CHAPTER 3. LOANS
IC 24-4.5-3
Chapter 3. Loans
(Part 1. General Provisions)
IC 24-4.5-3-101
Short title
Sec. 101. Short Title _ This Chapter shall be known and may be
cited as Uniform Consumer Credit Code _ Loans.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-102
Application
Sec. 102. This chapter applies to consumer loans, including
supervised loans. In addition, IC 24-4.5-3-601 through
IC 24-4.5-3-605 apply to consumer related loans. The licensing
provisions of this chapter apply to consumer credit sales under
IC 24-4.5-2 that are subordinate lien mortgage transactions.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by
P.L.152-1986, SEC.62; P.L.35-2010, SEC.47.
IC 24-4.5-3-103
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 24-4.5-3-104
Repealed
(Repealed by P.L.35-2010, SEC.209.)
IC 24-4.5-3-105
"Consumer loan"; first lien mortgage transaction not included
Sec. 105. Unless the loan is made subject to IC 24-4.5-3 by
agreement (IC 24-4.5-3-601), and except with respect to disclosure
(IC 24-4.5-3-301), debtors' remedies (IC 24-4.5-5-201), providing
payoff amounts (IC 24-4.5-3-209), providing property tax
information (IC 24-4.5-3-701), and powers and functions of the
department (IC 24-4.5-6-104), "consumer loan" does not include a
first lien mortgage transaction.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by Acts 1979,
P.L.238, SEC.1; Acts 1981, P.L.218, SEC.5; P.L.152-1986, SEC.63;
P.L.14-1992, SEC.23; P.L.176-1996, SEC.5; P.L.23-2000, SEC.4;
P.L.90-2008, SEC.7; P.L.35-2010, SEC.48.
IC 24-4.5-3-106
"Loan"
Sec. 106. Definition: "Loan" _ "Loan" includes
(1) the creation of debt by the lender's payment of or agreement
to pay money to the debtor or to a third party for the account of the
debtor;
(2) the creation of debt by a credit to an account with the lender
upon which the debtor is entitled to draw immediately;
(3) the creation of debt pursuant to a lender credit card or similar
arrangement; and
(4) the forbearance of debt arising from a loan.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-107
Definitions; "lender"; "precomputed"; "principal"
Sec. 107. Definitions: "Lender"; "Precomputed"; "Principal" . (1)
Except as otherwise provided, "lender" means a person regularly
engaged in making consumer loans. The term includes an assignee
of the lender's right to payment but use of the term does not in itself
impose on an assignee any obligation of the lender with respect to
events occurring before the assignment.
(2) A loan, refinancing, or consolidation is "precomputed" if the
debt is expressed as a sum comprising the principal and the amount
of the loan finance charge computed in advance.
(3) "Principal" of a loan means the total of:
(a) the net amount paid to, receivable by, or paid or payable for
the account of the debtor;
(b) the amount of any discount excluded from the loan finance
charge (subsection (2) of IC 24-4.5-3-109); and
(c) to the extent that payment is deferred:
(i) amounts actually paid or to be paid by the lender for
registration, certificate of title, or license fees if not included
in (a); and
(ii) additional charges permitted by this chapter (IC
24-4.5-3-202).
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by
P.L.145-2008, SEC.25.
IC 24-4.5-3-108
"Revolving loan account"
Sec. 108. Definition: "Revolving Loan Account" _ "Revolving
loan account" means an arrangement between a lender and a debtor
pursuant to which (1) the lender may permit the debtor to obtain
loans from time to time, (2) the unpaid balances of principal and the
loan finance and other appropriate charges are debited to an account,
(3) a loan finance charge if made is not precomputed but is computed
on the outstanding unpaid balances of the debtor's account from time
to time, and (4) the debtor has the privilege of paying the balances in
instalments.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-109
"Loan finance charge"
Sec. 109. (1) "Loan finance charge" means the sum of:
(a) all charges payable directly or indirectly by the debtor and
imposed directly or indirectly by the lender as an incident to the
extension of credit, including any of the following types of
charges which are applicable: interest or any amount payable
under a point, discount, or other system of charges, however
denominated, premium or other charge for any guarantee or
insurance protecting the lender against the debtor's default or
other credit loss; and
(b) charges incurred for investigating the collateral or
credit-worthiness of the debtor.
The term does not include charges as a result of default, additional
charges (IC 24-4.5-3-202), delinquency charges (IC 24-4.5-3-203.5),
or deferral charges (IC 24-4.5-3-204). The term does not include
charges paid or payable to a third party that are not required by the
lender as a condition or incident to the extension of credit except for
borrower paid mortgage broker fees, including fees paid directly to
the broker or the lender (for delivery to the broker), whether the fees
are paid in cash or financed. However, borrower paid mortgage
broker fees do not include fees paid to a mortgage broker by a
creditor, including yield spread premiums and service release fees.
(2) If a lender makes a loan to a debtor by purchasing or satisfying
obligations of the debtor pursuant to a lender credit card or similar
arrangement, and the purchase or satisfaction is made at less than the
face amount of the obligation, the discount is not part of the loan
finance charge.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by
P.L.247-1983, SEC.15; P.L.14-1992, SEC.24; P.L.172-1997, SEC.4.
(Part 2. Maximum Charges)
IC 24-4.5-3-201
Loan finance charge for consumer loans other than supervised
loans
Sec. 201. Loan Finance Charge for Consumer Loans other than
Supervised Loans_(1) Except as provided in subsections (6) and
(8), with respect to a consumer loan other than a supervised loan (IC
24-4.5-3-501), a lender may contract for a loan finance charge,
calculated according to the actuarial method, not exceeding
twenty-one percent (21%) per year on the unpaid balances of the
principal.
