Full Text of SB1167 095th General Assembly
SB1167enr 95TH GENERAL ASSEMBLY
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| AN ACT concerning property.
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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 Home Equity Assurance Act is amended by | 5 |
| changing Section 11 as follows:
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| (65 ILCS 95/11) (from Ch. 24, par. 1611)
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| Sec. 11. Guarantee Fund.
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| (a) Each governing commission and program
created by | 9 |
| referendum under the provisions of this Act shall maintain a
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| guarantee fund for the purposes of paying the costs of | 11 |
| administering the
program and extending protection to members | 12 |
| pursuant to the limitations and
procedures set forth in this | 13 |
| Act.
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| (b) The guarantee fund shall be raised by means of an | 15 |
| annual tax levied
on all residential property within the | 16 |
| territory of the program having at
least one, but not more than | 17 |
| 6 dwelling units and classified by county
ordinance as | 18 |
| residential. The rate of this tax may be changed from year to
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| year by majority vote of the governing commission but in no | 20 |
| case shall it
exceed a rate of .12% of the equalized assessed | 21 |
| valuation of all property
in the territory of the program | 22 |
| having at least one, but not
more than 6 dwelling units and | 23 |
| classified by county ordinance as
residential, or the maximum |
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| tax rate approved by the voters of the
territory at the | 2 |
| referendum which created the program
or, in the case of a | 3 |
| merged program, the maximum tax rate approved by
the voters at | 4 |
| the referendum authorizing the merger, whichever rate is
lower. | 5 |
| The commissioners shall cause the amount to be
raised by | 6 |
| taxation in each year to be certified to the county clerk in | 7 |
| the
manner provided by law, and any tax so levied and certified | 8 |
| shall be
collected and enforced in the same manner and by the | 9 |
| same officers as those
taxes for the purposes of the county and | 10 |
| city within which the territory of
the commission is located. | 11 |
| Any such tax, when collected, shall be paid
over to the proper | 12 |
| officer of the commission who is authorized to receive
and | 13 |
| receipt for such tax. The governing commission may issue tax
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| anticipation warrants against the taxes to be assessed for the | 15 |
| calendar
year in which the program is created and for the first | 16 |
| full calendar year
after the creation of the program.
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| (c) The moneys deposited in the guarantee fund shall, as | 18 |
| nearly as
practicable, be fully and continuously invested or | 19 |
| reinvested by the
governing commission in investment | 20 |
| obligations which shall be in such
amounts, and shall mature at | 21 |
| such times, that the maturity or date of
redemption at the | 22 |
| option of the holder of such investment obligations shall
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| coincide, as nearly as practicable, with the times at which | 24 |
| monies will be
required for the purposes of the program. For | 25 |
| the purposes of this
Section investment obligation shall mean | 26 |
| direct general municipal, state,
or federal obligations which |
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| at the time are legal investments under the
laws of this State | 2 |
| and the payment of principal of and interest on which
are | 3 |
| unconditionally guaranteed by the governing body issuing them.
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| (d) Except as permitted by this subsection and subsection | 5 |
| (d-5) ,
the guarantee fund shall be used solely and exclusively | 6 |
| for the
purpose of providing guarantees to members of the | 7 |
| particular Guaranteed
Home Equity Program and for reasonable | 8 |
| salaries, expenses, bills,
and fees incurred in administering | 9 |
| the program, and shall be used for no other
purpose.
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| A governing commission, with no less than $4,000,000 in its | 11 |
| guarantee
fund,
may, if authorized by referendum duly adopted | 12 |
| by a majority of the voters,
establish a Low
Interest
Home | 13 |
| Improvement Loan Program in accordance with and subject to | 14 |
| procedures
established by a financial institution, as defined | 15 |
| in the Illinois Banking Act.
Whenever
the question of creating | 16 |
| a Low Interest Home Improvement Loan Program is
initiated by
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| resolution or ordinance of the corporate authorities of the | 18 |
| municipality or by
a petition
signed by not less than 10% of | 19 |
| the total number of registered voters of each
precinct in
the | 20 |
| territory, the registered voters of which are eligible to sign | 21 |
| the
petition, it shall be the
duty of the election authority | 22 |
| having jurisdiction over the municipality to
submit the
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| question of creating the program to the electors of each | 24 |
| precinct within the
territory at
the regular election specified | 25 |
| in the resolution, ordinance, or petition
initiating the
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| question. A petition initiating a question described in this |
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| subsection shall
be filed with
the election authority having | 2 |
| jurisdiction over the municipality. The petition
shall be filed
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| and objections to the petition shall be made in the manner | 4 |
| provided in the
Election Code.
A resolution, ordinance, or | 5 |
| petition initiating a question described in this
subsection | 6 |
| shall
specify the election at which the question is to be | 7 |
| submitted. The referendum
on the
question shall be held in | 8 |
| accordance with the Election Code. The question
shall be in | 9 |
| substantially the
following form:
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| "Shall the (name of the home equity program) implement | 11 |
| a Low Interest Home
Improvement Loan Program with money | 12 |
| from the guarantee fund of the established
guaranteed home | 13 |
| equity program?"
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| The votes must be recorded as "Yes" or "No".
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| Whenever a majority of the voters on the public question | 16 |
| approve the
creation of
the program as certified by the proper | 17 |
| election authorities, the commission
shall
establish the | 18 |
| program and administer the program with funds collected under | 19 |
| the
Guaranteed Home Equity
Program, subject to the following | 20 |
| conditions:
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| (1) At any given time, the cumulative total of all | 22 |
| loans and loan
guarantees
(if applicable) issued under this | 23 |
| program may not reduce the balance of the
guarantee
fund to | 24 |
| less than $3,000,000.
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| (2) Only eligible applicants may apply for a
loan.
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| (3) The loan must be used for the repair, maintenance, |
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| remodeling,
alteration, or improvement of a guaranteed | 2 |
| residence. This condition is not
intended to exclude the | 3 |
| repair, maintenance, remodeling, alteration, or
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| improvement of a guaranteed residence's landscape. This | 5 |
| condition is intended
to exclude the demolition of a | 6 |
| current residence. This condition is also
intended to | 7 |
| exclude
the construction of a new residence.
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| (4) An eligible applicant may not borrow more than the | 9 |
| amount of equity
value in his or her residence.
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| (5) A commission must ensure that loans issued are | 11 |
| secured with
collateral that is at least equal to the | 12 |
| amount of the loan or loan guarantee.
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| (6) A commission shall charge an interest rate which it | 14 |
| determines to be
below the market rate of interest | 15 |
| generally available to the applicant.
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| (7) A commission may, by resolution, establish other | 17 |
| administrative
rules and procedures as are necessary to | 18 |
| implement this program including, but
not limited to, loan | 19 |
| dollar amounts and terms. A commission may also impose
on | 20 |
| loan applicants a one-time application fee for the purpose | 21 |
| of defraying the
costs of administering the program.
