CHAPTER 3. LOANS
IC 24-4.5-3
Chapter 3. Loans
(Part 1. General Provisions)
IC 24-4.5-3-101
Short title
Sec. 101. Short Title _ This Chapter shall be known and may becited as Uniform Consumer Credit Code _ Loans.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-102
Application
Sec. 102. This chapter applies to consumer loans, includingsupervised loans. In addition, IC 24-4.5-3-601 throughIC 24-4.5-3-605 apply to consumer related loans. The licensingprovisions of this chapter apply to consumer credit sales underIC 24-4.5-2 that are subordinate lien mortgage transactions.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended byP.L.152-1986, SEC.62; P.L.35-2010, SEC.47.
IC 24-4.5-3-103
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 24-4.5-3-104
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 24-4.5-3-105
"Consumer loan"; first lien mortgage transaction not included
Sec. 105. Unless the loan is made subject to IC 24-4.5-3 byagreement (IC 24-4.5-3-601), and except with respect to disclosure(IC 24-4.5-3-301), debtors' remedies (IC 24-4.5-5-201), providingpayoff amounts (IC 24-4.5-3-209), providing property taxinformation (IC 24-4.5-3-701), and powers and functions of thedepartment (IC 24-4.5-6-104), "consumer loan" does not include afirst lien mortgage transaction.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by Acts 1979,P.L.238, SEC.1; Acts 1981, P.L.218, SEC.5; P.L.152-1986, SEC.63;P.L.14-1992, SEC.23; P.L.176-1996, SEC.5; P.L.23-2000, SEC.4;P.L.90-2008, SEC.7; P.L.35-2010, SEC.48.
IC 24-4.5-3-106
"Loan"
Sec. 106. Definition: "Loan" _ "Loan" includes
(1) the creation of debt by the lender's payment of or agreementto pay money to the debtor or to a third party for the account of thedebtor;
(2) the creation of debt by a credit to an account with the lender
upon which the debtor is entitled to draw immediately;
(3) the creation of debt pursuant to a lender credit card or similararrangement; and
(4) the forbearance of debt arising from a loan.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-107
Definitions; "lender"; "precomputed"; "principal"
Sec. 107. Definitions: "Lender"; "Precomputed"; "Principal" . (1)Except as otherwise provided, "lender" means a person regularlyengaged in making consumer loans. The term includes an assigneeof the lender's right to payment but use of the term does not in itselfimpose on an assignee any obligation of the lender with respect toevents occurring before the assignment.
(2) A loan, refinancing, or consolidation is "precomputed" if thedebt is expressed as a sum comprising the principal and the amountof the loan finance charge computed in advance.
(3) "Principal" of a loan means the total of:
(a) the net amount paid to, receivable by, or paid or payable forthe account of the debtor;
(b) the amount of any discount excluded from the loan financecharge (subsection (2) of IC 24-4.5-3-109); and
(c) to the extent that payment is deferred:
(i) amounts actually paid or to be paid by the lender forregistration, certificate of title, or license fees if not includedin (a); and
(ii) additional charges permitted by this chapter (IC24-4.5-3-202).
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended byP.L.145-2008, SEC.25.
IC 24-4.5-3-108
"Revolving loan account"
Sec. 108. Definition: "Revolving Loan Account" _ "Revolvingloan account" means an arrangement between a lender and a debtorpursuant to which (1) the lender may permit the debtor to obtainloans from time to time, (2) the unpaid balances of principal and theloan finance and other appropriate charges are debited to an account,(3) a loan finance charge if made is not precomputed but is computedon the outstanding unpaid balances of the debtor's account from timeto time, and (4) the debtor has the privilege of paying the balances ininstalments.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-109
"Loan finance charge"
Sec. 109. (1) "Loan finance charge" means the sum of:
(a) all charges payable directly or indirectly by the debtor andimposed directly or indirectly by the lender as an incident to theextension of credit, including any of the following types of
charges which are applicable: interest or any amount payableunder a point, discount, or other system of charges, howeverdenominated, premium or other charge for any guarantee orinsurance protecting the lender against the debtor's default orother credit loss; and
(b) charges incurred for investigating the collateral orcredit-worthiness of the debtor.
The term does not include charges as a result of default, additionalcharges (IC 24-4.5-3-202), delinquency charges (IC 24-4.5-3-203.5),or deferral charges (IC 24-4.5-3-204). The term does not includecharges paid or payable to a third party that are not required by thelender as a condition or incident to the extension of credit except forborrower paid mortgage broker fees, including fees paid directly tothe broker or the lender (for delivery to the broker), whether the feesare paid in cash or financed. However, borrower paid mortgagebroker fees do not include fees paid to a mortgage broker by acreditor, including yield spread premiums and service release fees.
(2) If a lender makes a loan to a debtor by purchasing or satisfyingobligations of the debtor pursuant to a lender credit card or similararrangement, and the purchase or satisfaction is made at less than theface amount of the obligation, the discount is not part of the loanfinance charge.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended byP.L.247-1983, SEC.15; P.L.14-1992, SEC.24; P.L.172-1997, SEC.4.
(Part 2. Maximum Charges)
IC 24-4.5-3-201
Loan finance charge for consumer loans other than supervisedloans
Sec. 201. Loan Finance Charge for Consumer Loans other thanSupervised Loans_(1) Except as provided in subsections (6) and(8), with respect to a consumer loan other than a supervised loan (IC24-4.5-3-501), a lender may contract for a loan finance charge,calculated according to the actuarial method, not exceedingtwenty-one percent (21%) per year on the unpaid balances of theprincipal.
