95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB1998

 

Introduced 2/7/2008, by Sen. Jacqueline Y. Collins

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Residential Mortgage License Act of 1987. Replaces references to the Commissioner of Banks and Real Estate with the Director of the Division of Banking of the Department of Financial and Professional Regulation throughout the Act. Makes changes in provisions concerning the necessity for a license. Makes changes defining the term "exempt person or entity" and "full service office". Makes changes in provisions concerning the application process for obtaining a license, including provisions concerning a multistate automated licensing system. Makes changes in provisions concerning the application form used to obtain a license. Makes changes in provisions that require specified averments that accompany an application for a license. Makes changes in provisions concerning the Director's refusal to issue a license, including failure to comply with provisions of the multistate automated licensing system. Makes changes in provisions concerning the license issuance and renewal. Makes changes in provisions concerning (i) additional full service offices and (ii) the requirements for posting a license. Makes changes in a provision concerning a licensee's office and staff within the State. Makes changes in provisions requiring that the business affairs of a licensee shall be examined for compliance. Makes changes in provisions concerning the suspension or revocation of a license. Makes changes in provisions concerning annual reports of certain activities. Makes other changes. Contains a nonacceleration clause. Effective January 1, 2009.


LRB095 18639 MJR 44726 b

 

 

A BILL FOR

 

SB1998 LRB095 18639 MJR 44726 b

1     AN ACT concerning regulation.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Residential Mortgage License Act of 1987 is
5 amended by changing Sections 1-3, 1-4, 1-5, 2-2, 2-3, 2-4, 2-5,
6 2-6, 2-7, 2-8, 2-9, 2-11, 3-1, 3-2, 3-3, 3-4, 3-5, 3-9, 4-1,
7 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,
8 4-12, 4-13, 5-1, 6-3, and 7-1 and by adding Section 1-1.5 as
9 follows:
 
10     (205 ILCS 635/1-1.5 new)
11     Sec. 1-1.5. Findings.
12     The General Assembly finds that establishing and
13 implementing an automated multistate licensing system for
14 residential mortgage licensees is consistent with and furthers
15 the Purpose of Act and Policy Statement of Section 1-2. For
16 this purpose, the Director is authorized:
17     (a) to participate in a multistate automated licensing
18 system as the exclusive record collection and maintenance
19 system to apply for, renew, amend, and surrender residential
20 mortgage licenses;
21     (b) to adopt rules as necessary to implement a multistate
22 automated licensing system;
23     (c) to cause criminal history background checks by the

 

 

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1 Illinois State Police and Federal Bureau of Identification to
2 be performed for use in the multistate automated licensing
3 system;
4     (d) to require payments of licensing fees be made to the
5 third-party administrator for the multistate automated
6 licensing system for transfer to the State of Illinois and
7 payment of processing fees for use of the multistate automated
8 licensing system with those processing fees to be retained by
9 the third-party administrator; and
10     (e) to share licensing information in the multistate
11 automated licensing system pursuant to agreement with
12 participating state regulators and to protect licensing
13 information as so required by this Act or other applicable law.
 
14     (205 ILCS 635/1-3)  (from Ch. 17, par. 2321-3)
15     Sec. 1-3. Necessity for License; Scope of Act.
16     (a) No person, partnership, association, corporation or
17 other entity shall engage in the business of brokering,
18 funding, originating, servicing or purchasing of residential
19 mortgage loans without first obtaining a license from the
20 Director Commissioner in accordance with the licensing
21 procedure provided in this Article I and such regulations as
22 may be promulgated by the Director Commissioner. The licensing
23 provisions of this Section shall not apply to any entity
24 engaged solely in commercial mortgage lending or to any person,
25 partnership association, corporation or other entity exempted

 

 

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1 pursuant to Section 1-4, subsection (d), of this Act or in
2 accordance with regulations promulgated by the Director
3 Commissioner hereunder. No person, partnership, association,
4 corporation, or other entity that is not required to obtain a
5 license under this Act shall be granted a license under this
6 Act. The license of any person, partnership, association,
7 corporation, or other entity that is not required to obtain a
8 license under this Act shall be void and shall not be renewed.
9     (b) No person, partnership, association, corporation, or
10 other entity except a licensee under this Act or an entity
11 exempt from licensing pursuant to Section 1-4, subsection (d),
12 of this Act shall do any business under any name or title, or
13 circulate or use any advertising or make any representation or
14 give any information to any person, which indicates or
15 reasonably implies activity within the scope of this Act.
16     (c) The Director Commissioner may, through the Attorney
17 General, request the circuit court of either Cook or Sangamon
18 County to issue an injunction to restrain any person from
19 violating or continuing to violate any of the foregoing
20 provisions of this Section.
21     (d) When the Director Commissioner has reasonable cause to
22 believe that any entity which has not submitted an application
23 for licensure is conducting any of the activities described in
24 subsection (a) hereof, the Director Commissioner shall have the
25 power to examine all books and records of the entity and any
26 additional documentation necessary in order to determine

 

 

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1 whether such entity should become licensed under this Act.
2     (d-1) The Director Commissioner may issue orders against
3 any person if the Commissioner has reasonable cause to believe
4 that an unsafe, unsound, or unlawful practice has occurred, is
5 occurring, or is about to occur, if any person has violated, is
6 violating, or is about to violate any law, rule, or written
7 agreement with the Director Commissioner, or for the purposes
8 of administering the provisions of this Act and any rule
9 adopted in accordance with this Act.
10     (e) Any person, partnership, association, corporation or
11 other entity who violates any provision of this Section commits
12 a business offense and shall be fined an amount not to exceed
13 $25,000.
14     (f) Each person, partnership, association, corporation or
15 other entity conducting activities regulated by this Act shall
16 be issued one license. The person, partnership, association,
17 corporation, or other entity shall apply for a license only
18 under its real name and, if the application is approved, the
19 license shall be issued under and state the real name of the
20 person, partnership, association, corporation, or other
21 entity. In addition to the real name of the licensee, the
22 license shall also state any assumed name under which the
23 licensee intends to operate. A licensee may not operate under
24 an assumed name unless the Department has approved the use of
25 the assumed name and such name is stated on the license in
26 addition to the real name of the licensee. Each office, place

 

 

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1 of business or location at which a residential mortgage
2 licensee conducts any part of his or her business must be
3 recorded with the Director Commissioner pursuant to Section 2-8
4 of this Act.
5     (g) Licensees under this Act shall solicit, broker, fund,
6 originate, service and purchase residential mortgage loans
7 only in conformity with the provisions of this Act and such
8 rules and regulations as may be promulgated by the Director
9 Commissioner.
10     (h) This Act applies to all entities doing business in
11 Illinois as residential mortgage bankers, as defined by "An Act
12 to provide for the regulation of mortgage bankers", approved
13 September 15, 1977, as amended, regardless of whether licensed
14 under that or any prior Act. Any existing residential mortgage
15 lender or residential mortgage broker in Illinois whether or
16 not previously licensed, must operate in accordance with this
17 Act.
18     (i) This Act is a successor Act to and a continuance of the
19 regulation of residential mortgage bankers provided in, "An Act
20 to provide for the regulation of mortgage bankers", approved
21 September 15, 1977, as amended.
22     Entities and persons subject to the predecessor Act shall
23 be subject to this Act from and after its effective date.
24 (Source: P.A. 93-1018, eff. 1-1-05.)
 
25     (205 ILCS 635/1-4)  (from Ch. 17, par. 2321-4)

 

 

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1     Sec. 1-4. Definitions.
2     (a) "Residential real property" or "residential real
3 estate" shall mean real property located in this State improved
4 by a one-to-four family dwelling used or occupied, wholly or
5 partly, as the home or residence of one or more persons and may
6 refer, subject to regulations of the Director Commissioner, to
7 unimproved real property upon which those kinds dwellings are
8 to be constructed.
9     (b) "Making a residential mortgage loan" or "funding a
10 residential mortgage loan" shall mean for compensation or gain,
11 either directly or indirectly, advancing funds or making a
12 commitment to advance funds to a loan applicant for a
13 residential mortgage loan.
14     (c) "Soliciting, processing, placing, or negotiating a
15 residential mortgage loan" shall mean for compensation or gain,
16 either directly or indirectly, accepting or offering to accept
17 an application for a residential mortgage loan, assisting or
18 offering to assist in the processing of an application for a
19 residential mortgage loan on behalf of a borrower, or
20 negotiating or offering to negotiate the terms or conditions of
21 a residential mortgage loan with a lender on behalf of a
22 borrower including, but not limited to, the submission of
23 credit packages for the approval of lenders, the preparation of
24 residential mortgage loan closing documents, including a
25 closing in the name of a broker.
26     (d) "Exempt person or entity" shall mean the following:

 

 

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1         (1) (i) Any banking organization or foreign banking
2     corporation licensed by the Director Illinois Commissioner
3     of Banks and Real Estate or the United States Comptroller
4     of the Currency to transact business in this State; (ii)
5     any national bank, federally chartered savings and loan
6     association, federal savings bank, federal credit union;
7     (iii) any pension trust, bank trust, or bank trust company;
8     (iv) any bank, savings and loan association, savings bank,
9     industrial bank, or credit union organized under the laws
10     of this or any other state; (v) any Illinois Consumer
11     Installment Loan Act licensee; (vi) any insurance company
12     authorized to transact business in this State; (vii) any
13     entity engaged solely in commercial mortgage lending;
14     (viii) any service corporation or subsidiary of a savings
15     and loan association or savings bank organized under the
16     laws of this State, or any other state, or the service
17     corporation or subsidiary of a federally chartered savings
18     and loan association or savings bank having its principal
19     place of business in this State, other than a service
20     corporation or subsidiary licensed or entitled to
21     reciprocity under the Real Estate License Act of 2000; or
22     (ix) any first tier subsidiary of a bank, the charter of
23     which is issued under the Illinois Banking Act by the
24     Illinois Department of Financial and Professional
25     Regulation, Division of Banking, or the charter of which is
26     issued under the banking laws of any other state

 

 

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1     Commissioner of Banks and Real Estate, or the first tier
2     subsidiary of a bank chartered by the United States
3     Comptroller of the Currency and that has its principal
4     place of business in this State, provided that the first
5     tier subsidiary is regularly examined by the Illinois
6     Commissioner of Banks and Real Estate or the Comptroller of
7     the Currency, or a consumer compliance examination is
8     regularly conducted by the Federal Reserve Board.
9         (1.5) Any employee of a person or entity mentioned in
10     item (1) of this subsection.
11         (2) Any person or entity that does not originate
12     mortgage loans in the ordinary course of business making or
13     acquiring residential mortgage loans with his or her or its
14     own funds for his or her or its own investment without
15     intent to make, acquire, or resell more than 10 residential
16     mortgage loans in any one calendar year.
17         (3) Any person employed by a licensee to assist in the
18     performance of the activities regulated by this Act who is
19     compensated in any manner by only one licensee.
20         (4) Any person licensed pursuant to the Real Estate
21     License Act of 2000, who engages only in the taking of
22     applications and credit and appraisal information to
23     forward to a licensee or an exempt entity under this Act
24     and who is compensated by either a licensee or an exempt
25     entity under this Act, but is not compensated by either the
26     buyer (applicant) or the seller.

