Full Text of HB5331 98th General Assembly
HB5331 98TH GENERAL ASSEMBLY |
| | 98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014 HB5331 Introduced , by Rep. Michael J. Zalewski SYNOPSIS AS INTRODUCED: |
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Amends the Residential Mortgage License Act of 1987. From the definition of "exempt person or entity", deletes pension trusts, bank trusts, and bank trust companies. Provides that an applicant for a residential mortgage license that is a subsidiary may submit audited consolidated financial statements of its parent, intermediary parent, or ultimate parent as long as the consolidated statements are supported by consolidating statements. Provides that the applicant's chief financial officer shall attest to the applicant's financial statements disclosed in the consolidating statements. Makes changes concerning which financial statements are required under the Act. Makes other changes. Amends the Residential Real Property Disclosure Act. Throughout the Act, changes references to "HUD-certified counseling" to "HUD-approved counseling". Provides that certain deadlines are counted by business days rather than calendar days. Provides that it is the borrower's responsibility to (rather than "the borrower shall") select a HUD-approved counseling agency. Provides that the selection must take place and the appointment for the interview must be set within 10 business days, although the interview may take place beyond the 10 business day period. Provides that if a lis pendens is recorded, it may be filed with the Department of Financial and Professional Regulation either electronically or by filing a hard copy. Provides that all information entered into the predatory lending database must be true and correct to the best of the originator's knowledge. Provides that the originator shall, prior to closing, correct, update, or amend the data as necessary. Provides that if any corrections become necessary after the file has been accessed by the closing agent or housing counselor, a new file must be entered. Changes the predatory lending database pilot program to the predatory lending database program. Provides if certain exemptions to certain filing and reporting requirements apply, a certificate of exemption is required. Adds to the list of exemptions to the predatory lending database program mortgages secured by certain types of property and mortgages originated by an exempt person or entity. Effective immediately.
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| | A BILL FOR |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Residential Mortgage License Act of 1987 is | 5 | | amended by changing Sections 1-4, 2-2, 2-4, and 3-2 as follows: | 6 | | (205 ILCS 635/1-4) | 7 | | Sec. 1-4. Definitions. | 8 | | (a) "Residential real property" or "residential real | 9 | | estate" shall mean any real property located in Illinois, upon | 10 | | which is constructed or intended to be constructed a dwelling. | 11 | | (b) "Making a residential mortgage loan" or "funding a | 12 | | residential mortgage
loan" shall mean for compensation or gain, | 13 | | either directly or indirectly,
advancing funds or making a | 14 | | commitment to advance funds to a loan applicant
for a | 15 | | residential mortgage loan. | 16 | | (c) "Soliciting, processing, placing, or negotiating a | 17 | | residential
mortgage loan" shall mean for compensation or gain, | 18 | | either directly or
indirectly, accepting or offering to accept | 19 | | an application for a
residential mortgage loan, assisting or | 20 | | offering to assist in the
processing of an application for a | 21 | | residential mortgage loan on behalf of a
borrower, or | 22 | | negotiating or offering to negotiate the terms or conditions
of | 23 | | a residential mortgage loan with a lender on behalf of a |
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| 1 | | borrower
including, but not limited to, the submission of | 2 | | credit packages for the
approval of lenders, the preparation of | 3 | | residential mortgage loan closing
documents, including a | 4 | | closing in the name of a broker. | 5 | | (d) "Exempt person or entity" shall mean the following: | 6 | | (1) (i) Any banking organization or foreign banking | 7 | | corporation
licensed by the Illinois Commissioner of Banks | 8 | | and Real Estate or the
United States Comptroller of the | 9 | | Currency to transact business in this
State; (ii) any | 10 | | national bank, federally chartered savings and loan
| 11 | | association, federal savings bank, federal credit union; | 12 | | (iii) (blank); any pension
trust, bank trust, or bank trust | 13 | | company; (iv) any bank, savings and loan
association, | 14 | | savings bank, or credit union organized under the laws of | 15 | | this
or any other state; (v) any Illinois Consumer | 16 | | Installment Loan Act licensee;
(vi) any insurance company | 17 | | authorized to transact business in this State;
(vii) any | 18 | | entity engaged solely in commercial mortgage lending; | 19 | | (viii) any
service corporation of a savings and loan | 20 | | association or savings bank organized
under the laws of | 21 | | this State or the service corporation of a federally
| 22 | | chartered savings and loan association or savings bank | 23 | | having
its principal place of business in this State, other | 24 | | than a service
corporation licensed or entitled to | 25 | | reciprocity under the Real Estate
License Act of 2000; or | 26 | | (ix) any first tier subsidiary of a
bank, the charter of |
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| 1 | | which is issued under the Illinois Banking Act
by the | 2 | | Illinois Commissioner of Banks and Real Estate,
or the | 3 | | first tier subsidiary of a bank chartered by the United | 4 | | States
Comptroller of the Currency and that has its | 5 | | principal place of business
in this State, provided that | 6 | | the first tier subsidiary is regularly
examined by the | 7 | | Illinois Commissioner of Banks and Real Estate
or the | 8 | | Comptroller of the Currency, or a consumer compliance | 9 | | examination is
regularly conducted by the Federal Reserve | 10 | | Board. | 11 | | (1.5) Any employee of a person or entity mentioned in
| 12 | | item (1) of this subsection, when acting for such person or | 13 | | entity, or any registered mortgage loan originator when | 14 | | acting for an entity described in subsection (tt) of this | 15 | | Section. | 16 | | (1.8) Any person or entity that does not originate | 17 | | mortgage loans in the ordinary course of business, but | 18 | | makes or acquires residential mortgage loans with his or | 19 | | her own funds for his or her or its own investment without | 20 | | intent to make, acquire, or resell more than 3 residential | 21 | | mortgage loans in any one calendar year. | 22 | | (2) (Blank). | 23 | | (3) Any person employed by a licensee to assist in the | 24 | | performance of
the residential mortgage licensee's | 25 | | activities regulated by this Act who is compensated in any | 26 | | manner by
only one licensee. |
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| 1 | | (4) (Blank). | 2 | | (5) Any individual, corporation, partnership, or other | 3 | | entity that
originates, services, or brokers residential | 4 | | mortgage loans, as these
activities are defined in this | 5 | | Act, and who or which receives no
compensation for those | 6 | | activities, subject to the Commissioner's
regulations and | 7 | | the federal Secure and Fair Enforcement for Mortgage | 8 | | Licensing Act of 2008 and the rules promulgated under that | 9 | | Act with regard to the nature and amount of compensation. | 10 | | (6) (Blank). | 11 | | (e) "Licensee" or "residential mortgage licensee" shall | 12 | | mean a person,
partnership, association, corporation, or any | 13 | | other entity who or which is
licensed pursuant to this Act to | 14 | | engage in the activities regulated by
this Act. | 15 | | (f) "Mortgage loan" "residential mortgage loan" or "home
| 16 | | mortgage loan" shall mean any loan primarily for personal, | 17 | | family, or household use that is secured by a mortgage, deed of | 18 | | trust, or other equivalent consensual security interest on a | 19 | | dwelling as defined in Section 103(v) of the federal Truth in | 20 | | Lending Act, or residential real estate upon which is | 21 | | constructed or intended to be constructed a dwelling. | 22 | | (g) "Lender" shall mean any person, partnership, | 23 | | association,
corporation, or any other entity who either lends | 24 | | or invests money in
residential mortgage loans. | 25 | | (h) "Ultimate equitable owner" shall mean a person who, | 26 | | directly
or indirectly, owns or controls an ownership interest |
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| 1 | | in a corporation,
foreign corporation, alien business | 2 | | organization, trust, or any other form
of business organization | 3 | | regardless of whether the person owns or controls
the ownership | 4 | | interest through one or more persons or one or more proxies,
| 5 | | powers of attorney, nominees, corporations, associations, | 6 | | partnerships,
trusts, joint stock companies, or other entities | 7 | | or devices, or any
combination thereof. | 8 | | (i) "Residential mortgage financing transaction" shall | 9 | | mean the negotiation,
acquisition, sale, or arrangement for or | 10 | | the offer to negotiate, acquire,
sell, or arrange for, a | 11 | | residential mortgage loan or residential mortgage
loan | 12 | | commitment. | 13 | | (j) "Personal residence address" shall mean a street | 14 | | address and shall
not include a post office box number. | 15 | | (k) "Residential mortgage loan commitment" shall mean a | 16 | | contract for
residential mortgage loan financing. | 17 | | (l) "Party to a residential mortgage financing | 18 | | transaction" shall mean a
borrower, lender, or loan broker in a | 19 | | residential mortgage financing
transaction. | 20 | | (m) "Payments" shall mean payment of all or any of the | 21 | | following:
principal, interest and escrow reserves for taxes, | 22 | | insurance and other related
reserves, and reimbursement for | 23 | | lender advances. | 24 | | (n) "Commissioner" shall mean the Commissioner of Banks and | 25 | | Real Estate, except that, beginning on April 6, 2009 (the | 26 | | effective date of Public Act 95-1047), all references in this |