(2) This section does not limit or restrict the manner ofcontracting for the loan finance charge, whether by way of add-on,discount, or otherwise, so long as the rate of the loan finance chargedoes not exceed that permitted by this section. If the loan isprecomputed:
(a) the loan finance charge may be calculated on the assumptionthat all scheduled payments will be made when due; and
(b) the effect of prepayment is governed by the provisions onrebate upon prepayment (IC 24-4.5-3-210).
(3) For the purposes of this section, the term of a loan commenceswith the date the loan is made. Differences in the lengths of monthsare disregarded, and a day may be counted as one-thirtieth (1/30) ofa month. Subject to classifications and differentiations the lender
may reasonably establish, a part of a month in excess of fifteen (15)days may be treated as a full month if periods of fifteen (15) days orless are disregarded and if that procedure is not consistently used toobtain a greater yield than would otherwise be permitted. Forpurposes of computing average daily balances, the creditor may electto treat all months as consisting of thirty (30) days.
(4) With respect to a consumer loan made pursuant to a revolvingloan account:
(a) the loan finance charge shall be deemed not to exceed themaximum annual percentage rate if the loan finance chargecontracted for and received does not exceed a charge in eachmonthly billing cycle which is one and three-fourths percent (13/4%) of an amount no greater than:
(i) the average daily balance of the debt;
(ii) the unpaid balance of the debt on the same day of thebilling cycle; or
(iii) subject to subsection (5), the median amount within aspecified range within which the average daily balance orthe unpaid balance of the debt, on the same day of the billingcycle, is included; for the purposes of this subparagraph andsubparagraph (ii), a variation of not more than four (4) daysfrom month to month is "the same day of the billing cycle";
(b) if the billing cycle is not monthly, the loan finance chargeshall be deemed not to exceed the maximum annual percentagerate if the loan finance charge contracted for and received doesnot exceed a percentage which bears the same relation toone-twelfth (1/12) the maximum annual percentage rate as thenumber of days in the billing cycle bears to thirty (30); and
(c) notwithstanding subsection (1), if there is an unpaid balanceon the date as of which the loan finance charge is applied, thelender may contract for and receive a charge not exceeding fiftycents ($0.50) if the billing cycle is monthly or longer, or the prorata part of fifty cents ($0.50) which bears the same relation tofifty cents ($0.50) as the number of days in the billing cyclebears to thirty (30) if the billing cycle is shorter than monthly,but no charge may be made pursuant to this paragraph if thelender has made an annual charge for the same period aspermitted by the provisions on additional charges (paragraph (c)of subsection (1) of IC 24-4.5-3-202).
(5) Subject to classifications and differentiations, the lender mayreasonably establish and make the same loan finance charge on allamounts financed within a specified range. A loan finance chargedoes not violate subsection (1) if:
(a) when applied to the median amount within each range, itdoes not exceed the maximum permitted by subsection (1); and
(b) when applied to the lowest amount within each range, itdoes not produce a rate of loan finance charge exceeding therate calculated according to paragraph (a) by more than eightpercent (8%) of the rate calculated according to paragraph (a).
(6) With respect to a consumer loan not made pursuant to a
revolving loan account, the lender may contract for and receive aminimum loan finance charge of not more than thirty dollars ($30).The minimum loan finance charge allowed under this subsection maybe imposed only if:
(a) the debtor prepays in full a consumer loan, refinancing, orconsolidation, regardless of whether the loan, refinancing, orconsolidation is precomputed;
(b) the loan, refinancing, or consolidation prepaid by the debtoris subject to a loan finance charge that:
(i) is contracted for by the parties; and
(ii) does not exceed the rate prescribed in subsection (1); and
(c) the loan finance charge earned at the time of prepayment isless than the minimum loan finance charge contracted for underthis subsection.
(7) The amount of thirty dollars ($30) in subsection (6) is subjectto change under the provisions on adjustment of dollar amounts (IC24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), theReference Base Index to be used under this subsection is the Indexfor October 1992.
(8) In addition to the loan finance charge provided for in thissection, a lender may contract for the following:
(a) With respect to a consumer loan that is not made under arevolving loan account, a loan origination fee of not more thantwo percent (2%) of the loan amount.
(b) With respect to a consumer loan that is made under arevolving loan account, a loan origination fee of not more thantwo percent (2%) of the line of credit that was contracted for.
(9) The charges provided for in subsection (8):
(a) are not subject to refund or rebate;
(b) are not permitted if a lender makes a settlement chargeunder IC 24-4.5-3-202(d)(ii); and
(c) are limited to two percent (2%) of the part of the loan thatdoes not exceed two thousand dollars ($2,000), if the loan is notprimarily secured by an interest in land.
Notwithstanding subdivision (a), if a lender retains any part of a loanorigination fee charged on a loan that is paid in full by a new loanfrom the same lender within three (3) months after the date of theprior loan, the lender may charge a loan origination fee only on thatpart of the new loan not used to pay the amount due on the priorloan, or in the case of a revolving loan, the lender may charge a loanorigination fee only on the difference between the amount of theexisting credit line and the increased credit line. This subsection doesnot prohibit a lender from contracting for and receiving a fee forpreparing deeds, mortgages, reconveyance, and similar documentsunder IC 24-4.5-3-202(d)(ii), in addition to the charges provided forin subsection (8).
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by Acts 1982,P.L.150, SEC.3; P.L.14-1992, SEC.25; P.L.122-1994, SEC.18;P.L.45-1995, SEC.8; P.L.163-1999, SEC.1; P.L.10-2006, SEC.5 andP.L.57-2006, SEC.5; P.L.145-2008, SEC.26.
IC 24-4.5-3-202
Additional charges
Sec. 202. (1) In addition to the loan finance charge permitted byIC 24-4.5-3-201 through IC 24-4.5-3-210, a lender may contract forand receive the following additional charges in connection with aconsumer loan:
(a) Official fees and taxes.
