In general, there are several considerations that go into determining which state’s laws may apply to a loan. Your loan documents might include “choice of law” provisions that state which state’s law will apply. Emigrant Mortg. v. Chicago Financial, 386 Ill.App.3d 21 (1st Dist. 2007). In the absence of such provisions, Illinois courts look at which state has the “most significant contacts,” including consideration of the location of the subject matter of the contract and the domicile of the parties (among other factors). Diamond State Ins. Co. v. Chester-Jensen Co., 243 Ill.App.3d 471 (1st Dist. 1993); Kafka v. Bellevue Corp., 999 F.2d 1117 (7th Cir. 1993).

However, we recommend that you contact the IDFPR and request a written opinion on the applicability of the Mortgage Escrow Account Act for loans made to out-of-state residents or for properties located in other states. (The banking division can be reached at (217) 785-2900.) One bank has informed us that its FDIC examiner stated he would apply the Illinois High Risk Home Loan Act to all loans made by Illinois-chartered banks, regardless of other choice of law considerations. But since this is a state law, we think that an opinion from the IDFPR should be sought first and would carry weight with the primary federal regulators. (You may need to suggest to the IDFPR that it request a legal opinion from the Illinois Attorney General’s office on the question.)