This is planning to go state wide after 4 years in IL.
Here is a break down of the law with some links at the bottom
Perfect credit applicants are not exempt
Fixed rate mortgage are not exempt
If title companies will not issue clear title policies, lenders will not lend to mortgage applicants regardless of the law
Conditions that trigger Illinois House Bill 4050
FICO score less than 620, or
FICO score is between 621-650 and any one of these conditions is true:
Subject property was financed within the last 12 months
Mortgage product has an Interest Only feature
Mortgage product is an ARM with an initial fixed period of 3 years or less
Down payment is less than 5% of the purchase price
Mortgage product contains a prepayment penalty
Mortgage product contains a negative amortization feature (i.e. Option ARM)
About the affected areas
HB 4050 will include some, or all, of Cook County, Illinois.
That decision can be legally delayed until February 1, 2006. Therefore, until February 1, 2006 or an announcement from the DBRE, we must assume that all of Cook County is affected.
About counseling for mortgage applicants
All counseling must be completed face-to-face, not by telephone or Internet
All counseling must be paid for by the originating mortgage lender
Counseling may not be waived under any circumstances
About credit counseling and credit counselors
All counselors must be HUD-approved
Counselors can recommend to applicants that they go elsewhere to apply for a loan
Counselors can only make these recommendations:
Go forward with the loan
Look at another program or lender
Indicate that the rate is above market conditions
Proceed with the loan
The applicant can ignore the recommendation of the counselor
Once counseling is completed, a certificate is issued to applicant
About the HB 4050 application process
Within 10 days of application, the originating lender must submit applicant data to Illinois state database
Applicants are provided a list of HUD-approved counselors
Applicants must schedule in-person counseling session within 10 days
Counselor must submit report to Illinois state database within 7 days of counseling completion
Title company must verify with Illinois state database that applicant completed counseling
Title company cannot close loan without Certificate of Completion if applicant is required to attend counseling
About the Illinois state database
Stores personal information of all mortgage applicants in the state of Illinois
Originators, counselors, and title companies are permitted to submit data to database
What remains unknown (as of 16 December 2005)
The status of the Illinois state database (i.e. is it complete and ready for use?)
The cost of counseling for applicants
The legality of HB 4050 under Illinois state law
What can keep your mortgage from funding in the affected areas
Title companies are concerned to issue clear title policies
Title companies may not insure loans or issue riders pertaining to IL HB 4050 because of legal liabilities
Lenders won't lend if title is not clear because that would lenders would forgo their right to foreclose
Most important thing to know
If title companies decide that Illinois House Bill 4050 is a legal landmine, they will choose to avoid insuring areas affected by it and the "HB 4050 Triggers" portion becomes a moot point -- there will be no lending at all.
And there you have it. Just the facts.
http://www.idfpr.com/FinLit101/Docs/...oryLending.pdf http://www.nationalmortgagenews.com/...ow=plus164.htm http://www.obre.state.il.us/CBT/LEGAL/2005LegSum.htm http://www.klng.com/files/tbl_s48New...NA_Article.pdf
