Bill Text: IN HB1528 | 2011 | Regular Session | Enrolled
Bill Title: Financial institutions and consumer credit.
Spectrum: Bipartisan Bill
Status: (Passed) 2011-05-16 - SECTIONS 77 through 78 effective 07/01/2011 [HB1528 Detail]
Download: Indiana-2011-HB1528-Enrolled.html
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AN ACT to amend the Indiana Code concerning financial institutions.
(2) The underlying purposes and policies of this article are:
(a) to permit and encourage the development of fair and economically sound first lien mortgage lending practices; and
(b) to conform the regulation of first lien mortgage lending practices to applicable state and federal laws, rules, and regulations.
(3) A reference to a requirement imposed by this article includes reference to a related rule of the department adopted under this article.
(4) A reference to a federal law in this article is a reference to the law as in effect December 31,
(a) that is secured by an interest in:
(i) a dwelling; or
(ii) residential real estate upon which a dwelling is constructed or intended to be constructed;
in Indiana; and
(b) the closing for which takes place after December 31, 2008.
(2) This article does not apply to a first lien mortgage transaction if:
(a) the debtor is not a resident of Indiana at the time the transaction is entered into; and
(b) the laws of the debtor's state of residence require that the transaction be made under the laws of the state of the debtor's residence.
(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) a registered mortgage loan originator, when acting for an
entity described in subsection (6) or (7); or
(b) an individual who:
(i) performs the duties of a mortgage loan originator for
an entity described in subsection (6) or (7); and
(ii) is required to be registered with the NMLSR not
later than July 29, 2011.
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, any state or local
government, or any agency or instrumentality of any
governmental entity, including United States government
sponsored enterprises.
(13) A person in whose name a tablefunded transaction is
closed, as described in section 301(34)(a) of this chapter.
However, the exemption provided by this subsection does not
apply if:
(a) the transaction:
(i) is secured by a dwelling that is a mobile home, a
manufactured home, or a trailer; and
(ii) is not also secured by an interest in land; and
(b) the person in whose name the transaction is closed, as
described in section 301(34)(a) of this chapter, sells the
dwelling to the debtor through a retail installment contract
or other similar transaction.
(1) "Affiliate", with respect to any person subject to this article, means a person that, directly or indirectly, through one (1) or more intermediaries:
(a) controls;
(b) is controlled by; or
(c) is under common control with;
the person subject to this article.
(2) "Agreement" means the bargain of the parties in fact as found in the parties' language or by implication from other circumstances, including course of dealing or usage of trade or course of performance.
(3) "Agricultural products" includes agricultural products, horticultural products, viticultural products, dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, any products raised or produced on farms, and any products processed or manufactured from products raised or produced on farms.
(4) "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.
(5) "Consumer credit sale" is a sale of goods, services, or an interest in land in which:
(a) credit is granted by a person who 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
(e) with respect to a sale of goods or services, either the amount financed does not exceed fifty thousand dollars ($50,000) or the debt is secured by personal property used or expected to be used as the principal dwelling of the buyer.
(6) "Credit" means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.
(7) "Creditor" means a person:
(a) that engages in the extension of first lien mortgage transactions that are subject to a credit service 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
(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 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 a land
contract, (or another equivalent consensual security interest)
which that constitutes a first lien on a dwelling or on residential
real estate upon which a dwelling is constructed or intended to
be constructed. The term does not include a land contract.
(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.
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.
(21) "Mortgage loan originator" means an individual who, for
compensation or gain, or in the expectation of compensation or
gain, 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 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
(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, simultaneously to the mortgage
creditor providing the funding 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.
(a) one hundred dollars ($100) if an accurate payoff amount is not provided by the creditor or mortgage servicer not later than
(b) the greater of:
(i) one hundred dollars ($100); or
(ii) the loan finance charge that accrues on the first lien mortgage transaction from the date the creditor or mortgage servicer receives the first written request until the date on which the accurate payoff amount is provided;
if an accurate payoff amount is not provided by the creditor or mortgage servicer not later than
(2) This subsection applies to a first lien mortgage transaction, or the refinancing or consolidation of a first lien mortgage transaction, that:
(a) is closed after June 30, 2009; and
(b) has an interest rate that is subject to change at one (1) or more times during the term of the first lien mortgage transaction.
A creditor in a transaction to which this subsection applies may not contract for and may not charge the debtor a prepayment fee or penalty.
(3) This subsection applies to a first lien mortgage transaction with respect to which any installment or minimum payment due is
delinquent for at least sixty (60) days. The creditor, servicer, or the
creditor's agent shall acknowledge a written offer made in connection
with a proposed short sale not later than ten (10) five (5) business days
(excluding legal public holidays, Saturdays, and Sundays) after the
date of the offer if the offer complies with the requirements for a
qualified written request set forth in 12 U.S.C. 2605(e)(1)(B). The
creditor, servicer, or creditor's agent is required to acknowledge a
written offer made in connection with a proposed short sale from a
third party acting on behalf of the debtor only if the debtor has
provided written authorization for the creditor, servicer, or creditor's
agent to do so. Not later than thirty (30) business days (excluding legal
public holidays, Saturdays, and Sundays) after receipt of an offer
under this subsection, the creditor, servicer, or creditor's agent shall
respond to the offer with an acceptance or a rejection of the offer. The
thirty (30) day period described in this subsection may be extended
for not more than fifteen (15) business days (excluding legal public
holidays, Saturdays, and Sundays) if, before the end of the thirty
(30) day period, the creditor, the servicer, or the creditor's agent
notifies the debtor of the extension and the reason the extension is
needed. Payment accepted by a creditor, servicer, or creditor's agent in
connection with a short sale constitutes payment in full satisfaction of
the first lien mortgage transaction unless the creditor, servicer, or
creditor's agent obtains:
(a) the following statement: "The debtor remains liable for any
amount still owed under the first lien mortgage transaction."; or
(b) a statement substantially similar to the statement set forth in
subdivision (a);
acknowledged by the initials or signature of the debtor, on or before the
date on which the short sale payment is accepted. As used in this
subsection, "short sale" means a transaction in which the property that
is the subject of a first lien mortgage transaction is sold for an amount
that is less than the amount of the debtor's outstanding obligation under
the first lien mortgage transaction. A creditor or mortgage servicer that
fails to respond to an offer within the time prescribed by this subsection
is liable in accordance with 12 U.S.C. 2605(f) in any action brought
under that section.
(2) For purposes of subsection (1), disclosures are not required if the transaction is exempt from the federal Consumer Credit Protection Act (15 U.S.C. 1601 et seq.).
(2) Each:
(a) creditor licensed under this article; and
(b) entity exempt from licensing under this article that employs a licensed mortgage loan originator;
shall register with and maintain a valid unique identifier issued by the NMLSR. Each licensed mortgage loan originator must be employed by, and associated with, a licensed creditor, or an entity exempt from licensing under this article, in the NMLSR in order to originate loans.
(3) 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.
(a) must contain content as set forth by rule, instruction, or procedure of the director; and
(b) may be changed or updated as necessary by the director to carry out the purposes of this article.
(a) collect and maintain records; and
(b) process transaction fees or other fees related to licensees or other persons subject to this article.
(a) waive or modify, in whole or in part, by rule or order, any of the requirements of this article; and
(b) establish new requirements as reasonably necessary to participate in the NMLSR.
(2) A license may not be issued unless the department finds that the professional training and experience, financial responsibility, character, and fitness of:
(a) the applicant and any significant affiliate of the applicant;
(b) each executive officer, director, or manager of the applicant, or any other individual having a similar status or performing a similar function for the applicant; and
(c) if known, each person directly or indirectly owning of record or owning beneficially at least ten percent (10%) of the outstanding shares of any class of equity security of the applicant;
are such as to warrant belief that the business will be operated honestly and fairly within the purposes of this article.
(3) The director is entitled to request evidence of compliance with this section at:
(a) the time of application;
(b) the time of renewal of a license; or
(c) any other time considered necessary by the director.
(4) Evidence of compliance with this section must include:
(a) criminal background checks, as described in section 402.1 of this chapter, including a national criminal history background check (as defined in IC 10-13-3-12) by the Federal Bureau of Investigation, for any individual described in subsection (2);
(b) credit histories as described in section 402.2 of this chapter;
(c) surety bond requirements as described in section 402.3 of this chapter;
(d) a review of licensure actions in Indiana and in other states; and
(e) other background checks considered necessary by the director.
(5) For purposes of this section and in order to reduce the points of contact that the director has to maintain for purposes of this section, the director may use the NMLSR as a channeling agent for requesting and distributing information to and from any source as directed by the director.
(6) 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.
(7) Upon written request, the applicant is entitled to a hearing on the question of the qualifications of the applicant for a license in the manner provided in IC 4-21.5.
(8) The applicant shall pay the following fees at the time designated by the department:
(a) An initial license fee as established by the department under IC 28-11-3-5.
(b) An annual renewal fee as established by the department under IC 28-11-3-5.
(c) Examination fees as established by the department under IC 28-11-3-5.
(9) A fee as established by the department under IC 28-11-3-5 may be charged for each day a fee under subsection 8(b) or 8(c) is delinquent.
(10) Except in a transaction approved under section 406 of this chapter, a license issued under this section is not assignable or transferable.
(a) direct or cause the direction of the management or policies of a creditor, whether through the beneficial ownership of voting securities, by contract, or otherwise; or
(b) vote at least twenty-five percent (25%) of the voting securities of a creditor, whether the voting rights are derived through the beneficial ownership of voting securities, by contract, or otherwise.
(2) An organization or an individual acting directly, indirectly, or through or in concert with one (1) or more other organizations or individuals may not acquire control of any creditor unless the department has received and approved an application for change in control. The department has not more than one hundred twenty (120) days after receipt of an application to issue a notice approving the proposed change in control. The application must contain the name and address of the organization, individual, or individuals who propose to acquire control and any other information required by the director.
(3) The period for approval under subsection (2) may be extended:
(a) in the discretion of the director for an additional thirty (30) days; and
(b) not more than two (2) additional times for not more than forty-five (45) days each time if:
(i) the director determines that the organization, individual, or individuals who propose to acquire control have not submitted substantial evidence of the qualifications described in subsection (4);
(ii) the director determines that any material information submitted is substantially inaccurate; or
(iii) the director has been unable to complete the investigation of the organization, individual, or individuals who propose to acquire control because of any delay caused by or the inadequate cooperation of the organization, individual, or individuals.
(4) The department shall issue a notice approving the application only after it is satisfied that both of the following apply:
(a) The organization, individual, or individuals who propose to acquire control are qualified by competence, experience, character, and financial responsibility to control and operate the creditor in a legal and proper manner.
(b) The interests of the owners and creditors of the creditor and the interests of the public generally will not be jeopardized by the proposed change in control.
(5) The director may determine, in the director's discretion, that subsection (2) does not apply to a transaction if the director determines that the direct or beneficial ownership of the creditor will not change as a result of the transaction.
(6) The president or other chief executive officer of a creditor shall report to the director any transfer or sale of securities of the creditor that results in direct or indirect ownership by a holder or an affiliated group of holders of at least ten percent (10%) of the outstanding securities of the creditor. The report required by this section must be made not later than ten (10) days after the transfer of the securities on the books of the creditor.
(7) Depending on the circumstances of the transaction, the director may reserve the right to require the organization, individual, or individuals who propose to acquire control of a creditor licensed under this article to apply for a new license under section 401 of this chapter, instead of acquiring control of the
licensee under this section.
(2) The underlying purposes and policies of this article are:
(a) to simplify, clarify, and modernize the law governing retail installment sales, consumer credit, small loans, and usury;
(b) to provide rate ceilings to assure an adequate supply of credit to consumers;
(c) to further consumer understanding of the terms of credit transactions and to foster competition among suppliers of consumer credit so that consumers may obtain credit at reasonable cost;
(d) to protect consumer buyers, lessees, and borrowers against unfair practices by some suppliers of consumer credit, having due regard for the interests of legitimate and scrupulous creditors;
(e) to permit and encourage the development of fair and economically sound consumer credit practices;
(f) to conform the regulation of consumer credit transactions to the policies of the Federal Consumer Credit Protection Act; and
(g) to make uniform the law, including administrative rules among the various jurisdictions.
(3) A reference to a requirement imposed by this article includes reference to a related rule or guidance of the department adopted pursuant to this article.
(4) A reference to a federal law in
(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.
(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) The United States, any state or local government, or any agency or instrumentality of any governmental entity, including United States government sponsored enterprises.
(1) "Affiliate", with respect to any person subject to this article, means a person that, directly or indirectly, through one (1) or more intermediaries:
(a) controls;
(b) is controlled by; or
(c) is under common control with;
the person subject to this article.
(2) "Agreement" means the bargain of the parties in fact as found in their language or by implication from other circumstances, including 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 finance credit
service charge is made; and
(e) with respect to a sale of goods or services, either the amount
financed does not exceed fifty thousand dollars ($50,000) or 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 24-4.5-6-101), (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 does not exceed fifty thousand dollars
($50,000); 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,
(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
(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 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
(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, 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
(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)
(iv) any agent of the creditor, loan broker, or other mortgage loan originator described in items (i) through (iii);
a person or entity that only performs 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)).
(26) "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.
(27) "Mortgage transaction" means:
(a) a 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
intended to be constructed. The term does not include a land
contract.
(28) "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.
(29) "Nontraditional mortgage product" means any mortgage
product other than a thirty (30) year fixed rate mortgage.
(30) "Official fees" means:
(a) fees and charges prescribed by law which actually are or will
be paid to public officials for determining the existence of or for
perfecting, releasing, or satisfying a security interest related to a
consumer credit sale, consumer lease, or consumer loan; or
(b) premiums payable for insurance in lieu of perfecting a security
interest otherwise required by the creditor in connection with the
sale, lease, or loan, if the premium does not exceed the fees and
charges described in paragraph (a) that would otherwise be
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", means 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
(b) (ii) at least one (1) time 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) at least one (1) time for a mortgage transaction secured
by a dwelling;
in the current calendar year, if a the person did not meet these
the numerical standards described in subdivision (a) in the
preceding calendar year. the numerical standards shall be applied
to the current 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.
(42) "Subordinate lien mortgage transaction" means:
(a) a 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 a land contract,
(or another equivalent consensual security interest) that constitutes a
subordinate lien on a dwelling or on residential real estate upon which
a dwelling is constructed or intended to be constructed. The term
does not include a land contract.
(43) "Unique identifier" means a number or other identifier assigned
by protocols established by the NMLSR.
(44) "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.
"Amount financed" Section
"Cash price" Section
"Consumer credit sale"
"Consumer lease" Section
"Consumer related sale" Section
"Credit service charge" Section
"Goods" Section
"Home solicitation sale" Section
"Merchandise certificate" Section
"Precomputed" Section
"Revolving charge account" Section
"Sale of goods" Section
"Sale of an interest in land" Section
"Sale of services" Section
"Seller" Section
"Services" Section
(a) Official fees and taxes.
(b) Charges for insurance as described in subsection (2).
(c) Notwithstanding provisions of the Federal Consumer Credit Protection Act concerning disclosure, charges for other benefits, including insurance, conferred on the buyer, if the benefits are of value to the buyer and if the charges are reasonable in relation to the benefits, and are excluded as permissible additional charges from the credit service charge. With respect to any additional charge not specifically provided for in this section, to be a permitted charge under this subsection the seller must submit a written explanation of the charge to the department indicating how the charge would be assessed and the value or benefit to the buyer. Supporting documents may be required by the department. The department shall determine whether the charge would be of benefit to the buyer and is reasonable in relation to the benefits.
(d) A charge not to exceed twenty-five dollars ($25) for each return by a bank or other depository institution of a dishonored check, negotiable order of withdrawal, or share draft issued by the debtor.
(e) Annual participation fees assessed in connection with a revolving charge account. Annual participation fees must:
(i) be reasonable in amount;
(ii) bear a reasonable relationship to the seller's costs to maintain and monitor the charge account; and
(iii) not be assessed for the purpose of circumvention or evasion of this article, as determined by the department.
(2) An additional charge may be made for insurance written in connection with the sale, other than insurance protecting the seller against the buyer's default or other credit loss:
(a) with respect to insurance against loss of or damage to property, or against liability, if the seller furnishes a clear and specific statement in writing to the buyer, setting forth the cost of the insurance if obtained from or through the seller and stating that the buyer may choose the person, subject to the seller's reasonable approval, through whom the insurance is to be obtained; and
(b) with respect to consumer credit insurance providing life, accident, unemployment or other loss of income, or health coverage, if the insurance coverage is not a factor in the approval by the seller of the extension of credit and is clearly disclosed in writing to the buyer, and if, in order to obtain the insurance in connection with the extension of credit, the buyer gives specific, affirmative, written indication of the desire to do so after written disclosure of the cost.
(3) With respect to a subordinate lien mortgage transaction, the following closing costs, if the costs are bona fide, reasonable in amount, and not for the purpose of circumvention or evasion of this article:
(a) fees for title examination, abstract of title, title insurance, property surveys, or similar purposes;
(b) fees for preparing deeds, mortgages, and reconveyance, settlement, and similar documents;
(c) notary and credit report fees;
(d) amounts required to be paid into escrow or trustee accounts if the amounts would not otherwise be included in the
(e) appraisal fees.
(2) At the time of prepayment of a credit sale not subject to the provisions of rebate upon prepayment
(3) The creditor or mortgage servicer shall provide, in writing, an accurate payoff
(A) one hundred dollars ($100) if an accurate consumer credit sale payoff amount is not provided by the creditor or mortgage servicer within
(B) the greater of:
(i) one hundred dollars ($100); or
(ii) the credit service charge that accrues on the sale from the date the creditor or mortgage servicer receives the first written request until the date on which the accurate consumer credit sale payoff amount is provided;
if an accurate consumer credit sale payoff amount is not provided by the creditor or mortgage servicer within
A liability under this subsection is an excess charge under IC 24-4.5-5-202.
(4) As used in this subsection, "mortgage transaction" does not include a land contract and means a consumer credit sale in which a mortgage
(a) the following statement: "The debtor remains liable for any amount still owed under the mortgage transaction."; or
(b) a statement substantially similar to the statement set forth in subdivision (a);
acknowledged by the initials or signature of the debtor, on or before the date on which the short sale payment is accepted. As used in this subsection, "short sale" means a transaction in which the property that is the subject of a mortgage transaction is sold for an amount that is less than the amount of the debtor's outstanding obligation under the
mortgage transaction. A creditor or mortgage servicer that fails to
respond to an offer within the time prescribed by this subsection is
liable in accordance with 12 U.S.C. 2605(f) in any action brought
under that section.
(a) if the loan is refinanced or consolidated with the same creditor;
(b) for prepayment by proceeds of any insurance or acceleration after default; or
(c) after three (3) years from the contract date.
(2) At the time of prepayment of a consumer loan not subject to the provisions of rebate upon prepayment
(a) The loan origination fee allowed under
(b) The debtor paid mortgage broker fee, if any, paid to a person who does not control, is not controlled by, or is not under common control with, the creditor holding the loan at the time a consumer loan is prepaid.
(3) The creditor or mortgage servicer shall provide, in writing, an accurate payoff
statement was prepared and the payoff amount as of that date,
including an itemization of each fee, charge, or other sum included
within the payoff amount. A creditor or mortgage servicer who fails
to provide the accurate consumer loan payoff amount is liable for:
(a) one hundred dollars ($100) if an accurate consumer loan
payoff amount is not provided by the creditor or mortgage
servicer within ten (10) calendar seven (7) business days
(excluding legal public holidays, Saturdays, and Sundays) after
the creditor or mortgage servicer receives the debtor's first written
request; and
(b) the greater of:
(i) one hundred dollars ($100); or
(ii) the loan finance charge that accrues on the loan from the
date the creditor or mortgage servicer receives the first written
request until the date on which the accurate consumer loan
payoff amount is provided;
if an accurate consumer loan payoff amount is not provided by the
creditor or mortgage servicer within ten (10) calendar seven (7)
business days (excluding legal public holidays, Saturdays, and
Sundays) after the creditor or mortgage servicer receives the
debtor's second written request, and the creditor or mortgage
servicer failed to comply with subdivision (a).
A liability under this subsection is an excess charge under
IC 24-4.5-5-202.
(4) As used in this subsection, "mortgage transaction" means a
consumer credit loan in which a mortgage deed of trust, (or a land
contract another equivalent consensual security interest) that
constitutes a lien is created or retained against land upon which there
is constructed or intended to be constructed a dwelling that is or will
be used by the debtor primarily for personal, family, or household
purposes. This subsection applies to a mortgage transaction with
respect to which any installment or minimum payment due is
delinquent for at least sixty (60) days. The creditor, servicer, or the
creditor's agent shall acknowledge a written offer made in connection
with a proposed short sale not later than ten (10) five (5) business days
(excluding legal public holidays, Saturdays, and Sundays) after the
date of the offer if the offer complies with the requirements for a
qualified written request set forth in 12 U.S.C. 2605(e)(1)(B). The
creditor, servicer, or creditor's agent is required to acknowledge a
written offer made in connection with a proposed short sale from a
third party acting on behalf of the debtor only if the debtor has
provided written authorization for the creditor, servicer, or creditor's
agent to do so. Not later than thirty (30) business days (excluding legal
public holidays, Saturdays, and Sundays) after receipt of an offer
under this subsection, the creditor, servicer, or creditor's agent shall
respond to the offer with an acceptance or a rejection of the offer. The
thirty (30) day period described in this subsection may be extended
for not more than fifteen (15) business days (excluding legal public
holidays, Saturdays, and Sundays) if, before the end of the thirty
(30) day period, the creditor, the servicer, or the creditor's agent
notifies the debtor of the extension and the reason the extension is
needed. Payment accepted by a creditor, servicer, or creditor's agent in
connection with a short sale constitutes payment in full satisfaction of
the mortgage transaction unless the creditor, servicer, or creditor's
agent obtains:
(a) the following statement: "The debtor remains liable for any
amount still owed under the mortgage transaction."; or
(b) a statement substantially similar to the statement set forth in
subdivision (a);
acknowledged by the initials or signature of the debtor, on or before the
date on which the short sale payment is accepted. As used in this
subsection, "short sale" means a transaction in which the property that
is the subject of a mortgage transaction is sold for an amount that is
less than the amount of the debtor's outstanding obligation under the
mortgage transaction. A creditor or mortgage servicer that fails to
respond to an offer within the time prescribed by this subsection is
liable in accordance with 12 U.S.C. 2605(f) in any action brought
under that section.
