Section 1050.100  High Risk Home Loan Definitions; Applicability

Pursuant to Section 150 of the High Risk Home Loan Act (Act) [815 ILCS 137/150], Sections 1050.155, 1050.190, 1050.195, 1050.197, 1050.198 and 1050.199 of this Part do not apply to loans closed on or after January 1, 2004.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.110  Definitions

"Act" means the Residential Mortgage License Act of 1987 [205 ILCS 635].

"Administrative decision" means an order or action of the Director, such as assessment of a fine, denial of a license, suspension, or revocation of a license.

"Approved credit counselor" means a credit counselor approved by the Director of the Department of Financial and Professional Regulation-Division of Financial Institutions.

"Assisting" as used in Section 1-4(o) of the Act shall not include the following activities or services when undertaken by a person in an otherwise licensed profession or occupation provided such activities or services are undertaken by such person in pursuit of such persons licensed profession or occupation including, but not limited to insurance producer, attorney at law, certified public accountant, land surveyor, or professional engineer:

Activities or services of, or incidental to, the licensed occupation or profession;

Delivery of surveys, abstracts of title, title commitments, opinions of title, draft deeds, mortgage forms or lender sales material;

Coordinating the activities associated with the borrower's completion or submission of a loan application;

Contracting or conferring with a licensed attorney, title insurance company, insurance producer, or lender as to the status of the loan application, loan commitment, title commitment, fire or extended coverage insurance, or closing requirements.

"Control" means the power to, directly or indirectly, whether acting through one or more persons, effect the voting interest of 10 percent or more of any class of the outstanding voting shares, or partnership interest, of an entity subject to the Act.

"Conviction" or "convicted" means, with respect to a criminal charge, the final judgment, or the act of receiving final judgment, on a verdict or finding of guilty, a plea of guilty, or a plea of nolo contendere.

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

"Director" means the Director of the Department of Financial and Professional Regulation-Division of Banking.

"Division" means the Department of Financial and Professional Regulation-Division of Banking, with the authority delegated by the Secretary.

"Document", for purposes of Section 6-2(2) of the Act, shall include all business and financial documents and all books and records, such as, but not limited to in either type, characteristics, or function, tax returns, signature cards, writings that engage or provide information to accountants, consultants, or other agents, applications, authorizations to do business, licenses or certificates, and submissions for insurance endorsements.

"Employee" and "person employed":

As used in Section 1-4(d)(1.5) of the Act, "employee" means:

any natural person who performs activity subject to licensure or registration under the Act for an exempt entity under Section 1-4(d)(1) of the Act, provided that the exempt entity:

expressly, in a writing submitted to and approved by the Director, assumes full and direct legal responsibility for the activity of the natural person that is performed on behalf of or in the name of the exempt entity or that benefits or is intended to benefit the exempt entity; or

submits to the Director for approval a written opinion of counsel stating that the relationship between the exempt entity and the natural person is one in which the exempt entity assumes full and direct responsibility for the activity of the natural person that is performed on behalf of or in the name of the exempt entity or that benefits or is intended to benefit the exempt entity; or

any natural person who performs activity subject to licensure or registration under the Act for an exempt entity under Section 1-4(d)(1) of the Act, provided that the natural person's performance of the activity is otherwise under statute or administrative rule, subject to comprehensive regulation and supervision, regular examination of books and records and activities and administrative agency sanctions for violation of regulatory, supervisory, or examination requirements by the State of Illinois or by a federal depository institution regulator.

As used in Section 1-4(d)(3) of the Act, "person employed" means any natural person who performs activity licensable under the Act exclusively for one licensee under the Act, provided that the licensee, expressly in writing on a form approved by the Director, assumes full and direct legal responsibility for the licensable activity performed on behalf of or in the name of the licensee or that benefits or is intended to benefit the licensee.

"First tier subsidiary", as used in Section 1-4 of the Act, means a subsidiary the stock of which is directly owned by the parent corporation, without any intervening layer of ownership by another corporation.

"Hearing Officer" means an attorney licensed in the State of Illinois, other than an attorney who is a regular employee of the Division, who is the presiding official appointed by the Director to conduct a hearing.

"High risk home loan" means a home equity loan on residential real property in which:

at the time of origination, the APR exceeds by more than 6 percentage points in the case of a first lien mortgage, or by more than 8 percentage points in the case of a junior mortgage, the yield on U.S. Treasury securities having comparable periods of maturity to the loan maturity as of the 15^th day of the month immediately preceding the month in which the application for the loan is received by the lender; or

the total points and fees payable by the consumer at or before closing will exceed the greater of 5% of the total loan amount or $800.  The $800 figure shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index.

However, this Part shall not apply to a loan that is made primarily for a business purpose unrelated to the residential real property securing the loan or to an open-end credit plan subject to 12 CFR 226 (2000, no subsequent amendments or editions are included).

"Home equity loan" means any loan secured by the borrower's primary residence when the proceeds are not used as purchase money for the residence.

"Independent loan processing entity" means an entity engaged solely in providing loan processing services through the sponsoring of individuals acting pursuant to Section 7-1A(d) of the Act.

"Licensee" means a person or entity licensed under the Act.

"Material", as used in Section 6-2(2) of the Act, shall include, but not be limited to, a misstatement or omission of fact that, if it had not been misstated or omitted, would have altered the decision, approval, determination, or finding made by the Director or his or her agent in reliance upon the misstatement or omission.  "Material" shall also include a misstatement or omission of fact that, if it had not been misstated or omitted, would have caused the Director or his or her agent to act or consider acting pursuant to any of the powers vested in the Director or his or her agents or in the Department or the Division by the Act or the rules promulgated under the Act.

"NMLS" means the Nationwide Multistate Licensing System and Registry.

"Other regulatory agencies", as used in Section 4-2(e) of the Act, shall include the United States Department of Housing and Urban Development, state insurance commissions, any state or Federal agency having jurisdiction over the licensee, state and federal securities regulators, and the United States Department of Labor.

"Party" means any person, including the Director, named on a pleading or affected by an administrative decision.

"Petitioner" means a person affected by an administrative decision of the Division or the Department who files a request for hearing, or the Director when he or she initiates a notice for hearing to a named respondent.

"Principal place of business", as used in Section 1-4(d)(1)(ix) of the Act, shall mean the principal place of business of the subsidiary's parent bank, which must be chartered by the Comptroller of the Currency of the United States.

"Repurchase a loan":

As used in Section 2-4(w) of the Act, means those instances in which:

the licensee has demanded that another licensee repurchase a loan and the first scheduled loan payment has not been received by the licensee making the demand; or

the licensee has demanded that another licensee repurchase a loan as a result of the determination, after reasonable investigation, by the licensee making the demand, that materially false representations, documentation or information may have been provided to any person in connection with the origination or transfer of the loan.

As used in Section 2-4(x) of the Act, means those instances in which:

the licensee has received a demand that it repurchase a loan and the first scheduled loan payment has not been received by the person making the demand; or

the licensee has received a demand that it repurchase a loan as a result of the determination, after reasonable investigation, by the person making the demand, that materially false representations, documentation or information may have been provided to any person in connection with the origination or transfer of the loan.

"Points and fees" means:

all items required to be disclosed as points and fees under 12 CFR 226.32 (2000, no subsequent amendments or editions included);

the premium of any single premium credit life, credit disability, credit unemployment, or any other life or health insurance that is financed directly or indirectly into the loan;

all compensation paid directly or indirectly to a mortgage broker, including a broker that originates a loan in its own name in a table funded transaction, not otherwise included in the points and fees disclosed under 12 CFR 226.32.

"Respondent" means a person who is named in the notice of hearing when the notice is initiated by the Director, or the Director when a petitioner files a request for hearing.

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

"Servicer" means any entity licensed under the Act who is responsible for the collection or remittance for, or the right or obligation to collect or remit for, any lender, noteowner, or noteholder, or for a licensee's own account, of payments, interest, 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.

"Shared appreciation agreement" means a writing evidencing a transaction or any option, future, or any other derivative between a person and a consumer where the consumer receives money or any other item of value in exchange for an interest or future interest in a dwelling or residential real estate or a future obligation to repay a sum on the occurrence of an event, such as:

the transfer of ownership;

a repayment maturity date;

the death of the consumer; or

any other event contemplated by the writing. [205 ILCS 635/1-4(ccc)]

"State" means the State of Illinois.

"Total loan amount" is the same as the term used in 12 CFR 226.32, and shall be calculated in accordance with the Federal Reserve Board's Official Staff Commentary to that regulation.

(Source:  Amended at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.115  Administrative Decision (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.120  Assisting (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.125  Commissioner (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.130  Control (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.132  Conviction or Convicted (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.135  Document (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.140  Employee (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.145  First Tier Subsidiary (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.150  Hearing Officer (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.155  High Risk Home Loan (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.157  Licensee (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.160  Material (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.165  Other Regulatory Agencies (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.170  Party (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.175  Principal Place of Business (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.180  Repurchase a Loan (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.185  State (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.190  Servicer (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.195  Points and Fees (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.197  Total Loan Amount (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.198  Approved Credit Counselor (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.199  Home Equity Loan (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.210  Fees

a)         Method of Payment of Fees

The fees listed in this Section shall be payable to the Department, or to the Nationwide Mortgage Licensing System and Registry for transfer to the Department as approved by the Director. The Director may specify the form of payment to the Department or to the NMLS, which may include certified check, money order, credit card, or other forms authorized by the Director.  The Director may specify that fees be paid separately or combined, and may pro-rate fees for implementation of the NMLS.  The NMLS shall be authorized to collect and process transaction fees or other fees related to licensees or other persons subject to the Act.

b)         Residential Mortgage License

1)         Investigation Fee:  The applicant shall pay a non-refundable fee of $1,500 or such non-refundable amount as authorized by the Director that, when combined with the license fee set forth in subsection (b)(2)(A), totals an amount equal to $2,700 annually or the amount authorized by Section 2-2 of the Act.

2)         License Fee: 

A)       Initial Licensure:  For each application for an initial Illinois Residential Mortgage License on which the Director has made the findings that a license shall be issued, the applicant shall pay a non-refundable license fee of $1,200, plus the investigation fee set forth in subsection (b)(1), or such non-refundable amount as authorized by the Director that, when combined with the investigation fee set forth in subsection (b)(1), totals an amount equal to $2,700 annually or the amount authorized by Section 2-2 of the Act.

B)        License Renewal:  For each application for an annual renewal of an Illinois Residential Mortgage License, the applicant shall pay a non-refundable license fee of $2,700, or the total amount set forth in subsections (b)(1) and (b)(2)(A).

C)        Amended License:  The licensee shall pay a non-refundable fee of $500 for each Notice of Change of Ownership or Control amended license that is required by Subpart D.

D)        Notice of Change:  The licensee shall pay a non-refundable fee of $50 with each Notice of Change of Officers or Directors or Change of Name or Address or Change of Activity.

E)         Duplicate License:  The licensee shall pay a non-refundable fee of $50 for each duplicate original license issued.

F)         Returned Payment:  Any licensee or person who delivers a check or other payment to the  Department that is returned unpaid by the financial institution upon which it is drawn shall pay to the Department, in addition to the amount already owed, a fee of $50.

3)         Exempt Registration Fee: For each application for initial registration or annual renewal of registration as authorized by Section 1-3(a-1) of the Act, the applicant or registrant shall pay the Department a non-refundable registration fee of $2,700.

c)         Mortgage Loan Originator License

1)         Application Fee:  An applicant for a Mortgage Loan Originator license shall pay a non-refundable fee of $200 for each individual licensed on the initial application and $150 annually for each individual renewal, plus an additional $75 late fee for any renewal that is received after the expiration date of the preceding license. 

2)        License Transfer Fee:  There shall be paid by or on behalf of the Mortgage Loan Originator a non-refundable fee of $50 for each license transferred.

3)         License Reactivation Fee:  There shall be paid by or on behalf of the applicant a non-refundable fee of $150 for reactivating each or license on Inactive or Inoperative Status. 

4)         Duplicate Documents:  The licensee shall pay a non-refundable fee of $50 for each duplicate document.

5)         Returned Payment:  Any person who delivers a check or other payment to the Department that is returned to the Department unpaid by the financial institution upon which it is drawn shall pay to the Department, in addition to the amount already owed to the Department, a fee of $50.

d)        Examination

1)        Fees:  Time expended in the conduct of any examination of the affairs of any licensee or its affiliates pursuant to the provision of Section 4-2 of the Act shall be billed by the Department at a rate of $510 per examiner day. Fees will be billed following completion of the examination and shall be paid within 30 days after receipt of the billing.

2)         Out-of-State Travel:  When out-of-state travel occurs in the conduct of any examination, the licensee shall make arrangements to reimburse the Department all charges for services such as travel expenses, including airfare, hotel and per diem incurred by the employee.  These expenses are to be in accord with applicable travel regulations published by the Department of Central Management Services and approved by the Governor's Travel Control Board (80 Ill. Adm. Code 2800).

e)         Additional Full-Service Office: 

1)         Initial Fee:  The licensee shall pay a non-refundable fee of $250 for each Notice of Intent to Establish an Additional Full-Service Office required by Subpart C.

