The result of the IBA lawsuit: the amendment to the mortgage expiration statute is not retroactive.
As you are probably aware, the Indiana Bankers Association (IBA), on behalf of certain members, instituted an action to have the United States District Court determine that the amendment to the mortgage expiration statute was unconstitutional, to the extent that it applied retroactively.
This lawsuit was resolved by the Indiana Attorney General stipulating that the amendment to the mortgage modification statute was not retroactive and is unenforceable as it relates to mortgages executed prior to July 1, 2012. The United States District Court entered an order to this effect.
The result of this action is certainly a welcome turn of events relating to this issue, and the IBA should be commended on this effort.
It should be noted that this is only a decision from a trial court. It is not the decision of an appellate court or the Indiana Supreme Court. A decision of a trial court is not binding precedent as to any other court. The fact that the Indiana Attorney General stipulated that the statue was not intended to be retroactive should have great weight in any further litigation.
However, this action does not prevent a borrower from attempting to have a mortgage determined to have expired under the statute as amended. Thus, it is our recommendation that lenders continue to take remedial action as to mortgages that may be deemed to expire July 1, 2012, as a result of the statutory amendment, or which may expire during the next twelve months.
It is our understanding that there will be an effort made in the early days of the 2013 legislative session to enact a statutory provision which has the same effect as the court's decision.
When a mortgage does contain a maturity date, is the appropriate remedial action to provide for a new maturity date in an affidavit or through a modification/amendment to the mortgage?
It is our belief that an affidavit is not the appropriate remedial step to provide for a new maturity date when the original mortgage contained a maturity date. Under those circumstances, the appropriate action would be the execution by the lender and the borrower of an amendment or modification of the mortgage to state the new maturity date.
Form of Affidavit
We have revised the form of affidavit to include a statement in the notarization clause which provides that the person executing the affidavit was "duly sworn, under the penalties of perjury" at the time of the execution of the affidavit as to the facts stated in the affidavit. If you would like to have a Word version of the form of affidavit, in order to make additional changes to the document, contact Jennifer Walker at email@example.com.
Please feel free to contact the attorneys in the Bankruptcy and Creditors' Rights Group if you have any questions.