SB1998eng 95TH GENERAL ASSEMBLY

SB1998 Engrossed LRB095 18639 MJR 44726 b

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Homeowner Protection Act.

Section 5. Purpose and construction. The purpose of this Act is to help homeowners and communities avoid the devastating effects of foreclosure. This Act is to be construed as a borrower protection statute for all purposes. This Act shall be liberally construed to effectuate its purpose.

Section 10. Definitions. As used in this Act:

"Approved counseling agency" means a housing counseling agency approved by the U.S. Department of Housing and Urban Development, a credit counseling agency approved by the Secretary, or any other person or entity approved by the Secretary.

"Borrower" means a natural person who seeks or obtains a home loan.

"Delinquent" means past due with respect to payments on a home loan.

"Department" means the Department of Financial and Professional Regulation.

"Foreclosure Prevention Report" means the report required by Section 30 of this Act.

"Home loan" means a loan to or for the benefit of any natural person made primarily for personal, family, or household use, primarily secured by either a mortgage on residential real property, title to a mobile home, or certificates of stock or other evidence of ownership interests in and proprietary leases from corporations, partnerships, or limited liability companies formed for the purpose of cooperative ownership of residential real property, all located in this State.

"Lender" means any person, partnership, association, corporation, or any other entity who either transfers, offers, lends, or invests money in home loans.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation or other person authorized to act in the Secretary's stead.

"Servicer" means any entity chartered under the Illinois Banking Act, the Savings Bank Act, the Illinois Credit Union Act, or the Illinois Savings and Loan Act of 1985 and any person or entity licensed under the Residential Mortgage License Act of 1987, the Consumer Installment Loan Act, or the Sales Finance Agency Act who is responsible for the collection or remittance for or has the right or obligation to collect or remit for any lender, note owner, or note holder or for a lender's own account of payments, interest, principal, and escrow items (such as hazard insurance and taxes on a residential mortgage loan) in accordance with the terms of the home loan, including loan payment follow up, delinquency loan follow up, loan analysis, and any notifications to the borrower that are necessary to enable the borrower to keep the loan current and in good standing.

Section 15. Counseling prior to perfecting foreclosure proceedings.

(a) Except for home loans in which any borrower has filed for relief under the United States Bankruptcy Code, if a home loan becomes delinquent by more than 30 days, the servicer shall send a notice advising the borrower that he or she may wish to seek approved credit counseling.

(b) The notice required in subsection (a) of this Section shall state the date on which the notice was mailed, shall be headed in bold, 14-point type, "GRACE PERIOD NOTICE", and shall state the following in 14-point type: "YOUR LOAN IS OR WAS MORE THAN 30 DAYS PAST DUE. YOU MAY BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY BE IN YOUR BEST INTEREST TO SEEK APPROVED HOUSING OR CREDIT COUNSELING. YOU HAVE A GRACE PERIOD OF 30 DAYS FROM THE DATE OF THIS FORM TO OBTAIN APPROVED HOUSING OR CREDIT COUNSELING. DURING THE GRACE PERIOD, THE LAW PROHIBITS US FROM TAKING ANY LEGAL ACTION AGAINST YOU. A LIST OF APPROVED COUNSELING AGENCIES MAY BE OBTAINED FROM THE ILLINOIS DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION." The notice shall also list the Department's current consumer hotline, the Department's website, and the telephone number, fax number, and mailing address of the servicer's loss mitigation department. No language, other than the language prescribed in this subsection (b), shall be included in the notice. The requirements of this subsection (b) shall be deemed satisfied if the language and format prescribed in this subsection (b) is included in a counseling notification required under federal law.

(c) Upon mailing the notice provided for under subsection (b) of this Section, neither the lender, servicer, nor lender's agent shall institute legal action under Part 15 of Article XV of the Code of Civil Procedure for 30 days. Only one such 30-day period of forbearance is allowed under this subsection (c) per subject loan.

(d) If, within the 30-day period provided under subsection (c) of this Section, an approved counseling agency notifies the lender, servicer, or lender's agent that the borrower is seeking approved counseling services, then the lender, servicer, or lender's agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for 30 days after the date of that notice. During the 30-day period provided under this subsection (d), the borrower or counselor or both may prepare and proffer to the lender, servicer, or lender's agent a proposed debt management plan. The lender, servicer, or lender's agent shall then determine whether to accept the proposed debt management plan, based upon an evaluation of the borrower's ability to repay the loan under the proffered plan, in light of the borrower's current income and other financial resources. If the lender, servicer, or lender's agent and the borrower agree to a debt management plan, then the lender, servicer, or lender's agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for as long as the debt management plan is complied with by the borrower. The agreed debt management plan and any modifications thereto must be in writing and signed by the lender, servicer, or lender's agent and the borrower. Upon written notice to the lender, servicer, or lender's agent, the borrower may change approved counseling agencies, but such a change does not entitle the borrower to any additional period of forbearance.

(e) If the borrower fails to comply with the agreed debt management plan, then nothing in this Section shall be construed to impair the legal right of the lender, servicer, or lender's agent to enforce the contract.

(f) This Section is repealed on December 31, 2010.

Section 20. Foreclosure Prevention Report; requirements. A servicer shall compile and submit to the Secretary on or before the twentieth business day of every other month a Foreclosure Prevention Report that contains the following information for the preceding 2 months or as otherwise indicated:

(1) The number of home loans the servicer is servicing.

(2) The number of home loans that the servicer is servicing that are in payment default.

(3) Information on loss mitigation activities undertaken, including, but not limited to, the following:

(A) the number and identification of home loans that were refinanced into more affordable or fixed home loans;

(B) the number and identification of home loans for which the borrower has sought housing or credit counseling, if known;

(C) the number of workout arrangements entered into by the servicer in connection with home loans; and

(D) the proactive steps taken by the servicer to identify borrowers at a heightened risk of default, such as those with impending interest rate resets, including, but not limited to, contacts with borrowers to assess their ability to repay their home loan obligations.

(4) The number of foreclosure actions commenced in this State in connection with home loans it is servicing.

(5) Any other information that the Secretary may deem necessary, including geographic information regarding applicable home loans.

Section 25. Foreclosure Prevention Report; form and manner prescribed by Secretary. The Secretary shall prescribe the form and manner for filing the Foreclosure Prevention Report. This Section is repealed on December 31, 2010.

Section 30. Foreclosure Prevention Report; publication. The Secretary may publish for public review the Foreclosure Prevention Report or any information contained in the Foreclosure Prevention Report, except personally identifying information regarding borrowers. This Section is repealed on December 31, 2010.

Section 90. Enforcement.

(a) The Secretary shall have the power to issue orders against any person or entity if the Secretary has reasonable cause to believe that a violation of this Act has occurred, is occurring, or is about to occur, if any person has violated, is violating, or is about to violate any law, rule, order, or written agreement with the Secretary, or for the purpose of administering the provisions of this Act and any rule promulgated in accordance with this Act.

(b) The Secretary may impose civil penalties of up to $1,000 against any person for each violation of any provision of this Act, any rule promulgated in accordance with this Act, or any order of the Secretary. The Secretary shall also have the power to subpoena witnesses, to administer an oath, to examine any person under oath, and to require the production of any relevant books, papers, accounts, and documents in the course of and pursuant to any investigation being conducted or any action being taken by the Secretary in respect of any matter relating to the duties imposed upon or the powers vested in the Secretary under the provisions of this Act or any rule promulgated in accordance with this Act.

(c) Any actions taken by the Secretary pursuant to this Section shall be done in accordance with the Illinois Administrative Procedure Act.

Section 95. Rulemaking. The Department may adopt reasonable rules to implement and administer this Act.

Section 100. Judicial review. All final administrative decisions under this Act are subject to judicial review pursuant to the provisions of the Administrative Review Law and any rules adopted pursuant thereto.

Section 105. Waiver prohibited. There shall be no waiver of any provision of this Act.

Section 900. The Residential Mortgage License Act of 1987 is amended by changing Sections 1-3, 1-4, 1-5, 2-2, 2-3, 2-4, 2-5, 2-6, 2-7, 2-8, 2-9, 2-11, 3-1, 3-2, 3-3, 3-4, 3-5, 3-9, 4-1, 4-2, 4-3, 4-4, 4-5, 4-6, 4-8, 4-8.1, 4-8.2, 4-8.3, 4-10, 4-11, 4-12, 4-13, 5-1, 6-3, and 7-1 and by adding Section 1-1.5 as follows:

(205 ILCS 635/1-1.5 new)

Sec. 1-1.5. Findings; procedures for multistate automated licensing system.

(1) The General Assembly finds that establishing and implementing an automated multistate licensing system for residential mortgage licensees is consistent with and furthers the Purpose of Act and Policy Statement of Section 1-2. For this purpose, the Director is authorized:

(a) to participate in a multistate automated licensing system as the exclusive record collection and maintenance system to apply for, renew, amend, and surrender residential mortgage licenses;

(b) to adopt rules as necessary to implement a multistate automated licensing system;

(c) to cause criminal history background checks by the Illinois State Police and Federal Bureau of Identification to be performed for use in the multistate automated licensing system;

(d) to require payments of licensing fees be made to the third-party administrator for the multistate automated licensing system for transfer to the State of Illinois and payment of processing fees for use of the multistate automated licensing system with those processing fees to be retained by the third-party administrator; and

(e) to share licensing information in the multistate automated licensing system pursuant to agreement with participating state regulators and to protect licensing information as so required by this Act or other applicable law.

(2) The Director shall not require any exempt person to submit information to the multistate automated licensing system. For purposes of this Section, "exempt person" means any individual or company exempt from licensure in this State.

(3) No person shall be authorized to obtain information from the multistate automated licensing system or initiate any action based on information obtained from the multistate automated licensing system that the person could not otherwise have obtained or initiated based on information currently available under existing State law.

(4) The Director shall accept and abide by the Privacy, Data Security, and Security Breach Notification Policy, as adopted by the multistate automated licensing system, and ensure that it is in full compliance with existing State law. The Director may make available, upon written request, a copy of the contract between the Department and the multistate automated licensing system that satisfies the provisions of this subsection (4).

(5) The Director may, upon written request and consistent with other state regulators, provide the most recently available audited financial report of the multistate automated licensing system.

(205 ILCS 635/1-3) (from Ch. 17, par. 2321-3)

Sec. 1-3. Necessity for License; Scope of Act.

