*HB1397.1*

January 19, 2018

HOUSE BILL No. 1397_____

DIGEST OF HB 1397 (Updated January 17, 2018 4:08 pm - DI 84)

Citations Affected: IC 24-4.4; IC 24-4.5; IC 24-7; IC 28-1; IC 28-2;IC 28-6.1; IC 28-7; IC 28-8; IC 28-10.

Synopsis: Financial institutions and consumer credit. Makes variouschanges to the statutes concerning: (1) first lien mortgage lenders; (2)persons licensed under the Uniform Consumer Credit Code; (3) rentalpurchase agreements; (4) debt management companies; (5) banks; (6)savings banks; (7) credit unions; (8) pawnbrokers; (9) moneytransmitters; and (10) check cashers.

Effective: July 1, 2018.

Burton

January 11, 2018, read first time and referred to Committee on Financial Institutions.January 18, 2018, reported — Do Pass.

HB 1397—LS 7163/DI 101

January 19, 2018

Second Regular Session of the 120th General Assembly (2018)

PRINTING CODE. Amendments: Whenever an existing statute (or a section of the IndianaConstitution) is being amended, the text of the existing provision will appear in this style type,additions will appear in this style type, and deletions will appear in this style type. Additions: Whenever a new statutory provision is being enacted (or a new constitutionalprovision adopted), the text of the new provision will appear in this style type. Also, theword NEW will appear in that style type in the introductory clause of each SECTION that addsa new provision to the Indiana Code or the Indiana Constitution. Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflictsbetween statutes enacted by the 2017 Regular Session of the General Assembly.

HOUSE BILL No. 1397

A BILL FOR AN ACT to amend the Indiana Code concerningfinancial institutions.

Be it enacted by the General Assembly of the State of Indiana:

1 SECTION 1. IC 24-4.4-1-102, AS AMENDED BY P.L.159-2017,2 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE3 JULY 1, 2018]: Sec. 102. (1) This article shall be liberally construed4 and applied to promote its underlying purposes and policies.5 (2) The underlying purposes and policies of this article are:6 (a) to permit and encourage the development of fair and7 economically sound first lien mortgage lending practices; and8 (b) to conform the regulation of first lien mortgage lending9 practices to applicable state and federal laws, rules, regulations,

10 policies, and guidance.11 (3) A reference to a requirement imposed by this article includes12 reference to a related rule of the department adopted under this article.13 (4) A reference to a federal law in this article is a reference to the14 law as in effect December 31, 2016. 2017.15 SECTION 2. IC 24-4.4-1-202.5, AS AMENDED BY P.L.186-2015,16 SECTION 7, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE17 JULY 1, 2018]: Sec. 202.5. (1) If a person licensed or required to be

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1 licensed under this article by the department to engage in mortgage2 transactions also engages in the loan brokerage business, the person's3 loan brokerage business is subject to the following sections of the4 Indiana Code and any rules adopted to implement these sections:5 (a) IC 23-2-5-9.6 (b) IC 23-2-5-9.1.7 (c) IC 23-2-5-15.8 (d) IC 23-2-5-16.9 (e) IC 23-2-5-17.

10 (f) IC 23-2-5-18.11 (g) IC 23-2-5-18.5.12 (h) IC 23-2-5-20.13 (i) IC 23-2-5-23, except for IC 23-2-5-23(2)(B).14 (j) IC 23-2-5-24.15 (2) Loan broker business transactions engaged in by persons16 licensed or required to be licensed under this article by the17 department to engage in mortgage transactions are subject to18 examination by the department and to the examination fees described19 in IC 24-4.4-2-402(8)(c). The department may cooperate with the20 securities division of the office of the secretary of state in the21 department's examination of loan broker business transactions and may22 use the securities division's examiners to conduct examinations.23 SECTION 3. IC 24-4.4-1-301, AS AMENDED BY P.L.73-2016,24 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE25 JULY 1, 2018]: Sec. 301. In addition to definitions appearing in26 subsequent chapters of this article, the following definitions apply27 throughout this article:28 (1) "Affiliate", with respect to any person subject to this article,29 means a person that, directly or indirectly, through one (1) or30 more intermediaries:31 (a) controls;32 (b) is controlled by; or33 (c) is under common control with;34 the person subject to this article.35 (2) "Agreement" means the bargain of the parties in fact as found36 in the parties' language or by implication from other37 circumstances, including course of dealing or usage of trade or38 course of performance.39 (3) "Agricultural products" includes agricultural products,40 horticultural products, viticultural products, dairy products,41 livestock, wildlife, poultry, bees, forest products, fish and42 shellfish, any products raised or produced on farms, and any

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1 products processed or manufactured from products raised or2 produced on farms.3 (4) "Agricultural purpose" means a purpose related to the4 production, harvest, exhibition, marketing, transportation,5 processing, or manufacture of agricultural products by a natural6 person who cultivates, plants, propagates, or nurtures the7 agricultural products.8 (5) "Consumer credit sale" is a sale of goods, services, or an9 interest in land in which:

10 (a) credit is granted by a person who engages as a seller in11 credit transactions of the same kind;12 (b) the buyer is a person other than an organization;13 (c) the goods, services, or interest in land are purchased14 primarily for a personal, family, or household purpose;15 (d) either the debt is payable in installments or a credit service16 charge is made; and17 (e) with respect to a sale of goods or services, either:18 (i) the amount of credit extended, the written credit limit, or19 the initial advance does not exceed the exempt threshold20 amount, as adjusted in accordance with the annual21 adjustment of the exempt threshold amount, specified in22 Regulation Z (12 CFR 226.3 or 12 CFR 1026.3(b), as23 applicable); or24 (ii) the debt is secured by personal property used or expected25 to be used as the principal dwelling of the buyer.26 (6) "Credit" means the right granted by a creditor to a debtor to27 defer payment of debt or to incur debt and defer its payment.28 (7) "Creditor" means a person:29 (a) that regularly engages in the extension of first lien30 mortgage transactions that are subject to a credit service31 charge or loan finance charge, as applicable, or are payable by32 written agreement in more than four (4) installments (not33 including a down payment); and34 (b) to which the obligation is initially payable, either on the35 face of the note or contract, or by agreement if there is not a36 note or contract.37 The term does not include a person described in subsection38 (34)(a) in a tablefunded transaction. A creditor may be an39 individual, a limited liability company, a sole proprietorship, a40 partnership, a trust, a joint venture, a corporation, an41 unincorporated organization, or other form of entity, however42 organized.

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1 (8) "Department" refers to the members of the department of2 financial institutions.3 (9) "Depository institution" has the meaning set forth in the4 Federal Deposit Insurance Act (12 U.S.C. 1813(c)) and includes5 any credit union.6 (10) "Director" refers to the director of the department of financial7 institutions or the director's designee.8 (11) "Dwelling" means a residential structure that contains one9 (1) to four (4) units, regardless of whether the structure is

10 attached to real property. The term includes an individual:11 (a) condominium unit;12 (b) cooperative unit;13 (c) mobile home; or14 (d) trailer;15 that is used as a residence.16 (12) "Employee" means an individual who is paid wages or other17 compensation by an employer required under federal income tax18 law to file Form W-2 on behalf of the individual.19 (13) "Federal banking agencies" means the Board of Governors20 of the Federal Reserve System, the Office of the Comptroller of21 the Currency, the Office of Thrift Supervision, the National Credit22 Union Administration, and the Federal Deposit Insurance23 Corporation.24 (14) "First lien mortgage transaction" means:25 (a) a consumer loan; or26 (b) a consumer credit sale;27 that is or will be used by the debtor primarily for personal, family,28 or household purposes and that is secured by a mortgage or a land29 contract (or another consensual security interest equivalent to a30 mortgage or a land contract) that constitutes a first lien on a31 dwelling or on residential real estate upon which a dwelling is32 constructed or intended to be constructed.33 (15) "Immediate family member" means a spouse, child, sibling,34 parent, grandparent, or grandchild. The term includes stepparents,35 stepchildren, stepsiblings, and adoptive relationships.36 (16) "Individual" means a natural person.37 (17) "Licensee" means a person licensed to engage in mortgage38 transactions as a creditor. under this article.39 (18) "Loan" includes:40 (a) the creation of debt by:41 (i) the creditor's payment of or agreement to pay money to42 the debtor or to a third party for the account of the debtor; or

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1 (ii) the extension of credit by a person who engages as a2 seller in credit transactions primarily secured by an interest3 in land;4 (b) the creation of debt by a credit to an account with the5 creditor upon which the debtor is entitled to draw6 immediately; and7 (c) the forbearance of debt arising from a loan.8 (19) "Loan brokerage business" means any activity in which a9 person, in return for any consideration from any source, procures,

10 attempts to procure, or assists in procuring, a mortgage11 transaction from a third party or any other person, whether or not12 the person seeking the mortgage transaction actually obtains the13 mortgage transaction.14 (20) "Loan processor or underwriter" means an individual who15 performs clerical or support duties as an employee at the direction16 of, and subject to the supervision and instruction of, a person17 licensed to engage in mortgage transactions or a person18 exempt from licensing. under this article. For purposes of this19 subsection, the term "clerical or support duties" may include, after20 the receipt of an application, the following:21 (a) The receipt, collection, distribution, and analysis of22 information common for the processing or underwriting of a23 mortgage transaction.24 (b) The communication with a consumer to obtain the25 information necessary for the processing or underwriting of a26 loan, to the extent that the communication does not include:27 (i) offering or negotiating loan rates or terms; or28 (ii) counseling consumers about mortgage transaction rates29 or terms.30 (21) "Mortgage loan originator" means an individual who, for31 compensation or gain, or in the expectation of compensation or32 gain, regularly engages in taking a mortgage transaction33 application or in offering or negotiating the terms of a mortgage34 transaction that either is made under this article or under35 IC 24-4.5 or is made by an employee of a person licensed to36 engage in mortgage transactions or by an employee of a37 person that is exempt from licensing, under this article or under38 IC 24-4.5, while the employee is engaging in the loan brokerage39 business. The term does not include the following:40 (a) An individual engaged solely as a loan processor or41 underwriter as long as the individual works exclusively as an42 employee of a person licensed to engage in mortgage

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1 transactions or as an employee of a person exempt from2 licensing. under this article.3 (b) Unless the person or entity is compensated by:4 (i) a creditor;5 (ii) a loan broker;6 (iii) another mortgage loan originator; or7 (iv) any agent of a creditor, a loan broker, or another8 mortgage loan originator described in items (i) through (iii);9 a person or entity that performs only real estate brokerage

10 activities and is licensed or registered in accordance with11 applicable state law.12 (c) A person solely involved in extensions of credit relating to13 timeshare plans (as defined in 11 U.S.C. 101(53D)).14 (22) "Mortgage servicer" means the last person to whom a15 mortgagor or the mortgagor's successor in interest has been16 instructed by a mortgagee to send payments on a loan secured by17 a mortgage.18 (23) "Mortgage transaction" means:19 (a) a consumer loan; or20 (b) a consumer credit sale;21 that is or will be used by the debtor primarily for personal, family,22 or household purposes and that is secured by a mortgage or a land23 contract (or another consensual security interest equivalent to a24 mortgage or a land contract) on a dwelling or on residential real25 estate upon which a dwelling is constructed or intended to be26 constructed.27 (24) "Nationwide Multistate Licensing System and Registry" (or28 "Nationwide Mortgage Licensing System and Registry" or29 "NMLSR") means a multistate licensing system owned and30 operated by the State Regulatory Registry, LLC, or by any31 successor or affiliated entity, for the licensing and registration of32 creditors, mortgage loan originators, and other persons in the33 mortgage or financial services industries. The term includes any34 other name or acronym that may be assigned to the system by the35 State Regulatory Registry, LLC, or by any successor or affiliated36 entity.37 (25) "Nontraditional mortgage product" means any mortgage38 product other than a thirty (30) year fixed rate mortgage.39 (26) "Organization" means a corporation, a government or40 government subdivision, an agency, a trust, an estate, a41 partnership, a limited liability company, a cooperative, an42 association, a joint venture, an unincorporated organization, or

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1 any other entity, however organized.2 (27) "Payable in installments", with respect to a debt or an3 obligation, means that payment is required or permitted by written4 agreement to be made in more than four (4) installments not5 including a down payment.6 (28) "Person" includes an individual or an organization.7 (29) "Principal" of a mortgage transaction means the total of:8 (a) the net amount paid to, receivable by, or paid or payable9 for the account of the debtor; and

10 (b) to the extent that payment is deferred, amounts actually11 paid or to be paid by the creditor for registration, certificate of12 title, or license fees if not included in clause (a).13 (30) "Real estate brokerage activity" means any activity that14 involves offering or providing real estate brokerage services to the15 public, including the following:16 (a) Acting as a real estate agent or real estate broker for a17 buyer, seller, lessor, or lessee of real property.18 (b) Bringing together parties interested in the sale, purchase,19 lease, rental, or exchange of real property.20 (c) Negotiating, on behalf of any party, any part of a contract21 relating to the sale, purchase, lease, rental, or exchange of real22 property (other than in connection with providing financing23 with respect to the sale, purchase, lease, rental, or exchange of24 real property).25 (d) Engaging in any activity for which a person engaged in the26 activity is required to be registered or licensed as a real estate27 agent or real estate broker under any applicable law.28 (e) Offering to engage in any activity, or act in any capacity,29 described in this subsection.30 (31) "Registered mortgage loan originator" means any individual31 who:32 (a) meets the definition of mortgage loan originator and is an33 employee of:34 (i) a depository institution;35 (ii) a subsidiary that is owned and controlled by a depository36 institution and regulated by a federal banking agency; or37 (iii) an institution regulated by the Farm Credit38 Administration; and39 (b) is registered with, and maintains a unique identifier40 through, the NMLSR.41 (32) "Residential real estate" means any real property that is42 located in Indiana and on which there is located or intended to be

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1 constructed a dwelling.2 (33) "Revolving first lien mortgage transaction" means a first lien3 mortgage transaction in which:4 (a) the creditor permits the debtor to obtain advances from5 time to time;6 (b) the unpaid balances of principal, finance charges, and other7 appropriate charges are debited to an account; and8 (c) the debtor has the privilege of paying the balances in9 installments.

10 (34) "Tablefunded" means a transaction in which:11 (a) a person closes a first lien mortgage transaction in the12 person's own name as a mortgagee with funds provided by one13 (1) or more other persons; and14 (b) the transaction is assigned, not later than one (1) business15 day after the funding of the transaction, to the mortgage16 creditor providing the funding.17 (35) "Unique identifier" means a number or other identifier18 assigned by protocols established by the NMLSR.19 (36) "Land contract" means a contract for the sale of real estate in20 which the seller of the real estate retains legal title to the real21 estate until the total contract price is paid by the buyer.22 (37) "Bona fide nonprofit organization" means an organization23 that does the following, as determined by the director, under24 criteria established by the director:25 (a) Maintains tax exempt status under Section 501(c)(3) of the26 Internal Revenue Code.27 (b) Promotes affordable housing or provides home ownership28 education or similar services.29 (c) Conducts the organization's activities in a manner that30 serves public or charitable purposes.31 (d) Receives funding and revenue and charges fees in a32 manner that does not encourage the organization or the33 organization's employees to act other than in the best interests34 of the organization's clients.35 (e) Compensates the organization's employees in a manner that36 does not encourage employees to act other than in the best37 interests of the organization's clients.38 (f) Provides to, or identifies for, debtors mortgage transactions39 with terms that are favorable to the debtor (as described in40 section 202(b)(15) of this chapter) and comparable to41 mortgage transactions and housing assistance provided under42 government housing assistance programs.

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1 (g) Maintains certification by the United States Department of2 Housing and Urban Development or employs counselors who3 are certified by the Indiana housing and community4 development authority.5 (38) "Regularly engaged", with respect to a person who extends6 or originates first lien mortgage transactions, refers to a person7 who:8 (a) extended or originated more than five (5) first lien9 mortgage transactions in the preceding calendar year; or

10 (b) extends or originates, or will extend or originate, more than11 five (5) first lien mortgage transactions in the current calendar12 year if the person did not extend or originate more than five13 (5) first lien mortgage transactions in the preceding calendar14 year.15 SECTION 4. IC 24-4.4-2-401, AS AMENDED BY P.L.103-2014,16 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE17 JULY 1, 2018]: Sec. 401. (1) Unless a person subject to this article has18 first obtained a mortgage license under this article from the19 department and annually maintains the license, the person shall not20 engage in Indiana as a creditor in first lien mortgage transactions. A21 separate mortgage license under this article is required for each legal22 entity that engages in Indiana as a creditor in first lien mortgage23 transactions. However, a separate mortgage license under this article24 is not required for each branch of a legal entity licensed under this25 article. by the department.26 (2) Each:27 (a) creditor licensed under this article; by the department to28 engage in mortgage transactions; and29 (b) entity exempt from licensing under this article that:30 (i) employs a licensed mortgage loan originator; or31 (ii) sponsors under an exclusive written agreement, as32 permitted by IC 24-4.4-1-202(b)(6)(a), a licensed mortgage33 loan originator as an independent agent;34 shall register with and maintain a valid unique identifier issued by the35 NMLSR. Each licensed mortgage loan originator must be employed by,36 or sponsored under an exclusive written agreement (as permitted by37 IC 24-4.4-1-202(b)(6)(a)) and as an independent agent, and associated38 with, a licensed creditor (or an entity exempt from licensing) under this39 article, in that is registered with the NMLSR in order to originate40 loans.41 (3) An individual engaging solely in loan processor or underwriter42 activities shall not represent to the public, through advertising or other

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1 means of communicating or providing information, including the use2 of business cards, stationery, brochures, signs, rate lists, or other3 promotional items, that the individual can or will perform any of the4 activities of a mortgage loan originator.5 (4) Applicants for a mortgage license under this article must apply6 for the license in the form prescribed by the director. Each form:7 (a) must contain content as set forth by rule, instruction, or8 procedure of the director; and9 (b) may be changed or updated as necessary by the director to

10 carry out the purposes of this article.11 (5) To fulfill the purposes of this article, the director may establish12 relationships or contracts with the NMLSR or other entities designated13 by the NMLSR to:14 (a) collect and maintain records; and15 (b) process transaction fees or other fees related to licensees or16 other persons subject to this article.17 (6) For the purpose of participating in the NMLSR, the director or18 the department may:19 (a) waive or modify, in whole or in part, by rule or order, any of20 the requirements of this article; and21 (b) establish new requirements as reasonably necessary to22 participate in the NMLSR.23 SECTION 5. IC 24-4.4-2-402.3, AS AMENDED BY P.L.5-2015,24 SECTION 53, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE25 JULY 1, 2018]: Sec. 402.3. (1) Each:26 (a) creditor; and27 (b) person that is exempt (either under this article or under28 IC 24-4.5) from licensing under this article to engage in29 mortgage loans and that:30 (i) employs a licensed mortgage loan originator; or31 (ii) sponsors under an exclusive written agreement, as32 permitted by IC 24-4.4-1-202(b)(6)(a), a licensed mortgage33 loan originator as an independent agent;34 must be covered by a surety bond in accordance with this section.35 (2) A surety bond must:36 (a) provide coverage for:37 (i) a creditor; or38 (ii) a person that is exempt from licensing under this article39 and that employs a licensed mortgage loan originator, or that40 sponsors under an exclusive written agreement (as permitted41 by IC 24-4.4-1-202(b)(6)(a)) a licensed mortgage loan42 originator as an independent agent;

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1 in an amount as prescribed in subsection (4);2 (b) be in a form prescribed by the director;3 (c) be in effect:4 (i) during the term of the creditor's license; under this chapter;5 or6 (ii) at any time during which the person exempt from licensing7 under this article employs a licensed mortgage loan originator8 or sponsors under an exclusive written agreement (as9 permitted by IC 24-4.4-1-202(b)(6)(a)) a licensed mortgage

10 loan originator as an independent agent;11 as applicable;12 (d) remain in effect during the two (2) years after:13 (i) the creditor ceases offering financial services to individuals14 in Indiana; or15 (ii) the person exempt from licensing under this article ceases16 to employ a licensed mortgage loan originator, or ceases to17 sponsor under an exclusive written agreement (as permitted by18 IC 24-4.4-1-202(b)(6)(a)) a licensed mortgage loan originator19 as an independent agent, or to offer financial services to20 individuals in Indiana, whichever is later;21 as applicable;22 (e) be payable to the department for the benefit of:23 (i) the state; and24 (ii) individuals who reside in Indiana when they agree to25 receive financial services from the creditor or the person26 exempt from licensing, under this article, as applicable;27 (f) be issued by a bonding, surety, or insurance company28 authorized to do business in Indiana and rated at least "A-" by at29 least one (1) nationally recognized investment rating service; and30 (g) have payment conditioned upon:31 (i) the creditor's or any of the creditor's licensed mortgage loan32 originators'; or33 (ii) the exempt person's or any of the exempt person's licensed34 mortgage loan originators';35 noncompliance with or violation of this chapter, 750 IAC 9, or36 other federal or state laws or regulations applicable to mortgage37 lending.38 (3) The director may adopt rules or guidance documents with39 respect to the requirements for a surety bond as necessary to40 accomplish the purposes of this article.41 (4) The penal sum of the surety bond shall be maintained in an42 amount that reflects the dollar amount of mortgage transactions

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1 originated as determined by the director. If the principal amount of a2 surety bond required under this section is reduced by payment of a3 claim or judgment, the creditor or exempt person for whom the bond4 is issued shall immediately notify the director of the reduction and, not5 later than thirty (30) days after notice by the director, file a new or an6 additional surety bond in an amount set by the director. The amount of7 the new or additional bond set by the director must be at least the8 amount of the bond before payment of the claim or judgment.9 (5) If for any reason a surety terminates a bond issued under this

10 section, the creditor or the exempt person shall immediately notify the11 department and file a new surety bond in an amount determined by the12 director.13 (6) Cancellation of a surety bond issued under this section does not14 affect any liability incurred or accrued during the period when the15 surety bond was in effect.16 (7) The director may obtain satisfaction from a surety bond issued17 under this section if the director incurs expenses, issues a final order,18 or recovers a final judgment under this chapter.19 (8) Notices required under this section must be in writing and20 delivered by certified mail, return receipt requested and postage21 prepaid, or by overnight delivery using a nationally recognized carrier.22 SECTION 6. IC 24-4.4-2-402.4, AS AMENDED BY P.L.27-2012,23 SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE24 JULY 1, 2018]: Sec. 402.4. (1) Subject to subsection (6), the director25 shall designate the NMLSR to serve as the sole entity responsible for:26 (a) processing applications and renewals for mortgage licenses;27 under this article;28 (b) issuing unique identifiers for licensees and entities exempt29 from licensing under this article that employ a licensed mortgage30 loan originator under this article; and31 (c) performing other services that the director determines are32 necessary for the orderly administration of the department's33 mortgage licensing system. under this article.34 (2) Subject to the confidentiality provisions contained in IC 5-14-3,35 this section, and IC 28-1-2-30, the director shall regularly report36 significant or recurring violations of this article to the NMLSR.37 (3) Subject to the confidentiality provisions contained in IC 5-14-3,38 this section, and IC 28-1-2-30, the director may report complaints39 received regarding mortgage licensees under this article to the40 NMLSR.41 (4) The director may report publicly adjudicated licensure actions42 against a licensee to the NMLSR.

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1 (5) The director shall establish a process in which licensees may2 challenge information reported to the NMLSR by the department.3 (6) The director's authority to designate the NMLSR under4 subsection (1) is subject to the following:5 (a) Information stored in the NMLSR is subject to the6 confidentiality provisions of IC 5-14-3 and IC 28-1-2-30. A7 person may not:8 (i) obtain information from the NMLSR, unless the person is9 authorized to do so by statute;

10 (ii) initiate any civil action based on information obtained11 from the NMLSR if the information is not otherwise available12 to the person under any other state law; or13 (iii) initiate any civil action based on information obtained14 from the NMLSR if the person could not have initiated the15 action based on information otherwise available to the person16 under any other state law.17 (b) Documents, materials, and other forms of information in the18 control or possession of the NMLSR that are confidential under19 IC 28-1-2-30 and that are:20 (i) furnished by the director, the director's designee, or a21 licensee; or22 (ii) otherwise obtained by the NMLSR;23 are confidential and privileged by law and are not subject to24 inspection under IC 5-14-3, subject to subpoena, subject to25 discovery, or admissible in evidence in any civil action. However,26 the director may use the documents, materials, or other27 information available to the director in furtherance of any action28 brought in connection with the director's duties under this article.29 (c) Disclosure of documents, materials, and information:30 (i) to the director; or31 (ii) by the director;32 under this subsection does not result in a waiver of any applicable33 privilege or claim of confidentiality with respect to the34 documents, materials, or information.35 (d) Information provided to the NMLSR is subject to IC 4-1-11.36 (e) This subsection does not limit or impair a person's right to:37 (i) obtain information;38 (ii) use information as evidence in a civil action or proceeding;39 or40 (iii) use information to initiate a civil action or proceeding;41 if the information may be obtained from the director or the42 director's designee under any law.

