Senator Jacqueline Collins Tightens Rules to Prevent Mortgage Fraud
Katharine Eastvold
Published: May 30, 2012
For Immediate Release For More Information:
Wednesday, May 30, 2012 Katharine Eastvold (217-782-0663)
Sen. Collins Tightens Rules to Prevent Mortgage Fraud
Lenders may not require up-front payments for loan modifications
SPRINGFIELD, IL – State Senator Jacqueline Y. Collins (D-16th) has sponsored legislation tightening the regulation of mortgage lenders and protecting borrowers seeking loan modifications or short sales. House Bill 4521, now on its way to the governor’s desk, requires lenders to submit to background checks performed by a national industry standards group, increases licensing fees and fines for violators and prohibits lenders from charging homeowners in advance for loan modifications.
“In 2009, I co-sponsored the law that enrolled Illinois in the National Mortgage Licensing System and Registry; today, we are taking another step toward an objective, transparent and accountable process for licensing and regulating the lenders who hold so much power in our economy,” Sen. Collins said. “Exercising vigilant oversight in the areas of loan modifications and short sales will be particularly beneficial as we work to slow the rate of foreclosure and protect distressed homeowners from financial exploitation.”
With this law, lenders will have to pay an extra $657 per year for their licenses. The fee had been reduced in 2009; this bill restores the original amount in order to pay for background checks and other expenses of the Department of Financial and Professional Regulation.
HB 4521 also triples the maximum fine for a mortgage fraud violation (increasing it from $25,000 to $75,000) and includes protections for whistleblowers who report fraudulent activity. It clarifies that entities performing loan modification or short sale facilitation must be licensed to offer those services and may not force borrowers to pay up-front for loan modifications.
“We must have a strong mechanism for enforcing the laws that protect borrowers and homeowners,” Sen. Collins said. “Recent history has taught us that some lenders will take advantage of lax regulations. The results can devastate individuals, families and communities. I’m proud of the continued progress Illinois is achieving in the areas of housing and consumer finance as we work for justice in these trying times.”
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