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Full Text of SB1351  100th General Assembly

SB1351sam003 100TH GENERAL ASSEMBLY

Sen. Daniel Biss

Filed: 4/27/2017

 

 


 

 


 
10000SB1351sam003LRB100 10505 SMS 25673 a

1
AMENDMENT TO SENATE BILL 1351

2    AMENDMENT NO. ______. Amend Senate Bill 1351, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5
"ARTICLE 1. GENERAL PROVISIONS

 
6    "Section 1-1. Short title. This Act may be cited as the
7Student Loan Servicing Rights Act.
 
8    Section 1-5. Definitions. As used in this Act:
9    "Applicant" means a person applying for a license pursuant
10to this Act.
11    "Borrower" or "student loan borrower" means a person who
12has received or agreed to pay a student loan for his or her own
13educational expenses.
14    "Cosigner" means a person who has agreed to share
15responsibility for repaying a student loan with a borrower.

 

 

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1    "Department" means the Department of Financial and
2Professional Regulation.
3    "Division of Banking" means the Division of Banking of the
4Department of Financial and Professional Regulation.
5    "Federal loan borrower eligible for referral to a repayment
6specialist" means a borrower who possesses any of the following
7characteristics:
8        (1) requests information related to options to reduce
9    or suspend his or her monthly payment;
10        (2) indicates that he or she is experiencing or
11    anticipates experiencing financial hardship, distress, or
12    difficulty making his or her payments;
13        (3) has missed 2 consecutive monthly payments;
14        (4) is at least 75 days delinquent;
15        (5) is enrolled in a discretionary forbearance for more
16    than 9 of the previous 12 months;
17        (6) has rehabilitated or consolidated one or more loans
18    out of default within the past 12 months; or
19        (7) has not completed a course of study, as reflected
20    in the servicer's records, or the borrower identifies
21    himself or herself as not having completed a program of
22    study.
23    "Federal education loan" means any loan made, guaranteed,
24or insured under Title IV of the federal Higher Education Act
25of 1965.
26    "Income-driven payment plan certification" means the

 

 

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1documentation related to a federal student loan borrower's
2income or financial status the borrower must submit to renew an
3income-driven repayment plan.
4    "Income-driven repayment options" includes the
5Income-Contingent Repayment Plan, the Income-Based Repayment
6Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
7Plan, the Revised Pay As You Earn Plan, and any other federal
8student loan repayment plan that is calculated based on a
9borrower's income.
10    "Licensee" means a person licensed pursuant to this Act.
11    "Other repayment plans" means the Standard Repayment Plan,
12the Graduated Repayment Plan, the Extended Repayment Plan, or
13any other federal student loan repayment plan not based on a
14borrower's income.
15    "Private loan borrower eligible for referral to a repayment
16specialist" means a borrower who possesses any of the following
17characteristics:
18        (1) requests information related to options to reduce
19    or suspend his or her monthly payments; or
20        (2) indicates that he or she is experiencing or
21    anticipates experiencing financial hardship, distress, or
22    difficulty making his or her payments.
23    "Requester" means any borrower or cosigner that submits a
24request for assistance.
25    "Request for assistance" means all inquiries, complaints,
26account disputes, and requests for documentation a servicer

 

 

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1receives from borrowers or cosigners.
2    "Secretary" means the Secretary of Financial and
3Professional Regulation, or his or her designee, including the
4Director of the Division of Banking of the Department of
5Financial and Professional Regulation.
6    "Servicing" means: (1) receiving any scheduled periodic
7payments from a student loan borrower or cosigner pursuant to
8the terms of a student loan; (2) applying the payments of
9principal and interest and such other payments with respect to
10the amounts received from a student loan borrower or cosigner,
11as may be required pursuant to the terms of a student loan; and
12(3) performing other administrative services with respect to a
13student loan.
14    "Student loan" or "loan" means any federal education loan
15or other loan primarily for use to finance a postsecondary
16education and costs of attendance at a postsecondary
17institution, including, but not limited to, tuition, fees,
18books and supplies, room and board, transportation, and
19miscellaneous personal expenses. "Student loan" includes a
20loan made to refinance a student loan.
21    "Student loan" shall not include an extension of credit
22under an open-end consumer credit plan, a reverse mortgage
23transaction, a residential mortgage transaction, or any other
24loan that is secured by real property or a dwelling.
25    "Student loan" shall not include an extension of credit
26made by a postsecondary educational institution to a borrower

 

 

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1if one of the following apply:
2        (1) The term of the extension of credit is no longer
3    than the borrower's education program.
4        (2) The remaining, unpaid principal balance of the
5    extension of credit is less than $1,500 at the time of the
6    borrower's graduation or completion of the program.
7        (3) The borrower fails to graduate or successfully
8    complete his or her education program and has a balance due
9    at the time of his or her disenrollment from the
10    postsecondary institution.
11    "Student loan servicer" or "servicer" means any person
12engaged in the business of servicing student loans.
13    "Student loan servicer" shall not include:
14        (1) a bank, savings bank, savings association, or
15    credit union organized under the laws of the State or any
16    other state or under the laws of the United States;
17        (2) a wholly owned subsidiary of any bank, savings
18    bank, savings association, or credit union organized under
19    the laws of the State or any other state or under the laws
20    of the United States;
21        (3) an operating subsidiary where each owner of the
22    operating subsidiary is wholly owned by the same bank,
23    savings bank, savings association, or credit union
24    organized under the laws of the State or any other state or
25    under the laws of the United States;
26        (4) the Illinois Student Assistance Commission and its

 

 

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1    agents;
2        (5) a public postsecondary educational institution or
3    a private nonprofit postsecondary educational institution
4    servicing a student loan it extended to the borrower;
5        (6) a licensed debt management service under the Debt
6    Management Service Act, except to the extent that the
7    organization acts as a subcontractor, affiliate, or
8    service provider for an entity that is otherwise subject to
9    licensure under this Act;
10        (7) any collection agency licensed under the
11    Collection Agency Act that is collecting post-default
12    debt;
13        (8) in connection with its responsibilities as a
14    guaranty agency engaged in default aversion, a State
15    nonprofit private institution or organization having an
16    agreement with the U.S. Secretary of Education under
17    Section 428(b) of the Higher Education Act (20 U.S.C.
18    1078(B)); or
19        (9) a State institution or a nonprofit private
20    organization designated by a governmental entity to make or
21    service student loans, provided in each case that the
22    institution or organization services fewer than 20,000
23    student loan accounts of borrowers who reside in Illinois.
 
24
ARTICLE 5. STUDENT LOAN BILL OF RIGHTS

 

 

 

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1    Section 5-5. General provisions.
2    (a) A servicer shall not engage in any unfair or deceptive
3practice toward any borrower or cosigner or misrepresent or
4omit any material information in connection with the servicing
5of a student loan, including, but not limited to,
6misrepresenting the amount, nature, or terms of any fee or
7payment due or claimed to be due on a student loan, the terms
8and conditions of the student loan agreement, or the borrower's
9or cosigner's obligations under the student loan or the terms
10of any repayment plans.
11    (b) A servicer shall not misapply payments made by a
12borrower to the outstanding balance of a student loan.
13    (c) A servicer shall oversee third parties, including
14subservicers, debt collectors, independent contractors,
15subsidiaries, affiliates, or other agents, to ensure that those
16companies comply with this Article 5.
 
17    Section 5-10. Payment processing.
18    (a) A servicer shall credit borrower and cosigner payments
19promptly and accurately.
20    (b) A servicer shall provide borrowers and cosigners with
21prompt notice if the servicer changes the address to which the
22borrower or cosigner needs to send payments.
23    (c) A servicer shall not charge a penalty to a borrower or
24cosigner if a student loan payment is received at an address
25used for payments for a period of 90 days after the change in

 

 

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1address.
2    (d) A servicer shall not misrepresent the delinquent amount
3of the loan on any call with a borrower or cosigner.
4    (e) A servicer shall allow a borrower or cosigner to
5specify instructions as to how an overpayment should be applied
6to the balance of the loan as consistent with the promissory
7note.
 
8    Section 5-15. Fees.
9    (a) Unless otherwise provided by federal law, a servicer
10may only charge late fees that are reasonable and proportional
11to the cost it incurs related to a late payment.
12    (b) Unless otherwise provided by federal law, a servicer
13shall not charge a borrower or cosigner any fee to modify,
14defer, forbear, renew, extend, or amend the borrower's or
15cosigner's loan.
 
16    Section 5-20. Billing statements.
17    (a) In any student loan billing statement, a servicer shall
18not misrepresent the:
19        (1) fees assessed;
20        (2) total amount due for each loan;
21        (3) payment due date;
22        (4) date to avoid late fees;
23        (5) accrued interest during the billing cycle;
24        (6) default payment methodology;

 

 

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1        (7) means to provide instructions for a payment; or
2        (8) procedure regarding escalated requests for
3    assistance.
4    (b) A servicer shall not misrepresent information
5regarding the $0 bill and advancement of the due date on any
6billing statement that reflects $0 owed.
 