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1 (f) Except as otherwise provided in the federal Housing and2 Economic Recovery Act of 2008 (Public Law 110-289, Section3 1512), the requirements under any federal law or IC 5-14-34 regarding the privacy or confidentiality of any information or5 material provided to the NMLSR, and any privilege arising under6 federal or state law, including the rules of any federal or state7 court, with respect to the information or material, continue to8 apply to the information or material after the information or9 material has been disclosed to the NMLSR. The information and

10 material may be shared with all state and federal regulatory11 officials with mortgage industry oversight authority without the12 loss of privilege or the loss of confidentiality protections provided13 by federal law or IC 5-14-3.14 (g) For purposes of this section, the director may enter agreements15 or sharing arrangements with other governmental agencies, the16 Conference of State Bank Supervisors, the American Association17 of Residential Mortgage Regulators, or other associations18 representing governmental agencies, as established by rule or19 order of the director.20 (h) Information or material that is subject to a privilege or21 confidentiality under subdivision (f) is not subject to:22 (i) disclosure under any federal or state law governing the23 disclosure to the public of information held by an officer or an24 agency of the federal government or the respective state; or25 (ii) subpoena, discovery, or admission into evidence in any26 private civil action or administrative process, unless with27 respect to any privilege held by the NMLSR with respect to28 the information or material, the person to whom the29 information or material pertains waives, in whole or in part, in30 the discretion of the person, that privilege.31 (i) Any provision of IC 5-14-3 that concerns the disclosure of:32 (i) confidential supervisory information; or33 (ii) any information or material described in subdivision (f);34 and that is inconsistent with subdivision (f) is superseded by this35 section.36 (j) This section does not apply with respect to information or37 material that concerns the employment history of, and publicly38 adjudicated disciplinary and enforcement actions against, a39 person described in section 402(2) of this chapter and that is40 included in the NMLSR for access by the public.41 (k) The director may require a licensee required to submit42 information to the NMLSR to pay a processing fee considered

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1 reasonable by the director. In determining whether an NMLSR2 processing fee is reasonable, the director shall:3 (i) require review of; and4 (ii) make available;5 the audited financial statements of the NMLSR.6 (7) Notwithstanding any other provision of law, any:7 (a) application, renewal, or other form or document that:8 (i) relates to mortgage licenses issued under this article; by9 the department; and

10 (ii) is made or produced in an electronic format;11 (b) document filed as an electronic record in a multistate12 automated repository established and operated for the licensing or13 registration of mortgage lenders, brokers, or loan originators; or14 (c) electronic record filed through the NMLSR;15 is considered a valid original document when reproduced in paper form16 by the department.17 SECTION 7. IC 24-4.4-2-403, AS AMENDED BY P.L.27-2012,18 SECTION 9, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE19 JULY 1, 2018]: Sec. 403. (1) A mortgage license issued under this20 article by the department must be renewed through the NMLSR not21 later than December 31 of each calendar year. The minimum standards22 for license renewal for a creditor include the following:23 (a) The creditor has continued to meet the surety bond24 requirement under section 402.3 of this chapter.25 (b) The creditor has filed the creditor's call report in a manner that26 satisfies section 405(4) of this chapter.27 (c) The creditor has paid all required fees for renewal of the28 license.29 (d) The creditor and individuals described in section 402(2) of30 this chapter have certified to the department that they continue to31 meet all the standards for licensing contained in section 402 of32 this chapter.33 (e) The creditor has provided in the creditor's renewal application:34 (i) any information describing material changes in the35 information contained in the creditor's original application for36 licensure, or in any previous application, including any37 previous renewal application; and38 (ii) any other information the director requires in order to39 evaluate the renewal of the license. issued under this article.40 (2) A license issued by the department authorizing a person to41 engage in first lien mortgage transactions as a creditor under this article42 may be revoked or suspended by the department if the person fails to:

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1 (a) file any renewal form required by the department; or2 (b) pay any license renewal fee described under section 402 of3 this chapter;4 not later than sixty (60) days after the due date.5 (3) A person whose license is revoked or suspended under this6 section may do either of the following:7 (a) Pay all delinquent fees and apply for reinstatement of the8 license.9 (b) Appeal the revocation or suspension to the department for an

10 administrative review under IC 4-21.5-3. Pending the decision11 resulting from the hearing under IC 4-21.5-3 concerning the12 license revocation or suspension, the license remains in force.13 (4) If, at any time, the information or record contained in:14 (a) an original application for licensure filed under section 402 of15 this chapter; or16 (b) a renewal application filed under this section;17 is or becomes inaccurate or incomplete in a material respect, the18 applicant shall promptly file a correcting amendment with the19 department.20 SECTION 8. IC 24-4.4-2-404.2, AS ADDED BY P.L.35-2010,21 SECTION 20, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE22 JULY 1, 2018]: Sec. 404.2. (1) A notice issued under this chapter must:23 (a) be in writing;24 (b) contain a statement of the facts constituting the alleged25 practice, violation, or breach;26 (c) state the facts alleged in support of the violation, practice, or27 breach;28 (d) state the director's intention to enter an order under section29 404.4(1) of this chapter;30 (e) be delivered to the board of directors of the creditor;31 (f) be delivered to the officer, director, or employee concerned;32 (g) specify the procedures that must be followed to initiate a33 hearing to contest the facts alleged; and34 (h) if the director suspends or prohibits an officer, a director, or35 an employee of the creditor from participating in the affairs of the36 creditor, as described in subsection (5), include a statement of the37 suspension or prohibition.38 (2) If a hearing is requested not later than ten (10) days after service39 of the written notice, the department shall hold a hearing concerning40 the alleged practice, violation, or breach. The hearing shall be held not41 later than forty-five (45) days after receipt of the request. The42 department, based on the evidence presented at the hearing, shall enter

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1 a final order under section 404.4 of this chapter.2 (3) If no hearing is requested within the time specified in subsection3 (2), the director may proceed to issue a final order under section 404.44 of this chapter on the basis of the facts set forth in the written notice.5 (4) An officer, director, or employee who is removed from a6 position under a removal order that has become final may not7 participate in the conduct of the affairs of any mortgage licensee under8 this article without the approval of the director.9 (5) The director may, for the protection of the creditor or the

10 interests of its customers, suspend from office or prohibit from11 participation in the affairs of the creditor an officer, a director, or an12 employee of a creditor who is the subject of a written notice served by13 the director under section 404.1(1) of this chapter. A suspension or14 prohibition under this subsection becomes effective upon service of the15 notice under section 404.1(1) of this chapter. Unless stayed by a court16 in a proceeding authorized by subsection (6), the suspension or17 prohibition remains in effect pending completion of the proceedings18 related to the notice served under section 404.1(1) of this chapter and19 until the effective date of an order entered by the department under20 subsection (2) or the director under subsection (3). Copies of the notice21 shall also be served upon the creditor or affiliate of which the person22 is an officer, a director, or an employee.23 (6) Not more than fifteen (15) days after an officer, a director, or an24 employee has been suspended from office or prohibited from25 participation in the conduct of the affairs of the creditor or affiliate26 under subsection (5), the officer, director, or employee may apply to a27 court having jurisdiction for a stay of the suspension or prohibition28 pending completion of the proceedings related to the written notice29 served under section 404.1(1) of this chapter, and the court may stay30 the suspension or prohibition.31 (7) The department shall maintain an official record of a proceeding32 under this chapter.33 SECTION 9. IC 24-4.4-2-405, AS AMENDED BY P.L.103-2014,34 SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE35 JULY 1, 2018]: Sec. 405. (1) Every licensee shall maintain records in36 a manner that will enable the department to determine whether the37 licensee is complying with this article. The record keeping system of38 a licensee is sufficient if the licensee makes the required information39 reasonably available. The department shall determine the sufficiency40 of the records and whether the licensee has made the required41 information reasonably available. The department shall be given free42 access to the records wherever the records are located. Records

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1 concerning any first lien mortgage transaction shall be retained for two2 (2) years after the making of the final entry relating to the transaction,3 but in the case of a revolving first lien mortgage transaction, the two (2)4 years required under this subsection is measured from the date of each5 entry relating to the transaction. A federal savings bank that voluntarily6 registers with the department under IC 24-4.4-1-202(b)(6)(a) for the7 purpose of sponsoring, under an exclusive written agreement, licensed8 mortgage loan originators as independent agents shall:9 (a) cooperate with the department; and

10 (b) provide access to records and documents;11 as required by the department in carrying out examinations of the12 activities of the licensed mortgage loan originators sponsored by the13 federal savings bank.14 (2) The unique identifier of any person originating a mortgage15 transaction must be clearly shown on all mortgage transaction16 application forms and any other documents as required by the director.17 (3) Every licensee shall use automated examination and regulatory18 software designated by the director, including third party software. Use19 of the software consistent with guidance and policies issued by the20 director is not a violation of IC 28-1-2-30.21 (4) Each:22 (a) creditor licensed to engage in mortgage transactions by the23 department; under this article; and24 (b) entity that is exempt from licensing under this article and that:25 (i) employs one (1) or more licensed mortgage loan26 originators; or27 (ii) sponsors under an exclusive written agreement, as28 permitted by IC 24-4.4-1-202(b)(6)(a), one (1) or more29 licensed mortgage originators as independent agents;30 shall submit to the NMLSR reports of condition, which must be in a31 form and must contain information as required by the NMLSR.32 (5) Each:33 (a) creditor licensed by the department under this article; to34 engage in mortgage transactions; and35 (b) entity that is exempt from licensing under this article by the36 department to engage in mortgage transactions and that:37 (i) employs one (1) or more licensed mortgage loan38 originators; or39 (ii) sponsors under an exclusive written agreement, as40 permitted by IC 24-4.4-1-202(b)(6)(a), one (1) or more41 licensed mortgage loan originators as independent agents;42 shall file with the department additional financial statements relating

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1 to all first lien mortgage transactions originated by the licensed creditor2 or the exempt entity as required by the department, but not more3 frequently than annually, in the form prescribed by the department.4 (6) A licensed creditor shall file notification with the department if5 the licensee:6 (a) has a change in name, address, or any of its principals;7 (b) opens a new branch, closes an existing branch, or relocates an8 existing branch;9 (c) files for bankruptcy or reorganization; or

10 (d) is subject to revocation or suspension proceedings by a state11 or governmental authority with regard to the licensed creditor's12 activities;13 not later than thirty (30) days after the date of the event described in14 this subsection.15 (7) A licensee shall file notification with the department if the16 licensee or any director, executive officer, or manager of the licensee17 has been convicted of a felony under the laws of Indiana or any other18 jurisdiction. The licensee shall file the notification required by this19 subsection not later than thirty (30) days after the date of the event20 described in this subsection.21 (8) A licensee shall file notification with the department if the22 licensee or any director, executive officer, or manager of the licensee23 has had the person's authority to do business in the securities,24 commodities, banking, financial services, insurance, real estate, or real25 estate appraisal industry revoked or suspended by Indiana or by any26 other state, federal, or foreign governmental agency or self regulatory27 organization. The licensee shall file the notification required by this28 subsection not later than thirty (30) days after the date of the event29 described in this subsection.30 SECTION 10. IC 24-4.4-2-406, AS AMENDED BY P.L.6-2012,31 SECTION 165, IS AMENDED TO READ AS FOLLOWS32 [EFFECTIVE JULY 1, 2018]: Sec. 406. (1) As used in this section,33 "control" means possession of the power directly or indirectly to:34 (a) direct or cause the direction of the management or policies of35 a creditor, whether through the beneficial ownership of voting36 securities, by contract, or otherwise; or37 (b) vote at least twenty-five percent (25%) of the voting securities38 of a creditor, whether the voting rights are derived through the39 beneficial ownership of voting securities, by contract, or40 otherwise.41 (2) An organization or an individual acting directly, indirectly, or42 through or in concert with one (1) or more other organizations or

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1 individuals may not acquire control of any creditor unless the2 department has received and approved an application for change in3 control. The department has not more than one hundred twenty (120)4 days after receipt of an application to issue a notice approving the5 proposed change in control. The application must contain the name and6 address of the organization, individual, or individuals who propose to7 acquire control and any other information required by the director.8 (3) The period for approval under subsection (2) may be extended:9 (a) in the discretion of the director for an additional thirty (30)

10 days; and11 (b) not more than two (2) additional times for not more than12 forty-five (45) days each time if:13 (i) the director determines that the organization, individual, or14 individuals who propose to acquire control have not submitted15 substantial evidence of the qualifications described in16 subsection (4);17 (ii) the director determines that any material information18 submitted is substantially inaccurate; or19 (iii) the director has been unable to complete the investigation20 of the organization, individual, or individuals who propose to21 acquire control because of any delay caused by or the22 inadequate cooperation of the organization, individual, or23 individuals.24 (4) The department shall issue a notice approving the application25 only after it is satisfied that both of the following apply:26 (a) The organization, individual, or individuals who propose to27 acquire control are qualified by competence, experience,28 character, and financial responsibility to control and operate the29 creditor in a legal and proper manner.30 (b) The interests of the owners and creditors of the creditor and31 the interests of the public generally will not be jeopardized by the32 proposed change in control.33 (5) The director may determine, in the director's discretion, that34 subsection (2) does not apply to a transaction if the director determines35 that the direct or beneficial ownership of the creditor will not change36 as a result of the transaction.37 (6) The president or other chief executive officer of a creditor shall38 report to the director any transfer or sale of securities of the creditor39 that results in direct or indirect ownership by a holder or an affiliated40 group of holders of at least ten percent (10%) of the outstanding41 securities of the creditor. The report required by this subsection must42 be made not later than ten (10) days after the transfer of the securities

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1 on the books of the creditor.2 (7) Depending on the circumstances of the transaction, the director3 may reserve the right to require the organization, individual, or4 individuals who propose to acquire control of a creditor licensed under5 this article by the department to engage in mortgage transactions,6 to apply for a new license under section 401 of this chapter, instead of7 acquiring control of the licensee under this section.8 SECTION 11. IC 24-4.4-3-104, AS AMENDED BY P.L.186-2015,9 SECTION 9, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE

10 JULY 1, 2018]: Sec. 104. (1) In administering this article and in order11 to determine whether the provisions of this article are being complied12 with by persons engaging in acts subject to this article, the department13 may examine the records of persons and may make investigations of14 persons as may be necessary to determine compliance. Records subject15 to examination under this section include the following:16 (a) Training, operating, and policy manuals.17 (b) Minutes of:18 (i) management meetings; and19 (ii) other meetings.20 (c) Financial records, credit files, and data bases.21 (d) Other records that the department determines are necessary to22 perform its investigation or examination.23 The department may also administer oaths or affirmations, subpoena24 witnesses, and compel the attendance of witnesses, including officers,25 principals, mortgage loan originators, employees, independent26 contractors, agents, and customers of licensees, and other individuals27 or persons subject to this article. The department may also adduce28 evidence and require the production of any matter that is relevant to an29 investigation. The department shall determine the sufficiency of the30 records maintained and whether the person has made the required31 information reasonably available. The records concerning any32 transaction subject to this article shall be retained for two (2) years33 after the making of the final entry relating to the first lien mortgage34 transaction, but in the case of a revolving first lien mortgage35 transaction the two (2) year period is measured from the date of each36 entry.37 (2) The department's examination and investigatory authority under38 this article includes the following:39 (a) The authority to require a creditor to refund overcharges40 resulting from the creditor's noncompliance with the terms of a41 first lien mortgage transaction.42 (b) The authority to require a creditor to comply with the penalty

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1 provisions set forth in IC 24-4.4-2-201.2 (c) The authority to investigate complaints filed with the3 department by debtors.4 (3) The department shall be given free access to the records5 wherever the records are located. In making any examination or6 investigation authorized by this article, the director may control access7 to any documents and records of the licensee or person under8 examination or investigation. The director may take possession of the9 documents and records or place a person in exclusive charge of the

10 documents and records in the place where the documents are usually11 kept. During the period of control, a licensee or person may not remove12 or attempt to remove any of the documents and records except under13 a court order or with the consent of the director. Unless the director has14 reasonable grounds to believe the documents or records of the licensee15 or person have been, or are, at risk of being altered or destroyed for16 purposes of concealing a violation of this article, the licensee or person17 shall have access to the documents or records as necessary to conduct18 the licensee's or person's ordinary business affairs. If the person's19 records are located outside Indiana, the records shall be made available20 to the department at a convenient location within Indiana, or the person21 shall pay the reasonable and necessary expenses for the department or22 the department's representative to examine the records where they are23 maintained. The department may designate comparable officials of the24 state in which the records are located to inspect the records on behalf25 of the department.26 (4) Upon a person's failure without lawful excuse to obey a27 subpoena or to give testimony and upon reasonable notice by the28 department to all affected persons, the department may apply to any29 civil court with jurisdiction for an order compelling compliance.30 (5) The department shall not make public:31 (a) the name or identity of a person whose acts or conduct the32 department investigates under this section; or33 (b) the facts discovered in the investigation.34 However, this subsection does not apply to civil actions or enforcement35 proceedings under this article.36 (6) To discover violations of this article or to secure information37 necessary for the enforcement of this article, the department may38 investigate any:39 (a) licensee; or40 (b) person that the department suspects to be operating:41 (i) without a license, when a license is required under this42 article; or

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1 (ii) otherwise in violation of this article.2 The department has all investigatory and enforcement authority under3 this article that the department has under IC 28-11 with respect to4 financial institutions. If the department conducts an investigation under5 this section, the licensee or other person investigated shall pay all6 reasonably incurred costs of the investigation in accordance with the7 fee schedule adopted under IC 28-11-3-5. Any costs required to be paid8 under this section shall be paid not later than sixty (60) days after the9 person being assessed the costs receives a notice from the department

10 of the costs assessed. The department may impose a fee, in an amount11 fixed by the department under IC 28-11-3-5, for each day the assessed12 costs are not paid, beginning on the first day after the sixty (60) day13 period described in this subsection.14 (7) If a creditor contracts with an outside vendor to provide a service15 that would otherwise be undertaken internally by the creditor and be16 subject to the department's routine examination procedures, the person17 that provides the service to the creditor shall, at the request of the18 director, submit to an examination by the department. If the director19 determines that an examination under this subsection is necessary or20 desirable, the examination may be made at the expense of the person21 to be examined. If the person to be examined under this subsection22 refuses to permit the examination to be made, the director may order23 any creditor that is licensed under this article by the department to24 engage in mortgage transactions and that receives services from the25 person refusing the examination to:26 (a) discontinue receiving one (1) or more services from the27 person; or28 (b) otherwise cease conducting business with the person.29 SECTION 12. IC 24-4.5-1-102, AS AMENDED BY P.L.159-2017,30 SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE31 JULY 1, 2018]: Sec. 102. (1) This article shall be liberally construed32 and applied to promote its underlying purposes and policies.33 (2) The underlying purposes and policies of this article are:34 (a) to simplify, clarify, and modernize the law governing retail35 installment sales, consumer credit, small loans, and usury;36 (b) to provide rate ceilings to assure an adequate supply of credit37 to consumers;38 (c) to further consumer understanding of the terms of credit39 transactions and to foster competition among suppliers of40 consumer credit so that consumers may obtain credit at41 reasonable cost;42 (d) to protect consumer buyers, lessees, and borrowers against

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1 unfair practices by some suppliers of consumer credit, having due2 regard for the interests of legitimate and scrupulous creditors;3 (e) to permit and encourage the development of fair and4 economically sound consumer credit practices;5 (f) to conform the regulation of consumer credit transactions to6 the policies of the Consumer Credit Protection Act (15 U.S.C.7 1601 et seq.) and to applicable state and federal laws, rules,8 regulations, policies, and guidance; and9 (g) to make uniform the law, including administrative rules

10 among the various jurisdictions.11 (3) A reference to a requirement imposed by this article includes12 reference to a related rule or guidance of the department adopted13 pursuant to this article.14 (4) A reference to a federal law in this article is a reference to the15 law as in effect December 31, 2016. 2017.16 (5) This article applies to a transaction if the director determines17 that the transaction:18 (a) is in substance a disguised consumer credit transaction; or19 (b) involves the application of subterfuge for the purpose of20 avoiding this article.21 A determination by the director under this subsection must be in22 writing and shall be delivered to all parties to the transaction.23 IC 4-21.5-3 applies to a determination made under this subsection.24 (6) The authority of this article remains in effect, whether a licensee,25 an individual, or a person subject to this article acts or claims to act26 under any licensing or registration law of this state, or claims to act27 without such authority.28 (7) A violation of a state or federal law, regulation, or rule29 applicable to consumer credit transactions is a violation of this article.30 (8) The department may enforce penalty provisions set forth in 1531 U.S.C. 1640 for violations of disclosure requirements applicable to32 mortgage transactions.33 SECTION 13. IC 24-4.5-1-301.5, AS AMENDED BY34 P.L.159-2017, SECTION 6, IS AMENDED TO READ AS FOLLOWS35 [EFFECTIVE JULY 1, 2018]: Sec. 301.5. In addition to definitions36 appearing in subsequent chapters in this article, the following37 definitions apply throughout this article:38 (1) "Affiliate", with respect to any person subject to this article,39 means a person that, directly or indirectly, through one (1) or more40 intermediaries:41 (a) controls;42 (b) is controlled by; or

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1 (c) is under common control with;2 the person subject to this article.3 (2) "Agreement" means the bargain of the parties in fact as found in4 their language or by implication from other circumstances, including5 course of dealing or usage of trade or course of performance.6 (3) "Agricultural purpose" means a purpose related to the7 production, harvest, exhibition, marketing, transportation, processing,8 or manufacture of agricultural products by a natural person who9 cultivates, plants, propagates, or nurtures the agricultural products.