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| (d-5) A governing commission, with no less than $4,000,000 | 23 |
| in its guarantee fund, may, if authorized by referendum duly | 24 |
| adopted by a majority of the voters, establish a Foreclosure | 25 |
| Prevention Loan Fund to provide low interest emergency loans to | 26 |
| eligible applicants that may be forced into foreclosure |
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| proceedings. | 2 |
| Whenever the question of creating a Foreclosure Prevention | 3 |
| Loan Fund is initiated by resolution or ordinance of the | 4 |
| corporate authorities of the municipality or by a petition | 5 |
| signed by not less than 10% of the total number of registered | 6 |
| voters of each precinct in the territory, the registered voters | 7 |
| of which are eligible to sign the petition, it shall be the | 8 |
| duty of the election authority having jurisdiction over the | 9 |
| municipality to submit the question of creating the program to | 10 |
| the electors of each precinct within the territory at the | 11 |
| regular election specified in the resolution, ordinance, or | 12 |
| petition initiating the question. A petition initiating a | 13 |
| question described in this subsection shall be filed with the | 14 |
| election authority having jurisdiction over the municipality. | 15 |
| The petition shall be filed and objections to the petition | 16 |
| shall be made in the manner provided in the Election Code. A | 17 |
| resolution, ordinance, or petition initiating a question | 18 |
| described in this subsection shall specify the election at | 19 |
| which the question is to be submitted. The referendum on the | 20 |
| question shall be held in accordance with the Election Code. | 21 |
| The question shall be in substantially the following form: | 22 |
| "Shall the (name of the home equity program) implement a | 23 |
| Foreclosure Prevention Loan Fund with money from the guarantee | 24 |
| fund of the established guaranteed home equity program?" | 25 |
| The votes must be recorded as "Yes" or "No". | 26 |
| Whenever a majority of the voters on the public question |
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| approve the creation of a Foreclosure Prevention Loan Fund as | 2 |
| certified by the proper election authorities, the commission | 3 |
| shall establish the program and administer the program with | 4 |
| funds collected under the Guaranteed Home Equity Program, | 5 |
| subject to the following conditions: | 6 |
| (1) At any given time, the cumulative total of all | 7 |
| loans and loan guarantees (if applicable) issued under this | 8 |
| program may not exceed $3,000,000. | 9 |
| (2) Only eligible applicants may apply for a loan. The | 10 |
| Commission may establish, by resolution, additional | 11 |
| criteria for eligibility. | 12 |
| (3) The loan must be used to assist with preventing | 13 |
| foreclosure proceedings. | 14 |
| (4) An eligible applicant may not borrow more than the | 15 |
| amount of equity value in his or her residence. | 16 |
| (5) A commission must ensure that loans issued are | 17 |
| secured as a second lien on the property. | 18 |
| (6) A commission shall charge an interest rate which it | 19 |
| determines to be below the market rate of interest | 20 |
| generally available to the applicant. | 21 |
| (7) A commission may, by resolution, establish other | 22 |
| administrative rules and procedures as are necessary to | 23 |
| implement this program including, but not limited to, | 24 |
| eligibility requirements for eligible applicants, loan | 25 |
| dollar amounts, and loan terms. | 26 |
| (8) A commission may also impose on loan applicants a |
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| one-time application fee for the purpose of defraying the | 2 |
| costs of administering the program. | 3 |
| (e) The guarantee fund shall be maintained, invested, and | 4 |
| expended
exclusively by the governing commission of the program | 5 |
| for whose purposes
it was created. Under no circumstance shall | 6 |
| the guarantee fund be used by
any person or persons, | 7 |
| governmental body, or public or private agency or
concern other | 8 |
| than the governing commission of the program for whose
purposes | 9 |
| it was created. Under no circumstances shall the guarantee fund | 10 |
| be
commingled with other funds or investments.
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| (e-1) No commissioner or family member of a commissioner, | 12 |
| or employee or
family member of an employee, may receive any
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| financial benefit, either directly or indirectly, from the | 14 |
| guarantee fund.
Nothing in this subsection (e-1) shall be | 15 |
| construed to prohibit payment of
expenses to a commissioner in | 16 |
| accordance with Section 4 or payment of salaries
or expenses to | 17 |
| an employee in accordance with this Section.
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| As used in this subsection (e-1), "family member" means a | 19 |
| spouse, child,
stepchild, parent, brother, or sister of a | 20 |
| commissioner or a child, stepchild,
parent, brother, or sister | 21 |
| of a commissioner's spouse.
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| (f) An independent audit of the guarantee fund and the | 23 |
| management of the
program shall be conducted annually and made | 24 |
| available to the public
through any office of the governing | 25 |
| commission or a public facility such as
a local public library | 26 |
| located within the territory of the program.
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| (Source: P.A. 91-492, eff. 1-1-00.)
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| Section 10. The Residential Mortgage License Act of 1987 is | 3 |
| amended by changing Section 4-10 and by adding Sections 4-15, | 4 |
| 4-16, 5-6, 5-7, 5-8, 5-9, 5-10, 5-11, 5-12, 5-14, 5-15, 5-16, | 5 |
| and 5-17 as follows:
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| (205 ILCS 635/4-10) (from Ch. 17, par. 2324-10)
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| Sec. 4-10. Rules and Regulations of the Commissioner.
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| (a) In addition to such powers as may be prescribed by this | 9 |
| Act, the
Commissioner is hereby authorized and empowered to | 10 |
| promulgate regulations
consistent with the purposes of this | 11 |
| Act, including but not limited to:
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| (1) Such rules and regulations in connection with the | 13 |
| activities of
licensees as may be necessary and appropriate | 14 |
| for the protection of
consumers in this State;
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| (2) Such rules and regulations as may be necessary and | 16 |
| appropriate to
define improper or fraudulent business | 17 |
| practices in connection with the
activities of licensees in | 18 |
| making mortgage loans;
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| (3) Such rules and regulations as may define the terms | 20 |
| used in this Act
and as may be necessary and appropriate to | 21 |
| interpret and implement the
provisions of this Act; and
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| (4) Such rules and regulations as may be necessary for | 23 |
| the enforcement of this Act.
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| (b) The Commissioner is hereby authorized and empowered to |
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| make such
specific rulings, demands and findings as he or she | 2 |
| may deem necessary for the
proper conduct of the mortgage | 3 |
| lending industry. | 4 |
| (c) A person or entity may make a written application to | 5 |
| the Department for a written interpretation of this Act. The | 6 |
| Department may then, in its sole discretion, choose to issue a | 7 |
| written interpretation. To be valid, a written interpretation | 8 |
| must be signed by the Secretary, or his or her designated | 9 |
| Director of Financial and Professional Regulation, and the | 10 |
| Department's General Counsel. A written interpretation expires | 11 |
| 2 years after the date that it was issued. | 12 |
| (d) No provision in this Act that imposes liability or | 13 |
| establishes violations shall apply to any act taken by a person | 14 |
| or entity in conformity with a written interpretation of this | 15 |
| Act that is in effect at the time the act is taken, | 16 |
| notwithstanding whether the written interpretation is later | 17 |
| amended, rescinded, or determined by judicial or other | 18 |
| authority to by invalid for any reason.
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| (Source: P.A. 85-735.)
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| (205 ILCS 635/4-15 new) | 21 |
| Sec. 4-15. Enforcement and reporting provisions. The | 22 |
| Attorney General may enforce any violation of Section 5-6, 5-7, | 23 |
| 5-8, 5-9, 5-10, 5-11, 5-12, 5-14, or 5-15 of this Act as an | 24 |
| unlawful practice under the Consumer Fraud and Deceptive | 25 |
| Business Practices Act. |
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| (205 ILCS 635/4-16 new) | 2 |
| Sec. 4-16. Private right of action. A borrower injured by a | 3 |
| violation of the standards, duties, prohibitions, or | 4 |
| requirements of Sections 5-6, 5-7, 5-8, 5-9, 5-10, 5-11, 5-12, | 5 |
| 5-14, 5-15, and 5-16 of this Act shall have a private right of | 6 |
| action. | 7 |
| (a) A licensee is not liable for a violation of this Act | 8 |
| if: | 9 |
| (1) within 30 days of the loan closing and prior to | 10 |
| receiving any notice from the borrower of the violation, | 11 |
| the licensee has made appropriate restitution to the | 12 |
| borrower and appropriate adjustments are made to the loan; | 13 |
| or | 14 |
| (2) the violation was not intentional and resulted from | 15 |
| a bona fide error in fact, notwithstanding the maintenance | 16 |
| of procedures reasonably adopted to avoid such errors, and | 17 |
| within 60 days of the discovery of the violation and prior | 18 |
| to receiving any notice from the borrower of the violation, | 19 |
| the borrower is notified of the violation, appropriate | 20 |
| restitution is made to the borrower, and appropriate | 21 |
| adjustments are made to the loan. | 22 |
| (b) The remedies and rights provided for in this Act are | 23 |
| not exclusive, but cumulative, and all other applicable claims | 24 |
| are specifically preserved.
