(815 ILCS 137/10)
Sec. 10.
Definitions.
As used in this Act:
"Approved credit counselor" means a credit counselor approved by the
Director of Financial Institutions.
"Borrower" means a natural person who seeks or obtains a high risk
home loan.
"Commissioner" means the Commissioner of the Office of Banks and Real
Estate.
"Department" means the Department of Financial Institutions.
"Director" means the Director of Financial Institutions.
"Good faith" means honesty in fact in the conduct or transaction concerned.
"High risk home loan"
means a home equity loan in which (i) at the time of origination, the annual
percentage rate
exceeds by more than 6 percentage points in the case of a first lien mortgage,
or
by more than 8 percentage points in the case of a junior mortgage, the yield on
U.S. Treasury securities having comparable periods of maturity to the loan
maturity as of the fifteenth day of the month immediately preceding the month
in
which the application for the loan is received by the lender or (ii) the total
points
and fees payable by the consumer at or before closing will exceed the greater
of
5% of the total loan amount or $800. The $800 figure shall be adjusted annually
on January 1 by the annual percentage change in the Consumer Price Index for
All Urban Consumers for all items published by the United States Department of
Labor.
"High risk home loan"
does
not include a loan that is made primarily for a business purpose unrelated to
the
residential real property securing the loan or to an open‑end credit plan
subject to
12 CFR 226 (2000, no subsequent amendments or editions are included).
"Home equity loan" means any loan secured by the borrower's primary
residence where the proceeds are not used as purchase money for the
residence.
"Lender" means a natural or artificial person who transfers, deals in,
offers, or makes a high risk home loan. "Lender" includes, but is not limited
to,
creditors and
brokers who transfer, deal in, offer, or make high risk home loans. "Lender"
does not include purchasers, assignees, or subsequent holders of high risk home
loans.
"Office" means the Office of Banks and Real Estate.
"Points and fees" means all items required to be disclosed as points and
fees under 12 CFR 226.32 (2000, no subsequent amendments or editions
included); the premium of any single premium credit life, credit disability,
credit
unemployment, or any other life or health insurance that is financed directly
or
indirectly into the loan; and compensation paid directly or indirectly to a
mortgage
broker, including a broker that originates a loan in its own name in a
table‑funded
transaction, not otherwise included in 12 CFR 226.4.
"Reasonable" means fair, proper, just, or prudent under the circumstances.
"Servicer" means any entity chartered under the Illinois Banking Act, the
Savings Bank Act, the Illinois Credit Union Act, or the Illinois Savings and
Loan Act of 1985 and any person or entity licensed under the Residential
Mortgage License Act of 1987, the Consumer Installment Loan Act, or the Sales
Finance Agency Act who
is responsible for the collection or remittance for, or has the right or
obligation to collect or remit for, any lender, note owner, or note holder 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) in accordance with the
terms of the residential mortgage loan, including loan payment follow‑up,
delinquency loan follow‑up, loan analysis, and any notifications to
the borrower that are necessary to enable the borrower to keep the loan current
and in good
standing.
"Total loan amount" has the same meaning as that term is given in 12
CFR 226.32 and shall be calculated in accordance with the Federal Reserve
Board's Official Staff Commentary to that regulation.
(Source: P.A. 93‑561, eff. 1‑1‑04.)
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(815 ILCS 137/15)
Sec. 15.
Ability to repay.
A creditor or broker shall not transfer, deal
in, offer,
or
make a high risk home loan if the creditor or broker does not believe at the
time the loan
is
consummated that the borrower will be able to make the scheduled
payments to repay the obligation based upon a consideration of his or her
current and
expected income, current obligations, employment status, and other financial
resources (other than the borrower's equity in the dwelling that secures
repayment of the loan). A borrower shall be presumed to be able to repay the
loan if, at the time the loan is consummated, or at the time of the first rate
adjustment, in the case of a lower introductory interest rate, the borrower's
scheduled monthly payments on the loan (including principal, interest, taxes,
insurance, and assessments), combined with the scheduled payments for all
other disclosed debts, do not exceed 50% of the borrower's monthly gross
income.
