Bill Text: IL HB3806 | 2009-2010 | 96th General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Amends the Code of Civil Procedure by adding an Article that may be cited as the Mortgage Foreclosure Prevention Law of 2009. Provides that an eligible borrower has a right to defer a judicial sale for a specified period by providing an affidavit to the foreclosing lender. When the deferment period ends or the deferment is lost, a lender may schedule a sale by publishing a specified newspaper notice and serving a copy on those on the premises, 4 weeks before the sale. Provides a formula to set the borrower's monthly payment. Provides that a borrower loses the right to deferment if he or she ceases to reside on the premises. Provides for mortgage foreclosure counselors. Provides that a foreclosing lender and a borrower must negotiate in good faith. Provides that a borrower may dispute a deferment cancellation through arbitration. Provides that lenders shall send to borrowers a mandated notice about deferment. Provides that a lender who acts in bad faith or recklessly in violation of these provisions is liable to a person injured for actual damages, statutory damages up to $25,000, punitive damages, costs, and attorney's fees. Makes other changes. Effective 7 days after becoming law.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2010-11-30 - Senate Floor Amendment No. 2 Recommend Do Adopt Public Health; 006-002-000 [HB3806 Detail]
Download: Illinois-2009-HB3806-Introduced.html
Bill Title: Amends the Code of Civil Procedure by adding an Article that may be cited as the Mortgage Foreclosure Prevention Law of 2009. Provides that an eligible borrower has a right to defer a judicial sale for a specified period by providing an affidavit to the foreclosing lender. When the deferment period ends or the deferment is lost, a lender may schedule a sale by publishing a specified newspaper notice and serving a copy on those on the premises, 4 weeks before the sale. Provides a formula to set the borrower's monthly payment. Provides that a borrower loses the right to deferment if he or she ceases to reside on the premises. Provides for mortgage foreclosure counselors. Provides that a foreclosing lender and a borrower must negotiate in good faith. Provides that a borrower may dispute a deferment cancellation through arbitration. Provides that lenders shall send to borrowers a mandated notice about deferment. Provides that a lender who acts in bad faith or recklessly in violation of these provisions is liable to a person injured for actual damages, statutory damages up to $25,000, punitive damages, costs, and attorney's fees. Makes other changes. Effective 7 days after becoming law.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2010-11-30 - Senate Floor Amendment No. 2 Recommend Do Adopt Public Health; 006-002-000 [HB3806 Detail]
Download: Illinois-2009-HB3806-Introduced.html
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1 | AN ACT concerning civil law.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Code of Civil Procedure is amended by adding | ||||||||||||||||||||||||
5 | Part 18 to Article XV as follows:
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6 | (735 ILCS 5/Art. XV Pt. 18 heading new)
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7 | ARTICLE XV Pt. 18. Foreclosure Prevention | ||||||||||||||||||||||||
8 | (735 ILCS 5/15-1801 new)
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9 | Sec. 15-1801. Part title. This Part may be cited as the | ||||||||||||||||||||||||
10 | Mortgage Foreclosure Prevention Law of 2009.