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| 1 | | Act to the Commissioner of Banks and Real Estate are deemed, in | 2 | | appropriate contexts, to be references to the Secretary of | 3 | | Financial and Professional Regulation, or his or her designee, | 4 | | including the Director of the Division of Banking of the | 5 | | Department of Financial and Professional Regulation. | 6 | | (n-1) "Director" shall mean the Director of the Division of | 7 | | Banking of the Department of Financial and Professional | 8 | | Regulation, except that, beginning on July 31, 2009 (the | 9 | | effective date of Public Act 96-112), all references in this | 10 | | Act to the Director are deemed, in appropriate contexts, to be | 11 | | the Secretary of Financial and Professional Regulation, or his | 12 | | or her designee, including the Director of the Division of | 13 | | Banking of the Department of Financial and Professional | 14 | | Regulation. | 15 | | (o) "Loan brokering", "brokering", or "brokerage service" | 16 | | shall mean the act
of helping to obtain from another entity, | 17 | | for a borrower, a loan secured by
residential real estate | 18 | | situated in Illinois or assisting a borrower in
obtaining a | 19 | | loan secured by residential real estate situated in Illinois in
| 20 | | return for consideration to be paid by either the borrower or | 21 | | the lender
including, but not limited to, contracting for the | 22 | | delivery of residential
mortgage loans to a third party lender | 23 | | and soliciting, processing, placing,
or negotiating | 24 | | residential mortgage loans. | 25 | | (p) "Loan broker" or "broker" shall mean a person, | 26 | | partnership,
association, corporation, or limited liability |
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| 1 | | company, other than
those persons, partnerships,
associations, | 2 | | corporations, or limited liability companies exempted
from | 3 | | licensing pursuant to Section
1-4, subsection (d), of this Act, | 4 | | who performs the activities described
in subsections (c), (o), | 5 | | and (yy) of this Section. | 6 | | (q) "Servicing" shall mean the collection or remittance for | 7 | | or the
right or obligation to collect or remit for any lender, | 8 | | noteowner,
noteholder, or for a licensee's own account, of | 9 | | payments, interests,
principal, and trust items such as hazard | 10 | | insurance and taxes on a
residential mortgage loan in | 11 | | accordance with the terms of the residential
mortgage loan; and | 12 | | includes loan payment follow-up, delinquency loan
follow-up, | 13 | | loan analysis and any notifications to the borrower that are
| 14 | | necessary to enable the borrower to keep the loan current and | 15 | | in good standing. "Servicing" includes management of | 16 | | third-party entities acting on behalf of a residential mortgage | 17 | | licensee for the collection of delinquent payments and the use | 18 | | by such third-party entities of said licensee's servicing | 19 | | records or information, including their use in foreclosure. | 20 | | (r) "Full service office" shall mean an office, provided by | 21 | | the licensee and not subleased from the licensee's employees, | 22 | | and staff in Illinois
reasonably adequate to handle efficiently | 23 | | communications, questions, and
other matters relating to any | 24 | | application for, or an existing home mortgage
secured by | 25 | | residential real estate situated in Illinois
with respect to | 26 | | which the licensee is brokering, funding originating,
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| 1 | | purchasing, or servicing. The management and operation of each | 2 | | full service
office must include observance of good business | 3 | | practices such as proper signage; adequate,
organized, and | 4 | | accurate books and records; ample phone lines, hours of
| 5 | | business, staff training and supervision, and provision for a | 6 | | mechanism to
resolve consumer inquiries, complaints, and | 7 | | problems. The Commissioner
shall issue regulations with regard | 8 | | to these requirements and shall include
an evaluation of | 9 | | compliance with this Section in his or her periodic
examination | 10 | | of each licensee. | 11 | | (s) "Purchasing" shall mean the purchase of conventional or
| 12 | | government-insured mortgage loans secured by residential real | 13 | | estate
situated in Illinois from either the lender or from the | 14 | | secondary market. | 15 | | (t) "Borrower" shall mean the person or persons who seek | 16 | | the services of
a loan broker, originator, or lender. | 17 | | (u) "Originating" shall mean the issuing of commitments for | 18 | | and funding of
residential mortgage loans. | 19 | | (v) "Loan brokerage agreement" shall mean a written | 20 | | agreement in which a
broker or loan broker agrees to do either | 21 | | of the following: | 22 | | (1) obtain a residential mortgage loan for the borrower | 23 | | or assist the
borrower in obtaining a residential mortgage | 24 | | loan; or | 25 | | (2) consider making a residential mortgage loan to the | 26 | | borrower. |
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| 1 | | (w) "Advertisement" shall mean the attempt by publication,
| 2 | | dissemination, or circulation to induce, directly or | 3 | | indirectly,
any person to enter into a residential mortgage | 4 | | loan agreement or
residential mortgage loan brokerage | 5 | | agreement relative to a
mortgage secured by residential real | 6 | | estate situated in Illinois. | 7 | | (x) "Residential Mortgage Board" shall mean the | 8 | | Residential Mortgage
Board created in Section 1-5 of this Act. | 9 | | (y) "Government-insured mortgage loan" shall mean any | 10 | | mortgage loan made
on the security of residential real estate | 11 | | insured by the Department of
Housing and Urban Development or | 12 | | Farmers Home Loan Administration, or
guaranteed by the Veterans | 13 | | Administration. | 14 | | (z) "Annual audit" shall mean a certified audit of the | 15 | | licensee's books and
records and systems of internal control | 16 | | performed by a certified public
accountant in accordance with | 17 | | generally accepted accounting principles
and generally | 18 | | accepted auditing standards. | 19 | | (aa) "Financial institution" shall mean a savings and loan
| 20 | | association, savings bank, credit union, or a bank organized | 21 | | under the
laws of Illinois or a savings and loan association, | 22 | | savings bank,
credit union or a bank organized under the laws | 23 | | of the United States and
headquartered in Illinois. | 24 | | (bb) "Escrow agent" shall mean a third party, individual or | 25 | | entity
charged with the fiduciary obligation for holding escrow | 26 | | funds on a
residential mortgage loan pending final payout of |
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| 1 | | those funds
in accordance with the terms of the residential | 2 | | mortgage loan. | 3 | | (cc) "Net worth" shall have the meaning ascribed thereto in | 4 | | Section 3-5
of this Act. | 5 | | (dd) "Affiliate" shall mean: | 6 | | (1) any entity that directly controls or is controlled | 7 | | by the licensee
and any other company that is directly | 8 | | affecting activities regulated by
this Act that is | 9 | | controlled by the company that controls the licensee; | 10 | | (2) any entity: | 11 | | (A) that is controlled, directly or indirectly, by | 12 | | a trust or otherwise,
by or for the benefit of | 13 | | shareholders who beneficially or otherwise
control, | 14 | | directly or indirectly, by trust or otherwise, the | 15 | | licensee or any
company that controls the licensee; or | 16 | | (B) a majority of the directors or trustees of | 17 | | which constitute a
majority of the persons holding any | 18 | | such office with the licensee or any
company that | 19 | | controls the licensee; | 20 | | (3) any company, including a real estate investment | 21 | | trust, that is
sponsored and advised on a contractual basis | 22 | | by the licensee or any
subsidiary or affiliate of the | 23 | | licensee. | 24 | | The Commissioner may define by rule and regulation any | 25 | | terms used
in this Act for the efficient and clear | 26 | | administration of this Act. |
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| 1 | | (ee) "First tier subsidiary" shall be defined by regulation
| 2 | | incorporating the comparable definitions used by the Office of | 3 | | the
Comptroller of the Currency and the Illinois Commissioner | 4 | | of Banks
and Real Estate. | 5 | | (ff) "Gross delinquency rate" means the quotient | 6 | | determined by dividing
(1) the sum of (i) the number of | 7 | | government-insured residential mortgage loans
funded or | 8 | | purchased by a licensee in the preceding calendar year that are
| 9 | | delinquent and (ii) the number of conventional residential | 10 | | mortgage loans
funded or purchased by the licensee in the | 11 | | preceding calendar year that are
delinquent by (2) the sum of | 12 | | (i) the number of government-insured residential
mortgage | 13 | | loans funded or purchased by the licensee in the preceding | 14 | | calendar
year and (ii) the number of conventional residential | 15 | | mortgage loans funded or
purchased by the licensee in the | 16 | | preceding calendar year. | 17 | | (gg) "Delinquency rate factor" means the factor set by rule | 18 | | of the
Commissioner that is multiplied by the average gross | 19 | | delinquency rate of
licensees, determined annually for the | 20 | | immediately preceding calendar year, for
the purpose of | 21 | | determining which licensees shall be examined by the
| 22 | | Commissioner pursuant to subsection (b) of Section 4-8 of this | 23 | | Act. | 24 | | (hh) "Loan originator" means any natural person who, for | 25 | | compensation or in
the expectation of compensation, either | 26 | | directly or indirectly makes, offers to
make, solicits, places, |
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| 1 | | or negotiates a residential mortgage loan. This definition | 2 | | applies only to Section 7-1 of this Act. | 3 | | (ii) "Confidential supervisory information" means any | 4 | | report of examination, visitation, or investigation prepared | 5 | | by the Commissioner under this Act, any report of examination | 6 | | visitation, or investigation prepared by the state regulatory | 7 | | authority of another state that examines a licensee, any | 8 | | document or record prepared or obtained in connection with or | 9 | | relating to any examination, visitation, or investigation, and | 10 | | any record prepared or obtained by the Commissioner to the | 11 | | extent that the record summarizes or contains information | 12 | | derived from any report, document, or record described in this | 13 | | subsection. "Confidential supervisory information" does not | 14 | | include any information or record routinely prepared by a | 15 | | licensee and maintained in the ordinary course of business or | 16 | | any information or record that is required to be made publicly | 17 | | available pursuant to State or federal law or rule.