(a) No person, partnership, association, corporation or other entity shall engage in the business of brokering, funding, originating, servicing or purchasing of residential mortgage loans without first obtaining a license from the Director Commissioner in accordance with the licensing procedure provided in this Article I and such regulations as may be promulgated by the Director Commissioner. The licensing provisions of this Section shall not apply to any entity engaged solely in commercial mortgage lending or to any person, partnership association, corporation or other entity exempted pursuant to Section 1-4, subsection (d), of this Act or in accordance with regulations promulgated by the Director Commissioner hereunder. No person, partnership, association, corporation, or other entity that is not required to obtain a license under this Act shall be granted a license under this Act. The license of any person, partnership, association, corporation, or other entity that is not required to obtain a license under this Act shall be void and shall not be renewed.

(b) No person, partnership, association, corporation, or other entity except a licensee under this Act or an entity exempt from licensing pursuant to Section 1-4, subsection (d), of this Act shall do any business under any name or title, or circulate or use any advertising or make any representation or give any information to any person, which indicates or reasonably implies activity within the scope of this Act.

(c) The Director Commissioner may, through the Attorney General, request the circuit court of either Cook or Sangamon County to issue an injunction to restrain any person from violating or continuing to violate any of the foregoing provisions of this Section.

(d) When the Director Commissioner has reasonable cause to believe that any entity which has not submitted an application for licensure is conducting any of the activities described in subsection (a) hereof, the Director Commissioner shall have the power to examine all books and records of the entity and any additional documentation necessary in order to determine whether such entity should become licensed under this Act.

(d-1) The Director Commissioner may issue orders against any person if the Commissioner has reasonable cause to believe that an unsafe, unsound, or unlawful practice has occurred, is occurring, or is about to occur, if any person has violated, is violating, or is about to violate any law, rule, or written agreement with the Director Commissioner, or for the purposes of administering the provisions of this Act and any rule adopted in accordance with this Act.

(e) Any person, partnership, association, corporation or other entity who violates any provision of this Section commits a business offense and shall be fined an amount not to exceed $25,000.

(f) Each person, partnership, association, corporation or other entity conducting activities regulated by this Act shall be issued one license. The person, partnership, association, corporation, or other entity shall apply for a license only under its real name and, if the application is approved, the license shall be issued under and state the real name of the person, partnership, association, corporation, or other entity. In addition to the real name of the licensee, the license shall also state any assumed name under which the licensee intends to operate. A licensee may not operate under an assumed name unless the Department has approved the use of the assumed name and such name is stated on the license in addition to the real name of the licensee. Each office, place of business or location at which a residential mortgage licensee conducts any part of his or her business must be recorded with the Director Commissioner pursuant to Section 2-8 of this Act.

(g) Licensees under this Act shall solicit, broker, fund, originate, service and purchase residential mortgage loans only in conformity with the provisions of this Act and such rules and regulations as may be promulgated by the Director Commissioner.

(h) This Act applies to all entities doing business in Illinois as residential mortgage bankers, as defined by "An Act to provide for the regulation of mortgage bankers", approved September 15, 1977, as amended, regardless of whether licensed under that or any prior Act. Any existing residential mortgage lender or residential mortgage broker in Illinois whether or not previously licensed, must operate in accordance with this Act.

(i) This Act is a successor Act to and a continuance of the regulation of residential mortgage bankers provided in, "An Act to provide for the regulation of mortgage bankers", approved September 15, 1977, as amended.

Entities and persons subject to the predecessor Act shall be subject to this Act from and after its effective date.

(Source: P.A. 93-1018, eff. 1-1-05.)

(205 ILCS 635/1-4) (from Ch. 17, par. 2321-4)

Sec. 1-4. Definitions.

(a) "Residential real property" or "residential real estate" shall mean real property located in this State improved by a one-to-four family dwelling used or occupied, wholly or partly, as the home or residence of one or more persons and may refer, subject to regulations of the Director Commissioner, to unimproved real property upon which those kinds dwellings are to be constructed.

(b) "Making a residential mortgage loan" or "funding a residential mortgage loan" shall mean for compensation or gain, either directly or indirectly, advancing funds or making a commitment to advance funds to a loan applicant for a residential mortgage loan.

(c) "Soliciting, processing, placing, or negotiating a residential mortgage loan" shall mean for compensation or gain, either directly or indirectly, accepting or offering to accept an application for a residential mortgage loan, assisting or offering to assist in the processing of an application for a residential mortgage loan on behalf of a borrower, or negotiating or offering to negotiate the terms or conditions of a residential mortgage loan with a lender on behalf of a borrower including, but not limited to, the submission of credit packages for the approval of lenders, the preparation of residential mortgage loan closing documents, including a closing in the name of a broker.

(d) "Exempt person or entity" shall mean the following:

(1) (i) Any banking organization or foreign banking corporation licensed by the Director Illinois Commissioner of Banks and Real Estate or the United States Comptroller of the Currency to transact business in this State; (ii) any national bank, federally chartered savings and loan association, federal savings bank, federal credit union; (iii) any pension trust, bank trust, or bank trust company; (iv) any bank, savings and loan association, savings bank, industrial bank, or credit union organized under the laws of this or any other state; (v) any Illinois Consumer Installment Loan Act licensee; (vi) any insurance company authorized to transact business in this State; (vii) any entity engaged solely in commercial mortgage lending; (viii) any service corporation or subsidiary of a savings and loan association or savings bank organized under the laws of this State, or any other state, or the service corporation or subsidiary of a federally chartered savings and loan association or savings bank having its principal place of business in this State, other than a service corporation or subsidiary licensed or entitled to reciprocity under the Real Estate License Act of 2000; or (ix) any first tier subsidiary of a bank, the charter of which is issued under the Illinois Banking Act by the Illinois Department of Financial and Professional Regulation, Division of Banking, or the charter of which is issued under the banking laws of any other state Commissioner of Banks and Real Estate, or the first tier subsidiary of a bank chartered by the United States Comptroller of the Currency and that has its principal place of business in this State, provided that the first tier subsidiary is regularly examined by the Illinois Commissioner of Banks and Real Estate or the Comptroller of the Currency, or a consumer compliance examination is regularly conducted by the Federal Reserve Board.

(1.5) Any employee of a person or entity mentioned in item (1) of this subsection.

(2) Any person or entity that does not originate mortgage loans in the ordinary course of business making or acquiring residential mortgage loans with his or her or its own funds for his or her or its own investment without intent to make, acquire, or resell more than 10 residential mortgage loans in any one calendar year.

(3) Any person employed by a licensee to assist in the performance of the activities regulated by this Act who is compensated in any manner by only one licensee.

(4) Any person licensed pursuant to the Real Estate License Act of 2000, who engages only in the taking of applications and credit and appraisal information to forward to a licensee or an exempt entity under this Act and who is compensated by either a licensee or an exempt entity under this Act, but is not compensated by either the buyer (applicant) or the seller.

(5) Any individual, corporation, partnership, or other entity that originates, services, or brokers residential mortgage loans, as these activities are defined in this Act, and who or which receives no compensation for those activities, subject to the Director's Commissioner's regulations with regard to the nature and amount of compensation.

(6) A person who prepares supporting documentation for a residential mortgage loan application taken by a licensee and performs ministerial functions pursuant to specific instructions of the licensee who neither requires nor permits the preparer to exercise his or her discretion or judgment; provided that this activity is engaged in pursuant to a binding, written agreement between the licensee and the preparer that:

(A) holds the licensee fully accountable for the preparer's action; and

(B) otherwise meets the requirements of this Section and this Act, does not undermine the purposes of this Act, and is approved by the Director Commissioner.

(e) "Licensee" or "residential mortgage licensee" shall mean a person, partnership, association, corporation, or any other entity who or which is licensed pursuant to this Act to engage in the activities regulated by this Act.

(f) "Mortgage loan" "residential mortgage loan" or "home mortgage loan" shall mean a loan to or for the benefit of any natural person made primarily for personal, family, or household use, primarily secured by either a mortgage on residential real property or certificates of stock or other evidence of ownership interests in and proprietary leases from, corporations, partnerships, or limited liability companies formed for the purpose of cooperative ownership of residential real property, all located in Illinois.

(g) "Lender" shall mean any person, partnership, association, corporation, or any other entity who either lends or invests money in residential mortgage loans.

(h) "Ultimate equitable owner" shall mean a person who, directly or indirectly, owns or controls an ownership interest in a corporation, foreign corporation, alien business organization, trust, or any other form of business organization regardless of whether the person owns or controls the ownership interest through one or more persons or one or more proxies, powers of attorney, nominees, corporations, associations, partnerships, trusts, joint stock companies, or other entities or devices, or any combination thereof.

(i) "Residential mortgage financing transaction" shall mean the negotiation, acquisition, sale, or arrangement for or the offer to negotiate, acquire, sell, or arrange for, a residential mortgage loan or residential mortgage loan commitment.

(j) "Personal residence address" shall mean a street address and shall not include a post office box number.

(k) "Residential mortgage loan commitment" shall mean a contract for residential mortgage loan financing.

(l) "Party to a residential mortgage financing transaction" shall mean a borrower, lender, or loan broker in a residential mortgage financing transaction.

(m) "Payments" shall mean payment of all or any of the following: principal, interest and escrow reserves for taxes, insurance and other related reserves, and reimbursement for lender advances.

(n) "Director" "Commissioner" shall mean the Director of the Division of Banking of the Department of Financial and Professional Regulation Commissioner of Banks and Real Estate or a person authorized by the Director, the Division of Banking of the Department of Financial and Professional Regulation Commissioner, the Office of Banks and Real Estate Act, or this Act to act in the Director's Commissioner's stead.

(o) "Loan brokering", "brokering", or "brokerage service" shall mean the act of helping to obtain from another entity, for a borrower, a loan secured by residential real estate situated in Illinois or assisting a borrower in obtaining a loan secured by residential real estate situated in Illinois in return for consideration to be paid by either the borrower or the lender including, but not limited to, contracting for the delivery of residential mortgage loans to a third party lender and soliciting, processing, placing, or negotiating residential mortgage loans.

(p) "Loan broker" or "broker" shall mean a person, partnership, association, corporation, or limited liability company, other than those persons, partnerships, associations, corporations, or limited liability companies exempted from licensing pursuant to Section 1-4, subsection (d), of this Act, who performs the activities described in subsections (c) and (o) of this Section.

