815 ILCS 137/ High Risk Home Loan Act.

(815 ILCS 137/1)

Sec. 1. Short title. This Act may be cited as the High Risk Home Loan Act.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/5)

Sec. 5. Purpose and construction. The purpose of this Act is to protect borrowers who enter into high risk home loans from abuse that occurs in the credit marketplace when creditors and brokers are not sufficiently regulated in Illinois. This Act is to be construed as a borrower protection statute for all purposes. This Act shall be liberally construed to effectuate its purpose.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/10)

Sec. 10. Definitions. As used in this Act:

"Approved credit counselor" means a credit counselor approved by the Director of Financial Institutions.

"Bona fide discount points" means loan discount points that are knowingly paid by the consumer for the purpose of reducing, and that in fact result in a bona fide reduction of, the interest rate or time price differential applicable to the mortgage.

"Borrower" means a natural person who seeks or obtains a high risk home loan.

"Commissioner" means the Commissioner of the Office of Banks and Real Estate.

"Department" means the Department of Financial Institutions.

"Director" means the Director of Financial Institutions.

"Good faith" means honesty in fact in the conduct or transaction concerned.

"High risk home loan" means a consumer credit transaction, other than a reverse mortgage, that is secured by the consumer's principal dwelling if: (i) at the time of origination, the annual percentage rate exceeds by more than 6 percentage points in the case of a first lien mortgage, or by more than 8 percentage points in the case of a junior mortgage, the average prime offer rate, as defined in Section 129C(b)(2)(B) of the federal Truth in Lending Act, for a comparable transaction as of the date on which the interest rate for the transaction is set, or if the dwelling is personal property, then as provided under 15 U.S.C. 1602(bb), as amended, and any corresponding regulation, as amended, (ii) the loan documents permit the creditor to charge or collect prepayment fees or penalties more than 36 months after the transaction closing or such fees exceed, in the aggregate, more than 2% of the amount prepaid, or (iii) the total points and fees payable in connection with the transaction, other than bona fide third-party charges not retained by the mortgage originator, creditor, or an affiliate of the mortgage originator or creditor, will exceed (1) 5% of the total loan amount in the case of a transaction for $20,000 (or such other dollar amount as prescribed by federal regulation pursuant to the federal Dodd-Frank Act) or more or (2) the lesser of 8% of the total loan amount or $1,000 (or such other dollar amount as prescribed by federal regulation pursuant to the federal Dodd-Frank Act) in the case of a transaction for less than $20,000 (or such other dollar amount as prescribed by federal regulation pursuant to the federal Dodd-Frank Act), except that, with respect to all transactions, bona fide loan discount points may be excluded as provided for in Section 35 of this Act. "High risk home loan" does not include a loan that is made primarily for a business purpose unrelated to the residential real property securing the loan or a consumer credit transaction made by a natural person who provides seller financing secured by a principal residence no more than 3 times in a 12-month period, provided such consumer credit transaction is not made by a person that has constructed or acted as a contractor for the construction of the residence in the ordinary course of business of such person.

"Lender" means a natural or artificial person who transfers, deals in, offers, or makes a high risk home loan. "Lender" includes, but is not limited to, creditors and brokers who transfer, deal in, offer, or make high risk home loans. "Lender" does not include purchasers, assignees, or subsequent holders of high risk home loans.

"Office" means the Office of Banks and Real Estate.

