2013 Indiana Code TITLE 28. FINANCIAL INSTITUTIONS ARTICLE 15. SAVINGS ASSOCIATIONS CHAPTER 11. ALTERNATIVE MORTGAGE LOANS OF SAVINGS ASSOCIATIONS
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IC 28-15-11
Chapter 11. Alternative Mortgage Loans of Savings
Associations
IC 28-15-11-1
"Adjustable mortgage loan"
Sec. 1. As used in this chapter, "adjustable mortgage loan" means
a loan:
(1) whose terms permit adjustments to the interest rate that:
(A) reflect the movement of the money cost index; and
(B) are implemented through changes in the monthly
payment amounts, adjustments to the outstanding principal
loan balance, or changes in the loan term; and
(2) whose term does not exceed forty (40) years.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-2
"Alternative mortgage loan"
Sec. 2. As used in this chapter, "alternative mortgage loan" means
a mortgage loan authorized by this chapter.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-3
"Association"
Sec. 3. As used in this chapter, "association" refers to a savings
association (as defined in IC 28-15-1-11).
As added by P.L.193-1997, SEC.2.
IC 28-15-11-4
"Federal savings association"
Sec. 4. As used in this chapter, "federal savings association"
means any federal savings association or federal savings bank
chartered or regulated under Section 5 of the Home Owners' Loan
Act of 1933 (12 U.S.C. 1464).
As added by P.L.193-1997, SEC.2. Amended by P.L.27-2012,
SEC.113.
IC 28-15-11-5
"Graduated payment mortgage loan"
Sec. 5. As used in this chapter, "graduated payment mortgage
loan" or "GPM loan" means a mortgage loan under which:
(1) the scheduled repayments begin at a level lower than that of
a comparable standard mortgage loan and rise to a point
determined by the loan documents; and
(2) the period of the rise, the rate of increase, and the interest
rate are fixed in the loan documents.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-6
"Loan documents"
Sec. 6. As used in this chapter, "loan documents" means the
documents evidencing a loan transaction.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-7
"Money cost index"
Sec. 7. As used in this chapter, "money cost index" means any of
the following:
(1) The Federal Cost of Funds Index calculated and made
available by the Federal Home Loan Mortgage Corporation on
or about the twentieth day of each month.
(2) The monthly average of weekly auction rates on United
States Treasury bills with a maturity of three (3) months or six
(6) months, as published in the Federal Reserve Bulletin and
made available by the Federal Reserve Board each month.
(3) The monthly average yield on United States Treasury
securities adjusted to a constant maturity of one (1), two (2),
three (3), or five (5) years, as published in the Federal Reserve
Bulletin and made available by the Federal Reserve Board each
month.
(4) Any rate that is designated by the department.
As added by P.L.193-1997, SEC.2. Amended by P.L.89-2011,
SEC.74; P.L.27-2012, SEC.114.
IC 28-15-11-8
"Mortgage loan"
Sec. 8. As used in this chapter, "mortgage loan" means:
(1) a loan:
(A) secured by a mortgage on real estate that is improved by
a dwelling intended for occupancy by at least one (1) and not
more than four (4) families; and
(B) that includes:
(i) the note;
(ii) the mortgage; and
(iii) any other documents constituting the loan transaction;
or
(2) a loan:
(A) secured by a mortgage on real estate that is improved by
a combination home and business building; and
(B) that includes:
(i) the note;
(ii) the mortgage; and
(iii) any other documents constituting the loan transaction.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-9
"Reverse annuity mortgage loan" or "RAM loan"
Sec. 9. As used in this chapter, "reverse annuity mortgage loan"
or "RAM loan" means a mortgage loan that:
(1) provides periodic payments to the borrower based on the
accumulated equity in the real estate securing the loan, with
payments made directly by the lender or through the purchase
of an annuity from an insurance company; and
(2) becomes due either:
(A) at a specified date; or
(B) on the occurrence of a specified event, such as a sale of
the real estate securing the loan or the death of the borrower.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-10
"Rollover mortgage"
Sec. 10. As used in this chapter, "rollover mortgage" means a
mortgage loan that:
(1) is secured by a first mortgage on real estate improved by:
(A) a dwelling intended for occupancy by at least one (1)
and not more than four (4) families; or
(B) a combination home and business building; and
(2) may be subject to rate adjustments at regularly scheduled
times.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-11
"Standard mortgage loan"
Sec. 11. As used in this chapter, "standard mortgage loan" means
a loan under which the principal and interest are paid in equal
monthly installments for a period of not more than forty (40) years.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-12
Regulation of graduated payment mortgage loans
Sec. 12. (a) Graduated payment mortgage (GPM) loans are subject
to the following:
(1) Interest only may be paid for five (5) years, or increases in
mortgage payments may be made for periods of not more than
ten (10) years within the following maximum rates of increase:
(A) Seven and one-half percent (7.5%) annually for five (5)
years or less.