 

 

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1         (5) Any individual, corporation, partnership, or other
2     entity that originates, services, or brokers residential
3     mortgage loans, as these activities are defined in this
4     Act, and who or which receives no compensation for those
5     activities, subject to the Director's Commissioner's
6     regulations with regard to the nature and amount of
7     compensation.
8         (6) A person who prepares supporting documentation for
9     a residential mortgage loan application taken by a licensee
10     and performs ministerial functions pursuant to specific
11     instructions of the licensee who neither requires nor
12     permits the preparer to exercise his or her discretion or
13     judgment; provided that this activity is engaged in
14     pursuant to a binding, written agreement between the
15     licensee and the preparer that:
16             (A) holds the licensee fully accountable for the
17         preparer's action; and
18             (B) otherwise meets the requirements of this
19         Section and this Act, does not undermine the purposes
20         of this Act, and is approved by the Director
21         Commissioner.
22     (e) "Licensee" or "residential mortgage licensee" shall
23 mean a person, partnership, association, corporation, or any
24 other entity who or which is licensed pursuant to this Act to
25 engage in the activities regulated by this Act.
26     (f) "Mortgage loan" "residential mortgage loan" or "home

 

 

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1 mortgage loan" shall mean a loan to or for the benefit of any
2 natural person made primarily for personal, family, or
3 household use, primarily secured by either a mortgage on
4 residential real property or certificates of stock or other
5 evidence of ownership interests in and proprietary leases from,
6 corporations, partnerships, or limited liability companies
7 formed for the purpose of cooperative ownership of residential
8 real property, all located in Illinois.
9     (g) "Lender" shall mean any person, partnership,
10 association, corporation, or any other entity who either lends
11 or invests money in residential mortgage loans.
12     (h) "Ultimate equitable owner" shall mean a person who,
13 directly or indirectly, owns or controls an ownership interest
14 in a corporation, foreign corporation, alien business
15 organization, trust, or any other form of business organization
16 regardless of whether the person owns or controls the ownership
17 interest through one or more persons or one or more proxies,
18 powers of attorney, nominees, corporations, associations,
19 partnerships, trusts, joint stock companies, or other entities
20 or devices, or any combination thereof.
21     (i) "Residential mortgage financing transaction" shall
22 mean the negotiation, acquisition, sale, or arrangement for or
23 the offer to negotiate, acquire, sell, or arrange for, a
24 residential mortgage loan or residential mortgage loan
25 commitment.
26     (j) "Personal residence address" shall mean a street

 

 

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1 address and shall not include a post office box number.
2     (k) "Residential mortgage loan commitment" shall mean a
3 contract for residential mortgage loan financing.
4     (l) "Party to a residential mortgage financing
5 transaction" shall mean a borrower, lender, or loan broker in a
6 residential mortgage financing transaction.
7     (m) "Payments" shall mean payment of all or any of the
8 following: principal, interest and escrow reserves for taxes,
9 insurance and other related reserves, and reimbursement for
10 lender advances.
11     (n) "Director" "Commissioner" shall mean the Director of
12 the Division of Banking of the Department of Financial and
13 Professional Regulation Commissioner of Banks and Real Estate
14 or a person authorized by the Director, the Division of Banking
15 of the Department of Financial and Professional Regulation
16 Commissioner, the Office of Banks and Real Estate Act, or this
17 Act to act in the Director's Commissioner's stead.
18     (o) "Loan brokering", "brokering", or "brokerage service"
19 shall mean the act of helping to obtain from another entity,
20 for a borrower, a loan secured by residential real estate
21 situated in Illinois or assisting a borrower in obtaining a
22 loan secured by residential real estate situated in Illinois in
23 return for consideration to be paid by either the borrower or
24 the lender including, but not limited to, contracting for the
25 delivery of residential mortgage loans to a third party lender
26 and soliciting, processing, placing, or negotiating

 

 

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1 residential mortgage loans.
2     (p) "Loan broker" or "broker" shall mean a person,
3 partnership, association, corporation, or limited liability
4 company, other than those persons, partnerships, associations,
5 corporations, or limited liability companies exempted from
6 licensing pursuant to Section 1-4, subsection (d), of this Act,
7 who performs the activities described in subsections (c) and
8 (o) of this Section.
9     (q) "Servicing" shall mean the collection or remittance for
10 or the right or obligation to collect or remit for any lender,
11 noteowner, noteholder, or for a licensee's own account, of
12 payments, interests, principal, and trust items such as hazard
13 insurance and taxes on a residential mortgage loan in
14 accordance with the terms of the residential mortgage loan; and
15 includes loan payment follow-up, delinquency loan follow-up,
16 loan analysis and any notifications to the borrower that are
17 necessary to enable the borrower to keep the loan current and
18 in good standing.
19     (r) "Full service office" shall mean an office, provided by
20 the licensee and not subleased from the licensee's employees,
21 and staff in Illinois reasonably adequate to handle efficiently
22 communications, questions, and other matters relating to any
23 application for, or an existing home mortgage secured by
24 residential real estate situated in Illinois with respect to
25 which the licensee is brokering, funding originating,
26 purchasing, or servicing. The management and operation of each

 

 

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1 full service office must include observance of good business
2 practices such as adequate, organized, and accurate books and
3 records; ample phone lines, hours of business, staff training
4 and supervision, and provision for a mechanism to resolve
5 consumer inquiries, complaints, and problems. The Director
6 Commissioner shall issue regulations with regard to these
7 requirements and shall include an evaluation of compliance with
8 this Section in his or her periodic examination of each
9 licensee.
10     (s) "Purchasing" shall mean the purchase of conventional or
11 government-insured mortgage loans secured by residential real
12 estate situated in Illinois from either the lender or from the
13 secondary market.
14     (t) "Borrower" shall mean the person or persons who seek
15 the services of a loan broker, originator, or lender.
16     (u) "Originating" shall mean the issuing of commitments for
17 and funding of residential mortgage loans.
18     (v) "Loan brokerage agreement" shall mean a written
19 agreement in which a broker or loan broker agrees to do either
20 of the following:
21         (1) obtain a residential mortgage loan for the borrower
22     or assist the borrower in obtaining a residential mortgage
23     loan; or
24         (2) consider making a residential mortgage loan to the
25     borrower.
26     (w) "Advertisement" shall mean the attempt by publication,

 

 

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1 dissemination, or circulation to induce, directly or
2 indirectly, any person to enter into a residential mortgage
3 loan agreement or residential mortgage loan brokerage
4 agreement relative to a mortgage secured by residential real
5 estate situated in Illinois.
6     (x) "Residential Mortgage Board" shall mean the
7 Residential Mortgage Board created in Section 1-5 of this Act.
8     (y) "Government-insured mortgage loan" shall mean any
9 mortgage loan made on the security of residential real estate
10 insured by the Department of Housing and Urban Development or
11 Farmers Home Loan Administration, or guaranteed by the Veterans
12 Administration.
13     (z) "Annual audit" shall mean a certified audit of the
14 licensee's books and records and systems of internal control
15 performed by a certified public accountant in accordance with
16 generally accepted accounting principles and generally
17 accepted auditing standards.
18     (aa) "Financial institution" shall mean a savings and loan
19 association, savings bank, credit union, or a bank organized
20 under the laws of Illinois or a savings and loan association,
21 savings bank, credit union or a bank organized under the laws
22 of the United States and headquartered in Illinois.
23     (bb) "Escrow agent" shall mean a third party, individual or
24 entity charged with the fiduciary obligation for holding escrow
25 funds on a residential mortgage loan pending final payout of
26 those funds in accordance with the terms of the residential

 

 

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1 mortgage loan.
2     (cc) "Net worth" shall have the meaning ascribed thereto in
3 Section 3-5 of this Act.
4     (dd) "Affiliate" shall mean:
5         (1) any entity that directly controls or is controlled
6     by the licensee and any other company that is directly
7     affecting activities regulated by this Act that is
8     controlled by the company that controls the licensee;
9         (2) any entity:
10             (A) that is controlled, directly or indirectly, by
11         a trust or otherwise, by or for the benefit of
12         shareholders who beneficially or otherwise control,
13         directly or indirectly, by trust or otherwise, the
14         licensee or any company that controls the licensee; or
15             (B) a majority of the directors or trustees of
16         which constitute a majority of the persons holding any
17         such office with the licensee or any company that
18         controls the licensee;
19         (3) any company, including a real estate investment
20     trust, that is sponsored and advised on a contractual basis
21     by the licensee or any subsidiary or affiliate of the
22     licensee.
23     The Director Commissioner may define by rule and regulation
24 any terms used in this Act for the efficient and clear
25 administration of this Act.
26     (ee) "First tier subsidiary" shall be defined by regulation

 

 

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1 incorporating the comparable definitions used by the Office of
2 the Comptroller of the Currency and the "Director" Illinois
3 Commissioner of Banks and Real Estate.
4     (ff) "Gross delinquency rate" means the quotient
5 determined by dividing (1) the sum of (i) the number of
6 government-insured residential mortgage loans funded or
7 purchased by a licensee in the preceding calendar year that are
8 delinquent and (ii) the number of conventional residential
9 mortgage loans funded or purchased by the licensee in the
10 preceding calendar year that are delinquent by (2) the sum of
11 (i) the number of government-insured residential mortgage
12 loans funded or purchased by the licensee in the preceding
13 calendar year and (ii) the number of conventional residential
14 mortgage loans funded or purchased by the licensee in the
15 preceding calendar year.
16     (gg) "Delinquency rate factor" means the factor set by rule
17 of the "Director" Commissioner that is multiplied by the
18 average gross delinquency rate of licensees, determined
19 annually for the immediately preceding calendar year, for the
20 purpose of determining which licensees shall be examined by the
21 "Director" Commissioner pursuant to subsection (b) of Section
22 4-8 of this Act.
23     (hh) "Loan originator" means any natural person who, for
24 compensation or in the expectation of compensation, either
25 directly or indirectly makes, offers to make, solicits, places,
26 or negotiates a residential mortgage loan.

 

 

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1     (ii) "Confidential supervisory information" means any
2 report of examination, visitation, or investigation prepared
3 by the "Director" Commissioner under this Act, any report of
4 examination visitation, or investigation prepared by the state
5 regulatory authority of another state that examines a licensee,
6 any document or record prepared or obtained in connection with
7 or relating to any examination, visitation, or investigation,
8 and any record prepared or obtained by the Director
9 Commissioner to the extent that the record summarizes or
10 contains information derived from any report, document, or
11 record described in this subsection. "Confidential supervisory
12 information" does not include any information or record
13 routinely prepared by a licensee and maintained in the ordinary
14 course of business or any information or record that is
15 required to be made publicly available pursuant to State or
16 federal law or rule.
17 (Source: P.A. 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)
 
18     (205 ILCS 635/1-5)  (from Ch. 17, par. 2321-5)
19     Sec. 1-5. Residential Mortgage Board.
20     (a) Board composition, compensation. There is created the
21 Residential Mortgage Board composed of 5 members appointed by
22 the Director of the Division of Banks of the Department of
23 Financial and Professional Regulation Commissioner of Banks
24 and Real Estate. The majority of persons on the Board shall
25 have no financial interest in any residential mortgage business

 

 

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1 and one member shall be a representative of the Mortgage
2 Banking Trade Association and one member shall be a
3 representative of the Mortgage Broker Trade Association.
4 Members of the Board serving on the effective date of this
5 amendatory Act of 1996 shall continue to serve their unexpired
6 terms as members of the Residential Mortgage Board. Thereafter,
7 on or before January 15 of each year, the Director Commissioner
8 shall appoint one or more board members, as shall be necessary
9 to maintain a 5 member Board, whose terms shall be for 3 years
10 commencing February 1 of the year in which they are
11 respectively appointed.
12     If a vacancy occurs on the Residential Mortgage Board, the
13 Director Commissioner shall within 60 days appoint a new member
14 who shall hold office for the remainder of the vacated term.
15     The Board shall meet at the call of the chairman, who along
16 with a Secretary, shall be selected by the Board from among its
17 members.
18     The members of the Board serve at the pleasure of the
19 Director Commissioner.
20     (b) Duties of Board. The Residential Mortgage Board shall
21 assist the Director Commissioner by:
22         (1) submitting recommendations to the Director
23     Commissioner for the efficient administration of this Act;
24     and
25         (2) performing other duties as are prescribed by the
26     Director Commissioner.

 

 

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1     (c) Conflict of interest declarations. Each member of the
2 Residential Mortgage Board shall file annually, no later than
3 February 1, with the Director Commissioner a statement of his
4 or her current business transactions or other affiliations with
5 any licensee under this Act. The Director Commissioner may
6 adopt rules to avoid conflicts of interest on the part of
7 members of the Residential Mortgage Board in connection with
8 their position on the Board.
9 (Source: P.A. 93-1018, eff. 1-1-05.)
 
