SB1351sam002 100TH GENERAL ASSEMBLY

Sen. Daniel Biss

Filed: 4/24/2017

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 1351

2    AMENDMENT NO. ______. Amend Senate Bill 1351, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5
"ARTICLE 1. GENERAL PROVISIONS

 
6    "Section 1-1. Short title. This Act may be cited as the
7Student Loan Servicing Rights Act.
 
8    Section 1-5. Definitions. As used in this Act:
9    "Applicant" means a person applying for a license pursuant
10to this Act.
11    "Borrower" or "student loan borrower" means a person who
12has received or agreed to pay a student loan for his or her own
13educational expenses.
14    "Cosigner" means a person who has agreed to share
15responsibility for repaying a student loan with a borrower.

 

 

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1    "Department" means the Department of Financial and
2Professional Regulation.
3    "Division of Financial Institutions" means the Division of
4Financial Institutions of the Department of Financial and
5Professional Regulation.
6    "Federal loan borrower eligible for referral to a repayment
7specialist" means a borrower who possesses any of the following
8characteristics:
9        (1) requests information related to options to reduce
10    or suspend his or her monthly payment;
11        (2) indicates that he or she is experiencing or
12    anticipates experiencing financial hardship, distress, or
13    difficulty making his or her payments;
14        (3) has missed 2 consecutive monthly payments;
15        (4) is at least 75 days delinquent;
16        (5) is enrolled in a discretionary forbearance for more
17    than 9 of the previous 12 months;
18        (6) has rehabilitated or consolidated one or more loans
19    out of default within the past 12 months; or
20        (7) has not completed a course of study, as reflected
21    in the servicer's records, or the borrower identifies
22    himself or herself as not having completed a program of
23    study.
24    "Federal education loan" means any loan made, guaranteed,
25or insured under Title IV of the federal Higher Education Act
26of 1965.

 

 

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1    "Income-driven payment plan certification" means the
2documentation related to a federal student loan borrower's
3income or financial status the borrower must submit to renew an
4income-driven repayment plan.
5    "Income-driven repayment options" includes the
6Income-Contingent Repayment Plan, the Income-Based Repayment
7Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
8Plan, the Revised Pay As You Earn Plan, and any other federal
9student loan repayment plan that is calculated based on a
10borrower's income.
11    "Licensee" means a person licensed pursuant to this Act.
12    "Other repayment plans" means the Standard Repayment Plan,
13the Graduated Repayment Plan, the Extended Repayment Plan, or
14any other federal student loan repayment plan not based on a
15borrower's income.
16    "Private education loan" has the meaning given to that term
17in 15 U.S.C. 1650.
18    "Private loan borrower eligible for referral to a repayment
19specialist" means a borrower who possesses any of the following
20characteristics:
21        (1) requests information related to options to reduce
22    or suspend his or her monthly payments; or
23        (2) indicates that he or she is experiencing or
24    anticipates experiencing financial hardship, distress, or
25    difficulty making his or her payments.
26    "Requester" means any borrower or cosigner that submits a

 

 

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1request for assistance.
2    "Request for assistance" means all inquiries, complaints,
3account disputes, and requests for documentation a servicer
4receives from borrowers or cosigners.
5    "Secretary" means the Secretary of Financial and
6Professional Regulation, or his or her designee, including the
7Director of the Division of Banking of the Department of
8Financial and Professional Regulation.
9    "Servicing" means any of the following activities related
10to a student loan of a borrower or cosigner:
11        (1) receiving any scheduled periodic payments from a
12    borrower or cosigner or any notification that a borrower or
13    cosigner made a scheduled periodic payment;
14        (2) applying payments to the borrower's account
15    pursuant to the terms of the student loan or the contract
16    governing the servicing;
17        (3) during a period when no payment is required on a
18    student loan, performing both of the following:
19            (A) maintaining account records for the student
20        loan; and
21            (B) communicating with the borrower or cosigner
22        regarding the student loan on behalf of the owner of
23        the student loan promissory note; or
24        (4) interacting with a borrower or cosigner related to
25    that borrower's student loan with the goal of helping the
26    borrower avoid default on his or her student loan or

 

 

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1    facilitating the activities described in paragraph (1) or
2    (2).
3    "Student loan" or "loan" means any federal education loan,
4private education loan, or other loan primarily for use to
5finance a postsecondary education and costs of attendance at a
6postsecondary institution, including, but not limited to,
7tuition, fees, books and supplies, room and board,
8transportation, and miscellaneous personal expenses. "Student
9loan" includes a loan made to refinance a student loan.
10    "Student loan servicer" or "servicer" means any person
11engaged in the business of servicing student loans.
 
12
ARTICLE 5. STUDENT LOAN BILL OF RIGHTS

 
13    Section 5-5. General provisions.
14    (a) A servicer shall not engage in any unfair or deceptive
15practice toward any borrower or cosigner or misrepresent or
16omit any material information in connection with the servicing
17of a student loan, including, but not limited to,
18misrepresenting the amount, nature, or terms of any fee or
19payment due or claimed to be due on a student loan, the terms
20and conditions of the student loan agreement, or the borrower's
21or cosigner's obligations under the student loan or the terms
22of any repayment plans.
23    (b) A servicer shall not misapply payments made by a
24borrower to the outstanding balance of a student loan.

 

 

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1    (c) A servicer shall oversee third parties, including
2subservicers, debt collectors, independent contractors,
3subsidiaries, affiliates, or other agents, to ensure that those
4companies comply with this Article 5.
 
