Full Text of SB2677 99th General Assembly
SB2677enr 99TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly:
| 4 | | Section 5. The Residential Real Property Disclosure Act is | 5 | | amended 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 | 10 | | mortgage transaction that allows adjustments of the loan | 11 | | interest 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 | 14 | | subsection (p) of Section 1-4 of the Residential Mortgage | 15 | | License Act of 1987. | 16 | | "Closing agent" means an individual assigned by a title | 17 | | insurance company or a broker or originator to ensure that the | 18 | | execution of documents related to the closing of a real estate | 19 | | sale or the refinancing of a real estate loan and the | 20 | | disbursement of closing funds are in conformity with the | 21 | | instructions of the entity financing the transaction.
| 22 | | "Counseling" means in-person counseling provided by a | 23 | | counselor employed by a HUD-approved counseling agency to all |
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| 1 | | borrowers, or documented telephone counseling where a hardship | 2 | | would be imposed on one or more borrowers. A hardship shall | 3 | | exist in instances in which the borrower is confined to his or | 4 | | her home due to medical conditions, as verified in writing by a | 5 | | physician, or the borrower resides 50 miles or more from the | 6 | | nearest participating HUD-approved housing counseling agency. | 7 | | In instances of telephone counseling, the borrower must supply | 8 | | all necessary documents to the counselor at least 72 hours | 9 | | prior to the scheduled telephone counseling session. | 10 | | "Counselor" means a counselor employed by a HUD-approved | 11 | | housing counseling agency. | 12 | | "Credit score" means a credit risk score as defined by the | 13 | | Fair Isaac Corporation, or its successor, and reported under | 14 | | such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE" | 15 | | by one or more of the following credit reporting agencies or | 16 | | their successors: Equifax, Inc., Experian Information | 17 | | Solutions, Inc., and TransUnion
LLC. If the borrower's credit | 18 | | report contains credit scores from 2 reporting agencies, then | 19 | | the broker or loan originator shall report the lower score. If | 20 | | the borrower's credit report contains credit scores from 3 | 21 | | reporting agencies, then the broker or loan originator shall | 22 | | report the middle score.
| 23 | | "Department" means the Department of Financial and | 24 | | Professional Regulation.
| 25 | | "Exempt person or entity" means that term as it is defined | 26 | | in subsections (d)(1), (d)(1.5), and (d)(1.8) of Section 1-4 of |
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| 1 | | the Residential Mortgage License Act of 1987.
| 2 | | "First-time homebuyer" means a borrower who has not held an | 3 | | ownership interest in residential property.
| 4 | | "HUD-approved counseling" or "counseling" means counseling | 5 | | given to a borrower by a counselor employed by a HUD-approved | 6 | | housing counseling agency. | 7 | | "Interest only" means a closed-end loan that permits one or | 8 | | more payments of interest without any reduction of the | 9 | | principal balance of the loan, other than the first payment on | 10 | | the loan. | 11 | | "Lender" means that term as it is defined in subsection (g) | 12 | | of Section 1-4 of the Residential Mortgage License Act of 1987.
| 13 | | "Licensee" means that term as it is defined in subsection | 14 | | (e) of Section 1-4 of the Residential Mortgage License Act of | 15 | | 1987.
| 16 | | "Mortgage loan" means that term as it is defined in | 17 | | subsection (f) of Section 1-4 of the Residential Mortgage | 18 | | License Act of 1987.
| 19 | | "Negative amortization" means an amortization method under | 20 | | which the outstanding balance may increase at any time over the | 21 | | course of the loan because the regular periodic payment does | 22 | | not cover the full amount of interest due. | 23 | | "Originator" means a "loan originator" as defined in | 24 | | subsection (hh) of Section 1-4 of the Residential Mortgage | 25 | | License Act of 1987, except an exempt person, and means a | 26 | | "mortgage loan originator" as defined in subsection (jj) of |
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| 1 | | Section 1-4 of the Residential Mortgage License Act of 1987, | 2 | | except an exempt person. | 3 | | "Points and fees" has the meaning ascribed to that term in | 4 | | Section 10 of the High Risk Home Loan Act. | 5 | | "Prepayment penalty" means a charge imposed by a lender | 6 | | under a mortgage note or rider when the loan is paid before the | 7 | | expiration of the term of the loan. | 8 | | "Refinancing" means a loan secured by the borrower's or | 9 | | borrowers' primary residence where the proceeds are not used as | 10 | | purchase money for the residence. | 11 | | "Title insurance company" means any domestic company | 12 | | organized under the laws of this State for the purpose of | 13 | | conducting the business of guaranteeing or insuring titles to | 14 | | real estate and any title insurance company organized under the | 15 | | laws of another State, the District of Columbia, or a foreign | 16 | | government and authorized to transact the business of | 17 | | guaranteeing or insuring titles to real estate in this State.
| 18 | | (a-5) A predatory lending database program shall be | 19 | | established within Cook County. The program shall be | 20 | | administered in accordance with this Article. The inception | 21 | | date of the program shall be July 1, 2008.
