CHAPTER 1. GENERAL PROVISIONS AND DEFINITIONS
IC 24-4.4
ARTICLE 4.4. FIRST LIEN MORTGAGE LENDING
IC 24-4.4-1
Chapter 1. General Provisions and Definitions
IC 24-4.4-1-101
Short title; rules concerning licensing system for creditors andmortgage loan originators
Sec. 101. (a) This article shall be known and may be cited as theFirst Lien Mortgage Lending Act.
(b) Notwithstanding any other provision of this article orIC 24-4.5, the department may adopt emergency rules underIC 4-22-2-37.1, to remain effective until codified in the IndianaCode, in order to provide for a system of licensing creditors andmortgage loan originators that meets the requirements of the Secureand Fair Enforcement for Mortgage Licensing Act of 2008 (H.R.3221 Title V) and the interpretations of that Act issued by theSecretary of Housing and Urban Development.
As added by P.L.145-2008, SEC.20. Amended by P.L.182-2009(ss),SEC.369.
IC 24-4.4-1-102
Purposes; rules of construction
Sec. 102. (1) This article shall be liberally construed and appliedto promote its underlying purposes and policies.
(2) The underlying purposes and policies of this article are:
(a) to permit and encourage the development of fair andeconomically sound first lien mortgage lending practices; and
(b) to conform the regulation of first lien mortgage lendingpractices to applicable state and federal laws, rules, andregulations.
(3) A reference to a requirement imposed by this article includesreference to a related rule of the department adopted under thisarticle.
(4) A reference to a federal law in this article is a reference to thelaw in effect December 31, 2009.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,SEC.5.
IC 24-4.4-1-103
Unified coverage of subject matter; construction against impliedrepeal
Sec. 103. This article:
(1) is a general act intended as a unified coverage of its subjectmatter; and
(2) any part of this article may not be considered to be impliedlyrepealed by subsequent legislation if such construction canreasonably be avoided.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-1-104
Severability
Sec. 104. The provisions of this article are severable, so that if:
(1) any provisions of this article; or
(2) the application of this article to any person orcircumstances;
is held invalid, the invalidity does not affect other provisions orapplications of this article that can be given effect without the invalidprovision or application.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-1-201
Application; nonresident debtor
Sec. 201. (1) Except as provided in subsection (2), this articleapplies to a first lien mortgage transaction:
(a) that is secured by an interest in land in Indiana; and
(b) the closing for which takes place after December 31, 2008.
(2) This article does not apply to a first lien mortgage transactionif:
(a) the debtor is not a resident of Indiana at the time thetransaction is entered into; and
(b) the laws of the debtor's state of residence require that thetransaction be made under the laws of the state of the debtor'sresidence.
As added by P.L.145-2008, SEC.20. Amended by P.L.1-2009,SEC.134.
IC 24-4.4-1-202
Exempt transactions
Sec. 202. This article does not apply to the following:
(1) Extensions of credit to government or governmentalagencies or instrumentalities.
(2) A first lien mortgage transaction in which the debt isincurred primarily for a purpose other than a personal, family,or household purpose.
(3) An extension of credit primarily for a business, acommercial, or an agricultural purpose.
(4) Except for IC 24-4.4-2-401(2), IC 24-4.4-2-402.3,IC 24-4.4-2-405(4), and IC 24-4.4-2-405(5), a first lienmortgage transaction made:
(a) in compliance with the requirements of; and
(b) by a community development corporation (as defined inIC 4-4-28-2) acting as a subrecipient of funds from;
the Indiana housing and community development authorityestablished by IC 5-20-1-3.
(5) Except for IC 24-4.4-2-401(2), IC 24-4.4-2-402.3,IC 24-4.4-2-405(4), and IC 24-4.4-2-405(5), a first lienmortgage transaction made by an entity that exclusively usesfunds provided by the United States Department of Housing andUrban Development under Title 1 of the federal Housing and
Community Development Act of 1974, Public Law 93-383, asamended (42 U.S.C. 5301 et seq.).
(6) An extension of credit originated by:
(a) a depository institution;
(b) subsidiaries that are:
(i) owned and controlled by a depository institution; and
(ii) regulated by a federal banking agency; or
(c) an institution regulated by the Farm CreditAdministration.