7    Section 5-25. Payment histories. A servicer shall provide a
8written payment history to a borrower or cosigner upon request
9at no cost within 21 calendar days of receiving the request.
 
10    Section 5-30. Specialized assistance for student loan
11borrowers.
12    (a) A servicer shall specially designate servicing and
13collections personnel deemed repayment specialists who have
14received enhanced training related to repayment options.
15    (b) A servicer shall refrain from presenting forbearance as
16the sole or first repayment option to a student loan borrower
17struggling with repayment unless the servicer has determined
18that, based on the borrower's financial status, a short term
19forbearance is appropriate.
20    (c) All inbound and outbound calls from a federal loan
21borrower eligible for referral to a repayment specialist and a
22private loan borrower eligible for referral to a repayment
23specialist shall be routed to a repayment specialist.
24    (d) During each inbound or outbound communication with an

 

 

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1eligible federal loan borrower, a repayment specialist shall
2first inform a federal loan borrower eligible for referral to a
3repayment specialist that federal income-driven repayment
4plans that can reduce the borrower's monthly payment may be
5available, discuss such plans, and assist the borrower in
6determining whether a particular repayment plan may be
7appropriate for the borrower.
8    (e) A repayment specialist shall assess the long-term and
9short-term financial situation and needs of a federal loan
10borrower eligible for referral to a repayment specialist and
11consider any available specific information from the borrower
12as necessary to assist the borrower in determining whether a
13particular income-driven repayment option may be available to
14the borrower.
15    (f) In each discussion with a federal loan borrower
16eligible for referral to a repayment specialist, a repayment
17specialist shall present and explain the following options, as
18appropriate:
19        (1) total and permanent disability discharge, public
20    service loan forgiveness, closed school discharge, and
21    defenses to repayment;
22        (2) other repayment plans;
23        (3) deferment; and
24        (4) forbearance.
25    (g) A repayment specialist shall assess the long-term and
26short-term financial situation and needs of a private loan

 

 

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1borrower eligible for referral to a repayment specialist in
2determining whether any private loan repayment options may be
3appropriate for the borrower.
4    (h) A servicer shall present and explain all private loan
5repayment options, including alternative repayment
6arrangements applicable to private student loan borrowers.
7    (i) A servicer shall be prohibited from implementing any
8compensation plan that has the intended or actual effect of
9incentivizing a repayment specialist to violate this Act or any
10other measure that encourages undue haste or lack of quality.
11    (j) The requirements of this Section shall not apply if a
12repayment specialist has already conversed with a borrower
13consistent with the requirements of this Section.
 
14    Section 5-35. Disclosures related to discharge and
15cancellation. If a servicer is aware that a student loan
16borrower attended a school the United States Department of
17Education has made findings supporting a defense to repayment
18claim or closed school discharge, or that a borrower may be
19eligible to have his or her loans forgiven under a total and
20permanent disability discharge program, the servicer's
21personnel shall disclose information related to the Department
22of Education's procedure for asserting a defense to repayment
23claim, closed school discharge, or submitting an application
24for a total and permanent disability discharge.
 

 

 

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1    Section 5-40. Income-driven repayment plan certifications.
2A servicer shall disclose the date that a borrower's
3income-driven payment plan certification will expire and the
4consequences to the borrower for failing to recertify by the
5date, including the new repayment amount.
 
6    Section 5-45. Information to be provided to private
7education loan borrowers.
8    (a) A servicer shall provide on its website a description
9of any alternative repayment plan offered by the servicer for
10private education loans.
11    (b) A servicer shall establish policies and procedures and
12implement them consistently in order to facilitate evaluation
13of private student loan alternative repayment arrangement
14requests, including providing accurate information regarding
15any private student loan alternative repayment arrangements
16that may be available to the borrower through the promissory
17note or that may have been marketed to the borrower through
18marketing materials.
19    A private student loan alternative repayment arrangements
20shall consider the affordability of repayment plans for a
21distressed borrower, as well as investor, guarantor, and
22insurer guidelines and previous outcome and performance
23information.
24    (c) If a servicer offers private student loan repayment
25arrangements, a servicer shall consistently present and offer

 

 

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1those arrangements to borrowers with similar financial
2circumstances.
 
3    Section 5-50. Cosigner release. For private student loans,
4a servicer shall provide information on its website concerning
5the availability and criteria for a cosigner release.
 
6    Section 5-55. Payoff statements. A servicer shall indicate
7on its website that a borrower may request a payoff statement.
8A servicer shall provide the payoff statement within 10 days,
9including information the requester needs to pay off the loan.
10If a payoff is made, the servicer must send a paid-in-full
11notice within 30 days.
 
12    Section 5-60. Requirements related to the transfer of
13servicing.
14    (a) When acting as the transferor servicer, a servicer
15shall provide to each borrower subject to the transfer a
16written notice not less than 15 calendar days before the
17effective date of the transfer. The transferee servicer and
18transferor servicer may provide a single notice, in which case
19the notice shall be provided not less than 15 calendar days
20before the effective date of the transfer. The notice by the
21transferor servicer or, if applicable, the combined notice of
22transfer shall contain the following information:
23        (1) the effective date of the transfer of servicing;

 

 

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1        (2) the name, address, and toll-free telephone number
2    for the transferor servicer's designated point of contact
3    that can be contacted by the borrower to obtain answers to
4    servicing inquiries;
5        (3) the name, address, and toll-free telephone number
6    for the transferee servicer's designated point of contact
7    that can be contacted by the borrower to obtain answers to
8    servicing inquiries;
9        (4) the date on which the transferor servicer will
10    cease to accept payments relating to the loan and the date
11    on which the transferee servicer will begin to accept such
12    payments; the dates shall either be the same or consecutive
13    days;
14        (5) a statement that the transfer of servicing does not
15    affect any term or condition of the loan other than terms
16    directly related to the servicing of a loan;
17        (6) information on whether the borrower's
18    authorization for recurring electronic fund transfers, if
19    applicable, will be transferred to the transferee
20    servicer; if any such recurring electronic funds transfers
21    cannot be transferred, the transferee servicer shall
22    provide information explaining how the borrower may
23    establish new recurring electronic funds transfers with
24    the transferee servicer; and
25        (7) a statement of the current loan balance, including
26    the current unpaid amount of principal, interest, and fees.

 

 

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1    (b) When acting as the transferee servicer, a servicer
2shall provide to each borrower subject to the transfer a
3written notice not more than 15 calendar days after the
4effective date of the transfer. The transferee servicer and
5transferor servicer may provide a combined notice of transfer,
6in which case the notice shall be provided not less than 15
7days before the effective date of the transfer. The notice by
8the transferee servicer or, if applicable, the combined notice
9of transfer shall contain the following information:
10        (1) the effective date of the transfer of servicing;
11        (2) the name, address, and toll-free telephone number
12    for the transferee servicer's designated point of contact
13    that can be contacted by the borrower to obtain answers to
14    servicing inquiries;
15        (3) the date on which the transferor servicer will
16    cease to accept payments relating to the loan and the date
17    on which the transferee servicer will begin to accept such
18    payments; the dates shall either be the same or consecutive
19    days;
20        (4) a statement that the transfer of servicing does not
21    affect any term or condition of the student loan other than
22    terms directly related to the servicing of a loan;
23        (5) information on whether the borrower's
24    authorization for recurring electronic fund transfers, if
25    applicable, will be transferred to the transferee
26    servicer; if any such recurring electronic funds transfers

 

 

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1    cannot be transferred, the transferee servicer shall
2    provide information explaining how the borrower may
3    establish new recurring electronic funds transfers with
4    the transferee servicer; and
5        (6) a statement of the current loan balance, including
6    the current unpaid amount of principal, interest, and fees.
7    (c) During the 60 calendar day period beginning on the
8effective date of transfer of the servicing of any loan, a
9payment timely made to the transferor servicer may not be
10treated as late for any purpose by the transferee servicer,
11including the assessment of late fees, accrual of additional
12interest, and furnishing negative credit information.
13    (d) To the extent practicable, for at least 120 calendar
14days beginning on the effective date of transfer of servicing
15of any loan, when acting as the transferor servicer, a servicer
16shall promptly transfer payments received to the transferee
17servicer for application to the borrower's loan account.
18    (e) Unless a borrower's authorizations for recurring
19electronic fund transfers are automatically transferred to the
20transferee servicer, when acting as transferee servicer, a
21servicer shall make available to a borrower whose loan
22servicing is transferred an online process through which a
23borrower may make a new authorization for recurring electronic
24fund transfers. A servicer shall also provide a process through
25which the borrower may make a new authorization for recurring
26electronic funds transfers by phone or through written

 

 

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1approval.
 
