100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB1288

 

Introduced , by Rep. Michael J. Madigan

 

SYNOPSIS AS INTRODUCED:
 
205 ILCS 635/1-3  from Ch. 17, par. 2321-3

    Amends the Residential Mortgage License Act of 1987. Makes a technical change in a Section concerning the necessity of obtaining a license.


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A BILL FOR

 

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1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Residential Mortgage License Act of 1987 is
5amended by changing Section 1-3 as follows:
 
6    (205 ILCS 635/1-3)  (from Ch. 17, par. 2321-3)
7    Sec. 1-3. Necessity for license; scope of Act.
8    (a) No person, partnership, association, corporation or
9other entity shall engage in the the business of brokering,
10funding, originating, servicing or purchasing of residential
11mortgage loans without first obtaining a license from the
12Secretary in accordance with the licensing procedure provided
13in this Article I and such regulations as may be promulgated by
14the Secretary. The licensing provisions of this Section shall
15not apply to any entity engaged solely in commercial mortgage
16lending or to any person, partnership association, corporation
17or other entity exempted pursuant to Section 1-4, subsection
18(d), of this Act or in accordance with regulations promulgated
19by the Secretary hereunder. No provision of this Act shall
20apply to an exempt person or entity as defined in items (1) and
21(1.5) of subsection (d) of Section 1-4 of this Act.
22Notwithstanding anything to the contrary in the preceding
23sentence, an individual acting as a mortgage loan originator

 

 

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1who is not employed by and acting for an entity described in
2item (1) of subsection (tt) of Section 1-4 of this Act shall be
3subject to the mortgage loan originator licensing requirements
4of Article VII of this Act.
5    Effective January 1, 2011, no provision of this Act shall
6apply to an exempt person or entity as defined in item (1.8) of
7subsection (d) of Section 1-4 of this Act. Notwithstanding
8anything to the contrary in the preceding sentence, an
9individual acting as a mortgage loan originator who is not
10employed by and acting for an entity described in item (1) of
11subsection (tt) of Section 1-4 of this Act shall be subject to
12the mortgage loan originator licensing requirements of Article
13VII of this Act, and provided that an individual acting as a
14mortgage loan originator under item (1.8) of subsection (d) of
15Section 1-4 of this Act shall be further subject to a
16determination by the U.S. Department of Housing and Urban
17Development through final rulemaking or other authorized
18agency determination under the federal Secure and Fair
19Enforcement for Mortgage Licensing Act of 2008.
20    (a-1) A person who is exempt from licensure pursuant to
21paragraph (ii) of item (1) of subsection (d) of Section 1-4 of
22this Act as a federally chartered savings bank that is
23registered with the Nationwide Mortgage Licensing System and
24Registry may apply to the Secretary for an exempt company
25registration for the purpose of sponsoring one or more
26individuals subject to the mortgage loan originator licensing

 

 

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1requirements of Article VII of this Act. Registration with the
2Division of Banking of the Department shall not affect the
3exempt status of the applicant.
4        (1) A mortgage loan originator eligible for licensure
5    under this subsection shall (A) be covered under an
6    exclusive written contract with, and originate residential
7    mortgage loans solely on behalf of, that exempt person; and
8    (B) hold a current, valid insurance producer license under
9    Article XXXI of the Illinois Insurance Code.
10        (2) An exempt person shall: (A) fulfill any reporting
11    requirements required by the Nationwide Mortgage Licensing
12    System and Registry or the Secretary; (B) provide a blanket
13    surety bond pursuant to Section 7-12 of this Act covering
14    the activities of all its sponsored mortgage loan
15    originators; (C) reasonably supervise the activities of
16    all its sponsored mortgage loan originators; (D) comply
17    with all rules and orders (including the averments
18    contained in Section 2-4 of this Act as applicable to a
19    non-licensed exempt entity provided for in this Section)
20    that the Secretary deems necessary to ensure compliance
21    with the federal SAFE Act; and (E) pay an annual
22    registration fee established by the Director.
23        (3) The Secretary may deny an exempt company
24    registration to an exempt person or fine, suspend, or
25    revoke an exempt company registration if the Secretary
26    finds one of the following:

