 6. Except as otherwise provided, IC 4-21.5-3 governs any
action taken by the department under this chapter or IC 37-1-3-4
through IC 37-1-3-19. IC 4-22-2 applies to the adoption of rules by
the department under this article. All proceedings for
administrative review under IC 4-21.5-3 or judicial review under
IC 4-21.5-5 shall be held in Marion County.
Sec. 7. (a) After notice and hearing, the department may order
a creditor or a person acting on behalf of the creditor to cease and
desist from engaging in violations of this article. In any civil court
with jurisdiction:
(1) a respondent aggrieved by an order of the department
may obtain judicial review of the order; and
(2) the department may obtain an order of the court for the
enforcement of the department's order.
A proceeding for review or enforcement under this subsection shall
be initiated by the filing of a petition in the court. Copies of the
petition shall be served upon all parties of record.
(b) Not later than thirty (30) days after service of a petition for
review upon the department under subsection (a), or within such
further time as the court may allow, the department shall transmit
to the court the original or a certified copy of the entire record
upon which the order that is the subject of the review is based,
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including any transcript of testimony, which need not be printed.
By stipulation of all parties to the review proceeding, the record
may be shortened. After conducting a hearing on the matter, the
court may:
(1) reverse or modify the order if the findings of fact of the
department are clearly erroneous in view of the reliable,
probative, and substantial evidence in the whole record;
(2) grant any temporary relief or restraining order the court
considers just; and
(3) enter an order:
(A) enforcing;
(B) modifying;
(C) enforcing as modified; or
(D) setting aside;
in whole or in part, the order of the department; or
(4) enter an order remanding the case to the department for
further proceedings.
(c) An objection not urged at the hearing shall not be considered
by the court unless the failure to urge the objection is excused for
good cause shown. A party may move the court to remand the case
to the department in the interest of justice for the purpose of:
(1) adducing additional specified and material evidence; and
(2) seeking a finding upon such evidence;
upon good cause shown for the failure to previously adduce this
evidence before the department.
(d) The jurisdiction of the court is exclusive and the court's final
judgment or decree is subject to review on appeal in the same
manner and form and with the same effect as in appeals from a
final judgment or decree. The department's copy of the testimony
shall be available at reasonable times to all parties for examination
without cost.
(e) A proceeding for review under this section must be initiated
not later than thirty (30) days after a copy of the order of the
department is received. If a proceeding is not initiated within the
time set forth in this subsection, the department may obtain a
decree of a civil court with jurisdiction for enforcement of the
department's order upon a showing that:
(1) the order was issued in compliance with this section;
(2) a proceeding for review was not initiated within the thirty
(30) day period prescribed by this subsection; and
(3) the respondent is subject to the jurisdiction of the court.
(f) With respect to unconscionable agreements or fraudulent or
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unconscionable conduct by a respondent, the department may not
issue an order under this section but may bring a civil action for an
injunction under section 12 of this chapter.
Sec. 8. If it is claimed that a person has engaged in conduct
subject to an order by:
(1) the department under section 7(a) of this chapter; or
(2) a court under sections 9 through 11 of this chapter;
the department may accept an assurance in writing that the person
will not engage in the conduct in the future. If a person giving an
assurance of discontinuance fails to comply with the terms of the
assurance, the assurance is evidence that before the assurance was
issued the person engaged in the conduct described in the
assurance.
Sec. 9. The department may bring a civil action to restrain a
person from violating this article or other state or federal law, rule,
or regulation and for other appropriate relief.
Sec. 10. (a) As used in this section, "deceptive act" means an act
or a practice in which a person knowingly or intentionally:
(1) makes a material misrepresentation concerning; or
(2) conceals material information regarding the terms or
conditions of;
a first lien mortgage transaction.
(b) For purposes of this section, "knowingly" means having
actual knowledge at the time of the transaction.
(c) The department may bring a civil action to enjoin a
deceptive act performed in connection with a first lien mortgage
transaction.
Sec. 11. With respect to an action brought under:
(1) section 9 of this chapter to enjoin violations of this article;
or
(2) section 10 of this chapter to enjoin deceptive acts;
the department may apply to the court for appropriate temporary
relief against a respondent, pending final determination of the
proceedings. If the court finds after a hearing held upon notice to
the respondent that there is reasonable cause to believe that the
respondent is engaging in or is likely to engage in the conduct
sought to be restrained, the court may grant any temporary relief
or restraining order the court considers appropriate.
Sec. 12. (a) The department may bring a civil action against a
creditor or a person acting on behalf of the creditor to recover a
civil penalty for willfully violating this article. If the court finds
that the defendant has engaged in a course of repeated and willful
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violations of this article, the court may assess a civil penalty of not
more than five thousand dollars ($5,000). A civil penalty may not
be imposed under this subsection:
(1) for violations of this article occurring more than two (2)
years before the action is brought; or
(2) for making unconscionable agreements or engaging in a
course of fraudulent or unconscionable conduct.
(b) If the department determines, after notice and an
opportunity to be heard, that a person has violated this article, the
department may, in addition to or instead of all other remedies
available under this section, impose upon the person a civil penalty
not greater than ten thousand dollars ($10,000) per violation.
(c) If the department determines, after notice and opportunity
to be heard, that a person has willfully violated this article, the
department may, in addition to or instead of all other remedies
available under this section, order restitution against the person
subject to this article for a violation of this article.
Sec. 13. The grant of powers to the department under this
article does not affect remedies available to debtors under this
article or under other principles of law or equity.
Sec. 14. The department may bring an action or a proceeding in
a court in a county:
(1) in which an act on which the action or proceeding is based
occurred;
(2) in which the respondent resides or transacts business; or
(3) in which the action or proceeding is otherwise authorized
by rule or venue laws.
ARTICLE 2. UNIFORM CONSUMER CREDIT CODE
Chapter 1. General Provisions
Sec. 0.1. This article must be construed as a recodification of
prior law. The enactment of this article by SEA 169-2026 does not
affect the substantive operation and effect of the prior law.
Sec. 0.3. A contract entered into in accordance with IC 24-4.5
(before its repeal) is considered a contract entered into in
accordance with this article.
Sec. 0.5. Any document, website, or business communication
created in accordance with IC 24-4.5 (before its repeal) is
considered a document, website, or business communication
created in accordance with this article.
Sec. 0.7. (a) A reference in a statute or rule to a statute that is
repealed and replaced in the same or a different form in the
recodification act of the 2026 regular session of the general
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assembly is treated after the effective date of the new provision as
a reference to the new provision.
(b) A citation reference in the recodification act of the 2026
regular session of the general assembly to another provision of the
recodification act of the 2026 regular session of the general
assembly is treated as including a reference to the provision of the
uniform consumer credit code that is substantively equivalent to
the provision of the recodification act of the 2026 regular session
of the general assembly that is referred to by the citation reference.
Sec. 1. (a) This article shall be liberally construed and applied
to promote the following underlying purposes and policies of this
article:
(1) To simplify, clarify, and modernize the law governing
retail installment sales, consumer credit, small loans, and
usury.
(2) To provide rate ceilings to assure an adequate supply of
credit to consumers.
(3) To further consumer understanding of the terms of credit
transactions and to foster competition among suppliers of
consumer credit so that consumers may obtain credit at
reasonable cost.
(4) To protect consumer buyers, lessees, and borrowers
against unfair practices by some suppliers of consumer credit,
having due regard for the interests of legitimate and
scrupulous creditors.
(5) To permit and encourage the development of fair and
economically sound consumer credit practices.
(6) To conform the regulation of consumer credit transactions
to the policies of the Consumer Credit Protection Act (15
U.S.C. 1601 et seq.) and to applicable state and federal laws,
rules, regulations, policies, and guidance.
(7) To make uniform the law, including administrative rules,
among the various jurisdictions.
(b) A reference to a requirement imposed by this article includes
reference to a related rule or guidance of the department adopted
pursuant to this article.
(c) A reference to a federal law in this article is a reference to
the law as in effect December 31, 2024.
(d) This article applies to a transaction if the director
determines that the transaction:
(1) is in substance a disguised consumer credit transaction; or
(2) involves the application of subterfuge for the purpose of
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avoiding this article.
A determination by the director under this subsection must be in
writing and shall be delivered to all parties to the transaction.
IC 4-21.5-3 applies to a determination made under this subsection.
(e) The authority of this article remains in effect, whether a
licensee, an individual, or a person subject to this article acts or
claims to act under any licensing or registration law of this state,
or claims to act without such authority.
(f) A violation of a state or federal law, regulation, or rule
applicable to consumer credit transactions is a violation of this
article.
(g) The department may enforce penalty provisions set forth in
15 U.S.C. 1640 for violations of disclosure requirements applicable
to mortgage transactions.
Sec. 2. Unless displaced by the particular provisions of this
article, the Uniform Commercial Code (IC 26-1) and the principles
of law and equity (including the law relative to capacity to
contract, principal and agent, estoppel, fraud, misrepresentation,
duress, coercion, mistake, bankruptcy, or other validating or
invalidating cause) shall supplement the provisions of this article.
Sec. 3. This article is a general statute intended to provide
unified coverage of its subject matter. Subsequent legislation may
not be construed to repeal any part of the article by implication if
the construction can reasonably be avoided.
Sec. 4. 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.
Sec. 5. (a) The dollar amounts in this article designated as
subject to change shall change, as provided in this section,
according to the Consumer Price Index for Urban Wage Earners
and Clerical Workers: U.S. City Average, All Items, 1957-59 equals
100, compiled by Bureau of Labor Statistics, United States
Department of Labor, and referred to in this section as the Index.
The Index for October 1971, is the Reference Base Index.
(b) The dollar amounts shall change on January 1 of each
odd-numbered year if the percentage of change, calculated to the
nearest whole percentage point, between the Index at the end of the
preceding odd-numbered year and the Reference Base Index is ten
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percent (10%) or more, except that:
(1) the portion of the percentage change in the Index in excess
of a multiple of ten percent (10%) shall be disregarded and
the dollar amounts shall change only in multiples of ten
percent (10%) of the amounts on March 5, 1971;
(2) the dollar amounts shall not change if the amounts
required by this section are those currently in effect pursuant
to this article as a result of earlier application of the section;
and
(3) in no event shall the dollar amounts be reduced below the
amounts appearing in this article on March 5, 1971.
(c) If the Index is revised after December 1967, the percentage
of change shall be calculated on the basis of the revised Index. If
the revision of the Index changes the Reference Base Index, a
revised Reference Base Index shall be determined by multiplying
the Reference Base Index by the ratio of the revised Index to the
current Index, as each was for the first month in which the revised
Index is available. If the Index is superseded, the Index is the one
represented by the Bureau of Labor Statistics as reflecting most
accurately changes in the purchasing power of the dollar for
consumers.
(d) The department shall issue a rule under IC 4-22-2
announcing:
(1) sixty (60) days before January 1 of each odd-numbered
year in which dollar amounts are to change, the changes in
dollar amounts required by subsection (b); and
(2) promptly after the changes occur, changes in the Index
required by subsection (c), including, when applicable, the
numerical equivalent of the Reference Base Index under a
revised Reference Base Index and the designation or title of
any index superseding the Index.
(e) A person does not violate this article through a transaction
otherwise complying with this article if the person relies on dollar
amounts either determined according to subsection (b) or
appearing in the last rule of the department announcing the then
current dollar amounts.
Sec. 6. (a) Except as otherwise provided in this article, a buyer,
lessee, or debtor may not waive or agree to forego rights or
benefits under this article.
(b) A claim by a buyer, lessee, or debtor against a creditor for
an excess charge, other violation of this article, or civil penalty, or
a claim against a buyer, lessee, or debtor for default or breach of
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a duty imposed by this article, if disputed in good faith, may be
settled by agreement.
(c) A claim, whether or not disputed against a buyer, lessee, or
debtor may be settled for less value than the amount claimed.
(d) A settlement in which the buyer, lessee, or debtor waives or
agrees to forego rights or benefits under this article is invalid if the
court as a matter of law finds the settlement to have been
unconscionable at the time it was made. The competence of the
buyer, lessee, or debtor, any deception or coercion practiced upon
the buyer, lessee, or debtor, the nature and extent of the legal
advice received by the buyer, lessee, or debtor, and the value of the
consideration are relevant to the issue of unconscionability.
Sec. 7. (a) This article prescribes maximum charges for all
creditors, except lessors and those excluded under section 10 of this
chapter, extending consumer credit, including consumer credit
sales, consumer loans, and consumer related sales and loans, and
displaces existing limitations on the powers of those creditors based
on maximum charges.
(b) With respect to sellers of goods or services, small loan
companies, licensed lenders, consumer and sales finance
companies, industrial loan and investment companies, and
commercial banks and trust companies, this article displaces
existing limitations on their powers based solely on amount or
duration of credit.
(c) Except as provided in subsection (a) and IC 24-4.6-1, this
article does not displace limitations on powers of credit unions,
savings banks, savings or building and loan associations, or other
thrift institutions whether organized for the profit of shareholders
or as mutual organizations.
(d) Except as provided in subsections (a) and (b), this article
does not displace:
(1) limitations on powers of depository institutions with
respect to the amount of a loan to a single borrower, the ratio
of a loan to the value of collateral, the duration of a loan that
is a mortgage transaction, or other similar restrictions
designed to protect deposits; or
(2) limitations on powers an organization is authorized to
exercise under the laws of this state or the United States.
Sec. 8. All persons licensed on October 1, 1971, under:
(1) IC 24-5-4 (before its repeal on October 1, 1971);
(2) IC 28-7-4 (before its repeal on October 1, 1971);
(3) IC 28-7-2 (before its repeal on October 1, 1971); or
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(4) IC 28-5-1-4;
are licensed to make supervised loans under this article, subject to
the renewal provisions contained in this article. All provisions of
this article apply to the persons previously licensed or authorized.
The department may deliver evidence of licensing to the persons
previously licensed or authorized.
Sec. 9. (a) Except as otherwise provided in this section, this
article applies to sales, leases, and loans made in this state and to
modifications, including refinancings, consolidations, and
deferrals, made in this state, of sales, leases, and loans, wherever
made. For purposes of this article, the following apply:
(1) A sale or modification of a sale agreement is made in this
state if the buyer's agreement or offer to purchase or to
modify is received by the seller or a person acting on behalf of
the seller in this state.
(2) A lease or modification of a lease agreement is made in this
state if the lessee's agreement or offer to lease or to modify is
received by the lessor or a person acting on behalf of the
lessor in this state.
(3) A loan or modification of a loan agreement is made in this
state if a writing signed by the debtor and evidencing the debt
is received by the lender or a person acting on behalf of the
lender in this state.
(4) Except as provided in subdivisions (5) and (6), a sale, lease,
or loan transaction occurs in Indiana if a consumer who is a
resident of Indiana enters into a consumer sale, lease, or loan
transaction with a creditor or a person acting on behalf of the
creditor in another state and the creditor or the person acting
on behalf of the creditor has advertised or solicited sales,
leases, or loans in Indiana by any means, including by mail,
brochure, telephone, print, radio, television, the Internet, or
electronic means.
(5) A sale, lease, or loan transaction does not occur in Indiana
if a consumer who is a resident of Indiana enters into a
consumer sale, lease, or loan transaction secured by an
interest in land located outside Indiana.
(6) A sale, lease, or loan transaction does not occur in Indiana
if a consumer who is a resident of Indiana enters into a
consumer sale, lease, or loan transaction at a creditor's place
of business in another state.
For purposes of subdivisions (1) through (4), an offer is received by
a creditor or a person acting on behalf of the creditor in Indiana if
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the offer is physically delivered, or otherwise transmitted or
communicated, to a person who has actual or apparent authority
to act for the creditor or the person acting on behalf of the creditor
in Indiana, regardless of whether approval, acceptance, or
ratification by any other agent or representative of the creditor or
the person acting on behalf of the creditor in another state is
necessary to give legal consequence to the consumer credit
transaction.
(b) IC 37-2-6-1 through IC 37-2-6-7 apply to actions or other
proceedings brought in this state to enforce rights arising from
consumer credit sales, consumer leases, or consumer loans, or
extortionate extensions of credit, wherever made.
(c) Except as provided in subsection (b), a sale, lease, loan, or
modification thereof, made in another state to a person who was
not a resident of this state when the sale, lease, loan, or
modification was made is valid and enforceable in this state
according to its terms to the extent that it is valid and enforceable
under the laws of the state applicable to the transaction.
(d) For the purposes of this article, the residence of a buyer,
lessee, or debtor is the address given by the buyer, lessee, or debtor
as the buyer's, lessee's, or debtor's residence in any writing or
electronic communication made by the buyer, lessee, or debtor in
connection with a credit transaction. Until the buyer, lessee, or
debtor notifies the creditor or the person acting on behalf of the
creditor of a new or different address, the given address is
presumed to be unchanged.
(e) Notwithstanding other provisions of this section:
(1) except as provided in subsection (b), this article does not
apply if the buyer, lessee, or debtor is not a resident of this
state at the time of a credit transaction and the parties then
agree that the law of the buyer's, lessee's, or debtor's
residence applies; and
(2) this article applies if the buyer, lessee, or debtor is a
resident of this state at the time of a credit transaction and the
parties then agree that the law of this state applies.
(f) Except as provided in subsection (e), the following
agreements by a buyer, lessee, or debtor are invalid with respect to
consumer credit sales, consumer leases, consumer loans, or
modifications thereof, to which this article applies:
(1) An agreement that the law of another state shall apply.
(2) An agreement that the buyer, lessee, or debtor consents to
the jurisdiction of another state.
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(3) An agreement that fixes venue.
(g) The following provisions of this article specify the applicable
law governing certain cases:
(1) IC 37-2-7-1 (applicability of the provisions on powers and
functions of the department).
(2) IC 37-2-7-24 (applicability of the provisions on notification
and fees).
(h) If a creditor or a person acting on behalf of the creditor has
violated the provisions of this article that apply to the authority to
make consumer loans (IC 37-2-4-23), the loan is void and the
debtor is not obligated to pay either the principal or loan finance
charge, as set forth in IC 37-2-6-9.
Sec. 10. This article does not apply to the following:
(1) Extensions of credit to or by a government or
governmental agencies or instrumentalities.
(2) The sale of insurance by an insurer, except as otherwise
provided in the chapter on insurance (IC 37-2-5).
(3) Transactions under public utility, municipal utility, or
common carrier tariffs if a subdivision or agency of this state
or of the United States regulates the charges for the services
involved, the charges for delayed payment, and any discount
allowed for early payment.
(4) The rates and charges and the disclosure of rates and
charges of a licensed pawnbroker established in accordance
with a statute or ordinance concerning these matters.
(5) A sale of goods, services, or an interest in land in which the
goods, services, or interest in land are purchased primarily
for a purpose other than a personal, family, or household
purpose.
(6) A loan in which the debt is incurred primarily for a
purpose other than a personal, family, or household purpose.
(7) An extension of credit primarily for a business, a
commercial, or an agricultural purpose.
(8) An installment agreement for the purchase of home fuels
in which a finance charge is not imposed.
(9) Loans made, insured, or guaranteed under a program
authorized by Title IV of the Higher Education Act of 1965
(20 U.S.C. 1070 et seq.).
(10) Transactions in securities or commodities accounts in
which credit is extended by a broker-dealer registered with
the Securities and Exchange Commission or the Commodity
Futures Trading Commission.
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(11) Except for IC 37-2-4-24(d), IC 37-2-4-29, IC 37-2-4-33(d),
and IC 37-2-4-33(e), a loan 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.
(12) Except for IC 37-2-4-24(d), IC 37-2-4-29, IC 37-2-4-33(d),
and IC 37-2-4-33(e), a subordinate 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 Housing and Community
Development Act of 1974, Public Law 93-383, as amended (42
U.S.C. 5301 et seq.).
(13) The United States, any state or local government, or any
agency or instrumentality of any governmental entity,
including United States government sponsored enterprises
and state educational institutions (as defined in
IC 21-7-13-32). For purposes of this subdivision, an
"instrumentality" of a governmental entity includes a
foundation, a corporate or nonprofit subsidiary, or an affiliate
of the governmental entity.
(14) A bona fide nonprofit organization not operating in a
commercial context, as determined by the director, if the
following criteria are satisfied:
(A) Subject to clause (B), the organization originates only
one (1) or both of the following types of mortgage
transactions:
(i) Zero (0) interest first lien mortgage transactions.
(ii) Zero (0) interest subordinate lien mortgage
transactions.
(B) The organization does not require, under the terms of
the mortgage or otherwise, balloon payments with respect
to the mortgage transactions described in clause (A).
(C) The organization is exempt from federal income
taxation under Section 501(c)(3) of the Internal Revenue
Code.
(D) The organization's primary purpose is to serve the
public by helping low income individuals and families
build, repair, and purchase housing.
(E) The organization uses only:
(i) unpaid volunteers; or
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(ii) employees whose compensation is not based on the
number or size of any mortgage transactions that the
employees originate;
to originate the mortgage transactions described in clause
(A).
(F) The organization does not charge loan origination fees
in connection with the mortgage transactions described in
clause (A).
(15) A bona fide nonprofit organization 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.
(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.
Sec. 11. In examinations or other regulatory activities conducted
by the department and related to licensees under this article, the
department may cooperate with the Indiana securities
commissioner in the regulation of individuals who, in addition to
conducting business regulated under this article, also conduct a
loan broker business subject to IC 23-2.5.
Chapter 2. Definitions
Sec. 1. The definitions set forth in this chapter apply throughout
this article:
Sec. 2. "Affiliate", with respect to any person subject to this
article, means a person that, directly or indirectly, through one (1)
or more intermediaries:
(1) controls;
(2) is controlled by; or
(3) is under common control with;
the person subject to this article.
Sec. 2.5. "Amount financed" means the total of the following to
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the extent that payment is deferred:
(1) The cash price of the goods, services, or interest in land
less the amount of down payment whether made in cash or
property.
(2) The amount actually paid or to be paid by the seller
pursuant to an agreement with the buyer to discharge a
security interest or lien on property traded in.
(3) If not included in the cash price:
(A) any applicable sales, use, excise or documentary fees;
(B) amounts actually paid or to be paid by the seller for
registration, certificate of title, or license fees; and
(C) additional charges permitted by IC 37-2-3-5.
Sec. 3. "Agreement" means the bargain of the parties in fact as
found in their language or by implication from other
circumstances, including course of dealing or usage of trade or
course of performance.
Sec. 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. "Agricultural products" includes
agricultural, horticultural, viticultural, and dairy products,
livestock, wildlife, poultry, bees, forest products, fish and shellfish,
and any and all products raised or produced on farms and any
processed or manufactured products thereof.
Sec. 5. "Average daily balance" means the sum of each of the
daily balances in a billing cycle divided by the number of days in
the billing cycle, and if the billing cycle is a month, the creditor
may elect to treat the number of days in each billing cycle as thirty
(30).
Sec. 6. "Balloon payment", with respect to a mortgage
transaction, means any payment that:
(1) the creditor requires the debtor to make at any time
during the term of the mortgage;
(2) 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
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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.
Sec. 7. "Bona fide nonprofit organization" means an
organization that does the following, as determined by the director
under criteria established by the director:
(1) Maintains tax exempt status under Section 501(c)(3) of the
Internal Revenue Code.
(2) Promotes affordable housing or provides home ownership
education or similar services.
(3) Conducts the organization's activities in a manner that
serves public or charitable purposes.
(4) Receives funding and revenue and charges fees in a
manner that does not encourage the organization or the
organization's employees to act other than in the best interests
of the organization's clients.
(5) Compensates the organization's employees in a manner
that does not encourage employees to act other than in the
best interests of the organization's clients.
(6) Provides to, or identifies for, debtors mortgage
transactions with terms that are favorable to the debtor (as
described in IC 37-2-1-10(15)) and comparable to mortgage
transactions and housing assistance provided under
government housing assistance programs.
(7) Maintains certification by the United States Department
of Housing and Urban Development or employs counselors
who are certified by the Indiana housing and community
development authority.
Sec. 7.5. "Cash price" means the price at which the goods,
services, or interest in land are offered for sale by the seller to cash
buyers in the ordinary course of business, and may include:
(1) applicable sales, use, and excise and documentary fees;
(2) the cash price of accessories or related services such as
delivery, installation, servicing, repairs, alterations, service
contracts, and improvements; and
(3) amounts actually paid or to be paid by the seller for
registration, certificate of title, or license fees.
Sec. 7.7. "Civil court" means any court of Indiana having civil
jurisdiction.
Sec. 8. "Closing costs" with respect to a subordinate lien
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mortgage transaction includes:
(1) fees or premiums for title examination, title insurance, or
similar purposes, including surveys;
(2) fees for preparation of a deed, settlement statement, or
other documents;
(3) escrows for future payments of taxes and insurance;
(4) fees for notarizing deeds and other documents;
(5) appraisal fees; and
(6) fees for credit reports.
Sec. 9. "Conspicuous" refers to a term or clause when it is so
written that a reasonable person against whom it is to operate
ought to have noticed it.
Sec. 10. "Consumer credit" means credit offered or extended to
a consumer primarily for a personal, family, or household purpose.
Sec. 10.5. "Consumer credit insurance" means insurance, other
than insurance on property, by which the satisfaction of debt in
whole or in part is a benefit provided, but does not include:
(1) insurance issued as an isolated transaction on the part of
the insurer not related to an agreement or plan for insuring
debtors of the creditor; or
(2) insurance indemnifying the creditor against loss due to the
debtor's default.
Sec. 11. "Consumer Credit Protection Act" refers to the
Consumer Credit Protection Act (15 U.S.C. 1601 et seq.), as
amended, and includes both the Truth in Lending Simplification
and Reform Act amendments (Public Law 96-221, Title VI, 94 Stat.
168) and any regulations issued under those laws. However, the
department may otherwise define this term by rule issued in
accordance with IC 37-2-7-7.
Sec. 12. "Consumer credit sale" is a sale of goods, services, or
an interest in land in which:
(1) credit is granted by a person who regularly engages as a
seller in credit transactions of the same kind;
(2) the buyer is a person other than an organization;
(3) the goods, services, or interest in land are purchased
primarily for a personal, family, or household purpose;
(4) either the debt is payable in installments or a credit service
charge is made; and
(5) with respect to a sale of goods or services, either:
(A) the amount of credit extended, the written credit limit,
or the initial advance does not exceed the exempt threshold
amount, as adjusted in accordance with the annual
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adjustment of the exempt threshold amount, specified in
Regulation Z (12 CFR 226.3 or 12 CFR 1026.3(b), as
applicable); or
(B) the debt is secured by personal property used or
expected to be used as the principal dwelling of the buyer.
Unless the sale is made subject to this article by agreement
under IC 37-2-3-29, "consumer credit sale" does not include
a sale in which the seller allows the buyer to purchase goods
or services pursuant to a lender credit card or similar
arrangement or, except as provided with respect to disclosure
(IC 37-2-3-13), debtors' remedies (IC 37-2-6-8), providing
payoff amounts (IC 37-2-3-11), and powers and functions of
the department (IC 37-2-7), a sale of an interest in land which
is a first lien mortgage transaction.
Sec. 12.5. "Consumer lease" means a lease of goods:
(1) which a lessor regularly engaged in the business of leasing
makes to a person, other than an organization, who takes
under the lease primarily for a personal, family, or household
purpose;
(2) in which the amount payable under the lease does not
exceed the exempt threshold amount, as adjusted in
accordance with the annual adjustment of the exempt
threshold amount, specified in Regulation Z (12 CFR 226.3 or
12 CFR 1026.3(b), as applicable); and
(3) which is for a term exceeding four (4) months.
The term does not include a lease made pursuant to a lender credit
card or similar arrangement.
Sec. 13. "Consumer loan" means a loan made by a person
regularly engaged in the business of making loans in which:
(1) the debtor is a person other than an organization;
(2) the debt is primarily for a personal, family, or household
purpose;
(3) either the debt is payable in installments or a loan finance
charge is made; and
(4) either:
(A) the amount of credit extended, the written credit limit,
or the initial advance does not exceed the exempt threshold
amount, as adjusted in accordance with the annual
adjustment of the exempt threshold amount, specified in
Regulation Z (12 CFR 226.3 or 12 CFR 1026.3(b), as
applicable); or
(B) the debt is secured by an interest in land or by personal
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property used or expected to be used as the principal
dwelling of the debtor.
Except as described in IC 37-2-4-2, the term does not include a first
lien mortgage transaction.
Sec. 13.3. "Consumer related loan" refers to a loan in which the
following apply:
(1) The loan is made by a person who is not regularly engaged
as a lender in credit transactions of the same kind.
(2) The debtor is a person other than an organization.
(3) The debt is primarily for a personal, family, or household
purpose.
(4) Either the debt is payable in installments or a loan finance
charge is made.
(5) Either:
(A) the amount of credit extended, the written credit limit,
or the initial advance does not exceed the exempt threshold
amount, as adjusted in accordance with the annual
adjustment of the exempt threshold amount, specified in
Regulation Z (12 CFR 226.3 or 12 CFR 1026.3(b), as
applicable); or
(B) the debt is secured by an interest in land or by personal
property used or expected to be used as the principal
dwelling of the debtor.
Sec. 13.5. "Consumer related sale" means a sale of goods,
services, or an interest in land in which:
(1) credit is granted by a person that is not regularly engaged
as a seller in credit transactions of the same kind;
(2) the buyer is a person other than an organization;
(3) the goods, services, or interest in land are purchased
primarily for a personal, family, or household purpose;
(4) either the debt is payable in installments or a credit service
charge is made; and
(5) with respect to a sale of goods or services:
(A) either the amount of credit extended, the written credit
limit, or the initial advance does not exceed the exempt
threshold amount, as adjusted in accordance with the
annual adjustment of the exempt threshold amount,
specified in Regulation Z (12 CFR 226.3 or 12 CFR
1026.3(b), as applicable); or
(B) the debt is secured by personal property used or
expected to be used as the principal dwelling of the buyer.
Sec. 14. "Credit" means the right granted by a creditor to a
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debtor to defer payment of debt or to incur debt and defer its
payment.
Sec. 14.5. "Credit service charge" means the sum of:
(1) all charges payable directly or indirectly by the buyer and
imposed directly or indirectly by the seller as an incident to
the extension of credit, including any of the following types of
charges which are applicable: time price differential, service,
carrying or other charge, however denominated, premium or
other charge for any guarantee or insurance protecting the
seller against the buyer's default or other credit loss; and
(2) charges incurred for investigating the collateral or
credit-worthiness of the buyer.
The term does not include charges as a result of default, additional
charges (IC 37-2-3-5), delinquency charges (IC 37-2-3-6), or
deferral charges (IC 37-2-3-7). The term does not include charges
paid or payable to a third party that are not required by the seller
as a condition or incident to the extension of credit except for
borrower paid mortgage broker fees, including fees paid directly
to the broker or the seller (for delivery to the broker), whether the
fees are paid in cash or financed. However, borrower paid
mortgage broker fees do not include fees paid to a mortgage broker
by a creditor, including yield spread premiums and service release
fees.
Sec. 15. "Creditor" means a person:
(1) who regularly engages in the extension of consumer credit
that is subject to a credit service charge or loan finance
charge, as applicable, or is payable by written agreement in
more than four (4) installments (not including a down
payment); and
(2) to whom the obligation is initially payable, either on the
face of the note or contract, or by agreement when there is not
a note or contract.
Sec. 15.5. "Debt cancellation agreement" means an agreement
that provides coverage for payment or satisfaction of all or part of
a debt in the event of the loss of life, health, or income. The term
does not include a GAP agreement.
Sec. 15.7. "Department" refers to the department of financial
institutions.
Sec. 16. "Depository institution" has the meaning set forth in
the Federal Deposit Insurance Act (12 U.S.C. 1813(c)) and includes
any credit union.
Sec. 17. "Director" means the director of the department of
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financial institutions or the director's designee.
Sec. 18. "Dwelling" means a residential structure that contains
one (1) to four (4) units, regardless of whether the structure is
attached to real property. The term includes an individual:
(1) condominium unit;
(2) cooperative unit;
(3) mobile home; or
(4) trailer;
that is used as a residence.
Sec. 19. "Earnings" means compensation paid or payable for
personal services, whether denominated as wages, salary,
commission, bonus, or otherwise, and includes periodic payments
under a pension or retirement program.
Sec. 20. "Employee" means an individual who is paid wages or
other compensation by an employer required under federal income
tax law to file Form W-2 on behalf of the individual.
Sec. 20.5. "Expedited payment service" means a service offered
to a consumer to ensure that a payment made by the consumer
with respect to a consumer credit sale or a consumer loan will be
reflected as paid and posted on an expedited basis.
Sec. 21. "Federal banking agencies" means the Board of
Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the National Credit Union
Administration, and the Federal Deposit Insurance Corporation.
Sec. 21.5. "First lien mortgage transaction" means:
(1) a consumer loan; or
(2) 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) that constitutes a first lien on a
dwelling or on residential real estate upon which a dwelling is
constructed or intended to be constructed.
Sec. 22. "Guaranteed asset protection agreement", "guaranteed
auto protection agreement", or "GAP agreement" means, with
respect to a consumer credit sale or a consumer loan involving a
motor vehicle or another titled asset, an agreement in which the
seller or lender agrees to cancel or waive all or part of the
outstanding debt after all property insurance benefits have been
exhausted after the occurrence of a specified event.
Sec. 22.5. "Goods" includes goods not in existence at the time
the transaction is entered into and merchandise certificates, but
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excludes money, chattel paper, documents of title, and instruments.
Sec. 22.7. "Home solicitation sale" means a consumer credit sale
of goods, other than farm equipment, or services in which:
(1) the seller or a person acting for the seller engages in a
personal solicitation of the sale, including a solicitation over
the telephone, at a residence of the buyer and the buyer's
agreement or offer to purchase is there given to the seller or
a person acting for the seller; or
(2) the seller or the seller's agent, solicits a sale in a city or
town in which the seller does not have a permanent business
establishment, through mailings, advertisements, or telephone
calls, which require the buyer to meet the seller or the seller's
agent at a place other than the seller's permanent business
establishment.
The term does not include a sale made pursuant to a preexisting
revolving charge account, or a sale made pursuant to prior
negotiations between the parties at a business establishment at a
fixed location where goods or services are offered or exhibited for
sale.
Sec. 23. "Immediate family member" means a spouse, child,
sibling, parent, grandparent, or grandchild. The term includes
stepparents, stepchildren, stepsiblings, and adoptive relationships.
Sec. 24. "Individual" means a natural person.
Sec. 25. "Land contract" means a contract for the sale of real
estate in which the seller of the real estate retains legal title to the
real estate until the total contract price is paid by the buyer.
Sec. 25.5. Except as otherwise provided, "lender" means a
person regularly engaged in making consumer loans. The term
includes an assignee of the lender's right to payment but use of the
term does not in itself impose on an assignee any obligation of the
lender with respect to events occurring before the assignment.
Sec. 26. "Lender credit card or similar arrangement" means an
arrangement or loan agreement, other than a seller credit card,
pursuant to which a lender gives a debtor the privilege of using a
credit card, letter of credit, or other credit confirmation or
identification in transactions out of which debt arises:
(1) by the lender's honoring a draft or similar order for the
payment of money drawn or accepted by the debtor;
(2) by the lender's payment or agreement to pay the debtor's
obligations; or
(3) by the lender's purchase from the obligee of the debtor's
obligations.
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Sec. 27. "Licensee" means a person licensed as a creditor under
this article.
Sec. 27.5. "Loan" includes:
(1) the creation of debt by the lender's payment of or
agreement to pay money to the debtor or to a third party for
the account of the debtor;
(2) the creation of debt by a credit to an account with the
lender upon which the debtor is entitled to draw immediately;
(3) the creation of debt pursuant to a lender credit card or
similar arrangement; and
(4) the forbearance of debt arising from a loan.
Sec. 28. "Loan brokerage business" means any activity in which
a person, in return for any consideration from any source,
procures, attempts to procure, or assists in procuring, a mortgage
transaction from a third party or any other person, whether or not
the person seeking the mortgage transaction actually obtains the
mortgage transaction.
Sec. 28.5. (a) "Loan finance charge" means the sum of:
(1) all charges payable directly or indirectly by the debtor and
imposed directly or indirectly by the lender as an incident to
the extension of credit, including any of the following types of
charges which are applicable: interest or any amount payable
under a point, discount, or other system of charges, however
denominated, premium or other charge for any guarantee or
insurance protecting the lender against the debtor's default or
other credit loss; and
(2) charges incurred for investigating the collateral or
credit-worthiness of the debtor.
The term does not include charges as a result of default, additional
charges (IC 37-2-4-5), delinquency charges (IC 37-2-4-6), or
deferral charges (IC 37-3-4-7). The term does not include charges
paid or payable to a third party that are not required by the lender
as a condition or incident to the extension of credit except for
borrower paid mortgage broker fees, including fees paid directly
to the broker or the lender (for delivery to the broker), whether the
fees are paid in cash or financed. However, borrower paid
mortgage broker fees do not include fees paid to a mortgage broker
by a creditor, including yield spread premiums and service release
fees.
(b) If a lender makes a loan to a debtor by purchasing or
satisfying obligations of the debtor pursuant to a lender credit card
or similar arrangement, and the purchase or satisfaction is made
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at less than the face amount of the obligation, the discount is not
part of the loan finance charge.
Sec. 29. "Loan processor or underwriter" means an individual
who performs clerical or support duties as an employee at the
direction of, and subject to the supervision and instruction of, a
person licensed to engage in mortgage transactions or a person
exempt from licensing. For purposes of this subdivision, the term
"clerical or support duties" may include, after the receipt of an
application, the following:
(1) The receipt, collection, distribution, and analysis of
information common for the processing or underwriting of a
mortgage transaction.
(2) The communication with a consumer to obtain the
information necessary for the processing or underwriting of
a loan, to the extent that the communication does not include:
(A) offering or negotiating loan rates or terms; or
(B) counseling consumers about mortgage transaction
rates or terms.
The term "loan processor or underwriter" does not include an
individual who is an employee of a person that is not engaged in
mortgage transactions as a creditor if that person is permitted to
voluntarily register with the department to sponsor the individual
under IC 37-1-1-6(8) to engage solely in the activities described in
this subdivision. An individual engaging solely in loan processor or
underwriter activities shall not represent to the public through
advertising or other means of communicating or providing
information, including the use of business cards, stationery,
brochures, signs, rate lists, or other promotional items, that the
individual can or will perform any of the activities of a mortgage
loan originator. However, an individual who is licensed as a
mortgage loan originator under IC 37-1 and 750 IAC 9-3, and who
is sponsored by a person, as permitted by IC 37-1-1-6(8), to engage
solely as a third party loan processor or underwriter, is subject to
the prohibition set forth in this subdivision with respect to the
individual's engagement under the sponsorship.
Sec. 29.5. "Merchandise certificate" means a writing issued by
a seller not redeemable in cash and usable in its face amount in lieu
of cash in exchange for goods or services.
Sec. 30. "Mortgage loan originator" means an individual who,
for compensation or gain, or in the expectation of compensation or
gain, regularly engages in taking a mortgage transaction
application or in offering or negotiating the terms of a mortgage
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transaction that either is made under this article or under IC 37-1
or is made by an employee of a person licensed to engage in
mortgage transactions or by an employee of a person that is
exempt from licensing, while the employee is engaging in the loan
brokerage business. The term does not include the following:
(1) An individual engaged solely as a loan processor or
underwriter as long as the individual works exclusively as an
employee of a person licensed to engage in mortgage
transactions or as an employee of a person exempt from
licensing. However, the term includes an individual who is
licensed as a mortgage loan originator under IC 37-1-1 and
750 IAC 9-3 and who is an employee of a person that is not
engaged in mortgage transactions as a creditor if that person
voluntarily registers with the department to sponsor the
individual under IC 37-1-1-6(8), to engage solely as a third
party processor or underwriter.
(2) Unless the person or entity is compensated by:
(A) a creditor;
(B) a loan broker;
(C) another mortgage loan originator; or
(D) any agent of the creditor, loan broker, or other
mortgage loan originator described in clauses (A) through
(C);
a person or entity that only performs real estate brokerage
activities and is licensed or registered in accordance with
applicable state law.
(3) A person solely involved in extensions of credit relating to
timeshare plans (as defined in 11 U.S.C. 101(53D)).