| 18 | | (jj) "Mortgage loan originator" means an individual who for | 19 | | compensation or gain or in the expectation of compensation or | 20 | | gain: | 21 | | (i) takes a residential mortgage loan application; or | 22 | | (ii) offers or negotiates terms of a residential | 23 | | mortgage loan. | 24 | | "Mortgage loan originator" includes an individual engaged | 25 | | in loan modification activities as defined in subsection (yy) | 26 | | of this Section. A mortgage loan originator engaged in loan |
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| 1 | | modification activities shall report those activities to the | 2 | | Department of Financial and Professional Regulation in the | 3 | | manner provided by the Department; however, the Department | 4 | | shall not impose a fee for reporting, nor require any | 5 | | additional qualifications to engage in those activities beyond | 6 | | those provided pursuant to this Act for mortgage loan | 7 | | originators. | 8 | | "Mortgage loan originator" does not include an individual | 9 | | engaged solely as a loan processor or underwriter except as | 10 | | otherwise provided in subsection (d) of Section 7-1A of this | 11 | | Act. | 12 | | "Mortgage loan originator" does not include a person or | 13 | | entity that only performs real estate brokerage activities and | 14 | | is licensed in accordance with the Real Estate License Act of | 15 | | 2000, unless the person or entity is compensated by a lender, a | 16 | | mortgage broker, or other mortgage loan originator, or by any | 17 | | agent of that lender, mortgage broker, or other mortgage loan | 18 | | originator. | 19 | | "Mortgage loan originator" does not include a person or | 20 | | entity solely involved in extensions of credit relating to | 21 | | timeshare plans, as that term is defined in Section 101(53D) of | 22 | | Title 11, United States Code. | 23 | | (kk) "Depository institution" has the same meaning as in | 24 | | Section 3 of the Federal Deposit Insurance Act, and includes | 25 | | any credit union. | 26 | | (ll) "Dwelling" means a residential structure or mobile |
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| 1 | | home which contains one to 4 family housing units, or | 2 | | individual units of condominiums or cooperatives. | 3 | | (mm) "Immediate family member" means a spouse, child, | 4 | | sibling, parent, grandparent, or grandchild, and includes | 5 | | step-parents, step-children, step-siblings, or adoptive | 6 | | relationships. | 7 | | (nn) "Individual" means a natural person. | 8 | | (oo) "Loan processor or underwriter" means an individual | 9 | | who performs clerical or support duties as an employee at the | 10 | | direction of and subject to the supervision and instruction of | 11 | | a person licensed, or exempt from licensing, under this Act. | 12 | | "Clerical or support duties" includes subsequent to the receipt | 13 | | of an application: | 14 | | (i) the receipt, collection, distribution, and | 15 | | analysis of information common for the processing or | 16 | | underwriting of a residential mortgage loan; and | 17 | | (ii) communicating with a consumer to obtain the | 18 | | information necessary for the processing or underwriting | 19 | | of a loan, to the extent that the communication does not | 20 | | include offering or negotiating loan rates or terms, or | 21 | | counseling consumers about residential mortgage loan rates | 22 | | or terms. An individual engaging solely in loan processor | 23 | | or underwriter activities shall not represent to the | 24 | | public, through advertising or other means of | 25 | | communicating or providing information, including the use | 26 | | of business cards, stationery, brochures, signs, rate |
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| 1 | | lists, or other promotional items, that the individual can | 2 | | or will perform any of the activities of a mortgage loan | 3 | | originator. | 4 | | (pp) "Nationwide Mortgage Licensing System and Registry" | 5 | | means a mortgage licensing system developed and maintained by | 6 | | the Conference of State Bank Supervisors and the American | 7 | | Association of Residential Mortgage Regulators for the | 8 | | licensing and registration of licensed mortgage loan | 9 | | originators. | 10 | | (qq) "Nontraditional mortgage product" means any mortgage | 11 | | product other than a 30-year fixed rate mortgage. | 12 | | (rr) "Person" means a natural person, corporation, | 13 | | company, limited liability company, partnership, or | 14 | | association. | 15 | | (ss) "Real estate brokerage activity" means any activity | 16 | | that involves offering or providing real estate brokerage | 17 | | services to the public, including: | 18 | | (1) acting as a real estate agent or real estate broker | 19 | | for a buyer, seller, lessor, or lessee of real property; | 20 | | (2) bringing together parties interested in the sale, | 21 | | purchase, lease, rental, or exchange of real property; | 22 | | (3) negotiating, on behalf of any party, any portion of | 23 | | a contract relating to the sale, purchase, lease, rental, | 24 | | or exchange of real property, other than in connection with | 25 | | providing financing with respect to any such transaction; | 26 | | (4) engaging in any activity for which a person engaged |
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| 1 | | in the activity is required to be registered or licensed as | 2 | | a real estate agent or real estate broker under any | 3 | | applicable law; or | 4 | | (5) offering to engage in any activity, or act in any | 5 | | capacity, described in this subsection (ss). | 6 | | (tt) "Registered mortgage loan originator" means any | 7 | | individual that: | 8 | | (1) meets the definition of mortgage loan originator | 9 | | and is an employee of: | 10 | | (A) a depository institution; | 11 | | (B) a subsidiary that is: | 12 | | (i) owned and controlled by a depository | 13 | | institution; and | 14 | | (ii) regulated by a federal banking agency; or | 15 | | (C) an institution regulated by the Farm Credit | 16 | | Administration; and | 17 | | (2) is registered with, and maintains a unique | 18 | | identifier through, the Nationwide Mortgage Licensing | 19 | | System and Registry. | 20 | | (uu) "Unique identifier" means a number or other identifier | 21 | | assigned by protocols established by the Nationwide Mortgage | 22 | | Licensing System and Registry. | 23 | | (vv) "Residential mortgage license" means a license issued | 24 | | pursuant to Section 1-3, 2-2, or 2-6 of this Act. | 25 | | (ww) "Mortgage loan originator license" means a license | 26 | | issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act. |
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| 1 | | (xx) "Secretary" means the Secretary of the Department of | 2 | | Financial and Professional Regulation, or a person authorized | 3 | | by the Secretary or by this Act to act in the Secretary's | 4 | | stead. | 5 | | (yy) "Loan modification" means, for compensation or gain, | 6 | | either directly or indirectly offering or negotiating on behalf | 7 | | of a borrower or homeowner to adjust the terms of a residential | 8 | | mortgage loan in a manner not provided for in the original or | 9 | | previously modified mortgage loan. | 10 | | (zz) "Short sale facilitation" means, for compensation or | 11 | | gain, either directly or indirectly offering or negotiating on | 12 | | behalf of a borrower or homeowner to facilitate the sale of | 13 | | residential real estate subject to one or more residential | 14 | | mortgage loans or debts constituting liens on the property in | 15 | | which the proceeds from selling the residential real estate | 16 | | will fall short of the amount owed and the lien holders are | 17 | | contacted to agree to release their lien on the residential | 18 | | real estate and accept less than the full amount owed on the | 19 | | debt. | 20 | | (Source: P.A. 96-112, eff. 7-31-09; 96-1000, eff. 7-2-10; | 21 | | 96-1216, eff. 1-1-11; 97-143, eff. 7-14-11; 97-891, eff. | 22 | | 8-3-12.)
