HB 1229-1_ Filed 03/03/2004, 23:25
CONFERENCE COMMITTEE REPORT
DIGEST FOR EHB 1229
Citations Affected: IC 4-4-3-8; IC 4-4-3-23; IC 4-6-12; IC 23-2-5-3; IC 23-2-5-19;
IC 23-15-8-3; IC 24-4.5-1-102; IC 24-4.5-1-202; IC 24-4.5-7; IC 24-9; IC 28-1-20-4;
IC 28-7-1-9; IC 28-7-1-9.2; IC 28-8-4-27; IC 28-8-4-33; IC 28-10-1-1; IC 28-11-3-6;
IC 28-13-16-4; IC 28-13-16-5; IC 28-15-2-2; IC 32-29-1-2.5; IC 34-7-4-2; IC 36-2-7-10;
IC 24-4.5-7-407; IC 24-4.5-7-408.
Synopsis: Home loan practices. Restricts certain lending acts and practices. Establishes the
homeowner protection unit in the office of the attorney general. Provides enforcement procedures
for deceptive mortgage acts. Establishes a $3 mortgage recording fee. Requires the department
of commerce to provide home ownership education programs. Provides that certain provisions
do not apply to certain financial institutions. Makes changes to the definition of a high cost home
loan. Prohibits certain lending practices. Updates references in financial institutions law to
conform with federal law. Permits a state chartered financial institution to engage in activities
related to a product, a service, or an investment that is available to or offered by national banks
domiciled in Indiana. Removes limitations on the amount of public funds that may be deposited
in a credit union. (Currently, deposits of public funds are limited to 10% of total credit union
assets.) Increases the minimum amount of the bond required for a money transmitter from
$100,000 to $200,000 and the maximum amount from $200,000 to $300,000. Increases the
insurance coverage required for a money transmitter for criminal or dishonest acts from 50% to
100% of the amount of the money transmitter's security bond or deposit. Provides that state law
applies to a state chartered bank, trust company, savings association, savings bank, credit union,
corporate fiduciary, or industrial loan and investment company to the same extent it applies to a
federally chartered institution of the same type. Establishes administrative procedures governing
requests for an exemption from state law due to the preemption of state law as it is applied to
federally chartered institutions. Makes various changes in the small loan provisions of the Uniform
Consumer Credit Code, including: (1) defines a small loan as a loan with a principal amount that
is more than $50 and not more than $500; (2) prohibits the renewal of a small loan; (3) removes
limitations on finance charges; (4 ) increases delinquency charges; (5) allows a small loan to be
secured by a borrower's authorization to debit an account instead of a borrower's check; (6)
increases civil penalties and statutory damages from $1,000 to $2,000; and (7) prohibits a small
loan if the total payable amount of the small loan exceeds 15% of the borrower's monthly gross
income. (Current law provides that a small loan is prohibited if it exceeds 20% of the borrower's
monthly net income.) Repeals provisions that relate to the renewal of a small loan. Permits the
secretary of state to administratively dissolve a business entity whose name contains the term
"banc" or "banco" in violation of financial institutions law. (Current law allows the secretary of
state to take this action in the case of an entity whose name contains the term "bank".) Permits
the use of the word "bank", "banc", or "banco" in the name of a subsidiary of : (1) a bank or trust
company; and (2) a bank holding company. Prohibits a lender from requiring a borrower to obtain
hazard insurance in an amount exceeding the replacement value of the improvements on
mortgaged property as a condition of receiving or maintaining the mortgage. Voids provisions in
an agreement to purchase a security that would waive compliance with securities law or a rule
or order made under securities law. Provides a procedure for an issuer of securities to respond
to comments regarding an application for registration made by the securities division. Permits the
appointment of a securities division attorney to serve as a special deputy prosecutor in actions
arising under securities law. Prohibits the issuance of an interpretive opinions by the securities
commissioner concerning an activity that occurred before or is occurring on the date that the
opinion is requested. Requires that notice and opportunity to be heard must be provided to a
person accused of violating securities law, rather than requiring that a hearing occur as provided
by current law. Prohibits various deceptive practices by a person that supplies information
concerning securities. Provides that an administrative action under securities law survives the
death of a person who might have been a respondent. Makes changes to definitions used in the
loan broker statutes. Exempts persons engaged in certain federally regulated transactions from
the requirements of the loan broker law. (This conference committee report: requires the
department of commerce, rather than the Indiana housing finance authority, to provide
home ownership education programs; and incorporates the provisions of SB 222, ESB 405,
ESB 406, ESB 469, and some provisions of HB 1230.)
Effective: Upon passage; January 1, 2004 (retroactive); July 1, 2004; January 1, 2005.
Text Box
Adopted Rejected
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CONFERENCE COMMITTEE REPORT
MR. SPEAKER:
Your Conference Committee appointed to confer with a like committee from the Senate
upon Engrossed Senate Amendments to Engrossed House Bill No. 1229 respectfully
reports that said two committees have conferred and agreed as follows to wit:
that the House recede from its dissent from all Senate amendments and that
the House now concur in all Senate amendments to the bill and that the bill
be further amended as follows:
Delete everything after the enacting clause and insert the following:
SOURCE: IC 4-4-3-8; (04)CC122903.1. -->
SECTION 1. IC 4-4-3-8 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2005]: Sec. 8. (a) The department shall
develop and promote programs designed to make the best use of the
resources of the state so as to assure a balanced economy and
continuing economic growth for Indiana and for those purposes may
do the following:
(1) Cooperate with federal, state, and local governments and
agencies in the coordination of programs to make the best use of
the resources of the state.
(2) Receive and expend all funds, grants, gifts, and contributions
of money, property, labor, interest accrued from loans made by the
department, and other things of value from public and private
sources, including grants from agencies and instrumentalities of the
state and the federal government. The department:
(A) may accept federal grants for providing planning assistance,
making grants, or providing other services or functions
necessary to political subdivisions, planning commissions, or
other public or private organizations;
(B) shall administer these grants in accordance with their terms;
and
(C) may contract with political subdivisions, planning
commissions, or other public or private organizations to carry out
the purposes for which the grants were made.
(3) Direct that assistance, information, and advice regarding the
duties and functions of the department be given the department by
any officer, agent, or employee of the state. The head of any other
state department or agency may assign one (1) or more of the
department's or agency's employees to the department on a
temporary basis, or may direct any division or agency under the
department's or agency's supervision and control to make any
special study or survey requested by the director.
(b) The department shall perform the following duties:
(1) Disseminate information concerning the industrial, commercial,
governmental, educational, cultural, recreational, agricultural, and
other advantages of Indiana.
(2) Plan, direct, and conduct research activities.
(3) Develop and implement industrial development programs to
encourage expansion of existing industrial, commercial, and
business facilities within Indiana and to encourage new industrial,
commercial, and business locations within Indiana.
(4) Assist businesses and industries in acquiring, improving, and
developing overseas markets and encourage international plant
locations within Indiana. The director, with the approval of the
governor, may establish foreign offices to assist in this function.
(5) Promote the growth of minority business enterprises by doing
the following:
(A) Mobilizing and coordinating the activities, resources, and
efforts of governmental and private agencies, businesses, trade
associations, institutions, and individuals.
(B) Assisting minority businesses in obtaining governmental or
commercial financing for expansion, establishment of new
businesses, or individual development projects.
(C) Aiding minority businesses in procuring contracts from
governmental or private sources, or both.
(D) Providing technical, managerial, and counseling assistance to
minority business enterprises.
(6) Assist in community economic development planning and the
implementation of programs designed to further this development.
(7) Assist in the development and promotion of Indiana's tourist
resources, facilities, attractions, and activities.
(8) Assist in the promotion and marketing of Indiana's agricultural
products, and provide staff assistance to the director in fulfilling the
director's responsibilities as commissioner of agriculture.
(9) Perform the following energy related functions:
(A) Assist in the development and promotion of alternative energy
resources, including Indiana coal, oil shale, hydropower, solar,
wind, geothermal, and biomass resources.
(B) Encourage the conservation and efficient use of energy,
including energy use in commercial, industrial, residential,
governmental, agricultural, transportation, recreational, and
educational sectors.
(C) Assist in energy emergency preparedness.
(D) Not later than January 1, 1994, establish:
(i) specific goals for increased energy efficiency in the
operations of state government and for the use of alternative
fuels in vehicles owned by the state; and
(ii) guidelines for achieving the goals established under item (i).
(E) Establish procedures for state agencies to use in reporting to
the department on energy issues.
(F) Carry out studies, research projects, and other activities
required to:
(i) assess the nature and extent of energy resources required to
meet the needs of the state, including coal and other fossil
fuels, alcohol fuels produced from agricultural and forest
products and resources, renewable energy, and other energy
resources;
(ii) promote cooperation among government, utilities, industry,
institutions of higher education, consumers, and all other
parties interested in energy and recycling market development
issues; and
(iii) promote the dissemination of information concerning
energy and recycling market development issues.
(10) Implement any federal program delegated to the state to
effectuate the purposes of this chapter.
(11) Promote the growth of small businesses by doing the
following:
(A) Assisting small businesses in obtaining and preparing the
permits required to conduct business in Indiana.
(B) Serving as a liaison between small businesses and state
agencies.
(C) Providing information concerning business assistance
programs available through government agencies and private
sources.
(12) Assist the Indiana commission for agriculture and rural
development in performing its functions under IC 4-4-22.
(13) Develop and promote markets for the following recyclable
items:
(A) Aluminum containers.
(B) Corrugated paper.
(C) Glass containers.
(D) Magazines.
(E) Steel containers.
(F) Newspapers.
(G) Office waste paper.
(H) Plastic containers.
(I) Foam polystyrene packaging.
(J) Containers for carbonated or malt beverages that are primarily
made of a combination of steel and aluminum.
(14) Produce an annual recycled products guide and at least one (1)
time each year distribute the guide to the following:
(A) State agencies.
(B) The judicial department of state government.
(C) The legislative department of state government.
(D) State educational institutions (as defined in IC 20-12-0.5-1).
(E) Political subdivisions (as defined in IC 36-1-2-13).
(F) Bodies corporate and politic created by statute.
A recycled products guide distributed under this subdivision must
include a description of supplies and other products that contain
recycled material and information concerning the availability of the
supplies and products.
(15) Beginning July 1, 2005, the department shall identify,
promote, assist, and fund home ownership education programs
conducted throughout Indiana by nonprofit counseling
agencies certified by the department using funds appropriated
under IC 4-4-3-23(e). The department shall adopt rules under
IC 4-22-2 governing certification procedures and counseling
requirements for nonprofit home ownership counselors. The
attorney general and the entities listed in IC 4-6-12-4(a)(1)
through IC 4-6-12-4(a)(10) shall cooperate with the
department in implementing this subdivision.
(c) The department shall submit a report to the general assembly
before October 1 of each year concerning the availability of and location
of markets for recycled products in Indiana. The report must include
the following:
(1) A priority listing of recyclable materials to be targeted for
market development. The listing must be based on an examination
of the need and opportunities for the marketing of the following:
(A) Paper.
(B) Glass.
(C) Aluminum containers.
(D) Steel containers.
(E) Bi-metal containers.
(F) Glass containers.
(G) Plastic containers.
(H) Landscape waste.
(I) Construction materials.
(J) Waste oil.
(K) Waste tires.
(L) Coal combustion wastes.
(M) Other materials.
(2) A presentation of a market development strategy that:
(A) considers the specific material marketing needs of Indiana;
and
(B) makes recommendations for legislative action.
(3) An analysis that examines the cost and effectiveness of future
market development options.
SOURCE: IC 4-4-3-23; (04)CC122903.2. -->
SECTION 2. IC 4-4-3-23 IS ADDED TO THE INDIANA CODE AS
A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JANUARY
1, 2005]: Sec. 23. (a) The home ownership education account
within the state general fund is established to support the home
ownership education programs established under section 8(b)(15)
of this chapter. The account is administered by the department.
(b) The home ownership education account consists of fees
collected under IC 24-9-9.
(c) The expenses of administering the home ownership education
account shall be paid from money in the fund.
(d) The treasurer of state shall invest the money in the home
ownership education account not currently needed to meet the
obligations of the account in the same manner as other public
money may be invested.
(e) Money in the account may be spent only after appropriation
by the general assembly.
SOURCE: IC 4-6-3-3; (04)CC122903.3. -->
SECTION 3. IC 4-6-3-3, AS AMENDED BY P.L.2-2002, SECTION
24, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY
1, 2005]: Sec. 3. If the attorney general has reasonable cause to believe
that a person may be in possession, custody, or control of documentary
material, or may have knowledge of a fact that is relevant to an
investigation conducted to determine if a person is or has been engaged
in a violation of IC 4-6-9, IC 4-6-10, IC 13-14-10, IC 13-14-12,
IC 13-24-2, IC 13-30-4, IC 13-30-5, IC 13-30-6, IC 13-30-8,
IC 23-7-8, IC 24-1-2, IC 24-5-0.5, IC 24-5-7, IC 24-5-8, IC 24-9,
IC 25-1-7, IC 32-34-1, or any other statute enforced by the attorney
general, only the attorney general may issue in writing, and cause to be
served upon the person or the person's representative or agent, an
investigative demand that requires that the person served do any
combination of the following:
(1) Produce the documentary material for inspection and copying
or reproduction.
(2) Answer under oath and in writing written interrogatories.
(3) Appear and testify under oath before the attorney general or the
attorney general's duly authorized representative.
SOURCE: IC 4-6-12; (04)CC122903.4. -->
SECTION 4. IC 4-6-12 IS ADDED TO THE INDIANA CODE AS
A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JANUARY
1, 2005]:
Chapter 12. Homeowner Protection Unit
Sec. 1. As used in this chapter, "unit" refers to the homeowner
protection unit established under this chapter.
Sec. 2. The attorney general shall establish a homeowner
protection unit to enforce IC 24-9 and to carry out this chapter.
Sec. 3. (a) Beginning July 1, 2005, the unit shall do the
following:
(1) Investigate deceptive acts in connection with mortgage
lending.
(2) Investigate violations of IC 24-9.
(3) Institute appropriate administrative and civil actions to
redress:
(A) deceptive acts in connection with mortgage lending; and
(B) violations of IC 24-5-0.5 and IC 24-9.
(4) Cooperate with federal, state, and local law enforcement
agencies in the investigation of:
(A) deceptive acts in connection with mortgage lending;
(B) criminal violations involving deceptive acts in connection
with mortgage lending; and
(C) violations of IC 24-5-0.5 and IC 24-9.
(b) The attorney general shall adopt rules under IC 4-22-2 to the
extent necessary to organize the unit.
Sec. 4. (a) The following may cooperate with the unit to
implement this chapter:
(1) The Indiana professional licensing agency and the
appropriate licensing boards with respect to persons licensed
under IC 25.
(2) The department of financial institutions.
(3) The department of insurance with respect to the sale of
insurance in connection with mortgage lending.
(4) The securities division of the office of the secretary of
state.
(5) The supreme court disciplinary commission with respect to
attorney misconduct.
(6) The Indiana housing finance authority.
(7) The department of state revenue.
(8) The state police department.
(9) A prosecuting attorney.
(10) Local law enforcement agencies.
(11) The department of commerce.
(b) Notwithstanding IC 5-14-3, the entities listed in subsection
(a) may share information with the unit.
Sec. 5. The attorney general may file complaints with any of the
entities listed in section 4 of this chapter to carry out this chapter
and IC 24-9.
Sec. 6. The establishment of the unit and the unit's powers does
not limit the jurisdiction of an entity described in section 4 of this
chapter.
Sec. 7. The attorney general and an investigator of the unit may
do any of the following when conducting an investigation under
section 3 of this chapter:
(1) Issue and serve a subpoena for the production of records,
including records stored in electronic data processing systems,
for inspection by the attorney general or the investigator.
(2) Issue and serve a subpoena for the appearance of a person
to provide testimony under oath.
(3) Apply to a court with jurisdiction to enforce a subpoena
described in subdivision (1) or (2).
Sec. 8. The unit shall cooperate with the department of
commerce in the development and implementation of the home
ownership education programs established under
IC 4-4-3-8(b)(15).
Sec. 9. (a) The homeowner protection unit account within the
general fund is established to support the operations of the unit.
The account is administered by the attorney general.
(b) The homeowner protection unit account consists of fees
collected under IC 24-9-9.
(c) The expenses of administering the homeowner protection
unit account shall be paid from money in the account.
(d) The treasurer of state shall invest the money in the
homeowner protection unit account not currently needed to meet
the obligations of the account in the same manner as other public
money may be invested.
(e) Before July 1, 2007:
(1) money in the homeowner protection unit account at the
end of the state fiscal year does not revert to the state general
fund; and
(2) there is annually appropriated to the attorney general
from the homeowner protection unit account money sufficient
for carrying out the purposes of this chapter and IC 24-9.
(f) After June 30, 2007:
(1) money in the homeowner protection unit account at the
end of a state fiscal year reverts to the state general fund;
and
(2) money in the homeowner protection unit account may only
be spent after appropriation by the general assembly.
SOURCE: IC 23-2-1-2; (04)CC122903.5. -->
SECTION 5. IC 23-2-1-2 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2004]: Sec. 2. (a) The following securities are
exempted from the registration requirements of section 3 of this
chapter:
(1) A security (including a revenue obligation) issued or guaranteed
by the United States, a state, a political subdivision of a state, or an
agency or corporate or other instrumentality of one (1) or more of
the foregoing or a certificate of deposit for any of the foregoing.
(2) A security issued or guaranteed by Canada, a Canadian
province, a political subdivision of a Canadian province, an agency,
or corporate or other instrumentality of one (1) or more of the
foregoing, or any other foreign government with which the United
States currently maintains diplomatic relations, if the security is
recognized as a valid obligation by the issuer or guarantor.