 

 

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1            (A) that the exempt person is not a person of
2        honesty, truthfulness, or good character;
3            (B) that the exempt person violated any applicable
4        law, rule, or order;
5            (C) that the exempt person refused or failed to
6        furnish, within a reasonable time, any information or
7        make any report that may be required by the Secretary;
8            (D) that the exempt person had a final judgment
9        entered against him or her in a civil action on grounds
10        of fraud, deceit, or misrepresentation, and the
11        conduct on which the judgment is based indicates that
12        it would be contrary to the interest of the public to
13        permit the exempt person to manage a loan originator;
14            (E) that the exempt person had an order entered
15        against him or her involving fraud, deceit, or
16        misrepresentation by an administrative agency of this
17        State, the federal government, or any other state or
18        territory of the United States, and the facts relating
19        to the order indicate that it would be contrary to the
20        interest of the public to permit the exempt person to
21        manage a loan originator;
22            (F) that the exempt person made a material
23        misstatement or suppressed or withheld information on
24        the application for an exempt company registration or
25        any document required to be filed with the Secretary;
26        or

 

 

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1            (G) that the exempt person violated Section 4-5 of
2        this Act.
3    (b) No person, partnership, association, corporation, or
4other entity except a licensee under this Act or an entity
5exempt from licensing pursuant to Section 1-4, subsection (d),
6of this Act shall do any business under any name or title, or
7circulate or use any advertising or make any representation or
8give any information to any person, which indicates or
9reasonably implies activity within the scope of this Act.
10    (c) The Secretary may, through the Attorney General,
11request the circuit court of either Cook or Sangamon County to
12issue an injunction to restrain any person from violating or
13continuing to violate any of the foregoing provisions of this
14Section.
15    (d) When the Secretary has reasonable cause to believe that
16any entity which has not submitted an application for licensure
17is conducting any of the activities described in subsection (a)
18hereof, the Secretary shall have the power to examine all books
19and records of the entity and any additional documentation
20necessary in order to determine whether such entity should
21become licensed under this Act.
22    (d-1) The Secretary may issue orders against any person if
23the Secretary has reasonable cause to believe that an unsafe,
24unsound, or unlawful practice has occurred, is occurring, or is
25about to occur, if any person has violated, is violating, or is
26about to violate any law, rule, or written agreement with the

 

 

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1Secretary, or for the purposes of administering the provisions
2of this Act and any rule adopted in accordance with this Act.
3    (e) Any person, partnership, association, corporation or
4other entity who violates any provision of this Section commits
5a business offense and shall be fined an amount not to exceed
6$25,000. A mortgage loan brokered, funded, originated,
7serviced, or purchased by a party who is not licensed under
8this Section shall not be held to be invalid solely on the
9basis of a violation under this Section. The changes made to
10this Section by this amendatory Act of the 99th General
11Assembly are declarative of existing law.
12    (f) Each person, partnership, association, corporation or
13other entity conducting activities regulated by this Act shall
14be issued one license. Each office, place of business or
15location at which a residential mortgage licensee conducts any
16part of his or her business must be recorded with the Secretary
17pursuant to Section 2-8 of this Act.
18    (g) Licensees under this Act shall solicit, broker, fund,
19originate, service and purchase residential mortgage loans
20only in conformity with the provisions of this Act and such
21rules and regulations as may be promulgated by the Secretary.
22    (h) This Act applies to all entities doing business in
23Illinois as residential mortgage bankers, as defined by "An Act
24to provide for the regulation of mortgage bankers", approved
25September 15, 1977, as amended, regardless of whether licensed
26under that or any prior Act. Any existing residential mortgage

 

 

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1lender or residential mortgage broker in Illinois whether or
2not previously licensed, must operate in accordance with this
3Act.
4    (i) This Act is a successor Act to and a continuance of the
5regulation of residential mortgage bankers provided in, "An Act
6to provide for the regulation of mortgage bankers", approved
7September 15, 1977, as amended.
8    Entities and persons subject to the predecessor Act shall
9be subject to this Act from and after its effective date.
10(Source: P.A. 98-492, eff. 8-16-13; 99-113, eff. 7-23-15.)