(b) Charges for insurance as described in subsection (2).
(c) Annual participation fees assessed in connection with arevolving loan account. Annual participation fees must:
(i) be reasonable in amount;
(ii) bear a reasonable relationship to the lender's costs tomaintain and monitor the loan account; and
(iii) not be assessed for the purpose of circumvention orevasion of this article, as determined by the department.
(d) With respect to a debt secured by an interest in land, thefollowing closing costs, if they are bona fide, reasonable inamount, and not for the purpose of circumvention or evasion ofthis article:
(i) Fees for title examination, abstract of title, title insurance,property surveys, or similar purposes.
(ii) Fees for preparing deeds, mortgages, and reconveyance,settlement, and similar documents.
(iii) Notary and credit report fees.
(iv) Amounts required to be paid into escrow or trusteeaccounts if the amounts would not otherwise be included inthe loan finance charge.
(v) Appraisal fees.
(e) Notwithstanding provisions of the Federal Consumer CreditProtection Act concerning disclosure, charges for otherbenefits, including insurance, conferred on the debtor, if thebenefits are of value to the debtor and if the charges arereasonable in relation to the benefits, and are excluded aspermissible additional charges from the loan finance charge.With respect to any other additional charge not specificallyprovided for in this section to be a permitted charge under thissubsection, the creditor must submit a written explanation of thecharge to the department indicating how the charge would beassessed and the value or benefit to the debtor. Supportingdocuments may be required by the department. The departmentshall determine whether the charge would be of benefit to thedebtor and is reasonable in relation to the benefits.
(f) A charge not to exceed twenty-five dollars ($25) for eachreturn by a bank or other depository institution of a dishonoredcheck, negotiable order of withdrawal, or share draft issued bythe debtor.
(g) With respect to a revolving loan account, a fee not to exceedtwenty-five dollars ($25) in each billing cycle during which thebalance due under the revolving loan account exceeds by morethan one hundred dollars ($100) the maximum credit limit for
the account established by the lender.
(h) With respect to a revolving loan account, a transaction feethat may not exceed the lesser of the following:
(i) Two percent (2%) of the amount of the transaction.
(ii) Ten dollars ($10).
The additional charges provided for in subdivisions (f), (g), and (h)are not subject to refund or rebate.
(2) An additional charge may be made for insurance in connectionwith the loan, other than insurance protecting the lender against thedebtor's default or other credit loss:
(a) with respect to insurance against loss of or damage toproperty or against liability, if the lender furnishes a clear andspecific statement in writing to the debtor, setting forth the costof the insurance if obtained from or through the lender andstating that the debtor may choose the person, subject to thelender's reasonable approval, through whom the insurance is tobe obtained; and
(b) with respect to consumer credit insurance providing life,accident, unemployment or other loss of income, or healthcoverage, if the insurance coverage is not a factor in theapproval by the lender of the extension of credit and this fact isclearly disclosed in writing to the debtor, and if, in order toobtain the insurance in connection with the extension of credit,the debtor gives specific affirmative written indication of thedesire to do so after written disclosure of the cost of theinsurance.
(Formerly: Acts 1971, P.L.366, SEC.4; Acts 1975, P.L.266, SEC.1.)As amended by P.L.247-1983, SEC.16; P.L.139-1990, SEC.1;P.L.181-1991, SEC.3; P.L.14-1992, SEC.26; P.L.122-1994, SEC.19;P.L.45-1995, SEC.9; P.L.80-1998, SEC.6; P.L.213-2007, SEC.8;P.L.217-2007, SEC.7.
IC 24-4.5-3-203
Repealed
(Repealed by P.L.122-1994, SEC.122.)
IC 24-4.5-3-203.5
Delinquency charges; credit charges not precomputed
Sec. 203.5. Delinquency Charges _ (1) With respect to aconsumer loan, refinancing, or consolidation, the parties maycontract for a delinquency charge of not more than five dollars ($5)on any installment or minimum payment due not paid in full withinten (10) days after its scheduled due date.
(2) A delinquency charge under this section may be collected onlyonce on an installment however long it remains in default. Withregard to a delinquency charge on consumer loans made under arevolving loan account, the delinquency charge may be applied eachmonth that the payment is less than the minimum required paymenton the account. A delinquency charge may be collected any timeafter it accrues. A delinquency charge may not be collected if the
installment has been deferred and a deferral charge (IC 24-4.5-3-204)has been paid or incurred.
(3) A delinquency charge may not be collected on an installmentor payment due that is paid in full within ten (10) days after itsscheduled due date even though an earlier maturing installment,minimum payment, or a delinquency charge on:
(a) an earlier installment; or
(b) payment due;
may not have been paid in full. For purposes of this subsection,payments are applied first to current installments or payments dueand then to delinquent installments or payments due.
(4) If two (2) installments or parts of two (2) installments of aprecomputed loan are in default for ten (10) days or more, the lendermay elect to convert the loan from a precomputed loan to a loan inwhich the finance charge is based on unpaid balances. A lender thatmakes this election shall make a rebate under the provisions onrebates upon prepayment (IC 24-4.5-3-210) as of the maturity date ofthe first delinquent installment, and thereafter may make a loanfinance charge as authorized by the provisions on loan financecharges for consumer loans (IC 24-4.5-3-201) or supervised loans (IC24-4.5-3-508). The amount of the rebate shall not be reduced by theamount of any permitted minimum charge (IC 24-4.5-3-210). Anydeferral charges made on installments due at or after the maturitydate of the first delinquent installment shall be rebated, and nofurther deferral charges shall be made.
