Full Text of SB0776 100th General Assembly
SB0776enr 100TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning civil law.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Residential Real Property Disclosure Act is | 5 | | amended by changing Sections 70, 72, and 76 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. | 13 | | "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 | 17 | | insurance company or a broker or originator to ensure that the | 18 | | execution of documents related to the closing of a real estate | 19 | | sale or the refinancing of a real estate loan and the | 20 | | disbursement of closing funds are in conformity with the | 21 | | instructions of the entity financing the transaction. | 22 | | "Counseling" means in-person counseling provided by a | 23 | | counselor employed by a HUD-approved counseling agency to all |
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| 1 | | borrowers, or documented telephone counseling where a hardship | 2 | | would be imposed on one or more borrowers. A hardship shall | 3 | | exist in instances in which the borrower is confined to his or | 4 | | her home due to medical conditions, as verified in writing by a | 5 | | physician, or the borrower resides 50 miles or more from the | 6 | | nearest participating HUD-approved housing counseling agency. | 7 | | In instances of telephone counseling, the borrower must supply | 8 | | all necessary documents to the counselor at least 72 hours | 9 | | prior to the scheduled telephone counseling session. | 10 | | "Counselor" means a counselor employed by a HUD-approved | 11 | | housing counseling agency. | 12 | | "Credit score" means a credit risk score as defined by the | 13 | | Fair Isaac Corporation, or its successor, and reported under | 14 | | such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE" | 15 | | by one or more of the following credit reporting agencies or | 16 | | their successors: Equifax, Inc., Experian Information | 17 | | Solutions, Inc., and TransUnion
LLC. If the borrower's credit | 18 | | report contains credit scores from 2 reporting agencies, then | 19 | | the broker or loan originator shall report the lower score. If | 20 | | the borrower's credit report contains credit scores from 3 | 21 | | reporting agencies, then the broker or loan originator shall | 22 | | report the middle score. | 23 | | "Department" means the Department of Financial and | 24 | | Professional Regulation. | 25 | | "Exempt person or entity" means that term as it is defined | 26 | | in subsections (d)(1), (d)(1.5), and (d)(1.8) of Section 1-4 of |
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| 1 | | the Residential Mortgage License Act of 1987. | 2 | | "First-time homebuyer" means a borrower who has not held an | 3 | | ownership interest in residential property. | 4 | | "HUD-approved counseling" or "counseling" means counseling | 5 | | given to a borrower by a counselor employed by a HUD-approved | 6 | | housing counseling agency. | 7 | | "Interest only" means a closed-end loan that permits one or | 8 | | more payments of interest without any reduction of the | 9 | | principal balance of the loan, other than the first payment on | 10 | | the loan. | 11 | | "Lender" means that term as it is defined in subsection (g) | 12 | | of Section 1-4 of the Residential Mortgage License Act of 1987. | 13 | | "Licensee" means that term as it is defined in subsection | 14 | | (e) of Section 1-4 of the Residential Mortgage License Act of | 15 | | 1987. | 16 | | "Mortgage loan" means that term as it is defined in | 17 | | subsection (f) of Section 1-4 of the Residential Mortgage | 18 | | License Act of 1987. | 19 | | "Negative amortization" means an amortization method under | 20 | | which the outstanding balance may increase at any time over the | 21 | | course of the loan because the regular periodic payment does | 22 | | not cover the full amount of interest due. | 23 | | "Originator" means a "loan originator" as defined in | 24 | | subsection (hh) of Section 1-4 of the Residential Mortgage | 25 | | License Act of 1987, except an exempt person, and means a | 26 | | "mortgage loan originator" as defined in subsection (jj) of |
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| 1 | | Section 1-4 of the Residential Mortgage License Act of 1987, | 2 | | except an exempt person. | 3 | | "Points and fees" has the meaning ascribed to that term in | 4 | | Section 10 of the High Risk Home Loan Act. | 5 | | "Prepayment penalty" means a charge imposed by a lender | 6 | | under a mortgage note or rider when the loan is paid before the | 7 | | expiration of the term of the loan. | 8 | | "Refinancing" means a loan secured by the borrower's or | 9 | | borrowers' primary residence where the proceeds are not used as | 10 | | purchase money for the residence. | 11 | | "Title insurance company" means any domestic company | 12 | | organized under the laws of this State for the purpose of | 13 | | conducting the business of guaranteeing or insuring titles to | 14 | | real estate and any title insurance company organized under the | 15 | | laws of another State, the District of Columbia, or a foreign | 16 | | government and authorized to transact the business of | 17 | | guaranteeing or insuring titles to real estate in this State. | 18 | | (a-5) A predatory lending database program shall be | 19 | | established within Cook County. The program shall be | 20 | | administered in accordance with this Article. The inception | 21 | | date of the program shall be July 1, 2008.