(2) A license shall not be issued unless the department finds that the professional training and experience, financial responsibility, character, and fitness of:
(a) the applicant and any significant affiliate of the applicant;
(b) each executive officer, director, or manager of the applicant, or any other individual having a similar status or performing a similar function for the applicant; and
(c) if known, each person directly or indirectly owning of record or owning beneficially at least ten percent (10%) of the outstanding shares of any class of equity security of the applicant;
are such as to warrant belief that the business will be operated honestly and fairly within the purposes of this article.
(3) The director is entitled to request evidence of compliance with this section at:
(a) the time of application;
(b) the time of renewal of a license; or
(c) any other time considered necessary by the director.
(4) Evidence of compliance with this section concerning a person licensed under section 502 of this chapter may include and for a person licensed under section 502.1 of this chapter must include:
(a) criminal background checks as described in section 503.1 of this chapter, including a national criminal history background check (as defined in IC 10-13-3-12) by the Federal Bureau of Investigation, for any individual described in subsection (2);
(b) credit histories as described in section 503.2 of this chapter;
(c) surety bond requirements as described in section 503.3 of this chapter;
(d) a review of licensure actions in Indiana and other states; and
(e) other background checks considered necessary by the director.
(5) For purposes of this section and in order to reduce the points of contact that the director may have to maintain under this section, the director may use the NMLSR as a channeling agent for requesting and distributing information to and from any source as directed by the director.
(6) 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.
(7) Upon written request, the applicant is entitled to a hearing on the question of the qualifications of the applicant for a license as provided in IC 4-21.5.
(8) The applicant shall pay the following fees at the time designated by the department:
(a) An initial license fee as established by the department under IC 28-11-3-5.
(b) Examination fees as established by the department under IC 28-11-3-5.
(c) An annual renewal fee as established by the department under IC 28-11-3-5.
(9) A fee as established by the department under IC 28-11-3-5 may be charged for each day a fee under subsection (8)(b) or (8)(c) is delinquent.
(10) The licensee may deduct the fees required under subsection (8)(a) and (8)(c) from the filing fees paid under IC 24-4.5-6-203.
(11) Except in a transaction approved under section 515 of this chapter, a license issued under this section is not assignable or transferable.
(a) If the creditor is licensed in accordance with section 502 of this chapter, the creditor has:
(i) paid all required fees for renewal of the license; and
(ii) filed all reports and information required by the director.
(b) If the creditor is licensed under section 502.1 of this chapter, the following:
(i) The creditor has continued to meet the surety bond requirement under section 503.3 of this chapter.
(ii) The creditor has filed the creditor's annual call report in a manner that satisfies section 505(4) of this chapter.
(iii) The creditor has paid all required fees for renewal of the license.
(iv) The creditor and individuals described in section 503(2) of this chapter continue to meet all the standards for licensing established under section 503 of this chapter.
(v) The creditor has filed all reports and information required by the director.
(2) A license issued by the department authorizing a person to engage as a creditor in consumer loans or consumer credit sales under this article may be revoked or suspended by the department if the person fails to:
(a) file any renewal form required by the department; or
(b) pay any license renewal fee described under section 503(8)(c) of this chapter;
not later than sixty (60) days after the due date.
(3) A person whose license is revoked or suspended under this section may do either of the following:
(a) Pay all delinquent fees and apply for reinstatement of the license.
(b) Appeal the revocation or suspension to the department for an
administrative review under IC 4-21.5-3.
The Pending the decision from a hearing under IC 4-21.5-3
concerning license revocation or suspension, a license remains in
force. pending the decision resulting from the hearing under
IC 4-21.5-3.
(a) direct or cause the direction of the management or policies of a creditor, whether through the beneficial ownership of voting securities, by contract, or otherwise; or
(b) vote at least twenty-five percent (25%) of the voting securities of a creditor, whether the voting rights are derived through the beneficial ownership of voting securities, by contract, or otherwise.
(2) An organization or an individual acting directly, indirectly, or through or in concert with one (1) or more other organizations or individuals may not acquire control of any creditor unless the department has received and approved an application for change in control. The department has not more than one hundred twenty (120) days after receipt of an application to issue a notice approving the proposed change in control. The application must contain the name and address of the organization, individual, or individuals who propose to acquire control and any other information required by the director.
(3) The period for approval under subsection (2) may be extended:
(a) in the discretion of the director for an additional thirty (30) days; and
(b) not more than two (2) additional times for not more than forty-five (45) days each time if:
(i) the director determines that the organization, individual, or individuals who propose to acquire control have not submitted substantial evidence of the qualifications described in subsection (4);
(ii) the director determines that any material information submitted is substantially inaccurate; or
(iii) the director has been unable to complete the investigation of the organization, individual, or individuals who propose to acquire control because of any delay caused by or the inadequate cooperation of the
organization, individual, or individuals.
(4) The department shall issue a notice approving the
application only after the department is satisfied that both of the
following apply:
(a) The organization, individual, or individuals who propose
to acquire control are qualified by competence, experience,
character, and financial responsibility to control and operate
the creditor in a legal and proper manner.
(b) The interests of the owners and creditors of the creditor
and the interests of the public generally will not be
jeopardized by the proposed change in control.
(5) The director may determine, in the director's discretion, that
subsection (2) does not apply to a transaction if the director
determines that the direct or beneficial ownership of the creditor
will not change as a result of the transaction.
(6) The president or other chief executive officer of a creditor
shall report to the director any transfer or sale of securities of the
creditor that results in direct or indirect ownership by a holder or
an affiliated group of holders of at least ten percent (10%) of the
outstanding securities of the creditor. The report required by this
section must be made not later than ten (10) days after the transfer
of the securities on the books of the creditor.
(7) Depending on the circumstances of the transaction, the
director may reserve the right to require the organization,
individual, or individuals who propose to acquire control of a
creditor licensed under this article to apply for a new license under
section 503 of this chapter, instead of acquiring control of the
licensee under this section.
(b) The term includes the following:
(1) A home loan subject to IC 24-9.
(2) A loan described in IC 24-9-1-1, to the extent allowed under federal law.
(3) A first lien mortgage transaction (as defined in IC 24-4.4-1-301) subject to IC 24-4.4.
(4) A consumer credit sale subject to IC 24-4.5-2 in which a mortgage
(5) A consumer credit loan subject to IC 24-4.5-3 in which a mortgage
(6) A loan in which a mortgage
(A) that is located in Indiana;
(B) upon which there is a dwelling that is not or will not be used by the borrower primarily for personal, family, or household purposes; and
(C) that is classified as residential for property tax purposes.
The term includes a loan that is secured by land in Indiana upon which there is a dwelling that is purchased by or through the borrower for investment or other business purposes.
(c) The term does not include a land contract.
(b) The term includes any of the following that meets the conditions set forth in subsection (a):
(1) A home loan subject to IC 24-9.
(2) A loan described in IC 24-9-1-1, to the extent allowed under federal law.
(3) A first lien mortgage transaction (as defined in IC 24-4.4-1-301) subject to IC 24-4.4.
(c) The term does not include a land contract (as defined in IC 24-4.4-1-301(36)).
(1) Receive and act on complaints, take action designed to obtain voluntary compliance with this article, or commence proceedings on the department's own initiative.
(2) Issue and enforce administrative orders under IC 4-21.5.
(3) Counsel persons and groups on their rights and duties under this article.
(4) Establish programs for the education of consumers with respect to rental purchase agreement practices and problems.
(5) Make studies appropriate to effectuate the purposes and policies of this article and make the results available to the public.
(6) Adopt rules under IC 4-22-2, including emergency rules under IC 4-22-2-37.1, to carry out this article.
(7) Maintain more than one (1) office within Indiana.
(8) Bring a civil action to restrain a person from violating this article and for other appropriate relief.
(b) If the department determines, after notice and an opportunity to be heard, that a person has violated this article, the department may, in addition to or instead of all other remedies available under this section, impose upon the person a civil penalty not greater than ten thousand dollars ($10,000) per violation.
(1) designed primarily for occupancy of one (1) to four (4) families; and
(2) that is or will be occupied by a borrower as the borrower's principal dwelling.
(b) The term does not include a land contract.
(b) This subsection applies to a home loan, or the refinancing or consolidation of a home loan, that:
(1) is closed after June 30, 2009; and
(2) has an interest rate that is subject to change at one (1) or more times during the term of the home loan.
A creditor in a transaction to which this subsection applies may not contract for and may not charge the borrower a prepayment fee or penalty.
(c) This subsection applies to a home loan with respect to which any installment or minimum payment due is delinquent for at least sixty (60) days. The creditor, servicer, or the creditor's agent shall acknowledge a written offer made in connection with a proposed short sale not later than
behalf of the debtor only if the debtor has provided written
authorization for the creditor, servicer, or creditor's agent to do so. Not
later than thirty (30) business days (excluding legal public holidays,
Saturdays, and Sundays) after receipt of an offer under this
subsection, the creditor, servicer, or creditor's agent shall respond to the
offer with an acceptance or a rejection of the offer. The thirty (30) day
period described in this subsection may be extended for not more
than fifteen (15) business days (excluding legal public holidays,
Saturdays, and Sundays) if, before the end of the thirty (30) day
period, the creditor, the servicer, or the creditor's agent notifies the
debtor of the extension and the reason the extension is needed. As
used in this subsection, "short sale" means a transaction in which the
property that is the subject of a home loan is sold for an amount that is
less than the amount of the borrower's outstanding obligation on the
home loan. A creditor, a servicer, or a creditor's agent that fails to
respond to an offer within the time prescribed by this subsection is
liable in accordance with 12 U.S.C. 2605(f) in any action brought
under that section.
(1) A home loan subject to this article.
(2) To the extent allowed under federal law, a loan described in IC 24-9-1-1 that is secured by a mortgage (or
(A) designed primarily for occupancy of one (1) to four (4) families; and
(B) that is or will be occupied by a borrower as the borrower's principal dwelling.
(3) A first lien mortgage transaction (as defined in IC 24-4.4-1-301) subject to IC 24-4.4.
(4) A consumer credit sale subject to IC 24-4.5-2 in which a mortgage
(A) that is located in Indiana; and
(B) upon which there is constructed or intended to be constructed a dwelling that is or will be used by the debtor primarily for personal, family, or household purposes.
(5) A consumer credit loan subject to IC 24-4.5-3 in which a mortgage
(A) that is located in Indiana; and
(B) upon which there is constructed or intended to be constructed a dwelling that is or will be used by the debtor primarily for personal, family, or household purposes.
(6) A loan in which a mortgage,
(A) that is located in Indiana;
(B) upon which there is constructed or intended to be constructed a dwelling that is not or will not be used by the borrower primarily for personal, family, or household purposes; and
(C) that is classified as residential for property tax purposes.
The term includes a loan that is secured by land in Indiana upon which there is constructed or intended to be constructed a dwelling that is purchased by or through the borrower for investment or other business purposes.
(7) A reverse mortgage transaction that is secured by real estate in Indiana on which there is located a structure that is occupied by a borrower as the borrower's principal dwelling.
The term does not include a land contract.
(b) As used in this section, "real estate transaction" means the sale or lease of any legal or equitable interest in real estate:
(1) that is located in Indiana;
(2) upon which there is constructed or intended to be constructed a dwelling; and
(3) that is classified as residential for property tax purposes.
(c) A person may not do any of the following:
(1) Divide a home loan transaction into separate parts with the intent of evading a provision of this article.
(2) Structure a home loan transaction as an open-end loan with the intent of evading the provisions of this article if the home loan would be a high cost home loan if the home loan had been structured as a closed-end loan.
(3) Engage in a deceptive act in connection with a mortgage transaction or a real estate transaction.
(4) Engage in, or solicit to engage in, a real estate transaction or a mortgage transaction without a permit or license required by
law.
(5) With respect to a real estate transaction or a mortgage
transaction, represent that:
(A) the transaction has:
(i) certain terms or conditions; or
(ii) the sponsorship or approval of a particular person or
entity;
that it does not have and that the person knows or reasonably
should know it does not have; or
(B) the real estate or property that is the subject of the
transaction has any improvements, appurtenances, uses,
characteristics, or associated benefits that it does not have and
that the person knows or reasonably should know it does not
have.
(6) Maintain or offer to maintain an account for the receipt of
funds for the payment of real estate taxes and insurance unless the
person is any of the following:
(A) Any of the following that is chartered under the laws of a
state or the United States:
(i) A bank.
(ii) A savings and loan association.
(iii) A credit union.
(iv) A savings bank.
(B) The creditor in a mortgage transaction.
(C) A mortgage servicer acting on behalf of the creditor in a
mortgage transaction.
(D) A closing agent (as defined in IC 27-7-3.7-1).
(7) Fail to provide the notice required under subsection (d), within
the time specified in subsection (d), if the person is a seller in a
real estate transaction described in subsection (d).
(d) This subsection applies to a real estate transaction that involves
a land contract between the seller and the buyer in the transaction. If
the real estate that is the subject of the transaction is subject to any
encumbrance, including any tax lien, foreclosure action, legal
judgment, or other encumbrance affecting the title to the real estate, the
seller must provide written notice by certified mail, return receipt
requested, of the encumbrance to the buyer:
(1) not later than the time the land contract is executed, if the
encumbrance is created before or at the time the land contract is
executed; or
(2) not later than ten (10) business days after the encumbrance is
created, if the encumbrance is created after the land contract is
executed.
(1) "Acceptable collateral" means, as to securities lending transactions:
(A) cash;
(B) cash equivalents;
(C) letters of credit; and
(D) direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
(2) "Acceptable collateral" means, as to lending foreign securities, sovereign debt that is rated:
(A) A- or higher by Standard & Poor's Corporation;
(B) A3 or higher by Moody's Investors Service, Inc.;
(C) A- or higher by Duff and Phelps, Inc.; or
(D) 1 by the Securities Valuation Office.
(3) "Acceptable collateral" means, as to repurchase transactions:
(A) cash;
(B) cash equivalents; and
(C) direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
(4) "Acceptable collateral" means, as to reverse repurchase transactions:
(A) cash; and
(B) cash equivalents.
(5) "Admitted assets" means assets permitted to be reported as admitted assets on the statutory financial statement of the life insurance company most recently required to be filed with the commissioner.
(6) "Business entity" means:
(A) a sole proprietorship;
(B) a corporation;
(C) a limited liability company;
(D) an association;
(E) a partnership;
(F) a joint stock company;
(G) a joint venture;
(H) a mutual fund;
(I) a trust;
(J) a joint tenancy; or
(K) other, similar form of business organization;
whether organized for-profit or not-for-profit.
(7) "Cash" means any of the following:
(A) United States denominated paper currency and coins.
(B) Negotiable money orders and checks.
(C) Funds held in any time or demand deposit in any depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.
(8) "Cash equivalent" means any of the following:
(A) A certificate of deposit issued by a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.
(B) A banker's acceptance issued by a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.
(C) A government money market mutual fund.
(D) A class one money market mutual fund.
(9) "Class one money market mutual fund" means a money market mutual fund that at all times qualifies for investment pursuant to the "Purposes and Procedures of the Securities Valuation Office" or any successor publication either using the bond class one reserve factor or because it is exempt from asset valuation reserve requirements.
(10) "Dollar roll transaction" means two (2) simultaneous transactions that have settlement dates not more than ninety-six (96) days apart and that meet the following description:
(A) In one (1) transaction, a life insurance company sells to a business entity one (1) or both of the following:
(i) Asset-backed securities that are issued, assumed, or guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation or the successor of an entity referred to in this item.
(ii) Other asset-backed securities referred to in Section 106 of Title I of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r-1), as amended.
(B) In the other transaction, the life insurance company is
obligated to purchase from the same business entity securities
that are substantially similar to the securities sold under clause
(A).
(11) "Domestic jurisdiction" means:
(A) the United States;
(B) any state, territory, or possession of the United States;
(C) the District of Columbia;
(D) Canada; or
(E) any province of Canada.
(12) "Earnings available for fixed charges" means income, after
deducting:
(A) operating and maintenance expenses other than expenses
that are fixed charges;
(B) taxes other than federal and state income taxes;
(C) depreciation; and
(D) depletion;
but excluding extraordinary nonrecurring items of income or
expense appearing in the regular financial statements of a
business entity.
(13) "Fixed charges" includes:
(A) interest on funded and unfunded debt;
(B) amortization of debt discount; and
(C) rentals for leased property.
(14) "Foreign currency" means a currency of a foreign
jurisdiction.
(15) "Foreign jurisdiction" means a jurisdiction other than a
domestic jurisdiction.
(16) "Government money market mutual fund" means a money
market mutual fund that at all times:
(A) invests only in:
(i) obligations that are issued, guaranteed, or insured by the
United States; or
(ii) collateralized repurchase agreements composed of
obligations that are issued, guaranteed, or insured by the
United States; and
(B) qualifies for investment without a reserve pursuant to the
"Purposes and Procedures of the Securities Valuation Office"
or any successor publication.
(17) "Guaranteed or insured," when used in reference to an
obligation acquired under this section, means that the guarantor
or insurer has agreed to:
(A) perform or insure the obligation of the obligor or purchase
the obligation; or
(B) be unconditionally obligated, until the obligation is repaid,
to maintain in the obligor a minimum net worth, fixed charge
coverage, stockholders' equity, or sufficient liquidity to enable
the obligor to pay the obligation in full.
(18) "Investment company" means:
(A) an investment company as defined in Section 3(a) of the
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as
amended; or
(B) a person described in Section 3(c) of the Investment
Company Act of 1940.
(19) "Investment company series" means an investment portfolio
of an investment company that is organized as a series company
to which assets of the investment company have been specifically
allocated.
(20) "Letter of credit" means a clean, irrevocable, and
unconditional letter of credit that is:
(A) issued or confirmed by; and
(B) payable and presentable at;
a financial institution on the list of financial institutions meeting
the standards for issuing letters of credit under the "Purposes and
Procedures of the Securities Valuation Office" or any successor
publication. To constitute acceptable collateral for the purposes
of paragraph 29 of subsection (b), a letter of credit must have an
expiration date beyond the term of the subject transaction.
(21) "Market value" means the following:
(A) As to cash, the amount of the cash.
(B) As to cash equivalents, the amount of the cash equivalents.
(C) As to letters of credit, the amount of the letters of credit.
(D) As to a security as of any date:
(i) the price for the security on that date obtained from a
generally recognized source, or the most recent quotation
from such a source; or
(ii) if no generally recognized source exists, the price for the
security as determined in good faith by the parties to a
transaction;
plus accrued but unpaid income on the security to the extent
not included in the price as of that date.
(22) "Money market mutual fund" means a mutual fund that
meets the conditions of 17 CFR 270.2a-7, under the Investment
Company Act of 1940 (15 U.S.C. 80a-1 et seq.).
(23) "Multilateral development bank" means an international
development organization of which the United States is a
member.
(24) "Mutual fund" means:
(A) an investment company; or
(B) in the case of an investment company that is organized as
a series company, an investment company series;
that is registered with the United States Securities and Exchange
Commission under the Investment Company Act of 1940 (15
U.S.C. 80a-1 et seq.).
(25) "Obligation" means any of the following:
(A) A bond.
(B) A note.
(C) A debenture.
(D) Any other form of evidence of debt.
(26) "Person" means:
(A) an individual;
(B) a business entity;
(C) a multilateral development bank; or
(D) a government or quasi-governmental body, such as a
political subdivision or a government sponsored enterprise.
(27) "Repurchase transaction" means a transaction in which a life
insurance company purchases securities from a business entity
that is obligated to repurchase the purchased securities or
equivalent securities from the life insurance company at a
specified price, either within a specified period of time or upon
demand.
(28) "Reverse repurchase transaction" means a transaction in
which a life insurance company sells securities to a business
entity and is obligated to repurchase the sold securities or
equivalent securities from the business entity at a specified price,
either within a specified period of time or upon demand.
(29) "Securities lending transaction" means a transaction in which
securities are loaned by a life insurance company to a business
entity that is obligated to return the loaned securities or equivalent
securities to the life insurance company, either within a specified
period of time or upon demand.
(30) "Securities Valuation Office" refers to:
(A) the Securities Valuation Office of the National Association
of Insurance Commissioners; or
(B) any successor of the office referred to in Clause (A)
established by the National Association of Insurance
Commissioners.
(31) "Series company" means an investment company that is organized as a series company (as defined in Rule 18f-2(a) adopted under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended).
