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Rep. Joseph M. Lyons
Filed: 1/12/2009
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| AMENDMENT TO SENATE BILL 2513
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| AMENDMENT NO. ______. Amend Senate Bill 2513, AS AMENDED, |
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| with reference to page and line numbers of House Amendment No. |
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| 2, on page 2, by inserting after line 9 the following:
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| "Section 7. The Home Equity Assurance Act is amended by |
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| changing Sections 3, 7, and 8 as follows:
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| (65 ILCS 95/3) (from Ch. 24, par. 1603)
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| Sec. 3. Definitions. For the purposes of this Act:
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| (a) "Bona fide offer" means an offer made in good faith and |
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| for a
valuable consideration to purchase a qualified residence |
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| at a price that in the opinion of the governing commission is |
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| reasonable given current market conditions .
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| (b) "Certificate of participation" means the duly |
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| notarized document of
membership in a program, signed by the |
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| qualified applicant and by an
authorized representative of the |
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| governing commission, which specifies the
location and |
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| description of the guaranteed residence, its guaranteed value,
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| the registration date, and which has attached a program |
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| appraisal for
the guaranteed residence.
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| (c) "Community organization" means a not-for-profit |
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| organization which
has been registered with this State for at |
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| least 5 years as a
not-for-profit organization, which qualifies |
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| for tax exempt status
under Section 501 (c) (3) or 501
(c) (4) |
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| of the United States Internal Revenue Code of 1986, as now or
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| hereafter amended, which continuously maintains an office or |
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| business
location within the territory of a program together |
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| with a current listed
telephone number, and whose members |
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| reside within the territory of a program.
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| (d) "Eligible applicant" means a natural person who is the |
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| owner of a
qualified residence within the territory of a |
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| program who continuously
occupies or has a family member who |
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| occupies such qualified residence as
the principal place of |
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| residence.
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| (e) "Family member" means a spouse, child, stepchild, |
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| parent,
grandparent, brother, sister, or any such relations of |
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| the
spouse of the member.
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| (f) "Governing commission" means the 9 member (or 18 member |
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| in the
case of a merged program) governing body which is |
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| authorized by voter
approval of the creation of a home equity |
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| program (or merger of programs) as
provided in this Act and |
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| which is appointed by the mayor of the
municipality in which |
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| the program has been approved with the approval of
the city |
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| council, 7 (or 14 in the case of a merged program) of whom |
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| shall be
appointed from a list or lists of nominees submitted |
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| by a community
organization or community organizations as |
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| defined in this Act.
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| (g) "Gross selling value" means the total consideration to |
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| be paid for
the purchase of a guaranteed residence, and shall |
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| include
any amount that the buyer or prospective buyer agrees |
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| to assume on behalf
of a member, including broker commissions, |
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| points, legal fees,
personal financing, or other items of value |
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| involved in the sale.
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| (h) "Guarantee fund" means the funds collected under the |
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| provisions of
this Act for the purpose of guaranteeing the |
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| property values of members
within the territory of a program.
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| (i) "Guaranteed residence" means a qualified residence for |
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| which a
certificate of participation has been issued, which is |
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| occupied
continuously as the place of legal residence by the |
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| member or a family
member, which is described in the |
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| certificate of participation, and which
is entitled to coverage |
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| under this Act.
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| (j) "Guaranteed value" means the appraised valuation based |
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| upon a
standard of current fair market value as of the |
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| registration date on the
qualified residence as determined by a |
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| program appraiser pursuant to
accepted professional appraisal |
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| standards and which is authorized by the
commission for the |
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| registration date. The guaranteed value shall be used
solely by |
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| the commission for the purpose of administering the program and
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| shall remain confidential.
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| (k) "Member" means the owner of a guaranteed residence.
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| (l) "Owner" means a natural person who is the legal
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| titleholder or who is the
beneficiary of a trust which is the |
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| legal titleholder.
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| (m) "Physical perils" means physical occurrences such as, |
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| but not limited
to, fire, windstorm, hail, nuclear explosion or |
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| seepage, war,
insurrection, wear and tear, cracking, settling, |
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| vermin,
rodents, insects, vandalism, pollution or |
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| contamination, and all such
related occurrences or acts of God.
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| (n) "Program" means the guaranteed home equity program |
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| governed by a
specific home equity commission.
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| (o) "Program appraisal" means a real estate appraisal |
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| conducted by a
program appraiser for the purpose of |
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| establishing the guaranteed value of a
qualified residence |
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| under a program and providing a general description of
the |
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| qualified residence. The program appraisal shall be used solely |
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| by the
governing commission for the purpose of administering |
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| the program and shall
remain confidential.
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| (p) "Program appraiser" means a real estate appraiser who |
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| meets the
professional standards established by the American |
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| Institute of Real
Estate Appraisers (AIREA), the National |
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| Association of Independent Fee
Appraisers (NAIFA), the |
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| National Society of Real Estate Appraisers (NSREA)
or the |
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| American Society of Appraisers (ASA) and
whose name is |
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| submitted to the governing
commission by the appraiser to |
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| conduct program appraisals
under the provisions of a program.