(2) This section does not limit or restrict the manner of
contracting for the loan finance charge, whether by way of add-on,
discount, or otherwise, so long as the rate of the loan finance charge
does not exceed that permitted by this section. If the loan is
precomputed:
(a) the loan finance charge may be calculated on the assumption
that all scheduled payments will be made when due; and
(b) the effect of prepayment is governed by the provisions on
rebate upon prepayment (IC 24-4.5-3-210).
(3) For the purposes of this section, the term of a loan commences
with the date the loan is made. Differences in the lengths of months
are disregarded, and a day may be counted as one-thirtieth (1/30) of
a month. Subject to classifications and differentiations the lender
may reasonably establish, a part of a month in excess of fifteen (15)
days may be treated as a full month if periods of fifteen (15) days or
less are disregarded and if that procedure is not consistently used to
obtain a greater yield than would otherwise be permitted. For
purposes of computing average daily balances, the creditor may elect
to treat all months as consisting of thirty (30) days.
(4) With respect to a consumer loan made pursuant to a revolving
loan account:
(a) the loan finance charge shall be deemed not to exceed the
maximum annual percentage rate if the loan finance charge
contracted for and received does not exceed a charge in each
monthly billing cycle which is one and three-fourths percent (1
3/4%) of an amount no greater than:
(i) the average daily balance of the debt;
(ii) the unpaid balance of the debt on the same day of the
billing cycle; or
(iii) subject to subsection (5), the median amount within a
specified range within which the average daily balance or
the unpaid balance of the debt, on the same day of the billing
cycle, is included; for the purposes of this subparagraph and
subparagraph (ii), a variation of not more than four (4) days
from month to month is "the same day of the billing cycle";
(b) if the billing cycle is not monthly, the loan finance charge
shall be deemed not to exceed the maximum annual percentage
rate if the loan finance charge contracted for and received does
not exceed a percentage which bears the same relation to
one-twelfth (1/12) the maximum annual percentage rate as the
number of days in the billing cycle bears to thirty (30); and
(c) notwithstanding subsection (1), if there is an unpaid balance
on the date as of which the loan finance charge is applied, the
lender may contract for and receive a charge not exceeding fifty
cents ($0.50) if the billing cycle is monthly or longer, or the pro
rata part of fifty cents ($0.50) which bears the same relation to
fifty cents ($0.50) as the number of days in the billing cycle
bears to thirty (30) if the billing cycle is shorter than monthly,
but no charge may be made pursuant to this paragraph if the
lender has made an annual charge for the same period as
permitted by the provisions on additional charges (paragraph (c)
of subsection (1) of IC 24-4.5-3-202).
(5) Subject to classifications and differentiations, the lender may
reasonably establish and make the same loan finance charge on all
amounts financed within a specified range. A loan finance charge
does not violate subsection (1) if:
(a) when applied to the median amount within each range, it
does not exceed the maximum permitted by subsection (1); and
(b) when applied to the lowest amount within each range, it
does not produce a rate of loan finance charge exceeding the
rate calculated according to paragraph (a) by more than eight
percent (8%) of the rate calculated according to paragraph (a).
(6) With respect to a consumer loan not made pursuant to a
revolving loan account, the lender may contract for and receive a
minimum loan finance charge of not more than thirty dollars ($30).
The minimum loan finance charge allowed under this subsection may
be imposed only if:
(a) the debtor prepays in full a consumer loan, refinancing, or
consolidation, regardless of whether the loan, refinancing, or
consolidation is precomputed;
(b) the loan, refinancing, or consolidation prepaid by the debtor
is subject to a loan finance charge that:
(i) is contracted for by the parties; and
(ii) does not exceed the rate prescribed in subsection (1); and
(c) the loan finance charge earned at the time of prepayment is
less than the minimum loan finance charge contracted for under
this subsection.
(7) The amount of thirty dollars ($30) in subsection (6) is subject
to change under the provisions on adjustment of dollar amounts (IC
24-4.5-1-106). However, notwithstanding IC 24-4.5-1-106(1), the
Reference Base Index to be used under this subsection is the Index
for October 1992.
(8) In addition to the loan finance charge provided for in this
section, a lender may contract for the following:
(a) With respect to a consumer loan that is not made under a
revolving loan account, a loan origination fee of not more than
two percent (2%) of the loan amount.
(b) With respect to a consumer loan that is made under a
revolving loan account, a loan origination fee of not more than
two percent (2%) of the line of credit that was contracted for.
(9) The charges provided for in subsection (8):
(a) are not subject to refund or rebate;
(b) are not permitted if a lender makes a settlement charge
under IC 24-4.5-3-202(d)(ii); and
(c) are limited to two percent (2%) of the part of the loan that
does not exceed two thousand dollars ($2,000), if the loan is not
primarily secured by an interest in land.
Notwithstanding subdivision (a), if a lender retains any part of a loan
origination fee charged on a loan that is paid in full by a new loan
from the same lender within three (3) months after the date of the
prior loan, the lender may charge a loan origination fee only on that
part of the new loan not used to pay the amount due on the prior
loan, or in the case of a revolving loan, the lender may charge a loan
origination fee only on the difference between the amount of the
existing credit line and the increased credit line. This subsection does
not prohibit a lender from contracting for and receiving a fee for
preparing deeds, mortgages, reconveyance, and similar documents
under IC 24-4.5-3-202(d)(ii), in addition to the charges provided for
in subsection (8).
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by Acts 1982,
P.L.150, SEC.3; P.L.14-1992, SEC.25; P.L.122-1994, SEC.18;
P.L.45-1995, SEC.8; P.L.163-1999, SEC.1; P.L.10-2006, SEC.5 and
P.L.57-2006, SEC.5; P.L.145-2008, SEC.26.
IC 24-4.5-3-202
Additional charges
Sec. 202. (1) In addition to the loan finance charge permitted by
IC 24-4.5-3-201 through IC 24-4.5-3-210, a lender may contract for
and receive the following additional charges in connection with a
consumer loan:
(a) Official fees and taxes.
