« August 2017 | Main | October 2017 »

Indiana Code 32-30-10.5-8.6: Can Foreclosing Lenders Obtain Provisional Court Orders Requiring Borrowers To Make Monthly Payments?

Lesson. In Indiana residential mortgage foreclosure cases, under certain circumstances a court can require a borrower to make monthly payments during the pendency of the foreclosure action. Typically, this happens when the parties are discussing a loan modification or similar workout. Before entering such an order, however, the court must first determine the borrower’s ability to pay.

Case cite. Yeager v. Deutsche Bank, 64 N.E.3d 908 (Ind. Ct. App. 2016).

Legal issue. Whether the trial court abused its discretion by failing to hold a hearing or otherwise obtain data to determine the borrowers’ ability to make monthly payments before it issued its provisional order.

Vital facts. Yeager was a residential mortgage foreclosure case. Borrowers defaulted under a promissory note and mortgage, and lender filed suit to foreclose. During the suit, lender filed a “motion for payment of mortgage, taxes and insurance premiums” in which lender sought a “provisional order,” essentially requiring the borrowers to make their monthly mortgage payment.

Procedural history. The trial court granted lender’s motion without a hearing and before the borrowers even filed a response. The borrowers appealed.

Key rules.

Yeager involved Ind. Code § 32-30-10.5 entitled “Foreclosure Prevention Agreements for Residential Mortgages.” This statute was born in 2009 during the Great Recession and has many provisions regulating the residential foreclosure process, including loss mitigation.

The specific section at issue in Yeager was 8.6(b):

(b) During the pendency of an action to which this section applies, regardless of any stay that is issued by the court under section 8.5 of this chapter, if the debtor continues to occupy the dwelling that is the subject of the mortgage upon which the action is based, the court may issue a provisional order that requires the debtor to continue to make monthly payments with respect to the mortgage on which the action is based. The amount of the monthly payment:

    (1) shall be determined by the court, which may base its determination on the debtor's ability to pay; and
    (2) may not exceed the debtor's monthly obligation under the mortgage at the time the action is filed.

Holding. The Indiana Court of Appeals, with one Judge dissenting, reversed the trial court’s ruling and remanded the case back to the trial court for a factual determination of the borrowers’ ability to pay.


The lender contended that a hearing was not required because the provisional order “did nothing more than direct such matters as permitted by statute.” Further, neither the statute nor any procedural rules required a hearing. Finally, the lender asserted that the order did not harm the borrowers. (Subsection [c] of the statute calls for any payments to be held in trust pending a future court order for disbursement.)

The borrowers countered that the trial court entered the order “ex parte” (without the borrowers being present or heard) in violation of due process. The Court’s opinion suggested that the lack of a hearing may not have been the compelling factor. Rather, the error stemmed from the trial court’s failure to conduct, in some fashion, “any inquiry on which to base its determination of the monthly payment prior to issuing the Provisional Order” in violation of 8.6(b)(1) set out above. The record contained no evidence of the borrowers’ current financial situation.

Related posts.

Certain Summonses In Indiana Residential Mortgage Foreclosure Cases Deemed Confidential

Indiana State Courts Cannot Modify (Cram Down) A Mortgage


I have represented lenders, as well as their mortgage loan servicers, in connection with consumer finance litigation. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenmclaughlin.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

8 of 9 Consumer Finance Race-Based Claims Against Servicer Dismissed In Recent Indiana Federal Court Case

Lesson. In Indiana, it is difficult to defend mortgage foreclosure actions based upon the mere assertion of consumer finance statutory violations. To avoid dismissal of the claims, courts commonly require plaintiffs to articulate specific facts.

Case cite. Sims v. New Penn Financial, 2016 U.S. Dist. LEXIS 155241 (N.D. Ind. 2016) (.pdf).

Legal issue. There were several in Sims. This case was more about procedural (pleading) requirements than anything.

