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90_SB1076enr
New Act
Creates the Mortgage Insurance Limitation and
Notification Act. Prohibits mortgagees from requiring
mortgage insurance after the mortgagor has reduced the amount
of the loan to 80% of the original amount of the loan.
Effective January 1, 1998.
LRB9003310JSgc
SB1076 Enrolled LRB9003310JSgc
1 AN ACT concerning mortgage insurance.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short Title. This Act may be cited as the
5 Mortgage Insurance Limitation and Notification Act.
6 Section 5. Application. This Act applies to mortgages
7 entered into on or after the effective date of this Act and
8 only to the principal single family residence of the
9 mortgagor.
10 Section 10. Definitions. For the purpose of this Act:
11 "Mortgagee" means the holder of an indebtedness secured
12 by a mortgage of a single family residence or the entity that
13 provides the servicing of the mortgage, meaning the receipt
14 of payments from the mortgagor and the administration of the
15 loan on behalf of the entity that holds the mortgage.
16 "Mortgage insurance" means insurance, including any
17 mortgage guaranty insurance, against the nonpayment of, or
18 default on, a mortgage or loan involved in a residential
19 mortgage transaction, the premiums of which are paid by the
20 mortgagor.
21 "Mortgagor" means a natural person whose interest in a
22 single family residence is the subject of a mortgage for
23 which the mortgagee has required mortgage insurance.
24 "Private mortgage insurance" means mortgage insurance
25 other than mortgage insurance made available under the
26 federal National Housing Act, title 38 of the United States
27 Code, or title V of the Housing Act of 1949.
28 Section 15. Transaction disclosure. After July 1, 1998,
29 if a person enters into a transaction to obtain a mortgage
SB1076 Enrolled -2- LRB9003310JSgc
1 for his or her principal residence and private mortgage
2 insurance may be required in connection with that
3 transaction, the mortgagee shall disclose in writing all of
4 the following:
5 (1) Whether private mortgage insurance will be
6 required to be obtained or maintained with respect to the
7 mortgage.
8 (2) The period during which the insurance shall be
9 required to be in effect.
10 (3) The conditions under which the mortgagor may
11 cancel the insurance.
12 (4) That the mortgagor will be notified not less
13 than annually of an address and telephone number that may
14 be used to contact the mortgagee to determine whether or
15 not the insurance may be terminated and, if the insurance
16 may be terminated, the conditions and procedures for
17 termination.
18 Section 20. Annual notification statement. After July
19 1, 1998, in addition to the transaction disclosure
20 requirement set forth in Section 10 and within 30 days after
21 the end of the calendar year, the mortgagee shall inform the
22 mortgagor in writing of the procedure to cancel the private
23 mortgage insurance together with the telephone number and
24 address. The annual statement required by this Section may
25 be printed on or included with any other annual statement
26 that is required by any federal or State law to be made by
27 the mortgagee to the mortgagor.
28 Nothing contained in this Section shall prevent a
29 mortgagee from waiving any or all of the conditions of its
30 cancellation policy in effect when the mortgage loan is
31 originated or from modifying its cancellation policy
32 applicable to a particular mortgage loan from time to time,
33 upon the written approval of the mortgagor. If a
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1 cancellation policy is modified, the mortgagor shall be
2 notified within 30 days of material changes to the policy.
3 Section 30. Federal law. If federal law is enacted
4 governing or otherwise regulating private mortgage insurance,
5 a mortgagee who is governed by the provisions of this Act may
6 have the option to comply with the federal law, and
7 compliance with the federal law by the mortgagee shall be
8 deemed compliance with this Act.
9 Section 40. Severability. The provisions of this Act
10 are severable under Section 1.31 of the Statute on Statutes.
11 Section 99. Effective date. This Act takes effect July
12 1, 1998.