Citations Affected: IC 24-5.5.
Synopsis: Mortgage rescue protection fraud. Establishes notice
requirements regarding foreclosures on real property. Provides that a
homeowner may rescind: (1) contracts with foreclosure consultants;
and (2) foreclosure reconveyance agreements. Requires a homeowner
who rescinds a contract with a foreclosure consultant or a foreclosure
reconveyance agreement to repay amounts paid to the homeowner.
Prohibits foreclosure consultants and foreclosure purchasers from
certain actions. Requires foreclosure purchasers to: (1) ensure that title
to real property has been reconveyed to the homeowner in a timely
manner if reconveyance is required; (2) make certain payments to the
homeowner; and (3) make a detailed accounting of the basis for the
amount of payment made to the homeowner if the real property is
resold within a certain time. Allows: (1) the attorney general to seek an
injunction; (2) a court to enter certain orders or judgments; and (3) a
homeowner to bring an action for damages; for a violation of the
mortgage rescue protection fraud laws. Allows a court to award treble
damages for a willful or knowing violation of the mortgage rescue
protection fraud laws. Requires the attorney general to maintain a list
of nonprofit organizations that offer counseling or advice to
homeowners on foreclosure or loan defaults. Makes a violation of the
mortgage rescue protection fraud laws a Class A misdemeanor.
Effective: July 1, 2007.
January 16, 2007, read first time and referred to Committee on Corrections, Criminal, and
A BILL FOR AN ACT to amend the Indiana Code concerning trade
Sec. 3. "Foreclosure purchaser" means a person who purchases real property in a foreclosure sale.
Sec. 4. "Foreclosure reconveyance" means a transaction involving:
(1) the transfer of interest in real property by a homeowner to a person during or incident to a proposed foreclosure proceeding, either by:
(A) transfer of interest from the homeowner to the person; or
(B) creation of a mortgage, trust, or other lien or encumbrance during the foreclosure process;
that allows the person to obtain legal or equitable title to all or part of the real property; and
(2) the subsequent conveyance, or promise of subsequent conveyance, of interest back to the homeowner by the person or the person's agent that allows the homeowner to possess the real property following the completion of the foreclosure proceeding.
Sec. 5. "Formal settlement" means a face-to-face meeting with a homeowner to complete final documents incident to the:
(1) sale or transfer of real property; or
(2) creation of a mortgage or equitable interest in real property;
conducted by a person who is not employed by or an affiliate of the foreclosure purchaser.
Sec. 6. "Homeowner" means a person who holds record title to residential real property as of the date on which an action to foreclose the mortgage or deed of trust on the residential real property is filed.
Chapter 2. Notice of Foreclosures
Sec. 1. (a) In addition to any other notice requirements regarding a foreclosure on real property, a person authorized to make a sale in an action to foreclose a mortgage or deed of trust shall give written notice in accordance with subsections (b) and (c) of the action to the record owner of the real property that is to be sold in the foreclosure.
(b) The written notice described under subsection (a) must be sent, not later than two (2) days after the action to foreclose is docketed, by:
(1) certified mail, postage prepaid, return receipt requested; and
homeowner unless the:
(1) foreclosure purchaser verifies and demonstrates that the homeowner has or will have a reasonable ability to:
(A) pay for the subsequent reconveyance of the property back to the homeowner on completion of the terms of the foreclosure conveyance; or
(B) if the foreclosure conveyance provides for a lease with an option to repurchase the real property, make the lease payment and repurchase the real property within the period of the option to repurchase; and
(2) foreclosure purchaser and the homeowner complete a formal settlement before any transfer of interest in the effected property.
Sec. 4. A foreclosure purchaser shall:
(1) ensure that title to real property has been reconveyed to the homeowner in a timely manner if the terms of a foreclosure reconveyance agreement require a reconveyance; or
(2) make payment to the homeowner not later than ninety (90) days after any resale of real property to the homeowner in an amount equal to at least eighty-two percent (82%) of the net proceeds from any resale of the property if the real property subject to a foreclosure reconveyance is sold within eighteen (18) months after entering into a foreclosure reconveyance agreement.
Sec. 5. A foreclosure purchaser may not:
(1) enter into repurchase or lease terms as part of the foreclosure reconveyance that are unfair or commercially unreasonable or engage in any other unfair conduct;
(2) represent, directly or indirectly, that the:
(A) foreclosure purchaser is acting:
(i) as an adviser or a consultant; or
(ii) in any other manner on behalf of the homeowner;
(B) foreclosure purchaser is assisting the homeowner to save the residence; or
(C) foreclosure purchaser is assisting the homeowner in preventing a foreclosure if the result of the transaction is that the homeowner will not complete a redemption of the property; or
(3) until the homeowner's right to rescind or cancel the foreclosure reconveyance agreement has expired:
(A) record any document, including an instrument or
conveyance, signed by the homeowner; or
(B) transfer or encumber or purport to transfer or encumber any interest in the residential real property in foreclosure to a third party.
Sec. 6. A foreclosure purchaser shall make a detailed accounting of the basis for the amount of payment made to a homeowner of real property resold within eighteen (18) months after entering into a foreclosure reconveyance agreement on a form prescribed by the attorney general.
Chapter 5. Enforcement
Sec. 1. The attorney general may seek an injunction to prohibit a person from engaging in an act in violation of this article.
Sec. 2. A court may enter an order or judgment necessary to:
(1) prevent any prohibited practice in violation of this article;
(2) restore to a person any money or real or personal property acquired from the person by means of a violation of this article; or
(3) appoint a receiver in a case of a willful violation of this article.
Sec. 3. The attorney general may recover costs of an action under this chapter.
Sec. 4. (a) A homeowner may bring an action against a person for damages incurred as a result of a violation of this article.
(b) A homeowner who:
(1) brings an action under this section; and
(2) is awarded damages;
may seek reasonable attorney's fees.
Sec. 5. (a) A court may award attorney's fees under section 4(b) of this chapter.
(b) If the court finds that a person willfully or knowingly violated this article, the court may award damages equal to three (3) times the amount of actual damages.
Sec. 6. A person who knowingly or intentionally violates this article commits a Class A misdemeanor.
Sec. 7. (a) The attorney general shall maintain a list of nonprofit organizations that:
(1) offer counseling or advice to homeowners in foreclosure or loan defaults; and
(2) do not contract for services with for-profit lenders or foreclosure purchasers.
(b) The attorney general shall provide names and telephone numbers of the organizations described in subsection (a) to a
homeowner upon request.
Sec. 8. The attorney general may adopt rules under IC 4-22-2 necessary to implement this article.