Illinois General Assembly - Full Text of HB5542
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Full Text of HB5542  100th General Assembly


Rep. Nick Sauer

Filed: 3/29/2018





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2    AMENDMENT NO. ______. Amend House Bill 5542 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 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.



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1        (3) The payment, in certified funds, of investigation
2    and application fees, the total of which shall be in an
3    amount equal to $2,700 annually.
4        (4) Except for a broker applying to renew a license,
5    the filing of an audited balance sheet including all
6    footnotes prepared by a certified public accountant in
7    accordance with generally accepted accounting principles
8    and generally accepted auditing standards which evidences
9    that the applicant meets the net worth requirements of
10    Section 3-5. Notwithstanding the requirements of this
11    subsection, an applicant that is a subsidiary may submit
12    audited consolidated financial statements of its parent,
13    intermediary parent, or ultimate parent as long as the
14    consolidated statements are supported by consolidating
15    statements which include the applicant's financial
16    statement. If the consolidating statements are unaudited,
17    the applicant's chief financial officer shall attest to the
18    applicant's financial statements disclosed in the
19    consolidating statements.
20        (5) The filing of proof satisfactory to the Secretary
21    Commissioner that the applicant, the members thereof if the
22    applicant is a partnership or association, the members or
23    managers thereof that retain any authority or
24    responsibility under the operating agreement if the
25    applicant is a limited liability company, or the officers
26    thereof if the applicant is a corporation have 3 years



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1    experience preceding application in real estate finance.
2    Instead of this requirement, the applicant and the
3    applicant's officers or members, as applicable, may
4    satisfactorily complete a program of education in real
5    estate finance and fair lending, as approved by the
6    Secretary Commissioner, prior to receiving the initial
7    license. The Secretary Commissioner shall adopt promulgate
8    rules regarding proof of experience requirements and
9    educational requirements and the satisfactory completion
10    of those requirements. The Secretary Commissioner may
11    establish by rule a list of duly licensed professionals and
12    others who may be exempt from this requirement.
13        (6) An investigation of the application averments
14    required by Section 2-4, which investigation must allow the
15    Secretary Commissioner to issue positive findings stating
16    that the financial responsibility, experience, character,
17    and general fitness of the license applicant and of the
18    members thereof if the license applicant is a partnership
19    or association, of the officers and directors thereof if
20    the license applicant is a corporation, and of the managers
21    and members that retain any authority or responsibility
22    under the operating agreement if the license applicant is a
23    limited liability company are such as to command the
24    confidence of the community and to warrant belief that the
25    business will be operated honestly, fairly and efficiently
26    within the purpose of this Act. If the Secretary



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1    Commissioner shall not so find, he or she shall not issue
2    such license, and he or she shall notify the license
3    applicant of the denial.
4    The Secretary Commissioner may impose conditions on a
5license if the Secretary Commissioner determines that the
6conditions are necessary or appropriate. These conditions
7shall be imposed in writing and shall continue in effect for
8the period prescribed by the Secretary Commissioner.
9    (b) All licenses shall be issued to the license applicant.
10    Upon receipt of such license, a residential mortgage
11licensee shall be authorized to engage in the business
12regulated by this Act. Such license shall remain in full force
13and effect until it expires without renewal, is surrendered by
14the licensee or revoked or suspended as hereinafter provided.
15(Source: P.A. 98-1081, eff. 1-1-15; 99-15, eff. 1-1-16.)
16    (205 ILCS 635/2-4)  (from Ch. 17, par. 2322-4)
17    Sec. 2-4. Prohibited acts and practices for licensees.
18Averments of Licensee. It is a violation of this Act for a
19licensee subject to this Act to Each application for license
20shall be accompanied by the following averments stating that
21the applicant:
22        (a) fail to Will maintain at least one full service
23    office within the State of Illinois if required to do so
24    pursuant to Section 3-4 of this Act;
25        (b) fail to Will maintain staff reasonably adequate to



