Illinois General Assembly - Full Text of HB4521
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Full Text of HB4521  97th General Assembly


Rep. Marlow H. Colvin

Filed: 2/27/2012





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2    AMENDMENT NO. ______. Amend House Bill 4521 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Residential Mortgage License Act of 1987 is
5amended by changing Sections 1-4, 2-2, 2-4, 3-2, 4-5, 4-8.2,
67-1A, 7-11, and 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.



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1    (c) "Soliciting, processing, placing, or negotiating a
2residential mortgage loan" shall mean for compensation or gain,
3either directly or indirectly, accepting or offering to accept
4an application for a residential mortgage loan, assisting or
5offering to assist in the processing of an application for a
6residential mortgage loan on behalf of a borrower, or
7negotiating or offering to negotiate the terms or conditions of
8a residential mortgage loan with a lender on behalf of a
9borrower including, but not limited to, the submission of
10credit packages for the approval of lenders, the preparation of
11residential mortgage loan closing documents, including a
12closing in the name of a broker.
13    (d) "Exempt person or entity" shall mean the following:
14        (1) (i) Any banking organization or foreign banking
15    corporation licensed by the Illinois Commissioner of Banks
16    and Real Estate or the United States Comptroller of the
17    Currency to transact business in this State; (ii) any
18    national bank, federally chartered savings and loan
19    association, federal savings bank, federal credit union;
20    (iii) any pension trust, bank trust, or bank trust company;
21    (iv) any bank, savings and loan association, savings bank,
22    or credit union organized under the laws of this or any
23    other state; (v) any Illinois Consumer Installment Loan Act
24    licensee; (vi) any insurance company authorized to
25    transact business in this State; (vii) any entity engaged
26    solely in commercial mortgage lending; (viii) any service



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1    corporation of a savings and loan association or savings
2    bank organized under the laws of this State or the service
3    corporation of a federally chartered savings and loan
4    association or savings bank having its principal place of
5    business in this State, other than a service corporation
6    licensed or entitled to reciprocity under the Real Estate
7    License Act of 2000; or (ix) any first tier subsidiary of a
8    bank, the charter of which is issued under the Illinois
9    Banking Act by the Illinois Commissioner of Banks and Real
10    Estate, or the first tier subsidiary of a bank chartered by
11    the United States Comptroller of the Currency and that has
12    its principal place of business in this State, provided
13    that the first tier subsidiary is regularly examined by the
14    Illinois Commissioner of Banks and Real Estate or the
15    Comptroller of the Currency, or a consumer compliance
16    examination is regularly conducted by the Federal Reserve
17    Board.
18        (1.5) Any employee of a person or entity mentioned in
19    item (1) of this subsection, when acting for such person or
20    entity, or any registered mortgage loan originator when
21    acting for an entity described in subsection (tt) of this
22    Section.
23        (1.8) Any person or entity that does not originate
24    mortgage loans in the ordinary course of business, but
25    makes or acquires residential mortgage loans with his or
26    her own funds for his or her or its own investment without



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1    intent to make, acquire, or resell more than 3 residential
2    mortgage loans in any one calendar year.
3        (2) (Blank).
4        (3) Any person employed by a licensee to assist in the
5    performance of the residential mortgage licensee's
6    activities regulated by this Act who is compensated in any
7    manner by only one licensee.
8        (4) (Blank).
9        (5) Any individual, corporation, partnership, or other
10    entity that originates, services, or brokers residential
11    mortgage loans, as these activities are defined in this
12    Act, and who or which receives no compensation for those
13    activities, subject to the Commissioner's regulations and
14    the federal Secure and Fair Enforcement for Mortgage
15    Licensing Act of 2008 and the rules promulgated under that
16    Act with regard to the nature and amount of compensation.
17        (6) (Blank).
18    (e) "Licensee" or "residential mortgage licensee" shall
19mean a person, partnership, association, corporation, or any
20other entity who or which is licensed pursuant to this Act to
21engage in the activities regulated by this Act.
22    (f) "Mortgage loan" "residential mortgage loan" or "home
23mortgage loan" shall mean any loan primarily for personal,
24family, or household use that is secured by a mortgage, deed of
25trust, or other equivalent consensual security interest on a
26dwelling as defined in Section 103(v) of the federal Truth in



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1Lending Act, or residential real estate upon which is
2constructed or intended to be constructed a dwelling.
3    (g) "Lender" shall mean any person, partnership,
4association, corporation, or any other entity who either lends
5or invests money in residential mortgage loans.
6    (h) "Ultimate equitable owner" shall mean a person who,
7directly or indirectly, owns or controls an ownership interest
8in a corporation, foreign corporation, alien business
9organization, trust, or any other form of business organization
10regardless of whether the person owns or controls the ownership
11interest through one or more persons or one or more proxies,
12powers of attorney, nominees, corporations, associations,
13partnerships, trusts, joint stock companies, or other entities
14or devices, or any combination thereof.
15    (i) "Residential mortgage financing transaction" shall
16mean the negotiation, acquisition, sale, or arrangement for or
17the offer to negotiate, acquire, sell, or arrange for, a
18residential mortgage loan or residential mortgage loan
20    (j) "Personal residence address" shall mean a street
21address and shall not include a post office box number.
22    (k) "Residential mortgage loan commitment" shall mean a
23contract for residential mortgage loan financing.
24    (l) "Party to a residential mortgage financing
25transaction" shall mean a borrower, lender, or loan broker in a
26residential mortgage financing transaction.



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1    (m) "Payments" shall mean payment of all or any of the
2following: principal, interest and escrow reserves for taxes,
3insurance and other related reserves, and reimbursement for
4lender advances.
5    (n) "Commissioner" shall mean the Commissioner of Banks and
6Real Estate, except that, beginning on April 6, 2009 (the
7effective date of Public Act 95-1047), all references in this
8Act to the Commissioner of Banks and Real Estate are deemed, in
9appropriate contexts, to be references to the Secretary of
10Financial and Professional Regulation, or his or her designee,
11including the Director of the Division of Banking of the
12Department of Financial and Professional Regulation.
13    (n-1) "Director" shall mean the Director of the Division of
14Banking of the Department of Financial and Professional
15Regulation, except that, beginning on July 31, 2009 (the
16effective date of Public Act 96-112), all references in this
17Act to the Director are deemed, in appropriate contexts, to be
18the Secretary of Financial and Professional Regulation, or his
19or her designee, including the Director of the Division of
20Banking of the Department of Financial and Professional
22    (o) "Loan brokering", "brokering", or "brokerage service"
23shall mean the act of helping to obtain from another entity,
24for a borrower, a loan secured by residential real estate
25situated in Illinois or assisting a borrower in obtaining a
26loan secured by residential real estate situated in Illinois in



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1return for consideration to be paid by either the borrower or
2the lender including, but not limited to, contracting for the
3delivery of residential mortgage loans to a third party lender
4and soliciting, processing, placing, or negotiating
5residential mortgage loans.
6    (p) "Loan broker" or "broker" shall mean a person,
7partnership, association, corporation, or limited liability
8company, other than those persons, partnerships, associations,
9corporations, or limited liability companies exempted from
10licensing pursuant to Section 1-4, subsection (d), of this Act,
11who performs the activities described in subsections (c), and
12(o), and (yy) of this Section.
13    (q) "Servicing" shall mean the collection or remittance for
14or the right or obligation to collect or remit for any lender,
15noteowner, noteholder, or for a licensee's own account, of
16payments, interests, principal, and trust items such as hazard
17insurance and taxes on a residential mortgage loan in
18accordance with the terms of the residential mortgage loan; and
19includes loan payment follow-up, delinquency loan follow-up,
20loan analysis and any notifications to the borrower that are
21necessary to enable the borrower to keep the loan current and
22in good standing. "Servicing" includes management of
23third-party entities acting on behalf of a residential mortgage
24licensee for the collection of delinquent payments and the use
25by such third-party entities of said licensee's servicing
26records or information, including their use in foreclosure.