10 "Agricultural products" includes agricultural, horticultural, viticultural,11 and dairy products, livestock, wildlife, poultry, bees, forest products,12 fish and shellfish, and any and all products raised or produced on farms13 and any processed or manufactured products thereof.14 (4) "Average daily balance" means the sum of each of the daily15 balances in a billing cycle divided by the number of days in the billing16 cycle, and if the billing cycle is a month, the creditor may elect to treat17 the number of days in each billing cycle as thirty (30).18 (5) "Closing costs" with respect to a subordinate lien mortgage19 transaction includes:20 (a) fees or premiums for title examination, title insurance, or21 similar purposes, including surveys;22 (b) fees for preparation of a deed, settlement statement, or other23 documents;24 (c) escrows for future payments of taxes and insurance;25 (d) fees for notarizing deeds and other documents;26 (e) appraisal fees; and27 (f) fees for credit reports.28 (6) "Conspicuous" refers to a term or clause when it is so written29 that a reasonable person against whom it is to operate ought to have30 noticed it.31 (7) "Consumer credit" means credit offered or extended to a32 consumer primarily for a personal, family, or household purpose.33 (8) "Consumer credit sale" is a sale of goods, services, or an interest34 in land in which:35 (a) credit is granted by a person who regularly engages as a seller36 in credit transactions of the same kind;37 (b) the buyer is a person other than an organization;38 (c) the goods, services, or interest in land are purchased primarily39 for a personal, family, or household purpose;40 (d) either the debt is payable in installments or a credit service41 charge is made; and42 (e) with respect to a sale of goods or services, either:

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1 (i) the amount of credit extended, the written credit limit, or2 the initial advance does not exceed the exempt threshold3 amount, as adjusted in accordance with the annual adjustment4 of the exempt threshold amount, specified in Regulation Z (125 CFR 226.3 or 12 CFR 1026.3(b), as applicable); or6 (ii) the debt is secured by personal property used or expected7 to be used as the principal dwelling of the buyer.8 Unless the sale is made subject to this article by agreement9 (IC 24-4.5-2-601), "consumer credit sale" does not include a sale

10 in which the seller allows the buyer to purchase goods or services11 pursuant to a lender credit card or similar arrangement or, except12 as provided with respect to disclosure (IC 24-4.5-2-301), debtors'13 remedies (IC 24-4.5-5-201), providing payoff amounts14 (IC 24-4.5-2-209), and powers and functions of the department15 (IC 24-4.5-6), a sale of an interest in land which is a first lien16 mortgage transaction.17 (9) "Consumer loan" means a loan made by a person regularly18 engaged in the business of making loans in which:19 (a) the debtor is a person other than an organization;20 (b) the debt is primarily for a personal, family, or household21 purpose;22 (c) either the debt is payable in installments or a loan finance23 charge is made; and24 (d) either:25 (i) the amount of credit extended, the written credit limit, or26 the initial advance does not exceed the exempt threshold27 amount, as adjusted in accordance with the annual adjustment28 of the exempt threshold amount, specified in Regulation Z (1229 CFR 226.3 or 12 CFR 1026.3(b), as applicable); or30 (ii) the debt is secured by an interest in land or by personal31 property used or expected to be used as the principal dwelling32 of the debtor.33 Except as described in IC 24-4.5-3-105, the term does not include a34 first lien mortgage transaction.35 (10) "Credit" means the right granted by a creditor to a debtor to36 defer payment of debt or to incur debt and defer its payment.37 (11) "Creditor" means a person:38 (a) who regularly engages in the extension of consumer credit that39 is subject to a credit service charge or loan finance charge, as40 applicable, or is payable by written agreement in more than four41 (4) installments (not including a down payment); and42 (b) to whom the obligation is initially payable, either on the face

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1 of the note or contract, or by agreement when there is not a note2 or contract.3 (12) "Depository institution" has the meaning set forth in the4 Federal Deposit Insurance Act (12 U.S.C. 1813(c)) and includes any5 credit union.6 (13) "Director" means the director of the department of financial7 institutions or the director's designee.8 (14) "Dwelling" means a residential structure that contains one (1)9 to four (4) units, regardless of whether the structure is attached to real

10 property. The term includes an individual:11 (a) condominium unit;12 (b) cooperative unit;13 (c) mobile home; or14 (d) trailer;15 that is used as a residence.16 (15) "Earnings" means compensation paid or payable for personal17 services, whether denominated as wages, salary, commission, bonus,18 or otherwise, and includes periodic payments under a pension or19 retirement program.20 (16) "Employee" means an individual who is paid wages or other21 compensation by an employer required under federal income tax law22 to file Form W-2 on behalf of the individual.23 (17) "Federal banking agencies" means the Board of Governors of24 the Federal Reserve System, the Office of the Comptroller of the25 Currency, the National Credit Union Administration, and the Federal26 Deposit Insurance Corporation.27 (18) "First lien mortgage transaction" means:28 (a) a consumer loan; or29 (b) a consumer credit sale;30 that is or will be used by the debtor primarily for personal, family, or31 household purposes and that is secured by a mortgage or a land32 contract (or another consensual security interest equivalent to a33 mortgage or a land contract) that constitutes a first lien on a dwelling34 or on residential real estate upon which a dwelling is constructed or35 intended to be constructed.36 (19) "Immediate family member" means a spouse, child, sibling,37 parent, grandparent, or grandchild. The term includes stepparents,38 stepchildren, stepsiblings, and adoptive relationships.39 (20) "Individual" means a natural person.40 (21) "Lender credit card or similar arrangement" means an41 arrangement or loan agreement, other than a seller credit card, pursuant42 to which a lender gives a debtor the privilege of using a credit card,

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1 letter of credit, or other credit confirmation or identification in2 transactions out of which debt arises:3 (a) by the lender's honoring a draft or similar order for the4 payment of money drawn or accepted by the debtor;5 (b) by the lender's payment or agreement to pay the debtor's6 obligations; or7 (c) by the lender's purchase from the obligee of the debtor's8 obligations.9 (22) "Licensee" means a person licensed as a creditor under this

10 article.11 (23) "Loan brokerage business" means any activity in which a12 person, in return for any consideration from any source, procures,13 attempts to procure, or assists in procuring, a mortgage transaction14 from a third party or any other person, whether or not the person15 seeking the mortgage transaction actually obtains the mortgage16 transaction.17 (24) "Loan processor or underwriter" means an individual who18 performs clerical or support duties as an employee at the direction of,19 and subject to the supervision and instruction of, a person licensed to20 engage in mortgage transactions or a person exempt from licensing.21 under this article. For purposes of this subsection, the term "clerical or22 support duties" may include, after the receipt of an application, the23 following:24 (a) The receipt, collection, distribution, and analysis of25 information common for the processing or underwriting of a26 mortgage transaction.27 (b) The communication with a consumer to obtain the information28 necessary for the processing or underwriting of a loan, to the29 extent that the communication does not include:30 (i) offering or negotiating loan rates or terms; or31 (ii) counseling consumers about mortgage transaction rates or32 terms.33 An individual engaging solely in loan processor or underwriter34 activities shall not represent to the public through advertising or other35 means of communicating or providing information, including the use36 of business cards, stationery, brochures, signs, rate lists, or other37 promotional items, that the individual can or will perform any of the38 activities of a mortgage loan originator.39 (25) "Mortgage loan originator" means an individual who, for40 compensation or gain, or in the expectation of compensation or gain,41 regularly engages in taking a mortgage transaction application or in42 offering or negotiating the terms of a mortgage transaction that either

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1 is made under this article or under IC 24-4.4 or is made by an employee2 of a person licensed to engage in mortgage transactions or by an3 employee of a person that is exempt from licensing, under this article4 or under IC 24-4.4, while the employee is engaging in the loan5 brokerage business. The term does not include the following:6 (a) An individual engaged solely as a loan processor or7 underwriter as long as the individual works exclusively as an8 employee of a person licensed to engage in mortgage9 transactions or as an employee of a person exempt from

10 licensing. under this article.11 (b) Unless the person or entity is compensated by:12 (i) a creditor;13 (ii) a loan broker;14 (iii) another mortgage loan originator; or15 (iv) any agent of the creditor, loan broker, or other mortgage16 loan originator described in items (i) through (iii);17 a person or entity that only performs real estate brokerage18 activities and is licensed or registered in accordance with19 applicable state law.20 (c) A person solely involved in extensions of credit relating to21 timeshare plans (as defined in 11 U.S.C. 101(53D)).22 (26) "Mortgage servicer" means the last person to whom a23 mortgagor or the mortgagor's successor in interest has been instructed24 by a mortgagee to send payments on a loan secured by a mortgage.25 (27) "Mortgage transaction" means:26 (a) a consumer loan; or27 (b) a consumer credit sale;28 that is or will be used by the debtor primarily for personal, family, or29 household purposes and that is secured by a mortgage or a land30 contract (or another consensual security interest equivalent to a31 mortgage or a land contract) on a dwelling or on residential real estate32 upon which a dwelling is constructed or intended to be constructed.33 (28) "Nationwide Multistate Licensing System and Registry" (or34 "Nationwide Mortgage Licensing System and Registry" or "NMLSR")35 means a multistate licensing system owned and operated by the State36 Regulatory Registry, LLC, or by any successor or affiliated entity, for37 the licensing and registration of creditors, mortgage loan originators,38 and other persons in the mortgage or financial services industries. The39 term includes any other name or acronym that may be assigned to the40 system by the State Regulatory Registry, LLC, or by any successor or41 affiliated entity.42 (29) "Nontraditional mortgage product" means any mortgage

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1 product other than a thirty (30) year fixed rate mortgage.2 (30) "Official fees" means:3 (a) fees and charges prescribed by law which actually are or will4 be paid to public officials for determining the existence of or for5 perfecting, releasing, or satisfying a security interest related to a6 consumer credit sale, consumer lease, or consumer loan; or7 (b) premiums payable for insurance in lieu of perfecting a security8 interest otherwise required by the creditor in connection with the9 sale, lease, or loan, if the premium does not exceed the fees and

10 charges described in subdivision (a) that would otherwise be11 payable.12 (31) "Organization" means a corporation, a government or13 governmental subdivision, an agency, a trust, an estate, a partnership,14 a limited liability company, a cooperative, an association, a joint15 venture, an unincorporated organization, or any other entity, however16 organized.17 (32) "Payable in installments" means that payment is required or18 permitted by written agreement to be made in more than four (4)19 installments not including a down payment.20 (33) "Person" includes an individual or an organization.21 (34) "Person related to" with respect to an individual means:22 (a) the spouse of the individual;23 (b) a brother, brother-in-law, sister, or sister-in-law of the24 individual;25 (c) an ancestor or lineal descendants of the individual or the26 individual's spouse; and27 (d) any other relative, by blood or marriage, of the individual or28 the individual's spouse who shares the same home with the29 individual.30 (35) "Person related to" with respect to an organization means:31 (a) a person directly or indirectly controlling, controlled by, or32 under common control with the organization;33 (b) a director, an executive officer, or a manager of the34 organization or a person performing similar functions with respect35 to the organization or to a person related to the organization;36 (c) the spouse of a person related to the organization; and37 (d) a relative by blood or marriage of a person related to the38 organization who shares the same home with the person.39 (36) "Presumed" or "presumption" means that the trier of fact must40 find the existence of the fact presumed, unless and until evidence is41 introduced that would support a finding of its nonexistence.42 (37) "Real estate brokerage activity" means any activity that

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1 involves offering or providing real estate brokerage services to the2 public, including the following:3 (a) Acting as a real estate agent or real estate broker for a buyer,4 seller, lessor, or lessee of real property.5 (b) Bringing together parties interested in the sale, purchase,6 lease, rental, or exchange of real property.7 (c) Negotiating, on behalf of any party, any part of a contract8 relating to the sale, purchase, lease, rental, or exchange of real9 property (other than in connection with providing financing with

10 respect to the sale, purchase, lease, rental, or exchange of real11 property).12 (d) Engaging in any activity for which a person is required to be13 registered or licensed as a real estate agent or real estate broker14 under any applicable law.15 (e) Offering to engage in any activity, or act in any capacity,16 described in this subsection.17 (38) "Registered mortgage loan originator" means any individual18 who:19 (a) meets the definition of mortgage loan originator and is an20 employee of:21 (i) a depository institution;22 (ii) a subsidiary that is owned and controlled by a depository23 institution and regulated by a federal banking agency; or24 (iii) an institution regulated by the Farm Credit25 Administration; and26 (b) is registered with, and maintains a unique identifier through,27 the NMLSR.28 (39) "Regularly engaged", with respect to a person who extends29 consumer credit, refers to a person who:30 (a) extended consumer credit:31 (i) more than twenty-five (25) times; or32 (ii) more than five (5) times for a mortgage transaction secured33 by a dwelling;34 in the preceding calendar year; or35 (b) extends or will extend consumer credit:36 (i) more than twenty-five (25) times; or37 (ii) more than five (5) times for a mortgage transaction secured38 by a dwelling;39 in the current calendar year, if the person did not meet the40 numerical standards described in subdivision (a) in the preceding41 calendar year.42 (40) "Residential real estate" means any real property that is located

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1 in Indiana and on which there is located or intended to be constructed2 a dwelling.3 (41) "Seller credit card" means an arrangement that gives to a buyer4 or lessee the privilege of using a credit card, letter of credit, or other5 credit confirmation or identification for the purpose of purchasing or6 leasing goods or services from that person, a person related to that7 person, or from that person and any other person. The term includes a8 card that is issued by a person, that is in the name of the seller, and that9 can be used by the buyer or lessee only for purchases or leases at

10 locations of the named seller.11 (42) "Subordinate lien mortgage transaction" means:12 (a) a consumer loan; or13 (b) a consumer credit sale;14 that is or will be used by the debtor primarily for personal, family, or15 household purposes and that is secured by a mortgage or a land16 contract (or another consensual security interest equivalent to a17 mortgage or a land contract) that constitutes a subordinate lien on a18 dwelling or on residential real estate upon which a dwelling is19 constructed or intended to be constructed.20 (43) "Unique identifier" means a number or other identifier assigned21 by protocols established by the NMLSR.22 (44) "Land contract" means a contract for the sale of real estate in23 which the seller of the real estate retains legal title to the real estate24 until the total contract price is paid by the buyer.25 (45) "Bona fide nonprofit organization" means an organization that26 does the following, as determined by the director under criteria27 established by the director:28 (a) Maintains tax exempt status under Section 501(c)(3) of the29 Internal Revenue Code.30 (b) Promotes affordable housing or provides home ownership31 education or similar services.32 (c) Conducts the organization's activities in a manner that serves33 public or charitable purposes.34 (d) Receives funding and revenue and charges fees in a manner35 that does not encourage the organization or the organization's36 employees to act other than in the best interests of the37 organization's clients.38 (e) Compensates the organization's employees in a manner that39 does not encourage employees to act other than in the best40 interests of the organization's clients.41 (f) Provides to, or identifies for, debtors mortgage transactions42 with terms that are favorable to the debtor (as described in section

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1 202(b)(15) of this chapter) and comparable to mortgage2 transactions and housing assistance provided under government3 housing assistance programs.4 (g) Maintains certification by the United States Department of5 Housing and Urban Development or employs counselors who are6 certified by the Indiana housing and community development7 authority.8 (46) "Civil proceeding advance payment transaction", or "CPAP9 transaction", has the meaning set forth in IC 24-4.5-3-110.

10 (47) "Civil proceeding", with respect to a CPAP transaction, has the11 meaning set forth in IC 24-4.5-3-110.5.12 (48) "Civil proceeding advance payment contract", or "CPAP13 contract", has the meaning set forth in IC 24-4.5-3-110.5.14 (49) "Civil proceeding advance payment provider", or "CPAP15 provider", has the meaning set forth in IC 24-4.5-3-110.5.16 (50) "Consumer claimant", with respect to a CPAP transaction, has17 the meaning set forth in IC 24-4.5-3-110.5.18 (51) "Funded amount", with respect to a CPAP transaction, has the19 meaning set forth in IC 24-4.5-3-110.5.20 SECTION 14. IC 24-4.5-2-202, AS AMENDED BY P.L.159-2017,21 SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE22 JULY 1, 2018]: Sec. 202. (1) In addition to the credit service charge23 permitted by this chapter, a seller may contract for and receive any of24 the following additional charges in connection with a consumer credit25 sale:26 (a) Official fees and taxes.27 (b) Charges for insurance as described in subsection (2).28 (c) Notwithstanding provisions of the Consumer Credit Protection29 Act (15 U.S.C. 1601 et seq.) concerning disclosure, charges for30 other benefits, including insurance, conferred on the buyer,31 consumer, if the benefits are of value to the buyer consumer and32 if the charges are reasonable in relation to the benefits, and are33 excluded as permissible additional charges from the credit service34 charge. With respect to any additional charge not specifically35 provided for in this section, to be a permitted charge under this36 subsection the seller must submit a written explanation of the37 charge to the department indicating how the charge would be38 assessed and the value or benefit to the buyer. consumer.39 Supporting documents may be required by the department. The40 department shall determine whether the charge would be of41 benefit to the buyer consumer and is reasonable in relation to the42 benefits.

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1 (d) A charge not to exceed twenty-five dollars ($25) for each2 return returned payment by a bank or other depository3 institution of a dishonored check, electronic funds transfer,4 negotiable order of withdrawal, or share draft issued by the5 debtor. consumer.6 (e) Annual participation fees assessed in connection with a7 revolving charge account. Annual participation fees must:8 (i) be reasonable in amount;9 (ii) bear a reasonable relationship to the seller's costs to

10 maintain and monitor the charge account; and11 (iii) not be assessed for the purpose of circumvention or12 evasion of this article, as determined by the department.13 (f) A charge not to exceed twenty-five dollars ($25) for a14 skip-a-payment service, subject to the following:15 (i) At the time of use of the service, the consumer must be16 given written notice of the amount of the charge and must17 acknowledge the amount in writing, including by electronic18 signature.19 (ii) A charge for a skip-a-payment service may not be20 assessed with respect to a consumer credit sale subject to21 the provisions on rebate upon prepayment that are set22 forth in section 210 of this chapter.23 (iii) A charge for a skip-a-payment service may not be24 assessed with respect to any payment for which a25 delinquency charge has been assessed under section 203.526 of this chapter.27 (g) A charge not to exceed ten dollars ($10) for an optional28 expedited payment service, subject to the following:29 (i) The charge may be assessed only upon request by the30 consumer to use the expedited payment service.31 (ii) The amount of the charge must be disclosed to the32 consumer at the time of the consumer's request to use the33 expedited payment service.34 (iii) The consumer must be informed that the consumer35 retains the option to make a payment by traditional means.36 (iv) The charge may not be established in advance, through37 any agreement with the consumer, as the expected method38 of payment.39 (v) The charge may not be assessed with respect to any40 payment for which a delinquency charge has been assessed41 under section 203.5 of this chapter.42 (h) A charge for a GAP agreement, subject to subsection (4).

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1 (2) An additional charge may be made for insurance written in2 connection with the sale, other than insurance protecting the seller3 against the buyer's consumer's default or other credit loss:4 (a) with respect to insurance against loss of or damage to5 property, or against liability, if the seller furnishes a clear and6 specific statement in writing to the buyer, consumer, setting forth7 the cost of the insurance if obtained from or through the seller and8 stating that the buyer consumer may choose the person, subject9 to the seller's reasonable approval, through whom the insurance

10 is to be obtained; and11 (b) with respect to consumer credit insurance providing life,12 accident, unemployment or other loss of income, or health13 coverage, if the insurance coverage is not a factor in the approval14 by the seller of the extension of credit and is clearly disclosed in15 writing to the buyer, consumer, and if, in order to obtain the16 insurance in connection with the extension of credit, the buyer17 consumer gives specific, affirmative, written indication of the18 desire to do so after written disclosure of the cost.19 (3) With respect to a subordinate lien mortgage transaction, the20 following closing costs, if the costs are bona fide, reasonable in21 amount, and not for the purpose of circumvention or evasion of this22 article:23 (a) fees for title examination, abstract of title, title insurance,24 property surveys, or similar purposes;25 (b) fees for preparing deeds, mortgages, and reconveyance,26 settlement, and similar documents;27 (c) notary and credit report fees;28 (d) amounts required to be paid into escrow or trustee accounts if29 the amounts would not otherwise be included in the credit service30 charge; and31 (e) appraisal fees.32 (4) An additional charge may be made for a GAP agreement,33 subject to the following:34 (a) A GAP agreement or GAP coverage may not be required35 by the seller, and that fact must be disclosed in writing to the36 consumer.37 (b) The charge for the initial term of coverage under the GAP38 agreement must be disclosed in writing to the consumer. The39 charge may be disclosed on a unit-cost basis only in the case40 of the following transactions:41 (i) Revolving charge accounts.42 (ii) Closed-end credit transactions, if the request for

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1 coverage is made by mail or telephone.2 (iii) Closed- end credit transactions, if the GAP agreement3 limits the total amount of indebtedness eligible for4 coverage.5 (c) If the term of coverage under the GAP agreement is less6 than the term of the consumer credit sale, the term of7 coverage under the GAP agreement must be disclosed in8 writing to the consumer.9 (d) The consumer must sign or initial an affirmative written

10 request for coverage after receiving all required disclosures.11 (e) The GAP agreement must include the following:12 (i) In the case of GAP coverage for a new motor vehicle,13 the manufacturer's suggested retail price (MSRP) for the14 motor vehicle.15 (ii) In the case of GAP coverage for a used motor vehicle,16 the National Automobile Dealers Association (NADA)17 average retail value for the motor vehicle.18 (iii) The name of the financing entity taking assignment of19 the agreement.20 (iv) The name and address of the consumer.21 (v) The name of the creditor selling the agreement.22 (vi) Information advising the consumer that the consumer23 may be able to obtain similar coverage from the24 consumer's primary insurance carrier.25 (vii) A coverage provision that includes a minimum26 deductible of five hundred dollars ($500).27 (viii) A provision providing for a minimum thirty (30) day28 free-look period.29 (ix) In the case of a consumer credit sale involving a motor30 vehicle, a provision excluding the sale of GAP coverage if31 the amount financed under the consumer credit sale (not32 including the cost of the GAP agreement, the cost of any33 credit insurance, and the cost of any warranties or service34 agreements) is less than eighty percent (80%) of the35 manufacturer's suggested retail price (MSRP), in the case36 of a new motor vehicle, or the National Automobile37 Dealers Association (NADA) average retail value, in the38 case of a used motor vehicle.39 (x) In the case of a GAP agreement in which the charge for40 the agreement exceeds four hundred dollars ($400),41 specific instructions that may be used by the consumer to42 cancel the agreement and obtain a refund of the unearned

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1 GAP charge before prepayment in full, in accordance with2 the procedures, and subject to the conditions, set forth in3 subdivision (f).4 (f) If the charge for the GAP agreement exceeds four hundred5 dollars ($400), the consumer is entitled to cancel the6 agreement and obtain a refund of the unearned GAP charge7 before prepayment in full. Refunds of unearned GAP charges8 shall be made subject to the following conditions:9 (i) A refund of the charge for a GAP agreement must be

10 calculated using a method that is no less favorable to the11 consumer than a refund calculated on a pro rata basis.12 (ii) The consumer is entitled to a refund of the unearned13 GAP agreement charge as outlined in the GAP agreement.14 (iii) The seller of the GAP agreement is responsible for15 making a timely refund to the consumer of unearned GAP16 agreement charges, and the consumer is not obligated to17 initiate a request for any refund of unearned GAP18 agreement charges to which the consumer is entitled under19 this subdivision.20 (g) Upon prepayment in full of the consumer credit sale:21 (i) the GAP coverage is automatically terminated; and22 (ii) the seller of the GAP agreement must issue a refund in23 accordance with subdivision (f).24 (h) A creditor that sells GAP agreements must:25 (i) insure its GAP agreement obligations under a contract26 liability insurance policy issued by an insurer licensed in27 Indiana; and28 (ii) retain appropriate records, as required under this29 article, regarding GAP agreements sold, refunded, and30 expired.31 (5) As used in this section, "expedited payment service" means32 a service offered to a consumer to ensure that a payment made by33 the consumer with respect to a consumer credit sale will be34 reflected as paid and posted on an expedited basis.35 (6) As used in this section:36 (a) "guaranteed asset protection agreement";37 (b) "guaranteed auto protection agreement"; or38 (c) "GAP agreement";39 means, with respect to consumer credit sales involving motor40 vehicles or other titled assets, an agreement in which the seller41 agrees to cancel or waive all or part of the outstanding debt after42 all property insurance benefits have been exhausted after the

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1 occurrence of a specified event.2 (7) As used in this section, "skip-a-payment service" means a3 service that:4 (a) is offered by a creditor to a consumer; and5 (b) permits the consumer to miss or skip a payment due under6 a consumer credit sale without resulting in default.7 SECTION 15. IC 24-4.5-2-417 IS ADDED TO THE INDIANA8 CODE AS A NEW SECTION TO READ AS FOLLOWS9 [EFFECTIVE JULY 1, 2018]: Sec. 417. (1) This section applies to

10 consumer credit sales, including revolving charge accounts.11 (2) Except as provided in subsection (3), a creditor shall credit12 a payment to a consumer's account as of the date of receipt, except13 when a delay in crediting does not result in a finance charge or14 other charge, including a delinquency charge under section 203.515 of this chapter. A delay in posting does not violate this section so16 long as the payment is credited as of the date of receipt.17 (3) If a creditor specifies in writing requirements for the18 consumer to follow in making payments, but accepts a payment19 that does not conform to the requirements, the creditor shall credit20 the payment within five (5) days of receipt of the payment.21 (4) If a creditor fails to credit a payment as required by this22 section in time to avoid the imposition of a finance or other charge,23 including a delinquency charge, the creditor shall adjust the24 consumer's account so that the charges imposed are credited to the25 consumer's account during the next payment period.26 SECTION 16. IC 24-4.5-3-105, AS AMENDED BY P.L.35-2010,27 SECTION 48, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE28 JULY 1, 2018]: Sec. 105. Unless the loan is made subject to29 IC 24-4.5-3 by agreement (IC 24-4.5-3-601), and except with respect30 to:31 (a) disclosure (IC 24-4.5-3-301);32 (b) debtors' remedies (IC 24-4.5-5-201);33 (c) providing payoff amounts (IC 24-4.5-3-209);34 (d) providing property tax information (IC 24-4.5-3-701); and35 (e) powers and functions of the department (IC 24-4.5-6-104);36 (f) the department's examination and investigatory authority37 (IC 24-4.5-6-106); and38 (g) the department's administrative enforcement authority39 (IC 24-4.5-6-108);40 "consumer loan" does not include a first lien mortgage transaction.41 SECTION 17. IC 24-4.5-3-202, AS AMENDED BY P.L.159-2017,42 SECTION 11, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE

