Update –Whether Amended Indiana Trial Rule 9.2, Set To Take Effect 1/1/20, Applies to Mortgage Foreclosures

On October 31, 2017, the Indiana Supreme Court entered its official Order Amending Indiana Rules of Trial Procedure that included amendments to Rule 9.2., (see attached).  Said amendments, “(A)(1) and (A)(2)” are to take effect on January 1, 2020.  However, there has not yet been a determination or consensus made as to whether Rule 9.2, as amended, applies to mortgage foreclosures.  As a result, based on our firm’s research and review we recommend that no changes be taken at this time.

As originally drafted Rule 9.2 divided pleading requirements into categories of cases founded on “written instruments” (i.e. mortgages) and those founded on “accounts” (i.e. credit cards).  In regards to written instrument cases, Rule 9.2 has always required copies of instruments to be attached to the mortgage foreclosure complaint.  Amended Rule 9.2(A)(2)(B) adds a requirement that if a claim arises out of a “written contract” a plaintiff who is not the original creditor must also include an affidavit providing a chronological listing of the names of all prior “owners” of the debt, including the date of each transfer of ownership of the debt, beginning with the name of the original creditor.  Amended Rule 9.2(A)(2) also requires a certified or other properly authenticated copy of the bill of sale or other document that transferred ownership of the debt to the plaintiff.

Unlike the original Rule 9.2, the amended rule fails to make a distinction as to whether the additional affidavit and transfer provision apply to written instruments, accounts or both.  This is problematic, as an adverse determination could require additional pleadings.  However, as provided above, after reviewing, researching and discussing with others similarly situated it is our firm’s recommendation that the amendments are an additional requirement for actions on accounts only and not written instruments.

In Indiana, when foreclosing on a mortgage, it is the enforcement of a security instrument.  If foreclosing on a note, it is the enforcement of a negotiable instrument.  As a result, a separate statutory section, Indiana’s version of the Uniform Commercial Code, would apply as it is not a typical “written contract.”  Further, there are several statutory sections, unique to Indiana, that were created to protect borrowers in mortgage foreclosures.  An example is Indiana Code §32-30-10.5, “Indiana’s Foreclosure Prevention Agreement.”  This section created safeguards that go much farther than what the amended rule provides.  We have also received information from courts, that have been in direct contact with the Indiana Supreme Court rules committee, who provided that the amendment’s intent was not to apply to mortgage foreclosures.  However, because the amendment has yet to go into effect there is no precedent to rely on at this time. 

Finally, although Amended Rule 9.2 does not yet provide a distinction, it does allow for an amendment of the complaint in the event of challenges by a defendant or court.  Therefore, given the uncertainty of the above, the review completed by the firm and the ability to amend the complaint if subsequently challenged, Reisenfeld intends to proceed as normal with first legal filings unless circumstances change or directed otherwise by our clients.

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