(Source: P.A. 93‑561, eff. 1‑1‑04.)
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(815 ILCS 137/20)
Sec. 20.
Verification of ability to repay loan.
The lender shall verify
the
borrower's ability to repay the loan in the case of a high risk home loan. The
verification shall require, at a minimum, the following:
(1) That the borrower prepare and submit to the |
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lender a personal income and expense statement in a form prescribed by the Commissioner or the Director, who may permit the use of other forms such as the URLA (Fannie Mae Form 1003 (10/92), available from Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, D.C. 20016‑2892, and Freddie Mac Form 85 (10/92), available from Freddie Mac at 1101 Pennsylvania Avenue, NW, Suite 950, P.O. Box 37347, Washington, D.C. 20077‑0001, no subsequent amendments or editions) and Transmittal Summary (Fannie Mae Form 1077 (3/97), available from Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, D.C. 20016‑2892, and Freddie Mac Form 1008 (3/97), available from Freddie Mac at 1101 Pennsylvania Avenue, NW, Suite 950, P.O. Box 37347, Washington, D.C. 20077‑0001, no subsequent amendments or editions).
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(2) That the borrower's income is verified by means
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of tax returns, pay stubs, accounting statements, or other prudent means.
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(3) That a credit report is obtained regarding the
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(Source: P.A. 93‑561, eff. 1‑1‑04.)
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(815 ILCS 137/30)
Sec. 30.
Prepayment penalty.
For any loan that is subject to the
provisions of this Act and is not subject to the provisions of the Home
Ownership and Equity Protection Act of 1994, no lender shall make a high risk
home loan
that includes a penalty provision for payment made: (i) after the expiration of
the 36‑month period following the date the loan was made; or (ii) that is more
than:
(1) 3% of the total loan amount if the prepayment is |
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made within the first 12‑month period following the date the loan was made;
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(2) 2% of the total loan amount if the prepayment is
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made within the second 12‑month period following the date the loan was made; or
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(3) 1% of the total loan amount if the prepayment is
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made within the third 12‑month period following the date the loan was made.
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(Source: P.A. 93‑561, eff. 1‑1‑04.)
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(815 ILCS 137/80)
Sec. 80.
Late payment fee.
A lender shall not transfer, deal in, offer,
or make a high risk home loan that provides for a late payment fee, except
under
the following conditions:
(1) the late payment fee shall not be in excess of |
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5% of the amount of the payment past due;
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(2) the late payment fee shall only be assessed for
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a payment past due for 15 days or more;
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(3) the late payment fee shall not be imposed more
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than once with respect to a single late payment;
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(4) a late payment fee that the lender has collected
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shall be reimbursed if the borrower presents proof of having made a timely payment; and
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(5) a lender shall treat each payment as posted on
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the same business day as it was received by the lender, servicer, or lender's agent or at the address provided to the borrower by the lender, servicer, or lender's agent for making payments.
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(Source: P.A. 93‑561, eff. 1‑1‑04.)
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(815 ILCS 137/100)
Sec. 100.
Counseling prior to perfecting foreclosure proceedings.
(a) If a high risk home loan becomes delinquent by more than 30 days, the
servicer shall send a notice advising the borrower that he or she may wish to
seek approved credit counseling.
(b) The notice required in subsection (a) shall, at a minimum, include the
following language:
"YOUR LOAN IS OR WAS MORE THAN 30 DAYS PAST DUE. YOU MAY
BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY BE IN YOUR BEST
INTEREST TO SEEK APPROVED CREDIT COUNSELING. A LIST OF
APPROVED CREDIT COUNSELORS MAY BE OBTAINED FROM EITHER THE
ILLINOIS DEPARTMENT OF FINANCIAL INSTITUTIONS OR THE ILLINOIS
OFFICE OF BANKS AND REAL ESTATE."
