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, before filing an action for
foreclosure, provide a presuit notice to the debtor that informs the
debtor that the creditor intends to initiate foreclosure proceedings, that
the debtor may obtain assistance from a foreclosure counselor, and that
provides information on how to contact a counselor. Establishes certain
exceptions to the presuit notice requirement. Provides that, if a creditor
files an action for foreclosure, the creditor shall include with the
complaint a notice to the debtor that informs the debtor of the debtor's
right to participate in a settlement conference, and that if the debtor
wishes to participate in a settlement conference, the debtor must
contact the court not later than 30 days after notice is served. Provides
that a court may not render a judgment of foreclosure until 60 days
after the notice is filed, unless the premises are vacant. Specifies that,
if a settlement conference is conducted: (1) it must be scheduled
between 25 and 60 days after the notice is sent; (2) the debtor must
contact a foreclosure counselor before the conference and bring certain
documents to the conference; (3) the creditor must bring a complete
transaction history to the conference; (4) the creditor's agent must have
the authority to negotiate with the creditor; and (5) the conference will
be conducted by telephone unless the parties make a contrary
stipulation. Provides that the court may require any person who is a
party to the action to participate in a settlement conference, and that the
February 20, 2009
SENATE BILL No. 492
DIGEST OF SB 492
(Updated February 19, 2009 6:45 pm - DI 106)
Citations Affected: IC 24-5.5; IC 24-9; IC 25-1; IC 25-34.1; IC 32-30.
(Continued next page)
Tallian, Bray, Randolph, Lanane
January 15, 2009, read first time and referred to Committee on Judiciary.
February 12, 2009, amended, reported favorably _ Do Pass.
February 19, 2009, read second time, amended, ordered engrossed.
court may reconvene a settlement conference. Requires the creditor to
file a copy of the foreclosure prevention agreement with the court if the
parties reach an agreement, and provides that a foreclosure action may
be stayed or dismissed for as long as the debtor complies with the terms
of the foreclosure agreement. Specifies that if a foreclosure is
dismissed and the debtor defaults in the terms of the foreclosure
agreement, the creditor may bring a new foreclosure action without
being required to send certain notices. Provides that participation in a
settlement conference satisfies any mediation or alternative dispute
resolution requirement established by court rule. Makes other changes
and conforming amendments. Provides that certain notice of
foreclosure requirements apply to all mortgagees. Requires a
foreclosure consultant to retain certain records for a specific time.
Allows certain licensing boards to require practitioners to pay real
estate appraisal costs in certain administrative actions. Prohibits certain
professional licensing boards from accepting the surrender of a
practitioner's license if the attorney general has filed a complaint
against the practitioner and opposes the surrender. Provides that a
broker or salesperson licensee who violates the credit services
organizations or mortgage rescue protection fraud provisions is subject
to certain disciplinary actions. Prohibits a person from: (1) engaging in
real estate transactions or consumer credit mortgage transactions
without a permit or license; or (2) misrepresenting certain terms and
characteristics of real estate transactions and consumer credit
mortgages; and subjects a person who violates any of these prohibitions
to certain penalties under the home loan practices law. Removes
language prohibiting a person from engaging in a deceptive act in
connection with certain loans.
February 20, 2009
First Regular Session 116th General Assembly (2009)
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
this style type.
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
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
this style type
between statutes enacted by the 2008 Regular Session of the General Assembly.
SENATE BILL No. 492
A BILL FOR AN ACT to amend the Indiana Code concerning
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 24-5.5-1-1; (09)SB0492.2.1. -->
SECTION 1. IC 24-5.5-1-1, AS ADDED BY P.L.209-2007,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2009]: Sec. 1. Except for IC 24-5.5-3,
this article does not
apply to the following:
(1) A person organized or chartered under the laws of this state,
any other state, or the United States that relate to a bank, a trust
company, a savings association, a savings bank, a credit union, or
an industrial loan and investment company.
