CHAPTER 3. ADMINISTRATION
IC 24-4.4-3
Chapter 3. Administration
IC 24-4.4-3-101
Short title
Sec. 101. This chapter shall be known and may be cited as theFirst Lien Mortgage Lending Act - Administration.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-3-102
Application
Sec. 102. This chapter applies to a person that engages as acreditor in first lien mortgage transactions in Indiana. The authorityof this chapter remains in effect, whether a licensee, individual, orperson subject to this article acts or claims to act under any licensingor registration law of Indiana or claims to act without such authority.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,SEC.28.
IC 24-4.4-3-103
Powers of department; no liability for conforming act or omission
Sec. 103. (1) In addition to other powers granted by this article,the department within the limitations provided by law may:
(a) receive and act on complaints, take action designed to obtainvoluntary compliance with this article, or commenceproceedings on the department's own initiative;
(b) counsel persons and groups on their rights and duties underthis article;
(c) establish programs for the education of consumers withrespect to credit practices and problems;
(d) make studies appropriate to effectuate the purposes andpolicies of this article and make the results available to thepublic;
(e) adopt, amend, and repeal rules, orders, policies, and formsto carry out the provisions of this article;
(f) maintain more than one (1) office within Indiana; and
(g) appoint any necessary attorneys, hearing examiners, clerks,and other employees and agents and fix their compensation, andauthorize attorneys appointed under this section to appear forand represent the department in court.
(2) Liability may not be imposed under this article for an act doneor omitted in conformity with a rule, written notice, written opinion,written interpretation, or written directive of the departmentnotwithstanding the fact that after the act is done or omitted the rule,written notice, written opinion, written interpretation, or writtendirective may be:
(a) amended or repealed; or
(b) determined by judicial or other authority to be invalid;
for any reason.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-3-104
Department's examination and investigatory authority; recordretention; director's authority to control access to records; courtorder compelling compliance; confidentiality; examination ofvendors
Sec. 104. (1) In administering this article and in order todetermine whether the provisions of this article are being compliedwith by persons engaging in acts subject to this article, thedepartment may examine the records of persons and may makeinvestigations of persons as may be necessary to determinecompliance. Records subject to examination under this sectioninclude the following:
(a) Training, operating, and policy manuals.
(b) Minutes of:
(i) management meetings; and
(ii) other meetings.
(c) Financial records, credit files, and data bases.
(d) Other records that the department determines are necessaryto perform its investigation or examination.
The department may also administer oaths or affirmations, subpoenawitnesses, and compel the attendance of witnesses, includingofficers, principals, mortgage loan originators, employees,independent contractors, agents, and customers of licensees, andother individuals or persons subject to this article. The departmentmay also adduce evidence and require the production of any matterthat is relevant to an investigation. The department shall determinethe sufficiency of the records maintained and whether the person hasmade the required information reasonably available. The recordsconcerning any transaction subject to this article shall be retained fortwo (2) years after the making of the final entry relating to the firstlien mortgage transaction, but in the case of a revolving first lienmortgage transaction the two (2) year period is measured from thedate of each entry.
(2) The department's examination and investigatory authorityunder this article includes the following:
(a) The authority to require a creditor to refund overchargesresulting from the creditor's noncompliance with the terms of afirst lien mortgage transaction.
(b) The authority to require a creditor to comply with thepenalty provisions set forth in IC 24-4.4-2-201.
(c) The authority to investigate complaints filed with thedepartment by debtors.
(3) The department shall be given free access to the recordswherever the records are located. In making any examination orinvestigation authorized by this article, the director may controlaccess to any documents and records of the licensee or person underexamination or investigation. The director may take possession of thedocuments and records or place a person in exclusive charge of thedocuments and records in the place where the documents are usuallykept. During the period of control, a licensee or person may not
remove or attempt to remove any of the documents and recordsexcept under a court order or with the consent of the director. Unlessthe director has reasonable grounds to believe the documents orrecords of the licensee or person have been, or are, at risk of beingaltered or destroyed for purposes of concealing a violation of thisarticle, the licensee or person shall have access to the documents orrecords as necessary to conduct the licensee's or person's ordinarybusiness affairs. If the person's records are located outside Indiana,the records shall be made available to the department at a convenientlocation within Indiana, or the person shall pay the reasonable andnecessary expenses for the department or the department'srepresentative to examine the records where they are maintained. Thedepartment may designate comparable officials of the state in whichthe records are located to inspect the records on behalf of thedepartment.
