HB5895 95TH GENERAL ASSEMBLY

LRB095 17993 RAS 44076 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB5895

Introduced , by Rep. Joe Dunn

SYNOPSIS AS INTRODUCED:

New Act
5 ILCS 80/4.29 new

Creates the Mortgage Foreclosure Consultant Licensing Act. Provides for the licensure of mortgage foreclosure consultants with the Department of Financial and Professional Regulation. Sets forth powers and duties of the Department, licensure and written agreement requirements, grounds for discipline, civil and criminal penalties for violation of the Act, and administrative procedure. Includes provisions concerning exemption from the Act. Provides that the Act does not limit the power of a unit of local government from regulating or licensing the practice of mortgage foreclosure consulting in a stricter manner. Amends the Regulatory Sunset Act to set a repeal date of January 1, 2019 for the new Act. Effective immediately.

CORRECTIONAL BUDGET AND IMPACT NOTE ACT MAY APPLY

FISCAL NOTE ACT MAY APPLY

HOME RULE NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Mortgage Foreclosure Consultant Licensing Act.

Section 5. Purpose. The practice of mortgage foreclosure consulting in the State of Illinois is hereby declared to affect the public health, safety, and welfare and to be subject to regulation in the public interest. It is further declared to be a matter of public interest and concern that the practice of mortgage foreclosure consulting merit and receive the confidence of the public by permitting only qualified persons to practice the profession in the State of Illinois. The purpose of this Act is to protect and benefit the public by setting standards for those who seek to engage in the practice of mortgage foreclosure consulting and to protect consumers from unprofessional conduct by persons licensed to practice mortgage foreclosure consulting. This Act shall be liberally construed to carry out these purposes.

Section 10. Definitions. In this Act:

"Department" means the Department of Financial and Professional Regulation.

"Mortgage foreclosure consultant" means any person who engages in the practice of mortgage foreclosure consulting.

"Mortgage foreclosure consulting" means either of the following:

(1) Systematically contacting owners of property that court records or newspaper advertisements show are in foreclosure or in danger of foreclosure.

(2) Performing or soliciting, representing, or offering to perform for a homeowner facing foreclosure any any of the following services:

(A) Preventing, postponing, or reversing the effect of a foreclosure.

(B) Allowing a homeowner to become a lessee or renter entitled to continue to reside in the homeowner's residence.

(C) Allowing a homeowner to have an option to repurchase the homeowner's residence.

(D) Obtaining an extension of time to repay a mortgage loan.

(E) Obtaining an alternative loan or mortgage.

(F) Obtaining an advance of funds.

(G) Obtaining a forbearance from a beneficiary under a deed of trust, mortgage, or lien.

(H) Filing documents with a bankruptcy court.

(I) Repairing a homeowner's credit after foreclosure.

(J) Obtaining a waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage on a residence in a foreclosure or contained in the mortgage.

(K) Purchasing or obtaining an option to purchase a homeowner's residence after the residence is in foreclosure.

(L) Receiving money for the purpose of distributing it to creditors in payment or partial payment of any obligation secured by a lien on a residence in foreclosure.

(M) Contacting mortgagees or other creditors on behalf of a homeowner.

(N) Assisting a homeowner in curing a default or obtaining an extension of the period within which the homeowner may cure a default.

"Secretary" means the Secretary of Financial and Professional Regulation.

Section 15. Exemptions. The following persons are exempt from the provisions of this Act:

(1) Licensed attorneys acting in the normal scope of their duties.

(2) Licensed debt adjustors.

(3) Licensed real estate brokers or appraisers.

(4) Any person acting as an agent of the United States or any territory of the United States.

(5) Any person doing business under a law relating to banks, trust companies, savings and loan associations, industrial loan and thrift companies, regulated lenders, credit unions, insurance companies, or a mortgagee that is a U.S. Department of Housing and Urban Development-approved mortgagee.

(6) Any person who holds or is owed as an obligation secured by a lien on any residence in foreclosure with the person and performs services in connection with the obligation or lien, if the obligation or lien did not arise as a result of a foreclosure reconveyance.

