Bill Text: IL SB0776 | 2017-2018 | 100th General Assembly | Engrossed


Bill Title: Amends the Predatory Lending Database Article of the Residential Real Property Disclosure Act. Changes the definition of "counseling" and "originator". Provides that each certificate of compliance with the Article or certificate of exemption must contain, at a minimum, one of the borrower's names on the mortgage loan and the property index number for the subject property. Makes changes concerning the information which must be collected and submitted by the broker or originator and by the title insurance company or closing agent. Effective immediately.

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Engrossed) 2017-05-26 - Final Action Deadline Extended-9(b) May 31, 2017 [SB0776 Detail]

Download: Illinois-2017-SB0776-Engrossed.html



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1 AN ACT concerning civil law.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Residential Real Property Disclosure Act is
5amended by changing Sections 70, 72, and 76 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
10mortgage transaction that allows adjustments of the loan
11interest 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
14subsection (p) of Section 1-4 of the Residential Mortgage
15License Act of 1987.
16 "Closing agent" means an individual assigned by a title
17insurance company or a broker or originator to ensure that the
18execution of documents related to the closing of a real estate
19sale or the refinancing of a real estate loan and the
20disbursement of closing funds are in conformity with the
21instructions of the entity financing the transaction.
22 "Counseling" means in-person or electronic face-to-face
23counseling provided by a counselor employed by a HUD-approved

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1counseling agency to all borrowers, or documented telephone
2counseling where a hardship would be imposed on one or more
3borrowers. A hardship shall exist in instances in which the
4borrower is confined to his or her home due to medical
5conditions, as verified in writing by a physician, or the
6borrower resides 50 miles or more from the nearest
7participating HUD-approved housing counseling agency. In
8instances of telephone counseling, the borrower must supply all
9necessary documents to the counselor at least 72 hours prior to
10the scheduled telephone counseling session.
11 "Counselor" means a counselor employed by a HUD-approved
12housing counseling agency.
13 "Credit score" means a credit risk score as defined by the
14Fair Isaac Corporation, or its successor, and reported under
15such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE"
16by one or more of the following credit reporting agencies or
17their successors: Equifax, Inc., Experian Information
18Solutions, Inc., and TransUnion LLC. If the borrower's credit
19report contains credit scores from 2 reporting agencies, then
20the broker or loan originator shall report the lower score. If
21the borrower's credit report contains credit scores from 3
22reporting agencies, then the broker or loan originator shall
23report the middle score.
24 "Department" means the Department of Financial and
25Professional Regulation.
26 "Exempt person or entity" means that term as it is defined

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1in subsections (d)(1), (d)(1.5), and (d)(1.8) of Section 1-4 of
2the Residential Mortgage License Act of 1987.
3 "First-time homebuyer" means a borrower who has not held an
4ownership interest in residential property.
5 "HUD-approved counseling" or "counseling" means counseling
6given to a borrower by a counselor employed by a HUD-approved
7housing counseling agency.
8 "Interest only" means a closed-end loan that permits one or
9more payments of interest without any reduction of the
10principal balance of the loan, other than the first payment on
11the loan.
12 "Lender" means that term as it is defined in subsection (g)
13of Section 1-4 of the Residential Mortgage License Act of 1987.
14 "Licensee" means that term as it is defined in subsection
15(e) of Section 1-4 of the Residential Mortgage License Act of
161987.
17 "Mortgage loan" means that term as it is defined in
18subsection (f) of Section 1-4 of the Residential Mortgage
19License Act of 1987.
20 "Negative amortization" means an amortization method under
21which the outstanding balance may increase at any time over the
22course of the loan because the regular periodic payment does
23not cover the full amount of interest due.
24 "Originator" means a "loan originator" as defined in
25subsection (hh) of Section 1-4 of the Residential Mortgage
26License Act of 1987, except an exempt person, and means a

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1"mortgage loan originator" as defined in subsection (jj) of
2Section 1-4 of the Residential Mortgage License Act of 1987,
3except an exempt person.
4 "Points and fees" has the meaning ascribed to that term in
5Section 10 of the High Risk Home Loan Act.
6 "Prepayment penalty" means a charge imposed by a lender
7under a mortgage note or rider when the loan is paid before the
8expiration of the term of the loan.
9 "Refinancing" means a loan secured by the borrower's or
10borrowers' primary residence where the proceeds are not used as
11purchase money for the residence.
12 "Title insurance company" means any domestic company
13organized under the laws of this State for the purpose of
14conducting the business of guaranteeing or insuring titles to
15real estate and any title insurance company organized under the
16laws of another State, the District of Columbia, or a foreign
17government and authorized to transact the business of
18guaranteeing or insuring titles to real estate in this State.
19 (a-5) A predatory lending database program shall be
20established within Cook County. The program shall be
21administered in accordance with this Article. The inception
22date of the program shall be July 1, 2008. A predatory lending
23database program shall be expanded to include Kane, Peoria, and
24Will counties. The inception date of the expansion of the
25program as it applies to Kane, Peoria, and Will counties shall
26be July 1, 2010. Until the inception date, none of the duties,