(7) Except for IC 24-4.4-2-401(2), IC 24-4.4-2-402.3,IC 24-4.4-2-405(4), and IC 24-4.4-2-405(5), a credit unionservice organization that is majority owned, directly orindirectly, by one (1) or more credit unions.
(8) A first lien mortgage transaction originated by a registeredmortgage loan originator, when acting for an entity described insubsection (6). However, a privately insured state charteredcredit union shall comply with the system of mortgage loanoriginator registration developed by the Federal FinancialInstitutions Examinations Council under Section 1507 of thefederal Safe and Fair Enforcement for Mortgage Licensing Actof 2008 (SAFE).
(9) An individual who offers or negotiates terms of a mortgagetransaction with or on behalf of an immediate family memberof the individual.
(10) An individual who offers or negotiates terms of a mortgagetransaction secured by a dwelling that served as the individual'sresidence.
(11) 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 othermortgage loan originator described in clauses (a) through(c);
a licensed attorney who negotiates the terms of a mortgagetransaction on behalf of a client as an ancillary matter to theattorney's representation of the client.
(12) Agencies, instrumentalities, and government ownedcorporations of the United States, including United Statesgovernment sponsored enterprises.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,SEC.6.
IC 24-4.4-1-202.5
Persons also engaging in loan brokerage business; applicability ofloan broker statutes; examination by department; cooperation withsecurities division
Sec. 202.5. (1) If a person licensed or required to be licensedunder this article also engages in the loan brokerage business, theperson's loan brokerage business is subject to the following sections
of the Indiana Code and any rules adopted to implement thesesections:
(a) IC 23-2-5-9.
(b) IC 23-2-5-9.1.
(c) IC 23-2-5-15.
(d) IC 23-2-5-16.
(e) IC 23-2-5-17.
(f) IC 23-2-5-18.
(g) IC 23-2-5-18.5.
(h) IC 23-2-5-20.
(i) IC 23-2-5-23, except for IC 23-2-5-23(2)(B).
(j) IC 23-2-5-24.
(2) Loan broker business transactions engaged in by personslicensed or required to be licensed under this article are subject toexamination by the department and to the examination fees describedin IC 24-4.4-2-402(7)(c). The department may cooperate with thesecurities division of the office of the secretary of state in thedepartment's examination of loan broker business transactions andmay use the securities division's examiners to conduct examinations.
As added by P.L.35-2010, SEC.7.
IC 24-4.4-1-203
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 24-4.4-1-204
Entities that also conduct loan broker business; regulatorycooperation with securities commissioner
Sec. 204. In the department's examination and regulatory activitiesrelated to licensees under this article, the department may cooperatewith the Indiana securities commissioner in the regulation of entitiesthat, in addition to conducting business regulated under this article,also conduct a loan brokerage business subject to IC 23-2-5.
As added by P.L.35-2010, SEC.8.
IC 24-4.4-1-301
Definitions
Sec. 301. In addition to definitions appearing in subsequentchapters of this article, the following definitions apply throughoutthis article:
(1) "Affiliate", with respect to any person subject to this article,means a person that, directly or indirectly, through one (1) ormore intermediaries:
(a) controls;
(b) is controlled by; or
(c) is under common control with;
the person subject to this article.
(2) "Agreement" means the bargain of the parties in fact asfound in the parties' language or by implication from othercircumstances, including course of dealing or usage of trade or
course of performance.
(3) "Agricultural products" includes agricultural, horticultural,viticultural, dairy products, livestock, wildlife, poultry, bees,forest products, fish and shellfish, any products raised orproduced on farms, and any products processed ormanufactured from products raised or produced on farms.
(4) "Agricultural purpose" means a purpose related to theproduction, harvest, exhibition, marketing, transportation,processing, or manufacture of agricultural products by a naturalperson who cultivates, plants, propagates, or nurtures theagricultural products.
(5) "Consumer credit sale" is a sale of goods, services, or aninterest in land in which:
(a) credit is granted by a person who engages as a seller incredit transactions of the same kind;
(b) the buyer is a person other than an organization;
(c) the goods, services, or interest in land are purchasedprimarily for a personal, family, or household purpose;
(d) either the debt is payable in installments or a financecharge is made; and
(e) with respect to a sale of goods or services, either theamount financed does not exceed fifty thousand dollars($50,000) or the debt is secured by personal property used orexpected to be used as the principal dwelling of the buyer.
