ORDINANCE BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CHICAGO:

SECTION 1. Chapter 2-32 of the Municipal Code of Chicago is hereby amended by amending Section 2-32-440 by deleting the language in brackets and adding the language underscored, and by adding a new Section 2-32-455 as follows:

2-32-440 Lending and deposit specifications required. With each bid for interest upon city and school funds, [commencing with bids for 1975 funds,] the comptroller shall obtain, in a form prescribed by him from each bidder, the lending and deposit information for its home office and for each branch office or facility the following information: * * *

(g) Predatory lending information. The information shall include, but is not limited to, the affidavit required under Section 2-32-455, and the number of high cost loans made by the lender and its affiliates, the market share ratio of the lender's refinance loans in minority census tracts in Chicago to nonminority census tracts in Chicago, and the market share ratio of the lender's refinance loans in low and moderate income census tracts in Chicago to middle and upper income census tracts; with ratios of high cost loans broken out separately; and considering each lender and affiliate separately in the calculations.

2-32-455 Predatory lenders.
(a) No bidding bank or savings and loan association may be designated as a city depository if it or any of its affiliates is a predatory lender. Every bidding bank and loan association shall, prior to any such designation, submit to the City an affidavit certifying that neither it, nor any of its affiliates, is a predatory lender. The affidavit shall be in a form prescribed by the Chief Financial Officer and shall be sworn by one or more of the officers of the bank or loan association.

(b) As used in this Section: "Affiliate" means any entity that controls, is controlled by, or is under common control with another entity. "Flipping" means the refinancing, and charging of additional points, charges or other costs, on any loan secured by residential real estate within a two year period after the original loan was made, unless the refinancing results in a demonstrable net economic benefit to the borrower. "High-cost loan" means a loan entered into after the effective date of this section, where:
(1) at the time of the loan's origination, the annual percentage rate of the loan exceeds by 5 or more percentage points the yield on United States securities having comparable periods of maturity to the loan's maturity, measured as of the 15th day of each month; or
(2) the total points and fees exceed 4% of the total loan amount. "Points and fees" means:
(1) All items required to disclosed under sections 22.4(a) and 226.4(b) of Title 12 of the Code of Federal Regulations, as amended from time to time, except interest or the time-price differential; (2) All charges for items listed under section 226.4(c)(7) of Title 12 of the Code of Federal Regulations, as amended from time to time, but only if the lender receives direct or indirect compensation in connection with the charge or the charge is paid to an affiliate of the lender; otherwise, the charges are not included within the meaning of the phrase "points and fees";
(3) All compensation paid directly or indirectly to a mortgage broker, including a broker that originates a loan in its own name in a tablefunded trasaction, not otherwise included in sub-subdivision 1 or 2 of this subdivision;
"Points and fees" shall not include: (i) taxes, filing fees, recording and other charges and fees paid or to be paid to public officials for determining the existence of or for perfecting, releasing or satisfying a security interest; and (ii) bona fide and reasonable fees paid to a person other than a lender or an affiliate of the lender or to the mortgage broker or an affiliate of the mortgage broker for the following: fees for flood certification; fees for pest infestation and flood determinations; appraisal fees; fees for home inspections performed prior to closing; credit reports; surveys; attorney's fees (if the borrower has the right to select the attorney from an approved list or otherwise); notary fees; escrow charges, so long as not otherwise included under sub-subdivision (1) of this subdivision; title insurance premiums; and fire insurance and flood insurance premiums, provided that the conditions in section 226.4(d)(2) of Title 12 of the Code of Federal Regulations are met.
"Predatory lender" means a business entity that has made, within the previous 24 month period, predatory loans that comprise either: (1) 5% of the total annual number of loans made, or (2) 25 individual loans; whichever is less. Each lender and affiliate shall be considered separately for the purposes of these calculations, and only loans secured by residential real estate that is located within the City of Chicago shall be considered. The term "predatory lender" shall not include a business entity that has demonstrated to the satisfaction of the Chief Financial Officer that it has discontinued the practice of making predatory loans and has taken steps to ensure that it does not make such loans in the future.
"Predatory loan" means a high-cost loan that is secured by residential real estate that is located within the City, including but not limited to home purchase, home refinance and home equity loans, that the Chief Financial Officer has determined was made under circumstances that are abusive, based upon the factors set forth in this paragraph. The circumstances upon which the Chief Financial Officer shall base his or her determination shall include unfair or abusive loan terms, unscrupulous and misleading marketing, high pressure lending tactics that limit information or choices available to a consumer, or any combination thereof. Practices that indicate that a loan was made under abusive circumstances shall include, but are not limited to, the following:
(1) Fraudulent, high-pressure and misleading marketing and sales efforts to sell high cost loans; (2) Excessive fees and exorbitant interest rates that are well beyond the levels appropriate or necessary to cover risk and a profitable return;
(3) The financing of those excessive origination fees as well as fees for excessively priced - or unnecessary - products into high cost loans;
(4) Prepayment penalties that force borrowers to keep an unfavorable or unaffordable high cost loan;
(5) Short-term balloon payments which often force refinancing into another high cost loan and may prompt foreclosure;
(6) Loan flipping;
(7) The stripping of equity out of the home through financing high fees, frequent refinancing of high cost loans or through artificially reducing monthly payments through negative amortization; (8) The financing of any credit life, credit disability, credit unemployment, or any other life or health insurance, directly or indirectly, into one or more high cost loans;
(9) The extension of credit based on the consumers' collateral without regard to the consumers' repayment ability, including the consumers' current and expected income, current obligations, and employment, and without regard to the availability of lower cost alternative financing options;
(10) The payment by a lender to a contractor under a home repair or improvement contract from loan proceeds, unless the payment-- (i) is in the form of an instrument that is payable to the consumer or jointly to the consumer and the contractor; or (ii) is by a third party escrow agent in accordance with terms established in a written agreement signed by the consumer, the lender, and the contractor before the date of payment; and
(11) The payment by a lender to a contractor under a home repair or improvement contract from loan proceeds, where the contractor has been, on two or more occasions within the previous 24 month period, found by a court or the department of administrative hearings to be in violation of any law or ordinance prohibiting deceptive practices or similar conduct.

