Public Act 099-0288
 
SB1942 EnrolledLRB099 10017 JLS 30237 b

    AN ACT concerning business.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The High Risk Home Loan Act is amended by
changing Section 10 as follows:
 
    (815 ILCS 137/10)
    (Text of Section before P.A. 97-849 takes effect)
    Sec. 10. Definitions. As used in this Act:
    "Approved credit counselor" means a credit counselor
approved by the Director of Financial Institutions.
    "Borrower" means a natural person who seeks or obtains a
high risk home loan.
    "Commissioner" means the Commissioner of the Office of
Banks and Real Estate.
    "Department" means the Department of Financial
Institutions.
    "Director" means the Director of Financial Institutions.
    "Good faith" means honesty in fact in the conduct or
transaction concerned.
    "High risk home loan" means a home equity loan in which (i)
at the time of origination, the annual percentage rate exceeds
by more than 6 percentage points in the case of a first lien
mortgage, or by more than 8 percentage points in the case of a
junior mortgage, the yield on U.S. Treasury securities having
comparable periods of maturity to the loan maturity as of the
fifteenth day of the month immediately preceding the month in
which the application for the loan is received by the lender or
(ii) the total points and fees payable by the consumer at or
before closing will exceed the greater of 5% of the total loan
amount or $800. The $800 figure shall be adjusted annually on
January 1 by the annual percentage change in the Consumer Price
Index for All Urban Consumers for all items published by the
United States Department of Labor. "High risk home loan" does
not include a loan that is made primarily for a business
purpose unrelated to the residential real property securing the
loan or to an open-end credit plan subject to 12 CFR 226 (2000,
no subsequent amendments or editions are included).
    "Home equity loan" means any loan secured by the borrower's
primary residence where the proceeds are not used as purchase
money for the residence.
    "Lender" means a natural or artificial person who
transfers, deals in, offers, or makes a high risk home loan.
"Lender" includes, but is not limited to, creditors and brokers
who transfer, deal in, offer, or make high risk home loans.
"Lender" does not include purchasers, assignees, or subsequent
holders of high risk home loans.
    "Office" means the Office of Banks and Real Estate.
    "Points and fees" means all items required to be disclosed
as points and fees under 12 CFR 226.32 (2000, no subsequent
amendments or editions included); the premium of any single
premium credit life, credit disability, credit unemployment,
or any other life or health insurance that is financed directly
or indirectly into the loan; and compensation paid directly or
indirectly to a mortgage broker, including a broker that
originates a loan in its own name in a table-funded
transaction, not otherwise included in 12 CFR 226.4.
    "Reasonable" means fair, proper, just, or prudent under the
circumstances.
    "Servicer" means any entity chartered under the Illinois
Banking Act, the Savings Bank Act, the Illinois Credit Union
Act, or the Illinois Savings and Loan Act of 1985 and any
person or entity licensed under the Residential Mortgage
License Act of 1987, the Consumer Installment Loan Act, or the
Sales Finance Agency Act who is responsible for the collection
or remittance for, or has the right or obligation to collect or
remit for, any lender, note owner, or note holder or for a
licensee's own account, of payments, interest, principal, and
trust items (such as hazard insurance and taxes on a
residential mortgage loan) in accordance with the terms of the
residential mortgage loan, including loan payment follow-up,
delinquency loan follow-up, loan analysis, and any
notifications to the borrower that are necessary to enable the
borrower to keep the loan current and in good standing.
    "Total loan amount" has the same meaning as that term is
given in 12 CFR 226.32 and shall be calculated in accordance
with the Federal Reserve Board's Official Staff Commentary to
that regulation.
(Source: P.A. 93-561, eff. 1-1-04.)
 
