Illinois Compiled Statutes 765 ILCS 77/70 – Predatory lending database program
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(a) As used in this Article:
“Adjustable rate mortgage” or “ARM” means a closed-end mortgage transaction that allows adjustments of the loan interest rate during the first 3 years of the loan term.
“Borrower” means a person seeking a mortgage loan.
“Broker” means a “broker” or “loan broker”, as defined in subsection (p) of § 1-4 of the Residential Mortgage License Act of 1987.
“Closing agent” means an individual assigned by a title insurance company or a broker or originator to ensure that the execution of documents related to the closing of a real estate sale or the refinancing of a real estate loan and the disbursement of closing funds are in conformity with the instructions of the entity financing the transaction.
“Counseling” means in-person counseling provided by a counselor employed by a HUD-approved counseling agency to all borrowers, or documented telephone counseling where a hardship would be imposed on one or more borrowers. A hardship shall exist in instances in which the borrower is confined to his or her home due to medical conditions, as verified in writing by a physician, or the borrower resides 50 miles or more from the nearest participating HUD-approved housing counseling agency.
“Counselor” means a counselor employed by a HUD-approved housing counseling agency.
“Credit score” means a credit risk score as defined by the Fair Isaac Corporation, or its successor, and reported under such names as “BEACON”, “EMPIRICA”, and “FAIR ISAAC RISK SCORE” by one or more of the following credit reporting agencies or their successors: Equifax, Inc., Experian Information Solutions, Inc., and TransUnion LLC. If the borrower’s credit report contains credit scores from 2 reporting agencies, then the broker or loan originator shall report the lower score. If the borrower’s credit report contains credit scores from 3 reporting agencies, then the broker or loan originator shall report the middle score.
“Department” means the Department of Financial and Professional Regulation.
“Exempt person or entity” means that term as it is defined in subsections (d)(1), (d)(1.5), and (d)(1.8) of § 1-4 of the Residential Mortgage License Act of 1987.
“First-time homebuyer” means a borrower who has not held an ownership interest in residential property.
“HUD-approved counseling” or “counseling” means counseling given to a borrower by a counselor employed by a HUD-approved housing counseling agency.
“Interest only” means a closed-end loan that permits one or more payments of interest without any reduction of the principal balance of the loan, other than the first payment on the loan.
“Lender” means that term as it is defined in subsection (g) of § 1-4 of the Residential Mortgage License Act of 1987.
“Licensee” means that term as it is defined in subsection (e) of § 1-4 of the Residential Mortgage License Act of 1987.
“Mortgage loan” means that term as it is defined in subsection (f) of § 1-4 of the Residential Mortgage License Act of 1987.
“Negative amortization” means an amortization method under which the outstanding balance may increase at any time over the course of the loan because the regular periodic payment does not cover the full amount of interest due.
“Originator” means a “mortgage loan originator” as defined in subsection (jj) of § 1-4 of the Residential Mortgage License Act of 1987, except an exempt person.
“Points and fees” has the meaning ascribed to that term in Section 10 of the High Risk Home Loan Act.
“Prepayment penalty” means a charge imposed by a lender under a mortgage note or rider when the loan is paid before the expiration of the term of the loan.
“Refinancing” means a loan secured by the borrower’s or borrowers’ primary residence where the proceeds are not used as purchase money for the residence.
“Title insurance company” means any domestic company organized under the laws of this State for the purpose of conducting the business of guaranteeing or insuring titles to real estate and any title insurance company organized under the laws of another State, the District of Columbia, or a foreign government and authorized to transact the business of guaranteeing or insuring titles to real estate in this State.
(a-5) A predatory lending database program shall be established within Cook County. The program shall be administered in accordance with this Article. The inception date of the program shall be July 1, 2008. A predatory lending database program shall be expanded to include Kane, Peoria, and Will counties. The inception date of the expansion of the program as it applies to Kane, Peoria, and Will counties shall be July 1, 2010. Until the inception date, none of the duties, obligations, contingencies, or consequences of or from the program shall be imposed. The program shall apply to all mortgage applications that are governed by this Article and that are made or taken on or after the inception of the program.