2    Section 5-65. Requests for assistance; account dispute
3resolution; appeals.
4    (a) A servicer shall implement reasonable policies and
5procedures for accepting, processing, investigating, and
6responding to requests for assistance in a timely and effective
7manner, including, but not limited to, the following
8requirements:
9        (1) A servicer shall provide readily accessible
10    methods for consumers to submit a request for assistance to
11    the servicer, including such methods as phone, email, and
12    U.S. mail.
13        (2) A servicer shall post on its website and disclose
14    on its billing statements:
15            (A) the toll-free telephone number, email address,
16        and mailing address for consumers to submit a requests
17        for assistance to the servicer; and
18            (B) the procedures for a requester to send a
19        written communication to the servicer regarding any
20        request for assistance.
21        (3) For any request for assistance that includes a
22    request for documentation or information, where a response
23    cannot be immediately provided, a servicer shall provide
24    the requested documentation or information to the
25    requester within 14 calendar days of the request; if a

 

 

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1    servicer determines in good faith that it is unable to
2    provide the documentation or information within 14
3    calendar days, promptly after making the determination,
4    the servicer shall notify the requester of the expected
5    response period, which must be reasonable for the request
6    for assistance.
7    (b) A servicer shall implement a process by which a
8requester can escalate any request for assistance. Such process
9shall allow a requester who has made a request for assistance
10on the phone and who receives a response during the call to
11obtain immediate review of the response by an employee of the
12servicer at a higher supervisory level.
13    (c) The following requirements shall apply when a requester
14submits a written or oral request for assistance which contains
15an account dispute to a servicer:
16        (1) Within 14 calendar days after its receipt of the
17    written communication or oral request for further
18    escalation, a servicer shall attempt to make contact,
19    including providing the requester with name and contact
20    information of the representative handling the account
21    dispute, by phone or in writing, to the requester and
22    document such attempt in the borrower's account.
23        (2) A servicer shall complete the following actions
24    within 30 calendar days of its receipt of the written
25    communication or oral request for further escalation,
26    subject to paragraph (3) of this subsection:

 

 

10000SB1351sam003- 19 -LRB100 10505 SMS 25673 a

1            (A) conduct a thorough investigation of the
2        account dispute;
3            (B) make all appropriate corrections to the
4        account of the requester, including crediting any late
5        fees assessed and derogatory credit furnishing as the
6        result of any error, and, if any corrections are made,
7        sending the requester a written notification that
8        includes the following information:
9                (i) an explanation of the correction or
10            corrections to the requester's account that have
11            been made; and
12                (ii) the toll-free telephone number, email
13            address, and mailing address of the servicer's
14            personnel knowledgeable about the investigation
15            and resolution of the account dispute.
16        (3) If a servicer determines in good faith that it
17    cannot complete a thorough investigation of the account
18    dispute within 30 calendar days after receiving the written
19    communication or oral request for further escalation
20    regarding the account dispute, then, promptly after making
21    the determination, the servicer shall notify the requester
22    of the expected resolution time period, which must be
23    reasonable for the account dispute. A servicer must
24    complete the actions listed in the investigation and
25    resolution of account dispute within this time period.
26        (4) If a servicer determines as a result of its

 

 

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1    investigation that the requested changes to a requester's
2    dispute will not be made, the servicer shall provide the
3    requester with a written notification that includes the
4    following information:
5            (A) a description of its determination and an
6        explanation of the reasons for that determination;
7            (B) the toll-free telephone number, email address,
8        and mailing address of the servicer's personnel
9        knowledgeable about the investigation and resolution
10        of the account dispute;
11            (C) instructions about how the requester can
12        appeal the servicer's determination in accordance with
13        paragraph (5) of this subsection; and
14            (D) information regarding the method by which a
15        borrower may request copies of documents a servicer
16        relied on to make a determination that no changes to a
17        requester's account will be made.
18        (5) After the requester receives a determination
19    regarding an account dispute in accordance with paragraph
20    (4) of this subsection, the servicer shall allow a process
21    by which the requester can appeal, in writing, the
22    determination. The appeals process shall include:
23            (A) a written acknowledgment notifying the
24        requester that the servicer has commenced the appeals
25        process; such acknowledgment shall be sent within 14
26        calendar days after receiving a written request for

 

 

10000SB1351sam003- 21 -LRB100 10505 SMS 25673 a

1        appeal from the requester;
2            (B) an independent reassessment of the servicer's
3        determination regarding the account dispute, performed
4        by another employee of the servicer at an equal or
5        higher supervisory level than the employee or
6        employees involved in the initial account dispute
7        determination;
8            (C) investigation and resolution of appeals within
9        30 calendar days after a servicer's commencement of the
10        appeals process; and
11            (D) notification sent to the requester, in
12        writing, documenting the outcome of the appeal,
13        including any reason for denial.
14    (d) While a requester has a pending account dispute,
15including any applicable appeal, a servicer shall take
16reasonable steps to:
17        (1) prevent negative credit reporting with respect to
18    the borrower's or cosigner's account while the dispute is
19    under review; and
20        (2) suspend all collection activities on the account
21    while the account dispute is being researched or resolved,
22    if the account dispute is related to the delinquency.
 
23
ARTICLE 10. STUDENT LOAN OMBUDSMAN

 
24    Section 10-5. Student Loan Ombudsman.

 

 

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1    (a) The position of Student Loan Ombudsman is created
2within the Office of the Attorney General to provide timely
3assistance to student loan borrowers.
4    (b) The Student Loan Ombudsman, in consultation with the
5Secretary, shall:
6        (1) receive, review, and attempt to resolve any
7    complaints from student loan borrowers, including, but not
8    limited to, attempts to resolve complaints in
9    collaboration with institutions of higher education,
10    student loan servicers, and any other participants in
11    student loan lending;
12        (2) compile and analyze data on student loan borrower
13    complaints;
14        (3) assist student loan borrowers to understand their
15    rights and responsibilities under the terms of student
16    education loans;
17        (4) provide information to the public, agencies,
18    legislators, and others regarding the problems and
19    concerns of student loan borrowers and make
20    recommendations for resolving those problems and concerns;
21        (5) analyze and monitor the development and
22    implementation of federal, State, and local laws,
23    regulations, and policies relating to student loan
24    borrowers and recommend any changes the Student Loan
25    Ombudsman deems necessary;
26        (6) review the complete student education loan history

 

 

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1    for any student loan borrower who has provided written
2    consent for such review;
3        (7) disseminate information concerning the
4    availability of the Student Loan Ombudsman to assist
5    student loan borrowers and potential student loan
6    borrowers, as well as public institutions of higher
7    education, student loan servicers, and any other
8    participant in student education loan lending, with any
9    student loan servicing concerns; and
10        (8) take any other actions necessary to fulfill the
11    duties of the Student Loan Ombudsman as set forth in this
12    subsection.
 
13
ARTICLE 15. LICENSURE

 
14    Section 15-5. Scope; requirement for student loan
15servicing license.
16    (a) It shall be unlawful for any person to operate as a
17student loan servicer in Illinois except as authorized by this
18Act and without first having obtained a license in accordance
19with this Act.
20    (b) The provisions of this Act do not apply to any of the
21following:
22        (1) a bank, savings bank, savings association, or
23    credit union organized under the laws of the State or any
24    other state or under the laws of the United States;

 

 

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1        (2) a wholly owned subsidiary of any bank, savings
2    bank, savings association, or credit union organized under
3    the laws of the State or any other state or under the laws
4    of the United States;
5        (3) an operating subsidiary where each owner of the
6    operating subsidiary is wholly owned by the same bank,
7    savings bank, savings association, or credit union
8    organized under the laws of the State or any other state or
9    under the laws of the United States;
10        (4) the Illinois Student Assistance Commission and its
11    agents;
12        (5) a public postsecondary educational institution or
13    a private nonprofit postsecondary educational institution
14    servicing a student loan it extended to the borrower;
15        (6) a licensed debt management service under the Debt
16    Management Service Act, except to the extent that the
17    organization acts as a subcontractor, affiliate, or
18    service provider for an entity that is otherwise subject to
19    licensure under this Act;
20        (7) any collection agency licensed under the
21    Collection Agency Act that is collecting post-default
22    debt;
23        (8) in connection with its responsibilities as a
24    guaranty agency engaged in default aversion, a State
25    nonprofit private institution or organization having an
26    agreement with the U.S. Secretary of Education under

 

 

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1    Section 428(b) of the Higher Education Act (20 U.S.C.
2    1078(B); or
3        (9) a State institution or a nonprofit private
4    organization designated by a governmental entity to make or
5    service student loans, provided in each case that the
6    institution or organization services fewer than 20,000
7    student loan accounts of borrowers who reside in Illinois.
 
