IC 24-4.4-2-101 Short title
Sec. 101. This chapter shall be known and may be cited as the
First Lien Mortgage Lending Act - Miscellaneous. As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-201 Duty to provide payoff amount; liability for failure to provide;
prepayment penalty prohibited for adjustable rate mortgages;
short sales
Sec. 201. (1) A creditor or mortgage servicer shall provide an
accurate payoff amount for a first lien mortgage transaction to the
debtor not later than ten (10) calendar days after the creditor or
mortgage servicer receives the debtor's written request for the
accurate payoff amount. A creditor or mortgage servicer who fails to
provide an accurate payoff amount is liable for:
(a) one hundred dollars ($100) if an accurate payoff amount is
not provided by the creditor or mortgage servicer not later than
ten (10) calendar days after the creditor or mortgage 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 first lien
mortgage transaction from the date the creditor or mortgage
servicer receives the first written request until the date on
which the accurate payoff amount is provided;
if an accurate payoff amount is not provided by the creditor or
mortgage servicer not later than ten (10) calendar days after the
creditor or mortgage servicer receives the debtor's second
written request, and the creditor or mortgage servicer fails to
comply with subdivision (a).
(2) This subsection applies to a first lien mortgage transaction, or
the refinancing or consolidation of a first lien mortgage transaction,
that:
(a) is closed after June 30, 2009; and
(b) has an interest rate that is subject to change at one (1) or
more times during the term of the first lien mortgage
transaction.
A creditor in a transaction to which this subsection applies may not
contract for and may not charge the debtor a prepayment fee or
penalty.
(3) This subsection applies to a first lien mortgage transaction
with respect to which any installment or minimum payment due is
delinquent for at least sixty (60) days. The creditor, servicer, or the
creditor's agent shall acknowledge a written offer made in connection
with a proposed short sale not later than ten (10) business days after
the date of the offer if the offer complies with the requirements for
a qualified written request set forth in 12 U.S.C. 2605(e)(1)(B). The
creditor, servicer, or creditor's agent is required to acknowledge a
written offer made in connection with a proposed short sale from a
third party acting on behalf of the debtor only if the debtor has
provided written authorization for the creditor, servicer, or creditor's
agent to do so. Not later than thirty (30) business days after receipt
of an offer under this subsection, the creditor, servicer, or creditor's
agent shall respond to the offer with an acceptance or a rejection of
the offer. Payment accepted by a creditor, servicer, or creditor's agent
in connection with a short sale constitutes payment in full
satisfaction of the first lien mortgage transaction unless the creditor,
servicer, or creditor's agent obtains:
(a) the following statement: "The debtor remains liable for any
amount still owed under the first lien mortgage transaction."; or
(b) a statement substantially similar to the statement set forth in
subdivision (a);
acknowledged by the initials or signature of the debtor, on or before
the date on which the short sale payment is accepted. As used in this
subsection, "short sale" means a transaction in which the property
that is the subject of a first lien mortgage transaction is sold for an
amount that is less than the amount of the debtor's outstanding
obligation under the first lien mortgage transaction. A creditor or
mortgage servicer that fails to respond to an offer within the time
prescribed by this subsection is liable in accordance with 12 U.S.C.
2605(f) in any action brought under that section. As added by P.L.145-2008, SEC.20. Amended by P.L.52-2009,
SEC.1; P.L.35-2010, SEC.10.
IC 24-4.4-2-301 Violation of state or federal law, regulation, or rule; enforcement
Sec. 301. (1) A violation of a state or federal law, regulation, or
rule applicable to first lien mortgage transactions is a violation of this
article.
(2) The department may enforce penalty provisions set forth in 15
U.S.C. 1640 for violations of disclosure requirements applicable to
first lien mortgage transactions. As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-401 License required; registration with NMLSR; licensed mortgage
loan originators; applications for licensure; director's authority to
contract with NMLSR
Sec. 401. (1) Unless a person subject to this article has first
obtained a license under this article from the department and
annually maintains the license, the person shall not engage in Indiana
as a creditor in first lien mortgage transactions. A separate license
under this article is required for each legal entity that engages in
Indiana as a creditor in first lien mortgage transactions. However, a
separate license under this article is not required for each branch of
a legal entity licensed under this article.
(2) Each:
(a) creditor licensed under this article; and
(b) entity exempt from licensing under this article that employs
a licensed mortgage loan originator;
shall register with and maintain a valid unique identifier issued by
the NMLSR. Each licensed mortgage loan originator must be
employed by, and associated with, a licensed creditor, or an entity
exempt from licensing under this article, in the NMLSR in order to
originate loans.
(3) Applicants for a license under this article must apply for the
license in the form prescribed by the director. Each form:
(a) must contain content as set forth by rule, instruction, or
procedure of the director; and
(b) may be changed or updated as necessary by the director to
carry out the purposes of this article.
(4) To fulfill the purposes of this article, the director may
establish relationships or contracts with the NMLSR or other entities
designated 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 director
or the department may:
(a) waive or modify, in whole or in part, by rule or order, any of
the requirements of this article; and
(b) establish new requirements as reasonably necessary to
participate in the NMLSR. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.11.
IC 24-4.4-2-402 Applications for licenses; issuance; evidence of compliance; use of
NMLSR; denial of application; right to hearing; fees
Sec. 402. (1) The department shall receive and act on all
applications for licenses to engage in first lien mortgage transactions.
Applications must be made as prescribed by the director.
(2) A license may not be issued unless the department finds that
the 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 a
similar function for the applicant; and
(c) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
are such as to warrant belief that the business will be operated
honestly and fairly within the purposes of this article.
(3) The director is entitled to request evidence of compliance with
this 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 must include:
(a) criminal background checks, as described in section 402.1
of this chapter, including a national criminal history background
check (as defined in IC 10-13-3-12) by the Federal Bureau of
Investigation, for any individual described in subsection (2);
(b) credit histories as described in section 402.2 of this chapter;
(c) surety bond requirements as described in section 402.3 of
this chapter;
(d) a review of licensure actions in Indiana and in other states;
and
(e) other background checks considered necessary by the
director.
(5) For purposes of this section and in order to reduce the points
of contact that the director has to maintain for purposes of this
section, the director may use the NMLSR as a channeling agent for
requesting and distributing information to and from any source as
directed by the director.
(6) The department may deny an application under this section if
the director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(7) Upon written request, the applicant is entitled to a hearing on
the question of the qualifications of the applicant for a license in the
manner provided in IC 4-21.5.
(8) The applicant shall pay the following fees at the time
designated by the department:
(a) An initial license fee as established by the department under
IC 28-11-3-5.
(b) An annual renewal fee as established by the department
under IC 28-11-3-5.
(c) Examination fees as established by the department under
IC 28-11-3-5.
(9) A fee as established by the department under IC 28-11-3-5
may be charged for each day a fee under subsection 8(b) or 8(c) is
delinquent.
(10) A license issued under this section is not assignable or
transferable. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.12.
IC 24-4.4-2-402.1 National criminal history background check; fingerprints;
payment of fees or costs; use of NMLSR
Sec. 402.1. (1) When the director requests a national criminal
history background check under section 402(4)(a) of this chapter for
an individual described in section 402(2) of this chapter, the director
shall require the individual to submit fingerprints to the department,
state police department, or NMLSR, as directed, at the time evidence
of compliance is requested under section 402(3) of this chapter. The
individual to whom the request is made shall pay any fees or costs
associated with processing and evaluating the fingerprints and the
national criminal history background check. The national criminal
history background check may be used by the director to determine
the individual's compliance with this section. The director or the
department may not release the results of the national criminal
history background check to any private entity.
(2) For purposes of this section and in order to reduce the points
of contact that the Federal Bureau of Investigation may have to
maintain for purposes of this section, the director may use the
NMLSR as a channeling agent for requesting information from and
distributing information to the United States Department of Justice
or any governmental agency. As added by P.L.35-2010, SEC.13.
IC 24-4.4-2-402.2 Credit reports; payment of fees or costs; demonstrated financial
responsibility; considerations
Sec. 402.2. (1) If the director requests a credit report for an
individual described in section 402(2) of this chapter, the individual
to whom the request is made shall pay any fees or costs associated
with procuring the report.
(2) The individual must submit personal history and experience
information in a form prescribed by the NMLSR, including the
submission of authorization for the NMLSR or the director to obtain
an independent credit report obtained from a consumer reporting
agency described in Section 603(p) of the Fair Credit Reporting Act
(15 U.S.C. 1681a(p)).
(3) The director may consider one (1) or more of the following
when determining if an individual has demonstrated financial
responsibility:
(a) Bankruptcies filed within the last ten (10) years.
(b) Current outstanding judgments, except judgments solely as
a result of medical expenses.
(c) Current outstanding tax liens or other government liens or
filings.
(d) Foreclosures within the past three (3) years.
(e) A pattern of serious delinquent accounts within the past
three (3) years. As added by P.L.35-2010, SEC.14.
IC 24-4.4-2-402.3 Surety bond; penal sum to reflect amount of mortgages originated
Sec. 402.3. (1) Each:
(a) creditor; and
(b) entity exempt from licensing under this article that employs
a licensed mortgage loan originator;
must be covered by a surety bond in accordance with this section.
(2) A surety bond must:
(a) provide coverage for each creditor and each entity exempt
from licensing under this article that employs a mortgage loan
originator in an amount as prescribed in subsection (4); and
(b) be in a form prescribed by the director.
(3) The director may adopt rules or guidance documents with
respect to the requirements for a surety bond as necessary to
accomplish the purposes of this article.
(4) The penal sum of the surety bond shall be maintained in an
amount that reflects the dollar amount of mortgage transactions
originated as determined by the director.
(5) If an action is commenced on the surety bond of a creditor or
an entity exempt from licensing under this article as described in
subsection (1), the director may require the filing of a new bond.
(6) A creditor or an entity exempt from licensing under this article
as described in subsection (1) shall file a new surety bond
immediately upon recovery of any action on the surety bond required
under this section. As added by P.L.35-2010, SEC.15.
IC 24-4.4-2-402.4 NMLSR as sole entity responsible for processing licenses;
reporting of information to NMLSR; confidentiality of
information; agreements with governmental agencies or
associations; waiver of privilege; processing fee
Sec. 402.4. (1) Subject to subsection (6), the director shall
designate the NMLSR to serve as the sole entity responsible for:
(a) processing applications and renewals for licenses under this
article;
(b) issuing unique identifiers for licensees and entities exempt
from licensing under this article that employ a licensed
mortgage loan originator under this article; and
(c) performing other services that the director determines are
necessary for the orderly administration of the department's
licensing system under this article.
(2) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director shall regularly
report significant or recurring violations of this article to the
NMLSR.
(3) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director may report
complaints received regarding licensees under this article to the
NMLSR.
(4) The director may report publicly adjudicated licensure actions
against a licensee to the NMLSR.
(5) The director shall establish a process in which licensees may
challenge information reported to the NMLSR by the department.
(6) The director's authority to designate the NMLSR under
subsection (1) is subject to the following:
(a) Information stored in the NMLSR is subject to the
confidentiality provisions of IC 5-14-3 and IC 28-1-2-30. A
person may not:
(i) obtain information from the NMLSR, unless the person
is authorized to do so by statute;
(ii) initiate any civil action based on information obtained
from the NMLSR if the information is not otherwise
available to the person under any other state law; or
(iii) initiate any civil action based on information obtained
from the NMLSR if the person could not have initiated the
action based on information otherwise available to the
person under any other state law.
(b) Documents, materials, and other forms of information in the
control or possession of the NMLSR that are confidential under
IC 28-1-2-30 and that are:
(i) furnished by the director, the director's designee, or a
licensee; or
(ii) otherwise obtained by the NMLSR;
are confidential and privileged by law and are not subject to
inspection under IC 5-14-3, subject to subpoena, subject to
discovery, or admissible in evidence in any civil action.
However, the director may use the documents, materials, or
other information available to the director in furtherance of any
action brought in connection with the director's duties under
this article.