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1    (r) "Full service office" shall mean an office, provided by
2the licensee and not subleased from the licensee's employees,
3and staff in Illinois reasonably adequate to handle efficiently
4communications, questions, and other matters relating to any
5application for, or an existing home mortgage secured by
6residential real estate situated in Illinois with respect to
7which the licensee is brokering, funding originating,
8purchasing, or servicing. The management and operation of each
9full service office must include observance of good business
10practices such as proper signage; adequate, organized, and
11accurate books and records; ample phone lines, hours of
12business, staff training and supervision, and provision for a
13mechanism to resolve consumer inquiries, complaints, and
14problems. The Commissioner shall issue regulations with regard
15to these requirements and shall include an evaluation of
16compliance with this Section in his or her periodic examination
17of each licensee.
18    (s) "Purchasing" shall mean the purchase of conventional or
19government-insured mortgage loans secured by residential real
20estate situated in Illinois from either the lender or from the
21secondary market.
22    (t) "Borrower" shall mean the person or persons who seek
23the services of a loan broker, originator, or lender.
24    (u) "Originating" shall mean the issuing of commitments for
25and funding of residential mortgage loans.
26    (v) "Loan brokerage agreement" shall mean a written



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1agreement in which a broker or loan broker agrees to do either
2of the following:
3        (1) obtain a residential mortgage loan for the borrower
4    or assist the borrower in obtaining a residential mortgage
5    loan; or
6        (2) consider making a residential mortgage loan to the
7    borrower.
8    (w) "Advertisement" shall mean the attempt by publication,
9dissemination, or circulation to induce, directly or
10indirectly, any person to enter into a residential mortgage
11loan agreement or residential mortgage loan brokerage
12agreement relative to a mortgage secured by residential real
13estate situated in Illinois.
14    (x) "Residential Mortgage Board" shall mean the
15Residential Mortgage Board created in Section 1-5 of this Act.
16    (y) "Government-insured mortgage loan" shall mean any
17mortgage loan made on the security of residential real estate
18insured by the Department of Housing and Urban Development or
19Farmers Home Loan Administration, or guaranteed by the Veterans
21    (z) "Annual audit" shall mean a certified audit of the
22licensee's books and records and systems of internal control
23performed by a certified public accountant in accordance with
24generally accepted accounting principles and generally
25accepted auditing standards.
26    (aa) "Financial institution" shall mean a savings and loan



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1association, savings bank, credit union, or a bank organized
2under the laws of Illinois or a savings and loan association,
3savings bank, credit union or a bank organized under the laws
4of the United States and headquartered in Illinois.
5    (bb) "Escrow agent" shall mean a third party, individual or
6entity charged with the fiduciary obligation for holding escrow
7funds on a residential mortgage loan pending final payout of
8those funds in accordance with the terms of the residential
9mortgage loan.
10    (cc) "Net worth" shall have the meaning ascribed thereto in
11Section 3-5 of this Act.
12    (dd) "Affiliate" shall mean:
13        (1) any entity that directly controls or is controlled
14    by the licensee and any other company that is directly
15    affecting activities regulated by this Act that is
16    controlled by the company that controls the licensee;
17        (2) any entity:
18            (A) that is controlled, directly or indirectly, by
19        a trust or otherwise, by or for the benefit of
20        shareholders who beneficially or otherwise control,
21        directly or indirectly, by trust or otherwise, the
22        licensee or any company that controls the licensee; or
23            (B) a majority of the directors or trustees of
24        which constitute a majority of the persons holding any
25        such office with the licensee or any company that
26        controls the licensee;



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1        (3) any company, including a real estate investment
2    trust, that is sponsored and advised on a contractual basis
3    by the licensee or any subsidiary or affiliate of the
4    licensee.
5    The Commissioner may define by rule and regulation any
6terms used in this Act for the efficient and clear
7administration of this Act.
8    (ee) "First tier subsidiary" shall be defined by regulation
9incorporating the comparable definitions used by the Office of
10the Comptroller of the Currency and the Illinois Commissioner
11of Banks and Real Estate.
12    (ff) "Gross delinquency rate" means the quotient
13determined by dividing (1) the sum of (i) the number of
14government-insured residential mortgage loans funded or
15purchased by a licensee in the preceding calendar year that are
16delinquent and (ii) the number of conventional residential
17mortgage loans funded or purchased by the licensee in the
18preceding calendar year that are delinquent by (2) the sum of
19(i) the number of government-insured residential mortgage
20loans funded or purchased by the licensee in the preceding
21calendar year and (ii) the number of conventional residential
22mortgage loans funded or purchased by the licensee in the
23preceding calendar year.
24    (gg) "Delinquency rate factor" means the factor set by rule
25of the Commissioner that is multiplied by the average gross
26delinquency rate of licensees, determined annually for the



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1immediately preceding calendar year, for the purpose of
2determining which licensees shall be examined by the
3Commissioner pursuant to subsection (b) of Section 4-8 of this
5    (hh) "Loan originator" means any natural person who, for
6compensation or in the expectation of compensation, either
7directly or indirectly makes, offers to make, solicits, places,
8or negotiates a residential mortgage loan. This definition
9applies only to Section 7-1 of this Act.
10    (ii) "Confidential supervisory information" means any
11report of examination, visitation, or investigation prepared
12by the Commissioner under this Act, any report of examination
13visitation, or investigation prepared by the state regulatory
14authority of another state that examines a licensee, any
15document or record prepared or obtained in connection with or
16relating to any examination, visitation, or investigation, and
17any record prepared or obtained by the Commissioner to the
18extent that the record summarizes or contains information
19derived from any report, document, or record described in this
20subsection. "Confidential supervisory information" does not
21include any information or record routinely prepared by a
22licensee and maintained in the ordinary course of business or
23any information or record that is required to be made publicly
24available pursuant to State or federal law or rule.
25    (jj) "Mortgage loan originator" means an individual who for
26compensation or gain or in the expectation of compensation or



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2        (i) takes a residential mortgage loan application; or
3        (ii) offers or negotiates terms of a residential
4    mortgage loan.
5    "Mortgage loan originator" includes an individual engaged
6in loan modification activities as defined in subsection (yy)
7of this Section. A mortgage loan originator engaged in loan
8modification activities shall report those activities to the
9Department of Financial and Professional Regulation in the
10manner provided by the Department; however, the Department
11shall not impose a fee for reporting, nor require any
12additional qualifications to engage in those activities beyond
13those provided pursuant to this Act for mortgage loan
15    "Mortgage loan originator" does not include an individual
16engaged solely as a loan processor or underwriter except as
17otherwise provided in subsection (d) of Section 7-1A of this
19    "Mortgage loan originator" does not include a person or
20entity that only performs real estate brokerage activities and
21is licensed in accordance with the Real Estate License Act of
222000, unless the person or entity is compensated by a lender, a
23mortgage broker, or other mortgage loan originator, or by any
24agent of that lender, mortgage broker, or other mortgage loan
26    "Mortgage loan originator" does not include a person or



