Full Text of SB3551 103rd General Assembly
SB3551sam002 103RD GENERAL ASSEMBLY | Sen. Sara Feigenholtz Filed: 3/15/2024 | | 10300SB3551sam002 | | LRB103 37488 RTM 71003 a |
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| 1 | | AMENDMENT TO SENATE BILL 3551
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 3551, AS AMENDED, | 3 | | by replacing everything after the enacting clause with the | 4 | | following: | 5 | | "Section 5. The Residential Mortgage License Act of 1987 | 6 | | is amended by changing Section 1-4 and by adding Section | 7 | | 5-12.5 as follows: | 8 | | (205 ILCS 635/1-4) | 9 | | Sec. 1-4. Definitions. The following words and phrases | 10 | | have the meanings given to them in this Section: | 11 | | (a) "Residential real property" or "residential real | 12 | | estate" shall mean any real property located in Illinois, upon | 13 | | which is constructed or intended to be constructed a dwelling. | 14 | | Those terms include a manufactured home as defined in | 15 | | subdivision (53) of Section 9-102 of the Uniform Commercial | 16 | | Code which is real property as defined in Section 5-35 of the |
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| 1 | | Conveyance and Encumbrance of Manufactured Homes as Real | 2 | | Property and Severance Act. | 3 | | (b) "Making a residential mortgage loan" or "funding a | 4 | | residential mortgage loan" shall mean for compensation or | 5 | | gain, either directly or indirectly, advancing funds or making | 6 | | a commitment to advance funds to a loan applicant for a | 7 | | residential mortgage loan. | 8 | | (c) "Soliciting, processing, placing, or negotiating a | 9 | | residential mortgage loan" shall mean for compensation or | 10 | | gain, either directly or indirectly, accepting or offering to | 11 | | accept an application for a residential mortgage loan, | 12 | | assisting or offering to assist in the processing of an | 13 | | application for a residential mortgage loan on behalf of a | 14 | | borrower, or negotiating or offering to negotiate the terms or | 15 | | conditions of a residential mortgage loan with a lender on | 16 | | behalf of a borrower including, but not limited to, the | 17 | | submission of credit packages for the approval of lenders, the | 18 | | preparation of residential mortgage loan closing documents, | 19 | | including a closing in the name of a broker. | 20 | | (d) "Exempt person or entity" shall mean the following: | 21 | | (1) (i) Any banking organization or foreign banking | 22 | | corporation licensed by the Illinois Commissioner of Banks | 23 | | and Real Estate or the United States Comptroller of the | 24 | | Currency to transact business in this State; (ii) any | 25 | | national bank, federally chartered savings and loan | 26 | | association, federal savings bank, federal credit union; |
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| 1 | | (iii) (blank); (iv) any bank, savings and loan | 2 | | association, savings bank, or credit union organized under | 3 | | the laws of this or any other state; (v) any Illinois | 4 | | Consumer Installment Loan Act licensee; (vi) any insurance | 5 | | company authorized to transact business in this State; | 6 | | (vii) any entity engaged solely in commercial mortgage | 7 | | lending; (viii) any service corporation of a savings and | 8 | | loan association or savings bank organized under the laws | 9 | | of this State or the service corporation of a federally | 10 | | chartered savings and loan association or savings bank | 11 | | having its principal place of business in this State, | 12 | | other than a service corporation licensed or entitled to | 13 | | reciprocity under the Real Estate License Act of 2000; or | 14 | | (ix) any first tier subsidiary of a bank, the charter of | 15 | | which is issued under the Illinois Banking Act by the | 16 | | Illinois Commissioner of Banks and Real Estate, or the | 17 | | first tier subsidiary of a bank chartered by the United | 18 | | States Comptroller of the Currency and that has its | 19 | | principal place of business in this State, provided that | 20 | | the first tier subsidiary is regularly examined by the | 21 | | Illinois Commissioner of Banks and Real Estate or the | 22 | | Comptroller of the Currency, or a consumer compliance | 23 | | examination is regularly conducted by the Federal Reserve | 24 | | Board. | 25 | | (1.5) Any employee of a person or entity mentioned in | 26 | | item (1) of this subsection, when acting for such person |
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| 1 | | or entity, or any registered mortgage loan originator when | 2 | | acting for an entity described in subsection (tt) of this | 3 | | Section. | 4 | | (1.8) Any person or entity that does not originate | 5 | | mortgage loans in the ordinary course of business, but | 6 | | makes or acquires residential mortgage loans with his or | 7 | | her own funds for his or her or its own investment without | 8 | | intent to make, acquire, or resell more than 3 residential | 9 | | mortgage loans in any one calendar year. | 10 | | (2) (Blank). | 11 | | (2.1) A bona fide nonprofit organization. | 12 | | (2.2) An employee of a bona fide nonprofit | 13 | | organization when acting on behalf of that organization. | 14 | | (3) Any person employed by a licensee to assist in the | 15 | | performance of the residential mortgage licensee's | 16 | | activities regulated by this Act who is compensated in any | 17 | | manner by only one licensee. | 18 | | (4) (Blank). | 19 | | (5) Any individual, corporation, partnership, or other | 20 | | entity that originates, services, or brokers residential | 21 | | mortgage loans, as these activities are defined in this | 22 | | Act, and who or which receives no compensation for those | 23 | | activities, subject to the Commissioner's regulations and | 24 | | the federal Secure and Fair Enforcement for Mortgage | 25 | | Licensing Act of 2008 and the rules promulgated under that | 26 | | Act with regard to the nature and amount of compensation. |