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1 JULY 1, 2018]: Sec. 202. (1) In addition to the loan finance charge2 permitted by this chapter, a lender may contract for and receive the3 following additional charges in connection with a consumer loan:4 (a) Official fees and taxes.5 (b) Charges for insurance as described in subsection (2).6 (c) Annual participation fees assessed in connection with a7 revolving loan account. Annual participation fees must:8 (i) be reasonable in amount;9 (ii) bear a reasonable relationship to the lender's costs to

10 maintain and monitor the loan account; and11 (iii) not be assessed for the purpose of circumvention or12 evasion of this article, as determined by the department.13 (d) With respect to a debt secured by an interest in land, the14 following closing costs, if they are bona fide, reasonable in15 amount, and not for the purpose of circumvention or evasion of16 this article:17 (i) Fees for title examination, abstract of title, title insurance,18 property surveys, or similar purposes.19 (ii) Fees for preparing deeds, mortgages, and reconveyance,20 settlement, and similar documents.21 (iii) Notary and credit report fees.22 (iv) Amounts required to be paid into escrow or trustee23 accounts if the amounts would not otherwise be included in24 the loan finance charge.25 (v) Appraisal fees.26 (e) Notwithstanding provisions of the Consumer Credit Protection27 Act (15 U.S.C. 1601 et seq.) concerning disclosure, charges for28 other benefits, including insurance, conferred on the debtor, if the29 benefits are of value to the debtor and if the charges are30 reasonable in relation to the benefits, and are excluded as31 permissible additional charges from the loan finance charge. With32 respect to any other additional charge not specifically provided33 for in this section to be a permitted charge under this subsection,34 the creditor must submit a written explanation of the charge to the35 department indicating how the charge would be assessed and the36 value or benefit to the debtor. Supporting documents may be37 required by the department. The department shall determine38 whether the charge would be of benefit to the debtor and is39 reasonable in relation to the benefits.40 (f) A charge not to exceed twenty-five dollars ($25) for each41 return returned payment by a bank or other depository42 institution of a dishonored check, electronic funds transfer,

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1 negotiable order of withdrawal, or share draft issued by the2 debtor.3 (g) With respect to a revolving loan account, a fee not to exceed4 twenty-five dollars ($25) in each billing cycle during which the5 balance due under the revolving loan account exceeds by more6 than one hundred dollars ($100) the maximum credit limit for the7 account established by the lender.8 (h) With respect to a revolving loan account, a transaction fee that9 may not exceed the lesser of the following:

10 (i) Two percent (2%) of the amount of the transaction.11 (ii) Ten dollars ($10).12 (i) A charge not to exceed twenty-five dollars ($25) for a13 skip-a-payment service, subject to the following:14 (i) At the time of use of the service, the consumer must be15 given written notice of the amount of the charge and must16 acknowledge the amount in writing, including by electronic17 signature.18 (ii) A charge for a skip-a-payment service may not be19 assessed with respect to a consumer loan subject to the20 provisions on rebate upon prepayment that are set forth in21 section 210 of this chapter.22 (iii) A charge for a skip-a-payment service may not be23 assessed with respect to any payment for which a24 delinquency charge has been assessed under section 203.525 of this chapter.26 (j) A charge not to exceed ten dollars ($10) for an optional27 expedited payment service, subject to the following:28 (i) The charge may be assessed only upon request by the29 consumer to use the expedited payment service.30 (ii) The amount of the charge must be disclosed to the31 consumer at the time of the consumer's request to use the32 expedited payment service.33 (iii) The consumer must be informed that the consumer34 retains the option to make a payment by traditional means.35 (iv) The charge may not be established in advance, through36 any agreement with the consumer, as the expected method37 of payment.38 (v) The charge may not be assessed with respect to any39 payment for which a delinquency charge has been assessed40 under section 203.5 of this chapter.41 (i) (k) This subdivision applies to a CPAP transaction offered or42 entered into after June 30, 2016. With respect to a CPAP

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1 transaction, a CPAP provider may impose the following charges2 and fees:3 (i) A fee calculated at an annual rate that does not exceed4 thirty-six percent (36%) of the funded amount.5 (ii) A servicing charge calculated at an annual rate that does6 not exceed seven percent (7%) of the funded amount.7 (iii) If the funded amount of the CPAP transaction is less than8 five thousand dollars ($5,000), a one (1) time charge that does9 not exceed two hundred fifty dollars ($250) for obtaining and

10 preparing documents.11 (iv) If the funded amount of the CPAP transaction is at least12 five thousand dollars ($5,000), a one (1) time charge that does13 not exceed five hundred dollars ($500) for obtaining and14 preparing documents.15 A CPAP provider may not assess, or collect from the consumer16 claimant, any other fee or charge in connection with a CPAP17 transaction, including any finance charges under section 201 or18 508 of this chapter.19 (l) A charge for a GAP agreement, subject to subsection (3).20 (m) With respect to consumer loans made by a person exempt21 from licensing under IC 24-4.5-3-502(1), a charge for a debt22 cancellation agreement, subject to the following:23 (i) A debt cancellation agreement or debt cancellation24 coverage may not be required by the lender, and that fact25 must be disclosed in writing to the consumer.26 (ii) The charge for the initial term of coverage under the27 debt cancellation agreement must be disclosed in writing28 to the consumer. The charge may be disclosed on a29 unit-cost basis only in the case of revolving loan accounts,30 closed-end credit transactions if the request for coverage31 is made by mail or telephone, and closed-end credit32 transactions if the debt cancellation agreement limits the33 total amount of indebtedness eligible for coverage.34 (iii) If the term of coverage under the debt cancellation35 agreement is less than the term of the consumer loan, the36 term of coverage under the debt cancellation agreement37 must be disclosed in writing to the consumer.38 (iv) The consumer must sign or initial an affirmative39 written request for coverage after receiving all required40 disclosures.41 (v) If debt cancellation coverage for two (2) or more events42 is provided for in a single charge under a debt cancellation

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1 agreement, the entire charge may be excluded from the2 loan finance charge and imposed as an additional charge3 under this section if at least one (1) of the events is the loss4 of life, health, or income.5 The additional charges provided for in subdivisions (f) (g), (h), and (i)6 through (k) are not subject to refund or rebate.7 (2) An additional charge may be made for insurance in connection8 with the loan, other than insurance protecting the lender against the9 debtor's default or other credit loss:

10 (a) with respect to insurance against loss of or damage to property11 or against liability, if the lender furnishes a clear and specific12 statement in writing to the debtor, setting forth the cost of the13 insurance if obtained from or through the lender and stating that14 the debtor may choose the person, subject to the lender's15 reasonable approval, through whom the insurance is to be16 obtained; and17 (b) with respect to consumer credit insurance providing life,18 accident, unemployment or other loss of income, or health19 coverage, if the insurance coverage is not a factor in the approval20 by the lender of the extension of credit and this fact is clearly21 disclosed in writing to the debtor, and if, in order to obtain the22 insurance in connection with the extension of credit, the debtor23 gives specific affirmative written indication of the desire to do so24 after written disclosure of the cost of the insurance.25 (3) An additional charge may be made for a GAP agreement,26 subject to the following:27 (a) A GAP agreement or GAP coverage may not be required28 by the lender, and that fact must be disclosed in writing to the29 consumer.30 (b) The charge for the initial term of coverage under the GAP31 agreement must be disclosed in writing to the consumer. The32 charge may be disclosed on a unit-cost basis only in the case33 of the following transactions:34 (i) Revolving loan accounts.35 (ii) Closed-end credit transactions, if the request for36 coverage is made by mail or telephone.37 (iii) Closed- end credit transactions, if the GAP agreement38 limits the total amount of indebtedness eligible for39 coverage.40 (c) If the term of coverage under the GAP agreement is less41 than the term of the consumer loan, the term of coverage42 under the GAP agreement must be disclosed in writing to the

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1 consumer.2 (d) The consumer must sign or initial an affirmative written3 request for coverage after receiving all required disclosures.4 (e) The GAP agreement must include the following:5 (i) In the case of GAP coverage for a new motor vehicle,6 the manufacturer's suggested retail price (MSRP) for the7 motor vehicle.8 (ii) In the case of GAP coverage for a used motor vehicle,9 the National Automobile Dealers Association (NADA)

10 average retail value for the motor vehicle.11 (iii) The name of the financing entity taking assignment of12 the agreement, as applicable.13 (iv) The name and address of the consumer.14 (v) The name of the lender selling the agreement.15 (vi) Information advising the consumer that the consumer16 may be able to obtain similar coverage from the17 consumer's primary insurance carrier.18 (vii) A coverage provision that includes a minimum19 deductible of five hundred dollars ($500).20 (viii) A provision providing for a minimum thirty (30) day21 trial period.22 (ix) In the case of a consumer loan made with respect to a23 motor vehicle, a provision excluding the sale of GAP24 coverage if the amount financed under the consumer loan25 (not including the cost of the GAP agreement, the cost of26 any credit insurance, and the cost of any warranties or27 service agreements) is less than eighty percent (80%) of the28 manufacturer's suggested retail price (MSRP), in the case29 of a new motor vehicle, or the National Automobile30 Dealers Association (NADA) average retail value, in the31 case of a used motor vehicle.32 (x) In the case of a GAP agreement in which the charge for33 the agreement exceeds four hundred dollars ($400),34 specific instructions that may be used by the consumer to35 cancel the agreement and obtain a refund of the unearned36 GAP charge before prepayment in full, in accordance with37 the procedures, and subject to the conditions, set forth in38 subdivision (f).39 (f) If the charge for the GAP agreement exceeds four hundred40 dollars ($400), the consumer is entitled to cancel the41 agreement and obtain a refund of the unearned GAP charge42 before prepayment in full. Refunds of unearned GAP charges

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1 shall be made subject to the following conditions:2 (i) A refund of the charge for a GAP agreement must be3 calculated using a method that is no less favorable to the4 consumer than a refund calculated on a pro rata basis.5 (ii) The consumer is entitled to a refund of the unearned6 GAP agreement charge as outlined in the GAP agreement.7 (iii) The seller of the GAP agreement, or the seller's8 assignee, is responsible for making a timely refund to the9 consumer of unearned GAP agreement charges, and the

10 consumer is not obligated to initiate a request for any11 refund of unearned GAP agreement charges to which the12 consumer is entitled under this subdivision.13 (g) Upon prepayment in full of the consumer loan:14 (i) the GAP coverage is automatically terminated; and15 (ii) the seller of the GAP agreement must issue a refund in16 accordance with subdivision (f).17 (h) A lender that sells GAP agreements must:18 (i) insure its GAP agreement obligations under a contract19 liability insurance policy issued by an insurer licensed in20 Indiana; and21 (ii) retain appropriate records, as required under this22 article, regarding GAP agreements sold, refunded, and23 expired.24 (4) As used in this section, "debt cancellation agreement" means25 an agreement that provides coverage for payment or satisfaction26 of all or part of a debt in the event of the loss of life, health, or27 income. The term does not include a GAP agreement.28 (5) As used in this section, "expedited payment service" means29 a service offered to a consumer to ensure that a payment made by30 the consumer with respect to a consumer loan will be reflected as31 paid and posted on an expedited basis.32 (6) As used in this section:33 (a) "guaranteed asset protection agreement";34 (b) "guaranteed auto protection agreement"; or35 (c) "GAP agreement";36 means, with respect to consumer loans involving motor vehicles or37 other titled assets, an agreement in which the lender agrees to38 cancel or waive all or part of the outstanding debt after all39 property insurance benefits have been exhausted after the40 occurrence of a specified event.41 (7) As used in this section, "skip-a-payment service" means a42 service that:

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1 (a) is offered by a lender to a consumer; and2 (b) permits the consumer to miss or skip a payment due under3 a consumer loan without resulting in default.4 SECTION 18. IC 24-4.5-3-408 IS AMENDED TO READ AS5 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 408. (1) This section6 also applies to consumer loans, including revolving loan accounts.7 (2) Except as provided in subsection (3), a creditor shall credit a8 payment to a consumer's account as of the date of receipt, except when9 a delay in crediting does not result in a finance charge or other charge,

10 including a late delinquency charge under section 203.5 of this11 chapter. A delay in posting does not violate this section so long as the12 payment is credited as of the date of receipt.13 (3) If a creditor specifies in writing requirements for the consumer14 to follow in making payments, of the contract, payment coupon book,15 payment coupon or statement, or periodic statement, but accepts a16 payment that does not conform to the requirements, the creditor shall17 credit the payment within two (2) five (5) days of receipt of the18 payment.19 (4) If a creditor fails to credit a payment as required by this section20 in time to avoid the imposition of a finance or other charge, including21 a delinquency charge, the creditor shall adjust the consumer's account22 so that the charges imposed are credited to the consumer's account23 during the next payment period.24 SECTION 19. IC 24-4.5-3-502.1, AS AMENDED BY25 P.L.186-2015, SECTION 17, IS AMENDED TO READ AS26 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 502.1. (1) A person that27 is a:28 (a) depository institution;29 (b) subsidiary that is owned and controlled by a depository30 institution and regulated by a federal banking agency; or31 (c) credit union service organization;32 may engage in Indiana in the making of subordinate lien mortgage33 transactions without obtaining a mortgage license under this article.34 issued by the department.35 (2) A collection agency licensed under IC 25-11-1 or an institution36 regulated by the Farm Credit Administration may engage in:37 (a) taking assignments of subordinate lien mortgage transactions;38 and39 (b) undertaking the direct collection of payments from or the40 enforcement of rights against debtors arising from subordinate41 lien mortgage transactions;42 in Indiana without obtaining a mortgage license under this article.

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1 issued by the department.2 (3) A person that does not qualify is not otherwise exempt under3 subsection (1) or (2) shall acquire and retain a mortgage license4 relating to subordinate lien mortgage transactions under this chapter5 issued by the department in order to regularly engage in Indiana in6 the following actions with respect to subordinate lien mortgage7 transactions:8 (a) The making of subordinate lien mortgage loans.9 (b) Taking assignments of subordinate lien mortgage loans.

10 (c) Undertaking the direct collection of payments from or the11 enforcement of rights against debtors arising from subordinate12 lien mortgage loans.13 (4) Each:14 (a) creditor licensed by the department under this chapter to15 engage in subordinate lien mortgage transactions; and16 (b) entity that is exempt from licensing (either under this article17 or under IC 24-4.4-1-202(b)(6)(a)) from licensing and that:18 (i) employs a licensed mortgage loan originator; or19 (ii) sponsors under an exclusive written agreement, as20 permitted by IC 24-4.4-1-202(b)(6)(a), a licensed mortgage21 loan originator as an independent agent;22 shall register with and maintain a valid unique identifier issued by the23 NMLSR. Each licensed mortgage loan originator must be employed by,24 or sponsored under an exclusive written agreement (as permitted by25 IC 24-4.4-1-202(b)(6)(a)) and as an independent agent, and associated26 with, a licensed creditor licensed under this chapter to engage in27 subordinate lien mortgage transactions (or an exempt entity described28 under subdivision (b)) in that is registered with the NMLSR in order29 to originate loans.30 (5) Applicants for a mortgage license to engage in subordinate lien31 mortgage transactions must apply to the department for a the license32 under this chapter in a form prescribed by the director. Each form:33 (a) must contain content as set forth by rule, instruction, or34 procedure of the director; and35 (b) may be changed or updated as necessary by the director to36 carry out the purposes of this article.37 (6) To fulfill the purposes of this article, the director may establish38 relationships or contracts with the NMLSR or other entities designated39 by the NMLSR to:40 (a) collect and maintain records; and41 (b) process transaction fees or other fees;42 related to licensees or other persons subject to this article.

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1 (7) For the purpose of participating in the NMLSR, the director or2 the department may:3 (a) waive or modify, in whole or in part, by rule, regulation, or4 order, any or all of the requirements of this article; and5 (b) establish new requirements as reasonably necessary to6 participate in the NMLSR.7 SECTION 20. IC 24-4.5-3-503.3, AS AMENDED BY8 P.L.103-2014, SECTION 6, IS AMENDED TO READ AS FOLLOWS9 [EFFECTIVE JULY 1, 2018]: Sec. 503.3. (1) Each:

10 (a) creditor licensed by the department under this article; to11 engage in mortgage transactions; and12 (b) person that is exempt from licensing (either under this article13 or under IC 24-4.4-1-202(b)(6)(a)) from licensing and that:14 (i) employs a licensed mortgage loan originator; or15 (ii) sponsors under an exclusive written agreement, as16 permitted by IC 24-4.4-1-202(b)(6)(a), a licensed mortgage17 loan originator as an independent agent;18 must be covered by a surety bond in accordance with this section.19 (2) A surety bond must:20 (a) provide coverage for:21 (i) a creditor described in subsection (1)(a); and22 (ii) an exempt person described in subsection (1)(b);23 in an amount as prescribed in subsection (4);24 (b) be in a form as prescribed by the director;25 (c) be in effect:26 (i) during the term of the creditor's license; under this chapter;27 or28 (ii) at any time during which the person exempt from licensing29 under this article or under IC 24-4.4-1-202(b)(6)(a) employs30 a licensed mortgage loan originator, or sponsors under an31 exclusive written agreement (as permitted by32 IC 24-4.4-1-202(b)(6)(a)) a licensed mortgage loan originator33 as an independent agent;34 as applicable;35 (d) remain in effect during the two (2) years after:36 (i) the creditor ceases offering financial services to individuals37 in Indiana; or38 (ii) the person exempt from licensing under this article or39 under IC 24-4.4-1-202(b)(6)(a) ceases to employ a licensed40 mortgage loan originator, or ceases to sponsor under an41 exclusive written agreement (as permitted by42 IC 24-4.4-1-202(b)(6)(a)) a licensed mortgage loan originator

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1 as an independent agent, or to offer financial services to2 individuals in Indiana, whichever is later;3 as applicable;4 (e) be payable to the department for the benefit of:5 (i) the state; and6 (ii) individuals who reside in Indiana when they agree to7 receive financial services from the creditor or the person8 exempt from licensing, under this article or under9 IC 24-4.4-1-202(b)(6)(a), as applicable;

10 (f) be issued by a bonding, surety, or insurance company11 authorized to do business in Indiana and rated at least "A-" by at12 least one (1) nationally recognized investment rating service; and13 (g) have payment conditioned upon:14 (i) the creditor's or any of the creditor's licensed mortgage loan15 originators'; or16 (ii) the exempt person's or any of the exempt person's licensed17 mortgage loan originators';18 noncompliance with or violation of this chapter, 750 IAC 9, or19 other federal or state laws or regulations applicable to mortgage20 lending.21 (3) The director may adopt rules or guidance documents with22 respect to the requirements for surety bonds as necessary to accomplish23 the purposes of this article.24 (4) The penal sum of the surety bond shall be maintained in an25 amount that reflects the dollar amount of mortgage transactions26 originated as determined by the director. If the principal amount of a27 surety bond required under this section is reduced by payment of a28 claim or judgment, the creditor or exempt person for whom the bond29 is issued shall immediately notify the director of the reduction and, not30 later than thirty (30) days after notice by the director, file a new or an31 additional surety bond in an amount set by the director. The amount of32 the new or additional bond set by the director must be at least the33 amount of the bond before payment of the claim or judgment.34 (5) If for any reason a surety terminates a bond issued under this35 section, the creditor or the exempt person shall immediately notify the36 department and file a new surety bond in an amount determined by the37 director.38 (6) Cancellation of a surety bond issued under this section does not39 affect any liability incurred or accrued during the period when the40 surety bond was in effect.41 (7) The director may obtain satisfaction from a surety bond issued42 under this section if the director incurs expenses, issues a final order,

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1 or recovers a final judgment under this chapter.2 (8) Notices required under this section must be in writing and3 delivered by certified mail, return receipt requested and postage4 prepaid, or by overnight delivery using a nationally recognized carrier.5 SECTION 21. IC 24-4.5-3-503.4, AS AMENDED BY P.L.27-2012,6 SECTION 20, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE7 JULY 1, 2018]: Sec. 503.4. (1) Subject to subsection (6), the director8 shall designate the NMLSR to serve as the sole entity responsible for:9 (a) processing applications and renewals for licenses under

10 section 502.1 of this chapter;11 (b) issuing unique identifiers for licensees under section 502.1 of12 this chapter and for entities exempt from licensing under this13 article that employ licensed mortgage loan originators; and14 (c) performing other services that the director determines15 necessary for the orderly administration of the department's16 licensing system under section 502.1 of this chapter.17 (2) Subject to the confidentiality provisions contained in IC 5-14-3,18 this section, and IC 28-1-2-30, the director shall regularly report19 significant or recurring violations of this article related to subordinate20 lien mortgage transactions to the NMLSR.21 (3) Subject to the confidentiality provisions contained in IC 5-14-3,22 this section, and IC 28-1-2-30, the director may report complaints23 received regarding licensees under this article related and relating to24 subordinate lien mortgage transactions to the NMLSR.25 (4) The director may report publicly adjudicated licensure actions26 against licensees under section 502.1 of this chapter to the NMLSR.27 (5) The director shall establish a process in which persons licensed28 in accordance with section 502.1 of this chapter may challenge29 information reported to the NMLSR by the department.30 (6) The director's authority to designate the NMLSR under31 subsection (1) is subject to the following:32 (a) Information stored in the NMLSR is subject to the33 confidentiality provisions of IC 28-1-2-30 and IC 5-14-3. A34 person may not:35 (i) obtain information from the NMLSR unless the person is36 authorized to do so by statute;37 (ii) initiate any civil action based on information obtained38 from the NMLSR if the information is not otherwise available39 to the person under any other state law; or40 (iii) initiate any civil action based on information obtained41 from the NMLSR if the person could not have initiated the42 action based on information otherwise available to the person

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1 under any other state law.2 (b) Documents, materials, and other forms of information in the3 control or possession of the NMLSR that are confidential under4 IC 28-1-2-30 and that are:5 (i) furnished by the director, the director's designee, or a6 licensee; or7 (ii) otherwise obtained by the NMLSR;8 are confidential and privileged by law and are not subject to9 inspection under IC 5-14-3, subject to subpoena, subject to

10 discovery, or admissible in evidence in any civil action. However,11 the director may use the documents, materials, or other12 information available to the director in furtherance of any action13 brought in connection with the director's duties under this article.14 (c) Disclosure of documents, materials, and information:15 (i) to the director; or16 (ii) by the director;17 under this subsection does not result in a waiver of any applicable18 privilege or claim of confidentiality with respect to the19 documents, materials, or information.20 (d) Information provided to the NMLSR is subject to IC 4-1-11.21 (e) This subsection does not limit or impair a person's right to:22 (i) obtain information;23 (ii) use information as evidence in a civil action or proceeding;24 or25 (iii) use information to initiate a civil action or proceeding;26 if the information may be obtained from the director or the27 director's designee under any law.28 (f) Except as otherwise provided in the federal Housing and29 Economic Recovery Act of 2008, Public Law 110-289, Section30 1512, the requirements under any federal law or IC 5-14-331 regarding the privacy or confidentiality of any information or32 material provided to the NMLSR, and any privilege arising under33 federal or state law, including the rules of any federal or state34 court, with respect to the information or material, continue to35 apply to the information or material after the information or36 material has been disclosed to the NMLSR. The information and37 material may be shared with all state and federal regulatory38 officials with mortgage industry oversight authority without the39 loss of privilege or the loss of confidentiality protections provided40 by federal law or IC 5-14-3.41 (g) For purposes of this section, the director may enter agreements42 or sharing arrangements with other governmental agencies, the

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1 Conference of State Bank Supervisors, the American Association2 of Residential Mortgage Regulators, or other associations3 representing governmental agencies as established by rule or4 order of the director.5 (h) Information or material that is subject to a privilege or6 confidentiality under subdivision (f) is not subject to:7 (i) disclosure under any federal or state law governing the8 disclosure to the public of information held by an officer or an9 agency of the federal government or the respective state; or