Sec. 31. "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.
Sec. 32. "Mortgage transaction" means:
(1) a consumer loan; or
(2) 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.
Sec. 33. "Nationwide Multistate Licensing System and Registry"
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(or "Nationwide Mortgage Licensing System and Registry" or
"NMLSR") means a multistate licensing system owned and
operated by the State Regulatory Registry, LLC, or by any
successor or affiliated entity, for the licensing and registration of
creditors, mortgage loan originators, and other persons in the
mortgage or financial services industries. The term includes any
other name or acronym that may be assigned to the system by the
State Regulatory Registry, LLC, or by any successor or affiliated
entity.
Sec. 34. "Nontraditional mortgage product" means any
mortgage product other than a thirty (30) year fixed rate
mortgage.
Sec. 35. "Official fees" means:
(1) fees and charges prescribed by law which actually are or
will be paid to public officials for determining the existence of
or for perfecting, releasing, or satisfying a security interest
related to a consumer credit sale, consumer lease, or
consumer loan; or
(2) premiums payable for insurance in lieu of perfecting a
security interest otherwise required by the creditor in
connection with the sale, lease, or loan, if the premium does
not exceed the fees and charges described in subdivision (1)
that would otherwise be payable.
Sec. 36. "Organization" means a corporation, a government or
governmental 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.
Sec. 37. "Payable in installments" means that payment is
required or permitted by written agreement to be made in more
than four (4) installments not including a down payment.
Sec. 38. "Person" includes an individual or an organization.
Sec. 39. "Person related to" with respect to an individual
means:
(1) the spouse of the individual;
(2) a brother, brother-in-law, sister, or sister-in-law of the
individual;
(3) an ancestor or lineal descendants of the individual or the
individual's spouse; and
(4) any other relative, by blood or marriage, of the individual
or the individual's spouse who shares the same home with the
individual.
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Sec. 40. "Person related to" with respect to an organization
means:
(1) a person directly or indirectly controlling, controlled by,
or under common control with the organization;
(2) a director, an executive officer, or a manager of the
organization or a person performing similar functions with
respect to the organization or to a person related to the
organization;
(3) the spouse of a person related to the organization; and
(4) a relative by blood or marriage of a person related to the
organization who shares the same home with the person.
Sec. 40.5. "Principal" of a loan means the total of:
(1) the net amount paid to, receivable by, or paid or payable
for the account of the debtor;
(2) the amount of any discount excluded from the loan finance
charge (section 28.5(b) of this chapter); and
(3) to the extent that payment is deferred:
(A) amounts actually paid or to be paid by the lender for
registration, certificate of title, or license fees if not
included in subdivision (1); and
(B) additional charges permitted by IC 37-2-4-5.
The term does not include any loan proceeds held as security for
the loan.
Sec. 41. "Presumed" or "presumption" means that the trier of
fact must find the existence of the fact presumed, unless and until
evidence is introduced that would support a finding of its
nonexistence.
Sec. 42. "Real estate brokerage activity" means any activity that
involves offering or providing real estate brokerage services to the
public, including the following:
(1) Acting as a real estate agent or real estate broker for a
buyer, seller, lessor, or lessee of real property.
(2) Bringing together parties interested in the sale, purchase,
lease, rental, or exchange of real property.
(3) 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).
(4) Engaging in any activity for which a person is required to
be registered or licensed as a real estate agent or real estate
broker under any applicable law.
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(5) Offering to engage in any activity, or act in any capacity,
described in this subsection.
Sec. 43. "Registered mortgage loan originator" means any
individual who:
(1) meets the definition of mortgage loan originator and is an
employee of:
(A) a depository institution;
(B) a subsidiary that is owned and controlled by a
depository institution and regulated by a federal banking
agency; or
(C) an institution regulated by the Farm Credit
Administration; and
(2) is registered with, and maintains a unique identifier
through, the NMLSR.
Sec. 44. "Regularly engaged", with respect to a person who
extends consumer credit, refers to a person who:
(1) extended consumer credit:
(A) more than twenty-five (25) times; or
(B) more than five (5) times for a mortgage transaction
secured by a dwelling;
in the preceding calendar year; or
(2) extends or will extend consumer credit:
(A) more than twenty-five (25) times; or
(B) more than five (5) times for a mortgage transaction
secured by a dwelling;
in the current calendar year, if the person did not meet the
numerical standards described in subdivision (1) in the
preceding calendar year.
Sec. 44.5."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.
Sec. 44.7. "Revolving charge account" means an arrangement
between a seller and a buyer pursuant to which:
(1) the seller may permit the buyer to purchase goods or
services on credit either from the seller or pursuant to a seller
credit card;
(2) the unpaid balances of amounts financed arising from
purchases and the credit service and other appropriate
charges are debited to an account;
(3) a credit service charge if made is not precomputed but is
computed on the outstanding unpaid balances of the buyer's
account from time to time; and
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(4) the buyer has the privilege of paying the balances in
installments.
Sec. 45. "Revolving loan account" means an arrangement
between a lender and a debtor pursuant to which:
(1) the lender may permit the debtor to obtain loans from
time to time;
(2) the unpaid balances of principal and the loan finance and
other appropriate charges are debited to an account;
(3) a loan finance charge if made is not precomputed but is
computed on the outstanding unpaid balances of the debtor's
account from time to time; and
(4) the debtor has the privilege of paying the balances in
installments.
Sec. 45.1. "Sale of an interest in land" includes a lease in which
the lessee has an option to purchase the interest and all or a
substantial part of the rental or other payments previously made
by the lessee are applied to the purchase price.
Sec. 45.3. "Sale of goods" includes any agreement in the form of
a bailment or lease of goods if the bailee or lessee agrees to pay as
compensation for use a sum substantially equivalent to or in excess
of the aggregate value of the goods involved and it is agreed that
the bailee or lessee will become, or for no other or a nominal
consideration has the option to become, the owner of the goods
upon full compliance with the bailee's or the lessee's obligations
under the agreement.
Sec. 45.5. "Sale of services" means furnishing or agreeing to
furnish services and includes making arrangements to have
services furnished by another.
Sec. 45.7. Except as otherwise provided,"seller" means a person
regularly engaged as a creditor in making consumer credit sales.
The term includes an assignee of the seller's right to payment but
use of the term does not in itself impose on an assignee any
obligation of the seller with respect to events occurring before the
assignment.
Sec. 46. "Seller credit card" means an arrangement that gives
to a buyer or lessee the privilege of using a credit card, letter of
credit, or other credit confirmation or identification for the
purpose of purchasing or leasing goods or services from that
person, a person related to that person, or from that person and
any other person. The term includes a card that is issued by a
person that is in the name of the seller, and that can be used by the
buyer or lessee only for purchases or leases at locations of the
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named seller.
Sec. 46.5. "Services" includes:
(1) work, labor, and other personal services;
(2) privileges with respect to transportation, hotel and
restaurant accommodations, education, entertainment,
recreation, physical culture, hospital accommodations,
funerals, cemetery accommodations, and the like; and
(3) insurance provided by a person other than the insurer.
Sec. 46.7. "Skip-a-payment service" means a service that:
(1) in the case of a consumer credit sale:
(A) is offered by a creditor to a consumer; and
(B) permits the consumer to miss or skip a payment due
under a consumer credit sale without resulting in default;
and
(2) in the case of a consumer loan:
(A) is offered by a lender to a consumer; and
(B) permits the consumer to miss or skip a payment due
under a consumer loan without resulting in default.
Sec. 47. "Subordinate lien mortgage transaction" means:
(1) a consumer loan; or
(2) 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) that constitutes a subordinate lien on
a dwelling or on residential real estate upon which a dwelling is
constructed or intended to be constructed.
Sec. 47.3. "Supervised lender" means a person authorized to
make or take assignments of supervised loans.
Sec. 47.5. "Supervised loan" means a consumer loan in which
the rate of the loan finance charge exceeds twenty-five percent
(25%) per year as determined according to the provisions on loan
finance charge for consumer loans in IC 37-2-4-4.
Sec. 48. "Unique identifier" means a number or other identifier
assigned by protocols established by the NMLSR.
Chapter 3. Credit Sales
Sec. 1. (a) This chapter applies to consumer credit sales,
including home solicitation sales, and consumer leases.
(b) Sections 14 through 27 of this chapter apply to consumer
credit sales and consumer leases.
(c) Sections 29 through 33 of this chapter apply to consumer
related sales.
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(d) Licensing under IC 37-2-4-24 applies to consumer credit
sales that are subordinate lien mortgage transactions.
Sec. 2. A sale, refinancing, or consolidation is considered
precomputed if the debt is expressed as a sum comprising the
amount financed and the amount of the credit service charge
computed in advance.
Sec. 3. The cash price stated by the seller to the buyer pursuant
to section 13 of this chapter is presumed to be the cash price.
Sec. 4. (a) Except as provided in subsections (h) and (k), with
respect to a consumer credit sale, a seller may contract for and
receive a credit service charge not exceeding that permitted by this
section.
(b) The credit service charge, calculated according to the
actuarial method, may not exceed the equivalent of the greater of:
(1) the total of:
(A) thirty-six percent (36%) per year on that part of the
unpaid balances of the amount financed which is two
thousand dollars ($2,000) or less;
(B) twenty-one percent (21%) per year on that part of the
unpaid balances of the amount financed which is more
than two thousand dollars ($2,000) but does not exceed
four thousand dollars ($4,000); and
(C) fifteen percent (15%) per year on that part of the
unpaid balances of the amount financed which is more
than four thousand dollars ($4,000); or
(2) twenty-five percent (25%) per year on the unpaid balances
of the amount financed.
(c) In the case of a sale agreement entered into before July 1,
2020, this section does not limit or restrict the manner of
contracting for the credit service charge, whether by way of
add-on, discount, or otherwise, so long as the rate of the credit
service charge does not exceed that permitted by this section. If the
sale is precomputed:
(1) the credit service charge may be calculated on the
assumption that all scheduled payments will be made when
due; and
(2) the effect of prepayment is governed by the provisions on
rebate upon prepayment in section 12 of this chapter.
(d) The following apply to a sale agreement for a consumer
credit sale (or for the refinancing or consolidation of a consumer
credit sale) that is entered into after June 30, 2020:
(1) The credit service charge authorized by this section must
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be:
(A) contracted for between the seller and the debtor; and
(B) calculated by applying a rate not exceeding the rate set
forth in subsection (b) to unpaid balances of the amount
financed.
(2) A sale agreement for a precomputed consumer credit sale
is prohibited.
(3) Subject to subsection (m), in addition to the credit service
charge authorized by subsection (b) and to any other fees
permitted by this chapter, and not subject to the rate set forth
in subsection (b), the seller may contract for and receive as a
condition for, or an incident to, the extension of credit a
nonrefundable prepaid finance charge under subsection (k),
whether the charge is:
(A) paid separately in cash or by check before or at
consummation; or
(B) withheld from the proceeds of the consumer credit sale.
(e) For the purposes of this section, the term of a sale agreement
commences with the date the credit is granted or, if goods are
delivered or services performed more than thirty (30) days after
that date, with the date of commencement of delivery or
performance except as follows:
(1) This subdivision applies to a delay attributable to the
customer. Where the customer requests delivery after the
thirty (30) day period or where delivery occurs after the
thirty (30) day period for a reason attributable to the
customer (including but not limited to failure to close on a
residence or failure to obtain lease approval), the term of the
sale agreement shall commence with the date credit is
granted.
(2) This subdivision applies to a partial delivery. Where any
portion of the order has been delivered within the thirty (30)
day period, the term of the sale agreement shall commence
with the date credit is granted.
Differences in the lengths of months are disregarded and a day
may be counted as one-thirtieth (1/30) of a month. Subject to
classifications and differentiations the seller may reasonably
establish, a part of a month in excess of fifteen (15) days may be
treated as a full month if periods of fifteen (15) days or less are
disregarded and that procedure is not consistently used to obtain
a greater yield than would otherwise be permitted.
(f) With respect to a consumer credit sale made pursuant to a
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revolving charge account, the parties to the sale may contract for
the payment by the buyer of a credit service charge not exceeding
that permitted in this section, subject to the following:
(1) The credit service charge contracted for and received may
not exceed a charge in each monthly billing cycle which is two
and eighty-three thousandths percent (2.083%) of an amount
not greater than:
(A) the average daily balance of the account;
(B) the unpaid balance of the account on the same day of
the billing cycle; or
(C) subject to subsection (g), the median amount within a
specified range within which the average daily balance of
the account or the unpaid balance of the account, on the
same day of the billing cycle, is included.
For purposes of clauses (B) and (C), a variation of not more
than four (4) days from month to month is "the same day of
the billing cycle".
(2) If the billing cycle is not monthly, the maximum charge is
that percentage which bears the same relation to the
applicable monthly maximum percentage as the number of
days in the billing cycle bears to thirty (30).
(3) Notwithstanding subdivision (1), if there is an unpaid
balance on the date as of which the credit service charge is
applied, the seller may contract for and receive a charge not
exceeding fifty cents ($0.50) if the billing cycle is monthly or
longer, or the pro rata part of fifty cents ($0.50) which bears
the same relation to fifty cents ($0.50) as the number of days
in the billing cycle bears to thirty (30) if the billing cycle is
shorter than monthly. However, a seller may not contract for
or receive a charge under this subdivision if the seller has
made an annual charge for the same period as permitted by
the provisions on additional charges in section 5(a)(5) of this
chapter.
(g) Subject to classifications and differentiations the seller may
reasonably establish, the seller may make the same credit service
charge on all amounts financed within a specified range. A credit
service charge so made does not violate subsection (b) if:
(1) when applied to the median amount within each range, it
does not exceed the maximum permitted by subsection (b);
and
(2) when applied to the lowest amount within each range, it
does not produce a rate of credit service charge exceeding the
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rate calculated according to subdivision (1) by more than
eight percent (8%) of the rate calculated according to
subdivision (1).
(h) Notwithstanding subsection (b), with respect to a consumer
sale other than a sale under a revolving charge account, the seller
may contract for and receive a minimum credit service charge of
not more than thirty dollars ($30). The minimum credit service
charge allowed under this subsection may be imposed only if the
seller does not contract for or receive a nonrefundable prepaid
finance charge under subsection (k) and:
(1) the debtor prepays in full a consumer credit sale,
refinancing, or consolidation, regardless of whether the sale,
refinancing, or consolidation is precomputed;
(2) the sale, refinancing, or consolidation prepaid by the
debtor is subject to a credit service charge that:
(A) is contracted for by the parties; and
(B) does not exceed the rate prescribed in subsection (b);
and
(3) the credit service charge earned at the time of prepayment
is less than the minimum credit service charge contracted for
under this subsection.
(i) The amounts of two thousand dollars ($2,000) and four
thousand dollars ($4,000) in subsection (b) are subject to change
pursuant to the provisions on adjustment of dollar amounts
(IC 37-2-1-5). However, notwithstanding IC 37-2-1-5(a), the
Reference Base Index to be used under this subsection is the Index
for October 2012.
(j) The amount of thirty dollars ($30) in subsection (h) is subject
to change under the provisions on adjustment of dollar amounts
(IC 37-2-1-5). However, notwithstanding IC 37-2-1-5(a), the
Reference Base Index to be used under this subsection is the Index
for October 1992.
(k) This subsection applies to a sale agreement entered into after
June 30, 2020. Except as provided in subsection (h), and subject to
subsection (m), in addition to the credit service charge authorized
by subsection (b), and to any other fees permitted by this chapter,
a seller may contract for and receive a nonrefundable prepaid
finance charge in an amount which is not more than:
(1) seventy-five dollars ($75) for an amount financed which is
two thousand dollars ($2,000) or less;
(2) one hundred fifty dollars ($150) for an amount financed
which is more than two thousand dollars ($2,000) but does not
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exceed four thousand dollars ($4,000); and
(3) two hundred dollars ($200) for an amount financed which
is more than four thousand dollars ($4,000).
The nonrefundable prepaid finance charge is not subject to refund
or rebate. However, any amount charged by the seller, other than
by a seller that is a depository institution, under this subsection
that exceeds the applicable amount permitted by this subsection
constitutes a violation of this article under IC 37-2-7-8(12) and is
subject to refund. Any amount charged by a depository institution
under this subsection that exceeds the applicable amount set forth
in this subsection is subject to refund. The amounts in this
subsection are not subject to change under IC 37-2-1-5.
(l) If the director determines that a seller's accrual method of
accounting as applied to a consumer credit sale under this section
involves the application of subterfuge for the purpose of
circumventing this chapter, the director may conform the credit
service charge and fees for the transaction to the limitations set
forth in this section and may require a refund of overcharges
under IC 37-2-7-5(b)(1). A determination by the director under this
subsection:
(1) must be in writing;
(2) shall be delivered to all parties in the transaction; and
(3) is subject to IC 4-21.5-3.
(m) At the time of consummation of a consumer credit sale:
(1) the credit service charge authorized by subsection (b); and
(2) the nonrefundable prepaid finance charge authorized by
subsection (k) (including any amount charged by a depository
institution that exceeds the applicable amount set forth in
subsection (k)) in the case of a sale agreement entered into
after June 30, 2020;
are subject to IC 35-45-7 and, when combined, may not exceed the
rate set forth in IC 35-45-7-2.
Sec. 5. (a) In addition to the credit service charge permitted by
this chapter, a seller may contract for and receive any of the
following additional charges in connection with a consumer credit
sale:
(1) Official fees and taxes.
(2) Charges for insurance as described in subsection (b).
(3) Notwithstanding provisions of the Consumer Credit
Protection Act (15 U.S.C. 1601 et seq.) concerning disclosure,
charges for other benefits, including insurance, conferred on
the consumer, if the benefits are of value to the consumer and
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if the charges are reasonable in relation to the benefits, and
are excluded as permissible additional charges from the credit
service charge. With respect to any additional charge not
specifically provided for in this section, to be a permitted
charge under this subsection the seller must submit a written
explanation of the charge to the department indicating how
the charge would be assessed and the value or benefit to the
consumer. Supporting documents may be required by the
department. The department shall determine whether the
charge would be of benefit to the consumer and is reasonable
in relation to the benefits.
(4) A charge not to exceed twenty-five dollars ($25) for each
returned payment by a bank or other depository institution of
a dishonored check, electronic funds transfer, negotiable
order of withdrawal, or share draft issued by the consumer.
(5) Annual participation fees assessed in connection with a
revolving charge account. Annual participation fees must:
(A) be reasonable in amount;
(B) bear a reasonable relationship to the seller's costs to
maintain and monitor the charge account; and
(C) not be assessed for the purpose of circumvention or
evasion of this article, as determined by the department.
(6) A charge not to exceed twenty-five dollars ($25) for a
skip-a-payment service, subject to the following:
(A) At the time of use of the service, the consumer must be
given written notice of the amount of the charge and must
acknowledge the amount in writing, including by electronic
signature.
(B) A charge for a skip-a-payment service may not be
assessed with respect to a consumer credit sale subject to
the provisions on rebate upon prepayment that are set
forth in section 12 of this chapter.
(C) A charge for a skip-a-payment service may not be
assessed with respect to any payment for which a
delinquency charge has been assessed under section 6 of
this chapter.
(7) A charge not to exceed ten dollars ($10) for an optional
expedited payment service, subject to the following:
(A) The charge may be assessed only upon request by the
consumer to use the expedited payment service.
(B) The amount of the charge must be disclosed to the
consumer at the time of the consumer's request to use the
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expedited payment service.
(C) The consumer must be informed that the consumer
retains the option to make a payment by traditional means.
(D) The charge may not be established in advance, through
any agreement with the consumer, as the expected method
of payment.
(E) The charge may not be assessed with respect to any
payment for which a delinquency charge has been assessed
under section 6 of this chapter.
(8) A charge for a GAP agreement, subject to subsection (d).
(b) An additional charge may be made for insurance written in
connection with the sale, other than insurance protecting the seller
against the consumer's default or other credit loss:
(1) with respect to insurance against loss of or damage to
property, or against liability, if the seller furnishes a clear and
specific statement in writing to the consumer, setting forth the
cost of the insurance if obtained from or through the seller
and stating that the consumer may choose the person, subject
to the seller's reasonable approval, through whom the
insurance is to be obtained; and
(2) with respect to consumer credit insurance providing life,
accident, unemployment or other loss of income, or health
coverage, if the insurance coverage is not a factor in the
approval by the seller of the extension of credit and is clearly
disclosed in writing to the consumer, and if, in order to obtain
the insurance in connection with the extension of credit, the
consumer gives specific, affirmative, written indication of the
desire to do so after written disclosure of the cost.
(c) With respect to a subordinate lien mortgage transaction, the
following closing costs, if the costs are bona fide, reasonable in
amount, and not for the purpose of circumvention or evasion of
this article:
(1) fees for title examination, abstract of title, title insurance,
property surveys, or similar purposes;
(2) fees for preparing deeds, mortgages, and reconveyance,
settlement, and similar documents;
(3) notary and credit report fees;
(4) amounts required to be paid into escrow or trustee
accounts if the amounts would not otherwise be included in
the credit service charge; and
(5) appraisal fees.
(d) An additional charge may be made for a GAP agreement,
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subject to the following:
(1) A GAP agreement or GAP coverage may not be required
by the seller, and that fact must be disclosed in writing to the
consumer.
(2) The charge for the initial term of coverage under the GAP
agreement must be disclosed in writing to the consumer. The
charge may be disclosed on a unit-cost basis only in the case
of the following transactions:
(A) Revolving charge accounts.
(B) Closed-end credit transactions, if the request for
coverage is made by mail or telephone.
(C) Closed-end credit transactions, if the GAP agreement
limits the total amount of indebtedness eligible for
coverage.
(3) If the term of coverage under the GAP agreement is less
than the term of the consumer credit sale, the term of
coverage under the GAP agreement must be disclosed in
writing to the consumer.
(4) The consumer must sign or initial an affirmative written
request for coverage after receiving all required disclosures.
(5) The GAP agreement must include the following:
(A) In the case of GAP coverage for a new motor vehicle,
the manufacturer's suggested retail price (MSRP) for the
motor vehicle.
(B) In the case of GAP coverage for a used motor vehicle,
the average retail value for the motor vehicle, as
determined by use of a third party valuation service
provider that is customarily relied upon in the used motor
vehicle commercial marketplace.
(C) The name of the financing entity taking assignment of
the agreement.
(D) The name and address of the consumer.
(E) The name of the creditor selling the agreement.
(F) Information advising the consumer that the consumer
may be able to obtain similar coverage from the
consumer's primary insurance carrier.
(G) A coverage provision that includes a minimum
deductible of five hundred dollars ($500).
(H) A provision providing for a minimum thirty (30) day
free-look period.
(I) In the case of a consumer credit sale involving a motor
vehicle, a provision excluding the sale of GAP coverage if
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the amount financed under the consumer credit sale (not
including the cost of the GAP agreement, the cost of any
credit insurance, and the cost of any warranties or service
agreements) is less than eighty percent (80%) of the
manufacturer's suggested retail price (MSRP), in the case
of a new motor vehicle, or the average retail value (as
determined by use of a third party valuation service
provider that is customarily relied upon in the used motor
vehicle commercial marketplace), in the case of a used
motor vehicle.
(J) In the case of a GAP agreement in which the charge for
the agreement exceeds four hundred dollars ($400),
specific instructions that may be used by the consumer to
cancel the agreement and obtain a refund of the unearned
GAP charge before prepayment in full, in accordance with
the procedures, and subject to the conditions, set forth in
subdivision (6).
(6) If the charge for the GAP agreement exceeds four hundred
dollars ($400), the consumer is entitled to cancel the
agreement and obtain a refund of the unearned GAP charge
before prepayment in full. Refunds of unearned GAP charges
shall be made subject to the following conditions:
(A) A refund of the charge for a GAP agreement must be
calculated using a method that is no less favorable to the
consumer than a refund calculated on a pro rata basis.
(B) The consumer is entitled to a refund of the unearned
GAP agreement charge as outlined in the GAP agreement.
(C) The seller of the GAP agreement is responsible for
making a timely refund to the consumer of unearned GAP
agreement charges under the terms and conditions of the
GAP agreement.
(7) Upon prepayment in full of the consumer credit sale:
(A) the GAP coverage is automatically terminated; and
(B) the seller of the GAP agreement must issue a refund in
accordance with subdivision (6).
(8) A creditor that sells GAP agreements must:
(A) insure its GAP agreement obligations under a
contractual liability insurance policy issued by an insurer
authorized to engage in the insurance business in Indiana;
and
(B) retain appropriate records, as required under this
article, regarding GAP agreements sold, refunded, and
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expired.
Sec. 6. (a) With respect to a consumer credit sale, refinancing,
or consolidation, the parties may contract for a delinquency charge
of not more than the following:
(1) Five dollars ($5) on any installment or minimum payment
due that is not paid in full not later than ten (10) days after its
scheduled due date, in the case of a consumer credit sale,
refinancing, or consolidation that is made before July 1, 2019.
The amount of five dollars ($5) in this subdivision is subject
to change under IC 37-2-1-5. In addition, the parties may
provide by contract for a delinquency charge that is subject
to change. If the parties provide by contract for a delinquency
charge that is subject to change, the seller shall disclose in the
contract that the amount of the delinquency charge is subject
to change under IC 37-2-1-5 or this section.
(2) In the case of a consumer credit sale, refinancing, or
consolidation that is made after June 30, 2019, the following:
(A) Five dollars ($5) on any installment or minimum
payment due that is not paid in full not later than ten (10)
days after its scheduled due date, if installments under the
consumer credit sale, refinancing, or consolidation are due
every fourteen (14) days or less. The amount of five dollars
($5) in this clause is not subject to change under
IC 37-2-1-5.
(B) Twenty-five dollars ($25) on any installment or
minimum payment due that is not paid in full not later
than ten (10) days after its scheduled due date, if
installments under the consumer credit sale, refinancing,
or consolidation are due every fifteen (15) days or more.
The amount of twenty-five dollars ($25) in this clause is not
subject to change under IC 37-2-1-5.
(C) Twenty-five dollars ($25) on any installment or
minimum payment due that is not paid in full not later
than ten (10) days after its scheduled due date, in the case
of a consumer credit sale, refinancing, or consolidation
that is payable in a single installment that is due at least
thirty (30) days after the consumer credit sale, refinancing,
or consolidation is made. The amount of twenty-five
dollars ($25) in this clause is not subject to change under
IC 37-2-1-5.
(b) A delinquency charge under this section may be collected
only once on an installment however long it remains in default. A
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delinquency charge on consumer credit sales made under a
revolving charge account may be applied each month that the
payment is less than the minimum required payment. A
delinquency charge may be collected any time after it accrues. No
delinquency charge may be collected if:
(1) the installment has been deferred and a deferral charge
under section 7 of this chapter has been paid or incurred;
(2) a charge for a skip-a-payment service has been paid or
incurred, as provided in section 5 of this chapter; or
(3) a charge for an optional expedited payment service has
been paid or incurred, as provided in section 5 of this chapter.
(c) A creditor may not, directly or indirectly, charge or collect
a delinquency charge on a payment that:
(1) is paid not later than ten (10) days after its scheduled due
date; and
(2) is otherwise a full payment of the payment due for the
applicable installment period;
if the only delinquency with respect to the consumer credit sale,
refinancing, or consolidation is attributable to a delinquency
charge assessed on an earlier installment.
(d) If two (2) or more installments, or parts of two (2) or more
installments, of a precomputed consumer credit sale are in default
for ten (10) days or more, the creditor may elect to convert the
consumer credit sale from a precomputed consumer credit sale to
a consumer credit sale in which the credit service charge is based
on unpaid balances. A creditor that makes this election shall make
a rebate under the provisions on rebates upon prepayment under
section 12 of this chapter as of the maturity date of the first
delinquent installment, and thereafter may make a credit service
charge as authorized by the provisions on credit service charges for
consumer credit sales under section 4 of this chapter. The amount
of the rebate shall not be reduced by the amount of any permitted
minimum charge under section 12 of this chapter. Any deferral
charges made on installments due at or after the maturity date of
the first delinquent installment shall be rebated, and no further
deferral charges shall be made.
Sec. 7. (a) This section applies only to a consumer credit sale,
refinancing, or consolidation, that is entered into before July 1,
2020. With respect to a precomputed consumer credit sale,
refinancing, or consolidation, the parties before or after default
may agree in writing to a deferral of all or part of one (1) or more
unpaid installments, and the seller may make and collect a charge
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not exceeding the lesser of thirty-six percent (36%) per year or the
rate previously stated to the buyer pursuant to section 13 of this
chapter applied to the amount or amounts deferred for the period
of deferral calculated without regard to differences in lengths of
months, but proportionately for a part of a month, counting each
day as one-thirtieth (1/30) of a month. A deferral charge may be
collected at the time it is assessed or at any time thereafter.
(b) The seller, in addition to the deferral charge, may make
appropriate additional charges under section 5 of this chapter, and
the amount of these charges which is not paid in cash may be added
to the amount deferred for the purpose of calculating the deferral
charge.
(c) The parties may agree in writing at the time of a
precomputed consumer credit sale, refinancing, or consolidation
that if an installment is not paid within ten (10) days after its due
date, the seller may unilaterally grant a deferral and make charges
as provided in this section. No deferral charge may be made for a
period after the date that the seller elects to accelerate the maturity
of the agreement.
(d) A delinquency charge made by the seller on an installment
may not be retained if a deferral charge is made pursuant to this
section with respect to the period of delinquency.
Sec. 8. With respect to a consumer credit sale, refinancing, or
consolidation, the seller may by agreement with the buyer
refinance the unpaid balance and may contract for and receive a
credit service charge based on the amount financed resulting from
the refinancing at a rate not exceeding that permitted by the
provisions on credit service charge for consumer credit sales under
section 4 of this chapter. For the purpose of determining the credit
service charge permitted, the amount financed resulting from the
refinancing comprises the following:
(1) If:
(A) the transaction was not precomputed, the total of the
unpaid balance and accrued charges on the date of
refinancing; or
(B) the transaction was precomputed, in the case of a
transaction entered into before July 1, 2020, the amount
which the buyer would have been required to pay upon
prepayment pursuant to the provisions on rebate upon
prepayment (section 12 of this chapter) on the date of
refinancing.
(2) Appropriate additional charges under section 5 of this
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chapter, payment of which is deferred.
Sec. 9. If a buyer owes an unpaid balance to a seller with respect
to a consumer credit sale, refinancing, or consolidation, and
becomes obligated on another consumer credit sale, refinancing, or
consolidation with the same seller, the parties may agree to a
consolidation resulting in a single schedule of payments pursuant
to either of the following:
(1) The parties may agree to refinance the unpaid balance
with respect to the previous sale pursuant to the provisions on
refinancing (section 8 of this chapter) and to consolidate the
amount financed resulting from the refinancing by adding it
to the amount financed with respect to the subsequent sale.
The seller may contract for and receive a credit service
charge based on the aggregate amount financed resulting
from the consolidation at a rate not exceeding that permitted
by the provisions on credit service charge for consumer credit
sales (section 4 of this chapter).
(2) The parties may agree to consolidate by adding together
the unpaid balances with respect to the two sales.
Sec. 10. (a) If the agreement with respect to a consumer credit
sale, refinancing, or consolidation contains covenants by the buyer
to perform certain duties pertaining to insuring or preserving
collateral and the seller pursuant to the agreement pays for
performance of the duties on behalf of the buyer, the seller may
add the amounts paid to the debt. Within a reasonable time after
advancing any sums, the seller shall state to the buyer in writing
the amount of the sums advanced, any charges with respect to this
amount, and any revised payment schedule and, if the duties of the
buyer performed by the seller pertain to insurance, a brief
description of the insurance paid for by the seller including the
type and amount of coverages. No further information need be
given.
(b) A credit service charge may be made for sums advanced
pursuant to subsection (a) at a rate not exceeding the rate stated to
the buyer pursuant to section 13 of this chapter with respect to the
sale, refinancing or consolidation, except that with respect to a
revolving charge account the amount of the advance may be added
to the unpaid balance of the account and the seller may make a
credit service charge not exceeding that permitted by the
provisions on credit service charge for revolving charge accounts
set forth in section 4(f) of this chapter.
Sec. 11. (a) Subject to the provisions on rebate upon prepayment
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set forth in section 12 of this chapter, the buyer may prepay in full
the unpaid balance of a consumer credit sale, refinancing, or
consolidation at any time without penalty.
(b) At the time of prepayment of a credit sale not subject to the
provisions of rebate upon prepayment set forth in section 12 of this
chapter, the total credit service charge:
(1) including the prepaid credit service charge; but
(2) subject to section 4(m) of this chapter, excluding the
nonrefundable prepaid finance charge allowed under section
4(k) of this chapter, in the case of a sale agreement entered
into after June 30, 2020;
may not exceed the maximum charge allowed under this chapter
for the period the credit sale was in effect.
(c) The creditor or mortgage servicer shall provide, in writing,
an accurate payoff amount for the consumer credit sale to the
debtor within seven (7) business days (excluding legal public
holidays, Saturdays, and Sundays) after the creditor or mortgage
servicer receives the debtor's written request for the accurate
consumer credit sale payoff amount. A payoff statement provided
by a creditor or mortgage servicer under this subsection must show
the date the statement was prepared and itemize the unpaid
principal balance and each fee, charge, or other sum included
within the payoff amount. A creditor or mortgage servicer who
fails to provide the accurate consumer credit sale payoff amount
is liable for:
(1) one hundred dollars ($100) if an accurate consumer credit
sale payoff amount is not provided by the creditor or
mortgage servicer within seven (7) business days (excluding
legal public holidays, Saturdays, and Sundays) after the
creditor or mortgage servicer receives the debtor's first
written request; and
(2) the greater of:
(A) one hundred dollars ($100); or
(B) the credit service charge that accrues on the sale from
the date the creditor or mortgage servicer receives the first
written request until the date on which the accurate
consumer credit sale payoff amount is provided;
if an accurate consumer credit sale payoff amount is not
provided by the creditor or mortgage servicer within seven (7)
business days (excluding legal public holidays, Saturdays, and
Sundays) after the creditor or mortgage servicer receives the
debtor's second written request, and the creditor or mortgage
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servicer failed to comply with subdivision (1).
A liability under this subsection is an excess charge under
IC 37-2-6-9.
(d) As used in this subsection, "mortgage transaction" means a
consumer credit sale in which a mortgage or a land contract (or
another consensual security interest equivalent to a mortgage or a
land contract) that constitutes a lien is created or retained against
land upon which there is constructed or intended to be constructed
a dwelling that is or will be used by the debtor primarily for
personal, family, or household purposes. This subsection applies to
a mortgage transaction with respect to which any installment or
minimum payment due is delinquent for at least sixty (60) days.
The creditor, servicer, or the creditor's agent shall acknowledge a
written offer made in connection with a proposed short sale not
later than five (5) business days (excluding legal public holidays,
Saturdays, and Sundays) after the date of the offer if the offer
complies with the requirements for a qualified written request set
forth in 12 U.S.C. 2605(e)(1)(B). The creditor, servicer, or
creditor's agent is required to acknowledge a written offer made
in connection with a proposed short sale from a third party acting
on behalf of the debtor only if the debtor has provided written
authorization for the creditor, servicer, or creditor's agent to do so.
Not later than thirty (30) business days (excluding legal public
holidays, Saturdays, and Sundays) after receipt of an offer under
this subsection, the creditor, servicer, or creditor's agent shall
respond to the offer with an acceptance or a rejection of the offer.
The thirty (30) day period described in this subsection may be
extended for not more than fifteen (15) business days (excluding
legal public holidays, Saturdays, and Sundays) if, before the end of
the thirty (30) day period, the creditor, the servicer, or the
creditor's agent notifies the debtor of the extension and the reason
the extension is needed. Payment accepted by a creditor, servicer,
or creditor's agent in connection with a short sale constitutes
payment in full satisfaction of the mortgage transaction unless the
creditor, servicer, or creditor's agent obtains either:
(1) a statement that: "The debtor remains liable for any
amount still owed under the mortgage transaction."; or
(2) a statement substantially similar to the statement set forth
in subdivision (1);
acknowledged by the initials or signature of the debtor, on or
before the date on which the short sale payment is accepted. As
used in this subsection, "short sale" means a transaction in which
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the property that is the subject of a mortgage transaction is sold
for an amount that is less than the amount of the debtor's
outstanding obligation under the mortgage transaction. A creditor
or mortgage servicer that fails to respond to an offer within the
time prescribed by this subsection is liable in accordance with 12
U.S.C. 2605(f) in any action brought under that section.
(e) This section is not intended to provide the owner of real
estate subject to the issuance of process under a judgment or
decree of foreclosure any protection or defense against a deficiency
judgment for purposes of the borrower protections from liability
that must be disclosed under 12 CFR 1026.38(p)(3) on the form
required by 12 CFR 1026.38 ("Closing Disclosures" form under
the Amendments to the 2013 Integrated Mortgage Disclosures Rule
Under the Real Estate Settlement Procedures Act (Regulation X)
and the Truth In Lending Act (Regulation Z) and the 2013 Loan
Originator Rule Under the Truth in Lending Act (Regulation Z)).
Sec. 12. (a) Except for subsections (b) and (i), this section applies
only to a sale agreement entered into before July 1, 2020. Except as
provided in subsection (b), upon prepayment in full of the unpaid
balance of a precomputed consumer credit sale, refinancing, or
consolidation, an amount not less than the unearned portion of the
credit service charge calculated according to this section shall be
rebated to the buyer. If the rebate required is less than one dollar
($1), no rebate need be made.
(b) Upon prepayment in full of a consumer credit sale,
refinancing, or consolidation, other than one pursuant to a
revolving charge account, if the credit service charge then earned
is less than any permitted minimum credit service charge under
section 4(h) of this chapter contracted for, whether or not the sale,
refinancing, or consolidation is precomputed, the seller may collect
or retain the minimum charge, as if earned, not exceeding the
credit service charge contracted for.
(c) The unearned portion of the credit service charge is a
fraction of the credit service charge of which the numerator is the
sum of the periodic balances scheduled to follow the computational
period in which prepayment occurs, and the denominator is the
sum of all periodic balances under either the sale agreement or, if
the balance owing resulted from a refinancing (section 8 of this
chapter) or a consolidation (section 9 of this chapter), under the
refinancing agreement or consolidation agreement.
(d) In this section:
(1) "periodic balance" means the amount scheduled to be
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outstanding on the last day of a computational period before
deducting the payment, if any, scheduled to be made on that
day;
(2) "computational period" means one (1) month if one-half
(1/2) or more of the intervals between scheduled payments
under the agreement is one (1) month or more, and otherwise
means one (1) week;
(3) the "interval" to the due date of the first scheduled
installment or the final scheduled payment date is measured
from the date of a sale, refinancing, or consolidation, or any
later date prescribed for calculating maximum credit service
charges under section 4(e) of this chapter and includes either
the first or last day of the interval; and
(4) if the interval to the due date of the first scheduled
installment does not exceed one (1) month by more than
fifteen (15) days when the computational period is one (1)
month, or eleven (11) days when the computational period is
one (1) week, the interval shall be considered as one (1)
computational period.
(e) This subsection applies only if the schedule of payments is
not regular.
(1) If the computational period is one (1) month and:
(A) if the number of days in the interval to the due date of
the first scheduled installment is less than one (1) month by
more than five (5) days, or more than one (1) month by
more than five (5) but not more than fifteen (15) days, the
unearned credit service charge shall be increased by an
adjustment for each day by which the interval is less than
one (1) month and, at the option of the seller, may be
reduced by an adjustment for each day by which the
interval is more than one (1) month; the adjustment for
each day shall be one-thirtieth (1/30) of that part of the
credit service charge earned in the computational period
prior to the due date of the first scheduled installment
assuming that period to be one (1) month; and
(B) if the interval to the final scheduled payment date is a
number of computational periods plus an additional
number of days less than a full month, the additional
number of days shall be considered a computational period
only if sixteen (16) days or more. This clause applies
whether or not clause (A) applies.
(2) Notwithstanding subdivision (1), if the computational
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period is one (1) month, the number of days in the interval to
the due date of the first installment exceeds one (1) month by
not more than fifteen (15) days, and the schedule of payments
is otherwise regular, the seller, at the seller's option, may
exclude the extra days and the charge for the extra days in
computing the unearned credit service charge; but if the seller
does so and a rebate is required before the due date of the
first scheduled installment, the seller shall compute the earned
charge for each elapsed day as one-thirtieth (1/30) of the
amount the earned charge would have been if the first
interval had been one (1) month.