(7) Escrow, title, or mortgage agents.

(8) Mortgage brokers or bankers.

(9) Nonprofit agencies and organizations that offer credit counseling or advice to a homeowner of a residence in foreclosure or a person in default on a loan.

(10) A judgment creditor of a homeowner, if the judgment creditor's claim accrued before the written notice of foreclosure sale is sent.

(12) Title insurers.

Section 20. Licensure required. Beginning 6 months after the adoption of final rules under this Act, no person may practice, offer to practice, attempt to practice, or hold himself or herself out to practice mortgage foreclosure consulting or use the title "mortgage foreclosure consultant", "licensed mortgage foreclosure consultant", or any other title that includes the words "mortgage foreclosure consulting" without being licensed under this Act.

Section 25. Powers and duties of the Department.

(a) The Department shall exercise the powers and duties prescribed by the Civil Administrative Code of Illinois for the administration of licensing Acts and shall exercise the other powers and duties vested in it by this Act.

(b) The Department shall adopt rules and regulations necessary for the administration and enforcement of this Act, including rules and regulations concerning standards and criteria for licensure and for the payment of applicable fees.

(c) The Department must prescribe forms required for the administration of this Act.

Section 30. Licensure requirements.

(a) Every person applying to the Department for licensure must do so in writing on forms prescribed by the Department and pay the required nonrefundable fee. The application shall include without limitation the name, principal place of business, address, and telephone number of the applicant.

(b) The Department shall establish further requirements for licensure by rule, which may include educational requirements and the requirement of the successful completion of an examination administered by the Department or an entity approved by the Department.

Section 35. Current address. Every licensee under this Act must maintain a current address with the Department. It shall be the responsibility of the licensee to notify the Department in writing of any change of address.

Section 40. Social Security Number on license application. In addition to any other information required to be contained in the application, every application for an original, renewal, or restored license under this Act shall include the applicant's Social Security Number.

Section 45. Consulting agreement required. Prior to rendering any mortgage foreclosure consulting services to any homeowner, a licensee under this Act must execute a written and plainly-worded agreement with the homeowner in a language that the homeowner or the homeowner's authorized agent understands. The agreement must include the name, business contact information, and license number of the licensee and must provide full disclosure of fees and services and of totals and terms of payment. The agreement must be signed and dated by all parties and notarized. All provisions of the agreement must be printed in at least 10-point type. The homeowner shall receive a copy of the agreement immediately upon execution.

An agreement executed under this Section must specify the time period of recission for any funds paid by the mortgage foreclosure consultant under the terms of the contract to stop or delay the foreclosure; however, the right of recission of the agreement shall be unconditional and may not be conditioned upon the repayment of funds. The agreement must also include provisions detailing the procedure for notice of cancellation and may not include any provision purporting to waive any of the homeowner's rights.

Section 50. Renewal; restoration; military service.

(a) The expiration date and renewal period for each license issued under this Act shall be set by the Department by rule. The Department may adopt rules concerning the completion of continuing education requirements as a condition of renewal.

(b) Any person who has permitted his or her license to expire may have his or her license restored by applying to the Department, filing proof acceptable to the Department of his or her fitness to have the license restored, which may include sworn evidence certifying to active practice in another jurisdiction satisfactory to the Department, and paying the required restoration fee. If the person has not maintained an active practice in another jurisdiction satisfactory to the Department, the Department shall determine, by an evaluation program established by rule, the person's fitness to resume active status and may require the successful completion of an examination.

(c) Any person whose license has expired while he or she has been engaged (i) in federal service on active duty with the Armed Forces of the United States or the State Militia called into service or training or (ii) in training or education under the supervision of the United States preliminary to induction into the military service, may have his or her license renewed or restored without paying any lapsed renewal fees if, within 2 years after termination of service, training, or education, other than by dishonorable discharge, he or she furnishes the Department with satisfactory evidence to the effect that he or she has been so engaged and that the service, training, or education has been so terminated.