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| (q) "Program guidelines" means those policies, rules, |
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| regulations, and
bylaws established from time to time by the |
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| governing commission to
explain, clarify, or modify the program |
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| in order to fulfill its goals
and objectives.
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| (r) "Qualified residence" means a building: (1) located in |
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| the
territory of a program having at least one, but not more |
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| than 6, dwelling
units; (2) classified by county ordinance as |
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| residential and assessed for
property tax purposes; and (3) |
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| with at least one dwelling unit continuously
occupied as the |
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| principal legal residence of a member or family member.
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| (s) "Registration date" means the date of receipt by the |
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| governing
commission of the registration fee and a completed
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| application of a qualified applicant for participation in a |
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| program.
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| (t) "Registration fee" means the fee which is established
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| by the governing commission to defray the cost of a program |
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| appraisal on a
qualified residence.
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| (Source: P.A. 86-684.)
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| (65 ILCS 95/7) (from Ch. 24, par. 1607)
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| Sec. 7. Guarantee. A member or the estate of a member |
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| participating
in a program created under the provisions of this |
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| Act shall be paid 100% of
the difference between the guaranteed |
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| value as determined by the program
and the gross selling value |
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| as determined in Section 8 of this Act if the
guaranteed value |
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| is greater than the gross selling value. The guarantee
provided |
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| by the program shall only apply to sales made 5 years or more
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| after the date of issuance of the certificate of participation |
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| and shall be
provided subject to all of the terms, conditions, |
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| and stipulations of the
program. The guarantee provided by the |
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| program shall extend only to those who
qualified as members at |
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| the time of their application, or to the estates of
members; |
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| provided that the estate applies within 2 years of the member's
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| death or immediately upon completion of the fifth year after |
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| the date of
issuance of the certificate of participation, |
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| whichever is later. A member shall receive the guarantee |
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| provided by the program only if the member has accepted a bona |
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| fide offer and the sale of the guaranteed residence has closed. |
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| A member
of a program agrees to
abide by all conditions, |
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| stipulations, and provisions of a program and
shall not be |
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| eligible for protection and shall not receive the guarantee
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| unless all such conditions, stipulations and provisions have |
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| been met. Any
member failing to abide by the conditions, |
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| stipulations and provisions of a
program or who engages in |
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| fraud, misrepresentation, or concealment in any
process |
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| involving a program forfeits both the registration fee and any
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| claim to the guarantee.
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| (Source: P.A. 85-1044.)
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| (65 ILCS 95/8) (from Ch. 24, par. 1608)
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| Sec. 8. Procedures for obtaining benefits. (a) In order to |
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| be eligible
for payment under a program created pursuant to |
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| this Act, a member must
follow the program guidelines adopted |
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| by the governing commission as well
as the procedures set forth |
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| in this Section.
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| (b) A member must file a "Notice of Intent to Sell" with |
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| the governing
commission in accordance with program guidelines |
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| if and when the member
intends to place the guaranteed |
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| residence on the market for sale. Upon
receipt of a "Notice of |
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| Intent to Sell", the governing commission shall
provide the |
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| member with a copy of this Section and a written description of
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| the rights and responsibilities of both the member and the |
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| governing
commission and the procedures for obtaining |
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| benefits; provided, however,
that such information provided by |
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| the governing commission shall not
restrict or advise the |
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| member with respect to the selection of a real
estate broker or |
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| agent. The information shall be delivered to the member
either |
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| in person or by registered mail. A member is not eligible to |
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| file
"Notice of Intent to Sell" until 5 years after the |
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| member's registration date.
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| (c) A member is required to offer the guaranteed residence
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| for sale according to the program guidelines, including the
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| utilization of complete and proper methods for listing |
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| residential
property, listing the guaranteed residence at a |
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| price which reasonably can
be expected to attract buyers, and |
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| providing reasonable
access for potential buyers to see the |
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| guaranteed residence.
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| (d) A member shall may list the guaranteed residence in |
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| accordance with
program guidelines with a real estate broker of |
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| the member's choice, for up
to 90 days following the date on |
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| which the member listed the residence.
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| (e) Within 60 days of receipt of a "Notice of Intent to |
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| Sell", the
governing commission shall has the right to have the |
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| guaranteed residence
inspected by a program appraiser, at the |
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| governing commission's expense,
in order to determine if the |
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| guaranteed residence is in substantially the
same condition as |
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| described by the program appraisal attached to the
certificate |
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| of participation. If the guaranteed residence fails to meet
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| this standard, the following procedures shall be followed:
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| (1) The program appraiser shall determine the percentage |
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| depreciation of
the guaranteed residence due to failure to |
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| maintain the premises or due to
physical perils or other causes |
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| not covered by the program.
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| (2) This percentage figure shall be multiplied by the |
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| guaranteed value to
determine the dollar depreciation.
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| (3) This dollar depreciation shall be subtracted from the |
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| guaranteed
value to derive a lower guaranteed value to be used |
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| for the purpose of
determining the amount of payment under the |
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| program.
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| (f) A member shall make the guaranteed residence available |
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| to a program
appraiser within a reasonable time within this 60 |
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| day period after receipt
of notice from the commission that an |
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| inspection under paragraph (e) of
this Section is required, or |
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| the member's coverage under the program shall
be null, void and |
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| of no further effect, and the member's registration fee
shall |
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| be forfeited.
