97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB0061

 

Introduced 1/27/2011, by Sen. Ira I. Silverstein

 

SYNOPSIS AS INTRODUCED:
 
765 ILCS 940/5

    Amends the Mortgage Rescue Fraud Act. Changes definition of "distressed property consultant" by narrowing the attorney exception to the definition, so that an attorney is only considered to be excluded from the definition of "distressed property consultant" if the attorney is licensed in Illinois and is providing distressed property consultant services as an ancillary matter to the attorney's representation of an owner of distressed property as a client. Effective immediately.


LRB097 00511 AJO 40529 b

 

 

A BILL FOR

 

SB0061LRB097 00511 AJO 40529 b

1    AN ACT concerning civil law.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Mortgage Rescue Fraud Act is amended by
5changing Section 5 as follows:
 
6    (765 ILCS 940/5)
7    Sec. 5. Definitions. As used in this Act:
8    "Distressed property" means residential real property
9consisting of one to 6 family dwelling units that is in
10foreclosure or at risk of loss due to nonpayment of taxes, or
11whose owner is more than 30 days delinquent on any loan that is
12secured by the property.
13    "Distressed property consultant" means any person who,
14directly or indirectly, for compensation from the owner, makes
15any solicitation, representation, or offer to perform or who,
16for compensation from the owner, performs any service that the
17person represents will in any manner do any of the following:
18        (1) stop or postpone the foreclosure sale or stop or
19    postpone the loss of the home due to nonpayment of taxes;
20        (2) obtain any forbearance from any beneficiary or
21    mortgagee, or relief with respect to a tax sale of the
22    property;
23        (3) assist the owner to exercise any right of

 

 

SB0061- 2 -LRB097 00511 AJO 40529 b

1    reinstatement or right of redemption;
2        (4) obtain any extension of the period within which the
3    owner may reinstate the owner's rights with respect to the
4    property;
5        (5) obtain any waiver of an acceleration clause
6    contained in any promissory note or contract secured by a
7    mortgage on a distressed property or contained in the
8    mortgage;
9        (6) assist the owner in foreclosure, loan default, or
10    post-tax sale redemption period to obtain a loan or advance
11    of funds;
12        (7) avoid or ameliorate the impairment of the owner's
13    credit resulting from the recording of a notice of default
14    or the conduct of a foreclosure sale or tax sale; or
15        (8) save the owner's residence from foreclosure or save
16    the owner from loss of home due to nonpayment of taxes.
17    A "distressed property consultant" does not include any of
18the following:
19        (1) a person or the person's authorized agent acting
20    under the express authority or written approval of the
21    Department of Housing and Urban Development;
22        (2) a person who holds or is owed an obligation secured
23    by a lien on any distressed property, or a person acting
24    under the express authorization or written approval of such
25    person, when the person performs services in connection
26    with the obligation or lien, if the obligation or lien did

 

 

SB0061- 3 -LRB097 00511 AJO 40529 b

1    not arise as the result of or as part of a proposed
2    distressed property conveyance;
3        (3) banks, savings banks, savings and loan
4    associations, credit unions, and insurance companies
5    organized, chartered, or holding a certificate of
6    authority to do business under the laws of this State or
7    any other state or under the laws of the United States;
8        (4) an attorney attorneys licensed in Illinois who is
9    providing distressed property consultant services as an
10    ancillary matter to the attorney's representation of an
11    owner of distressed property as a client engaged in the
12    practice of law;
13        (5) a Department of Housing and Urban Development
14    approved mortgagee and any subsidiary or affiliate of these
15    persons or entities, and any agent or employee of these
16    persons or entities, while engaged in the business of these
17    persons or entities;
18        (6) a 501(c)(3) nonprofit agency or organization,
19    doing business for no less than 5 years, that offers
20    counseling or advice to an owner of a distressed property,
21    if they do not contract for services with for-profit
22    lenders or distressed property purchasers, or any person
23    who structures or plans such a transaction;
24        (7) (blank);
25        (8) licensees of the Consumer Installment Loan Act who
26    are authorized to make loans secured by real property; or

 

 

SB0061- 4 -LRB097 00511 AJO 40529 b

1        (9) licensees of the Real Estate License Act of 2000
2    when providing licensed activities.
3    "Distressed property purchaser" means any person who
4acquires any interest in fee in a distressed property or a
5beneficial interest in a trust holding title to a distressed
6property while allowing the owner to possess, occupy, or retain
7any present or future interest in fee in the property, or any
8person who participates in a joint venture or joint enterprise
9involving a distressed property conveyance. "Distressed
10property purchaser" does not mean any person who acquires
11distressed property at a short sale or any person acting in
12participation with any person who acquires distressed property
13at a short sale, if that person does not promise to convey an
14interest in fee back to the owner or does not give the owner an
15option to purchase the property at a later date.
16    "Distressed property conveyance" means a transaction in
17which an owner of a distressed property transfers an interest
18in fee in the distressed property or in which the holder of all
19or some part of the beneficial interest in a trust holding
20title to a distressed property transfers that interest; the
21acquirer of the property allows the owner of the distressed
22property to occupy the property; and the acquirer of the
23property or a person acting in participation with the acquirer
24of the property conveys or promises to convey an interest in
25fee back to the owner or gives the owner an option to purchase
26the property at a later date.

 

 

SB0061- 5 -LRB097 00511 AJO 40529 b

1    "Person" means any individual, partnership, corporation,
2limited liability company, association, or other group or
3entity, however organized.
4    "Service" means, without limitation, any of the following:
5        (1) debt, budget, or financial counseling of any type;
6        (2) receiving money for the purpose of distributing it
7    to creditors in payment or partial payment of any
8    obligation secured by a lien on a distressed property;
9        (3) contacting creditors on behalf of an owner of a
10    residence that is distressed property;
11        (4) arranging or attempting to arrange for an extension
12    of the period within which the owner of a distressed
13    property may cure the owner's default and reinstate his or
14    her obligation;
15        (5) arranging or attempting to arrange for any delay or
16    postponement of the time of sale of the distressed
17    property;
18        (6) advising the filing of any document or assisting in
19    any manner in the preparation of any document for filing
20    with any court; or
21        (7) giving any advice, explanation, or instruction to
22    an owner of a distressed property that in any manner
23    relates to the cure of a default or forfeiture or to the
24    postponement or avoidance of sale of the distressed
25    property.
26(Source: P.A. 94-822, eff. 1-1-07; 95-691, eff. 6-1-08;

 

 

SB0061- 6 -LRB097 00511 AJO 40529 b

195-1047, eff. 4-6-09.)
 
2    Section 99. Effective date. This Act takes effect upon
3becoming law.