Public Act 099-0660
Public Act 0660 99TH GENERAL ASSEMBLY
|Public Act 099-0660|
|SB2677 Enrolled||LRB099 16934 EGJ 41281 b|
AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
The Residential Real Property Disclosure Act is
amended by changing Section 70 as follows:
(765 ILCS 77/70)
Predatory lending database program.
(a) As used in this Article:
"Adjustable rate mortgage" or "ARM" means a closed-end
mortgage transaction that allows adjustments of the loan
interest rate during the first 3 years of the loan term.
"Borrower" means a person seeking a mortgage loan.
"Broker" means a "broker" or "loan broker", as defined in
subsection (p) of Section 1-4 of the Residential Mortgage
License Act of 1987.
"Closing agent" means an individual assigned by a title
insurance company or a broker or originator to ensure that the
execution of documents related to the closing of a real estate
sale or the refinancing of a real estate loan and the
disbursement of closing funds are in conformity with the
instructions of the entity financing the transaction.
"Counseling" means in-person counseling provided by a
counselor employed by a HUD-approved counseling agency to all
borrowers, or documented telephone counseling where a hardship
would be imposed on one or more borrowers. A hardship shall
exist in instances in which the borrower is confined to his or
her home due to medical conditions, as verified in writing by a
physician, or the borrower resides 50 miles or more from the
nearest participating HUD-approved housing counseling agency.
In instances of telephone counseling, the borrower must supply
all necessary documents to the counselor at least 72 hours
prior to the scheduled telephone counseling session.
"Counselor" means a counselor employed by a HUD-approved
housing counseling agency.
"Credit score" means a credit risk score as defined by the
Fair Isaac Corporation, or its successor, and reported under
such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE"
by one or more of the following credit reporting agencies or
their successors: Equifax, Inc., Experian Information
Solutions, Inc., and TransUnion
LLC. If the borrower's credit
report contains credit scores from 2 reporting agencies, then
the broker or loan originator shall report the lower score. If
the borrower's credit report contains credit scores from 3
reporting agencies, then the broker or loan originator shall
report the middle score.
"Department" means the Department of Financial and
"Exempt person or entity" means that term as it is defined
in subsections (d)(1), (d)(1.5), and (d)(1.8) of Section 1-4 of
the Residential Mortgage License Act of 1987.
"First-time homebuyer" means a borrower who has not held an
ownership interest in residential property.
"HUD-approved counseling" or "counseling" means counseling
given to a borrower by a counselor employed by a HUD-approved
housing counseling agency.
"Interest only" means a closed-end loan that permits one or
more payments of interest without any reduction of the
principal balance of the loan, other than the first payment on
"Lender" means that term as it is defined in subsection (g)
of Section 1-4 of the Residential Mortgage License Act of 1987.
"Licensee" means that term as it is defined in subsection
(e) of Section 1-4 of the Residential Mortgage License Act of
"Mortgage loan" means that term as it is defined in
subsection (f) of Section 1-4 of the Residential Mortgage
License Act of 1987.
"Negative amortization" means an amortization method under
which the outstanding balance may increase at any time over the
course of the loan because the regular periodic payment does
not cover the full amount of interest due.
"Originator" means a "loan originator" as defined in
subsection (hh) of Section 1-4 of the Residential Mortgage
License Act of 1987, except an exempt person, and means a
"mortgage loan originator" as defined in subsection (jj) of
Section 1-4 of the Residential Mortgage License Act of 1987,
except an exempt person.
"Points and fees" has the meaning ascribed to that term in
Section 10 of the High Risk Home Loan Act.
"Prepayment penalty" means a charge imposed by a lender
under a mortgage note or rider when the loan is paid before the
expiration of the term of the loan.
"Refinancing" means a loan secured by the borrower's or
borrowers' primary residence where the proceeds are not used as
purchase money for the residence.
"Title insurance company" means any domestic company
organized under the laws of this State for the purpose of
conducting the business of guaranteeing or insuring titles to
real estate and any title insurance company organized under the
laws of another State, the District of Columbia, or a foreign
government and authorized to transact the business of
guaranteeing or insuring titles to real estate in this State.
(a-5) A predatory lending database program shall be
established within Cook County. The program shall be
administered in accordance with this Article. The inception
date of the program shall be July 1, 2008.
A predatory lending
database program shall be expanded to include Kane, Peoria, and
Will counties. The
inception date of the expansion of the
program as it applies to Kane, Peoria, and Will
be July 1, 2010. Until the inception date, none of the duties,
obligations, contingencies, or consequences of or from the
program shall be imposed. The program shall apply to all
mortgage applications that are governed by this Article and
that are made or taken on or after the inception of the
(b) The database created under this program shall be
maintained and administered by the Department. The database
shall be designed to allow brokers, originators, counselors,
title insurance companies, and closing agents to submit
information to the database online. The database shall not be
designed to allow those entities to retrieve information from
the database, except as otherwise provided in this Article.
Information submitted by the broker or originator to the
Department may be used to populate the online form submitted by
a counselor, title insurance company, or closing agent.
(c) Within 10 business days after taking a mortgage
application, the broker or originator for any mortgage on
residential property within the program area must submit to the
predatory lending database all of the information required
under Section 72 and any other information required by the
Department by rule. Within 7 business days after receipt of the
information, the Department shall compare that information to
counseling standards in Section 73
and issue to the
borrower and the broker or originator a determination of
whether counseling is recommended for the borrower. The
borrower may not waive counseling. If at any time after
submitting the information required under Section 72 the broker
or originator (i) changes the terms of the loan or (ii) issues
a new commitment to the borrower, then, within 5 business days
thereafter, the broker or originator shall re-submit all of the
information required under Section 72 and, within 4 business
days after receipt of the information re-submitted by the
broker or originator, the Department shall compare that
information to the housing
counseling standards in Section 73
and shall issue to the borrower and the broker or originator a
new determination of whether re-counseling
is recommended for
the borrower based on the information re-submitted by the
broker or originator. The Department shall require
re-counseling if the loan terms have been modified to meet
another counseling standard in Section 73, or if the broker has
increased the interest rate by more than 200 basis points.