2)         Annual Fee:  After the notice filed under subsection (e)(1), the licensee shall pay an annual non-refundable Additional Full-Service Office fee of $250 on the initial license anniversary date.

f)         Hearing Fees:  Each party that requests a hearing pursuant to Section 4-1(n) of the Act shall pay a non-refundable fee of $500, except that a  Mortgage Loan Originator requesting a hearing shall pay a non-refundable fee of $250, unless the fee is waived by the Director.  In determining whether to waive the fee, the Director shall consider the financial hardship imposed on the party.

(Source:  Amended at 43 Ill. Reg. 5272, effective May 10, 2019)

Section 1050.220  License Fees (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.230  Amended License Fees − Corporate Changes (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.240  Duplicate Original License Fees (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.245  Loan Originator Registration Application Fee (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.246  Loan Originator Registration Transfer Fee (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.247  Loan Originator Registration Reactivation Fee (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.248  Duplicate Loan Originator Certificate of Registration or Pocket Card Fee (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.250  Examination Fees (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.255  Direct Expenses of Out-of-State Examinations (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.260  Additional Full-Service Office Fees (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.270  Hearing Fees (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.280  Late Fees (Repealed)

(Source:  Repealed at 15 Ill. Reg. 8580, effective May 28, 1991)

Section 1050.290  Manner of Payment (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.310  Application for an Illinois Residential Mortgage License

a)         Any person, association, corporation or partnership (other than those entities exempt by Section 1-4(d) of the Act) that intends to operate as a licensee shall file an application for an Illinois license on a form prescribed by the Director.  Each application shall be accompanied by an investigation fee, as set forth in Section 1050.210 of this Part.  Upon completion of an investigation that the findings set forth in Section 2-2 of the Act have been met, a license fee, as set forth in Section 1050.210 of this Part shall be paid to the Department.

b)        Notwithstanding any other provision of this Part, failure to perfect an application, i.e., meet a second request for information within 10 business days after the request, shall automatically require the Director to issue a denial of the application, except that the Director may upon good cause shown grant an extension.  An example of good cause may include, but shall not be limited to, death or incapacitating illness of the preparer, or catastrophic occurrence.  Denial under such circumstances shall not affect new applications filed after the denial.  Upon submission of an additional investigation fee, an applicant for a new license or renewal may reapply following denial.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.320  Application for Renewal of an Illinois Residential Mortgage License (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.330  Waiver of License Fee

Each applicant for a new Illinois Residential Mortgage License and each applicant for a renewal of an Illinois Residential Mortgage License that intends to request a waiver of the licensing fee under Section 2-7 of the Act shall file a request on a form prescribed by the Director.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.340  Full-Service Office

a)         Each licensee shall maintain a full-service office consistent with the provisions of Sections 3-4 and 1-4(r) of the Act.  At a minimum, each licensee shall:

1)         Maintain a registered agent in Illinois; and

2)         Provide a person or persons reasonably adequate to handle efficiently communications, questions, and other matters relating (Section 3-4 of the Act) to an application for a loan or existing loan and provide a toll-free telephone arrangement for doing so.  In determining whether a licensee handles such matters in a reasonably adequate manner, the Director shall consider consumer complaints received regarding the licensees and information obtained from examinations conducted and reports filed pursuant to the Act.  In addition, the Director shall consider whether the licensee has:

A)        Provided facilities and personnel adequate to accommodate a borrower who wishes to bring all documents applicable to his or her application for or existing home mortgage to the full-service office for examination in conjunction with an inquiry, complaint or concern.

B)        Maintained a supply of all documents required under Subparts G, H, I, J, K, and L of this Part, when those Subparts apply to the licensee.

b)         If the Director determines that a licensee is not in compliance with Sections 3-4 and 1-4(r) of the Act, the Director shall notify the licensee, in writing, detailing the requirements for bringing the licensee into compliance.  The Director may require a licensee to demonstrate compliance with this Section in instances in which personnel are conducting licensable activities in Illinois without adequate facilities and/or licensed offices in Illinois.  The Director, at his or her discretion, may require documentation from licensees and hold hearings to take testimony from owners, officers, directors and employees of a licensee, as selected by the Director, and compel attendance of those so selected for the purpose of determining compliance with this Section.

(Source:  Amended at 36 Ill. Reg. 250, effective January 1, 2012)

Section 1050.350  Additional Full-Service Office

Each licensee that intends to operate and maintain an additional full-service office shall file a Notice of Intent to Establish an Additional Full-Service Office, on a form prescribed by the Director, 30 days prior to the proposed operation of the additional office.  The notice shall be accompanied by the fee set forth in Section 1050.210 of this Part.  Additionally, an annual fee shall be paid upon approval of the Application for Renewal of an Illinois Residential Mortgage License pursuant to Section 1050.320 of this Subpart.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.360  Continuing Education Requirements for Certain Employees (Repealed)

(Source:  Repealed at 28 Ill. Reg. 10352, effective June 29, 2004)

Section 1050.370  Licensing of Mortgage Loan Originators

a)         License Applications

The Director may withdraw any license application for which the applicant has failed or refused to provide a written response, including any required documentation, within 21 business days after receiving a deficiency letter for this response and required documentation from the Director. 

b)         Licenses

1)         Issuance of License; Conditions and Reports. Upon approving an application for an original or renewed Mortgage Loan Originator License pursuant to Article VII of the Act and this Part, the Director may issue the Mortgage Loan Originator License through electronic licensing systems such as the NMLS and maintain a public record of all licenses issued within those electronic licensing systems. The Director may make copies of licenses available to licensees through electronic or other methods. Mortgage Loan Originator Licenses shall be issued subject to the following conditions:

A)        The Director shall use applicable license numbers and/or identifiers for each Mortgage Loan Originator License, including unique identifiers as authorized by Section 7-14 of the Act.

B)        Each Mortgage Loan Originator shall provide notification to the Director through the NMLS, within 10 calendar days after obtaining information that the Mortgage Loan Originator has had his or her license revoked in any governmental jurisdiction (see Section 7-3(1) of the Act), has been convicted of, or pled guilty or nolo contendere to, a felony (see Section 7-3(2) of the Act), or has had an adverse judgment of $500 or more in any jurisdiction (see the financial responsibility, character and general fitness requirements of Section 7-3(3) of the Act). The notification shall describe fully all convictions, revocations and adverse judgments. The Director may take disciplinary action against any Mortgage Loan Originator for convictions, revocations and adverse judgments based upon failure to comply with Sections 7-3(1), (2), or (3) of the Act and may take disciplinary action against a Mortgage Loan Originator who fails to comply with the reporting requirement of this subsection (b)(1)(B).

C)        Each employing licensee or registrant shall provide notification to the Director through submitting a sponsor removal to the NMLS, immediately, but no later than 30 calendar days after the termination of a Mortgage Loan Originator's employment. The employing licensee or registrant may notify the Director of the reasons for the termination and, if applicable, the employing licensee or registrant also shall provide a report to the Director pursuant to Section 6-2(4) of the Act. The Director may take disciplinary action against an employing licensee or registrant that fails to comply with the reporting requirement of this subsection (b)(1)(C) or files a frivolous, false or misleading report under Section 6-2(4) of the Act.

D)        Each Mortgage Loan Originator shall notify the Director through the NMLS, within 30 days if the Mortgage Loan Originator's information contained in the initial application or any renewal application is no longer current and must file accurate supplemental information.  The Director may take disciplinary action against a Mortgage Loan Originator who fails to notify the Director as required by this subsection (b)(1)(D).

2)         Inactive or Inoperative Status and Reactivation; Transfers

The Director may create categories of inactive or inoperative status. A Mortgage Loan Originator License shall be considered on inactive or inoperative status at any time a Mortgage Loan Originator is not actively employed by a licensee or registrant prior to the expiration date of the license. A Mortgage Loan Originator shall apply to the Director through the NMLS, and include the transfer fee set forth in Section 1050.210, in order to transfer the sponsorship of his or her license to another employing licensee. A Mortgage Loan Originator cannot conduct licensable activities while on inactive or inoperative status or any time prior to the Director accepting the new sponsor in the NMLS. When a Mortgage Loan Originator has been on inactive or inoperative status for more than 90 calendar days, prior to resuming active status, the Mortgage Loan Originator shall pay to the Director a Mortgage Loan Originator Reactivation Fee in the amount set forth in Section 1050.210. A Mortgage Loan Originator's inactive or inoperative status expires with the expiration of the license and any subsequent licensing shall require submission of a new license application and fee in the amount set forth in Section 1050.210.

3)         Independent Loan Processors

An independent loan processor entity must employ one or more individuals licensed as a Mortgage Loan Originator to provide supervision and instruction to one or more individuals performing loan processing services. If only one loan processor is providing services for an independent loan processing entity, that individual must be licensed as a Mortgage Loan Originator to meet the supervision and instruction requirement set forth in the Act and this Part.

(Source:  Amended at 43 Ill. Reg. 5272, effective May 10, 2019)

Section 1050.410  Net Worth

a)         Amount.  Except as provided in subsection (c) of this Section, each licensee shall maintain net worth of not less than $150,000.

b)         Calculation.  Net worth shall be defined as total assets minus total liabilities, except that total assets shall not include the following:  

1)         That portion of a licensee's assets pledged to secure obligation of any person or entity other than that of the mortgagee;

2)         Any asset (except construction loans receivable, secured by first mortgages from related companies) due from officers or stockholders having an interest;

3)         That portion of any marketable security (listed or unlisted) not shown at the lower of cost or market, except for any shares of Federal National Mortgage Association stock required to be held under a servicing agreement, which shall be carried at cost;

4)         Any real estate held for sale or investment if development will not start within 2 years from date of acquisition;

5)         Any amount in excess of the lower of the cost or market value of mortgages in foreclosure, construction loans, or foreclosed property acquired through foreclosures;

6)         Any amount shown on the books for investment in and advances to joint ventures, subsidiaries, affiliates, and selected companies that is greater than the value of the assets at equity;

7)         Goodwill or value placed on insurance renewals or property management contract renewals or other similar intangibles;

8)         Organization costs;

9)         Any leasehold improvements not being amortized over the lesser of the expected life of the asset or the remaining term of the lease;

10)         Commitment fees paid that are not recoverable through the closing or selling of loans;

11)         The value of any servicing contracts not determined in accordance with Financial Accounting Standards Board Statement No. 65 and Financial Accounting Standards Board Technical Bulletin 87-3; and

12)         Any asset may be excluded from the calculation of the licensee's net worth upon the Director's finding that including the asset undermines or may undermine, in whole or in part, any purpose of the Act, as identified at Section 1-2 of the Act.  Any report or finding made under this subsection (b)(12) shall, in writing, identify which of the Act's purposes is or may be undermined and how including the asset results in that effect.

c)         A licensee that engages solely in loan brokering as defined in Section 1-4(o) of the Act is excepted from complying with the net worth requirements of subsection (a) of this Section provided the licensee provides written evidence to the Director of the licensee's conformance with a net worth of $50,000, as required by Section 3-5 of the Act.  The allowable components of the $50,000 net worth shall conform pro rata with the net worth requirements of the United States Department of Housing and Urban Development, as set forth in the Audit Guide for Audits of HUD Approved Nonsupervised Mortgagees for Use by Independent Public Accountants and be subject to subsection (b)(12) of this Section.  The audit guide for audits of HUD approved non-supervised mortgagees for use by independent public accountants can be obtained by contacting the U.S. Department of Housing and Urban Development, Office of Inspector General, 451 Seventh Street SW, Washington, D.C. 20410.  This handbook was last issued August 25, 1997 (no subsequent dates or editions), under the title: Handbook 2000.04 REV-2, Consolidated Audit Guide for Audits of HUD Programs.

(Source:  Amended at 34 Ill. Reg. 17339, effective October 29, 2010)

Section 1050.420  Line of Credit (Repealed)

(Source:  Repealed at 13 Ill. Reg. 17056, effective October 20, 1989)

Section 1050.425  Examination

a)         As part of each regularly scheduled examination, the Director shall evaluate and rate licensees, for purposes of scheduling the next regular examination, in accordance with uniform rating factors.

b)         Composite ratings shall include but not be limited to:

1)         Composite "1".  Licensees in this group had no violations noted during the examination; any findings or comments were of a minor nature.  Such licensees evidence strong financial condition and management skills.

2)         Composite "2".  Licensees in this group had violations noted that are correctable in the normal course of business.

3)         Composite "3".  Licensees in this category exhibit either compliance, financial or operational weaknesses that give cause for remedial action to correct the weaknesses.

4)         Composite "4".  Licensees in this group have compliance violations that are not being addressed or resolved by the licensee.  Licensees in this category require urgent and decisive corrective measures.