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| (g) Ninety days after listing the guaranteed residence, a |
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| member shall be
eligible to file a "Notice of Intent to Claim" |
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| with the governing commission,
in accordance with guidelines |
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| established by the governing commission,
attesting to the fact |
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| that the member has followed program guidelines in
offering the |
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| guaranteed residence for sale, that the member is unable to
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| obtain an offer for purchase of the guaranteed residence for at |
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| least its
guaranteed value, and that the member intends to file |
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| a claim against the
program. Such notice shall include |
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| verifiable evidence of placement of the
guaranteed residence on |
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| the market, the dates such placement took place,
and shall list |
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| all reasonable offers to buy the property. Verifiable
evidence |
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| may include a copy of advertisements for sale, a contract with |
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| a
licensed real estate broker, or other evidence satisfactory |
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| to a majority
of the governing commission.
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| (h) Upon receipt of the "Notice of Intent to Claim", the |
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| governing
commission has 60 days during which it shall require |
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| the member to list the
guaranteed residence at a price that the |
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| governing commission deems
reasonable with a real estate broker |
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| of the member's choosing. The real
estate broker chosen by the |
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| member shall advertise the guaranteed residence
throughout the |
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| municipality which encompasses the territory of the program.
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| (i) During the 60 day period described in paragraph (h) of |
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| this Section,
the member shall forward to the governing |
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| commission all offers of purchase
by either personal delivery |
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| or registered mail.
If the member receives an offer of purchase |
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| which can reasonably be
expected to be consummated if accepted |
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| and whose gross selling value is
greater than the guaranteed |
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| value of the guaranteed residence, then no
benefits may be |
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| claimed under the program. If the member receives an
offer to |
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| purchase at a gross selling value that is less than the |
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| guaranteed
value, a majority of the Commission must determine |
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| if it is a bona fide offer. If the governing commission |
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| determines the offer is not bona fide, the offer shall be |
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| deemed rejected by the governing commission. The member shall |
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| have a right to request arbitration. If the offer is deemed |
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| bona fide, the governing commission shall, within 7 3 working |
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| days of the receipt
of such offer, either:
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| (1) approve the offer, in which case the governing |
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| commission shall
authorize the payment of the amount afforded |
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| under this Act upon receipt of
verifiable evidence of the sale |
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| of the guaranteed residence subject to the
following |
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| conditions: (i) sales involving eminent domain shall be covered
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| as set forth in paragraph (l) of this Section; (ii) sales |
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| subsequent to an
insured property and casualty loss shall be |
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| guaranteed for the guaranteed
value as determined according to |
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| paragraph (e) of this Section; (iii)
contract sales shall be |
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| guaranteed as determined by the guaranteed value
in paragraph |
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| (e) of this Section, however proceeds payable from the program
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| shall be disbursed in equal annual installments over the life |
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| of the
contract; or
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| (2) reject the offer, in which case the member shall |
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| continue showing the
guaranteed residence until the |
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| termination of the 60 day period.
Any offer that the |
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| governing commission deems not to be a bona fide
offer shall be |
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| rejected by the governing commission.
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| Unless the member and the governing commission otherwise |
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| agree, the
governing commission's failure to act upon an offer |
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| within 7 3 working days
shall be deemed to be a rejection of |
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| the offer.
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| If the member does not receive a bona fide offer within the |
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| 60 day period described in subsection (h), the Commission may |
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| order an appraisal, at the governing commission expense, of the |
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| property to determine the current fair market value. If the |
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| current fair market value is below the guaranteed value, the |
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| Commission may require the member to list the guaranteed |
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| residence at the fair market value price with a real estate |
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| broker of the member's choosing. If the member does not receive |
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| a bona fide offer within 90 days thereafter, the member may |
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| further reduce the price with the consent of the Commission. |
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| Every 90 days thereafter, the member may request, and the |
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| Commission may consent to, an reduced listing price. |
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| (j) No guarantee is afforded by the program unless the |
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| member has accepted a bona fide offer and the sale of the |
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| guaranteed property has closed, and until 60 days after a |
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| member
files a "Notice of Intent to Claim". The Furthermore, |
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| the governing commission
shall be required to make payments to |
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| a member only upon receipt of
verifiable evidence of the actual |
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| sale of the guaranteed residence in
accordance with the terms |
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| agreed upon between the member and the governing
commission at |
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| the time the governing commission authorized payment. If a
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| member rejects an offer for purchase which has been submitted |
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| to and
approved by the governing commission, the governing |
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| commission or program
shall not be liable for any future |
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| guarantee payment larger than that
authorized for this proposed |
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| sale.
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| (k) Except as otherwise provided in this Act, payments |
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| under the program
as provided in Section 7 of this Act shall |
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| not be made until the sale of
the guaranteed residence has |
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| closed and title has passed or the beneficial
interest has been |
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| transferred.
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| (l) When a guaranteed residence is to be acquired through |
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| the use of
eminent domain by a condemning body, the following |
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| procedures shall apply:
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| (1) If the member rejects an offer from the condemning body |
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| equal to or
greater than the guaranteed value, then no benefits |
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| may be claimed under
the program.
