Illinois Compiled Statutes
Chapter 765 - PROPERTY
765 ILCS 945/ - Reverse Mortgage Act.

(765 ILCS 945/1)
Sec. 1. Short title. This Act may be cited as the Reverse Mortgage Act.

(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/5)
Sec. 5. General definitions. As used in this Act, unless the context otherwise requires:
"Borrower" means a natural person who seeks or obtains a reverse mortgage.
"Business day" means any calendar day except Saturday, Sunday, or a State or federal holiday.
"Homestead property" means the domicile and contiguous real estate owned and occupied by the borrower. "Homestead property" includes a manufactured home as defined in subdivision (53) of Section 9-102 of the Uniform Commercial Code that is real property under Section 5-35 of the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act.
"Lender" means a natural or artificial person who transfers, deals in, offers, or makes a reverse mortgage. "Lender" includes, but is not limited to, creditors and brokers who transfer, deal in, offer, or make reverse mortgages. "Lender" does not include purchasers, assignees, or subsequent holders of reverse mortgages.
"Real property" includes a manufactured home as defined in subdivision (53) of Section 9-102 of the Uniform Commercial Code that is real property under Section 5-35 of the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act.
"Reverse mortgage" means a non-recourse loan, secured by real property or a homestead property, that complies with all of the following:
(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/10)
Sec. 10. Reverse mortgages.
(a) Reverse mortgage loans shall be subject to all of the following provisions:
(b) The repayment obligation under a reverse mortgage is subject to all of the following:
(c) A reverse mortgage shall become due and payable upon the occurrence of any of the following events, unless the maturity date has been deferred under the Federal Housing Administration's Home Equity Conversion Mortgage Program:
(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/15)
Sec. 15. Reverse mortgage disclosures.
(a) The Office of the Attorney General shall develop the content and format of an educational document providing independent consumer information regarding reverse mortgages, potential alternatives to reverse mortgages, and the availability of independent counseling services, including services provided by nonprofit agencies certified by the federal government to provide required counseling for reverse mortgages insured by the U.S. Federal Government. The document shall also include a statement that the terms of a reverse mortgage may adversely affect the applicant's eligibility to obtain a tax deferral under the Senior Citizens Real Estate Tax Deferral Act. The document shall be updated and revised as often as deemed necessary by the Office of the Attorney General.
(b) Lenders are required to provide each borrower a document regarding the availability of counseling services that shall be in at least 12-point font, containing contact information (including agency name, address, telephone number, and, if applicable, website) for agencies approved by the U.S. Department of Housing and Urban Development (HUD) to conduct reverse mortgage counseling. The agencies included on the list shall be in accordance with requirements for the Federal Housing Administration's Home Equity Conversion Mortgage Program. This document shall contain the following statement:
"IMPORTANT NOTICE: Under Illinois law, reverse mortgages are non-recourse loans secured by real or homestead property. Reverse mortgages insured by the U.S. Federal Government, known as Home Equity Conversion Mortgages or HECM loans, require people considering reverse mortgages to get counseling prior to submitting a completed application for the loan from an agency approved by the U.S. Department of Housing and Urban Development (HUD) to conduct reverse mortgage counseling.
The purpose of the counseling is to help the prospective borrower understand the financial implications, alternatives to securing a reverse mortgage, borrower obligations, costs of obtaining the loan, repayment conditions, and other issues. Counseling can also be a benefit to people considering reverse mortgages not insured by the federal government. There are advantages to receiving this counseling in person, as this method allows for greater participation by the prospective borrower, and also allows the counselor to more accurately determine the prospective borrower's understanding of the program. However, counseling can also be conducted over the telephone.
In accordance with federal requirements, Illinois State law requires reverse mortgage lenders to provide potential reverse mortgage borrowers with a list, including contact information, of agencies that are approved by HUD to conduct reverse mortgage counseling. Contact information for additional approved counseling agencies is available from HUD or your lender.".
(c) At the time of the initial inquiry regarding a reverse mortgage or, if not practically feasible, after the borrower makes a request to apply for a reverse mortgage, a lender shall provide to the borrower the documents described in subsections (a) and (b) of this Section.