(q) "Servicing" shall mean the collection or remittance for or the right or obligation to collect or remit for any lender, noteowner, noteholder, or for a licensee's own account, of payments, interests, principal, and trust items such as hazard insurance and taxes on a residential mortgage loan in accordance with the terms of the residential mortgage loan; and includes loan payment follow-up, delinquency loan follow-up, loan analysis and any notifications to the borrower that are necessary to enable the borrower to keep the loan current and in good standing.

(r) "Full service office" shall mean an office, provided by the licensee and not subleased from the licensee's employees, and staff in Illinois reasonably adequate to handle efficiently communications, questions, and other matters relating to any application for, or an existing home mortgage secured by residential real estate situated in Illinois with respect to which the licensee is brokering, funding originating, purchasing, or servicing. The management and operation of each full service office must include observance of good business practices such as adequate, organized, and accurate books and records; ample phone lines, hours of business, staff training and supervision, and provision for a mechanism to resolve consumer inquiries, complaints, and problems. The Director Commissioner shall issue regulations with regard to these requirements and shall include an evaluation of compliance with this Section in his or her periodic examination of each licensee.

(s) "Purchasing" shall mean the purchase of conventional or government-insured mortgage loans secured by residential real estate situated in Illinois from either the lender or from the secondary market.

(t) "Borrower" shall mean the person or persons who seek the services of a loan broker, originator, or lender.

(u) "Originating" shall mean the issuing of commitments for and funding of residential mortgage loans.

(v) "Loan brokerage agreement" shall mean a written agreement in which a broker or loan broker agrees to do either of the following:

(1) obtain a residential mortgage loan for the borrower or assist the borrower in obtaining a residential mortgage loan; or

(2) consider making a residential mortgage loan to the borrower.

(w) "Advertisement" shall mean the attempt by publication, dissemination, or circulation to induce, directly or indirectly, any person to enter into a residential mortgage loan agreement or residential mortgage loan brokerage agreement relative to a mortgage secured by residential real estate situated in Illinois.

(x) "Residential Mortgage Board" shall mean the Residential Mortgage Board created in Section 1-5 of this Act.

(y) "Government-insured mortgage loan" shall mean any mortgage loan made on the security of residential real estate insured by the Department of Housing and Urban Development or Farmers Home Loan Administration, or guaranteed by the Veterans Administration.

(z) "Annual audit" shall mean a certified audit of the licensee's books and records and systems of internal control performed by a certified public accountant in accordance with generally accepted accounting principles and generally accepted auditing standards.

(aa) "Financial institution" shall mean a savings and loan association, savings bank, credit union, or a bank organized under the laws of Illinois or a savings and loan association, savings bank, credit union or a bank organized under the laws of the United States and headquartered in Illinois.

(bb) "Escrow agent" shall mean a third party, individual or entity charged with the fiduciary obligation for holding escrow funds on a residential mortgage loan pending final payout of those funds in accordance with the terms of the residential mortgage loan.

(cc) "Net worth" shall have the meaning ascribed thereto in Section 3-5 of this Act.

(dd) "Affiliate" shall mean:

(1) any entity that directly controls or is controlled by the licensee and any other company that is directly affecting activities regulated by this Act that is controlled by the company that controls the licensee;

(2) any entity:

(A) that is controlled, directly or indirectly, by a trust or otherwise, by or for the benefit of shareholders who beneficially or otherwise control, directly or indirectly, by trust or otherwise, the licensee or any company that controls the licensee; or

(B) a majority of the directors or trustees of which constitute a majority of the persons holding any such office with the licensee or any company that controls the licensee;

(3) any company, including a real estate investment trust, that is sponsored and advised on a contractual basis by the licensee or any subsidiary or affiliate of the licensee.

The Director Commissioner may define by rule and regulation any terms used in this Act for the efficient and clear administration of this Act.

(ee) "First tier subsidiary" shall be defined by regulation incorporating the comparable definitions used by the Office of the Comptroller of the Currency and the Director Illinois Commissioner of Banks and Real Estate.

(ff) "Gross delinquency rate" means the quotient determined by dividing (1) the sum of (i) the number of government-insured residential mortgage loans funded or purchased by a licensee in the preceding calendar year that are delinquent and (ii) the number of conventional residential mortgage loans funded or purchased by the licensee in the preceding calendar year that are delinquent by (2) the sum of (i) the number of government-insured residential mortgage loans funded or purchased by the licensee in the preceding calendar year and (ii) the number of conventional residential mortgage loans funded or purchased by the licensee in the preceding calendar year.

(gg) "Delinquency rate factor" means the factor set by rule of the Director Commissioner that is multiplied by the average gross delinquency rate of licensees, determined annually for the immediately preceding calendar year, for the purpose of determining which licensees shall be examined by the Director Commissioner pursuant to subsection (b) of Section 4-8 of this Act.

(hh) "Loan originator" means any natural person who, for compensation or in the expectation of compensation, either directly or indirectly makes, offers to make, solicits, places, or negotiates a residential mortgage loan.

(ii) "Confidential supervisory information" means any report of examination, visitation, or investigation prepared by the Director Commissioner under this Act, any report of examination visitation, or investigation prepared by the state regulatory authority of another state that examines a licensee, any document or record prepared or obtained in connection with or relating to any examination, visitation, or investigation, and any record prepared or obtained by the Director Commissioner to the extent that the record summarizes or contains information derived from any report, document, or record described in this subsection. "Confidential supervisory information" does not include any information or record routinely prepared by a licensee and maintained in the ordinary course of business or any information or record that is required to be made publicly available pursuant to State or federal law or rule.

(Source: P.A. 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)

(205 ILCS 635/1-5) (from Ch. 17, par. 2321-5)

Sec. 1-5. Residential Mortgage Board.

(a) Board composition, compensation. There is created the Residential Mortgage Board composed of 5 members appointed by the Director of the Division of Banks of the Department of Financial and Professional Regulation Commissioner of Banks and Real Estate. The majority of persons on the Board shall have no financial interest in any residential mortgage business and one member shall be a representative of the Mortgage Banking Trade Association and one member shall be a representative of the Mortgage Broker Trade Association. Members of the Board serving on the effective date of this amendatory Act of 1996 shall continue to serve their unexpired terms as members of the Residential Mortgage Board. Thereafter, on or before January 15 of each year, the Director Commissioner shall appoint one or more board members, as shall be necessary to maintain a 5 member Board, whose terms shall be for 3 years commencing February 1 of the year in which they are respectively appointed.

If a vacancy occurs on the Residential Mortgage Board, the Director Commissioner shall within 60 days appoint a new member who shall hold office for the remainder of the vacated term.

The Board shall meet at the call of the chairman, who along with a Secretary, shall be selected by the Board from among its members.

The members of the Board serve at the pleasure of the Director Commissioner.

(b) Duties of Board. The Residential Mortgage Board shall assist the Director Commissioner by:

(1) submitting recommendations to the Director Commissioner for the efficient administration of this Act; and

(2) performing other duties as are prescribed by the Director Commissioner.

(c) Conflict of interest declarations. Each member of the Residential Mortgage Board shall file annually, no later than February 1, with the Director Commissioner a statement of his or her current business transactions or other affiliations with any licensee under this Act. The Director Commissioner may adopt rules to avoid conflicts of interest on the part of members of the Residential Mortgage Board in connection with their position on the Board.

(Source: P.A. 93-1018, eff. 1-1-05.)

(205 ILCS 635/2-2) (from Ch. 17, par. 2322-2)

Sec. 2-2. Application process; investigation; fee.

(a) The Director Commissioner shall issue a license upon completion of all of the following:

(1) The filing of an application for license with the Director or a multistate automated licensing system approved by the Director. If an application is filed with an approved multistate automated licensing system, then the Director shall issue a license upon completion of the multistate automated licensing system.

(2) The filing with the Director Commissioner of a listing of judgments entered against, and bankruptcy petitions by, the license applicant for the preceding 10 years.

(3) The payment, in certified funds, of investigation and application fees, the total of which shall be in an amount equal to $2,700 annually, however, alternatively a licensing fee equal to $2,700 shall be paid through an approved credit card or Automated Clearing House (ACH) payment to the multistate automated licensing system. The Director the Commissioner may increase the investigation and application fees by rule as provided in Section 4-11.

(4) Except for a broker applying to renew a license, the filing of an audited balance sheet including all footnotes prepared by a certified public accountant in accordance with generally accepted accounting principles and generally accepted auditing principles which evidences that the applicant meets the net worth requirements of Section 3-5.

(5) The filing of proof satisfactory to the Director Commissioner that the applicant, the members thereof if the applicant is a partnership or association, the members or managers thereof that retain any authority or responsibility under the operating agreement if the applicant is a limited liability company, or the officers thereof if the applicant is a corporation have 3 years experience preceding application in real estate finance. Instead of this requirement, the applicant and the applicant's officers or members, as applicable, may satisfactorily complete a program of education in real estate finance and fair lending, as approved by the Director Commissioner, prior to receiving the initial license. The Director Commissioner shall promulgate rules regarding proof of experience requirements and educational requirements and the satisfactory completion of those requirements. The Commissioner may establish by rule a list of duly licensed professionals and others who may be exempt from this requirement.

(6) An investigation of the averments required by Section 2-4, which investigation must allow the Director Commissioner to issue positive findings stating that the financial responsibility, experience, character, and general fitness of the license applicant and of the members thereof if the license applicant is a partnership or association, of the officers and directors thereof if the license applicant is a corporation, and of the managers and members that retain any authority or responsibility under the operating agreement if the license applicant is a limited liability company are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly and efficiently within the purpose of this Act. If the Director Commissioner shall not so find, he or she shall not issue such license, and he or she shall notify the license applicant of the denial.

The Director Commissioner may impose conditions on a license if the Director Commissioner determines that the conditions are necessary or appropriate. These conditions shall be imposed in writing and shall continue in effect for the period prescribed by the Director Commissioner.

(b) All licenses shall be issued in duplicate with one copy being transmitted to the license applicant or license status may be posted on the multistate automated licensing system and the second being retained with the Commissioner.

Upon receipt of such license, a residential mortgage licensee shall be authorized to engage in the business regulated by this Act. Such license shall remain in full force and effect until it expires without renewal, is surrendered by the licensee or revoked or suspended as hereinafter provided.

(Source: P.A. 93-32, eff. 7-1-03; 93-1018, eff. 1-1-05.)

(205 ILCS 635/2-3) (from Ch. 17, par. 2322-3)

Sec. 2-3. Application form.