(3) If the computational period is one (1) week and:
(A) if the number of days in the interval to the due date of
this first scheduled installment is less than five (5) days or
more than nine (9) days but not more than eleven (11)
days, the unearned credit service charge shall be increased
by an adjustment for each day by which the interval is less
than seven (7) days and, at the option of the seller, may be
reduced by an adjustment for each day by which the
interval is more than seven (7) days; the adjustment for
each day shall be one-seventh (1/7) of that part of the
credit service charge earned in the computational period
prior to the due date of the first scheduled installment
assuming that period to be one (1) week; and
(B) if the interval to the final scheduled payment date is a
number of computational periods plus an additional
number of days less than a full week, the additional
number of days shall be considered a computational period
only if five (5) days or more. This clause applies whether or
not clause (A) applies.
(f) If a deferral under section 7 of this chapter has been agreed
to, the unearned portion of the credit service charge shall be
computed without regard to the deferral. The amount of deferral
charge earned at the date of prepayment shall also be calculated.
If the deferral charge earned is less than the deferral charge paid,
the difference shall be added to the unearned portion of the credit
service charge. If any part of a deferral charge has been earned but
has not been paid, that part shall be subtracted from the unearned
portion of the credit service charge or shall be added to the unpaid
balance.
(g) This section does not preclude the collection or retention by
the seller of delinquency charges under section 6 of this chapter.
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(h) If the maturity is accelerated for any reason and judgment
is obtained, the buyer is entitled to the same rebate as if payment
had been made on the date judgment is entered.
(i) Upon prepayment in full of a consumer credit sale by the
proceeds of consumer credit insurance, the buyer or the buyer's
estate shall pay the same credit service charge or receive the same
rebate as though the buyer had prepaid the agreement on the date
the proceeds of the insurance are paid to the seller, but no later
than ten (10) business days after satisfactory proof of loss is
furnished to the seller. This subsection applies whether or not the
credit sale is precomputed.
(j) Upon prepayment in full of a transaction with a term of more
than sixty-one (61) months, the unearned part of the credit service
charge shall be computed by applying the disclosed annual
percentage rate that would yield the credit service charge
originally contracted for to the unpaid balances of the amount
financed for the full computational periods following the
prepayment, as originally scheduled or as deferred.
Sec. 13. (a) For purposes of this section, "consumer credit sale"
includes a sale that is a sale of an interest in land and that is a first
lien mortgage transaction if the sale is otherwise a consumer credit
sale.
(b) The seller shall disclose to the buyer to whom credit is
extended with respect to a consumer credit sale, and the lessor
shall disclose to the lessee with respect to a consumer lease, the
information required by the Consumer Credit Protection Act (15
U.S.C. 1601 et seq.).
(c) For purposes of subsection (b), disclosures shall not be
required on a consumer credit sale if the transaction is exempt
from the Consumer Credit Protection Act (15 U.S.C. 1601 et seq.).
Sec. 14. A seller may not use multiple agreements with intent to
obtain a higher credit service charge than would otherwise be
permitted by this article or to avoid disclosure of an annual
percentage rate pursuant to section 13 of this chapter. The excess
amount of credit service charge provided for in agreements in
violation of this section is an excess charge for the purposes of the
provisions on the effect of violations on rights of parties
(IC 37-2-6-9) and the provisions on civil actions by the department
(IC 37-2-7-14).
Sec. 15. (a) For the purposes of this section, "terms of the
refinancing" means:
(1) in the case of a fixed-rate consumer credit sale, the
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individual payment amounts, the charges as a result of default
by the buyer, and the rate of the credit service charge; and
(2) in the case of a variable rate consumer credit sale, the
method used to determine the individual payment amounts,
the charges as a result of default by the buyer, the method
used to determine the rate of the credit service charge, the
circumstances under which the rate of the credit service
charge may increase, and any limitations on the increase in
the rate of the credit service charge.
(b) With respect to a consumer credit sale, other than one
pursuant to a revolving charge account or one on which only credit
service charges are payable before the time that the final scheduled
payment is due, if any scheduled payment is more than twice as
large as the average of earlier scheduled payments, the buyer has
the right to refinance the amount of that payment at the time it is
due without penalty. The terms of the refinancing shall be no less
favorable to the buyer than the terms of the original sale. This
section does not apply to the extent that the payment schedule is
adjusted to the seasonal or irregular income of the buyer.
Sec. 16. The obligation of a lessee upon expiration of a consumer
lease may not exceed three (3) times the average payment allocable
to a monthly period under the lease. This limitation does not apply
to charges for damages to the leased property or for other default.
Sec. 17. (a) With respect to a consumer credit sale, a seller may
take a security interest in the property sold. In addition, a seller
may take a security interest in goods upon which services are
performed or in which goods sold are installed or to which they are
annexed, or in land to which the goods are affixed or which is
maintained, repaired, or improved as a result of the sale of the
goods or services, if, in the case of a subordinate lien mortgage
transaction, the debt secured is four thousand dollars ($4,000) or
more, or, in the case of a security interest in goods the debt secured
is three hundred dollars ($300) or more. Except as provided with
respect to cross-collateral in section 19 of this chapter, a seller may
not otherwise take a security interest in property of the buyer to
secure the debt arising from a consumer credit sale.
(b) With respect to a consumer lease, a lessor may not take a
security interest in property of the lessee to secure the debt arising
from the lease.
(c) A security interest taken in violation of this section is void.
(d) The amounts of four thousand dollars ($4,000) and three
hundred dollars ($300) in subsection (a) are subject to change
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pursuant to the provisions on adjustment of dollar amounts in
IC 37-2-1-5. However, notwithstanding IC 37-2-1-5(a), the
Reference Base Index to be used with respect to the amount of:
(1) three hundred dollars ($300) is the Index for October
1992; and
(2) four thousand dollars ($4,000) is the Index for October
2012.
Sec. 18. The leasing of live domestic animals (as defined in
IC 34-30-30-1) under this chapter is prohibited.
Sec. 19. (a) As used in this section, "seller" does not include an
assignee not related to the original seller.
(b) In addition to contracting for a security interest pursuant to
the provisions on security in sales or leases in section 17 of this
chapter, a seller in a consumer credit sale may secure the debt
arising from the sale by contracting for a security interest in other
property if as a result of a prior sale the seller has an existing
security interest in the other property. The seller may also contract
for a security interest in the property sold in the subsequent sale as
security for the previous debt.
(c) If the seller contracts for a security interest in other property
pursuant to this section, the rate of credit service charge thereafter
on the aggregate unpaid balances so secured may not exceed that
permitted if the balances so secured were consolidated pursuant to
the provisions on consolidation involving a refinancing in section
9(a) of this chapter. The seller has a reasonable time after so
contracting to make any adjustments required by this section.
Sec. 20. (a) If debts arising from two (2) or more consumer
credit sales, other than sales pursuant to a revolving charge
account, are secured by cross-collateral under section 19 of this
chapter or consolidated into one (1) debt payable on a single
schedule of payments, and the debt is secured by security interests
taken with respect to one (1) or more of the sales, payments
received by the seller after the taking of the cross-collateral or the
consolidation are deemed, for the purpose of determining the
amount of the debt secured by the various security interests, to
have been first applied to the payment of the debts arising from the
sales first made. To the extent debts are paid according to this
section, security interests in items of property terminate as the debt
originally incurred with respect to each item is paid.
(b) Payments received by the seller upon a revolving charge
account are deemed, for the purpose of determining the amount of
the debt secured by the various security interests, to have been
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applied first to the payment of credit service charges in the order
of their entry to the account and then to the payment of debts in
the order in which the entries to the account showing the debts
were made.
(c) If the debts consolidated arose from two (2) or more sales
made on the same day, payments received by the seller are deemed,
for the purpose of determining the amount of the debts secured by
the various security interests, to have been applied first to the
payment of the smallest debt.
Sec. 21. A seller or lessor may not take an assignment of
earnings of the buyer or lessee for payment or as security for
payment of a claim, whether arising out of a consumer credit sale,
consumer lease, or otherwise. An assignment of earnings in
violation of this section is unenforceable by the assignees of the
earnings and revocable by the buyer or lessee. This section does not
prohibit an employee from authorizing deductions from the
employee's earnings if the authorization is revocable and is
otherwise permitted by law.
Sec. 22. With respect to a consumer credit sale or consumer
lease the seller or lessor may not give or offer to give a rebate or
discount or otherwise pay or offer to pay value to the buyer or
lessee as an inducement for a sale or lease in consideration of the
buyer or lessee giving to the seller or lessor the names of
prospective purchasers or lessees, or otherwise aiding the seller or
lessor in making a sale or lease to another person, if the earning of
the rebate, discount or other value is contingent upon the
occurrence of an event subsequent to the time the buyer or lessee
agrees to buy or lease. If a buyer or lessee is induced by a violation
of this section to enter into a consumer credit sale or consumer
lease, the agreement is unenforceable by the seller or lessor and the
buyer or lessee, at the buyer's or lessee's option, may rescind the
agreement or retain the goods delivered and the benefit of any
services performed, without any obligation to pay for them.
Sec. 23. The buyer or lessee is authorized to pay the original
seller or lessor until the buyer or lessee receives notification of
assignment of the rights to payment pursuant to a consumer credit
sale or consumer lease and that payment is to be made to the
assignee. A notification which does not reasonably identify the
rights assigned is ineffective. If requested by the buyer or lessee,
the assignee must seasonably furnish reasonable proof that the
assignment has been made and unless the assignee does so the
buyer or lessee may pay the seller or lessor.
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Sec. 24. With respect to a consumer credit sale or consumer
lease the agreement may provide for the payment by the buyer or
lessee of reasonable attorney's fees and after default and referral
to an attorney not a salaried employee of the seller, or of the lessor
or the lessor's assignee. A provision in violation of this section is
unenforceable.
Sec. 25. Except for reasonable expenses incurred in realizing on
a security interest, the agreement with respect to a consumer credit
sale may not provide for any charges as a result of default by the
buyer other than those authorized by this article. A provision in
violation of this section is unenforceable.
Sec. 26. A buyer or lessee may not authorize any person to
confess judgment on a claim arising out of a consumer credit sale
or consumer lease. An authorization in violation of this section is
void.
Sec. 27. (a) This section applies to consumer credit sales,
including revolving charge accounts.
(b) Except as provided in subsection (c), a creditor shall credit
a payment to a consumer's account as of the date of receipt, except
when a delay in crediting does not result in a finance charge or
other charge, including a delinquency charge under section 6 of
this chapter. A delay in posting does not violate this section so long
as the payment is credited as of the date of receipt.
(c) If a creditor specifies in writing requirements for the
consumer to follow in making payments, but accepts a payment
that does not conform to the requirements, the creditor shall credit
the payment within five (5) days of receipt of the payment.
(d) If a creditor fails to credit a payment as required by this
section in time to avoid the imposition of a finance or other charge,
including a delinquency charge, the creditor shall adjust the
consumer's account so that the charges imposed are credited to the
consumer's account during the next payment period.
Sec. 28. The requirements of 16 CFR 429 must be met in regard
to the following provisions concerning a home solicitation sale:
(1) Period within which cancellation may be made by the
buyer.
(2) Notice of cancellation.
(3) Form of cancellation.
(4) Form of agreement or offer to purchase.
(5) Statement of buyer's rights.
(6) Restoration of down payment.
(7) Retention of cancellation fee.
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(8) Duty of buyer.
(9) Any other relevant requirements in 16 CFR 429.
Sec. 29. The parties to a sale other than a consumer credit sale
may agree in a writing signed by the parties that the sale is subject
to the provisions of this article applying to consumer credit sales.
If the parties so agree, the sale is a consumer credit sale for the
purposes of this article.
Sec. 30. (a) With respect to a consumer related sale not made
pursuant to a revolving charge account, the parties may contract
for an amount comprising the amount financed and a credit service
charge not in excess of twenty-five percent (25%) per year
calculated according to the actuarial method on the unpaid
balances of the amount financed.
(b) With respect to a consumer related sale made pursuant to a
revolving charge account, the parties may contract for a credit
service charge not in excess of that permitted by the provisions on
credit service charge for revolving charge accounts set forth in
section 4(f) of this chapter.
(c) A person engaged in consumer related sales is not required
to comply with IC 37-2-7-24 through IC 37-2-7-26.
Sec. 31. Except for the rate of the credit service charge set forth
in section 4 of this chapter and the rights to prepay and to rebate
upon prepayment, sections 4 through 12 of this chapter apply to a
consumer related sale.
Sec. 32. (a) An agreement with respect to a consumer related
sale may provide for only the following charges as a result of the
buyer's default:
(1) Reasonable attorney's fees and reasonable expenses
incurred in realizing on a security interest.
(2) Deferral charges not in excess of twenty-five percent
(25%) per year of the amount deferred for the period of
deferral.
(3) Other charges that could have been made had the sale
been a consumer credit sale.
(b) A provision in violation of this section is unenforceable.
Sec. 33. With respect to a sale other than a consumer credit sale
or a consumer related sale, the parties may contract for the
payment by the buyer of any credit service charge.
Chapter 4. Loans
Sec. 0.1. The following amendments to IC 24-4.5-3 (before its
repeal) applied as follows:
(1) The amendments made to IC 24-4.5-3-201 (before its
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repeal) by P.L.163-1999 did not apply to consumer loans in
existence before July 1, 1999.
(2) The amendments made to IC 24-4.5-3-209(1) (before its
repeal) by P.L.159-2001 applied to a contract between a
lender and a debtor that is entered into or renewed after June
30, 2001.
Sec. 1. (a) This chapter applies to consumer loans, including
supervised loans.
(b) Sections 15 through 21 of this chapter apply to consumer
loans. Except as otherwise provided, all provisions of this article
applying to consumer loans apply to supervised loans.
(c) Sections 41 through 44 of this chapter apply to consumer
related loans.
(d) Except for the rate of the loan finance charge and the rights
to prepay and to rebate upon prepayment, sections 4 through 13 of
this chapter apply to a consumer related loan.
(e) The licensing provisions of this chapter apply to consumer
credit sales under IC 37-2-3 that are subordinate lien mortgage
transactions.
Sec. 2. Unless a loan is made subject to this chapter by
agreement under section 41 of this chapter, and except with respect
to:
(1) disclosure (section 14 of this chapter);
(2) debtors' remedies (IC 37-2-6-8);
(3) providing payoff amounts (section 12 of this chapter);
(4) providing property tax information (section 46 of this
chapter);
(5) powers and functions of the department (IC 37-2-7-3);
(6) the department's examination and investigatory authority
(IC 37-2-7-5); and
(7) the department's administrative enforcement authority
(IC 37-2-7-9);
the term "consumer loan" does not include a first lien mortgage
transaction.
Sec. 3. A loan, refinancing, or consolidation is considered
precomputed if the debt is expressed as a sum comprising the
principal and the amount of the loan finance charge computed in
advance.
Sec. 4. (a) This section does not apply to a supervised loan.
Except as provided in subsections (f) and (i), with respect to a
consumer loan, a lender may contract for a loan finance charge,
calculated according to the actuarial method, not exceeding
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twenty-five percent (25%) per year on the unpaid balances of the
principal.
(b) In the case of a loan agreement entered into before July 1,
2020, this section does not limit or restrict the manner of
contracting for the loan finance charge, whether by way of add-on,
discount, or otherwise, so long as the rate of the loan finance
charge does not exceed that permitted by this section. If the loan is
precomputed:
(1) the loan finance charge may be calculated on the
assumption that all scheduled payments will be made when
due; and
(2) the effect of prepayment is governed by the provisions on
rebate upon prepayment in section 13 of this chapter.
(c) The following apply to a loan agreement for a consumer loan
(or for the refinancing or consolidation of a consumer loan) that is
entered into after June 30, 2020:
(1) The consumer loan is subject to this section, including the
limitations set forth in:
(A) subsection (a) with respect to the loan finance charge;
and
(B) subsection (i)(2) with respect to the amount of the
authorized nonrefundable prepaid finance charge, in the
case of a consumer loan that is not secured by an interest
in land.
(2) The loan finance charge authorized by this section must
be:
(A) contracted for between the lender and the debtor; and
(B) calculated by applying a rate not exceeding the rate set
forth in subsection (a) to unpaid balances of the principal.
(3) A loan agreement for a precomputed consumer loan is
prohibited.
(4) Subject to subsection (l), in addition to the loan finance
charge authorized by subsection (a) and to any other fees
permitted by this chapter, and not subject to the twenty-five
percent (25%) rate set forth in subsection (a), the lender may
contract for and receive as a condition for, or an incident to,
the extension of credit a nonrefundable prepaid finance
charge under subsection (i), whether the charge is:
(A) paid separately in cash or by check before or at
consummation; or
(B) withheld from the proceeds of the consumer loan.
(d) For the purposes of this section, the term of a loan
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commences with the date the loan is made. Differences in the
lengths of months are disregarded, and a day may be counted as
one-thirtieth (1/30) of a month. Subject to classifications and
differentiations the lender may reasonably establish, a part of a
month in excess of fifteen (15) days may be treated as a full month
if periods of fifteen (15) days or less are disregarded and if that
procedure is not consistently used to obtain a greater yield than
would otherwise be permitted. For purposes of computing average
daily balances, the creditor may elect to treat all months as
consisting of thirty (30) days.
(e) With respect to a consumer loan made pursuant to a
revolving loan account:
(1) the loan finance charge shall be deemed not to exceed the
maximum annual percentage rate if the loan finance charge
contracted for and received does not exceed a charge in each
monthly billing cycle which is two and eighty-three
thousandths percent (2.083%) of an amount not greater than:
(A) the average daily balance of the debt;
(B) the unpaid balance of the debt on the same day of the
billing cycle; or
(C) subject to subsection (f), the median amount within a
specified range within which the average daily balance or
the unpaid balance of the debt, on the same day of the
billing cycle, is included; for the purposes of this clause and
clause (B), a variation of not more than four (4) days from
month to month is "the same day of the billing cycle";
(2) if the billing cycle is not monthly, the loan finance charge
shall be deemed not to exceed the maximum annual
percentage rate if the loan finance charge contracted for and
received does not exceed a percentage which bears the same
relation to one-twelfth (1/12) the maximum annual percentage
rate as the number of days in the billing cycle bears to thirty
(30); and
(3) notwithstanding subsection (a), if there is an unpaid
balance on the date as of which the loan finance charge is
applied, the lender may contract for and receive a charge not
exceeding fifty cents ($0.50) if the billing cycle is monthly or
longer, or the pro rata part of fifty cents ($0.50) which bears
the same relation to fifty cents ($0.50) as the number of days
in the billing cycle bears to thirty (30) if the billing cycle is
shorter than monthly, but no charge may be made pursuant
to this subdivision if the lender has made an annual charge for
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the same period as permitted by the provisions on additional
charges in section 5(a)(3) of this chapter.
(f) Subject to classifications and differentiations the lender may
reasonably establish, the lender may make the same loan finance
charge on all amounts financed within a specified range. A loan
finance charge does not violate subsection (a) if:
(1) when applied to the median amount within each range, it
does not exceed the maximum permitted by subsection (a);
and
(2) when applied to the lowest amount within each range, it
does not produce a rate of loan finance charge exceeding the
rate calculated according to subdivision (1) by more than
eight percent (8%) of the rate calculated according to
subdivision (1).
(g) With respect to a consumer loan not made pursuant to a
revolving loan account, the lender may contract for and receive a
minimum loan finance charge of not more than thirty dollars ($30).
The minimum loan finance charge allowed under this subsection
may be imposed only if the lender does not contract for or receive
a nonrefundable prepaid finance charge under subsection (i) and:
(1) the debtor prepays in full a consumer loan, refinancing, or
consolidation, regardless of whether the loan, refinancing, or
consolidation is precomputed;
(2) the loan, refinancing, or consolidation prepaid by the
debtor is subject to a loan finance charge that:
(A) is contracted for by the parties; and
(B) does not exceed the rate prescribed in subsection (a);
and
(3) the loan finance charge earned at the time of prepayment
is less than the minimum loan finance charge contracted for
under this subsection.
(h) The amount of thirty dollars ($30) in subsection (g) is subject
to change under the provisions on adjustment of dollar amounts set
forth in IC 37-2-1-5. However, notwithstanding IC 37-2-1-5(a), the
Reference Base Index to be used under this subsection is the Index
for October 1992.
(i) Except as provided in subsection (g), and subject to
subsection (l), in addition to the loan finance charge authorized by
subsection (a) and to any other charges and fees permitted by this
chapter, a lender may contract for and receive a nonrefundable
prepaid finance charge of not more than the following:
(1) In the case of a consumer loan that is secured by an
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interest in land and that:
(A) is not made under a revolving loan account, three
percent (3%) of the loan amount; or
(B) is made under a revolving loan account, three percent
(3%) of the line of credit.
(2) In the case of consumer loan that is not secured by an
interest in land, fifty dollars ($50) if the loan agreement is
entered into before July 1, 2020. If the loan agreement is
entered into after June 30, 2020, not more than the following:
(A) Seventy-five dollars ($75), in the case of a loan
agreement for a principal amount which is two thousand
dollars ($2,000) or less.
(B) One hundred fifty dollars ($150) in the case of a loan
agreement for a principal amount which is more than two
thousand dollars ($2,000) but does not exceed four
thousand dollars ($4,000).
(C) Two hundred dollars ($200) in the case of a loan
agreement for a principal amount which is more than four
thousand dollars ($4,000).
The amounts in this subsection are not subject to change under
IC 37-2-1-5.
(j) The nonrefundable prepaid finance charge provided for in
subsection (i) is not subject to refund or rebate. However, for any
loan entered into after June 30, 2020, any amount charged by the
lender, other than by a lender that is a depository institution,
under subsection (i) that exceeds the applicable amount permitted
by subsection (i)(2) constitutes a violation of this article under
IC 37-2-7-8(12) and is subject to refund. Any amount charged by
a depository institution under subsection (i) that exceeds the
applicable amount set forth in subsection (i)(2) is subject to refund.
(k) If the director determines that a lender's accrual method of
accounting as applied to a consumer loan under this section
involves the application of subterfuge for the purpose of
circumventing this chapter, the director may conform the loan
finance charge and fees for the transaction to the limitations set
forth in this section and may require a refund of overcharges
under IC 37-2-7-5(b)(1). A determination by the director under this
subsection:
(1) must be in writing;
(2) shall be delivered to all parties in the transaction; and
(3) is subject to IC 4-21.5-3.
(l) At the time of consummation of a consumer loan:
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(1) the loan finance charge authorized by subsection (a); and
(2) the nonrefundable prepaid finance charge authorized by
subsection (i) (including any amount charged by a depository
institution that exceeds the applicable amount set forth in
subsection (i)(2));
are subject to IC 35-45-7 and, when combined, may not exceed the
rate set forth in IC 35-45-7-2.
(m) Notwithstanding subsections (i) and (j), in the case of a
consumer loan that is not secured by an interest in land, if a lender
retains any part of a nonrefundable prepaid finance charge
charged on a loan that is paid in full by a new loan from the same
lender, the following apply:
(1) If the loan is paid in full by the new loan within three (3)
months after the date of the prior loan, the lender may not
charge a nonrefundable prepaid finance charge on the new
loan, or, in the case of a revolving loan, on the increased credit
line.
(2) The lender may not assess more than two (2)
nonrefundable prepaid finance charges in any twelve (12)
month period.
(3) Subject to subdivisions (1) and (2), if a loan that is entered
into by a lender and a debtor before July 1, 2020, is paid in
full by a new loan from the same lender after June 30, 2020,
the lender may contract for and receive a nonrefundable
prepaid finance charge in the amount set forth in subsection
(i)(2) for loan agreements entered into after June 30, 2020.
(n) In the case of a consumer loan that is secured by an interest
in land, this section does not prohibit a lender from contracting for
and receiving a fee for preparing deeds, mortgages, reconveyances,
and similar documents under section 5(a)(4)(B) of this chapter, in
addition to the nonrefundable prepaid finance charge provided for
in subsection (i).
Sec. 5. (a) In addition to the loan finance charge permitted by
this chapter, a lender may contract for and receive the following
additional charges in connection with a consumer loan:
(1) Official fees and taxes.
(2) Charges for insurance as described in subsection (b).
(3) Annual participation fees assessed in connection with a
revolving loan account. Annual participation fees must:
(A) be reasonable in amount;
(B) bear a reasonable relationship to the lender's costs to
maintain and monitor the loan account; and
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(C) not be assessed for the purpose of circumvention or
evasion of this article, as determined by the department.
(4) With respect to a debt secured by an interest in land, the
following closing costs, if they are bona fide, reasonable in
amount, and not for the purpose of circumvention or evasion
of this article:
(A) Fees for title examination, abstract of title, title
insurance, property surveys, or similar purposes.
(B) Fees for preparing deeds, mortgages, and
reconveyance, settlement, and similar documents.
(C) Notary and credit report fees.
(D) Amounts required to be paid into escrow or trustee
accounts if the amounts would not otherwise be included in
the loan finance charge.
(E) Appraisal fees.
(5) Notwithstanding provisions of the Consumer Credit
Protection Act (15 U.S.C. 1601 et seq.) concerning disclosure,
charges for other benefits, including insurance, conferred on
the debtor, if the benefits are of value to the debtor and if the
charges are reasonable in relation to the benefits, and are
excluded as permissible additional charges from the loan
finance charge. With respect to any other additional charge
not specifically provided for in this section to be a permitted
charge under this subsection, the creditor must submit a
written explanation of the charge to the department
indicating how the charge would be assessed and the value or
benefit to the debtor. Supporting documents may be required
by the department. The department shall determine whether
the charge would be of benefit to the debtor and is reasonable
in relation to the benefits.
(6) A charge not to exceed twenty-five dollars ($25) for each
returned payment by a bank or other depository institution of
a dishonored check, electronic funds transfer, negotiable
order of withdrawal, or share draft issued by the debtor.
(7) With respect to a revolving loan account, a fee not to
exceed twenty-five dollars ($25) in each billing cycle during
which the balance due under the revolving loan account
exceeds by more than one hundred dollars ($100) the
maximum credit limit for the account established by the
lender.
(8) With respect to a revolving loan account, a transaction fee
that may not exceed the greater of the following:
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(A) Two percent (2%) of the amount of the transaction.
(B) Ten dollars ($10).
(9) A charge not to exceed twenty-five dollars ($25) for a
skip-a-payment service, subject to the following:
(A) At the time of use of the service, the consumer must be
given written notice of the amount of the charge and must
acknowledge the amount in writing, including by electronic
signature.
(B) A charge for a skip-a-payment service may not be
assessed with respect to a consumer loan subject to the
provisions on rebate upon prepayment that are set forth in
section 13 of this chapter.
(C) A charge for a skip-a-payment service may not be
assessed with respect to any payment for which a
delinquency charge has been assessed under section 6 of
this chapter.
(10) A charge not to exceed ten dollars ($10) for an optional
expedited payment service, subject to the following:
(A) The charge may be assessed only upon request by the
consumer to use the expedited payment service.
(B) The amount of the charge must be disclosed to the
consumer at the time of the consumer's request to use the
expedited payment service.
(C) The consumer must be informed that the consumer
retains the option to make a payment by traditional means.
(D) The charge may not be established in advance, through
any agreement with the consumer, as the expected method
of payment.
(E) The charge may not be assessed with respect to any
payment for which a delinquency charge has been assessed
under section 6 of this chapter.
(11) A charge for a GAP agreement, subject to subsection (c).
(12) With respect to consumer loans made by a person exempt
from licensing under section 24(a) of this chapter, a charge
for a debt cancellation agreement, subject to the following:
(A) A debt cancellation agreement or debt cancellation
coverage may not be required by the lender, and that fact
must be disclosed in writing to the consumer.
(B) The charge for the initial term of coverage under the
debt cancellation agreement must be disclosed in writing
to the consumer. The charge may be disclosed on a
unit-cost basis only in the case of revolving loan accounts,
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closed-end credit transactions if the request for coverage
is made by mail or telephone, and closed-end credit
transactions if the debt cancellation agreement limits the
total amount of indebtedness eligible for coverage.
(C) If the term of coverage under the debt cancellation
agreement is less than the term of the consumer loan, the
term of coverage under the debt cancellation agreement
must be disclosed in writing to the consumer.
(D) The consumer must sign or initial an affirmative
written request for coverage after receiving all required
disclosures.
(E) If debt cancellation coverage for two (2) or more events
is provided for in a single charge under a debt cancellation
agreement, the entire charge may be excluded from the
loan finance charge and imposed as an additional charge
under this section if at least one (1) of the events is the loss
of life, health, or income.
The additional charges provided for in subdivisions (7) through
(10) are not subject to refund or rebate.
(b) An additional charge may be made for insurance in
connection with the loan, other than insurance protecting the
lender against the debtor's default or other credit loss:
(1) with respect to insurance against loss of or damage to
property or against liability, if the lender furnishes a clear
and specific statement in writing to the debtor, setting forth
the cost of the insurance if obtained from or through the
lender and stating that the debtor may choose the person,
subject to the lender's reasonable approval, through whom
the insurance is to be obtained; and
(2) with respect to consumer credit insurance providing life,
accident, unemployment or other loss of income, or health
coverage, if the insurance coverage is not a factor in the
approval by the lender of the extension of credit and this fact
is clearly disclosed in writing to the debtor, and if, in order to
obtain the insurance in connection with the extension of
credit, the debtor gives specific affirmative written indication
of the desire to do so after written disclosure of the cost of the
insurance.
(c) An additional charge may be made for a GAP agreement,
subject to the following:
(1) A GAP agreement or GAP coverage may not be required
by the lender, and that fact must be disclosed in writing to the
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consumer.
(2) The charge for the initial term of coverage under the GAP
agreement must be disclosed in writing to the consumer. The
charge may be disclosed on a unit-cost basis only in the case
of the following transactions:
(A) Revolving loan accounts.
(B) Closed-end credit transactions, if the request for
coverage is made by mail or telephone.
(C) Closed-end credit transactions, if the GAP agreement
limits the total amount of indebtedness eligible for
coverage.
(3) If the term of coverage under the GAP agreement is less
than the term of the consumer loan, the term of coverage
under the GAP agreement must be disclosed in writing to the
consumer.
(4) The consumer must sign or initial an affirmative written
request for coverage after receiving all required disclosures.
(5) The GAP agreement must include the following:
(A) In the case of GAP coverage for a new motor vehicle,
the manufacturer's suggested retail price (MSRP) for the
motor vehicle.
(B) In the case of GAP coverage for a used motor vehicle,
the average retail value for the motor vehicle, as
determined by use of a third party valuation service
provider that is customarily relied upon in the used motor
vehicle commercial marketplace.
(C) The name of the financing entity taking assignment of
the agreement, as applicable.
(D) The name and address of the consumer.
(E) The name of the lender selling the agreement.
(F) Information advising the consumer that the consumer
may be able to obtain similar coverage from the
consumer's primary insurance carrier.
(G) A coverage provision that includes a minimum
deductible of five hundred dollars ($500).
(H) A provision providing for a minimum thirty (30) day
trial period.
(I) In the case of a consumer loan made with respect to a
motor vehicle, a provision excluding the sale of GAP
coverage if the amount financed under the consumer loan
(not including the cost of the GAP agreement, the cost of
any credit insurance, and the cost of any warranties or
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service agreements) is less than eighty percent (80%) of the
manufacturer's suggested retail price (MSRP), in the case
of a new motor vehicle, or of the average retail value (as
determined by use of a third party valuation service
provider that is customarily relied upon in the used motor
vehicle commercial marketplace), in the case of a used
motor vehicle.
(J) In the case of a GAP agreement in which the charge for
the agreement exceeds four hundred dollars ($400),
specific instructions that may be used by the consumer to
cancel the agreement and obtain a refund of the unearned
GAP charge before prepayment in full, in accordance with
the procedures, and subject to the conditions, set forth in
subdivision (6).
(6) If the charge for the GAP agreement exceeds four hundred
dollars ($400), the consumer is entitled to cancel the
agreement and obtain a refund of the unearned GAP charge
before prepayment in full. Refunds of unearned GAP charges
shall be made subject to the following conditions:
(A) A refund of the charge for a GAP agreement must be
calculated using a method that is no less favorable to the
consumer than a refund calculated on a pro rata basis.
(B) The consumer is entitled to a refund of the unearned
GAP agreement charge as outlined in the GAP agreement.
(C) The seller of the GAP agreement, or the seller's
assignee, is responsible for making a timely refund to the
consumer of unearned GAP agreement charges under the
terms and conditions of the GAP agreement.
(7) Upon prepayment in full of the consumer loan:
(A) the GAP coverage is automatically terminated; and
(B) the seller of the GAP agreement must issue a refund in
accordance with subdivision (6).
(8) A lender that sells GAP agreements must:
(A) insure its GAP agreement obligations under a
contractual liability insurance policy issued by an insurer
authorized to engage in the insurance business in Indiana;
and
(B) retain appropriate records, as required under this
article, regarding GAP agreements sold, refunded, and
expired.
Sec. 6. (a) With respect to a consumer loan, refinancing, or
consolidation, the parties may contract for a delinquency charge of
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not more than the following:
(1) Five dollars ($5) on any installment or minimum payment
due that is not paid in full not later than ten (10) days after its
scheduled due date, in the case of a consumer loan,
refinancing, or consolidation that is made before July 1, 2019.
The amount of five dollars ($5) in this subdivision is subject
to change under IC 37-2-1-5. In addition, the parties may
provide by contract for a delinquency charge that is subject
to change. If the parties provide by contract for a delinquency
charge that is subject to change, the lender shall disclose in
the contract that the amount of the delinquency charge is
subject to change under IC 37-2-1-5 or this section.
(2) In the case of a consumer loan, refinancing, or
consolidation that is made after June 30, 2019, the following:
(A) Five dollars ($5) on any installment or minimum
payment due that is not paid in full not later than ten (10)
days after its scheduled due date, if installments under the
consumer loan, refinancing, or consolidation are due every
fourteen (14) days or less. The amount of five dollars ($5)
in this clause is not subject to change under IC 37-2-1-5.
(B) Twenty-five dollars ($25) on any installment or
minimum payment due that is not paid in full not later
than ten (10) days after its scheduled due date, if
installments under the consumer loan, refinancing, or
consolidation are due every fifteen (15) days or more. The
amount of twenty-five dollars ($25) in this clause is not
subject to change under IC 37-2-1-5.
(C) Twenty-five dollars ($25) on any installment or
minimum payment due that is not paid in full not later
than ten (10) days after its scheduled due date, in the case
of a consumer loan, refinancing, or consolidation that is
payable in a single installment that is due at least thirty
(30) days after the consumer loan, refinancing, or
consolidation is made. The amount of twenty-five dollars
($25) in this clause is not subject to change under
IC 37-2-1-5.
(b) A delinquency charge under this section may be collected
only once on an installment however long it remains in default.
With regard to a delinquency charge on consumer loans made
under a revolving loan account, the delinquency charge may be
applied each month that the payment is less than the minimum
required payment on the account. A delinquency charge may be
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collected any time after it accrues. A delinquency charge may not
be collected if:
(1) the installment has been deferred and a deferral charge
under section 7 of this chapter has been paid or incurred;
(2) a charge for a skip-a-payment service under section 5(a)(9)
of this chapter has been paid or incurred, as provided in
section 5(a)(9)(C) of this chapter; or
(3) a charge for an optional expedited payment service under
section 5(a)(10) of this chapter has been paid or incurred, as
provided in section 5(a)(10)(E) of this chapter.
(c) A creditor may not, directly or indirectly, charge or collect
a delinquency charge on a payment that:
(1) is paid not later than ten (10) days after its scheduled due
date; and
(2) is otherwise a full payment of the payment due for the
applicable installment period;
if the only delinquency with respect to the consumer loan,
refinancing, or consolidation is attributable to a delinquency
charge assessed on an earlier installment.
(d) If two (2) or more installments, or parts of two (2) or more
installments, of a precomputed loan are in default for ten (10) days
or more, the lender may elect to convert the loan from a
precomputed loan to a loan in which the finance charge is based on
unpaid balances. A lender that makes this election shall make a
rebate under the provisions on rebates upon prepayment set forth
in section 13 of this chapter as of the maturity date of the first
delinquent installment, and thereafter may make a loan finance
charge as authorized by the provisions on loan finance charges for
consumer loans (section 4 of this chapter) or supervised loans
(section 35 of this chapter). The amount of the rebate shall not be
reduced by the amount of any permitted minimum charge under
section 13 of this chapter. Any deferral charges made on
installments due at or after the maturity date of the first delinquent
installment shall be rebated, and no further deferral charges shall
be made.
Sec. 7. (a) This section applies only to a consumer loan,
refinancing, or consolidation, that is entered into before July 1,
2020. With respect to a precomputed consumer loan, refinancing,
or consolidation, the parties before or after default may agree in
writing to a deferral of all or part of one (1) or more unpaid
installments, and the lender may make and collect a charge not
exceeding the lesser of thirty-six percent (36%) per year or the rate
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previously stated to the debtor pursuant to section 14 of this
chapter applied to the amount or amounts deferred for the period
of deferral calculated without regard to difference in the lengths of
months, but proportionally for a part of a month, counting each
day as one-thirtieth (1/30) of a month. A deferral charge may be
collected at the time it is assessed or at any time thereafter.
(b) The lender, in addition to the deferral charge, may make
appropriate additional charges under section 5 of this chapter, and
the amount of these charges which is not paid in cash may be added
to the amount deferred for the purpose of calculating the deferral
charge.
(c) The parties may agree in writing at the time of a
precomputed consumer loan, refinancing, or consolidation that if
an installment is not paid within ten (10) days after its due date, the
lender may unilaterally grant a deferral and make charges as
provided in this section. No deferral charge may be made for a
period after the date that the lender elects to accelerate the
maturity of the agreement.
(d) A delinquency charge made by the lender on an installment
may not be retained if a deferral charge is made pursuant to this
section with respect to the period of delinquency.
Sec. 8. With respect to a consumer loan, refinancing, or
consolidation, the lender may by agreement with the debtor
refinance the unpaid balance and may contract for and receive a
loan finance charge based on the principal resulting from the
refinancing at a rate not exceeding that permitted by the provisions
on a loan finance charge for consumer loans (section 4 of this
chapter) or the provisions on a loan finance charge for supervised
loans (section 35 of this chapter), whichever is appropriate. For the
purpose of determining the loan finance charge permitted, the
principal resulting from the refinancing comprises the following:
(1) If:
(A) the transaction was not precomputed, the total of the
unpaid balance and the accrued charges on the date of the
refinancing; or
(B) the transaction was precomputed, in the case of a
transaction entered into before July 1, 2020, the amount
which the debtor would have been required to pay upon
prepayment pursuant to the provisions on rebate upon
prepayment under section 13 of this chapter on the date of
refinancing.
(2) Appropriate additional charges under section 5 of this
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chapter, payment of which is deferred.
Sec. 9. (a) If a debtor owes an unpaid balance to a lender with
respect to a consumer loan, refinancing, or consolidation, and
becomes obligated on another consumer loan, refinancing, or
consolidation with the same lender, the parties may agree to a
consolidation resulting in a single schedule of payments. If the
previous consumer loan, refinancing, or consolidation was not
precomputed, the parties may agree to add the unpaid amount of
principal and accrued charges on the date of consolidation to the
principal with respect to the subsequent loan. If the previous
consumer loan, refinancing, or consolidation was precomputed, in
the case of a transaction entered into before July 1, 2020, the
parties may agree to refinance the unpaid balance pursuant to the
provisions on refinancing set forth in section 8 of this chapter and
to consolidate the principal resulting from the refinancing by
adding it to the principal with respect to the subsequent loan. In
either case the lender may contract for and receive a loan finance
charge based on the aggregate principal resulting from the
consolidation at a rate not in excess of that permitted by the
provisions on loan finance charge for consumer loans (section 4 of
this chapter) or the provisions on loan finance charge for
supervised loans (section 35 of this chapter), whichever is
appropriate.
(b) The parties may agree to consolidate the unpaid balance of
a consumer loan with the unpaid balance of a consumer credit sale.