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1entity solely involved in extensions of credit relating to
2timeshare plans, as that term is defined in Section 101(53D) of
3Title 11, United States Code.
4    (kk) "Depository institution" has the same meaning as in
5Section 3 of the Federal Deposit Insurance Act, and includes
6any credit union.
7    (ll) "Dwelling" means a residential structure or mobile
8home which contains one to 4 family housing units, or
9individual units of condominiums or cooperatives.
10    (mm) "Immediate family member" means a spouse, child,
11sibling, parent, grandparent, or grandchild, and includes
12step-parents, step-children, step-siblings, or adoptive
14    (nn) "Individual" means a natural person.
15    (oo) "Loan processor or underwriter" means an individual
16who performs clerical or support duties as an employee at the
17direction of and subject to the supervision and instruction of
18a person licensed, or exempt from licensing, under this Act.
19"Clerical or support duties" includes subsequent to the receipt
20of an application:
21        (i) the receipt, collection, distribution, and
22    analysis of information common for the processing or
23    underwriting of a residential mortgage loan; and
24        (ii) communicating with a consumer to obtain the
25    information necessary for the processing or underwriting
26    of a loan, to the extent that the communication does not



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1    include offering or negotiating loan rates or terms, or
2    counseling consumers about residential mortgage loan rates
3    or terms. An individual engaging solely in loan processor
4    or underwriter activities shall not represent to the
5    public, through advertising or other means of
6    communicating or providing information, including the use
7    of business cards, stationery, brochures, signs, rate
8    lists, or other promotional items, that the individual can
9    or will perform any of the activities of a mortgage loan
10    originator.
11    (pp) "Nationwide Mortgage Licensing System and Registry"
12means a mortgage licensing system developed and maintained by
13the Conference of State Bank Supervisors and the American
14Association of Residential Mortgage Regulators for the
15licensing and registration of licensed mortgage loan
17    (qq) "Nontraditional mortgage product" means any mortgage
18product other than a 30-year fixed rate mortgage.
19    (rr) "Person" means a natural person, corporation,
20company, limited liability company, partnership, or
22    (ss) "Real estate brokerage activity" means any activity
23that involves offering or providing real estate brokerage
24services to the public, including:
25        (1) acting as a real estate agent or real estate broker
26    for a buyer, seller, lessor, or lessee of real property;



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1        (2) bringing together parties interested in the sale,
2    purchase, lease, rental, or exchange of real property;
3        (3) negotiating, on behalf of any party, any portion of
4    a contract relating to the sale, purchase, lease, rental,
5    or exchange of real property, other than in connection with
6    providing financing with respect to any such transaction;
7        (4) engaging in any activity for which a person engaged
8    in the activity is required to be registered or licensed as
9    a real estate agent or real estate broker under any
10    applicable law; or
11        (5) offering to engage in any activity, or act in any
12    capacity, described in this subsection (ss).
13    (tt) "Registered mortgage loan originator" means any
14individual that:
15        (1) meets the definition of mortgage loan originator
16    and is an employee of:
17            (A) a depository institution;
18            (B) a subsidiary that is:
19                (i) owned and controlled by a depository
20            institution; and
21                (ii) regulated by a federal banking agency; or
22            (C) an institution regulated by the Farm Credit
23        Administration; and
24        (2) is registered with, and maintains a unique
25    identifier through, the Nationwide Mortgage Licensing
26    System and Registry.



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1    (uu) "Unique identifier" means a number or other identifier
2assigned by protocols established by the Nationwide Mortgage
3Licensing System and Registry.
4    (vv) "Residential mortgage license" means a license issued
5pursuant to Section 1-3, 2-2, or 2-6 of this Act.
6    (ww) "Mortgage loan originator license" means a license
7issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act.
8    (xx) "Secretary" means the Secretary of the Department of
9Financial and Professional Regulation, or a person authorized
10by the Secretary or by this Act to act in the Secretary's
12    (yy) "Loan modification" means, for compensation or gain,
13either directly or indirectly offering or negotiating on behalf
14of a borrower or homeowner to adjust the terms of a residential
15mortgage loan in a manner not provided for in the original or
16previously modified mortgage loan.
17    (zz) "Short sale facilitation" means, for compensation or
18gain, either directly or indirectly offering or negotiating on
19behalf of a borrower or homeowner to facilitate the sale of
20residential real estate subject to one or more residential
21mortgage loans or debts constituting liens on the property in
22which the proceeds from selling the residential real estate
23will fall short of the amount owed and the lien holders are
24contacted to agree to release their lien on the residential
25real estate and accept less than the full amount owed on the



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1(Source: P.A. 96-112, eff. 7-31-09; 96-1000, eff. 7-2-10;
296-1216, eff. 1-1-11; 97-143, eff. 7-14-11.)
3    (205 ILCS 635/2-2)
4    Sec. 2-2. Application process; investigation; fee.
5    (a) The Secretary shall issue a license upon completion of
6all of the following:
7        (1) The filing of an application for license with the
8    Director or the Nationwide Mortgage Licensing System and
9    Registry as approved by the Director.
10        (2) The filing with the Secretary of a listing of
11    judgments entered against, and bankruptcy petitions by,
12    the license applicant for the preceding 10 years.
13        (3) The payment, in certified funds, of investigation
14    and application fees, the total of which shall be in an
15    amount equal to $2,700 $2,043 annually. To comply with the
16    common renewal date and requirements of the Nationwide
17    Mortgage Licensing System and Registry, the term of initial
18    licenses may be extended or shortened with applicable fees
19    prorated or combined accordingly.
20        (4) Except for a broker applying to renew a license,
21    the filing of an audited balance sheet including all
22    footnotes prepared by a certified public accountant in
23    accordance with generally accepted accounting principles
24    and generally accepted auditing principles which evidences
25    that the applicant meets the net worth requirements of



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1    Section 3-5.
2        (5) The filing of proof satisfactory to the
3    Commissioner that the applicant, the members thereof if the
4    applicant is a partnership or association, the members or
5    managers thereof that retain any authority or
6    responsibility under the operating agreement if the
7    applicant is a limited liability company, or the officers
8    thereof if the applicant is a corporation have 3 years
9    experience preceding application in real estate finance.
10    Instead of this requirement, the applicant and the
11    applicant's officers or members, as applicable, may
12    satisfactorily complete a program of education in real
13    estate finance and fair lending, as approved by the
14    Commissioner, prior to receiving the initial license. The
15    Commissioner shall promulgate rules regarding proof of
16    experience requirements and educational requirements and
17    the satisfactory completion of those requirements. The
18    Commissioner may establish by rule a list of duly licensed
19    professionals and others who may be exempt from this
20    requirement.
21        (6) An investigation of the averments required by
22    Section 2-4, which investigation must allow the
23    Commissioner to issue positive findings stating that the
24    financial responsibility, experience, character, and
25    general fitness of the license applicant and of the members
26    thereof if the license applicant is a partnership or



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1    association, of the officers and directors thereof if the
2    license applicant is a corporation, and of the managers and
3    members that retain any authority or responsibility under
4    the operating agreement if the license applicant is a
5    limited liability company are such as to command the
6    confidence of the community and to warrant belief that the
7    business will be operated honestly, fairly and efficiently
8    within the purpose of this Act. If the Commissioner shall
9    not so find, he or she shall not issue such license, and he
10    or she shall notify the license applicant of the denial.
11    The Commissioner may impose conditions on a license if the
12Commissioner determines that the conditions are necessary or
13appropriate. These conditions shall be imposed in writing and
14shall continue in effect for the period prescribed by the
16    (b) All licenses shall be issued to the license applicant.
17    Upon receipt of such license, a residential mortgage
18licensee shall be authorized to engage in the business
19regulated by this Act. Such license shall remain in full force
20and effect until it expires without renewal, is surrendered by
21the licensee or revoked or suspended as hereinafter provided.
22(Source: P.A. 95-1047, eff. 4-6-09; 96-112, eff. 7-31-09;
2396-1000, eff. 7-2-10.)
24    (205 ILCS 635/2-3A new)
25    Sec. 2-3A. Residential mortgage license application and



