Citations Affected: IC 24-5.5; IC 32-29-7-3; IC 32-30.
Synopsis: Foreclosure of residential mortgages. Provides that in the
case of a residential mortgage transaction in which the debtor defaults
after June 30, 2009, the creditor shall provide a written notice to the
debtor that informs the debtor of the default and offers the debtor the
opportunity to participate in a conference with the creditor to negotiate
a foreclosure prevention agreement. Requires the debtor to contact the
creditor not later than 30 days after the date of the notice to schedule
a conference. Provides that the debtor has the right to be represented
by an attorney or a mortgage foreclosure counselor at the conference.
Requires the creditor to ensure that any person representing the creditor
at the conference or in any negotiations with the debtor has authority
to bind the creditor. Upon the conclusion of a conference, requires the
creditor to report to the housing and community development authority
(authority) on whether the parties were able to agree on the terms of a
foreclosure prevention agreement. Provides that after June 30, 2009, a
creditor may not proceed to file a residential mortgage foreclosure
action unless: (1) the creditor has given the required notice offering a
conference to the debtor; (2) either the debtor did not respond to the
creditor's notice not later than 30 days after the date of the notice, or the
parties were unable to negotiate a mortgage prevention agreement after
a conference is held; and (3) at least 90 days have elapsed since the
date of the creditor's notice. Provides that in a residential mortgage
foreclosure action filed after June 30, 2009, the court may not enter a
judgment of foreclosure until 60 days after the date the complaint is
filed, in a case in which the debtor did not respond to the creditor's
notice not later than 30 days after the date of the notice. Provides that,
Effective: July 1, 2009.
January 15, 2009, read first time and referred to Committee on Judiciary.
upon petition by the creditor, the court may waive the 60 day period
under certain circumstances. Provides that in the case of a residential
mortgage foreclosure action that: (1) is pending on July 1, 2009; or (2)
is filed after June 30, 2009; the court having jurisdiction of the action
shall serve notice of a settlement conference on the parties to the
action. Provides that the notice must set forth a date and time by which
the parties must conduct a settlement conference. Provides that the date
specified in the notice may not be earlier than 25 days after the date of
the notice or later than 60 days after the date of the notice. Provides
that the notice must require: (1) the debtor to contact a mortgage
foreclosure counselor before the settlement conference and bring to the
settlement conference certain documents; and (2) the creditor to bring
to the settlement conference a complete transaction history for the
mortgage upon which the foreclosure action is based. Provides that
each party has the right to be represented by an attorney or a mortgage
foreclosure counselor at the settlement conference. Provides that the
settlement conference must be held at the county courthouse at the date
and time specified in the court's notice unless the parties agree to hold
the settlement conference: (1) by telephone; or (2) in person at a
location agreed to by the parties; at a time and date agreed to by the
parties, but not later than the time and date specified in the notice.
Provides that any party may file: (1) objections to the settlement
conference; or (2) a petition for the court to review a proposed
foreclosure prevention agreement offered by the creditor to the debtor
in connection with the conference held before the filing of the
complaint; not later than 15 days after the date of the court's notice.
Provides that after reviewing a proposed agreement offered by the
creditor in connection with the previous conference, the court may
order the parties to appear before the court for a hearing, instead of
holding a settlement conference. Provides that the creditor shall ensure
that any person representing the creditor at the settlement conference
has the authority to bind the creditor. Provides that if the parties agree
to enter into a foreclosure prevention agreement as a result of the
settlement conference, the creditor must report that fact to: (1) the
court; and (2) the authority; not later than seven business days after the
signing of the agreement. Provides that if, after conducting a settlement
conference, the parties are unable to reach agreement on the terms of
a foreclosure prevention agreement: (1) the creditor must report that
fact to the court and the authority not later than seven business days
after the date of the settlement conference; and (2) the foreclosure
action filed by the creditor may proceed as allowed by law.
A BILL FOR AN ACT to amend the Indiana Code concerning
property.
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.
decree of sale is entered, regardless of the date the mortgage is
executed.