(B) Six and one-half percent (6.5%) annually for six (6)
years.
(C) Five and one-half percent (5.5%) annually for seven (7)
years.
(D) Four and one-half percent (4.5%) annually for eight (8)
years.
(E) Three and one-half percent (3.5%) annually for nine (9)
years.
(F) Three percent (3%) annually for ten (10) years.
(2) Payment amounts may be changed annually only after one
(1) year following the first regular loan payment.
(b) The borrower may convert a GPM loan into a standard
mortgage loan with the same interest rate and maturity if the
borrower is qualified under the normal underwriting standards of the
savings association. A savings association may not assess penalties
for any conversion.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-13
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 28-15-11-14
Regulation of adjustable mortgage loans
Sec. 14. Adjustable mortgage loans are subject to the following:
(1) Adjustments to the principal loan balance are permissible
only if:
(A) the initial payment amount is sufficient to fully amortize
the loan at the beginning of the loan term; and
(B) the payment amount is adjusted at least every five (5)
years to amortize the loan at the current interest rate and
principal loan balance over the remaining term of the loan.
(2) Prepayment in full or in part shall be allowed without
penalty.
(3) Adjustments to the interest rate must correspond directly to
the movement of the money cost index, subject to such
rate-adjustment limitations, if any, as a savings association may
provide. For the purposes of this subdivision:
(A) the initial money cost index value is the value of the
money cost index most recently available within six (6)
months before the date of the closing of the loan; and
(B) the interest rate at adjustment shall reflect the difference,
in reference to the interest rate of the loan on the date of
closing, between the initial money cost index value and
either:
(i) the money cost index value most recently available as
of the date of rate adjustment, if the payment is not
simultaneously adjusted; or
(ii) the money cost index value most recently available as
of the date of notification of a payment adjustment.
However, when the movement of the money cost index permits
an interest rate increase, the savings association may decline to
increase the interest rate by the indicated amount. The savings
association may decrease the interest rate at any time.
(4) The borrower may not be charged any costs or fees in
connection with regularly scheduled adjustments to:
(A) the interest rate;
(B) the payment;
(C) the outstanding principal loan balance; or
(D) the loan term.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-15
Restrictions on graduated payment adjustable mortgage loans
Sec. 15. A savings association may make graduated payment
adjustable mortgage loans subject to the requirements set forth in
section 14 of this chapter, except that:
(1) the amount of the scheduled monthly payment at the
beginning of the loan may be insufficient to fully amortize the
loan; and
(2) during a period of not more than ten (10) years beginning
with the closing date of the loan, the scheduled payments must
rise sufficiently to amortize the loan at the then existing interest
rate and principal balance over the then remaining loan term,
and thereafter the monthly payments must be adjusted every
five (5) years to a level sufficient to fully amortize the loan.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-16
Regulation of rollover mortgage loans
Sec. 16. Rollover mortgage loans are subject to the following:
(1) At each scheduled adjustment time, if the loan is not in
default, the lender shall make rate adjustments available for the
amount of the outstanding loan.
(2) In adjusting the loan, administrative expenses may not be
charged to the borrower.
(3) Adjustments must be at least one (1) year apart.
(4) The lender may not charge a penalty or other assessment for
the prepayment of the loan.
(5) The lender and the borrower may agree to increase or
decrease the interest rate applicable to the outstanding balance
of the loan at each adjustment.
(6) The lender may grant the borrower the option of extending
the amortization period for purposes of calculating monthly
payments on the loan in accordance with the following rules:
(A) The extension of the amortization period may equal up
to one-third (1/3) of the original amortization period,
regardless of whether this extends the amortization period
beyond thirty (30) years.
(B) To the extent of any extension of the amortization
period, the amortization period will be reduced upon a
subsequent downward adjustment in the interest rate.
As added by P.L.193-1997, SEC.2.
IC 28-15-11-17
Alternative mortgage loans; required disclosures
Sec. 17. (a) Any statement, disclosure, or notification required by
this chapter with respect to an alternative mortgage loan may be
made in the form prescribed by the primary federal regulator or its
successor for a similar alternative mortgage loan made by a federal
savings association.
(b) In addition to the disclosures required by this chapter, the
department may adopt rules under IC 4-22-2, including emergency
rules under IC 4-22-2-37.1, or policies that require additional
disclosures for alternative mortgage loans.
As added by P.L.193-1997, SEC.2. Amended by P.L.27-2012,
SEC.115; P.L.140-2013, SEC.20.
IC 28-15-11-18
Inapplicability of Indiana laws; interest added to principal; lien
provided by mortgage
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 to a loan
described in subsection (a), "principal" (as defined in
IC 24-4.5-3-107(3)) 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.
As added by P.L.193-1997, SEC.2. Amended by P.L.27-2012,
SEC.116.
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