5    Section 5-10. Payment processing.
6    (a) A servicer shall credit borrower and cosigner payments
7promptly and accurately.
8    (b) A servicer shall provide borrowers and cosigners no
9less than 45 days' notice if the servicer changes the address
10to which the borrower or cosigner needs to send payments.
11    (c) A servicer shall not charge a penalty to a borrower or
12cosigner if a student loan payment is received at an address
13used for payments for a period of 90 days after the change in
14address.
15    (d) A servicer shall not misrepresent the delinquent amount
16of the loan on any call with a borrower or cosigner.
17    (e) A servicer shall allow a borrower or cosigner to
18specify instructions as to how an overpayment should be applied
19to the balance of the loan as consistent with the promissory
20note.
 
21    Section 5-15. Fees.
22    (a) A servicer may only charge late fees that are
23reasonable and proportional to the cost it incurs related to a
24late payment.

 

 

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1    (b) A servicer shall not charge a borrower or cosigner any
2fee to modify, defer, forbear, renew, extend, or amend the
3borrower's or cosigner's loan.
 
4    Section 5-20. Billing statements.
5    (a) In any student loan billing statement, a servicer shall
6not misrepresent the:
7        (1) fees assessed;
8        (2) total amount due for each loan;
9        (3) payment due date;
10        (4) date to avoid late fees;
11        (5) accrued interest during the billing cycle;
12        (6) default payment methodology;
13        (7) means to provide instructions for a payment; or
14        (8) procedure regarding escalated requests for
15    assistance.
16    (b) A servicer shall not misrepresent information
17regarding the $0 bill and advancement of the due date on any
18billing statement that reflects $0 owed.
 
19    Section 5-25. Payment histories. A servicer shall provide a
20written payment history to a borrower or cosigner upon request
21at no cost within 21 calendar days of receiving the request.
 
22    Section 5-30. Specialized assistance for student loan
23borrowers.

 

 

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1    (a) A servicer shall specially designate servicing and
2collections personnel deemed repayment specialists who have
3received enhanced training related to repayment options.
4    (b) A servicer shall refrain from presenting forbearance as
5the sole or first repayment option to a student loan borrower
6struggling with repayment unless the servicer has determined
7that, based on the borrower's financial status, a short term
8forbearance is appropriate.
9    (c) All inbound and outbound calls from a federal loan
10borrower eligible for referral to a repayment specialist and a
11private loan borrower eligible for referral to a repayment
12specialist shall be routed to a repayment specialist.
13    (d) During each inbound or outbound communication with an
14eligible federal loan borrower, a repayment specialist shall
15first inform a federal loan borrower eligible for referral to a
16repayment specialist that federal income-driven repayment
17plans that can reduce the borrower's monthly payment may be
18available, discuss such plans, and assist the borrower in
19determining whether a particular repayment plan may be
20appropriate for the borrower.
21    (e) A repayment specialist shall assess the long-term and
22short-term financial situation and needs of a federal loan
23borrower eligible for referral to a repayment specialist and
24consider any available specific information from the borrower
25as necessary to assist the borrower in determining whether a
26particular income-driven repayment option may be available to

 

 

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1the borrower.
2    (f) In each discussion with a federal loan borrower
3eligible for referral to a repayment specialist, a repayment
4specialist shall present and explain the following options, as
5appropriate:
6        (1) total and permanent disability discharge, public
7    service loan forgiveness, closed school discharge, and
8    defenses to repayment;
9        (2) other repayment plans;
10        (3) deferment; and
11        (4) forbearance.
12    (g) A repayment specialist shall assess the long-term and
13short-term financial situation and needs of a private loan
14borrower eligible for referral to a repayment specialist in
15determining whether any private loan repayment options may be
16appropriate for the borrower.
17    (h) A servicer shall present and explain all private loan
18repayment options, including alternative repayment
19arrangements applicable to private student loan borrowers.
20    (i) A servicer shall be prohibited from implementing any
21compensation plan that has the intended or actual effect of
22incentivizing a repayment specialist to violate this Act or any
23other measure that encourages undue haste or lack of quality.
24    (j) The requirements of this Section shall not apply if a
25repayment specialist has already conversed with a borrower
26consistent with the requirements of this Section.
 

 

 

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1    Section 5-35. Disclosures related to discharge and
2cancellation. If a servicer is aware that a student loan
3borrower attended a school the United States Department of
4Education has made findings supporting a defense to repayment
5claim or closed school discharge, or that a borrower may be
6eligible to have his or her loans forgiven under a total and
7permanent disability discharge program, the servicer's
8personnel shall disclose information related to the Department
9of Education's procedure for asserting a defense to repayment
10claim, closed school discharge, or submitting an application
11for a total and permanent disability discharge.
 
12    Section 5-40. Income-driven repayment plan certifications.
13A servicer shall disclose the date that a borrower's
14income-driven payment plan certification will expire and the
15consequences to the borrower for failing to recertify by the
16date, including the new repayment amount.
 
17    Section 5-45. Information to be provided to private
18education loan borrowers.
19    (a) A servicer shall provide on its website a description
20of any alternative repayment plan offered by the servicer for
21private education loans.
22    (b) A servicer shall establish policies and procedures and
23implement them consistently in order to facilitate evaluation

 

 

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1of private student loan alternative repayment arrangement
2requests, including providing accurate information regarding
3any private student loan alternative repayment arrangements
4that may be available to the borrower through the promissory
5note or that may have been marketed to the borrower through
6marketing materials.
7    A private student loan alternative repayment arrangements
8shall consider the affordability of repayment plans for a
9distressed borrower, as well as investor, guarantor, and
10insurer guidelines and previous outcome and performance
11information.
12    (c) If a servicer offers private student loan repayment
13arrangements, a servicer shall consistently present and offer
14those arrangements to borrowers with similar financial
15circumstances.
 
