2023 Indiana Code › Title 24. Trade Regulation › Article 4.4. First Lien Mortgage Lending › Chapter 2. Miscellaneous › 24-4.4-2-402.3. Surety Bond; Requirements; Amount; Termination; Liability; Notices

Sec. 402.3. (1) Each:
(a) creditor; and
(b) person that is exempt (either under this article or under IC 24-4.5) from licensing and that:
(i) employs a licensed mortgage loan originator; or
(ii) sponsors a licensed mortgage loan originator as permitted by IC 24-4.4-1-202(b)(8) or by 750 IAC 9;
must be covered by a surety bond in accordance with this section.
(2) A surety bond must:
(a) provide coverage for:
(i) a creditor; or
(ii) a person that is exempt from licensing and that employs a licensed mortgage loan originator, or that sponsors a licensed mortgage loan originator as permitted by IC 24-4.4-1-202(b)(8) or by 750 IAC 9;
in an amount as prescribed in subsection (4);
(b) be in a form prescribed by the director;
(c) be in effect:
(i) during the term of the creditor's license; or
(ii) at any time during which the person exempt from licensing employs a licensed mortgage loan originator or sponsors a licensed mortgage loan originator as permitted by IC 24-4.4-1-202(b)(8) or by 750 IAC 9;
as applicable;
(d) subject to subsection (3), remain in effect during the two (2) years after:
(i) the license of the creditor is surrendered or terminated; or
(ii) the person exempt from licensing ceases to employ a licensed mortgage loan originator, or ceases to sponsor a licensed mortgage loan originator as permitted by IC 24-4.4-1-202(b)(8) or by 750 IAC 9, or to offer financial services to individuals in Indiana, whichever is later;
as applicable;
(e) be payable to the department for the benefit of:
(i) the state; and
(ii) individuals who reside in Indiana when they agree to receive financial services from the creditor or the person exempt from licensing, as applicable;
(f) be issued by a bonding, surety, or insurance company authorized to do business in Indiana and rated at least "A-" by at least one (1) nationally recognized investment rating service; and
(g) have payment conditioned upon:
(i) the creditor's or any of the creditor's licensed mortgage loan originators'; or
(ii) the exempt person's or any of the exempt person's licensed mortgage loan originators';
noncompliance with or violation of this chapter, 750 IAC 9, or other federal or state laws or regulations applicable to mortgage lending.
(3) The director may adopt rules or guidance documents with respect to the requirements for a surety bond as necessary to accomplish the purposes of this article. Upon written request from:
(a) a creditor described in subsection (1)(a); or
(b) an exempt person described in subsection (1)(b);
the director may, at the discretion of the director, waive or shorten the two (2) year period set forth in subsection (2)(d) during which a surety bond required by this section must remain in effect after the occurrence of an event described in subsection (2)(d)(i) or (2)(d)(ii), as applicable.
(4) The penal sum of the surety bond shall be maintained in an amount that reflects the dollar amount of mortgage transactions originated as determined by the director. If the principal amount of a surety bond required under this section is reduced by payment of a claim or judgment, the creditor or exempt person for whom the bond is issued shall immediately notify the director of the reduction and, not later than thirty (30) days after notice by the director, file a new or an additional surety bond in an amount set by the director. The amount of the new or additional bond set by the director must be at least the amount of the bond before payment of the claim or judgment.
(5) If for any reason a surety terminates a bond issued under this section, the creditor or the exempt person shall immediately notify the department and file a new surety bond in an amount determined by the director.
(6) Cancellation of a surety bond issued under this section does not affect any liability incurred or accrued during the period when the surety bond was in effect.
(7) The director may obtain satisfaction from a surety bond issued under this section if the director incurs expenses, issues a final order, or recovers a final judgment under this chapter.
(8) Notices required under this section must be made in writing and submitted through the NMLSR or any other electronic registration system that may be approved by the director.
As added by P.L.35-2010, SEC.15. Amended by P.L.216-2013, SEC.3; P.L.137-2014, SEC.4; P.L.103-2014, SEC.3; P.L.5-2015, SEC.53; P.L.69-2018, SEC.5; P.L.176-2019, SEC.3; P.L.129-2020, SEC.3; P.L.197-2023, SEC.5.