SB1942 EngrossedLRB099 10017 JLS 30237 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The High Risk Home Loan Act is amended by
5changing Section 10 as follows:
 
6    (815 ILCS 137/10)
7    (Text of Section before P.A. 97-849 takes effect)
8    Sec. 10. Definitions. As used in this Act:
9    "Approved credit counselor" means a credit counselor
10approved by the Director of Financial Institutions.
11    "Borrower" means a natural person who seeks or obtains a
12high risk home loan.
13    "Commissioner" means the Commissioner of the Office of
14Banks and Real Estate.
15    "Department" means the Department of Financial
16Institutions.
17    "Director" means the Director of Financial Institutions.
18    "Good faith" means honesty in fact in the conduct or
19transaction concerned.
20    "High risk home loan" means a home equity loan in which (i)
21at the time of origination, the annual percentage rate exceeds
22by more than 6 percentage points in the case of a first lien
23mortgage, or by more than 8 percentage points in the case of a

 

 

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1junior mortgage, the yield on U.S. Treasury securities having
2comparable periods of maturity to the loan maturity as of the
3fifteenth day of the month immediately preceding the month in
4which the application for the loan is received by the lender or
5(ii) the total points and fees payable by the consumer at or
6before closing will exceed the greater of 5% of the total loan
7amount or $800. The $800 figure shall be adjusted annually on
8January 1 by the annual percentage change in the Consumer Price
9Index for All Urban Consumers for all items published by the
10United States Department of Labor. "High risk home loan" does
11not include a loan that is made primarily for a business
12purpose unrelated to the residential real property securing the
13loan or to an open-end credit plan subject to 12 CFR 226 (2000,
14no subsequent amendments or editions are included).
15    "Home equity loan" means any loan secured by the borrower's
16primary residence where the proceeds are not used as purchase
17money for the residence.
18    "Lender" means a natural or artificial person who
19transfers, deals in, offers, or makes a high risk home loan.
20"Lender" includes, but is not limited to, creditors and brokers
21who transfer, deal in, offer, or make high risk home loans.
22"Lender" does not include purchasers, assignees, or subsequent
23holders of high risk home loans.
24    "Office" means the Office of Banks and Real Estate.
25    "Points and fees" means all items required to be disclosed
26as points and fees under 12 CFR 226.32 (2000, no subsequent

 

 

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1amendments or editions included); the premium of any single
2premium credit life, credit disability, credit unemployment,
3or any other life or health insurance that is financed directly
4or indirectly into the loan; and compensation paid directly or
5indirectly to a mortgage broker, including a broker that
6originates a loan in its own name in a table-funded
7transaction, not otherwise included in 12 CFR 226.4.
8    "Reasonable" means fair, proper, just, or prudent under the
9circumstances.
10    "Servicer" means any entity chartered under the Illinois
11Banking Act, the Savings Bank Act, the Illinois Credit Union
12Act, or the Illinois Savings and Loan Act of 1985 and any
13person or entity licensed under the Residential Mortgage
14License Act of 1987, the Consumer Installment Loan Act, or the
15Sales Finance Agency Act who is responsible for the collection
16or remittance for, or has the right or obligation to collect or
17remit for, any lender, note owner, or note holder or for a
18licensee's own account, of payments, interest, principal, and
19trust items (such as hazard insurance and taxes on a
20residential mortgage loan) in accordance with the terms of the
21residential mortgage loan, including loan payment follow-up,
22delinquency loan follow-up, loan analysis, and any
23notifications to the borrower that are necessary to enable the
24borrower to keep the loan current and in good standing.
25    "Total loan amount" has the same meaning as that term is
26given in 12 CFR 226.32 and shall be calculated in accordance

 

 

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1with the Federal Reserve Board's Official Staff Commentary to
2that regulation.
3(Source: P.A. 93-561, eff. 1-1-04.)
 
4    (Text of Section after P.A. 97-849 takes effect)
5    Sec. 10. Definitions. As used in this Act:
6    "Approved credit counselor" means a credit counselor
7approved by the Director of Financial Institutions.
8    "Bona fide discount points" means loan discount points that
9are knowingly paid by the consumer for the purpose of reducing,
10and that in fact result in a bona fide reduction of, the
11interest rate or time price differential applicable to the
12mortgage.
13    "Borrower" means a natural person who seeks or obtains a
14high risk home loan.
15    "Commissioner" means the Commissioner of the Office of
16Banks and Real Estate.
17    "Department" means the Department of Financial
18Institutions.
19    "Director" means the Director of Financial Institutions.
20    "Good faith" means honesty in fact in the conduct or
21transaction concerned.
22    "High risk home loan" means a consumer credit transaction,
23other than a reverse mortgage, that is secured by the
24consumer's principal dwelling if: (i) at the time of
25origination, the annual percentage rate exceeds by more than 6

 

 

