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| | 99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3101 Introduced , by Rep. Marcus C. Evans, Jr. SYNOPSIS AS INTRODUCED:
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Amends the High Risk Home Loan Act. Provides that the term "high risk home loan" includes certain loans that exceed an amount established by federal regulation. Defines the terms "prepayment penalty" and "prepayment fees or penalties". Effective immediately.
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| | A BILL FOR |
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| 1 | | AN ACT concerning business.
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| 2 | | Be it enacted by the People of the State of Illinois,
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| 3 | | represented in the General Assembly:
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| 4 | | Section 5. The High Risk Home Loan Act is amended by |
| 5 | | changing Section 10 as follows:
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| 6 | | (815 ILCS 137/10)
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| 7 | | (Text of Section before P.A. 97-849 takes effect) |
| 8 | | Sec. 10. Definitions. As used in this Act:
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| 9 | | "Approved credit counselor" means a credit counselor |
| 10 | | approved by the
Director of Financial Institutions.
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| 11 | | "Borrower" means a natural person who seeks or obtains a |
| 12 | | high risk
home loan.
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| 13 | | "Commissioner" means the Commissioner of the Office of |
| 14 | | Banks and Real
Estate.
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| 15 | | "Department" means the Department of Financial |
| 16 | | Institutions.
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| 17 | | "Director" means the Director of Financial Institutions.
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| 18 | | "Good faith" means honesty in fact in the conduct or |
| 19 | | transaction concerned.
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| 20 | | "High risk home loan"
means a home equity loan in which (i) |
| 21 | | at the time of origination, the annual
percentage rate
exceeds |
| 22 | | by more than 6 percentage points in the case of a first lien |
| 23 | | mortgage,
or
by more than 8 percentage points in the case of a |
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| 1 | | junior mortgage, the yield on
U.S. Treasury securities having |
| 2 | | comparable periods of maturity to the loan
maturity as of the |
| 3 | | fifteenth day of the month immediately preceding the month
in
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| 4 | | which the application for the loan is received by the lender or |
| 5 | | (ii) the total
points
and fees payable by the consumer at or |
| 6 | | before closing will exceed the greater
of
5% of the total loan |
| 7 | | amount or $800. The $800 figure shall be adjusted annually
on |
| 8 | | January 1 by the annual percentage change in the Consumer Price |
| 9 | | Index for
All Urban Consumers for all items published by the |
| 10 | | United States Department of
Labor.
"High risk home loan"
does
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| 11 | | not include a loan that is made primarily for a business |
| 12 | | purpose unrelated to
the
residential real property securing the |
| 13 | | loan or to an open-end credit plan
subject to
12 CFR 226 (2000, |
| 14 | | no subsequent amendments or editions are included).
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| 15 | | "Home equity loan" means any loan secured by the borrower's |
| 16 | | primary
residence where the proceeds are not used as purchase |
| 17 | | money for the
residence.
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| 18 | | "Lender" means a natural or artificial person who |
| 19 | | transfers, deals in,
offers, or makes a high risk home loan. |
| 20 | | "Lender" includes, but is not limited
to,
creditors and
brokers |
| 21 | | who transfer, deal in, offer, or make high risk home loans. |
| 22 | | "Lender"
does not include purchasers, assignees, or subsequent |
| 23 | | holders of high risk home
loans.
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| 24 | | "Office" means the Office of Banks and Real Estate.
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| 25 | | "Points and fees" means all items required to be disclosed |
| 26 | | as points and
fees under 12 CFR 226.32 (2000, no subsequent |
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| 1 | | amendments or editions
included); the premium of any single |
| 2 | | premium credit life, credit disability,
credit
unemployment, |
| 3 | | or any other life or health insurance that is financed directly
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| 4 | | or
indirectly into the loan; and compensation paid directly or |
| 5 | | indirectly to a
mortgage
broker, including a broker that |
| 6 | | originates a loan in its own name in a
table-funded
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| 7 | | transaction, not otherwise included in 12 CFR 226.4.
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| 8 | | "Reasonable" means fair, proper, just, or prudent under the |
| 9 | | circumstances.
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| 10 | | "Servicer" means any entity chartered under the Illinois |
| 11 | | Banking Act, the
Savings Bank Act, the Illinois Credit Union |
| 12 | | Act, or the Illinois Savings and
Loan Act of 1985 and any |
| 13 | | person or entity licensed under the Residential
Mortgage |
| 14 | | License Act of 1987, the Consumer Installment Loan Act, or the |
| 15 | | Sales
Finance Agency Act who
is responsible for the collection |
| 16 | | or remittance for, or has the right or
obligation to collect or |
| 17 | | remit for, any lender, note owner, or note holder or
for a |
| 18 | | licensee's own account, of payments, interest, principal, and |
| 19 | | trust items
(such as hazard
insurance and taxes on a |
| 20 | | residential mortgage loan) in accordance with the
terms of the |
| 21 | | residential mortgage loan, including loan payment follow-up,
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| 22 | | delinquency loan follow-up, loan analysis, and any |
| 23 | | notifications to
the borrower that are necessary to enable the |
| 24 | | borrower to keep the loan current
and in good
standing.