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| (205 ILCS 635/5-6 new) | 2 |
| Sec. 5-6. Verification of borrower's ability to repay. | 3 |
| (a) No licensee may make, provide, or arrange for a | 4 |
| residential mortgage loan without verifying the borrower's | 5 |
| reasonable ability to pay the principal and interest on the | 6 |
| loan, real estate taxes, homeowner's insurance, assessments, | 7 |
| and mortgage insurance premiums, if applicable. | 8 |
| For residential mortgage loans in which the interest rate | 9 |
| may vary, the reasonable ability to pay the principal and | 10 |
| interest on the loan shall be determined based on a fully | 11 |
| indexed rate, which rate shall be calculated by using the index | 12 |
| rate prevailing at the time of origination of the loan plus the | 13 |
| margin that will apply when calculating the adjustable rate | 14 |
| under the terms of the loan, assuming a fully amortizing | 15 |
| repayment schedule based on the term of the loan. | 16 |
| For loans that allow for negative amortization, the | 17 |
| principal amount of the loan shall be calculated by including | 18 |
| the maximum amount the principal balance may increase due to | 19 |
| negative amortization under the terms of the loan. | 20 |
| (b) For all residential mortgage loans made by a licensee, | 21 |
| the borrower's income and financial resources must be verified | 22 |
| by tax returns, payroll receipts, bank records, or other | 23 |
| reasonably reliable methods, based upon the circumstances of | 24 |
| the proposed loan. Nothing in this Section shall be construed | 25 |
| to limit a licensee's ability to rely on criteria other than | 26 |
| the borrower's income and financial resources to establish the |
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| borrower's reasonable ability to repay a residential mortgage | 2 |
| loan; however, such other criteria must be verified through | 3 |
| reasonably reliable methods and documentation. A statement by | 4 |
| the borrower to the licensee of the borrower's income and | 5 |
| resources is not sufficient to establish the existence of the | 6 |
| income or resources when verifying the reasonable ability to | 7 |
| pay. Stated income should be accepted only if there are | 8 |
| mitigating factors that clearly minimize the need for direct | 9 |
| verification of ability to repay. | 10 |
| (205 ILCS 635/5-7 new) | 11 |
| Sec. 5-7. Broker agency relationship. | 12 |
| (a) A mortgage broker shall be considered to have created | 13 |
| an agency relationship with the borrower in all cases and shall | 14 |
| comply with the following duties: | 15 |
| (1) A mortgage broker shall act in the borrower's best | 16 |
| interest and in good faith toward the borrower. A mortgage | 17 |
| broker shall not accept, give, or charge any undisclosed | 18 |
| compensation or realize any undisclosed remuneration, | 19 |
| either through direct or indirect means, that inures to the | 20 |
| benefit of the mortgage broker on an expenditure made for | 21 |
| the borrower; | 22 |
| (2) mortgage brokers shall carry out all lawful | 23 |
| instructions given by borrowers; | 24 |
| (3) mortgage brokers shall disclose to borrowers all | 25 |
| material facts of which the mortgage broker has knowledge |
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| which might reasonably affect the borrower's rights, | 2 |
| interests, or ability to receive the borrower's intended | 3 |
| benefit from the residential mortgage loan, but not facts | 4 |
| which are reasonably susceptible to the knowledge of the | 5 |
| borrower; | 6 |
| (4) mortgage brokers shall use reasonable care in | 7 |
| performing duties; and | 8 |
| (5) mortgage brokers shall account to a borrower for | 9 |
| all the borrower's money and
property received as agent. | 10 |
| (b) Nothing in this Section prohibits a mortgage broker | 11 |
| from contracting for or collecting a fee for services rendered | 12 |
| and which had been disclosed to the borrower in advance of the | 13 |
| provision of those services. | 14 |
| (c) Nothing in this Section requires a mortgage broker to | 15 |
| obtain a loan containing terms or conditions not available to | 16 |
| the mortgage broker in the mortgage broker's usual course of | 17 |
| business, or to obtain a loan for the borrower from a mortgage | 18 |
| lender with whom the mortgage broker does not have a business | 19 |
| relationship. | 20 |
| (205 ILCS 635/5-8 new) | 21 |
| Sec. 5-8. Prepayment penalties. | 22 |
| (a) No licensee may make, provide, or arrange a mortgage | 23 |
| loan with a prepayment
penalty unless the licensee offers the | 24 |
| borrower a loan without a prepayment penalty, the
offer is in | 25 |
| writing, and the borrower initials the offer to indicate that |
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| the borrower has
declined the offer. In addition, the licensee | 2 |
| must disclose the discount in rate received in
consideration | 3 |
| for a mortgage loan with the prepayment penalty. | 4 |
| (b) If a borrower declines an offer required under | 5 |
| subsection (a) of this Section, the licensee may include a | 6 |
| prepayment penalty that extends no longer than three years or | 7 |
| the first change date or rate adjustment of a variable rate | 8 |
| mortgage, whichever comes earlier, provided that, if a | 9 |
| prepayment is made during the fixed rate period, the licensee | 10 |
| shall receive an amount that is no more than: | 11 |
| (1) 3% of the total loan amount if the prepayment is | 12 |
| made within the first 12-month period following the date | 13 |
| the loan was made; | 14 |
| (2) 2% of the total loan amount if the prepayment is | 15 |
| made within the second
12-month period following the date | 16 |
| the loan was made; or | 17 |
| (3) 1% of the total loan amount if the prepayment is | 18 |
| made within the third 12-month period following the date | 19 |
| the loan was made, if the fixed rate period
extends 3 | 20 |
| years. | 21 |
| (c) Notwithstanding any provision in this Section, | 22 |
| prepayment penalties are prohibited in connection with the sale | 23 |
| or destruction of a dwelling secured by a residential mortgage | 24 |
| loan.
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| (d) This Section applies to loans made, refinanced, | 26 |
| renewed, extended, or modified on or after the effective date |
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| of this amendatory Act of the 95th General Assembly. | 2 |
| (205 ILCS 635/5-9 new) | 3 |
| Sec. 5-9. Notice of change in loan terms. | 4 |
| (a) No licensee may fail to do either of the following: | 5 |
| (1) Provide timely notice to the borrower of any | 6 |
| material change in the terms of the residential mortgage | 7 |
| loan prior to the closing of the loan. For purposes of this | 8 |
| Section, a "material change means" any of the following: | 9 |
| (A) A change in the type of loan being offered, | 10 |
| such as a fixed or variable rate loan or a loan with a | 11 |
| balloon payment. | 12 |
| (B) A change in the term of the loan, as reflected | 13 |
| in the number of monthly payments due before a final | 14 |
| payment is scheduled to be made. | 15 |
| (C) An increase in the interest rate of more than | 16 |
| 0.15%, or an equivalent
increase in the amount of | 17 |
| discount points charged. | 18 |
| (D) An increase in the regular monthly payment of | 19 |
| principal and interest of more than 5%. | 20 |
| (E) A change regarding the requirement or amount of | 21 |
| escrow of taxes or insurance. | 22 |
| (F) A change regarding the requirement or payment, | 23 |
| or both, of private mortgage insurance. | 24 |
| (2) Timely inform the borrower if any fees payable by | 25 |
| the borrower to the licensee increase by more than 10% or |
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| $100, whichever is greater. | 2 |
| (b) The disclosures required by this Section shall be | 3 |
| deemed timely if the licensee provides the borrower with the | 4 |
| revised information not later than 3 days after learning of the | 5 |
| change or 24 hours before the residential mortgage loan is | 6 |
| closed, whichever is earlier. If the licensee discloses a | 7 |
| material change more than the 3 days after learning of the | 8 |
| change but still 24 hours before the residential mortgage loan | 9 |
| is closed, it will not be liable for penalties or forfeitures | 10 |
| if the licensee cures in time for the borrower to avoid any | 11 |
| damage. | 12 |
| (c) If an increase in the total amount of the fee to be | 13 |
| paid by the borrower to the broker is not disclosed in | 14 |
| accordance with this Section, the broker shall refund to the | 15 |
| borrower the amount by which the fee was increased. If the fee | 16 |
| is financed into the residential mortgage loan, the broker | 17 |
| shall also refund to the borrower the interest charged to | 18 |
| finance the fee. | 19 |
| (d) Licensees limited to soliciting residential mortgage | 20 |
| loan applications as approved by the Director under Title 38, | 21 |
| Section 1050.2115(c)(1) of the Illinois Administrative Code | 22 |
| are not required to provide the disclosures under this Section | 23 |
| as long as the solicitor does not discuss the terms and | 24 |
| conditions with the potential borrower.