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2    (a) Applicants for a license shall apply in a form
3prescribed by the Director. Each form shall contain content as
4set forth by rule, regulation, instruction, or procedure of the
5Director and may be changed or updated as necessary by the
6Director in order to carry out the purposes of this Act.
7    (b) In order to fulfill the purposes of this Act, the
8Director is authorized to establish relationships or contracts
9with the Nationwide Mortgage Licensing System and Registry or
10other entities designated by the Nationwide Mortgage Licensing
11System and Registry to collect and maintain records and process
12transaction fees or other fees related to licensees or other
13persons subject to this Act.
14    (c) In connection with an application for licensing, the
15applicant may be required, at a minimum, to furnish to the
16Nationwide Mortgage Licensing System and Registry information
17concerning the applicant's identity, including:
18        (1) fingerprints for submission to the Federal Bureau
19    of Investigation or any governmental agency or entity
20    authorized to receive such information for a State,
21    national, and international criminal history background
22    check; and
23        (2) personal history and experience in a form
24    prescribed by the Nationwide Mortgage Licensing System and
25    Registry, including the submission of authorization for
26    the Nationwide Mortgage Licensing System and Registry and



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1    the Director to obtain:
2            (A) an independent credit report obtained from a
3        consumer reporting agency described in Section 603(p)
4        of the Fair Credit Reporting Act (15 U.S.C. 1681a(p));
5        and
6            (B) information related to any administrative,
7        civil, or criminal findings by any governmental
8        jurisdiction.
9    (d) For the purposes of this Section, and in order to
10reduce the points of contact that the Federal Bureau of
11Investigation may have to maintain for purposes of subsection
12(c) of this Section, the Director may use the Nationwide
13Mortgage Licensing System and Registry as a channeling agent
14for requesting information from and distributing information
15to the Department of Justice or any governmental agency.
16    (e) For the purposes of this Section, and in order to
17reduce the points of contact that the Director may have to
18maintain for purposes of item (2) of subsection (c) of this
19Section, the Director may use the Nationwide Mortgage Licensing
20System and Registry as a channeling agent for requesting and
21distributing information to and from any source so directed by
22the Director.
23    (205 ILCS 635/2-4)  (from Ch. 17, par. 2322-4)
24    Sec. 2-4. Averments of Licensee. Each application for
25license or for the renewal of a license shall be accompanied by



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1the following averments stating that the applicant:
2        (a) Will maintain at least one full service office
3    within the State of Illinois pursuant to Section 3-4 of
4    this Act;
5        (b) Will maintain staff reasonably adequate to meet the
6    requirements of Section 3-4 of this Act;
7        (c) Will keep and maintain for 36 months the same
8    written records as required by the federal Equal Credit
9    Opportunity Act, and any other information required by
10    regulations of the Commissioner regarding any home
11    mortgage in the course of the conduct of its residential
12    mortgage business;
13        (d) Will file with the Commissioner or Nationwide
14    Mortgage Licensing System and Registry as applicable, when
15    due, any report or reports which it is required to file
16    under any of the provisions of this Act;
17        (e) Will not engage, whether as principal or agent, in
18    the practice of rejecting residential mortgage
19    applications without reasonable cause, or varying terms or
20    application procedures without reasonable cause, for home
21    mortgages on real estate within any specific geographic
22    area from the terms or procedures generally provided by the
23    licensee within other geographic areas of the State;
24        (f) Will not engage in fraudulent home mortgage
25    underwriting practices;
26        (g) Will not make payment, whether directly or



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1    indirectly, of any kind to any in house or fee appraiser of
2    any government or private money lending agency with which
3    an application for a home mortgage has been filed for the
4    purpose of influencing the independent judgment of the
5    appraiser with respect to the value of any real estate
6    which is to be covered by such home mortgage;
7        (h) Has filed tax returns (State and Federal) for the
8    past 3 years or filed with the Commissioner an accountant's
9    or attorney's statement as to why no return was filed;
10        (i) Will not engage in any discrimination or redlining
11    activities prohibited by Section 3-8 of this Act;
12        (j) Will not knowingly make any false promises likely
13    to influence or persuade, or pursue a course of
14    misrepresentation and false promises through agents,
15    solicitors, advertising or otherwise;
16        (k) Will not knowingly misrepresent, circumvent or
17    conceal, through whatever subterfuge or device, any of the
18    material particulars or the nature thereof, regarding a
19    transaction to which it is a party to the injury of another
20    party thereto;
21        (l) Will disburse funds in accordance with its
22    agreements;
23        (m) Has not committed a crime against the law of this
24    State, any other state or of the United States, involving
25    moral turpitude, fraudulent or dishonest dealing, and that
26    no final judgment has been entered against it in a civil



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1    action upon grounds of fraud, misrepresentation or deceit
2    which has not been previously reported to the Commissioner;
3        (n) Will account or deliver to the owner upon request
4    any personal property such as money, fund, deposit, check,
5    draft, mortgage, other document or thing of value which it
6    is not in law or equity entitled to retain under the
7    circumstances;
8        (o) Has not engaged in any conduct which would be cause
9    for denial of a license;
10        (p) Has not become insolvent;
11        (q) Has not submitted an application for a license
12    under this Act which contains a material misstatement;
13        (r) Has not demonstrated by course of conduct,
14    negligence or incompetence in performing any act for which
15    it is required to hold a license under this Act;
16        (s) Will advise the Commissioner in writing, or the
17    Nationwide Mortgage Licensing System and Registry as
18    applicable, of any changes to the information submitted on
19    the most recent application for license within 30 days of
20    said change. The written notice must be signed in the same
21    form as the application for license being amended;
22        (t) Will comply with the provisions of this Act, or
23    with any lawful order, rule or regulation made or issued
24    under the provisions of this Act;
25        (u) Will submit to periodic examination by the
26    Commissioner as required by this Act;



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1        (v) Will advise the Commissioner in writing of
2    judgments entered against, and bankruptcy petitions by,
3    the license applicant within 5 days of occurrence;
4        (w) Will advise the Commissioner in writing within 30
5    days of any request made to a licensee under this Act to
6    repurchase a loan in a manner that completely and clearly
7    identifies to whom the request was made, the loans
8    involved, and the reason therefor;
9        (x) Will advise the Commissioner in writing within 30
10    days of any request from any entity to repurchase a loan in
11    a manner that completely and clearly identifies to whom the
12    request was made, the loans involved, and the reason for
13    the request;
14        (y) Will at all times act in a manner consistent with
15    subsections (a) and (b) of Section 1-2 of this Act; and
16        (z) Will not knowingly hire or employ a loan originator
17    who is not registered, or mortgage loan originator who is
18    not licensed, with the Commissioner as required under
19    Section 7-1 or Section 7-1A, as applicable, of this Act; .
20        (aa) Will not charge or collect advance payments from
21    borrowers or homeowners for engaging in loan modification;
22    and
23        (bb) Will not structure activities or contracts to
24    evade provisions of this Act.
25    A licensee who fails to fulfill obligations of an averment,
26to comply with averments made, or otherwise violates any of the