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11 | (735 ILCS 5/15-1805 new)
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12 | Sec. 15-1805. Definitions. In this Part: | ||||||||||||||||||||||||
13 | "Part" means the Mortgage Foreclosure Prevention Law of | ||||||||||||||||||||||||
14 | 2009. | ||||||||||||||||||||||||
15 | "Deferment payment" means the monthly amount that is due to | ||||||||||||||||||||||||
16 | the foreclosing lender by an eligible foreclosed borrower under | ||||||||||||||||||||||||
17 | Section 15-1820 to maintain the right to deferment. | ||||||||||||||||||||||||
18 | "Deferment period" means the period that begins on the | ||||||||||||||||||||||||
19 | effective date of the effective date of this amendatory Act of | ||||||||||||||||||||||||
20 | the 96th General Assembly and expires one year following the | ||||||||||||||||||||||||
21 | effective date of the this amendatory Act of the 96th General |
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1 | Assembly. | ||||||
2 | "Deferment right" means the relief provided to an eligible | ||||||
3 | foreclosed borrower in Section 15-1810. | ||||||
4 | "Eligible foreclosed loan" means a residential mortgage | ||||||
5 | loan for which a foreclosing lender has scheduled a judicial | ||||||
6 | sale under this Article or schedules a judicial sale during the | ||||||
7 | deferment period if it is a subprime loan or a loan with | ||||||
8 | negative amortization for which the required minimum payment of | ||||||
9 | principal and interest increased after the date the loan was | ||||||
10 | originated. An eligible foreclosed loan does not include a loan | ||||||
11 | originated by a State or federally chartered bank, savings | ||||||
12 | bank, or credit union, or an organization majority owned by one | ||||||
13 | or more credit unions. | ||||||
14 | "Eligible foreclosed borrower" means a borrower who: | ||||||
15 | (1) is a mortgagor under an eligible foreclosed loan; | ||||||
16 | (2) resides at the mortgaged property and intends to | ||||||
17 | reside at the mortgaged property at least until the end of | ||||||
18 | the deferment period; | ||||||
19 | (3) has a household adjusted gross income of less than | ||||||
20 | $250,000 per year according to the borrower's most recent | ||||||
21 | federal income tax return, provided that if the borrower | ||||||
22 | was not required to file a federal income tax return, the | ||||||
23 | borrower must qualify by providing the return that the | ||||||
24 | borrower would have filed if required; and | ||||||
25 | (4) is a legal United States resident. A borrower does | ||||||
26 | not reside at the property unless the property has been the |
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1 | borrower's primary residence for 6 months prior to the date | ||||||
2 | of the affidavit of deferment. | ||||||
3 | "Foreclosing lender" means the mortgagee who is | ||||||
4 | foreclosing the mortgage of an eligible foreclosed borrower. | ||||||
5 | "Fully indexed rate" equals the index rate prevailing at | ||||||
6 | the time a residential mortgage loan is originated, plus the | ||||||
7 | margin that will apply after the expiration of an introductory | ||||||
8 | interest rate. | ||||||
9 | "Mortgage foreclosure counselor" means an individual who | ||||||
10 | provides mortgage foreclosure counseling on behalf of a | ||||||
11 | nonprofit or government agency. | ||||||
12 | "Negative amortization" occurs when the borrower's | ||||||
13 | compliance with any repayment option offered pursuant to the | ||||||
14 | terms of the residential mortgage loan is insufficient to | ||||||
15 | satisfy the interest accruing on the loan, resulting in an | ||||||
16 | increase in the loan balance. Negative amortization does not | ||||||
17 | occur when a residential mortgage loan is originated, | ||||||
18 | subsidized, or guaranteed by or through a State, local | ||||||
19 | government, or nonprofit organization, and bears one or more of | ||||||
20 | the following nonstandard payment terms that substantially | ||||||
21 | benefit the borrower: payments vary with income; payments of | ||||||
22 | principal and interest are deferred until the maturity date of | ||||||
23 | the loan or the sale of the residence; principal or interest is | ||||||
24 | forgivable under specified conditions; or where no interest or | ||||||
25 | an annual interest rate of 2% or less is charged in connection | ||||||
26 | with the loan. |
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1 | "Residential mortgage loan" means a loan secured primarily | ||||||
2 | by either: (1) a mortgage on residential real property; or (2) | ||||||
3 | certificates of stock or other evidence of ownership interest | ||||||
