98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB1667

 

Introduced 2/13/2013, by Sen. Jacqueline Y. Collins

 

SYNOPSIS AS INTRODUCED:
 
205 ILCS 635/1-3  from Ch. 17, par. 2321-3

    Amends the Residential Mortgage License Act of 1987. Provides that persons exempt from licensure as a federally chartered savings bank registered with the Nationwide Mortgage Licensing System and Registry may apply for an exempt company registration for the purpose of sponsoring one or more individuals subject to the mortgage loan originator licensing requirements of the Act. Establishes requirements for exempt company registration and denial, suspension, or revocation of the registration. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning regulation.
 
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 Section 1-3 as follows:
 
6    (205 ILCS 635/1-3)  (from Ch. 17, par. 2321-3)
7    Sec. 1-3. Necessity for License; Scope of Act.
8    (a) No person, partnership, association, corporation or
9other entity shall engage in the business of brokering,
10funding, originating, servicing or purchasing of residential
11mortgage loans without first obtaining a license from the
12Commissioner in accordance with the licensing procedure
13provided in this Article I and such regulations as may be
14promulgated by the Commissioner. The licensing provisions of
15this Section shall not apply to any entity engaged solely in
16commercial mortgage lending or to any person, partnership
17association, corporation or other entity exempted pursuant to
18Section 1-4, subsection (d), of this Act or in accordance with
19regulations promulgated by the Commissioner hereunder. No
20provision of this Act shall apply to an exempt person or entity
21as defined in items (1) and (1.5) of subsection (d) of Section
221-4 of this Act. Notwithstanding anything to the contrary in
23the preceding sentence, an individual acting as a mortgage loan

 

 

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1originator who is not employed by and acting for an entity
2described in item (1) of subsection (tt) of Section 1-4 of this
3Act shall be subject to the mortgage loan originator licensing
4requirements of Article VII of this Act.
5    Effective January 1, 2011, no provision of this Act shall
6apply to an exempt person or entity as defined in item (1.8) of
7subsection (d) of Section 1-4 of this Act. Notwithstanding
8anything to the contrary in the preceding sentence, an
9individual acting as a mortgage loan originator who is not
10employed by and acting for an entity described in item (1) of
11subsection (tt) of Section 1-4 of this Act shall be subject to
12the mortgage loan originator licensing requirements of Article
13VII of this Act, and provided that an individual acting as a
14mortgage loan originator under item (1.8) of subsection (d) of
15Section 1-4 of this Act shall be further subject to a
16determination by the U.S. Department of Housing and Urban
17Development through final rulemaking or other authorized
18agency determination under the federal Secure and Fair
19Enforcement for Mortgage Licensing Act of 2008.
20    (a-1) A person who is exempt from licensure pursuant to
21paragraph (ii) of item (1) of subsection (d) of Section 1-4 of
22this Act as a federally chartered savings bank that is
23registered with the Nationwide Mortgage Licensing System and
24Registry may apply to the Director for an exempt company
25registration for the purpose of sponsoring one or more
26individuals subject to the mortgage loan originator licensing

 

 

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1requirements of Article VII of this Act. Registration with the
2Division of Banking of the Department shall not affect the
3exempt status of the applicant.
4        (1) A mortgage loan originator eligible for licensure
5    under this subsection shall (A) be covered under an
6    exclusive written contract with, and originate residential
7    mortgage loans solely on behalf of, that exempt person; and
8    (B) hold a current, valid insurance producer license under
9    Article XXXI of the Illinois Insurance Code.
10        (2) An exempt person shall: (A) fulfill any reporting
11    requirements required by the Nationwide Mortgage Licensing
12    System and Registry or the Director; (B) provide a blanket
13    surety bond pursuant to Section 7-12 of this Act covering
14    the activities of all its sponsored mortgage loan
15    originators; (C) reasonably supervise the activities of
16    all its sponsored mortgage loan originators; (D) comply
17    with all rules and orders (including the averments
18    contained in Section 2-4 of this Act) that the Director
19    deems necessary to ensure compliance with the federal SAFE
20    Act; and (E) pay an annual registration fee established by
21    the Director.
22        (3) The Director may deny an exempt company
23    registration to an exempt person or suspend or revoke an
24    exempt company registration if the Director finds that the
25    exempt person has:
26            (A) shown that the exempt person is not a person of