10 (ii) subpoena, discovery, or admission into evidence, in any11 private civil action or administrative process, unless with12 respect to any privilege held by the NMLSR with respect to13 the information or material, the person to whom the14 information or material pertains waives, in whole or in part, in15 the discretion of the person, that privilege.16 (i) Any provision of IC 5-14-3 that concerns the disclosure of:17 (i) confidential supervisory information; or18 (ii) any information or material described in subdivision (f);19 and that is inconsistent with subdivision (f) is superseded by this20 section.21 (j) This section does not apply with respect to information or22 material that concerns the employment history of, and publicly23 adjudicated disciplinary and enforcement actions against, a24 person licensed in accordance with section 502.1 of this chapter25 and described in section 503(2) of this chapter and that is26 included in the NMLSR for access by the public.27 (k) The director may require a licensee required to submit28 information to the NMLSR to pay a processing fee considered29 reasonable by the director. In determining whether an NMLSR30 processing fee is reasonable, the director shall:31 (i) require review of; and32 (ii) make available;33 the audited financial statements of the NMLSR.34 (7) Notwithstanding any other provision of law, any:35 (a) application, renewal, or other form or document that:36 (i) relates to mortgage licenses issued under this article; by37 the department; and38 (ii) is made or produced in an electronic format;39 (b) document filed as an electronic record in a multistate40 automated repository established and operated for the licensing or41 registration of mortgage lenders, brokers, or loan originators; or42 (c) electronic record filed through the NMLSR;

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1 is considered a valid original document when reproduced in paper form2 by the department.3 SECTION 22. IC 24-4.5-3-505, AS AMENDED BY P.L.103-2014,4 SECTION 7, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE5 JULY 1, 2018]: Sec. 505. (1) Every creditor required to be licensed6 under this article shall maintain records in conformity with United7 States generally accepted accounting principles and practices, or in8 any other form that may be preapproved at the discretion of the9 director, in a manner that will enable the department to determine

10 whether the licensee is complying with the provisions of this article.11 The record keeping system of a licensee shall be sufficient if the12 licensee makes the required information reasonably available. The13 department shall determine the sufficiency of the records and whether14 the licensee has made the required information reasonably available.15 The department shall be given free access to the records wherever16 located. The records pertaining to any loan shall be retained for two (2)17 years after making the final entry relating to the loan, but in the case of18 a revolving loan account the two (2) years is measured from the date of19 each entry. A person licensed or required to be licensed under this20 chapter is subject to IC 28-1-2-30.5 with respect to any records21 maintained by the person. A person that is exempt from licensing22 (either under this article or under IC 24-4.4-1-202(b)(6)(a)) from23 licensing and that sponsors one (1) or more licensed mortgage loan24 originators as independent agents under an exclusive written25 agreement, as permitted by IC 24-4.4-1-202(b)(6)(a), shall:26 (a) cooperate with the department; and27 (b) provide access to records and documents;28 as required by the department in carrying out examinations of the29 activities of the licensed mortgage loan originators sponsored by the30 federal savings bank.31 (2) The unique identifier of any person originating a mortgage32 transaction must be clearly shown on all mortgage transaction33 application forms and any other documents as required by the director.34 (3) Every licensee that engages in mortgage transactions shall use35 automated examination and regulatory software designated by the36 director, including third party software. Use of the software consistent37 with guidance documents and policies issued by the director is not a38 violation of IC 28-1-2-30.39 (4) Each:40 (a) creditor that is licensed by the department under this article41 and that engages to engage in mortgage transactions; and42 (b) entity that is exempt from licensing (either under this article

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1 or under IC 24-4.4-1-202(b)(6)(a)) from licensing and that:2 (i) employs one (1) or more licensed mortgage loan3 originators; or4 (ii) sponsors under an exclusive written agreement, as5 permitted by IC 24-4.4-1-202(b)(6)(a), one (1) or more6 licensed mortgage loan originators as independent agents;7 shall submit to the NMLSR a call report, which must be in the form8 and contain information the NMLSR requires.9 (5) Every creditor required to be licensed under this article shall file

10 with the department a composite report as required by the department,11 but not more frequently than annually, in the form prescribed by the12 department relating to all consumer loans made by the licensee. The13 department shall consult with comparable officials in other states for14 the purpose of making the kinds of information required in the reports15 uniform among the states. Information contained in the reports shall be16 confidential and may be published only in composite form. The17 department may impose a fee in an amount fixed by the department18 under IC 28-11-3-5 for each day that a creditor fails to file the report19 required by this subsection.20 (6) A creditor required to be licensed under this article shall file21 notification with the department if the licensee:22 (a) has a change in name, address, or principals;23 (b) opens a new branch, closes an existing branch, or relocates an24 existing branch;25 (c) files for bankruptcy or reorganization; or26 (d) is subject to revocation or suspension proceedings by a state27 or governmental authority with regard to the licensee's activities;28 not later than thirty (30) days after the date of the event described in29 this subsection.30 (7) Every licensee shall file notification with the department if the31 licensee or any director, executive officer, or manager of the licensee32 has been convicted of a felony under the laws of Indiana or any other33 jurisdiction. The licensee shall file the notification required by this34 subsection not later than thirty (30) days after the date of the event35 described in this subsection.36 SECTION 23. IC 24-4.5-3-602, AS AMENDED BY P.L.73-2016,37 SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE38 JULY 1, 2018]: Sec. 602. (1) A "consumer related loan" is a loan in39 which the following apply:40 (a) The loan is made by a person who is not regularly engaged as41 a lender in credit transactions of the same kind.42 (b) The debtor is a person other than an organization.

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1 (c) The debt is primarily for a personal, family, or household2 purpose.3 (d) Either the debt is payable in installments or a loan finance4 charge is made.5 (e) Either:6 (i) the amount of credit extended, the written credit limit, or7 the initial advance does not exceed the exempt threshold8 amount, as adjusted in accordance with the annual adjustment9 of the exempt threshold amount, specified in Regulation Z (12

10 CFR 226.3 or 12 CFR 1026.3(b), as applicable); or11 (ii) the debt is secured by an interest in land or by personal12 property used or expected to be used as the principal dwelling13 of the debtor.14 (2) With respect to a consumer related loan, including one made15 pursuant to a revolving loan account, the parties may contract for the16 payment by the debtor of a loan finance charge, not in excess of that17 permitted by the provisions on loan finance charge for consumer loans18 other than supervised loans (IC 24-4.5-3-201). calculated according19 to the actuarial method, not to exceed twenty-five percent (25%)20 per year on the unpaid principal balance.21 (3) A person engaged in consumer related loans is not required to22 comply with:23 (a) the licensing requirements set forth in section 503 of this24 chapter; or25 (b) IC 24-4.5-6-201 through IC 24-4.5-6-203.26 SECTION 24. IC 24-4.5-6-106, AS AMENDED BY P.L.186-2015,27 SECTION 22, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE28 JULY 1, 2018]: Sec. 106. (1) In administering this article and in order29 to determine whether the provisions of this article are being complied30 with by persons engaging in acts subject to this article, the department31 may examine the records of persons and may make investigations of32 persons as may be necessary to determine compliance. Records subject33 to examination under this section include the following:34 (a) Training, operating, and policy manuals.35 (b) Minutes of:36 (i) management meetings; and37 (ii) other meetings.38 (c) Other records that the department determines are necessary to39 perform its investigation or examination.40 The department may also administer oaths or affirmations, subpoena41 witnesses, and compel the attendance of witnesses, including directors,42 executive officers, managers, principals, mortgage loan originators,

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1 employees, independent contractors, agents, and customers of the2 licensee, individual, or person subject to this article. The department3 may also adduce evidence, and require the production of any matter4 which is relevant to the investigation. The department shall determine5 the sufficiency of the records maintained and whether the person has6 made the required information reasonably available. The records7 pertaining to any transaction subject to this article shall be retained for8 two (2) years after making the final entry relating to the consumer9 credit transaction, but in the case of a revolving loan account or

10 revolving charge account, the two (2) years is measured from the date11 of each entry.12 (2) The department's examination and investigatory authority under13 this article includes the following:14 (a) The authority to require a creditor to refund overcharges15 resulting from the creditor's noncompliance with the terms of16 consumer credit sales, consumer leases, or consumer loans.17 (b) The authority to require a creditor to comply with the18 prepayment penalty provisions set forth in IC 24-4.5-3-209.19 (c) The authority to investigate complaints filed with the20 department by debtors.21 (3) If the department:22 (a) investigates; or23 (b) examines the books and records of;24 a person that is subject to IC 24-4.5-6-201, IC 24-4.5-6-202, and25 IC 24-4.5-6-203, the person shall pay all reasonably incurred costs of26 the investigation or examination in accordance with the fee schedule27 adopted by the department under IC 28-11-3-5. However, the person is28 liable for the costs of an investigation or examination under this29 subsection only to the extent that the costs exceed the amount of the30 filing fees paid most recently under IC 24-4.5-6-203. Any costs31 required to be paid under this section shall be paid not later than sixty32 (60) days after the person receives a notice from the department of the33 costs being assessed. The department may impose a fee, in an amount34 fixed by the department under IC 28-11-3-5, for each day that the35 assessed costs are not paid, beginning on the first day after the sixty36 (60) day period described in this subsection.37 (4) The department shall be given free access to the records38 wherever located. In making any examination or investigation39 authorized by this article, the director may control access to any40 documents and records of the licensee or person under examination or41 investigation. The director may take possession of the documents and42 records or place a person in exclusive charge of the documents and

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1 records in the place where the documents are usually kept. During the2 period of control, the licensee or person may not remove or attempt to3 remove any of the documents and records except under a court order4 or with the consent of the director. Unless the director has reasonable5 grounds to believe the documents or records of the licensee or person6 have been, or are, at risk of being altered or destroyed for purposes of7 concealing a violation of this article, the licensee or person being8 examined or investigated is entitled to access to the documents or9 records as necessary to conduct the licensee's or person's ordinary

10 business affairs. If the person's records are located outside Indiana, the11 records shall be made available to the department at a convenient12 location within Indiana, or the person shall pay the reasonable and13 necessary expenses for the department or its representative to examine14 them where they are maintained. The department may designate15 comparable officials of the state in which the records are located to16 inspect them on behalf of the department.17 (5) Upon a person's failure without lawful excuse to obey a18 subpoena or to give testimony and upon reasonable notice to all19 affected persons, the department may apply to any civil court with20 jurisdiction for an order compelling compliance.21 (6) The department shall not make public the name or identity of a22 person whose acts or conduct the department investigates pursuant to23 this section or the facts disclosed in the investigation, but this24 subsection does not apply to disclosures in actions or enforcement25 proceedings pursuant to this article.26 (7) To discover violations of this article or to secure information27 necessary for the enforcement of this article, the department may28 investigate any:29 (a) licensee or registrant; or30 (b) person that the department suspects to be operating:31 (i) without a license or registration, when a license or32 registration is required under this article; or33 (ii) otherwise in violation of this article.34 The department has all investigatory and enforcement authority under35 this article that the department has under IC 28-11 with respect to36 financial institutions. If the department conducts an investigation under37 this section, the licensee, registrant, or other person investigated shall38 pay all reasonably incurred costs of the investigation in accordance39 with the fee schedule adopted under IC 28-11-3-5. Any costs required40 to be paid under this section shall be paid not later than sixty (60) days41 after the person receives a notice from the department of the costs42 being assessed. The department may impose a fee, in an amount fixed

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1 by the department under IC 28-11-3-5, for each day that the assessed2 costs are not paid, beginning on the first day after the sixty (60) day3 period described in this subsection.4 (8) If a creditor contracts with an outside vendor to provide a service5 that would otherwise be undertaken internally by the creditor and be6 subject to the department's routine examination procedures, the person7 that provides the service to the creditor shall, at the request of the8 director, submit to an examination by the department. If the director9 determines that an examination under this subsection is necessary or

10 desirable, the examination may be made at the expense of the person11 to be examined. If the person to be examined under this subsection12 refuses to permit the examination to be made, the director may order13 any creditor that is licensed under this article by the department and14 that receives services from the person refusing the examination to:15 (a) discontinue receiving one (1) or more services from the16 person; or17 (b) otherwise cease conducting business with the person.18 SECTION 25. IC 24-4.5-7-102, AS AMENDED BY P.L.186-2015,19 SECTION 23, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE20 JULY 1, 2018]: Sec. 102. (1) Except as otherwise provided, all21 provisions of this article applying to consumer loans, including22 IC 24-4.5-3-502.2, apply to small loans, as defined in this chapter.23 (2) Subject to subsection (7), a person may not regularly engage in24 Indiana in any of the following actions unless the department first25 issues to the person a license under this chapter:26 (a) The making of small loans.27 (b) Taking assignments of small loans.28 (c) Undertaking the direct collection of payments from or the29 enforcement of rights against debtors arising from small loans.30 (3) Subject to subsection (4), a person that seeks licensure under31 this chapter:32 (a) shall apply to the department for a license in the form and33 manner prescribed by the department; and34 (b) is subject to the same licensure requirements and procedures35 as an applicant for a license to make consumer loans (other than36 mortgage transactions) under IC 24-4.5-3-502.37 (4) A person that seeks to make, take assignments of, or undertake38 the direct collection of payments from or the enforcement of rights39 against debtors arising from both:40 (a) small loans under this chapter; and41 (b) consumer loans (other than mortgage transactions) that are not42 small loans;

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1 must obtain a separate license from the department for each type of2 loan, as described in IC 24-4.5-3-502(5).3 (5) This chapter applies to:4 (a) a lender; or to any person who facilitates, enables, or acts as5 a conduit for any person who is or may be exempt from licensing6 under IC 24-4.5-3-502;7 (b) a bank, savings association, credit union, or other state or8 federally regulated financial institution except those that are9 specifically exempt regarding limitations on interest rates and

10 fees; or11 (c) a person, if the department determines that a transaction is:12 (i) in substance a disguised loan; or13 (ii) the application of subterfuge for the purpose of avoiding14 this chapter.15 (6) A loan that:16 (a) does not qualify as a small loan under section 104 of this17 chapter;18 (b) is for a term shorter than that specified in section 401(1) of19 this chapter; or20 (c) is made in violation of section 201, 401, 402, 404, or 410 of21 this chapter;22 is subject to this article. The department may conform the loan finance23 charge for a loan described in this subsection to the limitations set forth24 in IC 24-4.5-3-508. IC 24-4.5-3-508(2).25 (7) Notwithstanding IC 24-4.5-1-301.5, for purposes of subsection26 (2), a person "regularly engages" in any of the activities described in27 subsection (2) with respect to a small loan if the person:28 (a) performed any of the activities described in subsection (2)29 with respect to a small loan at least one (1) time in the preceding30 calendar year; or31 (b) performs or will perform any of the activities described in32 subsection (2) with respect to a small loan at least one (1) time in33 the current calendar year if the person did not perform any of the34 activities described in subsection (2) with respect to a small loan35 at least one (1) time in the preceding calendar year.36 SECTION 26. IC 24-4.5-7-202, AS AMENDED BY P.L.60-2016,37 SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE38 JULY 1, 2018]: Sec. 202. (1) Notwithstanding any other law, the only39 fee that may be contracted for and received by the lender or an assignee40 on a small loan is a charge, not to exceed twenty-five dollars ($25), for41 each:42 (a) return by a bank or other depository institution of a

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1 dishonored:2 (i) check;3 (ii) electronic funds transfer;4 (ii) (iii) negotiable order of withdrawal; or5 (iii) (iv) share draft;6 issued by the borrower; or7 (b) time an authorization to debit the borrower's account is8 dishonored.9 This additional charge may be assessed one (1) time regardless of how

10 many times a check or an authorization to debit the borrower's account11 may be submitted by the lender and dishonored.12 (2) A lender may:13 (a) present a borrower's check for payment; or14 (b) exercise a borrower's authorization to debit the borrower's15 account;16 not more than three (3) times.17 SECTION 27. IC 24-4.5-7-301, AS AMENDED BY P.L.159-2017,18 SECTION 18, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE19 JULY 1, 2018]: Sec. 301. (1) For purposes of this section, the lender20 shall disclose to the borrower to whom credit is extended with respect21 to a small loan the information required by the Consumer Credit22 Protection Act (15 U.S.C. 1601 et seq.).23 (2) In addition to the requirements of subsection (1), the lender must24 conspicuously display in bold type a notice to the public both in the25 lending area of each business location and in the loan documents the26 following statement:27 "WARNING: A small loan is not intended to meet long term28 financial needs. A small loan should be used only to meet short29 term cash needs. The cost of your small loan may be higher than30 loans offered by other lending institutions. Small loans are31 regulated by the State of Indiana Department of Financial32 Institutions.33 A borrower may rescind a small loan without cost by paying the34 cash amount of the principal of the small loan to the lender not35 later than the end of the business day immediately following the36 day on which the small loan was made.". borrower receives the37 loan proceeds.".38 (3) The statement required in subsection (2) must be in:39 (a) 14 point bold face type in the loan documents; and40 (b) not less than one (1) inch bold print in the lending area of the41 business location.42 (4) When a borrower enters into a small loan, the lender shall

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1 provide the borrower with a pamphlet approved by the department that2 describes:3 (a) the availability of debt management and credit counseling4 services; and5 (b) the borrower's rights and responsibilities in the transaction.6 SECTION 28. IC 24-4.5-7-401, AS AMENDED BY P.L.186-2015,7 SECTION 25, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE8 JULY 1, 2018]: Sec. 401. (1) A small loan may not be made for a term9 of less than fourteen (14) days.

10 (2) If five (5) consecutive small loans have been made to a borrower11 after the borrower's initial small loan, another small loan may not be12 made to that borrower within seven (7) days after the fifth consecutive13 small loan is paid in full. After the borrower's fifth consecutive small14 loan, the balance must be paid in full.15 (3) Subject to subsection (4), whenever a borrower has entered into16 an initial small loan followed by three (3) consecutive small loans, the17 lender shall offer the borrower the option to repay:18 (a) the third consecutive small loan; and19 (b) subject to subsection (2), any small loan entered into after the20 third consecutive small loan;21 under an extended payment plan. At the time of execution of a small22 loan described in subdivision (a) or (b), the lender shall disclose to the23 borrower the extended payment plan option by providing the borrower24 a written description of the extended payment plan option in a separate25 disclosure document approved by the director.26 (4) A lender shall offer an extended payment plan under subsection27 (3) under the following terms and conditions:28 (a) A borrower shall be permitted to request an extended payment29 plan at any time during the term of a third or subsequent30 consecutive small loan if:31 (i) the borrower has not defaulted on the outstanding small32 loan; and33 (ii) the rescission period under section 402(6) of this34 chapter has expired.35 (b) An extended payment plan must allow the outstanding small36 loan to be paid in at least four (4) equal installments over a period37 of not less than sixty (60) days.38 (c) An agreement for an extended payment plan may not require39 a borrower to pay any amount before the original maturity date of40 the outstanding small loan.41 (d) The lender may not assess any fee or charge on a borrower for42 entering into an extended payment plan.

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1 (e) An agreement for an extended payment plan must be in2 writing and acknowledged by both the borrower and the lender.3 (f) A borrower may not enter into another small loan transaction4 while engaged in an extended payment plan.5 (g) A lender may shall not: compel, or require a borrower to pay6 off an outstanding small loan that is eligible for an extended7 payment plan and to subsequently enter into a new small loan8 with the lender if the borrower and lender have not entered into9 an extended payment plan with respect to the eligible outstanding

10 small loan.11 (i) compel, advise, solicit, or coerce a borrower to not12 exercise the borrower's right to request an extended13 payment plan;14 (ii) discourage a borrower from exercising the borrower's15 right to request an extended payment plan; or16 (iii) take any other action to influence a borrower's right17 to request an extended payment plan.18 (5) An agreement for an extended payment plan under subsection19 (3):20 (a) shall be considered an extension of the outstanding small loan;21 and22 (b) may not be considered a new loan.23 SECTION 29. IC 24-4.5-7-402, AS AMENDED BY P.L.27-2012,24 SECTION 30, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE25 JULY 1, 2018]: Sec. 402. (1) A lender is prohibited from making a26 small loan to a borrower if the total of:27 (a) the principal amount and finance charges of the small loan to28 be issued; plus29 (b) any other small loan balances that the borrower has30 outstanding with any lender;31 exceeds twenty percent (20%) of the borrower's monthly gross income.32 (2) A small loan may be secured by only one (1) check or33 authorization to debit the borrower's account per small loan. The check34 or electronic debit may not exceed the amount advanced to or on behalf35 of the borrower plus loan finance charges contracted for and permitted.36 (3) A borrower may make partial payments in any amount on the37 small loan without charge at any time before the due date of the small38 loan.39 (4) After any payment is made on a small loan, whether the payment40 is made in part or in full before, on, or after the due date of the small41 loan, the lender shall give a signed and dated receipt to the borrower42 making a payment showing the amount paid and the balance due on the

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1 small loan.2 (5) The lender shall provide to each borrower a copy of the required3 loan documents before the disbursement of the loan proceeds.4 (6) A borrower may rescind a small loan without cost by paying the5 cash amount of the principal of the small loan to the lender not later6 than the end of the business day immediately following the day on7 which the small loan was made. borrower receives the proceeds.8 (7) A lender shall not enter into a renewal with a borrower. If a loan9 is paid in full, a subsequent loan is not a renewal.

