"My administration is committed to fight predatory lending and to
help hard working families realize the dream of owning their own
home," said Gov. Blagojevich. "But even though this law was designed
to fight predatory loans, it is clear that the program may be
negatively affecting the communities it is designed to protect. I am
stopping the program until we can find a system that effectively
fights predatory lending and protects homebuyers."
HB 4050 has created uncertainty for lenders, limiting their interest
in offering products to consumers. Furthermore, a recent report from
the University of Illinois Urbana-Champaign showed that housing
sales in the HB 4050 zip codes have dropped by nearly half over the
fall of 2006. Comparable zip codes in which the pilot program is not
being applied have seen a decline of 20 percent. The report also
stated that the pilot program does not offer borrowers additional
Late last year, the Governor ordered IDFPR to reach out to
community members affected by the pilot program. At a well-attended
public meeting held late last year, the Department heard
overwhelming opposition from community groups and real estate
professionals to the impact the law was having in the affected
In a directive issued Jan. 19, the Illinois Department of
Financial and Professional Regulation (IDFPR) is withdrawing the
designation of the ten zip codes that had comprised the "Pilot
Program Area" as directed by HB 4050 (60620, 60621, 60623, 60628,
60629, 60632, 60636, 60638, 60643 and 60652) and designates the
Pilot Program Area as no zip codes or areas whatsoever. In making
this designation, the Department received and reviewed information
that suggests that the prior designation may be detrimental to the
Pilot Program's purpose, namely, to curb predatory lending practices
in areas with high rates of foreclosure on residential home
Throughout his administration, Gov. Blagojevich has taken
numerous actions to help homebuyers and protect consumers.
Reduced the number
of high-risk home loans: In August 2003, the Governor signed the
High Risk Home Loan Act to protect consumers from predatory
mortgage lending practices. As a result of the Act, the state
has seen both a reduction in the number of high-risk home loans
and a change in lenders' business practices so they are no
longer offering high-risk loans as defined in the law.
legislation to protect homeowners from unscrupulous loan
originators who actually process loans (Loan Originators). The
law requires them to undergo both criminal and credit background
checks and demonstrate in-depth knowledge of the residential
finance industry. During the initial registration of loan
originators, 29,000 people applied for registration. Forty
percent of those applicants failed the Loan Originator Exam, and
almost 800 applicants were denied licenses after background
checks were completed. There are approximately 16,000 registered
loan originators in Illinois.
easy access to accurate information about their properties: In
August 2005, Gov. Blagojevich signed three bills to help
homebuyers and homeowners obtain access to accurate and
important information about their properties: House Bill 1428,
which requires lenders to notify homebuyers of accurate and
timely property tax payment from the buyer's escrow account;
House Bill 2462, which requires property tax exemption
information to be included on the seller's transfer declaration;
and House Bill 2594, which requires home repair contracts to
increase consumer awareness of contract clauses that waive the
homeowner's right to trial by jury for repair disputes.
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homebuyers from discrimination: In 2005, Gov. Blagojevich
announced a Fair Housing program to help protect homebuyers
against discrimination in housing. The Illinois Department of
Human Rights and other agencies conduct training seminars around
the state to inform homebuyers, tenants, landlords, property
owners, advertisers, housing advocates, and community
organizations about Illinois' anti-discrimination laws.
IDFPR has taken
the lead in a national initiative to create a residential
mortgage lender license system and data base that permits
sharing of supervisory and disciplinary actions to prevent
disciplined licensees from moving to another state and preying
on new victims.
The state has
taken rigorous enforcement actions against unscrupulous lenders
and real estate professionals:
have shut down a "mortgage rescue" scam that defrauded
vulnerable Chicago metropolitan area residents of their homes.
In a series of complaints filed the week of Jan. 14, IDFPR
charged that Mutual Trust, Charles White and seven title
insurance agencies worked together to defraud unwary homeowners.
In 2004, IDFPR
began to investigate complaints about the business practices of
Gary Knox and Dennis Weise. In 2005, federal charges were
brought against these men. In the interim, IDFPR revoked the
appraisal license of Dennis Weise, charged Gary Knox with
selling real estate without a license, closed down one of the
mortgage companies doing business with these men, and approved a
transfer of another company into new ownership.
IDFPR worked with
the Attorney General to file suit against Cambridge Credit, one
of its licensees, alleging the firm accepted hundreds of dollars
in fees and debt payments from individual consumers seeking debt
management counseling but, in some cases, did not pay consumers'
creditors in a timely fashion.
of banking has collected almost $15.5 million from enforcement
actions against residential finance companies since 2003. Among
those actions, IDFPR worked with six other state agencies to
take action against Ameriquest Company, one of the nation's
largest sub-prime lenders. Illinois received $14.5 million in
fines and penalties from a global settlement of $325 million
More than 20
Illinois appraisers have been disciplined for their involvement
in predatory or fraudulent real estate transactions. More than
$30,000 in fines were collected and hundreds of appraisals were
reviewed to make sure that loan transactions were accurate.
copied from file provided by the
Illinois Office of Communication and Information)