Section 55. Inactive status.

(a) Any mortgage foreclosure consultant who notifies the Department in writing on forms prescribed by the Department may elect to place his or her license on inactive status and shall be excused from payment of renewal fees until he or she notifies the Department in writing of his or her desire to resume active status.

(b) Any person whose license has been expired for more than 3 years may have his or her license restored by making application to the Department and filing proof acceptable to the Department of his or her fitness to have his or her license restored, including evidence certifying to active practice in another jurisdiction, and by paying the required restoration fee.

(c) Any mortgage foreclosure consultant whose license is on inactive status, has been suspended or revoked, or has expired may not represent himself or herself to be a mortgage foreclosure consultant or use the title "mortgage foreclosure consultant", "licensed mortgage foreclosure consultant", or any other title that includes the words "mortgage foreclosure consulting".

Section 60. Fees; disposition of funds.

(a) The Department shall establish by rule a schedule of fees for the administration and maintenance of this Act. Such fees shall be nonrefundable.

(b) All of the fees and fines collected under this Act shall be deposited into the General Professions Dedicated Fund. The moneys deposited into the General Professions Dedicated Fund under this Section must be used by the Department, as appropriate, for the ordinary and contingent expenses of the Department. Moneys deposited in the General Professions Dedicated Fund under this Section may be invested and reinvested, with all earnings received from these investments being deposited into that Fund and used for the same purposes as the fees and fines deposited into that Fund.

Section 65. Roster. The Department shall maintain a roster of the names and addresses of all licensees under this Act. This roster shall be made available upon written request and payment of the required fee.

Section 70. Advertising. Any person licensed under this Act may advertise the availability of professional services in the public media or on the premises where such professional services are rendered, provided that such advertising is truthful and not misleading.

Section 75. Unlicensed practice; civil penalty.

(a) Beginning 6 months after the adoption of final rules under this Act, any person who practices, offers to practice, attempts to practice, or holds himself or herself out to practice mortgage foreclosure consulting without being licensed under this Act shall, in addition to any other penalty provided by law, pay a civil penalty to the Department in an amount not to exceed $10,000 for each offense as determined by the Department. The civil penalty shall be assessed by the Department after a hearing is held in accordance with the provisions set forth in this Act regarding the provision of a hearing for the discipline of a licensee.

(b) The Department has the authority and power to investigate any and all unlicensed activities.

(c) The civil penalty imposed under this Section must be paid within 60 days after the effective date of the order imposing the civil penalty. The order shall constitute a judgment and may be filed and execution had thereon in the same manner as any judgment from any court of record.

Section 80. Injunction; criminal penalty; cease and desist order.

(a) If any person violates any provision of this Act, the Secretary may, in the name of the People of the State of Illinois and through the Attorney General or the State's Attorney of any county in which the violation occurs, petition for an order enjoining such violation and for an order enforcing compliance with this Act. Upon the filing of a verified petition in court, the court may issue a temporary restraining order, without notice or bond, and may preliminarily and permanently enjoin such violation. If it is established that such person has violated or is violating the injunction, the Court may punish the offender for contempt of court. Proceedings under this Section shall be in addition to, and not in lieu of, all other remedies and penalties provided by this Act.

(b) Beginning 6 months after the adoption of final rules under this Act, if any person holds himself or herself out as a "mortgage foreclosure consultant" or a "licensed mortgage foreclosure consultant" without being licensed under the provisions of this Act, then any mortgage foreclosure consultant, interested party, or person injured thereby may, in addition to the Secretary, petition for relief as provided in subsection (a) of this Section.

(c) Whoever holds himself or herself out as a "mortgage foreclosure consultant" or a "licensed mortgage foreclosure consultant in this State without being licensed for that purpose is guilty of a Class A misdemeanor, and for each subsequent conviction, is guilty of a Class 4 felony.

