State of Illinois
2011 and 2012


Introduced 1/31/2012, by Rep. Marlow H. Colvin


See Index

    Amends the Residential Mortgage License Act of 1987. Defines "loan modification" and "short sale facilitation". Authorizes the Director of the Division of Banking of the Department of Financial and Professional Regulation to establish relationships or contracts with the Nationwide Mortgage Licensing System and Registry. Provides that residential mortgage license applicants may be required to furnish information to the Nationwide Mortgage Licensing System and Registry. Provides that each application for a license or for the renewal of a license shall be accompanied by an averment stating that the applicant will not charge or collect advance payments from borrowers or homeowners for engaging in loan modification or short sale facilitation. Amends the Residential Real Property Disclosure Act. Provides that, for each loan, a broker or loan originator must submit information concerning the borrower's debt to income ratio for inclusion in the predatory lending database. Effective immediately, except that certain provisions take effect on January 1, 2013.

LRB097 19725 PJG 64984 b






HB4521LRB097 19725 PJG 64984 b

1    AN ACT concerning residential mortgages.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Residential Mortgage License Act of 1987 is
5amended by changing Sections 1-4, 2-2, 2-4, 4-5, 7-1A, 7-11,
6and 7-13 and by adding Section 2-3A as follows:
7    (205 ILCS 635/1-4)
8    Sec. 1-4. Definitions.
9    (a) "Residential real property" or "residential real
10estate" shall mean any real property located in Illinois, upon
11which is constructed or intended to be constructed a dwelling.
12    (b) "Making a residential mortgage loan" or "funding a
13residential mortgage loan" shall mean for compensation or gain,
14either directly or indirectly, advancing funds or making a
15commitment to advance funds to a loan applicant for a
16residential mortgage loan.
17    (c) "Soliciting, processing, placing, or negotiating a
18residential mortgage loan" shall mean for compensation or gain,
19either directly or indirectly, accepting or offering to accept
20an application for a residential mortgage loan, assisting or
21offering to assist in the processing of an application for a
22residential mortgage loan on behalf of a borrower, or
23negotiating or offering to negotiate the terms or conditions of



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1a residential mortgage loan with a lender on behalf of a
2borrower including, but not limited to, the submission of
3credit packages for the approval of lenders, the preparation of
4residential mortgage loan closing documents, including a
5closing in the name of a broker.
6    (d) "Exempt person or entity" shall mean the following:
7        (1) (i) Any banking organization or foreign banking
8    corporation licensed by the Illinois Commissioner of Banks
9    and Real Estate or the United States Comptroller of the
10    Currency to transact business in this State; (ii) any
11    national bank, federally chartered savings and loan
12    association, federal savings bank, federal credit union;
13    (iii) any pension trust, bank trust, or bank trust company;
14    (iv) any bank, savings and loan association, savings bank,
15    or credit union organized under the laws of this or any
16    other state; (v) any Illinois Consumer Installment Loan Act
17    licensee; (vi) any insurance company authorized to
18    transact business in this State; (vii) any entity engaged
19    solely in commercial mortgage lending; (viii) any service
20    corporation of a savings and loan association or savings
21    bank organized under the laws of this State or the service
22    corporation of a federally chartered savings and loan
23    association or savings bank having its principal place of
24    business in this State, other than a service corporation
25    licensed or entitled to reciprocity under the Real Estate
26    License Act of 2000; or (ix) any first tier subsidiary of a



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1    bank, the charter of which is issued under the Illinois
2    Banking Act by the Illinois Commissioner of Banks and Real
3    Estate, or the first tier subsidiary of a bank chartered by
4    the United States Comptroller of the Currency and that has
5    its principal place of business in this State, provided
6    that the first tier subsidiary is regularly examined by the
7    Illinois Commissioner of Banks and Real Estate or the
8    Comptroller of the Currency, or a consumer compliance
9    examination is regularly conducted by the Federal Reserve
10    Board.
11        (1.5) Any employee of a person or entity mentioned in
12    item (1) of this subsection, when acting for such person or
13    entity, or any registered mortgage loan originator when
14    acting for an entity described in subsection (tt) of this
15    Section.
16        (1.8) Any person or entity that does not originate
17    mortgage loans in the ordinary course of business, but
18    makes or acquires residential mortgage loans with his or
19    her own funds for his or her or its own investment without
20    intent to make, acquire, or resell more than 3 residential
21    mortgage loans in any one calendar year.
22        (2) (Blank).
23        (3) Any person employed by a licensee to assist in the
24    performance of the residential mortgage licensee's
25    activities regulated by this Act who is compensated in any
26    manner by only one licensee.



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1        (4) (Blank).
2        (5) Any individual, corporation, partnership, or other
3    entity that originates, services, or brokers residential
4    mortgage loans, as these activities are defined in this
5    Act, and who or which receives no compensation for those
6    activities, subject to the Commissioner's regulations and
7    the federal Secure and Fair Enforcement for Mortgage
8    Licensing Act of 2008 and the rules promulgated under that
9    Act with regard to the nature and amount of compensation.
10        (6) (Blank).
11    (e) "Licensee" or "residential mortgage licensee" shall
12mean a person, partnership, association, corporation, or any
13other entity who or which is licensed pursuant to this Act to
14engage in the activities regulated by this Act.
15    (f) "Mortgage loan" "residential mortgage loan" or "home
16mortgage loan" shall mean any loan primarily for personal,
17family, or household use that is secured by a mortgage, deed of
18trust, or other equivalent consensual security interest on a
19dwelling as defined in Section 103(v) of the federal Truth in
20Lending Act, or residential real estate upon which is
21constructed or intended to be constructed a dwelling.
22    (g) "Lender" shall mean any person, partnership,
23association, corporation, or any other entity who either lends
24or invests money in residential mortgage loans.
25    (h) "Ultimate equitable owner" shall mean a person who,
26directly or indirectly, owns or controls an ownership interest



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1in a corporation, foreign corporation, alien business
2organization, trust, or any other form of business organization
3regardless of whether the person owns or controls the ownership
4interest through one or more persons or one or more proxies,
5powers of attorney, nominees, corporations, associations,
6partnerships, trusts, joint stock companies, or other entities
7or devices, or any combination thereof.
8    (i) "Residential mortgage financing transaction" shall
9mean the negotiation, acquisition, sale, or arrangement for or
10the offer to negotiate, acquire, sell, or arrange for, a
11residential mortgage loan or residential mortgage loan
13    (j) "Personal residence address" shall mean a street
14address and shall not include a post office box number.
15    (k) "Residential mortgage loan commitment" shall mean a
16contract for residential mortgage loan financing.
17    (l) "Party to a residential mortgage financing
18transaction" shall mean a borrower, lender, or loan broker in a
19residential mortgage financing transaction.
20    (m) "Payments" shall mean payment of all or any of the
21following: principal, interest and escrow reserves for taxes,
22insurance and other related reserves, and reimbursement for
23lender advances.
24    (n) "Commissioner" shall mean the Commissioner of Banks and
25Real Estate, except that, beginning on April 6, 2009 (the
26effective date of Public Act 95-1047), all references in this



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1Act to the Commissioner of Banks and Real Estate are deemed, in
2appropriate contexts, to be references to the Secretary of
3Financial and Professional Regulation, or his or her designee,
4including the Director of the Division of Banking of the
5Department of Financial and Professional Regulation.
6    (n-1) "Director" shall mean the Director of the Division of
7Banking of the Department of Financial and Professional
8Regulation, except that, beginning on July 31, 2009 (the
9effective date of Public Act 96-112), all references in this
10Act to the Director are deemed, in appropriate contexts, to be
11the Secretary of Financial and Professional Regulation, or his
12or her designee, including the Director of the Division of
13Banking of the Department of Financial and Professional
15    (o) "Loan brokering", "brokering", or "brokerage service"
16shall mean the act of helping to obtain from another entity,
17for a borrower, a loan secured by residential real estate
18situated in Illinois or assisting a borrower in obtaining a
19loan secured by residential real estate situated in Illinois in
20return for consideration to be paid by either the borrower or
21the lender including, but not limited to, contracting for the
22delivery of residential mortgage loans to a third party lender
23and soliciting, processing, placing, or negotiating
24residential mortgage loans.
25    (p) "Loan broker" or "broker" shall mean a person,
26partnership, association, corporation, or limited liability