(a) Application for a residential mortgage license must be made in accordance with Section 2-6 and the requirements of the multistate automated licensing system approved by the Director. The application shall be in writing, under oath, and on a form obtained from and prescribed by the Director, or may be submitted electronically, with attestation, to the multistate automated licensing system Commissioner.

(b) The application shall contain the name and complete business and residential address or addresses of the license applicant. If the license applicant is a partnership, association, corporation or other form of business organization, the application shall contain the names and complete business and residential addresses of each member, director and principal officer thereof. Such application shall also include a description of the activities of the license applicant, in such detail and for such periods, as the Director Commissioner may require, including all of the following:

(1) An affirmation of financial solvency noting such capitalization requirements as may be required by the Director Commissioner, and access to such credit as may be required by the Director Commissioner.

(2) An affirmation that the license applicant or its members, directors or principals as may be appropriate, are at least 18 years of age.

(3) Information as to the character, fitness, financial and business responsibility, background, experience, and criminal record of any (i) person, entity, or ultimate equitable owner that owns or controls, directly or indirectly, 10% or more of any class of stock of the license applicant; (ii) person, entity, or ultimate equitable owner that is not a depository institution, as defined in Section 1007.50 of the Savings Bank Act, that lends, provides, or infuses, directly or indirectly, in any way, funds to or into a license applicant, in an amount equal to or more than 10% of the license applicant's net worth; (iii) person, entity, or ultimate equitable owner that controls, directly or indirectly, the election of 25% or more of the members of the board of directors of a license applicant; or (iv) person, entity, or ultimate equitable owner that the Director Commissioner finds influences management of the license applicant.

(4) Upon written request by the licensee and notwithstanding the provisions of paragraphs (1), (2), and (3) of this subsection, the Director Commissioner may permit the licensee to omit all or part of the information required by those paragraphs if, in lieu of the omitted information, the licensee submits an affidavit stating that the information submitted on the licensee's previous renewal application is still true and accurate. The Director Commissioner may promulgate rules prescribing the form and content of the affidavit that are necessary to accomplish the purposes of this Section.

(5) Such other information as required by regulations of the Director Commissioner.

In the event the information required by the multistate automated licensing system, as adopted by the Director, conflicts with any information required in this subsection (b), the requirements of the multistate automated licensing system as adopted shall prevail.

(Source: P.A. 89-355, eff. 8-17-95.)

(205 ILCS 635/2-4) (from Ch. 17, par. 2322-4)

Sec. 2-4. Averments of Licensee. Each application for license or for the renewal of a license shall be accompanied by the following averments stating that the applicant:

(a) Will maintain at least one full service office within the State of Illinois pursuant to Section 3-4 of this Act;

(b) Will maintain staff reasonably adequate to meet the requirements of Section 3-4 of this Act;

(c) Will keep and maintain for 36 months the same written records as required by the federal Equal Credit Opportunity Act, and any other information required by regulations of the Director Commissioner regarding any home mortgage in the course of the conduct of its residential mortgage business;

(d) Will file with the Director, or multistate automated licensing system Commissioner, when due, any report or reports which it is required to file under any of the provisions of this Act;

(e) Will not engage, whether as principal or agent, in the practice of rejecting residential mortgage applications without reasonable cause, or varying terms or application procedures without reasonable cause, for home mortgages on real estate within any specific geographic area from the terms or procedures generally provided by the licensee within other geographic areas of the State;

(f) Will not engage in fraudulent home mortgage underwriting practices;

(g) Will not make payment, whether directly or indirectly, of any kind to any in house or fee appraiser of any government or private money lending agency with which an application for a home mortgage has been filed for the purpose of influencing the independent judgment of the appraiser with respect to the value of any real estate which is to be covered by such home mortgage;

(h) Has filed tax returns (State and Federal) for the past 3 years or filed as required by the Director with the Commissioner an accountant's or attorney's statement as to why no return was filed;

(i) Will not engage in any discrimination or redlining activities prohibited by Section 3-8 of this Act;

(j) Will not knowingly make any false promises likely to influence or persuade, or pursue a course of misrepresentation and false promises through agents, solicitors, advertising or otherwise;

(k) Will not knowingly misrepresent, circumvent or conceal, through whatever subterfuge or device, any of the material particulars or the nature thereof, regarding a transaction to which it is a party to the injury of another party thereto;

(l) Will disburse funds in accordance with its agreements;

(m) Has not committed a crime against the law of this State, any other state or of the United States, involving moral turpitude, fraudulent or dishonest dealing, and that no final judgment has been entered against it in a civil action upon grounds of fraud, misrepresentation or deceit which has not been previously reported to the Director Commissioner;

(n) Will account or deliver to the owner upon request any person any personal property such as money, fund, deposit, check, draft, mortgage, other document or thing of value, which has come into its possession, and which is not its property, or which it is not in law or equity entitled to retain under the circumstances, at the time which has been agreed upon or is required by law, or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery;

(o) Has not engaged in any conduct which would be cause for denial of a license;

(p) Has not become insolvent;

(q) Has not submitted an application for a license under this Act which contains a material misstatement;

(r) Has not demonstrated by course of conduct, negligence or incompetence in performing any act for which it is required to hold a license under this Act;

(s) Will advise the Director Commissioner in writing, or the multistate automated licensing system by electronic means, of any changes to the information submitted on the most recent application for license within 30 days of said change, or by the date required for entry of changes to the multistate automated licensing system. The written notice must be signed in the same form as the application for license being amended;

(t) Will comply with the provisions of this Act, or with any lawful order, rule or regulation made or issued under the provisions of this Act;

(u) Will submit to periodic examination by the Director Commissioner as required by this Act;

(v) Will advise the Director Commissioner in writing of judgments entered against, and bankruptcy petitions by, the license applicant within 5 days of occurrence;

(w) Will advise the Director Commissioner in writing within 30 days of any request made to when the license applicant requests a licensee under this Act to repurchase a loan in a manner that completely and clearly identifies to whom the request was made, the loans involved, and the reason for the request , and the circumstances therefor;

(x) Will advise the Director Commissioner in writing within 30 days of any request from any entity when the license applicant is requested by another entity to repurchase a loan in a manner that completely and clearly identifies who made the request, the loans involved, and the reason for the request , and the circumstances therefor;

(y) Will at all times act in a manner consistent with subsections (a) and (b) of Section 1-2 of this Act; and

(z) Will not knowingly hire or employ a loan originator who is not registered with the Director Commissioner as required under Section 7-1 of this Act.

A licensee who fails to fulfill obligations of an averment, to comply with averments made, or otherwise violates any of the averments made under this Section shall be subject to the penalties in Section 4-5 of this Act.

(Source: P.A. 95-331, eff. 8-21-07.)

(205 ILCS 635/2-5) (from Ch. 17, par. 2322-5)

Sec. 2-5. Refusal to Issue License. The Director Commissioner shall refuse to license or renew a license if:

(1) it is determined that the applicant is not in compliance with any provisions of the Act or the provisions of the multistate automated licensing system as approved by the Director; or

(2) there is substantial continuity between the applicant and any violator of this Act; or

(3) the Director Commissioner cannot make the findings specified in Section 2-2, subsection (a), of this Act.

(Source: P.A. 86-137; 87-642.)

(205 ILCS 635/2-6) (from Ch. 17, par. 2322-6)

Sec. 2-6. License issuance and renewal; fee.

(a) Beginning July 1, 2003, licenses shall be renewed every year on the anniversary of the date of issuance of the original license, or if the multistate automated licensing system is approved, then on the common renewal date selected for the multistate automated licensing system. Properly completed renewal application forms and filing fees must be received by the Director Commissioner 60 days prior to the renewal date, or if the multistate automated licensing system is approved, then by the date of receipt selected for the multistate automated licensing system.

(b) It shall be the responsibility of each licensee to accomplish renewal of its license; failure of the licensee to receive renewal forms or electronic notice absent a request sent by certified mail for such forms will not waive said responsibility. Failure by a licensee to submit a properly completed renewal application form, or complete renewal on the multistate automated licensing system, and pay fees in a timely fashion, absent a written extension from the Director Commissioner, will result in the assessment of additional fees, as follows:

(1) A fee of $750 will be assessed to the licensee 30 days after the proper renewal date and $1,500 each month thereafter, or late fees as determined by the Director in conjunction with the multistate automated licensing system, until the license is either renewed or expires pursuant to Section 2-6, subsections (c) and (d), of this Act.

(2) Such fee will be assessed without prior notice to the licensee, but will be assessed only in cases wherein the Director Commissioner has in his or her possession documentation of the licensee's continuing activity for which the unrenewed license was issued.

(c) A license which is not renewed by the date required in this Section shall automatically become inactive. No activity regulated by this Act shall be conducted by the licensee when a license becomes inactive. The Director Commissioner may require the licensee to provide a plan for the disposition of any residential mortgage loans not closed or funded when the license becomes inactive. The Director Commissioner may allow a licensee with an inactive license to conduct activities regulated by this Act for the sole purpose of assisting borrowers in the closing or funding of loans for which the loan application was taken from a borrower while the license was active. An inactive license may be reactivated by the Director, or by the multistate automated licensing system at the direction of the Director, Commissioner upon payment of the renewal fee, and payment of a reactivation fee equal to the renewal fee.

(d) A license which is not renewed within one year of becoming inactive shall expire.

(e) A licensee ceasing an activity or activities regulated by this Act and desiring to no longer be licensed shall so inform the Director Commissioner in writing and, at the same time, convey the license and all other symbols or indicia of licensure, or request a license status change on the multistate automated licensing system. The licensee shall include a plan for the withdrawal from regulated business, including a timetable for the disposition of the business and comply with surrender guidelines of the Director to ensure proper surrender of the license. Upon completion of all requirements receipt of such written notice, the Director Commissioner shall issue a certified statement canceling the license or the surrendered or cancelled license status shall be posted on the multistate automated licensing system.

(Source: P.A. 93-32, eff. 7-1-03; 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)

(205 ILCS 635/2-7) (from Ch. 17, par. 2322-7)

Sec. 2-7. Waiver of licensing fee. The Director Commissioner may waive the licensing fee upon receipt of:

(a) an application for a residential mortgage license in Illinois,

(b) an addendum requesting waiver of the fee stating the grounds in support of such waiver, including but not limited to, not for profit status, bankruptcy or the showing of undue hardship, and

(c) in case of an out-of-state servicer of loans in Illinois, the following documentation is required:

(1) A verification that the firm services only 100 or fewer loans secured by residential real estate situated in Illinois;

(2) An agreement not to originate, purchase or acquire additional servicing of loans secured by residential real estate situated in Illinois;

(3) An agreement to maintain a dedicated toll free (800) number for exclusive use by the licensee's Illinois customers;

(4) An agreement to provide a written notice at least annually to the licensee's Illinois customers advising them of the dedicated toll free (800) number; and to furnish the Director Commissioner with a copy of such written notice.