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1averments made under this Section shall be subject to the
2penalties in Section 4-5 of this Act.
3(Source: P.A. 95-331, eff. 8-21-07; 96-112, eff. 7-31-09.)
4    (205 ILCS 635/3-2)  (from Ch. 17, par. 2323-2)
5    Sec. 3-2. Annual audit.
6    (a) At the licensee's fiscal year-end, but in no case more
7than 12 months after the last audit conducted pursuant to this
8Section, except as otherwise provided in this Section, it shall
9be mandatory for each residential mortgage licensee to cause
10its books and accounts to be audited by a certified public
11accountant not connected with such licensee. The books and
12records of all licensees under this Act shall be maintained on
13an accrual basis. The audit must be sufficiently comprehensive
14in scope to permit the expression of an opinion on the
15financial statements, which must be prepared in accordance with
16generally accepted accounting principles, and must be
17performed in accordance with generally accepted auditing
18standards. Notwithstanding the requirements of this
19subsection, a licensee that is a first tier subsidiary may
20submit audited consolidated financial statements of its parent
21as long as the consolidated statements are supported by
22consolidating statements. The licensee's chief financial
23officer shall attest to the licensee's financial statements
24disclosed in the consolidating statements.
25    (b) As used herein, the term "expression of opinion"



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1includes either (1) an unqualified opinion, (2) a qualified
2opinion, (3) a disclaimer of opinion, or (4) an adverse
4    (c) If a qualified or adverse opinion is expressed or if an
5opinion is disclaimed, the reasons therefore must be fully
6explained. An opinion, qualified as to a scope limitation,
7shall not be acceptable.
8    (d) The most recent audit report shall be filed with the
9Commissioner within 90 days after the end of the licensee's
10fiscal year, or with the Nationwide Mortgage Licensing System
11and Registry, if applicable, pursuant to Mortgage Call Report
12requirements. The report filed with the Commissioner shall be
13certified by the certified public accountant conducting the
14audit. The Commissioner may promulgate rules regarding late
15audit reports.
16    (e) If any licensee required to make an audit shall fail to
17cause an audit to be made, the Commissioner shall cause the
18same to be made by a certified public accountant at the
19licensee's expense. The Commissioner shall select such
20certified public accountant by advertising for bids or by such
21other fair and impartial means as he or she establishes by
23    (f) In lieu of the audit or compilation financial statement
24required by this Section, a licensee shall submit and the
25Commissioner may accept any audit made in conformance with the
26audit requirements of the U.S. Department of Housing and Urban



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2    (g) With respect to licensees who solely broker residential
3mortgage loans as defined in subsection (o) of Section 1-4,
4instead of the audit required by this Section, the Commissioner
5may accept compilation financial statements prepared at least
6every 12 months, and the compilation financial statement must
7be prepared by an independent certified public accountant
8licensed under the Illinois Public Accounting Act or by an
9equivalent state licensing law with full disclosure in
10accordance with generally accepted accounting principals and
11must be submitted within 90 days after the end of the
12licensee's fiscal year, or with the Nationwide Mortgage
13Licensing System and Registry, if applicable, pursuant to
14Mortgage Call Report requirements. If a licensee under this
15Section fails to file a compilation as required, the
16Commissioner shall cause an audit of the licensee's books and
17accounts to be made by a certified public accountant at the
18licensee's expense. The Commissioner shall select the
19certified public accountant by advertising for bids or by such
20other fair and impartial means as he or she establishes by
21rule. A licensee who files false or misleading compilation
22financial statements is guilty of a business offense and shall
23be fined not less than $5,000.
24    (h) The workpapers of the certified public accountants
25employed by each licensee for purposes of this Section are to
26be made available to the Commissioner or the Commissioner's



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1designee upon request and may be reproduced by the Commissioner
2or the Commissioner's designee to enable to the Commissioner to
3carry out the purposes of this Act.
4    (i) Notwithstanding any other provision of this Section, if
5a licensee relying on subsection (g) of this Section causes its
6books to be audited at any other time or causes its financial
7statements to be reviewed, a complete copy of the audited or
8reviewed financial statements shall be delivered to the
9Commissioner at the time of the annual license renewal payment
10following receipt by the licensee of the audited or reviewed
11financial statements. All workpapers shall be made available to
12the Commissioner upon request. The financial statements and
13workpapers may be reproduced by the Commissioner or the
14Commissioner's designee to carry out the purposes of this Act.
15(Source: P.A. 96-112, eff. 7-31-09; revised 11-18-11.)
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 of paragraph (2) of subsection (i) of this Section;
12    and
13        (6) Denial of a license.
14    (i) The following acts shall constitute grounds for which
15the disciplinary actions specified in subsection (h) above may
16be taken:
17        (1) Being convicted or found guilty, regardless of
18    pendency of an appeal, of a crime in any jurisdiction which
19    involves fraud, dishonest dealing, or any other act of
20    moral turpitude;
21        (2) Fraud, misrepresentation, deceit or negligence in
22    any mortgage financing transaction;
23        (3) A material or intentional misstatement of fact on
24    an initial or renewal application;
25        (4) Failure to follow the Commissioner's regulations
26    with respect to placement of funds in escrow accounts;



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



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



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1officer, director, shareholder, joint venture, partner,
2ultimate equitable owner, or employee of the licensee.
3    (k) Such licensee shall be subject to suspension or
4revocation for unauthorized employee actions only if there is a
5pattern of repeated violations by employees or the licensee has
6knowledge of the violations, or there is substantial harm to a
8    (l) Procedure for surrender of license:
9        (1) The Commissioner may, after 10 days notice by
10    certified mail to the licensee at the address set forth on
11    the license, stating the contemplated action and in general
12    the grounds therefor and the date, time and place of a
13    hearing thereon, and after providing the licensee with a
14    reasonable opportunity to be heard prior to such action,
15    fine such licensee an amount not exceeding $25,000 per
16    violation, or revoke or suspend any license issued
17    hereunder if he or she finds that:
18            (i) The licensee has failed to comply with any
19        provision of this Act or any order, decision, finding,
20        rule, regulation or direction of the Commissioner
21        lawfully made pursuant to the authority of this Act; or
22            (ii) Any fact or condition exists which, if it had
23        existed at the time of the original application for the
24        license, clearly would have warranted the Commissioner
25        in refusing to issue the license.
26        (2) Any licensee may submit application to surrender a



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1    license, but upon the Director approving the surrender, it
2    shall not affect the licensee's civil or criminal liability
3    for acts committed prior to surrender or entitle the
4    licensee to a return of any part of the license fee.
5(Source: P.A. 96-112, eff. 7-31-09.)
6    (205 ILCS 635/4-8.2)
7    Sec. 4-8.2. Reports of violations. Any person licensed
8under this Act or any other person may report to the
9Commissioner any information to show that a person subject to
10this Act is or may be in violation of this Act. A licensee who
11files a report with the Department of Financial and
12Professional Regulation that another licensee is engaged in one
13or more violations pursuant to this Act shall not be the
14subject of disciplinary action by the Department, unless the
15Department determines, by a preponderance of the evidence
16available to the Department, that the reporting person
17knowingly and willingly participated in the violation that was
19(Source: P.A. 93-561, eff. 1-1-04.)
20    (205 ILCS 635/7-1A)
21    Sec. 7-1A. Mortgage loan originator license.
22    (a) It is unlawful for any individual to act or assume to
23act as a mortgage loan originator, as defined in subsection
24(jj) of Section 1-4 of this Act, without obtaining a license