16    Section 5-50. Cosigner release. A servicer shall provide
17information on billing statements and its website concerning
18the availability and criteria for a cosigner release.
 
19    Section 5-55. Payoff statements. A servicer shall indicate
20on its billing statements and website that a borrower may
21request a payoff statement. A servicer shall provide the payoff
22statement within 10 days, including information the requester
23needs to pay off the loan. If a payoff is made, the servicer
24must send a paid-in-full notice within 30 days.
 

 

 

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1    Section 5-60. Requirements related to the transfer of
2servicing.
3    (a) When acting as the transferor servicer, a servicer
4shall provide to each borrower subject to the transfer a
5written notice not less than 15 calendar days before the
6effective date of the transfer. The transferee servicer and
7transferor servicer may provide a single notice, in which case
8the notice shall be provided not less than 15 calendar days
9before the effective date of the transfer. The notice by the
10transferor servicer or, if applicable, the combined notice of
11transfer shall contain the following information:
12        (1) the effective date of the transfer of servicing;
13        (2) the name, address, and toll-free telephone number
14    for the transferor servicer's designated point of contact
15    that can be contacted by the borrower to obtain answers to
16    servicing inquiries;
17        (3) the name, address, and toll-free telephone number
18    for the transferee servicer's designated point of contact
19    that can be contacted by the borrower to obtain answers to
20    servicing inquiries;
21        (4) the date on which the transferor servicer will
22    cease to accept payments relating to the loan and the date
23    on which the transferee servicer will begin to accept such
24    payments; the dates shall either be the same or consecutive
25    days;

 

 

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1        (5) a statement that the transfer of servicing does not
2    affect any term or condition of the loan other than terms
3    directly related to the servicing of a loan;
4        (6) information on whether the borrower's
5    authorization for recurring electronic fund transfers, if
6    applicable, will be transferred to the transferee
7    servicer; if any such recurring electronic funds transfers
8    cannot be transferred, the transferee servicer shall
9    provide information explaining how the borrower may
10    establish new recurring electronic funds transfers with
11    the transferee servicer; and
12        (7) a statement of the current loan balance, including
13    the current unpaid amount of principal, interest, and fees.
14    (b) When acting as the transferee servicer, a servicer
15shall provide to each borrower subject to the transfer a
16written notice not more than 15 calendar days after the
17effective date of the transfer. The transferee servicer and
18transferor servicer may provide a combined notice of transfer,
19in which case the notice shall be provided not less than 15
20days before the effective date of the transfer. The notice by
21the transferee servicer or, if applicable, the combined notice
22of transfer shall contain the following information:
23        (1) the effective date of the transfer of servicing;
24        (2) the name, address, and toll-free telephone number
25    for the transferee servicer's designated point of contact
26    that can be contacted by the borrower to obtain answers to

 

 

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1    servicing inquiries;
2        (3) the date on which the transferor servicer will
3    cease to accept payments relating to the loan and the date
4    on which the transferee servicer will begin to accept such
5    payments; the dates shall either be the same or consecutive
6    days;
7        (4) a statement that the transfer of servicing does not
8    affect any term or condition of the student loan other than
9    terms directly related to the servicing of a loan;
10        (5) information on whether the borrower's
11    authorization for recurring electronic fund transfers, if
12    applicable, will be transferred to the transferee
13    servicer; if any such recurring electronic funds transfers
14    cannot be transferred, the transferee servicer shall
15    provide information explaining how the borrower may
16    establish new recurring electronic funds transfers with
17    the transferee servicer; and
18        (6) a statement of the current loan balance, including
19    the current unpaid amount of principal, interest, and fees.
20    (c) During the 60 calendar day period beginning on the
21effective date of transfer of the servicing of any loan, a
22payment timely made to the transferor servicer may not be
23treated as late for any purpose by the transferee servicer,
24including the assessment of late fees, accrual of additional
25interest, and furnishing negative credit information.
26    (d) To the extent practicable, for at least 120 calendar

 

 

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1days beginning on the effective date of transfer of servicing
2of any loan, when acting as the transferor servicer, a servicer
3shall promptly transfer payments received to the transferee
4servicer for application to the borrower's loan account.
5    (e) Unless a borrower's authorizations for recurring
6electronic fund transfers are automatically transferred to the
7transferee servicer, when acting as transferee servicer, a
8servicer shall make available to a borrower whose loan
9servicing is transferred an online process through which a
10borrower may make a new authorization for recurring electronic
11fund transfers. A servicer shall also provide a process through
12which the borrower may make a new authorization for recurring
13electronic funds transfers by phone or through written
14approval.
 
15    Section 5-65. Requests for assistance; account dispute
16resolution; appeals.
17    (a) A servicer shall implement reasonable policies and
18procedures for accepting, processing, investigating, and
19responding to requests for assistance in a timely and effective
20manner, including, but not limited to, the following
21requirements:
22        (1) A servicer shall provide readily accessible
23    methods for consumers to submit a request for assistance to
24    the servicer, including such methods as phone, email, and
25    U.S. mail.

