(a)The five star mortgage program is
established. Not later than June 1, 2010, the department shall adopt
guidelines to implement the program. The program established by this
section, as implemented through the department's guidelines, must
meet the following criteria:
(1)The program must be available on a voluntary basis to
creditors that offer mortgages to Indiana customers after June 30,
2010.
(2)To participate in the program, a creditor must submit a
certification, on a form prescribed by the department, attesting
that the creditor qualifies as a five star mortgage lender.
(3)To qualify as a five star mortgage lender under the program,
a creditor must certify, on the form described in subdivision (2),
that the creditor meets the following conditions:
(A)The creditor offers or will
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(a) The five star mortgage program is
established. Not later than June 1, 2010, the department shall adopt
guidelines to implement the program. The program established by this
section, as implemented through the department's guidelines, must
meet the following criteria:
(1) The program must be available on a voluntary basis to
creditors that offer mortgages to Indiana customers after June 30,
2010.
(2) To participate in the program, a creditor must submit a
certification, on a form prescribed by the department, attesting
that the creditor qualifies as a five star mortgage lender.
(3) To qualify as a five star mortgage lender under the program,
a creditor must certify, on the form described in subdivision (2),
that the creditor meets the following conditions:
(A) The creditor offers or will offer to Indiana customers after
June 30, 2010, at least one (1) mortgage product that qualifies
as a five star mortgage under the program.
(B) The creditor does not have a record of any significant or
recurring violation of:
(i) IC 24-5-23.5-7; or
(ii) any other state or federal law, regulation, or rule
applicable to mortgage transactions;
as of the date of the creditor's certification. If the creditor is not
certain whether it meets the criterion set forth in this clause, the
creditor shall consult with the department before filing a
certification to participate in the program.
(C) The creditor does not have a director or an executive officer
who has been convicted of a felony involving fraud, deceit, or
misrepresentation under the laws of Indiana or any other
jurisdiction, as of the date of the creditor's certification. If the
creditor is not certain whether it meets the criterion set forth in
this clause, the creditor shall consult with the department before
filing a certification to participate in the program.
(4) To qualify as a five star mortgage under the program, a
mortgage must include the following terms and conditions:
(A) If the mortgage involves a purchase money transaction, the
mortgage must require a down payment by the debtor, or a
person acting on behalf of the debtor, of at least ten percent
(10%) of the purchase price of the dwelling that is the subject
of the mortgage. If the mortgage involves the refinancing of an
existing mortgage, the customer must have equity of at least ten
percent (10%) in the dwelling that is the subject of the
mortgage.
(B) The mortgage must have a fixed rate of interest.
(C) The mortgage must provide for an escrow account that:
(i) is established by the creditor, or a person acting on behalf
of the creditor, for the benefit of the debtor;
(ii) is maintained by the creditor, or a person acting on behalf
of the creditor, during the life of the mortgage; and
(iii) is used during the life of the mortgage to pay taxes and
insurance owed with respect to the dwelling that is the
subject of the mortgage.
However, this clause does not apply if, in the creditor's ordinary
course of business, the creditor does not regularly establish and
maintain, or contract for the establishment and maintenance of,
escrow accounts for the payment of taxes and insurance, on
behalf of the creditor's customers.
(D) The term of the mortgage may not exceed thirty (30) years.
(E) The mortgage may not include a prepayment penalty or fee.
(5) A creditor that qualifies as a five star mortgage lender and
files a certification with the department under subdivision (3)
shall provide a written statement, on a form and in the manner
prescribed by the department, to any Indiana customer who:
(A) applies for a five star mortgage offered by the creditor; and
(B) does not qualify for the five star mortgage based on the
creditor's underwriting standards for the five star mortgage.
The statement must set forth the reasons why the Indiana
customer did not qualify for the five star mortgage.
(6) A creditor that qualifies as a five star mortgage lender and
files a certification with the department may include that fact in
any marketing material or solicitation directed at Indiana
customers, subject to any conditions or limitations imposed by the
department in the guidelines adopted under this section.
