205 ILCS 635/ Residential Mortgage License Act of 1987.

(205 ILCS 635/4-11) (from Ch. 17, par. 2324-11)

Sec. 4-11. Costs of Supervision; Examination and Investigative Fees. The expenses of administering this Act, including investigations and examinations provided for in this Act shall be borne by and assessed against entities regulated by this Act. Subject to the limitations set forth in Section 2-2 of this Act, the Secretary shall establish fees by regulation in at least the following categories:

(1) application fees;

(2) investigation of license applicant fees;

(3) examination fees;

(4) contingent fees;

and such other categories as may be required to administer this Act.

(Source: P.A. 95-1047, eff. 4-6-09.)

(205 ILCS 635/4-12) (from Ch. 17, par. 2324-12)

Sec. 4-12. Appeal and Review. (a) Any person or entity affected by a decision of the Commissioner under any provision of this Act may obtain review of such decision within the Office of the Commissioner.

(b) The Commissioner shall, in accordance with the "Illinois Administrative Procedure Act", promulgate rules and regulations to provide for review within the Office of the Commissioner (hereinafter referred to as "agency review") of his or her decisions affecting the rights of entities under this Act. Such review shall provide for, at a minimum:

(1) appointment of a hearing officer other than a regular employee of the Office of the Commissioner;

(2) appropriate procedural rules, specific deadlines for filings, and standards of evidence and of proof;

(3) provision for apportioning costs among parties to the appeal.

(c) All final agency determinations of appeals to decisions of the Commissioner may be reviewed in accordance with and under the provisions of the "Administrative Review Law". Appeals from all final orders and judgments entered by a court in review of any final administrative decision of the Commissioner or of any final agency review of a decision of the Commissioner may be taken as in other civil cases.

(Source: P.A. 85-735.)

(205 ILCS 635/4-13) (from Ch. 17, par. 2324-13)

Sec. 4-13. Violations of this Act; Commissioner's Orders. If the Commissioner finds, as the result of examination, investigation or review of reports submitted by a licensee that the business and affairs of a licensee are not being conducted in accordance with this Act, the Commissioner shall notify the licensee of the correction necessary. Should a licensee fail to correct such violations, the Commissioner shall issue an order requiring immediate correction and compliance with this Act, specifying a reasonable date for performance.

The Commissioner shall promulgate rules and regulations to provide for an orderly and timely appeal of all orders within the Office of the Commissioner. Such rules shall include provision for assessment of fees and costs.

(Source: P.A. 85-735.)

(205 ILCS 635/4-14) (from Ch. 17, par. 2324-14)

Sec. 4-14. Collection of fees. Unless exempt from licensure under this Act, no person engaged in or offering to engage in any act or service, for which a license under this Act is required, may bring or maintain any action in any court of this State to collect compensation for the performance of the licensable services without alleging and proving that he or she was the holder of a valid Residential Mortgage License under this Act at all times during the performance of those services.

(Source: P.A. 87-642.)

(205 ILCS 635/4-15)

Sec. 4-15. Enforcement and reporting provisions. The Attorney General may enforce any violation of Section 5-6, 5-7, 5-8, 5-9, 5-10, 5-11, 5-12, 5-14, or 5-15 of this Act as an unlawful practice under the Consumer Fraud and Deceptive Business Practices Act.

(Source: P.A. 95-691, eff. 6-1-08.)

(205 ILCS 635/4-16)

Sec. 4-16. Private right of action. A borrower injured by a violation of the standards, duties, prohibitions, or requirements of Sections 5-6, 5-7, 5-8, 5-9, 5-10, 5-11, 5-12, 5-14, 5-15, and 5-16 of this Act shall have a private right of action.

(a) A licensee is not liable for a violation of this Act if:

(1) within 30 days of the loan closing and prior to receiving any notice from the borrower of the violation, the licensee has made appropriate restitution to the borrower and appropriate adjustments are made to the loan; or

(2) the violation was not intentional and resulted from a bona fide error in fact, notwithstanding the maintenance of procedures reasonably adopted to avoid such errors, and within 60 days of the discovery of the violation and prior to receiving any notice from the borrower of the violation, the borrower is notified of the violation, appropriate restitution is made to the borrower, and appropriate adjustments are made to the loan.

(b) The remedies and rights provided for in this Act are not exclusive, but cumulative, and all other applicable claims are specifically preserved.

(Source: P.A. 95-691, eff. 6-1-08.)

(205 ILCS 635/Art. V heading) ARTICLE V LENDING PROCEDURES

(205 ILCS 635/5-1) (from Ch. 17, par. 2325-1)

Sec. 5-1. The Commissioner may promulgate rules with respect to brokering and lending procedures of residential mortgage licensees as necessary to accomplish the purposes of this Act.

(Source: P.A. 85-735.)

(205 ILCS 635/5-5)

Sec. 5-5. (Repealed).

(Source: P.A. 93-863, eff. 8-5-04. Repealed by P.A. 99-331, eff. 1-1-16.)

(205 ILCS 635/5-5A)

Sec. 5-5A. Violations of the Reverse Mortgage Act. Any violation of the Reverse Mortgage Act by a residential mortgage licensee shall be considered a violation of this Act.

(Source: P.A. 99-331, eff. 1-1-16.)