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1company, other than those persons, partnerships, associations,
2corporations, or limited liability companies exempted from
3licensing pursuant to Section 1-4, subsection (d), of this Act,
4who performs the activities described in subsections (c), and
5(o), (yy), and (zz) of this Section.
6    (q) "Servicing" shall mean the collection or remittance for
7or the right or obligation to collect or remit for any lender,
8noteowner, noteholder, or for a licensee's own account, of
9payments, interests, principal, and trust items such as hazard
10insurance and taxes on a residential mortgage loan in
11accordance with the terms of the residential mortgage loan; and
12includes loan payment follow-up, delinquency loan follow-up,
13loan analysis and any notifications to the borrower that are
14necessary to enable the borrower to keep the loan current and
15in good standing. "Servicing" includes management of
16third-party entities acting on behalf of a residential mortgage
17licensee for the collection of delinquent payments and the use
18by such third-party entities of said licensee's servicing
19records or information, including their use in foreclosure.
20    (r) "Full service office" shall mean an office, provided by
21the licensee and not subleased from the licensee's employees,
22and staff in Illinois reasonably adequate to handle efficiently
23communications, questions, and other matters relating to any
24application for, or an existing home mortgage secured by
25residential real estate situated in Illinois with respect to
26which the licensee is brokering, funding originating,



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1purchasing, or servicing. The management and operation of each
2full service office must include observance of good business
3practices such as proper signage; adequate, organized, and
4accurate books and records; ample phone lines, hours of
5business, staff training and supervision, and provision for a
6mechanism to resolve consumer inquiries, complaints, and
7problems. The Commissioner shall issue regulations with regard
8to these requirements and shall include an evaluation of
9compliance with this Section in his or her periodic examination
10of each licensee.
11    (s) "Purchasing" shall mean the purchase of conventional or
12government-insured mortgage loans secured by residential real
13estate situated in Illinois from either the lender or from the
14secondary market.
15    (t) "Borrower" shall mean the person or persons who seek
16the services of a loan broker, originator, or lender.
17    (u) "Originating" shall mean the issuing of commitments for
18and funding of residential mortgage loans.
19    (v) "Loan brokerage agreement" shall mean a written
20agreement in which a broker or loan broker agrees to do either
21of the following:
22        (1) obtain a residential mortgage loan for the borrower
23    or assist the borrower in obtaining a residential mortgage
24    loan; or
25        (2) consider making a residential mortgage loan to the
26    borrower.



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1    (w) "Advertisement" shall mean the attempt by publication,
2dissemination, or circulation to induce, directly or
3indirectly, any person to enter into a residential mortgage
4loan agreement or residential mortgage loan brokerage
5agreement relative to a mortgage secured by residential real
6estate situated in Illinois.
7    (x) "Residential Mortgage Board" shall mean the
8Residential Mortgage Board created in Section 1-5 of this Act.
9    (y) "Government-insured mortgage loan" shall mean any
10mortgage loan made on the security of residential real estate
11insured by the Department of Housing and Urban Development or
12Farmers Home Loan Administration, or guaranteed by the Veterans
14    (z) "Annual audit" shall mean a certified audit of the
15licensee's books and records and systems of internal control
16performed by a certified public accountant in accordance with
17generally accepted accounting principles and generally
18accepted auditing standards.
19    (aa) "Financial institution" shall mean a savings and loan
20association, savings bank, credit union, or a bank organized
21under the laws of Illinois or a savings and loan association,
22savings bank, credit union or a bank organized under the laws
23of the United States and headquartered in Illinois.
24    (bb) "Escrow agent" shall mean a third party, individual or
25entity charged with the fiduciary obligation for holding escrow
26funds on a residential mortgage loan pending final payout of



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1those funds in accordance with the terms of the residential
2mortgage loan.
3    (cc) "Net worth" shall have the meaning ascribed thereto in
4Section 3-5 of this Act.
5    (dd) "Affiliate" shall mean:
6        (1) any entity that directly controls or is controlled
7    by the licensee and any other company that is directly
8    affecting activities regulated by this Act that is
9    controlled by the company that controls the licensee;
10        (2) any entity:
11            (A) that is controlled, directly or indirectly, by
12        a trust or otherwise, by or for the benefit of
13        shareholders who beneficially or otherwise control,
14        directly or indirectly, by trust or otherwise, the
15        licensee or any company that controls the licensee; or
16            (B) a majority of the directors or trustees of
17        which constitute a majority of the persons holding any
18        such office with the licensee or any company that
19        controls the licensee;
20        (3) any company, including a real estate investment
21    trust, that is sponsored and advised on a contractual basis
22    by the licensee or any subsidiary or affiliate of the
23    licensee.
24    The Commissioner may define by rule and regulation any
25terms used in this Act for the efficient and clear
26administration of this Act.



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1    (ee) "First tier subsidiary" shall be defined by regulation
2incorporating the comparable definitions used by the Office of
3the Comptroller of the Currency and the Illinois Commissioner
4of Banks and Real Estate.
5    (ff) "Gross delinquency rate" means the quotient
6determined by dividing (1) the sum of (i) the number of
7government-insured residential mortgage loans funded or
8purchased by a licensee in the preceding calendar year that are
9delinquent and (ii) the number of conventional residential
10mortgage loans funded or purchased by the licensee in the
11preceding calendar year that are delinquent by (2) the sum of
12(i) the number of government-insured residential mortgage
13loans funded or purchased by the licensee in the preceding
14calendar year and (ii) the number of conventional residential
15mortgage loans funded or purchased by the licensee in the
16preceding calendar year.
17    (gg) "Delinquency rate factor" means the factor set by rule
18of the Commissioner that is multiplied by the average gross
19delinquency rate of licensees, determined annually for the
20immediately preceding calendar year, for the purpose of
21determining which licensees shall be examined by the
22Commissioner pursuant to subsection (b) of Section 4-8 of this
24    (hh) "Loan originator" means any natural person who, for
25compensation or in the expectation of compensation, either
26directly or indirectly makes, offers to make, solicits, places,



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1or negotiates a residential mortgage loan. This definition
2applies only to Section 7-1 of this Act.
3    (ii) "Confidential supervisory information" means any
4report of examination, visitation, or investigation prepared
5by the Commissioner under this Act, any report of examination
6visitation, or investigation prepared by the state regulatory
7authority of another state that examines a licensee, any
8document or record prepared or obtained in connection with or
9relating to any examination, visitation, or investigation, and
10any record prepared or obtained by the Commissioner to the
11extent that the record summarizes or contains information
12derived from any report, document, or record described in this
13subsection. "Confidential supervisory information" does not
14include any information or record routinely prepared by a
15licensee and maintained in the ordinary course of business or
16any information or record that is required to be made publicly
17available pursuant to State or federal law or rule.
18    (jj) "Mortgage loan originator" means an individual who for
19compensation or gain or in the expectation of compensation or
21        (i) takes a residential mortgage loan application; or
22        (ii) offers or negotiates terms of a residential
23    mortgage loan.
24    "Mortgage loan originator" includes an individual engaged
25in loan modification and short sale facilitation activities as
26defined in subsections (yy) and (zz) of this Section.



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1    "Mortgage loan originator" does not include an individual
2engaged solely as a loan processor or underwriter except as
3otherwise provided in subsection (d) of Section 7-1A of this
5    "Mortgage loan originator" does not include a person or
6entity that only performs real estate brokerage activities and
7is licensed in accordance with the Real Estate License Act of
82000, unless the person or entity is compensated by a lender, a
9mortgage broker, or other mortgage loan originator, or by any
10agent of that lender, mortgage broker, or other mortgage loan
12    "Mortgage loan originator" does not include a person or
13entity solely involved in extensions of credit relating to
14timeshare plans, as that term is defined in Section 101(53D) of
15Title 11, United States Code.
16    (kk) "Depository institution" has the same meaning as in
17Section 3 of the Federal Deposit Insurance Act, and includes
18any credit union.
19    (ll) "Dwelling" means a residential structure or mobile
20home which contains one to 4 family housing units, or
21individual units of condominiums or cooperatives.
22    (mm) "Immediate family member" means a spouse, child,
23sibling, parent, grandparent, or grandchild, and includes
24step-parents, step-children, step-siblings, or adoptive
26    (nn) "Individual" means a natural person.