(b) Charges for insurance as described in subsection (2).
(c) Annual participation fees assessed in connection with a
revolving loan account. Annual participation fees must:
(i) be reasonable in amount;
(ii) bear a reasonable relationship to the lender's costs to
maintain and monitor the loan account; and
(iii) not be assessed for the purpose of circumvention or
evasion of this article, as determined by the department.
(d) With respect to a debt secured by an interest in land, the
following closing costs, if they are bona fide, reasonable in
amount, and not for the purpose of circumvention or evasion of
this article:
(i) Fees for title examination, abstract of title, title insurance,
property surveys, or similar purposes.
(ii) Fees for preparing deeds, mortgages, and reconveyance,
settlement, and similar documents.
(iii) Notary and credit report fees.
(iv) Amounts required to be paid into escrow or trustee
accounts if the amounts would not otherwise be included in
the loan finance charge.
(v) Appraisal fees.
(e) Notwithstanding provisions of the Federal Consumer Credit
Protection Act concerning disclosure, charges for other
benefits, including insurance, conferred on the debtor, if the
benefits are of value to the debtor and if the charges are
reasonable in relation to the benefits, and are excluded as
permissible additional charges from the loan finance charge.
With respect to any other additional charge not specifically
provided for in this section to be a permitted charge under this
subsection, the creditor must submit a written explanation of the
charge to the department indicating how the charge would be
assessed and the value or benefit to the debtor. Supporting
documents may be required by the department. The department
shall determine whether the charge would be of benefit to the
debtor and is reasonable in relation to the benefits.
(f) A charge not to exceed twenty-five dollars ($25) for each
return by a bank or other depository institution of a dishonored
check, negotiable order of withdrawal, or share draft issued by
the debtor.
(g) With respect to a revolving loan account, a fee not to exceed
twenty-five dollars ($25) in each billing cycle during which the
balance due under the revolving loan account exceeds by more
than one hundred dollars ($100) the maximum credit limit for
the account established by the lender.
(h) With respect to a revolving loan account, a transaction fee
that may not exceed the lesser of the following:
(i) Two percent (2%) of the amount of the transaction.
(ii) Ten dollars ($10).
The additional charges provided for in subdivisions (f), (g), and (h)
are not subject to refund or rebate.
(2) An additional charge may be made for insurance in connection
with the loan, other than insurance protecting the lender against the
debtor's default or other credit loss:
(a) with respect to insurance against loss of or damage to
property or against liability, if the lender furnishes a clear and
specific statement in writing to the debtor, setting forth the cost
of the insurance if obtained from or through the lender and
stating that the debtor may choose the person, subject to the
lender's reasonable approval, through whom the insurance is to
be obtained; and
(b) with respect to consumer credit insurance providing life,
accident, unemployment or other loss of income, or health
coverage, if the insurance coverage is not a factor in the
approval by the lender of the extension of credit and this fact is
clearly disclosed in writing to the debtor, and if, in order to
obtain the insurance in connection with the extension of credit,
the debtor gives specific affirmative written indication of the
desire to do so after written disclosure of the cost of the
insurance.
(Formerly: Acts 1971, P.L.366, SEC.4; Acts 1975, P.L.266, SEC.1.)
As amended by P.L.247-1983, SEC.16; P.L.139-1990, SEC.1;
P.L.181-1991, SEC.3; P.L.14-1992, SEC.26; P.L.122-1994, SEC.19;
P.L.45-1995, SEC.9; P.L.80-1998, SEC.6; P.L.213-2007, SEC.8;
P.L.217-2007, SEC.7.
IC 24-4.5-3-203
Repealed
(Repealed by P.L.122-1994, SEC.122.)
IC 24-4.5-3-203.5
Delinquency charges; credit charges not precomputed
Sec. 203.5. Delinquency Charges _ (1) With respect to a
consumer loan, refinancing, or consolidation, the parties may
contract for a delinquency charge of not more than five dollars ($5)
on any installment or minimum payment due not paid in full within
ten (10) days after its scheduled due date.
(2) A delinquency charge under this section may be collected only
once on an installment however long it remains in default. With
regard to a delinquency charge on consumer loans made under a
revolving loan account, the delinquency charge may be applied each
month that the payment is less than the minimum required payment
on the account. A delinquency charge may be collected any time
after it accrues. A delinquency charge may not be collected if the
installment has been deferred and a deferral charge (IC 24-4.5-3-204)
has been paid or incurred.
(3) A delinquency charge may not be collected on an installment
or payment due that is paid in full within ten (10) days after its
scheduled due date even though an earlier maturing installment,
minimum payment, or a delinquency charge on:
(a) an earlier installment; or
(b) payment due;
may not have been paid in full. For purposes of this subsection,
payments are applied first to current installments or payments due
and then to delinquent installments or payments due.
(4) If two (2) installments or parts of two (2) installments of a
precomputed loan are in default for ten (10) days or more, the lender
may elect to convert the loan from a precomputed loan to a loan in
which the finance charge is based on unpaid balances. A lender that
makes this election shall make a rebate under the provisions on
rebates upon prepayment (IC 24-4.5-3-210) as of the maturity date of
the first delinquent installment, and thereafter may make a loan
finance charge as authorized by the provisions on loan finance
charges for consumer loans (IC 24-4.5-3-201) or supervised loans (IC
24-4.5-3-508). The amount of the rebate shall not be reduced by the
amount of any permitted minimum charge (IC 24-4.5-3-210). Any
deferral charges made on installments due at or after the maturity
date of the first delinquent installment shall be rebated, and no
further deferral charges shall be made.
(5) The amount of five dollars ($5) in subsection (1) is subject to
change pursuant to the section on adjustment of dollar amounts (IC
24-4.5-1-106).
