205 ILCS 635/ Residential Mortgage License Act of 1987.

(205 ILCS 635/Art. I heading) ARTICLE I GENERAL PROVISIONS

(205 ILCS 635/1-1) (from Ch. 17, par. 2321-1)

Sec. 1-1. This Act shall be known and may be cited as the "Residential Mortgage License Act of 1987".

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

(205 ILCS 635/1-2) (from Ch. 17, par. 2321-2)

Sec. 1-2. Purpose of Act and Policy Statement.

(a) The origination, funding, purchasing and brokering of residential mortgage loans and the type of entities involved in residential mortgage lending have undergone significant changes in recent years, due in part to developments in the general economy, specifically interest rate volatility, the sophistication of the national secondary market for mortgage loans and the market for mortgage backed securities. The recent trend toward deregulation in the financial services industry has accelerated the evolution of residential mortgage lending, dramatically increasing the types of mortgage loans offered and the manner in which they are advertised and marketed to consumers. Depository institutions, traditionally the major source of residential mortgage financing for individuals, now compete for capital and customers with mortgage bankers and other financial service organizations. Residential mortgage lenders of every type have increasingly relied on nonfinancial intermediaries, such as mortgage brokers, to find customers. These developments have raised questions as to whether all entities engaging in this banking function operate under appropriate regulatory scrutiny and as to whether all residential mortgage lenders are conducting their business in the best interests of Illinois homeowners and potential homeowners.

(b) The activities of lenders and their offering of financing for residential real property have a direct and immediate impact upon the housing industry, the neighborhoods and communities of this State, its homeowners and potential homeowners. The General Assembly finds that it is essential for the protection of the citizens of this State and the stability of the State's economy that reasonable standards governing the business practices of residential mortgage lenders and their agents be imposed. The General Assembly further finds that the obligations of lenders and their agents to consumers in connection with making, soliciting, processing, placing or negotiating of residential mortgage loans are such as to warrant the uniform regulation of the residential mortgage lending process, including the application, solicitation, making and servicing of residential mortgage loans. The purpose of this Act is to protect Illinois consumers seeking residential mortgage loans and to ensure that the residential mortgage lending industry is operating fairly, honestly and efficiently, free from deceptive and anti-competitive practices. The purpose of this Act is to regulate residential mortgage lending to benefit our citizens by ensuring availability of residential mortgage funding, to benefit responsible providers of residential mortgage loans and services, and to avoid requirements inconsistent with legitimate and responsible business practices in the residential mortgage lending industry.

(c) The General Assembly finds that the provisions of this amendatory Act of the 96th General Assembly that set forth the authority and framework for State participation in a Nationwide Mortgage Licensing System and Registry are consistent with the purposes of this Section and for the purpose of complying with the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

(Source: P.A. 96-112, eff. 7-31-09.)

(205 ILCS 635/1-3) (from Ch. 17, par. 2321-3)

Sec. 1-3. Necessity for license; scope of Act.

(a) No person, partnership, association, corporation or other entity shall engage in the business of brokering, funding, originating, servicing or purchasing of residential mortgage loans without first obtaining a license from the Secretary in accordance with the licensing procedure provided in this Article I and such regulations as may be promulgated by the Secretary. The licensing provisions of this Section shall not apply to any entity engaged solely in commercial mortgage lending or to any person, partnership association, corporation or other entity exempted pursuant to Section 1-4, subsection (d), of this Act or in accordance with regulations promulgated by the Secretary hereunder. No provision of this Act shall apply to an exempt person or entity as defined in items (1) and (1.5) of subsection (d) of Section 1-4 of this Act. Notwithstanding anything to the contrary in the preceding sentence, an individual acting as a mortgage loan originator who is not employed by and acting for an entity described in item (1) of subsection (tt) of Section 1-4 of this Act shall be subject to the mortgage loan originator licensing requirements of Article VII of this Act.

Effective January 1, 2011, no provision of this Act shall apply to an exempt person or entity as defined in item (1.8) of subsection (d) of Section 1-4 of this Act. Notwithstanding anything to the contrary in the preceding sentence, an individual acting as a mortgage loan originator who is not employed by and acting for an entity described in item (1) of subsection (tt) of Section 1-4 of this Act shall be subject to the mortgage loan originator licensing requirements of Article VII of this Act, and provided that an individual acting as a mortgage loan originator under item (1.8) of subsection (d) of Section 1-4 of this Act shall be further subject to a determination by the U.S. Department of Housing and Urban Development through final rulemaking or other authorized agency determination under the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

(a-1) A person who is exempt from licensure pursuant to paragraph (ii) of item (1) of subsection (d) of Section 1-4 of this Act as a federally chartered savings bank that is registered with the Nationwide Multistate Licensing System and Registry may apply to the Secretary for an exempt company registration for the purpose of sponsoring one or more individuals subject to the mortgage loan originator licensing requirements of Article VII of this Act. Registration with the Division of Banking of the Department shall not affect the exempt status of the applicant.

(1) A mortgage loan originator eligible for licensure under this subsection shall (A) be covered under an exclusive written contract with, and originate residential mortgage loans solely on behalf of, that exempt person; and (B) hold a current, valid insurance producer license under Article XXXI of the Illinois Insurance Code.

(2) An exempt person shall: (A) fulfill any reporting requirements required by the Nationwide Multistate Licensing System and Registry or the Secretary; (B) provide a blanket surety bond pursuant to Section 7-12 of this Act covering the activities of all its sponsored mortgage loan originators; (C) reasonably supervise the activities of all its sponsored mortgage loan originators; (D) comply with all rules and orders (including the averments contained in Section 2-4 of this Act as applicable to a non-licensed exempt entity provided for in this Section) that the Secretary deems necessary to ensure compliance with the federal SAFE Act; and (E) pay an annual registration fee established by the Director.

(3) The Secretary may deny an exempt company registration to an exempt person or fine, suspend, or revoke an exempt company registration if the Secretary finds one of the following:

(A) that the exempt person is not a person of honesty, truthfulness, or good character;

(B) that the exempt person violated any applicable law, rule, or order;

(C) that the exempt person refused or failed to furnish, within a reasonable time, any information or make any report that may be required by the Secretary;

(D) that the exempt person had a final judgment entered against him or her in a civil action on grounds of fraud, deceit, or misrepresentation, and the conduct on which the judgment is based indicates that it would be contrary to the interest of the public to permit the exempt person to manage a loan originator;

(E) that the exempt person had an order entered against him or her involving fraud, deceit, or misrepresentation by an administrative agency of this State, the federal government, or any other state or territory of the United States, and the facts relating to the order indicate that it would be contrary to the interest of the public to permit the exempt person to manage a loan originator;

(F) that the exempt person made a material misstatement or suppressed or withheld information on the application for an exempt company registration or any document required to be filed with the Secretary; or

(G) that the exempt person violated Section 4-5 of this Act.

(a-5) An entity that is exempt from licensure pursuant to item (7) of subsection (d) of Section 1-4 of this Act as an independent loan processing entity shall annually apply to the Secretary through the Nationwide Multistate Licensing System and Registry for an exempt company registration for the purpose of sponsoring one or more individuals subject to the mortgage loan originator licensing requirements of Article VII of this Act. A loan processor who performs clerical or support duties at the direction of and subject to the supervision and instruction of a licensed mortgage loan originator sponsored by an independent loan processing entity shall be exempt from his or her own licensing as a mortgage loan originator. An independent loan processing entity shall not be subject to examination by the Secretary. The Secretary may adopt rules to implement any provisions necessary for the administration of this subsection.

(b) No person, partnership, association, corporation, or other entity except a licensee under this Act or an entity exempt from licensing pursuant to Section 1-4, subsection (d), of this Act shall do any business under any name or title, or circulate or use any advertising or make any representation or give any information to any person, which indicates or reasonably implies activity within the scope of this Act.

(c) The Secretary may, through the Attorney General, request the circuit court of either Cook or Sangamon County to issue an injunction to restrain any person from violating or continuing to violate any of the foregoing provisions of this Section.

(d) When the Secretary has reasonable cause to believe that any entity which has not submitted an application for licensure is conducting any of the activities described in subsection (a) hereof, the Secretary shall have the power to examine all books and records of the entity and any additional documentation necessary in order to determine whether such entity should become licensed under this Act.

(d-1) The Secretary may issue orders against any person if the Secretary has reasonable cause to believe that an unsafe, unsound, or unlawful practice has occurred, is occurring, or is about to occur, if any person has violated, is violating, or is about to violate any law, rule, or written agreement with the Secretary, or for the purposes of administering the provisions of this Act and any rule adopted in accordance with this Act.

(e) Any person, partnership, association, corporation or other entity who violates any provision of this Section commits a business offense and shall be fined an amount not to exceed $25,000. A mortgage loan brokered, funded, originated, serviced, or purchased by a party who is not licensed under this Section shall not be held to be invalid solely on the basis of a violation under this Section. The changes made to this Section by Public Act 99-113 are declarative of existing law.

(f) Each person, partnership, association, corporation or other entity conducting activities regulated by this Act shall be issued one license. Each full service office at which a residential mortgage licensee conducts any part of his or her business must be recorded with the Secretary pursuant to Section 2-8 of this Act.

(g) Licensees under this Act shall solicit, broker, fund, originate, service and purchase residential mortgage loans only in conformity with the provisions of this Act and such rules and regulations as may be promulgated by the Secretary.

(h) This Act applies to all entities doing business in Illinois as residential mortgage bankers, as defined by "An Act to provide for the regulation of mortgage bankers", approved September 15, 1977, as amended, regardless of whether licensed under that or any prior Act. Any existing residential mortgage lender or residential mortgage broker in Illinois whether or not previously licensed, must operate in accordance with this Act.

(i) This Act is a successor Act to and a continuance of the regulation of residential mortgage bankers provided in "An Act to provide for the regulation of mortgage bankers", approved September 15, 1977, as amended.

Entities and persons subject to the predecessor Act shall be subject to this Act from and after its effective date.

(Source: P.A. 103-156, eff. 1-1-24.)

(205 ILCS 635/1-4)

Sec. 1-4. Definitions. The following words and phrases have the meanings given to them in this Section:

(a) "Residential real property" or "residential real estate" shall mean any real property located in Illinois, upon which is constructed or intended to be constructed a dwelling. Those terms include a manufactured home as defined in subdivision (53) of Section 9-102 of the Uniform Commercial Code which is real property as defined in Section 5-35 of the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act.

(b) "Making a residential mortgage loan" or "funding a residential mortgage loan" shall mean for compensation or gain, either directly or indirectly, advancing funds or making a commitment to advance funds to a loan applicant for a residential mortgage loan.

(c) "Soliciting, processing, placing, or negotiating a residential mortgage loan" shall mean for compensation or gain, either directly or indirectly, accepting or offering to accept an application for a residential mortgage loan, assisting or offering to assist in the processing of an application for a residential mortgage loan on behalf of a borrower, or negotiating or offering to negotiate the terms or conditions of a residential mortgage loan with a lender on behalf of a borrower including, but not limited to, the submission of credit packages for the approval of lenders, the preparation of residential mortgage loan closing documents, including a closing in the name of a broker.

(d) "Exempt person or entity" shall mean the following:

(1) (i) Any banking organization or foreign banking corporation licensed by the Illinois Commissioner of Banks and Real Estate or the United States Comptroller of the Currency to transact business in this State; (ii) any national bank, federally chartered savings and loan association, federal savings bank, federal credit union; (iii) (blank); (iv) any bank, savings and loan association, savings bank, or credit union organized under the laws of this or any other state; (v) any Illinois Consumer Installment Loan Act licensee; (vi) any insurance company authorized to transact business in this State; (vii) any entity engaged solely in commercial mortgage lending; (viii) any service corporation of a savings and loan association or savings bank organized under the laws of this State or the service corporation of a federally chartered savings and loan association or savings bank having its principal place of business in this State, other than a service corporation licensed or entitled to reciprocity under the Real Estate License Act of 2000; or (ix) any first tier subsidiary of a bank, the charter of which is issued under the Illinois Banking Act by the Illinois Commissioner of Banks and Real Estate, or the first tier subsidiary of a bank chartered by the United States Comptroller of the Currency and that has its principal place of business in this State, provided that the first tier subsidiary is regularly examined by the Illinois Commissioner of Banks and Real Estate or the Comptroller of the Currency, or a consumer compliance examination is regularly conducted by the Federal Reserve Board.

(1.5) Any employee of a person or entity mentioned in item (1) of this subsection, when acting for such person or entity, or any registered mortgage loan originator when acting for an entity described in subsection (tt) of this Section.

(1.8) Any person or entity that does not originate mortgage loans in the ordinary course of business, but makes or acquires residential mortgage loans with his or her own funds for his or her or its own investment without intent to make, acquire, or resell more than 3 residential mortgage loans in any one calendar year.

(2) (Blank).

(2.1) A bona fide nonprofit organization.

(2.2) An employee of a bona fide nonprofit organization when acting on behalf of that organization.

(3) Any person employed by a licensee to assist in the performance of the residential mortgage licensee's activities regulated by this Act who is compensated in any manner by only one licensee.

(4) (Blank).

(5) Any individual, corporation, partnership, or other entity that originates, services, or brokers residential mortgage loans, as these activities are defined in this Act, and who or which receives no compensation for those activities, subject to the Commissioner's regulations and the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 and the rules promulgated under that Act with regard to the nature and amount of compensation.

(6) (Blank).

(7) Any entity engaged solely in providing loan processing services through the sponsoring of individuals acting pursuant to subsection (d) of Section 7-1A of this Act.

(e) "Licensee" or "residential mortgage licensee" shall mean a person, partnership, association, corporation, or any other entity who or which is licensed pursuant to this Act to engage in the activities regulated by this Act.

(f) "Mortgage loan" "residential mortgage loan" or "home mortgage loan" shall mean any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling as defined in Section 103(v) of the federal Truth in Lending Act, or residential real estate upon which is constructed or intended to be constructed a dwelling.

(g) "Lender" shall mean any person, partnership, association, corporation, or any other entity who either lends or invests money in residential mortgage loans.

(h) "Ultimate equitable owner" shall mean a person who, directly or indirectly, owns or controls an ownership interest in a corporation, foreign corporation, alien business organization, trust, or any other form of business organization regardless of whether the person owns or controls the ownership interest through one or more persons or one or more proxies, powers of attorney, nominees, corporations, associations, partnerships, trusts, joint stock companies, or other entities or devices, or any combination thereof.