A predatory lending
| 22 | | database program shall be expanded to include Kane, Peoria, and | 23 | | Will counties. The
inception date of the expansion of the | 24 | | program as it applies to Kane, Peoria, and Will
counties shall | 25 | | be July 1, 2010. Until the inception date, none of the duties, | 26 | | obligations, contingencies, or consequences of or from the |
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| 1 | | program shall be imposed. The program shall apply to all | 2 | | mortgage applications that are governed by this Article and | 3 | | that are made or taken on or after the inception of the | 4 | | program. | 5 | | (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 business days after taking a mortgage | 16 | | application, the broker or originator for any mortgage on | 17 | | residential property within the program area must submit to the | 18 | | predatory lending database all of the information required | 19 | | under Section 72 and any other information required by the | 20 | | Department by rule. Within 7 business days after receipt of the | 21 | | information, the Department shall compare that information to | 22 | | the housing
counseling standards in Section 73
and issue to the | 23 | | borrower and the broker or originator a determination of | 24 | | whether counseling is recommended for the borrower. The | 25 | | borrower may not waive counseling. If at any time after | 26 | | submitting the information required under Section 72 the broker |
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| 1 | | or originator (i) changes the terms of the loan or (ii) issues | 2 | | a new commitment to the borrower, then, within 5 business days | 3 | | thereafter, the broker or originator shall re-submit all of the | 4 | | information required under Section 72 and, within 4 business | 5 | | days after receipt of the information re-submitted by the | 6 | | broker or originator, the Department shall compare that | 7 | | information to the housing
counseling standards in Section 73
| 8 | | and shall issue to the borrower and the broker or originator a | 9 | | new determination of whether re-counseling
is recommended for | 10 | | the borrower based on the information re-submitted by the | 11 | | broker or originator. The Department shall require | 12 | | re-counseling if the loan terms have been modified to meet | 13 | | another counseling standard in Section 73, or if the broker has | 14 | | increased the interest rate by more than 200 basis points. | 15 | | (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-approved 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 business days after receipt of the notice | 21 | | of HUD-approved counseling agencies, it is the borrower's | 22 | | responsibility to select one of those agencies and shall engage | 23 | | in an interview with a counselor associated with that agency. | 24 | | The borrower must supply all necessary documents, as set forth | 25 | | by the counselor, at least 72 hours before the scheduled | 26 | | interview. The selection must take place and the appointment |
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| 1 | | for the interview must be set within 10 business days, although | 2 | | the interview may take place beyond the 10 business day period. | 3 | | Within 7 business days after interviewing the borrower, the | 4 | | counselor must submit to the predatory lending database all of | 5 | | the information required under Section 74 and any other | 6 | | information required by the Department by rule. Reasonable and | 7 | | customary costs not to exceed $300
associated with counseling | 8 | | provided under the program shall be paid by the broker or | 9 | | originator and shall not be charged back to, or recovered from, | 10 | | the borrower. The Department shall annually calculate to the | 11 | | nearest dollar an adjusted rate for inflation. A counselor | 12 | | shall not recommend or suggest that a borrower contact any | 13 | | specific mortgage origination company, financial institution, | 14 | | or entity that deals in mortgage finance to obtain a loan, | 15 | | another quote, or for any other reason related to the specific | 16 | | mortgage transaction; however, a counselor may suggest that the | 17 | | borrower seek an opinion or a quote from another mortgage | 18 | | origination company, financial institution, or entity that | 19 | | deals in mortgage finance. A counselor or housing counseling | 20 | | agency that
