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| Public Act 096-0854 |
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AN ACT concerning property.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Mortgage Escrow Account Act is amended by | ||||
adding Section 6.5 as follows: | ||||
(765 ILCS 910/6.5 new)
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Sec. 6.5. Homeownership preservation program. | ||||
(a) For purposes of this Section, | ||||
"Homeownership Preservation Program" means | ||||
(1) a program that is expressly intended to assist | ||||
homeowners by refinancing or restructuring existing | ||||
mortgage obligations either (i) to avoid default or | ||||
foreclosure, or both, or (ii) to lower interest rates, and | ||||
that is sponsored by a federal, state, or local government | ||||
authority or a non-profit organization; or | ||||
(2) a lender-sponsored program that is expressly | ||||
intended to assist homeowners by restructuring existing | ||||
mortgage obligations to avoid default or foreclosure, or | ||||
both. | ||||
"Subprime Mortgage Lender" means a mortgage lender that | ||||
has, for at least 2 of the prior 3 reporting years, reported | ||||
the rate spread, as required under 12 C.F.R. § 203.4(a)(12), | ||||
for at least 75% of the loans reported by the mortgage lender | ||||
in the Loan/Application Register filed in compliance with the | ||
federal Home Mortgage Disclosure Act, 12 U.S.C. 2801 et seq., | ||
and implementing Regulation C, 12 C.F.R. 201 et seq. | ||
(b) Section 6 shall not apply: | ||
(1) to a mortgage loan made by a subprime mortgage | ||
lender in compliance with the requirements for | ||
higher-priced mortgage loans established in Regulation Z | ||
12 C.F.R. Part 226, issued by the Board of Governors of the | ||
Federal Reserve System to implement the federal Truth in | ||
Lending Act, whether or not the mortgage loan is a | ||
higher-priced mortgage loan, provided that: | ||
(A) for loans that are not higher-priced mortgage | ||
loans, the escrow account must be terminated upon the | ||
borrower's request at no cost to the borrower; and | ||
(B) for loans that are higher-priced mortgage | ||
loans, the escrow account must be terminated upon the | ||
borrower's request at no cost to the borrower on terms | ||
no stricter than the following conditions: | ||
(i) the escrow termination requirements | ||
established in Regulation Z are satisfied; | ||
(ii) the borrower has maintained a | ||
satisfactory payment history (no payments more | ||
than 30 days late) for the 12 months prior to the | ||
mortgage lender's receipt of the borrower's | ||
termination request; and | ||
(iii) the borrower has reimbursed the mortgage | ||
lender for any escrow advances or escrow | ||
deficiencies existing at the time of the | ||
borrower's termination request. | ||
(2) to a refinance or modification made by a subprime | ||
mortgage lender under a homeownership preservation program | ||
that requires establishment of an escrow account as a | ||
condition or requirement of the refinance or modification, | ||
provided that the escrow account must be terminated upon | ||
the borrower's request at no cost to the borrower on terms | ||
no stricter than the following conditions: | ||
(A) termination is permitted under the terms of the | ||
government or non-profit sponsored homeownership | ||
preservation program, if applicable, and the borrower | ||
complies with all conditions or requirements for | ||
termination established by or allowed under such | ||
program; | ||
(B) the borrower has maintained a satisfactory | ||
payment history (no payments more than 30 days late) | ||
for the 12 months prior to the mortgage lender's | ||
receipt of the borrower's termination request; and | ||
(C) the borrower has reimbursed the mortgage | ||
lender for any escrow advances or escrow deficiencies | ||
existing at the time of the borrower's termination | ||
request. | ||
Termination may not be denied for failure to reimburse | ||
escrow advances or escrow deficiencies under item (iii) of | ||
subparagraph (B) of paragraph (1) of subsection (b), or | ||
subparagraph (C) of paragraph (2) of subsection (b) if the | ||
borrower claims, in writing, that there is an error with such | ||
advances or deficiencies. In such case, the lender must | ||
terminate the escrow account if all other conditions of | ||
termination are satisfied; however, such termination will not | ||
alter or affect any other rights of the mortgage lender or the | ||
borrower with respect to the collection of such escrow advances | ||
or escrow deficiencies.
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Section 99. Effective date. This Act takes effect upon | ||
becoming law. | ||