(2) The Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation, or a Federal Home Loan
(3) A department or agency of the United States or of Indiana.
(4) A person that is servicing or enforcing a loan that it owns.
(5) A person that is servicing a loan:
(A) for a person described in subdivisions (1) through (4);
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.
SOURCE: IC 24-5.5-3-1; (09)SB0492.2.2. -->
SECTION 2. IC 24-5.5-3-1, AS ADDED BY P.L.209-2007,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2009]: Sec. 1. Subject to IC 32-30-10.5 with respect to first
lien mortgage transactions and
in addition to any other notice
required by law, a mortgagee, or the mortgagee's assignee, that
proceeds under IC 32-30-10 to foreclose a mortgage or deed of trust
shall, at the time of filing the complaint in the action, provide the
following written notice to the mortgagor in a statement printed in at
least 14 point boldface type:
"NOTICE REQUIRED BY STATE LAW
Mortgage foreclosure is a complex process. People may
approach you about "saving" your home. You should be
careful about any such promises. There are government
agencies and nonprofit organizations you may contact for
helpful information about the foreclosure process. For the
name and telephone number of an organization near you,
please call the Indiana housing and community development
Service of the written notice required by this chapter shall be made as
provided in the Indiana Rules of Trial Procedure governing service of
process upon a person.
SOURCE: IC 24-5.5-5-7; (09)SB0492.2.3. -->
SECTION 3. IC 24-5.5-5-7 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2009]: Sec. 7. A foreclosure consultant shall retain all records
and documents related to services performed on behalf of a
homeowner for at least three (3) years after the termination or
conclusion of a contract with the homeowner.
SOURCE: IC 24-9-2-12.5; (09)SB0492.2.4. -->
SECTION 4. IC 24-9-2-12.5 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2009]: Sec. 12.5. "Real estate transaction" has the meaning set
forth in IC 25-34.1-10-8.
SOURCE: IC 24-9-3-7; (09)SB0492.2.5. -->
SECTION 5. IC 24-9-3-7, AS AMENDED BY P.L.141-2005,
SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2009]: Sec. 7. A person may not:
(1) divide a loan transaction into separate parts with the intent of
evading a provision of this article;
(2) structure a home loan transaction as an open-end loan with the
intent of evading the provisions of this article if the loan would be
a high cost home loan if the home loan had been structured as a
(3) engage in a deceptive act in connection with a:
(A) home loan; or
(B) loan described in IC 24-9-1-1.
(3) engage or solicit to engage in a real estate transaction or
a consumer credit mortgage transaction without a permit or
license required by law; or
(4) represent that a real estate transaction or a consumer
credit mortgage transaction has sponsorship, approval,
performance, characteristics, accessories, uses, or benefits
(A) the real estate transaction or consumer credit
mortgage does not have; and
(B) the person knows or reasonably should know the real
estate transaction or consumer credit mortgage does not
SOURCE: IC 25-1-11-17; (09)SB0492.2.6. -->
SECTION 6. IC 25-1-11-17 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 17. A practitioner may
petition the board to accept the surrender of the practitioner's license
instead of having a hearing before the board. The practitioner may not
surrender the practitioner's license without the written approval of the
board, and the board may impose any conditions appropriate to the
surrender or reinstatement of a surrendered license. The board may
not accept the surrender of a practitioner's license if the office of
(1) has filed an administrative complaint concerning the
practitioner's license; and
(2) opposes the surrender of the license.
SOURCE: IC 25-1-11-18; (09)SB0492.2.7. -->
SECTION 7. IC 25-1-11-18, AS AMENDED BY P.L.194-2005,
SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2009]: Sec. 18. A practitioner who has been subjected to
disciplinary sanctions may be required by a board to pay the costs of
the proceeding. The practitioner's ability to pay shall be considered
when costs are assessed. If the practitioner fails to pay the costs, a
suspension may not be imposed solely upon the practitioner's inability
to pay the amount assessed. These costs are limited to costs for the
(1) Court reporters.