(5) The amount of five dollars ($5) in subsection (1) is subject tochange pursuant to the section on adjustment of dollar amounts (IC24-4.5-1-106).
(6) If the parties provide by contract for a delinquency charge thatis subject to change, the lender shall disclose in the contract that theamount of the delinquency charge is subject to change as allowed byIC 24-4.5-1-106.
As added by P.L.247-1983, SEC.17. Amended by P.L.181-1991,SEC.4; P.L.115-1992, SEC.2; P.L.14-1992, SEC.27; P.L.122-1994,SEC.20; P.L.45-1995, SEC.10.
IC 24-4.5-3-204
Deferral charges
Sec. 204. Deferral Charges _ (1) With respect to a precomputedconsumer loan, refinancing, or consolidation, the parties before orafter default may agree in writing to a deferral of all or part of one ormore unpaid instalments, and the lender may make and collect acharge not exceeding the rate previously stated to the debtor pursuantto the provisions on disclosure (Part 3) applied to the amount oramounts deferred for the period of deferral calculated without regardto difference in the lengths of months, but proportionally for a partof a month, counting each day as one-thirtieth (1/30) of a month. Adeferral charge may be collected at the time it is assessed or at anytime thereafter.
(2) The lender, in addition to the deferral charge, may make
appropriate additional charges (24-4.5-3-202), and the amount ofthese charges which is not paid in cash may be added to the amountdeferred for the purpose of calculating the deferral charge.
(3) The parties may agree in writing at the time of a precomputedconsumer loan, refinancing, or consolidation that if an instalment isnot paid within ten (10) days after its due date, the lender mayunilaterally grant a deferral and make charges as provided in thissection. No deferral charge may be made for a period after the datethat the lender elects to accelerate the maturity of the agreement.
(4) A delinquency charge made by the lender on an instalmentmay not be retained if a deferral charge is made pursuant to thissection with respect to the period of delinquency.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-205
Loan finance charge on refinancing
Sec. 205. Loan Finance Charge on Refinancing _ With respectto a consumer loan, refinancing, or consolidation, the lender may byagreement with the debtor refinance the unpaid balance and maycontract for and receive a loan finance charge based on the principalresulting from the refinancing at a rate not exceeding that permittedby the provisions on a loan finance charge for consumer loans (IC24-4.5-3-201) or the provisions on a loan finance charge forsupervised loans (IC 24-4.5-3-508), whichever is appropriate. For thepurpose of determining the loan finance charge permitted, theprincipal resulting from the refinancing comprises the following:
(1) if the transaction was not precomputed, the total of the unpaidbalance and the accrued charges on the date of the refinancing, or, ifthe transaction was precomputed, the amount which the debtor wouldhave been required to pay upon prepayment pursuant to theprovisions on rebate upon prepayment (IC 24-4.5-3-210) on the dateof refinancing; and
(2) appropriate additional charges (IC 24-4.5-3-202), payment ofwhich is deferred.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by P.L.14-1992,SEC.28.
IC 24-4.5-3-206
Loan finance charge on consolidation
Sec. 206. Loan Finance Charge on Consolidation _ (1) If adebtor owes an unpaid balance to a lender with respect to a consumerloan, refinancing, or consolidation, and becomes obligated onanother consumer loan, refinancing, or consolidation with the samelender, the parties may agree to a consolidation resulting in a singleschedule of payments. If the previous consumer loan, refinancing, orconsolidation was not precomputed, the parties may agree to add theunpaid amount of principal and accrued charges on the date ofconsolidation to the principal with respect to the subsequent loan. Ifthe previous consumer loan, refinancing, or consolidation wasprecomputed, the parties may agree to refinance the unpaid balance
pursuant to the provisions on refinancing (24-4.5-3-205) and toconsolidate the principal resulting from the refinancing by adding itto the principal with respect to the subsequent loan. In either case thelender may contract for and receive a loan finance charge based onthe aggregate principal resulting from the consolidation at a rate notin excess of that permitted by the provisions on loan finance chargefor consumer loans (24-4.5-3-201) or the provisions on loan financecharge for supervised loans (24-4.5-3-508), whichever is appropriate.
(2) The parties may agree to consolidate the unpaid balance of aconsumer loan with the unpaid balance of a consumer credit sale.The parties may agree to refinance the previous unpaid balancepursuant to the provisions on refinancing sales (24-4.5-2-205) or theprovisions on refinancing loans (24-4.5-3-205), whichever isappropriate, and to consolidate the amount financed resulting fromthe refinancing or the principal resulting from the refinancing byadding it to the amount financed or principal with respect to thesubsequent sale or loan. The aggregate amount resulting from theconsolidation shall be deemed principal, and the creditor maycontract for and receive a loan finance charge based on the principalat a rate not in excess of that permitted by the provisions on loanfinance charge for consumer loans (24-4.5-3-201) or the provisionson loan finance charge for supervised loans (24-4.5-3-508),whichever is appropriate.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-207
Conversion to revolving loan account
Sec. 207. Conversion to Revolving Loan Account. _ The partiesmay agree to add to a revolving loan account the unpaid balance ofa consumer loan, not made pursuant to a revolving loan account, ora refinancing, or consolidation thereof, or the unpaid balance of aconsumer credit sale, refinancing or consolidation, for the purposeof this section.
(1) the unpaid balance of a consumer loan, refinancing, orconsolidation is an amount equal to the principal determinedaccording to the provisions on refinancing (24-4.5-3-205); and
(2) the unpaid balance of a consumer credit sale, refinancing, orconsolidation is an amount equal to the amount financed determinedaccording to the provisions on refinancing (24-4.5-2-205).