5)         Composite "5".  This category is reserved for licensees with deficiencies or uncorrected violations critical enough to support conservatorship, suspension, or revocation.  Some examples might include, but are not limited to:  ability to demonstrate net worth, failure to procure required bonds, fraudulent mortgage practices, fraudulent application for licensure, and being subject to other regulators' disciplinary or enforcement actions.

c)         All licensees shall be subject to examination by the Director.  The Director may enter into cooperative agreements with other regulatory authorities and contract with others to provide for examinations and the Director may accept examination reports from those regulatory authorities and under such contracts as meet the requirements of this Section.  The examination shall result in a rating as referenced in subsection (b) and will be charged at the rate referenced.  Thereafter, licensees shall have a frequency of regular examinations at least as follows:

d)         The Director may conduct an examination at any time at the Director's sole discretion.  In determining whether to conduct an examination, the Director may consider information such as an allegation or evidence that a licensee is engaged in fraudulent, unsafe, unsound, or unlawful activities, evidence of loan repurchase demands made upon the licensee, receipt of complaints regarding a licensee, a change in ownership of a licensee, other governmental inquiries, failure to maintain or demonstrate net worth, notice of cancellation of surety bond or fidelity bond, and vendor complaints.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.430  Late Audit Reports

Audit reports not delivered within 90 days after the date specified in Section 3-2 of the Act, unless extended for cause by the Director, shall cause the licensee to pay a fee at the rate of $50 per calendar day for up to three months.  An independent auditor may be appointed by the Director at the expense of the licensee at any time after the 90^th day.  To qualify for an extension of time, a licensee shall apply to the Director in writing at least 15 days prior to the deadline.  In determining whether to grant an extension of time, the Director shall consider whether the extension of time is based on conditions beyond the control of the licensee.  The Director shall appoint an independent auditor when the licensee is engaged in the activities of residential mortgage lending and has failed after the 90^th day to submit the required certified annual audited financial statements, and has not been granted an extension by the Director.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.440  Escrow

a)         Escrow funds shall be disclosed as a part of the licensee's financial statement package.  Escrow funds collected pursuant to Section 1050.1335 and for payment of real property taxes or any other purpose authorized by the mortgage contract shall be maintained in a depository institution as described in subsection (b) and may not be commingled with any licensee funds.  If no funds are to be escrowed in a shared appreciation agreement, no disclosure is required to be part of the licensee's financial statement package.

b)         When escrow funds have been collected pursuant to Section 1050.1335, or when servicing includes maintenance of an escrow (impound) account for payment of tax bills and/or hazard insurance premiums, the funds collected for the account shall be placed in a federally insured depository institution, or a Federal Home Loan Bank, or a Federal Reserve Bank, or other similar government-sponsored enterprise, to be removed and used only for:

1)         authorized payments from the related escrow (impound) account for tax bills and/or hazard insurance premiums;

2)         refunds to the mortgagor;

3)         transferring to another institution as described in subsection (b);

4)         forwarding to the appropriate servicer in case of a transfer of servicing;

5)         any other purpose authorized by the mortgage contract;

6)         compliance with a regulatory or court order; or

7)         payment to a licensee pursuant to the provisions of Section 1050.1335.

c)         All escrow funds are subject to examination by agents of the Director.

(Source:  Amended at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.450  Audit Workpapers

Upon request from the Director, a licensee shall forward authorization to release workpapers of the licensee's independent auditor to the Director within two days after receipt of the request.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.460  Selection of Independent Auditor (Repealed)

(Source:  Repealed at 34 Ill. Reg. 17339, effective October 29, 2010)

Section 1050.470  Proceedings Affecting a License

Each licensee shall be required to provide notification to the Director within two days after the licensee becomes the subject of any other Federal or State governmental agency's proceedings that which could affect the licensee's authority to do business as a licensee.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.475  Change in Business Activities

Each licensee shall be required to provide advance written notice to the Director at least 10 business days prior to:

a)         Closing a full-service office; or

b)         Discontinuing brokering, originating, or servicing, as defined under the Act.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.480  Change of Ownership, Control or Name or Address of Licensee

Prior to a change of ownership or control, a change of name or address or a change of officers or directors, a licensee shall complete and file the appropriate application and the appropriate fee as set forth in Section 1050.210 of this Part so that the Director may determine whether such a change would alter the findings for issuance of a new license as set forth in Section 2-2(a) of the Act or would change materially any of the information in the licensee's new license application or license renewal application.

a)         Change of Ownership or Control.  A completed application for a new Illinois Residential Mortgage License shall be submitted to the Director, along with payment of the appropriate fee as set forth in Section 1050.210 of this Part, by the prospective purchaser at least 10 days prior to the proposed date of the change.  The Director shall issue either a new license or a finding that the proposed change of ownership or control does not require a new license.

b)         Change of Name or Address.  At least 10 days before the proposed effective date of the change, a licensee shall file with the Director a completed Application for Change of Name or Address on a form prescribed by the Director and accompanied by the fee set forth in Section 1050.210 of this Part.  The Director shall approve the name change unless the Director finds the proposed name is the same as, or deceptively similar to, another licensee's name.  In determining whether a name is deceptively similar, the Director shall consider the geographic area in which each licensee operates.  If the Director denies an Application for Change of Name or Address, the Director shall inform both the applicant licensee and the licensee that has the deceptively similar or same name.  Upon approval of the application and upon receipt of payment of the appropriate fee as set forth in Section 1050.210 of this Part, the Director shall issue an amended license.

c)         Change of Officers or Directors.  Whenever one or more of a licensee's principal officers or directors resign, or are replaced, or whenever additional principal officers or directors are installed, the change shall be reported to the Director within 30 days, or by the end of the calendar month in which the change occurred, whichever is later, of the effective date of the change.  The change shall be reported on a form prescribed by the Director, accompanied by the appropriate fee set forth in Section 1050.210 of this Part.  For purposes of this Section, "principal officers or directors" shall mean those officers who engage in activities covered by the Act.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.490  Bonding Requirements

a)         In lieu of a paper surety bond, each licensee shall file and maintain an electronic surety bond in the NMLS in conformance with Section 3-1 of the Act.  The amount of the bond shall be not less than $25,000 and in an amount according to the scale in subsection (b).

b)         Each Mortgage Loan Originator must be covered by the electronic surety bond filed and maintained by his or her employing licensee pursuant to subsection (a).  Registered exempt companies or entities shall file and maintain electronic surety bonds in the same manner as subsection (a) for the purpose of covering their Mortgage Loan Originator employees or sponsored individuals.  Licensed mortgage brokers and mortgage bankers and exempt company or entity registrants must file and maintain an electronic surety bond that provides coverage for each sponsored Mortgage Loan Originator in an amount that reflects the dollar amount of Illinois mortgage loans applied for or originated by its Mortgage Loan Originators during the preceding calendar year.  Exempt independent loan processing entity registrants must file and maintain an electronic surety bond in the same manner as subsection (a) that provides coverage for each sponsored Mortgage Loan Originator in the amount of $50,000.  The surety bond amount will be set for each licensed mortgage broker and mortgage banker and registered exempt company or entity in accordance with the following scale, or, for exempt independent loan processing entity registrants, the $50,000, based upon Illinois residential mortgage loans brokered, processed, underwritten, funded, originated, serviced or purchased, as the case may be, during the preceding calendar year:

The Director may require licensed mortgage brokers and mortgage bankers and registered exempt companies to file reports of Illinois mortgage loan volumes with the Director or NMLS for purposes of determining that the bond is in an amount that complies with the scale in this subsection (b).  Based upon these reports, the Director may cause licensed mortgage brokers and mortgage bankers and registered exempt companies to adjust the amount of the bonds to an amount that complies with the scale in subsection (b). 

c)         Each electronic surety bond required pursuant to Section 3-1 of the Act and this Section shall be for a perpetual term.

(Source:  Amended at 43 Ill. Reg. 5272, effective May 10, 2019)

Section 1050.610  Filing Requirements

On or before March 1 of each year, each licensee, except entities engaged solely in loan brokering activities and entities engaged solely in servicing activities, shall file an Annual Report of Mortgage Activity.  On or before March 1 of each year, each licensee that brokers loans must file an Annual Report of Mortgage Brokerage Activity.  On or before March 1 of each year, each licensee that services residential mortgage loans shall file an Annual Report of Mortgage Servicing Activity.  On or before March 1 of each year, each licensee that purchases residential mortgage loans shall file an annual report of purchasing activity set forth in Section 1050.655.  The Director may require reporting by licensees of mortgage, mortgage brokerage, and mortgage servicing activities to the NMLS, upon the dates established by the NMLS.

(Source:  Amended at 43 Ill. Reg. 5272, effective May 10, 2019)

Section 1050.620  Reporting Forms

The reports required by Section 1050.610 must be filed with the Director on forms prescribed by and obtained from the Director and in accordance with the instructions for filing included with the forms.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.630  Annual Report of Mortgage Activity

a)         Each licensee shall report the number and aggregate dollar amount of application for, and the number granted and the aggregate dollar amount of, loans pursuant to Section 4-8.3 of the Act.  This report shall be categorized by:  residential mortgage loans; construction loans; and home improvement and rehabilitation loans.  The reporting shall be made by census tract.  If the U.S. Department of Commerce Census Bureau has not assigned census tracts, the reporting shall be by zip code.

b)         Each licensee shall report the information regarding residential mortgage loans pursuant to Section 4-8.3 of the Act by census tract.  If the U.S. Department of Commerce Census Bureau has not assigned census tracts, then reporting shall be by zip code.  In addition to the information required to be reported under Section 4-8.3 of the Act, each licensee shall furnish the name of any loan broker who has had any connection with such loans.

c)         Service corporations of savings and loan associations and subsidiaries or affiliates of certain banks and foreign banking corporations exempted from licensing at Section 1-4(d)(1)(viii) and (ix) of the Act (except those that only service or only broker loans), are required to file Annual Reports of Mortgage Activity as though they are licensees.  They shall so file on forms prescribed by and obtained from the Director.  In lieu of the information required by subsection (a), the service corporations of savings and loan associations may submit Federal Home Loan Bank Board (FHLBB) Form 1154-0 "Loan Application Register of Mortgage Loans".

(Source:  Amended at 29 Ill. Reg. 19187, effective November 10, 2005)

Section 1050.640  Annual Report of Brokerage Activity

a)         Each licensee and service corporation of savings and loan associations and subsidiaries or affiliates of certain banks and foreign banking organizations exempted from licensing by Section 1-4(d)(viii) and (ix) of the Act, which broker residential mortgage loans, shall file an Annual Report of Brokerage Activity.

b)         The Annual Report of Brokerage Activity shall include the names of the loan funders, dollar amount of the loans and with whom the licensee had mortgage brokerage agreements including any specific loan programs and any aggregate dollar limits.

(Source:  Amended at 29 Ill. Reg. 19187, effective November 10, 2005)

Section 1050.650  Annual Report of Servicing Activity

Each licensee that services home loan mortgages and reports any of these loans as being in default or foreclosure pursuant to Section 4-8.3 of the Act shall furnish, in addition to other information requested by the Director the names of the lenders who funded the loan.

(Source:  Amended at 29 Ill. Reg. 19187, effective November 10, 2005)

Section 1050.655 Annual Report of Purchasing Activity

Each licensee that purchases residential mortgage loans shall file an Annual Report of Purchasing Activity. The Annual Report of Purchasing Activity shall include the names of originating entities, dollar amounts for each loan by property address or dollar amount of Illinois loans contained in a multi-state property portfolio, identifying the portfolio, and a total dollar amount for all Illinois loans purchased.

(Source:  Added at 36 Ill. Reg. 250, effective January 1, 2012)

Section 1050.660  Verification

A notarized affidavit or oath, affirmation or declaration under penalty of perjury, attesting to the accuracy and truthfulness of the report must accompany each Annual Report of Mortgage Activity, Annual Report of Brokerage Activity and Annual Servicing Report, and Annual Report of Purchasing Activity submitted to the Director.  This verification must be signed by the owner, if the licensee is a sole proprietorship; by all partners, if the licensee is a partnership; by two officers or all directors, if the licensee is a corporation; or by all members, if the licensee is an association.

(Source:  Amended at 36 Ill. Reg. 250, effective January 1, 2012)

Section 1050.710  Computation of National Residential Mortgage Foreclosure Rate (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.720  Computation of Illinois Residential Mortgage Foreclosure Rate (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.730  Excess Foreclosure Rate (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.740  Loan Delinquency Hearing

a)         Authority.  The Director may hold public hearings concerning a licensee that is subject to examination pursuant to Section 4-8 of the Act.  The hearing shall be held in accordance with Section 4-8(c) of the Act.

b)         Notice.  Written notice of the time, place, date and subject of the hearing shall be posted in both the Springfield and Chicago offices of the Division at least 10 days prior to the hearing.  The Director may distribute such notice to other interested persons upon request.

c)         Testimony.  Testimony at the public hearings shall be taken in accordance with Section 4-8(c) of the Act.  Testimony may be either oral or written.  If oral, the party proposing to testify must complete a witness slip that shall be provided at the hearing.  If written, the proposed testimony must be received by the Director prior to the hearing.  Notwithstanding the foregoing, testimony shall be permitted at the hearing only if the party proposing to testify has completed, and the Director has received, either a written letter of complaint or a consumer complaint form as prescribed by the Director.

d)         Hearings.  Hearings held under this Section shall be for informational purposes only and shall not be subject to 38 Ill. Adm. Code 100.