in good faith provides counseling shall not be | 21 | | liable to a broker or originator or borrower for civil damages, | 22 | | except for willful or wanton misconduct on the part of the | 23 | | counselor in providing the counseling. | 24 | | (e) The broker or originator and the borrower may not take | 25 | | any legally binding action concerning the loan transaction | 26 | | until the later of the following: |
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| 1 | | (1) the Department issues a determination not to | 2 | | recommend HUD-approved
counseling for the borrower in | 3 | | accordance with subsection (c); or | 4 | | (2) the Department issues a determination that | 5 | | HUD-approved
counseling is recommended for the borrower | 6 | | and the counselor submits all required information to the | 7 | | database in accordance with subsection (d). | 8 | | (f) Within 10 business days after closing, the title | 9 | | insurance company or closing agent must submit to the predatory | 10 | | lending database all of the information required under Section | 11 | | 76 and any other information required by the Department by | 12 | | rule. | 13 | | (g) The title insurance company or closing agent shall | 14 | | attach to the mortgage a certificate of
compliance with the | 15 | | requirements of this Article, as generated by the database. If | 16 | | the transaction is exempt, the title insurance company or | 17 | | closing agent shall attach to the mortgage a certificate of | 18 | | exemption, as generated by the database. Each certificate of | 19 | | compliance or certificate of exemption must contain, at a | 20 | | minimum, one of the borrower's names on the mortgage loan and | 21 | | the property index number for the subject property. If the | 22 | | title insurance company or closing agent fails to attach the | 23 | | certificate of compliance or exemption, whichever is required, | 24 | | then the mortgage is not recordable. In addition, if any lis | 25 | | pendens for a residential mortgage foreclosure is recorded on | 26 | | the property within the program area, a certificate of service |
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| 1 | | must be simultaneously recorded that affirms that a copy of the | 2 | | lis pendens was filed with the Department. A lis pendens filed | 3 | | after July 1, 2016 shall be filed with the Department | 4 | | electronically. If the certificate of service is not recorded, | 5 | | then the lis pendens pertaining to the residential mortgage | 6 | | foreclosure in question is not recordable and is of no force | 7 | | and effect. | 8 | | (h) All information provided to the predatory lending | 9 | | database under the program is confidential and is not subject | 10 | | to disclosure under the Freedom of Information Act, except as | 11 | | otherwise provided in this Article. Information or documents | 12 | | obtained by employees of the Department in the course of | 13 | | maintaining and administering the predatory lending database | 14 | | are deemed confidential. Employees are prohibited from making | 15 | | disclosure of such confidential information or documents. Any | 16 | | request for production of information from the predatory | 17 | | lending database, whether by subpoena, notice, or any other | 18 | | source, shall be referred to the Department of Financial and | 19 | | Professional Regulation. Any borrower may authorize in writing | 20 | | the release of database information. The Department may use the | 21 | | information in the database without the consent of the | 22 | | borrower: (i) for the purposes of administering and enforcing | 23 | | the program; (ii) to provide relevant information to a | 24 | | counselor providing counseling to a borrower under the program; | 25 | | or (iii) to the appropriate law enforcement agency or the | 26 | | applicable administrative agency if the database information |