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| (2) If the condemning body offers less than the guaranteed |
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| value, the
governing commission may either: (i) pay 100% of the |
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| difference between the
guaranteed value and the offered price |
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| if the member agrees to sell at the
offered price; or (ii) |
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| advise the member that the offer is inadequate and
should be |
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| refused. If the member refuses the offer and the final court
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| determination of the value of the property is less than the |
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| guaranteed
value, then the program shall pay 100% of the |
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| difference between the
judgment and the guaranteed value.
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| (Source: P.A. 86-684.)"; and
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| on page 76, by inserting after line 2 the following: |
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| "Section 35. The Code of Civil Procedure is amended by |
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| adding Section 15-1502.5 as follows: |
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| (735 ILCS 5/15-1502.5 new) |
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| Sec. 15-1502.5. Homeowner protection. |
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| (a) As used in this Section: |
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| "Approved counseling agency" means a housing counseling |
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| agency approved by the U.S. Department of Housing and Urban |
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| Development. |
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| "Approved Housing Counseling" means in-person counseling |
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| provided by a counselor employed by an approved counseling |
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| agency to all borrowers, or documented telephone counseling |
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| where a hardship would be imposed on one or more borrowers. A |
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| hardship shall exist in instances in which the borrower is |
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| confined to his or her home due to medical conditions, as |
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| verified in writing by a physician or the borrower resides 50 |
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| miles or more from the nearest approved counseling agency. In |
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| instances of telephone counseling, the borrower must supply all |
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| necessary documents to the counselor at least 72 hours prior to |
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| the scheduled telephone counseling session. |
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| "Delinquent" means past due with respect to a payment on a |
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| mortgage secured by residential real estate. |
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| "Department" means the Department of Financial and |
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| Professional Regulation. |
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| "Secretary" means the Secretary of Financial and |
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| Professional Regulation or other person authorized to act in |
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| the Secretary's stead. |
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| "Sustainable loan workout plan" means a plan that the |
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| mortgagor and approved counseling agency believe shall enable |
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| the mortgagor to stay current on his or her mortgage payments |
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| for the foreseeable future when taking into account the |
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| mortgagor income and existing and foreseeable debts. A |
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| sustainable loan workout plan may include, but is not limited |
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| to, (1) a temporary suspension of payments, (2) a lengthened |
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| loan term, (3) a lowered or frozen interest rate, (4) a |
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| principal write down, (5) a repayment plan to pay the existing |
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| loan in full, (6) deferred payments, or (7) refinancing into a |
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| new affordable loan. |
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| (b) Except in the circumstance in which a mortgagor has |
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| filed a petition for relief under the United States Bankruptcy |
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| Code, no mortgagee shall file a complaint to foreclose a |
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| mortgage secured by residential real estate until the |
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| requirements of this Section have been satisfied. |
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| (c) Notwithstanding any other provision to the contrary, |
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| with respect to a particular mortgage secured by residential |
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| real estate, the procedures and forbearances described in this |
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| Section apply only once per subject mortgage. |
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| Except for mortgages secured by residential real estate in |
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| which any mortgagor has filed for relief under the United |
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| States Bankruptcy Code, if a mortgage secured by residential |
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| real estate becomes delinquent by more than 30 days the |
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| mortgagee shall send via U.S. mail a notice advising the |
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| mortgagor that he or she may wish to seek approved housing |
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| counseling. Notwithstanding anything to the contrary in this |
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| Section, nothing shall preclude the mortgagor and mortgagee |
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| from communicating with each other during the initial 30 days |
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| of delinquency or reaching agreement on a sustainable loan |
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| workout plan, or both. |
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| No foreclosure action under Part 15 of Article XV of the |
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| Code of Civil Procedure shall be instituted on a mortgage |
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| secured by residential real estate before mailing the notice |
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| described in this subsection (c). |
20 |
| The notice required in this subsection (c) shall state the |
21 |
| date on which the notice was mailed, shall be headed in bold |
22 |
| 14-point type "GRACE PERIOD NOTICE", and shall state the |
23 |
| following in 14-point type:
"YOUR LOAN IS MORE THAN 30 DAYS |
24 |
| PAST DUE. YOU MAY BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY |
25 |
| BE IN YOUR BEST INTEREST TO SEEK APPROVED HOUSING COUNSELING. |
26 |
| YOU HAVE A GRACE PERIOD OF 30 DAYS FROM THE DATE OF THIS NOTICE |
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09500SB2513ham003 |
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| TO OBTAIN APPROVED HOUSING COUNSELING. DURING THE GRACE PERIOD, |
2 |
| THE LAW PROHIBITS US FROM TAKING ANY LEGAL ACTION AGAINST YOU. |
3 |
| YOU MAY BE ENTITLED TO AN ADDITIONAL 30 DAY GRACE PERIOD IF YOU |
4 |
| OBTAIN HOUSING COUNSELING FROM AN APPROVED HOUSING COUNSELING |
5 |
| AGENCY.