(Source:  Amended at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.750  Director's Authority − Unusually High Rate (Repealed)

 (Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.810  New Loans

When a borrower is required to make monthly payments, payment instructions shall be issued in time to reasonably assure receipt by the customer at least 15 days before the first payment is due and shall include, but not be limited to the following:  

a)         The name, address and telephone number of the entity to whom payments are to be made and the name of the person to whom inquiries should be directed.  Phone numbers shall be toll free to the customer;

b)         The exact amount of the monthly payment and a plain English explanation of the method of calculation; and

c)         A clear and conspicuous statement as to monthly date of each payment, regardless of interval between due date and assessment of any late-payment penalty.

(Source:  Amended at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.820  Transfer of Servicing

a)         No licensee shall sell or transfer servicing to, or accept or purchase servicing from, any entity other than a licensee or an entity exempt from licensing pursuant to Section 1-4(d) of the Act unless specifically authorized by the Director.

b)         Any licensee who is a party to an arrangement for large transfers of servicing shall make certain that sufficient staff and facilities are dedicated to the transfers to prevent inconvenience to mortgagors.

c)         Notice to Mortgagor of Transfer.  Licensee shall comply with the notice requirement set forth in 12 CFR 1024.33 (Mortgage Servicing Transfers) (2017, no subsequent dates or editions included). 

d)         Responsibilities of Transferring Licensee.  Responsibilities of a licensee who transfers or sells servicing on a residential mortgage loan shall:  

1)         Promptly providing the insurance carrier or agent with a notice of transfer identifying both the policy number and loan number when servicing includes payment of hazard insurance premiums;

2)         Promptly notifying the tax-bill service or taxing authority of the transfer when servicing includes payment of real property taxes;

3)         Forward to the buying or accepting servicer:  

A)        Escrow (impound) balances;

B)        Correspondence, bills, receipts and documents relating to the transferred loans;

C)        Mortgage payments daily, for a period of at least 60 days.

e)         In addition to the notice described in subsection (c), responsibilities of a licensee buying or accepting transfer of servicing of a residential mortgage loan shall include but not be limited to:  

1)         Promptly furnishing to the customer payment identification materials required by the licensee for efficient processing of customer remittances. Examples of such items are payment coupon books and preprinted envelopes;

2)         Promptly responding to each mortgagor's questions regarding payoffs, assumptions, statements of account and general servicing procedures;

3)         Practicing forbearance with the mortgagor when sorting out transfer-related problems, including but not limited to delinquency and assessment of late charges.

(Source:  Amended at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.830  Real Property Tax and Hazard Insurance Payments

Where servicing includes maintenance of an escrow (impound) account for payment of tax bills and hazard insurance premiums, the licensee shall make a good faith effort to comply with the following guidelines:  

a)         Tax bills received 30 days before discount or penalty dates should be paid on or before those dates;

b)         Hazard insurance premium bills received 30 days before the due date should be paid on or before the due date;

c)         To ensure accrual of sufficient funds to pay taxes and insurance premiums, a complete analysis of each mortgage escrow (impound) account shall be performed at least once every year.  No later than 30 days before the effective date of a change in payment, the customer shall receive the analysis, along with a plain English explanation of how the new payment amount has been calculated.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.840  Payment Processing

A licensee shall process and properly credit to a mortgage loan account any payment from a mortgagor on the same calendar date the payment is physically delivered, either in person or via United States Mail, at the address designated by the licensee for payments. No late fee shall be imposed if the licensee has received the mortgagor's payment in readily identifiable form by 5:00 p.m. on the day on which the payment is due in the amount, manner, location and time indicated by the mortgagee to avoid the imposition of late fees. Upon demand by the Department, the licensee shall produce documentation as to the date on which any payment in question was received by the licensee.

(Source:  Amended at 36 Ill. Reg. 250, effective January 1, 2012)

Section 1050.850  Toll-Free Telephone Arrangement

Telephone calls, regarding a mortgage loan account, to a licensee with a telephone area code other than that of the customer shall not be at the customer's expense.  When a licensee is not required by the Act or this Part to maintain an Illinois-dedicated "800" telephone number, it still shall be the responsibility of the licensee to provide some form of toll-free telephone arrangement for customer contacts to the licensee during normal business hours.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.860  Payoff of Outstanding Mortgage Loan

a)         When a check or other negotiable instrument received in final payment is deposited in a financial institution, the licensee's refund policy shall conform to Section 4-213 of the Uniform Commercial Code [810 ILCS 5/4-213] time requirements on making those funds available for withdrawal by the licensee.

b)         Payoff Letter.  Within seven business days of receipt of a written request from an entity authorized by the borrower, a licensee shall furnish a written notice of the total amount required to pay in full on an outstanding mortgage loan, as of a specified date.  Payoff letters shall itemize and explain all charges included in the total figure stated.

c)         For shared appreciation agreements, the licensee shall furnish within five business days after receipt of a written request from a borrower or an entity authorized by the borrower an initial estimate of the total amount required for the borrower to pay at the termination or settlement of the shared appreciation agreement. The licensee shall furnish a final written notice of the total amount required for the borrower to pay at the termination or settlement of the shared appreciation agreement within three business days after the licensee receives the valuations on which the Ending Home Value and Final Settlement Payment Amount are based. The final written notice shall be provided to the borrower no more than 30 days after the licensee receives the request.

(Source:  Amended at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.870  Compliance with Other Laws

Servicing and foreclosure procedures of a licensee shall comply with applicable federal and State statutes and regulations, including but not limited to, Section 15-1502.5 of the Illinois Mortgage Foreclosure Law [735 ILCS 5/15-1502.5].

(Source:  Added at 36 Ill. Reg. 250, effective January 1, 2012)

Section 1050.910  General Prohibition

No person, partnership, association, corporation or other, entity except a licensee or an entity exempt from licensing pursuant to Section 1-4(d) of the Act, shall cause to be circulated or use any advertising appearing in the State of Illinois or make any representation or give any information to any person that indicates or reasonably implies activity involving the making, servicing or brokering of loans secured by residential real estate located in Illinois.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.920  Definition of Advertisement

a)         An advertisement is any message, except as provided in subsection (b) of this Section, conveyed in any format, including, but not limited to, the Internet, and attempting to induce, directly or indirectly, any person to enter into a residential mortgage loan or residential mortgage loan brokerage agreement as defined in Section 1-4(w) of the Act.

b)         Small items bearing only the name, address and telephone number of the distributing entity shall not be considered messages intended to induce any person to enter into a residential mortgage loan agreement or residential loan brokerage agreement as defined in the Act and shall not be considered advertisements.  Examples of these items are pencils, pens, buttons, pins, pocket calendars, and balloons.  Business cards shall be considered an advertisement.

(Source:  Amended at 43 Ill. Reg. 5272, effective May 10, 2019)

Section 1050.930  Compliance with Other Laws

Every advertisement shall comply with Sections 1-3(b) and 3-3 of the Act, as well as applicable Federal and State statutes and regulations, including, but not limited, to the Consumer Credit Protection Act (15 USC 1601, et seq.) including Title VII (Equal Credit Opportunity Act) and Title I (Truth in Lending Act) of that Act and the Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505].

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.940  Requirements

Any advertisement appearing in Illinois by a licensee regarding residential mortgage loans, whether via electronic or print media, including mailings to individual potential residential mortgage loan customers, shall include, in a manner that is clear and conspicuous to the consumer:

a)         The NMLS Consumer Access homepage (www.nmlsconsumeraccess.org).  For electronic media, the licensee shall use the phrase "For licensing information, go to:  www.nmlsconsumeraccess.org."

b)         The NMLS Unique Identifier of the licensee.  If a Mortgage Loan Orignator (MLO) is advertised, the licensee must include its MLO employee's individual NMLS Unique Indentifier, in addition to the licensee's NMLS Unique Indentifier.

(Source:  Amended at 43 Ill. Reg. 5272, effective May 10, 2019)

Section 1050.950  Misleading and Deceptive Advertising Prohibition

Advertisements by licensees shall not be false, misleading or deceptive.  Examples of prohibited advertising include but are not limited to the following:  

a)         No advertisement regarding residential mortgage lending or brokering may indicate or imply that interest rates or charges for loans are in any way "recommended", "approved", "set" or "established" by the State or the Act;

b)         The NMLS Unique Identifier of the licensee shall not appear in any advertisement relating to activities other than residential mortgage lending or brokering, unless wording relating to the licensee's residential mortgage services also appears in the such advertisements and in prominence equal to or greater than the language regarding its other activities.

(Source:  Amended at 43 Ill. Reg. 5272, effective May 10, 2019; expedited correction at 43 Ill. Reg. 9197, effective May 10, 2019)

Section 1050.1010  Loan Brokerage Agreement

Before a mortgage loan applicant (also referred to in this Section as "borrower" or "customer") signs a completed residential mortgage loan application or gives the licensee any consideration, whichever comes first, a loan brokerage agreement shall be required and shall be in writing and signed by both the mortgage loan applicant and a licensee whose services to the customer shall be loan brokering as defined at Section 1-4(o) of the Act.

a)         The loan brokerage agreement shall carry a clear and conspicuous statement that, upon request, a copy of the agreement shall be made available to the borrower or the borrower's attorney for review prior to signing.

b)         Both the licensee's authorized representative and the borrower shall sign and date the loan brokerage agreement, and a copy of the executed agreement shall be given to the customer.

c)         The loan brokerage agreement shall contain an explicit description of the services the licensee agrees to perform for the borrower and an accounting of estimated loan costs and fees paid to the licensee that may be provided through reference to, or be taken from, a good faith estimate or TILA-RESPA Integrated Loan Estimate. The loan brokerage agreement shall contain language of prominence equal to or greater than the estimate, listing the types of situations or conditions that could materially affect the amounts indicated as a result of details that could not be known by the licensee at the time of signing the loan brokerage agreement.  Examples of such situations or conditions include, but are not limited to, an appraised value different from that estimated by the borrower or credit obligations that the borrower fails to report.

d)         The loan brokerage agreement shall carry a clear and conspicuous statement as to the conditions under which the borrower is obligated to pay the licensee.

e)         The loan brokerage agreement shall provide that, if the licensee makes false or misleading statements in the agreement, the borrower may, upon written notice:  

1)         void the agreement;

2)         recover monies paid to the broker for which no services have been performed; and

3)         recover actual costs, including attorney fees for enforcing the borrower's rights under the loan brokerage agreement.

f)         The loan brokerage agreement shall incorporate by reference the Loan Brokerage Disclosure Statement described in Section 1050.1020.

g)         Except for a Rate-Lock Fee Agreement in accordance with Section 1050.1335, the loan brokerage agreement shall be the only agreement between the borrower and licensee with respect to a single loan; provider, however, that the licensee also shall provide to the customer any disclosure statement necessary to comply with Federal and State requirements, including, but not limited to, the Consumer Protection Credit Act (15 USC 1601), Equal Credit Opportunity Act (Title VII), and Truth in Lending Act (Title I) and Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505].

h)         The loan brokerage agreement shall contain the name and Unique Identifier in the Nationwide Multistate Licensing System and Registry of any licensee and Mortgage Loan Originator assisting the licensee in performing services for the borrower.

