AN ACT to amend the Indiana Code concerning financial institutions.
charge or loan finance charge, as applicable, or are payable by
written agreement in more than four (4) installments (not
including a down payment); and
(b) to which the obligation is initially payable, either on the
face of the note or contract, or by agreement if there is not a
note or contract.
The term does not include a person described in subsection
(34)(a) in a tablefunded transaction. A creditor may be an
individual, a limited liability company, a sole proprietorship, a
partnership, a trust, a joint venture, a corporation, an
unincorporated organization, or other form of entity, however
organized.
(8) "Department" refers to the members of the department of
financial institutions.
(9) "Depository institution" has the meaning set forth in the
Federal Deposit Insurance Act (12 U.S.C. 1813(c)) and includes
any credit union.
(10) "Director" refers to the director of the department of financial
institutions or the director's designee.
(11) "Dwelling" means a residential structure that contains one
(1) to four (4) units, regardless of whether the structure is
attached to real property. The term includes an individual:
(a) condominium unit;
(b) cooperative unit;
(c) mobile home; or
(d) trailer;
that is used as a residence.
(12) "Employee" means an individual who is paid wages or other
compensation by an employer required under federal income tax
law to file Form W-2 on behalf of the individual.
(13) "Federal banking agencies" means 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, and the Federal Deposit Insurance
Corporation.
(14) "First lien mortgage transaction" means:
(a) a consumer loan; or
(b) a consumer credit sale;
that is or will be used by the debtor primarily for personal, family,
or household purposes and that is secured by a mortgage or a land
contract (or another consensual security interest equivalent to a
mortgage or a land contract) that constitutes a first lien on a
dwelling or on residential real estate upon which a dwelling is
constructed or intended to be constructed.
(15) "Immediate family member" means a spouse, child, sibling,
parent, grandparent, or grandchild. The term includes stepparents,
stepchildren, stepsiblings, and adoptive relationships.
(16) "Individual" means a natural person.
(17) "Licensee" means a person licensed as a creditor under this
article.
(18) "Loan" includes:
(a) the creation of debt by:
(i) the creditor's payment of or agreement to pay money to
the debtor or to a third party for the account of the debtor; or
(ii) the extension of credit by a person who engages as a
seller in credit transactions primarily secured by an interest
in land;
(b) the creation of debt by a credit to an account with the
creditor upon which the debtor is entitled to draw
immediately; and
(c) the forbearance of debt arising from a loan.
(19) "Loan brokerage business" means any activity in which a
person, in return for any consideration from any source, procures,
attempts to procure, or assists in procuring, a mortgage
transaction from a third party or any other person, whether or not
the person seeking the mortgage transaction actually obtains the
mortgage transaction.
(20) "Loan processor or underwriter" means an individual who
performs clerical or support duties as an employee at the direction
of, and subject to the supervision and instruction of, a person
licensed or exempt from licensing under this article. For purposes
of this subsection, the term "clerical or support duties" may
include, after the receipt of an application, the following:
(a) The receipt, collection, distribution, and analysis of
information common for the processing or underwriting of a
mortgage transaction.
(b) The communication with a consumer to obtain the
information necessary for the processing or underwriting of a
loan, to the extent that the communication does not include:
(i) offering or negotiating loan rates or terms; or
(ii) counseling consumers about mortgage transaction rates
or terms.
(21) "Mortgage loan originator" means an individual who, for
compensation or gain, or in the expectation of compensation or
gain, regularly engages in taking a mortgage transaction
application or in offering or negotiating the terms of a mortgage
transaction that either is made under this article or under
IC 24-4.5 or is made by an employee of a person licensed or
exempt from licensing under this article or under IC 24-4.5, while
the employee is engaging in the loan brokerage business. The
term does not include the following:
(a) An individual engaged solely as a loan processor or
underwriter as long as the individual works exclusively as an
employee of a person licensed or exempt from licensing under
this article.
(b) Unless the person or entity is compensated by:
(i) a creditor;
(ii) a loan broker;
(iii) another mortgage loan originator; or
(iv) any agent of a creditor, a loan broker, or another
mortgage loan originator described in items (i) through (iii);
a person or entity that performs only real estate brokerage
activities and is licensed or registered in accordance with
applicable state law.
(c) A person solely involved in extensions of credit relating to
timeshare plans (as defined in 11 U.S.C. 101(53D)).
(22) "Mortgage servicer" means the last person to whom a
mortgagor or the mortgagor's successor in interest has been
instructed by a mortgagee to send payments on a loan secured by
a mortgage.
(23) "Mortgage transaction" means:
(a) a consumer loan; or
(b) a consumer credit sale;
that is or will be used by the debtor primarily for personal, family,
or household purposes and that is secured by a mortgage or a land
contract (or another consensual security interest equivalent to a
mortgage or a land contract) on a dwelling or on residential real
estate upon which a dwelling is constructed or intended to be
constructed.
(24) "Nationwide Mortgage Licensing System and Registry" or
"NMLSR" means a mortgage licensing system developed and
maintained by the Conference of State Bank Supervisors and the
American Association of Residential Mortgage Regulators for the
licensing and registration of creditors and mortgage loan
originators.
(25) "Nontraditional mortgage product" means any mortgage
product other than a thirty (30) year fixed rate mortgage.
(26) "Organization" means a corporation, a government or
government subdivision, an agency, a trust, an estate, a
partnership, a limited liability company, a cooperative, an
association, a joint venture, an unincorporated organization, or
any other entity, however organized.
(27) "Payable in installments", with respect to a debt or an
obligation, means that payment is required or permitted by written
agreement to be made in more than four (4) installments not
including a down payment.
(28) "Person" includes an individual or an organization.
(29) "Principal" of a mortgage transaction means the total of:
(a) the net amount paid to, receivable by, or paid or payable
for the account of the debtor; and
(b) to the extent that payment is deferred, amounts actually
paid or to be paid by the creditor for registration, certificate of
title, or license fees if not included in clause (a).
(30) "Real estate brokerage activity" means any activity that
involves offering or providing real estate brokerage services to the
public, including the following:
(a) Acting as a real estate agent or real estate broker for a
buyer, seller, lessor, or lessee of real property.
(b) Bringing together parties interested in the sale, purchase,
lease, rental, or exchange of real property.
(c) Negotiating, on behalf of any party, any part of a contract
relating to the sale, purchase, lease, rental, or exchange of real
property (other than in connection with providing financing
with respect to the sale, purchase, lease, rental, or exchange of
real property).
(d) Engaging in any activity for which a person engaged in the
activity is required to be registered or licensed as a real estate
agent or real estate broker under any applicable law.
(e) Offering to engage in any activity, or act in any capacity,
described in this subsection.
(31) "Registered mortgage loan originator" means any individual
who:
(a) meets the definition of mortgage loan originator and is an
employee of:
(i) a depository institution;
(ii) a subsidiary that is owned and controlled by a depository
institution and regulated by a federal banking agency; or
(iii) an institution regulated by the Farm Credit
Administration; and
(b) is registered with, and maintains a unique identifier
through, the NMLSR.
(32) "Residential real estate" means any real property that is
located in Indiana and on which there is located or intended to be
constructed a dwelling.
(33) "Revolving first lien mortgage transaction" means a first lien
mortgage transaction in which:
(a) the creditor permits the debtor to obtain advances from
time to time;
(b) the unpaid balances of principal, finance charges, and other
appropriate charges are debited to an account; and
(c) the debtor has the privilege of paying the balances in
installments.
(34) "Tablefunded" means a transaction in which:
(a) a person closes a first lien mortgage transaction in the
person's own name as a mortgagee with funds provided by one
(1) or more other persons; and
(b) the transaction is assigned, not later than one (1) business
day after the funding of the transaction, to the mortgage
creditor providing the funding.
(35) "Unique identifier" means a number or other identifier
assigned by protocols established by the NMLSR.
(36) "Land contract" means a contract for the sale of real estate in
which the seller of the real estate retains legal title to the real
estate until the total contract price is paid by the buyer.
(37) "Bona fide nonprofit organization" means an organization
that the does the following, as determined by the director, under
criteria established by the director:
(a) Maintains tax exempt status under Section 501(c)(3) of the
Internal Revenue Code.
(b) Promotes affordable housing or provides home ownership
education or similar services.
(c) Conducts the organization's activities in a manner that
serves public or charitable purposes.
(d) Receives funding and revenue and charges fees in a
manner that does not encourage the organization or the
organization's employees to act other than in the best interests
of the organization's clients.