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| 25 | | "Total loan amount" has the same meaning as that term is |
| 26 | | given in 12
CFR 226.32 and shall be calculated in accordance |
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| 1 | | with the Federal Reserve
Board's Official Staff Commentary to |
| 2 | | that regulation.
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| 3 | | (Source: P.A. 93-561, eff. 1-1-04.)
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| 4 | | (Text of Section after P.A. 97-849 takes effect) |
| 5 | | Sec. 10. Definitions. As used in this Act:
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| 6 | | "Approved credit counselor" means a credit counselor |
| 7 | | approved by the
Director of Financial Institutions.
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| 8 | | "Bona fide discount points" means loan discount points that |
| 9 | | are knowingly paid by the consumer for the purpose of reducing, |
| 10 | | and that in fact result in a bona fide reduction of, the
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| 11 | | interest rate or time price differential applicable to the |
| 12 | | mortgage. |
| 13 | | "Borrower" means a natural person who seeks or obtains a |
| 14 | | high risk
home loan.
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| 15 | | "Commissioner" means the Commissioner of the Office of |
| 16 | | Banks and Real
Estate.
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| 17 | | "Department" means the Department of Financial |
| 18 | | Institutions.
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| 19 | | "Director" means the Director of Financial Institutions.
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| 20 | | "Good faith" means honesty in fact in the conduct or |
| 21 | | transaction concerned.
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| 22 | | "High risk home loan"
means a consumer credit transaction, |
| 23 | | other than a reverse mortgage, that is secured by the |
| 24 | | consumer's principal dwelling if: (i) at the time of |
| 25 | | origination, the annual
percentage rate
exceeds by more than 6 |
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| 1 | | percentage points in the case of a first lien mortgage,
or
by |
| 2 | | more than 8 percentage points in the case of a junior mortgage, |
| 3 | | the average prime offer rate, as defined in Section |
| 4 | | 129C(b)(2)(B) of the federal Truth in Lending Act, for a |
| 5 | | comparable transaction as of the date on which the interest |
| 6 | | rate for the transaction is set, (ii) the loan documents permit |
| 7 | | the creditor to charge or collect prepayment fees or penalties |
| 8 | | more than 36 months after the transaction closing or such fees |
| 9 | | exceed, in the aggregate, more than 2% of the amount prepaid, |
| 10 | | or (iii) the total
points
and fees payable in connection with |
| 11 | | the transaction, other than bona fide third-party charges not |
| 12 | | retained by the mortgage originator, creditor, or an affiliate |
| 13 | | of the mortgage originator or creditor, will exceed (1)
5% of |
| 14 | | the total loan amount in the case of a transaction for $20,000 |
| 15 | | (or such other dollar amount as prescribed by federal |
| 16 | | regulation pursuant to the federal Dodd-Frank Act) or more or |
| 17 | | (2) the lesser of 8% of the total loan amount or $1,000 (or |
| 18 | | such other dollar amount as prescribed by federal regulation |
| 19 | | pursuant to the federal Dodd-Frank Act) in the case of a |
| 20 | | transaction for less than $20,000 (or such other dollar amount |
| 21 | | as prescribed by federal regulation pursuant to the federal |
| 22 | | Dodd-Frank Act), except that, with respect to all transactions, |
| 23 | | bona fide loan discount points may be excluded as provided for |
| 24 | | in Section 35 of this Act.
"High risk home loan"
does
not |
| 25 | | include a loan that is made primarily for a business purpose |
| 26 | | unrelated to
the
residential real property securing the loan or |
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| 1 | | a consumer credit transaction made by a natural person who |
| 2 | | provides seller financing secured by a principal residence no |
| 3 | | more than 3 times in a 12-month period, provided such consumer |
| 4 | | credit transaction is not made by a person that has constructed |
| 5 | | or acted as a contractor for the construction of the residence |
| 6 | | in the ordinary course of business of such person.
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| 7 | | "Lender" means a natural or artificial person who |
| 8 | | transfers, deals in,
offers, or makes a high risk home loan. |
| 9 | | "Lender" includes, but is not limited
to,
creditors and
brokers |
| 10 | | who transfer, deal in, offer, or make high risk home loans. |
| 11 | | "Lender"
does not include purchasers, assignees, or subsequent |
| 12 | | holders of high risk home
loans.
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| 13 | | "Office" means the Office of Banks and Real Estate.
