Indiana Passes Amendment

An amendment of the Indiana Home Loan Protections Act is now in effect that clarifies that rescission rights granted for a violation of the law, in Indiana's high-cost home loan statutes, refers only to a violation of the Truth In Lending Act.Gov. Mitch Daniels signed the amendment, following its passage by both the Indiana House and the Senate. The state legislature said it had made a mistake and had not meant to be ambiguous in its initial wording of the act, according to Nanci Weissgold, a partner with the Washington law firm of Kirkpatrick & Lockhart Nicholson Graham LLP. Previous language inadvertently was interpreted to permit rescission rights for violations of any law, including the state predatory lending law. "The act said 'a violation of the 'law'" which was not defined … It was unclear," Ms. Weissgold said. "Because of the confusion, Standard & Poor's has required credit enhancement for home loans. Penalties are indeterminable because S&P didn't know what the violations were." Credit enhancement for home loans is an important issue, said Ms. Weissgold, adding that it costs more to make plain "vanilla loans" when rescission is used as a defense for foreclosure.