A request for waiver of the filing fee must be submitted each year in conjunction with the license renewal procedure.

(Source: P.A. 90-301, eff. 8-1-97.)

(205 ILCS 635/2-8) (from Ch. 17, par. 2322-8)

Sec. 2-8. Additional Full-service Offices.

(a) A licensee may apply for authority to open and maintain additional full-service offices by:

(1) Giving the Director or multistate automated licensing system Commissioner prior notice of its intention in such form as shall be prescribed by the Commissioner.

(2) Payment of a fee to be established by regulation.

(b) Upon receipt of the notice and fee required in subsection (a) above, the Commissioner shall issue a certificate for the additional full-service office, or the license status shall be posted to the multistate automated licensing system.

(c) The certificate, if issued by the Director, shall be conspicuously posted in the respective additional full-service offices.

(Source: P.A. 85-735.)

(205 ILCS 635/2-9) (from Ch. 17, par. 2322-9)

Sec. 2-9. Posting of license. The license of a licensee whose home office is within the State of Illinois or of an out-of-state licensee, if issued by the Director, shall be conspicuously posted in every office of the licensee located in Illinois. Out-of-state licensees without an Illinois office shall produce the license, if issued, upon request. Licensees originating loans on the Internet shall post on their Internet web site their license number and the address and telephone number of the Director Commissioner. The license shall state the full name and address of the licensee. The license shall not be transferable or assignable. A separate certificate may shall be issued for posting in each full service Illinois office.

(Source: P.A. 91-586, eff. 8-14-99.)

(205 ILCS 635/2-11) (from Ch. 17, par. 2322-11)

Sec. 2-11. Miscellaneous fees. In addition to any license fee collected under this Act, the Director Commissioner shall by rule and regulation establish a schedule to apply to assessment and collection of necessary contingent and miscellaneous fees.

(Source: P.A. 85-735.)

(205 ILCS 635/3-1) (from Ch. 17, par. 2323-1)

Sec. 3-1. Bonds of licensees.

(a) Every licensee, with respect to any person appointed or elected to any position requiring the receipt of payment, management, or use of money belonging to a residential mortgage licensee engaged in the activities of originating, servicing, or purchasing mortgage loans or whose duties permit him or her to have access to or custody of any of its money or securities or custody of any money or securities belonging to third parties or whose duties permit him or her regularly to make entries in the books or other records of a licensee, shall, before assuming his or her duties, maintain a fidelity bond in the amount of $100,000 by some fidelity insurance company licensed to do business in this State.

(b) Each bond shall be for any loss the licensee may sustain in money or other property through the commission of any dishonest or criminal act or omission by any person required to be bonded, whether committed alone or in concert with another. The bond shall be in the form and amount approved by the Director Commissioner who may at any time require one or more additional bonds. A true copy of every bond, including all riders and endorsements executed subsequent to the effective date of the bond, shall be filed at all times with the Director Commissioner. Each bond shall provide that a cancellation thereof shall not become effective unless and until 30 days notice in writing first shall have been given to the Director Commissioner unless he or she shall have approved the cancellation earlier. If the Director Commissioner believes the licensee's business is being conducted in an unsafe manner due to the lack of bonds or the inadequacy of bonds, he or she may proceed against the licensee as provided for in Section 4-5.

(c) All licensees shall maintain a bond in accordance with this subsection. Each bond shall be for the recovery of expenses, fines, or fees due to or levied by the Director Commissioner in accordance with this Act. The bond shall be payable when the licensee fails to comply with any provisions of this Act and shall be in the form of a surety or licensure bond in the amount and form as prescribed by the Director Commissioner pursuant to rules and regulations. The bond shall be payable to the Division of Banking of the Department of Financial and Professional Regulation Office of Banks and Real Estate and shall be issued by some insurance company authorized to do business in this State. A copy of the bond, including any and all riders and endorsements executed subsequent to the effective date of the bond, shall be placed on file with the Division of Banking of the Department of Financial and Professional Regulation Office of Banks and Real Estate within 10 days of the execution thereof.

(d) The Director Commissioner may promulgate rules with respect to bonding requirements for residential mortgage licensees that are reasonable and necessary to accomplish the purposes of this Act.

(Source: P.A. 89-508, eff. 7-3-96.)

(205 ILCS 635/3-2) (from Ch. 17, par. 2323-2)

Sec. 3-2. Annual audit.

(a) At the licensee's fiscal year-end, but in no case more than 12 months after the last audit conducted pursuant to this Section, except as otherwise provided in this Section, it shall be mandatory for each residential mortgage licensee to cause its books and accounts to be audited by a certified public accountant licensed under the Illinois Public Accounting Act or by an equivalent state licensing law not connected with such licensee. The books and records of all licensees under this Act shall be maintained on an accrual basis. The audit must be sufficiently comprehensive in scope to permit the expression of an opinion on the financial statements, which must be prepared in accordance with generally accepted accounting principles, and must be performed in accordance with generally accepted auditing standards. Notwithstanding the requirements of this subsection, a licensee that is a first tier subsidiary may submit audited consolidated financial statements of its parent as long as the consolidated statements are supported by consolidating statements. The licensee's chief financial officer shall attest to the licensee's financial statements disclosed in the consolidating statements.

(b) As used herein, the term "expression of opinion" includes either (1) an unqualified opinion, (2) a qualified opinion, (3) a disclaimer of opinion, or (4) an adverse opinion.

(c) If a qualified or adverse opinion is expressed or if an opinion is disclaimed, the reasons therefore must be fully explained. An opinion, qualified as to a scope limitation, shall not be acceptable.

(d) The most recent audit report shall be filed with the Director Commissioner within 90 days after the end of the licensee's fiscal year. The report filed with the Director Commissioner shall be certified by the certified public accountant conducting the audit. The Director Commissioner may promulgate rules regarding late audit reports.

(e) If any licensee required to make an audit shall fail to cause an audit to be made, the Director Commissioner shall cause the same to be made by a certified public accountant at the licensee's expense. The Director Commissioner shall select such certified public accountant by advertising for bids or by such other fair and impartial means as he or she establishes by regulation.

(f) In lieu of the audit or compilation financial statement required by this Section, a licensee shall submit and the Director Commissioner may accept any audit made in conformance with the audit requirements of the U.S. Department of Housing and Urban Development.

(g) With respect to licensees who solely broker residential mortgage loans as defined in subsection (o) of Section 1-4, instead of the audit required by this Section, the Director Commissioner may accept compilation financial statements prepared at least every 12 months, and the compilation financial statement must be prepared by an independent certified public accountant licensed under the Illinois Public Accounting Act or by an equivalent state licensing law with full disclosure in accordance with generally accepted accounting principals and must be submitted within 90 days after the end of the licensee's fiscal year. If a licensee under this Section fails to file a compilation as required, the Director Commissioner shall cause an audit of the licensee's books and accounts to be made by a certified public accountant at the licensee's expense. The Director Commissioner shall select the certified public accountant by advertising for bids or by such other fair and impartial means as he or she establishes by rule. A licensee who files false or misleading compilation financial statements is guilty of a business offense and shall be fined not less than $5,000.

(h) The workpapers of the certified public accountants employed by each licensee for purposes of this Section are to be made available to the Director Commissioner or the Director's Commissioner's designee upon request and may be reproduced by the Director Commissioner or the Director's Commissioner's designee to enable to the Director Commissioner to carry out the purposes of this Act.

(i) Notwithstanding any other provision of this Section, if a licensee relying on subsection (g) of this Section causes its books to be audited at any other time or causes its financial statements to be reviewed, a complete copy of the audited or reviewed financial statements shall be delivered to the Director Commissioner at the time of the annual license renewal payment following receipt by the licensee of the audited or reviewed financial statements. All workpapers shall be made available to the Director Commissioner upon request. The financial statements and workpapers may be reproduced by the Director Commissioner or the Director's Commissioner's designee to carry out the purposes of this Act.

(Source: P.A. 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)

(205 ILCS 635/3-3) (from Ch. 17, par. 2323-3)

Sec. 3-3. Advertising. In addition to such other rules, regulations and policies as the Director Commissioner may promulgate to effectuate the purpose of this Act, the Director Commissioner shall prescribe regulations governing the advertising of mortgage loans, including without limitation, the following requirements:

(a) Advertising for loans transacted under this Act may not be false, misleading or deceptive. No entity whose activities are regulated under this Act may advertise in any manner so as to indicate or imply that its interest rates or charges for loans are in any way "recommended", "approved", "set" or "established" by the State or by this Act. The Director Commissioner may issue a cease and desist order for any violation of this Section.

(b) All advertisements by a licensee shall contain the name and an office address of such entity, which shall conform to a name and address on record with the Director Commissioner.

(c) No licensee shall advertise its services in Illinois in any media, whether print or electronic, without the words "Illinois Residential Mortgage Licensee".

(Source: P.A. 87-1098.)

(205 ILCS 635/3-4) (from Ch. 17, par. 2323-4)

Sec. 3-4. Office and staff within the State.

(a) A licensee whose principal place of business is located in the State of Illinois shall maintain at least one full service office with staff reasonably adequate to handle efficiently communications, questions, and all other matters relating to any application for a home mortgage or an existing home mortgage with respect to which such licensee is performing services, regardless of kind, for any borrower or lender, note owner or holder, or for himself or herself while engaged in the residential mortgage business. The location and operation of a full service office shall be in compliance with any applicable zoning laws or ordinances and home office or business regulations. The office or place of business shall not be located in any real estate, retail, or financial business establishment unless it is separated from the other business by a separate and distinct area within the establishment.

(b) In lieu of maintaining a full service office in the State of Illinois, and subject to the rules of the Department, a licensee whose principal place of business is located outside the State of Illinois may comply with all of the following requirements:

(1) maintain a limited service office in Illinois that is adequate to accommodate a full-scope examination of the licensee's books and records as they relate to activity in Illinois, as determined by the Department;

(2) must submit a certified audit as required in Section 3-2 of this Act evidencing a minimum net worth of $150,000 $100,000, which must be maintained at all times; and

(3) , and shall submit and maintain a fidelity bond in the amount of $100,000, a copy of which must be submitted to the Department. The Department may promulgate rules permitting licensees that do not comply with the net worth requirement established on the effective date of this amendatory Act of the 95th General Assembly to do so within 12 months after the effective date of this amendatory Act of the 95th General Assembly.

