CHAPTER 5. CLAIMS, DEFENSES, REMEDIES
IC 24-9-5
Chapter 5. Claims, Defenses, Remedies
IC 24-9-5-1
Purchaser or assignee subject to affirmative claims and defenses;claims available to borrower
Sec. 1. (a) A person who purchases or is otherwise assigned a highcost home loan is subject to all affirmative claims and any defenses,except for an affirmative claim or defense pursuant to IC 24-9-3-7,with respect to the high cost home loan that the borrower could assertagainst a creditor or broker of the high cost home loan. However, thissection does not apply if the purchaser or assignee demonstrates bya preponderance of the evidence that a reasonable person exercisingordinary due diligence could not determine that the loan was a highcost home loan. A purchaser or an assignee is presumed to haveexercised reasonable due diligence if the purchaser or assignee:
(1) has in place at the time of the purchase or assignment of thesubject loans, policies that expressly prohibit the purchase oracceptance of the assignment of any high cost home loans;
(2) requires by contract that a seller or an assignor of homeloans to the purchaser or assignee represents and warrants to thepurchaser or assignee that either:
(A) the seller or assignor will not sell or reassign any highcost home loans to the purchaser or assignee; or
(B) the seller or assignor is a beneficiary of a representationand warranty from a previous seller or assignor to thateffect;
(3) exercises reasonable due diligence:
(A) at the time of purchase or assignment of home loans; or
(B) within a reasonable period after the purchase orassignment of home loans;
intended by the purchaser or assignee to prevent the purchaseror assignee from purchasing or taking assignment of any highcost home loans; or
(4) satisfies the requirements of subdivisions (1) and (2) andestablishes that a reasonable person exercising ordinary duediligence could not determine that the loan was a high costhome loan based on the:
(A) documentation required by the federal Truth in LendingAct (15 U.S.C. 1601 et seq.); and
(B) itemization of the amount financed and otherdisbursement disclosures.
(b) A borrower acting only in an individual capacity may assertagainst the creditor or any subsequent holder or assignee of a highcost home loan:
(1) a violation of IC 24-9-4-2 as a defense, claim, orcounterclaim, after:
(A) an action to enjoin foreclosure or to preserve or obtainpossession of the dwelling that secures the loan is initiated;
(B) an action to collect on the loan or foreclose on the
collateral securing the loan is initiated; or
(C) the loan is more than sixty (60) days in default;
within three (3) years after the closing of a home loan;
(2) a violation of this article in connection to the high cost homeloan as a defense, claim, or counterclaim in an original actionwithin five (5) years after the closing of a high cost home loan;and
(3) any defense, claim, counterclaim, or action to enjoinforeclosure or preserve or obtain possession of the home thatsecures the loan, including a violation of this article after:
(A) an action to collect on the loan or foreclose on thecollateral securing the loan is initiated;
(B) the debt arising from the loan is accelerated; or
(C) the loan is more than sixty (60) days in default;
at any time during the term of a high cost home loan.
(c) In an action, a claim, or a counterclaim brought undersubsection (b), the borrower may recover only amounts required toreduce or extinguish the borrower's liability under a home loan plusamounts required to recover costs, including reasonable attorney'sfees.
(d) The provisions of this section are effective notwithstandingany other provision of law. This section shall not be construed tolimit the substantive rights, remedies, or procedural rights availableto a borrower against any creditor, assignee, or holder under anyother law. The rights conferred on borrowers by subsections (a) and(b) are independent of each other and do not limit each other.
As added by P.L.73-2004, SEC.33. Amended by P.L.141-2005,SEC.6.
IC 24-9-5-2
Acceleration; reinstatement of high cost home loan after cure ofdefault
Sec. 2. (a) If a creditor asserts that grounds for acceleration underthe terms of a high cost home loan exist and requires the payment infull of all sums secured by the security instrument, the borrower ora person authorized to act on the borrower's behalf at any time beforethe title is transferred by means of foreclosure, judicial proceedingand sale, or otherwise may cure the default and reinstate the highcost home loan by tendering the amount or performance as specifiedin the security instrument.
(b) If the borrower cures the default on a high cost home loan, theoriginal loan terms shall be reinstated, and any acceleration of anyobligation under the security instrument or note arising from thedefault is nullified as of the date of the cure.
As added by P.L.73-2004, SEC.33.
