Thank you very much for the update.  I've been trying to keep up with all of this as much as possible, but not sure what the SB1674 consists of... can you shed some light on this for me?

Rahil,

There are 3 bills involved.  HB 4050 the Predatory Lending Pilot program in Chicago zip codes.  The adopted rules call for a predatory lending database to be maintained, mandatory credit counseling guidelines for FICO's below 650 (in some instances) and other criteria.  Essentially it does away with SISA types of loans for what they define as low credit scores (650).  LO's or brokers have to pay for the credit counseling. Go to http://www.iamb.org/ and in the upper left of the screen select "PAC & Find a Legislator" then "Final Rules.....",  That will pull up a Word Doc with the final rules for the pilot program.

The second part of this saga is in HB1478.  Information on it can be found at http://www.ilga.gov/legislation/billstatus.asp?DocNum=1478&GAID=9&GA=95&DocTypeID=HB&LegID=30270&SessionID=51 . The basics of this house bill are:

• Creates the Predatory Home Loan Practices Act
• Prohibits various practices and charges in connection with home loans made to persons with respect to their primary residence
• Prohibits the imposition of prepayment penalties, flipping of loans, and lender financing of credit insurance
• Prohibits loans unless the lender reasonably believes that the borrower is able to make scheduled payments to repay the loan without respect to the borrower's equity in the property
• Authorizes a borrower to obtain damages for violations of the Act  If this passes the borrower can now come after an LO's personal assets if the loan defaults.
• Requires full documentation for ALL loans

The third part is SB1674 which combines the previous 2 and puts it into legislation as a Senate Bill.  The critical part of this is Amendment 3 which defines fiduciary responsibility for the LO's and the rules and regulations found in HB4050 & HB 1478.  Detailed information can be found at http://www.ilga.gov/legislation/billstatus.asp?DocNum=1674&GAID=9&GA=95&DocTypeID=SB&LegID=29807&SessionID=51 .  The IAMB website (http://www.iamb.org/) Has a link to the full amendment in the middle of the page. 

There are also some clauses that allow government regulation of loans.  In the HB4050 pilot program I heard horror stories of Judges telling LO's what a property was worth and what they could charge regardless of lender defined yield spreads.   

Is there a need in the industry to aggressively eliminate those LO's who are in it for the $ and prey on the uneducated consumer for personal gain?  ABSOLUTELY.  Is there a need to find and penalize those who put people in loans they can't afford and will lead to foreclosure, bankruptcy, financial hardship and possibly ruin?  ABSOLUTELY, NO QUESTION ABOUT IT.  There is ABSOLUTELY a need to find those who don't put the client's best interests and future well being as the first priority in a transaction. 

THIS IS NOT THE WAY TO DO THAT.  This will hurt the true professionals that conduct business with integrity and open the door further for those who are not licensed, not educated in the industry, not professional, and driven only by production numbers. 

Hope this helps...