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91_HB4324
LRB9110042MWpcA
1 AN ACT to amend the Illinois Housing Development Act by
2 adding Section 7.24i.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Housing Development Act is
6 amended by adding Section 7.24i as follows:
7 (20 ILCS 3805/7.24i new)
8 Sec. 7.24i. Homeowners' Emergency Mortgage Assistance
9 Program.
10 (a) The Authority shall administer the Homeowners'
11 Emergency Mortgage Assistance Program.
12 (b) Definitions. In this Section:
13 "Chairman" means the Chairman of the Illinois
14 Housing Development Authority.
15 "Single family residence" means a house,
16 condominium, mobile home, or other interest in real
17 estate that is intended for residential use by no more
18 than 4 households and that is located in Illinois.
19 "Gross household income" means the total income of a
20 mortgagor, the mortgagor's spouse, children residing in
21 the same residence as the mortgagor, and any other person
22 living in the residence that is declared by the mortgagor
23 as a dependent for federal income tax purposes.
24 "Housing expense" means the sum of the mortgagor's
25 monthly maintenance, utility, and hazard insurance
26 expenses, taxes, and required mortgage payments,
27 including escrows.
28 "Net effective income" means the gross household
29 income of the mortgagor less city, State, and federal
30 income and social security taxes.
31 "Household" means 2 or more persons residing
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1 together or a person living alone.
2 (c) Homeowners' Emergency Mortgage Assistance Program.
3 (1) In general. The Authority shall establish a
4 program to prevent mortgage foreclosure by providing for
5 temporary payments on a mortgage for a single-family
6 residence when:
7 (A) the mortgagee has given the mortgagor
8 notice that the mortgage is in default;
9 (B) at least 2 full monthly installments due
10 on the mortgage are unpaid after the application of
11 any partial payments that may have been accepted but
12 not yet applied to the mortgage account;
13 (C) the mortgagor is suffering financial
14 hardship due to circumstances beyond the control of
15 the mortgagor that render the mortgagor unable to
16 correct the delinquency on the mortgage and unable
17 to make full mortgage payments before the expiration
18 of a 60-day period beginning on the date that the
19 mortgagee sent notice to the mortgagor of intent to
20 foreclose;
21 (D) there is a reasonable prospect that the
22 mortgagor will be able to resume full mortgage
23 payments not later than 36 months after the
24 beginning of the period for which assistance
25 payments are provided and to pay the mortgage in
26 full by its maturity date or by a later date agreed
27 upon by the mortgagee;
28 (F) the property mortgaged is the mortgagor's
29 principal place of residence;
30 (G) the mortgagor has applied to the program
31 for assistance in accordance with this Section and
32 rules adopted by the Chairman for its
33 implementation; and
34 (H) the mortgagor's gross household income
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1 does not exceed 80% of area median income adjusted
2 for family size.
3 (2) Effect of finding of ineligibility. If, after
4 reviewing an application for assistance submitted under
5 subsection (e), the Chairman determines that the
6 mortgagor has not met the conditions of eligibility
7 described in paragraph (1) of this subsection, the
8 mortgagor is prohibited from re-applying for assistance
9 under this Section until the expiration of a 6-month
10 period beginning on the date of that determination unless
11 there is a material change in the financial circumstances
12 of the mortgagor.
13 (3) Determination of financial hardship. In
14 determining whether a financial hardship (which may be
15 caused by a reduction in income, an increase in expenses,
16 or both) is due to circumstances beyond the control of a
17 mortgagor, the Chairman may consider information
18 regarding the mortgagor's employment record, credit
19 history, and current income. The circumstances shall
20 include, but not be limited to:
21 (A) loss of job of a member of the household;
22 (B) salary, wage, or earnings reduction of a
23 member of the household;
24 (C) injury, disability, or illness of a member
25 of the household;
26 (D) divorce or separation in the household;
27 (E) death of a member of the household; or
28 (F) major unanticipated household expense.
