ApprovedCMBAct

Disclaimer: The Office of Banks and Real Estate has made every attempt to assure that these rules are accurate. However, the official rules are those filed with the Secretary of State and there may be corrections or technical changes prior to their effective date. The rules are not final until their effective date, May 17, 2001.

ILLINOIS REGISTEROFFICE OF BANKS AND

REAL

ESTATENOTICE OF ADOPTED RULESTITLE 38: FINANCIAL INSTITUTIONS

CHAPTER

II: OFFICE OF BANKS AND REAL ESTATE

PART

345HIGH RISK HOME LOANS

Section345.10Definitions345.20Ability to Repay345.30Verification of Ability to Pay Loan345.40 Fraudulent or Deceptive Practices345.45Prepayment Penalty345.50Pre-paid Insurance Products and Warranties345.60Refinancing Prohibited in Certain Cases345.65Balloon Payments345.70Financing of Certain Points and Fees345.80Payments to Contractors345.90Negative Amortization345.100Negative Equity345.110Counseling Prior to Perfecting Foreclosure Proceedings345.120Mortgage Awareness Program345.130Report of Default and Foreclosure Rates on Conventional Loans345.140Commissioner’s Review and Analysis345.150Third Party Review of High Risk Home LoansAPPENDIX AEstimated Monthly Income and Expenses WorksheetAPPENDIX BMortgage Ratio WorksheetAUTHORITY:Implementing and authorized by Section 48 of the Illinois Banking Act [205 ILCS/48(6)(a)].SOURCE:Sections 345.130, 345.140, and 345.150 adopted by emergency rulemaking at 24 Ill. Reg. 19308,effective December 15, 2000, for a maximum of 150 days; emergency rulemaking repealed at 25 Ill. Reg. 3692,effective January 30, 2001 in response to an objection of the Joint Committee on Administrative Rules at 25 Ill.Reg. 1855; adopted at 25 Ill. Reg.

____________________________________

,

effective ________________).Section 345.10 Definitions“Act” means the Illinois Banking Act [205 ILCS 5].“Approved Credit Counselor”

means a credit counselor as approved by

the Director of the Department of Financial Institutions.“Good faith” means honesty in fact in the conduct of the transaction.

“High risk home loan on residential real property” means a home equity loan in which:

ILLINOIS REGISTER

OFFICE

OF BANKS AND REAL ESTATE

NOTICE OF ADOPTED RULESat the time of origination, the

APR

exceeds by more than 6 percentage points in the case of a first lienmortgage, or by more than 8 percentage points in the case of a junior mortgage, the yield on U.S. Treasurysecurities having comparable periods of maturity to the loan maturity as of the fifteenth day of the monthimmediately preceding the month in which the application for the loan is received by the lender; orthe total points and fees payable by the consumer at or before closing will exceed the greater of 5% of thetotal loan amount or $800. The $800 figure shall be adjusted annually on January 1 by the annualpercentage change in the Consumer Price Index.However, this Part shall not apply to a loan that is made primarily for a business purpose unrelated to theresidential real property securing the loan or to an open-end credit plan subject to 12 CFR 226 (2000, nosubsequent amendments or editions are included).“Home equity loan” means any loan secured by the borrower’s primary residence where the proceeds are not usedas purchase money for the residence.“Points and fees” means:all items required to be disclosed as points and fees under 12 CFR 226.32 (2000, no subsequentamendments or editions included);the premium of any single premium credit life, credit disability, credit unemployment, or any other life orhealth insurance that is financed directly or indirectly into the loan;all compensation paid directly or indirectly to a mortgage broker, including a broker that originates a loanin its own name in a table funded transaction, not otherwise included in 12 CFR 226.4.‘‘Servicer” means any entity chartered under the Act who is responsible for the collection or remittance for, or theright or obligation to collect or remit for, any lender, noteowner, noteholder, or for a licensee’s own account, of payments, interest, principal, and trust items such as hazard insurance and taxes on a residential mortgage loan inaccordance with the terms of the residential mortgage loan; and includes loan payment follow-up, delinquency loanfollow-up, loan analysis and any notifications to the borrower that are necessary to enable the borrower to keep theloan current and in good standing.“Total loan amount” is the same as the term used in 12 CFR 226.32, and shall be calculated in accordance with theFederal Reserve Board’s Official Staff Commentary to that regulation.

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