A LIST OF APPROVED COUNSELING AGENCIES MAY BE OBTAINED |
6 |
| FROM THE ILLINOIS DEPARTMENT OF FINANCIAL AND PROFESSIONAL |
7 |
| REGULATION." |
8 |
| The notice shall also list the Department's current |
9 |
| consumer hotline, the Department's website, and the telephone |
10 |
| number, fax number, and mailing address of the mortgagee. No |
11 |
| language, other than language substantially similar to the |
12 |
| language prescribed in this subsection (c), shall be included |
13 |
| in the notice. Notwithstanding any other provision to the |
14 |
| contrary, the grace period notice required by this subsection |
15 |
| (c) may be combined with a counseling notification required |
16 |
| under federal law. |
17 |
| The sending of the notice required under this subsection |
18 |
| (c) means depositing or causing to be deposited into the United |
19 |
| States mail an envelope with first-class postage prepaid that |
20 |
| contains the document to be delivered. The envelope shall be |
21 |
| addressed to the mortgagor at the common address of the |
22 |
| residential real estate securing the mortgage. |
23 |
| (d) Until 30 days after mailing the notice provided for |
24 |
| under subsection (c) of this Section, no legal action shall be |
25 |
| instituted under Part 15 of Article XV of the Code of Civil |
26 |
| Procedure. |
|
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09500SB2513ham003 |
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LRB095 18312 WGH 53987 a |
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| (e) If, within the 30-day period provided under subsection |
2 |
| (d) of this Section, an approved counseling agency provides |
3 |
| written notice to the mortgagee that the mortgagor is seeking |
4 |
| approved counseling services, then no legal action under Part |
5 |
| 15 of Article XV of the Code of Civil Procedure shall be |
6 |
| instituted for 30 days after the date of that notice. The date |
7 |
| that such notice is sent shall be stated in the notice, and |
8 |
| shall be sent to the address or fax number contained in the |
9 |
| Grace Period Notice required under subsection (c) of this |
10 |
| Section. During the 30-day period provided under this |
11 |
| subsection (e), the mortgagor or counselor or both may prepare |
12 |
| and proffer to the mortgagee a proposed sustainable loan |
13 |
| workout plan. The mortgagee will then determine whether to |
14 |
| accept the proposed sustainable loan workout plan. If the |
15 |
| mortgagee and the mortgagor agree to a sustainable loan workout |
16 |
| plan, then no legal action under Part 15 of Article XV of the |
17 |
| Code of Civil Procedure shall be instituted for as long as the |
18 |
| sustainable loan workout plan is complied with by the |
19 |
| mortgagor. |
20 |
| The agreed sustainable loan workout plan and any |
21 |
| modifications thereto must be in writing and signed by the |
22 |
| mortgagee and the mortgagor. |
23 |
| Upon written notice to the mortgagee, the mortgagor may |
24 |
| change approved counseling agencies, but such a change does not |
25 |
| entitle the mortgagor to any additional period of forbearance. |
26 |
| (f) If the mortgagor fails to comply with the sustainable |
|
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09500SB2513ham003 |
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LRB095 18312 WGH 53987 a |
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| loan workout plan, then nothing in this Section shall be |
2 |
| construed to impair the legal rights of the mortgagee to |
3 |
| enforce the contract. |
4 |
| (g) A counselor employed by a housing counseling agency or |
5 |
| the housing counseling agency that in good faith provides |
6 |
| counseling shall not be liable to a mortgagee or mortgagor for |
7 |
| civil damages, except for willful or wanton misconduct on the |
8 |
| part of the counselor in providing the counseling. |
9 |
| (h) There shall be no waiver of any provision of this |
10 |
| Section. |
11 |
| (i) It is the General Assembly's intent that compliance |
12 |
| with this Section shall not prejudice a mortgagee in ratings of |
13 |
| its bad debt collection or calculation standards or policies. |
14 |
| (j) This Section shall not apply, or shall cease to apply, |
15 |
| to residential real estate that is not occupied as a principal |
16 |
| residence by the mortgagor. |
17 |
| (k) This Section is repealed 2 years after the effective |
18 |
| date of this amendatory Act of the 95th General Assembly. |
19 |
| Section 40. The Mortgage Rescue Fraud Act is amended by |
20 |
| changing Sections 5 and 50 and by adding Sections 7 and 70 as |
21 |
| follows: |
22 |
| (765 ILCS 940/5) |
23 |
| Sec. 5. Definitions. As used in this Act: |
24 |
| "Distressed property" means residential real property |
|
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09500SB2513ham003 |
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| consisting of one to 6 family dwelling units that is in |
2 |
| foreclosure or at risk of loss due to nonpayment of taxes, or |
3 |
| whose owner is more than 30 90 days delinquent on any loan that |
4 |
| is secured by the property. |
5 |
| "Distressed property consultant" means any person who, |
6 |
| directly or indirectly, for compensation from the owner, makes |
7 |
| any solicitation, representation, or offer to perform or who, |
8 |
| for compensation from the owner, performs any service that the |
9 |
| person represents will in any manner do any of the following: |
10 |
| (1) stop or postpone the foreclosure sale or stop or |
11 |
| postpone the loss of the home due to nonpayment of taxes; |
12 |
| (2) obtain any forbearance from any beneficiary or |
13 |
| mortgagee, or relief with respect to a tax sale of the |
14 |
| property; |
15 |
| (3) assist the owner to exercise any right of |
16 |
| reinstatement or right of redemption; |
17 |
| (4) obtain any extension of the period within which the |
18 |
| owner may reinstate the owner's rights with respect to the |
19 |
| property; |
20 |