(Source:  Amended at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.1020  Loan Brokerage Disclosure Statement

Before the borrower signs a loan brokerage agreement or gives the licensee any consideration, whichever comes first, the licensee shall give the borrower a written disclosure statement and shall obtain the customer's signature on a duplicate of the disclosure statement near clear and conspicuous wording indicating that the customer has read and understands the disclosure statement or has had the contents explained to him or her by someone not connected with the licensee.  The disclosure statement shall prominently display the following material, in the order presented:  

a)         In the case of a licensee who only brokers as defined in the Act, a clear and conspicuous statement that:

1)         the licensee does not make loans, and

2)         actual funds are provided by another entity that may affect availability of funds;

b)         The name under which the entity is licensed under the Act, any other names under which the licensee has engaged in activities regulated by the Act, even if not licensed under the current or predecessor Act, during the preceding 10 years and, if applicable, the name of the parent or affiliated company;

c)         Whether the licensee does business as an individual, partnership, association, corporation or any other organization form;

d)         If the licensee brokers loans to only one entity, disclosure of that fact.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1030  Prohibited Practice

No licensee shall knowingly provide, or offer to provide, for any borrower any loan brokerage services, as defined by the Act, under any arrangement with any entity other than a licensee or an entity exempt from licensing by Section 1-4(d) of the Act.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1100  High Risk Home Loan Application Practices; Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], Sections 1050.1180, 1050.1185, 1050.1186 and 1050.1187 of this Subpart J do not apply to loans closed on or after January 1, 2004.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1110  Borrower Information Document

Borrower Information Document.  Before a mortgage loan applicant, also referred to in this Subpart as "borrower" or "customer", signs a completed residential mortgage loan application or gives the licensee any consideration, whichever comes first, the licensee shall give the customer a Borrower Information Document.  The document may be incorporated into or appended to the material as is necessary for compliance with relative Federal requirements, including, but not limited to, Regulation Z (12 CFR 226).  Except for the explicit wording required by subsection (a) of this Section, the following format is for illustrative purposes only; however, all of the following information shall be included in the document:

a)         Regulatory Disclosure Statement:  The following statement:  "This document is being provided to you pursuant to the Residential Mortgage License Act of 1987 and Rules promulgated thereunder (38 Ill. Adm. Code 1050).  The purpose of this document is to set forth those exhibits and materials you should receive or be receiving in connection with your (residential mortgage loan or shared appreciation agreement) application with (name of licensee), holder of License (license number) and regulated by the State of Illinois, Division of Banking, under the aforesaid Act".

b)         Significant information:  Significant information on the types of situations that could affect the processing of the loan but that may not be known by the licensee at the time the application was taken.  Examples of those situations include, but are not limited to:

1)         An appraisal value different from that estimated by the borrower;

2)         Credit obligations the borrower fails to report;

3)         A change in the borrower's financial circumstances that would result in the borrower's ineligibility for the loan; or

4)         A material change or discontinuation of a loan program by an investor or other entity, such as the U.S. Department of Housing and Urban Development, the Veterans' Administration or a private investor.

c)         "Your Home Loan Toolkit":  If the mortgage relates to the purchase of the security real estate, a "Your Home Loan Toolkit" as required by the federal Consumer Financial Protection Bureau that describes the home buying process.  The "Your Home Loan Toolkit" may be obtained at the CFPB website: consumerfinance.gov, or from the United States Government Printing Office (GPO) at the GPO website:  bookstore.gpo.gov.  This toolkit, released on March 31, 2015 and effective October 3, 2015, is hereby incorporated by reference with no subsequent dates or editions included.  A licensee that makes a shared appreciation agreement and provides the required disclosures in compliance with Section 1050.2310 shall be deemed to have complied with this subsection.

d)         Good Faith or Loan Estimate of Costs:

1)         For any residential mortgage loan, regardless of whether it represents a position of first or junior lien against the security real estate, a good faith estimate or TILA-RESPA Integrated Loan Estimate of the costs that will be paid in connection with the financing as outlined in Regulation Z (12 CFR 226).

2)         If the mortgage relates to the purchase of the security real estate, a good faith estimate or TILA-RESPA Integrated Loan Estimate of the amount and nature of charges discussed at Section 1050.1320(b).

3)         A licensee that makes a shared appreciation agreement and provides the required disclosures in compliance with Section 1050.2310 shall be deemed to have complied with this subsection.

e)         Loan Application:  A copy of the loan application or equivalent form that will have to be signed and delivered to the lender in order to obtain the loan.

f)         Mortgage Escrow Account Act, Related Document:  If the mortgage is not FHA-insured or VA-guaranteed and relates to the purchase of owner-occupied, single-family security real estate, unless there is a certainty that the lender will not require maintenance on an escrow account for payment of taxes, a copy of the Mortgage Escrow Account Act [765 ILCS 910], along with a copy of the document to be executed by the applicant at closing with respect to use of a pledged time deposit account in lieu of an escrow account pursuant to that Act.

g)         "Consumer Handbook on Adjustable Rate Mortgages":  If the mortgage is an adjustable rate mortgage representing a first-lien position with respect to the security real estate, the "Consumer Handbook on Adjustable Rate Mortgages", as required by Federal regulations (12 CFR 535.33), that describes the special features of adjustable rate mortgages.

h)         Documents upon Request:  Upon request by the applicant, the following information shall be provided:  

1)         A sample of the form of note and mortgage that will be executed if the loan applied for is approved; and

2)         A general description of underwriting standards that will be considered in evaluating the application.

i)          Dated Customer Acknowledgment:  A provision for an applicant to acknowledge receipt of each of the above-listed disclosures, showing the date of receipt.

(Source:  Amended at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.1120  Description of Required Documentation

A licensee shall provide an applicant, at the time of application, with an accurate and complete description of the exhibits and documentation the applicant is reasonably required to provide in order for the licensee to underwrite the loan.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1130  Maintenance of Records (Repealed)

(Source:  Repealed at 15 Ill. Reg. 8580, effective May 28, 1991)

Section 1050.1140  Loan Application Procedures

Loan application procedures shall comply with the Act as well as applicable Federal and State law and regulations, including, but not limited to, the Consumer Credit Protection Act (15 USC 1601 et seq.), including Title VII (Equal Credit Opportunity Act) and Title I (Truth in Lending Act) of that Act, and the Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505].

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1150  Copies of Signed Documents

The customer shall be provided, at the time of signing, a copy of each document he or she signs, except for releases for credit information and verifications of employment, bank accounts and current mortgage history.  Forms furnished for application by mail shall carry a clear and conspicuous statement that it is the responsibility of the customer to obtain machine copies before mailing the signed documents back to the licensee.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1160  Confirmation of Statements

Upon a customer's written request, a licensee shall, within 3 days after receiving the request, confirm in writing any specific oral statements or promises made to the customer or the customer's agent or attorney.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1170  Cancellation of Application

If a residential mortgage loan applicant delivers to a licensee written cancellation of his or her application on the same day application was received by the licensee, the licensee shall refund all sums paid by the applicant, except the licensee may, at its discretion, retain $25.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1175  Loan Log

a)         Broker/Origination Loan Log.  Each licensee engaged in loan brokerage or loan origination shall maintain a Broker/Origination Loan Log that contains the following for each loan application received, except that a Broker/Origination Log for reverse mortgages shall contain the information in subsection (c) and a Broker/Origination Loan Log for shared appreciation agreements shall contain the information in subsection (f)(1):

1)         Application date (sort loan log by application date);

2)         Borrower name or names;

3)         Borrower or borrowers employer name;

4)         Borrower or borrowers employer address;

5)         Property seller name or names (indicate NA in the event of a refinance);

6)         Property address;

7)         Loan amount;

8)         APR loan program;

9)         Mortgage Loan Originator name;

10)       Mortgage Loan Originator Unique Identifier (Nationwide Mortgage Licensing System);

11)       Processor name or names;

12)       Appraiser name or names;

13)       Appraiser or appraisers license number;

14)       Statement of whether the loan application was cancelled, rejected or closed or is pending and, if the loan application was closed, the closing date and name of the owner and servicer of the loan;

15)       Loan closer name and employer name; and

16)       Loan closing location.

b)         Servicer Loan Log.  Each licensee engaged in loan servicing shall maintain a Servicer Loan Log that contains the following for each loan serviced, except that a Servicer Loan Log for shared appreciation agreements shall contain the information in subsection (f)(2):

1)         Loan number;

2)         Note date;

3)         Borrower name or names;

4)         Property address;

5)         Loan type;

6)         Lien position;

7)         Original principal balance;

8)         Unpaid principal balance;

9)         Total monthly payment;

10)       Principal/interest;

11)       Property tax; and

12)       Hazard insurance.

c)         Reverse Mortgage Loan Log shall include the information in subsection (a) for items 1, 2 (add ages), 6, 8 (add lump sum, monthly payment, line of credit), 9, 10, 11, 12, and add information for new items of appraised value, loan to value, and counseling (yes or no; if yes, add name of agency and HUD approval status).

d)         Secondary Market Loan Log.  Each licensee that sells, assigns or purchases any loans on the secondary market shall maintain a Secondary Market Loan Log that contains the following for each loan sold, assigned or purchased:

1)         Name of loan seller or assignor;

2)         Name of loan buyer or assignee;

3)         Date of transaction;

4)         Name of borrower or borrowers for underlying property;

5)         Amount financed on underlying loan; and

6)         Name of Loan Servicer.

e)         High Risk Home Loans.  If a licensee performs licensable acts with respect to a loan subject to the High Risk Home Loan Act, then the licensee shall maintain a separate High Risk Home Loan Log with the information required in subsection (a) with respect to each loan application received during the previous 60 months and shall maintain the respective loan files for 60 months from the date of closing or other termination of loan processing.

f)         Shared Appreciation Agreement Loan Logs:  A licensee that performs licensable acts with respect to shared appreciation agreements shall separately maintain a Shared Appreciation Agreement Broker/Origination Loan Log and a Shared Appreciation Agreement Servicer Loan Log.

1)         A Shared Appreciation Agreement Broker/Origination Loan Log shall include the information in subsection (a) for items 1, 2, 5,6, 7, 9, 10, 11, 12, 13, 14, 15, 16, and add information for new items of starting value, starting value calculation method, share percentage, counseling date, and counseling provider.

2)         A Shared Appreciation Agreement Servicer Loan Log shall include the information in subsection (b) for items 1, 2, 3, 4, 5, 6, 7, 11, 12, and add information for new items of starting value, starting value calculation method, share percentage, counseling date, and counseling provider.

(Source:  Amended at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.1176  Record Retention

a)         Record Retention.  Pursuant to Section 2-4(c) of the Act, each licensee shall retain all records prepared or received in the course of its residential mortgage business for 36 months. 

1)         For records pertaining to the activities of loan brokering or originating, the 36 month period shall begin on the date of the loan closing or other termination date of the loan process.

2)         For records pertaining to buying/selling loans on the secondary market, the 36 month period shall begin on the date the loan was sold.

3)         For records pertaining to the servicing of loans, the 36 month period shall begin on the date the loan was paid off or on the date the servicing rights were sold.

b)         Format of Retention.  Records pertaining to the activities of loan brokering, loan originating, or buying/selling loans on the secondary market may be retained for the 36 month period:

1)         In hard copy or paper-based form; or

2)         In electronic or digital form.  The electronic or digital form must be capable of legible hard copy reproduction and the licensee must accurately and authentically preserve any alterations, erasures or similar indications of changes on the documents.  The licensee must also retain documentation that explains the process used to convert hard copy or paper-based documents to electronic or digital formats and specifies the date of conversion, the method of conversion, and the disposition of the original hard copy or paper-based document.

(Source:  Amended at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.1177  Required Loan Application File Documents

For licensees engaged in loan brokering or originating, each licensee shall maintain a loan application file for each loan application.  Each loan application file shall include:

a)         the Loan Brokerage Agreement and Loan Brokerage Disclosure Statement, if any mortgage loan brokerage services were utilized by the borrower;

b)         the Borrower Information Document;

c)         all documents signed by the borrower or borrowers, including, but not limited to, the initial loan application, disclosure documents and closing documents;

d)         the appraisal and credit report, as well as other third-party documents relating to the loan; and

e)         all other documents in or related to the loan file.

(Source:  Added at 34 Ill. Reg. 17339, effective October 29, 2010)

Section 1050.1180  Ability to Repay

A lender shall not make a high risk home loan if the lender does not believe, at the time the loan is consummated, that the borrower or borrowers will be able to make the scheduled payments to repay the obligation based upon a consideration of their current and expected income, current obligations, employment status and other financial resources (other than the borrower's equity in the dwelling that secures repayment of the loan).  A borrower shall be presumed to be able to repay the loan if, at the time the loan is consummated, or at the time of the first rate adjustment in the case of a lower introductory interest rate, the borrower's scheduled monthly payments on the loan (including principal, interest, taxes, insurance and assessments), combined with the scheduled payments for all other disclosed debts, do not exceed 50% of the borrower's monthly gross income.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1185  Verification of Ability to Pay Loan

The lender shall verify the borrower's ability to repay the loan in the case of high risk home loans.  The verification shall require, at a minimum, the following:

a)         The borrower prepares and submits to the lender a personal income and expense statement in a form prescribed by the Director who may permit the use of other forms such as the URLA (Fannie Mae Form 1003 (10/92), available from Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, DC 20016-2892 and Freddie Mac Form 85 (10/92), available from Freddie Mac at 1101 Pennsylvania Avenue, NW, Suite 950, PO Box 37347, Washington, DC 20077-0001, no subsequent amendments or editions) and Transmittal Summary (Fannie Mae Form 1077 (3/97), available from Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, DC 20016-2892 and Freddie Mac Form 1008 (3/97), available from Freddie Mac at 1101 Pennsylvania Avenue, NW, Suite 950, PO Box 37347, Washington, DC 20077-0001, no subsequent amendments or editions).

b)         Income is verified by means of tax returns, pay stubs, accounting statements or other prudent means.

c)         A credit report is obtained regarding the borrower.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1186  Fraudulent or Deceptive Practices

No lender shall employ fraudulent or deceptive acts or practices in the making of a high risk home loan, including deceptive marketing and sales efforts.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1187  Prepayment Penalty

No lender shall make a high risk home loan that includes a penalty provision for payment made:

a)         after the expiration of the 36 month period following the date the loan was made; or

b)         that is 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 after 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.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1200  High Risk Home Loan Lending Practices; Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], Section 1050.1250, to the extent it applies to high risk home loans, and Sections 1050.1260, 1050.1270, 1050.1272, 1050.1275, 1050.1276; 1050.1277, 1050.1278 and 1050.1280 of this Subpart do not apply to loans closed on or after January 1, 2004.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1210  Notice to Joint Borrowers

