§ 28-5-1-9 — Mortgage loans

An industrial loan and investment company,
hereinafter in this section sometimes called "company" may, subject to
the requirements of this section, make or acquire a loan secured by a
first lien upon real estate (including a leasehold) located in any state or
the District of Columbia in an amount and for terms not to exceed (a)
in the case of improved real estate, including farmland, (i) three-fourths
(3/4) of the appraised value if the terms of the loan require substantially
equal payments at successive intervals of not more than one (1) year
each and if the terms of the loan are such as would require the payment
of forty percent (40%) of the principal of and all interest on the loan
within a period of ten (10) years or (ii) nine-tenths (9/10) of the
appraised value if the terms of the loan require substantially equal
payments at successive intervals of not more than one (1) year each and
if the terms of the loan are such as would require the payment of all
principal and interest on the loan within a period of thirty (30) years,
except that the date of the initial payment of principal on a loan to a
business borrower may be deferred for a period of not to exceed three
(3) years from the date of the loan; or (b) in the case of unimproved
real estate, one-half (1/2) the appraised value for a term not to exceed
five (5) years or two-thirds (2/3) of the appraised value for a term not
to exceed five (5) years if utilities, roads, or streets necessary for the
development of such real estate have been completed. If the money
borrowed on real estate is to be used for erecting improvements, and if
the money is to be advanced as the work progresses, in such event, the
appraised value for purposes of the loan shall be based upon the
condition of the real estate when such improvements shall have been
completed.
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.
In a case in which a loan subject to this section is made to finance
construction of an improvement and such loan is combined with a
permanent loan to continue after completion of construction, the term
of the construction loan or that portion of the term not in excess of
three (3) years, shall not be counted against the maximum term for the
permanent loan permitted under this section but such combined
construction loan and permanent loan shall be subject to all other
requirements of this section.
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.