Bill Text: IN HB1402 | 2013 | Regular Session | Introduced
Bill Title: Refinancing of underwater mortgages.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2013-01-22 - First reading: referred to Committee on Financial Institutions [HB1402 Detail]
Download: Indiana-2013-HB1402-Introduced.html
Citations Affected: IC 24-5-23.7.
Effective: Upon passage.
January 22, 2013, read first time and referred to Committee on Financial Institutions.
Digest Continued
reports to the department concerning the mortgage products: (1)
offered to; (2) applied for by; and (3) closed for; Indiana customers by
the approved creditor during the applicable reporting period. Provides
that any personal information concerning a debtor that is reported to
the department is confidential. Requires the department to publish on
the department's Internet web site a list of approved creditors that have
a current and accurate program certification on file with the
department. Requires the department to remove a creditor's name from
the list for certain violations.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or
A BILL FOR AN ACT to amend the Indiana Code concerning trade
regulation.
Chapter 23.7. Refinancing of Underwater Mortgages
Sec. 1. As used in this chapter, "appraisal" has the meaning set forth in IC 24-5-23.5-1.
Sec. 2. As used in this chapter, "approved creditor" means a creditor that:
(1) offers in Indiana to refinance qualifying underwater mortgages made by another creditor, subject to the approved creditor's underwriting standards; and
(2) has a current and accurate certification on file with the department, as described in section 10(a)(3) of this chapter.
Sec. 3. (a) As used in this chapter, "creditor" means a person:
(1) that regularly engages in Indiana in the extension of
mortgages that are subject to a credit service charge or loan
finance charge, as applicable, or are payable by written
agreement in more than four (4) installments (not including
a down payment); and
(2) to which the obligation is initially payable, either on the
face of the note or contract, or by agreement if there is not a
note or contract.
(b) The term does not include a person described in
IC 24-9-2-6(b).
Sec. 4. As used in this chapter, "department" refers to the
department of financial institutions established by IC 28-11-1-1.
Sec. 5. As used in this chapter, "debtor", with respect to a
mortgage, refers to the maker of the note secured by the mortgage.
Sec. 6. As used in this chapter, "dwelling" means a residential
structure that is located in Indiana and that contains one (1) to
four (4) units, regardless of whether the structure is permanently
attached to real property. The term includes an individual:
(1) condominium unit;
(2) cooperative unit;
(3) mobile home; or
(4) trailer;
that is used as a residence.
Sec. 7. (a) As used in this chapter, "mortgage" means:
(1) a consumer loan; or
(2) a consumer credit sale;
that is or will be used by the debtor primarily for personal, family,
or household purposes and that is secured by a mortgage (or
another equivalent consensual security interest) that constitutes a
first lien on a dwelling in Indiana or on residential real estate in
Indiana upon which a dwelling is constructed or intended to be
constructed.
(b) The term does not include a land contract (as defined in
IC 24-4.4-1-301(36)) or similar agreement in which the debtor does
not possess a deed.
Sec. 8. As used in this chapter, "program" refers to the
underwater mortgage refinancing program established by section
10 of this chapter.
Sec. 9. As used in this chapter, "underwater mortgage" means
a mortgage with respect to which the outstanding balance owed by
the debtor exceeds the market value of the mortgaged property, as
determined by an appraisal.
Sec. 10. (a) The underwater mortgage refinancing program is
established. Not later than June 1, 2013, the department shall
adopt guidelines to implement the program. The program
established by this section, as implemented through the
department's guidelines, must meet the following criteria:
( 1) The program must be available on a voluntary basis to
creditors that offer in Indiana after June 30, 2013, to
refinance qualifying underwater mortgages made by another
creditor, subject to the underwriting standards of the offering
creditor.
(2) To participate in the program, a creditor must submit a
certification, on a form prescribed by the department,
attesting that the creditor qualifies to be an approved creditor
under the program.
(3) To qualify as an approved creditor under the program, a
creditor must certify, on the form described in subdivision (2),
that the creditor meets the following conditions:
(A) The creditor offers or will offer in Indiana after June
30, 2013, to refinance qualifying underwater mortgages
made by another creditor, subject to the underwriting
standards of the offering creditor.
(B) The creditor does not have a record of any significant
or recurring violation of:
(i) IC 24-5-23.5-7; or
(ii) any other state or federal law, regulation, or rule
applicable to mortgage transactions;
as of the date of the creditor's certification. If the creditor
is not certain whether it meets the criterion set forth in this
clause, the creditor shall consult with the department
before filing a certification to participate in the program.
(C) The creditor does not have a director or an executive
officer who has been convicted of a felony involving fraud,
deceit, or misrepresentation under the laws of Indiana or
any other jurisdiction, as of the date of the creditor's
certification. If the creditor is not certain whether it meets
the criterion set forth in this clause, the creditor shall
consult with the department before filing a certification to
participate in the program.
