Illinois Strengthens Abusive Lending Law

The governor of Illinois has signed a new law that strengthens the state's existing predatory lending law and makes it easier for consumers to sue lenders and investors who purchase high cost mortgage loans.The High Risk Home Loan Act sets lending standards on loans with interest rates or fees that exceed 5% of the total loan amount. But the American Financial Services Industry is warning that the assignee liability provisions in the law may dry up the secondary market for subprime loans coming from Illinois. "It remains to be seen how the rating agencies will react and whether Illinois turns into another Georgia, which had such a negative effect on the people and economy of that state that it had to be substantially overhauled within six months of being enacted," AFSA said. The new law amends the Illinois Consumer Fraud and Deceptive Practices Act and it gives the state attorney general authority to prosecute unscrupulous lenders.