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90_SB1076eng
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 Engrossed 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. Definitions. For the purpose of this Act:
7 "Mortgagee" means the holder of an indebtedness secured
8 by a mortgage of a single family residence or the entity that
9 provides the servicing of the mortgage, meaning the receipt
10 of payments from the mortgagor and the administration of the
11 loan on behalf of the entity that holds the mortgage.
12 "Mortgage insurance" means insurance, including any
13 mortgage guaranty insurance, against the nonpayment of, or
14 default on, a mortgage or loan involved in a residential
15 mortgage transaction.
16 "Mortgagor" means a natural person whose interest in a
17 single family residence is the subject of a mortgage for
18 which the mortgagee has required mortgage insurance.
19 "Private mortgage insurance" means mortgage insurance
20 other than mortgage insurance made available under the
21 federal National Housing Act, title 38 of the United States
22 Code, or title V of the Housing Act of 1949.
23 "Private mortgage insurance ratio" means a principal
24 balance outstanding on a residential mortgage equal to less
25 than 80% of the original value at the time at which the
26 consumer entered into the original residential mortgage
27 transaction relating to the property securing the loan.
28 Section 10. Application. This Act applies only to the
29 principal single family residence of the mortgagor.
SB1076 Engrossed -2- LRB9003310JSgc
1 Section 15. Transaction notice. If at the time a person
2 enters into a transaction to obtain a mortgage for his or her
3 principal residence and the mortgagee requires mortgage
4 insurance to effect the transaction, the mortgagee shall
5 disclose in writing the current private mortgage insurance
6 ratio for the mortgage and the monthly and annual cost of
7 private mortgage insurance. The mortgagee shall furnish a
8 written statement to the person disclosing the conditions
9 under which he or she may cancel private mortgage insurance
10 and an address and telephone number which may be used to
11 contact the mortgagee to effect the cancellation.
12 Section 20. Notification statement. After July 1, 1998,
13 in addition to the requirements of Section 15 of this Act,
14 within 30 days after the end of a calendar year ending during
15 which the private mortgage insurance ratio has been exceeded,
16 the mortgagee shall inform the mortgagor in writing of the
17 procedure to cancel the private mortgage insurance together
18 with a telephone number and address to notify the mortgagee
19 of the request to effect the cancellation. The statement
20 required by this Section may be printed on or included with
21 any other annual statement that is required by any federal or
22 State law to be made by the mortgagee to the mortgagor.
23 Section 25. Effect of cancellation. Within 30 days
24 after a mortgagor's request for cancellation of private
25 mortgage insurance, the mortgagee shall effect the
26 cancellation of the private mortgage insurance. The
27 mortgagee shall, in writing, inform the mortgagor of the
28 cancellation. This statement may be included in any monthly
29 statement provided by the mortgagee to the mortgagor. The
30 mortgagee shall not impose any fee or charge to the mortgagor
31 for the cancellation of the private mortgage insurance.
SB1076 Engrossed -3- LRB9003310JSgc
1 Section 30. Penalty.
2 (a) A mortgagee that violates this Act is guilty of a
3 petty offense and shall be fined $500.
4 (b) A mortgagee that violates this Act is liable for
5 damages to the mortgagor injured by the violation.
6 Section 40. Severability. The provisions of this Act
7 are severable under Section 1.31 of the Statute on Statutes.
8 Section 99. Effective date. This Act takes effect
9 January 1, 1998.