Topic: Delinquent Borrowers
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Can we charge a late fee after a ten-day delinquency on a loan secured by a mortgage? It appears that Illinois law permits late fees after ten days, but the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) preemption provisions permit late fees after fifteen days.
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We are not aware of any law that would prevent you from charging a late fee after a ten-day delinquency on a loan that is secured by a mortgage, provided that your customers have agreed to such charges in their loan agreements. While Section 4.1a of the Illinois Interest Act requires a ten-day grace period…
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Is it true that Illinois law does not require a grace period before we can charge late fees for loan payments?
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We are not aware of any Illinois law that requires a mandatory grace period for loan payments made to a financial institution. While Section 4.1a of the Illinois Interest Act requires a ten-day grace period before a lender can collect a delinquency fee on a loan payment, that provision does not apply to banks. 815…
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Are there any additional requirements for cosigners on a home mortgage loan other than providing the initial “Notice to Cosigner”? Are you required to send the co-signer reminder notices for past due payments?
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Illinois law prescribes a notice for loan cosigners and limits the actions you may take regarding a cosigner in the event of a default or delinquency by the primary obligor. The Consumer Fraud and Deceptive Business Practices Act requires notification of a cosigner by first class mail of any delinquency or default by the primary…
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If a borrower is not paying property taxes on the property securing a loan, but is making their mortgage payments, are we required to send the housing counseling notice required by Illinois law? Must we send the notice before initiating legal action?
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Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5. The answer depends on whether the mortgage loan is considered delinquent. The notice requirement in the Code of Civil Procedure (sometimes called the “grace period notice” requirement)…
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Do the new RESPA rules requiring a 120-day grace period before initiating a foreclosure action include an exception for abandoned properties?
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No. There is no exception for abandoned properties in the RESPA prohibition on initiating a foreclosure action before the borrower is more than 120 days delinquent (provided that the property is the borrower's principal residence). 12 CFR 1026.41(f)(1)(i). The CFPB received requests from industry commenters to include such an exception, and the CFPB declined to…