10     (205 ILCS 635/2-2)  (from Ch. 17, par. 2322-2)
11     Sec. 2-2. Application process; investigation; fee.
12     (a) The Director Commissioner shall issue a license upon
13 completion of all of the following:
14         (1) The filing of an application for license with the
15     Director or a multistate automated licensing system
16     approved by the Director. If an application is filed with
17     an approved multistate automated licensing system, then
18     the Director shall issue a license upon completion of the
19     multistate automated licensing system.
20         (2) The filing with the Director Commissioner of a
21     listing of judgments entered against, and bankruptcy
22     petitions by, the license applicant for the preceding 10
23     years.
24         (3) The payment, in certified funds, of investigation
25     and application fees, the total of which shall be in an

 

 

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1     amount equal to $2,700 annually, however, alternatively a
2     licensing fee equal to $2,700 shall be paid through an
3     approved credit card or Automated Clearing House (ACH)
4     payment to the multistate automated licensing system. The
5     Director the Commissioner may increase the investigation
6     and application fees by rule as provided in Section 4-11.
7         (4) Except for a broker applying to renew a license,
8     the filing of an audited balance sheet including all
9     footnotes prepared by a certified public accountant in
10     accordance with generally accepted accounting principles
11     and generally accepted auditing principles which evidences
12     that the applicant meets the net worth requirements of
13     Section 3-5.
14         (5) The filing of proof satisfactory to the Director
15     Commissioner that the applicant, the members thereof if the
16     applicant is a partnership or association, the members or
17     managers thereof that retain any authority or
18     responsibility under the operating agreement if the
19     applicant is a limited liability company, or the officers
20     thereof if the applicant is a corporation have 3 years
21     experience preceding application in real estate finance.
22     Instead of this requirement, the applicant and the
23     applicant's officers or members, as applicable, may
24     satisfactorily complete a program of education in real
25     estate finance and fair lending, as approved by the
26     Director Commissioner, prior to receiving the initial

 

 

SB1998 - 21 - LRB095 18639 MJR 44726 b

1     license. The Director Commissioner shall promulgate rules
2     regarding proof of experience requirements and educational
3     requirements and the satisfactory completion of those
4     requirements. The Commissioner may establish by rule a list
5     of duly licensed professionals and others who may be exempt
6     from this requirement.
7         (6) An investigation of the averments required by
8     Section 2-4, which investigation must allow the Director
9     Commissioner to issue positive findings stating that the
10     financial responsibility, experience, character, and
11     general fitness of the license applicant and of the members
12     thereof if the license applicant is a partnership or
13     association, of the officers and directors thereof if the
14     license applicant is a corporation, and of the managers and
15     members that retain any authority or responsibility under
16     the operating agreement if the license applicant is a
17     limited liability company are such as to command the
18     confidence of the community and to warrant belief that the
19     business will be operated honestly, fairly and efficiently
20     within the purpose of this Act. If the Director
21     Commissioner shall not so find, he or she shall not issue
22     such license, and he or she shall notify the license
23     applicant of the denial.
24     The Director Commissioner may impose conditions on a
25 license if the Director Commissioner determines that the
26 conditions are necessary or appropriate. These conditions

 

 

SB1998 - 22 - LRB095 18639 MJR 44726 b

1 shall be imposed in writing and shall continue in effect for
2 the period prescribed by the Director Commissioner.
3     (b) All licenses shall be issued in duplicate with one copy
4 being transmitted to the license applicant or license status
5 may be posted on the multistate automated licensing system and
6 the second being retained with the Commissioner.
7     Upon receipt of such license, a residential mortgage
8 licensee shall be authorized to engage in the business
9 regulated by this Act. Such license shall remain in full force
10 and effect until it expires without renewal, is surrendered by
11 the licensee or revoked or suspended as hereinafter provided.
12 (Source: P.A. 93-32, eff. 7-1-03; 93-1018, eff. 1-1-05.)
 
13     (205 ILCS 635/2-3)  (from Ch. 17, par. 2322-3)
14     Sec. 2-3. Application form.
15     (a) Application for a residential mortgage license must be
16 made in accordance with Section 2-6 and the requirements of the
17 multistate automated licensing system approved by the
18 Director. The application shall be in writing, under oath, and
19 on a form obtained from and prescribed by the Director, or may
20 be submitted electronically, with attestation, to the
21 multistate automated licensing system Commissioner.
22     (b) The application shall contain the name and complete
23 business and residential address or addresses of the license
24 applicant. If the license applicant is a partnership,
25 association, corporation or other form of business

 

 

SB1998 - 23 - LRB095 18639 MJR 44726 b

1 organization, the application shall contain the names and
2 complete business and residential addresses of each member,
3 director and principal officer thereof. Such application shall
4 also include a description of the activities of the license
5 applicant, in such detail and for such periods, as the Director
6 Commissioner may require, including all of the following:
7         (1) An affirmation of financial solvency noting such
8     capitalization requirements as may be required by the
9     Director Commissioner, and access to such credit as may be
10     required by the Director Commissioner.
11         (2) An affirmation that the license applicant or its
12     members, directors or principals as may be appropriate, are
13     at least 18 years of age.
14         (3) Information as to the character, fitness,
15     financial and business responsibility, background,
16     experience, and criminal record of any (i) person, entity,
17     or ultimate equitable owner that owns or controls, directly
18     or indirectly, 10% or more of any class of stock of the
19     license applicant; (ii) person, entity, or ultimate
20     equitable owner that is not a depository institution, as
21     defined in Section 1007.50 of the Savings Bank Act, that
22     lends, provides, or infuses, directly or indirectly, in any
23     way, funds to or into a license applicant, in an amount
24     equal to or more than 10% of the license applicant's net
25     worth; (iii) person, entity, or ultimate equitable owner
26     that controls, directly or indirectly, the election of 25%

 

 

SB1998 - 24 - LRB095 18639 MJR 44726 b

1     or more of the members of the board of directors of a
2     license applicant; or (iv) person, entity, or ultimate
3     equitable owner that the Director Commissioner finds
4     influences management of the license applicant.
5         (4) Upon written request by the licensee and
6     notwithstanding the provisions of paragraphs (1), (2), and
7     (3) of this subsection, the Director Commissioner may
8     permit the licensee to omit all or part of the information
9     required by those paragraphs if, in lieu of the omitted
10     information, the licensee submits an affidavit stating
11     that the information submitted on the licensee's previous
12     renewal application is still true and accurate. The
13     Director Commissioner may promulgate rules prescribing the
14     form and content of the affidavit that are necessary to
15     accomplish the purposes of this Section.
16         (5) Such other information as required by regulations
17     of the Director Commissioner.
18         In the event the information required by the multistate
19     automated licensing system, as adopted by the Director,
20     conflicts with any information required in this subsection
21     (b), the requirements of the multistate automated
22     licensing system as adopted shall prevail.
23 (Source: P.A. 89-355, eff. 8-17-95.)
 
24     (205 ILCS 635/2-4)  (from Ch. 17, par. 2322-4)
25     Sec. 2-4. Averments of Licensee. Each application for

 

 

SB1998 - 25 - LRB095 18639 MJR 44726 b

1 license or for the renewal of a license shall be accompanied by
2 the following averments stating that the applicant:
3         (a) Will maintain at least one full service office
4     within the State of Illinois pursuant to Section 3-4 of
5     this Act;
6         (b) Will maintain staff reasonably adequate to meet the
7     requirements of Section 3-4 of this Act;
8         (c) Will keep and maintain for 36 months the same
9     written records as required by the federal Equal Credit
10     Opportunity Act, and any other information required by
11     regulations of the Director Commissioner regarding any
12     home mortgage in the course of the conduct of its
13     residential mortgage business;
14         (d) Will file with the Director, or multistate
15     automated licensing system Commissioner, when due, any
16     report or reports which it is required to file under any of
17     the provisions of this Act;
18         (e) Will not engage, whether as principal or agent, in
19     the practice of rejecting residential mortgage
20     applications without reasonable cause, or varying terms or
21     application procedures without reasonable cause, for home
22     mortgages on real estate within any specific geographic
23     area from the terms or procedures generally provided by the
24     licensee within other geographic areas of the State;
25         (f) Will not engage in fraudulent home mortgage
26     underwriting practices;

 

 

SB1998 - 26 - LRB095 18639 MJR 44726 b

1         (g) Will not make payment, whether directly or
2     indirectly, of any kind to any in house or fee appraiser of
3     any government or private money lending agency with which
4     an application for a home mortgage has been filed for the
5     purpose of influencing the independent judgment of the
6     appraiser with respect to the value of any real estate
7     which is to be covered by such home mortgage;
8         (h) Has filed tax returns (State and Federal) for the
9     past 3 years or filed as required by the Director with the
10     Commissioner an accountant's or attorney's statement as to
11     why no return was filed;
12         (i) Will not engage in any discrimination or redlining
13     activities prohibited by Section 3-8 of this Act;
14         (j) Will not knowingly make any false promises likely
15     to influence or persuade, or pursue a course of
16     misrepresentation and false promises through agents,
17     solicitors, advertising or otherwise;
18         (k) Will not knowingly misrepresent, circumvent or
19     conceal, through whatever subterfuge or device, any of the
20     material particulars or the nature thereof, regarding a
21     transaction to which it is a party to the injury of another
22     party thereto;
23         (l) Will disburse funds in accordance with its
24     agreements;
25         (m) Has not committed a crime against the law of this
26     State, any other state or of the United States, involving

 

 

SB1998 - 27 - LRB095 18639 MJR 44726 b

1     moral turpitude, fraudulent or dishonest dealing, and that
2     no final judgment has been entered against it in a civil
3     action upon grounds of fraud, misrepresentation or deceit
4     which has not been previously reported to the Director
5     Commissioner;
6         (n) Will account or deliver to the owner upon request
7     any person any personal property such as money, fund,
8     deposit, check, draft, mortgage, other document or thing of
9     value, which has come into its possession, and which is not
10     its property, or which it is not in law or equity entitled
11     to retain under the circumstances, at the time which has
12     been agreed upon or is required by law, or, in the absence
13     of a fixed time, upon demand of the person entitled to such
14     accounting and delivery;
15         (o) Has not engaged in any conduct which would be cause
16     for denial of a license;
17         (p) Has not become insolvent;
18         (q) Has not submitted an application for a license
19     under this Act which contains a material misstatement;
20         (r) Has not demonstrated by course of conduct,
21     negligence or incompetence in performing any act for which
22     it is required to hold a license under this Act;
23         (s) Will advise the Director Commissioner in writing,
24     or the multistate automated licensing system by electronic
25     means, of any changes to the information submitted on the
26     most recent application for license within 30 days of said

 

 

SB1998 - 28 - LRB095 18639 MJR 44726 b

1     change, or by the date required for entry of changes to the
2     multistate automated licensing system. The written notice
3     must be signed in the same form as the application for
4     license being amended;
5         (t) Will comply with the provisions of this Act, or
6     with any lawful order, rule or regulation made or issued
7     under the provisions of this Act;
8         (u) Will submit to periodic examination by the Director
9     Commissioner as required by this Act;
10         (v) Will advise the Director Commissioner in writing of
11     judgments entered against, and bankruptcy petitions by,
12     the license applicant within 5 days of occurrence;
13         (w) Will advise the Director Commissioner in writing
14     within 30 days of any request made to when the license
15     applicant requests a licensee under this Act to repurchase
16     a loan in a manner that completely and clearly identifies
17     to whom the request was made, the loans involved, and the
18     reason for the request , and the circumstances therefor;
19         (x) Will advise the Director Commissioner in writing
20     within 30 days of any request from any entity when the
21     license applicant is requested by another entity to
22     repurchase a loan in a manner that completely and clearly
23     identifies who made the request, the loans involved, and
24     the reason for the request , and the circumstances therefor;
25         (y) Will at all times act in a manner consistent with
26     subsections (a) and (b) of Section 1-2 of this Act; and

 

 

SB1998 - 29 - LRB095 18639 MJR 44726 b

1         (z) Will not knowingly hire or employ a loan originator
2     who is not registered with the Director Commissioner as
3     required under Section 7-1 of this Act.
4     A licensee who fails to fulfill obligations of an averment,
5 to comply with averments made, or otherwise violates any of the
6 averments made under this Section shall be subject to the
7 penalties in Section 4-5 of this Act.
8 (Source: P.A. 95-331, eff. 8-21-07.)
 