"Points and fees" means all items considered to be points and fees under 12 CFR 226.32 (2000, or as initially amended pursuant to Section 1431 of the federal Dodd-Frank Act with no subsequent amendments or editions included, whichever is later); compensation paid directly or indirectly by a consumer or creditor to a mortgage broker from any source, including a broker that originates a loan in its own name in a table-funded transaction, not otherwise included in 12 CFR 226.4; the maximum prepayment fees and penalties that may be charged or collected under the terms of the credit transaction; all prepayment fees or penalties that are incurred by the consumer if the loan refinances a previous loan made or currently held by the same creditor or an affiliate of the creditor; and premiums or other charges payable at or before closing or financed directly or indirectly into the loan for any credit life, credit disability, credit unemployment, credit property, other accident, loss of income, life, or health insurance or payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that insurance premiums or debt cancellation or suspension fees calculated and paid in full on a monthly basis shall not be considered financed by the creditor. "Points and fees" does not include any insurance premium provided by an agency of the federal government or an agency of a state; any insurance premium paid by the consumer after closing; and any amount of a premium, charge, or fee that is not in excess of the amount payable under policies in effect at the time of origination under Section 203(c)(2)(A) of the National Housing Act (12 U.S.C. 1709(c)(2)(A)), provided that the premium, charge, or fee is required to be refundable on a pro-rated basis and the refund is automatically issued upon notification of the satisfaction of the underlying mortgage loan.

"Prepayment penalty" and "prepayment fees or penalties" mean: (i) for a closed-end credit transaction, a charge imposed for paying all or part of the transaction's principal before the date on which the principal is due, other than a waived, bona fide third-party charge that the creditor imposes if the consumer prepays all of the transaction's principal sooner than 36 months after consummation and (ii) for an open-end credit plan, a charge imposed by the creditor if the consumer terminates the open-end credit plan prior to the end of its term, other than a waived, bona fide third-party charge that the creditor imposes if the consumer terminates the open-end credit plan sooner than 36 months after account opening.

"Reasonable" means fair, proper, just, or prudent under the circumstances.

"Servicer" means any entity chartered under the Illinois Banking Act, the Savings Bank Act, the Illinois Credit Union Act, or the Illinois Savings and Loan Act of 1985 and any person or entity licensed under the Residential Mortgage License Act of 1987, the Consumer Installment Loan Act, or the Sales Finance Agency Act who is responsible for the collection or remittance for, or has the right or obligation to collect or remit for, any lender, note owner, or note holder or for a licensee's own account, of payments, interest, principal, and trust items (such as hazard insurance and taxes on a residential mortgage loan) in accordance with the terms of the residential mortgage loan, including loan payment follow-up, delinquency loan follow-up, loan analysis, and any notifications to the borrower that are necessary to enable the borrower to keep the loan current and in good standing.

"Total loan amount" has the same meaning as that term is given in 12 CFR 226.32 and shall be calculated in accordance with the Federal Reserve Board's Official Staff Commentary to that regulation.

(Source: P.A. 99-150, eff. 7-28-15; 99-288, eff. 8-5-15; 99-642, eff. 7-28-16; 100-201, eff. 8-18-17.)

(815 ILCS 137/15)

Sec. 15. Ability to repay. A creditor or broker shall not transfer, deal in, offer, or make a high risk home loan if the creditor or broker does not believe at the time the loan is consummated that the borrower will be able to make the scheduled payments to repay the obligation based upon a consideration of his or her current and expected income, current obligations, employment status, and other financial resources (other than the borrower's equity in the dwelling that secures repayment of the loan). A borrower shall be presumed to be able to repay the loan if, at the time the loan is consummated, or at the time of the first rate adjustment, in the case of a lower introductory interest rate, the borrower's scheduled monthly payments on the loan (including principal, interest, taxes, insurance, and assessments), combined with the scheduled payments for all other disclosed debts, do not exceed 50% of the borrower's monthly gross income.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/20)

Sec. 20. Verification of ability to repay loan. The lender shall verify the borrower's ability to repay the loan in the case of a high risk home loan. The verification shall require, at a minimum, the following:

(1) That the borrower prepare and submit to the lender a personal income and expense statement in a form prescribed by the Commissioner or the Director, who may permit the use of other forms such as the URLA (Fannie Mae Form 1003 (10/92), available from Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, D.C. 20016-2892, and Freddie Mac Form 85 (10/92), available from Freddie Mac at 1101 Pennsylvania Avenue, NW, Suite 950, P.O. Box 37347, Washington, D.C. 20077-0001, no subsequent amendments or editions) and Transmittal Summary (Fannie Mae Form 1077 (3/97), available from Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, D.C. 20016-2892, and Freddie Mac Form 1008 (3/97), available from Freddie Mac at 1101 Pennsylvania Avenue, NW, Suite 950, P.O. Box 37347, Washington, D.C. 20077-0001, no subsequent amendments or editions).