10 SECTION 30. IC 24-7-2-8 IS AMENDED TO READ AS11 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 8. "Property" means12 any property that:13 (1) is not real property or intangible personal property under14 Indiana law; and15 (2) is used or intended for use by an individual primarily for16 personal, family, or household purposes;17 (3) a lessor holds complete and total ownership of, or18 ownership rights to; and19 (2) (4) is made available by a lessor to a lessee under a rental20 purchase agreement.21 SECTION 31. IC 24-7-2-9, AS AMENDED BY P.L.217-2007,22 SECTION 28, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE23 JULY 1, 2018]: Sec. 9. (a) "Rental purchase agreement" means an24 agreement between a lessor and a lessee that:25 (1) provides for the use of personal property by an individual26 primarily for personal, family, or household purposes; permits a27 lessee's use of property for a specified time;28 (2) has an initial period of four (4) months or less;29 (3) is automatically renewable with each rental payment; and30 (4) permits the lessee to become the owner of the property.31 (b) The term includes:32 (1) an agreement; or33 (2) a transaction;34 that the director determines to be a rental purchase agreement, despite35 efforts by a person to structure the transaction in a manner that the36 director determines is being used to avoid application of this article.37 SECTION 32. IC 24-7-3-3 IS AMENDED TO READ AS38 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 3. The lessor shall39 disclose the following:40 (1) A brief description of the property sufficient to identify the41 property to the lessee and lessor.42 (2) The total number, total amount, and timing of all rental

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1 payments necessary to acquire ownership of the property,2 including:3 (A) any initial payment, less any:4 (i) optional liability waiver fees under IC 24-7-5-11; and5 (ii) optional products and services offered6 contemporaneously with the rental purchase agreement7 under IC 24-7-8-6;8 (B) all regular rental payments; and9 (C) taxes paid to or through the lessor. necessary to acquire

10 ownership of the property.11 (3) A statement that the lessee will not own the property until the12 lessee has:13 (A) made the number of all regular rental payments, and the14 total of as well as any initial rental payments payment,15 necessary to acquire ownership of the property; or16 (B) exercised an early purchase option.17 (4) A statement that charges in addition to the total rental18 payments necessary to acquire ownership of the leased property19 may be imposed under the agreement and that the lessee should20 read the contract for an explanation of these charges.21 (5) A brief explanation of all additional charges that may be22 imposed under the agreement. If a security deposit is required, the23 explanation must include an explanation of the conditions under24 which the deposit will be returned to the lessee.25 (6) A statement indicating who is responsible for property if it is26 lost, stolen, damaged, or destroyed.27 (7) A statement indicating that the value of lost, stolen, damaged,28 or destroyed property is its fair market value on the date that it is29 lost, stolen, damaged, or destroyed.30 (8) A statement indicating whether the property is new or used.31 However, property that is new may be described as used.32 (9) A statement that the lessee has an early purchase option to33 purchase the property at any time during the period that the rental34 purchase agreement is in effect. The statement must specify the35 price or the formula or other method for determining the price at36 which the property may be purchased.37 (10) A brief explanation of the lessee's right to reinstate a rental38 purchase agreement and a description of the amount, or method39 of determining the amount, of any penalty or other charge40 applicable under IC 24-7-5 to the reinstatement of a rental41 purchase agreement.42 (11) An itemization of all charges and fees included in any

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1 initial rental payment.2 SECTION 33. IC 24-7-3-6 IS AMENDED TO READ AS3 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 6. Before any regular4 rental payment is due under the rental purchase agreement, the lessor5 shall obtain the signature of the lessee on the writing containing the6 terms of the rental purchase agreement and shall furnish the lessee with7 a copy of the written and signed rental purchase agreement. If there is8 more than one (1) lessee in a rental purchase agreement, delivery of a9 copy of the rental purchase agreement to one (1) of the lessees is

10 sufficient to comply with this section.11 SECTION 34. IC 24-7-3-8 IS AMENDED TO READ AS12 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 8. The lessor shall13 furnish the lessee, without request by the lessee, a written receipt for14 each initial rental payment and any subsequent regular rental15 payment made:16 (1) in cash; or17 (2) by another method of rental payment that does not provide18 evidence of the rental payment.19 SECTION 35. IC 24-7-4-1 IS AMENDED TO READ AS20 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 1. At any time after the21 first initial rental payment is made, the lessee may acquire ownership22 of the property under the terms specified in the rental purchase23 agreement.24 SECTION 36. IC 24-7-4-1.5 IS ADDED TO THE INDIANA CODE25 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY26 1, 2018]: Sec. 1.5. (a) Any up-front payment made by the lessee at27 the time a rental purchase agreement is entered into must be28 treated by the lessor as an initial rental payment.29 (b) An initial rental payment:30 (1) is subject to the disclosure requirements of IC 24-7; and31 (2) may be in a sum larger than a regular rental payment due32 under the rental purchase agreement.33 SECTION 37. IC 24-7-4-11 IS AMENDED TO READ AS34 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 11. Except as provided35 in section 1 of this chapter, a lessor shall not require or permit a36 lessee may not be required to:37 (1) make any payment in addition to an initial rental payment38 and regular rental payments in order to acquire ownership of the39 property; or40 (2) pay rental payments totaling more than the cost to acquire41 ownership stated in the rental purchase agreement; or42 (3) make any payment to a third party as a condition to

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1 entering into a rental purchase agreement.2 SECTION 38. IC 24-7-4-13, AS ADDED BY P.L.35-2010,3 SECTION 90, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE4 JULY 1, 2018]: Sec. 13. (a) Except as provided in subsection (b), a5 lessor may not accept payment from a lessee and hold the amount of6 the payment in a reserve account for future payments. Any amounts7 paid by a lessee must be applied:8 (1) as an initial rental payment;9 (2) as a regular rental payment; or

10 (3) to an accrued permissible additional charge under IC 24-7-5.11 (b) If a lessee makes a payment that exceeds the sum of the12 scheduled regular rental payment and any permitted additional charges13 that are due, the lessor may hold the excess funds in a reserve account14 subject to the following conditions:15 (1) The balance of the lessee's reserve account may not exceed the16 amount of the next scheduled regular rental payment.17 (2) If the balance in the lessee's reserve account reaches the limit18 specified in subdivision (1), the lessor shall apply the funds to the19 lessee's next scheduled regular rental payment.20 (c) This section may not be construed to preclude a lessor from21 accepting and applying:22 (1) an initial rental payment; or23 (2) multiple regular rental payments;24 before the rental payments' scheduled due dates.25 SECTION 39. IC 24-7-5-5, AS AMENDED BY P.L.217-2007,26 SECTION 29, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE27 JULY 1, 2018]: Sec. 5. (a) The parties to a rental purchase28 agreement may contract for late charges or delinquency fees as29 follows:30 (1) For rental purchase agreements with monthly renewal dates,31 a late charge not exceeding eight dollars ($8) may be assessed on32 any rental payment not made within five (5) days after:33 (A) the renewal date for the agreement; or34 (B) the return of the property is required under the rental35 purchase agreement.36 (2) For rental purchase agreements with weekly or biweekly37 renewal dates, a late charge not exceeding the amount specified38 in subsection (e) may be assessed on any rental payments not39 made within two (2) days after:40 (A) the renewal date for the agreement; or41 (B) the return of the property is required under the rental42 purchase agreement.

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1 (b) A late charge on a rental purchase agreement may be collected2 only once on any accrued regular rental payment, no matter how long3 it remains unpaid.4 (c) A late charge may be collected at any time after it accrues.5 (d) A late charge may not be assessed against a regular rental6 payment that is timely made, even though an earlier late charge has not7 been paid in full.8 (e) The amount that may be assessed under subsection (a)(2) is as9 follows:

10 (1) Three dollars ($3) for any payment not greater than twenty11 dollars ($20).12 (2) Five dollars ($5) for any payment greater than twenty dollars13 ($20).14 SECTION 40. IC 24-7-5-5.5, AS ADDED BY P.L.217-2007,15 SECTION 30, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE16 JULY 1, 2018]: Sec. 5.5. A lessor may contract for and receive a17 charge a returned payment fee not to exceed twenty-five dollars ($25)18 for each return by a bank or other depository institution of a dishonored19 check, electronic funds transfer, negotiable order of withdrawal, or20 share draft issued by the lessee.21 SECTION 41. IC 24-7-5-10 IS AMENDED TO READ AS22 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 10. (a) If a lessee is23 liable to a lessor for the replacement cost of property leased under a24 rental purchase agreement, the lessor may not charge the lessee more25 than the fair market value for the property.26 (b) For purposes of subsection (a), fair market value shall be27 determined by the lessor in the same manner, and using the same28 method, that would apply if the lessee were exercising an early29 purchase option under the rental purchase agreement.30 SECTION 42. IC 24-7-6-2 IS AMENDED TO READ AS31 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 2. (a) As a condition32 precedent to reinstatement of the rental purchase agreement, a lessor33 may charge:34 (1) the outstanding balance of any accrued regular rental35 payments, returned payment charges, and delinquency charges;36 (2) a reinstatement fee not exceeding the amount allowed under37 IC 24-7-5-6; and38 (3) delivery charges not exceeding the amounts allowed under39 IC 24-7-5-3 if redelivery of the item is necessary.40 (b) A reinstatement fee may not be charged under subsection (a)(2)41 unless the property has been returned to the lessor and is in the lessor's42 possession.

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1 SECTION 43. IC 24-7-7-1, AS AMENDED BY P.L.89-2011,2 SECTION 24, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE3 JULY 1, 2018]: Sec. 1. (a) The department shall enforce this article. To4 carry out this responsibility, the department may do the following:5 (1) Receive and act on complaints, take action designed to obtain6 voluntary compliance with this article, or commence proceedings7 on the department's own initiative.8 (2) Issue and enforce administrative orders under IC 4-21.5.9 (3) Counsel persons and groups on their rights and duties under

10 this article.11 (4) Establish programs for the education of consumers with12 respect to rental purchase agreement practices and problems.13 (5) Make studies appropriate to effectuate the purposes and14 policies of this article and make the results available to the public.15 (6) Adopt rules under IC 4-22-2, including emergency rules under16 IC 4-22-2-37.1, to carry out this article.17 (7) Maintain more than one (1) office within Indiana.18 (8) Bring a civil action to restrain a person from violating this19 article and for other appropriate relief, and exercise the same20 enforcement powers provided under IC 24-4.5-6-108.21 (b) If the department determines, after notice and an opportunity to22 be heard, that a person has violated this article, the department may, in23 addition to or instead of all other remedies available under this section,24 impose upon the person a civil penalty not greater than ten thousand25 dollars ($10,000) per violation.26 SECTION 44. IC 24-7-7-2, AS AMENDED BY P.L.186-2015,27 SECTION 27, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE28 JULY 1, 2018]: Sec. 2. (a) A person subject to this article shall make29 the books and records of the person reasonably available for inspection30 by the department or the department's representative.31 (b) At a minimum, every lessor shall keep a record of all payments32 remitted by the lessee on a rental purchase agreement, including the33 following:34 (1) The name of the lessee.35 (2) The date of each transaction.36 (3) The total amount of each payment.37 (4) A breakdown of each payment reflecting:38 (A) each type of charge; and39 (B) the amount of each type of charge.40 (c) A person subject to this article shall maintain books and41 records that demonstrate to the department that a lessor has42 acquired, before entering into a rental purchase agreement with a

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1 lessee, complete and total ownership rights to the property subject2 to the rental purchase agreement.3 (d) The method of maintaining this any data required under this4 section is at the discretion of the lessor, if hard copies of the required5 data are readily available. The record keeping system of the lessor shall6 be made available in Indiana for examination. The director shall7 determine the sufficiency of the records and whether the lessor has8 made the required information reasonably available.9 (b) (e) In administering this article and in order to determine

10 compliance with this article, the department or the department's11 representative may examine the books and records of persons subject12 to the article and may make investigations of persons necessary to13 determine compliance. For this purpose, the department may14 administer oaths or affirmations, and, upon the department's own15 motion or upon request of any party, may subpoena witnesses, compel16 their attendance, compel testimony, and require the production of any17 matter that is relevant to the investigation, including the existence,18 description, nature, custody, condition, and location of any books,19 documents, or other tangible things and the identity and location of20 persons having knowledge of relevant facts, or any other matter21 reasonably calculated to lead to the discovery of admissible evidence.22 (c) (f) If the person's records are located outside Indiana, but within23 the continental United States, the person shall, at the person's option,24 either make them available to the department at a convenient location25 in Indiana, or pay the reasonable and necessary expenses for the26 department or the department's representative to examine them at the27 place where they are maintained within the continental United States.28 The department may designate representatives, including comparable29 officials of the state in which the records are located, to inspect them30 on the department's behalf.31 (d) (g) Upon failure without lawful excuse to obey a subpoena or to32 give testimony and upon reasonable notice to all persons affected33 thereby, the department may apply to a court for an order compelling34 compliance.35 (e) (h) The department may not make public the name or identity of36 a person whose acts or conduct the department investigates under this37 section or the facts disclosed in the investigation, but this subsection38 does not apply to disclosures in actions or enforcement proceedings39 under this article.40 (f) (i) A lessor shall use United States generally accepted41 accounting principles and practices in keeping books and records so42 that the department or the department's representative may determine

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1 if the lessor is in compliance with this article or a rule adopted under2 this article.3 (g) (j) A lessor shall keep the lessor's books and records that pertain4 to a rental purchase agreement for at least two (2) years after the rental5 purchase agreement has terminated.6 (h) (k) To discover violations of this article or to secure information7 necessary for the enforcement of this article, the department may8 investigate:9 (1) any person subject to this article; and

10 (2) any person that the department suspects to be operating in11 violation of this article.12 The department has all investigatory and enforcement authority under13 this article that the department has under IC 28-11 with respect to14 financial institutions. If the department conducts an investigation under15 this section, the person investigated shall pay all reasonably incurred16 costs of the investigation in accordance with the fee schedule adopted17 under IC 28-11-3-5. Any costs required to be paid under this section18 shall be paid not later than sixty (60) days after the person receives a19 notice from the department of the costs being assessed. The department20 may impose a fee, in an amount fixed by the department under21 IC 28-11-3-5, for each day that the assessed costs are not paid,22 beginning on the first day after the sixty (60) day period described in23 this subsection.24 (i) (l) If a lessor contracts with an outside vendor to provide a25 service that would otherwise be undertaken internally by the lessor and26 be subject to the department's routine examination procedures, the27 person that provides the service to the lessor shall, at the request of the28 director, submit to an examination by the department. If the director29 determines that an examination under this subsection is necessary or30 desirable, the examination may be made at the expense of the person31 to be examined. If the person to be examined under this subsection32 refuses to permit the examination to be made, the director may order33 any lessor that receives services from the person refusing the34 examination to:35 (1) discontinue receiving one (1) or more services from the36 person; or37 (2) otherwise cease conducting business with the person.38 SECTION 45. IC 24-7-8-2, AS AMENDED BY P.L.35-2010,39 SECTION 93, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE40 JULY 1, 2018]: Sec. 2. The notification required under section 1 of this41 chapter must include the following:42 (1) The name of the lessor.

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1 (2) The name in which business is transacted if different from2 subdivision (1).3 (3) The address of the principal office, which may be outside4 Indiana if it is in another state in the continental United States.5 (4) The address of all offices or stores, if any, in Indiana at which6 rental purchase agreements are made.7 (5) If rental purchase agreements are made in a place other than8 an office or retail store in Indiana, a brief description of the9 manner in which they are made.

10 (6) The address of the designated agent upon whom service of11 process may be made in Indiana.12 (7) Other information required by the director of the department.13 SECTION 46. IC 28-1-29-5, AS AMENDED BY P.L.216-2013,14 SECTION 22, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE15 JULY 1, 2018]: Sec. 5. (a) Every person doing business as a debt16 management company shall make application to the department for a17 license to engage in such business. Such application shall be in the18 form prescribed by the director and shall contain such information as19 the director may require.20 (b) The department may not issue a license unless the department21 finds that the financial responsibility, character, and fitness of:22 (1) the applicant and any significant affiliate of the applicant;23 (2) each executive officer, director, or manager of the applicant,24 or any other individual having a similar status or performing a25 similar function for the applicant;26 (3) if known, each person directly or indirectly owning of record27 or owning beneficially at least ten percent (10%) of the28 outstanding shares of any class of equity security of the applicant;29 and30 (4) each of the applicant's:31 (A) employees; or32 (B) agents;33 authorized to initiate transactions involving the trust account34 required under section 9 of this chapter;35 warrant belief that the business will be operated honestly and fairly36 under this chapter. The department is entitled to request evidence of an37 applicant's financial responsibility, character, and fitness.38 (c) An application submitted under this section must indicate39 whether any individuals described in subsection (b)(2), (b)(3), or40 (b)(4):41 (1) are, at the time of the application, under indictment for a42 felony under Indiana law or the laws of any other jurisdiction; or

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1 (2) have been convicted of a felony under Indiana law or the laws2 of any other jurisdiction.3 (d) Unless waived upon written request to and approval by the4 director, an application submitted to the department under this section5 must include copies of the applicant's audited financial statements for6 the applicant's most recently concluded fiscal year and, if available, for7 the applicant's two (2) fiscal years immediately preceding the8 applicant's most recently concluded fiscal year, including a:9 (1) balance sheet;

10 (2) statement of income or loss;11 (3) statement of changes in shareholder equity; and12 (4) statement of changes in financial position.13 A financial statement required to be submitted under this subsection14 must be prepared, by an independent certified public accountant15 authorized to do business in the United States, in accordance with16 AICPA Statements on Standards for Accounting and Review Services17 (SSARS) and in accordance with United States generally accepted18 accounting principles.19 (e) The department may deny an application under this section if the20 director of the department determines that the application was21 submitted for the benefit of, or on behalf of, a person who does not22 qualify for a license.23 (f) Upon written request, an applicant is entitled to a hearing under24 IC 4-21.5 on the question of the qualifications of the applicant for a25 license.26 SECTION 47. IC 28-1-29-8, AS AMENDED BY P.L.159-2017,27 SECTION 34, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE28 JULY 1, 2018]: Sec. 8. (a) An agreement between a licensee and a29 debtor must:30 (1) be in a written form;31 (2) be dated and signed by the licensee and the debtor;32 (3) include the name of the debtor and the address where the33 debtor resides;34 (4) include the name, business address, and telephone number of35 the licensee;36 (5) be delivered to the debtor immediately upon formation of the37 agreement; and38 (6) disclose the following:39 (A) The services to be provided.40 (B) The amount or method of determining the amount of all41 fees and charges, individually itemized, to be paid by the42 debtor.

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1 (C) The schedule of payments to be made by or on behalf of2 the debtor, including the amount of each payment, the date on3 which each payment is due, and an estimate of the date of the4 final payment.5 (D) If a plan provides for regular periodic payments to6 creditors:7 (i) each creditor of the debtor to which payment will be8 made, the amount owed to each creditor, and any9 concessions the licensee reasonably believes each creditor

10 will offer; and11 (ii) the schedule of expected payments to each creditor,12 including the amount of each payment and the date on which13 the payment will be made.14 (E) Each creditor that the licensee believes will not participate15 in the plan and to which the licensee will not direct payment.16 (F) The manner in which the licensee will comply with the17 licensee's obligations under section 9(k) of this chapter.18 (G) That:19 (i) the licensee may terminate the agreement for good cause,20 upon return of unexpended money of the debtor; and21 (ii) the debtor may contact the department with any22 questions or complaints regarding the licensee.23 (H) The address, telephone number, and Internet address or24 web site of the department.25 (I) That the debtor has a right to terminate the agreement at26 any time without penalty (notwithstanding the close-out fee as27 permitted by section 8.3(d) of this chapter) or obligation.28 (J) That the debtor authorizes any bank insured by the Federal29 Deposit Insurance Corporation in which the licensee or the30 licensee's agent has established a trust account to disclose to31 the department any financial records relating to the trust32 account.33 (K) That the licensee shall notify the debtor within five (5)34 days after learning of a creditor's final decision to reject or35 withdraw from a plan under the agreement.36 (b) For purposes of subsection (a)(5), delivery of an electronic37 record occurs when:38 (1) the record is made available in a format in which the debtor39 may retrieve, save, and print the record; and40 (2) the debtor is notified that the record is available.41 (c) A debtor may exercise the debtor's right to terminate the42 agreement at any time without penalty (notwithstanding the close-out

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1 fee as permitted by section 8.3(d) of this chapter) or obligation, as2 described in subsection (a)(6)(I), by giving the licensee written or3 electronic notice, in which event:4 (1) the licensee shall:5 (A) refund all unexpended money that the licensee or the6 licensee's agent has received from or on behalf of the debtor7 for the reduction or satisfaction of the debtor's debt; and8 (B) notify immediately in writing all creditors in the debt9 management plan of the cancellation by the contract debtor;

10 and11 (2) all powers of attorney granted by the debtor to the licensee are12 revoked and ineffective.13 (d) A licensee's notice of a creditor's final decision to reject or14 withdraw from a plan under the agreement, as described in subsection15 (a)(6)(K) must include:16 (1) the identity of the creditor; and17 (2) a statement that the debtor has the right to modify or terminate18 the agreement.19 (e) All creditors included in the plan must be notified of the contract20 debtor's and licensee's relationship.21 (f) A licensee shall give to the contract debtor a dated receipt for22 each payment, at the time of the payment, unless the payment is made23 by check, money order, or automated clearinghouse withdrawal as24 authorized by the contract debtor.25 (g) A licensee may not enter into an agreement with a debtor unless26 the licensee does the following:27 (1) Conducts a thorough, written budget analysis of the debtor.28 (2) Determines, based on the analysis of the information provided29 by the debtor or otherwise available to the licensee, that:30 (A) a debt management plan is a suitable solution for the31 debtor; and32 (B) the debtor can reasonably meet the payments required33 under a proposed debt management plan.34 (3) If:35 (A) the licensee has made a determination described in36 subdivision (2)(A); and37 (B) the debtor's current monthly expense and debt payments38 exceed the debtor's net income;39 establishes a written plan that supplements the debt management40 plan and specifies the manner by which it will be possible for the41 debtor to meet the payment obligations under a proposed debt42 management plan.

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1 (h) A licensee may not enter into an agreement with a debtor for a2 period longer than sixty (60) months.3 (i) A licensee may provide services under this chapter in the same4 place of business in which another business is operating, or from which5 other products or services are sold, if the director issues a written6 determination that:7 (1) the operation of the other business; or8 (2) the sale of other products and services;9 from the location in question is not contrary to the best interests of

10 debtors.11 (j) A licensee without a physical location in Indiana may:12 (1) solicit sales of; and13 (2) sell;14 additional products and services to Indiana residents if the director15 issues a written determination that the proposed solicitation or sale is16 not contrary to the best interests of debtors. carry on other business17 at a location where the licensee engages in debt management18 services unless the licensee carries on other business for the19 purpose of evasion or violation of this chapter.20 (k) (j) A licensee shall maintain a toll free communication system,21 staffed at a level that reasonably permits a contract debtor to speak to22 a counselor, debt specialist, or customer service representative, as23 appropriate, during ordinary business hours.24 (l) (k) A debt management company shall act in good faith in all25 matters under this chapter.26 SECTION 48. IC 28-1-29-8.3, AS AMENDED BY P.L.186-2015,27 SECTION 34, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE28 JULY 1, 2018]: Sec. 8.3. (a) Except as otherwise permitted by this29 section, a licensee may not:30 (1) impose, directly or indirectly, a fee or other charge on a31 debtor; or32 (2) receive money from or on behalf of a debtor for debt33 management services.34 (b) A licensee may not impose charges or receive payment for debt35 management services until:36 (1) the licensee and the debtor have agreed upon a plan and have37 signed an agreement that complies with sections 8 and 9.5 of this38 chapter; and39 (2) at least one (1) payment has been made to a creditor under the40 plan.41 All creditors must be notified of the debtor's and licensee's relationship.42 (c) If a debtor assents to a plan, the licensee may charge the

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1 following:2 (1) A set up fee of not more than fifty dollars ($50) for3 consultation, obtaining a credit report, and setting up an account.4 Acceptance of a plan payment by a creditor constitutes agreement5 by the creditor to the plan. A set up fee under this subdivision6 may not be collected until the debtor, or the licensee on behalf of7 the debtor, has made at least one (1) payment to a creditor under8 the plan.9 (2) Subject to subsection (d), a monthly service fee of the lesser

10 of the following:11 (A) Not more than fifteen percent (15%) of the amount the12 licensee receives from the contract debtor for payment to the13 contract debtor's creditors during the applicable month.14 However, if the amount calculated under this clause is less15 than five dollars ($5) for a particular month, the licensee may16 charge a monthly service fee of five dollars ($5) for that17 month.18 (B) Seventy-five dollars ($75).19 The monthly service fee under this subdivision may be charged20 for any one (1) month or part of a month. The amount of a set up21 fee under subdivision (1) may not be included in the calculation22 of the monthly service fee.23 (d) Upon cancellation by a contract debtor or termination of24 payments by a contract debtor, a licensee may withhold for the25 licensee's own benefit not more than one hundred dollars ($100), which26 may be accrued as a close-out fee.27 (e) A licensee may not charge a contract debtor more than one (1)28 set up fee or one (1) close-out fee unless the contract debtor leaves the29 services of the licensee for more than six (6) months.30 (f) With respect to any additional charge not specifically provided31 for in this section, the licensee must submit a written explanation of the32 charge to the department indicating how the charge would be assessed33 and the value or benefit conferred on the contract debtor in connection34 with the charge. Supporting documents may be required by the35 department. The department shall determine whether the charge:36 (1) would be imposed in relation to some benefit conferred on the37 consumer; and38 (2) is reasonable in relation to the benefit conferred.39 An additional charge is not permitted unless approved by the40 department.41 (g) For purposes of this chapter, the terms of an agreement42 commence on the date on which the agreement is made.

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1 (h) A licensee may assess a charge of not more than twenty-five2 dollars ($25) for each return returned payment by a bank or other3 depository institution of a dishonored check, electronic funds4 transfer, negotiable order of withdrawal, or share draft issued by the5 contract debtor.6 (i) Any fee charged by the licensee to the debtor under this section7 for services rendered by the licensee, other than the fees described8 under subsection (e), is not considered a debt owed by the debtor to the9 licensee.

