2016 Indiana Code TITLE 24. TRADE REGULATION ARTICLE 4.4. FIRST LIEN MORTGAGE LENDING CHAPTER 2. MISCELLANEOUS
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IC 24-4.4-2
Chapter 2. Miscellaneous
IC 24-4.4-2-101
Short title
Sec. 101. This chapter shall be known and may be cited as the
First Lien Mortgage Lending Act - Miscellaneous.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-201
Duty to provide payoff amount; liability for failure to provide;
prepayment penalty prohibited for adjustable rate mortgages;
short sales; foreclosed property; no protection from deficiency
judgment
Sec. 201. (1) 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:
(a) 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
(b) the greater of:
(i) one hundred dollars ($100); or
(ii) 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 (a).
(2) This subsection applies to a first lien mortgage transaction, or
the refinancing or consolidation of a first lien mortgage transaction,
that:
(a) is closed after June 30, 2009; and
(b) has an interest rate that is subject to change at one (1) or
more times during the term of the first lien mortgage
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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.
(3) 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 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:
(a) the following statement: "The debtor remains liable for any
amount still owed under the first lien mortgage transaction."; or
(b) a statement substantially similar to the statement set forth in
subdivision (a);
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.
(4) 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
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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)).
As added by P.L.145-2008, SEC.20. Amended by P.L.52-2009,
SEC.1; P.L.35-2010, SEC.10; P.L.89-2011, SEC.5; P.L.27-2012,
SEC.6; P.L.54-2016, SEC.1; P.L.73-2016, SEC.3.
IC 24-4.4-2-202
Federal disclosure requirements; creditor's duty to comply;
exempt transactions
Sec. 202. (1) The creditor shall comply with disclosure
requirements applicable to first lien mortgage transactions in the
federal Consumer Credit Protection Act (15 U.S.C. 1601 et seq.).
(2) For purposes of subsection (1), disclosures are not required if
the transaction is exempt from the federal Consumer Credit
Protection Act (15 U.S.C. 1601 et seq.).
As added by P.L.89-2011, SEC.6.
IC 24-4.4-2-301
Violation of state or federal law, regulation, or rule; enforcement
Sec. 301. (1) A violation of a state or federal law, regulation, or
rule applicable to first lien mortgage transactions is a violation of this
article.
(2) 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.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-401
License required; registration with NMLSR; licensed mortgage
loan originators; loan processor or underwriting activities;
applications for licensure; director's authority to contract with
NMLSR
Sec. 401. (1) Unless a person subject to this article has first
obtained a license under this article 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 license
under this article is required for each legal entity that engages in
Indiana as a creditor in first lien mortgage transactions. However, a
separate license under this article is not required for each branch of
a legal entity licensed under this article.
(2) Each:
(a) creditor licensed under this article; and
(b) entity exempt from licensing under this article that:
(i) employs a licensed mortgage loan originator; or
(ii) sponsors under an exclusive written agreement, as
permitted by IC 24-4.4-1-202(b)(6)(a), a licensed mortgage
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loan originator as an independent agent;
shall register with and maintain a valid unique identifier issued by
the NMLSR. Each licensed mortgage loan originator must be
employed by, or sponsored under an exclusive written agreement (as
permitted by IC 24-4.4-1-202(b)(6)(a)) and as an independent agent,
and associated with, a licensed creditor, or an entity exempt from
licensing under this article, in the NMLSR in order to originate
loans.
(3) 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.
(4) Applicants for a license under this article must apply for the
license in the form prescribed by the director. Each form:
(a) must contain content as set forth by rule, instruction, or
procedure of the director; and
(b) may be changed or updated as necessary by the director to
carry out the purposes of this article.
(5) 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:
(a) collect and maintain records; and
(b) process transaction fees or other fees related to licensees or
other persons subject to this article.
(6) For the purpose of participating in the NMLSR, the director
or the department may:
(a) waive or modify, in whole or in part, by rule or order, any of
the requirements of this article; and
(b) establish new requirements as reasonably necessary to
participate in the NMLSR.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.11; P.L.89-2011, SEC.7; P.L.103-2014, SEC.2.
IC 24-4.4-2-402
Applications for licenses; issuance; evidence of compliance; use of
NMLSR; denial of application; right to hearing; fees; license not
assignable or transferable
Sec. 402. (1) 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:
(a) an application filed under this section; or
(b) a renewal application filed under section 403 of this chapter;
is or becomes inaccurate or incomplete in a material respect, the
applicant shall promptly file a correcting amendment with the
department.