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| 14 | | "Points and fees" means all items considered to be points |
| 15 | | and
fees under 12 CFR 226.32 (2000, or as initially amended |
| 16 | | pursuant to Section 1431 of the federal Dodd-Frank Act with no |
| 17 | | subsequent amendments or editions
included, whichever is |
| 18 | | later); compensation paid directly or indirectly by a consumer |
| 19 | | or creditor to a
mortgage
broker from any source, including a |
| 20 | | broker that originates a loan in its own name in a
table-funded
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| 21 | | transaction, not otherwise included in 12 CFR 226.4; the |
| 22 | | maximum prepayment fees and penalties that may be charged or |
| 23 | | collected under the terms of the credit transaction; all |
| 24 | | prepayment fees or penalties that are incurred by the consumer |
| 25 | | if the loan refinances a previous loan made or currently held |
| 26 | | by the same creditor or an affiliate of the creditor; and |
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| 1 | | premiums or other charges payable at or before closing or |
| 2 | | financed directly or indirectly into the loan for any credit |
| 3 | | life, credit disability, credit unemployment, credit property, |
| 4 | | other accident, loss of income, life, or health insurance or |
| 5 | | payments directly or indirectly for any debt cancellation or |
| 6 | | suspension agreement or contract, except that insurance |
| 7 | | premiums or debt cancellation or suspension fees calculated and |
| 8 | | paid in full on a monthly basis shall not be considered |
| 9 | | financed by the creditor. "Points and fees" does not include |
| 10 | | any insurance premium provided by an agency of the federal |
| 11 | | government or an agency of a state; any insurance premium paid |
| 12 | | by the consumer after closing; and any amount of a premium, |
| 13 | | charge, or fee that is not in excess of the amount payable |
| 14 | | under policies in effect at the time of origination under |
| 15 | | Section 203(c)(2)(A) of the National Housing Act (12 U.S.C. |
| 16 | | 1709(c)(2)(A)), provided that the premium, charge, or fee is |
| 17 | | required to be refundable on a pro-rated basis and the refund |
| 18 | | is automatically issued upon notification of the satisfaction |
| 19 | | of the underlying mortgage loan. |
| 20 | | "Prepayment penalty" and "prepayment fees or penalties" |
| 21 | | mean: (i) for a closed-end credit transaction, a charge imposed |
| 22 | | for paying all or part of the transaction's principal before |
| 23 | | the date on which the principal is due, other than a waived, |
| 24 | | bona fide third-party charge that the creditor imposes if the |
| 25 | | consumer prepays all of the transactions's principal sooner |
| 26 | | than 36 months after consummation and (ii) for an open-end |
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| 1 | | credit plan, a charge imposed by the creditor if the consumer |
| 2 | | terminates the open-end credit plan prior to the end of its |
| 3 | | term, other than a waived, bona fide third-party charge that |
| 4 | | the creditor imposes if the consumer terminates the open-end |
| 5 | | credit plan sooner than 36 months after account opening.
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| 6 | | "Reasonable" means fair, proper, just, or prudent under the |
| 7 | | circumstances.
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| 8 | | "Servicer" means any entity chartered under the Illinois |
| 9 | | Banking Act, the
Savings Bank Act, the Illinois Credit Union |
| 10 | | Act, or the Illinois Savings and
Loan Act of 1985 and any |
| 11 | | person or entity licensed under the Residential
Mortgage |
| 12 | | License Act of 1987, the Consumer Installment Loan Act, or the |
| 13 | | Sales
Finance Agency Act who
is responsible for the collection |
| 14 | | or remittance for, or has the right or
obligation to collect or |
| 15 | | remit for, any lender, note owner, or note holder or
for a |
| 16 | | licensee's own account, of payments, interest, principal, and |
| 17 | | trust items
(such as hazard
insurance and taxes on a |
| 18 | | residential mortgage loan) in accordance with the
terms of the |
| 19 | | residential mortgage loan, including loan payment follow-up,
|
| 20 | | delinquency loan follow-up, loan analysis, and any |
| 21 | | notifications to
the borrower that are necessary to enable the |
| 22 | | borrower to keep the loan current
and in good
standing.
|
| 23 | | "Total loan amount" has the same meaning as that term is |
| 24 | | given in 12
CFR 226.32 and shall be calculated in accordance |
| 25 | | with the Federal Reserve
Board's Official Staff Commentary to |
| 26 | | that regulation.
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| 1 | | (Source: P.A. 97-849, see Section 10 of P.A. 97-1159 for |
| 2 | | effective date of P.A. 97-849.)
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| 3 | | Section 95. No acceleration or delay. Where this Act makes |
| 4 | | changes in a statute that is represented in this Act by text |
| 5 | | that is not yet or no longer in effect (for example, a Section |
| 6 | | represented by multiple versions), the use of that text does |
| 7 | | not accelerate or delay the taking effect of (i) the changes |
| 8 | | made by this Act or (ii) provisions derived from any other |
| 9 | | Public Act.
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| 10 | | Section 99. Effective date. This Act takes effect upon |
| 11 | | becoming law.
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