(i) "Residential mortgage financing transaction" shall mean the negotiation, acquisition, sale, or arrangement for or the offer to negotiate, acquire, sell, or arrange for, a residential mortgage loan or residential mortgage loan commitment.

(j) "Personal residence address" shall mean a street address and shall not include a post office box number.

(k) "Residential mortgage loan commitment" shall mean a contract for residential mortgage loan financing.

(l) "Party to a residential mortgage financing transaction" shall mean a borrower, lender, or loan broker in a residential mortgage financing transaction.

(m) "Payments" shall mean payment of all or any of the following: principal, interest and escrow reserves for taxes, insurance and other related reserves, and reimbursement for lender advances.

(n) "Commissioner" shall mean the Commissioner of Banks and Real Estate, except that, beginning on April 6, 2009 (the effective date of Public Act 95-1047), all references in this Act to the Commissioner of Banks and Real Estate are deemed, in appropriate contexts, to be references to the Secretary of Financial and Professional Regulation, or his or her designee, including the Director of the Division of Banking of the Department of Financial and Professional Regulation.

(n-1) "Director" shall mean the Director of the Division of Banking of the Department of Financial and Professional Regulation, except that, beginning on July 31, 2009 (the effective date of Public Act 96-112), all references in this Act to the Director are deemed, in appropriate contexts, to be the Secretary of Financial and Professional Regulation, or his or her designee, including the Director of the Division of Banking of the Department of Financial and Professional Regulation.

(o) "Loan brokering", "brokering", or "brokerage service" shall mean the act of helping to obtain from another entity, for a borrower, a loan secured by residential real estate situated in Illinois or assisting a borrower in obtaining a loan secured by residential real estate situated in Illinois in return for consideration to be paid by either the borrower or the lender including, but not limited to, contracting for the delivery of residential mortgage loans to a third party lender and soliciting, processing, placing, or negotiating residential mortgage loans.

(p) "Loan broker" or "broker" shall mean a person, partnership, association, corporation, or limited liability company, other than those persons, partnerships, associations, corporations, or limited liability companies exempted from licensing pursuant to Section 1-4, subsection (d), of this Act, who performs the activities described in subsections (c), (o), and (yy) of this Section.

(q) "Servicing" shall mean the collection or remittance for or the right or obligation to collect or remit for any lender, noteowner, noteholder, or for a licensee's own account, of payments, interests, principal, and trust items such as hazard insurance and taxes on a residential mortgage loan in accordance with the terms of the residential mortgage loan; and includes loan payment follow-up, delinquency loan follow-up, loan analysis and any notifications to the borrower that are necessary to enable the borrower to keep the loan current and in good standing. "Servicing" includes management of third-party entities acting on behalf of a residential mortgage licensee for the collection of delinquent payments and the use by such third-party entities of said licensee's servicing records or information, including their use in foreclosure.

(r) "Full service office" shall mean an office, provided by the licensee and not subleased from the licensee's employees or independent contractors, and staff in Illinois reasonably adequate to handle efficiently communications, questions, and other matters relating to any application for, or an existing home mortgage secured by residential real estate situated in Illinois with respect to which the licensee is brokering, funding originating, purchasing, or servicing. The management and operation of each full service office must include observance of good business practices such as proper signage; adequate, organized, and accurate books and records; ample phone lines, hours of business, staff training and supervision, and provision for a mechanism to resolve consumer inquiries, complaints, and problems. The Commissioner shall issue regulations with regard to these requirements and shall include an evaluation of compliance with this Section in his or her periodic examination of each licensee. "Full service office" does not include a remote location.

(s) "Purchasing" shall mean the purchase of conventional or government-insured mortgage loans secured by residential real estate situated in Illinois from either the lender or from the secondary market.

(t) "Borrower" shall mean the person or persons who seek the services of a loan broker, originator, or lender.

(u) "Originating" shall mean the issuing of commitments for and funding of residential mortgage loans.

(v) "Loan brokerage agreement" shall mean a written agreement in which a broker or loan broker agrees to do either of the following:

(1) obtain a residential mortgage loan for the borrower or assist the borrower in obtaining a residential mortgage loan; or

(2) consider making a residential mortgage loan to the borrower.

(w) "Advertisement" shall mean the attempt by publication, dissemination, or circulation to induce, directly or indirectly, any person to enter into a residential mortgage loan agreement or residential mortgage loan brokerage agreement relative to a mortgage secured by residential real estate situated in Illinois.

(x) (Blank).

(y) "Government-insured mortgage loan" shall mean any mortgage loan made on the security of residential real estate insured by the Department of Housing and Urban Development or Farmers Home Loan Administration, or guaranteed by the Veterans Administration.

(z) "Annual audit" shall mean a certified audit of the licensee's books and records and systems of internal control performed by a certified public accountant in accordance with generally accepted accounting principles and generally accepted auditing standards.

(aa) "Financial institution" shall mean a savings and loan association, savings bank, credit union, or a bank organized under the laws of Illinois or a savings and loan association, savings bank, credit union or a bank organized under the laws of the United States and headquartered in Illinois.

(bb) "Escrow agent" shall mean a third party, individual or entity charged with the fiduciary obligation for holding escrow funds on a residential mortgage loan pending final payout of those funds in accordance with the terms of the residential mortgage loan.

(cc) "Net worth" shall have the meaning ascribed thereto in Section 3-5 of this Act.

(dd) "Affiliate" shall mean:

(1) any entity that directly controls or is controlled by the licensee and any other company that is directly affecting activities regulated by this Act that is controlled by the company that controls the licensee;

(2) any entity:

(A) that is controlled, directly or indirectly, by a trust or otherwise, by or for the benefit of shareholders who beneficially or otherwise control, directly or indirectly, by trust or otherwise, the licensee or any company that controls the licensee; or

(B) a majority of the directors or trustees of which constitute a majority of the persons holding any such office with the licensee or any company that controls the licensee;

(3) any company, including a real estate investment trust, that is sponsored and advised on a contractual basis by the licensee or any subsidiary or affiliate of the licensee.

(ee) "First tier subsidiary" shall be defined by regulation incorporating the comparable definitions used by the Office of the Comptroller of the Currency and the Illinois Commissioner of Banks and Real Estate.

(ff) "Gross delinquency rate" means the quotient determined by dividing (1) the sum of (i) the number of government-insured residential mortgage loans funded or purchased by a licensee in the preceding calendar year that are delinquent and (ii) the number of conventional residential mortgage loans funded or purchased by the licensee in the preceding calendar year that are delinquent by (2) the sum of (i) the number of government-insured residential mortgage loans funded or purchased by the licensee in the preceding calendar year and (ii) the number of conventional residential mortgage loans funded or purchased by the licensee in the preceding calendar year.

(gg) "Delinquency rate factor" means the factor set by rule of the Commissioner that is multiplied by the average gross delinquency rate of licensees, determined annually for the immediately preceding calendar year, for the purpose of determining which licensees shall be examined by the Commissioner pursuant to subsection (b) of Section 4-8 of this Act.

(hh) (Blank).

(ii) "Confidential supervisory information" means any report of examination, visitation, or investigation prepared by the Commissioner under this Act, any report of examination visitation, or investigation prepared by the state regulatory authority of another state that examines a licensee, any document or record prepared or obtained in connection with or relating to any examination, visitation, or investigation, and any record prepared or obtained by the Commissioner to the extent that the record summarizes or contains information derived from any report, document, or record described in this subsection. "Confidential supervisory information" does not include any information or record routinely prepared by a licensee and maintained in the ordinary course of business or any information or record that is required to be made publicly available pursuant to State or federal law or rule.

(jj) "Mortgage loan originator" means an individual who for compensation or gain or in the expectation of compensation or gain:

(i) takes a residential mortgage loan application; or

(ii) offers or negotiates terms of a residential mortgage loan.

"Mortgage loan originator" includes an individual engaged in loan modification activities as defined in subsection (yy) of this Section. A mortgage loan originator engaged in loan modification activities shall report those activities to the Department of Financial and Professional Regulation in the manner provided by the Department; however, the Department shall not impose a fee for reporting, nor require any additional qualifications to engage in those activities beyond those provided pursuant to this Act for mortgage loan originators.

"Mortgage loan originator" does not include an individual engaged solely as a loan processor or underwriter except as otherwise provided in subsection (d) of Section 7-1A of this Act.

"Mortgage loan originator" does not include a person or entity that only performs real estate brokerage activities and is licensed in accordance with the Real Estate License Act of 2000, unless the person or entity is compensated by a lender, a mortgage broker, or other mortgage loan originator, or by any agent of that lender, mortgage broker, or other mortgage loan originator.

"Mortgage loan originator" does not include a person or entity solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101(53D) of Title 11, United States Code.

(kk) "Depository institution" has the same meaning as in Section 3 of the Federal Deposit Insurance Act, and includes any credit union.

(ll) "Dwelling" means a residential structure or mobile home which contains one to 4 family housing units, or individual units of condominiums or cooperatives.

(mm) "Immediate family member" means a spouse, child, sibling, parent, grandparent, or grandchild, and includes step-parents, step-children, step-siblings, or adoptive relationships.

(nn) "Individual" means a natural person.

(oo) "Loan processor or underwriter" means an individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of a person licensed, or exempt from licensing, under this Act. "Clerical or support duties" includes subsequent to the receipt of an application:

(i) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and

(ii) communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that the communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms. An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator.

(pp) "Nationwide Multistate Licensing System and Registry" means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of licensed mortgage loan originators.

(qq) "Nontraditional mortgage product" means any mortgage product other than a 30-year fixed rate mortgage.

(rr) "Person" means a natural person, corporation, company, limited liability company, partnership, or association.

(ss) "Real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including:

(1) acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;

(2) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;

(3) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than in connection with providing financing with respect to any such transaction;

(4) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; or

(5) offering to engage in any activity, or act in any capacity, described in this subsection (ss).

(tt) "Registered mortgage loan originator" means any individual that:

(1) meets the definition of mortgage loan originator and is an employee of:

(A) a depository institution;

(B) a subsidiary that is:

(i) owned and controlled by a depository institution; and

(ii) regulated by a federal banking agency; or

(C) an institution regulated by the Farm Credit Administration; and

(2) is registered with, and maintains a unique identifier through, the Nationwide Multistate Licensing System and Registry.

(uu) "Unique identifier" means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System and Registry.

(vv) "Residential mortgage license" means a license issued pursuant to Section 1-3, 2-2, or 2-6 of this Act.

(ww) "Mortgage loan originator license" means a license issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act.

(xx) "Secretary" means the Secretary of the Department of Financial and Professional Regulation, or a person authorized by the Secretary or by this Act to act in the Secretary's stead.

(yy) "Loan modification" means, for compensation or gain, either directly or indirectly offering or negotiating on behalf of a borrower or homeowner to adjust the terms of a residential mortgage loan in a manner not provided for in the original or previously modified mortgage loan.

(zz) "Short sale facilitation" means, for compensation or gain, either directly or indirectly offering or negotiating on behalf of a borrower or homeowner to facilitate the sale of residential real estate subject to one or more residential mortgage loans or debts constituting liens on the property in which the proceeds from selling the residential real estate will fall short of the amount owed and the lien holders are contacted to agree to release their lien on the residential real estate and accept less than the full amount owed on the debt.

(aaa) "Bona fide nonprofit organization" means an organization that is described in Section 501(c)(3) of the Internal Revenue Code, is exempt from federal income tax under Section 501(a) of the Internal Revenue Code, does not operate in a commercial context, and does all of the following:

(1) Promotes affordable housing or provides home ownership education or similar services.

(2) Conducts its activities in a manner that serves public or charitable purposes.

(3) Receives funding and revenue and charges fees in a manner that does not create an incentive for itself or its employees to act other than in the best interests of its clients.

(4) Compensates its employees in a manner that does not create an incentive for its employees to act other than in the best interests of its clients.

(5) Provides to, or identifies for, the borrower residential mortgage loans with terms favorable to the borrower and comparable to residential mortgage loans and housing assistance provided under government housing assistance programs.

(bbb) "Remote location" means a location other than a principal place of business or a full service office at which a mortgage loan originator of a licensee may conduct business.

The Commissioner may define by rule and regulation any terms used in this Act for the efficient and clear administration of this Act.

(Source: P.A. 103-156, eff. 1-1-24.)

(205 ILCS 635/1-5)

Sec. 1-5. (Repealed).

(Source: P.A. 93-1018, eff. 1-1-05. Repealed by P.A. 100-783, eff. 8-10-18.)

(205 ILCS 635/Art. II heading) ARTICLE II LICENSING PROCEDURE

(205 ILCS 635/2-1) (from Ch. 17, par. 2322-1)

Sec. 2-1. Licensee name.

(a) No person, partnership, association, corporation, limited liability company, or other entity engaged in the business regulated by this Act shall operate such business under a name other than the real names of the entity and individuals conducting such business. Such business may in addition operate under an assumed corporate name pursuant to the Business Corporation Act of 1983, an assumed limited liability company name pursuant to the Limited Liability Company Act, or an assumed business name pursuant to the Assumed Business Name Act.

(b) A knowing violation of this Section constitutes an unlawful practice within the meaning of this Act, and in addition to the administrative relief available under this Act, may be prosecuted for the commission of a Class A misdemeanor. A person who is convicted of a second or subsequent violation of this Section is guilty of a Class 4 felony.

(Source: P.A. 99-15, eff. 1-1-16.)

(205 ILCS 635/2-2)

Sec. 2-2. Application process; investigation; fee.

(a) The Secretary shall issue a license upon completion of all of the following:

(1) The filing of an application for license with the Director or the Nationwide Multistate Licensing System and Registry as approved by the Director.

(2) The filing with the Secretary of a listing of judgments entered against, and bankruptcy petitions by, the license applicant for the preceding 10 years.

(3) The payment, in certified funds, of investigation and application fees, the total of which shall be in an amount equal to $2,700 annually.

(4) Except for a broker applying to renew a license, the filing of an audited balance sheet including all footnotes prepared by a certified public accountant in accordance with generally accepted accounting principles and generally accepted auditing standards which evidences that the applicant meets the net worth requirements of Section 3-5. Notwithstanding the requirements of this subsection, an applicant that is a subsidiary may submit audited consolidated financial statements of its parent, intermediary parent, or ultimate parent as long as the consolidated statements are supported by consolidating statements which include the applicant's financial statement. If the consolidating statements are unaudited, the applicant's chief financial officer shall attest to the applicant's financial statements disclosed in the consolidating statements.

