Public Act 90-0455 of the 90th General Assembly

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90th General Assembly

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Public Act 90-0455

SB1076 Enrolled                                LRB9003310JSgc

    AN ACT concerning mortgage insurance.

    Be it enacted by the People of  the  State  of  Illinois,
represented in the General Assembly:

    Section  1.  Short  Title.   This Act may be cited as the
Mortgage Insurance Limitation and Notification Act.

    Section 5.  Application.  This Act applies  to  mortgages
entered  into  on or after the effective date of this Act and
only  to  the  principal  single  family  residence  of   the
mortgagor.

    Section 10.  Definitions.  For the purpose of this Act:
    "Mortgagee"  means  the holder of an indebtedness secured
by a mortgage of a single family residence or the entity that
provides the servicing of the mortgage, meaning  the  receipt
of  payments from the mortgagor and the administration of the
loan on behalf of the entity that holds the mortgage.
    "Mortgage  insurance"  means  insurance,  including   any
mortgage  guaranty  insurance,  against the nonpayment of, or
default on, a mortgage or  loan  involved  in  a  residential
mortgage  transaction,  the premiums of which are paid by the
mortgagor.
    "Mortgagor" means a natural person whose  interest  in  a
single  family  residence  is  the  subject of a mortgage for
which the mortgagee has required mortgage insurance.
    "Private mortgage  insurance"  means  mortgage  insurance
other  than  mortgage  insurance  made  available  under  the
federal  National  Housing Act, title 38 of the United States
Code, or title V of the Housing Act of 1949.

    Section 15.  Transaction disclosure.  After July 1, 1998,
if a person enters into a transaction to  obtain  a  mortgage
for  his  or  her  principal  residence  and private mortgage
insurance  may  be   required   in   connection   with   that
transaction,  the  mortgagee shall disclose in writing all of
the following:
         (1)  Whether  private  mortgage  insurance  will  be
    required to be obtained or maintained with respect to the
    mortgage.
         (2)  The period during which the insurance shall  be
    required to be in effect.
         (3)  The  conditions  under  which the mortgagor may
    cancel the insurance.
         (4)  That the mortgagor will be  notified  not  less
    than annually of an address and telephone number that may
    be  used to contact the mortgagee to determine whether or
    not the insurance may be terminated and, if the insurance
    may be terminated,  the  conditions  and  procedures  for
    termination.

    Section  20.  Annual  notification statement.  After July
1,  1998,  in  addition   to   the   transaction   disclosure
requirement  set forth in Section 10 and within 30 days after
the end of the calendar year, the mortgagee shall inform  the
mortgagor  in  writing of the procedure to cancel the private
mortgage insurance together with  the  telephone  number  and
address.   The  annual statement required by this Section may
be printed on or included with  any  other  annual  statement
that  is  required by any federal or State  law to be made by
the mortgagee to the mortgagor.
    Nothing  contained  in  this  Section  shall  prevent   a
mortgagee  from  waiving  any or all of the conditions of its
cancellation policy in  effect  when  the  mortgage  loan  is
originated   or   from   modifying  its  cancellation  policy
applicable to a particular mortgage loan from time  to  time,
upon   the   written   approval   of  the  mortgagor.   If  a



cancellation policy  is  modified,  the  mortgagor  shall  be
notified within 30 days of material changes to the policy.

    Section  30.  Federal  law.   If  federal  law is enacted
governing or otherwise regulating private mortgage insurance,
a mortgagee who is governed by the provisions of this Act may
have  the  option  to  comply  with  the  federal  law,   and
compliance  with  the  federal  law by the mortgagee shall be
deemed compliance with this Act.

    Section 40.  Severability.  The provisions  of  this  Act
are severable under Section 1.31 of the Statute on Statutes.

    Section  99.  Effective date.  This Act takes effect July
1, 1998.

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