The parties may agree to refinance the previous unpaid balance
pursuant to the provisions on refinancing sales set forth in
IC 37-2-3-8 or the provisions on refinancing loans set forth in
section 8 of this chapter, whichever is appropriate, and to
consolidate the amount financed resulting from the refinancing or
the principal resulting from the refinancing by adding it to the
amount financed or principal with respect to the subsequent sale
or loan. The aggregate amount resulting from the consolidation
shall be deemed principal, and the creditor may contract for and
receive a loan finance charge based on the principal at a rate not
in excess of that permitted by the provisions on loan finance charge
for consumer loans set forth in section 4 of this chapter or the
provisions on loan finance charge for supervised loans set forth in
section 35 of this chapter, whichever is appropriate.
Sec. 10. The parties may agree to add to a revolving loan
account the unpaid balance of a consumer loan, not made pursuant
to a revolving loan account, or a refinancing, or consolidation
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thereof, or the unpaid balance of a consumer credit sale,
refinancing or consolidation. For the purpose of this section:
(1) the unpaid balance of a consumer loan, refinancing, or
consolidation is an amount equal to the principal determined
according to the provisions on refinancing set forth in section
8 of this chapter; and
(2) the unpaid balance of a consumer credit sale, refinancing,
or consolidation is an amount equal to the amount financed
determined according to the provisions on refinancing set
forth in IC 37-2-3-8.
Sec. 11. (a) If the agreement with respect to a consumer loan,
refinancing, or consolidation contains covenants by the debtor to
perform certain duties pertaining to insuring or preserving
collateral and if the lender pursuant to the agreement pays for
performance of the duties on behalf of the debtor, the lender may
add the amounts paid to the debt. Within a reasonable time after
advancing any sums, the lender shall state to the debtor in writing
the amount of the sums advanced, any charges with respect to this
amount, and any revised payment schedule and, if the duties of the
debtor performed by the lender pertain to insurance, a brief
description of the insurance paid for by the lender including the
type and amount of coverages. No further information need be
given.
(b) A loan finance charge may be made for sums advanced
pursuant to subsection (a) at a rate not exceeding the rate stated to
the debtor pursuant to section 14 of this chapter with respect to the
loan, refinancing, or consolidation, except that with respect to a
revolving loan account the amount of the advance may be added to
the unpaid balance of the debt and the lender may make a loan
finance charge not exceeding that permitted by the provisions on
loan finance charge for consumer loans set forth in section 4 of this
chapter or for supervised loans set forth in section 35 of this
chapter, whichever is appropriate.
Sec. 12. (a) Subject to the provisions on rebate upon prepayment
set forth in section 13 of this chapter, the debtor may prepay in full
the unpaid balance of a consumer loan, refinancing, or
consolidation at any time without penalty. With respect to a
consumer loan that is primarily secured by an interest in land, a
lender may contract for a penalty for prepayment of the loan in
full, not to exceed two percent (2%) of any amount prepaid within
sixty (60) days of the date of the prepayment in full, after deducting
all refunds and rebates as of the date of the prepayment. However,
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the penalty may not be imposed:
(1) if the loan is refinanced or consolidated with the same
creditor;
(2) for prepayment by proceeds of any insurance or
acceleration after default; or
(3) after three (3) years from the contract date.
For purposes of this section, the collection of the amount of any
conditionally waived closing costs (as allowed under section 5 of
this chapter) by a creditor, as stipulated in the loan agreement, at
the time of prepayment in full does not constitute a prepayment
penalty and is not subject to the limitations set forth in this
subsection.
(b) At the time of prepayment of a consumer loan not subject to
the provisions of rebate upon prepayment set forth in section 13 of
this chapter, the total finance charge, including the prepaid finance
charge but excluding the nonrefundable prepaid finance charge
allowed under section 4(i) or section 35(h) of this chapter, as
applicable, may not exceed the maximum charge allowed under
this chapter for the period the loan was in effect. For the purposes
of determining compliance with this subsection, the total finance
charge does not include the following:
(1) The nonrefundable prepaid finance charge allowed under
section 4(i) or section 35(h) of this chapter, as applicable.
(2) The debtor paid mortgage broker fee, if any, paid to a
person who does not control, is not controlled by, or is not
under common control with, the creditor holding the loan at
the time a consumer loan is prepaid.
(c) The creditor or mortgage servicer shall provide, in writing,
an accurate payoff amount for the consumer loan to the debtor
within seven (7) business days (excluding legal public holidays,
Saturdays, and Sundays) after the creditor or mortgage servicer
receives the debtor's written request for the accurate consumer
loan payoff amount. A payoff statement provided by a creditor or
mortgage servicer under this subsection must show the date the
statement was prepared and itemize the unpaid principal balance
and each fee, charge, or other sum included within the payoff
amount. A creditor or mortgage servicer who fails to provide the
accurate consumer loan payoff amount is liable for:
(1) one hundred dollars ($100) if an accurate consumer loan
payoff amount is not provided by the creditor or mortgage
servicer within seven (7) business days (excluding legal public
holidays, Saturdays, and Sundays) after the creditor or
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mortgage servicer receives the debtor's first written request;
and
(2) the greater of:
(A) one hundred dollars ($100); or
(B) the loan finance charge that accrues on the loan from
the date the creditor or mortgage servicer receives the first
written request until the date on which the accurate
consumer loan payoff amount is provided;
if an accurate consumer loan payoff amount is not provided
by the creditor or mortgage servicer within seven (7) business
days (excluding legal public holidays, Saturdays, and
Sundays) after the creditor or mortgage servicer receives the
debtor's second written request, and the creditor or mortgage
servicer failed to comply with subdivision (1).
A liability under this subsection is an excess charge under
IC 37-2-6-9.
(d) As used in this subsection, "mortgage transaction" means a
consumer loan in which a mortgage or a land contract (or another
consensual security interest equivalent to a mortgage or a land
contract) that constitutes a lien is created or retained against land
upon which there is constructed or intended to be constructed a
dwelling that is or will be used by the debtor primarily for
personal, family, or household purposes. This subsection applies to
a mortgage transaction with respect to which any installment or
minimum payment due is delinquent for at least sixty (60) days.
The creditor, servicer, or the creditor's agent shall acknowledge a
written offer made in connection with a proposed short sale not
later than five (5) business days (excluding legal public holidays,
Saturdays, and Sundays) after the date of the offer if the offer
complies with the requirements for a qualified written request set
forth in 12 U.S.C. 2605(e)(1)(B). The creditor, servicer, or
creditor's agent is required to acknowledge a written offer made
in connection with a proposed short sale from a third party acting
on behalf of the debtor only if the debtor has provided written
authorization for the creditor, servicer, or creditor's agent to do so.
Not later than thirty (30) business days (excluding legal public
holidays, Saturdays, and Sundays) after receipt of an offer under
this subsection, the creditor, servicer, or creditor's agent shall
respond to the offer with an acceptance or a rejection of the offer.
The thirty (30) day period described in this subsection may be
extended for not more than fifteen (15) business days (excluding
legal public holidays, Saturdays, and Sundays) if, before the end of
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the thirty (30) day period, the creditor, the servicer, or the
creditor's agent notifies the debtor of the extension and the reason
the extension is needed. Payment accepted by a creditor, servicer,
or creditor's agent in connection with a short sale constitutes
payment in full satisfaction of the mortgage transaction unless the
creditor, servicer, or creditor's agent obtains either:
(1) a statement that: "The debtor remains liable for any
amount still owed under the mortgage transaction."; or
(2) a statement substantially similar to the statement set forth
in subdivision (1);
acknowledged by the initials or signature of the debtor, on or
before the date on which the short sale payment is accepted. As
used in this subsection, "short sale" means a transaction in which
the property that is the subject of a mortgage transaction is sold
for an amount that is less than the amount of the debtor's
outstanding obligation under the mortgage transaction. A creditor
or mortgage servicer that fails to respond to an offer within the
time prescribed by this subsection is liable in accordance with 12
U.S.C. 2605(f) in any action brought under that section.
(e) This section is not intended to provide the owner of real
estate subject to the issuance of process under a judgment or
decree of foreclosure any protection or defense against a deficiency
judgment for purposes of the borrower protections from liability
that must be disclosed under 12 CFR 1026.38(p)(3) on the form
required by 12 CFR 1026.38 ("Closing Disclosures" form under
the Amendments to the 2013 Integrated Mortgage Disclosures Rule
Under the Real Estate Settlement Procedures Act (Regulation X)
and the Truth In Lending Act (Regulation Z) and the 2013 Loan
Originator Rule Under the Truth in Lending Act (Regulation Z)).
Sec. 13. (a) Except for subsections (b) and (i), this section applies
only to a loan agreement entered into before July 1, 2020. Except
as provided in subsection (b), upon prepayment in full of the
unpaid balance of a precomputed consumer loan, refinancing, or
consolidation, an amount not less than the unearned portion of the
loan finance charge calculated according to this section shall be
rebated to the debtor. If the rebate otherwise required is less than
one dollar ($1), no rebate need be made.
(b) Upon prepayment in full of a consumer loan, refinancing, or
consolidation, other than one under a revolving loan account, if the
loan finance charge earned is less than any permitted minimum
loan finance charge under section 4(g) or 35(g) of this chapter
contracted for, whether or not the consumer loan, refinancing, or
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consolidation is precomputed, the lender may collect or retain the
minimum loan finance charge, as if earned, not exceeding the loan
finance charge contracted for.
(c) The unearned portion of the loan finance charge is a fraction
of the loan finance charge of which the numerator is the sum of the
periodic balances scheduled to follow the computational period in
which prepayment occurs, and the denominator is the sum of all
periodic balances under either the loan agreement or, if the
balance owing resulted from a refinancing under section 8 of this
chapter or a consolidation under section 9 of this chapter, under
the refinancing agreement or consolidation agreement.
(d) In this section:
(1) "periodic balance" means the amount scheduled to be
outstanding on the last day of a computational period before
deducting the payment, if any, scheduled to be made on that
day;
(2) "computation period" means one (1) month if one-half
(1/2) or more of the intervals between scheduled payments
under the agreement is one (1) month or more, and otherwise
means one (1) week;
(3) the "interval" to the due date of the first scheduled
installment or the final scheduled payment date is measured
from the date of a loan, refinancing, or consolidation, and
includes either the first or last day of the interval; and
(4) if the interval to the due date of the first scheduled
installment does not exceed one (1) month by more than
fifteen (15) days when the computational period is one (1)
month, or eleven (11) days when the computational period is
one (1) week, the interval shall be considered as one (1)
computational period.
(e) This subsection applies only if the schedule of payments is
not regular.
(1) If the computational period is one (1) month and:
(A) if the number of days in the interval to the due date of
the first scheduled installment is less than one (1) month by
more than five (5) days, or more than one (1) month by
more than five (5) but not more than fifteen (15) days, the
unearned loan finance charge shall be increased by an
adjustment for each day by which the interval is less than
one (1) month and, at the option of the lender, may be
reduced by an adjustment for each day by which the
interval is more than one (1) month; the adjustment for
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each day shall be one-thirtieth (1/30) of that part of the
loan finance charge earned in the computational period
prior to the due date of the first scheduled installment
assuming that period to be one (1) month; and
(B) if the interval to the final scheduled payment date is a
number of computational periods plus an additional
number of days less than a full month, the additional
number of days shall be considered a computational period
only if sixteen (16) days or more. This clause applies
whether or not clause (A) applies.
(2) Notwithstanding subdivision (1), if the computational
period is one (1) month, the number of days in the interval to
the due date of the first installment exceeds one (1) month by
not more than fifteen (15) days, and the schedule of payments
is otherwise regular, the lender, at the lender's option, may
exclude the extra days and the charge for the extra days in
computing the unearned loan finance charge; but if the lender
does so and a rebate is required before the due date of the
first scheduled installment, the lender shall compute the
earned charge for each elapsed day as one-thirtieth (1/30) of
the amount the earned charge would have been if the first
interval had been one (1) month.
(3) If the computational period is one (1) week and:
(A) if the number of days in the interval to the due date of
the first scheduled installment is less than five (5) days, or
more than nine (9) days, but not more than eleven (11)
days, the unearned loan finance charge shall be increased
by an adjustment for each day by which the interval is less
than seven (7) days and, at the option of the lender, may be
reduced by an adjustment for each day by which the
interval is more than seven (7) days; the adjustment for
each day shall be one-seventh (1/7) of that part of the loan
finance charge earned in the computational period prior to
the due date of the first scheduled installment, assuming
that period to be one (1) week; and
(B) if the interval to the final scheduled payment date is a
number of computational periods plus an additional
number of days less than a full week, the additional
number of days shall be considered a computational period
only if five (5) days or more. This clause applies whether or
not clause (A) applies.
(f) If a deferral has been agreed to under section 7 of this
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chapter, the unearned portion of the loan finance charge shall be
computed without regard to the deferral. The amount of deferral
charge earned at the date of prepayment shall also be calculated.
If the deferral charge earned is less than the deferral charge paid,
the difference shall be added to the unearned portion of the loan
finance charge. If any part of a deferral charge has been earned
but has not been paid, that part shall be subtracted from the
unearned portion of the loan finance charge or shall be added to
the unpaid balance.
(g) This section does not preclude the collection or retention by
the lender of delinquency charges under section 6 of this chapter.
(h) If the maturity is accelerated for any reason and judgment
is obtained, the debtor is entitled to the same rebate as if payment
had been made on the date judgment is entered.
(i) Upon prepayment in full of a consumer loan by the proceeds
of consumer credit insurance, the debtor or the debtor's estate
shall pay the same loan finance charge or receive the same rebate
as though the debtor had prepaid the agreement on the date the
proceeds of the insurance are paid to the lender, but no later than
ten (10) business days after satisfactory proof of loss is furnished
to the lender. This subsection applies whether or not the loan is
precomputed.
(j) Upon prepayment in full of a transaction with a term of more
than sixty-one (61) months, the unearned loan finance charge shall
be computed by applying the disclosed annual percentage rate that
would yield the loan finance charge originally contracted for to the
unpaid balances of the amount financed for the full computational
periods following the prepayment, as originally scheduled or as
deferred.
Sec. 14. (a) For the purposes of this section, "consumer loan"
includes a loan that is a first lien mortgage transaction if the loan
is otherwise a consumer loan.
(b) The lender shall disclose to the debtor to whom credit is
extended with respect to a consumer loan the information required
by the Consumer Credit Protection Act (15 U.S.C. 1601 et seq.).
(c) For purposes of subsection (b), disclosures shall not be
required on a consumer loan if the transaction is exempt from the
Consumer Credit Protection Act (15 U.S.C. 1601 et seq.).
Sec. 15. (a) This section does not apply to a first lien mortgage
transaction.
(b) Except as provided in IC 37-5-4-3 with respect to a high cost
home loan (as defined in IC 37-5-2-8), with respect to a consumer
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loan, other than one pursuant to a revolving loan account or one on
which only loan finance charges are payable prior to the time that
the final scheduled payment is due, if any scheduled payment is
more than twice as large as the average of earlier scheduled
payments, the debtor has the right to refinance the amount of that
payment at the time it is due without penalty. The terms of the
refinancing shall be no less favorable to the debtor than the terms
of the original loan. This section does not apply to the extent that
the payment schedule is adjusted to the seasonal or irregular
income of the debtor.
(c) For the purposes of this section, "terms of the refinancing"
means:
(1) in the case of a fixed-rate consumer loan, the individual
payment amounts, the charges as a result of default by the
debtor, and the rate of the loan finance charge; and
(2) in the case of a variable rate consumer loan, the method
used to determine the individual payment amounts, the
charges as a result of default by the debtor, the method used
to determine the rate of the loan finance charge, the
circumstances under which the rate of the loan finance charge
may increase, and any limitations on the increase in the rate
of the loan finance charge.
(d) If a consumer loan is made under the authority of the
Alternative Mortgage Transaction Parity Act (12 U.S.C. 3802 et
seq.), the note evidencing the mortgage must contain a reference to
the applicable federal law.
Sec. 16. (a) A lender may not take an assignment of earnings of
the debtor for payment or as security for payment of a debt arising
out of a consumer loan or otherwise. An assignment of earnings in
violation of this section is unenforceable by the assignee of the
earnings and revocable by the debtor. This section does not
prohibit an employee from authorizing deductions from his
earnings if the authorization is revocable and is otherwise
permitted by law.
(b) A sale of unpaid earnings made in consideration of the
payment of money to or for the account of the seller of the earnings
is deemed to be a loan to the seller secured by an assignment of
earnings.
Sec. 17. With respect to a consumer loan the agreement may
provide for the payment by the debtor of reasonable attorney's fees
after default and referral to an attorney not a salaried employee of
the lender. A provision in violation of this section is unenforceable.
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Sec. 18. Except for reasonable expenses incurred in realizing on
a security interest, the agreement with respect to a consumer loan
may not provide for charges as a result of default by the debtor
other than those authorized by this article. A provision in violation
of this section is unenforceable.
Sec. 19. The debtor is authorized to pay the original lender until
the debtor receives notification of assignment of rights to payment
pursuant to a consumer loan and that payment is to be made to the
assignee. A notification which does not reasonably identify the
rights assigned is ineffective. If requested by the debtor, the
assignee must seasonably furnish reasonable proof that the
assignment has been made and unless the assignee does so the
debtor may pay the original lender.
Sec. 20. A debtor may not authorize any person to confess
judgment on a claim arising out of a consumer loan. An
authorization in violation of this section is void.
Sec. 21. (a) This section applies to consumer loans, including
revolving loan accounts.
(b) Except as provided in subsection (c), a creditor shall credit
a payment to a consumer's account as of the date of receipt, except
when a delay in crediting does not result in a finance charge or
other charge, including a delinquency charge under section 6 of
this chapter. A delay in posting does not violate this section so long
as the payment is credited as of the date of receipt.
(c) If a creditor specifies in writing requirements for the
consumer to follow in making payments, but accepts a payment
that does not conform to the requirements, the creditor shall credit
the payment within five (5) days of receipt of the payment.
(d) If a creditor fails to credit a payment as required by this
section in time to avoid the imposition of a finance or other charge,
including a delinquency charge, the creditor shall adjust the
consumer's account so that the charges imposed are credited to the
consumer's account during the next payment period.
Sec. 22. (a) If a person licensed or required to be licensed under
section 24 of this chapter also engages in activities of a loan broker
described in IC 23-2.5, the activities of a loan broker are subject to
the following sections of the Indiana Code and any rules adopted
to implement these sections:
(1) IC 23-2.5-8-1, except for IC 23-2.5-8-1(b)(2).
(2) IC 23-2.5-8-2.
(3) IC 23-2.5-11-15(b) and IC 23-2.5-11-15(c).
(4) IC 23-2.5-11-17.
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(5) IC 23-2.5-8-3.
(6) IC 23-2.5-8-4 through IC 23-2.5-8-9.
(7) IC 23-2.5-8-10.
(8) IC 23-2.5-10-1.
(9) IC 23-2.5-9-1.
(10) IC 23-2.5-11-16.
(b) Loan broker business transactions engaged in by persons
licensed or required to be licensed under section 24 of this chapter
are subject to examination by the department and to the
examination fees described in section 26(h)(2) of this chapter. 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.
Sec. 23. (a) A person that is a:
(1) depository institution;
(2) subsidiary that is owned and controlled by a depository
institution and regulated by a federal banking agency; or
(3) credit union service organization;
may engage in Indiana in the making of consumer loans (including
small loans that are subject to IC 37-3) that are not mortgage
transactions without obtaining a license under this article.
(b) A collection agency licensed under IC 25-11-1 may engage
in:
(1) taking assignments of consumer loans (including small
loans that are subject to IC 37-3) that are not mortgage
transactions; and
(2) undertaking the direct collection of payments from or the
enforcement of rights against debtors arising from consumer
loans (including small loans that are subject to IC 37-3) that
are not mortgage transactions;
in Indiana without obtaining a license under this article.
(c) A person that does not qualify under subsection (a) or (b)
shall acquire and retain a license under this chapter in order to
regularly engage in Indiana in the following actions with respect to
consumer loans that are not small loans (as defined in IC 37-3-2)
or mortgage transactions:
(1) The making of consumer loans.
(2) Taking assignments of consumer loans.
(3) Undertaking the direct collection of payments from or the
enforcement of rights against debtors arising from consumer
loans.
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(d) A separate license under this chapter is required for each
legal entity that engages in Indiana in any activity described in
subsection (c). However, a separate license under this chapter is
not required for each branch of a legal entity licensed under this
chapter to perform an activity described in subsection (c).
(e) Except as otherwise provided in subsections (a) and (b), a
separate license under IC 37-3 is required in order to regularly
engage in Indiana in the following actions with respect to small
loans (as defined in IC 37-3-2):
(1) The making of small loans (as defined in IC 37-3-2).
(2) Taking assignments of small loans (as defined in
IC 37-3-2).
(3) Undertaking the direct collection of payments from or the
enforcement of rights against debtors arising from small loans
(as defined in IC 37-3-2).
A person that seeks licensure under IC 37-3 in order to regularly
engage in Indiana in the actions set forth in this subsection shall
apply to the department for that license in the form and manner
prescribed by the department, and is subject to the same licensure
requirements and procedures as an applicant for a license to make
consumer loans (other than small loans or mortgage transactions)
under this section.
Sec. 24. (a) A person that is a:
(1) depository institution;
(2) subsidiary that is owned and controlled by a depository
institution and regulated by a federal banking agency; or
(3) credit union service organization;
may engage in Indiana in the making of subordinate lien mortgage
transactions without obtaining a mortgage license issued by the
department.
(b) A collection agency licensed under IC 25-11-1 or an
institution regulated by the Farm Credit Administration may
engage in:
(1) taking assignments of subordinate lien mortgage
transactions; and
(2) undertaking the direct collection of payments from or the
enforcement of rights against debtors arising from
subordinate lien mortgage transactions;
in Indiana without obtaining a mortgage license issued by the
department.
(c) A person that is not otherwise exempt under subsection (a)
or (b) shall acquire and retain a mortgage license issued by the
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department in order to regularly engage in Indiana in the following
actions with respect to subordinate lien mortgage transactions:
(1) The making of subordinate lien mortgage loans.
(2) Taking assignments of subordinate lien mortgage loans.
(3) Undertaking the direct collection of payments from or the
enforcement of rights against debtors arising from
subordinate lien mortgage loans.
(d) Each:
(1) creditor licensed by the department to engage in
subordinate lien mortgage transactions; and
(2) person that is exempt (either under this article or under
IC 37-1-1-6(8)) from licensing and that:
(A) employs a licensed mortgage loan originator; or
(B) sponsors a licensed mortgage loan originator as
permitted by IC 37-1-1-6(8) or by 750 IAC 9;
shall register with and maintain a valid unique identifier issued by
the NMLSR. Each licensed mortgage loan originator must be
employed by, or sponsored as permitted by IC 37-1-1-6(8) or by
750 IAC 9, and associated with, a licensed creditor (or an exempt
person described under subdivision (2)) that is registered with the
NMLSR.
(e) Applicants for a mortgage license must apply to the
department for the license in a form prescribed by the director.
Each form:
(1) must contain content as set forth by rule, instruction, or
procedure of the director; and
(2) may be changed or updated as necessary by the director to
carry out the purposes of this article.
(f) To fulfill the purposes of this article, the director may
establish relationships or contracts with the NMLSR or other
entities designated by the NMLSR to:
(1) collect and maintain records; and
(2) process transaction fees or other fees;
related to licensees or other persons subject to this article.
(g) For the purpose of participating in the NMLSR, the director
or the department may:
(1) waive or modify, in whole or in part, by rule, regulation,
or order, any or all of the requirements of this article; and
(2) establish new requirements as reasonably necessary to
participate in the NMLSR.
Sec. 25. (a) Subject to subsection (f), the director may designate
the NMLSR to serve as the sole entity responsible for:
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(1) processing applications and renewals for licenses required
under section 23 of this chapter;
(2) issuing unique identifiers for licensees and entities exempt
from licensing under section 23 of this chapter; and
(3) performing other services that the director determines are
necessary for the orderly administration of the department's
licensing system under section 23 of this chapter.
(b) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director may
regularly report to the NMLSR significant or recurring violations
of this article related to consumer loans that are not mortgage
transactions, including small loans under IC 37-3.
(c) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director may report
to the NMLSR complaints received regarding licensees under
section 23 of this chapter in connection with consumer loans that
are not mortgage transactions, including small loans under
IC 37-3.
(d) The director may report to the NMLSR publicly adjudicated
licensure actions against licensees under section 23 of this chapter.
(e) The director shall establish a process in which persons
licensed in accordance with section 23 of this chapter may
challenge information reported to the NMLSR by the department.
(f) The director's authority to designate the NMLSR under
subsection (a) is subject to the following:
(1) Information stored in the NMLSR is subject to the
confidentiality provisions of IC 28-1-2-30 and IC 5-14-3. A
person may not:
(A) obtain information from the NMLSR unless the person
is authorized to do so by statute;
(B) initiate any civil action based on information obtained
from the NMLSR if the information is not otherwise
available to the person under any other state law; or
(C) initiate any civil action based on information obtained
from the NMLSR if the person could not have initiated the
action based on information otherwise available to the
person under any other state law.
(2) Documents, materials, and other forms of information in
the control or possession of the NMLSR that are confidential
under IC 28-1-2-30 and that are:
(A) furnished by the director, the director's designee, or a
licensee; or
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(B) otherwise obtained by the NMLSR;
are confidential and privileged by law and are not subject to
inspection under IC 5-14-3, subject to subpoena, subject to
discovery, or admissible in evidence in any civil action.
However, the director may use the documents, materials, or
other information available to the director in furtherance of
any action brought in connection with the director's duties
under this article.
(3) Disclosure of documents, materials, and information:
(A) to the director; or
(B) by the director;
under this subsection does not result in a waiver of any
applicable privilege or claim of confidentiality with respect to
the documents, materials, or information.
(4) Information provided to the NMLSR is subject to
IC 4-1-11.
(5) This subsection does not limit or impair a person's right
to:
(A) obtain information;
(B) use information as evidence in a civil action or
proceeding; or
(C) use information to initiate a civil action or proceeding;
if the information may be obtained from the director or the
director's designee under any law.
(6) The requirements under any federal law or IC 5-14-3
regarding the privacy or confidentiality of any information or
material provided to the NMLSR, and any privilege arising
under federal or state law, including the rules of any federal
or state court, with respect to the information or material,
continue to apply to the information or material after the
information or material has been disclosed to the NMLSR.
The information and material may be shared with all state
and federal regulatory officials with financial services
industry oversight authority without the loss of privilege or
the loss of confidentiality protections provided by federal law
or IC 5-14-3.
(7) For purposes of this section, the director may enter
agreements or sharing arrangements with other governmental
agencies, the Conference of State Bank Supervisors, or other
associations representing governmental agencies as
established by rule or order of the director.
(8) Information or material that is subject to a privilege or
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confidentiality under subdivision (6) is not subject to:
(A) disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or
an agency of the federal government or the respective
state; or
(B) subpoena, discovery, or admission into evidence, in any
private civil action or administrative process, unless with
respect to any privileged information or material held by
the NMLSR, the person to whom the information or
material pertains waives, in whole or in part, in the
discretion of the person, that privilege.
(9) Any provision of IC 5-14-3 that concerns the disclosure of:
(A) confidential supervisory information; or
(B) any information or material described in subdivision
(6);
and that is inconsistent with subdivision (6) is superseded by
this section.
(10) This section does not apply with respect to information or
material that concerns the employment history of, and
publicly adjudicated disciplinary and enforcement actions
against, a person licensed in accordance with section 23 of this
chapter and described in section 26(b) of this chapter and that
is included in the NMLSR for access by the public.
(11) The director may require a licensee required to submit
information to the NMLSR to pay a processing fee considered
reasonable by the director. In determining whether an
NMLSR processing fee is reasonable, the director shall:
(A) require review of; and
(B) make available;
the audited financial statements of the NMLSR.
(g) Notwithstanding any other provision of law, any:
(1) application, renewal, or other form or document that:
(A) relates to licenses issued under section 23 of this
chapter; and
(B) is made or produced in an electronic format;
(2) document filed as an electronic record in a multistate
automated repository established and operated for the
licensing or registration of financial services entities and their
employees; or
(3) electronic record filed through the NMLSR;
is considered a valid original document when reproduced in paper
form by the department.
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Sec. 26. (a) The department shall receive and act on all
applications for licenses to make consumer loans. Applications
must be as prescribed by the director of the department of
financial institutions. If, at any time, the information or record
contained in:
(1) an application filed under section 23 of this chapter or
section 24 of this chapter; or
(2) a renewal application filed under section 31 of this
chapter;
is or becomes inaccurate or incomplete in a material respect, the
applicant shall promptly file a correcting amendment with the
department.
(b) A license shall not be issued unless the department finds that
the professional training and experience, financial responsibility,
character, and fitness of:
(1) the applicant and any significant affiliate of the applicant;
(2) each executive officer, director, or manager of the
applicant, or any other individual having a similar status or
performing a similar function for the applicant; and
(3) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
are such as to warrant belief that the business will be operated
honestly and fairly within the purposes of this article.
(c) The director is entitled to request evidence of compliance
with this section at:
(1) the time of application;
(2) the time of renewal of a license; or
(3) any other time considered necessary by the director.
(d) Evidence of compliance with this section concerning a
person licensed under section 23 of this chapter may include and
for a person licensed under section 24 of this chapter must include:
(1) criminal background checks as described in section 27 of
this chapter, including a national criminal history background
check (as defined in IC 10-13-3-12) by the Federal Bureau of
Investigation, for any individual described in subsection (b);
(2) credit histories as described in section 28 of this chapter;
(3) surety bond requirements as described in section 29 of this
chapter;
(4) a review of licensure actions in Indiana and other states;
and
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(5) other background checks considered necessary by the
director.
(e) For purposes of this section and in order to reduce the points
of contact that the director may have to maintain under this
section, the director may use the NMLSR as a channeling agent for
requesting and distributing information to and from any source as
directed by the director.
(f) The department may deny an application under this section
if the director of the department determines that the application
was submitted for the benefit of, or on behalf of, a person who does
not qualify for a license.
(g) Upon written request, the applicant is entitled to a hearing
on the question of the qualifications of the applicant for a license
as provided in IC 4-21.5.
(h) The applicant shall pay the following fees at the time
designated by the department:
(1) An initial license fee as established by the department
under IC 28-11-3-5.
(2) Examination fees as established by the department under
IC 28-11-3-5.
(3) An annual renewal fee as established by the department
under IC 28-11-3-5.
(i) A fee as established by the department under IC 28-11-3-5
may be charged for each day a fee under subsection (h)(2) or (h)(3)
is delinquent.
(j) The licensee may deduct the fees required under subsection
(h)(1) and (h)(3) from the filing fees paid under IC 37-2-7-26.
(k) Except in a transaction approved under section 41 of this
chapter, a license issued under this section is not assignable or
transferable.
(l) If the department of state revenue notifies the department
that a person is on the most recent tax warrant list, the department
shall not issue or renew the person's license until:
(1) the person provides to the department a statement from
the department of state revenue that the person's tax warrant
has been satisfied; or
(2) the department receives a notice from the commissioner of
the department of state revenue under IC 6-8.1-8-2(k).
Sec. 27. (a) When the director requests a national criminal
history background check under section 26(d)(1) of this chapter for
an individual described in section 26(b) of this chapter, the director
shall require the individual to submit fingerprints to the
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department, state police department, or NMLSR, as directed, at
the time evidence of compliance is requested under section 26(d) of
this chapter. The individual to whom the request is made shall pay
any fees or costs associated with processing and evaluating the
fingerprints and the national criminal history background check.
The national criminal history background check may be used by
the director to determine the individual's compliance with this
section. The director or the department may not release the results
of the national criminal history background check to any private
entity.
(b) For purposes of this section and in order to reduce the points
of contact that the Federal Bureau of Investigation may have to
maintain for purposes of this section, the director may use the
NMLSR as a channeling agent for requesting information from
and distributing information to the United States Department of
Justice or any governmental agency.
Sec. 28. (a) If the director requests a credit report for an
individual described in section 26(b) of this chapter, the individual
to whom the request is made shall pay any fees or costs associated
with procuring the report.
(b) The individual must submit personal history and experience
information in a form prescribed by the NMLSR, including the
submission of authorization for the NMLSR or the director to
obtain an independent credit report obtained from a consumer
reporting agency described in Section 603(p) of the Fair Credit
Reporting Act (15 U.S.C. 1681a(p)).
(c) The director may consider one (1) or more of the following
when determining if an individual has demonstrated financial
responsibility:
(1) Bankruptcies filed within the last ten (10) years.
(2) Current outstanding judgments, except judgments solely
as a result of medical expenses.
(3) Current outstanding tax liens or other government liens or
filings.
(4) Foreclosures within the past three (3) years.
(5) A pattern of serious delinquent accounts within the past
three (3) years.
Sec. 29. (a) Each:
(1) creditor licensed by the department to engage in mortgage
transactions; and
(2) person that is exempt (either under this article or under
IC 37-1-1-6(8)) from licensing and that:
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(A) employs a licensed mortgage loan originator; or
(B) sponsors a licensed mortgage loan originator as
permitted by IC 37-1-1-6(8) or by 750 IAC 9;
must be covered by a surety bond in accordance with this section.
(b) A surety bond must:
(1) provide coverage for:
(A) a creditor described in subsection (a)(1); and
(B) an exempt person described in subsection (a)(2);
in an amount as prescribed in subsection (d);
(2) be in a form as prescribed by the director;
(3) be in effect:
(A) during the term of the creditor's license; or
(B) at any time during which the person exempt from
licensing employs a licensed mortgage loan originator, or
sponsors a licensed mortgage loan originator as permitted
by IC 37-1-1-6(8) or by 750 IAC 9;
as applicable;
(4) subject to subsection (c), remain in effect during the two
(2) years after:
(A) the license of the creditor is surrendered or
terminated; or
(B) the person exempt from licensing ceases to employ a
licensed mortgage loan originator, or ceases to sponsor a
licensed mortgage loan originator as permitted by
IC 37-1-1-6(8) or by 750 IAC 9, or to offer financial
services to individuals in Indiana, whichever is later;
as applicable;
(5) be payable to the department for the benefit of:
(A) the state; and
(B) individuals who reside in Indiana when they agree to
receive financial services from the creditor or the person
exempt from licensing, as applicable;
(6) be issued by a bonding, surety, or insurance company
authorized to do business in Indiana and rated at least "A-"
by at least one (1) nationally recognized investment rating
service; and
(7) have payment conditioned upon:
(A) the creditor's or any of the creditor's licensed
mortgage loan originators'; or
(B) the exempt person's or any of the exempt person's
licensed mortgage loan originators';
noncompliance with or violation of this chapter, 750 IAC 9, or
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other federal or state laws or regulations applicable to
mortgage lending.
(c) The director may adopt rules or guidance documents with
respect to the requirements for surety bonds as necessary to
accomplish the purposes of this article. Upon written request from:
(1) a creditor described in subsection (a)(1); or
(2) an exempt person described in subsection (a)(2);
the director may, at the discretion of the director, waive or shorten
the two (2) year period set forth in subsection (b)(4) during which
a surety bond required by this section must remain in effect after
the occurrence of an event described in subsection (b)(4)(A) or
(b)(4)(B), as applicable.
(d) The penal sum of the surety bond shall be maintained in an
amount that reflects the dollar amount of mortgage transactions
originated as determined by the director. If the principal amount
of a surety bond required under this section is reduced by payment
of a claim or judgment, the creditor or exempt person for whom
the bond is issued shall immediately notify the director of the
reduction and, not later than thirty (30) days after notice by the
director, file a new or an additional surety bond in an amount set
by the director. The amount of the new or additional bond set by
the director must be at least the amount of the bond before
payment of the claim or judgment.
(e) If for any reason a surety terminates a bond issued under
this section, the creditor or the exempt person shall immediately
notify the department and file a new surety bond in an amount
determined by the director.
(f) Cancellation of a surety bond issued under this section does
not affect any liability incurred or accrued during the period when
the surety bond was in effect.
(g) The director may obtain satisfaction from a surety bond
issued under this section if the director incurs expenses, issues a
final order, or recovers a final judgment under this chapter.
(h) Notices required under this section must be made in writing
and submitted through the NMLSR or any other electronic
registration system that may be approved by the director.
Sec. 30. (a) Subject to subsection (g), the director shall designate
the NMLSR to serve as the sole entity responsible for:
(1) processing applications and renewals for licenses under
section 24 of this chapter;
(2) issuing unique identifiers for licensees under section 24 of
this chapter and for persons exempt from licensing (either
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under this article or under IC 37-1-1-6(8)) that employ
licensed mortgage loan originators or that sponsor licensed
mortgage loan originators as permitted by IC 37-1-1-6(8) or
by 750 IAC 9; and
(3) performing other services that the director determines
necessary for the orderly administration of the department's
licensing system under section 24 of this chapter.
(b) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director may
regularly report significant or recurring violations of this article
related to subordinate lien mortgage transactions to the NMLSR.
(c) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director may report
complaints received regarding licensees and relating to
subordinate lien mortgage transactions to the NMLSR.
(d) The director may report publicly adjudicated licensure
actions against licensees under section 24 of this chapter to the
NMLSR.
(e) The director shall establish a process in which persons
licensed in accordance with section 24 of this chapter may
challenge information reported to the NMLSR by the department.
(f) The director's authority to designate the NMLSR under
subsection (a) is subject to the following:
(1) Information stored in the NMLSR is subject to the
confidentiality provisions of IC 28-1-2-30 and IC 5-14-3. A
person may not:
(A) obtain information from the NMLSR unless the person
is authorized to do so by statute;
(B) initiate any civil action based on information obtained
from the NMLSR if the information is not otherwise
available to the person under any other state law; or
(C) initiate any civil action based on information obtained
from the NMLSR if the person could not have initiated the
action based on information otherwise available to the
person under any other state law.
(2) Documents, materials, and other forms of information in
the control or possession of the NMLSR that are confidential
under IC 28-1-2-30 and that are:
(A) furnished by the director, the director's designee, or a
licensee; or
(B) otherwise obtained by the NMLSR;
are confidential and privileged by law and are not subject to
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inspection under IC 5-14-3, subject to subpoena, subject to
discovery, or admissible in evidence in any civil action.
However, the director may use the documents, materials, or
other information available to the director in furtherance of
any action brought in connection with the director's duties
under this article.
(3) Disclosure of documents, materials, and information:
(A) to the director; or
(B) by the director;
under this subsection does not result in a waiver of any
applicable privilege or claim of confidentiality with respect to
the documents, materials, or information.
(4) Information provided to the NMLSR is subject to
IC 4-1-11.
(5) This subsection does not limit or impair a person's right
to:
(A) obtain information;
(B) use information as evidence in a civil action or
proceeding; or
(C) use information to initiate a civil action or proceeding;
if the information may be obtained from the director or the
director's designee under any law.
(6) Except as otherwise provided in the federal Housing and
Economic Recovery Act of 2008, Public Law 110-289, Section
1512, the requirements under any federal law or IC 5-14-3
regarding the privacy or confidentiality of any information or
material provided to the NMLSR, and any privilege arising
under federal or state law, including the rules of any federal
or state court, with respect to the information or material,
continue to apply to the information or material after the
information or material has been disclosed to the NMLSR.
The information and material may be shared with all state
and federal regulatory officials with mortgage industry
oversight authority without the loss of privilege or the loss of
confidentiality protections provided by federal law or
IC 5-14-3.
(7) For purposes of this section, the director may enter
agreements or sharing arrangements with other governmental
agencies, the Conference of State Bank Supervisors, the
American Association of Residential Mortgage Regulators, or
other associations representing governmental agencies as
established by rule or order of the director.
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(8) Information or material that is subject to a privilege or
confidentiality under subdivision (6) is not subject to:
(A) disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or
an agency of the federal government or the respective
state; or
(B) subpoena, discovery, or admission into evidence, in any
private civil action or administrative process, unless with
respect to any privilege held by the NMLSR with respect
to the information or material, the person to whom the
information or material pertains waives, in whole or in
part, in the discretion of the person, that privilege.
