Illinois Compiled Statutes
Chapter 765 - PROPERTY
765 ILCS 940/ - Mortgage Rescue Fraud Act.

(765 ILCS 940/1)
Sec. 1. Short title. This Act may be cited as the Mortgage Rescue Fraud Act.

(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/5)
Sec. 5. Definitions. As used in this Act:
"Distressed property" means residential real property consisting of one to 6 family dwelling units that is in foreclosure or at risk of loss due to nonpayment of taxes, or whose owner is more than 30 days delinquent on any loan that is secured by the property.
"Distressed property consultant" means any person who, directly or indirectly, for compensation from the owner, makes any solicitation, representation, or offer to perform or who, for compensation from the owner, performs any service that the person represents will in any manner do any of the following:
A "distressed property consultant" does not include any of the following:
"Distressed property purchaser" means any person who acquires any interest in fee in a distressed property or a beneficial interest in a trust holding title to a distressed property while allowing the owner to possess, occupy, or retain any present or future interest in fee in the property, or any person who participates in a joint venture or joint enterprise involving a distressed property conveyance. "Distressed property purchaser" does not mean any person who acquires distressed property at a short sale or any person acting in participation with any person who acquires distressed property at a short sale, if that person does not promise to convey an interest in fee back to the owner or does not give the owner an option to purchase the property at a later date.
"Distressed property conveyance" means a transaction in which an owner of a distressed property transfers an interest in fee in the distressed property or in which the holder of all or some part of the beneficial interest in a trust holding title to a distressed property transfers that interest; the acquirer of the property allows the owner of the distressed property to occupy the property; and the acquirer of the property or a person acting in participation with the acquirer of the property conveys or promises to convey an interest in fee back to the owner or gives the owner an option to purchase the property at a later date.
"Person" means any individual, partnership, corporation, limited liability company, association, or other group or entity, however organized.
"Service" means, without limitation, any of the following:
(Source: P.A. 94-822, eff. 1-1-07; 95-691, eff. 6-1-08; 95-1047, eff. 4-6-09.)
 
(765 ILCS 940/7)
Sec. 7. Residential Mortgage License Act of 1987 licensees. Licensees of the Residential Mortgage License Act of 1987 are exempt from the requirements of Sections 10, 15, 20, 50(a)(4), 50(a)(5), 50(a)(6), and 50(a)(7). Licensees are also exempt from the requirements of Section 50(a)(2) and Section 70 for any transaction resulting in the origination of a new mortgage loan extinguishing the existing mortgage loan.

(Source: P.A. 95-1047, eff. 4-6-09.)
 
(765 ILCS 940/10)
Sec. 10. Distressed property consultant contract terms.
(a) A distressed property consultant contract must be in writing and must fully disclose the exact nature of the distressed property consultant's services and the total amount and terms of compensation.
(b) The following notice, printed in at least 12-point boldface type and completed with the name of the distressed property consultant, must be printed immediately above the statement required by subsection (c) of this Section:

...............................(Name) or anyone working for him or her CANNOT:
(c) A distressed property consultant contract must be written in the same language as principally used by the distressed property consultant to describe his or her services or to negotiate the contract, must be dated and signed by the owner, and must contain in immediate proximity to the space reserved for the owner's signature a conspicuous statement in a size equal to at least 12-point boldface type, as follows:
(d) A distressed property contract must contain on the first page, in a type size no smaller than that generally used in the body of the document, each of the following:
(e) A distressed property consultant contract must be accompanied by a completed form in duplicate, captioned "NOTICE OF CANCELLATION," which must be attached to the contract, must be easily detachable, and must contain, in at least 12-point boldface type, the following statement written in the same language as used in the contract:


You may cancel this transaction, without any penalty or obligation, at any time until after the distressed property consultant has fully performed each and every service the distressed property consultant contracted to perform or represented he or she would perform.
To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice to:
..................(Name of distressed property consultant) at ...........................(Address of distressed property consultant's place of business)
I hereby cancel this transaction on ...............(Date)
.....................................(Owner's signature)".
(f) The distressed property consultant shall provide the owner with a copy of a distressed property consultant contract and the attached notice of cancellation immediately upon execution of the contract.


