Illinois General Assembly - Full Text of HB4030
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Full Text of HB4030  101st General Assembly




State of Illinois
2019 and 2020


Introduced 1/8/2020, by Rep. Jonathan Carroll


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    "Bona fide discount points" means loan discount points that
11are knowingly paid by the consumer for the purpose of reducing,
12and that in fact result in a bona fide reduction of, the
13interest rate or time price differential applicable to the
15    "Borrower" means a natural person who seeks or obtains a
16high risk home loan.
17    "Commissioner" means the Commissioner of the Office of
18Banks and Real Estate.
19    "Department" means the Department of Financial
21    "Director" means the Director of Financial Institutions.
22    "Good faith" means honesty in fact in the conduct or
23transaction concerned.



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1    "High risk home loan" means a consumer credit transaction,
2other than a reverse mortgage, that is secured by the
3consumer's principal dwelling if: (i) at the time of
4origination, the annual percentage rate exceeds by more than 6
5percentage points in the case of a first lien mortgage, or by
6more than 8 percentage points in the case of a junior mortgage,
7the average prime offer rate, as defined in Section
8129C(b)(2)(B) of the federal Truth in Lending Act, for a
9comparable transaction as of the date on which the interest
10rate for the transaction is set, or if the dwelling is personal
11property, then as provided under 15 U.S.C. 1602(bb), as
12amended, and any corresponding regulation, as amended, (ii) the
13loan documents permit the creditor to charge or collect
14prepayment fees or penalties more than 36 months after the
15transaction closing or such fees exceed, in the aggregate, more
16than 2% of the amount prepaid, or (iii) the total points and
17fees payable in connection with the transaction, other than
18bona fide third-party charges not retained by the mortgage
19originator, creditor, or an affiliate of the mortgage
20originator or creditor, will exceed (1) 5% of the total loan
21amount in the case of a transaction for $20,000 (or such other
22dollar amount as prescribed by federal regulation pursuant to
23the federal Dodd-Frank Act) or more or (2) the lesser of 8% of
24the total loan amount or $1,000 (or such other dollar amount as
25prescribed by federal regulation pursuant to the federal
26Dodd-Frank Act) in the case of a transaction for less than



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1$20,000 (or such other dollar amount as prescribed by federal
2regulation pursuant to the federal Dodd-Frank Act), except
3that, with respect to all transactions, bona fide loan discount
4points may be excluded as provided for in Section 35 of this
5Act. "High risk home loan" does not include a loan for reverse
6mortgage financing of residential real estate, including under
7programs regulated by the Federal Housing Administration
8(FHA), a loan that is made primarily for a business purpose
9unrelated to the residential real property securing the loan,
10or a consumer credit transaction made by a natural person who
11provides seller financing secured by a principal residence no
12more than 3 times in a 12-month period, provided such consumer
13credit transaction is not made by a person that has constructed
14or acted as a contractor for the construction of the residence
15in the ordinary course of business of such person.
16    "Lender" means a natural or artificial person who
17transfers, deals in, offers, or makes a high risk home loan.
18"Lender" includes, but is not limited to, creditors and brokers
19who transfer, deal in, offer, or make high risk home loans.
20"Lender" does not include purchasers, assignees, or subsequent
21holders of high risk home loans.
22    "Office" means the Office of Banks and Real Estate.
23    "Points and fees" means all items considered to be points
24and fees under 12 CFR 226.32 (2000, or as initially amended
25pursuant to Section 1431 of the federal Dodd-Frank Act with no
26subsequent amendments or editions included, whichever is



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1later); compensation paid directly or indirectly by a consumer
2or creditor to a mortgage broker from any source, including a
3broker that originates a loan in its own name in a table-funded
4transaction, not otherwise included in 12 CFR 226.4; the
5maximum prepayment fees and penalties that may be charged or
6collected under the terms of the credit transaction; all
7prepayment fees or penalties that are incurred by the consumer
8if the loan refinances a previous loan made or currently held
9by the same creditor or an affiliate of the creditor; and
10premiums or other charges payable at or before closing or
11financed directly or indirectly into the loan for any credit
12life, credit disability, credit unemployment, credit property,
13other accident, loss of income, life, or health insurance or
14payments directly or indirectly for any debt cancellation or
15suspension agreement or contract, except that insurance
16premiums or debt cancellation or suspension fees calculated and
17paid in full on a monthly basis shall not be considered
18financed by the creditor. "Points and fees" does not include
19any insurance premium provided by an agency of the federal
20government or an agency of a state; any insurance premium paid
21by the consumer after closing; and any amount of a premium,
22charge, or fee that is not in excess of the amount payable
23under policies in effect at the time of origination under
24Section 203(c)(2)(A) of the National Housing Act (12 U.S.C.
251709(c)(2)(A)), provided that the premium, charge, or fee is
26required to be refundable on a pro-rated basis and the refund



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1is automatically issued upon notification of the satisfaction
2of the underlying mortgage loan.
3    "Prepayment penalty" and "prepayment fees or penalties"
4mean: (i) for a closed-end credit transaction, a charge imposed
5for paying all or part of the transaction's principal before
6the date on which the principal is due, other than a waived,
7bona fide third-party charge that the creditor imposes if the
8consumer prepays all of the transaction's principal sooner than
936 months after consummation and (ii) for an open-end credit
10plan, a charge imposed by the creditor if the consumer
11terminates the open-end credit plan prior to the end of its
12term, other than a waived, bona fide third-party charge that
13the creditor imposes if the consumer terminates the open-end
14credit plan sooner than 36 months after account opening.
15    "Reasonable" means fair, proper, just, or prudent under the
17    "Servicer" means any entity chartered under the Illinois
18Banking Act, the Savings Bank Act, the Illinois Credit Union
19Act, or the Illinois Savings and Loan Act of 1985 and any
20person or entity licensed under the Residential Mortgage
21License Act of 1987, the Consumer Installment Loan Act, or the
22Sales Finance Agency Act who is responsible for the collection
23or remittance for, or has the right or obligation to collect or
24remit for, any lender, note owner, or note holder or for a
25licensee's own account, of payments, interest, principal, and
26trust items (such as hazard insurance and taxes on a



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1residential mortgage loan) in accordance with the terms of the
2residential mortgage loan, including loan payment follow-up,
3delinquency loan follow-up, loan analysis, and any
4notifications to the borrower that are necessary to enable the
5borrower to keep the loan current and in good standing.
6    "Total loan amount" has the same meaning as that term is
7given in 12 CFR 226.32 and shall be calculated in accordance
8with the Federal Reserve Board's Official Staff Commentary to
9that regulation.
10(Source: P.A. 99-150, eff. 7-28-15; 99-288, eff. 8-5-15;
1199-642, eff. 7-28-16; 100-201, eff. 8-18-17.)