Full Text of HB4030 101st General Assembly
HB4030 101ST GENERAL ASSEMBLY |
| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020 HB4030 Introduced 1/8/2020, by Rep. Jonathan Carroll SYNOPSIS AS INTRODUCED: |
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Amends the High Risk Home Loan Act. Provides that "high risk home loan" does not include a loan for reverse mortgage financing of residential real estate, including under programs regulated by the Federal Housing Administration (FHA).
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| | A BILL FOR |
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| 1 | | AN ACT concerning business.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The High Risk Home Loan Act is amended by | 5 | | changing 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 | 9 | | approved by the
Director of Financial Institutions.
| 10 | | "Bona fide discount points" means loan discount points that | 11 | | are knowingly paid by the consumer for the purpose of reducing, | 12 | | and that in fact result in a bona fide reduction of, the
| 13 | | interest rate or time price differential applicable to the | 14 | | mortgage. | 15 | | "Borrower" means a natural person who seeks or obtains a | 16 | | high risk
home loan.
| 17 | | "Commissioner" means the Commissioner of the Office of | 18 | | Banks and Real
Estate.
| 19 | | "Department" means the Department of Financial | 20 | | Institutions.
| 21 | | "Director" means the Director of Financial Institutions.
| 22 | | "Good faith" means honesty in fact in the conduct or | 23 | | transaction concerned.
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| 1 | | "High risk home loan"
means a consumer credit transaction, | 2 | | other than a reverse mortgage, that is secured by the | 3 | | consumer's principal dwelling if: (i) at the time of | 4 | | origination, the annual
percentage rate
exceeds by more than 6 | 5 | | percentage points in the case of a first lien mortgage,
or
by | 6 | | more than 8 percentage points in the case of a junior mortgage, | 7 | | the average prime offer rate, as defined in Section | 8 | | 129C(b)(2)(B) of the federal Truth in Lending Act, for a | 9 | | comparable transaction as of the date on which the interest | 10 | | rate for the transaction is set, or if the dwelling is personal | 11 | | property, then as provided under 15 U.S.C. 1602(bb), as | 12 | | amended, and any corresponding regulation, as amended, (ii) the | 13 | | loan documents permit the creditor to charge or collect | 14 | | prepayment fees or penalties more than 36 months after the | 15 | | transaction closing or such fees exceed, in the aggregate, more | 16 | | than 2% of the amount prepaid, or (iii) the total
points
and | 17 | | fees payable in connection with the transaction, other than | 18 | | bona fide third-party charges not retained by the mortgage | 19 | | originator, creditor, or an affiliate of the mortgage | 20 | | originator or creditor, will exceed (1)
5% of the total loan | 21 | | amount in the case of a transaction for $20,000 (or such other | 22 | | dollar amount as prescribed by federal regulation pursuant to | 23 | | the federal Dodd-Frank Act) or more or (2) the lesser of 8% of | 24 | | the total loan amount or $1,000 (or such other dollar amount as | 25 | | prescribed by federal regulation pursuant to the federal | 26 | | Dodd-Frank Act) in the case of a transaction for less than |
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| 1 | | $20,000 (or such other dollar amount as prescribed by federal | 2 | | regulation pursuant to the federal Dodd-Frank Act), except | 3 | | that, with respect to all transactions, bona fide loan discount | 4 | | points may be excluded as provided for in Section 35 of this | 5 | | Act.
"High risk home loan"
does
not include a loan for reverse | 6 | | mortgage financing of residential real estate, including under | 7 | | programs regulated by the Federal Housing Administration | 8 | | (FHA), a loan that is made primarily for a business purpose | 9 | | unrelated to
the
residential real property securing the loan , | 10 | | or a consumer credit transaction made by a natural person who | 11 | | provides seller financing secured by a principal residence no | 12 | | more than 3 times in a 12-month period, provided such consumer | 13 | | credit transaction is not made by a person that has constructed | 14 | | or acted as a contractor for the construction of the residence | 15 | | in the ordinary course of business of such person.
| 16 | | "Lender" means a natural or artificial person who | 17 | | transfers, deals in,
offers, or makes a high risk home loan. | 18 | | "Lender" includes, but is not limited
to,
creditors and
brokers | 19 | | who transfer, deal in, offer, or make high risk home loans. | 20 | | "Lender"
does not include purchasers, assignees, or subsequent | 21 | | holders of high risk home
loans.
