Rep. Margaret Croke

Filed: 3/4/2024

 

 


 

 


 
10300HB5231ham001LRB103 37487 JRC 70355 a

1
AMENDMENT TO HOUSE BILL 5231

2    AMENDMENT NO. ______. Amend House Bill 5231 on page 20, by
3replacing line 12 with the following:
4"is amended by changing Sections 70, 72, and 73 as follows:
 
5    (765 ILCS 77/70)
6    Sec. 70. Predatory lending database program.
7    (a) As used in this Article:
8    "Adjustable rate mortgage" or "ARM" means a closed-end
9mortgage transaction that allows adjustments of the loan
10interest rate during the first 3 years of the loan term.
11    "Borrower" means a person seeking a mortgage loan.
12    "Broker" means a "broker" or "loan broker", as defined in
13subsection (p) of Section 1-4 of the Residential Mortgage
14License Act of 1987.
15    "Closing agent" means an individual assigned by a title
16insurance company or a broker or originator to ensure that the
17execution of documents related to the closing of a real estate

 

 

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1sale or the refinancing of a real estate loan and the
2disbursement of closing funds are in conformity with the
3instructions of the entity financing the transaction.
4    "Counseling" means in-person counseling provided by a
5counselor employed by a HUD-approved counseling agency to all
6borrowers, or documented telephone counseling where a hardship
7would be imposed on one or more borrowers. A hardship shall
8exist in instances in which the borrower is confined to his or
9her home due to medical conditions, as verified in writing by a
10physician, or the borrower resides 50 miles or more from the
11nearest participating HUD-approved housing counseling agency.
12    "Counselor" means a counselor employed by a HUD-approved
13housing counseling agency.
14    "Credit score" means a credit risk score as defined by the
15Fair Isaac Corporation, or its successor, and reported under
16such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK
17SCORE" by one or more of the following credit reporting
18agencies or their successors: Equifax, Inc., Experian
19Information Solutions, Inc., and TransUnion LLC. If the
20borrower's credit report contains credit scores from 2
21reporting agencies, then the broker or loan originator shall
22report the lower score. If the borrower's credit report
23contains credit scores from 3 reporting agencies, then the
24broker or loan originator shall report the middle score.
25    "Department" means the Department of Financial and
26Professional Regulation.

 

 

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1    "Exempt person or entity" means that term as it is defined
2in subsection subsections (d)(1), (d)(1.5), and (d)(1.8) of
3Section 1-4 of the Residential Mortgage License Act of 1987.
4    "First-time homebuyer" means a borrower who has not held
5an ownership interest in residential property.
6    "HUD-approved counseling" or "counseling" means counseling
7given to a borrower by a counselor employed by a HUD-approved
8housing counseling agency.
9    "Interest only" means a closed-end loan that permits one
10or more payments of interest without any reduction of the
11principal balance of the loan, other than the first payment on
12the loan.
13    "Lender" means that term as it is defined in subsection
14(g) of Section 1-4 of the Residential Mortgage License Act of
151987.
16    "Licensee" means that term as it is defined in subsection
17(e) of Section 1-4 of the Residential Mortgage License Act of
181987.
19    "Mortgage loan" means that term as it is defined in
20subsection (f) of Section 1-4 of the Residential Mortgage
21License Act of 1987.
22    "Negative amortization" means an amortization method under
23which the outstanding balance may increase at any time over
24the course of the loan because the regular periodic payment
25does not cover the full amount of interest due.
26    "Originator" means a "mortgage loan originator" as defined

 

 

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1in subsection (jj) of Section 1-4 of the Residential Mortgage
2License Act of 1987, except an exempt person.
3    "Points and fees" has the meaning ascribed to that term in
4Section 10 of the High Risk Home Loan Act.
5    "Prepayment penalty" means a charge imposed by a lender
6under a mortgage note or rider when the loan is paid before the
7expiration of the term of the loan.
8    "Refinancing" means a loan secured by the borrower's or
9borrowers' primary residence where the proceeds are not used
10as purchase money for the residence.
11    "Title insurance company" means any domestic company
12organized under the laws of this State for the purpose of
13conducting the business of guaranteeing or insuring titles to
14real estate and any title insurance company organized under
15the laws of another State, the District of Columbia, or a
16foreign government and authorized to transact the business of
17guaranteeing or insuring titles to real estate in this State.
18    (a-5) A predatory lending database program shall be
19established within Cook County. The program shall be
20administered in accordance with this Article. The inception
21date of the program shall be July 1, 2008. A predatory lending
22database program shall be expanded to include Kane, Peoria,
23and Will counties. The inception date of the expansion of the
24program as it applies to Kane, Peoria, and Will counties shall
25be July 1, 2010. Until the inception date, none of the duties,
26obligations, contingencies, or consequences of or from the