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| 1 | | (6) (Blank). | 2 | | (7) Any entity engaged solely in providing loan | 3 | | processing services through the sponsoring of individuals | 4 | | acting pursuant to subsection (d) of Section 7-1A of this | 5 | | Act. | 6 | | (e) "Licensee" or "residential mortgage licensee" shall | 7 | | mean a person, partnership, association, corporation, or any | 8 | | other entity who or which is licensed pursuant to this Act to | 9 | | engage in the activities regulated by this Act. | 10 | | (f) "Mortgage loan" , "residential mortgage loan" , or "home | 11 | | mortgage loan" shall mean any loan primarily for personal, | 12 | | family, or household use that is secured by a mortgage, deed of | 13 | | trust, or other equivalent consensual security interest on a | 14 | | dwelling as defined in Section 103(v) of the federal Truth in | 15 | | Lending Act, or residential real estate upon which is | 16 | | constructed or intended to be constructed a dwelling. | 17 | | "Mortgage loan", "residential mortgage loan", or "home | 18 | | mortgage loan" includes a loan in which funds are advanced | 19 | | through a shared appreciation agreement. | 20 | | (g) "Lender" shall mean any person, partnership, | 21 | | association, corporation, or any other entity who either lends | 22 | | or invests money in residential mortgage loans. | 23 | | (h) "Ultimate equitable owner" shall mean a person who, | 24 | | directly or indirectly, owns or controls an ownership interest | 25 | | in a corporation, foreign corporation, alien business | 26 | | organization, trust, or any other form of business |
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| 1 | | organization regardless of whether the person owns or controls | 2 | | the ownership interest through one or more persons or one or | 3 | | more proxies, powers of attorney, nominees, corporations, | 4 | | associations, partnerships, trusts, joint stock companies, or | 5 | | other entities or devices, or any combination thereof. | 6 | | (i) "Residential mortgage financing transaction" shall | 7 | | mean the negotiation, acquisition, sale, or arrangement for or | 8 | | the offer to negotiate, acquire, sell, or arrange for, a | 9 | | residential mortgage loan or residential mortgage loan | 10 | | commitment. | 11 | | (j) "Personal residence address" shall mean a street | 12 | | address and shall not include a post office box number. | 13 | | (k) "Residential mortgage loan commitment" shall mean a | 14 | | contract for residential mortgage loan financing. | 15 | | (l) "Party to a residential mortgage financing | 16 | | transaction" shall mean a borrower, lender, or loan broker in | 17 | | a residential mortgage financing transaction. | 18 | | (m) "Payments" shall mean payment of all or any of the | 19 | | following: principal, interest and escrow reserves for taxes, | 20 | | insurance and other related reserves, and reimbursement for | 21 | | lender advances. | 22 | | (n) "Commissioner" shall mean the Commissioner of Banks | 23 | | and Real Estate, except that, beginning on April 6, 2009 (the | 24 | | effective date of Public Act 95-1047), all references in this | 25 | | Act to the Commissioner of Banks and Real Estate are deemed, in | 26 | | appropriate contexts, to be references to the Secretary of |
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| 1 | | Financial and Professional Regulation, or his or her designee, | 2 | | including the Director of the Division of Banking of the | 3 | | Department of Financial and Professional Regulation. | 4 | | (n-1) "Director" shall mean the Director of the Division | 5 | | of Banking of the Department of Financial and Professional | 6 | | Regulation, except that, beginning on July 31, 2009 (the | 7 | | effective date of Public Act 96-112), all references in this | 8 | | Act to the Director are deemed, in appropriate contexts, to be | 9 | | the Secretary of Financial and Professional Regulation, or his | 10 | | or her designee, including the Director of the Division of | 11 | | Banking of the Department of Financial and Professional | 12 | | Regulation. | 13 | | (o) "Loan brokering", "brokering", or "brokerage service" | 14 | | shall mean the act of helping to obtain from another entity, | 15 | | for a borrower, a loan secured by residential real estate | 16 | | situated in Illinois or assisting a borrower in obtaining a | 17 | | loan secured by residential real estate situated in Illinois | 18 | | in return for consideration to be paid by either the borrower | 19 | | or the lender including, but not limited to, contracting for | 20 | | the delivery of residential mortgage loans to a third party | 21 | | lender and soliciting, processing, placing, or negotiating | 22 | | residential mortgage loans. | 23 | | (p) "Loan broker" or "broker" shall mean a person, | 24 | | partnership, association, corporation, or limited liability | 25 | | company, other than those persons, partnerships, associations, | 26 | | corporations, or limited liability companies exempted from |