(3) A security issued by and representing an interest in or a debt of,
or guaranteed by a bank organized under the laws of the United
States, a bank, savings institution, or trust company organized and
supervised under the laws of a state, a federal savings association,
a savings association organized under the laws of a state and
authorized to do business in Indiana, a federal credit union or a
credit union, industrial loan association, or similar association
organized and supervised under the laws of this state, or a
corporation or organization whose issuance of securities is required
by any other law to be passed upon and authorized by the
department of financial institutions or by a federal agency or
authority.
(4) A security issued or guaranteed by a railroad or other common
or contract carrier, a public utility, or a common or contract carrier
or public utility holding company. However, an issuer or guarantor
must be subject to regulation or supervision as to the issuance of
its own securities by a public commission, board, or officer of the
government of the United States, of a state, territory, or insular
possession of the United States, of a municipality located in a state,
territory, or insular possession, of the District of Columbia, or of
the Dominion of Canada or a province of Canada.
(5) A security listed or approved for listing upon notice of issuance
on the New York Stock Exchange, the American Stock Exchange,
the Chicago Stock Exchange, or on any other exchange approved
and designated by the commissioner, any other security of the
same issuer that is of senior rank or substantially equal rank, a
security called for by subscription rights or warrants so listed or
approved, or a warrant or right to purchase or subscribe to any of
the foregoing.
(6) A promissory note, draft, bill of exchange, or banker's
acceptance that is evidence of:
(A) an obligation;
(B) a guarantee of an obligation;
(C) a renewal of an obligation; or
(D) a guarantee of a renewal of an obligation;
to pay cash within nine (9) months after the date of issuance,
excluding grace days, that is issued in denominations of at least
fifty thousand dollars ($50,000) and receives a rating in one (1) of
the three (3) highest rating categories from a nationally recognized
statistical rating organization.
(7) A security issued in connection with an employee stock
purchase, savings, pension, profit-sharing, or similar benefit plan.
(8) A security issued by an association incorporated under
IC 15-7-1.
(9) A security that is an industrial development bond (as defined in
Section 103(b)(2) of the Internal Revenue Code of 1954) the
interest of which is excludable from gross income under Section
103(a)(1) of the Internal Revenue Code of 1954 if, by reason of the
application of paragraph (4) or (6) of Section 103(b) of the Internal
Revenue Code of 1954 (determined as if paragraphs (4)(A), (5),
and (7) were not included in Section 103(b)), paragraph (1) of
Section 103(b) does not apply to the security.
(10) A security issued by a nonprofit corporation that meets the
requirements of Section 103(e) of the Internal Revenue Code of
1954 and is designated by the governor as the secondary market
for guaranteed student loans under IC 20-12-21.2.
(11) A security designated or approved for designation upon notice
of issuance on the National Association of Securities Dealers
Automatic Quotation National Market System or any other national
market system approved and designated by the commissioner, any
other security of the same issuer that is of senior rank or
substantially equal rank, a security called for by subscription rights
or warrants so listed or approved, or a warrant or right to purchase
or subscribe to any of the foregoing.
(12) A security that is a "qualified bond" (as defined in Section
141(e) of the Internal Revenue Code, as amended).
(b) The following transactions are exempted from the registration
requirements of section 3 of this chapter:
(1) An isolated nonissuer offer or sale, whether effected through a
broker-dealer or not.
(2) A nonissuer sale effected by or through a registered
broker-dealer pursuant to an unsolicited order or offer to buy.
(3) A nonissuer offer or sale by a registered broker-dealer, acting
either as principal or agent, of issued and outstanding securities if
the following conditions are satisfied:
(A) The securities are sold at prices reasonably related to the
current market price at the time of sale, and if the registered
broker-dealer is acting as agent, the commission collected by the
registered broker-dealer on account of the sale is not in excess of
usual and customary commissions collected with respect to
securities and transactions having comparable characteristics.
(B) The securities do not constitute an unsold allotment to or
subscription by the broker-dealer as a participant in the
distribution of the securities by the issuer or by or through an
underwriter.
(C) Either:
(i) information consisting of the names of the issuer's officers
and directors, a balance sheet of the issuer as of a date not
more than eighteen (18) months prior to the date of the sale,
and a profit and loss statement for either the fiscal year
preceding that date or the most recent year of operations is
published in a securities manual approved by the
commissioner;
(ii) the issuer is required to file reports with the Securities and
Exchange Commission pursuant to sections 13 and 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m and 78o) and
is not delinquent in the filing of the reports on the date of the
sale; or
(iii) information consisting of the names of the issuer's officers
and directors, a balance sheet of the issuer as of a date not
more than sixteen (16) months prior to the date of the sale, and
a profit and loss statement for either the fiscal year preceding
that date or the most recent year of operations is on file with
the commissioner. The information required by this item to be
on file with the commissioner must be on a form and made in
a manner as the commissioner prescribes. The fee for the initial
filing of the form shall be twenty-five dollars ($25). The fee
for the annual renewal filing shall be fifteen dollars ($15).
When a filing is withdrawn or is not completed by the issuer,
the commissioner must retain the filing fee.
(D) There has been compliance with section 6(l) of this chapter.
(E) Unless the issuer is registered under the Investment Company
Act of 1940, all the following must be true at the time of the
transaction:
(i) The security belongs to a class that has been in the hands of
the public for at least ninety (90) days.
(ii) The issuer of the security is a going concern, is actually
engaged in business, and is not in bankruptcy or receivership.
(iii) Except as permitted by order of the commissioner, the
issuer and any predecessors have been in continuous operation
for at least five (5) years. An issuer or predecessor is in
continuous operation only if the issuer or predecessor has
gross operating revenue in each of the five (5) years
immediately preceding the issuer's or predecessor's claim of
exemption and has had total gross operating revenue of at least
two million five hundred thousand dollars ($2,500,000) for
those five (5) years or has had gross operating revenue of at
least five hundred thousand dollars ($500,000) in not less than
three (3) of those five (5) years.
The commissioner may revoke the exemption afforded by this
subdivision with respect to any securities by issuing an order:
(i) if the commissioner finds that the further sale of the
securities in this state would work or tend to work a fraud on
purchasers of the securities;
(ii) if the commissioner finds that the financial condition of the
issuer is such that it is in the public interest and is necessary
for the protection of investors to revoke or restrict the
exemption afforded by this subsection; or
(iii) if the commissioner finds that, due to the limited number
of shares in the hands of the public or due to the limited
number of broker-dealers making a market in the securities,
there is not a sufficient market for the securities so that there
is not a current market price for the securities.
(4) A transaction between the issuer or other person on whose
behalf the offering is made by an underwriter, or among
underwriters.
(5) A transaction in a bond or other evidence of indebtedness
secured by a real or chattel mortgage or deed of trust, or by
agreement for the sale of real estate or chattels, if the entire
mortgage, deed of trust, or agreement, together with all the bonds
or other evidences of indebtedness, is offered and sold as a unit.
(6) A transaction by an executor, administrator, personal
representative, sheriff, marshal, receiver, trustee in bankruptcy,
guardian, conservator, or a person acting in a trust or fiduciary
capacity where the transaction is effected pursuant to the authority
of or subject to approval by a court of competent jurisdiction.
(7) A transaction executed by a bona fide pledgee without any
purpose of evading this chapter.
(8) An offer or sale to a bank, a savings institution, a trust
company, an insurance company, an investment company (as
defined in the Investment Company Act of 1940 (15 U.S.C. 80a-1
through 80a-52)), a pension or profit-sharing trust, or other
financial institution or institutional buyer, or to a broker-dealer,
whether the purchaser is acting for itself or in a fiduciary capacity.
(9) The offer or sale of securities of an issuer:
(i) to a person who is:
(A) a director, an executive officer, a general partner, an
administrator, or a person who performs similar functions for
or who is similarly situated with respect to the issuer;
(B) a director, an executive officer, or a general partner of a
general partner of the issuer; or
(C) any other natural person employed on a full-time basis by
the issuer as an attorney or accountant if the person has been
acting in this capacity for at least one (1) year immediately
prior to the offer or sale;
(ii) to an entity affiliated with the issuer;
(iii) if the issuer is a corporation, to a person who is the owner
of shares of the corporation or of an affiliated corporation
representing and possessing ten percent (10%) or more of the
total combined voting power of all classes of stock (of the
corporation or affiliated corporation) issued and outstanding and
who is entitled to vote; or
(iv) if the issuer is a limited liability company, to a person who is
the owner of an interest in the limited liability company
representing and possessing at least ten percent (10%) of the
total combined voting power of all classes of such interests (of
the limited liability company or affiliated limited liability company)
issued and outstanding.
(10) The offer or sale of a security by the issuer of the security if
all of the following conditions are satisfied:
(A) The issuer reasonably believes that either:
(i) there are no more than thirty-five (35) purchasers of the
securities from the issuer in an offering pursuant to this
subsection, including purchasers outside Indiana; or
(ii) there are no more than twenty (20) purchasers in Indiana.
In either case, there shall be excluded in determining the number
of purchasers a purchaser whom the issuer reasonably believes
to be an accredited investor or who purchases the securities after
they are registered under this chapter.
(B) The issuer does not offer or sell the securities by means of
a form of general advertisement or general solicitation.
(C) The issuer reasonably believes that each purchaser of the
securities is acquiring the securities for the purchaser's own
investment and is aware of any restrictions imposed on
transferability and resale of the securities. The basis for
reasonable belief may include:
(i) obtaining a written representation signed by the purchaser
that the purchaser is acquiring the securities for the
purchaser's own investment and is aware of any restrictions
imposed on the transferability and resale of the securities; and
(ii) placement of a legend on the certificate or other document
that evidences the securities stating that the securities have not
been registered under section 3 of this chapter, and setting
forth or referring to the restrictions on transferability and sale
of the securities.
(D) The issuer:
(i) files with the commissioner and provides to each purchaser
in this state an offering statement that sets forth all material
facts with respect to the securities; and
(ii) reasonably believes immediately before making a sale that
each purchaser who is not an accredited investor either alone
or with a purchaser representative has knowledge and
experience in financial and business matters to the extent that
the purchaser is capable of evaluating the merits and risks of
the prospective investment.
(E) If the aggregate offering price of the securities in an offering
pursuant to this subdivision (including securities sold outside of
Indiana) does not exceed five hundred thousand dollars
($500,000), the issuer is not required to comply with clause (D)
if the issuer files with the commissioner and provides to each
purchaser in Indiana the following information and materials:
(i) copies of all written materials, if any, concerning the
securities that have been provided by the issuer to any
purchaser; and
(ii) unless clearly presented in all written materials, a written
notification setting forth the name, address, and form of
organization of the issuer and any affiliate, the nature of the
principal businesses of the issuer and any affiliate, and the
information required in section 5(b)(1)(B), 5(b)(1)(C),
5(b)(1)(D), 5(b)(1)(E), 5(b)(1)(H), and 5(b)(1)(I) of this
chapter.
(F) The commissioner does not disallow the exemption provided
by this subdivision within ten (10) full business days after receipt
of the filing required by clause (D) or (E). The issuer may make
offers (but not sales) before and during the ten (10) day period,
if:
(i) each prospective purchaser is advised in writing that the
offer is preliminary and subject to material change; and
(ii) no enforceable offer to purchase the securities may be
made by a prospective purchaser, and no consideration in any
form may be accepted or received (directly or indirectly) from
a prospective purchaser, before the expiration of the ten (10)
day period and the vacation of an order disallowing the
exemption.
(G) The issuer need not comply with clause (D), (E), or (F) if:
(i) each purchaser has access to all the material facts with
respect to the securities by reason of the purchaser's active
involvement in the organization or management of the issuer or
the purchaser's family relationship with a person actively
involved in the organization or management of the issuer;
(ii) there are not more than fifteen (15) purchasers in Indiana
and each Indiana purchaser is an accredited investor or is a
purchaser described in item (i); or
(iii) the aggregate offering price of the securities, including
securities sold outside Indiana, does not exceed five hundred
thousand dollars ($500,000), the total number of purchasers,
including purchasers outside of Indiana, does not exceed
twenty-five (25) and each purchaser either receives all of the
material facts with respect to the security or is an accredited
investor or a purchaser described in item (i).
(H) If the issuer makes or is required to make a filing with the
commissioner under clause (D) or (E), the issuer must also file
with the commissioner at the time of the filing the consent to
service of process required by section 16 of this chapter. The
issuer shall also file with the commissioner, at the times and in
the forms as the commissioner may prescribe, notices of sales
made in reliance upon this subdivision.
(I) The commissioner may by rule deny exemption provided in
this subdivision to a particular class of issuers, or may make the
exemption available to the issuers upon compliance with
additional conditions and requirements, if appropriate in
furtherance of the intent of this chapter.
(11) An offer or sale of securities to existing security holders of the
issuer, including persons who at the time of the transaction are
holders of convertible securities, nontransferable warrants, or
transferable warrants exercisable within not more than ninety (90)
days of their issuance if no commission or other remuneration
(other than a standby commission) is paid or given for soliciting a
security holder in this state.
(12) An offer (but not a sale) of a security for which registration
statements or applications have been filed under this chapter and
the Securities Act of 1933 (15 U.S.C. 77a-77aa), if no stop order
or refusal order is in effect and no public proceeding or
examination looking toward an order is pending under either law.
(13) The deposit of shares under a voting-trust agreement and the
issue of voting-trust certificates for the deposit.
(14) The offer or sale of a commodity futures contract.
(15) The offer or sale of securities to or for the benefit of security
holders incident to a vote by the security holders pursuant to the
articles of incorporation or applicable instrument, on a merger or
share exchange under IC 23-1-40 or the laws of another state,
reclassification of securities, exchange of securities under
IC 28-1-7.5, or sale of assets of the issuer in consideration of the
issuance of securities of the same or another issuer.
(16) A limited offering transactional exemption, which may be
created by rule adopted by the commissioner. The exemption must
further the objectives of compatibility with federal exemptions and
uniformity among the states.
(c) The commissioner may consider and determine if a proposed sale,
transaction, issue, or security is entitled to an exemption accorded by
this section. The commissioner may decline to exercise the
commissioner's authority as to a proposed sale, transaction, issue, or
security. An interested party desiring the commissioner to exercise the
commissioner's authority must submit to the commissioner a verified
statement of all material facts relating to the proposed sale, transaction,
issue, or security, which must be accompanied by a request for a ruling
as to the particular exemption claimed, together with a filing fee of one
hundred dollars ($100). After notice to the interested parties as the
commissioner determines is proper and after a hearing, if any, the
commissioner may enter an order finding the proposed sale, transaction,
issue, or security entitled or not entitled to the exemption claimed. An
order entered, unless an appeal is taken from it in the manner prescribed
in section 20 of this chapter, is binding upon the commissioner and
upon all interested parties, provided that the proposed sale, transaction,
issue, or security when consummated or issued conforms in every
relevant and material particular with the facts as set forth in the verified
statement submitted.
(d) The commissioner may by order deny or revoke an exemption
specified in subsection (a)(6), (a)(7), or (b) with respect to a specific
security or transaction, if the commissioner finds that the securities to
which the exemption applies would not qualify for registration under
sections 4 and 5 of this chapter. No order may be entered without
appropriate prior notice to all interested parties, opportunity for hearing,
and written findings of fact and conclusions of law, except that the
commissioner may by order summarily deny or revoke any of the
specific exemptions pending final determination of a proceeding under
this subsection. Upon the entry of a summary order, the commissioner
shall promptly notify all interested parties that it has been entered, of the
reasons for the order, and that within fifteen (15) days of the receipt of
a written request the matter will be set down for hearing. If no hearing
is requested and none is ordered by the commissioner, the order will
remain in effect until it is modified or vacated by the commissioner. If
a hearing is requested or ordered, the commissioner, after notice of and
opportunity for hearing to all interested persons, may modify or vacate
the order or extend it until final determination. No order under this
subsection may operate retroactively. No person may be considered to
have violated section 3 of this chapter by reason of an offer or sale
effected after the entry of an order under this subsection if the person
sustains the burden of proof that the person did not know, and in the
exercise of reasonable care could not have known, of the order.
(e) If, with respect to an offering of securities, any notices or written
statements are required to be filed with the commissioner under
subsection (b)(10), the first filing made with respect to the offering
must be accompanied by a filing fee of one hundred dollars ($100).
(f) A condition, stipulation, or provision requiring a person
acquiring a security to waive compliance with this chapter or a
rule or order under this chapter is void.
SOURCE: IC 23-2-1-6; (04)CC122903.6. -->
SECTION 6. IC 23-2-1-6 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2004]: Sec. 6. (a) An application for registration
may be filed by:
(1) the issuer;
(2) any other person on whose behalf the offering is to be made; or
(3) a registered broker-dealer.
(b) A person filing an application for registration shall pay a filing fee
of one-twentieth of one percent (0.05%) of the maximum aggregate
offering price at which the registered securities are to be offered in
Indiana, but the fee may not be less than two hundred fifty dollars
($250) and may not be more than one thousand dollars ($1,000).
(c) When an application for registration under subsection (b) is
withdrawn before the effective date or a preeffective stop order is
entered under section 7 of this chapter, the commissioner shall retain
two hundred fifty dollars ($250) of the fee.
(d) A person filing an amendment to an effective registration which
requires an order of the commissioner shall pay a twenty-five dollar
($25) filing fee.
(e) An application for registration shall specify:
(1) the amount of securities to be offered in this state;
(2) the states in which a registration statement or similar document
in connection with the offering has been or is to be filed; and
(3) an adverse order, judgment, or decree entered in connection
with the offering by the regulatory authorities in each state or by a
court or the Securities and Exchange Commission.
(f) A document filed under this chapter within five (5) years
preceding the filing of an application for registration may be
incorporated by reference in the application for registration if the
document is currently accurate.
(g) The commissioner may by rule or otherwise permit the omission
of an item of information or document from an application for
registration.
