CHAPTER 23.6. FIVE STAR MORTGAGES
IC 24-5-23.6
Chapter 23.6. Five Star Mortgages
IC 24-5-23.6-1
"Creditor"
Sec. 1. (a) As used in this chapter, "creditor" means:
(1) a person:
(A) that engages in Indiana in the extension of mortgagesthat are subject to a credit service charge or loan financecharge, as applicable, or are payable by written agreement inmore than four (4) installments (not including a downpayment); and
(B) to whom the obligation arising from a mortgage isinitially payable, either on the face of the note or contract, orby agreement if there is not a note or contract; or
(2) a person who brokers a mortgage, including a person who:
(A) directly or indirectly solicits, processes, places, ornegotiates mortgages for others;
(B) offers to solicit, process, place, or negotiate mortgagesfor others; or
(C) closes mortgages that may be in the person's own namewith funds provided by others and that are thereafterassigned to the person providing funding for the mortgages.
(b) The term does not include a person described inIC 24-9-2-6(b).
As added by P.L.115-2010, SEC.20.
IC 24-5-23.6-2
"Debtor"
Sec. 2. (a) As used in this chapter, "debtor", with respect to amortgage, refers to the maker of the note secured by the mortgage.
(b) The term includes a prospective debtor with respect to amortgage for which a closing has not occurred.
As added by P.L.115-2010, SEC.20.
IC 24-5-23.6-3
"Department"
Sec. 3. As used in this chapter, "department" refers to thedepartment of financial institutions established by IC 28-11-1-1.
As added by P.L.115-2010, SEC.20.
IC 24-5-23.6-4
"Dwelling"
Sec. 4. As used in this chapter, "dwelling" means a residentialstructure that is located in Indiana and that contains one (1) to four(4) units, regardless of whether the structure is permanently attachedto real property. The term includes an individual:
(1) condominium unit;
(2) cooperative unit;
(3) mobile home; or (4) trailer;
that is used as a residence.
As added by P.L.115-2010, SEC.20.
IC 24-5-23.6-5
"Five star mortgage lender"
Sec. 5. As used in this chapter, "five star mortgage lender" meansa creditor that:
(1) offers at least one (1) mortgage product that qualifies as afive star mortgage under the program; and
(2) has a current and accurate certification on file with thedepartment, as described in section 9(a)(3) of this chapter.
As added by P.L.115-2010, SEC.20.
IC 24-5-23.6-6
"Indiana customer"
Sec. 6. As used in this chapter, "Indiana customer", with respectto a mortgage offered by a creditor, means an individual who:
(1) is an Indiana resident at the time the mortgage is offered bythe creditor; or
(2) would become an Indiana resident after purchasing andoccupying the dwelling that is the subject of the mortgage beingoffered.
As added by P.L.115-2010, SEC.20.
IC 24-5-23.6-7
"Mortgage"
Sec. 7. (a) As used in this chapter, "mortgage" means a sale orloan, or the refinancing or consolidation of a sale or loan, in whicha first mortgage, deed of trust, or a land contract that constitutes afirst lien, is created or retained against land that is located in Indianaand upon which there is a dwelling that is or will be used by thedebtor primarily for personal, family, or household purposes.
(b) The term includes any of the following that meets theconditions set forth in subsection (a):
(1) A home loan subject to IC 24-9.
(2) A loan described in IC 24-9-1-1, to the extent allowed underfederal law.
(3) A first lien mortgage transaction (as defined inIC 24-4.4-1-301) subject to IC 24-4.4.
As added by P.L.115-2010, SEC.20.
IC 24-5-23.6-8
"Program"
Sec. 8. As used in this chapter, "program" refers to the five starmortgage program established by section 9 of this chapter.
As added by P.L.115-2010, SEC.20.
