Illinois Amends Mortgage Escrow Account Act

Illinois has amended parts of its Mortgage Escrow Account Act, as it applies to higher-priced mortgage loans.  The amendment was effective upon becoming law, on July 28, 2023.

The amendment provides that for higher-priced mortgage loans, mortgage lenders who comply with the escrow account requirements of Regulation Z for higher-priced mortgage loans are also deemed to be in compliance with the state’s general requirement that lenders provide notice to borrowers of their right to terminate escrow accounts when their mortgage is reduced to 65% of its original amount by timely-made payments of a borrower not in default.  In addition, the amendment provides that a borrower does not have the right to terminate an escrow arrangement for a higher-priced mortgage loan unless the borrower has met all conditions for cancellation of an escrow account for a higher-priced mortgage loan in Regulation Z.