WASHINGTON, D.C. – January 28, 2013 – (RealEstateRama) — An exemption for reverse mortgages from the Illinois High Risk Home Loan Act that just took effect at the beginning of January will be postponed for another year under a bill that passed the legislature and was sent to Gov. Pat Quinn for his approval.
The Illinois bill will postpone the exemption until January 10, 2014, when changes to the federal Home Ownership and Equity Protection Act (HOEPA) – which the High Risk Home Loan Act is closely aligned with – take effect. The forthcoming changes to HOEPA resulted from the recent publication of final rules by the Consumer Financial Protection Bureau, as mandated by Dodd-Frank Wall Street Reform and Consumer Protection Act.
The reverse mortgage industry sought and received an exemption from the Illinois High Risk Home Loan Act for reverse mortgages. Last summer, the Illinois legislature passed Senate Bill 1692, which provided an exemption for reverse mortgages from the Illinois High Risk Home Loan Act and implemented other changes to the Act that took effect on January 1, 2013.
However, in order to align Illinois high cost law in the forward mortgage area with the recent publication of final rules by the CFPB, Illinois House Bill 5019 delays the changes made by Senate Bill 1692, and the reverse mortgage exemption, for one year.
House Bill 5019 passed both houses on January 8. As of today, no action has been taken by Governor Quinn to sign House Bill 5019.
While the Illinois High Risk Home Loan Act continues to exclude open-end credit reverse mortgages and HECM for Purchase loans, the exemption for closed-end reverse mortgages will be delayed for one year. As a result, lenders that chose to limit reverse mortgage product offerings in Illinois in the past may choose to continue to do so until early next year. Further updates will be provided.