(c) Disclosure of documents, materials, and information:
(i) to the director; or
(ii) by the director;
under this subsection does not result in a waiver of any
applicable privilege or claim of confidentiality with respect to
the documents, materials, or information.
(d) Information provided to the NMLSR is subject to IC 4-1-11.
(e) This subsection does not limit or impair a person's right to:
(i) obtain information;
(ii) use information as evidence in a civil action or
proceeding; or
(iii) use information to initiate a civil action or proceeding;
if the information may be obtained from the director or the
director's designee under any law.
(f) Except as otherwise provided in Public Law 110-289,
Section 1512, the requirements under any federal law or
IC 5-14-3 regarding the privacy or confidentiality of any
information or material provided to the NMLSR, and any
privilege arising under federal or state law, including the rules
of any federal or state court, with respect to the information or
material, continue to apply to the information or material after
the information or material has been disclosed to the NMLSR.
The information and material may be shared with all state and
federal regulatory officials with mortgage industry oversight
authority without the loss of privilege or the loss of
confidentiality protections provided by federal law or IC 5-14-3.
(g) For purposes of this section, the director may enter
agreements or sharing arrangements with other governmental
agencies, the Conference of State Bank Supervisors, the
American Association of Residential Mortgage Regulators, or
other associations representing governmental agencies, as
established by rule or order of the director.
(h) Information or material that is subject to a privilege or
confidentiality under subdivision (f) is not subject to:
(i) disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or
an agency of the federal government or the respective state;
or
(ii) subpoena, discovery, or admission into evidence in any
private civil action or administrative process, unless with
respect to any privilege held by the NMLSR with respect to
the information or material, the person to whom the
information or material pertains waives, in whole or in part,
in the discretion of the person, that privilege.
(i) Any provision of IC 5-14-3 that concerns the disclosure of:
(i) confidential supervisory information; or
(ii) any information or material described in subdivision (f);
and that is inconsistent with subdivision (f) is superseded by
this section.
(j) This section does not apply with respect to information or
material that concerns the employment history of, and publicly
adjudicated disciplinary and enforcement actions against, a
person described in section 402(2) of this chapter and that is
included in the NMLSR for access by the public.
(k) The director may require a licensee required to submit
information to the NMLSR to pay a processing fee considered
reasonable by the director. In determining whether an NMLSR
processing fee is reasonable, the director shall:
(i) require review of; and
(ii) make available;
the audited financial statements of the NMLSR. As added by P.L.35-2010, SEC.16.
IC 24-4.4-2-403 License renewal; revocation or suspension of license not renewed;
reinstatement or appeal
Sec. 403. (1) A license issued under this article must be renewed
through the NMLSR not later than December 31 of each calendar
year. The minimum standards for license renewal for a creditor
include the following:
(a) The creditor has continued to meet the surety bond
requirement under section 402.3 of this chapter.
(b) The creditor has filed the creditor's annual call report in a
manner that satisfies section 405(4) of this chapter.
(c) The creditor has paid all required fees for renewal of the
license.
(d) The creditor and individuals described in section 402(2) of
this chapter continue to meet all the standards for licensing
contained in section 402 of this chapter.
(2) A license issued by the department authorizing a person to
engage in first lien mortgage transactions as a creditor under this
article may be revoked or suspended by the department if the person
fails to:
(a) file any renewal form required by the department; or
(b) pay any license renewal fee described under section 402 of
this chapter;
not later than sixty (60) days after the due date.
(3) A person whose license is revoked or suspended under this
section may do either of the following:
(a) Pay all delinquent fees and apply for reinstatement of the
license.
(b) Appeal the revocation or suspension to the department for
an administrative review under IC 4-21.5-3. Pending the
decision resulting from the hearing under IC 4-21.5-3
concerning the license revocation or suspension, the license
remains in force. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.17.
IC 24-4.4-2-404 Suspension or revocation of license; order to show cause;
immediate suspension pending investigation; order;
relinquishment of license; obligations under existing contracts not
affected; reinstatement
Sec. 404. (1) The department may issue to a person licensed to
engage in first lien mortgage transactions as a creditor an order to
show cause why the person's license should not be revoked or
suspended for a period determined by the department. The order
must state the place and time for a meeting with the department that
is not less than ten (10) days from the date of the order. After the
meeting, the department shall revoke or suspend the license if the
department finds that:
(a) the licensee has repeatedly and willfully violated:
(i) this article or any rule, order, or guidance document
lawfully adopted or issued under this article; or
(ii) any other state or federal law, regulation, or rule
applicable to first lien mortgage transactions;
(b) the licensee does not meet the licensing qualifications
contained in section 402 of this chapter; or
(c) facts or conditions exist which would clearly have justified
the department in refusing to grant a license had the facts or
conditions been known to exist at the time the application for
the license was made.
(2) Except as provided in section 403 of this chapter, a revocation
or suspension of a license is not authorized under this article unless
before instituting proceedings to suspend or revoke the license, the
department gives notice to the licensee of the conduct or facts that
warrant the intended action, and the licensee is given an opportunity
to show compliance with all lawful requirements for retention of the
license.
(3) If the department finds that probable cause for revocation of
a license exists and that enforcement of this article requires
immediate suspension of the license pending investigation, the
department may, after a hearing with the licensee upon five (5) days
written notice to the licensee, enter an order suspending the license
for not more than thirty (30) days.
(4) Whenever the department revokes or suspends a license, the
department shall enter an order to that effect and notify the licensee
of the revocation or suspension. Not later than five (5) days after the
entry of the order the department shall deliver to the licensee a copy
of the order and the findings supporting the order.
(5) Any person holding a license to engage in first lien mortgage
transactions as a creditor may relinquish the license by notifying the
department in writing of the relinquishment. However, a
relinquishment under this paragraph does not affect the person's
liability for acts previously committed and coming within the scope
of this article.
(6) If the director determines it to be in the public interest, the
director may pursue revocation of a license of a licensee that has
relinquished the license under subsection (5).
(7) A revocation, suspension, or relinquishment of a license does
not impair or affect the obligation of any preexisting lawful contract
between:
(a) the person whose license has been revoked, suspended, or
relinquished; and
(b) any debtor.
(8) The department may reinstate a license or terminate a
suspension of a license to a person whose license has been revoked
or suspended if the director determines that, at the time the
determination is made, there is no fact or condition that exists that
clearly would justify the department in refusing to reinstate a license.
(9) If the director:
(a) has just cause to believe an emergency exists from which it
is necessary to protect the interests of the public; or
(b) determines that a license was obtained for the benefit of, or
on behalf of, a person who does not qualify for a license;
the director may proceed with the revocation of the license under
IC 4-21.5-3-6. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.18.
IC 24-4.4-2-404.1 Violations by certain individuals; director's notice of intent to issue
order; felonies; civil penalties
Sec. 404.1. (1) If the director determines that a director, an
officer, or an employee of a creditor:
(a) has committed a violation of a statute, a rule, a final cease
and desist order, any condition imposed in writing by the
director in connection with the granting of any application or
other request by the creditor, or any written agreement between
the creditor and the director or the department;
(b) has committed fraudulent or unconscionable conduct; or
(c) has been convicted of or has pleaded guilty or nolo
contendere to a felony under the laws of Indiana or any other
jurisdiction;
the director, subject to subsection (2), may issue and serve upon the
officer, director, or employee a notice of the director's intent to issue
an order removing the person from the person's office or
employment, an order prohibiting any participation by the person in
the conduct of the affairs of any creditor, or an order both removing
the person and prohibiting the person's participation.
(2) A violation, practice, or breach specified in subsection (1) is
subject to the authority of the director under subsection (1) if the
director finds any of the following:
(a) The interests of the creditor's customers could be seriously
prejudiced by reason of the violation or practice.
(b) The violation, practice, or breach involves personal
dishonesty on the part of the officer, director, or employee
involved.
(c) The violation, practice, or breach demonstrates a willful or
continuing disregard by the officer, director, or employee for
state and federal laws and regulations, and for the consumer
protections contained in this article.
(3) A person who:
(a) has been convicted of; or
(b) has pleaded guilty or nolo contendere to;
a felony under the laws of Indiana or any other jurisdiction may not
serve as an officer, a director, or an employee of a creditor, or serve
in any similar capacity, unless the person obtains the written consent
of the director.
(4) A creditor that willfully permits a person to serve the creditor
in violation of subsection (3) is subject to a civil penalty of five
hundred dollars ($500) for each day the violation continues. As added by P.L.35-2010, SEC.19.
IC 24-4.4-2-404.2 Director's notice of intent to issue order; contents; hearing; final
order; suspension or prohibition pending final order; official
record
Sec. 404.2. (1) A notice issued under this chapter must:
(a) be in writing;
(b) contain a statement of the facts constituting the alleged
practice, violation, or breach;
(c) state the facts alleged in support of the violation, practice, or
breach;
(d) state the director's intention to enter an order under section
404.4(1) of this chapter;
(e) be delivered to the board of directors of the creditor;
(f) be delivered to the officer, director, or employee concerned;
(g) specify the procedures that must be followed to initiate a
hearing to contest the facts alleged; and
(h) if the director suspends or prohibits an officer, a director, or
an employee of the creditor from participating in the affairs of
the creditor, as described in subsection (5), include a statement
of the suspension or prohibition.
(2) If a hearing is requested not later than ten (10) days after
service of the written notice, the department shall hold a hearing
concerning the alleged practice, violation, or breach. The hearing
shall be held not later than forty-five (45) days after receipt of the
request. The department, based on the evidence presented at the
hearing, shall enter a final order under section 404.4 of this chapter.
(3) If no hearing is requested within the time specified in
subsection (2), the director may proceed to issue a final order under
section 404.4 of this chapter on the basis of the facts set forth in the
written notice.
(4) An officer, director, or employee who is removed from a
position under a removal order that has become final may not
participate in the conduct of the affairs of any licensee under this
article without the approval of the director.
(5) The director may, for the protection of the creditor or the
interests of its customers, suspend from office or prohibit from
participation in the affairs of the creditor an officer, a director, or an
employee of a creditor who is the subject of a written notice served
by the director under section 404.1(1) of this chapter. A suspension
or prohibition under this subsection becomes effective upon service
of the notice under section 404.1(1) of this chapter. Unless stayed by
a court in a proceeding authorized by subsection (6), the suspension
or prohibition remains in effect pending completion of the
proceedings related to the notice served under section 404.1(1) of
this chapter and until the effective date of an order entered by the
department under subsection (2) or the director under subsection (3).
Copies of the notice shall also be served upon the creditor or affiliate
of which the person is an officer, a director, or an employee.
(6) Not more than fifteen (15) days after an officer, a director, or
an employee has been suspended from office or prohibited from
participation in the conduct of the affairs of the creditor or affiliate
under subsection (5), the officer, director, or employee may apply to
a court having jurisdiction for a stay of the suspension or prohibition
pending completion of the proceedings related to the written notice
served under section 404.1(1) of this chapter, and the court may stay
the suspension or prohibition.
(7) The department shall maintain an official record of a
proceeding under this chapter. As added by P.L.35-2010, SEC.20.
IC 24-4.4-2-404.3 Consent agreement; notice of charges not required
Sec. 404.3. If the director enters into a consent to a final order
under section 404.4 of this chapter with a creditor, a director, an
officer, or an employee, the director is not required to issue and serve
a notice of charges upon the creditor, director, or officer under
section 404.1 of this chapter. A consent agreement may be negotiated
and entered into before or after the issuance of a notice of charges.
The director shall provide a copy of the consent order to the board of
directors of the creditor. As added by P.L.35-2010, SEC.21.
IC 24-4.4-2-404.4 Final order; remedies; consent presumed
Sec. 404.4. (1) If, after a hearing described in section 404.2(2) of
this chapter, the department finds that the conditions specified in
section 404.1 of this chapter have been established, the department
may issue a final order. If a hearing is not requested within the time
specified in section 404.2(2) of this chapter, the director may issue
a final order on the basis of the facts set forth in the written notice
served under section 404.1(1) of this chapter.