(Source: P.A. 93-1018, eff. 1-1-05.)

(205 ILCS 635/3-5) (from Ch. 17, par. 2323-5)

Sec. 3-5. Net worth requirement. A licensee that holds a license on the effective date of this amendatory Act of the 93rd General Assembly shall have and maintain a net worth of not less than $100,000; however, no later than 2 years after the effective date of this amendatory Act of the 93rd General Assembly, the licensee must maintain a net worth of not less than $150,000. A licensee that first obtains a license after the effective date of this amendatory Act of the 93rd General Assembly must have and maintain a net worth of not less than $150,000. Notwithstanding other requirements of this Section, the net worth requirement for a residential mortgage licensee whose only licensable activity is that of brokering residential mortgage loans and that holds a license on the effective date of this amendatory Act of the 93rd General Assembly shall be $35,000; however, no later than 2 years after the effective date of this amendatory Act of the 93rd General Assembly, the licensee must maintain a net worth of not less than $50,000. Such a licensee that first obtains a license after the effective date of this amendatory Act of the 93rd General Assembly must have and maintain a net worth of not less than $50,000. Net worth shall be evidenced by a balance sheet prepared by a certified public accountant in accordance with generally accepted accounting principles and generally accepted auditing standards or by the compilation financial statements authorized under subsection (g) of Section 3-2. The Director Commissioner may promulgate rules with respect to net worth definitions and requirements for residential mortgage licensees as necessary to accomplish the purposes of this Act. In lieu of the net worth requirement established by this Section, the Director Commissioner may accept evidence of conformance by the licensee with the net worth requirements of the United States Department of Housing and Urban Development.

(Source: P.A. 93-561, eff. 1-1-04.)

(205 ILCS 635/3-9) (from Ch. 17, par. 2323-9)

Sec. 3-9. Escrow Funds. The Director Commissioner may promulgate rules with respect to placement in escrow accounts by any licensee of any money, fund, deposit, check or draft entrusted to it by any persons dealing with it as a residential mortgage licensee.

(Source: P.A. 85-735.)

(205 ILCS 635/4-1) (from Ch. 17, par. 2324-1)

Sec. 4-1. Director of the Division of Banking of the Department of Financial and Professional Regulation Commissioner of Banks and Real Estate; functions, powers, and duties. The functions, powers, and duties of the Director Commissioner of Banks and Real Estate shall include the following:

(a) To issue or refuse to issue any license as provided by this Act;

(b) To revoke or suspend for cause any license issued under this Act;

(c) To keep records of all licenses issued under this Act;

(d) To receive, consider, investigate, and act upon complaints made by any person in connection with any residential mortgage licensee in this State;

(e) To consider and act upon any recommendations from the Residential Mortgage Board;

(f) To prescribe the forms of and receive:

(1) applications for licenses; and

(2) all reports and all books and records required to be made by any licensee under this Act, including annual audited financial statements and annual reports of mortgage activity;

(g) To adopt rules and regulations necessary and proper for the administration of this Act;

(h) To subpoena documents and witnesses and compel their attendance and production, to administer oaths, and to require the production of any books, papers, or other materials relevant to any inquiry authorized by this Act;

(h-1) To issue orders against any person, if the Director Commissioner has reasonable cause to believe that an unsafe, unsound, or unlawful practice has occurred, is occurring, or is about to occur, if any person has violated, is violating, or is about to violate any law, rule, or written agreement with the Director Commissioner, or for the purpose of administering the provisions of this Act and any rule adopted in accordance with the Act;

(h-2) To address any inquiries to any licensee, or the officers thereof, in relation to its activities and conditions, or any other matter connected with its affairs, and it shall be the duty of any licensee or person so addressed, to promptly reply in writing to such inquiries. The Director Commissioner may also require reports from any licensee at any time the Director Commissioner may deem desirable;

(i) To require information with regard to any license applicant as he or she may deem desirable, with due regard to the paramount interests of the public as to the experience, background, honesty, truthfulness, integrity, and competency of the license applicant as to financial transactions involving primary or subordinate mortgage financing, and where the license applicant is an entity other than an individual, as to the honesty, truthfulness, integrity, and competency of any officer or director of the corporation, association, or other entity, or the members of a partnership;

(j) To examine the books and records of every licensee under this Act at intervals as specified in Section 4-2;

(k) To enforce provisions of this Act;

(l) To levy fees, fines, and charges for services performed in administering this Act; the aggregate of all fees collected by the Director Commissioner on and after the effective date of this Act shall be paid promptly after receipt of the same, accompanied by a detailed statement thereof, into the Savings and Residential Finance Regulatory Fund; the amounts deposited into that Fund shall be used for the ordinary and contingent expenses of the Office of Banks and Real Estate. Nothing in this Act shall prevent continuing the practice of paying expenses involving salaries, retirement, social security, and State-paid insurance of State officers by appropriation from the General Revenue Fund.

(m) To appoint examiners, supervisors, experts, and special assistants as needed to effectively and efficiently administer this Act;

(n) To conduct hearings for the purpose of:

(1) appeals of orders of the Director Commissioner;

(2) suspensions or revocations of licenses, or fining of licensees;

(3) investigating:

(i) complaints against licensees; or

(ii) annual gross delinquency rates; and

(4) carrying out the purposes of this Act;

(o) To exercise exclusive visitorial power over a licensee unless otherwise authorized by this Act or as vested in the courts, or upon prior consultation with the Director Commissioner, a foreign residential mortgage regulator with an appropriate supervisory interest in the parent or affiliate of a licensee;

(p) To enter into cooperative agreements with state regulatory authorities of other states to provide for examination of corporate offices or branches of those states and to accept reports of such examinations;

(q) To assign an examiner or examiners to monitor the affairs of a licensee with whatever frequency the Commissioner determines appropriate and to charge the licensee for reasonable and necessary expenses of the Director Commissioner, if in the opinion of the Director Commissioner an emergency exists or appears likely to occur; and

(r) To impose civil penalties of up to $50 per day against a licensee for failing to respond to a regulatory request or reporting requirement.

(Source: P.A. 93-1018, eff. 1-1-05.)

(205 ILCS 635/4-2) (from Ch. 17, par. 2324-2)

Sec. 4-2. Examination; prohibited activities.

(a) The business affairs of a licensee under this Act shall be examined for compliance with this Act as often as the Director Commissioner deems necessary and proper. The Director Commissioner shall promulgate rules with respect to the frequency and manner of examination. The Director Commissioner shall appoint a suitable person to perform such examination. The Director Commissioner and his appointees may examine the entire books, records, documents, and operations of each licensee and its subsidiary, affiliate, or agent, and may examine any of the licensee's or its subsidiary's, affiliate's, or agent's officers, directors, employees and agents under oath. For purposes of this Section, "agent" includes service providers such as accountants, closing services providers, providers of outsourced services such as call centers, marketing consultants, and loan processors, even if exempt from licensure under this Act.

(b) The Director Commissioner shall prepare a sufficiently detailed report of each licensee's examination, shall issue a copy of such report to each licensee's principals, officers, or directors and shall take appropriate steps to ensure correction of violations of this Act.

(c) Affiliates of a licensee shall be subject to examination by the Director Commissioner on the same terms as the licensee, but only when reports from, or examination of a licensee provides for documented evidence of unlawful activity between a licensee and affiliate benefiting, affecting or deriving from the activities regulated by this Act.

(d) The expenses of any examination of the licensee and affiliates shall be borne by the licensee and assessed by the Commissioner as established by regulation.

(e) Upon completion of the examination, the Director Commissioner shall issue a report to the licensee. All confidential supervisory information, including the examination report and the work papers of the report, shall belong to the Director's Commissioner's office and may not be disclosed to anyone other than the licensee, law enforcement officials or other regulatory agencies that have an appropriate regulatory interest as determined by the Commissioner, or to a party presenting a lawful subpoena to the Office of the Director Commissioner. The Director Commissioner may immediately appeal to the court of jurisdiction the disclosure of such confidential supervisory information and seek a stay of the subpoena pending the outcome of the appeal. Reports required of licensees by the Director Commissioner under this Act and results of examinations performed by the Director Commissioner under this Act shall be the property of only the Director Commissioner, but may be shared with the licensee. Access under this Act to the books and records of each licensee shall be limited to the Director Commissioner and his agents as provided in this Act and to the licensee and its authorized agents and designees. No other person shall have access to the books and records of a licensee under this Act. Any person upon whom a demand for production of confidential supervisory information is made, whether by subpoena, order, or other judicial or administrative process, must withhold production of the confidential supervisory information and must notify the Director Commissioner of the demand, at which time the Director Commissioner is authorized to intervene for the purpose of enforcing the limitations of this Section or seeking the withdrawal or termination of the attempt to compel production of the confidential supervisory information. The Director Commissioner may impose any conditions and limitations on the disclosure of confidential supervisory information that are necessary to protect the confidentiality of such information. Except as authorized by the Director Commissioner, no person obtaining access to confidential supervisory information may make a copy of the confidential supervisory information. The Director Commissioner may condition a decision to disclose confidential supervisory information on entry of a protective order by the court or administrative tribunal presiding in the particular case or on a written agreement of confidentiality. In a case in which a protective order or agreement has already been entered between parties other than the Director Commissioner, the Director Commissioner may nevertheless condition approval for release of confidential supervisory information upon the inclusion of additional or amended provisions in the protective order. The Director Commissioner may authorize a party who obtained the records for use in one case to provide them to another party in another case, subject to any conditions that the Director Commissioner may impose on either or both parties. The requestor shall promptly notify other parties to a case of the release of confidential supervisory information obtained and, upon entry of a protective order, shall provide copies of confidential supervisory information to the other parties.

(f) The Director, deputy directors, and employees of the Division of Banks of the Department of Financial and Professional Regulation Commissioner, deputy commissioners, and employees of the Office of Banks and Real Estate shall be subject to the restrictions provided in Section 2.5 of the Office of Banks and Real Estate Act including, without limitation, the restrictions on (i) owning shares of stock or holding any other equity interest in an entity regulated under this Act or in any corporation or company that owns or controls an entity regulated under this Act; (ii) being an officer, director, employee, or agent of an entity regulated under this Act; and (iii) obtaining a loan or accepting a gratuity from an entity regulated under this Act.

