205 ILCS 635/4-8

(205 ILCS 635/4-8) (from Ch. 17, par. 2324-8)

Sec. 4-8. Default rate; examination.

(a) The Commissioner shall obtain from the U.S. Department of Housing and Urban Development on a semi-annual basis that Department's default claim rates for endorsements issued by that Department.

(b) The Commissioner shall conduct an examination of each licensee having a default rate equal to or greater than 5%.

This subsection shall not be construed as a limitation of the Commissioner's examination authority under Section 4-2 of this Act or as otherwise provided in this Act. The Commissioner may require a licensee to provide loan default data as the Commissioner deems necessary for the proper enforcement of the Act.

(c) The purpose of the examination under subsection (b) shall be to determine whether the default rate of the licensee has resulted from practices which deviate from sound and accepted mortgage underwriting practices, including but not limited to credit fraud, appraisal fraud and property inspection fraud. For the purpose of conducting this examination, the Commissioner may accept materials prepared for the U.S. Department of Housing and Urban Development. At the conclusion of the examination, the Commissioner shall make his or her findings available to the Residential Mortgage Board.

(d) The Commissioner, at his or her discretion, may hold public hearings, or at the direction of the Residential Mortgage Board, shall hold public hearings. Such testimony shall be by a homeowner or mortgagor or his agent, whose residential interest is affected by the activities of the residential mortgage licensee subject to such hearing. At such public hearing, a witness may present testimony on his or her behalf concerning only his or her home, or home mortgage or a witness may authorize a third party to appear on his or her behalf. The testimony shall be restricted to information and comments related to a specific residence or specific residential mortgage application or applications for a residential mortgage or residential loan transaction. The testimony must be preceded by either a letter of complaint or a completed consumer complaint form prescribed by the Commissioner.

(e) The Commissioner shall, at the conclusion of the public hearings, release his or her findings and shall also make public any action taken with respect to the licensee. The Commissioner shall also give full consideration to the findings of this examination whenever reapplication is made by the licensee for a new license under this Act.

(f) A licensee that is examined pursuant to subsection (b) shall submit to the Commissioner a plan which shall be designed to reduce that licensee's default rate to a figure that is less than 5%. The plan shall be implemented by the licensee as approved by the Commissioner. A licensee that is examined pursuant to subsection (b) shall report monthly, for a one year period, one, 2, and 3 month defaults.

(g) Whenever the Commissioner finds that a licensee's default rate on insured mortgages is unusually high within a particular geographic area, he or she shall require that licensee to submit such information as is necessary to determine whether that licensee's practices have constituted credit fraud, appraisal fraud or property inspection fraud. The Commissioner shall promulgate such rules as are necessary to determine whether any licensee's default rate is unusually high within a particular area.

(Source: P.A. 89-355, eff. 1-1-96; 89-626, eff. 8-9-96; 90-301, eff. 8-1-97.)