8    Section 15-10. Licensee name. No person, partnership,
9association, corporation, limited liability company, or other
10entity engaged in the business regulated by this Act shall
11operate such business under a name other than the real names of
12the entity and individuals conducting such business. Such
13business may in addition operate under an assumed corporate
14name pursuant to the Business Corporation Act of 1983, an
15assumed limited liability company name pursuant to the Limited
16Liability Company Act, or an assumed business name pursuant to
17the Assumed Business Name Act.
 
18    Section 15-15. Application process; investigation; fees.
19    (a) The Secretary shall issue a license upon completion of
20all of the following:
21        (1) the filing of an application for license with the
22    Secretary or the Nationwide Mortgage Licensing System and
23    Registry as approved by the Secretary;
24        (2) the filing with the Secretary of a listing of

 

 

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1    judgments entered against, and bankruptcy petitions by,
2    the license applicant for the preceding 10 years;
3        (3) the payment, in certified funds, of investigation
4    and application fees, the total of which shall be in an
5    amount equal to $1,000 for an initial application and $800
6    for a background investigation;
7        (4) the filing of an audited balance sheet, including
8    all footnotes prepared by a certified public accountant in
9    accordance with generally accepted accounting principles
10    and generally accepted auditing standards; notwithstanding
11    the requirements of this subsection, an applicant that is a
12    subsidiary may submit audited consolidated financial
13    statements of its parent, intermediary parent, or ultimate
14    parent as long as the consolidated statements are supported
15    by consolidating statements that include the applicant's
16    financial statement; if the consolidating statements are
17    unaudited, the applicant's chief financial officer shall
18    attest to the applicant's financial statements disclosed
19    in the consolidating statements; and
20        (5) an investigation of the averments required by
21    Section 15-30, which investigation must allow the
22    Secretary to issue positive findings stating that the
23    financial responsibility, experience, character, and
24    general fitness of the license applicant and of the members
25    thereof if the license applicant is a partnership or
26    association, of the officers and directors thereof if the

 

 

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1    license applicant is a corporation, and of the managers and
2    members that retain any authority or responsibility under
3    the operating agreement if the license applicant is a
4    limited liability company, are such as to command the
5    confidence of the community and to warrant belief that the
6    business will be operated honestly, fairly, and
7    efficiently within the purpose of this Act; if the
8    Secretary does not so find, he or she shall not issue the
9    license, and he or she shall notify the license applicant
10    of the denial.
11    The Secretary may impose conditions on a license if the
12Secretary determines that those conditions are necessary or
13appropriate. These conditions shall be imposed in writing and
14shall continue in effect for the period prescribed by the
15Secretary.
16    (b) All licenses shall be issued to the license applicant.
17Upon receipt of the license, a student loan servicing licensee
18shall be authorized to engage in the business regulated by this
19Act. The license shall remain in full force and effect until it
20expires without renewal, is surrendered by the licensee, or
21revoked or suspended as hereinafter provided.
 
22    Section 15-20. Application form.
23    (a) Application for a student loan servicer license must be
24made in accordance with Section 15-40 and, if applicable, in
25accordance with requirements of the Nationwide Mortgage

 

 

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1Licensing System and Registry. The application shall be in
2writing, under oath, and on a form obtained from and prescribed
3by the Secretary, or may be submitted electronically, with
4attestation, to the Nationwide Mortgage Licensing System and
5Registry.
6    (b) The application shall contain the name and complete
7business and residential address or addresses of the license
8applicant. If the license applicant is a partnership,
9association, corporation, or other form of business
10organization, the application shall contain the names and
11complete business and residential addresses of each member,
12director, and principal officer thereof. The application shall
13also include a description of the activities of the license
14applicant in such detail and for such periods as the Secretary
15may require, including all of the following:
16        (1) an affirmation of financial solvency noting such
17    capitalization requirements as may be required by the
18    Secretary and access to such credit as may be required by
19    the Secretary;
20        (2) an affirmation that the license applicant or its
21    members, directors, or principals, as may be appropriate,
22    are at least 18 years of age;
23        (3) information as to the character, fitness,
24    financial and business responsibility, background,
25    experience, and criminal record of any (i) person, entity,
26    or ultimate equitable owner that owns or controls, directly

 

 

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1    or indirectly, 10% or more of any class of stock of the
2    license applicant; (ii) person, entity, or ultimate
3    equitable owner that is not a depository institution, as
4    defined in Section 1007.50 of the Savings Bank Act, that
5    lends, provides, or infuses, directly or indirectly, in any
6    way, funds to or into a license applicant in an amount
7    equal to or more than 10% of the license applicant's net
8    worth; (iii) person, entity, or ultimate equitable owner
9    that controls, directly or indirectly, the election of 25%
10    or more of the members of the board of directors of a
11    license applicant; or (iv) person, entity, or ultimate
12    equitable owner that the Secretary finds influences
13    management of the license applicant; the provisions of this
14    subsection shall not apply to a public official serving on
15    the board of directors of a State guaranty agency;
16        (4) upon written request by the licensee and
17    notwithstanding the provisions of paragraphs (1), (2), and
18    (3) of this subsection, the Secretary may permit the
19    licensee to omit all or part of the information required by
20    those paragraphs if, in lieu of the omitted information,
21    the licensee submits an affidavit stating that the
22    information submitted on the licensee's previous renewal
23    application is still true and accurate; the Secretary may
24    adopt rules prescribing the form and content of the
25    affidavit that are necessary to accomplish the purposes of
26    this Section; and

 

 

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1        (5) such other information as required by rules of the
2    Secretary.
 
3    Section 15-25. Student loan servicer license application
4and issuance.
5    (a) Applicants for a license shall apply in a form
6prescribed by the Secretary. Each form shall contain content as
7set forth by rule, regulation, instruction, or procedure of the
8Secretary and may be changed or updated as necessary by the
9Secretary in order to carry out the purposes of this Act.
10    (b) In order to fulfill the purposes of this Act, the
11Secretary is authorized to establish relationships or
12contracts with the Nationwide Mortgage Licensing System and
13Registry or other entities designated by the Nationwide
14Mortgage Licensing System and Registry to collect and maintain
15records and process transaction fees or other fees related to
16licensees or other persons subject to this Act.
17    (c) In connection with an application for licensing, the
18applicant may be required, at a minimum, to furnish to the
19Nationwide Mortgage Licensing System and Registry information
20concerning the applicant's identity, including:
21        (1) fingerprints for submission to the Federal Bureau
22    of Investigation or any governmental agency or entity
23    authorized to receive such information for a State,
24    national, and international criminal history background
25    check; and

 

 

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1        (2) personal history and experience in a form
2    prescribed by the Nationwide Mortgage Licensing System and
3    Registry, including the submission of authorization for
4    the Nationwide Mortgage Licensing System and Registry and
5    the Secretary to obtain:
6            (A) an independent credit report obtained from a
7        consumer reporting agency described in Section 603(p)
8        of the Fair Credit Reporting Act (15 U.S.C. 1681a(p));
9        and
10            (B) information related to any administrative,
11        civil, or criminal findings by any governmental
12        jurisdiction.
13    (d) For the purposes of this Section, and in order to
14reduce the points of contact that the Federal Bureau of
15Investigation may have to maintain for purposes of subsection
16(c) of this Section, the Secretary may use the Nationwide
17Mortgage Licensing System and Registry as a channeling agent
18for requesting information from and distributing information
19to the federal Department of Justice or any governmental
20agency.
21    (e) For the purposes of this Section, and in order to
22reduce the points of contact that the Secretary may have to
23maintain for purposes of paragraph (2) of subsection (c) of
24this Section, the Secretary may use the Nationwide Mortgage
25Licensing System and Registry as a channeling agent for
26requesting and distributing information to and from any source

 

 

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1as directed by the Secretary.
2    (f) The provisions of this Section shall not apply to a
3public official serving on the board of directors of a State
4guaranty agency.
 
