Mortgage Foreclosures In Indiana

Indiana’s legislature has enacted various laws applicable to mortgage foreclosures in Indiana, including laws governing mortgage foreclosure actions and laws aimed at preventing residential mortgage foreclosures, which have been deemed a serious threat to Indiana’s economy. Under Indiana law, if a mortgagor (i.e., borrower) defaults in the performance of any condition contained in a mortgage, the mortgagee (i.e., creditor) may file a lawsuit in court to foreclose the equity of redemption contained in the mortgage. Ind. Code § 32-30-10-3. Absent an express agreement to the contrary, the remedy of the mortgagee in foreclosing is limited to the property mortgaged. Ind. Code § 32-30-10-4. In rendering a judgment of foreclosure for a mortgagee, the court will order the mortgaged premises, or as much of the mortgaged premises as may be necessary to satisfy the mortgage and court costs, to be sold in a manner reasonably likely to bring the highest net proceeds from the sale. Ind. Code §§ 32-30-10-5, 32-30-10-9. Proceeds from the sale of the mortgaged premises will first be applied to the expenses of the sale and then to the payment of the principal due on the mortgage, interest and costs. Ind. Code § 32-30-10-14. Upon satisfaction of a foreclosure judgment, the prevailing party must record the satisfaction of the mortgage at the recorder’s office of the county in which the property is located. Ind. Code § 32-30-10-6.

At any time before a final judgment of foreclosure is entered by the court, a mortgagor-borrower can avoid foreclosure by paying the principal and any interest due, with costs. Ind. Code § 32-30-10-11. After a final judgment, a mortgagor can obtain a stay of any foreclosure judgment proceedings by paying the principal and interest due. Id. The stay may be removed, however, if the mortgagor-borrower subsequently defaults on the mortgage. Id.

Mortgagors can also avoid foreclosures by taking advantage of various legally-mandated foreclosure prevention activities, which Indiana’s legislature enacted into law to avoid unnecessary foreclosures of residential properties in Indiana and provide increased stability to local and state economies. Ind. Code § 32-30-10.5-1. For example, before filing suit to foreclose on a mortgage, mortgagees-creditors are required to provide certain notices to mortgagors, including notice of default, not later than thirty (30) days before filing an action for foreclosure in court. Ind. Code § 32-30-10.5-8. Additionally, with some exceptions, courts cannot enter foreclosure judgments until the mortgagors-borrowers have had an opportunity to engage in settlement discussions with the mortgagees-creditors in an attempt to reach an agreement to prevent the foreclosure, which may include, in appropriate circumstances, modification of the mortgage. Ind. Code § 32-30-10.5-8.

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