Illinois General Assembly - Full Text of HB4521
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Full Text of HB4521  97th General Assembly




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1    AN ACT concerning residential mortgages.
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 1-4, 2-2, 2-4, 3-2, 4-5, 4-8.2,
67-1A, 7-11, and 7-13 and by adding Section 2-3A as follows:
7    (205 ILCS 635/1-4)
8    Sec. 1-4. Definitions.
9    (a) "Residential real property" or "residential real
10estate" shall mean any real property located in Illinois, upon
11which is constructed or intended to be constructed a dwelling.
12    (b) "Making a residential mortgage loan" or "funding a
13residential mortgage loan" shall mean for compensation or gain,
14either directly or indirectly, advancing funds or making a
15commitment to advance funds to a loan applicant for a
16residential mortgage loan.
17    (c) "Soliciting, processing, placing, or negotiating a
18residential mortgage loan" shall mean for compensation or gain,
19either directly or indirectly, accepting or offering to accept
20an application for a residential mortgage loan, assisting or
21offering to assist in the processing of an application for a
22residential mortgage loan on behalf of a borrower, or
23negotiating or offering to negotiate the terms or conditions of



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1a residential mortgage loan with a lender on behalf of a
2borrower including, but not limited to, the submission of
3credit packages for the approval of lenders, the preparation of
4residential mortgage loan closing documents, including a
5closing in the name of a broker.
6    (d) "Exempt person or entity" shall mean the following:
7        (1) (i) Any banking organization or foreign banking
8    corporation licensed by the Illinois Commissioner of Banks
9    and Real Estate or the United States Comptroller of the
10    Currency to transact business in this State; (ii) any
11    national bank, federally chartered savings and loan
12    association, federal savings bank, federal credit union;
13    (iii) any pension trust, bank trust, or bank trust company;
14    (iv) any bank, savings and loan association, savings bank,
15    or credit union organized under the laws of this or any
16    other state; (v) any Illinois Consumer Installment Loan Act
17    licensee; (vi) any insurance company authorized to
18    transact business in this State; (vii) any entity engaged
19    solely in commercial mortgage lending; (viii) any service
20    corporation of a savings and loan association or savings
21    bank organized under the laws of this State or the service
22    corporation of a federally chartered savings and loan
23    association or savings bank having its principal place of
24    business in this State, other than a service corporation
25    licensed or entitled to reciprocity under the Real Estate
26    License Act of 2000; or (ix) any first tier subsidiary of a



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1    bank, the charter of which is issued under the Illinois
2    Banking Act by the Illinois Commissioner of Banks and Real
3    Estate, or the first tier subsidiary of a bank chartered by
4    the United States Comptroller of the Currency and that has
5    its principal place of business in this State, provided
6    that the first tier subsidiary is regularly examined by the
7    Illinois Commissioner of Banks and Real Estate or the
8    Comptroller of the Currency, or a consumer compliance
9    examination is regularly conducted by the Federal Reserve
10    Board.
11        (1.5) Any employee of a person or entity mentioned in
12    item (1) of this subsection, when acting for such person or
13    entity, or any registered mortgage loan originator when
14    acting for an entity described in subsection (tt) of this
15    Section.
16        (1.8) Any person or entity that does not originate
17    mortgage loans in the ordinary course of business, but
18    makes or acquires residential mortgage loans with his or
19    her own funds for his or her or its own investment without
20    intent to make, acquire, or resell more than 3 residential
21    mortgage loans in any one calendar year.
22        (2) (Blank).
23        (3) Any person employed by a licensee to assist in the
24    performance of the residential mortgage licensee's
25    activities regulated by this Act who is compensated in any
26    manner by only one licensee.



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1        (4) (Blank).
2        (5) Any individual, corporation, partnership, or other
3    entity that originates, services, or brokers residential
4    mortgage loans, as these activities are defined in this
5    Act, and who or which receives no compensation for those
6    activities, subject to the Commissioner's regulations and
7    the federal Secure and Fair Enforcement for Mortgage
8    Licensing Act of 2008 and the rules promulgated under that
9    Act with regard to the nature and amount of compensation.
10        (6) (Blank).
11    (e) "Licensee" or "residential mortgage licensee" shall
12mean a person, partnership, association, corporation, or any
13other entity who or which is licensed pursuant to this Act to
14engage in the activities regulated by this Act.
15    (f) "Mortgage loan" "residential mortgage loan" or "home
16mortgage loan" shall mean any loan primarily for personal,
17family, or household use that is secured by a mortgage, deed of
18trust, or other equivalent consensual security interest on a
19dwelling as defined in Section 103(v) of the federal Truth in
20Lending Act, or residential real estate upon which is
21constructed or intended to be constructed a dwelling.
22    (g) "Lender" shall mean any person, partnership,
23association, corporation, or any other entity who either lends
24or invests money in residential mortgage loans.
25    (h) "Ultimate equitable owner" shall mean a person who,
26directly or indirectly, owns or controls an ownership interest



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1in a corporation, foreign corporation, alien business
2organization, trust, or any other form of business organization
3regardless of whether the person owns or controls the ownership
4interest through one or more persons or one or more proxies,
5powers of attorney, nominees, corporations, associations,
6partnerships, trusts, joint stock companies, or other entities
7or devices, or any combination thereof.
8    (i) "Residential mortgage financing transaction" shall
9mean the negotiation, acquisition, sale, or arrangement for or
10the offer to negotiate, acquire, sell, or arrange for, a
11residential mortgage loan or residential mortgage loan
13    (j) "Personal residence address" shall mean a street
14address and shall not include a post office box number.
15    (k) "Residential mortgage loan commitment" shall mean a
16contract for residential mortgage loan financing.
17    (l) "Party to a residential mortgage financing
18transaction" shall mean a borrower, lender, or loan broker in a
19residential mortgage financing transaction.
20    (m) "Payments" shall mean payment of all or any of the
21following: principal, interest and escrow reserves for taxes,
22insurance and other related reserves, and reimbursement for
23lender advances.
24    (n) "Commissioner" shall mean the Commissioner of Banks and
25Real Estate, except that, beginning on April 6, 2009 (the
26effective date of Public Act 95-1047), all references in this



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1Act to the Commissioner of Banks and Real Estate are deemed, in
2appropriate contexts, to be references to the Secretary of
3Financial and Professional Regulation, or his or her designee,
4including the Director of the Division of Banking of the
5Department of Financial and Professional Regulation.
6    (n-1) "Director" shall mean the Director of the Division of
7Banking of the Department of Financial and Professional
8Regulation, except that, beginning on July 31, 2009 (the
9effective date of Public Act 96-112), all references in this
10Act to the Director are deemed, in appropriate contexts, to be
11the Secretary of Financial and Professional Regulation, or his
12or her designee, including the Director of the Division of
13Banking of the Department of Financial and Professional
15    (o) "Loan brokering", "brokering", or "brokerage service"
16shall mean the act of helping to obtain from another entity,
17for a borrower, a loan secured by residential real estate
18situated in Illinois or assisting a borrower in obtaining a
19loan secured by residential real estate situated in Illinois in
20return for consideration to be paid by either the borrower or
21the lender including, but not limited to, contracting for the
22delivery of residential mortgage loans to a third party lender
23and soliciting, processing, placing, or negotiating
24residential mortgage loans.
25    (p) "Loan broker" or "broker" shall mean a person,
26partnership, association, corporation, or limited liability



