Topic: Mortgage Loans
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Can we send disclosures to residential real estate loan applicants electronically?
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?
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?
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?
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?
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%?
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?
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?
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?
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)?
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…