5    Section 15-30. Averments of licensee. Each application for
6license shall be accompanied by the following averments stating
7that the applicant:
8        (1) will file with the Secretary or Nationwide Mortgage
9    Licensing System and Registry, as applicable, when due, any
10    report or reports that it is required to file under any of
11    the provisions of this Act;
12        (2) has not committed a crime against the law of this
13    State, any other state, or of the United States involving
14    moral turpitude or fraudulent or dishonest dealing, and
15    that no final judgment has been entered against it in a
16    civil action upon grounds of fraud, misrepresentation, or
17    deceit that has not been previously reported to the
18    Secretary;
19        (3) has not engaged in any conduct that would be cause
20    for denial of a license;
21        (4) has not become insolvent;
22        (5) has not submitted an application for a license
23    under this Act that contains a material misstatement;
24        (6) has not demonstrated by course of conduct,
25    negligence or incompetence in performing any act for which

 

 

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1    it is required to hold a license under this Act;
2        (7) will advise the Secretary in writing or the
3    Nationwide Mortgage Licensing System and Registry, as
4    applicable, of any changes to the information submitted on
5    the most recent application for license or averments of
6    record within 30 days of the change; the written notice
7    must be signed in the same form as the application for the
8    license being amended;
9        (8) will comply with the provisions of this Act and
10    with any lawful order, rule, or regulation made or issued
11    under the provisions of this Act;
12        (9) will submit to periodic examination by the
13    Secretary as required by this Act; and
14        (10) will advise the Secretary in writing of judgments
15    entered against and bankruptcy petitions by the license
16    applicant within 5 days after the occurrence.
17    A licensee who fails to fulfill the obligations of an
18averment, fails to comply with averments made, or otherwise
19violates any of the averments made under this Section shall be
20subject to the penalties of this Act.
 
21    Section 15-35. Refusal to issue license. The Secretary
22shall refuse to issue or renew a license if:
23        (1) it is determined that the applicant is not in
24    compliance with any provisions of this Act;
25        (2) there is substantial continuity between the

 

 

10000SB1351sam003- 34 -LRB100 10505 SMS 25673 a

1    applicant and any violator of this Act; or
2        (3) the Secretary cannot make the findings specified in
3    subsection (a) of Section 15-15 of this Act.
 
4    Section 15-40. License issuance and renewal; fees.
5    (a) Licenses shall be renewed every year using the common
6renewal date of the Nationwide Mortgage Licensing System and
7Registry, as adopted by the Secretary. Properly completed
8renewal application forms and filing fees may be received by
9the Secretary 60 days prior to the license expiration date,
10but, to be deemed timely, the completed renewal application
11forms and filing fees must be received by the Secretary no
12later than 30 days prior to the license expiration date.
13    (b) It shall be the responsibility of each licensee to
14accomplish renewal of its license. Failure by a licensee to
15submit a properly completed renewal application form and fees
16in a timely fashion, absent a written extension from the
17Secretary, shall result in the license becoming inactive.
18    (c) No activity regulated by this Act shall be conducted by
19the licensee when a license becomes inactive. An inactive
20license may be reactivated by the Secretary upon payment of the
21renewal fee and payment of a reactivation fee equal to the
22renewal fee.
23    (d) A licensee ceasing an activity or activities regulated
24by this Act and desiring to no longer be licensed shall so
25inform the Secretary in writing and, at the same time, convey

 

 

10000SB1351sam003- 35 -LRB100 10505 SMS 25673 a

1any license issued and all other symbols or indicia of
2licensure. The licensee shall include a plan for the withdrawal
3from regulated business, including a timetable for the
4disposition of the business, and comply with the surrender
5guidelines or requirements of the Secretary. Upon receipt of
6such written notice, the Secretary shall post the cancellation
7or issue a certified statement canceling the license.
8    (e) The expenses of administering this Act, including
9investigations and examinations provided for in this Act, shall
10be borne by and assessed against entities regulated by this
11Act. Subject to the limitations set forth in Section 15-15 of
12this Act, the Secretary shall establish fees by rule in at
13least the following categories:
14        (1) investigation of licensees and license applicant
15    fees;
16        (2) examination fees;
17        (3) contingent fees; and
18        (4) such other categories as may be required to
19    administer this Act.
 
20
ARTICLE 20. SUPERVISION

 
21    Section 20-5. Functions; powers; duties. The functions,
22powers, and duties of the Secretary shall include the
23following:
24        (1) to issue or refuse to issue any license as provided

 

 

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1    by this Act;
2        (2) to revoke or suspend for cause any license issued
3    under this Act;
4        (3) to keep records of all licenses issued under this
5    Act;
6        (4) to receive, consider, investigate, and act upon
7    complaints made by any person in connection with any
8    student loan servicing licensee in this State;
9        (5) to prescribe the forms of and receive:
10            (A) applications for licenses; and
11            (B) all reports and all books and records required
12        to be made by any licensee under this Act, including
13        annual audited financial statements and annual reports
14        of student loan activity;
15        (6) to adopt rules necessary and proper for the
16    administration of this Act;
17        (7) to subpoena documents and witnesses and compel
18    their attendance and production, to administer oaths, and
19    to require the production of any books, papers, or other
20    materials relevant to any inquiry authorized by this Act;
21        (8) to issue orders against any person if the Secretary
22    has reasonable cause to believe that an unsafe, unsound, or
23    unlawful practice has occurred, is occurring, or is about
24    to occur; if any person has violated, is violating, or is
25    about to violate any law, rule, or written agreement with
26    the Secretary; or for the purpose of administering the

 

 

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1    provisions of this Act and any rule adopted in accordance
2    with this Act;
3        (9) to address any inquiries to any licensee, or the
4    officers thereof, in relation to its activities and
5    conditions, or any other matter connected with its affairs,
6    and it shall be the duty of any licensee or person so
7    addressed to promptly reply in writing to those inquiries;
8    the Secretary may also require reports from any licensee at
9    any time the Secretary may deem desirable;
10        (10) to examine the books and records of every licensee
11    under this Act;
12        (11) to enforce provisions of this Act;
13        (12) to levy fees, fines, and charges for services
14    performed in administering this Act; the aggregate of all
15    fees collected by the Secretary on and after the effective
16    date of this Act shall be paid promptly after receipt,
17    accompanied by a detailed statement thereof, into the Bank
18    and Trust Company Fund under Section 20-10; the amounts
19    deposited into that Fund shall be used for the ordinary and
20    contingent expenses of the Department; nothing in this Act
21    shall prevent the continuation of the practice of paying
22    expenses involving salaries, retirement, social security,
23    and State-paid insurance of State officers by
24    appropriation from the General Revenue Fund;
25        (13) to appoint examiners, supervisors, experts, and
26    special assistants as needed to effectively and

 

 

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1    efficiently administer this Act;
2        (14) to conduct hearings for the purpose of:
3            (A) appeals of orders of the Secretary;
4            (B) suspensions or revocations of licenses, or
5        fining of licensees;
6            (C) investigating:
7                (i) complaints against licensees; or
8                (ii) annual gross delinquency rates; and
9            (D) carrying out the purposes of this Act;
10        (15) to exercise exclusive visitorial power over a
11    licensee unless otherwise authorized by this Act or as
12    vested in the courts, or upon prior consultation with the
13    Secretary, a foreign student loan servicing regulator with
14    an appropriate supervisory interest in the parent or
15    affiliate of a licensee;
16        (16) to enter into cooperative agreements with state
17    regulatory authorities of other states to provide for
18    examination of corporate offices or branches of those
19    states and to accept reports of such examinations;
20        (17) to assign an examiner or examiners to monitor the
21    affairs of a licensee with whatever frequency the Secretary
22    determines appropriate and to charge the licensee for
23    reasonable and necessary expenses of the Secretary if in
24    the opinion of the Secretary an emergency exists or appears
25    likely to occur;
26        (18) to impose civil penalties of up to $50 per day

 

 

10000SB1351sam003- 39 -LRB100 10505 SMS 25673 a

1    against a licensee for failing to respond to a regulatory
2    request or reporting requirement; and
3        (19) to enter into agreements in connection with the
4    Nationwide Mortgage Licensing System and Registry.
 
5    Section 20-10. Bank and Trust Company Fund. All moneys
6received by the Secretary under this Act in conjunction with
7the provisions relating to student loan servicers shall be paid
8into and all expenses incurred by the Secretary under this Act
9in conjunction with the provisions relating to student loan
10servicers shall be paid from the Bank and Trust Company Fund.
 