(2) That the borrower's income is verified by means of tax returns, pay stubs, accounting statements, or other prudent means.

(3) That a credit report is obtained regarding the borrower.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/25)

Sec. 25. Good faith dealings; fraudulent or deceptive practices. A lender must act in good faith in all relations with a borrower, including but not limited to, transferring, dealing in, offering, or making a high risk home loan.

No lender shall employ fraudulent or deceptive acts or practices in the making of a high risk home loan, including deceptive marketing and sales efforts.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/30)

Sec. 30. No prepayment penalty. A high risk home loan may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal before the date on which the principal is due. For purposes of this Section, any method of computing a refund of unearned scheduled interest is a prepayment penalty if it is less favorable to the consumer than the actuarial method as that term is defined by Section 933(d) of the federal Housing and Community Development Act of 1992, 15 U.S.C. 1615(d).

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(815 ILCS 137/35)

Sec. 35. Bona fide discount points. For the purposes of determining whether the amount of points and fees meets the definition of "high risk home loan" under this Act, either the amounts described in paragraph (1) or (2) of this Section, but not both, shall be excluded:

(1) Up to and including 2 bona fide discount points payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage's interest rate will be discounted does not exceed by more than one percentage point:

(A) the average prime offer rate, as defined in Section 129C of the federal Truth in Lending Act (15 U.S.C. 1639); or

(B) if secured by a personal property loan, the average rate on a loan in connection with which insurance is provided under Title I of the National Housing Act (12 U.S.C. 1702 et seq.).

(2) Unless 2 bona fide discount points have been excluded under paragraph (1), up to and including one bona fide discount point payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage's interest rate will be discounted does not exceed by more than 2 percentage points:

(A) the average prime offer rate, as defined in Section 129C of the federal Truth in Lending Act (15 U.S.C. 1639); or

(B) if secured by a personal property loan, the average rate on a loan in connection with which insurance is provided under Title I of the National Housing Act (12 U.S.C. 1702 et seq.).

Paragraphs (1) and (2) shall not apply to discount points used to purchase an interest rate reduction unless the amount of the interest rate reduction purchased is reasonably consistent with established industry norms and practices for secondary mortgage market transactions.

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(815 ILCS 137/35.5)

Sec. 35.5. No balloon payments. No high risk home loan may contain a scheduled payment that is more than twice as large as the average of earlier scheduled payments. This Section does not apply when the payment schedule is adjusted to the seasonal or irregular income of the consumer.

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(815 ILCS 137/40)

Sec. 40. Pre-paid insurance products and warranties. No lender shall transfer, deal in, offer, or make a high risk home loan that finances a single premium credit life, credit disability, credit unemployment, or any other life or health insurance, directly or indirectly. Insurance calculated and paid on a monthly basis shall not be considered to be financed by the lender.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/45)

Sec. 45. Refinancing prohibited in certain cases. No lender shall refinance any high risk home loan where such refinancing charges additional points and fees within a 12-month period after the original loan agreement was signed, unless the refinancing results in a tangible net benefit to the borrower.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/55)

Sec. 55. Financing of points and fees. No lender shall transfer, deal in, offer, or make a high risk home loan that finances, directly or indirectly, any points and fees. No lender shall transfer, deal in, offer, or make a high risk home loan that finances any prepayment fee or penalty payable by the consumer in a refinancing transaction if the creditor or an affiliate of the creditor is the noteholder of the note being refinanced.

