HB 5231 — SHARED APPRECIATION AGREEMENTS

(3)"Closing Theagent" borrower'smeans creditan scoreindividual atassigned by a title insurance company or a broker or originator to ensure that the timeexecution of application.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 HB5231 Engrossed - 21 - LRB103 37487 RTM 67610 b instructions of the entity financing the transaction.

(4)"Counseling" Informationmeans aboutin-person thecounseling originatorprovided andby thea companycounselor theemployed originator works for, including the originator's license number and address, fees being charged, whether the fees are being charged as points up front, the yield spread premium payable outside closing, and other charges made or remuneration required by thea brokerHUD-approved orcounseling originatoragency orto itsall affiliatesborrowers. or the broker's or originator's employer or its affiliates for the mortgage loans.

(5)Counseling (Blank).must be provided in the following manner:

(6)(i) All information indicated in connectionperson; with the TILA-RESPA Integrated Loan Estimate Disclosure or on the Good Faith Estimate and Truth in Lending statement disclosures given to the borrower by the broker or originator.

(7)or Annual(ii) realby estateremote taxeselectronic foror thetelephonic property,means, together with anythe assessmentspermission payableof inall connectionborrowers, withwhere the propertysession tocan be securedconducted byin privacy, the collateralcounselor andis able to verify the proposedidentity monthlyof principaleach borrower, and interestthe chargecounseling ofis alldocumented loansby the counselor, subject to any rules that may be takenenacted by the borrowerDepartment and, securedor bydocumented thetelephone HB5231counseling -where 22a -hardship LRB103would 37487be RTMimposed 67610on bone propertyor ofmore theborrowers. borrower.

(8)A Informationhardship concerningshall howexist in instances in which the brokerborrower is confined to his or originatorher obtainedhome thedue clientto andmedical conditions, as verified in writing by a physician, or the nameborrower ofresides its50 referralmiles source,or ifmore any.from the nearest participating HUD-approved housing counseling agency.

(9)"Counselor" Informationmeans concerninga thecounselor noticesemployed provided by thea brokerHUD-approved orhousing originatorcounseling toagency. the borrower as required by law and the date those notices were given.

(10)"Credit Informationscore" concerningmeans whether a salecredit andrisk leasebackscore isas contemplateddefined andby 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 lessorfollowing andcredit lessee,reporting seller,agencies andor purchaser.their successors:

(11)Equifax, AnyInc., andExperian allInformation financingSolutions, byInc., theand borrowerTransUnion forLLC. the subject property within 12 months prior to the date of application.

(12)If Loanthe information,HB5231 includingEngrossed interest- rate,22 term,- purchaseLRB103 price,37487 downRTM payment,67610 andb closingborrower's costs.credit report contains credit scores from 2 reporting agencies, then the broker or loan originator shall report the lower score.

(13)If Whether the buyerborrower's iscredit areport first-timecontains homebuyercredit scores from 3 reporting agencies, then the broker or refinancingloan aoriginator primaryshall residence.report the middle score.

(14)"Department" Whethermeans the loanDepartment permitsof interestFinancial onlyand payments.Professional Regulation.

(15)"Exempt Whetherperson theor loanentity" maymeans resultthat term as it is defined in negativesubsection amortization.subsections (d)(1), (d)(1.5), and (d)(1.8) of Section 1-4 of the Residential Mortgage License Act of 1987.

(16)"First-time Whetherhomebuyer" themeans totala pointsborrower andwho feeshas payablenot byheld thean borrowersownership atinterest orin beforeresidential closingproperty. will exceed 5%.

(17)"HUD-approved Whethercounseling" theor loan"counseling" includesmeans counseling given to a prepaymentborrower penalty,by and,a ifcounselor so,employed theby termsa ofHUD-approved thehousing penalty.counseling agency.

(18)"Interest Whetheronly" themeans a closed-end loan isthat anpermits ARM.one or more payments of interest without any reduction of the principal balance of the loan, other than the first payment on the loan.

(19)"Lender" Whethermeans thethat borrowerterm hasas enteredit intois adefined sharedin HB5231subsection -(g) 23of - LRB103 37487 RTM 67610 b appreciation agreement as defined in Section 1-4 of the Residential Mortgage License Act of 1987.

All"Licensee" informationmeans enteredthat intoterm theas predatoryit lendingis databasedefined mustin besubsection true(e) andof correctSection to1-4 of the bestResidential ofMortgage theLicense originator'sAct knowledge.of 1987.

The"Mortgage originatorloan" shall,means priorthat toterm closing,as correct,it update,is ordefined amendin HB5231 Engrossed - 23 - LRB103 37487 RTM 67610 b subsection (f) of Section 1-4 of the dataResidential asMortgage necessary.License Act of 1987.

If"Negative anyamortization" correctionsmeans becomean necessaryamortization aftermethod under which the fileoutstanding hasbalance beenmay accessedincrease byat any time over the closingcourse agentof orthe housingloan counselor,because athe newregular fileperiodic mustpayment bedoes entered.not cover the full amount of interest due.

(Source:"Originator" 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 HB5231 Engrossed - 24 - LRB103 37487 RTM 67610 b 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 HB5231 Engrossed - 25 - LRB103 37487 RTM 67610 b 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, where HB5231 Engrossed - 26 - LRB103 37487 RTM 67610 b applicable, nationally HUD-approved counseling agencies, 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 borrower must supply all necessary documents, as set forth by the counselor, at least 72 hours before the scheduled interview.

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 HB5231 Engrossed - 27 - LRB103 37487 RTM 67610 b 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 HB5231 Engrossed - 28 - LRB103 37487 RTM 67610 b closing agent shall attach to the mortgage a certificate of exemption, as generated by the database.

Each certificate of compliance or certificate of exemption must contain, at a minimum, one of the borrower's names on the mortgage loan and the property index number for the subject property.

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.

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 HB5231 Engrossed - 29 - LRB103 37487 RTM 67610 b 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 HB5231 Engrossed - 30 - LRB103 37487 RTM 67610 b 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.

HB5231 Engrossed - 31 - LRB103 37487 RTM 67610 b (Source:

99-660, eff.

7-28-16;

9-15-17.) (765 ILCS 77/73) Sec.

73.

Standards for counseling.

A borrower or borrowers subject to this Article shall be recommended for counseling if, after reviewing the information in the predatory lending database submitted under Section 72, the Department finds the borrower or borrowers are all first-time homebuyers or refinancing a primary residence and the loan is a mortgage that includes one or more of the following:

(1) the loan permits interest only payments;

(2) the loan may result in negative amortization;

(3) the total points and fees payable by the borrower at or before closing will exceed 5%;

(4) the loan includes a prepayment penalty;

or (5) the loan is an ARM;

or .

(6) the borrower has entered into a shared HB5231 - 24 - LRB103 37487 RTM 67610 b appreciation agreement as defined in Section 1-4 of the Residential Mortgage License Act of 1987.

(Source:

P.A.

95-691, eff.

6-1-08.) Section 99.

Effective date.

This Act takes effect upon becoming law.