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#284509 - 12/03/04 09:31 PM Closing Agents and Property Tax Deduction Discl
Comply 101 Offline
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Comply 101
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Posts: 708
Is anyone familiar with IC 6-1.1-12-43 that will require by Jan 1 to give borrower at closing a disclosure indicating what Indiana property tax deductions are available to them? It has to be on gold or yellow paper and "closing agents" will be fined $25 for each violation. We don't close most of our loans that are secured by a principal dwelling, but I am wondering about second lien or Heloc loans that we do close at the bank. The code says transactions applicable are first lien purchase money mortgage transactions or refinancing transactions. What if we have a Heloc that is paying off a first. Would this not be considered a refinancing and the disclosure would then be required?
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#284510 - 12/04/04 04:51 PM Re: Closing Agents and Property Tax Deduction Discl
Anonymous
Unregistered

We already give information to the customer about filing or refiling for exemptions. We list the phone numbers to auditors in our area. We were doing it to help our customers. Did not know it was going to be mandatory. Interesting things that you find on this board.

Thanks

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#284511 - 12/06/04 05:04 PM Re: Closing Agents and Property Tax Deduction Discl
Comply 101 Offline
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Comply 101
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We also have always given a reminder to the borrower about refiling, but this is now required with a very specific form. Any others that could answer my original question?


Thanks!
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#284512 - 12/06/04 05:20 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Our local government held a "training" session on this last week and to hand out the forms. I'm still waiting for my mortgage people to send me examples.

If you have not received anything, I would advise contacting your county Assessor, Auditor or Clerk.

The forms were required to be provided to your local governments by 6/1 if I remember correctly.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#284513 - 12/09/04 04:41 PM Re: Closing Agents and Property Tax Deduction Discl
Anonymous
Unregistered

For those of you that would like the form. It can be found at: www.in.gov.icpr/webfile/formsdiv/51781.pdf

My take on the question about the HELOC. If the first mortgage is being released therefore the disclosure would be needed.

This is my opinion, not my employers.

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#284514 - 12/09/04 08:35 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Anon, thanks for the link but I get a "this web site cannot not be found". Would you please tell us where you found it on the IN site? Thanks.
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#284515 - 12/10/04 09:02 PM Re: Closing Agents and Property Tax Deduction Discl
Anonymous
Unregistered

Dan and others

Sorry-- I guess that my typing is not what it used to be.Please try this site: www.in.gov/icpr/webfile/formsdiv/51781.pdf
If for some reason that I did not get it again. if you go to the website for the State of Indiana www.in.gov and go to the search engine within the website and ask for "form 51781" it should come up.

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#284516 - 12/10/04 11:39 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Posts: 47,018
Bloomington, IN
The new link worked fine. Thank you.
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#284517 - 12/13/04 04:56 PM Re: Closing Agents and Property Tax Deduction Discl
Anonymous
Unregistered

Where can I find a plainly worded summary of when this is required?

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#284518 - 12/13/04 05:14 PM Re: Closing Agents and Property Tax Deduction Discl
Anonymous
Unregistered

Are most Indiana banks planning on having an acknowledgement signed? How will examiners know that it has been delivered?

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#284519 - 12/13/04 06:32 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
The statute is clear that a closing agent (a person who closes a transaction) must provide the form BEFORE closing any applicable loan AFTER 12/31/04.

There is no signatory requirement that I saw.
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#284520 - 12/13/04 06:42 PM Re: Closing Agents and Property Tax Deduction Discl
Anonymous
Unregistered

Dan, will you simply distribute the form and rely on procedures to show compliance?

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#284521 - 12/13/04 07:16 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Posts: 47,018
Bloomington, IN
That is the intent. However, we haven't decided yet on the procedures. The closing agent is responsible for this form, therefore the burden falls on the title company, attorney, etc. if it is an outside closing.

What's being tossed around (for us) is:

1. Include the form with our application packets (my preference)
2. Send it with the early disclosures.
3. Give it at closing.

