SB3962 96TH GENERAL ASSEMBLY

LRB096 24065 AJO 43482 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB3962

Introduced 11/4/2010, by Sen. Rickey R. Hendon

SYNOPSIS AS INTRODUCED:

735 ILCS 5/15-1110 new

Amends the Code of Civil Procedure. Provides for a moratorium stay on all pending residential real estate mortgage foreclosures filed by lending institutions, subject to a review by the Attorney General of the practices and procedures of each lending institution to determine whether the lending institution properly uses genuine, accurate, properly executed, and appropriate documents that are properly processed, include full and accurate accountings, and are in full compliance with applicable federal and State laws and regulations. Provides definitions. Creates within the Office of the Attorney General, the Office for the Monitoring of Residential Real Estate Mortgage Foreclosures headed up by the Mortgage Foreclosure Monitor, appointed by the Attorney General. Provides that the Attorney General will have the power to: administer this program; issue reports about lending institutions; make recommendations to the General Assembly; obtain necessary documents, subpoena documents, and engage in related activities. Provides that any delay caused by this process shall toll any statutory or contractual time requirements. Effective immediately.

A BILL FOR

AN ACT concerning civil law.

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

Section 5. The Code of Civil Procedure is amended by adding Section 15-1110 as follows:

(735 ILCS 5/15-1110 new)

Sec. 15-1110. Residential real estate foreclosure moratorium.

(a) Findings. The General Assembly finds that:

(1) The significant number of residential real estate foreclosures in Illinois in recent years have resulted in serious, deleterious effects upon the individuals and families whose residences were in foreclosure, the value of residential properties that are not in foreclosure, and the overall Illinois economy.

(2) The existence and use of insufficient or false documents in mortgage foreclosures is an abuse against mortgagors perpetrated by lending institutions and other mortgage holders to foreclose on mortgages and this abuse exacerbated the harm done to individuals and families through foreclosures.

(3) The most effective way to make certain that no other residential real estate is improperly foreclosed upon in Illinois is for there to be a moratorium on foreclosures and to provide for a review of the practices and procedures employed by lending institutions that have pending mortgage foreclosure actions and that have foreclosure actions that are ready to be filed, to determine whether the practices and procedures employed by those lending institutions properly use genuine, accurate, properly executed, and appropriate documents that are properly processed, include full and accurate accountings, and are in full compliance with all applicable federal and State laws and regulations.

(b) Definitions. For purposes of this Section:

"Documents" means all pleadings, motions, court documents, mortgages, mortgage notes, lien documents, calculations, accountings, appraisals, papers, or data, whether maintained on paper or in an electronic format.

"Foreclosure" means a mortgage foreclosure action to foreclose on residential real estate.

"Monitor" means the Mortgage Foreclosure Monitor position created by this Section.

"Lending institution" means any bank, bank holding company, credit union, trust company, savings bank, national banking association, savings and loan association, building and loan association, mortgage banker or other lending institution which customarily provides service or otherwise aids in the financing of home mortgages, or any holding company for any of the foregoing. The term "lending institution" includes any agent or assignee of the lending institution.

(c) Stay. Any action to foreclose a mortgage on residential real estate filed by a lending institution that is pending on the effective date of this amendatory Act of the 96th General Assembly is automatically stayed and shall remain stayed until the Attorney General issues a report concerning the lending institution pursuant to this Section.

(d) Mortgage Foreclosure Monitor. There is created in the Office of the Attorney General the Office for the Monitoring of Residential Real Estate Mortgage Foreclosures. The Attorney General shall appoint a Mortgage Foreclosure Monitor, who shall be an attorney licensed to practice in Illinois. The Office for the Monitoring of Residential Real Estate Mortgage Foreclosures shall be comprised of the Mortgage Foreclosure Monitor and such assistant attorneys general and other staff as are deemed necessary by the Attorney General.

