Illinois General Assembly - Full Text of HB5542
Illinois General Assembly

Previous General Assemblies

Full Text of HB5542  100th General Assembly




HB5542 EngrossedLRB100 17500 XWW 32669 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Residential Mortgage License Act of 1987 is
5amended by changing Sections 2-2, 2-4, 4-8, 4-8.3, and 5-9 as
7    (205 ILCS 635/2-2)
8    Sec. 2-2. Application process; investigation; fee.
9    (a) The Secretary shall issue a license upon completion of
10all of the following:
11        (1) The filing of an application for license with the
12    Director or the Nationwide Mortgage Licensing System and
13    Registry as approved by the Director.
14        (2) The filing with the Secretary of a listing of
15    judgments entered against, and bankruptcy petitions by,
16    the license applicant for the preceding 10 years.
17        (3) The payment, in certified funds, of investigation
18    and application fees, the total of which shall be in an
19    amount equal to $2,700 annually.
20        (4) Except for a broker applying to renew a license,
21    the filing of an audited balance sheet including all
22    footnotes prepared by a certified public accountant in
23    accordance with generally accepted accounting principles



HB5542 Engrossed- 2 -LRB100 17500 XWW 32669 b

1    and generally accepted auditing standards which evidences
2    that the applicant meets the net worth requirements of
3    Section 3-5. Notwithstanding the requirements of this
4    subsection, an applicant that is a subsidiary may submit
5    audited consolidated financial statements of its parent,
6    intermediary parent, or ultimate parent as long as the
7    consolidated statements are supported by consolidating
8    statements which include the applicant's financial
9    statement. If the consolidating statements are unaudited,
10    the applicant's chief financial officer shall attest to the
11    applicant's financial statements disclosed in the
12    consolidating statements.
13        (5) The filing of proof satisfactory to the Secretary
14    Commissioner that the applicant, the members thereof if the
15    applicant is a partnership or association, the members or
16    managers thereof that retain any authority or
17    responsibility under the operating agreement if the
18    applicant is a limited liability company, or the officers
19    thereof if the applicant is a corporation have 3 years
20    experience preceding application in real estate finance.
21    Instead of this requirement, the applicant and the
22    applicant's officers or members, as applicable, may
23    satisfactorily complete a program of education in real
24    estate finance and fair lending, as approved by the
25    Secretary Commissioner, prior to receiving the initial
26    license. The Secretary Commissioner shall adopt promulgate



HB5542 Engrossed- 3 -LRB100 17500 XWW 32669 b

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



HB5542 Engrossed- 4 -LRB100 17500 XWW 32669 b

1the period prescribed by the Secretary Commissioner.
2    (b) All licenses shall be issued to the license applicant.
3    Upon receipt of such license, a residential mortgage
4licensee shall be authorized to engage in the business
5regulated by this Act. Such license shall remain in full force
6and effect until it expires without renewal, is surrendered by
7the licensee or revoked or suspended as hereinafter provided.
8(Source: P.A. 98-1081, eff. 1-1-15; 99-15, eff. 1-1-16.)
9    (205 ILCS 635/2-4)  (from Ch. 17, par. 2322-4)
10    Sec. 2-4. Prohibited acts and practices for licensees.
11Averments of Licensee. It is a violation of this Act for a
12licensee subject to this Act to Each application for license
13shall be accompanied by the following averments stating that
14the applicant:
15        (a) fail to Will maintain at least one full service
16    office within the State of Illinois if required to do so
17    pursuant to Section 3-4 of this Act;
18        (b) fail to Will maintain staff reasonably adequate to
19    meet the requirements of Section 3-4 of this Act;
20        (c) fail to Will keep and maintain for 36 months the
21    same written records as required by the federal Equal
22    Credit Opportunity Act, and any other information required
23    by regulations of the Secretary Commissioner regarding any
24    home mortgage in the course of the conduct of its
25    residential mortgage business;