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(815 ILCS 137/60)

Sec. 60. Payments to contractors. No lender shall make a payment of any proceeds of a high risk home loan directly to a contractor under a home improvement contract other than:

(1) by instrument payable to the borrower or payable jointly to the borrower and contractor; or

(2) at the election of the borrower, by a third-party escrow agent in accordance with the terms established in a written agreement that is signed by the borrower, the lender, and the contractor before the date of payment.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/65)

Sec. 65. Negative amortization. No lender shall transfer, deal in, offer, or make a high risk home loan, other than a loan secured only by a reverse mortgage, with terms under which the outstanding balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of the interest due, unless the negative amortization is the consequence of a temporary forbearance sought by the borrower.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/70)

Sec. 70. Negative equity. No lender shall transfer, deal in, offer, or make a high risk home loan where the loan amount exceeds the value of the property securing the loan.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/80)

Sec. 80. Late payment fee. A lender shall not transfer, deal in, offer, or make a high risk home loan that provides for a late payment fee, except under the following conditions:

(1) the late payment fee shall not be in excess of 4% of the amount of the payment past due;

(2) the late payment fee shall only be assessed for a payment past due for 15 days or more;

(3) the late payment fee shall not be imposed more than once with respect to a single late payment;

(4) a late payment fee that the lender has collected shall be reimbursed if the borrower presents proof of having made a timely payment; and

(5) a lender shall treat each payment as posted on the same business day as it was received by the lender, servicer, or lender's agent or at the address provided to the borrower by the lender, servicer, or lender's agent for making payments.

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(815 ILCS 137/80.5)

Sec. 80.5. Coordination with subsequent late fees. If a payment is otherwise a full payment for the applicable period, is paid on its due date or within an applicable grace period, and the only delinquency or insufficiency of payment is attributable to any late fee or delinquency charge assessed on any earlier payment, no late fee or delinquency charge may be imposed on the payment.

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(815 ILCS 137/80.6)

Sec. 80.6. Failure to make installment payment. If, in the case of a loan agreement the terms of which provide that any payment shall first be applied to any past principal balance, the consumer fails to make an installment payment and the consumer subsequently resumes making installment payments but has not paid all past due installments, the creditor may impose a separate late payment charge or fee for any principal due (without deduction due to late fees or related fees) until the default is cured.

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(815 ILCS 137/85)

Sec. 85. Payment compounding. No lender shall transfer, deal in, offer, or make a high risk home loan that includes terms under which more than 2 periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/90)

Sec. 90. Call provision. No lender shall transfer, deal in, offer, or make a high risk home loan that contains a provision that permits the lender, in its sole discretion, to accelerate the indebtedness, provided that this provision does not prohibit acceleration of a loan in good faith due to a borrower's failure to abide by the material terms of the loan.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/90.5)

Sec. 90.5. Modification and deferral fees prohibited. A lender, successor in interest, assignee, or any agent of any of the foregoing may not charge a consumer any fee to modify, renew, extend, or amend a high risk home loan or to defer any payment due under the terms of the loan.

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(815 ILCS 137/95)

Sec. 95. Disclosure prior to making a high risk home loan. A lender shall not transfer, deal in, offer, or make a high risk home loan unless the lender has given the following notice or a substantially similar notice in writing, to the borrower, acknowledged in writing and signed by the borrower not later than the time the notice is required under the notice provision contained in 12 CFR 226.31(c):