(9) Any provision of IC 5-14-3 that concerns the disclosure of:
(A) confidential supervisory information; or
(B) any information or material described in subdivision
(6);
and that is inconsistent with subdivision (6) is superseded by
this section.
(10) This section does not apply with respect to information or
material that concerns the employment history of, and
publicly adjudicated disciplinary and enforcement actions
against, a person licensed in accordance with section 24 of this
chapter and described in section 26(b) of this chapter and that
is included in the NMLSR for access by the public.
(11) The director may require a licensee required to submit
information to the NMLSR to pay a processing fee considered
reasonable by the director. In determining whether an
NMLSR processing fee is reasonable, the director shall:
(A) require review of; and
(B) make available;
the audited financial statements of the NMLSR.
(g) Notwithstanding any other provision of law, any:
(1) application, renewal, or other form or document that:
(A) relates to mortgage licenses issued by the department;
and
(B) is made or produced in an electronic format;
(2) document filed as an electronic record in a multistate
automated repository established and operated for the
licensing or registration of mortgage lenders, brokers, or loan
originators; or
(3) electronic record filed through the NMLSR;
is considered a valid original document when reproduced in paper
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form by the department.
Sec. 31. (a) A license issued under this article must be renewed
not later than December 31 of each calendar year. A license issued
under section 24 of this chapter must be renewed through the
NMLSR. The minimum standards for license renewal for a
creditor include the following:
(1) If the creditor is licensed in accordance with section 23 of
this chapter, the creditor has:
(A) paid all required fees for renewal of the license; and
(B) filed all reports and information required by the
director.
(2) If the creditor is licensed under section 24 of this chapter,
the following:
(A) The creditor has continued to meet the surety bond
requirement under section 29 of this chapter.
(B) The creditor has filed the creditor's call report in a
manner that satisfies section 33(d) of this chapter.
(C) The creditor has paid all required fees for renewal of
the license.
(D) The creditor and individuals described in section 26(b)
of this chapter have certified to the department that they
continue to meet all the standards for licensing established
under section 26 of this chapter.
(E) The creditor has filed all reports and information
required by the director.
(F) The creditor has provided in the creditor's renewal
application any information describing material changes
in the information contained in the creditor's original
application for licensure, or in any previous application,
including any previous renewal application, along with any
other information the director requires in order to
evaluate the renewal of the license issued under this article.
(b) A license issued by the department authorizing a person to
engage as a creditor in consumer loans or consumer credit sales
under this article may be revoked or suspended by the department
if the person fails to:
(1) file any renewal form required by the department; or
(2) pay any license renewal fee described under section
26(h)(3) of this chapter;
not later than sixty (60) days after the due date.
(c) A person whose license is revoked or suspended under this
section may do either of the following:
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(1) Pay all delinquent fees and apply for reinstatement of the
license.
(2) Appeal the revocation or suspension to the department for
an administrative review under IC 4-21.5-3.
Pending the decision from a hearing under IC 4-21.5-3 concerning
license revocation or suspension, a license remains in force.
(d) If, at any time, the information or record contained in:
(1) an original application for licensure filed under section 23
or 24 of this chapter; or
(2) a renewal application filed under this section;
is or becomes inaccurate or incomplete in a material respect, the
applicant shall promptly file a correcting amendment with the
department.
Sec. 32. (a) The department may issue to a person licensed to:
(1) make consumer loans; or
(2) engage in consumer credit sales that are mortgage
transactions;
an order to show cause why the license should not be revoked or
suspended for a period determined by the department.
(b) An order issued under subsection (a) must:
(1) include:
(A) a statement of the place, date, and time for a meeting
with the department, which date may not be less than ten
(10) days from the date of the order;
(B) a description of the action contemplated by the
department; and
(C) a statement of the facts or conduct supporting the
issuance of the order; and
(2) be accompanied by a notice stating that the licensee is
entitled to:
(A) a reasonable opportunity to be heard; and
(B) show the licensee's compliance with all lawful
requirements for retention of the license;
at the meeting described in subdivision (1)(A).
(c) After the meeting described in subsection (b)(1)(A), the
department may revoke or suspend the license if the department
finds that:
(1) the licensee has repeatedly and willfully violated:
(A) this article or any applicable rule, order, or guidance
document adopted or issued by the department; or
(B) any other state or federal laws, rules, or regulations
applicable to consumer credit transactions;
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(2) the licensee does not meet the licensing qualifications
under section 26 of this chapter;
(3) the licensee obtained the license for the benefit of, or on
behalf of, a person who does not qualify for the license;
(4) the licensee knowingly or intentionally made material
misrepresentations to, or concealed material information
from, the department; or
(5) facts or conditions exist that, had they existed at the time
the licensee applied for the license, would have been grounds
for the department to deny the issuance of the license.
(d) Whenever the department revokes or suspends a license, the
department shall enter an order to that effect and forthwith notify
the licensee of:
(1) the revocation or suspension;
(2) if a suspension has been ordered, the duration of the
suspension;
(3) the procedure for appealing the revocation or suspension
under IC 4-21.5-3-6; and
(4) any other terms and conditions that apply to the
revocation or suspension.
Not later than five (5) days after the entry of the order the
department shall deliver to the licensee a copy of the order and the
findings supporting the order.
(e) Any person holding a license to make consumer loans may
relinquish the license by notifying the department in writing of its
relinquishment, but this relinquishment does not affect the person's
liability for acts previously committed and coming within the scope
of this article.
(f) If the director determines it is in the public interest, the
director may pursue revocation of a license of a licensee that has
relinquished the license under subsection (e).
(g) If a person's license is revoked, suspended, or relinquished,
the revocation, suspension, or relinquishment does not impair or
affect any obligation owed by any person under any preexisting
lawful contract.
(h) If the director has just cause to believe an emergency exists
from which it is necessary to protect the interests of the public, the
director may proceed with the revocation of a license through an
emergency or another temporary order under IC 4-21.5-4.
Sec. 33. (a) Every creditor required to be licensed under this
article shall maintain records in conformity with United States
generally accepted accounting principles and practices, or in any
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other form that may be preapproved at the discretion of the
director, in a manner that will enable the department to determine
whether the licensee is complying with the provisions of this article.
The record keeping system of a licensee shall be sufficient if the
licensee makes the required information reasonably available. The
department shall determine the sufficiency of the records and
whether the licensee has made the required information reasonably
available. The department shall be given free access to the records
wherever located. The records pertaining to any loan shall be
retained for two (2) years after making the final entry relating to
the loan, but in the case of a revolving loan account the two (2)
years is measured from the date of each entry. A person licensed
or required to be licensed under this chapter is subject to
IC 28-1-2-30.5 with respect to any records maintained by the
person. A person that is exempt (either under this article or under
IC 37-1-1-6(8)) from licensing and that sponsors one (1) or more
licensed mortgage loan originators as permitted by IC 37-1-1-6(8)
or by 750 IAC 9, shall:
(1) cooperate with the department; and
(2) provide access to records and documents;
as required by the department in carrying out examinations of the
activities of the licensed mortgage loan originators sponsored by
the person.
(b) The unique identifier of any person originating a mortgage
transaction must be clearly shown on all mortgage transaction
application forms and any other documents as required by the
director.
(c) Every licensee that engages in mortgage transactions shall
use automated examination and regulatory software designated by
the director, including third party software. Use of the software
consistent with guidance documents and policies issued by the
director is not a violation of IC 28-1-2-30.
(d) Each:
(1) creditor that is licensed by the department to engage in
mortgage transactions; and
(2) person that is exempt (either under this article or under
IC 37-1-1-6(8)) from licensing and that:
(A) employs one (1) or more licensed mortgage loan
originators; or
(B) sponsors one (1) or more licensed mortgage loan
originators as permitted by IC 37-1-1-6(8) or by 750
IAC 9;
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shall submit to the NMLSR a call report, which must be in the
form and contain information the NMLSR requires.
(e) Every creditor required to be licensed under this article shall
file with the department a composite report as required by the
department, but not more frequently than annually, in the form
prescribed by the department relating to all consumer loans made
by the licensee. The department shall consult with comparable
officials in other states for the purpose of making the kinds of
information required in the reports uniform among the states.
Information contained in the reports shall be confidential and may
be published only in composite form. The department may impose
a fee in an amount fixed by the department under IC 28-11-3-5 for
each day that a creditor fails to file the report required by this
subsection.
(f) A creditor required to be licensed under this article shall file
notification with the department if the licensee:
(1) has a change in name, address, or principals;
(2) opens a new branch, closes an existing branch, or relocates
an existing branch;
(3) files for bankruptcy or reorganization; or
(4) is subject to revocation or suspension proceedings by a
state or governmental authority with regard to the licensee's
activities;
not later than thirty (30) days after the date of the event described
in this subsection.
(g) Every licensee shall file notification with the department if
the licensee or any director, executive officer, or manager of the
licensee has been convicted of a felony under the laws of Indiana or
any other jurisdiction. The licensee shall file the notification
required by this subsection not later than thirty (30) days after the
date of the event described in this subsection.
Sec. 34. (a) As used in this section, "automated loan machine"
means an unmanned machine that performs routine lending
functions.
(b) A licensee may make loans through an automated loan
machine at an offsite location if the licensee:
(1) notifies the department in writing of the existence and
location of the automated loan machine;
(2) maintains at a location licensed or approved by the
department the books, accounts, records, and files concerning
transactions performed through the automated loan machine;
and
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(3) posts at the offsite location where the automated loan
machine is located the:
(A) address where the books, accounts, records and files
are located; and
(B) telephone number at which the licensee may be
contacted.
Sec. 35. (a) With respect to a supervised loan, including a loan
pursuant to a revolving loan account, a supervised lender may
contract for and receive a loan finance charge not exceeding that
permitted by this section.
(b) The loan finance charge, calculated according to the
actuarial method, may not exceed the equivalent of the greater of:
(1) the total of:
(A) thirty-six percent (36%) per year on that part of the
unpaid balances of the principal which is two thousand
dollars ($2,000) or less;
(B) twenty-one percent (21%) per year on that part of the
unpaid balances of the principal which is more than two
thousand dollars ($2,000) but does not exceed four
thousand dollars ($4,000); and
(C) fifteen percent (15%) per year on that part of the
unpaid balances of the principal which is more than four
thousand dollars ($4,000); or
(2) twenty-five percent (25%) per year on the unpaid balances
of the principal.
(c) In the case of a loan agreement entered into before July 1,
2020, this section does not limit or restrict the manner of
contracting for the loan finance charge, whether by way of add-on,
discount, or otherwise, so long as the rate of the loan finance
charge does not exceed that permitted by this section. If the loan is
precomputed:
(1) the loan finance charge may be calculated on the
assumption that all scheduled payments will be made when
due; and
(2) the effect of prepayment is governed by the provisions on
rebate upon prepayment in section 13 of this chapter.
After June 30, 2020, a loan agreement may not be entered into for
a precomputed supervised loan. The loan finance charge
authorized by this section must be contracted for between the
lender and the debtor, and must be calculated by applying a rate
not exceeding the rate set forth in subsection (b) to unpaid balances
of the principal.
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(d) The term of a loan for the purposes of this section
commences on the date the loan is made. Differences in the lengths
of months are disregarded, and a day may be counted as
one-thirtieth (1/30) of a month. Subject to classifications and
differentiations the lender may reasonably establish, a part of a
month in excess of fifteen (15) days may be treated as a full month
if periods of fifteen (15) days or less are disregarded and that
procedure is not consistently used to obtain a greater yield than
would otherwise be permitted.
(e) Subject to classifications and differentiations the lender may
reasonably establish, the lender may make the same loan finance
charge on all principal amounts within a specified range. A loan
finance charge does not violate subsection (b) if:
(1) when applied to the median amount within each range, it
does not exceed the maximum permitted in subsection (b);
and
(2) when applied to the lowest amount within each range, it
does not produce a rate of loan finance charge exceeding the
rate calculated according to subdivision (1) by more than
eight percent (8%) of the rate calculated according to
subdivision (1).
(f) The amounts of two thousand dollars ($2,000) and four
thousand dollars ($4,000) in subsection (b) and thirty dollars ($30)
in subsection (g) are subject to change pursuant to the provisions
on adjustment of dollar amounts set forth in IC 37-2-1-5. However,
notwithstanding IC 37-2-1-5(a), for the adjustment of the amount
of thirty dollars ($30), the Reference Base Index to be used is the
Index for October 1992. Notwithstanding IC 37-2-1-5(a), for the
adjustment of the amounts of two thousand dollars ($2,000) and
four thousand dollars ($4,000), the Reference Base Index to be used
is the Index for October 2012.
(g) With respect to a supervised loan not made pursuant to a
revolving loan account, the lender may contract for and receive a
minimum loan finance charge of not more than thirty dollars ($30).
The minimum loan finance charge allowed under this subsection
may be imposed only if the lender does not assess a nonrefundable
prepaid finance charge under subsection (h) and:
(1) the debtor prepays in full a consumer loan, refinancing, or
consolidation, regardless of whether the loan, refinancing, or
consolidation is precomputed;
(2) the loan, refinancing, or consolidation prepaid by the
debtor is subject to a loan finance charge that:
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(A) is contracted for by the parties; and
(B) does not exceed the rate prescribed in subsection (b);
and
(3) the loan finance charge earned at the time of prepayment
is less than the minimum loan finance charge contracted for
under this subsection.
(h) Except as provided in subsections (g) and (j)(3), in addition
to the loan finance charge provided for in this section and to any
other charges and fees permitted by this chapter, the lender may
contract for and receive a nonrefundable prepaid finance charge
of not more than fifty dollars ($50) if the loan agreement is entered
into before July 1, 2020. If the loan agreement is entered into after
June 30, 2020, not more than the following:
(1) Seventy-five dollars ($75), in the case of a loan agreement
for a principal amount which is two thousand dollars ($2,000)
or less.
(2) One hundred fifty dollars ($150) in the case of a loan
agreement for a principal amount which is more than two
thousand dollars ($2,000) but does not exceed four thousand
dollars ($4,000).
(3) Two hundred dollars ($200) in the case of a loan
agreement for a principal amount which is more than four
thousand dollars ($4,000).
The amounts in this subsection are not subject to change under
IC 37-2-1-5.
(i) The nonrefundable prepaid finance charge provided for in
subsection (h) is not subject to refund or rebate. However, for any
supervised loan entered into after June 30, 2020, any amount
charged by the lender, other than by a lender that is a depository
institution, under subsection (h) that exceeds the applicable amount
permitted by subsection (h) constitutes a violation of this article
under IC 37-2-7-8(12) and is subject to refund. Any amount
charged by a depository institution under subsection (h) that
exceeds the applicable amount set forth in subsection (h) is subject
to refund.
(j) Notwithstanding subsections (h) and (i), in the case of a
supervised loan that is not secured by an interest in land, if a
lender retains any part of a nonrefundable prepaid finance charge
charged on a loan that is paid in full by a new loan from the same
lender, the following apply:
(1) If the loan is paid in full by the new loan within three (3)
months after the date of the prior loan, the lender may not
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charge a nonrefundable prepaid finance charge on the new
loan, or, in the case of a revolving loan, on the increased credit
line.
(2) The lender may not assess more than two (2)
nonrefundable prepaid finance charges in any twelve (12)
month period.
(3) Subject to subdivisions (a) and (b), if a supervised loan
that is entered into by a lender and a debtor before July 1,
2020, is paid in full by a new loan from the same lender after
June 30, 2020, the lender may contract for and receive a
nonrefundable prepaid finance charge in the amount set forth
in subsection (h) for loan agreements entered into after June
30, 2020.
(k) In the case of a supervised loan that is secured by an interest
in land, this section does not prohibit a lender from contracting for
and receiving a fee for preparing deeds, mortgages, reconveyances,
and similar documents under section 5(a)(4)(B) of this chapter, in
addition to the nonrefundable prepaid finance charge provided for
in subsection (h).
Sec. 36. With respect to a consumer loan, no lender may permit
any person, or husband and wife, to become obligated in any way
under more than one loan agreement with the lender or with a
person related to the lender, with intent to obtain a higher rate of
loan finance charge than would otherwise be permitted by the
provisions on loan finance charge for supervised loans set forth in
section 35 of this chapter or to avoid disclosure of an annual
percentage rate pursuant to the provisions on disclosure set forth
in section 14 of this chapter. The excess amount of loan finance
charge provided for in agreements in violation of this section is an
excess charge for the purposes of the provisions on effect of
violations on rights of parties (IC 37-2-6-9) and the provisions on
civil actions by the department (IC 37-2-7-14).
Sec. 37. (a) With respect to a supervised loan in which the
principal is four thousand dollars ($4,000) or less, a lender may not
contract for an interest in land as security. A security interest
taken in violation of this section is void.
(b) The amount of four thousand dollars ($4,000) in subsection
(a) is subject to change pursuant to the provisions on adjustment
of dollar amounts set forth in IC 37-2-1-5. However,
notwithstanding IC 37-2-1-5(a), the Reference Base Index to be
used under this subsection is the Index for October 2012.
Sec. 38. (a) Supervised loans not made pursuant to a revolving
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loan account and in which the principal is four thousand dollars
($4,000) or less are payable in a single installment or shall be
scheduled to be payable in substantially equal installments that are
payable at equal periodic intervals, except to the extent that the
schedule of payments is adjusted to the seasonal or irregular
income of the debtor, and:
(1) over a period of not more than thirty-seven (37) months if
the principal is more than three hundred dollars ($300); or
(2) over a period of not more than twenty-five (25) months if
the principal is three hundred dollars ($300) or less.
(b) The amounts of three hundred dollars ($300) and four
thousand dollars ($4,000) in subsection (a) are subject to change
pursuant to the provisions on adjustment of dollar amounts set
forth in IC 37-2-1-5. However, notwithstanding IC 37-2-1-5(a), the
Reference Base Index to be used with respect to the amount of:
(1) three hundred dollars ($300) is the Index for October
1992; and
(2) four thousand dollars ($4,000) is the Index for October
2012.
Sec. 39. A licensee may carry on other business at a location
where the licensee makes consumer loans unless the licensee
carries on other business for the purpose of evasion or violation of
this article.
Sec. 40. (a) As used in this section, "control" means possession
of the power directly or indirectly to:
(1) direct or cause the direction of the management or policies
of a creditor, whether through the beneficial ownership of
voting securities, by contract, or otherwise; or
(2) vote at least twenty-five percent (25%) of the voting
securities of a creditor, whether the voting rights are derived
through the beneficial ownership of voting securities, by
contract, or otherwise.
(b) An organization or an individual acting directly, indirectly,
or through or in concert with one (1) or more other organizations
or individuals may not acquire control of any creditor unless the
department has received and approved an application for change
in control. The department has not more than one hundred twenty
(120) days after receipt of an application to issue a notice
approving the proposed change in control. The application must
contain the name and address of the organization, individual, or
individuals who propose to acquire control and any other
information required by the director.
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(c) The period for approval under subsection (b) may be
extended:
(1) in the discretion of the director for an additional thirty
(30) days; and
(2) not more than two (2) additional times for not more than
forty-five (45) days each time if:
(A) the director determines that the organization,
individual, or individuals who propose to acquire control
have not submitted substantial evidence of the
qualifications described in subsection (d);
(B) the director determines that any material information
submitted is substantially inaccurate; or
(C) the director has been unable to complete the
investigation of the organization, individual, or individuals
who propose to acquire control because of any delay
caused by or the inadequate cooperation of the
organization, individual, or individuals.
(d) The department shall issue a notice approving the
application only after the department is satisfied that both of the
following apply:
(1) The organization, individual, or individuals who propose
to acquire control are qualified by competence, experience,
character, and financial responsibility to control and operate
the creditor in a legal and proper manner.
(2) The interests of the owners and creditors of the creditor
and the interests of the public generally will not be
jeopardized by the proposed change in control.
(e) The director may determine, in the director's discretion, that
subsection (b) does not apply to a transaction if the director
determines that the direct or beneficial ownership of the creditor
will not change as a result of the transaction.
(f) The president or other chief executive officer of a creditor
shall report to the director any transfer or sale of securities of the
creditor that results in direct or indirect ownership by a holder or
an affiliated group of holders of at least ten percent (10%) of the
outstanding securities of the creditor. The report required by this
subsection must be made not later than ten (10) days after the
transfer of the securities on the books of the creditor.
(g) Depending on the circumstances of the transaction, the
director may reserve the right to require the organization,
individual, or individuals who propose to acquire control of a
creditor licensed under this article to apply for a new license under
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section 26 of this chapter, instead of acquiring control of the
licensee under this section.
Sec. 41. The parties to a loan other than a consumer loan may
agree in writing signed by the parties that the loan is subject to the
provisions of this article applying to consumer loans. If the parties
so agree, the loan is a consumer loan for the purposes of this
article.
Sec. 42. (a) With respect to a consumer related loan, including
one made pursuant to a revolving loan account, the parties may
contract for the payment by the debtor of a loan finance charge,
calculated according to the actuarial method, not to exceed
twenty-five percent (25%) per year on the unpaid principal
balance.
(b) A person engaged in consumer related loans is not required
to comply with:
(1) the licensing requirements set forth in section 26 of this
chapter; or
(2) IC 37-2-7-24 through IC 37-2-7-26.
Sec. 43. (a) The agreement with respect to a consumer related
loan may provide for only the following charges as a result of the
debtor's default:
(1) reasonable attorney's fees and reasonable expenses
incurred in realizing on a security interest;
(2) deferral charges not in excess of twenty-five percent (25%)
per year of the amount deferred for the period of deferral;
and
(3) other charges that could have been made had the loan
been a consumer loan.
(b) A provision in violation of this section is unenforceable.
Sec. 44. With respect to a loan other than a consumer loan or a
consumer related loan, the parties may contract for the payment
by the debtor of any loan finance charge.
Sec. 45. (a) In addition to any disclosures otherwise provided by
law, a lender soliciting loans using a negotiable check, facsimile, or
other negotiable instrument that may be used by a consumer to
activate a new loan shall disclose the following:
"This is a solicitation for a loan. Read the enclosed disclosures
before signing this agreement.".
This notice shall be printed in at least ten point type and shall
appear conspicuously on the offer.
(b) If a negotiable check, a facsimile, or another instrument is
stolen or incorrectly received by someone other than the intended
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payee and the instrument is fraudulently cashed, the consumer who
was the intended payee is not liable for the loan obligation.
Sec. 46. With respect to a consumer loan secured by an interest
in land used or expected to be used as the principal dwelling of the
debtor, a lender shall comply with IC 6-1.1-12-43.
Chapter 5. Insurance
Sec. 1. (a) Except as provided in subsection (b), this chapter
applies to insurance provided or to be provided in relation to a
consumer credit sale, a consumer lease, or a consumer loan.
(b) Section 17 of this chapter concerning cancellation by a
creditor applies to loans the primary purpose of which is the
financing of insurance. No other provision of this chapter applies
to insurance so financed.
(c) This chapter supplements and does not repeal IC 27-8-4 (the
credit insurance act). The provisions of this article concerning
administrative controls, liabilities, and penalties do not apply to
persons acting as insurers, and the similar provisions of IC 27-8-4
do not apply to creditors and debtors.
Sec. 2. (a) Except as otherwise provided in this chapter and
subject to the provisions on:
(1) additional charges set forth in IC 37-2-3-5 and
IC 37-2-4-5;
(2) maximum charges set forth in IC 37-2-3-4 through
IC 37-2-3-12; and
(3) maximum charges set forth in IC 37-2-4-4 through
IC 37-2-4-13;
a creditor may agree to provide insurance, and may contract for
and receive a charge for insurance separate from and in addition
to other charges. A creditor need not make a separate charge for
insurance provided or required by the creditor. This article does
not authorize the issuance of any insurance prohibited under any
statute, or rule thereunder, governing the business of insurance.
(b) The excess amount of a charge for insurance provided for in
agreements in violation of this chapter is an excess charge for the
purposes of the provisions of the chapter on remedies and penalties
(IC 37-2-6) as to effect of violations on rights of parties
(IC 37-2-6-9) and of the provisions of IC 37-2-7 as to civil actions
by the department (IC 37-2-7-14).
Sec. 3. If a creditor agrees with a debtor to provide insurance:
(1) the insurance shall be evidenced by an individual policy or
certificate of insurance delivered to the debtor, or sent to the
debtor at the debtor's address as stated by the debtor, within
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thirty (30) days after the term of the insurance commences
under the agreement between the creditor and debtor; or
(2) the creditor shall promptly notify the debtor of any failure
or delay in providing the insurance.
Sec. 4. (a) In applying the provisions of this article on
unconscionability (IC 37-2-6-7 and IC 37-2-7-12) to a separate
charge for insurance, consideration shall be given, among other
factors, to:
(1) potential benefits to the debtor including the satisfaction
of the debtor's obligations;
(2) the creditor's need for the protection provided by the
insurance; and
(3) the relation between the amount and terms of credit
granted and the insurance benefits provided.
(b) If consumer credit insurance otherwise complies with this
chapter and other applicable law, neither the amount nor the term
of the insurance nor the amount of a charge therefor is in itself
unconscionable.
Sec. 5. (a) Except as provided in subsection (b), if a creditor
contracts for or receives a separate charge for insurance, the
amount charged to the debtor for the insurance may not exceed the
premium to be charged by the insurer, as computed at the time the
charge to the debtor is determined, conforming to any rate filings
required by law and made by the insurer with the insurance
commissioner.
(b) A creditor who provides consumer credit insurance in
relation to a revolving charge account or revolving loan account
may calculate the charge to the debtor in each billing cycle by
applying the current premium rate to one (1) of the following:
(1) The average daily unpaid balance of the debt in the cycle.
(2) The unpaid balance of the debt or a median amount within
a specified range of unpaid balances of debt on approximately
the same day of the cycle. The day of the cycle need not be the
day used in calculating the credit service charge under
IC 37-2-3-4(f) or loan finance charge (IC 37-2-4-4 and
IC 37-2-4-35), but the specified range shall be the range used
for that purpose.
(3) The unpaid balances of principal calculated according to
the actuarial method.
(4) The amount of the insurance benefit for the cycle.
Sec. 6. (a) Upon prepayment in full of a consumer credit sale or
consumer loan by the proceeds of consumer credit insurance, the
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debtor or the debtor's estate is entitled to a refund of:
(1) any portion of a separate charge for insurance which by
reason of prepayment is retained by the creditor or returned
to the creditor by the insurer unless the charge was computed
from time to time on the basis of the balances of the debtor's
account; and
(2) any portion of an additional charge that is:
(A) assessed in accordance with IC 37-2-3-5(a)(3),
IC 37-2-3-5(a)(8), IC 37-2-3-5(a)(5), or IC 37-2-4-5(a)(11);
and
(B) subject to rebate upon prepayment.
(b) This chapter does not require a creditor to grant a refund or
credit to the debtor if all refunds and credits due to the debtor
under this chapter amount to less than one dollar ($1), and except
as provided in subsection (a) does not require the creditor to
account to the debtor for any portion of a separate charge for
insurance because:
(1) the insurance is terminated by performance of the
insurer's obligation;
(2) the creditor pays or accounts for premiums to the insurer
in amounts and at times determined by the agreement
between them; or
(3) the creditor receives directly or indirectly under any
policy of insurance a gain or advantage not prohibited by law.
(c) Except as provided in subsection (b), the creditor or the
creditor's assignee shall promptly make an appropriate refund or
credit to the debtor for any separate charge made for insurance or
for an additional charge described in subsection (a)(2) if:
(1) the insurance is not provided or is provided for a term
shorter than the term for which the charge to the debtor for
insurance was computed; or
(2) the insurance or the protection provided in exchange for
the additional charge described in subsection (a)(2) terminates
prior to the end of the scheduled term of the coverage because
of prepayment in full or otherwise.
(d) An initial creditor, a subsequent creditor, or an assignee of
an initial or a subsequent creditor, shall maintain documentation
of any account that is subject to a refund or credit under this
section. The information maintained under this subsection shall be
made available to the department as necessary to determine
compliance with this section.
(e) A refund or credit required by subsection (c)(1) is
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appropriate as to amount if it is computed according to a method
prescribed or approved by the insurance commissioner or a
formula filed by the insurer with the insurance commissioner at
least thirty (30) days before the debtor's right to a refund or credit
becomes determinable, unless the method or formula is used after
the insurance commissioner notifies the insurer that it is
disapproved.
(f) If a refund or credit required by subsection (a) or (c) is not
made to the debtor within sixty (60) days after the date the debt is
terminated, due to prepayment in full or otherwise, the creditor
shall pay to the debtor for each day after the sixty (60) day period
has expired an amount equal to the daily interest at the contracted
annual percentage rate on the amount of the refund required by
subsection (a) due at the time of prepayment or termination. The
director may impose an additional civil penalty of not greater than
one thousand dollars ($1,000) per occurrence if a creditor engages
in a pattern or practice of failing to comply with this subsection.
Sec. 7. If a creditor requires insurance, upon notice to the
creditor the debtor shall have the option of providing the required
insurance through an existing policy of insurance owned or
controlled by the debtor, or through a policy to be obtained and
paid for by the debtor, but the creditor may for reasonable cause
decline the insurance provided by the debtor.
Sec. 8. (a) A creditor may not contract for or receive a separate
charge for insurance in connection with a deferral (IC 37-2-3-7 or
IC 37-2-4-7), a refinancing (IC 37-2-3-8 or IC 37-2-4-8), or a
consolidation (IC 37-2-3-9 or IC 37-2-4-9), unless:
(1) the debtor agrees at or before the time of the deferral,
refinancing, or consolidation that the charge may be made;
(2) the debtor is or is to be provided with insurance for an
amount or a term, or insurance of a kind, in addition to that
to which the debtor would have been entitled had there been
no deferral, refinancing, or consolidation;
(3) the debtor receives a refund or credit on account of any
unexpired term of existing insurance in the amount that
would be required if the insurance were terminated under
section 6 of this chapter; and
(4) the charge does not exceed the amount permitted by
section 5 of this chapter.
(b) A creditor may not contract for or receive a separate charge
for insurance which duplicates insurance with respect to which the
creditor has previously contracted for or received a separate
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charge.
Sec. 9. The department and the insurance commissioner are
authorized and directed to consult and assist one another in
maintaining compliance with this chapter. They may jointly pursue
investigations, prosecute suits, and take other official action, as
may seem to them appropriate, if either of them is otherwise
empowered to take the action. If the department is informed of a
violation or suspected violation by an insurer of this chapter, or of
the insurance laws, rules, and regulations of Indiana, the
department shall advise the insurance commissioner of the
circumstances.
Sec. 10. (a) To the extent that the commissioner's responsibility
under this chapter requires, the commissioner of insurance shall
issue rules with respect to insurers, and with respect to refunds
(section 6 of this chapter), forms, schedules of premium rates and
charges (section 13 of this chapter), and the commissioner's
approval or disapproval thereof and, in case of violation, may
make an order for compliance.
(b) IC 4-21.5-3 applies to and governs all agency action taken by
the commissioner of insurance pursuant to this section.
Sec. 11. (a) Consumer credit insurance provided by a creditor
may be subject to the furnishing of evidence of insurability
satisfactory to the insurer. Whether or not such evidence is
required, the term of the insurance shall commence no later than
when the debtor becomes obligated to the creditor or when the
debtor applies for the insurance, whichever is later, except as
follows:
(1) if any required evidence of insurability is not furnished
until more than thirty (30) days after the term would
otherwise commence, the term may commence on the date
when the insurer determines the evidence to be satisfactory;
or
(2) if the creditor provides insurance not previously provided
covering debts previously created, the term may commence on
the effective date of the policy.
(b) The originally scheduled term of the insurance shall extend
at least until the due date of the last scheduled payment of the debt
except as follows:
(1) if the insurance relates to a revolving charge account or
revolving loan account, the term need extend only until the
payment of the debt under the account and may be sooner
terminated after at least thirty (30) days notice to the debtor;
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or
(2) if the debtor is advised in writing that the insurance will be
written for a specified shorter time, the term need extend only
until the end of the specified time.
(c) The term of the insurance shall not extend more than fifteen
(15) days after the originally scheduled due date of the last
scheduled payment of the debt unless it is extended without
additional cost to the debtor or as an incident to a deferral;
refinancing, or consolidation.
Sec. 12. (a) Except as provided in subsection (b):
(1) in the case of consumer credit insurance providing life
coverage, the amount of insurance may not initially exceed the
debt and, if the debt is payable in installments, may not at any
time exceed the greater of the scheduled or actual amount of
the debt; or
(2) in the case of any other consumer credit insurance, the
total amount of periodic benefits payable may not exceed the
total of scheduled unpaid installments of the debt, and the
amount of any periodic benefit may not exceed the original
amount of debt divided by the number of periodic
installments in which it is payable.
(b) If consumer credit insurance is provided in connection with
a revolving charge account or revolving loan account, the amounts
payable as insurance benefits may be reasonably commensurate
with the amount of debt as it exists from time to time. If consumer
credit insurance is provided in connection with a commitment to
grant credit in the future, the amounts payable as insurance
benefits may be reasonably commensurate with the total from time
to time of the amount of debt and the amount of the commitment.
Sec. 13. (a) A creditor may not use a form, or a schedule of
premium rates or charges, the filing of which is required by this
section, if the insurance commissioner has disapproved the form or
schedule and has notified the insurer of the insurance
commissioner's disapproval. A creditor may not use a form or
schedule unless:
(1) the form or schedule has been on file with the insurance
commissioner for thirty (30) days, or has earlier been
approved by the commissioner; and
(2) the insurer has complied with this section with respect to
the insurance.
(b) Except as provided in subsection (c), all policies, certificates
of insurance, notices of proposed insurance, applications for
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insurance, endorsements and riders relating to consumer credit
insurance delivered or issued for delivery in this state, and the
schedules of premium rates or charges pertaining thereto, shall be
filed by the insurer with the insurance commissioner. Within thirty
(30) days after the filing of any form or schedule, the commissioner
shall disapprove it if the premium rates or charges are
unreasonable in relation to the benefits provided under the form,
or if the form contains provisions which are unjust, unfair,
inequitable, or deceptive, or encourage misrepresentation of the
coverage, or are contrary to any provision of IC 27 or of any rule
promulgated under IC 27.
(c) If a group policy has been delivered in another state, the
forms to be filed by the insurer with the insurance commissioner
are the group certificates and notices of proposed insurance. The
commissioner shall approve them if:
(1) they provide the information that would be required if the
group policy were delivered in this state; and
(2) the applicable premium rates or charges do not exceed
those established by the commissioner's rules.
Sec. 14. (a) A creditor may not contract for or receive a separate
charge for insurance against loss of or damage to property unless:
(1) the insurance covers a substantial risk of loss of or damage
to property related to the credit transaction;
(2) the amount, terms, and conditions of the insurance are
reasonable in relation to the character and value of the
property insured or to be insured; and
(3) the term of the insurance is reasonable in relation to the
terms of credit.
(b) The term of the insurance is reasonable if it is customary
and does not extend substantially beyond a scheduled maturity.
(c) A creditor may not contract for or receive a separate charge
for insurance against loss of or damage to property unless the
amount financed or principal exclusive of charges for the insurance
is three hundred dollars ($300) or more, and the value of the
property is three hundred dollars ($300) or more.
(d) The amounts of three hundred dollars ($300) in subsection
(c) are subject to change pursuant to the provisions on adjustment
of dollar amounts (IC 37-2-1-5). However, notwithstanding
IC 37-2-1-5(a), the Reference Base Index to be used under this
subsection is the Index for October 1992.
Sec. 15. If a creditor contracts for or receives a separate charge
for insurance against loss of or damage to property, the risk of loss
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or damage not willfully caused by the debtor is on the debtor only
to the extent of any deficiency in the effective coverage of the
insurance, even though the insurance covers only the interest of the
creditor.
Sec. 16. A creditor may not contract for or receive a separate
charge for insurance against liability unless the insurance covers
a substantial risk of liability arising out of the ownership or use of
property related to the credit transaction.
Sec. 17. A creditor shall not request cancellation of a policy of
property or liability insurance except after the debtor's default or
in accordance with a written authorization by the debtor, and in
either case the cancellation does not take effect until written notice
is delivered to the debtor or mailed to the debtor at the debtor's
address as stated by the debtor. The notice shall state that the
policy may be canceled on a date not less than ten (10) days after
the notice is delivered, or, if the notice is mailed, not less than
thirteen (13) days after it is mailed.
Sec. 18. Upon the payment in full of a consumer credit sale or
consumer loan, the creditor or creditor's assignee shall promptly
make an appropriate refund of the unearned premium for any
property insurance with respect to which the creditor or the credit
account of the consumer is a beneficiary.
Chapter 6. Remedies and Penalties
Sec. 0.1. The amendments made to IC 24-4.5-5-203 (before its
repeal) by P.L.181-1991 applied to causes of action accruing after
June 30, 1991.
Sec. 1. Sections 0.1 through 7 of this chapter apply to:
(1) actions or other proceedings to enforce rights arising from
consumer credit sales, consumer leases, and consumer loans;
(2) garnishments of the earnings of an individual; and
(3) extortionate extensions of credit.
Sec. 2. (a) This section applies to a consumer credit sale of goods
or services.
(b) If the seller repossesses or voluntarily accepts surrender of
goods which were the subject of the sale and in which the seller has
a security interest, and the cash price of the goods repossessed or
surrendered was four thousand dollars ($4,000) or less, the buyer
is not personally liable to the seller for the unpaid balance of the
debt arising from the sale of the goods, and the seller is not
obligated to resell the collateral.
(c) If the seller repossesses or voluntarily accepts surrender of
goods which were not the subject of the sale but in which the seller
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has a security interest to secure a debt arising from a sale of goods
or services or a combined sale of goods and services and the cash
price of the sale was four thousand dollars ($4,000) or less, the
buyer is not personally liable to the seller for the unpaid balance of
the debt arising from the sale.
(d) For the purpose of determining the unpaid balance of
consolidated debts or debts pursuant to revolving charge accounts,
the allocation of payments to a debt shall be determined in the
same manner as provided for determining the amount of debt
secured by various security interests under IC 37-2-3-20.
(e) The buyer may be liable in damages to the seller if the buyer
has wrongfully damaged the collateral or if, after default and
demand, the buyer has wrongfully failed to make the collateral
available to the seller.
(f) If the seller elects to bring an action against the buyer for a
debt arising from a consumer credit sale of goods or services, and
under this section the seller would not be entitled to a deficiency
judgment if the seller repossessed the collateral, and the seller
obtains a judgment:
(1) the seller may not repossess the collateral; and
(2) the collateral is not subject to levy or sale on execution or
similar proceedings pursuant to the judgment.
(g) The amounts of four thousand dollars ($4,000) in subsections
(b) and (c) are subject to change pursuant to the provisions on
adjustment of dollar amounts (IC 37-2-1-5). However,
notwithstanding IC 37-2-1-5(a), the Reference Base Index to be
used under this subsection is the Index for October 2012.
Sec. 3. Prior to entry of judgment in an action against the
debtor, no creditor may attach unpaid earnings of the debtor by
garnishment or like proceedings.
Sec. 4. (a) For the purposes of sections 1 through 7 of this
chapter:
(1) "disposable earnings" means that part of the earnings of
an individual, including wages, commissions, income, rents, or
profits remaining after the deduction from those earnings of
amounts required by law to be withheld;
(2) "garnishment" means any legal or equitable proceedings
through which the earnings of an individual are required to
be withheld by a garnishee, by the individual debtor, or by
any other person for the payment of a judgment; and
(3) "support withholding" means that part of the earnings
that are withheld from an individual for child support in
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accordance with the laws of this state.
(b) Except as provided in subsection (h), the maximum part of
the aggregate disposable earnings of an individual for any
workweek which is subjected to garnishment to enforce the
payment of one (1) or more judgments against the individual may
not exceed the lesser of the following amounts:
(1) An amount equal to twenty-five percent (25%) of the
individual's disposable earnings for that week or, upon a
showing of good cause by the individual why the amount
should be reduced, an amount equal to:
(A) less than twenty-five percent (25%); and
(B) at least ten percent (10%);
of the individual's disposable earnings for that week.
(2) The amount by which the individual's disposable earnings
for that week exceed thirty (30) times the federal minimum
hourly wage prescribed by 29 U.S.C. 206(a)(1) in effect at the
time the earnings are payable.