HB5542 Engrossed- 5 -LRB100 17500 XWW 32669 b

1        (d) fail to Will file with the Secretary Commissioner
2    or Nationwide Mortgage Licensing System and Registry as
3    applicable, when due, any report or reports which it is
4    required to file under any of the provisions of this Act;
5        (e) engage Will not engage, whether as principal or
6    agent, in the practice of rejecting residential mortgage
7    applications without reasonable cause, or varying terms or
8    application procedures without reasonable cause, for home
9    mortgages on real estate within any specific geographic
10    area from the terms or procedures generally provided by the
11    licensee within other geographic areas of the State;
12        (f) engage Will not engage in fraudulent home mortgage
13    underwriting practices;
14        (g) make Will not make payment, whether directly or
15    indirectly, of any kind to any in house or fee appraiser of
16    any government or private money lending agency with which
17    an application for a home mortgage has been filed for the
18    purpose of influencing the independent judgment of the
19    appraiser with respect to the value of any real estate
20    which is to be covered by such home mortgage;
21        (h) fail to file Has filed tax returns (State and
22    Federal) for the past 3 years or filed with the Secretary
23    Commissioner an accountant's or attorney's statement as to
24    why no return was filed;
25        (i) engage Will not engage in any discrimination or
26    redlining activities prohibited by Section 3-8 of this Act;



HB5542 Engrossed- 6 -LRB100 17500 XWW 32669 b

1        (j) knowingly Will not knowingly make any false
2    promises likely to influence or persuade, or pursue a
3    course of misrepresentation and false promises through
4    agents, solicitors, advertising or otherwise;
5        (k) knowingly Will not knowingly misrepresent,
6    circumvent or conceal, through whatever subterfuge or
7    device, any of the material particulars or the nature
8    thereof, regarding a transaction to which it is a party to
9    the injury of another party thereto;
10        (l) fail to Will disburse funds in accordance with its
11    agreements;
12        (m) commit Has not committed a crime against the law of
13    this State, any other state or of the United States,
14    involving moral turpitude, fraudulent or dishonest
15    dealing, and that no final judgment has been entered
16    against it in a civil action upon grounds of fraud,
17    misrepresentation or deceit which has not been previously
18    reported to the Secretary Commissioner;
19        (n) fail to Will account or deliver to the owner upon
20    request any personal property such as money, fund, deposit,
21    check, draft, mortgage, other document or thing of value
22    which it is not in law or equity entitled to retain under
23    the circumstances;
24        (o) engage Has not engaged in any conduct which would
25    be cause for denial of a license;
26        (p) become Has not become insolvent;



HB5542 Engrossed- 7 -LRB100 17500 XWW 32669 b

1        (q) submit Has not submitted an application for a
2    license under this Act which contains a material
3    misstatement;
4        (r) demonstrate Has not demonstrated by course of
5    conduct, negligence or incompetence in performing any act
6    for which it is required to hold a license under this Act;
7        (s) fail to Will advise the Secretary Commissioner in
8    writing, or the Nationwide Mortgage Licensing System and
9    Registry, as applicable, of any changes to the information
10    submitted on the most recent application for license or
11    averments of record within 30 days of said change. The
12    written notice must be signed in the same form as the
13    application for license being amended;
14        (t) fail to Will comply with the provisions of this
15    Act, or with any lawful order, rule or regulation made or
16    issued under the provisions of this Act;
17        (u) fail to Will submit to periodic examination by the
18    Secretary Commissioner as required by this Act;
19        (v) fail to Will advise the Secretary Commissioner in
20    writing of judgments entered against, and bankruptcy
21    petitions by, the license applicant within 5 days of
22    occurrence;
23        (w) fail to Will advise the Secretary Commissioner in
24    writing within 30 days of any request made to a licensee
25    under this Act to repurchase a loan in a manner that
26    completely and clearly identifies to whom the request was