(e) Compensates the organization's employees in a manner that
does not encourage employees to act other than in the best
interests of the organization's clients.
individuals in Indiana; or
(ii) the person exempt from licensing under this article
ceases to employ a licensed mortgage loan originator or to
offer financial services to individuals in Indiana, whichever
is later;
as applicable;
(e) be payable to the department for the benefit of:
(i) the state; and
(ii) individuals who reside in Indiana when they agree to
receive financial services from the creditor or the person
exempt from licensing under this article, as applicable;
(f) be issued by a bonding, surety, or insurance company
authorized to do business in Indiana and rated at least "A-"
by at least one (1) nationally recognized investment rating
service; and
(g) have payment conditioned upon:
(i) the creditor's or any of the creditor's licensed mortgage
loan originators'; or
(ii) the exempt person's or any of the exempt person's
licensed mortgage loan originators';
noncompliance with or violation of this chapter, 750 IAC 9, or
other federal or state laws or regulations applicable to
mortgage lending.
(3) The director may adopt rules or guidance documents with
respect to the requirements for a surety bond as necessary to
accomplish the purposes of this article.
(4) The penal sum of the surety bond shall be maintained in an
amount that reflects the dollar amount of mortgage transactions
originated as determined by the director. If the principal amount of
a surety bond required under this section is reduced by payment
of a claim or judgment, the creditor or exempt person for whom
the bond is issued shall immediately notify the director of the
reduction and, not later than thirty (30) days after notice by the
director, file a new or an additional surety bond in an amount set
by the director. The amount of the new or additional bond set by
the director must be at least the amount of the bond before
payment of the claim or judgment.
(5) If an action is commenced on the surety bond of a creditor or an
entity exempt from licensing under this article as described in
subsection (1), the director may require the filing of a new bond.
(6) A creditor or an entity exempt from licensing under this article
as described in subsection (1) shall file a new surety bond immediately
upon recovery of any action on the surety bond required under this
section.
(5) If for any reason a surety terminates a bond issued under
this section, the creditor or the exempt person shall immediately
notify the department and file a new surety bond in an amount
determined by the director.
(6) Cancellation of a surety bond issued under this section does
not affect any liability incurred or accrued during the period when
the surety bond was in effect.
(7) The director may obtain satisfaction from a surety bond
issued under this section if the director incurs expenses, issues a
final order, or recovers a final judgment under this chapter.
(8) Notices required under this section must be in writing and
delivered by certified mail, return receipt requested and postage
prepaid, or by overnight delivery using a nationally recognized
carrier.
transaction, but in the case of a revolving first lien mortgage
transaction the two (2) year period is measured from the date of each
entry.
(2) The department's examination and investigatory authority under
this article includes the following:
(a) The authority to require a creditor to refund overcharges
resulting from the creditor's noncompliance with the terms of a
first lien mortgage transaction.
(b) The authority to require a creditor to comply with the penalty
provisions set forth in IC 24-4.4-2-201.
(c) The authority to investigate complaints filed with the
department by debtors.
(3) The department shall be given free access to the records
wherever the records are located. In making any examination or
investigation authorized by this article, the director may control access
to any documents and records of the licensee or person under
examination or investigation. The director may take possession of the
documents and records or place a person in exclusive charge of the
documents and records in the place where the documents are usually
kept. During the period of control, a licensee or person may not remove
or attempt to remove any of the documents and records except under
a court order or with the consent of the director. Unless the director has
reasonable grounds to believe the documents or records of the licensee
or person have been, or are, at risk of being altered or destroyed for
purposes of concealing a violation of this article, the licensee or person
shall have access to the documents or records as necessary to conduct
the licensee's or person's ordinary business affairs. If the person's
records are located outside Indiana, the records shall be made available
to the department at a convenient location within Indiana, or the person
shall pay the reasonable and necessary expenses for the department or
the department's representative to examine the records where they are
maintained. The department may designate comparable officials of the
state in which the records are located to inspect the records on behalf
of the department.
(4) Upon a person's failure without lawful excuse to obey a
subpoena or to give testimony and upon reasonable notice by the
department to all affected persons, the department may apply to any
civil court with jurisdiction for an order compelling compliance.
(5) The department shall not make public:
(a) the name or identity of a person whose acts or conduct the
department investigates under this section; or
(b) the facts discovered in the investigation.
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 to
applicable state and federal laws, rules, regulations, policies, and
guidance; 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 or guidance of the department adopted
pursuant to this article.
(4) A reference to a federal law in this article is a reference to the
law as in effect December 31, 2011. 2012.
(5) This article applies to a transaction if the director determines
that the transaction:
(a) is in substance a disguised consumer credit transaction; or
(b) involves the application of subterfuge for the purpose of
avoiding this article.
A determination by the director under this paragraph must be in writing
and shall be delivered to all parties to the transaction. IC 4-21.5-3
applies to a determination made under this paragraph.
(6) The authority of this article remains in effect, whether a licensee,
an individual, or a person subject to this article acts or claims to act
under any licensing or registration law of this state, or claims to act
without such authority.
(7) A violation of a state or federal law, regulation, or rule
applicable to consumer credit transactions is a violation of this article.
(8) The department may enforce penalty provisions set forth in 15
U.S.C. 1640 for violations of disclosure requirements applicable to
mortgage transactions.
For purposes of this article, the following apply:
(a) A sale or modification of a sale agreement is made in this state
if the buyer's agreement or offer to purchase or to modify is
received by the seller or a person acting on behalf of the seller in
this state.
(b) A lease or modification of a lease agreement is made in this
state if the lessee's agreement or offer to lease or to modify is
received by the lessor or a person acting on behalf of the lessor in
this state.
(c) A loan or modification of a loan agreement is made in this
state if a writing signed by the debtor and evidencing the debt is
received by the lender or a person acting on behalf of the lender
in this state.
(d) Except as provided in subdivision subdivisions (e) and (f), a
sale, lease, or loan transaction occurs in Indiana if a consumer
who is a resident of Indiana enters into a consumer sale, lease, or
loan transaction with a creditor or a person acting on behalf of the
creditor in another state and the creditor or the person acting on
behalf of the creditor has advertised or solicited sales, leases, or
loans in Indiana by any means, including by mail, brochure,
telephone, print, radio, television, the Internet, or electronic
means. However, during the period beginning July 1, 2007, and
ending June 30, 2009, this subdivision does not apply to an
affiliate or a subsidiary of a financial corporation issued a
certificate of authority to operate as an industrial loan and
investment company under IC 28-5 if all of the following apply:
(i) The industrial loan and investment company notifies the
department in writing that an affiliate or a subsidiary of the
industrial loan and investment company engages or plans to
engage in activity involving Indiana residents at an out of state
location. The notification required by this clause must list all
states other than Indiana in which consumer loans may be
made and must describe the nature of the proposed
transactions.
(ii) The industrial loan and investment company provides
written consent allowing the department to consult with and
review information provided by other state regulators, as may
be requested by the department, concerning the activities
identified in clause (i) of any affiliate or subsidiary engaging
in consumer lending to Indiana residents in the states
identified under clause (i).
(iii) The industrial loan and investment company provides
written consent allowing the department to inspect or examine
all out of state locations in which an affiliate or a subsidiary of
the industrial loan and investment company engages in the
activities identified under clause (i) for the purpose of
investigating the affiliate's or subsidiary's consumer lending
practices involving Indiana residents. An inspection or
examination performed by the department under this clause is
subject to the schedule of fees established by the department
under IC 28-11-3-5.
(e) A sale, lease, or loan transaction does not occur in Indiana if
a consumer who is a resident of Indiana enters into a consumer
sale, lease, or loan transaction secured by an interest in land
located outside Indiana.
(f) A sale, lease, or loan transaction does not occur in Indiana
if a consumer who is a resident of Indiana enters into a
consumer sale, lease, or loan transaction at a creditor's place
of business in another state.
For purposes of subdivisions (a) through (c), an offer is received by a
creditor or a person acting on behalf of the creditor in Indiana if the
offer is physically delivered, or otherwise transmitted or
communicated, to a person who has actual or apparent authority to act
for the creditor or the person acting on behalf of the creditor in Indiana,
regardless of whether approval, acceptance, or ratification by any other
agent or representative of the creditor or the person acting on behalf of
the creditor in another state is necessary to give legal consequence to
the consumer credit transaction.
(2) IC 24-4.5-5-101 through IC 24-4.5-5-108 apply to actions or
other proceedings brought in this state to enforce rights arising from
consumer credit sales, consumer leases, or consumer loans, or
extortionate extensions of credit, wherever made.
(3) Except as provided in subsection (2), a sale, lease, loan, or
modification thereof, made in another state to a person who was not a
resident of this state when the sale, lease, loan, or modification was
made is valid and enforceable in this state according to its terms to the
extent that it is valid and enforceable under the laws of the state
applicable to the transaction.
(4) For the purposes of this article, the residence of a buyer, lessee,
or debtor is the address given by the buyer, lessee, or debtor as the
buyer's, lessee's, or debtor's residence in any writing or electronic
communication made by the buyer, lessee, or debtor in connection with
a credit transaction. Until the buyer, lessee, or debtor notifies the
creditor or the person acting on behalf of the creditor of a new or
different address, the given address is presumed to be unchanged.