IC 24-5-23.6-9
Five star mortgage program established; guidelines; requirements;
certifications; fees; investigations; enforcement
Sec. 9. (a) The five star mortgage program is established. Not laterthan June 1, 2010, the department shall adopt guidelines toimplement the program. The program established by this section, asimplemented through the department's guidelines, must meet thefollowing criteria:
(1) The program must be available on a voluntary basis tocreditors that offer mortgages to Indiana customers after June30, 2010.
(2) To participate in the program, a creditor must submit acertification, on a form prescribed by the department, attestingthat the creditor qualifies as a five star mortgage lender.
(3) To qualify as a five star mortgage lender under the program,a creditor must certify, on the form described in subdivision (2),that the creditor meets the following conditions:
(A) The creditor offers or will offer to Indiana customersafter June 30, 2010, at least one (1) mortgage product thatqualifies as a five star mortgage under the program.
(B) The creditor does not have a record of any significant orrecurring violation of:
(i) IC 24-5-23.5-7; or
(ii) any other state or federal law, regulation, or ruleapplicable to mortgage transactions;
as of the date of the creditor's certification. If the creditor isnot certain whether it meets the criterion set forth in thisclause, the creditor shall consult with the department beforefiling a certification to participate in the program.
(C) The creditor does not have a director or an executiveofficer who has been convicted of or pleaded guilty or nolocontendere to a felony involving fraud, deceit, ormisrepresentation under the laws of Indiana or any otherjurisdiction, as of the date of the creditor's certification. Ifthe creditor is not certain whether it meets the criterion setforth in this clause, the creditor shall consult with thedepartment before filing a certification to participate in theprogram.
(4) To qualify as a five star mortgage under the program, amortgage must include the following terms and conditions:
(A) If the mortgage involves a purchase money transaction,the mortgage must require a down payment by the debtor, ora person acting on behalf of the debtor, of at least tenpercent (10%) of the purchase price of the dwelling that isthe subject of the mortgage. If the mortgage involves therefinancing of an existing mortgage, the customer must haveequity of at least ten percent (10%) in the dwelling that is thesubject of the mortgage.
(B) The mortgage must have a fixed rate of interest.
(C) The mortgage must provide for an escrow account that:
(i) is established by the creditor, or a person acting onbehalf of the creditor, for the benefit of the debtor; (ii) is maintained by the creditor, or a person acting onbehalf of the creditor, during the life of the mortgage; and
(iii) is used during the life of the mortgage to pay taxesand insurance owed with respect to the dwelling that is thesubject of the mortgage.
However, this clause does not apply if, in the creditor'sordinary course of business, the creditor does not regularlyestablish and maintain, or contract for the establishment andmaintenance of, escrow accounts for the payment of taxesand insurance, on behalf of the creditor's customers.
(D) The term of the mortgage may not exceed thirty (30)years.
(E) The mortgage may not include a prepayment penalty orfee.
(5) A creditor that qualifies as a five star mortgage lender andfiles a certification with the department under subdivision (3)shall provide a written statement, on a form and in the mannerprescribed by the department, to any Indiana customer who:
(A) applies for a five star mortgage offered by the creditor;and
(B) does not qualify for the five star mortgage based on thecreditor's underwriting standards for the five star mortgage.
The statement must set forth the reasons why the Indianacustomer did not qualify for the five star mortgage.
(6) A creditor that qualifies as a five star mortgage lender andfiles a certification with the department may include that fact inany marketing material or solicitation directed at Indianacustomers, subject to any conditions or limitations imposed bythe department in the guidelines adopted under this section.
