Indiana State Legislative Update February 11, 2020

February 11, 2020 3:57 PM | Alan Thorup (Administrator)

STATEHOUSE SUMMARY

This past week marked both second and third reading deadlines for all bills. This means that any bill that did not receive a committee vote prior and/or failed to move from third reading last week is considered dead for purposes of legislative tracking. This week marks the beginning of the second half of session and the IMBA will continue to work on several legislative action items.


BILLS TO WATCH

SB 327 – Reporting of Consumer Loans by Unlicensed Lenders

Sen. Andy Zay (R-Huntington)

Why it matters
The bill requires the reporting of base-level consumer loan information to a private reporting agency approved by the Department of Financial Institutions under Chapter 7 (the payday lending section of the code). There is currently only one vendor approved by the department under Chapter 7. The requirement would apply to all lenders, both domiciled in state and out-of-state. Per IMBA conversations about the bill, this was an unintended consequence of the drafting of the bill. The IMBA was concerned about the new burdens this bill placed on lenders. Sen. Zay worked with the IMBA to clarify that the bill does not apply to depositories.

Latest action
The bill passed the Senate by a vote of 47-2 on third reading and is now eligible for consideration by the House.


SB 395 – Uniform Consumer Credit Code

Sen. Eric Bassler (R-Washington)

Why it matters
This bill originated from recommendations made by the Financial Institutions Study Committee last summer. The IMBA provided suggested changes to the Uniform Consumer Credit Code for purposes of reforming the antiquated uniform law. However, the bill was amended in the Senate Insurance and Financial Institutions Committee with several significant changes. Most notably, the bill still attempts to fix the problematic refundable calculation of the prepaid/origination fee by establishing a flat origination fee/prepaid finance charge of no more than $75 for a consumer loan under $2,000, $150 for a consumer loan between $2,000 and $4,000, and $250 for a consumer loan over $4,000. The bill also raised the state usury rate from 25% to 36% but was amended to keep the rate at 25%. The bill was amended to remove several provisions about which the IMBA expressed concern, but still contains several items that are in need of additional work. The IMBA is continuing to work on addressing those issues.

Latest action
The bill passed the Senate by a vote of 40-9 on third reading and is now eligible for consideration by the House.


HB 1021 – Liens

Rep. Jerry Torr (R-Carmel)

Why it matters

The bill would allow a person to discharge a mechanic’s lien directly with the recorder’s office without first filing in a court of record. A person may discharge a mechanic's lien by filing an indemnification, payment or cash bond with the recorder's office in an amount equal to at least 150% of the lien or $7,500, whichever is greater. By removing the requirement to file a lawsuit to satisfy a mechanic’s lien, the likelihood of a lien being satisfied is much greater which is a positive change for lenders if they have a borrower with property that is subject to the mechanic’s lien.

Latest action

The bill passed the House by a vote of 60-33 on third reading and is now eligible for consideration by the Senate.


HB 1191 – Land Contracts

Rep. Ed Clere (R-New Albany)

Why it matters

The bill aims to place greater regulations on land contracts for purposes of businesses that engage in more than four land contracts at once. Exempted from the application of these new regulations are depository institutions, first lien mortgage lenders and subsidiaries of a first lien mortgage lender.

Latest action

The bill passed the House by a vote of 84-9 on third reading and is now eligible for consideration by the Senate.


HB 1353 – Financial Institutions and Consumer Credit

Rep. Woody Burton (R-Whiteland)

Why it matters

The IMBA supports HB 1353, which is the annual bill from the Department of Financial Institutions. Every year, the DFI has an agency bill that cleans up portions of the code that it identifies as needing to be updated. The IMBA has reviewed the bill and supports the changes. There is one section of the bill that the IMBA sought clarification to fix the issue of which delinquency charge may be assessed. Last session the permissible delinquency charge was set in statute at $25 through the passage of HEA 1136. There was some confusion within contracts whether the delinquency share should be $25 or the former indexed rate according to the Consumer Price Index. The IMBA worked with legislators to clarify this inconsistency.

Latest action

The bill passed the House by a vote of 92-0 on third reading and is now eligible for consideration by the Senate.



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