(6) "Credit" means the right granted by a creditor to a debtor todefer payment of debt or to incur debt and defer its payment.
(7) "Creditor" means a person:
(a) that engages in the extension of first lien mortgagetransactions that are subject to a credit service charge or loanfinance charge, as applicable, or are payable by writtenagreement in more than four (4) installments (not includinga down payment); and
(b) to which the obligation is initially payable, either on theface of the note or contract, or by agreement if there is not anote or contract.
The term does not include a person described in subsection33(a) in a tablefunded transaction. A creditor may be anindividual, a limited liability company, a sole proprietorship, apartnership, a trust, a joint venture, a corporation, anunincorporated organization, or other form of entity, howeverorganized.
(8) "Department" refers to the members of the department offinancial institutions.
(9) "Depository institution" has the meaning set forth in theFederal Deposit Insurance Act (12 U.S.C. 1813(c)) and includesany credit union.
(10) "Director" refers to the director of the department offinancial institutions or the director's designee.
(11) "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:
(a) condominium unit;
(b) cooperative unit;
(c) mobile home; or
(d) trailer;
that is used as a residence.
(12) "Employee" means an individual who is paid wages orother compensation by an employer required under federalincome tax law to file Form W-2 on behalf of the individual.
(13) "Federal banking agencies" means the Board of Governorsof the Federal Reserve System, the Comptroller of theCurrency, the Office of Thrift Supervision, the National CreditUnion Administration, and the Federal Deposit InsuranceCorporation.
(14) "First lien mortgage transaction" means:
(a) a loan; or
(b) a consumer credit sale;
that is or will be used by the debtor primarily for personal,family, or household purposes and that is secured by amortgage, a land contract, or another equivalent consensualsecurity interest which constitutes a first lien on a dwelling orresidential real estate.
(15) "Immediate family member" means a spouse, child, sibling,parent, grandparent, or grandchild. The term includesstepparents, stepchildren, stepsiblings, and adoptiverelationships.
(16) "Individual" means a natural person.
(17) "Licensee" means a person licensed as a creditor under thisarticle.
(18) "Loan" includes:
(a) the creation of debt by:
(i) the creditor's payment of or agreement to pay money tothe debtor or to a third party for the account of the debtor;or
(ii) the extension of credit by a person who engages as aseller in credit transactions primarily secured by aninterest in land;
(b) the creation of debt by a credit to an account with thecreditor upon which the debtor is entitled to drawimmediately; and
(c) the forbearance of debt arising from a loan.
(19) "Loan brokerage business" means any activity in which aperson, in return for any consideration from any source,procures, attempts to procure, or assists in procuring, amortgage transaction from a third party or any other person,whether or not the person seeking the mortgage transactionactually obtains the mortgage transaction.
(20) "Loan processor or underwriter" means an individual whoperforms clerical or support duties as an employee at thedirection of, and subject to the supervision and instruction of,
a person licensed or exempt from licensing under this article.For purposes of this subsection, the term "clerical or supportduties" may include, after the receipt of an application, thefollowing:
(a) The receipt, collection, distribution, and analysis ofinformation common for the processing or underwriting ofa mortgage transaction.
(b) The communication with a consumer to obtain theinformation necessary for the processing or underwriting ofa loan, to the extent that the communication does notinclude:
(i) offering or negotiating loan rates or terms; or
(ii) counseling consumers about mortgage transaction ratesor terms.
An individual engaging solely in loan processor or underwriteractivities shall not represent to the public, through advertisingor 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 orwill perform any of the activities of a mortgage loan originator.
(21) "Mortgage loan originator" means an individual who, forcompensation or gain, or in the expectation of compensation orgain, engages in taking a mortgage transaction application or inoffering or negotiating the terms of a mortgage transaction thateither is made under this article or under IC 24-4.5 or is madeby an employee of a person licensed or exempt from licensingunder this article or under IC 24-4.5, while the employee isengaging in the loan brokerage business. The term does notinclude the following:
(a) An individual engaged solely as a loan processor orunderwriter as long as the individual works exclusively as anemployee of a person licensed or exempt from licensingunder this article.