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1    meet the requirements of Section 3-4 of this Act;
2        (c) fail to Will keep and maintain for 36 months the
3    same written records as required by the federal Equal
4    Credit Opportunity Act, and any other information required
5    by regulations of the Secretary Commissioner regarding any
6    home mortgage in the course of the conduct of its
7    residential mortgage business;
8        (d) fail to Will file with the Secretary Commissioner
9    or Nationwide Mortgage Licensing System and Registry as
10    applicable, when due, any report or reports which it is
11    required to file under any of the provisions of this Act;
12        (e) engage Will not engage, whether as principal or
13    agent, in the practice of rejecting residential mortgage
14    applications without reasonable cause, or varying terms or
15    application procedures without reasonable cause, for home
16    mortgages on real estate within any specific geographic
17    area from the terms or procedures generally provided by the
18    licensee within other geographic areas of the State;
19        (f) engage Will not engage in fraudulent home mortgage
20    underwriting practices;
21        (g) make Will not make payment, whether directly or
22    indirectly, of any kind to any in house or fee appraiser of
23    any government or private money lending agency with which
24    an application for a home mortgage has been filed for the
25    purpose of influencing the independent judgment of the
26    appraiser with respect to the value of any real estate



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1    which is to be covered by such home mortgage;
2        (h) fail to file Has filed tax returns (State and
3    Federal) for the past 3 years or filed with the Secretary
4    Commissioner an accountant's or attorney's statement as to
5    why no return was filed;
6        (i) engage Will not engage in any discrimination or
7    redlining activities prohibited by Section 3-8 of this Act;
8        (j) knowingly Will not knowingly make any false
9    promises likely to influence or persuade, or pursue a
10    course of misrepresentation and false promises through
11    agents, solicitors, advertising or otherwise;
12        (k) knowingly Will not knowingly misrepresent,
13    circumvent or conceal, through whatever subterfuge or
14    device, any of the material particulars or the nature
15    thereof, regarding a transaction to which it is a party to
16    the injury of another party thereto;
17        (l) fail to Will disburse funds in accordance with its
18    agreements;
19        (m) commit Has not committed a crime against the law of
20    this State, any other state or of the United States,
21    involving moral turpitude, fraudulent or dishonest
22    dealing, and that no final judgment has been entered
23    against it in a civil action upon grounds of fraud,
24    misrepresentation or deceit which has not been previously
25    reported to the Secretary Commissioner;
26        (n) fail to Will account or deliver to the owner upon



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1    request any personal property such as money, fund, deposit,
2    check, draft, mortgage, other document or thing of value
3    which it is not in law or equity entitled to retain under
4    the circumstances;
5        (o) engage Has not engaged in any conduct which would
6    be cause for denial of a license;
7        (p) become Has not become insolvent;
8        (q) submit Has not submitted an application for a
9    license under this Act which contains a material
10    misstatement;
11        (r) demonstrate Has not demonstrated by course of
12    conduct, negligence or incompetence in performing any act
13    for which it is required to hold a license under this Act;
14        (s) fail to Will advise the Secretary Commissioner in
15    writing, or the Nationwide Mortgage Licensing System and
16    Registry, as applicable, of any changes to the information
17    submitted on the most recent application for license or
18    averments of record within 30 days of said change. The
19    written notice must be signed in the same form as the
20    application for license being amended;
21        (t) fail to Will comply with the provisions of this
22    Act, or with any lawful order, rule or regulation made or
23    issued under the provisions of this Act;
24        (u) fail to Will submit to periodic examination by the
25    Secretary Commissioner as required by this Act;
26        (v) fail to Will advise the Secretary Commissioner in