HB5542 Engrossed- 8 -LRB100 17500 XWW 32669 b

1    made, the loans involved, and the reason therefor;
2        (x) fail to Will advise the Secretary Commissioner in
3    writing within 30 days of any request from any entity to
4    repurchase a loan in a manner that completely and clearly
5    identifies to whom the request was made, the loans
6    involved, and the reason for the request;
7        (y) fail to Will at all times act in a manner
8    consistent with subsections (a) and (b) of Section 1-2 of
9    this Act;
10        (z) knowingly Will not knowingly hire or employ a loan
11    originator who is not registered, or mortgage loan
12    originator who is not licensed, with the Secretary
13    Commissioner as required under Section 7-1 or Section 7-1A,
14    as applicable, of this Act;
15        (aa) charge Will not charge or collect advance payments
16    from borrowers or homeowners for engaging in loan
17    modification; or and
18        (bb) structure Will not structure activities or
19    contracts to evade provisions of this Act.
20    A licensee who fails to fulfill obligations of an averment,
21to comply with this Section averments made, or otherwise
22violates any of the provisions of averments made under this
23Section shall be subject to the penalties in Section 4-5 of
24this Act.
25(Source: P.A. 97-891, eff. 8-3-12; 98-1081, eff. 1-1-15.)



HB5542 Engrossed- 9 -LRB100 17500 XWW 32669 b

1    (205 ILCS 635/4-8)  (from Ch. 17, par. 2324-8)
2    Sec. 4-8. Delinquency; examination.
3    (a) (Blank). The Commissioner shall obtain from the U.S.
4Department of Housing and Urban Development that Department's
5loan delinquency data.
6    (b) The Secretary Commissioner shall conduct as part of an
7examination of each licensee a review of the licensee's loan
8delinquency data.
9    This subsection shall not be construed as a limitation of
10the Secretary's Commissioner's examination authority under
11Section 4-2 of this Act or as otherwise provided in this Act.
12The Secretary Commissioner may require a licensee to provide
13loan delinquency data as the Secretary Commissioner deems
14necessary for the proper enforcement of the Act.
15    (c) The purpose of the examination under subsection (b)
16shall be to determine whether the loan delinquency data of the
17licensee has resulted from practices which deviate from sound
18and accepted mortgage underwriting practices, including, but
19not limited to, credit fraud, appraisal fraud, and property
20inspection fraud. For the purpose of conducting this
21examination, the Secretary Commissioner may accept materials
22prepared for the U.S. Department of Housing and Urban
23Development. At the conclusion of the examination, the
24Secretary Commissioner shall make his or her findings available
25to the Residential Mortgage Board.
26    (d) The Secretary Commissioner, at his or her discretion,



HB5542 Engrossed- 10 -LRB100 17500 XWW 32669 b

1may hold public hearings, or at the direction of the
2Residential Mortgage Board, shall hold public hearings. Such
3testimony shall be by a homeowner or mortgagor or his agent,
4whose residential interest is affected by the activities of the
5residential mortgage licensee subject to such hearing. At such
6public hearing, a witness may present testimony on his or her
7behalf concerning only his or her home, or home mortgage or a
8witness may authorize a third party to appear on his or her
9behalf. The testimony shall be restricted to information and
10comments related to a specific residence or specific
11residential mortgage application or applications for a
12residential mortgage or residential loan transaction. The
13testimony must be preceded by either a letter of complaint or a
14completed consumer complaint form prescribed by the Secretary
16    (e) The Secretary Commissioner shall, at the conclusion of
17the public hearings, release his or her findings and shall also
18make public any action taken with respect to the licensee. The
19Secretary Commissioner shall also give full consideration to
20the findings of this examination whenever reapplication is made
21by the licensee for a new license under this Act.
22    (f) A licensee that is examined pursuant to subsection (b)
23shall submit to the Secretary Commissioner a plan which shall
24be designed to reduce that licensee's loan delinquencies. The
25plan shall be implemented by the licensee as approved by the
26Secretary Commissioner. A licensee that is examined pursuant to



