HB2973sam005 95TH GENERAL ASSEMBLY

Sen. Jacqueline Y. Collins

Filed: 11/19/2008

09500HB2973sam005 LRB095 06413 MJR 53694 a

AMENDMENT TO HOUSE BILL 2973

AMENDMENT NO. ______. Amend House Bill 2973, AS AMENDED, by replacing everything after the enacting clause with the following:

"Section 5. The Code of Civil Procedure is amended by adding Section 15-1502.5 as follows:

(735 ILCS 5/15-1502.5 new)

Sec. 15-1502.5. Homeowner protection.

(a) As used in this Section:

"Approved counseling agency" means a housing counseling agency approved by the U.S. Department of Housing and Urban Development.

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

"Consumer reporting agency" shall have the same meaning as that term is defined in the federal Fair Credit Reporting Act.

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

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

"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, 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 Illinois. "Home loan" does not include any loan used to finance a home in which the borrower or the borrower's immediate family does not intend to reside. This Section shall not apply, or shall cease to apply, to residential real estate that is not occupied as a principal residence by the mortgagor.

"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 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 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.

"Sustainable loan workout plan" means a plan that the parties believe shall enable the borrower to stay current on his or her mortgage payments for the foreseeable future when taking into account the borrower's income and existing and foreseeable debts. A sustainable loan workout plan may include, but is not limited to, (1) a temporary suspension of payments, (2) a lengthened loan term, (3) a lowered or frozen interest rate, (4) a principal write down, (5) a repayment plan to pay the existing loan in full, (6) deferred payments, or (7) refinancing into a new affordable loan.

(b) Except in the circumstance in which a mortgagor has filed a petition for relief under the United States Bankruptcy Code, no mortgagee shall file a complaint to foreclose a mortgage secured by residential real estate until the mortgagee has satisfied the requirements of this Section.

(c) Notwithstanding any provision to the contrary, with respect to a particular home loan, a lender, servicer, or lender's agent need comply with the procedures and forbearances described in this Section only once per subject loan.

Except for home loans in which any borrower has filed for relief under the United States Bankruptcy Code, if a home loan becomes delinquent, the lender, servicer, or lender's agent shall send via certified U.S. mail, return receipt requested, a notice advising the borrower that he or she may wish to seek approved housing counseling.

At the same time, the lender, servicer, or lender's agent shall send the notice via at least one of the following means: regular U.S. mail, express or overnight mail, personal e-mail, or personal fax machine. Neither the lender, servicer, nor lender's agent shall institute legal action under Part 15 of Article XV of the Code of Civil Procedure before mailing the notice described in this subsection (c).

The notice required in this subsection (c) 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 45 DAYS PAST DUE. YOU MAY BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY BE IN YOUR BEST INTEREST TO SEEK APPROVED HOUSING COUNSELING. YOU HAVE A GRACE PERIOD OF 45 DAYS FROM THE DATE OF THIS FORM TO OBTAIN APPROVED HOUSING 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 (c), shall be included in the notice. The requirements of this subsection (c) shall be deemed satisfied if the language and format prescribed in this subsection is included in a counseling notification required under federal law.

(d) Upon mailing the notice provided for under subsection (c) 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 45 days.

(e) If, within the 45-day period provided under subsection (d) of this Section, an approved counseling agency provides written notice to the lender, servicer, or lender's agent that the borrower is seeking approved counseling services, then the lender, servicer, or lender's agent must not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for 45 days after the date of that notice. During the 45-day period provided under this subsection (e), the borrower or counselor or both may prepare and proffer to the lender, servicer, or lender's agent a proposed sustainable loan workout plan. The lender, servicer, or lender's agent will then determine whether to accept the proposed sustainable loan workout plan. If the lender, servicer, or lender's agent and the borrower agree to a sustainable loan workout 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 sustainable loan workout plan is complied with by the borrower.

The agreed sustainable loan workout 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.

(f) If the borrower fails to comply with the sustainable loan workout 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.

(g) A counselor employed by a housing counseling agency or the housing counseling agency that in good faith provides counseling shall not be liable to a lender, servicer, lender's agent, or borrower for civil damages, except for willful or wanton misconduct on the part of the counselor in providing the counseling.

(h) A lender, servicer, or lender's agent that provides information to a consumer reporting agency about a borrower who is or has been in a period of forbearance provided under this Section shall include in the report to the consumer reporting agency that the borrower is or was in a statutorily guaranteed period of forbearance and shall list the dates of the forbearance.

(i) If the Secretary finds that the demand for counseling services in any particular geographic area exceeds the number of available approved counseling agencies, then he or she may certify other persons or entities as approved counseling agencies. Except as provided for in this Section, no for-profit entities may be certified as approved counseling agencies.

(j) 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 Section 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 Section and any rule promulgated in accordance with this Section.

The Secretary may impose civil penalties of up to $1,000 against any person for each violation of any provision of this Section, any rule promulgated in accordance with this Section, 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 with respect to any matter relating to the duties imposed upon, or the powers vested in, the Secretary under the provisions of this Section or any rule promulgated in accordance with this Section.

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

(k) The Department may adopt rules necessary for implementation and administration of this Section.

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

(m) There shall be no waiver of any provision of this Section.

(n) It is the General Assembly's intent that compliance with this Section shall not prejudice a mortgagee in ratings of its bad debt collection or calculation standards or policies.

(o) This Section shall not apply to mortgages securing residential real estate that were issued or originated on or after November 1, 2008.

(p) This Section is repealed 2 years after the effective date of this amendatory Act of the 95th General Assembly.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 99. Effective date. This Act takes effect upon becoming law.".