State of Illinois
92nd General Assembly
Legislation

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[ Engrossed ][ Enrolled ][ Senate Amendment 001 ]


92_SB0049

 
                                               LRB9201970MWcd

 1        AN ACT concerning home mortgages.

 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    Local Government Housing Finance Act.

 6        Section 5. Definitions.  In this Act:
 7        "Appraised value" means the fair market value of  a  home
 8    determined  in  accordance with generally accepted procedures
 9    and standards applicable to the appraisal of real property.
10        "Authority" means any county or any municipality in  this
11    State.
12        "Bonds"  means  any  revenue bonds  authorized under this
13    Act and payable as provided under this Act.
14        "Corporate authorities" means the  county  board  or  the
15    corporate  authorities  of  a  municipality as defined in the
16    Illinois Municipal Code.
17        "Home" means  real  property  and  improvements  on  real
18    property  located within the Authority consisting of not more
19    than  4  dwelling  units,  including,  but  not  limited  to,
20    condominium units owned by  one  mortgagor  who  occupies  or
21    intends to occupy one of the units.
22        "Home  mortgage loan" means an interest-bearing loan to a
23    mortgagor evidenced by a promissory note  and  secured  by  a
24    mortgage on a home purchased or originated in accordance with
25    this  Act  made  for the purpose of acquiring a home having a
26    purchase price less than the maximum home value.
27        "Lender" means any lending institution participating in a
28    residential housing finance plan as the  originator  of  home
29    mortgage loans.
30        "Lending   institution"  means  any  bank,  bank  holding
31    company, credit union, trust company, savings bank,  national
 
                            -2-                LRB9201970MWcd
 1    banking  association,  savings and loan association, building
 2    and loan association, mortgage  banker,  or  other  financial
 3    institution  that  customarily  provides service or otherwise
 4    aids in the financing  of  home  mortgages,  or  any  holding
 5    company for any of the foregoing.
 6        "Maximum  home  value" means the amount determined by the
 7    corporate authorities.
 8        "Mortgagor" means a person of low or moderate income  who
 9    has  received or qualifies to receive a home mortgage loan on
10    a home.
11        "Ordinance" means an ordinance adopted  and  approved  by
12    the corporate authorities of an Authority.
13        "Purchase  price"  means the actual consideration paid to
14    the seller of a home.
15        "Person" means a natural person or persons  or  a  trust,
16    provided  that  the  trust  is  for  the benefit of a natural
17    person or members of that person's immediate family.
18        "Participation  commitment"  means  any  undertaking   or
19    agreement  by  a  lending  institution  to participate in the
20    implementation of a residential housing finance plan.
21        "Persons of low or moderate income"  means  a  person  or
22    family  (consisting of one or more persons all of whom occupy
23    or  will  occupy  the  home)  whose  aggregate  gross  income
24    including the gross income of any co-signer or  guarantor  of
25    the  promissory  note made in connection with the making of a
26    home mortgage loan does not exceed a  maximum  amount  to  be
27    established  by  the  corporate authorities and determined in
28    accordance with appropriate criteria, rules, and regulations,
29    approved by the corporate authorities in connection with  the
30    implementation of a residential housing finance plan.
31        "Residential   housing  finance  plan"  means  a  program
32    implemented under this Act by an Authority to assist  persons
33    of  low  or  moderate  income  in acquiring safe, decent, and
34    sanitary housing that they can afford.
 
                            -3-                LRB9201970MWcd
 1        "State" means the State of Illinois.
 2        "Trustee" means any  State  or  national  bank  or  trust
 3    company,  having  trust powers, located within or outside the
 4    State of Illinois, that  may  be  appointed  to  act  in  any
 5    capacity  with  respect to a residential housing finance plan
 6    and the issuance  of  bonds  to  finance  that  plan  whether
 7    designated as a trustee, custodian, or administrator.

