IBA Compliance Connection

Your go to source for compliance!

Our mortgage document provider is going to start including a document called the “Illinois Waiver of Participation in Mortgage Awareness Program.” The document indicates that the customer was provided written notice of their legal right to participate in a counseling and education program through the IDFPR called the “Mortgage Awareness Program,” and that they are waiving their right to participate in the program. I found a few references to the document on the IDFPR website, but one indicated that the form has been repealed. Do we need to use this form and notify a customer of their right to participate in the program?

—

by

admin

We believe the waiver of participation for the Mortgage Awareness Program is necessary only for “high risk home loans” as defined in the Illinois High Risk Home Loan Act (HRHLA).

Under the HRHLA, the Illinois Department of Financial and Professional Regulation (IDFPR) is required to provide the Mortgage Awareness Program — a counseling and education program for consumers. Prior to making a high risk home loan, lenders are required to inform the borrower in writing of the right to participate in the Mortgage Awareness Program. The borrower may waive participation in the program by signing a waiver approved by the IDFPR, provided that the waiver occurs no less than two business days after the borrower receives notice of the program.

A copy of the “Waiver of Participation in Mortgage Awareness Program” is available on the IDFPR’s website at the link below. We note that after the passage of the HRHLA, certain provisions of the Illinois Administrative Code requiring lenders to inform borrowers of the Mortgage Awareness Program were repealed, as the HRHLA made them unnecessary.

For resources related to our guidance, please see:

  • Illinois High Risk Home Loan Act, 815 ILCS 137/110(a) (“The Mortgage Awareness Program is a counseling and educational component that must be provided by the Director and the Commissioner.”)
  • Illinois High Risk Home Loan Act, 815 ILCS 137/110(f) (“Any lender, prior to making a high risk home loan, shall inform the borrower in writing of the right to participate in the Mortgage Awareness Program.”)
  • Illinois High Risk Home Loan Act, 815 ILCS 137/110(h) (“Except as prohibited elsewhere in this Section, the borrower may waive participation in the program, provided that the waiver occurs no less than 2 business days after the day that the borrower receives the notice required by subsection (f) of this Section and that the waiver is in writing in a form approved by the Commissioner and the Director.”)