I'm curious to know how other lenders (not claiming exemption as national banks under OCC Section 34.4) are handling Indiana's Right to Refinance provisions on balloon loans? Specifically, with the "no less favorable" terms language in the statutory authority, which ultametly precludes the lender from extending new credit on terms that reflect a deterioration in credit quality of the borrower.

Have other lenders decided to no longer offer the balloon product, or has anyone figured out a way to offer the product in compliance with the statutory provision, taking into account deterioration of credit quality?

Any input is much appreciated.

We will not, under any circumstance, do a consumer balloon payment loan unless it is secured by a first lien on real estate. There is no legal way to get around the statutory requirements.

Dan is, of course, correct on this. We got caught recently by the DFI with a couple of deposit secured loans that were set up as balloon payments. Rate was higher when renewed and we were in violation. Luckily it was only two loans. No way around it as far as we could determine either.

Can someone provide the statute number or reference to where that can be read? Thanks!

For anyone interest in reading:

IC 24-4.5-3-402
Balloon payments