(d) Whenever, in the opinion of the Department, a person violates any provision of this Act, the Department may issue a rule to show cause why an order to cease and desist should not be entered against that person. The rule shall clearly set forth the grounds relied upon by the Department and shall allow the person at least 7 days after the date of the rule to file an answer that is satisfactory to the Department. Failure to answer to the satisfaction of the Department shall cause an order to cease and desist to be issued.

Section 85. Civil claim; punitive damages. Any consumer who is injured as a result of a violation of this Act or rules adopted under this Act may be awarded up to 3 times the amount of actual damages in punitive damages in a civil claim against a licensee under this Act.

Section 90. Disciplinary grounds.

(a) The Department may refuse to issue or renew, or may revoke, suspend, place on probation, reprimand, or take other disciplinary action as the Department considers appropriate, including the issuance of fines not to exceed $10,000 for each violation, with regard to any license for any one or more of the following causes:

(1) Violation of this Act or any rule adopted under this Act.

(2) Conviction of any crime under the laws of another U.S. jurisdiction that is a felony or a misdemeanor an essential element of which is dishonesty or that directly relates to the practice of the profession.

(3) Making any misrepresentation for the purpose of obtaining a license.

(4) Professional incompetence or gross negligence in the practice of mortgage foreclosure consulting.

(5) Gross malpractice, prima facie evidence of which may be a conviction or judgment of malpractice in any court of competent jurisdiction.

(6) Aiding or assisting another person in violating any provision of this Act or any rule adopted under this Act.

(7) Failing, within 60 days, to provide information in response to a written request made by the Department that has been sent by certified or registered mail to the licensee's last known address.

(8) Engaging in dishonorable, unethical, or unprofessional conduct of a character likely to deceive, defraud, or harm the public.

(9) Habitual or excessive use of or addiction to alcohol, narcotics, stimulants, or any other chemical agent or drug that results in the inability to practice with reasonable judgment, skill, or safety.

(10) Discipline by another U.S. jurisdiction or foreign nation, if at least one of the grounds for the discipline is the same or substantially equivalent to those set forth in this Section.

(11) Directly or indirectly giving to or receiving from any person, firm, corporation, partnership, or association any fee, commission, rebate, or other form of compensation for any professional service not actually rendered.

(12) A finding by the Department that a licensee, after having his or her license placed on probationary status, has violated the terms of probation.

(13) Conviction by any court of competent jurisdiction, either within or without this State, of any violation of any law governing the practice of mortgage foreclosure consulting if the Department determines, after investigation, that such person has not been sufficiently rehabilitated to warrant the public trust.

(14) A finding that licensure has been applied for or obtained by fraudulent means.

(15) Practicing, attempting to practice, or advertising under a name other than the full name as shown on the license or any other legally authorized name.

(16) Gross and willful overcharging for professional services, including filing false statements for collection of fees or moneys for which services are not rendered.

(17) Failure to file a tax return or to pay any final assessment of tax, penalty, or interest, as required by any tax Act administered by the Department of Revenue, until such time as the requirements of any such tax Act are satisfied.

(18) Failure to continue to meet the requirements of this Act.

(19) Physical or mental disability, including deterioration through the aging process or loss of abilities and skills, that result in an inability to practice the profession with reasonable judgment, skill, or safety.

(20) Material misstatement in furnishing information to the Department or to any other State agency.

(21) Advertising in any manner that is false, misleading, or deceptive.

(22) The determination by a court that a licensee is subject to involuntary admission or judicial admission as provided in the Mental Health and Developmental Disabilities Code. Such determination shall result in an automatic suspension of a licensee's license. The suspension shall end upon a finding by a court that the licensee is no longer subject to involuntary admission or judicial admission, the issuance of an order so finding and discharging the patient, and the recommendation of the Department that the licensee be allowed to resume practice within the profession.

(b) The Department shall deny the issuance or renewal of any license under this Act to any person who has defaulted on an educational loan guaranteed by the Illinois Student Assistance Commission; however, the Department may issue a license or renewal if the person in default has established a satisfactory repayment record, as determined by the Illinois Student Assistance Commission.