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(2) A license may not be issued unless the department finds that
the professional training and experience, financial responsibility,
character, and fitness of:
(a) the applicant and any significant affiliate of the applicant;
(b) 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
(c) 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.
(3) The director is entitled to request evidence of compliance with
this section at:
(a) the time of application;
(b) the time of renewal of a license; or
(c) any other time considered necessary by the director.
(4) Evidence of compliance with this section must include:
(a) criminal background checks, as described in section 402.1
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 (2);
(b) credit histories as described in section 402.2 of this chapter;
(c) surety bond requirements as described in section 402.3 of
this chapter;
(d) a review of licensure actions in Indiana and in other states;
and
(e) other background checks considered necessary by the
director.
(5) 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.
(6) 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.
(7) 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.
(8) The applicant shall pay the following fees at the time
designated by the department:
(a) An initial license fee as established by the department under
IC 28-11-3-5.
(b) An annual renewal fee as established by the department
under IC 28-11-3-5.
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(c) Examination fees as established by the department under
IC 28-11-3-5.
(9) A fee as established by the department under IC 28-11-3-5
may be charged for each day a fee under subsection 8(b) or 8(c) is
delinquent.
(10) Except in a transaction approved under section 406 of this
chapter, a license issued under this section is not assignable or
transferable.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.12; P.L.89-2011, SEC.8; P.L.27-2012, SEC.7.
IC 24-4.4-2-402.1
National criminal history background check; fingerprints;
payment of fees or costs; use of NMLSR
Sec. 402.1. (1) When the director requests a national criminal
history background check under section 402(4)(a) of this chapter for
an individual described in section 402(2) 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 402(3) 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.
(2) 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.
As added by P.L.35-2010, SEC.13.
IC 24-4.4-2-402.2
Credit reports; payment of fees or costs; demonstrated financial
responsibility; considerations
Sec. 402.2. (1) If the director requests a credit report for an
individual described in section 402(2) of this chapter, the individual
to whom the request is made shall pay any fees or costs associated
with procuring the report.
(2) 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)).
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(3) The director may consider one (1) or more of the following
when determining if an individual has demonstrated financial
responsibility:
(a) Bankruptcies filed within the last ten (10) years.
(b) Current outstanding judgments, except judgments solely as
a result of medical expenses.
(c) Current outstanding tax liens or other government liens or
filings.
(d) Foreclosures within the past three (3) years.
(e) A pattern of serious delinquent accounts within the past
three (3) years.
As added by P.L.35-2010, SEC.14.
IC 24-4.4-2-402.3
Surety bond; requirements; amount; termination; liability; notices
Sec. 402.3. (1) Each:
(a) creditor; and
(b) person exempt from licensing under this article that:
(i) employs a licensed mortgage loan originator; or
(ii) sponsors under an exclusive written agreement, as
permitted by IC 24-4.4-1-202(b)(6)(a), a licensed mortgage
loan originator as an independent agent;
must be covered by a surety bond in accordance with this section.
(2) A surety bond must:
(a) provide coverage for:
(i) a creditor; or
(ii) a person exempt from licensing under this article that
employs a licensed mortgage loan originator, or that
sponsors under an exclusive written agreement (as permitted
by IC 24-4.4-1-202(b)(6)(a)) a licensed mortgage loan
originator as an independent agent;
in an amount as prescribed in subsection (4);
(b) be in a form prescribed by the director;
(c) be in effect:
(i) during the term of the creditor's license under this
chapter; or
(ii) at any time during which the person exempt from
licensing under this article employs a licensed mortgage loan
originator or sponsors under an exclusive written agreement
(as permitted by IC 24-4.4-1-202(b)(6)(a)) a licensed
mortgage loan originator as an independent agent;
as applicable;
(d) remain in effect during the two (2) years after:
(i) the creditor ceases offering financial services to
individuals in Indiana; or
(ii) the person exempt from licensing under this article
ceases to employ a licensed mortgage loan originator, or
ceases to sponsor under an exclusive written agreement (as
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permitted by IC 24-4.4-1-202(b)(6)(a)) a licensed mortgage
loan originator as an independent agent, or to offer financial
services to individuals in Indiana, whichever is later;
as applicable;
(e) be payable to the department for the benefit of:
(i) the state; and
(ii) individuals who reside in Indiana when they agree to
receive financial services from the creditor or the person
exempt from licensing under this article, as applicable;
(f) 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
(g) have payment conditioned upon:
(i) the creditor's or any of the creditor's licensed mortgage
loan originators'; or
(ii) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(8) 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
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carrier.