| 25 |
| (205 ILCS 635/5-10 new) |
|
|
|
SB1167 Enrolled |
- 18 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| Sec. 5-10. Comparable monthly payment quotes. When | 2 |
| comparing different loans, the licensee must not state or imply | 3 |
| that monthly loan payments, if they include amounts escrowed | 4 |
| for payment of property taxes and homeowner's insurance, are | 5 |
| comparable with monthly loan payments that do not include these | 6 |
| amounts. | 7 |
| (205 ILCS 635/5-11 new) | 8 |
| Sec. 5-11. Requirement to provide borrower with a copy of | 9 |
| all appraisals. Licensees must provide to the borrower a | 10 |
| complete copy of any appraisal, including any appraisal | 11 |
| generated using the Automated Valuation Model, obtained by the | 12 |
| lender for use in underwriting the residential mortgage loan | 13 |
| within 3 business days of receipt by the licensee, but in no | 14 |
| event less than 24 hours prior to the day of closing. The | 15 |
| appraisal may be sent via first class mail, commercial carrier, | 16 |
| by facsimile or by e-mail, if the borrower has supplied an | 17 |
| e-mail address. | 18 |
| (205 ILCS 635/5-12 new) | 19 |
| Sec. 5-12. Disclosure of refinancing options. If the | 20 |
| subject of a future loan is discussed by a licensee making, | 21 |
| providing, or arranging a mortgage loan, the licensee shall | 22 |
| disclose the circumstances under which a new loan could be | 23 |
| considered. Such disclosure shall clearly state that it is not | 24 |
| a contract and that the licensee is not representing or |
|
|
|
SB1167 Enrolled |
- 19 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| promising that a new loan could or would be made at any time in | 2 |
| the future. | 3 |
| (205 ILCS 635/5-14 new) | 4 |
| Sec. 5-14. Prohibition on equity stripping and loan | 5 |
| flipping. No licensee may engage in equity stripping or loan | 6 |
| flipping, as those terms are defined in the Illinois Fairness | 7 |
| in Lending Act. | 8 |
| (205 ILCS 635/5-15 new) | 9 |
| Sec. 5-15. Prohibition on financing certain insurance | 10 |
| premiums. No licensee may make, provide, or arrange for a | 11 |
| residential mortgage loan that finances, directly or | 12 |
| indirectly, any credit life, credit disability, or credit | 13 |
| unemployment insurance; however, insurance premiums calculated | 14 |
| and paid on a monthly basis shall not be considered to be | 15 |
| financed by the lender. | 16 |
| (205 ILCS 635/5-16 new) | 17 |
| Sec. 5-16. Prohibition on encouraging default. A licensee | 18 |
| may not recommend or encourage default or the failure to make | 19 |
| timely payments on an existing residential mortgage loan or | 20 |
| other debt prior to and in connection with the closing or | 21 |
| planned closing of a residential mortgage loan that refinances | 22 |
| all or any portion of the existing loan or debt. |
|
|
|
SB1167 Enrolled |
- 20 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| (205 ILCS 635/5-17 new) | 2 |
| Sec. 5-17. Severability. If any provision of this Act or | 3 |
| its application to any person or circumstance is held invalid, | 4 |
| the invalidity of that provision or application does not affect | 5 |
| other provisions or applications of this Act that can be given | 6 |
| effect without the invalid provision or application.
| 7 |
| Section 15. The Residential Real Property Disclosure Act is | 8 |
| amended by changing Sections 70, 72, and 74 and adding Sections | 9 |
| 73 and 78 as follows: | 10 |
| (765 ILCS 77/70) | 11 |
| Sec. 70. Predatory lending database pilot program. | 12 |
| (a) As used in this Article: | 13 |
| "Adjustable rate mortgage" or "ARM" means a closed-end | 14 |
| mortgage transaction that allows adjustments of the loan | 15 |
| interest rate during the first 3 years of the loan term. | 16 |
| "Borrower" means a person seeking a mortgage loan.
| 17 |
| "Broker" means a "broker" or "loan broker", as defined in | 18 |
| subsection (p) of Section 1-4 of the Residential Mortgage | 19 |
| License Act of 1987. | 20 |
| "Closing agent" means an individual assigned by a title | 21 |
| insurance company or a broker or originator to ensure that the | 22 |
| execution of documents related to the closing of a real estate | 23 |
| sale or the refinancing of a real estate loan and the | 24 |
| disbursement of closing funds are in conformity with the |
|
|
|
SB1167 Enrolled |
- 21 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| instructions of the entity financing the transaction.
| 2 |
| "Counseling" means in-person counseling provided by a | 3 |
| counselor employed by a HUD-certified counseling agency to all | 4 |
| borrowers, or documented telephone counseling where a hardship | 5 |
| would be imposed on one or more borrowers. A hardship shall | 6 |
| exist in instances in which the borrower is confined to his or | 7 |
| her home due to medical conditions, as verified in writing by a | 8 |
| physician, or the borrower resides 50 miles or more from the | 9 |
| nearest participating HUD-certified housing counseling agency. | 10 |
| In instances of telephone counseling, the borrower must supply | 11 |
| all necessary documents to the counselor at least 72 hours | 12 |
| prior to the scheduled telephone counseling session. | 13 |
| "Counselor" means a counselor employed by a HUD-certified | 14 |
| housing counseling agency. | 15 |
| "Credit score" means a credit risk score as defined by the | 16 |
| Fair Isaac Corporation, or its successor, and reported under | 17 |
| such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE" | 18 |
| by one or more of the following credit reporting agencies or | 19 |
| their successors: Equifax, Inc., Experian Information | 20 |
| Solutions, Inc., and TransUnion
LLC. If the borrower's credit | 21 |
| report contains credit scores from 2 reporting agencies, then | 22 |
| the broker or loan originator shall report the lower score. If | 23 |
| the borrower's credit report contains credit scores from 3 | 24 |
| reporting agencies, then the broker or loan originator shall | 25 |
| report the middle score.
| 26 |
| "Department" means the Department of Financial and |
|
|
|
SB1167 Enrolled |
- 22 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| Professional Regulation.
| 2 |
| "Exempt person" means that term as it is defined in | 3 |
| subsections (d)(1) and (d)(1.5) of Section 1-4 of the | 4 |
| Residential Mortgage License Act of 1987.
| 5 |
| "First-time homebuyer" means a borrower who has not held an | 6 |
| ownership interest in residential property.
| 7 |
| "HUD-certified counseling" or "counseling" means | 8 |
| counseling given to a borrower by a counselor employed by a | 9 |
| HUD-certified housing counseling agency. | 10 |
| "Interest only" means a closed-end loan that permits one or | 11 |
| more payments of interest without any reduction of the | 12 |
| principal balance of the loan, other than the first payment on | 13 |
| the loan. | 14 |
| "Lender" means that term as it is defined in subsection (g) | 15 |
| of Section 1-4 of the Residential Mortgage License Act.