In the case of earnings for a pay period other than a week, the
earnings shall be computed upon a multiple of the federal
minimum hourly wage equivalent to thirty (30) times the federal
minimum hourly wage as prescribed in this section.
(c) The maximum part of the aggregate disposable earnings of
an individual for any workweek which is subject to garnishment or
support withholding to enforce any order for the support of any
person shall not exceed:
(1) where such individual is supporting the individual's spouse
or dependent child (other than a spouse or child with respect
to whose support such order is used), fifty percent (50%) of
such individual's disposable earnings for that week; and
(2) where such individual is not supporting such a spouse or
dependent child described in subdivision (1), sixty percent
(60%) of such individual's disposable earnings for that week;
except that, with respect to the disposable earnings of any
individual for any workweek, the fifty percent (50%) specified in
subdivision (1) shall be deemed to be fifty-five percent (55%) and
the sixty percent (60%) specified in subdivision (2) shall be deemed
to be sixty-five percent (65%), if and to the extent that such
earnings are subject to garnishment or support withholding to
enforce a support order with respect to a period which is prior to
the twelve (12) week period which ends with the beginning of such
workweek.
(d) No court may make, execute, or enforce an order or process
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in violation of this section.
(e) An employer who is required to make deductions from an
individual's disposable earnings pursuant to a garnishment order
or series of orders arising out of the same judgment debt
(excluding a judgment for payment of child support) may collect,
as a fee to compensate the employer for making these deductions,
an amount equal to the greater of twelve dollars ($12) or three
percent (3%) of the total amount required to be deducted by the
garnishment order or series of orders arising out of the same
judgment debt. If the employer chooses to impose a fee, the fee
shall be allocated as follows:
(1) One-half (1/2) of the fee shall be borne by the debtor, and
that amount may be deducted by the employer directly from
the employee's disposable earnings.
(2) One-half (1/2) of the fee shall be borne by the creditor, and
that amount may be retained by the employer from the
amount otherwise due the creditor.
The deductions made under this subsection for a collection fee do
not increase the amount of the judgment debt for which the fee is
collected for the purpose of calculating or collecting judgment
interest. This fee may be collected by an employer only once for
each garnishment order or series of orders arising out of the same
judgment debt. The employer may collect the entire fee from one
(1) or more of the initial deductions from the employee's disposable
earnings. Alternatively, the employer may collect the fee ratably
over the number of pay periods during which deductions from the
employee's disposable earnings are required.
(f) The deduction of the garnishment collection fee under
subsection (e)(1) or subsection (g) is not an assignment of wages
under IC 22-2-6.
(g) An employer who is required to make a deduction from an
individual's disposable earnings in accordance with a judgment for
payment of child support may collect a fee of two dollars ($2) each
time the employer is required to make the deduction. The fee may
be deducted by the employer from the individual's disposable
earnings each time the employer makes the deduction for support.
If the employer elects to deduct such a fee, the amount to be
deducted for the payment of support must be reduced accordingly
if necessary to avoid exceeding the maximum amount permitted to
be deducted under subsection (c).
(h) A support withholding order takes priority over a
garnishment order irrespective of their dates of entry or activation.
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If a person is subject to a support withholding order and a
garnishment order, the garnishment order shall be honored only
to the extent that disposable earnings withheld under the support
withholding order do not exceed the maximum amount subject to
garnishment as computed under subsection (b).
Sec. 5. No employer shall discharge an employee for the reason
that a creditor or creditors of the employee has subjected or
attempted to subject unpaid earnings of the employee to
garnishment or like proceedings directed to the employer for the
purpose of paying a judgment or judgments.
Sec. 6. (a) If it is the understanding of the creditor and the
debtor at the time an extension of credit is made that delay in
making repayment or failure to make repayment could result in
the use of violence or other criminal means to cause harm to the
person, reputation, or property of any person, the repayment of the
extension of credit is unenforceable through civil judicial processes
against the debtor.
(b) If it is shown that an extension of credit was made at an
annual rate exceeding forty-five percent (45%) calculated
according to the actuarial method and that the creditor then had
a reputation for the use or threat of use of violence or other
criminal means to cause harm to the person, reputation, or
property of any person to collect extensions of credit or to punish
the nonrepayment thereof, there is prima facie evidence that the
extension of credit was unenforceable under subsection (a).
Sec. 7. (a) With respect to a consumer credit sale, consumer
lease, or consumer loan, if the court as a matter of law finds the
agreement or any clause of the agreement to have been
unconscionable at the time it was made the court may refuse to
enforce the agreement, or it may enforce the remainder of the
agreement without the unconscionable clause, or it may so limit the
application of any unconscionable clause as to avoid any
unconscionable result.
(b) If it is claimed or appears to the court that the agreement or
any clause thereof may be unconscionable the parties shall be
afforded a reasonable opportunity to present evidence as to its
setting, purpose, and effect to aid the court in making the
determination.
(c) For the purpose of this section, a charge or practice
expressly permitted by this article is not in itself unconscionable.
Sec. 8. For purposes of the provisions on civil liability for
violation of disclosure provisions set forth in section 10 of this
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chapter and on a debtor's right to rescind certain transactions set
forth in section 11 of this chapter a:
(1) consumer credit sale includes a sale that is a first lien
mortgage transaction if the sale is otherwise a consumer
credit sale; and
(2) consumer loan includes a loan that is a first lien mortgage
transaction if the loan is otherwise a consumer loan.
Sec. 9. (a) If a creditor has violated the provision of this article
applying to limitations on the schedule of payments or loan term
for supervised loans (IC 37-2-4-38), the debtor is not obligated to
pay the loan finance charge, and has a right to recover from the
person violating this article or from an assignee of that person's
rights who undertakes direct collection of payments or
enforcement of rights arising from the debt a penalty in an amount
determined by the court not in excess of three times the amount of
the loan finance charge. No action pursuant to this subsection may
be brought more than one (1) year after the due date of the last
scheduled payment of the agreement with respect to which the
violation occurred.
(b) If a creditor has violated the provisions of this article
applying to authority to make consumer loans (IC 37-2-4-23), the
loan is void and the debtor is not obligated to pay either the
principal or loan finance charge. If the debtor has paid any part of
the principal or of the loan finance charge, the debtor has a right
to recover the payment from the person violating this article or
from an assignee of that person's rights who undertakes direct
collection of payments or enforcement of rights arising from the
debt. With respect to violations arising from loans made pursuant
to revolving loan accounts, no action pursuant to this subsection
may be brought more than two (2) years after the violation
occurred. With respect to violations arising from other loans, no
action pursuant to this subsection may be brought more than one
(1) year after the due date of the last scheduled payment of the
agreement pursuant to which the charge was paid.
(c) A debtor is not obligated to pay a charge in excess of that
allowed by this article, and if the debtor has paid an excess charge
the debtor has a right to a refund. A refund may be made by
reducing the debtor's obligation by the amount of the excess
charge. If the debtor has paid an amount in excess of the lawful
obligation under the agreement, the debtor may recover the excess
amount from the person who made the excess charge or from an
assignee of that person's rights who undertakes direct collection of
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payments from or enforcement of rights against debtors arising
from the debt.
(d) If a debtor is entitled to a refund and a person liable to the
debtor refuses to make a refund within a reasonable time after
demand, the debtor may recover from that person a penalty in an
amount determined by a court not exceeding the greater of either
the amount of the credit service or loan finance charge or ten (10)
times the amount of the excess charge. If the creditor has made an
excess charge in deliberate violation of or in reckless disregard for
this article, the penalty may be recovered even though the creditor
has refunded the excess charge. No penalty pursuant to this
subsection may be recovered if a court has ordered a similar
penalty assessed against the same person in a civil action by the
department (IC 37-2-7-14). With respect to excess charges arising
from sales made pursuant to revolving charge accounts or from
loans made pursuant to revolving loan accounts, no action
pursuant to this subsection may be brought more than two (2)
years after the time the excess charge was made. With respect to
excess charges arising from other consumer credit sales or
consumer loans, no action pursuant to this subsection may be
brought more than one (1) year after the due date of the last
scheduled payment of the agreement pursuant to which the charge
was made.
(e) Except as otherwise provided, no violation of this article
impairs rights on a debt.
(f) If an employer discharges an employee in violation of the
provisions prohibiting discharge (section 5 of this chapter), the
employee may within six (6) months bring a civil action for
recovery of wages lost as a result of the violation and for an order
requiring the reinstatement of the employee. Damages recoverable
shall not exceed lost wages for six (6) weeks.
(g) If the creditor establishes by a preponderance of evidence
that a violation is unintentional or the result of a bona fide error,
no liability is imposed under subsections (a), (b), and (d) and the
validity of the transaction is not affected.
(h) In any case in which it is found that a creditor has violated
this article, the court may award reasonable attorney's fees
incurred by the debtor.
(i) The department may act on behalf of a debtor to enforce the
debtor's rights under this section against a creditor who is licensed
or registered with the department or is required to be licensed or
registered with the department.
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Sec. 10. (a) Except as otherwise provided in this section, a
creditor who, in violation of the provisions on disclosure in
IC 37-2-3-13 and IC 37-2-4-14, fails to disclose information to a
person entitled to the information under this article is liable to that
person in an amount equal to the sum of:
(1) the following:
(A) In the case of an individual action, twice the amount of
the credit service or loan finance charge in connection with
the transaction, but the liability pursuant to this
subdivision shall be not less than one hundred dollars
($100) nor more than one thousand dollars ($1,000).
(B) In the case of a class action, an amount the court
allows, except that as to each member of the class no
minimum recovery is applicable, and the total recovery
under this subdivision in any class action or series of class
actions arising out of the same failure to comply by the
same creditor may not be more than the lesser of:
(i) five hundred thousand dollars ($500,000); or
(ii) one percent (1%) of the net worth of the creditor.
(2) In the case of a successful action to enforce the liability
under subdivision (1), the costs of the action together with
reasonable attorney's fees as determined by the court. In
determining the amount of the award in a class action, the
court shall consider, among other relevant factors, the
amount of any award granted under the Consumer Credit
Protection Act (15 U.S.C. 1601 et seq.), the frequency and
persistence of failures of compliance by the creditor, the
resources of the creditor, the number of persons adversely
affected, and the extent to which the creditor's failure of
compliance was intentional.
(b) A creditor has no liability under this section if within sixty
(60) days after discovering an error, and prior to the institution of
an action under this section or the receipt of written notice of the
error, the creditor notifies the person concerned of the error and
makes whatever adjustments in the appropriate account are
necessary to assure that the person will not be required to pay a
credit service charge or loan finance charge in excess of the
amount or percentage rate actually disclosed.
(c) A creditor may not be held liable in any action brought
under this section for a violation of this article if the creditor shows
by a preponderance of evidence that the violation was not
intentional and resulted from a bona fide error notwithstanding
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the maintenance of procedures reasonably adapted to avoid the
error.
(d) If there are multiple obligors in a consumer credit
transaction or consumer lease, there may not be more than one (1)
recovery of damages under subsection (a)(1) for one (1) violation
of this article with respect to that consumer credit transaction or
consumer lease.
(e) The multiple failure to disclose to any person any
information required under this article to be disclosed in
connection with a single account under an open end consumer
credit plan, a single consumer credit sale, a consumer loan, a
consumer lease, or another extension of consumer credit entitles
that person to a single recovery under this section. However,
continued failure to disclose after a recovery has been granted
gives rise to rights to additional recoveries.
(f) Any action which may be brought under this section against
the original creditor in any credit transaction involving a security
interest in land may be maintained against any subsequent assignee
of the original creditor where the assignee, its subsidiaries, or
affiliates were in a continuing business relationship with the
original creditor either at the time the credit was extended or at the
time of the assignment, unless the assignment was involuntary, or
the assignee shows by a preponderance of evidence that it did not
have reasonable grounds to believe that the original creditor was
engaged in violations of this article, and that it maintained
procedures reasonably adapted to apprise it of the existence of the
violations.
(g) No action pursuant to this section may be brought more than
one (1) year after the date of the occurrence of the violations.
(h) In this section, creditor includes a person who in the
ordinary course of business regularly extends or arranges for the
extension of credit, or offers to arrange for the extension of credit.
Sec. 11. (a) A violation by a creditor of Section 125 of the
Consumer Credit Protection Act concerning the debtor's right to
rescind a transaction that is a consumer credit sale or a consumer
loan constitutes a violation of this article. A creditor may not
accrue interest during the period when a consumer loan may be
rescinded under Section 125 of the Consumer Credit Protection
Act (15 U.S.C. 1635).
(b) A creditor must make available for disbursement the
proceeds of a transaction subject to subsection (a) on the later of:
(1) the date the creditor is reasonably satisfied that the
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consumer has not rescinded the transaction; or
(2) the first business day after the expiration of the rescission
period under subsection (a).
Sec. 12. Refunds or penalties to which the debtor is entitled
pursuant to sections 8 through 11 of this chapter may be set off
against the debtor's obligation, and may be raised as a defense to
a suit on the obligation without regard to the time limitations
prescribed by sections 8 through 11 of this chapter.
Sec. 13. (a) A lender who knowingly makes charges in excess of
those permitted by the provisions of this article commits a Class A
misdemeanor.
(b) A person who knowingly engages in the business of making
consumer loans without a license in violation of the provisions of
this article applying to authority to make consumer loans
(IC 37-2-4-23 and IC 37-2-4-24) commits a Class A misdemeanor.
(c) A person who knowingly:
(1) engages in the business of making consumer credit sales,
consumer leases, or consumer loans, or of taking assignments
of rights against debtors; and
(2) undertakes direct collection of payments or enforcement
of these rights, without complying with the provisions of this
article concerning notification (IC 37-2-7-25) or payment of
fees (IC 37-2-7-26);
commits a Class A infraction.
Sec. 14. A person commits a Class A misdemeanor if the person
knowingly gives false or inaccurate information or fails to provide
information which the person is required to disclose under the
provisions of IC 37-2-3-13 or IC 37-2-4-14.
Chapter 7. Administration
Sec. 1. (a) Sections 1 through 16 of this chapter apply to persons
who:
(1) make or solicit consumer credit sales, consumer leases,
consumer loans, consumer related sales (as described in
IC 37-2-2-13.5), and consumer related loans (as described in
IC 37-2-2-13.3); or
(2) directly collect payments from or enforce rights against
debtors arising from sales, leases, or loans specified in
subsection (a), wherever they are made.
(b) For purposes of sections 1 through 16 of this chapter:
(1) "consumer credit sale" includes a sale that is a first lien
mortgage transaction if the sale is otherwise a consumer
credit sale; and
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(2) "consumer loan" includes a loan that is a first lien
mortgage transaction if the loan is otherwise a consumer loan.
Sec. 2. The division of consumer credit shall have charge of the
administration of this article.
Sec. 3. (a) In addition to other powers granted by this article,
the department within the limitations provided by law may:
(1) receive and act on complaints, take action designed to
obtain voluntary compliance with this article, or commence
proceedings on the department's own initiative;
(2) counsel persons and groups on their rights and duties
under this article;
(3) establish programs for the education of consumers with
respect to credit practices and problems;
(4) make studies appropriate to effectuate the purposes and
policies of this article and make the results available to the
public;
(5) adopt, amend, and repeal rules, orders, policies, and forms
to carry out the provisions of this article;
(6) maintain more than one (1) office within Indiana; and
(7) appoint any necessary attorneys, hearing examiners,
clerks, and other employees and agents and fix their
compensation, and authorize attorneys appointed under this
section to appear for and represent the department in court.
(b) No liability is imposed under this article for an act done or
omitted in conformity with a rule, written notice, written opinion,
written interpretation, or written directive of the department
notwithstanding that after the act or omission the rule, written
notice, written opinion, written interpretation, or written directive
may be amended or repealed, or be determined by judicial or other
authority to be invalid for any reason.
Sec. 4. (a) With respect to depository institutions, the powers of
examination and investigation (section 5 of this chapter) and
administrative enforcement (section 9 of this chapter) shall be
exercised by the department. The department may, at its
discretion, accept any examination of any financial institution
made by a federal authority in lieu of the examination made under
the provisions of this article. All other powers of the department
under this article may be exercised by the director with respect to
a depository institution.
(b) If the department receives a complaint or other information
concerning noncompliance with this article by a depository
institution, the director shall inform the official or agency having
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supervisory authority over the organization concerned. The
department may request information about depository institutions
from the officials or agencies supervising them.
(c) The department and any official or agency of this state
having supervisory authority over a depository institution are
authorized and directed to consult and assist one another in
maintaining compliance with this article. They may jointly pursue
investigations, prosecute suits, and take other official action, as
they deem appropriate, if either of them otherwise is empowered
to take the action.
Sec. 5. (a) In administering this article and in order to determine
whether the provisions of this article are being complied with by
persons engaging in acts subject to this article, the department may
examine the records of persons and may make investigations of
persons as may be necessary to determine compliance. Records
subject to examination under this section include the following:
(1) Training, operating, and policy manuals.
(2) Minutes of:
(A) management meetings; and
(B) other meetings.
(3) Other records that the department determines are
necessary to perform its investigation or examination.
The department may also administer oaths or affirmations,
subpoena witnesses, and compel the attendance of witnesses,
including directors, executive officers, managers, principals,
mortgage loan originators, employees, independent contractors,
agents, and customers of the licensee, individual, or person subject
to this article. The department may also adduce evidence, and
require the production of any matter which is relevant to the
investigation. The department shall determine the sufficiency of the
records maintained and whether the person has made the required
information reasonably available. The records pertaining to any
transaction subject to this article shall be retained for two (2) years
after making the final entry relating to the consumer credit
transaction, but in the case of a revolving loan account or revolving
charge account, the two (2) years is measured from the date of each
entry.
(b) The department's examination and investigatory authority
under this article includes the following:
(1) The authority to require a creditor to refund overcharges
resulting from the creditor's noncompliance with the terms of
consumer credit sales, consumer leases, or consumer loans.
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(2) The authority to require a creditor to comply with the
prepayment penalty provisions set forth in IC 37-2-4-12.
(3) The authority to investigate complaints filed with the
department by debtors.
(c) If the department:
(1) investigates; or
(2) examines the books and records of;
a person that is subject to sections 24 through 26 of this chapter,
the person shall pay all reasonably incurred costs of the
investigation or examination in accordance with the fee schedule
adopted by the department under IC 28-11-3-5. However, the
person is liable for the costs of an investigation or examination
under this subsection only to the extent that the costs exceed the
amount of the filing fees paid most recently under section 26 of this
chapter. Any costs required to be paid under this section shall be
paid not later than sixty (60) days after the person receives a notice
from the department of the costs being assessed. The department
may impose a fee, in an amount fixed by the department under
IC 28-11-3-5, for each day that the assessed costs are not paid,
beginning on the first day after the sixty (60) day period described
in this subsection.
(d) The department shall be given free access to the records
wherever located. In making any examination or investigation
authorized by this article, the director may control access to any
documents and records of the licensee or person under
examination or investigation. The director may take possession of
the documents and records or place a person in exclusive charge of
the documents and records in the place where the documents are
usually kept. During the period of control, the licensee or person
may not remove or attempt to remove any of the documents and
records except under a court order or with the consent of the
director. Unless the director has reasonable grounds to believe the
documents or records of the licensee or person have been, or are,
at risk of being altered or destroyed for purposes of concealing a
violation of this article, the licensee or person being examined or
investigated is entitled to access to the documents or records as
necessary to conduct the licensee's or person's ordinary business
affairs. If the person's records are located outside Indiana, the
records shall be made available to the department at a convenient
location within Indiana, or the person shall pay the reasonable and
necessary expenses for the department or its representative to
examine them where they are maintained. The department may
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designate comparable officials of the state in which the records are
located to inspect them on behalf of the department.
(e) Upon a person's failure without lawful excuse to obey a
subpoena or to give testimony and upon reasonable notice to all
affected persons, the department may apply to any civil court with
jurisdiction for an order compelling compliance.
(f) The department shall not make public the name or identity
of a person whose acts or conduct the department investigates
pursuant to this section or the facts disclosed in the investigation,
but this subsection does not apply to disclosures in actions or
enforcement proceedings pursuant to this article.
(g) To discover violations of this article or to secure information
necessary for the enforcement of this article, the department may
investigate any:
(1) licensee or registrant; or
(2) person that the department suspects to be operating:
(A) without a license or registration, when a license or
registration is required under this article; or
(B) otherwise in violation of this article.
The department has all investigatory and enforcement authority
under this article that the department has under IC 28-11 with
respect to financial institutions. If the department conducts an
investigation under this section, the licensee, registrant, or other
person investigated shall pay all reasonably incurred costs of the
investigation in accordance with the fee schedule adopted under
IC 28-11-3-5. Any costs required to be paid under this section shall
be paid not later than sixty (60) days after the person receives a
notice from the department of the costs being assessed. The
department may impose a fee, in an amount fixed by the
department under IC 28-11-3-5, for each day that the assessed
costs are not paid, beginning on the first day after the sixty (60)
day period described in this subsection.
(h) If a creditor contracts with an outside vendor to provide a
service that would otherwise be undertaken internally by the
creditor and be subject to the department's routine examination
procedures, the person that provides the service to the creditor
shall, at the request of the director, submit to an examination by
the department. If the director determines that an examination
under this subsection is necessary or desirable, the examination
may be made at the expense of the person to be examined. If the
person to be examined under this subsection refuses to permit the
examination to be made, the director may order any creditor that
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is licensed by the department and that receives services from the
person refusing the examination to:
(1) discontinue receiving one (1) or more services from the
person; or
(2) otherwise cease conducting business with the person.
Sec. 6. To carry out the purposes of this chapter, the director
may:
(1) retain attorneys, accountants, or other professionals and
specialists as examiners, auditors, or investigators to conduct
or assist in the conduct of examinations or investigations;
(2) enter into agreements or relationships with other
government officials or regulatory associations to improve
efficiencies and reduce regulatory burden by sharing:
(A) resources;
(B) standardized or uniform methods or procedures; and
(C) documents, records, information, or evidence obtained
under this section;
(3) use, hire, contract, or employ public or privately available
analytical systems, methods, or software to examine or
investigate a licensee, an individual, or a person subject to this
article;
(4) accept and rely on examination or investigation reports
made by other government officials, in or outside Indiana;
(5) accept audit reports made by an independent certified
public accountant for the licensee, individual, or person
subject to this article in the course of that part of the
examination covering the same general subject matter as the
audit and may incorporate the audit report in the report of
the examination, report of investigation, or other writing of
the director; and
(6) use, hire, contract, or employ public or privately available
analytical systems, methods, software, or technology solutions
to enable the department to capture and examine transaction
level activity to:
(A) verify and oversee compliance with; and
(B) enforce;
all state law concerning a small loan regulated under IC 37-3.
Sec. 7. Except as otherwise provided, IC 4-21.5-3 governs all
agency action taken by the department under this chapter or
IC 37-2-4-22 through IC 37-2-4-39. All proceedings for
administrative review under IC 4-21.5-3 or judicial review under
IC 4-21.5-5 shall be held in Marion County. The provisions of
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IC 4-22-2 prescribing procedures for the adoption of rules by
agencies apply to the adoption of rules by the department of
financial institutions under this article.
Sec. 8. It is a violation of this article for a person or individual
subject to this article to:
(1) directly or indirectly employ any scheme, device, or
artifice to defraud or mislead borrowers or lenders or to
defraud any person;
(2) engage in any unfair or deceptive practice toward any
person;
(3) obtain property by fraud or misrepresentation;
(4) solicit or enter into a contract with a borrower that
provides in substance that the person or individual subject to
this article may earn a fee or commission through "best
efforts" to obtain a loan even though no loan is actually
obtained for the borrower;
(5) solicit, advertise, or enter into a contract for specific
interest rates, points, or other financing terms unless the
terms are actually available at the time of soliciting,
advertising, or contracting;
(6) conduct any business covered by this article without
holding a valid license as required under this article, or assist
or aid and abet any person in the conduct of business under
this article without a valid license as required under this
article;
(7) fail to make disclosures as required by this article and any
other applicable state or federal law, including regulations
under that law;
(8) fail to comply with this article or rules adopted under this
article, or fail to comply with any other state or federal law,
rule, or regulation, applicable to any business authorized or
conducted under this article;
(9) make, in any manner, any false or deceptive statement or
representation, including, with regard to the rates, points, or
other financing terms or conditions for a mortgage
transaction, or engage in bait and switch advertising;
(10) negligently make any false statement or knowingly and
willfully make any omission of material fact in connection
with any information or reports filed with a governmental
agency or the NMLSR or in connection with any investigation
conducted by the director or another governmental agency;
(11) make any payment, threat, or promise, directly or
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indirectly, to any person for the purposes of influencing the
independent judgment of the person in connection with a
mortgage transaction, or make any payment, threat, or
promise, directly or indirectly, to any appraiser of a property,
for the purposes of influencing the independent judgment of
the appraiser with respect to the value of the property;
(12) collect, charge, attempt to collect or charge, or use or
propose any agreement purporting to collect or charge any
fee prohibited by this article;
(13) cause or require a borrower to obtain property insurance
coverage in an amount that exceeds the replacement cost of
the improvements as established by the property insurer;
(14) fail to account truthfully for money belonging to a party
to a mortgage transaction; or
(15) knowingly withhold, abstract, remove, mutilate, destroy,
or secrete any books, records, computer records, or other
information subject to examination under this article.
Sec. 9. (a) After notice and an opportunity to be heard, the
department may order a creditor, or a person acting on behalf of
the creditor, to cease and desist from engaging in violations of this
article. A respondent aggrieved by an order of the department may
obtain judicial review of the order and the department may obtain
an order of the court for enforcement of its order in any civil court.
The proceeding for review or enforcement is initiated by filing a
petition in the court. Copies of the petition shall be served upon all
parties of record.
(b) Within thirty (30) days after service of the petition for
review upon the department, or within any further time the court
may allow, the department shall transmit to the court the original
or a certified copy of the entire record upon which the order is
based, including any transcript of testimony, which need not be
printed. By stipulation of all parties to the review proceeding, the
record may be shortened. After hearing the court may:
(1) reverse or modify the order if the findings of fact of the
department are clearly erroneous in view of the reliable,
probative, and substantial evidence on the whole record;
(2) grant any temporary relief or restraining order it deems
just; and
(3) enter an order enforcing, modifying, and enforcing as
modified, or setting aside in whole or in part the order of the
department, or remanding the case to the department for
further proceedings.
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(c) An objection not urged at the hearing shall not be considered
by the court unless the failure to urge the objection is excused for
good cause shown. A party may move the court to remand the case
to the department in the interest of justice for the purpose of
adducing additional specified and material evidence and seeking
finding thereon upon good cause shown for the failure to adduce
this evidence before the department.
(d) The jurisdiction of the court shall be exclusive and its final
judgment or decree shall be subject to review by the court on
appeal in the same manner and form and with the same effect as in
appeals from a final judgment or decree. The department's copy of
the testimony shall be available at reasonable times to all parties
for examination without cost.
(e) A proceeding for review under this section must be initiated
within thirty (30) days after a copy of the order of the department
is received. If no proceeding is so initiated, the department may
obtain a decree of the civil court for enforcement of its order upon
a showing that an order was issued in compliance with this section,
that no proceeding for review was initiated within thirty (30) days
after copy of the order was received, and that the respondent is
subject to the jurisdiction of the court.
(f) With respect to unconscionable agreements or fraudulent or
unconscionable conduct by the respondent, the department may
not issue an order pursuant to this section but may bring a civil
action for an injunction under section 12 of this chapter.
Sec. 10. If it is claimed that a person has engaged in conduct
subject to an order by the department under section 9 of this
chapter or by a court under sections 11 through 13 of this chapter,
the department may accept an assurance in writing that the person
will not engage in the conduct in the future. If a person giving an
assurance of discontinuance fails to comply with its terms, the
assurance is evidence that prior to the assurance the person
engaged in the conduct described in the assurance.
Sec. 11. The department may bring a civil action to restrain a
person from violating this article or another state or federal law or
regulation, and for other appropriate relief.
Sec. 12. (a) The department may bring a civil action to restrain
a creditor or a person acting in behalf of a creditor from engaging
in a course of:
(1) making or enforcing unconscionable terms or provisions
of consumer credit sales, consumer leases, or consumer loans;
(2) fraudulent or unconscionable conduct in inducing debtors
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to enter into consumer credit sales, consumer leases, or
consumer loans; or
(3) fraudulent or unconscionable conduct in the collection of
debts arising from consumer credit sales, consumer leases, or
consumer loans.
(b) In an action brought pursuant to this section the court may
grant relief only if it finds:
(1) that the respondent has made unconscionable agreements
or has engaged or is likely to engage in a course of fraudulent
or unconscionable conduct;
(2) that the agreements or conduct of the respondent has
caused or is likely to cause injury to consumers; and
(3) that the respondent has been able to cause or will be able
to cause the injury primarily because the transactions
involved are credit transactions.
(c) In applying this section, consideration shall be given to each
of the following factors, among others:
(1) belief by the creditor at the time consumer credit sales,
consumer leases, or consumer loans are made that there was
no reasonable probability of payment in full of the obligation
by the debtor;
(2) in the case of consumer credit sales or consumer leases,
knowledge by the seller or lessor at the time of the sale or
lease of the inability of the buyer or lessee to receive
substantial benefits from the property or services sold or
leased;
(3) in the case of consumer credit sales or consumer leases,
gross disparity between the price of the property or services
sold or leased and the value of the property or services
measured by the price at which similar property or services
are readily obtainable in credit transactions by like buyers or
lessees;
(4) the fact that the creditor contracted for or received
separate charges for insurance with respect to consumer
credit sales or consumer loans with the effect of making the
sales or loans, considered as a whole, unconscionable; and
(5) the fact that the respondent has knowingly taken
advantage of the inability of the debtor reasonably to protect
the debtor's interests by reason of physical or mental
infirmities, ignorance, illiteracy or inability to understand the
language of the agreement, or similar factors.
(d) In an action brought pursuant to this section, a charge or
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practice expressly permitted by this article is not in itself
unconscionable.
Sec. 13. With respect to an action brought to enjoin violations
of this article under section 11 of this chapter or unconscionable
agreements or fraudulent or unconscionable conduct under section
12 of this chapter, the department may apply to the court for
appropriate temporary relief against a respondent, pending final
determination of proceedings. If the court finds after a hearing
held upon notice to the respondent that there is reasonable cause
to believe that the respondent is engaging in or is likely to engage
in conduct sought to be restrained, it may grant any temporary
relief or restraining order it deems appropriate.
Sec. 14. (a) After demand, the department may bring a civil
action against a creditor for making or collecting charges in excess
of those permitted by this article. An action may relate to
transactions with more than one debtor. If it is found that an excess
charge has been made, the court shall order the respondent to
refund to the debtor or debtors the amount of the excess charge. If
a creditor has made an excess charge in deliberate violation of or
in reckless disregard for this article, or if a creditor has refused to
refund an excess charge within a reasonable time after demand by
the debtor or the department, the court may also order the
respondent to pay to the debtor or debtors a civil penalty in an
amount determined by the court not in excess of the greater of
either the amount of the credit service or loan finance charge or
ten (10) times the amount of the charge. Refunds and penalties to
which the debtor is entitled pursuant to this subsection may be set
off against the debtor's obligation. If a debtor brings an action
against a creditor to recover an excess charge or civil penalty, an
action by the department to recover for the same excess charge or
civil penalty shall be stayed while the debtor's action is pending
and shall be dismissed if the debtor's action is dismissed with
prejudice or results in a final judgment granting or denying the
debtor's claim. With respect to excess charges arising from sales
made pursuant to revolving charge accounts or from loans made
pursuant to revolving loan accounts, no action pursuant to this
subsection may be brought more than two (2) years after the time
the excess charge was made. With respect to excess charges arising
from other consumer credit sales or consumer loans, no action
pursuant to this subsection may be brought more than one (1) year
after the due date of the last scheduled payment of the agreement
pursuant to which the charge was made. If the creditor establishes
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by a preponderance of evidence that a violation is unintentional or
the result of a bona fide error, no liability to pay a penalty shall be
imposed under this subsection.
(b) The department may bring a civil action against a creditor
or a person acting in the creditor's behalf to recover a civil penalty
for willfully violating this article, and if the court finds that the
defendant has engaged in a course of repeated and willful
violations of this article, it may assess a civil penalty of no more
than five thousand dollars ($5,000). No civil penalty pursuant to
this subsection may be imposed for violations of this article
occurring more than two (2) years before the action is brought or
for making unconscionable agreements or engaging in a course of
fraudulent or unconscionable conduct.
(c) If the department determines, after notice and opportunity
for the person to be heard, that a person has violated this article,
the department may, in addition to or instead of all other remedies
available under this section, impose upon the person a civil penalty
not greater than ten thousand dollars ($10,000) per violation.
Sec. 15. The grant of powers to the department in this article
does not affect remedies available to debtors under this article or
under other principles of law or equity.
Sec. 16. The department may bring actions or proceedings in a
court in a county in which an act on which the action or proceeding
is based occurred or in a county in which respondent resides or
transacts business or in a county otherwise authorized by rule or
venue laws.
Sec. 17. (a) Subject to subsection (b), if the director determines
that a director, an officer, or a manager of a creditor:
(1) has committed a violation of a statute, a rule, a final cease
and desist order, a condition imposed in writing by the
director in connection with the grant of an application or
other request by the creditor, or a written agreement between
the creditor and the director or the department;
(2) has committed fraudulent or unconscionable conduct; or
(3) has been convicted of a felony under the laws of Indiana or
any other jurisdiction;
the director may issue and serve upon the person a notice of
charges and of the director's intent to issue an order removing the
person from the person's office or employment, an order
prohibiting participation by the person in the conduct of the affairs
of any creditor, or an order both removing the person and
prohibiting the person's participation.
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(b) A violation, practice, or breach described in subsection (a)
is subject to the authority of the director under subsections (a) and
(c) if the director finds any of the following:
(1) The interests of the creditor's customers could be seriously
prejudiced by reason of the violation, practice, or breach.
(2) The violation, practice, or breach involves an act of fraud,
dishonesty, theft, breach of trust, money laundering, or
wrongful taking of property on the part of the officer,
director, or manager involved.
(3) The violation, practice, or breach demonstrates a willful
or continuing disregard by the officer, director, or manager
for state or federal law and regulations, and for the consumer
protections contained in this article.
(c) Subject to subsections (a) and (b), a person who has been
convicted of a felony under the laws of Indiana or any other
jurisdiction may not serve as an officer, a director, or a manager
of a creditor, or serve in any similar capacity, unless the person
obtains the written consent of the director.
(d) A creditor that willfully permits a person to serve the
creditor in violation of subsection (c) is subject to a civil penalty of
five hundred dollars ($500) for each day the violation occurs.
(e) A creditor shall give the department written notice of the
resignation, discharge, or termination of an employee, independent
contractor, or agent against whom allegations were made that
accused the employee, independent contractor, or agent of:
(1) violating this article or other laws, regulations, rules, or
industry standards of conduct applicable to consumer credit
transactions; or
(2) fraud, dishonesty, theft, breach of trust, money
laundering, or the wrongful taking of property.
The creditor shall provide the department the notice required
under this subsection not later than thirty (30) days after the
effective date of the resignation, discharge, or termination.
Sec. 18. (a) A notice issued under section 17 of this chapter
must:
(1) be in writing;
(2) contain a statement of:
(A) the facts constituting the alleged violation, practice, or
breach;
(B) the facts alleged in support of the violation, practice, or
breach; and
(C) the director's intention to issue an order under section
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20(a) of this chapter;
(3) be delivered to the board of directors of the creditor;
(4) be delivered to the officer, director, or manager to which
the notice applies;
(5) specify the procedures that must be followed to initiate a
hearing to contest the alleged violation, practice, or breach;
and
(6) if the director suspends or prohibits the officer, director,
or manager from participation in the affairs of the creditor as
described under subsection (e), contain a statement of the
suspension or prohibition.
(b) If a hearing is requested not later than ten (10) days after
service of the notice described under subsection (a), the
department shall hold a hearing concerning the alleged violation,
practice, or breach. The hearing shall be held not later than
forty-five (45) days after receipt of the request. The department,
based on the evidence presented at the hearing, shall enter a final
order in accordance with section 20 of this chapter.
(c) If no hearing is requested within the period of time specified
in subsection (b), the director may proceed to issue a final order
under section 20 of this chapter on the basis of the facts set forth in
the notice described under subsection (a).
(d) An officer, a director, or a manager of a creditor who is
removed from a position under a removal order under section 20
of this chapter that has become final may not, without the approval
of the director, participate in the conduct of the affairs of a licensee
described under IC 37-2-4.
(e) The director may, for the protection of the creditor or the
interests of the creditor's customers, suspend from office or
prohibit from participation in the affairs of the creditor an officer,
a director, or a manager of a creditor who is the subject of a
written notice served by the director under section 17(a) of this
chapter. A suspension or prohibition under this subsection becomes
effective upon service of the notice under section 17(a) of this
chapter. Unless stayed by a court in a proceeding authorized by
subsection (f), the suspension or prohibition remains in effect
pending completion of the proceedings related to the notice served
under section 17(a) of this chapter and until the effective date of an
order entered by the department under subsection (b) or the
director under subsection (c). If the director suspends or prohibits
participation of an officer, a director, or a manager under this
subsection, copies of the notice shall also be served upon the
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creditor or affiliate of which the person is an officer, a director, or
a manager.
(f) Not more than fifteen (15) days after an officer, a director, or
a manager has been suspended from office or prohibited from
participation in the conduct of the affairs of the creditor or affiliate
under subsection (e), the officer, director, or manager may apply
to a court having jurisdiction for a stay of the suspension or
prohibition pending completion of the proceedings related to the
notice served under section 17(a) of this chapter. The court may
stay a suspension of prohibition of the officer, director, or
manager.
(g) The department shall maintain an official record of a
proceeding under this chapter.
Sec. 19. If the director enters into a consent to a final order with
a director, an officer, or a manager, the director is not required to
issue and serve a notice of charges upon the director, officer, or
manager under section 17 of this chapter. A consent agreement
may be negotiated and entered into before or after the issuance of
a notice of charges. The director shall provide a copy of the consent
order to the board of directors of the creditor.
Sec. 20. (a) Subject to section 18 of this chapter, if, after a
hearing described in section 18(b) of this chapter, the department
determines that a director, an officer, or a manager of a creditor
has committed an act described in section 17 of this chapter, the
department may issue a final order. If a hearing is not requested
within the time specified in section 18(b) of this chapter, the
director may issue a final order on the basis of the facts set forth
in the written notice served under section 18(a) of this chapter.
(b) Unless the director has entered into a consent agreement
described in section 19 of this chapter, a final order must include
separately stated findings of fact and conclusions of law for all
aspects of the order.
(c) In a final order under this section, the department or the
director, as appropriate, may order one (1) or more of the
following with respect to an officer, a director, or a manager of a
creditor:
(1) The removal of the officer, director, or manager from the
person's office, position, or employment.
(2) A prohibition against any participation by the officer,
director, or manager in the conduct of the affairs of any
creditor.
(3) If the subject of the order is an officer or a director of a
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creditor, and subject to section 22 of this chapter, the
imposition of a civil penalty not to exceed fifteen thousand
dollars ($15,000) for each practice, violation, or act that:
(A) is described in section 17 of this chapter; and
(B) is found to exist by the department or the director.
(d) A final order shall be issued in writing not later than ninety
(90) days after conclusion of a hearing held under section 18(b) of
this chapter, unless this period is waived or extended with the
written consent of all parties or for good cause shown.
(e) If the officer, director, or manager does not appear
individually or by an authorized representative at a hearing held
under section 18(b) of this chapter, the officer, director, or
manager is considered to have consented to the issuance of a final
order.
(f) The director may keep a final order confidential if the
director determines that the immediate release of the order would
endanger the stability of the creditor. However, after two (2) years
following the date that an order is issued, a final order is no longer
confidential.
(g) The remedies provided in this chapter are in addition to
other remedies contained in this article.
Sec. 21. (a) A final order issued under section 20 of this chapter
is effective the eleventh day after the date the order is served.
However, a final order issued upon consent under section 19 of this
chapter is effective at the time specified in the order.
(b) A final order remains effective and enforceable as provided
in the order.
(c) The department or a reviewing court may stay, modify, or
vacate a final order.