 8        Section  10.   Powers.   In  addition  to  powers that an
 9    Authority  may  now  have,  Authorities  have  the  following
10    powers:
11        (a)  To acquire, and to contract and enter  into  advance
12    commitments   to   acquire,   directly  or  indirectly,  home
13    mortgages owned by lending institutions  at  any  prices  and
14    upon  any  other  terms and conditions that are determined by
15    the Authority or trustee that the Authority designates as its
16    agent.
17        (b)  To  make  and   execute   contracts   with   lending
18    institutions  for  the  origination  and  servicing  of  home
19    mortgage  loans  on  behalf  of  an  Authority and to pay the
20    reasonable value of  services  rendered  in  accordance  with
21    those contracts.
22        (c)  To  make loans to lenders to enable those lenders to
23    make home mortgage loans in accordance with this Act.
24        (d)  To establish, by rules, regulations,  or  ordinances
25    relating  to  the  issuance  of  bonds  or  in  any financing
26    documents relating to the issuance of  bonds,  any  standards
27    and  requirements applicable to the purchase of home mortgage
28    loans or the origination of home mortgage loans or  loans  to
29    lenders  that  the  Authority deems necessary or desirable to
30    effectuate the public purposes of this Act, including but not
31    limited to: (i) the time within  which  lending  institutions
32    must  make  participation  commitments and make disbursements
33    for home mortgage loans; (ii) the  terms  and  conditions  of
 
                            -4-                LRB9201970MWcd
 1    home  mortgage  loans to be acquired or originated; (iii) the
 2    standards and criteria to be  applied  by  the  Authority  in
 3    defining  persons of low or moderate income; (iv) the amounts
 4    and types of  insurance  coverage  required  on  homes,  home
 5    mortgage  loans,  and  bonds;  (v)  the  representations  and
 6    warranties to be required of persons and lending institutions
 7    as   evidence   of   compliance   with   the   standards  and
 8    requirements; (vi) restrictions as to interest rate and other
 9    terms of home mortgage loans or the return realized therefrom
10    by  lending  institutions;  (vii)  the  type  and  amount  of
11    collateral security to be provided to assure repayment of any
12    loans to lenders by the Authority and to assure repayment  of
13    bonds;  and  (viii) any other matters related to the purchase
14    or origination of home mortgage loans or the making of  loans
15    to  lenders that shall be deemed relevant or necessary by the
16    corporate authorities.
17        (e)  To require from each lending institution from  which
18    home  mortgage  loans  are  to  be  purchased  or  that  will
19    originate  home  mortgage loans on behalf of the Authority or
20    from lenders to which loans are made the submission,  at  the
21    time   of   making  participation  commitments,  of  evidence
22    satisfactory to the Authority of the ability and intention of
23    the lending institutions to make home mortgage loans and  the
24    submission,  within  the  time specified by the Authority for
25    making disbursements for home  mortgage  loans,  of  evidence
26    satisfactory  to the Authority of the making of home mortgage
27    loans and of compliance with any standards  and  requirements
28    established by the Authority.
29        (f)  To  require  that  a  lending  institution or lender
30    furnish, prior to or concurrent  with  the  delivery  of  any
31    participation   commitment   by   a  lending  institution,  a
32    commitment fee in the form  of  a  cash  deposit,  letter  of
33    credit,  promissory  note,  surety  bond, or other instrument
34    approved by the  corporate  authorities  executed  by  or  on
 
