State of Illinois
2011 and 2012


Introduced 2/9/2011, by Sen. Terry Link


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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1    AN ACT concerning business.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The High Risk Home Loan Act is amended by
5changing Section 10 as follows:
6    (815 ILCS 137/10)
7    Sec. 10. Definitions. As used in this Act:
8    "Approved credit counselor" means a credit counselor
9approved by the Director of Financial Institutions.
10    "Borrower" means a natural person who seeks or obtains a
11high risk home loan.
12    "Commissioner" means the Commissioner of the Office of
13Banks and Real Estate.
14    "Department" means the Department of Financial
16    "Director" means the Director of Financial Institutions.
17    "Good faith" means honesty in fact in the conduct or
18transaction concerned.
19    "High risk home loan" means a home equity loan in which (i)
20at the time of origination, the annual percentage rate exceeds
21by more than 6 percentage points in the case of a first lien
22mortgage, or by more than 8 percentage points in the case of a
23junior mortgage, the yield on U.S. Treasury securities having



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1comparable periods of maturity to the loan maturity as of the
2fifteenth day of the month immediately preceding the month in
3which the application for the loan is received by the lender or
4(ii) the total points and fees payable by the consumer at or
5before closing will exceed the greater of 5% of the total loan
6amount or $800. The $800 figure shall be adjusted annually on
7January 1 by the annual percentage change in the Consumer Price
8Index for All Urban Consumers for all items published by the
9United States Department of Labor. "High risk home loan" does
10not include a loan for reverse mortgage financing of
11residential real estate, including under programs regulated by
12the Federal Housing Administration (FHA), or a loan that is
13made primarily for a business purpose unrelated to the
14residential real property securing the loan or to an open-end
15credit plan subject to 12 CFR 226 (2000, no subsequent
16amendments or editions are included).
17    "Home equity loan" means any loan secured by the borrower's
18primary residence where the proceeds are not used as purchase
19money for the residence.
20    "Lender" means a natural or artificial person who
21transfers, deals in, offers, or makes a high risk home loan.
22"Lender" includes, but is not limited to, creditors and brokers
23who transfer, deal in, offer, or make high risk home loans.
24"Lender" does not include purchasers, assignees, or subsequent
25holders of high risk home loans.
26    "Office" means the Office of Banks and Real Estate.



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1    "Points and fees" means all items required to be disclosed
2as points and fees under 12 CFR 226.32 (2000, no subsequent
3amendments or editions included); the premium of any single
4premium credit life, credit disability, credit unemployment,
5or any other life or health insurance that is financed directly
6or indirectly into the loan; and compensation paid directly or
7indirectly to a mortgage broker, including a broker that
8originates a loan in its own name in a table-funded
9transaction, not otherwise included in 12 CFR 226.4.
10    "Reasonable" means fair, proper, just, or prudent under the
12    "Servicer" means any entity chartered under the Illinois
13Banking Act, the Savings Bank Act, the Illinois Credit Union
14Act, or the Illinois Savings and Loan Act of 1985 and any
15person or entity licensed under the Residential Mortgage
16License Act of 1987, the Consumer Installment Loan Act, or the
17Sales Finance Agency Act who is responsible for the collection
18or remittance for, or has the right or obligation to collect or
19remit for, any lender, note owner, or note holder or for a
20licensee's own account, of payments, interest, principal, and
21trust items (such as hazard insurance and taxes on a
22residential mortgage loan) in accordance with the terms of the
23residential mortgage loan, including loan payment follow-up,
24delinquency loan follow-up, loan analysis, and any
25notifications to the borrower that are necessary to enable the
26borrower to keep the loan current and in good standing.



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1    "Total loan amount" has the same meaning as that term is
2given in 12 CFR 226.32 and shall be calculated in accordance
3with the Federal Reserve Board's Official Staff Commentary to
4that regulation.
5(Source: P.A. 93-561, eff. 1-1-04.)