(b) The database created under this program shall be maintained and administered by the Department. The database shall be designed to allow brokers, originators, counselors, title insurance companies, and closing agents to submit information to the database online. The database shall not be designed to allow those entities to retrieve information from the database, except as otherwise provided in this Article. Information submitted by the broker or originator to the Department may be used to populate the online form submitted by a counselor, title insurance company, or closing agent.
(c) Within 10 business days after taking a mortgage application, the broker or originator for any mortgage on residential property within the program area must submit to the predatory lending database all of the information required under Section 72 and any other information required by the Department by rule. Within 7 business days after receipt of the information, the Department shall compare that information to the housing counseling standards in Section 73 and issue to the borrower and the broker or originator a determination of whether counseling is recommended for the borrower. The borrower may not waive counseling. If at any time after submitting the information required under Section 72 the broker or originator (i) changes the terms of the loan or (ii) issues a new commitment to the borrower, then, within 5 business days thereafter, the broker or originator shall re-submit all of the information required under Section 72 and, within 4 business days after receipt of the information re-submitted by the broker or originator, the Department shall compare that information to the housing counseling standards in Section 73 and shall issue to the borrower and the broker or originator a new determination of whether re-counseling is recommended for the borrower based on the information re-submitted by the broker or originator. The Department shall require re-counseling if the loan terms have been modified to meet another counseling standard in Section 73, or if the broker has increased the interest rate by more than 200 basis points.
(d) If the Department recommends counseling for the borrower under subsection (c), then the Department shall notify the borrower of all participating HUD-approved counseling agencies located within the State and direct the borrower to interview with a counselor associated with one of those agencies. Within 10 business days after receipt of the notice of HUD-approved counseling agencies, it is the borrower’s responsibility to select one of those agencies and shall engage in an interview with a counselor associated with that agency. The borrower must supply all necessary documents, as set forth by the counselor, at least 72 hours before the scheduled interview. The selection must take place and the appointment for the interview must be set within 10 business days, although the interview may take place beyond the 10 business day period. Within 7 business days after interviewing the borrower, the counselor must submit to the predatory lending database all of the information required under Section 74 and any other information required by the Department by rule. Reasonable and customary costs not to exceed $300 associated with counseling provided under the program shall be paid by the broker or originator and shall not be charged back to, or recovered from, the borrower. The Department shall annually calculate to the nearest dollar an adjusted rate for inflation. A counselor shall not recommend or suggest that a borrower contact any specific mortgage origination company, financial institution, or entity that deals in mortgage finance to obtain a loan, another quote, or for any other reason related to the specific mortgage transaction; however, a counselor may suggest that the borrower seek an opinion or a quote from another mortgage origination company, financial institution, or entity that deals in mortgage finance. A counselor or housing counseling agency that in good faith provides counseling shall not be liable to a broker or originator or borrower for civil damages, except for willful or wanton misconduct on the part of the counselor in providing the counseling.
(e) The broker or originator and the borrower may not take any legally binding action concerning the loan transaction until the later of the following:
(1) the Department issues a determination not to
“Adjustable rate mortgage” or “ARM” means a closed-end mortgage transaction that allows adjustments of the loan interest rate during the first 3 years of the loan term.
Terms Used In Illinois Compiled Statutes 765 ILCS 77/70
- Amortization: Paying off a loan by regular installments.