(2) Unless the director has entered into a consent agreement
described in section 404.3 of this chapter, a final order must include
separately stated findings of fact and conclusions of law for all
aspects of the order.
(3) In a final order under this section, the department or the
director, as appropriate, may order one (1) or more of the following
with respect to an officer, a director, or an employee of a creditor:
(a) The removal of the officer, director, or employee from the
person's office, position, or employment.
(b) A prohibition against any participation by the officer,
director, or employee in the conduct of the affairs of any
creditor.
(c) If the subject of the order is an officer or a director of a
creditor, and subject to section 404.6 of this chapter, the
imposition of a civil penalty not to exceed fifteen thousand
dollars ($15,000) for each practice, violation, or act that:
(i) is described in section 404.1 of this chapter; and
(ii) is found to exist by the department or the director.
(4) A final order shall be issued in writing not later than ninety
(90) days after conclusion of a hearing held under section 404.2(2)
of this chapter, unless this period is waived or extended with the
written consent of all parties or for good cause shown.
(5) If the officer, director, or employee does not appear
individually or by an authorized representative at a hearing held
under section 404.2(2) of this chapter, the officer, director, or
employee is considered to have consented to the issuance of a final
order.
(6) The remedies provided in this chapter are in addition to other
remedies contained in this article.
As added by P.L.35-2010, SEC.22.
IC 24-4.4-2-404.5 Final order; effective date; authority of department or court to
stay, modify, or vacate
Sec. 404.5. (1) A final order issued under this chapter is effective
on the eleventh day after service of the order. However, a final order
issued upon consent under section 404.3 of this chapter is effective
at the time specified in the order.
(2) A final order remains effective and enforceable as provided in
the order.
(3) The department or a reviewing court may stay, modify, or
vacate a final order. As added by P.L.35-2010, SEC.23.
IC 24-4.4-2-404.6 Factors for determining amount of civil penalty; indemnification
by creditor prohibited; deposit of civil penalties in financial
institutions fund
Sec. 404.6. (1) The director or the department, as appropriate,
shall consider the following factors in determining the amount of a
civil penalty that should be assessed against a director or an officer
in a final order issued under section 404.4(3)(c) of this chapter:
(a) The appropriateness of the civil penalty with respect to the
financial resources and good faith of the individual charged.
(b) The gravity of the practice, violation, or act.
(c) The history of previous practices, violations, or acts.
(d) The economic benefit derived by the individual from the
practice, violation, or act.
(e) Other factors that justice requires.
(2) A creditor may not indemnify a director or an officer for a
civil penalty imposed in a final order under section 404.4(3)(c) of
this chapter.
(3) Civil penalties shall be deposited in the financial institutions
fund established by IC 28-11-2-9. As added by P.L.35-2010, SEC.24.
IC 24-4.4-2-404.7 Authority of director to enforce orders, agreements, or conditions
in court
Sec. 404.7. The director may enforce any of the following by
applying for appropriate relief to a court having jurisdiction:
(a) An order issued under this chapter.
(b) A written agreement entered into by the department or the
director and any director, officer, or employee of a creditor.
(c) Any condition imposed in writing by the department or the
director on any director, officer, or employee of a creditor. As added by P.L.35-2010, SEC.25.
IC 24-4.4-2-405 Record keeping; use of unique identifier on forms and documents;
use of examination and regulatory software; reports of condition
to NMLSR; financial statements; notice to department of certain
events or changes
Sec. 405. (1) Every licensee shall maintain records in a manner
that will enable the department to determine whether the licensee is
complying with this article. The record keeping system of a licensee
is sufficient if the licensee makes the required information
reasonably available. The department shall determine the sufficiency
of the records and whether the licensee has made the required
information reasonably available. The department shall be given free
access to the records wherever the records are located. Records
concerning any first lien mortgage transaction shall be retained for
two (2) years after the making of the final entry relating to the
transaction, but in the case of a revolving first lien mortgage
transaction, the two (2) years required under this subsection is
measured from the date of each entry relating to the transaction.
(2) The unique identifier of any person originating a mortgage
transaction must be clearly shown on all mortgage transaction
application forms and any other documents as required by the
director.
(3) Every licensee shall use automated examination and regulatory
software designated by the director, including third party software.
Use of the software consistent with guidance and policies issued by
the director is not a violation of IC 28-1-2-30.
(4) Each:
(a) creditor licensed by the department under this article; and
(b) entity that is exempt from licensing under this article and
that employs one (1) or more licensed mortgage originators;
shall submit to the NMLSR reports of condition, which must be in a
form and must contain information as required by the NMLSR.
(5) Each:
(a) creditor licensed by the department under this article; and
(b) entity exempt from licensing under this article that employs
licensed mortgage loan originators;
shall file with the department additional financial statements relating
to all first lien mortgage transactions originated by the licensed
creditor or the exempt entity as required by the department, but not
more frequently than annually, in the form prescribed by the
department.
(6) A licensed creditor shall file notification with the department
if the licensee:
(a) has a change in name, address, or any of its principals;
(b) opens a new branch, closes an existing branch, or relocates
an existing branch;
(c) files for bankruptcy or reorganization; or
(d) is subject to revocation or suspension proceedings by a state
or governmental authority with regard to the licensed creditor's
activities;
not later than thirty (30) days after the date of the event described in
this subsection.
(7) A licensee shall file notification with the department if the
licensee or any director, executive officer, or manager of the licensee
has been convicted of or pleaded guilty or nolo contendere to a
felony under the laws of Indiana or any other jurisdiction. The
licensee shall file the notification required by this subsection not
later than thirty (30) days after the date of the event described in this
subsection.
(8) A licensee shall file notification with the department if the
licensee or any director, executive officer, or manager of the licensee
has had the person's authority to do business in the securities,
commodities, banking, financial services, insurance, real estate, or
real estate appraisal industry revoked or suspended by Indiana or by
any other state, federal, or foreign governmental agency or self
regulatory organization. The licensee shall file the notification
required by this subsection not later than thirty (30) days after the
date of the event described in this subsection. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.26.
IC 24-4.4-2-501 Creditor's duty to comply with closing requirements
Sec. 501. A creditor in a first lien mortgage transaction shall
comply with IC 6-1.1-12-43, to the extent applicable. As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-502 Debtor's right to rescind; accruing interest prohibited during
rescission period; disbursement of proceeds
Sec. 502. (1) A violation by a creditor in a first lien mortgage
transaction of Section 125 of the Federal Consumer Credit Protection
Act (15 U.S.C. 1635) (concerning a debtor's right to rescind a
transaction) constitutes a violation of this article. A creditor may not
accrue interest during the period when a first lien mortgage
transaction may be rescinded under Section 125 of the Federal
Consumer Credit Protection Act (15 U.S.C. 1635).
(2) A creditor must make available for disbursement the proceeds
of a transaction subject to subsection (1) on the later of:
(a) the date the creditor is reasonably satisfied that the debtor
has not rescinded the transaction; or
(b) the first business day after the expiration of the rescission
period under subsection (1). As added by P.L.145-2008, SEC.20. Amended by P.L.1-2009,
SEC.135.
IC 24-4.4-2-503 Reverse mortgages; pamphlet; counseling required for debtor
Sec. 503. A creditor in a first lien mortgage transaction that:
(1) qualifies as a home equity conversion mortgage under the
Federal Housing Administration's program; or
(2) otherwise constitutes a reverse mortgage;
shall provide the debtor with a pamphlet that is approved by the
department and that describes the availability of reverse mortgage
counseling services provided by housing counselors approved by the
Secretary of the United States Department of Housing and Urban
Development, as provided in 24 CFR 206.41(a). The debtor must
receive the counseling described in this section and present the
creditor with the certificate described in 24 CFR 206.41(c) before the
creditor may make a first lien mortgage transaction described in this
section to the debtor. As added by P.L.35-2010, SEC.27.
IC 24-4.4-2-101 Short title
Sec. 101. This chapter shall be known and may be cited as the
First Lien Mortgage Lending Act - Miscellaneous. As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-201 Duty to provide payoff amount; liability for failure to provide;
prepayment penalty prohibited for adjustable rate mortgages;
short sales
Sec. 201. (1) A creditor or mortgage servicer shall provide an
accurate payoff amount for a first lien mortgage transaction to the
debtor not later than ten (10) calendar days after the creditor or
mortgage servicer receives the debtor's written request for the
accurate payoff amount. A creditor or mortgage servicer who fails to
provide an accurate payoff amount is liable for:
(a) one hundred dollars ($100) if an accurate payoff amount is
not provided by the creditor or mortgage servicer not later than
ten (10) calendar days after the creditor or mortgage 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 first lien
mortgage transaction from the date the creditor or mortgage
servicer receives the first written request until the date on
which the accurate payoff amount is provided;
if an accurate payoff amount is not provided by the creditor or
mortgage servicer not later than ten (10) calendar days after the
creditor or mortgage servicer receives the debtor's second
written request, and the creditor or mortgage servicer fails to
comply with subdivision (a).
(2) This subsection applies to a first lien mortgage transaction, or
the refinancing or consolidation of a first lien mortgage transaction,
that:
(a) is closed after June 30, 2009; and
(b) has an interest rate that is subject to change at one (1) or
more times during the term of the first lien mortgage
transaction.
A creditor in a transaction to which this subsection applies may not
contract for and may not charge the debtor a prepayment fee or
penalty.
(3) This subsection applies to a first lien mortgage transaction
with respect to which any installment or minimum payment due is
delinquent for at least sixty (60) days. The creditor, servicer, or the
creditor's agent shall acknowledge a written offer made in connection
with a proposed short sale not later than ten (10) business days after
the date of the offer if the offer complies with the requirements for
a qualified written request set forth in 12 U.S.C. 2605(e)(1)(B). The
creditor, servicer, or creditor's agent is required to acknowledge a
written offer made in connection with a proposed short sale from a
third party acting on behalf of the debtor only if the debtor has
provided written authorization for the creditor, servicer, or creditor's
agent to do so. Not later than thirty (30) business days after receipt
of an offer under this subsection, the creditor, servicer, or creditor's
agent shall respond to the offer with an acceptance or a rejection of
the offer. Payment accepted by a creditor, servicer, or creditor's agent
in connection with a short sale constitutes payment in full
satisfaction of the first lien mortgage transaction unless the creditor,
servicer, or creditor's agent obtains:
(a) the following statement: "The debtor remains liable for any
amount still owed under the first lien mortgage transaction."; or
(b) a statement substantially similar to the statement set forth in
subdivision (a);
acknowledged by the initials or signature of the debtor, on or before
the date on which the short sale payment is accepted. As used in this
subsection, "short sale" means a transaction in which the property
that is the subject of a first lien mortgage transaction is sold for an
amount that is less than the amount of the debtor's outstanding
obligation under the first lien mortgage transaction. A creditor or
mortgage servicer that fails to respond to an offer within the time
prescribed by this subsection is liable in accordance with 12 U.S.C.
2605(f) in any action brought under that section. As added by P.L.145-2008, SEC.20. Amended by P.L.52-2009,
SEC.1; P.L.35-2010, SEC.10.
IC 24-4.4-2-301 Violation of state or federal law, regulation, or rule; enforcement
Sec. 301. (1) A violation of a state or federal law, regulation, or
rule applicable to first lien mortgage transactions is a violation of this
article.
(2) The department may enforce penalty provisions set forth in 15
U.S.C. 1640 for violations of disclosure requirements applicable to
first lien mortgage transactions. As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-401 License required; registration with NMLSR; licensed mortgage
loan originators; applications for licensure; director's authority to
contract with NMLSR
Sec. 401. (1) Unless a person subject to this article has first
obtained a license under this article from the department and
annually maintains the license, the person shall not engage in Indiana
as a creditor in first lien mortgage transactions. A separate license
under this article is required for each legal entity that engages in
Indiana as a creditor in first lien mortgage transactions. However, a
separate license under this article is not required for each branch of
a legal entity licensed under this article.