(c) If, within 15 days after mailing the notice provided for under
subsection
(b), a lender, servicer, or lender's agent is notified in writing by an
approved
credit counselor and the approved credit counselor advises the lender,
servicer,
or lender's agent that the borrower is seeking approved credit counseling, then
the lender, servicer, or lender's agent shall not institute legal action under
Part 15
of Article XV of the Code of Civil Procedure for 30 days after the date of that
notice. Only one such 30‑day period of forbearance is allowed under this
Section
per subject loan.
(d) If, within the 30‑day period provided under subsection (c), the lender,
servicer, or lender's agent, the approved credit counselor, and the borrower
agree to a debt management plan, then the lender, servicer, or lender's agent
shall not institute legal action under Part 15 of Article XV of the Code of
Civil
Procedure for as long as the debt management plan is complied with by the
borrower.
The agreed debt management plan must be in writing and signed by the
lender, servicer, or lender's agent, the approved credit counselor, and the
borrower. No modification of an approved debt management plan can be made
without the mutual agreement of the lender, servicer, or lender's agent, the
approved credit counselor, and the borrower.
Upon written notice to the lender, servicer, or lender's agent, the borrower
may change approved credit counselors.
(e) If the borrower fails to comply with the agreed debt management plan,
then nothing in this Section shall be construed to impair the legal right of
the
lender, servicer, or lender's agent to enforce the contract.
(Source: P.A. 93‑561, eff. 1‑1‑04.)
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(815 ILCS 137/105)
Sec. 105.
Right to cure.
(a) Before an action is filed to foreclose or collect money due pursuant to
a
high risk home loan or before other action is taken to seize or transfer
ownership
of property subject to a high risk home loan, the lender or lender's assignee
of
the loan shall deliver to the borrower a notice of the right to cure the
default,
informing the borrower of all of the following:
(1) The nature of the default.
(2) The borrower's right to cure the default by |
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paying the sum of money required, provided that a lender or assignee shall accept any partial payment made or tendered in response to the notice. If the amount necessary to cure the default will change within 30 days of the notice due to the application of a daily interest rate or the addition of late fees, as allowed by the Act, the notice shall give sufficient information to enable the borrower to calculate the amount at any point within the 30‑day period.
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(3) The date by which the borrower may cure the
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default to avoid a court action, acceleration and initiation of foreclosure, or other action to seize the property, which date shall not be less than 30 days after the date the notice is delivered, and the name, address, and telephone number of a person to whom the payment or tender shall be made.
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(4) That if the borrower does not cure the default
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by the date specified, the lender or assignee may file an action for money due or take steps to terminate the borrower's ownership in the property by requiring payment in full of the high risk home loan and commencing a foreclosure proceeding or other action to seize the property.
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(5) The name, address, and telephone number of a
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person whom the borrower may contact if the borrower disagrees with the assertion that a default has occurred or the correctness of the calculation of the amount required to cure the default.
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(b) If a lender or assignee asserts that grounds for acceleration exist and
requires the payment in full of all sums secured by the high risk home loan,
the
borrower or anyone authorized to act on the borrower's behalf may, at any time
before the title is transferred by means of foreclosure, by judicial
proceeding and sale, or other means, cure the default, and reinstate the high
risk
home loan. Cure of the default shall reinstate the borrower to the same
position
as if the default had not occurred and shall nullify, as of the date of the
cure, an
acceleration of any obligation under the high risk home loan arising from the
default.
(c) To cure a default under this Section, a borrower shall not be required
to pay any charge, fee, or penalty attributable to the exercise of the right to
cure
a default, other than the fees specifically allowed by this subsection. The
borrower
shall not be liable for any attorney fees relating to the default that are
incurred by
the lender or assignee prior to or during the 30‑day period set forth in
subsection
(a) of this Section, nor for any such fees in excess of $100 that are incurred
by
the lender or assignee after the expiration of the 30‑day period but before the
lender or assignee files a foreclosure or other judicial action or takes other
action
to seize or transfer ownership of the real estate. After the lender or assignee
files
a foreclosure or other judicial action or takes other action to seize or
transfer
ownership of the real estate, the borrower shall only be liable for attorney fees
that are reasonable and actually incurred by the lender or assignee, based on a
reasonable hourly rate and a reasonable number of hours.