- Borrower: means a person seeking a mortgage loan. See Illinois Compiled Statutes 765 ILCS 77/70
- Broker: means a "broker" or "loan broker" as defined in subsection (p) of § 1-4 of the Residential Mortgage License Act of 1987. See Illinois Compiled Statutes 765 ILCS 77/70
- Closing agent: means an individual assigned by a title insurance company or a broker or originator to ensure that the execution of documents related to the closing of a real estate sale or the refinancing of a real estate loan and the disbursement of closing funds are in conformity with the instructions of the entity financing the transaction. See Illinois Compiled Statutes 765 ILCS 77/70
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Counseling: means in-person counseling provided by a counselor employed by a HUD-approved counseling agency to all borrowers, or documented telephone counseling where a hardship would be imposed on one or more borrowers. See Illinois Compiled Statutes 765 ILCS 77/70
- Counselor: means a counselor employed by a HUD-approved housing counseling agency. See Illinois Compiled Statutes 765 ILCS 77/70
- Credit report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. Source: OCC
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Department: means the Department of Financial and Professional Regulation. See Illinois Compiled Statutes 765 ILCS 77/70
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Fraud: Intentional deception resulting in injury to another.
- Freedom of Information Act: A federal law that mandates that all the records created and kept by federal agencies in the executive branch of government must be open for public inspection and copying. The only exceptions are those records that fall into one of nine exempted categories listed in the statute. Source: OCC
- individual: shall include every infant member of the species homo sapiens who is born alive at any stage of development. See Illinois Compiled Statutes 5 ILCS 70/1.36
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Lender: means that term as it is defined in subsection (g) of § 1-4 of the Residential Mortgage License Act of 1987. See Illinois Compiled Statutes 765 ILCS 77/70
- Licensee: means that term as it is defined in subsection (e) of § 1-4 of the Residential Mortgage License Act of 1987. See Illinois Compiled Statutes 765 ILCS 77/70
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
- Mortgage loan: means that term as it is defined in subsection (f) of § 1-4 of the Residential Mortgage License Act of 1987. See Illinois Compiled Statutes 765 ILCS 77/70
- Originator: means a "mortgage loan originator" as defined in subsection (jj) of § 1-4 of the Residential Mortgage License Act of 1987, except an exempt person. See Illinois Compiled Statutes 765 ILCS 77/70
- Refinancing: means a loan secured by the borrower's or borrowers' primary residence where the proceeds are not used as purchase money for the residence. See Illinois Compiled Statutes 765 ILCS 77/70
- State: when applied to different parts of the United States, may be construed to include the District of Columbia and the several territories, and the words "United States" may be construed to include the said district and territories. See Illinois Compiled Statutes 5 ILCS 70/1.14
- Subpoena: A command to a witness to appear and give testimony.
- Title insurance company: means any domestic company organized under the laws of this State for the purpose of conducting the business of guaranteeing or insuring titles to real estate and any title insurance company organized under the laws of another State, the District of Columbia, or a foreign government and authorized to transact the business of guaranteeing or insuring titles to real estate in this State. See Illinois Compiled Statutes 765 ILCS 77/70
“Borrower” means a person seeking a mortgage loan.
“Broker” means a “broker” or “loan broker”, as defined in subsection (p) of § 1-4 of the Residential Mortgage License Act of 1987.
“Closing agent” means an individual assigned by a title insurance company or a broker or originator to ensure that the execution of documents related to the closing of a real estate sale or the refinancing of a real estate loan and the disbursement of closing funds are in conformity with the instructions of the entity financing the transaction.
“Counseling” means in-person counseling provided by a counselor employed by a HUD-approved counseling agency to all borrowers, or documented telephone counseling where a hardship would be imposed on one or more borrowers. A hardship shall exist in instances in which the borrower is confined to his or her home due to medical conditions, as verified in writing by a physician, or the borrower resides 50 miles or more from the nearest participating HUD-approved housing counseling agency.
“Counselor” means a counselor employed by a HUD-approved housing counseling agency.
“Credit score” means a credit risk score as defined by the Fair Isaac Corporation, or its successor, and reported under such names as “BEACON”, “EMPIRICA”, and “FAIR ISAAC RISK SCORE” by one or more of the following credit reporting agencies or their successors: Equifax, Inc., Experian Information Solutions, Inc., and TransUnion LLC. If the borrower’s credit report contains credit scores from 2 reporting agencies, then the broker or loan originator shall report the lower score. If the borrower’s credit report contains credit scores from 3 reporting agencies, then the broker or loan originator shall report the middle score.