(g) After the initial examination for those licensees whose only mortgage activity is servicing fewer than 1,000 Illinois residential loans, the examination required in subsection (a) may be waived upon submission of a letter from the licensee's independent certified auditor that the licensee serviced fewer than 1,000 Illinois residential loans during the year in which the audit was performed.

(Source: P.A. 93-1018, eff. 1-1-05.)

(205 ILCS 635/4-3) (from Ch. 17, par. 2324-3)

Sec. 4-3. Subpoena power of the Director Commissioner. (a) The Director Commissioner shall have the power to issue and to serve subpoenas and subpoenas duces tecum to compel the attendance of witnesses and the production of all books, accounts, records and other documents and materials relevant to an examination or investigation. The Director Commissioner or his or her duly authorized representative, shall have power to administer oaths and affirmations to any person.

(b) In the event of noncompliance with a subpoena or subpoena duces tecum issued or caused to be issued by the Director Commissioner, the Director Commissioner may petition the circuit court of the county in which the person subpoenaed resides or has its principal place of business for an order requiring the subpoenaed person to appear and testify and to produce such books, accounts, records and other documents as are specified in the subpoena duces tecum. The court may grant injunctive relief restraining the person from advertising, promoting, soliciting, entering into, offering to enter into, continuing, or completing any residential mortgage financing transaction or residential mortgage servicing transaction. The court may grant such other relief, including, but not limited to, the restraint, by injunction or appointment of a receiver, of any transfer, pledge, assignment or other disposition of the person's assets or any concealment, alteration, destruction or other disposition of books, accounts, records or other documents and materials as the court deems appropriate, until the person has fully complied with the subpoena or subpoena duces tecum and the Director Commissioner has completed an investigation or examination.

(c) When it shall appear to the Director Commissioner that the compliance with a subpoena or subpoena duces tecum issued or caused to be issued by the Director Commissioner pursuant to this Section is essential to an investigation or examination, the Director Commissioner, in addition to the other remedies provided for herein, may apply for relief to the circuit court of the county in which the subpoenaed person resides or has its principal place of business. The court shall thereupon direct the issuance of an order against the subpoenaed person requiring sufficient bond conditioned on compliance with the subpoena or subpoena duces tecum. The court shall cause to be endorsed on the order a suitable amount of bond or payment pursuant to which the person named in the order shall be freed, having a due regard to the nature of the case.

(d) In addition, the Director Commissioner may seek a writ of attachment or an equivalent order from the circuit court having jurisdiction over the person who has refused to obey a subpoena, who has refused to give testimony or who has refused to produce the matters described in the subpoena duces tecum.

(Source: P.A. 85-735.)

(205 ILCS 635/4-4) (from Ch. 17, par. 2324-4)

Sec. 4-4. Report Required of Licensee; False Statements; Delay; Penalties.(a) In addition to any reports required under this Act, every licensee shall file such other reports as the Director Commissioner shall request.

(b) Any licensee or any officer, director, employee or agent of any licensee who shall fail to file any reports required by this Act, including those under subsection (a) above, or who shall deliberately, wilfully or knowingly make, subscribe to or cause to be made any false entry with intent to deceive the Director Commissioner or his or her appointees or who shall purposely cause unreasonable delay in filing such reports, shall be guilty of a Class 4 Felony.

(Source: P.A. 85-735.)

(205 ILCS 635/4-5) (from Ch. 17, par. 2324-5)

Sec. 4-5. Suspension, revocation of licenses; fines.

(a) Upon written notice to a licensee, the Director Commissioner may suspend or revoke any license issued pursuant to this Act if he or she shall make a finding of one or more of the following in the notice that:

(1) Through separate acts or an act or a course of conduct, the licensee has violated any provisions of this Act, any rule or regulation promulgated by the Director Commissioner or of any other law, rule or regulation of this State or the United States.

(2) Any fact or condition exists which, if it had existed at the time of the original application for such license would have warranted the Director Commissioner in refusing originally to issue such license.

(3) If a licensee is other than an individual, any ultimate equitable owner, officer, director, or member of the licensed partnership, association, corporation, or other entity has so acted or failed to act as would be cause for suspending or revoking a license to that party as an individual.

(b) No license shall be suspended or revoked, except as provided in this Section, nor shall any licensee be fined without notice of his or her right to a hearing as provided in Section 4-12 of this Act.

(c) The Director Commissioner, on good cause shown that an emergency exists, may suspend any license for a period not exceeding 180 days, pending investigation. Upon a showing that a licensee has failed to meet the experience or educational requirements of Section 2-2 or the requirements of subsection (g) of Section 3-2, the Director Commissioner shall suspend, prior to hearing as provided in Section 4-12, the license until those requirements have been met.

(d) The provisions of subsection (e) of Section 2-6 of this Act shall not affect a licensee's civil or criminal liability for acts committed prior to surrender of a license.

(e) No revocation, suspension or surrender of any license shall impair or affect the obligation of any pre-existing lawful contract between the licensee and any person.

(f) Every license issued under this Act shall remain in force and effect until the same shall have expired without renewal, have been surrendered, revoked or suspended in accordance with the provisions of this Act, but the Director Commissioner shall have authority to reinstate a suspended license or to issue a new license to a licensee whose license shall have been revoked if no fact or condition then exists which would have warranted the Director Commissioner in refusing originally to issue such license under this Act.

(g) Whenever the Director Commissioner shall revoke or suspend a license issued pursuant to this Act or fine a licensee under this Act, he or she shall forthwith execute in duplicate a written order to that effect. The Director Commissioner shall publish notice of such order in the Illinois Register or and post notice of the order on an agency Internet site maintained by the Director Commissioner and shall forthwith serve a copy of such order upon the licensee. Any such order may be reviewed in the manner provided by Section 4-12 of this Act.

(h) When the Director Commissioner finds any person in violation of the grounds set forth in subsection (i), he or she may enter an order imposing one or more of the following penalties:

(1) Revocation of license;

(2) Suspension of a license subject to reinstatement upon satisfying all reasonable conditions the Director Commissioner may specify;

(3) Placement of the licensee or applicant on probation for a period of time and subject to all reasonable conditions as the Director Commissioner may specify;

(4) Issuance of a reprimand;

(5) Imposition of a fine not to exceed $25,000 for each count of separate offense; and

(6) Denial of a license.

(i) The following acts shall constitute grounds for which the disciplinary actions specified in subsection (h) above may be taken:

(1) Being convicted or found guilty, regardless of pendency of an appeal, of a crime in any jurisdiction which involves fraud, dishonest dealing, or any other act of moral turpitude;

(2) Fraud, misrepresentation, deceit or negligence in any mortgage financing transaction;

(3) A material or intentional misstatement of fact on an initial or renewal application;

(4) Failure to follow the Director's Commissioner's regulations with respect to placement of funds in escrow accounts;

(5) Insolvency or filing under any provision of the Bankruptcy Code as a debtor;

(6) Failure to account or deliver to any person any property such as any money, fund, deposit, check, draft, mortgage, or other document or thing of value, which has come into his or her hands and which is not his or her property or which he or she is not in law or equity entitled to retain, under the circumstances and at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery;

(7) Failure to disburse funds in accordance with agreements;

(8) Any misuse, misapplication, or misappropriation of trust funds or escrow funds;

(9) Having a license, or the equivalent, to practice any profession or occupation revoked, suspended, or otherwise acted against, including the denial of licensure by a licensing authority of this State or another state, territory or country for fraud, dishonest dealing or any other act of moral turpitude;

(10) Failure to issue a satisfaction of mortgage when the residential mortgage has been executed and proceeds were not disbursed to the benefit of the mortgagor and when the mortgagor has fully paid licensee's costs and commission;

(11) Failure to comply with any order of the Commissioner or rule made or issued under the provisions of this Act;

(12) Engaging in activities regulated by this Act without a current, active license unless specifically exempted by this Act;

(13) Failure to pay in a timely manner any fee, charge or fine under this Act;

(14) Failure to maintain, preserve, and keep available for examination, all books, accounts or other documents required by the provisions of this Act and the rules of the Director Commissioner;

(15) Refusing, obstructing, evading, or unreasonably delaying an investigation, information request, or examination authorized under this Act, or refusing, obstructing, evading, or unreasonably delaying compliance with the Director's Refusal to permit an investigation or examination of the licensee's or its affiliates' books and records or refusal to comply with the Commissioner's subpoena or subpoena duces tecum;

(16) A pattern of substantially underestimating the maximum closing costs;

(17) Failure to comply with or violation of any provision of this Act.

(j) A licensee shall be subject to the disciplinary actions specified in this Act for violations of subsection (i) by any officer, director, shareholder, joint venture, partner, ultimate equitable owner, or employee of the licensee.

(k) Such licensee shall be subject to suspension or revocation for employee actions only if there is a pattern of repeated violations by employees or the licensee has knowledge of the violations.

(l) Procedure for surrender of license:

(1) The Director Commissioner may, after 10 days notice by certified mail to the licensee at the address set forth on the license, stating the contemplated action and in general the grounds therefor and the date, time and place of a hearing thereon, and after providing the licensee with a reasonable opportunity to be heard prior to such action, fine such licensee an amount not exceeding $25,000 per violation, or revoke or suspend any license issued hereunder if he or she finds that:

(i) The licensee has failed to comply with any provision of this Act or any order, decision, finding, rule, regulation or direction of the Director Commissioner lawfully made pursuant to the authority of this Act; or

(ii) Any fact or condition exists which, if it had existed at the time of the original application for the license, clearly would have warranted the Commissioner in refusing to issue the license.

(2) A surrender of a license Any licensee may surrender a license by delivering to the Commissioner written notice that he or she thereby surrenders such license, but surrender shall not affect the licensee's civil or criminal liability for acts committed prior to surrender or entitle the licensee to a return of any part of the license fee.

(Source: P.A. 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)

(205 ILCS 635/4-6) (from Ch. 17, par. 2324-6)

Sec. 4-6. Investigation of Complaints. The Director Commissioner shall at all times maintain staff and facilities adequate to receive, record and investigate complaints and inquiries made by any person concerning this Act and any licensees under this Act. Each licensee shall open its books, records, documents and offices wherever situated to the Director Commissioner or his or her appointees as needed to facilitate such investigations.

(Source: P.A. 85-735.)