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1    (oo) "Loan processor or underwriter" means an individual
2who performs clerical or support duties as an employee at the
3direction of and subject to the supervision and instruction of
4a person licensed, or exempt from licensing, under this Act.
5"Clerical or support duties" includes subsequent to the receipt
6of an application:
7        (i) the receipt, collection, distribution, and
8    analysis of information common for the processing or
9    underwriting of a residential mortgage loan; and
10        (ii) communicating with a consumer to obtain the
11    information necessary for the processing or underwriting
12    of a loan, to the extent that the communication does not
13    include offering or negotiating loan rates or terms, or
14    counseling consumers about residential mortgage loan rates
15    or terms. An individual engaging solely in loan processor
16    or underwriter activities shall not represent to the
17    public, through advertising or other means of
18    communicating or providing information, including the use
19    of business cards, stationery, brochures, signs, rate
20    lists, or other promotional items, that the individual can
21    or will perform any of the activities of a mortgage loan
22    originator.
23    (pp) "Nationwide Mortgage Licensing System and Registry"
24means a mortgage licensing system developed and maintained by
25the Conference of State Bank Supervisors and the American
26Association of Residential Mortgage Regulators for the



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1licensing and registration of licensed mortgage loan
3    (qq) "Nontraditional mortgage product" means any mortgage
4product other than a 30-year fixed rate mortgage.
5    (rr) "Person" means a natural person, corporation,
6company, limited liability company, partnership, or
8    (ss) "Real estate brokerage activity" means any activity
9that involves offering or providing real estate brokerage
10services to the public, including:
11        (1) acting as a real estate agent or real estate broker
12    for a buyer, seller, lessor, or lessee of real property;
13        (2) bringing together parties interested in the sale,
14    purchase, lease, rental, or exchange of real property;
15        (3) negotiating, on behalf of any party, any portion of
16    a contract relating to the sale, purchase, lease, rental,
17    or exchange of real property, other than in connection with
18    providing financing with respect to any such transaction;
19        (4) engaging in any activity for which a person engaged
20    in the activity is required to be registered or licensed as
21    a real estate agent or real estate broker under any
22    applicable law; or
23        (5) offering to engage in any activity, or act in any
24    capacity, described in this subsection (ss).
25    (tt) "Registered mortgage loan originator" means any
26individual that:



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1        (1) meets the definition of mortgage loan originator
2    and is an employee of:
3            (A) a depository institution;
4            (B) a subsidiary that is:
5                (i) owned and controlled by a depository
6            institution; and
7                (ii) regulated by a federal banking agency; or
8            (C) an institution regulated by the Farm Credit
9        Administration; and
10        (2) is registered with, and maintains a unique
11    identifier through, the Nationwide Mortgage Licensing
12    System and Registry.
13    (uu) "Unique identifier" means a number or other identifier
14assigned by protocols established by the Nationwide Mortgage
15Licensing System and Registry.
16    (vv) "Residential mortgage license" means a license issued
17pursuant to Section 1-3, 2-2, or 2-6 of this Act.
18    (ww) "Mortgage loan originator license" means a license
19issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act.
20    (xx) "Secretary" means the Secretary of the Department of
21Financial and Professional Regulation, or a person authorized
22by the Secretary or by this Act to act in the Secretary's
24    (yy) "Loan modification" means, for compensation or gain,
25either directly or indirectly offering or negotiating on behalf
26of a borrower or homeowner to adjust the terms of a residential



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1mortgage loan in a manner not provided for in the original or
2previously modified mortgage loan.
3    (zz) "Short sale facilitation" means, for compensation or
4gain, either directly or indirectly offering or negotiating on
5behalf of a borrower or homeowner to facilitate the sale of
6residential real estate subject to one or more residential
7mortgage loans or debts constituting liens on the property in
8which the proceeds from selling the residential real estate
9will fall short of the amount owed and the lien holders are
10contacted to agree to release their lien on the residential
11real estate and accept less than the full amount owed on the
13(Source: P.A. 96-112, eff. 7-31-09; 96-1000, eff. 7-2-10;
1496-1216, eff. 1-1-11; 97-143, eff. 7-14-11.)
15    (205 ILCS 635/2-2)
16    Sec. 2-2. Application process; investigation; fee.
17    (a) The Secretary shall issue a license upon completion of
18all of the following:
19        (1) The filing of an application for license with the
20    Director or the Nationwide Mortgage Licensing System and
21    Registry as approved by the Director.
22        (2) The filing with the Secretary of a listing of
23    judgments entered against, and bankruptcy petitions by,
24    the license applicant for the preceding 10 years.
25        (3) The payment, in certified funds, of investigation



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1    and application fees, the total of which shall be in an
2    amount equal to $2,700 $2,043 annually. To comply with the
3    common renewal date and requirements of the Nationwide
4    Mortgage Licensing System and Registry, the term of initial
5    licenses may be extended or shortened with applicable fees
6    prorated or combined accordingly.
7        (4) Except for a broker applying to renew a license,
8    the filing of an audited balance sheet including all
9    footnotes prepared by a certified public accountant in
10    accordance with generally accepted accounting principles
11    and generally accepted auditing principles which evidences
12    that the applicant meets the net worth requirements of
13    Section 3-5.
14        (5) The filing of proof satisfactory to the
15    Commissioner that the applicant, the members thereof if the
16    applicant is a partnership or association, the members or
17    managers thereof that retain any authority or
18    responsibility under the operating agreement if the
19    applicant is a limited liability company, or the officers
20    thereof if the applicant is a corporation have 3 years
21    experience preceding application in real estate finance.
22    Instead of this requirement, the applicant and the
23    applicant's officers or members, as applicable, may
24    satisfactorily complete a program of education in real
25    estate finance and fair lending, as approved by the
26    Commissioner, prior to receiving the initial license. The



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1    Commissioner shall promulgate rules regarding proof of
2    experience requirements and educational requirements and
3    the satisfactory completion of those requirements. The
4    Commissioner may establish by rule a list of duly licensed
5    professionals and others who may be exempt from this
6    requirement.
7        (6) An investigation of the averments required by
8    Section 2-4, which investigation must allow the
9    Commissioner to issue positive findings stating that the
10    financial responsibility, experience, character, and
11    general fitness of the license applicant and of the members
12    thereof if the license applicant is a partnership or
13    association, of the officers and directors thereof if the
14    license applicant is a corporation, and of the managers and
15    members that retain any authority or responsibility under
16    the operating agreement if the license applicant is a
17    limited liability company are such as to command the
18    confidence of the community and to warrant belief that the
19    business will be operated honestly, fairly and efficiently
20    within the purpose of this Act. If the Commissioner shall
21    not so find, he or she shall not issue such license, and he
22    or she shall notify the license applicant of the denial.
23    The Commissioner may impose conditions on a license if the
24Commissioner determines that the conditions are necessary or
25appropriate. These conditions shall be imposed in writing and
26shall continue in effect for the period prescribed by the



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2    (b) All licenses shall be issued to the license applicant.
3    Upon receipt of such license, a residential mortgage
4licensee shall be authorized to engage in the business
5regulated by this Act. Such license shall remain in full force
6and effect until it expires without renewal, is surrendered by
7the licensee or revoked or suspended as hereinafter provided.
8(Source: P.A. 95-1047, eff. 4-6-09; 96-112, eff. 7-31-09;
996-1000, eff. 7-2-10.)
10    (205 ILCS 635/2-3A new)
11    Sec. 2-3A. Residential mortgage license application and
13    (a) Applicants for a license shall apply in a form
14prescribed by the Director. Each form shall contain content as
15set forth by rule, regulation, instruction, or procedure of the
16Director and may be changed or updated as necessary by the
17Director in order to carry out the purposes of this Act.
18    (b) In order to fulfill the purposes of this Act, the
19Director is authorized to establish relationships or contracts
20with the Nationwide Mortgage Licensing System and Registry or
21other entities designated by the Nationwide Mortgage Licensing
22System and Registry to collect and maintain records and process
23transaction fees or other fees related to licensees or other
24persons subject to this Act.
25    (c) In connection with an application for licensing, the



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1applicant may be required, at a minimum, to furnish to the
2Nationwide Mortgage Licensing System and Registry information
3concerning the applicant's identity, including:
4        (1) fingerprints for submission to the Federal Bureau
5    of Investigation or any governmental agency or entity
6    authorized to receive such information for a State,
7    national, and international criminal history background
8    check; and
9        (2) personal history and experience in a form
10    prescribed by the Nationwide Mortgage Licensing System and
11    Registry, including the submission of authorization for
12    the Nationwide Mortgage Licensing System and Registry and
13    the Director to obtain:
14            (A) an independent credit report obtained from a
15        consumer reporting agency described in Section 603(p)
16        of the Fair Credit Reporting Act (15 U.S.C. 1681a(p));
17        and
18            (B) information related to any administrative,
19        civil, or criminal findings by any governmental
20        jurisdiction.
21    (d) For the purposes of this Section, and in order to
22reduce the points of contact that the Federal Bureau of
23Investigation may have to maintain for purposes of subsection
24(c) of this Section, the Director may use the Nationwide
25Mortgage Licensing System and Registry as a channeling agent
26for requesting information from and distributing information