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1company, other than those persons, partnerships, associations,
2corporations, or limited liability companies exempted from
3licensing pursuant to Section 1-4, subsection (d), of this Act,
4who performs the activities described in subsections (c), and
5(o), and (yy) of this Section.
6    (q) "Servicing" shall mean the collection or remittance for
7or the right or obligation to collect or remit for any lender,
8noteowner, noteholder, or for a licensee's own account, of
9payments, interests, principal, and trust items such as hazard
10insurance and taxes on a residential mortgage loan in
11accordance with the terms of the residential mortgage loan; and
12includes loan payment follow-up, delinquency loan follow-up,
13loan analysis and any notifications to the borrower that are
14necessary to enable the borrower to keep the loan current and
15in good standing. "Servicing" includes management of
16third-party entities acting on behalf of a residential mortgage
17licensee for the collection of delinquent payments and the use
18by such third-party entities of said licensee's servicing
19records or information, including their use in foreclosure.
20    (r) "Full service office" shall mean an office, provided by
21the licensee and not subleased from the licensee's employees,
22and staff in Illinois reasonably adequate to handle efficiently
23communications, questions, and other matters relating to any
24application for, or an existing home mortgage secured by
25residential real estate situated in Illinois with respect to
26which the licensee is brokering, funding originating,



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1purchasing, or servicing. The management and operation of each
2full service office must include observance of good business
3practices such as proper signage; adequate, organized, and
4accurate books and records; ample phone lines, hours of
5business, staff training and supervision, and provision for a
6mechanism to resolve consumer inquiries, complaints, and
7problems. The Commissioner shall issue regulations with regard
8to these requirements and shall include an evaluation of
9compliance with this Section in his or her periodic examination
10of each licensee.
11    (s) "Purchasing" shall mean the purchase of conventional or
12government-insured mortgage loans secured by residential real
13estate situated in Illinois from either the lender or from the
14secondary market.
15    (t) "Borrower" shall mean the person or persons who seek
16the services of a loan broker, originator, or lender.
17    (u) "Originating" shall mean the issuing of commitments for
18and funding of residential mortgage loans.
19    (v) "Loan brokerage agreement" shall mean a written
20agreement in which a broker or loan broker agrees to do either
21of the following:
22        (1) obtain a residential mortgage loan for the borrower
23    or assist the borrower in obtaining a residential mortgage
24    loan; or
25        (2) consider making a residential mortgage loan to the
26    borrower.



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1    (w) "Advertisement" shall mean the attempt by publication,
2dissemination, or circulation to induce, directly or
3indirectly, any person to enter into a residential mortgage
4loan agreement or residential mortgage loan brokerage
5agreement relative to a mortgage secured by residential real
6estate situated in Illinois.
7    (x) "Residential Mortgage Board" shall mean the
8Residential Mortgage Board created in Section 1-5 of this Act.
9    (y) "Government-insured mortgage loan" shall mean any
10mortgage loan made on the security of residential real estate
11insured by the Department of Housing and Urban Development or
12Farmers Home Loan Administration, or guaranteed by the Veterans
14    (z) "Annual audit" shall mean a certified audit of the
15licensee's books and records and systems of internal control
16performed by a certified public accountant in accordance with
17generally accepted accounting principles and generally
18accepted auditing standards.
19    (aa) "Financial institution" shall mean a savings and loan
20association, savings bank, credit union, or a bank organized
21under the laws of Illinois or a savings and loan association,
22savings bank, credit union or a bank organized under the laws
23of the United States and headquartered in Illinois.
24    (bb) "Escrow agent" shall mean a third party, individual or
25entity charged with the fiduciary obligation for holding escrow
26funds on a residential mortgage loan pending final payout of



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1those funds in accordance with the terms of the residential
2mortgage loan.
3    (cc) "Net worth" shall have the meaning ascribed thereto in
4Section 3-5 of this Act.
5    (dd) "Affiliate" shall mean:
6        (1) any entity that directly controls or is controlled
7    by the licensee and any other company that is directly
8    affecting activities regulated by this Act that is
9    controlled by the company that controls the licensee;
10        (2) any entity:
11            (A) that is controlled, directly or indirectly, by
12        a trust or otherwise, by or for the benefit of
13        shareholders who beneficially or otherwise control,
14        directly or indirectly, by trust or otherwise, the
15        licensee or any company that controls the licensee; or
16            (B) a majority of the directors or trustees of
17        which constitute a majority of the persons holding any
18        such office with the licensee or any company that
19        controls the licensee;
20        (3) any company, including a real estate investment
21    trust, that is sponsored and advised on a contractual basis
22    by the licensee or any subsidiary or affiliate of the
23    licensee.
24    The Commissioner may define by rule and regulation any
25terms used in this Act for the efficient and clear
26administration of this Act.



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1    (ee) "First tier subsidiary" shall be defined by regulation
2incorporating the comparable definitions used by the Office of
3the Comptroller of the Currency and the Illinois Commissioner
4of Banks and Real Estate.
5    (ff) "Gross delinquency rate" means the quotient
6determined by dividing (1) the sum of (i) the number of
7government-insured residential mortgage loans funded or
8purchased by a licensee in the preceding calendar year that are
9delinquent and (ii) the number of conventional residential
10mortgage loans funded or purchased by the licensee in the
11preceding calendar year that are delinquent by (2) the sum of
12(i) the number of government-insured residential mortgage
13loans funded or purchased by the licensee in the preceding
14calendar year and (ii) the number of conventional residential
15mortgage loans funded or purchased by the licensee in the
16preceding calendar year.
17    (gg) "Delinquency rate factor" means the factor set by rule
18of the Commissioner that is multiplied by the average gross
19delinquency rate of licensees, determined annually for the
20immediately preceding calendar year, for the purpose of
21determining which licensees shall be examined by the
22Commissioner pursuant to subsection (b) of Section 4-8 of this
24    (hh) "Loan originator" means any natural person who, for
25compensation or in the expectation of compensation, either
26directly or indirectly makes, offers to make, solicits, places,



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1or negotiates a residential mortgage loan. This definition
2applies only to Section 7-1 of this Act.
3    (ii) "Confidential supervisory information" means any
4report of examination, visitation, or investigation prepared
5by the Commissioner under this Act, any report of examination
6visitation, or investigation prepared by the state regulatory
7authority of another state that examines a licensee, any
8document or record prepared or obtained in connection with or
9relating to any examination, visitation, or investigation, and
10any record prepared or obtained by the Commissioner to the
11extent that the record summarizes or contains information
12derived from any report, document, or record described in this
13subsection. "Confidential supervisory information" does not
14include any information or record routinely prepared by a
15licensee and maintained in the ordinary course of business or
16any information or record that is required to be made publicly
17available pursuant to State or federal law or rule.
18    (jj) "Mortgage loan originator" means an individual who for
19compensation or gain or in the expectation of compensation or
21        (i) takes a residential mortgage loan application; or
22        (ii) offers or negotiates terms of a residential
23    mortgage loan.
24    "Mortgage loan originator" includes an individual engaged
25in loan modification activities as defined in subsection (yy)
26of this Section. A mortgage loan originator engaged in loan



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1modification activities shall report those activities to the
2Department of Financial and Professional Regulation in the
3manner provided by the Department; however, the Department
4shall not impose a fee for reporting, nor require any
5additional qualifications to engage in those activities beyond
6those provided pursuant to this Act for mortgage loan
8    "Mortgage loan originator" does not include an individual
9engaged solely as a loan processor or underwriter except as
10otherwise provided in subsection (d) of Section 7-1A of this
12    "Mortgage loan originator" does not include a person or
13entity that only performs real estate brokerage activities and
14is licensed in accordance with the Real Estate License Act of
152000, unless the person or entity is compensated by a lender, a
16mortgage broker, or other mortgage loan originator, or by any
17agent of that lender, mortgage broker, or other mortgage loan
19    "Mortgage loan originator" does not include a person or
20entity solely involved in extensions of credit relating to
21timeshare plans, as that term is defined in Section 101(53D) of
22Title 11, United States Code.
23    (kk) "Depository institution" has the same meaning as in
24Section 3 of the Federal Deposit Insurance Act, and includes
25any credit union.
26    (ll) "Dwelling" means a residential structure or mobile