“Department” means the Department of Financial and Professional Regulation.
“Exempt person or entity” means that term as it is defined in subsections (d)(1), (d)(1.5), and (d)(1.8) of § 1-4 of the Residential Mortgage License Act of 1987.
“First-time homebuyer” means a borrower who has not held an ownership interest in residential property.
“HUD-approved counseling” or “counseling” means counseling given to a borrower by a counselor employed by a HUD-approved housing counseling agency.
“Interest only” means a closed-end loan that permits one or more payments of interest without any reduction of the principal balance of the loan, other than the first payment on the loan.
“Lender” means that term as it is defined in subsection (g) of § 1-4 of the Residential Mortgage License Act of 1987.
“Licensee” means that term as it is defined in subsection (e) of § 1-4 of the Residential Mortgage License Act of 1987.
“Mortgage loan” means that term as it is defined in subsection (f) of § 1-4 of the Residential Mortgage License Act of 1987.
“Negative amortization” means an amortization method under which the outstanding balance may increase at any time over the course of the loan because the regular periodic payment does not cover the full amount of interest due.
“Originator” means a “mortgage loan originator” as defined in subsection (jj) of § 1-4 of the Residential Mortgage License Act of 1987, except an exempt person.
“Points and fees” has the meaning ascribed to that term in Section 10 of the High Risk Home Loan Act.
“Prepayment penalty” means a charge imposed by a lender under a mortgage note or rider when the loan is paid before the expiration of the term of the loan.
“Refinancing” means a loan secured by the borrower’s or borrowers’ primary residence where the proceeds are not used as purchase money for the residence.
“Title insurance company” means any domestic company organized under the laws of this State for the purpose of conducting the business of guaranteeing or insuring titles to real estate and any title insurance company organized under the laws of another State, the District of Columbia, or a foreign government and authorized to transact the business of guaranteeing or insuring titles to real estate in this State.
(a-5) A predatory lending database program shall be established within Cook County. The program shall be administered in accordance with this Article. The inception date of the program shall be July 1, 2008. A predatory lending database program shall be expanded to include Kane, Peoria, and Will counties. The inception date of the expansion of the program as it applies to Kane, Peoria, and Will counties shall be July 1, 2010. Until the inception date, none of the duties, obligations, contingencies, or consequences of or from the program shall be imposed. The program shall apply to all mortgage applications that are governed by this Article and that are made or taken on or after the inception of the program.
(b) The database created under this program shall be maintained and administered by the Department. The database shall be designed to allow brokers, originators, counselors, title insurance companies, and closing agents to submit information to the database online. The database shall not be designed to allow those entities to retrieve information from the database, except as otherwise provided in this Article. Information submitted by the broker or originator to the Department may be used to populate the online form submitted by a counselor, title insurance company, or closing agent.
(c) Within 10 business days after taking a mortgage application, the broker or originator for any mortgage on residential property within the program area must submit to the predatory lending database all of the information required under Section 72 and any other information required by the Department by rule. Within 7 business days after receipt of the information, the Department shall compare that information to the housing counseling standards in Section 73 and issue to the borrower and the broker or originator a determination of whether counseling is recommended for the borrower. The borrower may not waive counseling. If at any time after submitting the information required under Section 72 the broker or originator (i) changes the terms of the loan or (ii) issues a new commitment to the borrower, then, within 5 business days thereafter, the broker or originator shall re-submit all of the information required under Section 72 and, within 4 business days after receipt of the information re-submitted by the broker or originator, the Department shall compare that information to the housing counseling standards in Section 73 and shall issue to the borrower and the broker or originator a new determination of whether re-counseling is recommended for the borrower based on the information re-submitted by the broker or originator. The Department shall require re-counseling if the loan terms have been modified to meet another counseling standard in Section 73, or if the broker has increased the interest rate by more than 200 basis points.
