Public Act 099-0660
 
SB2677 EnrolledLRB099 16934 EGJ 41281 b



    AN ACT concerning regulation.

 
    Be it enacted by the People of the State of Illinois, 
represented in the General Assembly: 



 
    Section 5. The Residential Real Property Disclosure Act is 
amended  by changing Section 70 as follows:
 
    (765 ILCS 77/70)
    Sec. 70. Predatory lending database program.
    (a) As used in this Article:
    "Adjustable rate mortgage" or "ARM" means a closed-end 
mortgage transaction that allows adjustments of the loan 
interest rate during the first 3 years of the loan term.
    "Borrower" means a person seeking a mortgage loan.

    "Broker" means a "broker" or "loan broker", as defined in 
subsection (p) of  Section 1-4 of the Residential Mortgage 
License Act of 1987.
    "Closing agent" means an individual assigned by a title 
insurance company or a broker or  originator to ensure that the 
execution of documents related to the closing of a real estate 
sale or the refinancing of a real estate loan and the 
disbursement of closing funds are in conformity with the 
instructions of the entity financing the transaction.

    "Counseling" means in-person counseling provided by a 
counselor employed by a HUD-approved counseling agency to all 
borrowers, or documented telephone counseling where a hardship 
would be imposed on one or more borrowers. A hardship shall 
exist in instances in which the borrower is confined to his or 
her home due to medical conditions, as verified in writing by a 
physician, or the borrower resides 50 miles or more from the 
nearest participating HUD-approved housing counseling agency.  
In instances of telephone counseling, the borrower must supply 
all necessary documents to the counselor at least 72 hours 
prior to the scheduled telephone counseling session.
    "Counselor" means a counselor employed by a HUD-approved 
housing counseling agency.
    "Credit score" means a credit risk score as defined by the 
Fair Isaac Corporation, or its successor, and reported under 
such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE" 
by one or more of the following credit reporting agencies or 
their successors: Equifax, Inc., Experian Information 
Solutions, Inc., and TransUnion
LLC. If the borrower's credit 
report contains credit scores from 2 reporting agencies, then 
the broker or loan originator shall report the lower score.  If 
the borrower's credit report contains credit scores from 3 
reporting agencies, then the broker or loan originator shall 
report the middle score.

    "Department" means the Department of Financial and 
Professional Regulation.

    "Exempt person or entity" means that term as it is defined 
in subsections (d)(1), (d)(1.5), and (d)(1.8) of Section 1-4 of 
the Residential Mortgage License Act of 1987.

    "First-time homebuyer" means a borrower who has not held an 
ownership interest in residential property.

    "HUD-approved counseling" or "counseling" means counseling 
given to a borrower by a counselor employed by a HUD-approved 
housing counseling agency.
    "Interest only" means a closed-end loan that permits one or 
more payments of interest without any reduction of the 
principal balance of the loan, other than the first payment on 
the loan.
    "Lender" means that term as it is defined in subsection (g) 
of Section 1-4 of the Residential Mortgage License Act of 1987.

    "Licensee" means that term as it is defined in subsection 
(e) of Section 1-4 of the Residential Mortgage License Act of 
1987.

    "Mortgage loan" means that term as it is defined in 
subsection (f) of Section 1-4 of the Residential Mortgage 
License Act of 1987.

    "Negative amortization" means an amortization method under 
which the outstanding balance may increase at any time over the 
course of the loan because the regular periodic payment does 
not cover the full amount of interest due.
    "Originator" means a "loan originator" as defined in 
subsection (hh) of Section 1-4 of the Residential Mortgage 
License Act of 1987, except an exempt person, and means a 
"mortgage loan originator" as defined in subsection (jj) of 
Section 1-4 of the Residential Mortgage License Act of 1987, 
except an exempt person.
    "Points and fees" has the meaning ascribed to that term in 
Section 10 of the High Risk Home Loan Act.
    "Prepayment penalty" means a charge imposed by a lender 
under a mortgage note or rider when the loan is paid before the 
expiration of the term of the loan.
    "Refinancing" means a loan secured by the borrower's or 
borrowers' primary residence where the proceeds are not used as 
purchase money for the residence.
    "Title insurance company" means any domestic company 
organized under the laws of this State for the purpose of 
conducting the business of guaranteeing or insuring titles to 
real estate and any title insurance company organized under the 
laws of another State, the District of Columbia, or a foreign 
government and authorized to transact the business of 
guaranteeing or insuring titles to real estate in this State.