9     (205 ILCS 635/2-5)  (from Ch. 17, par. 2322-5)
10     Sec. 2-5. Refusal to Issue License. The Director
11 Commissioner shall refuse to license or renew a license if:
12         (1) it is determined that the applicant is not in
13     compliance with any provisions of the Act or the provisions
14     of the multistate automated licensing system as approved by
15     the Director; or
16         (2) there is substantial continuity between the
17     applicant and any violator of this Act; or
18         (3) the Director Commissioner cannot make the findings
19     specified in Section 2-2, subsection (a), of this Act.
20 (Source: P.A. 86-137; 87-642.)
 
21     (205 ILCS 635/2-6)  (from Ch. 17, par. 2322-6)
22     Sec. 2-6. License issuance and renewal; fee.
23     (a) Beginning July 1, 2003, licenses shall be renewed every
24 year on the anniversary of the date of issuance of the original

 

 

SB1998 - 30 - LRB095 18639 MJR 44726 b

1 license, or if the multistate automated licensing system is
2 approved, then on the common renewal date selected for the
3 multistate automated licensing system. Properly completed
4 renewal application forms and filing fees must be received by
5 the Director Commissioner 60 days prior to the renewal date, or
6 if the multistate automated licensing system is approved, then
7 by the date of receipt selected for the multistate automated
8 licensing system.
9     (b) It shall be the responsibility of each licensee to
10 accomplish renewal of its license; failure of the licensee to
11 receive renewal forms or electronic notice absent a request
12 sent by certified mail for such forms will not waive said
13 responsibility. Failure by a licensee to submit a properly
14 completed renewal application form, or complete renewal on the
15 multistate automated licensing system, and pay fees in a timely
16 fashion, absent a written extension from the Director
17 Commissioner, will result in the assessment of additional fees,
18 as follows:
19         (1) A fee of $750 will be assessed to the licensee 30
20     days after the proper renewal date and $1,500 each month
21     thereafter, or late fees as determined by the Director in
22     conjunction with the multistate automated licensing
23     system, until the license is either renewed or expires
24     pursuant to Section 2-6, subsections (c) and (d), of this
25     Act.
26         (2) Such fee will be assessed without prior notice to

 

 

SB1998 - 31 - LRB095 18639 MJR 44726 b

1     the licensee, but will be assessed only in cases wherein
2     the Director Commissioner has in his or her possession
3     documentation of the licensee's continuing activity for
4     which the unrenewed license was issued.
5     (c) A license which is not renewed by the date required in
6 this Section shall automatically become inactive. No activity
7 regulated by this Act shall be conducted by the licensee when a
8 license becomes inactive. The Director Commissioner may
9 require the licensee to provide a plan for the disposition of
10 any residential mortgage loans not closed or funded when the
11 license becomes inactive. The Director Commissioner may allow a
12 licensee with an inactive license to conduct activities
13 regulated by this Act for the sole purpose of assisting
14 borrowers in the closing or funding of loans for which the loan
15 application was taken from a borrower while the license was
16 active. An inactive license may be reactivated by the Director,
17 or by the multistate automated licensing system at the
18 direction of the Director, Commissioner upon payment of the
19 renewal fee, and payment of a reactivation fee equal to the
20 renewal fee.
21     (d) A license which is not renewed within one year of
22 becoming inactive shall expire.
23     (e) A licensee ceasing an activity or activities regulated
24 by this Act and desiring to no longer be licensed shall so
25 inform the Director Commissioner in writing and, at the same
26 time, convey the license and all other symbols or indicia of

 

 

SB1998 - 32 - LRB095 18639 MJR 44726 b

1 licensure, or request a license status change on the multistate
2 automated licensing system. The licensee shall include a plan
3 for the withdrawal from regulated business, including a
4 timetable for the disposition of the business and comply with
5 surrender guidelines of the Director to ensure proper surrender
6 of the license. Upon completion of all requirements receipt of
7 such written notice, the Director Commissioner shall issue a
8 certified statement canceling the license or the surrendered or
9 cancelled license status shall be posted on the multistate
10 automated licensing system.
11 (Source: P.A. 93-32, eff. 7-1-03; 93-561, eff. 1-1-04; 93-1018,
12 eff. 1-1-05.)
 
13     (205 ILCS 635/2-7)  (from Ch. 17, par. 2322-7)
14     Sec. 2-7. Waiver of licensing fee. The Director
15 Commissioner may waive the licensing fee upon receipt of:
16     (a) an application for a residential mortgage license in
17 Illinois,
18     (b) an addendum requesting waiver of the fee stating the
19 grounds in support of such waiver, including but not limited
20 to, not for profit status, bankruptcy or the showing of undue
21 hardship, and
22     (c) in case of an out-of-state servicer of loans in
23 Illinois, the following documentation is required:
24         (1) A verification that the firm services only 100 or
25     fewer loans secured by residential real estate situated in

 

 

SB1998 - 33 - LRB095 18639 MJR 44726 b

1     Illinois;
2         (2) An agreement not to originate, purchase or acquire
3     additional servicing of loans secured by residential real
4     estate situated in Illinois;
5         (3) An agreement to maintain a dedicated toll free
6     (800) number for exclusive use by the licensee's Illinois
7     customers;
8         (4) An agreement to provide a written notice at least
9     annually to the licensee's Illinois customers advising
10     them of the dedicated toll free (800) number; and to
11     furnish the Director Commissioner with a copy of such
12     written notice.
13     A request for waiver of the filing fee must be submitted
14 each year in conjunction with the license renewal procedure.
15 (Source: P.A. 90-301, eff. 8-1-97.)
 
16     (205 ILCS 635/2-8)  (from Ch. 17, par. 2322-8)
17     Sec. 2-8. Additional Full-service Offices.
18     (a) A licensee may apply for authority to open and maintain
19 additional full-service offices by:
20     (1) Giving the Director or multistate automated licensing
21 system Commissioner prior notice of its intention in such form
22 as shall be prescribed by the Commissioner.
23     (2) Payment of a fee to be established by regulation.
24     (b) Upon receipt of the notice and fee required in
25 subsection (a) above, the Commissioner shall issue a

 

 

SB1998 - 34 - LRB095 18639 MJR 44726 b

1 certificate for the additional full-service office, or the
2 license status shall be posted to the multistate automated
3 licensing system.
4     (c) The certificate, if issued by the Director, shall be
5 conspicuously posted in the respective additional full-service
6 offices.
7 (Source: P.A. 85-735.)
 
8     (205 ILCS 635/2-9)  (from Ch. 17, par. 2322-9)
9     Sec. 2-9. Posting of license. The license of a licensee
10 whose home office is within the State of Illinois or of an
11 out-of-state licensee, if issued by the Director, shall be
12 conspicuously posted in every office of the licensee located in
13 Illinois. Out-of-state licensees without an Illinois office
14 shall produce the license, if issued, upon request. Licensees
15 originating loans on the Internet shall post on their Internet
16 web site their license number and the address and telephone
17 number of the Director Commissioner. The license shall state
18 the full name and address of the licensee. The license shall
19 not be transferable or assignable. A separate certificate may
20 shall be issued for posting in each full service Illinois
21 office.
22 (Source: P.A. 91-586, eff. 8-14-99.)
 
23     (205 ILCS 635/2-11)  (from Ch. 17, par. 2322-11)
24     Sec. 2-11. Miscellaneous fees. In addition to any license

 

 

SB1998 - 35 - LRB095 18639 MJR 44726 b

1 fee collected under this Act, the Director Commissioner shall
2 by rule and regulation establish a schedule to apply to
3 assessment and collection of necessary contingent and
4 miscellaneous fees.
5 (Source: P.A. 85-735.)
 
6     (205 ILCS 635/3-1)  (from Ch. 17, par. 2323-1)
7     Sec. 3-1. Bonds of licensees.
8     (a) Every licensee, with respect to any person appointed or
9 elected to any position requiring the receipt of payment,
10 management, or use of money belonging to a residential mortgage
11 licensee engaged in the activities of originating, servicing,
12 or purchasing mortgage loans or whose duties permit him or her
13 to have access to or custody of any of its money or securities
14 or custody of any money or securities belonging to third
15 parties or whose duties permit him or her regularly to make
16 entries in the books or other records of a licensee, shall,
17 before assuming his or her duties, maintain a fidelity bond in
18 the amount of $100,000 by some fidelity insurance company
19 licensed to do business in this State.
20     (b) Each bond shall be for any loss the licensee may
21 sustain in money or other property through the commission of
22 any dishonest or criminal act or omission by any person
23 required to be bonded, whether committed alone or in concert
24 with another. The bond shall be in the form and amount approved
25 by the Director Commissioner who may at any time require one or

 

 

SB1998 - 36 - LRB095 18639 MJR 44726 b

1 more additional bonds. A true copy of every bond, including all
2 riders and endorsements executed subsequent to the effective
3 date of the bond, shall be filed at all times with the Director
4 Commissioner. Each bond shall provide that a cancellation
5 thereof shall not become effective unless and until 30 days
6 notice in writing first shall have been given to the Director
7 Commissioner unless he or she shall have approved the
8 cancellation earlier. If the Director Commissioner believes
9 the licensee's business is being conducted in an unsafe manner
10 due to the lack of bonds or the inadequacy of bonds, he or she
11 may proceed against the licensee as provided for in Section
12 4-5.
13     (c) All licensees shall maintain a bond in accordance with
14 this subsection. Each bond shall be for the recovery of
15 expenses, fines, or fees due to or levied by the Director
16 Commissioner in accordance with this Act. The bond shall be
17 payable when the licensee fails to comply with any provisions
18 of this Act and shall be in the form of a surety or licensure
19 bond in the amount and form as prescribed by the Director
20 Commissioner pursuant to rules and regulations. The bond shall
21 be payable to the Division of Banking of the Department of
22 Financial and Professional Regulation Office of Banks and Real
23 Estate and shall be issued by some insurance company authorized
24 to do business in this State. A copy of the bond, including any
25 and all riders and endorsements executed subsequent to the
26 effective date of the bond, shall be placed on file with the

 

 

SB1998 - 37 - LRB095 18639 MJR 44726 b

1 Division of Banking of the Department of Financial and
2 Professional Regulation Office of Banks and Real Estate within
3 10 days of the execution thereof.
4     (d) The Director Commissioner may promulgate rules with
5 respect to bonding requirements for residential mortgage
6 licensees that are reasonable and necessary to accomplish the
7 purposes of this Act.
8 (Source: P.A. 89-508, eff. 7-3-96.)
 