IC 24-9-5-3
Foreclosure proceedings
Sec. 3. (a) A creditor making a high cost home loan that has theright to foreclose must use the judicial foreclosure procedures of the
state in which the property securing the high cost home loan islocated. The borrower has the right to assert in the proceeding thenonexistence of a default and any other claim or defense toacceleration and foreclosure, including any claim or defense basedon any violations of this article.
(b) This section is not intended and shall not be construed toallow any claim or defense otherwise barred by any statute oflimitation or repose.
As added by P.L.73-2004, SEC.33.
IC 24-9-5-4
Liability for violation; exceptions; damages; equitable relief;recoupment; action by homeowner protection unit for deceptiveact; statute of limitations; priority of damages over civil penalties
Sec. 4. (a) This section does not apply to a violation ofIC 24-9-3-7(c)(4), IC 24-9-3-7(c)(5), or IC 24-9-3-7(c)(6). A personwho violates this article is liable to a person who is a party to thehome loan transaction, mortgage transaction (as defined inIC 24-9-3-7(a)), or real estate transaction (as defined inIC 24-9-3-7(b)), as appropriate, that gave rise to the violation for thefollowing:
(1) Actual damages, including consequential damages. A personis not required to demonstrate reliance in order to receive actualdamages.
(2) Statutory damages equal to two (2) times the financecharges agreed to in a home loan agreement.
(3) Costs and reasonable attorney's fees.
(b) A person may be granted injunctive, declaratory, and otherequitable relief as the court determines appropriate in an action toenforce compliance with this chapter.
(c) The right of rescission granted under 15 U.S.C. 1601 et seq.for a violation of the federal Truth in Lending Act (15 U.S.C. 1601et seq.) is available to a person acting only in an individual capacityby way of recoupment as a defense against a party foreclosing on ahome loan at any time during the term of the loan. Any recoupmentclaim asserted under this provision is limited to the amount requiredto reduce or extinguish the person's liability under the home loanplus amounts required to recover costs, including reasonableattorney's fees. This article shall not be construed to limit therecoupment rights available to a person under any other law.
(d) The remedies provided in this section are cumulative but arenot intended to be the exclusive remedies available to a person.Except as provided in subsection (e), a person is not required toexhaust any administrative remedies under this article or under anyother applicable law.
(e) Before bringing an action regarding an alleged deceptive actunder this chapter, a person must:
(1) notify the homeowner protection unit established byIC 4-6-12-2 of the alleged violation giving rise to the action;and (2) allow the homeowner protection unit at least ninety (90)days to institute appropriate administrative and civil action toredress a violation.
(f) An action under this chapter must be brought within five (5)years after the date that the person knew, or by the exercise ofreasonable diligence should have known, of the violation of thisarticle.
(g) An award of damages under subsection (a) has priority over acivil penalty imposed under this article.
As added by P.L.73-2004, SEC.33. Amended by P.L.3-2005, SEC.1;P.L.105-2009, SEC.10; P.L.114-2010, SEC.19.
IC 24-9-5-5
Unintentional or erroneous violations; corrections by creditors
Sec. 5. (a) If the creditor or an assignee establishes by apreponderance of evidence that a violation of this article isunintentional or the result of a bona fide error of law or factnotwithstanding the maintenance of procedures reasonably adoptedto avoid any such violation or error, the validity of the transaction isnot affected, and no liability is imposed under section 4 of thischapter except in the case of a refusal to make a refund.
(b) Except as provided in subsection (c), a creditor in a high costhome loan who in good faith fails to comply with this article is notconsidered to have violated this article if the creditor does thefollowing before receiving notice of the failure from the borrower:
(1) Not later than ninety (90) days after the date of the loanclosing:
(A) makes appropriate restitution to the borrower of anyamounts collected in error; and
(B) takes necessary action to make all appropriateadjustments to the loan to correct the error.
(2) Not later than one hundred twenty (120) days after the dateof the loan closing, notifies the borrower of:
(A) the error; and
(B) the amount of the required restitution or adjustment.
(c) Subsection (b) does not apply unless the creditor establishesthat the compliance failure was not intentional and resulted from abona fide error of fact or law, notwithstanding the maintenance ofprocedures reasonably adopted to avoid the errors.
As added by P.L.73-2004, SEC.33.
IC 24-9-5-6
Relation to other laws
Sec. 6. The rights conferred by this article are in addition to rightsgranted under any other law.
As added by P.L.73-2004, SEC.33.