Vital facts. Plaintiffs bought a home on a land contract. Plaintiffs later discovered that the land contract seller had stopped paying the mortgage loan on the home. The seller’s lender filed to foreclose. To avoid a sheriff’s sale, Plaintiffs sought to assume the seller’s loan, but the servicer of the loan refused to do so until Plaintiffs brought the loan current. In response, Plaintiffs filed suit in federal court against the loan servicer. The essential premise upon which Plaintiffs based their claim was that the servicer declined the loan assumption because Plaintiffs were African-American.

Procedural history. The defendant mortgage loan servicer filed a Rule 12(b)(6) motion to dismiss Plaintiffs’ complaint. The Sims opinion outlines Chief Judge Philip Simon’s ruling on the motion.

Key rules. Plaintiffs asserted nine consumer finance-related causes of action. I’ll address five of them here.

  1. Fair Housing Act: A claim under the FHA requires an allegation that the servicer “acted with the intent to discriminate or that its actions had a disparate impact on African Americans.” See generally, 42 U.S.C. 3604.
  2. Indiana Deceptive Consumer Sales Act: The IDCSA, Ind. Code 24-4-0.5, has the purpose of encouraging “the development of fair consumer sales practices … and provides that a “supplier may not commit an unfair, abusive, or deceptive act, omission, or practice in connection with a consumer transaction.”
  3. Fair Debt Collection Practices Act: The FDCPA generally “prohibits a debt collector from using certain enumerated collection methods in its effort to collect a ‘debt’ from a consumer.”
  4. Dodd-Frank Wall Street Reform & Consumer Protection Act: The Court noted that although “there is no doubt that Dodd-Frank creates a private cause of action for whistleblowers, courts have been reluctant to find that Dodd-Frank created any other private cause of action.”
  5. Equal Credit Opportunity Act: The ECOA generally prohibits creditors “from discriminating against ‘applicants’ on the basis of race.” 15 U.S.C. 1691(a). And, “if credit is denied or another ‘adverse action’ is taken,” the ECOA “requires creditors to set out its reasons for the action.” An “applicant” is “any person who requests … an extension of credit … including any person who is or may become contractually liable.” 12 C.F.R. 202.2(e).

Holding. The Court granted the servicer’s motion to dismiss on eight of the nine counts asserted by Plaintiffs. The sole count that survived was the ECOA claim. This did not mean that the servicer was liable under that claim – only that Plaintiffs sufficiently pleaded the action so as to notify the servicer of the allegations “and to make the right to relief under the ECOA more than speculative.”


  1. As to the FHA claim, the Court concluded that Plaintiffs alleged no “facts” to support the “vague” allegation that the servicer hindered Plaintiffs’ “efforts to assume the mortgage, because of their race and color.”
  2. Plaintiffs complained that a letter the servicer sent to Plaintiffs omitted language spelling out that the assumption approval was contingent upon Plaintiffs’ ability to reinstate the loan. The Court reasoned that “there is no plausible IDCSA claim here because the complaint pleads no facts to support the notion that [the servicer’s] omission was ‘unfair, abusive, or deceptive’ in any way.” The servicer’s failure to mention one of many requirements for approval could not “reasonably be viewed as unfair, abusive, or deceptive.”
  3. Regarding the FDCPA count, the Court’s rationale was that Plaintiffs’ complaint did not allege a false or misleading representation prohibited under the Act. Further, Plaintiffs were not “consumers” for purposes of the Act because they were never obligated to pay the contract seller’s debt but instead “could walk away from [his] debt at any point.”
  4. The Court dismissed the Dodd-Frank claim for the simple reason that a so-called “private right of action” [see post below] did not exist in this context.
  5. The ECOA cause of action passed the initial test because Plaintiffs fell under the broad definition of “applicants” requesting an extension of credit. Further, the servicer’s rejection of Plaintiffs’ assumption application theoretically “could constitute an adverse action under the ECOA.” The Court cautioned, however, that “it remains to be seen whether [Plaintiffs] can prove an ECOA violation.” 

Related posts.

I have represented lenders, as well as their mortgage loan servicers, in connection with consumer finance litigation.  If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenmclaughlin.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.