| 23 | | (205 ILCS 635/2-2)
| 24 | | Sec. 2-2. Application process; investigation; fee.
| 25 | | (a) The Secretary shall issue a license upon completion of |
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| 1 | | all of the
following:
| 2 | | (1) The filing of an application for license with the | 3 | | Director or the Nationwide Mortgage Licensing System and | 4 | | Registry as approved by the Director.
| 5 | | (2) The filing with the Secretary of a listing of | 6 | | judgments entered
against, and bankruptcy petitions by, | 7 | | the license applicant for the
preceding 10 years.
| 8 | | (3) The payment, in certified funds, of
investigation | 9 | | and application fees, the total of which shall be in an
| 10 | | amount equal to $2,700 annually. To comply with the common | 11 | | renewal date and requirements of the Nationwide Mortgage | 12 | | Licensing System and Registry, the term of initial licenses | 13 | | may be extended or shortened with applicable fees prorated | 14 | | or combined accordingly.
| 15 | | (4) Except for a broker applying to renew a license, | 16 | | the filing of an
audited balance sheet including all | 17 | | footnotes prepared by a certified public
accountant in | 18 | | accordance with generally accepted accounting principles | 19 | | and
generally accepted auditing standards principles which | 20 | | evidences that the applicant meets
the net worth | 21 | | requirements of Section 3-5. Notwithstanding the | 22 | | requirements of this subsection, an applicant that is a | 23 | | subsidiary may submit audited consolidated financial | 24 | | statements of its parent, intermediary parent, or ultimate | 25 | | parent as long as the consolidated statements are supported | 26 | | by consolidating statements which include the applicant's |
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| 1 | | financial statement. If the consolidating statements are | 2 | | unaudited, the applicant's chief financial officer shall | 3 | | attest to the applicant's financial statements disclosed | 4 | | in the consolidating statements.
| 5 | | (5) The filing of proof satisfactory to the | 6 | | Commissioner that the
applicant, the members thereof if the | 7 | | applicant is a partnership or
association, the members or | 8 | | managers thereof that retain any authority or
| 9 | | responsibility under the operating agreement if the | 10 | | applicant is a limited
liability company, or the officers | 11 | | thereof if the applicant
is a corporation have 3 years | 12 | | experience preceding application
in real estate finance. | 13 | | Instead of this requirement, the applicant and the
| 14 | | applicant's officers or members, as applicable, may
| 15 | | satisfactorily complete a program of education in real | 16 | | estate finance and
fair lending, as
approved by the | 17 | | Commissioner, prior to receiving the
initial license.
The | 18 | | Commissioner shall promulgate rules regarding proof of | 19 | | experience
requirements and educational requirements and | 20 | | the satisfactory completion of
those requirements. The | 21 | | Commissioner may establish by rule a list of duly
licensed | 22 | | professionals and others who may be exempt from this | 23 | | requirement.
| 24 | | (6) An investigation of the averments required by | 25 | | Section 2-4, which
investigation must allow the | 26 | | Commissioner to issue positive findings stating
that the |
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| 1 | | financial responsibility, experience, character, and | 2 | | general fitness
of the license applicant and of the members | 3 | | thereof if the license applicant is
a partnership or | 4 | | association, of the officers and directors thereof if the
| 5 | | license applicant is a corporation, and of the managers and | 6 | | members that retain
any authority or responsibility under | 7 | | the operating agreement if the license
applicant is a | 8 | | limited liability company are such as to command the | 9 | | confidence
of the community and to warrant belief that the | 10 | | business will be operated
honestly, fairly and efficiently | 11 | | within the purpose of this Act. If the
Commissioner shall | 12 | | not so find, he or she shall not issue such license, and he
| 13 | | or she shall notify the license applicant of the denial. | 14 | | The Commissioner may impose conditions on a license if the | 15 | | Commissioner determines that the conditions are necessary or | 16 | | appropriate. These conditions shall be imposed in writing and | 17 | | shall continue in effect for the period prescribed by the | 18 | | Commissioner.
| 19 | | (b) All licenses shall be issued to the license applicant.
| 20 | | Upon receipt of such license, a residential mortgage | 21 | | licensee shall be
authorized to engage in the business | 22 | | regulated by this Act. Such license
shall remain in full force | 23 | | and effect until it expires without renewal, is
surrendered by | 24 | | the licensee or revoked or suspended as hereinafter provided.
| 25 | | (Source: P.A. 96-112, eff. 7-31-09; 96-1000, eff. 7-2-10; | 26 | | 97-891, eff. 8-3-12.)
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| 1 | | (205 ILCS 635/2-4) (from Ch. 17, par. 2322-4)
| 2 | | Sec. 2-4. Averments of Licensee. Each application for | 3 | | license or for the
renewal of a license shall be accompanied by | 4 | | the following averments stating
that the applicant:
| 5 | | (a) Will maintain at least one full service office | 6 | | within the
State of Illinois pursuant to Section 3-4 of | 7 | | this Act;
| 8 | | (b) Will maintain staff reasonably adequate to meet the | 9 | | requirements of
Section 3-4 of this Act;
| 10 | | (c) Will keep and maintain for 36 months the same | 11 | | written records
as required by the federal Equal Credit | 12 | | Opportunity Act, and any other
information required by | 13 | | regulations of the Commissioner regarding any home
| 14 | | mortgage in the course of the conduct of its residential | 15 | | mortgage business;
| 16 | | (d) Will file with the Commissioner or Nationwide | 17 | | Mortgage Licensing System and Registry as applicable, when | 18 | | due, any report or reports
which it is required to file | 19 | | under any of the provisions of this Act;
| 20 | | (e) Will not engage, whether as principal or agent, in | 21 | | the practice of
rejecting residential mortgage | 22 | | applications without reasonable cause, or
varying terms or | 23 | | application procedures without reasonable cause, for home
| 24 | | mortgages on real estate within any specific geographic | 25 | | area from the terms
or procedures generally provided by the |
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| 1 | | licensee within other geographic
areas of the State;
| 2 | | (f) Will not engage in fraudulent home mortgage | 3 | | underwriting practices;
| 4 | | (g) Will not make payment, whether directly or | 5 | | indirectly, of any kind
to any in house or fee appraiser of | 6 | | any government or private money lending
agency with which | 7 | | an application for a home mortgage has been filed for the
| 8 | | purpose of influencing the independent judgment of the | 9 | | appraiser with respect
to the value of any real estate | 10 | | which is to be covered by such home mortgage;
| 11 | | (h) Has filed tax returns (State and Federal) for the | 12 | | past 3
years or filed with the Commissioner an accountant's | 13 | | or attorney's
statement as to why no return was filed;
| 14 | | (i) Will not engage in any discrimination or redlining | 15 | | activities
prohibited by Section 3-8 of this Act;
| 16 | | (j) Will not knowingly make any false promises likely | 17 | | to influence or
persuade, or pursue a course of | 18 | | misrepresentation and false promises
through agents, | 19 | | solicitors, advertising or otherwise;
| 20 | | (k) Will not knowingly misrepresent, circumvent or | 21 | | conceal, through
whatever subterfuge or device, any of the | 22 | | material particulars or the
nature thereof, regarding a | 23 | | transaction to which it is a party to the
injury of another | 24 | | party thereto;
| 25 | | (l) Will disburse funds in accordance with its | 26 | | agreements;
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| 1 | | (m) Has not committed a crime against the law of this | 2 | | State, any other
state or of the United States, involving | 3 | | moral turpitude, fraudulent or
dishonest dealing, and that | 4 | | no final judgment has been entered against it in
a civil | 5 | | action upon grounds of fraud, misrepresentation or deceit | 6 | | which has
not been previously reported to the Commissioner;