 

 

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1        (2) A servicer shall post on its website and disclose
2    on its billing statements:
3            (A) the toll-free telephone number, email address,
4        and mailing address for consumers to submit a requests
5        for assistance to the servicer; and
6            (B) the procedures for a requester to send a
7        written communication to the servicer regarding any
8        request for assistance.
9        (3) For any request for assistance that includes a
10    request for documentation or information, where a response
11    cannot be immediately provided, a servicer shall provide
12    the requested documentation or information to the
13    requester within 14 calendar days of the request; if a
14    servicer determines in good faith that it is unable to
15    provide the documentation or information within 14
16    calendar days, promptly after making the determination,
17    the servicer shall notify the requester of the expected
18    response period, which must be reasonable for the request
19    for assistance.
20    (b) A servicer shall implement a process by which a
21requester can escalate any request for assistance. Such process
22shall allow a requester who has made a request for assistance
23on the phone and who receives a response during the call to
24obtain immediate review of the response by an employee of the
25servicer at a higher supervisory level.
26    (c) The following requirements shall apply when a requester

 

 

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1submits a written or oral request for assistance which contains
2an account dispute to a servicer:
3        (1) Within 14 calendar days after its receipt of the
4    written communication or oral request for further
5    escalation, a servicer shall attempt to make contact,
6    including providing the requester with name and contact
7    information of the representative handling the account
8    dispute, by phone or in writing, to the requester and
9    document such attempt in the borrower's account.
10        (2) A servicer shall complete the following actions
11    within 30 calendar days of its receipt of the written
12    communication or oral request for further escalation,
13    subject to paragraph (3) of this subsection:
14            (A) conduct a thorough investigation of the
15        account dispute;
16            (B) make all appropriate corrections to the
17        account of the requester, including crediting any late
18        fees assessed and derogatory credit furnishing as the
19        result of any error, and, if any corrections are made,
20        sending the requester a written notification that
21        includes the following information:
22                (i) an explanation of the correction or
23            corrections to the requester's account that have
24            been made; and
25                (ii) the toll-free telephone number, email
26            address, and mailing address of the servicer's

 

 

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1            personnel knowledgeable about the investigation
2            and resolution of the account dispute.
3        (3) If a servicer determines in good faith that it
4    cannot complete a thorough investigation of the account
5    dispute within 30 calendar days after receiving the written
6    communication or oral request for further escalation
7    regarding the account dispute, then, promptly after making
8    the determination, the servicer shall notify the requester
9    of the expected resolution time period, which must be
10    reasonable for the account dispute. A servicer must
11    complete the actions listed in the investigation and
12    resolution of account dispute within this time period.
13        (4) If a servicer determines as a result of its
14    investigation that the requested changes to a requester's
15    dispute will not be made, the servicer shall provide the
16    requester with a written notification that includes the
17    following information:
18            (A) a description of its determination and an
19        explanation of the reasons for that determination;
20            (B) the toll-free telephone number, email address,
21        and mailing address of the servicer's personnel
22        knowledgeable about the investigation and resolution
23        of the account dispute;
24            (C) instructions about how the requester can
25        appeal the servicer's determination in accordance with
26        paragraph (5) of this subsection; and

 

 

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1            (D) information regarding the method by which a
2        borrower may request copies of documents a servicer
3        relied on to make a determination that no changes to a
4        requester's account will be made.
5        (5) After the requester receives a determination
6    regarding an account dispute in accordance with paragraph
7    (4) of this subsection, the servicer shall allow a process
8    by which the requester can appeal, in writing, the
9    determination. The appeals process shall include:
10            (A) a written acknowledgment notifying the
11        requester that the servicer has commenced the appeals
12        process; such acknowledgment shall be sent within 14
13        calendar days after receiving a written request for
14        appeal from the requester;
15            (B) an independent reassessment of the servicer's
16        determination regarding the account dispute, performed
17        by another employee of the servicer at an equal or
18        higher supervisory level than the employee or
19        employees involved in the initial account dispute
20        determination;
21            (C) investigation and resolution of appeals within
22        30 calendar days after a servicer's commencement of the
23        appeals process; and
24            (D) notification sent to the requester, in
25        writing, documenting the outcome of the appeal,
26        including any reason for denial.

 

 

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1    (d) While a requester has a pending account dispute,
2including any applicable appeal, a servicer shall take
3reasonable steps to:
4        (1) prevent negative credit reporting with respect to
5    the borrower's or cosigner's account while the dispute is
6    under review; and
7        (2) suspend all collection activities on the account
8    while the account dispute is being researched or resolved,
9    if the account dispute is related to the delinquency.
 
10
ARTICLE 10. STUDENT LOAN OMBUDSMAN

 
11    Section 10-5. Student Loan Ombudsman.
12    (a) The position of Student Loan Ombudsman is created
13within the Office of the Attorney General to provide timely
14assistance to student loan borrowers.
15    (b) The Student Loan Ombudsman, in consultation with the
16Secretary, shall:
17        (1) receive, review, and attempt to resolve any
18    complaints from student loan borrowers, including, but not
19    limited to, attempts to resolve complaints in
20    collaboration with institutions of higher education,
21    student loan servicers, and any other participants in
22    student loan lending;
23        (2) compile and analyze data on student loan borrower
24    complaints;

 

 

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1        (3) assist student loan borrowers to understand their
2    rights and responsibilities under the terms of student
3    education loans;
4        (4) provide information to the public, agencies,
5    legislators, and others regarding the problems and
6    concerns of student loan borrowers and make
7    recommendations for resolving those problems and concerns;
8        (5) analyze and monitor the development and
9    implementation of federal, State, and local laws,
10    regulations, and policies relating to student loan
11    borrowers and recommend any changes the Student Loan
12    Ombudsman deems necessary;
13        (6) review the complete student education loan history
14    for any student loan borrower who has provided written
15    consent for such review;
16        (7) disseminate information concerning the
17    availability of the Student Loan Ombudsman to assist
18    student loan borrowers and potential student loan
19    borrowers, as well as public institutions of higher
20    education, student loan servicers, and any other
21    participant in student education loan lending, with any
22    student loan servicing concerns; and
23        (8) take any other actions necessary to fulfill the
24    duties of the Student Loan Ombudsman as set forth in this
25    subsection.
 