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| 1 | | licensing pursuant to Section 1-4, subsection (d), of this | 2 | | Act, who performs the activities described in subsections (c), | 3 | | (o), and (yy) of this Section. | 4 | | (q) "Servicing" shall mean the collection or remittance | 5 | | for or the right or obligation to collect or remit for any | 6 | | lender, noteowner, noteholder, or for a licensee's own | 7 | | account, of payments, interests, principal, and trust items | 8 | | such as hazard insurance and taxes on a residential mortgage | 9 | | loan in accordance with the terms of the residential mortgage | 10 | | loan; and includes loan payment follow-up, delinquency loan | 11 | | follow-up, loan analysis and any notifications to the borrower | 12 | | that are necessary to enable the borrower to keep the loan | 13 | | current and in good standing. "Servicing" includes management | 14 | | of third-party entities acting on behalf of a residential | 15 | | mortgage licensee for the collection of delinquent payments | 16 | | and the use by such third-party entities of said licensee's | 17 | | servicing records or information, including their use in | 18 | | foreclosure. | 19 | | (r) "Full service office" shall mean an office, provided | 20 | | by the licensee and not subleased from the licensee's | 21 | | employees or independent contractors, and staff in Illinois | 22 | | reasonably adequate to handle efficiently communications, | 23 | | questions, and other matters relating to any application for, | 24 | | or an existing home mortgage secured by residential real | 25 | | estate situated in Illinois with respect to which the licensee | 26 | | is brokering, funding originating, purchasing, or servicing. |
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| 1 | | The management and operation of each full service office must | 2 | | include observance of good business practices such as proper | 3 | | signage; adequate, organized, and accurate books and records; | 4 | | ample phone lines, hours of business, staff training and | 5 | | supervision, and provision for a mechanism to resolve consumer | 6 | | inquiries, complaints, and problems. The Commissioner shall | 7 | | issue regulations with regard to these requirements and shall | 8 | | include an evaluation of compliance with this Section in his | 9 | | or her periodic examination of each licensee. "Full service | 10 | | office" does not include a remote location. | 11 | | (s) "Purchasing" shall mean the purchase of conventional | 12 | | or government-insured mortgage loans secured by residential | 13 | | real estate situated in Illinois from either the lender or | 14 | | from the 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 | 18 | | for 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 | 23 | | borrower or assist the borrower in obtaining a residential | 24 | | mortgage 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) (Blank). | 8 | | (y) "Government-insured mortgage loan" shall mean any | 9 | | mortgage loan made on the security of residential real estate | 10 | | insured by the Department of Housing and Urban Development or | 11 | | Farmers Home Loan Administration, or guaranteed by the | 12 | | Veterans Administration. | 13 | | (z) "Annual audit" shall mean a certified audit of the | 14 | | licensee's books and records and systems of internal control | 15 | | performed by a certified public accountant in accordance with | 16 | | generally accepted accounting principles and generally | 17 | | accepted auditing standards. | 18 | | (aa) "Financial institution" shall mean a savings and loan | 19 | | association, savings bank, credit union, or a bank organized | 20 | | under the laws of Illinois or a savings and loan association, | 21 | | savings bank, credit union or a bank organized under the laws | 22 | | of the United States and headquartered in Illinois. | 23 | | (bb) "Escrow agent" shall mean a third party, individual | 24 | | or entity charged with the fiduciary obligation for holding | 25 | | escrow funds on a residential mortgage loan pending final | 26 | | payout of those funds in accordance with the terms of the |
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| 1 | | residential mortgage loan. | 2 | | (cc) "Net worth" shall have the meaning ascribed thereto | 3 | | in Section 3-5 of this Act. | 4 | | (dd) "Affiliate" shall mean: | 5 | | (1) any entity that directly controls or is controlled | 6 | | by the licensee and any other company that is directly | 7 | | affecting activities regulated by this Act that is | 8 | | controlled by the company that controls the licensee; | 9 | | (2) any entity: | 10 | | (A) that is controlled, directly or indirectly, by | 11 | | a trust or otherwise, by or for the benefit of | 12 | | shareholders who beneficially or otherwise control, | 13 | | directly or indirectly, by trust or otherwise, the | 14 | | licensee or any company that controls the licensee; or | 15 | | (B) a majority of the directors or trustees of | 16 | | which constitute a majority of the persons holding any | 17 | | such office with the licensee or any company that | 18 | | controls the licensee; | 19 | | (3) any company, including a real estate investment | 20 | | trust, that is sponsored and advised on a contractual | 21 | | basis by the licensee or any subsidiary or affiliate of | 22 | | the licensee. | 23 | | (ee) "First tier subsidiary" shall be defined by | 24 | | regulation incorporating the comparable definitions used by | 25 | | the Office of the Comptroller of the Currency and the Illinois | 26 | | Commissioner of Banks and Real Estate. |
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| 1 | | (ff) "Gross delinquency rate" means the quotient | 2 | | determined by dividing (1) the sum of (i) the number of | 3 | | government-insured residential mortgage loans funded or | 4 | | purchased by a licensee in the preceding calendar year that | 5 | | are delinquent and (ii) the number of conventional residential | 6 | | mortgage loans funded or purchased by the licensee in the | 7 | | preceding calendar year that are delinquent by (2) the sum of | 8 | | (i) the number of government-insured residential mortgage | 9 | | loans funded or purchased by the licensee in the preceding | 10 | | calendar year and (ii) the number of conventional residential | 11 | | mortgage loans funded or purchased by the licensee in the | 12 | | preceding calendar year. | 13 | | (gg) "Delinquency rate factor" means the factor set by | 14 | | rule of the Commissioner that is multiplied by the average | 15 | | gross delinquency rate of licensees, determined annually for | 16 | | the immediately preceding calendar year, for the purpose of | 17 | | determining which licensees shall be examined by the | 18 | | Commissioner pursuant to subsection (b) of Section 4-8 of this | 19 | | Act. | 20 | | (hh) (Blank). | 21 | | (ii) "Confidential supervisory information" means any | 22 | | report of examination, visitation, or investigation prepared | 23 | | by the Commissioner under this Act, any report of examination | 24 | | visitation, or investigation prepared by the state regulatory | 25 | | authority of another state that examines a licensee, any | 26 | | document or record prepared or obtained in connection with or |