| 7 | | (n) Will account or deliver to the owner upon request | 8 | | any personal property such as
money, fund, deposit, check, | 9 | | draft, mortgage, other document or thing of
value which it | 10 | | is not in law or equity entitled to retain under the
| 11 | | circumstances;
| 12 | | (o) Has not engaged in any conduct which would be cause | 13 | | for denial of a
license;
| 14 | | (p) Has not become insolvent;
| 15 | | (q) Has not submitted an application for a license | 16 | | under this Act which
contains a material misstatement;
| 17 | | (r) Has not demonstrated by course of conduct, | 18 | | negligence or incompetence
in performing any act for which | 19 | | it is required to hold a license under this
Act;
| 20 | | (s) Will advise the Commissioner in writing, or the | 21 | | Nationwide Mortgage Licensing System and Registry as | 22 | | applicable, of any changes to the
information submitted on | 23 | | the most recent application for license or averments of | 24 | | record within 30
days of said change. The written notice | 25 | | must be signed in the same form as
the application for | 26 | | license being amended;
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| 1 | | (t) Will comply with the provisions of this Act, or | 2 | | with any lawful
order, rule or regulation made or issued | 3 | | under the provisions of this Act;
| 4 | | (u) Will submit to periodic examination by the | 5 | | Commissioner as required
by this Act;
| 6 | | (v) Will advise the Commissioner in writing of | 7 | | judgments entered
against, and bankruptcy petitions by, | 8 | | the license applicant within 5
days of occurrence;
| 9 | | (w) Will advise the Commissioner in writing within 30 | 10 | | days of any request made to a licensee under this Act to | 11 | | repurchase a loan in a manner that completely and clearly | 12 | | identifies to whom the request was made, the loans | 13 | | involved, and the reason therefor;
| 14 | | (x) Will advise the Commissioner in writing within 30 | 15 | | days of any request from any entity to repurchase a loan in | 16 | | a manner that completely and clearly identifies to whom the | 17 | | request was made, the loans involved, and the reason for | 18 | | the request;
| 19 | | (y) Will at all times act in a manner consistent with | 20 | | subsections (a) and
(b) of Section 1-2 of this Act;
| 21 | | (z) Will not knowingly hire or employ a loan originator | 22 | | who is
not registered, or mortgage loan originator who is | 23 | | not licensed, with the Commissioner as required under | 24 | | Section 7-1 or Section 7-1A, as applicable, of this Act;
| 25 | | (aa) Will not charge or collect advance payments from | 26 | | borrowers or homeowners for engaging in loan modification; |
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| 1 | | and | 2 | | (bb) Will not structure activities or contracts to | 3 | | evade provisions 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. 96-112, eff. 7-31-09; 97-891, eff. 8-3-12.)
| 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
not connected with such licensee. The books and | 17 | | records of all licensees
under this Act shall be maintained on | 18 | | an accrual basis. The audit must be
sufficiently comprehensive | 19 | | in scope to permit
the expression of an opinion on the | 20 | | financial statements, which must be
prepared in accordance with | 21 | | generally accepted accounting principles, and
must be | 22 | | performed in accordance with generally accepted auditing | 23 | | standards. Notwithstanding
the requirements of this | 24 | | subsection, a licensee that is a first tier subsidiary
may | 25 | | submit audited consolidated financial statements of its |
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| 1 | | parent , intermediary parent, or ultimate parent as long as
the | 2 | | consolidated statements are supported by consolidating | 3 | | statements which include the licensee's financial statement. | 4 | | If the consolidating statements are unaudited, the . The
| 5 | | licensee's chief financial officer shall attest to the | 6 | | licensee's financial
statements disclosed in the consolidating | 7 | | statements.
| 8 | | (b) As used herein, the term "expression of opinion" | 9 | | includes either
(1) an unqualified opinion, (2) a qualified | 10 | | opinion, (3) a disclaimer of
opinion, or (4) an adverse | 11 | | opinion.
| 12 | | (c) If a qualified or adverse opinion is expressed or if an | 13 | | opinion is
disclaimed, the reasons therefore must be fully | 14 | | explained. An opinion,
qualified as to a scope limitation, | 15 | | shall not be acceptable.
| 16 | | (d) The most recent audit report shall be filed with the
| 17 | | Commissioner within 90 days after the end of the licensee's | 18 | | fiscal year, or with the Nationwide Mortgage Licensing System | 19 | | and Registry, if applicable, pursuant to Mortgage Call Report | 20 | | requirements. The report
filed with the Commissioner shall be | 21 | | certified by the certified public
accountant conducting the | 22 | | audit. The Commissioner may promulgate rules
regarding late | 23 | | audit reports.
| 24 | | (e) If any licensee required to make an audit shall fail to | 25 | | cause an
audit to be made, the Commissioner shall cause the | 26 | | same to be made by a
certified public accountant at the |
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| 1 | | licensee's expense. The Commissioner
shall select such | 2 | | certified public accountant by advertising for bids or
by such | 3 | | other fair and impartial means as he or she establishes by | 4 | | regulation.
| 5 | | (f) In lieu of the audit or compilation financial statement
| 6 | | required by this Section, a licensee shall submit and the | 7 | | Commissioner may
accept any audit made in conformance with the | 8 | | audit
requirements of the U.S. Department of Housing and Urban | 9 | | Development.
| 10 | | (g) With respect to licensees who solely broker residential | 11 | | mortgage
loans as defined in subsection (o) of Section 1-4, | 12 | | instead of the audit
required by this Section, the Commissioner | 13 | | may
accept
compilation financial statements prepared at least | 14 | | every 12 months, and
the compilation financial statement must | 15 | | be submitted within 90 days after the end of
the licensee's | 16 | | fiscal year, or with the Nationwide Mortgage Licensing System | 17 | | and Registry, if applicable, pursuant to Mortgage Call Report | 18 | | requirements. If a
licensee
under this Section fails to file a | 19 | | compilation as required, the Commissioner
shall cause an audit | 20 | | of the licensee's books and accounts to be made by a
certified | 21 | | public accountant at the licensee's expense. The Commissioner | 22 | | shall
select the certified public accountant by advertising for | 23 | | bids or by such other
fair and impartial means as he or she | 24 | | establishes by rule. A licensee who
files false or misleading | 25 | | compilation financial statements is guilty of a
business | 26 | | offense and shall be fined not less than $5,000.
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| 1 | | (h) The workpapers of the certified public accountants | 2 | | employed
by each
licensee for purposes of this Section are to | 3 | | be made available to the
Commissioner or the Commissioner's | 4 | | designee upon request and may be
reproduced by the Commissioner | 5 | | or the Commissioner's designee to enable to
the Commissioner to | 6 | | 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 | | Commissioner at the time of the annual license renewal payment | 13 | | following
receipt by the licensee of the audited or reviewed | 14 | | financial statements. All workpapers shall be made available to | 15 | | the
Commissioner upon request. The financial statements and | 16 | | workpapers may be
reproduced by the Commissioner or the | 17 | | Commissioner's designee to carry out the
purposes of this Act.
| 18 | | (Source: P.A. 97-813, eff. 7-13-12; 97-891, eff. 8-3-12; | 19 | | 98-463, eff. 8-16-13.)
| 20 | | Section 10. The Residential Real Property Disclosure Act is | 21 | | amended by changing Sections 70, 72, 74, 76, 78, and 80 as | 22 | | follows: | 23 | | (765 ILCS 77/70) | 24 | | Sec. 70. Predatory lending database program. |
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| 1 | | (a) As used in this Article: | 2 | | "Adjustable rate mortgage" or "ARM" means a closed-end | 3 | | mortgage transaction that allows adjustments of the loan | 4 | | interest rate during the first 3 years of the loan term. | 5 | | "Borrower" means a person seeking a mortgage loan.