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| 1 | | demonstrates criminal, fraudulent, or otherwise illegal | 2 | | activity. | 3 | | (i) Nothing in this Article is intended to prevent a | 4 | | borrower from making his or her own decision as to whether to | 5 | | proceed with a transaction. | 6 | | (j) Any person who violates any provision of this Article | 7 | | commits an unlawful practice within the meaning of the Consumer | 8 | | Fraud and Deceptive Business Practices Act. | 9 | | (j-1) A violation of any provision of this Article by a | 10 | | mortgage banking licensee or licensed mortgage loan originator | 11 | | shall constitute a violation of the Residential Mortgage | 12 | | License Act of 1987. | 13 | | (j-2) A violation of any provision of this Article by a | 14 | | title insurance company, title agent, or escrow agent shall | 15 | | constitute a violation of the Title Insurance Act. | 16 | | (j-3) A violation of any provision of this Article by a | 17 | | housing counselor shall be referred to the Department of | 18 | | Housing and Urban Development. | 19 | | (k) During the existence of the program, the Department | 20 | | shall submit semi-annual reports to the Governor and to the | 21 | | General Assembly by May 1 and November 1 of each year detailing | 22 | | its findings regarding the program. The report shall include, | 23 | | by county, at least the following information for each | 24 | | reporting period: | 25 | | (1) the number of loans registered with the program; | 26 | | (2) the number of borrowers receiving counseling; |
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| 1 | | (3) the number of loans closed; | 2 | | (4) the number of loans requiring counseling for each | 3 | | of the standards set forth in Section 73; | 4 | | (5) the number of loans requiring counseling where the | 5 | | mortgage originator changed the loan terms subsequent to | 6 | | counseling;
| 7 | | (6) the number of licensed mortgage brokers and loan | 8 | | originators entering information into
the database; | 9 | | (7) the number of investigations based on information | 10 | | obtained from the database,
including the number of | 11 | | licensees fined, the number of licenses suspended, and the
| 12 | | number of licenses revoked; | 13 | | (8) a summary of the types of non-traditional mortgage | 14 | | products being offered; and | 15 | | (9) a summary of how the Department is actively | 16 | | utilizing the program to combat
mortgage fraud. | 17 | | (Source: P.A. 98-1081, eff. 1-1-15; 99-660, eff. 7-28-16.) | 18 | | (765 ILCS 77/72) | 19 | | Sec. 72. Originator; required information. As part of the | 20 | | predatory lending database program, the broker or originator | 21 | | must submit all of the following information for inclusion in | 22 | | the predatory lending database for each loan for which the | 23 | | originator takes an application: | 24 | | (1) The borrower's name, address, social security | 25 | | number or taxpayer identification number, date of birth, |
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| 1 | | and income and expense information, including total | 2 | | monthly consumer debt, contained in the mortgage | 3 | | application.
| 4 | | (2) The address , permanent index number, and a | 5 | | description of the collateral and information about the | 6 | | loan or loans being applied for and the loan terms, | 7 | | including the amount of the loan, the rate and whether the | 8 | | rate is fixed or adjustable, amortization or loan period | 9 | | terms, and any other material terms.
| 10 | | (3) The borrower's credit score at the time of | 11 | | application.
| 12 | | (4) Information about the originator and the company | 13 | | the originator works for, including the originator's | 14 | | license number and address, fees being charged, whether the | 15 | | fees are being charged as points up front, the yield spread | 16 | | premium payable outside closing, and other charges made or | 17 | | remuneration required by the broker or originator or its | 18 | | affiliates or the broker's or originator's employer or its | 19 | | affiliates for the mortgage loans.
| 20 | | (5) (Blank). Information about affiliated or third | 21 | | party service providers, including the names and addresses | 22 | | of appraisers, title insurance companies, closing agents, | 23 | | attorneys, and realtors who are involved with the | 24 | | transaction and the broker or originator and any moneys | 25 | | received from the broker or originator in connection with | 26 | | the transaction.