(5) The filing of proof satisfactory to the Secretary that the applicant, the members thereof if the applicant is a partnership or association, the members or managers thereof that retain any authority or responsibility under the operating agreement if the applicant is a limited liability company, or the officers thereof if the applicant is a corporation have 3 years experience preceding application in real estate finance. Instead of this requirement, the applicant and the applicant's officers or members, as applicable, may satisfactorily complete a program of education in real estate finance and fair lending, as approved by the Secretary, prior to receiving the initial license. The Secretary shall adopt rules regarding proof of experience requirements and educational requirements and the satisfactory completion of those requirements. The Secretary may establish by rule a list of duly licensed professionals and others who may be exempt from this requirement.

(6) An investigation of the application, which investigation must allow the Secretary to issue positive findings stating that the financial responsibility, experience, character, and general fitness of the license applicant and of the members thereof if the license applicant is a partnership or association, of the officers and directors thereof if the license applicant is a corporation, and of the managers and members that retain any authority or responsibility under the operating agreement if the license applicant is a limited liability company are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly and efficiently within the purpose of this Act. If the Secretary shall not so find, he or she shall not issue such license, and he or she shall notify the license applicant of the denial.

The Secretary may impose conditions on a license if the Secretary determines that the conditions are necessary or appropriate. These conditions shall be imposed in writing and shall continue in effect for the period prescribed by the Secretary.

(b) All licenses shall be issued to the license applicant.

Upon receipt of such license, a residential mortgage licensee shall be authorized to engage in the business regulated by this Act. Such license shall remain in full force and effect until it expires without renewal, is surrendered by the licensee or revoked or suspended as hereinafter provided.

(Source: P.A. 99-15, eff. 1-1-16; 100-1153, eff. 12-19-18.)

(205 ILCS 635/2-3) (from Ch. 17, par. 2322-3)

Sec. 2-3. Application form.

(a) Application for a residential mortgage license must be made in accordance with Section 2-6 and, if applicable, in accordance with requirements of the Nationwide Multistate Licensing System and Registry. The application shall be in writing, under oath, and on a form obtained from and prescribed by the Commissioner, or may be submitted electronically, with attestation, to the Nationwide Multistate Licensing System and Registry.

(b) The application shall contain the name and complete business and residential address or addresses of the license applicant. If the license applicant is a partnership, association, corporation or other form of business organization, the application shall contain the names and complete business and residential addresses of each member, director and principal officer thereof. Such application shall also include a description of the activities of the license applicant, in such detail and for such periods, as the Commissioner may require, including all of the following:

(1) An affirmation of financial solvency noting such capitalization requirements as may be required by the Commissioner, and access to such credit as may be required by the Commissioner.

(2) An affirmation that the license applicant or its members, directors or principals as may be appropriate, are at least 18 years of age.

(3) Information as to the character, fitness, financial and business responsibility, background, experience, and criminal record of any (i) person, entity, or ultimate equitable owner that owns or controls, directly or indirectly, 10% or more of any class of stock of the license applicant; (ii) person, entity, or ultimate equitable owner that is not a depository institution, as defined in Section 1007.50 of the Savings Bank Act, that lends, provides, or infuses, directly or indirectly, in any way, funds to or into a license applicant, in an amount equal to or more than 10% of the license applicant's net worth; (iii) person, entity, or ultimate equitable owner that controls, directly or indirectly, the election of 25% or more of the members of the board of directors of a license applicant; or (iv) person, entity, or ultimate equitable owner that the Commissioner finds influences management of the license applicant.

(4) Upon written request by the licensee and notwithstanding the provisions of paragraphs (1), (2), and (3) of this subsection, the Commissioner may permit the licensee to omit all or part of the information required by those paragraphs if, in lieu of the omitted information, the licensee submits an affidavit stating that the information submitted on the licensee's previous renewal application is still true and accurate. The Commissioner may promulgate rules prescribing the form and content of the affidavit that are necessary to accomplish the purposes of this Section.

(5) Such other information as required by regulations of the Commissioner.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/2-3A)

Sec. 2-3A. Residential mortgage license application and issuance.

(a) Applicants for a license shall apply in a form prescribed by the Director. Each form shall contain content as set forth by rule, regulation, instruction, or procedure of the Director and may be changed or updated as necessary by the Director in order to carry out the purposes of this Act.

(b) In order to fulfill the purposes of this Act, the Director is authorized to establish relationships or contracts with the Nationwide Multistate Licensing System and Registry or other entities designated by the Nationwide Multistate Licensing System and Registry to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to this Act.

(c) In connection with an application for licensing, the applicant may be required, at a minimum, to furnish to the Nationwide Multistate Licensing System and Registry information concerning the applicant's identity, including:

(1) fingerprints for submission to the Federal Bureau of Investigation or any governmental agency or entity authorized to receive such information for a State, national, and international criminal history background check; and

(2) personal history and experience in a form prescribed by the Nationwide Multistate Licensing System and Registry, including the submission of authorization for the Nationwide Multistate Licensing System and Registry and the Director to obtain:

(A) an independent credit report obtained from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act (15 U.S.C. 1681a(p)); and

(B) information related to any administrative, civil, or criminal findings by any governmental jurisdiction.

(d) For the purposes of this Section, and in order to reduce the points of contact that the Federal Bureau of Investigation may have to maintain for purposes of subsection (c) of this Section, the Director may use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting information from and distributing information to the Department of Justice or any governmental agency.

(e) For the purposes of this Section, and in order to reduce the points of contact that the Director may have to maintain for purposes of item (2) of subsection (c) of this Section, the Director may use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting and distributing information to and from any source so directed by the Director.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/2-4) (from Ch. 17, par. 2322-4)

Sec. 2-4. Prohibited acts and practices for licensees. It is a violation of this Act for a licensee subject to this Act to:

(a) fail to maintain at least one full service office within the State of Illinois if required to do so pursuant to Section 3-4 of this Act;

(b) fail to maintain staff reasonably adequate to meet the requirements of Section 3-4 of this Act;

(c) fail to keep and maintain for 36 months the same written records as required by the federal Equal Credit Opportunity Act, and any other information required by regulations of the Secretary regarding any home mortgage in the course of the conduct of its residential mortgage business;

(d) fail to file with the Secretary or Nationwide Multistate Licensing System and Registry as applicable, when due, any report or reports which it is required to file under any of the provisions of this Act;

(e) engage, whether as principal or agent, in the practice of rejecting residential mortgage applications without reasonable cause, or varying terms or application procedures without reasonable cause, for home mortgages on real estate within any specific geographic area from the terms or procedures generally provided by the licensee within other geographic areas of the State;

(f) engage in fraudulent home mortgage underwriting practices;

(g) make payment, whether directly or indirectly, of any kind to any in house or fee appraiser of any government or private money lending agency with which an application for a home mortgage has been filed for the purpose of influencing the independent judgment of the appraiser with respect to the value of any real estate which is to be covered by such home mortgage;

(h) fail to file tax returns (State and Federal) for the past 3 years or filed with the Secretary an accountant's or attorney's statement as to why no return was filed;

(i) engage in any discrimination or redlining activities prohibited by Section 3-8 of this Act;

(j) knowingly make any false promises likely to influence or persuade, or pursue a course of misrepresentation and false promises through agents, solicitors, advertising or otherwise;

(k) knowingly misrepresent, circumvent or conceal, through whatever subterfuge or device, any of the material particulars or the nature thereof, regarding a transaction to which it is a party to the injury of another party thereto;

(l) fail to disburse funds in accordance with its agreements;

(m) commit a crime against the law of this State, any other state or of the United States, involving moral turpitude, fraudulent or dishonest dealing, and that no final judgment has been entered against it in a civil action upon grounds of fraud, misrepresentation or deceit which has not been previously reported to the Secretary;

(n) fail to account or deliver to the owner upon request any personal property such as money, fund, deposit, check, draft, mortgage, other document or thing of value which it is not in law or equity entitled to retain under the circumstances;

(o) engage in any conduct which would be cause for denial of a license;

(p) become insolvent;

(q) submit an application for a license under this Act which contains a material misstatement;

(r) demonstrate by course of conduct, negligence or incompetence in performing any act for which it is required to hold a license under this Act;

(s) fail to advise the Secretary in writing, or the Nationwide Multistate Licensing System and Registry, as applicable, of any changes to the information submitted on the most recent application for license or averments of record within 30 days of said change. The written notice must be signed in the same form as the application for license being amended;

(t) fail to comply with the provisions of this Act, or with any lawful order, rule or regulation made or issued under the provisions of this Act;

(u) fail to submit to periodic examination by the Secretary as required by this Act;

(v) fail to advise the Secretary in writing of judgments entered against, and bankruptcy petitions by, the license applicant within 5 days of occurrence;

(w) fail to advise the Secretary in writing within 30 days of any request made to a licensee under this Act to repurchase a loan in a manner that completely and clearly identifies to whom the request was made, the loans involved, and the reason therefor;

(x) fail to advise the Secretary in writing within 30 days of any request from any entity to repurchase a loan in a manner that completely and clearly identifies to whom the request was made, the loans involved, and the reason for the request;

(y) fail to at all times act in a manner consistent with subsections (a) and (b) of Section 1-2 of this Act;

(z) knowingly hire or employ a mortgage loan originator who is not licensed with the Secretary as required under Section 7-1A of this Act;

(aa) charge or collect advance payments from borrowers or homeowners for engaging in loan modification; or

(bb) structure activities or contracts to evade provisions of this Act.

A licensee who fails to comply with this Section or otherwise violates any of the provisions of this Section shall be subject to the penalties in Section 4-5 of this Act.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/2-5) (from Ch. 17, par. 2322-5)

Sec. 2-5. Refusal to Issue License. The Commissioner shall refuse to license or renew a license if:

(1) it is determined that the applicant is not in compliance with any provisions of the Act; or

(2) there is substantial continuity between the applicant and any violator of this Act; or

(3) the Commissioner cannot make the findings specified in Section 2-2, subsection (a), of this Act.

(Source: P.A. 86-137; 87-642.)

(205 ILCS 635/2-6)

Sec. 2-6. License issuance and renewal; fee.

(a) Licenses shall be renewed every year using the common renewal date of the Nationwide Multistate Licensing System and Registry as adopted by the Director. Properly completed renewal application forms and filing fees may be received by the Secretary 60 days prior to the license expiration date, but, to be deemed timely, the completed renewal application forms and filing fees must be received by the Secretary no later than 30 days prior to the license expiration date.

(b) It shall be the responsibility of each licensee to accomplish renewal of its license. Failure by a licensee to submit a properly completed renewal application form and fees in a timely fashion, absent a written extension from the Secretary, will result in the license becoming inactive.

(c) No activity regulated by this Act shall be conducted by the licensee when a license becomes inactive. The Commissioner may require the licensee to provide a plan for the disposition of any residential mortgage loans not closed or funded when the license becomes inactive. The Commissioner may allow a licensee with an inactive license to conduct activities regulated by this Act for the sole purpose of assisting borrowers in the closing or funding of loans for which the loan application was taken from a borrower while the license was active. An inactive license may be reactivated by the Commissioner upon payment of the renewal fee, and payment of a reactivation fee equal to the renewal fee.

(d) (Blank).

(e) A licensee ceasing an activity or activities regulated by this Act and desiring to no longer be licensed shall so inform the Commissioner in writing and, at the same time, convey any license issued and all other symbols or indicia of licensure. The licensee shall include a plan for the withdrawal from regulated business, including a timetable for the disposition of the business, and comply with the surrender guidelines or requirements of the Director. Upon receipt of such written notice, the Commissioner shall post the cancellation or issue a certified statement canceling the license.

(Source: P.A. 99-15, eff. 1-1-16; 100-1153, eff. 12-19-18.)

(205 ILCS 635/2-7) (from Ch. 17, par. 2322-7)

Sec. 2-7. Waiver of licensing fee. The Commissioner may waive the licensing fee upon receipt of:

(a) an application for a residential mortgage license in Illinois,

(b) an addendum requesting waiver of the fee stating the grounds in support of such waiver, including but not limited to, not for profit status, bankruptcy or the showing of undue hardship, and

(c) in case of an out-of-state servicer of loans in Illinois, the following documentation is required:

(1) A verification that the firm services only 100 or fewer loans secured by residential real estate situated in Illinois;

(2) An agreement not to originate, purchase or acquire additional servicing of loans secured by residential real estate situated in Illinois;

(3) An agreement to maintain a dedicated toll free (800) number for exclusive use by the licensee's Illinois customers;

(4) An agreement to provide a written notice at least annually to the licensee's Illinois customers advising them of the dedicated toll free (800) number; and to furnish the Commissioner with a copy of such written notice.

A request for waiver of the filing fee must be submitted each year in conjunction with the license renewal procedure.

(Source: P.A. 90-301, eff. 8-1-97.)

(205 ILCS 635/2-8) (from Ch. 17, par. 2322-8)

Sec. 2-8. Additional Full-service Offices.

(a) A licensee may apply for authority to open and maintain additional full-service offices by:

(1) Giving the Commissioner prior notice of its intention in such form as shall be prescribed by the Commissioner.

(2) Payment of a fee to be established by regulation.

(b) Upon receipt of the notice and fee required in subsection (a) above, the Commissioner shall issue a certificate for the additional full-service office.

(c) The certificate shall be conspicuously posted in the respective additional full-service offices.

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

(205 ILCS 635/2-9) (from Ch. 17, par. 2322-9)

Sec. 2-9. Posting of license. The license of a licensee whose home office is within the State of Illinois or of an out-of-state licensee shall be conspicuously posted in every office of the licensee located in Illinois. Out-of-state licensees without an Illinois office shall produce the license upon request. Licensees originating loans on the Internet shall post on their Internet web site their license number and the address and telephone number of the Commissioner. The license shall state the full name and address of the licensee. The license shall not be transferable or assignable. A separate certificate shall be issued for posting in each full service Illinois office.

(Source: P.A. 91-586, eff. 8-14-99.)

(205 ILCS 635/2-11) (from Ch. 17, par. 2322-11)

Sec. 2-11. Miscellaneous fees. In addition to any license fee collected under this Act, the Commissioner shall by rule and regulation establish a schedule to apply to assessment and collection of necessary contingent and miscellaneous fees.

