CHAPTER 5. CLAIMS, DEFENSES, REMEDIES
IC 24-9-5
Chapter 5. Claims, Defenses, Remedies
IC 24-9-5-1
Purchaser or assignee subject to affirmative claims and defenses;
claims available to borrower
Sec. 1. (a) A person who purchases or is otherwise assigned a high
cost home loan is subject to all affirmative claims and any defenses,
except for an affirmative claim or defense pursuant to IC 24-9-3-7,
with respect to the high cost home loan that the borrower could assert
against a creditor or broker of the high cost home loan. However, this
section does not apply if the purchaser or assignee demonstrates by
a preponderance of the evidence that a reasonable person exercising
ordinary due diligence could not determine that the loan was a high
cost home loan. A purchaser or an assignee is presumed to have
exercised reasonable due diligence if the purchaser or assignee:
(1) has in place at the time of the purchase or assignment of the
subject loans, policies that expressly prohibit the purchase or
acceptance of the assignment of any high cost home loans;
(2) requires by contract that a seller or an assignor of home
loans to the purchaser or assignee represents and warrants to the
purchaser or assignee that either:
(A) the seller or assignor will not sell or reassign any high
cost home loans to the purchaser or assignee; or
(B) the seller or assignor is a beneficiary of a representation
and warranty from a previous seller or assignor to that
effect;
(3) exercises reasonable due diligence:
(A) at the time of purchase or assignment of home loans; or
(B) within a reasonable period after the purchase or
assignment of home loans;
intended by the purchaser or assignee to prevent the purchaser
or assignee from purchasing or taking assignment of any high
cost home loans; or
(4) satisfies the requirements of subdivisions (1) and (2) and
establishes that a reasonable person exercising ordinary due
diligence could not determine that the loan was a high cost
home loan based on the:
(A) documentation required by the federal Truth in Lending
Act (15 U.S.C. 1601 et seq.); and
(B) itemization of the amount financed and other
disbursement disclosures.
(b) A borrower acting only in an individual capacity may assert
against the creditor or any subsequent holder or assignee of a high
cost home loan:
(1) a violation of IC 24-9-4-2 as a defense, claim, or
counterclaim, after:
(A) an action to enjoin foreclosure or to preserve or obtain
possession of the dwelling that secures the loan is initiated;
(B) an action to collect on the loan or foreclose on the
collateral securing the loan is initiated; or
(C) the loan is more than sixty (60) days in default;
within three (3) years after the closing of a home loan;
(2) a violation of this article in connection to the high cost home
loan as a defense, claim, or counterclaim in an original action
within five (5) years after the closing of a high cost home loan;
and
(3) any defense, claim, counterclaim, or action to enjoin
foreclosure or preserve or obtain possession of the home that
secures the loan, including a violation of this article after:
(A) an action to collect on the loan or foreclose on the
collateral securing the loan is initiated;
(B) the debt arising from the loan is accelerated; or
(C) the loan is more than sixty (60) days in default;
at any time during the term of a high cost home loan.
(c) In an action, a claim, or a counterclaim brought under
subsection (b), the borrower may recover only amounts required to
reduce or extinguish the borrower's liability under a home loan plus
amounts required to recover costs, including reasonable attorney's
fees.
(d) The provisions of this section are effective notwithstanding
any other provision of law. This section shall not be construed to
limit the substantive rights, remedies, or procedural rights available
to a borrower against any creditor, assignee, or holder under any
other law. The rights conferred on borrowers by subsections (a) and
(b) are independent of each other and do not limit each other.
As added by P.L.73-2004, SEC.33. Amended by P.L.141-2005,
SEC.6.
IC 24-9-5-2
Acceleration; reinstatement of high cost home loan after cure of
default
Sec. 2. (a) If a creditor asserts that grounds for acceleration under
the terms of a high cost home loan exist and requires the payment in
full of all sums secured by the security instrument, the borrower or
a person authorized to act on the borrower's behalf at any time before
the title is transferred by means of foreclosure, judicial proceeding
and sale, or otherwise may cure the default and reinstate the high
cost home loan by tendering the amount or performance as specified
in the security instrument.
(b) If the borrower cures the default on a high cost home loan, the
original loan terms shall be reinstated, and any acceleration of any
obligation under the security instrument or note arising from the
default is nullified as of the date of the cure.
As added by P.L.73-2004, SEC.33.