(3) Certification of documents.
(4) Photo duplication.
(5) Witness attendance and mileage fees.
(7) Expert witnesses.
(10) Administrative law judges.
(11) Real estate appraisals.
SOURCE: IC 25-34.1-6-2; (09)SB0492.2.8. -->
SECTION 8. IC 25-34.1-6-2 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 2. (a) A person who:
(1) performs the acts of a salesperson without a salesperson
(2) performs the acts of a broker without a broker license; or
(3) conducts, or solicits or accepts enrollment of students for, a
course as prescribed in IC 25-34.1-3 without course approval;
commits a Class A infraction. Upon conviction for an offense under
this section, the court shall add to any fine imposed, the amount of any
fee or other compensation earned in the commission of the offense.
Each transaction constitutes a separate offense.
(b) In all actions for the collection of a fee or other compensation for
performing acts regulated by this article, it must be alleged and proved
that, at the time the cause of action arose, the party seeking relief was
not in violation of this section.
(c) The commission may issue a cease and desist order to prevent
violations of this section.
(1) If the commission determines that a person is violating this
section, or is believed to be violating this section, the commission
may issue an order to that person setting forth the time and place
for a hearing at which the affected person may appear and show
cause as to why the challenged activities are not in violation of
(2) After an opportunity for hearing, if the commission determines
that the person is violating this section, the commission shall
issue a cease and desist order which shall describe the person and
activities which are the subject of the order.
(3) A cease and desist order issued under this section is
enforceable in the circuit courts of this state.
(d) The attorney general, the commission, or the prosecuting
attorney of any county in which a violation occurs may maintain an
action in the name of the state to enjoin a person from violating this
(e) In charging any person in a complaint for an injunction or in
affidavit, information, or indictment with the violation of the provisions
of this section, it is sufficient, without averring any further or more
particular facts, to charge that the person upon a certain day and in a
certain county either acted as a real estate broker or salesperson not
having a license or conducted, or solicited or accepted enrollment of
students for, a broker or salesperson course without course approval.
(f) A licensee who violates IC 24-5-15 or IC 24-5.5 may be
disciplined under IC 25-1-11 and this section.
(f) (g) Each enforcement procedure established in this section is
supplemental to other enforcement procedures established in this
SOURCE: IC 32-30-10-3; (09)SB0492.2.9. -->
SECTION 9. IC 32-30-10-3 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 3. (a) Except as
provided in IC 32-30-10.5 for first lien mortgage transactions, if a
mortgagor defaults in the performance of any condition contained in a
mortgage, the mortgagee or the mortgagee's assigns may proceed in the
circuit court of the county where the real estate is located to foreclose
the equity of redemption contained in the mortgage.
(b) If the real estate is located in more than one (1) county, the
circuit court of any county in which the real estate is located has
jurisdiction for an action for the foreclosure of the equity of redemption
contained in the mortgage.
SOURCE: IC 32-30-10-10; (09)SB0492.2.10. -->
SECTION 10. IC 32-30-10-10 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 10. A plaintiff may not:
(1) proceed to foreclose the mortgagee's mortgage:
(A) while the plaintiff is prosecuting any other action for the
same debt or matter that is secured by the mortgage; or
(B) while the plaintiff is seeking to obtain execution of any
judgment in any other action;
(2) prosecute any other action for the same matter while the
plaintiff is foreclosing the mortgagee's mortgage or prosecuting
a judgment of foreclosure; or
(3) proceed to foreclose a mortgage (as defined in
IC 32-30-10.5-5) until the notice under IC 32-30-10.5-8(a) has
been sent, if required.
SOURCE: IC 32-30-10.5; (09)SB0492.2.11. -->
SECTION 11. IC 32-30-10.5 IS ADDED TO THE INDIANA
CODE AS A NEW
CHAPTER TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2009]:
Chapter 10.5. Foreclosure Prevention Agreements for
Sec. 1. (a) The general assembly makes the following findings:
(1) Indiana faces a serious threat to its state economy and to
the economies of its political subdivisions because of Indiana's
high rate of residential mortgage foreclosures, which
constitutes an emergency.