(6) If the parties provide by contract for a delinquency charge that
is subject to change, the lender shall disclose in the contract that the
amount of the delinquency charge is subject to change as allowed by
IC 24-4.5-1-106.
As added by P.L.247-1983, SEC.17. Amended by P.L.181-1991,
SEC.4; P.L.115-1992, SEC.2; P.L.14-1992, SEC.27; P.L.122-1994,
SEC.20; P.L.45-1995, SEC.10.
IC 24-4.5-3-204
Deferral charges
Sec. 204. Deferral Charges _ (1) With respect to a precomputed
consumer loan, refinancing, or consolidation, the parties before or
after default may agree in writing to a deferral of all or part of one or
more unpaid instalments, and the lender may make and collect a
charge not exceeding the rate previously stated to the debtor pursuant
to the provisions on disclosure (Part 3) applied to the amount or
amounts deferred for the period of deferral calculated without regard
to difference in the lengths of months, but proportionally for a part
of a month, counting each day as one-thirtieth (1/30) of a month. A
deferral charge may be collected at the time it is assessed or at any
time thereafter.
(2) The lender, in addition to the deferral charge, may make
appropriate additional charges (24-4.5-3-202), and the amount of
these charges which is not paid in cash may be added to the amount
deferred for the purpose of calculating the deferral charge.
(3) The parties may agree in writing at the time of a precomputed
consumer loan, refinancing, or consolidation that if an instalment is
not paid within ten (10) days after its due date, the lender may
unilaterally grant a deferral and make charges as provided in this
section. No deferral charge may be made for a period after the date
that the lender elects to accelerate the maturity of the agreement.
(4) A delinquency charge made by the lender on an instalment
may not be retained if a deferral charge is made pursuant to this
section with respect to the period of delinquency.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-205
Loan finance charge on refinancing
Sec. 205. Loan Finance Charge on Refinancing _ With respect
to a consumer loan, refinancing, or consolidation, the lender may by
agreement with the debtor refinance the unpaid balance and may
contract for and receive a loan finance charge based on the principal
resulting from the refinancing at a rate not exceeding that permitted
by the provisions on a loan finance charge for consumer loans (IC
24-4.5-3-201) or the provisions on a loan finance charge for
supervised loans (IC 24-4.5-3-508), whichever is appropriate. For the
purpose of determining the loan finance charge permitted, the
principal resulting from the refinancing comprises the following:
(1) if the transaction was not precomputed, the total of the unpaid
balance and the accrued charges on the date of the refinancing, or, if
the transaction was precomputed, the amount which the debtor would
have been required to pay upon prepayment pursuant to the
provisions on rebate upon prepayment (IC 24-4.5-3-210) on the date
of refinancing; and
(2) appropriate additional charges (IC 24-4.5-3-202), payment of
which is deferred.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by P.L.14-1992,
SEC.28.
IC 24-4.5-3-206
Loan finance charge on consolidation
Sec. 206. Loan Finance Charge on Consolidation _ (1) If a
debtor owes an unpaid balance to a lender with respect to a consumer
loan, refinancing, or consolidation, and becomes obligated on
another consumer loan, refinancing, or consolidation with the same
lender, the parties may agree to a consolidation resulting in a single
schedule of payments. If the previous consumer loan, refinancing, or
consolidation was not precomputed, the parties may agree to add the
unpaid amount of principal and accrued charges on the date of
consolidation to the principal with respect to the subsequent loan. If
the previous consumer loan, refinancing, or consolidation was
precomputed, the parties may agree to refinance the unpaid balance
pursuant to the provisions on refinancing (24-4.5-3-205) and to
consolidate the principal resulting from the refinancing by adding it
to the principal with respect to the subsequent loan. In either case the
lender may contract for and receive a loan finance charge based on
the aggregate principal resulting from the consolidation at a rate not
in excess of that permitted by the provisions on loan finance charge
for consumer loans (24-4.5-3-201) or the provisions on loan finance
charge for supervised loans (24-4.5-3-508), whichever is appropriate.
(2) The parties may agree to consolidate the unpaid balance of a
consumer loan with the unpaid balance of a consumer credit sale.
The parties may agree to refinance the previous unpaid balance
pursuant to the provisions on refinancing sales (24-4.5-2-205) or the
provisions on refinancing loans (24-4.5-3-205), whichever is
appropriate, and to consolidate the amount financed resulting from
the refinancing or the principal resulting from the refinancing by
adding it to the amount financed or principal with respect to the
subsequent sale or loan. The aggregate amount resulting from the
consolidation shall be deemed principal, and the creditor may
contract for and receive a loan finance charge based on the principal
at a rate not in excess of that permitted by the provisions on loan
finance charge for consumer loans (24-4.5-3-201) or the provisions
on loan finance charge for supervised loans (24-4.5-3-508),
whichever is appropriate.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-207
Conversion to revolving loan account
Sec. 207. Conversion to Revolving Loan Account. _ The parties
may agree to add to a revolving loan account the unpaid balance of
a consumer loan, not made pursuant to a revolving loan account, or
a refinancing, or consolidation thereof, or the unpaid balance of a
consumer credit sale, refinancing or consolidation, for the purpose
of this section.
(1) the unpaid balance of a consumer loan, refinancing, or
consolidation is an amount equal to the principal determined
according to the provisions on refinancing (24-4.5-3-205); and
(2) the unpaid balance of a consumer credit sale, refinancing, or
consolidation is an amount equal to the amount financed determined
according to the provisions on refinancing (24-4.5-2-205).
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-208
Advances to perform covenants of debtor
Sec. 208. Advances to Perform Covenants of Debtor. _ (1) If the
agreement with respect to a consumer loan, refinancing, or
consolidation contains covenants by the debtor to perform certain
duties pertaining to insuring or preserving collateral and if the lender
pursuant to the agreement pays for performance of the duties on
behalf of the debtor, the lender may add the amounts paid to the debt.