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1from the Director, unless the individual is exempt under
2subsection (c) of this Section. It is unlawful for any
3individual who holds a mortgage loan originator license to
4provide short sale facilitation services unless he or she holds
5a license under the Real Estate License Act of 2000. Each
6licensed mortgage loan originator must register with and
7maintain a valid unique identifier issued by the Nationwide
8Mortgage Licensing System and Registry.
9    (b) In order to facilitate an orderly transition to
10licensing and minimize disruption in the mortgage marketplace,
11the operability date for subsection (a) of this Section shall
12be as provided in this subsection (b). For this purpose, the
13Director may require submission of licensing information to the
14Nationwide Mortgage Licensing System and Registry prior to the
15operability dates designated by the Director pursuant to items
16(1) and (2) of this subsection (b).
17        (1) For all individuals other than individuals
18    described in item (2) of this subsection (b), the
19    operability date as designated by the Director shall be no
20    later than July 31, 2010, or any date approved by the
21    Secretary of the U.S. Department of Housing and Urban
22    Development, pursuant to the authority granted under
23    federal Public Law 110-289, Section 1508.
24        (2) For all individuals registered as loan originators
25    as of the effective date of this amendatory Act of the 96th
26    General Assembly, the operability date as designated by the



09700HB4521ham001- 39 -LRB097 19725 PJG 66587 a

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



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1    loan originator.
2    (d) A loan processor or underwriter who is an independent
3contractor may not engage in the activities of a loan processor
4or underwriter unless he or she obtains and maintains a license
5under subsection (a) of this Section. Each independent
6contractor loan processor or underwriter licensed as a mortgage
7loan originator must have and maintain a valid unique
8identifier issued by the Nationwide Mortgage Licensing System
9and Registry.
10    (e) For the purposes of implementing an orderly and
11efficient licensing process, the Director may establish
12licensing rules or regulations and interim procedures for
13licensing and acceptance of applications. For previously
14registered or licensed individuals, the Director may establish
15expedited review and licensing procedures.
16(Source: P.A. 96-112, eff. 7-31-09.)
17    (205 ILCS 635/7-11)
18    Sec. 7-11. Mortgage loan originator suspension or
19revocation of registration; refusal to renew; fines.
20    (a) In addition to any other action authorized by this Act
21or any other applicable law, rule or regulation, the Director
22may do the following:
23        (1) Suspend, revoke, or refuse to renew a license or
24    reprimand, place on probation or otherwise discipline a
25    licensee if the Director finds that the mortgage loan



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1    originator has violated this Act or any other applicable
2    law or regulation or has been convicted of a criminal
3    offense.
4        (2) Impose a fine of not more than $1,000 or, for
5    engaging in an act prohibited by item (1) of Section 7-13,
6    not more than $3,000 for each day for each violation of
7    this Act or any other applicable law or regulation that is
8    committed. If the Mortgage Loan Originator engages in a
9    pattern of repeated violations, the Director may impose a
10    fine of not more than $2,000 or, for engaging in an act
11    prohibited by item (1) of Section 7-13, not more than
12    $6,000 for each day for each violation committed. In
13    determining the amount of a fine to be imposed pursuant to
14    this Act or any other applicable law or regulation, the
15    Director shall consider all of the following:
16            (A) The seriousness of the violation;
17            (B) The mortgage loan originator's good faith
18        efforts to prevent the violation; and
19            (C) The mortgage loan originator's history of
20        violations and compliance with orders.
21    (b) In addition to any other action authorized by this Act
22or any other applicable law, rule or regulation, the Director
23may investigate alleged violations of the Act or any other
24applicable law, rule or regulation and complaints concerning
25any such violation. The Director may seek a court order to
26enjoin the violation.



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1    (c) In addition to any other action authorized by this Act
2or any other applicable law, rule or regulation, if the
3Director determines that a mortgage loan originator is engaged
4in or is believed to be engaged in activities that may
5constitute a violation of this Act or any other applicable law,
6rule or regulation, the Director may issue a cease and desist
7order to compel the mortgage loan originator to comply with
8this Act or any other applicable law, rule or regulation or,
9upon a showing that an emergency exists, may suspend the
10mortgage loan originator's license for a period not exceeding
11180 calendar days, pending investigation.
12(Source: P.A. 96-112, eff. 7-31-09.)
13    (205 ILCS 635/7-13)
14    Sec. 7-13. Prohibited acts and practices for mortgage loan
15originators. It is a violation of this Act for an individual
16subject to this Act to:
17        (1) Directly or indirectly employ any scheme, device,
18    or artifice to defraud or mislead borrowers or lenders or
19    to defraud any person.
20        (2) Engage in any unfair or deceptive practice toward
21    any person.
22        (3) Obtain property by fraud or misrepresentation.
23        (4) Solicit or enter into a contract with a borrower
24    that provides in substance that the person or individual
25    subject to this Act may earn a fee or commission through



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1    "best efforts" to obtain a loan even though no loan is
2    actually obtained for the borrower.
3        (5) Solicit, advertise, or enter into a contract for
4    specific interest rates, points, or other financing terms
5    unless the terms are actually available at the time of
6    soliciting, advertising, or contracting.
7        (6) Conduct any business covered by this Act without
8    holding a valid license as required under this Act, or
9    assist or aid and abet any person in the conduct of
10    business under this Act without a valid license as required
11    under this Act.
12        (7) Fail to make disclosures as required by this Act
13    and any other applicable State or federal law, including
14    regulations thereunder.
15        (8) Fail to comply with this Act or rules or
16    regulations promulgated under this Act, or fail to comply
17    with any other state or federal law, including the rules
18    and regulations thereunder, applicable to any business
19    authorized or conducted under this Act.
20        (9) Make, in any manner, any false or deceptive
21    statement or representation of a material fact, or any
22    omission of a material fact, required on any document or
23    application subject to this Act.
24        (10) Negligently make any false statement or knowingly
25    and willfully make any omission of material fact in
26    connection with any information or report filed with a



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1    governmental agency or the Nationwide Mortgage Licensing
2    System and Registry or in connection with any investigation
3    conducted by the Director or another governmental agency.
4        (11) Make any payment, threat or promise, directly or
5    indirectly, to any person for the purpose of influencing
6    the independent judgment of the person in connection with a
7    residential mortgage loan, or make any payment threat or
8    promise, directly or indirectly, to any appraiser of a
9    property, for the purpose of influencing the independent
10    judgment of the appraiser with respect to the value of the
11    property.
12        (12) Collect, charge, attempt to collect or charge, or
13    use or propose any agreement purporting to collect or
14    charge any fee prohibited by this Act, including advance
15    fees for loan modification.
16        (13) Cause or require a borrower to obtain property
17    insurance coverage in an amount that exceeds the
18    replacement cost of the improvements as established by the
19    property insurer.
20        (14) Fail to truthfully account for monies belonging to
21    a party to a residential mortgage loan transaction.
22        (15) Engage in conduct that constitutes dishonest
23    dealings.
24        (16) Knowingly instruct, solicit, propose, or cause a
25    person other than the borrower to sign a borrower's
26    signature on a mortgage related document, or solicit,



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1    accept or execute any contract or other document related to
2    the residential mortgage transaction that contains any
3    blanks to be filled in after signing or initialing the
4    contract or other document, except for forms authorizing
5    the verification of application information.
6        (17) Discourage any applicant from seeking or
7    participating in housing or financial counseling either
8    before or after the consummation of a loan transaction, or
9    fail to provide information on counseling resources upon
10    request.
11        (18) Charge for any ancillary products or services, not
12    essential to the basic loan transaction for which the
13    consumer has applied, without the applicant's knowledge
14    and written authorization, or charge for any ancillary
15    products or services not actually provided in the
16    transaction.
17        (19) Fail to give reasonable consideration to a
18    borrower's ability to repay the debt.
19        (20) Interfere or obstruct an investigation or
20    examination conducted pursuant to this Act.
21        (21) Structure activities or contracts to evade
22    provisions of this Act.
23(Source: P.A. 96-112, eff. 7-31-09.)
24    Section 10. The Title Insurance Act is amended by changing
25Section 23



