Indiana § 37-5-4-1 - Limitations and prohibited practices
Full text of Indiana Indiana Code § 37-5-4-1 — Limitations and prohibited practices, with citation guidance and answers to common questions.
§ 37-5-4-1. Limitations and prohibited practices
Sec. 1. The following additional limitations and prohibited practices apply to a high cost home loan:
(1) A creditor making a high cost home loan may not directly or indirectly finance any points and fees.
(2) This subdivision does not apply to a high cost home loan described in IC 37-5-3-6(b). Prepayment fees or penalties may not be included in the loan documents for a high cost home loan or charged to the borrower if the fees or penalties exceed in total two percent (2%) of the high cost home loan amount prepaid during the first twenty-four (24) months after the high cost home loan closing.
(3) This subdivision does not apply to a high cost home loan described in IC 37-5-3-6(b). A prepayment penalty may not be contracted for after the second year following the high cost home loan closing.
(4) This subdivision does not apply to a high cost home loan described in IC 37-5-3-6(b). A creditor may not include a prepayment penalty fee in a high cost home loan unless the creditor offers the borrower the option of choosing a loan product without a prepayment fee. The terms of the offer must be made in writing and must be initialed by the borrower. The document containing the offer must be clearly labeled in large bold type and must include the following disclosure:
"LOAN PRODUCT CHOICE
I was provided with an offer to accept a product both with and without a prepayment penalty provision. I have chosen to accept the product with a prepayment penalty.".
(5) A creditor shall not sell or otherwise assign a high cost home loan without furnishing the following statement to the purchaser or assignee:
"NOTICE: This is a loan subject to special rules under IC 37-5. Purchasers or assignees may be liable for all claims and defenses with respect to the loan that the borrower could assert against the lender.".
(6) A mortgage or deed of trust that secures a high cost home loan at the time the mortgage or deed of trust is recorded must prominently display the following on the face of the instrument:
"This instrument secures a high cost home loan as defined in IC 37-5-2-8.".
(7) A creditor making a high cost home loan may not finance, directly or indirectly, any life or health insurance.
[Pre-2026 Revision Citation: 24-9-4-1.]
As added by P.L.115-2026, SEC.97.
Frequently Asked Questions About Indiana § 37-5-4-1
What does Indiana Code § 37-5-4-1 cover?
Section 37-5-4-1 ("Limitations and prohibited practices") is part of the Indiana Code, the codified statutory law of Indiana. It sets out the legal rule or procedure described in the text above. Statutes are amended regularly, so always verify against the official source.
How do I cite Indiana § 37-5-4-1?
A common citation format is "Indiana Code § 37-5-4-1" (Indiana). Legal writing may require the code abbreviation, section number, and year or edition. Match the style required by your court, professor, or publisher.
Is this the official text of Indiana law?
No. This page is for research and education and may not include the most recent amendments. For official current law, check the Indiana official source linked on this page or consult a licensed Indiana attorney.
How does Indiana § 37-5-4-1 apply to my situation?
Statutes are interpreted in context, and application depends on your specific facts. Only a licensed attorney in Indiana can advise on how this section applies to you. Contact your state or local bar association for a referral.
Sources & Verification
Not legal advice. Verify against the official source and consult a licensed attorney in Indiana.