| 6 | | "Broker" means a "broker" or "loan broker", as defined in | 7 | | subsection (p) of Section 1-4 of the Residential Mortgage | 8 | | License Act of 1987. | 9 | | "Closing agent" means an individual assigned by a title | 10 | | insurance company or a broker or originator to ensure that the | 11 | | execution of documents related to the closing of a real estate | 12 | | sale or the refinancing of a real estate loan and the | 13 | | disbursement of closing funds are in conformity with the | 14 | | instructions of the entity financing the transaction.
| 15 | | "Counseling" means in-person counseling provided by a | 16 | | counselor employed by a HUD-approved HUD-certified counseling | 17 | | agency to all borrowers, or documented telephone counseling | 18 | | where a hardship would be imposed on one or more borrowers. A | 19 | | hardship shall exist in instances in which the borrower is | 20 | | confined to his or her home due to medical conditions, as | 21 | | verified in writing by a physician, or the borrower resides 50 | 22 | | miles or more from the nearest participating HUD-approved | 23 | | HUD-certified housing counseling agency. In instances of | 24 | | telephone counseling, the borrower must supply all necessary | 25 | | documents to the counselor at least 72 hours prior to the | 26 | | scheduled telephone counseling session. |
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| 1 | | "Counselor" means a counselor employed by a HUD-approved | 2 | | HUD-certified housing counseling agency. | 3 | | "Credit score" means a credit risk score as defined by the | 4 | | Fair Isaac Corporation, or its successor, and reported under | 5 | | such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE" | 6 | | by one or more of the following credit reporting agencies or | 7 | | their successors: Equifax, Inc., Experian Information | 8 | | Solutions, Inc., and TransUnion
LLC. If the borrower's credit | 9 | | report contains credit scores from 2 reporting agencies, then | 10 | | the broker or loan originator shall report the lower score. If | 11 | | the borrower's credit report contains credit scores from 3 | 12 | | reporting agencies, then the broker or loan originator shall | 13 | | report the middle score.
| 14 | | "Department" means the Department of Financial and | 15 | | Professional Regulation.
| 16 | | "Exempt person or entity " means that term as it is defined | 17 | | in subsections (d)(1), (d)(1.5), and (d)(1.8) of Section 1-4 of | 18 | | the Residential Mortgage License Act of 1987.
| 19 | | "First-time homebuyer" means a borrower who has not held an | 20 | | ownership interest in residential property.
| 21 | | " HUD-approved HUD-certified counseling" or "counseling" | 22 | | means counseling given to a borrower by a counselor employed by | 23 | | a HUD-approved HUD-certified housing counseling agency. | 24 | | "Interest only" means a closed-end loan that permits one or | 25 | | more payments of interest without any reduction of the | 26 | | principal balance of the loan, other than the first payment on |
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| 1 | | the loan. | 2 | | "Lender" means that term as it is defined in subsection (g) | 3 | | of Section 1-4 of the Residential Mortgage License Act of 1987.
| 4 | | "Licensee" means that term as it is defined in subsection | 5 | | (e) of Section 1-4 of the Residential Mortgage License Act of | 6 | | 1987.
| 7 | | "Mortgage loan" means that term as it is defined in | 8 | | subsection (f) of Section 1-4 of the Residential Mortgage | 9 | | License Act of 1987.
| 10 | | "Negative amortization" means an amortization method under | 11 | | which the outstanding balance may increase at any time over the | 12 | | course of the loan because the regular periodic payment does | 13 | | not cover the full amount of interest due. | 14 | | "Originator" means a "loan originator" as defined in | 15 | | subsection (hh) of Section 1-4 of the Residential Mortgage | 16 | | License Act of 1987, except an exempt person, and means a | 17 | | "mortgage loan originator" as defined in subsection (jj) of | 18 | | Section 1-4 of the Residential Mortgage License Act of 1987, | 19 | | except an exempt person. | 20 | | "Points and fees" has the meaning ascribed to that term in | 21 | | Section 10 of the High Risk Home Loan Act. | 22 | | "Prepayment penalty" means a charge imposed by a lender | 23 | | under a mortgage note or rider when the loan is paid before the | 24 | | expiration of the term of the loan. | 25 | | "Refinancing" means a loan secured by the borrower's or | 26 | | borrowers' primary residence where the proceeds are not used as |
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| 1 | | purchase money for the residence. | 2 | | "Title insurance company" means any domestic company | 3 | | organized under the laws of this State for the purpose of | 4 | | conducting the business of guaranteeing or insuring titles to | 5 | | real estate and any title insurance company organized under the | 6 | | laws of another State, the District of Columbia, or a foreign | 7 | | government and authorized to transact the business of | 8 | | guaranteeing or insuring titles to real estate in this State.
| 9 | | (a-5) A predatory lending database program shall be | 10 | | established within Cook County. The program shall be | 11 | | administered in accordance with this Article. The inception | 12 | | date of the program shall be July 1, 2008.
A predatory lending
| 13 | | database program shall be expanded to include Kane, Peoria, and | 14 | | Will counties. The
inception date of the expansion of the | 15 | | program as it applies to Kane, Peoria, and Will
counties shall | 16 | | be July 1, 2010. Until the inception date, none of the duties, | 17 | | obligations, contingencies, or consequences of or from the | 18 | | program shall be imposed. The program shall apply to all | 19 | | mortgage applications that are governed by this Article and | 20 | | that are made or taken on or after the inception of the | 21 | | program.
| 22 | | (b) The database created under this program shall be | 23 | | maintained and administered by the Department. The database | 24 | | shall be designed to allow brokers, originators, counselors, | 25 | | title insurance companies, and closing agents to submit | 26 | | information to the database online. The database shall not be |
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| 1 | | designed to allow those entities to retrieve information from | 2 | | the database, except as otherwise provided in this Article. | 3 | | Information submitted by the broker or originator to the | 4 | | Department may be used to populate the online form submitted by | 5 | | a counselor, title insurance company, or closing agent. | 6 | | (c) Within 10 business days after taking a mortgage | 7 | | application, the broker or originator for any mortgage on | 8 | | residential property within the program area must submit to the | 9 | | predatory lending database all of the information required | 10 | | under Section 72 and any other information required by the | 11 | | Department by rule. Within 7 business days after receipt of the | 12 | | information, the Department shall compare that information to | 13 | | the housing
counseling standards in Section 73
and issue to the | 14 | | borrower and the broker or originator a determination of | 15 | | whether counseling is recommended for the borrower. The | 16 | | borrower may not waive counseling. If at any time after | 17 | | submitting the information required under Section 72 the broker | 18 | | or originator (i) changes the terms of the loan or (ii) issues | 19 | | a new commitment to the borrower, then, within 5 business days | 20 | | thereafter, the broker or originator shall re-submit all of the | 21 | | information required under Section 72 and, within 4 business | 22 | | days after receipt of the information re-submitted by the | 23 | | broker or originator, the Department shall compare that | 24 | | information to the housing
counseling standards in Section 73
| 25 | | and shall issue to the borrower and the broker or originator a | 26 | | new determination of whether re-counseling
is recommended for |
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| 1 | | the borrower based on the information re-submitted by the | 2 | | broker or originator. The Department shall require | 3 | | re-counseling if the loan terms have been modified to meet | 4 | | another counseling standard in Section 73, or if the broker has | 5 | | increased the interest rate by more than 200 basis points.
