Full Text of SB1089 96th General Assembly
SB1089sam001 96TH GENERAL ASSEMBLY
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Sen. Terry Link
Filed: 3/25/2009
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| AMENDMENT TO SENATE BILL 1089
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| AMENDMENT NO. ______. Amend Senate Bill 1089 by replacing | 3 |
| everything after the enacting clause with the following:
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| "Section 5. The Residential Real Property Disclosure Act is | 5 |
| amended by changing Section 70 as follows: | 6 |
| (765 ILCS 77/70) | 7 |
| Sec. 70. Predatory lending database program. | 8 |
| (a) As used in this Article: | 9 |
| "Adjustable rate mortgage" or "ARM" means a closed-end | 10 |
| mortgage transaction that allows adjustments of the loan | 11 |
| interest rate during the first 3 years of the loan term. | 12 |
| "Borrower" means a person seeking a mortgage loan.
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| "Broker" means a "broker" or "loan broker", as defined in | 14 |
| subsection (p) of Section 1-4 of the Residential Mortgage | 15 |
| License Act of 1987. | 16 |
| "Closing agent" means an individual assigned by a title |
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| insurance company or a broker or originator to ensure that the | 2 |
| execution of documents related to the closing of a real estate | 3 |
| sale or the refinancing of a real estate loan and the | 4 |
| disbursement of closing funds are in conformity with the | 5 |
| instructions of the entity financing the transaction.
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| "Counseling" means in-person counseling provided by a | 7 |
| counselor employed by a HUD-certified counseling agency to all | 8 |
| borrowers, or documented telephone counseling where a hardship | 9 |
| would be imposed on one or more borrowers. A hardship shall | 10 |
| exist in instances in which the borrower is confined to his or | 11 |
| her home due to medical conditions, as verified in writing by a | 12 |
| physician, or the borrower resides 50 miles or more from the | 13 |
| nearest participating HUD-certified housing counseling agency. | 14 |
| In instances of telephone counseling, the borrower must supply | 15 |
| all necessary documents to the counselor at least 72 hours | 16 |
| prior to the scheduled telephone counseling session. | 17 |
| "Counselor" means a counselor employed by a HUD-certified | 18 |
| housing counseling agency. | 19 |
| "Credit score" means a credit risk score as defined by the | 20 |
| Fair Isaac Corporation, or its successor, and reported under | 21 |
| such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE" | 22 |
| by one or more of the following credit reporting agencies or | 23 |
| their successors: Equifax, Inc., Experian Information | 24 |
| Solutions, Inc., and TransUnion
LLC. If the borrower's credit | 25 |
| report contains credit scores from 2 reporting agencies, then | 26 |
| the broker or loan originator shall report the lower score. If |
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| the borrower's credit report contains credit scores from 3 | 2 |
| reporting agencies, then the broker or loan originator shall | 3 |
| report the middle score.
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| "Department" means the Department of Financial and | 5 |
| Professional Regulation.
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| "Exempt person" means that term as it is defined in | 7 |
| subsections (d)(1) and (d)(1.5) of Section 1-4 of the | 8 |
| Residential Mortgage License Act of 1987.
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| "First-time homebuyer" means a borrower who has not held an | 10 |
| ownership interest in residential property.
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| "HUD-certified counseling" or "counseling" means | 12 |
| counseling given to a borrower by a counselor employed by a | 13 |
| HUD-certified housing counseling agency. | 14 |
| "Interest only" means a closed-end loan that permits one or | 15 |
| more payments of interest without any reduction of the | 16 |
| principal balance of the loan, other than the first payment on | 17 |
| the loan. | 18 |
| "Lender" means that term as it is defined in subsection (g) | 19 |
| of Section 1-4 of the Residential Mortgage License Act of 1987 .
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| "Licensee" means that term as it is defined in subsection | 21 |
| (e) of Section 1-4 of the Residential Mortgage License Act of | 22 |
| 1987.
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| "Mortgage loan" means that term as it is defined in | 24 |
| subsection (f) of Section 1-4 of the Residential Mortgage | 25 |
| License Act of 1987.