(b) A judgment and decree in a proceeding to foreclose a mortgage
that is entered by a court having jurisdiction may be filed with the clerk
in any county as provided in IC 33-32-3-2. Except as provided in
IC 32-30-10.5 for first lien mortgage transactions, after the period
set forth in subsection (a) expires, a person who may enforce the
judgment and decree may file a praecipe with the clerk in any county
where the judgment and decree is filed, and the clerk shall promptly
issue and certify to the sheriff of that county a copy of the judgment
and decree under the seal of the court.
(c) Upon receiving a certified judgment under subsection (b), the
sheriff shall, subject to section 4 of this chapter, sell the mortgaged
premises or as much of the mortgaged premises as necessary to satisfy
the judgment, interest, and costs at public auction at the office of the
sheriff or at another location that is reasonably likely to attract higher
competitive bids. The sheriff shall schedule the date and time of the
sheriff's sale for a time certain between the hours of 10 a.m. and 4 p.m.
on any day of the week except Sunday.
(d) Before selling mortgaged property, the sheriff must advertise the
sale by publication once each week for three (3) successive weeks in
a daily or weekly newspaper of general circulation. The sheriff shall
publish the advertisement in at least one (1) newspaper published and
circulated in each county where the real estate is situated. The first
publication shall be made at least thirty (30) days before the date of
sale. At the time of placing the first advertisement by publication, the
sheriff shall also serve a copy of the written or printed notice of sale
upon each owner of the real estate. Service of the written notice shall
be made as provided in the Indiana Rules of Trial Procedure governing
service of process upon a person. The sheriff shall charge a fee of ten
dollars ($10) to one (1) owner and three dollars ($3) to each additional
owner for service of written notice under this subsection. The fee is:
(1) a cost of the proceeding;
(2) to be collected as other costs of the proceeding are collected;
and
(3) to be deposited in the county general fund for appropriation
for operating expenses of the sheriff's department.
(e) The sheriff also shall post written or printed notices of the sale
at the door of the courthouse of each county in which the real estate is
located.
(f) If the sheriff is unable to procure the publication of a notice
within the county, the sheriff may dispense with publication. The
sheriff shall state that the sheriff was not able to procure the
publication and explain the reason why publication was not possible.
(g) Notices under subsections (d) and (e) must contain a statement,
for informational purposes only, of the location of each property by
street address, if any, or other common description of the property other
than legal description. A misstatement in the informational statement
under this subsection does not invalidate an otherwise valid sale.
(h) The sheriff may charge an administrative fee of not more than
two hundred dollars ($200) with respect to a proceeding referred to in
subsection (b) for actual costs directly attributable to the administration
of the sale under subsection (c). The fee is:
(1) payable by the person seeking to enforce the judgment and
decree; and
(2) due at the time of filing of the praecipe;
under subsection (b).
foreclosure by allowing debtors to repay their mortgages.
Placing conditions on a creditor's ability to access the state's
foreclosure process is essential to ensure that the process does
not result in more foreclosed properties entering the Indiana
housing market when a foreclosure could have been avoided.
(8) Placing conditions on a creditor's ability to access the
state's foreclosure process will do the following:
(A) Benefit the health, safety, morals, and welfare of the
state and its political subdivisions.
(B) Serve to prevent the further decline in property values
throughout the state.
(C) Reduce public expenditures required for governmental
functions such as police and fire protection and other
services.
(b) The purpose of this chapter is to avoid unnecessary
foreclosures of residential properties and thereby provide stability
to Indiana's statewide and local economies by:
(1) requiring early contact and communications between
creditors, their authorized agents, and debtors in order to
engage in negotiations that could avoid foreclosure; and
(2) facilitating the modification of residential mortgages in
appropriate circumstances.
Sec. 2. As used in this chapter, "creditor" refers to:
(1) the creditor (as defined in IC 24-4.4-1-301(2)); or
(2) a mortgage servicer;
in a first lien mortgage transaction (as defined in
IC 24-4.4-1-301(6)).
Sec. 3. As used in this chapter, "debtor" refers to a person
obligated to repay a mortgage, including a coborrower, cosigner,
or guarantor.
