Bill Text: IN HB1180 | 2011 | Regular Session | Enrolled
Bill Title: Zero interest mortgages by nonprofit entities.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2011-05-16 - Effective 07/01/2011 [HB1180 Detail]
Download: Indiana-2011-HB1180-Enrolled.html
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
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AN ACT to amend the Indiana Code concerning trade regulation.
(1) the creditor requires the debtor to make at any time during the term of the mortgage;
(2) represents the entire amount of the outstanding balance with respect to the mortgage; and
(3) the entire amount of which is due as of a specified date or at the end of a specified period;
if the aggregate amount of the minimum periodic payments required under the mortgage would not fully amortize the outstanding balance by the specified date or at the end of the specified period. The term does not include a payment required by a creditor under a due-on-sale clause (as defined in 12 U.S.C. 1701j-3(a)) or a payment required by a creditor under a provision in the mortgage that permits the creditor to accelerate the debt upon the debtor's default or failure to abide by the material terms of the mortgage.
(b) This article does not apply to the following:
(1) Extensions of credit to government or governmental agencies
or instrumentalities.
(2) A first lien mortgage transaction in which the debt is incurred
primarily for a purpose other than a personal, family, or
household purpose.
(3) An extension of credit primarily for a business, a commercial,
or an agricultural purpose.
(4) Except for IC 24-4.4-2-401(2), IC 24-4.4-2-402.3,
IC 24-4.4-2-405(4), and IC 24-4.4-2-405(5), a first lien mortgage
transaction made:
(a) in compliance with the requirements of; and
(b) by a community development corporation (as defined in
IC 4-4-28-2) acting as a subrecipient of funds from;
the Indiana housing and community development authority
established by IC 5-20-1-3.
(5) Except for IC 24-4.4-2-401(2), IC 24-4.4-2-402.3,
IC 24-4.4-2-405(4), and IC 24-4.4-2-405(5), a first lien mortgage
transaction made by an entity that exclusively uses funds provided
by the United States Department of Housing and Urban
Development under Title 1 of the federal Housing and
Community Development Act of 1974, Public Law 93-383, as
amended (42 U.S.C. 5301 et seq.).
(6) An extension of credit originated by:
(a) a depository institution;
(b) subsidiaries that are:
(i) owned and controlled by a depository institution; and
(ii) regulated by a federal banking agency; or
(c) an institution regulated by the Farm Credit Administration.
(7) Except for IC 24-4.4-2-401(2), IC 24-4.4-2-402.3,
IC 24-4.4-2-405(4), and IC 24-4.4-2-405(5), a credit union service
organization that is majority owned, directly or indirectly, by one
(1) or more credit unions.
(8) A first lien mortgage transaction originated by a registered
mortgage loan originator, when acting for an entity described in
subsection (6). However, A privately insured state chartered
credit union shall also comply with the system of mortgage loan
originator registration developed by the Federal Financial
Institutions Examinations Council under Section 1507 of the
federal Safe Secure and Fair Enforcement for Mortgage
Licensing Act of 2008 (SAFE).
(9) An individual who offers or negotiates terms of a mortgage
transaction with or on behalf of an immediate family member of
the individual.
(10) An individual who offers or negotiates terms of a mortgage transaction secured by a dwelling that served as the individual's residence.
(11) Unless the attorney is compensated by:
(a) a lender;
(b) a mortgage broker;
(c) another mortgage loan originator; or
(d) any agent of the lender, mortgage broker, or other mortgage loan originator described in clauses (a) through (c);
a licensed attorney who negotiates the terms of a mortgage transaction on behalf of a client as an ancillary matter to the attorney's representation of the client.
(12) Agencies, instrumentalities, and government owned corporations of the United States, including United States government sponsored enterprises.
(13) A bona fide nonprofit entity not operating in a commercial context, as determined by the director, if the following criteria are satisfied:
(A) Subject to clause (B), the entity originates only one (1) or both of the following types of mortgage transactions:
(i) Zero (0) interest first lien mortgage transactions.
(ii) Zero (0) interest subordinate lien mortgage transactions.
(B) The entity does not require, under the terms of the mortgage or otherwise, balloon payments with respect to the mortgage transactions described in clause (A).
(C) The entity is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code.
(D) The entity's primary purpose is to serve the public by helping low income individuals and families build, repair, and purchase housing.