(4) Upon a person's failure without lawful excuse to obey asubpoena or to give testimony and upon reasonable notice by thedepartment to all affected persons, the department may apply to anycivil court with jurisdiction for an order compelling compliance.
(5) The department shall not make public:
(a) the name or identity of a person whose acts or conduct thedepartment investigates under this section; or
(b) the facts discovered in the investigation.
However, this subsection does not apply to civil actions orenforcement proceedings under this article.
(6) If a creditor contracts with an outside vendor to provide aservice that would otherwise be undertaken internally by the creditorand be subject to the department's routine examination procedures,the person that provides the service to the creditor shall, at therequest of the director, submit to an examination by the department.If the director determines that an examination under this subsectionis necessary or desirable, the examination may be made at theexpense of the person to be examined. If the person to be examinedunder this subsection refuses to permit the examination to be made,the director may order any creditor that is licensed under this articleand that receives services from the person refusing the examinationto:
(a) discontinue receiving one (1) or more services from theperson; or
(b) otherwise cease conducting business with the person.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,SEC.29.
IC 24-4.4-3-104.5
Powers of director
Sec. 104.5. To carry out the purposes of this section, the directormay:
(a) retain attorneys, accountants, or other professionals andspecialists as examiners, auditors, or investigators to conduct orassist in the conduct of examinations or investigations; (b) enter into agreements or relationships with othergovernment officials or regulatory associations in order toimprove efficiencies and reduce regulatory burden by sharing:
(i) resources;
(ii) standardized or uniform methods or procedures; and
(iii) documents, records, information, or evidence obtainedunder this section;
(c) use, hire, contract, or employ public or privately availableanalytical systems, methods, or software to examine orinvestigate a licensee, an individual, or a person subject to thisarticle;
(d) accept and rely on examination or investigation reportsmade by other government officials within or outside Indiana;and
(e) accept audit reports made by an independent certified publicaccountant for the licensee, individual, or person subject to thisarticle in the course of that part of the examination covering thesame general subject matter as the audit and may incorporatethe audit report in the report of the examination, report ofinvestigation, or other writing of the director.
As added by P.L.35-2010, SEC.30.
IC 24-4.4-3-104.6
Prohibited acts
Sec. 104.6. It is a violation of this article for a person orindividual subject to this article to:
(a) directly or indirectly employ any scheme, device, or artificeto defraud or mislead borrowers or lenders or to defraud anyperson;
(b) engage in any unfair or deceptive practice toward anyperson;
(c) obtain property by fraud or misrepresentation;
(d) solicit or enter into a contract with a borrower that providesin substance that the person or individual subject to this articlemay earn a fee or commission through "best efforts" to obtaina loan even though no loan is actually obtained for theborrower;
(e) solicit, advertise, or enter into a contract for specific interestrates, points, or other financing terms unless the terms areactually available at the time of soliciting, advertising, orcontracting;
(f) conduct any business covered by this article without holdinga valid license as required under this article, or assist or aid andabet any person in the conduct of business under this articlewithout a valid license as required under this article;
(g) fail to make disclosures as required by this article orregulation adopted under this article and any other applicablestate or federal law regulation;
(h) fail to comply with this article or rules adopted under thisarticle, or fail to comply with any other state or federal law,
rule, or regulation, applicable to any business authorized orconducted under this article;
(i) make, in any manner, any false or deceptive statement orrepresentation, with regard to the rates, points, or otherfinancing terms or conditions for a mortgage transaction, orengage in bait and switch advertising;
(j) negligently make any false statement or knowingly andwillfully make any omission of material fact in connection withany information or reports filed with a governmental agency orthe NMLSR or in connection with any investigation conductedby the director or another governmental agency;
(k) make any payment, threat, or promise, directly or indirectly,to any person for the purposes of influencing the independentjudgment of the person in connection with a mortgagetransaction, or make any payment, threat, or promise, directlyor indirectly, to any appraiser of a property, for the purposes ofinfluencing the independent judgment of the appraiser withrespect to the value of the property;
(l) collect, charge, attempt to collect or charge, or use orpropose any agreement purporting to collect or charge any feeprohibited by this article;
(m) cause or require a borrower to obtain property insurancecoverage in an amount that exceeds the replacement cost of theimprovements as established by the property insurer;
(n) fail to account truthfully for money belonging to a party toa mortgage transaction; or
(o) knowingly withhold, abstract, remove, mutilate, destroy, orsecrete any books, records, computer records, or otherinformation subject to examination under this article.
