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Does the notification requirement in the Mortgage Escrow Account Act apply to a business-purpose loan, where we are taking a mortgage on the borrower’s principal residence? – IBA Compliance Connection

IBA Compliance Connection

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Does the notification requirement in the Mortgage Escrow Account Act apply to a business-purpose loan, where we are taking a mortgage on the borrower’s principal residence?

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We do not believe that the law would apply to a business-purpose loan, even if the loan is secured by a mortgage on the borrower’s primary residence. The Mortgage Escrow Account Act applies only to “the granting or servicing of a mortgage on a single-family owner occupied residential property” that is made “for the purpose of enabling another to purchase a residence.” 765 ILCS 910/4765 ILCS 910/2(c). We believe these provisions would exclude most business-purpose loans from the law’s scope.