|
Rep. Angelo Saviano
Filed: 4/12/2005
|
|
09400HB0868ham001 |
|
LRB094 03453 LCB 44461 a |
|
|
1 |
| AMENDMENT TO HOUSE BILL 868
|
2 |
| AMENDMENT NO. ______. Amend House Bill 868 by replacing |
3 |
| everything after the enacting clause with the following:
|
4 |
| "Section 1. Short title. This Act may be cited as the |
5 |
| Mortgage Lender's
Closing Duties Act.
|
6 |
| Section 5. Definitions. As used in this Act:
|
7 |
| "Residential real estate", "lender", "borrower", "mortgage |
8 |
| loan",
"residential mortgage loan", "loan broker", "loan |
9 |
| originator", "loan
originating", "residential mortgage loan |
10 |
| commitment", and "escrow agent" are
defined as in the |
11 |
| Residential Mortgage License Act of 1987.
|
12 |
| "Loan package" refers to any and all documentation tendered |
13 |
| by a
lender reasonably necessary to effectuate the escrow |
14 |
| closing, the execution of
which by the borrower shall permit |
15 |
| the immediate disbursement of mortgage loan
proceeds.
|
16 |
| "Escrow closing" refers to the process of accepting escrow |
17 |
| funds and a
loan package by an escrow agent on a residential |
18 |
| mortgage loan and the final
disbursement of those funds, along |
19 |
| with the borrower's down payment, if any,
and the acceptance of |
20 |
| documents from the seller of the residential real
property |
21 |
| sufficient to transfer title (legal or
equitable) to the |
22 |
| subject property to the borrower; and the simultaneous
transfer |
23 |
| of the balance of such funds as may be due to the seller, or as |
24 |
| the
seller and borrower may direct, and the delivery of the |
|
|
|
09400HB0868ham001 |
- 2 - |
LRB094 03453 LCB 44461 a |
|
|
1 |
| documents from the
seller to the borrower, including, if |
2 |
| applicable, the placing for recording of
the deed or other |
3 |
| document intended to place the borrower in title to the
subject |
4 |
| residential real property.
|
5 |
| "Investor" refers to the entity that invests money in |
6 |
| residential
mortgage loans, or ultimately provides funding |
7 |
| necessary to close a residential
mortgage financing |
8 |
| transaction.
|
9 |
| "Funding" and "good funds" refer to the monetary |
10 |
| consideration provided
by a lender incident to and simultaneous |
11 |
| with the closing of a "residential
mortgage financing |
12 |
| transaction", as that term is defined and used in the
|
13 |
| Residential Mortgage License Act of 1987, and shall consist of |
14 |
| cash,
a cashier's check or checks, a certified check or checks, |
15 |
| a money order or
money orders, or the electronic transfer to |
16 |
| the escrow agent of such cash,
cashier's check or checks, |
17 |
| certified check or checks, or money order or orders,
but do not |
18 |
| include a bank draft or drafts or the electronic transfer to |
19 |
| the
escrow agent of a bank draft or drafts, nor any other form |
20 |
| of funding
containing conditions precedent to the negotiation |
21 |
| of that funding.
|
22 |
| "Firm written commitment for mortgage loan financing" |
23 |
| means a non-contingent written
agreement to lend to a borrower |
24 |
| good funds secured by a mortgage against a
specific parcel of |
25 |
| residential real property and which shall, at a minimum,
state |
26 |
| the amount of the loan, the rate of interest per annum, the |
27 |
| annual
percentage rate, and any loan origination and loan |
28 |
| discount fees, and shall
be subject to only the following |
29 |
| conditions:
|
30 |
| (1) no material changes in the borrower's financial |
31 |
| condition;
|
32 |
| (2) the lien of the mortgage being insured by a |
33 |
| licensed title insurance
company as the first and paramount |
34 |
| lien against the residential real property;
|
|
|
|
09400HB0868ham001 |
- 3 - |
LRB094 03453 LCB 44461 a |
|
|
1 |
| (3) matters of survey;
|
2 |
| (4) homeowner's insurance satisfactory to the lender; |
3 |
| and
|
4 |
| (5) the mortgage being funded by a date certain.
|
5 |
| Section 10. Provision of loan documents. A lender or |
6 |
| investor who has
issued a firm written
commitment for mortgage |
7 |
| loan financing, upon receiving reasonable notice prior
to the
|
8 |
| closing from the buyer, the seller, or the escrow closing |
9 |
| company of the date,
time, and location of the closing of the |
10 |
| purchase and sale of 1-4 family,
owner-occupied residential |
11 |
| real estate, must provide to the escrow
closer
the mortgage |
12 |
| loan documents or loan package at the time, date, and place for
|
13 |
| the closing for execution by the borrower and reasonably sought |
14 |
| by that lender
as a precondition to the disbursement of |
15 |
| mortgage loan proceeds.
