HB2973sam004 95TH GENERAL ASSEMBLY

Sen. Jacqueline Y. Collins

Filed: 11/19/2008

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AMENDMENT TO HOUSE BILL 2973

AMENDMENT NO. ______. Amend House Bill 2973, AS AMENDED, by replacing everything after the enacting clause with 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 protect and help homeowners and communities avoid the devastating effects of foreclosure. This Act is to be construed as a borrower protection statute. 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.

"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.

"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.

Section 15. Initial one-time grace period. No lender, servicer, or lender's agent shall institute legal action under Part 15 of Article XV of the Code of Civil Procedure with respect to a home loan at any time during the first 45 days of delinquency. A borrower is entitled to only one 45-day period of forbearance under this Section per subject loan. A borrower's right to a 45-day period of forbearance under this Section is deemed to have been exercised as of the 46th consecutive day of delinquency.

Section 20. One-time notice and counseling grace period.

(a) 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.

(b) 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 45 days, 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 (b).

The notice required in this subsection (b) 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 (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 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 45 days.

(d) If, within the 45-day period provided under subsection (c) 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 (d), 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.

(e) 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.

(f) 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.

Section 25. Delinquent loans.

(a) Loans that are delinquent by 45 days or less as of the effective date of this Act shall be entitled to the 45-day period of forbearance prescribed in Section 15 of this Act. The 45-day period of forbearance shall begin on the effective date of this Act. After the 45-day period of forbearance, the borrower shall be entitled to all the protections and procedures period provided for in Section 20 of this Act.

(b) Loans that are delinquent by more than 45 days as of the effective date of this Act shall not be entitled to the 45-day period of forbearance provided for in Section 15 of this Act. The borrower shall be entitled to all protections and procedures provided for in Section 20 of this Act.

Section 30. Reports to consumer reporting agencies. 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 Act 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.

Section 35. Excess demand for counseling. 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.

Section 40. 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 with respect to 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 45. Rulemaking. The Department may adopt rules necessary for implementation and administration of this Act.

Section 50. 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 55. Waiver prohibited. There shall be no waiver of any provision of this Act.

Section 65. Compliance. Compliance with this Act by a lender, lender's agent, or servicer shall not negatively impact the Department's ratings of the lender, lender's agent, or servicer with respect to bad debt collection or calculation standards or policies.

Section 70. Repealer. This Act is repealed on December 31, 2010.

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.".