(2) Each:
(a) creditor licensed under this article; and
(b) entity exempt from licensing under this article that employs
a licensed mortgage loan originator;
shall register with and maintain a valid unique identifier issued by
the NMLSR. Each licensed mortgage loan originator must be
employed by, and associated with, a licensed creditor, or an entity
exempt from licensing under this article, in the NMLSR in order to
originate loans.
(3) Applicants for a license under this article must apply for the
license in the form prescribed by the director. Each form:
(a) must contain content as set forth by rule, instruction, or
procedure of the director; and
(b) may be changed or updated as necessary by the director to
carry out the purposes of this article.
(4) To fulfill the purposes of this article, the director may
establish relationships or contracts with the NMLSR or other entities
designated 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 director
or the department may:
(a) waive or modify, in whole or in part, by rule or order, any of
the requirements of this article; and
(b) establish new requirements as reasonably necessary to
participate in the NMLSR. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.11.
IC 24-4.4-2-402 Applications for licenses; issuance; evidence of compliance; use of
NMLSR; denial of application; right to hearing; fees
Sec. 402. (1) The department shall receive and act on all
applications for licenses to engage in first lien mortgage transactions.
Applications must be made as prescribed by the director.
(2) A license may not be issued unless the department finds that
the 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 a
similar function for the applicant; and
(c) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
are such as to warrant belief that the business will be operated
honestly and fairly within the purposes of this article.
(3) The director is entitled to request evidence of compliance with
this 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 must include:
(a) criminal background checks, as described in section 402.1
of this chapter, including a national criminal history background
check (as defined in IC 10-13-3-12) by the Federal Bureau of
Investigation, for any individual described in subsection (2);
(b) credit histories as described in section 402.2 of this chapter;
(c) surety bond requirements as described in section 402.3 of
this chapter;
(d) a review of licensure actions in Indiana and in other states;
and
(e) other background checks considered necessary by the
director.
(5) For purposes of this section and in order to reduce the points
of contact that the director has to maintain for purposes of this
section, the director may use the NMLSR as a channeling agent for
requesting and distributing information to and from any source as
directed by the director.
(6) The department may deny an application under this section if
the director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(7) Upon written request, the applicant is entitled to a hearing on
the question of the qualifications of the applicant for a license in the
manner provided in IC 4-21.5.
(8) The applicant shall pay the following fees at the time
designated by the department:
(a) An initial license fee as established by the department under
IC 28-11-3-5.
(b) An annual renewal fee as established by the department
under IC 28-11-3-5.
(c) Examination fees as established by the department under
IC 28-11-3-5.
(9) A fee as established by the department under IC 28-11-3-5
may be charged for each day a fee under subsection 8(b) or 8(c) is
delinquent.
(10) A license issued under this section is not assignable or
transferable. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.12.
IC 24-4.4-2-402.1 National criminal history background check; fingerprints;
payment of fees or costs; use of NMLSR
Sec. 402.1. (1) When the director requests a national criminal
history background check under section 402(4)(a) of this chapter for
an individual described in section 402(2) of this chapter, the director
shall require the individual to submit fingerprints to the department,
state police department, or NMLSR, as directed, at the time evidence
of compliance is requested under section 402(3) of this chapter. The
individual to whom the request is made shall pay any fees or costs
associated with processing and evaluating the fingerprints and the
national criminal history background check. The national criminal
history background check may be used by the director to determine
the individual's compliance with this section. The director or the
department may not release the results of the national criminal
history background check to any private entity.
(2) For purposes of this section and in order to reduce the points
of contact that the Federal Bureau of Investigation may have to
maintain for purposes of this section, the director may use the
NMLSR as a channeling agent for requesting information from and
distributing information to the United States Department of Justice
or any governmental agency. As added by P.L.35-2010, SEC.13.
IC 24-4.4-2-402.2 Credit reports; payment of fees or costs; demonstrated financial
responsibility; considerations
Sec. 402.2. (1) If the director requests a credit report for an
individual described in section 402(2) of this chapter, the individual
to whom the request is made shall pay any fees or costs associated
with procuring the report.
(2) The individual must submit personal history and experience
information in a form prescribed by the NMLSR, including the
submission of authorization for the NMLSR or the director to obtain
an independent credit report obtained from a consumer reporting
agency described in Section 603(p) of the Fair Credit Reporting Act
(15 U.S.C. 1681a(p)).
(3) The director may consider one (1) or more of the following
when determining if an individual has demonstrated financial
responsibility:
(a) Bankruptcies filed within the last ten (10) years.
(b) Current outstanding judgments, except judgments solely as
a result of medical expenses.
(c) Current outstanding tax liens or other government liens or
filings.
(d) Foreclosures within the past three (3) years.
(e) A pattern of serious delinquent accounts within the past
three (3) years. As added by P.L.35-2010, SEC.14.
IC 24-4.4-2-402.3 Surety bond; penal sum to reflect amount of mortgages originated
Sec. 402.3. (1) Each:
(a) creditor; and
(b) entity exempt from licensing under this article that employs
a licensed mortgage loan originator;
must be covered by a surety bond in accordance with this section.
(2) A surety bond must:
(a) provide coverage for each creditor and each entity exempt
from licensing under this article that employs a mortgage loan
originator in an amount as prescribed in subsection (4); and
(b) be in a form prescribed by the director.
(3) The director may adopt rules or guidance documents with
respect to the requirements for a surety bond as necessary to
accomplish the purposes of this article.
(4) The penal sum of the surety bond shall be maintained in an
amount that reflects the dollar amount of mortgage transactions
originated as determined by the director.
(5) If an action is commenced on the surety bond of a creditor or
an entity exempt from licensing under this article as described in
subsection (1), the director may require the filing of a new bond.
(6) A creditor or an entity exempt from licensing under this article
as described in subsection (1) shall file a new surety bond
immediately upon recovery of any action on the surety bond required
under this section. As added by P.L.35-2010, SEC.15.
IC 24-4.4-2-402.4 NMLSR as sole entity responsible for processing licenses;
reporting of information to NMLSR; confidentiality of
information; agreements with governmental agencies or
associations; waiver of privilege; processing fee
Sec. 402.4. (1) Subject to subsection (6), the director shall
designate the NMLSR to serve as the sole entity responsible for:
(a) processing applications and renewals for licenses under this
article;
(b) issuing unique identifiers for licensees and entities exempt
from licensing under this article that employ a licensed
mortgage loan originator under this article; and
(c) performing other services that the director determines are
necessary for the orderly administration of the department's
licensing system under this article.
(2) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director shall regularly
report significant or recurring violations of this article to the
NMLSR.
(3) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director may report
complaints received regarding licensees under this article to the
NMLSR.
(4) The director may report publicly adjudicated licensure actions
against a licensee to the NMLSR.
(5) The director shall establish a process in which licensees may
challenge information reported to the NMLSR by the department.
(6) The director's authority to designate the NMLSR under
subsection (1) is subject to the following:
(a) Information stored in the NMLSR is subject to the
confidentiality provisions of IC 5-14-3 and IC 28-1-2-30. A
person may not:
(i) obtain information from the NMLSR, unless the person
is authorized to do so by statute;
(ii) initiate any civil action based on information obtained
from the NMLSR if the information is not otherwise
available to the person under any other state law; or
(iii) initiate any civil action based on information obtained
from the NMLSR if the person could not have initiated the
action based on information otherwise available to the
person under any other state law.
(b) Documents, materials, and other forms of information in the
control or possession of the NMLSR that are confidential under
IC 28-1-2-30 and that are:
(i) furnished by the director, the director's designee, or a
licensee; or
(ii) otherwise obtained by the NMLSR;
are confidential and privileged by law and are not subject to
inspection under IC 5-14-3, subject to subpoena, subject to
discovery, or admissible in evidence in any civil action.
However, the director may use the documents, materials, or
other information available to the director in furtherance of any
action brought in connection with the director's duties under
this article.
(c) Disclosure of documents, materials, and information:
(i) to the director; or
(ii) by the director;
under this subsection does not result in a waiver of any
applicable privilege or claim of confidentiality with respect to
the documents, materials, or information.
(d) Information provided to the NMLSR is subject to IC 4-1-11.
(e) This subsection does not limit or impair a person's right to:
(i) obtain information;
(ii) use information as evidence in a civil action or
proceeding; or
(iii) use information to initiate a civil action or proceeding;
if the information may be obtained from the director or the
director's designee under any law.
(f) Except as otherwise provided in Public Law 110-289,
Section 1512, the requirements under any federal law or
IC 5-14-3 regarding the privacy or confidentiality of any
information or material provided to the NMLSR, and any
privilege arising under federal or state law, including the rules
of any federal or state court, with respect to the information or
material, continue to apply to the information or material after
the information or material has been disclosed to the NMLSR.
The information and material may be shared with all state and
federal regulatory officials with mortgage industry oversight
authority without the loss of privilege or the loss of
confidentiality protections provided by federal law or IC 5-14-3.
(g) For purposes of this section, the director may enter
agreements or sharing arrangements with other governmental
agencies, the Conference of State Bank Supervisors, the
American Association of Residential Mortgage Regulators, or
other associations representing governmental agencies, as
established by rule or order of the director.
(h) Information or material that is subject to a privilege or
confidentiality under subdivision (f) is not subject to:
(i) disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or
an agency of the federal government or the respective state;
or
(ii) subpoena, discovery, or admission into evidence in any
private civil action or administrative process, unless with
respect to any privilege held by the NMLSR with respect to
the information or material, the person to whom the
information or material pertains waives, in whole or in part,
in the discretion of the person, that privilege.
(i) Any provision of IC 5-14-3 that concerns the disclosure of:
(i) confidential supervisory information; or
(ii) any information or material described in subdivision (f);
and that is inconsistent with subdivision (f) is superseded by
this section.
(j) This section does not apply with respect to information or
material that concerns the employment history of, and publicly
adjudicated disciplinary and enforcement actions against, a
person described in section 402(2) of this chapter and that is
included in the NMLSR for access by the public.
(k) The director may require a licensee required to submit
information to the NMLSR to pay a processing fee considered
reasonable by the director. In determining whether an NMLSR
processing fee is reasonable, the director shall:
(i) require review of; and
(ii) make available;
the audited financial statements of the NMLSR. As added by P.L.35-2010, SEC.16.
IC 24-4.4-2-403 License renewal; revocation or suspension of license not renewed;
reinstatement or appeal
Sec. 403. (1) A license issued under this article must be renewed
through the NMLSR not later than December 31 of each calendar
year. The minimum standards for license renewal for a creditor
include the following:
(a) The creditor has continued to meet the surety bond
requirement under section 402.3 of this chapter.
(b) The creditor has filed the creditor's annual call report in a
manner that satisfies section 405(4) of this chapter.
(c) The creditor has paid all required fees for renewal of the
license.
(d) The creditor and individuals described in section 402(2) of
this chapter continue to meet all the standards for licensing
contained in section 402 of this chapter.
(2) A license issued by the department authorizing a person to
engage in first lien mortgage transactions as a creditor under this
article may be revoked or suspended by the department if the person
fails to:
(a) file any renewal form required by the department; or
(b) pay any license renewal fee described under section 402 of
this chapter;
not later than sixty (60) days after the due date.
(3) A person whose license is revoked or suspended under this
section may do either of the following:
(a) Pay all delinquent fees and apply for reinstatement of the
license.
(b) Appeal the revocation or suspension to the department for
an administrative review under IC 4-21.5-3. Pending the
decision resulting from the hearing under IC 4-21.5-3
concerning the license revocation or suspension, the license
remains in force. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.17.
