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91_HB3868
LRB9112116SMtm
1 AN ACT to create the Home Loan Collateral Fund Act.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Home Loan Collateral Fund Act.
6 Section 5. Definitions. For the purposes of this Act:
7 "Annual percentage rate" means the annual percentage rate
8 for a loan calculated according to the provisions of the
9 federal Truth-in-Lending Act and the regulations promulgated
10 thereunder by the Federal Reserve Board.
11 "High-cost home loan" means a home loan in which the
12 annual percentage rate at the consummation of the loan
13 exceeds by more than 6 percentage points the weekly average
14 yield on United States Treasury securities adjusted to a
15 constant maturity of one year, as made available by the
16 Federal Reserve Board, as of the week immediately preceding
17 the week in which the interest rate for the loan is
18 established.
19 "Home loan" means a loan, other than an open-end credit
20 plan or a reverse mortgage transaction, for which (i) the
21 principal amount of the loan does not exceed 50% of the
22 conforming loan size limit for a single-family dwelling as
23 established from time to time by the Federal National
24 Mortgage Association, (ii) the borrower is a natural person,
25 (iii) the debt is incurred by the borrower primarily for
26 personal, family, or household purposes, and (iv) the loan is
27 secured by a mortgage or deed of trust on real estate upon
28 which there is located or there is to be located a structure
29 designed principally for the occupancy of one family and that
30 is or will be occupied by the borrower as the borrower's
31 principal dwelling.
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1 "Obligor" means each borrower, coborrower, cosigner, or
2 guarantor obligated to repay a loan.
3 Section 5. The Home Loan Collateral Fund. The Home Loan
4 Collateral Fund is created as a special fund in the State
5 treasury. The Home Loan Collateral Fund shall be
6 administered by the State Treasurer to provide collateral for
7 Illinois citizens seeking home loans for a home in the State
8 or seeking to avoid foreclosure on an existing home loan for
9 a home in the State. All interest earned from the investment
10 or deposit of moneys accumulated in the Home Loan Collateral
11 Fund shall, pursuant to Section 4.1 of the State Finance Act,
12 be deposited into the Home Loan Collateral Fund. The State
13 Treasurer shall transfer from the General Revenue Fund, to
14 the Home Loan Collateral Fund, an amount equal to the full
15 amount of moneys appropriated by the General Assembly for
16 transfer to the Home Loan Collateral Fund.
17 Section 10. Administration. The State Treasurer shall
18 administer the Home Loan Collateral Fund as follows:
19 (1) The State Treasurer may pledge a portion of the
20 Home Loan Collateral Fund to financial institutions
21 extending home loans to Illinois citizens purchasing
22 homes in Illinois. The amount of the Home Loan Collateral
23 Fund pledged to guarantee a home loan shall not exceed
24 10% of the appraised value of the home. In order for a
25 home loan to qualify for collateralization from the Home
26 Loan Collateral Fund, the financial institution making
27 the loan must certify to the State Treasurer that the
28 financial institution would not be able to offer the
29 borrower a home loan other than a high-cost home loan
30 without the use of the Home Loan Collateral Fund. The
31 Home Loan Collateral Fund may not be pledged to secure
32 high-cost home loans.
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1 (2) The State Treasurer may pledge a portion of the
2 Home Loan Collateral Fund to a financial institution that
3 provides loans to Illinois citizens who have failed to
4 make payments on home loans as a result of a temporary
5 layoff or a disability. To qualify, the borrower must
6 have resumed making payments on the home loan. The loan
7 must be used to make the payments on the home loan that
8 are past due. The amount of the Home Loan Collateral Fund
9 that is pledged to a financial institution for a home
10 loan shall not exceed the amount of the mortgage payments
11 that are past due. The annual percentage rate on the loan
12 must be less than the annual percentage rate on a
13 high-cost home loan.
14 (3) The State Treasurer's costs to administer the
15 Home Loan Collateral Fund may be paid from the Fund. The
16 amount for this purpose may not exceed 5% of the amount
17 of the Home Loan Collateral Fund in any one fiscal year.
18 Section 15. Restrictions. The State Treasurer shall
19 observe and require that lenders observe the following
20 restrictions on the use of Home Loan Home Loan Collateral
21 Fund:
22 (1) No more than 3% of the Home Loan Collateral
23 Fund may be pledged to secure loans issued by any one
24 lender.
25 (2) No prepayment fees or penalties may be
26 contracted by the borrower and lender with respect to a
27 loan secured by the Home Loan Collateral Fund.
28 (3) The lender shall not knowingly or intentionally
29 engage in the practice of flipping a loan secured by the
30 Home Loan Collateral Fund. For the purpose of this item
31 (3), "flipping a loan" means the making of a home loan to
32 a borrower that refinances an existing home loan when the
33 new loan does not have reasonable, tangible net benefit
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1 to the borrower considering all of the circumstances,
2 including the terms of both the new and refinanced loans,
3 the cost of the new loan, and the borrowers
4 circumstances.
5 (4) When there is a charge in addition to the
6 stated rate of interest payable directly or indirectly
7 by the borrower and imposed directly or indirectly by the
8 lender as consideration for a loan secured by the Home
9 Loan Collateral Fund, whether paid by the borrower or the
10 seller to a third party in connection with the loan, the
11 charge shall not exceed 3% of the total loan amount.
12 (5) The lender must reasonably believe at the time
13 a loan secured by the Home Loan Collateral Fund is
14 consummated that one or more of the obligors, when
15 considered individually or collectively, will be able to
16 make the scheduled payments to repay the obligation based
17 on a consideration of their current and expected income,
18 current obligations, employment status, and other
19 financial resources (other than the borrower's equity in
20 the dwelling that secures repayment of the loan). An
21 obligor shall be presumed to be able to make the
22 scheduled payments to repay the obligation if, at the
23 time the loan is consummated, the obligor's total monthly
24 debts, including amounts owed under the loan, do not
25 exceed 45% of the obligor's monthly gross income as
26 verified by the credit application, the obligor's
27 financial statement, a credit report, financial
28 information provided to the lender by or on behalf of the
29 obligor, or any other reasonable means.
30 Section 20. Rules and procedures. The State Treasurer
31 shall establish rules and procedures for the administration
32 of the Home Loan Collateral Fund and the Home Loan Collateral
33 Fund Act.
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1 Section 95. The State Finance Act is amended by adding
2 Section 5.541 as follows:
3 (30 ILCS 105/5.541 new)
4 Sec. 5.541. The Home Loan Collateral Fund. This Fund is
5 not subject to the provisions of subsection (c) of Section 5.