Sec. 22. (a) The director or the department, as appropriate, shall
consider the following factors in determining the amount of a civil
penalty that should be assessed against a director or an officer
under section 20(c)(3) of this chapter:
(1) The appropriateness of the civil penalty with respect to the
financial resources and good faith of the individual charged.
(2) The gravity of the practice, violation, or breach.
(3) The history of previous practices, violations, or breaches.
(4) The economic benefit derived by the individual from the
practice, violation, or breach.
(5) Other factors that justice requires.
(b) A creditor may not indemnify a director or an officer for a
civil penalty imposed against the director or officer under this
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section.
(c) Civil penalties shall be deposited in the financial institutions
fund established by IC 28-11-2-9.
Sec. 23. The director may enforce any of the following by
applying for appropriate relief to a court having jurisdiction:
(1) An order issued under section 19 or 20 of this chapter.
(2) A written agreement entered into by the director or the
department and a director, an officer, or a manager of a
creditor.
(3) Any condition imposed in writing by the director or the
department on a director, an officer, or a manager of a
creditor.
Sec. 24. (a) This section and sections 25 and 26 of this chapter
apply to a person, including a depository institution, but not
including a collection agency licensed under IC 25-11-1, engaged
in Indiana in any of the following:
(1) Making consumer credit sales, consumer leases, or
consumer loans.
(2) Taking assignments of rights against debtors that arise
from sales, leases, or loans by a person having an office or a
place of business in Indiana.
(3) Undertaking direct collection of payments from the
debtors or enforcement of rights against the debtors.
(4) Placing consumer credit insurance, receiving commissions
for consumer credit insurance, or acting as a limited line
credit insurance producer in the sale of consumer credit
insurance.
(5) Selling insurance or other benefits, the charges for which
are approved by the department as additional charges under
IC 37-2-3-5 or IC 37-2-4-5.
(b) This section and sections 25 and 26 of this chapter are not
applicable to a seller whose credit sales consist entirely of sales
made pursuant to a seller credit card issued by a person other than
the seller if the issuer of the card has complied with the provisions
of this section and sections 25 and 26 of this chapter.
(c) This section and sections 25 and 26 of this chapter apply to
a seller whose credit sales are made using credit cards that:
(1) are issued by a lender;
(2) are in the name of the seller; and
(3) can be used by the buyer or lessee only for purchases or
leases at locations of the named seller.
Sec. 25. (a) Persons that are subject to this section and sections
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24 and 26 of this chapter shall file notification with the department
within thirty (30) days after commencing business in Indiana and
thereafter on an annual basis, on the date set forth in subsection
(b). The notification shall state the:
(1) name of the person;
(2) name in which business is transacted if different from
subdivision (1);
(3) address of principal office, which may be outside Indiana;
and
(4) address of all offices or retail stores, if any, in Indiana at
which consumer credit sales, consumer leases, or consumer
loans are made, or in the case of a person taking assignments
of obligations, the offices or places of business within Indiana
at which business is transacted.
(b) A person required to be licensed under this article shall file
the notification required by subsection (a) not later than December
31 of each year. All other persons subject to this section shall file
the notification required by subsection (a) not later than January
31 of each year.
(c) Persons subject to sections 24 and 26 of this chapter and this
section shall notify the department not later than thirty (30) days
after the person:
(1) has a change in name, address, or principals;
(2) opens a new branch, closes an existing branch, or relocates
an existing branch;
(3) files for bankruptcy or reorganization;
(4) is notified that the person is subject to revocation or
suspension proceedings by a state or governmental authority
with regard to the person's activities; or
(5) has been convicted of a felony involving fraud, deceit, or
misrepresentation under the laws of Indiana or any other
jurisdiction.
Sec. 26. (a) Persons required to file notification who are sellers,
lessors, or lenders shall pay a fee in an amount and at intervals to
be prescribed by the director under IC 28-11-3-5. The fee shall be
a set amount for each one hundred thousand dollars ($100,000), or
part thereof, in excess of one hundred thousand dollars ($100,000),
of the original unpaid balances arising from consumer credit sales,
consumer leases, and consumer loans made in Indiana and held
either by the seller, lessor, or lender for more than thirty (30) days
after the inception of the sale, lease, or loan giving rise to the
obligations, or by an assignee who has not filed notification. A
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refinancing of a sale, lease, or loan resulting in an increase in the
amount of an obligation is a new sale, lease, or loan to the extent of
the increase. In prescribing the fee, the department shall consider
the costs and expense incurred or estimated to be incurred by the
department in the administration of this article, including, but not
limited to, the supervision, regulation, and examination of persons
subject to the provisions of the article.
(b) Persons required to file notification who are assignees shall
pay a fee as prescribed and fixed by the department under
subsection (a) on the unpaid balances at the time of the assignment
of obligations arising from consumer credit sales, consumer leases,
and consumer loans made in Indiana taken by assignment during
the preceding calendar year, but an assignee need not pay a fee
with respect to an obligation on which the assignor or other person
has already paid a fee.
(c) Persons required to file notification who are assignors shall
pay a fee as prescribed by the department under subsection (a) on
the unpaid balances at the time of the assignment of obligations
arising from consumer credit sales, consumer leases, and consumer
loans made in Indiana during the preceding calendar year unless
the assignee has already paid the fees.
(d) Persons required to renew a license under IC 37-2-4-31 may
deduct the fees paid under IC 37-2-4-26(h)(2) and
IC 37-2-4-26(h)(3), as applicable, from fees paid under this section.
(e) A person that is required to file notification under section 25
of this chapter shall pay a fee at the same rate as prescribed and
fixed by the department under subsection (a) on the original
unpaid balances of all closed end credit obligations originating
from the person's place of business during the time preceding the
notification as specified under subsection (a), unless the fees for the
obligations have been paid by another person.
Sec. 27. IC 37-2-4-23 and sections 24 through 26 of this chapter
are not applicable to services performed by attorneys.
ARTICLE 3. SMALL LOANS
Chapter 1. General Provisions
Sec. 0.1. This article must be construed as a recodification of
prior law. The enactment of this article by SEA 169-2026 does not
affect the substantive operation and effect of the prior law.
Sec. 0.3. A contract entered into in accordance with IC 24-4.5-7
(before its repeal) is considered a contract entered into in
accordance with this article.
Sec. 0.5. Any document, website, or business communication
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created in accordance with IC 24-4.5-7 (before its repeal) is
considered a document, website, or business communication
created in accordance with this article.
Sec. 0.7. (a) A reference in a statute or rule to a statute that is
repealed and replaced in the same or a different form in the
recodification act of the 2026 regular session of the general
assembly is treated after the effective date of the new provision as
a reference to the new provision.
(b) A citation reference in the recodification act of the 2026
regular session of the general assembly to another provision of the
recodification act of the 2026 regular session of the general
assembly is treated as including a reference to the provision of the
small loans law that is substantively equivalent to the provision of
the recodification act of the 2026 regular session of the general
assembly that is referred to by the citation reference.
Sec. 1. (a) Except as otherwise provided, all provisions of
IC 37-2 applying to consumer loans, including IC 37-2-4-25, apply
to small loans.
(b) Subject to section 4 of this chapter, a person may not
regularly engage in Indiana in any of the following actions unless
the department first issues to the person a license under this
article:
(1) The making of small loans.
(2) Taking assignments of small loans.
(3) Undertaking the direct collection of payments from or the
enforcement of rights against debtors arising from small
loans.
(c) Subject to section 4 of this chapter, a person that seeks
licensure under this article:
(1) shall apply to the department for a license in the form and
manner prescribed by the department; and
(2) is subject to the same licensure requirements and
procedures as an applicant for a license to make consumer
loans (other than mortgage transactions) under IC 37-2-4-23.
(d) A person that seeks to make, take assignments of, or
undertake the direct collection of payments from or the
enforcement of rights against debtors arising from both:
(1) small loans under this chapter; and
(2) consumer loans (other than mortgage transactions) that
are not small loans;
must obtain a separate license from the department for each type
of loan, as described in IC 37-2-4-23(e).
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Sec. 2. This article applies to:
(1) a lender;
(2) a bank, savings association, credit union, or other state or
federally regulated financial institution except those that are
specifically exempt regarding limitations on interest rates and
fees; or
(3) a person, if the department determines that a transaction
is:
(A) in substance a disguised loan; or
(B) the application of subterfuge for the purpose of
avoiding this chapter.
Sec. 3. A loan that:
(1) does not qualify as a small loan under IC 37-3-2-10;
(2) is for a term shorter than that specified in IC 37-3-3-5(a);
or
(3) is made in violation of section IC 37-3-3-2, IC 37-3-3-5,
IC 37-3-3-6, IC 37-3-3-8, or IC 37-3-3-12;
is subject to this article. The department may conform the loan
finance charge for a loan described in this section to the limitations
set forth in IC 37-2-4-35(b).
Sec. 4. Notwithstanding IC 37-2-2, for purposes of section 1(b)
of this chapter, a person "regularly engages" in any of the
activities described in section 1(b) of this chapter with respect to a
small loan if the person:
(1) performed any of the activities described in section 1(b) of
this chapter with respect to a small loan at least one (1) time
in the preceding calendar year; or
(2) performs or will perform any of the activities described in
section 1(b) of this chapter with respect to a small loan at least
one (1) time in the current calendar year if the person did not
perform any of the activities described in section 1(b) of this
chapter with respect to a small loan at least one (1) time in the
preceding calendar year.
Chapter 2. Definitions
Sec. 1. Except as otherwise provided, the definitions set forth in
IC 37-2-2 apply throughout this article.
Sec. 2. The definitions set forth in this chapter apply throughout
this article.
Sec. 3. "Check" has the meaning set forth in IC 26-1-3.1-104.
Sec. 4. "Consecutive small loan" means a new small loan
agreement that the lender enters with the same borrower not later
than seven (7) calendar days after a previous small loan made to
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that borrower is paid in full.
Sec. 5. "Lender" means a person that acquires and retains a
license issued by the department of financial institutions under this
chapter to engage in small loans.
Sec. 6. "Monthly gross income" means the income received by
the borrower in the thirty (30) day period preceding the
borrower's application for a small loan under this chapter and
exclusive of any income other than regular gross pay received, or
as otherwise determined by the department.
Sec. 7. "Paid in full" means the termination of a small loan
through:
(1) the presentment of the borrower's check for payment by
the drawee bank or the exercise by the lender of an
authorization to debit an account of the borrower; or
(2) the return of a check to a borrower who redeems it for
consideration.
Sec. 8. "Principal" means the total of:
(1) the net amount paid to, receivable by, or paid or payable
from the account of the borrower; and
(2) to the extent that the payment is deferred, the additional
charges permitted by this chapter that are not included in
subdivision (1).
Sec. 9. "Renewal" refers to a small loan that takes the place of
an existing small loan by:
(1) renewing;
(2) repaying;
(3) refinancing; or
(4) consolidating;
a small loan with the proceeds of another small loan made to the
same borrower by a lender.
Sec. 10. (a) "Small loan" means a loan:
(1) with a principal loan amount that is at least fifty dollars
($50) and not more than five hundred fifty dollars ($550); and
(2) in which the lender holds the borrower's check for a
specific period, or receives the borrower's written
authorization to debit the borrower's account (other than as
a result of default) under an agreement, either express or
implied, for a specific period, before the lender:
(A) offers the check for deposit or presentment; or
(B) exercises the authorization to debit the borrower's
account.
(b) The amount of five hundred fifty dollars ($550) in subsection
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(a)(1) is subject to change under the provisions on adjustment of
dollar amounts set forth in IC 37-2-1-5. However, notwithstanding
IC 37-2-1-5(a), the Reference Base Index to be used under this
subsection is the Index for October 2006.
Chapter 3. Regulation of Small Loans
Sec. 1. A lender is not considered a financial institution, except
for purposes of IC 28-1.
Sec. 2. (a) Finance charges on the first two hundred fifty dollars
($250) of a small loan are limited to fifteen percent (15%) of the
principal.
(b) Finance charges on the amount of a small loan greater than
two hundred fifty dollars ($250) and less than or equal to four
hundred dollars ($400) are limited to thirteen percent (13%) of the
amount over two hundred fifty dollars ($250) and less than or
equal to four hundred dollars ($400).
(c) Finance charges on the amount of the small loan greater
than four hundred dollars ($400) and less than or equal to five
hundred fifty dollars ($550) are limited to ten percent (10%) of the
amount over four hundred dollars ($400) and less than or equal to
five hundred fifty dollars ($550).
(d) The amount of five hundred fifty dollars ($550) in subsection
(c) is subject to change under the provisions on adjustment of
dollar amounts set forth in IC 37-2-1-5. However, notwithstanding
IC 37-2-1-5(a), the Reference Base Index to be used under this
subsection is the Index for October 2006.
Sec. 3. (a) Notwithstanding any other law, the only fee that may
be contracted for and received by the lender or an assignee on a
small loan is a charge, not to exceed twenty-five dollars ($25), for
each:
(1) return by a bank or other depository institution of a
dishonored:
(A) check;
(B) electronic funds transfer;
(C) negotiable order of withdrawal; or
(D) share draft;
issued by the borrower; or
(2) time an authorization to debit the borrower's account is
dishonored.
This additional charge may be assessed one (1) time regardless of
how many times a check or an authorization to debit the
borrower's account may be submitted by the lender and
dishonored.
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(b) A lender may:
(1) present a borrower's check for payment; or
(2) exercise a borrower's authorization to debit the
borrower's account;
not more than three (3) times.
Sec. 4. (a) For purposes of this section, the lender shall disclose
to the borrower to whom credit is extended with respect to a small
loan the information required by the Consumer Credit Protection
Act (15 U.S.C. 1601 et seq.).
(b) In addition to the requirements of subsection (a), the lender
must conspicuously display in bold type a notice to the public both
in the lending area of each business location and in the loan
documents the following statement:
"WARNING: A small loan is not intended to meet long term
financial needs. A small loan should be used only to meet
short term cash needs. The cost of your small loan may be
higher than loans offered by other lending institutions. Small
loans are regulated by the State of Indiana Department of
Financial Institutions.
A borrower may rescind a small loan without cost by paying
the cash amount of the principal of the small loan to the
lender not later than the end of the business day immediately
following the day on which the borrower receives the loan
proceeds.".
(c) The statement required in subsection (b) must be in:
(1) 14 point bold face type in the loan documents; and
(2) not less than one (1) inch bold print in the lending area of
the business location.
(d) When a borrower enters into a small loan, the lender shall
provide the borrower with a pamphlet approved by the
department that describes:
(1) the availability of debt management and credit counseling
services; and
(2) the borrower's rights and responsibilities in the
transaction.
Sec. 5. (a) A small loan may not be made for a term of less than
fourteen (14) days.
(b) If five (5) consecutive small loans have been made to a
borrower after the borrower's initial small loan, another small
loan may not be made to that borrower within seven (7) days after
the fifth consecutive small loan is paid in full. After the borrower's
fifth consecutive small loan, the balance must be paid in full.
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(c) Subject to subsection (d), whenever a borrower has entered
into an initial small loan followed by three (3) consecutive small
loans, the lender shall offer the borrower the option to repay:
(1) the third consecutive small loan; and
(2) subject to subsection (b), any small loan entered into after
the third consecutive small loan;
under an extended payment plan. At the time of execution of a
small loan described in subdivision (1) or (2), the lender shall
disclose to the borrower the extended payment plan option by
providing the borrower a written description of the extended
payment plan option in a separate disclosure document approved
by the director.
(d) A lender shall offer an extended payment plan under
subsection (c) under the following terms and conditions:
(1) A borrower shall be permitted to request an extended
payment plan at any time during the term of a third or
subsequent consecutive small loan if:
(A) the borrower has not defaulted on the outstanding
small loan; and
(B) the rescission period under section 6(f) of this chapter
has expired.
(2) An extended payment plan must allow the outstanding
small loan to be paid in at least four (4) equal installments
over a period of not less than sixty (60) days.
(3) An agreement for an extended payment plan may not
require a borrower to pay any amount before the original
maturity date of the outstanding small loan.
(4) The lender may not assess any fee or charge on a borrower
for entering into an extended payment plan.
(5) An agreement for an extended payment plan must be in
writing and acknowledged by both the borrower and the
lender.
(6) A borrower may not enter into another small loan
transaction while engaged in an extended payment plan.
(7) A lender shall not:
(A) compel, advise, solicit, or coerce a borrower to not
exercise the borrower's right to request an extended
payment plan;
(B) discourage a borrower from exercising the borrower's
right to request an extended payment plan; or
(C) take any other action to influence a borrower's right to
request an extended payment plan.
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(e) An agreement for an extended payment plan under
subsection (c):
(1) shall be considered an extension of the outstanding small
loan; and
(2) may not be considered a new loan.
Sec. 6. (a) A lender is prohibited from making a small loan to a
borrower if the total of:
(1) the principal amount and finance charges of the small loan
to be issued; plus
(2) any other small loan balances that the borrower has
outstanding with any lender;
exceeds twenty percent (20%) of the borrower's monthly gross
income.
(b) A small loan may be secured by only one (1) check or
authorization to debit the borrower's account per small loan. The
check or electronic debit may not exceed the amount advanced to
or on behalf of the borrower plus loan finance charges contracted
for and permitted.
(c) A borrower may make partial payments in any amount on
the small loan without charge at any time before the due date of the
small loan.
(d) After any payment is made on a small loan, whether the
payment is made in part or in full before, on, or after the due date
of the small loan, the lender shall give a signed and dated receipt
to the borrower making a payment showing the amount paid and
the balance due on the small loan.
(e) The lender shall provide to each borrower a copy of the
required loan documents before the disbursement of the loan
proceeds.
(f) A borrower may rescind a small loan without cost by paying
the cash amount of the principal of the small loan to the lender not
later than the end of the business day immediately following the
day on which the borrower receives the proceeds.
(g) A lender shall not enter into a renewal with a borrower. If
a loan is paid in full, a subsequent loan is not a renewal.
Sec. 7. A small loan may not be secured by personal property
other than a check or electronic debit.
Sec. 8. (a) As used in this section, "commercially reasonable
method of verification" means a private consumer credit reporting
service that the department determines to be capable of providing
a lender with adequate verification information necessary to
ensure compliance with subsection (d).
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(b) With respect to a small loan, no lender may permit a person
to become obligated under more than one (1) loan agreement with
the lender at any time.
(c) A lender shall not make a small loan that, when combined
with the outstanding balance on another outstanding small loan
owed to another lender, exceeds a total of five hundred fifty dollars
($550), excluding finance charges. A lender shall not make a small
loan to a borrower who has two (2) or more small loans
outstanding, regardless of the total value of the small loans. The
amount of five hundred fifty dollars ($550) in this subsection is
subject to change under the provisions on adjustment of dollar
amounts (IC 37-2-1-5). However, notwithstanding IC 37-2-1-5(a),
the Reference Base Index to be used under this subsection is the
Index for October 2006.
(d) A lender complies with subsection (c) if the lender
independently verifies the total number of outstanding small loans
and the total outstanding balance of those small loans for a
customer through a commercially reasonable method of
verification. A lender's method of verifying whether a borrower
has any outstanding small loans and the total outstanding balance
of any loans will be considered commercially reasonable if the
method includes a manual investigation or an electronic query of:
(1) the lender's own records, including both records
maintained at the location where the borrower is applying for
the transaction and records maintained at other locations
within the state that are owned and operated by the lender;
and
(2) an available third party data base provided by a private
consumer reporting service, subject to the identification
verification requirements set forth in subsection (l).
(e) The department shall monitor the effectiveness of private
consumer credit reporting services in providing the verification
information required under subsection (d). If the department
determines that a commercially reasonable method of verification
is available, the department shall:
(1) provide reasonable notice to all lenders identifying the
commercially reasonable method of verification that is
available; and
(2) require each lender to use, consistent with the policies of
the department, the identified commercially reasonable
method of verification as a means of complying with
subsection (d).
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(f) If a borrower presents evidence to a lender that a loan has
been discharged in bankruptcy, the lender shall cause the record
of the borrower's loan to be updated in the data base described in
subsection (d)(2) to reflect the bankruptcy discharge.
(g) A lender shall cause the record of a borrower's loan to be
updated in the data base described in subsection (d)(2) to reflect:
(1) presentment of the borrower's check for payment; or
(2) exercise of the borrower's authorization to debit the
borrower's account.
If a check is returned or an authorization is dishonored because of
insufficient funds in the borrower's account, the lender shall
reenter the record of the loan in the data base.
(h) A lender shall update information in a data base described
in subsection (d)(2) to reflect partial payments made on an
outstanding loan, the record of which is maintained in the data
base.
(i) If a lender ceases doing business in Indiana, the director may
require the operator of the data base described in subsection (d)(2)
to remove records of the lender's loans from the operator's data
base.
(j) The director may impose a civil penalty not to exceed one
hundred dollars ($100) for each violation of:
(1) this section; or
(2) any rule or policy adopted by the director to implement
this section.
(k) The excess amount of loan finance charge provided for in
agreements in violation of this section is an excess charge for
purposes of the provisions concerning effect of violations on rights
of parties (IC 37-2-6-9) and the provisions concerning civil actions
by the department (IC 37-2-7-14).
(l) If a borrower provides the borrower's Social Security
number to a lender in connection with any transaction or proposed
transaction under this chapter, the lender shall:
(1) maintain procedures to verify that the Social Security
number provided is legitimate and belongs to the borrower;
and
(2) retain copies of any documents used to verify the
borrower's Social Security number. Documentation under
this subdivision may be in electronic form and the numbers
may be truncated.
If a borrower does not have a Social Security number, the lender
may require and accept another valid form of government issued
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identification, subject to the requirements of subdivisions (1) and
(2) with respect to the government issued identification accepted.
Sec. 9. (a) This section does not apply to a business that is
licensed by the department for a purpose other than consumer
loans.
(b) A licensee may carry on other business at a location where
the licensee makes small loans unless the licensee carries on other
business for the purpose of evasion or violation of this article.
Sec. 10. (a) An agreement with respect to a small loan may not
provide for charges as a result of default by the borrower other
than those specifically authorized by this chapter. A provision in a
small loan agreement in violation of this section is unenforceable.
(b) A lender or an assignee of a small loan may seek only the
following remedies upon default by a borrower:
(1) Recovery of:
(A) the contracted principal amount of the loan; and
(B) the loan finance charge.
(2) If contracted for under section 3 of this chapter, collection
of a fee for:
(A) a returned check, negotiable order of withdrawal, or
share draft; or
(B) a dishonored authorization to debit the borrower's
account;
because of insufficient funds in the borrower's account.
(3) Collection of postjudgment interest, if awarded by a court.
(4) Collection of court costs, if awarded by a court.
(c) A lender or an assignee of a small loan may not seek any of
the following damages or remedies upon default by a borrower:
(1) Payment of the lender's attorney's fees.
(2) Treble damages.
(3) Prejudgment interest.
(4) Damages allowed for dishonored checks under any statute
other than this chapter.
(5) Any damages or remedies not set forth in subsection (b).
(d) A contractual agreement in a small loan transaction must
include a notice of the following in 14 point bold type:
(1) The remedies available to a lender or an assignee under
subsection (b).
(2) The remedies and damages that a lender or an assignee is
prohibited from seeking in a small loan transaction under
subsection (c).
Sec. 11. (a) This section applies to licensees and unlicensed
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persons.
(b) A person who violates this chapter:
(1) is subject to the remedies provided in IC 37-2-6-9;
(2) commits a deceptive act under IC 24-5-0.5 and is subject
to the penalties listed in IC 24-5-0.5;
(3) has no right to collect, receive, or retain any principal,
interest, or other charges from a small loan; however, this
subdivision does not apply if the violation is the result of an
accident or bona fide error of computation; and
(4) is liable to the borrower for actual damages, statutory
damages of two thousand dollars ($2,000) per violation, costs,
and attorney's fees; however, this subdivision does not apply
if the violation is the result of an accident or bona fide error
of computation.
The remedies described in this subsection are in addition to all
other remedies set forth in IC 37-2 and this article.
(c) The department may sue:
(1) to enjoin any conduct that constitutes or will constitute a
violation of this chapter; and
(2) for other equitable relief.
(d) The remedies provided in this section are cumulative but are
not intended to be the exclusive remedies available to a borrower.
A borrower is not required to exhaust any administrative remedies
under this section or any other applicable law.
Sec. 12. A lender making small loans, or an assignee of a small
loan, shall not commit nor cause to be committed any of the
following acts:
(1) Threatening to use or using the criminal process in any
state to collect on a small loan.
(2) Threatening to take action against a borrower that is
prohibited by this chapter.
(3) Making a misleading or deceptive statement regarding a
small loan or a consequence of taking a small loan.
(4) Contracting for or collecting attorney's fees on small loans
made under this chapter.
(5) Altering the date or any other information on a check or
an authorization to debit the borrower's account held as
security.
(6) Using a device or agreement that the department
determines would have the effect of charging or collecting
more fees, charges, or interest than allowed by this chapter,
including, but not limited to:
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(A) entering a different type of transaction with the
borrower;
(B) entering into a sales/leaseback arrangement;
(C) catalog sales;
(D) entering into transactions in which a customer receives
a purported cash rebate that is advanced by someone
offering Internet content services, or some other product
or service, when the cash rebate does not represent a
discount or an adjustment of the purchase price for the
product or service; or
(E) entering any other transaction with the borrower that
is designed to evade the applicability of this chapter.
(7) Engaging in unfair, deceptive, or fraudulent practices in
the making or collecting of a small loan.
(8) Charging to cash a check representing the proceeds of a
small loan.
(9) Except as otherwise provided in this chapter:
(A) accepting the proceeds of a new small loan as payment
of an existing small loan provided by the same lender; or
(B) renewing, refinancing, or consolidating a small loan
with the proceeds of another small loan made by the same
lender.
(10) Including any of the following provisions in a loan
document:
(A) A hold harmless clause.
(B) A confession of judgment clause.
(C) A mandatory arbitration clause, unless the terms and
conditions of the arbitration have been approved by the
director of the department.
(D) An assignment of or order for payment of wages or
other compensation for services.
(E) A provision in which the borrower agrees not to assert
a claim or defense arising out of contract.
(F) A waiver of any provision of this chapter.
(11) Selling insurance of any kind in connection with the
making or collecting of a small loan.
(12) Entering into a renewal with a borrower.
Sec. 13. Finance charges made in compliance with this chapter
are exempt from IC 37-2-4-35 and IC 35-45-7.
Sec. 14. Upon the receipt of a check from a borrower for a small
loan, unless the check is marked as void at the time of acceptance
by the lender, the lender shall immediately stamp the back of the
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check with an endorsement that states:
"This check is being negotiated as part of a small loan under
IC 37-3, and any holder of this check takes it subject to the
claims and defenses of the maker.".
Sec. 15. (a) A person engaged in making small loans under this
chapter shall post a bond to the department in the amount of fifty
thousand dollars ($50,000) for each location where small loans will
be made, up to a maximum bond in an amount determined by the
director.
(b) A surety bond issued under this section must:
(1) provide coverage for a lender engaged in making small
loans under this chapter in an amount as prescribed in
subsection (a);
(2) be in a form prescribed by the director;
(3) be in effect during the term of the lender's license under
this chapter;
(4) subject to subsection (c), remain in effect during the two
(2) years after the lender's license under this chapter is
surrendered or terminated;
(5) be payable to the department for the benefit of:
(A) the state; and
(B) individuals who reside in Indiana when they agree to
receive financial services from the lender;
(6) be issued by a bonding, surety, or insurance company
authorized to do business in Indiana and rated at least "A-"
by at least one (1) nationally recognized investment rating
service; and
(7) have payment conditioned upon the lender's or any of the
lender's employees' or agents' noncompliance with or
violation of this article or other applicable federal or state
laws or regulations.
(c) The director may adopt rules or guidance documents with
respect to the requirements for a surety bond as necessary to
accomplish the purposes of this chapter. Upon written request
from a lender, the director may, at the discretion of the director,
waive or shorten the two (2) year period set forth in subsection
(b)(4) during which a surety bond required by this section must
remain in effect after the lender's license under this chapter is
surrendered or terminated.
(d) If the principal amount of a surety bond required under this
section is reduced by payment of a claim or judgment, the lender
for whom the bond is issued shall immediately notify the director
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of the reduction and, not later than thirty (30) days after notice by
the director, file a new or an additional surety bond in an amount
set by the director. The amount of the new or additional bond set
by the director must be at least the amount of the bond before
payment of the claim or judgment.
(e) If for any reason a surety terminates a bond issued under
this section, the lender shall immediately notify the department and
file a new surety bond in an amount as prescribed in subsection (a).
(f) Cancellation of a surety bond issued under this section does
not affect any liability incurred or accrued during the period when
the surety bond was in effect.
(g) The director may obtain satisfaction from a surety bond
issued under this section if the director incurs expenses, issues a
final order, or recovers a final judgment under this chapter.
(h) Notices required under this section must be in writing and
delivered by certified mail, return receipt requested and postage
prepaid, or by overnight delivery using a nationally recognized
carrier.
Sec. 16. The department may adopt rules under IC 4-22-2 to
implement this article.
ARTICLE 4. MORTGAGE RESCUE PROTECTION FRAUD
Chapter 1. Application
Sec. 0.1. This article must be construed as a recodification of
prior law. The enactment of this article by SEA 169-2026 does not
affect the substantive operation and effect of the prior law.
Sec. 0.3. A contract entered into in accordance with IC 24-5.5
(before its repeal) is considered a contract entered into in
accordance with this article.
Sec. 0.5. Any document, website, or business communication
created in accordance with IC 24-5.5 (before its repeal) is
considered a document, website, or business communication
created in accordance with this article.
Sec. 0.7. (a) A reference in a statute or rule to a statute that is
repealed and replaced in the same or a different form in the
recodification act of the 2026 regular session of the general
assembly is treated after the effective date of the new provision as
a reference to the new provision.
(b) A citation reference in the recodification act of the 2026
regular session of the general assembly to another provision of the
recodification act of the 2026 regular session of the general
assembly is treated as including a reference to the provision of the
law concerning mortgage rescue protection fraud that is
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substantively equivalent to the provision of the recodification act
of the 2026 regular session of the general assembly that is referred
to by the citation reference.
Sec. 1. This article does not apply to the following:
(1) A person organized or chartered under the laws of this
state, any other state, or the United States that relate to a
bank, a trust company, a savings association, a savings bank,
a credit union, or an industrial loan and investment company.
(2) The Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation, or a Federal Home Loan
Bank.
(3) A department or agency of the United States or of Indiana.
(4) A person that is servicing or enforcing a loan that it owns.
(5) A person that is servicing a loan:
(A) for a person described in subdivisions (1) through (4);
or
(B) insured by the Department of Housing and Urban
Development or guaranteed by the Veterans
Administration.
(6) An attorney licensed to practice law in Indiana who is
representing a mortgagor.
Chapter 2. Definitions
Sec. 1. The definitions in this chapter apply throughout this
article.
Sec. 2. "Foreclosure consultant" means a person who, directly
or indirectly, makes a solicitation, a representation, or an offer to
a homeowner to perform, with or without compensation, any
service that the person represents will:
(1) prevent or postpone the initiation of a foreclosure
proceeding, or reverse the effect of a foreclosure proceeding;
(2) allow the homeowner to become a lessee or renter in the
homeowner's residence during or after a foreclosure
proceeding; or
(3) allow the homeowner to have an option to repurchase the
homeowner's residence after a foreclosure proceeding.
Sec. 3. "Foreclosure purchaser" means a person who purchases
real property in a foreclosure proceeding.
Sec. 4. "Foreclosure reconveyance" means a transaction
involving:
(1) the transfer of interest in real property by a homeowner
to a person during or incident to a proposed foreclosure
proceeding, either by:
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(A) transfer of interest from the homeowner to the person;
or
(B) creation of a mortgage, trust, or other lien or
encumbrance during the foreclosure process;
that allows the person to obtain legal or equitable title to all
or part of the real property; and
(2) the subsequent conveyance, or promise of subsequent
conveyance, of interest back to the homeowner by the person
or the person's agent that allows the homeowner to possess
the real property following the completion of the foreclosure
proceeding.
Sec. 5. "Formal settlement" means a face-to-face meeting with
a homeowner to complete final documents incident to the:
(1) sale or transfer of real property; or
(2) creation of a mortgage or equitable interest in real
property;
conducted by a person who is not employed by or an affiliate of the
foreclosure purchaser.
Sec. 6. "Homeowner" means a person who holds record title to
residential real property as of the date on which:
(1) a contract with a foreclosure consultant; or
(2) a foreclosure reconveyance agreement;
with respect to the residential real property is entered into.
Chapter 3. Rescission of Contracts With Foreclosure
Consultants and Foreclosure Reconveyance Agreements
Sec. 1. In addition to any other right under law to cancel or
rescind a contract, a homeowner may rescind a:
(1) contract with a foreclosure consultant at any time before
midnight of the seventh business day after the date the
contract is signed; and
(2) foreclosure reconveyance agreement at any time before
midnight of the seventh business day after the homeowner's
transfer of the interest in the real property that is the subject
of the agreement, as described in IC 37-4-2-4(1).
Sec. 2. A homeowner effectively rescinds a contract with a
foreclosure consultant if the homeowner gives written notice of a
rescission to the foreclosure consultant by one (1) of the following:
(1) Mailing the rescission to the address specified in the
contract.
(2) Sending the rescission through any facsimile or electronic
mail address identified in the contract or other material
provided to the homeowner by the foreclosure consultant.
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Sec. 3. (a) If a notice of rescission under this chapter is sent by
mail, the rescission is effective three (3) days after the notice is
deposited in the United States mail, properly addressed, with
postage prepaid.
(b) A homeowner is not required to give notice of rescission in
the form required under the contract if the form under the
contract is inconsistent with the requirements under this chapter.
Sec. 4. (a) If a homeowner rescinds a contract with a foreclosure
consultant or a foreclosure reconveyance agreement, the
homeowner shall, not later than thirty (30) days after the date of
rescission, repay any amounts paid or advanced by:
(1) the foreclosure consultant or the foreclosure consultant's
agent under the terms of the foreclosure consulting contract;
or
(2) a person under a foreclosure reconveyance agreement.
(b) A rescission by a homeowner under this chapter is void if the
payments required under this section are not made within the time
set forth in subsection (a).
Sec. 5. If a homeowner rescinds a contract with a foreclosure
consultant, not less than ten (10) days following the effective date
of the rescission, the consultant shall return to the homeowner any
payments made by the homeowner, less any amounts for actual
services rendered.
Chapter 4. Limitations on Foreclosure Consultants and
Foreclosure Reconveyances
Sec. 1. For purposes of this chapter, there is a rebuttable
presumption that:
(1) a homeowner has a reasonable ability to pay for a
subsequent reconveyance of real property if the homeowner's
payments for primary housing expenses and regular principal
and interest payments on other personal debt, on a monthly
basis, do not exceed sixty percent (60%) of the homeowner's
monthly gross income; and
(2) the foreclosure purchaser has not verified reasonable
payment ability if the foreclosure purchaser has not obtained
documents other than a statement by the homeowner of
assets, liability, and income.
Sec. 2. In addition to any prohibitions that apply under
IC 24-5-15-1 through IC 24-5-15-8, a foreclosure consultant may
not:
(1) enter into or attempt to enter into a foreclosure consultant
contract with a homeowner unless the foreclosure consultant
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first provides the homeowner written notice of the
homeowner's rights under this article;
(2) demand or receive compensation until after the
foreclosure consultant has fully performed all services the
foreclosure consultant contracted to perform or represented
that the foreclosure consultant would perform, unless the
foreclosure consultant complies with the security
requirements under IC 24-5-15-8;
(3) demand or receive a fee, interest, or any other
compensation that exceeds eight percent (8%) per year of the
amount of any loan that the foreclosure consultant makes to
the homeowner;
(4) take a wage assignment, a lien of any type on real or
personal property, or any other security to secure the
payment of compensation;
(5) receive consideration from a third party in connection
with foreclosure consulting services provided to a homeowner
unless the consideration is first fully disclosed in writing to the
homeowner;
(6) acquire any interest, directly or indirectly, in residential
real property in foreclosure from a homeowner with whom
the foreclosure consultant has contracted;
(7) except to inspect documents as provided by law, take any
power of attorney from a homeowner for any purpose;
(8) execute any contract or agreement with a homeowner or
receive money or other valuable consideration from a
homeowner without providing the homeowner with the
written statement required by IC 24-5-15-6; or
(9) fail to provide a homeowner with a written contract that
includes the notice of cancellation required by IC 24-5-15-7.
Sec. 3. A foreclosure purchaser may not enter into or attempt to
enter into a foreclosure reconveyance agreement with a
homeowner unless the:
(1) foreclosure purchaser verifies and demonstrates that the
homeowner has or will have a reasonable ability to:
(A) pay for the subsequent reconveyance of the property
back to the homeowner on completion of the terms of the
foreclosure conveyance; or
(B) if the foreclosure conveyance provides for a lease with
an option to repurchase the real property, make the lease
payment and repurchase the real property within the
period of the option to repurchase;
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(2) foreclosure purchaser provides the homeowner written
notice of the homeowner's rights under this article;
(3) foreclosure purchaser and the homeowner complete a
formal settlement before any transfer of interest in the
affected property; and
(4) foreclosure purchaser complies with the security
requirements under IC 24-5-15-8.
Sec. 4. A foreclosure purchaser shall:
(1) ensure that title to real property has been reconveyed to
the homeowner in a timely manner if the terms of a
foreclosure reconveyance agreement require a reconveyance;
or
(2) if the real property subject to a foreclosure reconveyance
agreement is sold within eighteen (18) months after entering
into the foreclosure reconveyance agreement, make payment
to the homeowner not later than ninety (90) days after the
resale of the real property in an amount equal to at least
sixty-six percent (66%) of the net proceeds from the resale of
the property.
Sec. 5. A foreclosure purchaser may not:
(1) enter into repurchase or lease terms as part of the
foreclosure reconveyance that are unfair or commercially
unreasonable or engage in any other unfair conduct;
(2) represent, directly or indirectly, that the:
(A) foreclosure purchaser is acting:
(i) as an adviser or a consultant; or
(ii) in any other manner on behalf of the homeowner;
(B) foreclosure purchaser is assisting the homeowner to
save the residence; or
(C) foreclosure purchaser is assisting the homeowner in
preventing a foreclosure if the result of the transaction is
that the homeowner will not complete a redemption of the
property; or
(3) until the homeowner's right to rescind or cancel the
foreclosure reconveyance agreement has expired:
(A) record any document, including an instrument or
conveyance, signed by the homeowner; or
(B) transfer to a third party or encumber, or purport to
transfer to a third party or encumber, any interest in the
residential real property in foreclosure.
Sec. 6. A foreclosure purchaser shall make a detailed accounting
of the basis for the amount of payment made to a homeowner of
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real property resold within eighteen (18) months after entering into
a foreclosure reconveyance agreement on a form prescribed by the
attorney general.
Sec. 7. A foreclosure consultant shall retain all records and
documents, including the foreclosure consultant contract, related
to services performed on behalf of a homeowner for at least three
(3) years after the termination or conclusion of the foreclosure
consultant contract entered into by the foreclosure consultant and
the homeowner.
Sec. 8. A foreclosure consultant may not represent to a
homeowner that the foreclosure consultant is endorsed, sponsored,
or affiliated with any governmental or government sponsored
agency or program.
Chapter 5. Enforcement
Sec. 1. A person who knowingly or intentionally violates this
article commits:
(1) a Class A misdemeanor;
(2) a deceptive act that is actionable by the attorney general
under IC 24-5-0.5-4 and is subject to the penalties and
remedies available to the attorney general under IC 24-5-0.5;
and
(3) a deceptive act that is actionable by the attorney general
under IC 37-5-8-2 and is subject to the penalties and remedies
available to the attorney general under IC 37-5.
Sec. 2. (a) A homeowner may bring an action against a person
for damages incurred as a result of a violation of this article.
(b) A homeowner who:
(1) brings an action under this section; and
(2) is awarded damages;
may seek reasonable attorney's fees.
Sec. 3. (a) A court may award attorney's fees under section 2(b)
of this chapter.
(b) If the court finds that a person willfully or knowingly
violated this article, the court may award damages equal to three
(3) times the amount of actual damages.
