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1     AN ACT concerning property.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Mortgage Escrow Account Act is amended by
5 adding Section 6.5 as follows:
 
6     (765 ILCS 910/6.5 new)
7     Sec. 6.5. Homeownership preservation program.
8     (a) For purposes of this Section,
9     "Homeownership Preservation Program" means
10         (1) a program that is expressly intended to assist
11     homeowners by refinancing or restructuring existing
12     mortgage obligations either (i) to avoid default or
13     foreclosure, or both, or (ii) to lower interest rates, and
14     that is sponsored by a federal, state, or local government
15     authority or a non-profit organization; or
16         (2) a lender-sponsored program that is expressly
17     intended to assist homeowners by restructuring existing
18     mortgage obligations to avoid default or foreclosure, or
19     both.
20     "Subprime Mortgage Lender" means a mortgage lender that
21 has, for at least 2 of the prior 3 reporting years, reported
22 the rate spread, as required under 12 C.F.R. § 203.4(a)(12),
23 for at least 75% of the loans reported by the mortgage lender

 

 

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1 in the Loan/Application Register filed in compliance with the
2 federal Home Mortgage Disclosure Act, 12 U.S.C. 2801 et seq.,
3 and implementing Regulation C, 12 C.F.R. 201 et seq.
4     (b) Section 6 shall not apply:
5         (1) to a mortgage loan made by a subprime mortgage
6     lender in compliance with the requirements for
7     higher-priced mortgage loans established in Regulation Z
8     12 C.F.R. Part 226, issued by the Board of Governors of the
9     Federal Reserve System to implement the federal Truth in
10     Lending Act, whether or not the mortgage loan is a
11     higher-priced mortgage loan, provided that:
12             (A) for loans that are not higher-priced mortgage
13         loans, the escrow account must be terminated upon the
14         borrower's request at no cost to the borrower; and
15             (B) for loans that are higher-priced mortgage
16         loans, the escrow account must be terminated upon the
17         borrower's request at no cost to the borrower on terms
18         no stricter than the following conditions:
19                 (i) the escrow termination requirements
20             established in Regulation Z are satisfied;
21                 (ii) the borrower has maintained a
22             satisfactory payment history (no payments more
23             than 30 days late) for the 12 months prior to the
24             mortgage lender's receipt of the borrower's
25             termination request; and
26                 (iii) the borrower has reimbursed the mortgage

 

 

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1             lender for any escrow advances or escrow
2             deficiencies existing at the time of the
3             borrower's termination request.
4         (2) to a refinance or modification made by a subprime
5     mortgage lender under a homeownership preservation program
6     that requires establishment of an escrow account as a
7     condition or requirement of the refinance or modification,
8     provided that the escrow account must be terminated upon
9     the borrower's request at no cost to the borrower on terms
10     no stricter than the following conditions:
11             (A) termination is permitted under the terms of the
12         government or non-profit sponsored homeownership
13         preservation program, if applicable, and the borrower
14         complies with all conditions or requirements for
15         termination established by or allowed under such
16         program;
17             (B) the borrower has maintained a satisfactory
18         payment history (no payments more than 30 days late)
19         for the 12 months prior to the mortgage lender's
20         receipt of the borrower's termination request; and
21             (C) the borrower has reimbursed the mortgage
22         lender for any escrow advances or escrow deficiencies
23         existing at the time of the borrower's termination
24         request.
25     Termination may not be denied for failure to reimburse
26 escrow advances or escrow deficiencies under item (iii) of

 

 

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1 subparagraph (B) of paragraph (1) of subsection (b), or
2 subparagraph (C) of paragraph (2) of subsection (b) if the
3 borrower claims, in writing, that there is an error with such
4 advances or deficiencies. In such case, the lender must
5 terminate the escrow account if all other conditions of
6 termination are satisfied; however, such termination will not
7 alter or affect any other rights of the mortgage lender or the
8 borrower with respect to the collection of such escrow advances
9 or escrow deficiencies.
 
10     Section 99. Effective date. This Act takes effect upon
11 becoming law.