Topic: Mortgage Loans
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Can we send disclosures to residential real estate loan applicants electronically?
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The Illinois Financial Institutions Electronic Documents and Digital Signature Act and the federal Electronic Signatures in Global and National Commerce (ESIGN) Act allow banks to send “information relating to a transaction” required by law in electronic form (after sending the required notices and obtaining the consumer’s consent). 205 ILCS 705/10(c)
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Can we reuse an appraisal that is four months old if it was prepared on behalf of a different institution?
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We do not believe that it is illegal to use an existing appraisal transferred from another lender for a new loan, provided that the appraisal “conforms to the Board’s appraisal regulations and is otherwise acceptable.” FRB Commercial Bank Examination Manual, Section 4140.1, p. 12
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Is there a ceiling on the amount that can be placed into an escrow account? Would that ceiling apply to a savings account opened in lieu of an escrow account?
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The Mortgage Tax Escrow Account Act provides the ceiling for how much can be placed in escrow accounts. No agreement for the mortgage of a single-family residence shall contain any requirement that the mortgagor of the residence shall maintain in any escrow account for the payment of real property taxes or in any escrow-like arrangement…
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In filling out a Form 1003 mortgage application, if the loan applicants are in a civil union, should we list them as unmarried?
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It would be most accurate to list the legal relationship as a “domestic partnership,” as a civil union is not the strict equivalent of a marriage. Under Illinois’s civil union law, every reference to “spouse” in any Illinois statute is now deemed to include a “party to a civil union.” 750 ILCS 75/10. A “party…
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As to Section 7 of the Mortgage Escrow Account Act, does federal law preempt the mortgage escrow requirement for higher priced mortgage loans or where Fannie Mae requires an escrow account? Is the 65% notification still required, even though we would not be able to release the escrow account under federal law?
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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…
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Under the Mortgage Escrow Account Act, if a customer opts to establish a certificate-in-lieu account instead of an escrow account, would we have to notify the customer of their option to terminate the account once the loan is reduced to 65%? Would we have to release the pledge if requested after reducing the loan amount to 65%?
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We believe that Section 5 (requiring lenders to notify borrowers of the option to terminate an escrow account) would apply when a borrower holds a time deposit account in lieu of an escrow account. While Section 5 mentions only “escrow accounts,” we believe that it was intended to also cover pledged accounts established under Section…
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Does the Mortgage Escrow Account Act requirement that we notify borrowers when the loan principal is down to 65% apply just to the property tax escrow, or does that apply to everything in the escrow account?
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We believe that the notice requirement in Section 5 of the Act applies only to an escrow account set up to pay property taxes. 765 ILCS 910/5. This is because “escrow account” is defined in the Act as an account “out of which the lender pays the taxes on the property covered by the mortgage,”…
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Does Illinois require that we send loan payoff statements to customers, and can we send these statements electronically?
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Illinois law requires you to send certain documents when a loan is paid off. As to mortgages, you must execute and deliver a release of the mortgage to the mortgagor or to the county recorder. 765 ILCS 905/2. The release must be delivered within one month after the payment of the debt. 765 ILCS 905/4.…
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Does Illinois have a law setting a maximum prepaid finance charge?
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We do not believe that Illinois has a law setting a ceiling for prepaid finance charges with respect to financial institutions. Section 5e of the Banking Act states that “[n]otwithstanding the provisions of any other law in connection with extensions of credit” banks may charge any fees, “subject only to the provisions of [subsection 4(1)]…
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In closing a mortgage loan, what documents need to be signed by a spouse who does not have title in the property being mortgaged (the non-titled spouse)?
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We do not believe that you would have to provide the TIL disclosure or the rescission disclosure to a spouse who is not receiving credit and who does not own the property securing the transaction. Regulation Z requires that banks provide all the required disclosures to “the consumer.” 12 CFR 1026.5, 1026.17. For purposes of…