(205 ILCS 635/5-6)

Sec. 5-6. Verification of borrower's ability to repay.

(a) No licensee may make, provide, or arrange for a residential mortgage loan without verifying the borrower's reasonable ability to pay the principal and interest on the loan, real estate taxes, homeowner's insurance, assessments, and mortgage insurance premiums, if applicable.

For residential mortgage loans in which the interest rate may vary, the reasonable ability to pay the principal and interest on the loan shall be determined based on a fully indexed rate, which rate shall be calculated by using the index rate prevailing at the time of origination of the loan plus the margin that will apply when calculating the adjustable rate under the terms of the loan, assuming a fully amortizing repayment schedule based on the term of the loan.

For loans that allow for negative amortization, the principal amount of the loan shall be calculated by including the maximum amount the principal balance may increase due to negative amortization under the terms of the loan.

(b) For all residential mortgage loans made by a licensee, the borrower's income and financial resources must be verified by tax returns, payroll receipts, bank records, or other reasonably reliable methods, based upon the circumstances of the proposed loan. Nothing in this Section shall be construed to limit a licensee's ability to rely on criteria other than the borrower's income and financial resources to establish the borrower's reasonable ability to repay a residential mortgage loan; however, such other criteria must be verified through reasonably reliable methods and documentation. A statement by the borrower to the licensee of the borrower's income and resources is not sufficient to establish the existence of the income or resources when verifying the reasonable ability to pay. Stated income should be accepted only if there are mitigating factors that clearly minimize the need for direct verification of ability to repay.

(Source: P.A. 95-691, eff. 6-1-08.)

(205 ILCS 635/5-7)

Sec. 5-7. Broker agency relationship.

(a) A mortgage broker shall be considered to have created an agency relationship with the borrower in all cases and shall comply with the following duties:

(1) A mortgage broker shall act in the borrower's best interest and in good faith toward the borrower. A mortgage broker shall not accept, give, or charge any undisclosed compensation or realize any undisclosed remuneration, either through direct or indirect means, that inures to the benefit of the mortgage broker on an expenditure made for the borrower;

(2) mortgage brokers shall carry out all lawful instructions given by borrowers;

(3) mortgage brokers shall disclose to borrowers all material facts of which the mortgage broker has knowledge which might reasonably affect the borrower's rights, interests, or ability to receive the borrower's intended benefit from the residential mortgage loan, but not facts which are reasonably susceptible to the knowledge of the borrower;

(4) mortgage brokers shall use reasonable care in performing duties; and

(5) mortgage brokers shall account to a borrower for all the borrower's money and property received as agent.

(b) Nothing in this Section prohibits a mortgage broker from contracting for or collecting a fee for services rendered and which had been disclosed to the borrower in advance of the provision of those services.

(c) Nothing in this Section requires a mortgage broker to obtain a loan containing terms or conditions not available to the mortgage broker in the mortgage broker's usual course of business, or to obtain a loan for the borrower from a mortgage lender with whom the mortgage broker does not have a business relationship.

(Source: P.A. 95-691, eff. 6-1-08.)

(205 ILCS 635/5-8)

Sec. 5-8. Prepayment penalties.

(a) No licensee may make, provide, or arrange a mortgage loan with a prepayment penalty unless the licensee offers the borrower a loan without a prepayment penalty, the offer is in writing, and the borrower initials the offer to indicate that the borrower has declined the offer. In addition, the licensee must disclose the discount in rate received in consideration for a mortgage loan with the prepayment penalty.

(b) If a borrower declines an offer required under subsection (a) of this Section, the licensee may include, except as prohibited by Section 30 of the High Risk Home Loan Act, a prepayment penalty that extends no longer than three years or the first change date or rate adjustment of a variable rate mortgage, whichever comes earlier, provided that, if a prepayment is made during the fixed rate period, the licensee shall receive an amount that is no more than:

(1) 3% of the total loan amount if the prepayment is made within the first 12-month period following the date the loan was made;

(2) 2% of the total loan amount if the prepayment is made within the second 12-month period following the date the loan was made; or

(3) 1% of the total loan amount if the prepayment is made within the third 12-month period following the date the loan was made, if the fixed rate period extends 3 years.

(c) Notwithstanding any provision in this Section, prepayment penalties are prohibited in connection with the sale or destruction of a dwelling secured by a residential mortgage loan.

(d) This Section applies to loans made, refinanced, renewed, extended, or modified on or after the effective date of this amendatory Act of the 95th General Assembly.

(Source: P.A. 97-849, eff. 1-10-14 (see Section 10 of P.A. 97-1159, 78 Fed. Reg. 6855, 6857, 78 Fed. Reg. 10695, 10696, and 78 Fed. Reg. 44685, 44686).)

(205 ILCS 635/5-8.5)

Sec. 5-8.5. Arrearage payments. When a mortgagor is in arrears more than one month, no licensee shall refuse to accept any payments offered by the mortgagor in whole month payment amounts. Such payments shall be applied to the unpaid balance in the manner provided in the licensee's mortgage with that mortgagor.

Nothing in this Section shall be construed to otherwise impair the ability of the licensee to enforce its rights under the mortgage with that mortgagor; nothing in this Section shall be construed to otherwise impair the obligations of the mortgagor under the mortgage with the licensee.

(Source: P.A. 100-268, eff. 1-1-18.)