Sen. Pamela J. Althoff

Filed: 4/12/2016

 

 


 

 


 
09900SB2677sam001LRB099 16934 HEP 46805 a

1
AMENDMENT TO SENATE BILL 2677

2    AMENDMENT NO. ______. Amend Senate Bill 2677 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Residential Real Property Disclosure Act is
5amended by changing Section 70 as follows:
 
6    (765 ILCS 77/70)
7    Sec. 70. Predatory lending database program.
8    (a) As used in this Article:
9    "Adjustable rate mortgage" or "ARM" means a closed-end
10mortgage transaction that allows adjustments of the loan
11interest rate during the first 3 years of the loan term.
12    "Borrower" means a person seeking a mortgage loan.
13    "Broker" means a "broker" or "loan broker", as defined in
14subsection (p) of Section 1-4 of the Residential Mortgage
15License Act of 1987.
16    "Closing agent" means an individual assigned by a title

 

 

09900SB2677sam001- 2 -LRB099 16934 HEP 46805 a

1insurance company or a broker or originator to ensure that the
2execution of documents related to the closing of a real estate
3sale or the refinancing of a real estate loan and the
4disbursement of closing funds are in conformity with the
5instructions of the entity financing the transaction.
6    "Counseling" means in-person counseling provided by a
7counselor employed by a HUD-approved counseling agency to all
8borrowers, or documented telephone counseling where a hardship
9would be imposed on one or more borrowers. A hardship shall
10exist in instances in which the borrower is confined to his or
11her home due to medical conditions, as verified in writing by a
12physician, or the borrower resides 50 miles or more from the
13nearest participating HUD-approved housing counseling agency.
14In instances of telephone counseling, the borrower must supply
15all necessary documents to the counselor at least 72 hours
16prior to the scheduled telephone counseling session.
17    "Counselor" means a counselor employed by a HUD-approved
18housing counseling agency.
19    "Credit score" means a credit risk score as defined by the
20Fair Isaac Corporation, or its successor, and reported under
21such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE"
22by one or more of the following credit reporting agencies or
23their successors: Equifax, Inc., Experian Information
24Solutions, Inc., and TransUnion LLC. If the borrower's credit
25report contains credit scores from 2 reporting agencies, then
26the broker or loan originator shall report the lower score. If

 

 

09900SB2677sam001- 3 -LRB099 16934 HEP 46805 a

1the borrower's credit report contains credit scores from 3
2reporting agencies, then the broker or loan originator shall
3report the middle score.
4    "Department" means the Department of Financial and
5Professional Regulation.
6    "Exempt person or entity" means that term as it is defined
7in subsections (d)(1), (d)(1.5), and (d)(1.8) of Section 1-4 of
8the Residential Mortgage License Act of 1987.
9    "First-time homebuyer" means a borrower who has not held an
10ownership interest in residential property.
11    "HUD-approved counseling" or "counseling" means counseling
12given to a borrower by a counselor employed by a HUD-approved
13housing counseling agency.
14    "Interest only" means a closed-end loan that permits one or
15more payments of interest without any reduction of the
16principal balance of the loan, other than the first payment on
17the loan.
18    "Lender" means that term as it is defined in subsection (g)
19of Section 1-4 of the Residential Mortgage License Act of 1987.
20    "Licensee" means that term as it is defined in subsection
21(e) of Section 1-4 of the Residential Mortgage License Act of
221987.
23    "Mortgage loan" means that term as it is defined in
24subsection (f) of Section 1-4 of the Residential Mortgage
25License Act of 1987.
26    "Negative amortization" means an amortization method under

 

 

09900SB2677sam001- 4 -LRB099 16934 HEP 46805 a

1which the outstanding balance may increase at any time over the
2course of the loan because the regular periodic payment does
3not cover the full amount of interest due.
4    "Originator" means a "loan originator" as defined in
5subsection (hh) of Section 1-4 of the Residential Mortgage
6License Act of 1987, except an exempt person, and means a
7"mortgage loan originator" as defined in subsection (jj) of
8Section 1-4 of the Residential Mortgage License Act of 1987,
9except an exempt person.
10    "Points and fees" has the meaning ascribed to that term in
11Section 10 of the High Risk Home Loan Act.
12    "Prepayment penalty" means a charge imposed by a lender
13under a mortgage note or rider when the loan is paid before the
14expiration of the term of the loan.
15    "Refinancing" means a loan secured by the borrower's or
16borrowers' primary residence where the proceeds are not used as
17purchase money for the residence.
18    "Title insurance company" means any domestic company
19organized under the laws of this State for the purpose of
20conducting the business of guaranteeing or insuring titles to
21real estate and any title insurance company organized under the
22laws of another State, the District of Columbia, or a foreign
23government and authorized to transact the business of
24guaranteeing or insuring titles to real estate in this State.
25    (a-5) A predatory lending database program shall be
26established within Cook County. The program shall be

 

 

09900SB2677sam001- 5 -LRB099 16934 HEP 46805 a

1administered in accordance with this Article. The inception
2date of the program shall be July 1, 2008. A predatory lending
3database program shall be expanded to include Kane, Peoria, and
4Will counties. The inception date of the expansion of the
5program as it applies to Kane, Peoria, and Will counties shall
6be July 1, 2010. Until the inception date, none of the duties,
7obligations, contingencies, or consequences of or from the
8program shall be imposed. The program shall apply to all
9mortgage applications that are governed by this Article and
10that are made or taken on or after the inception of the
11program.
12    (b) The database created under this program shall be
13maintained and administered by the Department. The database
14shall be designed to allow brokers, originators, counselors,
15title insurance companies, and closing agents to submit
16information to the database online. The database shall not be
17designed to allow those entities to retrieve information from
18the database, except as otherwise provided in this Article.
19Information submitted by the broker or originator to the
20Department may be used to populate the online form submitted by
21a counselor, title insurance company, or closing agent.
22    (c) Within 10 business days after taking a mortgage
23application, the broker or originator for any mortgage on
24residential property within the program area must submit to the
25predatory lending database all of the information required
26under Section 72 and any other information required by the