| 16 |
| "Licensee" means that term as it is defined in subsection | 17 |
| (e) of Section 1-4 of the Residential Mortgage License Act of | 18 |
| 1987.
| 19 |
| "Mortgage loan" means that term as it is defined in | 20 |
| subsection (f) of Section 1-4 of the Residential Mortgage | 21 |
| License Act of 1987.
| 22 |
| "Negative amortization" means an amortization method under | 23 |
| which the outstanding balance may increase at any time over the | 24 |
| course of the loan because the regular periodic payment does | 25 |
| not cover the full amount of interest due. | 26 |
| "Originator" means a "loan originator" as defined in |
|
|
|
SB1167 Enrolled |
- 23 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| subsection (hh) of Section 1-4 of the Residential Mortgage | 2 |
| License Act of 1987, except an exempt person. | 3 |
| "Pilot program area" means all areas within Cook County | 4 |
| designated as such by the Department due to the high rate of | 5 |
| foreclosure on residential home mortgages that is primarily the | 6 |
| result of predatory lending practices. The Department shall | 7 |
| designate the pilot program area within 30 days after the | 8 |
| effective date of this amendatory Act of the 94th General | 9 |
| Assembly.
| 10 |
| "Points and fees" has the meaning ascribed to that term in | 11 |
| Section 10 of the High Risk Home Loan Act. | 12 |
| "Prepayment penalty" means a charge imposed by a lender | 13 |
| under a mortgage note or rider when the loan is paid before the | 14 |
| expiration of the term of the loan. | 15 |
| "Refinancing" means a loan secured by the borrower's or | 16 |
| borrowers' primary residence where the proceeds are not used as | 17 |
| purchase money for the residence. | 18 |
| "Title insurance company" means any domestic company | 19 |
| organized under the laws of this State for the purpose of | 20 |
| conducting the business of guaranteeing or insuring titles to | 21 |
| real estate and any title insurance company organized under the | 22 |
| laws of another State, the District of Columbia, or a foreign | 23 |
| government and authorized to transact the business of | 24 |
| guaranteeing or insuring titles to real estate in this State.
| 25 |
| (a-5) A predatory lending database program shall be | 26 |
| established within Cook County. The program shall be |
|
|
|
SB1167 Enrolled |
- 24 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| administered in accordance with this Article. The inception | 2 |
| date of the program shall be July 1, 2008.
Inception date. The | 3 |
| Secretary of Financial and Professional Regulation shall | 4 |
| declare in writing the date of inception of the pilot program. | 5 |
| The inception date shall be no later than September 1, 2006, | 6 |
| and shall be at least 30 days after the date the Secretary | 7 |
| issues a declaration establishing that date. The Secretary's | 8 |
| declaration shall be posted on the Department's website, and | 9 |
| the Department shall communicate the declaration to affected | 10 |
| licensees of the Department. Until the inception date, none of | 11 |
| the duties, obligations, contingencies, or consequences of or | 12 |
| from the pilot program shall be imposed. The pilot program | 13 |
| shall apply to all mortgage applications that are governed by | 14 |
| this Article and that are made or taken on or after the | 15 |
| inception of the pilot program.
| 16 |
| (b) A predatory lending database pilot program is | 17 |
| established within the pilot program area, effective upon the | 18 |
| inception date established by the Secretary of the Department. | 19 |
| The pilot program shall be in effect and operational
for a | 20 |
| total of 4 years and shall be administered in accordance with | 21 |
| Article 3 of this Act. The database created under this program | 22 |
| shall be maintained and administered by the Department. The | 23 |
| database shall be designed to allow brokers, originators, | 24 |
| credit counselors, title insurance companies, and closing | 25 |
| agents to submit information to the database online. The | 26 |
| database shall not be designed to allow those entities to |
|
|
|
SB1167 Enrolled |
- 25 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| retrieve information from the database, except as otherwise | 2 |
| provided in this Article. Information submitted by the broker | 3 |
| or originator to the Department may be used to populate the | 4 |
| online form submitted by a credit counselor, title insurance | 5 |
| company, or closing agent. | 6 |
| (c) Within 10 days after taking a mortgage application, the | 7 |
| broker or originator for any mortgage on residential property | 8 |
| within the pilot program area must submit to the predatory | 9 |
| lending database all of the information required under Section | 10 |
| 72 and any other information required by the Department by | 11 |
| rule. Within 7 days after receipt of the information, the | 12 |
| Department shall compare that information to the housing
credit
| 13 |
| counseling standards in Section 73
developed by the Department | 14 |
| by rule and issue to the borrower and the broker or originator | 15 |
| a determination of whether credit counseling is recommended for | 16 |
| the borrower. The borrower may not waive credit counseling. If | 17 |
| at any time after submitting the information required under | 18 |
| Section 72 the broker or originator (i) changes the terms of | 19 |
| the loan or (ii) issues a new commitment to the borrower, then, | 20 |
| within 5 days thereafter, the broker or originator shall | 21 |
| re-submit all of the information required under Section 72 and, | 22 |
| within 4 days after receipt of the information re-submitted by | 23 |
| the broker or originator, the Department shall compare that | 24 |
| information to the housing
credit counseling standards in | 25 |
| Section 73
developed by the Department by rule and shall issue | 26 |
| to the borrower and the broker or originator a new |
|
|
|
SB1167 Enrolled |
- 26 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| determination of whether re-counseling
credit counseling is | 2 |
| recommended for the borrower based on the information | 3 |
| re-submitted by the broker or originator. The Department shall | 4 |
| require re-counseling if the loan terms have been modified to | 5 |
| meet another counseling standard in Section 73, or if the | 6 |
| broker has increased the interest rate by more than 200 basis | 7 |
| points.
| 8 |
| (d) If the Department recommends credit counseling for the | 9 |
| borrower under subsection (c), then the Department shall notify | 10 |
| the borrower of all participating HUD-certified counseling | 11 |
| agencies located within the State and direct the borrower to | 12 |
| interview with a counselor associated with one of those | 13 |
| agencies. Within 10 days after receipt of the notice of | 14 |
| HUD-certified counseling agencies, the borrower shall select | 15 |
| one of those agencies and shall engage in an interview with a | 16 |
| counselor associated with that agency. Within 7 days after | 17 |
| interviewing the borrower, the credit counselor must submit to | 18 |
| the predatory lending database all of the information required | 19 |
| under Section 74 and any other information required by the | 20 |
| Department by rule. Reasonable and customary costs not to | 21 |
| exceed $300
Any costs associated with credit counseling | 22 |
| provided under the pilot program shall be paid by the broker or | 23 |
| originator. The Department shall annually calculate to the | 24 |
| nearest dollar an adjusted rate for inflation. A counselor | 25 |
| shall not recommend or suggest that a borrower contact any | 26 |
| specific mortgage origination company, financial institution, |
|
|
|
SB1167 Enrolled |
- 27 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| or entity that deals in mortgage finance to obtain a loan, | 2 |
| another quote, or for any other reason related to the specific | 3 |
| mortgage transaction; however, a counselor may suggest that the | 4 |
| borrower seek an opinion or a quote from another mortgage | 5 |
| origination company, financial institution, or entity that | 6 |
| deals in mortgage finance. A credit counselor or housing | 7 |
| counseling agency that
who in good faith provides counseling | 8 |
| services shall not be liable to a broker or originator or | 9 |
| borrower for civil damages, except for willful or wanton | 10 |
| misconduct on the part of the counselor in providing the | 11 |
| counseling services . | 12 |
| (e) The broker or originator and the borrower may not take | 13 |
| any legally binding action concerning the loan transaction | 14 |
| until the later of the following: | 15 |
| (1) the Department issues a determination not to | 16 |
| recommend HUD-certified
credit counseling for the borrower | 17 |
| in accordance with subsection (c); or | 18 |
| (2) the Department issues a determination that | 19 |
| HUD-certified
credit counseling is recommended for the | 20 |
| borrower and the credit counselor submits all required | 21 |
| information to the database in accordance with subsection | 22 |
| (d).
