Has anyone else seen this yet? 735 ILCS 5/15-1502.5 Homeowner protection
Mortgage Foreclosure Act. House Bill 2973 (Hamos, D-Chicago; Collins, D-Chicago) or something similar to it may be sent to the Governor on either of the last two days of the 95th General Assembly (Jan. 12, 13, 2009). Senate Amendment No. 7 creates a new section in the Mortgage Foreclosure Act that prohibits a mortgagee from filing a foreclosure complaint unless the requirements of this new Section have been satisfied. It applies only to residential real estate that is the primary residence of the mortgagor and may be used only once per mortgage. It does not apply to mortgages issued or originated on or after the effective date of this bill (when the Governor signs it) or if the mortgagor has sought relief under the U.S. Bankruptcy Code.
If a mortgage is delinquent more than 30 days, it requires that the mortgagee send a notice by first-class mail to the mortgagor advising that he or she may wish to seek housing counseling. No foreclosure action may be instituted before this notice is sent, and legal action is stayed for 30 days after the notice is mailed. The new section details what information must be contained in the notice, and it may be combined with a counseling notification required under federal law. It is to be sent to the common address of the residential real estate secured by the mortgage.
During the 30-day stay after this notice, if an approved housing-counseling agency sends written notice to the mortgagee advising that the mortgagor is seeking its services, it creates another 30 days’ stay after the date of that notice. During this new stay the mortgagor or counselor or both may proffer to the mortgagee a loan-workout plan. If the mortgagee accepts this plan, it prohibits any foreclosure action as long as the mortgagor complies with it. If the mortgagor does not comply with it, the mortgagee may enforce the contract. The plan and any modifications must be in writing and signed by both parties.
Housing-counseling agencies must be approved by the U.S. Department of Housing and Urban Development. It also allows the Secretary of the Department of Financial and Professional Regulation to certify other persons or entities as approved counseling agencies if there are shortages of them in a particular geographic area. But for-profit entities may not be certified to do this.
House Bill 2973 prohibits the parties from waiving any provision of this new section. The General Assembly’s written intent is that compliance with this Section does not prejudice a mortgagee in ratings of its bad-debt collection or calculation standards or policies. This new section is automatically repealed two years from its effective date, which is when the Governor signs it.
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Section 35. The Code of Civil Procedure is amended by
adding Section 15-1502.5 as follows:
(735 ILCS 5/15-1502.5 new)
Sec. 15-1502.5. Homeowner protection.
(a) As used in this Section:
"Approved counseling agency" means a housing counseling
agency approved by the U.S. Department of Housing and Urban
Development.
"Approved Housing Counseling" means in-person counseling
provided by a counselor employed by an 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 approved counseling agency. In
instances of telephone counseling, the borrower must supply all
necessary documents to the counselor at least 72 hours prior to
the scheduled telephone counseling session.
"Delinquent" means past due with respect to a payment on a
mortgage secured by residential real estate.
"Department" means the Department of Financial and
Professional Regulation.
"Secretary" means the Secretary of Financial and
Professional Regulation or other person authorized to act in
the Secretary's stead.
"Sustainable loan workout plan" means a plan that the
mortgagor and approved counseling agency believe shall enable
the mortgagor to stay current on his or her mortgage payments
for the foreseeable future when taking into account the
mortgagor income and existing and foreseeable debts. A
sustainable loan workout plan may include, but is not limited
to, (1) a temporary suspension of payments, (2) a lengthened
loan term, (3) a lowered or frozen interest rate, (4) a
principal write down, (5) a repayment plan to pay the existing
loan in full, (6) deferred payments, or (7) refinancing into a
new affordable loan.
(b) Except in the circumstance in which a mortgagor has
filed a petition for relief under the United States Bankruptcy
Code, no mortgagee shall file a complaint to foreclose a
mortgage secured by residential real estate until the
requirements of this Section have been satisfied.
(c) Notwithstanding any other provision to the contrary,
with respect to a particular mortgage secured by residential
real estate, the procedures and forbearances described in this
Section apply only once per subject mortgage.
Except for mortgages secured by residential real estate in
which any mortgagor has filed for relief under the United
States Bankruptcy Code, if a mortgage secured by residential
real estate becomes delinquent by more than 30 days the
mortgagee shall send via U.S. mail a notice advising the
mortgagor that he or she may wish to seek approved housing
counseling. Notwithstanding anything to the contrary in this
Section, nothing shall preclude the mortgagor and mortgagee
from communicating with each other during the initial 30 days
of delinquency or reaching agreement on a sustainable loan
workout plan, or both.