As added by P.L.35-2010, SEC.15. Amended by P.L.216-2013,
SEC.3; P.L.137-2014, SEC.4; P.L.103-2014, SEC.3; P.L.5-2015,
SEC.53.
IC 24-4.4-2-402.4
Use of NMLSR in department's licensing system; reporting of
information to NMLSR; confidentiality; director's authority to
enter agreements; waiver of privilege; processing fee; electronic
records
Sec. 402.4. (1) Subject to subsection (6), the director shall
designate the NMLSR to serve as the sole entity responsible for:
(a) processing applications and renewals for licenses under this
article;
(b) issuing unique identifiers for licensees and entities exempt
from licensing under this article that employ a licensed
mortgage loan originator under this article; and
(c) performing other services that the director determines are
necessary for the orderly administration of the department's
licensing system under this article.
(2) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director shall regularly
report significant or recurring violations of this article to the
NMLSR.
(3) 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 under this article to the
NMLSR.
(4) The director may report publicly adjudicated licensure actions
against a licensee to the NMLSR.
(5) The director shall establish a process in which licensees may
challenge information reported to the NMLSR by the department.
(6) The director's authority to designate the NMLSR under
subsection (1) is subject to the following:
(a) 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:
(i) obtain information from the NMLSR, unless the person
is authorized to do so by statute;
(ii) 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
(iii) 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.
(b) Documents, materials, and other forms of information in the
control or possession of the NMLSR that are confidential under
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IC 28-1-2-30 and that are:
(i) furnished by the director, the director's designee, or a
licensee; or
(ii) 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.
(c) Disclosure of documents, materials, and information:
(i) to the director; or
(ii) 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.
(d) Information provided to the NMLSR is subject to IC 4-1-11.
(e) This subsection does not limit or impair a person's right to:
(i) obtain information;
(ii) use information as evidence in a civil action or
proceeding; or
(iii) 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.
(f) 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.
(g) 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.
(h) Information or material that is subject to a privilege or
confidentiality under subdivision (f) is not subject to:
(i) disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or
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an agency of the federal government or the respective state;
or
(ii) 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.
(i) Any provision of IC 5-14-3 that concerns the disclosure of:
(i) confidential supervisory information; or
(ii) any information or material described in subdivision (f);
and that is inconsistent with subdivision (f) is superseded by
this section.
(j) 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 402(2) of this chapter and that is
included in the NMLSR for access by the public.
(k) 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:
(i) require review of; and
(ii) make available;
the audited financial statements of the NMLSR.
(7) Notwithstanding any other provision of law, any:
(a) application, renewal, or other form or document that:
(i) relates to licenses issued under this article; and
(ii) is made or produced in an electronic format;
(b) 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
(c) electronic record filed through the NMLSR;
is considered a valid original document when reproduced in paper
form by the department.
As added by P.L.35-2010, SEC.16. Amended by P.L.27-2012, SEC.8.
IC 24-4.4-2-403
License renewal; revocation or suspension of license not renewed;
reinstatement or appeal; correcting amendments
Sec. 403. (1) A license issued under this article 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:
(a) The creditor has continued to meet the surety bond
requirement under section 402.3 of this chapter.
(b) The creditor has filed the creditor's call report in a manner
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that satisfies section 405(4) of this chapter.
(c) The creditor has paid all required fees for renewal of the
license.
(d) The creditor and individuals described in section 402(2) of
this chapter have certified to the department that they continue
to meet all the standards for licensing contained in section 402
of this chapter.
(e) The creditor has provided in the creditor's renewal
application:
(i) 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
(ii) any other information the director requires in order to
evaluate the renewal of the license issued under this article.
(2) 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:
(a) file any renewal form required by the department; or
(b) pay any license renewal fee described under section 402 of
this chapter;
not later than sixty (60) days after the due date.
(3) A person whose license is revoked or suspended under this
section may do either of the following:
(a) Pay all delinquent fees and apply for reinstatement of the
license.
(b) 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.
(4) If, at any time, the information or record contained in:
(a) an original application for licensure filed under section 402
of this chapter; or
(b) 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.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.17; P.L.27-2012, SEC.9.