(32) "Supported", when used in reference to an obligation, by whomever issued or made, means that:
(i) a domestic jurisdiction or by an administration, agency, authority, or instrumentality of a domestic jurisdiction; or
(ii) a business entity;
as the case may be, is secured by real or personal property of value at least equal to the principal amount of the obligation by means of mortgage, assignment of vendor's interest in one (1) or more conditional sales contracts, other title retention device, or by means of other security interest in such property for the benefit of the holder of the obligation; and
(i) domestic jurisdiction or administration, agency, authority, or instrumentality of the domestic jurisdiction; or
(ii) business entity;
as the case may be, has entered into a firm agreement to rent or use the property pursuant to which it is obligated to pay money as rental or for the use of such property in amounts and at times which shall be sufficient, after provision for taxes upon and other expenses of use of the property, to repay in full the obligation with interest and when such agreement and the money obligated to be paid thereunder are assigned, pledged, or secured for the benefit of the holder of the obligation. However, where the security for the repayment of the obligation consists of a first mortgage lien or deed of trust on a fee interest in real property, the obligation may provide for the amortization, during the initial, fixed period of the lease or contract, of less than one hundred percent (100%) of the obligation if there is pledged or assigned, as additional security for the obligation, sufficient rentals payable under the lease, or of contract payments, to secure the amortized obligation payments required during the initial, fixed period of the lease or contract, including but not limited to payments of principal, interest, and taxes other than the income taxes of the borrower, and if there is to be left unamortized at the end of such period an amount not greater than the original appraised value of the land only, exclusive of all improvements, as
prescribed by law.
(b) Investments of domestic life insurance companies at the time
they are made shall conform to the following categories, conditions,
limitations, and standards:
1. Obligations of a domestic jurisdiction or of any administration,
agency, authority, or instrumentality of a domestic jurisdiction.
2. Obligations guaranteed, supported, or insured as to principal and
interest by a domestic jurisdiction or by an administration, agency,
authority, or instrumentality of a domestic jurisdiction.
3. Obligations issued under or pursuant to the Farm Credit Act of
1971 (12 U.S.C. 2001 through 2279aa-14) as in effect on December 31,
1990, or the Federal Home Loan Bank Act (12 U.S.C. 1421 through
1449) as in effect on December 31, 1990, interest bearing obligations
of the FSLIC Resolution Fund or shares of any institution whose
deposits are insured by the Savings Association Insurance Fund of the
Federal Deposit Insurance Corporation to the extent that such shares
are insured, obligations issued or guaranteed by a multilateral
development bank, and obligations issued or guaranteed by the African
Development Bank.
4. Obligations issued, guaranteed, or insured as to principal and
interest by a city, county, drainage district, road district, school district,
tax district, town, township, village, or other civil administration,
agency, authority, instrumentality, or subdivision of a domestic
jurisdiction, providing such obligations are authorized by law and are:
(a) direct and general obligations of the issuing, guaranteeing or
insuring governmental unit, administration, agency, authority,
district, subdivision, or instrumentality;
(b) payable from designated revenues pledged to the payment of
the principal and interest thereof; or
(c) improvement bonds or other obligations constituting a first
lien, except for tax liens, against all of the real estate within the
improvement district or on that part of such real estate not
discharged from such lien through payment of the assessment.
The area to which such improvement bonds or other obligations
relate shall be situated within the limits of a town or city and at
least fifty percent (50%) of the properties within such area shall
be improved with business buildings or residences.
5. Loans evidenced by obligations secured by first mortgage liens
on otherwise unencumbered real estate or otherwise unencumbered
leaseholds having at least fifty (50) years of unexpired term, such real
estate, or leaseholds to be located in a domestic jurisdiction. Such loans
shall not exceed eighty percent (80%) of the fair value of the security
determined in a manner satisfactory to the department, except that the
percentage stated may be exceeded if and to the extent such excess is
guaranteed or insured by:
(a) a domestic jurisdiction or by an administration, agency,
authority, or instrumentality of any domestic jurisdiction; or
(b) a private mortgage insurance corporation approved by the
department.
If improvements constitute a part of the value of the real estate or
leaseholds, such improvements shall be insured against fire for the
benefit of the mortgagee in an amount not less than the difference
between the value of the land and the unpaid balance of the loan.
For the purpose of this section, real estate or a leasehold shall not be
deemed to be encumbered by reason of the existence in relation thereto
of:
(1) liens inferior to the lien securing the loan made by the life
insurance company;
(2) taxes or assessment liens not delinquent;
(3) instruments creating or reserving mineral, oil, water or timber
rights, rights-of-way, common or joint driveways, sewers, walls,
or utility connections;
(4) building restrictions or other restrictive covenants; or
(5) an unassigned lease reserving rents or profits to the owner.
A loan that is authorized by this paragraph remains qualified under this
paragraph notwithstanding any refinancing, modification, or extension
of the loan. Investments authorized by this paragraph shall not in the
aggregate exceed forty-five percent (45%) of the life insurance
company's admitted assets.
6. Loans evidenced by obligations guaranteed or insured, but only
to the extent guaranteed or insured, by a domestic jurisdiction or by any
agency, administration, authority, or instrumentality of any domestic
jurisdiction, and secured by second or subsequent mortgages or deeds
of trust on real estate or leaseholds, provided the terms of the leasehold
mortgages or deeds of trust shall not exceed four-fifths (4/5) of the
unexpired lease term, including enforceable renewable options
remaining at the time of the loan.
7. Real estate contracts involving otherwise unencumbered real
estate situated in a domestic jurisdiction, to be secured by the title to
such real estate, which shall be transferred to the life insurance
company or to a trustee or nominee of its choosing. For statement and
deposit purposes, the value of a contract acquired pursuant to this
paragraph shall be whichever of the following amounts is the least:
(a) eighty percent (80%) of the contract price of the real estate;
(b) eighty percent (80%) of the fair value of the real estate at the time the contract is purchased, such value to be determined in a manner satisfactory to the department; or
(c) the amount due under the contract.
For the purpose of this paragraph, real estate shall not be deemed encumbered by reason of the existence in relation thereto of: (1) taxes or assessment liens not delinquent; (2) instruments creating or reserving mineral, oil, water or timber rights, rights-of-way, common or joint driveways, sewers, walls or utility connections; (3) building restrictions or other restrictive covenants; or (4) an unassigned lease reserving rents or profits to the owner. Fire insurance upon improvements constituting a part of the real estate described in the contract shall be maintained in an amount at least equal to the unpaid balance due under the contract or the fair value of improvements, whichever is the lesser.
8. Improved or unimproved real property, whether encumbered or unencumbered, or any interest therein, held directly or evidenced by joint venture interests, general or limited partnership interests, trust certificates, or any other instruments, and acquired by the life insurance company as an investment, which real property, if unimproved, is developed within five (5) years. Real property acquired for investment under this paragraph, whether leased or intended to be developed for commercial or residential purposes or otherwise lawfully held, is subject to the following conditions and limitations:
(a) The real estate shall be located in a domestic jurisdiction.
(b) The admitted assets of the life insurance company must exceed twenty-five million dollars ($25,000,000).
(c) The life insurance company shall have the right to expend from time to time whatever amount or amounts may be necessary to conform the real estate to the needs and purposes of the lessee and the amount so expended shall be added to and become a part of the investment in such real estate.
(d) The value for statement and deposit purposes of an investment under this paragraph shall be reduced annually by amortization of the costs of improvement and development, less land costs, over the expected life of the property, which value and amortization shall for statement and deposit purposes be determined in a manner satisfactory to the commissioner. In determining such value with respect to the calendar years in which an investment begins or ends with respect to a point in time other than the beginning or end of a calendar year, the amortization provided above shall be made on a proportional basis.
(e) Fire insurance shall be maintained in an amount at least equal to the insurable value of the improvements or the difference between the value of the land and the value at which such real estate is carried for statement and deposit purposes, whichever amount is smaller.
(f) Real estate acquired in any of the manners described and sanctioned under section 3 of this chapter, or otherwise lawfully held, except paragraph 5 of that section which specifically relates to the acquisition of real estate under this paragraph, shall not be affected in any respect by this paragraph unless such real estate at or subsequent to its acquisition fulfills the conditions and limitations of this paragraph, and is declared by the life insurance company in a writing filed with the department to be an investment under this paragraph. The value of real estate acquired under section 3 of this chapter, or otherwise lawfully held, and invested under this paragraph shall be initially that at which it was carried for statement and deposit purposes under that section.
(g) Neither the cost of each parcel of improved real property nor the aggregate cost of all unimproved real property acquired under the authority of this paragraph may exceed two percent (2%) of the life insurance company's admitted assets. For purposes of this paragraph, "unimproved real property" means land containing no structures intended for commercial, industrial, or residential occupancy, and "improved real property" consists of all land containing any such structure. When applying the limitations of subparagraph (d) of this paragraph, unimproved real property becomes improved real property as soon as construction of any commercial, industrial, or residential structure is so completed as to be capable of producing income. In the event the real property is mortgaged with recourse to the life insurance company or the life insurance company commences a plan of construction upon real property at its own expense or guarantees payment of borrowed funds to be used for such construction, the total project cost of the real property will be used in applying the two percent (2%) test. Further, no more than ten percent (10%) of the life insurance company's admitted assets may be invested in all property, measured by the property value for statement and deposit purposes as defined in this paragraph, held under this paragraph at the same time.
9. Deposits of cash in a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation, or certificates of deposit issued by a depository institution, the deposits of
which are insured by the Federal Deposit Insurance Corporation.
10. Bank and bankers' acceptances and other bills of exchange of
kinds and maturities eligible for purchase or rediscount by federal
reserve banks.
11. Obligations that are issued, guaranteed, assumed, or supported
by a business entity organized under the laws of a domestic jurisdiction
and that are rated:
(a) BBB- or higher by Standard & Poor's Corporation (or A-2 or
higher in the case of commercial paper);
(b) Baa 3 or higher by Moody's Investors Service, Inc. (or P-2 or
higher in the case of commercial paper);
(c) BBB- or higher by Duff and Phelps, Inc. (or D-2 or higher in
the case of commercial paper); or
(d) 1 or 2 by the Securities Valuation Office.
Investments may also be made under this paragraph in obligations
that have not received a rating if the earnings available for fixed
charges of the business entity for the period of its five (5) fiscal years
next preceding the date of purchase shall have averaged per year not
less than one and one-half (1 1/2) times its average annual fixed
charges applicable to such period and if during either of the last two (2)
years of such period such earnings available for fixed charges shall
have been not less than one and one-half (1 1/2) times its fixed charges
for such year. However, if the business entity is a finance company or
other lending institution at least eighty percent (80%) of the assets of
which are cash and receivables representing loans or discounts made
or purchased by it, the multiple shall be one and one-quarter (1 1/4)
instead of one and one-half (1 1/2).
11.(A) Obligations issued, guaranteed, or assumed by a business
entity organized under the laws of a domestic jurisdiction, which
obligations have not received a rating or, if rated, have not received a
rating that would qualify the obligations for investment under
paragraph 11 of this section. Investments authorized by this paragraph
may not exceed ten percent (10%) of the life insurance company's
admitted assets.
12. Preferred stock of, or common or preferred stock guaranteed as
to dividends by, any corporation organized under the laws of a
domestic jurisdiction, which over the period of the seven (7) fiscal
years immediately preceding the date of purchase earned an average
amount per annum at least equal to five percent (5%) of the par value
of its common and preferred stock (or, in the case of stocks having no
par value, of its issued or stated value) outstanding at date of purchase,
or which over such period earned an average amount per annum at least
equal to two (2) times the total of its annual interest charges, preferred
dividends and dividends guaranteed by it, determined with reference
to the date of purchase. No investment shall be made under this
paragraph in a stock upon which any dividend is in arrears or has been
in arrears for ninety (90) days within the immediately preceding five
(5) year period.
13. Common stock of any solvent corporation organized under the
laws of a domestic jurisdiction which over the seven (7) fiscal years
immediately preceding purchase earned an average amount per annum
at least equal to six percent (6%) of the par value of its capital stock
(or, in the case of stock having no par value, of the issued or stated
value of such stock) outstanding at date of purchase, but the conditions
and limitations of this paragraph shall not apply to the special area of
investment to which paragraph 23 of this section pertains.
13.(A) Stock or shares of any mutual fund that:
(a) has been in existence for a period of at least five (5) years
immediately preceding the date of purchase, has assets of not less
than twenty-five million dollars ($25,000,000) at the date of
purchase, and invests substantially all of its assets in investments
permitted under this section; or
(b) is a class one money market mutual fund or a class one bond
mutual fund.
Investments authorized by this paragraph 13(A) in mutual funds having
the same or affiliated investment advisers shall not at any one (1) time
exceed in the aggregate ten percent (10%) of the life insurance
company's admitted assets. The limitations contained in paragraph 22
of this subsection apply to investments in the types of mutual funds
described in subparagraph (a). For the purposes of this paragraph,
"class one bond mutual fund" means a mutual fund that at all times
qualifies for investment using the bond class one reserve factor under
the "Purposes and Procedures of the Securities Valuation Office" or
any successor publication.
The aggregate amount of investments under this paragraph may be
limited by the commissioner if the commissioner finds that investments
under this paragraph may render the operation of the life insurance
company hazardous to the company's policyholders or creditors or to
the general public.
14. Loans upon the pledge of any of the investments described in
this section other than real estate and those qualifying solely under
paragraph 20 of this subsection, but the amount of such a loan shall not
exceed seventy-five percent (75%) of the value of the investment
pledged.
15. Real estate acquired or otherwise lawfully held under the provisions of IC 27-1, except under paragraph 7 or 8 of this subsection, which real estate as an investment shall also include the value of improvements or betterments made thereon subsequent to its acquisition. The value of such real estate for deposit and statement purposes is to be determined in a manner satisfactory to the department.
15.(A) Tangible personal property, equipment trust obligations, or other instruments evidencing an ownership interest or other interest in tangible personal property when the life insurance company purchasing such property has admitted assets in excess of twenty-five million dollars ($25,000,000), and where there is a right to receive determined portions of rental, purchase, or other fixed obligatory payments for the use of such personal property from a corporation whose obligations would be eligible for investment under the provisions of paragraph 11 of this subsection, provided that the aggregate of such payments together with the estimated salvage value of such property at the end of its minimum useful life, to be determined in a manner acceptable to the insurance commissioner, and the estimated tax benefits to the insurer resulting from ownership of such property, is adequate to return the cost of the investment in such property, and provided further, that each net investment in tangible personal property for which any single private corporation is obligated to pay rental, purchase, or other obligatory payments thereon does not exceed one-half of one percent (1/2%) of the life insurance company's admitted assets, and the aggregate net investments made under the provisions of this paragraph do not exceed five percent (5%) of the life insurance company's admitted assets.
16. Loans to policyholders of the life insurance company in amounts not exceeding in any case the reserve value of the policy at the time the loan is made.
17. A life insurance company doing business in a foreign jurisdiction may, if permitted or required by the laws of such jurisdiction, invest funds equal to its obligations in such jurisdiction in investments legal for life insurance companies domiciled in such jurisdiction or doing business therein as alien companies.
17.(A) Investments in (i) obligations issued, guaranteed, assumed, or supported by a foreign jurisdiction or by a business entity organized under the laws of a foreign jurisdiction and (ii) preferred stock and common stock issued by any such business entity, if the obligations of such foreign jurisdiction or business entity, as appropriate, are rated:
(a) BBB- or higher by Standard & Poor's Corporation (or A-2 or
higher in the case of commercial paper);
(b) Baa 3 or higher by Moody's Investors Service, Inc. (or P-2 or
higher in the case of commercial paper);
(c) BBB- or higher by Duff and Phelps, Inc. (or D-2 or higher in
the case of commercial paper); or
(d) 1 or 2 by the Securities Valuation Office.
If the obligations issued by a business entity organized under the laws
of a foreign jurisdiction have not received a rating, investments may
nevertheless be made under this paragraph in such obligations and in
the preferred and common stock of the business entity if the earnings
available for fixed charges of the business entity for a period of five (5)
fiscal years preceding the date of purchase have averaged at least three
(3) times its average fixed charges applicable to such period, and if
during either of the last two (2) years of such period, the earnings
available for fixed charges were at least three (3) times its fixed
charges for such year. Investments authorized by this paragraph in a
single foreign jurisdiction shall not exceed ten percent (10%) of the life
insurance company's admitted assets. Subject to section 2.2(g) of this
chapter, investments authorized by this paragraph denominated in
foreign currencies shall not in the aggregate exceed ten percent (10%)
of a life insurance company's admitted assets, and investments in any
one (1) foreign currency shall not exceed five percent (5%) of the life
insurance company's admitted assets. Investments authorized by this
paragraph and paragraph 17(B) shall not in the aggregate exceed
twenty percent (20%) of the life insurance company's admitted assets.
This paragraph in no way limits or restricts investments which are
otherwise specifically eligible for deposit under this section.
17.(B) Investments in:
(a) obligations issued, guaranteed, or assumed by a foreign
jurisdiction or by a business entity organized under the laws of a
foreign jurisdiction; and
(b) preferred stock and common stock issued by a business entity
organized under the laws of a foreign jurisdiction;
which investments are not eligible for investment under paragraph
17.(A).
Investments authorized by this paragraph 17(B) shall not in the
aggregate exceed five percent (5%) of the life insurance company's
admitted assets. Subject to section 2.2(g) of this chapter, if investments
authorized by this paragraph 17(B) are denominated in a foreign
currency, the investments shall not, as to such currency, exceed two
percent (2%) of the life insurance company's admitted assets.
Investments authorized by this paragraph 17(B) in any one (1) foreign
jurisdiction shall not exceed two percent (2%) of the life insurance
company's admitted assets.
Investments authorized by paragraph 17(A) of this subsection and
this paragraph 17(B) shall not in the aggregate exceed twenty percent
(20%) of the life insurance company's admitted assets.
18. To protect itself against loss, a company may in good faith
receive in payment of or as security for debts due or to become due,
investments or property which do not conform to the categories,
conditions, limitations, and standards set out above.
19. A life insurance company may purchase for its own benefit any
of its outstanding annuity or insurance contracts or other obligations
and the claims of holders thereof.
20. A life insurance company may make investments although not
conforming to the categories, conditions, limitations, and standards
contained in paragraphs 1 through 11, 12 through 19, and 29 through
31 of this subsection, but limited in aggregate amount to the lesser of:
(a) ten percent (10%) of the company's admitted assets; or
(b) the aggregate of the company's capital, surplus, and
contingency reserves reported on the statutory financial statement
of the insurer most recently required to be filed with the
commissioner.
This paragraph 20 does not apply to investments authorized by
paragraph 11.(A) of this subsection.
20.(A) Investments under paragraphs 1 through 20 and paragraphs
29 through 31 of this subsection are subject to the general conditions,
limitations, and standards contained in paragraphs 21 through 28 of
this subsection.
21. Investments in obligations (other than real estate mortgage
indebtedness) and capital stock of, and in real estate and tangible
personal property leased to, a single corporation, shall not exceed two
percent (2%) of the life insurance company's admitted assets, taking
into account the provisions of section 2.2(h) of this chapter. The
conditions and limitations of this paragraph shall not apply to
investments under paragraph 13(A) of this subsection or the special
area of investment to which paragraph 23 of this subsection pertains.
22. Investments in:
(a) preferred stock; and
(b) common stock;
shall not, in the aggregate, exceed twenty percent (20%) of the life
insurance company's admitted assets, exclusive of assets held in
segregated accounts of the nature defined in class 1(c) of IC 27-1-5-1.
These limitations shall not apply to investments for the special
purposes described in paragraph 23 of this subsection nor to
investments in connection with segregated accounts provided for in
class 1(c) of IC 27-1-5-1.
23. Investments in subsidiary companies must be made in
accordance with IC 27-1-23-2.6.
24. No investment, other than commercial bank deposits and loans
on life insurance policies, shall be made unless authorized by the life
insurance company's board of directors or a committee designated by
the board of directors and charged with the duty of supervising loans
or investments.
25. No life insurance company shall subscribe to or participate in
any syndicate or similar underwriting of the purchase or sale of
securities or property or enter into any transaction for such purchase or
sale on account of said company, jointly with any other corporation,
firm, or person, or enter into any agreement to withhold from sale any
of its securities or property, but the disposition of its assets shall at all
times be within its control. Nothing contained in this paragraph shall
be construed to invalidate or prohibit an agreement by two (2) or more
companies to join and share in the purchase of investments for bona
fide investment purposes.
26. No life insurance company may invest in the stocks or
obligations, except investments under paragraphs 9 and 10 of this
subsection, of any corporation in which an officer of such life insurance
company is either an officer or director. However, this limitation shall
not apply with respect to such investments in:
(a) a corporation which is a subsidiary or affiliate of such life
insurance company; or
(b) a trade association, provided such investment meets the
requirements of paragraph 5 of this subsection.
27. Except for the purpose of mutualization provided for in section
23 of this chapter, or for the purpose of retirement of outstanding
shares of capital stock pursuant to amendment of its articles of
incorporation, or in connection with a plan approved by the
commissioner for purchase of such shares by the life insurance
company's officers, employees, or agents, no life insurance company
shall invest in its own stock.
28. In applying the conditions, limitations, and standards prescribed
in paragraphs 11, 12, and 13 of this subsection to the stocks or
obligations of a corporation which in the seven (7) year period
preceding purchase of such stocks or obligations acquired its property
or a substantial part thereof through consolidation, merger, or purchase,
the earnings of the several predecessors or constituent corporations
shall be consolidated.
29. A. Before a life insurance company may engage in securities
lending transactions, repurchase transactions, reverse repurchase
transactions, or dollar roll transactions, the life insurance company's
board of directors must adopt a written plan that includes guidelines
and objectives to be followed, including the following:
(1) A description of how cash received will be invested or used
for general corporate purposes of the company.
(2) Operational procedures for managing interest rate risk,
counterparty default risk, and the use of acceptable collateral in
a manner that reflects the liquidity needs of the transaction.
(3) A statement of the extent to which the company may engage
in securities lending transactions, repurchase transactions, reverse
repurchase transactions, and dollar roll transactions.