HB5542 Engrossed- 11 -LRB100 17500 XWW 32669 b

1subsection (b) shall report monthly, for a one year period,
2one, 2, and 3 month loan delinquencies.
3    (g) Whenever the Secretary Commissioner finds that a
4licensee's loan delinquencies on insured mortgages is
5unusually high within a particular geographic area, he or she
6shall require that licensee to submit such information as is
7necessary to determine whether that licensee's practices have
8constituted credit fraud, appraisal fraud or property
9inspection fraud. The Secretary Commissioner shall promulgate
10such rules as are necessary to determine whether any licensee's
11loan delinquencies are unusually high within a particular area.
12(Source: P.A. 99-15, eff. 1-1-16.)
13    (205 ILCS 635/4-8.3)
14    Sec. 4-8.3. Annual report of mortgage brokerage and
15servicing activity. On or before March 1 of each year or the
16date selected for Mortgage Call Reports under Section 4-9.1 of
17this Act, each licensee shall file a report with the Secretary
18Commissioner that discloses shall disclose such information as
19the Secretary Commissioner requires. A licensee filing a
20Mortgage Call Report is not required to file an annual report.
21Exempt entities as defined in subsection (d) of Section 1-4
22shall not file the annual report of mortgage and servicing
23activity required by this Section.
24(Source: P.A. 96-112, eff. 7-31-09.)



HB5542 Engrossed- 12 -LRB100 17500 XWW 32669 b

1    (205 ILCS 635/5-9)
2    Sec. 5-9. Notice of change in loan terms.
3    (a) No licensee may fail to do either of the following:
4        (1) Provide timely notice to the borrower of any
5    material change in the terms of the residential mortgage
6    loan prior to the closing of the loan. For purposes of this
7    Section, a "material change means" any of the following:
8            (A) A change in the type of loan being offered,
9        such as a fixed or variable rate loan or a loan with a
10        balloon payment.
11            (B) A change in the term of the loan, as reflected
12        in the number of monthly payments due before a final
13        payment is scheduled to be made.
14            (C) An increase in the interest rate of more than
15        0.15%, or an equivalent increase in the amount of
16        discount points charged.
17            (D) An increase in the regular monthly payment of
18        principal and interest of more than 5%.
19            (E) A change regarding the requirement or amount of
20        escrow of taxes or insurance.
21            (F) A change regarding the requirement or payment,
22        or both, of private mortgage insurance.
23        (2) Timely inform the borrower if any fees payable by
24    the borrower to the licensee increase by more than 10% or
25    $100, whichever is greater.
26    (b) The disclosures required by this Section shall be



HB5542 Engrossed- 13 -LRB100 17500 XWW 32669 b

1deemed timely if the licensee provides the borrower with the
2revised information not later than 3 days after learning of the
3change or 24 hours before the residential mortgage loan is
4closed, whichever is earlier. If the licensee discloses a
5material change more than the 3 days after learning of the
6change but still 24 hours before the residential mortgage loan
7is closed, it will not be liable for penalties or forfeitures
8if the licensee cures in time for the borrower to avoid any
10    (c) If an increase in the total amount of the fee to be
11paid by the borrower to the broker is not disclosed in
12accordance with this Section, the broker shall refund to the
13borrower the amount by which the fee was increased. If the fee
14is financed into the residential mortgage loan, the broker
15shall also refund to the borrower the interest charged to
16finance the fee.
17    (d) The requirements of this Section do not apply to a
18licensee providing a notice of change in loan terms pursuant to
19the federal Consumer Financial Protection Bureau's Know Before
20You Owe mortgage disclosure procedure pursuant to the federal
21Truth in Lending Act and amendments promulgated under 12 CFR
221026 and the federal Real Estate Settlement Procedures Act and
23amendments promulgated under 12 CFR 1024. Licensees limited to
24soliciting residential mortgage loan applications as approved
25by the Director under Title 38, Section 1050.2115(c)(1) of the
26Illinois Administrative Code are not required to provide the



HB5542 Engrossed- 14 -LRB100 17500 XWW 32669 b

1disclosures under this Section as long as the solicitor does
2not discuss the terms and conditions with the potential
4(Source: P.A. 95-691, eff. 6-1-08.)
5    Section 99. Effective date. This Act takes effect upon
6becoming law.