(h) In the case of a nonissuer distribution, any part of the information
that might otherwise be required under section 5 of this chapter or
subsection (i) need not be furnished if the person filing the application
for registration produces evidence to the reasonable satisfaction of the
commissioner that the person, or the persons on whose behalf the
distribution is to be made, cannot furnish that part of the required
information without unreasonable effort or expense.
(i) A registration is effective for:
(1) two (2) years from its effective date; or
(2) a shorter period during which the security is being offered or
distributed in a nonexempted transaction by or for the account of
the issuer or the person on whose behalf the offering is being made
or by an underwriter or broker-dealer who is still offering part of
an unsold allotment or subscription taken by the underwriter or
broker-dealer as a participant in the distribution, except during the
time a stop order is in effect under section 7 of this chapter.
(j) So long as a registration is effective, the commissioner may by
rule or order require the person who filed the application for registration
to file reports, not more often than quarterly, to keep reasonably current
the information contained in the application for registration and to
disclose the progress of the offering.
(k) The commissioner may by rule or order require as a condition of
registration by qualification or coordination:
(1) that a security issued within the past three (3) years or to be
issued to a promoter for a consideration substantially different from
the public offering price, or to a person for a consideration other
than cash, be deposited in escrow; and
(2) that the proceeds from the sale of the registered security be
impounded until the issuer receives a specified amount.
The commissioner may by rule or order determine the conditions of an
escrow or impounding required under this subsection, but the
commissioner may not reject a depository solely because of location in
another state.
(l) No transferable share is exempt from registration under section
2(b)(3) of this chapter or is qualified for registration under sections 4
or 5 of this chapter unless the issuer has designated a qualified transfer
agent to handle all transfers. The commissioner may adopt rules to
implement this subsection. The commissioner may by rule or order
exempt an issuer, wholly or partially, from the requirements of this
subsection.
(m) A registration statement may be amended after its effective date
to increase the securities specified to be offered and sold if the public
offering price and underwriters' discounts and commissions are not
changed from the amounts reported to the commissioner. An
amendment becomes effective upon an order of the commissioner. A
person filing an amendment must pay a late registration fee of
twenty-five dollars ($25) and a filing fee under subsection (b) for the
additional securities proposed to be offered. An amendment relates back
to the date of the sale of additional securities being registered if the
amendment is filed within three (3) months after the date of the sale and
the additional filing fee and late registration fee are paid.
(n) As permitted by Section 106(c) of the Secondary Mortgage
Market Enhancement Act of 1984 (15 U.S.C. 77r-1(c)), securities that
are offered and sold pursuant to Section 4(5) of the Securities Act of
1933 or that are mortgage-related securities (as that term is defined in
Section 3(a)(41) of the Securities Exchange Act of 1934, 15 U.S.C.
78c(a)(41)):
(1) must comply with all applicable:
(A) registration and qualification requirements of this chapter;
and
(B) rules adopted by the commissioner; and
(2) shall not be treated as obligations issued by the United States for
the purposes of this chapter.
(o) If:
(1) the division:
(A) does not approve an application for registration by
coordination or qualification; and
(B) notifies the applicant not later than ten (10) days after
the date the application was not approved of a deficiency in
the application that, if satisfied, would allow the approval of
the application;
the applicant may satisfy the deficiency within sixty (60) days
after the date described in clause (B); and
(2) an applicant does not satisfy the deficiency described in
subdivision (1):
(A) the application is considered abandoned;
(B) the issuer does not receive a refund of the application
fee; and
(C) no further action is required by the division.
SOURCE: IC 23-2-1-15; (04)CC122903.7. -->
SECTION 7. IC 23-2-1-15, AS AMENDED BY P.L.270-2003,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 15. (a) This chapter shall be administered by a
division of the office of the secretary of state. The secretary of state
shall appoint a securities commissioner who shall be responsible for the
direction and supervision of the division and the administration of this
chapter under the direction and control of the secretary of state. The
salary of the securities commissioner shall be paid out of the funds
appropriated for the administration of this chapter. The commissioner
shall serve at the will of the secretary of state.
(b) The secretary of state:
(1) shall employ a chief deputy, a senior investigator, a senior
accountant, and other deputies, investigators, accountants, clerks,
stenographers, and other employees necessary for the
administration of this chapter; and
(2) shall fix their compensation with the approval of the budget
agency.
The chief deputy, other deputies, the senior investigator, and the senior
accountant, once employed under this chapter, may be dismissed only
for cause by the secretary of state upon ten (10) days notice in writing
stating the reasons for dismissal. Within fifteen (15) days after
dismissal, the chief deputy, other deputies, the senior investigator, and
the senior accountant may appeal to the state personnel board. The state
personnel board shall hold a hearing, and if it finds that the appealing
party was dismissed for a political, social, religious, or racial reason, the
appealing party shall be reinstated to the appealing party's position
without loss of pay. In all other cases, if the decision is favorable to the
appealing party, the secretary of state shall follow the findings and
recommendations of the board, which may include reinstatement and
payment of salary or wages lost. The hearing and any subsequent
proceedings or appeals shall be governed by the provisions of IC 4-15-2
and IC 4-21.5.
(c) Fees and funds of whatever character accruing from the
administration of this chapter shall be accounted for by the secretary of
state and shall be deposited with the treasurer of state to be deposited
by the treasurer of state in the general fund of the state. Expenses
incurred in the administration of this chapter shall be paid from the
general fund upon appropriation being made for the expenses in the
manner provided by law for the making of those appropriations.
However, costs of investigations recovered under sections 16(d) and
17.1(c) of this chapter shall be deposited with the treasurer of state to
be deposited by the treasurer of state in a separate account to be known
as the securities division enforcement account. The funds in the
account shall be available, with the approval of the budget agency, to
augment and supplement the funds appropriated for the administration
of this chapter. The funds in the account do not revert to the general
fund at the end of any fiscal year.
(d) In connection with the administration and enforcement of the
provisions of this chapter, the attorney general shall render all necessary
assistance to the securities commissioner upon the commissioner's
request, and to that end, the attorney general shall employ legal and
other professional services as are necessary to adequately and fully
perform the service under the direction of the securities commissioner
as the demands of the securities division shall require. Expenses
incurred by the attorney general for the purposes stated in this
subsection shall be chargeable against and paid out of funds
appropriated to the attorney general for the administration of the
attorney general's office.
(e) Neither the secretary of state, the securities commissioner, nor an
employee of the securities division shall be liable in their individual
capacity, except to the state, for an act done or omitted in connection
with the performance of their respective duties under this chapter.
(f) The commissioner, subject to the approval of the secretary of
state, may adopt rules, orders, and forms necessary to carry out this
chapter, including rules and forms concerning registration statements,
applications, reports, and the definitions of any terms if the definitions
are consistent with this chapter. The commissioner may by rule or
order allow for exemptions from registration requirements under
sections 3 and 8 of this chapter if the exemptions are consistent with
the public interest and this chapter.
(g) The provisions of this chapter delegating and granting power to
the secretary of state, the securities division, and the securities
commissioner shall be liberally construed to the end that:
(1) the practice or commission of fraud may be prohibited and
prevented;
(2) disclosure of sufficient and reliable information in order to
afford reasonable opportunity for the exercise of independent
judgment of the persons involved may be assured; and
(3) the qualifications may be prescribed to assure availability of
reliable broker-dealers, investment advisers, and agents engaged in
and in connection with the issuance, barter, sale, purchase,
transfer, or disposition of securities in this state.
It is the intent and purpose of this chapter to delegate and grant to and
vest in the secretary of state, the securities division, and the securities
commissioner full and complete power to carry into effect and
accomplish the purpose of this chapter and to charge them with full and
complete responsibility for its effective administration.
(h) It is the duty of a prosecuting attorney, as well as of the attorney
general, to assist the securities commissioner upon the commissioner's
request in the prosecution to final judgment of a violation of the penal
provisions of this chapter and in a civil proceeding or action arising
under this chapter. If the commissioner determines that an action based
on the securities division's investigations is meritorious:
(1) the commissioner or a designee empowered by the
commissioner shall certify the facts drawn from the investigation
to the prosecuting attorney of the judicial circuit in which the crime
may have been committed;
(2) the commissioner and the securities division shall assist the
prosecuting attorney in prosecuting an action under this section,
which may include a securities division attorney serving as a
special deputy prosecutor appointed by the prosecuting
attorney;
(3) a prosecuting attorney to whom facts concerning fraud are
certified under subdivision (1) may refer the matter to the attorney
general; and
(4) if a matter has been referred to the attorney general under
subdivision (3), the attorney general may:
(A) file an information in a court with jurisdiction over the matter
in the county in which the offense is alleged to have been
committed; and
(B) prosecute the alleged offense.
(i) The securities commissioner shall take, prescribe, and file the oath
of office prescribed by law. The securities commissioner, senior
investigator, and each deputy are police officers of the state and shall
have all the powers and duties of police officers in making arrests for
violations of this chapter, or in serving any process, notice, or order
connected with the enforcement of this chapter by whatever officer or
authority or court issued. The securities commissioner, the deputy
commissioners for enforcement, and the investigators comprise the
enforcement department of the division and are considered a criminal
justice agency for purposes of IC 5-2-4 and IC 10-13-3.
(j) The securities commissioner and each employee of the securities
division shall be reimbursed for necessary hotel and travel expenses
when required to travel on official duty. Hotel and travel
reimbursements shall be paid in accordance with the travel regulations
prescribed by the budget agency.
(k) It is unlawful for the secretary of state, the securities
commissioner, or the securities division's employees to use for personal
benefit information that is filed with or obtained by the securities
division and that is not made public. No provision of this chapter
authorizes the secretary of state, the securities commissioner, or the
employees of the securities division to disclose information except
among themselves, or when necessary or appropriate, in a proceeding
or investigation under this chapter. No provision of this chapter either
creates or derogates from a privilege that exists at common law or
otherwise when documentary or other evidence is sought under a
subpoena directed to the secretary of state, the securities commissioner,
or the securities division or its employees.
(l) The commissioner may honor requests from interested persons for
interpretative opinions and from interested persons for determinations
that the commissioner will not institute enforcement proceedings against
specified persons for specified activities. A determination not to institute
enforcement proceedings must be consistent with this chapter. A
person may not request an interpretive opinion concerning an
activity that:
(1) occurred before; or
(2) is occurring on;
the date that the opinion is requested. The commissioner shall
charge a fee of one hundred dollars ($100) for an interpretative opinion
or determination.
SOURCE: IC 23-2-1-19; (04)CC122903.8. -->
SECTION 8. IC 23-2-1-19 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2004]: Sec. 19. (a) A person who offers or sells
a security in violation of this chapter, and who does not sustain the
burden of proof that the person did not know and in the exercise of
reasonable care could not have known of the violation, is liable to any
other party to the transaction who did not knowingly participate in the
violation or who did not have, at the time of the transaction, knowledge
of the violation, who may sue either at law or in equity to rescind the
transaction or to recover the consideration paid, together, in either case,
with interest as computed in subsection (g)(1), plus costs, and
reasonable attorney's fees, less the amount of any cash or other
property received on the security upon the tender of the security by the
person bringing the action or for damages if the person no longer owns
the security. Damages are the amount that would be recoverable upon
a tender less:
(1) the value of the security when the buyer disposed of the
security; and
(2) the interest as computed in subsection (g)(1) on the value of the
security from the date of disposition.
(b) A person who purchases a security in violation of this chapter,
and who does not sustain the burden of proof that the person did not
know and in the exercise of reasonable care could not have known of
the violation, is liable to any other party to the transaction who did not
knowingly participate in the violation or who did not have, at the time
of the transaction, knowledge of the violation. The other party to the
transaction may bring an action to rescind the transaction or for
damages, together, in either case, with reasonable attorney's fees, upon
the tender of the consideration received by the person bringing the
action.
(c) A person who, for compensation, engages in the business of
advising others, either directly or through publications or writings, as
to the value of securities or as to the advisability of investing in,
purchasing, or selling securities, or who, for compensation and as a
part of a regular business, issues analyses or reports concerning
securities and:
(1) violates section 8, 12.1(b), or 14, or 26 of this chapter;
(2) employs a device, scheme, or artifice to defraud a person; or
(3) engages in an act that operates or would operate as fraud or
deceit upon a person;
is liable to the other person, who may bring an action to recover any
consideration paid for advice, any loss due to advice, interest at eight
percent (8%) each year from the date consideration was paid, costs,
and reasonable attorney's fees less the value of cash or property
received due to the advice. It is a defense to an action brought for a
violation of section 12.1(b) or 26 of this chapter that the person
accused of the violation did not know of the violation and, exercising
reasonable care, could not have known of the violation.
(d) A person who directly or indirectly controls a person liable under
subsection (a), (b), or (c), a partner, officer, or director of the person,
a person occupying a similar status or performing similar functions, an
employee of a person who materially aids in the conduct creating the
liability, and a broker-dealer or agent who materially aids in the conduct
are also liable jointly and severally with and to the same extent as the
person, unless the person who is liable sustains the burden of proof that
the person did not know, and in the exercise of reasonable care could
not have known, of the existence of the facts by reason of which the
liability is alleged to exist. There is contribution as in cases of contract
among the several persons liable.
(e) A tender specified in this section may be made at any time before
entry of judgment.
(f) A cause of action under this statute survives the death of a person
who might have been a plaintiff or defendant.
(g) Action under this section shall be commenced within three (3)
years after discovery by the person bringing the action of a violation of
this chapter, and not afterwards. No person may sue under this section:
(1) if that person received a written offer, before suit and at a time
when the person owned the security, to refund the consideration
paid together with interest on that amount from the date of payment
to the date of repayment, with interest on:
(A) interest-bearing obligations to be computed at the same rate
as provided on the security; and
(B) all other securities at the rate of eight percent (8%) per year;
less the amount of any income received on the security, and the
person failed to accept the offer within thirty (30) days of its
receipt; or
(2) if the person received an offer before suit and at a time when
the person did not own the security, unless the person rejected the
offer in writing within thirty (30) days of its receipt.
(h) No person who has made or engaged in the performance of a
contract in violation of this chapter or a rule or order under this chapter,
or who has acquired a purported right under a contract with knowledge
of the facts by reason of which its making or performance was in
violation, may base a suit on the contract.
(i) A condition, stipulation, or provision binding a person acquiring a
security to waive compliance with this chapter or a rule or order under
this chapter is void.
(j) The rights and remedies specifically prescribed by this chapter are
the only rights and remedies created by this chapter, but are in addition
to any other rights or remedies that exist at law or in equity.
SOURCE: IC 23-2-1-19.5; (04)CC122903.9. -->
SECTION 9. IC 23-2-1-19.5 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 19.5. (a) If the
commissioner determines, after notice and opportunity for a hearing,
that any person has violated this chapter, the commissioner may, in
addition to or in lieu of all other remedies, impose a civil penalty upon
any person who has violated this chapter. This penalty may not exceed
ten thousand dollars ($10,000) for each violation of this chapter found
to have been committed. An appeal from the decision of the
commissioner imposing a civil penalty under this subsection may be
taken by any aggrieved party pursuant to section 20 of this chapter.
(b) The commissioner may bring any action in the circuit or superior
court of Marion County to enforce payment of any penalty imposed
under subsection (a).
(c) Penalties collected under this section shall be deposited in the
securities division enforcement account established under section 15(c)
of this chapter.
SOURCE: IC 23-2-1-26; (04)CC122903.10. -->
SECTION 10. IC 23-2-1-26 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2004]: Sec. 26. (a) This section applies to a person engaged in
the business of providing advice to others, directly or by means of
analyses, reports, or other publications, concerning:
(1) the value of securities; or
(2) the advisability of:
(A) investing in;
(B) purchasing; or
(C) selling;
securities.
(b) A person described in subsection (a) may not:
(1) employ a device, a scheme, or an artifice to defraud a
person; or
(2) engage in an act, a practice, or a course of business that
operates or would operate as fraud or deceit upon a person.
SOURCE: IC 23-2-1-27; (04)CC122903.11. -->
SECTION 11. IC 23-2-1-27 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2004]: Sec. 27. An administrative action under this chapter
survives the death of a person who might have been a respondent.
SOURCE: IC 23-2-5-3; (04)CC122903.12. -->
SECTION 12. IC 23-2-5-3, AS AMENDED BY P.L.115-2001,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 3. (a) As used in this chapter, "certificate of
registration" means a certificate issued by the commissioner authorizing
an individual to engage in origination activities on behalf of a licensee.
(b) As used in this chapter, "creditor" means a person:
(1) that loans funds of the person in connection with a loan; and
(2) to whom the loan is initially payable on the face of the note or
contract evidencing the loan.
(c) As used in this chapter, "license" means a license issued by the
commissioner authorizing a person to engage in the loan brokerage
business.
(d) As used in this chapter, "licensee" means a person that is issued
a license under this chapter.
(e) As used in this chapter, "loan broker" means any person who, in
return for any consideration from any source procures, attempts to
procure, or assists in procuring a loan from a third party or any
other person, promises to procure a loan for any person or assist any
person in procuring a loan from any third party, or who promises to
consider whether or not to make a loan to any person. whether or not
the person seeking the loan actually obtains the loan. "Loan
broker" does not include:
(1) any bank, savings bank, trust company, savings association,
credit union, or any other financial institution that is:
(A) regulated by any agency of the United States or any state;
and
(B) regularly actively engaged in the business of making
consumer loans that are not secured by real estate or taking
assignment of consumer sales contracts that are not secured by
real estate;
(2) any person authorized to sell and service loans for the Federal
National Mortgage Association or the Federal Home Loan Mortgage
Corporation, issue securities backed by the Government National
Mortgage Association, make loans insured by the United States
Department of Housing and Urban Development, act as a
supervised lender or nonsupervised automatic lender of the United
States Department of Veterans Affairs, or act as a correspondent
of loans insured by the United States Department of Housing and
Urban Development;
(3) (2) any insurance company; or
(4) (3) any person arranging financing for the sale of the person's
product.