 

 

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1
ARTICLE 15. LICENSURE

 
2    Section 15-5. Scope; requirement for student loan
3servicing license.
4    (a) It shall be unlawful for any person to operate as a
5student loan servicer in Illinois except as authorized by this
6Act and without first having obtained a license in accordance
7with this Act.
8    (b) The provisions of this Act do not apply to any of the
9following:
10        (1) a bank, out-of-state bank, Illinois credit union,
11    federal credit union, or out-of-state credit union;
12        (2) a wholly owned subsidiary of any such bank or
13    credit union;
14        (3) an operating subsidiary where each owner of the
15    operating subsidiary is wholly owned by the same bank or
16    credit union;
17        (4) the Illinois Student Assistance Commission;
18        (5) a public postsecondary educational institution or
19    a private nonprofit postsecondary educational institution
20    servicing a student loan it extended to the borrower;
21        (6) a licensed debt management service under the Debt
22    Management Service Act, except to the extent that the
23    organization acts as a subcontractor, affiliate, or
24    service provider for an entity that is otherwise subject to
25    licensure under this Act; or

 

 

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1        (7) any collection agency licensed under the
2    Collection Agency Act that is collecting post-default
3    debt.
 
4    Section 15-10. Licensee name.
5    (a) No person, partnership, association, corporation,
6limited liability company, or other entity engaged in the
7business regulated by this Act shall operate such business
8under a name other than the real names of the entity and
9individuals conducting such business. Such business may in
10addition operate under an assumed corporate name pursuant to
11the Business Corporation Act of 1983, an assumed limited
12liability company name pursuant to the Limited Liability
13Company Act, or an assumed business name pursuant to the
14Assumed Business Name Act.
15    (b) A knowing violation of this Section constitutes an
16unlawful practice within the meaning of this Act and, in
17addition to the administrative relief available under this Act,
18may be prosecuted for the commission of a Class A misdemeanor.
19A person who is convicted of a second or subsequent violation
20of this Section is guilty of a Class 4 felony.
 
21    Section 15-15. Application process; investigation; fees.
22    (a) The Secretary shall issue a license upon completion of
23all of the following:
24        (1) the filing of an application for license with the

 

 

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1    Secretary or the Nationwide Mortgage Licensing System and
2    Registry as approved by the Secretary;
3        (2) the filing with the Secretary of a listing of
4    judgments entered against, and bankruptcy petitions by,
5    the license applicant for the preceding 10 years;
6        (3) the payment, in certified funds, of investigation
7    and application fees, the total of which shall be in an
8    amount equal to $1,000 for an initial application and $800
9    for a background investigation;
10        (4) the filing of an audited balance sheet, including
11    all footnotes prepared by a certified public accountant in
12    accordance with generally accepted accounting principles
13    and generally accepted auditing standards; notwithstanding
14    the requirements of this subsection, an applicant that is a
15    subsidiary may submit audited consolidated financial
16    statements of its parent, intermediary parent, or ultimate
17    parent as long as the consolidated statements are supported
18    by consolidating statements that include the applicant's
19    financial statement; if the consolidating statements are
20    unaudited, the applicant's chief financial officer shall
21    attest to the applicant's financial statements disclosed
22    in the consolidating statements; and
23        (5) an investigation of the averments required by
24    Section 15-30, which investigation must allow the
25    Secretary to issue positive findings stating that the
26    financial responsibility, experience, character, and

 

 

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1    general fitness of the license applicant and of the members
2    thereof if the license applicant is a partnership or
3    association, of the officers and directors thereof if the
4    license applicant is a corporation, and of the managers and
5    members that retain any authority or responsibility under
6    the operating agreement if the license applicant is a
7    limited liability company are such as to command the
8    confidence of the community and to warrant belief that the
9    business will be operated honestly, fairly, and
10    efficiently within the purpose of this Act; if the
11    Secretary does not so find, he or she shall not issue the
12    license, and he or she shall notify the license applicant
13    of the denial.
14    The Secretary may impose conditions on a license if the
15Secretary determines that those conditions are necessary or
16appropriate. These conditions shall be imposed in writing and
17shall continue in effect for the period prescribed by the
18Secretary.
19    (b) All licenses shall be issued to the license applicant.
20Upon receipt of the license, a student loan servicing licensee
21shall be authorized to engage in the business regulated by this
22Act. The license shall remain in full force and effect until it
23expires without renewal, is surrendered by the licensee, or
24revoked or suspended as hereinafter provided.
 
25    Section 15-20. Application form.

 

 

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1    (a) Application for a student loan servicer license must be
2made in accordance with Section 15-40 and, if applicable, in
3accordance with requirements of the Nationwide Mortgage
4Licensing System and Registry. The application shall be in
5writing, under oath, and on a form obtained from and prescribed
6by the Secretary, or may be submitted electronically, with
7attestation, to the Nationwide Mortgage Licensing System and
8Registry.
9    (b) The application shall contain the name and complete
10business and residential address or addresses of the license
11applicant. If the license applicant is a partnership,
12association, corporation, or other form of business
13organization, the application shall contain the names and
14complete business and residential addresses of each member,
15director, and principal officer thereof. The application shall
16also include a description of the activities of the license
17applicant in such detail and for such periods as the Secretary
18may require, including all of the following:
19        (1) an affirmation of financial solvency noting such
20    capitalization requirements as may be required by the
21    Secretary and access to such credit as may be required by
22    the Secretary;
23        (2) an affirmation that the license applicant or its
24    members, directors, or principals, as may be appropriate,
25    are at least 18 years of age;
26        (3) information as to the character, fitness,

 

 