SECTION 2. Chapter 2-92 of the Municipal Code of Chicago is hereby amended by adding a new Section 2-92-325 as follows:

2-92-325 Predatory lenders.
(a) No person or business entity shall be awarded a contract with the City if the person or business entity, or any of its affiliates is a predatory lender. Every person or business entity seeking to do business with the City shall submit to the City an affidavit certifying that neither it, nor any of its affiliates, is a predatory lender. The affidavit shall be in a form prescribed by the Chief Financial Officer and shall be sworn by the person or one or more of the officers or owners of the business entity, as the case may be. Nothing in this section shall affect the validity of any contract entered into in connection with any debt obligations issued by or on behalf of the City, regardless of whether the contract is awarded in compliance with this Section. Any other contract awarded in violation of this Section shall be voidable at the option of the City. For purposes of this Section, "predatory lender" and "affiliations" shall have the meaning ascribed to the terms in Section 2-32-455.
(b) The purchasing agent may suspend the ineligibility of a person or business entity in order to allow execution of a contract with the person or entity, upon written application by the head of a city agency or department affected by the proposed contract, setting forth facts sufficient in the judgment of the purchasing agent to establish:
(i) that the public health, safety or welfare of the city requires the goods or services of the person or business entity; and
(ii) that the city is unable to acquire the goods or services at comparable price and quality, and in sufficient quantity from other sources.

SECTION 3. Chapter 4-4 of the Municipal Code of Chicago is hereby amended by adding a new Section 4-4-155 as follows:

4-4-155 Predatory lenders.
(a) No person licensed under this Title 4 may receive, under a home repair or improvement contract, the payment of proceeds from any loan secured by residential real estate within this City, unless the payment--
(i) is in the form of an instrument that is payable to the consumer or jointly to the consumer and the contractor; or
(ii) is by a third party escrow agent in accordance with terms established in a written agreement signed by the consumer, the lender, and the contractor before the date of payment.
(b) No person licensed under this Title 4 may, in connection with any home repair or improvement contract, act as agent for, or advertise, promote or recommend the services of, a predatory lender or its affiliate, as those terms are defined in Section 2-32-455.

SECTION 4. Chapter 8-4 of the Municipal Code of Chicago is hereby amended by adding a new Section 8-4-325 as follows:

8-4-325 Deceptive practices-residential real estate.
(a) No person shall engage in any act of consumer fraud, unfair method of competition or deceptive practice in connection with any contract which may result in the foreclosure on any residential real estate that is situated within the City. Nothing in this section shall be construed as permitting the regulation of any business to the extent that such regulation is not permitted under the statutory or home rule powers of the city.
(b) The commissioner of consumer services shall be charged with the enforcement of this section, and may institute an action in the department of administrative hearings to determine liability and seek remedies provided in this Section.
(c) Any person who violates this Section shall be subject to a fine of not less than $500 and not more than $10,000, and may be ordered to pay restitution and may be subject to other equitable relief.

SECTION 5. Severability.
If any provision of this ordinance is held invalid, such provision shall be deemed excised from this ordinance and the invalidity thereof shall not affect any of the other provisions of this ordinance. If the application of any provision of this ordinance to any person or circumstance is held invalid, it shall not affect the application of such provision to other persons or circumstances.

SECTION 6. This ordinance shall take effect 30 days after its passage and approval.