Bulletin: IL2008002

Dear Associates:

Background Information
The State of Illinois has developed a Predatory Lending Database pursuant to SB 1167. The database requires all mortgage brokers and loan originators licensed by the Illinois Department of Financial and Professional Regulation, Division of Banking to submit into the Predatory Lending Database (PLD) loan application information for every borrower applying for finance of residential real estate one-to-four units located in Cook County, Illinois (Chicagoland area).

Date of Implementation
July 1, 2008 is the date on which the program comes into effect. The Cook County Recorder of Deeds will require that a Certificate of Compliance or Exempt Certificate be included as a cover sheet for every mortgage filed for recording in the designated area. A Certificate of Compliance or Exempt Certificate will be issued by the Illinois Department of Financial and Professional Regulation (IDFPR) through the PLD website.

Application to the PLD
Title insurance agents can sign up for access to the PLD through use of the website. PowerPoint training screens and further explanations beyond this synopsis will also be posted on the state website.

The Predatory Lender Database (PLD)

The database envisions three user types: 1) Administrator: responsible for maintaining the organization's access to the PLD; 2) Closer Supervisor: responsible for maintaining information associated with the loan applications; reassigning loan applications; and 3) Closer: responsible for maintaining and corroborating information associated with the loan applications.

An organization will be given a code for only one Administrator. That Administrator is responsible for the set-up of the all other parties in the organization. The Administrator is responsible for initial password set-up and designation, i.e., administrator, closer supervisor, or closer. There are no limits on how many people can be named as administrator, closer supervisor, or closer. It is highly recommended, however, that there be at least two administrators for each organization.

Individuals can hold more than one position in the system; i.e., an administrator can be a closer supervisor, or a closer supervisor can be also registered as a closer.

Users will automatically be logged out of the system if the user has not interacted with the PLD within 30 minutes of the last time he/she used the PLD.

The specific requirements for set-up of an administrator will be available on the www.ilapld.com website.

Closing Agent Screens

The concept behind the closing agent screens is that the title closer will be verifying the information that has been input into the system by the loan originator or broker. In order to find the correct party, the social security number of the borrower or the permanent index number of the property needs to be input into the system.

The input of this information will bring up the loans involving the borrowers. The title supervisor or closer can then choose the loan. That choice will then assign the closing to that title company and the specific closer. If a wrong choice is made, a toll free number will need to be called to reset the loan application.

Note: Borrower records will only capture two names. Loans with three (3) or more borrowers will require a double entry for the certificates.

The title closing agent will be asked to verify certain information before a certificate of compliance or a certificate of exemption will be issued.

Screens concerning the borrower, property, loan, originator, closing agent, 3rd parties, notices, sale/leaseback, and HUD-1 will need to be reviewed and input. In the interest of helping the industry save some time, a pdf file can be made of the final HUD-1 and good faith estimate. This pdf file can be attached through the PLD system. Naming conventions for the HUD-1 pdf files will be posted on the website.

Illinois Rule 346.20 sets out the parameters for the issuance of certificates. Two types of certificates will be issued: Certificates of Compliance and Certificates of Exemption.

Both exempt certificates and certificates of compliance will require input on the part of the title closing agent.

Loans and borrowers which do not meet the criteria for an exempt certificate or a certificate of compliance will receive a message that the borrowers need to have loan counseling. The database will prohibit the issuance of any certificate until a loan counselor posts the approval for that particular loan.

Certificates

Exempt Real Estate: If the real estate is not residential real estate defined by the Residential Mortgage License Act of 1987 as an owner occupied one-to-four family dwelling unit, (205 ILCS 635/1-4(a)), the Department will authorize the title closing agent to issue an Exempt Certificate to be recorded with the mortgage.

Exempt Entity: If the application was originated by an exempt entity, as defined in subsections (d)(1) and (d)(1.5) of Section 1-4 of the Residential Mortgage License Act of 1987, the Department will authorize the title closing agent to issue an Exempt Certificate to be recorded with the mortgage. Exempt entities include but are not limited to, National Banks, State Banks, and Federal and State Credit Unions.

Subject Real Estate: Reverse Mortgage; Exempt Certificate: If a borrower submits an application to a licensed mortgage broker or loan originator for reverse mortgage financing of residential real estate covered by programs regulated by the Federal Housing authority (FHA) and located in the designated area, the mortgage broker or loan originator will submit the application information to the SB 1167 database, but the borrower may comply by submitting at closing a reverse mortgage HUD counseling certificate as provided in Rule 346.40. The Department will authorize the issuance of a Certificate of Compliance by a title closing agent if a HUD counseling certificate is received in compliance with Rule 346.40.

Subject Real Estate: Counseling not recommended; Certificate of Compliance: If the real estate is subject to Article 3 of the Act and the Department, applying the standards found in rule 346.20 has not recommended a borrower for housing counseling and the final loan terms for the features set out in Rule 346.20 have not changed, the Department will authorize the title closing agent to issue a Certificate of Compliance to be recorded with the mortgage.

Subject Real Estate: No counseling; Qualified; Certificate of Compliance Denied: As required by Section 70(c) of the Act, if a borrower has not been counseled, but after review of the final loan terms, the borrower qualifies for counseling under the standards contained in Rule 346.20, then the borrower must engage in an interview with a counselor associated with a HUD-certified counseling agency before the Department will authorize the title closing agent to issue a Certificate of Compliance.

Subject Real Estate: Counseling; Added Features; Certificate of Compliance Denied: As required by Section 70(c) of the Act, if a borrower has been counseled, but the final loan terms contain added Rule 346.20 features not disclosed before counseling, then the borrower must engaged in re-counseling with a counselor with a HUD-certified agency before the Department will authorize a closing agent to issue a Certificate of Compliance.

Enforcement
The Cook County Recorder of Deeds has taken the position that it will not record any mortgage or loan within area unless it has a certificate of compliance or a certificate of exemption with it.

Further Information
To contact the SB1167 website: www.idfpr.com. Toll-free phone number (866) 266-4120.

To contact the Cook County Recorder of Deeds: Deborah Fortier: Telephone: (312) 603-5237; website: www. CCRD.info.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

Additional Anti Predatory Lending Database Information (click here to view).