                            -5-                LRB9201970MWcd
 1    behalf  of  the  lending  institution,  in  an  amount  to be
 2    determined by the corporate authorities.
 3        (g)  To issue its bonds to defray, in whole or  in  part,
 4    (i)  the cost of acquiring or originating home mortgage loans
 5    or making loans to lenders in order to enable  them  to  make
 6    home  mortgage  loans; (ii) if deemed necessary or advisable,
 7    the cost of paying interest  on  bonds  during  a  reasonable
 8    period  necessary  to  acquire or originate the home mortgage
 9    loans or to make the loans to the lender; (iii) the costs  of
10    studies  and  surveys, insurance premiums, underwriting fees,
11    legal,  accounting,  and  marketing  services   incurred   in
12    connection  with  the  issuance  and  the  sale of the bonds,
13    including amounts required to establish reasonably  necessary
14    bond  and  interest reserve accounts, and trustee, custodian,
15    and  rating  agency  fees;  (iv)  the  costs  of   reasonable
16    reserves; and (v) any other costs that are reasonably related
17    to the foregoing.
18        (h)  To  authorize  the  sale or other disposition of any
19    home mortgage loan, in whole or in part, upon any  terms,  at
20    any  price  and  time,  and  from  time  to  time,  as may be
21    necessary to assure that the  revenues  and  receipts  to  be
22    derived  with  respect  to  the home mortgage loans, together
23    with any insurance proceeds, funds held in reserve  accounts,
24    and  earnings thereon, shall produce and provide revenues and
25    receipts at  least  sufficient  to  provide  for  the  prompt
26    payment  of  the  principal, redemption premiums, if any, and
27    interest at maturity of all bonds issued pursuant to this Act
28    or to otherwise authorize the sale or  other  disposition  of
29    any  home  mortgage  loan  after  the bonds have been paid or
30    deemed to be paid.
31        (i)  To pledge any revenues and receipts to  be  received
32    from any home mortgage loans to the punctual payment of bonds
33    authorized  under  this  Act, and the interest and redemption
34    premiums, if any, on the bonds.
 
                            -6-                LRB9201970MWcd
 1        (j)  To mortgage, pledge, or grant security interests  in
 2    any home mortgage loans, notes, or other property in favor of
 3    the holder or holders of bonds issued therefor.
 4        (k)  To  issue  its  bonds  in  any  amount  that  may be
 5    necessary (and not limited by the amount of  bonds  refunded)
 6    for  the  purpose  of  refunding, in whole or in part, at any
 7    time,  bonds  previously  issued,  the  proceeds   of   which
 8    refunding  bonds  may  be  used,  at  the  discretion  of the
 9    corporate authorities, for paying bonds at maturity,  calling
10    bonds for payment, and paying bonds prior to maturity, or for
11    deposit  into  an escrow or trust fund in advance of maturity
12    of bonds to be  held  for  payment  thereof  at  maturity  or
13    earlier.
14        (l)  To  appoint  or  designate a trustee or trustees for
15    the benefit of the bondholders and  to  delegate  and  assign
16    thereto,  insofar  as  it  may  lawfully  do  so, its rights,
17    duties, and responsibilities with respect to carrying out and
18    enforcing the terms and provisions of its residential housing
19    finance plan.
20        (m)  To provide for and authorize the use and disposition
21    of any funds remaining in the possession of the Authority  or
22    its trustees following payment and retirement of the bonds of
23    a designated series issued under this Act.
24        (n)  To  make and execute contracts and other instruments
25    necessary or convenient to the exercise of any of the  powers
26    granted in this Act.

27        Section  15.   Ordinance  authorizing exercise of powers.
28    The exercise of any or all powers granted by this  Act  shall
29    be  authorized and the bonds shall be authorized to be issued
30    under this Act for the purposes set forth in this Act, by  an
31    ordinance  adopted  by  the  corporate authorities that takes
32    effect immediately upon adoption.  The  ordinance  shall  set
33    forth  a  finding  and  declaration (i) of the public purpose
 
                            -7-                LRB9201970MWcd
 1    therefor and (ii) that the ordinance is adopted  pursuant  to
 2    this  Act,  which finding and declaration shall be conclusive
 3    evidence of the  existence  and  sufficiency  of  the  public
 4    purpose  and of the power to carry out and give effect to the
 5    public purpose.
 6        The bonds shall  bear  interest  at  any  rate  or  rates
 7    without  regard  to any other law pertaining to interest rate
 8    limitations, may be payable at any time or times, may  be  in
 9    one or more series, may bear any date or dates, may mature at
10    any   time  or  times  not  exceeding  40  years  from  their
11    respective dates, may be payable in any medium of payment  at
12    any  place  or places, may carry any registration privileges,
13    may be subject to any terms of redemption  at  any  premiums,
14    may  be  executed  in  any  manner,  may  contain  any terms,
15    covenants, and conditions, and may be  in  any  form,  either
16    coupon  or  registered,  that the corporate authorities shall
17    provide.  The bonds may be sold at public or private sale  at
18    any  price,  in  any  manner  and  upon  any  terms  that the
19    corporate authorities may authorize, and may be issued to the
20    purchaser or purchasers of bonds sold under  this  Act.   The
21    bonds  and interim notes shall be deemed to be securities and
22    negotiable instruments within the  meaning  of  and  for  all
23    purposes of the Uniform Commercial Code.