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| "Negative amortization" means an amortization method under |
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| which the outstanding balance may increase at any time over the | 2 |
| course of the loan because the regular periodic payment does | 3 |
| not cover the full amount of interest due. | 4 |
| "Originator" means a "loan originator" as defined in | 5 |
| subsection (hh) of Section 1-4 of the Residential Mortgage | 6 |
| License Act of 1987, except an exempt person. | 7 |
| "Points and fees" has the meaning ascribed to that term in | 8 |
| Section 10 of the High Risk Home Loan Act. | 9 |
| "Prepayment penalty" means a charge imposed by a lender | 10 |
| under a mortgage note or rider when the loan is paid before the | 11 |
| expiration of the term of the loan. | 12 |
| "Refinancing" means a loan secured by the borrower's or | 13 |
| borrowers' primary residence where the proceeds are not used as | 14 |
| purchase money for the residence. | 15 |
| "Title insurance company" means any domestic company | 16 |
| organized under the laws of this State for the purpose of | 17 |
| conducting the business of guaranteeing or insuring titles to | 18 |
| real estate and any title insurance company organized under the | 19 |
| laws of another State, the District of Columbia, or a foreign | 20 |
| government and authorized to transact the business of | 21 |
| guaranteeing or insuring titles to real estate in this State.
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| (a-5) A predatory lending database program shall be | 23 |
| established within Cook County. The program shall be | 24 |
| administered in accordance with this Article. The inception | 25 |
| date of the program shall be July 1, 2008.
Until the inception | 26 |
| date, none of the duties, obligations, contingencies, or |
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| consequences of or from the program shall be imposed. The | 2 |
| program shall apply to all mortgage applications that are | 3 |
| governed by this Article and that are made or taken on or after | 4 |
| the inception of the program.
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| (b) The database created under this program shall be | 6 |
| maintained and administered by the Department. The database | 7 |
| shall be designed to allow brokers, originators, counselors, | 8 |
| title insurance companies, and closing agents to submit | 9 |
| information to the database online. The database shall not be | 10 |
| designed to allow those entities to retrieve information from | 11 |
| the database, except as otherwise provided in this Article. | 12 |
| Information submitted by the broker or originator to the | 13 |
| Department may be used to populate the online form submitted by | 14 |
| a counselor, title insurance company, or closing agent. | 15 |
| (c) Within 10 days after taking a mortgage application, the | 16 |
| broker or originator for any mortgage on residential property | 17 |
| within the program area must submit to the predatory lending | 18 |
| database all of the information required under Section 72 and | 19 |
| any other information required by the Department by rule. | 20 |
| Within 7 days after receipt of the information, the Department | 21 |
| shall compare that information to the housing
counseling | 22 |
| standards in Section 73
and issue to the borrower and the | 23 |
| broker or originator a determination of whether counseling is | 24 |
| recommended for the borrower. The borrower may not waive | 25 |
| counseling. If at any time after submitting the information | 26 |
| required under Section 72 the broker or originator (i) changes |
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| the terms of the loan or (ii) issues a new commitment to the | 2 |
| borrower, then, within 5 days thereafter, the broker or | 3 |
| originator shall re-submit all of the information required | 4 |
| under Section 72 and, within 4 days after receipt of the | 5 |
| information re-submitted by the broker or originator, the | 6 |
| Department shall compare that information to the housing
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| counseling standards in Section 73
and shall issue to the | 8 |
| borrower and the broker or originator a new determination of | 9 |
| whether re-counseling
is recommended for the borrower based on | 10 |
| the information re-submitted by the broker or originator. The | 11 |
| Department shall require re-counseling if the loan terms have | 12 |
| been modified to meet another counseling standard in Section | 13 |
| 73, or if the broker has increased the interest rate by more | 14 |
| than 200 basis points.
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| (d) If the Department recommends counseling for the | 16 |
| borrower under subsection (c), then the Department shall notify | 17 |
| the borrower of all participating HUD-certified counseling | 18 |
| agencies located within the State and direct the borrower to | 19 |
| interview with a counselor associated with one of those | 20 |
| agencies. Within 10 days after receipt of the notice of | 21 |
| HUD-certified counseling agencies, the borrower shall select | 22 |
| one of those agencies and shall engage in an interview with a | 23 |
| counselor associated with that agency. Within 7 days after | 24 |
| interviewing the borrower, the counselor must submit to the | 25 |
| predatory lending database all of the information required | 26 |
| under Section 74 and any other information required by the |
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| Department by rule. Reasonable and customary costs not to | 2 |
| exceed $300
associated with counseling provided under the | 3 |
| program shall be paid by the broker or originator. The | 4 |
| Department shall annually calculate to the nearest dollar an | 5 |
| adjusted rate for inflation. A counselor shall not recommend or | 6 |
| suggest that a borrower contact any specific mortgage | 7 |
| origination company, financial institution, or entity that | 8 |
| deals in mortgage finance to obtain a loan, another quote, or | 9 |
| for any other reason related to the specific mortgage | 10 |
| transaction; however, a counselor may suggest that the borrower | 11 |
| seek an opinion or a quote from another mortgage origination | 12 |
| company, financial institution, or entity that deals in | 13 |
| mortgage finance. A counselor or housing counseling agency that
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| in good faith provides counseling shall not be liable to a | 15 |
| broker or originator or borrower for civil damages, except for | 16 |
| willful or wanton misconduct on the part of the counselor in | 17 |
| providing the counseling. | 18 |
| (e) The broker or originator and the borrower may not take | 19 |
| any legally binding action concerning the loan transaction | 20 |
| until the later of the following: | 21 |
| (1) the Department issues a determination not to | 22 |
| recommend HUD-certified
counseling for the borrower in | 23 |
| accordance with subsection (c); or | 24 |
| (2) the Department issues a determination that | 25 |
| HUD-certified
counseling is recommended for the borrower | 26 |
| and the counselor submits all required information to the |
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| database in accordance with subsection (d).