9     (205 ILCS 635/3-2)  (from Ch. 17, par. 2323-2)
10     Sec. 3-2. Annual audit.
11     (a) At the licensee's fiscal year-end, but in no case more
12 than 12 months after the last audit conducted pursuant to this
13 Section, except as otherwise provided in this Section, it shall
14 be mandatory for each residential mortgage licensee to cause
15 its books and accounts to be audited by a certified public
16 accountant licensed under the Illinois Public Accounting Act or
17 by an equivalent state licensing law not connected with such
18 licensee. The books and records of all licensees under this Act
19 shall be maintained on an accrual basis. The audit must be
20 sufficiently comprehensive in scope to permit the expression of
21 an opinion on the financial statements, which must be prepared
22 in accordance with generally accepted accounting principles,
23 and must be performed in accordance with generally accepted
24 auditing standards. Notwithstanding the requirements of this
25 subsection, a licensee that is a first tier subsidiary may

 

 

SB1998 - 38 - LRB095 18639 MJR 44726 b

1 submit audited consolidated financial statements of its parent
2 as long as the consolidated statements are supported by
3 consolidating statements. The licensee's chief financial
4 officer shall attest to the licensee's financial statements
5 disclosed in the consolidating statements.
6     (b) As used herein, the term "expression of opinion"
7 includes either (1) an unqualified opinion, (2) a qualified
8 opinion, (3) a disclaimer of opinion, or (4) an adverse
9 opinion.
10     (c) If a qualified or adverse opinion is expressed or if an
11 opinion is disclaimed, the reasons therefore must be fully
12 explained. An opinion, qualified as to a scope limitation,
13 shall not be acceptable.
14     (d) The most recent audit report shall be filed with the
15 Director Commissioner within 90 days after the end of the
16 licensee's fiscal year. The report filed with the Director
17 Commissioner shall be certified by the certified public
18 accountant conducting the audit. The Director Commissioner may
19 promulgate rules regarding late audit reports.
20     (e) If any licensee required to make an audit shall fail to
21 cause an audit to be made, the Director Commissioner shall
22 cause the same to be made by a certified public accountant at
23 the licensee's expense. The Director Commissioner shall select
24 such certified public accountant by advertising for bids or by
25 such other fair and impartial means as he or she establishes by
26 regulation.

 

 

SB1998 - 39 - LRB095 18639 MJR 44726 b

1     (f) In lieu of the audit or compilation financial statement
2 required by this Section, a licensee shall submit and the
3 Director Commissioner may accept any audit made in conformance
4 with the audit requirements of the U.S. Department of Housing
5 and Urban Development.
6     (g) With respect to licensees who solely broker residential
7 mortgage loans as defined in subsection (o) of Section 1-4,
8 instead of the audit required by this Section, the Director
9 Commissioner may accept compilation financial statements
10 prepared at least every 12 months, and the compilation
11 financial statement must be prepared by an independent
12 certified public accountant licensed under the Illinois Public
13 Accounting Act or by an equivalent state licensing law with
14 full disclosure in accordance with generally accepted
15 accounting principals and must be submitted within 90 days
16 after the end of the licensee's fiscal year. If a licensee
17 under this Section fails to file a compilation as required, the
18 Director Commissioner shall cause an audit of the licensee's
19 books and accounts to be made by a certified public accountant
20 at the licensee's expense. The Director Commissioner shall
21 select the certified public accountant by advertising for bids
22 or by such other fair and impartial means as he or she
23 establishes by rule. A licensee who files false or misleading
24 compilation financial statements is guilty of a business
25 offense and shall be fined not less than $5,000.
26     (h) The workpapers of the certified public accountants

 

 

SB1998 - 40 - LRB095 18639 MJR 44726 b

1 employed by each licensee for purposes of this Section are to
2 be made available to the Director Commissioner or the
3 Director's Commissioner's designee upon request and may be
4 reproduced by the Director Commissioner or the Director's
5 Commissioner's designee to enable to the Director Commissioner
6 to carry out the purposes of this Act.
7     (i) Notwithstanding any other provision of this Section, if
8 a licensee relying on subsection (g) of this Section causes its
9 books to be audited at any other time or causes its financial
10 statements to be reviewed, a complete copy of the audited or
11 reviewed financial statements shall be delivered to the
12 Director Commissioner at the time of the annual license renewal
13 payment following receipt by the licensee of the audited or
14 reviewed financial statements. All workpapers shall be made
15 available to the Director Commissioner upon request. The
16 financial statements and workpapers may be reproduced by the
17 Director Commissioner or the Director's Commissioner's
18 designee to carry out the purposes of this Act.
19 (Source: P.A. 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)
 
20     (205 ILCS 635/3-3)  (from Ch. 17, par. 2323-3)
21     Sec. 3-3. Advertising. In addition to such other rules,
22 regulations and policies as the Director Commissioner may
23 promulgate to effectuate the purpose of this Act, the Director
24 Commissioner shall prescribe regulations governing the
25 advertising of mortgage loans, including without limitation,

 

 

SB1998 - 41 - LRB095 18639 MJR 44726 b

1 the following requirements:
2     (a) Advertising for loans transacted under this Act may not
3 be false, misleading or deceptive. No entity whose activities
4 are regulated under this Act may advertise in any manner so as
5 to indicate or imply that its interest rates or charges for
6 loans are in any way "recommended", "approved", "set" or
7 "established" by the State or by this Act. The Director
8 Commissioner may issue a cease and desist order for any
9 violation of this Section.
10     (b) All advertisements by a licensee shall contain the name
11 and an office address of such entity, which shall conform to a
12 name and address on record with the Director Commissioner.
13     (c) No licensee shall advertise its services in Illinois in
14 any media, whether print or electronic, without the words
15 "Illinois Residential Mortgage Licensee".
16 (Source: P.A. 87-1098.)
 
17     (205 ILCS 635/3-4)  (from Ch. 17, par. 2323-4)
18     Sec. 3-4. Office and staff within the State.
19     (a) A licensee whose principal place of business is located
20 in the State of Illinois shall maintain at least one full
21 service office with staff reasonably adequate to handle
22 efficiently communications, questions, and all other matters
23 relating to any application for a home mortgage or an existing
24 home mortgage with respect to which such licensee is performing
25 services, regardless of kind, for any borrower or lender, note

 

 

SB1998 - 42 - LRB095 18639 MJR 44726 b

1 owner or holder, or for himself or herself while engaged in the
2 residential mortgage business. The location and operation of a
3 full service office shall be in compliance with any applicable
4 zoning laws or ordinances and home office or business
5 regulations. The office or place of business shall not be
6 located in any real estate, retail, or financial business
7 establishment unless it is separated from the other business by
8 a separate and distinct area within the establishment.
9     (b) In lieu of maintaining a full service office in the
10 State of Illinois, and subject to the rules of the Department,
11 a licensee whose principal place of business is located outside
12 the State of Illinois may comply with all of the following
13 requirements:
14         (1) maintain a limited service office in Illinois that
15     is adequate to accommodate a full-scope examination of the
16     licensee's books and records as they relate to activity in
17     Illinois, as determined by the Department;
18         (2) must submit a certified audit as required in
19     Section 3-2 of this Act evidencing a minimum net worth of
20     $150,000 $100,000, which must be maintained at all times;
21     and
22         (3) , and shall submit and maintain a fidelity bond in
23     the amount of $100,000, a copy of which must be submitted
24     to the Department. The Department may promulgate rules
25     permitting licensees that do not comply with the net worth
26     requirement established on the effective date of this

 

 

SB1998 - 43 - LRB095 18639 MJR 44726 b

1     amendatory Act of the 95th General Assembly to do so within
2     12 months after the effective date of this amendatory Act
3     of the 95th General Assembly.
4 (Source: P.A. 93-1018, eff. 1-1-05.)
 
5     (205 ILCS 635/3-5)  (from Ch. 17, par. 2323-5)
6     Sec. 3-5. Net worth requirement. A licensee that holds a
7 license on the effective date of this amendatory Act of the
8 93rd General Assembly shall have and maintain a net worth of
9 not less than $100,000; however, no later than 2 years after
10 the effective date of this amendatory Act of the 93rd General
11 Assembly, the licensee must maintain a net worth of not less
12 than $150,000. A licensee that first obtains a license after
13 the effective date of this amendatory Act of the 93rd General
14 Assembly must have and maintain a net worth of not less than
15 $150,000. Notwithstanding other requirements of this Section,
16 the net worth requirement for a residential mortgage licensee
17 whose only licensable activity is that of brokering residential
18 mortgage loans and that holds a license on the effective date
19 of this amendatory Act of the 93rd General Assembly shall be
20 $35,000; however, no later than 2 years after the effective
21 date of this amendatory Act of the 93rd General Assembly, the
22 licensee must maintain a net worth of not less than $50,000.
23 Such a licensee that first obtains a license after the
24 effective date of this amendatory Act of the 93rd General
25 Assembly must have and maintain a net worth of not less than

 

 

SB1998 - 44 - LRB095 18639 MJR 44726 b

1 $50,000. Net worth shall be evidenced by a balance sheet
2 prepared by a certified public accountant in accordance with
3 generally accepted accounting principles and generally
4 accepted auditing standards or by the compilation financial
5 statements authorized under subsection (g) of Section 3-2. The
6 Director Commissioner may promulgate rules with respect to net
7 worth definitions and requirements for residential mortgage
8 licensees as necessary to accomplish the purposes of this Act.
9 In lieu of the net worth requirement established by this
10 Section, the Director Commissioner may accept evidence of
11 conformance by the licensee with the net worth requirements of
12 the United States Department of Housing and Urban Development.
13 (Source: P.A. 93-561, eff. 1-1-04.)
 
14     (205 ILCS 635/3-9)  (from Ch. 17, par. 2323-9)
15     Sec. 3-9. Escrow Funds. The Director Commissioner may
16 promulgate rules with respect to placement in escrow accounts
17 by any licensee of any money, fund, deposit, check or draft
18 entrusted to it by any persons dealing with it as a residential
19 mortgage licensee.
20 (Source: P.A. 85-735.)
 
21     (205 ILCS 635/4-1)  (from Ch. 17, par. 2324-1)
22     Sec. 4-1. Director of the Division of Banking of the
23 Department of Financial and Professional Regulation
24 Commissioner of Banks and Real Estate; functions, powers, and

 

 

SB1998 - 45 - LRB095 18639 MJR 44726 b

1 duties. The functions, powers, and duties of the Director
2 Commissioner of Banks and Real Estate shall include the
3 following:
4     (a) To issue or refuse to issue any license as provided by
5 this Act;
6     (b) To revoke or suspend for cause any license issued under
7 this Act;
8     (c) To keep records of all licenses issued under this Act;
9     (d) To receive, consider, investigate, and act upon
10 complaints made by any person in connection with any
11 residential mortgage licensee in this State;
12     (e) To consider and act upon any recommendations from the
13 Residential Mortgage Board;
14     (f) To prescribe the forms of and receive:
15         (1) applications for licenses; and
16         (2) all reports and all books and records required to
17     be made by any licensee under this Act, including annual
18     audited financial statements and annual reports of
19     mortgage activity;
20     (g) To adopt rules and regulations necessary and proper for
21 the administration of this Act;
22     (h) To subpoena documents and witnesses and compel their
23 attendance and production, to administer oaths, and to require
24 the production of any books, papers, or other materials
25 relevant to any inquiry authorized by this Act;
26     (h-1) To issue orders against any person, if the Director

 

 

SB1998 - 46 - LRB095 18639 MJR 44726 b

1 Commissioner has reasonable cause to believe that an unsafe,
2 unsound, or unlawful practice has occurred, is occurring, or is
3 about to occur, if any person has violated, is violating, or is
4 about to violate any law, rule, or written agreement with the
5 Director Commissioner, or for the purpose of administering the
6 provisions of this Act and any rule adopted in accordance with
7 the Act;
8     (h-2) To address any inquiries to any licensee, or the
9 officers thereof, in relation to its activities and conditions,
10 or any other matter connected with its affairs, and it shall be
11 the duty of any licensee or person so addressed, to promptly
12 reply in writing to such inquiries. The Director Commissioner
13 may also require reports from any licensee at any time the
14 Director Commissioner may deem desirable;
15     (i) To require information with regard to any license
16 applicant as he or she may deem desirable, with due regard to
17 the paramount interests of the public as to the experience,
18 background, honesty, truthfulness, integrity, and competency
19 of the license applicant as to financial transactions involving
20 primary or subordinate mortgage financing, and where the
21 license applicant is an entity other than an individual, as to
22 the honesty, truthfulness, integrity, and competency of any
23 officer or director of the corporation, association, or other
24 entity, or the members of a partnership;
25     (j) To examine the books and records of every licensee
26 under this Act at intervals as specified in Section 4-2;

 

 

