Paula Henry

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Forestall Future Foreclosure in Indiana

July 3rd, 2007 categories: Indianapolis Real Estate News, Indy Foreclosures, Real Estate Financing

MortgageForclosure rates in the State of Indiana have been the subject of many opinions and news stories. National ranking has the state placing in the top ten most months. While it is better than the first place rank we held, the moniker is one which we would like to place elsewhere.

We have all heard the stories where greed and corruption within the industry has left entire neighborhoods with vacancies and lower property values. Mortgage Fraud and fraudulent loan broker practices have contributed to many of these transactions which have resulted in foreclosure.

The State of Indiana has enacted new laws and regulations regarding loan brokers.

Major provisions of House Bill 1717 include:

  • Requirement for the creation of a principal manager who will oversee the loan brokers at each firm. The principal manager, who must have at least three years of experience in the financial services industry, will be hired privately by each firm.
  • Requirement for criminal background checks on loan broker employees, owners and principal managers.
  • Requirement for written examinations for employees and principal managers. Currently registered employees must take the test upon license renewal.
  • Increased flexibility for the Indiana Securities Commissioner to revoke, deny or suspend a loan broker license for reasons including violations of loan broker-related laws in the past 10 years under the Commissioner’s jurisdiction. In addition, knowingly filing false statements is now a Class C felony.
  • Requirements for certain exempt entities to file notices with the Securities Division every two years.

The new laws went into effect on Saturday, June 30, 2007. While the acts and laws of the State will hamper the initialzation of fraudulent practice in the mortgage industry, it is wise for the consumer to know and understand details of the loan they are qualifying and signing for.

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  1. laurie mindnich said at July 12th, 2007 at 8:43 am

    The buying and selling public needs the type of awareness that you are providing- it’s a scary time in real estate for many!

  2. Joanne Hanson said at July 31st, 2007 at 4:06 pm

    Colorado is also one of the top states for foreclosures, but I think that consumers must take a little of the blame too. Yes, lenders have encouraged them to use 100% or even up to 120% financing, but consumers have to have some responsiblity for overextending themselves and getting into precarious situations. I do feel bad for them, and hopefully lenders have also learned a lesson from the situation.

  3. Paula Henry said at July 31st, 2007 at 4:35 pm

    Joanne - I definately agree with your point of view. Indianapolis did not have the high equity growth many parts of the nation had. During this time though, we did encounter many unscrupulous “deals” with lender/appraisal partnerships and fraudulent loan practices, which resulted in many foreclosures.

    Our high foreclosure rate has mostly resulted from economic issues. Regardless of the reasons, home buyers need to be aware of the loan documents they are signing.

    The state decided to enact stricter guidelines, which is good for the industry.

  4. Paula Henry said at August 5th, 2007 at 7:49 pm

    Laurie - I missed you somehow. The public does need to know what is going on. Scary, definately. It seems our market is starting to come around. We’ll watch, wait and work on educating the consumer.

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