HB1061 94TH GENERAL ASSEMBLY

LRB094 04316 RXD 34345 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB1061

Introduced 2/4/2005, by Rep. JoAnn D. Osmond

SYNOPSIS AS INTRODUCED:

205 ILCS 635/3-11 new
815 ILCS 505/2VV new

Amends the Residential Mortgage License Act of 1987. Provides that: the soliciting and sale of mortgages by a home builder shall be conducted only by persons who have been licensed under the Act and shall be subject to the Act; a home builder transacting mortgage business in this State shall be licensed under the Act and shall be subject to the Act; and a licensee may not pay, directly or indirectly, any commission, service fee, brokerage fee, or other valuable consideration to any person for services as a home builder. Amends the Consumer Fraud and Deceptive Business Practices Act. Provides that a home builder may not: (1) offer any incentives to a consumer for the purpose of influencing his or her selection of a mortgage lender; (2) offer his or her products or services on the condition or requirement that the consumer obtain a mortgage from a particular mortgage lender; (3) require a consumer to negotiate or purchase a mortgage from a particular mortgage lender as a condition to purchasing the home, or renewing any contract between the home builder and the consumer; (4) require a consumer to pay a separate charge or fee if he or she does not select a mortgage lender suggested by the home builder; or (5) use any advertisement that would mislead or suggest that the consumer is required to use a particular mortgage lender. Requires a home builder to clearly and conspicuously disclose, on any written advertisement or promotional or informational material, the nature of any relationship he or she has with a mortgage lender.

A BILL FOR

AN ACT concerning business.

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

Section 5. The Residential Mortgage License Act of 1987 is amended by adding Section 3-11 as follows:

(205 ILCS 635/3-11 new)

Sec. 3-11. Home builders.

(a) The soliciting and sale of mortgages by a home builder shall be conducted only by persons who have been licensed under this Act and shall be subject to this Act.

(b) A home builder transacting mortgage business in this State shall be licensed under this Act and shall be subject to this Act.

(c) A licensee may not pay, directly or indirectly, any commission, service fee, brokerage fee, or other valuable consideration to any person for services as a home builder.

(d) As used in this Section:

"Home builder" means a building contractor engaged in the construction of new homes.

"Home" includes single-family residences and townhouses, but does not include apartment buildings or condominiums.

Section 10. The Consumer Fraud and Deceptive Business Practices Act is amended by adding Section 2VV as follows:

(815 ILCS 505/2VV new)

Sec. 2VV. Home builders; mortgages.

(a) A home builder may not:

(1) offer any incentives to a consumer for the purpose of influencing the consumer's selection of a mortgage lender, including, but not limited to, offering home improvement upgrades, and closing cost rebates or discounts;

(2) offer products or services or fix or vary the consideration for an offer, on the condition or requirement that the consumer obtain a mortgage from a particular mortgage lender, including, but not limited to, a mortgage lender that is an affiliate or partner of the home builder;

(3) require a consumer to negotiate or purchase a mortgage from a particular mortgage lender as a condition to purchasing the home or renewing any contract between the home builder and the consumer;

(4) require a consumer to pay a separate charge or fee if he or she does not select a mortgage lender suggested by the home builder;

(5) pay, directly or indirectly, any commission, service fee, brokerage fee, or other valuable consideration to any person for services as a mortgage broker or mortgage company;

(6) use any advertisement that would mislead or suggest that the consumer is required to use a particular mortgage lender, or that the State or federal government is responsible for selecting a mortgage lender; or

(7) release any information to a mortgage company, except information essential to finalize a mortgage entered into freely by a consumer.

(b) A home builder shall clearly and conspicuously disclose, on any written advertisement or promotional or informational material, the nature of any relationship the home builder has with a mortgage lender. If a home builder has an existing relationship with a mortgage lender, directly or indirectly, and sells or suggests the mortgage lender's products or services, he or she shall clearly and conspicuously disclose to the consumer in writing at the time the application is completed or at the time of closing, the following information: "You may obtain a mortgage in connection with your home purchase from any mortgage lender or financial institution that offers mortgages. Your choice of a mortgage lender will not affect the purchase of your home."

(c) An employee or agent of a home builder may not solicit or sell a mortgage within a building or structure at which other business transactions associated with the purchase or sale of a home take place.

(d) As used in this Section:

"Home builder" means a building contractor engaged in the construction of new homes.

"Home" includes single-family residences and townhouses, but does not include apartment buildings or condominiums.