11    Section 20-15. Examination; prohibited activities.
12    (a) The business affairs of a licensee under this Act shall
13be examined for compliance with this Act as often as the
14Secretary deems necessary and proper. The Secretary may adopt
15rules with respect to the frequency and manner of examination.
16The Secretary shall appoint a suitable person to perform such
17examination. The Secretary and his or her appointees may
18examine the entire books, records, documents, and operations of
19each licensee and its subsidiary, affiliate, or agent, and may
20examine any of the licensee's or its subsidiary's, affiliate's,
21or agent's officers, directors, employees, and agents under
22oath.
23    (b) The Secretary shall prepare a sufficiently detailed
24report of each licensee's examination, shall issue a copy of

 

 

10000SB1351sam003- 40 -LRB100 10505 SMS 25673 a

1such report to each licensee's principals, officers, or
2directors, and shall take appropriate steps to ensure
3correction of violations of this Act.
4    (c) Affiliates of a licensee shall be subject to
5examination by the Secretary on the same terms as the licensee,
6but only when reports from or examination of a licensee
7provides for documented evidence of unlawful activity between a
8licensee and affiliate benefiting, affecting, or deriving from
9the activities regulated by this Act.
10    (d) The expenses of any examination of the licensee and
11affiliates shall be borne by the licensee and assessed by the
12Secretary as may be established by rule.
13    (e) Upon completion of the examination, the Secretary shall
14issue a report to the licensee. All confidential supervisory
15information, including the examination report and the work
16papers of the report, shall belong to the Secretary's office
17and may not be disclosed to anyone other than the licensee, law
18enforcement officials or other regulatory agencies that have an
19appropriate regulatory interest as determined by the
20Secretary, or to a party presenting a lawful subpoena to the
21Department. The Secretary may, through the Attorney General,
22immediately appeal to the court of jurisdiction the disclosure
23of such confidential supervisory information and seek a stay of
24the subpoena pending the outcome of the appeal. Reports
25required of licensees by the Secretary under this Act and
26results of examinations performed by the Secretary under this

 

 

10000SB1351sam003- 41 -LRB100 10505 SMS 25673 a

1Act shall be the property of only the Secretary, but may be
2shared with the licensee. Access under this Act to the books
3and records of each licensee shall be limited to the Secretary
4and his or her agents as provided in this Act and to the
5licensee and its authorized agents and designees. No other
6person shall have access to the books and records of a licensee
7under this Act. Any person upon whom a demand for production of
8confidential supervisory information is made, whether by
9subpoena, order, or other judicial or administrative process,
10must withhold production of the confidential supervisory
11information and must notify the Secretary of the demand, at
12which time the Secretary is authorized to intervene for the
13purpose of enforcing the limitations of this Section or seeking
14the withdrawal or termination of the attempt to compel
15production of the confidential supervisory information. The
16Secretary may impose any conditions and limitations on the
17disclosure of confidential supervisory information that are
18necessary to protect the confidentiality of that information.
19Except as authorized by the Secretary, no person obtaining
20access to confidential supervisory information may make a copy
21of the confidential supervisory information. The Secretary may
22condition a decision to disclose confidential supervisory
23information on entry of a protective order by the court or
24administrative tribunal presiding in the particular case or on
25a written agreement of confidentiality. In a case in which a
26protective order or agreement has already been entered between

 

 

10000SB1351sam003- 42 -LRB100 10505 SMS 25673 a

1parties other than the Secretary, the Secretary may
2nevertheless condition approval for release of confidential
3supervisory information upon the inclusion of additional or
4amended provisions in the protective order. The Secretary may
5authorize a party who obtained the records for use in one case
6to provide them to another party in another case, subject to
7any conditions that the Secretary may impose on either or both
8parties. The requester shall promptly notify other parties to a
9case of the release of confidential supervisory information
10obtained and, upon entry of a protective order, shall provide
11copies of confidential supervisory information to the other
12parties.
13    (f) The Secretary and employees of the Department shall be
14subject to the restrictions provided in Section 2.5 of the
15Division of Banking Act, including, without limitation, the
16restrictions on (i) owning shares of stock or holding any other
17equity interest in an entity regulated under this Act or in any
18corporation or company that owns or controls an entity
19regulated under this Act; (ii) being an officer, director,
20employee, or agent of an entity regulated under this Act; and
21(iii) obtaining a loan or accepting a gratuity from an entity
22regulated under this Act.
 
23    Section 20-20. Subpoena power of the Secretary.
24    (a) The Secretary shall have the power to issue and to
25serve subpoenas and subpoenas duces tecum to compel the

 

 

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1attendance of witnesses and the production of all books,
2accounts, records, and other documents and materials relevant
3to an examination or investigation. The Secretary, or his or
4her duly authorized representative, shall have power to
5administer oaths and affirmations to any person.
6    (b) In the event of noncompliance with a subpoena or
7subpoena duces tecum issued or caused to be issued by the
8Secretary, the Secretary may, through the Attorney General,
9petition the circuit court of the county in which the person
10subpoenaed resides or has its principal place of business for
11an order requiring the subpoenaed person to appear and testify
12and to produce such books, accounts, records, and other
13documents as are specified in the subpoena duces tecum. The
14court may grant injunctive relief restraining the person from
15advertising, promoting, soliciting, entering into, offering to
16enter into, continuing, or completing any student loan
17servicing transaction. The court may grant other relief,
18including, but not limited to, the restraint, by injunction or
19appointment of a receiver, of any transfer, pledge, assignment,
20or other disposition of the person's assets or any concealment,
21alteration, destruction, or other disposition of books,
22accounts, records, or other documents and materials as the
23court deems appropriate, until the person has fully complied
24with the subpoena or subpoena duces tecum and the Secretary has
25completed an investigation or examination.
26    (c) If it appears to the Secretary that the compliance with

 

 

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1a subpoena or subpoena duces tecum issued or caused to be
2issued by the Secretary pursuant to this Section is essential
3to an investigation or examination, the Secretary, in addition
4to the other remedies provided for in this Act, may, through
5the Attorney General, apply for relief to the circuit court of
6the county in which the subpoenaed person resides or has its
7principal place of business. The court shall thereupon direct
8the issuance of an order against the subpoenaed person
9requiring sufficient bond conditioned on compliance with the
10subpoena or subpoena duces tecum. The court shall cause to be
11endorsed on the order a suitable amount of bond or payment
12pursuant to which the person named in the order shall be freed,
13having a due regard to the nature of the case.
14    (d) In addition, the Secretary may, through the Attorney
15General, seek a writ of attachment or an equivalent order from
16the circuit court having jurisdiction over the person who has
17refused to obey a subpoena, who has refused to give testimony,
18or who has refused to produce the matters described in the
19subpoena duces tecum.
 
20    Section 20-25. Report required of licensee. In addition to
21any reports required under this Act, every licensee shall file
22any other report the Secretary requests.
 
23    Section 20-30. Suspension; revocation of licenses; fines.
24    (a) Upon written notice to a licensee, the Secretary may

 

 

10000SB1351sam003- 45 -LRB100 10505 SMS 25673 a

1suspend or revoke any license issued pursuant to this Act if,
2in the notice, he or she makes a finding of one or more of the
3following:
4        (1) that through separate acts or an act or a course of
5    conduct, the licensee has violated any provisions of this
6    Act, any rule adopted by the Secretary, or any other law,
7    rule, or regulation of this State or the United States;
8        (2) that any fact or condition exists that, if it had
9    existed at the time of the original application for the
10    license, would have warranted the Secretary in refusing
11    originally to issue the license; or
12        (3) that if a licensee is other than an individual, any
13    ultimate equitable owner, officer, director, or member of
14    the licensed partnership, association, corporation, or
15    other entity has acted or failed to act in a way that would
16    be cause for suspending or revoking a license to that party
17    as an individual.
18    (b) No license shall be suspended or revoked, except as
19provided in this Section, nor shall any licensee be fined
20without notice of his or her right to a hearing as provided in
21Section 20-65 of this Act.
22    (c) The Secretary, on good cause shown that an emergency
23exists, may suspend any license for a period not exceeding 180
24days, pending investigation.
25    (d) The provisions of subsection (d) of Section 15-40 of
26this Act shall not affect a licensee's civil or criminal

 

 

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1liability for acts committed prior to surrender of a license.
2    (e) No revocation, suspension, or surrender of any license
3shall impair or affect the obligation of any pre-existing
4lawful contract between the licensee and any person.
5    (f) Every license issued under this Act shall remain in
6force and effect until the license expires without renewal, is
7surrendered, is revoked, or is suspended in accordance with the
8provisions of this Act, but the Secretary shall have authority
9to reinstate a suspended license or to issue a new license to a
10licensee whose license has been revoked if no fact or condition
11then exists which would have warranted the Secretary in
12refusing originally to issue that license under this Act.
13    (g) Whenever the Secretary revokes or suspends a license
14issued pursuant to this Act or fines a licensee under this Act,
15he or she shall execute a written order to that effect. The
16Secretary shall post notice of the order on an agency Internet
17site maintained by the Secretary or on the Nationwide Mortgage
18Licensing System and Registry and shall serve a copy of the
19order upon the licensee. Any such order may be reviewed in the
20manner provided by Section 20-65 of this Act.
21    (h) If the Secretary finds any person in violation of the
22grounds set forth in subsection (i), he or she may enter an
23order imposing one or more of the following penalties:
24        (1) revocation of license;
25        (2) suspension of a license subject to reinstatement
26    upon satisfying all reasonable conditions the Secretary

 

 

