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Good Funds Legislation and APLD Requirements New to Central Illinois in 2010

Good Funds Legislation. Buyers/borrowers at closings are used to bringing funds needed to close in the form of certified or cashier’s checks. But effective 1/1/2010, if the amount needed to close is $50,000 or more, the funds have to be wired to the title company. Title companies are prohibited from disbursing money from a fiduciary trust account unless the funds are “Good Funds” or “Collected Funds”. There are exceptions to this wiring requirement such as a government check or a fiduciary trust check from another title company, but borrowers/buyers will now need to include payments of fees associated with wiring funds (normally less than $50) in determining closing costs.

Anti Predatory Lending Database (ALPD) comes to Peoria County effective July 1, 2010. Our current economy bears the consequences of loans given to borrowers when the real estate market was HOT, credit was easier to obtain and loan underwriting was less exhaustive. Two years ago Cook County was made subject to the ALPD with the express purposes of reducing predatory lending practices by assisting the borrowers in understanding the terms and conditions of the loan for which they have applied. The legislation does not prohibit any type of loan but it attempts to give the borrower adequate information before they proceed with the loan.

ALPD only applies to Peoria County and to residential 1-4 family real estate. A three phase process is imposed: first, the loan originator must enter information in the database within 10 days of taking a loan application; next, the data base analyzes the information for possible referral to a housing counselor, and third, the closing agent must print out a certificate (of either exemption or compliance) which is attached to the mortgage before it can be recorded.

Many lenders are exempt from entering information (for example, credit unions and depository banks) but a certificate of exemption will still be required for attachment to the mortgage. Private loans, for example loans from family members, will also require this exemption certificate so advance planning will be required.