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1    writing of judgments entered against, and bankruptcy
2    petitions by, the license applicant within 5 days of
3    occurrence;
4        (w) fail to Will advise the Secretary Commissioner in
5    writing within 30 days of any request made to a licensee
6    under this Act to repurchase a loan in a manner that
7    completely and clearly identifies to whom the request was
8    made, the loans involved, and the reason therefor;
9        (x) fail to Will advise the Secretary Commissioner in
10    writing within 30 days of any request from any entity 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 for the request;
14        (y) fail to Will at all times act in a manner
15    consistent with subsections (a) and (b) of Section 1-2 of
16    this Act;
17        (z) knowingly Will not knowingly hire or employ a loan
18    originator who is not registered, or mortgage loan
19    originator who is not licensed, with the Secretary
20    Commissioner as required under Section 7-1 or Section 7-1A,
21    as applicable, of this Act;
22        (aa) charge Will not charge or collect advance payments
23    from borrowers or homeowners for engaging in loan
24    modification; or and
25        (bb) structure Will not structure activities or
26    contracts to evade provisions of this Act.



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1    A licensee who fails to fulfill obligations of an averment,
2to comply with this Section averments made, or otherwise
3violates any of the provisions of averments made under this
4Section shall be subject to the penalties in Section 4-5 of
5this Act.
6(Source: P.A. 97-891, eff. 8-3-12; 98-1081, eff. 1-1-15.)
7    (205 ILCS 635/4-8)  (from Ch. 17, par. 2324-8)
8    Sec. 4-8. Delinquency; examination.
9    (a) (Blank). The Commissioner shall obtain from the U.S.
10Department of Housing and Urban Development that Department's
11loan delinquency data.
12    (b) The Secretary Commissioner shall conduct as part of an
13examination of each licensee a review of the licensee's loan
14delinquency data.
15    This subsection shall not be construed as a limitation of
16the Secretary's Commissioner's examination authority under
17Section 4-2 of this Act or as otherwise provided in this Act.
18The Secretary Commissioner may require a licensee to provide
19loan delinquency data as the Secretary Commissioner deems
20necessary for the proper enforcement of the Act.
21    (c) The purpose of the examination under subsection (b)
22shall be to determine whether the loan delinquency data of the
23licensee has resulted from practices which deviate from sound
24and accepted mortgage underwriting practices, including, but
25not limited to, credit fraud, appraisal fraud, and property



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1inspection fraud. For the purpose of conducting this
2examination, the Secretary Commissioner may accept materials
3prepared for the U.S. Department of Housing and Urban
4Development. At the conclusion of the examination, the
5Secretary Commissioner shall make his or her findings available
6to the Residential Mortgage Board.
7    (d) The Secretary Commissioner, at his or her discretion,
8may hold public hearings, or at the direction of the
9Residential Mortgage Board, shall hold public hearings. Such
10testimony shall be by a homeowner or mortgagor or his agent,
11whose residential interest is affected by the activities of the
12residential mortgage licensee subject to such hearing. At such
13public hearing, a witness may present testimony on his or her
14behalf concerning only his or her home, or home mortgage or a
15witness may authorize a third party to appear on his or her
16behalf. The testimony shall be restricted to information and
17comments related to a specific residence or specific
18residential mortgage application or applications for a
19residential mortgage or residential loan transaction. The
20testimony must be preceded by either a letter of complaint or a
21completed consumer complaint form prescribed by the Secretary
23    (e) The Secretary Commissioner shall, at the conclusion of
24the public hearings, release his or her findings and shall also
25make public any action taken with respect to the licensee. The
26Secretary Commissioner shall also give full consideration to



