Illinois Department of Financial & Professional Regulation Illinois Department of Financial & Professional Regulation
 
Manuel Flores, Acting Secretary  
Pat Quinn, Governor
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HOMEOWNER PROTECTION ACT

On April 5, 2009, Governor Pat Quinn signed into law the Homeowner Protection Act. The Homeowner Protection Act, which was passed unanimously by the General Assembly, gives homeowners who fall behind on their mortgage payments time to work with their lender to develop a plan that will allow them to stay in their homes. IDFPR stands ready to help you understand this new law and take advantage of its important protections. While the information below is meant to address most questions, please do not hesitate to contact the IDFPR Toll Free Hotline at 800-532-8785 for additional information.

Click Here to View the Act
 

Three-Month Grace Period on Foreclosures

The Homeowner Protection Act establishes a grace period of up to 90-days on mortgage foreclosures for homeowners that enter housing counseling. The Act requires that all lenders and loan servicers notify homeowners who are at least 30-days late on their mortgage payments that they have 30-days to seek housing counseling to get their loan back on track. If a homeowner enters housing counseling, he or she gets an additional 30-day grace period on foreclosure in order to work out a payment plan or refinance option.
 

Details of the ACT

Who does this apply to? The Act applies to all loans that have not entered the foreclosure process.  All lenders and loan servicers in the state must comply with this law.  The law is set to expire two years after being signed by the Governor.

Initial notice to borrowers: Lenders cannot proceed with a foreclosure action (1) prior to advising borrowers of their rights under the Act and (2) for 30 days after advising borrowers of their rights under the Act.  Borrowers who, during the 30-day period after receiving notice of their rights under the Act, elect housing counseling receive an additional 30 days to complete a sustainable loan workout plan.

Who provides counseling? Borrowers will work with non-profit housing counseling agencies that follow U.S. Department of Housing and Urban Development (HUD) guidelines and that are recognized by the Illinois Department of Financial and Professional Regulation.  For a list of HUD-approved counselors click here.

How much does housing counseling cost? HUD-approved agencies typically do not charge a fee.  However, they may charge a reasonable fee so long as the fee does not place a hardship on the consumer.  A consumer cannot be turned away because of an inability to pay. Agency fee schedules are subject to review by HUD during periodic monitoring.
If an agency chooses to charge fees, it must:

  • Provide counseling without charge to persons who cannot afford the fees.
  • Charge fees that are equivalent to the level of services provided and reasonable and customary for the area.

Sustainable loan workout plans: Borrowers will work with housing counselors to develop a sustainable loan workout plan that will enable the borrower to stay current on mortgage payments for the foreseeable future, taking into account the borrower's income and existing and foreseeable debts.

What will the sustainable workout plan do? A sustainable loan workout plan may include (1) a temporary suspension of payments, (2) a lengthened loan term, (3) a lowered or frozen interest rate, (4) a principal write down, (5) a repayment plan to pay the existing loan in full, or (6) refinancing into a new affordable loan.

Are there any income limits? There are no income, asset or credit requirements to receive the protections of this law. It is important to remember that thislaw does not guarantee any particular outcome for a borrower. It simply provides time and resources for a borrower to fairly negotiate a plan with their lender to stay in their home.

What if a homeowner wants to move to a new counselor? A borrower is free to change housing counselors and housing counseling agencies as he or she develops a sustainable loan workout plan. However, the 30-day period will not restart with each new counselor.
 
HUD Approved Counseling Agencies

For a list of HUD-approved counselors click here.

For Additional Assistance
Please Call the IDFPR Toll Free Hotline at 800-532-8785

 
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