(b) Unless the person or entity is compensated by:
(i) a creditor;
(ii) a loan broker;
(iii) another mortgage loan originator; or
(iv) any agent of a creditor, a loan broker, or anothermortgage loan originator described in items (i) through(iii);
a person or entity that performs only real estate brokerageactivities and is licensed or registered in accordance withapplicable state law.
(c) A person solely involved in extensions of credit relatingto timeshare plans (as defined in 11 U.S.C. 101(53D)).
(22) "Mortgage servicer" means the last person to whom amortgagor or the mortgagor's successor in interest has beeninstructed by a mortgagee to send payments on a loan securedby a mortgage.
(23) "Mortgage transaction" means: (a) a loan; or
(b) a consumer credit sale;
that is or will be used by the debtor primarily for personal,family, or household purposes and that is secured by amortgage, a land contract, or another equivalent consensualsecurity interest on a dwelling or residential real estate.
(24) "Nationwide Mortgage Licensing System and Registry" or"NMLSR" means a mortgage licensing system developed andmaintained by the Conference of State Bank Supervisors andthe American Association of Residential Mortgage Regulatorsfor the licensing and registration of creditors and mortgage loanoriginators.
(25) "Nontraditional mortgage product" means any mortgageproduct other than a thirty (30) year fixed rate mortgage.
(26) "Organization" means a corporation, a government orgovernment subdivision, an agency, a trust, an estate, apartnership, a limited liability company, a cooperative, anassociation, a joint venture, an unincorporated organization, orany other entity, however organized.
(27) "Payable in installments", with respect to a debt or anobligation, means that payment is required or permitted bywritten agreement to be made in more than four (4) installmentsnot including a down payment.
(28) "Person" includes an individual or an organization.
(29) "Principal" of a mortgage transaction means the total of:
(a) the net amount paid to, receivable by, or paid or payablefor the account of the debtor; and
(b) to the extent that payment is deferred, amounts actuallypaid or to be paid by the creditor for registration, certificateof title, or license fees if not included in clause (a).
(30) "Real estate brokerage activity" means any activity thatinvolves offering or providing real estate brokerage services tothe public, including the following:
(a) Acting as a real estate agent or real estate broker for abuyer, seller, lessor, or lessee of real property.
(b) Bringing together parties interested in the sale, purchase,lease, rental, or exchange of real property.
(c) Negotiating, on behalf of any party, any part of a contractrelating to the sale, purchase, lease, rental, or exchange ofreal property (other than in connection with providingfinancing with respect to the sale, purchase, lease, rental, orexchange of real property).
(d) Engaging in any activity for which a person engaged inthe activity is required to be registered or licensed as a realestate agent or real estate broker under any applicable law.
(e) Offering to engage in any activity, or act in any capacity,described in this subsection.
(31) "Registered mortgage loan originator" means anyindividual who:
(a) meets the definition of mortgage loan originator and is an
employee of:
(i) a depository institution;
(ii) a subsidiary that is owned and controlled by adepository institution and regulated by a federal bankingagency; or
(iii) an institution regulated by the Farm CreditAdministration; and
(b) is registered with, and maintains a unique identifierthrough, the NMLSR.
(32) "Residential real estate" means any real property that islocated in Indiana and on which there is located or intended tobe constructed a dwelling.
(33) "Revolving first lien mortgage transaction" means a firstlien mortgage transaction in which:
(a) the creditor permits the debtor to obtain advances fromtime to time;
(b) the unpaid balances of principal, finance charges, andother appropriate charges are debited to an account; and
(c) the debtor has the privilege of paying the balances ininstallments.
(34) "Tablefunded" means a transaction in which:
(a) a person closes a first lien mortgage transaction in theperson's own name as a mortgagee with funds provided byone (1) or more other persons; and
(b) the transaction is assigned simultaneously to themortgage creditor providing the funding not later than one(1) business day after the funding of the transaction.
(35) "Unique identifier" means a number or other identifierassigned by protocols established by the NMLSR.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,SEC.9.