(7) If a creditor:
(A) holds itself out as a five star mortgage lender and:
(i) the creditor has not filed an accurate certification,including any renewal certification required by thedepartment under subsection (b)(3), with the departmentunder this chapter; or
(ii) the creditor has filed a certification or a renewalcertification with the department under this chapter andsubsequently ceases offering at least one (1) mortgageproduct that qualifies as a five star mortgage; or
(B) fails to comply with any program requirement;
the department, upon discovering the act described in clause(A) or (B), shall immediately provide written notice to thecreditor that the creditor does not qualify for participation in theprogram, or no longer qualifies for participation in the program,as appropriate. The notice provided under this subdivision mustinform the creditor of the reason or reasons the creditor doesnot qualify for participation in the program, or no longerqualifies for participation in the program, as appropriate. Notlater than seven (7) days after the date of the notice provided tothe creditor under this subdivision, the department shall remove
the creditor from the list of creditors published on thedepartment's Internet web site under subsection (c), asappropriate, and shall post, on the same Internet web page onwhich the list described in subsection (c) is published, a link tothe notice provided to the creditor under this subdivision.
(b) In addition to the program criteria required by subsection (a),the guidelines adopted by the department under this section mayinclude the following:
(1) Provisions allowing a creditor that qualifies as a five starmortgage lender and files a certification with the department toinclude in the paperwork associated with a five star mortgage:
(A) a statement;
(B) a seal; or
(C) any other designation considered appropriate by thedepartment;
indicating that the particular mortgage product is a five starmortgage.
(2) A requirement that a creditor that qualifies as a five starmortgage lender and files a certification with the departmentshall report the following information to the department on anannual basis, or any other basis determined appropriate by thedepartment:
(A) The total number and types of residential mortgageproducts that were offered by the creditor to Indianacustomers during the applicable reporting period, includingany five star mortgages reported under clause (C).
(B) The total number of residential mortgages described inclause (A) that were closed by the creditor during theapplicable reporting period, including any five starmortgages that were closed during the reporting period, asreported under clause (D).
(C) The number of mortgage products that:
(i) qualified as five star mortgages under the program; and
(ii) were offered by the creditor to Indiana customers;
during the applicable reporting period.
(D) The number of five star mortgages offered to Indianacustomers that were closed by the creditor during theapplicable reporting period.
(3) A requirement that a creditor that qualifies as a five starmortgage lender and files a certification with the departmentshall periodically submit to the department a renewalcertification, on a form prescribed by the department, inconjunction with a report filed under subdivision (2), or at suchother time as the department determines appropriate. In anyrenewal certification required under this subdivision, a creditormust attest that the creditor:
(A) continued to meet the criteria necessary to qualify as afive star mortgage lender; and
(B) complied with all program requirements;
during the applicable reporting period. (4) A fee fixed by the department under IC 28-11-3-5 for eachcertification and recertification submitted by a creditor underthis chapter. However, any fee fixed by the department underthis subdivision may not exceed the department's actual coststo:
(A) process certifications and renewal certifications;
(B) publish the list described in subsection (c) on thedepartment's Internet web site; and
(C) otherwise administer the program.
(5) Any other program requirements, criteria, or incentives thatthe department determines necessary to implement and evaluatea program to encourage creditors to offer stable mortgageproducts to qualified Indiana customers.
(c) The department shall publish on the department's Internet website a list of all creditors that have a current and accurate:
(1) certification under this chapter; or
(2) renewal certification under this chapter;
on file with the department. The Indiana housing and communitydevelopment authority and the securities division of the office of thesecretary of state shall provide a link to the list described in thissubsection on their respective Internet web sites.
(d) The program guidelines established by the department undersubsections (a) and (b) must be made available:
(1) for public inspection and copying at the offices of thedepartment under IC 5-14-3; and
(2) on the department's Internet web site.
(e) The department shall investigate any credible complaintreceived by any means alleging that a creditor has committed aviolation described in subsection (a)(7). If the creditor that is thesubject of a complaint under this subsection is not subject toregulation by the department, the department shall forward thecomplaint to the appropriate state or federal regulatory agency.
(f) Notwithstanding subsection (a), the department may adopt adifferent name for the program, other than the five star mortgageprogram, in adopting the guidelines to implement the program.
As added by P.L.115-2010, SEC.20.