SB1998 - 47 - LRB095 18639 MJR 44726 b

1     (k) To enforce provisions of this Act;
2     (l) To levy fees, fines, and charges for services performed
3 in administering this Act; the aggregate of all fees collected
4 by the Director Commissioner on and after the effective date of
5 this Act shall be paid promptly after receipt of the same,
6 accompanied by a detailed statement thereof, into the Savings
7 and Residential Finance Regulatory Fund; the amounts deposited
8 into that Fund shall be used for the ordinary and contingent
9 expenses of the Office of Banks and Real Estate. Nothing in
10 this Act shall prevent continuing the practice of paying
11 expenses involving salaries, retirement, social security, and
12 State-paid insurance of State officers by appropriation from
13 the General Revenue Fund.
14     (m) To appoint examiners, supervisors, experts, and
15 special assistants as needed to effectively and efficiently
16 administer this Act;
17     (n) To conduct hearings for the purpose of:
18         (1) appeals of orders of the Director Commissioner;
19         (2) suspensions or revocations of licenses, or fining
20     of licensees;
21         (3) investigating:
22             (i) complaints against licensees; or
23             (ii) annual gross delinquency rates; and
24         (4) carrying out the purposes of this Act;
25     (o) To exercise exclusive visitorial power over a licensee
26 unless otherwise authorized by this Act or as vested in the

 

 

SB1998 - 48 - LRB095 18639 MJR 44726 b

1 courts, or upon prior consultation with the Director
2 Commissioner, a foreign residential mortgage regulator with an
3 appropriate supervisory interest in the parent or affiliate of
4 a licensee;
5     (p) To enter into cooperative agreements with state
6 regulatory authorities of other states to provide for
7 examination of corporate offices or branches of those states
8 and to accept reports of such examinations;
9     (q) To assign an examiner or examiners to monitor the
10 affairs of a licensee with whatever frequency the Commissioner
11 determines appropriate and to charge the licensee for
12 reasonable and necessary expenses of the Director
13 Commissioner, if in the opinion of the Director Commissioner an
14 emergency exists or appears likely to occur; and
15     (r) To impose civil penalties of up to $50 per day against
16 a licensee for failing to respond to a regulatory request or
17 reporting requirement.
18 (Source: P.A. 93-1018, eff. 1-1-05.)
 
19     (205 ILCS 635/4-2)  (from Ch. 17, par. 2324-2)
20     Sec. 4-2. Examination; prohibited activities.
21     (a) The business affairs of a licensee under this Act shall
22 be examined for compliance with this Act as often as the
23 Director Commissioner deems necessary and proper. The Director
24 Commissioner shall promulgate rules with respect to the
25 frequency and manner of examination. The Director Commissioner

 

 

SB1998 - 49 - LRB095 18639 MJR 44726 b

1 shall appoint a suitable person to perform such examination.
2 The Director Commissioner and his appointees may examine the
3 entire books, records, documents, and operations of each
4 licensee and its subsidiary, affiliate, or agent, and may
5 examine any of the licensee's or its subsidiary's, affiliate's,
6 or agent's officers, directors, employees and agents under
7 oath. For purposes of this Section, "agent" includes service
8 providers such as accountants, closing services providers,
9 providers of outsourced services such as call centers,
10 marketing consultants, and loan processors, even if exempt from
11 licensure under this Act.
12     (b) The Director Commissioner shall prepare a sufficiently
13 detailed report of each licensee's examination, shall issue a
14 copy of such report to each licensee's principals, officers, or
15 directors and shall take appropriate steps to ensure correction
16 of violations of this Act.
17     (c) Affiliates of a licensee shall be subject to
18 examination by the Director Commissioner on the same terms as
19 the licensee, but only when reports from, or examination of a
20 licensee provides for documented evidence of unlawful activity
21 between a licensee and affiliate benefiting, affecting or
22 deriving from the activities regulated by this Act.
23     (d) The expenses of any examination of the licensee and
24 affiliates shall be borne by the licensee and assessed by the
25 Commissioner as established by regulation.
26     (e) Upon completion of the examination, the Director

 

 

SB1998 - 50 - LRB095 18639 MJR 44726 b

1 Commissioner shall issue a report to the licensee. All
2 confidential supervisory information, including the
3 examination report and the work papers of the report, shall
4 belong to the Director's Commissioner's office and may not be
5 disclosed to anyone other than the licensee, law enforcement
6 officials or other regulatory agencies that have an appropriate
7 regulatory interest as determined by the Commissioner, or to a
8 party presenting a lawful subpoena to the Office of the
9 Director Commissioner. The Director Commissioner may
10 immediately appeal to the court of jurisdiction the disclosure
11 of such confidential supervisory information and seek a stay of
12 the subpoena pending the outcome of the appeal. Reports
13 required of licensees by the Director Commissioner under this
14 Act and results of examinations performed by the Director
15 Commissioner under this Act shall be the property of only the
16 Director Commissioner, but may be shared with the licensee.
17 Access under this Act to the books and records of each licensee
18 shall be limited to the Director Commissioner and his agents as
19 provided in this Act and to the licensee and its authorized
20 agents and designees. No other person shall have access to the
21 books and records of a licensee under this Act. Any person upon
22 whom a demand for production of confidential supervisory
23 information is made, whether by subpoena, order, or other
24 judicial or administrative process, must withhold production
25 of the confidential supervisory information and must notify the
26 Director Commissioner of the demand, at which time the Director

 

 

SB1998 - 51 - LRB095 18639 MJR 44726 b

1 Commissioner is authorized to intervene for the purpose of
2 enforcing the limitations of this Section or seeking the
3 withdrawal or termination of the attempt to compel production
4 of the confidential supervisory information. The Director
5 Commissioner may impose any conditions and limitations on the
6 disclosure of confidential supervisory information that are
7 necessary to protect the confidentiality of such information.
8 Except as authorized by the Director Commissioner, no person
9 obtaining access to confidential supervisory information may
10 make a copy of the confidential supervisory information. The
11 Director Commissioner may condition a decision to disclose
12 confidential supervisory information on entry of a protective
13 order by the court or administrative tribunal presiding in the
14 particular case or on a written agreement of confidentiality.
15 In a case in which a protective order or agreement has already
16 been entered between parties other than the Director
17 Commissioner, the Director Commissioner may nevertheless
18 condition approval for release of confidential supervisory
19 information upon the inclusion of additional or amended
20 provisions in the protective order. The Director Commissioner
21 may authorize a party who obtained the records for use in one
22 case to provide them to another party in another case, subject
23 to any conditions that the Director Commissioner may impose on
24 either or both parties. The requestor shall promptly notify
25 other parties to a case of the release of confidential
26 supervisory information obtained and, upon entry of a

 

 

SB1998 - 52 - LRB095 18639 MJR 44726 b

1 protective order, shall provide copies of confidential
2 supervisory information to the other parties.
3     (f) The Director, deputy directors, and employees of the
4 Division of Banks of the Department of Financial and
5 Professional Regulation Commissioner, deputy commissioners,
6 and employees of the Office of Banks and Real Estate shall be
7 subject to the restrictions provided in Section 2.5 of the
8 Office of Banks and Real Estate Act including, without
9 limitation, the restrictions on (i) owning shares of stock or
10 holding any other equity interest in an entity regulated under
11 this Act or in any corporation or company that owns or controls
12 an entity regulated under this Act; (ii) being an officer,
13 director, employee, or agent of an entity regulated under this
14 Act; and (iii) obtaining a loan or accepting a gratuity from an
15 entity regulated under this Act.
16     (g) After the initial examination for those licensees whose
17 only mortgage activity is servicing fewer than 1,000 Illinois
18 residential loans, the examination required in subsection (a)
19 may be waived upon submission of a letter from the licensee's
20 independent certified auditor that the licensee serviced fewer
21 than 1,000 Illinois residential loans during the year in which
22 the audit was performed.
23 (Source: P.A. 93-1018, eff. 1-1-05.)
 
24     (205 ILCS 635/4-3)  (from Ch. 17, par. 2324-3)
25     Sec. 4-3. Subpoena power of the Director Commissioner. (a)

 

 

SB1998 - 53 - LRB095 18639 MJR 44726 b

1 The Director Commissioner shall have the power to issue and to
2 serve subpoenas and subpoenas duces tecum to compel the
3 attendance of witnesses and the production of all books,
4 accounts, records and other documents and materials relevant to
5 an examination or investigation. The Director Commissioner or
6 his or her duly authorized representative, shall have power to
7 administer oaths and affirmations to any person.
8     (b) In the event of noncompliance with a subpoena or
9 subpoena duces tecum issued or caused to be issued by the
10 Director Commissioner, the Director Commissioner may petition
11 the circuit court of the county in which the person subpoenaed
12 resides or has its principal place of business for an order
13 requiring the subpoenaed person to appear and testify and to
14 produce such books, accounts, records and other documents as
15 are specified in the subpoena duces tecum. The court may grant
16 injunctive relief restraining the person from advertising,
17 promoting, soliciting, entering into, offering to enter into,
18 continuing, or completing any residential mortgage financing
19 transaction or residential mortgage servicing transaction. The
20 court may grant such other relief, including, but not limited
21 to, the restraint, by injunction or appointment of a receiver,
22 of any transfer, pledge, assignment or other disposition of the
23 person's assets or any concealment, alteration, destruction or
24 other disposition of books, accounts, records or other
25 documents and materials as the court deems appropriate, until
26 the person has fully complied with the subpoena or subpoena

 

 

SB1998 - 54 - LRB095 18639 MJR 44726 b

1 duces tecum and the Director Commissioner has completed an
2 investigation or examination.
3     (c) When it shall appear to the Director Commissioner that
4 the compliance with a subpoena or subpoena duces tecum issued
5 or caused to be issued by the Director Commissioner pursuant to
6 this Section is essential to an investigation or examination,
7 the Director Commissioner, in addition to the other remedies
8 provided for herein, may apply for relief to the circuit court
9 of the county in which the subpoenaed person resides or has its
10 principal place of business. The court shall thereupon direct
11 the issuance of an order against the subpoenaed person
12 requiring sufficient bond conditioned on compliance with the
13 subpoena or subpoena duces tecum. The court shall cause to be
14 endorsed on the order a suitable amount of bond or payment
15 pursuant to which the person named in the order shall be freed,
16 having a due regard to the nature of the case.
17     (d) In addition, the Director Commissioner may seek a writ
18 of attachment or an equivalent order from the circuit court
19 having jurisdiction over the person who has refused to obey a
20 subpoena, who has refused to give testimony or who has refused
21 to produce the matters described in the subpoena duces tecum.
22 (Source: P.A. 85-735.)
 
23     (205 ILCS 635/4-4)  (from Ch. 17, par. 2324-4)
24     Sec. 4-4. Report Required of Licensee; False Statements;
25 Delay; Penalties.(a) In addition to any reports required under

 

 

SB1998 - 55 - LRB095 18639 MJR 44726 b

1 this Act, every licensee shall file such other reports as the
2 Director Commissioner shall request.
3     (b) Any licensee or any officer, director, employee or
4 agent of any licensee who shall fail to file any reports
5 required by this Act, including those under subsection (a)
6 above, or who shall deliberately, wilfully or knowingly make,
7 subscribe to or cause to be made any false entry with intent to
8 deceive the Director Commissioner or his or her appointees or
9 who shall purposely cause unreasonable delay in filing such
10 reports, shall be guilty of a Class 4 Felony.
11 (Source: P.A. 85-735.)
 