B. A life insurance company must enter into a written agreement for
all transactions authorized by this paragraph, other than dollar roll
transactions. The written agreement:
(1) must require the termination of each transaction not more than
one (1) year after its inception or upon the earlier demand of the
company; and
(2) must be with the counterparty business entity, except that, for
securities lending transactions, the agreement may be with an
agent acting on behalf of the life insurance company if:
(A) the agent is:
(i) a business entity, the obligations of which are rated BBB-
or higher by Standard & Poor's Corporation (or A-2 or
higher in the case of commercial paper), Baa3 or higher by
Moody's Investors Service, Inc. (or P-2 or higher in the case
of commercial paper), BBB- or higher by Duff and Phelps,
Inc. (or D-2 or higher in the case of commercial paper), or
1 or 2 by the Securities Valuation Office;
(ii) a business entity that is a primary dealer in United States
government securities, recognized by the Federal Reserve
Bank of New York; or
(iii) any other business entity approved by the
commissioner; and
(B) the agreement requires the agent to enter into with each
counterparty separate agreements that are consistent with the
requirements of this paragraph.
C. Cash received in a transaction under this paragraph shall be:
(1) invested:
(A) in accordance with this section 2; and
(B) in a manner that recognizes the liquidity needs of the transaction; or
(2) used by the life insurance company for its general corporate purposes.
D. For as long as a transaction under this paragraph remains outstanding, the life insurance company or its agent or custodian shall maintain, as to acceptable collateral received in the transaction, either physically or through book entry systems of the Federal Reserve, the Depository Trust Company, the Participants Trust Company, or another securities depository approved by the commissioner:
(1) possession of the acceptable collateral;
(2) a perfected security interest in the acceptable collateral; or
(3) in the case of a jurisdiction outside the United States:
(A) title to; or
(B) rights of a secured creditor to;
the acceptable collateral.
E. The limitations set forth in paragraphs 17 and 21 of this subsection do not apply to transactions under this paragraph 29. For purposes of calculations made to determine compliance with this paragraph, no effect may be given to the future obligation of the life insurance company to:
(1) resell securities, in the case of a repurchase transaction; or
(2) repurchase securities, in the case of a reverse repurchase transaction.
F. A life insurance company shall not enter into a transaction under this paragraph if, as a result of the transaction, and after giving effect to the transaction:
(1) the aggregate amount of securities then loaned, sold to, or purchased from any one (1) business entity under this paragraph would exceed five percent (5%) of the company's admitted assets (but in calculating the amount sold to or purchased from a business entity under repurchase or reverse repurchase transactions, effect may be given to netting provisions under a master written agreement); or
(2) the aggregate amount of all securities then loaned, sold to, or purchased from all business entities under this paragraph would exceed forty percent (40%) of the admitted assets of the company (provided, however, that this limitation does not apply to a reverse repurchase transaction if the borrowing is used to meet operational liquidity requirements resulting from an officially declared catastrophe and is subject to a plan approved by the commissioner).
G. The following collateral requirements apply to all transactions under this paragraph:
(1) In a securities lending transaction, the life insurance company must receive acceptable collateral having a market value as of the transaction date at least equal to one hundred two percent (102%) of the market value of the securities loaned by the company in the transaction as of that date. If at any time the market value of the acceptable collateral received from a particular business entity is less than the market value of all securities loaned by the company to that business entity, the business entity shall be obligated to deliver additional acceptable collateral to the company, the market value of which, together with the market value of all acceptable collateral then held in connection with all securities lending transactions with that business entity, equals at least one hundred two percent (102%) of the market value of the loaned securities.
(2) In a reverse repurchase transaction, other than a dollar roll transaction, the life insurance company must receive acceptable collateral having a market value as of the transaction date equal to at least ninety-five percent (95%) of the market value of the securities transferred by the company in the transaction as of that date. If at any time the market value of the acceptable collateral received from a particular business entity is less than ninety-five percent (95%) of the market value of all securities transferred by the company to that business entity, the business entity shall be obligated to deliver additional acceptable collateral to the company, the market value of which, together with the market value of all acceptable collateral then held in connection with all reverse repurchase transactions with that business entity, equals at least ninety-five percent (95%) of the market value of the transferred securities.
(3) In a dollar roll transaction, the life insurance company must receive cash in an amount at least equal to the market value of the securities transferred by the company in the transaction as of the transaction date.
(4) In a repurchase transaction, the life insurance company must receive acceptable collateral having a market value equal to at least one hundred two percent (102%) of the purchase price paid by the company for the securities. If at any time the market value of the acceptable collateral received from a particular business entity is less than one hundred percent (100%) of the purchase price paid by the life insurance company in all repurchase
transactions with that business entity, the business entity shall be
obligated to provide additional acceptable collateral to the
company, the market value of which, together with the market
value of all acceptable collateral then held in connection with all
repurchase transactions with that business entity, equals at least
one hundred two percent (102%) of the purchase price. Securities
acquired by a life insurance company in a repurchase transaction
shall not be:
(A) sold in a reverse repurchase transaction;
(B) loaned in a securities lending transaction; or
(C) otherwise pledged.
30. A life insurance company may invest in obligations or interests
in trusts or partnerships regardless of the issuer, which are secured by:
(a) investments authorized by paragraphs 1, 2, 3, 4, or 11 of this
subsection; or
(b) collateral with the characteristics and limitations prescribed
for loans under paragraph 5 of this subsection.
For the purposes of this paragraph 30, collateral may be substituted for
other collateral if it is in the same amount with the same or greater
interest rate and qualifies as collateral under subparagraph (a) or (b) of
this paragraph.
31. A life insurance company may invest in obligations or interests
in trusts or partnerships, regardless of the issuer, secured by any form
of collateral other than that described in subparagraphs (a) and (b) of
paragraph 30 of this subsection, which obligations or interests in trusts
or partnerships are rated:
(a) A- or higher by Standard & Poor's Corporation or Duff and
Phelps, Inc.;
(b) A 3 or higher by Moody's Investor Service, Inc.; or
(c) 1 by the Securities Valuation Office.
Investments authorized by this paragraph may not exceed ten percent
(10%) of the life insurance company's admitted assets.
32. A. A life insurance company may invest in short-term pooling
arrangements as provided in this paragraph.
B. The following definitions apply throughout this paragraph:
(1) "Affiliate" means, as to any person, another person that,
directly or indirectly through one (1) or more intermediaries,
controls, is controlled by, or is under common control with the
person.
(2) "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract (other than a commercial contract for goods
or non-management services), or otherwise, unless the power is
the result of an official position with or corporate office held by
the person. Control shall be presumed to exist if a person, directly
or indirectly, owns, controls, holds with the power to vote or holds
proxies representing ten percent (10%) or more of the voting
securities of another person. This presumption may be rebutted by
a showing that control does not exist in fact. The commissioner
may determine, after furnishing all interested persons notice and
an opportunity to be heard and making specific findings of fact to
support the determination, that control exists in fact,
notwithstanding the absence of a presumption to that effect.
(3) "Qualified bank" means a national bank, state bank, or trust
company that at all times is not less than adequately capitalized
as determined by standards adopted by United States banking
regulators and that is either regulated by state banking laws or is
a member of the Federal Reserve System.
C. A life insurer may participate in investment pools qualified under
this paragraph that invest only in:
(1) obligations that are rated BBB- or higher by Standard & Poor's
Corporation (or A-2 or higher in the case of commercial paper),
Baa 3 or higher by Moody's Investors Service, Inc. (or P-2 or
higher in the case of commercial paper), BBB- or higher by Duff
and Phelps, Inc. (or D-2 or higher in the case of commercial
paper), or 1 or 2 by the Securities Valuation Office, and have:
(A) a remaining maturity of three hundred ninety-seven (397)
days or less or a put that entitles the holder to receive the
principal amount of the obligation which put may be exercised
through maturity at specified intervals not exceeding three
hundred ninety-seven (397) days; or
(B) a remaining maturity of three (3) years or less and a
floating interest rate that resets not less frequently than
quarterly on the basis of a current short-term index (for
example, federal funds, prime rate, treasury bills, London
InterBank Offered Rate (LIBOR) or commercial paper) and is
not subject to a maximum limit, if the obligations do not have
an interest rate that varies inversely to market interest rate
changes;
(2) government money market mutual funds or class one money
market mutual funds; or
(3) securities lending, repurchase, and reverse repurchase and
dollar roll transactions that meet the requirements of paragraph 29
of this subsection and any applicable regulations of the
department;
provided that the investment pool shall not acquire investments in any
one (1) business entity that exceed ten percent (10%) of the total assets
of the investment pool.
D. For an investment pool to be qualified under this paragraph, the
investment pool shall not:
(1) acquire securities issued, assumed, guaranteed, or insured by
the life insurance company or an affiliate of the company; or
(2) borrow or incur any indebtedness for borrowed money, except
for securities lending, reverse repurchase, and dollar roll
transactions that meet the requirements of paragraph 29 of this
subsection.
E. A life insurance company shall not participate in an investment
pool qualified under this paragraph if, as a result of and after giving
effect to the participation, the aggregate amount of participation then
held by the company in all investment pools under this paragraph and
section 2.4 of this chapter would exceed thirty-five percent (35%) of its
admitted assets.
F. For an investment pool to be qualified under this paragraph:
(1) the manager of the investment pool must:
(A) be organized under the laws of the United States, a state or
territory of the United States, or the District of Columbia, and
designated as the pool manager in a pooling agreement; and
(B) be the life insurance company, an affiliated company, a
business entity affiliated with the company, or a qualified bank
or a business entity registered under the Investment Advisors
Act of 1940 (15 U.S.C. 80a-1 et seq.);
(2) the pool manager or an entity designated by the pool manager
of the type set forth in subdivision (1) of this subparagraph F shall
compile and maintain detailed accounting records setting forth:
(A) the cash receipts and disbursements reflecting each
participant's proportionate participation in the investment pool;
(B) a complete description of all underlying assets of the
investment pool (including amount, interest rate, maturity date
(if any) and other appropriate designations); and
(C) other records which, on a daily basis, allow third parties to
verify each participant's interest in the investment pool; and
(3) the assets of the investment pool shall be held in one (1) or
more accounts, in the name of or on behalf of the investment pool,
under a custody agreement or trust agreement with a qualified
bank, which must:
(A) state and recognize the claims and rights of each participant;
(B) acknowledge that the underlying assets of the investment pool are held solely for the benefit of each participant in proportion to the aggregate amount of its participation in the investment pool; and
(C) contain an agreement that the underlying assets of the investment pool shall not be commingled with the general assets of the qualified bank or any other person.
G. The pooling agreement for an investment pool qualified under this paragraph must be in writing and must include the following provisions:
(1) Insurers, subsidiaries, or affiliates of insurers holding interests in the pool, or any pension or profit sharing plan of such insurers or their subsidiaries or affiliates, shall, at all times, hold one hundred percent (100%) of the interests in the investment pool.
(2) The underlying assets of the investment pool shall not be commingled with the general assets of the pool manager or any other person.
(3) In proportion to the aggregate amount of each pool participant's interest in the investment pool:
(A) each participant owns an undivided interest in the underlying assets of the investment pool; and
(B) the underlying assets of the investment pool are held solely for the benefit of each participant.
(4) A participant or (in the event of the participant's insolvency, bankruptcy, or receivership) its trustee, receiver, or other successor-in-interest may withdraw all or any portion of its participation from the investment pool under the terms of the pooling agreement.
(5) Withdrawals may be made on demand without penalty or other assessment on any business day, but settlement of funds shall occur within a reasonable and customary period thereafter. Payments upon withdrawals under this paragraph shall be calculated in each case net of all then applicable fees and expenses of the investment pool. The pooling agreement shall provide for such payments to be made to the participants in one (1) of the following forms, at the discretion of the pool manager:
(A) in cash, the then fair market value of the participant's pro rata share of each underlying asset of the investment pool;
(B) in kind, a pro rata share of each underlying asset; or
(C) in a combination of cash and in kind distributions, a pro
rata share in each underlying asset.
(6) The records of the investment pool shall be made available for
inspection by the commissioner.
(1) "Acceptable collateral" means the following:
(A) As to securities lending transactions and for the purpose of calculating counterparty exposure:
(i) cash;
(ii) cash equivalents;
(iii) letters of credit; and
(iv) direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
(B) As to lending foreign securities, sovereign debt rated 1 by the Securities Valuation Office.
(C) As to repurchase transactions:
(i) cash;
(ii) cash equivalents; and
(iii) direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, including the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
(D) As to reverse repurchase transactions:
(i) cash; and
(ii) cash equivalents.
(2) "Admitted assets" means assets permitted to be reported as admitted assets on the statutory financial statement of the insurer most recently required to be filed with the commissioner.
(3) "Business entity" means any of the following:
(A) A sole proprietorship.
(B) A corporation.
(C) A limited liability company.
(D) An association.
(E) A general partnership.
(F) A limited partnership.
(G) A limited liability partnership.
(H) A joint stock company.
(I) A joint venture.
(J) A trust.
(K) A joint tenancy.
(L) Any other similar form of business organization, whether for profit or nonprofit.
(4) "Cash" means any of the following:
(A) United States denominated paper currency and coins.
(B) Negotiable money orders and checks.
(C) Funds held in any time or demand deposit in any depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.
(5) "Cash equivalent" means any of the following:
(A) A certificate of deposit issued by a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.
(B) A banker's acceptance issued by a depository institution, the deposits of which are insured by the Federal Deposit Insurance Corporation.
(C) A government money market mutual fund.
(D) A class one (1) money market mutual fund.
(6) "Class one (1) money market mutual fund" means a money market mutual fund that at all times qualifies for investment using the bond class one (1) reserve factor pursuant to the Purposes and Procedures of the Securities Valuation Office of the National Association of Insurance Commissioners or any successor publication.
(7) "Government money market mutual fund" means a money market mutual fund that at all times:
(A) invests only in obligations issued, guaranteed, or insured by the United States or collateralized repurchase agreements composed of these obligations; and
(B) qualifies for investment without a reserve pursuant to the Purposes and Procedures of the Securities Valuation Office of the National Association of Insurance Commissioners or any successor publication.
(8) "Money market mutual fund" means a mutual fund that meets the conditions of 17 CFR 270.2a-7, under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).
(9) "Mutual fund" means:
(A) an investment company; or
(B) in the case of an investment company that is organized as a series company, an investment company series;
that is registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).
(10) "Obligation" means any of the following:
(A) A bond.
(B) A note.
(C) A debenture.
(D) Any other form of evidence of debt.
(11) "Qualified business entity" means a business entity that is:
(A) an issuer of obligations or preferred stock that is rated one (1) or two (2) or is rated the equivalent of one (1) or two (2) by the Securities Valuation Office or by a nationally recognized statistical rating organization recognized by the Securities Valuation Office; or
(B) a primary dealer in United States government securities, recognized by the Federal Reserve Bank of New York.
(12) "Securities Valuation Office" refers to the Securities Valuation Office of the National Association of Insurance Commissioners or any successor of the Office established by the National Association of Insurance Commissioners.
(b) Any company, other than one organized as a life insurance company, organized under the provisions of IC 27-1 or any other law of this state and authorized to make any or all kinds of insurance described in class 2 or class 3 of IC 27-1-5-1 shall invest its capital or guaranty fund as follows and not otherwise:
(1) In cash.
(2) In:
(A) direct obligations of the United States; or
(B) obligations secured or guaranteed as to principal and interest by the United States.
(3) In:
(A) direct obligations; or
(B) obligations secured by the full faith and credit;
of any state of the United States or the District of Columbia.
(4) In obligations of any county, township, city, town, village, school district, or other municipal district within the United States which are a direct obligation of the county, township, city, town, village, or district issuing the same.
(5) In obligations secured by mortgages or deeds of trust or unencumbered real estate or perpetual leases thereon in the United States not exceeding eighty percent (80%) of the fair value of the security determined in a manner satisfactory to the
department, except that the percentage stated may be exceeded if
and to the extent such excess is guaranteed or insured by the
United States, any state, territory, or possession of the United
States, the District of Columbia, Canada, any province of Canada,
or by an administration, agency, authority, or instrumentality of
any such governmental units. Where improvements on the land
constitute a part of the value on which the loan is made, the
improvements shall be insured against fire and tornado for the
benefit of the mortgagee. For the purposes of this section, real
estate may not be deemed to be encumbered by reason of the
existence of taxes or assessments that are not delinquent,
instruments creating or reserving mineral, oil, or timber rights,
rights-of-way, joint driveways, sewer rights, rights-in-walls, nor
by reason of building restrictions, or other restrictive covenants,
nor when such real estate is subject to lease in whole or in part
whereby rents or profits are reserved to the owner. The
restrictions contained in this subdivision do not apply to loans or
investments made under section 5 of this chapter.
(c) Any company organized under the provisions of this article or
any other law of this state and authorized to make any or all of the
kinds of insurance described in class 2 or class 3 of IC 27-1-5-1 shall
invest its funds over and above its required capital stock or required
guaranty fund as follows, and not otherwise:
(1) In cash or cash equivalents. However, not more than ten
percent (10%) of admitted assets may be invested in any single
government money market mutual fund or class one (1) money
market mutual fund.
(2) In direct obligations of the United States or obligations
secured or guaranteed as to principal and interest by the United
States.
(3) In obligations issued, guaranteed, or insured as to principal
and interest by a city, county, drainage district, road district,
school district, tax district, town, township, village or other civil
administration, agency, authority, instrumentality or subdivision
of a state, territory, or possession of the United States, the District
of Columbia, Canada, or any province of Canada, providing such
obligations are authorized by law and are either:
(A) direct and general obligations of the issuing, guaranteeing,
or insuring governmental unit, administration, agency,
authority, district, subdivision, or instrumentality;
(B) payable from designated revenues pledged to the payment
of the principal and interest of the obligations; or
(C) improvement bonds or other obligations constituting a first lien, except for tax liens, against all of the real estate within the improvement district or on that part of such real estate not discharged from such lien through payment of the assessment.
The area to which the improvement bonds or other obligations under clause (C) relate must be situated within the limits of a town or city and at least fifty percent (50%) of the properties within that area must be improved with business buildings or residences.
(4) In:
(A) direct obligations; or
(B) obligations secured by the full faith and credit;
of any state of the United States, the District of Columbia, or Canada or any province thereof.
(5) In obligations guaranteed, supported, or insured as to principal and interest by the United States, any state, territory, or possession of the United States, the District of Columbia, Canada, any province of Canada, or by an administration, agency, authority, or instrumentality of any of the political units listed in this subdivision. An obligation is "supported" for the purposes of this subdivision when repayment of the obligation is secured by real or personal property of value at least equal to the principal amount of the indebtedness by means of mortgage, assignment of vendor's interest in one (1) or more conditional sales contracts, other title retention device, or by means of other security interest in the property for the benefit of the holder of the obligation, and one (1) of the political units listed in this subdivision, or an administration, agency, authority, or instrumentality listed in this subdivision, has entered into a firm agreement to rent or use the property pursuant to which entity is obligated to pay money as rental or for the use of the property in amounts and at times that are sufficient, after provision for taxes upon and for other expenses of the use of the property, to repay in full the indebtedness, both principal and interest, and when the firm agreement and the money obligated to be paid under the agreement are assigned, pledged, or secured for the benefit of the holder of the obligation. However, where the security consists of a first mortgage lien or deed of trust on a fee interest in real property, the obligation may provide for the amortization, during the initial fixed period of the lease or contract of less than one hundred percent (100%) of the indebtedness if there is pledged or assigned, as additional security for the obligation, sufficient
rentals payable under the lease, or of contract payments, to secure
the amortized obligation payments required during the initial,
fixed period of the lease or contract, including but not limited to
payments of principal, interest, and taxes other than the income
taxes of the borrower, and if there is to be left unamortized at the
end of the period an amount not greater than the original
appraised value of the land only, exclusive of all improvements,
as prescribed by law.
(6) In obligations secured by mortgages or deeds of trust or
unencumbered real estate or perpetual leases thereon, in any state
in the United States, the District of Columbia, Canada, or any
province of Canada, not exceeding eighty percent (80%) of the
fair value of the security determined in a manner satisfactory to
the department, except that the percentage stated may be
exceeded if and to the extent that the excess is guaranteed or
insured by the United States, any state, territory, or possession of
the United States, the District of Columbia, Canada, any province
of Canada, or by an administration, agency, authority, or
instrumentality of any of such governmental units. The value of
the real estate must be determined by a method and in a manner
satisfactory to the department. The restrictions contained in this
subdivision do not apply to loans or investments made under
section 5 of this chapter.
(7) In obligations issued under or pursuant to the Farm Credit Act
of 1971 (12 U.S.C. 2001 through 2279aa-14) as in effect on
December 31, 1990, or the Federal Home Loan Bank Act (12
U.S.C. 1421 through 1449) as in effect on December 31, 1990,
interest bearing obligations of the FSLIC Resolution Fund and
shares of any institution that is insured by the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation to
the extent that the shares are insured, obligations issued or
guaranteed by the International Bank for Reconstruction and
Development, obligations issued or guaranteed by the
Inter-American Development Bank, and obligations issued or
guaranteed by the African Development Bank.
(8) In any mutual fund that:
(A) has been registered with the Securities and Exchange
Commission for a period of at least five (5) years immediately
preceding the date of purchase;
(B) has net assets of at least twenty-five million dollars
($25,000,000) on the date of purchase; and
(C) invests substantially all of its assets in investments
permitted under this subsection.
The amount invested in any single mutual fund shall not exceed
ten percent (10%) of admitted assets. The aggregate amount of
investments under this subdivision may be limited by the
commissioner if the commissioner finds that investments under
this subdivision may render the operation of the company
hazardous to the company's policyholders, to the company's
creditors, or to the general public. This subdivision in no way
limits or restricts investments that are otherwise specifically
permitted under this section.