(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/15)
Sec. 15. Rescission of distressed property consultant contract.
(a) In addition to any other legal right to rescind a contract, an owner has the right to cancel a distressed property consultant contract at any time until after the distressed property consultant has fully performed each service the distressed property consultant contracted to perform or represented he or she would perform.
(b) Cancellation occurs when the owner gives written notice of cancellation to the distressed property consultant at the address specified in the distressed property consultant contract.
(c) Notice of cancellation, if given by mail, is effective when deposited in the mail properly addressed with postage prepaid. Notice by certified mail, return receipt requested, addressed to the address specified in the distressed property consultant contract, shall be conclusive proof of notice of service.
(d) Notice of cancellation given by the owner need not take the particular form as provided with the distressed property consultant contract and, however expressed, is effective if it indicates the intention of the owner not to be bound by the contract.


(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/20)
Sec. 20. Waiver of a distressed property consultant contract.
(a) Any waiver by an owner of the provisions of Section 10 or 15 is void and unenforceable as contrary to public policy.
(b) Any attempt by a distressed property consultant to induce an owner to waive the owner's rights is a violation of the Act.
(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/25)
Sec. 25. Distressed property conveyance contract. A distressed property purchaser shall enter into every distressed property conveyance in the form of a written contract. Every distressed property conveyance contract must be written in letters of a size equal to at least 12-point boldface type, in the same language principally used by the owner of the distressed property to negotiate the sale of the distressed property, must be fully completed, signed, and dated by the owner of the distressed property and the distressed property purchaser, and must be witnessed and acknowledged by a notary public, before the execution of any instrument of conveyance of the distressed property.

(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/30)
Sec. 30. Distressed property conveyance contract terms. Every contract required by Section 25 must contain the entire agreement of the parties, be fully assignable, and survive delivery of any instrument of conveyance of the distressed property. Every lease entered into pursuant to a contract required by Section 25 is terminable at will by the distressed property owner, without liability. Every contract required by Section 25 must include the following terms:
(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/35)
Sec. 35. Cancellation of a distressed property conveyance contract.
(a) In addition to any other right of rescission, the owner of the distressed property has the right to cancel any contract with a distressed property purchaser until midnight of the fifth business day following the day on which the owner of the distressed property signs a contract that complies with Sections 25 and 30 or until 8:00 a.m. on the last day of the period during which the owner of the distressed property has a right of redemption under the Illinois Mortgage Foreclosure Law or the Property Tax Code, whichever occurs first.
(b) Cancellation occurs when the owner of the distressed property delivers, by any means, written notice of cancellation to the address specified in the distressed property conveyance contract.
(c) A notice of cancellation given by the owner of the distressed property need not take the particular form as provided with the distressed property conveyance contract.
(d) Within 10 days following receipt of a notice of cancellation given in accordance with this Section, the distressed property purchaser shall return, without condition, any original contract and any other documents signed by the owner of the distressed property.


(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/40)
Sec. 40. Notice of cancellation of a distressed property conveyance contract.
(a) The contract must contain in immediate proximity to the space reserved for the owner of the distressed property's signature a conspicuous statement in a size equal to at least 12-point boldface type, if the contract is printed, or in capital letters, if the contract is typed, as follows:
(b) The contract must be accompanied by a completed form in duplicate, captioned "NOTICE OF CANCELLATION" in a size equal to a 12-point boldface type, if the contract is printed, or in capital letters, if the contract is typed, followed by a space in which the distressed property purchaser shall enter the date on which the owner of the distressed property executes any contract. This form must be attached to the contract, must be easily detachable, and must contain in at least 12-point type, if the contract is printed, or in capital letters, if the contract is typed, the following statement written in the same language as used in the contract:


You may cancel this contract for the sale of your home, without any penalty or obligation, at any time before ....................(enter date and time of day). To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice to .......................(Name of purchaser) at .............................................. (Street address of purchaser's place of business) NOT LATER THAN ................................ (Enter date and time of day).
I hereby cancel this transaction on ............... (Date) ............................................... (Seller's signature)".
(c) The distressed property purchaser shall provide the owner of the distressed property with a copy of the contract and the attached notice of cancellation immediately at the time the contract is executed by all parties.
(d) The distressed property purchaser shall record the contract with the recorder of deeds in the county where the distressed property is located within 10 days of its execution, provided the contract has not been canceled.
(e) The 5 business days during which the owner of the distressed property may cancel the contract shall not begin to run until all parties to the contract have executed the contract and the distressed property purchaser has complied with all the requirements of this Section.