NOTICE TO BORROWER

YOU SHOULD BE AWARE THAT YOU MIGHT BE ABLE TO OBTAIN A LOAN AT A LOWER COST. YOU SHOULD SHOP AROUND AND COMPARE LOAN RATES AND FEES. LOAN RATES AND CLOSING COSTS AND FEES VARY BASED ON MANY FACTORS, INCLUDING YOUR PARTICULAR CREDIT AND FINANCIAL CIRCUMSTANCES, YOUR EMPLOYMENT HISTORY, THE LOAN-TO-VALUE REQUESTED, AND THE TYPE OF PROPERTY THAT WILL SECURE YOUR LOAN. THE LOAN RATE AND FEES COULD ALSO VARY BASED ON WHICH LENDER OR BROKER YOU SELECT. IF YOU ACCEPT THE TERMS OF THIS LOAN, THE LENDER WILL HAVE A MORTGAGE LIEN ON YOUR HOME. YOU COULD LOSE YOUR HOME AND ANY MONEY YOU PUT INTO IT IF YOU DO NOT MEET YOUR PAYMENT OBLIGATIONS UNDER THE LOAN. YOU SHOULD CONSULT AN ATTORNEY-AT-LAW AND AN APPROVED CREDIT COUNSELOR OR OTHER EXPERIENCED FINANCIAL ADVISOR REGARDING THE RATE, FEES, AND PROVISIONS OF THIS LOAN BEFORE YOU PROCEED. A LIST OF APPROVED CREDIT COUNSELORS IS AVAILABLE BY CONTACTING EITHER THE ILLINOIS DEPARTMENT OF FINANCIAL INSTITUTIONS OR THE ILLINOIS OFFICE OF BANKS AND REAL ESTATE. YOU ARE NOT REQUIRED TO COMPLETE THIS LOAN AGREEMENT MERELY BECAUSE YOU HAVE RECEIVED THIS DISCLOSURE OR HAVE SIGNED A LOAN APPLICATION. ALSO, YOUR PAYMENTS ON EXISTING DEBTS CONTRIBUTE TO YOUR CREDIT RATINGS. YOU SHOULD NOT ACCEPT ANY ADVICE TO IGNORE YOUR REGULAR PAYMENTS TO YOUR EXISTING LENDERS.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/100)

Sec. 100. Counseling prior to perfecting foreclosure proceedings.

(a) If a high risk home loan becomes delinquent by more than 30 days, the servicer shall send a notice advising the borrower that he or she may wish to seek approved credit counseling.

(b) The notice required in subsection (a) shall, at a minimum, include the following language:

"YOUR LOAN IS OR WAS MORE THAN 30 DAYS PAST DUE. YOU MAY BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY BE IN YOUR BEST INTEREST TO SEEK APPROVED CREDIT COUNSELING. A LIST OF APPROVED CREDIT COUNSELORS MAY BE OBTAINED FROM EITHER THE ILLINOIS DEPARTMENT OF FINANCIAL INSTITUTIONS OR THE ILLINOIS OFFICE OF BANKS AND REAL ESTATE."

(c) If, within 15 days after mailing the notice provided for under subsection (b), a lender, servicer, or lender's agent is notified in writing by an approved credit counselor and the approved credit counselor advises the lender, servicer, or lender's agent that the borrower is seeking approved credit counseling, then the lender, servicer, or lender's agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for 30 days after the date of that notice. Only one such 30-day period of forbearance is allowed under this Section per subject loan.

(d) If, within the 30-day period provided under subsection (c), the lender, servicer, or lender's agent, the approved credit counselor, and the borrower agree to a debt management plan, then the lender, servicer, or lender's agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for as long as the debt management plan is complied with by the borrower.

The agreed debt management plan must be in writing and signed by the lender, servicer, or lender's agent, the approved credit counselor, and the borrower. No modification of an approved debt management plan can be made without the mutual agreement of the lender, servicer, or lender's agent, the approved credit counselor, and the borrower.

Upon written notice to the lender, servicer, or lender's agent, the borrower may change approved credit counselors.

(e) If the borrower fails to comply with the agreed debt management plan, then nothing in this Section shall be construed to impair the legal right of the lender, servicer, or lender's agent to enforce the contract.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/105)

Sec. 105. Right to cure.

(a) Before an action is filed to foreclose or collect money due pursuant to a high risk home loan or before other action is taken to seize or transfer ownership of property subject to a high risk home loan, the lender or lender's assignee of the loan shall deliver to the borrower a notice of the right to cure the default, informing the borrower of all of the following:

(1) The nature of the default.

(2) The borrower's right to cure the default by paying the sum of money required, provided that a lender or assignee shall accept any partial payment made or tendered in response to the notice. If the amount necessary to cure the default will change within 30 days of the notice due to the application of a daily interest rate or the addition of late fees, as allowed by the Act, the notice shall give sufficient information to enable the borrower to calculate the amount at any point within the 30-day period.

(3) The date by which the borrower may cure the default to avoid a court action, acceleration and initiation of foreclosure, or other action to seize the property, which date shall not be less than 30 days after the date the notice is delivered, and the name, address, and telephone number of a person to whom the payment or tender shall be made.