(205 ILCS 635/4-8) (from Ch. 17, par. 2324-8)

Sec. 4-8. Default rate; examination.

(a) The Director Commissioner shall obtain from the U.S. Department of Housing and Urban Development on a semi-annual basis that Department's default claim rates for endorsements issued by that Department.

(b) The Director Commissioner shall conduct an examination of each licensee having a default rate equal to or greater than 5%.

This subsection shall not be construed as a limitation of the Director's Commissioner's examination authority under Section 4-2 of this Act or as otherwise provided in this Act. The Director Commissioner may require a licensee to provide loan default data as the Director Commissioner deems necessary for the proper enforcement of the Act.

(c) The purpose of the examination under subsection (b) shall be to determine whether the default rate of the licensee has resulted from practices which deviate from sound and accepted mortgage underwriting practices, including but not limited to credit fraud, appraisal fraud and property inspection fraud. For the purpose of conducting this examination, the Director Commissioner may accept materials prepared for the U.S. Department of Housing and Urban Development. At the conclusion of the examination, the Director Commissioner shall make his or her findings available to the Residential Mortgage Board.

(d) The Director Commissioner, at his or her discretion, may hold public hearings, or at the direction of the Residential Mortgage Board, shall hold public hearings. Such testimony shall be by a homeowner or mortgagor or his agent, whose residential interest is affected by the activities of the residential mortgage licensee subject to such hearing. At such public hearing, a witness may present testimony on his or her behalf concerning only his or her home, or home mortgage or a witness may authorize a third party to appear on his or her behalf. The testimony shall be restricted to information and comments related to a specific residence or specific residential mortgage application or applications for a residential mortgage or residential loan transaction. The testimony must be preceded by either a letter of complaint or a completed consumer complaint form prescribed by the Commissioner.

(e) The Director Commissioner shall, at the conclusion of the public hearings, release his or her findings and shall also make public any action taken with respect to the licensee. The Director Commissioner shall also give full consideration to the findings of this examination whenever reapplication is made by the licensee for a new license under this Act.

(f) A licensee that is examined pursuant to subsection (b) shall submit to the Director Commissioner a plan which shall be designed to reduce that licensee's default rate to a figure that is less than 5%. The plan shall be implemented by the licensee as approved by the Director Commissioner. A licensee that is examined pursuant to subsection (b) shall report monthly, for a one year period, one, 2, and 3 month defaults.

(g) Whenever the Director Commissioner finds that a licensee's default rate on insured mortgages is unusually high within a particular geographic area, he or she shall require that licensee to submit such information as is necessary to determine whether that licensee's practices have constituted credit fraud, appraisal fraud or property inspection fraud. The Director Commissioner shall promulgate such rules as are necessary to determine whether any licensee's default rate is unusually high within a particular area.

(Source: P.A. 89-355, eff. 1-1-96; 89-626, eff. 8-9-96; 90-301, eff. 8-1-97.)

(205 ILCS 635/4-8.2)

Sec. 4-8.2. Reports of violations. Any person licensed under this Act or any other person may report to the Director Commissioner any information to show that a person subject to this Act is or may be in violation of this Act.

(Source: P.A. 93-561, eff. 1-1-04.)

(205 ILCS 635/4-8.3)

Sec. 4-8.3. Annual reports report of mortgage, brokerage, and servicing activity. On or before March 1 of each year, or by the date selected by the multistate automated licensing system, each licensee, except residential mortgage brokers, shall file a report of its mortgage, brokerage, and servicing activity with the Director Commissioner that shall disclose such information as the Commissioner requires. Exempt entities as defined in subsection (d) of Section 1-4 shall not file the annual reports report of mortgage, brokerage, and servicing activity required by this Section.

(Source: P.A. 93-1018, eff. 1-1-05.)

(205 ILCS 635/4-10) (from Ch. 17, par. 2324-10)

(Text of Section before amendment by P.A. 95-691)

Sec. 4-10. Rules and Regulations of the Director Commissioner. (a) In addition to such powers as may be prescribed by this Act, the Director Commissioner is hereby authorized and empowered to promulgate regulations consistent with the purposes of this Act, including but not limited to:

(1) Such rules and regulations in connection with the activities of licensees as may be necessary and appropriate for the protection of consumers in this State;

(2) Such rules and regulations as may be necessary and appropriate to define improper or fraudulent business practices in connection with the activities of licensees in making mortgage loans;

(3) Such rules and regulations as may define the terms used in this Act and as may be necessary and appropriate to interpret and implement the provisions of this Act; and

(4) Such rules and regulations as may be necessary for the enforcement of this Act.

(b) The Director Commissioner is hereby authorized and empowered to make such specific rulings, demands and findings as he or she may deem necessary for the proper conduct of the mortgage lending industry.

(Source: P.A. 85-735.)

(Text of Section after amendment by P.A. 95-691)

Sec. 4-10. Rules and Regulations of the Director Commissioner.

(a) In addition to such powers as may be prescribed by this Act, the Director Commissioner is hereby authorized and empowered to promulgate regulations consistent with the purposes of this Act, including but not limited to:

(1) Such rules and regulations in connection with the activities of licensees as may be necessary and appropriate for the protection of consumers in this State;

(2) Such rules and regulations as may be necessary and appropriate to define improper or fraudulent business practices in connection with the activities of licensees in making mortgage loans;

(3) Such rules and regulations as may define the terms used in this Act and as may be necessary and appropriate to interpret and implement the provisions of this Act; and

(4) Such rules and regulations as may be necessary for the enforcement of this Act.

(b) The Director Commissioner is hereby authorized and empowered to make such specific rulings, demands and findings as he or she may deem necessary for the proper conduct of the mortgage lending industry.

(c) A person or entity may make a written application to the Department for a written interpretation of this Act. The Department may then, in its sole discretion, choose to issue a written interpretation. To be valid, a written interpretation must be signed by the Secretary, or his or her designated Director of Financial and Professional Regulation, and the Department's General Counsel. A written interpretation expires 2 years after the date that it was issued.

(d) No provision in this Act that imposes liability or establishes violations shall apply to any act taken by a person or entity in conformity with a written interpretation of this Act that is in effect at the time the act is taken, notwithstanding whether the written interpretation is later amended, rescinded, or determined by judicial or other authority to by invalid for any reason.

(Source: P.A. 95-691, eff. 6-1-08.)

(205 ILCS 635/4-11) (from Ch. 17, par. 2324-11)

Sec. 4-11. Costs of Supervision; Examination and Investigative Fees. The expenses of administering this Act, including investigations and examinations provided for in this Act shall be borne by and assessed against entities regulated by this Act. The Director Commissioner shall establish fees by regulation in at least the following categories:

(1) application fees;

(2) investigation of license applicant fees;

(3) examination fees;

(4) contingent fees;

and such other categories as may be required to administer this Act.

(Source: P.A. 85-735.)

(205 ILCS 635/4-12) (from Ch. 17, par. 2324-12)

Sec. 4-12. Appeal and Review. (a) Any person or entity affected by a decision of the Director Commissioner under any provision of this Act may obtain review of such decision within the Office of the Director Commissioner.

(b) The Director Commissioner shall, in accordance with the "Illinois Administrative Procedure Act", promulgate rules and regulations to provide for review within the Office of the Director Commissioner (hereinafter referred to as "agency review") of his or her decisions affecting the rights of entities under this Act. Such review shall provide for, at a minimum:

(1) appointment of a hearing officer other than a regular employee of the Office of the Director Commissioner;

(2) appropriate procedural rules, specific deadlines for filings, and standards of evidence and of proof;

(3) provision for apportioning costs among parties to the appeal.

(c) All final agency determinations of appeals to decisions of the Director Commissioner may be reviewed in accordance with and under the provisions of the "Administrative Review Law". Appeals from all final orders and judgments entered by a court in review of any final administrative decision of the Director Commissioner or of any final agency review of a decision of the Director Commissioner may be taken as in other civil cases.

(Source: P.A. 85-735.)

(205 ILCS 635/4-13) (from Ch. 17, par. 2324-13)

Sec. 4-13. Violations of this Act; Director's Commissioner's Orders. If the Director Commissioner finds, as the result of examination, investigation or review of reports submitted by a licensee that the business and affairs of a licensee are not being conducted in accordance with this Act, the Director Commissioner shall notify the licensee of the correction necessary. Should a licensee fail to correct such violations, the Director Commissioner shall issue an order requiring immediate correction and compliance with this Act, specifying a reasonable date for performance.

The Director Commissioner shall promulgate rules and regulations to provide for an orderly and timely appeal of all orders within the Office of the Director Commissioner. Such rules shall include provision for assessment of fees and costs.

(Source: P.A. 85-735.)

(205 ILCS 635/5-1) (from Ch. 17, par. 2325-1)

Sec. 5-1. The Director Commissioner may promulgate rules with respect to brokering and lending procedures of residential mortgage licensees as necessary to accomplish the purposes of this Act.

(Source: P.A. 85-735.)

(205 ILCS 635/6-3) (from Ch. 17, par. 2326-3)

Sec. 6-3. Appointment of receiver or conservator. When the Director Commissioner makes a finding that a receivership or conservatorship is necessary to protect consumers of a licensee from the consequences of the licensee's failures to comply with this Act or other unsafe and unsound practices, the Director Commissioner shall request the Attorney General of this State to petition the Circuit Court of Cook County, or of the county in which the licensee is located, to appoint a receiver or conservator for purposes of protecting consumers and resolving the affairs of the licensee.

(Source: P.A. 87-1098.)

(205 ILCS 635/7-1)

Sec. 7-1. Registration required; rules and regulations. Beginning 6 months after the effective date of this amendatory Act of the 93rd General Assembly, it is unlawful for any natural person to act or assume to act as a loan originator, as defined in subsection (hh) of Section 1-4, without being registered with the Director Commissioner unless the natural person is exempt under items (1) and (1.5) of subsection (d) of Section 1-4 of this Act. The Director Commissioner shall promulgate rules prescribing the criteria for the registration and regulation of loan originators, including but not limited to, qualifications, fees, examination, education, supervision, and enforcement.

(Source: P.A. 93-561, eff. 1-1-04.)

Section 95. No acceleration or delay. Where this Act makes changes in a statute that is represented in this Act by text that is not yet or no longer in effect (for example, a Section represented by multiple versions), the use of that text does not accelerate or delay the taking effect of (i) the changes made by this Act or (ii) provisions derived from any other Public Act.

Section 950. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 999. Effective date. This Act takes effect January 1, 2009.