(E) The entity uses only:
(i) unpaid volunteers; or
(ii) employees whose compensation is not based on the number or size of any mortgage transactions that the employees originate;
to originate the mortgage transactions described in clause (A).
(F) The entity does not charge loan origination fees in connection with the mortgage transactions described in clause (A).
SECTION 39, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2011]: Sec. 202. (a) As used in this section, "balloon
payment", with respect to a mortgage transaction, means any
payment that:
(1) the creditor requires the debtor to make at any time
during the term of the mortgage;
(2) represents the entire amount of the outstanding balance
with respect to the mortgage; and
(3) the entire amount of which is due as of a specified date or
at the end of a specified period;
if the aggregate amount of the minimum periodic payments
required under the mortgage would not fully amortize the
outstanding balance by the specified date or at the end of the
specified period. The term does not include a payment required by
a creditor under a due-on-sale clause (as defined in 12 U.S.C.
1701j-3(a)) or a payment required by a creditor under a provision
in the mortgage that permits the creditor to accelerate the debt
upon the debtor's default or failure to abide by the material terms
of the mortgage.
(b) This article does not apply to the following:
(1) Extensions of credit to government or governmental agencies
or instrumentalities.
(2) The sale of insurance by an insurer, except as otherwise
provided in the chapter on insurance (IC 24-4.5-4).
(3) Transactions under public utility, municipal utility, or
common carrier tariffs if a subdivision or agency of this state or
of the United States regulates the charges for the services
involved, the charges for delayed payment, and any discount
allowed for early payment.
(4) The rates and charges and the disclosure of rates and charges
of a licensed pawnbroker established in accordance with a statute
or ordinance concerning these matters.
(5) A sale of goods, services, or an interest in land in which the
goods, services, or interest in land are purchased primarily for a
purpose other than a personal, family, or household purpose.
(6) A loan in which the debt is incurred primarily for a purpose
other than a personal, family, or household purpose.
(7) An extension of credit primarily for a business, a commercial,
or an agricultural purpose.
(8) An installment agreement for the purchase of home fuels in
which a finance charge is not imposed.
(9) Loans made, insured, or guaranteed under a program
authorized by Title IV of the Higher Education Act of 1965 (20
U.S.C. 1070 et seq.).
(10) Transactions in securities or commodities accounts in which
credit is extended by a broker-dealer registered with the Securities
and Exchange Commission or the Commodity Futures Trading
Commission.
(11) Except for IC 24-4.5-3-502.1(2), IC 24-4.5-3-503.3,
IC 24-4.5-3-505(4), and IC 24-4.5-3-505(5), a loan made:
(A) in compliance with the requirements of; and
(B) by a community development corporation (as defined in
IC 4-4-28-2) acting as a subrecipient of funds from;
the Indiana housing and community development authority
established by IC 5-20-1-3.
(12) Except for IC 24-4.5-3-502.1(2), IC 24-4.5-3-503.3,
IC 24-4.5-3-505(4), and IC 24-4.5-3-505(5), a subordinate lien
mortgage transaction made by an entity that exclusively uses
funds provided by the United States Department of Housing and
Urban Development under Title 1 of the Housing and Community
Development Act of 1974, Public Law 93-383, as amended (42
U.S.C. 5301 et seq).
(13) A bona fide nonprofit entity not operating in a
commercial context, as determined by the director, if the
following criteria are satisfied:
(A) Subject to clause (B), the entity originates only one (1)
or both of the following types of mortgage transactions:
(i) Zero (0) interest first lien mortgage transactions.
(ii) Zero (0) interest subordinate lien mortgage
transactions.
(B) The entity does not require, under the terms of the
mortgage or otherwise, balloon payments with respect to
the mortgage transactions described in clause (A).
(C) The entity is exempt from federal income taxation
under Section 501(c)(3) of the Internal Revenue Code.
(D) The entity's primary purpose is to serve the public by
helping low income individuals and families build, repair,
and purchase housing.
(E) The entity uses only:
(i) unpaid volunteers; or
(ii) employees whose compensation is not based on the
number or size of any mortgage transactions that the
employees originate;
to originate the mortgage transactions described in clause
(A).
(F) The entity does not charge loan origination fees in
connection with the mortgage transactions described in
clause (A).
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