24        Section  20.  Covenants.   Any ordinances authorizing the
25    issuance of the bonds under this Act  may  contain  covenants
26    regarding  (i)  the  use  and disposition of the revenues and
27    receipts from any home mortgage loans for which the bonds are
28    to be issued, including the creation and maintenance  of  any
29    reasonable   and   adequate   reserves   that  the  corporate
30    authorities may determine; (ii) the insurance to  be  carried
31    on   any  home  mortgage  loan  or  bonds  and  the  use  and
32    disposition of the proceeds  of  that  insurance;  (iii)  the
33    appointment  of  one  or more trustees for the benefit of the
 
                            -8-                LRB9201970MWcd
 1    bondholders, paying agents, or  bond  registrants;  (iv)  the
 2    investment  of  any  funds  held  by  the  trustee or lender,
 3    notwithstanding any  other  law  to  the  contrary;  (v)  the
 4    maximum  rate payable on any home mortgage loan; and (vi) the
 5    terms and conditions upon which the holders of the  bonds  or
 6    any  portion of the bonds, or any trustees for the bonds, are
 7    entitled to the appointment of  a  receiver  by  a  court  of
 8    competent  jurisdiction,  and  any  terms  and conditions may
 9    provide that the receiver may take  possession  of  the  home
10    mortgage  loans  or  any  part thereof and maintain, sell, or
11    otherwise dispose of the home mortgage loans, prescribe other
12    payments, and collect, receive,  and  apply  all  income  and
13    revenues   thereafter   derived   therefrom.    An  ordinance
14    authorizing the issuance of bonds under this Act may  provide
15    that payment of the principal of, redemption premium, if any,
16    on  and  interest on any bonds issued under this Act shall be
17    secured by a mortgage, pledge, security  interest,  insurance
18    agreement,  or  indenture  of trust of or with respect to any
19    home mortgage loans and a lien upon the revenues and receipts
20    derived therefrom or from any notes or other  obligations  of
21    lending  institutions  with  respect  to  which the bonds are
22    issued.  The mortgage, pledge, security  interest,  insurance
23    agreement,  or  indenture of trust constitute a contract with
24    the holder or holders of the bonds  and  continue  in  effect
25    until  the  principal of, the interest on, and the redemption
26    premiums, if any, on  the  bonds  have  been  fully  paid  or
27    provision  made  for the payment of the bonds, and the duties
28    of the Authority and its corporate authorities  and  officers
29    under  this  Act  and any ordinance and any mortgage, pledge,
30    security interest, insurance agreement, or indenture of trust
31    shall be enforceable as provided therein by any bondholder by
32    mandamus,  foreclosure  of  any  mortgage,  pledge,  security
33    interest, insurance agreement,  or  indenture  of  trust,  or
34    other appropriate suit, action, or proceeding in any court of
 
                            -9-                LRB9201970MWcd
 1    competent   jurisdiction;   provided  the  ordinance  or  any
 2    mortgage, pledge, security interest, insurance agreement,  or
 3    indenture  of  trust  under  which  the  bonds are issued may
 4    provide that all remedies and rights to  enforcement  may  be
 5    vested  in a trustee (with full power of appointment) for the
 6    benefit of  all  the  bondholders,  which  trustee  shall  be
 7    subject  to the control of any number of holders or owners of
 8    any outstanding bonds as provided therein.