(5) Notwithstanding other provisions of this section:
(a) except as provided in subsection (2), this article does not apply
if the buyer, lessee, or debtor is not a resident of this state at the
time of a credit transaction and the parties then agree that the law
of the buyer's, lessee's, or debtor's residence applies; and
(b) this article applies if the buyer, lessee, or debtor is a resident
of this state at the time of a credit transaction and the parties then
agree that the law of this state applies.
(6) Except as provided in subsection (5), the following agreements
by a buyer, lessee, or debtor are invalid with respect to consumer credit
sales, consumer leases, consumer loans, or modifications thereof, to
which this article applies:
(a) An agreement that the law of another state shall apply.
(b) An agreement that the buyer, lessee, or debtor consents to the
jurisdiction of another state. and
(c) An agreement that fixes venue.
(7) The following provisions of this article specify the applicable
law governing certain cases:
(a) applicability IC 24-4.5-6-102 (applicability of the provisions
on powers and functions of the department). and
(b) applicability IC 24-4.5-6-201 (applicability of the provisions
on notification and fees).
(8) If a creditor or a person acting on behalf of the creditor has
violated the provisions of this article that apply to the authority to make
consumer loans (IC 24-4.5-3-502), the loan is void and the debtor is not
obligated to pay either the principal or loan finance charge, as set forth
in IC 24-4.5-5-202.
course of dealing or usage of trade or course of performance.
(3) "Agricultural purpose" means a purpose related to the
production, harvest, exhibition, marketing, transportation, processing,
or manufacture of agricultural products by a natural person who
cultivates, plants, propagates, or nurtures the agricultural products.
"Agricultural products" includes agricultural, horticultural, viticultural,
and dairy products, livestock, wildlife, poultry, bees, forest products,
fish and shellfish, and any and all products raised or produced on farms
and any processed or manufactured products thereof.
(4) "Average daily balance" means the sum of each of the daily
balances in a billing cycle divided by the number of days in the billing
cycle, and if the billing cycle is a month, the creditor may elect to treat
the number of days in each billing cycle as thirty (30).
(5) "Closing costs" with respect to a subordinate lien mortgage
transaction includes:
(a) fees or premiums for title examination, title insurance, or
similar purposes, including surveys;
(b) fees for preparation of a deed, settlement statement, or other
documents;
(c) escrows for future payments of taxes and insurance;
(d) fees for notarizing deeds and other documents;
(e) appraisal fees; and
(f) fees for credit reports.
(6) "Conspicuous" refers to a term or clause when it is so written
that a reasonable person against whom it is to operate ought to have
noticed it.
(7) "Consumer credit" means credit offered or extended to a
consumer primarily for a personal, family, or household purpose.
(8) "Consumer credit sale" is a sale of goods, services, or an interest
in land in which:
(a) credit is granted by a person who regularly engages as a seller
in credit transactions of the same kind;
(b) the buyer is a person other than an organization;
(c) the goods, services, or interest in land are purchased primarily
for a personal, family, or household purpose;
(d) either the debt is payable in installments or a credit service
charge is made; and
(e) with respect to a sale of goods or services, either:
(i) the sale amount financed does not exceed fifty
fifty-three thousand dollars ($50,000) ($53,000) or another
amount as adjusted in accordance with the annual
adjustment of the exempt threshold amount specified in
Regulation Z (12 CFR 226.3 or 12 CFR 1026.3(b), as
applicable); or
(ii) the debt is secured by personal property used or expected
to be used as the principal dwelling of the buyer.
Unless the sale is made subject to this article by agreement
(IC 24-4.5-2-601), "consumer credit sale" does not include a sale
in which the seller allows the buyer to purchase goods or services
pursuant to a lender credit card or similar arrangement or except
as provided with respect to disclosure (IC 24-4.5-2-301), debtors'
remedies (IC 24-4.5-5-201), providing payoff amounts
(IC 24-4.5-2-209), and powers and functions of the department
(IC 24-4.5-6) a sale of an interest in land which is a first lien
mortgage transaction.
(9) "Consumer loan" means a loan made by a person regularly
engaged in the business of making loans in which:
(a) the debtor is a person other than an organization;
(b) the debt is primarily for a personal, family, or household
purpose;
(c) either the debt is payable in installments or a loan finance
charge is made; and
(d) either:
(i) the principal loan amount does not exceed fifty fifty-three
thousand dollars ($50,000); ($53,000) or another amount as
adjusted in accordance with the annual adjustment of the
exempt threshold amount specified in Regulation Z (12
CFR 226.3 or 12 CFR 1026.3(b), as applicable); or
(ii) the debt is secured by an interest in land or by personal
property used or expected to be used as the principal dwelling
of the debtor.
Except as described in IC 24-4.5-3-105, the term does not include a
first lien mortgage transaction.
(10) "Credit" means the right granted by a creditor to a debtor to
defer payment of debt or to incur debt and defer its payment.
(11) "Creditor" means a person:
(a) who regularly engages in the extension of consumer credit that
is subject to a credit service charge or loan finance charge, as
applicable, or is payable by written agreement in more than four
(4) installments (not including a down payment); and
(b) to whom the obligation is initially payable, either on the face
of the note or contract, or by agreement when there is not a note
or contract.
(12) "Depository institution" has the meaning set forth in the
Federal Deposit Insurance Act (12 U.S.C. 1813(c)) and includes any
credit union.
(13) "Director" means the director of the department of financial
institutions or the director's designee.
(14) "Dwelling" means a residential structure that contains one (1)
to four (4) units, regardless of whether the structure is attached to real
property. The term includes an individual:
(a) condominium unit;
(b) cooperative unit;
(c) mobile home; or
(d) trailer;
that is used as a residence.
(15) "Earnings" means compensation paid or payable for personal
services, whether denominated as wages, salary, commission, bonus,
or otherwise, and includes periodic payments under a pension or
retirement program.
(16) "Employee" means an individual who is paid wages or other
compensation by an employer required under federal income tax law
to file Form W-2 on behalf of the individual.
(17) "Federal banking agencies" means 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, and the Federal Deposit Insurance Corporation.
(18) "First lien mortgage transaction" means:
(a) a consumer loan; or
(b) a consumer credit sale;
that is or will be used by the debtor primarily for personal, family, or
household purposes and that is secured by a mortgage or a land
contract (or another consensual security interest equivalent to a
mortgage or a land contract) that constitutes a first lien on a dwelling
or on residential real estate upon which a dwelling is constructed or
intended to be constructed.
(19) "Immediate family member" means a spouse, child, sibling,
parent, grandparent, or grandchild. The term includes stepparents,
stepchildren, stepsiblings, and adoptive relationships.
(20) "Individual" means a natural person.
(21) "Lender credit card or similar arrangement" means an
arrangement or loan agreement, other than a seller credit card, pursuant
to which a lender gives a debtor the privilege of using a credit card,
letter of credit, or other credit confirmation or identification in
transactions out of which debt arises:
(a) by the lender's honoring a draft or similar order for the
payment of money drawn or accepted by the debtor;
(b) by the lender's payment or agreement to pay the debtor's
obligations; or
(c) by the lender's purchase from the obligee of the debtor's
obligations.
(22) "Licensee" means a person licensed as a creditor under this
article.
(23) "Loan brokerage business" means any activity in which a
person, in return for any consideration from any source, procures,
attempts to procure, or assists in procuring, a mortgage transaction
from a third party or any other person, whether or not the person
seeking the mortgage transaction actually obtains the mortgage
transaction.
(24) "Loan processor or underwriter" means an individual who
performs clerical or support duties as an employee at the direction of,
and subject to the supervision and instruction of, a person licensed or
exempt from licensing under this article. For purposes of this
subsection, the term "clerical or support duties" may include, after the
receipt of an application, the following:
(a) The receipt, collection, distribution, and analysis of
information common for the processing or underwriting of a
mortgage transaction.
(b) The communication with a consumer to obtain the information
necessary for the processing or underwriting of a loan, to the
extent that the communication does not include:
(i) offering or negotiating loan rates or terms; or
(ii) counseling consumers about mortgage transaction rates or
terms.
An individual engaging solely in loan processor or underwriter
activities shall not represent to the public through advertising or other
means of communicating or providing information, including the use
of business cards, stationery, brochures, signs, rate lists, or other
promotional items, that the individual can or will perform any of the
activities of a mortgage loan originator.
(25) "Mortgage loan originator" means an individual who, for
compensation or gain, or in the expectation of compensation or gain,
regularly engages in taking a mortgage transaction application or in
offering or negotiating the terms of a mortgage transaction that either
is made under this article or under IC 24-4.4 or is made by an employee
of a person licensed or exempt from licensing under this article or
under IC 24-4.4, while the employee is engaging in the loan brokerage
business. The term does not include the following:
payable.
(31) "Organization" means a corporation, a government or
governmental subdivision, an agency, a trust, an estate, a partnership,
a limited liability company, a cooperative, an association, a joint
venture, an unincorporated organization, or any other entity, however
organized.