| 6 | | (d) If the Department recommends counseling for the | 7 | | borrower under subsection (c), then the Department shall notify | 8 | | the borrower of all participating HUD-approved HUD-certified | 9 | | counseling agencies located within the State and direct the | 10 | | borrower to interview with a counselor associated with one of | 11 | | those agencies. Within 10 business days after receipt of the | 12 | | notice of HUD-approved HUD-certified counseling agencies, it | 13 | | is the borrower's responsibility to borrower shall select one | 14 | | of those agencies and shall engage in an interview with a | 15 | | counselor associated with that agency. The selection must take | 16 | | place and the appointment for the interview must be set within | 17 | | 10 business days, although the interview may take place beyond | 18 | | the 10 business day period. Within 7 business days after | 19 | | interviewing the borrower, the counselor must submit to the | 20 | | predatory lending database all of the information required | 21 | | under Section 74 and any other information required by the | 22 | | Department by rule. Reasonable and customary costs not to | 23 | | exceed $300
associated with counseling provided under the | 24 | | program shall be paid by the broker or originator and shall not | 25 | | be charged back to, or recovered from, the borrower . The | 26 | | Department shall annually calculate to the nearest dollar an |
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| 1 | | adjusted rate for inflation. A counselor shall not recommend or | 2 | | suggest that a borrower contact any specific mortgage | 3 | | origination company, financial institution, or entity that | 4 | | deals in mortgage finance to obtain a loan, another quote, or | 5 | | for any other reason related to the specific mortgage | 6 | | transaction; however, a counselor may suggest that the borrower | 7 | | seek an opinion or a quote from another mortgage origination | 8 | | company, financial institution, or entity that deals in | 9 | | mortgage finance. A counselor or housing counseling agency that
| 10 | | in good faith provides counseling shall not be liable to a | 11 | | broker or originator or borrower for civil damages, except for | 12 | | willful or wanton misconduct on the part of the counselor in | 13 | | providing the counseling. | 14 | | (e) The broker or originator and the borrower may not take | 15 | | any legally binding action concerning the loan transaction | 16 | | until the later of the following: | 17 | | (1) the Department issues a determination not to | 18 | | recommend HUD-approved HUD-certified
counseling for the | 19 | | borrower in accordance with subsection (c); or | 20 | | (2) the Department issues a determination that | 21 | | HUD-approved HUD-certified
counseling is recommended for | 22 | | the borrower and the counselor submits all required | 23 | | information to the database in accordance with subsection | 24 | | (d).
| 25 | | (f) Within 10 business days after closing, the title | 26 | | insurance company or closing agent must submit to the predatory |
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| 1 | | lending database all of the information required under Section | 2 | | 76 and any other information required by the Department by | 3 | | rule. | 4 | | (g) The title insurance company or closing agent shall | 5 | | attach to the mortgage a certificate of
compliance with the | 6 | | requirements of this Article, as generated by the database. If | 7 | | the transaction is exempt, the title insurance company or | 8 | | closing agent shall attach to the mortgage a certificate of | 9 | | exemption, as generated by the database. If the title insurance | 10 | | company or closing agent fails to attach the certificate of | 11 | | compliance or exemption, whichever is required , then the | 12 | | mortgage is not recordable. In addition, if any lis pendens for | 13 | | a residential mortgage foreclosure is recorded on the property | 14 | | within the program area, a certificate of service must be | 15 | | simultaneously recorded that affirms that a copy of the lis | 16 | | pendens was filed with the Department. The lis pendens may be | 17 | | filed with the Department either electronically or by filing a | 18 | | hard copy. If the certificate of service is not recorded, then | 19 | | the lis pendens pertaining to the residential mortgage | 20 | | foreclosure in question is not recordable and is of no force | 21 | | and effect. | 22 | | (h) All information provided to the predatory lending | 23 | | database under the program is confidential and is not subject | 24 | | to disclosure under the Freedom of Information Act, except as | 25 | | otherwise provided in this Article. Information or documents | 26 | | obtained by employees of the Department in the course of |
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| 1 | | maintaining and administering the predatory lending database | 2 | | are deemed confidential. Employees are prohibited from making | 3 | | disclosure of such confidential information or documents. Any | 4 | | request for production of information from the predatory | 5 | | lending database, whether by subpoena, notice, or any other | 6 | | source, shall be referred to the Department of Financial and | 7 | | Professional Regulation. Any borrower may authorize in writing | 8 | | the release of database information. The Department may use the | 9 | | information in the database without the consent of the | 10 | | borrower: (i) for the purposes of administering and enforcing | 11 | | the program; (ii) to provide relevant information to a | 12 | | counselor providing counseling to a borrower under the program; | 13 | | or (iii) to the appropriate law enforcement agency or the | 14 | | applicable administrative agency if the database information | 15 | | demonstrates criminal, fraudulent, or otherwise illegal | 16 | | activity.
| 17 | | (i) Nothing in this Article is intended to prevent a | 18 | | borrower from making his or her own decision as to whether to | 19 | | proceed with a transaction.
| 20 | | (j) Any person who violates any provision of this Article | 21 | | commits an unlawful practice within the meaning of the Consumer | 22 | | Fraud and Deceptive Business Practices Act.
| 23 | | (j-1) A violation of any provision of this Article by a | 24 | | mortgage banking licensee or licensed mortgage loan originator | 25 | | shall constitute a violation of the Residential Mortgage | 26 | | License Act of 1987. |
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| 1 | | (j-2) A violation of any provision of this Article by a | 2 | | title insurance company, title agent, or escrow agent shall | 3 | | constitute a violation of the Title Insurance Act. | 4 | | (j-3) A violation of any provision of this Article by a | 5 | | housing counselor shall be referred to the Department of | 6 | | Housing and Urban Development. | 7 | | (k) During the existence of the program, the Department | 8 | | shall submit semi-annual reports to the Governor and to the | 9 | | General Assembly by May 1 and November 1 of each year detailing | 10 | | its findings regarding the program. The report shall include, | 11 | | by county, at least the following information for each | 12 | | reporting period: | 13 | | (1) the number of loans registered with the program; | 14 | | (2) the number of borrowers receiving counseling; | 15 | | (3) the number of loans closed; | 16 | | (4) the number of loans requiring counseling for each | 17 | | of the standards set forth in Section 73; | 18 | | (5) the number of loans requiring counseling where the | 19 | | mortgage originator changed the loan terms subsequent to | 20 | | counseling;
| 21 | | (6) the number of licensed mortgage brokers and loan | 22 | | originators entering information into
the database; | 23 | | (7) the number of investigations based on information | 24 | | obtained from the database,
including the number of | 25 | | licensees fined, the number of licenses suspended, and the
| 26 | | number of licenses revoked; |
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| 1 | | (8) a summary of the types of non-traditional mortgage | 2 | | products being offered; and | 3 | | (9) a summary of how the Department is actively | 4 | | utilizing the program to combat
mortgage fraud. | 5 | | (Source: P.A. 96-328, eff. 8-11-09; 96-856, eff. 12-31-09; | 6 | | 97-891, eff. 1-1-13.) | 7 | | (765 ILCS 77/72) | 8 | | Sec. 72. Originator; required information. As part of the | 9 | | predatory lending database program, the broker or originator | 10 | | must submit all of the following information for inclusion in | 11 | | the predatory lending database for each loan for which the | 12 | | originator takes an application: | 13 | | (1) The borrower's name, address, social security | 14 | | number or taxpayer identification number, date of birth, | 15 | | and income and expense information, including total | 16 | | monthly consumer debt , contained in the mortgage | 17 | | application .
| 18 | | (2) The address, permanent index number, and a | 19 | | description of the collateral and information about the | 20 | | loan or loans being applied for and the loan terms, | 21 | | including the amount of the loan, the rate and whether the | 22 | | rate is fixed or adjustable, amortization or loan period | 23 | | terms, and any other material terms.
| 24 | | (3) The borrower's credit score at the time of | 25 | | application.