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1home which contains one to 4 family housing units, or
2individual units of condominiums or cooperatives.
3    (mm) "Immediate family member" means a spouse, child,
4sibling, parent, grandparent, or grandchild, and includes
5step-parents, step-children, step-siblings, or adoptive
7    (nn) "Individual" means a natural person.
8    (oo) "Loan processor or underwriter" means an individual
9who performs clerical or support duties as an employee at the
10direction of and subject to the supervision and instruction of
11a person licensed, or exempt from licensing, under this Act.
12"Clerical or support duties" includes subsequent to the receipt
13of an application:
14        (i) the receipt, collection, distribution, and
15    analysis of information common for the processing or
16    underwriting of a residential mortgage loan; and
17        (ii) communicating with a consumer to obtain the
18    information necessary for the processing or underwriting
19    of a loan, to the extent that the communication does not
20    include offering or negotiating loan rates or terms, or
21    counseling consumers about residential mortgage loan rates
22    or terms. An individual engaging solely in loan processor
23    or underwriter activities shall not represent to the
24    public, through advertising or other means of
25    communicating or providing information, including the use
26    of business cards, stationery, brochures, signs, rate



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1    lists, or other promotional items, that the individual can
2    or will perform any of the activities of a mortgage loan
3    originator.
4    (pp) "Nationwide Mortgage Licensing System and Registry"
5means a mortgage licensing system developed and maintained by
6the Conference of State Bank Supervisors and the American
7Association of Residential Mortgage Regulators for the
8licensing and registration of licensed mortgage loan
10    (qq) "Nontraditional mortgage product" means any mortgage
11product other than a 30-year fixed rate mortgage.
12    (rr) "Person" means a natural person, corporation,
13company, limited liability company, partnership, or
15    (ss) "Real estate brokerage activity" means any activity
16that involves offering or providing real estate brokerage
17services to the public, including:
18        (1) acting as a real estate agent or real estate broker
19    for a buyer, seller, lessor, or lessee of real property;
20        (2) bringing together parties interested in the sale,
21    purchase, lease, rental, or exchange of real property;
22        (3) negotiating, on behalf of any party, any portion of
23    a contract relating to the sale, purchase, lease, rental,
24    or exchange of real property, other than in connection with
25    providing financing with respect to any such transaction;
26        (4) engaging in any activity for which a person engaged



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1    in the activity is required to be registered or licensed as
2    a real estate agent or real estate broker under any
3    applicable law; or
4        (5) offering to engage in any activity, or act in any
5    capacity, described in this subsection (ss).
6    (tt) "Registered mortgage loan originator" means any
7individual that:
8        (1) meets the definition of mortgage loan originator
9    and is an employee of:
10            (A) a depository institution;
11            (B) a subsidiary that is:
12                (i) owned and controlled by a depository
13            institution; and
14                (ii) regulated by a federal banking agency; or
15            (C) an institution regulated by the Farm Credit
16        Administration; and
17        (2) is registered with, and maintains a unique
18    identifier through, the Nationwide Mortgage Licensing
19    System and Registry.
20    (uu) "Unique identifier" means a number or other identifier
21assigned by protocols established by the Nationwide Mortgage
22Licensing System and Registry.
23    (vv) "Residential mortgage license" means a license issued
24pursuant to Section 1-3, 2-2, or 2-6 of this Act.
25    (ww) "Mortgage loan originator license" means a license
26issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act.



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1    (xx) "Secretary" means the Secretary of the Department of
2Financial and Professional Regulation, or a person authorized
3by the Secretary or by this Act to act in the Secretary's
5    (yy) "Loan modification" means, for compensation or gain,
6either directly or indirectly offering or negotiating on behalf
7of a borrower or homeowner to adjust the terms of a residential
8mortgage loan in a manner not provided for in the original or
9previously modified mortgage loan.
10    (zz) "Short sale facilitation" means, for compensation or
11gain, either directly or indirectly offering or negotiating on
12behalf of a borrower or homeowner to facilitate the sale of
13residential real estate subject to one or more residential
14mortgage loans or debts constituting liens on the property in
15which the proceeds from selling the residential real estate
16will fall short of the amount owed and the lien holders are
17contacted to agree to release their lien on the residential
18real estate and accept less than the full amount owed on the
20(Source: P.A. 96-112, eff. 7-31-09; 96-1000, eff. 7-2-10;
2196-1216, eff. 1-1-11; 97-143, eff. 7-14-11.)
22    (205 ILCS 635/2-2)
23    Sec. 2-2. Application process; investigation; fee.
24    (a) The Secretary shall issue a license upon completion of
25all of the following:



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1        (1) The filing of an application for license with the
2    Director or the Nationwide Mortgage Licensing System and
3    Registry as approved by the Director.
4        (2) The filing with the Secretary of a listing of
5    judgments entered against, and bankruptcy petitions by,
6    the license applicant for the preceding 10 years.
7        (3) The payment, in certified funds, of investigation
8    and application fees, the total of which shall be in an
9    amount equal to $2,700 $2,043 annually. To comply with the
10    common renewal date and requirements of the Nationwide
11    Mortgage Licensing System and Registry, the term of initial
12    licenses may be extended or shortened with applicable fees
13    prorated or combined accordingly.
14        (4) Except for a broker applying to renew a license,
15    the filing of an audited balance sheet including all
16    footnotes prepared by a certified public accountant in
17    accordance with generally accepted accounting principles
18    and generally accepted auditing principles which evidences
19    that the applicant meets the net worth requirements of
20    Section 3-5.
21        (5) The filing of proof satisfactory to the
22    Commissioner that the applicant, the members thereof if the
23    applicant is a partnership or association, the members or
24    managers thereof that retain any authority or
25    responsibility under the operating agreement if the
26    applicant is a limited liability company, or the officers



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



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1    within the purpose of this Act. If the Commissioner shall
2    not so find, he or she shall not issue such license, and he
3    or she shall notify the license applicant of the denial.
4    The Commissioner may impose conditions on a license if the
5Commissioner determines that the conditions are necessary or
6appropriate. These conditions shall be imposed in writing and
7shall continue in effect for the period prescribed by the
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. 95-1047, eff. 4-6-09; 96-112, eff. 7-31-09;
1696-1000, eff. 7-2-10.)
17    (205 ILCS 635/2-3A new)
18    Sec. 2-3A. Residential mortgage license application and
20    (a) Applicants for a license shall apply in a form
21prescribed by the Director. Each form shall contain content as
22set forth by rule, regulation, instruction, or procedure of the
23Director and may be changed or updated as necessary by the
24Director in order to carry out the purposes of this Act.
25    (b) In order to fulfill the purposes of this Act, the



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1Director is authorized to establish relationships or contracts
2with the Nationwide Mortgage Licensing System and Registry or
3other entities designated by the Nationwide Mortgage Licensing
4System and Registry to collect and maintain records and process
5transaction fees or other fees related to licensees or other
6persons subject to this Act.
7    (c) In connection with an application for licensing, the
8applicant may be required, at a minimum, to furnish to the
9Nationwide Mortgage Licensing System and Registry information
10concerning the applicant's identity, including:
11        (1) fingerprints for submission to the Federal Bureau
12    of Investigation or any governmental agency or entity
13    authorized to receive such information for a State,
14    national, and international criminal history background
15    check; and
16        (2) personal history and experience in a form
17    prescribed by the Nationwide Mortgage Licensing System and
18    Registry, including the submission of authorization for
19    the Nationwide Mortgage Licensing System and Registry and
20    the Director to obtain:
21            (A) an independent credit report obtained from a
22        consumer reporting agency described in Section 603(p)
23        of the Fair Credit Reporting Act (15 U.S.C. 1681a(p));
24        and
25            (B) information related to any administrative,
26        civil, or criminal findings by any governmental



