Illinois General Assembly - Full Text of SB1667
Illinois General Assembly

Previous General Assemblies

Full Text of SB1667  98th General Assembly


Sen. Jacqueline Y. Collins

Filed: 4/15/2013





09800SB1667sam001LRB098 09990 MGM 44336 a


2    AMENDMENT NO. ______. Amend Senate Bill 1667 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Residential Mortgage License Act of 1987 is
5amended by changing Sections 1-3 and 4-2 and adding Section
67-15 as follows:
7    (205 ILCS 635/1-3)  (from Ch. 17, par. 2321-3)
8    Sec. 1-3. Necessity for License; Scope of Act.
9    (a) No person, partnership, association, corporation or
10other entity shall engage in the business of brokering,
11funding, originating, servicing or purchasing of residential
12mortgage loans without first obtaining a license from the
13Secretary Commissioner in accordance with the licensing
14procedure provided in this Article I and such regulations as
15may be promulgated by the Secretary Commissioner. The licensing
16provisions of this Section shall not apply to any entity



09800SB1667sam001- 2 -LRB098 09990 MGM 44336 a

1engaged solely in commercial mortgage lending or to any person,
2partnership association, corporation or other entity exempted
3pursuant to Section 1-4, subsection (d), of this Act or in
4accordance with regulations promulgated by the Secretary
5Commissioner hereunder. No provision of this Act shall apply to
6an exempt person or entity as defined in items (1) and (1.5) of
7subsection (d) of Section 1-4 of this Act. Notwithstanding
8anything to the contrary in the preceding sentence, an
9individual acting as a mortgage loan originator who is not
10employed by and acting for an entity described in item (1) of
11subsection (tt) of Section 1-4 of this Act shall be subject to
12the mortgage loan originator licensing requirements of Article
13VII of this Act.
14    Effective January 1, 2011, no provision of this Act shall
15apply to an exempt person or entity as defined in item (1.8) of
16subsection (d) of Section 1-4 of this Act. Notwithstanding
17anything to the contrary in the preceding sentence, an
18individual acting as a mortgage loan originator who is not
19employed by and acting for an entity described in item (1) of
20subsection (tt) of Section 1-4 of this Act shall be subject to
21the mortgage loan originator licensing requirements of Article
22VII of this Act, and provided that an individual acting as a
23mortgage loan originator under item (1.8) of subsection (d) of
24Section 1-4 of this Act shall be further subject to a
25determination by the U.S. Department of Housing and Urban
26Development through final rulemaking or other authorized



09800SB1667sam001- 3 -LRB098 09990 MGM 44336 a

1agency determination under the federal Secure and Fair
2Enforcement for Mortgage Licensing Act of 2008.
3    (a-1) A person who is exempt from licensure pursuant to
4paragraph (ii) of item (1) of subsection (d) of Section 1-4 of
5this Act as a federally chartered savings bank that is
6registered with the Nationwide Mortgage Licensing System and
7Registry may apply to the Secretary for an exempt company
8registration for the purpose of sponsoring one or more
9individuals subject to the mortgage loan originator licensing
10requirements of Article VII of this Act. Registration with the
11Division of Banking of the Department shall not affect the
12exempt status of the applicant.
13        (1) A mortgage loan originator eligible for licensure
14    under this subsection shall (A) be covered under an
15    exclusive written contract with, and originate residential
16    mortgage loans solely on behalf of, that exempt person; and
17    (B) hold a current, valid insurance producer license under
18    Article XXXI of the Illinois Insurance Code.
19        (2) An exempt person shall: (A) fulfill any reporting
20    requirements required by the Nationwide Mortgage Licensing
21    System and Registry or the Secretary; (B) provide a blanket
22    surety bond pursuant to Section 7-12 of this Act covering
23    the activities of all its sponsored mortgage loan
24    originators; (C) reasonably supervise the activities of
25    all its sponsored mortgage loan originators; (D) comply
26    with all rules and orders (including the averments



09800SB1667sam001- 4 -LRB098 09990 MGM 44336 a

1    contained in Section 2-4 of this Act as applicable to a
2    non-licensed exempt entity provided for in this Section)
3    that the Secretary deems necessary to ensure compliance
4    with the federal SAFE Act; and (E) pay an annual
5    registration fee established by the Director.
6        (3) The Secretary may deny an exempt company
7    registration to an exempt person or fine, suspend, or
8    revoke an exempt company registration if the Secretary
9    finds one of the following:
10            (A) that the exempt person is not a person of
11        honesty, truthfulness, or good character;
12            (B) that the exempt person violated any applicable
13        law, rule, or order;
14            (C) that the exempt person refused or failed to
15        furnish, within a reasonable time, any information or
16        make any report that may be required by the Secretary;
17            (D) that the exempt person had a final judgment
18        entered against him or her in a civil action on grounds
19        of fraud, deceit, or misrepresentation, and the
20        conduct on which the judgment is based indicates that
21        it would be contrary to the interest of the public to
22        permit the exempt person to manage a loan originator;
23            (E) that the exempt person had an order entered
24        against him or her involving fraud, deceit, or
25        misrepresentation by an administrative agency of this
26        State, the federal government, or any other state or