(f) As used in this chapter, "loan brokerage business" means a person
acting as a loan broker.
(g) As used in this chapter, "origination activities" means establishing
the terms or conditions of a loan with a borrower or prospective
borrower communication with or assistance of a borrower or
prospective borrower in the selection of loan products or terms.
(h) As used in this chapter, "originator" means a person
engaged in origination activities. The term "originator" does not
include a person who performs origination activities for any entity
that is not a loan broker under subsection (e).
(i) As used in this chapter, "person" means an individual, a
partnership, a trust, a corporation, a limited liability company, a limited
liability partnership, a sole proprietorship, a joint venture, a joint stock
company, or another group or entity, however organized.
(i) (j) As used in this chapter, "registrant" means an individual who is
registered to engage in origination activities under this chapter.
(j) (k) As used in this chapter, "ultimate equitable owner" means a
person who, directly or indirectly, owns or controls any ownership
interest in a person, regardless of whether the person owns or controls
the ownership interest through one (1) or more other persons or one (1)
or more proxies, powers of attorney, or variances.
SOURCE: IC 23-2-5-19; (04)CC122903.13. -->
SECTION 13. IC 23-2-5-19, AS AMENDED BY P.L.230-1999,
SECTION 11, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 19. (a) The following persons are exempt from the
requirements of sections 4, 5, 6, 9,
10, 17,
and 18,
and 21 of this
chapter:
(1) Any attorney while engaging in the practice of law.
(2) Any certified public accountant, public accountant, or
accountant practitioner holding a certificate or registered under
IC 25-2.1 while performing the practice of accountancy (as defined
by IC 25-2.1-1-10).
(3) Any person licensed as a real estate broker or salesperson under
IC 25-34.1 to the extent that the person is rendering loan related
services in the ordinary course of a transaction in which a license
as a real estate broker or salesperson is required.
(4) Any broker-dealer, agent, or investment advisor registered
under IC 23-2-1.
(5) Any person that:
(A) procures;
(B) promises to procure; or
(C) assists in procuring;
a loan that is not subject to the Truth in Lending Act (15 U.S.C.
1601 through 1667e).
(6)
Any community development corporation (as defined in
IC 4-4-28-2) acting as a subrecipient of funds from the
Indiana housing finance authority established by IC 5-20-1-3.
(7) The Indiana housing finance authority.
(8) Any person authorized to:
(A) sell and service a loan for the Federal National Mortgage
Association or the Federal Home Loan Mortgage
Association;
(B) issue securities backed by the Government National
Mortgage Association;
(C) make loans insured by the United States Department of
Housing and Urban Development or the United States
Department of Agriculture Rural Housing Service;
(D) act as a supervised lender or nonsupervised automatic
lender of the United States Department of Veterans Affairs;
or
(E) act as a correspondent of loans insured by the United
States Department of Housing and Urban Development.
(9) Any person who is a creditor, or proposed to be a creditor, for
any loan.
(b) As used in this chapter, "bona fide third party fee" includes fees
for the following:
(1) Credit reports, investigations, and appraisals performed by a
person who holds a license or certificate as a real estate appraiser
under IC 25-34.1-8.
(2) If the loan is to be secured by real property, title examinations,
an abstract of title, title insurance, a property survey, and similar
purposes.
(3) The services provided by a loan broker in procuring possible
business for a lending institution if the fees are paid by the lending
institution.
(c) As used in this section, "successful procurement of a loan" means
that a binding commitment from a creditor to advance money has been
received and accepted by the borrower.
(d) The burden of proof of any exemption or classification provided
in this chapter is on the party claiming the exemption or classification.
SOURCE: IC 23-15-8-3; (04)CC122903.14. -->
SECTION 14. IC 23-15-8-3, AS ADDED BY P.L.277-2001,
SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 3. (a) If the department of financial institutions
determines that a business entity has violated IC 28-1-20-4, the
department of financial institutions shall notify the secretary of state of
the violation.
(b) The secretary of state shall commence a proceeding under this
section to administratively dissolve a business entity if:
(1) the name of the business entity contains the word "bank",
" banc", or "banco"; and
(2) the department of financial institutions determines that the
business entity violates IC 28-1-20-4.
(c) If the secretary of state commences an administrative dissolution
under subsection (b), the secretary of state shall serve the business
entity with written notice of the determination under subsection (b)(2).
The secretary of state shall, at the same time notice is sent to the
business entity, provide a copy of the notice to the department of
financial institutions.
(d) If a business entity that receives a notice under subsection (c)
does not:
(1) correct the grounds for dissolution; or
(2) demonstrate to the reasonable satisfaction of the department of
financial institutions that the grounds for dissolution do not exist;
at any time after sixty (60) days after service of the notice is perfected,
the department of financial institutions shall notify the secretary of state
in writing of the continuing violation. After receiving the written notice
from the department of financial institutions, the secretary of state shall
administratively dissolve the business entity by signing a certificate of
dissolution that recites the grounds for dissolution and the effective date
of the dissolution. The secretary of state shall file the original certificate
of dissolution and serve a copy of the certificate of dissolution on the
business entity.
(e) A business entity administratively dissolved under this section may
carry on only those activities necessary to wind up and liquidate the
business entity's affairs.
SOURCE: IC 24-4.5-1-102; (04)CC122903.15. -->
SECTION 15. IC 24-4.5-1-102, AS AMENDED BY P.L.258-2003,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2004 (RETROACTIVE)]: Sec. 102. Purposes; Rules of
Construction.(1) This article shall be liberally construed and applied to
promote its underlying purposes and policies.
(2) The underlying purposes and policies of this article are:
(a) to simplify, clarify, and modernize the law governing retail
installment sales, consumer credit, small loans, and usury;
(b) to provide rate ceilings to assure an adequate supply of credit
to consumers;
(c) to further consumer understanding of the terms of credit
transactions and to foster competition among suppliers of
consumer credit so that consumers may obtain credit at reasonable
cost;
(d) to protect consumer buyers, lessees, and borrowers against
unfair practices by some suppliers of consumer credit, having due
regard for the interests of legitimate and scrupulous creditors;
(e) to permit and encourage the development of fair and
economically sound consumer credit practices;
(f) to conform the regulation of consumer credit transactions to the
policies of the Federal Consumer Credit Protection Act; and
(g) to make uniform the law including administrative rules among
the various jurisdictions.
(3) A reference to a requirement imposed by this article includes
reference to a related rule of the department adopted pursuant to this
article.
(4) A reference to a federal law in IC 24-4.5 is a reference to the law
in effect December 31, 2002. 2003.
SOURCE: IC 24-4.5-1-202; (04)CC122903.16. -->
SECTION 16. IC 24-4.5-1-202 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 202. This article does
not apply to the following:
(1) Extensions of credit to government or governmental agencies
or instrumentalities.
(2) The sale of insurance by an insurer, except as otherwise
provided in the chapter on insurance (IC 24-4.5-4).
(3) Transactions under public utility, municipal utility, or common
carrier tariffs if a subdivision or agency of this state or of the
United States regulates the charges for the services involved, the
charges for delayed payment, and any discount allowed for early
payment.
(4) The rates and charges and the disclosure of rates and charges
of a licensed pawnbroker established in accordance with a statute
or ordinance concerning these matters.
(5) A sale of goods, services, or an interest in land in which the
goods, services, or interest in land are purchased primarily for a
purpose other than a personal, family, or household purpose.
(6) A loan in which the debt is incurred primarily for a purpose
other than a personal, family, or household purpose.
(7) An extension of credit primarily for a business, a commercial,
or an agricultural purpose.
(8) An installment agreement for the purchase of home fuels in
which a finance charge is not imposed.
(9) Loans made, insured, or guaranteed under a program authorized
by Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070
et seq.).
(10) Transactions in securities or commodities accounts in which
credit is extended by a broker-dealer registered with the Securities
and Exchange Commission or the Commodity Futures Trading
Commission.
(11) A loan made:
(A) in compliance with the requirements of; and
(B) by a community development corporation (as defined in
IC 4-4-28-2) acting as a subrecipient of funds from;
the Indiana housing finance authority established by
IC 5-20-1-3.
SOURCE: IC 24-4.5-7-104; (04)CC122903.17. -->
SECTION 17. IC 24-4.5-7-104, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 104. "Small loan" means a loan:
(a) with a principal loan amount that is more than at least fifty
dollars ($50) and less than four not more than five hundred one
dollars ($401); ($500); and
(b) in which the lender holds the borrower's check or receives the
borrower's written authorization to debit the borrower's
account under an agreement, either express or implied, for a
specific period before the lender:
(i) offers the check for deposit or presentment; or
(ii) seeks exercises the authorization to transfer or withdraw
funds from debit the borrower's account.
SOURCE: IC 24-4.5-7-105; (04)CC122903.18. -->
SECTION 18. IC 24-4.5-7-105, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 105. "Principal" means the total of:
(a) the net amount paid to, receivable by, or paid or payable from
the account of the consumer; borrower; and
(b) to the extent that the payment is deferred, the additional charges
permitted by this chapter that are not included in subdivision (a).
SOURCE: IC 24-4.5-7-107; (04)CC122903.19. -->
SECTION 19. IC 24-4.5-7-107, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 107. "Renewal" refers to a small loan that takes the
place of an existing small loan by:
(a) renewing;
(b) repaying;
(c) refinancing; or
(d) consolidating;
a small loan with the proceeds of another small loan made to the same
consumer borrower by a lender.
SOURCE: IC 24-4.5-7-108; (04)CC122903.20. -->
SECTION 20. IC 24-4.5-7-108, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 108. "Consecutive small loan" means a new small
loan agreement that the lender enters with the same
consumer borrower
not later than seven (7) calendar days after a previous small loan made
to that customer borrower is paid in full.
SOURCE: IC 24-4.5-7-109; (04)CC122903.21. -->
SECTION 21. IC 24-4.5-7-109, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 109. "Paid in full" means the termination of a small
loan through:
(1) the payment of the consumer's borrower's check by the
drawee bank or authorized electronic transfer;
(2) the return of a check to a consumer borrower who redeems it
for consideration;
(3) the authorized debiting of the borrower's account; or
(4) any other method of termination.
SOURCE: IC 24-4.5-7-110; (04)CC122903.22. -->
SECTION 22. IC 24-4.5-7-110, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 110. "Monthly net gross income" means the
income received by the consumer borrower in the four (4) week thirty
(30) day period preceding the consumer's borrower's application for
a small loan under this chapter and exclusive of any income other than
regular net gross pay received, or as otherwise determined by the
department.
SOURCE: IC 24-4.5-7-201; (04)CC122903.23. -->
SECTION 23. IC 24-4.5-7-201, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 201. (1) Finance charges on the first one two
hundred fifty dollars ($100) ($250) of a small loan are limited to fifteen
percent (15%) of the principal.
(2) Finance charges on the amount of a small loan greater than one
two hundred fifty dollars ($100) ($250) and less than or equal to
four hundred dollars ($400) are limited to ten thirteen percent (10%)
(13%) of the amount over one two hundred fifty dollars ($100). ($250)
and less than four hundred dollars ($400).
(3) The total amount of finance charges may not exceed thirty-five
dollars ($35). Finance charges on the amount of the small loan
greater than four hundred dollars ($400) and less than or equal to
five hundred dollars ($500) are limited to ten percent (10%) of the
amount over four hundred dollars ($400) and less than five
hundred dollars ($500).
SOURCE: IC 24-4.5-7-202; (04)CC122903.24. -->
SECTION 24. IC 24-4.5-7-202, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 202. (1) Notwithstanding any other law,
only the
following fees the only fee that may be contracted for and received
by the lender on a small loan
or subsequent refinancing:
(a) The parties may contract for a delinquency charge of not more
than five dollars ($5) on any installment not paid in full within ten
(10) days after its scheduled due date.
(b) A delinquency charge under this section may be collected only
once on an installment, however long it remains in default. A
delinquency charge may be collected any time after it accrues.
(2) an additional charge may be made is a charge, not to exceed
twenty dollars ($20), for each:
(a) return by a bank or other depository institution of a:
(i) dishonored check;
(ii) negotiable order of withdrawal; or
(iii) share draft issued by the consumer; borrower; or
(b) time an authorization to debit the borrower's account is
dishonored.
This additional charge may be assessed one (1) time regardless of how
many times a check or an authorization to debit the borrower's
account may be submitted by the lender and dishonored.
SOURCE: IC 24-4.5-7-301; (04)CC122903.25. -->
SECTION 25. IC 24-4.5-7-301, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 301. (1) For purposes of this section, the lender
shall disclose to the consumer borrower to whom credit is extended
with respect to a small loan the information required by the Federal
Consumer Credit Protection Act.
(2) In addition to the requirements of subsection (1), the lender must
conspicuously display in bold type a notice to the public both in the
lending area of each business location and in the loan documents the
following statement:
"WARNING: A small loan is not intended to meet long term
financial needs. A small loan should be used only to meet short
term cash needs. Renewing the small loan rather than paying the
debt in full will require additional finance charges. The cost of your
small loan may be higher than loans offered by other lending
institutions. Small loans are regulated by the State of Indiana
Department of Financial Institutions.
A consumer borrower may rescind a small loan without cost not
later than the end of the business day immediately following the day
on which the small loan was made. To rescind a small loan, a
consumer borrower must inform the lender that the consumer
borrower wants to rescind the small loan, and the consumer
borrower must return the cash amount of the principal of the small
loan to the lender.".
(3) The statement required in subsection (2) must be in:
(a) 14 point bold face type in the loan documents; and
(b) not less than one (1) inch bold print in the lending area of the
business location.
(4) When a borrower enters into a small loan, the lender shall
provide the borrower with a pamphlet approved by the department
that describes:
(a) the availability of debt management and credit counseling
services; and
(b) the borrower's rights and responsibilities in the
transaction.
SOURCE: IC 24-4.5-7-401; (04)CC122903.26. -->
SECTION 26. IC 24-4.5-7-401, AS AMENDED BY P.L.258-2003,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 401. (1) Except as provided in subsection (2), A
small loan may not be made for a term of less than fourteen (14) days.
(2) After the consumer's third borrower's fifth consecutive small
loan, another small loan may not be made to that consumer borrower
within seven (7) days after the due date of the third fifth consecutive
small loan. unless the new small loan is for a term of twenty-eight (28)
days or longer. After the borrower's fifth consecutive small loan,
the balance must be paid in full. However, the borrower and
lender may agree to enter into a simple interest loan, payable in
installments, under IC 24-4.5-3 within seven (7) days after the
due date of the fifth consecutive small loan.
SOURCE: IC 24-4.5-7-402; (04)CC122903.27. -->
SECTION 27. IC 24-4.5-7-402, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 402. (1) A lender is prohibited from making a
small loan to a consumer borrower if the total payable amount of the
small loan exceeds twenty fifteen percent (20%) (15%) of the
consumer's borrower's monthly net gross income.
(2) A small loan may be secured by only one (1) check or electronic
authorization to debit the borrower's account per small loan. The
check or electronic debit may not exceed the amount advanced to or on
behalf of the consumer borrower plus loan finance charges contracted
for and permitted.
(3) A consumer borrower may make partial payments in any amount
on the small loan without charge at any time before the due date of the
small loan. After each payment is made on a small loan, whether the
payment is in part or in full, the lender shall give a signed and dated
receipt to the consumer borrower making a payment showing the
amount paid and the balance due on the small loan.
(4) The lender shall provide to each consumer borrower a copy of
the required loan documents before the disbursement of the loan
proceeds.
(5) A consumer borrower may rescind a small loan without cost not
later than the end of the business day immediately following the day on
which the small loan was made. To rescind a small loan, a consumer
borrower must:
(a) inform the lender that the consumer borrower wants to rescind
the small loan; and
(b) return the cash amount of the principal of the small loan to the
lender.
(6) A lender shall not enter into a renewal with a borrower. If a
loan is paid in full, a subsequent loan is not a renewal.
SOURCE: IC 24-4.5-7-404; (04)CC122903.28. -->
SECTION 28. IC 24-4.5-7-404, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 404. (1)
As used in this section, "commercially
reasonable method of verification" means one (1) or more private
consumer credit reporting services that the department
determines to be capable of providing a lender with adequate
verification information necessary to ensure compliance with
subsection (4).
(2) With respect to a small loan,
or subsequent refinancing, no lender
may permit a person to become obligated under more than one (1) loan
agreement with the lender at any time.
(2) (3) A lender shall not make a small loan or subsequent refinancing
that, when combined with another outstanding small loan owed to
another lender, exceeds a total of four five hundred dollars ($400)
($500) when the face amounts of the checks written or debits
authorized in connection with each loan are combined into a single
sum. A lender shall not make a small loan to a consumer borrower who
has two (2) or more small loans outstanding, regardless of the total
value of the small loans.
(3) (4) A lender complies with subsection (2) (3) if the consumer
borrower represents in writing that the consumer borrower does not
have any outstanding small loans with the lender, or with any other
another lender, an affiliate of the lender or another lender, or a
separate entity involved in a business association with the lender
or another lender in making small loans, and the lender
independently verifies the accuracy of the consumer's borrower's
written representation through a commercially reasonable means.
method of verification. A lender's method of verifying whether a
consumer borrower has any outstanding small loans will be considered
commercially reasonable if the method includes a manual investigation
or an electronic query of:
(a) the lender's own records, including both records maintained at
the location where the consumer borrower is applying for the
transaction and records maintained at other locations within the
state that are owned and operated by the lender; and
(b) available department approved third party databases.
(5) The department shall monitor the effectiveness of private
consumer credit reporting services in providing the verification
information required under subsection (4). If the department
determines that one (1) or more commercially reasonable
methods of verification are available, the department shall:
(a) provide reasonable notice to all lenders identifying the
commercially reasonable methods of verification that are
available; and
(b) require each lender to use one (1) of the identified
commercially reasonable methods of verification as a means
of complying with subsection (4).
