Section 7 exempts mortgages guaranteed by the federal government from Section 5 (allowing cancellation at 65%). 765 ILCS 910/7 (“The borrower shall not have the right to terminate any such arrangement under Section 5 in conjunction with mortgages insured, guaranteed, supplemented, or assisted by the State of Illinois or the federal government that require an escrow arrangement for their continuation”).

However, Section 7 does not exempt higher-priced mortgage loans from Section 5. Borrowers are permitted to terminate escrow accounts for such loans: Regulation Z authorizes higher-priced mortgage loan borrowers to cancel an escrow account with a dated written request to the lender, once 365 days have passed since the consummation of the loan. 12 CFR 1026.35(b)(3)(iii). To the extent that a federal requirement conflicts with the Illinois law, federal law will preempt the state law. Olsen v. Financial Fed. Sav. & Loan Ass’n, 105 Ill.App.3d 364, 371 (1st Dist. 1982).