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

(205 ILCS 635/Art. III heading) ARTICLE III OPERATIONS, CAPITALIZATION, INSURANCE

(205 ILCS 635/3-1) (from Ch. 17, par. 2323-1)

Sec. 3-1. Bonds of licensees.

(a) Every licensee, with respect to any person appointed or elected to any position requiring the receipt of payment, management, or use of money belonging to a residential mortgage licensee engaged in the activities of originating, servicing, or purchasing mortgage loans or whose duties permit him or her to have access to or custody of any of its money or securities or custody of any money or securities belonging to third parties or whose duties permit him or her regularly to make entries in the books or other records of a licensee, shall, before assuming his or her duties, maintain a fidelity bond in the amount of $100,000 by some fidelity insurance company licensed to do business in this State.

(b) Each bond shall be for any loss the licensee may sustain in money or other property through the commission of any dishonest or criminal act or omission by any person required to be bonded, whether committed alone or in concert with another. The bond shall be in the form and amount approved by the Commissioner who may at any time require one or more additional bonds. A true copy of every bond, including all riders and endorsements executed subsequent to the effective date of the bond, shall be filed at all times with the Commissioner. Each bond shall provide that a cancellation thereof shall not become effective unless and until 30 days notice in writing first shall have been given to the Commissioner unless he or she shall have approved the cancellation earlier. If the Commissioner believes the licensee's business is being conducted in an unsafe manner due to the lack of bonds or the inadequacy of bonds, he or she may proceed against the licensee as provided for in Section 4-5.

(c) All licensees shall maintain a bond in accordance with this subsection. Each bond shall be for the recovery of expenses, fines, or fees due to or levied by the Commissioner in accordance with this Act. The bond shall be payable when the licensee fails to comply with any provisions of this Act and shall be in the form of a surety or licensure bond in the amount and form as prescribed by the Commissioner pursuant to rules and regulations. The bond shall be payable to the Office of Banks and Real Estate and shall be issued by some insurance company authorized to do business in this State. A copy of the bond, including any and all riders and endorsements executed subsequent to the effective date of the bond, shall be placed on file with the Office of Banks and Real Estate within 10 days of the execution thereof.

(d) The Commissioner may promulgate rules with respect to bonding requirements for residential mortgage licensees and their mortgage loan originators that are reasonable and necessary to accomplish the purposes of this Act.

(Source: P.A. 96-112, eff. 7-31-09.)

(205 ILCS 635/3-2) (from Ch. 17, par. 2323-2)

Sec. 3-2. Annual audit.

(a) At the licensee's fiscal year-end, but in no case more than 12 months after the last audit conducted pursuant to this Section, except as otherwise provided in this Section, it shall be mandatory for each residential mortgage licensee to cause its books and accounts to be audited by a certified public accountant not connected with such licensee. The books and records of all licensees under this Act shall be maintained on an accrual basis. The audit must be sufficiently comprehensive in scope to permit the expression of an opinion on the financial statements, which must be prepared in accordance with generally accepted accounting principles, and must be performed in accordance with generally accepted auditing standards. Notwithstanding the requirements of this subsection, a licensee that is a subsidiary may submit audited consolidated financial statements of its parent, intermediary parent, or ultimate parent as long as the consolidated statements are supported by consolidating statements which include the licensee's financial statement. If the consolidating statements are unaudited, the licensee's chief financial officer shall attest to the licensee's financial statements disclosed in the consolidating statements.

(b) As used herein, the term "expression of opinion" includes either (1) an unqualified opinion, (2) a qualified opinion, (3) a disclaimer of opinion, or (4) an adverse opinion.

(c) If a qualified or adverse opinion is expressed or if an opinion is disclaimed, the reasons therefore must be fully explained. An opinion, qualified as to a scope limitation, shall not be acceptable.

(d) The most recent audit report shall be filed with the Commissioner within 90 days after the end of the licensee's fiscal year, or with the Nationwide Multistate Licensing System and Registry, if applicable, pursuant to Mortgage Call Report requirements. The report filed with the Commissioner shall be certified by the certified public accountant conducting the audit. The Commissioner may promulgate rules regarding late audit reports.

(e) (Blank).

(f) In lieu of the audit or compilation financial statement required by this Section, a licensee shall submit and the Commissioner may accept any audit made in conformance with the audit requirements of the U.S. Department of Housing and Urban Development.

(g) With respect to licensees who solely broker residential mortgage loans as defined in subsection (o) of Section 1-4, instead of the audit required by this Section, the Commissioner may accept compilation financial statements prepared at least every 12 months, and the compilation financial statement must be submitted within 90 days after the end of the licensee's fiscal year, or with the Nationwide Multistate Licensing System and Registry, if applicable, pursuant to Mortgage Call Report requirements. A licensee who files false or misleading compilation financial statements is guilty of a business offense and shall be fined not less than $5,000.

(h) The workpapers of the certified public accountants employed by each licensee for purposes of this Section are to be made available to the Commissioner or the Commissioner's designee upon request and may be reproduced by the Commissioner or the Commissioner's designee to enable to the Commissioner to carry out the purposes of this Act.

(i) Notwithstanding any other provision of this Section, if a licensee relying on subsection (g) of this Section causes its books to be audited at any other time or causes its financial statements to be reviewed, a complete copy of the audited or reviewed financial statements shall be delivered to the Commissioner at the time of the annual license renewal payment following receipt by the licensee of the audited or reviewed financial statements. All workpapers shall be made available to the Commissioner upon request. The financial statements and workpapers may be reproduced by the Commissioner or the Commissioner's designee to carry out the purposes of this Act.

(Source: P.A. 99-933, eff. 1-27-17; 100-1153, eff. 12-19-18.)

(205 ILCS 635/3-3) (from Ch. 17, par. 2323-3)

Sec. 3-3. Advertising. In addition to such other rules and policies as the Secretary may adopt to effectuate the purpose of this Act, the Secretary shall adopt rules governing the advertising of mortgage loans, including without limitation, the following requirements:

(a) Advertising for loans transacted under this Act may not be false, misleading, or deceptive. No entity whose activities are regulated under this Act may advertise in any manner so as to indicate or imply that its interest rates or charges for loans are in any way "recommended", "approved", "set", or "established" by the State or by this Act. The Secretary may issue a cease and desist order for any violation of this Section.

(b) Mortgage loan advertisements must reference the Nationwide Multistate Licensing System and Registry's Consumer Access website, except where exempted by the Secretary.

(c) No licensee shall advertise its services in Illinois in any media, whether print or electronic, without including its unique identifier.

(Source: P.A. 100-795, eff. 8-10-18.)

(205 ILCS 635/3-4) (from Ch. 17, par. 2323-4)

Sec. 3-4. Office and staff within the State.

(a) A licensee whose principal place of business is located in the State of Illinois shall maintain at least one full service office with staff reasonably adequate to handle efficiently communications, questions, and all other matters relating to any application for a home mortgage or an existing home mortgage with respect to which such licensee is performing services, regardless of kind, for any borrower or lender, note owner or holder, or for himself or herself while engaged in the residential mortgage business. Offices shall not be located in any real estate, retail, or financial business establishment, unless separated from the other business by a separate and distinct area within the establishment. The location and operation of a full service office shall be in compliance with any applicable zoning laws or ordinances and home office or business regulations. The Director may require a licensee operating from a home or residentially zoned office to provide another approved location that is suitable to conduct an examination under Sections 4-2 and 4-7 of the Act. This subsection (a) does not limit the Director's authority to examine at any other office, facility or location of the licensee as permitted by the Act.

(b) In lieu of maintaining a full service office in the State of Illinois, and subject to the rules of the Department, a licensee whose principal place of business is located outside the State of Illinois may comply with all of the following requirements:

(1) provide, upon the Director's request and notice, an approved location that is suitable to conduct an examination under Sections 4-2 and 4-7 of the Act. This subsection (b) does not limit the Director's authority to examine at any other office, facility or location of the licensee as permitted by the Act.

(2) submit a certified audit as required in Section 3-2 of this Act evidencing a minimum net worth of $150,000, which must be maintained at all times, and shall submit and maintain a fidelity bond in the amount of $100,000.

(Source: P.A. 96-112, eff. 7-31-09.)

(205 ILCS 635/3-5) (from Ch. 17, par. 2323-5)

Sec. 3-5. Net worth requirement. A licensee that holds a license on the effective date of this amendatory Act of the 93rd General Assembly shall have and maintain a net worth of not less than $100,000; however, no later than 2 years after the effective date of this amendatory Act of the 93rd General Assembly, the licensee must maintain a net worth of not less than $150,000. A licensee that first obtains a license after the effective date of this amendatory Act of the 93rd General Assembly must have and maintain a net worth of not less than $150,000. Notwithstanding other requirements of this Section, the net worth requirement for a residential mortgage licensee whose only licensable activity is that of brokering residential mortgage loans and that holds a license on the effective date of this amendatory Act of the 93rd General Assembly shall be $35,000; however, no later than 2 years after the effective date of this amendatory Act of the 93rd General Assembly, the licensee must maintain a net worth of not less than $50,000. Such a licensee that first obtains a license after the effective date of this amendatory Act of the 93rd General Assembly must have and maintain a net worth of not less than $50,000. Net worth shall be evidenced by a balance sheet prepared by a certified public accountant in accordance with generally accepted accounting principles and generally accepted auditing standards or by the compilation financial statements authorized under subsection (g) of Section 3-2. The Commissioner may promulgate rules with respect to net worth definitions and requirements for residential mortgage licensees as necessary to accomplish the purposes of this Act. In lieu of the net worth requirement established by this Section, the Commissioner may accept evidence of conformance by the licensee with the net worth requirements of the United States Department of Housing and Urban Development.

(Source: P.A. 93-561, eff. 1-1-04.)

(205 ILCS 635/3-7) (from Ch. 17, par. 2323-7)

Sec. 3-7. Transfer of Servicing; Notices. Whenever the servicing of a residential mortgage is transferred or sold by a licensee, notice shall be given to the mortgagor simultaneous with such transfer and shall include, at the minimum, where and to whom to address the mortgagor's questions relating to the residential mortgage, the exact name, address and telephone number to whom at least the next 3 months payments are to be submitted and the total amount required of the mortgagor by the servicer for each of the months referred to herein.

(Source: P.A. 86-137.)

(205 ILCS 635/3-8) (from Ch. 17, par. 2323-8)

Sec. 3-8. Discrimination and redlining prohibited. It shall be considered discriminatory to refuse to grant loans or to vary the terms of loans or the application procedures for loans because of:

(i) in the case of the proposed borrower, said borrower's race, color, religion, national origin, age, gender or marital status; or

(ii) in the case of a mortgage loan, solely the geographic location of the proposed security.

(Source: P.A. 100-863, eff. 8-14-18.)

(205 ILCS 635/3-9) (from Ch. 17, par. 2323-9)

Sec. 3-9. Escrow Funds. The Commissioner may promulgate rules with respect to placement in escrow accounts by any licensee of any money, fund, deposit, check or draft entrusted to it by any persons dealing with it as a residential mortgage licensee.

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

(205 ILCS 635/3-10) (from Ch. 17, par. 2323-10)

Sec. 3-10. (Repealed).

(Source: P.A. 90-772, eff. 1-1-99. Repealed by P.A. 90-772, eff. 1-1-99.)

(205 ILCS 635/3-11)

Sec. 3-11. Remote location operations. Licensees may allow mortgage loan originators to work from a remote location if:

(1) the licensee has written policies and procedures for the supervision of mortgage loan originators working from a remote location;

(2) access to company platforms and customer information is in accordance with the licensee's comprehensive written information security plan;

(3) no in-person customer interaction occurs at a mortgage originator's residence unless that residence is a licensed location;

(4) physical records are not maintained at a remote location;

(5) customer interactions and conversations about consumers will be in compliance with federal and State information security requirements, including applicable provisions under the federal Gramm-Leach-Bliley Act and the Safeguards Rule established by the Federal Trade Commission and set forth in 16 CFR Part 314, as such requirements may be amended from time to time;

(6) mortgage loan originators working at a remote location access the company's secure systems, including a cloud-based system, directly from any out-of-office device the mortgage loan originator uses, including, but not limited to, a laptop, phone, desktop computer, or tablet, via a virtual private network or comparable system that ensures secure connectivity and requires passwords or other forms of authentication to access;

(7) the licensee ensures that appropriate security updates, patches, or other alterations to the security of all devices used at remote locations are installed and maintained;

(8) the licensee has an ability to remotely lock or erase company-related contents of any device or otherwise remotely limit all access to a company's secure systems; and

(9) the Nationwide Multistate Licensing System and Registry record of a loan originator that works from a remote location designates the principal place of business as the loan originator's registered location unless the loan originator elects another licensed branch office as a registered location.

(Source: P.A. 103-156, eff. 1-1-24.)

(205 ILCS 635/Art. IV heading) ARTICLE IV SUPERVISION

(205 ILCS 635/4-1) (from Ch. 17, par. 2324-1)

Sec. 4-1. Commissioner of Banks and Real Estate; functions, powers, and duties. The functions, powers, and duties of the Commissioner of Banks and Real Estate shall include the following:

(a) to issue or refuse to issue any license as provided by this Act;

(b) to revoke or suspend for cause any license issued under this Act;

(c) to keep records of all licenses issued under this Act;

(d) to receive, consider, investigate, and act upon complaints made by any person in connection with any residential mortgage licensee in this State;

(e) (blank);

(f) to prescribe the forms of and receive:

(1) applications for licenses; and

(2) all reports and all books and records required to be made by any licensee under this Act, including annual audited financial statements and annual reports of mortgage activity;

(g) to adopt rules and regulations necessary and proper for the administration of this Act;

(h) to subpoena documents and witnesses and compel their attendance and production, to administer oaths, and to require the production of any books, papers, or other materials relevant to any inquiry authorized by this Act;

(h-1) to issue orders against any person, if the Commissioner has reasonable cause to believe that an unsafe, unsound, or unlawful practice has occurred, is occurring, or is about to occur, if any person has violated, is violating, or is about to violate any law, rule, or written agreement with the Commissioner, or for the purpose of administering the provisions of this Act and any rule adopted in accordance with the Act;

(h-2) to address any inquiries to any licensee, or the officers thereof, in relation to its activities and conditions, or any other matter connected with its affairs, and it shall be the duty of any licensee or person so addressed, to promptly reply in writing to such inquiries. The Commissioner may also require reports from any licensee at any time the Commissioner may deem desirable;

(i) to require information with regard to any license applicant as he or she may deem desirable, with due regard to the paramount interests of the public as to the experience, background, honesty, truthfulness, integrity, and competency of the license applicant as to financial transactions involving primary or subordinate mortgage financing, and where the license applicant is an entity other than an individual, as to the honesty, truthfulness, integrity, and competency of any officer or director of the corporation, association, or other entity, or the members of a partnership;

(j) to examine the books and records of every licensee under this Act at intervals as specified in Section 4-2;

(k) to enforce provisions of this Act;

(l) to levy fees, fines, and charges for services performed in administering this Act; the aggregate of all fees collected by the Commissioner on and after the effective date of this Act shall be paid promptly after receipt of the same, accompanied by a detailed statement thereof, into the Residential Finance Regulatory Fund under Section 4-1.5 of this Act; the amounts deposited into that Fund shall be used for the ordinary and contingent expenses of the Office of Banks and Real Estate. Nothing in this Act shall prevent continuing the practice of paying expenses involving salaries, retirement, social security, and State-paid insurance of State officers by appropriation from the General Revenue Fund.