Within a reasonable time after advancing any sums, he shall state to
the debtor in writing the amount of the sums advanced, any charges
with respect to this amount, and any revised payment schedule and,
if the duties of the debtor performed by the lender pertain to
insurance, a brief description of the insurance paid for by the lender
including the type and amount of coverages. No further information
need be given.
(2) A loan finance charge may be made for sums advanced
pursuant to subsection (1) at a rate not exceeding the rate stated to
the debtor pursuant to the provisions on disclosure (Part 3) with
respect to the loan, refinancing, or consolidation, except that with
respect to a revolving loan account the amount of the advance may
be added to the unpaid balance of the debt and the lender may make
a loan finance charge not exceeding that permitted by the provisions
on loan finance charge for consumer loans (24-4.5-3-201) or for
supervised loans (24-4.5-3-508), whichever is appropriate.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-209
Right to prepay; payoff amount; liability for failure to provide;
short sale; acknowledgment of offer; acceptance or rejection;
acceptance of payment; liability for failure to respond
Sec. 209. Right to Prepay - (1) Subject to the provisions on rebate
upon prepayment (IC 24-4.5-3-210), the debtor may prepay in full
the unpaid balance of a consumer loan, refinancing, or consolidation
at any time without penalty. With respect to a consumer loan that is
primarily secured by an interest in land, a lender may contract for a
penalty for prepayment of the loan in full, not to exceed two percent
(2%) of any amount prepaid within sixty (60) days of the date of the
prepayment in full, after deducting all refunds and rebates as of the
date of the prepayment. However, the penalty may not be imposed:
(a) if the loan is refinanced or consolidated with the same
creditor;
(b) for prepayment by proceeds of any insurance or acceleration
after default; or
(c) after three (3) years from the contract date.
(2) At the time of prepayment of a consumer loan not subject to
the provisions of rebate upon prepayment (IC 24-4.5-3-210), the total
finance charge, including the prepaid finance charge but excluding
the loan origination fee allowed under IC 24-4.5-3-201, may not
exceed the maximum charge allowed under this chapter for the
period the loan was in effect. For the purposes of determining
compliance with this subsection, the total finance charge does not
include the following:
(a) The loan origination fee allowed under IC 24-4.5-3-201.
(b) The debtor paid mortgage broker fee, if any, paid to a person
who does not control, is not controlled by, or is not under
common control with, the creditor holding the loan at the time
a consumer loan is prepaid.
(3) The creditor or mortgage servicer shall provide an accurate
payoff of the consumer loan to the debtor within ten (10) calendar
days after the creditor or mortgage servicer receives the debtor's
written request for the accurate consumer loan payoff amount. A
creditor or mortgage servicer who fails to provide the accurate
consumer loan payoff amount is liable for:
(a) one hundred dollars ($100) if an accurate consumer loan
payoff amount is not provided by the creditor or mortgage
servicer within ten (10) calendar days after the creditor or
mortgage servicer receives the debtor's first written request; and
(b) the greater of:
(i) one hundred dollars ($100); or
(ii) the loan finance charge that accrues on the loan from the
date the creditor or mortgage servicer receives the first
written request until the date on which the accurate
consumer loan payoff amount is provided;
if an accurate consumer loan payoff amount is not provided by
the creditor or mortgage servicer within ten (10) calendar days
after the creditor or mortgage servicer receives the debtor's
second written request, and the creditor or mortgage servicer
failed to comply with subdivision (a).
A liability under this subsection is an excess charge under
IC 24-4.5-5-202.
(4) As used in this subsection, "mortgage transaction" means a
consumer credit loan in which a mortgage, deed of trust, or a land
contract that constitutes a lien is created or retained against land
upon which there is a dwelling that is or will be used by the debtor
primarily for personal, family, or household purposes. This
subsection applies to a mortgage transaction with respect to which
any installment or minimum payment due is delinquent for at least
sixty (60) days. The creditor, servicer, or the creditor's agent shall
acknowledge a written offer made in connection with a proposed
short sale not later than ten (10) business days after the date of the
offer if the offer complies with the requirements for a qualified
written request set forth in 12 U.S.C. 2605(e)(1)(B). The creditor,
servicer, or creditor's agent is required to acknowledge a written
offer made in connection with a proposed short sale from a third
party acting on behalf of the debtor only if the debtor has provided
written authorization for the creditor, servicer, or creditor's agent to
do so. Not later than thirty (30) business days after receipt of an offer
under this subsection, the creditor, servicer, or creditor's agent shall
respond to the offer with an acceptance or a rejection of the offer.
Payment accepted by a creditor, servicer, or creditor's agent in
connection with a short sale constitutes payment in full satisfaction
of the mortgage transaction unless the creditor, servicer, or creditor's
agent obtains:
(a) the following statement: "The debtor remains liable for any
amount still owed under the mortgage transaction."; or
(b) a statement substantially similar to the statement set forth in
subdivision (a);
acknowledged by the initials or signature of the debtor, on or before
the date on which the short sale payment is accepted. As used in this
subsection, "short sale" means a transaction in which the property
that is the subject of a mortgage transaction is sold for an amount
that is less than the amount of the debtor's outstanding obligation
under the mortgage transaction. A creditor or mortgage servicer that
fails to respond to an offer within the time prescribed by this
subsection is liable in accordance with 12 U.S.C. 2605(f) in any
action brought under that section.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by P.L.14-1992,
SEC.29; P.L.122-1994, SEC.21; P.L.23-2000, SEC.6; P.L.159-2001,
SEC.1; P.L.145-2008, SEC.27; P.L.35-2010, SEC.49.
IC 24-4.5-3-210
Rebate upon prepayment
Sec. 210. Rebate upon Prepayment. _ (1) Except as provided in
subsection (2), upon prepayment in full of the unpaid balance of a
precomputed consumer loan, refinancing, or consolidation, an
amount not less than the unearned portion of the loan finance charge
calculated according to this section shall be rebated to the debtor. If
the rebate otherwise required is less than one dollar ($1), no rebate
need be made.
