Illinois General Assembly - Full Text of HB3294
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Full Text of HB3294  98th General Assembly



State of Illinois
2013 and 2014


Introduced , by Rep. Carol A. Sente


815 ILCS 137/10

    Amends the High Risk Home Loan Act. Provides that the term "points and fees" does not include fees paid to the United States Department of Veterans Affairs required by law, fees paid to the Federal Housing Administration required by law, and fees paid to the United States Department of Agriculture's Rural Development Loan Program required by law.

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1    AN ACT concerning business.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The High Risk Home Loan Act is amended by
5changing Section 10 as follows:
6    (815 ILCS 137/10)
7    Sec. 10. Definitions. As used in this Act:
8    "Approved credit counselor" means a credit counselor
9approved by the Director of Financial Institutions.
10    "Bona fide discount points" means loan discount points that
11are knowingly paid by the consumer for the purpose of reducing,
12and that in fact result in a bona fide reduction of, the
13interest rate or time price differential applicable to the
15    "Borrower" means a natural person who seeks or obtains a
16high risk home loan.
17    "Commissioner" means the Commissioner of the Office of
18Banks and Real Estate.
19    "Department" means the Department of Financial
21    "Director" means the Director of Financial Institutions.
22    "Good faith" means honesty in fact in the conduct or
23transaction concerned.



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1    "High risk home loan" means a consumer credit transaction,
2other than a reverse mortgage, that is secured by the
3consumer's principal dwelling if: (i) at the time of
4origination, the annual percentage rate exceeds by more than 6
5percentage points in the case of a first lien mortgage, or by
6more than 8 percentage points in the case of a junior mortgage,
7the average prime offer rate, as defined in Section
8129C(b)(2)(B) of the federal Truth in Lending Act, for a
9comparable transaction as of the date on which the interest
10rate for the transaction is set, (ii) the loan documents permit
11the creditor to charge or collect prepayment fees or penalties
12more than 36 months after the transaction closing or such fees
13exceed, in the aggregate, more than 2% of the amount prepaid,
14or (iii) the total points and fees payable in connection with
15the transaction, other than bona fide third-party charges not
16retained by the mortgage originator, creditor, or an affiliate
17of the mortgage originator or creditor, will exceed (1) 5% of
18the total loan amount in the case of a transaction for $20,000
19or more or (2) the lesser of 8% of the total loan amount or
20$1,000 (or such other dollar amount as prescribed by federal
21regulation pursuant to the federal Dodd-Frank Act) in the case
22of a transaction for less than $20,000, except that, with
23respect to all transactions, bona fide loan discount points may
24be excluded as provided for in Section 35 of this Act. "High
25risk home loan" does not include a loan that is made primarily
26for a business purpose unrelated to the residential real



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1property securing the loan or a consumer credit transaction
2made by a natural person who provides seller financing secured
3by a principal residence no more than 3 times in a 12-month
4period, provided such consumer credit transaction is not made
5by a person that has constructed or acted as a contractor for
6the construction of the residence in the ordinary course of
7business of such person.
8    "Lender" means a natural or artificial person who
9transfers, deals in, offers, or makes a high risk home loan.
10"Lender" includes, but is not limited to, creditors and brokers
11who transfer, deal in, offer, or make high risk home loans.
12"Lender" does not include purchasers, assignees, or subsequent
13holders of high risk home loans.
14    "Office" means the Office of Banks and Real Estate.
15    "Points and fees" means all items considered to be points
16and fees under 12 CFR 226.32 (2000, or as initially amended
17pursuant to Section 1431 of the federal Dodd-Frank Act with no
18subsequent amendments or editions included, whichever is
19later); compensation paid directly or indirectly by a consumer
20or creditor to a mortgage broker from any source, including a
21broker that originates a loan in its own name in a table-funded
22transaction, not otherwise included in 12 CFR 226.4; the
23maximum prepayment fees and penalties that may be charged or
24collected under the terms of the credit transaction; all
25prepayment fees or penalties that are incurred by the consumer
26if the loan refinances a previous loan made or currently held



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1by the same creditor or an affiliate of the creditor; and
2premiums or other charges payable at or before closing or
3financed directly or indirectly into the loan for any credit
4life, credit disability, credit unemployment, credit property,
5other accident, loss of income, life, or health insurance or
6payments directly or indirectly for any debt cancellation or
7suspension agreement or contract, except that insurance
8premiums or debt cancellation or suspension fees calculated and
9paid in full on a monthly basis shall not be considered
10financed by the creditor. "Points and fees" does not include:
11any insurance premium provided by an agency of the federal
12government or an agency of a state; any insurance premium paid
13by the consumer after closing; and any amount of a premium,
14charge, or fee that is not in excess of the amount payable
15under policies in effect at the time of origination under
16Section 203(c)(2)(A) of the National Housing Act (12 U.S.C.
171709(c)(2)(A)), provided that the premium, charge, or fee is
18required to be refundable on a pro-rated basis and the refund
19is automatically issued upon notification of the satisfaction
20of the underlying mortgage loan; fees paid to the United States
21Department of Veterans Affairs required by law; fees paid to
22the Federal Housing Administration required by law; and fees
23paid to the United States Department of Agriculture's Rural
24Development Loan Program required by law.
25    "Reasonable" means fair, proper, just, or prudent under the



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1    "Servicer" means any entity chartered under the Illinois
2Banking Act, the Savings Bank Act, the Illinois Credit Union
3Act, or the Illinois Savings and Loan Act of 1985 and any
4person or entity licensed under the Residential Mortgage
5License Act of 1987, the Consumer Installment Loan Act, or the
6Sales Finance Agency Act who is responsible for the collection
7or remittance for, or has the right or obligation to collect or
8remit for, any lender, note owner, or note holder or for a
9licensee's own account, of payments, interest, principal, and
10trust items (such as hazard insurance and taxes on a
11residential mortgage loan) in accordance with the terms of the
12residential mortgage loan, including loan payment follow-up,
13delinquency loan follow-up, loan analysis, and any
14notifications to the borrower that are necessary to enable the
15borrower to keep the loan current and in good standing.
16    "Total loan amount" has the same meaning as that term is
17given in 12 CFR 226.32 and shall be calculated in accordance
18with the Federal Reserve Board's Official Staff Commentary to
19that regulation.
20(Source: P.A. 97-849, eff. 1-1-13.)