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. Excludes certain banks,
trust companies, governmental entities, attorneys, and other persons
from the law. 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
February 19, 2007, amended, reported favorably _ Do Pass.
A BILL FOR AN ACT to amend the Indiana Code concerning trade
of this section; or
(B) insured by the Department of Housing and Urban Development or guaranteed by the Veterans Administration.
(6) An attorney licensed to practice law in Indiana who is representing a mortgagor.
Chapter 2. Definitions
Sec. 1. The definitions in this chapter apply throughout this article.
Sec. 2. "Foreclosure consultant" means a person who, directly or indirectly, makes a solicitation, representation, or offer to a homeowner subject to a foreclosure proceeding to perform, with or without compensation, any service that the person represents will:
(1) prevent, postpone, or reverse the effect of a foreclosure sale;
(2) allow the homeowner to become a lessee or renter in the homeowner's residence; or
(3) allow the homeowner to have an option to repurchase the homeowner's residence.
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
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 3. Notice of Foreclosures
Sec. 1. In addition to any other notice requirements regarding a foreclosure on real property, a person in an action to foreclose a mortgage or deed of trust shall give written notice as follows in a statement printed in at least 14 point boldface type:
(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 6. 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 certified by the Indiana housing and community development authority 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.