IBA Compliance Connection

Your go to source for compliance!

Under the Illinois Mortgage Escrow Account Act, does a “residence” include only the borrower’s principal residence, or would a non-owner occupied, 1–4 family investment property also be included? Also, it appears that the property tax notice required in Section 15 of the Act requires inclusion of only one of the four items listed (PIN, mortgage acct number, address of subject property, OR other property description). Is that correct?

—

by

admin

The Illinois Mortgage Escrow Account Act (MEAA) applies only to mortgage loans secured by owner-occupied, single-family residential real estate, when made “for the purpose of enabling another to purchase a residence.” Consequently, it would not apply to a purchase loan for non-owner occupied investment property, although it could apply to a borrower’s second residence.

We agree that Section 15 of the MEAA requires lenders to provide notices for each property tax payment that include “the permanent index number, mortgage account number, address of the property, or other property description,” in addition to other information. For purposes of this subset of the notice, you are not required to provide all four property identifiers.

Perhaps more importantly, the MEAA exempts lenders from this notice requirement, provided that the lender is sending an annual escrow account notice (such as the annual notice required by RESPA) along with contact information for borrowers to access additional details about individual property tax payments (such as through a toll-free number or website).

For resources related to our guidance, please see:

  • Mortgage Escrow Account Act, 765 ILCS 910/4 (“On or after the effective date of this Act, each mortgage lender in conjunction with the granting or servicing of a mortgage on a single-family owner occupied residential property, shall comply with the provisions of this Act.”)
  • Mortgage Escrow Account Act, 765 ILCS 910/2(c) (“‘Mortgage Lender’ means any bank, savings bank, savings and loan association, credit union, mortgage banker, or other institution, association, partnership, corporation or person who extends the loan of monies for the purpose of enabling another to purchase a residence or who services the loan, including successors in interest of the foregoing.”)
  • Mortgage Escrow Account Act, 765 ILCS 910/15(a) (“When any mortgage lender pays the property tax from an escrow account, the mortgage lender must give the borrower written notice of the following, within 45 business days after the tax payment: (1) the date the taxes were paid; (2) the amount of taxes paid; and (3) the permanent index number, mortgage account number, address of the property, or other property description that is used for assessment and taxation purposes under the Property Tax Code.”)
  • Mortgage Escrow Account Act, 765 ILCS 910/15(c) (“[A] mortgage lender that provides notice at least annually to a borrower in the manner provided in subsection (b) of a means of communication for the borrower to access the information set forth in subsection (a) [notice of tax payments] by telephone, facsimile, e-mail, Internet access, or other means of communication, is deemed to be in compliance with subsection (a).”)