SB1998sam003 95TH GENERAL ASSEMBLY

Sen. Jacqueline Y. Collins

Filed: 4/11/2008

09500SB1998sam003 LRB095 18639 MJR 49486 a

AMENDMENT TO SENATE BILL 1998

AMENDMENT NO. ______. Amend Senate Bill 1998 on page 1, immediately below line 3, by inserting the following:

"Section 1. Short title. This Act may be cited as the Homeowner Protection Act.

Section 5. Purpose and construction. The purpose of this Act is to help homeowners and communities avoid the devastating effects of foreclosure. This Act is to be construed as a borrower protection statute for all purposes. This Act shall be liberally construed to effectuate its purpose.

Section 10. Definitions. As used in this Act:

"Approved counseling agency" means a housing counseling agency approved by the U.S. Department of Housing and Urban Development, a credit counseling agency approved by the Secretary, or any other person or entity approved by the Secretary.

"Borrower" means a natural person who seeks or obtains a home loan.

"Delinquent" means past due with respect to payments on a home loan.

"Department" means the Department of Financial and Professional Regulation.

"Foreclosure Prevention Report" means the report required by Section 30 of this Act.

"Home loan" means a loan to or for the benefit of any natural person made primarily for personal, family, or household use, primarily secured by either a mortgage on residential real property, title to a mobile home, or certificates of stock or other evidence of ownership interests in and proprietary leases from corporations, partnerships, or limited liability companies formed for the purpose of cooperative ownership of residential real property, all located in this State.

"Lender" means any person, partnership, association, corporation, or any other entity who either transfers, offers, lends, or invests money in home loans.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation or other person authorized to act in the Secretary's stead.

"Servicer" means any entity chartered under the Illinois Banking Act, the Savings Bank Act, the Illinois Credit Union Act, or the Illinois Savings and Loan Act of 1985 and any person or entity licensed under the Residential Mortgage License Act of 1987, the Consumer Installment Loan Act, or the Sales Finance Agency Act who is responsible for the collection or remittance for or has the right or obligation to collect or remit for any lender, note owner, or note holder or for a lender's own account of payments, interest, principal, and escrow items (such as hazard insurance and taxes on a residential mortgage loan) in accordance with the terms of the home loan, including loan payment follow up, delinquency loan follow up, loan analysis, and any notifications to the borrower that are necessary to enable the borrower to keep the loan current and in good standing.

Section 15. Counseling prior to perfecting foreclosure proceedings.

(a) Except for home loans in which any borrower has filed for relief under the United States Bankruptcy Code, if a home loan becomes delinquent by more than 30 days, the servicer shall send a notice advising the borrower that he or she may wish to seek approved credit counseling.

(b) The notice required in subsection (a) of this Section shall state the date on which the notice was mailed, shall be headed in bold, 14-point type, "GRACE PERIOD NOTICE", and shall state the following in 14-point type: "YOUR LOAN IS OR WAS MORE THAN 30 DAYS PAST DUE. YOU MAY BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY BE IN YOUR BEST INTEREST TO SEEK APPROVED HOUSING OR CREDIT COUNSELING. YOU HAVE A GRACE PERIOD OF 30 DAYS FROM THE DATE OF THIS FORM TO OBTAIN APPROVED HOUSING OR CREDIT COUNSELING. DURING THE GRACE PERIOD, THE LAW PROHIBITS US FROM TAKING ANY LEGAL ACTION AGAINST YOU. A LIST OF APPROVED COUNSELING AGENCIES MAY BE OBTAINED FROM THE ILLINOIS DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION." The notice shall also list the Department's current consumer hotline, the Department's website, and the telephone number, fax number, and mailing address of the servicer's loss mitigation department. No language, other than the language prescribed in this subsection (b), shall be included in the notice. The requirements of this subsection (b) shall be deemed satisfied if the language and format prescribed in this subsection (b) is included in a counseling notification required under federal law.

(c) Upon mailing the notice provided for under subsection (b) of this Section, neither the lender, servicer, nor lender's agent shall institute legal action under Part 15 of Article XV of the Code of Civil Procedure for 30 days. Only one such 30-day period of forbearance is allowed under this subsection (c) per subject loan.

