AARP-Backed Law Will Toughen Standards for Mortgage Brokers Takes Aim at Consumer Protections from Predatory Loans
CHICAGO, Nov. 6 /PRNewswire-USNewswire/ — In the midst of the foreclosure crisis striking the nation, Illinois homeowners received some good news; Governor Rod Blagojevich has delivered a state law to help protect consumers from losing their homes.
The AARP-backed Homeowner Protection Act, sponsored by Senator Jacqueline Collins (Chicago) and Representative Karen Yarbrough (Broadview), will help eliminate misleading loan information, serve to better inform consumers, and hold mortgage brokers more accountable.
“Nearly 30% of older borrowers have their home loans at a sub-prime rate, leaving them at an increased risk of losing their most valuable asset, their home,” said Bob Gallo, State Director for AARP Illinois. “AARP commends the Governor, Senator Collins and Representative Yarbrough for moving to protect Illinois homeowners from the crisis of facing a foreclosure due to a misleading home loan.”
AARP pressed for the new law as older homeowners are increasingly targeted for predatory mortgage loans. Among the key provisions, the Homeowner Protection Act:
— Requires mortgage brokers and mortgage lenders to assess the borrowers’ ability to repay the loan, including the initial monthly payment and the higher balloon payment.
— Holds the broker accountable to provide the borrower with the best loan.
— Requires the borrower to be informed of changes in loan terms and provided with a copy of the appraisal, prior to closing.
— Prohibits misleading statements implying a “low monthly payment” includes taxes and insurance.
According to the Center for Responsible Lending, 20% of Illinois homeowners with sub-prime mortgage loans were forced into foreclosure in 2006. Nationwide, over 7 million families hold sub-prime mortgages, with nearly 15% in default.
AARP has over 1.7 million members in Illinois. AARP is a nonprofit, nonpartisan membership organization dedicated to making life better for people 50 and over. We provide information and resources; offer a wide range of unique benefits, special products, and services for our members. These include AARP engage in legislative, regulatory and legal advocacy; assist members in serving their communities; and The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; Segunda Juventud, our quarterly newspaper in Spanish; Live and Learn, our quarterly newsletter for National Retired Teachers Association members; and our web site, www.aarp.org. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
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