Full Text of HB0537 96th General Assembly
HB0537eng 96TH GENERAL ASSEMBLY
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| AN ACT concerning financial regulation.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Residential Mortgage License Act of 1987 is | 5 |
| amended by changing Section 5-8 as follows: | 6 |
| (205 ILCS 635/5-8) | 7 |
| Sec. 5-8. Prepayment penalties prohibited . | 8 |
| (a) No licensee may make, provide, or arrange a mortgage | 9 |
| loan with a prepayment
penalty unless the licensee offers the | 10 |
| borrower a loan without a prepayment penalty, the
offer is in | 11 |
| writing, and the borrower initials the offer to indicate that | 12 |
| the borrower has
declined the offer. In addition, the licensee | 13 |
| must disclose the discount in rate received in
consideration | 14 |
| for a mortgage loan with the prepayment penalty . | 15 |
| (b) (Blank). If a borrower declines an offer required under | 16 |
| subsection (a) of this Section, the licensee may include a | 17 |
| prepayment penalty that extends no longer than three years or | 18 |
| the first change date or rate adjustment of a variable rate | 19 |
| mortgage, whichever comes earlier, provided that, if a | 20 |
| prepayment is made during the fixed rate period, the licensee | 21 |
| shall receive an amount that is no more than: | 22 |
| (1) 3% of the total loan amount if the prepayment is | 23 |
| made within the first 12-month period following the date |
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| the loan was made; | 2 |
| (2) 2% of the total loan amount if the prepayment is | 3 |
| made within the second
12-month period following the date | 4 |
| the loan was made; or | 5 |
| (3) 1% of the total loan amount if the prepayment is | 6 |
| made within the third 12-month period following the date | 7 |
| the loan was made, if the fixed rate period
extends 3 | 8 |
| years. | 9 |
| (c) Prepayment Notwithstanding any provision in this | 10 |
| Section, prepayment penalties are prohibited in connection | 11 |
| with the sale or destruction of a dwelling secured by a | 12 |
| residential mortgage loan.
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| (d) This Section applies to loans made, refinanced, | 14 |
| renewed, extended, or modified on or after the effective date | 15 |
| of this amendatory Act of the 95th General Assembly.
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| (Source: P.A. 95-691, eff. 6-1-08 .) | 17 |
| Section 10. The High Risk Home Loan Act is amended by | 18 |
| changing Section 30 as follows:
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| (815 ILCS 137/30)
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| Sec. 30. Prepayment penalty. For any loan that is subject | 21 |
| to the
provisions of this Act and is not subject to the | 22 |
| provisions of the Home
Ownership and Equity Protection Act of | 23 |
| 1994, no lender shall make a high risk
home loan
that includes | 24 |
| a penalty provision for payment made: (i) after the expiration |
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| of
the 36-month period following the date the loan was made; or | 2 |
| (ii) that is more
than:
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| (1) 3% of the total loan amount if the prepayment is | 4 |
| made within the first
12-month period following the date | 5 |
| the loan was made;
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| (2) 2% of the total loan amount if the prepayment is | 7 |
| made within the
second 12-month period following the date | 8 |
| the loan was made; or
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| (3) 1% of the total loan amount if the prepayment is | 10 |
| made within the third
12-month period following the date | 11 |
| the loan was made .
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| (Source: P.A. 93-561, eff. 1-1-04.)
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| Section 15. The Interest Act is amended by changing Section | 14 |
| 4.1a as follows:
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| (815 ILCS 205/4.1a) (from Ch. 17, par. 6406)
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| Sec. 4.1a. Charges for and cost of the following items paid | 17 |
| or
incurred by any lender in connection with any loan shall not | 18 |
| be deemed
to be charges for or in connection with any loan of | 19 |
| money referred to in
Section 6 of this Act, or charges by the | 20 |
| lender as a consideration for
the loan referred to in this | 21 |
| Section:
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| (a) hazard, mortgage or life insurance premiums, | 23 |
| survey, credit
report, title insurance, abstract and | 24 |
| attorneys' fees, recording
charges, escrow and appraisal |
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| fees, and similar charges.
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| (b) in the case of construction loans, in addition to | 3 |
| the matters
referred to in clause (a) above, the actual | 4 |
| cost incurred by the lender
for services for making | 5 |
| physical inspections, processing payouts,
examining and | 6 |
| reviewing contractors' and subcontractors' sworn
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| statements and waivers of lien and the like.