IC 24-4.4-2-404
Suspension or revocation of license as creditor; order to show
cause; order of suspension or revocation; relinquishment of
license; preexisting contracts; emergency order for revocation
Sec. 404. (1) The department may issue to a person licensed as a
creditor to engage in first lien mortgage transactions an order to show
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cause why the person's license should not be revoked or suspended
for a period determined by the department.
(2) An order issued under subsection (1) must:
(a) include:
(i) 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;
(ii) a description of the action contemplated by the
department; and
(iii) a statement of the facts or conduct supporting the
issuance of the order; and
(b) be accompanied by a notice stating that the licensee is
entitled to:
(i) a reasonable opportunity to be heard; and
(ii) show the licensee's compliance with all lawful
requirements for retention of the license;
at the meeting described in subdivision (a)(i).
(3) After the meeting described in subsection (2)(a)(i), the
department may revoke or suspend the license if the department finds
that:
(a) the licensee has repeatedly and willfully violated:
(i) this article or any applicable rule, order, or guidance
document adopted or issued by the department; or
(ii) any other state or federal law, regulation, or rule
applicable to first lien mortgage transactions;
(b) the licensee does not meet the licensing qualifications
contained in section 402 of this chapter;
(c) the licensee obtained the license for the benefit of, or on
behalf of, another person;
(d) the licensee knowingly or intentionally made material
misrepresentations to, or concealed material information from,
the department; or
(e) 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.
(4) Whenever the department revokes or suspends a license, the
department shall enter an order to that effect and notify the licensee
of:
(a) the revocation or suspension;
(b) if a suspension has been ordered, the duration of the
suspension;
(c) the procedure for appealing the revocation or suspension
under IC 4-21.5-3-6; and
(d) 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.
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(5) 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.
(6) 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 (5).
(7) 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.
(8) 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.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.18; P.L.27-2012, SEC.10; P.L.186-2015, SEC.8.
IC 24-4.4-2-404.1
Violations by individuals; persons convicted of felonies; civil
penalties; creditor's duty to notify department of discharge or
termination
Sec. 404.1. (1) If the director determines that a director, an
officer, or an employee of a creditor:
(a) 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;
(b) has committed fraudulent or unconscionable conduct; or
(c) has been convicted of a felony under the laws of Indiana or
any other jurisdiction;
the director, subject to subsection (2), may issue and serve upon the
officer, director, or employee a notice of the director's intent to issue
an order removing the person from the person's office or
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.
(2) A violation, practice, or breach specified in subsection (1) is
subject to the authority of the director under subsection (1) if the
director finds any of the following:
(a) The interests of the creditor's customers could be seriously
prejudiced by reason of the violation or practice.
(b) The violation, practice, or breach involves personal
dishonesty on the part of the officer, director, or employee
involved.
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(c) The violation, practice, or breach demonstrates a willful or
continuing disregard by the officer, director, or employee for
state and federal laws and regulations, and for the consumer
protections contained in this article.
(3) 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 an employee of a creditor, or serve in any similar
capacity, unless the person obtains the written consent of the
director.
(4) A creditor that willfully permits a person to serve the creditor
in violation of subsection (3) is subject to a civil penalty of five
hundred dollars ($500) for each day the violation continues.
(5) 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:
(a) violating this article or other laws, regulations, rules, or
industry standards of conduct applicable to first lien mortgage
transactions; or
(b) fraud, dishonesty, theft, 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.
As added by P.L.35-2010, SEC.19. Amended by P.L.27-2012,
SEC.11.
IC 24-4.4-2-404.2
Director's notice of intent to issue order; contents; hearing; final
order; suspension or prohibition pending final order; official
record
Sec. 404.2. (1) A notice issued under this chapter must:
(a) be in writing;
(b) contain a statement of the facts constituting the alleged
practice, violation, or breach;
(c) state the facts alleged in support of the violation, practice, or
breach;
(d) state the director's intention to enter an order under section
404.4(1) of this chapter;
(e) be delivered to the board of directors of the creditor;
(f) be delivered to the officer, director, or employee concerned;
(g) specify the procedures that must be followed to initiate a
hearing to contest the facts alleged; and
(h) if the director suspends or prohibits an officer, a director, or
an employee of the creditor from participating in the affairs of
the creditor, as described in subsection (5), include a statement
of the suspension or prohibition.
(2) If a hearing is requested not later than ten (10) days after
service of the written notice, the department shall hold a hearing
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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 404.4 of this chapter.
(3) If no hearing is requested within the time specified in
subsection (2), the director may proceed to issue a final order under
section 404.4 of this chapter on the basis of the facts set forth in the
written notice.