Section 95. Investigation; notice of hearing. The Department may investigate the actions or qualifications of any applicant or person holding or claiming to hold a license. The Department shall, before suspending or revoking, placing on probation, reprimanding, or taking any other disciplinary action under Section 90 of this Act, at least 30 days before the date set for the hearing, notify the applicant or licensee in writing of the nature of the charges and that a hearing will be held on the date designated. The written notice may be served by personal delivery or certified or registered mail to the applicant or licensee at the address of his or her last notification to the Department. The Department shall direct the applicant or licensee to file a written answer with the Department, under oath, within 20 days after the service of the notice, and inform the person that if he or she fails to file an answer, his or her license may be revoked, suspended, placed on probation, reprimanded, or the Department may take any other additional disciplinary action, including the issuance of fines not to exceed $1,000 for each violation, as the Department may consider necessary, without a hearing. At the time and place fixed in the notice, members of the Department who have been designated by the Secretary shall proceed to hear the charges and the parties or their counsel. All parties shall be afforded an opportunity to present any statements, testimony, evidence, and arguments as may be pertinent to the charges or to their defense. The Department may continue the hearing from time to time.

Section 100. Record of proceedings; transcript. The Department, at its expense, shall preserve a record of all proceedings at the formal hearing of any case involving the refusal to issue, renew, or restore a license or the discipline of a licensee. The notice of hearing, complaint, and all other documents in the nature of pleadings and written motions filed in the proceedings, the transcript of testimony, the written report of designated members of the Department, and the orders of the Department shall be the record of the proceedings.

Section 105. Subpoenas; depositions; oaths. The Department may subpoena and bring before it any person and take testimony, either orally, by deposition, or both, with the same fees and mileage and in the same manner as prescribed in civil cases in circuit courts of this State. The Secretary, the designated hearing officer, and any designated member of the Department has the power to administer oaths to witnesses at any hearing which the Department is authorized to conduct, and any other oaths authorized in any Act administered by the Department.

Section 110. Compelling testimony. Any court, upon the application of the Department, designated hearing officer, or the applicant or licensee against whom proceedings under Section 90 of this Act are pending, may enter an order requiring the attendance of witnesses and their testimony and the production of documents, papers, files, books, and records in connection with any hearing or investigation. The court may compel obedience to its order by proceedings for contempt.

Section 115. Findings and recommendations. At the conclusion of a hearing, members of the Department who have been designated by the Secretary shall present a written report of findings of fact, conclusions of law, and recommendations to the Secretary. The report shall contain a finding as to whether the licensee violated this Act or failed to comply with the conditions required in this Act. The report shall specify the nature of the violation or failure to comply and shall make recommendations to the Secretary.

The report of findings of fact, conclusions of law, and recommendations shall be the basis for the Department's order for refusal or for the granting of the license. If the Secretary disagrees with the recommendations set forth in the written report, the Secretary may issue an order in contravention of the written report. The Secretary shall issue a written report on any disagreement and shall specify the reasons for the action in the final order. These findings are not admissible in evidence against the person in a criminal prosecution for violation of this Act, but the hearing and findings shall not serve as a bar to criminal prosecution for violation of this Act.

Section 120. Department; rehearing. At the conclusion of a hearing, a copy of the written report required under Section 115 of this Act shall be served upon the accused person, either personally or as provided in this Act for the service of the notice. Within 20 days after such service, the applicant or licensee may present to the Department a motion in writing for a rehearing which shall specify the particular grounds for rehearing. If no motion for a rehearing is filed, then upon the expiration of the time specified for filing such a motion or if a motion for rehearing is denied, then upon the denial, the Secretary may enter any order in accordance with recommendations of the written report, except as otherwise provided in this Act. If the applicant or licensee requests and pays for a transcript of the record within the time for filing a motion for rehearing, the 20-day period within which a motion may be filed shall commence upon the delivery of the transcript to the applicant or licensee.

Whenever the Secretary is not satisfied that substantial justice has been done, he or she may order a rehearing. At the expiration of the time specified for filing a motion for a rehearing the Secretary has the right to take the action recommended by the written report.