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1    financial and business responsibility, background,
2    experience, and criminal record of any (i) person, entity,
3    or ultimate equitable owner that owns or controls, directly
4    or indirectly, 10% or more of any class of stock of the
5    license applicant; (ii) person, entity, or ultimate
6    equitable owner that is not a depository institution, as
7    defined in Section 1007.50 of the Savings Bank Act, that
8    lends, provides, or infuses, directly or indirectly, in any
9    way, funds to or into a license applicant in an amount
10    equal to or more than 10% of the license applicant's net
11    worth; (iii) person, entity, or ultimate equitable owner
12    that controls, directly or indirectly, the election of 25%
13    or more of the members of the board of directors of a
14    license applicant; or (iv) person, entity, or ultimate
15    equitable owner that the Secretary finds influences
16    management of the license applicant;
17        (4) upon written request by the licensee and
18    notwithstanding the provisions of paragraphs (1), (2), and
19    (3) of this subsection, the Secretary may permit the
20    licensee to omit all or part of the information required by
21    those paragraphs if, in lieu of the omitted information,
22    the licensee submits an affidavit stating that the
23    information submitted on the licensee's previous renewal
24    application is still true and accurate; the Secretary may
25    adopt rules prescribing the form and content of the
26    affidavit that are necessary to accomplish the purposes of

 

 

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

 

 

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

 

 

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1requesting and distributing information to and from any source
2as directed by the Secretary.
 
3    Section 15-30. Averments of licensee. Each application for
4license shall be accompanied by the following averments stating
5that the applicant:
6        (1) will file with the Secretary or Nationwide Mortgage
7    Licensing System and Registry, as applicable, when due, any
8    report or reports that it is required to file under any of
9    the provisions of this Act;
10        (2) has not committed a crime against the law of this
11    State, any other state, or of the United States involving
12    moral turpitude or fraudulent or dishonest dealing, and
13    that no final judgment has been entered against it in a
14    civil action upon grounds of fraud, misrepresentation, or
15    deceit that has not been previously reported to the
16    Secretary;
17        (3) has not engaged in any conduct that would be cause
18    for denial of a license;
19        (4) has not become insolvent;
20        (5) has not submitted an application for a license
21    under this Act that contains a material misstatement;
22        (6) has not demonstrated by course of conduct,
23    negligence or incompetence in performing any act for which
24    it is required to hold a license under this Act;
25        (7) will advise the Secretary in writing or the

 

 

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1    Nationwide Mortgage Licensing System and Registry, as
2    applicable, of any changes to the information submitted on
3    the most recent application for license or averments of
4    record within 30 days of the change; the written notice
5    must be signed in the same form as the application for the
6    license being amended;
7        (8) will comply with the provisions of this Act and
8    with any lawful order, rule, or regulation made or issued
9    under the provisions of this Act;
10        (9) will submit to periodic examination by the
11    Secretary as required by this Act; and
12        (10) will advise the Secretary in writing of judgments
13    entered against and bankruptcy petitions by the license
14    applicant within 5 days after the occurrence.
15    A licensee who fails to fulfill the obligations of an
16averment, fails to comply with averments made, or otherwise
17violates any of the averments made under this Section shall be
18subject to the penalties of this Act.
 
19    Section 15-35. Refusal to issue license. The Secretary
20shall refuse to issue or renew a license if:
21        (1) it is determined that the applicant is not in
22    compliance with any provisions of this Act;
23        (2) there is substantial continuity between the
24    applicant and any violator of this Act; or
25        (3) the Secretary cannot make the findings specified in

 

 

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1    subsection (a) of Section 15-15 of this Act.
 
2    Section 15-40. License issuance and renewal; fees.
3    (a) Licenses shall be renewed every year using the common
4renewal date of the Nationwide Mortgage Licensing System and
5Registry, as adopted by the Secretary. Properly completed
6renewal application forms and filing fees may be received by
7the Secretary 60 days prior to the license expiration date,
8but, to be deemed timely, the completed renewal application
9forms and filing fees must be received by the Secretary no
10later than 30 days prior to the license expiration date.
11    (b) It shall be the responsibility of each licensee to
12accomplish renewal of its license. Failure by a licensee to
13submit a properly completed renewal application form and fees
14in a timely fashion, absent a written extension from the
15Secretary, shall result in the license becoming inactive.
16    (c) No activity regulated by this Act shall be conducted by
17the licensee when a license becomes inactive. An inactive
18license may be reactivated by the Secretary upon payment of the
19renewal fee and payment of a reactivation fee equal to the
20renewal fee.
21    (d) A licensee ceasing an activity or activities regulated
22by this Act and desiring to no longer be licensed shall so
23inform the Secretary in writing and, at the same time, convey
24any license issued and all other symbols or indicia of
25licensure. The licensee shall include a plan for the withdrawal

 

 

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1from regulated business, including a timetable for the
2disposition of the business, and comply with the surrender
3guidelines or requirements of the Secretary. Upon receipt of
4such written notice, the Secretary shall post the cancellation
5or issue a certified statement canceling the license.
 