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| (f) Within 10 days after closing, the title insurance | 3 |
| company or closing agent must submit to the predatory lending | 4 |
| database all of the information required under Section 76 and | 5 |
| any other information required by the Department by rule. | 6 |
| (g) The title insurance company or closing agent shall | 7 |
| attach to the mortgage a certificate of
compliance with the | 8 |
| requirements of this Article or a certificate of exemption , as | 9 |
| generated by the database. If the title insurance company or | 10 |
| closing agent fails to attach either the certificate of | 11 |
| compliance or the certificate of exemption , then the mortgage | 12 |
| is not recordable. The failure to attach the appropriate | 13 |
| certificate shall not affect the enforceability of the lien of | 14 |
| mortgage. In addition, if any lis pendens for a residential | 15 |
| mortgage foreclosure is recorded on the property within the | 16 |
| program area, a certificate of service must be simultaneously | 17 |
| recorded that affirms that a copy of the lis pendens was filed | 18 |
| with the Department. If the certificate of service is not | 19 |
| recorded, then the lis pendens pertaining to the residential | 20 |
| mortgage foreclosure in question is not recordable and is of no | 21 |
| force and effect. | 22 |
| (h) All information provided to the predatory lending | 23 |
| database under the program is confidential and is not subject | 24 |
| to disclosure under the Freedom of Information Act, except as | 25 |
| otherwise provided in this Article. Information or documents | 26 |
| obtained by employees of the Department in the course of |
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| maintaining and administering the predatory lending database | 2 |
| are deemed confidential. Employees are prohibited from making | 3 |
| disclosure of such confidential information or documents. Any | 4 |
| request for production of information from the predatory | 5 |
| lending database, whether by subpoena, notice, or any other | 6 |
| source, shall be referred to the Department of Financial and | 7 |
| Professional Regulation. Any borrower may authorize in writing | 8 |
| the release of database information. The Department may use the | 9 |
| information in the database without the consent of the | 10 |
| borrower: (i) for the purposes of administering and enforcing | 11 |
| the program; (ii) to provide relevant information to a | 12 |
| counselor providing counseling to a borrower under the program; | 13 |
| or (iii) to the appropriate law enforcement agency or the | 14 |
| applicable administrative agency if the database information | 15 |
| demonstrates criminal, fraudulent, or otherwise illegal | 16 |
| activity.
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| (i) Nothing in this Article is intended to prevent a | 18 |
| borrower from making his or her own decision as to whether to | 19 |
| proceed with a transaction.
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| (j) Any person who violates any provision of this Article | 21 |
| commits an unlawful practice within the meaning of the Consumer | 22 |
| Fraud and Deceptive Business Practices Act.
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| (k) During the existence of the program, the Department | 24 |
| shall submit semi-annual reports to the Governor and to the | 25 |
| General Assembly by May 1 and November 1 of each year detailing | 26 |
| its findings regarding the program. The report shall include at |
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| least the following information for each reporting period: | 2 |
| (1) the number of loans registered with the program; | 3 |
| (2) the number of borrowers receiving counseling; | 4 |
| (3) the number of loans closed; | 5 |
| (4) the number of loans requiring counseling for each | 6 |
| of the standards set forth in Section 73; | 7 |
| (5) the number of loans requiring counseling where the | 8 |
| mortgage originator changed the loan terms subsequent to | 9 |
| counseling.
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| (Source: P.A. 94-280, eff. 1-1-06; 94-1029, eff. 7-14-06; | 11 |
| 95-691, eff. 6-1-08; revised 11-6-08.)".
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