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| 1 | | relating to any examination, visitation, or investigation, and | 2 | | any record prepared or obtained by the Commissioner to the | 3 | | extent that the record summarizes or contains information | 4 | | derived from any report, document, or record described in this | 5 | | subsection. "Confidential supervisory information" does not | 6 | | include any information or record routinely prepared by a | 7 | | licensee and maintained in the ordinary course of business or | 8 | | any information or record that is required to be made publicly | 9 | | available pursuant to State or federal law or rule. | 10 | | (jj) "Mortgage loan originator" means an individual who | 11 | | for compensation or gain or in the expectation of compensation | 12 | | or gain: | 13 | | (i) takes a residential mortgage loan application; or | 14 | | (ii) offers or negotiates terms of a residential | 15 | | mortgage loan. | 16 | | "Mortgage loan originator" includes an individual engaged | 17 | | in loan modification activities as defined in subsection (yy) | 18 | | of this Section. A mortgage loan originator engaged in loan | 19 | | modification activities shall report those activities to the | 20 | | Department of Financial and Professional Regulation in the | 21 | | manner provided by the Department; however, the Department | 22 | | shall not impose a fee for reporting, nor require any | 23 | | additional qualifications to engage in those activities beyond | 24 | | those provided pursuant to this Act for mortgage loan | 25 | | originators. | 26 | | "Mortgage loan originator" does not include an individual |
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| 1 | | engaged solely as a loan processor or underwriter except as | 2 | | otherwise provided in subsection (d) of Section 7-1A of this | 3 | | Act. | 4 | | "Mortgage loan originator" does not include a person or | 5 | | entity that only performs real estate brokerage activities and | 6 | | is licensed in accordance with the Real Estate License Act of | 7 | | 2000, unless the person or entity is compensated by a lender, a | 8 | | mortgage broker, or other mortgage loan originator, or by any | 9 | | agent of that lender, mortgage broker, or other mortgage loan | 10 | | originator. | 11 | | "Mortgage loan originator" does not include a person or | 12 | | entity solely involved in extensions of credit relating to | 13 | | timeshare plans, as that term is defined in Section 101(53D) | 14 | | of Title 11, United States Code. | 15 | | (kk) "Depository institution" has the same meaning as in | 16 | | Section 3 of the Federal Deposit Insurance Act, and includes | 17 | | any credit union. | 18 | | (ll) "Dwelling" means a residential structure or mobile | 19 | | home which contains one to 4 family housing units, or | 20 | | individual units of condominiums or cooperatives. | 21 | | (mm) "Immediate family member" means a spouse, child, | 22 | | sibling, parent, grandparent, or grandchild, and includes | 23 | | step-parents, step-children, step-siblings, or adoptive | 24 | | relationships. | 25 | | (nn) "Individual" means a natural person. | 26 | | (oo) "Loan processor or underwriter" means an individual |
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| 1 | | who performs clerical or support duties as an employee at the | 2 | | direction of and subject to the supervision and instruction of | 3 | | a person licensed, or exempt from licensing, under this Act. | 4 | | "Clerical or support duties" includes subsequent to the | 5 | | receipt of an application: | 6 | | (i) the receipt, collection, distribution, and | 7 | | analysis of information common for the processing or | 8 | | underwriting of a residential mortgage loan; and | 9 | | (ii) communicating with a consumer to obtain the | 10 | | information necessary for the processing or underwriting | 11 | | of a loan, to the extent that the communication does not | 12 | | include offering or negotiating loan rates or terms, or | 13 | | counseling consumers about residential mortgage loan rates | 14 | | or terms. An individual engaging solely in loan processor | 15 | | or underwriter activities shall not represent to the | 16 | | public, through advertising or other means of | 17 | | communicating or providing information, including the use | 18 | | of business cards, stationery, brochures, signs, rate | 19 | | lists, or other promotional items, that the individual can | 20 | | or will perform any of the activities of a mortgage loan | 21 | | originator. | 22 | | (pp) "Nationwide Multistate Licensing System and Registry" | 23 | | means a mortgage licensing system developed and maintained by | 24 | | the Conference of State Bank Supervisors and the American | 25 | | Association of Residential Mortgage Regulators for the | 26 | | licensing and registration of licensed mortgage loan |