4 | in and proprietary lease from corporations, partnerships, or | ||||||
5 | other forms of business organizations formed for the purpose of | ||||||
6 | cooperative ownership of residential real property. | ||||||
7 | "Residential mortgage servicer" or "servicer" means a | ||||||
8 | person who engages in the activity of servicing a residential | ||||||
9 | mortgage. | ||||||
10 | "Residential real property" or "residential real estate" | ||||||
11 | means real property improved or intended to be improved by a | ||||||
12 | structure designed principally for the occupancy of from one to | ||||||
13 | 4 families, whether or not the owner occupies the real | ||||||
14 | property. | ||||||
15 | "Secretary" means the Secretary of the Department of | ||||||
16 | Financial and Professional Regulation. | ||||||
17 | "Subprime loan" means, in the case of an adjustable rate | ||||||
18 | loan secured by a first lien on a dwelling that can increase in | ||||||
19 | interest rate but not decrease in interest rate below the fully | ||||||
20 | indexed rate at the time of origination, a loan for which the | ||||||
21 | annual percentage rate (APR) is greater than 2 percentage | ||||||
22 | points above the yield on United States Treasury securities | ||||||
23 | having comparable periods of maturity, as of the 15th day of | ||||||
24 | the preceding month if the rate is set between the first and | ||||||
25 | the 14th day of the month and as of the 15th day of the current | ||||||
26 | month if the rate is set on or after the 15th day. |
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1 | For all other loans secured by a first lien on a dwelling, | ||||||
2 | the term means a loan for which the APR is greater than 3 | ||||||
3 | percentage points above the yield on United States Treasury | ||||||
4 | securities having comparable periods of maturity, as of the | ||||||
5 | 15th day of the preceding month if the rate is set between the | ||||||
6 | first and the 14th day of the month and as of the 15th day of | ||||||
7 | the current month if the rate is set on or after the 15th day. | ||||||
8 | For loans secured by a subordinate lien on a dwelling, the | ||||||
9 | term means a loan for which the APR is greater than 5 | ||||||
10 | percentage points above the yield on United States Treasury | ||||||
11 | securities having comparable periods of maturity, as of the | ||||||
12 | 15th day of the preceding month if the rate is set between the | ||||||
13 | first and the 14th day of the month and as of the 15th day of | ||||||
14 | the current month if the rate is set on or after the 15th day. | ||||||
15 | For purposes of this Section, the annual percentage rate | ||||||
16 | has the meaning given in title 12, Code of Federal Regulations, | ||||||
17 | part 226.
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18 | (735 ILCS 5/15-1810 new)
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19 | Sec. 15-1810. Right to foreclosure deferment. An eligible | ||||||
20 | foreclosed borrower has the right to defer a judicial sale | ||||||
21 | under this Article until the expiration of the deferment period | ||||||
22 | by providing an affidavit of deferment to the foreclosing | ||||||
23 | lender in accordance with Section 15-1815. A foreclosing lender | ||||||
24 | shall cancel a judicial sale if the eligible foreclosed | ||||||
25 | borrower has submitted to the foreclosing lender an affidavit |
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1 | of deferment prior to or at the time of the judicial sale, | ||||||
2 | unless the lender has served a notice of denial in accordance | ||||||
3 | with Section 15-1825. A foreclosing lender shall also provide | ||||||
4 | written notice of receipt of an affidavit of deferment to all | ||||||
5 | parties with a recorded request for notice of mortgage | ||||||
6 | foreclosure under this Article or who are listed as a holder of | ||||||
7 | a security interest in the subject property in the affidavit of | ||||||
8 | deferment. A lender is not required to cancel a judicial sale | ||||||
9 | if a borrower has previously obtained a deferment under this | ||||||
10 | Part. Upon expiration of the deferment period or the loss of | ||||||
11 | the deferment, a foreclosing lender may schedule a deferred | ||||||
12 | judicial sale by publishing the notice of judicial sale once in | ||||||
13 | the newspaper in which the original advertisement was published | ||||||
14 | and by serving a copy of the notice of judicial sale in a like | ||||||
15 | manner as a summons in a civil action in the circuit court upon | ||||||
16 | the person in possession of the mortgaged premises, if the same | ||||||
17 | are actually occupied, at least 4 weeks prior to the sale.