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1to the Department of Justice or any governmental agency.
2    (e) For the purposes of this Section, and in order to
3reduce the points of contact that the Director may have to
4maintain for purposes of item (2) of subsection (c) of this
5Section, the Director may use the Nationwide Mortgage Licensing
6System and Registry as a channeling agent for requesting and
7distributing information to and from any source so directed by
8the Director.
9    (205 ILCS 635/2-4)  (from Ch. 17, par. 2322-4)
10    Sec. 2-4. Averments of Licensee. Each application for
11license or for the renewal of a license shall be accompanied by
12the following averments stating that the applicant:
13        (a) Will maintain at least one full service office
14    within the State of Illinois pursuant to Section 3-4 of
15    this Act;
16        (b) Will maintain staff reasonably adequate to meet the
17    requirements of Section 3-4 of this Act;
18        (c) Will keep and maintain for 36 months the same
19    written records as required by the federal Equal Credit
20    Opportunity Act, and any other information required by
21    regulations of the Commissioner regarding any home
22    mortgage in the course of the conduct of its residential
23    mortgage business;
24        (d) Will file with the Commissioner or Nationwide
25    Mortgage Licensing System and Registry as applicable, when



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1    due, any report or reports which it is required to file
2    under any of the provisions of this Act;
3        (e) Will not engage, whether as principal or agent, in
4    the practice of rejecting residential mortgage
5    applications without reasonable cause, or varying terms or
6    application procedures without reasonable cause, for home
7    mortgages on real estate within any specific geographic
8    area from the terms or procedures generally provided by the
9    licensee within other geographic areas of the State;
10        (f) Will not engage in fraudulent home mortgage
11    underwriting practices;
12        (g) Will not make payment, whether directly or
13    indirectly, of any kind to any in house or fee appraiser of
14    any government or private money lending agency with which
15    an application for a home mortgage has been filed for the
16    purpose of influencing the independent judgment of the
17    appraiser with respect to the value of any real estate
18    which is to be covered by such home mortgage;
19        (h) Has filed tax returns (State and Federal) for the
20    past 3 years or filed with the Commissioner an accountant's
21    or attorney's statement as to why no return was filed;
22        (i) Will not engage in any discrimination or redlining
23    activities prohibited by Section 3-8 of this Act;
24        (j) Will not knowingly make any false promises likely
25    to influence or persuade, or pursue a course of
26    misrepresentation and false promises through agents,



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1    solicitors, advertising or otherwise;
2        (k) Will not knowingly misrepresent, circumvent or
3    conceal, through whatever subterfuge or device, any of the
4    material particulars or the nature thereof, regarding a
5    transaction to which it is a party to the injury of another
6    party thereto;
7        (l) Will disburse funds in accordance with its
8    agreements;
9        (m) Has not committed a crime against the law of this
10    State, any other state or of the United States, involving
11    moral turpitude, fraudulent or dishonest dealing, and that
12    no final judgment has been entered against it in a civil
13    action upon grounds of fraud, misrepresentation or deceit
14    which has not been previously reported to the Commissioner;
15        (n) Will account or deliver to the owner upon request
16    any personal property such as money, fund, deposit, check,
17    draft, mortgage, other document or thing of value which it
18    is not in law or equity entitled to retain under the
19    circumstances;
20        (o) Has not engaged in any conduct which would be cause
21    for denial of a license;
22        (p) Has not become insolvent;
23        (q) Has not submitted an application for a license
24    under this Act which contains a material misstatement;
25        (r) Has not demonstrated by course of conduct,
26    negligence or incompetence in performing any act for which



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1    it is required to hold a license under this Act;
2        (s) Will advise the Commissioner in writing, or the
3    Nationwide Mortgage Licensing System and Registry as
4    applicable, of any changes to the information submitted on
5    the most recent application for license within 30 days of
6    said change. The written notice must be signed in the same
7    form as the application for license being amended;
8        (t) Will comply with the provisions of this Act, or
9    with any lawful order, rule or regulation made or issued
10    under the provisions of this Act;
11        (u) Will submit to periodic examination by the
12    Commissioner as required by this Act;
13        (v) Will advise the Commissioner in writing of
14    judgments entered against, and bankruptcy petitions by,
15    the license applicant within 5 days of occurrence;
16        (w) Will advise the Commissioner in writing within 30
17    days of any request made to a licensee under this Act to
18    repurchase a loan in a manner that completely and clearly
19    identifies to whom the request was made, the loans
20    involved, and the reason therefor;
21        (x) Will advise the Commissioner in writing within 30
22    days of any request from any entity to repurchase a loan in
23    a manner that completely and clearly identifies to whom the
24    request was made, the loans involved, and the reason for
25    the request;
26        (y) Will at all times act in a manner consistent with



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1    subsections (a) and (b) of Section 1-2 of this Act; and
2        (z) Will not knowingly hire or employ a loan originator
3    who is not registered, or mortgage loan originator who is
4    not licensed, with the Commissioner as required under
5    Section 7-1 or Section 7-1A, as applicable, of this Act; .
6        (aa) Will not charge or collect advance payments from
7    borrowers or homeowners for engaging in loan modification
8    or short sale facilitation; and
9        (bb) Will not structure activities or contracts to
10    evade provisions of this Act.
11    A licensee who fails to fulfill obligations of an averment,
12to comply with averments made, or otherwise violates any of the
13averments made under this Section shall be subject to the
14penalties in Section 4-5 of this Act.
15(Source: P.A. 95-331, eff. 8-21-07; 96-112, eff. 7-31-09.)
16    (205 ILCS 635/4-5)  (from Ch. 17, par. 2324-5)
17    Sec. 4-5. Suspension, revocation of licenses; fines.
18    (a) Upon written notice to a licensee, the Commissioner may
19suspend or revoke any license issued pursuant to this Act if he
20or she shall make a finding of one or more of the following in
21the notice that:
22        (1) Through separate acts or an act or a course of
23    conduct, the licensee has violated any provisions of this
24    Act, any rule or regulation promulgated by the Commissioner
25    or of any other law, rule or regulation of this State or



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1    the United States.
2        (2) Any fact or condition exists which, if it had
3    existed at the time of the original application for such
4    license would have warranted the Commissioner in refusing
5    originally to issue such license.
6        (3) If a licensee is other than an individual, any
7    ultimate equitable owner, officer, director, or member of
8    the licensed partnership, association, corporation, or
9    other entity has so acted or failed to act as would be
10    cause for suspending or revoking a license to that party as
11    an individual.
12    (b) No license shall be suspended or revoked, except as
13provided in this Section, nor shall any licensee be fined
14without notice of his or her right to a hearing as provided in
15Section 4-12 of this Act.
16    (c) The Commissioner, on good cause shown that an emergency
17exists, may suspend any license for a period not exceeding 180
18days, pending investigation. Upon a showing that a licensee has
19failed to meet the experience or educational requirements of
20Section 2-2 or the requirements of subsection (g) of Section
213-2, the Commissioner shall suspend, prior to hearing as
22provided in Section 4-12, the license until those requirements
23have been met.
24    (d) The provisions of subsection (e) of Section 2-6 of this
25Act shall not affect a licensee's civil or criminal liability
26for acts committed prior to surrender of a license.