09800SB1667sam001- 5 -LRB098 09990 MGM 44336 a

1        territory of the United States, and the facts relating
2        to the order indicate that it would be contrary to the
3        interest of the public to permit the exempt person to
4        manage a loan originator;
5            (F) that the exempt person made a material
6        misstatement or suppressed or withheld information on
7        the application for an exempt company registration or
8        any document required to be filed with the Secretary;
9        or
10            (G) that the exempt person violated Section 4-5 of
11        this Act.
12    (b) No person, partnership, association, corporation, or
13other entity except a licensee under this Act or an entity
14exempt from licensing pursuant to Section 1-4, subsection (d),
15of this Act shall do any business under any name or title, or
16circulate or use any advertising or make any representation or
17give any information to any person, which indicates or
18reasonably implies activity within the scope of this Act.
19    (c) The Secretary Commissioner may, through the Attorney
20General, request the circuit court of either Cook or Sangamon
21County to issue an injunction to restrain any person from
22violating or continuing to violate any of the foregoing
23provisions of this Section.
24    (d) When the Secretary Commissioner has reasonable cause to
25believe that any entity which has not submitted an application
26for licensure is conducting any of the activities described in



09800SB1667sam001- 6 -LRB098 09990 MGM 44336 a

1subsection (a) hereof, the Secretary Commissioner shall have
2the power to examine all books and records of the entity and
3any additional documentation necessary in order to determine
4whether such entity should become licensed under this Act.
5    (d-1) The Secretary Commissioner may issue orders against
6any person if the Secretary Commissioner has reasonable cause
7to believe that an unsafe, unsound, or unlawful practice has
8occurred, is occurring, or is about to occur, if any person has
9violated, is violating, or is about to violate any law, rule,
10or written agreement with the Secretary Commissioner, or for
11the purposes of administering the provisions of this Act and
12any rule adopted in accordance with this Act.
13    (e) Any person, partnership, association, corporation or
14other entity who violates any provision of this Section commits
15a business offense and shall be fined an amount not to exceed
17    (f) Each person, partnership, association, corporation or
18other entity conducting activities regulated by this Act shall
19be issued one license. Each office, place of business or
20location at which a residential mortgage licensee conducts any
21part of his or her business must be recorded with the Secretary
22Commissioner pursuant to Section 2-8 of this Act.
23    (g) Licensees under this Act shall solicit, broker, fund,
24originate, service and purchase residential mortgage loans
25only in conformity with the provisions of this Act and such
26rules and regulations as may be promulgated by the Secretary



09800SB1667sam001- 7 -LRB098 09990 MGM 44336 a

2    (h) This Act applies to all entities doing business in
3Illinois as residential mortgage bankers, as defined by "An Act
4to provide for the regulation of mortgage bankers", approved
5September 15, 1977, as amended, regardless of whether licensed
6under that or any prior Act. Any existing residential mortgage
7lender or residential mortgage broker in Illinois whether or
8not previously licensed, must operate in accordance with this
10    (i) This Act is a successor Act to and a continuance of the
11regulation of residential mortgage bankers provided in, "An Act
12to provide for the regulation of mortgage bankers", approved
13September 15, 1977, as amended.
14    Entities and persons subject to the predecessor Act shall
15be subject to this Act from and after its effective date.
16(Source: P.A. 96-112, eff. 7-31-09; 96-1216, eff. 1-1-11;
1797-143, eff. 7-14-11.)
18    (205 ILCS 635/4-2)  (from Ch. 17, par. 2324-2)
19    Sec. 4-2. Examination; prohibited activities.
20    (a) The business affairs of a licensee under this Act shall
21be examined for compliance with this Act as often as the
22Secretary Commissioner deems necessary and proper. The
23Secretary Commissioner shall promulgate rules with respect to
24the frequency and manner of examination. The Secretary
25Commissioner shall appoint a suitable person to perform such