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1        jurisdiction.
2    (d) For the purposes of this Section, and in order to
3reduce the points of contact that the Federal Bureau of
4Investigation may have to maintain for purposes of subsection
5(c) of this Section, the Director may use the Nationwide
6Mortgage Licensing System and Registry as a channeling agent
7for requesting information from and distributing information
8to the Department of Justice or any governmental agency.
9    (e) For the purposes of this Section, and in order to
10reduce the points of contact that the Director may have to
11maintain for purposes of item (2) of subsection (c) of this
12Section, the Director may use the Nationwide Mortgage Licensing
13System and Registry as a channeling agent for requesting and
14distributing information to and from any source so directed by
15the Director.
16    (205 ILCS 635/2-4)  (from Ch. 17, par. 2322-4)
17    Sec. 2-4. Averments of Licensee. Each application for
18license or for the renewal of a license shall be accompanied by
19the following averments stating that the applicant:
20        (a) Will maintain at least one full service office
21    within the State of Illinois pursuant to Section 3-4 of
22    this Act;
23        (b) Will maintain staff reasonably adequate to meet the
24    requirements of Section 3-4 of this Act;
25        (c) Will keep and maintain for 36 months the same



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



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



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



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1    involved, and the reason therefor;
2        (x) Will advise the Commissioner in writing within 30
3    days of any request from any entity to repurchase a loan in
4    a manner that completely and clearly identifies to whom the
5    request was made, the loans involved, and the reason for
6    the request;
7        (y) Will at all times act in a manner consistent with
8    subsections (a) and (b) of Section 1-2 of this Act; and
9        (z) Will not knowingly hire or employ a loan originator
10    who is not registered, or mortgage loan originator who is
11    not licensed, with the Commissioner as required under
12    Section 7-1 or Section 7-1A, as applicable, of this Act; .
13        (aa) Will not charge or collect advance payments from
14    borrowers or homeowners for engaging in loan modification;
15    and
16        (bb) Will not structure activities or contracts to
17    evade provisions of this Act.
18    A licensee who fails to fulfill obligations of an averment,
19to comply with averments made, or otherwise violates any of the
20averments made under this Section shall be subject to the
21penalties in Section 4-5 of this Act.
22(Source: P.A. 95-331, eff. 8-21-07; 96-112, eff. 7-31-09.)
23    (205 ILCS 635/3-2)  (from Ch. 17, par. 2323-2)
24    Sec. 3-2. Annual audit.
25    (a) At the licensee's fiscal year-end, but in no case more



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1than 12 months after the last audit conducted pursuant to this
2Section, except as otherwise provided in this Section, it shall
3be mandatory for each residential mortgage licensee to cause
4its books and accounts to be audited by a certified public
5accountant not connected with such licensee. The books and
6records of all licensees under this Act shall be maintained on
7an accrual basis. The audit must be sufficiently comprehensive
8in scope to permit the expression of an opinion on the
9financial statements, which must be prepared in accordance with
10generally accepted accounting principles, and must be
11performed in accordance with generally accepted auditing
12standards. Notwithstanding the requirements of this
13subsection, a licensee that is a first tier subsidiary may
14submit audited consolidated financial statements of its parent
15as long as the consolidated statements are supported by
16consolidating statements. The licensee's chief financial
17officer shall attest to the licensee's financial statements
18disclosed in the consolidating statements.
19    (b) As used herein, the term "expression of opinion"
20includes either (1) an unqualified opinion, (2) a qualified
21opinion, (3) a disclaimer of opinion, or (4) an adverse
23    (c) If a qualified or adverse opinion is expressed or if an
24opinion is disclaimed, the reasons therefore must be fully
25explained. An opinion, qualified as to a scope limitation,
26shall not be acceptable.



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1    (d) The most recent audit report shall be filed with the
2Commissioner within 90 days after the end of the licensee's
3fiscal year, or with the Nationwide Mortgage Licensing System
4and Registry, if applicable, pursuant to Mortgage Call Report
5requirements. The report filed with the Commissioner shall be
6certified by the certified public accountant conducting the
7audit. The Commissioner may promulgate rules regarding late
8audit reports.
9    (e) If any licensee required to make an audit shall fail to
10cause an audit to be made, the Commissioner shall cause the
11same to be made by a certified public accountant at the
12licensee's expense. The Commissioner shall select such
13certified public accountant by advertising for bids or by such
14other fair and impartial means as he or she establishes by
16    (f) In lieu of the audit or compilation financial statement
17required by this Section, a licensee shall submit and the
18Commissioner may accept any audit made in conformance with the
19audit requirements of the U.S. Department of Housing and Urban
21    (g) With respect to licensees who solely broker residential
22mortgage loans as defined in subsection (o) of Section 1-4,
23instead of the audit required by this Section, the Commissioner
24may accept compilation financial statements prepared at least
25every 12 months, and the compilation financial statement must
26be prepared by an independent certified public accountant



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1licensed under the Illinois Public Accounting Act or by an
2equivalent state licensing law with full disclosure in
3accordance with generally accepted accounting principals and
4must be submitted within 90 days after the end of the
5licensee's fiscal year, or with the Nationwide Mortgage
6Licensing System and Registry, if applicable, pursuant to
7Mortgage Call Report requirements. If a licensee under this
8Section fails to file a compilation as required, the
9Commissioner shall cause an audit of the licensee's books and
10accounts to be made by a certified public accountant at the
11licensee's expense. The Commissioner shall select the
12certified public accountant by advertising for bids or by such
13other fair and impartial means as he or she establishes by
14rule. A licensee who files false or misleading compilation
15financial statements is guilty of a business offense and shall
16be fined not less than $5,000.
17    (h) The workpapers of the certified public accountants
18employed by each licensee for purposes of this Section are to
19be made available to the Commissioner or the Commissioner's
20designee upon request and may be reproduced by the Commissioner
21or the Commissioner's designee to enable to the Commissioner to
22carry out the purposes of this Act.
23    (i) Notwithstanding any other provision of this Section, if
24a licensee relying on subsection (g) of this Section causes its
25books to be audited at any other time or causes its financial
26statements to be reviewed, a complete copy of the audited or



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1reviewed financial statements shall be delivered to the
2Commissioner at the time of the annual license renewal payment
3following receipt by the licensee of the audited or reviewed
4financial statements. All workpapers shall be made available to
5the Commissioner upon request. The financial statements and
6workpapers may be reproduced by the Commissioner or the
7Commissioner's designee to carry out the purposes of this Act.
8(Source: P.A. 96-112, eff. 7-31-09; revised 11-18-11.)
9    (205 ILCS 635/4-5)  (from Ch. 17, par. 2324-5)
10    Sec. 4-5. Suspension, revocation of licenses; fines.
11    (a) Upon written notice to a licensee, the Commissioner may
12suspend or revoke any license issued pursuant to this Act if he
13or she shall make a finding of one or more of the following in
14the notice that:
15        (1) Through separate acts or an act or a course of
16    conduct, the licensee has violated any provisions of this
17    Act, any rule or regulation promulgated by the Commissioner
18    or of any other law, rule or regulation of this State or
19    the United States.
20        (2) Any fact or condition exists which, if it had
21    existed at the time of the original application for such
22    license would have warranted the Commissioner in refusing
23    originally to issue such license.
24        (3) If a licensee is other than an individual, any
25    ultimate equitable owner, officer, director, or member of



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1    the licensed partnership, association, corporation, or
2    other entity has so acted or failed to act as would be
3    cause for suspending or revoking a license to that party as
4    an individual.
5    (b) No license shall be suspended or revoked, except as
6provided in this Section, nor shall any licensee be fined
7without notice of his or her right to a hearing as provided in
8Section 4-12 of this Act.
9    (c) The Commissioner, on good cause shown that an emergency
10exists, may suspend any license for a period not exceeding 180
11days, pending investigation. Upon a showing that a licensee has
12failed to meet the experience or educational requirements of
13Section 2-2 or the requirements of subsection (g) of Section
143-2, the Commissioner shall suspend, prior to hearing as
15provided in Section 4-12, the license until those requirements
16have been met.
17    (d) The provisions of subsection (e) of Section 2-6 of this
18Act shall not affect a licensee's civil or criminal liability
19for acts committed prior to surrender of a license.
20    (e) No revocation, suspension or surrender of any license
21shall impair or affect the obligation of any pre-existing
22lawful contract between the licensee and any person.
23    (f) Every license issued under this Act shall remain in
24force and effect until the same shall have expired without
25renewal, have been surrendered, revoked or suspended in
26accordance with the provisions of this Act, but the



