Pursuant to this year’s state-specific disclosure audit, the following changes will be made to some of the disclosures provided in document packages for loans secured by property located in Illinois:
1. The Illinois Mortgage Escrow Account Act (cx1207), a copy of which is required to be given to the borrower under Ill. Admin. Code tit. 38, §1050.1110(f), will now include Section 6.5 of the Mortgage Escrow Account Act (765 ILCS 910/6.5). It will also begin to print only in Initial Disclosure packages. A new disclosure (cx16095) has been created, which also provides a copy of the Mortgage Escrow Account Act, which will print in Closing Document packages if there is an escrow account and the property is owner occupied. The Closing version of the form will not contain an interest bearing time deposit in lieu of escrow account election section.
2. Several changes have been made to the “IL Loan Brokerage Agreement” (cx1909) as follows:
a. The following language in Clause 4 has been formatted to print in bold, due to the provisions of Ill. Admin. Code tit. 38, §1050.1010(c) which requires this language to be “of prominence equal to or greater than the estimate [of all consideration and remuneration paid to the broker]”:
“The estimate of costs and the actual costs could be affected by conditions which may include, but are not limited to, an appraised value different from that estimated by the Borrower or credit obligations which the Borrower fails to report.”
b. The first sentence of Clause 1, setting the term of the agreement to a specific number of days has been replaced with the following text:
“Term of Broker Agreement. This Agreement will continue in effect until the earliest of the following events:
(a) The Borrower obtains a loan.
(b) The loan application is denied.
(c) The Borrower or the Broker cancel this Agreement in writing.
(d) The Borrower or the Broker enter into a new agreement superseding this Agreement.”
c. The capitalized sentences of Clause 5 have been re-written as follows:
“The loan fee is an obligation of Borrower upon commitment and shall be paid at the time of the loan closing or out of the loan proceeds, unless the Broker will be receiving compensation exclusively from the Lender. Under such circumstance, Borrower is not allowed nor obligated to pay the Broker any compensation or broker loan fee, pursuant to Federal Law (12 CFR §1026.36[d]).
d. Minor edits to the citations referenced in the Agreement.
3. New text has been added to the “IL Escrow Account Disclosure Agreement” (cx1012). The new text includes:
a. A new clause in the second paragraph wherein the borrower agrees to deposit into his escrow account all amounts necessary for the payment of taxes and insurance premiums;
b. A new third paragraph explaining to the borrower that if the account has excess amounts then the borrower’s monthly payments will be decreased until the excess amounts are depleted; and
c. A new clause at the end of the fourth paragraph (formerly third paragraph) explaining that the lender will inform the borrower of any increase in monthly payments at least 30 days prior to such increase.
4. We are providing a new “IL Notice of Independent Review” (cx16096), pursuant to the provisions of 815 Ill. Comp. Stat. Ann. 137/125, which prints in all Initial Disclosure packages for loans that are considered to be High-Risk Home Loans under Illinois law. This text and format of this document matches the model mortgage form provided by the Illinois Department of Financial and Professional Regulation (http://www.idfpr.com/dfi/ccd/ccd_apps.asp; “Notice of Independent Review”).
5. The “IL Mortgage Awareness Program Notice” (cx1902) and the “IL Mortgage Awareness Waiver” (cx1903) were updated to match the model forms provided by the Illinois Department of Financial and Professional Regulation (http://www.idfpr.com/dfi/ccd/ccd_apps.asp; “Notice Mortgage Awareness Program” and “Waiver of Participation in Mortgage Awareness Program,” respectively).
6. The following language required under Ill. Admin. Code tit. 38, §1050.1150, was incorporated into “Addendum to Loan Application” (cx13441) for the state of Illinois:
“It is the Borrower(s)’ responsibility to obtain machine copies of all forms furnished for application by mail before mailing any signed documents back to the licensee.”
7. Minor text edits were made to the following documents to have legal citations conform with The Blue Book standards and for polishing text language:
a. The “IL Borrower Information Document” (cx1206);
b. The “IL Required Underwriting Documentation” (cx4558); and
c. The “IL Mortgage Escrow Account Act Applicability” (cx14127)
Items 1 through 3 above (cx1207, cx16095, cx1909, and cx1012) will go into effect January 10, 2012. The other changes are already in place. If you have any questions or concerns, please contact Customer Support at 1-800-497-3584.
January 4, 2012
DR 115360, 115361, 118789, 120139