As added by P.L.35-2010, SEC.31.
IC 24-4.4-3-105
Applicability of laws governing administrative orders and rules;venue; emergency rulemaking authority
Sec. 105. Except as otherwise provided, IC 4-21.5-3 governs anyaction taken by the department under this chapter or IC 24-4.4-2-401through IC 24-4.4-2-405. IC 4-22-2 applies to the adoption of rulesby the department under this article. All proceedings foradministrative review under IC 4-21.5-3 or judicial review underIC 4-21.5-5 shall be held in Marion County. However, if thedepartment determines that an emergency exists, the department mayadopt any rules authorized by this article under IC 4-22-2-37.1.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,SEC.32.
IC 24-4.4-3-106
Cease and desist orders; judicial review or enforcementproceedings; record; appeal; unconscionable or fraudulent conductsubject to injunction
Sec. 106. (1) After notice and hearing, the department may order
a creditor or a person acting on behalf of the creditor to cease anddesist from engaging in violations of this article. In any civil courtwith jurisdiction:
(a) a respondent aggrieved by an order of the department mayobtain judicial review of the order; and
(b) the department may obtain an order of the court for theenforcement of the department's order.
A proceeding for review or enforcement under this subsection shallbe initiated by the filing of a petition in the court. Copies of thepetition shall be served upon all parties of record.
(2) Not later than thirty (30) days after service of a petition forreview upon the department under subsection (1), or within suchfurther time as the court may allow, the department shall transmit tothe court the original or a certified copy of the entire record uponwhich the order that is the subject of the review is based, includingany transcript of testimony, which need not be printed. By stipulationof all parties to the review proceeding, the record may be shortened.After conducting a hearing on the matter, the court may:
(a) reverse or modify the order if the findings of fact of thedepartment are clearly erroneous in view of the reliable,probative, and substantial evidence in the whole record;
(b) grant any temporary relief or restraining order the courtconsiders just; and
(c) enter an order:
(i) enforcing;
(ii) modifying;
(iii) enforcing as modified; or
(iv) setting aside;
in whole or in part, the order of the department; or
(d) enter an order remanding the case to the department forfurther proceedings.
(3) An objection not urged at the hearing shall not be consideredby the court unless the failure to urge the objection is excused forgood cause shown. A party may move the court to remand the caseto the department in the interest of justice for the purpose of:
(a) adducing additional specified and material evidence; and
(b) seeking a finding upon such evidence;
upon good cause shown for the failure to previously adduce thisevidence before the department.
(4) The jurisdiction of the court is exclusive and the court's finaljudgment or decree is subject to review on appeal in the samemanner and form and with the same effect as in appeals from a finaljudgment or decree. The department's copy of the testimony shall beavailable at reasonable times to all parties for examination withoutcost.
(5) A proceeding for review under this section must be initiatednot later than thirty (30) days after a copy of the order of thedepartment is received. If a proceeding is not initiated within thetime set forth in this subsection, the department may obtain a decreeof a civil court with jurisdiction for enforcement of the department's
order upon a showing that:
(a) the order was issued in compliance with this section;
(b) a proceeding for review was not initiated within the thirty(30) day period prescribed by this subsection; and
(c) the respondent is subject to the jurisdiction of the court.