(d) If the Department recommends counseling for the
borrower under subsection (c), then the Department shall notify
the borrower of all participating HUD-approved counseling
agencies located within the State and direct the borrower to
interview with a counselor associated with one of those
agencies. Within 10 business days after receipt of the notice
of HUD-approved counseling agencies, it is the borrower's
responsibility to select one of those agencies and shall engage
in an interview with a counselor associated with that agency.
The selection must take place and the appointment for the
interview must be set within 10 business days, although the
interview may take place beyond the 10 business day period.
Within 7 business days after interviewing the borrower, the
counselor must submit to the predatory lending database all of
the information required under Section 74 and any other
information required by the Department by rule. Reasonable and
customary costs not to exceed $300
associated with counseling
provided under the program shall be paid by the broker or
originator and shall not be charged back to, or recovered from,
the borrower. The Department shall annually calculate to the
nearest dollar an adjusted rate for inflation. A counselor
shall not recommend or suggest that a borrower contact any
specific mortgage origination company, financial institution,
or entity that deals in mortgage finance to obtain a loan,
another quote, or for any other reason related to the specific
mortgage transaction; however, a counselor may suggest that the
borrower seek an opinion or a quote from another mortgage
origination company, financial institution, or entity that
deals in mortgage finance. A counselor or housing counseling
in good faith provides counseling shall not be
liable to a broker or originator or borrower for civil damages,
except for willful or wanton misconduct on the part of the
counselor in providing the counseling.
(e) The broker or originator and the borrower may not take
any legally binding action concerning the loan transaction
until the later of the following:
(1) the Department issues a determination not to
counseling for the borrower in
accordance with subsection (c); or
(2) the Department issues a determination that
counseling is recommended for the borrower
and the counselor submits all required information to the
database in accordance with subsection (d).
(f) Within 10 business days after closing, the title
insurance company or closing agent must submit to the predatory
lending database all of the information required under Section
76 and any other information required by the Department by
(g) The title insurance company or closing agent shall
attach to the mortgage a certificate of
compliance with the
requirements of this Article, as generated by the database. If
the transaction is exempt, the title insurance company or
closing agent shall attach to the mortgage a certificate of
exemption, as generated by the database. If the title insurance
company or closing agent fails to attach the certificate of
compliance or exemption, whichever is required, then the
mortgage is not recordable. In addition, if any lis pendens for
a residential mortgage foreclosure is recorded on the property
within the program area, a certificate of service must be
simultaneously recorded that affirms that a copy of the lis
pendens was filed with the Department.
A lis pendens filed
after July 1, 2016 shall be filed with the Department
The lis pendens may be filed with the
Department either electronically or by filing a hard copy.
the certificate of service is not recorded, then the lis
pendens pertaining to the residential mortgage foreclosure in
question is not recordable and is of no force and effect.
(h) All information provided to the predatory lending
database under the program is confidential and is not subject
to disclosure under the Freedom of Information Act, except as
otherwise provided in this Article. Information or documents
obtained by employees of the Department in the course of
maintaining and administering the predatory lending database
are deemed confidential. Employees are prohibited from making
disclosure of such confidential information or documents. Any
request for production of information from the predatory
lending database, whether by subpoena, notice, or any other
source, shall be referred to the Department of Financial and
Professional Regulation. Any borrower may authorize in writing
the release of database information. The Department may use the
information in the database without the consent of the
borrower: (i) for the purposes of administering and enforcing
the program; (ii) to provide relevant information to a
counselor providing counseling to a borrower under the program;
or (iii) to the appropriate law enforcement agency or the
applicable administrative agency if the database information
demonstrates criminal, fraudulent, or otherwise illegal
(i) Nothing in this Article is intended to prevent a
borrower from making his or her own decision as to whether to
proceed with a transaction.
(j) Any person who violates any provision of this Article
commits an unlawful practice within the meaning of the Consumer
Fraud and Deceptive Business Practices Act.
(j-1) A violation of any provision of this Article by a
mortgage banking licensee or licensed mortgage loan originator
shall constitute a violation of the Residential Mortgage
License Act of 1987.
(j-2) A violation of any provision of this Article by a
title insurance company, title agent, or escrow agent shall
constitute a violation of the Title Insurance Act.
(j-3) A violation of any provision of this Article by a
housing counselor shall be referred to the Department of
Housing and Urban Development.
(k) During the existence of the program, the Department
shall submit semi-annual reports to the Governor and to the
General Assembly by May 1 and November 1 of each year detailing
its findings regarding the program. The report shall include,
by county, at least the following information for each
(1) the number of loans registered with the program;
(2) the number of borrowers receiving counseling;
(3) the number of loans closed;
(4) the number of loans requiring counseling for each
of the standards set forth in Section 73;
(5) the number of loans requiring counseling where the
mortgage originator changed the loan terms subsequent to
(6) the number of licensed mortgage brokers and loan
originators entering information into
(7) the number of investigations based on information
obtained from the database,
including the number of
licensees fined, the number of licenses suspended, and the
number of licenses revoked;
(8) a summary of the types of non-traditional mortgage
products being offered; and
(9) a summary of how the Department is actively
utilizing the program to combat
(Source: P.A. 97-891, eff. 1-1-13; 98-1081, eff. 1-1-15
This Act takes effect upon
Effective Date: 7/28/2016