| 22 | | "Office" means the Office of Banks and Real Estate.
| 23 | | "Points and fees" means all items considered to be points | 24 | | and
fees under 12 CFR 226.32 (2000, or as initially amended | 25 | | pursuant to Section 1431 of the federal Dodd-Frank Act with no | 26 | | subsequent amendments or editions
included, whichever is |
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| 1 | | later); compensation paid directly or indirectly by a consumer | 2 | | or creditor to a
mortgage
broker from any source, including a | 3 | | broker that originates a loan in its own name in a
table-funded
| 4 | | transaction, not otherwise included in 12 CFR 226.4; the | 5 | | maximum prepayment fees and penalties that may be charged or | 6 | | collected under the terms of the credit transaction; all | 7 | | prepayment fees or penalties that are incurred by the consumer | 8 | | if the loan refinances a previous loan made or currently held | 9 | | by the same creditor or an affiliate of the creditor; and | 10 | | premiums or other charges payable at or before closing or | 11 | | financed directly or indirectly into the loan for any credit | 12 | | life, credit disability, credit unemployment, credit property, | 13 | | other accident, loss of income, life, or health insurance or | 14 | | payments directly or indirectly for any debt cancellation or | 15 | | suspension agreement or contract, except that insurance | 16 | | premiums or debt cancellation or suspension fees calculated and | 17 | | paid in full on a monthly basis shall not be considered | 18 | | financed by the creditor. "Points and fees" does not include | 19 | | any insurance premium provided by an agency of the federal | 20 | | government or an agency of a state; any insurance premium paid | 21 | | by the consumer after closing; and any amount of a premium, | 22 | | charge, or fee that is not in excess of the amount payable | 23 | | under policies in effect at the time of origination under | 24 | | Section 203(c)(2)(A) of the National Housing Act (12 U.S.C. | 25 | | 1709(c)(2)(A)), provided that the premium, charge, or fee is | 26 | | required to be refundable on a pro-rated basis and the refund |
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| 1 | | is automatically issued upon notification of the satisfaction | 2 | | of the underlying mortgage loan. | 3 | | "Prepayment penalty" and "prepayment fees or penalties" | 4 | | mean: (i) for a closed-end credit transaction, a charge imposed | 5 | | for paying all or part of the transaction's principal before | 6 | | the date on which the principal is due, other than a waived, | 7 | | bona fide third-party charge that the creditor imposes if the | 8 | | consumer prepays all of the transaction's principal sooner than | 9 | | 36 months after consummation and (ii) for an open-end credit | 10 | | plan, a charge imposed by the creditor if the consumer | 11 | | terminates the open-end credit plan prior to the end of its | 12 | | term, other than a waived, bona fide third-party charge that | 13 | | the creditor imposes if the consumer terminates the open-end | 14 | | credit plan sooner than 36 months after account opening.
| 15 | | "Reasonable" means fair, proper, just, or prudent under the | 16 | | circumstances.
| 17 | | "Servicer" means any entity chartered under the Illinois | 18 | | Banking Act, the
Savings Bank Act, the Illinois Credit Union | 19 | | Act, or the Illinois Savings and
Loan Act of 1985 and any | 20 | | person or entity licensed under the Residential
Mortgage | 21 | | License Act of 1987, the Consumer Installment Loan Act, or the | 22 | | Sales
Finance Agency Act who
is responsible for the collection | 23 | | or remittance for, or has the right or
obligation to collect or | 24 | | remit for, any lender, note owner, or note holder or
for a | 25 | | licensee's own account, of payments, interest, principal, and | 26 | | trust items
(such as hazard
insurance and taxes on a |
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| 1 | | residential mortgage loan) in accordance with the
terms of the | 2 | | residential mortgage loan, including loan payment follow-up,
| 3 | | delinquency loan follow-up, loan analysis, and any | 4 | | notifications to
the borrower that are necessary to enable the | 5 | | borrower to keep the loan current
and in good
standing.
| 6 | | "Total loan amount" has the same meaning as that term is | 7 | | given in 12
CFR 226.32 and shall be calculated in accordance | 8 | | with the Federal Reserve
Board's Official Staff Commentary to | 9 | | that regulation.
| 10 | | (Source: P.A. 99-150, eff. 7-28-15; 99-288, eff. 8-5-15; | 11 | | 99-642, eff. 7-28-16; 100-201, eff. 8-18-17.)
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