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| (c) in the case of any loan made pursuant to the | 9 |
| provisions of the
Emergency Home Purchase Assistance Act of | 10 |
| 1974 (Section 313 of the
National Housing Act, Chapter B of | 11 |
| Title 12 of the United States Code),
in addition to the | 12 |
| matters referred to in paragraphs (a) and (b) of this
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| Section all charges required or allowed by the Government | 14 |
| National
Mortgage Association, whether designated as | 15 |
| processing fees, commitment
fees, loss reserve and | 16 |
| marketing fees, discounts, origination fees or
otherwise | 17 |
| designated.
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| (d) in the case of a single payment loan, made for a | 19 |
| period of 6 months
or less, a regulated financial | 20 |
| institution or licensed lender may contract
for and receive | 21 |
| a maximum charge of $15 in lieu of interest. Such charge
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| may be collected when the loan is made, but only one such | 23 |
| charge may be
contracted for, received, or collected for | 24 |
| any such loan, including any
extension or renewal thereof.
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| (e) if the agreement governing the loan so provides, a | 26 |
| charge not to
exceed the rate permitted under Section 3-806 |
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| of the Uniform Commercial
Code-Commercial Paper for any | 2 |
| check, draft or order for the payment of
money submitted in | 3 |
| accordance with said agreement which is unpaid or not
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| honored by a bank or other depository institution.
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| (f) if the agreement governing the loan so provides, | 6 |
| for each loan
installment in default for a period of not | 7 |
| less than 10 days, a charge in
an amount not in excess of | 8 |
| 5% of such loan installment. Only one
delinquency charge | 9 |
| may be collected on any such loan installment regardless
of | 10 |
| the period during which it remains in default. Payments | 11 |
| timely received
by the lender under a written extension or | 12 |
| deferral agreement shall not be
subject to any delinquency | 13 |
| charge.
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| Notwithstanding items (k) and (l) of subsection (1) of | 15 |
| Section 4 of this Act, the lender, in the case of any nonexempt | 16 |
| residential mortgage loan, as defined in Section 1-4 of the | 17 |
| Residential Mortgage License Act of 1987, shall have the right | 18 |
| to include a prepayment penalty that extends no longer than the | 19 |
| fixed rate period of a variable rate mortgage provided that, if | 20 |
| a prepayment is made during the fixed rate period and not in | 21 |
| connection with the sale or destruction of the dwelling | 22 |
| securing the loan, the lender shall receive an amount that is | 23 |
| no more than: | 24 |
| (1) 3% of the total loan amount if the prepayment is | 25 |
| made within the first 12-month period following the date | 26 |
| the loan was made; |
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| (2) 2% of the total loan amount if the prepayment is | 2 |
| made within the second
12-month period following the date | 3 |
| the loan was made; or | 4 |
| (3) 1% of the total loan amount if the prepayment is | 5 |
| made within the third 12-month period following the date | 6 |
| the loan was made, if the fixed rate period
extends 3 | 7 |
| years.
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| This Section applies to loans made, refinanced, renewed, | 9 |
| extended, or modified on or after the effective date of this | 10 |
| amendatory Act of the 95th General Assembly.
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| Where there is a charge in addition to the stated rate of | 12 |
| interest
payable directly or indirectly by the borrower and | 13 |
| imposed directly or
indirectly by the lender as a consideration | 14 |
| for the loan, or for or in
connection with the loan of money, | 15 |
| whether paid or payable by the
borrower, the seller, or any | 16 |
| other person on behalf of the borrower to
the lender or to a | 17 |
| third party, or for or in connection with the loan of
money, | 18 |
| other than as hereinabove in this Section provided, whether
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| denominated "points," "service charge," "discount," | 20 |
| "commission," or
otherwise, and without regard to declining | 21 |
| balances of principal which
would result from any required or | 22 |
| optional amortization of the principal
of the loan, the rate of | 23 |
| interest shall be calculated in the following
manner:
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| The percentage of the principal amount of the loan | 25 |
| represented by all
of such charges shall first be computed, | 26 |
| which in the case of a loan
with an interest rate in excess of |
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| 8% per annum secured by residential
real estate, other than | 2 |
| loans described in paragraphs (e) and (f) of
Section 4, shall | 3 |
| not exceed 3% of such principal amount. Said
percentage shall | 4 |
| then be divided by the number of years and fractions
thereof of | 5 |
| the period of the loan according to its stated maturity. The
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| percentage thus obtained shall then be added to the percentage | 7 |
| of the
stated annual rate of interest.
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| (Source: P.A. 95-691, eff. 6-1-08 .)
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