Sec. 4. As used in this chapter, "foreclosure prevention
agreement" means a written agreement that:
(1) is executed by both the creditor and the debtor; and
(2) offers the debtor an individualized plan that:
(A) is designed to allow the debtor to repay the mortgage
based on:
(i) reasonable lending practices; and
(ii) the debtor's present and future income, expenses,
assets, and liabilities; and
(B) may include:
(i) a temporary forbearance with respect to the
mortgage;
creditor.
(d) A conference that is scheduled under subsection (c) may be
conducted by telephone or in person at a location that is acceptable
to both parties. If the conference is conducted by telephone, the
creditor shall provide any technology needed to allow:
(1) a mortgage foreclosure counselor; or
(2) an attorney;
representing the debtor to participate in the call simultaneously
with the debtor.
(e) The creditor shall ensure that any person representing the
creditor:
(1) at a conference scheduled under subsection (c); or
(2) in any negotiations with the debtor designed to reach
agreement on the terms of a foreclosure prevention
agreement;
has authority to bind the creditor in negotiating a foreclosure
prevention agreement with the debtor.
(f) If, as a result of a conference scheduled under subsection (c),
the debtor and the creditor agree to enter into a foreclosure
prevention agreement, the agreement shall be reduced to writing
and signed by both parties, and each party shall retain a copy of
the signed agreement. Not later than seven (7) business days after
the signing of the foreclosure prevention agreement, the creditor
shall file with the reporting agency, on a form prescribed by the
reporting agency, a notice indicating that a foreclosure prevention
agreement has been reached.
(g) If, as a result of a conference held under subsection (c), the
debtor and the creditor are unable to reach an agreement on the
terms of a foreclosure prevention agreement, the creditor shall, not
later than seven (7) business days after the date of the conference,
file with the reporting agency, on a form prescribed by the
reporting agency, a notice indicating:
(1) that a conference was held in accordance with this section;
(2) that the debtor and the creditor were unable to agree on
the terms of a foreclosure prevention agreement;
(3) the terms of any foreclosure prevention agreement offered
by the creditor before or at the conference; and
(4) the debtor's stated reasons for rejecting the agreement, to
the extent known.
Sec. 10. (a) After June 30, 2009, a creditor may not proceed
under IC 32-30-10-3 to foreclose a mortgage subject to this chapter
by filing a complaint in a court having jurisdiction unless all of the
following apply:
(1) The creditor has given the notice required under section
9(a) of this chapter.
(2) The debtor either:
(A) does not contact the creditor within the thirty (30) day
period described in section 9(a)(4) of this chapter to
schedule a conference offered by the debtor under section
9(a)(2) of this chapter; or
(B) contacts the creditor within the thirty (30) day period
described in section 9(a)(4) of this chapter to schedule a
conference offered by the debtor under section 9(a)(2) of
this chapter and, upon the conclusion of such conference,
the parties are unable to reach agreement on the terms of
a foreclosure prevention agreement.
(3) At least ninety (90) days have elapsed since the date of the
notice sent by the creditor under section 9(a) of this chapter.
(b) In a foreclosure action filed under subsection (a), the
creditor shall attach to the complaint filed with the court a copy of
the notice sent to the debtor under section 9(a) of this chapter.
(c) Except as provided in subsection (d), in a foreclosure action
filed under subsection (a) after June 30, 2009, the court may not
render a judgment of foreclosure until:
(1) sixty (60) days after the date the complaint is filed, in the
case of a complaint filed under subsection (a)(2)(A); or
(2) the action may proceed under section 11(j) of this chapter,
in the case of a complaint filed under subsection (a)(2)(B).
(d) Upon petition by the creditor, the court may waive the sixty
(60) day period described in subsection (c)(1) under any of the
following circumstances:
(1) All of the following occur:
(A) The debtor does not respond to the creditor's notice
under section 9(a) of this chapter not later than thirty (30)
days after the date of the notice.
(B) The creditor demonstrates to the court that the
creditor has made a reasonable effort to verify the mailing
address of the debtor, if the creditor's records indicate that
the mailing address of the debtor is other than the address
of the mortgaged property.
(C) The court is satisfied that service was perfected.