| 23 |
| (f) Within 10 days after closing, the title insurance | 24 |
| company or closing agent must submit to the predatory lending | 25 |
| database all of the information required under Section 76 and | 26 |
| any other information required by the Department by rule. |
|
|
|
SB1167 Enrolled |
- 28 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| (g) The title insurance company or closing agent shall | 2 |
| attach to the mortgage a certificate of
compliance with the | 3 |
| requirements of this Article, as generated by the database. If | 4 |
| the title insurance company or closing agent fails to attach | 5 |
| the certificate of compliance, then the mortgage is not | 6 |
| recordable. In addition, if any lis pendens for a residential | 7 |
| mortgage foreclosure is recorded on the property within the | 8 |
| pilot program area, a certificate of service must be | 9 |
| simultaneously recorded that affirms that a copy of the lis | 10 |
| pendens was filed with the Department. If the certificate of | 11 |
| service is not recorded, then the lis pendens pertaining to the | 12 |
| residential mortgage foreclosure in question is not recordable | 13 |
| and is of no force and effect. | 14 |
| (h) All information provided to the predatory lending | 15 |
| database under the program is confidential and is not subject | 16 |
| to disclosure under the Freedom of Information Act, except as | 17 |
| otherwise provided in this Article. Information or documents | 18 |
| obtained by employees of the Department in the course of | 19 |
| maintaining and administering the predatory lending database | 20 |
| are deemed confidential. Employees are prohibited from making | 21 |
| disclosure of such confidential information or documents. Any | 22 |
| request for production of information from the predatory | 23 |
| lending database, whether by subpoena, notice, or any other | 24 |
| source, shall be referred to the Department of Financial and | 25 |
| Professional Regulation. Any borrower may authorize in writing | 26 |
| the release of database information. The Department may use the |
|
|
|
SB1167 Enrolled |
- 29 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| information in the database without the consent of the | 2 |
| borrower: (i) for the purposes of administering and enforcing | 3 |
| the pilot program; (ii) to provide relevant information to a | 4 |
| credit counselor providing credit counseling to a borrower | 5 |
| under the pilot program; or (iii) to the appropriate law | 6 |
| enforcement agency or the applicable administrative agency if | 7 |
| the database information demonstrates criminal, fraudulent, or | 8 |
| otherwise illegal activity.
| 9 |
| (i) Nothing in this Article is intended to prevent a | 10 |
| borrower from making his or her own decision as to whether to | 11 |
| proceed with a transaction.
| 12 |
| (j) Any person who violates any provision of this Article | 13 |
| commits an unlawful practice within the meaning of the Consumer | 14 |
| Fraud and Deceptive Business Practices Act.
| 15 |
| (k) During the existence of the program, the Department | 16 |
| shall submit semi-annual reports to the Governor and to the | 17 |
| General Assembly by May 1 and November 1 of each year detailing | 18 |
| its findings regarding the program. The report shall include at | 19 |
| least the following information for each reporting period: | 20 |
| (1) the number of loans registered with the program; | 21 |
| (2) the number of borrowers receiving counseling; | 22 |
| (3) the number of loans closed; | 23 |
| (4) the number of loans requiring counseling for each | 24 |
| of the standards set forth in Section 73; | 25 |
| (5) the number of loans requiring counseling where the | 26 |
| mortgage originator changed the loan terms subsequent to |
|
|
|
SB1167 Enrolled |
- 30 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| counseling.
| 2 |
| Not later than one year after the Department designates the | 3 |
| pilot program area and annually thereafter during the existence | 4 |
| of the pilot program, the Department shall report to the | 5 |
| Governor and to the General Assembly concerning its | 6 |
| administration and the effectiveness of the pilot program.
| 7 |
| (Source: P.A. 94-280, eff. 1-1-06; 94-1029, eff. 7-14-06.) | 8 |
| (765 ILCS 77/72) | 9 |
| Sec. 72. Originator; required information. As part of the | 10 |
| predatory lending database pilot program, the broker or | 11 |
| originator must submit all of the following information for | 12 |
| inclusion in the predatory lending database for each loan for | 13 |
| which the originator takes an application: | 14 |
| (1) The borrower's name, address, social security | 15 |
| number or taxpayer identification number, date of birth, | 16 |
| and income and expense information contained in the | 17 |
| mortgage application.
| 18 |
| (2) The address, permanent index number, and a | 19 |
| description of the collateral and information about the | 20 |
| loan or loans being applied for and the loan terms, | 21 |
| including the amount of the loan, the rate and whether the | 22 |
| rate is fixed or adjustable, amortization or loan period | 23 |
| terms, and any other material terms.
| 24 |
| (3) The borrower's credit score at the time of | 25 |
| application.
|
|
|
|
SB1167 Enrolled |
- 31 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| (4) Information about the originator and the company | 2 |
| the originator works for, including the originator's | 3 |
| license number and address, fees being charged, whether the | 4 |
| fees are being charged as points up front, the yield spread | 5 |
| premium payable outside closing, and other charges made or | 6 |
| remuneration required by the broker or originator or its | 7 |
| affiliates or the broker's or originator's employer or its | 8 |
| affiliates for the mortgage loans.
| 9 |
| (5) Information about affiliated or third party | 10 |
| service providers, including the names and addresses of | 11 |
| appraisers, title insurance companies, closing agents, | 12 |
| attorneys, and realtors who are involved with the | 13 |
| transaction and the broker or originator and any moneys | 14 |
| received from the broker or originator in connection with | 15 |
| the transaction.
| 16 |
| (6) All information indicated on the Good Faith | 17 |
| Estimate and Truth in Lending statement disclosures given | 18 |
| to the borrower by the broker or originator.
| 19 |
| (7) Annual real estate taxes for the property, together | 20 |
| with any assessments payable in connection with the | 21 |
| property to be secured by the collateral and the proposed | 22 |
| monthly principal and interest charge of all loans to be | 23 |
| taken by the borrower and secured by the property of the | 24 |
| borrower.
| 25 |
| (8) Information concerning how the broker or | 26 |
| originator obtained the client and the name of its referral |
|
|
|
SB1167 Enrolled |
- 32 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| source, if any.
| 2 |
| (9) Information concerning the notices provided by the | 3 |
| broker or originator to the borrower as required by law and | 4 |
| the date those notices were given.
| 5 |
| (10) Information concerning whether a sale and | 6 |
| leaseback is contemplated and the names of the lessor and | 7 |
| lessee, seller, and purchaser.
| 8 |
| (11) Any and all financing by the borrower for the | 9 |
| subject property within 12 months prior to the date of | 10 |
| application. | 11 |
| (12) Loan information, including interest rate, term, | 12 |
| purchase price, down payment, and closing costs. | 13 |
| (13) Whether the buyer is a first-time homebuyer or | 14 |
| refinancing a primary residence. | 15 |
| (14) Whether the loan permits interest only payments. | 16 |
| (15) Whether the loan may result in negative | 17 |
| amortization. | 18 |
| (16) Whether the total points and fees payable by the | 19 |
| borrowers at or before closing will exceed 5%. | 20 |
| (17) Whether the loan includes a prepayment penalty, | 21 |
| and, if so, the terms of the penalty. | 22 |
| (18) Whether the loan is an ARM. | 23 |
| (Source: P.A. 94-280, eff. 1-1-06.) | 24 |
| (765 ILCS 77/73 new)
| 25 |
| Sec. 73. Standards for counseling. A borrower or borrowers |
|
|
|
SB1167 Enrolled |
- 33 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| subject to this Article shall be recommended for counseling if, | 2 |
| after reviewing the information in the predatory lending | 3 |
| database submitted under Section 72, the Department finds the | 4 |
| borrower or borrowers are all first-time homebuyers or | 5 |
| refinancing a primary residence and the loan is a mortgage that | 6 |
| includes one or more of the following: | 7 |
| (1) the loan permits interest only payments; | 8 |
| (2) the loan may result in negative amortization; | 9 |
| (3) the total points and fees payable by the borrower | 10 |
| at or before closing will exceed 5%; | 11 |
| (4) the loan includes a prepayment penalty; or | 12 |
| (5) the loan is an ARM. | 13 |
| (765 ILCS 77/74) | 14 |
| Sec. 74. Counselor
Credit counselor ; required information. | 15 |
| As part of the predatory lending database pilot program, a | 16 |
| credit counselor must submit all of the following information | 17 |
| for inclusion in the predatory lending database: | 18 |
| (1) The information called for in items (1), (6), (9), | 19 |
| (11), (12), (13), (14), (15), (16), (17), and (18) of
| 20 |
| Section 72. | 21 |
| (2) Any information from the borrower that confirms or | 22 |
| contradicts the information called for under item (1) of | 23 |
| this Section. | 24 |
| (3) The name and address of the credit counselor and | 25 |
| address of the HUD-certifed housing counseling agency that |
|
|
|
SB1167 Enrolled |
- 34 - |
LRB095 10973 AJO 31278 b |
|
| 1 |
| employs the counselor .