(m) to appoint examiners, supervisors, experts, and special assistants as needed to effectively and efficiently administer this Act;

(n) to conduct hearings for the purpose of:

(1) appeals of orders of the Commissioner;

(2) suspensions or revocations of licenses, or fining of licensees;

(3) investigating:

(i) complaints against licensees; or

(ii) annual gross delinquency rates; and

(4) carrying out the purposes of this Act;

(o) to exercise exclusive visitorial power over a licensee unless otherwise authorized by this Act or as vested in the courts, or upon prior consultation with the Commissioner, a foreign residential mortgage regulator with an appropriate supervisory interest in the parent or affiliate of a licensee;

(p) to enter into cooperative agreements with state regulatory authorities of other states to provide for examination of corporate offices or branches of those states and to accept reports of such examinations;

(q) to assign an examiner or examiners to monitor the affairs of a licensee with whatever frequency the Commissioner determines appropriate and to charge the licensee for reasonable and necessary expenses of the Commissioner, if in the opinion of the Commissioner an emergency exists or appears likely to occur;

(r) to impose civil penalties of up to $50 per day against a licensee for failing to respond to a regulatory request or reporting requirement; and

(s) to enter into agreements in connection with the Nationwide Multistate Licensing System and Registry.

(Source: P.A. 100-783, eff. 8-10-18; 100-1153, eff. 12-19-18; 101-81, eff. 7-12-19.)

(205 ILCS 635/4-1.5)

Sec. 4-1.5. Residential Finance Regulatory Fund.

(a) The aggregate of all moneys collected by the Secretary under this Act shall be paid promptly after receipt of the same, accompanied by a detailed statement thereof, into the State treasury and shall be set apart in the Residential Finance Regulatory Fund, formerly designated the Savings and Residential Finance Regulatory Fund, a special fund created in the State treasury. The amounts deposited into the Fund shall be used for the ordinary and contingent expenses of the Department of Financial and Professional Regulation and the Division of Banking, or their successors, in administering and enforcing the Residential Mortgage License Act of 1987 and other laws, rules, and regulations as may apply to the administration and enforcement of the foregoing laws, rules, and regulations, as amended from time to time. Nothing in this Act shall prevent continuing the practice of paying expenses involving salaries, retirement, social security, and State paid insurance of State officers by appropriation from the General Revenue Fund.

(b) Moneys in the Residential Finance Regulatory Fund may be transferred to the Professions Indirect Cost Fund, as authorized under Section 2105-300 of the Department of Professional Regulation Law of the Civil Administrative Code of Illinois.

(c) All earnings received from investments of funds in the Residential Finance Regulatory Fund shall be deposited into that Fund and may be used for the same purposes as fees deposited into that Fund.

(Source: P.A. 98-1081, eff. 1-1-15.)

(205 ILCS 635/4-2) (from Ch. 17, par. 2324-2)

Sec. 4-2. Examination; prohibited activities.

(a) The business affairs of a licensee under this Act shall be examined for compliance with this Act as often as the Secretary deems necessary and proper. The Secretary shall promulgate rules with respect to the frequency and manner of examination. The Secretary shall appoint a suitable person to perform such examination. The Secretary and his appointees may examine the entire books, records, documents, and operations of each licensee and its subsidiary, affiliate, or agent, and may examine any of the licensee's or its subsidiary's, affiliate's, or agent's officers, directors, employees and agents under oath. For purposes of this Section, "agent" includes service providers such as accountants, closing services providers, providers of outsourced services such as call centers, marketing consultants, and loan processors, even if exempt from licensure under this Act. This Section does not apply to an attorney's privileged work product or communications.

(b) The Secretary shall prepare a sufficiently detailed report of each licensee's examination, shall issue a copy of such report to each licensee's principals, officers, or directors and shall take appropriate steps to ensure correction of violations of this Act.

(c) Affiliates of a licensee shall be subject to examination by the Secretary on the same terms as the licensee, but only when reports from, or examination of a licensee provides for documented evidence of unlawful activity between a licensee and affiliate benefiting, affecting or deriving from the activities regulated by this Act.

(d) The expenses of any examination of the licensee and affiliates shall be borne by the licensee and assessed by the Secretary as established by regulation.

(e) Upon completion of the examination, the Secretary shall issue a report to the licensee. All confidential supervisory information, including the examination report and the work papers of the report, shall belong to the Secretary's office and may not be disclosed to anyone other than the licensee, law enforcement officials or other regulatory agencies that have an appropriate regulatory interest as determined by the Secretary, or to a party presenting a lawful subpoena to the Office of the Secretary. The Secretary may immediately appeal to the court of jurisdiction the disclosure of such confidential supervisory information and seek a stay of the subpoena pending the outcome of the appeal. Reports required of licensees by the Secretary under this Act and results of examinations performed by the Secretary under this Act shall be the property of only the Secretary, but may be shared with the licensee. Access under this Act to the books and records of each licensee shall be limited to the Secretary and his agents as provided in this Act and to the licensee and its authorized agents and designees. No other person shall have access to the books and records of a licensee under this Act. Any person upon whom a demand for production of confidential supervisory information is made, whether by subpoena, order, or other judicial or administrative process, must withhold production of the confidential supervisory information and must notify the Secretary of the demand, at which time the Secretary is authorized to intervene for the purpose of enforcing the limitations of this Section or seeking the withdrawal or termination of the attempt to compel production of the confidential supervisory information. The Secretary may impose any conditions and limitations on the disclosure of confidential supervisory information that are necessary to protect the confidentiality of such information. Except as authorized by the Secretary, no person obtaining access to confidential supervisory information may make a copy of the confidential supervisory information. The Secretary may condition a decision to disclose confidential supervisory information on entry of a protective order by the court or administrative tribunal presiding in the particular case or on a written agreement of confidentiality. In a case in which a protective order or agreement has already been entered between parties other than the Secretary, the Secretary may nevertheless condition approval for release of confidential supervisory information upon the inclusion of additional or amended provisions in the protective order. The Secretary may authorize a party who obtained the records for use in one case to provide them to another party in another case, subject to any conditions that the Secretary may impose on either or both parties. The requestor shall promptly notify other parties to a case of the release of confidential supervisory information obtained and, upon entry of a protective order, shall provide copies of confidential supervisory information to the other parties.

(f) The Secretary, deputy commissioners, and employees of the Office of Banks and Real Estate shall be subject to the restrictions provided in Section 2.5 of the Division of Banking Act including, without limitation, the restrictions on (i) owning shares of stock or holding any other equity interest in an entity regulated under this Act or in any corporation or company that owns or controls an entity regulated under this Act; (ii) being an officer, director, employee, or agent of an entity regulated under this Act; and (iii) obtaining a loan or accepting a gratuity from an entity regulated under this Act.

(g) After the initial examination for those licensees whose only mortgage activity is servicing fewer than 1,000 Illinois residential loans, the examination required in subsection (a) may be waived upon submission of a letter from the licensee's independent certified auditor that the licensee serviced fewer than 1,000 Illinois residential loans during the year in which the audit was performed.

(h) An exempt entity under subsection (a-1) of Section 1-3 of this Act shall cooperate with the Secretary in the examination and investigation of its sponsored and licensed mortgage loan originators at a frequency determined by the Secretary. The exempt entity under subsection (a-1) of Section 1-3 of this Act shall cooperate with the Secretary in providing mortgage loan originator documents and access to mortgage loan originator offices for the purposes of examination and investigation. The activities of the exempt entity shall not relieve a mortgage loan originator of his or her individual requirements under Section 7-15 of this Act. An exempt entity under subsection (a-1) of Section 1-3 of this Act shall pay to the Department any examination fees invoiced by the Secretary for examination of its sponsored mortgage loan originators. The Secretary shall have the authority to make oral or written inquiries regarding the management of an exempt entity under subsection (a-1) of Section 1-3 of this Act and it shall be the duty of the exempt entity to promptly reply by telephone, in writing, or other means to the inquiry.

(Source: P.A. 98-492, eff. 8-16-13.)

(205 ILCS 635/4-3) (from Ch. 17, par. 2324-3)

Sec. 4-3. Subpoena power of the Commissioner. (a) The Commissioner shall have the power to issue and to serve subpoenas and subpoenas duces tecum to compel the attendance of witnesses and the production of all books, accounts, records and other documents and materials relevant to an examination or investigation. The Commissioner or his or her duly authorized representative, shall have power to administer oaths and affirmations to any person.

(b) In the event of noncompliance with a subpoena or subpoena duces tecum issued or caused to be issued by the Commissioner, the Commissioner may petition the circuit court of the county in which the person subpoenaed resides or has its principal place of business for an order requiring the subpoenaed person to appear and testify and to produce such books, accounts, records and other documents as are specified in the subpoena duces tecum. The court may grant injunctive relief restraining the person from advertising, promoting, soliciting, entering into, offering to enter into, continuing, or completing any residential mortgage financing transaction or residential mortgage servicing transaction. The court may grant such other relief, including, but not limited to, the restraint, by injunction or appointment of a receiver, of any transfer, pledge, assignment or other disposition of the person's assets or any concealment, alteration, destruction or other disposition of books, accounts, records or other documents and materials as the court deems appropriate, until the person has fully complied with the subpoena or subpoena duces tecum and the Commissioner has completed an investigation or examination.

(c) When it shall appear to the Commissioner that the compliance with a subpoena or subpoena duces tecum issued or caused to be issued by the Commissioner pursuant to this Section is essential to an investigation or examination, the Commissioner, in addition to the other remedies provided for herein, may apply for relief to the circuit court of the county in which the subpoenaed person resides or has its principal place of business. The court shall thereupon direct the issuance of an order against the subpoenaed person requiring sufficient bond conditioned on compliance with the subpoena or subpoena duces tecum. The court shall cause to be endorsed on the order a suitable amount of bond or payment pursuant to which the person named in the order shall be freed, having a due regard to the nature of the case.

(d) In addition, the Commissioner may seek a writ of attachment or an equivalent order from the circuit court having jurisdiction over the person who has refused to obey a subpoena, who has refused to give testimony or who has refused to produce the matters described in the subpoena duces tecum.

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

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

Sec. 4-4. Report Required of Licensee; False Statements; Delay; Penalties.(a) In addition to any reports required under this Act, every licensee shall file such other reports as the Commissioner shall request.

(b) Any licensee or any officer, director, employee or agent of any licensee who shall fail to file any reports required by this Act, including those under subsection (a) above, or who shall deliberately, wilfully or knowingly make, subscribe to or cause to be made any false entry with intent to deceive the Commissioner or his or her appointees or who shall purposely cause unreasonable delay in filing such reports, shall be guilty of a Class 4 Felony.

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

(205 ILCS 635/4-5) (from Ch. 17, par. 2324-5)

Sec. 4-5. Suspension, revocation of licenses; fines.

(a) Upon written notice to a licensee, the Commissioner may suspend or revoke any license issued pursuant to this Act if he or she shall make a finding of one or more of the following in the notice that:

(1) Through separate acts or an act or a course of conduct, the licensee has violated any provisions of this Act, any rule or regulation promulgated by the Commissioner or of any other law, rule or regulation of this State or the United States.

(2) Any fact or condition exists which, if it had existed at the time of the original application for such license would have warranted the Commissioner in refusing originally to issue such license.

(3) If a licensee is other than an individual, any ultimate equitable owner, officer, director, or member of the licensed partnership, association, corporation, or other entity has so acted or failed to act as would be cause for suspending or revoking a license to that party as an individual.

(b) No license shall be suspended or revoked, except as provided in this Section, nor shall any licensee be fined without notice of his or her right to a hearing as provided in Section 4-12 of this Act.

(c) The Commissioner, on good cause shown that an emergency exists, may suspend any license for a period not exceeding 180 days, pending investigation. Upon a showing that a licensee has failed to meet the experience or educational requirements of Section 2-2 or the requirements of subsection (g) of Section 3-2, the Commissioner shall suspend, prior to hearing as provided in Section 4-12, the license until those requirements have been met.

(d) The provisions of subsection (e) of Section 2-6 of this Act shall not affect a licensee's civil or criminal liability for acts committed prior to surrender of a license.

(e) No revocation, suspension or surrender of any license shall impair or affect the obligation of any pre-existing lawful contract between the licensee and any person.

(f) Every license issued under this Act shall remain in force and effect until the same shall have expired without renewal, have been surrendered, revoked or suspended in accordance with the provisions of this Act, but the Commissioner shall have authority to reinstate a suspended license or to issue a new license to a licensee whose license shall have been revoked if no fact or condition then exists which would have warranted the Commissioner in refusing originally to issue such license under this Act.

(g) Whenever the Commissioner shall revoke or suspend a license issued pursuant to this Act or fine a licensee under this Act, he or she shall forthwith execute a written order to that effect. The Commissioner shall post notice of the order on an agency Internet site maintained by the Commissioner or on the Nationwide Multistate Licensing System and Registry and shall forthwith serve a copy of such order upon the licensee. Any such order may be reviewed in the manner provided by Section 4-12 of this Act.