 

 

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1program shall be imposed. The program shall apply to all
2mortgage applications that are governed by this Article and
3that are made or taken on or after the inception of the
4program.
5    (b) The database created under this program shall be
6maintained and administered by the Department. The database
7shall be designed to allow brokers, originators, counselors,
8title insurance companies, and closing agents to submit
9information to the database online. The database shall not be
10designed to allow those entities to retrieve information from
11the database, except as otherwise provided in this Article.
12Information submitted by the broker or originator to the
13Department may be used to populate the online form submitted
14by a counselor, title insurance company, or closing agent.
15    (c) Within 10 business days after taking a mortgage
16application, the broker or originator for any mortgage on
17residential property within the program area must submit to
18the predatory lending database all of the information required
19under Section 72 and any other information required by the
20Department by rule. Within 7 business days after receipt of
21the information, the Department shall compare that information
22to the housing counseling standards in Section 73 and issue to
23the borrower and the broker or originator a determination of
24whether counseling is recommended for the borrower. The
25borrower may not waive counseling. If at any time after
26submitting the information required under Section 72 the

 

 

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1broker or originator (i) changes the terms of the loan or (ii)
2issues a new commitment to the borrower, then, within 5
3business days thereafter, the broker or originator shall
4re-submit all of the information required under Section 72
5and, within 4 business days after receipt of the information
6re-submitted by the broker or originator, the Department shall
7compare that information to the housing counseling standards
8in Section 73 and shall issue to the borrower and the broker or
9originator a new determination of whether re-counseling is
10recommended for the borrower based on the information
11re-submitted by the broker or originator. The Department shall
12require re-counseling if the loan terms have been modified to
13meet another counseling standard in Section 73, or if the
14broker has increased the interest rate by more than 200 basis
15points.
16    (d) If the Department recommends counseling for the
17borrower under subsection (c), then the Department shall
18notify the borrower of all participating HUD-approved
19counseling agencies located within the State and direct the
20borrower to interview with a counselor associated with one of
21those agencies. Within 10 business days after receipt of the
22notice of HUD-approved counseling agencies, it is the
23borrower's responsibility to select one of those agencies and
24shall engage in an interview with a counselor associated with
25that agency. The borrower must supply all necessary documents,
26as set forth by the counselor, at least 72 hours before the

 

 

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1scheduled interview. The selection must take place and the
2appointment for the interview must be set within 10 business
3days, although the interview may take place beyond the 10
4business day period. Within 7 business days after interviewing
5the borrower, the counselor must submit to the predatory
6lending database all of the information required under Section
774 and any other information required by the Department by
8rule. Reasonable and customary costs not to exceed $300
9associated with counseling provided under the program shall be
10paid by the broker or originator and shall not be charged back
11to, or recovered from, the borrower. The Department shall
12annually calculate to the nearest dollar an adjusted rate for
13inflation. A counselor shall not recommend or suggest that a
14borrower contact any specific mortgage origination company,
15financial institution, or entity that deals in mortgage
16finance to obtain a loan, another quote, or for any other
17reason related to the specific mortgage transaction; however,
18a counselor may suggest that the borrower seek an opinion or a
19quote from another mortgage origination company, financial
20institution, or entity that deals in mortgage finance. A
21counselor or housing counseling agency that in good faith
22provides counseling shall not be liable to a broker or
23originator or borrower for civil damages, except for willful
24or wanton misconduct on the part of the counselor in providing
25the counseling.
26    (e) The broker or originator and the borrower may not take

 

 