29 (4) Designated agencies. The Chairman shall, by
30 rule, establish a procedure to designate and approve
31 Illinois not-for-profit corporations as agencies to
32 assist in implementing the program. Agencies designated
33 and approved under this paragraph shall provide
34 assistance to an eligible mortgagor during the entire
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1 period that the mortgagor receives assistance under this
2 Section.
3 (d) Legal action.
4 (1) Legal actions prohibited. Except as otherwise
5 provided in this subsection, a mortgagee may not
6 accelerate the maturity of or commence or continue any
7 legal action regarding a mortgage, including but not
8 limited to mortgage foreclosure to recover under that
9 obligation, or take possession of any security of the
10 mortgagor for the mortgage obligation unless the
11 mortgagee has sent to the mortgagor notice under
12 paragraph (2) of this subsection. In addition, the
13 mortgagee may not take or continue that action:
14 (A) before the expiration of the 30-day period
15 beginning on the date that notice of the intent to
16 take the action was sent to the mortgagor under
17 accordance with paragraph (2) of this subsection;
18 (B) before the expiration of the 30-day period
19 beginning on the date of the initial meeting between
20 the mortgagor and an approved agency;
21 (C) if an application for assistance under
22 this Section has been submitted to the Authority or
23 a designated agency and the application (i) is
24 pending or (ii) has been approved but payments have
25 not yet been made toward the mortgage; or
26 (D) if payment toward the mortgage is being
27 made under this Section.
28 (2) Notice of legal action. The Chairman must
29 adopt rules that include, but are not limited to, a
30 uniform notice under this paragraph. The notice must be
31 in plain language and must do the following:
32 (A) inform the mortgagor in large bold type
33 that he or she may be eligible for temporary
34 assistance in making mortgage payments;
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1 (B) include an explanation of the mortgage
2 assistance program created by this Section;
3 (C) inform the mortgagor that to apply for
4 mortgage assistance, he or she must request a
5 meeting under paragraph (1) of subsection (e) within
6 30 days after the date of the notice;
7 (D) include the legal action intended and the
8 basis for that action;
9 (E) include a list of approved designated
10 agencies;
11 (F) be sent by first class mail to the last
12 known address of the mortgagor; and
13 (G) be subject to any other requirements
14 adopted, by rule, by the Chairman.
15 (e) Application for assistance.
16 (1) Meeting.
17 (A) To apply for assistance under this
18 Section, not later than 30 days after receiving
19 notice under subsection (d), a mortgagor shall
20 request a meeting with the mortgagee or a designated
21 agency to attempt to address the mortgage default
22 for which the notice was sent by restructuring the
23 mortgage payment schedule. A meeting under this
24 subparagraph (A) may be conducted over the telephone
25 under circumstances prescribed by the Chairman.
26 (B) If the mortgagor meets with a designated
27 agency within the period specified in subparagraph
28 (A), the designated agency must send notice of the
29 meeting that includes, but is not limited to, the
30 date of the meeting, to the mortgagee not later than
31 5 business days after the meeting.
32 (2) Preparation; submission. If the mortgagor is
33 not able to resolve the default and prevent foreclosure
34 before the expiration of the 30-day period beginning on
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1 the date of the meeting, the mortgagor may file an
2 application for mortgage assistance under this Section.
3 At the request of the mortgagor, a designated agency must
4 (i) assist the mortgagor in preparing an application for
5 assistance under this Section and (ii) not later than 30
6 days after the mortgagor initially requests assistance in
7 the preparation of the application, complete an
8 application on behalf of the mortgagor.
9 The Authority may pay designated agencies a fee, in
10 an amount determined by the Chairman, for rendering
11 assistance under to this Section.
12 (3) Notice to mortgagee. If the designated agency
13 submits an application for assistance to the Authority on
14 behalf of a mortgagor, the designated agency must, not
15 later than 5 business days after submitting the
16 application, inform the mortgagee of the date that the
17 application was submitted.