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1percentage points in the case of a first lien mortgage, or by
2more than 8 percentage points in the case of a junior mortgage,
3the average prime offer rate, as defined in Section
4129C(b)(2)(B) of the federal Truth in Lending Act, for a
5comparable transaction as of the date on which the interest
6rate for the transaction is set, (ii) the loan documents permit
7the creditor to charge or collect prepayment fees or penalties
8more than 36 months after the transaction closing or such fees
9exceed, in the aggregate, more than 2% of the amount prepaid,
10or (iii) the total points and fees payable in connection with
11the transaction, other than bona fide third-party charges not
12retained by the mortgage originator, creditor, or an affiliate
13of the mortgage originator or creditor, will exceed (1) 5% of
14the total loan amount in the case of a transaction for $20,000
15(or such other dollar amount as prescribed by federal
16regulation pursuant to the federal Dodd-Frank Act) or more or
17(2) the lesser of 8% of the total loan amount or $1,000 (or
18such other dollar amount as prescribed by federal regulation
19pursuant to the federal Dodd-Frank Act) in the case of a
20transaction for less than $20,000 (or such other dollar amount
21as prescribed by federal regulation pursuant to the federal
22Dodd-Frank Act), except that, with respect to all transactions,
23bona fide loan discount points may be excluded as provided for
24in Section 35 of this Act. "High risk home loan" does not
25include a loan that is made primarily for a business purpose
26unrelated to the residential real property securing the loan or

 

 

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1a consumer credit transaction made by a natural person who
2provides seller financing secured by a principal residence no
3more than 3 times in a 12-month period, provided such consumer
4credit transaction is not made by a person that has constructed
5or acted as a contractor for the construction of the residence
6in the ordinary course of business of such person.
7    "Lender" means a natural or artificial person who
8transfers, deals in, offers, or makes a high risk home loan.
9"Lender" includes, but is not limited to, creditors and brokers
10who transfer, deal in, offer, or make high risk home loans.
11"Lender" does not include purchasers, assignees, or subsequent
12holders of high risk home loans.
13    "Office" means the Office of Banks and Real Estate.
14    "Points and fees" means all items considered to be points
15and fees under 12 CFR 226.32 (2000, or as initially amended
16pursuant to Section 1431 of the federal Dodd-Frank Act with no
17subsequent amendments or editions included, whichever is
18later); compensation paid directly or indirectly by a consumer
19or creditor to a mortgage broker from any source, including a
20broker that originates a loan in its own name in a table-funded
21transaction, not otherwise included in 12 CFR 226.4; the
22maximum prepayment fees and penalties that may be charged or
23collected under the terms of the credit transaction; all
24prepayment fees or penalties that are incurred by the consumer
25if the loan refinances a previous loan made or currently held
26by the same creditor or an affiliate of the creditor; and

 

 

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1premiums or other charges payable at or before closing or
2financed directly or indirectly into the loan for any credit
3life, credit disability, credit unemployment, credit property,
4other accident, loss of income, life, or health insurance or
5payments directly or indirectly for any debt cancellation or
6suspension agreement or contract, except that insurance
7premiums or debt cancellation or suspension fees calculated and
8paid in full on a monthly basis shall not be considered
9financed by the creditor. "Points and fees" does not include
10any insurance premium provided by an agency of the federal
11government or an agency of a state; any insurance premium paid
12by the consumer after closing; and any amount of a premium,
13charge, or fee that is not in excess of the amount payable
14under policies in effect at the time of origination under
15Section 203(c)(2)(A) of the National Housing Act (12 U.S.C.
161709(c)(2)(A)), provided that the premium, charge, or fee is
17required to be refundable on a pro-rated basis and the refund
18is automatically issued upon notification of the satisfaction
19of the underlying mortgage loan.
20    "Prepayment penalty" and "prepayment fees or penalties"
21mean: (i) for a closed-end credit transaction, a charge imposed
22for paying all or part of the transaction's principal before
23the date on which the principal is due, other than a waived,
24bona fide third-party charge that the creditor imposes if the
25consumer prepays all of the transactions's principal sooner
26than 36 months after consummation and (ii) for an open-end

 

 

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1credit plan, a charge imposed by the creditor if the consumer
2terminates the open-end credit plan prior to the end of its
3term, other than a waived, bona fide third-party charge that
4the creditor imposes if the consumer terminates the open-end
5credit plan sooner than 36 months after account opening.
6    "Reasonable" means fair, proper, just, or prudent under the
7circumstances.
8    "Servicer" means any entity chartered under the Illinois
9Banking Act, the Savings Bank Act, the Illinois Credit Union
10Act, or the Illinois Savings and Loan Act of 1985 and any
11person or entity licensed under the Residential Mortgage
12License Act of 1987, the Consumer Installment Loan Act, or the
13Sales Finance Agency Act who is responsible for the collection
14or remittance for, or has the right or obligation to collect or
15remit for, any lender, note owner, or note holder or for a
16licensee's own account, of payments, interest, principal, and
17trust items (such as hazard insurance and taxes on a
18residential mortgage loan) in accordance with the terms of the
19residential mortgage loan, including loan payment follow-up,
20delinquency loan follow-up, loan analysis, and any
21notifications to the borrower that are necessary to enable the
22borrower to keep the loan current and in good standing.
23    "Total loan amount" has the same meaning as that term is
24given in 12 CFR 226.32 and shall be calculated in accordance
25with the Federal Reserve Board's Official Staff Commentary to
26that regulation.

 

 

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1(Source: P.A. 97-849, see Section 10 of P.A. 97-1159 for
2effective date of P.A. 97-849.)
 
3    Section 95. No acceleration or delay. Where this Act makes
4changes in a statute that is represented in this Act by text
5that is not yet or no longer in effect (for example, a Section
6represented by multiple versions), the use of that text does
7not accelerate or delay the taking effect of (i) the changes
8made by this Act or (ii) provisions derived from any other
9Public Act.
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.