12     (205 ILCS 635/4-5)  (from Ch. 17, par. 2324-5)
13     Sec. 4-5. Suspension, revocation of licenses; fines.
14     (a) Upon written notice to a licensee, the Director
15 Commissioner may suspend or revoke any license issued pursuant
16 to this Act if he or she shall make a finding of one or more of
17 the following in the notice that:
18         (1) Through separate acts or an act or a course of
19     conduct, the licensee has violated any provisions of this
20     Act, any rule or regulation promulgated by the Director
21     Commissioner or of any other law, rule or regulation of
22     this State or the United States.
23         (2) Any fact or condition exists which, if it had
24     existed at the time of the original application for such
25     license would have warranted the Director Commissioner in

 

 

SB1998 - 56 - LRB095 18639 MJR 44726 b

1     refusing originally to issue such license.
2         (3) If a licensee is other than an individual, any
3     ultimate equitable owner, officer, director, or member of
4     the licensed partnership, association, corporation, or
5     other entity has so acted or failed to act as would be
6     cause for suspending or revoking a license to that party as
7     an individual.
8     (b) No license shall be suspended or revoked, except as
9 provided in this Section, nor shall any licensee be fined
10 without notice of his or her right to a hearing as provided in
11 Section 4-12 of this Act.
12     (c) The Director Commissioner, on good cause shown that an
13 emergency exists, may suspend any license for a period not
14 exceeding 180 days, pending investigation. Upon a showing that
15 a licensee has failed to meet the experience or educational
16 requirements of Section 2-2 or the requirements of subsection
17 (g) of Section 3-2, the Director Commissioner shall suspend,
18 prior to hearing as provided in Section 4-12, the license until
19 those requirements have been met.
20     (d) The provisions of subsection (e) of Section 2-6 of this
21 Act shall not affect a licensee's civil or criminal liability
22 for acts committed prior to surrender of a license.
23     (e) No revocation, suspension or surrender of any license
24 shall impair or affect the obligation of any pre-existing
25 lawful contract between the licensee and any person.
26     (f) Every license issued under this Act shall remain in

 

 

SB1998 - 57 - LRB095 18639 MJR 44726 b

1 force and effect until the same shall have expired without
2 renewal, have been surrendered, revoked or suspended in
3 accordance with the provisions of this Act, but the Director
4 Commissioner shall have authority to reinstate a suspended
5 license or to issue a new license to a licensee whose license
6 shall have been revoked if no fact or condition then exists
7 which would have warranted the Director Commissioner in
8 refusing originally to issue such license under this Act.
9     (g) Whenever the Director Commissioner shall revoke or
10 suspend a license issued pursuant to this Act or fine a
11 licensee under this Act, he or she shall forthwith execute in
12 duplicate a written order to that effect. The Director
13 Commissioner shall publish notice of such order in the Illinois
14 Register or and post notice of the order on an agency Internet
15 site maintained by the Director Commissioner and shall
16 forthwith serve a copy of such order upon the licensee. Any
17 such order may be reviewed in the manner provided by Section
18 4-12 of this Act.
19     (h) When the Director Commissioner finds any person in
20 violation of the grounds set forth in subsection (i), he or she
21 may enter an order imposing one or more of the following
22 penalties:
23         (1) Revocation of license;
24         (2) Suspension of a license subject to reinstatement
25     upon satisfying all reasonable conditions the Director
26     Commissioner may specify;

 

 

SB1998 - 58 - LRB095 18639 MJR 44726 b

1         (3) Placement of the licensee or applicant on probation
2     for a period of time and subject to all reasonable
3     conditions as the Director Commissioner may specify;
4         (4) Issuance of a reprimand;
5         (5) Imposition of a fine not to exceed $25,000 for each
6     count of separate offense; and
7         (6) Denial of a license.
8     (i) The following acts shall constitute grounds for which
9 the disciplinary actions specified in subsection (h) above may
10 be taken:
11         (1) Being convicted or found guilty, regardless of
12     pendency of an appeal, of a crime in any jurisdiction which
13     involves fraud, dishonest dealing, or any other act of
14     moral turpitude;
15         (2) Fraud, misrepresentation, deceit or negligence in
16     any mortgage financing transaction;
17         (3) A material or intentional misstatement of fact on
18     an initial or renewal application;
19         (4) Failure to follow the Director's Commissioner's
20     regulations with respect to placement of funds in escrow
21     accounts;
22         (5) Insolvency or filing under any provision of the
23     Bankruptcy Code as a debtor;
24         (6) Failure to account or deliver to any person any
25     property such as any money, fund, deposit, check, draft,
26     mortgage, or other document or thing of value, which has

 

 

SB1998 - 59 - LRB095 18639 MJR 44726 b

1     come into his or her hands and which is not his or her
2     property or which he or she is not in law or equity
3     entitled to retain, under the circumstances and at the time
4     which has been agreed upon or is required by law or, in the
5     absence of a fixed time, upon demand of the person entitled
6     to such accounting and delivery;
7         (7) Failure to disburse funds in accordance with
8     agreements;
9         (8) Any misuse, misapplication, or misappropriation of
10     trust funds or escrow funds;
11         (9) Having a license, or the equivalent, to practice
12     any profession or occupation revoked, suspended, or
13     otherwise acted against, including the denial of licensure
14     by a licensing authority of this State or another state,
15     territory or country for fraud, dishonest dealing or any
16     other act of moral turpitude;
17         (10) Failure to issue a satisfaction of mortgage when
18     the residential mortgage has been executed and proceeds
19     were not disbursed to the benefit of the mortgagor and when
20     the mortgagor has fully paid licensee's costs and
21     commission;
22         (11) Failure to comply with any order of the
23     Commissioner or rule made or issued under the provisions of
24     this Act;
25         (12) Engaging in activities regulated by this Act
26     without a current, active license unless specifically

 

 

SB1998 - 60 - LRB095 18639 MJR 44726 b

1     exempted by this Act;
2         (13) Failure to pay in a timely manner any fee, charge
3     or fine under this Act;
4         (14) Failure to maintain, preserve, and keep available
5     for examination, all books, accounts or other documents
6     required by the provisions of this Act and the rules of the
7     Director Commissioner;
8         (15) Refusing, obstructing, evading, or unreasonably
9     delaying an investigation, information request, or
10     examination authorized under this Act, or refusing,
11     obstructing, evading, or unreasonably delaying compliance
12     with the Director's Refusal to permit an investigation or
13     examination of the licensee's or its affiliates' books and
14     records or refusal to comply with the Commissioner's
15     subpoena or subpoena duces tecum;
16         (16) A pattern of substantially underestimating the
17     maximum closing costs;
18         (17) Failure to comply with or violation of any
19     provision of this Act.
20     (j) A licensee shall be subject to the disciplinary actions
21 specified in this Act for violations of subsection (i) by any
22 officer, director, shareholder, joint venture, partner,
23 ultimate equitable owner, or employee of the licensee.
24     (k) Such licensee shall be subject to suspension or
25 revocation for employee actions only if there is a pattern of
26 repeated violations by employees or the licensee has knowledge

 

 

SB1998 - 61 - LRB095 18639 MJR 44726 b

1 of the violations.
2     (l) Procedure for surrender of license:
3         (1) The Director Commissioner may, after 10 days notice
4     by certified mail to the licensee at the address set forth
5     on the license, stating the contemplated action and in
6     general the grounds therefor and the date, time and place
7     of a hearing thereon, and after providing the licensee with
8     a reasonable opportunity to be heard prior to such action,
9     fine such licensee an amount not exceeding $25,000 per
10     violation, or revoke or suspend any license issued
11     hereunder if he or she finds that:
12             (i) The licensee has failed to comply with any
13         provision of this Act or any order, decision, finding,
14         rule, regulation or direction of the Director
15         Commissioner lawfully made pursuant to the authority
16         of this Act; or
17             (ii) Any fact or condition exists which, if it had
18         existed at the time of the original application for the
19         license, clearly would have warranted the Commissioner
20         in refusing to issue the license.
21         (2) A surrender of a license Any licensee may surrender
22     a license by delivering to the Commissioner written notice
23     that he or she thereby surrenders such license, but
24     surrender shall not affect the licensee's civil or criminal
25     liability for acts committed prior to surrender or entitle
26     the licensee to a return of any part of the license fee.

 

 

SB1998 - 62 - LRB095 18639 MJR 44726 b

1 (Source: P.A. 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)
 
2     (205 ILCS 635/4-6)  (from Ch. 17, par. 2324-6)
3     Sec. 4-6. Investigation of Complaints. The Director
4 Commissioner shall at all times maintain staff and facilities
5 adequate to receive, record and investigate complaints and
6 inquiries made by any person concerning this Act and any
7 licensees under this Act. Each licensee shall open its books,
8 records, documents and offices wherever situated to the
9 Director Commissioner or his or her appointees as needed to
10 facilitate such investigations.
11 (Source: P.A. 85-735.)
 
12     (205 ILCS 635/4-8)  (from Ch. 17, par. 2324-8)
13     Sec. 4-8. Default rate; examination.
14     (a) The Director Commissioner shall obtain from the U.S.
15 Department of Housing and Urban Development on a semi-annual
16 basis that Department's default claim rates for endorsements
17 issued by that Department.
18     (b) The Director Commissioner shall conduct an examination
19 of each licensee having a default rate equal to or greater than
20 5%.
21     This subsection shall not be construed as a limitation of
22 the Director's Commissioner's examination authority under
23 Section 4-2 of this Act or as otherwise provided in this Act.
24 The Director Commissioner may require a licensee to provide

 

 

SB1998 - 63 - LRB095 18639 MJR 44726 b

1 loan default data as the Director Commissioner deems necessary
2 for the proper enforcement of the Act.
3     (c) The purpose of the examination under subsection (b)
4 shall be to determine whether the default rate of the licensee
5 has resulted from practices which deviate from sound and
6 accepted mortgage underwriting practices, including but not
7 limited to credit fraud, appraisal fraud and property
8 inspection fraud. For the purpose of conducting this
9 examination, the Director Commissioner may accept materials
10 prepared for the U.S. Department of Housing and Urban
11 Development. At the conclusion of the examination, the Director
12 Commissioner shall make his or her findings available to the
13 Residential Mortgage Board.
14     (d) The Director Commissioner, at his or her discretion,
15 may hold public hearings, or at the direction of the
16 Residential Mortgage Board, shall hold public hearings. Such
17 testimony shall be by a homeowner or mortgagor or his agent,
18 whose residential interest is affected by the activities of the
19 residential mortgage licensee subject to such hearing. At such
20 public hearing, a witness may present testimony on his or her
21 behalf concerning only his or her home, or home mortgage or a
22 witness may authorize a third party to appear on his or her
23 behalf. The testimony shall be restricted to information and
24 comments related to a specific residence or specific
25 residential mortgage application or applications for a
26 residential mortgage or residential loan transaction. The

 

 

SB1998 - 64 - LRB095 18639 MJR 44726 b

1 testimony must be preceded by either a letter of complaint or a
2 completed consumer complaint form prescribed by the
3 Commissioner.
4     (e) The Director Commissioner shall, at the conclusion of
5 the public hearings, release his or her findings and shall also
6 make public any action taken with respect to the licensee. The
7 Director Commissioner shall also give full consideration to the
8 findings of this examination whenever reapplication is made by
9 the licensee for a new license under this Act.
10     (f) A licensee that is examined pursuant to subsection (b)
11 shall submit to the Director Commissioner a plan which shall be
12 designed to reduce that licensee's default rate to a figure
13 that is less than 5%. The plan shall be implemented by the
14 licensee as approved by the Director Commissioner. A licensee
15 that is examined pursuant to subsection (b) shall report
16 monthly, for a one year period, one, 2, and 3 month defaults.
17     (g) Whenever the Director Commissioner finds that a
18 licensee's default rate on insured mortgages is unusually high
19 within a particular geographic area, he or she shall require
20 that licensee to submit such information as is necessary to
21 determine whether that licensee's practices have constituted
22 credit fraud, appraisal fraud or property inspection fraud. The
23 Director Commissioner shall promulgate such rules as are
24 necessary to determine whether any licensee's default rate is
25 unusually high within a particular area.
26 (Source: P.A. 89-355, eff. 1-1-96; 89-626, eff. 8-9-96; 90-301,

 

 

SB1998 - 65 - LRB095 18639 MJR 44726 b

1 eff. 8-1-97.)
 