| (5) obtain any waiver of an acceleration clause |
21 |
| contained in any promissory note or contract secured by a |
22 |
| mortgage on a distressed property or contained in the |
23 |
| mortgage; |
24 |
| (6) assist the owner in foreclosure, loan default, or |
25 |
| post-tax sale redemption period to obtain a loan or advance |
26 |
| of funds; |
|
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09500SB2513ham003 |
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| (7) avoid or ameliorate the impairment of the owner's |
2 |
| credit resulting from the recording of a notice of default |
3 |
| or the conduct of a foreclosure sale or tax sale; or |
4 |
| (8) save the owner's residence from foreclosure or save |
5 |
| the owner from loss of home due to nonpayment of taxes. |
6 |
| A "distressed property consultant" does not include any of |
7 |
| the following: |
8 |
| (1) a person or the person's authorized agent acting |
9 |
| under the express authority or written approval of the |
10 |
| Department of Housing and Urban Development; |
11 |
| (2) a person who holds or is owed an obligation secured |
12 |
| by a lien on any distressed property, or a person acting |
13 |
| under the express authorization or written approval of such |
14 |
| person, when the person performs services in connection |
15 |
| with the obligation or lien, if the obligation or lien did |
16 |
| not arise as the result of or as part of a proposed |
17 |
| distressed property conveyance; |
18 |
| (3) banks, savings banks, savings and loan |
19 |
| associations, credit unions, and insurance companies |
20 |
| organized, chartered, or holding a certificate of |
21 |
| authority to do business under the laws of this State or |
22 |
| any other state or under the laws of the United States; |
23 |
| (4) licensed attorneys licensed in Illinois engaged in |
24 |
| the practice of law; |
25 |
| (5) a Department of Housing and Urban Development |
26 |
| approved mortgagee and any subsidiary or affiliate of these |
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| persons or entities, and any agent or employee of these |
2 |
| persons or entities, while engaged in the business of these |
3 |
| persons or entities; |
4 |
| (6) a 501(c)(3) nonprofit agency or organization, |
5 |
| doing business for no less than 5 years, that offers |
6 |
| counseling or advice to an owner of a distressed property, |
7 |
| if they do not contract for services with for-profit |
8 |
| lenders or distressed property purchasers, or any person |
9 |
| who structures or plans such a transaction; |
10 |
| (7) (blank) licensees of the Residential Mortgage |
11 |
| License Act of 1987 ; |
12 |
| (8) licensees of the Consumer Installment Loan Act who |
13 |
| are authorized to make loans secured by real property; or |
14 |
| (9) licensees of the Real Estate License Act of 2000 |
15 |
| when providing licensed activities. |
16 |
| "Distressed property purchaser" means any person who |
17 |
| acquires any interest in fee in a distressed property or a |
18 |
| beneficial interest in a trust holding title to a distressed |
19 |
| property while allowing the owner to possess, occupy, or retain |
20 |
| any present or future interest in fee in the property, or any |
21 |
| person who participates in a joint venture or joint enterprise |
22 |
| involving a distressed property conveyance. "Distressed |
23 |
| property purchaser" does not mean any person who acquires |
24 |
| distressed property at a short sale or any person acting in |
25 |
| participation with any person who acquires distressed property |
26 |
| at a short sale, if that person does not promise to convey an |
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| interest in fee back to the owner or does not give the owner an |
2 |
| option to purchase the property at a later date. |
3 |
| "Distressed property conveyance" means a transaction in |
4 |
| which an owner of a distressed property transfers an interest |
5 |
| in fee in the distressed property or in which the holder of all |
6 |
| or some part of the beneficial interest in a trust holding |
7 |
| title to a distressed property transfers that interest; the |
8 |
| acquirer of the property allows the owner of the distressed |
9 |
| property to occupy the property; and the acquirer of the |
10 |
| property or a person acting in participation with the acquirer |
11 |
| of the property conveys or promises to convey an interest in |
12 |
| fee back to the owner or gives the owner an option to purchase |
13 |
| the property at a later date. |
14 |
| "Person" means any individual, partnership, corporation, |
15 |
| limited liability company, association, or other group or |
16 |
| entity, however organized. |
17 |
| "Service" means, without limitation, any of the following: |
18 |
| (1) debt, budget, or financial counseling of any type; |
19 |
| (2) receiving money for the purpose of distributing it |
20 |
| to creditors in payment or partial payment of any |
21 |
| obligation secured by a lien on a distressed property; |
22 |
| (3) contacting creditors on behalf of an owner of a |
23 |
| residence that is distressed property; |
24 |
| (4) arranging or attempting to arrange for an extension |
25 |
| of the period within which the owner of a distressed |
26 |
| property may cure the owner's default and reinstate his or |
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|
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| her obligation;
|
2 |
| (5) arranging or attempting to arrange for any delay or |
3 |
| postponement of the time of sale of the distressed |
4 |
| property; |
5 |
| (6) advising the filing of any document or assisting in |
6 |
| any manner in the preparation of any document for filing |
7 |
| with any court; or |
8 |
| (7) giving any advice, explanation, or instruction to |
9 |
| an owner of a distressed property that in any manner |
10 |
| relates to the cure of a default or forfeiture or to the |
11 |
| postponement or avoidance of sale of the distressed |
12 |
| property.
