Indiana § 28-15-11-14 - Regulation of adjustable mortgage loans

§ 28-15-11-14. Regulation of adjustable mortgage loans

Sec. 14. Adjustable mortgage loans are subject to the following:

(1) Adjustments to the principal loan balance are permissible only if:

(A) the initial payment amount is sufficient to fully amortize the loan at the beginning of the loan term; and

(B) the payment amount is adjusted at least every five (5) years to amortize the loan at the current interest rate and principal loan balance over the remaining term of the loan.

(2) Prepayment in full or in part shall be allowed without penalty.

(3) Adjustments to the interest rate must correspond directly to the movement of the money cost index, subject to such rate-adjustment limitations, if any, as a savings association may provide. For the purposes of this subdivision:

(A) the initial money cost index value is the value of the money cost index most recently available within six (6) months before the date of the closing of the loan; and

(B) the interest rate at adjustment shall reflect the difference, in reference to the interest rate of the loan on the date of closing, between the initial money cost index value and either:

(i) the money cost index value most recently available as of the date of rate adjustment, if the payment is not simultaneously adjusted; or

(ii) the money cost index value most recently available as of the date of notification of a payment adjustment.

However, when the movement of the money cost index permits an interest rate increase, the savings association may decline to increase the interest rate by the indicated amount. The savings association may decrease the interest rate at any time.

(4) The borrower may not be charged any costs or fees in connection with regularly scheduled adjustments to:

(A) the interest rate;

(B) the payment;

(C) the outstanding principal loan balance; or

(D) the loan term.

As added by P.L.193-1997, SEC.2.