Ill. Admin. Code tit. 38, § 1050.810 requires the following:
“Payment instructions shall be issued in time to reasonably assure receipt by the customer at least 15 days before the first payment is due and shall include, but not be limited to the following:
a) The name, address and telephone number of the entity to whom payments are to be made and the name of the person to whom inquiries should be directed. Such phone numbers shall be toll free to the customer.
b) The exact amount of the monthly payment and a plain English explanation of the method of calculation; and
c) A clear and conspicuous statement as to monthly date of each payment, regardless of interval between due date and assessment of any late-payment penalty.”
While this requirement appears in Subpart G of Part 1050 (entitled “Servicing”), it is not clear from the language whether this requirement applies to servicers qua servicers or to any licensee governed by Part 1050 (which includes brokers, lenders, and servicers – see 205 Ill. Comp. Stat. Ann. 635/1-3 & 635/1-4[e] and Supra § 1050.110).
To ensure compliance with this requirement for any clients who may be subject to Supra, we will be taking a conservative approach and modifying our Illinois versions of “First Payment Letter Enhanced Fees” (Cx7606) and “Notice of Servicing Transfer” (Cx17905) – both of which may be considered “payment instructions” – to conform with this requirement.
Cx7606
While Illinois requires “the exact amount of the monthly payment” to be disclosed, this is not possible for construction loans when payments are based on the actual amounts advanced during the construction phase (which, outside of a set schedule, are not known at the time of closing). We will, therefore, format the second sentence in the third paragraph to state the following when:
- Loan Purpose (FI 5991) = ConstructionOnly OR ConstructiontoPermanent
- Construction Calculation Type (FI 51812) = A: Interest on Amount Advanced
- State Code (FI 2279) = Illinois
“Based on the preliminary information now available for the amount of taxes and insurance, the undersigned understands that the ESTIMATE of the total monthly payment is calculated by adding the following ESTIMATED amounts together into a total sum (which is the ESTIMATED total payment):”
In all other cases in Illinois (including construction loans where payments are based on the full loan amount), the following will print instead:
“The EXACT amount of the total monthly payment is calculated by adding the following amounts together into a total sum (which is the total payment):”
The texts above will be worded slightly different for loans with biweekly payments. While Cx7606 is designed to inform the borrower of their first payment, Ill. Admin. Code tit. 38, § 1050.810 requires the “the exact amount of the monthly payment” to be disclosed, even for loans with biweekly payments. Therefore, for such loans, we will be modifying the payment table to always disclose the components of a singular, biweekly payment and we will add the following text and fields to the end of the table:
“TOTAL OF PAYMENTS FOR 1st MONTH (2 Biweekly Payments*: $[Total Biweekly Payment Amount Times Two {FI 137166}]
TOTAL OF PAYMENTS FOR 1st MONTH (3 Biweekly Payments)*: $[Total Biweekly Payment Amount Times Three {FI 137165}]
* These totals are calculated by taking the ‘TOTAL PAYMENT’ disclosed above and either multiplying it by two or three. Depending on the month, the undersigned may be paying two or three biweekly payments.”
We will also add a new paragraph after the table, with dynamic text which will print based on whether the payments are biweekly or monthly. If biweekly, the following will print:
“The payments of the undersigned shall be due every 14 days beginning [‘First Payment Date’ {FI 750}]. Further information about biweekly payments are set forth in the [if ‘Integrated Disclosure Loan Indicator’ {FI 82233} equals ‘No’] “HUD-1 Settlement Statement” and “Truth-in-Lending Disclosure” [else if FI 82233 does not equal ‘No’] “Closing Disclosure” [the following will print always] provided to you.”
If the payments are other than biweekly, the same paragraph will print, except that the first sentence will be replaced with the following:
“The payments of the undersigned shall be due on the [FI 750] day of each month.”
Finally, we will be configuring the text which appears after “Payment Must Be Sent To:” on the Arkansas-version of Cx7606 to print also for Illinois (see https://compliance.docutech.com/2014/02/07/document-updates-first-payment-letter-enhanced-fees-cx7606/ for details).
Cx17905
We will be replacing the fifth paragraph (“Your total estimated payments [etc.]”) with the following when:
- Loan Purpose = ConstructionOnly OR ConstructiontoPermanent
- Construction Calculation Type = A: Interest on Amount Advanced
- State Code = Illinois
“The following is an ESTIMATED summary of how much each of your mortgage payment(s) will be calculated each month, for the first three months following the date that the transferee will begin accepting your payments. Each individual amount which you owe for principal, interest, taxes, fees, and other services (as listed below) is added together and the sum is the total amount of your mortgage payment(s) each month:”
The same paragraph will print in all other cases, except “EXACT” will replace “ESTIMATED”. The list of the first three monthly payments following the fifth paragraph will be replaced with the same payment table used on Cx7606. Following this table, the following paragraph will print when “Biweekly” (FI 18134) does not equal “No”:
“Your payments shall be due every 14 days beginning [FI 750]. Please note that the amounts above reflect the total of all payments you will make in a month and does not reflect your individual payments. You may find further information about your payments in the [if FI 82233 does not equal ‘No’] “Closing Disclosure” [else if FI 82233 equals ‘No’] “HUD-1 Settlement Statement” and “Truth-in-Lending Disclosure” [the following will print always] provided to you.”
The same paragraph will print in any other case, except that the first two sentences will be replaced by the following sentence:
“Your payments shall be due on the [FI 750] day of each month.”
Effective Date
These changes will go into effect on November 20, 2019. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
DR 302864