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1    (e) No revocation, suspension or surrender of any license
2shall impair or affect the obligation of any pre-existing
3lawful contract between the licensee and any person.
4    (f) Every license issued under this Act shall remain in
5force and effect until the same shall have expired without
6renewal, have been surrendered, revoked or suspended in
7accordance with the provisions of this Act, but the
8Commissioner shall have authority to reinstate a suspended
9license or to issue a new license to a licensee whose license
10shall have been revoked if no fact or condition then exists
11which would have warranted the Commissioner in refusing
12originally to issue such license under this Act.
13    (g) Whenever the Commissioner shall revoke or suspend a
14license issued pursuant to this Act or fine a licensee under
15this Act, he or she shall forthwith execute a written order to
16that effect. The Commissioner shall publish notice of such
17order in the Illinois Register and post notice of the order on
18an agency Internet site maintained by the Commissioner or on
19the Nationwide Mortgage Licensing System and Registry and shall
20forthwith serve a copy of such order upon the licensee. Any
21such order may be reviewed in the manner provided by Section
224-12 of this Act.
23    (h) When the Commissioner finds any person in violation of
24the grounds set forth in subsection (i), he or she may enter an
25order imposing one or more of the following penalties:
26        (1) Revocation of license;



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1        (2) Suspension of a license subject to reinstatement
2    upon satisfying all reasonable conditions the Commissioner
3    may specify;
4        (3) Placement of the licensee or applicant on probation
5    for a period of time and subject to all reasonable
6    conditions as the Commissioner may specify;
7        (4) Issuance of a reprimand;
8        (5) Imposition of a fine not to exceed $25,000 for each
9    count of separate offense, provided that a fine may be
10    imposed not to exceed $75,000 for each separate count of
11    offense in instances of mortgage fraud; and
12        (6) Denial of a license.
13    (i) The following acts shall constitute grounds for which
14the disciplinary actions specified in subsection (h) above may
15be taken:
16        (1) Being convicted or found guilty, regardless of
17    pendency of an appeal, of a crime in any jurisdiction which
18    involves fraud, dishonest dealing, or any other act of
19    moral turpitude;
20        (2) Fraud, misrepresentation, deceit or negligence in
21    any mortgage financing transaction;
22        (3) A material or intentional misstatement of fact on
23    an initial or renewal application;
24        (4) Failure to follow the Commissioner's regulations
25    with respect to placement of funds in escrow accounts;
26        (5) Insolvency or filing under any provision of the



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1    Bankruptcy Code as a debtor;
2        (6) Failure to account or deliver to any person any
3    property such as any money, fund, deposit, check, draft,
4    mortgage, or other document or thing of value, which has
5    come into his or her hands and which is not his or her
6    property or which he or she is not in law or equity
7    entitled to retain, under the circumstances and at the time
8    which has been agreed upon or is required by law or, in the
9    absence of a fixed time, upon demand of the person entitled
10    to such accounting and delivery;
11        (7) Failure to disburse funds in accordance with
12    agreements;
13        (8) Any misuse, misapplication, or misappropriation of
14    trust funds or escrow funds;
15        (9) Having a license, or the equivalent, to practice
16    any profession or occupation revoked, suspended, or
17    otherwise acted against, including the denial of licensure
18    by a licensing authority of this State or another state,
19    territory or country for fraud, dishonest dealing or any
20    other act of moral turpitude;
21        (10) Failure to issue a satisfaction of mortgage when
22    the residential mortgage has been executed and proceeds
23    were not disbursed to the benefit of the mortgagor and when
24    the mortgagor has fully paid licensee's costs and
25    commission;
26        (11) Failure to comply with any order of the



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1    Commissioner or rule made or issued under the provisions of
2    this Act;
3        (12) Engaging in activities regulated by this Act
4    without a current, active license unless specifically
5    exempted by this Act;
6        (13) Failure to pay in a timely manner any fee, charge
7    or fine under this Act;
8        (14) Failure to maintain, preserve, and keep available
9    for examination, all books, accounts or other documents
10    required by the provisions of this Act and the rules of the
11    Commissioner;
12        (15) Refusing, obstructing, evading, or unreasonably
13    delaying an investigation, information request, or
14    examination authorized under this Act, or refusing,
15    obstructing, evading, or unreasonably delaying compliance
16    with the Director's subpoena or subpoena duces tecum;
17        (16) A pattern of substantially underestimating the
18    maximum closing costs;
19        (17) Failure to comply with or violation of any
20    provision of this Act; .
21        (18) Failure to comply with or violation of any
22    provision of Article 3 of the Residential Real Property
23    Disclosure Act.
24    (j) A licensee shall be subject to the disciplinary actions
25specified in this Act for violations of subsection (i) by any
26officer, director, shareholder, joint venture, partner,



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1ultimate equitable owner, or employee of the licensee.
2    (k) Such licensee shall be subject to suspension or
3revocation for unauthorized employee actions only if there is a
4pattern of repeated violations by employees or the licensee has
5knowledge of the violations, or there is substantial harm to a
7    (l) Procedure for surrender of license:
8        (1) The Commissioner may, after 10 days notice by
9    certified mail to the licensee at the address set forth on
10    the license, stating the contemplated action and in general
11    the grounds therefor and the date, time and place of a
12    hearing thereon, and after providing the licensee with a
13    reasonable opportunity to be heard prior to such action,
14    fine such licensee an amount not exceeding $25,000 per
15    violation, or revoke or suspend any license issued
16    hereunder if he or she finds that:
17            (i) The licensee has failed to comply with any
18        provision of this Act or any order, decision, finding,
19        rule, regulation or direction of the Commissioner
20        lawfully made pursuant to the authority of this Act; or
21            (ii) Any fact or condition exists which, if it had
22        existed at the time of the original application for the
23        license, clearly would have warranted the Commissioner
24        in refusing to issue the license.
25        (2) Any licensee may submit application to surrender a
26    license, but upon the Director approving the surrender, it



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1    shall not affect the licensee's civil or criminal liability
2    for acts committed prior to surrender or entitle the
3    licensee to a return of any part of the license fee.
4(Source: P.A. 96-112, eff. 7-31-09.)
5    (205 ILCS 635/7-1A)
6    Sec. 7-1A. Mortgage loan originator license.
7    (a) It is unlawful for any individual to act or assume to
8act as a mortgage loan originator, as defined in subsection
9(jj) of Section 1-4 of this Act, without obtaining a license
10from the Director, unless the individual is exempt under
11subsection (c) of this Section. Each licensed mortgage loan
12originator must register with and maintain a valid unique
13identifier issued by the Nationwide Mortgage Licensing System
14and Registry.
15    (b) In order to facilitate an orderly transition to
16licensing and minimize disruption in the mortgage marketplace,
17the operability date for subsection (a) of this Section shall
18be as provided in this subsection (b). For this purpose, the
19Director may require submission of licensing information to the
20Nationwide Mortgage Licensing System and Registry prior to the
21operability dates designated by the Director pursuant to items
22(1) and (2) of this subsection (b).
23        (1) For all individuals other than individuals
24    described in item (2) of this subsection (b), the
25    operability date as designated by the Director shall be no



HB4521- 34 -LRB097 19725 PJG 64984 b

1    later than July 31, 2010, or any date approved by the
2    Secretary of the U.S. Department of Housing and Urban
3    Development, pursuant to the authority granted under
4    federal Public Law 110-289, Section 1508.
5        (2) For all individuals registered as loan originators
6    as of the effective date of this amendatory Act of the 96th
7    General Assembly, the operability date as designated by the
8    Director shall be no later than January 1, 2011, or any
9    date approved by the Secretary of the U.S. Department of
10    Housing and Urban Development, pursuant to the authority
11    granted under Public Law 110-289, Section 1508.
12        (3) For all individuals described in item (1) or (2) of
13    this subsection (b) who are loss mitigation specialists
14    employed by servicers, the operability date shall be July
15    31, 2011, or any date approved by the Secretary of the U.S.
16    Department of Housing and Urban Development pursuant to
17    authority granted under Public Law 110-289, Section 1508.
18    (c) The following, when engaged in the following
19activities, are exempt from this Act:
20        (1) Registered mortgage loan originators, when acting
21    for an entity described in subsection (tt) of Section 1-4.
22        (2) Any individual who offers or negotiates terms of a
23    residential mortgage loan with or on behalf of an immediate
24    family member of the individual.
25        (3) Any individual who offers or negotiates terms of a
26    residential mortgage loan secured by a dwelling that served



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1    as the individual's residence.
2        (4) A licensed attorney who negotiates the terms of a
3    residential mortgage loan on behalf of a client as an
4    ancillary matter to the attorney's representation of the
5    client, unless the attorney is compensated by a lender, a
6    mortgage broker, or other mortgage loan originator or by
7    any agent of a lender, mortgage broker, or other mortgage
8    loan originator.
9        (5) A real estate licensee who facilitates a short sale
10    for and is the listing agent for a residential real
11    property.
12    (d) A loan processor or underwriter who is an independent
13contractor may not engage in the activities of a loan processor
14or underwriter unless he or she obtains and maintains a license
15under subsection (a) of this Section. Each independent
16contractor loan processor or underwriter licensed as a mortgage
17loan originator must have and maintain a valid unique
18identifier issued by the Nationwide Mortgage Licensing System
19and Registry.
20    (e) For the purposes of implementing an orderly and
21efficient licensing process, the Director may establish
22licensing rules or regulations and interim procedures for
23licensing and acceptance of applications. For previously
24registered or licensed individuals, the Director may establish
25expedited review and licensing procedures.
26(Source: P.A. 96-112, eff. 7-31-09.)



