Indiana Code 28-5-1-9. Mortgage loans
The department may by rule or regulation increase or decrease the fraction of the appraised value which may be loaned with real estate as security and may increase or decrease the terms for which such loans may be made if the department finds that it is in the interest of the economy of the state and in conformity with sound financial practice.
Terms Used In Indiana Code 28-5-1-9
- Appraisal: A determination of property value.
- company: shall mean and include any corporation to which this chapter is applicable. See Indiana Code 28-5-1-3
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Deed: The legal instrument used to transfer title in real property from one person to another.
- department: means the department of financial institutions of the state of Indiana. See Indiana Code 28-5-1-3
- in writing: include printing, lithographing, or other mode of representing words and letters. See Indiana Code 1-1-4-5
- Judgment: means all final orders, decrees, and determinations in an action and all orders upon which executions may issue. See Indiana Code 1-1-4-5
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgagee: The person to whom property is mortgaged and who has loaned the money.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.
- Year: means a calendar year, unless otherwise expressed. See Indiana Code 1-1-4-5
For the purpose of this section, a “leasehold” shall mean the interest, which is security for a loan, of a lessee of real estate under a lease which on the date of the loan has an unexpired term extending at least five (5) years beyond the maturity of the loan, or contains a right of renewal, which may be exercised by the mortgagee, extending at least five (5) years beyond the maturity of the loan. The requirements for a loan subject to this section shall be: (i) the loan shall be evidenced by a bond, note, or other obligation and the lien securing such loan shall be obtained by a mortgage, deed of trust, or judgment; (ii) the lien shall be a first lien (except for a lien of taxes, assessments, or charges which are not yet due or which are payable without penalty) unless all prior liens are held by the company and the aggregate of all loans by the company secured by liens on the real estate satisfy all other requirements of this section pertaining to such loans; (iii) insurance against loss from fire on all buildings on the real estate which are included in the appraised value, issued by insurers acceptable to the company and authorized to do business where the real estate is located and in form and amount satisfactory to the company, shall be maintained during the term of the loan by or at the expense of the borrower, except that the company may at its own expense maintain such insurance covering only its interest as lender; and (iv) the borrower shall pay all expenses in connection with the loan for title insurance, searches and certificates, appraisal fees and fees for preparation and recording of documents.
The appraised value of the real estate offered for security shall be determined by one (1) or more competent persons who shall report such valuation in writing to such company. The written report so made shall be signed and in the event that such company makes such a loan, shall be kept on file by it subject to inspection by the department.
The foregoing limitations and restrictions shall not apply to real estate loans which are (1) mentioned in sections 6(a)(10), (11), and (12) of this chapter and the regulations issued thereunder insofar as said sections and regulations apply to loans on the security of real estate; and (2) made under 38 U.S.C. § 1801 through 1825 and the regulations issued under that federal law, insofar as said federal law and regulations apply to loans on the security of real estate, and under such limitations and restrictions as the department may, by regulation, prescribe.
The limitations set forth in this section shall not apply to mortgages taken as additional security for loans otherwise authorized by this chapter or as security for any loans which are in default or to second mortgages. Loans made to businesses where the company looks for repayment out of the operations of the borrower’s business, relying primarily on the borrower’s general credit standing and forecast of operations, with or without other security, but wishes to take a mortgage on the borrower’s real estate as a precaution against contingencies, shall not be considered as real estate loans within the meaning of this section and, therefore, shall not be subject to the limitations of this section.
Any loan made upon the security of real estate which exceeds the maximum fraction of the appraised value of such real estate will not be in violation of this section so long as that portion of the loan in excess of the maximum fraction of the appraised value of the real estate is fully guaranteed or is fully secured by collateral consisting of a savings deposit, certificate of deposit, certificates of indebtedness or investment, assignment of rent, life insurance, or other collateral security to which the company has ready access and a first claim.
Subject to the limitations and restrictions of this section, any industrial loan and investment company, in addition to being permitted to make loans as provided by this section, may purchase, acquire, hold, and dispose of any loan, made to any other person, firm, limited liability company, or corporation and the notes and mortgages securing such loan. Before any such loan shall be purchased by any industrial loan and investment company the real estate securing such loan shall be appraised in the manner provided by this section for appraisement of the real estate offered as security for a loan to be made by such industrial loan and investment company.
Subject to the limitations of this section relating to the fraction of the appraised value which may be loaned on real estate as security, a company may make variable rate mortgage loans and rollover mortgage loans subject to the same limitations and rights provided state chartered banks and federally chartered banks under IC 28-1-13.5.
Formerly: Acts 1935, c.181, s.9; Acts 1947, c.135, s.1; Acts 1955, c.20, s.4; Acts 1971, P.L.399, SEC.4; Acts 1973, P.L.284, SEC.4. As amended by Acts 1979, P.L.265, SEC.3; Acts 1980, P.L.176, SEC.7; P.L.8-1993, SEC.449; P.L.176-1996, SEC.17.