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1any legally binding action concerning the loan transaction
2until the later of the following:
3        (1) the Department issues a determination not to
4    recommend HUD-approved counseling for the borrower in
5    accordance with subsection (c); or
6        (2) the Department issues a determination that
7    HUD-approved counseling is recommended for the borrower
8    and the counselor submits all required information to the
9    database in accordance with subsection (d).
10    (f) Within 10 business days after closing, the title
11insurance company or closing agent must submit to the
12predatory lending database all of the information required
13under Section 76 and any other information required by the
14Department by rule.
15    (g) The title insurance company or closing agent shall
16attach to the mortgage a certificate of compliance with the
17requirements of this Article, as generated by the database. If
18the transaction is exempt, the title insurance company or
19closing agent shall attach to the mortgage a certificate of
20exemption, as generated by the database. Each certificate of
21compliance or certificate of exemption must contain, at a
22minimum, one of the borrower's names on the mortgage loan and
23the property index number for the subject property. If the
24title insurance company or closing agent fails to attach the
25certificate of compliance or exemption, whichever is required,
26then the mortgage is not recordable. In addition, if any lis

 

 

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1pendens for a residential mortgage foreclosure is recorded on
2the property within the program area, a certificate of service
3must be simultaneously recorded that affirms that a copy of
4the lis pendens was filed with the Department. A lis pendens
5filed after July 1, 2016 shall be filed with the Department
6electronically. If the certificate of service is not recorded,
7then the lis pendens pertaining to the residential mortgage
8foreclosure in question is not recordable and is of no force
9and effect.
10    (h) All information provided to the predatory lending
11database under the program is confidential and is not subject
12to disclosure under the Freedom of Information Act, except as
13otherwise provided in this Article. Information or documents
14obtained by employees of the Department in the course of
15maintaining and administering the predatory lending database
16are deemed confidential. Employees are prohibited from making
17disclosure of such confidential information or documents. Any
18request for production of information from the predatory
19lending database, whether by subpoena, notice, or any other
20source, shall be referred to the Department of Financial and
21Professional Regulation. Any borrower may authorize in writing
22the release of database information. The Department may use
23the information in the database without the consent of the
24borrower: (i) for the purposes of administering and enforcing
25the program; (ii) to provide relevant information to a
26counselor providing counseling to a borrower under the

 

 

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1program; or (iii) to the appropriate law enforcement agency or
2the applicable administrative agency if the database
3information demonstrates criminal, fraudulent, or otherwise
4illegal activity.
5    (i) Nothing in this Article is intended to prevent a
6borrower from making his or her own decision as to whether to
7proceed with a transaction.
8    (j) Any person who violates any provision of this Article
9commits an unlawful practice within the meaning of the
10Consumer Fraud and Deceptive Business Practices Act.
11    (j-1) A violation of any provision of this Article by a
12mortgage banking licensee or licensed mortgage loan originator
13shall constitute a violation of the Residential Mortgage
14License Act of 1987.
15    (j-2) A violation of any provision of this Article by a
16title insurance company, title agent, or escrow agent shall
17constitute a violation of the Title Insurance Act.
18    (j-3) A violation of any provision of this Article by a
19housing counselor shall be referred to the Department of
20Housing and Urban Development.
21    (k) During the existence of the program, the Department
22shall submit semi-annual reports to the Governor and to the
23General Assembly by May 1 and November 1 of each year detailing
24its findings regarding the program. The report shall include,
25by county, at least the following information for each
26reporting period:

 

 

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1        (1) the number of loans registered with the program;
2        (2) the number of borrowers receiving counseling;
3        (3) the number of loans closed;
4        (4) the number of loans requiring counseling for each
5    of the standards set forth in Section 73;
6        (5) the number of loans requiring counseling where the
7    mortgage originator changed the loan terms subsequent to
8    counseling;
9        (6) the number of licensed mortgage brokers and loan
10    originators entering information into the database;
11        (7) the number of investigations based on information
12    obtained from the database, including the number of
13    licensees fined, the number of licenses suspended, and the
14    number of licenses revoked;
15        (8) a summary of the types of non-traditional mortgage
16    products being offered; and
17        (9) a summary of how the Department is actively
18    utilizing the program to combat mortgage fraud.
19(Source: P.A. 99-660, eff. 7-28-16; 100-509, eff. 9-15-17.)".