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1    (205 ILCS 635/7-11)
2    Sec. 7-11. Mortgage loan originator suspension or
3revocation of registration; refusal to renew; fines.
4    (a) In addition to any other action authorized by this Act
5or any other applicable law, rule or regulation, the Director
6may do the following:
7        (1) Suspend, revoke, or refuse to renew a license or
8    reprimand, place on probation or otherwise discipline a
9    licensee if the Director finds that the mortgage loan
10    originator has violated this Act or any other applicable
11    law or regulation or has been convicted of a criminal
12    offense.
13        (2) Impose a fine of not more than $1,000 or, in
14    instances of mortgage fraud, not more than $3,000 for each
15    day for each violation of this Act or any other applicable
16    law or regulation that is committed. If the Mortgage Loan
17    Originator engages in a pattern of repeated violations, the
18    Director may impose a fine of not more than $2,000 or, in
19    instances of mortgage fraud, not more than $6,000 for each
20    day for each violation committed. In determining the amount
21    of a fine to be imposed pursuant to this Act or any other
22    applicable law or regulation, the Director shall consider
23    all of the following:
24            (A) The seriousness of the violation;
25            (B) The mortgage loan originator's good faith



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1        efforts to prevent the violation; and
2            (C) The mortgage loan originator's history of
3        violations and compliance with orders.
4    (b) In addition to any other action authorized by this Act
5or any other applicable law, rule or regulation, the Director
6may investigate alleged violations of the Act or any other
7applicable law, rule or regulation and complaints concerning
8any such violation. The Director may seek a court order to
9enjoin the violation.
10    (c) In addition to any other action authorized by this Act
11or any other applicable law, rule or regulation, if the
12Director determines that a mortgage loan originator is engaged
13in or is believed to be engaged in activities that may
14constitute a violation of this Act or any other applicable law,
15rule or regulation, the Director may issue a cease and desist
16order to compel the mortgage loan originator to comply with
17this Act or any other applicable law, rule or regulation or,
18upon a showing that an emergency exists, may suspend the
19mortgage loan originator's license for a period not exceeding
20180 calendar days, pending investigation.
21(Source: P.A. 96-112, eff. 7-31-09.)
22    (205 ILCS 635/7-13)
23    Sec. 7-13. Prohibited acts and practices for mortgage loan
24originators. It is a violation of this Act for an individual
25subject to this Act to:



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1        (1) Directly or indirectly employ any scheme, device,
2    or artifice to defraud or mislead borrowers or lenders or
3    to defraud any person.
4        (2) Engage in any unfair or deceptive practice toward
5    any person.
6        (3) Obtain property by fraud or misrepresentation.
7        (4) Solicit or enter into a contract with a borrower
8    that provides in substance that the person or individual
9    subject to this Act may earn a fee or commission through
10    "best efforts" to obtain a loan even though no loan is
11    actually obtained for the borrower.
12        (5) Solicit, advertise, or enter into a contract for
13    specific interest rates, points, or other financing terms
14    unless the terms are actually available at the time of
15    soliciting, advertising, or contracting.
16        (6) Conduct any business covered by this Act without
17    holding a valid license as required under this Act, or
18    assist or aid and abet any person in the conduct of
19    business under this Act without a valid license as required
20    under this Act.
21        (7) Fail to make disclosures as required by this Act
22    and any other applicable State or federal law, including
23    regulations thereunder.
24        (8) Fail to comply with this Act or rules or
25    regulations promulgated under this Act, or fail to comply
26    with any other state or federal law, including the rules



HB4521- 39 -LRB097 19725 PJG 64984 b

1    and regulations thereunder, applicable to any business
2    authorized or conducted under this Act.
3        (9) Make, in any manner, any false or deceptive
4    statement or representation of a material fact, or any
5    omission of a material fact, required on any document or
6    application subject to this Act.
7        (10) Negligently make any false statement or knowingly
8    and willfully make any omission of material fact in
9    connection with any information or report filed with a
10    governmental agency or the Nationwide Mortgage Licensing
11    System and Registry or in connection with any investigation
12    conducted by the Director or another governmental agency.
13        (11) Make any payment, threat or promise, directly or
14    indirectly, to any person for the purpose of influencing
15    the independent judgment of the person in connection with a
16    residential mortgage loan, or make any payment threat or
17    promise, directly or indirectly, to any appraiser of a
18    property, for the purpose of influencing the independent
19    judgment of the appraiser with respect to the value of the
20    property.
21        (12) Collect, charge, attempt to collect or charge, or
22    use or propose any agreement purporting to collect or
23    charge any fee prohibited by this Act, including advance
24    fees for loan modification or short sale facilitation.
25        (13) Cause or require a borrower to obtain property
26    insurance coverage in an amount that exceeds the



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1    replacement cost of the improvements as established by the
2    property insurer.
3        (14) Fail to truthfully account for monies belonging to
4    a party to a residential mortgage loan transaction.
5        (15) Engage in conduct that constitutes dishonest
6    dealings.
7        (16) Knowingly instruct, solicit, propose, or cause a
8    person other than the borrower to sign a borrower's
9    signature on a mortgage related document, or solicit,
10    accept or execute any contract or other document related to
11    the residential mortgage transaction that contains any
12    blanks to be filled in after signing or initialing the
13    contract or other document, except for forms authorizing
14    the verification of application information.
15        (17) Discourage any applicant from seeking or
16    participating in housing or financial counseling either
17    before or after the consummation of a loan transaction, or
18    fail to provide information on counseling resources upon
19    request.
20        (18) Charge for any ancillary products or services, not
21    essential to the basic loan transaction for which the
22    consumer has applied, without the applicant's knowledge
23    and written authorization, or charge for any ancillary
24    products or services not actually provided in the
25    transaction.
26        (19) Fail to give reasonable consideration to a



HB4521- 41 -LRB097 19725 PJG 64984 b

1    borrower's ability to repay the debt.
2        (20) Interfere or obstruct an investigation or
3    examination conducted pursuant to this Act.
4        (21) Structure activities or contracts to evade
5    provisions of this Act.
6(Source: P.A. 96-112, eff. 7-31-09.)
7    Section 10. The Title Insurance Act is amended by changing
8Section 23
9    (215 ILCS 155/23)  (from Ch. 73, par. 1423)
10    Sec. 23. Violation; penalties.
11    (a) Any violation of any of the provisions of this Act and,
12beginning January 1, 2013, any violation of any of the
13provisions of Article 3 of the Residential Real Property
14Disclosure Act shall constitute a business offense and shall
15subject the party violating the same to a penalty of $1000 for
16each offense.
17    (b) Nothing contained in this Section shall affect the
18right of the Secretary to revoke or suspend a title insurance
19company's or independent escrowee's certificate of authority
20or a title insurance agent's registration under any other
21Section of this Act.
22(Source: P.A. 94-893, eff. 6-20-06.)
23    Section 15. The Residential Real Property Disclosure Act is



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1amended by changing Sections 70, 72, 73, and 74 as follows:
2    (765 ILCS 77/70)
3    Sec. 70. Predatory lending database program.
4    (a) As used in this Article:
5    "Adjustable rate mortgage" or "ARM" means a closed-end
6mortgage transaction that allows adjustments of the loan
7interest rate during the first 3 years of the loan term.
8    "Borrower" means a person seeking a mortgage loan.
9    "Broker" means a "broker" or "loan broker", as defined in
10subsection (p) of Section 1-4 of the Residential Mortgage
11License Act of 1987.
12    "Closing agent" means an individual assigned by a title
13insurance company or a broker or originator to ensure that the
14execution of documents related to the closing of a real estate
15sale or the refinancing of a real estate loan and the
16disbursement of closing funds are in conformity with the
17instructions of the entity financing the transaction.
18    "Counseling" means in-person counseling provided by a
19counselor employed by a HUD-certified counseling agency to all
20borrowers, or documented telephone counseling where a hardship
21would be imposed on one or more borrowers. A hardship shall
22exist in instances in which the borrower is confined to his or
23her home due to medical conditions, as verified in writing by a
24physician, or the borrower resides 50 miles or more from the
25nearest participating HUD-certified housing counseling agency.