IC 24-4.4-2-404 Suspension or revocation of license; order to show cause;
immediate suspension pending investigation; order;
relinquishment of license; obligations under existing contracts not
affected; reinstatement
Sec. 404. (1) The department may issue to a person licensed to
engage in first lien mortgage transactions as a creditor an order to
show cause why the person's license should not be revoked or
suspended for a period determined by the department. The order
must state the place and time for a meeting with the department that
is not less than ten (10) days from the date of the order. After the
meeting, the department shall revoke or suspend the license if the
department finds that:
(a) the licensee has repeatedly and willfully violated:
(i) this article or any rule, order, or guidance document
lawfully adopted or issued under this article; or
(ii) any other state or federal law, regulation, or rule
applicable to first lien mortgage transactions;
(b) the licensee does not meet the licensing qualifications
contained in section 402 of this chapter; or
(c) facts or conditions exist which would clearly have justified
the department in refusing to grant a license had the facts or
conditions been known to exist at the time the application for
the license was made.
(2) Except as provided in section 403 of this chapter, a revocation
or suspension of a license is not authorized under this article unless
before instituting proceedings to suspend or revoke the license, the
department gives notice to the licensee of the conduct or facts that
warrant the intended action, and the licensee is given an opportunity
to show compliance with all lawful requirements for retention of the
license.
(3) If the department finds that probable cause for revocation of
a license exists and that enforcement of this article requires
immediate suspension of the license pending investigation, the
department may, after a hearing with the licensee upon five (5) days
written notice to the licensee, enter an order suspending the license
for not more than thirty (30) days.
(4) Whenever the department revokes or suspends a license, the
department shall enter an order to that effect and notify the licensee
of the revocation or suspension. Not later than five (5) days after the
entry of the order the department shall deliver to the licensee a copy
of the order and the findings supporting the order.
(5) Any person holding a license to engage in first lien mortgage
transactions as a creditor may relinquish the license by notifying the
department in writing of the relinquishment. However, a
relinquishment under this paragraph does not affect the person's
liability for acts previously committed and coming within the scope
of this article.
(6) If the director determines it to be in the public interest, the
director may pursue revocation of a license of a licensee that has
relinquished the license under subsection (5).
(7) A revocation, suspension, or relinquishment of a license does
not impair or affect the obligation of any preexisting lawful contract
between:
(a) the person whose license has been revoked, suspended, or
relinquished; and
(b) any debtor.
(8) The department may reinstate a license or terminate a
suspension of a license to a person whose license has been revoked
or suspended if the director determines that, at the time the
determination is made, there is no fact or condition that exists that
clearly would justify the department in refusing to reinstate a license.
(9) If the director:
(a) has just cause to believe an emergency exists from which it
is necessary to protect the interests of the public; or
(b) determines that a license was obtained for the benefit of, or
on behalf of, a person who does not qualify for a license;
the director may proceed with the revocation of the license under
IC 4-21.5-3-6. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.18.
IC 24-4.4-2-404.1 Violations by certain individuals; director's notice of intent to issue
order; felonies; civil penalties
Sec. 404.1. (1) If the director determines that a director, an
officer, or an employee of a creditor:
(a) has committed a violation of a statute, a rule, a final cease
and desist order, any condition imposed in writing by the
director in connection with the granting of any application or
other request by the creditor, or any written agreement between
the creditor and the director or the department;
(b) has committed fraudulent or unconscionable conduct; or
(c) has been convicted of or has pleaded guilty or nolo
contendere to a felony under the laws of Indiana or any other
jurisdiction;
the director, subject to subsection (2), may issue and serve upon the
officer, director, or employee a notice of the director's intent to issue
an order removing the person from the person's office or
employment, an order prohibiting any participation by the person in
the conduct of the affairs of any creditor, or an order both removing
the person and prohibiting the person's participation.
(2) A violation, practice, or breach specified in subsection (1) is
subject to the authority of the director under subsection (1) if the
director finds any of the following:
(a) The interests of the creditor's customers could be seriously
prejudiced by reason of the violation or practice.
(b) The violation, practice, or breach involves personal
dishonesty on the part of the officer, director, or employee
involved.
(c) The violation, practice, or breach demonstrates a willful or
continuing disregard by the officer, director, or employee for
state and federal laws and regulations, and for the consumer
protections contained in this article.
(3) A person who:
(a) has been convicted of; or
(b) has pleaded guilty or nolo contendere to;
a felony under the laws of Indiana or any other jurisdiction may not
serve as an officer, a director, or an employee of a creditor, or serve
in any similar capacity, unless the person obtains the written consent
of the director.
(4) A creditor that willfully permits a person to serve the creditor
in violation of subsection (3) is subject to a civil penalty of five
hundred dollars ($500) for each day the violation continues. As added by P.L.35-2010, SEC.19.
IC 24-4.4-2-404.2 Director's notice of intent to issue order; contents; hearing; final
order; suspension or prohibition pending final order; official
record
Sec. 404.2. (1) A notice issued under this chapter must:
(a) be in writing;
(b) contain a statement of the facts constituting the alleged
practice, violation, or breach;
(c) state the facts alleged in support of the violation, practice, or
breach;
(d) state the director's intention to enter an order under section
404.4(1) of this chapter;
(e) be delivered to the board of directors of the creditor;
(f) be delivered to the officer, director, or employee concerned;
(g) specify the procedures that must be followed to initiate a
hearing to contest the facts alleged; and
(h) if the director suspends or prohibits an officer, a director, or
an employee of the creditor from participating in the affairs of
the creditor, as described in subsection (5), include a statement
of the suspension or prohibition.
(2) If a hearing is requested not later than ten (10) days after
service of the written notice, the department shall hold a hearing
concerning the alleged practice, violation, or breach. The hearing
shall be held not later than forty-five (45) days after receipt of the
request. The department, based on the evidence presented at the
hearing, shall enter a final order under section 404.4 of this chapter.
(3) If no hearing is requested within the time specified in
subsection (2), the director may proceed to issue a final order under
section 404.4 of this chapter on the basis of the facts set forth in the
written notice.
(4) An officer, director, or employee who is removed from a
position under a removal order that has become final may not
participate in the conduct of the affairs of any licensee under this
article without the approval of the director.
(5) The director may, for the protection of the creditor or the
interests of its customers, suspend from office or prohibit from
participation in the affairs of the creditor an officer, a director, or an
employee of a creditor who is the subject of a written notice served
by the director under section 404.1(1) of this chapter. A suspension
or prohibition under this subsection becomes effective upon service
of the notice under section 404.1(1) of this chapter. Unless stayed by
a court in a proceeding authorized by subsection (6), the suspension
or prohibition remains in effect pending completion of the
proceedings related to the notice served under section 404.1(1) of
this chapter and until the effective date of an order entered by the
department under subsection (2) or the director under subsection (3).
Copies of the notice shall also be served upon the creditor or affiliate
of which the person is an officer, a director, or an employee.
(6) Not more than fifteen (15) days after an officer, a director, or
an employee has been suspended from office or prohibited from
participation in the conduct of the affairs of the creditor or affiliate
under subsection (5), the officer, director, or employee may apply to
a court having jurisdiction for a stay of the suspension or prohibition
pending completion of the proceedings related to the written notice
served under section 404.1(1) of this chapter, and the court may stay
the suspension or prohibition.
(7) The department shall maintain an official record of a
proceeding under this chapter. As added by P.L.35-2010, SEC.20.
IC 24-4.4-2-404.3 Consent agreement; notice of charges not required
Sec. 404.3. If the director enters into a consent to a final order
under section 404.4 of this chapter with a creditor, a director, an
officer, or an employee, the director is not required to issue and serve
a notice of charges upon the creditor, director, or officer under
section 404.1 of this chapter. A consent agreement may be negotiated
and entered into before or after the issuance of a notice of charges.
The director shall provide a copy of the consent order to the board of
directors of the creditor. As added by P.L.35-2010, SEC.21.
IC 24-4.4-2-404.4 Final order; remedies; consent presumed
Sec. 404.4. (1) If, after a hearing described in section 404.2(2) of
this chapter, the department finds that the conditions specified in
section 404.1 of this chapter have been established, the department
may issue a final order. If a hearing is not requested within the time
specified in section 404.2(2) of this chapter, the director may issue
a final order on the basis of the facts set forth in the written notice
served under section 404.1(1) of this chapter.
(2) Unless the director has entered into a consent agreement
described in section 404.3 of this chapter, a final order must include
separately stated findings of fact and conclusions of law for all
aspects of the order.
(3) In a final order under this section, the department or the
director, as appropriate, may order one (1) or more of the following
with respect to an officer, a director, or an employee of a creditor:
(a) The removal of the officer, director, or employee from the
person's office, position, or employment.
(b) A prohibition against any participation by the officer,
director, or employee in the conduct of the affairs of any
creditor.
(c) If the subject of the order is an officer or a director of a
creditor, and subject to section 404.6 of this chapter, the
imposition of a civil penalty not to exceed fifteen thousand
dollars ($15,000) for each practice, violation, or act that:
(i) is described in section 404.1 of this chapter; and
(ii) is found to exist by the department or the director.
(4) A final order shall be issued in writing not later than ninety
(90) days after conclusion of a hearing held under section 404.2(2)
of this chapter, unless this period is waived or extended with the
written consent of all parties or for good cause shown.
(5) If the officer, director, or employee does not appear
individually or by an authorized representative at a hearing held
under section 404.2(2) of this chapter, the officer, director, or
employee is considered to have consented to the issuance of a final
order.
(6) The remedies provided in this chapter are in addition to other
remedies contained in this article.
As added by P.L.35-2010, SEC.22.
IC 24-4.4-2-404.5 Final order; effective date; authority of department or court to
stay, modify, or vacate
Sec. 404.5. (1) A final order issued under this chapter is effective
on the eleventh day after service of the order. However, a final order
issued upon consent under section 404.3 of this chapter is effective
at the time specified in the order.
(2) A final order remains effective and enforceable as provided in
the order.
(3) The department or a reviewing court may stay, modify, or
vacate a final order. As added by P.L.35-2010, SEC.23.
IC 24-4.4-2-404.6 Factors for determining amount of civil penalty; indemnification
by creditor prohibited; deposit of civil penalties in financial
institutions fund
Sec. 404.6. (1) The director or the department, as appropriate,
shall consider the following factors in determining the amount of a
civil penalty that should be assessed against a director or an officer
in a final order issued under section 404.4(3)(c) of this chapter:
(a) The appropriateness of the civil penalty with respect to the
financial resources and good faith of the individual charged.
(b) The gravity of the practice, violation, or act.
(c) The history of previous practices, violations, or acts.
(d) The economic benefit derived by the individual from the
practice, violation, or act.
(e) Other factors that justice requires.
(2) A creditor may not indemnify a director or an officer for a
civil penalty imposed in a final order under section 404.4(3)(c) of
this chapter.
(3) Civil penalties shall be deposited in the financial institutions
fund established by IC 28-11-2-9. As added by P.L.35-2010, SEC.24.
IC 24-4.4-2-404.7 Authority of director to enforce orders, agreements, or conditions
in court
Sec. 404.7. The director may enforce any of the following by
applying for appropriate relief to a court having jurisdiction:
(a) An order issued under this chapter.
(b) A written agreement entered into by the department or the
director and any director, officer, or employee of a creditor.
(c) Any condition imposed in writing by the department or the
director on any director, officer, or employee of a creditor. As added by P.L.35-2010, SEC.25.
IC 24-4.4-2-405 Record keeping; use of unique identifier on forms and documents;
use of examination and regulatory software; reports of condition
to NMLSR; financial statements; notice to department of certain
events or changes
Sec. 405. (1) Every licensee shall maintain records in a manner
that will enable the department to determine whether the licensee is
complying with this article. The record keeping system of a licensee
is sufficient if the licensee makes the required information
reasonably available. The department shall determine the sufficiency
of the records and whether the licensee has made the required
information reasonably available. The department shall be given free
access to the records wherever the records are located. Records
concerning any first lien mortgage transaction shall be retained for
two (2) years after the making of the final entry relating to the
transaction, but in the case of a revolving first lien mortgage
transaction, the two (2) years required under this subsection is
measured from the date of each entry relating to the transaction.