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| 1 | | originators. | 2 | | (qq) "Nontraditional mortgage product" means any mortgage | 3 | | product other than a 30-year fixed rate mortgage. | 4 | | (rr) "Person" means a natural person, corporation, | 5 | | company, limited liability company, partnership, or | 6 | | association. | 7 | | (ss) "Real estate brokerage activity" means any activity | 8 | | that involves offering or providing real estate brokerage | 9 | | services to the public, including: | 10 | | (1) acting as a real estate agent or real estate | 11 | | broker for a buyer, seller, lessor, or lessee of real | 12 | | property; | 13 | | (2) bringing together parties interested in the sale, | 14 | | purchase, lease, rental, or exchange of real property; | 15 | | (3) negotiating, on behalf of any party, any portion | 16 | | of a contract relating to the sale, purchase, lease, | 17 | | rental, or exchange of real property, other than in | 18 | | connection with providing financing with respect to any | 19 | | such transaction; | 20 | | (4) engaging in any activity for which a person | 21 | | engaged in the activity is required to be registered or | 22 | | licensed as a real estate agent or real estate broker | 23 | | under any applicable law; or | 24 | | (5) offering to engage in any activity, or act in any | 25 | | capacity, described in this subsection (ss). | 26 | | (tt) "Registered mortgage loan originator" means any |
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| 1 | | individual that: | 2 | | (1) meets the definition of mortgage loan originator | 3 | | and is an employee of: | 4 | | (A) a depository institution; | 5 | | (B) a subsidiary that is: | 6 | | (i) owned and controlled by a depository | 7 | | institution; and | 8 | | (ii) regulated by a federal banking agency; or | 9 | | (C) an institution regulated by the Farm Credit | 10 | | Administration; and | 11 | | (2) is registered with, and maintains a unique | 12 | | identifier through, the Nationwide Multistate Licensing | 13 | | System and Registry. | 14 | | (uu) "Unique identifier" means a number or other | 15 | | identifier assigned by protocols established by the Nationwide | 16 | | Multistate Licensing System and Registry. | 17 | | (vv) "Residential mortgage license" means a license issued | 18 | | pursuant to Section 1-3, 2-2, or 2-6 of this Act. | 19 | | (ww) "Mortgage loan originator license" means a license | 20 | | issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act. | 21 | | (xx) "Secretary" means the Secretary of the Department of | 22 | | Financial and Professional Regulation, or a person authorized | 23 | | by the Secretary or by this Act to act in the Secretary's | 24 | | stead. | 25 | | (yy) "Loan modification" means, for compensation or gain, | 26 | | either directly or indirectly offering or negotiating on |
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| 1 | | behalf of a borrower or homeowner to adjust the terms of a | 2 | | residential mortgage loan in a manner not provided for in the | 3 | | original or previously modified mortgage loan. | 4 | | (zz) "Short sale facilitation" means, for compensation or | 5 | | gain, either directly or indirectly offering or negotiating on | 6 | | behalf of a borrower or homeowner to facilitate the sale of | 7 | | residential real estate subject to one or more residential | 8 | | mortgage loans or debts constituting liens on the property in | 9 | | which the proceeds from selling the residential real estate | 10 | | will fall short of the amount owed and the lien holders are | 11 | | contacted to agree to release their lien on the residential | 12 | | real estate and accept less than the full amount owed on the | 13 | | debt. | 14 | | (aaa) "Bona fide nonprofit organization" means an | 15 | | organization that is described in Section 501(c)(3) of the | 16 | | Internal Revenue Code, is exempt from federal income tax under | 17 | | Section 501(a) of the Internal Revenue Code, does not operate | 18 | | in a commercial context, and does all of the following: | 19 | | (1) Promotes affordable housing or provides home | 20 | | ownership education or similar services. | 21 | | (2) Conducts its activities in a manner that serves | 22 | | public or charitable purposes. | 23 | | (3) Receives funding and revenue and charges fees in a | 24 | | manner that does not create an incentive for itself or its | 25 | | employees to act other than in the best interests of its | 26 | | clients. |
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| 1 | | (4) Compensates its employees in a manner that does | 2 | | not create an incentive for its employees to act other | 3 | | than in the best interests of its clients. | 4 | | (5) Provides to, or identifies for, the borrower | 5 | | residential mortgage loans with terms favorable to the | 6 | | borrower and comparable to residential mortgage loans and | 7 | | housing assistance provided under government housing | 8 | | assistance programs. | 9 | | (bbb) "Remote location" means a location other than a | 10 | | principal place of business or a full service office at which a | 11 | | mortgage loan originator of a licensee may conduct business. | 12 | | (ccc) "Shared appreciation agreement" means a writing | 13 | | evidencing a transaction or any option, future, or any other | 14 | | derivative between a person and a consumer where the consumer | 15 | | receives money or any other item of value in exchange for an | 16 | | interest or future interest in a dwelling or residential real | 17 | | estate or a future obligation to repay a sum on the occurrence | 18 | | of an event, such as: | 19 | | (1) the transfer of ownership; | 20 | | (2) a repayment maturity date; | 21 | | (3) the death of the consumer; or | 22 | | (4) any other event contemplated by the writing. | 23 | | The Commissioner may define by rule and regulation any | 24 | | terms used in this Act for the efficient and clear | 25 | | administration of this Act. | 26 | | (Source: P.A. 103-156, eff. 1-1-24 .) |