(32) "Payable in installments" means that payment is required or
permitted by written agreement to be made in more than four (4)
installments not including a down payment.
(33) "Person" includes an individual or an organization.
(34) "Person related to" with respect to an individual means:
(a) the spouse of the individual;
(b) a brother, brother-in-law, sister, or sister-in-law of the
individual;
(c) an ancestor or lineal descendants of the individual or the
individual's spouse; and
(d) any other relative, by blood or marriage, of the individual or
the individual's spouse who shares the same home with the
individual.
(35) "Person related to" with respect to an organization means:
(a) a person directly or indirectly controlling, controlled by, or
under common control with the organization;
(b) a director, an executive officer, or a manager of the
organization or a person performing similar functions with respect
to the organization or to a person related to the organization;
(c) the spouse of a person related to the organization; and
(d) a relative by blood or marriage of a person related to the
organization who shares the same home with the person.
(36) "Presumed" or "presumption" means that the trier of fact must
find the existence of the fact presumed, unless and until evidence is
introduced that would support a finding of its nonexistence.
(37) "Real estate brokerage activity" means any activity that
involves offering or providing real estate brokerage services to the
public, including the following:
(a) Acting as a real estate agent or real estate broker for a buyer,
seller, lessor, or lessee of real property.
(b) Bringing together parties interested in the sale, purchase,
lease, rental, or exchange of real property.
(c) Negotiating, on behalf of any party, any part of a contract
relating to the sale, purchase, lease, rental, or exchange of real
property (other than in connection with providing financing with
respect to the sale, purchase, lease, rental, or exchange of real
property).
(d) Engaging in any activity for which a person is required to be
registered or licensed as a real estate agent or real estate broker
under any applicable law.
(e) Offering to engage in any activity, or act in any capacity,
described in this subsection.
(38) "Registered mortgage loan originator" means any individual
who:
(a) meets the definition of mortgage loan originator and is an
employee of:
(i) a depository institution;
(ii) a subsidiary that is owned and controlled by a depository
institution and regulated by a federal banking agency; or
(iii) an institution regulated by the Farm Credit
Administration; and
(b) is registered with, and maintains a unique identifier through,
the NMLSR.
(39) "Regularly engaged", with respect to a person who extends
consumer credit, refers to a person who:
(a) extended consumer credit:
(i) more than twenty-five (25) times; or
(ii) more than five (5) times for a mortgage transaction secured
by a dwelling;
in the preceding calendar year; or
(b) extends or will extend consumer credit:
(i) more than twenty-five (25) times; or
(ii) more than five (5) times for a mortgage transaction secured
by a dwelling;
in the current calendar year, if the person did not meet the
numerical standards described in subdivision (a) in the preceding
calendar year.
(40) "Residential real estate" means any real property that is located
in Indiana and on which there is located or intended to be constructed
a dwelling.
(41) "Seller credit card" means an arrangement that gives to a buyer
or lessee the privilege of using a credit card, letter of credit, or other
credit confirmation or identification for the purpose of purchasing or
leasing goods or services from that person, a person related to that
person, or from that person and any other person. The term includes a
card that is issued by a person, that is in the name of the seller, and that
can be used by the buyer or lessee only for purchases or leases at
locations of the named seller.
licensed mortgage loan originators';
noncompliance with or violation of this chapter, 750 IAC 9, or
other federal or state laws or regulations applicable to
mortgage lending.
(3) The director may adopt rules or guidance documents with
respect to the requirements for surety bonds as necessary to accomplish
the purposes of this article.
(4) The penal sum of the surety bond shall be maintained in an
amount that reflects the dollar amount of mortgage transactions
originated as determined by the director. If the principal amount of
a surety bond required under this section is reduced by payment
of a claim or judgment, the creditor or exempt person for whom
the bond is issued shall immediately notify the director of the
reduction and, not later than thirty (30) days after notice by the
director, file a new or an additional surety bond in an amount set
by the director. The amount of the new or additional bond set by
the director must be at least the amount of the bond before
payment of the claim or judgment.
(5) If an action is commenced on the surety bond of a creditor or an
entity exempt from licensing under this article as described in
subsection (1), the director may require the filing of a new bond.
(6) A creditor or an entity exempt from licensing under this article
as described in subsection (1) shall file a new surety bond immediately
upon recovery of any action on the surety bond required under this
section.
(5) If for any reason a surety terminates a bond issued under
this section, the creditor or the exempt person shall immediately
notify the department and file a new surety bond in an amount
determined by the director.
(6) Cancellation of a surety bond issued under this section does
not affect any liability incurred or accrued during the period when
the surety bond was in effect.
(7) The director may obtain satisfaction from a surety bond
issued under this section if the director incurs expenses, issues a
final order, or recovers a final judgment under this chapter.
(8) Notices required under this section must be in writing and
delivered by certified mail, return receipt requested and postage
prepaid, or by overnight delivery using a nationally recognized
carrier.
related loan" is a loan in which the following apply:
(a) The loan is made by a person who is not regularly engaged as
a lender in credit transactions of the same kind.
(b) The debtor is a person other than an organization.
(c) The debt is primarily for a personal, family, or household
purpose.
(d) Either the debt is payable in installments or a loan finance
charge is made.
(e) Either:
(i) the principal loan amount does not exceed fifty fifty-three
thousand dollars ($50,000); ($53,000) or another amount as
adjusted in accordance with the annual adjustment of the
exempt threshold amount specified in Regulation Z (12
CFR 226.3 or 12 CFR 1026.3(b), as applicable); or
(ii) the debt is secured by an interest in land or by personal
property used or expected to be used as the principal dwelling
of the debtor.
(2) With respect to a consumer related loan, including one made
pursuant to a revolving loan account, the parties may contract for the
payment by the debtor of a loan finance charge not in excess of that
permitted by the provisions on loan finance charge for consumer loans
other than supervised loans (IC 24-4.5-3-201).
(3) A person engaged in consumer related loans is not required to
comply with:
(a) the licensing requirements set forth in section 503 of this
chapter; or
(b) IC 24-4.5-6-201 through IC 24-4.5-6-203.
witnesses, and compel the attendance of witnesses, including directors,
executive officers, managers, principals, mortgage loan originators,
employees, independent contractors, agents, and customers of the
licensee, individual, or person subject to this article. The department
may also adduce evidence, and require the production of any matter
which is relevant to the investigation. The department shall determine
the sufficiency of the records maintained and whether the person has
made the required information reasonably available. The records
pertaining to any transaction subject to this article shall be retained for
two (2) years after making the final entry relating to the consumer
credit transaction, but in the case of a revolving loan account or
revolving charge account, the two (2) years is measured from the date
of each entry.
(2) The department's examination and investigatory authority under
this article includes the following:
(a) The authority to require a creditor to refund overcharges
resulting from the creditor's noncompliance with the terms of
consumer credit sales, consumer leases, or consumer loans.
(b) The authority to require a creditor to comply with the
prepayment penalty provisions set forth in IC 24-4.5-3-209.
(c) The authority to investigate complaints filed with the
department by debtors.
(3) If the department:
(a) investigates; or
(b) examines the books and records of;
a person that is subject to IC 24-4.5-6-201, IC 24-4.5-6-202, and
IC 24-4.5-6-203, the person shall pay all reasonably incurred costs of
the investigation or examination in accordance with the fee schedule
adopted by the department under IC 28-11-3-5. However, the person is
liable for the costs of an investigation or examination under this
subsection only to the extent that the costs exceed the amount of the
filing fees paid most recently under IC 24-4.5-6-203. Any costs
required to be paid under this subsection shall be paid not later than
sixty (60) days after the person receives a notice from the department
of the costs being assessed. The department may impose a fee, in an
amount fixed by the department under IC 28-11-3-5, for each day that
the assessed costs are not paid, beginning on the first day after the sixty
(60) day period described in this subsection.
(4) The department shall be given free access to the records
wherever located. In making any examination or investigation
authorized by this article, the director may control access to any
documents and records of the licensee or person under examination or
investigation. The director may take possession of the documents and
records or place a person in exclusive charge of the documents and
records in the place where the documents are usually kept. During the
period of control, the licensee or person may not remove or attempt to
remove any of the documents and records except under a court order
or with the consent of the director. Unless the director has reasonable
grounds to believe the documents or records of the licensee or person
have been, or are, at risk of being altered or destroyed for purposes of
concealing a violation of this article, the licensee or person being
examined or investigated is entitled to access to the documents or
records as necessary to conduct the licensee's or person's ordinary
business affairs. If the person's records are located outside Indiana, the
records shall be made available to the department at a convenient
location within Indiana, or the person shall pay the reasonable and
necessary expenses for the department or its representative to examine
them where they are maintained. The department may designate
comparable officials of the state in which the records are located to
inspect them on behalf of the department.
(5) Upon a person's failure without lawful excuse to obey a
subpoena or to give testimony and upon reasonable notice to all
affected persons, the department may apply to any civil court with
jurisdiction for an order compelling compliance.