(2) Upon prepayment in full of a consumer loan, refinancing, or
consolidation, other than one (1) under a revolving loan account, if
the loan finance charge earned is less than any permitted minimum
loan finance charge (IC 24-4.5-3-201(6) or IC 24-4.5-3-508(7))
contracted for, whether or not the consumer loan, refinancing, or
consolidation is precomputed, the lender may collect or retain the
minimum loan finance charge, as if earned, not exceeding the loan
finance charge contracted for.
(3) The unearned portion of the loan finance charge is a fraction
of the loan finance charge of which the numerator is the sum of the
periodic balances scheduled to follow the computational period in
which prepayment occurs, and the denominator is the sum of all
periodic balances under either the loan agreement or, if the balance
owing resulted from a refinancing (IC 24-4.5-3-205) or a
consolidation (IC 24-4.5-3-206), under the refinancing agreement or
consolidation agreement.
(4) In this section:
(a) "periodic balance" means the amount scheduled to be
outstanding on the last day of a computational period before
deducting the payment, if any, scheduled to be made on that
day;
(b) "computation period" means one (1) month if one-half (1/2)
or more of the intervals between scheduled payments under the
agreement is one (1) month or more, and otherwise means one
(1) week;
(c) the "interval" to the due date of the first scheduled
installment or the final scheduled payment date is measured
from the date of a loan, refinancing, or consolidation, and
includes either the first or last day of the interval; and
(d) if the interval to the due date of the first scheduled
installment does not exceed one (1) month by more than fifteen
(15) days when the computational period is one (1) month, or
eleven (11) days when the computational period is one (1)
week, the interval shall be considered as one (1) computational
period.
(5) This subsection applies only if the schedule of payments is not
regular.
(a) If the computational period is one (1) month and:
(i) if the number of days in the interval to the due date of the
first scheduled installment is less than one (1) month by
more than five (5) days, or more than one (1) month by more
than five (5) but not more than fifteen (15) days, the
unearned loan finance charge shall be increased by an
adjustment for each day by which the interval is less than
one (1) month and, at the option of the lender, may be
reduced by an adjustment for each day by which the interval
is more than one (1) month; the adjustment for each day
shall be one-thirtieth (1/30) of that part of the loan finance
charge earned in the computational period prior to the due
date of the first scheduled installment assuming that period
to be one (1) month; and
(ii) if the interval to the final scheduled payment date is a
number of computational periods plus an additional number
of days less than a full month, the additional number of days
shall be considered a computational period only if sixteen
(16) days or more. This subparagraph applies whether or not
subparagraph (i) applies.
(b) Notwithstanding paragraph (a), if the computational period
is one (1) month, the number of days in the interval to the due
date of the first installment exceeds one (1) month by not more
than fifteen (15) days, and the schedule of payments is
otherwise regular, the lender, at the lender's option, may
exclude the extra days and the charge for the extra days in
computing the unearned loan finance charge; but if the lender
does so and a rebate is required before the due date of the first
scheduled installment, the lender shall compute the earned
charge for each elapsed day as one-thirtieth (1/30) of the
amount the earned charge would have been if the first interval
had been one (1) month.
(c) If the computational period is one (1) week and:
(i) if the number of days in the interval to the due date of the
first scheduled installment is less than five (5) days, or more
than nine (9) days, but not more than eleven (11) days, the
unearned loan finance charge shall be increased by an
adjustment for each day by which the interval is less than
seven (7) days and, at the option of the lender, may be
reduced by an adjustment for each day by which the interval
is more than seven (7) days; the adjustment for each day
shall be one-seventh (1/7) of that part of the loan finance
charge earned in the computational period prior to the due
date of the first scheduled installment, assuming that period
to be one (1) week; and
(ii) if the interval to the final scheduled payment date is a
number of computational periods plus an additional number
of days less than a full week, the additional number of days
shall be considered a computational period only if five (5)
days or more. This subparagraph applies whether or not
subparagraph (i) applies.
(6) If a deferral (IC 24-4.5-3-204) has been agreed to, the
unearned portion of the loan finance charge shall be computed
without regard to the deferral. The amount of deferral charge earned
at the date of prepayment shall also be calculated. If the deferral
charge earned is less than the deferral charge paid, the difference
shall be added to the unearned portion of the loan finance charge. If
any part of a deferral charge has been earned but has not been paid,
that part shall be subtracted from the unearned portion of the loan
finance charge or shall be added to the unpaid balance.
(7) This section does not preclude the collection or retention by
the lender of delinquency charges (IC 24-4.5-3-203, repealed in
1994).
(8) If the maturity is accelerated for any reason and judgment is
obtained, the debtor is entitled to the same rebate as if payment had
been made on the date judgment is entered.
(9) Upon prepayment in full of a consumer loan by the proceeds
of consumer credit insurance (IC 24-4.5-4-103), the debtor or the
debtor's estate shall pay the same loan finance charge or receive the
same rebate as though the debtor had prepaid the agreement on the
date the proceeds of the insurance are paid to the lender, but no later
than ten (10) business days after satisfactory proof of loss is
furnished to the lender. This subsection applies whether or not the
loan is precomputed.
(10) Upon prepayment in full of a transaction with a term of more
than sixty-one (61) months, the unearned loan finance charge shall
be computed by applying the disclosed annual percentage rate that
would yield the loan finance charge originally contracted for to the
unpaid balances of the amount financed for the full computational
periods following the prepayment, as originally scheduled or as
deferred.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by P.L.14-1992,
SEC.30; P.L.122-1994, SEC.22; P.L.2-1995, SEC.92; P.L.176-1996,
SEC.6.