The statute does not appear to put the burden of proof on the bank if an outside closing, but I don't feel comfortable not being able to demonstrate through procedures that we, the lender, are insuring the notice is being given.
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#284522 - 12/13/04 07:31 PM There is an acknowledgment requirement
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
I must apologize - I overlooked the following:

(e) A closing agent to which this section applies shall document its compliance with this section with respect to each transaction in the form of verification of compliance signed by the customer.

(f) A closing agent is subject to a civil penalty of twenty-five dollars ($25) for each instance in which the closing agent fails to comply with this section with respect to a customer.

So, there will have to be some sort of acknowledgment whether it be having them sign the form, or sign a separate form acknowledging they have received all federal and state disclosures with those disclosures listed on the acknowledgment form.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#284523 - 12/13/04 09:14 PM Re: There is an acknowledgment requirement
Anonymous
Unregistered

Thanks Dan--I didn't see that in there either.

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#284524 - 12/15/04 08:27 PM Re: There is an acknowledgment requirement
Comply 101 Offline
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Comply 101
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I would caution those banks like our own that have title companies close their first mortgage loans, but may, in some cases, close a loan in their bank which would fall under the definition of a refinancing. If you have a consumer loan that closes at the bank and it fits the definition of refinance as stated in Reg Z, the borrower would need this disclosure. I received this guidance from the DFI via Mark Tarpey. They also state while there is nothing in the code that says we have to have proof of compliance when a title company closed a loan, they highly suggested we have some form of proof.
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#284525 - 12/20/04 04:38 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Quote:

Where can I find a plainly worded summary of when this is required?




You're talking IN Code - there is no commentary (plain text). However, the code says:

(b) Before closing a transaction after December 31, 2004, a closing agent must provide to the customer the form referred to in subsection (c).

Quote:

Are most Indiana banks planning on having an acknowledgement signed? How will examiners know that it has been delivered?





Yes we will add signature lines. The code says - (e) A closing agent to which this section applies shall document its compliance with this section with respect to each transaction in the form of verification of compliance signed by the customer - your procedures/practices will not be enough IMO.

Also, this document MUST be printed on yellow or gold paper.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#284526 - 12/20/04 06:46 PM Re: Closing Agents and Property Tax Deduction Discl
Anonymous
Unregistered

Dan--
Are you saying that the form for verification of compliance has to be in yellow or gold also?

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#284527 - 12/20/04 06:53 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
No (sorry for the confusion), only the form/disclosure.
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#284528 - 12/20/04 07:51 PM Re: Closing Agents and Property Tax Deduction Discl
Anonymous
Unregistered

Thanks Dan.

One more stupid question. (hopefully)

Is this another one of the State laws that only applies to state chartered banks? What agency will be checking the national banks for compliance?

Sorry that was two questions not one.

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#284529 - 12/20/04 09:09 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
This law applies to anyone closing a first lien mortgage loan. Title companies, attorneys, credit unions, banks, etc.

I'm not sure who will examine national banks for compliance. If I'm reading the code correctly the DFI will examine state banks and whatever state agency regulates title companies will examine them, whoever regulates attorneys will examine them, etc.

"The penalty:
(1) may be enforced by the state agency that has administrative jurisdiction over the closing agent in the same manner that the agency enforces the payment of fees or other penalties payable to the agency; and
(2) shall be paid into the property tax replacement fund."


I would speculate this will be a "hot button", because each violation is $25 and that money goes into the state's property tax replacement funds. (Maybe this is how they are going to pay for the Colts new stadium!)
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#284530 - 12/27/04 06:52 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
FWIW, I was talking to the DFI concerning another issue and I brought up a question concerning showing compliance with this new notice requirement when a loan was closed outside the bank (title companies, attorneys, etc.). The person I was talking to said since they (title companies, attorneys, etc.) would be acting as our agent, we would still be considered the closing agent and responsible for showing compliance.
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#284531 - 12/28/04 05:33 PM Re: Closing Agents and Property Tax Deduction Discl
Elaine K. Sheehan Offline
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Elaine  K. Sheehan
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Grand Rapids, MI
This is related but a little off the topic, do you also in certain transactions make sure that the Sales Disclosure Form (Form 46021) is completed, or is this strictly a title company or attorney function?