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1    may specify;
2        (3) placement of the licensee or applicant on probation
3    for a period of time and subject to all reasonable
4    conditions as the Secretary may specify;
5        (4) issuance of a reprimand;
6        (5) imposition of a fine not to exceed $25,000 for each
7    count of separate offense; except that a fine may be
8    imposed not to exceed $75,000 for each separate count of
9    offense of paragraph (2) of subsection (i) of this Section;
10    or
11        (6) denial of a license.
12    (i) The following acts shall constitute grounds for which
13the disciplinary actions specified in subsection (h) may be
14taken:
15        (1) being convicted or found guilty, regardless of
16    pendency of an appeal, of a crime in any jurisdiction that
17    involves fraud, dishonest dealing, or any other act of
18    moral turpitude;
19        (2) fraud, misrepresentation, deceit, or negligence in
20    any student loan transaction;
21        (3) a material or intentional misstatement of fact on
22    an initial or renewal application;
23        (4) insolvency or filing under any provision of the
24    federal Bankruptcy Code as a debtor;
25        (5) failure to account or deliver to any person any
26    property, such as any money, fund, deposit, check, draft,

 

 

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1    or other document or thing of value, that has come into his
2    or her hands and that is not his or her property or that he
3    or she is not in law or equity entitled to retain, under
4    the circumstances and at the time which has been agreed
5    upon or is required by law or, in the absence of a fixed
6    time, upon demand of the person entitled to such accounting
7    and delivery;
8        (6) failure to disburse funds in accordance with
9    agreements;
10        (7) having a license, or the equivalent, to practice
11    any profession or occupation revoked, suspended, or
12    otherwise acted against, including the denial of licensure
13    by a licensing authority of this State or another state,
14    territory, or country for fraud, dishonest dealing, or any
15    other act of moral turpitude;
16        (8) failure to comply with an order of the Secretary or
17    rule made or issued under the provisions of this Act;
18        (9) engaging in activities regulated by this Act
19    without a current, active license unless specifically
20    exempted by this Act;
21        (10) failure to pay in a timely manner any fee, charge,
22    or fine under this Act;
23        (11) failure to maintain, preserve, and keep available
24    for examination all books, accounts, or other documents
25    required by the provisions of this Act and the rules of the
26    Secretary;

 

 

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1        (12) refusing, obstructing, evading, or unreasonably
2    delaying an investigation, information request, or
3    examination authorized under this Act, or refusing,
4    obstructing, evading, or unreasonably delaying compliance
5    with the Secretary's subpoena or subpoena duces tecum; and
6        (13) failure to comply with or a violation of any
7    provision of this Act.
8    (j) A licensee shall be subject to the disciplinary actions
9specified in this Act for violations of subsection (i) by any
10officer, director, shareholder, joint venture, partner,
11ultimate equitable owner, or employee of the licensee.
12    (k) A licensee shall be subject to suspension or revocation
13for unauthorized employee actions only if there is a pattern of
14repeated violations by employees or the licensee has knowledge
15of the violations or there is substantial harm to a consumer.
16    (l) Procedures for surrender of a license include the
17following:
18        (1) The Secretary may, after 10 days' notice by
19    certified mail to the licensee at the address set forth on
20    the license, stating the contemplated action and in general
21    the grounds for the contemplated action and the date, time,
22    and place of a hearing thereon, and after providing the
23    licensee with a reasonable opportunity to be heard prior to
24    such action, fine such licensee an amount not exceeding
25    $25,000 per violation, or revoke or suspend any license
26    issued under this Act if he or she finds that:

 

 

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1            (i) the licensee has failed to comply with any
2        provision of this Act or any order, decision, finding,
3        rule, regulation, or direction of the Secretary
4        lawfully made pursuant to the authority of this Act; or
5            (ii) any fact or condition exists that, if it had
6        existed at the time of the original application for the
7        license, clearly would have warranted the Secretary in
8        refusing to issue the license.
9        (2) Any licensee may submit an application to surrender
10    a license, but, upon the Secretary approving the surrender,
11    it shall not affect the licensee's civil or criminal
12    liability for acts committed prior to surrender or entitle
13    the licensee to a return of any part of the license fee.
 
14    Section 20-35. Investigation of complaints. The Secretary
15shall at all times maintain staff and facilities adequate to
16receive, record, and investigate complaints and inquiries made
17by any person concerning this Act and any licensees under this
18Act. Each licensee shall open its books, records, documents,
19and offices wherever situated to the Secretary or his or her
20appointees as needed to facilitate such investigations.
 
21    Section 20-40. Additional investigation and examination
22authority. In addition to any authority allowed under this Act,
23the Secretary shall have the authority to conduct
24investigations and examinations as follows:

 

 

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1        (1) For purposes of initial licensing, license
2    renewal, license suspension, license conditioning, license
3    revocation or termination, or general or specific inquiry
4    or investigation to determine compliance with this Act, the
5    Secretary shall have the authority to access, receive, and
6    use any books, accounts, records, files, documents,
7    information, or evidence, including, but not limited to,
8    the following:
9            (A) criminal, civil, and administrative history
10        information, including nonconviction data as specified
11        in the Criminal Code of 2012;
12            (B) personal history and experience information,
13        including independent credit reports obtained from a
14        consumer reporting agency described in Section 603(p)
15        of the federal Fair Credit Reporting Act; and
16            (C) any other documents, information, or evidence
17        the Secretary deems relevant to the inquiry or
18        investigation, regardless of the location, possession,
19        control, or custody of the documents, information, or
20        evidence.
21        (2) For the purposes of investigating violations or
22    complaints arising under this Act or for the purposes of
23    examination, the Secretary may review, investigate, or
24    examine any licensee, individual, or person subject to this
25    Act as often as necessary in order to carry out the
26    purposes of this Act. The Secretary may direct, subpoena,

 

 

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1    or order the attendance of and examine under oath all
2    persons whose testimony may be required about the loans or
3    the business or subject matter of any such examination or
4    investigation, and may direct, subpoena, or order the
5    person to produce books, accounts, records, files, and any
6    other documents the Secretary deems relevant to the
7    inquiry.
8        (3) Each licensee, individual, or person subject to
9    this Act shall make available to the Secretary upon request
10    the books and records relating to the operations of the
11    licensee, individual, or person subject to this Act. The
12    Secretary shall have access to those books and records and
13    interview the officers, principals, employees, independent
14    contractors, agents, and customers of the licensee,
15    individual, or person subject to this Act concerning their
16    business.
17        (4) Each licensee, individual, or person subject to
18    this Act shall make or compile reports or prepare other
19    information as directed by the Secretary in order to carry
20    out the purposes of this Section, including, but not
21    limited to:
22            (A) accounting compilations;
23            (B) information lists and data concerning loan
24        transactions in a format prescribed by the Secretary;
25        or
26            (C) other information deemed necessary to carry

 

 

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1        out the purposes of this Section.
2        (5) In making any examination or investigation
3    authorized by this Act, the Secretary may control access to
4    any documents and records of the licensee or person under
5    examination or investigation. The Secretary may take
6    possession of the documents and records or place a person
7    in exclusive charge of the documents and records in the
8    place where they are usually kept. During the period of
9    control, no person shall remove or attempt to remove any of
10    the documents or records, except pursuant to a court order
11    or with the consent of the Secretary. Unless the Secretary
12    has reasonable grounds to believe the documents or records
13    of the licensee have been, or are at risk of being altered
14    or destroyed for purposes of concealing a violation of this
15    Act, the licensee or owner of the documents and records
16    shall have access to the documents or records as necessary
17    to conduct its ordinary business affairs.
18        (6) In order to carry out the purposes of this Section,
19    the Secretary may:
20            (A) retain attorneys, accountants, or other
21        professionals and specialists as examiners, auditors,
22        or investigators to conduct or assist in the conduct of
23        examinations or investigations;
24            (B) enter into agreements or relationships with
25        other government officials or regulatory associations
26        in order to improve efficiencies and reduce regulatory

 

 

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1        burden by sharing resources, standardized or uniform
2        methods or procedures, and documents, records,
3        information, or evidence obtained under this Section;
4            (C) use, hire, contract, or employ public or
5        privately available analytical systems, methods, or
6        software to examine or investigate the licensee,
7        individual, or person subject to this Act;
8            (D) accept and rely on examination or
9        investigation reports made by other government
10        officials, within or outside this State; or
11            (E) accept audit reports made by an independent
12        certified public accountant for the licensee,
13        individual, or person subject to this Act in the course
14        of that part of the examination covering the same
15        general subject matter as the audit and may incorporate
16        the audit report in the report of the examination,
17        report of investigation, or other writing of the
18        Secretary.
19        (7) The authority of this Section shall remain in
20    effect, whether such a licensee, individual, or person
21    subject to this Act acts or claims to act under any
22    licensing or registration law of this State or claims to
23    act without the authority.
24        (8) No licensee, individual, or person subject to
25    investigation or examination under this Section may
26    knowingly withhold, abstract, remove, mutilate, destroy,

 

 

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1    or secrete any books, records, computer records, or other
2    information.
 