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-208
Advances to perform covenants of debtor
Sec. 208. Advances to Perform Covenants of Debtor. _ (1) If theagreement with respect to a consumer loan, refinancing, orconsolidation contains covenants by the debtor to perform certainduties pertaining to insuring or preserving collateral and if the lenderpursuant to the agreement pays for performance of the duties onbehalf of the debtor, the lender may add the amounts paid to the debt.Within a reasonable time after advancing any sums, he shall state to
the debtor in writing the amount of the sums advanced, any chargeswith respect to this amount, and any revised payment schedule and,if the duties of the debtor performed by the lender pertain toinsurance, a brief description of the insurance paid for by the lenderincluding the type and amount of coverages. No further informationneed be given.
(2) A loan finance charge may be made for sums advancedpursuant to subsection (1) at a rate not exceeding the rate stated tothe debtor pursuant to the provisions on disclosure (Part 3) withrespect to the loan, refinancing, or consolidation, except that withrespect to a revolving loan account the amount of the advance maybe added to the unpaid balance of the debt and the lender may makea loan finance charge not exceeding that permitted by the provisionson loan finance charge for consumer loans (24-4.5-3-201) or forsupervised loans (24-4.5-3-508), whichever is appropriate.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-209
Right to prepay; payoff amount; liability for failure to provide;short sale; acknowledgment of offer; acceptance or rejection;acceptance of payment; liability for failure to respond
Sec. 209. Right to Prepay - (1) Subject to the provisions on rebateupon prepayment (IC 24-4.5-3-210), the debtor may prepay in fullthe unpaid balance of a consumer loan, refinancing, or consolidationat any time without penalty. With respect to a consumer loan that isprimarily secured by an interest in land, a lender may contract for apenalty for prepayment of the loan in full, not to exceed two percent(2%) of any amount prepaid within sixty (60) days of the date of theprepayment in full, after deducting all refunds and rebates as of thedate of the prepayment. However, the penalty may not be imposed:
(a) if the loan is refinanced or consolidated with the samecreditor;
(b) for prepayment by proceeds of any insurance or accelerationafter default; or
(c) after three (3) years from the contract date.
(2) At the time of prepayment of a consumer loan not subject tothe provisions of rebate upon prepayment (IC 24-4.5-3-210), the totalfinance charge, including the prepaid finance charge but excludingthe loan origination fee allowed under IC 24-4.5-3-201, may notexceed the maximum charge allowed under this chapter for theperiod the loan was in effect. For the purposes of determiningcompliance with this subsection, the total finance charge does notinclude the following:
(a) The loan origination fee allowed under IC 24-4.5-3-201.
(b) The debtor paid mortgage broker fee, if any, paid to a personwho does not control, is not controlled by, or is not undercommon control with, the creditor holding the loan at the timea consumer loan is prepaid.
(3) The creditor or mortgage servicer shall provide an accuratepayoff of the consumer loan to the debtor within ten (10) calendar
days after the creditor or mortgage servicer receives the debtor'swritten request for the accurate consumer loan payoff amount. Acreditor or mortgage servicer who fails to provide the accurateconsumer loan payoff amount is liable for:
(a) one hundred dollars ($100) if an accurate consumer loanpayoff amount is not provided by the creditor or mortgageservicer within ten (10) calendar days after the creditor ormortgage 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 loan from thedate the creditor or mortgage servicer receives the firstwritten request until the date on which the accurateconsumer loan payoff amount is provided;
if an accurate consumer loan payoff amount is not provided bythe creditor or mortgage servicer within ten (10) calendar daysafter the creditor or mortgage servicer receives the debtor'ssecond written request, and the creditor or mortgage servicerfailed to comply with subdivision (a).
A liability under this subsection is an excess charge underIC 24-4.5-5-202.
(4) As used in this subsection, "mortgage transaction" means aconsumer credit loan in which a mortgage, deed of trust, or a landcontract that constitutes a lien is created or retained against landupon which there is a dwelling that is or will be used by the debtorprimarily for personal, family, or household purposes. Thissubsection applies to a mortgage transaction with respect to whichany installment or minimum payment due is delinquent for at leastsixty (60) days. The creditor, servicer, or the creditor's agent shallacknowledge a written offer made in connection with a proposedshort sale not later than ten (10) business days after the date of theoffer if the offer complies with the requirements for a qualifiedwritten request set forth in 12 U.S.C. 2605(e)(1)(B). The creditor,servicer, or creditor's agent is required to acknowledge a writtenoffer made in connection with a proposed short sale from a thirdparty acting on behalf of the debtor only if the debtor has providedwritten authorization for the creditor, servicer, or creditor's agent todo so. Not later than thirty (30) business days after receipt of an offerunder this subsection, the creditor, servicer, or creditor's agent shallrespond to the offer with an acceptance or a rejection of the offer.Payment accepted by a creditor, servicer, or creditor's agent inconnection with a short sale constitutes payment in full satisfactionof the mortgage transaction unless the creditor, servicer, or creditor'sagent obtains:
(a) the following statement: "The debtor remains liable for anyamount still owed under the mortgage transaction."; or
(b) a statement substantially similar to the statement set forth insubdivision (a);
acknowledged by the initials or signature of the debtor, on or beforethe date on which the short sale payment is accepted. As used in this
subsection, "short sale" means a transaction in which the propertythat is the subject of a mortgage transaction is sold for an amountthat is less than the amount of the debtor's outstanding obligationunder the mortgage transaction. A creditor or mortgage servicer thatfails to respond to an offer within the time prescribed by thissubsection is liable in accordance with 12 U.S.C. 2605(f) in anyaction brought under that section.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by P.L.14-1992,SEC.29; P.L.122-1994, SEC.21; P.L.23-2000, SEC.6; P.L.159-2001,SEC.1; P.L.145-2008, SEC.27; P.L.35-2010, SEC.49.
