SPRINGFIELD – The Homeowner Protection Act announced by Governor Rod R. Blagojevich last week was introduced today by Senator Jacqueline Collins (D-Chicago). The measure is part of a comprehensive Homeowners Assistance Initiative launched by the Governor in February and will provide homeowners struggling to make their monthly mortgage payments an early warning of trouble and additional time to fix their financial problems.
Joined by Dean Martinez, Secretary of the Illinois Department of Financial and Professional Regulation (IDFPR), which regulates mortgage lenders and servicers, the lawmaker discussed the legislation outlined by Gov. Blagojevich last week that gives struggling homeowners new legal protections including a grace period of up to 60 days during which their lender could not attempt to foreclose on the home. The Act is being introduced as an amendment to SB 1998, which was recently approved by the Senate Licensed Activities Committee.
“We have to stay vigilant and do what we can to protect struggling families. This legislation will make sure homeowners are notified when they’re in trouble and have time to work with counselors on repayment options before they can be sent to foreclosure. Often, borrowers just need a little more time and a little more information to find a workable solution and keep their home. I appreciate Sen. Collins and Sen. Rutherford working with me to give struggling families in Illinois help to stay in their homes,” Gov. Blagojevich said.
“Too many families are facing foreclosure because they didn’t know where to turn for help when paying their bills first became a struggle. The Homeowner Protection Act gives families an opportunity to deal with their financial situation before they are at risk of losing their homes,” said Sen. Collins.
The measure requires lenders and loan servicers to notify homeowners at the first sign of trouble – when a mortgage is 30-days delinquent. Once notified that their loans are delinquent, homeowners have 30 days to seek mortgage counseling services to get their loans back on track.
If a borrower enters counseling, he or she would get an additional 30-day moratorium on foreclosure in order to work out a payment plan or refinance option. Once a payment plan or refinance is agreed to, all three parties involved in the process – the homeowner, the lender or servicer and the housing counselor must sign a written agreement outlining the terms of the new arrangement.
“At homeowner outreach events across the state, we hear from families who did not know where to turn for financial assistance,” said Secretary Martinez. “This measure will provide homeowners the tools and knowledge they need to save their homes from foreclosure, before it is too late.”
The legislation also expands current reporting requirements of loan servicers so that they will report to the state on a monthly basis the specific, proactive steps they are taking to identify and assist distressed homeowners. Requiring servicers to report this information will encourage them to play a more active role in addressing the nation’s mortgage crisis and will better enable policymakers to identify possible solutions.
Finally, the measure allows Illinois to join 38 other states in a multi-state automated licensing system that allows the tracking of mortgage professionals’ disciplinary and license status if they choose to relocate. While Illinois does criminal and credit background checks of loan originators before granting licenses, this program ensures that regulators will know of any administrative discipline administered in another state before an Illinois license is granted. The system will also allow license discipline information to be shared throughout the licensed professional’s career.
The introduction of the Homeowner Protection Act is part of the Governor’s Homeowner Assistance Initiative which also:
· Provides access to a new $310 million Homeowner Assistance Pool to help families refinance existing mortgages and get into more affordable, stable loans;
· Establishes a statewide counseling network to help people(or borrowers) understand their options and negotiate with their lenders;
· Provides consumers protection by making it easier for homeowners to report fraudulent and deceptive practices that result in unwarranted financial strain and foreclosures;
· Urges all Illinois lenders to become part of the solution by: joining in the national “Project Lifeline” initiative and agree to contact their borrowers who are at up to 90 days behind on mortgage payments, but not yet scheduled for foreclosure and offering to work with them to negotiate new loans that keep them in their homes; participate in the new Homeowner Assistance Pool; and participate in Homeowner Outreach Days.