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18 | (735 ILCS 5/15-1815 new)
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19 | Sec. 15-1815. Affidavit of deferment. | ||||||
20 | (a) Affidavit of deferment. The affidavit of deferment | ||||||
21 | shall state the
name of the eligible foreclosed borrower, the | ||||||
22 | address of the property in foreclosure, and
contain the | ||||||
23 | following statements: | ||||||
24 | "(1) I am the borrower on a mortgage loan on | ||||||
25 | residential property located at [address of property] |
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1 | (hereinafter "subject property"). | ||||||
2 | (2) A judicial sale has been scheduled on the subject | ||||||
3 | property. | ||||||
4 | (3) I currently reside at the subject property. | ||||||
5 | (4) I have resided at the subject property as my | ||||||
6 | primary residence for 6 months
prior to the date of this | ||||||
7 | affidavit. | ||||||
8 | (5) If permitted to reside at the subject property, I | ||||||
9 | intend to reside at the subject
property until at least | ||||||
10 | [end of deferment period]. | ||||||
11 | (6) I have sought the assistance of a mortgage | ||||||
12 | foreclosure counselor and during the deferment I agree to | ||||||
13 | continue to use the assistance of a mortgage foreclosure | ||||||
14 | counselor to negotiate in good faith with the foreclosing | ||||||
15 | lender to modify the terms of the mortgage on the subject | ||||||
16 | property. | ||||||
17 | (7) I believe that the mortgage loan on the subject | ||||||
18 | property is either: | ||||||
19 | (i) a subprime loan; or | ||||||
20 | (ii) a loan with negative amortization for which | ||||||
21 | the required minimum payment has increased." | ||||||
22 | The affidavit shall be signed by at least one eligible | ||||||
23 | foreclosed borrower who is the
mortgagor of the residential | ||||||
24 | real property being foreclosed. The affidavit also shall be
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25 | signed by a mortgage foreclosure counselor solely to certify | ||||||
26 | that the borrower has sought
the assistance of the mortgage |
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1 | foreclosure counselor. | ||||||
2 | (b) Service on foreclosing lender. An affidavit of | ||||||
3 | deferment shall be served by personal service, United States | ||||||
4 | mail, or other reliable delivery service to the address | ||||||
5 | provided in the notice of right to deferment or to the address | ||||||
6 | of the counsel for the mortgagee in the notice of foreclosure. | ||||||
7 | (c) Acknowledgment by foreclosing lender. Unless the | ||||||
8 | foreclosing lender has served a notice of denial under Section | ||||||
9 | 15-1825, the foreclosing lender shall, within 10 days after | ||||||
10 | receiving the affidavit of deferment, provide to the eligible | ||||||
11 | foreclosed borrower a written acknowledgment that it has | ||||||
12 | received the affidavit of deferment. The acknowledgment shall | ||||||
13 | state the following: | ||||||
14 | (1) that the judicial sale has been canceled; | ||||||
15 | (2) the deferment payment amount that is due by the | ||||||
16 | eligible foreclosed borrower; | ||||||
17 | (3) the date that the first deferment payment is due; | ||||||
18 | (4) the date that each subsequent deferment payment is | ||||||
19 | due; and | ||||||
20 | (5) the address to which the borrower should send the | ||||||
21 | deferment payment or
the payment delivery methods that are | ||||||
22 | acceptable to the foreclosing lender. | ||||||
23 | The acknowledgment shall be on a single sheet of paper, | ||||||
24 | shall use plain language, and
no other documents shall be | ||||||
25 | included with the acknowledgment. The bottom of the
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26 | acknowledgment shall include the following disclosure in bold, |
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1 | 14-point type: | ||||||
2 | "The cancellation of the judicial sale on your property | ||||||
3 | is the result of a law passed
by the Illinois General | ||||||
4 | Assembly in 2009. You must make the monthly payment in full
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5 | by the due dates listed in this letter. If you do not make | ||||||
6 | the payments on time, we
will have the right to schedule a | ||||||
7 | judicial sale on your property." | ||||||
8 | (d) Charges prohibited. A foreclosing lender shall not | ||||||
9 | charge an eligible foreclosed borrower any amount other than | ||||||
10 | the deferment payment for exercising the deferment right.