(4) (6) The excess amount of loan finance charge provided for in
agreements in violation of this section is an excess charge for purposes
of the provisions concerning effect of violations on rights of parties (IC
24-4.5-5-202) and the provisions concerning civil actions by the
department (IC 24-4.5-6-113).
SOURCE: IC 24-4.5-7-406; (04)CC122903.29. -->
SECTION 29. IC 24-4.5-7-406, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 406. An agreement with respect to a small loan
may not provide for charges as a result of default by the
consumer
borrower other than those authorized by this chapter. A provision in
violation of this section is unenforceable.
SOURCE: IC 24-4.5-7-409; (04)CC122903.30. -->
SECTION 30. IC 24-4.5-7-409, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 409. (1) This section applies to licensees and
unlicensed persons.
(2) The following apply to small loans only when a check or an
authorization to debit a borrower's account is used to defraud
another person:
(a) IC 26-1-3.1-502.5 (surcharge after dishonor).
(b) IC 26-2-7 (penalties for stopping payments or permitting
dishonor of checks and drafts).
(c) IC 34-4-30 (before its repeal).
(d) IC 34-24-3 and (treble damages allowed in certain civil
actions by crime victims).
(e) IC 35-43-5 apply to small loans only when a check is used to
defraud another person. (forgery, fraud, and other deceptions).
(f) IC 24-4.5-3-404 (attorney's fees) does not apply to a small
loan.
(3) A contractual agreement in a small loan transaction must include
the language of subsection (2) in 14 point bold type.
(4) A person who violates this chapter:
(a) is subject to a civil penalty up to one two thousand dollars
($1,000) ($2,000) imposed by the department;
(b) is subject to the remedies provided in IC 24-4.5-5-202;
(c) commits a deceptive act under IC 24-5-0.5 and is subject to the
penalties listed in IC 24-5-0.5;
(d) has no right to collect, receive, or retain any principal, interest,
or other charges from a small loan; however, this subdivision does
not apply if the violation is the result of an accident or bona fide
error of computation; and
(e) is liable to the consumer borrower for actual damages,
statutory damages of one two thousand dollars ($1,000) ($2,000)
per violation, costs, and attorney's fees; however, this subdivision
does not apply if the violation is the result of an accident or bona
fide error of computation.
(5) The department may sue:
(a) to enjoin any conduct that constitutes or will constitute a
violation of this chapter; and
(b) for other equitable relief.
(6) The remedies provided in this section are cumulative but are not
intended to be the exclusive remedies available to a consumer.
borrower. A consumer borrower is not required to exhaust any
administrative remedies under this section or any other applicable law.
SOURCE: IC 24-4.5-7-410; (04)CC122903.31. -->
SECTION 31. IC 24-4.5-7-410, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 410. A lender making small loans shall not
commit nor cause to be committed any of the following acts:
(a) Threatening to use or using the criminal process in any state to
collect on a small loan.
(b) Threatening to take action against a consumer borrower that is
prohibited by this chapter.
(c) Making a misleading or deceptive statement regarding a small
loan or a consequence of taking a small loan.
(d) Contracting for and collecting attorney's fees on small loans
made under this chapter.
(e) Altering the date or any other information on a check or an
authorization to debit the borrower's account held as security.
(f) Using a device or agreement that the department determines
would have the effect of charging or collecting more fees, charges,
or interest than allowed by this chapter, including, but not limited
to:
(i) entering a different type of transaction with the consumer;
borrower;
(ii) entering into a sales/leaseback arrangement;
(iii) catalog sales; or
(iv) entering into transactions in which a customer receives
a purported cash rebate that is advanced by someone
offering Internet content services, or some other product or
service, when the cash rebate does not represent a discount
or an adjustment of the purchase price for the product or
service; or
(v) entering any other transaction with the consumer borrower
that is designed to evade the applicability of this chapter.
(g) Engaging in unfair, deceptive, or fraudulent practices in the
making or collecting of a small loan.
(h) Charging to cash a check representing the proceeds of a small
loan.
(i) Except as otherwise provided in this chapter:
(i) accepting the proceeds of a new small loan as payment of an
existing small loan provided by the same lender; or
(ii) renewing, refinancing, or consolidating a small loan with the
proceeds of another small loan made by the same lender.
(j) Including any of the following provisions in a loan document:
(i) A hold harmless clause.
(ii) A confession of judgment clause.
(iii) A mandatory arbitration clause, unless the terms and
conditions of the arbitration have been approved by the director
of the department.
(iv) An assignment of or order for payment of wages or other
compensation for services.
(v) A provision in which the consumer borrower agrees not to
assert a claim or defense arising out of contract.
(vi) A waiver of any provision of this chapter.
(k) Selling insurance of any kind in connection with the making or
collecting of a small loan.
(l) Entering into a renewal with a borrower.
SOURCE: IC 24-4.5-7-412; (04)CC122903.32. -->
SECTION 32. IC 24-4.5-7-412, AS ADDED BY P.L.38-2002,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 412. Upon the receipt of a check from a consumer
borrower for a small loan, the lender shall immediately stamp the back
of the check with an endorsement that states:
"This check is being negotiated as part of a small loan under
IC 24-4.5, and any holder of this check takes it subject to the
claims and defenses of the maker.".
SOURCE: IC 24-9; (04)CC122903.33. -->
SECTION 33. IC 24-9 IS ADDED TO THE INDIANA CODE AS A
NEW ARTICLE TO READ AS FOLLOWS [EFFECTIVE JANUARY
1, 2005]:
ARTICLE 9. HOME LOAN PRACTICES
Chapter 1. Application
Sec. 1. Except for IC 24-9-3-7(3), this article does not apply to:
(1) a loan made or acquired by a person organized or chartered
under the laws of this state, any other state, or the United
States relating to banks, trust companies, savings
associations, savings banks, credit unions, or industrial loan
and investment companies; or
(2) a loan:
(A) that can be purchased by the Federal National Mortgage
Association, the Federal Home Loan Mortgage Association,
or the Federal Home Loan Bank;
(B) to be insured by the United States Department of
Housing and Urban Development;
(C) to be guaranteed by the United States Department of
Veterans Affairs;
(D) to be made or guaranteed by the United States
Department of Agriculture Rural Housing Service;
(E) to be funded by the Indiana housing finance authority;
or
(F) with a principal amount that exceeds the conforming
loan size limit for a single family dwelling as established by
the Federal National Mortgage Association.
Chapter 2. Definitions
Sec. 1. The definitions in this chapter apply throughout this
article.
Sec. 2. "Benchmark rate" means the interest rate established
under Section 152 of the Federal Home Ownership and Equity
Protection Act of 1994 (15 U.S.C. 1602 (aa)) and the regulations
adopted under that act by the Federal Reserve Board, including 12
CFR 226.32 and the Official Staff Commentary to the regulations
as amended.
Sec. 3. "Bona fide discount points" means loan discount points
that:
(1) are knowingly paid by the borrower;
(2) are paid for the express purpose of reducing the interest
rate applicable to the loan;
(3) reduce the interest rate from an interest rate that does
not exceed the benchmark rate; and
(4) are recouped within the first four (4) years of the
scheduled loan payments;
if the reduction in the interest rate that is achieved by the
payment of the loan discount points reduces the interest charged
on the scheduled payments so that the borrower's dollar amount
of savings in interest during the first four (4) years of the loan is
equal to or greater than the dollar amount of loan discount points
paid by the borrower.
Sec. 4. "Borrower" means a person obligated to repay a home
loan, including a coborrower, cosigner, or guarantor.
Sec. 5. "Bridge loan" means temporary or short term financing
with a maturity of less than eighteen (18) months that requires
payments of interest only until the entire unpaid balance is due
and payable.
Sec. 6. (a) "Creditor" means:
(1) a person:
(A) who regularly extends consumer credit that is subject to
a finance charge or that is payable by written agreement in
more than four (4) installments; and
(B) to whom the debt arising from a home loan transaction
is initially payable; or
(2) a person who brokers a home loan, including a person who:
(A) directly or indirectly solicits, processes, places, or
negotiates home loans for others;
(B) offers to solicit, process, place, or negotiate home loans
for others; or
(C) closes home loans that may be in the person's own name
with funds provided by others and that are thereafter
assigned to the person providing funding for the loans.
(b) The term does not include:
(1) a servicer;
(2) a state or local housing finance authority;
(3) any other state or local governmental or
quasi-governmental entity; or
(4) an attorney providing legal services in association with the
closing of a home loan.
Sec. 7. (a) "Deceptive act" means an act or a practice as part of
a consumer credit mortgage transaction involving real property
located in Indiana in which a person at the time of the transaction
knowingly or intentionally:
(1) makes a material misrepresentation; or
(2) conceals material information regarding the terms or
conditions of the transaction.
(b) For purposes of this section, "knowingly" means having
actual knowledge at the time of the transaction.
Sec. 8. (a) "High cost home loan" means a home loan with:
(1) a trigger rate that exceeds the benchmark rate; or
(2) total points and fees that exceed:
(A) five percent (5%) of the loan principal for a home loan
having a loan principal of at least forty thousand dollars
($40,000); or
(B) six percent (6%) of the loan principal for a home loan
having a loan principal of less than forty thousand dollars
($40,000).
(b) Beginning July 1, 2006, the dollar amounts set forth in this
section are subject to change at the times and according to the
procedure set forth in the provisions of IC 24-4.5-1-106
concerning the adjustment of dollar amounts in IC 24-4.5.
Sec. 9. "Home loan" means a loan, other than an open end
credit plan or a reverse mortgage transaction, that is secured by
a mortgage or deed of trust on real estate in Indiana on which
there is located or will be located a structure or structures:
(1) designed primarily for occupancy of one (1) to four (4)
families; and
(2) that is or will be occupied by a borrower as the borrower's
principal dwelling.
Sec. 10. (a) Except as provided in subsection (b), "points and
fees" means the total of the following:
(1) Points and fees (as defined in 12 CFR 226.32(b)(1) on
January 1, 2004).
(2) All compensation paid directly or indirectly to a mortgage
broker, including a broker that originates a loan in the
broker's own name.
As used in subdivision (2), "compensation" does not include a
payment included in subdivision (1).
(b) The term does not include the following:
(1) Bona fide discount points.
(2) An amount not to exceed one and one-half (1 1/2) points in
indirect broker compensation, if the terms of the loan do not
include a prepayment penalty that exceeds two percent (2%)
of the home loan principle.
(3) Reasonable fees paid to an affiliate of the creditor.
(4) Interest prepaid by the borrower for the month in which
the home loan is closed.
Sec. 11. "Political subdivision" means a municipality, school
district, public library, local housing authority, fire protection
district, public transportation corporation, local building authority,
local hospital authority or corporation, local airport authority,
special service district, special taxing district, or any other type of
local governmental corporate entity.
Sec. 12. "Rate" means the interest rate charged on a home
loan, based on an annual simple interest yield.
Sec. 13. "Total loan amount" means the principal of the home
loan minus the points and fees that are included in the principal
amount of the loan.
Sec. 14. "Trigger rate" means:
(1) for fixed rate home loans in which the interest rate will not
vary during the term of the loan, the rate as of the date of
closing;
(2) for home loans in which the interest varies according to an
index, the sum of the index rate as of the date of closing plus
the maximum margin permitted at any time under the loan
agreement; or
(3) for all other home loans in which the rate may vary at any
time during the term of the loan, the maximum rate that may
be charged during the term of the home loan.
Chapter 3. Prohibited Lending Practices Generally
Sec. 1. (a) A creditor making a home loan may not finance,
directly or indirectly, any:
(1) credit life insurance;
(2) credit disability insurance;
(3) credit unemployment insurance;
(4) credit property insurance; or
(5) payments directly or indirectly for any cancellation
suspension agreement or contract.
(b) Insurance premiums, debt cancellation fees, or suspension
fees calculated and paid on a monthly basis are not considered to
be financed by the creditor for purposes of this chapter.
Sec. 2. (a) A creditor may not knowingly or intentionally replace
or consolidate a zero (0) interest rate or other subsidized low rate
loan made by a governmental or nonprofit lender with a high cost
home loan within the first ten (10) years of the subsidized low rate
loan unless the current holder of the loan consents in writing to
the refinancing.
(b) For purposes of this section, a "subsidized low rate loan" is
a loan that carries a current interest rate of at least two (2)
percentage points below the current yield on treasury securities
with a comparable maturity. If the loan's current interest rate is
either a discounted introductory rate or a rate that automatically
steps up over time, the fully indexed rate or the fully stepped up
rate, as appropriate, should be used instead of the current rate to
determine whether a loan is a subsidized low rate loan.
(c) Each mortgage or deed of trust securing a zero (0) interest
rate or other subsidized low rate loan executed after January 1,
2005, must prominently display the following on the face of the
instrument:
"This instrument secures a zero (0) interest rate or other
subsidized low rate loan subject to IC 24-9-3-2.".
(d) A creditor may reasonably rely on the presence or absence
of the statement described in subsection (c) on the face of an
instrument executed after January 1, 2005, as conclusive proof of
the existence or nonexistence of a zero (0) interest rate or other
subsidized low rate loan.
Sec. 3. A creditor may not recommend or encourage default on
an existing loan or other debt before and in connection with the
closing or planned closing of a home loan that refinances all or
part of the existing loan or debt.
Sec. 4. A creditor shall treat each payment made by a borrower
in regard to a home loan as posted on the same business day as
the payment was received by the creditor, servicer, or creditor's
agent, or at the address provided to the borrower by the creditor,
servicer, or creditor's agent for making payments.
Sec. 5. (a) A home loan agreement may not contain a provision
that permits the creditor, in the creditor's sole discretion, to
accelerate the indebtedness without material cause.
(b) This section does not prohibit acceleration of a home loan in
good faith due to the borrower's failure to abide by the material
terms of the loan.
Sec. 6. (a) A creditor may not charge a fee for informing or
transmitting to a person the balance due to pay off a home loan or
to provide a written release upon prepayment. A creditor must
provide a payoff balance not later than ten (10) business days
after the request is received by the creditor.
(b) For purposes of this section, "fee" does not include actual
charges incurred by a creditor for express or priority delivery
requested by the borrower of home loan documents to the
borrower.
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 closed-end loan; or
(3) engage in a deceptive act in connection with a home loan.
Sec. 8. A person seeking to enforce section 7(3) of this chapter,
may not knowingly or intentionally intimidate, coerce, or harass
another person.
Sec. 9. It is unlawful for a creditor to discriminate against any
applicant with respect to any aspect of a credit transaction on the
basis of race, color, religion, national origin, sex, marital status,
or age, if the applicant has the ability to contract.
Chapter 4. Additional Prohibitions for High Cost Home Loans
Sec. 1. The following additional limitations and prohibited
practices apply to a high cost home loan:
(1) A creditor making a high cost home loan may not directly
or indirectly finance any points and fees.
(2) Prepayment fees or penalties may not be included in the
loan documents for a high cost home loan or charged to the
borrower if the fees or penalties exceed in total two percent
(2%) of the high cost home loan amount prepaid during the
first twenty-four (24) months after the high cost home loan
closing.
(3) A prepayment penalty may not be contracted for after the
second year following the high cost home loan closing.
(4) A creditor may not include a prepayment penalty fee in a
high cost home loan unless the creditor offers the borrower
the option of choosing a loan product without a prepayment
fee. The terms of the offer must be made in writing and must
be initialed by the borrower. The document containing the
offer must be clearly labeled in large bold type and must
include the following disclosure:
"LOAN PRODUCT CHOICE
I was provided with an offer to accept a product both with
and without a prepayment penalty provision. I have chosen
to accept the product with a prepayment penalty.".
(5) A creditor shall not sell or otherwise assign a high cost
home loan without furnishing the following statement to the
purchaser or assignee:
"NOTICE: This is a loan subject to special rules under
IC 24-9. Purchasers or assignees may be liable for all claims
and defenses with respect to the loan that the borrower
could assert against the lender.".
(6) A mortgage or deed of trust that secures a high cost home
loan at the time the mortgage or deed of trust is recorded
must prominently display the following on the face of the
instrument:
"This instrument secures a high cost home loan as defined
in IC 24-9-2-8.".
(7) A creditor making a high cost home loan may not finance,
directly or indirectly, any life or health insurance.
Sec. 2. A creditor may not knowingly or intentionally:
(1) refinance a high cost home loan by charging points and
fees on the part of the proceeds of the new high cost home
loan that is used to refinance the existing high cost loan
within four (4) years of the origination of the existing high
cost home loan; or
(2) divide a home loan transaction into multiple transactions
with the effect of evading this article. Where multiple
transactions are involved, the total points and fees charged in
all transactions shall be considered when determining whether
the protections of this section apply.
Sec. 3. Notwithstanding IC 24-4.5-3-402, a high cost home loan
agreement may not require a scheduled payment that is more
than twice as large as the average of earlier scheduled monthly
payments under the high cost home loan agreement unless the
payment becomes due and payable at least one hundred twenty
(120) months after the date of the high cost home loan. This
prohibition does not apply if:
(1) the payment schedule is adjusted to account for the
seasonal or irregular income of the borrower; or
(2) the loan is a bridge loan connected with or related to the
acquisition or construction of a dwelling intended to become
the borrower's principal dwelling.
Sec. 4. (a) Except as provided in subsection (b), a high cost home
loan may not include payment terms under which the outstanding
principal balance will increase at any time over the course of the
high cost home loan because the regular periodic payments do not
cover the full amount of interest due.
(b) This section does not apply to a temporary forbearance that
is requested by a borrower regarding a high cost home loan.
Sec. 5. A high cost home loan may not contain a provision that
increases the interest rate after default. However, this section
does not apply to interest rate changes in a variable rate loan
otherwise consistent with the provisions of the high cost home
loan documents if the change in the interest rate is not triggered
by the event of default or the acceleration of the indebtedness.