(6) The department shall not make public the name or identity of a
person whose acts or conduct the department investigates pursuant to
this section or the facts disclosed in the investigation, but this
subsection does not apply to disclosures in actions or enforcement
proceedings pursuant to this article.
(7) To discover violations of this article or to secure information
necessary for the enforcement of this article, the department may
investigate any:
(a) licensee or registrant; or
(b) person that the department suspects to be operating:
(i) without a license or registration, when a license or
registration is required under this article; or
(ii) otherwise in violation of this article.
The department has all investigatory and enforcement authority
under this article that the department has under IC 28-11 with
respect to financial institutions. If the department conducts an
investigation under this section, the licensee, registrant, or other
person investigated shall pay all reasonably incurred costs of the
investigation in accordance with the fee schedule adopted under
IC 28-11-3-5.
delivered by certified mail, return receipt requested and postage
prepaid, or by overnight delivery using a nationally recognized
carrier.
of such corporation.
(i) A brief summary showing the manner in which the corporate
debts and liabilities were disposed of or paid. and
(j) A complete itemized list, in a format approved by the director
of the department, of all of the corporate assets and property
distributed to its the corporation's shareholders the name of each such
shareholder, the amount distributed to each, and the date of
distribution. and any other information required by the director of
the department.
to:
(1) an attorney at law authorized to practice in Indiana; or
(2) persons under the supervision and control of an attorney
at law authorized to practice in Indiana;
to the extent the attorney's debt management services are
incidental to the attorney's practice of law.
(b) This chapter does not apply to a depository financial
institution (as defined in IC 28-1-1-6).
(b) (c) This chapter does not apply to a third-party bill paying
service with which the customer contracts solely for the customer's
convenience of paying routine bills, in an arrangement in which the
customer retains full control over all funds deposited. The types of
payments made by a bill paying service are exempt from this chapter
as long as the company's actions are not an attempt, as determined by
the director, to circumvent limitations under this chapter.
licensee's Indiana contract debtors;
(C) (D) designated as a trust account or other account
designated to indicate indicating that the money in the trust
account is not the money of the licensee; and
(D) (E) used to hold money of one (1) or more Indiana
contract debtors for disbursement to creditors of the Indiana
contract debtors.
(16) "Month" means a calendar month.
(17) "Day" means a calendar day.
(18) "Concessions" means assent to repayment of a debt on terms
more favorable to a contract debtor than the terms of the contract
between the that debtor and a creditor.
(19) "Good faith" means honesty in fact and the observance of
reasonable standards of fair dealing.
(20) "Control of a related interest" refers to a situation in which
a person, directly or indirectly, or through or in concert with one
(1) or more other persons, possesses any of the following:
(A) The ownership of, control of, or power to vote at least
twenty-five percent (25%) of the voting securities of a related
interest.
(B) The control in any manner of the election of a majority of
the directors of a related interest.
(C) The power to exercise a controlling influence over the
management or policies of a related interest. For purposes of
this clause, a person is presumed to have control, including the
power to exercise a controlling influence over the management
or policies of the related interest, if the person:
(i) is an executive officer or a director of the related interest
and directly or indirectly owns, controls, or has the power to
vote more than ten percent (10%) of any class of voting
securities of the related interest; or
(ii) directly or indirectly owns, controls, or has the power to
vote more than ten percent (10%) of any class of voting
securities of the related interest and no other person owns,
controls, or has the power to vote a greater percentage of
that class of voting securities.
(21) "Lead generator" means a person that, in the regular
course of business:
(A) supplies a debt management company with the name
of a potential contract debtor;
(B) directs an individual to contact or communicate with
a debt management company; or
(C) otherwise refers a debtor to a debt management
company.
background check. The national criminal history background check
may be used by the director to determine the individual's compliance
with this section. The director or the department may not release the
results of the national criminal history background check to any private
entity.
(d) The fee for a license or renewal of a license shall be fixed by the
department under IC 28-11-3-5 and shall be nonrefundable. The
department may impose a fee under IC 28-11-3-5 for each day that a
renewal fee and any related documents that are required to be
submitted with a renewal application are delinquent.
(e) If a person knowingly acts as a debt management company in
violation of this chapter, any agreement the person has made under this
chapter is void and the debtor under the agreement is not obligated to
pay any fees. If the debtor has paid any amounts to the person, the
debtor, or the department on behalf of the debtor, may recover the
payment from the person that violated this section.
(f) A license issued under this section, (1) except in a transaction
approved under section 3.1 of this chapter, is not assignable or
transferable. and (2) In order to remain in force, a license issued under
this section must be renewed every year in the manner prescribed by
the director of the department. The director of the department shall
prescribe the form of the renewal application. In order to be accepted
for processing, a renewal application must be accompanied by the
following:
(1) The license renewal fee imposed under subsection (d). and
(2) The licensee's most recent audited financial statements
covering the licensee's immediately preceding fiscal year, as
prepared by an independent certified public accountant in
compliance with the requirements set forth in section 5(d) of
this chapter. If the licensee's financial statements for the
immediately preceding fiscal year are not available at the time
of renewal, the licensee has one hundred twenty (120) days
after the end of the immediately preceding fiscal year to file
the financial statements.
(3) All other information and documents requested by the
director of the department.
(g) If the department of state revenue notifies the department that a
person is on the most recent tax warrant list, the department shall not
issue or renew the person's license until:
(1) the person provides to the department a statement from the
department of state revenue that the person's tax warrant has been
satisfied; or
fiscal year, including a:
(1) balance sheet;
(2) statement of income or loss;
(3) statement of changes in shareholder equity; and
(4) statement of changes in financial position.
A financial statement required to be submitted under this
subsection must be prepared by an independent certified public
accountant authorized to do business in the United States in
accordance with AICPA Statements on Standards for Accounting
and Review Services (SSARS).
(d) (e) The department may deny an application under this section
if the director of the department determines that the application was
submitted for the benefit of, or on behalf of, a person who does not
qualify for a license.
(e) (f) Upon written request, an applicant is entitled to a hearing
under IC 4-21.5 on the question of the qualifications of the applicant
for a license.
prepaid, or by overnight delivery using a nationally recognized
carrier.
by check, money order, or automated clearinghouse withdrawal as
authorized by the contract debtor.
(f) A licensee shall, upon cancellation by a contract debtor of the
agreement, notify immediately in writing all creditors in the debt
management plan of the cancellation by the contract debtor.
(g) A licensee may not enter into an agreement with a debtor unless
a thorough, written budget analysis of the debtor indicates that the
debtor can reasonably meet the payments required under a proposed
plan. The following must be included in the budget analysis:
(1) Documentation and verification of all income considered. All
income verification must be dated not more than sixty (60) days
before the completion of the budget analysis.
(2) Monthly living expense figures, which must be reasonable for
the particular family size and part of the state. Indiana. If
expenditure reductions are part of the planned budget for the
debtor, details of the expected savings must be documented in
the debtor's file and set forth in the budget provided to the
debtor.
(3) Documentation and verification, by a current credit bureau
report, current debtor account statements, or direct documentation
from the creditor, of monthly debt payments and balances to be
paid outside the plan.
(4) Documentation and verification, by a current credit bureau
report, current debtor account statements, or direct documentation
from the creditor, of the monthly debt payments and current
balances to be paid through the plan.
(5) The date of the budget analysis and the signature of the debtor.
(h) A licensee may not enter into an agreement with a contract
debtor for a period longer than sixty (60) months. Every thirty (30)
months, the licensee shall complete a thorough, written budget analysis
of the contract debtor to ensure the debt management plan is still
suitable for the contract debtor and the contract debtor will be able to
meet the payment obligations under the plan. If adjustments are needed
to change the indebtedness listed in the agreement, the licensee shall
execute a new agreement or modify, in writing, the existing agreement,
using the revised figures. If during the term of the original agreement,
the agreement is modified in writing or a new agreement is executed,
a licensee:
(1) may not increase the amount of the monthly fee as originally
calculated under section 8.3(c)(2) of this chapter; and
(2) must decrease the amount of the monthly fee as originally
calculated under section 8.3(c)(2) of this chapter if applying the
percentage specified in section 8.3(c)(2)(A) of this chapter to the
new monthly amount of indebtedness to be paid through the
licensee (as of the date of the review under this subsection) would
result in an amount that is less than seventy-five dollars ($75) in
any month.
(i) A licensee may provide services under this chapter in the same
place of business in which another business is operating, or from which
other products or services are sold, if the director issues a written
determination that:
(1) the operation of the other business; or
(2) the sale of other products and services;
from the location in question is not contrary to the best interests of the
licensee's contract debtors.
(j) A licensee without a physical location in Indiana may:
(1) solicit sales of; and
(2) sell;
additional products and services to Indiana residents if the director
issues a written determination that the proposed solicitation or sale is
not contrary to the best interests of contract debtors.