| 2 |
| (4) Information pertaining to the borrower's monthly | 3 |
| expenses that assists the credit counselor in determining | 4 |
| whether the borrower can afford the loans or loans for | 5 |
| which the borrower is applying. | 6 |
| (5) A list of the disclosures furnished to the | 7 |
| borrower, as seen and reviewed by the credit counselor, and | 8 |
| a comparison of that list to all disclosures required by | 9 |
| law. | 10 |
| (6) Whether the borrower provided tax returns to the | 11 |
| broker or originator or to the credit counselor, and, if | 12 |
| so, who prepared the tax returns. | 13 |
| (7) The date the loan commitment expires and whether a | 14 |
| written commitment has been given, together with the | 15 |
| proposed date of closing. | 16 |
| (7)
(8) A statement of the recommendations of the | 17 |
| credit
counselor that indicates the counselor's response | 18 |
| to each of the following statements: | 19 |
| (A) The loan should not be approved due to indicia | 20 |
| of fraud. | 21 |
| (B) The loan should be approved; no material | 22 |
| problems noted. | 23 |
| (C) The borrower cannot afford the loan. | 24 |
| (D) The borrower does not understand the | 25 |
| transaction. | 26 |
| (E) The borrower does not understand the costs |
|
|
|
SB1167 Enrolled |
- 35 - |
LRB095 10973 AJO 31278 b |
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| associated with the transaction. | 2 |
| (F) The borrower's monthly income and expenses | 3 |
| have been reviewed and disclosed. | 4 |
| (G) The rate of the loan is above market rate. | 5 |
| (H) The borrower should seek a competitive bid from | 6 |
| another broker or originator. | 7 |
| (I) There are discrepancies between the borrower's | 8 |
| verbal understanding and the originator's completed | 9 |
| form. | 10 |
| (J) The borrower is precipitously close to not | 11 |
| being able to afford the loan. | 12 |
| (K) The borrower understands the true cost of debt | 13 |
| consolidation and the need for credit card discipline.
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| (L) The information that the borrower provided the | 15 |
| originator has been amended by the originator.
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| (Source: P.A. 94-280, eff. 1-1-06.) | 17 |
| (765 ILCS 77/78 new)
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| Sec. 78. Exemption. Borrowers applying for reverse | 19 |
| mortgage financing of residential real estate including under | 20 |
| programs regulated by the Federal Housing Authority (FHA) that | 21 |
| require HUD-certified counseling are exempt from the program | 22 |
| and may submit a HUD counseling certificate to comply with the | 23 |
| program. | 24 |
| Section 20. The Mortgage Rescue Fraud Act is amended by |
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| changing Section 5 as follows: | 2 |
| (765 ILCS 940/5)
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| Sec. 5. Definitions. As used in this Act: | 4 |
| "Distressed property" means residential real property | 5 |
| consisting of one to 6 family dwelling units that is in | 6 |
| foreclosure or at risk of loss due to nonpayment of taxes, or | 7 |
| whose owner is more than 90 days delinquent on any loan that is | 8 |
| secured by the property. | 9 |
| "Distressed property consultant" means any person who, | 10 |
| directly or indirectly, for compensation from the owner, makes | 11 |
| any solicitation, representation, or offer to perform or who, | 12 |
| for compensation from the owner, performs any service that the | 13 |
| person represents will in any manner do any of the following: | 14 |
| (1) stop or postpone the foreclosure sale or the loss | 15 |
| of the home due to nonpayment of taxes; | 16 |
| (2) obtain any forbearance from any beneficiary or | 17 |
| mortgagee, or relief with respect to a tax sale of the | 18 |
| property; | 19 |
| (3) assist the owner to exercise any right of | 20 |
| reinstatement or right of redemption; | 21 |
| (4) obtain any extension of the period within which the | 22 |
| owner may reinstate the owner's rights with respect to the | 23 |
| property; | 24 |
| (5) obtain any waiver of an acceleration clause | 25 |
| contained in any promissory note or contract secured by a |
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| mortgage on a distressed property or contained in the | 2 |
| mortgage; | 3 |
| (6) assist the owner in foreclosure, loan default, or | 4 |
| post-tax sale redemption period to obtain a loan or advance | 5 |
| of funds; | 6 |
| (7) avoid or ameliorate the impairment of the owner's | 7 |
| credit resulting from the recording of a notice of default | 8 |
| or the conduct of a foreclosure sale or tax sale; or | 9 |
| (8) save the owner's residence from foreclosure or loss | 10 |
| of home due to nonpayment of taxes. | 11 |
| A "distressed property consultant" does not include any of | 12 |
| the following: | 13 |
| (1) a person or the person's authorized agent acting | 14 |
| under the express authority or written approval of the | 15 |
| Department of Housing and Urban Development; | 16 |
| (2) a person who holds or is owed an obligation secured | 17 |
| by a lien on any distressed property, or a person acting | 18 |
| under the express authorization or written approval of such | 19 |
| person, when the person performs services in connection | 20 |
| with the obligation or lien, if the obligation or lien did | 21 |
| not arise as the result of or as part of a proposed | 22 |
| distressed property conveyance; | 23 |
| (3) banks, savings banks, savings and loan | 24 |
| associations, credit unions, and insurance companies | 25 |
| organized, chartered, or holding a certificate of | 26 |
| authority to do business under the laws of this State or |
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| any other state or under the laws of the United States; | 2 |
| (4) licensed attorneys engaged in the practice of law; | 3 |
| (5) a Department of Housing and Urban Development | 4 |
| approved mortgagee and any subsidiary or affiliate of these | 5 |
| persons or entities, and any agent or employee of these | 6 |
| persons or entities, while engaged in the business of these | 7 |
| persons or entities; | 8 |
| (6) a 501(c)(3) nonprofit agency or organization, | 9 |
| doing business for no less than 5 years, that offers | 10 |
| counseling or advice to an owner of a distressed property, | 11 |
| if they do not contract for services with for-profit | 12 |
| lenders or distressed property purchasers, or any person | 13 |
| who structures or plans such a transaction; | 14 |
| (7) licensees of the Residential Mortgage License Act | 15 |
| of 1987; | 16 |
| (8) licensees of the Consumer Installment Loan Act who | 17 |
| are authorized to make loans secured by real property; or | 18 |
| (9) licensees of the Real Estate License Act of 2000 | 19 |
| when providing licensed activities. | 20 |
| "Distressed property purchaser" means any person who | 21 |
| acquires any interest in fee in a distressed property or a | 22 |
| beneficial interest in a trust holding title to a distressed | 23 |
| property while allowing the owner to possess, occupy, or retain | 24 |
| any present or future interest in fee in the property, or any | 25 |
| person who participates in a joint venture or joint enterprise | 26 |
| involving a distressed property conveyance. "Distressed |
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| property purchaser" does not mean any person who acquires | 2 |
| distressed property at a short sale or any person acting in | 3 |
| participation with any person who acquires distressed property | 4 |
| at a short sale, if that person does not promise to convey an | 5 |
| interest in fee back to the owner or does not give the owner an | 6 |
| option to purchase the property at a later date. | 7 |
| "Distressed property conveyance" means a transaction in | 8 |
| which an owner of a distressed property transfers an interest | 9 |
| in fee in the distressed property or in which the holder of all | 10 |
| or some part of the beneficial interest in a trust holding | 11 |
| title to a distressed property transfers that interest ; the | 12 |
| acquirer of the property allows the owner of the distressed | 13 |
| property to occupy the property; and the acquirer of the | 14 |
| property or a person acting in participation with the acquirer | 15 |
| of the property conveys or promises to convey an interest in | 16 |
| fee back to the owner or gives the owner an option to purchase | 17 |
| the property at a later date. | 18 |
| "Person" means any individual, partnership, corporation, | 19 |
| limited liability company, association, or other group or | 20 |
| entity, however organized. | 21 |
| "Service" means, without limitation, any of the following: | 22 |
| (1) debt, budget, or financial counseling of any type; | 23 |
| (2) receiving money for the purpose of distributing it | 24 |
| to creditors in payment or partial payment of any | 25 |
| obligation secured by a lien on a distressed property; | 26 |
| (3) contacting creditors on behalf of an owner of a |
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| residence that is distressed property; | 2 |
| (4) arranging or attempting to arrange for an extension | 3 |
| of the period within which the owner of a distressed | 4 |
| property may cure the owner's default and reinstate his or | 5 |
| her obligation;
| 6 |
| (5) arranging or attempting to arrange for any delay or | 7 |
| postponement of the time of sale of the distressed | 8 |
| property; | 9 |
| (6) advising the filing of any document or assisting in | 10 |
| any manner in the preparation of any document for filing | 11 |
| with any court; or | 12 |
| (7) giving any advice, explanation, or instruction to | 13 |
| an owner of a distressed property that in any manner | 14 |
| relates to the cure of a default or forfeiture or to the | 15 |
| postponement or avoidance of sale of the distressed | 16 |
| property.
