Bill Text: IL HB2627 | 2015-2016 | 99th General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the High Risk Home Loan Act. Includes within the definition of the term "high risk home loan" a consumer credit transaction that is secured by the consumer's principal personal dwelling if the dwelling is personal property. Effective immediately.

Sponsorship: Moderate Partisan Bill (Democrat 4-1)

Status: (Passed) 2015-07-28 - Public Act . . . . . . . . . 99-0150 [HB2627 Detail]

Download: Illinois-2015-HB2627-Enrolled.html

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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

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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

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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

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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

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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, or if the dwelling is personal
property, then as provided under 15 U.S.C. 1602(bb), as
amended, and any corresponding regulation, as amended, (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 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, 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

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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

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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.
"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

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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.