(4) That if the borrower does not cure the default by the date specified, the lender or assignee may file an action for money due or take steps to terminate the borrower's ownership in the property by requiring payment in full of the high risk home loan and commencing a foreclosure proceeding or other action to seize the property.

(5) The name, address, and telephone number of a person whom the borrower may contact if the borrower disagrees with the assertion that a default has occurred or the correctness of the calculation of the amount required to cure the default.

(b) If a lender or assignee asserts that grounds for acceleration exist and requires the payment in full of all sums secured by the high risk home loan, the borrower or anyone authorized to act on the borrower's behalf may, at any time before the title is transferred by means of foreclosure, by judicial proceeding and sale, or other means, cure the default, and reinstate the high risk home loan. Cure of the default shall reinstate the borrower to the same position as if the default had not occurred and shall nullify, as of the date of the cure, an acceleration of any obligation under the high risk home loan arising from the default.

(c) To cure a default under this Section, a borrower shall not be required to pay any charge, fee, or penalty attributable to the exercise of the right to cure a default, other than the fees specifically allowed by this subsection. The borrower shall not be liable for any attorney fees relating to the default that are incurred by the lender or assignee prior to or during the 30-day period set forth in subsection (a) of this Section, nor for any such fees in excess of $100 that are incurred by the lender or assignee after the expiration of the 30-day period but before the lender or assignee files a foreclosure or other judicial action or takes other action to seize or transfer ownership of the real estate. After the lender or assignee files a foreclosure or other judicial action or takes other action to seize or transfer ownership of the real estate, the borrower shall only be liable for attorney fees that are reasonable and actually incurred by the lender or assignee, based on a reasonable hourly rate and a reasonable number of hours.

(d) If a default is cured prior to the initiation of any action to foreclose or to seize the residence, the lender or assignee shall not institute a proceeding or other action for that default. If a default is cured after the initiation of any action, the lender or assignee shall take such steps as are necessary to terminate the action.

(e) A lender or a lender's assignee of a high risk home loan that has the legal right to foreclose shall use the judicial foreclosure procedures provided by law. In such a proceeding, the borrower may assert the nonexistence of a default and any other claim or defense to acceleration and foreclosure, including any claim or defense based on a violation of the Act, though no such claim or defense shall be deemed a compulsory counterclaim.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/110)

Sec. 110. Mortgage Awareness Program.

(a) The Mortgage Awareness Program is a counseling and educational component that must be provided by the Director and the Commissioner.

(b) The core curriculum of the Mortgage Awareness Program shall include all of the following:

(1) Explanation of the amount financed.

(2) Explanation of the finance charge.

(3) Explanation of the annual percentage rate.

(4) Explanation of the total payments.

(5) Explanation of the loan costs, including broker's fees, finance charges, points, and origination fees.

(6) Explanation of the right of rescission.

(7) Explanation of foreclosure procedures.

(8) Explanation of the significant debt ratios, including total debt to income, loan debt to income, and loan debt to value of residence.

(9) Explanation of adjustable rate mortgage.

(10) Explanation of balloon payments.

(11) Explanation of credit options.

(12) Explanation of each item that appears on a good faith estimate.

(13) Explanation of pre-payment penalties.

(c) Counseling session attendees must complete a personal income and expense statement, as well as a balance sheet, on forms provided by the Commissioner or the Director.

(d) Prior to signing a certificate of completion, approved credit counselors shall privately discuss with each attendee that attendee's income and expense statement and balance sheet, as well as the terms of any loan the attendee currently has or may be contemplating, and provide a third party review to establish the affordability of the loan.

(e) Counseling session attendees must be given a brochure that contains information covered by the Mortgage Awareness Program.

(f) Any lender, prior to making a high risk home loan, shall inform the borrower in writing of the right to participate in the Mortgage Awareness Program.

(g) No lender shall offer less favorable loan terms to a borrower due to a borrower's participation in the Mortgage Awareness Program.