Any notice required by this Subpart to be given to a residential mortgage loan applicant, also referred to as "borrower" or "customer", needs be given only to any one of any joint applicants, borrowers or customers.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1220  Inaccuracy of Disclosed Information

If any information disclosed in accordance with this Part is subsequently rendered inaccurate as a result of any act or occurrence beyond the control of any party to the transaction, the inaccuracy shall not constitute a violation of this Part.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1230  Changes Affecting Loans in Process (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.1240  Prohibition of Unauthorized Lenders

With respect to loans secured by mortgages on residential real estate located in the State of Illinois, no licensee shall knowingly utilize the services of any loan broker or lender, other than a licensee or an entity exempt from licensing pursuant to Section 1-4(d) of the Act.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1250  Good Faith Requirements

a)         For the purpose of this Part, "good faith" means honesty in fact in the conduct of the transaction.

b)         Any disclosure or action required by the Act or this Part shall be made in good faith.

c)         A licensee shall not accept a fee or charge for a residential mortgage loan application, unless the licensee is able to demonstrate to the Director that, if its normal residential mortgage loan requirements are met, there is a reasonable likelihood that a loan commitment will be issued for the loan for the amount, term, rate, charges and other conditions set forth in the loan application and the applicable disclosures and document required by this Part and that the loan has a reasonable likelihood of being paid by the applicant based on his or her ability to pay.

d)         A licensee who has accepted an application for a loan to purchase residential real estate shall make a good faith effort to process the application within the time specified in the residential mortgage loan application.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1260  Pre-paid Insurance Products and Warranties

No lender shall make a high risk home loan that finances a single premium credit life, credit disability, credit unemployment or any other life or health insurance, directly or indirectly.  Insurance calculated and paid on a monthly basis shall not be considered to be financed by the lender.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1270  Refinancing Prohibited in Certain Cases

No lender shall refinance any high risk home loan, if the refinancing charges additional points and fees, within a 12 month period after the original loan agreement was signed, unless the refinancing results in a financial benefit to the borrower.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1272  Balloon Payments

No lender shall make a high risk home loan that contains a scheduled final payment that is more than twice as large as the average of earlier scheduled monthly payments unless the balloon payment becomes due and payable at least 15 years after the loan's origination.  This prohibition does not apply when the payment schedule is adjusted to account for the seasonal or irregular income of the borrower or if the purpose of the loan is a "bridge" loan connected with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1275  Financing of Certain Points and Fees

No lender shall make a high risk home loan if that loan finances points and fees in excess of 6% of the total loan amount.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1276  Payments to Contractors

No lender shall make a payment of any proceeds of a high risk home loan to a contractor under a home improvement contract other than:

a)         by instrument payable to the borrower or payable jointly to the borrower and the contractor; or

b)         at the election of the borrower, by a third party escrow agent in accordance with the terms established in a written agreement signed by the borrower, the lender, and the contractor before the date of payment.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1277  Negative Amortization

Other than a loan secured only by a reverse mortgage, no lender shall make a high risk home loan with terms under which the outstanding balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of the interest due, unless the negative amortization is the consequence of a temporary forbearance sought by the borrower.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1278  Negative Equity

No lender shall make a high risk home loan when the loan amount exceeds the value of the property securing the loan plus reasonable closing costs not to exceed 5% of the total loan amount.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1280  Counseling Prior to Perfecting Foreclosure Proceedings

a)         In the event that a high risk home loan becomes delinquent by more than 30 days, the servicer shall send a notice advising the borrower that he or she may wish to seek consumer credit counseling.

b)         The notice required in subsection (a) shall, at a minimum, include the following language:

            "YOUR LOAN IS OR WAS MORE THAN 30 DAYS PAST DUE.  YOU MAY BE EXPERIENCING FINANCIAL DIFFICULTY.  IT MAY BE IN YOUR BEST INTEREST TO SEEK APPROVED CONSUMER CREDIT COUNSELING.  A LIST OF APPROVED CREDIT COUNSELORS MAY BE OBTAINED FROM THE ILLINOIS DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION-DIVISION OF BANKING."

c)         If, within 15 days after mailing the notice provided for under subsection (b), a lender or its agent is notified in writing by an approved consumer credit counselor and the approved consumer credit counselor advises the lender or its agent that the borrower is seeking approved consumer credit counseling, then the lender and its agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for 30 days from the date of that notice.  Only one such 30-day period of forbearance is allowed under this Section per subject loan.

d)         If, within the 30-day period provided under subsection (c), the lender or its agent, the approved consumer credit counselor, and the borrower agree to a debt management plan, then the lender and its agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for so long as the debt management plan is complied with by the borrower.

1)         The agreed debt management plan must be in writing and signed by the lender or its agent, the approved consumer credit counselor, and the borrower.  No modification of an approved debt management plan can be made without the mutual agreement of the lender or its agent, the approved consumer credit counselor, and the borrower.

2)         Upon written notice to the lender or its agent, the borrower may change approved consumer credit counselors.

e)         If the borrower fails to comply with the agreed debt management plan, then nothing in this Subpart K shall be construed to impair the legal right of the lender or its agent to enforce contracts or mortgage agreements.

f)         This Section applies only to high risk home loans as defined by Section 1050.155.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1305  Approval Notice (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.1310  Inconsistent Conditions Prohibited

No residential mortgage loan commitment shall contain conditions inconsistent with those required by this Part in effect at the time of application, unless those conditions are less onerous to the borrower.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1315  Avoidance of Commitment

If a residential mortgage loan applicant and the subject residential real estate meet a licensee's normal standards, the licensee shall not refuse to make a residential mortgage loan to the applicant in order to avoid complying with terms stated in written agreements between the licensee and borrower or in written disclosures required by this Part.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1320  Charges to Seller

a)         Except for FHA-insured or VA-guaranteed residential mortgage loans, no licensee shall:

1)         impose any charges upon a seller under a borrower's purchase contract;

2)         condition any commitment for a residential mortgage loan upon the agreement of the seller to pay such charges; or

3)         incur any charges on behalf of the seller, unless specifically authorized by that seller to do so.

b)         With respect to FHA-insured or VA-guaranteed residential mortgage loans, the licensee shall provide, at time of application, a written good faith estimate or TILA-RESPA Integrated Loan Estimate Disclosure of the amounts and nature of charges to be paid that are disallowed by the applicable Federal agency for payment by the buyer.  A clear and conspicuous statement shall disclose that such charges are disallowed by the applicable Federal agency for payment by the borrower. Examples of such charges may include, but are not limited to, tax service fee, assignment fee, underwriter fee.

c)         For purposes of this Section, "seller" refers to the vendor of real estate that is the subject of the residential mortgage loan.

(Source:  Amended at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.1325  Intentional Delay

Any licensee that intentionally delays the processing of an application during periods of interest rate fluctuations so that the delay causes a borrower to incur higher costs regarding a residential mortgage loan shall be liable to the borrower for such costs.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1330  No Duplication to Borrower of Seller's Costs

No licensee may require a borrower to furnish, or charge a borrower for, items that are inconsistent with the licensee's usual standards for residential mortgage loans.  Those items may include, but are not limited to, a survey or title commitment.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1335  Fees and Charges

a)         Except as prohibited by federal statute or regulation, a licensee shall not require a borrower to pay any fees or charges prior to the loan closing, except charges to be incurred by the licensee on behalf of the borrower for services from third parties necessary to process the application, such as for credit reports and appraisals, and:

1)         Loan Fees

A)        Loan fees, such as origination or commitment fees, including fees detailed in the Loan Brokerage Agreement, may be charged prior to closing only if a licensee is able to demonstrate either that:

i)          The loan commitment is provided in writing by the funding entity and accepted in writing by the borrower; or

ii)         The loan commitment provided in writing is consistent with a Loan Brokerage Agreement provided to the borrower pursuant to Section 1050.1010 of this Part and signed by the borrower.

B)        The loan fee, including fees detailed in the Loan Brokerage Agreement, collected prior to closing shall be deposited in escrow by the licensee in accordance with the requirements of Section 1050.440 of this Part.

C)        If the loan commitment provided by the funding entity pursuant to subsection (a)(1) is subject to any condition or conditions, and any condition is not met due to an action or lack of action on the part of the borrower, the licensee may retain the loan fee.  In all other cases, if the loan does not close as agreed by the licensee and the borrower, the licensee shall refund the loan fee to the borrower.

D)        A loan fee, including fees detailed in the Loan Brokerage Agreement, may be collected by a licensee even if a loan does not close if:

i)          Either the fee was provided for in the loan commitment accepted in writing by the borrower or the fee was disclosed in the Loan Brokerage Agreement provided to a borrower pursuant to Section 1050.1010 of this Part and signed by the borrower, and a loan commitment was obtained by the licensee consistent with the Loan Brokerage Agreement; and

ii)         The borrower withdraws the loan application; or the borrower has made a material misrepresentation on the loan application; or the borrower has failed to provide documentation necessary to the processing or closing of the loan.

2)         Rate-Lock Fee

A)        A Rate-Lock Fee Agreement shall be in writing and signed by both the licensee and prospective borrower and provided to prospective borrowers regardless of whether a fee is collected or the interest rate is locked or floating.

B)        The Rate-Lock Fee Agreement shall state all of the following:

i)          The expiration date of the Rate-Lock Fee Agreement;

ii)         The amount of the loan;

iii)        The maximum interest rate of the loan;

iv)        The term of the loan;

v)         The maximum discount (points) to be paid; and

vi)        That the interest rate is locked or the interest rate is floating.

C)        The licensee shall be able to demonstrate to the Director that:

i)          The licensee is able to perform under the terms of the Rate-Lock Fee Agreement;

ii)         Subject to verification, the information submitted by the borrower indicates that the loan will be approved in accordance with the Rate-Lock Fee Agreement; and

iii)        The Rate-Lock Fee will be credited to the borrower at closing.

D)        The Rate-Lock Fee shall be deposited in escrow by the licensee in accordance with the requirements of Section 1050.440 of this Part.

E)        A Rate-Lock fee may be collected by a licensee even if a loan does not close if:

i)          The fee was disclosed in the Rate-Lock Fee Agreement provided to a borrower and signed by the borrower; and

ii)         A Rate-Lock was obtained by the licensee consistent with the Rate-Lock Fee Agreement and the borrower withdraws the loan application; or the borrower has made a material misrepresentation on the loan application; or the borrower has failed to provide documentation necessary to the processing or closing of the loan.

3)         Assumption Fee

            A licensee may charge a borrower an Assumption Fee for a Federal Housing Administration (FHA) or Department of Veterans Affairs (VA) loan assumption that, by regulation, requires full credit approval prior to closing, subject to the following requirements:

A)        The applicant must qualify for the extension of credit as required under:

i)          The terms and conditions of mortgages given on property in Illinois that are insured by the Federal Housing Administration and dated on or after December 15, 1989 requiring prior credit approval of the Secretary of Housing and Urban Development.

ii)         The terms and conditions of mortgages given on property located in Illinois that are guaranteed by the U.S. Department of Veterans Affairs (VA) dated on or after March 1, 1988 and requiring approval of VA or its authorized agent.

B)        An Assumption Fee may be collected by a licensee even if a loan does not close if:

i)          The fee was disclosed in an Assumption Fee Agreement provided to a borrower and signed by the borrower; and

ii)         An Assumption Fee Agreement was obtained by the licensee consistent with the Assumption Fee Agreement and the borrower withdraws the loan application; or the borrower has made a material misrepresentation on the loan application; or the borrower has failed to provide documentation necessary to the processing or closing of the loan.

b)         Nothing in this Section  shall be interpreted to limit the right of a licensee to recover from a borrower any fee that the borrower has agreed to pay pursuant to a Loan Brokerage Agreement, a loan commitment or other written agreement entered into between the borrower and the licensee. This subsection shall not abridge Section 1050.1010(g) so as to permit an agreement or agreements in addition to the Rate-Lock Fee Agreement or the Loan Brokerage Agreement.

c)         For each violation of this Section, the Director may fine a licensee up to $500 in addition to all other actions authorized under the Act and this Part.

(Source:  Amended at 34 Ill. Reg. 17339, effective October 29, 2010)

Section 1050.1340  Refunds on Failure to Close

If a residential mortgage loan is not closed, all the licensee's charges as described in Section 1050.1335(a)(1) shall be refunded to the borrower, except:

a)         To the extent a written agreement between the borrower and licensee or a written notification required by this Part specifies that they are nonrefundable; and

b)         To the extent the charges were incurred by the licensee on behalf of the borrower for services from third parties necessary to process the application, such as credit reports and appraisals.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1345  Representative at Closing

No licensee may require a borrower to be present personally at the closing of a residential mortgage loan, if the borrower is willing to execute all the loan documents in advance and will be represented at the closing by an attorney.  A licensee shall make reasonable efforts to accommodate a borrower who makes a request to execute the loan documents in advance.  A borrower who chooses not be at the closing personally may be charged reasonable additional fees, such as a document preparation fee to cover additional expenses.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1350  Compliance with Other Laws

Commitment and closing procedures, including those involving TILA-RESPA Intergrated Disclosures set forth at 12 CFR 1024 (2017) and 12 CFR 1026 (2017), of a licensee shall comply with applicable Federal and State statutes and regulations, including but not limited to the following:

a)         The Interest Act [815 ILCS 205];

b)         Mortgage Escrow Account Act [765 ILCS 910];

c)         Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505];

d)         The Truth in Lending Act (15 USC 1601) as implemented by Regulation Z (12 CFR 1026) (2017));

e)         The Real Estate Settlement Procedure Act of 1974 d (12 USC 2601) as implemented by Regulation X (12 CFR 1024) (2017).