    (Text of Section after P.A. 97-849 takes effect)
    Sec. 10. Definitions. As used in this Act:
    "Approved credit counselor" means a credit counselor
approved by the Director of Financial Institutions.
    "Bona fide discount points" means loan discount points that
are knowingly paid by the consumer for the purpose of reducing,
and that in fact result in a bona fide reduction of, the
interest rate or time price differential applicable to the
mortgage.
    "Borrower" means a natural person who seeks or obtains a
high risk home loan.
    "Commissioner" means the Commissioner of the Office of
Banks and Real Estate.
    "Department" means the Department of Financial
Institutions.
    "Director" means the Director of Financial Institutions.
    "Good faith" means honesty in fact in the conduct or
transaction concerned.
    "High risk home loan" means a consumer credit transaction,
other than a reverse mortgage, that is secured by the
consumer's principal dwelling if: (i) at the time of
origination, the annual percentage rate exceeds by more than 6
percentage points in the case of a first lien mortgage, or by
more than 8 percentage points in the case of a junior mortgage,
the average prime offer rate, as defined in Section
129C(b)(2)(B) of the federal Truth in Lending Act, for a
comparable transaction as of the date on which the interest
rate for the transaction is set, (ii) the loan documents permit
the creditor to charge or collect prepayment fees or penalties
more than 36 months after the transaction closing or such fees
exceed, in the aggregate, more than 2% of the amount prepaid,
or (iii) the total points and fees payable in connection with
the transaction, other than bona fide third-party charges not
retained by the mortgage originator, creditor, or an affiliate
of the mortgage originator or creditor, will exceed (1) 5% of
the total loan amount in the case of a transaction for $20,000
(or such other dollar amount as prescribed by federal
regulation pursuant to the federal Dodd-Frank Act) or more or
(2) the lesser of 8% of the total loan amount or $1,000 (or
such other dollar amount as prescribed by federal regulation
pursuant to the federal Dodd-Frank Act) in the case of a
transaction for less than $20,000 (or such other dollar amount
as prescribed by federal regulation pursuant to the federal
Dodd-Frank Act), except that, with respect to all transactions,
bona fide loan discount points may be excluded as provided for
in Section 35 of this Act. "High risk home loan" does not
include a loan that is made primarily for a business purpose
unrelated to the residential real property securing the loan or
a consumer credit transaction made by a natural person who
provides seller financing secured by a principal residence no
more than 3 times in a 12-month period, provided such consumer
credit transaction is not made by a person that has constructed
or acted as a contractor for the construction of the residence
in the ordinary course of business of such person.
    "Lender" means a natural or artificial person who
transfers, deals in, offers, or makes a high risk home loan.
"Lender" includes, but is not limited to, creditors and brokers
who transfer, deal in, offer, or make high risk home loans.
"Lender" does not include purchasers, assignees, or subsequent
holders of high risk home loans.
    "Office" means the Office of Banks and Real Estate.
    "Points and fees" means all items considered to be points
and fees under 12 CFR 226.32 (2000, or as initially amended
pursuant to Section 1431 of the federal Dodd-Frank Act with no
subsequent amendments or editions included, whichever is
later); compensation paid directly or indirectly by a consumer
or creditor to a mortgage broker from any source, including a
broker that originates a loan in its own name in a table-funded
transaction, not otherwise included in 12 CFR 226.4; the
maximum prepayment fees and penalties that may be charged or
collected under the terms of the credit transaction; all
prepayment fees or penalties that are incurred by the consumer
if the loan refinances a previous loan made or currently held
by the same creditor or an affiliate of the creditor; and
premiums or other charges payable at or before closing or
financed directly or indirectly into the loan for any credit
life, credit disability, credit unemployment, credit property,
other accident, loss of income, life, or health insurance or
payments directly or indirectly for any debt cancellation or
suspension agreement or contract, except that insurance
premiums or debt cancellation or suspension fees calculated and
paid in full on a monthly basis shall not be considered
financed by the creditor. "Points and fees" does not include
any insurance premium provided by an agency of the federal
government or an agency of a state; any insurance premium paid
by the consumer after closing; and any amount of a premium,
charge, or fee that is not in excess of the amount payable
under policies in effect at the time of origination under
Section 203(c)(2)(A) of the National Housing Act (12 U.S.C.
1709(c)(2)(A)), provided that the premium, charge, or fee is
required to be refundable on a pro-rated basis and the refund
is automatically issued upon notification of the satisfaction
of the underlying mortgage loan.
    "Prepayment penalty" and "prepayment fees or penalties"
mean: (i) for a closed-end credit transaction, a charge imposed
for paying all or part of the transaction's principal before
the date on which the principal is due, other than a waived,
bona fide third-party charge that the creditor imposes if the
consumer prepays all of the transactions's principal sooner
than 36 months after consummation and (ii) for an open-end
credit plan, a charge imposed by the creditor if the consumer
terminates the open-end credit plan prior to the end of its
term, other than a waived, bona fide third-party charge that
the creditor imposes if the consumer terminates the open-end
credit plan sooner than 36 months after account opening.
    "Reasonable" means fair, proper, just, or prudent under the
circumstances.
    "Servicer" means any entity chartered under the Illinois
Banking Act, the Savings Bank Act, the Illinois Credit Union
Act, or the Illinois Savings and Loan Act of 1985 and any
person or entity licensed under the Residential Mortgage
License Act of 1987, the Consumer Installment Loan Act, or the
Sales Finance Agency Act who is responsible for the collection
or remittance for, or has the right or obligation to collect or
remit for, any lender, note owner, or note holder or for a
licensee's own account, of payments, interest, principal, and
trust items (such as hazard insurance and taxes on a
residential mortgage loan) in accordance with the terms of the
residential mortgage loan, including loan payment follow-up,
delinquency loan follow-up, loan analysis, and any
notifications to the borrower that are necessary to enable the
borrower to keep the loan current and in good standing.
    "Total loan amount" has the same meaning as that term is
given in 12 CFR 226.32 and shall be calculated in accordance
with the Federal Reserve Board's Official Staff Commentary to
that regulation.
(Source: P.A. 97-849, see Section 10 of P.A. 97-1159 for
effective date of P.A. 97-849.)
 
    Section 95. No acceleration or delay. Where this Act makes
changes in a statute that is represented in this Act by text
that is not yet or no longer in effect (for example, a Section
represented by multiple versions), the use of that text does
not accelerate or delay the taking effect of (i) the changes
made by this Act or (ii) provisions derived from any other
Public Act.
 
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 8/5/2015