6
ARTICLE 20. SUPERVISION

 
7    Section 20-5. Functions; powers; duties. The functions,
8powers, and duties of the Secretary shall include the
9following:
10        (1) to issue or refuse to issue any license as provided
11    by this Act;
12        (2) to revoke or suspend for cause any license issued
13    under this Act;
14        (3) to keep records of all licenses issued under this
15    Act;
16        (4) to receive, consider, investigate, and act upon
17    complaints made by any person in connection with any
18    student loan servicing licensee in this State;
19        (5) to prescribe the forms of and receive:
20            (A) applications for licenses; and
21            (B) all reports and all books and records required
22        to be made by any licensee under this Act, including
23        annual audited financial statements and annual reports
24        of student loan activity;

 

 

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1        (6) to adopt rules necessary and proper for the
2    administration of this Act;
3        (7) to subpoena documents and witnesses and compel
4    their attendance and production, to administer oaths, and
5    to require the production of any books, papers, or other
6    materials relevant to any inquiry authorized by this Act;
7        (8) to issue orders against any person if the Secretary
8    has reasonable cause to believe that an unsafe, unsound, or
9    unlawful practice has occurred, is occurring, or is about
10    to occur; if any person has violated, is violating, or is
11    about to violate any law, rule, or written agreement with
12    the Secretary; or for the purpose of administering the
13    provisions of this Act and any rule adopted in accordance
14    with this Act;
15        (9) to address any inquiries to any licensee, or the
16    officers thereof, in relation to its activities and
17    conditions, or any other matter connected with its affairs,
18    and it shall be the duty of any licensee or person so
19    addressed to promptly reply in writing to those inquiries;
20    the Secretary may also require reports from any licensee at
21    any time the Secretary may deem desirable;
22        (10) to examine the books and records of every licensee
23    under this Act;
24        (11) to enforce provisions of this Act;
25        (12) to levy fees, fines, and charges for services
26    performed in administering this Act; the aggregate of all

 

 

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1    fees collected by the Secretary on and after the effective
2    date of this Act shall be paid promptly after receipt,
3    accompanied by a detailed statement thereof, into the Bank
4    and Trust Company Fund under Section 20-10; the amounts
5    deposited into that Fund shall be used for the ordinary and
6    contingent expenses of the Department; nothing in this Act
7    shall prevent the continuation of the practice of paying
8    expenses involving salaries, retirement, social security,
9    and State-paid insurance of State officers by
10    appropriation from the General Revenue Fund;
11        (13) to appoint examiners, supervisors, experts, and
12    special assistants as needed to effectively and
13    efficiently administer this Act;
14        (14) to conduct hearings for the purpose of:
15            (A) appeals of orders of the Secretary;
16            (B) suspensions or revocations of licenses, or
17        fining of licensees;
18            (C) investigating:
19                (i) complaints against licensees; or
20                (ii) annual gross delinquency rates; and
21            (D) carrying out the purposes of this Act;
22        (15) to exercise exclusive visitorial power over a
23    licensee unless otherwise authorized by this Act or as
24    vested in the courts, or upon prior consultation with the
25    Secretary, a foreign student loan servicing regulator with
26    an appropriate supervisory interest in the parent or

 

 

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1    affiliate of a licensee;
2        (16) to enter into cooperative agreements with state
3    regulatory authorities of other states to provide for
4    examination of corporate offices or branches of those
5    states and to accept reports of such examinations;
6        (17) to assign an examiner or examiners to monitor the
7    affairs of a licensee with whatever frequency the Secretary
8    determines appropriate and to charge the licensee for
9    reasonable and necessary expenses of the Secretary if in
10    the opinion of the Secretary an emergency exists or appears
11    likely to occur;
12        (18) to impose civil penalties of up to $50 per day
13    against a licensee for failing to respond to a regulatory
14    request or reporting requirement; and
15        (19) to enter into agreements in connection with the
16    Nationwide Mortgage Licensing System and Registry.
 
17    Section 20-10. Bank and Trust Company Fund. All moneys
18received by the Secretary under this Act in conjunction with
19the provisions relating to student loan servicers shall be paid
20into and all expenses incurred by the Secretary under this Act
21in conjunction with the provisions relating to student loan
22servicers shall be paid from the Bank and Trust Company Fund.
 
23    Section 20-15. Examination; prohibited activities.
24    (a) The business affairs of a licensee under this Act shall

 

 

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1be examined for compliance with this Act as often as the
2Secretary deems necessary and proper. The Secretary may adopt
3rules with respect to the frequency and manner of examination.
4The Secretary shall appoint a suitable person to perform such
5examination. The Secretary and his or her appointees may
6examine the entire books, records, documents, and operations of
7each licensee and its subsidiary, affiliate, or agent, and may
8examine any of the licensee's or its subsidiary's, affiliate's,
9or agent's officers, directors, employees, and agents under
10oath.
11    (b) The Secretary shall prepare a sufficiently detailed
12report of each licensee's examination, shall issue a copy of
13such report to each licensee's principals, officers, or
14directors, and shall take appropriate steps to ensure
15correction of violations of this Act.
16    (c) Affiliates of a licensee shall be subject to
17examination by the Secretary on the same terms as the licensee,
18but only when reports from or examination of a licensee
19provides for documented evidence of unlawful activity between a
20licensee and affiliate benefiting, affecting, or deriving from
21the activities regulated by this Act.
22    (d) The expenses of any examination of the licensee and
23affiliates shall be borne by the licensee and assessed by the
24Secretary as may be established by rule.
25    (e) Upon completion of the examination, the Secretary shall
26issue a report to the licensee. All confidential supervisory

 

 

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1information, including the examination report and the work
2papers of the report, shall belong to the Secretary's office
3and may not be disclosed to anyone other than the licensee, law
4enforcement officials or other regulatory agencies that have an
5appropriate regulatory interest as determined by the
6Secretary, or to a party presenting a lawful subpoena to the
7Department. The Secretary may, through the Attorney General,
8immediately appeal to the court of jurisdiction the disclosure
9of such confidential supervisory information and seek a stay of
10the subpoena pending the outcome of the appeal. Reports
11required of licensees by the Secretary under this Act and
12results of examinations performed by the Secretary under this
13Act shall be the property of only the Secretary, but may be
14shared with the licensee. Access under this Act to the books
15and records of each licensee shall be limited to the Secretary
16and his or her agents as provided in this Act and to the
17licensee and its authorized agents and designees. No other
18person shall have access to the books and records of a licensee
19under this Act. Any person upon whom a demand for production of
20confidential supervisory information is made, whether by
21subpoena, order, or other judicial or administrative process,
22must withhold production of the confidential supervisory
23information and must notify the Secretary of the demand, at
24which time the Secretary is authorized to intervene for the
25purpose of enforcing the limitations of this Section or seeking
26the withdrawal or termination of the attempt to compel