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1Commissioner shall have authority to reinstate a suspended
2license or to issue a new license to a licensee whose license
3shall have been revoked if no fact or condition then exists
4which would have warranted the Commissioner in refusing
5originally to issue such license under this Act.
6    (g) Whenever the Commissioner shall revoke or suspend a
7license issued pursuant to this Act or fine a licensee under
8this Act, he or she shall forthwith execute a written order to
9that effect. The Commissioner shall publish notice of such
10order in the Illinois Register and post notice of the order on
11an agency Internet site maintained by the Commissioner or on
12the Nationwide Mortgage Licensing System and Registry and shall
13forthwith serve a copy of such order upon the licensee. Any
14such order may be reviewed in the manner provided by Section
154-12 of this Act.
16    (h) When the Commissioner finds any person in violation of
17the grounds set forth in subsection (i), he or she may enter an
18order imposing one or more of the following penalties:
19        (1) Revocation of license;
20        (2) Suspension of a license subject to reinstatement
21    upon satisfying all reasonable conditions the Commissioner
22    may specify;
23        (3) Placement of the licensee or applicant on probation
24    for a period of time and subject to all reasonable
25    conditions as the Commissioner may specify;
26        (4) Issuance of a reprimand;



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1        (5) Imposition of a fine not to exceed $25,000 for each
2    count of separate offense, provided that a fine may be
3    imposed not to exceed $75,000 for each separate count of
4    offense of paragraph (2) of subsection (i) of this Section;
5    and
6        (6) Denial of a license.
7    (i) The following acts shall constitute grounds for which
8the disciplinary actions specified in subsection (h) above may
9be taken:
10        (1) Being convicted or found guilty, regardless of
11    pendency of an appeal, of a crime in any jurisdiction which
12    involves fraud, dishonest dealing, or any other act of
13    moral turpitude;
14        (2) Fraud, misrepresentation, deceit or negligence in
15    any mortgage financing transaction;
16        (3) A material or intentional misstatement of fact on
17    an initial or renewal application;
18        (4) Failure to follow the Commissioner's regulations
19    with respect to placement of funds in escrow accounts;
20        (5) Insolvency or filing under any provision of the
21    Bankruptcy Code as a debtor;
22        (6) Failure to account or deliver to any person any
23    property such as any money, fund, deposit, check, draft,
24    mortgage, or other document or thing of value, which has
25    come into his or her hands and which is not his or her
26    property or which he or she is not in law or equity



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1    entitled to retain, under the circumstances and at the time
2    which has been agreed upon or is required by law or, in the
3    absence of a fixed time, upon demand of the person entitled
4    to such accounting and delivery;
5        (7) Failure to disburse funds in accordance with
6    agreements;
7        (8) Any misuse, misapplication, or misappropriation of
8    trust funds or escrow funds;
9        (9) Having a license, or the equivalent, to practice
10    any profession or occupation revoked, suspended, or
11    otherwise acted against, including the denial of licensure
12    by a licensing authority of this State or another state,
13    territory or country for fraud, dishonest dealing or any
14    other act of moral turpitude;
15        (10) Failure to issue a satisfaction of mortgage when
16    the residential mortgage has been executed and proceeds
17    were not disbursed to the benefit of the mortgagor and when
18    the mortgagor has fully paid licensee's costs and
19    commission;
20        (11) Failure to comply with any order of the
21    Commissioner or rule made or issued under the provisions of
22    this Act;
23        (12) Engaging in activities regulated by this Act
24    without a current, active license unless specifically
25    exempted by this Act;
26        (13) Failure to pay in a timely manner any fee, charge



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1    or fine under this Act;
2        (14) Failure to maintain, preserve, and keep available
3    for examination, all books, accounts or other documents
4    required by the provisions of this Act and the rules of the
5    Commissioner;
6        (15) Refusing, obstructing, evading, or unreasonably
7    delaying an investigation, information request, or
8    examination authorized under this Act, or refusing,
9    obstructing, evading, or unreasonably delaying compliance
10    with the Director's subpoena or subpoena duces tecum;
11        (16) A pattern of substantially underestimating the
12    maximum closing costs;
13        (17) Failure to comply with or violation of any
14    provision of this Act; .
15        (18) Failure to comply with or violation of any
16    provision of Article 3 of the Residential Real Property
17    Disclosure Act.
18    (j) A licensee shall be subject to the disciplinary actions
19specified in this Act for violations of subsection (i) by any
20officer, director, shareholder, joint venture, partner,
21ultimate equitable owner, or employee of the licensee.
22    (k) Such licensee shall be subject to suspension or
23revocation for unauthorized employee actions only if there is a
24pattern of repeated violations by employees or the licensee has
25knowledge of the violations, or there is substantial harm to a



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1    (l) Procedure for surrender of license:
2        (1) The Commissioner may, after 10 days notice by
3    certified mail to the licensee at the address set forth on
4    the license, stating the contemplated action and in general
5    the grounds therefor and the date, time and place of a
6    hearing thereon, and after providing the licensee with a
7    reasonable opportunity to be heard prior to such action,
8    fine such licensee an amount not exceeding $25,000 per
9    violation, or revoke or suspend any license issued
10    hereunder if he or she finds that:
11            (i) The licensee has failed to comply with any
12        provision of this Act or any order, decision, finding,
13        rule, regulation or direction of the Commissioner
14        lawfully made pursuant to the authority of this Act; or
15            (ii) Any fact or condition exists which, if it had
16        existed at the time of the original application for the
17        license, clearly would have warranted the Commissioner
18        in refusing to issue the license.
19        (2) Any licensee may submit application to surrender a
20    license, but upon the Director approving the surrender, it
21    shall not affect the licensee's civil or criminal liability
22    for acts committed prior to surrender or entitle the
23    licensee to a return of any part of the license fee.
24(Source: P.A. 96-112, eff. 7-31-09.)
25    (205 ILCS 635/4-8.2)



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1    Sec. 4-8.2. Reports of violations. Any person licensed
2under this Act or any other person may report to the
3Commissioner any information to show that a person subject to
4this Act is or may be in violation of this Act. A licensee who
5files a report with the Department of Financial and
6Professional Regulation that another licensee is engaged in one
7or more violations pursuant to this Act shall not be the
8subject of disciplinary action by the Department, unless the
9Department determines, by a preponderance of the evidence
10available to the Department, that the reporting person
11knowingly and willingly participated in the violation that was
13(Source: P.A. 93-561, eff. 1-1-04.)
14    (205 ILCS 635/7-1A)
15    Sec. 7-1A. Mortgage loan originator license.
16    (a) It is unlawful for any individual to act or assume to
17act as a mortgage loan originator, as defined in subsection
18(jj) of Section 1-4 of this Act, without obtaining a license
19from the Director, unless the individual is exempt under
20subsection (c) of this Section. It is unlawful for any
21individual who holds a mortgage loan originator license to
22provide short sale facilitation services unless he or she holds
23a license under the Real Estate License Act of 2000. Each
24licensed mortgage loan originator must register with and
25maintain a valid unique identifier issued by the Nationwide