Sec. 6. A high cost home loan may not include terms under
which more than two (2) periodic payments required under the
high cost home loan are consolidated and paid in advance from the
high cost home loan proceeds provided to the borrower.
Sec. 7. A creditor may not make a high cost home loan without
first providing the borrower information to facilitate contact with
a nonprofit counseling agency certified by:
(1) the United States Department of Housing and Urban
Development; or
(2) the department of commerce under IC 4-4-3-8(b)(15);
at the same time as the good faith estimates are provided to the
borrower in accordance with the requirements of the federal Real
Estate Settlement Procedures Act (12 U.S.C. 2601 et seq.) as
amended.
Sec. 8. (a) A creditor may not make a high cost home loan
without regard to repayment ability.
(b) If a creditor presents evidence that the creditor followed
commercially reasonable practices in determining the borrower's
debt to income ratio, there is a rebuttable presumption that the
creditor made the high cost home loan with due regard to
repayment ability. For purposes of this section, there is a
rebuttable presumption that the borrower's statement of income
provided to the creditor is true and complete.
(c) Commercially reasonable practices include the use of:
(1) the debt to income ratio:
(A) listed in 38 CFR 36.4337(c)(1); and
(B) defined in 38 CFR 36.4337(d); and
(2) the residual income guidelines established under:
(A) 38 CFR 36.4337(e); and
(B) United States Department of Veterans Affairs form
26-6393.
Sec. 9. A creditor may not pay a contractor under a home
improvement contract from the proceeds of a high cost home loan
unless:
(1) the creditor is presented with a signed and dated
completion certificate showing that the home improvements
have been completed; and
(2) the instrument is payable to the borrower or jointly to the
borrower and the contractor or, at the election of the
borrower, through a third party escrow agent under a written
agreement signed by the borrower, the creditor, and the
contractor before the disbursement.
Sec. 10. A creditor may not charge a borrower any fees or other
charges to modify, renew, extend, or amend a high cost home loan
or to defer a payment due under the terms of a high cost home
loan.
Sec. 11. A creditor may not make a high cost home loan unless
the creditor has given the following notice, in writing, to the
borrower not later than the time that notice is required under 12
CFR 226.31(c):
"NOTICE TO BORROWER
YOU SHOULD BE AWARE THAT YOU MIGHT BE ABLE TO
OBTAIN A LOAN AT A LOWER COST. YOU SHOULD
COMPARE LOAN RATES, COSTS, AND FEES. MORTGAGE
LOAN RATES AND CLOSING COSTS AND FEES VARY
BASED ON MANY FACTORS, INCLUDING YOUR
PARTICULAR CREDIT AND FINANCIAL
CIRCUMSTANCES, YOUR EMPLOYMENT HISTORY, THE
LOAN-TO-VALUE REQUESTED, AND THE TYPE OF
PROPERTY THAT WILL SECURE YOUR LOAN. THE LOAN
RATE, COSTS, AND FEES COULD ALSO VARY BASED ON
WHICH CREDITOR OR BROKER YOU SELECT.
IF YOU ACCEPT THE TERMS OF THIS LOAN, THE
CREDITOR WILL HAVE A MORTGAGE LIEN ON YOUR
HOME. YOU COULD LOSE YOUR HOME AND ANY MONEY
YOU HAVE PAID IF YOU DO NOT MEET YOUR PAYMENT
OBLIGATIONS UNDER THE LOAN.
YOU SHOULD CONSULT AN ATTORNEY AND A
QUALIFIED INDEPENDENT CREDIT COUNSELOR OR
OTHER EXPERIENCED FINANCIAL ADVISER REGARDING
THE RATE, FEES, AND PROVISIONS OF THIS MORTGAGE
LOAN BEFORE YOU PROCEED. A LIST OF QUALIFIED
COUNSELORS IS AVAILABLE FROM THE INDIANA
DEPARTMENT OF COMMERCE.
YOU ARE NOT REQUIRED TO COMPLETE THIS LOAN
AGREEMENT MERELY BECAUSE YOU HAVE RECEIVED
THIS DISCLOSURE OR HAVE SIGNED A LOAN
APPLICATION. REMEMBER, PROPERTY TAXES AND
HOMEOWNER'S INSURANCE ARE YOUR
RESPONSIBILITY. NOT ALL CREDITORS PROVIDE
ESCROW SERVICES FOR THESE PAYMENTS. YOU
SHOULD ASK YOUR CREDITOR ABOUT THESE SERVICES.
ALSO, YOUR PAYMENTS ON EXISTING DEBTS
CONTRIBUTE TO YOUR CREDIT RATINGS. YOU SHOULD
NOT ACCEPT ANY ADVICE TO IGNORE YOUR REGULAR
PAYMENTS TO YOUR EXISTING CREDITORS.".
Sec. 12. Without regard to whether a borrower is acting
individually or on behalf of others similarly situated, a provision
of a high cost home loan agreement that:
(1) requires arbitration of a claim or defense;
(2) allows a party to require a borrower to assert a claim or
defense in a forum that is:
(A) less convenient;
(B) more costly; or
(C) more dilatory;
for the resolution of the dispute than an Indiana court in
which the borrower may otherwise bring a claim or defense;
or
(3) limits in any way any claim or defense the borrower may
have;
is unconscionable and void.
Chapter 5. Claims, Defenses, Remedies
Sec. 1. (a) A person who purchases or is otherwise assigned a
high cost home loan is subject to all affirmative claims and any
defenses with respect to the high cost home loan that the
borrower could assert against a creditor or broker of the high cost
home loan. However, this section does not apply if the purchaser
or assignee demonstrates by a preponderance of the evidence that
a reasonable person exercising ordinary due diligence could not
determine that the loan was a high cost home loan. A purchaser
or an assignee is presumed to have exercised reasonable due
diligence if the purchaser or assignee:
(1) has in place at the time of the purchase or assignment of
the subject loans, policies that expressly prohibit the purchase
or acceptance of the assignment of any high cost home loans;
(2) requires by contract that a seller or an assignor of home
loans to the purchaser or assignee represents and warrants to
the purchaser or assignee that either:
(A) the seller or assignor will not sell or reassign any high
cost home loans to the purchaser or assignee; or
(B) the seller or assignor is a beneficiary of a representation
and warranty from a previous seller or assignor to that
effect;
(3) exercises reasonable due diligence:
(A) at the time of purchase or assignment of home loans; or
(B) within a reasonable period after the purchase or
assignment of home loans;
intended by the purchaser or assignee to prevent the
purchaser or assignee from purchasing or taking assignment
of any high cost home loans; or
(4) satisfies the requirements of subdivisions (1) and (2) and
establishes that a reasonable person exercising ordinary due
diligence could not determine that the loan was a high cost
home loan based on the:
(A) documentation required by the federal Truth in Lending
Act (15 U.S.C. 1601 et seq.); and
(B) itemization of the amount financed and other
disbursement disclosures.
(b) A borrower acting only in an individual capacity may assert
against the creditor or any subsequent holder or assignee of a
high cost home loan:
(1) a violation of IC 24-9-4-2 as a defense, claim, or
counterclaim, after:
(A) an action to enjoin foreclosure or to preserve or obtain
possession of the dwelling that secures the loan is initiated;
(B) an action to collect on the loan or foreclose on the
collateral securing the loan is initiated; or
(C) the loan is more than sixty (60) days in default;
within three (3) years after the closing of a home loan;
(2) a violation of this article in connection to the high cost
home loan as a defense, claim, or counterclaim in an original
action within five (5) years after the closing of a high cost
home loan; and
(3) any defense, claim, counterclaim, or action to enjoin
foreclosure or preserve or obtain possession of the home that
secures the loan, including a violation of this article after:
(A) an action to collect on the loan or foreclose on the
collateral securing the loan is initiated;
(B) the debt arising from the loan is accelerated; or
(C) the loan is more than sixty (60) days in default;
at any time during the term of a high cost home loan.
(c) In an action, a claim, or a counterclaim brought under
subsection (b), the borrower may recover only amounts required
to reduce or extinguish the borrower's liability under a home loan
plus amounts required to recover costs, including reasonable
attorney's fees.
(d) The provisions of this section are effective notwithstanding
any other provision of law. This section shall not be construed to
limit the substantive rights, remedies, or procedural rights
available to a borrower against any creditor, assignee, or holder
under any other law. The rights conferred on borrowers by
subsections (a) and (b) are independent of each other and do not
limit each other.
Sec. 2. (a) If a creditor asserts that grounds for acceleration
under the terms of a high cost home loan exist and requires the
payment in full of all sums secured by the security instrument,
the borrower or a person authorized to act on the borrower's
behalf at any time before the title is transferred by means of
foreclosure, judicial proceeding and sale, or otherwise may cure
the default and reinstate the high cost home loan by tendering the
amount or performance as specified in the security instrument.
(b) If the borrower cures the default on a high cost home loan,
the original loan terms shall be reinstated, and any acceleration
of any obligation under the security instrument or note arising
from the default is nullified as of the date of the cure.
Sec. 3. (a) A creditor making a high cost home loan that has the
right to foreclose must use the judicial foreclosure procedures of
the state in which the property securing the high cost home loan
is located. The borrower has the right to assert in the proceeding
the nonexistence of a default and any other claim or defense to
acceleration and foreclosure, including any claim or defense based
on any violations of this article.
(b) This section is not intended and shall not be construed to
allow any claim or defense otherwise barred by any statute of
limitation or repose.
Sec. 4. (a) A person who violates this article is liable to a person
who is a party to the home loan transaction that gave rise to the
violation for the following:
(1) Actual damages, including consequential damages. A
person is not required to demonstrate reliance in order to
receive actual damages.
(2) Statutory damages equal to two (2) times the finance
charges agreed to in the home loan agreement.
(3) Costs and reasonable attorney's fees.
(b) A person may be granted injunctive, declaratory, and other
equitable relief as the court determines appropriate in an action
to enforce compliance with this chapter.
(c) The right of rescission granted under 15 U.S.C. 1601 et seq.
for a violation of law is available to a person acting only in an
individual capacity by way of recoupment as a defense against a
party foreclosing on a home loan at any time during the term of
the loan. Any recoupment claim asserted under this provision is
limited to the amount required to reduce or extinguish the
person's liability under the home loan plus amounts required to
recover costs, including reasonable attorney's fees. This article
shall not be construed to limit the recoupment rights available to
a person under any other law.
(d) The remedies provided in this section are cumulative but are
not intended to be the exclusive remedies available to a person.
Except as provided in subsection (e), a person is not required to
exhaust any administrative remedies under this article or under
any other applicable law.
(e) Before bringing an action regarding an alleged deceptive act
under this chapter, a person must:
(1) notify the homeowner protection unit established by
IC 4-6-12-2 of the alleged violation giving rise to the action;
and
(2) allow the homeowner protection unit at least ninety (90)
days to institute appropriate administrative and civil action to
redress a violation.
(f) An action under this chapter must be brought within five (5)
years after the date that the person knew, or by the exercise of
reasonable diligence should have known, of the violation of this
article.
(g) An award of damages under subsection (a) has priority over
a civil penalty imposed under this article.
Sec. 5. (a) If the creditor or an assignee establishes by a
preponderance of evidence that a violation of this article is
unintentional or the result of a bona fide error of law or fact
notwithstanding the maintenance of procedures reasonably
adopted to avoid any such violation or error, the validity of the
transaction is not affected, and no liability is imposed under
section 4 of this chapter except in the case of a refusal to make a
refund.
(b) Except as provided in subsection (c), a creditor in a high cost
home loan who in good faith fails to comply with this article is not
considered to have violated this article if the creditor does the
following before receiving notice of the failure from the borrower:
(1) Not later than ninety (90) days after the date of the loan
closing:
(A) makes appropriate restitution to the borrower of any
amounts collected in error; and
(B) takes necessary action to make all appropriate
adjustments to the loan to correct the error.
(2) Not later than one hundred twenty (120) days after the
date of the loan closing, notifies the borrower of:
(A) the error; and
(B) the amount of the required restitution or adjustment.
(c) Subsection (b) does not apply unless the creditor establishes
that the compliance failure was not intentional and resulted from
a bona fide error of fact or law, notwithstanding the maintenance
of procedures reasonably adopted to avoid the errors.
Sec. 6. The rights conferred by this article are in addition to
rights granted under any other law.
Chapter 6. Reporting Requirements
Sec. 1. (a) A servicer of a high cost home loan shall report at
least once each calendar quarter to a nationally recognized
consumer credit reporting agency both the favorable and
unfavorable payment history information of the borrower on
payments due to the creditor on a high cost home loan.
(b) This section does not prohibit a servicer from agreeing with
the borrower not to report specified payment history information
in the event of a resolved or an unresolved dispute with a
borrower and does not apply to high cost home loans held or
serviced by a lender for less than ninety (90) days.
Chapter 7. State Power to Regulate Lending
Sec. 1. The state is the sole regulator of the business of
originating, granting, servicing, and collecting loans and other
forms of credit in Indiana and the manner in which the business
is conducted. This regulation preempts all other regulation of
these activities by any political subdivision.
Sec. 2. Political subdivisions may not:
(1) enact, issue, or enforce ordinances, resolutions,
regulations, orders, requests for proposals, or requests for
bids pertaining to financial or lending activities, including
ordinances, resolutions, and rules that disqualify persons from
doing business with a municipality and that are based upon
lending terms or practices; or
(2) impose reporting requirements or any other obligations
upon persons regarding financial services or lending practices
or upon subsidiaries or affiliates that:
(A) are subject to the jurisdiction of the department of
financial institutions;
(B) are subject to the jurisdiction or regulatory supervision
of the Board of Governors of the Federal Reserve System,
the Office of the Comptroller of the Currency, the Office of
Thrift Supervision, the National Credit Union
Administration, the Federal Deposit Insurance Corporation,
the Federal Trade Commission, or the United States
Department of Housing and Urban Development;
(C) are chartered by the United States Congress to engage
in secondary market mortgage transactions;
(D) are created by the Indiana housing finance authority; or
(E) originate, purchase, sell, assign, securitize, or service
property interests or obligations created by financial
transactions or loans made, executed, originated, or
purchased by persons referred to in clauses (A), (B), (C), or
(D).
Chapter 8. Penalties and Enforcement
Sec. 1. A person who knowingly or intentionally violates this
article commits:
(1) a Class A misdemeanor; and
(2) an act that is actionable by the attorney general under
IC 24-5-0.5 and is subject to the penalties listed in IC 24-5-0.5.
Sec. 2. (a) Beginning July 1, 2005, the attorney general and the
attorney general's homeowner protection unit established under
IC 4-6-12 shall enforce this article for any violation occurring
within five (5) years after the making of a home loan.
(b) The attorney general may refer a matter under section 1 of
this chapter to a prosecuting attorney for enforcement.
Sec. 3. (a) The attorney general may bring an action to enjoin a
violation of this article. A court in which the action is brought
may:
(1) issue an injunction;
(2) order a person to make restitution;
(3) order a person to reimburse the state for reasonable costs
of the attorney general's investigation and prosecution of the
violation of this article; and
(4) impose a civil penalty of not more than ten thousand
dollars ($10,000) per violation.
(b) A person who violates an injunction under this section is
subject to a civil penalty of not more than ten thousand dollars
($10,000) per violation.
(c) The court that issues an injunction retains jurisdiction over
a proceeding seeking the imposition of a civil penalty under this
section.
Sec. 4. The attorney general may file complaints with any of the
agencies listed in IC 4-6-12-4 to implement this chapter.
Chapter 9. Fees
Sec. 1. The county recorder shall assess a fee of three dollars
($3) under IC 36-2-7-10(b)(11) for each mortgage recorded. The
fee shall be paid to the county treasurer at the end of each
calendar month as provided in IC 36-2-7-10(a).
Sec. 2. The county auditor shall credit fifty cents ($0.50) of the
fee collected under IC 36-2-7-10(b)(11) for each mortgage
recorded to the county recorder's records perpetuation fund
established under IC 36-2-7-10(c).
Sec. 3. On or before June 20 and December 20 of each year,
after completing an audit of the county treasurer's monthly
reports required by IC 36-2-10-16, the county auditor shall
distribute to the auditor of state two dollars and fifty cents ($2.50)
of the mortgage recording fee collected under IC 36-2-7-10(b)(11)
for each mortgage recorded by the county recorder. The auditor
of state shall deposit the money in the state general fund to be
distributed as described in section 4 of this chapter.
Sec. 4. On or before June 30 and December 31 of each year the
auditor of state shall distribute one dollar and twenty-five cents
($1.25) of the mortgage recording fee to the home ownership
education account established by IC 4-4-3-23 and one dollar and
twenty-five cents ($1.25) of the mortgage recording fee to the
homeowner protection unit account established by IC 4-6-12-9.
SOURCE: IC 28-1-11-3.2; (04)CC122903.34. -->
SECTION 34. IC 28-1-11-3.2 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 3.2. (a) As used in this
section, "rights and privileges" means the power:
(1) to:
(1) (A) create;
(2) (B) deliver;
(3) (C) acquire; or
(4) (D) sell;
a product, a service, or an investment that is available to or offered
by; or
(2) to engage in other activities authorized for;
national banks domiciled in Indiana.
(b) A bank that intends to exercise any rights and privileges that are:
(1) granted to national banks; but
(2) not authorized for banks under the Indiana Code (except for
this section) or any rule adopted under the Indiana Code;
shall submit a letter to the department describing in detail the requested
rights and privileges granted to national banks that the bank intends to
exercise. If available, copies of relevant federal law, regulations, and
interpretive letters must be attached to the letter submitted by the bank.
(c) The department shall promptly notify the requesting bank of the
department's receipt of the letter submitted under subsection (b).
Except as provided in subsection (e), the bank may exercise the
requested rights and privileges sixty (60) days after the date on which
the department receives the letter unless otherwise notified by the
department.