(4) An officer, director, or employee 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 licensee under this
article without the approval of the director.
(5) 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 an
employee of a creditor who is the subject of a written notice served
by the director under section 404.1(1) of this chapter. A suspension
or prohibition under this subsection becomes effective upon service
of the notice under section 404.1(1) of this chapter. Unless stayed by
a court in a proceeding authorized by subsection (6), the suspension
or prohibition remains in effect pending completion of the
proceedings related to the notice served under section 404.1(1) of
this chapter and until the effective date of an order entered by the
department under subsection (2) or the director under subsection (3).
Copies of the notice shall also be served upon the creditor or affiliate
of which the person is an officer, a director, or an employee.
(6) Not more than fifteen (15) days after an officer, a director, or
an employee has been suspended from office or prohibited from
participation in the conduct of the affairs of the creditor or affiliate
under subsection (5), the officer, director, or employee 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 404.1(1) of this chapter, and the court may stay
the suspension or prohibition.
(7) The department shall maintain an official record of a
proceeding under this chapter.
As added by P.L.35-2010, SEC.20.
IC 24-4.4-2-404.3
Consent agreement; notice of charges not required
Sec. 404.3. If the director enters into a consent to a final order
under section 404.4 of this chapter with a creditor, a director, an
officer, or an employee, the director is not required to issue and serve
a notice of charges upon the creditor, director, or officer under
section 404.1 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.
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As added by P.L.35-2010, SEC.21.
IC 24-4.4-2-404.4
Final order; remedies; consent presumed
Sec. 404.4. (1) If, after a hearing described in section 404.2(2) of
this chapter, the department finds that the conditions specified in
section 404.1 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 404.2(2) 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 404.1(1) of this chapter.
(2) Unless the director has entered into a consent agreement
described in section 404.3 of this chapter, a final order must include
separately stated findings of fact and conclusions of law for all
aspects of the order.
(3) 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 an employee of a creditor:
(a) The removal of the officer, director, or employee from the
person's office, position, or employment.
(b) A prohibition against any participation by the officer,
director, or employee in the conduct of the affairs of any
creditor.
(c) If the subject of the order is an officer or a director of a
creditor, and subject to section 404.6 of this chapter, the
imposition of a civil penalty not to exceed fifteen thousand
dollars ($15,000) for each practice, violation, or act that:
(i) is described in section 404.1 of this chapter; and
(ii) is found to exist by the department or the director.
(4) A final order shall be issued in writing not later than ninety
(90) days after conclusion of a hearing held under section 404.2(2)
of this chapter, unless this period is waived or extended with the
written consent of all parties or for good cause shown.
(5) If the officer, director, or employee does not appear
individually or by an authorized representative at a hearing held
under section 404.2(2) of this chapter, the officer, director, or
employee is considered to have consented to the issuance of a final
order.
(6) The remedies provided in this chapter are in addition to other
remedies contained in this article.
As added by P.L.35-2010, SEC.22.
IC 24-4.4-2-404.5
Final order; effective date; authority of department or court to
stay, modify, or vacate
Sec. 404.5. (1) 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 404.3 of this chapter is effective
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at the time specified in the order.
(2) A final order remains effective and enforceable as provided in
the order.
(3) The department or a reviewing court may stay, modify, or
vacate a final order.
As added by P.L.35-2010, SEC.23.
IC 24-4.4-2-404.6
Factors for determining amount of civil penalty; indemnification
by creditor prohibited; deposit of civil penalties in financial
institutions fund
Sec. 404.6. (1) 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 404.4(3)(c) of this chapter:
(a) The appropriateness of the civil penalty with respect to the
financial resources and good faith of the individual charged.
(b) The gravity of the practice, violation, or act.
(c) The history of previous practices, violations, or acts.
(d) The economic benefit derived by the individual from the
practice, violation, or act.
(e) Other factors that justice requires.
(2) A creditor may not indemnify a director or an officer for a
civil penalty imposed in a final order under section 404.4(3)(c) of
this chapter.
(3) Civil penalties shall be deposited in the financial institutions
fund established by IC 28-11-2-9.
As added by P.L.35-2010, SEC.24.
IC 24-4.4-2-404.7
Authority of director to enforce orders, agreements, or conditions
in court
Sec. 404.7. The director may enforce any of the following by
applying for appropriate relief to a court having jurisdiction:
(a) An order issued under this chapter.