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1    (215 ILCS 155/23)  (from Ch. 73, par. 1423)
2    Sec. 23. Violation; penalties.
3    (a) Any violation of any of the provisions of this Act and,
4beginning January 1, 2013, any violation of any of the
5provisions of Article 3 of the Residential Real Property
6Disclosure Act shall constitute a business offense and shall
7subject the party violating the same to a penalty of $1000 for
8each offense.
9    (b) Nothing contained in this Section shall affect the
10right of the Secretary to revoke or suspend a title insurance
11company's or independent escrowee's certificate of authority
12or a title insurance agent's registration under any other
13Section of this Act.
14(Source: P.A. 94-893, eff. 6-20-06.)
15    Section 15. The Residential Real Property Disclosure Act is
16amended by changing Sections 70 and 72 as follows:
17    (765 ILCS 77/70)
18    Sec. 70. Predatory lending database program.
19    (a) As used in this Article:
20    "Adjustable rate mortgage" or "ARM" means a closed-end
21mortgage transaction that allows adjustments of the loan
22interest rate during the first 3 years of the loan term.
23    "Borrower" means a person seeking a mortgage loan.



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1    "Broker" means a "broker" or "loan broker", as defined in
2subsection (p) of Section 1-4 of the Residential Mortgage
3License Act of 1987.
4    "Closing agent" means an individual assigned by a title
5insurance company or a broker or originator to ensure that the
6execution of documents related to the closing of a real estate
7sale or the refinancing of a real estate loan and the
8disbursement of closing funds are in conformity with the
9instructions of the entity financing the transaction.
10    "Counseling" means in-person counseling provided by a
11counselor employed by a HUD-certified counseling agency to all
12borrowers, or documented telephone counseling where a hardship
13would be imposed on one or more borrowers. A hardship shall
14exist in instances in which the borrower is confined to his or
15her home due to medical conditions, as verified in writing by a
16physician, or the borrower resides 50 miles or more from the
17nearest participating HUD-certified housing counseling agency.
18In instances of telephone counseling, the borrower must supply
19all necessary documents to the counselor at least 72 hours
20prior to the scheduled telephone counseling session.
21    "Counselor" means a counselor employed by a HUD-certified
22housing counseling agency.
23    "Credit score" means a credit risk score as defined by the
24Fair Isaac Corporation, or its successor, and reported under
25such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE"
26by one or more of the following credit reporting agencies or



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1their successors: Equifax, Inc., Experian Information
2Solutions, Inc., and TransUnion LLC. If the borrower's credit
3report contains credit scores from 2 reporting agencies, then
4the broker or loan originator shall report the lower score. If
5the borrower's credit report contains credit scores from 3
6reporting agencies, then the broker or loan originator shall
7report the middle score.
8    "Department" means the Department of Financial and
9Professional Regulation.
10    "Exempt person" means that term as it is defined in
11subsections (d)(1) and (d)(1.5) of Section 1-4 of the
12Residential Mortgage License Act of 1987.
13    "First-time homebuyer" means a borrower who has not held an
14ownership interest in residential property.
15    "HUD-certified counseling" or "counseling" means
16counseling given to a borrower by a counselor employed by a
17HUD-certified housing counseling agency.
18    "Interest only" means a closed-end loan that permits one or
19more payments of interest without any reduction of the
20principal balance of the loan, other than the first payment on
21the loan.
22    "Lender" means that term as it is defined in subsection (g)
23of Section 1-4 of the Residential Mortgage License Act of 1987.
24    "Licensee" means that term as it is defined in subsection
25(e) of Section 1-4 of the Residential Mortgage License Act of



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1    "Mortgage loan" means that term as it is defined in
2subsection (f) of Section 1-4 of the Residential Mortgage
3License Act of 1987.
4    "Negative amortization" means an amortization method under
5which the outstanding balance may increase at any time over the
6course of the loan because the regular periodic payment does
7not cover the full amount of interest due.
8    "Originator" means a "loan originator" as defined in
9subsection (hh) of Section 1-4 of the Residential Mortgage
10License Act of 1987, except an exempt person.
11    "Points and fees" has the meaning ascribed to that term in
12Section 10 of the High Risk Home Loan Act.
13    "Prepayment penalty" means a charge imposed by a lender
14under a mortgage note or rider when the loan is paid before the
15expiration of the term of the loan.
16    "Refinancing" means a loan secured by the borrower's or
17borrowers' primary residence where the proceeds are not used as
18purchase money for the residence.
19    "Title insurance company" means any domestic company
20organized under the laws of this State for the purpose of
21conducting the business of guaranteeing or insuring titles to
22real estate and any title insurance company organized under the
23laws of another State, the District of Columbia, or a foreign
24government and authorized to transact the business of
25guaranteeing or insuring titles to real estate in this State.
26    (a-5) A predatory lending database program shall be



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1established within Cook County. The program shall be
2administered in accordance with this Article. The inception
3date of the program shall be July 1, 2008. A predatory lending
4database program shall be expanded to include Kane, Peoria, and
5Will counties. The inception date of the expansion of the
6program as it applies to Kane, Peoria, and Will counties shall
7be July 1, 2010. Until the inception date, none of the duties,
8obligations, contingencies, or consequences of or from the
9program shall be imposed. The program shall apply to all
10mortgage applications that are governed by this Article and
11that are made or taken on or after the inception of the
13    (b) The database created under this program shall be
14maintained and administered by the Department. The database
15shall be designed to allow brokers, originators, counselors,
16title insurance companies, and closing agents to submit
17information to the database online. The database shall not be
18designed to allow those entities to retrieve information from
19the database, except as otherwise provided in this Article.
20Information submitted by the broker or originator to the
21Department may be used to populate the online form submitted by
22a counselor, title insurance company, or closing agent.
23    (c) Within 10 days after taking a mortgage application, the
24broker or originator for any mortgage on residential property
25within the program area must submit to the predatory lending
26database all of the information required under Section 72 and



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1any other information required by the Department by rule.
2Within 7 days after receipt of the information, the Department
3shall compare that information to the housing counseling
4standards in Section 73 and issue to the borrower and the
5broker or originator a determination of whether counseling is
6recommended for the borrower. The borrower may not waive
7counseling. If at any time after submitting the information
8required under Section 72 the broker or originator (i) changes
9the terms of the loan or (ii) issues a new commitment to the
10borrower, then, within 5 days thereafter, the broker or
11originator shall re-submit all of the information required
12under Section 72 and, within 4 days after receipt of the
13information re-submitted by the broker or originator, the
14Department shall compare that information to the housing
15counseling standards in Section 73 and shall issue to the
16borrower and the broker or originator a new determination of
17whether re-counseling is recommended for the borrower based on
18the information re-submitted by the broker or originator. The
19Department shall require re-counseling if the loan terms have
20been modified to meet another counseling standard in Section
2173, or if the broker has increased the interest rate by more
22than 200 basis points.
23    (d) If the Department recommends counseling for the
24borrower under subsection (c), then the Department shall notify
25the borrower of all participating HUD-certified counseling
26agencies located within the State and direct the borrower to