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11 | (735 ILCS 5/15-1820 new)
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12 | Sec. 15-1820. Borrower payment and residency requirements. | ||||||
13 | (a) Borrower payment required. An eligible foreclosed | ||||||
14 | borrower who has a deferment right shall make monthly payments | ||||||
15 | to the foreclosing lender. The payment shall be made no later | ||||||
16 | than the 15th day of each month. The first payment is not due | ||||||
17 | until the 15th day of the month that is a minimum of 30 days | ||||||
18 | after the date that the foreclosing lender sends the | ||||||
19 | acknowledgment required by paragraph (c) of Section 15-1815. | ||||||
20 | (b) Amount of payment. For an eligible foreclosed borrower | ||||||
21 | with a subprime loan, the amount of payment shall be the lesser | ||||||
22 | of: (1) the monthly payment of principal and interest on the | ||||||
23 | date the loan was originated; or (2) 65% of the monthly payment
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24 | of principal and interest at the time the borrower defaulted | ||||||
25 | prior to foreclosure. For an
eligible foreclosed borrower with |
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1 | a negative amortization loan that is not also a subprime
loan, | ||||||
2 | the amount of payment would be the minimum monthly payment on | ||||||
3 | the date the
loan was originated. | ||||||
4 | (c) Payment advice notice. The foreclosing lender shall | ||||||
5 | provide to the eligible foreclosed borrower monthly written | ||||||
6 | payment advice notices. The notice shall be sent by the first | ||||||
7 | day of each month until the expiration of the deferment period | ||||||
8 | or the loss of the deferment under paragraph (d). Each notice | ||||||
9 | shall state (1) the amount of payment owed from the eligible | ||||||
10 | foreclosed borrower; (2) the address to which the borrower | ||||||
11 | should send the deferment payment; and (3) the date that the | ||||||
12 | payment must be received to avoid loss of the deferment right | ||||||
13 | under paragraph (d). The payment advice notice shall be on a | ||||||
14 | single sheet of paper, shall use plain language, and no other | ||||||
15 | documents shall be included with the notice. The bottom of the | ||||||
16 | notice shall include the following disclosure in bold, 14-point | ||||||
17 | type: | ||||||
18 | "The deferment of the judicial sale on your property is | ||||||
19 | the result of a law passed by the Illinois General Assembly | ||||||
20 | in 2009. You must continue to make the monthly payment in | ||||||
21 | full by the 15th day of each month. If you do not make the | ||||||
22 | payments on time, we will have the right to schedule a | ||||||
23 | judicial sale on your property. The deferment period will | ||||||
24 | end on (last day of deferment period). By the end of the | ||||||
25 | deferment period, you will need to pay the entire amount | ||||||
26 | that has been deferred plus other costs allowed by law in |
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1 | order to avoid a judicial sale." | ||||||
2 | (d) Borrower failure to pay. An eligible foreclosed | ||||||
3 | borrower who fails to make payments in the amount required and | ||||||
4 | by the date required under this Section shall lose the | ||||||
5 | deferment right. | ||||||
6 | (e) Borrower residency requirement. An eligible foreclosed | ||||||
7 | borrower loses the right to deferment if the borrower ceases to | ||||||
8 | reside at the mortgaged property during the deferment period.