 

 

09900SB2677sam001- 6 -LRB099 16934 HEP 46805 a

1Department by rule. Within 7 business days after receipt of the
2information, the Department shall compare that information to
3the housing counseling standards in Section 73 and issue to the
4borrower and the broker or originator a determination of
5whether counseling is recommended for the borrower. The
6borrower may not waive counseling. If at any time after
7submitting the information required under Section 72 the broker
8or originator (i) changes the terms of the loan or (ii) issues
9a new commitment to the borrower, then, within 5 business days
10thereafter, the broker or originator shall re-submit all of the
11information required under Section 72 and, within 4 business
12days after receipt of the information re-submitted by the
13broker or originator, the Department shall compare that
14information to the housing counseling standards in Section 73
15and shall issue to the borrower and the broker or originator a
16new determination of whether re-counseling is recommended for
17the borrower based on the information re-submitted by the
18broker or originator. The Department shall require
19re-counseling if the loan terms have been modified to meet
20another counseling standard in Section 73, or if the broker has
21increased the interest rate by more than 200 basis points.
22    (d) If the Department recommends counseling for the
23borrower under subsection (c), then the Department shall notify
24the borrower of all participating HUD-approved counseling
25agencies located within the State and direct the borrower to
26interview with a counselor associated with one of those

 

 

09900SB2677sam001- 7 -LRB099 16934 HEP 46805 a

1agencies. Within 10 business days after receipt of the notice
2of HUD-approved counseling agencies, it is the borrower's
3responsibility to select one of those agencies and shall engage
4in an interview with a counselor associated with that agency.
5The selection must take place and the appointment for the
6interview must be set within 10 business days, although the
7interview may take place beyond the 10 business day period.
8Within 7 business days after interviewing the borrower, the
9counselor must submit to the predatory lending database all of
10the information required under Section 74 and any other
11information required by the Department by rule. Reasonable and
12customary costs not to exceed $300 associated with counseling
13provided under the program shall be paid by the broker or
14originator and shall not be charged back to, or recovered from,
15the borrower. The Department shall annually calculate to the
16nearest dollar an adjusted rate for inflation. A counselor
17shall not recommend or suggest that a borrower contact any
18specific mortgage origination company, financial institution,
19or entity that deals in mortgage finance to obtain a loan,
20another quote, or for any other reason related to the specific
21mortgage transaction; however, a counselor may suggest that the
22borrower seek an opinion or a quote from another mortgage
23origination company, financial institution, or entity that
24deals in mortgage finance. A counselor or housing counseling
25agency that in good faith provides counseling shall not be
26liable to a broker or originator or borrower for civil damages,

 

 

09900SB2677sam001- 8 -LRB099 16934 HEP 46805 a

1except for willful or wanton misconduct on the part of the
2counselor in providing the counseling.
3    (e) The broker or originator and the borrower may not take
4any legally binding action concerning the loan transaction
5until the later of the following:
6        (1) the Department issues a determination not to
7    recommend HUD-approved counseling for the borrower in
8    accordance with subsection (c); or
9        (2) the Department issues a determination that
10    HUD-approved counseling is recommended for the borrower
11    and the counselor submits all required information to the
12    database in accordance with subsection (d).
13    (f) Within 10 business days after closing, the title
14insurance company or closing agent must submit to the predatory
15lending database all of the information required under Section
1676 and any other information required by the Department by
17rule.
18    (g) The title insurance company or closing agent shall
19attach to the mortgage a certificate of compliance with the
20requirements of this Article, as generated by the database. If
21the transaction is exempt, the title insurance company or
22closing agent shall attach to the mortgage a certificate of
23exemption, as generated by the database. If the title insurance
24company or closing agent fails to attach the certificate of
25compliance or exemption, whichever is required, then the
26mortgage is not recordable. In addition, if any lis pendens for

 

 

09900SB2677sam001- 9 -LRB099 16934 HEP 46805 a

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

 

 

09900SB2677sam001- 10 -LRB099 16934 HEP 46805 a

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

 

 

09900SB2677sam001- 11 -LRB099 16934 HEP 46805 a

1reporting period:
2        (1) the number of loans registered with the program;
3        (2) the number of borrowers receiving counseling;
4        (3) the number of loans closed;
5        (4) the number of loans requiring counseling for each
6    of the standards set forth in Section 73;
7        (5) the number of loans requiring counseling where the
8    mortgage originator changed the loan terms subsequent to
9    counseling;
10        (6) the number of licensed mortgage brokers and loan
11    originators entering information into the database;
12        (7) the number of investigations based on information
13    obtained from the database, including the number of
14    licensees fined, the number of licenses suspended, and the
15    number of licenses revoked;
16        (8) a summary of the types of non-traditional mortgage
17    products being offered; and
18        (9) a summary of how the Department is actively
19    utilizing the program to combat mortgage fraud.
20(Source: P.A. 97-891, eff. 1-1-13; 98-1081, eff. 1-1-15.)
 
21    Section 99. Effective date. This Act takes effect upon
22becoming law.".