(Part 3. Disclosure and Advertising)
IC 24-4.5-3-301
Disclosures required by Federal Consumer Credit Protection Act
Sec. 301. (1) For the purposes of this section, "consumer loan"
includes a loan that is a first lien mortgage transaction if the loan is
otherwise a consumer loan (IC 24-4.5-1-301.5(9)).
(2) The lender shall disclose to the debtor to whom credit is
extended with respect to a consumer loan the information required
by the Federal Consumer Credit Protection Act.
(3) For purposes of subsection (2), disclosures shall not be
required on a consumer loan if the transaction is exempt from the
Federal Consumer Credit Protection Act.
(Formerly: Acts 1971, P.L.366, SEC.4; Acts 1975, P.L.267, SEC.1.)
As amended by Acts 1981, P.L.218, SEC.6; Acts 1981, P.L.217,
SEC.2; P.L.247-1983, SEC.18; P.L.45-1995, SEC.11; P.L.35-2010,
SEC.50.
IC 24-4.5-3-302
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-303
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-304
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-305
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-306
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-307
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-308
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-309
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-310
Repealed
(Repealed by P.L.247-1983, SEC.26.)
IC 24-4.5-3-311
Repealed
(Repealed by P.L.247-1983, SEC.26.)
(Part 4. Limitations on Agreements and Practices)
IC 24-4.5-3-401
Scope
Sec. 401. Scope _ This Part applies to consumer loans.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-402
Balloon payments; compliance with Alternative Mortgage
Transaction Parity Act
Sec. 402. (1) This section does not apply to a first lien mortgage
transaction.
(2) Except as provided in IC 24-9-4-3 with respect to a high cost
home loan (as defined in IC 24-9-2-8), with respect to a consumer
loan, other than one pursuant to a revolving loan account or one on
which only loan finance charges are payable prior to the time that the
final scheduled payment is due, if any scheduled payment is more
than twice as large as the average of earlier scheduled payments, the
debtor has the right to refinance the amount of that payment at the
time it is due without penalty. The terms of the refinancing shall be
no less favorable to the debtor than the terms of the original loan.
This section does not apply to the extent that the payment schedule
is adjusted to the seasonal or irregular income of the debtor.
(3) For the purposes of this section, .terms of the refinancing.
means:
(a) in the case of a fixed-rate consumer loan, the individual
payment amounts, the charges as a result of default by the
debtor, and the rate of the loan finance charge; and
(b) in the case of a variable rate consumer loan, the method
used to determine the individual payment amounts, the charges
as a result of default by the debtor, the method used to
determine the rate of the loan finance charge, the circumstances
under which the rate of the loan finance charge may increase,
and any limitations on the increase in the rate of the loan
finance charge.
(4) If a consumer loan is made under the authority of the
Alternative Mortgage Transaction Parity Act (12 U.S.C. 3802 et
seq.), the note evidencing the mortgage must contain a reference to
the applicable federal law.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by
P.L.247-1983, SEC.19; P.L.213-2007, SEC.9; P.L.217-2007, SEC.8;
P.L.90-2008, SEC.8.
IC 24-4.5-3-403
No assignment of earnings
Sec. 403. No Assignment of Earnings _ (1) A lender may not
take an assignment of earnings of the debtor for payment or as
security for payment of a debt arising out of a consumer loan or
otherwise. An assignment of earnings in violation of this section is
unenforceable by the assignee of the earnings and revocable by the
debtor. This section does not prohibit an employee from authorizing
deductions from his earnings if the authorization is revocable and is
otherwise permitted by law.
(2) A sale of unpaid earnings made in consideration of the
payment of money to or for the account of the seller of the earnings
is deemed to be a loan to him secured by an assignment of earnings.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-404
Attorney's fees
Sec. 404. With respect to a consumer loan the agreement may
provide for the payment by the debtor of reasonable attorney's fees
after default and referral to an attorney not a salaried employee of the
lender. A provision in violation of this section is unenforceable.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by
P.L.152-1986, SEC.64; P.L.14-1992, SEC.31.
IC 24-4.5-3-405
Limitation on default charges
Sec. 405. Limitation on Default Charges _ Except for reasonable
expenses incurred in realizing on a security interest, the agreement
with respect to a consumer loan may not provide for charges as a
result of default by the debtor other than those authorized by this
Article. A provision in violation of this section is unenforceable.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-406
Notice of assignment
Sec. 406. Notice of Assignment _ The debtor is authorized to
pay the original lender until he receives notification of assignment of
rights to payment pursuant to a consumer loan and that payment is to
be made to the assignee. A notification which does not reasonably
identify the rights assigned is ineffective. If requested by the debtor,
the assignee must seasonably furnish reasonable proof that the
assignment has been made and unless he does so the debtor may pay
the original lender.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-407
Authorization to confess judgment prohibited
Sec. 407. Authorization to Confess Judgment Prohibited _ A
debtor may not authorize any person to confess judgment on a claim
arising out of a consumer loan. An authorization in violation of this
section is void.
(Formerly: Acts 1971, P.L.366, SEC.4.)
IC 24-4.5-3-408
Time for crediting payments
Sec. 408. (1) This section also applies to revolving loan accounts.
(2) Except as provided in subsection (3) a creditor shall credit a
payment to a consumer's account as of the date of receipt, except
when a delay in crediting does not result in a finance charge or other
charge, including a late charge. A delay in posting does not violate
this section so long as the payment is credited as of the date of
receipt.
(3) If a creditor specifies requirements for the consumer to follow
in making payments of the contract, payment coupon book, payment
coupon or statement, or periodic statement, but accepts a payment
that does not conform to the requirements, the creditor shall credit
the payment within two (2) days of receipt of the payment.
(4) If a creditor fails to credit a payment as required by this
section in time to avoid the imposition of a finance or other charge,
including a delinquency charge, the creditor shall adjust the
consumer's account so that the charges imposed are credited to the
consumer's account during the next payment period.