Sec. 4. (a) The Indiana housing and community development
authority shall maintain a list of nonprofit organizations that:
(1) offer counseling or advice to homeowners in foreclosure or
loan defaults; and
(2) do not contract for services with for-profit lenders or
foreclosure purchasers.
(b) The Indiana housing and community development authority
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shall provide names and telephone numbers of the organizations
described in subsection (a) to a homeowner upon request.
Sec. 5. The attorney general may adopt rules under IC 4-22-2
necessary to implement this article.
Sec. 6. Except as provided in IC 24-5-15-7(d), this article may
not be construed to preempt the provisions of IC 24-5-15-1 through
IC 24-5-15-11.
ARTICLE 5. HOME LOAN PRACTICES
Chapter 1. Application
Sec. 0.1. This article must be construed as a recodification of
prior law. The enactment of this article by SEA 169-2026 does not
affect the substantive operation and effect of the prior law.
Sec. 0.3. A contract entered into in accordance with IC 24-9
(before its repeal) is considered a contract entered into in
accordance with this article.
Sec. 0.5. Any document, website, or business communication
created in accordance with IC 24-9 (before its repeal) is considered
a document, website, or business communication created in
accordance with this article.
Sec. 0.7. (a) A reference in a statute or rule to a statute that is
repealed and replaced in the same or a different form in the
recodification act of the 2026 regular session of the general
assembly is treated after the effective date of the new provision as
a reference to the new provision.
(b) A citation reference in the recodification act of the 2026
regular session of the general assembly to another provision of the
recodification act of the 2026 regular session of the general
assembly is treated as including a reference to the provision of the
law concerning home loan practices that is substantively equivalent
to the provision of the recodification act of the 2026 regular session
of the general assembly that is referred to by the citation reference.
Sec. 1. Except for IC 37-5-3-7(c)(3), IC 37-5-3-7(c)(4), and
IC 37-5-3-7(c)(5), this article does not apply to:
(1) a loan made or acquired by a person organized or
chartered under the laws of this state, any other state, or the
United States relating to banks, trust companies, savings
associations, savings banks, credit unions, or industrial loan
and investment companies; or
(2) a loan:
(A) that can be purchased by the Federal National
Mortgage Association, the Federal Home Loan Mortgage
Association, or the Federal Home Loan Bank;
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(B) to be insured by the United States Department of
Housing and Urban Development;
(C) to be guaranteed by the United States Department of
Veterans Affairs;
(D) to be made or guaranteed by the United States
Department of Agriculture Rural Housing Service;
(E) to be funded by the Indiana housing and community
development authority; or
(F) with a principal amount that exceeds the conforming
loan size limit for a single family dwelling as established by
the Federal National Mortgage Association.
Chapter 2. Definitions
Sec. 1. The definitions in this chapter apply throughout this
article.
Sec. 2. "Benchmark rate" means the interest rate established
under Section 152 of the Federal Home Ownership and Equity
Protection Act of 1994 (15 U.S.C. 1602 (aa)) and the regulations
adopted under that act by the Federal Reserve Board, including 12
CFR 226.32 and the Official Staff Commentary to the regulations
as amended.
Sec. 3. "Bona fide discount points" means loan discount points
that:
(1) are knowingly paid by the borrower;
(2) are paid for the express purpose of reducing the interest
rate applicable to the loan;
(3) reduce the interest rate from an interest rate that does not
exceed the benchmark rate; and
(4) are recouped within the first four (4) years of the
scheduled loan payments;
if the reduction in the interest rate that is achieved by the payment
of the loan discount points reduces the interest charged on the
scheduled payments so that the borrower's dollar amount of
savings in interest during the first four (4) years of the loan is equal
to or greater than the dollar amount of loan discount points paid
by the borrower.
Sec. 4. "Borrower" means a person obligated to repay a home
loan, including a coborrower, cosigner, or guarantor.
Sec. 5. "Bridge loan" means temporary or short term financing
with a maturity of less than eighteen (18) months that requires
payments of interest only until the entire unpaid balance is due and
payable.
Sec. 6. (a) "Creditor" means:
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(1) a person:
(A) who regularly extends consumer credit that is subject
to a finance charge or that is payable by written agreement
in more than four (4) installments; and
(B) to whom the debt arising from a home loan transaction
is initially payable; or
(2) a person who brokers a home loan, including a person
who:
(A) directly or indirectly solicits, processes, places, or
negotiates home loans for others;
(B) offers to solicit, process, place, or negotiate home loans
for others; or
(C) closes home loans that may be in the person's own
name with funds provided by others and that are
thereafter assigned to the person providing funding for the
loans.
(b) The term does not include:
(1) a servicer;
(2) a state or local housing finance authority;
(3) any other state or local governmental or
quasi-governmental entity; or
(4) an attorney providing legal services in association with the
closing of a home loan.
Sec. 7. (a) "Deceptive act" means:
(1) an act or a practice as part of a mortgage transaction (as
defined in IC 37-5-3-7(a)), or of a real estate transaction (as
defined in IC 37-5-3-7(b)), in which a person at the time of the
transaction knowingly or intentionally:
(A) makes a material misrepresentation; or
(B) conceals material information regarding the terms or
conditions of the transaction; or
(2) a violation of IC 37-4 concerning mortgage rescue
protection fraud as set forth in IC 37-4-5-1.
(b) For purposes of this section, "knowingly" means having
actual knowledge at the time of the transaction.
Sec. 8. (a) "High cost home loan" means a home loan with:
(1) a trigger rate that exceeds the benchmark rate; or
(2) total points and fees that exceed:
(A) five percent (5%) of the loan principal for a home loan
having a loan principal of at least forty thousand dollars
($40,000); or
(B) six percent (6%) of the loan principal for a home loan
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having a loan principal of less than forty thousand dollars
($40,000).
(b) Beginning July 1, 2006, the dollar amounts set forth in this
section are subject to change at the times and according to the
procedure set forth in the provisions of IC 37-2-1-5 concerning the
adjustment of dollar amounts in IC 37-2.
Sec. 9. (a) "Home loan" means a loan, other than an open end
credit plan, a reverse mortgage transaction, or a loan described in
IC 37-5-1-1, that is secured by a mortgage or deed of trust on real
estate in Indiana on which there is located or will be located a
structure or structures:
(1) designed primarily for occupancy of one (1) to four (4)
families; and
(2) that is or will be occupied by a borrower as the borrower's
principal dwelling.
(b) The term does not include a land contract.
Sec. 9.5. "Land contract" means a contract for the sale of real
estate in which the seller of the real estate retains legal title to the
real estate until the total contract price is paid by the buyer.
Sec. 10. (a) Except as provided in subsection (b), "points and
fees" means the total of the following:
(1) Points and fees (as defined in 12 CFR 226.32(b)(1) on
January 1, 2004).
(2) All compensation paid directly or indirectly to a mortgage
broker, including a broker that originates a loan in the
broker's own name.
As used in subdivision (2), "compensation" does not include a
payment included in subdivision (1).
(b) The term does not include the following:
(1) Bona fide discount points.
(2) An amount not to exceed one and one-half (1 1/2) points in
indirect broker compensation, if the terms of the loan do not
include:
(A) a prepayment penalty, in the case of a home loan
described in IC 37-5-3-6(b); or
(B) a prepayment penalty that exceeds two percent (2%) of
the home loan principal, in the case of a home loan other
than a home loan described in IC 37-5-3-6(b).
(3) Reasonable fees paid to an affiliate of the creditor.
(4) Interest prepaid by the borrower for the month in which
the home loan is closed.
Sec. 11. "Political subdivision" means a municipality, school
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district, public library, local housing authority, fire protection
district, public transportation corporation, local building
authority, local hospital authority or corporation, local airport
authority, special service district, special taxing district, or any
other type of local governmental corporate entity.
Sec. 12. "Rate" means the interest rate charged on a home loan,
based on an annual simple interest yield.
Sec. 13. "Total loan amount" means the principal of the home
loan minus the points and fees that are included in the principal
amount of the loan.
Sec. 14. "Trigger rate" means:
(1) for fixed rate home loans in which the interest rate will not
vary during the term of the loan, the rate as of the date of
closing;
(2) for home loans in which the interest varies according to an
index, the sum of the index rate as of the date of closing plus
the maximum margin permitted at any time under the loan
agreement; or
(3) for all other home loans in which the rate may vary at any
time during the term of the loan, the maximum rate that may
be charged during the term of the home loan.
Chapter 3. Prohibited Lending Practices Generally
Sec. 0.1. A person is not subject to a prohibition or requirement
of:
(1) IC 24-9-3 (before its repeal) and IC 24-9-4 (before its
repeal), both as added by P.L.73-2004; or
(2) this chapter and IC 37-5-4;
with respect to a loan made before January 1, 2005.
Sec. 1. (a) A creditor making a home loan may not finance,
directly or indirectly, any:
(1) credit life insurance;
(2) credit disability insurance;
(3) credit unemployment insurance;
(4) credit property insurance; or
(5) payments directly or indirectly for any cancellation
suspension agreement or contract.
(b) Insurance premiums, debt cancellation fees, or suspension
fees calculated and paid on a monthly basis are not considered to
be financed by the creditor for purposes of this chapter.
Sec. 2. (a) A creditor may not knowingly or intentionally replace
or consolidate a zero (0) interest rate or other subsidized low rate
loan made by a governmental or nonprofit lender with a high cost
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home loan within the first ten (10) years of the subsidized low rate
loan unless the current holder of the loan consents in writing to the
refinancing.
(b) For purposes of this section, a "subsidized low rate loan" is
a loan that carries a current interest rate of at least two (2)
percentage points below the current yield on treasury securities
with a comparable maturity. If the loan's current interest rate is
either a discounted introductory rate or a rate that automatically
steps up over time, the fully indexed rate or the fully stepped up
rate, as appropriate, should be used instead of the current rate to
determine whether a loan is a subsidized low rate loan.
(c) Each mortgage or deed of trust securing a zero (0) interest
rate or other subsidized low rate loan executed after January 1,
2005, must prominently display the following on the face of the
instrument:
"This instrument secures a zero (0) interest rate or other
subsidized low rate loan subject to IC 37-5-3-2.".
(d) A creditor may reasonably rely on the presence or absence
of the statement described in subsection (c) on the face of an
instrument executed after January 1, 2005, as conclusive proof of
the existence or nonexistence of a zero (0) interest rate or other
subsidized low rate loan.
Sec. 3. A creditor may not recommend or encourage default on
an existing loan or other debt before and in connection with the
closing or planned closing of a home loan that refinances all or part
of the existing loan or debt.
Sec. 4. A creditor shall treat each payment made by a borrower
in regard to a home loan as posted on the same business day as the
payment was received by the creditor, servicer, or creditor's agent,
or at the address provided to the borrower by the creditor,
servicer, or creditor's agent for making payments.
Sec. 5. (a) A home loan agreement may not contain a provision
that permits the creditor, in the creditor's sole discretion, to
accelerate the indebtedness without material cause.
(b) This section does not prohibit acceleration of a home loan in
good faith due to the borrower's failure to abide by the material
terms of the loan.
Sec. 6. (a) A creditor may not charge a fee for informing or
transmitting to a person the balance due to pay off a home loan or
to provide a written release upon prepayment. A creditor must
provide, in writing, a payoff balance not later than seven (7)
business days (excluding legal public holidays, Saturdays, and
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Sundays) after the request is received by the creditor. A payoff
statement provided by a creditor under this subsection must show
the date the statement was prepared and itemize the unpaid
principal balance and each fee, charge, or other sum included
within the payoff amount. For purposes of this subsection, "fee"
does not include actual charges incurred by a creditor for express
or priority delivery of home loan documents to the borrower if
such delivery is requested by the borrower.
(b) This subsection applies to a home loan, or the refinancing or
consolidation of a home loan, that:
(1) is closed after June 30, 2009; and
(2) has an interest rate that is subject to change at one (1) or
more times during the term of the home loan.
A creditor in a transaction to which this subsection applies may not
contract for and may not charge the borrower a prepayment fee or
penalty.
(c) This subsection applies to a home loan with respect to which
any installment or minimum payment due is delinquent for at least
sixty (60) days. The creditor, servicer, or the creditor's agent shall
acknowledge a written offer made in connection with a proposed
short sale not later than five (5) business days (excluding legal
public holidays, Saturdays, and Sundays) after the date of the offer
if the offer complies with the requirements for a qualified written
request set forth in 12 U.S.C. 2605(e)(1)(B). The creditor, servicer,
or creditor's agent is required to acknowledge a written offer made
in connection with a proposed short sale from a third party acting
on behalf of the debtor only if the debtor has provided written
authorization for the creditor, servicer, or creditor's agent to do so.
Not later than thirty (30) business days (excluding legal public
holidays, Saturdays, and Sundays) after receipt of an offer under
this subsection, the creditor, servicer, or creditor's agent shall
respond to the offer with an acceptance or a rejection of the offer.
The thirty (30) day period described in this subsection may be
extended for not more than fifteen (15) business days (excluding
legal public holidays, Saturdays, and Sundays) if, before the end of
the thirty (30) day period, the creditor, the servicer, or the
creditor's agent notifies the debtor of the extension and the reason
the extension is needed. As used in this subsection, "short sale"
means a transaction in which the property that is the subject of a
home loan is sold for an amount that is less than the amount of the
borrower's outstanding obligation on the home loan. A creditor, a
servicer, or a creditor's agent that fails to respond to an offer
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within the time prescribed by this subsection is liable in accordance
with 12 U.S.C. 2605(f) in any action brought under that section.
Sec. 7. (a) As used in this section, "mortgage transaction"
includes the following:
(1) A home loan subject to this article.
(2) To the extent allowed under federal law, a loan described
in IC 37-5-1-1 that is secured by a mortgage or a land
contract (or another consensual security interest equivalent
to a mortgage or a land contract) on real estate in Indiana on
which there is located or will be located a structure or
structures:
(A) designed primarily for occupancy of one (1) to four (4)
families; and
(B) that is or will be occupied by a borrower as the
borrower's principal dwelling.
(3) A first lien mortgage transaction (as defined in
IC 37-1-2-18) subject to IC 37-1.
(4) A consumer credit sale subject to IC 37-2-3 in which a
mortgage or a land contract (or another consensual security
interest equivalent to a mortgage or a land contract) that
constitutes a lien is created or retained against land:
(A) that is located in Indiana; and
(B) upon which there is constructed or intended to be
constructed a dwelling that is or will be used by the debtor
primarily for personal, family, or household purposes.
(5) A consumer loan subject to IC 37-2-4 in which a mortgage
or a land contract (or another consensual security interest
equivalent to a mortgage or a land contract) that constitutes
a lien is created or retained against land:
(A) that is located in Indiana; and
(B) upon which there is constructed or intended to be
constructed a dwelling that is or will be used by the debtor
primarily for personal, family, or household purposes.
(6) A loan in which a mortgage or a land contract (or another
consensual security interest equivalent to a mortgage or a
land contract) that constitutes a lien is created or retained
against land:
(A) that is located in Indiana;
(B) upon which there is constructed or intended to be
constructed a dwelling that is not or will not be used by the
borrower primarily for personal, family, or household
purposes; and
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(C) that is classified as residential for property tax
purposes.
The term includes a loan that is secured by land in Indiana
upon which there is constructed or intended to be constructed
a dwelling that is purchased by or through the borrower for
investment or other business purposes.
(7) A reverse mortgage transaction that is secured by real
estate in Indiana on which there is located a structure that is
occupied by a borrower as the borrower's principal dwelling.
(b) As used in this section, "real estate transaction" means the
sale or lease of any legal or equitable interest in real estate:
(1) that is located in Indiana;
(2) upon which there is constructed or intended to be
constructed a dwelling; and
(3) that is classified as residential for property tax purposes.
(c) A person may not do any of the following:
(1) Divide a home loan transaction into separate parts with
the intent of evading a provision of this article.
(2) Structure a home loan transaction as an open-end loan
with the intent of evading the provisions of this article if the
home loan would be a high cost home loan if the home loan
had been structured as a closed-end loan.
(3) Engage in a deceptive act in connection with a mortgage
transaction or a real estate transaction.
(4) Engage in, or solicit to engage in, a real estate transaction
or a mortgage transaction without a permit or license
required by law.
(5) With respect to a real estate transaction or a mortgage
transaction, represent that:
(A) the transaction has:
(i) certain terms or conditions; or
(ii) the sponsorship or approval of a particular person or
entity;
that it does not have and that the person knows or
reasonably should know it does not have; or
(B) the real estate or property that is the subject of the
transaction has any improvements, appurtenances, uses,
characteristics, or associated benefits that it does not have
and that the person knows or reasonably should know it
does not have.
(6) Maintain or offer to maintain an account for the receipt of
funds for the payment of real estate taxes and insurance
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unless the person is any of the following:
(A) Any of the following that is chartered under the laws
of a state or the United States:
(i) A bank.
(ii) A savings and loan association.
(iii) A credit union.
(iv) A savings bank.
(B) The creditor in a mortgage transaction.
(C) A mortgage servicer acting on behalf of the creditor in
a mortgage transaction.
(D) A closing agent (as defined in IC 27-7-3.7-1).
(7) Fail to provide the notice required under subsection (d),
within the time specified in subsection (d), if the person is a
seller in a real estate transaction described in subsection (d).
(d) This subsection applies to a real estate transaction that
involves a land contract between the seller and the buyer in the
transaction. If the real estate that is the subject of the transaction
is subject to any encumbrance, including any tax lien, foreclosure
action, legal judgment, or other encumbrance affecting the title to
the real estate, the seller must provide written notice by certified
mail, return receipt requested, of the encumbrance to the buyer:
(1) not later than the time the land contract is executed, if the
encumbrance is created before or at the time the land
contract is executed; or
(2) not later than ten (10) business days after the
encumbrance is created, if the encumbrance is created after
the land contract is executed.
Sec. 8. A person seeking to enforce section 7(c)(3), 7(c)(4), or
7(c)(5) of this chapter may not knowingly or intentionally
intimidate, coerce, or harass another person.
Sec. 9. It is unlawful for a creditor to discriminate against any
applicant with respect to any aspect of a credit transaction on the
basis of race, color, religion, national origin, sex, marital status, or
age, if the applicant has the ability to contract.
Chapter 4. Additional Prohibitions for High Cost Home Loans
Sec. 0.1. A person is not subject to a prohibition or requirement
of:
(1) IC 24-9-3 (before its repeal) and IC 24-9-4 (before its
repeal), both as added by P.L.73-2004; or
(2) this chapter and IC 37-5-3;
with respect to a loan made before January 1, 2005.
Sec. 1. The following additional limitations and prohibited
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practices apply to a high cost home loan:
(1) A creditor making a high cost home loan may not directly
or indirectly finance any points and fees.
(2) This subdivision does not apply to a high cost home loan
described in IC 37-5-3-6(b). Prepayment fees or penalties may
not be included in the loan documents for a high cost home
loan or charged to the borrower if the fees or penalties exceed
in total two percent (2%) of the high cost home loan amount
prepaid during the first twenty-four (24) months after the
high cost home loan closing.
(3) This subdivision does not apply to a high cost home loan
described in IC 37-5-3-6(b). A prepayment penalty may not be
contracted for after the second year following the high cost
home loan closing.
(4) This subdivision does not apply to a high cost home loan
described in IC 37-5-3-6(b). A creditor may not include a
prepayment penalty fee in a high cost home loan unless the
creditor offers the borrower the option of choosing a loan
product without a prepayment fee. The terms of the offer
must be made in writing and must be initialed by the
borrower. The document containing the offer must be clearly
labeled in large bold type and must include the following
disclosure:
"LOAN PRODUCT CHOICE
I was provided with an offer to accept a product both with
and without a prepayment penalty provision. I have chosen
to accept the product with a prepayment penalty.".
(5) A creditor shall not sell or otherwise assign a high cost
home loan without furnishing the following statement to the
purchaser or assignee:
"NOTICE: This is a loan subject to special rules under
IC 37-5. Purchasers or assignees may be liable for all
claims and defenses with respect to the loan that the
borrower could assert against the lender.".
(6) A mortgage or deed of trust that secures a high cost home
loan at the time the mortgage or deed of trust is recorded
must prominently display the following on the face of the
instrument:
"This instrument secures a high cost home loan as defined
in IC 37-5-2-8.".
(7) A creditor making a high cost home loan may not finance,
directly or indirectly, any life or health insurance.
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Sec. 2. A creditor may not knowingly or intentionally:
(1) refinance a high cost home loan by charging points and
fees on the part of the proceeds of the new high cost home
loan that is used to refinance the existing high cost loan within
four (4) years of the origination of the existing high cost home
loan; or
(2) divide a home loan transaction into multiple transactions
with the effect of evading this article. Where multiple
transactions are involved, the total points and fees charged in
all transactions shall be considered when determining
whether the protections of this section apply.
Sec. 3. Notwithstanding IC 37-2-4-15, a high cost home loan
agreement may not require a scheduled payment that is more than
twice as large as the average of earlier scheduled monthly
payments under the high cost home loan agreement unless the
payment becomes due and payable at least one hundred twenty
(120) months after the date of the high cost home loan. This
prohibition does not apply if:
(1) the payment schedule is adjusted to account for the
seasonal or irregular income of the borrower; or
(2) the loan is a bridge loan connected with or related to the
acquisition or construction of a dwelling intended to become
the borrower's principal dwelling.
Sec. 4. (a) Except as provided in subsection (b), a high cost home
loan may not include payment terms under which the outstanding
principal balance will increase at any time over the course of the
high cost home loan because the regular periodic payments do not
cover the full amount of interest due.
(b) This section does not apply to a temporary forbearance that
is requested by a borrower regarding a high cost home loan.
Sec. 5. A high cost home loan may not contain a provision that
increases the interest rate after default. However, this section does
not apply to interest rate changes in a variable rate loan otherwise
consistent with the provisions of the high cost home loan
documents if the change in the interest rate is not triggered by the
event of default or the acceleration of the indebtedness.
Sec. 6. A high cost home loan may not include terms under
which more than two (2) periodic payments required under the
high cost home loan are consolidated and paid in advance from the
high cost home loan proceeds provided to the borrower.
Sec. 7. A creditor may not make a high cost home loan without
first providing the borrower information to facilitate contact with
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a nonprofit counseling agency certified by:
(1) the United States Department of Housing and Urban
Development; or
(2) the Indiana housing and community development
authority under IC 5-20-1-4(d);
at the same time as the good faith estimates are provided to the
borrower in accordance with the requirements of the federal Real
Estate Settlement Procedures Act (12 U.S.C. 2601 et seq.) as
amended.
Sec. 8. (a) A creditor may not make a high cost home loan
without regard to repayment ability.
(b) If a creditor presents evidence that the creditor followed
commercially reasonable practices in determining the borrower's
debt to income ratio, there is a rebuttable presumption that the
creditor made the high cost home loan with due regard to
repayment ability. For purposes of this section, there is a
rebuttable presumption that the borrower's statement of income
provided to the creditor is true and complete.
(c) Commercially reasonable practices include the use of:
(1) the debt to income ratio:
(A) listed in 38 CFR 36.4337(c)(1); and
(B) defined in 38 CFR 36.4337(d); and
(2) the residual income guidelines established under:
(A) 38 CFR 36.4337(e); and
(B) United States Department of Veterans Affairs form
26-6393.
Sec. 9. A creditor may not pay a contractor under a home
improvement contract from the proceeds of a high cost home loan
unless:
(1) the creditor is presented with a signed and dated
completion certificate showing that the home improvements
have been completed; and
(2) the instrument is payable to the borrower or jointly to the
borrower and the contractor or, at the election of the
borrower, through a third party escrow agent under a written
agreement signed by the borrower, the creditor, and the
contractor before the disbursement.
Sec. 10. A creditor may not charge a borrower any fees or other
charges to modify, renew, extend, or amend a high cost home loan
or to defer a payment due under the terms of a high cost home
loan.
Sec. 11. A creditor may not make a high cost home loan unless
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the creditor has given the following notice, in writing, to the
borrower not later than the time that notice is required under 12
CFR 226.31(c):
"NOTICE TO BORROWER
YOU SHOULD BE AWARE THAT YOU MIGHT BE ABLE
TO OBTAIN A LOAN AT A LOWER COST. YOU SHOULD
COMPARE LOAN RATES, COSTS, AND FEES.
MORTGAGE LOAN RATES AND CLOSING COSTS AND
FEES VARY BASED ON MANY FACTORS, INCLUDING
YOUR PARTICULAR CREDIT AND FINANCIAL
CIRCUMSTANCES, YOUR EMPLOYMENT HISTORY,
THE LOAN-TO-VALUE REQUESTED, AND THE TYPE
OF PROPERTY THAT WILL SECURE YOUR LOAN. THE
LOAN RATE, COSTS, AND FEES COULD ALSO VARY
BASED ON WHICH CREDITOR OR BROKER YOU
SELECT.
IF YOU ACCEPT THE TERMS OF THIS LOAN, THE
CREDITOR WILL HAVE A MORTGAGE LIEN ON YOUR
HOME. YOU COULD LOSE YOUR HOME AND ANY
MONEY YOU HAVE PAID IF YOU DO NOT MEET YOUR
PAYMENT OBLIGATIONS UNDER THE LOAN.
YOU SHOULD CONSULT AN ATTORNEY AND A
QUALIFIED INDEPENDENT CREDIT COUNSELOR OR
OTHER EXPERIENCED FINANCIAL ADVISER
REGARDING THE RATE, FEES, AND PROVISIONS OF
THIS MORTGAGE LOAN BEFORE YOU PROCEED. A
LIST OF QUALIFIED COUNSELORS IS AVAILABLE
FROM THE INDIANA HOUSING AND COMMUNITY
DEVELOPMENT AUTHORITY.
YOU ARE NOT REQUIRED TO COMPLETE THIS LOAN
AGREEMENT MERELY BECAUSE YOU HAVE
RECEIVED THIS DISCLOSURE OR HAVE SIGNED A
LOAN APPLICATION. REMEMBER, PROPERTY TAXES
AND HOMEOWNER'S INSURANCE ARE YOUR
RESPONSIBILITY. NOT ALL CREDITORS PROVIDE
ESCROW SERVICES FOR THESE PAYMENTS. YOU
SHOULD ASK YOUR CREDITOR ABOUT THESE
SERVICES.
ALSO, YOUR PAYMENTS ON EXISTING DEBTS
CONTRIBUTE TO YOUR CREDIT RATINGS. YOU
SHOULD NOT ACCEPT ANY ADVICE TO IGNORE
YOUR REGULAR PAYMENTS TO YOUR EXISTING
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CREDITORS.".
Sec. 12. Without regard to whether a borrower is acting
individually or on behalf of others similarly situated, a provision
of a high cost home loan agreement that:
(1) requires arbitration of a claim or defense;
(2) allows a party to require a borrower to assert a claim or
defense in a forum that is:
(A) less convenient;
(B) more costly; or
(C) more dilatory;
for the resolution of the dispute than an Indiana court in
which the borrower may otherwise bring a claim or defense;
or
(3) limits in any way any claim or defense the borrower may
have;
is unconscionable and void.
Chapter 5. Claims, Defenses, Remedies
Sec. 1. (a) A person who purchases or is otherwise assigned a
high cost home loan is subject to all affirmative claims and any
defenses, except for an affirmative claim or defense pursuant to
IC 37-5-3-7, with respect to the high cost home loan that the
borrower could assert against a creditor or broker of the high cost
home loan. However, this section does not apply if the purchaser or
assignee demonstrates by a preponderance of the evidence that a
reasonable person exercising ordinary due diligence could not
determine that the loan was a high cost home loan. A purchaser or
an assignee is presumed to have exercised reasonable due diligence
if the purchaser or assignee:
(1) has in place at the time of the purchase or assignment of
the subject loans, policies that expressly prohibit the purchase
or acceptance of the assignment of any high cost home loans;
(2) requires by contract that a seller or an assignor of home
loans to the purchaser or assignee represents and warrants to
the purchaser or assignee that either:
(A) the seller or assignor will not sell or reassign any high
cost home loans to the purchaser or assignee; or
(B) the seller or assignor is a beneficiary of a
representation and warranty from a previous seller or
assignor to that effect;
(3) exercises reasonable due diligence:
(A) at the time of purchase or assignment of home loans;
or
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(B) within a reasonable period after the purchase or
assignment of home loans;
intended by the purchaser or assignee to prevent the
purchaser or assignee from purchasing or taking assignment
of any high cost home loans; or
(4) satisfies the requirements of subdivisions (1) and (2) and
establishes that a reasonable person exercising ordinary due
diligence could not determine that the loan was a high cost
home loan based on the:
(A) documentation required by the federal Truth in
Lending Act (15 U.S.C. 1601 et seq.); and
(B) itemization of the amount financed and other
disbursement disclosures.
(b) A borrower acting only in an individual capacity may assert
against the creditor or any subsequent holder or assignee of a high
cost home loan:
(1) a violation of IC 37-5-4-2 as a defense, claim, or
counterclaim, after:
(A) an action to enjoin foreclosure or to preserve or obtain
possession of the dwelling that secures the loan is initiated;
(B) an action to collect on the loan or foreclose on the
collateral securing the loan is initiated; or
(C) the loan is more than sixty (60) days in default;
within three (3) years after the closing of a home loan;
(2) a violation of this article in connection to the high cost
home loan as a defense, claim, or counterclaim in an original
action within five (5) years after the closing of a high cost
home loan; and
(3) any defense, claim, counterclaim, or action to enjoin
foreclosure or preserve or obtain possession of the home that
secures the loan, including a violation of this article after:
(A) an action to collect on the loan or foreclose on the
collateral securing the loan is initiated;
(B) the debt arising from the loan is accelerated; or
(C) the loan is more than sixty (60) days in default;
at any time during the term of a high cost home loan.
(c) In an action, a claim, or a counterclaim brought under
subsection (b), the borrower may recover only amounts required
to reduce or extinguish the borrower's liability under a home loan
plus amounts required to recover costs, including reasonable
attorney's fees.
(d) The provisions of this section are effective notwithstanding
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any other provision of law. This section shall not be construed to
limit the substantive rights, remedies, or procedural rights
available to a borrower against any creditor, assignee, or holder
under any other law. The rights conferred on borrowers by
subsections (a) and (b) are independent of each other and do not
limit each other.
Sec. 2. (a) If a creditor asserts that grounds for acceleration
under the terms of a high cost home loan exist and requires the
payment in full of all sums secured by the security instrument, the
borrower or a person authorized to act on the borrower's behalf at
any time before the title is transferred by means of foreclosure,
judicial proceeding and sale, or otherwise may cure the default and
reinstate the high cost home loan by tendering the amount or
performance as specified in the security instrument.
(b) If the borrower cures the default on a high cost home loan,
the original loan terms shall be reinstated, and any acceleration of
any obligation under the security instrument or note arising from
the default is nullified as of the date of the cure.
Sec. 3. (a) A creditor making a high cost home loan that has the
right to foreclose must use the judicial foreclosure procedures of
the state in which the property securing the high cost home loan is
located. The borrower has the right to assert in the proceeding the
nonexistence of a default and any other claim or defense to
acceleration and foreclosure, including any claim or defense based
on any violations of this article.
(b) This section is not intended and shall not be construed to
allow any claim or defense otherwise barred by any statute of
limitation or repose.
Sec. 4. (a) This section does not apply to a violation of
IC 37-5-3-7(c)(4), IC 37-5-3-7(c)(5), or IC 37-5-3-7(c)(6). A person
who violates this article is liable to a person who is a party to the
home loan transaction, mortgage transaction (as defined in
IC 37-5-3-7(a)), or real estate transaction (as defined in
IC 37-5-3-7(b)), as appropriate, that gave rise to the violation for
the following:
(1) Actual damages, including consequential damages. A
person is not required to demonstrate reliance in order to
receive actual damages.
(2) Statutory damages equal to two (2) times the finance
charges agreed to in a home loan agreement.
(3) Costs and reasonable attorney's fees.
(b) A person may be granted injunctive, declaratory, and other
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equitable relief as the court determines appropriate in an action to
enforce compliance with this chapter.
(c) The right of rescission granted under 15 U.S.C. 1601 et seq.
for a violation of the federal Truth in Lending Act (15 U.S.C. 1601
et seq.) is available to a person acting only in an individual capacity
by way of recoupment as a defense against a party foreclosing on
a home loan at any time during the term of the loan. Any
recoupment claim asserted under this provision is limited to the
amount required to reduce or extinguish the person's liability
under the home loan plus amounts required to recover costs,
including reasonable attorney's fees. This article shall not be
construed to limit the recoupment rights available to a person
under any other law.
(d) The remedies provided in this section are cumulative but are
not intended to be the exclusive remedies available to a person.
Except as provided in subsection (e), a person is not required to
exhaust any administrative remedies under this article or under
any other applicable law.
(e) Before bringing an action regarding an alleged deceptive act
under this chapter, a person must:
(1) notify the homeowner protection unit established by
IC 4-6-12-2 of the alleged violation giving rise to the action;
and
(2) allow the homeowner protection unit at least ninety (90)
days to institute appropriate administrative and civil action
to redress a violation.
(f) An action under this chapter must be brought within five (5)
years after the date that the person knew, or by the exercise of
reasonable diligence should have known, of the violation of this
article.
(g) An award of damages under subsection (a) has priority over
a civil penalty imposed under this article.
Sec. 5. (a) If the creditor or an assignee establishes by a
preponderance of evidence that a violation of this article is
unintentional or the result of a bona fide error of law or fact
notwithstanding the maintenance of procedures reasonably
adopted to avoid any such violation or error, the validity of the
transaction is not affected, and no liability is imposed under section
4 of this chapter except in the case of a refusal to make a refund.
(b) Except as provided in subsection (c), a creditor in a high cost
home loan who in good faith fails to comply with this article is not
considered to have violated this article if the creditor does the
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following before receiving notice of the failure from the borrower:
(1) Not later than ninety (90) days after the date of the loan
closing:
(A) makes appropriate restitution to the borrower of any
amounts collected in error; and
(B) takes necessary action to make all appropriate
adjustments to the loan to correct the error.
(2) Not later than one hundred twenty (120) days after the
date of the loan closing, notifies the borrower of:
(A) the error; and
(B) the amount of the required restitution or adjustment.
(c) Subsection (b) does not apply unless the creditor establishes
that the compliance failure was not intentional and resulted from
a bona fide error of fact or law, notwithstanding the maintenance
of procedures reasonably adopted to avoid the errors.
Sec. 6. The rights conferred by this article are in addition to
rights granted under any other law.
Chapter 6. Reporting Requirements
Sec. 1. (a) A servicer of a high cost home loan shall report at
least once each calendar quarter to a nationally recognized
consumer credit reporting agency both the favorable and
unfavorable payment history information of the borrower on
payments due to the creditor on a high cost home loan.
(b) This section does not prohibit a servicer from agreeing with
the borrower not to report specified payment history information
in the event of a resolved or an unresolved dispute with a borrower
and does not apply to high cost home loans held or serviced by a
lender for less than ninety (90) days.
Chapter 7. State Power to Regulate Lending
Sec. 1. The state is the sole regulator of the business of
originating, granting, servicing, and collecting loans and other
forms of credit in Indiana and the manner in which the business is
conducted. This regulation preempts all other regulation of these
activities by any political subdivision.
Sec. 2. Political subdivisions may not:
(1) enact, issue, or enforce ordinances, resolutions,
regulations, orders, requests for proposals, or requests for
bids pertaining to financial or lending activities, including
ordinances, resolutions, and rules that disqualify persons
from doing business with a municipality and that are based
upon lending terms or practices; or
(2) impose reporting requirements or any other obligations
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upon persons regarding financial services or lending practices
or upon subsidiaries or affiliates that:
(A) are subject to the jurisdiction of the department of
financial institutions;
(B) are subject to the jurisdiction or regulatory supervision
of the Board of Governors of the Federal Reserve System,
the Office of the Comptroller of the Currency, the National
Credit Union Administration, the Federal Deposit
Insurance Corporation, the Federal Trade Commission, or
the United States Department of Housing and Urban
Development;
(C) are chartered by the United States Congress to engage
in secondary market mortgage transactions;
(D) are created by the Indiana housing and community
development authority; or
(E) originate, purchase, sell, assign, securitize, or service
property interests or obligations created by financial
transactions or loans made, executed, originated, or
purchased by persons referred to in clause (A), (B), (C), or
(D).
Chapter 8. Penalties and Enforcement
Sec. 1. A person who knowingly or intentionally violates this
article commits:
(1) a Class A misdemeanor; and
(2) except for a violation of IC 37-5-3-7(c)(4) by a person
required to be licensed by the department of financial
institutions, an act that is actionable by the attorney general
under IC 24-5-0.5 and is subject to the penalties listed in
IC 24-5-0.5.
Sec. 2. (a) The attorney general and the attorney general's
homeowner protection unit established under IC 4-6-12 shall
enforce this article. An action may not be brought under this
article more than five (5) years after the occurrence of the
violation.
(b) The attorney general may refer a matter under section 1 of
this chapter to a prosecuting attorney for enforcement.
Sec. 3. (a) This section does not apply to a violation of
IC 37-5-3-7(c)(4) by a person required to be licensed by the
department of financial institutions. The attorney general may
bring an action to enjoin a violation of this article. A court in which
the action is brought may:
(1) issue an injunction;
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(2) order a person to make restitution;
(3) order a person to reimburse the state for reasonable costs
of the attorney general's investigation and prosecution of the
violation of this article; and
(4) impose a civil penalty of not more than ten thousand
dollars ($10,000) per violation.
(b) A person who violates an injunction under this section is
subject to a civil penalty of not more than ten thousand dollars
($10,000) per violation.
(c) The court that issues an injunction retains jurisdiction over
a proceeding seeking the imposition of a civil penalty under this
section.
Sec. 4. The attorney general may file complaints with any of the
agencies listed in IC 4-6-12-4 to implement this chapter.
Chapter 9. Fees
Sec. 1. The county recorder shall assess a fee for each mortgage
recorded that shall be paid to the county treasurer at the end of
each calendar month as set forth in IC 36-2-7-10(c)(2).
Sec. 2. On or before June 20 and December 20 of each year,
after completing an audit of the county treasurer's monthly reports
required by IC 36-2-10-16, the county auditor shall distribute to
the state comptroller two dollars and fifty cents ($2.50) of the
mortgage recording fee collected under IC 36-2-7-10(c)(2) for each
mortgage recorded by the county recorder. The state comptroller
shall deposit the money in the state general fund to be distributed
as described in section 3 of this chapter.
Sec. 3. On or before June 30 and December 31 of each year the
state comptroller shall distribute one dollar and twenty-five cents
($1.25) of the mortgage recording fee to the state general fund and
one dollar and twenty-five cents ($1.25) of the mortgage recording
fee to the homeowner protection unit account established by
IC 4-6-12-9.
SECTION 98. [EFFECTIVE JULY 1, 2026] (a) This SECTION
applies to a person subject to:
(1) IC 24-4.4;
(2) IC 24-4.5;
(3) IC 24-5.5; or
(4) IC 24-9;
before their repeal.
(b) A person described in subsection (a) has until July 1, 2027,
to amend any document, website, or business communication to
comply with the recodification of the statutes described in
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subsection (a) in IC 37, as added by this act.
(c) This SECTION expires June 30, 2028.
SECTION 99. [EFFECTIVE JULY 1, 2026] (a) As used in the
recodification act of the 2026 regular session of the general
assembly, a reference to rules adopted under any provision of
IC 24-4.4, IC 24-4.5, IC 24-5.5, or IC 24-9 or under any other
provision of the recodification act of the 2026 regular session of the
general assembly refers to either:
(1) rules adopted under the recodification act of the 2026
regular session of the general assembly; or
(2) rules adopted under the prior law until those rules have
been amended, repealed, or superseded.
(b) Rules adopted under prior law continue in effect after June
30, 2026, until the rules are amended, repealed, or suspended.
(c) Before January 1, 2028, the department of financial
institutions and the secretary of state shall amend its rules to
comply with the changes made by this act.
(d) This SECTION expires June 30, 2028.
SEA 169 — Concur
President of the Senate
President Pro Tempore
Speaker of the House of Representatives
Governor of the State of Indiana
Date: Time:
SEA 169 — ConcurEvery fact on this page links to its source, starting with the official bill record.