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1obligations, contingencies, or consequences of or from the
2program shall be imposed. The program shall apply to all
3mortgage applications that are governed by this Article and
4that are made or taken on or after the inception of the
5program.
6 (b) The database created under this program shall be
7maintained and administered by the Department. The database
8shall be designed to allow brokers, originators, counselors,
9title insurance companies, and closing agents to submit
10information to the database online. The database shall not be
11designed to allow those entities to retrieve information from
12the database, except as otherwise provided in this Article.
13Information submitted by the broker or originator to the
14Department may be used to populate the online form submitted by
15a counselor, title insurance company, or closing agent.
16 (c) Within 10 business days after taking a mortgage
17application, the broker or originator for any mortgage on
18residential property within the program area must submit to the
19predatory lending database all of the information required
20under Section 72 and any other information required by the
21Department by rule. Within 7 business days after receipt of the
22information, the Department shall compare that information to
23the housing counseling standards in Section 73 and issue to the
24borrower and the broker or originator a determination of
25whether counseling is recommended for the borrower. The
26borrower may not waive counseling. If at any time after

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1submitting the information required under Section 72 the broker
2or originator (i) changes the terms of the loan or (ii) issues
3a new commitment to the borrower, then, within 5 business days
4thereafter, the broker or originator shall re-submit all of the
5information required under Section 72 and, within 4 business
6days after receipt of the information re-submitted by the
7broker or originator, the Department shall compare that
8information to the housing counseling standards in Section 73
9and shall issue to the borrower and the broker or originator a
10new determination of whether re-counseling is recommended for
11the borrower based on the information re-submitted by the
12broker or originator. The Department shall require
13re-counseling if the loan terms have been modified to meet
14another counseling standard in Section 73, or if the broker has
15increased the interest rate by more than 200 basis points.
16 (d) If the Department recommends counseling for the
17borrower under subsection (c), then the Department shall notify
18the borrower of all participating HUD-approved counseling
19agencies located within the State and direct the borrower to
20interview with a counselor associated with one of those
21agencies. Within 10 business days after receipt of the notice
22of HUD-approved counseling agencies, it is the borrower's
23responsibility to select one of those agencies and shall engage
24in an interview with a counselor associated with that agency.
25The borrower must supply all necessary documents, as set forth
26by the counselor, at least 72 hours before the scheduled

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1interview. The selection must take place and the appointment
2for the interview must be set within 10 business days, although
3the interview may take place beyond the 10 business day period.
4Within 7 business days after interviewing the borrower, the
5counselor must submit to the predatory lending database all of
6the information required under Section 74 and any other
7information required by the Department by rule. Reasonable and
8customary costs not to exceed $300 associated with counseling
9provided under the program shall be paid by the broker or
10originator and shall not be charged back to, or recovered from,
11the borrower. The Department shall annually calculate to the
12nearest dollar an adjusted rate for inflation. A counselor
13shall not recommend or suggest that a borrower contact any
14specific mortgage origination company, financial institution,
15or entity that deals in mortgage finance to obtain a loan,
16another quote, or for any other reason related to the specific
17mortgage transaction; however, a counselor may suggest that the
18borrower seek an opinion or a quote from another mortgage
19origination company, financial institution, or entity that
20deals in mortgage finance. A counselor or housing counseling
21agency that in good faith provides counseling shall not be
22liable to a broker or originator or borrower for civil damages,
23except for willful or wanton misconduct on the part of the
24counselor in providing the counseling.
25 (e) The broker or originator and the borrower may not take
26any legally binding action concerning the loan transaction

