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


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 3-1)

Status: (Enrolled) 2017-07-01 - Passed Both Houses [SB0776 Detail]

Download: Illinois-2017-SB0776-Enrolled.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 counseling provided by a
23counselor employed by a HUD-approved counseling agency to all

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1borrowers, or documented telephone counseling where a hardship
2would be imposed on one or more borrowers. A hardship shall
3exist in instances in which the borrower is confined to his or
4her home due to medical conditions, as verified in writing by a
5physician, or the borrower resides 50 miles or more from the
6nearest participating HUD-approved housing counseling agency.
7In instances of telephone counseling, the borrower must supply
8all necessary documents to the counselor at least 72 hours
9prior to the scheduled telephone counseling session.
10 "Counselor" means a counselor employed by a HUD-approved
11housing counseling agency.
12 "Credit score" means a credit risk score as defined by the
13Fair Isaac Corporation, or its successor, and reported under
14such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE"
15by one or more of the following credit reporting agencies or
16their successors: Equifax, Inc., Experian Information
17Solutions, Inc., and TransUnion LLC. If the borrower's credit
18report contains credit scores from 2 reporting agencies, then
19the broker or loan originator shall report the lower score. If
20the borrower's credit report contains credit scores from 3
21reporting agencies, then the broker or loan originator shall
22report the middle score.
23 "Department" means the Department of Financial and
24Professional Regulation.
25 "Exempt person or entity" means that term as it is defined
26in subsections (d)(1), (d)(1.5), and (d)(1.8) of Section 1-4 of

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1the Residential Mortgage License Act of 1987.
2 "First-time homebuyer" means a borrower who has not held an
3ownership interest in residential property.
4 "HUD-approved counseling" or "counseling" means counseling
5given to a borrower by a counselor employed by a HUD-approved
6housing counseling agency.
7 "Interest only" means a closed-end loan that permits one or
8more payments of interest without any reduction of the
9principal balance of the loan, other than the first payment on
10the loan.
11 "Lender" means that term as it is defined in subsection (g)
12of Section 1-4 of the Residential Mortgage License Act of 1987.
13 "Licensee" means that term as it is defined in subsection
14(e) of Section 1-4 of the Residential Mortgage License Act of
151987.
16 "Mortgage loan" means that term as it is defined in
17subsection (f) of Section 1-4 of the Residential Mortgage
18License Act of 1987.
19 "Negative amortization" means an amortization method under
20which the outstanding balance may increase at any time over the
21course of the loan because the regular periodic payment does
22not cover the full amount of interest due.
23 "Originator" means a "loan originator" as defined in
24subsection (hh) of Section 1-4 of the Residential Mortgage
25License Act of 1987, except an exempt person, and means a
26"mortgage loan originator" as defined in subsection (jj) of

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

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

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

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

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1 (1) the Department issues a determination not to
2 recommend HUD-approved counseling for the borrower in
3 accordance with subsection (c); or
4 (2) the Department issues a determination that
5 HUD-approved counseling is recommended for the borrower
6 and the counselor submits all required information to the
7 database in accordance with subsection (d).
8 (f) Within 10 business days after closing, the title
9insurance company or closing agent must submit to the predatory
10lending database all of the information required under Section
1176 and any other information required by the Department by
12rule.
13 (g) The title insurance company or closing agent shall
14attach to the mortgage a certificate of compliance with the
15requirements of this Article, as generated by the database. If
16the transaction is exempt, the title insurance company or
17closing agent shall attach to the mortgage a certificate of
18exemption, as generated by the database. Each certificate of
19compliance or certificate of exemption must contain, at a
20minimum, one of the borrower's names on the mortgage loan and
21the property index number for the subject property. If the
22title insurance company or closing agent fails to attach the
23certificate of compliance or exemption, whichever is required,
24then the mortgage is not recordable. In addition, if any lis
25pendens for a residential mortgage foreclosure is recorded on
26the property within the program area, a certificate of service

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

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

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

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

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

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

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

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