Governor OKs new mortgage counseling

The law replaces one known as HB 4050 that took effect in September 2006. Blagojevich suspended that measure in January over complaints that it promoted redlining because it required counseling for home buyers only in certain Chicago ZIP codes with sizable minority populations. The critics also said the complex provisions caused lending to dry up in the affected areas. The new law has some requirements that affect all of Illinois; others apply only in Cook County.

The statewide provisions take effect June 1 and require mortgage brokers to verify that borrowers can afford the full costs of a loan, including principal, interest and taxes, according to the governor’s office. All brokers in Illinois also must fully disclose material facts about the loans, such as how much the broker will be paid, and it limits some prepayment penalties.

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