(4) For purposes of the program, a qualifying underwater
mortgage must satisfy the conditions set forth in subsection
(b).
(5) A creditor that qualifies as an approved creditor under the
program and files a certification with the department under
subdivision (3) must provide a written statement, on a form
and in the manner prescribed by the department, to any
debtor who:
(A) submits an application to the creditor for a refinancing
of a qualifying underwater mortgage; and
(B) does not qualify for the refinancing based on the
creditor's underwriting standards.
The statement must set forth the reasons why the debtor did
not qualify for the refinancing.
(6) The program must allow a creditor that:
(A) qualifies as an approved creditor under the program;
and
(B) files a certification with the department;
to hold itself out as an approved creditor in any marketing
material or solicitation directed at Indiana customers, subject
to any conditions or limitations imposed by the department in
the guidelines adopted under this section.
(7) The program must provide that if a creditor:
(A) holds itself out as an approved creditor under the
program and:
(i) the creditor has not filed an accurate certification or
renewal certification with the department under this
chapter; or
(ii) the creditor has filed a certification or a renewal
certification with the department under this chapter and
subsequently ceases to offer in Indiana to refinance
qualifying underwater mortgages made by another
creditor; or
(B) fails to comply with any program requirement;
the department, upon discovering the act described in clause
(A) or (B), shall immediately provide written notice to the
creditor that the creditor does not qualify for participation in
the program, or no longer qualifies for participation in the
program, as appropriate. The notice must inform the creditor
of the reason or reasons the creditor does not qualify for
participation in the program, or no longer qualifies for
participation in the program, as appropriate.
(8) The program must include a requirement that on an
annual basis, or any other basis determined appropriate by
the department, a creditor that qualifies as an approved
creditor under the program and files a certification with the
department must report to the department the following
information for the applicable reporting period:
(A) A description of each type of residential mortgage
product offered by the creditor to Indiana customers,
including products involving the refinancing of qualifying
underwater mortgages.
(B) For each type of residential mortgage product
described under clause (A), the total number of Indiana
customers who applied for the product, including the total
number of Indiana customers who applied for products
involving the refinancing of qualifying underwater
mortgages.
(C) For each type of residential mortgage product
described under clause (A), the total number of mortgages
that were closed for Indiana customers, including the total
number of closings for products involving the refinancing
of qualifying underwater mortgages for Indiana
customers.
(D) For each closing of a product involving the refinancing
of a qualifying underwater mortgage for an Indiana
customer, the following information:
(i) The date on which an appraisal described in
subsection (b)(1) was performed with respect to the
mortgaged property.
(ii) The market value of the mortgaged property as
determined by the appraisal described in subsection
(b)(1).
(iii) The amount by which the outstanding balance owed
by the debtor on the qualifying underwater mortgage
exceeded the market value of the mortgaged property as
of the date of the debtor's application for the refinancing
of the qualifying underwater mortgage.
(iv) An identification of each criterion set forth in
subsection (b)(2) that the creditor determined was a
cause of the qualifying underwater mortgage's
underwater status.
(v) Any other information that the department may
require with respect to the refinancing of a qualifying
underwater mortgage.
The department may require an approved creditor to submit
documents or other evidence to verify any of the information
contained in a report under this subdivision. Any information,
evidence, or documents submitted to the department under
clause (D) with respect to a particular refinancing of a
qualifying underwater mortgage is subject to the
confidentiality requirements set forth in subsection (g).
(b) For purposes of the program, a qualifying underwater
mortgage must satisfy the following conditions:
(1) The mortgage's underwater status must be determined by
an appraisal performed:
(A) in connection with a refinancing sought by the debtor
under the program; or
(B) before a refinancing is sought by the debtor under the
program, subject to any time restrictions specified in the
department's guidelines to ensure that the market value
determined at the time of the appraisal reflects the market
value at the time a refinancing is sought by the debtor
under the program.
(2) The mortgage's underwater status is the result of one (1)
or more of the following, as determined by an approved
creditor in connection with a refinancing applied for by the
debtor under the program and, if the refinancing applied for
is closed by the approved creditor, as reported by the
approved creditor to the department under subsection
(a)(8)(D)(iv):
(A) The appraisal performed at the time the mortgage was
made was the subject of:
(i) a disciplinary action;
(ii) an enforcement action; or
(iii) a criminal prosecution;
under IC 24-5-23.5, subject to verification by the
department under subsection (a)(8). In making a
determination under this clause, an approved creditor
acting in good faith is entitled to rely on information or
evidence provided by the debtor or on representations
made by the debtor and, when acting in good faith, is not
liable for the negligence or malfeasance of the debtor or
any other person in connection with the information or
evidence provided or the representations made.
