24 Hoosier Banker October 2015 W We have a new logo this year . . . . sieem.infotex.com COMPLIANCE CONNECTION Question: The TILA-RESPA Integrated Disclosure (TRID) requirements* that took effect Oct. 3, 2015, ask me to disclose whether my state law protects the borrower from personal liability for an unpaid balance after a foreclosure. Considering that the TRID is a federal disclosure, what specifically does Indiana law require? Additionally, which box should I check with respect to the question from the last page of the Closing Disclosure, as shown below? Liability after Foreclosure If your lender forecloses on this property and the foreclosure does not cover the amount of unpaid balance on this loan, • State law may protect you from liability for the unpaid balance. If you refinance or take on any additional debt on this property, you may lose this protection and have to pay any debt remaining even after foreclosure. You may want to consult a lawyer for more information. • State law does not protect you from liability for the unpaid balance. Answer: Provided your bank has the borrower sign a promissory note and security agreement, you should check the second box, indicating Indiana state law does not protect the borrower from liability for the unpaid balance. Ind. Code § 32-30-10-7 provides: “If there is an express written agreement for the payment of the sum of money that is secured by a mortgage or separate instrument, the court shall direct in the order of sale that the balance due on the mortgage and costs that may remain unsatisfied after the sale of the mortgaged premises be levied on any property of the mortgage-debtor.” Conversely Ind. Code § 32-30-10-4 provides: “If there is not an express agreement in the mortgage or a separate instrument for the payment of the sum secured by the mortgage, the remedy of the mortgagee is confined to the property mortgaged.” Not surprisingly, most banks ensure their promissory notes or security agreements impose liability on the debtor for any unsatisfied judgment amount. In the unlikely event that your bank does not require the borrower to sign an express agreement, then the first box in the Closing Disclosure should be checked. For mortgages on Indiana property, the second option should be selected. t About Compliance Connection In order to address compliance inquiries from members, IBA provides Compliance Connection, an assistance program offering advice on Indianaspecific compliance questions. If the matter requires legal advice, IBA Compliance Connection will refer the bank to a law firm. Acting as IBA’s compliance counsel is Brett J. Ashton, partner with Krieg DeVault LLP, Indianapolis, and chair of the firm’s financial institutions practice group. Submit Compliance Connection questions to IBA’s Amber R. Van Til at avantil@indianabankers. org or Josh Myers at jmyers@indianabankers.org. This information is provided for general education purposes and is not intended to be legal advice. Please consult legal counsel for specific guidance as to how this information applies to your institution’s circumstances or situation. * See Model Closing Disclosure, Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z). Examples of these disclosures are available on the CFPB website at: www.consumerfinance.gov/regulatoryimplementation/tila-respa/
RkJQdWJsaXNoZXIy MTg3NDExNQ==