(k) A licensee shall maintain a toll free communication system,
staffed at a level that reasonably permits a contract debtor to speak to
a counselor, debt specialist, or customer service representative, as
appropriate, during ordinary business hours.
(l) A debt management company shall act in good faith in all
matters under this chapter.
following:
(1) A set up fee of not more than fifty dollars ($50) for
consultation, obtaining a credit report, and setting up an account.
Acceptance of a plan payment by a creditor constitutes agreement
by the creditor to the plan. A set up fee under this subdivision
may not be collected until the debtor, or the licensee on behalf of
the debtor, has made at least one (1) payment to a creditor under
the plan.
(2) Subject to subsection (d), a monthly service fee of the lesser
of the following:
(A) Not more than fifteen percent (15%) of the amount the
contract debtor agrees to pay through the licensee divided into
equal monthly payments over the term of the agreement; or
receives from the contract debtor for payment to the
contract debtor's creditors for the applicable month.
However, if the amount calculated under this clause is less
than five dollars ($5) for a particular month, the licensee
may charge a monthly service fee of five dollars ($5) for
that month.
(B) not more than Seventy-five dollars ($75). in any month.
The monthly service fee under this subdivision may be charged
for any one (1) month or part of a month. The amount of a set up
fee under subdivision (1) may not be included in the calculation
of the monthly service fee.
(d) If during the term of the original agreement, the agreement is
modified in writing or a new agreement is executed, a licensee:
(1) may not increase the amount of the monthly fee as originally
calculated under subsection (c)(2); and
(2) must decrease the amount of the monthly fee as originally
calculated under subsection (c)(2) if applying the percentage
specified in subsection (c)(2)(A) to the monthly amount of
indebtedness to be paid through the licensee as of the date of the
modification of the original agreement or the execution of the new
agreement, as applicable, would result in an amount that is less
than seventy-five dollars ($75) in any month.
(e) (d) Upon cancellation by a contract debtor or termination of
payments by a contract debtor, a licensee may withhold for the
licensee's own benefit not more than one hundred dollars ($100), which
may be accrued as a close-out fee.
(f) (e) A licensee may not charge a contract debtor more than one
(1) set up fee or one (1) close-out fee unless the contract debtor leaves
the services of the licensee for more than six (6) months.
agreement is in effect.
(2) A letter of continuation must contain a detailed explanation of
the reason or reasons for the missed payment.
(3) If an agreement for which a letter of continuation that meets
the requirements of this subsection is filed, the agreement remains
in effect and subject to cancellation for any future failure to make
a payment as described in this subsection. section.
(4) An agreement between a licensee and a contract debtor must
clearly provide for one (1) letter of continuation by a contract
debtor.
(5) (4) A contract debtor may not file a letter of continuation with
a licensee at during the beginning of first six (6) months an
agreement is in effect.
(5) If one (1) or more creditors included in the contract
debtor's plan agree to continue the plan based on the
explanation provided under subdivision (2), the contract
debtor and the licensee shall modify the agreement then in
effect between the contract debtor and the licensee to reflect
the changes agreed to under the letter of continuation.
(b) (c) If a licensee or a contract debtor terminates an agreement, the
licensee shall immediately return to the contract debtor any money of
the contract debtor held in trust for the benefit of the contract debtor.
of the licensee's license under this chapter.
Upon approval by the director of a request described in this
subsection, the licensee shall maintain the documentation described
in subdivisions (1) and (2) for review by department examiners
during the course of the department's routine examinations under
this chapter. Before the close of the same banking day the that funds
are received from an Indiana contract debtor, the licensee shall
deposit the money in a the trust account established for the benefit of
the contract debtor to whom the licensee is furnishing debt
management services. required under this section.
(b) A licensee shall do the following:
(1) Maintain separate records of account for each individual
contract debtor to whom the licensee is furnishing debt
management services in Indiana.
(2) Disburse money paid by or on behalf of the a contract debtor
to creditors of the contract debtor as disclosed in the agreement
between the licensee and the contract debtor.
(3) Make remittances not later than thirty (30) days after initial
receipt of funds from a contract debtor. After the initial receipt
of funds, remittances, less fees and costs, shall be made not later
than thirty (30) days after receipt of funds, less fees and costs,
unless the reasonable payment of one (1) or more of the contract
debtor's obligations requires that the funds be held for a longer
period to accumulate a sum certain. For purposes of this section,
the close-out fee set forth in section 8.3(e) 8.3(d) of this chapter
is not considered an obligation of the contract debtor.
(4) Retain for charges in the contract debtor's trust account for
charges, required under this section an amount less than or
equal to the sum of one (1) month's fee fees for the licensee's
Indiana contract debtors whose money is held in the account,
as permitted by section 8.3(c)(2) of this chapter, plus the a
close-out fee, as permitted by section 8.3(e) 8.3(d) of this chapter,
for each of the licensee's Indiana contract debtors whose
money is held in the account, unless a greater amount is
approved in writing by the department.
(5) Promptly:
(A) correct any payments on behalf of a contract debtor that
are not made or that are misdirected as a result of an error by
the licensee or other person in control of the trust account; and
(B) reimburse the contract debtor for any costs or fees imposed
by a creditor as a result of the failure to pay or misdirection.
(c) A licensee may not commingle the licensee's own funds with
money in a the trust account established under this section for the
benefit of a contract debtor to whom the licensee is furnishing debt
management services with money of other persons. the licensee's
Indiana contract debtors.
(d) A The trust account required under this section must at all
times have a cash balance equal to at least the sum of the balances of
each contract debtor's account. individual account maintained for
each Indiana contract debtor whose money is held in the trust
account.
(e) If a licensee has established a trust account under subsection (a),
The licensee shall reconcile the trust account required under this
section at least every thirty (30) days after receipt of the bank
statement. The reconciliation must compare the cash balance in the
trust account for all the licensee's Indiana contract debtors whose
money is held in the account with the sum of the balances in each of
those Indiana contract debtor's account. individual accounts. If the
licensee or the licensee's designee has more than one (1) trust account
under this section, each trust account must be individually reconciled.
If the cash balance held in a trust account for the benefit of the
licensee's Indiana contract debtors reflects a shortage when
compared with the sum of the balances in each of those Indiana
contract debtor's individual accounts, the licensee shall
immediately provide written notice to the department of that fact
and of any remedial action taken by the licensee. If the cash
balance held in a trust account for the benefit of the licensee's
Indiana contract debtors reflects a surplus when compared with
the sum of the balances in each of those Indiana contract debtor's
individual accounts, the licensee shall attempt to remedy the
surplus and shall retain, for review by department examiners,
documentation of the actions taken.
(f) If a licensee or a licensee's employee discovers, or has a
reasonable suspicion of, embezzlement or other unlawful appropriation
of money held in trust, the licensee or the licensee's employee shall
immediately notify the department in writing. Unless the department
by regulation, rule, policy, or guidance provides otherwise, the licensee
shall give notice to the department describing the remedial action taken
or to be taken not later than five (5) days after the licensee or the
licensee's employee discovers, or has a reasonable suspicion of, the
embezzlement or other unlawful appropriation.
(g) If a contract debtor terminates an agreement or it becomes
reasonably apparent to a licensee that a plan has failed, the licensee
shall, promptly not later than fifteen (15) days after the effective
date of the termination of the agreement or the date on which it
becomes apparent to the licensee that the plan has failed, as
applicable, refund to the contract debtor all money paid by or on behalf
of the contract debtor that has not been paid to creditors less the fee
that is payable to the licensee under section 8.3(e) 8.3(d) of this
chapter.
(h) Before relocating a trust account from one (1) bank to another,
a licensee shall inform the department of the name, business address,
and telephone number of the new bank. As soon as practicable, the
licensee shall inform the department of the account number of the trust
account at the new bank.
(i) Before adding or replacing any signatory on the trust account
required under this section, the licensee shall:
(1) ensure that the new signatory is qualified based on a
background check consistent with section 3(c) of this chapter;
and
(2) maintain, for review by department examiners,
documentation of the background check conducted.
(i) (j) At least once every three (3) months each month while an
agreement between a licensee and a contract debtor is in effect, the
licensee shall render to the contract debtor an accounting statement
to the contract debtor which must itemize that includes the following:
(1) The following information with respect to the month for
which the accounting statement is prepared:
(A) The total amount received from the contract debtor.
(B) The total amount paid to each creditor on behalf of the
contract debtor.
(C) The amount of any charges deducted by the licensee. and
(D) Any amount held in reserve on behalf of the contract
debtor.
(2) A statement that the contract debtor's plan is regulated by
the department, along with the department's contact
information, including the department's address, Internet web
site address, and toll free telephone number.
A licensee shall also provide such an accounting statement described
in this subsection to a contract debtor not later than seven (7) days
after written demand but by the contract debtor for such a
statement. However, the licensee is not required to provide more than
three (3) such requested accountings per six (6) month period.