(d) If a default is cured prior to the initiation of any action to foreclose or to
seize the residence, the lender or assignee shall not institute a proceeding or
other action for that default. If a default is cured after the initiation of any action,
the lender or assignee shall take such steps as are necessary to terminate the
action.
(e) A lender or a lender's assignee of a high risk home loan that has the
legal right to foreclose shall use the judicial foreclosure procedures provided
by
law. In such a proceeding, the borrower may assert the nonexistence of a
default
and any other claim or defense to acceleration and foreclosure, including any
claim or defense based on a violation of the Act, though no such claim or
defense shall be deemed a compulsory counterclaim.
(Source: P.A. 93‑561, eff. 1‑1‑04.)
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(815 ILCS 137/110)
Sec. 110.
Mortgage Awareness Program.
(a) The Mortgage Awareness Program is a counseling and educational
component that must be provided by the Director and the Commissioner.
(b) The core curriculum of the Mortgage Awareness Program shall include
all of the following:
(1) Explanation of the amount financed.
(2) Explanation of the finance charge.
(3) Explanation of the annual percentage rate.
(4) Explanation of the total payments.
(5) Explanation of the loan costs, including |
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broker's fees, finance charges, points, and origination fees.
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(6) Explanation of the right of rescission.
(7) Explanation of foreclosure procedures.
(8) Explanation of the significant debt ratios,
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including total debt to income, loan debt to income, and loan debt to value of residence.
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(9) Explanation of adjustable rate mortgage.
(10) Explanation of balloon payments.
(11) Explanation of credit options.
(12) Explanation of each item that appears on a good
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(13) Explanation of pre‑payment penalties.
(c) Counseling session attendees must complete a personal income
and expense statement, as well as a balance sheet, on forms provided by the
Commissioner or the Director.
(d) Prior to signing a certificate of completion, approved credit counselors
shall privately discuss with each attendee that attendee's income and expense
statement and balance sheet, as well as the terms of any loan the attendee
currently has or may be contemplating, and provide a third party review to
establish the affordability of the loan.
(e) Counseling session attendees must be given a brochure that
contains information covered by the Mortgage Awareness Program.
(f) Any lender, prior to making a high risk home loan, shall inform the
borrower in writing of the right to participate in the Mortgage Awareness
Program.
(g) No lender shall offer less favorable loan terms to a borrower due to a
borrower's participation in the Mortgage Awareness Program.
(h) Except as prohibited elsewhere in this Section, the borrower may waive
participation in the program, provided that the waiver occurs no less than 2
business days after the day that the borrower receives the notice required by
subsection (f) of this Section and that the waiver is in writing in a form
approved by the Commissioner and the Director.
(Source: P.A. 93‑561, eff. 1‑1‑04.)
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(815 ILCS 137/115)
Sec. 115.
Report of default and foreclosure rates on conventional
loans.
(a) On or before October 1 and April 1 of each year, each
servicer of Illinois residential mortgage loans shall report to the
Commissioner or the Director
the default and foreclosure data of conventional loans for the 6‑month periods
ending June 30 and December 31, respectively.
(b) Each servicer shall report the following information:
(1) The average quarterly dollar amount of |
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conventional one to 4 family mortgage loans secured by Illinois real estate.
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(2) The average quarterly number of conventional one
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to 4 family mortgage loans secured by Illinois real estate.
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(3) The average quarterly dollar amount of
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conventional one to 4 family mortgage loans secured by Illinois real estate that are in default over 90 days.
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(4) The average quarterly number of conventional one
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to 4 family mortgage loans secured by Illinois real estate that are in default over 90 days.