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| 1 | | (205 ILCS 635/5-12.5 new) | 2 | | Sec. 5-12.5. Shared appreciation agreement consumer | 3 | | counseling and disclosures. | 4 | | (a) Notwithstanding any provision in this Act to the | 5 | | contrary, before taking any legally binding action on a shared | 6 | | appreciation agreement, the borrower or borrowers shall be | 7 | | provided counseling. The borrower may not waive counseling. | 8 | | (b) The Secretary may adopt rules relating to shared | 9 | | appreciation agreements, including, but not limited to, rules | 10 | | defining statutory terms; relating to disclosures to help | 11 | | consumers understand the cost, duration, and fees of the | 12 | | agreement, as well as potential alternatives; on the limits on | 13 | | the interest or other fees that may be charged to a borrower; | 14 | | and relating to counseling under subsection (a). | 15 | | Section 10. The Residential Real Property Disclosure Act | 16 | | is amended by changing Section 70 as follows: | 17 | | (765 ILCS 77/70) | 18 | | Sec. 70. Predatory lending database program. | 19 | | (a) As used in this Article: | 20 | | "Adjustable rate mortgage" or "ARM" means a closed-end | 21 | | mortgage transaction that allows adjustments of the loan | 22 | | interest rate during the first 3 years of the loan term. | 23 | | "Borrower" means a person seeking a mortgage loan. |
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| 1 | | "Broker" means a "broker" or "loan broker", as defined in | 2 | | subsection (p) of Section 1-4 of the Residential Mortgage | 3 | | License Act of 1987. | 4 | | "Closing agent" means an individual assigned by a title | 5 | | insurance company or a broker or originator to ensure that the | 6 | | execution of documents related to the closing of a real estate | 7 | | sale or the refinancing of a real estate loan and the | 8 | | disbursement of closing funds are in conformity with the | 9 | | instructions of the entity financing the transaction. | 10 | | "Counseling" means in-person counseling provided by a | 11 | | counselor employed by a HUD-approved counseling agency to all | 12 | | borrowers . Counseling must be provided in the following | 13 | | manner: | 14 | | (i) in person; or | 15 | | (ii) by remote electronic or telephonic means, with | 16 | | the permission of all borrowers, where the session can be | 17 | | conducted in privacy, the counselor is able to verify the | 18 | | identity of each borrower, and the counseling is | 19 | | documented by the counselor, subject to any rules that may | 20 | | be enacted by the Department , or documented telephone | 21 | | counseling where a hardship would be imposed on one or | 22 | | more borrowers. A hardship shall exist in instances in | 23 | | which the borrower is confined to his or her home due to | 24 | | medical conditions, as verified in writing by a physician, | 25 | | or the borrower resides 50 miles or more from the nearest | 26 | | participating HUD-approved housing counseling agency . |
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| 1 | | "Counselor" means a counselor employed by a HUD-approved | 2 | | 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 | 6 | | SCORE" by one or more of the following credit reporting | 7 | | agencies or their successors: Equifax, Inc., Experian | 8 | | Information Solutions, Inc., and TransUnion LLC. If the | 9 | | borrower's credit report contains credit scores from 2 | 10 | | reporting agencies, then the broker or loan originator shall | 11 | | report the lower score. If the borrower's credit report | 12 | | contains credit scores from 3 reporting agencies, then the | 13 | | broker or loan originator shall 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 subsection subsections (d) (1), (d)(1.5), and (d)(1.8) of | 18 | | Section 1-4 of the Residential Mortgage License Act of 1987. | 19 | | "First-time homebuyer" means a borrower who has not held | 20 | | an ownership interest in residential property. | 21 | | "HUD-approved counseling" or "counseling" means counseling | 22 | | given to a borrower by a counselor employed by a HUD-approved | 23 | | housing counseling agency. | 24 | | "Interest only" means a closed-end loan that permits one | 25 | | or 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 | 3 | | (g) of Section 1-4 of the Residential Mortgage License Act of | 4 | | 1987. | 5 | | "Licensee" means that term as it is defined in subsection | 6 | | (e) of Section 1-4 of the Residential Mortgage License Act of | 7 | | 1987. | 8 | | "Mortgage loan" means that term as it is defined in | 9 | | subsection (f) of Section 1-4 of the Residential Mortgage | 10 | | License Act of 1987. | 11 | | "Negative amortization" means an amortization method under | 12 | | which the outstanding balance may increase at any time over | 13 | | the course of the loan because the regular periodic payment | 14 | | does not cover the full amount of interest due. | 15 | | "Originator" means a "mortgage loan originator" as defined | 16 | | in subsection (jj) of Section 1-4 of the Residential Mortgage | 17 | | License Act of 1987, except an exempt person. | 18 | | "Points and fees" has the meaning ascribed to that term in | 19 | | Section 10 of the High Risk Home Loan Act. | 20 | | "Prepayment penalty" means a charge imposed by a lender | 21 | | under a mortgage note or rider when the loan is paid before the | 22 | | expiration of the term of the loan. | 23 | | "Refinancing" means a loan secured by the borrower's or | 24 | | borrowers' primary residence where the proceeds are not used | 25 | | as purchase money for the residence. | 26 | | "Title insurance company" means any domestic company |