(h) Except as prohibited elsewhere in this Section, the borrower may waive participation in the program, provided that the waiver occurs no less than 2 business days after the day that the borrower receives the notice required by subsection (f) of this Section and that the waiver is in writing in a form approved by the Commissioner and the Director.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/115)

Sec. 115. Report of default and foreclosure rates on conventional loans.

(a) On or before October 1 and April 1 of each year, each servicer of Illinois residential mortgage loans shall report to the Commissioner or the Director the default and foreclosure data of conventional loans for the 6-month periods ending June 30 and December 31, respectively.

(b) Each servicer shall report the following information:

(1) The average quarterly dollar amount of conventional one to 4 family mortgage loans secured by Illinois real estate.

(2) The average quarterly number of conventional one to 4 family mortgage loans secured by Illinois real estate.

(3) The average quarterly dollar amount of conventional one to 4 family mortgage loans secured by Illinois real estate that are in default over 90 days.

(4) The average quarterly number of conventional one to 4 family mortgage loans secured by Illinois real estate that are in default over 90 days.

(5) The dollar amount of foreclosures on one to 4 family conventional loans completed during the reporting period.

(6) The number of foreclosures on one to 4 family conventional loans completed during the reporting period.

(7) Whether any of the loans where a foreclosure was completed were originated less than 18 months before the completed foreclosure.

(8) Whether any of the loans where a foreclosure was completed had a note rate greater than 10% for first lien mortgage loans or greater than 12% in the case of a junior lien.

(c) An officer of the servicer shall sign the form.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/120)

Sec. 120. Review and analysis.

(a) The Commissioner or Director shall review and analyze the default and foreclosure rate data reports submitted under Section 115.

(b) The reports and their analyses may be used for the following purposes:

(1) In setting the scope of a regularly scheduled examination.

(2) In setting the scope of a special examination.

(3) In comparing the reported information of a servicer.

(c) The Commissioner or the Director may correspond with a servicer to seek clarification of information contained in its report and to gather additional data concerning loans in default or loans in foreclosure.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/125)

Sec. 125. Third party review of high risk home loans.

(a) In the case of any high risk home loan, the borrower shall be afforded the opportunity to seek independent review by the Office or the Department of the loan terms, in order to determine affordability of the loan, when and if the General Assembly appropriates adequate funding to the Office or the Department specifically for this Section.

(b) The Office or the Department shall inform the borrower of the amount the borrower has available for a monthly mortgage payment based upon the borrower's budget.

(c) The Office or the Department shall review loan information pertaining to balloon payments and adjustable interest rates and other items disclosed by the loan documents affecting amount of payment and shall inform the borrower of such items.

(d) If, based upon the review, the borrower determines that the loan is not in his or her best economic interest, the reviewer shall so notify the lender. This determination shall enable the borrower to withdraw from the contemplated loan with no financial penalty.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/130)

Sec. 130. Circumstances voiding mandatory arbitration provisions. Without regard to whether a borrower is acting individually or on behalf of others similarly situated, a mandatory arbitration provision of a high risk home loan agreement that is oppressive, unfair, unconscionable, or substantially in derogation of the rights of the borrower is void.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/135)

Sec. 135. Remedies, enforcement, and limitations of liability.

(a) The remedies provided in this Act are cumulative and apply to persons or entities subject to this Act.

(b) Any knowing violation of this Act constitutes a violation of the Consumer Fraud and Deceptive Business Practices Act.

(c) If any provision of an agreement for a high risk home loan violates this Act, then that provision is unenforceable against the borrower.

(d)(1) Any natural or artificial person who purchases or otherwise is assigned or subsequently holds a high risk home loan shall be subject to all affirmative claims and defenses with respect to the loan that the borrower could assert against the lender or broker of the loan, provided that this item (d)(1) shall not apply if the purchaser, assignee or holder demonstrates by a preponderance of the evidence that it:

(A) has in place, at the time of the purchase, assignment or transfer of the loans, policies that expressly prohibit its purchase, acceptance of assignment or holding of any high risk home loans;