(j) (k) Upon the completion or termination of a contract between a
licensee and a contract debtor, the licensee shall provide to the contract
debtor a statement:
licensee's employees.
(9) Settle a debt or lead a contract debtor to believe that a
payment to a creditor is in settlement of a debt to the creditor
unless, at the time of settlement, the contract debtor receives a
certification by the creditor that the payment is in full settlement
of the debt.
(10) Make a representation that:
(A) the licensee will furnish money to pay bills or prevent
attachments;
(B) payment of a certain amount will permit satisfaction of a
certain amount or range of indebtedness; or
(C) participation in a plan will or may prevent litigation,
garnishment, attachment, repossession, foreclosure, eviction,
or loss of employment.
(11) Misrepresent that the licensee is authorized or competent to
furnish legal advice or perform legal services.
(12) Represent in the licensee's agreements, disclosures required
by this chapter, advertisements, or Internet web site that the
licensee is:
(A) a nonprofit entity unless the licensee is organized and
properly operating as a nonprofit entity under the law of the
state in which the entity was formed; or
(B) a tax exempt entity unless the entity has received
certification of tax exempt status from the Internal Revenue
Service and is properly operating as a nonprofit entity under
the law of the state in which the entity was formed.
(13) Take a confession of judgment or power of attorney to
confess judgment against a contract debtor.
(14) Employ an unfair, unconscionable, or deceptive act or
practice, including the knowing omission of any material
information.
(b) If a licensee furnishes debt management services to a debtor, the
licensee may not, directly or indirectly, do any of the following:
(1) Purchase a debt or obligation of the debtor.
(2) Receive from or on behalf of the debtor:
(A) a promissory note or other negotiable instrument other
than a check or a demand draft; or
(B) a postdated check or demand draft.
(3) Lend money or provide credit to the debtor.
(4) Obtain a mortgage or other security interest from any person
in connection with the services provided to the debtor.
(5) Except as permitted by federal law, disclose the identity or
identifying information of the debtor or the identity of the debtor's
creditors, except:
(A) to the department, upon proper demand;
(B) to a creditor of the debtor, to the extent necessary to secure
the cooperation of the creditor in a plan; or
(C) to the extent necessary to administer the plan.
(6) Charge the debtor for or provide credit or other insurance,
coupons for goods or services, membership in a club, access to
computers or the Internet, or any other matter not directly related
to debt management services or educational services concerning
personal finance, except as permitted under section 8(j) of this
chapter.
(7) Furnish legal advice or perform legal services unless the
person furnishing the advice or performing the services is
licensed to practice law.
(c) This chapter does not authorize any person to engage in the
practice of law.
(d) A licensee may not receive a gift, bonus, premium, reward, or
other compensation, directly or indirectly, for advising, arranging, or
assisting a debtor in connection with obtaining an extension of credit
or other service from a lender or service provider.
represents includes "pawn", "pawnbroker", "pawn shop", "pawn
loan", or any word or phrase that would reasonably lead another
person to conclude that the person is a pawnbroker, except as
authorized by this chapter and without first obtaining a license from the
department. is engaging in business as a pawnbroker, or is engaging
in conduct that would mislead or confuse a person into believing
that the person is a pawnbroker or is engaging in business as a
pawnbroker.
(b) A pawnbroking transaction occurs in Indiana and is subject
to the licensing requirements of this chapter and all other
requirements of this chapter if a consumer who is a resident of
Indiana enters into the pawnbroking transaction with a
pawnbroker, or a person acting on behalf of the pawnbroker, that
is located:
(1) in Indiana; or
(2) outside Indiana if the pawnbroker or person acting on
behalf of the pawnbroker has advertised or solicited
pawnbroking in Indiana by any means, including by mail,
brochure, telephone, print, radio, television, the Internet, or
electronic means.
A pawnbroking transaction does not occur in Indiana if a
consumer who is a resident of Indiana enters into the pawnbroking
transaction at a pawnbroker's place of business in another state.
whether any individual described in section 8(a)(2) or 8(a)(3) of this
chapter at the time of the application:
(1) is under indictment for a felony under the laws of Indiana or
any other jurisdiction; or
(2) has been convicted of or pleaded guilty or nolo contendere to
a felony under the laws of Indiana or any other jurisdiction.
(c) The director may request that the applicant provide evidence of
compliance with this section at:
(1) the time of application;
(2) the time of renewal of a license; or
(3) any other time considered necessary by the director.
(d) For purposes of subsection (c), evidence of compliance with this
section may include:
(1) criminal background checks, 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 (b);
(2) credit histories; and
(3) other background checks considered necessary by the director.
If the director requests a national criminal history background check
under subdivision (1) for an individual described in that subdivision,
the director shall require the individual to submit fingerprints to the
department or to the state police department, as appropriate, at the time
evidence of compliance is requested under subsection (c). The
individual to whom the request is made shall pay any fees or costs
associated with the fingerprints and the national criminal history
background check. The national criminal history background check
may be used by the director to determine the individual's compliance
with this section. The director or the department may not release the
results of the national criminal history background check to any private
entity.
loan obligation. Acceptance of partial payments under this
subsection does not require the pawnbroker to extend the two (2)
month period described in section 30(a) of this chapter with respect
to any loan.
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2013]: Sec. 8.5. As used in this chapter, "individual" means a
natural person.
chapter, "person" means an individual a partnership, an association, a
joint stock association, a trust, or a corporation. an organization.
department or to the state police department, as appropriate, at the time
evidence of compliance is requested under subsection (d). The
individual to whom the request is made shall pay any fees or costs
associated with the fingerprints and the national criminal history
background check. The national criminal history background check
may be used by the director to determine the individual's compliance
with this section. The director or the department may not release the
results of the national criminal history background check to any private
entity.
(f) If the department of state revenue notifies the department that a
person is on the most recent tax warrant list, the department shall not
issue or renew the person's license until:
(1) the person provides to the department a statement from the
department of state revenue that the person's tax warrant has been
satisfied; or
(2) the department receives a notice from the commissioner of the
department of state revenue under IC 6-8.1-8-2(k).
may report complaints received regarding licensees under this
chapter to the NMLSR.
(e) The director may report publicly adjudicated licensure
actions against a licensee to the NMLSR.
(f) The director shall establish a process by which licensees may
challenge information reported to the NMLSR by the department.
(g) The director's authority to designate the NMLSR under
subsection (b) is subject to the following:
(1) Information stored in the NMLSR is subject to the
confidentiality provisions of IC 5-14-3 and section 47 of this
chapter. A person may not:
(A) obtain information from the NMLSR, unless the
person is authorized to do so by statute;
(B) initiate any civil action based on information obtained
from the NMLSR if the information is not otherwise
available to the person under any other state law; or
(C) initiate any civil action based on information obtained
from the NMLSR if the person could not have initiated the
action based on information otherwise available to the
person under any other state law.
(2) Documents, materials, and other forms of information in
the control or possession of the NMLSR that are confidential
under section 47 of this chapter and that are:
(A) furnished by the director, the director's designee, or a
licensee; or
(B) otherwise obtained by the NMLSR;
are confidential and privileged by law and are not subject to
inspection under IC 5-14-3, subject to subpoena, subject to
discovery, or admissible in evidence in any civil action.
However, the director may use the documents, materials, or
other information available to the director in furtherance of
any action brought in connection with the director's duties
under this chapter.
(3) Disclosure of documents, materials, and information:
(A) to the director; or
(B) by the director;
under this subsection does not result in a waiver of any
applicable privilege or claim of confidentiality with respect to
the documents, materials, or information.
(4) Information provided to the NMLSR is subject to
IC 4-1-11.
(5) This subsection does not limit or impair a person's right
to:
(A) obtain information;
(B) use information as evidence in a civil action or
proceeding; or
(C) use information to initiate a civil action or proceeding;
if the information may be obtained from the director or the
director's designee under any law.
(6) The requirements under any federal law or IC 5-14-3
regarding the privacy or confidentiality of any information or
material provided to the NMLSR, and any privilege arising
under federal or state law, including the rules of any federal
or state court, with respect to the information or material,
continue to apply to the information or material after the
information or material has been disclosed to the NMLSR.
The information and material may be shared with all state
and federal regulatory officials with financial services
industry oversight authority without the loss of privilege or
the loss of confidentiality protections provided by federal law
or IC 5-14-3.
(7) For purposes of this section, the director may enter
agreements or sharing arrangements with other governmental
agencies, the Conference of State Bank Supervisors, the
Money Transmitters Regulators Association, or other
associations representing governmental agencies, as
established by rule or order of the director.
(8) Information or material that is subject to a privilege or
confidentiality under subdivision (6) is not subject to:
(A) disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or
an agency of the federal government or the respective
state; or
(B) subpoena, discovery, or admission into evidence in any
private civil action or administrative process, unless with
respect to any privilege held by the NMLSR with respect
to the information or material, the person to whom the
information or material pertains waives, in whole or in
part, in the discretion of the person, that privilege.