(6) With respect to unconscionable agreements or fraudulent orunconscionable conduct by a respondent, the department may notissue an order under this section but may bring a civil action for aninjunction under section 111 of this chapter.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,SEC.33.
IC 24-4.4-3-107
Assurance of discontinuance of conduct; failure to comply
Sec. 107. If it is claimed that a person has engaged in conductsubject to an order by:
(a) the department under section 106(1) of this chapter; or
(b) a court under sections 108 through 110 of this chapter;
the department may accept an assurance in writing that the personwill not engage in the conduct in the future. If a person giving anassurance of discontinuance fails to comply with the terms of theassurance, the assurance is evidence that before the assurance wasissued the person engaged in the conduct described in the assurance.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-3-108
Civil action by department to restrain violation
Sec. 108. The department may bring a civil action to restrain aperson from violating this article or other state or federal law, rule,or regulation and for other appropriate relief.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,SEC.34.
IC 24-4.4-3-109
Civil action by department to enjoin deceptive act
Sec. 109. (1) As used in this section, "deceptive act" means an actor a practice in which a person knowingly or intentionally:
(a) makes a material misrepresentation concerning; or
(b) conceals material information regarding the terms orconditions of;
a first lien mortgage transaction.
(2) For purposes of this section, "knowingly" means having actualknowledge at the time of the transaction.
(3) The department may bring a civil action to enjoin a deceptiveact performed in connection with a first lien mortgage transaction.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-3-110
Department's application to court for temporary relief orrestraining order Sec. 110. With respect to an action brought under:
(a) section 108 of this chapter to enjoin violations of thisarticle; or
(b) section 109 of this chapter to enjoin deceptive acts;
the department may apply to the court for appropriate temporaryrelief against a respondent, pending final determination of theproceedings. If the court finds after a hearing held upon notice to therespondent that there is reasonable cause to believe that therespondent is engaging in or is likely to engage in the conduct soughtto be restrained, the court may grant any temporary relief orrestraining order the court considers appropriate.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-3-111
Civil action by department for willful violation; imposition of civilpenalty by department; restitution
Sec. 111. (1) The department may bring a civil action against acreditor or a person acting on behalf of the creditor to recover a civilpenalty for willfully violating this article. If the court finds that thedefendant has engaged in a course of repeated and willful violationsof this article, the court may assess a civil penalty of not more thanfive thousand dollars ($5,000). A civil penalty may not be imposedunder this subsection:
(a) for violations of this article occurring more than two (2)years before the action is brought; or
(b) for making unconscionable agreements or engaging in acourse of fraudulent or unconscionable conduct.
(2) If the department determines, after notice and an opportunityto be heard, that a person has violated this article, the departmentmay, in addition to or instead of all other remedies available underthis section, impose upon the person a civil penalty not greater thanten thousand dollars ($10,000) per violation.
(3) If the department determines, after notice and opportunity tobe heard, that a person has willfully violated this article, thedepartment may, in addition to or instead of all other remediesavailable under this section, order restitution against the personsubject to this article for a violation of this article.
As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,SEC.35.
IC 24-4.4-3-112
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 24-4.4-3-113
Rights of debtors not affected
Sec. 113. The grant of powers to the department under this articledoes not affect remedies available to debtors under this article orunder other principles of law or equity.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-3-114
Actions brought by department; venue
Sec. 114. The department may bring an action or a proceeding ina court in a county:
(1) in which an act on which the action or proceeding is basedoccurred;
(2) in which the respondent resides or transacts business; or
(3) in which the action or proceeding is otherwise authorized byrule or venue laws.
As added by P.L.145-2008, SEC.20.
IC 24-4.4-3-115
"Civil court"
Sec. 115. As used in this article, "civil court" means any court inIndiana having jurisdiction of civil cases.
As added by P.L.145-2008, SEC.20.