10 SECTION 49. IC 28-1-29-9.5, AS AMENDED BY P.L.216-2013,11 SECTION 31, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE12 JULY 1, 2018]: Sec. 9.5. (a) A licensee may not, directly or indirectly,13 do any of the following:14 (1) Misappropriate or misapply money held in trust.15 (2) Exercise or attempt to exercise a power of attorney after a16 contract debtor has terminated an agreement.17 (3) Initiate a transfer to or from a contract debtor's account at a18 bank or with another person unless the transfer is:19 (A) a return of money to the contract debtor; or20 (B) before the termination of an agreement, properly21 authorized by the agreement and this chapter, and for:22 (i) payment to one (1) or more creditors under an agreement;23 or24 (ii) payment of a fee.25 (4) Offer a gift or bonus, premium, reward, or other compensation26 to a debtor for executing an agreement.27 (5) Offer, pay, or give:28 (A) a gift or bonus;29 (B) a premium;30 (C) a reward; or31 (D) other compensation;32 to a lead generator or another person for referring a prospective33 customer if the person making the referral has a financial interest34 in the outcome of debt management services provided to the35 customer.36 (6) Receive a bonus, a commission, or other benefit for referring37 a debtor to a person.38 (7) Structure a plan in a manner that would result in a negative39 amortization of any of a debtor's debts, unless a creditor that is40 owed a negatively amortizing debt agrees to refund or waive the41 finance charge upon payment of the principal amount of the debt.42 (8) Compensate the licensee's employees on the basis of a formula

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1 that incorporates the number of debtors the employee induces to2 enter into agreements. It is not a violation of this subsection for a3 licensee to use the number of successfully completed debt4 management plans as a criterion for compensation for the5 licensee's employees.6 (9) Settle a debt or lead a contract debtor to believe that a7 payment to a creditor is in settlement of a debt to the creditor8 unless, at the time of settlement, the contract debtor receives a9 certification by the creditor that the payment is in full settlement

10 of the debt.11 (10) Make a representation that:12 (A) the licensee will furnish money to pay bills or prevent13 attachments;14 (B) payment of a certain amount will permit satisfaction of a15 certain amount or range of indebtedness; or16 (C) participation in a plan will or may prevent litigation,17 garnishment, attachment, repossession, foreclosure, eviction,18 or loss of employment.19 (11) Misrepresent that the licensee is authorized or competent to20 furnish legal advice or perform legal services.21 (12) Represent in the licensee's agreements, disclosures required22 by this chapter, advertisements, or Internet web site that the23 licensee is:24 (A) a nonprofit entity unless the licensee is organized and25 properly operating as a nonprofit entity under the law of the26 state in which the entity was formed; or27 (B) a tax exempt entity unless the entity has received28 certification of tax exempt status from the Internal Revenue29 Service and is properly operating as a nonprofit entity under30 the law of the state in which the entity was formed.31 (13) Take a confession of judgment or power of attorney to32 confess judgment against a contract debtor.33 (14) Employ an unfair, unconscionable, or deceptive act or34 practice, including the knowing omission of any material35 information.36 (b) If a licensee furnishes debt management services to a debtor, the37 licensee may not, directly or indirectly, do any of the following:38 (1) Purchase a debt or obligation of the debtor.39 (2) Receive from or on behalf of the debtor:40 (A) a promissory note or other negotiable instrument other41 than a check or a demand draft; or42 (B) a postdated check or demand draft.

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1 (3) Lend money or provide credit to the debtor.2 (4) Obtain a mortgage or other security interest from any person3 in connection with the services provided to the debtor.4 (5) Except as permitted by federal law, disclose the identity or5 identifying information of the debtor or the identity of the debtor's6 creditors, except:7 (A) to the department, upon proper demand;8 (B) to a creditor of the debtor, to the extent necessary to secure9 the cooperation of the creditor in a plan; or

10 (C) to the extent necessary to administer the plan.11 (6) Charge the debtor for or provide credit or other insurance,12 coupons for goods or services, membership in a club, access to13 computers or the Internet, or any other matter not directly related14 to debt management services or educational services concerning15 personal finance. except as permitted under section 8(j) of this16 chapter.17 (7) Furnish legal advice or perform legal services unless the18 person furnishing the advice or performing the services is19 licensed to practice law.20 (c) This chapter does not authorize any person to engage in the21 practice of law.22 (d) A licensee may not receive a gift, bonus, premium, reward, or23 other compensation, directly or indirectly, for advising, arranging, or24 assisting a debtor in connection with obtaining an extension of credit25 or other service from a lender or service provider.26 SECTION 50. IC 28-2-13-19 IS AMENDED TO READ AS27 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 19. (a) Subject to28 subsections (b) and (c), a state bank is entitled to establish one (1) or29 more branches de novo and one (1) or more branches by acquisition in30 any location or locations within Indiana.31 (b) A state bank is entitled to establish a branch de novo under this32 section with the written approval of the department. The location of any33 branch established under this section may be changed at any time to a34 location within Indiana when the change of location is authorized by35 the board of directors of the state bank and approved by the36 department. A state bank desiring to establish one (1) or more branches37 de novo under this section must file a written application in the form38 prescribed by the director. The department may approve or disapprove39 the application. Before the department approves the application, the40 state bank must demonstrate to the satisfaction of the department that41 the applicant state bank will have adequate capital, sound management,42 and adequate future earnings prospects after the establishment of the

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1 branch.2 (c) The investigation of the department relative to any application3 as required by this subsection section shall be conducted without a4 public hearing.5 (d) A branch by acquisition may be established under this section6 only if done in compliance with applicable provisions of IC 28-1-7,7 IC 28-1-8, or IC 28-3-2.8 (e) The department may establish criteria to exempt a state9 bank from the approval requirements described in this section.

10 SECTION 51. IC 28-2-18-19 IS AMENDED TO READ AS11 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 19. (a) With the prior12 written approval of the department, any Indiana state bank may13 establish and maintain a de novo branch or acquire a branch in a state14 other than Indiana.15 (b) An Indiana state bank that desires to:16 (1) establish one (1) or more de novo branches; or17 (2) acquire one (1) or more branches under this section;18 must file a written application with the department. The application19 must be in the form and contain the information prescribed by the20 director.21 (c) The department may approve or disapprove an application filed22 under this section. Before the department approves an application, the23 bank must demonstrate to the satisfaction of the department that:24 (1) the applicant state bank will have adequate capital, sound25 management, and adequate future earnings prospects after the26 establishment of the branch; and27 (2) the establishment of the proposed branch will not violate the28 laws of the host state.29 (d) The investigation of the department relative to any application30 as required by this subsection section shall be conducted without a31 public hearing.32 (e) The location of any branch in another state established or33 acquired under this section may be changed at any time to a location34 within the state where the branch is located if the change of location:35 (1) is authorized by the board of directors of the Indiana state36 bank; and37 (2) approved by the department.38 (f) A savings association or an industrial loan and investment39 company organized or reorganized under the laws of Indiana may40 establish and maintain a de novo branch or acquire a branch in a state41 other than Indiana to the same extent and under the same restrictions,42 conditions, and requirements as an Indiana state bank.

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1 (g) The department may establish criteria to exempt an Indiana2 state bank from the approval requirements described in this3 section.4 SECTION 52. IC 28-6.1-12-3 IS AMENDED TO READ AS5 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 3. (a) Subject to this6 section, a savings bank is entitled to establish one (1) or more branches7 de novo and one (1) or more branches by acquisition in any location or8 locations within Indiana.9 (b) A branch de novo may not be established under this section

10 without the written approval of the department. A savings bank11 desiring to establish one (1) or more branches de novo under this12 section must file a written application to do so in the form, and13 containing the information, required by the director.14 (c) The department may approve or disapprove the application.15 Before the department approves the application, the department shall16 determine to its satisfaction that the applicant savings bank will have17 adequate capital, sound management, and adequate future earnings18 prospects after the establishment of the branch. The investigation of the19 department relative to any application as required by this section shall20 be conducted without a public hearing.21 (d) The location of a branch established under this section may be22 changed at any time to a location within Indiana when the change of23 location is authorized by the board of the savings bank and approved24 by the department.25 (e) Except as provided in IC 28-6.1-6-23, a savings bank organized,26 reorganized, or operating under IC 28-6 (before its repeal) before27 January 1, 1993, may not establish a branch by acquisition.28 (f) A savings bank created as a result of a conversion under29 IC 28-1-30 may retain all branches in existence on the date of30 conversion.31 (g) The department may establish criteria to exempt a savings32 bank from the approval requirements described in this section.33 SECTION 53. IC 28-7-1-9, AS AMENDED BY P.L.159-2017,34 SECTION 35, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE35 JULY 1, 2018]: Sec. 9. (a) A credit union has the following powers:36 (1) To issue shares of its capital stock to its members. No37 commission or compensation shall be paid for securing members38 or for the sale of shares.39 (2) To make loans to officers, directors, or committee members40 under sections 17.1 and 17.2 of this chapter.41 (3) To invest in any of the following:42 (A) Bonds, notes, or certificates that are the direct or indirect

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1 obligations of the United States, or of the state, or the direct2 obligations of a county, township, city, town, or other taxing3 district or municipality or instrumentality of Indiana and that4 are not in default.5 (B) Bonds or debentures issued by the Federal Home Loan6 Bank Act (12 U.S.C. 1421 through 1449) or the Home Owners'7 Loan Act (12 U.S.C. 1461 through 1468).8 (C) Obligations of national mortgage associations issued under9 the authority of the National Housing Act.

10 (D) Mortgages on real estate situated in Indiana which are11 fully insured under Title 2 of the National Housing Act (1212 U.S.C. 1707 through 1715z).13 (E) Obligations issued by farm credit banks and banks for14 cooperatives under the Farm Credit Act of 1971 (12 U.S.C.15 2001 through 2279aa-14).16 (F) Savings and loan associations, other credit unions that are17 insured under section 31.5 of this chapter, and certificates of18 indebtedness or investment of an industrial loan and19 investment company if the association or company is federally20 insured. Not more than twenty percent (20%) of the assets of21 a credit union may be invested in the shares or certificates of22 an association or company, nor more than forty percent (40%)23 in all such associations and companies.24 (G) Corporate credit unions.25 (H) Federal funds or similar types of daily funds transactions26 with other financial institutions.27 (I) Shares or certificates of an open-end management28 investment company registered with the Securities and29 Exchange Commission under the Investment Company Act of30 1940 (15 U.S.C. 80a-1 through 15 U.S.C. 80a-3 and 15 U.S.C.31 80a-4 through 15 U.S.C. 80a-64), if all of the following32 conditions are met:33 (i) The fund's assets consist of and are limited to securities34 in which a credit union may invest directly.35 (ii) The credit union has an equitable and undivided interest36 in the underlying assets of the fund.37 (iii) The credit union is not liable for acts or obligations of38 the fund.39 (iv) The credit union's investment in any one (1) fund does40 not exceed fifteen percent (15%) of the amount of the credit41 union's net worth.42 (J) For a credit union that is well capitalized (as defined in Part

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1 702 of the Rules and Regulations of the National Credit Union2 Administration, 12 CFR 702), investment securities, as may be3 defined by a statute or a policy or rule of the department and4 subject to the following:5 (i) The department may prescribe, by policy or rule,6 limitations or restrictions on a credit union's investment in7 investment securities.8 (ii) The total aggregate amount of investment securities9 purchased or held by a credit union may never exceed at any

10 given time ten percent (10%) of the capital and surplus of11 the credit union. However, the limitations imposed by this12 item do not apply to investments in the direct or indirect13 obligations of the United States or in the direct obligations14 of a United States territory or insular possession, or in the15 direct obligations of the state or any municipal corporation16 or taxing district in Indiana.17 (iii) A credit union may not purchase for its own account18 any bond, note, or other evidence of indebtedness that is19 commonly designated as a security that is speculative in20 character or that has speculative characteristics. For the21 purposes of this item, a security is speculative or has22 speculative characteristics if at the time of purchase the23 security is in default, is rated below the first four (4) rating24 classes by a generally recognized security rating service, or25 is otherwise considered speculative by the director.26 (iv) A credit union may purchase for its own account a27 security that is not rated by a generally recognized security28 rating service if the credit union at the time of purchase29 obtains financial information that is adequate to document30 the investment quality of the security and if the security is31 not otherwise considered speculative by the director.32 (v) A credit union that purchases a security for its own33 account shall maintain sufficient records of the security to34 allow the security to be properly identified by the35 department for examination purposes.36 (vi) Except as otherwise authorized by this title, a credit37 union may not acquire for its own account, whether by38 purchase or otherwise, any share of stock of a corporation39 that is not a subsidiary of that credit union unless the40 acquisition is considered expedient to prevent loss from a41 debt previously contracted in good faith. Any shares of stock42 or other ownership interest in a corporation or another entity

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1 thus acquired by a credit union and that would not have been2 eligible for acquisition shall be sold and disposed of within3 six (6) months from the date of acquisition unless the4 director grants an extension of time for the sale and5 disposition.6 (vii) Subject to items (i) through (iv), a credit union may7 purchase yankee dollar deposits, eurodollar deposits,8 banker's acceptances, deposit notes, bank notes with original9 weighted average maturities of less than five (5) years, and

10 investments in obligations of, or issued by, any state or11 political subdivision (including any agency, corporation, or12 instrumentality of a state or political subdivision).13 (K) Collateralized obligations that are eligible for purchase14 and sale by federal credit unions. However, a credit union may15 purchase for its own account and sell the obligations only to16 the extent that a federal credit union can purchase and sell17 those obligations.18 (4) With the prior approval of the department, and subject to the19 limitations of this subsection, a credit union may organize, invest20 in, or loan money to a credit union service organization (as21 defined in Part 712 of the regulations of the National Credit22 Union Administration, 12 CFR 712). A credit union may not loan23 or invest in a credit union service organization if the aggregate24 amount of all such loans or investments in a particular credit25 union service organization is greater than ten percent (10%) of the26 capital, surplus, and unimpaired shares of the credit union without27 the prior written approval of the department. A credit union may28 organize, invest in, or loan money to a credit union service29 organization described in this subdivision only if the following30 requirements are met:31 (A) The credit union service organization is adequately32 capitalized or has a reasonable plan for adequate capitalization33 if the credit union service organization is to be formed or is34 newly formed.35 (B) The credit union service organization is structured and36 operated as a separate legal entity from the credit union.37 (C) The credit union obtains a written legal opinion that the38 credit union service organization is structured and operated in39 a manner that limits the credit union's potential liability for the40 debts and liabilities of the credit union service organization to41 not more than the loss of money invested in or loaned to the42 credit union service organization by the credit union.

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1 (D) The credit union service organization agrees in writing to2 prepare financial statements and provide the financial3 statements to the credit union at least quarterly, and to the4 department upon request.5 (E) The credit union service organization agrees in writing to6 obtain an audit of the credit union service organization from a7 certified public accountant at least annually and provide a8 copy of each audit report to the credit union, and to the9 department upon request. A wholly owned credit union service

10 organization is not required to obtain a separate annual audit11 if the credit union service organization is included in the12 annual consolidated audit of the credit union that is the credit13 union service organization's parent.14 (F) The credit union service organization operates in15 compliance with all applicable federal and state laws.16 (5) To deposit its funds into:17 (A) depository institutions that are federally insured; or18 (B) state chartered credit unions that are privately insured by19 an insurer approved by the department.20 (6) To purchase, hold, own, or convey real estate as may be21 conveyed to the credit union in satisfaction of debts previously22 contracted or in exchange for real estate conveyed to the credit23 union.24 (7) To own, hold, or convey real estate as may be purchased by25 the credit union upon judgment in its favor or decrees of26 foreclosure upon mortgages.27 (8) To issue shares of stock and upon the terms, conditions,28 limitations, and restrictions and with the relative rights as may be29 stated in the bylaws of the credit union, but no stock may have30 preference or priority over the other to share in the assets of the31 credit union upon liquidation or dissolution or for the payment of32 dividends except as to the amount of the dividends and the time33 for the payment of the dividends as provided in the bylaws.34 (9) To charge the member's share account for the actual cost of a35 necessary locator service when the member has failed to keep the36 credit union informed about the member's current address. The37 charge shall be made only for amounts paid to a person or concern38 normally engaged in providing such service, and shall be made39 against the account or accounts of any one (1) member not more40 than once in any twelve (12) month period.41 (10) To transfer to an accounts payable account, a dormant42 account, or a special account share accounts which have been

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1 inactive, except for dividend credits, for a period of at least two2 (2) years. The credit union shall not consider the payment of3 dividends on the transferred account.4 (11) To invest in fixed assets with the funds of the credit union.5 An investment in fixed assets in excess of five percent (5%) of its6 assets is subject to the approval of the department. A credit union7 may rent excess space at the credit union's main office or branch8 as a source of income.9 (12) To establish branch offices, upon:

10 (A) approval of the department; or11 (B) meeting the department's established criteria to be12 exempt from the department's approval;13 provided that all books of account shall be maintained at the14 principal office.15 (13) To pay an interest refund on loans proportionate to the16 interest paid during the dividend period by borrowers who are17 members at the end of the dividend period.18 (14) To purchase life savings and loan protection insurance for19 the benefit of the credit union and its members, if:20 (A) the coverage is placed with an insurance company licensed21 to do business in Indiana; and22 (B) no officer, director, or employee of the credit union23 personally benefits, directly or indirectly, from the sale or24 purchase of the coverage.25 (15) To sell and cash negotiable checks, travelers checks, and26 money orders for members.27 (16) To purchase members' notes from any liquidating credit28 union, with written approval from the department, at prices agreed29 upon by the boards of directors of both the liquidating and the30 purchasing credit unions. However, the aggregate of the unpaid31 balances of all notes of liquidating credit unions purchased by any32 one (1) credit union shall not exceed ten percent (10%) of the33 purchasing credit union's capital and surplus unless special34 written authorization has been granted by the department.35 (17) To exercise such incidental powers necessary or requisite to36 enable it to carry on effectively the business for which it is37 incorporated.38 (18) To act as a custodian or trustee of any trust created or39 organized in the United States and forming part of a tax40 advantaged savings plan which qualifies or qualified for specific41 tax treatment under Section 223, 401(d), 408, 408A, or 530 of the42 Internal Revenue Code, if the funds of the trust are invested only

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1 in share accounts or insured certificates of the credit union.2 (19) To issue shares or insured certificates to a trustee or3 custodian of a pension plan, profit sharing plan, or stock bonus4 plan which qualifies for specific tax treatment under Sections5 401(d) or 408(a) of the Internal Revenue Code.6 (20) To exercise any rights and privileges that are:7 (A) granted to federal credit unions; but8 (B) not authorized for credit unions under the Indiana Code9 (except for this section) or any rule adopted under the Indiana

10 Code;11 if the credit union complies with section 9.2 of this chapter.12 (21) To sell, pledge, or discount any of its assets. However, a13 credit union may not pledge any of its assets as security for the14 safekeeping and prompt payment of any money deposited, except15 that a credit union may, for the safekeeping and prompt payment16 of money deposited, give security as authorized by federal law.17 (22) To purchase assets of a corporation (as defined in18 IC 28-1-8-0.5) and to assume the liabilities of the corporation, or19 to sell, lease, exchange, or otherwise dispose of all or20 substantially all of the credit union's property and assets to a21 corporation, if:22 (A) the credit union complies with IC 28-1-8; and23 (B) the transaction is authorized in accordance with24 IC 28-1-8-4.25 (23) To act as a fiscal agent of the United States and to receive26 deposits from nonmember units of the federal, state, or county27 governments, from political subdivisions, and from other credit28 unions upon which the credit union may pay varying interest rates29 at varying maturities subject to terms, rates, and conditions that30 are established by the board of directors. However, the total31 amount of public funds received from units of state and county32 governments and political subdivisions that a credit union may33 have on deposit may not exceed twenty percent (20%) of the total34 assets of that credit union, excluding those public funds.35 (24) To join the National Credit Union Administration Central36 Liquidity Facility.37 (25) To participate in community investment initiatives under the38 administration of organizations:39 (A) exempt from taxation under Section 501(c)(3) of the40 Internal Revenue Code; and41 (B) located or conducting activities in communities in which42 the credit union does business.

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1 Participation may be in the form of either charitable contributions2 or participation loans. In either case, disbursement of funds3 through the administering organization is not required to be4 limited to members of the credit union. Total contributions or5 participation loans may not exceed one-tenth of one percent6 (0.1%) of total assets of the credit union. A recipient of a7 contribution or loan is not considered qualified for credit union8 membership. A contribution or participation loan made under this9 subdivision must be approved by the board of directors.

10 (26) To establish and operate an automated teller machine11 (ATM):12 (A) at any location within Indiana; or13 (B) as permitted by the laws of the state in which the14 automated teller machine is to be located.15 (27) To demand and receive, for the faithful performance and16 discharge of services performed under the powers vested in the17 credit union by this article:18 (A) reasonable compensation, or compensation as fixed by19 agreement of the parties;20 (B) all advances necessarily paid out and expended in the21 discharge and performance of its duties; and22 (C) unless otherwise agreed upon, interest at the legal rate on23 the advances referred to in clause (B).24 (28) Subject to any restrictions the department may impose, to25 become the owner or lessor of personal property acquired upon26 the request and for the use of a member and to incur additional27 obligations as may be incident to becoming an owner or lessor of28 such property.29 (b) A credit union shall maintain files containing credit and other30 information adequate to demonstrate evidence of prudent business31 judgment in exercising the investment powers granted under this32 chapter or by rule, order, or declaratory ruling of the department.33 (c) Subject to any limitations or restrictions that the department or34 a federal regulator may impose by regulation, rule, policy, or guidance,35 a credit union may purchase and hold life insurance as follows:36 (1) Life insurance purchased or held in connection with employee37 compensation or benefit plans approved by the credit union's38 board of directors.39 (2) Life insurance purchased or held to recover the cost of40 providing preretirement or postretirement employee benefits41 approved by the credit union's board of directors.42 (3) Life insurance on the lives of borrowers.

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1 (4) Life insurance held as security for a loan.2 (5) Life insurance that a federal credit union may purchase or3 hold under 12 CFR 701.19(c).4 SECTION 54. IC 28-7-1-16, AS AMENDED BY P.L.35-2010,5 SECTION 155, IS AMENDED TO READ AS FOLLOWS6 [EFFECTIVE JULY 1, 2018]: Sec. 16. (a) Not more than thirty (30)7 business days after the conclusion of the annual meeting, the board of8 directors shall elect from its own members:9 (1) a chairperson;

10 (2) a vice chairperson or vice chairpersons;11 (3) a secretary;12 (4) a treasurer; and13 (5) other officers determined necessary by the board of directors.14 (b) The board may appoint officers of the credit union.15 (c) The office of secretary and treasurer may be held by the same16 person. The board may appoint:17 (1) an assistant secretary;18 (2) an assistant treasurer; or19 (3) both an assistant secretary and an assistant treasurer.20 (d) The board of directors shall have the general management of the21 affairs, funds, and records of the credit union and shall meet at least22 monthly, in person or by any means of communication by which all23 directors participating may simultaneously hear each other during the24 meeting. A director participating in a meeting in accordance with this25 subsection is considered to be present in person at the meeting.26 Minutes of every meeting of the board of directors or executive27 committee shall be kept and maintained.28 (e) The board may appoint an executive committee to exercise29 authority delegated to it by the board. The board retains ultimate30 responsibility for authority delegated to an executive committee.31 (f) It is the duty of the directors to do the following:32 (1) To determine:33 (A) the maximum number of shares which may be held by a34 member; and35 (B) the maximum amount which may be loaned to a member.36 (2) To amend the bylaws, provided that the qualifications for37 membership in the credit union are principally defined in the38 articles of incorporation.39 (3) To fill vacancies on the board and the credit committee until40 the next election.41 (4) To set the compensation of members of the board, credit42 committee, or supervisory committee.