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1Mortgage Licensing System and Registry.
2    (b) In order to facilitate an orderly transition to
3licensing and minimize disruption in the mortgage marketplace,
4the operability date for subsection (a) of this Section shall
5be as provided in this subsection (b). For this purpose, the
6Director may require submission of licensing information to the
7Nationwide Mortgage Licensing System and Registry prior to the
8operability dates designated by the Director pursuant to items
9(1) and (2) of this subsection (b).
10        (1) For all individuals other than individuals
11    described in item (2) of this subsection (b), the
12    operability date as designated by the Director shall be no
13    later than July 31, 2010, or any date approved by the
14    Secretary of the U.S. Department of Housing and Urban
15    Development, pursuant to the authority granted under
16    federal Public Law 110-289, Section 1508.
17        (2) For all individuals registered as loan originators
18    as of the effective date of this amendatory Act of the 96th
19    General Assembly, the operability date as designated by the
20    Director shall be no later than January 1, 2011, or any
21    date approved by the Secretary of the U.S. Department of
22    Housing and Urban Development, pursuant to the authority
23    granted under Public Law 110-289, Section 1508.
24        (3) For all individuals described in item (1) or (2) of
25    this subsection (b) who are loss mitigation specialists
26    employed by servicers, the operability date shall be July



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1    31, 2011, or any date approved by the Secretary of the U.S.
2    Department of Housing and Urban Development pursuant to
3    authority granted under Public Law 110-289, Section 1508.
4    (c) The following, when engaged in the following
5activities, are exempt from this Act:
6        (1) Registered mortgage loan originators, when acting
7    for an entity described in subsection (tt) of Section 1-4.
8        (2) Any individual who offers or negotiates terms of a
9    residential mortgage loan with or on behalf of an immediate
10    family member of the individual.
11        (3) Any individual who offers or negotiates terms of a
12    residential mortgage loan secured by a dwelling that served
13    as the individual's residence.
14        (4) A licensed attorney who negotiates the terms of a
15    residential mortgage loan on behalf of a client as an
16    ancillary matter to the attorney's representation of the
17    client, unless the attorney is compensated by a lender, a
18    mortgage broker, or other mortgage loan originator or by
19    any agent of a lender, mortgage broker, or other mortgage
20    loan originator.
21    (d) A loan processor or underwriter who is an independent
22contractor may not engage in the activities of a loan processor
23or underwriter unless he or she obtains and maintains a license
24under subsection (a) of this Section. Each independent
25contractor loan processor or underwriter licensed as a mortgage
26loan originator must have and maintain a valid unique



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1identifier issued by the Nationwide Mortgage Licensing System
2and Registry.
3    (e) For the purposes of implementing an orderly and
4efficient licensing process, the Director may establish
5licensing rules or regulations and interim procedures for
6licensing and acceptance of applications. For previously
7registered or licensed individuals, the Director may establish
8expedited review and licensing procedures.
9(Source: P.A. 96-112, eff. 7-31-09.)
10    (205 ILCS 635/7-11)
11    Sec. 7-11. Mortgage loan originator suspension or
12revocation of registration; refusal to renew; fines.
13    (a) In addition to any other action authorized by this Act
14or any other applicable law, rule or regulation, the Director
15may do the following:
16        (1) Suspend, revoke, or refuse to renew a license or
17    reprimand, place on probation or otherwise discipline a
18    licensee if the Director finds that the mortgage loan
19    originator has violated this Act or any other applicable
20    law or regulation or has been convicted of a criminal
21    offense.
22        (2) Impose a fine of not more than $1,000 or, for
23    engaging in an act prohibited by item (1) of Section 7-13,
24    not more than $3,000 for each day for each violation of
25    this Act or any other applicable law or regulation that is



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1    committed. If the Mortgage Loan Originator engages in a
2    pattern of repeated violations, the Director may impose a
3    fine of not more than $2,000 or, for engaging in an act
4    prohibited by item (1) of Section 7-13, not more than
5    $6,000 for each day for each violation committed. In
6    determining the amount of a fine to be imposed pursuant to
7    this Act or any other applicable law or regulation, the
8    Director shall consider all of the following:
9            (A) The seriousness of the violation;
10            (B) The mortgage loan originator's good faith
11        efforts to prevent the violation; and
12            (C) The mortgage loan originator's history of
13        violations and compliance with orders.
14    (b) In addition to any other action authorized by this Act
15or any other applicable law, rule or regulation, the Director
16may investigate alleged violations of the Act or any other
17applicable law, rule or regulation and complaints concerning
18any such violation. The Director may seek a court order to
19enjoin the violation.
20    (c) In addition to any other action authorized by this Act
21or any other applicable law, rule or regulation, if the
22Director determines that a mortgage loan originator is engaged
23in or is believed to be engaged in activities that may
24constitute a violation of this Act or any other applicable law,
25rule or regulation, the Director may issue a cease and desist
26order to compel the mortgage loan originator to comply with



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1this Act or any other applicable law, rule or regulation or,
2upon a showing that an emergency exists, may suspend the
3mortgage loan originator's license for a period not exceeding
4180 calendar days, pending investigation.
5(Source: P.A. 96-112, eff. 7-31-09.)
6    (205 ILCS 635/7-13)
7    Sec. 7-13. Prohibited acts and practices for mortgage loan
8originators. It is a violation of this Act for an individual
9subject to this Act to:
10        (1) Directly or indirectly employ any scheme, device,
11    or artifice to defraud or mislead borrowers or lenders or
12    to defraud any person.
13        (2) Engage in any unfair or deceptive practice toward
14    any person.
15        (3) Obtain property by fraud or misrepresentation.
16        (4) Solicit or enter into a contract with a borrower
17    that provides in substance that the person or individual
18    subject to this Act may earn a fee or commission through
19    "best efforts" to obtain a loan even though no loan is
20    actually obtained for the borrower.
21        (5) Solicit, advertise, or enter into a contract for
22    specific interest rates, points, or other financing terms
23    unless the terms are actually available at the time of
24    soliciting, advertising, or contracting.
25        (6) Conduct any business covered by this Act without



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1    holding a valid license as required under this Act, or
2    assist or aid and abet any person in the conduct of
3    business under this Act without a valid license as required
4    under this Act.
5        (7) Fail to make disclosures as required by this Act
6    and any other applicable State or federal law, including
7    regulations thereunder.
8        (8) Fail to comply with this Act or rules or
9    regulations promulgated under this Act, or fail to comply
10    with any other state or federal law, including the rules
11    and regulations thereunder, applicable to any business
12    authorized or conducted under this Act.
13        (9) Make, in any manner, any false or deceptive
14    statement or representation of a material fact, or any
15    omission of a material fact, required on any document or
16    application subject to this Act.
17        (10) Negligently make any false statement or knowingly
18    and willfully make any omission of material fact in
19    connection with any information or report filed with a
20    governmental agency or the Nationwide Mortgage Licensing
21    System and Registry or in connection with any investigation
22    conducted by the Director or another governmental agency.
23        (11) Make any payment, threat or promise, directly or
24    indirectly, to any person for the purpose of influencing
25    the independent judgment of the person in connection with a
26    residential mortgage loan, or make any payment threat or



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1    promise, directly or indirectly, to any appraiser of a
2    property, for the purpose of influencing the independent
3    judgment of the appraiser with respect to the value of the
4    property.
5        (12) Collect, charge, attempt to collect or charge, or
6    use or propose any agreement purporting to collect or
7    charge any fee prohibited by this Act, including advance
8    fees for loan modification.
9        (13) Cause or require a borrower to obtain property
10    insurance coverage in an amount that exceeds the
11    replacement cost of the improvements as established by the
12    property insurer.
13        (14) Fail to truthfully account for monies belonging to
14    a party to a residential mortgage loan transaction.
15        (15) Engage in conduct that constitutes dishonest
16    dealings.
17        (16) Knowingly instruct, solicit, propose, or cause a
18    person other than the borrower to sign a borrower's
19    signature on a mortgage related document, or solicit,
20    accept or execute any contract or other document related to
21    the residential mortgage transaction that contains any
22    blanks to be filled in after signing or initialing the
23    contract or other document, except for forms authorizing
24    the verification of application information.
25        (17) Discourage any applicant from seeking or
26    participating in housing or financial counseling either