(Source:  Amended at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.1355  Failure to Close – Disclosure

If a residential mortgage loan fails to close within a specified commitment period, the licensee shall provide detailed written notification, in plain English, to the applicant as to why the residential mortgage loan failed to close and specifying any resulting conditions that will affect the availability of the loan.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1360  Escrow Account Agreements at Closing

a)         If the mortgage is not FHA-insured or VA-guaranteed and relates to the purchase of owner-occupied, single-family security real estate:

1)         A document shall be executed by the residential mortgage loan applicant at closing to indicate his or her acceptance or rejection of the use of a pledged time deposit account in lieu of an escrow account pursuant to the Mortgage Escrow Account Act [205 ILCS 910]; or

2)         In the case of a lender who is not required by law to comply with the Mortgage Escrow Account Act, the licensee shall furnish a written explanation, including citations, to the authority for noncompliance to be given to the mortgage loan applicant at closing, with a copy to be signed by the applicant acknowledging receipt.

b)         If the mortgage represents a first-lien position and provides for an escrow account to be maintained for payment of taxes and/or insurance premiums, an Escrow Account Disclosure Agreement shall be required between the licensee and the residential mortgage loan applicant.  The agreement shall be in writing and executed at the closing.  The agreement shall describe the procedures for adjustment to the escrow account and shall provide that, if there is an increase in the amount of the escrow account, the applicant shall receive written notice from the licensee at least 30 days prior to the date of the increase.  The agreement may be amended from time to time as agreed upon by the parties, except that the 30 day notice requirement shall not be amended.

c)         This Section does not apply to any mortgage for which the lender elects not to require maintenance of an escrow account or other specific arrangement for the payment of taxes.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1410  General

The exemption provision of Section 1-4(d) of the Act shall be construed to avoid duplication of licensing and regulatory supervision of the same or similar activity by State and Federal agencies.  To the extent that the specific conduct or business activity is not otherwise separately licensed or regulated, the provisions of Section 1-4(d) shall be strictly construed.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1420  Interpretative Guidelines

Any person may request an interpretative ruling of the Director on the question of whether that person is an exempt entity within the meaning of the Act.  Such requests shall be in writing and contain sufficient information as to reasonably inform the Director of the basis for the exemption.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1510  Hearings

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

(Source:  Amended at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1520  Definitions (Repealed)

(Source:  Repealed at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1530  Filing (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1540  Form of Documents (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1550  Computation of Time (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1560  Appearances (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1570  Request for Hearing (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1580  Notice of Hearing (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1590  Service of the Notice of Hearing (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1595  Bill of Particulars or Motion for More Definite Statement (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1600  Motion and Answer (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1610  Consolidation and Severance of Matters – Additional Parties (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1620  Intervention (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1630  Postponement or Continuance of Hearing (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1640  Authority of Hearing Officer (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1650  Bias or Disqualification of Hearing Officer (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1660  Prehearing Conferences (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1670  Discovery (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1680  Subpoenas (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1690  Conduct of Hearing (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1700  Default (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1710  Evidence (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1720  Hostile Witnesses (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1730  Record of Proceedings (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1740  Briefs (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1750  Hearing Officer's Recommendation (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1760  Order of the Director (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1770  Rehearings and Reopening of Hearings (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1790  Costs of Hearing (Repealed)

(Source:  Repealed at 46 Ill. Reg. 17985, effective October 27, 2022)

Section 1050.1800  Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], this Subpart O does not apply to loans closed on or after January 1, 2004.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1810  General

The Mortgage Awareness Program is a counseling and educational component that is provided by the Department of Financial and Professional Regulation-Division of Financial Institutions.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1820  Guidelines

a)         The core curriculum of the Mortgage Awareness Program shall include an explanation of:

1)         the amount financed;

2)         the finance charge;

3)         the annual percentage rate;

4)         the total payments;

5)         the loan costs, including broker's fees, finance charges, points, origination fees;

6)         the right of recission;

7)         the foreclosure procedures;

8)         the significant debt ratios, including total debt to income, loan debt to income, and loan debt to value of residence;

9)         adjustable rate mortgage;

10)         balloon payments;

11)         credit options;

12)         each item that appears on a good faith estimate;

13)         pre-payment penalties.

b)         Counseling session attendees must also complete a personal income and expense statement, as well as a balance sheet on forms provided by the Division of Financial Institutions.

c)         Prior to signing a certificate of completion, counselors shall privately discuss with each attendee that attendee's income and expense statement and balance sheet, as well as the terms of any loan the attendee currently has or may be contemplating and provide a third party review to establish the affordability of the loan.

d)         Counseling session attendees must also be given a brochure that contains information covered by the Mortgage Awareness Program.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1830  Offer of Mortgage Awareness Program

a)         Any lender, prior to making a high risk home loan, shall inform the borrower in writing of the right to participate in the Mortgage Awareness Program.

b)         No lender shall offer less favorable loan terms to a borrower due to a borrower's participation in a Mortgage Awareness Program.

c)         Except as prohibited elsewhere in this Part, the borrower may waive participation in the program, provided that the waiver occurs no less than 2 business days after the day that the borrower receives the written notice required by subsection (a) and that the waiver is in writing in a form approved by the Director.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1900  Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], this Subpart P does not apply to loans closed on or after January 1, 2004.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1910  Report of Default and Foreclosure Rates on Conventional Loans

a)         On or before October 1 and April 1 of each year, each licensee that is a servicer of Illinois residential mortgage loans shall report to the Director the default and foreclosure data of conventional loans for the six month periods ending June 30 and December 31, respectively.

b)         Each licensee shall report:

1)         The average quarterly dollar amount of conventional 1-4 family mortgage loans secured by Illinois real estate.

2)         The average quarterly number of conventional 1-4 family mortgage loans secured by Illinois real estate.

3)         The average quarterly dollar amount of conventional 1-4 family mortgage loans secured by Illinois real estate that are in default over 90 days.

4)         The average quarterly number of conventional 1-4 family mortgage loans secured by Illinois real estate that are in default over 90 days.

5)         The dollar amount of foreclosures on 1-4 family conventional loans completed during the reporting period.

6)         The number of foreclosures on 1-4 family conventional loans completed during the reporting period.

7)         Whether any of the loans where a foreclosure was completed were originated less than 18 months before the completed foreclosure.

8)         Whether any of the loans where a foreclosure was completed had a note rate greater than 10% for first lien mortgage loans or greater than 12% in the case of a junior lien.

c)         An officer of the licensee shall sign the form.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.1920  Director's Review and Analysis

a)         The Director shall review and analyze the default and foreclosure rate data reports submitted under Section 1050.1910.

b)         The reports and their analyses may be used:

1)         In setting the scope of a regularly scheduled examination.

2)         In setting the scope of a special examination.

3)         In comparing the reported information of a licensee to other licensees subject to the Act.

4)         In comparing the reported information of a licensee to the reports submitted by licensees and charters under other Acts.

c)         The Director may correspond with a licensee to seek clarification of information contained in its report and to gather additional data concerning loans in default or loans in foreclosure.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.2000  Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], this Subpart Q does not apply to loans closed on or after January 1, 2004.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.2010  Third Party Review of High Risk Home Loans

In the case of any high risk home loan, the borrower shall be afforded the opportunity to seek independent review by the Division of the loan terms, in order to determine affordability of the loan, when and if the General Assembly appropriates adequate funding to the Division specifically for this program.

a)         Every borrower who chooses to participate in the independent review provided in this Section shall submit information requested on the worksheets outlined in Appendix A and Appendix B.

b)         The Division shall provide the borrower with a review of the worksheets and shall also inform the borrower of the amount the borrower has available for a monthly mortgage payment based upon the borrower's budget.

c)         In addition, the Division shall review loan information pertaining to balloon payments and adjustable interest rates and other items disclosed by the loan documents affecting amount of payment and shall inform the borrower of such items.

d)         The borrower shall receive a copy of the completed forms and shall sign the forms acknowledging receipt.  A copy of the written and signed forms shall be submitted to the lender prior to the closing of the loan and shall become a part of the permanent file for the loan.

e)         If, based upon the review, the borrower determines that the loan is not in his or her best economic interest, the reviewer shall so note this in the completed forms sent to the lender.  This determination shall enable the borrower to withdraw from the contemplated loan with no financial penalty.

(Source:  Amended at 29 Ill. Reg. 14808, effective September 26, 2005)

Section 1050.2100  Mortgage Loan Originators; Applicability (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2110  Application for Registration (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2112  Evaluation of Applications (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2115  Examination (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2120  Continuing Education Requirements for Loan Originators (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2125  Certificate of Registration Issuance (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2130  Roster of Registered Loan Originators (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2135  Pocket Card (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2140  Certificate of Registration Renewal (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2145  Certificate of Registration Transfer Application or Inactive Notice (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2150  Inactive Registration Status; Reactivation (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2155  Temporary Permits (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2160  Confidential Information (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2165  Averments (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2170  Suspension or Revocation of Registration, Refusal to Renew, Fines (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2175 Loan Originator Hearings; Fees and Costs (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section  1050.2180  Criminal Proceedings (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2185  Violations of Tax Acts (Repealed)

 (Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2190  Disciplinary Action for Educational Loan Defaults (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2195  Nonpayment of Child Support (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section  1050.2200  Purpose (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2210  Definitions (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2220  Registration Required (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section  1050.2230  Exemptions (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2240  Application for Provisional Certificate of Registration; Contents; Amendment (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2250  Issuance of Provisional Certificate of Registration; Effective Date; Conditions (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2260  Loan Origination Practices (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2270  Enforcement (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.2300  Definitions

"Actual change in value" means, with respect to each scenario included on the disclosure form found in Appendix C of this chapter, the average annual change in value for homes in the State of Illinois over the most recent number of years used in that scenario.

"Annual percentage rate" has the meaning stated in 12 CFR 1026.22(a), as amended from time to time.

"Annualized cost" means a measure of the cost of credit, expressed as a yearly rate, provided to allow a borrower to compare the cost of a shared appreciation agreement with the cost of other forms of credit.

"Arms-length sale" means a transaction for the sale of property between two unrelated and unaffiliated parties of equal bargaining power acting independently and in their respective self-interests.

"Automated valuation model" or "AVM" means a statistically based estimate of a property's value based on publicly available information such as comparable sales, property characteristics, and price trends.

"Borrower" means a person who receives funds under a shared appreciation agreement.

"Broker price opinion" or "BPO" means an estimate, provided by a real estate broker licensed by the State or another qualified professional, of the price for which a property is likely to sell.

"Commitment" shall mean a contract for residential mortgage loan financing.

"Ending Home Value" means the value of the property at the termination of the shared appreciation agreement as calculated using the estimated fair market value of the property, or, in an arms-length sale, the sale price of the property.

"Estimated fair market value" means:

an estimate of value determined through either:

the use of an appraisal from an appraiser licensed by the State; or

the average of two distinct non-appraisal valuation methods, which may include an automated valuation model, a broker price opinion, or another valuation method approved by the Department; or

an estimate of value provided by the borrower, if a disclosure is provided before the lender obtains an estimated fair market value by appraisal, or the average of two distinct non-appraisal valuation methods.

"Final Settlement Payment Amount" means the amount a borrower is required to pay the lender at the termination of the shared appreciation agreement.

"Lender" shall mean any person, partnership, association, corporation, or any other entity who either lends or invests money in residential mortgage loans. [205 ILCS 635/1-4(g)]

"Share percentage" means the lender's share of the property's appreciation or value, based on the Ending Home Value, at the termination of the shared appreciation agreement as calculated without regard to any contractual limit on the repayment amount.

"Starting Home Value" means the estimated fair market value of a property as calculated under Section 1050.2320 of this Part.

"Truth in Lending Act" refers to 15 U.S.C. 1601, and its implementing regulations under 12 CFR 1026.

(Source:  Added at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.2310  Required Disclosures

a)         Financing Agreements and Commitments

1)         In addition to providing any other disclosures required by the Uniform Commercial Code [810 ILCS 5] or the Consumer Installment Loan Act [205 ILCS 670], a lender receiving an application for a shared appreciation agreement shall, regardless of lien position, provide the applicant with a financing agreement.

2)         The lender shall satisfy the requirement to provide a financing agreement for a mortgage loan made under a shared appreciation agreement in the following manner:

A)        By providing an estimate disclosure on the form prescribed in Appendix C of this Part, or a substantially similar form, within 3 business days after the date an application for a shared appreciation agreement is received by the lender; and

B)        By calculating the annualized cost based on the term in each scenario within the form in Appendix C of this Part using the method prescribed in 12 CFR Part 1026 Appendix J for calculating an annual percentage rate.