A predatory lending
| 22 | | database program shall be expanded to include Kane, Peoria, and | 23 | | Will counties. The
inception date of the expansion of the | 24 | | program as it applies to Kane, Peoria, and Will
counties shall | 25 | | be July 1, 2010. Until the inception date, none of the duties, | 26 | | obligations, contingencies, or consequences of or from the |
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| 1 | | program shall be imposed. The program shall apply to all | 2 | | mortgage applications that are governed by this Article and | 3 | | that are made or taken on or after the inception of the | 4 | | program.
| 5 | | (b) The database created under this program shall be | 6 | | maintained and administered by the Department. The database | 7 | | shall be designed to allow brokers, originators, counselors, | 8 | | title insurance companies, and closing agents to submit | 9 | | information to the database online. The database shall not be | 10 | | designed to allow those entities to retrieve information from | 11 | | the database, except as otherwise provided in this Article. | 12 | | Information submitted by the broker or originator to the | 13 | | Department may be used to populate the online form submitted by | 14 | | a counselor, title insurance company, or closing agent. | 15 | | (c) Within 10 business days after taking a mortgage | 16 | | application, the broker or originator for any mortgage on | 17 | | residential property within the program area must submit to the | 18 | | predatory lending database all of the information required | 19 | | under Section 72 and any other information required by the | 20 | | Department by rule. Within 7 business days after receipt of the | 21 | | information, the Department shall compare that information to | 22 | | the housing
counseling standards in Section 73
and issue to the | 23 | | borrower and the broker or originator a determination of | 24 | | whether counseling is recommended for the borrower. The | 25 | | borrower may not waive counseling. If at any time after | 26 | | submitting the information required under Section 72 the broker |
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| 1 | | or originator (i) changes the terms of the loan or (ii) issues | 2 | | a new commitment to the borrower, then, within 5 business days | 3 | | thereafter, the broker or originator shall re-submit all of the | 4 | | information required under Section 72 and, within 4 business | 5 | | days after receipt of the information re-submitted by the | 6 | | broker or originator, the Department shall compare that | 7 | | information to the housing
counseling standards in Section 73
| 8 | | and shall issue to the borrower and the broker or originator a | 9 | | new determination of whether re-counseling
is recommended for | 10 | | the borrower based on the information re-submitted by the | 11 | | broker or originator. The Department shall require | 12 | | re-counseling if the loan terms have been modified to meet | 13 | | another counseling standard in Section 73, or if the broker has | 14 | | increased the interest rate by more than 200 basis points.
| 15 | | (d) If the Department recommends counseling for the | 16 | | borrower under subsection (c), then the Department shall notify | 17 | | the borrower of all participating HUD-approved counseling | 18 | | agencies located within the State and direct the borrower to | 19 | | interview with a counselor associated with one of those | 20 | | agencies. Within 10 business days after receipt of the notice | 21 | | of HUD-approved counseling agencies, it is the borrower's | 22 | | responsibility to select one of those agencies and shall engage | 23 | | in an interview with a counselor associated with that agency. | 24 | | The selection must take place and the appointment for the | 25 | | interview must be set within 10 business days, although the | 26 | | interview may take place beyond the 10 business day period. |
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| 1 | | Within 7 business days after interviewing the borrower, the | 2 | | counselor must submit to the predatory lending database all of | 3 | | the information required under Section 74 and any other | 4 | | information required by the Department by rule. Reasonable and | 5 | | customary costs not to exceed $300
associated with counseling | 6 | | provided under the program shall be paid by the broker or | 7 | | originator and shall not be charged back to, or recovered from, | 8 | | the borrower. The Department shall annually calculate to the | 9 | | nearest dollar an adjusted rate for inflation. A counselor | 10 | | shall not recommend or suggest that a borrower contact any | 11 | | specific mortgage origination company, financial institution, | 12 | | or entity that deals in mortgage finance to obtain a loan, | 13 | | another quote, or for any other reason related to the specific | 14 | | mortgage transaction; however, a counselor may suggest that the | 15 | | borrower seek an opinion or a quote from another mortgage | 16 | | origination company, financial institution, or entity that | 17 | | deals in mortgage finance. A counselor or housing counseling | 18 | | agency that
in good faith provides counseling shall not be | 19 | | liable to a broker or originator or borrower for civil damages, | 20 | | except for willful or wanton misconduct on the part of the | 21 | | counselor in providing the counseling. | 22 | | (e) The broker or originator and the borrower may not take | 23 | | any legally binding action concerning the loan transaction | 24 | | until the later of the following: | 25 | | (1) the Department issues a determination not to | 26 | | recommend HUD-approved
counseling for the borrower in |
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| 1 | | accordance with subsection (c); or | 2 | | (2) the Department issues a determination that | 3 | | HUD-approved
counseling is recommended for the borrower | 4 | | and the counselor submits all required information to the | 5 | | database in accordance with subsection (d).