18 (4) Form; contents. An application for assistance
19 under this Section shall be on a form prescribed, by
20 rule, by the Chairman and shall include a financial
21 statement disclosing all assets and liabilities of the
22 mortgagor, whether singly or jointly held, and all
23 household income regardless of source.
24 (5) Effect of misrepresentation. A mortgagor who
25 intentionally misrepresents any material financial
26 information in connection with the filing of an
27 application for assistance under this Section may be
28 denied assistance and required to immediately repay any
29 amount of assistance received. The mortgagee may, at any
30 time thereafter, take any legal action to enforce the
31 mortgage without any further restrictions or requirements
32 under this Section. The Chairman must, by rule,
33 establish a process for determining intentional
34 misrepresentation and for the prompt appeal of positive
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1 determinations.
2 (6) Availability. An application for assistance
3 under this Section may be obtained from a designated
4 agency.
5 (7) Determination on application. The Chairman must
6 determine eligibility of a mortgagor for assistance under
7 this Section not later than 60 days after receipt of the
8 application of the mortgagor.
9 Not later than 5 business days after making the
10 determination on an application for assistance, the
11 Chairman shall notify the mortgagor and the mortgagee as
12 to whether the application has been approved or
13 disapproved.
14 (f) Assistance payments.
15 (1) Amount to bring mortgage current. If the
16 Chairman or designated agency determines that a mortgagor
17 is eligible for assistance under this Section, the
18 Authority or designated agency shall pay to the mortgagee
19 the full amount due to the mortgagee under the terms of
20 the mortgage without regard to any acceleration under the
21 mortgage, or the full amount of any alternative mortgage
22 payments agreed to by the mortgagee and mortgagor on the
23 date that the application is approved. This amount shall
24 include the amount of principal, interest, taxes,
25 assessments, ground rents, hazard insurance, mortgage
26 insurance or credit insurance premiums, and reasonable
27 attorneys' fees incurred by the mortgagee in relation to
28 the arrearage.
29 (2) Monthly assistance payments. The Authority or
30 designated agency shall make monthly mortgage assistance
31 payments to the mortgagee on behalf of the mortgagor
32 under to this subsection.
33 A mortgagor on whose behalf the Authority or
34 designated agency is making the mortgage assistance
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1 payments must pay his or her monthly payments to the
2 Authority or designated agency. The payments shall be in
3 an amount that will not cause the mortgagor's total
4 housing expense to exceed 35% of the mortgagor's net
5 effective income. This is the maximum amount the
6 mortgagor can be required to pay during the 36 months
7 that a mortgagor is eligible for mortgage assistance. The
8 mortgagor must make the payments at least 7 days before
9 each mortgage payment is due under the mortgage.
10 Upon receipt of this payment from the mortgagor, the
11 Authority or the designated agency shall send the total
12 mortgage payment directly to the mortgagee.
13 (3) Review upon delinquency. If the mortgagor
14 fails to pay to the Authority or designated agency any
15 amounts due directly from the mortgagor under this
16 subsection, not later than 15 days after the due date the
17 Chairman or designated agency shall review the
18 mortgagor's financial circumstances to determine whether
19 a delinquency in payments due from the mortgagor under
20 this subsection is the result of a change in the
21 mortgagor's financial circumstances since the payment
22 amount was last determined. If the delinquency is not
23 the result of a change in the mortgagor's financial
24 circumstances, the Chairman or designated agency may
25 terminate future mortgage assistance payments and the
26 mortgagee may, at any time after the termination, take
27 appropriate legal action to enforce its mortgage without
28 any further restriction or requirement under this
29 Section. If the delinquency is the result of a change,
30 the Chairman or designated agency shall modify the
31 mortgagor's required payments as the Chairman or
32 designated agency determines. For one time only, and at
33 the sole discretion of the Chairman, the delinquency
34 incurred for non-financial reasons may be satisfied by
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1 the Authority if it appears that the payment will prevent
2 foreclosure.