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| 1 | | (6) All information indicated in connection with the | 2 | | TILA-RESPA Integrated Loan Estimate Disclosure or on the | 3 | | Good Faith Estimate and Truth in Lending statement | 4 | | disclosures given to the borrower by the broker or | 5 | | originator.
| 6 | | (7) Annual real estate taxes for the property, together | 7 | | with any assessments payable in connection with the | 8 | | property to be secured by the collateral and the proposed | 9 | | monthly principal and interest charge of all loans to be | 10 | | taken by the borrower and secured by the property of the | 11 | | borrower.
| 12 | | (8) Information concerning how the broker or | 13 | | originator obtained the client and the name of its referral | 14 | | source, if any.
| 15 | | (9) Information concerning the notices provided by the | 16 | | broker or originator to the borrower as required by law and | 17 | | the date those notices were given.
| 18 | | (10) Information concerning whether a sale and | 19 | | leaseback is contemplated and the names of the lessor and | 20 | | lessee, seller, and purchaser.
| 21 | | (11) Any and all financing by the borrower for the | 22 | | subject property within 12 months prior to the date of | 23 | | application. | 24 | | (12) Loan information, including interest rate, term, | 25 | | purchase price, down payment, and closing costs. | 26 | | (13) Whether the buyer is a first-time homebuyer or |
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| 1 | | refinancing a primary residence. | 2 | | (14) Whether the loan permits interest only payments. | 3 | | (15) Whether the loan may result in negative | 4 | | amortization. | 5 | | (16) Whether the total points and fees payable by the | 6 | | borrowers at or before closing will exceed 5%. | 7 | | (17) Whether the loan includes a prepayment penalty, | 8 | | and, if so, the terms of the penalty. | 9 | | (18) Whether the loan is an ARM. | 10 | | All information entered into the predatory lending | 11 | | database must be true and correct to the best of the | 12 | | originator's knowledge. The originator shall, prior to | 13 | | closing, correct, update, or amend the data as necessary. If | 14 | | any corrections become necessary after the file has been | 15 | | accessed by the closing agent or housing counselor, a new file | 16 | | must be entered. | 17 | | (Source: P.A. 97-891, eff. 1-1-13; 98-1081, eff. 1-1-15 .) | 18 | | (765 ILCS 77/76) | 19 | | Sec. 76. Title insurance company or closing agent; required | 20 | | information. As part of the predatory lending database program, | 21 | | a title insurance company or closing agent must submit all of | 22 | | the following information for inclusion in the predatory | 23 | | lending database:
| 24 | | (1) The borrower's name, address, social security | 25 | | number or taxpayer identification number, date of birth, |
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| 1 | | and income and expense information contained in the | 2 | | mortgage application. | 3 | | (2) The address, permanent index number, and a | 4 | | description of the collateral and information about the | 5 | | loan or loans being applied for and the loan terms, | 6 | | including the amount of the loan, the rate and whether the | 7 | | rate is fixed or adjustable, amortization or loan period | 8 | | terms, and any other material terms. | 9 | | (3) Annual real estate taxes for the property, together | 10 | | with any assessments payable in connection with the | 11 | | property to be secured by the collateral and the proposed | 12 | | monthly principal and interest charge of all loans to be | 13 | | taken by the borrower and secured by the property of the | 14 | | borrower as well as any required escrows and the amounts | 15 | | paid monthly for those escrows. | 16 | | (4) All itemizations and descriptions set forth in or | 17 | | in connection with the TILA-RESPA Integrated Closing | 18 | | Disclosure or RESPA settlement statement , including items | 19 | | to be disbursed, payable outside closing "POC" items noted | 20 | | on the statement, and a list of payees and the amounts of | 21 | | their checks. | 22 | | (5) The name and license number of the title insurance | 23 | | company or closing agent together with the name of the | 24 | | agent actually conducting the closing. | 25 | | (6) The names and addresses of all originators, | 26 | | brokers, appraisers, sales persons, attorneys, and |
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| 1 | | surveyors that are present at the closing. | 2 | | (7) The date of closing, a detailed list of all notices | 3 | | provided to the borrower at closing and the date of those | 4 | | notices, and all information indicated on or in connection | 5 | | with the TILA-RESPA Integrated Loan Estimate Disclosure or | 6 | | on the Truth in Lending statement and Good Faith Estimate | 7 | | disclosures.
| 8 | | (Source: P.A. 98-1081, eff. 1-1-15 .)
| 9 | | Section 99. Effective date. This Act takes effect upon | 10 | | becoming law.
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