§ 24-4.5-3-209 — Right to prepay; prepayment penalty; total finance charge; payoff statement; liability for failure to provide; short sales; foreclosed property; no protection from deficiency judgment

Right to Prepay - (1) Subject to the
provisions on rebate upon prepayment (section 210 of this chapter), the
debtor may prepay in full the unpaid balance of a consumer loan,
refinancing, or consolidation at any time without penalty. With respect
to a consumer loan that is primarily secured by an interest in land, a
lender may contract for a penalty for prepayment of the loan in full, not
to exceed two percent (2%) of any amount prepaid within sixty (60)
days of the date of the prepayment in full, after deducting all refunds
and rebates as of the date of the prepayment. However, the penalty may
not be imposed:
(a) if the loan is refinanced or consolidated with the same
creditor;
(b) for prepayment by proceeds of any insurance or acceleration
after default; or
(c) after three (3) years from the contract date.
For purposes of this section, the collection of the amount of any
conditionally waived closing costs (as allowed under section 202(d) of
this chapter) by a creditor, as stipulated in the loan agreement, at the
time of prepayment in full does not constitute a prepayment penalty
and is not subject to the limitations set forth in this subsection.
(2) At the time of prepayment of a consumer loan not subject to the
provisions of rebate upon prepayment (section 210 of this chapter), the
total finance charge, including the prepaid finance charge but
excluding the nonrefundable prepaid finance charge allowed under
section 201(9) or section 508(8) of this chapter, as applicable, may not
exceed the maximum charge allowed under this chapter for the period
the loan was in effect. For the purposes of determining compliance with
this subsection, the total finance charge does not include the following:
(a) The nonrefundable prepaid finance charge allowed under
section 201(9) or section 508(8) of this chapter, as applicable.
(b) The debtor paid mortgage broker fee, if any, paid to a person
who does not control, is not controlled by, or is not under
common control with, the creditor holding the loan at the time a
consumer loan is prepaid.
(3) The creditor or mortgage servicer shall provide, in writing, an
accurate payoff amount for the consumer loan to the debtor within
seven (7) business days (excluding legal public holidays, Saturdays,
and Sundays) after the creditor or mortgage servicer receives the
debtor's written request for the accurate consumer loan payoff amount.
A payoff statement provided by a creditor or mortgage servicer under
this subsection must show the date the statement was prepared and
itemize the unpaid principal balance and each fee, charge, or other sum
included within the payoff amount. A creditor or mortgage servicer
who fails to provide the accurate consumer loan payoff amount is liable
for:
(a) one hundred dollars ($100) if an accurate consumer loan
payoff amount is not provided by the creditor or mortgage
servicer within seven (7) business days (excluding legal public
holidays, Saturdays, and Sundays) after the creditor or mortgage
servicer receives the debtor's first written request; and
(b) the greater of:
(i) one hundred dollars ($100); or
(ii) the loan finance charge that accrues on the loan from the
date the creditor or mortgage servicer receives the first written
request until the date on which the accurate consumer loan
payoff amount is provided;
if an accurate consumer loan payoff amount is not provided by the
creditor or mortgage servicer within seven (7) business days
(excluding legal public holidays, Saturdays, and Sundays) after
the creditor or mortgage servicer receives the debtor's second
written request, and the creditor or mortgage servicer failed to
comply with subdivision (a).
A liability under this subsection is an excess charge under IC 24-4.5-5-202.
(4) As used in this subsection, "mortgage transaction" means a
consumer loan in which a mortgage or a land contract (or another
consensual security interest equivalent to a mortgage or a land contract)
that constitutes a lien is created or retained against land upon which
there is constructed or intended to be constructed a dwelling that is or
will be used by the debtor primarily for personal, family, or household
purposes. This subsection applies to a mortgage transaction with
respect to which any installment or minimum payment due is
delinquent for at least sixty (60) days. The creditor, servicer, or the
creditor's agent shall acknowledge a written offer made in connection
with a proposed short sale not later than five (5) business days
(excluding legal public holidays, Saturdays, and Sundays) after the date
of the offer if the offer complies with the requirements for a qualified
written request set forth in 12 U.S.C. 2605(e)(1)(B). The creditor,
servicer, or creditor's agent is required to acknowledge a written offer
made in connection with a proposed short sale from a third party acting
on behalf of the debtor only if the debtor has provided written
authorization for the creditor, servicer, or creditor's agent to do so. Not
later than thirty (30) business days (excluding legal public holidays,
Saturdays, and Sundays) after receipt of an offer under this subsection,
the creditor, servicer, or creditor's agent shall respond to the offer with
an acceptance or a rejection of the offer. The thirty (30) day period
described in this subsection may be extended for not more than fifteen
(15) business days (excluding legal public holidays, Saturdays, and
Sundays) if, before the end of the thirty (30) day period, the creditor,
the servicer, or the creditor's agent notifies the debtor of the extension
and the reason the extension is needed. Payment accepted by a creditor,
servicer, or creditor's agent in connection with a short sale constitutes
payment in full satisfaction of the mortgage transaction unless the
creditor, servicer, or creditor's agent obtains:
(a) the following statement: "The debtor remains liable for any
amount still owed under the mortgage transaction."; or
(b) a statement substantially similar to the statement set forth in
subdivision (a);
acknowledged by the initials or signature of the debtor, on or before the
date on which the short sale payment is accepted. As used in this
subsection, "short sale" means a transaction in which the property that
is the subject of a mortgage transaction is sold for an amount that is
less than the amount of the debtor's outstanding obligation under the
mortgage transaction. A creditor or mortgage servicer that fails to
respond to an offer within the time prescribed by this subsection is
liable in accordance with 12 U.S.C. 2605(f) in any action brought
under that section.
(5) This section is not intended to provide the owner of real estate
subject to the issuance of process under a judgment or decree of
foreclosure any protection or defense against a deficiency judgment for
purposes of the borrower protections from liability that must be
disclosed under 12 CFR 1026.38(p)(3) on the form required by 12 CFR
1026.38 ("Closing Disclosures" form under the Amendments to the
2013 Integrated Mortgage Disclosures Rule Under the Real Estate
Settlement Procedures Act (Regulation X) and the Truth In Lending
Act (Regulation Z) and the 2013 Loan Originator Rule Under the Truth
in Lending Act (Regulation Z)).
Formerly: Acts 1971, P.L.366, SEC.4. As amended by
P.L.14-1992, SEC.29; P.L.122-1994, SEC.21; P.L.23-2000, SEC.6;
P.L.159-2001, SEC.1; P.L.145-2008, SEC.27; P.L.35-2010, SEC.49;
P.L.89-2011, SEC.16; P.L.27-2012, SEC.18; P.L.54-2016, SEC.3;
P.L.73-2016, SEC.11; P.L.159-2017, SEC.12; P.L.85-2020, SEC.14;
P.L.206-2025, SEC.4.