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1In instances of telephone counseling, the borrower must supply
2all necessary documents to the counselor at least 72 hours
3prior to the scheduled telephone counseling session.
4    "Counselor" means a counselor employed by a HUD-certified
5housing counseling agency.
6    "Credit score" means a credit risk score as defined by the
7Fair Isaac Corporation, or its successor, and reported under
8such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE"
9by one or more of the following credit reporting agencies or
10their successors: Equifax, Inc., Experian Information
11Solutions, Inc., and TransUnion LLC. If the borrower's credit
12report contains credit scores from 2 reporting agencies, then
13the broker or loan originator shall report the lower score. If
14the borrower's credit report contains credit scores from 3
15reporting agencies, then the broker or loan originator shall
16report the middle score.
17    "Department" means the Department of Financial and
18Professional Regulation.
19    "Exempt person" means that term as it is defined in
20subsections (d)(1) and (d)(1.5) of Section 1-4 of the
21Residential Mortgage License Act of 1987.
22    "First-time homebuyer" means a borrower who has not held an
23ownership interest in residential property.
24    "HUD-certified counseling" or "counseling" means
25counseling given to a borrower by a counselor employed by a
26HUD-certified housing counseling agency.



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1    "Interest only" means a closed-end loan that permits one or
2more payments of interest without any reduction of the
3principal balance of the loan, other than the first payment on
4the loan.
5    "Lender" means that term as it is defined in subsection (g)
6of Section 1-4 of the Residential Mortgage License Act of 1987.
7    "Licensee" means that term as it is defined in subsection
8(e) of Section 1-4 of the Residential Mortgage License Act of
10    "Mortgage loan" means that term as it is defined in
11subsection (f) of Section 1-4 of the Residential Mortgage
12License Act of 1987.
13    "Negative amortization" means an amortization method under
14which the outstanding balance may increase at any time over the
15course of the loan because the regular periodic payment does
16not cover the full amount of interest due.
17    "Originator" means a "loan originator" as defined in
18subsection (hh) of Section 1-4 of the Residential Mortgage
19License Act of 1987, except an exempt person.
20    "Points and fees" has the meaning ascribed to that term in
21Section 10 of the High Risk Home Loan Act.
22    "Prepayment penalty" means a charge imposed by a lender
23under a mortgage note or rider when the loan is paid before the
24expiration of the term of the loan.
25    "Refinancing" means a loan secured by the borrower's or
26borrowers' primary residence where the proceeds are not used as



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1purchase money for the residence.
2    "Title insurance company" means any domestic company
3organized under the laws of this State for the purpose of
4conducting the business of guaranteeing or insuring titles to
5real estate and any title insurance company organized under the
6laws of another State, the District of Columbia, or a foreign
7government and authorized to transact the business of
8guaranteeing or insuring titles to real estate in this State.
9    (a-5) A predatory lending database program shall be
10established within Cook County. The program shall be
11administered in accordance with this Article. The inception
12date of the program shall be July 1, 2008. A predatory lending
13database program shall be expanded to include Kane, Peoria, and
14Will counties. The inception date of the expansion of the
15program as it applies to Kane, Peoria, and Will counties shall
16be July 1, 2010. Until the inception date, none of the duties,
17obligations, contingencies, or consequences of or from the
18program shall be imposed. The program shall apply to all
19mortgage applications that are governed by this Article and
20that are made or taken on or after the inception of the
22    (b) The database created under this program shall be
23maintained and administered by the Department. The database
24shall be designed to allow brokers, originators, counselors,
25title insurance companies, and closing agents to submit
26information to the database online. The database shall not be



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1designed to allow those entities to retrieve information from
2the database, except as otherwise provided in this Article.
3Information submitted by the broker or originator to the
4Department may be used to populate the online form submitted by
5a counselor, title insurance company, or closing agent.
6    (c) Within 10 days after taking a mortgage application, the
7broker or originator for any mortgage on residential property
8within the program area must submit to the predatory lending
9database all of the information required under Section 72 and
10any other information required by the Department by rule.
11Within 7 days after receipt of the information, the Department
12shall compare that information to the housing counseling
13standards in Section 73 and issue to the borrower and the
14broker or originator a determination of whether counseling is
15recommended for the borrower. The borrower may not waive
16counseling. If at any time after submitting the information
17required under Section 72 the broker or originator (i) changes
18the terms of the loan or (ii) issues a new commitment to the
19borrower, then, within 5 days thereafter, the broker or
20originator shall re-submit all of the information required
21under Section 72 and, within 4 days after receipt of the
22information re-submitted by the broker or originator, the
23Department shall compare that information to the housing
24counseling standards in Section 73 and shall issue to the
25borrower and the broker or originator a new determination of
26whether re-counseling is recommended for the borrower based on



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1the information re-submitted by the broker or originator. The
2Department shall require re-counseling if the loan terms have
3been modified to meet another counseling standard in Section
473, or if the broker has increased the interest rate by more
5than 200 basis points.
6    (d) If the Department recommends counseling for the
7borrower under subsection (c), then the Department shall notify
8the borrower of all participating HUD-certified counseling
9agencies located within the State and direct the borrower to
10interview with a counselor associated with one of those
11agencies. Within 10 days after receipt of the notice of
12HUD-certified counseling agencies, the borrower shall select
13one of those agencies and shall engage in an interview with a
14counselor associated with that agency. Within 7 days after
15interviewing the borrower, the counselor must submit to the
16predatory lending database all of the information required
17under Section 74 and any other information required by the
18Department by rule. Reasonable and customary costs not to
19exceed $300 associated with counseling provided under the
20program shall be paid by the broker or originator. The
21Department shall annually calculate to the nearest dollar an
22adjusted rate for inflation. A counselor shall not recommend or
23suggest that a borrower contact any specific mortgage
24origination company, financial institution, or entity that
25deals in mortgage finance to obtain a loan, another quote, or
26for any other reason related to the specific mortgage



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1transaction; however, a counselor may suggest that the borrower
2seek an opinion or a quote from another mortgage origination
3company, financial institution, or entity that deals in
4mortgage finance. A counselor or housing counseling agency that
5in good faith provides counseling shall not be liable to a
6broker or originator or borrower for civil damages, except for
7willful or wanton misconduct on the part of the counselor in
8providing the counseling.
9    (e) The broker or originator and the borrower may not take
10any legally binding action concerning the loan transaction
11until the later of the following:
12        (1) the Department issues a determination not to
13    recommend HUD-certified counseling for the borrower in
14    accordance with subsection (c); or
15        (2) the Department issues a determination that
16    HUD-certified counseling is recommended for the borrower
17    and the counselor submits all required information to the
18    database in accordance with subsection (d).
19    (f) Within 10 days after closing, the title insurance
20company or closing agent must submit to the predatory lending
21database all of the information required under Section 76 and
22any other information required by the Department by rule.
23    (g) The title insurance company or closing agent shall
24attach to the mortgage a certificate of compliance with the
25requirements of this Article, as generated by the database. If
26the title insurance company or closing agent fails to attach



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1the certificate of compliance, then the mortgage is not
2recordable. In addition, if any lis pendens for a residential
3mortgage foreclosure is recorded on the property within the
4program area, a certificate of service must be simultaneously
5recorded that affirms that a copy of the lis pendens was filed
6with the Department. If the certificate of service is not
7recorded, then the lis pendens pertaining to the residential
8mortgage foreclosure in question is not recordable and is of no
9force and effect.
10    (h) All information provided to the predatory lending
11database under the program is confidential and is not subject
12to disclosure under the Freedom of Information Act, except as
13otherwise provided in this Article. Information or documents
14obtained by employees of the Department in the course of
15maintaining and administering the predatory lending database
16are deemed confidential. Employees are prohibited from making
17disclosure of such confidential information or documents. Any
18request for production of information from the predatory
19lending database, whether by subpoena, notice, or any other
20source, shall be referred to the Department of Financial and
21Professional Regulation. Any borrower may authorize in writing
22the release of database information. The Department may use the
23information in the database without the consent of the
24borrower: (i) for the purposes of administering and enforcing
25the program; (ii) to provide relevant information to a
26counselor providing counseling to a borrower under the program;