(h) When the Commissioner finds any person in violation of the grounds set forth in subsection (i), he or she may enter an order imposing one or more of the following penalties:

(1) Revocation of license;

(2) Suspension of a license subject to reinstatement upon satisfying all reasonable conditions the Commissioner may specify;

(3) Placement of the licensee or applicant on probation for a period of time and subject to all reasonable conditions as the Commissioner may specify;

(4) Issuance of a reprimand;

(5) Imposition of a fine not to exceed $25,000 for each count of separate offense, provided that a fine may be imposed not to exceed $75,000 for each separate count of offense of paragraph (2) of subsection (i) of this Section; and

(6) Denial of a license.

(i) The following acts shall constitute grounds for which the disciplinary actions specified in subsection (h) above may be taken:

(1) Being convicted or found guilty, regardless of pendency of an appeal, of a crime in any jurisdiction which involves fraud, dishonest dealing, or any other act of moral turpitude;

(2) Fraud, misrepresentation, deceit or negligence in any mortgage financing transaction;

(3) A material or intentional misstatement of fact on an initial or renewal application;

(4) Failure to follow the Commissioner's regulations with respect to placement of funds in escrow accounts;

(5) Insolvency or filing under any provision of the Bankruptcy Code as a debtor;

(6) Failure to account or deliver to any person any property such as any money, fund, deposit, check, draft, mortgage, or other document or thing of value, which has come into his or her hands and which is not his or her property or which he or she is not in law or equity entitled to retain, under the circumstances and at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery;

(7) Failure to disburse funds in accordance with agreements;

(8) Any misuse, misapplication, or misappropriation of trust funds or escrow funds;

(9) Having a license, or the equivalent, to practice any profession or occupation revoked, suspended, or otherwise acted against, including the denial of licensure by a licensing authority of this State or another state, territory or country for fraud, dishonest dealing or any other act of moral turpitude;

(10) Failure to issue a satisfaction of mortgage when the residential mortgage has been executed and proceeds were not disbursed to the benefit of the mortgagor and when the mortgagor has fully paid licensee's costs and commission;

(11) Failure to comply with any order of the Commissioner or rule made or issued under the provisions of this Act;

(12) Engaging in activities regulated by this Act without a current, active license unless specifically exempted by this Act;

(13) Failure to pay in a timely manner any fee, charge or fine under this Act;

(14) Failure to maintain, preserve, and keep available for examination, all books, accounts or other documents required by the provisions of this Act and the rules of the Commissioner;

(15) Refusing, obstructing, evading, or unreasonably delaying an investigation, information request, or examination authorized under this Act, or refusing, obstructing, evading, or unreasonably delaying compliance with the Director's subpoena or subpoena duces tecum;

(16) A pattern of substantially underestimating the maximum closing costs;

(17) Failure to comply with or violation of any provision of this Act;

(18) Failure to comply with or violation of any provision of Article 3 of the Residential Real Property Disclosure Act.

(j) A licensee shall be subject to the disciplinary actions specified in this Act for violations of subsection (i) by any officer, director, shareholder, joint venture, partner, ultimate equitable owner, or employee of the licensee.

(k) Such licensee shall be subject to suspension or revocation for unauthorized employee actions only if there is a pattern of repeated violations by employees or the licensee has knowledge of the violations, or there is substantial harm to a consumer.

(l) Procedure for surrender of license:

(1) The Commissioner may, after 10 days notice by certified mail to the licensee at the address set forth on the license, stating the contemplated action and in general the grounds therefor and the date, time and place of a hearing thereon, and after providing the licensee with a reasonable opportunity to be heard prior to such action, fine such licensee an amount not exceeding $25,000 per violation, or revoke or suspend any license issued hereunder if he or she finds that:

(i) The licensee has failed to comply with any provision of this Act or any order, decision, finding, rule, regulation or direction of the Commissioner lawfully made pursuant to the authority of this Act; or

(ii) Any fact or condition exists which, if it had existed at the time of the original application for the license, clearly would have warranted the Commissioner in refusing to issue the license.

(2) Any licensee may submit application to surrender a license, but upon the Director approving the surrender, it shall not affect the licensee's civil or criminal liability for acts committed prior to surrender or entitle the licensee to a return of any part of the license fee.

(Source: P.A. 99-15, eff. 1-1-16; 100-1153, eff. 12-19-18.)

(205 ILCS 635/4-6) (from Ch. 17, par. 2324-6)

Sec. 4-6. Investigation of Complaints. The Commissioner shall at all times maintain staff and facilities adequate to receive, record and investigate complaints and inquiries made by any person concerning this Act and any licensees under this Act. Each licensee shall open its books, records, documents and offices wherever situated to the Commissioner or his or her appointees as needed to facilitate such investigations.

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

(205 ILCS 635/4-7)

Sec. 4-7. Additional investigation and examination authority. In addition to any authority allowed under this Act, the Director shall have the authority to conduct investigations and examinations as follows:

(a) For purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or general or specific inquiry or investigation to determine compliance with this Act, the Commissioner shall have the authority to access, receive, and use any books, accounts, records, files, documents, information, or evidence including, but not limited to, the following:

(1) criminal, civil, and administrative history information, including nonconviction data as specified in the Criminal Code of 2012;

(2) personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in Section 603(p) of the federal Fair Credit Reporting Act; and

(3) any other documents, information, or evidence the Commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control, or custody of the documents, information, or evidence.

(b) For the purposes of investigating violations or complaints arising under this Act, or for the purposes of examination, the Commissioner may review, investigate, or examine any licensee, individual, or person subject to this Act, as often as necessary in order to carry out the purposes of this Act. The Commissioner may direct, subpoena, or order the attendance of and examine under oath all persons whose testimony may be required about the loans or the business or subject matter of any such examination or investigation, and may direct, subpoena, or order the person to produce books, accounts, records, files, and any other documents the Commissioner deems relevant to the inquiry.

(c) Each licensee, individual, or person subject to this Act shall make available to the Commissioner upon request the books and records relating to the operations of such licensee, individual, or person subject to this Act. The Commissioner shall have access to such books and records and interview the officers, principals, mortgage loan originators, employees, independent contractors, agents, and customers of the licensee, individual, or person subject to this Act concerning their business.

(d) Each licensee, individual, or person subject to this Act shall make or compile reports or prepare other information as directed by the Commissioner in order to carry out the purposes of this Section including, but not limited to:

(1) accounting compilations;

(2) information lists and data concerning loan transactions in a format prescribed by the Commissioner; or

(3) other information deemed necessary to carry out the purposes of this Section.

(e) In making any examination or investigation authorized by this Act, the Commissioner may control access to any documents and records of the licensee or person under examination or investigation. The Commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no individual or person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the Commissioner. Unless the Commissioner has reasonable grounds to believe the documents or records of the licensee have been, or are at risk of being altered or destroyed for purposes of concealing a violation of this Act, the licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.

(f) In order to carry out the purposes of this Section, the Commissioner may:

(1) retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations;

(2) enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information or evidence obtained under this Section;

(3) use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine or investigate the licensee, individual, or person subject to this Act;

(4) accept and rely on examination or investigation reports made by other government officials, within or without this State; or

(5) accept audit reports made by an independent certified public accountant for the licensee, individual, or person subject to this Act in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of the examination, report of investigation, or other writing of the Commissioner.

(g) The authority of this Section shall remain in effect, whether such a licensee, individual, or person subject to this Act acts or claims to act under any licensing or registration law of this State, or claims to act without the authority.

(h) No licensee, individual, or person subject to investigation or examination under this Section may knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.

(Source: P.A. 96-112, eff. 7-31-09; 97-1150, eff. 1-25-13.)

(205 ILCS 635/4-8) (from Ch. 17, par. 2324-8)

Sec. 4-8. Delinquency; examination.

(a) (Blank).

(b) The Secretary shall conduct as part of an examination of each licensee a review of the licensee's loan delinquency data.

This subsection shall not be construed as a limitation of the Secretary's examination authority under Section 4-2 of this Act or as otherwise provided in this Act. The Secretary may require a licensee to provide loan delinquency data as the Secretary deems necessary for the proper enforcement of the Act.

(c) The purpose of the examination under subsection (b) shall be to determine whether the loan delinquency data of the licensee has resulted from practices which deviate from sound and accepted mortgage underwriting practices, including, but not limited to, credit fraud, appraisal fraud, and property inspection fraud. For the purpose of conducting this examination, the Secretary may accept materials prepared for the U.S. Department of Housing and Urban Development.

(d) The Secretary, at his or her discretion, may hold public hearings. Such testimony shall be by a homeowner or mortgagor or his agent, whose residential interest is affected by the activities of the residential mortgage licensee subject to such hearing. At such public hearing, a witness may present testimony on his or her behalf concerning only his or her home or home mortgage, or a witness may authorize a third party to appear on his or her behalf. The testimony shall be restricted to information and comments related to a specific residence or specific residential mortgage application or applications for a residential mortgage or residential loan transaction. The testimony must be preceded by either a letter of complaint or a completed consumer complaint form prescribed by the Secretary.

(e) The Secretary shall, at the conclusion of the public hearings, release his or her findings and shall also make public any action taken with respect to the licensee. The Secretary shall also give full consideration to the findings of this examination whenever reapplication is made by the licensee for a new license under this Act.

(f) A licensee that is examined pursuant to subsection (b) shall submit to the Secretary a plan which shall be designed to reduce that licensee's loan delinquencies. The plan shall be implemented by the licensee as approved by the Secretary. A licensee that is examined pursuant to subsection (b) shall report monthly, for a one year period, one, 2, and 3 month loan delinquencies.

(g) Whenever the Secretary finds that a licensee's loan delinquencies on insured mortgages is unusually high within a particular geographic area, he or she shall require that licensee to submit such information as is necessary to determine whether that licensee's practices have constituted credit fraud, appraisal fraud or property inspection fraud. The Secretary shall promulgate such rules as are necessary to determine whether any licensee's loan delinquencies are unusually high within a particular area.

(Source: P.A. 100-783, eff. 8-10-18; 100-1153, eff. 12-19-18; 101-81, eff. 7-12-19.)

(205 ILCS 635/4-8.1)

Sec. 4-8.1. Confidential information. In hearings conducted under this Act, information presented into evidence that was acquired by the licensee when serving any individual in connection with a residential mortgage, including all financial information of the individual, shall be deemed strictly confidential and shall be made available only as part of the record of a hearing under this Act or otherwise (i) when the record is required, in its entirety, for purposes of judicial review or (ii) upon the express written consent of the individual served, or in the case of his or her death or disability, the consent of his or her personal representative.

(Source: P.A. 93-561, eff. 1-1-04.)

(205 ILCS 635/4-8.1A)

Sec. 4-8.1A. Confidentiality.

(a) In order to promote more effective regulation and reduce regulatory burden through supervisory information sharing, except as otherwise provided in federal Public Law 110-289, Section 1512, the requirements under any federal law or state law regarding the privacy or confidentiality of any information or material provided to the Nationwide Multistate Licensing System and Registry, and any privilege arising under federal or state law, including the rules of any federal or state court, with respect to such information or material, shall continue to apply to information or material after the information or material has been disclosed to the Nationwide Multistate Licensing System and Registry. The information and material may be shared with all state and federal regulatory officials with mortgage industry oversight authority without the loss of privilege or the loss of confidentiality protections provided by federal law or state law.

(b) In order to promote more effective regulation and reduce regulatory burden through supervisory information sharing, the Director is authorized to enter agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators or other associations representing governmental agencies as established by rule, regulation or order of the Director. The sharing of confidential supervisory information or any information or material described in subsection (a) of this Section pursuant to an agreement or sharing arrangement shall not result in the loss of privilege or the loss of confidentiality protections provided by federal law or state law.

(c) In order to promote more effective regulation and reduce regulatory burden through supervisory information sharing, information or material that is subject to a privilege or confidentiality under subsection (a) of this Section shall not be subject to the following:

(1) disclosure under any State law governing the disclosure to the public of information held by an officer or an agency of the State; or

(2) subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Nationwide Multistate Licensing System and Registry with respect to the information or material, the person to whom such information or material pertains waives, in whole or in part, in the discretion of that person, that privilege.

(d) In order to promote more effective regulation and reduce regulatory burden through supervisory information sharing, other law relating to the disclosure of confidential supervisory information or any information or material described in subsection (a) of this Section that is inconsistent with subsection (a) of this Section shall be superseded by the requirements of this Section to the extent the other law provides less confidentiality or a weaker privilege.

(e) In order to promote more effective regulation and reduce regulatory burden through supervisory information sharing, this Section shall not apply to the employment history of a mortgage loan originator, and the record of publicly adjudicated disciplinary and enforcement actions against a mortgage loan originator.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/4-8.2)

Sec. 4-8.2. Reports of violations. Any person licensed under this Act or any other person may report to the Commissioner any information to show that a person subject to this Act is or may be in violation of this Act. A licensee who files a report with the Department of Financial and Professional Regulation that another licensee is engaged in one or more violations pursuant to this Act shall not be the subject of disciplinary action by the Department, unless the Department determines, by a preponderance of the evidence available to the Department, that the reporting person knowingly and willingly participated in the violation that was reported.

(Source: P.A. 97-891, eff. 8-3-12.)

(205 ILCS 635/4-8.3)

Sec. 4-8.3. Annual report. On or before March 1 of each year or the date selected for Mortgage Call Reports under Section 4-9.1 of this Act, each licensee shall file a report with the Secretary that discloses such information as the Secretary requires. A licensee filing a Mortgage Call Report is not required to file an annual report. Exempt entities as defined in subsection (d) of Section 1-4 shall not file the annual report of mortgage and servicing activity required by this Section.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/4-9) (from Ch. 17, par. 2324-9)

Sec. 4-9. (Repealed).

(Source: P.A. 89-355, eff. 8-17-95. Repealed by 90-301, eff. 8-1-97.)

(205 ILCS 635/4-9.1)

Sec. 4-9.1. Mortgage call reports. Each residential mortgage licensee shall submit to the Nationwide Multistate Licensing System and Registry reports of condition, which shall be in the form and shall contain the information that the Nationwide Multistate Licensing System and Registry may require.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/4-10) (from Ch. 17, par. 2324-10)

Sec. 4-10. Rules and regulations of the Commissioner.