 9        Section 25. Signatures. The bonds shall bear  the  manual
10    or facsimile signatures of any officers of the Authority that
11    may  be designated in the ordinance authorizing the bonds and
12    the signatures constitute the valid and binding signatures of
13    the officers, notwithstanding that before the delivery of and
14    payment for the  bonds  any  or  all  of  the  persons  whose
15    signatures  appear  thereon have ceased to be officers of the
16    Authority.  The validity of the bonds shall not be  dependent
17    on  nor  affected  by  the  validity  or  regularity  of  any
18    proceedings  relating  to the home mortgage loans acquired or
19    made from proceeds of the bonds.  A recital in the bonds that
20    they are issued pursuant to  this  Act  shall  be  conclusive
21    evidence  of  their  validity  and of the regularity of their
22    issuance.

23        Section 30. Pledges; validity.  Any pledge made to secure
24    bonds shall be valid and  binding  from  the  time  when  the
25    pledge  is  made.   The  revenues and receipts or property or
26    interests in property pledged and thereafter received by  the
27    Authority or trustee shall immediately be subject to the lien
28    of  the pledge without any physical delivery of the pledge or
29    further act, and the lien of any such pledge shall  be  valid
30    and  binding as against all parties having claims of any kind
31    in tort, contract, or  otherwise  against  the  Authority  or
32    trustee  irrespective  of  whether  the  parties  have notice
 
                            -10-               LRB9201970MWcd
 1    thereof.  Neither the ordinance, nor any other instrument  by
 2    which a pledge is created, need be recorded.

 3        Section 35. Bonds; obligations  of  the  Authority.   All
 4    bonds  issued  under this Act shall be limited obligations of
 5    the Authority issuing the same, payable solely from  the  (i)
 6    bond  proceeds,  (ii)  revenues and receipts derived from the
 7    home mortgage loans or from any notes or other obligations of
 8    persons with respect  to  which  the  bonds  are  issued  and
 9    secured  by  a mortgage, pledge, security interest, insurance
10    agreement, or indenture of trust of or with respect  to  such
11    home  mortgage  loans, (iii) certain insurance proceeds which
12    may relate to the bonds or the  home  mortgage  loans,   (iv)
13    participation   fees,  or  (v)  certain  reserve  funds.   No
14    Authority shall have any right or authority to levy taxes  to
15    pay  any  of the principal of, redemption premium, if any, or
16    interest on any bonds issued pursuant  to  this  Act  or  any
17    judgment  against  an  Authority on account of the bonds.  No
18    holder of any bonds issued under  this  Act  shall  have  the
19    right  to  compel  any  exercise  of  the taxing power of any
20    Authority to pay  the  bonds,  the  interest,  or  redemption
21    premium,  if  any,  on  the  bonds,  and  the bonds shall not
22    constitute an indebtedness of the Authority, or a loan of the
23    faith and credit of the Authority, within the meaning of  any
24    constitutional or statutory provision, nor shall the bonds be
25    construed  to  create any moral obligation on the part of the
26    Authority to provide for the payment of the bonds.  It  shall
27    be  plainly  stated on the face of each bond that it has been
28    issued under the provisions of this Act and that it does  not
29    constitute an indebtedness of the Authority, or a loan of the
30    faith  and credit of the Authority, within the meaning of any
31    constitutional or statutory provision.  Bonds may  be  issued
32    pursuant  to  this  Act  without  regard to (i) any statutory
33    limitation  as  to  bonded  indebtedness  and  shall  not  be
 
                            -11-               LRB9201970MWcd
 1    included in computing total bonded  indebtedness  within  the
 2    meaning  of any statutory limitation, (ii) any requirement of
 3    competitive bidding  or  procedure  for  award  of  contracts
 4    applicable   by   any   statute,  (iii)  any  requirement  of
 5    publication of ordinance or  other  documents,  or  (iv)  any
 6    requirement of referendum or petition.

 7        Section  40.  Personal  liability; corporate authorities.
 8    Neither the  members  of  the  corporate  authorities  of  an
 9    Authority,  nor  any  official or employee the Authority, nor
10    any person executing bonds issued under  this  Act  shall  be
11    liable personally for payment of the bonds or the interest or
12    redemption  premium,  if  any,  thereon  or be subject to any
13    personal  liability  or  accountability  by  reason  of   the
14    issuance thereof.