    (a-5) A predatory lending database program shall be 
established within Cook County. The program shall be 
administered in accordance with this Article. The inception 
date of the program shall be July 1, 2008.
 A predatory lending


database program shall be expanded to include Kane, Peoria, and 
Will counties.  The

inception date of the expansion of the 
program as it applies to Kane, Peoria, and Will

counties shall 
be July 1, 2010. Until the inception date, none of the duties, 
obligations, contingencies, or consequences of or from the 
program shall be imposed. The program shall apply to all 
mortgage applications that are governed by this Article and 
that are made or taken on or after the inception of the 
program.

    (b) The database created under this program shall be 
maintained and administered by the Department. The database 
shall be designed to allow brokers, originators, counselors, 
title insurance companies, and closing agents to submit 
information to the database online. The database shall not be 
designed to allow those entities to retrieve information from 
the database, except as otherwise provided in this Article. 
Information submitted by the broker or originator to the 
Department may be used to populate the online form submitted by 
a counselor, title insurance company, or closing agent.
    (c) Within 10 business days after taking a mortgage 
application, the broker or originator for any mortgage on 
residential property within the program area must submit to the 
predatory lending database all of the information required 
under Section 72 and any other information required by the 
Department by rule. Within 7 business days after receipt of the 
information, the Department shall compare that information to 
the housing

counseling standards in Section 73
 and issue to the 
borrower and the broker or originator a determination of 
whether counseling is recommended for the borrower. The 
borrower may not waive counseling. If at any time after 
submitting the information required under Section 72 the broker 
or originator (i) changes the terms of the loan or (ii) issues 
a new commitment to the borrower, then, within 5 business days 
thereafter, the broker or originator shall re-submit all of the 
information required under Section 72 and, within 4 business 
days after receipt of the information re-submitted by the 
broker or originator, the Department shall compare that 
information to the housing
 counseling standards in Section 73
 
and shall issue to the borrower and the broker or originator a 
new determination of whether re-counseling
 is recommended for 
the borrower based on the information re-submitted by the 
broker or originator. The Department shall require 
re-counseling if the loan terms have been modified to meet 
another counseling standard in Section 73, or if the broker has 
increased the interest rate by more than 200 basis points.

    (d) If the Department recommends counseling for the 
borrower under subsection (c), then the Department shall notify 
the borrower  of all participating HUD-approved counseling 
agencies located within the State and direct the borrower to 
interview with a counselor associated with one of those 
agencies. Within 10 business days after receipt of the notice 
of HUD-approved counseling agencies, it is the borrower's 
responsibility to select one of those agencies and shall engage 
in an interview with  a counselor associated with that agency. 
The selection must take place and the appointment for the 
interview must be set within 10 business days, although the 
interview may take place beyond the 10 business day period. 
Within 7 business days after interviewing the borrower, the 
counselor must submit to the predatory lending database all of 
the information required under Section 74 and any other 
information required by the Department by rule. Reasonable and 
customary costs not to exceed $300
 associated with counseling 
provided under the program shall be paid by the broker or 
originator and shall not be charged back to, or recovered from, 
the borrower. The Department shall annually calculate to the 
nearest dollar an adjusted rate for inflation. A counselor 
shall not recommend or suggest that a borrower contact any 
specific mortgage origination company, financial institution, 
or entity that deals in mortgage finance to obtain a loan, 
another quote, or for any other reason related to the specific 
mortgage transaction; however, a counselor may suggest that the 
borrower seek an opinion or a quote from another mortgage 
origination company, financial institution, or entity that 
deals in mortgage finance. A counselor or housing counseling 
agency that
 in good faith provides counseling shall not be 
liable to a broker or originator or borrower for civil damages, 
except for willful or wanton misconduct on the part of the 
counselor in providing the counseling.
    (e) The broker or originator and the borrower may not take 
any legally binding action concerning the loan transaction 
until the later of the following:
        (1) the Department issues a determination not to 
    recommend HUD-approved
 counseling for the borrower in 
    accordance with subsection (c); or
        (2) the Department issues a determination that 
    HUD-approved
 counseling is recommended for the borrower 
    and the counselor submits all required information to the 
    database in accordance with subsection (d).