3)         If the terms of an estimate disclosure provided to an applicant under subsection (a)(2)(A) of this Section materially change or become materially inaccurate, including with respect to the Starting Home Value, transaction amount, share percentage, cost cap, origination fee, agreement expiration date, closing costs, or expenses, the lender shall provide a revised estimate disclosure with all changed terms to the applicant. The applicant shall receive the revised estimate disclosure within three business days after the lender receives information sufficient to establish that it is required under this subsection (a)(3), and at least four business days prior to consummation of the transaction. A lender shall not provide a revised estimate disclosure required under this subsection (a)(3) on or after the date on which the lender provides the closing disclosure required under subsection (a)(5)(A).

4)         If the terms of the disclosure provided by the lender under subsection (a)(2) are subject to change, a lender offering a shared appreciation agreement, regardless of lien position, shall provide the applicant with a commitment.

5)         The lender shall satisfy the requirement to provide a commitment for a mortgage loan made under a shared appreciation agreement in the following manner:

A)        By providing a closing disclosure on the form prescribed in Appendix C of this Part, or a substantially similar form, with a statement that the terms therein are not subject to change, at least 72 hours before the consummation of the transaction; and

B)        By calculating the annualized cost based on the term in each scenario within the form in Appendix C of this Part using the method prescribed in 12 CFR Part 1026 Appendix J for calculating an annual percentage rate.

b)         Compliance with Disclosures in Appendix C of this Part

1)         A form will be considered substantially similar to the one in Appendix C of this Part if it includes all information required in this Section and included in Appendix C.

2)         A lender shall disclose the following information regarding the estimated fair market value of the property:

A)        The methods used to calculate the estimated fair market value;

B)        The estimated fair market value of the property; and

C)        When funds from the agreement are utilized for approved home improvement projects, including details of eligible improvements and the terms of how they will be deducted from the Ending Home Value.

c)         Disclosure Obligations for Lenders Offering Shared Appreciation Agreements

1)         Lenders must issue a notice to a prospective borrower with the following statement, which shall be clear and conspicuous on the first page of the disclosures required by this Section:  "You are not required to complete a shared appreciation agreement transaction just because you have received these disclosures or have signed a loan application.  If you proceed with this transaction, the shared appreciation agreement provider will have a lien on your home and you would agree to pay the provider a portion of your home's value or the future increase in your home's value at the end of the agreement. If you complete the transaction and do not meet your obligations under the agreement, you could lose your home, and any money you have put into it.  The information in this disclosure is based on the shared appreciation agreement for which you have applied and provides examples of the amounts you may be required to pay at the end of the agreement. If the agreement ends in connection with the sale of your home, your obligation to the provider may include some or all of the sale proceeds. The terms of a shared appreciation agreement are different from those of a traditional mortgage loan. Please carefully read this disclosure, the shared appreciation agreement transaction documents, and all other materials from the provider. You are required to complete a counseling session from an independent, HUD-certified housing counselor before completing a shared appreciation agreement and you may wish to speak with a financial professional or an attorney before proceeding. A shared appreciation agreement may also affect your taxes, so you may also wish to speak with a qualified tax advisor."

2)         Borrowers must seek independent counseling from a HUD-certified counselor.

d)         Foreclosure and Usage Restrictions:  Lenders must disclose any restrictions on property use or conditions that could lead to foreclosure.

e)         Cap on Repayment Amount:  The total repayment amount must be capped at a rate not exceeding the rate cap provided in Section 15-5-5 of the Predatory Loan Prevention Act [815 ILCS 123/15-5-5].  Contracts lacking a cap or exceeding this statutory limit shall be deemed null and void.

f)         Settlement Examples and Cost Scenario Tables:  Lenders must explain how the Final Settlement Payment Amount under a shared appreciation agreement will be calculated and, if example calculations are provided, at least one example must be based on a decrease in home value. The lender shall also provide cost scenario tables with illustrative examples detailing repayment scenarios for 5-year, 10-year, and maximum agreement durations.  For each duration, the lender shall provide the Ending Home Value, the Final Settlement Payment Amount, whether the Final Settlement Payment Amount is share-based or capped, and the annualized cost for each of the following changes from the Starting Home Value:

1)         Average Annual Change in Value as described in Section 1050.2330(a);

2)         5.5% annual appreciation;

3)         3.5% annual appreciation;

4)         no change in value; and

5)         10% total depreciation.

g)         Short Summary of Terms:  Lenders must provide a concise summary of key terms and conditions for the borrower's understanding, ensuring clarity and transparency.

h)         The borrower has a right to be represented by an independent attorney of the borrower's choice at closing.

i)          A borrower may be responsible for any fees or costs of counseling required under Section 5-12.5(a) of the Act [205 ILCS 635/5-12.5(a)] only if the borrower elects to close, and does not rescind, the transaction. If a borrower receives counseling and elects not to close or timely rescinds the transaction, the shared appreciation agreement provider shall be responsible for any fees or costs of the counseling.

(Source:  Added at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.2320  Calculation of Property Value

a)         Means of Calculating the Property Value.

1)         The lender shall use the estimated fair market value to determine the Starting Home Value of the property.

2)         The lender shall use the same method for calculating the Starting Home Value and the Final Home Value.  Nothing in this subsection (a)(2) shall limit a borrower's ability to obtain and use additional valuations to determine the estimated fair market value, Starting Home Value, or Ending Home Value pursuant to the terms of the shared appreciation agreement.

3)         The Starting Home Value shall be calculated using either an appraisal or the average of at least two distinct non-appraisal valuation methods, which may include an AVM, a BPO, or another method approved by the Department.

4)         In complying with the requirements of subsection (a)(2), a lender may use a value stipulated by the borrower as the Starting Home Value on an initial estimate disclosure provided under Section 1050.2310(a)(2) if the lender has not yet obtained an appraisal, AVM, or BPO and the terms of the disclosure are subject to change.

b)         Sale of Property.  If a shared appreciation agreement terminates with the sale of the property, the Ending Home Value may not exceed the sale price if:

1)         The sale was an arms-length sale;

2)         The property was not sold as part of a foreclosure; and

3)         The borrower did not retain an interest in the property, including an interest as a life estate.

(Source:  Added at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.2330  Calculating Values in Appendix C of this Part

a)         Average Annual Change in Value for purposes of Section 1050.2310(f)(1) shall be the average annual change in value in Illinois over the prior 5 years based on the All-Transactions House Price Index as published by the Federal Reserve Bank of St. Louis. 

b)         The Final Settlement Payment Amount shall be the lender's share of appreciation or equity, plus, if applicable under the terms of the agreement, any other amounts payable by the borrower at termination of the agreement, minus any amount over any repayment limit to which the lender and the borrower have agreed or set by law.

(Source:  Added at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.2340  Ability to Repay

A lender offering a shared appreciation agreement is deemed to have given due regard to a borrower's ability to repay if disclosures are provided by the lender to the borrower in compliance with Section 1050.2310, provided that:

a)         The shared appreciation agreement does not require periodic payments prior to termination of the agreement; and

b)         The term of the shared appreciation agreement is no less than five years.

(Source:  Added at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.2350  Counseling

a)         Counselor Qualifications

1)         Any individual providing counseling services related to shared appreciation agreements shall be a housing counselor providing counseling through a HUD-approved housing counseling agency under 12 C.F.R. Part 214.

2)         The counselor providing guidance on shared appreciation mortgages must be independent of the shared appreciation agreement provider to ensure unbiased and objective advice to borrowers.

3)         Other than where a shared appreciation agreement provider is responsible for payment of fees and costs of counseling, including under Section 1050.2310(i), a counselor shall not receive any direct or indirect compensation, financial incentive, or referral fee from the shared appreciation agreement provider being considered by the borrower.

4)         If a counselor has any financial, professional, or personal interest in the shared appreciation agreement provider or transaction, the counselor must disclose that interest to the borrower and recuse themselves from providing counseling services for that specific transaction.

5)         A counselor who is employed by or affiliated with a shared appreciation agreement provider may not provide counseling services to a borrower who is considering an agreement offered by that provider.

b)         Content of Counseling Session:

1)         General Explanation of Shared Appreciation Agreements.  The counseling session shall provide a comprehensive overview of shared appreciation agreements, including, but not limited to:

A)        The fundamental principles and structure of a shared appreciation agreement;

B)        Definitions of key terms used by the shared appreciation agreement originator;

C)        The legal and financial implications for homeowners;

D)        The calculation and determination of appreciation sharing upon home sale or refinancing;

E)        The borrower's loan amount, terms, and how their final repayment amount will be calculated;

F)         The borrower's financial situation (e.g., budget, final payment strategies);

G)        Disclosure form Settlement Examples and Cost Scenario Tables that outline the borrower's possible repayment amounts given varying term lengths and changes in home value;

H)        The borrower's rights and obligations under a shared appreciation agreement;

I)         The potential risks and benefits associated with entering into a shared appreciation agreement;

J)         Other options available to the borrower such as deferred payment loans, property tax deferral programs, social services programs, and reverse mortgages;

K)        Usage of home restrictions and events that could trigger foreclosure;

L)        Tax implications; and

M)       An overview of how shared appreciation agreement impacts their rights to refinance.

2)         Differences Between Shared Appreciation Agreements and Traditional & Reverse Mortgages.  The counseling session shall ensure that borrowers fully understand the distinctions between shared appreciation agreements from other home financing options to be able to make an informed decision, including by distinguishing shared appreciation agreements from:

A)        Traditional mortgages, including:

i)          Traditional mortgages involve periodic repayment of principal and interest, whereas shared appreciation agreements do not require monthly payments;

ii)         In a mortgage, the borrower retains full equity ownership subject to loan repayment, whereas in a shared appreciation agreement the provider shares in future home appreciation; and

iii)        The impact of interest rates on mortgage payments compared to the equity-based return structure of shared appreciation agreements.

B)        Reverse Mortgages, including:

i)          Reverse mortgages allow homeowners, typically seniors, to access home equity through loan disbursements, requiring repayment upon sale, move-out, or death, whereas shared appreciation agreements involve repayment of a share in future appreciation of the property's value by a set date;

ii)         Reverse mortgages accrue interest, whereas shared appreciation agreements require a share of appreciation upon exit;

iii)        Differences in eligibility, such as age restrictions for reverse mortgages versus eligibility for shared appreciation agreements; and

iv)        Counselors shall ensure that borrowers fully understand these distinctions to make an informed decision regarding their home equity options.

c)         Counseling Recordkeeping.

1)         Each counseling session shall be documented by the counselor.  A counselor's records shall be maintained electronically and be available for inspection by the Department upon request.  The Department may audit any records held by the responsible counselor at any time.

2)         A counselor shall develop recordkeeping policies and procedures consistent with this Section.

3)         A counselor shall retain all records for at least three years from the date of creation and shall include, but not be limited to, the following:

A)        Counseling program materials;

B)        A list of borrowers for whom counseling was provided and counseling program materials used in each counseling session;

C)        Completed counseling certificates for each borrower; and

D)        All other records, policies, and procedures required by the Act and this Subpart T.

4)         Storage and transfer of records.  If a counselor ceases operations due to insolvency, revocation, bankruptcy or for any other reason, all records must be preserved at the expense of the counselor for at least three years in a form and location in Illinois acceptable to the Department.  The counselor shall retain the records longer if requested by the Department.  The counselor shall notify the Department of the location where the records are stored or transferred.

5)         A counselor shall provide the shared appreciation agreement provider with the following information regarding each counseling session:

A)        Counseling session materials; and

B)        Completed counseling certificate for each borrower.

6)         A shared appreciation agreement provider shall develop and adopt recordkeeping policies and procedures, maintain electronic records of completed counseling sessions, and make them available for inspection at the Department's request.  If a shared appreciation agreement provider ceases operations due to insolvency, revocation, bankruptcy or for any other reason, all records must be preserved at the expense of the shared appreciation agreement provider for at least 3 years in a form and location in Illinois acceptable to the Department.  The shared appreciation agreement provider shall retain the records longer if requested by the Department.  The shared appreciation agreement provider shall notify the Department of the location where the records are stored or transferred.

d)         Counseling must be provided in the following manner:

1)         In person; or

2)         By remote electronic or telephonic means, with the permission of all borrowers, where the session can be conducted in privacy, the counselor is able to verify the identity of each borrower, and the counseling is documented by the counselor. For remote counseling sessions, the counselor shall provide the Department with access to any remote, real-time online video counseling upon request, including login credentials and schedules.

(Source:  Added at 50 Ill. Reg. 8010, effective June 1, 2026)

Section 1050.APPENDIX A   Estimated Monthly Income and Expenses Worksheet (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.APPENDIX B   Mortgage Ratio Worksheet (Repealed)

(Source:  Repealed at 41 Ill. Reg. 12405, effective October 6, 2017)

Section 1050.APPENDIX C   Form of Shared Appreciation Agreement Disclosure

_______________________________________

Provider Name

__________________________________________________________________________

Provider Address

(Source:  Added at 50 Ill. Reg. 8010, effective June 1, 2026)