|
13 |
| (Source: P.A. 94-822, eff. 1-1-07; 95-691, eff. 6-1-08 .) |
14 |
| (765 ILCS 940/7 new)
|
15 |
| Sec. 7. Residential Mortgage License Act of 1987 licensees. |
16 |
| Licensees of the Residential Mortgage License Act of 1987 are |
17 |
| exempt from the requirements of Sections 10, 15, 20, 50(a)(4), |
18 |
| 50(a)(5), 50(a)(6), and 50(a)(7). Licensees are also exempt |
19 |
| from the requirements of Section 50(a)(2) and Section 70 for |
20 |
| any transaction resulting in the origination of a new mortgage |
21 |
| loan extinguishing the existing mortgage loan. |
22 |
| (765 ILCS 940/50)
|
23 |
| Sec. 50. Violations.
|
24 |
| (a) It is a violation for a distressed property consultant |
|
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09500SB2513ham003 |
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|
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| to:
|
2 |
| (1) claim, demand, charge, collect, or receive any |
3 |
| compensation until after the distressed property |
4 |
| consultant has fully performed each service the distressed |
5 |
| property consultant contracted to perform or represented |
6 |
| he or she would perform; |
7 |
| (2) claim, demand, charge, collect, or receive any fee, |
8 |
| interest, or any other compensation for any reason that |
9 |
| does not comport with Section 70 exceeds 2 monthly mortgage |
10 |
| payments of principal and interest or the most recent tax |
11 |
| installment on the distressed property, whichever is less ; |
12 |
| (3) take a wage assignment, a lien of any type on real |
13 |
| or personal property, or other security to secure the |
14 |
| payment of compensation. Any such security is void and |
15 |
| unenforceable; |
16 |
| (4) receive any consideration from any third party in |
17 |
| connection with services rendered to an owner unless the |
18 |
| consideration is first fully disclosed to the owner; |
19 |
| (5) acquire any interest, directly or indirectly, or by |
20 |
| means of a subsidiary or affiliate in a distressed property |
21 |
| from an owner with whom the distressed property consultant |
22 |
| has contracted; |
23 |
| (6) take any power of attorney from an owner for any |
24 |
| purpose, except to inspect documents as provided by law; or
|
25 |
| (7) induce or attempt to induce an owner to enter a |
26 |
| contract that does not comply in all respects with Sections |
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09500SB2513ham003 |
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| 10 and 15 of this Act. |
2 |
|
(b) A distressed property purchaser, in the course of a |
3 |
| distressed property conveyance, shall not: |
4 |
| (1) enter into, or attempt to enter into, a distressed |
5 |
| property conveyance unless the distressed property |
6 |
| purchaser verifies and can demonstrate that the owner of |
7 |
| the distressed property has a reasonable ability to pay for |
8 |
| the subsequent conveyance of an interest back to the owner |
9 |
| of the distressed property and to make monthly or any other |
10 |
| required payments due prior to that time; |
11 |
| (2) fail to make a payment to the owner of the |
12 |
| distressed property at the time the title is conveyed so |
13 |
| that the owner of the distressed property has received |
14 |
| consideration in an amount of at least 82% of the |
15 |
| property's fair market value, or, in the alternative, fail |
16 |
| to pay the owner of the distressed property no more than |
17 |
| the costs necessary to extinguish all of the existing |
18 |
| obligations on the distressed property, as set forth in |
19 |
| subdivision (b)(10) of Section 45, provided that the |
20 |
| owner's costs to repurchase the distressed property |
21 |
| pursuant to the terms of the distressed property conveyance |
22 |
| contract do not exceed 125% of the distressed property |
23 |
| purchaser's costs to purchase the property. If an owner is |
24 |
| unable to repurchase the property pursuant to the terms of |
25 |
| the distressed property conveyance contract, the |
26 |
| distressed property purchaser shall not fail to make a |
|
|
|
09500SB2513ham003 |
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LRB095 18312 WGH 53987 a |
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|
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| payment to the owner of the distressed property so that the |
2 |
| owner of the distressed property has received |
3 |
| consideration in an amount of at least 82% of the |
4 |
| property's fair market value at the time of conveyance or |
5 |
| at the expiration of the owner's option to repurchase. |
6 |
| (3) enter into repurchase or lease terms as part of the |
7 |
| subsequent conveyance that are unfair or commercially |
8 |
| unreasonable, or engage in any other unfair conduct; |
9 |
| (4) represent, directly or indirectly, that the |
10 |
| distressed property purchaser is acting as an advisor or a |
11 |
| consultant, or in any other manner represent that the |
12 |
| distressed property purchaser is acting on behalf of the |
13 |
| homeowner, or the distressed property purchaser is |
14 |
| assisting the owner of the distressed property to "save the |
15 |
| house", "buy time", or do anything couched in substantially |
16 |
| similar language; |
17 |
| (5) misrepresent the distressed property purchaser's |
18 |