    (f) Within 10 business days after closing, the title 
insurance company or closing agent must submit to the predatory 
lending database all of the information required under Section 
76 and any other information required by the Department by 
rule.
    (g) The title insurance company or closing agent shall 
attach to the mortgage a certificate of
compliance with the 
requirements of this Article, as generated by the database. If 
the transaction is exempt, the title insurance company or 
closing agent shall attach to the mortgage a certificate of 
exemption, as generated by the database. If the title insurance 
company or closing agent fails to attach the certificate of 
compliance or exemption, whichever is required, then the 
mortgage is not recordable. In addition, if any lis pendens for 
a residential mortgage foreclosure is recorded on the property 
within the program area, a certificate of service must be 
simultaneously recorded that affirms that a copy of the lis 
pendens was filed with the Department. A lis pendens filed 
after July 1, 2016 shall be filed with the Department 
electronically. The lis pendens may be filed with the 
Department either electronically or by filing a hard copy. If 
the certificate of service is not recorded, then the lis 
pendens pertaining to the residential mortgage foreclosure in 
question is not recordable and is of no force and effect.
    (h) All information provided to the predatory lending 
database under the program is confidential and is not subject 
to disclosure under the Freedom of Information Act, except as 
otherwise provided in this Article. Information or documents 
obtained by employees of the Department in the course of 
maintaining and administering the predatory lending database 
are deemed confidential.  Employees are prohibited from making 
disclosure of such confidential information or documents.  Any 
request for production of information from the predatory 
lending database, whether by subpoena, notice, or any other 
source, shall be referred to the Department of Financial and 
Professional Regulation. Any borrower may authorize in writing  
the release of database information. The Department may use the 
information in the database without the consent of the 
borrower: (i) for the purposes of administering and enforcing 
the program; (ii) to provide relevant information to a 
counselor providing counseling to a borrower under the program; 
or (iii) to the appropriate law enforcement agency or the 
applicable administrative agency if the database information 
demonstrates criminal, fraudulent, or otherwise illegal 
activity.

    (i) Nothing in this Article is intended to prevent a 
borrower from making his or her own decision as to whether to 
proceed with a transaction.

    (j) Any person who violates any provision of this Article 
commits an unlawful practice within the meaning of the Consumer 
Fraud and Deceptive Business Practices Act.

    (j-1) A violation of any provision of this Article by a 
mortgage banking licensee or licensed mortgage loan originator 
shall constitute a violation of the Residential Mortgage 
License Act of 1987.
    (j-2) A violation of any provision of this Article by a 
title insurance company, title agent, or escrow agent shall 
constitute a violation of the Title Insurance Act.
    (j-3) A violation of any provision of this Article by a 
housing counselor shall be referred to the Department of 
Housing and Urban Development. 
    (k) During the existence of the program, the Department 
shall submit semi-annual reports to the Governor and to the 
General Assembly by May 1 and November 1 of each year detailing 
its findings regarding the program.  The report shall include, 
by county,  at least the following information for each 
reporting period:
        (1) the number of loans registered with the program;
        (2) the number of borrowers receiving counseling;
        (3) the number of loans closed;
        (4) the number of loans requiring counseling for each 
    of the standards set forth in Section 73;
        (5) the number of loans requiring counseling where the 
    mortgage originator changed the loan terms subsequent to 
    counseling;


        (6) the number of licensed mortgage brokers and loan 
    originators entering information into

the database;
        (7) the number of investigations based on information 
    obtained from the database,

including the number of 
    licensees fined, the number of licenses suspended, and the


    number of licenses revoked;
        (8) a summary of the types of non-traditional mortgage 
    products being offered; and
        (9) a summary of how the Department is actively 
    utilizing the program to combat

mortgage fraud. 
(Source: P.A. 97-891, eff. 1-1-13; 98-1081, eff. 1-1-15.)
 

    Section 99. Effective date. This Act takes effect upon 
becoming law.