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1    before or after the consummation of a loan transaction, or
2    fail to provide information on counseling resources upon
3    request.
4        (18) Charge for any ancillary products or services, not
5    essential to the basic loan transaction for which the
6    consumer has applied, without the applicant's knowledge
7    and written authorization, or charge for any ancillary
8    products or services not actually provided in the
9    transaction.
10        (19) Fail to give reasonable consideration to a
11    borrower's ability to repay the debt.
12        (20) Interfere or obstruct an investigation or
13    examination conducted pursuant to this Act.
14        (21) Structure activities or contracts to evade
15    provisions of this Act.
16(Source: P.A. 96-112, eff. 7-31-09.)
17    Section 10. The Title Insurance Act is amended by changing
18Section 23 as follows:
19    (215 ILCS 155/23)  (from Ch. 73, par. 1423)
20    Sec. 23. Violation; penalties.
21    (a) Any violation of any of the provisions of this Act and,
22beginning January 1, 2013, any violation of any of the
23provisions of Article 3 of the Residential Real Property
24Disclosure Act shall constitute a business offense and shall



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1subject the party violating the same to a penalty of $1000 for
2each offense.
3    (b) Nothing contained in this Section shall affect the
4right of the Secretary to revoke or suspend a title insurance
5company's or independent escrowee's certificate of authority
6or a title insurance agent's registration under any other
7Section of this Act.
8(Source: P.A. 94-893, eff. 6-20-06.)
9    Section 15. The Residential Real Property Disclosure Act is
10amended by changing Sections 70 and 72 as follows:
11    (765 ILCS 77/70)
12    Sec. 70. Predatory lending database program.
13    (a) As used in this Article:
14    "Adjustable rate mortgage" or "ARM" means a closed-end
15mortgage transaction that allows adjustments of the loan
16interest rate during the first 3 years of the loan term.
17    "Borrower" means a person seeking a mortgage loan.
18    "Broker" means a "broker" or "loan broker", as defined in
19subsection (p) of Section 1-4 of the Residential Mortgage
20License Act of 1987.
21    "Closing agent" means an individual assigned by a title
22insurance company or a broker or originator to ensure that the
23execution of documents related to the closing of a real estate
24sale or the refinancing of a real estate loan and the



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1disbursement of closing funds are in conformity with the
2instructions of the entity financing the transaction.
3    "Counseling" means in-person counseling provided by a
4counselor employed by a HUD-certified counseling agency to all
5borrowers, or documented telephone counseling where a hardship
6would be imposed on one or more borrowers. A hardship shall
7exist in instances in which the borrower is confined to his or
8her home due to medical conditions, as verified in writing by a
9physician, or the borrower resides 50 miles or more from the
10nearest participating HUD-certified housing counseling agency.
11In instances of telephone counseling, the borrower must supply
12all necessary documents to the counselor at least 72 hours
13prior to the scheduled telephone counseling session.
14    "Counselor" means a counselor employed by a HUD-certified
15housing counseling agency.
16    "Credit score" means a credit risk score as defined by the
17Fair Isaac Corporation, or its successor, and reported under
18such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE"
19by one or more of the following credit reporting agencies or
20their successors: Equifax, Inc., Experian Information
21Solutions, Inc., and TransUnion LLC. If the borrower's credit
22report contains credit scores from 2 reporting agencies, then
23the broker or loan originator shall report the lower score. If
24the borrower's credit report contains credit scores from 3
25reporting agencies, then the broker or loan originator shall
26report the middle score.



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1    "Department" means the Department of Financial and
2Professional Regulation.
3    "Exempt person" means that term as it is defined in
4subsections (d)(1), and (d)(1.5), and (d)(1.8) of Section 1-4
5of the Residential Mortgage License Act of 1987.
6    "First-time homebuyer" means a borrower who has not held an
7ownership interest in residential property.
8    "HUD-certified counseling" or "counseling" means
9counseling given to a borrower by a counselor employed by a
10HUD-certified housing counseling agency.
11    "Interest only" means a closed-end loan that permits one or
12more payments of interest without any reduction of the
13principal balance of the loan, other than the first payment on
14the loan.
15    "Lender" means that term as it is defined in subsection (g)
16of Section 1-4 of the Residential Mortgage License Act of 1987.
17    "Licensee" means that term as it is defined in subsection
18(e) of Section 1-4 of the Residential Mortgage License Act of
20    "Mortgage loan" means that term as it is defined in
21subsection (f) of Section 1-4 of the Residential Mortgage
22License Act of 1987.
23    "Negative amortization" means an amortization method under
24which the outstanding balance may increase at any time over the
25course of the loan because the regular periodic payment does
26not cover the full amount of interest due.



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1    "Originator" means a "loan originator" as defined in
2subsection (hh) of Section 1-4 of the Residential Mortgage
3License Act of 1987, except an exempt person, and means a
4"mortgage loan originator" as defined in subsection (jj) of
5Section 1-4 of the Residential Mortgage License Act of 1987,
6except an exempt person.
7    "Points and fees" has the meaning ascribed to that term in
8Section 10 of the High Risk Home Loan Act.
9    "Prepayment penalty" means a charge imposed by a lender
10under a mortgage note or rider when the loan is paid before the
11expiration of the term of the loan.
12    "Refinancing" means a loan secured by the borrower's or
13borrowers' primary residence where the proceeds are not used as
14purchase money for the residence.
15    "Title insurance company" means any domestic company
16organized under the laws of this State for the purpose of
17conducting the business of guaranteeing or insuring titles to
18real estate and any title insurance company organized under the
19laws of another State, the District of Columbia, or a foreign
20government and authorized to transact the business of
21guaranteeing or insuring titles to real estate in this State.
22    (a-5) A predatory lending database program shall be
23established within Cook County. The program shall be
24administered in accordance with this Article. The inception
25date of the program shall be July 1, 2008. A predatory lending
26database program shall be expanded to include Kane, Peoria, and



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1Will counties. The inception date of the expansion of the
2program as it applies to Kane, Peoria, and Will counties shall
3be July 1, 2010. Until the inception date, none of the duties,
4obligations, contingencies, or consequences of or from the
5program shall be imposed. The program shall apply to all
6mortgage applications that are governed by this Article and
7that are made or taken on or after the inception of the
9    (b) The database created under this program shall be
10maintained and administered by the Department. The database
11shall be designed to allow brokers, originators, counselors,
12title insurance companies, and closing agents to submit
13information to the database online. The database shall not be
14designed to allow those entities to retrieve information from
15the database, except as otherwise provided in this Article.
16Information submitted by the broker or originator to the
17Department may be used to populate the online form submitted by
18a counselor, title insurance company, or closing agent.
19    (c) Within 10 days after taking a mortgage application, the
20broker or originator for any mortgage on residential property
21within the program area must submit to the predatory lending
22database all of the information required under Section 72 and
23any other information required by the Department by rule.
24Within 7 days after receipt of the information, the Department
25shall compare that information to the housing counseling
26standards in Section 73 and issue to the borrower and the



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1broker or originator a determination of whether counseling is
2recommended for the borrower. The borrower may not waive
3counseling. If at any time after submitting the information
4required under Section 72 the broker or originator (i) changes
5the terms of the loan or (ii) issues a new commitment to the
6borrower, then, within 5 days thereafter, the broker or
7originator shall re-submit all of the information required
8under Section 72 and, within 4 days after receipt of the
9information re-submitted by the broker or originator, the
10Department shall compare that information to the housing
11counseling standards in Section 73 and shall issue to the
12borrower and the broker or originator a new determination of
13whether re-counseling is recommended for the borrower based on
14the information re-submitted by the broker or originator. The
15Department shall require re-counseling if the loan terms have
16been modified to meet another counseling standard in Section
1773, or if the broker has increased the interest rate by more
18than 200 basis points.
19    (d) If the Department recommends counseling for the
20borrower under subsection (c), then the Department shall notify
21the borrower of all participating HUD-certified counseling
22agencies located within the State and direct the borrower to
23interview with a counselor associated with one of those
24agencies. Within 10 days after receipt of the notice of
25HUD-certified counseling agencies, the borrower shall select
26one of those agencies and shall engage in an interview with a



