Legislative Recap: Short Session, Long Results

Hoosier Banker, Apr 2008 by Van Til, Amber R, Neese, Beth

Another legislative session has come and gone. Although 2008 marked a "short-session" of less than 10 weeks, much was accomplished, with three major issues considered:

1. Property taxes;

2. Immigration;

3. Mortgage foreclosures.

The Indiana Bankers Association government relations team began the session monitoring more than 45 bills. In the end, we were left with five bills.

Below is a summary of legislation passed by the General Assembly. We highlight the property tax legislation (HB 1001) and the foreclosure legislation (HB 1359). The immigration bills (SB 335 and SB 345) died during the final days of session.

For a list of legislation that did not survive the legislative session, please visit the CapWiz web page available under the "Advocacy" tab at www.indianabankers.org.

House Bill 1359: Mortgage Lending

Originally introduced as the annual legislation of the Indiana Department of Financial Institutions (DFI), HB 1359 was stripped of its contents, and SB 89 and some language from HB 1360 were inserted. SB 89 contained muchneeded language that would strengthen regulation against mortgage brokers. HB 1360, as introduced, was arguably the most restrictive and over-reaching foreclosure legislation in the country. The IBA worked diligently to ensure that the legislation addressed appropriate concerns and provide real solutions for Indiana's foreclosure problem.

HB 1359 as passed:

* Establishes additional regulation of Indiana's mortgage brokers. The bill requires criminal background checks and permits the commissioner to designate a multistate automated licensing system, also to be used by the DFI, which would certify brokers and check qualifications and background of the applicants. HB 1359 specifies that the loan broker is subject to state statutes requiring disclosure of the breach of the security of any records.

* Prohibits loan brokers or originators (including depository institutions) from disposing of unencrypted or unredacted personal information without taking the appropriate actions to ensure that information is not misused. It prohibits a person from doing any of the following in connection with a contract for the services of a loan broker: (1) receiving funds that the person knows were generated as a result of a fraudulent act; (2) filing or causing to be filed with a county recorder any document that contains a misstatement or untrue statement or that omits a material fact; or (3) knowingly releasing or disclosing, or engaging in any reckless or negligent activity allowing the release or disclosure of, the personal information of a borrower or prospective borrower.

* Requires the homeowner protection unit in the attorney general's office to: (1) establish a new toll-free telephone number; or (2) designate an existing tollfree telephone number - to receive calls from persons having information about suspected fraudulent residential real estate transactions. Unless otherwise prohibited by law, requires the unit to share information reported by callers with appropriate law enforcement and regulatory agencies not later than 15 business days after the unit determines the appropriate entity to which the information should be referred.

* Eliminates the exemption from the loan broker statute for: (1) persons authorized to make loans on behalf of, or insured by, certain federal agencies; and (2) licensed real estate brokers and salespersons who render loan-related services in a real estate transaction.

* Specifies that evidence of compliance with the licensing and registration requirements for loan brokers, originators and principal managers may include a national criminal history background check by the Federal Bureau of Investigation. Specifies that the securities commissioner shall require each: (1) equitable owner of a loan brokerage business, and (2) applicant for registration as an originator or a principal manager, to submit fingerprints for a national criminal history background check by the FBI. Prohibits the commissioner from releasing the results of a national criminal history background check to a private entity.

* Provides that: (1) first-lien mortgage transactions are subject to regulation by, and (2) creditors making first-lien mortgage transactions must be licensed by the DFI. (Depository institutions are exempt from this provision.)

* Requires a creditor, a mortgage servicer or an agent of a creditor to acknowledge a written offer made in connection with a proposed short sale of property that is subject to a mortgage transaction that is at least 60 days delinquent. Provides that the acknowledgment must be provided not later than 10 business days after the date of the offer. Requires the creditor, servicer or agent to accept or reject the short sale offer not later than 30 business days after receipt of the offer.

* Requires the real estate appraiser licensure and certification board to require each initial applicant for licensure or certification as a real estate appraiser to submit fingerprints for a national criminal history background check by the FBI.