IC 24-9-5-3
Foreclosure proceedings
Sec. 3. (a) A creditor making a high cost home loan that has the
right to foreclose must use the judicial foreclosure procedures of the
state in which the property securing the high cost home loan is
located. The borrower has the right to assert in the proceeding the
nonexistence of a default and any other claim or defense to
acceleration and foreclosure, including any claim or defense based
on any violations of this article.
(b) This section is not intended and shall not be construed to
allow any claim or defense otherwise barred by any statute of
limitation or repose.
As added by P.L.73-2004, SEC.33.
IC 24-9-5-4
Liability for violation; exceptions; damages; equitable relief;
recoupment; action by homeowner protection unit for deceptive
act; statute of limitations; priority of damages over civil penalties
Sec. 4. (a) This section does not apply to a violation of
IC 24-9-3-7(c)(4), IC 24-9-3-7(c)(5), or IC 24-9-3-7(c)(6). A person
who violates this article is liable to a person who is a party to the
home loan transaction, mortgage transaction (as defined in
IC 24-9-3-7(a)), or real estate transaction (as defined in
IC 24-9-3-7(b)), as appropriate, that gave rise to the violation for the
following:
(1) Actual damages, including consequential damages. A person
is not required to demonstrate reliance in order to receive actual
damages.
(2) Statutory damages equal to two (2) times the finance
charges agreed to in a home loan agreement.
(3) Costs and reasonable attorney's fees.
(b) A person may be granted injunctive, declaratory, and other
equitable relief as the court determines appropriate in an action to
enforce compliance with this chapter.
(c) The right of rescission granted under 15 U.S.C. 1601 et seq.
for a violation of the federal Truth in Lending Act (15 U.S.C. 1601
et seq.) is available to a person acting only in an individual capacity
by way of recoupment as a defense against a party foreclosing on a
home loan at any time during the term of the loan. Any recoupment
claim asserted under this provision is limited to the amount required
to reduce or extinguish the person's liability under the home loan
plus amounts required to recover costs, including reasonable
attorney's fees. This article shall not be construed to limit the
recoupment rights available to a person under any other law.
(d) The remedies provided in this section are cumulative but are
not intended to be the exclusive remedies available to a person.
Except as provided in subsection (e), a person is not required to
exhaust any administrative remedies under this article or under any
other applicable law.
(e) Before bringing an action regarding an alleged deceptive act
under this chapter, a person must:
(1) notify the homeowner protection unit established by
IC 4-6-12-2 of the alleged violation giving rise to the action;
and
(2) allow the homeowner protection unit at least ninety (90)
days to institute appropriate administrative and civil action to
redress a violation.
(f) An action under this chapter must be brought within five (5)
years after the date that the person knew, or by the exercise of
reasonable diligence should have known, of the violation of this
article.
(g) An award of damages under subsection (a) has priority over a
civil penalty imposed under this article.
As added by P.L.73-2004, SEC.33. Amended by P.L.3-2005, SEC.1;
P.L.105-2009, SEC.10; P.L.114-2010, SEC.19.
IC 24-9-5-5
Unintentional or erroneous violations; corrections by creditors
Sec. 5. (a) If the creditor or an assignee establishes by a
preponderance of evidence that a violation of this article is
unintentional or the result of a bona fide error of law or fact
notwithstanding the maintenance of procedures reasonably adopted
to avoid any such violation or error, the validity of the transaction is
not affected, and no liability is imposed under section 4 of this
chapter except in the case of a refusal to make a refund.
(b) Except as provided in subsection (c), a creditor in a high cost
home loan who in good faith fails to comply with this article is not
considered to have violated this article if the creditor does the
following before receiving notice of the failure from the borrower:
(1) Not later than ninety (90) days after the date of the loan
closing:
(A) makes appropriate restitution to the borrower of any
amounts collected in error; and
(B) takes necessary action to make all appropriate
adjustments to the loan to correct the error.
(2) Not later than one hundred twenty (120) days after the date
of the loan closing, notifies the borrower of:
(A) the error; and
(B) the amount of the required restitution or adjustment.
(c) Subsection (b) does not apply unless the creditor establishes
that the compliance failure was not intentional and resulted from a
bona fide error of fact or law, notwithstanding the maintenance of
procedures reasonably adopted to avoid the errors.
As added by P.L.73-2004, SEC.33.
IC 24-9-5-6
Relation to other laws
Sec. 6. The rights conferred by this article are in addition to rights
granted under any other law.
As added by P.L.73-2004, SEC.33.