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1until the later of the following:
2 (1) the Department issues a determination not to
3 recommend HUD-approved counseling for the borrower in
4 accordance with subsection (c); or
5 (2) the Department issues a determination that
6 HUD-approved counseling is recommended for the borrower
7 and the counselor submits all required information to the
8 database in accordance with subsection (d).
9 (f) Within 10 business days after closing, the title
10insurance company or closing agent must submit to the predatory
11lending database all of the information required under Section
1276 and any other information required by the Department by
13rule.
14 (g) The title insurance company or closing agent shall
15attach to the mortgage a certificate of compliance with the
16requirements of this Article, as generated by the database. If
17the transaction is exempt, the title insurance company or
18closing agent shall attach to the mortgage a certificate of
19exemption, as generated by the database. Each certificate of
20compliance or certificate of exemption must contain, at a
21minimum, one of the borrower's names on the mortgage loan and
22the property index number for the subject property. If the
23title insurance company or closing agent fails to attach the
24certificate of compliance or exemption, whichever is required,
25then the mortgage is not recordable. In addition, if any lis
26pendens for a residential mortgage foreclosure is recorded on

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1the property within the program area, a certificate of service
2must be simultaneously recorded that affirms that a copy of the
3lis pendens was filed with the Department. A lis pendens filed
4after July 1, 2016 shall be filed with the Department
5electronically. If the certificate of service is not recorded,
6then the lis pendens pertaining to the residential mortgage
7foreclosure in question is not recordable and is of no force
8and effect.
9 (h) All information provided to the predatory lending
10database under the program is confidential and is not subject
11to disclosure under the Freedom of Information Act, except as
12otherwise provided in this Article. Information or documents
13obtained by employees of the Department in the course of
14maintaining and administering the predatory lending database
15are deemed confidential. Employees are prohibited from making
16disclosure of such confidential information or documents. Any
17request for production of information from the predatory
18lending database, whether by subpoena, notice, or any other
19source, shall be referred to the Department of Financial and
20Professional Regulation. Any borrower may authorize in writing
21the release of database information. The Department may use the
22information in the database without the consent of the
23borrower: (i) for the purposes of administering and enforcing
24the program; (ii) to provide relevant information to a
25counselor providing counseling to a borrower under the program;
26or (iii) to the appropriate law enforcement agency or the

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1applicable administrative agency if the database information
2demonstrates criminal, fraudulent, or otherwise illegal
3activity.
4 (i) Nothing in this Article is intended to prevent a
5borrower from making his or her own decision as to whether to
6proceed with a transaction.
7 (j) Any person who violates any provision of this Article
8commits an unlawful practice within the meaning of the Consumer
9Fraud and Deceptive Business Practices Act.
10 (j-1) A violation of any provision of this Article by a
11mortgage banking licensee or licensed mortgage loan originator
12shall constitute a violation of the Residential Mortgage
13License Act of 1987.
14 (j-2) A violation of any provision of this Article by a
15title insurance company, title agent, or escrow agent shall
16constitute a violation of the Title Insurance Act.
17 (j-3) A violation of any provision of this Article by a
18housing counselor shall be referred to the Department of
19Housing and Urban Development.
20 (k) During the existence of the program, the Department
21shall submit semi-annual reports to the Governor and to the
22General Assembly by May 1 and November 1 of each year detailing
23its findings regarding the program. The report shall include,
24by county, at least the following information for each
25reporting period:
26 (1) the number of loans registered with the program;

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1 (2) the number of borrowers receiving counseling;
2 (3) the number of loans closed;
3 (4) the number of loans requiring counseling for each
4 of the standards set forth in Section 73;
5 (5) the number of loans requiring counseling where the
6 mortgage originator changed the loan terms subsequent to
7 counseling;
8 (6) the number of licensed mortgage brokers and loan
9 originators entering information into the database;
10 (7) the number of investigations based on information
11 obtained from the database, including the number of
12 licensees fined, the number of licenses suspended, and the
13 number of licenses revoked;
14 (8) a summary of the types of non-traditional mortgage
15 products being offered; and
16 (9) a summary of how the Department is actively
17 utilizing the program to combat mortgage fraud.
18(Source: P.A. 98-1081, eff. 1-1-15; 99-660, eff. 7-28-16.)
19 (765 ILCS 77/72)
20 Sec. 72. Originator; required information. As part of the
21predatory lending database program, the broker or originator
22must submit all of the following information for inclusion in
23the predatory lending database for each loan for which the
24originator takes an application:
25 (1) The borrower's name, address, social security