(d) If the Department recommends counseling for the borrower under subsection (c), then the Department shall notify the borrower of all participating HUD-approved counseling agencies located within the State and direct the borrower to interview with a counselor associated with one of those agencies. Within 10 business days after receipt of the notice of HUD-approved counseling agencies, it is the borrower’s responsibility to select one of those agencies and shall engage in an interview with a counselor associated with that agency. The borrower must supply all necessary documents, as set forth by the counselor, at least 72 hours before the scheduled interview. The selection must take place and the appointment for the interview must be set within 10 business days, although the interview may take place beyond the 10 business day period. Within 7 business days after interviewing the borrower, the counselor must submit to the predatory lending database all of the information required under Section 74 and any other information required by the Department by rule. Reasonable and customary costs not to exceed $300 associated with counseling provided under the program shall be paid by the broker or originator and shall not be charged back to, or recovered from, the borrower. The Department shall annually calculate to the nearest dollar an adjusted rate for inflation. A counselor shall not recommend or suggest that a borrower contact any specific mortgage origination company, financial institution, or entity that deals in mortgage finance to obtain a loan, another quote, or for any other reason related to the specific mortgage transaction; however, a counselor may suggest that the borrower seek an opinion or a quote from another mortgage origination company, financial institution, or entity that deals in mortgage finance. A counselor or housing counseling agency that in good faith provides counseling shall not be liable to a broker or originator or borrower for civil damages, except for willful or wanton misconduct on the part of the counselor in providing the counseling.
(e) The broker or originator and the borrower may not take any legally binding action concerning the loan transaction until the later of the following:
(1) the Department issues a determination not to
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recommend HUD-approved counseling for the borrower in accordance with subsection (c); or
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(2) the Department issues a determination that
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HUD-approved counseling is recommended for the borrower and the counselor submits all required information to the database in accordance with subsection (d).
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(f) Within 10 business days after closing, the title insurance company or closing agent must submit to the predatory lending database all of the information required under Section 76 and any other information required by the Department by rule.
(g) The title insurance company or closing agent shall attach to the mortgage a certificate of compliance with the requirements of this Article, as generated by the database. If the transaction is exempt, the title insurance company or closing agent shall attach to the mortgage a certificate of exemption, as generated by the database. Each certificate of compliance or certificate of exemption must contain, at a minimum, one of the borrower’s names on the mortgage loan and the property index number for the subject property. If the title insurance company or closing agent fails to attach the certificate of compliance or exemption, whichever is required, then the mortgage is not recordable. In addition, if any lis pendens for a residential mortgage foreclosure is recorded on the property within the program area, a certificate of service must be simultaneously recorded that affirms that a copy of the lis pendens was filed with the Department. A lis pendens filed after July 1, 2016 shall be filed with the Department electronically. If the certificate of service is not recorded, then the lis pendens pertaining to the residential mortgage foreclosure in question is not recordable and is of no force and effect.
(h) All information provided to the predatory lending database under the program is confidential and is not subject to disclosure under the Freedom of Information Act, except as otherwise provided in this Article. Information or documents obtained by employees of the Department in the course of maintaining and administering the predatory lending database are deemed confidential. Employees are prohibited from making disclosure of such confidential information or documents. Any request for production of information from the predatory lending database, whether by subpoena, notice, or any other source, shall be referred to the Department of Financial and Professional Regulation. Any borrower may authorize in writing the release of database information. The Department may use the information in the database without the consent of the borrower: (i) for the purposes of administering and enforcing the program; (ii) to provide relevant information to a counselor providing counseling to a borrower under the program; or (iii) to the appropriate law enforcement agency or the applicable administrative agency if the database information demonstrates criminal, fraudulent, or otherwise illegal activity.
(i) Nothing in this Article is intended to prevent a borrower from making his or her own decision as to whether to proceed with a transaction.
(j) Any person who violates any provision of this Article commits an unlawful practice within the meaning of the Consumer Fraud and Deceptive Business Practices Act.