IC 24-4.5-3-210
Rebate upon prepayment
Sec. 210. Rebate upon Prepayment. _ (1) Except as provided insubsection (2), upon prepayment in full of the unpaid balance of aprecomputed consumer loan, refinancing, or consolidation, anamount not less than the unearned portion of the loan finance chargecalculated according to this section shall be rebated to the debtor. Ifthe rebate otherwise required is less than one dollar ($1), no rebateneed be made.
(2) Upon prepayment in full of a consumer loan, refinancing, orconsolidation, other than one (1) under a revolving loan account, ifthe loan finance charge earned is less than any permitted minimumloan finance charge (IC 24-4.5-3-201(6) or IC 24-4.5-3-508(7))contracted for, whether or not the consumer loan, refinancing, orconsolidation is precomputed, the lender may collect or retain theminimum loan finance charge, as if earned, not exceeding the loanfinance charge contracted for.
(3) The unearned portion of the loan finance charge is a fractionof the loan finance charge of which the numerator is the sum of theperiodic balances scheduled to follow the computational period inwhich prepayment occurs, and the denominator is the sum of allperiodic balances under either the loan agreement or, if the balanceowing resulted from a refinancing (IC 24-4.5-3-205) or aconsolidation (IC 24-4.5-3-206), under the refinancing agreement orconsolidation agreement.
(4) In this section:
(a) "periodic balance" means the amount scheduled to beoutstanding on the last day of a computational period beforededucting the payment, if any, scheduled to be made on thatday;
(b) "computation period" means one (1) month if one-half (1/2)or more of the intervals between scheduled payments under theagreement is one (1) month or more, and otherwise means one(1) week;
(c) the "interval" to the due date of the first scheduledinstallment or the final scheduled payment date is measuredfrom the date of a loan, refinancing, or consolidation, andincludes either the first or last day of the interval; and
(d) if the interval to the due date of the first scheduled
installment does not exceed one (1) month by more than fifteen(15) days when the computational period is one (1) month, oreleven (11) days when the computational period is one (1)week, the interval shall be considered as one (1) computationalperiod.
(5) This subsection applies only if the schedule of payments is notregular.
(a) If the computational period is one (1) month and:
(i) if the number of days in the interval to the due date of thefirst scheduled installment is less than one (1) month bymore than five (5) days, or more than one (1) month by morethan five (5) but not more than fifteen (15) days, theunearned loan finance charge shall be increased by anadjustment for each day by which the interval is less thanone (1) month and, at the option of the lender, may bereduced by an adjustment for each day by which the intervalis more than one (1) month; the adjustment for each dayshall be one-thirtieth (1/30) of that part of the loan financecharge earned in the computational period prior to the duedate of the first scheduled installment assuming that periodto be one (1) month; and
(ii) if the interval to the final scheduled payment date is anumber of computational periods plus an additional numberof days less than a full month, the additional number of daysshall be considered a computational period only if sixteen(16) days or more. This subparagraph applies whether or notsubparagraph (i) applies.
(b) Notwithstanding paragraph (a), if the computational periodis one (1) month, the number of days in the interval to the duedate of the first installment exceeds one (1) month by not morethan fifteen (15) days, and the schedule of payments isotherwise regular, the lender, at the lender's option, mayexclude the extra days and the charge for the extra days incomputing the unearned loan finance charge; but if the lenderdoes so and a rebate is required before the due date of the firstscheduled installment, the lender shall compute the earnedcharge for each elapsed day as one-thirtieth (1/30) of theamount the earned charge would have been if the first intervalhad been one (1) month.
(c) If the computational period is one (1) week and:
(i) if the number of days in the interval to the due date of thefirst scheduled installment is less than five (5) days, or morethan nine (9) days, but not more than eleven (11) days, theunearned loan finance charge shall be increased by anadjustment for each day by which the interval is less thanseven (7) days and, at the option of the lender, may bereduced by an adjustment for each day by which the intervalis more than seven (7) days; the adjustment for each dayshall be one-seventh (1/7) of that part of the loan financecharge earned in the computational period prior to the due
date of the first scheduled installment, assuming that periodto be one (1) week; and
(ii) if the interval to the final scheduled payment date is anumber of computational periods plus an additional numberof days less than a full week, the additional number of daysshall be considered a computational period only if five (5)days or more. This subparagraph applies whether or notsubparagraph (i) applies.
(6) If a deferral (IC 24-4.5-3-204) has been agreed to, theunearned portion of the loan finance charge shall be computedwithout regard to the deferral. The amount of deferral charge earnedat the date of prepayment shall also be calculated. If the deferralcharge earned is less than the deferral charge paid, the differenceshall be added to the unearned portion of the loan finance charge. Ifany part of a deferral charge has been earned but has not been paid,that part shall be subtracted from the unearned portion of the loanfinance charge or shall be added to the unpaid balance.
(7) This section does not preclude the collection or retention bythe lender of delinquency charges (IC 24-4.5-3-203, repealed in1994).
(8) If the maturity is accelerated for any reason and judgment isobtained, the debtor is entitled to the same rebate as if payment hadbeen made on the date judgment is entered.
(9) Upon prepayment in full of a consumer loan by the proceedsof consumer credit insurance (IC 24-4.5-4-103), the debtor or thedebtor's estate shall pay the same loan finance charge or receive thesame rebate as though the debtor had prepaid the agreement on thedate the proceeds of the insurance are paid to the lender, but no laterthan ten (10) business days after satisfactory proof of loss isfurnished to the lender. This subsection applies whether or not theloan is precomputed.