(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/45)
Sec. 45. Waiver of a distressed property conveyance contract. Any waiver of the provisions of Sections 35 and 40 are void and unenforceable as contrary to public policy, except that a consumer may waive the 5-day right to cancel provided in Section 35 if the property is subject to a foreclosure sale within the 5 business days and the owner of the distressed property agrees to waive his or her right to cancel in a handwritten statement that is signed by all parties holding title to the distressed property.

(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/50)
Sec. 50. Violations.
(a) It is a violation for a distressed property consultant to:

(b) A distressed property purchaser, in the course of a distressed property conveyance, shall not:
(c) There is a rebuttable presumption that an appraisal by a person licensed or certified by an agency of this State or the federal government is an accurate determination of the fair market value of the property.
(d) "Consideration" in item (2) of subsection (b) means any payment or thing of value provided to the owner of the distressed property, including reasonable costs paid to independent third parties necessary to complete the distressed property conveyance or payment of money to satisfy a debt or legal obligation of the owner of the distressed property.

"Consideration" shall not include amounts imputed as a downpayment or fee to the distressed property purchaser, or a person acting in participation with the distressed property purchaser.
(e) An evaluation of "reasonable ability to pay" under subsection (b)(1) of this Section 50 shall include debt to income ratio, fair market value of the distressed property, and the distressed property owner's payment history. There is a rebuttable presumption that the distressed property purchaser has not verified reasonable payment ability if the distressed property purchaser has not obtained documents of assets, liabilities, and income, other than a statement by the owner of the distressed property.


(Source: P.A. 100-1048, eff. 8-23-18.)
 
(765 ILCS 940/55)
Sec. 55. Civil remedies.
(a) A violation of any of the provisions of this Act constitutes an unlawful practice under the Consumer Fraud and Deceptive Business Practices Act. All remedies, penalties, and authority granted to the Attorney General or State's Attorney by the Consumer Fraud and Deceptive Business Practices Act shall be available to him or her for the enforcement of this Act.
(b) A consumer who suffers loss by reason of any violation of any provision of this Act may bring a civil action in accordance with the Consumer Fraud and Deceptive Business Practices Act to enforce that provision. All remedies and rights granted to a consumer by the Consumer Fraud and Deceptive Business Practices Act shall be available to the consumer bringing such an action.
The remedies and rights provided for in this Act are not exclusive, but cumulative, and all other applicable claims, including, but not limited to, those brought under the doctrine of equitable mortgage, are specifically preserved.

(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/60)
Sec. 60. Criminal mortgage rescue fraud. A person commits the offense of criminal mortgage rescue fraud when he or she intentionally violates any provision enumerated in Section 50 of this Act.

(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/65)
Sec. 65. Criminal penalties. A person who commits the offense of criminal mortgage rescue fraud is guilty of a Class 2 felony.

(Source: P.A. 94-822, eff. 1-1-07.)
 
(765 ILCS 940/70)
Sec. 70. Distressed property consultant compensation. In transactions that reduce the existing payment on a homeowner's mortgage loan for a period of no less than 5 years, a distressed property consultant shall not claim, demand, charge, collect, or receive any fee, interest, or any other compensation that exceeds the lesser of the homeowner's:
For all other transactions, a distressed property consultant shall not claim, demand, charge, collect, or receive any fee, interest, or any other compensation for any reason that exceeds 50% of the owner's existing monthly principal and interest mortgage payments.

(Source: P.A. 95-1047, eff. 4-6-09.)
 
(765 ILCS 940/300)
Sec. 300. (Amendatory provisions; text omitted).

(Source: P.A. 94-822, eff. 1-1-07; text omitted.)
 
(765 ILCS 940/999)
Sec. 999. Effective date. This Act takes effect January 1, 2007.

(Source: P.A. 94-822, eff. 1-1-07.)

Structure Illinois Compiled Statutes