PSN Creditor Issue
Our office recently identified an inconsistency between I.C. 32-30-10.5, the Indiana statute that requires creditors to send a Pre-suit Notice (“PSN“) 30 days prior to initiating a foreclosure, and the instructions for completing the PSN issued by the Indiana Housing and Community Development Authority (“IHCDA”), which is the State Agency tasked with creating and implementing the PSN.
I.C. 32-30-10.5-2 defines creditor as:
(a) …a person:
(1) that regularly engages in the extension of mortgages that are subject to a credit service charge or loan finance charge, as applicable, or are payable by written agreement in more than four (4) installments (not including a down payment); and
(2) to which the obligation is initially payable, either on the face of the note or contract, or by agreement if there is not a note or contract.
(b) The term includes a mortgage servicer.
The instruction issued by the IHCDA state that the “Creditor” listed in the first paragraph of the PSN should be the “creditor that holds the mortgage”. Many times the current “creditor that holds the mortgage” is neither the entity “to which the obligation is initially payable” nor the servicer. Thus, there was at best ambiguity as to whether the Creditor listed could be the servicer or if it had to be the current mortgagee of record.
Our office has discussed this with, and obtained an opinion from, the Deputy Executive Director, General Counsel & Chief of Staff of the IHCDA stating that the instructions issued by the IHCDA are not meant to conflict with IC 32-30-10.5-2 and 32-30-10.5-8 and that the Creditor listed in the PSN can be servicer as required by IC 32-30-10.5-2(b).
Therefore, when completing the PSN you may, and should, list the servicer as the “Creditor” on the PSN even if you are going to later require that the foreclosure action be initiated in the name of the investor. If you have any questions or concerns, please to do not hesitate to contact us.