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1counselor associated with that agency. Within 7 days after
2interviewing the borrower, the counselor must submit to the
3predatory lending database all of the information required
4under Section 74 and any other information required by the
5Department by rule. Reasonable and customary costs not to
6exceed $300 associated with counseling provided under the
7program shall be paid by the broker or originator. The
8Department shall annually calculate to the nearest dollar an
9adjusted rate for inflation. A counselor shall not recommend or
10suggest that a borrower contact any specific mortgage
11origination company, financial institution, or entity that
12deals in mortgage finance to obtain a loan, another quote, or
13for any other reason related to the specific mortgage
14transaction; however, a counselor may suggest that the borrower
15seek an opinion or a quote from another mortgage origination
16company, financial institution, or entity that deals in
17mortgage finance. A counselor or housing counseling agency that
18in good faith provides counseling shall not be liable to a
19broker or originator or borrower for civil damages, except for
20willful or wanton misconduct on the part of the counselor in
21providing the counseling.
22    (e) The broker or originator and the borrower may not take
23any legally binding action concerning the loan transaction
24until the later of the following:
25        (1) the Department issues a determination not to
26    recommend HUD-certified counseling for the borrower in



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1    accordance with subsection (c); or
2        (2) the Department issues a determination that
3    HUD-certified counseling is recommended for the borrower
4    and the counselor submits all required information to the
5    database in accordance with subsection (d).
6    (f) Within 10 days after closing, the title insurance
7company or closing agent must submit to the predatory lending
8database all of the information required under Section 76 and
9any other information required by the Department by rule.
10    (g) The title insurance company or closing agent shall
11attach to the mortgage a certificate of compliance with the
12requirements of this Article, as generated by the database. If
13the title insurance company or closing agent fails to attach
14the certificate of compliance, then the mortgage is not
15recordable. In addition, if any lis pendens for a residential
16mortgage foreclosure is recorded on the property within the
17program area, a certificate of service must be simultaneously
18recorded that affirms that a copy of the lis pendens was filed
19with the Department. If the certificate of service is not
20recorded, then the lis pendens pertaining to the residential
21mortgage foreclosure in question is not recordable and is of no
22force and effect.
23    (h) All information provided to the predatory lending
24database under the program is confidential and is not subject
25to disclosure under the Freedom of Information Act, except as
26otherwise provided in this Article. Information or documents



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1obtained by employees of the Department in the course of
2maintaining and administering the predatory lending database
3are deemed confidential. Employees are prohibited from making
4disclosure of such confidential information or documents. Any
5request for production of information from the predatory
6lending database, whether by subpoena, notice, or any other
7source, shall be referred to the Department of Financial and
8Professional Regulation. Any borrower may authorize in writing
9the release of database information. The Department may use the
10information in the database without the consent of the
11borrower: (i) for the purposes of administering and enforcing
12the program; (ii) to provide relevant information to a
13counselor providing counseling to a borrower under the program;
14or (iii) to the appropriate law enforcement agency or the
15applicable administrative agency if the database information
16demonstrates criminal, fraudulent, or otherwise illegal
18    (i) Nothing in this Article is intended to prevent a
19borrower from making his or her own decision as to whether to
20proceed with a transaction.
21    (j) Any person who violates any provision of this Article
22commits an unlawful practice within the meaning of the Consumer
23Fraud and Deceptive Business Practices Act.
24    (j-1) A violation of any provision of this Article by a
25mortgage banking licensee or licensed mortgage loan originator
26shall constitute a violation of the Residential Mortgage



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1License Act of 1987.
2    (j-2) A violation of any provision of this Article by a
3title insurance company, title agent, or escrow agent shall
4constitute a violation of the Title Insurance Act.
5    (j-3) A violation of any provision of this Article by a
6housing counselor shall be referred to the Department of
7Housing and Urban Development.
8    (k) During the existence of the program, the Department
9shall submit semi-annual reports to the Governor and to the
10General Assembly by May 1 and November 1 of each year detailing
11its findings regarding the program. The report shall include,
12by county, at least the following information for each
13reporting period:
14        (1) the number of loans registered with the program;
15        (2) the number of borrowers receiving counseling;
16        (3) the number of loans closed;
17        (4) the number of loans requiring counseling for each
18    of the standards set forth in Section 73;
19        (5) the number of loans requiring counseling where the
20    mortgage originator changed the loan terms subsequent to
21    counseling;
22        (6) the number of licensed mortgage brokers and loan
23    originators entering information into the database;
24        (7) the number of investigations based on information
25    obtained from the database, including the number of
26    licensees fined, the number of licenses suspended, and the



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1    number of licenses revoked;
2        (8) a summary of the types of non-traditional mortgage
3    products being offered; and
4        (9) a summary of how the Department is actively
5    utilizing the program to combat mortgage fraud.
6(Source: P.A. 95-691, eff. 6-1-08; 96-328, eff. 8-11-09;
796-856, eff. 12-31-09.)
8    (765 ILCS 77/72)
9    Sec. 72. Originator; required information. As part of the
10predatory lending database program, the broker or originator
11must submit all of the following information for inclusion in
12the predatory lending database for each loan for which the
13originator takes an application:
14        (1) The borrower's name, address, social security
15    number or taxpayer identification number, date of birth,
16    and income and expense information, including total
17    monthly consumer debt, contained in the mortgage
18    application.
19        (2) The address, permanent index number, and a
20    description of the collateral and information about the
21    loan or loans being applied for and the loan terms,
22    including the amount of the loan, the rate and whether the
23    rate is fixed or adjustable, amortization or loan period
24    terms, and any other material terms.
25        (3) The borrower's credit score at the time of



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1    application.
2        (4) Information about the originator and the company
3    the originator works for, including the originator's
4    license number and address, fees being charged, whether the
5    fees are being charged as points up front, the yield spread
6    premium payable outside closing, and other charges made or
7    remuneration required by the broker or originator or its
8    affiliates or the broker's or originator's employer or its
9    affiliates for the mortgage loans.
10        (5) Information about affiliated or third party
11    service providers, including the names and addresses of
12    appraisers, title insurance companies, closing agents,
13    attorneys, and realtors who are involved with the
14    transaction and the broker or originator and any moneys
15    received from the broker or originator in connection with
16    the transaction.
17        (6) All information indicated on the Good Faith
18    Estimate and Truth in Lending statement disclosures given
19    to the borrower by the broker or originator.
20        (7) Annual real estate taxes for the property, together
21    with any assessments payable in connection with the
22    property to be secured by the collateral and the proposed
23    monthly principal and interest charge of all loans to be
24    taken by the borrower and secured by the property of the
25    borrower.
26        (8) Information concerning how the broker or



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1    originator obtained the client and the name of its referral
2    source, if any.
3        (9) Information concerning the notices provided by the
4    broker or originator to the borrower as required by law and
5    the date those notices were given.
6        (10) Information concerning whether a sale and
7    leaseback is contemplated and the names of the lessor and
8    lessee, seller, and purchaser.
9        (11) Any and all financing by the borrower for the
10    subject property within 12 months prior to the date of
11    application.
12        (12) Loan information, including interest rate, term,
13    purchase price, down payment, and closing costs.
14        (13) Whether the buyer is a first-time homebuyer or
15    refinancing a primary residence.
16        (14) Whether the loan permits interest only payments.
17        (15) Whether the loan may result in negative
18    amortization.
19        (16) Whether the total points and fees payable by the
20    borrowers at or before closing will exceed 5%.
21        (17) Whether the loan includes a prepayment penalty,
22    and, if so, the terms of the penalty.
23        (18) Whether the loan is an ARM.
24(Source: P.A. 94-280, eff. 1-1-06; 95-691, eff. 6-1-08.)
25    Section 99. Effective date. This Act takes effect upon
26becoming law, except that Section 15 takes effect on January 1,



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