(d) The department, through its members, may prohibit the bank
from exercising the requested rights and privileges only if the members
find that:
(1) national banks domiciled in Indiana do not possess the
requested rights and privileges; or
(2) the exercise of the requested rights and privileges by the bank
would adversely affect the safety and soundness of the bank.
(e) The sixty (60) day period referred to in subsection (c) may be
extended by the department based on a determination that the bank's
letter raised issues requiring additional information or additional time for
analysis. If the sixty (60) day period is extended under this subsection,
the bank may exercise the requested rights and privileges only if the
bank receives prior written approval from the department. However:
(1) the members must:
(A) approve or deny the requested rights and privileges; or
(B) convene a hearing;
not later than sixty (60) days after the department receives the
bank's letter; and
(2) if a hearing is convened, the members must approve or deny
the requested rights and privileges not later than sixty (60) days
after the hearing is concluded.
(f) The exercise of rights and privileges by a bank in compliance with
and in the manner authorized by this section is not a violation of any
provision of the Indiana Code or rules adopted under IC 4-22-2.
(g) Whenever, in compliance with this section, a bank exercises
rights and privileges granted to national banks domiciled in Indiana, all
banks may exercise the same rights and privileges if the department by
order determines that the exercise of the rights and privileges by all
banks would not adversely affect their safety and soundness.
(h) If the department denies the request of a bank under this section
to exercise any rights and privileges that are granted to national banks,
the bank may appeal the decision of the department to the circuit court
with jurisdiction in the county in which the principal office of the bank
is located. In an appeal under this section, the court shall determine the
matter de novo.
SOURCE: IC 28-1-20-4; (04)CC122903.35. -->
SECTION 35. IC 28-1-20-4, AS AMENDED BY P.L.258-2003,
SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 4. (a) Except as provided in subsections (c),
(d), (g), and (k), it is unlawful for any person, firm, limited liability
company, or corporation (other than a bank or trust company, a bank
holding company, a subsidiary of a bank or trust company, a
subsidiary of a bank holding company, a subsidiary of a savings
bank, a subsidiary of a savings association, or a corporate fiduciary
organized or reorganized under IC 28 or statutes in effect at the time of
organization or reorganization or under the laws of the United States):
(1) to use the word "bank", "banc", or "banco" as a part of the
name or title of the person, firm, or corporation; or
(2) to advertise or represent the person, firm, limited liability
company, or corporation to the public:
(A) as a bank or trust company or a corporate fiduciary; or
(B) as affording the services or performing the duties which by
law only a bank or trust company or a corporate fiduciary is
entitled to afford and perform.
(b) A financial institution organized under the laws of any state or the
United States that establishes a branch office under this title is
authorized to do business at that branch using a name other than the
name of its home office.
(c) Notwithstanding the prohibitions of this section, an out-of-state
financial institution with the word "bank" in its legal name may use the
word "bank" if the financial institution is insured by the Federal Deposit
Insurance Corporation or its successor.
(d) Notwithstanding subsection (a), a building and loan association
organized under IC 28-4 (before its repeal) may include in its name or
title:
(1) the words "savings bank"; or
(2) the word "bank" if the name or title also includes either the
words "savings bank" or letters "SB".
A building and loan association that includes "savings bank" in its title
under this section does not by that action become a savings bank for
purposes of IC 28-6.1.
(e) The name or title of a savings bank governed by IC 28-6.1 must
include the words "savings bank" or the letters "SB".
(f) A savings association may include in its name the words "building
and loan association".
(g) Notwithstanding subsection (a), a bank holding company (as
defined in 12 U.S.C. 1841) may use the word "bank" or "banks" as a
part of its name. However, this subsection does not permit a bank
holding company to advertise or represent itself to the public as
affording the services or performing the duties that by law a bank or
trust company only is entitled to afford and perform.
(h) The department is authorized to investigate the business affairs of
any person, firm, limited liability company, or corporation that uses
"bank", "banc", or "banco" in its title or holds itself out as a bank,
corporate fiduciary, or trust company for the purpose of determining
whether the person, firm, limited liability company, or corporation is
violating any of the provisions of this article, and, for that purpose, the
department and its agents shall have access to any and all of the books,
records, papers, and effects of the person, firm, limited liability
company, or corporation. In making its examination, the department
may examine any person and the partners, officers, members, or agents
of the firm, limited liability company, or corporation under oath,
subpoena witnesses, and require the production of the books, records,
papers, and effects considered necessary. On application of the
department, the circuit or superior court of the county in which the
person, firm, limited liability company, or corporation maintains a place
of business shall, by proper proceedings, enforce the attendance and
testimony of witnesses and the production and examination of books,
papers, records, and effects.
(i) The department is authorized to exercise the powers under
IC 28-11-4 against a person, firm, limited liability company, or
corporation that improperly holds itself out as a financial institution.
(j) A person, firm, limited liability company, or corporation who
violates this section is subject to a penalty of five hundred dollars
($500) per day for each and every day during which the violation
continues. The penalty imposed shall be recovered in the name of the
state on relation of the department and, when recovered, shall be paid
into the financial institutions fund established by IC 28-11-2-9.
(k) The word "bank", "banc", or "banco" may not be included in the
name of a corporate fiduciary.
(l) A person, firm, limited liability company, or corporation may not
use the name of an existing bank or bank holding company or a name
confusingly similar to that of an existing bank or bank holding company
when marketing to or soliciting business from a customer or
prospective customer if the reference to the existing bank or bank
holding company is:
(1) without the consent of the existing bank or bank holding
company; and
(2) in a manner that could cause a reasonable person to believe that
the marketing material or solicitation:
(A) originated from;
(B) is endorsed by; or
(C) is in any other way the responsibility of;
the existing bank or bank holding company.
(m) An existing bank or bank holding company may, in addition to
any other remedies available under the law, report an alleged violation
of subsection (l) to the department. If the department finds that the
marketing material or solicitation in question is in violation of subsection
(l), the department may direct the person, firm, limited liability
company, or corporation to cease and desist from using that marketing
material or solicitation in Indiana. If that person, firm, limited liability
company, or corporation persists in using the marketing material or
solicitation, the department may impose a civil penalty of up to fifteen
thousand dollars ($15,000) for each violation. Each instance in which
the marketing material or solicitation is sent to a customer or
prospective customer constitutes a separate violation of subsection (l).
(n) Nothing in subsection (l) or (m) prohibits the use of or reference
to the name of an existing bank or bank holding company in marketing
materials or solicitations, if the use or reference does not deceive or
confuse a reasonable person regarding whether the marketing material
or solicitation:
(1) originated from;
(2) is endorsed by; or
(3) is in any other way the responsibility of;
the existing bank or bank holding company.
(o) The department may adopt rules under IC 4-22-2 to implement
this section.
SOURCE: IC 28-7-1-9; (04)CC122903.36. -->
SECTION 36. IC 28-7-1-9, AS AMENDED BY P.L.258-2003,
SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 9. A credit union has the following powers:
(1) To issue shares of its capital stock to its members. No
commission or compensation shall be paid for securing members
or for the sale of shares.
(2) To make loans to members or other credit unions. A loan to
another credit union may not exceed twenty percent (20%) of the
paid-in capital and surplus of the credit union making the loan.
(3) To make loans to officers, directors, or committee members,
but only if:
(A) the loan complies with all requirements under this chapter
with respect to loans to other borrowers and is not on terms
more favorable than those extended to other borrowers;
(B) upon the making of the loan, the aggregate amount of loans
outstanding under this subdivision will not exceed twenty percent
(20%) of the unimpaired capital and surplus of the credit union;
(C) the loan is approved by the credit committee or loan officer;
and
(D) the borrower takes no part in the consideration of or vote on
the application.
(4) To invest in any of the following:
(A) Bonds, notes, or certificates that are the direct or indirect
obligations of the United States, or of the state, or the direct
obligations of a county, township, city, town, or other taxing
district or municipality or instrumentality of Indiana and that are
not in default.
(B) Bonds or debentures issued by the Federal Home Loan Bank
Act (12 U.S.C. 1421 through 1449) or the Home Owners' Loan
Act (12 U.S.C. 1461 through 1468).
(C) Interest-bearing obligations of the FSLIC Resolution Fund
and obligations of national mortgage associations issued under the
authority of the National Housing Act.
(D) Mortgages on real estate situated in Indiana which are fully
insured under Title 2 of the National Housing Act (12 U.S.C.
1707 through 1715z).
(E) Obligations issued by farm credit banks and banks for
cooperatives under the Farm Credit Act of 1971 (12 U.S.C. 2001
through 2279aa-14).
(F) In savings and loan associations, other credit unions that are
insured under IC 28-7-1-31.5 and certificates of indebtedness or
investment of an industrial loan and investment company if the
association or company is federally insured. Not more than
twenty percent (20%) of the assets of a credit union may be
invested in the shares or certificates of an association or
company; nor more than forty percent (40%) in all such
associations and companies.
(G) Corporate credit unions.
(H) Federal funds or similar types of daily funds transactions
with other financial institutions.
(I) Mutual funds created and controlled by credit unions, credit
union associations, or their subsidiaries. Mutual funds referred to
in this clause may invest only in instruments that are approved
for credit union purchase under this chapter.
(J) Shares, stocks, or obligations of any credit union service
organization (as defined in Section 712 of the Rules and
Regulations of the National Credit Union Administration) with the
approval of the department. Not more than five percent (5%) of
the total paid in and unimpaired capital of the credit union may be
invested under this clause.
(5) To deposit its funds into:
(A) depository institutions that are federally insured; or
(B) state chartered credit unions that are privately insured by an
insurer approved by the department.
(6) To purchase, hold, own, or convey real estate as may be
conveyed to the credit union in satisfaction of debts previously
contracted or in exchange for real estate conveyed to the credit
union.
(7) To own, hold, or convey real estate as may be purchased by
the credit union upon judgment in its favor or decrees of
foreclosure upon mortgages.
(8) To issue shares of stock and upon the terms, conditions,
limitations, and restrictions and with the relative rights as may be
stated in the bylaws of the credit union, but no stock may have
preference or priority over the other to share in the assets of the
credit union upon liquidation or dissolution or for the payment of
dividends except as to the amount of the dividends and the time for
the payment of the dividends as provided in the bylaws.
(9) To charge the member's share account for the actual cost of
necessary locator service when the member has failed to keep the
credit union informed about the member's current address. The
charge shall be made only for amounts paid to a person or concern
normally engaged in providing such service, and shall be made
against the account or accounts of any one (1) member not more
than once in any twelve (12) month period.
(10) To transfer to an accounts payable, a dormant account, or a
special account share accounts which have been inactive, except
for dividend credits, for a period of two (2) years. The credit union
shall not consider the payment of dividends on the transferred
account.
(11) To invest in fixed assets with the funds of the credit union. An
investment in fixed assets in excess of five percent (5%) of its
assets is subject to the approval of the department.
(12) To establish branch offices, upon approval of the department,
provided that all books of account shall be maintained at the
principal office.
(13) To pay an interest refund on loans proportionate to the interest
paid during the dividend period by borrowers who are members at
the end of the dividend period.
(14) To purchase life savings and loan protection insurance for the
benefit of the credit union and its members, if:
(A) the coverage is placed with an insurance company licensed
to do business in Indiana; and
(B) no officer, director, or employee of the credit union
personally benefits, directly or indirectly, from the sale or
purchase of the coverage.
(15) To sell and cash negotiable checks, travelers checks, and
money orders for members.
(16) To purchase members' notes from any liquidating credit union,
with written approval from the department, at prices agreed upon
by the boards of directors of both the liquidating and the
purchasing credit unions. However, the aggregate of the unpaid
balances of all notes of liquidating credit unions purchased by any
one (1) credit union shall not exceed ten percent (10%) of its
unimpaired capital and surplus unless special written authorization
has been granted by the department.
(17) To exercise such incidental powers necessary or requisite to
enable it to carry on effectively the business for which it is
incorporated.
(18) To act as a custodian or trustee of any trust created or
organized in the United States and forming part of a stock bonus,
pension, or profit sharing plan which qualifies or qualified for
specific tax treatment under Section 408(a) or Section 401(d) of
the Internal Revenue Code, if the funds of the trust are invested
only in share accounts or insured certificates of the credit union.
(19) To issue shares of its capital stock or insured certificates to a
trustee or custodian of a pension plan, profit sharing plan, or stock
bonus plan which qualifies for specific tax treatment under
Sections 401(d) or 408(a) of the Internal Revenue Code.
(20) A credit union may exercise any rights and privileges that are:
(A) granted to federal credit unions; but
(B) not authorized for credit unions under the Indiana Code
(except for this section) or any rule adopted under the Indiana
Code;
if the credit union complies with section 9.2 of this chapter.
(21) To sell, pledge, or discount any of its assets. However, a
credit union may not pledge any of its assets as security for the
safekeeping and prompt payment of any money deposited, except
that a credit union may, for the safekeeping and prompt payment
of money deposited, give security as authorized by federal law.
(22) To purchase assets of another credit union and to assume the
liabilities of the selling credit union.
(23) To act as a fiscal agent of the United States and to receive
deposits from nonmember units of the federal, state, or county
governments, from political subdivisions, and from other credit
unions upon which the credit union may pay varying interest rates
at varying maturities subject to terms, rates, and conditions that are
established by the board of directors. However, the total amount of
public funds received from units of state and county governments
and political subdivisions that a credit union may have on deposit
may not exceed
ten twenty percent
(10%) (20%) of the total
assets of that credit union, excluding those public funds.
(24) To join the National Credit Union Administration Central
Liquidity Facility.
(25) To participate in community investment initiatives under the
administration of organizations:
(A) exempt from taxation under Section 501(c)(3) of the Internal
Revenue Code; and
(B) located or conducting activities in communities in which the
credit union does business.
Participation may be in the form of either charitable contributions
or participation loans. In either case, disbursement of funds
through the administering organization is not required to be limited
to members of the credit union. Total contributions or participation
loans may not exceed one tenth of one percent (0.001) of total
assets of the credit union. A recipient of a contribution or loan is
not considered qualified for credit union membership. A
contribution or participation loan made under this subdivision must
be approved by the board of directors.
(26) To establish and operate an automated teller machine (ATM):
(A) at any location within Indiana; or
(B) as permitted by the laws of the state in which the automated
teller machine is to be located.
(27) To demand and receive, for the faithful performance and
discharge of services performed under the powers vested in the
credit union by this article:
(A) reasonable compensation, or compensation as fixed by
agreement of the parties;
(B) all advances necessarily paid out and expended in the
discharge and performance of its duties; and
(C) unless otherwise agreed upon, interest at the legal rate on the
advances referred to in clause (B).
(28) Subject to any restrictions the department may impose, to
become the owner or lessor of personal property acquired upon the
request and for the use of a member and to incur additional
obligations as may be incident to becoming an owner or lessor of
such property.
SOURCE: IC 28-7-1-9.2; (04)CC122903.37. -->
SECTION 37. IC 28-7-1-9.2, AS ADDED BY P.L.134-2001,
SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 9.2. (a) As used in this section, "rights and
privileges" means the power:
(1) to:
(1) (A) create;
(2) (B) deliver;
(3) (C) acquire; or
(4) (D) sell;
a product, a service, or an investment that is available to or offered
by;
or
(2) to engage in other activities authorized for;
federal credit unions domiciled in Indiana.
(b) A credit union that intends to exercise any rights and privileges
that are:
(1) granted to federal credit unions; but
(2) not authorized for credit unions under the Indiana Code (except
for this section) or any rule adopted under the Indiana Code;
shall submit a letter to the department describing in detail the requested
rights and privileges granted to federal credit unions that the credit
union intends to exercise. If available, copies of relevant federal law,
regulations, and interpretive letters must be attached to the letter
submitted by the credit union.
(c) The department shall promptly notify the requesting credit union
of the department's receipt of the letter submitted under subsection (b).
Except as provided in subsection (e), the credit union may exercise the
requested rights and privileges sixty (60) days after the date on which
the department receives the letter unless otherwise notified by the
department.
(d) The department, through its members, may prohibit the credit
union from exercising the requested rights and privileges only if the
members find that:
(1) federal credit unions domiciled in Indiana do not possess the
requested rights and privileges; or
(2) the exercise of the requested rights and privileges by the credit
union would adversely affect the safety and soundness of the credit
union.
(e) The sixty (60) day period referred to in subsection (c) may be
extended by the department based on a determination that the credit
union's letter raised issues requiring additional information or additional
time for analysis. If the sixty (60) day period is extended under this
subsection, the credit union may exercise the requested rights and
privileges only if the credit union receives prior written approval from
the department. However:
(1) the members must:
(A) approve or deny the requested rights and privileges; or
(B) convene a hearing;
not later than sixty (60) days after the department receives the
credit union's letter; and
(2) if a hearing is convened, the members must approve or deny
the requested rights and privileges not later than sixty (60) days
after the hearing is concluded.
(f) The exercise of rights and privileges by a credit union in
compliance with and in the manner authorized by this section is not a
violation of any provision of the Indiana Code or rules adopted under
IC 4-22-2.
(g) Whenever, in compliance with this section, a credit union
exercises rights and privileges granted to federal credit unions domiciled
in Indiana, all credit unions may exercise the same rights and privileges
if the department by order determines that the exercise of the rights and
privileges by all credit unions would not adversely affect their safety
and soundness.
(h) If the department denies the request of a credit union under this
section to exercise any rights and privileges that are granted to federal
credit unions, the credit union may appeal the decision of the
department to the circuit court with jurisdiction in the county in which
the principal office of the credit union is located. In an appeal under this
section, the court shall determine the matter de novo.
SOURCE: IC 28-8-4-27; (04)CC122903.38. -->
SECTION 38. IC 28-8-4-27 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 27. (a) Except as
provided in section 29 of this chapter, an application must be
accompanied by a security device that secures the faithful performance
of the obligations of the licensee to receive, handle, transmit, and pay
money in connection with the:
(1) sale and issuance of payment instruments; or
(2) transmission of money.