Now back to the topic at hand Form 51781 Indiana Property Tax Benefits. In talking with the Department of Local Government Finance it was indicated that they have produced the format for the form but that no government agency would supply the gold or yellow paper versions. They expect that when the form is needed that the entity would whip out its gold paper and slip it into the printer. My question is are you more likely to print off your own copies or order from a preprint form provider?

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#284532 - 12/28/04 07:55 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Yes we make sure the Sales Disclosure is completed and a completed copy must be returned with the closing package.

We will print our own as needed.
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#284533 - 12/28/04 08:14 PM Re: Closing Agents and Property Tax Deduction Discl
Elaine K. Sheehan Offline
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Elaine  K. Sheehan
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Posts: 157
Grand Rapids, MI
Dan, is there any circumstance when your institution prepares the Sales Disclosure?

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#284534 - 12/28/04 08:29 PM Re: Closing Agents and Property Tax Deduction Discl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Only if we close the loan in-house. However the majority of our purchase transactions are closed at a title company.
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#284535 - 01/14/05 09:54 PM Re: There is an acknowledgment requirement
Terry Offline
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Terry
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Posts: 314
Midwest
Quote:

If you have a consumer loan that closes at the bank and it fits the definition of refinance as stated in Reg Z, the borrower would need this disclosure. I received this guidance from the DFI via Mark Tarpey.




I don't think Reg Z defines what is a refinance. But it does define "residential mortgage transaction". Do you think he meant that the only refinances covered by new regulation are refinances of residential mortgage transactions? Where do HELOCs, bridge loans, and construction loans fit in?

I just learned of this new regulation today, but I see that you've all be discussing it for the last month! Where did you all find out about this? It wasn't in the Hoosier Banker or any IBA e-mail newsletters that I can recall.
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#284536 - 01/20/05 02:38 PM Re: There is an acknowledgment requirement
Anonymous
Unregistered

Just spoke with a field assessor with the Department of Local Government Finance (DLGF) . That state agency/department is responsible for property tax assessment, therefore has responsibility for implementing this new law.

Indiana had its property tax system declared unconstitutional by a court a few years back and had to totally revise the system to a "market value" approach. As a result, the nearly, fully depreciated older homes saw a huge potential property tax increase, the homeowners screamed, and the state legislators began enacting a variety of property tax exemptions and deductions to ease the impact of the increase.

The new form is a way of publicizing all of the property tax exemptions and deductions. According to the field assessor, it probably should be received on any loan or line collateralized by a single family residence, regardless of lien position. However, the field assessor doesn't make policy, the department's policymakers are at a conference 1/20/05, and I'll call tomorrow to get an update - DLGF main number is 317-232-3777.

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#284537 - 01/20/05 03:29 PM Re: There is an acknowledgment requirement
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Anon, thanks for the information.

Quote:

According to the field assessor, it probably should be received on any loan or line collateralized by a single family residence, regardless of lien position.




Although I don't disagree with this statement from a customer service stand point, the IN Code does not require it for subordinate lien loans.

IC 6-1.1-12-43
Information provided by closing agents to customers in residential financing transactions; penalty; compliance
Sec. 43. (a) For purposes of this section :
(1) "benefit" refers to:
(A) a deduction under section 1, 9, 11, 13, 14, 16, 17.4, 26, 29, 31, 33, or 34 of this chapter; or
(B) the homestead credit under IC 6-1.1-20.9-2;
(2) "closing agent" means a person that closes a transaction;
(3) "customer" means an individual who obtains a loan in a transaction; and
(4) "transaction" means a single family residential:
(A) first lien purchase money mortgage transaction; or
(B) refinancing transaction.



Did the field assessor indicate this policy might be amended to require it for all single family transactions?
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#284538 - 01/20/05 06:56 PM Re: There is an acknowledgment requirement
Phoenix Offline
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Phoenix
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southeast
: ( - should have logged in this AM before posting my phone conversation with the field assessor.

