(a)Every loan application shall be submitted
on a form approved by the credit union. Loans may be disbursed upon
written approval by a majority of the credit committee or a loan officer.
If the credit committee or loan officer fails to approve an application
for a loan, the applicant may appeal to the board of directors, if such
appeal is authorized by the bylaws.
(b)Loans to members may be made only under the following terms
and conditions:
(1)All loans shall be evidenced by notes signed by the borrowing
member.
(2)Except as otherwise provided in this section, the terms of any
loan to a member with a maturity of more than six (6) months
shall provide for principal and interest payments that will
amortize the obligation in full within the terms of the loan
contract. If the income of th
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(a) Every loan application shall be submitted
on a form approved by the credit union. Loans may be disbursed upon
written approval by a majority of the credit committee or a loan officer.
If the credit committee or loan officer fails to approve an application
for a loan, the applicant may appeal to the board of directors, if such
appeal is authorized by the bylaws.
(b) Loans to members may be made only under the following terms
and conditions:
(1) All loans shall be evidenced by notes signed by the borrowing
member.
(2) Except as otherwise provided in this section, the terms of any
loan to a member with a maturity of more than six (6) months
shall provide for principal and interest payments that will
amortize the obligation in full within the terms of the loan
contract. If the income of the borrowing member is seasonal, the
terms of the loan contract may provide for seasonal amortization.
(3) Loans may be made upon the security of improved or
unimproved real estate. Except as otherwise specified in this
section, such loans must be secured by a first lien upon real estate
prior to all other liens, except for taxes and assessments not
delinquent, and may be made with repayment terms other than as
provided in subdivision (2). The credit union loan folder for all
real estate mortgage loans shall include the following:
(A) The loan application.
(B) The mortgage instrument.
(C) The note.
(D) The disclosure statement.
(E) The documentation of property insurance.
(F) For the real estate for which the loan is made:
(i) a written appraisal; or
(ii) a written estimate of market value;
consistent with the appraisal standards and transaction value
limitations set forth in the appraisal regulations of the National
Credit Union Administration (12 CFR 722).
(4) Subject to the limitations of subdivision (3), variable rate
mortgage loans and rollover mortgage loans may be made under
the same limitations and rights provided state chartered savings
associations under IC 28-1-21.5 (before its repeal) or IC 28-15 or
federal credit unions.
(5) As used in this subdivision, "originating lender" means the
participating lender with which the member contracts. A credit
union may participate with other state and federal depository
financial institutions (as defined in IC 28-1-1-6) or credit union
service organizations in making loans to credit union members
and may sell a participating interest in any of its loans under
written participation loan policies established by the board of
directors. However, the credit union may not sell more than ninety
percent (90%) of the principal of participating loans outstanding
at the time of sale. A participating credit union that is not the
originating lender may participate only in loans made to the credit
union's own members or to members of another participating state
or federal credit union. A master participation agreement must be
properly executed. The agreement must include provisions for
identifying, either through documents incorporated by reference
or directly in the agreement, the participation loan or loans before
the sale of the loans.
(6) As an alternative to making any loan authorized by and under
the conditions set forth in subdivisions (1) through (5), a credit
union may make any of the following:
(A) Any loan that may be made by a federal credit union.
However, IC 24-4.5 applies to any loan that is:
(i) made under this clause; and
(ii) within the scope of IC 24-4.5.
Any provision of federal law that is in conflict with IC 24-4.5
does not apply to a loan made under this clause.
(B) Subject to subdivision (3), any alternative mortgage loan
(as defined in IC 28-15-11-2) that may be made by a savings
association (as defined in IC 28-15-1-11) under IC 28-15-11. A
loan made under this clause by a credit union is subject to the
same terms, conditions, exceptions, and limitations that apply
to an alternative mortgage loan made by a savings association
under IC 28-15-11.
(7) A credit union may make a loan under either:
(A) subdivisions (2) through (5); or
(B) subdivision (6);
but not both. A credit union shall make an initial determination as
to whether to make a loan under subdivisions (2) through (5) or
under subdivision (6). If the credit union determines that a loan or
category of loans is to be made under subdivision (6), the written
loan policies of the credit union must include that determination.
A credit union may not combine the terms and conditions that
apply to a loan made under subdivisions (2) through (5) with the
terms and conditions that apply to a loan made under subdivision
(6) to make a loan not expressly described and authorized either
under subdivisions (2) through (5) or under subdivision (6).
(c) Nothing in this section prevents any credit union from taking an
indemnifying or second mortgage on real estate as additional security.
Formerly: Acts 1961, c.182, s.17; Acts 1969, c.133, s.4; Acts
1974, P.L.130, SEC.5. As amended by Acts 1977, P.L.294, SEC.9;
Acts 1979, P.L.267, SEC.2; Acts 1980, P.L.176, SEC.9; Acts 1982,
P.L.170, SEC.4; P.L.270-1983, SEC.6; P.L.166-1988, SEC.1;
P.L.260-1989, SEC.1; P.L.14-1992, SEC.125; P.L.228-1993, SEC.5;
P.L.263-1995, SEC.14; P.L.192-1997, SEC.18; P.L.11-1998, SEC.17;
P.L.79-1998, SEC.80; P.L.62-1999, SEC.7; P.L.53-2002, SEC.3;
P.L.141-2005, SEC.16; P.L.213-2007, SEC.68; P.L.217-2007, SEC.66;
P.L.35-2010, SEC.157; P.L.27-2012, SEC.93; P.L.186-2015, SEC.36;
P.L.159-2017, SEC.36; P.L.69-2018, SEC.55; P.L.176-2019, SEC.59;
P.L.129-2020, SEC.13; P.L.54-2021, SEC.3.