(b) The security device required under subsection (a) must:
(1) be in an amount as provided under subsection (c);
(2) run to the state; and
(3) be in a form acceptable to the director.
(c) The security device must be in an amount calculated as follows:
STEP ONE: Subtract one (1) from the number of locations where
the applicant proposes to engage in business under the license.
STEP TWO: Multiply the difference determined under STEP ONE
by ten thousand dollars ($10,000).
STEP THREE: Add one two hundred thousand dollars ($100,000)
($200,000) to the product determined under STEP TWO.
STEP FOUR: Pay the amount that is the lesser of:
(1) the sum determined in STEP THREE; or
(2) two three hundred thousand dollars ($200,000). ($300,000).
(d) If the security device filed is a bond, the aggregate liability of the
surety shall not exceed the principal sum of the bond.
SOURCE: IC 28-8-4-33; (04)CC122903.39. -->
SECTION 39. IC 28-8-4-33 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 33. (a) A license granted
under this chapter permits a licensee to conduct business:
(1) at one (1) or more locations directly or indirectly owned by the
licensee; or
(2) through one (1) or more authorized delegates.
(b) Each licensee shall maintain a policy of insurance issued by an
insurer authorized to do business in Indiana that insures the applicant
against loss by a criminal act or act of dishonesty. The principal sum of
the policy shall be equivalent to one-half (1/2) the amount of the
required security device required under section 27 of this chapter or
deposit required under section 29 of this chapter.
(c) Except as provided in subsection (d), a licensee must at all times
possess permissible investments with an aggregate market value
calculated in accordance with generally accepted accounting principles
of not less than the aggregate face amount of all outstanding payment
instruments issued or sold by the licensee or an authorized delegate of
the licensee in the United States.
(d) The director may waive the permissible investments requirement
in subsection (c) if the dollar volume of a licensee's outstanding
payment instruments does not exceed:
(1) the security device posted by the licensee under section 27 of
this chapter; or
(2) the deposit made by the licensee under section 29 of this
chapter.
(e) A licensee that is a corporation must at all times be in good
standing with the secretary of state of the state in which the licensee
was incorporated.
SOURCE: IC 28-10-1-1; (04)CC122903.40. -->
SECTION 40. IC 28-10-1-1, AS AMENDED BY P.L.258-2003,
SECTION 18, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2004 (RETROACTIVE)]: Sec. 1. A reference to a federal
law or federal regulation in IC 28 is a reference to the law or regulation
in effect January 1, 2003. 2004.
SOURCE: IC 28-11-3-6; (04)CC122903.41. -->
SECTION 41. IC 28-11-3-6 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2004]: Sec. 6. (a) As used in this section:
(1) "federally chartered" means an entity organized or
reorganized under the law of the United States; and
(2) "state chartered" means an entity organized or
reorganized under the law of Indiana or another state.
(b) If the department determines that federal law has
preempted a provision of IC 24, IC 26, IC 28, IC 29, or IC 30, the
provision of IC 24, IC 26, IC 28, IC 29, or IC 30 applies to a state
chartered entity only to the same extent that the department
determines the provision is applicable to the:
(1) same; or
(2) functionally equivalent;
type of federally chartered entity.
(c) A state chartered entity seeking an exemption from a
provision of IC 24, IC 26, IC 28, IC 29, or IC 30 based on the
preemption of the provision as applied to a federally chartered
entity shall submit a letter to the department:
(1) describing in detail; and
(2) documenting the federal preemption of;
the provisions from which it seeks exemption. If available, copies
of relevant federal law, regulations, and interpretive letters must
be attached to the letter submitted by the requesting entity.
(d) The department shall notify the requesting entity within ten
(10) business days after the department's receipt of a letter
described in subsection (c). Except as provided in subsection (e),
upon receipt of the notification, the requesting entity may operate
as if it is exempt from the provision of IC 24, IC 26, IC 28, IC 29,
or IC 30 for ninety (90) days after the date on which the
department receives the letter, unless otherwise notified by the
department. This period may be extended if the department
determines that the requesting entity's letter raises issues
requiring additional information or additional time for analysis. If
the department extends the period, the requesting entity may
operate as if the requesting entity is exempt from a provision of
IC 24, IC 26, IC 28, IC 29, or IC 30 only if the requesting entity
receives prior written approval from the department. However:
(1) the department must:
(A) approve or deny the requested exemption; or
(B) convene a hearing;
not later than ninety (90) days after the department receives
the requesting entity's letter; and
(2) if a hearing is convened, the department must approve or
deny the requested exemption not later than ninety (90) days
after the hearing is concluded.
(e) The department may refuse to exempt a requesting entity
from a provision of IC 24, IC 26, IC 28, IC 29, or IC 30 if the
department finds that any of the following conditions apply:
(1) The department determines that a described provision of
IC 24, IC 26, IC 28, IC 29, or IC 30 is not preempted for a
federally chartered entity of the:
(A) same; or
(B) functionally equivalent;
type.
(2) The extension of the federal preemption in the form of an
exemption from a provision of IC 24, IC 26, IC 28, IC 29, or
IC 30 to the requesting entity would:
(A) adversely affect the safety and soundness of the
requesting entity; or
(B) result in an unacceptable curtailment of consumer
protection provisions.
(3) The failure of the department to provide for the exemption
from a provision of IC 24, IC 26, IC 28, IC 29, or IC 30 will
not result in a competitive disadvantage to the requesting
entity.
(f) The operation of a financial institution in a manner
consistent with exemption from a provision of IC 24, IC 26, IC 28,
IC 29, or IC 30 under this section is not a violation of any
provision of the Indiana Code or rules adopted under IC 4-22-2.
(g) If a financial institution is exempted from the provisions of
IC 24, IC 26, IC 28, IC 29, or IC 30 in compliance with this
section, the department shall do the following:
(1) Determine whether the exemption shall apply to all
financial institutions that, in the opinion of the department,
possess a charter that is:
(A) the same as; or
(B) functionally the equivalent of;
the charter of the exempt institution.
(2) For purposes of the determination required under
subdivision (1), ensure that applying the exemption to the
financial institutions described in subdivision (1) will not:
(A) adversely affect the safety and soundness of the
financial institutions; or
(B) unduly constrain Indiana consumer protection
provisions.
(3) Issue an order published in the Indiana Register that
specifies whether the exemption applies to the financial
institutions described in subdivision (1).
(h) If the department denies the request of a financial
institution under this section for exemption from Indiana Code
provisions that are preempted for federally chartered institutions,
the requesting institution may appeal the decision of the
department to the circuit court of the county in which the
principal office of the requesting institution is located.
SOURCE: IC 28-13-16-4; (04)CC122903.42. -->
SECTION 42. IC 28-13-16-4, AS AMENDED BY P.L.258-2003,
SECTION 29, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 4. (a) A financial institution or any of its
subsidiaries may acquire or establish a qualifying subsidiary by
providing the department with written notice before acquiring or
establishing the subsidiary. The department shall notify the requesting
financial institution of the department's receipt of the notice.
(b) A subsidiary may exercise a power or engage in an activity
permitted to be performed by a financial institution under the same
conditions and restrictions as if the power or activity is performed by
the financial institution itself, or the activity has been authorized by as
"activity eligible for notice" procedures under 12 CFR
5.34(e)(2)(ii). 5.34(e).
(c) The qualified subsidiary may exercise or engage in the activity
thirty (30) days after the date on which the department receives the
notification unless otherwise notified by the department.
SOURCE: IC 28-13-16-5; (04)CC122903.43. -->
SECTION 43. IC 28-13-16-5, AS ADDED BY P.L.215-1999,
SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2004]: Sec. 5. A financial institution may acquire or establish
a nonqualifying subsidiary by submitting an application to the
department containing:
(1) a complete description of the financial institution's investment
in the subsidiary;
(2) the activity to be conducted; and
(3) a representation that the activity:
(A) could be performed by a financial institution under statutory
authority of this title;
(B) is a part of or incidental to the business of banking as
determined by the director; or
(C) has been authorized by as "activity eligible for notice"
procedures under 12 CFR 5.34(e)(2)(ii). 5.34(e).
The department shall notify the requesting financial institution of the
department's receipt of the application.
SOURCE: IC 28-15-2-2; (04)CC122903.44. -->
SECTION 44. IC 28-15-2-2 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 2. (a) As used in this
section, "rights and privileges" means the power:
(1) to:
(1) (A) create;
(2) (B) deliver;
(3) (C) acquire; or
(4) (D) sell;
a product or service product, a service, or an investment that is
available to or offered by; or
(2) to engage in other activities authorized for;
federal savings associations domiciled in Indiana.
(b) Subject to this section, savings associations may exercise the
rights and privileges that are granted to federal savings associations.
(c) A savings association that intends to exercise any rights and
privileges that are:
(1) granted to federal savings associations; but
(2) not authorized for savings associations under:
(A) the Indiana Code (except for this section); or
(B) a rule adopted under IC 4-22-2;
shall submit a letter to the department, describing in detail the requested
rights and privileges granted to federal savings associations that the
savings association intends to exercise. If available, copies of relevant
federal law, regulations, and interpretive letters must be attached to the
letter.
(d) The department shall promptly notify the requesting savings
association of its receipt of the letter submitted under subsection (c).
Except as provided in subsection (f), the savings association may
exercise the requested rights and privileges sixty (60) days after the date
on which the department receives the letter unless otherwise notified by
the department.
(e) The department, through its members, may prohibit the savings
association from exercising the requested rights and privileges only if
the members find that:
(1) federal savings associations in Indiana do not possess the
requested rights and privileges; or
(2) the exercise of the requested rights and privileges by the
savings association would adversely affect the safety and
soundness of the savings association.
(f) The sixty (60) day period referred to in subsection (d) may be
extended by the department based on a determination that the savings
association letter raises issues requiring additional information or
additional time for analysis. If the sixty (60) day period is extended
under this subsection, the savings association may exercise the
requested rights and privileges only if the savings association receives
prior written approval from the department. However:
(1) the members must:
(A) approve or deny the requested rights and privileges; or
(B) convene a hearing;
not later than sixty (60) days after the department receives the
savings association's letter; and
(2) if a hearing is convened, the members must approve or deny
the requested rights and privileges not later than sixty (60) days
after the hearing is concluded.
(g) The exercise of rights and privileges by a savings association in
compliance with and in the manner authorized by this section does not
constitute a violation of any provision of the Indiana Code or rules
adopted under IC 4-22-2.
(h) Whenever, in compliance with this section, a savings association
exercises rights and privileges granted to national savings associations
domiciled in Indiana, all savings associations may exercise the same
rights and privileges if the department by order determines that the
exercise of the rights and privileges by all savings associations would
not adversely affect their safety and soundness.
SOURCE: IC 32-29-1-2.5; (04)CC122903.45. -->
SECTION 45. IC 32-29-1-2.5 IS ADDED TO THE INDIANA CODE
AS A
NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2004]:
Sec. 2.5. A mortgagee or a mortgagee's assignee or
representative may not require a mortgagor, as a condition of
receiving or maintaining a mortgage, to obtain hazard insurance
coverage against risks to improvements on the mortgaged
property in an amount exceeding the replacement value of the
improvements.
SOURCE: IC 34-7-4-2; (04)CC122903.46. -->
SECTION 46. IC 34-7-4-2, AS AMENDED BY SEA 263-2004,
SECTION 120, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2005]: Sec. 2. Statutes outside IC 34 providing causes of
action or procedures include the following:
(1) IC 4-21.5-5 (Judicial review of administrative agency actions).
(2) IC 22-3-4 (Worker's compensation administration and
procedures).
(3) IC 22-4-17 (Unemployment compensation system, employee's
claims for benefits).
(4) IC 22-4-32 (Unemployment compensation system, employer's
appeal process).
(5) IC 22-9 (Civil rights actions).
(6) IC 24-9 (Home loans).
(7) IC 31-14 (Paternity).
(7) (8) IC 31-15 (Dissolution of marriage and legal separation).
(8) (9) IC 31-16 (Support of children and other dependants).
(9) (10) IC 31-17 (Custody and visitation).
(10) (11) IC 31-19 (Adoption).
(11) (12) IC 32-27-2, IC 32-30-1, IC 32-30-2, IC 32-30-2.1,
IC 32-30-2, IC 32-30-4, IC 32-30-9, IC 32-30-10, IC 32-30-12,
IC 32-30-13, and IC 32-30-14 (Real property).
(12) (13) IC 33-43-4 (Attorney liens).
SOURCE: IC 36-2-7-10; (04)CC122903.47. -->
SECTION 47. IC 36-2-7-10, AS AMENDED BY P.L.2-2003,
SECTION 101, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2005]: Sec. 10. (a) The county recorder shall tax and
collect the fees prescribed by this section for recording, filing, copying,
and other services the recorder renders, and shall pay them into the
county treasury at the end of each calendar month. The fees prescribed
and collected under this section supersede all other recording fees
required by law to be charged for services rendered by the county
recorder.
(b) The county recorder shall charge the following:
(1) Six dollars ($6) for the first page and two dollars ($2) for each
additional page of any document the recorder records if the pages
are not larger than eight and one-half (8 1/2) inches by fourteen
(14) inches.
(2) Fifteen dollars ($15) for the first page and five dollars ($5) for
each additional page of any document the recorder records, if the
pages are larger than eight and one-half (8 1/2) inches by fourteen
(14) inches.
(3) For attesting to the release, partial release, or assignment of any
mortgage, judgment, lien, or oil and gas lease contained on a
multiple transaction document, the fee for each transaction after the
first is the amount provided in subdivision (1) plus the amount
provided in subdivision (4) and one dollar ($1) for marginal
mortgage assignments or marginal mortgage releases.
(4) One dollar ($1) for each cross-reference of a recorded
document.
(5) One dollar ($1) per page not larger than eight and one-half (8
1/2) inches by fourteen (14) inches for furnishing copies of
records produced by a photographic process, and two dollars ($2)
per page that is larger than eight and one-half (8 1/2) inches by
fourteen (14) inches.
(6) Five dollars ($5) for acknowledging or certifying to a
document.
(7) Five dollars ($5) for each deed the recorder records, in addition
to other fees for deeds, for the county surveyor's corner
perpetuation fund for use as provided in IC 32-19-4-3 or
IC 36-2-12-11(e).
(8) A fee in an amount authorized under IC 5-14-3-8 for
transmitting a copy of a document by facsimile machine.
(9) A fee in an amount authorized by an ordinance adopted by the
county legislative body for duplicating a computer tape, a computer
disk, an optical disk, microfilm, or similar media. This fee may not
cover making a handwritten copy or a photocopy or using
xerography or a duplicating machine.
(10) A supplemental fee of three dollars ($3) for recording a
document that is paid at the time of recording. The fee under this
subdivision is in addition to other fees provided by law for
recording a document.
(11) Three dollars ($3) for each mortgage on real estate
recorded, in addition to other fees required by this section,
distributed as follows:
(A) Fifty cents ($0.50) is to be deposited in the recorder's
record perpetuation fund.
(B) Two dollars and fifty cents ($2.50) is to be distributed to
the auditor of state on or before June 20 and December 20
of each year as provided in IC 24-9-9-3.
(c) The county treasurer shall establish a recorder's records
perpetuation fund. All revenue received under subsection (b)(5), (b)(8),
(b)(9), and (b)(10), and fifty cents ($0.50) from revenue received
under subsection (b)(11), shall be deposited in this fund. The county
recorder may use any money in this fund without appropriation for the
preservation of records and the improvement of record keeping systems
and equipment.
(d) As used in this section, "record" or "recording" includes the
functions of recording, filing, and filing for record.
(e) The county recorder shall post the fees set forth in subsection (b)
in a prominent place within the county recorder's office where the fee
schedule will be readily accessible to the public.
(f) The county recorder may not tax or collect any fee for:
(1) recording an official bond of a public officer, a deputy, an
appointee, or an employee; or
(2) performing any service under any of the following:
(A) IC 6-1.1-22-2(c).
(B) IC 8-23-7.
(C) IC 8-23-23.
(D) IC 10-17-2-3.
(E) IC 10-17-3-2.
(F) IC 12-14-13.
(G) IC 12-14-16.
(g) The state and its agencies and instrumentalities are required to pay
the recording fees and charges that this section prescribes.
SOURCE: IC 24-4.5-7-407; IC 24-4.5-7-408.
; (04)CC122903.48. -->
SECTION 48. THE FOLLOWING ARE REPEALED [EFFECTIVE
JULY 1, 2004]: IC 24-4.5-7-407; IC 24-4.5-7-408.
SOURCE: ; (04)CC122903.49. -->
SECTION 49. [EFFECTIVE UPON PASSAGE] (a) Notwithstanding
IC 4-4-3-8(b)(15), as added by this act, the department of
commerce shall carry out the duties imposed on it under
IC 4-4-3-8(b)(15), as added by this act, under interim written
guidelines approved by the executive director of the department
of commerce.
(b) This SECTION expires on the earlier of the following:
(1) The date rules are adopted under IC 4-4-3-8(b)(15), as
added by this act.
(2) July 1, 2005.
SOURCE: ; (04)CC122903.50. -->
SECTION 50. [EFFECTIVE UPON PASSAGE] Notwithstanding
IC 24-9-3 and IC 24-9-4, both as added by this act, a person is not
subject to a prohibition or requirement of IC 24-9-3 and IC 24-9-4,
both as added by this act, with respect to a loan made before
January 1, 2005.
SOURCE: ; (04)CC122903.51. -->
SECTION 51.
An emergency is declared for this act.
(Reference is to EHB 1229 as reprinted February 26, 2004.)
Conference Committee Report
on
Engrossed House
Bill 1229
Text Box
S
igned by:
____________________________ ____________________________
Representative Bardon Senator Bray
Chairperson
____________________________ ____________________________
Representative Burton Senator Lanane
House Conferees Senate Conferees