(a) In addition to such powers as may be prescribed by this Act, the Commissioner is hereby authorized and empowered to promulgate regulations consistent with the purposes of this Act, including, but not limited to:

(1) such rules and regulations in connection with the activities of licensees as may be necessary and appropriate for the protection of consumers in this State;

(2) such rules and regulations as may be necessary and appropriate to define improper or fraudulent business practices in connection with the activities of licensees in making mortgage loans;

(3) such rules and regulations as may define the terms used in this Act and as may be necessary and appropriate to interpret and implement the provisions of this Act; and

(4) such rules and regulations as may be necessary for the enforcement of this Act.

(b) The Commissioner is hereby authorized and empowered to make such specific rulings, demands, and findings as he or she may deem necessary for the proper conduct of the mortgage lending industry.

(c) A person or entity may make a written application to the Department for a written interpretation of this Act. The Department may then, in its sole discretion, choose to issue a written interpretation. To be valid, a written interpretation must be signed by the Secretary, or his or her designated Director of Financial and Professional Regulation, and the Department's General Counsel. A written interpretation expires 2 years after the date that it was issued.

(d) No provision in this Act that imposes liability or establishes violations shall apply to any act taken by a person or entity in conformity with a written interpretation of this Act that is in effect at the time the act is taken, notwithstanding whether the written interpretation is later amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

(Source: P.A. 100-863, eff. 8-14-18.)

(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.)

(205 ILCS 635/5-9)

Sec. 5-9. Notice of change in loan terms.

(a) No licensee may fail to do either of the following:

(1) Provide timely notice to the borrower of any material change in the terms of the residential mortgage loan prior to the closing of the loan. For purposes of this Section, a "material change means" any of the following:

(A) A change in the type of loan being offered, such as a fixed or variable rate loan or a loan with a balloon payment.

(B) A change in the term of the loan, as reflected in the number of monthly payments due before a final payment is scheduled to be made.

(C) An increase in the interest rate of more than 0.15%, or an equivalent increase in the amount of discount points charged.

(D) An increase in the regular monthly payment of principal and interest of more than 5%.

(E) A change regarding the requirement or amount of escrow of taxes or insurance.

(F) A change regarding the requirement or payment, or both, of private mortgage insurance.

(2) Timely inform the borrower if any fees payable by the borrower to the licensee increase by more than 10% or $100, whichever is greater.

(b) The disclosures required by this Section shall be deemed timely if the licensee provides the borrower with the revised information not later than 3 days after learning of the change or 24 hours before the residential mortgage loan is closed, whichever is earlier. If the licensee discloses a material change more than the 3 days after learning of the change but still 24 hours before the residential mortgage loan is closed, it will not be liable for penalties or forfeitures if the licensee cures in time for the borrower to avoid any damage.

(c) If an increase in the total amount of the fee to be paid by the borrower to the broker is not disclosed in accordance with this Section, the broker shall refund to the borrower the amount by which the fee was increased. If the fee is financed into the residential mortgage loan, the broker shall also refund to the borrower the interest charged to finance the fee.

(d) The requirements of this Section do not apply to a licensee providing a notice of change in loan terms pursuant to the federal Consumer Financial Protection Bureau's Know Before You Owe mortgage disclosure procedure pursuant to the federal Truth in Lending Act and amendments promulgated under 12 CFR 1026 and the federal Real Estate Settlement Procedures Act and amendments promulgated under 12 CFR 1024.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/5-10)

Sec. 5-10. Comparable monthly payment quotes. When comparing different loans, the licensee must not state or imply that monthly loan payments, if they include amounts escrowed for payment of property taxes and homeowner's insurance, are comparable with monthly loan payments that do not include these amounts.

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

(205 ILCS 635/5-11)

Sec. 5-11. Requirement to provide borrower with a copy of all appraisals. Licensees must provide to the borrower a complete copy of any appraisal, including any appraisal generated using the Automated Valuation Model, obtained by the lender for use in underwriting the residential mortgage loan within 3 business days of receipt by the licensee, but in no event less than 24 hours prior to the day of closing. The appraisal may be sent via first class mail, commercial carrier, by facsimile or by e-mail, if the borrower has supplied an e-mail address.

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

(205 ILCS 635/5-12)

Sec. 5-12. Disclosure of refinancing options. If the subject of a future loan is discussed by a licensee making, providing, or arranging a mortgage loan, the licensee shall disclose the circumstances under which a new loan could be considered. Such disclosure shall clearly state that it is not a contract and that the licensee is not representing or promising that a new loan could or would be made at any time in the future.

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

(205 ILCS 635/5-14)

Sec. 5-14. Prohibition on equity stripping and loan flipping. No licensee may engage in equity stripping or loan flipping, as those terms are defined in the Illinois Fairness in Lending Act.

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

(205 ILCS 635/5-15)

Sec. 5-15. Prohibition on financing certain insurance premiums. No licensee may make, provide, or arrange for a residential mortgage loan that finances, directly or indirectly, any credit life, credit disability, or credit unemployment insurance; however, insurance premiums calculated and paid on a monthly basis shall not be considered to be financed by the lender.

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

(205 ILCS 635/5-16)

Sec. 5-16. Prohibition on encouraging default. A licensee may not recommend or encourage default or the failure to make timely payments on an existing residential mortgage loan or other debt prior to and in connection with the closing or planned closing of a residential mortgage loan that refinances all or any portion of the existing loan or debt.

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

(205 ILCS 635/5-17)

Sec. 5-17. Severability. If any provision of this Act or its application to any person or circumstance is held invalid, the invalidity of that provision or application does not affect other provisions or applications of this Act that can be given effect without the invalid provision or application.

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

(205 ILCS 635/Art. VI heading) ARTICLE VI. ENFORCEMENT POWERS

(205 ILCS 635/6-1) (from Ch. 17, par. 2326-1)

Sec. 6-1. Powers not exclusive. The powers granted by this Article shall be in addition to all others granted to the Commissioner by this Act. The powers granted by this Article shall not preclude the Commissioner from exercising such other powers granted under this Act as are necessary and proper to carrying out the purposes and provisions of this Act.

(Source: P.A. 87-1098.)

(205 ILCS 635/6-2) (from Ch. 17, par. 2326-2)

Sec. 6-2. Removal and prohibition.

(a) Upon making any one or more of the following findings, the Commissioner may issue a notice of intent to issue an order of removal or prohibition, or an order of removal and prohibition, which order may remove a named person, persons, or entity or entities from participating in the affairs of one or more licensees and may be permanent or for a specific shorter period of time. The findings required under this Section may be any one or more of the following:

(1) A finding that the party or entity subject to the order has been convicted of a crime involving material financial loss to a licensee, a federally insured depository institution, a government sponsored enterprise, a Federal Home Loan Bank, a Federal Reserve Bank, or any other person.

(2) A finding that the person or entity subject to the order has submitted or caused to be submitted any document that contains multiple willful and material misstatements of facts, and that includes the signature of the person or entity specified in the Commissioner's order, or that is notarized, certified, verified or is in any other way attested to, as to its veracity. An application for licensure or license renewal may be considered such a document.

(3) Conviction of a business offense under subsection (e) of Section 1-3 or subsection (g) of Section 3-2.

(4) A finding prepared by a hearing officer pursuant to a hearing held under Section 4-1(n) of this Act that the person subject to the order, while an employee of a licensee, has knowingly submitted or caused to be submitted any document that contains willful and material misstatement of facts and which is used in connection with any licensable activity as defined in Section 1-3(a) of this Act.

(b) Whenever, in the opinion of the Commissioner, any director, officer, or employee of a licensee shall have violated any law, rule, or order relating to that licensee or shall have obstructed or impeded any examination or investigation by the Commissioner, shall have engaged in an unsafe, unsound, or unlawful practice in conducting the business of the licensee, or shall have violated any law or engaged or participated in any unsafe, unsound or unlawful practice in connection with any licensee or other business entity such that the character and fitness of the director, officer, or employee does not assure reasonable promise of safe, sound, and lawful operation of the licensee, the Commissioner may issue an order of removal. If, in the opinion of the Commissioner, any former director, officer, or employee of a licensee, prior to the termination of his or her service with that licensee, violated any law, rule, or order relating to that licensee, obstructed or impeded any examination or investigation by the Commissioner, engaged in an unsafe or unsound practice in conducting the business of that licensee or any subsidiary or holding company of the licensee, or violated any law or engaged or participated in any unsafe, unsound, or unlawful practice in connection with any financial institution or other business entity such that the character and fitness of the director, officer, or employee would not have assured reasonable promise of safe, sound, and lawful operation of the licensee, the Commissioner may issue an order prohibiting that person from further service with a licensee as a director, officer, or employee. An order issued pursuant to this subsection shall be served upon the director, officer, or employee. A copy of the order shall be sent to each owner or director of the licensee affected by registered mail. The person affected by the action may make a request to the Commissioner for a hearing pursuant to Section 4-1(n) within 10 days after receipt of the order. The hearing shall be held before a hearing officer within 30 days after the request has been received by the Commissioner. The hearing officer shall prepare a finding and report the same to the Commissioner who shall consider the finding in making his determination approving, modifying, or disapproving his order as a final administrative decision. If a hearing is held before a hearing officer, the Commissioner shall make his determination within 60 days from the conclusion of the hearing. Any person affected by a decision of the Commissioner under this subsection (b) may have the decision reviewed only under and in accordance with the Administrative Review Law and the rules adopted pursuant thereto. A copy of the order shall also be served upon the licensee of which he is a director, officer, or employee, whereupon he shall cease to be a director, officer, or employee of that licensee. The Commissioner may institute a civil action against the director, officer, or employee of the licensee to enforce compliance with or to enjoin any violation of the terms of the order. Any person who has been the subject of an order of removal or an order of prohibition issued by the Commissioner under this subsection may not thereafter serve as director, officer, or employee of any licensee, or of any other entity that is subject to licensure or regulation by the Commissioner unless the Commissioner has granted prior approval in writing.

(Source: P.A. 93-1018, eff. 1-1-05.)

(205 ILCS 635/6-3) (from Ch. 17, par. 2326-3)

Sec. 6-3. Appointment of receiver or conservator. When the Commissioner makes a finding that a receivership or conservatorship is necessary to protect consumers of a licensee from the consequences of the licensee's failures to comply with this Act or other unsafe and unsound practices, the Commissioner shall request the Attorney General of this State to petition the Circuit Court of Cook County, or of the county in which the licensee is located, to appoint a receiver or conservator for purposes of protecting consumers and resolving the affairs of the licensee.

(Source: P.A. 87-1098.)

(205 ILCS 635/Art. VII heading) ARTICLE VII. MORTGAGE LOAN ORIGINATOR LICENSE REQUIRED (Source: P.A. 96-112, eff. 7-31-09.)

(205 ILCS 635/7-1)

Sec. 7-1. (Repealed).

(Source: P.A. 96-112, eff. 7-31-09. Repealed by P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-1A)

Sec. 7-1A. Mortgage loan originator license.

(a) It is unlawful for any individual to act or assume to act as a mortgage loan originator, as defined in subsection (jj) of Section 1-4 of this Act, without obtaining a license from the Director, unless the individual is exempt under subsection (c) of this Section. It is unlawful for any individual who holds a mortgage loan originator license to provide short sale facilitation services unless he or she holds a license under the Real Estate License Act of 2000. Each licensed mortgage loan originator must register with and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry.

(b) (Blank).

(c) The following, when engaged in the following activities, are exempt from this Act:

(1) Registered mortgage loan originators, when acting for an entity described in subsection (tt) of Section 1-4.

(2) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.

(3) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual's residence.

(4) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of a lender, mortgage broker, or other mortgage loan originator.

(5) Any individual described in paragraph (2.2) of subsection (d) of Section 1-4.

(d) A loan processor or underwriter who is an independent contractor may not engage in the activities of a loan processor or underwriter unless he or she obtains and maintains a license under subsection (a) of this Section. Each independent contractor loan processor or underwriter licensed as a mortgage loan originator must have and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry.

(e) For the purposes of implementing an orderly and efficient licensing process, the Director may establish licensing rules or regulations and interim procedures for licensing and acceptance of applications. For previously registered or licensed individuals, the Director may establish expedited review and licensing procedures.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-2)

Sec. 7-2. State license application and issuance.

(a) Applicants for a license shall apply in a form prescribed by the Director. Each form shall contain content as set forth by rule, regulation, instruction, or procedure of the Director and may be changed or updated as necessary by the Director in order to carry out the purposes of this Act.

(b) In order to fulfill the purposes of this Act, the Director is authorized to establish relationships or contracts with the Nationwide Multistate Licensing System and Registry or other entities designated by the Nationwide Multistate Licensing System and Registry to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to this Act.

(c) In connection with an application for licensing as a mortgage loan originator, the applicant shall, at a minimum, furnish to the Nationwide Multistate Licensing System and Registry information concerning the applicant's identity, including the following:

(1) Fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a state, national and international criminal history background check.

(2) Personal history and experience in a form prescribed by the Nationwide Multistate Licensing System and Registry, including the submission of authorization for the Nationwide Multistate Licensing System and Registry and the Director to obtain:

(A) an independent credit report obtained from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act; and

(B) information related to any administrative, civil, or criminal findings by any governmental jurisdiction.

(d) For the purpose of this Section, and in order to reduce the points of contact which the Federal Bureau of Investigation may have to maintain for purposes of subsection (c) of this Section, the Director may use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting information from and distributing information to the Department of Justice or any governmental agency.

(e) For the purposes of this Section and in order to reduce the points of contact which the Director may have to maintain for purposes of item (2) of subsection (c) of this Section, the Director may use the Nationwide Multistate Licensing System and Registry as a channeling agent for requesting and distributing information to and from any source so directed by the Director.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-3)

Sec. 7-3. Issuance of license. The Director shall not issue a mortgage loan originator license unless the Director makes at a minimum the following findings:

(1) The applicant has never had a mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent formal vacation of such revocation shall not be deemed a revocation.

(2) The applicant has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court:

(A) during the 7-year period preceding the date of the application for licensing and registration; or

(B) at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering;

provided that any pardon of a conviction shall not be a conviction for purposes of this item (2).