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| 1 | | organized under the laws of this State for the purpose of | 2 | | conducting the business of guaranteeing or insuring titles to | 3 | | real estate and any title insurance company organized under | 4 | | the laws of another State, the District of Columbia, or a | 5 | | foreign government and authorized to transact the business of | 6 | | guaranteeing or insuring titles to real estate in this State. | 7 | | (a-5) A predatory lending database program shall be | 8 | | established within Cook County. The program shall be | 9 | | administered in accordance with this Article. The inception | 10 | | date of the program shall be July 1, 2008. A predatory lending | 11 | | database program shall be expanded to include Kane, Peoria, | 12 | | and Will counties. The inception date of the expansion of the | 13 | | program as it applies to Kane, Peoria, and Will counties shall | 14 | | be July 1, 2010. Until the inception date, none of the duties, | 15 | | obligations, contingencies, or consequences of or from the | 16 | | program shall be imposed. The program shall apply to all | 17 | | mortgage applications that are governed by this Article and | 18 | | that are made or taken on or after the inception of the | 19 | | program. | 20 | | (b) The database created under this program shall be | 21 | | maintained and administered by the Department. The database | 22 | | shall be designed to allow brokers, originators, counselors, | 23 | | title insurance companies, and closing agents to submit | 24 | | information to the database online. The database shall not be | 25 | | designed to allow those entities to retrieve information from | 26 | | the database, except as otherwise provided in this Article. |
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| 1 | | Information submitted by the broker or originator to the | 2 | | Department may be used to populate the online form submitted | 3 | | by a counselor, title insurance company, or closing agent. | 4 | | (c) Within 10 business days after taking a mortgage | 5 | | application, the broker or originator for any mortgage on | 6 | | residential property within the program area must submit to | 7 | | the predatory lending database all of the information required | 8 | | under Section 72 and any other information required by the | 9 | | Department by rule. Within 7 business days after receipt of | 10 | | the information, the Department shall compare that information | 11 | | to the housing counseling standards in Section 73 and issue to | 12 | | the borrower and the broker or originator a determination of | 13 | | whether counseling is recommended for the borrower. The | 14 | | borrower may not waive counseling. If at any time after | 15 | | submitting the information required under Section 72 the | 16 | | broker or originator (i) changes the terms of the loan or (ii) | 17 | | issues a new commitment to the borrower, then, within 5 | 18 | | business days thereafter, the broker or originator shall | 19 | | re-submit all of the information required under Section 72 | 20 | | and, within 4 business days after receipt of the information | 21 | | re-submitted by the broker or originator, the Department shall | 22 | | compare that information to the housing counseling standards | 23 | | in Section 73 and shall issue to the borrower and the broker or | 24 | | originator a new determination of whether re-counseling is | 25 | | recommended for the borrower based on the information | 26 | | re-submitted by the broker or originator. The Department shall |
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| 1 | | require re-counseling if the loan terms have been modified to | 2 | | meet another counseling standard in Section 73, or if the | 3 | | broker has increased the interest rate by more than 200 basis | 4 | | points. | 5 | | (d) If the Department recommends counseling for the | 6 | | borrower under subsection (c), then the Department shall | 7 | | notify the borrower of all participating HUD-approved | 8 | | counseling agencies located within the State and, where | 9 | | applicable, nationally HUD-approved counseling agencies, and | 10 | | direct the borrower to interview with a counselor associated | 11 | | with one of those agencies. Within 10 business days after | 12 | | receipt of the notice of HUD-approved counseling agencies, it | 13 | | is the borrower's responsibility to select one of those | 14 | | agencies and shall engage in an interview with a counselor | 15 | | associated with that agency. The borrower must supply all | 16 | | necessary documents, as set forth by the counselor, at least | 17 | | 72 hours before the scheduled interview. The selection must | 18 | | take place and the appointment for the interview must be set | 19 | | within 10 business days, although the interview may take place | 20 | | beyond the 10 business day period. Within 7 business days | 21 | | after interviewing the borrower, the counselor must submit to | 22 | | the predatory lending database all of the information required | 23 | | under Section 74 and any other information required by the | 24 | | Department by rule. Reasonable and customary costs not to | 25 | | exceed $300 associated with counseling provided under the | 26 | | program shall be paid by the broker or originator and shall not |
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| 1 | | be charged back to, or recovered from, the borrower. The | 2 | | Department shall annually calculate to the nearest dollar an | 3 | | adjusted rate for inflation. A counselor shall not recommend | 4 | | or suggest that a borrower contact any specific mortgage | 5 | | origination company, financial institution, or entity that | 6 | | deals in mortgage finance to obtain a loan, another quote, or | 7 | | for any other reason related to the specific mortgage | 8 | | transaction; however, a counselor may suggest that the | 9 | | borrower seek an opinion or a quote from another mortgage | 10 | | origination company, financial institution, or entity that | 11 | | deals in mortgage finance. A counselor or housing counseling | 12 | | agency that in good faith provides counseling shall not be | 13 | | liable to a broker or originator or borrower for civil | 14 | | damages, except for willful or wanton misconduct on the part | 15 | | of the counselor in providing the counseling. | 16 | | (e) The broker or originator and the borrower may not take | 17 | | any legally binding action concerning the loan transaction | 18 | | until the later of the following: | 19 | | (1) the Department issues a determination not to | 20 | | recommend HUD-approved counseling for the borrower in | 21 | | accordance with subsection (c); or | 22 | | (2) the Department issues a determination that | 23 | | HUD-approved counseling is recommended for the borrower | 24 | | and the counselor submits all required information to the | 25 | | database in accordance with subsection (d). | 26 | | (f) Within 10 business days after closing, the title |