 

 

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1        honesty, truthfulness, or good character;
2            (B) violated any applicable law, rule, or order;
3            (C) refused or failed to furnish, within a
4        reasonable time, any information or make any report
5        that may be required by the Director;
6            (D) had a final judgment entered against him or her
7        in a civil action on grounds of fraud, deceit, or
8        misrepresentation, and the conduct on which the
9        judgment is based indicates that it would be contrary
10        to the interest of the public to permit the exempt
11        person to manage a loan originator;
12            (E) had an order entered against him or her
13        involving fraud, deceit, or misrepresentation by an
14        administrative agency of this State, the federal
15        government, or any other state or territory of the
16        United States, and the facts relating to the order
17        indicate that it would be contrary to the interest of
18        the public to permit the exempt person to manage a loan
19        originator; or
20            (F) made a material misstatement or suppressed or
21        withheld information on the application for an exempt
22        company registration or any document required to be
23        filed with the superintendent.
24    (b) No person, partnership, association, corporation, or
25other entity except a licensee under this Act or an entity
26exempt from licensing pursuant to Section 1-4, subsection (d),

 

 

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1of this Act shall do any business under any name or title, or
2circulate or use any advertising or make any representation or
3give any information to any person, which indicates or
4reasonably implies activity within the scope of this Act.
5    (c) The Commissioner may, through the Attorney General,
6request the circuit court of either Cook or Sangamon County to
7issue an injunction to restrain any person from violating or
8continuing to violate any of the foregoing provisions of this
9Section.
10    (d) When the Commissioner has reasonable cause to believe
11that any entity which has not submitted an application for
12licensure is conducting any of the activities described in
13subsection (a) hereof, the Commissioner shall have the power to
14examine all books and records of the entity and any additional
15documentation necessary in order to determine whether such
16entity should become licensed under this Act.
17    (d-1) The Commissioner may issue orders against any person
18if the Commissioner has reasonable cause to believe that an
19unsafe, unsound, or unlawful practice has occurred, is
20occurring, or is about to occur, if any person has violated, is
21violating, or is about to violate any law, rule, or written
22agreement with the Commissioner, or for the purposes of
23administering the provisions of this Act and any rule adopted
24in accordance with this Act.
25    (e) Any person, partnership, association, corporation or
26other entity who violates any provision of this Section commits

 

 

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1a business offense and shall be fined an amount not to exceed
2$25,000.
3    (f) Each person, partnership, association, corporation or
4other entity conducting activities regulated by this Act shall
5be issued one license. Each office, place of business or
6location at which a residential mortgage licensee conducts any
7part of his or her business must be recorded with the
8Commissioner pursuant to Section 2-8 of this Act.
9    (g) Licensees under this Act shall solicit, broker, fund,
10originate, service and purchase residential mortgage loans
11only in conformity with the provisions of this Act and such
12rules and regulations as may be promulgated by the
13Commissioner.
14    (h) This Act applies to all entities doing business in
15Illinois as residential mortgage bankers, as defined by "An Act
16to provide for the regulation of mortgage bankers", approved
17September 15, 1977, as amended, regardless of whether licensed
18under that or any prior Act. Any existing residential mortgage
19lender or residential mortgage broker in Illinois whether or
20not previously licensed, must operate in accordance with this
21Act.
22    (i) This Act is a successor Act to and a continuance of the
23regulation of residential mortgage bankers provided in, "An Act
24to provide for the regulation of mortgage bankers", approved
25September 15, 1977, as amended.
26    Entities and persons subject to the predecessor Act shall

 

 

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1be subject to this Act from and after its effective date.
2(Source: P.A. 96-112, eff. 7-31-09; 96-1216, eff. 1-1-11;
397-143, eff. 7-14-11.)
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.