3 (4) Period for assistance. Payments under this
4 subsection may be provided for a period not to exceed 36
5 months, either consecutively or non-consecutively. The
6 Chairman shall establish procedures for periodic review
7 of the mortgagor's financial circumstances for the
8 purpose of determining the necessity for continuation,
9 termination, or adjustment of the amount of the payments.
10 (g) Repayment of assistance.
11 (1) Assistance loan. The amount by which the
12 assistance payments made by the Authority or designated
13 agency to the mortgagee exceeds the amount of payments
14 made by the mortgagor to the Authority or designated
15 agency are a loan by the Authority or designated agency
16 to the mortgagor. The loan may be evidenced by any
17 documents that the Chairman determines, by rule, are
18 necessary to protect the interests of the State.
19 (2) Repayment of assistance loan. Before making
20 assistance payments under this Section on behalf of a
21 mortgagor, the Authority or designated agency must enter
22 into an agreement with the mortgagor for repayment of all
23 mortgage assistance provided under subsection (f) plus
24 interest as provided in paragraph (3) of this subsection.
25 The agreement must provide for monthly payments by the
26 mortgagor to the Authority or designated agency that:
27 (A) shall begin once the Chairman or
28 designated agency has determined that continuation
29 of mortgage assistance payments to the mortgagee is
30 unnecessary; and
31 (B) shall be in an amount determined as
32 follows:
33 (i) if the mortgagor's total housing
34 expense is less than 35% of the mortgagor's net
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1 effective income, the mortgagor must pay to the
2 Authority or designated agency the difference
3 between 35% of the mortgagor's net effective
4 income and the mortgagor's total housing
5 expense unless otherwise determined by the
6 Chairman or designated agency after examining
7 the mortgagor's financial circumstances and
8 ability to contribute to repayment of the
9 mortgage assistance; or
10 (ii) if the mortgagor's total housing
11 expense is more than 35% of the mortgagor's net
12 effective income, repayment of the mortgage
13 assistance shall be deferred until the
14 mortgagor's total housing expense is less than
15 35% of the mortgagor's net effective income.
16 (C) Notwithstanding subparagraphs (A) and (B)
17 of this paragraph, if repayment of mortgage
18 assistance is not made by the date that the mortgage
19 is paid in full, the mortgagor must make mortgage
20 assistance repayments in an amount not less than the
21 previous regular mortgage payment until the mortgage
22 assistance is repaid.
23 (3) Interest. Interest shall accrue on all
24 mortgage assistance payments made under this Section at
25 the rate, determined monthly by the Chairman, equal to
26 the then current average yield on outstanding 30-year
27 bonds issued by the Secretary of the United States
28 Treasury under Section 3102 of Title 31, United States
29 Code and shall accrue only during the period in which the
30 mortgagor is required to make repayment under this
31 subsection.
32 (4) Lien to secure repayment of assistance.
33 Repayment of amounts owed to the Authority or designated
34 agency from a mortgagor shall be secured by a mortgage
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1 lien on the property and by any other obligation that the
2 Chairman may, by rule, require. The lien or other
3 security interest of the Authority may not take priority
4 over any other secured lien or secured interest in effect
5 against the mortgagor's property on the date assistance
6 payments begin. The Authority may allow subordination of
7 the mortgage assistance lien only if the subordination is
8 in the best interest of the homeowner and necessary to
9 permit the mortgagor to obtain a home improvement loan
10 for repairs necessary to preserve the property.
11 (5) Time for repayment. Payments under this
12 subsection shall be made by the mortgagor to the
13 Authority or designated agency not later than 14 days
14 after each mortgage payment is due under the mortgage, or
15 in the case of repayment after the mortgage has been paid
16 in full, not later than the date the mortgage payments
17 were due under the mortgage.
18 Section 99. Effective date. This Act takes effect upon
19 becoming law.