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1 number or taxpayer identification number, date of birth,
2 and income and expense information, including total
3 monthly consumer debt, contained in the mortgage
4 application.
5 (2) The address, permanent index number, and a
6 description of the collateral and information about the
7 loan or loans being applied for and the loan terms,
8 including the amount of the loan, the rate and whether the
9 rate is fixed or adjustable, amortization or loan period
10 terms, and any other material terms.
11 (3) The borrower's credit score at the time of
12 application.
13 (4) Information about the originator and the company
14 the originator works for, including the originator's
15 license number and address, fees being charged, whether the
16 fees are being charged as points up front, the yield spread
17 premium payable outside closing, and other charges made or
18 remuneration required by the broker or originator or its
19 affiliates or the broker's or originator's employer or its
20 affiliates for the mortgage loans.
21 (5) (Blank). Information about affiliated or third
22 party service providers, including the names and addresses
23 of appraisers, title insurance companies, closing agents,
24 attorneys, and realtors who are involved with the
25 transaction and the broker or originator and any moneys
26 received from the broker or originator in connection with

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1 the transaction.
2 (6) All information indicated in connection with the
3 TILA-RESPA Integrated Loan Estimate Disclosure or on the
4 Good Faith Estimate and Truth in Lending statement
5 disclosures given to the borrower by the broker or
6 originator.
7 (7) Annual real estate taxes for the property, together
8 with any assessments payable in connection with the
9 property to be secured by the collateral and the proposed
10 monthly principal and interest charge of all loans to be
11 taken by the borrower and secured by the property of the
12 borrower.
13 (8) Information concerning how the broker or
14 originator obtained the client and the name of its referral
15 source, if any.
16 (9) Information concerning the notices provided by the
17 broker or originator to the borrower as required by law and
18 the date those notices were given.
19 (10) Information concerning whether a sale and
20 leaseback is contemplated and the names of the lessor and
21 lessee, seller, and purchaser.
22 (11) Any and all financing by the borrower for the
23 subject property within 12 months prior to the date of
24 application.
25 (12) Loan information, including interest rate, term,
26 purchase price, down payment, and closing costs.

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1 (13) Whether the buyer is a first-time homebuyer or
2 refinancing a primary residence.
3 (14) Whether the loan permits interest only payments.
4 (15) Whether the loan may result in negative
5 amortization.
6 (16) Whether the total points and fees payable by the
7 borrowers at or before closing will exceed 5%.
8 (17) Whether the loan includes a prepayment penalty,
9 and, if so, the terms of the penalty.
10 (18) Whether the loan is an ARM.
11 All information entered into the predatory lending
12database must be true and correct to the best of the
13originator's knowledge. The originator shall, prior to
14closing, correct, update, or amend the data as necessary. If
15any corrections become necessary after the file has been
16accessed by the closing agent or housing counselor, a new file
17must be entered.
18(Source: P.A. 97-891, eff. 1-1-13; 98-1081, eff. 1-1-15.)
19 (765 ILCS 77/76)
20 Sec. 76. Title insurance company or closing agent; required
21information. As part of the predatory lending database program,
22a title insurance company or closing agent must submit all of
23the following information for inclusion in the predatory
24lending database:
25 (1) The borrower's name, address, social security

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1 number or taxpayer identification number, date of birth,
2 and income and expense information contained in the
3 mortgage application.
4 (2) The address, permanent index number, and a
5 description of the collateral and information about the
6 loan or loans being applied for and the loan terms,
7 including the amount of the loan, the rate and whether the
8 rate is fixed or adjustable, amortization or loan period
9 terms, and any other material terms.
10 (3) Annual real estate taxes for the property, together
11 with any assessments payable in connection with the
12 property to be secured by the collateral and the proposed
13 monthly principal and interest charge of all loans to be
14 taken by the borrower and secured by the property of the
15 borrower as well as any required escrows and the amounts
16 paid monthly for those escrows.
17 (4) All itemizations and descriptions set forth in or
18 in connection with the TILA-RESPA Integrated Closing
19 Disclosure or RESPA settlement statement, including items
20 to be disbursed, payable outside closing "POC" items noted
21 on the statement, and a list of payees and the amounts of
22 their checks.
23 (5) The name and license number of the title insurance
24 company or closing agent together with the name of the
25 agent actually conducting the closing.
26 (6) The names and addresses of all originators,

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1 brokers, appraisers, sales persons, attorneys, and
2 surveyors that are present at the closing.
3 (7) The date of closing, a detailed list of all notices
4 provided to the borrower at closing and the date of those
5 notices, and all information indicated on or in connection
6 with the TILA-RESPA Integrated Loan Estimate Disclosure or
7 on the Truth in Lending statement and Good Faith Estimate
8 disclosures.
9(Source: P.A. 98-1081, eff. 1-1-15.)
10 Section 99. Effective date. This Act takes effect upon
11becoming law.
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