(B) requires by contract that a seller, assignor or transferor of high risk home loans to the purchaser, assignee or transferee represents and warrants to the purchaser, assignee or transferee that either (i) the seller, assignor or transferor will not sell, assign or transfer any high risk home loans to the purchaser, assignee or transferee, or (ii) the seller, assignor or transferor is a beneficiary of a representation and warranty from a previous seller, assignor or transferor to that effect; and

(C) exercises reasonable due diligence at the time of the purchase, assignment or transfer of high risk home loans, or within a reasonable period of time after the purchase, assignment or transfer of such home loans, which is intended by the purchaser, assignee or transferee to prevent the purchaser, assignee or transferee from purchasing or taking assignment or otherwise holding any high risk home loans, provided that this reasonable due diligence requirement may be met by sampling and need not require loan-by-loan review.

(2) Limited to the amount required to reduce or extinguish the borrower's liability under the high cost home loan plus the amount required to recover costs, including reasonable attorney fees, a borrower acting only in an individual capacity may assert claims that the borrower could assert against a lender of the home loan against a subsequent holder or assignee of the home loan as follows:

(A) within 5 years of the closing date of a high risk home loan, a violation of this Act in connection with the loan as an original action; and

(B) at any time during the term of a high risk home loan, after an action to collect on the home loan or to foreclose on the collateral securing the home loan has been initiated, or the debt arising from the home loan has been accelerated, or the home loan has become 60 days in default, any defense, claim, counterclaim or action to enjoin foreclosure or preserve or obtain possession of the home that secures the loan.

(e) In addition to the limitation of liability afforded to subsequent purchasers, assignees, or holders under subsection (d) of this Section, a lender and a subsequent purchaser, assignee, or holder of the high risk home loan is not liable for a violation of this Act if:

(1) within 30 days of the loan closing and prior to receiving any notice from the borrower of the violation, the lender has made appropriate restitution to the borrower and appropriate adjustments are made to the loan; or

(2) the violation was not intentional and resulted from a bona fide error in fact, notwithstanding the maintenance of procedures reasonably adopted to avoid such errors, and within 60 days of the discovery of the violation and prior to receiving any notice from the borrower of the violation, the borrower is notified of the violation, appropriate restitution is made to the borrower, and appropriate adjustments are made to the loan.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/145)

Sec. 145. Subterfuge prohibited. No lender, with the intent to avoid the application or provisions of this Act, shall (i) divide a loan transaction into separate parts, (ii) structure a loan transaction as an open-end credit plan or another form of loan, or (iii) perform any other subterfuge.

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(815 ILCS 137/150)

Sec. 150. Preemption of administrative rules. Any relevant administrative rule promulgated before the effective date of this Act by the Department or the Office is preempted.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/153)

Sec. 153. Reporting of violations. The Office and the Department must report to the Attorney General all violations of this Act of which they become aware.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/155)

Sec. 155. Rulemaking. The Office and the Department may adopt reasonable rules to implement and administer this Act.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/160)

Sec. 160. Judicial review. All final administrative decisions under this Act are subject to judicial review pursuant to the provisions of the Administrative Review Law and any rules adopted pursuant thereto.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/165)

Sec. 165. Waiver prohibited. There shall be no waiver of any provision of this Act, except as explicitly provided in subsection (h) of Section 110.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/170)

Sec. 170. Superiority of Act. To the extent this Act conflicts with any other Illinois State financial regulation laws, except the Interest Act, this Act is superior and supersedes those laws for the purposes of regulating high risk home loans in Illinois.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/175)

Sec. 175. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

(Source: P.A. 93-561, eff. 1-1-04.)

(815 ILCS 137/800)

Sec. 800. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/805)

Sec. 805. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/810)

Sec. 810. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/815)

Sec. 815. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/820)

Sec. 820. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/825)

Sec. 825. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/830)

Sec. 830. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/835)

Sec. 835. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/840)

Sec. 840. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/845)

Sec. 845. (Amendatory provisions; text omitted).

(Source: P.A. 93-561, eff. 1-1-04; text omitted.)

(815 ILCS 137/900)

Sec. 900. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

(Source: P.A. 93-561, eff. 1-1-04.)