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(5) The dollar amount of foreclosures on one to 4
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family conventional loans completed during the reporting period.
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(6) The number of foreclosures on one to 4 family
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conventional loans completed during the reporting period.
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(7) Whether any of the loans where a foreclosure was
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completed were originated less than 18 months before the completed foreclosure.
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(8) Whether any of the loans where a foreclosure was
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completed had a note rate greater than 10% for first lien mortgage loans or greater than 12% in the case of a junior lien.
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(c) An officer of the servicer shall sign the form.
(Source: P.A. 93‑561, eff. 1‑1‑04.)
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(815 ILCS 137/135)
Sec. 135.
Remedies, enforcement, and limitations of liability.
(a) The remedies provided in this Act are cumulative and apply to persons
or entities subject to this Act.
(b) Any knowing violation of this Act constitutes a violation of the
Consumer Fraud
and Deceptive Business Practices Act.
(c) If any provision of an agreement for a high risk home loan violates this
Act, then that provision is unenforceable against the borrower.
(d)(1) Any natural or artificial person who purchases or otherwise is
assigned or subsequently
holds a high risk home loan shall be subject to all affirmative claims and
defenses with respect to the loan that the borrower could assert against the
lender or broker of the loan, provided that this item (d)(1) shall not apply if
the purchaser, assignee or holder demonstrates by a preponderance of the
evidence that it:
(A) has in place, at the time of the purchase, |
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assignment or transfer of the loans, policies that expressly prohibit its purchase, acceptance of assignment or holding of any high risk home loans;
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(B) requires by contract that a seller, assignor or
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transferor of high risk home loans to the purchaser, assignee or transferee represents and warrants to the purchaser, assignee or transferee that either (i) the seller, assignor or transferor will not sell, assign or transfer any high risk home loans to the purchaser, assignee or transferee, or (ii) the seller, assignor or transferor is a beneficiary of a representation and warranty from a previous seller, assignor or transferor to that effect; and
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(C) exercises reasonable due diligence at the time
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of the purchase, assignment or transfer of high risk home loans, or within a reasonable period of time after the purchase, assignment or transfer of such home loans, which is intended by the purchaser, assignee or transferee to prevent the purchaser, assignee or transferee from purchasing or taking assignment or otherwise holding any high risk home loans, provided that this reasonable due diligence requirement may be met by sampling and need not require loan‑by‑loan review.
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(2) Limited to the amount required to reduce or extinguish the borrower's
liability under the high cost home loan plus the amount required to recover
costs, including reasonable attorney fees, a borrower acting only in an
individual capacity may assert claims that the borrower could assert against a
lender of the home loan against a
subsequent holder or assignee of the home loan as follows:
(A) within 5 years of the closing date of a high
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risk home loan, a violation of this Act in connection with the loan as an original action; and
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(B) at any time during the term of a high risk home
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loan, after an action to collect on the home loan or to foreclose on the collateral securing the home loan has been initiated, or the debt arising from the home loan has been accelerated, or the home loan has become 60 days in default, any defense, claim, counterclaim or action to enjoin foreclosure or preserve or obtain possession of the home that secures the loan.
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(e) In addition to the limitation of liability afforded to subsequent
purchasers, assignees, or holders under subsection (d) of this Section, a
lender
and a subsequent purchaser, assignee, or holder of the high risk home loan
is not liable for a violation of this Act if:
(1) within 30 days of the loan closing and prior to
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receiving any notice from the borrower of the violation, the lender has made appropriate restitution to the borrower and appropriate adjustments are made to the loan; or
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(2) the violation was not intentional and resulted
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from a bona fide error in fact, notwithstanding the maintenance of procedures reasonably adopted to avoid such errors, and within 60 days of the discovery of the violation and prior to receiving any notice from the borrower of the violation, the borrower is notified of the violation, appropriate restitution is made to the borrower, and appropriate adjustments are made to the loan.
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(Source: P.A. 93‑561, eff. 1‑1‑04.)
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