Bill Text: IL HB4030 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the High Risk Home Loan Act. Provides that "high risk home loan" does not include a loan for reverse mortgage financing of residential real estate, including under programs regulated by the Federal Housing Administration (FHA).

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2020-02-18 - Tabled [HB4030 Detail]

Download: Illinois-2019-HB4030-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB4030 Introduced , by Rep. Jonathan Carroll SYNOPSIS AS INTRODUCED:
815 ILCS 137/10
Amends the High Risk Home Loan Act. Provides that "high risk home loan" does not include a loan for reverse mortgage financing of residential real estate, including under programs regulated by the Federal Housing Administration (FHA).
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A BILL FOR
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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The High Risk Home Loan Act is amended by
changing Section 10 as follows:
(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.

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"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

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$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 for reverse
mortgage financing of residential real estate, including under
programs regulated by the Federal Housing Administration
(FHA), 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

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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

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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

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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.)