(10) Upon prepayment in full of a transaction with a term of morethan sixty-one (61) months, the unearned loan finance charge shallbe computed by applying the disclosed annual percentage rate thatwould yield the loan finance charge originally contracted for to theunpaid balances of the amount financed for the full computationalperiods following the prepayment, as originally scheduled or asdeferred.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by P.L.14-1992,SEC.30; P.L.122-1994, SEC.22; P.L.2-1995, SEC.92; P.L.176-1996,SEC.6.
(Part 3. Disclosure and Advertising)
IC 24-4.5-3-301
Disclosures required by Federal Consumer Credit Protection Act
Sec. 301. (1) For the purposes of this section, "consumer loan"includes a loan that is a first lien mortgage transaction if the loan isotherwise a consumer loan (IC 24-4.5-1-301.5(9)).
(2) The lender shall disclose to the debtor to whom credit is
extended with respect to a consumer loan the information requiredby the Federal Consumer Credit Protection Act.
(3) For purposes of subsection (2), disclosures shall not berequired on a consumer loan if the transaction is exempt from theFederal Consumer Credit Protection Act.
(Formerly: Acts 1971, P.L.366, SEC.4; Acts 1975, P.L.267, SEC.1.)As amended by Acts 1981, P.L.218, SEC.6; Acts 1981, P.L.217,SEC.2; P.L.247-1983, SEC.18; P.L.45-1995, SEC.11; P.L.35-2010,SEC.50.
IC 24-4.5-3-302
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-303
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-304
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-305
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-306
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-307
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-308
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-309
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-310
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-311
Repealed
(Repealed by P.L.247-1983, SEC.26.)
(Part 4. Limitations on Agreements and Practices)
IC 24-4.5-3-401
Scope
Sec. 401. Scope _ This Part applies to consumer loans.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-402
Balloon payments; compliance with Alternative MortgageTransaction Parity Act
Sec. 402. (1) This section does not apply to a first lien mortgagetransaction.
(2) Except as provided in IC 24-9-4-3 with respect to a high costhome loan (as defined in IC 24-9-2-8), with respect to a consumerloan, other than one pursuant to a revolving loan account or one onwhich only loan finance charges are payable prior to the time that thefinal scheduled payment is due, if any scheduled payment is morethan twice as large as the average of earlier scheduled payments, thedebtor has the right to refinance the amount of that payment at thetime it is due without penalty. The terms of the refinancing shall beno less favorable to the debtor than the terms of the original loan.This section does not apply to the extent that the payment scheduleis adjusted to the seasonal or irregular income of the debtor.
(3) For the purposes of this section, .terms of the refinancing.means:
(a) in the case of a fixed-rate consumer loan, the individualpayment amounts, the charges as a result of default by thedebtor, and the rate of the loan finance charge; and
(b) in the case of a variable rate consumer loan, the methodused to determine the individual payment amounts, the chargesas a result of default by the debtor, the method used todetermine the rate of the loan finance charge, the circumstancesunder which the rate of the loan finance charge may increase,and any limitations on the increase in the rate of the loanfinance charge.
(4) If a consumer loan is made under the authority of theAlternative Mortgage Transaction Parity Act (12 U.S.C. 3802 etseq.), the note evidencing the mortgage must contain a reference tothe applicable federal law.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended byP.L.247-1983, SEC.19; P.L.213-2007, SEC.9; P.L.217-2007, SEC.8;P.L.90-2008, SEC.8.
IC 24-4.5-3-403
No assignment of earnings
Sec. 403. No Assignment of Earnings _ (1) A lender may nottake an assignment of earnings of the debtor for payment or assecurity for payment of a debt arising out of a consumer loan orotherwise. An assignment of earnings in violation of this section isunenforceable by the assignee of the earnings and revocable by the
debtor. This section does not prohibit an employee from authorizingdeductions from his earnings if the authorization is revocable and isotherwise permitted by law.
(2) A sale of unpaid earnings made in consideration of thepayment of money to or for the account of the seller of the earningsis deemed to be a loan to him secured by an assignment of earnings.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-404
Attorney's fees
Sec. 404. With respect to a consumer loan the agreement mayprovide for the payment by the debtor of reasonable attorney's feesafter default and referral to an attorney not a salaried employee of thelender. A provision in violation of this section is unenforceable.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended byP.L.152-1986, SEC.64; P.L.14-1992, SEC.31.
IC 24-4.5-3-405
Limitation on default charges
Sec. 405. Limitation on Default Charges _ Except for reasonableexpenses incurred in realizing on a security interest, the agreementwith respect to a consumer loan may not provide for charges as aresult of default by the debtor other than those authorized by thisArticle. A provision in violation of this section is unenforceable.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-406
Notice of assignment
Sec. 406. Notice of Assignment _ The debtor is authorized topay the original lender until he receives notification of assignment ofrights to payment pursuant to a consumer loan and that payment is tobe made to the assignee. A notification which does not reasonablyidentify the rights assigned is ineffective. If requested by the debtor,the assignee must seasonably furnish reasonable proof that theassignment has been made and unless he does so the debtor may paythe original lender.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-407
Authorization to confess judgment prohibited
Sec. 407. Authorization to Confess Judgment Prohibited _ Adebtor may not authorize any person to confess judgment on a claimarising out of a consumer loan. An authorization in violation of thissection is void.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-408
Time for crediting payments
Sec. 408. (1) This section also applies to revolving loan accounts.
(2) Except as provided in subsection (3) a creditor shall credit a
payment to a consumer's account as of the date of receipt, exceptwhen a delay in crediting does not result in a finance charge or othercharge, including a late charge. A delay in posting does not violatethis section so long as the payment is credited as of the date ofreceipt.