(2) The unique identifier of any person originating a mortgage
transaction must be clearly shown on all mortgage transaction
application forms and any other documents as required by the
director.
(3) Every licensee shall use automated examination and regulatory
software designated by the director, including third party software.
Use of the software consistent with guidance and policies issued by
the director is not a violation of IC 28-1-2-30.
(4) Each:
(a) creditor licensed by the department under this article; and
(b) entity that is exempt from licensing under this article and
that employs one (1) or more licensed mortgage originators;
shall submit to the NMLSR reports of condition, which must be in a
form and must contain information as required by the NMLSR.
(5) Each:
(a) creditor licensed by the department under this article; and
(b) entity exempt from licensing under this article that employs
licensed mortgage loan originators;
shall file with the department additional financial statements relating
to all first lien mortgage transactions originated by the licensed
creditor or the exempt entity as required by the department, but not
more frequently than annually, in the form prescribed by the
department.
(6) A licensed creditor shall file notification with the department
if the licensee:
(a) has a change in name, address, or any of its principals;
(b) opens a new branch, closes an existing branch, or relocates
an existing branch;
(c) files for bankruptcy or reorganization; or
(d) is subject to revocation or suspension proceedings by a state
or governmental authority with regard to the licensed creditor's
activities;
not later than thirty (30) days after the date of the event described in
this subsection.
(7) A licensee shall file notification with the department if the
licensee or any director, executive officer, or manager of the licensee
has been convicted of or pleaded guilty or nolo contendere to a
felony under the laws of Indiana or any other jurisdiction. The
licensee shall file the notification required by this subsection not
later than thirty (30) days after the date of the event described in this
subsection.
(8) A licensee shall file notification with the department if the
licensee or any director, executive officer, or manager of the licensee
has had the person's authority to do business in the securities,
commodities, banking, financial services, insurance, real estate, or
real estate appraisal industry revoked or suspended by Indiana or by
any other state, federal, or foreign governmental agency or self
regulatory organization. The licensee shall file the notification
required by this subsection not later than thirty (30) days after the
date of the event described in this subsection. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.26.
IC 24-4.4-2-501 Creditor's duty to comply with closing requirements
Sec. 501. A creditor in a first lien mortgage transaction shall
comply with IC 6-1.1-12-43, to the extent applicable. As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-502 Debtor's right to rescind; accruing interest prohibited during
rescission period; disbursement of proceeds
Sec. 502. (1) A violation by a creditor in a first lien mortgage
transaction of Section 125 of the Federal Consumer Credit Protection
Act (15 U.S.C. 1635) (concerning a debtor's right to rescind a
transaction) constitutes a violation of this article. A creditor may not
accrue interest during the period when a first lien mortgage
transaction may be rescinded under Section 125 of the Federal
Consumer Credit Protection Act (15 U.S.C. 1635).
(2) A creditor must make available for disbursement the proceeds
of a transaction subject to subsection (1) on the later of:
(a) the date the creditor is reasonably satisfied that the debtor
has not rescinded the transaction; or
(b) the first business day after the expiration of the rescission
period under subsection (1). As added by P.L.145-2008, SEC.20. Amended by P.L.1-2009,
SEC.135.
IC 24-4.4-2-503 Reverse mortgages; pamphlet; counseling required for debtor
Sec. 503. A creditor in a first lien mortgage transaction that:
(1) qualifies as a home equity conversion mortgage under the
Federal Housing Administration's program; or
(2) otherwise constitutes a reverse mortgage;
shall provide the debtor with a pamphlet that is approved by the
department and that describes the availability of reverse mortgage
counseling services provided by housing counselors approved by the
Secretary of the United States Department of Housing and Urban
Development, as provided in 24 CFR 206.41(a). The debtor must
receive the counseling described in this section and present the
creditor with the certificate described in 24 CFR 206.41(c) before the
creditor may make a first lien mortgage transaction described in this
section to the debtor. As added by P.L.35-2010, SEC.27.
IC 24-4.4-2-101 Short title
Sec. 101. This chapter shall be known and may be cited as the
First Lien Mortgage Lending Act - Miscellaneous. As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-201 Duty to provide payoff amount; liability for failure to provide;
prepayment penalty prohibited for adjustable rate mortgages;
short sales
Sec. 201. (1) A creditor or mortgage servicer shall provide an
accurate payoff amount for a first lien mortgage transaction to the
debtor not later than ten (10) calendar days after the creditor or
mortgage servicer receives the debtor's written request for the
accurate payoff amount. A creditor or mortgage servicer who fails to
provide an accurate payoff amount is liable for:
(a) one hundred dollars ($100) if an accurate payoff amount is
not provided by the creditor or mortgage servicer not later than
ten (10) calendar days after the creditor or mortgage 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 first lien
mortgage transaction from the date the creditor or mortgage
servicer receives the first written request until the date on
which the accurate payoff amount is provided;
if an accurate payoff amount is not provided by the creditor or
mortgage servicer not later than ten (10) calendar days after the
creditor or mortgage servicer receives the debtor's second
written request, and the creditor or mortgage servicer fails to
comply with subdivision (a).
(2) This subsection applies to a first lien mortgage transaction, or
the refinancing or consolidation of a first lien mortgage transaction,
that:
(a) is closed after June 30, 2009; and
(b) has an interest rate that is subject to change at one (1) or
more times during the term of the first lien mortgage
transaction.
A creditor in a transaction to which this subsection applies may not
contract for and may not charge the debtor a prepayment fee or
penalty.
(3) This subsection applies to a first lien mortgage transaction
with respect to which any installment or minimum payment due is
delinquent for at least sixty (60) days. The creditor, servicer, or the
creditor's agent shall acknowledge a written offer made in connection
with a proposed short sale not later than ten (10) business days after
the date of the offer if the offer complies with the requirements for
a qualified written request set forth in 12 U.S.C. 2605(e)(1)(B). The
creditor, servicer, or creditor's agent is required to acknowledge a
written offer made in connection with a proposed short sale from a
third party acting on behalf of the debtor only if the debtor has
provided written authorization for the creditor, servicer, or creditor's
agent to do so. Not later than thirty (30) business days after receipt
of an offer under this subsection, the creditor, servicer, or creditor's
agent shall respond to the offer with an acceptance or a rejection of
the offer. Payment accepted by a creditor, servicer, or creditor's agent
in connection with a short sale constitutes payment in full
satisfaction of the first lien mortgage transaction unless the creditor,
servicer, or creditor's agent obtains:
(a) the following statement: "The debtor remains liable for any
amount still owed under the first lien mortgage transaction."; or
(b) a statement substantially similar to the statement set forth in
subdivision (a);
acknowledged by the initials or signature of the debtor, on or before
the date on which the short sale payment is accepted. As used in this
subsection, "short sale" means a transaction in which the property
that is the subject of a first lien mortgage transaction is sold for an
amount that is less than the amount of the debtor's outstanding
obligation under the first lien mortgage transaction. A creditor or
mortgage servicer that fails to respond to an offer within the time
prescribed by this subsection is liable in accordance with 12 U.S.C.
2605(f) in any action brought under that section. As added by P.L.145-2008, SEC.20. Amended by P.L.52-2009,
SEC.1; P.L.35-2010, SEC.10.
IC 24-4.4-2-301 Violation of state or federal law, regulation, or rule; enforcement
Sec. 301. (1) A violation of a state or federal law, regulation, or
rule applicable to first lien mortgage transactions is a violation of this
article.
(2) The department may enforce penalty provisions set forth in 15
U.S.C. 1640 for violations of disclosure requirements applicable to
first lien mortgage transactions. As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-401 License required; registration with NMLSR; licensed mortgage
loan originators; applications for licensure; director's authority to
contract with NMLSR
Sec. 401. (1) Unless a person subject to this article has first
obtained a license under this article from the department and
annually maintains the license, the person shall not engage in Indiana
as a creditor in first lien mortgage transactions. A separate license
under this article is required for each legal entity that engages in
Indiana as a creditor in first lien mortgage transactions. However, a
separate license under this article is not required for each branch of
a legal entity licensed under this article.
(2) Each:
(a) creditor licensed under this article; and
(b) entity exempt from licensing under this article that employs
a licensed mortgage loan originator;
shall register with and maintain a valid unique identifier issued by
the NMLSR. Each licensed mortgage loan originator must be
employed by, and associated with, a licensed creditor, or an entity
exempt from licensing under this article, in the NMLSR in order to
originate loans.
(3) Applicants for a license under this article must apply for the
license in the form prescribed by the director. Each form:
(a) must contain content as set forth by rule, instruction, or
procedure of the director; and
(b) may be changed or updated as necessary by the director to
carry out the purposes of this article.
(4) To fulfill the purposes of this article, the director may
establish relationships or contracts with the NMLSR or other entities
designated 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 director
or the department may:
(a) waive or modify, in whole or in part, by rule or order, any of
the requirements of this article; and
(b) establish new requirements as reasonably necessary to
participate in the NMLSR. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.11.
IC 24-4.4-2-402 Applications for licenses; issuance; evidence of compliance; use of
NMLSR; denial of application; right to hearing; fees
Sec. 402. (1) The department shall receive and act on all
applications for licenses to engage in first lien mortgage transactions.
Applications must be made as prescribed by the director.
(2) A license may not be issued unless the department finds that
the 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 a
similar function for the applicant; and
(c) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
are such as to warrant belief that the business will be operated
honestly and fairly within the purposes of this article.
(3) The director is entitled to request evidence of compliance with
this 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 must include:
(a) criminal background checks, as described in section 402.1
of this chapter, including a national criminal history background
check (as defined in IC 10-13-3-12) by the Federal Bureau of
Investigation, for any individual described in subsection (2);
(b) credit histories as described in section 402.2 of this chapter;
(c) surety bond requirements as described in section 402.3 of
this chapter;
(d) a review of licensure actions in Indiana and in other states;
and
(e) other background checks considered necessary by the
director.
(5) For purposes of this section and in order to reduce the points
of contact that the director has to maintain for purposes of this
section, the director may use the NMLSR as a channeling agent for
requesting and distributing information to and from any source as
directed by the director.
(6) The department may deny an application under this section if
the director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(7) Upon written request, the applicant is entitled to a hearing on
the question of the qualifications of the applicant for a license in the
manner provided in IC 4-21.5.
(8) The applicant shall pay the following fees at the time
designated by the department:
(a) An initial license fee as established by the department under
IC 28-11-3-5.
(b) An annual renewal fee as established by the department
under IC 28-11-3-5.
(c) Examination fees as established by the department under
IC 28-11-3-5.
(9) A fee as established by the department under IC 28-11-3-5
may be charged for each day a fee under subsection 8(b) or 8(c) is
delinquent.
(10) A license issued under this section is not assignable or
transferable. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.12.
IC 24-4.4-2-402.1 National criminal history background check; fingerprints;
payment of fees or costs; use of NMLSR
Sec. 402.1. (1) When the director requests a national criminal
history background check under section 402(4)(a) of this chapter for
an individual described in section 402(2) of this chapter, the director
shall require the individual to submit fingerprints to the department,
state police department, or NMLSR, as directed, at the time evidence
of compliance is requested under section 402(3) of this chapter. The
individual to whom the request is made shall pay any fees or costs
associated with processing and evaluating the fingerprints and the
national criminal history background check. The national criminal
history background check may be used by the director to determine
the individual's compliance with this section. The director or the
department may not release the results of the national criminal
history background check to any private entity.
(2) For purposes of this section and in order to reduce the points
of contact that the Federal Bureau of Investigation may have to
maintain for purposes of this section, the director may use the
NMLSR as a channeling agent for requesting information from and
distributing information to the United States Department of Justice
or any governmental agency. As added by P.L.35-2010, SEC.13.
IC 24-4.4-2-402.2 Credit reports; payment of fees or costs; demonstrated financial
responsibility; considerations
Sec. 402.2. (1) If the director requests a credit report for an
individual described in section 402(2) of this chapter, the individual
to whom the request is made shall pay any fees or costs associated
with procuring the report.