(2) Indiana's high rate of residential mortgage foreclosures
has adversely affected property values in Indiana, and may
have an even greater adverse effect on property values if the
foreclosure rate continues to rise.
(3) It is in the public interest for the state to modify the
foreclosure process to require creditors and debtors to engage
in good faith negotiations designed to avoid foreclosure by
allowing debtors to repay their mortgages.
(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
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
Sec. 3. As used in this chapter, "debtor" refers to the mortgagor
in a first lien mortgage transaction (as defined in
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 may include:
(A) a temporary forbearance with respect to the mortgage;
(B) a reduction of any arrearage owed by the debtor;
(C) a reduction of the interest rate that applies to the
(D) a repayment plan;
(E) a deed in lieu of foreclosure;
(F) reinstatement of the mortgage upon the debtor's
payment of any arrearage;
(G) a sale of the property; or
(H) any loss mitigation arrangement or debtor relief plan
established by federal law.
Sec. 5. As used in this chapter, "mortgage" refers to a first lien
mortgage transaction (as defined in IC 24-4.4-1-301(6)).
Sec. 6. As used in this chapter, "mortgage foreclosure
counselor" means a foreclosure prevention counselor who is part
of, or has been trained or certified by, the Indiana Foreclosure
Sec. 7. As used in this chapter, "mortgage servicer" means the
last person to whom:
(1) a debtor in a mortgage; or
(2) the debtor's successor in interest;
has been instructed to send payments on the mortgage.
Sec. 8. (a) After June 30, 2009, except as provided in subsection
(d) and section 10(f) of this chapter, before a creditor files an
action for foreclosure, the creditor shall send to the debtor by
certified mail, return receipt requested, a presuit notice in a form
prescribed by the Indiana housing and community development
authority established by IC 5-20-1-3 that informs the debtor that
the creditor intends to initiate a foreclosure and that the debtor
may obtain assistance from a foreclosure counselor and that
provides information on how to contact a housing counselor.
(b) The notice required by subsection (a) shall be sent to:
(1) the address of the mortgaged property; or
(2) the last known 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) Except as provided in subsection (d) and section 10(f) of this
chapter, if a creditor files an action to foreclose a mortgage, the
creditor shall include with the complaint served on the debtor a
notice that informs the debtor of a right to participate in a
settlement conference. The notice shall be served with the
complaint and in a form prescribed by the Indiana housing and
community development authority established by IC 5-20-1-3. The
notice must inform the debtor that the debtor may schedule a
settlement conference by notifying the court of the debtor's intent
to participate in a settlement conference not later than thirty (30)
days after the notice is served.
(d) A creditor is not required to send the notices described in
this section if:
(1) the loan is secured by a dwelling that is not the debtor's
(2) the loan has been the subject of a prior foreclosure
(3) bankruptcy law prohibits the creditor from participating
in a settlement conference under this chapter with respect to
the loan; or
(4) the court finds that a settlement conference would be of
limited value based on the result of a prior loss mitigation
effort between the debtor and the creditor.
Sec. 9. (a) After June 30, 2009, a court may not issue a judgment
of foreclosure under IC 32-30-10 on a mortgage subject to this
chapter unless all of the following apply:
(1) The creditor has given the notice required under section
8(c) of this chapter.
(2) The debtor either:
(A) does not contact the court within the thirty (30) day
period described in section (8)(c) of this chapter to
schedule a settlement conference under section (8)(c) of
this chapter; or
(B) contacts the court within the thirty (30) day period
described in section (8)(c) of this chapter to schedule a
conference under section (8)(c) of this chapter and, upon
the conclusion of the conference, the parties are unable to
reach agreement on the terms of a foreclosure prevention
(b) In a foreclosure action filed under IC 32-30-10-3, the
creditor shall attach to the complaint filed with the court a copy of
the notice sent to the debtor under section (8)(a) of this chapter.
