HB 4050 - An Update

Firstly, it is important to know that the new version of HB 4050 is not a new law, but a new rule that is proposed by Governor Blagojevich for the re-implementation of 4050.

The new version is currently before the Joint Committee on Administrative Rules (JCAR), who will either approve the bill as written, refer back to IDFPR for changes, or vote to stop implementation all as early as June 12th.

There is currently a 45 day comment period that runs until May 21st, and I strongly encourage all concerned Cook County residents to contact JCAR members (.pdf list), your respective state legislators (find yours), alderman, and mayors expressing your concerns and alternatives.

Highlights of the current issues being taken with HB 4050:

• Inability for the current system to handle the impending onslaught of mandatory counselings
• Delayed purchase closings, for both buyers and sellers, because of counseling backlogs. Delays in refinancing up to from 45-60 days longer
• Increased costs to consumers due to extended locks, mandatory counseling fees, and title fees
• All ARM products will require counseling, no matter how high your credit score
• All Stated Income Loans will require counseling, no matter how high your credit score. Furthermore, the counselors will require income documentation, thus ending stated loans.
• Failures with the previous iteration including lenders backing out of target areas, decreasing access to financing for borrowers
• Although the mandate initially was supposed to apply to those areas where foreclosures were highest, this version is a much more shotgun approach to legislation

As always, I encourage and welcome your feedback.