2     (205 ILCS 635/4-8.2)
3     Sec. 4-8.2. Reports of violations. Any person licensed
4 under this Act or any other person may report to the Director
5 Commissioner any information to show that a person subject to
6 this Act is or may be in violation of this Act.
7 (Source: P.A. 93-561, eff. 1-1-04.)
 
8     (205 ILCS 635/4-8.3)
9     Sec. 4-8.3. Annual reports report of mortgage, brokerage,
10 and servicing activity. On or before March 1 of each year, or
11 by the date selected by the multistate automated licensing
12 system, each licensee, except residential mortgage brokers,
13 shall file a report of its mortgage, brokerage, and servicing
14 activity with the Director Commissioner that shall disclose
15 such information as the Commissioner requires. Exempt entities
16 as defined in subsection (d) of Section 1-4 shall not file the
17 annual reports report of mortgage, brokerage, and servicing
18 activity required by this Section.
19 (Source: P.A. 93-1018, eff. 1-1-05.)
 
20     (205 ILCS 635/4-10)  (from Ch. 17, par. 2324-10)
21     (Text of Section before amendment by P.A. 95-691)
22     Sec. 4-10. Rules and Regulations of the Director
23 Commissioner. (a) In addition to such powers as may be

 

 

SB1998 - 66 - LRB095 18639 MJR 44726 b

1 prescribed by this Act, the Director Commissioner is hereby
2 authorized and empowered to promulgate regulations consistent
3 with the purposes of this Act, including but not limited to:
4     (1) Such rules and regulations in connection with the
5 activities of licensees as may be necessary and appropriate for
6 the protection of consumers in this State;
7     (2) Such rules and regulations as may be necessary and
8 appropriate to define improper or fraudulent business
9 practices in connection with the activities of licensees in
10 making mortgage loans;
11     (3) Such rules and regulations as may define the terms used
12 in this Act and as may be necessary and appropriate to
13 interpret and implement the provisions of this Act; and
14     (4) Such rules and regulations as may be necessary for the
15 enforcement of this Act.
16     (b) The Director Commissioner is hereby authorized and
17 empowered to make such specific rulings, demands and findings
18 as he or she may deem necessary for the proper conduct of the
19 mortgage lending industry.
20 (Source: P.A. 85-735.)
 
21     (Text of Section after amendment by P.A. 95-691)
22     Sec. 4-10. Rules and Regulations of the Director
23 Commissioner.
24     (a) In addition to such powers as may be prescribed by this
25 Act, the Director Commissioner is hereby authorized and

 

 

SB1998 - 67 - LRB095 18639 MJR 44726 b

1 empowered to promulgate regulations consistent with the
2 purposes of this Act, including but not limited to:
3         (1) Such rules and regulations in connection with the
4     activities of licensees as may be necessary and appropriate
5     for the protection of consumers in this State;
6         (2) Such rules and regulations as may be necessary and
7     appropriate to define improper or fraudulent business
8     practices in connection with the activities of licensees in
9     making mortgage loans;
10         (3) Such rules and regulations as may define the terms
11     used in this Act and as may be necessary and appropriate to
12     interpret and implement the provisions of this Act; and
13         (4) Such rules and regulations as may be necessary for
14     the enforcement of this Act.
15     (b) The Director Commissioner is hereby authorized and
16 empowered to make such specific rulings, demands and findings
17 as he or she may deem necessary for the proper conduct of the
18 mortgage lending industry.
19     (c) A person or entity may make a written application to
20 the Department for a written interpretation of this Act. The
21 Department may then, in its sole discretion, choose to issue a
22 written interpretation. To be valid, a written interpretation
23 must be signed by the Secretary, or his or her designated
24 Director of Financial and Professional Regulation, and the
25 Department's General Counsel. A written interpretation expires
26 2 years after the date that it was issued.

 

 

SB1998 - 68 - LRB095 18639 MJR 44726 b

1     (d) No provision in this Act that imposes liability or
2 establishes violations shall apply to any act taken by a person
3 or entity in conformity with a written interpretation of this
4 Act that is in effect at the time the act is taken,
5 notwithstanding whether the written interpretation is later
6 amended, rescinded, or determined by judicial or other
7 authority to by invalid for any reason.
8 (Source: P.A. 95-691, eff. 6-1-08.)
 
9     (205 ILCS 635/4-11)  (from Ch. 17, par. 2324-11)
10     Sec. 4-11. Costs of Supervision; Examination and
11 Investigative Fees. The expenses of administering this Act,
12 including investigations and examinations provided for in this
13 Act shall be borne by and assessed against entities regulated
14 by this Act. The Director Commissioner shall establish fees by
15 regulation in at least the following categories:
16     (1) application fees;
17     (2) investigation of license applicant fees;
18     (3) examination fees;
19     (4) contingent fees;
20 and such other categories as may be required to administer this
21 Act.
22 (Source: P.A. 85-735.)
 
23     (205 ILCS 635/4-12)  (from Ch. 17, par. 2324-12)
24     Sec. 4-12. Appeal and Review. (a) Any person or entity

 

 

SB1998 - 69 - LRB095 18639 MJR 44726 b

1 affected by a decision of the Director Commissioner under any
2 provision of this Act may obtain review of such decision within
3 the Office of the Director Commissioner.
4     (b) The Director Commissioner shall, in accordance with the
5 "Illinois Administrative Procedure Act", promulgate rules and
6 regulations to provide for review within the Office of the
7 Director Commissioner (hereinafter referred to as "agency
8 review") of his or her decisions affecting the rights of
9 entities under this Act. Such review shall provide for, at a
10 minimum:
11     (1) appointment of a hearing officer other than a regular
12 employee of the Office of the Director Commissioner;
13     (2) appropriate procedural rules, specific deadlines for
14 filings, and standards of evidence and of proof;
15     (3) provision for apportioning costs among parties to the
16 appeal.
17     (c) All final agency determinations of appeals to decisions
18 of the Director Commissioner may be reviewed in accordance with
19 and under the provisions of the "Administrative Review Law".
20 Appeals from all final orders and judgments entered by a court
21 in review of any final administrative decision of the Director
22 Commissioner or of any final agency review of a decision of the
23 Director Commissioner may be taken as in other civil cases.
24 (Source: P.A. 85-735.)
 
25     (205 ILCS 635/4-13)  (from Ch. 17, par. 2324-13)

 

 

SB1998 - 70 - LRB095 18639 MJR 44726 b

1     Sec. 4-13. Violations of this Act; Director's
2 Commissioner's Orders. If the Director Commissioner finds, as
3 the result of examination, investigation or review of reports
4 submitted by a licensee that the business and affairs of a
5 licensee are not being conducted in accordance with this Act,
6 the Director Commissioner shall notify the licensee of the
7 correction necessary. Should a licensee fail to correct such
8 violations, the Director Commissioner shall issue an order
9 requiring immediate correction and compliance with this Act,
10 specifying a reasonable date for performance.
11     The Director Commissioner shall promulgate rules and
12 regulations to provide for an orderly and timely appeal of all
13 orders within the Office of the Director Commissioner. Such
14 rules shall include provision for assessment of fees and costs.
15 (Source: P.A. 85-735.)
 
16     (205 ILCS 635/5-1)  (from Ch. 17, par. 2325-1)
17     Sec. 5-1. The Director Commissioner may promulgate rules
18 with respect to brokering and lending procedures of residential
19 mortgage licensees as necessary to accomplish the purposes of
20 this Act.
21 (Source: P.A. 85-735.)
 
22     (205 ILCS 635/6-3)  (from Ch. 17, par. 2326-3)
23     Sec. 6-3. Appointment of receiver or conservator. When the
24 Director Commissioner makes a finding that a receivership or

 

 

SB1998 - 71 - LRB095 18639 MJR 44726 b

1 conservatorship is necessary to protect consumers of a licensee
2 from the consequences of the licensee's failures to comply with
3 this Act or other unsafe and unsound practices, the Director
4 Commissioner shall request the Attorney General of this State
5 to petition the Circuit Court of Cook County, or of the county
6 in which the licensee is located, to appoint a receiver or
7 conservator for purposes of protecting consumers and resolving
8 the affairs of the licensee.
9 (Source: P.A. 87-1098.)
 
10     (205 ILCS 635/7-1)
11     Sec. 7-1. Registration required; rules and regulations.
12 Beginning 6 months after the effective date of this amendatory
13 Act of the 93rd General Assembly, it is unlawful for any
14 natural person to act or assume to act as a loan originator, as
15 defined in subsection (hh) of Section 1-4, without being
16 registered with the Director Commissioner unless the natural
17 person is exempt under items (1) and (1.5) of subsection (d) of
18 Section 1-4 of this Act. The Director Commissioner shall
19 promulgate rules prescribing the criteria for the registration
20 and regulation of loan originators, including but not limited
21 to, qualifications, fees, examination, education, supervision,
22 and enforcement.
23 (Source: P.A. 93-561, eff. 1-1-04.)
 
24     Section 95. No acceleration or delay. Where this Act makes

 

 

SB1998 - 72 - LRB095 18639 MJR 44726 b

1 changes in a statute that is represented in this Act by text
2 that is not yet or no longer in effect (for example, a Section
3 represented by multiple versions), the use of that text does
4 not accelerate or delay the taking effect of (i) the changes
5 made by this Act or (ii) provisions derived from any other
6 Public Act.
 
7     Section 99. Effective date. This Act takes effect January
8 1, 2009.

 

 

SB1998 - 73 - LRB095 18639 MJR 44726 b

1 INDEX
2 Statutes amended in order of appearance
3     205 ILCS 635/1-1.5 new
4     205 ILCS 635/1-3 from Ch. 17, par. 2321-3
5     205 ILCS 635/1-4 from Ch. 17, par. 2321-4
6     205 ILCS 635/1-5 from Ch. 17, par. 2321-5
7     205 ILCS 635/2-2 from Ch. 17, par. 2322-2
8     205 ILCS 635/2-3 from Ch. 17, par. 2322-3
9     205 ILCS 635/2-4 from Ch. 17, par. 2322-4
10     205 ILCS 635/2-5 from Ch. 17, par. 2322-5
11     205 ILCS 635/2-6 from Ch. 17, par. 2322-6
12     205 ILCS 635/2-7 from Ch. 17, par. 2322-7
13     205 ILCS 635/2-8 from Ch. 17, par. 2322-8
14     205 ILCS 635/2-9 from Ch. 17, par. 2322-9
15     205 ILCS 635/2-11 from Ch. 17, par. 2322-11
16     205 ILCS 635/3-1 from Ch. 17, par. 2323-1
17     205 ILCS 635/3-2 from Ch. 17, par. 2323-2
18     205 ILCS 635/3-3 from Ch. 17, par. 2323-3
19     205 ILCS 635/3-4 from Ch. 17, par. 2323-4
20     205 ILCS 635/3-5 from Ch. 17, par. 2323-5
21     205 ILCS 635/3-9 from Ch. 17, par. 2323-9
22     205 ILCS 635/4-1 from Ch. 17, par. 2324-1
23     205 ILCS 635/4-2 from Ch. 17, par. 2324-2
24     205 ILCS 635/4-3 from Ch. 17, par. 2324-3
25     205 ILCS 635/4-4 from Ch. 17, par. 2324-4

 

 

SB1998 - 74 - LRB095 18639 MJR 44726 b

1     205 ILCS 635/4-5 from Ch. 17, par. 2324-5
2     205 ILCS 635/4-6 from Ch. 17, par. 2324-6
3     205 ILCS 635/4-8 from Ch. 17, par. 2324-8
4     205 ILCS 635/4-8.2
5     205 ILCS 635/4-8.3
6     205 ILCS 635/4-10 from Ch. 17, par. 2324-10
7     205 ILCS 635/4-11 from Ch. 17, par. 2324-11
8     205 ILCS 635/4-12 from Ch. 17, par. 2324-12
9     205 ILCS 635/4-13 from Ch. 17, par. 2324-13
10     205 ILCS 635/5-1 from Ch. 17, par. 2325-1
11     205 ILCS 635/6-3 from Ch. 17, par. 2326-3
12     205 ILCS 635/7-1