(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/20)
Sec. 20. Reverse mortgages cooling-off period.
(a) Any written commitment provided by the lender to the borrower must contain the material terms and conditions of the reverse mortgage. That commitment may be subject to a satisfactory appraisal and the borrower meeting standard closing conditions.
(b) A borrower shall not be bound for 3 full business days after the borrower's acceptance, in writing, of a lender's written commitment to make a reverse mortgage loan and may not be required to close or proceed with the loan during that time period. A borrower may not waive the provisions of this subsection (b).
(c) At the time of making a written commitment, the lender shall provide the borrower a separate document in at least 12-point font that contains the following statement: "IMPORTANT NOTICE REGARDING THE COOLING-OFF PERIOD: Illinois State law requires a 3-day cooling-off period for reverse mortgage loans, during which time a potential borrower cannot be required to close or proceed with the loan. The purpose of this requirement is to provide potential borrowers with 3 business days to consider their decision whether to secure a reverse mortgage or not. Potential borrowers may want to seek additional information from a reverse mortgage counselor during this 3-day period. The 3-day cooling-off period cannot be waived.".


(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/25)
Sec. 25. Reverse mortgages; restriction on cross-selling. No lender may:
(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/30)
Sec. 30. Reverse mortgages; restriction on distribution of loan proceeds. No person, other than a borrower's spouse or partner, who directly or indirectly facilitates, processes, negotiates, assists, encourages, arranges, or otherwise induces consumers to take out a reverse mortgage with a lender may receive any portion of the loan proceeds for any service or product, including for services that fall under the Home Repair and Remodeling Act, other than that for bona fide fees for origination of the loan. This Section shall not prohibit disbursements of loan proceeds in compliance with guidelines, including uses defined as mandatory obligations, under the Federal Housing Administration's Home Equity Conversion Mortgage Program, nor shall it prohibit a borrower from using the loan proceeds to purchase products or services from a lender that is a financial institution in the ordinary course of the financial institution's business.

(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/35)
Sec. 35. Reverse mortgages; certification requirements.
(a) No reverse mortgage commitment may be made unless all lenders involved in brokering and making the reverse mortgage loan certify, in writing, that:
This Section shall not prohibit disbursements of loan proceeds in compliance with guidelines under the Federal Housing Administration's Home Equity Conversion Mortgage Program, including uses defined as mandatory obligations, nor shall it prohibit a borrower from using the loan proceeds to purchase products or services from a lender that is a financial institution in the ordinary course of the financial institution's business.
(b) The lender shall maintain the certification in an accurate, reproducible, and accessible format for the term of the reverse mortgage.


(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/40)
Sec. 40. Enforcement.
(a) Any violation of this Act shall also be considered an unlawful practice under the Consumer Fraud and Deceptive Business Practices Act. Only the Attorney General may enforce violations of this Act. The Attorney General shall only find a violation of this Act if the conduct constitutes a pattern or practice.
(b) Any violation of this Act by a licensee or residential mortgage licensee under the Residential Mortgage License Act of 1987 shall also be considered a violation of the Residential Mortgage License Act of 1987.


(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/900)
Sec. 900. (Amendatory provisions; text omitted).

(Source: P.A. 99-331, eff. 1-1-16; text omitted.)
 
(765 ILCS 945/905)
Sec. 905. The Illinois Banking Act is amended by repealing Sections 5a, 6.1, and 6.2.

(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/910)
Sec. 910. The Savings Bank Act is amended by repealing Section 1010.

(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/915)
Sec. 915. (Amendatory provisions; text omitted).

(Source: P.A. 99-331, eff. 1-1-16; text omitted.)
 
(765 ILCS 945/920)
Sec. 920. The Illinois Credit Union Act is amended by repealing Sections 46.1 and 46.2.

(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/925)
Sec. 925. (Amendatory provisions; text omitted).

(Source: P.A. 99-331, eff. 1-1-16; text omitted.)
 
(765 ILCS 945/930)
Sec. 930. The Residential Mortgage License Act of 1987 is amended by repealing Section 5-5.

(Source: P.A. 99-331, eff. 1-1-16.)
 
(765 ILCS 945/935)
Sec. 935. (Amendatory provisions; text omitted).

(Source: P.A. 99-331, eff. 1-1-16; text omitted.)

Structure Illinois Compiled Statutes