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1interview with a counselor associated with one of those
2agencies. Within 10 days after receipt of the notice of
3HUD-certified counseling agencies, the borrower shall select
4one of those agencies and shall engage in an interview with a
5counselor associated with that agency. Within 7 days after
6interviewing the borrower, the counselor must submit to the
7predatory lending database all of the information required
8under Section 74 and any other information required by the
9Department by rule. Reasonable and customary costs not to
10exceed $300 associated with counseling provided under the
11program shall be paid by the broker or originator. The
12Department shall annually calculate to the nearest dollar an
13adjusted rate for inflation. A counselor shall not recommend or
14suggest that a borrower contact any specific mortgage
15origination company, financial institution, or entity that
16deals in mortgage finance to obtain a loan, another quote, or
17for any other reason related to the specific mortgage
18transaction; however, a counselor may suggest that the borrower
19seek an opinion or a quote from another mortgage origination
20company, financial institution, or entity that deals in
21mortgage finance. A counselor or housing counseling agency that
22in good faith provides counseling shall not be liable to a
23broker or originator or borrower for civil damages, except for
24willful or wanton misconduct on the part of the counselor in
25providing the counseling.
26    (e) The broker or originator and the borrower may not take



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1any legally binding action concerning the loan transaction
2until the later of the following:
3        (1) the Department issues a determination not to
4    recommend HUD-certified counseling for the borrower in
5    accordance with subsection (c); or
6        (2) the Department issues a determination that
7    HUD-certified counseling is recommended for the borrower
8    and the counselor submits all required information to the
9    database in accordance with subsection (d).
10    (f) Within 10 days after closing, the title insurance
11company or closing agent must submit to the predatory lending
12database all of the information required under Section 76 and
13any other information required by the Department by rule.
14    (g) The title insurance company or closing agent shall
15attach to the mortgage a certificate of compliance with the
16requirements of this Article, as generated by the database. If
17the title insurance company or closing agent fails to attach
18the certificate of compliance, then the mortgage is not
19recordable. In addition, if any lis pendens for a residential
20mortgage foreclosure is recorded on the property within the
21program area, a certificate of service must be simultaneously
22recorded that affirms that a copy of the lis pendens was filed
23with the Department. If the certificate of service is not
24recorded, then the lis pendens pertaining to the residential
25mortgage foreclosure in question is not recordable and is of no
26force and effect.



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1    (h) All information provided to the predatory lending
2database under the program is confidential and is not subject
3to disclosure under the Freedom of Information Act, except as
4otherwise provided in this Article. Information or documents
5obtained by employees of the Department in the course of
6maintaining and administering the predatory lending database
7are deemed confidential. Employees are prohibited from making
8disclosure of such confidential information or documents. Any
9request for production of information from the predatory
10lending database, whether by subpoena, notice, or any other
11source, shall be referred to the Department of Financial and
12Professional Regulation. Any borrower may authorize in writing
13the release of database information. The Department may use the
14information in the database without the consent of the
15borrower: (i) for the purposes of administering and enforcing
16the program; (ii) to provide relevant information to a
17counselor providing counseling to a borrower under the program;
18or (iii) to the appropriate law enforcement agency or the
19applicable administrative agency if the database information
20demonstrates criminal, fraudulent, or otherwise illegal
22    (i) Nothing in this Article is intended to prevent a
23borrower from making his or her own decision as to whether to
24proceed with a transaction.
25    (j) Any person who violates any provision of this Article
26commits an unlawful practice within the meaning of the Consumer



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1Fraud and Deceptive Business Practices Act.
2    (j-1) A violation of any provision of this Article by a
3mortgage banking licensee or licensed mortgage loan originator
4shall constitute a violation of the Residential Mortgage
5License Act of 1987.
6    (j-2) A violation of any provision of this Article by a
7title insurance company, title agent, or escrow agent shall
8constitute a violation of the Title Insurance Act.
9    (j-3) A violation of any provision of this Article by a
10housing counselor shall be referred to the Department of
11Housing and Urban Development.
12    (k) During the existence of the program, the Department
13shall submit semi-annual reports to the Governor and to the
14General Assembly by May 1 and November 1 of each year detailing
15its findings regarding the program. The report shall include,
16by county, at least the following information for each
17reporting period:
18        (1) the number of loans registered with the program;
19        (2) the number of borrowers receiving counseling;
20        (3) the number of loans closed;
21        (4) the number of loans requiring counseling for each
22    of the standards set forth in Section 73;
23        (5) the number of loans requiring counseling where the
24    mortgage originator changed the loan terms subsequent to
25    counseling;
26        (6) the number of licensed mortgage brokers and loan



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1    originators entering information into the database;
2        (7) the number of investigations based on information
3    obtained from the database, including the number of
4    licensees fined, the number of licenses suspended, and the
5    number of licenses revoked;
6        (8) a summary of the types of non-traditional mortgage
7    products being offered; and
8        (9) a summary of how the Department is actively
9    utilizing the program to combat mortgage fraud.
10(Source: P.A. 95-691, eff. 6-1-08; 96-328, eff. 8-11-09;
1196-856, eff. 12-31-09.)
12    (765 ILCS 77/72)
13    Sec. 72. Originator; required information. As part of the
14predatory lending database program, the broker or originator
15must submit all of the following information for inclusion in
16the predatory lending database for each loan for which the
17originator takes an application:
18        (1) The borrower's name, address, social security
19    number or taxpayer identification number, date of birth,
20    and income and expense information, including total
21    monthly consumer debt, contained in the mortgage
22    application.
23        (2) The address, permanent index number, and a
24    description of the collateral and information about the
25    loan or loans being applied for and the loan terms,



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1    including the amount of the loan, the rate and whether the
2    rate is fixed or adjustable, amortization or loan period
3    terms, and any other material terms.
4        (3) The borrower's credit score at the time of
5    application.
6        (4) Information about the originator and the company
7    the originator works for, including the originator's
8    license number and address, fees being charged, whether the
9    fees are being charged as points up front, the yield spread
10    premium payable outside closing, and other charges made or
11    remuneration required by the broker or originator or its
12    affiliates or the broker's or originator's employer or its
13    affiliates for the mortgage loans.
14        (5) Information about affiliated or third party
15    service providers, including the names and addresses of
16    appraisers, title insurance companies, closing agents,
17    attorneys, and realtors who are involved with the
18    transaction and the broker or originator and any moneys
19    received from the broker or originator in connection with
20    the transaction.
21        (6) All information indicated on the Good Faith
22    Estimate and Truth in Lending statement disclosures given
23    to the borrower by the broker or originator.
24        (7) Annual real estate taxes for the property, together
25    with any assessments payable in connection with the
26    property to be secured by the collateral and the proposed



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1    monthly principal and interest charge of all loans to be
2    taken by the borrower and secured by the property of the
3    borrower.
4        (8) Information concerning how the broker or
5    originator obtained the client and the name of its referral
6    source, if any.
7        (9) Information concerning the notices provided by the
8    broker or originator to the borrower as required by law and
9    the date those notices were given.
10        (10) Information concerning whether a sale and
11    leaseback is contemplated and the names of the lessor and
12    lessee, seller, and purchaser.
13        (11) Any and all financing by the borrower for the
14    subject property within 12 months prior to the date of
15    application.
16        (12) Loan information, including interest rate, term,
17    purchase price, down payment, and closing costs.
18        (13) Whether the buyer is a first-time homebuyer or
19    refinancing a primary residence.
20        (14) Whether the loan permits interest only payments.
21        (15) Whether the loan may result in negative
22    amortization.
23        (16) Whether the total points and fees payable by the
24    borrowers at or before closing will exceed 5%.
25        (17) Whether the loan includes a prepayment penalty,
26    and, if so, the terms of the penalty.



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1        (18) Whether the loan is an ARM.
2(Source: P.A. 94-280, eff. 1-1-06; 95-691, eff. 6-1-08.)
3    Section 99. Effective date. This Act takes effect January
41, 2013.".