(b) A written agreement entered into by the department or the
director and any director, officer, or employee of a creditor.
(c) Any condition imposed in writing by the department or the
director on any director, officer, or employee of a creditor.
As added by P.L.35-2010, SEC.25.
IC 24-4.4-2-405
Record keeping; use of unique identifier on forms and documents;
use of examination and regulatory software; reports of condition
to NMLSR; financial statements; notice to department of certain
events or changes
Sec. 405. (1) Every licensee shall maintain records in a manner
that will enable the department to determine whether the licensee is
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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
federal savings bank that voluntarily registers with the department
under IC 24-4.4-1-202(b)(6)(a) for the purpose of sponsoring, under
an exclusive written agreement, licensed mortgage loan originators
as independent agents shall:
(a) cooperate with the department; and
(b) 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
federal savings bank.
(2) 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.
(3) 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.
(4) Each:
(a) creditor licensed by the department under this article; and
(b) entity that is exempt from licensing under this article and
that:
(i) employs one (1) or more licensed mortgage loan
originators; or
(ii) sponsors under an exclusive written agreement, as
permitted by IC 24-4.4-1-202(b)(6)(a), one (1) or more
licensed mortgage originators as independent agents;
shall submit to the NMLSR reports of condition, which must be in a
form and must contain information as required by the NMLSR.
(5) Each:
(a) creditor licensed by the department under this article; and
(b) entity exempt from licensing under this article that:
(i) employs one (1) or more licensed mortgage loan
originators; or
(ii) sponsors under an exclusive written agreement, as
permitted by IC 24-4.4-1-202(b)(6)(a), one (1) or more
licensed mortgage loan originators as independent agents;
shall file with the department additional financial statements relating
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to all first lien mortgage transactions originated by the licensed
creditor or the exempt entity as required by the department, but not
more frequently than annually, in the form prescribed by the
department.
(6) A licensed creditor shall file notification with the department
if the licensee:
(a) has a change in name, address, or any of its principals;
(b) opens a new branch, closes an existing branch, or relocates
an existing branch;
(c) files for bankruptcy or reorganization; or
(d) 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.
(7) 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.
(8) 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.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.26; P.L.27-2012, SEC.12; P.L.103-2014, SEC.4.
IC 24-4.4-2-406
Change in control of creditor; application to department;
timeframe for department's decision; conditions for approval;
creditor's duty to report transfer of securities; director's discretion
to require new license
Sec. 406. (1) As used in this section, "control" means possession
of the power directly or indirectly to:
(a) 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
(b) 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.
(2) An organization or an individual acting directly, indirectly, or
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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.
(3) The period for approval under subsection (2) may be
extended:
(a) in the discretion of the director for an additional thirty (30)
days; and
(b) not more than two (2) additional times for not more than
forty-five (45) days each time if:
(i) 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 (4);
(ii) the director determines that any material information
submitted is substantially inaccurate; or
(iii) 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.
(4) The department shall issue a notice approving the application
only after it is satisfied that both of the following apply:
(a) 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.
(b) 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.
(5) The director may determine, in the director's discretion, that
subsection (2) 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.
(6) 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.
(7) Depending on the circumstances of the transaction, the
director may reserve the right to require the organization, individual,
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or individuals who propose to acquire control of a creditor licensed
under this article to apply for a new license under section 401 of this
chapter, instead of acquiring control of the licensee under this
section.
As added by P.L.89-2011, SEC.9. Amended by P.L.6-2012, SEC.165.
IC 24-4.4-2-501
Creditor's duty to comply with closing requirements
Sec. 501. A creditor in a first lien mortgage transaction shall
comply with IC 6-1.1-12-43, to the extent applicable.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-502
Debtor's right to rescind; accruing interest prohibited during
rescission period; disbursement of proceeds
Sec. 502. (1) A violation by a creditor in a first lien mortgage
transaction of Section 125 of the Federal 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 Federal
Consumer Credit Protection Act (15 U.S.C. 1635).
(2) A creditor must make available for disbursement the proceeds
of a transaction subject to subsection (1) on the later of:
(a) the date the creditor is reasonably satisfied that the debtor
has not rescinded the transaction; or
(b) the first business day after the expiration of the rescission
period under subsection (1).
As added by P.L.145-2008, SEC.20. Amended by P.L.1-2009,
SEC.135.
IC 24-4.4-2-503
Reverse mortgages; pamphlet; counseling required for debtor
Sec. 503. 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 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.
As added by P.L.35-2010, SEC.27.
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