No - he didn't say anything about any amendment. In fact, he needed to confirm with his supervisor what form I was even talking about.

My concern, and our lenders' concern, is that sometimes home improvement loans and HELOCs are refinanced (same bank or another bank), and many of those have junior liens.

To simplify the interpretation, I'd love to think that the law's language refers only to purchase mortgage transactions, and refinances of those purchase mortgage transactions (for SFRs). My lenders and I just worry that what IN may want may be broader. So - I'll call tomorrow, in-between snow storms, and let everyone know what I hear.
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#284539 - 01/24/05 02:25 PM Re: There is an acknowledgment requirement
Anonymous
Unregistered

No update yet. The DLGF Communications Officer and I talked a bit Friday, 1/21/05, and she sent me a couple of emails that only restated the new law. I sent her our lenders' questions about junior liens and HELOCs and await her response.

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#284540 - 01/28/05 05:05 PM Re: There is an acknowledgment requirement
Phoenix Offline
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Phoenix
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southeast
The IBA confirmed a lot of what Dan's written previously. This legislation was pretty much under any media or political radar screen, so there won't be any record of its intent or debate or history. The IBA concentrated its lobbying effort on making sure that banks did not have the primary regulatory burden for sending out these disclosures, and in developing model disclosures, and the IBA succeeded in having that burden go the the closing agents and in having the IN government develop the model disclosure.

So - what does "refinance" mean? The IBA is suggesting that it's a refinance of the initial loan(s) obtained to acquire the property; however, it can also apply if that initial mortgage was paid off and later on the homeowners decide to get a HELOC or home loan with a brand new first lien.

The IBA noted that because this definition differs from the HMDA and other regulatory definitions, it may be easier to simply include this disclosure, and an acknowledgement of its receipt, in the initial home loan application packet on every home loan/line. Some lenders are doing that and marketing it as a customer service.

Maybe the next step for Indiana BOLers is to do a poll of what they're doing?
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#284541 - 01/28/05 05:38 PM Re: There is an acknowledgment requirement
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,018
Bloomington, IN
Quote:

it may be easier to simply include this disclosure, and an acknowledgement of its receipt, in the initial home loan application packet




This is what we are already doing.

Thanks for the update.
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#2185674 - 07/17/18 05:04 PM Re: Closing Agents and Property Tax Deduction Discl Elaine K. Sheehan
Newbie06 Offline
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Posts: 663
We have a separate piece of paper, where the customer acknowledges that they have received the IN Tax Benefit form, that we typically print on yellow paper. My question is does this signature page have to be on yellow paper. We always have had it on yellow paper but since we are getting into imaging documents the image doesn't show up in yellow.

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#2185809 - 07/18/18 01:35 PM Re: Closing Agents and Property Tax Deduction Discl Comply 101
Newbie06 Offline
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We provide the customer with the Indiana Tax Benefit form, on yellow paper without the signature line, and have the customer sign a separate page indicating they received the form. Does anyone know if this separate signature page has to be on yellow paper?

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#2185869 - 07/18/18 03:53 PM Re: Closing Agents and Property Tax Deduction Discl Comply 101
Dan Persfull Offline
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Dan Persfull
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Posts: 47,018
Bloomington, IN
Only the form has to be gold or yellow but the acknowledgment form should be in the following format.

CLOSING AGENT INSTRUCTIONS
Pursuant to Section 6-1.1-12-43 of the Indiana Code, before closing a transaction after December 31, 2004, a closing
agent must provide a copy of Indiana State Form 51781 (Indiana Property Tax Benefits) to individuals who obtain
a loan secured by a single-family residence, which is a first lien purchase money mortgage transaction or a refinance
transaction.

Accordingly, all closing agents are hereby instructed to reproduce the attached copy of Indiana State Form 51781
(Indiana Property Tax Benefits) on GOLD or YELLOW PAPER, and provide a copy to each borrower.

BORROWER ACKNOWLEDGMENT
By signing below, each of the undersigned hereby acknowledges receipt of a copy of Indiana State Form 51781
(Indiana Property Tax Benefits) on GOLD or YELLOW PAPER.
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