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| (Source: P.A. 94-822, eff. 1-1-07.) | 18 |
| Section 25. The Interest Act is amended by changing Section | 19 |
| 4.1a as follows:
| 20 |
| (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 | 22 |
| or
incurred by any lender in connection with any loan shall not | 23 |
| be deemed
to be charges for or in connection with any loan of | 24 |
| money referred to in
Section 6 of this Act, or charges by the |
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| lender as a consideration for
the loan referred to in this | 2 |
| Section:
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| (a) hazard, mortgage or life insurance premiums, | 4 |
| survey, credit
report, title insurance, abstract and | 5 |
| attorneys' fees, recording
charges, escrow and appraisal | 6 |
| fees, and similar charges.
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| (b) in the case of construction loans, in addition to | 8 |
| the matters
referred to in clause (a) above, the actual | 9 |
| cost incurred by the lender
for services for making | 10 |
| physical inspections, processing payouts,
examining and | 11 |
| reviewing contractors' and subcontractors' sworn
| 12 |
| statements and waivers of lien and the like.
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| (c) in the case of any loan made pursuant to the | 14 |
| provisions of the
Emergency Home Purchase Assistance Act of | 15 |
| 1974 (Section 313 of the
National Housing Act, Chapter B of | 16 |
| Title 12 of the United States Code),
in addition to the | 17 |
| matters referred to in paragraphs (a) and (b) of this
| 18 |
| Section all charges required or allowed by the Government | 19 |
| National
Mortgage Association, whether designated as | 20 |
| processing fees, commitment
fees, loss reserve and | 21 |
| marketing fees, discounts, origination fees or
otherwise | 22 |
| designated.
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| (d) in the case of a single payment loan, made for a | 24 |
| period of 6 months
or less, a regulated financial | 25 |
| institution or licensed lender may contract
for and receive | 26 |
| 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 | 2 |
| charge may be
contracted for, received, or collected for | 3 |
| any such loan, including any
extension or renewal thereof.
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| (e) if the agreement governing the loan so provides, a | 5 |
| charge not to
exceed the rate permitted under Section 3-806 | 6 |
| of the Uniform Commercial
Code-Commercial Paper for any | 7 |
| check, draft or order for the payment of
money submitted in | 8 |
| 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, | 11 |
| for each loan
installment in default for a period of not | 12 |
| less than 10 days, a charge in
an amount not in excess of | 13 |
| 5% of such loan installment. Only one
delinquency charge | 14 |
| may be collected on any such loan installment regardless
of | 15 |
| the period during which it remains in default. Payments | 16 |
| timely received
by the lender under a written extension or | 17 |
| deferral agreement shall not be
subject to any delinquency | 18 |
| charge.
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| Notwithstanding items (k) and (l) of subsection (1) of | 20 |
| Section 4 of this Act, the lender, in the case of any nonexempt | 21 |
| residential mortgage loan, as defined in Section 1-4 of the | 22 |
| Residential Mortgage License Act of 1987, shall have the right | 23 |
| to include a prepayment penalty that extends no longer than the | 24 |
| fixed rate period of a variable rate mortgage provided that, if | 25 |
| a prepayment is made during the fixed rate period and not in | 26 |
| connection with the sale or destruction of the dwelling |
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| securing the loan, the lender shall receive an amount that is | 2 |
| no more than: | 3 |
| (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; | 6 |
| (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 | 9 |
| (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, if the fixed rate period
extends 3 | 12 |
| years.
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| This Section applies to loans made, refinanced, renewed, | 14 |
| extended, or modified on or after the effective date of this | 15 |
| amendatory Act of the 95th General Assembly.
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| Where there is a charge in addition to the stated rate of | 17 |
| interest
payable directly or indirectly by the borrower and | 18 |
| imposed directly or
indirectly by the lender as a consideration | 19 |
| for the loan, or for or in
connection with the loan of money, | 20 |
| whether paid or payable by the
borrower, the seller, or any | 21 |
| other person on behalf of the borrower to
the lender or to a | 22 |
| third party, or for or in connection with the loan of
money, | 23 |
| other than as hereinabove in this Section provided, whether
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| denominated "points," "service charge," "discount," | 25 |
| "commission," or
otherwise, and without regard to declining | 26 |
| balances of principal which
would result from any required or |
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| optional amortization of the principal
of the loan, the rate of | 2 |
| interest shall be calculated in the following
manner:
| 3 |
| The percentage of the principal amount of the loan | 4 |
| represented by all
of such charges shall first be computed, | 5 |
| which in the case of a loan
with an interest rate in excess of | 6 |
| 8% per annum secured by residential
real estate, other than | 7 |
| loans described in paragraphs (e) and (f) of
Section 4, shall | 8 |
| not exceed 3% of such principal amount. Said
percentage shall | 9 |
| then be divided by the number of years and fractions
thereof of | 10 |
| 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 | 12 |
| of the
stated annual rate of interest.
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| The borrower in the case of nonexempt loan shall have the | 14 |
| right to
prepay the loan in whole or in part at any time, but, | 15 |
| except as may
otherwise be provided by Section 4, the lender | 16 |
| may require payment of
not more than 6 months' advance interest | 17 |
| on that part of the aggregate
amount of all prepayments on a | 18 |
| loan in one year, which exceeds 20% of
the original principal | 19 |
| amount of the loan.
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| (Source: P.A. 87-496 .)
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| Section 970. Severability. If any provision of this | 22 |
| amendatory Act of the 95th General Assembly or its application | 23 |
| to any person or circumstance is held invalid, the invalidity | 24 |
| of that provision or application does not affect other | 25 |
| provisions or applications of this amendatory Act that can be |
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| given effect without the invalid provision or application.
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