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1or (iii) to the appropriate law enforcement agency or the
2applicable administrative agency if the database information
3demonstrates criminal, fraudulent, or otherwise illegal
5    (i) Nothing in this Article is intended to prevent a
6borrower from making his or her own decision as to whether to
7proceed with a transaction.
8    (j) Any person who violates any provision of this Article
9commits an unlawful practice within the meaning of the Consumer
10Fraud and Deceptive Business Practices Act.
11    (j-1) A violation of any provision of this Article by a
12mortgage banking licensee or licensed mortgage loan originator
13shall constitute a violation of the Residential Mortgage
14License Act of 1987.
15    (j-2) A violation of any provision of this Article by a
16title insurance company, title agent, or escrow agent shall
17constitute a violation of the Title Insurance Act.
18    (j-3) A violation of any provision of this Article by a
19housing counselor shall be referred to the Department of
20Housing and Urban Development.
21    (k) During the existence of the program, the Department
22shall submit semi-annual reports to the Governor and to the
23General Assembly by May 1 and November 1 of each year detailing
24its findings regarding the program. The report shall include,
25by county, at least the following information for each
26reporting period:



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1        (1) the number of loans registered with the program;
2        (2) the number of borrowers receiving counseling;
3        (3) the number of loans closed;
4        (4) the number of loans requiring counseling for each
5    of the standards set forth in Section 73;
6        (5) the number of loans requiring counseling where the
7    mortgage originator changed the loan terms subsequent to
8    counseling;
9        (6) the number of licensed mortgage brokers and loan
10    originators entering information into the database;
11        (7) the number of investigations based on information
12    obtained from the database, including the number of
13    licensees fined, the number of licenses suspended, and the
14    number of licenses revoked;
15        (8) a summary of the types of non-traditional mortgage
16    products being offered; and
17        (9) a summary of how the Department is actively
18    utilizing the program to combat mortgage fraud.
19(Source: P.A. 95-691, eff. 6-1-08; 96-328, eff. 8-11-09;
2096-856, eff. 12-31-09.)
21    (765 ILCS 77/72)
22    Sec. 72. Originator; required information. As part of the
23predatory lending database program, the broker or originator
24must submit all of the following information for inclusion in
25the predatory lending database for each loan for which the



HB4521- 52 -LRB097 19725 PJG 64984 b

1originator takes an application:
2        (1) The borrower's name, address, social security
3    number or taxpayer identification number, date of birth,
4    and income and expense information contained in the
5    mortgage application.
6        (2) The address, permanent index number, and a
7    description of the collateral and information about the
8    loan or loans being applied for and the loan terms,
9    including the amount of the loan, the rate and whether the
10    rate is fixed or adjustable, amortization or loan period
11    terms, and any other material terms.
12        (3) The borrower's credit score at the time of
13    application.
14        (4) Information about the originator and the company
15    the originator works for, including the originator's
16    license number and address, fees being charged, whether the
17    fees are being charged as points up front, the yield spread
18    premium payable outside closing, and other charges made or
19    remuneration required by the broker or originator or its
20    affiliates or the broker's or originator's employer or its
21    affiliates for the mortgage loans.
22        (5) Information about affiliated or third party
23    service providers, including the names and addresses of
24    appraisers, title insurance companies, closing agents,
25    attorneys, and realtors who are involved with the
26    transaction and the broker or originator and any moneys



HB4521- 53 -LRB097 19725 PJG 64984 b

1    received from the broker or originator in connection with
2    the transaction.
3        (6) All information indicated on the Good Faith
4    Estimate and Truth in Lending statement disclosures given
5    to the borrower by the broker or originator.
6        (7) Annual real estate taxes for the property, together
7    with any assessments payable in connection with the
8    property to be secured by the collateral and the proposed
9    monthly principal and interest charge of all loans to be
10    taken by the borrower and secured by the property of the
11    borrower.
12        (8) Information concerning how the broker or
13    originator obtained the client and the name of its referral
14    source, if any.
15        (9) Information concerning the notices provided by the
16    broker or originator to the borrower as required by law and
17    the date those notices were given.
18        (10) Information concerning whether a sale and
19    leaseback is contemplated and the names of the lessor and
20    lessee, seller, and purchaser.
21        (11) Any and all financing by the borrower for the
22    subject property within 12 months prior to the date of
23    application.
24        (12) Loan information, including interest rate, term,
25    purchase price, down payment, and closing costs.
26        (13) Whether the buyer is a first-time homebuyer or



HB4521- 54 -LRB097 19725 PJG 64984 b

1    refinancing a primary residence.
2        (14) Whether the loan permits interest only payments.
3        (15) Whether the loan may result in negative
4    amortization.
5        (16) Whether the total points and fees payable by the
6    borrowers at or before closing will exceed 5%.
7        (17) Whether the loan includes a prepayment penalty,
8    and, if so, the terms of the penalty.
9        (18) Whether the loan is an ARM.
10        (19) Whether the borrower's debt-to-income ratio
11    exceeds 50%.
12(Source: P.A. 94-280, eff. 1-1-06; 95-691, eff. 6-1-08.)
13    (765 ILCS 77/73)
14    Sec. 73. Standards for counseling. A borrower or borrowers
15subject to this Article shall be recommended for counseling if,
16after reviewing the information in the predatory lending
17database submitted under Section 72, the Department finds the
18borrower or borrowers are all first-time homebuyers or
19refinancing a primary residence and the loan is a mortgage that
20includes one or more of the following:
21        (1) the loan permits interest only payments;
22        (2) the loan may result in negative amortization;
23        (3) the total points and fees payable by the borrower
24    at or before closing will exceed 5%;
25        (4) the loan includes a prepayment penalty; or



HB4521- 55 -LRB097 19725 PJG 64984 b

1        (5) the loan is an ARM; or .
2        (6) the borrower's debt-to-income ratio exceeds 50%.
3(Source: P.A. 95-691, eff. 6-1-08.)
4    (765 ILCS 77/74)
5    Sec. 74. Counselor; required information. As part of the
6predatory lending database program, a counselor must submit all
7of the following information for inclusion in the predatory
8lending database:
9        (1) The information called for in items (1), (6), (9),
10    (11), (12), (13), (14), (15), (16), (17), and (18), and
11    (19) of Section 72.
12        (2) Any information from the borrower that confirms or
13    contradicts the information called for under item (1) of
14    this Section.
15        (3) The name of the counselor and address of the
16    HUD-certified HUD-certifed housing counseling agency that
17    employs the counselor.
18        (4) Information pertaining to the borrower's monthly
19    expenses that assists the counselor in determining whether
20    the borrower can afford the loans or loans for which the
21    borrower is applying.
22        (5) A list of the disclosures furnished to the
23    borrower, as seen and reviewed by the counselor, and a
24    comparison of that list to all disclosures required by law.
25        (6) Whether the borrower provided tax returns to the



HB4521- 56 -LRB097 19725 PJG 64984 b

1    broker or originator or to the counselor, and, if so, who
2    prepared the tax returns.
3        (7) A statement of the recommendations of the counselor
4    that indicates the counselor's response to each of the
5    following statements:
6            (A) The loan should not be approved due to indicia
7        of fraud.
8            (B) The loan should be approved; no material
9        problems noted.
10            (C) The borrower cannot afford the loan.
11            (D) The borrower does not understand the
12        transaction.
13            (E) The borrower does not understand the costs
14        associated with the transaction.
15            (F) The borrower's monthly income and expenses
16        have been reviewed and disclosed.
17            (G) The rate of the loan is above market rate.
18            (H) The borrower should seek a competitive bid from
19        another broker or originator.
20            (I) There are discrepancies between the borrower's
21        verbal understanding and the originator's completed
22        form.
23            (J) The borrower is precipitously close to not
24        being able to afford the loan.
25            (K) The borrower understands the true cost of debt
26        consolidation and the need for credit card discipline.



HB4521- 57 -LRB097 19725 PJG 64984 b

1            (L) The information that the borrower provided the
2        originator has been amended by the originator.
3(Source: P.A. 94-280, eff. 1-1-06; 95-691, eff. 6-1-08; revised
5    Section 99. Effective date. This Act takes effect January
61, 2013.



HB4521- 58 -LRB097 19725 PJG 64984 b

2 Statutes amended in order of appearance
3    205 ILCS 635/1-4
4    205 ILCS 635/2-2
5    205 ILCS 635/2-3A new
6    205 ILCS 635/2-4from Ch. 17, par. 2322-4
7    205 ILCS 635/4-5from Ch. 17, par. 2324-5
8    205 ILCS 635/7-1A
9    205 ILCS 635/7-11
10    205 ILCS 635/7-13
11    215 ILCS 155/23from Ch. 73, par. 1423
12    765 ILCS 77/70
13    765 ILCS 77/72
14    765 ILCS 77/73
15    765 ILCS 77/74