| 6 | | (f) Within 10 business days after closing, the title | 7 | | insurance company or closing agent must submit to the predatory | 8 | | lending database all of the information required under Section | 9 | | 76 and any other information required by the Department by | 10 | | rule. | 11 | | (g) The title insurance company or closing agent shall | 12 | | attach to the mortgage a certificate of
compliance with the | 13 | | requirements of this Article, as generated by the database. If | 14 | | the transaction is exempt, the title insurance company or | 15 | | closing agent shall attach to the mortgage a certificate of | 16 | | exemption, as generated by the database. If the title insurance | 17 | | company or closing agent fails to attach the certificate of | 18 | | compliance or exemption, whichever is required, then the | 19 | | mortgage is not recordable. In addition, if any lis pendens for | 20 | | a residential mortgage foreclosure is recorded on the property | 21 | | within the program area, a certificate of service must be | 22 | | simultaneously recorded that affirms that a copy of the lis | 23 | | pendens was filed with the Department. A lis pendens filed | 24 | | after July 1, 2016 shall be filed with the Department | 25 | | electronically. The lis pendens may be filed with the | 26 | | Department either electronically or by filing a hard copy. If |
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| 1 | | the certificate of service is not recorded, then the lis | 2 | | pendens pertaining to the residential mortgage foreclosure in | 3 | | question is not recordable and is of no force and effect. | 4 | | (h) All information provided to the predatory lending | 5 | | database under the program is confidential and is not subject | 6 | | to disclosure under the Freedom of Information Act, except as | 7 | | otherwise provided in this Article. Information or documents | 8 | | obtained by employees of the Department in the course of | 9 | | maintaining and administering the predatory lending database | 10 | | are deemed confidential. Employees are prohibited from making | 11 | | disclosure of such confidential information or documents. Any | 12 | | request for production of information from the predatory | 13 | | lending database, whether by subpoena, notice, or any other | 14 | | source, shall be referred to the Department of Financial and | 15 | | Professional Regulation. Any borrower may authorize in writing | 16 | | the release of database information. The Department may use the | 17 | | information in the database without the consent of the | 18 | | borrower: (i) for the purposes of administering and enforcing | 19 | | the program; (ii) to provide relevant information to a | 20 | | counselor providing counseling to a borrower under the program; | 21 | | or (iii) to the appropriate law enforcement agency or the | 22 | | applicable administrative agency if the database information | 23 | | demonstrates criminal, fraudulent, or otherwise illegal | 24 | | activity.
| 25 | | (i) Nothing in this Article is intended to prevent a | 26 | | borrower from making his or her own decision as to whether to |
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| 1 | | proceed with a transaction.
| 2 | | (j) Any person who violates any provision of this Article | 3 | | commits an unlawful practice within the meaning of the Consumer | 4 | | Fraud and Deceptive Business Practices Act.
| 5 | | (j-1) A violation of any provision of this Article by a | 6 | | mortgage banking licensee or licensed mortgage loan originator | 7 | | shall constitute a violation of the Residential Mortgage | 8 | | License Act of 1987. | 9 | | (j-2) A violation of any provision of this Article by a | 10 | | title insurance company, title agent, or escrow agent shall | 11 | | constitute a violation of the Title Insurance Act. | 12 | | (j-3) A violation of any provision of this Article by a | 13 | | housing counselor shall be referred to the Department of | 14 | | Housing and Urban Development. | 15 | | (k) During the existence of the program, the Department | 16 | | shall submit semi-annual reports to the Governor and to the | 17 | | General Assembly by May 1 and November 1 of each year detailing | 18 | | its findings regarding the program. The report shall include, | 19 | | by county, at least the following information for each | 20 | | reporting period: | 21 | | (1) the number of loans registered with the program; | 22 | | (2) the number of borrowers receiving counseling; | 23 | | (3) the number of loans closed; | 24 | | (4) the number of loans requiring counseling for each | 25 | | of the standards set forth in Section 73; | 26 | | (5) the number of loans requiring counseling where the |
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| 1 | | mortgage originator changed the loan terms subsequent to | 2 | | counseling;
| 3 | | (6) the number of licensed mortgage brokers and loan | 4 | | originators entering information into
the database; | 5 | | (7) the number of investigations based on information | 6 | | obtained from the database,
including the number of | 7 | | licensees fined, the number of licenses suspended, and the
| 8 | | number of licenses revoked; | 9 | | (8) a summary of the types of non-traditional mortgage | 10 | | products being offered; and | 11 | | (9) a summary of how the Department is actively | 12 | | utilizing the program to combat
mortgage fraud. | 13 | | (Source: P.A. 97-891, eff. 1-1-13; 98-1081, eff. 1-1-15 .)
| 14 | | Section 99. Effective date. This Act takes effect upon | 15 | | becoming law.
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