No foreclosure action under Part 15 of Article XV of the
Code of Civil Procedure shall be instituted on a mortgage
secured by residential real estate before mailing the notice
described in this subsection (c).
The notice required in this subsection (c) shall state the
date on which the notice was mailed, shall be headed in bold
14-point type "GRACE PERIOD NOTICE", and shall state the
following in 14-point type: "YOUR LOAN IS MORE THAN 30 DAYS
PAST DUE. YOU MAY BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY
BE IN YOUR BEST INTEREST TO SEEK APPROVED HOUSING COUNSELING.
YOU HAVE A GRACE PERIOD OF 30 DAYS FROM THE DATE OF THIS NOTICE
TO OBTAIN APPROVED HOUSING COUNSELING. DURING THE GRACE PERIOD,
THE LAW PROHIBITS US FROM TAKING ANY LEGAL ACTION AGAINST YOU.
YOU MAY BE ENTITLED TO AN ADDITIONAL 30 DAY GRACE PERIOD IF YOU
OBTAIN HOUSING COUNSELING FROM AN APPROVED HOUSING COUNSELING
AGENCY. A LIST OF APPROVED COUNSELING AGENCIES MAY BE OBTAINED
FROM THE ILLINOIS DEPARTMENT OF FINANCIAL AND PROFESSIONAL
REGULATION."
The notice shall also list the Department's current
consumer hotline, the Department's website, and the telephone
number, fax number, and mailing address of the mortgagee. No
language, other than language substantially similar to the
language prescribed in this subsection (c), shall be included
in the notice. Notwithstanding any other provision to the
contrary, the grace period notice required by this subsection
(c) may be combined with a counseling notification required
under federal law.
The sending of the notice required under this subsection
(c) means depositing or causing to be deposited into the United
States mail an envelope with first-class postage prepaid that
contains the document to be delivered. The envelope shall be
addressed to the mortgagor at the common address of the
residential real estate securing the mortgage.
(d) Until 30 days after mailing the notice provided for
under subsection (c) of this Section, no legal action shall be
instituted under Part 15 of Article XV of the Code of Civil
Procedure.
(e) If, within the 30-day period provided under subsection
(d) of this Section, an approved counseling agency provides
written notice to the mortgagee that the mortgagor is seeking
approved counseling services, then no legal action under Part
15 of Article XV of the Code of Civil Procedure shall be
instituted for 30 days after the date of that notice. The date
that such notice is sent shall be stated in the notice, and
shall be sent to the address or fax number contained in the
Grace Period Notice required under subsection (c) of this
Section. During the 30-day period provided under this
subsection (e), the mortgagor or counselor or both may prepare
and proffer to the mortgagee a proposed sustainable loan
workout plan. The mortgagee will then determine whether to
accept the proposed sustainable loan workout plan. If the
mortgagee and the mortgagor agree to a sustainable loan workout
plan, then no legal action under Part 15 of Article XV of the
Code of Civil Procedure shall be instituted for as long as the
sustainable loan workout plan is complied with by the
mortgagor.
The agreed sustainable loan workout plan and any
modifications thereto must be in writing and signed by the
mortgagee and the mortgagor.
Upon written notice to the mortgagee, the mortgagor may
change approved counseling agencies, but such a change does not
entitle the mortgagor to any additional period of forbearance.
(f) If the mortgagor fails to comply with the sustainable
loan workout plan, then nothing in this Section shall be
construed to impair the legal rights of the mortgagee to
enforce the contract.
(g) A counselor employed by a housing counseling agency or
the housing counseling agency that in good faith provides
counseling shall not be liable to a mortgagee or mortgagor for
civil damages, except for willful or wanton misconduct on the
part of the counselor in providing the counseling.
(h) There shall be no waiver of any provision of this
Section.
(i) It is the General Assembly's intent that compliance
with this Section shall not prejudice a mortgagee in ratings of
its bad debt collection or calculation standards or policies.
(j) This Section shall not apply, or shall cease to apply,
to residential real estate that is not occupied as a principal
residence by the mortgagor.
(k) This Section is repealed 2 years after the effective
date of this amendatory Act of the 95th General Assembly.
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