(B) Property values in the neighborhood or area where the
mortgaged property is located have declined since the time
the mortgage was made, as documented in the appraisal
described in subdivision (1).
(C) The mortgage was made in violation of:
(i) IC 24-9-3-7(c)(3), IC 24-9-3-7(c)(4), or
IC 24-9-3-7(c)(5);
(ii) IC 24-4.4; or
(iii) any other applicable law or regulation;
subject to verification by the department under subsection
(a)(8). In making a determination under this clause, an
approved creditor acting in good faith is entitled to rely on
information or evidence provided by the debtor or on
representations made by the debtor and, when acting in
good faith, is not liable for the negligence or malfeasance
of the debtor or any other person in connection with the
information or evidence provided or the representations
made.
(3) The mortgage's underwater status is not the result of a:
(A) subordinate lien mortgage; or
(B) home equity line of credit;
entered into by the debtor with respect to the mortgaged
property.
(4) The debtor:
(A) has no past due payments with respect to the
mortgage; and
(B) has not otherwise defaulted on the mortgage;
at the time the debtor seeks a refinancing under the program.
(5) A foreclosure action has not been filed by the creditor that
made the mortgage.
(c) In addition to the program criteria required by subsection
(a), the guidelines adopted by the department under this section
may include the following:
(1) Provisions allowing a creditor that qualifies as an
approved creditor under the program and files a certification
with the department to include in the paperwork associated
with the refinancing of a qualifying underwater mortgage:
(A) a statement;
(B) a seal; or
(C) any other designation considered appropriate by the
department;
indicating that the particular mortgage product is a
refinancing of a qualifying underwater mortgage.
(2) A requirement that a creditor that qualifies as an
approved creditor under the program and files a certification
with the department must periodically submit to the
department a renewal certification, on a form prescribed by
the department, in conjunction with a report filed under
subsection (a)(8), or at such other time as the department
determines appropriate. In any renewal certification required
under this subdivision, a creditor must attest that the
creditor:
(A) continued to meet the criteria necessary to qualify as
an approved creditor under the program; and
(B) complied with all program requirements;
during the applicable reporting period.
(3) A fee fixed by the department under IC 28-11-3-5 for each
certification and recertification submitted by a creditor under
this chapter. However, any fee fixed by the department under
this subdivision may not exceed the department's actual costs
to:
(A) process certifications and renewal certifications;
(B) publish the list described in subsection (d) on the
department's Internet web site; and
(C) otherwise administer the program.
(4) Any other program requirements, criteria, or incentives
that the department determines necessary to implement and
evaluate a program to encourage creditors to offer to
refinance qualifying underwater mortgages for Indiana
customers.
(d) The department shall publish on the department's Internet
web site a list of all creditors that have a current and accurate:
(1) certification under this chapter; or
(2) renewal certification under this chapter;
on file with the department. Not later than seven (7) days after the
date that any notice described in subsection (a)(7) is provided to a
creditor by the department, the department shall remove the
creditor from the list of creditors published on the department's
Internet web site under this subsection (except with respect to a
creditor described in subsection (a)(7)(A)(i)) and shall post, on the
same Internet web page on which the list described in this
subsection is published, a link to the notice provided to the creditor
under subsection (a)(7).
(e) The Indiana housing and community development authority
shall provide a link to the list described in subsection (d) on its
Internet web site.
(f) The program guidelines established by the department under
subsections (a) and (c) must be made available:
(1) for public inspection and copying at the offices of the
department under IC 5-14-3; and
(2) on the department's Internet web site.
(g) Any information, evidence, or document submitted to the
department under subsection (a)(8)(D) with respect to a particular
refinancing of a qualifying underwater mortgage is confidential
and may not be disclosed or distributed outside the department by
the director or any officer or employee of the department.
However, the director may provide for the release of information
to representatives of:
(1) financial institution supervisory agencies;
(2) law enforcement agencies; or
(3) prosecutorial agencies or offices;
of a state, the United States, or a foreign country, as required by
law. An agency or office that receives information from the
director under this subsection shall maintain the confidentiality of
the information. This subsection does not prohibit the director
from releasing aggregated data that is obtained from all reports
under subsection (a)(8) and that does not include personal
information (as defined in IC 28-1-2-30.5(c)) concerning any
debtor.
(h) The department shall investigate any credible complaint
received by any means alleging that a creditor has committed a
violation described in subsection (a)(7). If the creditor that is the
subject of a complaint under this subsection is not subject to
regulation by the department, the department shall forward the
complaint to the appropriate state or federal regulatory agency.
(i) Notwithstanding subsection (a), the department may adopt
a different name for the program, other than the underwater
mortgage refinancing program, in adopting the guidelines to
implement the program.