However, the court may deny a creditor's petition under this
subsection and order the creditor to provide the notice
required under section 9(a) of this chapter using another
method of service.
(2) The court determines that the property that is the subject
of the mortgage has been abandoned.
(3) The debtor has defaulted on a previous foreclosure
prevention agreement or other workout agreement with the
creditor and, after reviewing the terms of such agreement, the
court determines that a waiver of the sixty (60) day period
described in subsection (c)(1) is appropriate and in the
interest of justice.
Sec. 11. (a) This section applies to a mortgage foreclosure action
with respect to which:
(1) the creditor has filed the complaint in the proceeding
before July 1, 2009, and the court having jurisdiction over the
proceeding:
(A) has not rendered a judgment of foreclosure before July
1, 2009; or
(B) has rendered a judgment of foreclosure before July 1,
2009, but the period set forth in IC 32-29-7-3(a) after
which the judgment may be enforced has not yet expired;
or
(2) the creditor has filed the complaint in the proceeding after
June 30, 2009, under section 10(a) of this chapter after the
creditor and the debtor were unable to agree on the terms of
a foreclosure prevention agreement, as described in section
10(a)(2)(B) of this chapter.
(b) In a mortgage foreclosure action to which this section
applies, the court having jurisdiction of the action:
(1) shall serve notice of a settlement conference described this
section on the parties to the action not later than:
(A) August 1, 2009, in the case of an action described in
subsection (a)(1)(A);
(B) the expiration of the period set forth in IC 32-29-7-3(a)
after which the judgment may be enforced in the action, in
the case of an action described in subsection (a)(1)(B); or
(C) thirty (30) days after the filing of the complaint, in an
action described in subsection (a)(2); and
(2) may not:
(A) proceed to render a judgment of foreclosure in an
action described in subsection (a)(1)(A) or (a)(2); or
(B) proceed under IC 32-29-7-3(b) to issue and certify to
the sheriff of the county a copy of the judgment and decree
in an action described in subsection (a)(1)(B);
require, including a statement of the borrower's reasons for
rejecting the proposed agreement. After reviewing a petition and
any accompanying documents submitted under this subsection, the
court may order the parties to appear before the court for a
hearing on the matter, instead of holding a settlement conference
under this section.
(e) The court may require any person that is a party to the
foreclosure action to appear at or participate in a settlement
conference held under this section.
(f) At the court's discretion, a settlement conference held at a
county courthouse under subsection (c)(6) may or may not be
attended by a judicial officer.
(g) The creditor shall ensure that any person representing the
creditor:
(1) at a settlement conference scheduled under subsection (c);
or
(2) in any negotiations with the debtor designed to reach
agreement on the terms of a foreclosure prevention
agreement;
has authority to bind the creditor in negotiating a foreclosure
prevention agreement with the debtor.
(h) If the parties elect under subsection (c)(6) to conduct a
settlement conference by telephone, the parties shall ensure the
availability of any technology needed to allow:
(1) a mortgage foreclosure counselor; or
(2) an attorney;
representing any party in the proceeding to participate in the call
simultaneously with the parties.
(i) If, as a result of a settlement conference held under this
section, the debtor and the creditor agree to enter into a
foreclosure prevention agreement, the agreement shall be reduced
to writing and signed by both parties, and each party shall retain
a copy of the signed agreement. Not later than seven (7) business
days after the signing of the foreclosure prevention agreement, the
creditor shall file with the court and the reporting agency, on a
form prescribed by the reporting agency, a notice indicating that
a foreclosure prevention agreement has been reached.
(j) If, as a result of a settlement conference held under this
section, the debtor and the creditor are unable to agree on the
terms of a foreclosure prevention agreement:
(1) the creditor shall, not later than seven (7) business days
after the date of the settlement conference, file with the court
and the reporting agency, on a form prescribed by the
reporting agency, a notice indicating:
(A) the terms of any foreclosure prevention agreement
offered by the creditor before or at the settlement
conference; and
(B) the debtor's stated reasons for rejecting the agreement,
to the extent known; and
(2) the foreclosure action filed by the creditor and described
in subsection (a) may proceed as otherwise allowed by law.