09800SB1667sam001- 8 -LRB098 09990 MGM 44336 a

1examination. The Secretary Commissioner and his appointees may
2examine the entire books, records, documents, and operations of
3each licensee and its subsidiary, affiliate, or agent, and may
4examine any of the licensee's or its subsidiary's, affiliate's,
5or agent's officers, directors, employees and agents under
6oath. For purposes of this Section, "agent" includes service
7providers such as accountants, closing services providers,
8providers of outsourced services such as call centers,
9marketing consultants, and loan processors, even if exempt from
10licensure under this Act. This Section does not apply to an
11attorney's privileged work product or communications.
12    (b) The Secretary Commissioner shall prepare a
13sufficiently detailed report of each licensee's examination,
14shall issue a copy of such report to each licensee's
15principals, officers, or directors and shall take appropriate
16steps to ensure correction of violations of this Act.
17    (c) Affiliates of a licensee shall be subject to
18examination by the Secretary Commissioner on the same terms as
19the licensee, but only when reports from, or examination of a
20licensee provides for documented evidence of unlawful activity
21between a licensee and affiliate benefiting, affecting or
22deriving from the activities regulated by this Act.
23    (d) The expenses of any examination of the licensee and
24affiliates shall be borne by the licensee and assessed by the
25Secretary Commissioner as established by regulation.
26    (e) Upon completion of the examination, the Secretary



09800SB1667sam001- 9 -LRB098 09990 MGM 44336 a

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



09800SB1667sam001- 10 -LRB098 09990 MGM 44336 a

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



09800SB1667sam001- 11 -LRB098 09990 MGM 44336 a

1obtained and, upon entry of a protective order, shall provide
2copies of confidential supervisory information to the other
4    (f) The Secretary Commissioner, deputy commissioners, and
5employees of the Office of Banks and Real Estate shall be
6subject to the restrictions provided in Section 2.5 of the
7Division of Banking Act including, without limitation, the
8restrictions on (i) owning shares of stock or holding any other
9equity interest in an entity regulated under this Act or in any
10corporation or company that owns or controls an entity
11regulated under this Act; (ii) being an officer, director,
12employee, or agent of an entity regulated under this Act; and
13(iii) obtaining a loan or accepting a gratuity from an entity
14regulated under this Act.
15    (g) After the initial examination for those licensees whose
16only mortgage activity is servicing fewer than 1,000 Illinois
17residential loans, the examination required in subsection (a)
18may be waived upon submission of a letter from the licensee's
19independent certified auditor that the licensee serviced fewer
20than 1,000 Illinois residential loans during the year in which
21the audit was performed.
22    (h) An exempt entity under subsection (a-1) of Section 1-3
23of this Act shall cooperate with the Secretary in the
24examination and investigation of its sponsored and licensed
25mortgage loan originators at a frequency determined by the
26Secretary. The exempt entity under subsection (a-1) of Section



09800SB1667sam001- 12 -LRB098 09990 MGM 44336 a

11-3 of this Act shall cooperate with the Secretary in providing
2mortgage loan originator documents and access to mortgage loan
3originator offices for the purposes of examination and
4investigation. The activities of the exempt entity shall not
5relieve a mortgage loan originator of his or her individual
6requirements under Section 7-15 of this Act. An exempt entity
7under subsection (a-1) of Section 1-3 of this Act shall pay to
8the Department any examination fees invoiced by the Secretary
9for examination of its sponsored mortgage loan originators. The
10Secretary shall have the authority to make oral or written
11inquiries regarding the management of an exempt entity under
12subsection (a-1) of Section 1-3 of this Act and it shall be the
13duty of the exempt entity to promptly reply by telephone, in
14writing, or other means to the inquiry.
15(Source: P.A. 96-112, eff. 7-31-09; 96-1365, eff. 7-28-10.)
16    (205 ILCS 635/7-15 new)
17    Sec. 7-15. Examination and investigation of certain
18mortgage loan originators. The activities requiring a licensee
19of a mortgage loan originator that are sponsored by an exempt
20entity under subsection (a-1) of Section 1-3 of this Act are
21subject to examination and investigation by the Secretary.
22Mortgage loan originators sponsored by an exempt entity shall
23keep and maintain records of his or her loan activities for a
24period of 36 months and shall produce records on demand by the
25Secretary. The records shall include a loan log or loan



09800SB1667sam001- 13 -LRB098 09990 MGM 44336 a

1production log as approved by the Secretary and any loan
2application entered, prepared, or created through or from the
3mortgage loan originator's activities. Mortgage loan
4originators sponsored by an exempt entity shall provide access,
5upon the Secretary's demand, to his or her offices for the
6purposes of the Department's examination and investigation.
7The Secretary shall determine the manner and frequency at which
8the Department shall conduct examinations of the mortgage loan
9originators. Mortgage loan originators sponsored by an exempt
10entity shall cooperate at all times with the Department
11pursuant to requirements of this Section and shall be subject
12to penalties under Section 7-11 of this Act for failure to
14    Section 99. Effective date. This Act takes effect upon
15becoming law.".