95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB4611

 

Introduced , by Rep. Constance A. Howard

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Housing Stabilization Act. Directs the Illinois Housing Development Authority to establish and administer a program under which the State shall guarantee refinancing loans to homeowners who are either in foreclosure or at risk of being in foreclosure. Provides that the State shall guarantee these loans for 5 years, at which time, if the homeowner is current and has not gone more than 30 days past-due more than 3 times during the first 60 months of the refinancing of his or her mortgage, the State's responsibility to guarantee the loan shall cease. Provides that if at the end of 5 years the homeowner is not current or has gone 30 days past-due more than 3 times, the State shall continue to guarantee the loan for an additional 36 months. Provides for a State guarantee of up to $3,000,000,000 each year for 3 years. Sets forth qualifications for homeowners and banks to participate in the program and other features of the program. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB4611 LRB095 17891 DRJ 43971 b

1     AN ACT concerning housing.
 
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 Housing Stabilization Act.
 
6     Section 5. Purpose. It has been estimated that 200,000
7 homeowners in the State of Illinois are at risk of losing their
8 homes due to foreclosure. If these events were to occur, the
9 impact on municipalities across Illinois would be devastating.
10 Local tax bases would be affected, and local school districts
11 could be undermined. The property values in thriving
12 middle-class neighborhoods could destabilize, due to high
13 numbers of vacant properties in these areas. The purpose of
14 this Act is to head off this catastrophe before it happens.
 
15     Section 10. Definitions. In this Act:
16     "Authority" means the Illinois Housing Development
17 Authority.
18     "Program" means the refinancing loan guarantee program
19 established under this Act.
 
20     Section 15. Refinancing loan guarantee program.
21     (a) The Authority shall establish and administer a program

 

 

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1 under which the State shall guarantee refinancing loans to
2 homeowners who are either in foreclosure or at risk of being in
3 foreclosure. Under the program, the State shall guarantee a
4 refinancing loan for 5 years, at which time, if the homeowner
5 is current and has not gone more than 30 days past-due more
6 than 3 times during the first 60 months of the refinancing of
7 his or her mortgage, the State's responsibility to guarantee
8 the loan shall cease. If at the end of 5 years the homeowner is
9 not current or has gone 30 days past-due more than 3 times, the
10 State shall continue to guarantee the loan for an additional 36
11 months.
12     (b) The State shall guarantee up to $3,000,000,000 in
13 refinancing loans under the program each year for 3 years after
14 the effective date of this Act. Thereafter, a State guarantee
15 of additional loans is subject to legislative approval.
 
16     Section 20. Homeowners; eligibility to participate in
17 program. A homeowner is eligible to participate in the program
18 if he or she meets all of the following requirements:
19         (1) He or she is a resident of Illinois.
20         (2) He or she occupies, as his or her primary
21     residence, the home that is the subject of the mortgage
22     that is to be refinanced.
23         (3) He or she has occupied that home for at least one
24     year.
 

 

 

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1     Section 25. Banks; eligibility to participate in program. A
2 bank is eligible to participate in the program if it meets all
3 of the following requirements:
4         (1) It is headquartered within the State of Illinois.
5         (2) It agrees to offer the refinanced mortgages under
6     the program for terms of 30 years at no more than 250 basis
7     points above the prime interest rate at the time the
8     refinanced mortgage is offered.
9         (3) It has been certified by the Authority for
10     participation in the program.
 
11     Section 30. Financial requirements.
12     (a) A refinanced mortgage payment under the program may not
13 exceed 40% of a program participant's net monthly income
14 averaged over the 12 months prior to the participant's
15 application to participate in the program. An applicant who
16 does not meet this income requirement may "buy down" the debt
17 to qualify for the program in accordance with rules adopted by
18 the Authority. An applicant may not, however, finance or borrow
19 the funds for a "buy-down" from any financial or lending
20 institution. The "buy-down" funds may be in part or whole a
21 gift from friends or family or another interested party. It is
22 the participant's responsibility to verify to the lender that
23 "buy-down" funds are not loans.
24     (b) A program participant may roll 90% of all refinancing
25 fees into the mortgage.
 

 

 

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1     Section 35. Foreclosure.
2     (a) A bank participating in the program may not attempt to
3 foreclose on any program loan before the loan is 120 days
4 past-due. During that 120-day period, interest shall continue
5 to accrue.
6     (b) If, during the first 5 years of participation in the
7 program, it becomes necessary to foreclose on a property, the
8 bank must try to sell the property within 180 days. During that
9 180-day period, interest shall continue to accrue.
10     (c) After the passage of the 180-day period described in
11 subsection (b), all interest stops and the bank may apply to
12 the State for the State to take possession of the property. If
13 necessary as determined according to rules adopted by the
14 Authority, the State shall contract with a company to sell at
15 auction any property that has reverted to the State under this
16 subsection. Auctions under this subsection shall be held
17 quarterly.
 
18     Section 40. Delinquency due to circumstances beyond
19 homeowner's control. If at any point during the first 60 months
20 of a loan under the program, if a homeowner becomes delinquent
21 due to circumstances beyond his or her control (including,
22 without limitation, job loss or catastrophic illness), the
23 homeowner may request that his or her loan be converted to an
24 interest-only loan for a period of up to 12 months, during

 

 

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1 which time the principal shall be recalculated back into the
2 original loan. At the end of the 12 months, the loan shall
3 automatically revert back to the 30-year fixed loan at the
4 original interest rate. A homeowner may take advantage of the
5 provisions of this Section only once during the life of the
6 loan.
 
7     Section 99. Effective date. This Act takes effect upon
8 becoming law.