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1the findings of this examination whenever reapplication is made
2by the licensee for a new license under this Act.
3    (f) A licensee that is examined pursuant to subsection (b)
4shall submit to the Secretary Commissioner a plan which shall
5be designed to reduce that licensee's loan delinquencies. The
6plan shall be implemented by the licensee as approved by the
7Secretary Commissioner. A licensee that is examined pursuant to
8subsection (b) shall report monthly, for a one year period,
9one, 2, and 3 month loan delinquencies.
10    (g) Whenever the Secretary Commissioner finds that a
11licensee's loan delinquencies on insured mortgages is
12unusually high within a particular geographic area, he or she
13shall require that licensee to submit such information as is
14necessary to determine whether that licensee's practices have
15constituted credit fraud, appraisal fraud or property
16inspection fraud. The Secretary Commissioner shall promulgate
17such rules as are necessary to determine whether any licensee's
18loan delinquencies are unusually high within a particular area.
19(Source: P.A. 99-15, eff. 1-1-16.)
20    (205 ILCS 635/4-8.3)
21    Sec. 4-8.3. Annual report of mortgage brokerage and
22servicing activity. On or before March 1 of each year or the
23date selected for Mortgage Call Reports under Section 4-9.1 of
24this Act, each licensee shall file a report with the Secretary
25Commissioner that discloses shall disclose such information as



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1the Secretary Commissioner requires. A licensee filing a
2Mortgage Call Report is not required to file an annual report.
3Exempt entities as defined in subsection (d) of Section 1-4
4shall not file the annual report of mortgage and servicing
5activity required by this Section.
6(Source: P.A. 96-112, eff. 7-31-09.)
7    (205 ILCS 635/5-9)
8    Sec. 5-9. Notice of change in loan terms.
9    (a) No licensee may fail to do either of the following:
10        (1) Provide timely notice to the borrower of any
11    material change in the terms of the residential mortgage
12    loan prior to the closing of the loan. For purposes of this
13    Section, a "material change means" any of the following:
14            (A) A change in the type of loan being offered,
15        such as a fixed or variable rate loan or a loan with a
16        balloon payment.
17            (B) A change in the term of the loan, as reflected
18        in the number of monthly payments due before a final
19        payment is scheduled to be made.
20            (C) An increase in the interest rate of more than
21        0.15%, or an equivalent increase in the amount of
22        discount points charged.
23            (D) An increase in the regular monthly payment of
24        principal and interest of more than 5%.
25            (E) A change regarding the requirement or amount of



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1        escrow of taxes or insurance.
2            (F) A change regarding the requirement or payment,
3        or both, of private mortgage insurance.
4        (2) Timely inform the borrower if any fees payable by
5    the borrower to the licensee increase by more than 10% or
6    $100, whichever is greater.
7    (b) The disclosures required by this Section shall be
8deemed timely if the licensee provides the borrower with the
9revised information not later than 3 days after learning of the
10change or 24 hours before the residential mortgage loan is
11closed, whichever is earlier. If the licensee discloses a
12material change more than the 3 days after learning of the
13change but still 24 hours before the residential mortgage loan
14is closed, it will not be liable for penalties or forfeitures
15if the licensee cures in time for the borrower to avoid any
17    (c) If an increase in the total amount of the fee to be
18paid by the borrower to the broker is not disclosed in
19accordance with this Section, the broker shall refund to the
20borrower the amount by which the fee was increased. If the fee
21is financed into the residential mortgage loan, the broker
22shall also refund to the borrower the interest charged to
23finance the fee.
24    (d) The requirements of this Section do not apply to a
25licensee providing a notice of change in loan terms pursuant to
26the federal Consumer Financial Protection Bureau's Know Before



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1You Owe mortgage disclosure procedure pursuant to the federal
2Truth in Lending Act and amendments promulgated under 12 CFR
31026 and the federal Real Estate Settlement Procedures Act and
4amendments promulgated under 12 CFR 1024. Licensees limited to
5soliciting residential mortgage loan applications as approved
6by the Director under Title 38, Section 1050.2115(c)(1) of the
7Illinois Administrative Code are not required to provide the
8disclosures under this Section as long as the solicitor does
9not discuss the terms and conditions with the potential
11(Source: P.A. 95-691, eff. 6-1-08.)
12    Section 99. Effective date. This Act takes effect upon
13becoming law.".