(2) The individual must submit personal history and experience
information in a form prescribed by the NMLSR, including the
submission of authorization for the NMLSR or the director to obtain
an independent credit report obtained from a consumer reporting
agency described in Section 603(p) of the Fair Credit Reporting Act
(15 U.S.C. 1681a(p)).
(3) The director may consider one (1) or more of the following
when determining if an individual has demonstrated financial
responsibility:
(a) Bankruptcies filed within the last ten (10) years.
(b) Current outstanding judgments, except judgments solely as
a result of medical expenses.
(c) Current outstanding tax liens or other government liens or
filings.
(d) Foreclosures within the past three (3) years.
(e) A pattern of serious delinquent accounts within the past
three (3) years. As added by P.L.35-2010, SEC.14.
IC 24-4.4-2-402.3 Surety bond; penal sum to reflect amount of mortgages originated
Sec. 402.3. (1) Each:
(a) creditor; and
(b) entity exempt from licensing under this article that employs
a licensed mortgage loan originator;
must be covered by a surety bond in accordance with this section.
(2) A surety bond must:
(a) provide coverage for each creditor and each entity exempt
from licensing under this article that employs a mortgage loan
originator in an amount as prescribed in subsection (4); and
(b) be in a form prescribed by the director.
(3) The director may adopt rules or guidance documents with
respect to the requirements for a surety bond as necessary to
accomplish the purposes of this article.
(4) The penal sum of the surety bond shall be maintained in an
amount that reflects the dollar amount of mortgage transactions
originated as determined by the director.
(5) If an action is commenced on the surety bond of a creditor or
an entity exempt from licensing under this article as described in
subsection (1), the director may require the filing of a new bond.
(6) A creditor or an entity exempt from licensing under this article
as described in subsection (1) shall file a new surety bond
immediately upon recovery of any action on the surety bond required
under this section. As added by P.L.35-2010, SEC.15.
IC 24-4.4-2-402.4 NMLSR as sole entity responsible for processing licenses;
reporting of information to NMLSR; confidentiality of
information; agreements with governmental agencies or
associations; waiver of privilege; processing fee
Sec. 402.4. (1) Subject to subsection (6), the director shall
designate the NMLSR to serve as the sole entity responsible for:
(a) processing applications and renewals for licenses under this
article;
(b) issuing unique identifiers for licensees and entities exempt
from licensing under this article that employ a licensed
mortgage loan originator under this article; and
(c) performing other services that the director determines are
necessary for the orderly administration of the department's
licensing system under this article.
(2) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director shall regularly
report significant or recurring violations of this article to the
NMLSR.
(3) Subject to the confidentiality provisions contained in
IC 5-14-3, this section, and IC 28-1-2-30, the director may report
complaints received regarding licensees under this article to the
NMLSR.
(4) The director may report publicly adjudicated licensure actions
against a licensee to the NMLSR.
(5) The director shall establish a process in which licensees may
challenge information reported to the NMLSR by the department.
(6) The director's authority to designate the NMLSR under
subsection (1) is subject to the following:
(a) Information stored in the NMLSR is subject to the
confidentiality provisions of IC 5-14-3 and IC 28-1-2-30. A
person may not:
(i) obtain information from the NMLSR, unless the person
is authorized to do so by statute;
(ii) initiate any civil action based on information obtained
from the NMLSR if the information is not otherwise
available to the person under any other state law; or
(iii) initiate any civil action based on information obtained
from the NMLSR if the person could not have initiated the
action based on information otherwise available to the
person under any other state law.
(b) Documents, materials, and other forms of information in the
control or possession of the NMLSR that are confidential under
IC 28-1-2-30 and that are:
(i) furnished by the director, the director's designee, or a
licensee; or
(ii) otherwise obtained by the NMLSR;
are confidential and privileged by law and are not subject to
inspection under IC 5-14-3, subject to subpoena, subject to
discovery, or admissible in evidence in any civil action.
However, the director may use the documents, materials, or
other information available to the director in furtherance of any
action brought in connection with the director's duties under
this article.
(c) Disclosure of documents, materials, and information:
(i) to the director; or
(ii) by the director;
under this subsection does not result in a waiver of any
applicable privilege or claim of confidentiality with respect to
the documents, materials, or information.
(d) Information provided to the NMLSR is subject to IC 4-1-11.
(e) This subsection does not limit or impair a person's right to:
(i) obtain information;
(ii) use information as evidence in a civil action or
proceeding; or
(iii) use information to initiate a civil action or proceeding;
if the information may be obtained from the director or the
director's designee under any law.
(f) Except as otherwise provided in Public Law 110-289,
Section 1512, the requirements under any federal law or
IC 5-14-3 regarding the privacy or confidentiality of any
information or material provided to the NMLSR, and any
privilege arising under federal or state law, including the rules
of any federal or state court, with respect to the information or
material, continue to apply to the information or material after
the information or material has been disclosed to the NMLSR.
The information and material may be shared with all state and
federal regulatory officials with mortgage industry oversight
authority without the loss of privilege or the loss of
confidentiality protections provided by federal law or IC 5-14-3.
(g) For purposes of this section, the director may enter
agreements or sharing arrangements with other governmental
agencies, the Conference of State Bank Supervisors, the
American Association of Residential Mortgage Regulators, or
other associations representing governmental agencies, as
established by rule or order of the director.
(h) Information or material that is subject to a privilege or
confidentiality under subdivision (f) is not subject to:
(i) disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or
an agency of the federal government or the respective state;
or
(ii) subpoena, discovery, or admission into evidence in any
private civil action or administrative process, unless with
respect to any privilege held by the NMLSR with respect to
the information or material, the person to whom the
information or material pertains waives, in whole or in part,
in the discretion of the person, that privilege.
(i) Any provision of IC 5-14-3 that concerns the disclosure of:
(i) confidential supervisory information; or
(ii) any information or material described in subdivision (f);
and that is inconsistent with subdivision (f) is superseded by
this section.
(j) This section does not apply with respect to information or
material that concerns the employment history of, and publicly
adjudicated disciplinary and enforcement actions against, a
person described in section 402(2) of this chapter and that is
included in the NMLSR for access by the public.
(k) The director may require a licensee required to submit
information to the NMLSR to pay a processing fee considered
reasonable by the director. In determining whether an NMLSR
processing fee is reasonable, the director shall:
(i) require review of; and
(ii) make available;
the audited financial statements of the NMLSR. As added by P.L.35-2010, SEC.16.
IC 24-4.4-2-403 License renewal; revocation or suspension of license not renewed;
reinstatement or appeal
Sec. 403. (1) A license issued under this article must be renewed
through the NMLSR not later than December 31 of each calendar
year. The minimum standards for license renewal for a creditor
include the following:
(a) The creditor has continued to meet the surety bond
requirement under section 402.3 of this chapter.
(b) The creditor has filed the creditor's annual call report in a
manner that satisfies section 405(4) of this chapter.
(c) The creditor has paid all required fees for renewal of the
license.
(d) The creditor and individuals described in section 402(2) of
this chapter continue to meet all the standards for licensing
contained in section 402 of this chapter.
(2) A license issued by the department authorizing a person to
engage in first lien mortgage transactions as a creditor under this
article may be revoked or suspended by the department if the person
fails to:
(a) file any renewal form required by the department; or
(b) pay any license renewal fee described under section 402 of
this chapter;
not later than sixty (60) days after the due date.
(3) A person whose license is revoked or suspended under this
section may do either of the following:
(a) Pay all delinquent fees and apply for reinstatement of the
license.
(b) Appeal the revocation or suspension to the department for
an administrative review under IC 4-21.5-3. Pending the
decision resulting from the hearing under IC 4-21.5-3
concerning the license revocation or suspension, the license
remains in force. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.17.
IC 24-4.4-2-404 Suspension or revocation of license; order to show cause;
immediate suspension pending investigation; order;
relinquishment of license; obligations under existing contracts not
affected; reinstatement
Sec. 404. (1) The department may issue to a person licensed to
engage in first lien mortgage transactions as a creditor an order to
show cause why the person's license should not be revoked or
suspended for a period determined by the department. The order
must state the place and time for a meeting with the department that
is not less than ten (10) days from the date of the order. After the
meeting, the department shall revoke or suspend the license if the
department finds that:
(a) the licensee has repeatedly and willfully violated:
(i) this article or any rule, order, or guidance document
lawfully adopted or issued under this article; or
(ii) any other state or federal law, regulation, or rule
applicable to first lien mortgage transactions;
(b) the licensee does not meet the licensing qualifications
contained in section 402 of this chapter; or
(c) facts or conditions exist which would clearly have justified
the department in refusing to grant a license had the facts or
conditions been known to exist at the time the application for
the license was made.
(2) Except as provided in section 403 of this chapter, a revocation
or suspension of a license is not authorized under this article unless
before instituting proceedings to suspend or revoke the license, the
department gives notice to the licensee of the conduct or facts that
warrant the intended action, and the licensee is given an opportunity
to show compliance with all lawful requirements for retention of the
license.
(3) If the department finds that probable cause for revocation of
a license exists and that enforcement of this article requires
immediate suspension of the license pending investigation, the
department may, after a hearing with the licensee upon five (5) days
written notice to the licensee, enter an order suspending the license
for not more than thirty (30) days.
(4) Whenever the department revokes or suspends a license, the
department shall enter an order to that effect and notify the licensee
of the revocation or suspension. Not later than five (5) days after the
entry of the order the department shall deliver to the licensee a copy
of the order and the findings supporting the order.
(5) Any person holding a license to engage in first lien mortgage
transactions as a creditor may relinquish the license by notifying the
department in writing of the relinquishment. However, a
relinquishment under this paragraph does not affect the person's
liability for acts previously committed and coming within the scope
of this article.
(6) If the director determines it to be in the public interest, the
director may pursue revocation of a license of a licensee that has
relinquished the license under subsection (5).
(7) A revocation, suspension, or relinquishment of a license does
not impair or affect the obligation of any preexisting lawful contract
between:
(a) the person whose license has been revoked, suspended, or
relinquished; and
(b) any debtor.
(8) The department may reinstate a license or terminate a
suspension of a license to a person whose license has been revoked
or suspended if the director determines that, at the time the
determination is made, there is no fact or condition that exists that
clearly would justify the department in refusing to reinstate a license.
(9) If the director:
(a) has just cause to believe an emergency exists from which it
is necessary to protect the interests of the public; or
(b) determines that a license was obtained for the benefit of, or
on behalf of, a person who does not qualify for a license;
the director may proceed with the revocation of the license under
IC 4-21.5-3-6. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.18.
IC 24-4.4-2-404.1 Violations by certain individuals; director's notice of intent to issue
order; felonies; civil penalties
Sec. 404.1. (1) If the director determines that a director, an
officer, or an employee of a creditor:
(a) has committed a violation of a statute, a rule, a final cease
and desist order, any condition imposed in writing by the
director in connection with the granting of any application or
other request by the creditor, or any written agreement between
the creditor and the director or the department;
(b) has committed fraudulent or unconscionable conduct; or
(c) has been convicted of or has pleaded guilty or nolo
contendere to a felony under the laws of Indiana or any other
jurisdiction;
the director, subject to subsection (2), may issue and serve upon the
officer, director, or employee a notice of the director's intent to issue
an order removing the person from the person's office or
employment, an order prohibiting any participation by the person in
the conduct of the affairs of any creditor, or an order both removing
the person and prohibiting the person's participation.
(2) A violation, practice, or breach specified in subsection (1) is
subject to the authority of the director under subsection (1) if the
director finds any of the following:
(a) The interests of the creditor's customers could be seriously
prejudiced by reason of the violation or practice.
(b) The violation, practice, or breach involves personal
dishonesty on the part of the officer, director, or employee
involved.
(c) The violation, practice, or breach demonstrates a willful or
continuing disregard by the officer, director, or employee for
state and federal laws and regulations, and for the consumer
protections contained in this article.
