Illinois Governor Pat Quinn Thursday signed a bill into law that will help to even the playing field between reverse mortgage brokers and lenders who are able to waive origination fees.
Reverse mortgages previously fell under the state’s high-risk loans act, meaning any loans where borrowers paid origination fees exceeding the greater of 5% of the loan amount or $800 were considered “high risk.” It made it difficult for brokers to compete on loans exceeding a certain amount.
With the passage of the bill this week, however, the definition has changed, making it easier to originate lower value loans and leveling the playing field for brokers by exempting reverse mortgages from the definition.
“This gives a more level playing field for the brokers, but also for the consumer,” says Mike Wyrostek, branch manager for Chicago-area based MSI Reverse Mortgage.
On a broader scale, the new laws increase protections for families from High Risk Home Loans and Refund Anticipation Loans and also establish stringent new guidelines before a borrower can be sent to jail following non-payment of debt.
“Illinois consumers deserve the strongest protections possible from predatory lenders and unfair collection practices,” Governor Quinn said. “These new laws will help consumers and empower Illinois families with a better understanding of lending and debt collection.”
Written by Elizabeth Ecker