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| 1 | | (4) Information about the originator and the company | 2 | | the originator works for, including the originator's | 3 | | license number and address, fees being charged, whether the | 4 | | fees are being charged as points up front, the yield spread | 5 | | premium payable outside closing, and other charges made or | 6 | | remuneration required by the broker or originator or its | 7 | | affiliates or the broker's or originator's employer or its | 8 | | affiliates for the mortgage loans.
| 9 | | (5) Information about affiliated or third party | 10 | | service providers, including the names and addresses of | 11 | | appraisers, title insurance companies, closing agents, | 12 | | attorneys, and realtors who are involved with the | 13 | | transaction and the broker or originator and any moneys | 14 | | received from the broker or originator in connection with | 15 | | the transaction.
| 16 | | (6) All information indicated on the Good Faith | 17 | | Estimate and Truth in Lending statement disclosures given | 18 | | to the borrower by the broker or originator.
| 19 | | (7) Annual real estate taxes for the property, together | 20 | | with any assessments payable in connection with the | 21 | | property to be secured by the collateral and the proposed | 22 | | monthly principal and interest charge of all loans to be | 23 | | taken by the borrower and secured by the property of the | 24 | | borrower.
| 25 | | (8) Information concerning how the broker or | 26 | | originator obtained the client and the name of its referral |
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| 1 | | source, if any.
| 2 | | (9) Information concerning the notices provided by the | 3 | | broker or originator to the borrower as required by law and | 4 | | the date those notices were given.
| 5 | | (10) Information concerning whether a sale and | 6 | | leaseback is contemplated and the names of the lessor and | 7 | | lessee, seller, and purchaser.
| 8 | | (11) Any and all financing by the borrower for the | 9 | | subject property within 12 months prior to the date of | 10 | | application. | 11 | | (12) Loan information, including interest rate, term, | 12 | | purchase price, down payment, and closing costs. | 13 | | (13) Whether the buyer is a first-time homebuyer or | 14 | | refinancing a primary residence. | 15 | | (14) Whether the loan permits interest only payments. | 16 | | (15) Whether the loan may result in negative | 17 | | amortization. | 18 | | (16) Whether the total points and fees payable by the | 19 | | borrowers at or before closing will exceed 5%. | 20 | | (17) Whether the loan includes a prepayment penalty, | 21 | | and, if so, the terms of the penalty. | 22 | | (18) Whether the loan is an ARM. | 23 | | All information entered into the predatory lending | 24 | | database must be true and correct to the best of the | 25 | | originator's knowledge. The originator shall, prior to | 26 | | closing, correct, update, or amend the data as necessary. If |
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| 1 | | any corrections become necessary after the file has been | 2 | | accessed by the closing agent or housing counselor, a new file | 3 | | must be entered. | 4 | | (Source: P.A. 97-891, eff. 1-1-13.) | 5 | | (765 ILCS 77/74) | 6 | | Sec. 74. Counselor; required information. As part of the | 7 | | predatory lending database program, a counselor must submit all | 8 | | of the following information for inclusion in the predatory | 9 | | lending database: | 10 | | (1) The information called for in items (1), (6), (9), | 11 | | (11), (12), (13), (14), (15), (16), (17), and (18) of
| 12 | | Section 72. | 13 | | (2) Any information from the borrower that confirms or | 14 | | contradicts the information called for under item (1) of | 15 | | this Section. | 16 | | (3) The name of the counselor and address of the | 17 | | HUD-approved HUD-certified housing counseling agency that | 18 | | employs the counselor.
| 19 | | (4) Information pertaining to the borrower's monthly | 20 | | expenses that assists the counselor in determining whether | 21 | | the borrower can afford the loans or loans for which the | 22 | | borrower is applying. | 23 | | (5) A list of the disclosures furnished to the | 24 | | borrower, as seen and reviewed by the counselor, and a | 25 | | comparison of that list to all disclosures required by law. |
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| 1 | | (6) Whether the borrower provided tax returns to the | 2 | | broker or originator or to the counselor, and, if so, who | 3 | | prepared the tax returns. | 4 | | (7)
A statement of the recommendations of the
counselor | 5 | | that indicates the counselor's response to each of the | 6 | | following statements: | 7 | | (A) The loan should not be approved due to indicia | 8 | | of fraud. | 9 | | (B) The loan should be approved; no material | 10 | | problems noted. | 11 | | (C) The borrower cannot afford the loan. | 12 | | (D) The borrower does not understand the | 13 | | transaction. | 14 | | (E) The borrower does not understand the costs | 15 | | associated with the transaction. | 16 | | (F) The borrower's monthly income and expenses | 17 | | have been reviewed and disclosed. | 18 | | (G) The rate of the loan is above market rate. | 19 | | (H) The borrower should seek a competitive bid from | 20 | | another broker or originator. | 21 | | (I) There are discrepancies between the borrower's | 22 | | verbal understanding and the originator's completed | 23 | | form. | 24 | | (J) The borrower is precipitously close to not | 25 | | being able to afford the loan. | 26 | | (K) The borrower understands the true cost of debt |
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| 1 | | consolidation and the need for credit card discipline.
| 2 | | (L) The information that the borrower provided the | 3 | | originator has been amended by the originator.
| 4 | | (Source: P.A. 97-813, eff. 7-13-12.) | 5 | | (765 ILCS 77/76) | 6 | | Sec. 76. Title insurance company or closing agent; required | 7 | | information. As part of the predatory lending database pilot | 8 | | program, a title insurance company or closing agent must submit | 9 | | all of the following information for inclusion in the predatory | 10 | | lending database:
| 11 | | (1) The borrower's name, address, social security | 12 | | number or taxpayer identification number, date of birth, | 13 | | and income and expense information contained in the | 14 | | mortgage application. | 15 | | (2) The address, permanent index number, and a | 16 | | description of the collateral and information about the | 17 | | loan or loans being applied for and the loan terms, | 18 | | including the amount of the loan, the rate and whether the | 19 | | rate is fixed or adjustable, amortization or loan period | 20 | | terms, and any other material terms. | 21 | | (3) Annual real estate taxes for the property, together | 22 | | with any assessments payable in connection with the | 23 | | property to be secured by the collateral and the proposed | 24 | | monthly principal and interest charge of all loans to be | 25 | | taken by the borrower and secured by the property of the |
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| 1 | | borrower as well as any required escrows and the amounts | 2 | | paid monthly for those escrows. | 3 | | (4) All itemizations and descriptions set forth in the | 4 | | RESPA settlement statement including items to be | 5 | | disbursed, payable outside closing "POC" items noted on the | 6 | | statement, and a list of payees and the amounts of their | 7 | | checks. | 8 | | (5) The name and license number of the title insurance | 9 | | company or closing agent together with the name of the | 10 | | agent actually conducting the closing. | 11 | | (6) The names and addresses of all originators, | 12 | | brokers, appraisers, sales persons, attorneys, and | 13 | | surveyors that are present at the closing. | 14 | | (7) The date of closing, a detailed list of all notices | 15 | | provided to the borrower at closing and the date of those | 16 | | notices, and all information indicated on the Truth in | 17 | | Lending statement and Good Faith Estimate disclosures.
| 18 | | (Source: P.A. 94-280, eff. 1-1-06.) | 19 | | (765 ILCS 77/78)
| 20 | | Sec. 78. Exemption. Borrowers applying for reverse | 21 | | mortgage financing of residential real estate including under | 22 | | programs regulated by the Federal Housing Administration (FHA) | 23 | | that require HUD-approved HUD-certified counseling are exempt | 24 | | from the program and may submit a HUD counseling certificate to | 25 | | comply with the program. A certificate of exemption is required |
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| 1 | | for recording.
| 2 | | Mortgages secured by non-owner occupied property, | 3 | | commercial property, residential property consisting of more | 4 | | than 4 units, and government property are exempt but require a | 5 | | certificate of exemption for recording. | 6 | | Mortgages originated by an exempt person or entity are | 7 | | exempt but require a certificate of exemption for recording. | 8 | | (Source: P.A. 98-463, eff. 8-16-13.) | 9 | | (765 ILCS 77/80)
| 10 | | Sec. 80. Predatory Lending Database Program Fund. The | 11 | | Predatory Lending Database Program Fund is created as a special | 12 | | fund in the State treasury. Subject to appropriation, moneys in | 13 | | the Fund shall be appropriated to the Illinois Housing | 14 | | Development Authority for the purpose of making grants for | 15 | | HUD-approved HUD-certified counseling agencies participating | 16 | | in the Predatory Lending Database Program to assist with | 17 | | implementation and development of the Predatory Lending | 18 | | Database Program.
| 19 | | (Source: P.A. 95-707, eff. 1-11-08.)
| 20 | | Section 99. Effective date. This Act takes effect upon | 21 | | becoming law.
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| 1 | |
INDEX
| 2 | |
Statutes amended in order of appearance
| | 3 | | 205 ILCS 635/1-4 | | | 4 | | 205 ILCS 635/2-2 | | | 5 | | 205 ILCS 635/2-4 | from Ch. 17, par. 2322-4 | | 6 | | 205 ILCS 635/3-2 | from Ch. 17, par. 2323-2 | | 7 | | 765 ILCS 77/70 | | | 8 | | 765 ILCS 77/72 | | | 9 | | 765 ILCS 77/74 | | | 10 | | 765 ILCS 77/76 | | | 11 | | 765 ILCS 77/78 | | | 12 | | 765 ILCS 77/80 | |
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