(d) If, within the 30-day period provided under subsection (c) of this Section, an approved counseling agency notifies the lender, servicer, or lender's agent that the borrower is seeking approved counseling services, then the lender, servicer, or lender's agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for 30 days after the date of that notice. During the 30-day period provided under this subsection (d), the borrower or counselor or both may prepare and proffer to the lender, servicer, or lender's agent a proposed debt management plan. The lender, servicer, or lender's agent shall then determine whether to accept the proposed debt management plan, based upon an evaluation of the borrower's ability to repay the loan under the proffered plan, in light of the borrower's current income and other financial resources. If the lender, servicer, or lender's agent and the borrower agree to a debt management plan, then the lender, servicer, or lender's agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for as long as the debt management plan is complied with by the borrower. The agreed debt management plan and any modifications thereto must be in writing and signed by the lender, servicer, or lender's agent and the borrower. Upon written notice to the lender, servicer, or lender's agent, the borrower may change approved counseling agencies, but such a change does not entitle the borrower to any additional period of forbearance.

(e) If the borrower fails to comply with the agreed debt management plan, then nothing in this Section shall be construed to impair the legal right of the lender, servicer, or lender's agent to enforce the contract.

(f) This Section is repealed on December 31, 2010.

Section 20. Foreclosure Prevention Report; requirements. A servicer shall compile and submit to the Secretary on or before the twentieth business day of every other month a Foreclosure Prevention Report that contains the following information for the preceding 2 months or as otherwise indicated:

(1) The number of home loans the servicer is servicing.

(2) The number of home loans that the servicer is servicing that are in payment default.

(3) Information on loss mitigation activities undertaken, including, but not limited to, the following:

(A) the number and identification of home loans that were refinanced into more affordable or fixed home loans;

(B) the number and identification of home loans for which the borrower has sought housing or credit counseling, if known;

(C) the number of workout arrangements entered into by the servicer in connection with home loans; and

(D) the proactive steps taken by the servicer to identify borrowers at a heightened risk of default, such as those with impending interest rate resets, including, but not limited to, contacts with borrowers to assess their ability to repay their home loan obligations.

(4) The number of foreclosure actions commenced in this State in connection with home loans it is servicing.

(5) Any other information that the Secretary may deem necessary, including geographic information regarding applicable home loans.

Section 25. Foreclosure Prevention Report; form and manner prescribed by Secretary. The Secretary shall prescribe the form and manner for filing the Foreclosure Prevention Report. This Section is repealed on December 31, 2010.

Section 30. Foreclosure Prevention Report; publication. The Secretary may publish for public review the Foreclosure Prevention Report or any information contained in the Foreclosure Prevention Report, except personally-identifying information regarding borrowers. This Section is repealed on December 31, 2010.

Section 90. Enforcement.

(a) The Secretary shall have the power to issue orders against any person or entity if the Secretary has reasonable cause to believe that a violation of this Act has occurred, is occurring, or is about to occur, if any person has violated, is violating, or is about to violate any law, rule, order, or written agreement with the Secretary, or for the purpose of administering the provisions of this Act and any rule promulgated in accordance with this Act.

(b) The Secretary may impose civil penalties of up to $1,000 against any person for each violation of any provision of this Act, any rule promulgated in accordance with this Act, or any order of the Secretary. The Secretary shall also have the power to subpoena witnesses, to administer an oath, to examine any person under oath, and to require the production of any relevant books, papers, accounts, and documents in the course of and pursuant to any investigation being conducted or any action being taken by the Secretary in respect of any matter relating to the duties imposed upon or the powers vested in the Secretary under the provisions of this Act or any rule promulgated in accordance with this Act.

(c) Any actions taken by the Secretary pursuant to this Section shall be done in accordance with the Illinois Administrative Procedure Act.

Section 95. Rulemaking. The Department may adopt reasonable rules to implement and administer this Act.

Section 100. Judicial review. All final administrative decisions under this Act are subject to judicial review pursuant to the provisions of the Administrative Review Law and any rules adopted pursuant thereto.

Section 105. Waiver prohibited. There shall be no waiver of any provision of this Act."; and

on page 1, line 4, by replacing "Section 5." with "Section 900."; and

on page 72, immediately below line 6, by inserting the following:

"Section 950. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes."; and

on page 72, line 7, by replacing "Section 99." with "Section 999.".