(e) Powers of Monitor. Through the Mortgage Foreclosure Monitor, the Attorney General shall have the power:

(1) to establish and administer a program to review and monitor pending residential real estate mortgage foreclosure actions filed by lending institutions to determine that the practices and procedures of the lending institutions that filed the pending residential real estate mortgage foreclosure actions were sufficient to:

(A) safeguard against premature filing of a residential real estate mortgage foreclosure action;

(B) provide that all those mortgagors who have a mortgage with that lending institution and who reside in residential real estate receive all notices, forms, documents, and opportunities provided by federal or State law or regulation so as to avoid foreclosure and to provide, after a foreclosure action is filed, to those mortgagors full information about and access to available legal assistance, mortgagor assistance, and remedies in foreclosure;

(C) provide legitimate and accurate calculations and accountings pertaining to fees, escrow accounts, taxes, insurance, and any other monies of the lending institution that are held by or owed to the lending institution; and

(D) prevent fraud of any type that adversely affects a mortgagor or the public interest.

(2) to issue a report about each lending institution subject to this Section and its practices and procedures concerning residential real estate mortgage foreclosures, which shall include findings and conclusions that are based on the monitor's review of that lending institution's practices and procedures for residential real estate mortgage foreclosures that:

(A) there appears no just cause to continue the moratorium stay on mortgage foreclosure actions filed by that lending institution or to prevent that lending institution from continuing to file residential real estate foreclosure actions; or

(B) the practices and procedures of the lending institution were found to be deficient in specified respects and what steps that lending institution must take before a report described in subparagraph (A) can be issued.

(3) to resolve disputes involving an adverse report about a lending institution or in response to a request for review initiated by the lending institution, by informally resolving the dispute or by issuing a revised or subsequent report; except that the Attorney General may not issue any report that only concerns a specific matter in an individual mortgage foreclosure action that has been filed;

(4) to respond to informal inquiries made by the public;

(5) to make recommendations to the General Assembly concerning ways to improve the laws concerning the residential real estate mortgage foreclosure process;

(6) to develop and make available on the Attorney General's website or by other means an electronic database of the reports issued about the lending institutions subject to this Section;

(7) to promulgate rules and emergency rules to implement these powers.

(f) Records. A lending institution must submit all documents and records to the Attorney General in order for the Attorney General to determine that generally the lending institution:

(1) utilizes documents in foreclosures that are genuine, accurate, properly executed, and appropriate;

(2) utilizes documents that are legally sufficient to give rise to the rights or remedies being asserted by the lending institution asserting those rights or remedies pursuant to those documents; and

(3) utilizes calculations pertaining to escrow accounts, taxes, insurance premiums, and any other monies of or credits due to the mortgagor that are accurately made or properly assessed by the lending institution, or its agents or assigns.

(g) Record production. Any document or other matter requested by the Attorney General, pursuant to this Section, from any lending institution or any party in a foreclosure action or a proposed foreclosure action shall be delivered to the Attorney General within a reasonable time, but in no event later than 28 days after the request is made by the Attorney General.

(h) To accomplish the objectives and to carry out the duties prescribed by this Section, the Monitor, in addition to other powers conferred upon him or her by this Section, may request that subpoenas be issued by the Attorney General in accordance with the provisions of this Section. Service by the Attorney General of any subpoena upon any person shall be made:

(1) personally by delivery of a duly executed copy thereof to the person to be served, or in the case of a public body, in the manner provided in Section 2-211; or

(2) by mailing by certified mail a duly executed copy thereof to the person to be served at his or her last known abode or, in the case of a public body, to its principal place of business.

(i) If any person or public body fails or refuses to obey any subpoena issued pursuant to this Section, the Attorney General may file a complaint in the circuit court to:

(1) obtain compliance with the subpoena; and

(2) obtain such other relief as may be required.

(j) Effect of stay. On and after the effective date of this amendatory Act of the 96th General Assembly, no action to foreclose a mortgage on residential real estate may be filed by a lending institution until the Attorney General has issued a report that concludes that there is no just cause to continue the moratorium stay as to that lending institution pursuant to this Section. The submission of all documents required by the Attorney General concerning any proposed action to foreclose a mortgage on residential real estate by a lending institution shall toll any statutory or contractual time requirement that is not able to be complied with or met because of the requirements of this Section or the passage of time prior to the issuance of a report of the Attorney General concerning that lending institution pursuant to this Section.

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