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1 (5) To establish and annually review written lending and2 investment policies and other policies necessary for the prudent3 operation of the credit union.4 (6) To approve an annual operating budget for the credit union.5 (g) The board may appoint loan officers. Each loan officer shall6 furnish to the credit committee or to the board a record of each loan7 approved or denied at its next meeting. A loan officer, including the8 treasurer or assistant treasurer, shall not have authority to disburse9 funds of the credit union for any loan which has been approved by the

10 loan officer.11 (h) A credit union board is responsible for the performance of all of12 the duties listed in this subsection. The board may delegate the13 performance of the duties to the chief executive officer, who may14 further delegate one (1) or more of the following duties:15 (1) Approving, disapproving, or otherwise acting on applications16 for membership.17 (2) Determining the interest rates on loans and on deposits.18 (3) Hiring employees other than the chief executive officer and19 fixing the employees' compensation.20 (4) Making and selling investments according to investment21 policies adopted by the board.22 (5) Designating one (1) or more depositories for funds.23 (6) Establishing procedures to implement policies of the credit24 union board.25 (7) Establishing internal controls as necessary.26 (8) Determining the amount of a dividend after providing for any27 required reserves and declaring the dividend.28 (i) The board of directors by a majority vote may suspend or remove29 any officer from the officer's duties as an officer.30 (j) Unless specifically prohibited by the bylaws, if this chapter31 requires or allows a credit union board to take an action at a meeting,32 the board may take that action without a meeting if a consent in writing33 setting forth the action taken is signed by all of the directors entitled to34 vote on the matter. A written consent under this subsection must35 contain one (1) or more written approvals, each of which sets forth the36 action taken and bears the signature of one (1) or more directors. The37 directors shall deliver the directors' signed approvals to the secretary,38 and the secretary shall file the approvals in the corporate records of the39 credit union. An action taken by written consent under this subsection40 is effective on the date that all the directors have approved the consent41 unless the consent specifies a different effective date. A consent signed42 by all the directors has the same effect as a unanimous vote. The credit

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1 union may represent that the action was approved by a unanimous vote2 in any document filed with the department under this act.3 SECTION 55. IC 28-7-1-17, AS AMENDED BY P.L.159-2017,4 SECTION 36, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE5 JULY 1, 2018]: Sec. 17. (a) Every loan application shall be submitted6 on a form approved by the board of directors. credit union. Loans may7 be dispersed upon written approval by a majority of the credit8 committee or a loan officer. If the credit committee or loan officer fails9 to approve an application for a loan, the applicant may appeal to the

10 board of directors, if such appeal is authorized by the bylaws.11 (b) Loans to members may be made only under the following terms12 and conditions:13 (1) All loans shall be evidenced by notes signed by the borrowing14 member.15 (2) Except as otherwise provided in this section, the terms of any16 loan to a member with a maturity of more than six (6) months17 shall provide for principal and interest payments that will18 amortize the obligation in full within the terms of the loan19 contract. If the income of the borrowing member is seasonal, the20 terms of the loan contract may provide for seasonal amortization.21 (3) Loans may be made upon the security of improved or22 unimproved real estate. Except as otherwise specified in this23 section, such loans must be secured by a first lien upon real estate24 prior to all other liens, except for taxes and assessments not25 delinquent, and may be made with repayment terms other than as26 provided in subdivision (2). The credit union loan folder for all27 real estate mortgage loans shall include the following:28 (A) The loan application.29 (B) The mortgage instrument.30 (C) The note.31 (D) The disclosure statement.32 (E) The documentation of property insurance.33 (F) For the real estate for which the loan is made, a written34 appraisal, which must be performed by a state licensed or35 certified appraiser designated by the board of directors if the36 amount of the loan is at least two hundred fifty thousand37 dollars ($250,000).38 (4) Loans made upon security of real estate are subject to the39 following restrictions:40 (A) Real estate loans in which no principal amortization is41 required shall provide for the payment of interest at least42 annually and shall mature within five (5) years of the date of

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1 the loan unless extended and shall not exceed fifty percent2 (50%) of the fair cash value of the real estate used as security.3 (B) Real estate loans on improved real estate, except for4 variable rate mortgage loans and rollover mortgage loans5 provided for in subdivision (5), shall require substantially6 equal payments at successive intervals of not more than one7 (1) year, shall mature within thirty (30) years, and shall not8 exceed one hundred percent (100%) of the fair cash value of9 the real estate used as security.

10 (C) Loans primarily secured by a mortgage which constitutes11 a second lien on improved real estate may be made only if the12 aggregate amount of all loans on the real estate does not13 exceed one hundred percent (100%) of the fair cash value of14 the real estate after such loan is made. Repayment terms shall15 be in accordance with subdivision (2).16 (D) Real estate loans may be made for the construction of17 improvements to real property. Funds borrowed may be18 advanced as work on the improvements progresses.19 Repayment terms must comply with subdivision (2).20 (5) Subject to the limitations of subdivision (3), variable rate21 mortgage loans and rollover mortgage loans may be made under22 the same limitations and rights provided state chartered savings23 associations under IC 28-1-21.5 (before its repeal) or IC 28-15 or24 federal credit unions.25 (6) As used in this subdivision, "originating lender" means the26 participating lender with which the member contracts. A credit27 union may participate with other state and federal depository28 financial institutions (as defined in IC 28-1-1-6) or credit union29 service organizations in making loans to credit union members30 and may sell a participating interest in any of its loans under31 written participation loan policies established by the board of32 directors. However, the credit union may not sell more than ninety33 percent (90%) of the principal of participating loans outstanding34 at the time of sale. A participating credit union that is not the35 originating lender may participate only in loans made to the credit36 union's own members or to members of another participating state37 or federal credit union. A master participation agreement must be38 properly executed. The agreement must include provisions for39 identifying, either through documents incorporated by reference40 or directly in the agreement, the participation loan or loans before41 the sale of the loans.42 (7) Notwithstanding As an alternative to making any loan

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1 authorized by and under the conditions set forth in2 subdivisions (1) through (6), a credit union may make any of the3 following:4 (A) Any loan that may be made by a federal credit union.5 However, IC 24-4.5 applies to any loan that is:6 (i) made under this clause; and7 (ii) within the scope of IC 24-4.5.8 Any provision of federal law that is in conflict with IC 24-4.59 does not apply to a loan made under this clause.

10 (B) Subject to subdivision (3), any alternative mortgage loan11 (as defined in IC 28-15-11-2) that may be made by a savings12 association (as defined in IC 28-15-1-11) under IC 28-15-11.13 A loan made under this clause by a credit union is subject to14 the same terms, conditions, exceptions, and limitations that15 apply to an alternative mortgage loan made by a savings16 association under IC 28-15-11.17 (8) A credit union may make a loan under either:18 (A) subdivisions (2) through (6); or19 (B) subdivision (7);20 but not both. A credit union shall make an initial determination as21 to whether to make a loan under subdivisions (2) through (6) or22 under subdivision (7). If the credit union determines that a loan or23 category of loans is to be made under subdivision (7), the written24 loan policies of the credit union must include that determination.25 A credit union may not combine the terms and conditions that26 apply to a loan made under subdivisions (2) through (6) with the27 terms and conditions that apply to a loan made under subdivision28 (7) to make a loan not expressly described and authorized either29 under subdivisions (2) through (6) or under subdivision (7).30 (c) Nothing in this section prevents any credit union from taking an31 indemnifying or second mortgage on real estate as additional security.32 SECTION 56. IC 28-7-1-24, AS AMENDED BY P.L.186-2015,33 SECTION 38, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE34 JULY 1, 2018]: Sec. 24. (a) All entrance charges shall, after payment35 of the organization expenses, be known as reserve income, and shall be36 added to the regular reserve of the credit union. At the close of the37 dividend period, there shall be set apart to the regular reserve ten38 percent (10%) of gross income until the regular reserve shall equal39 seven and one-half percent (7 1/2%) of the total of outstanding loans,40 then five percent (5%) of gross income until the regular reserve shall41 equal ten percent (10%) of the total of outstanding loans. Whenever the42 regular reserve falls below ten percent (10%) or seven and one-half

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1 percent (7 1/2%) of the total of outstanding loans, it shall be2 replenished by regular contributions to maintain the reserve goals of3 seven and one-half percent (7 1/2%) or ten percent (10%). The regular4 reserve shall be held to meet contingencies and shall not be distributed5 to the members except upon dissolution of the credit union.6 (b) A credit union may have an undivided profits account. The7 undivided profits account may be transferred to the regular reserve.8 (c) The department may, by rule, revise the formula prescribed by9 this section. A revised formula must be prudent and must reasonably

10 be expected to protect the credit unions.11 (d) Financial statements of credit unions must provide for full and12 fair disclosure of all assets, liabilities, and members' equity, including13 such allowance for loan loss accounts necessary to present fairly the14 financial position, and all income and expenses necessary to present15 fairly the results of operation for the period concerned.16 (e) The maintenance of an allowance for loan losses and investment17 or other losses does not exempt a credit union from the requirement set18 forth in subsection (a). or regulation CU-2. The totals of the regular19 reserve, the allowance for loan losses account, and the allowance for20 investment losses shall be combined for determining the percentage of21 gross income to be transferred to the regular reserve.22 (f) Loan losses of a credit union must be charged against the23 allowance for loan loss. Adjustments to the allowance for loan losses24 shall be made before the distribution of any dividend so that the25 allowance for loan loss represents the value of loans and anticipated26 losses resulting from:27 (1) uncollectible loans, notes, and contracts receivable, including28 any uncollectible accrued interest receivable thereon;29 (2) assets acquired in liquidation of loans; and30 (3) loans purchased from other credit unions.31 (g) Adjustments to the allowance for loan losses must be recorded32 in the expense account "provision for loan losses".33 SECTION 57. IC 28-7-1-28 IS AMENDED TO READ AS34 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 28. A credit union may:35 (1) with department approval; or36 (2) by meeting the department's established criteria to be37 exempt from the department's approval;38 change its place of business. The department may deny the change of39 location if the new situs is undesirable or would detrimentally affect the40 operation of the credit union.41 SECTION 58. IC 28-7-1-34, AS AMENDED BY P.L.217-2007,42 SECTION 67, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE

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1 JULY 1, 2018]: Sec. 34. (a) A credit union organized under the laws of2 another state may establish a branch office in Indiana if:3 (1) the credit union:4 (A) files an application with the department; or5 (B) otherwise meets criteria established by the department6 to be exempt from application;7 (2) the branch office is necessary to serve members within the8 field of membership of the credit union;9 (3) the field of membership of the credit union is consistent with

10 the laws of Indiana;11 (4) the law of the state in which the credit union was organized12 provides for the establishment of a branch office in that state by13 an Indiana credit union; and14 (5) either:15 (A) the department approves the application of the credit16 union; or17 (B) the credit union meets the department's established18 criteria to be exempt from the department's approval.19 (b) If the credit union that has established a branch office in Indiana20 is subsequently granted an expansion of its field of membership by its21 chartering state, the expanded field of membership must be approved22 by the department before the expanded field of membership can be23 served in Indiana. If an out-of-state credit union desires to establish a24 branch office in Indiana and that credit union's field of membership is25 an incorporated entity, the incorporated entity may not be admitted to26 do business in Indiana as a foreign corporation by the secretary of27 state's office until the department has approved the entry of the credit28 union to establish a branch office.29 (c) Subject to subsection (a)(1)(B), the department shall provide30 to a credit union desiring to establish a branch office in Indiana an31 application, which must provide at least the following information:32 (1) The credit union's financial condition.33 (2) The credit union's field of membership and the number of34 members to be served in Indiana.35 (3) The proposed location of any branch offices.36 (4) A letter of approval from the supervisory agency in the state37 in which the credit union's principal office is located, including a38 statement indicating whether such supervisory agency conducts39 periodic examinations of the credit union.40 (5) A statement that the credit union, with respect to its operation41 in this state, will comply with all applicable state and federal42 laws, rules, and regulations, as determined by the director.

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1 (d) The department shall approve or deny the an application within2 one hundred twenty (120) days. The department may deny the3 application or suspend or revoke an application previously approved if4 it finds any of the following:5 (1) That the credit union is insolvent or in imminent danger of6 insolvency.7 (2) That the credit union does not have the approval of its8 supervisory agency.9 (3) That the credit union fails to meet the requirements of

10 subsection (e).11 (4) A failure to comply with any written agreement or final order12 of the department or chartering supervisory agency that has13 regulatory authority over the credit union.14 (5) That the credit union has been serving an expanded field of15 membership in Indiana before obtaining the approval of the16 department for the expansion in the field of membership.17 (e) Any out-of-state credit union that has been approved to establish18 branch offices in this state shall, in addition to such other provisions of19 law applicable to credit unions, comply with the following:20 (1) Designate a resident agent for the service of process in this21 state.22 (2) Submit a copy of all reports required by its supervisory23 agency, unless otherwise required by the department to submit24 reports prescribed by the department.25 (3) Submit a copy of every:26 (A) regulatory examination report; and27 (B) insurance examination report;28 to the department.29 (4) Conduct its lending activities in accordance with Indiana law.30 (f) The department may examine such a branch office if it has31 reason to believe that the branch office is not operating in compliance32 with laws, rules, or regulations. The reasonable cost of any such33 examination authorized by this subsection shall be paid by the credit34 union.35 (g) For purposes of this section, IC 28-1-2-30 applies to information36 obtained by or provided to the department concerning branch offices37 established under this section.38 (h) The department may enter into cooperative, coordinating, and39 information sharing agreements with an organization listed in40 IC 28-11-3-3 with respect to the periodic examination or other41 supervision of a branch:42 (1) in Indiana of an out-of-state credit union; or

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1 (2) of an Indiana state credit union in a host state;2 and the department may accept the organization's reports of3 examination and reports of investigation instead of conducting the4 department's own examinations or investigations.5 (i) The department may enter into agreements with a financial6 institution supervisory agency that has concurrent jurisdiction over an7 Indiana state credit union or an out-of-state credit union operating a8 branch in Indiana under this chapter to:9 (1) engage the services of the agency's examiners at a reasonable

10 rate of compensation; or11 (2) provide the services of the department's examiners to the12 agency at a reasonable rate of compensation.13 An agreement under this subsection is subject to IC 36-1-7.14 (j) The department may enter into joint examinations or joint15 enforcement actions with other credit union supervisory agencies16 having concurrent jurisdiction over a branch established and17 maintained in Indiana by an out-of-state credit union or a branch18 established and maintained by an Indiana state credit union in a host19 state. The department may take action independently if the department20 considers the action to be necessary or appropriate to carry out its21 responsibilities under this chapter or to ensure compliance with Indiana22 law.23 (k) An out-of-state credit union that maintains at least one (1)24 branch in Indiana is subject to IC 28-11-3-5. Fees may be shared with25 other financial institution supervisory agencies or an organization26 affiliated with or representing at least one (1) credit union supervisory27 agency under agreements between those parties and the department.28 SECTION 59. IC 28-7-5-11, AS AMENDED BY P.L.89-2011,29 SECTION 53, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE30 JULY 1, 2018]: Sec. 11. (a) To remain in force, a license must be31 renewed before June 1 not later than December 31 of each year,32 beginning with the year following the date of issuance. A licensee may33 renew a license issued under this chapter by filing a renewal34 application prescribed by the director. The department shall prescribe35 the form of the renewal application. To be accepted for processing, a36 renewal application must be accompanied by:37 (1) the license renewal fee fixed by the department under38 IC 28-11-3-5; and39 (2) all other information and documents requested by the director.40 (b) The department may fix a daily late fee under IC 28-11-3-5 for41 a:42 (1) renewal application; or

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1 (2) license renewal fee;2 that is received by the department after June 1. December 31.3 SECTION 60. IC 28-8-4-12 IS AMENDED TO READ AS4 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 12. As used in this5 chapter, "material litigation" means litigation that under United States6 generally accepted accounting principles is considered significant to7 the financial health of a business and would be required to be8 referenced in a corporation's or business's annual audited financial9 statements, report to shareholders, or a similar document.

10 SECTION 61. IC 28-8-4-24, AS AMENDED BY P.L.159-2017,11 SECTION 45, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE12 JULY 1, 2018]: Sec. 24. An application for licensure under this chapter13 must contain the following:14 (1) The name of the applicant.15 (2) The applicant's principal address.16 (3) A fictitious or trade name, if any, used by the applicant in the17 conduct of its business.18 (4) The location of the applicant's business records.19 (5) The history of the applicant's:20 (A) material litigation; and21 (B) criminal convictions for felonies involving fraud, deceit,22 or misrepresentation under the laws of Indiana or any other23 jurisdiction.24 (6) A description of:25 (A) the activities conducted by the applicant;26 (B) the applicant's history of operations; and27 (C) the business activities in which the applicant seeks to be28 engaged in Indiana.29 (7) A list identifying the applicant's proposed authorized delegates30 in Indiana.31 (8) A sample authorized delegate contract, if applicable.32 (9) A sample form of payment instrument, if applicable.33 (10) The location or locations at which the applicant and its34 authorized delegates propose to conduct the licensed activities in35 Indiana.36 (11) The name and address of the clearing bank or banks on37 which the applicant's payment instruments will be drawn or38 through which such payment instruments will be payable.39 (12) Documents revealing that the applicant has a net worth of at40 least six hundred thousand dollars ($600,000), calculated in41 accordance with United States generally accepted accounting42 principles or in any other form that may be accepted at the

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1 discretion of the director.2 SECTION 62. IC 28-8-4-25, AS AMENDED BY P.L.216-2013,3 SECTION 50, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE4 JULY 1, 2018]: Sec. 25. In addition to the items listed in section 24 of5 this chapter, if an applicant for licensure under this chapter is not6 organized as a sole proprietorship, the applicant must provide the7 following items and information relating to the applicant's8 organizational structure:9 (1) State of incorporation or organization.

10 (2) Date of incorporation or organization.11 (3) A certificate from the state in which the applicant was12 incorporated or organized stating that the entity is in good13 standing, or an equivalent certification from the state in which the14 applicant was incorporated or organized.15 (4) A description of the organizational structure of the applicant,16 including the following:17 (A) The identity of the parent of the applicant.18 (B) The identity of each subsidiary of the applicant.19 (C) The names of the stock exchanges, if any, in which the20 applicant, the parent, and the subsidiaries are publicly traded.21 (5) The:22 (A) name;23 (B) business address;24 (C) residence address; and25 (D) employment history;26 for each individual described in section 35(b)(2) or 35(b)(3) of27 this chapter.28 (6) The:29 (A) history of material litigation; and30 (B) history of criminal convictions for felonies involving31 fraud, deceit, or misrepresentation under the laws of Indiana32 or any other jurisdiction;33 for each individual described in section 35(b)(2) or 35(b)(3) of34 this chapter.35 (7) Except as provided in subdivision (8), copies of the applicant's36 audited financial statements for the current year and, if available,37 for the preceding two (2) years, including a:38 (A) balance sheet;39 (B) statement of income or loss;40 (C) statement of changes in shareholder equity; and41 (D) statement of changes in financial position.42 A financial statement required to be submitted under this

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1 subdivision must be prepared, by an independent certified public2 accountant authorized to do business in the United States, in3 accordance with AICPA Statements on Standards for Accounting4 and Review Services (SSARS) and in accordance with United5 States generally accepted accounting principles.6 (8) If the applicant is a wholly owned subsidiary of:7 (A) a corporation or other organization publicly traded in the8 United States, financial statements for the current year or the9 parent corporation's or parent organization's Form 10K reports

10 filed with the United States Securities and Exchange11 Commission for the preceding three (3) years may be12 submitted with the applicant's unaudited financial statements;13 or14 (B) a corporation or other organization publicly traded outside15 the United States, similar documentation filed with the parent16 corporation's or parent organization's non-United States17 regulator may be submitted with the applicant's unaudited18 financial statements and may be accepted at the discretion19 of the director. The department reserves the right to20 request unaudited financial statements prepared in21 accordance with United States generally accepted22 accounting principles.23 (9) Copies of filings, if any, made by the applicant with the24 United States Securities and Exchange Commission, or with a25 similar regulator in a country other than the United States, not26 more than one (1) year before the date of filing of the application.27 SECTION 63. IC 28-8-4-33, AS AMENDED BY P.L.216-2013,28 SECTION 57, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE29 JULY 1, 2018]: Sec. 33. (a) A license granted under this chapter30 permits a licensee to conduct business:31 (1) at one (1) or more locations directly or indirectly owned by the32 licensee; or33 (2) through one (1) or more authorized delegates.34 (b) Each licensee shall maintain a policy of insurance issued by an35 insurer authorized to do business in Indiana that insures the applicant36 against loss by a criminal act or act of dishonesty. The principal sum37 of the policy shall be equivalent to the amount of the surety bond38 required under section 27 of this chapter.39 (c) A licensee must at all times possess permissible investments40 with an aggregate market value calculated in accordance with United41 States generally accepted accounting principles, or in any other form42 that may be preapproved at the discretion of the director, of not

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1 less than the aggregate face amount of all outstanding payment2 instruments issued or sold by the licensee or an authorized delegate of3 the licensee in the United States.4 (d) A licensee that is a corporation or a limited liability company5 must at all times be in good standing with the secretary of state of the6 state in which the licensee was incorporated.7 SECTION 64. IC 28-8-4-38, AS AMENDED BY P.L.159-2017,8 SECTION 46, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE9 JULY 1, 2018]: Sec. 38. A licensee may renew a license by complying

10 with the following:11 (1) Filing with the director or the director's designee the annual12 renewal in the form that is prescribed by the director and sent by13 the director to each licensee not later than December 31 of each14 year. The renewal must include the following, which, except for15 the financial statements described in clause (A), must be filed not16 later than December 31:17 (A) Either:18 (i) a copy of the licensee's most recent audited consolidated19 annual financial statements, including a balance sheet, a20 statement of income or loss, a statement of changes in21 shareholder equity, and a statement of changes in financial22 position; or23 (ii) if the licensee is a wholly owned subsidiary, the parent24 corporation's or parent organization's most recent recently25 prepared consolidated audited annual financial statements,26 or the parent corporation's or parent organization's most27 recent Form 10K report filed with the Securities and28 Exchange Commission, along with the licensee's unaudited29 annual financial statements.30 The audited financial statements required to be submitted31 under this clause must be prepared, by an independent32 certified public accountant authorized to do business in the33 United States, in accordance with AICPA Statements on34 Standards for Accounting and Review Services (SSARS) and35 in accordance with United States generally accepted36 accounting principles, and must be filed with the director or37 the director's designee not later than one hundred twenty (120)38 days after the close of the calendar or fiscal year covered by39 the statements.40 (B) The number of payment instruments sold by the licensee41 in Indiana, the dollar amount of those instruments, and the42 dollar amount of outstanding payment instruments sold by the

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1 licensee calculated from the most recent quarter for which data2 is available before the date of the filing of the renewal3 application, but in no event more than one hundred twenty4 (120) days before the renewal date.5 (C) Material changes to the information submitted by the6 licensee on its original application or as part of a renewal that7 have not been reported previously to the director on any other8 report or renewal required to be filed under this chapter.9 (D) A list of the licensee's permissible investments.

10 (E) A list of the locations within Indiana at which business11 regulated by this chapter will be conducted by either the12 licensee or its authorized delegate.13 (2) Paying the annual renewal fee described under section 37 of14 this chapter.15 SECTION 65. IC 28-8-4-44 IS AMENDED TO READ AS16 FOLLOWS [EFFECTIVE JULY 1, 2018]: Sec. 44. (a) The records17 maintained under section 43 of this chapter shall be:18 (1) maintained in conformity with United States generally19 accepted accounting principles and practices, or in any other20 form that may be preapproved at the discretion of the21 director, in a manner that will enable the director to determine22 whether the licensee is complying with the provisions of this23 chapter; and24 (2) made reasonably available to the director.25 (b) The director shall determine the sufficiency of the records and26 whether the licensee has made the required information reasonably27 available.28 SECTION 66. IC 28-8-5-14, AS AMENDED BY P.L.137-2014,29 SECTION 35, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE30 JULY 1, 2018]: Sec. 14. A license issued pursuant to this chapter31 expires on August January 1 of the year following the date of issuance32 unless earlier suspended, relinquished, or revoked.33 SECTION 67. IC 28-8-5-15, AS AMENDED BY P.L.137-2014,34 SECTION 36, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE35 JULY 1, 2018]: Sec. 15. (a) To remain in force, a license must be36 renewed not later than August 1 December 31 of each year, beginning37 with the year following the date of issuance, as set forth in section 1438 of this chapter. A licensee may renew a license issued under this39 chapter by filing a renewal application as prescribed by the director of40 the department. The department shall prescribe a form for the renewal41 application. To be accepted for processing, a renewal application must42 be accompanied by:

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1 (1) the license renewal fee described in subsection (b); and2 (2) all information and documents requested by the director of the3 department.4 (b) A licensee that seeks to renew a license issued under this chapter5 shall pay to the department before August 1 not later than December6 31 of each year a fee fixed by the department under IC 28-11-3-5 as a7 renewal fee. The department may fix a daily late fee under8 IC 28-11-3-5 for a:9 (1) renewal license application; or

10 (2) renewal fee;11 that is received by the department after August 1. December 31.12 SECTION 68. IC 28-10-1-1, AS AMENDED BY P.L.159-2017,13 SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE14 JULY 1, 2018]: Sec. 1. A reference to a federal law or federal15 regulation in this title is a reference to the law or regulation as in effect16 December 31, 2016. 2017.

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COMMITTEE REPORT

Mr. Speaker: Your Committee on Financial Institutions, to whichwas referred House Bill 1397, has had the same under considerationand begs leave to report the same back to the House with therecommendation that said bill do pass.

(Reference is to HB 1397 as introduced.)

BURTON Committee Vote: Yeas 10, Nays 0

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