(3) If a creditor specifies requirements for the consumer to followin making payments of the contract, payment coupon book, paymentcoupon or statement, or periodic statement, but accepts a paymentthat does not conform to the requirements, the creditor shall creditthe payment within two (2) days of receipt of the payment.
(4) If a creditor fails to credit a payment as required by thissection in time to avoid the imposition of a finance or other charge,including a delinquency charge, the creditor shall adjust theconsumer's account so that the charges imposed are credited to theconsumer's account during the next payment period.
As added by P.L.163-1999, SEC.2.
(Part 5. Regulated and Supervised Loans)
IC 24-4.5-3-501
Definitions; "supervised loan"; "supervised lender"
Sec. 501. Definitions:
(1) "Supervised loan" means a consumer loan in which the rate ofthe loan finance charge exceeds twenty-one percent (21%) per yearas determined according to the provisions on loan finance charge forconsumer loans (IC 24-4.5-3-201).
(2) "Supervised lender" means a person authorized to make ortake assignments of supervised loans.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by Acts 1982,P.L.150, SEC.4; P.L.122-1994, SEC.23.
IC 24-4.5-3-502
Authority to make consumer loans, take assignment of loans, orundertake collection activities; license required for certainpersons; separate licenses not required for branches
Sec. 502. (1) A person that is a:
(a) depository institution;
(b) subsidiary that is owned and controlled by a depositoryinstitution; or
(c) credit union service organization;
may engage in the making of consumer loans that are not mortgagetransactions without obtaining a license under this article.
(2) A collection agency licensed under IC 25-11-1 may engage in:
(a) taking assignments of consumer loans in Indiana; and
(b) undertaking direct collection of payments from orenforcement of rights in Indiana against debtors arising fromconsumer loans;
without obtaining a license under this article.
(3) A person that does not qualify under subsection (1) or (2) shallacquire and retain a license under this article in order to regularly
engage in Indiana in the following actions with respect to consumerloans that are not mortgage transactions:
(a) The making of consumer loans.
(b) Taking assignments of consumer loans.
(c) Undertaking direct collection of payments from orenforcement of rights against debtors arising from consumerloans.
(4) A separate license under this article is required for each legalentity that engages in Indiana in any activity described in subsection(3). However, a separate license under this article is not required foreach branch of a legal entity licensed under this article to perform anactivity described in subsection (3).
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by P.L.14-1992,SEC.32; P.L.122-1994, SEC.24; P.L.176-1996, SEC.7; P.L.23-2000,SEC.7; P.L.10-2006, SEC.6 and P.L.57-2006, SEC.6; P.L.35-2010,SEC.51.
IC 24-4.5-3-502.1
Engaging as a creditor in subordinate lien mortgage transactions;registration with NMLSR; licensed mortgage loan originators;applications for licensure; director's authority to contract withNMLSR
Sec. 502.1. (1) Unless a person:
(a) is a depository institution;
(b) is a subsidiary that is owned and controlled by a depositoryinstitution and regulated by a federal banking agency;
(c) is an institution regulated by the Farm CreditAdministration; or
(d) has first obtained, and subsequently retains, a license fromthe department under this article;
the person shall not regularly engage in Indiana as a creditor insubordinate lien mortgage transactions, take assignments in Indianaof subordinate lien mortgage transactions, or undertake in the directcollection of payments from or enforcement of rights against debtorsin Indiana arising from subordinate lien mortgage transactions.
(2) Each:
(a) creditor licensed by the department under this article; and
(b) entity exempt from licensing under this article that employsa licensed mortgage loan originator;
shall register with and maintain a valid unique identifier issued bythe NMLSR. Each licensed mortgage loan originator must beemployed by, and associated with, a licensed creditor or an exemptentity described under subdivision (b) in the NMLSR in order tooriginate loans.
(3) Applicants for a license must apply for a license under thischapter in a form prescribed by the director. Each form:
(a) must contain content as set forth by rule, instruction, orprocedure of the director; and
(b) may be changed or updated as necessary by the director tocarry out the purposes of this article. (4) To fulfill the purposes of this article, the director mayestablish relationships or contracts with the NMLSR or other entitiesdesignated 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.
(5) For the purpose of participating in the NMLSR, the directoror the department may:
(a) waive or modify, in whole or in part, by rule, regulation, ororder, any or all of the requirements of this article; and
(b) establish new requirements as reasonably necessary toparticipate in the NMLSR.
As added by P.L.35-2010, SEC.52.
IC 24-4.5-3-503
Applications for licenses; issuance; evidence of compliance; use ofNMLSR; denial of application; right to hearing; fees
Sec. 503. (1) The department shall receive and act on allapplications for licenses to make consumer loans. Applications mustbe as prescribed by the director of the department of financialinstitutions.
(2) A license shall not be issued unless the department finds thatthe 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 asimilar function for the applicant; and
(c) if known, each person directly or indirectly owning ofrecord or owning beneficially at least ten percent (10%) of theoutstanding shares of any class of equity security of theapplicant;
are such as to warrant belief that the business will be operatedhonestly and fairly within the purposes of this article.
(3) The director is entitled to request evidence of compliance withthis 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 concerning a personlicensed under section 502 of this chapter may include and undersection 502.1 of this chapter must include:
(a) criminal background checks as described in section 503.1 ofthis chapter, including a national criminal history backgroundcheck (as defined in IC 10-13-3-12) by the Federal Bureau ofInvestigation, for any individual described in subsection (2);
(b) credit histories as described in section 503.2 of this chapter;
(c) surety bond requirements as described in section 503.3 ofthis chapter;
(d) a review of licensure actions in Indiana and other states; and (e) other background checks considered necessary by thedirector.
(5) For purposes of this section and in order to reduce the pointsof contact that the director may have to maintain under this section,the director may use the NMLSR as a channeling