Section 125. Appointment of a hearing officer. The Secretary has the authority to appoint any attorney licensed to practice law in the State of Illinois to serve as the hearing officer in any action for refusal to issue or renew a license or to discipline a licensee. The hearing officer has full authority to conduct the hearing. At least one designated member of the Department shall attend each hearing. The hearing officer shall report his or her findings of fact, conclusions of law, and recommendations to designated members of the Department and the Secretary. Designated members of the Department have 60 days after receipt of the report to review it and present the written report of findings of fact, conclusions of law, and recommendations required under Section 115 of this Act to the Secretary. If the designated members of the Department fail to present a report within the 60-day period, the Secretary shall issue an order based on the report of the hearing officer. If the Secretary disagrees with the recommendation of the designated members of the Department or hearing officer, the Secretary may issue an order in contravention of the recommendation. The Secretary shall promptly issue a written explanation on any disagreement.

Section 130. Order of certified copy; prima facie proof.

An order or a certified copy thereof, over the seal of the Department and purporting to be signed by the Secretary, shall be prima facie proof that:

(1) the signature is the genuine signature of the Secretary;

(2) the Secretary is duly appointed and qualified; and

(3) the Department and the designated members thereof are qualified to act.

Section 135. Restoration of suspended or revoked license. At any time after the suspension or revocation of any license, the Department may restore it to the licensee upon the written recommendation of the Department, unless after an investigation and hearing, the Department determines that restoration is not in the public interest.

Section 140. Surrender of license. Upon the revocation or suspension of any license, the licensee shall immediately surrender his or her license to the Department. If the licensee fails to do so, the Department has the right to seize the license.

Section 145. Summary suspension of a license. The Secretary may summarily suspend a license issued under this Act without a hearing, simultaneously with the institution of proceedings for a hearing provided for in this Act, if the Secretary finds that evidence in the possession of the Secretary indicates that the continuation in practice by the licensee would constitute an imminent danger to the public. In the event that the Secretary temporarily suspends the license of an individual without a hearing, a hearing must be held within 30 days after such suspension has occurred.

Section 150. Administrative Review Law; venue.

(a) All final administrative decisions of the Department are subject to judicial review under the Administrative Review Law and its rules. The term "administrative decision" is defined as in Section 3-101 of the Code of Civil Procedure.

(b) Proceedings for judicial review shall be commenced in the circuit court of the county in which the party applying for review resides, but if the party is not a resident of this State, the venue shall be in Sangamon County.

Section 155. Certification of record; costs. The Department shall not be required to certify any record to the court or file an answer in court or to otherwise appear in any court in a judicial review proceeding, unless there is filed in the court with the complaint a receipt from the Department acknowledging payment of the costs of furnishing and certifying the record. Failure on the part of the plaintiff to file such receipt in court shall be grounds for dismissal of the action.

Section 160. Administrative Procedure Act. The Illinois Administrative Procedure Act is hereby expressly adopted and incorporated herein as if all of the provisions of that Act were included in this Act, except that the provision of subsection (d) of Section 10-65 of the Illinois Administrative Procedure Act that provides that at hearings the licensee has the right to show compliance with all lawful requirements for retention, continuation, or renewal of the license is specifically excluded. For the purposes of this Act, the notice required under Section 10-25 of the Illinois Administrative Procedure Act is deemed sufficient when mailed to the last known address of a party.

Section 165. Home rule. This Act shall not be construed to limit the power of a unit of local government from regulating or licensing the practice of mortgage foreclosure consulting in a stricter manner. This Section is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of powers and functions exercised by the State.

Section 900. The Regulatory Sunset Act is amended by adding Section 4.29 as follows:

(5 ILCS 80/4.29 new)

Sec. 4.29. Act repealed on January 1, 2019. The following Act is repealed on January 1, 2019:

The Mortgage Foreclosure Consultant Licensing Act.

Section 999. Effective date. This Act takes effect upon becoming law.