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Indiana Legislature approves mortgage certification program

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On The Beat Industry News In Brief

Brace yourself for a marketing blitz from banks touting the strength of their mortgages. In its last week, the General Assembly approved legislation allowing the Indiana Department of Financial Institutions to offer a five-star mortgage certification program.

The new program was originally proposed by State Rep. Ed DeLaney, D-Indianapolis, in a bill the Indiana House of Representatives unanimously approved. It then stalled in the Senate’s Committee on Insurance and Financial Institutions.

Late in the legislative process, the five-star mortgage idea was added to House Bill 1336, which overhauls the state’s $308 million Public Deposit Insurance Fund for the first time since 1937, as IBJ reported last week. Both the House and Senate approved HB 1336 in conference committee. It now awaits Gov. Mitch Daniels’ endorsement. He is expected to sign off.

“This will serve as an educational tool, letting first-time homebuyers know the risks of borrowing to buy a home and how they might avoid them,” DeLaney said in a statement.

Starting June 30, banks and mortgage brokers will be able to advertise their mortgages as five-star state-certified if they join the voluntary IDFI program and adhere to its requirements for mortgage terms, including:

• 10-percent down payments or, in the case of a refinancing, 10-percent equity

• a fixed interest rate

• provision of escrow accounts for payment of taxes and insurance

• terms that don’t exceed 30 years

• no prepayment penalty or fee.

Under the new law, banks that offer five-star mortgages must give any would-be borrowers they reject written statements of the reasons they don’t qualify. According to the bill’s fiscal impact statement, Indiana’s Legislative Services Agency expects the program to generate new revenue for the state via certification fees for banks involved in the program and civil penalties IDFI can levy against lenders who violate its terms.
 

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  • The 2 Mortgage Guys
    It keeps getting tougher and tougher. The good news is, most of the bad lenders got out of the industry because the testing wasn't easy and took quite a bit of time and studying. The mortgage menu has shrunken significantly and it's much harder to get files through underwriting guidelines so hopefully the world will have a lot less crooks in it. At least, in the mortgage industry that is!

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  1. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  2. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............

  3. Good try, Mr. Irwin, but I think we all know the primary motivation for pursuing legal action against the BMV is the HUGE FEES you and your firm expect to receive from the same people you claim to be helping ~ taxpayers! Almost all class action lawsuits end up with the victim receiving a pittance and the lawyers receiving a windfall.

  4. Fix the home life. We're not paying for your child to color, learn letters, numbers and possible self control. YOU raise your children...figure it out! We did. Then they'll do fine in elementary school. Weed out the idiots in public schools, send them well behaved kids (no one expects perfection) and watch what happens! Oh, and pray. A mom.

  5. To clarify, the system Cincinnati building is just a streetcar line which is the cheapest option for rail when you consider light rail (Denver, Portland, and Seattle.) The system (streetcar) that Cincy is building is for a downtown, not a city wide thing. With that said, I think the bus plan make sense and something I shouted to the rooftops about. Most cities with low density and low finances will opt for BRT as it makes more financial and logistical sense. If that route grows and finances are in place, then converting the line to a light rail system is easy as you already have the protected lanes in place. I do think however that Indy should build a streetcar system to connect different areas of downtown. This is the same thing that Tucson, Cincy, Kenosha WI, Portland, and Seattle have done. This allows for easy connections to downtown POI, and allows for more dense growth. Connecting the stadiums to the zoo, convention center, future transit center, and the mall would be one streetcar line that makes sense.

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