(7) If a creditor:
(A) holds itself out as a five star mortgage lender and:
(i) the creditor has not filed an accurate certification,
including any renewal certification required by the
department under subsection (b)(3), with the department
under this chapter; or
(ii) the creditor has filed a certification or a renewal
certification with the department under this chapter and
subsequently ceases offering at least one (1) mortgage
product that qualifies as a five star mortgage; or
(B) fails to comply with any program requirement;
the department, upon discovering the act described in clause (A)
or (B), shall immediately provide written notice to the creditor
that the creditor does not qualify for participation in the program,
or no longer qualifies for participation in the program, as
appropriate. The notice provided under this subdivision must
inform the creditor of the reason or reasons the creditor does not
qualify for participation in the program, or no longer qualifies for
participation in the program, as appropriate. Not later than seven
(7) days after the date of the notice provided to the creditor under
this subdivision, the department shall remove the creditor from
the list of creditors published on the department's Internet web
site under subsection (c), as appropriate, and shall post, on the
same Internet web page on which the list described in subsection
(c) is published, a link to the notice provided to the creditor under
this subdivision.
(b) In addition to the program criteria required by subsection (a), the
guidelines adopted by the department under this section may include
the following:
(1) Provisions allowing a creditor that qualifies as a five star
mortgage lender and files a certification with the department to
include in the paperwork associated with a five star mortgage:
(A) a statement;
(B) a seal; or
(C) any other designation considered appropriate by the
department;
indicating that the particular mortgage product is a five star
mortgage.
(2) A requirement that a creditor that qualifies as a five star
mortgage lender and files a certification with the department shall
report the following information to the department on an annual
basis, or any other basis determined appropriate by the
department:
(A) The total number and types of residential mortgage
products that were offered by the creditor to Indiana customers
during the applicable reporting period, including any five star
mortgages reported under clause (C).
(B) The total number of residential mortgages described in
clause (A) that were closed by the creditor during the
applicable reporting period, including any five star mortgages
that were closed during the reporting period, as reported under
clause (D).
(C) The number of mortgage products that:
(i) qualified as five star mortgages under the program; and
(ii) were offered by the creditor to Indiana customers;
during the applicable reporting period.
(D) The number of five star mortgages offered to Indiana
customers that were closed by the creditor during the applicable
reporting period.
(3) A requirement that a creditor that qualifies as a five star
mortgage lender and files a certification with the department shall
periodically submit to the department a renewal certification, on
a form prescribed by the department, in conjunction with a report
filed under subdivision (2), or at such other time as the
department determines appropriate. In any renewal certification
required under this subdivision, a creditor must attest that the
creditor:
(A) continued to meet the criteria necessary to qualify as a five
star mortgage lender; and
(B) complied with all program requirements;
during the applicable reporting period.
(4) A fee fixed by the department under IC 28-11-3-5 for each
certification and recertification submitted by a creditor under this
chapter. However, any fee fixed by the department under this
subdivision may not exceed the department's actual costs to:
(A) process certifications and renewal certifications;
(B) publish the list described in subsection (c) on the
department's Internet web site; and
(C) otherwise administer the program.
(5) Any other program requirements, criteria, or incentives that
the department determines necessary to implement and evaluate
a program to encourage creditors to offer stable mortgage
products to qualified Indiana customers.
(c) The department shall publish on the department's Internet web
site a list of all creditors that have a current and accurate:
(1) certification under this chapter; or
(2) renewal certification under this chapter;
on file with the department. The Indiana housing and community
development authority and the securities division of the office of the
secretary of state shall provide a link to the list described in this
subsection on their respective Internet web sites.
(d) The program guidelines established by the department under
subsections (a) and (b) must be made available:
(1) for public inspection and copying at the offices of the
department under IC 5-14-3; and
(2) on the department's Internet web site.
(e) The department shall investigate any credible complaint received
by any means alleging that a creditor has committed a violation
described in subsection (a)(7). If the creditor that is the subject of a
complaint under this subsection is not subject to regulation by the
department, the department shall forward the complaint to the
appropriate state or federal regulatory agency.
(f) Notwithstanding subsection (a), the department may adopt a
different name for the program, other than the five star mortgage
program, in adopting the guidelines to implement the program.