(3) The applicant has demonstrated financial responsibility, character, and general fitness so as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purposes of this Act. For purposes of this item (3) a person has shown that he or she is not financially responsible when he or she has shown a disregard for the management of his or her own financial condition. A determination that an individual has not shown financial responsibility may include, but is not limited to, consideration of:

(A) current outstanding judgments, except judgments solely as a result of medical expenses;

(B) current outstanding tax liens or other government liens and filings, educational loan defaults, and non-payment of child support;

(C) foreclosures within the past 3 years;

(D) a pattern of seriously delinquent accounts within the past 3 years; and

(E) an independent credit report obtained under Section 7-2(c)(2) of the Act; provided that, a credit score may not be the sole basis for determining that an individual has not shown financial responsibility; provided further that, the credit report may be the sole basis for determining that an individual has not shown financial responsibility.

(4) The applicant has completed the pre-licensing education requirement described in Section 7-4 of this Act.

(5) The applicant has passed a written test that meets the test requirement described in Section 7-5 of this Act.

(6) The applicant has met the surety bond requirement as required pursuant to Section 7-12 of this Act.

(Source: P.A. 96-112, eff. 7-31-09.)

(205 ILCS 635/7-4)

Sec. 7-4. Pre-licensing and education of mortgage loan originators.

(a) In order to meet the pre-licensing education requirement referred to in item (4) of Section 7-3 of this Act an individual shall complete at least 20 hours of education approved in accordance with subsection (b) of this Section, which shall include at least:

(1) 3 hours of Federal law and regulations;

(2) 3 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and

(3) 2 hours of training related to lending standards for the nontraditional mortgage product marketplace.

(b) For purposes of subsection (a) of this Section, pre-licensing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards. Review and approval of a pre-licensing education course shall include review and approval of the course provider.

(c) Nothing in this Section shall preclude any pre-licensing education course, as approved by the Nationwide Multistate Licensing System and Registry, that is provided by the employer of the applicant or an entity which is affiliated with the applicant by an agency contract, or any subsidiary or affiliate of such an employer or entity.

(d) Pre-licensing education may be offered in a classroom, online, or by any other means approved by the Nationwide Multistate Licensing System and Registry.

(e) The pre-licensing education requirements approved by the Nationwide Multistate Licensing System and Registry for the subjects listed in items (1) through (3) of subsection (a) for any state shall be accepted as credit towards completion of pre-licensing education requirements in Illinois.

(f) An individual previously registered under this Act who is applying to be licensed after the effective date of this amendatory Act of the 96th General Assembly must prove that he or she has completed all of the continuing education requirements for the year in which the registration or license was last held.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-5)

Sec. 7-5. Testing of mortgage loan originators.

(a) In order to meet the written test requirement referred to in item (5) of Section 7-3, an individual shall pass, in accordance with the standards established under this subsection (a), a qualified written test developed by the Nationwide Multistate Licensing System and Registry and administered by a test provider approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards.

(b) A written test shall not be treated as a qualified written test for purposes of subsection (a) of this Section unless the test adequately measures the applicant's knowledge and comprehension in appropriate subject areas, including:

(1) ethics;

(2) federal law and regulation pertaining to mortgage origination;

(3) State law and regulation pertaining to mortgage origination; and

(4) federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.

(c) Nothing in this Section shall prohibit a test provider approved by the Nationwide Multistate Licensing System and Registry from providing a test at the location of the employer of the applicant or the location of any subsidiary or affiliate of the employer of the applicant, or the location of any entity with which the applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.

(d) An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than 75% correct answers to questions.

An individual may retake a test 3 consecutive times with each consecutive taking occurring at least 30 days after the preceding test.

After failing 3 consecutive tests, an individual shall wait at least 6 months before taking the test again.

A licensed mortgage loan originator who fails to maintain a valid license for a period of 5 years or longer shall retake the test, not taking into account any time during which such individual is a registered mortgage loan originator.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-6)

Sec. 7-6. Standards for license renewal.

(a) The minimum standards for license renewal for mortgage loan originators shall include the following:

(1) The mortgage loan originator continues to meet the minimum standards for license issuance under Section 7-3.

(2) The mortgage loan originator has satisfied the annual continuing education requirements described in Section 7-7.

(3) The mortgage loan originator has paid all required fees for renewal of the license.

(b) The license of a mortgage loan originator failing to satisfy the minimum standards for license renewal shall expire. The Director may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the Nationwide Multistate Licensing System and Registry.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-7)

Sec. 7-7. Continuing education for mortgage loan originators.

(a) In order to meet the annual continuing education requirements referred to in Section 7-6, a licensed mortgage loan originator shall complete at least 8 hours of education approved in accordance with subsection (b) of this Section, which shall include at least:

(1) 3 hours of federal law and regulations;

(2) 2 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and

(3) 2 hours of training related to lending standards for the nontraditional mortgage product marketplace.

(b) For purposes of subsection (a), continuing education courses shall be reviewed and approved by the Nationwide Multistate Licensing System and Registry based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.

(c) Nothing in this Section shall preclude any education course, as approved by the Nationwide Multistate Licensing System and Registry, that is provided by the employer of the mortgage loan originator or an entity which is affiliated with the mortgage loan originator by an agency contract, or any subsidiary or affiliate of the employer or entity.

(d) Continuing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Multistate Licensing System and Registry.

(e) A licensed mortgage loan originator:

(1) except as provided in Section 7-6 and subsection (i) of this Section, may only receive credit for a continuing education course in the year in which the course is taken; and

(2) may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.

(f) A licensed mortgage loan originator who is an approved instructor of an approved continuing education course may receive credit for the licensed mortgage loan originator's own annual continuing education requirement at the rate of 2 hours credit for every one hour taught.

(g) A person having successfully completed the education requirements approved by the Nationwide Multistate Licensing System and Registry for the subjects listed in subsection (a) of this Section for any state shall be accepted as credit towards completion of continuing education requirements in this State.

(h) A licensed mortgage loan originator who subsequently becomes unlicensed must complete the continuing education requirements for the last year in which the license was held prior to issuance of a new or renewed license.

(i) A person meeting the requirements of Section 7-6 may make up any deficiency in continuing education as established by rule or regulation of the Director.

(Source: P.A. 103-154, eff. 6-30-23.)

(205 ILCS 635/7-8)

Sec. 7-8. Authority to require license. In addition to any other duties imposed upon the Director by law, the Director shall require mortgage loan originators to be licensed and registered through the Nationwide Multistate Licensing System and Registry. In order to carry out this requirement the Director is authorized to participate in the Nationwide Multistate Licensing System and Registry. For this purpose, the Director may establish by agreement, order or rule requirements as necessary, including, but not limited to, the following:

(1) Background checks for:

(A) criminal history through fingerprint or other databases;

(B) civil or administrative records;

(C) credit history; or

(D) any other information as deemed necessary by the Nationwide Multistate Licensing System and Registry.

(2) The payment of fees to apply for or renew licenses through the Nationwide Multistate Licensing System and Registry;

(3) The setting or resetting as necessary of renewal or reporting dates; and

(4) Requirements for amending or surrendering a license or any other such activities as the Director deems necessary for participation in the Nationwide Multistate Licensing System and Registry.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-9)

Sec. 7-9. Report to Nationwide Multistate Licensing System and Registry. Subject to State privacy laws, the Director is required to report regularly violations of this Act, as well as enforcement actions and other relevant information, to the Nationwide Multistate Licensing System and Registry subject to the provisions contained in Section 4-8.1A of this Act.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-10)

Sec. 7-10. Nationwide Multistate Licensing System and Registry information challenge process. The Director shall establish a process whereby mortgage loan originators may challenge information entered into the Nationwide Multistate Licensing System and Registry by the Director.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-11)

Sec. 7-11. Mortgage loan originator suspension or revocation of registration; refusal to renew; fines.

(a) In addition to any other action authorized by this Act or any other applicable law, rule or regulation, the Director may do the following:

(1) Suspend, revoke, or refuse to renew a license or reprimand, place on probation or otherwise discipline a licensee if the Director finds that the mortgage loan originator has violated this Act or any other applicable law or regulation or has been convicted of a criminal offense.

(2) Impose a fine of not more than $1,000 or, for engaging in an act prohibited by item (1) of Section 7-13, not more than $3,000 for each day for each violation of this Act or any other applicable law or regulation that is committed. If the Mortgage Loan Originator engages in a pattern of repeated violations, the Director may impose a fine of not more than $2,000 or, for engaging in an act prohibited by item (1) of Section 7-13, not more than $6,000 for each day for each violation committed. In determining the amount of a fine to be imposed pursuant to this Act or any other applicable law or regulation, the Director shall consider all of the following:

(A) The seriousness of the violation;

(B) The mortgage loan originator's good faith efforts to prevent the violation; and

(C) The mortgage loan originator's history of violations and compliance with orders.

(b) In addition to any other action authorized by this Act or any other applicable law, rule or regulation, the Director may investigate alleged violations of the Act or any other applicable law, rule or regulation and complaints concerning any such violation. The Director may seek a court order to enjoin the violation.

(c) In addition to any other action authorized by this Act or any other applicable law, rule or regulation, if the Director determines that a mortgage loan originator is engaged in or is believed to be engaged in activities that may constitute a violation of this Act or any other applicable law, rule or regulation, the Director may issue a cease and desist order to compel the mortgage loan originator to comply with this Act or any other applicable law, rule or regulation or, upon a showing that an emergency exists, may suspend the mortgage loan originator's license for a period not exceeding 180 calendar days, pending investigation.

(Source: P.A. 96-112, eff. 7-31-09; 97-891, eff. 8-3-12.)

(205 ILCS 635/7-12)

Sec. 7-12. Surety bond required.

(a) Each mortgage loan originator shall be covered by a surety bond in accordance with this Section. In the event that the mortgage loan originator is an employee or exclusive agent of a person subject to this Act, the surety bond of such person subject to this Act can be used in lieu of the mortgage loan originator's surety bond requirement. The surety bond shall provide coverage for each mortgage loan originator in an amount prescribed under subsection (b) of this Section. The surety bond shall be in a form prescribed by the Director. The Director may promulgate rules or regulations with respect to the requirements for such surety bonds as necessary to accomplish the purposes of this Act.

(b) The penal sum of the surety bond shall be maintained in an amount that reflects the dollar amount of loans originated as determined by the Director.

(c) When an action is commenced on a licensee's bond the Director may require the filing of a new bond.

(d) Immediately upon recovery upon any action on the bond the licensee shall file a new bond.

(Source: P.A. 96-112, eff. 7-31-09.)

(205 ILCS 635/7-13)

Sec. 7-13. Prohibited acts and practices for mortgage loan originators. It is a violation of this Act for an individual subject to this Act to:

(1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person.

(2) Engage in any unfair or deceptive practice toward any person.

(3) Obtain property by fraud or misrepresentation.

(4) Solicit or enter into a contract with a borrower that provides in substance that the person or individual subject to this Act may earn a fee or commission through "best efforts" to obtain a loan even though no loan is actually obtained for the borrower.

(5) Solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting.

(6) Conduct any business covered by this Act without holding a valid license as required under this Act, or assist or aid and abet any person in the conduct of business under this Act without a valid license as required under this Act.

(7) Fail to make disclosures as required by this Act and any other applicable State or federal law, including regulations thereunder.

(8) Fail to comply with this Act or rules or regulations promulgated under this Act, or fail to comply with any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under this Act.

(9) Make, in any manner, any false or deceptive statement or representation of a material fact, or any omission of a material fact, required on any document or application subject to this Act.

(10) Negligently make any false statement or knowingly and willfully make any omission of material fact in connection with any information or report filed with a governmental agency or the Nationwide Multistate Licensing System and Registry or in connection with any investigation conducted by the Director or another governmental agency.

(11) Make any payment, threat or promise, directly or indirectly, to any person for the purpose of influencing the independent judgment of the person in connection with a residential mortgage loan, or make any payment threat or promise, directly or indirectly, to any appraiser of a property, for the purpose of influencing the independent judgment of the appraiser with respect to the value of the property.

(12) Collect, charge, attempt to collect or charge, or use or propose any agreement purporting to collect or charge any fee prohibited by this Act, including advance fees for loan modification.

(13) Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer.

(14) Fail to truthfully account for monies belonging to a party to a residential mortgage loan transaction.

(15) Engage in conduct that constitutes dishonest dealings.

(16) Knowingly instruct, solicit, propose, or cause a person other than the borrower to sign a borrower's signature on a mortgage related document, or solicit, accept or execute any contract or other document related to the residential mortgage transaction that contains any blanks to be filled in after signing or initialing the contract or other document, except for forms authorizing the verification of application information.

(17) Discourage any applicant from seeking or participating in housing or financial counseling either before or after the consummation of a loan transaction, or fail to provide information on counseling resources upon request.

(18) Charge for any ancillary products or services, not essential to the basic loan transaction for which the consumer has applied, without the applicant's knowledge and written authorization, or charge for any ancillary products or services not actually provided in the transaction.

(19) Fail to give reasonable consideration to a borrower's ability to repay the debt.

(20) Interfere or obstruct an investigation or examination conducted pursuant to this Act.

(21) Structure activities or contracts to evade provisions of this Act.

(Source: P.A. 100-1153, eff. 12-19-18.)

(205 ILCS 635/7-14)

Sec. 7-14. Unique identifier shown. The unique identifier of any person originating a residential mortgage loan shall be clearly shown on all residential mortgage loan application forms, solicitations, and advertisements, including business cards and websites, and any other documents as established by rule, regulation, or order of the Commissioner.

(Source: P.A. 96-112, eff. 7-31-09.)

(205 ILCS 635/7-15)

Sec. 7-15. Examination and investigation of certain mortgage loan originators. The activities requiring a licensee of a mortgage loan originator that are sponsored by an exempt entity under subsection (a-1) of Section 1-3 of this Act are subject to examination and investigation by the Secretary. Mortgage loan originators sponsored by an exempt entity shall keep and maintain records of his or her loan activities for a period of 36 months and shall produce records on demand by the Secretary. The records shall include a loan log or loan production log as approved by the Secretary and any loan application entered, prepared, or created through or from the mortgage loan originator's activities. Mortgage loan originators sponsored by an exempt entity shall provide access, upon the Secretary's demand, to his or her offices for the purposes of the Department's examination and investigation. The Secretary shall determine the manner and frequency at which the Department shall conduct examinations of the mortgage loan originators. Mortgage loan originators sponsored by an exempt entity shall cooperate at all times with the Department pursuant to requirements of this Section and shall be subject to penalties under Section 7-11 of this Act for failure to comply.

(Source: P.A. 98-492, eff. 8-16-13.)