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9 | (735 ILCS 5/15-1825 new)
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10 | Sec. 15-1825. Resolution of disputes; effect of deferral. | ||||||
11 | (a) Dispute as to eligible foreclosed loan status. If the | ||||||
12 | foreclosing lender determines after a reasonable investigation | ||||||
13 | and in good faith that the person submitting an affidavit of | ||||||
14 | deferment is not the mortgagor under an eligible foreclosed | ||||||
15 | loan, the foreclosing lender shall provide a notice of denial | ||||||
16 | of deferment to the person submitting the affidavit of | ||||||
17 | deferment and to all parties with a recorded request for notice | ||||||
18 | of mortgage foreclosure under this Article or who are listed as | ||||||
19 | a holder of a security interest in the subject property in the | ||||||
20 | affidavit of deferment. The foreclosing lender must send a | ||||||
21 | notice of denial by certified mail through the United States | ||||||
22 | mail within 10 business days after receiving the affidavit of | ||||||
23 | deferment. The notice is effective on mailing. The notice of | ||||||
24 | denial shall be on a single sheet of paper and no other | ||||||
25 | documents shall be included with the notice. The notice must |
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1 | include an explanation, in plain language, of the reasons that | ||||||
2 | the loan is not an eligible foreclosed loan. The notice must | ||||||
3 | also inform the person who executed the affidavit of deferment | ||||||
4 | that the person has the right to apply to the court for an | ||||||
5 | order deferring the judicial sale. A copy of the notice also | ||||||
6 | must be sent by any means to the loan counselor who signed the | ||||||
7 | affidavit of deferment. | ||||||
8 | (b) Other disputes. For any other dispute about the | ||||||
9 | deferment right or other rights or requirements under this | ||||||
10 | Part, other than the arbitration of a dispute of good-faith | ||||||
11 | negotiation under Section 15-1830, a person can apply to the | ||||||
12 | circuit court in the county
where the property is located for | ||||||
13 | an order establishing the rights of the parties to the
dispute. | ||||||
14 | (c) Effect of deferral right. Nothing in this Part shall | ||||||
15 | alter contractual rights of the parties to the mortgage loan | ||||||
16 | other than providing the right to defer a judicial sale.
A bona | ||||||
17 | fide purchaser of an interest in real property mortgaged by an | ||||||
18 | eligible foreclosed
loan takes the interest in the real | ||||||
19 | property not subject to any claims of ownership by a
party | ||||||
20 | based on any rights under this Part. No act, agreement, or | ||||||
21 | deferment granted under
this Part alters the rights of other | ||||||
22 | parties or lenders with an interest in the subject property. An | ||||||
23 | order confirming a judicial sale is prima facie evidence of | ||||||
24 | compliance with this Part, provided that the eligible | ||||||
25 | foreclosed homeowner has the remedies for monetary relief under | ||||||
26 | Section 15-1840 for a reckless or bad faith violation of this |
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1 | Part. | ||||||
2 | (d) Mortgage foreclosure counselors. A mortgage | ||||||
3 | foreclosure counselor, and
the person employing or paying the | ||||||
4 | mortgage foreclosure counselor, shall not be liable to
any | ||||||
5 | person for signing or failing to sign an affidavit of deferment | ||||||
6 | under this Part.