(3) A person who:
(a) has been convicted of; or
(b) has pleaded guilty or nolo contendere to;
a felony under the laws of Indiana or any other jurisdiction may not
serve as an officer, a director, or an employee of a creditor, or serve
in any similar capacity, unless the person obtains the written consent
of the director.
(4) A creditor that willfully permits a person to serve the creditor
in violation of subsection (3) is subject to a civil penalty of five
hundred dollars ($500) for each day the violation continues. As added by P.L.35-2010, SEC.19.
IC 24-4.4-2-404.2 Director's notice of intent to issue order; contents; hearing; final
order; suspension or prohibition pending final order; official
record
Sec. 404.2. (1) A notice issued under this chapter must:
(a) be in writing;
(b) contain a statement of the facts constituting the alleged
practice, violation, or breach;
(c) state the facts alleged in support of the violation, practice, or
breach;
(d) state the director's intention to enter an order under section
404.4(1) of this chapter;
(e) be delivered to the board of directors of the creditor;
(f) be delivered to the officer, director, or employee concerned;
(g) specify the procedures that must be followed to initiate a
hearing to contest the facts alleged; and
(h) if the director suspends or prohibits an officer, a director, or
an employee of the creditor from participating in the affairs of
the creditor, as described in subsection (5), include a statement
of the suspension or prohibition.
(2) If a hearing is requested not later than ten (10) days after
service of the written notice, the department shall hold a hearing
concerning the alleged practice, violation, or breach. The hearing
shall be held not later than forty-five (45) days after receipt of the
request. The department, based on the evidence presented at the
hearing, shall enter a final order under section 404.4 of this chapter.
(3) If no hearing is requested within the time specified in
subsection (2), the director may proceed to issue a final order under
section 404.4 of this chapter on the basis of the facts set forth in the
written notice.
(4) An officer, director, or employee who is removed from a
position under a removal order that has become final may not
participate in the conduct of the affairs of any licensee under this
article without the approval of the director.
(5) The director may, for the protection of the creditor or the
interests of its customers, suspend from office or prohibit from
participation in the affairs of the creditor an officer, a director, or an
employee of a creditor who is the subject of a written notice served
by the director under section 404.1(1) of this chapter. A suspension
or prohibition under this subsection becomes effective upon service
of the notice under section 404.1(1) of this chapter. Unless stayed by
a court in a proceeding authorized by subsection (6), the suspension
or prohibition remains in effect pending completion of the
proceedings related to the notice served under section 404.1(1) of
this chapter and until the effective date of an order entered by the
department under subsection (2) or the director under subsection (3).
Copies of the notice shall also be served upon the creditor or affiliate
of which the person is an officer, a director, or an employee.
(6) Not more than fifteen (15) days after an officer, a director, or
an employee has been suspended from office or prohibited from
participation in the conduct of the affairs of the creditor or affiliate
under subsection (5), the officer, director, or employee may apply to
a court having jurisdiction for a stay of the suspension or prohibition
pending completion of the proceedings related to the written notice
served under section 404.1(1) of this chapter, and the court may stay
the suspension or prohibition.
(7) The department shall maintain an official record of a
proceeding under this chapter. As added by P.L.35-2010, SEC.20.
IC 24-4.4-2-404.3 Consent agreement; notice of charges not required
Sec. 404.3. If the director enters into a consent to a final order
under section 404.4 of this chapter with a creditor, a director, an
officer, or an employee, the director is not required to issue and serve
a notice of charges upon the creditor, director, or officer under
section 404.1 of this chapter. A consent agreement may be negotiated
and entered into before or after the issuance of a notice of charges.
The director shall provide a copy of the consent order to the board of
directors of the creditor. As added by P.L.35-2010, SEC.21.
IC 24-4.4-2-404.4 Final order; remedies; consent presumed
Sec. 404.4. (1) If, after a hearing described in section 404.2(2) of
this chapter, the department finds that the conditions specified in
section 404.1 of this chapter have been established, the department
may issue a final order. If a hearing is not requested within the time
specified in section 404.2(2) of this chapter, the director may issue
a final order on the basis of the facts set forth in the written notice
served under section 404.1(1) of this chapter.
(2) Unless the director has entered into a consent agreement
described in section 404.3 of this chapter, a final order must include
separately stated findings of fact and conclusions of law for all
aspects of the order.
(3) In a final order under this section, the department or the
director, as appropriate, may order one (1) or more of the following
with respect to an officer, a director, or an employee of a creditor:
(a) The removal of the officer, director, or employee from the
person's office, position, or employment.
(b) A prohibition against any participation by the officer,
director, or employee in the conduct of the affairs of any
creditor.
(c) If the subject of the order is an officer or a director of a
creditor, and subject to section 404.6 of this chapter, the
imposition of a civil penalty not to exceed fifteen thousand
dollars ($15,000) for each practice, violation, or act that:
(i) is described in section 404.1 of this chapter; and
(ii) is found to exist by the department or the director.
(4) A final order shall be issued in writing not later than ninety
(90) days after conclusion of a hearing held under section 404.2(2)
of this chapter, unless this period is waived or extended with the
written consent of all parties or for good cause shown.
(5) If the officer, director, or employee does not appear
individually or by an authorized representative at a hearing held
under section 404.2(2) of this chapter, the officer, director, or
employee is considered to have consented to the issuance of a final
order.
(6) The remedies provided in this chapter are in addition to other
remedies contained in this article.
As added by P.L.35-2010, SEC.22.
IC 24-4.4-2-404.5 Final order; effective date; authority of department or court to
stay, modify, or vacate
Sec. 404.5. (1) A final order issued under this chapter is effective
on the eleventh day after service of the order. However, a final order
issued upon consent under section 404.3 of this chapter is effective
at the time specified in the order.
(2) A final order remains effective and enforceable as provided in
the order.
(3) The department or a reviewing court may stay, modify, or
vacate a final order. As added by P.L.35-2010, SEC.23.
IC 24-4.4-2-404.6 Factors for determining amount of civil penalty; indemnification
by creditor prohibited; deposit of civil penalties in financial
institutions fund
Sec. 404.6. (1) The director or the department, as appropriate,
shall consider the following factors in determining the amount of a
civil penalty that should be assessed against a director or an officer
in a final order issued under section 404.4(3)(c) of this chapter:
(a) The appropriateness of the civil penalty with respect to the
financial resources and good faith of the individual charged.
(b) The gravity of the practice, violation, or act.
(c) The history of previous practices, violations, or acts.
(d) The economic benefit derived by the individual from the
practice, violation, or act.
(e) Other factors that justice requires.
(2) A creditor may not indemnify a director or an officer for a
civil penalty imposed in a final order under section 404.4(3)(c) of
this chapter.
(3) Civil penalties shall be deposited in the financial institutions
fund established by IC 28-11-2-9. As added by P.L.35-2010, SEC.24.
IC 24-4.4-2-404.7 Authority of director to enforce orders, agreements, or conditions
in court
Sec. 404.7. The director may enforce any of the following by
applying for appropriate relief to a court having jurisdiction:
(a) An order issued under this chapter.
(b) A written agreement entered into by the department or the
director and any director, officer, or employee of a creditor.
(c) Any condition imposed in writing by the department or the
director on any director, officer, or employee of a creditor. As added by P.L.35-2010, SEC.25.
IC 24-4.4-2-405 Record keeping; use of unique identifier on forms and documents;
use of examination and regulatory software; reports of condition
to NMLSR; financial statements; notice to department of certain
events or changes
Sec. 405. (1) Every licensee shall maintain records in a manner
that will enable the department to determine whether the licensee is
complying with this article. The record keeping system of a licensee
is sufficient if the licensee makes the required information
reasonably available. The department shall determine the sufficiency
of the records and whether the licensee has made the required
information reasonably available. The department shall be given free
access to the records wherever the records are located. Records
concerning any first lien mortgage transaction shall be retained for
two (2) years after the making of the final entry relating to the
transaction, but in the case of a revolving first lien mortgage
transaction, the two (2) years required under this subsection is
measured from the date of each entry relating to the transaction.
(2) The unique identifier of any person originating a mortgage
transaction must be clearly shown on all mortgage transaction
application forms and any other documents as required by the
director.
(3) Every licensee shall use automated examination and regulatory
software designated by the director, including third party software.
Use of the software consistent with guidance and policies issued by
the director is not a violation of IC 28-1-2-30.
(4) Each:
(a) creditor licensed by the department under this article; and
(b) entity that is exempt from licensing under this article and
that employs one (1) or more licensed mortgage originators;
shall submit to the NMLSR reports of condition, which must be in a
form and must contain information as required by the NMLSR.
(5) Each:
(a) creditor licensed by the department under this article; and
(b) entity exempt from licensing under this article that employs
licensed mortgage loan originators;
shall file with the department additional financial statements relating
to all first lien mortgage transactions originated by the licensed
creditor or the exempt entity as required by the department, but not
more frequently than annually, in the form prescribed by the
department.
(6) A licensed creditor shall file notification with the department
if the licensee:
(a) has a change in name, address, or any of its principals;
(b) opens a new branch, closes an existing branch, or relocates
an existing branch;
(c) files for bankruptcy or reorganization; or
(d) is subject to revocation or suspension proceedings by a state
or governmental authority with regard to the licensed creditor's
activities;
not later than thirty (30) days after the date of the event described in
this subsection.
(7) A licensee shall file notification with the department if the
licensee or any director, executive officer, or manager of the licensee
has been convicted of or pleaded guilty or nolo contendere to a
felony under the laws of Indiana or any other jurisdiction. The
licensee shall file the notification required by this subsection not
later than thirty (30) days after the date of the event described in this
subsection.
(8) A licensee shall file notification with the department if the
licensee or any director, executive officer, or manager of the licensee
has had the person's authority to do business in the securities,
commodities, banking, financial services, insurance, real estate, or
real estate appraisal industry revoked or suspended by Indiana or by
any other state, federal, or foreign governmental agency or self
regulatory organization. The licensee shall file the notification
required by this subsection not later than thirty (30) days after the
date of the event described in this subsection. As added by P.L.145-2008, SEC.20. Amended by P.L.35-2010,
SEC.26.
IC 24-4.4-2-501 Creditor's duty to comply with closing requirements
Sec. 501. A creditor in a first lien mortgage transaction shall
comply with IC 6-1.1-12-43, to the extent applicable. As added by P.L.145-2008, SEC.20.
IC 24-4.4-2-502 Debtor's right to rescind; accruing interest prohibited during
rescission period; disbursement of proceeds
Sec. 502. (1) A violation by a creditor in a first lien mortgage
transaction of Section 125 of the Federal Consumer Credit Protection
Act (15 U.S.C. 1635) (concerning a debtor's right to rescind a
transaction) constitutes a violation of this article. A creditor may not
accrue interest during the period when a first lien mortgage
transaction may be rescinded under Section 125 of the Federal
Consumer Credit Protection Act (15 U.S.C. 1635).
(2) A creditor must make available for disbursement the proceeds
of a transaction subject to subsection (1) on the later of:
(a) the date the creditor is reasonably satisfied that the debtor
has not rescinded the transaction; or
(b) the first business day after the expiration of the rescission
period under subsection (1). As added by P.L.145-2008, SEC.20. Amended by P.L.1-2009,
SEC.135.
IC 24-4.4-2-503 Reverse mortgages; pamphlet; counseling required for debtor
Sec. 503. A creditor in a first lien mortgage transaction that:
(1) qualifies as a home equity conversion mortgage under the
Federal Housing Administration's program; or
(2) otherwise constitutes a reverse mortgage;
shall provide the debtor with a pamphlet that is approved by the
department and that describes the availability of reverse mortgage
counseling services provided by housing counselors approved by the
Secretary of the United States Department of Housing and Urban
Development, as provided in 24 CFR 206.41(a). The debtor must
receive the counseling described in this section and present the
creditor with the certificate described in 24 CFR 206.41(c) before the
creditor may make a first lien mortgage transaction described in this
section to the debtor. As added by P.L.35-2010, SEC.27.