(9) Any provision of IC 5-14-3 that concerns the disclosure of:
(A) confidential supervisory information; or
(B) any information or material described in subdivision
(6);
and that is inconsistent with subdivision (6) is superseded by
this section.
(10) This section does not apply with respect to information or
material that concerns the employment history of, and
publicly adjudicated disciplinary and enforcement actions
against, a person described in section 35(b)(2) or 35(b)(3) of
this chapter and that is included in the NMLSR for access by
the public.
(11) The director may require a licensee required to submit
information to the NMLSR to pay a processing fee considered
reasonable by the director. In determining whether the
NMLSR processing fee is reasonable, the director shall:
(A) require review of; and
(B) make available;
the audited financial statements of the NMLSR.
(12) Notwithstanding any other provision of law, any:
(A) application, renewal, or other form or document that:
(i) relates to licenses issued under this chapter; and
(ii) is made or produced in an electronic format;
(B) document filed as an electronic record in a multistate
automated repository established and operated for the
licensing or registration of financial services entities and
their employees; or
(C) electronic record filed through the NMLSR;
is considered a valid original document when reproduced in
paper form by the department.
receive, handle, transmit, and pay money in connection with the:
(1) sale and issuance of payment instruments; or
(2) transmission of money. surety bond in accordance with this
section.
(b) The security device surety bond required under subsection (a)
must:
(1) be in an the amount as provided under subsection (c); of three
hundred thousand dollars ($300,000);
(2) run to the state; and
(3) (2) 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 two hundred thousand dollars ($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) three hundred thousand dollars ($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.
(3) be in effect during the term of the license issued under this
chapter;
(4) remain in effect during the five (5) years after the licensee
ceases offering money transmission services in Indiana;
(5) be payable to the department for the benefit of:
(A) the state;
(B) individuals who reside in Indiana when they agree to
receive money transmission services from the licensee; and
(C) entities that do business in Indiana when they agree to
receive money transmission services from the licensee;
(6) be issued by a bonding, surety, or insurance company
authorized to do business in Indiana and rated at least "A-"
by at least one (1) nationally recognized investment rating
service; and
(7) have payment conditioned upon the licensee's or any of the
licensee's employees' or agents' noncompliance with or
violation of this chapter or other applicable federal or state
laws or regulations.
(c) The director may adopt rules or guidance documents with
respect to the requirements for a surety bond as necessary to
accomplish the purposes of this chapter.
(d) If the principal amount of a surety bond required under this
section is reduced by payment of a claim or judgment, the licensee
for whom the bond is issued shall immediately notify the director
of the reduction and, not later than thirty (30) days after notice by
the director, file a new or an additional surety bond in the amount
needed to restore the amount of the surety bond to three hundred
thousand dollars ($300,000).
(e) If for any reason a surety terminates a bond issued under
this section, the licensee shall immediately notify the department
and file a new surety bond in the amount of three hundred
thousand dollars ($300,000).
(f) Cancellation of a surety bond issued under this section does
not affect any liability incurred or accrued during the period when
the surety bond was in effect.
(g) The director may obtain satisfaction from a surety bond
issued under this section if the director incurs expenses, issues a
final order, or recovers a final judgment under this chapter.
(h) Notices required under this section must be in writing and
delivered by certified mail, return receipt requested and postage
prepaid, or by overnight delivery using a nationally recognized
carrier.
2013]. Sec. 32. (a) An application must be accompanied by a
nonrefundable application fee as fixed by the department under
IC 28-11-3-5.
(b) If a license is granted, the application fee constitutes the license
fee for the applicant's activities through March 31 of the year in which
the initial license is granted.
after an application for licensure under this chapter is complete.
(b) The director shall investigate the financial condition and
responsibility, financial and business experience, and character and
general fitness of:
(1) the applicant and any significant affiliate of the applicant;
(2) 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
(3) if known, each controlling person.
(c) The director may conduct an onsite investigation of the
applicant, the reasonable cost of which shall be borne by the applicant.
(d) The director shall issue a license to an applicant authorizing the
applicant to engage in the licensed activities in Indiana for a term
expiring March December 31 of the year in which the license is issued
if the director finds that:
(1) the applicant's business will be conducted honestly, fairly, and
in a manner commanding the confidence and trust of the
community; and
(2) the applicant has fulfilled the requirements imposed by this
chapter.
(e) Upon application, the director shall determine whether a
particular person qualifies as a controlling person. The director may
waive any or all requirements of this chapter pertaining to a controlling
person for good cause shown.
(f) If the director finds that:
(1) an applicant does not satisfy the requirements in subsection
(d); or
(2) an application was submitted for the benefit of, or on behalf
of, a person who does not qualify for a license;
the director may deny the application. The director must set forth the
reasons for the denial in writing and send a copy of the reasons to the
applicant.
report renewal in the form that is prescribed by the director and
sent by the director to each licensee not less than three (3) months
immediately preceding the date established by the director for
license renewal. later than December 31 of each year. The
report renewal must include the following, which, except for the
financial statements described in clause (A), must be filed not
later than December 31:
(A) Either:
(i) a copy of the licensee's most recent audited consolidated
annual financial statement, statements, including a balance
sheet, a statement of income or loss, a statement of changes
in shareholder's equity, and a statement of changes in
financial position; or
(ii) if the licensee is a wholly owned subsidiary, the parent
corporation's or parent organization's most recent
consolidated audited annual financial statement statements
or the parent corporation's or parent organization's Form
10K reports filed with the Securities and Exchange
Commission for the previous three (3) years, along with the
licensee's unaudited annual financial statement. statements.
A The financial statement statements required to be
submitted under this clause must be prepared by a an
independent certified public accountant authorized to do
business in the United States in accordance with AICPA
Statements on Standards for Accounting and Review Services
(SSARS) A financial statement not covering the immediately
preceding twelve (12) month period is not considered the most
recent statement for purposes of license renewal under this
section. and must be filed with the director or the director's
designee not later than April 30 of the year that
immediately follows the calendar or fiscal year covered by
the statements.
(B) The number of payment instruments sold by the licensee
in Indiana, the dollar amount of those instruments, and the
dollar amount of outstanding payment instruments sold by the
licensee calculated from the most recent quarter for which data
is available before the date of the filing of the renewal
application, but in no event more than one hundred twenty
(120) days before the renewal date.
(C) Material changes to the information submitted by the
licensee on its original application or as part of a renewal
that have not been reported previously to the director on any
other report or renewal required to be filed under this chapter.
(D) A list of the licensee's permissible investments.
(E) A list of the locations within Indiana at which business
regulated by this chapter will be conducted by either the
licensee or its authorized delegate, including information
concerning any business, other than the business of money
transmission under this chapter, that will be conducted at each
identified location, as required under section 24(10) of this
chapter.
(2) Paying the annual renewal fee described under section 37 of
this chapter.
(b) A licensee that:
(1) does not:
(A) file:
(i) a renewal; report; or
(ii) any financial statements required by subsection
(a)(1)(A);
by the renewal filing deadline set by the director; or
(B) pay the renewal fee by March December 31 of each year;
and
(2) has not been granted an extension of time by the department
to meet the requirements described in subdivision (1);
shall be notified by the department, in writing, that a hearing will be
scheduled at which the licensee will be required to show cause why its
license should not be suspended pending compliance with these
requirements. If after the hearing the license is not suspended, the
department shall require a daily late fee beginning with the date the
renewal, report, the financial statements, or the annual renewal fee is
required by this chapter in an amount fixed by the department under
IC 28-11-3-5.
(c) The director may, for good cause shown, waive any requirement
of this section.
25(6)(B) of this chapter, whichever applies:
(1) not later than thirty (30) days after the licensee or individual
described in section 35(b)(2) or 35(b)(3) of this chapter has been
convicted of or pleaded guilty or nolo contendere to the felony; or
(2) if the licensee's next license renewal fee under section 37 of
this chapter is due before the date described in subdivision (1),
along with the licensee's next license renewal fee under section 37
of this chapter.
delegate of:
(1) violating this chapter or other laws, regulations, rules, or
industry standards of conduct applicable to money
transmission; or
(2) fraud, dishonesty, theft, or the wrongful taking of
property.
The licensee shall provide the department the notice required
under this subsection not later than thirty (30) days after the
effective date of the resignation, discharge, or termination.
may prescribe. Each officer shall hold office until the officer's
successor is chosen and has qualified. The president shall be chosen
from among the directors.
(c) If not already a director, the officer described in subsection
(a)(1) who is the highest acting officer of the corporation shall
become a director in accordance with the corporation's articles of
incorporation or bylaws as soon as practicable after being chosen
to serve in that office.
(d) If the articles of incorporation or the bylaws so provide, at
least two (2) or more offices may be held by the same person, except
that the duties of the president and the secretary or cashier an officer
described in subsection (a)(1) and an officer described in
subsection (a)(2) may not be performed by the same person.