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7 | (735 ILCS 5/15-1830 new)
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8 | Sec. 15-1830. Right to revoke deferment following | ||||||
9 | good-faith negotiation. | ||||||
10 | (a) Cancellation of deferment. If the foreclosing lender | ||||||
11 | has negotiated
in good faith to modify the eligible foreclosed | ||||||
12 | loan, the foreclosing lender may send a
notice of deferment | ||||||
13 | cancellation to the eligible foreclosed borrower and, no less | ||||||
14 | than 30
days after sending the notice, publish a notice of | ||||||
15 | judicial sale in accord with Section
15-1810. The notice shall | ||||||
16 | be on a single sheet of paper and shall include the name and
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17 | contact information for an employee or representative of the | ||||||
18 | foreclosing lender. The
notice must include an explanation, in | ||||||
19 | plain language, of the reasons that the deferment
is being | ||||||
20 | canceled. The notice must prominently state the date the notice | ||||||
21 | is mailed to the
eligible foreclosed borrower and the bottom of | ||||||
22 | the notice shall include the following
disclosure in bold, | ||||||
23 | 14-point type: | ||||||
24 | "If you do not agree that we have negotiated in good | ||||||
25 | faith to modify your loan,
you may request that an |
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1 | arbitrator be appointed to review your case. The arbitrator
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2 | will be a volunteer who will work at no cost to you. You | ||||||
3 | have until (insert date 30
days after date of notice) to | ||||||
4 | complete and mail the attached request for arbitration
form | ||||||
5 | to the address listed on the form. The State of Illinois | ||||||
6 | encourages you to
contact a mortgage foreclosure counselor | ||||||
7 | right away to discuss your options." | ||||||
8 | The foreclosing lender shall include a copy of the written | ||||||
9 | loan modification that the foreclosing lender offered as part | ||||||
10 | of a good-faith negotiation offer under paragraph (b). No | ||||||
11 | documents other than the written loan modification offer and | ||||||
12 | the arbitration request form required by paragraph (b) shall be | ||||||
13 | included with the notice. A copy of the notice also must be | ||||||
14 | sent by any means to the mortgage foreclosure counselor who | ||||||
15 | signed the affidavit of deferment. | ||||||
16 | (b) Arbitration of disputes. | ||||||
17 | (1) The eligible foreclosed borrower may dispute a | ||||||
18 | notice of deferment cancellation by sending to the | ||||||
19 | Secretary a request for arbitration form along with a copy | ||||||
20 | of the notice of deferment cancellation, including a copy | ||||||
21 | of the written loan modification that the foreclosing | ||||||
22 | lender asserts is a good-faith negotiation offer under this | ||||||
23 | paragraph (b). The request for arbitration must be | ||||||
24 | delivered or postmarked within 30 days after the date of | ||||||
25 | the notice of deferment cancellation. The deferment | ||||||
26 | continues pending resolution of the dispute. |
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1 | (2) On receipt of a timely request for arbitration, the | ||||||
2 | Secretary shall appoint a
volunteer arbitrator to resolve | ||||||
3 | the dispute as to whether the foreclosing lender negotiated | ||||||
4 | with the eligible foreclosed borrower in good faith. The | ||||||
5 | Secretary may appoint any person the Secretary deems | ||||||
6 | qualified to act as a volunteer arbitrator. | ||||||
7 | (3) The volunteer arbitrator may request additional | ||||||
8 | documents or appearances
from either the foreclosing | ||||||
9 | lender or the eligible foreclosed borrower prior to making | ||||||
10 | a determination. The decision of the arbitrator is binding | ||||||
11 | on both the foreclosing lender and the eligible foreclosed | ||||||
12 | borrower. | ||||||
13 | (4) The appointed arbitrator shall act as a volunteer | ||||||
14 | and may not charge any person
for the arbitrator's services | ||||||
15 | or costs related to the arbitration. | ||||||
16 | (c) Good-faith negotiation by foreclosing lender. | ||||||
17 | (1) A foreclosing lender has not negotiated in good | ||||||
18 | faith unless it offers in writing to modify the terms of | ||||||
19 | repayment of the eligible foreclosed loan to permit the | ||||||
20 | eligible foreclosed borrower to make monthly payments that | ||||||
21 | the borrower would have had the reasonable ability to pay | ||||||
22 | as of the date the loan was originated or, if the | ||||||
23 | borrower's income and financial resources have increased | ||||||
24 | since the loan was originated, monthly payments that the | ||||||
25 | borrower has the current reasonable ability to pay. | ||||||
26 | (2) For purposes of this Section, "monthly payments" |
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1 | includes principal, interest,
real estate taxes, | ||||||
2 | homeowner's insurance, assessments, and mortgage insurance | ||||||
3 | premiums, as applicable. | ||||||
4 | (3) For purposes of this Section, "reasonable ability | ||||||
5 | to pay" shall be determined
based on the following: | ||||||