3    Section 20-45. Confidential information. In hearings
4conducted under this Act, information presented into evidence
5that was acquired by the licensee when serving any individual
6in connection with a student loan, including all financial
7information of the individual, shall be deemed strictly
8confidential and shall be made available only as part of the
9record of a hearing under this Act or otherwise (i) when the
10record is required, in its entirety, for purposes of judicial
11review or (ii) upon the express written consent of the
12individual served, or in the case of his or her death or
13disability, the consent of his or her personal representative.
 
14    Section 20-50. Confidentiality.
15    (a) In order to promote more effective regulation and
16reduce regulatory burden through supervisory information
17sharing, except as otherwise provided in federal Public Law
18110-289, Section 1512, the requirements under any federal law
19or State law regarding the privacy or confidentiality of any
20information or material provided to the Nationwide Mortgage
21Licensing System and Registry, and any privilege arising under
22federal or State law, including the rules of any federal or
23State court, with respect to such information or material,
24shall continue to apply to information or material after the

 

 

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1information or material has been disclosed to the Nationwide
2Mortgage Licensing System and Registry. The information and
3material may be shared with all State and federal regulatory
4officials with student loan industry oversight authority
5without the loss of privilege or the loss of confidentiality
6protections provided by federal law or State law.
7    (b) In order to promote more effective regulation and
8reduce regulatory burden through supervisory information
9sharing, the Secretary is authorized to enter agreements or
10sharing arrangements with other governmental agencies, the
11Conference of State Bank Supervisors or other associations
12representing governmental agencies as established by rule,
13regulation, or order of the Secretary. The sharing of
14confidential supervisory information or any information or
15material described in subsection (a) of this Section pursuant
16to an agreement or sharing arrangement shall not result in the
17loss of privilege or the loss of confidentiality protections
18provided by federal law or State law.
19    (c) In order to promote more effective regulation and
20reduce regulatory burden through supervisory information
21sharing, information or material that is subject to a privilege
22or confidentiality under subsection (a) of this Section shall
23not be subject to the following:
24        (1) disclosure under any State law governing the
25    disclosure to the public of information held by an officer
26    or an agency of the State; or

 

 

10000SB1351sam003- 57 -LRB100 10505 SMS 25673 a

1        (2) subpoena or discovery, or admission into evidence,
2    in any private civil action or administrative process,
3    unless with respect to any privilege held by the Nationwide
4    Mortgage Licensing System and Registry with respect to the
5    information or material, the person to whom such
6    information or material pertains waives, in whole or in
7    part, in the discretion of that person, that privilege.
8    (d) In order to promote more effective regulation and
9reduce regulatory burden through supervisory information
10sharing, any other law relating to the disclosure of
11confidential supervisory information or any information or
12material described in subsection (a) of this Section that is
13inconsistent with subsection (a) of this Section shall be
14superseded by the requirements of this Section to the extent
15the other law provides less confidentiality or a weaker
16privilege.
 
17    Section 20-55. Reports of violations. Any person licensed
18under this Act or any other person may report to the Secretary
19any information to show that a person subject to this Act is or
20may be in violation of this Act. A licensee who files a report
21with the Department that another licensee is engaged in one or
22more violations pursuant to this Act shall not be the subject
23of disciplinary action by the Department, unless the Department
24determines, by a preponderance of the evidence available to the
25Department, that the reporting person knowingly and willingly

 

 

10000SB1351sam003- 58 -LRB100 10505 SMS 25673 a

1participated in the violation that was reported.
 
2    Section 20-60. Rules and regulations of the Secretary.
3    (a) In addition to such powers as may be prescribed by this
4Act, the Secretary is hereby authorized and empowered to adopt
5rules consistent with the purposes of this Act, including, but
6not limited to:
7        (1) rules in connection with the activities of
8    licensees as may be necessary and appropriate for the
9    protection of consumers in this State;
10        (2) rules as may be necessary and appropriate to define
11    improper or fraudulent business practices in connection
12    with the activities of licensees in servicing student
13    loans;
14        (3) rules that define the terms used in this Act and as
15    may be necessary and appropriate to interpret and implement
16    the provisions of this Act; and
17        (4) rules as may be necessary for the enforcement of
18    this Act.
19    (b) The Secretary is hereby authorized and empowered to
20make specific rulings, demands, and findings that he or she
21deems necessary for the proper conduct of the student loan
22servicing industry.
23    (c) A person or entity may make a written application to
24the Department for a written interpretation of this Act. The
25Department may then, in its sole discretion, choose to issue a

 

 

10000SB1351sam003- 59 -LRB100 10505 SMS 25673 a

1written interpretation. To be valid, a written interpretation
2must be signed by the Secretary, or his or her designee, and
3the Department's General Counsel. A written interpretation
4expires 2 years after the date that it was issued.
5    (d) No provision in this Act that imposes liability or
6establishes violations shall apply to any act taken by a person
7or entity in conformity with a written interpretation of this
8Act that is in effect at the time the act is taken,
9notwithstanding whether the written interpretation is later
10amended, rescinded, or determined by judicial or other
11authority to be invalid for any reason.
 
12    Section 20-65. Appeal and review.
13    (a) Any person or entity affected by a decision of the
14Secretary under any provision of this Act may obtain review of
15that decision within the Department.
16    (b) The Secretary may, in accordance with the Illinois
17Administrative Procedure Act, adopt rules to provide for review
18within the Department of his or her decisions affecting the
19rights of entities under this Act. The review shall provide
20for, at a minimum:
21        (1) appointment of a hearing officer other than a
22    regular employee of the Department;
23        (2) appropriate procedural rules, specific deadlines
24    for filings, and standards of evidence and of proof; and
25        (3) provision for apportioning costs among parties to

 

 

10000SB1351sam003- 60 -LRB100 10505 SMS 25673 a

1    the appeal.
2    (c) All final agency determinations of appeals to decisions
3of the Secretary may be reviewed in accordance with and under
4the provisions of the Administrative Review Law. Appeals from
5all final orders and judgments entered by a court in review of
6any final administrative decision of the Secretary or of any
7final agency review of a decision of the Secretary may be taken
8as in other civil cases.
 
9    Section 20-70. Violations of this Act; Secretary's orders.
10If the Secretary finds, as the result of examination,
11investigation, or review of reports submitted by a licensee,
12that the business and affairs of a licensee are not being
13conducted in accordance with this Act, the Secretary shall
14notify the licensee of the correction necessary. If a licensee
15fails to correct such violations, the Secretary shall issue an
16order requiring immediate correction and compliance with this
17Act, specifying a reasonable date for performance.
18    The Secretary may adopt rules to provide for an orderly and
19timely appeal of all orders within the Department. The rules
20may include provision for assessment of fees and costs.
 
21    Section 20-75. Collection of compensation. Unless exempt
22from licensure under this Act, no person engaged in or offering
23to engage in any act or service for which a license under this
24Act is required may bring or maintain any action in any court

 

 

10000SB1351sam003- 61 -LRB100 10505 SMS 25673 a

1of this State to collect compensation for the performance of
2the licensable services without alleging and proving that he or
3she was the holder of a valid student loan servicing license
4under this Act at all times during the performance of those
5services.
 
6    Section 20-80. Licensure fees.
7    (a) The fees for licensure shall be a $1,000 application
8fee and an additional $800 fee for investigation performed in
9conjunction with Section 15-5. The fees are nonrefundable.
10    (b) The fee for an application renewal shall be $1,000. The
11fee is nonrefundable.
 
12    Section 20-85. Injunction. The Secretary, through the
13Attorney General, may maintain an action in the name of the
14people of the State of Illinois and may apply for an injunction
15in the circuit court to enjoin a person from engaging in
16unlicensed student loan servicing activity.
 
17
ARTICLE 25. CONSUMER FRAUD AND DECEPTIVE BUSINESS
18
PRACTICES ACT

 
19    Section 25-5. Enforcement; Consumer Fraud and Deceptive
20Business Practices Act. The Attorney General may enforce a
21violation of Article 5 of this Act as an unlawful practice
22under the Consumer Fraud and Deceptive Business Practices Act.
 

 

 

10000SB1351sam003- 62 -LRB100 10505 SMS 25673 a

1
ARTICLE 99. SEVERABILITY; EFFECTIVE DATE

 
2    Section 99-1. Severability. The provisions of this Act are
3severable under Section 1.31 of the Statute on Statutes.
 
4    Section 99-99. Effective date. This Act takes effect
5December 31, 2018.".