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| 1 | | insurance company or closing agent must submit to the | 2 | | predatory lending database all of the information required | 3 | | under Section 76 and any other information required by the | 4 | | Department by rule. | 5 | | (g) The title insurance company or closing agent shall | 6 | | attach to the mortgage a certificate of compliance with the | 7 | | requirements of this Article, as generated by the database. If | 8 | | the transaction is exempt, the title insurance company or | 9 | | closing agent shall attach to the mortgage a certificate of | 10 | | exemption, as generated by the database. Each certificate of | 11 | | compliance or certificate of exemption must contain, at a | 12 | | minimum, one of the borrower's names on the mortgage loan and | 13 | | the property index number for the subject property. If the | 14 | | title insurance company or closing agent fails to attach the | 15 | | certificate of compliance or exemption, whichever is required, | 16 | | then the mortgage is not recordable. In addition, if any lis | 17 | | pendens for a residential mortgage foreclosure is recorded on | 18 | | the property within the program area, a certificate of service | 19 | | must be simultaneously recorded that affirms that a copy of | 20 | | the lis pendens was filed with the Department. A lis pendens | 21 | | filed after July 1, 2016 shall be filed with the Department | 22 | | electronically. If the certificate of service is not recorded, | 23 | | then the lis pendens pertaining to the residential mortgage | 24 | | foreclosure in question is not recordable and is of no force | 25 | | and effect. | 26 | | (h) All information provided to the predatory lending |
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| 1 | | database under the program is confidential and is not subject | 2 | | to disclosure under the Freedom of Information Act, except as | 3 | | otherwise provided in this Article. Information or documents | 4 | | obtained by employees of the Department in the course of | 5 | | maintaining and administering the predatory lending database | 6 | | are deemed confidential. Employees are prohibited from making | 7 | | disclosure of such confidential information or documents. Any | 8 | | request for production of information from the predatory | 9 | | lending database, whether by subpoena, notice, or any other | 10 | | source, shall be referred to the Department of Financial and | 11 | | Professional Regulation. Any borrower may authorize in writing | 12 | | the release of database information. The Department may use | 13 | | the information in the database without the consent of the | 14 | | borrower: (i) for the purposes of administering and enforcing | 15 | | the program; (ii) to provide relevant information to a | 16 | | counselor providing counseling to a borrower under the | 17 | | program; or (iii) to the appropriate law enforcement agency or | 18 | | the applicable administrative agency if the database | 19 | | information demonstrates criminal, fraudulent, or otherwise | 20 | | illegal activity. | 21 | | (i) Nothing in this Article is intended to prevent a | 22 | | borrower from making his or her own decision as to whether to | 23 | | proceed with a transaction. | 24 | | (j) Any person who violates any provision of this Article | 25 | | commits an unlawful practice within the meaning of the | 26 | | Consumer Fraud and Deceptive Business Practices Act. |
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| 1 | | (j-1) A violation of any provision of this Article by a | 2 | | mortgage banking licensee or licensed mortgage loan originator | 3 | | shall constitute a violation of the Residential Mortgage | 4 | | License Act of 1987. | 5 | | (j-2) A violation of any provision of this Article by a | 6 | | title insurance company, title agent, or escrow agent shall | 7 | | constitute a violation of the Title Insurance Act. | 8 | | (j-3) A violation of any provision of this Article by a | 9 | | housing counselor shall be referred to the Department of | 10 | | Housing and Urban Development. | 11 | | (k) During the existence of the program, the Department | 12 | | shall submit semi-annual reports to the Governor and to the | 13 | | General Assembly by May 1 and November 1 of each year detailing | 14 | | its findings regarding the program. The report shall include, | 15 | | by county, at least the following information for each | 16 | | reporting period: | 17 | | (1) the number of loans registered with the program; | 18 | | (2) the number of borrowers receiving counseling; | 19 | | (3) the number of loans closed; | 20 | | (4) the number of loans requiring counseling for each | 21 | | of the standards set forth in Section 73; | 22 | | (5) the number of loans requiring counseling where the | 23 | | mortgage originator changed the loan terms subsequent to | 24 | | counseling; | 25 | | (6) the number of licensed mortgage brokers and loan | 26 | | originators entering information into the database; |
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| 1 | | (7) the number of investigations based on information | 2 | | obtained from the database, including the number of | 3 | | licensees fined, the number of licenses suspended, and the | 4 | | number of licenses revoked; | 5 | | (8) a summary of the types of non-traditional mortgage | 6 | | products being offered; and | 7 | | (9) a summary of how the Department is actively | 8 | | utilizing the program to combat mortgage fraud. | 9 | | (Source: P.A. 99-660, eff. 7-28-16; 100-509, eff. 9-15-17.)". |
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