15        Section  45.  Joint  or  cooperative  action. One or more
16    Authorities (whether or not any of them are home rule  units)
17    may  join  together  or  cooperate  with  one  another in the
18    exercise, either jointly, on behalf of  the  Authorities,  or
19    otherwise,  of  any  one or more of the powers conferred upon
20    Authorities under this Act or other enabling acts or  powers.
21    Notwithstanding  any  other  law to the contrary, one or more
22    Authorities may issue bonds on behalf  of  other  Authorities
23    (whether or not any of the Authorities are home rule units of
24    government),  whether  or  not the home mortgage loan is made
25    within the corporate limits  of  the  Authority  issuing  the
26    bonds  or  any  other  cooperating  Authority.  The  joint or
27    cooperative action shall be taken only in accordance with and
28    pursuant to a written agreement entered into between or among
29    such cooperating parties.

30        Section 50. Legal investments.  Notwithstanding any other
31    provision of law, bonds issued pursuant to this Act shall  be
 
                            -12-               LRB9201970MWcd
 1    legal  investments  for all trust funds, insurance companies,
 2    savings and  loan  associations,  investment  companies,  and
 3    banks,  both  savings  and  commercial,  and  shall  be legal
 4    investments for executors, administrators, trustees, and  all
 5    other  fiduciaries.  The bonds shall be legal investments for
 6    State school funds and for any funds which may be invested in
 7    county, municipal, or school district bonds, and  such  bonds
 8    shall  be  deemed  to  be  securities  which may properly and
 9    legally be deposited with, and  received  by,  any  State  or
10    municipal  officer  or by any agency or political subdivision
11    of the State for any purpose for which the deposit  of  bonds
12    or  obligations  of  the  State  is now, or may hereafter, be
13    authorized by law, including deposits to secure public funds.

14        Section 55. Interests of corporate officers or employees;
15    participating  lending  institutions.   Notwithstanding   the
16    provisions  of any other law to the contrary, a member of the
17    corporate authorities, or  an  officer  or  employee  of  the
18    Authority,  may  be an officer, employee, or stockholder of a
19    lending institution or lender participating in a  residential
20    housing  finance  plan of the corporate authorities, provided
21    the  member  (if  a  member  of  the  corporate  authorities)
22    declares such position or interest at a  regular  meeting  of
23    the  corporate  authorities  prior to passage of an ordinance
24    establishing  the  plan  and  abstains  from  voting  on  the
25    ordinance.

26        Section 60.  Scope  of  additional  powers.   The  powers
27    conferred  by  this  Act are in addition and supplemental to,
28    and the limitations imposed by this Act shall not affect, the
29    powers conferred upon Authorities by any other law.  This Act
30    is not a limitation upon the powers of home rule units.  Home
31    mortgage loans may be acquired, purchased, and financed,  and
32    bonds  may  be  issued  under  this  Act  for those purposes,
 
                            -13-               LRB9201970MWcd
 1    notwithstanding that any other law or power may  provide  for
 2    the   acquisition,  purchase,  and  financing  of  like  home
 3    mortgage loans, or the issuance of bonds for  like  purposes,
 4    and   without   regard  to  the  requirements,  restrictions,
 5    limitations,  or  other  provisions  contained  in  any  law,
 6    including any law relating to any requirement of  competitive
 7    bidding  or restriction imposed on the sale or disposition of
 8    property or award of contracts.  Nothing in this Act shall be
 9    deemed or construed to prohibit the exercise  of  the  powers
10    conferred  upon  Authorities in connection with the financing
11    of federally assisted housing for persons of low and moderate
12    income.

13        Section 65.  Construction.   This Act  is  necessary  for
14    the  health,  welfare,  and safety of the State, its counties
15    and municipalities, and its inhabitants; therefore, it  shall
16    be liberally construed to effect its purposes.

17        Section  99.  Effective date.  This Act takes effect upon
18    becoming law.

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