Illinois House Bill 5019
On January 29, 2013, the Illinois Governor signed HB 5019, which amends sections of Public Act 097-0849 (SB 1692) relative to high-risk home loans. HB 5019 was effective January 29, 2013 for loans made, refinanced, renewed, extended, or modified on or after that date.
HB 5019 delays the effective date of sections 10, 15, and 25 of Public Act 097-0849 from January 1, 2013 to January 10, 2014, the effective date of the federal regulations implementing Sections 1431, 1432, and 1433 of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Sections 1431, 1432, and 1433 of the Dodd-Frank Act amend HOEPA to expand the types of loans potentially subject to HOEPA coverage, revise the triggers for HOEPA coverage, and strengthen and expand the restrictions that HOEPA imposes on those mortgages.
Sections 10, 15, and 25 of Public Act 097-0849 amended and broadened the definition of high-risk home loan, added the definition of bona fide discount points, amended the definition of points and fees, added prepayment penalties as a threshold, and amended substantive restrictions applicable to high-risk home loans. Under the legislation, the thresholds applied to open and closed-end loans, purchase and non-purchase money loans made, refinanced, renewed, extended, or modified on or after the effective date of January 1, 2013.
HB 5019 only delays the effective date of sections 10, 15, and 25 of Public Act 097-0849 from January 1, 2013 to January 10, 2014 and does not make other substantive changes to the law. Therefore, effective January 29, 2013, the Illinois limits revert to those in effect prior to January 1, 2013.
We have spoken to the Deputy General Counsel in the Illinois Department of Financial and Professional Regulation, Division of Banking. The Illinois regulators recognize that there is a gap from January 1, 2013 through January 28, 2013, in which loans may have been made, refinanced, renewed, extended, or modified under Public Act 097-0849. The regulators will issue an interpretive letter in the next few weeks to address the loans made, refinanced, renewed, extended, or modified during this period. We were advised that the current thought is that the loans made, refinanced, renewed, extended, or modified under Public Act 097-0849 need not be modified, as they were made, refinanced, renewed, extended, or modified pursuant to the law at the time. Loans which were not made, refinanced, renewed, extended, or modified under Public Act 097-0849 may be subject to more scrutiny, but the regulators recognize the confusion which these revisions to the law have generated.
Michigan Senate Bills 1283, 1284 and 1285
The Governor of Michigan signed into law Senate Bills 1283, 1284, and 1285 which amend the current definition of “mortgage loan” in several statutes that regulate mortgage lenders and mortgage lending practices. The new definition excludes a loan transaction in which the proceeds are not used primarily for a personal, family, or household purpose. The legislation also changes the definition of Commissioner from the Commissioner of the Office of Financial and Insurance Regulation of the Department of Energy, Labor, and Economic Growth or the Financial Institutions Bureau of the Department of Commerce to the Commissioner of the Department of Licensing and Regulatory Affairs. The legislation was effective December 27, 2012.
Missouri HB 1103
The Governor of Missouri signed into law House Bill1103, which amends existing law regarding the registration of appraisal management companies. The legislation is currently in effect.
The legislation provides that certain persons are not required to obtain an appraisal management company registration, including an appraisal management company that is a subsidiary owned and controlled by a financial institution and regulated by a federal institution regulatory agency. The legislation also includes substantive requirements relative to registered appraisal management companies, which are not addressed herein.
New Jersey 2013 Maximum Principal Loan Amount – High-Cost Home Loans
The New Jersey Department of Banking and Insurance has released the 2013 maximum principal loan amount relative to high-cost home loans. For 2013, the maximum principal loan amount of a loan that may be considered a high-cost home loan is $443,494.45.
The adjusted amount is effective for all completed applications received by the lender on or after January 1, 2013.
Ohio SB 333
The Governor of Ohio signed into law SB 333, which amends current provisions regarding temporary mortgage loan originator licenses. Specifically, the legislation permits the Superintendent of Financial Institutions to issue temporary mortgage loan originator licenses to out-of-state applicants who meet certain criteria. The legislation is effective March 22, 2013.
Ohio Pre-Payment Penalty Adjustment for 2013
The Ohio Division of Financial Institutions released the prepayment penalty adjustment for 2013. Under Ohio law, a prepayment penalty may not be charged for the prepayment or refinancing of a residential mortgage obligation of less than $75,000 (adjusted annually) that is made or arranged by a mortgage broker, loan officer, or non-bank mortgage lender and is secured by a first lien.
The dollar amount to which the prepayment penalty restriction applies is $85,080.00 for 2013. Therefore, effective January 1, 2013, a prepayment penalty is prohibited for a prepayment or refinancing of a residential mortgage loan of less than $85,080.00.
Pennsylvania “Base Figure” Annual Adjustment
The Pennsylvania Department of Banking announced the adjusted “base figure” for calendar year 2013. Under the Loan Interest and Protection Law, certain restrictions and limitations are applicable to loans with a loan amount equal to or less than the base figure. The adjusted base figure for 2013 is $234,692. This new base figure became effective January 1, 2013.
Fees are limited for loans of the base figure or less. Additionally, prepayment penalties are prohibited for loans of the base figure or less.
Vermont Declared Rate for 2013
The Vermont Department of Banking, Insurance, Securities and Health Administration (the “Department”) released the Declared Rate for 2013. While Vermont does not have state high-cost loan limitations, a High Rate/High Point Disclosure is required for first mortgage loans where the borrower is expected to be charged more than four points and/or the interest rate (note rate) is more than three percent over the “Declared Rate.” As determined by the Department, the Declared Rate for 2013 is 3.6%. As such, a loan with an interest rate of more than 6.6% in 2013 would trigger this disclosure.