6 | (A) the income and financial resources available | ||||||
7 | to the borrower at the time the loan was originated, | ||||||
8 | provided that tax returns, payroll receipts, bank | ||||||
9 | records, or other similarly reliable documents that | ||||||
10 | verify the borrower's income and financial resources | ||||||
11 | at the time of origination shall replace unverified | ||||||
12 | statements of income or financial resources contained | ||||||
13 | in the loan application, and the verified information | ||||||
14 | shall serve as the basis for computing the borrower's | ||||||
15 | reasonable ability to make monthly payments; or | ||||||
16 | (B) if the borrower's income and other financial | ||||||
17 | resources have increased since the loan was | ||||||
18 | originated, the borrower's current income and other | ||||||
19 | financial resources to the extent the information can | ||||||
20 | be verified by tax returns, payroll receipts, bank | ||||||
21 | records, or other similarly reliable documents. | ||||||
22 | (4) There is a presumption that the borrower has the | ||||||
23 | reasonable ability to pay if the monthly payments do not | ||||||
24 | exceed a combined debt-to-income ratio of 41% based on the | ||||||
25 | borrower's documented and verified monthly gross income, | ||||||
26 | provided the borrower has sufficient residual income as |
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1 | defined in title 38, Code of Federal Regulations, Section | ||||||
2 | 36.4337(e).
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3 | (735 ILCS 5/15-1835 new)
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4 | Sec. 15-1835. Notice of right to deferment. | ||||||
5 | (a) Notice requirement; form and delivery of notice. Every | ||||||
6 | foreclosing lender shall send to each borrower who has an | ||||||
7 | eligible foreclosed loan a notice of right to deferment. The | ||||||
8 | notice of right to deferment shall be in the form of, and | ||||||
9 | subject to the delivery requirements specified in this Part. | ||||||
10 | The notice of right to deferment must also indicate an address | ||||||
11 | at which the foreclosing lender will accept service of an | ||||||
12 | affidavit of deferment under paragraph (b) of Section 15-1815. | ||||||
13 | No notice is required for a foreclosure commenced on or before | ||||||
14 | the effective date. | ||||||
15 | (b) Content. The notice required by this Section must | ||||||
16 | appear substantially as follows: | ||||||
17 | "Emergency Help For Homeowners in Foreclosure: | ||||||
18 | IMPORTANT: You are eligible to have the foreclosure of | ||||||
19 | your home stopped until at least (end of deferment period). | ||||||
20 | The State of Illinois recently passed a law that lets | ||||||
21 | homeowners stop a judicial sale. | ||||||
22 | To qualify, you must currently live at the home in | ||||||
23 | foreclosure and intend to live at the home until the end of | ||||||
24 | the deferment period.
You will also need to complete and | ||||||
25 | sign a special form (called an "affidavit") and
provide |
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1 | that affidavit to us at the following address: (insert | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | address in the State of
Illinois). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | There are many government agencies and nonprofit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | organizations that can help
you complete this affidavit. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | For the name and telephone number of an
organization near | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | you, please call the Consumer Hotline of the Illinois | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Department of Financial and Professional Regulation
at | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | (insert telephone number and Web site). The State does not | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | guarantee the advice of
these agencies. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10 | Do not delay dealing with the foreclosure because your | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11 | options for foreclosure
deferment end with the judicial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12 | sale."
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13 | (735 ILCS 5/15-1840 new)
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14 | Sec. 15-1840. Bad faith or reckless violation. A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15 | foreclosing lender who acts in bad faith or recklessly in | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16 | violation of Sections 15-1810 to 15-1835 shall be liable to a | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
17 | person injured by the violation for actual damages, statutory | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18 | damages of up to $25,000, punitive damages in an amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
19 | determined by the court, costs, and reasonable attorney's fees.
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20 | Section 99. Effective date. This Act takes effect 7 days | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
21 | after becoming law.
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