(j-1) A violation of any provision of this Article by a mortgage banking licensee or licensed mortgage loan originator shall constitute a violation of the Residential Mortgage License Act of 1987.
(j-2) A violation of any provision of this Article by a title insurance company, title agent, or escrow agent shall constitute a violation of the Title Insurance Act.
(j-3) A violation of any provision of this Article by a housing counselor shall be referred to the Department of Housing and Urban Development.
(k) During the existence of the program, the Department shall submit semi-annual reports to the Governor and to the General Assembly by May 1 and November 1 of each year detailing its findings regarding the program. The report shall include, by county, at least the following information for each reporting period:
(1) the number of loans registered with the program;
(2) the number of borrowers receiving counseling;
(3) the number of loans closed;
(4) the number of loans requiring counseling for each
(g) The title insurance company or closing agent shall attach to the mortgage a certificate of compliance with the requirements of this Article, as generated by the database. If the transaction is exempt, the title insurance company or closing agent shall attach to the mortgage a certificate of exemption, as generated by the database. Each certificate of compliance or certificate of exemption must contain, at a minimum, one of the borrower’s names on the mortgage loan and the property index number for the subject property. If the title insurance company or closing agent fails to attach the certificate of compliance or exemption, whichever is required, then the mortgage is not recordable. In addition, if any lis pendens for a residential mortgage foreclosure is recorded on the property within the program area, a certificate of service must be simultaneously recorded that affirms that a copy of the lis pendens was filed with the Department. A lis pendens filed after July 1, 2016 shall be filed with the Department electronically. If the certificate of service is not recorded, then the lis pendens pertaining to the residential mortgage foreclosure in question is not recordable and is of no force and effect.
(h) All information provided to the predatory lending database under the program is confidential and is not subject to disclosure under the Freedom of Information Act, except as otherwise provided in this Article. Information or documents obtained by employees of the Department in the course of maintaining and administering the predatory lending database are deemed confidential. Employees are prohibited from making disclosure of such confidential information or documents. Any request for production of information from the predatory lending database, whether by subpoena, notice, or any other source, shall be referred to the Department of Financial and Professional Regulation. Any borrower may authorize in writing the release of database information. The Department may use the information in the database without the consent of the borrower: (i) for the purposes of administering and enforcing the program; (ii) to provide relevant information to a counselor providing counseling to a borrower under the program; or (iii) to the appropriate law enforcement agency or the applicable administrative agency if the database information demonstrates criminal, fraudulent, or otherwise illegal activity.
(i) Nothing in this Article is intended to prevent a borrower from making his or her own decision as to whether to proceed with a transaction.
(j) Any person who violates any provision of this Article commits an unlawful practice within the meaning of the Consumer Fraud and Deceptive Business Practices Act.
(j-1) A violation of any provision of this Article by a mortgage banking licensee or licensed mortgage loan originator shall constitute a violation of the Residential Mortgage License Act of 1987.
(j-2) A violation of any provision of this Article by a title insurance company, title agent, or escrow agent shall constitute a violation of the Title Insurance Act.
(j-3) A violation of any provision of this Article by a housing counselor shall be referred to the Department of Housing and Urban Development.
(k) During the existence of the program, the Department shall submit semi-annual reports to the Governor and to the General Assembly by May 1 and November 1 of each year detailing its findings regarding the program. The report shall include, by county, at least the following information for each reporting period:
(1) the number of loans registered with the program;
(2) the number of borrowers receiving counseling;
(3) the number of loans closed;
(4) the number of loans requiring counseling for each
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of the standards set forth in Section 73;
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(5) the number of loans requiring counseling where
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the mortgage originator changed the loan terms subsequent to counseling;
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(6) the number of licensed mortgage brokers and loan
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originators entering information into the database;
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(7) the number of investigations based on information
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obtained from the database, including the number of licensees fined, the number of licenses suspended, and the number of licenses revoked;
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(8) a summary of the types of non-traditional
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mortgage products being offered; and
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(9) a summary of how the Department is actively
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utilizing the program to combat mortgage fraud.
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