As added by P.L.163-1999, SEC.2.
(Part 5. Regulated and Supervised Loans)
IC 24-4.5-3-501
Definitions; "supervised loan"; "supervised lender"
Sec. 501. Definitions:
(1) "Supervised loan" means a consumer loan in which the rate of
the loan finance charge exceeds twenty-one percent (21%) per year
as determined according to the provisions on loan finance charge for
consumer loans (IC 24-4.5-3-201).
(2) "Supervised lender" means a person authorized to make or
take assignments of supervised loans.
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by Acts 1982,
P.L.150, SEC.4; P.L.122-1994, SEC.23.
IC 24-4.5-3-502
Authority to make consumer loans, take assignment of loans, or
undertake collection activities; license required for certain
persons; separate licenses not required for branches
Sec. 502. (1) A person that is a:
(a) depository institution;
(b) subsidiary that is owned and controlled by a depository
institution; or
(c) credit union service organization;
may engage in the making of consumer loans that are not mortgage
transactions without obtaining a license under this article.
(2) A collection agency licensed under IC 25-11-1 may engage in:
(a) taking assignments of consumer loans in Indiana; and
(b) undertaking direct collection of payments from or
enforcement of rights in Indiana against debtors arising from
consumer loans;
without obtaining a license under this article.
(3) A person that does not qualify under subsection (1) or (2) shall
acquire and retain a license under this article in order to regularly
engage in Indiana in the following actions with respect to consumer
loans that are not mortgage transactions:
(a) The making of consumer loans.
(b) Taking assignments of consumer loans.
(c) Undertaking direct collection of payments from or
enforcement of rights against debtors arising from consumer
loans.
(4) A separate license under this article is required for each legal
entity that engages in Indiana in any activity described in subsection
(3). However, a separate license under this article is not required for
each branch of a legal entity licensed under this article to perform an
activity described in subsection (3).
(Formerly: Acts 1971, P.L.366, SEC.4.) As amended by P.L.14-1992,
SEC.32; P.L.122-1994, SEC.24; P.L.176-1996, SEC.7; P.L.23-2000,
SEC.7; P.L.10-2006, SEC.6 and P.L.57-2006, SEC.6; P.L.35-2010,
SEC.51.
IC 24-4.5-3-502.1
Engaging as a creditor in subordinate lien mortgage transactions;
registration with NMLSR; licensed mortgage loan originators;
applications for licensure; director's authority to contract with
NMLSR
Sec. 502.1. (1) Unless a person:
(a) is a depository institution;
(b) is a subsidiary that is owned and controlled by a depository
institution and regulated by a federal banking agency;
(c) is an institution regulated by the Farm Credit
Administration; or
(d) has first obtained, and subsequently retains, a license from
the department under this article;
the person shall not regularly engage in Indiana as a creditor in
subordinate lien mortgage transactions, take assignments in Indiana
of subordinate lien mortgage transactions, or undertake in the direct
collection of payments from or enforcement of rights against debtors
in Indiana arising from subordinate lien mortgage transactions.
(2) Each:
(a) creditor licensed by the department under this article; and
(b) entity exempt from licensing under this article that employs
a licensed mortgage loan originator;
shall register with and maintain a valid unique identifier issued by
the NMLSR. Each licensed mortgage loan originator must be
employed by, and associated with, a licensed creditor or an exempt
entity described under subdivision (b) in the NMLSR in order to
originate loans.
(3) Applicants for a license must apply for a license under this
chapter in a form prescribed by the director. Each form:
(a) must contain content as set forth by rule, instruction, or
procedure of the director; and
(b) may be changed or updated as necessary by the director to
carry out the purposes of this article.
(4) To fulfill the purposes of this article, the director may
establish relationships or contracts with the NMLSR or other entities
designated by the NMLSR to:
(a) collect and maintain records; and
(b) process transaction fees or other fees;
related to licensees or other persons subject to this article.
(5) For the purpose of participating in the NMLSR, the director
or the department may:
(a) waive or modify, in whole or in part, by rule, regulation, or
order, any or all of the requirements of this article; and
(b) establish new requirements as reasonably necessary to
participate in the NMLSR.
As added by P.L.35-2010, SEC.52.
IC 24-4.5-3-503
Applications for licenses; issuance; evidence of compliance; use of
NMLSR; denial of application; right to hearing; fees
Sec. 503. (1) The department shall receive and act on all
applications for licenses to make consumer loans. Applications must
be as prescribed by the director of the department of financial
institutions.
(2) A license shall not be issued unless the department finds that
the professional training and experience, financial responsibility,
character, and fitness of:
(a) the applicant and any significant affiliate of the applicant;
(b) each executive officer, director, or manager of the applicant,
or any other individual having a similar status or performing a
similar function for the applicant; and
(c) if known, each person directly or indirectly owning of
record or owning beneficially at least ten percent (10%) of the
outstanding shares of any class of equity security of the
applicant;
are such as to warrant belief that the business will be operated
honestly and fairly within the purposes of this article.
(3) The director is entitled to request evidence of compliance with
this section at:
(a) the time of application;
(b) the time of renewal of a license; or
(c) any other time considered necessary by the director.
(4) Evidence of compliance with this section concerning a person
licensed under section 502 of this chapter may include and under
section 502.1 of this chapter must include:
(a) criminal background checks as described in section 503.1 of
this chapter, including a national criminal history background
check (as defined in IC 10-13-3-12) by the Federal Bureau of
Investigation, for any individual described in subsection (2);
(b) credit histories as described in section 503.2 of this chapter;
(c) surety bond requirements as described in section 503.3 of
this chapter;
(d) a review of licensure actions in Indiana and other states; and
(e) other background checks considered necessary by the
director.
(5) For purposes of this section and in order to reduce the points
of contact that the director may have to maintain under this section,
the director may use the NMLSR as a channeling