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On March 31, 2022, the Indiana Court of Appeals issued its second decision relating to the collection of mortgage interest during the pandemic. At the beginning of the initial surge of COVID-19, the Indiana Supreme Court had granted Marion County Courts’ request to toll the time in which a litigant must meet deadlines and comply with rules of procedure. The emergency order granted relief beginning March 16, 2020, and stated that “no interest shall be due or charged during the tolled period”. By further orders, this tolling period was extended through August 14, 2020. Based upon those emergency orders, a trial court issued a judgment and decree of foreclosure that excluded interest due under the terms of the note and mortgage for the period of March 16, 2020, through August 14, 2020.
In PNC Bank v. Page, the mortgage lender asked the Court to overrule the trial court’s decision to remove that portion of interest, arguing that the emergency order’s tolling of interest could not apply to foreclosure cases. The lender pointed to Governor Holcomb’s Executive Order 20-06, which temporarily suspended the prosecution of foreclosure and eviction actions in Indiana, and explicitly stated that the suspension does not relieve a borrower’s obligations under a mortgage. Previously, the Indiana Court of Appeals had found that post-judgment interest could not be tolled by Indiana courts because it is awarded to the judgment holder by statute and falls under the legislative powers of the state. Denman v. St. Vincent Med. Grp., Inc., Ind. Ct. App. 2021. By the same reasoning, the Court agreed with the lender and held that the tolling period does not apply to pre-judgment interest in a mortgage foreclosure.
Impact on Servicers and Lenders in Indiana
This pair of rulings is great news for mortgage lenders in Indiana. The somewhat contradictory orders issued by Indiana’s legislative and judicial branches have led to inconsistent rulings in mortgage foreclosures over the past 18 months. Now that the apparent contradiction has been resolved, lenders can rest easy that their standard interest calculations are enforceable in Indiana. Questions? This post was prepared by Caryn Beougher, Esq, an attorney in PLG's Indianapolis, Indiana office. Contact us here.
The foreclosure crisis starting around 2007 bore from it a slew of legislation which attempted to help borrowers facing imminent foreclosure or the loss of their home due to foreclosure. One such piece of legislation was the Troubled Asset Relief Program, or TARP. In February of 2010, the United States Treasury established the Hardest Hit Fund in an effort to provide targeted financial aid to states hit most significantly by the subprime mortgage crisis.
Indiana is one of 19 states that received money from the U.S. Treasury to fund its Indiana Hardest Hit Fund (“the Fund”). Over the course of its run since 2010, Indiana received more than $283 million for the Fund, which was a program run by the Indiana Housing and Community Development Authority (IHCDA). The final deadline for accepting applications for the fund ended on May 3, 2021. The program provided eligible borrowers with up to $30,000.00 to reinstate their mortgage loans (see 877gethope.org). The Indiana Foreclosure Prevention Network boasts that it has provided over $182 million to over 11,000 Hoosiers in the State.
Order Amending Local Bankruptcy Rules
The Bankruptcy Court for the Northern District of Indiana (“IN-N”) has adopted a new local rule and corresponding form for filing a Response to Notice of Final Cure (“Response”) effective January 1, 2021. Changes are summarized below:
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