(9) In obligations payable in United States dollars and issued,
guaranteed, assumed, insured, or accepted by a foreign
government or by a solvent business entity existing under the laws
of a foreign government, if the obligations of the foreign
government or business entity meet at least one (1) of the
following criteria:
(A) The obligations carry a rating of at least A3 conferred by
Moody's Investor Services, Inc.
(B) The obligations carry a rating of at least A- conferred by
Standard & Poor's Corporation.
(C) The earnings available for fixed charges of the business
entity for a period of five (5) fiscal years preceding the date of
purchase have averaged at least three (3) times the average
fixed charges of the business entity applicable to the period,
and if during either of the last two (2) years of the period, the
earnings available for fixed charges were at least three (3)
times the fixed charges of the business entity for the year. As
used in this subdivision, the terms "earnings available for fixed
charges" and "fixed charges" have the meanings set forth in
IC 27-1-12-2(a).
Foreign investments authorized by this subdivision shall not
exceed twenty percent (20%) of the company's admitted assets.
This subdivision in no way limits or restricts investments that are
otherwise specifically permitted under this section. Canada is not
a foreign government for purposes of this subdivision.
(10) In the obligations of any solvent business entity existing
under the laws of the United States, any state of the United States,
the District of Columbia, Canada, or any province of Canada,
provided that interest on the obligations is not in default.
(11) In the preferred or guaranteed shares of any solvent business
entity, so long as the business entity is not and has not been for
the preceding five (5) years in default in the payment of interest
due and payable on its outstanding debt or in arrears in the
payment of dividends on any issue of its outstanding preferred or
guaranteed stock.
(12) In the shares, other than those specified in subdivision (7), of
any solvent business entity existing under the laws of any state of
the United States, the District of Columbia, Canada, or any
province of Canada, and in the shares of any institution wherever
located which has the insurance protection provided by the
Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation. Except for the purpose of mutualization
or for the purpose of retirement of outstanding shares of capital
stock pursuant to amendment of its articles of incorporation, or in
connection with a plan approved by the commissioner for
purchase of such shares by the insurance company's officers,
employees, or agents, or for the elimination of fractional shares,
no company subject to the provisions of this section may invest in
its own stock.
(13) In loans upon the pledge of any mortgage, stocks, bonds, or
other evidences of indebtedness, acceptable as investments under
the terms of this chapter, if the current value of the mortgage,
stock, bond, or other evidences of indebtedness is at least
twenty-five percent (25%) more than the amount loaned on it.
(14) In real estate, subject to subsections (d) and (e).
(15) In securities lending, repurchase, and reverse repurchase
transactions with business entities, subject to the following
requirements:
(A) The company's board of directors shall adopt a written
plan that specifies guidelines and objectives to be followed,
such as:
(i) a description of how cash received will be invested or
used for general corporate purposes of the company;
(ii) operational procedures to manage interest rate risk,
counterparty default risk, and the use of acceptable collateral
in a manner that reflects the liquidity needs of the
transaction; and
(iii) the extent to which the company may engage in these
transactions.
(B) The company shall enter into a written agreement for all
transactions authorized in this subdivision. The written
agreement shall require the termination of each transaction not
more than one (1) year from its inception or upon the earlier
demand of the company. The agreement shall be with the
counterparty business entity but, for securities lending
transactions, the agreement may be with an agent acting on
behalf of the company if the agent is a qualified business entity
and if the agreement:
(i) requires the agent to enter into separate agreements with
each counterparty that are consistent with the requirements
of this section; and
(ii) prohibits securities lending transactions under the
agreement with the agent or its affiliates.
(C) Cash received in a transaction under this section shall be
invested in accordance with this section and in a manner that
recognizes the liquidity needs of the transaction or used by the
company for its general corporate purposes. For as long as the
transaction remains outstanding, the company or its agent or
custodian shall maintain, as to acceptable collateral received
in a transaction under this section, either physically or through
book entry systems of the Federal Reserve, Depository Trust
Company, Participants Trust Company, or other securities
depositories approved by the commissioner:
(i) possession of the acceptable collateral;
(ii) a perfected security interest in the acceptable collateral;
or
(iii) in the case of a jurisdiction outside the United States,
title to, or rights of a secured creditor to, the acceptable
collateral.
(D) For purposes of calculations made to determine
compliance with this subdivision, no effect may be given to
the company's future obligation to resell securities in the case
of a repurchase transaction, or to repurchase securities in the
case of a reverse repurchase transaction. A company shall not
enter into a transaction under this subdivision if, as a result of
and after giving effect to the transaction:
(i) the aggregate amount of securities then loaned, sold to,
or purchased from any one (1) business entity pursuant to
this subdivision would exceed five percent (5%) of its
admitted assets (but, in calculating the amount sold to or
purchased from a business entity pursuant to repurchase or
reverse repurchase transactions, effect may be given to
netting provisions under a master written agreement); or
(ii) the aggregate amount of all securities then loaned, sold
to, or purchased from all business entities under this
subdivision would exceed forty percent (40%) of its
admitted assets.
(E) In a securities lending transaction, the company shall
receive acceptable collateral having a market value as of the
transaction date at least equal to one hundred two percent
(102%) of the market value of the securities loaned by the
company in the transaction as of that date. If at any time the
market value of the acceptable collateral is less than the
market value of the loaned securities, the business entity shall
be obligated to deliver additional acceptable collateral, the
market value of which, together with the market value of all
acceptable collateral then held in connection with the
transaction, at least equals one hundred two percent (102%) of
the market value of the loaned securities.
(F) In a reverse repurchase transaction, the company shall
receive acceptable collateral having a market value as of the
transaction date at least equal to ninety-five percent (95%) of
the market value of the securities transferred by the company
in the transaction as of that date. If at any time the market
value of the acceptable collateral is less than ninety-five
percent (95%) of the market value of the securities so
transferred, the business entity shall be obligated to deliver
additional acceptable collateral, the market value of which,
together with the market value of all acceptable collateral then
held in connection with the transaction, equals at least
ninety-five percent (95%) of the market value of the
transferred securities.
(G) In a repurchase transaction, the company shall receive as
acceptable collateral transferred securities having a market
value equal to at least one hundred two percent (102%) of the
purchase price paid by the company for the securities. If at any
time the market value of the acceptable collateral is less than
one hundred percent (100%) of the purchase price paid by the
company, the business entity shall be obligated to provide
additional acceptable collateral, the market value of which,
together with the market value of all acceptable collateral then
held in connection with the transaction, equals at least one
hundred two percent (102%) of the purchase price. Securities
acquired by a company in a repurchase transaction shall not be
sold in a reverse repurchase transaction, loaned in a securities
lending transaction, or otherwise pledged.
(16) In mortgage backed securities, including collateralized
mortgage obligations, mortgage pass through securities, mortgage
backed bonds, and real estate mortgage investment conduits,
adequately secured by a pool of mortgages, which mortgages are
fully guaranteed or insured by the government of the United
States or any agency of the United States, including the Federal
National Mortgage Association or the Federal Home Loan
Mortgage Corporation.
(17) In mortgage backed securities, including collateralized
mortgage obligations, mortgage pass through securities, mortgage
backed bonds, and real estate mortgage investment conduits,
adequately secured by a pool of mortgages, if the securities carry
a rating of at least:
(A) A3 conferred by Moody's Investor Services, Inc.; or
(B) A- conferred by Standard & Poor's Corporation.
The amount invested in any one (1) obligation or pool of
obligations described in this subdivision shall not exceed five
percent (5%) of admitted assets. The aggregate amount of all
investments under this subdivision shall not exceed ten percent
(10%) of admitted assets.
(18) Any other investment acquired in good faith as payment on
account of existing indebtedness or in connection with the
refinancing, restructuring, or workout of existing indebtedness, if
taken to protect the interests of the company in that investment.
(19) In obligations or interests in trusts or partnerships in which
a life insurance company may invest as described in paragraph 31
of IC 27-1-12-2(b). Investments authorized by this paragraph may
not exceed ten percent (10%) of the company's admitted assets.
(20) In any other investment. The total of all investments under
this subdivision, except for investments in subsidiary companies
under IC 27-1-23-2.6, may not exceed an aggregate amount of ten
percent (10%) of the insurer's admitted assets. Investments are not
permitted under this subdivision:
(A) if expressly prohibited by statute; or
(B) in an insolvent organization or an organization in default
with respect to the payment of principal or interest on its
obligations.
(d) Any company subject to the provisions of this section shall have
power to acquire, hold, or convey real estate, or an interest therein, as
described below, and no other:
(1) Leaseholds, provided the mortgage term shall not exceed
four-fifths (4/5) of the unexpired lease term, including
enforceable renewable options, remaining at the time of the loan,
such real estate or leaseholds to be located in the United States,
any territory or possession of the United States, or Canada, the
value of such leasehold for statement purposes shall be
determined in a manner and form satisfactory to the department.
At the time the leasehold is acquired and approved by the
department, a schedule of annual depreciation shall be set up by
the department in which the value of said leasehold is to be
depreciated, and said depreciation is to be averaged out over not
exceeding a period of fifty (50) years.
(2) The building in which it has its principal office and the land
on which it stands.
(3) Such as shall be necessary for the convenient transaction of its
business.
(4) Such as shall have been acquired for the accommodation of its
business.
(5) Such as shall have been mortgaged to it in good faith by way
of security for loans previously contracted or for money due.
(6) Such as shall have been conveyed to it in connection with its
investments in real estate contracts or its investments in real
estate under lease or for the purpose of leasing or such as shall
have been acquired for the purpose of investment under any law,
order, or regulation authorizing such investment, for statement
purposes, the value of such real estate shall be determined in a
manner satisfactory to the department.
(7) Such as shall have been conveyed to it in satisfaction of debts
previously contracted in the course of its dealings, or in exchange
for real estate so conveyed to it.
(8) Such as it shall have purchased at sales on judgments, decrees,
or mortgages obtained or made for such debts.
(e) All real estate described in subsection (d)(4) through (d)(8)
which is not necessary for the convenient transaction of its business
shall be sold by said company and disposed of within ten (10) years
after it acquired title to the same, or within five (5) years after the same
has ceased to be necessary for the accommodation of its business,
unless the company procures the certificate of the commissioner that
its interests will suffer materially by a forced sale of the real estate, in
which event the time for the sale may be extended to such time as the
commissioner directs in the certificate.
(1) "Financial institution" means any bank, trust company,
corporate fiduciary, savings association, credit union, savings
bank, bank of discount and deposit, or industrial loan and
investment company organized or reorganized under the laws of
this state, and includes a consumer finance institution licensed to
make supervised or regulated loans licensees under IC 24-4.4
and IC 24-4.5.
(2) "Bank" or "bank or trust company" means a financial
institution organized or reorganized as a bank, bank of discount
and deposit, or trust company under the laws of this state with the
express power to receive and accept deposits of money subject to
withdrawal by check, and possessing such other rights and powers
granted by the provisions of this article in express terms or by
implication. The term "bank" or "bank or trust company" does not
include a savings association, credit union, or industrial loan and
investment company.
(3) "Domestic corporation" means a corporation formed under the
laws of this state, and "foreign corporation" means every other
corporation.
(4) "Articles of incorporation" includes both the original articles
of incorporation and any and all amendments thereto, except
where the original articles of incorporation only are expressly
referred to, and includes articles of merger and consolidation, and,
in the case of corporations organized before July 1, 1933, articles
of reorganization, and all amendments thereto.
(5) "Incorporator" means one (1) of the signers of the original
articles of incorporation.
(6) "Subscriber" means one who subscribes for shares of stock in
a financial institution.
(7) "Shareholder" means one who is a holder of record of shares
of stock in a financial institution.
(8) "Capital stock" means the aggregate amount of the par value
of all shares of capital stock.
(9) "Capital" means the aggregate amount paid in on the shares of
capital stock of a financial institution issued and outstanding.
(10) "Capital and surplus" or "unimpaired capital and unimpaired
surplus" has the meaning set forth in 12 CFR 32.2.
(11) "Assets" includes all of the property and rights of every kind
of a financial institution, and the term "fixed assets" means such
assets as are not intended to be sold or disposed of in the ordinary
course of business.
(12) "Principal office" means that office maintained by the
financial institution in this state, the address of which is required
by the provisions of this article to be kept on file in the office of
the secretary of state.
(13) "Subscription" means any written agreement or undertaking,
accepted by a financial institution, for the purchase of shares of
capital stock in the financial institution.
(14) "Department" means the department of financial institutions.
(15) "Member" means a member of the department of financial
institutions.
(16) "Branch" means any office, agency, or other place of
business, other than the principal office of a financial institution,
at which deposits are received, checks paid, or money lent.
(17) "Subsidiary" means any foreign or domestic corporation or
limited liability company in which the parent bank, savings bank,
savings association, or industrial loan and investment company
had at least eighty percent (80%) ownership before July 1, 1999,
or is formed or acquired in accordance with IC 28-13-16 after
June 30, 1999.
(18) "Savings bank" means a financial institution that:
(A) was organized, reorganized, or operating under IC 28-6
(before its repeal) before January 1, 1993;
(B) is formed as the result of a conversion under:
(i) IC 28-1-21.7;
(ii) IC 28-1-21.8;
(iii) IC 28-1-21.9; or
(iv) IC 28-1-30; or
(C) is incorporated under IC 28-12.
(19) "Corporate fiduciary" means a financial institution whose
primary business purpose is to engage in the trust business (as
defined in IC 28-14-1-8) and the execution and administration of
fiduciary accounts as a nondepository trust company incorporated
under Indiana law.
of the corporation, individual, or individuals who propose to acquire
control.
(b) The period for approval under subsection (a) may be extended:
(1) in the discretion of the director for an additional thirty (30)
days; and
(2) not to exceed two (2) additional times for not more than
forty-five (45) days each time if:
(A) the department director determines that the corporation,
individual, or individuals who propose to acquire control have
not submitted substantial evidence of the qualifications
described in subsection (c);
(B) the department director determines that any material
information submitted is substantially inaccurate; or
(C) the department director has been unable to complete the
investigation of the corporation, individual, or individuals who
propose to acquire control because of any delay caused by or
the inadequate cooperation of the corporation, individual, or
individuals.
(c) The department shall issue a notice approving the application
only after it has become satisfied that both of the following apply:
(1) The corporation, individual, or individuals who propose to
acquire control are qualified by competence, experience,
character, and financial responsibility to control and operate the
bank, trust company, stock savings bank, bank holding company,
corporate fiduciary, or industrial loan and investment company in
a legal and proper manner.
(2) The interests of the stockholders, depositors, and creditors of
the bank, trust company, stock savings bank, bank holding
company, corporate fiduciary, or industrial loan and investment
company and the interests of the public generally will not be
jeopardized by the proposed change in control.
(d) As used in this section, .holding company. means any company
(as defined in IC 28-2-15-5 before July 1, 1992, and as defined in
IC 28-2-16-5 beginning July 1, 1992) that directly or indirectly controls
one (1) or more state chartered financial institutions.
(e) As used in this section, "control", "controlling", "controlled by",
or "under common control with" means possession of the power
directly or indirectly to:
(1) direct or cause the direction of the management or policies of
a bank, a trust company, a holding company, a corporate
fiduciary, or an industrial loan and investment company, whether
through the beneficial ownership of voting securities, by contract,
or otherwise; or
(2) vote at least twenty-five percent (25%) of voting securities of
a bank, a trust company, a holding company, a corporate
fiduciary, or an industrial loan and investment company, whether
the voting rights are derived through the beneficial ownership of
voting securities, by contract, or otherwise.
(f) The director may determine, in the director's discretion, that
subsection (a) does not apply to a transaction if the director determines
that the direct or beneficial ownership of the bank, trust company, stock
savings bank, holding company, corporate fiduciary, or industrial loan
and investment company will not change as a result of the transaction.
(g) The president or other chief executive officer of a financial
institution or holding company shall report to the director any transfer
or sale of shares of stock of the financial institution or holding
company that results in direct or indirect ownership by a stockholder
or an affiliated group of stockholders of at least ten percent (10%) of
the outstanding stock of the financial institution or holding company.
The report required by this section must be made not later than ten (10)
days after the transfer of the shares of stock on the books of the
financial institution or holding company.
Chapter 7.1. Voluntary Supervisory Conversion
Sec. 1. As used in this chapter, "depository financial institution" has the meaning set forth in IC 28-1-1-6, but does not include a credit union.
Sec. 2. As used in this chapter, "standard conversion" refers to a transaction permitted under any of the following:
(1) IC 28-1-21.4.
(2) IC 28-1-21.6.
(3) IC 28-1-21.8.
(4) IC 28-1-21.9.
Sec. 3. A depository financial institution with mutual ownership may engage in a voluntary supervisory conversion only as set forth in this chapter.
Sec. 4. A voluntary supervisory conversion of a depository financial institution may include one (1) or more of the following transactions:
(1) A merger of the depository financial institution into an interim depository financial institution with stock ownership.
(2) Following a conversion of the depository financial
institution, a sale of shares of the converted depository
financial institution directly to an acquirer, which may be a
person, company, depository institution, or depository
institution holding company.
(3) A merger or consolidation with an existing or newly
created depository financial institution. Except as provided in
this chapter, a merger or consolidation under this subdivision
must be authorized by, and is subject to, any other applicable
laws and regulations.
Sec. 5. A depository financial institution with mutual ownership
is eligible for a voluntary supervisory conversion under this
chapter if, in the judgment of the director, the voluntary
supervisory conversion satisfies at least one (1) of the following
conditions:
(1) Both of the following apply:
(A) The depository financial institution is significantly
undercapitalized, or is undercapitalized and a standard
conversion to stock form is not feasible.
(B) After the voluntary supervisory conversion, the
converted depository financial institution will likely be a
viable entity, or the one (1) or more entities resulting from
the voluntary supervisory conversion will likely be viable
entities.
(2) Severe financial conditions threaten the stability of the
depository financial institution and a voluntary supervisory
conversion to stock form is likely to:
(A) improve the financial condition of the depository
financial institution; or
(B) result in one (1) or more entities with an improved
financial condition.
(3) The depository financial institution is in receivership or
conservatorship, or in imminent danger of receivership or
conservatorship, and the voluntary supervisory conversion
will enable the depository financial institution to:
(A) terminate the receivership or conservatorship; or
(B) avoid the institution of a receivership or
conservatorship.
Sec. 6. (a) The director may determine under section 5(1)(B) of
this chapter, based upon information then available to the director,
that a voluntary supervisory conversion will likely result in a
depository financial institution becoming a viable entity with stock
ownership if all the following are satisfied:
(1) The depository financial institution resulting from the conversion will be adequately capitalized.
(2) The depository financial institution resulting from the conversion, and any person acquiring capital stock in the depository financial resulting from the conversion, will comply with all applicable supervisory policies.
(3) The depository financial institution involved in, or the one (1) or more entities resulting from, the conversion will be insured by the Federal Deposit Insurance Corporation.
(4) The voluntary supervisory conversion is in the best interest of:
(A) the depository financial institution involved in, or the one (1) or more entities resulting from, the conversion; and
(B) the public.
(5) The voluntary supervisory conversion will not injure or be detrimental to:
(A) the depository financial institutions involved in, or the one (1) or more entities resulting from, the conversion; or
(B) the public interest.
(b) The director may act on a voluntary supervisory merger, consolidation, sale, or other disposition on behalf of the department.
(c) Except as otherwise provided in this chapter, a provision of IC 28-1-7 concerning mergers or consolidations applies to a voluntary supervisory conversion under this chapter unless the director determines that the provision should be waived or considered inapplicable with respect to a particular voluntary supervisory conversion. The director may make a determination described in this subsection if the director finds, in the director's discretion, that the determination will:
(1) facilitate the consummation of the voluntary supervisory conversion; and
(2) in the director's judgment and considering the available information under the prevailing circumstances, result in one (1) or more entities that are more favorable to the public than if:
(A) the provision were not waived or considered inapplicable; or
(B) the voluntary supervisory conversion were not approved.
Sec. 7. Depositors of a depository financial institution with mutual ownership do not have the right to approve or participate
in a voluntary supervisory conversion, and will not have any legal
or beneficial ownership interests in the converted depository
financial institution, unless the department allows otherwise.
Depositors may have interests in a liquidation account, if one is
established.
Sec. 8. A majority of the board of directors of a depository
financial institution with mutual ownership must adopt a plan of
voluntary supervisory conversion. The plan adopted must include
the following:
(1) The name and address of the depository financial
institution.
(2) The name and address of each proposed purchaser of
conversion shares and a description of that purchaser's
relationship to the depository financial institution.
(3) The title, per unit par value, number, and per unit and
aggregate offering price of shares that the converted
depository financial institution will issue.
(4) The number and percentage of shares that each investor
will purchase or acquire in a merger or other combination.
(5) The aggregate number and percentage of shares that each
director or officer of the converted depository financial
institution, and any affiliates or associates of the director or
officer, will purchase.
(6) A description of any liquidation account to be established
in connection with the voluntary supervisory conversion.
(7) Certified copies of all resolutions of the board of directors
of the depository financial institution relating to the
conversion.
Sec. 9. The following information and documents must be
included in an application for a voluntary supervisory conversion
made to the department:
(1) Evidence establishing that the depository financial
institution with mutual ownership meets the eligibility
requirements set forth in this chapter.
(2) An opinion of qualified, independent counsel or of an
independent, certified public accountant concerning the tax
consequences of the conversion, or an IRS ruling indicating
that the transaction qualifies as a tax free reorganization.
(3) A plan of voluntary supervisory conversion that complies
with section 8 of this chapter.
(4) A business plan, when required by the department.
(5) The depository financial institution's most recent audited
financial statements and call report.
(6) A detailed explanation of how the current capital levels
make the depository financial institution eligible to engage in
a voluntary supervisory conversion under this chapter.
(7) A description of the estimated conversion expenses.