|
16 |
| Section 15. Provision of loan funds. A lender or investor |
17 |
| who has
issued a firm written
commitment for
mortgage loan |
18 |
| financing, upon receiving reasonable notice from the buyer, the
|
19 |
| seller, or the escrow closing company of the date, time, and |
20 |
| location of the
closing of the purchase and sale of 1-4 family, |
21 |
| owner-occupied residential real
estate must provide to the |
22 |
| escrow closer the necessary funding for
the mortgage loan in |
23 |
| the form of "good funds" at the time, date, and place for
the |
24 |
| closing for use by the borrower incident to the purchase and |
25 |
| sale
transaction. Incident to the funding of that mortgage |
26 |
| loan, any lender
intending to utilize an electronic transfer of |
27 |
| funding shall first secure any
necessary wire transfer |
28 |
| instructions from the escrow closer and shall advise
the |
29 |
| borrower or the borrower's designee in writing of its intention |
30 |
| to transfer
the funding for the
transaction via electronic |
31 |
| means and shall institute that electronic transfer
in |
32 |
| sufficient time so that the necessary funding will be received |
|
|
|
09400HB0868ham001 |
- 4 - |
LRB094 03453 LCB 44461 a |
|
|
1 |
| by the escrow
closer prior to the time and date of the escrow |
2 |
| closing.
|
3 |
| Section 20. Fees to cover lender's fines prohibited. A |
4 |
| lender or investor
who has issued a firm written
commitment for
|
5 |
| mortgage loan financing, upon receiving reasonable notice from |
6 |
| the buyer, the
seller, or the escrow closing company of the |
7 |
| date, time, and location of the
closing of the purchase and |
8 |
| sale of 1-4 family, owner-occupied residential real
estate may |
9 |
| not charge or attempt to charge to the borrower a fee or |
10 |
| anything of
value to offset such costs as may be incurred by it |
11 |
| as a result of the
violation by the lender of any provision of |
12 |
| this Act.
|
13 |
| Section 25. Notice to investor. A notice of closing as |
14 |
| described in this Act
that is provided to a
loan
originator or |
15 |
| loan broker shall be deemed to constitute notice to any |
16 |
| investor.
|
17 |
| Section 30. Closing package. |
18 |
| (a) A lender who has issued a firm written commitment for |
19 |
| mortgage loan financing shall deliver a loan package and the |
20 |
| closing funds to the title company only after:
|
21 |
| (1) the lender confirms with the title company that the |
22 |
| lender's commitment requirements have been satisfied or |
23 |
| will be satisfied at the closing and a closing can be |
24 |
| scheduled; and
|
25 |
| (2) the lender receives written notice from the title |
26 |
| company that the buyer's and seller's representatives have |
27 |
| confirmed their readiness to close at the appointed time.
|
28 |
| (b) If the provisions of subsection (a) of this Section |
29 |
| have been met, the lender shall deliver the loan package to the |
30 |
| title company no later than 30 minutes prior to the scheduled |
31 |
| closing. The closing funds shall be in the escrowee's |
|
|
|
09400HB0868ham001 |
- 5 - |
LRB094 03453 LCB 44461 a |
|
|
1 |
| possession no later than the scheduled time of closing.
|
2 |
| Section 35. Delay of closing; loss. |
3 |
| (a) If the lender has complied with the provisions of |
4 |
| Section 30 of this Act and the transaction does not close on |
5 |
| the scheduled closing date, the buyer shall pay the lender the |
6 |
| amount of the lender's loss incurred by reason of the delay in |
7 |
| closing.
If the transaction never closes, the buyer shall pay |
8 |
| the lender the additional charges incurred by the lender as a |
9 |
| result of the early funding requirement.
|
10 |
| (b) A buyer who has been required to compensate a lender is |
11 |
| entitled to reimbursement of any amount paid to the lender for |
12 |
| its loss due to a delay or failure to close that is |
13 |
| attributable to the seller or any other party.
|
14 |
| Section 40. Violations. A loan originator or loan broker or |
15 |
| an
investor who violates this Act are jointly and severally |
16 |
| liable to the
borrower for the greater of actual damages |
17 |
| incurred by the borrower on account
of the violation or |
18 |
| violations or $1,000 per occurrence, plus reasonable
|
19 |
| attorney's fees.
|
20 |
| Section 45. Exemption. This Act does not apply to an exempt |
21 |
| entity as
defined in the Residential Mortgage License Act of |
22 |
| 1987.
|
23 |
| Section 50. Application. The provisions of this Act apply |
24 |
| to purchase money mortgages only.".
|