| status as to licensure or certification; |
19 |
| (6) do any of the following until after the time during |
20 |
| which the owner of a distressed property may cancel the |
21 |
| transaction: |
22 |
| (A) accept from the owner of the distressed |
23 |
| property an execution of any instrument of conveyance |
24 |
| of any interest in the distressed property; |
25 |
| (B) induce the owner of the distressed property to |
26 |
| execute an instrument of conveyance of any interest in |
|
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|
09500SB2513ham003 |
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LRB095 18312 WGH 53987 a |
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| the distressed property; or
|
2 |
| (C) record with the county recorder of deeds any |
3 |
| document signed by the owner of the distressed |
4 |
| property, including but not limited to any instrument |
5 |
| of conveyance;
|
6 |
| (7) fail to reconvey title to the distressed property |
7 |
| when the terms of the conveyance contract have been |
8 |
| fulfilled; |
9 |
| (8) induce the owner of the distressed property to |
10 |
| execute a quit claim deed when entering into a distressed |
11 |
| property conveyance; |
12 |
| (9) enter into a distressed property conveyance where |
13 |
| any party to the transaction is represented by power of |
14 |
| attorney; |
15 |
| (10) fail to extinguish all liens encumbering the |
16 |
| distressed property, immediately following the conveyance |
17 |
| of the distressed property, or fail to assume all liability |
18 |
| with respect to the lien in foreclosure and prior liens |
19 |
| that will not be extinguished by such foreclosure, which |
20 |
| assumption shall be accomplished without violations of the |
21 |
| terms and conditions of the lien being assumed. Nothing |
22 |
| herein shall preclude a lender from enforcing any provision |
23 |
| in a contract that is not otherwise prohibited by law; |
24 |
| (11) fail to complete a distressed property conveyance |
25 |
| before a notary in the offices of a title company licensed |
26 |
| by the Department of Financial and Professional |
|
|
|
09500SB2513ham003 |
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LRB095 18312 WGH 53987 a |
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| Regulation, before an agent of such a title company, a |
2 |
| notary in the office of a bank, or a licensed attorney |
3 |
| where the notary is employed; or |
4 |
| (12) cause the property to be conveyed or encumbered |
5 |
| without the knowledge or permission of the distressed |
6 |
| property owner, or in any way frustrate the ability of the |
7 |
| distressed property owner to complete the conveyance back |
8 |
| to the distressed property owner. |
9 |
| (c) There is a rebuttable presumption that an appraisal by |
10 |
| a person licensed or certified by an agency of this State or |
11 |
| the federal government is an accurate determination of the fair |
12 |
| market value of the property. |
13 |
| (d) "Consideration" in item (2) of subsection (b) means any |
14 |
| payment or thing of value provided to the owner of the |
15 |
| distressed property, including reasonable costs paid to |
16 |
| independent third parties necessary to complete the distressed |
17 |
| property conveyance or payment of money to satisfy a debt or |
18 |
| legal obligation of the owner of the distressed property. |
19 |
|
"Consideration" shall not include amounts imputed as a |
20 |
| downpayment or fee to the distressed property purchaser, or a |
21 |
| person acting in participation with the distressed property |
22 |
| purchaser. |
23 |
| (e) An evaluation of "reasonable ability to pay" under |
24 |
| subsection (b)(1) of this Section 50 shall include debt to |
25 |
| income ratio, fair market value of the distressed property, and |
26 |
| the distressed property owner's payment history. There is a |
|
|
|
09500SB2513ham003 |
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| rebuttable presumption that the distressed property purchaser |
2 |
| has not verified reasonable payment ability if the distressed |
3 |
| property purchaser has not obtained documents of assets, |
4 |
| liabilities, and income, other than a statement by the owner of |
5 |
| the distressed property.
|
6 |
| (Source: P.A. 94-822, eff. 1-1-07.) |
7 |
| (765 ILCS 940/70 new)
|
8 |
| Sec. 70. Distressed property consultant compensation. In |
9 |
| transactions that reduce the existing payment on a homeowner's |
10 |
| mortgage loan for a period of no less than 5 years, a |
11 |
| distressed property consultant shall not claim, demand, |
12 |
| charge, collect, or receive any fee, interest, or any other |
13 |
| compensation that exceeds the lesser of the homeowner's: |
14 |
| (1) existing monthly principal and interest mortgage |
15 |
| payment; or |
16 |
| (2) total net savings derived from the lowered monthly |
17 |
| principal and interest mortgage payment over the |
18 |
| succeeding 12 months. |
19 |
| For all other transactions, a distressed property |
20 |
| consultant shall not claim, demand, charge, collect, or receive |
21 |
| any fee, interest, or any other compensation for any reason |
22 |
| that exceeds 50% of the owner's existing monthly principal and |
23 |
| interest mortgage payments.
|
24 |
| Section 97. Severability. The provisions of this Act are |