(8) Evidence supporting the value of any noncash asset
contributions. Appraisals must be acceptable to the
department and each noncash asset must meet all other
department policy guidelines.
(9) Pro forma financial statements that reflect the effects of
the transaction. The depository financial institution must
identify its tangible, core, and risk based capital levels and
show the adjustments necessary to compute the pro forma
capital levels. The depository financial institution must
prepare its pro forma statements in conformance with
department regulations and policy.
(10) The proposed articles of incorporation and bylaws, if any,
of the depository financial institution formed as a result of the
voluntary supervisory conversion.
(11) The proposed stock certificate form, if any, for the
depository financial institution formed as a result of the
voluntary supervisory conversion.
(12) A copy of any agreements between the depository
financial institution formed as a result of the voluntary
supervisory conversion and proposed purchasers.
(13) A copy and description of all existing and proposed
employment contracts. The depository financial institution
formed as a result of the voluntary supervisory conversion
must include information describing the term, salary, and
severance provisions of the contract, the identity and
background of the officer or employee to be employed, and
the amount of any conversion shares to be purchased by the
officer or employee or his or her affiliates or associates.
(14) Any:
(A) required filings under federal law; or
(B) waivers of compliance with federal law obtained as a
result of conflicts with state law.
(15) Applications for permission to organize a stock
association and for approval of a merger, if applicable, and a
copy of any application for Federal Home Loan Bank
membership or FDIC insurance of accounts, if applicable.
(16) A statement describing any other applications required
under federal or state banking laws for all transactions
related to the conversion, copies of all dispositive documents
issued by regulatory authorities relating to the applications,
and, if requested by the department, copies of the applications
and related documents.
(17) A description of any of the features of the application that
do not conform to the requirements of this section, including
any request for waiver of such requirements.
Sec. 10. The director may not approve an application to engage
in a voluntary supervisory conversion if the director makes any of
the following findings:
(1) That the depository financial institution does not meet the
eligibility requirements for a voluntary supervisory
conversion under this chapter, or that the proceeds from the
sale of the conversion stock, less the expenses of the
conversion, would be insufficient to satisfy any applicable
viability requirement.
(2) That the transaction is detrimental to or would cause
potential injury to the depository financial institution or is
contrary to the public interest.
(3) That the depository financial institution or its acquirer, or
the controlling parties or directors and officers of the
depository financial institution or its acquirer, have engaged
in unsafe or unsound practices in connection with the
voluntary supervisory conversion.
(4) That the depository financial institution fails to justify an
employment contract incidental to the conversion, or that the
employment contract will be an unsafe or unsound practice or
represent a sale of control.
Sec. 11. (a) The director shall condition approval of a voluntary
supervisory conversion application on the applicant satisfying all
of the following:
(1) The depository financial institution must complete the
conversion stock sale, if any, not later than three (3) months
after the director approves the application. The director may
grant an extension for good cause.
(2) The depository financial institution and its acquirer must
comply with all applicable laws, rules, and regulations.
(3) The depository financial institution and its acquirer must
satisfy any other requirements or conditions imposed by the
director.
(4) The depository financial institution involved in, or the one
(1) or more entities resulting from, the voluntary supervisory
conversion must obtain insurance coverage of their deposits
by the Federal Deposit Insurance Corporation.
(b) The director may condition approval of a voluntary
supervisory conversion application on either of the following:
(1) The applicant must satisfy any conditions and restrictions
the director imposes to prevent unsafe or unsound practices,
to protect the public interest, or to prevent potential injury or
detriment to the depository financial institution before and
after the conversion. The director may impose these
conditions and restrictions on the depository financial
institution (before and after the conversion), its acquirer,
controlling parties, or directors and officers of the depository
financial institution or its acquirer.
(2) A larger amount of capital, if necessary, for safety and
soundness reasons must be infused following the voluntary
supervisory conversion.
upon the making of that acquisition, the aggregate amount of shares in
small business investment companies then held by the bank would
exceed five percent (5%) of its total equity capital.
(b) A bank or trust company may purchase for its own account and
sell:
(1) shares of open-end investment companies the portfolios of
which consist solely of securities that are eligible for purchase
and sale by national banking associations; and
(2) collateralized obligations that are eligible for purchase and
sale by national banking associations. However, a bank or trust
company may purchase for its own account and sell the
obligations only to the extent that a national banking association
can purchase and sell those obligations.
(c) A bank or trust company may deposit its funds in:
(1) a federally chartered savings association; or
(2) a savings association or other entity organized and operated
according to federal law or the laws of any state or the District of
Columbia;
the accounts of which are insured by the Saving Association Insurance
Fund of the Federal Deposit Insurance Corporation.
(d) A bank or trust company may not purchase for its own account
any bond, note, or other evidence of indebtedness that is commonly
designated as a security that is speculative in character or that has
speculative characteristics. For the purposes of this subsection, a
security is speculative or has speculative characteristics if at the time
of purchase the security:
(1) is rated below the first four (4) rating classes by a generally
recognized security rating service; or
(2) is in default; or
(3) is otherwise considered speculative by the director.
(e) A bank or trust company may purchase for its own account a
security that is not rated by a generally recognized security rating
service if:
(1) the bank or trust company at the time of purchase obtains
financial information that is adequate to document the investment
quality of the security; and
(2) the security is not otherwise considered speculative by the
director.
(f) Except as otherwise authorized by this title, a bank or trust
company may not purchase any share of stock of a corporation that is
not a subsidiary of that bank or trust company unless the purchase is
considered expedient to prevent loss from a debt previously contracted
in good faith. Any shares of stock thus acquired by a bank or trust
company that would not have been eligible for purchase shall be sold
and disposed of within six (6) months from the date of acquisition
unless the director grants an extension of time for the sale and
disposition.
(g) Notwithstanding any other provision of this article, a bank or
trust company may purchase for its own account shares of stock of a
banker's bank insured by the Bank Insurance Fund of the Federal
Deposit Insurance Corporation or a holding company that owns or
controls a banker's bank insured by the Bank Insurance Fund of the
Federal Deposit Insurance Corporation. For the purposes of this
subsection, a "banker's bank" is a bank (as defined in IC 28-2-14-2):
(1) the stock of which is owned exclusively by other banks (as
defined in IC 28-2-14-2), or by a bank holding company the stock
of which is owned exclusively by other banks (as defined in
IC 28-2-14-2); and
(2) that is engaged exclusively in providing services to other
banks (as defined in IC 28-2-14-2), and to their officers, directors,
and employees.
A bank's or trust company's holdings of the stock of an insured banker's
bank or of a holding company that owns or controls an insured banker's
bank may not exceed ten percent (10%) of the capital and surplus of
the bank or trust company. A bank or trust company may not purchase
the stock of an insured banker's bank or of a holding company that
owns or controls an insured banker's bank if, after the purchase, the
bank or trust company would own more than five percent (5%) of any
class of voting securities of the banker's bank or holding company.
(h) Notwithstanding any other provision of this article, a bank or
trust company may invest in a casualty insurance company organized
solely for the purpose of insuring banks, trust companies, and bank
holding companies and their officers and directors from and against
liabilities, including those covered by bankers' blanket bonds and
director and officer liability insurance and other public liability
insurance. The investment must take the form of:
(1) the purchase for the bank's or trust company's own account of
shares of stock of the casualty insurance company or shares of
stock of an association of banks organized for the purpose of
funding the casualty insurance company; or
(2) loans to such an association of banks.
The total investment of any bank or trust company under this
subsection may not exceed five percent (5%) of the capital and surplus
of the bank or trust company.
(i) Any bank or trust company may establish or acquire a subsidiary that engages in:
(1) the sale, distribution, or underwriting of securities issued by investment companies (as defined in Section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3); or
(2) the underwriting or distribution of securities backed by or representing an interest in mortgages.
(j) As used in this section, "total equity capital" means unimpaired capital stock, unimpaired surplus, unimpaired undivided profits, subordinated debt that has been approved by the state or federal regulatory agencies, and one hundred percent (100%) of loan reserves.
(k) The department may define an investment security by department policy or by rule.
(l) A bank or trust company may establish a trading account for the purchase and resale of securities that are otherwise eligible for purchase or resale by the bank or trust company. The trading account must comply with the requirements established by policy or rule of the department.
(m) A bank or trust company that purchases a security for its own account shall maintain sufficient records of the security to allow the security to be properly identified by the department for examination purposes.
(b) Any bank, savings bank, or trust company may impose and collect a monthly service charge and maintenance charge on dormant accounts,
(1) are reasonable, as determined by resolution of the board of directors; and
(2) are properly disclosed to
trust company's depositors.
(c) For the purpose of this section:
(1) every demand deposit a transaction account (as defined in
12 CFR 204.2(e)) is considered a dormant account after one (1)
year from the date of the last transaction recorded on the books of
the bank, savings bank, or trust company with respect to the
account; and
(2) every time deposit any other account that is not a
transaction account (as defined in 12 CFR 204.2(e)) is
considered a dormant account after three (3) years from the date
of the last transaction recorded on the books of the bank, savings
bank, or trust company with respect to the account.
(d) Any bank, savings bank, or trust company may impose and
collect monthly service charges and maintenance charges on active
accounts whether time or demand, that are carried by it on its books, in
such amounts as may be agreed upon between it and its depositors.
(e) This section is applicable to national banking associations doing
business in this state.
(1) "Person" includes individuals, sole proprietorships, partnerships, limited liability companies, trusts, joint ventures, corporations, unincorporated organizations, other entities, and their affiliates, however organized.
(2) "Debt management company" is any person doing business as a budget counseling, credit counseling, debt management, or debt pooling service or holding the person out, by words of similar import, as providing services to debtors in the management of their finances and debts, and having a written agreement with the debtor to disburse money or anything of value. The term includes the following:
(A) A person that simply holds any money, funds, check, personal check, money order, personal money order, draft, or any other instrument for the transmission of money.
(B) A person or an entity known as a "budget service company".
The term does not include a person that provides debt settlement services (as defined in IC 24-5-15-2.5).
(3) "License" means a license issued under the provisions of this
chapter.
(4) "Licensee" means any person to whom a license has been
issued pursuant to the provisions of this chapter.
(5) "Contract debtor" means a debtor who has entered into a
written agreement with a licensee.
(6) "Debt" means an obligation arising out of personal, family, or
household use.
(7) "Debtor" means an individual whose principal debts and
obligations arise out of personal, family, or household use and
shall not apply to persons whose principal indebtedness arises out
of business purpose transactions.
(8) "Department" means the members of the department of
financial institutions.
(9) "Finances" means a savings deposit that is:
(A) made on behalf of a contract debtor;
(B) owned and controlled exclusively by the contract debtor
and not a licensee who has a power of attorney of the contract
debtor; and
(C) placed in a bank or savings institution chartered by the
state or federal government.
(10) "Affiliate" means a person that, directly or indirectly, through
one (1) or more intermediaries:
(A) controls;
(B) is controlled by; or
(C) is under common control with;
a person subject to this chapter.
(11) "Fee" means the total amount of money charged to a contract
debtor by a debt management company for the administration of
a debt management plan.
(12) "Plan" means a written debt repayment program in which a
debt management company furnishes debt management services
to a contract debtor and that includes a schedule of payments to
be made by or on behalf of the contract debtor and used to pay
debts owed by the contract debtor.
(13) "Principal amount of the debt" means the total amount of a
debt at the time the contract debtor enters into an agreement.
(14) "Agreement" means an agreement between a debt
management company and a debtor for the performance of debt
management services.
(15) "Trust account" means an account held by a licensee that is:
(A) established in a bank insured by the Federal Deposit
Insurance Corporation;
(B) separate from other accounts held by the licensee;
(C) designated as a trust account or other account designated to indicate that the money in the account is not the money of the licensee; and
(D) used to hold money of one (1) or more contract debtors for disbursement to creditors of the 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 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.
(1) the person or any of the person's employees or agents are
located in Indiana; or
(2) the person:
(A) contracts with debtors who are residents of Indiana; or
(B) solicits business from residents of Indiana by
advertisements or other communications sent or delivered
through any of the following means:
(i) Mail.
(ii) Personal delivery.
(iii) Telephone.
(iv) Radio.
(v) Television.
(vi) The Internet or other electronic communications.
(vii) Any other means of communication.
(b) The director may request 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.
(c) For purposes of subsection (b), 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
section 5(b)(2) or 5(b)(3) of this chapter;
(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 (b). 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.
(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 the 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, 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 license renewal fee imposed
under subsection (d) and all information and documents requested by
the director of the department.
(1) direct or cause the direction of the management or policies of a licensee, whether through the beneficial ownership of voting securities, by contract, or otherwise; or
(2) vote at least twenty-five percent (25%) of the voting securities of a licensee, whether the voting rights are derived through the beneficial ownership of voting securities, by contract, or otherwise.
(b) An organization or an individual acting directly, indirectly, or through or in concert with one (1) or more other organizations or individuals may not acquire control of any licensee unless the department has received and approved an application for change in control. The department has not more than one hundred twenty (120) days after receipt of an application to issue a notice approving the proposed change in control. The application must contain the name and address of the organization, individual, or individuals who propose to acquire control and any other information required by the director.
(c) The period for approval under subsection (b) may be extended:
(1) in the discretion of the director for an additional thirty (30) days; and
(2) not more than two (2) additional times for not more than forty-five (45) days each time if:
(A) the director determines that the organization, individual, or individuals who propose to acquire control have not submitted substantial evidence of the qualifications described in subsection (d);
(B) the director determines that any material information submitted is substantially inaccurate; or
(C) the director has been unable to complete the investigation of the organization, individual, or individuals who propose to acquire control because of any delay caused by or the inadequate cooperation of the organization, individual, or individuals.
(d) The department shall issue a notice approving the application only after it is satisfied that both of the following apply:
(1) The organization, individual, or individuals who propose to acquire control are qualified by competence, experience, character, and financial responsibility to control and operate the licensee in a legal and proper manner.
(2) The interests of the owners and creditors of the licensee and the interests of the public generally will not be jeopardized by the proposed change in control.
(e) The director may determine, in the director's discretion, that subsection (b) does not apply to a transaction if the director determines that the direct or beneficial ownership of the licensee will not change as a result of the transaction.
(f) The president or other chief executive officer of a licensee shall report to the director any transfer or sale of securities of the licensee that results in direct or indirect ownership by a holder or an affiliated group of holders of at least ten percent (10%) of the outstanding securities of the licensee. The report required by this section must be made not later than ten (10) days after the transfer of the securities on the books of the licensee.
(g) Depending on the circumstances of the transaction, the director may reserve the right to require the organization, individual, or individuals who propose to acquire control of a licensee to apply for a new license under section 3 of this chapter, instead of acquiring control of the licensee under this section.
department if the person licensee fails to:
(1) file any renewal application prescribed by the director; or
(2) pay any license renewal fee described under section 3 of this
chapter;
within sixty (60) days after the date the renewal is due.
(b) A person whose license is revoked or suspended under this
section may:
(1) pay all delinquent fees and apply for a new reinstatement of
the license; or
(2) appeal the revocation or suspension to the department for an
administrative review under IC 4-21.5-3.
Pending the decision resulting from the a hearing under IC 4-21.5-3
concerning the a license revocation the or suspension, the license
remains in force.
(1) the licensee has prepared a budget analysis; and
(2) if the debtor is to make regular, periodic payments, the licensee:
(A) has prepared a plan for the debtor;
(B) has made a determination, based on the licensee's analysis of the information provided by the debtor and otherwise available to the licensee, that the plan is suitable for the debtor and the debtor will be able to meet the payment obligations under the plan; and
(C) believes that each creditor of the debtor listed as a participating creditor in the plan will accept payment of the debtor's debts as provided in the plan.
(b) Before a debtor enters into an agreement with a licensee to engage in a plan, the licensee shall:
(1) provide the debtor with a copy of the budget analysis and plan required by subsection (a) in a form that identifies the licensee and that the debtor may keep whether or not the debtor enters into the agreement;
(2) inform the debtor of the availability, at the debtor's option, of assistance provided through a toll free communication system or in person, where reasonably available to residents in Indiana, regarding the budget analysis and plan required by subsection (a); and
(3) with respect to all creditors identified by the debtor or
otherwise known by the licensee to be creditors of the debtor,
provide the debtor with a list of:
(A) creditors that the licensee expects to participate in the plan
and grant concessions;
(B) creditors that the licensee expects to participate in the plan
but not grant concessions;
(C) creditors that the licensee expects not to participate in the
plan; and
(D) all other creditors.
(c) Except as provided in subsections (d), (e), and (f), Before a
debtor enters into an agreement with a licensee, the licensee shall, in
a written form that is provided to the debtor separately, that contains no
other information, and that the debtor may keep whether or not the
debtor enters into the agreement, provide the following information to
the debtor:
(1) The licensee's name and business address of the licensee.
(2) A statement that:
(A) the licensee's plans are not suitable for all debtors and the
debtor may ask the licensee about other ways, including
bankruptcy, to deal with indebtedness;
(B) nonpayment of debt may lead creditors to increase finance
and other charges or undertake collection activity, including
litigation;
(C) unless the statement would be untrue, the licensee may
receive compensation from the creditors of the debtor; and
(D) unless the debtor is insolvent, if a creditor settles for less
than the full amount of the debt, the plan may result in the
creation of taxable income to the debtor, even though the
debtor does not receive any money.
(d) If a licensee may receive payments from a debtor's creditors and
the plan contemplates that the debtor's creditors will reduce finance
charges or fees for late payment, default, or delinquency, the licensee
may comply with subsection (c) by providing the following disclosure
in clear and conspicuous type, surrounded by black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
(1) Debt management plans are not right for all individuals, and
you may ask us to provide information about other ways,
including bankruptcy, to deal with your debts.
(2) We may receive compensation for our services from your
creditors.
_______________________________________
Name and business address of licensee".
(2) The following disclosure in clear and conspicuous type, surrounded by black lines:
"IMPORTANT INFORMATION FOR YOU TO CONSIDER
(1) Debt management plans are not right for all individuals, and you may ask us to provide information about other ways, including bankruptcy, to deal with your debts.
(2) We may receive compensation for our services from your creditors.
(3) Nonpayment of your debts under our program may:
(A) hurt your ability to obtain credit;
(B) lead your creditors to increase finance and other charges; and
(C) lead your creditors to undertake activity, including lawsuits, to collect the debts.
(4) Reduction of debt under our program may result in taxable income to you, even though you will not actually receive any money.
_________________________________________
(Name and business address of licensee)".
(1) be in a written form;
(2) be dated and signed by the licensee and the debtor;
(3) include the name of the debtor and the address where the debtor resides;
(4) include the name, business address, and telephone number of the licensee;
(5) be delivered to the debtor immediately upon formation of the agreement; and
(6) disclose the following:
(A) The services to be provided.
(B) The amount or method of determining the amount of all fees, individually itemized, to be paid by the debtor.
(C) The schedule of payments to be made by or on behalf of the debtor, including the amount of each payment, the date on which each payment is due, and an estimate of the date of the final payment.
(D) If a plan provides for regular periodic payments to creditors:
(i) each creditor of the debtor to which payment will be made, the amount owed to each creditor, and any concessions the licensee reasonably believes each creditor will offer; and
(ii) the schedule of expected payments to each creditor, including the amount of each payment and the date on which the payment will be made.
(E) Each creditor that the licensee believes will not participate in the plan and to which the licensee will not direct payment.
(F) The manner in which the licensee will comply with the licensee's obligations under section 9(j) of this chapter.
(G) A statement that:
(i) the licensee may terminate the agreement for good cause,
upon return of unexpended money of the debtor;
(ii) the debtor may cancel the agreement as provided in
section 8.6 of this chapter; and
(iii) the debtor may contact the department with any
questions or complaints regarding the licensee.
(H) The address, telephone number, and Internet address or
web site of the department.
(b) For purposes of subsection (a)(5), delivery of an electronic
record occurs when:
(1) the record is made available in a format in which the debtor
may retrieve, save, and print the record; and
(2) the debtor is notified that the record is available.
(c) An agreement must provide that:
(1) the debtor has a right to terminate the agreement at any time
without penalty, notwithstanding the close-out fee as permitted by
section 8.3(d) of this chapter, or obligation, by giving the licensee
written or electronic notice, in which event:
(A) the licensee shall refund all unexpended money that the
licensee or the licensee's agent has received from or on behalf
of the debtor for the reduction or satisfaction of the debtor's
debt; and
(B) all powers of attorney granted by the debtor to the licensee
are revoked and ineffective;
(2) the debtor authorizes any bank insured by the Federal Deposit
Insurance Corporation in which the licensee or the licensee's
agent has established a trust account to disclose to the department
any financial records relating to the trust account;
(3) the licensee shall notify the debtor within five (5) days after
learning of a creditor's final decision to reject or withdraw from
a plan under the agreement; and
(4) the notice under subdivision (3) must include:
(A) the identity of the creditor; and
(B) a statement that the debtor has the right to modify or
terminate the agreement.
(d) All creditors must be notified of the debtor's and licensee's
relationship.
(e) A licensee shall give to the contract debtor a dated receipt for
each payment, at the time of the payment, unless the payment is made
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 shall 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.
(3) Documentation and verification, either 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, either 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. When adjustments are
needed to change the indebtedness listed in the agreement, the licensee
may execute a new agreement using the revised figures. A licensee:
(1) may not increase the amount of the monthly fee percentage
as originally calculated under section 8.3(c)(2)(A) 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;
during the term of the original debt management plan agreement.
(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.
(1) impose, directly or indirectly, a fee or other charge on a debtor; or
(2) receive money from or on behalf of a debtor for debt management services.
(b) A licensee may not impose charges or receive payment for debt management services until:
(1) the licensee and the debtor have agreed upon a plan and have signed an agreement that complies with sections 8, 8.6, and 9.5 of this chapter; and
(2) at least one (1) payment has been made to a creditor under the plan.
