Rep. Arthur Turner

Filed: 5/13/2015

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 1440

2    AMENDMENT NO. ______. Amend Senate Bill 1440, AS AMENDED,
3with reference to page and line numbers of House Amendment No.
41, as follows:
 
5by replacing line 16 on page 4 through line 16 on page 6, with
6the following:
7    "(a) The Office of the Attorney General shall develop the
8content and format of an educational document providing
9independent consumer information regarding reverse mortgages,
10potential alternatives to reverse mortgages, and the
11availability of independent counseling services, including
12services provided by nonprofit agencies certified by the
13federal government to provide required counseling for reverse
14mortgages insured by the U.S. Federal Government. The document
15shall also include a statement that the terms of a reverse
16mortgage may adversely affect the applicant's eligibility to
17obtain a tax deferral under the Senior Citizens Real Estate Tax

 

 

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1Deferral Act. The document shall be updated and revised as
2often as deemed necessary by the Office of the Attorney
3General.
4    (b) Lenders are required to provide each borrower a
5document regarding the availability of counseling services
6that shall be in at least 12-point font, containing contact
7information (including agency name, address, telephone number,
8and, if applicable, website) for agencies approved by the U.S.
9Department of Housing and Urban Development (HUD) to conduct
10reverse mortgage counseling. The agencies included on the list
11shall be in accordance with requirements for the Federal
12Housing Administration's Home Equity Conversion Mortgage
13Program. This document shall contain the following statement:
14    "IMPORTANT NOTICE: Under Illinois law, reverse mortgages
15are non-recourse loans secured by real or homestead property.
16Reverse mortgages insured by the U.S. Federal Government, known
17as Home Equity Conversion Mortgages or HECM loans, require
18people considering reverse mortgages to get counseling prior to
19submitting a completed application for the loan from an agency
20approved by the U.S. Department of Housing and Urban
21Development (HUD) to conduct reverse mortgage counseling.
22    The purpose of the counseling is to help the prospective
23borrower understand the financial implications, alternatives
24to securing a reverse mortgage, borrower obligations, costs of
25obtaining the loan, repayment conditions, and other issues.
26Counseling can also be a benefit to people considering reverse

 

 

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1mortgages not insured by the federal government. There are
2advantages to receiving this counseling in person, as this
3method allows for greater participation by the prospective
4borrower, and also allows the counselor to more accurately
5determine the prospective borrower's understanding of the
6program. However, counseling can also be conducted over the
7telephone.
8    In accordance with federal requirements, Illinois State
9law requires reverse mortgage lenders to provide potential
10reverse mortgage borrowers with a list, including contact
11information, of agencies that are approved by HUD to conduct
12reverse mortgage counseling. Contact information for
13additional approved counseling agencies is available from HUD
14or your lender.".
15    (c) At the time of the initial inquiry regarding a reverse
16mortgage or, if not practically feasible, after the borrower
17makes a request to apply for a reverse mortgage, a lender shall
18provide to the borrower the documents described in subsections
19(a) and (b) of this Section."; and
 
20on page 7, line 14, by deleting "and an analysis of the
21commitment"; and
 
22on page 7, line 22, by replacing "precludes" with "shall
23preclude"; and
 

 

 

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1on page 7, line 25, after "home" by inserting "or the lender's
2lien"; and
 
3on page 8, line 7, by removing "or"; and
 
4on page 8, by replacing lines 8 through 11 with the following:
5        "(3) offer an annuity to the borrower before the
6    closing of the reverse mortgage or before the expiration of
7    the right of the borrower to rescind the reverse mortgage
8    agreement;
9        (4) refer the borrower to anyone for the purchase of an
10    annuity before the closing of the reverse mortgage or
11    before the expiration of the right of the borrower to
12    rescind the reverse mortgage agreement; or
13        (5) provide marketing information or annuity sales
14    leads to anyone regarding the prospective borrower or
15    borrower before the closing of the reverse mortgage or
16    before the expiration of the right of the borrower to
17    rescind the reverse mortgage loan."; and
 
18on page 8, line 24, after "Program", by inserting ", nor shall
19it prohibit a borrower from using the loan proceeds to purchase
20products or services from a lender that is a financial
21institution in the ordinary course of the financial
22institution's business"; and
 

 

 

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1on page 9, by replacing lines 5 through 9 with the following:
2        "(1) the borrower has received from the lender the
3    educational document prepared by the Office of the Attorney
4    General required in subsection (a) of Section 15 and the
5    document required in subsection (b) of Section 15 regarding
6    the availability of counseling services on reverse
7    mortgages;"; and
 
8on page 9, line 21, after "product;", by inserting "however,
9nothing in this paragraph (3) shall preclude a lender from
10requiring the borrower to purchase property and casualty
11insurance, title insurance, flood insurance, or other such
12products meant to insure or protect the value of the home or
13the lender's lien and that are customary for residential
14mortgage or reverse mortgage transactions;"; and
 
15on page 9, by replacing lines 22 through 26 with the following:
16        "(4) no offer an annuity was made to the borrower
17    before the closing of the reverse mortgage or will be
18    before the expiration of the right of the borrower to
19    rescind the reverse mortgage loan;
20        (5) the borrower was not referred to anyone for the
21    purchase of an annuity before the closing of the reverse
22    mortgage or will be before the expiration of the right of
23    the borrower to rescind the reverse mortgage loan;
24        (6) the borrower was not provided marketing

 

 

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1    information or annuity sales leads to anyone regarding the
2    prospective borrower or borrower before the closing of the
3    reverse mortgage or will be before the expiration of the
4    right of the borrower to rescind the reverse mortgage loan;
5    and"; and
 
6on page 10, line 1, by replacing "(5)" with "(7)"; and
 
7on page 10, line 13, after "obligations", by inserting ", nor
8shall it prohibit a borrower from using the loan proceeds to
9purchase products or services from a lender that is a financial
10institution in the ordinary course of the financial
11institution's business"; and
 
12on page 10, by replacing lines 14 and 15 with the following:
13    "(b) The lender".