(c) In a foreclosure action filed after June 30, 2009, the court
may not render a judgment of foreclosure until sixty (60) days
after the date the notice required by section 8(a) of this chapter
was sent unless the mortgaged property is vacant.
Sec. 10. (a) Unless a settlement conference is not required under
this chapter, the court shall issue a notice of a settlement
conference if the debtor contacts the court to schedule a settlement
conference as described in section 8(c) of this chapter. The court's
notice of a settlement conference must do the following:
(1) Order the creditor and the debtor to conduct a settlement
conference on or before a date and time specified in the
notice, which date must not be earlier than twenty-five (25)
days after the date of the notice or later than sixty (60) days
after the date of the notice, for the purpose of attempting to
negotiate a foreclosure prevention agreement.
(2) Require the debtor to contact a mortgage foreclosure
counselor before the date of the settlement conference. The
notice must provide the contact information for the Indiana
Foreclosure Prevention Network.
(3) Require the debtor to bring to the settlement conference
the following documents needed to engage in good faith
negotiations with the creditor:
(A) Documentation of the debtor's present and future
income, expenses, assets, and liabilities, including
documentation of the debtor's employment history.
(B) Any other documentation or information that the court
determines is needed for the debtor to engage in good faith
negotiations with the creditor. The court shall identify any
documents required under this clause with enough
specificity to allow the debtor to obtain the documents
before the scheduled settlement conference.
(4) Require the creditor to bring to the settlement conference
a complete transaction history for the mortgage upon which
the mortgage foreclosure action is based.
(5) Inform the parties that:
(A) each party has the right to be represented by an
attorney or assisted by a mortgage foreclosure counselor
at the settlement conference; and
(B) an attorney or a mortgage foreclosure counselor may
participate in the settlement conference in person or by
(6) Inform the parties that the settlement conference will be
conducted by telephone on the date and time specified in the
notice under subdivision (1) unless the parties submit to the
court a stipulation to modify the date, time, and place of the
(b) 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, and, for cause shown, the court
may order the creditor and the debtor to reconvene a settlement
conference at any time before judgment is entered.
(c) At the court's discretion, a settlement conference may or
may not be attended by a judicial officer.
(d) The creditor shall ensure that any person representing the
(1) at a settlement conference scheduled under subsection (a);
(2) in any negotiations with the debtor designed to reach
agreement on the terms of a foreclosure prevention
has authority to conduct negotiations.
(e) 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 a notice indicating that a
foreclosure prevention agreement has been reached. At the election
of the creditor, the foreclosure shall be dismissed or stayed for as
long as the debtor complies with the terms of the foreclosure
(f) If a foreclosure is dismissed and a default in the terms of the
foreclosure prevention plan later occurs, the creditor or its assigns
may bring a foreclosure action without being required to send the
notices described in section 8 of this chapter.
(g) Participation in a settlement conference under this section
satisfies any mediation or alternative dispute resolution
requirement established by court rule.
Sec. 11. (a) This section applies to a mortgage foreclosure action
with respect to which the creditor has filed the complaint in the
proceeding before July 1, 2009, and the court having jurisdiction
over the proceeding has not rendered a judgment of foreclosure
before July 1, 2009.
(b) In a mortgage foreclosure action to which this section
applies, the court having jurisdiction of the action shall serve
notice of the availability of a settlement conference under section
8(c) of this chapter.
SOURCE: IC 32-30-12-1; (09)SB0492.2.12. -->
SECTION 12. IC 32-30-12-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 1. Except as provided
in IC 32-30-10.5 for first lien mortgage transactions,
it is not
necessary in any action upon a mortgage or lien to give time for:
(1) the payment of money; or
(2) performing any other act.
Final judgment may be given in the first instance.