All creditors must be notified of the debtor's and licensee's relationship.
(c) If a debtor assents to a plan, the licensee may charge the 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 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) A monthly service fee of the lesser of:
(A) not more than fifteen percent (15%) of the
(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) Upon cancellation by a contract debtor or termination of payments by a contract debtor, a licensee may not withhold for the licensee's own benefit more than one hundred dollars ($100), which may be accrued as a close-out fee.
(e) A licensee may not charge a contract debtor more than one (1) set up fee or one (1) cancellation fee unless the contract debtor leaves the services of the licensee for more than six (6) months.
(f) With respect to any additional charge not specifically provided for in this section, the licensee must submit a written explanation of the charge to the department indicating how the charge would be assessed and the value or benefit
(1) would be
(2) is reasonable in relation to the
An additional charge is not permitted unless approved by the department.
(g) For purposes of this chapter, the terms of an agreement commence on the date on which the agreement is made.
(h) A licensee may assess a charge of not more than twenty-five dollars ($25) for each return by a bank or other depository institution of a dishonored check, negotiable order of withdrawal, or share draft issued by the contract debtor.
(i) Any fee charged by the licensee to the debtor under this section for services rendered by the licensee, other than the fees described under subsection (e), is not considered a debt owed by the debtor to the licensee.
following receipt, the funds are received, the licensee shall deposit the
money in a trust account established for the benefit of the contract
debtor to whom the licensee is furnishing debt management services.
(b) A licensee shall do the following:
(1) Maintain separate records of account for each individual to
whom the licensee is furnishing debt management services.
(2) Disburse money paid by or on behalf of the contract debtor to
creditors of the contract debtor as disclosed in the agreement.
(3) Make remittances not later than thirty (30) days after initial
receipt of funds. After the initial receipt of funds, remittances
shall be made not later than fifteen (15) 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(d) of this chapter is not considered an
obligation of the contract debtor.
(4) Retain in the contract debtor's trust account, for charges, an
amount less than or equal to the sum of one (1) month's fee as
permitted by section 8.3(c)(2) of this chapter plus the close-out
fee as permitted by section 8.3(d) of this chapter, unless a greater
amount is approved in writing by the department.
(5) Promptly:
(A) correct any payments 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 money in a trust account
established for the benefit of a contract debtors to whom the licensee
is furnishing debt management services with money of other persons.
(d) A trust account must at all times have a cash balance equal to the
sum of the balances of each contract debtor's account.
(e) If a licensee has established a trust account under subsection (a),
the licensee shall reconcile the trust account at least every thirty (30)
days after receipt of the bank statement. The reconciliation must
compare the cash balance in the trust account with the sum of the
balances in each contract debtor's account. If the licensee or the
licensee's designee has more than one (1) trust account, each trust
account must be individually reconciled.
(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:
(1) immediately notify the department in writing; and
(2) unless the department by rule provides otherwise, 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 refund to the contract debtor all money paid by or on
behalf of the contract debtor that has not been paid to creditors less fees
the fee that are is payable to the licensee under section 8.3(e) 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) At least once every three (3) months the licensee shall render an
accounting to the contract debtor which must itemize the total amount
received from the contract debtor, the total amount paid each creditor,
the amount of charges deducted, the amount of fair share fees received
or withheld by the licensee from each of the contract debtor's creditors,
and any amount held in reserve. A licensee shall in addition thereto,
render provide such an accounting to a contract debtor within not later
than seven (7) days after written demand, but is not required to
provide more than three (3) such accountings per six (6) month
period.
(j) Upon the completion or termination of a contract between a
licensee and a contract debtor, the licensee shall mail provide to the
contract debtor a statement:
(1) indicating that the licensee no longer holds funds in trust for
the contract debtor; and
(2) listing the name and address of:
(A) each creditor paid in full; and
(B) any creditors remaining unpaid.
(1) Order a debt management company or a director, employee,
or other agent of a debt management company to cease and desist
from any violations.
(2) Order a debt management company or a person that has
caused a violation to correct the violation, including making
restitution of money or property to a person aggrieved by a
violation.
(3) Impose on a debt management company or a person that
causes a violation of this chapter a civil penalty of not more than
ten thousand dollars ($10,000) for each violation.
(4) (3) Prosecute a civil action to:
(A) enforce an order;
(B) obtain restitution, an injunction, or other equitable relief;
or
(C) accomplish both clauses (A) and (B).
(b) Subject to subsection (c), if the department determines, after
notice and an opportunity to be heard, that a person has violated
this chapter, the department may, in addition to or instead of all
other remedies available under this section, impose upon the
person a civil penalty not greater than ten thousand dollars
($10,000) per violation.
(b) (c) If a person violates or knowingly authorizes, directs, or aids
in the violation of a final order issued under subsection (a)(1) or (a)(2),
the department may impose a civil penalty of not more than twenty
thousand dollars ($20,000) for each violation.
(c) (d) The department may maintain an action in any county to
enforce this chapter.
(d) (e) The department may recover the reasonable costs of
enforcing this chapter under subsections (a) through (c), (d), including
attorney's fees.
(e) (f) In determining the amount of a civil penalty to impose under
subsection (a) or (b) or (c), the department shall consider:
(1) the seriousness of the violation;
(2) the good faith of the person who violated this chapter;
(3) any previous violations by the person who violated this
chapter;
(4) the deleterious effect of the violation on the public;
(5) the net worth of the person who violated this chapter; and
(6) any other factor the department considers relevant to the
determination of a civil penalty.
(f) (g) In addition to the revocation provision of section 4 of this
chapter, a person who violates section 3, 5, 6, 8, 8.3, 9, or 9.5 of this
chapter commits a Class A misdemeanor, and the license of the
licensee shall be revoked on the date of the conviction of an offense.
(1) a federally chartered savings association; or
(2) a savings association or other entity organized and operated according to federal law or the laws of a state or the District of Columbia;
the accounts of which are insured by the
(1) is rated below the first four (4) rating classes by a generally recognized security rating service;
(2) is in default; or
(3) is otherwise considered speculative by the director.
(b) A savings bank may purchase for its own account a security that is not rated by a generally recognized security rating service if:
(1) the savings bank at the time of purchase obtains financial information that is adequate to document the investment quality of the security; and
(2) the security is not otherwise considered speculative by the director.
(1) To issue shares of its capital stock to its members. No commission or compensation shall be paid for securing members or for the sale of shares.
(2) To make loans to officers, directors, or committee members under sections 17.1 and 17.2 of this chapter.
(3) To invest in any of the following:
(A) Bonds, notes, or certificates that are the direct or indirect obligations of the United States, or of the state, or the direct obligations of a county, township, city, town, or other taxing district or municipality or instrumentality of Indiana and that
are not in default.
(B) Bonds or debentures issued by the Federal Home Loan
Bank Act (12 U.S.C. 1421 through 1449) or the Home Owners'
Loan Act (12 U.S.C. 1461 through 1468).
(C) Obligations of national mortgage associations issued under
the authority of the National Housing Act.
(D) Mortgages on real estate situated in Indiana which are
fully insured under Title 2 of the National Housing Act (12
U.S.C. 1707 through 1715z).
(E) Obligations issued by farm credit banks and banks for
cooperatives under the Farm Credit Act of 1971 (12 U.S.C.
2001 through 2279aa-14).
(F) In savings and loan associations, other credit unions that
are insured under IC 28-7-1-31.5, section 31.5 of this
chapter, and certificates of indebtedness or investment of an
industrial loan and investment company if the association or
company is federally insured. Not more than twenty percent
(20%) of the assets of a credit union may be invested in the
shares or certificates of an association or company; nor more
than forty percent (40%) in all such associations and
companies.
(G) Corporate credit unions.
(H) Federal funds or similar types of daily funds transactions
with other financial institutions.
(I) Shares or certificates of an open-end management
investment company registered with the Securities and
Exchange Commission under the Investment Company Act of
1940 (15 U.S.C. 80a-1 through 15 U.S.C. 80a-3 and 15 U.S.C.
80a-4 through 15 U.S.C. 80a-64), if all of the following
conditions are met:
(i) The fund's assets consist of and are limited to securities
in which a credit union may invest directly.
(ii) The credit union has an equitable and undivided interest
in the underlying assets of the fund.
(iii) The credit union is not liable for acts or obligations of
the fund.
(iv) The credit union's investment in any one (1) fund does
not exceed fifteen percent (15%) of the amount of the credit
union's net worth.
(J) For a credit union that is well capitalized (as defined in Part
702 of the Rules and Regulations of the National Credit Union
Administration, 12 CFR 702), investment securities, as may be
defined by a statute or a policy or rule of the department and
subject to the following:
(i) The department may prescribe, by policy or rule,
limitations or restrictions on a credit union's investment in
investment securities.
(ii) The total amount of any investment securities purchased
or held by a credit union may never exceed at any given time
ten percent (10%) of the capital and surplus of the credit
union. However, the limitations imposed by this item do not
apply to investments in the direct or indirect obligations of
the United States or in the direct obligations of a United
States territory or insular possession, or in the direct
obligations of the state or any municipal corporation or
taxing district in Indiana.
(iii) A credit union may not purchase for its own account
any bond, note, or other evidence of indebtedness that is
commonly designated as a security that is speculative in
character or that has speculative characteristics. For the
purposes of this item, a security is speculative or has
speculative characteristics if at the time of purchase the
security is in default, or is rated below the first four (4)
rating classes by a generally recognized security rating
service, or is otherwise considered speculative by the
director.
(iv) A credit union may purchase for its own account a
security that is not rated by a generally recognized security
rating service if the credit union at the time of purchase
obtains financial information that is adequate to document
the investment quality of the security and if the security is
not otherwise considered speculative by the director.
(v) A credit union that purchases a security for its own
account shall maintain sufficient records of the security to
allow the security to be properly identified by the
department for examination purposes.
(vi) Except as otherwise authorized by this title, a credit
union may not purchase any share of stock of a corporation.
If a credit union possesses stock or another equity
investment as a result of a loan default, the credit union shall
dispose of the investment within a reasonable period that
does not exceed one (1) year or a longer period if approved
by the department.
(vii) Subject to items (i) through (iv), a credit union may
purchase yankee dollar deposits, eurodollar deposits,
banker's acceptances, deposit notes, bank notes with original
weighted average maturities of less than five (5) years, and
investments in obligations of, or issued by, any state or
political subdivision (including any agency, corporation, or
instrumentality of a state or political subdivision).
(K) Collateralized obligations that are eligible for purchase
and sale by federal credit unions. However, a credit union may
purchase for its own account and sell the obligations only to
the extent that a federal credit union can purchase and sell
those obligations.
(4) With the prior approval of the department, and subject to the
limitations of this subsection, a credit union may organize, invest
in, or loan money to a credit union service organization (as
defined in Part 712 of the regulations of the National Credit
Union Administration, 12 CFR 712). A credit union may not loan
or invest in a credit union service organization if the aggregate
amount of all such loans or investments in a particular credit
union service organization is greater than ten percent (10%) of the
capital, surplus, and unimpaired shares of the credit union without
the prior written approval of the department. A credit union may
organize, invest in, or loan money to a credit union service
organization described in this subdivision only if the following
requirements are met:
(A) The credit union service organization is adequately
capitalized or has a reasonable plan for adequate capitalization
if the credit union service organization is to be formed or is
newly formed.
(B) The credit union service organization is structured and
operated as a separate legal entity from the credit union.
(C) The credit union obtains a written legal opinion that the
credit union service organization is structured and operated in
a manner that limits the credit union's potential liability for the
debts and liabilities of the credit union service organization to
not more than the loss of money invested in or loaned to the
credit union service organization by the credit union.
(D) The credit union service organization agrees in writing to
prepare financial statements and provide the financial
statements to the credit union at least quarterly, and to the
department upon request.
(E) The credit union service organization agrees in writing to
obtain an audit of the credit union service organization from a
certified public accountant at least annually and provide a
copy of each audit report to the credit union, and to the
department upon request. A wholly owned credit union service
organization is not required to obtain a separate annual audit
if the credit union service organization is included in the
annual consolidated audit of the credit union that is the credit
union service organization's parent.
(F) The credit union service organization operates in
compliance with all applicable federal and state laws.
(5) To deposit its funds into:
(A) depository institutions that are federally insured; or
(B) state chartered credit unions that are privately insured by
an insurer approved by the department.
(6) To purchase, hold, own, or convey real estate as may be
conveyed to the credit union in satisfaction of debts previously
contracted or in exchange for real estate conveyed to the credit
union.
(7) To own, hold, or convey real estate as may be purchased by
the credit union upon judgment in its favor or decrees of
foreclosure upon mortgages.
(8) To issue shares of stock and upon the terms, conditions,
limitations, and restrictions and with the relative rights as may be
stated in the bylaws of the credit union, but no stock may have
preference or priority over the other to share in the assets of the
credit union upon liquidation or dissolution or for the payment of
dividends except as to the amount of the dividends and the time
for the payment of the dividends as provided in the bylaws.
(9) To charge the member's share account for the actual cost of a
necessary locator service when the member has failed to keep the
credit union informed about the member's current address. The
charge shall be made only for amounts paid to a person or concern
normally engaged in providing such service, and shall be made
against the account or accounts of any one (1) member not more
than once in any twelve (12) month period.
(10) To transfer to an accounts payable account, a dormant
account, or a special account share accounts which have been
inactive, except for dividend credits, for a period of at least two
(2) years. The credit union shall not consider the payment of
dividends on the transferred account.
(11) To invest in fixed assets with the funds of the credit union.
An investment in fixed assets in excess of five percent (5%) of its
assets is subject to the approval of the department. A credit union
may rent excess space at the credit union's main office or branch
as a source of income.
(12) To establish branch offices, upon approval of the department,
provided that all books of account shall be maintained at the
principal office.
(13) To pay an interest refund on loans proportionate to the
interest paid during the dividend period by borrowers who are
members at the end of the dividend period.
(14) To purchase life savings and loan protection insurance for
the benefit of the credit union and its members, if:
(A) the coverage is placed with an insurance company licensed
to do business in Indiana; and
(B) no officer, director, or employee of the credit union
personally benefits, directly or indirectly, from the sale or
purchase of the coverage.
(15) To sell and cash negotiable checks, travelers checks, and
money orders for members.
(16) To purchase members' notes from any liquidating credit
union, with written approval from the department, at prices agreed
upon by the boards of directors of both the liquidating and the
purchasing credit unions. However, the aggregate of the unpaid
balances of all notes of liquidating credit unions purchased by any
one (1) credit union shall not exceed ten percent (10%) of the
purchasing credit union's capital and surplus unless special
written authorization has been granted by the department.
(17) To exercise such incidental powers necessary or requisite to
enable it to carry on effectively the business for which it is
incorporated.
(18) To act as a custodian or trustee of any trust created or
organized in the United States and forming part of a tax
advantaged savings plan which qualifies or qualified for specific
tax treatment under Section 223, 401(d), 408, 408A, or 530 of the
Internal Revenue Code, if the funds of the trust are invested only
in share accounts or insured certificates of the credit union.
(19) To issue shares or insured certificates to a trustee or
custodian of a pension plan, profit sharing plan, or stock bonus
plan which qualifies for specific tax treatment under Sections
401(d) or 408(a) of the Internal Revenue Code.
(20) A credit union may exercise any rights and privileges that
are:
(A) granted to federal credit unions; but
(B) not authorized for credit unions under the Indiana Code
(except for this section) or any rule adopted under the Indiana
Code;
if the credit union complies with section 9.2 of this chapter.
(21) To sell, pledge, or discount any of its assets. However, a
credit union may not pledge any of its assets as security for the
safekeeping and prompt payment of any money deposited, except
that a credit union may, for the safekeeping and prompt payment
of money deposited, give security as authorized by federal law.
(22) To purchase assets of another credit union and to assume the
liabilities of the selling credit union.
(23) To act as a fiscal agent of the United States and to receive
deposits from nonmember units of the federal, state, or county
governments, from political subdivisions, and from other credit
unions upon which the credit union may pay varying interest rates
at varying maturities subject to terms, rates, and conditions that
are established by the board of directors. However, the total
amount of public funds received from units of state and county
governments and political subdivisions that a credit union may
have on deposit may not exceed twenty percent (20%) of the total
assets of that credit union, excluding those public funds.
(24) To join the National Credit Union Administration Central
Liquidity Facility.
(25) To participate in community investment initiatives under the
administration of organizations:
(A) exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code; and
(B) located or conducting activities in communities in which
the credit union does business.
Participation may be in the form of either charitable contributions
or participation loans. In either case, disbursement of funds
through the administering organization is not required to be
limited to members of the credit union. Total contributions or
participation loans may not exceed one tenth of one percent
(0.1%) of total assets of the credit union. A recipient of a
contribution or loan is not considered qualified for credit union
membership. A contribution or participation loan made under this
subdivision must be approved by the board of directors.
(26) To establish and operate an automated teller machine
(ATM):
(A) at any location within Indiana; or
(B) as permitted by the laws of the state in which the
automated teller machine is to be located.
(27) To demand and receive, for the faithful performance and discharge of services performed under the powers vested in the credit union by this article:
(A) reasonable compensation, or compensation as fixed by agreement of the parties;
(B) all advances necessarily paid out and expended in the discharge and performance of its duties; and
(C) unless otherwise agreed upon, interest at the legal rate on the advances referred to in clause (B).
(28) Subject to any restrictions the department may impose, to become the owner or lessor of personal property acquired upon the request and for the use of a member and to incur additional obligations as may be incident to becoming an owner or lessor of such property.
(b) A credit union shall maintain files containing credit and other information adequate to demonstrate evidence of prudent business judgment in exercising the investment powers granted under this chapter or by rule, order, or declaratory ruling of the department.
(1) If shares are issued in a revocable trust, at least one (1) of the settlors must be a member of the credit union in the settlor's own right.
(2) If shares are issued in an irrevocable trust, at least one (1):
(A) settlor; or
(B) beneficiary;
must be a member of the credit union in the settlor's or the beneficiary's own right.
(3) The name of each beneficiary must be listed for the trust, whether the trust is revocable or irrevocable.
established by IC 28-11-2-9. Except as specified in IC 28-11-3-3
concerning individual depositors, any information contained in call
reports made by credit unions to the department must be made
available to any person upon request.
(1) the applicant, any employee of the applicant, and any significant affiliate of the applicant;
(2) each director, executive officer, 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 person directly or indirectly owning of record or owning beneficially at least ten percent (10%) of the outstanding shares of any class of equity security of the applicant;
are such that the business will be operated honestly, fairly, and efficiently and that the convenience and needs of the public exist for the operation of the business in the community wherein the applicant proposes to operate, it shall issue and deliver a license to the applicant, which license shall authorize the applicant to engage in the business of pawnbroking.
(b) The director is entitled to request evidence of compliance with the requirements of this section by the licensee, including any affiliate or person described in subsection (a), at:
(1) the time of issuance of the license;
(2) the time of renewal of the license; or
(3) any other time considered necessary by the director.
A license shall remain in effect until it is surrendered, revoked, or suspended. If the department denies the application, it shall notify the applicant of the denial. The department may hold a public hearing if the department considers the hearing necessary.
(c) The department may deny an application under this section if the director determines that the application was submitted for the benefit of, or on behalf of, a person who does not qualify for a license.
(d) If a licensee replaces a manager, the licensee shall give the department written notice of the replacement not later than thirty (30) days after engaging another person to serve as manager.
transaction approved under section 9.1 of this chapter, a license
shall not be transferable or assignable. More than one (1) place of
business may be maintained under the same license.
(1) direct or cause the direction of the management or policies of a licensee, whether through the beneficial ownership of voting securities, by contract, or otherwise; or
(2) vote at least twenty-five percent (25%) of the voting securities of a licensee, whether the voting rights are derived through the beneficial ownership of voting securities, by contract, or otherwise.
(b) An organization or an individual acting directly, indirectly, or through or in concert with one (1) or more other organizations or individuals may not acquire control of any licensee unless the department has received and approved an application for change in control. The department has not more than one hundred twenty (120) days after receipt of an application to issue a notice approving the proposed change in control. The application must contain the name and address of the organization, individual, or individuals who propose to acquire control and any other information required by the director.
(c) The period for approval under subsection (b) may be extended:
(1) in the discretion of the director for an additional thirty (30) days; and
(2) not more than two (2) additional times for not more than forty-five (45) days each time if:
(A) the director determines that the organization, individual, or individuals who propose to acquire control have not submitted substantial evidence of the qualifications described in subsection (d);
(B) the director determines that any material information submitted is substantially inaccurate; or
(C) the director has been unable to complete the investigation of the organization, individual, or individuals who propose to acquire control because of any delay caused by or the inadequate cooperation of the organization, individual, or individuals.
(d) The department shall issue a notice approving the
application only after it is satisfied that both of the following apply:
(1) The organization, individual, or individuals who propose
to acquire control are qualified by competence, experience,
character, and financial responsibility to control and operate
the licensee in a legal and proper manner.
(2) The interests of the owners and creditors of the licensee
and the interests of the public generally will not be
jeopardized by the proposed change in control.
(e) The director may determine, in the director's discretion, that
subsection (b) does not apply to a transaction if the director
determines that the direct or beneficial ownership of the licensee
will not change as a result of the transaction.
(f) The president or other chief executive officer of a licensee
shall report to the director any transfer or sale of securities of the
licensee that results in direct or indirect ownership by a holder or
an affiliated group of holders of at least ten percent (10%) of the
outstanding securities of the licensee. The report required by this
section must be made not later than ten (10) days after the transfer
of the securities on the books of the licensee.
(g) Depending on the circumstances of the transaction, the
director may reserve the right to require the organization,
individual, or individuals who propose to acquire control of a
licensee to apply for a new license under section 4 of this chapter,
instead of acquiring control of the licensee under this section.
(1) the license renewal fee fixed by the department under IC 28-11-3-5; and
(2) all other information and documents requested by the director.
(b) The department may
(1) renewal application; or
(2) license renewal fee;
that is
(1) file any renewal form required by the department; or
(2) pay any license renewal fee described under section 11 of this chapter;
(b) A person whose license is revoked or suspended under this section may:
(1) pay all delinquent fees and apply for
(2) appeal the revocation or suspension to the department for an administrative review under IC 4-21.5-3.
Pending the decision resulting from
(1) The United States or an instrumentality of the United States.
(2) The state, a political subdivision of the state, or an instrumentality of the state or of a political subdivision of the state.
(3) A bank, a bank holding company, an industrial loan and investment company, a credit union, a savings association, a savings bank, a mutual bank, or a mutual savings bank organized under the laws of any state or the United States.
(4) A stored value card issued by a state or federally chartered financial institution.
(1) the sale or issuance of payment instruments primarily for personal, family, or household purposes; or
(2) engaging in the business of:
(A) receiving money for transmission from; or
(B) transmitting money to;
any location and by any means, including a payment instrument, wire, facsimile, or electronic transfer, primarily for personal, family, or household purposes.
(1) State of incorporation or organization.
(2) Date of incorporation or organization.
(3) A certificate from the state in which the applicant was incorporated or organized stating that the entity is in good standing.
(4) A description of the organizational structure of the applicant, including the following:
(A) The identity of the parent of the applicant.
(B) The identity of each subsidiary of the applicant.
(C) The names of the stock exchanges, if any, in which the applicant, the parent, and the subsidiaries are publicly traded.
(5) The:
(A) name;
(B) business address;
(C) residence address; and
(D) employment history;
for each individual described in section 35(b)(2) or 35(b)(3) of this chapter.
(6) The:
(A) history of material litigation; and
(B) history of criminal indictments, convictions, and guilty or nolo contendere pleas for felonies involving fraud, deceit, or misrepresentation under the laws of Indiana or any other jurisdiction;
for each individual described in section 35(b)(2) or 35(b)(3) of this chapter.
(7) Except as provided in subdivision (8), copies of the applicant's audited financial statements for the current year and, if available,
for the preceding two (2) years, including a:
(A) balance sheet;
(B) statement of income or loss;
(C) statement of changes in shareholder equity; and
(D) statement of changes in financial position.
A financial statement required to be submitted under this
subdivision must be prepared by a certified public accountant
authorized to do business in the United States in accordance
with AICPA Statements on Standards for Accounting and
Review Services (SSARS).
(8) If the applicant is a wholly owned subsidiary of:
(A) a corporation publicly traded in the United States,
financial statements for the current year or the parent
corporation's Form 10K reports filed with the United States
Securities and Exchange Commission for the preceding three
(3) years may be submitted with the applicant's unaudited
financial statements; or
(B) a corporation publicly traded outside the United States,
similar documentation filed with the parent corporation's
non-United States regulator may be submitted with the
applicant's unaudited financial statements.
(9) Copies of filings, if any, made by the applicant with the
United States Securities and Exchange Commission, or with a
similar regulator in a country other than the United States, not
more than one (1) year before the date of filing of the application.
(1) direct or cause the direction of the management or policies of a licensee, whether through the beneficial ownership of voting securities, by contract, or otherwise; or
(2) vote at least twenty-five percent (25%) of the voting securities of a licensee, whether the voting rights are derived through the beneficial ownership of voting securities, by contract, or otherwise.
(b) An organization or an individual acting directly, indirectly,
or through or in concert with one (1) or more other organizations
or individuals may not acquire control of any licensee unless the
department has received and approved an application for change
in control. The department has not more than one hundred twenty
(120) days after receipt of an application to issue a notice
approving the proposed change in control. The application must
contain the name and address of the organization, individual, or
individuals who propose to acquire control and any other
information required by the director.
(c) The period for approval under subsection (b) may be
extended:
(1) in the discretion of the director for an additional thirty
(30) days; and
(2) not more than two (2) additional times for not more than
forty-five (45) days each time if:
(A) the director determines that the organization,
individual, or individuals who propose to acquire control
have not submitted substantial evidence of the
qualifications described in subsection (d);
(B) the director determines that any material information
submitted is substantially inaccurate; or
(C) the director has been unable to complete the
investigation of the organization, individual, or individuals
who propose to acquire control because of any delay
caused by or the inadequate cooperation of the
organization, individual, or individuals.
(d) The department shall issue a notice approving the
application only after it is satisfied that both of the following apply:
(1) The organization, individual, or individuals who propose
to acquire control are qualified by competence, experience,
character, and financial responsibility to control and operate
the licensee in a legal and proper manner.
(2) The interests of the owners and creditors of the licensee
and the interests of the public generally will not be
jeopardized by the proposed change in control.
(e) The director may determine, in the director's discretion, that
subsection (b) does not apply to a transaction if the director
determines that the direct or beneficial ownership of the licensee
will not change as a result of the transaction.
(f) The president or other chief executive officer of a licensee
shall report to the director any transfer or sale of securities of the
licensee that results in direct or indirect ownership by a holder or
an affiliated group of holders of at least ten percent (10%) of the
outstanding securities of the licensee. The report required by this
section must be made not later than ten (10) days after the transfer
of the securities on the books of the licensee.
(g) Depending on the circumstances of the transaction, the
director may reserve the right to require the organization,
individual, or individuals who propose to acquire control of a
licensee to apply for a new license under section 20 of this chapter,
instead of acquiring control of the licensee under this section.
(1) file any renewal form required by the department; or
(2) pay any license renewal fee described under section 37 of this chapter;
(b) A person whose license is revoked or suspended under this section may:
(1) pay all delinquent fees and apply for a
(2) appeal the revocation or suspension to the department for an administrative review under IC 4-21.5-3.
Pending the decision resulting from
(a) If the department determines, after notice and an opportunity to be heard, that a person has violated this chapter, the department may, in addition to or instead of all other remedies available under this chapter, impose upon the person a civil penalty not greater than ten thousand dollars ($10,000) per violation.
(b) This chapter does not apply to
(1) the
(2) the consideration (as defined in section 3 of this chapter) charged for cashing checks does not exceed
(1) direct or cause the direction of the management or policies of a licensee, whether through the beneficial ownership of voting securities, by contract, or otherwise; or
(2) vote at least twenty-five percent (25%) of the voting securities of a licensee, whether the voting rights are derived through the beneficial ownership of voting securities, by contract, or otherwise.
(b) An organization or an individual acting directly, indirectly, or through or in concert with one (1) or more other organizations or individuals may not acquire control of any licensee unless the department has received and approved an application for change
in control. The department has not more than one hundred twenty
(120) days after receipt of an application to issue a notice
approving the proposed change in control. The application must
contain the name and address of the organization, individual, or
individuals who propose to acquire control and any other
information required by the director.
(c) The period for approval under subsection (b) may be
extended:
(1) in the discretion of the director for an additional thirty
(30) days; and
(2) not more than two (2) additional times for not more than
forty-five (45) days each time if:
(A) the director determines that the organization,
individual, or individuals who propose to acquire control
have not submitted substantial evidence of the
qualifications described in subsection (d);
(B) the director determines that any material information
submitted is substantially inaccurate; or
(C) the director has been unable to complete the
investigation of the organization, individual, or individuals
who propose to acquire control because of any delay
caused by or the inadequate cooperation of the
organization, individual, or individuals.
(d) The department shall issue a notice approving the
application only after it is satisfied that both of the following apply:
(1) The organization, individual, or individuals who propose
to acquire control are qualified by competence, experience,
character, and financial responsibility to control and operate
the licensee in a legal and proper manner.
(2) The interests of the owners and creditors of the licensee
and the interests of the public generally will not be
jeopardized by the proposed change in control.
(e) The director may determine, in the director's discretion, that
subsection (b) does not apply to a transaction if the director
determines that the direct or beneficial ownership of the licensee
will not change as a result of the transaction.
(f) The president or other chief executive officer of a licensee
shall report to the director any transfer or sale of securities of the
licensee that results in direct or indirect ownership by a holder or
an affiliated group of holders of at least ten percent (10%) of the
outstanding securities of the licensee. The report required by this
section must be made not later than ten (10) days after the transfer
of the securities on the books of the licensee.
(g) Depending on the circumstances of the transaction, the
director may reserve the right to require the organization,
individual, or individuals who propose to acquire control of a
licensee to apply for a new license under section 11 of this chapter,
instead of acquiring control of the licensee under this section.
(1) the license renewal fee
(2) all information and documents requested by the director of the department.
(b) A licensee that seeks to renew a license issued under this chapter shall pay to the department before July 1 of each year a fee fixed by the department under IC 28-11-3-5 as a renewal fee. The department may fix a daily late fee under IC 28-11-3-5 for a:
(1) renewal license application; or
(2) renewal fee;
that is
(1) file any renewal applications prescribed by the director; or
(2) pay any license renewal fee described under section 15 of this chapter;
(b) A person whose license is revoked or suspended under this section may:
(1) pay all delinquent fees and apply for
(2) appeal the revocation to the department for an administrative
review under IC 4-21.5-3.
Pending the decision resulting from the a hearing under IC 4-21.5-3
concerning the license revocation the or suspension, a license remains
in force.
(b) In addition to or instead of imposing a civil penalty under subsection (a), the department may bring a civil action against a person for violating this chapter.
(b) The treasurer of state shall invest the money in the fund not currently needed to meet the obligations of the fund in the same manner as other public funds may be invested. Interest that accrues from these investments shall be deposited in the state general fund.
(c) All revenue accruing to the department shall be paid into the fund.
(d) All expenses incurred and all compensation paid by the department shall be paid out of the fund in the same manner as other state expenses and compensation are paid.
(e) Money in the fund at the end of a fiscal year does not revert to the state general fund.
(f) All civil penalties assessed by the department shall be paid into the fund.
(g) If the department is required to defend the constitutionality of any of the statutes or rules the department administers, the costs
and expenses incurred in connection with the defense may not:
(1) be paid from the fund; or
(2) be assessed in any way to the department's budget.
(1) on the date specified in the order; or
(2) ten (10) days after service of the order, if an effective date is not specified in the order.
(b) A final order remains effective and enforceable as provided in the order.
(c) The department or a reviewing court may stay, modify, or vacate a final order.
(b) In determining the amount of a civil penalty assessed under section 7 of this chapter, the following factors shall be considered:
(1) The appropriateness of the civil penalty with respect to the financial resources and good faith of the individual charged.
(2) The gravity of the practice, violation, or act.
(3) The history of previous practices, violations, or acts.
(4) The economic benefit derived by the individual from the practice, violation, or act.
(5) Other factors that justice requires.
(c) A financial institution may not indemnify a director or an officer for a civil penalty imposed under section 7 of this chapter.
(d) Civil penalties shall be deposited in the financial institutions fund established by IC 28-11-2-9.
(1) is rated below the first four (4) rating classes by a generally recognized security rating service;
(2) is in default; or
(3) is otherwise considered speculative by the director.
(b) A corporate fiduciary may purchase for its own account a security that is not rated by a generally recognized security rating service if:
(1) the corporate fiduciary at the time of purchase obtains financial information that is adequate to document the investment quality of the security; and
(2) the security is not otherwise considered speculative by the director.
(1) Accept deposit accounts.
(2) Issue evidence of deposit account ownership.
(3) Declare and distribute earnings to members.
(4) Pay, in part or in full, withdrawal requests of deposit accounts.
(5) Subject to the provisions and restrictions of 12 U.S.C. 84 and 12 CFR 32:
(A) Make loans to members on the security of deposit accounts.
(B) Make property improvement loans.
(C) Make other loans as provided under IC 28-15-8.
(D) Make mortgage loans.
(E) Accept additional collateral on mortgage loans.
(F) Purchase and sell loans.
(G) Negotiate loan servicing agreements.
(H) Purchase and sell participating interests in loans.
(I) Issue letters of credit with specific expiration dates.
(J) Make secured or unsecured loans, which are partially insured or guaranteed in any manner by any state of the United States, the United States government, or any of its agencies or government sponsored enterprises.
(K) Purchase commercial paper that is denominated in United States currency and that:
(i) is rated by at least one (1) nationally recognized investment rating service in one (1) of the two (2) highest grades; or
(ii) meets another standard of creditworthiness determined to be appropriate by the director.
(L) Make, purchase, or participate in alternative mortgage loans as provided in IC 28-15-11.
(6) Acquire and sell real estate in satisfaction of debts previously contracted.
(7) Acquire real estate for the convenient transaction of its business. A savings association has the same powers under this subdivision as a bank or trust company has under IC 28-1-11-5.
(8) Notwithstanding any other law, establish, maintain, or relocate one (1) or more branch offices by following the provisions of IC 28-2-13, IC 28-2-17, or IC 28-2-18 as if the savings association were a bank.
(9) Become a member in any agency or instrumentality of the federal government. For the purposes of this subdivision, membership in an agency or instrumentality of the federal government may include:
(A) purchasing stock;
(B) purchasing notes and debentures; or
(C) borrowing money.
(10) Subject to any limitations imposed by the department through policy:
(A) invest the money deposited in the savings association in the shares of the capital stock, bonds, debentures, notes, or other obligations of a federal home loan bank of the United States;
(B) become a member of the federal home loan bank of the district in which Indiana is located or an adjoining district;
(C) borrow money from:
(i) a federal home loan bank described in clause (B);
(ii) the Federal Deposit Insurance Corporation; or
(iii) any other corporation;
(D) transfer, assign to, and pledge with a federal home loan bank described in clause (B), the Federal Deposit Insurance Corporation, or any other corporation any of the bonds, notes, contracts, mortgages, securities, or other property of the savings association held or acquired as security for the payment of loans entered into under clause (C); and
(E) exercise all rights, powers, and privileges conferred upon, and do all things and perform all acts required of, members or shareholders of a federal home loan bank by the Federal Home Loan Bank Act (12 U.S.C. 1421 through 1449).
(11) Subject to the provisions and restrictions of 12 U.S.C. 24 and 12 CFR 1, invest in the following types of securities:
(A) Bonds, notes, certificates, and other valid obligations of the United States government or any agency of the United
States government.
(B) Accounts offered by federally insured banks, savings
banks, and savings associations.
(C) Bonds, notes, or other evidences of indebtedness that are
general obligations supported by the full faith and credit of any
state in the United States or any city, town, or other political
subdivision in any state in the United States if the obligations:
(i) have been assigned one (1) of the four (4) highest grades
by a nationally recognized investment rating service; or
(ii) meet another standard of creditworthiness
determined to be appropriate by the director.
(D) Shares of stock of a subsidiary that does not exercise a
power or engage in any activity that is not authorized for the
savings association. The investment power granted by this
subdivision is separate from the investment power granted by
IC 28-15-9.
(E) Corporate debt securities that are denominated in United
States currency and that:
(i) are rated by at least one (1) nationally recognized
investment rating service in one (1) of the four (4) highest
grades; or
(ii) meet another standard of creditworthiness
determined to be appropriate by the director.
Corporate debt securities in which a savings association
invests under this clause must be convertible into stock at the
sole option of the holder, and a savings association is
prohibited from exercising the conversion option.
(F) Shares of open end investment companies that are eligible
for purchase by national banks.
(G) Bankers' acceptances that are eligible for purchase by
national banks.
(12) For the purpose of:
(A) check and deposit sorting and posting;
(B) computation and posting of interest and other credits and
charges;
(C) preparation and mailing of checks, statements, notices, and
similar items; or
(D) other clerical, bookkeeping, accounting, statistical, or
similar functions performed by a savings association;
invest in a corporation organized in any state to perform those
functions for two (2) or more savings associations, each of which
owns a portion of the capital stock of the corporation. The total
investment of a savings association under this subdivision may
not exceed ten percent (10%) of the capital and surplus of the
savings association. A savings association may not invest in this
type of corporation unless the corporation furnishes assurances to
the department that it will subject itself to examination by the
department to the same extent as if the services were performed
by the savings association.
(13) Lend money to other savings associations:
(A) the deposits of which are insured by the Federal Deposit
Insurance Corporation; and
(B) that are incorporated and operating under the laws of any
state or of the United States.
(14) Borrow money and mortgage or pledge its property to secure
payment.
(15) Issue subordinated notes or debentures.
(16) Assess and collect interest, fees, and other charges.
(17) Insure its deposit accounts with the Federal Deposit
Insurance Corporation or its successor.
(18) Act as an agent for the United States or its instrumentalities.
(19) Accept property for safe keeping or escrow.
(20) Rent or lease safe deposit boxes.
(21) Issue and sell checks, drafts, money orders, and other
instruments for the transmission or payment of money.
(22) Exercise all the powers that:
(A) are incidental and proper; or
(B) may be necessary and usual;
in carrying on the business of the savings association.
(23) Purchase or construct buildings, hold legal title to the
buildings, and lease the buildings for public purposes to
municipal corporations or other public authorities that have
resources sufficient to make payment of all rentals as they become
due. Each lease agreement entered into under this subdivision
must provide that, upon expiration, the lessee will become the
owner of the building.
(24) Open or establish automated teller machines at any location.
An automated teller machine opened or established under this
subdivision may be owned and operated individually or jointly on
a cost sharing or fee basis.
(25) Act:
(A) in any fiduciary capacity in which a bank or trust company
is permitted to act under this title; and
(B) as an agent for the sale of real estate, without bond or other
security.
(26) Accept and maintain demand deposit accounts if the savings
association is insured by the Federal Deposit Insurance
Corporation or its successor.
(27) Without the approval of the department, to the extent
authorized by the board of directors of the savings association,
establish or maintain agencies that:
(A) only service and originate, but do not approve, loans and
contracts; or
(B) manage or sell real estate owned by the savings
association.
An agency established or maintained under this subdivision may
offer any services not referred to in this subdivision with the
approval of the department, except for accepting payment on
savings accounts. An agency shall maintain records of all
business it transacts and transmit copies to a branch or home
office of the savings association.
(b) Subject to any limitations or restrictions that the department may
impose by rule or policy, a savings association may purchase and hold
life insurance as follows:
(1) Life insurance purchased or held in connection with employee
compensation or benefit plans approved by the savings
association's board of directors.
(2) Life insurance purchased or held to recover the cost of
providing preretirement or postretirement employee benefits
approved by the savings association's board of directors.
(3) Life insurance on the lives of borrowers.
(4) Life insurance held as security for a loan.
(5) Life insurance that a national bank may purchase or hold
under 12 U.S.C. 24 (Seventh).
(1) The weekly net yield purchase quotations of conventional program home mortgages published by the Federal Home Loan Mortgage Corporation.
(2) The monthly national average mortgage rate index for all major lenders for the purchase of previously occupied single-family homes of the Office of Thrift Supervision or its successor.
(3) The average cost to savings associations of funds insured by the
Insurance Corporation, either for all Federal Home Loan Bank
districts or for a particular district or districts, as computed
semiannually and published by the Office of Thrift Supervision or
its successor and made available in news releases.
(4) The monthly average of weekly auction rates on United States
Treasury bills with a maturity of three (3) months or six (6)
months, as published in the Federal Reserve Bulletin and made
available by the Federal Reserve Board each month.
(5) The monthly average yield on United States Treasury
securities adjusted to a constant maturity of one (1), two (2), three
(3), or five (5) years, as published in the Federal Reserve Bulletin
and made available by the Federal Reserve Board each month.
(6) Any rate that is designated by the department.
(1) not to loan funds to the trustee or an affiliate;
(2) not to purchase or participate in the purchase of trust property from the trust for the trustee's own or an affiliate's account;
(3) not to sell or participate in the sale of the trustee's own or an affiliate's property to the trust; or
(4) if a corporate trustee, not to purchase for or retain in the trust its own or a parent or subsidiary corporation's stock, bonds, or other capital securities. However, the trustee may retain such securities already held in trusts created prior to September 2, 1971.
(b) Unless the terms of the trust provide otherwise, a corporate trustee may invest in, purchase for, or retain in the trust its own or an affiliate's obligations, including savings accounts and certificates of deposit, without the investment, purchase, or retention constituting a conflict of interest under section 5 of this chapter.
(c) Unless the terms of the trust provide otherwise, a corporate trustee does not violate subsection (a) by investing in, purchasing for, or retaining in the trust its own or an affiliate's obligations, including savings accounts and certificates of deposit, if the payment of each obligation is fully insured by
(d) If the terms of the trust permit the trustee to deal with a beneficiary for the trustee's own account, the trustee has a duty to deal fairly with and to disclose to the beneficiary all material facts related to the transaction which the trustee knows or should know.
(e) Unless the terms of the trust provide otherwise, the trustee may sell, exchange, or participate in the sale or exchange of trust property from one (1) trust to the trustee as trustee of another trust, provided the sale or exchange is fair and reasonable with respect to the beneficiaries of both trusts and the trustee discloses to the beneficiaries of both trusts all material facts related to the sale or exchange which the trustee knows or should know.
(f) This section does not prohibit a trustee from enforcing or fulfilling any enforceable contract or agreement:
(1) executed during the settlor's lifetime; and
(2) between the settlor and the trustee in the trustee's individual capacity.
(1) a loan; or
(2) a consumer credit sale;
(b) The term does not include a land contract (as defined in IC 24-4.4-1-301(36)).
(1) does business in Indiana; and
(2) is insured by the Federal Deposit Insurance Corporation,
; (11)HE1528.1.78. --> SECTION 78. THE FOLLOWING ARE REPEALED [EFFECTIVE
JULY 1, 2011]: IC 28-2-17-20.1; IC 28-2-18-29; IC 28-7-1-10.5;
IC 28-8-4-40; IC 28-8-5-5.
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