 

 

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1production of the confidential supervisory information. The
2Secretary may impose any conditions and limitations on the
3disclosure of confidential supervisory information that are
4necessary to protect the confidentiality of that information.
5Except as authorized by the Secretary, no person obtaining
6access to confidential supervisory information may make a copy
7of the confidential supervisory information. The Secretary may
8condition a decision to disclose confidential supervisory
9information on entry of a protective order by the court or
10administrative tribunal presiding in the particular case or on
11a written agreement of confidentiality. In a case in which a
12protective order or agreement has already been entered between
13parties other than the Secretary, the Secretary may
14nevertheless condition approval for release of confidential
15supervisory information upon the inclusion of additional or
16amended provisions in the protective order. The Secretary may
17authorize a party who obtained the records for use in one case
18to provide them to another party in another case, subject to
19any conditions that the Secretary may impose on either or both
20parties. The requester shall promptly notify other parties to a
21case of the release of confidential supervisory information
22obtained and, upon entry of a protective order, shall provide
23copies of confidential supervisory information to the other
24parties.
25    (f) The Secretary and employees of the Department shall be
26subject to the restrictions provided in Section 2.5 of the

 

 

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1Division of Banking Act, including, without limitation, the
2restrictions on (i) owning shares of stock or holding any other
3equity interest in an entity regulated under this Act or in any
4corporation or company that owns or controls an entity
5regulated under this Act; (ii) being an officer, director,
6employee, or agent of an entity regulated under this Act; and
7(iii) obtaining a loan or accepting a gratuity from an entity
8regulated under this Act.
9    (g) After the initial examination for those licensees whose
10only student loan activity is servicing fewer than 1,000
11Illinois student loans, the examination required in subsection
12(a) may be waived upon submission of a letter from the
13licensee's independent certified auditor that the licensee
14serviced fewer than 1,000 Illinois student loans during the
15year in which the audit was performed.
 
16    Section 20-20. Subpoena power of the Secretary.
17    (a) The Secretary shall have the power to issue and to
18serve subpoenas and subpoenas duces tecum to compel the
19attendance of witnesses and the production of all books,
20accounts, records, and other documents and materials relevant
21to an examination or investigation. The Secretary, or his or
22her duly authorized representative, shall have power to
23administer oaths and affirmations to any person.
24    (b) In the event of noncompliance with a subpoena or
25subpoena duces tecum issued or caused to be issued by the

 

 

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1Secretary, the Secretary may, through the Attorney General,
2petition the circuit court of the county in which the person
3subpoenaed resides or has its principal place of business for
4an order requiring the subpoenaed person to appear and testify
5and to produce such books, accounts, records, and other
6documents as are specified in the subpoena duces tecum. The
7court may grant injunctive relief restraining the person from
8advertising, promoting, soliciting, entering into, offering to
9enter into, continuing, or completing any student loan
10servicing transaction. The court may grant other relief,
11including, but not limited to, the restraint, by injunction or
12appointment of a receiver, of any transfer, pledge, assignment,
13or other disposition of the person's assets or any concealment,
14alteration, destruction, or other disposition of books,
15accounts, records, or other documents and materials as the
16court deems appropriate, until the person has fully complied
17with the subpoena or subpoena duces tecum and the Secretary has
18completed an investigation or examination.
19    (c) If it appears to the Secretary that the compliance with
20a subpoena or subpoena duces tecum issued or caused to be
21issued by the Secretary pursuant to this Section is essential
22to an investigation or examination, the Secretary, in addition
23to the other remedies provided for in this Act, may, through
24the Attorney General, apply for relief to the circuit court of
25the county in which the subpoenaed person resides or has its
26principal place of business. The court shall thereupon direct

 

 

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1the issuance of an order against the subpoenaed person
2requiring sufficient bond conditioned on compliance with the
3subpoena or subpoena duces tecum. The court shall cause to be
4endorsed on the order a suitable amount of bond or payment
5pursuant to which the person named in the order shall be freed,
6having a due regard to the nature of the case.
7    (d) In addition, the Secretary may, through the Attorney
8General, seek a writ of attachment or an equivalent order from
9the circuit court having jurisdiction over the person who has
10refused to obey a subpoena, who has refused to give testimony,
11or who has refused to produce the matters described in the
12subpoena duces tecum.
 
13    Section 20-25. Report required of licensee; false
14statements; delay; penalties.
15    (a) In addition to any reports required under this Act,
16every licensee shall file any other report the Secretary
17requests.
18    (b) Any licensee or any officer, director, employee, or
19agent of any licensee who fails to file any report required by
20this Act, including those under subsection (a), or who
21deliberately, willfully, or knowingly makes, subscribes to, or
22causes to be made any false entry with intent to deceive the
23Secretary or his or her appointees or who purposely causes
24unreasonable delay in filing such reports, shall be guilty of a
25Class 4 Felony.
 

 

 

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1    Section 20-30. Suspension; revocation of licenses; fines.
2    (a) Upon written notice to a licensee, the Secretary may
3suspend or revoke any license issued pursuant to this Act if,
4in the notice, he or she makes a finding of one or more of the
5following:
6        (1) that through separate acts or an act or a course of
7    conduct, the licensee has violated any provisions of this
8    Act, any rule adopted by the Secretary, or any other law,
9    rule, or regulation of this State or the United States;
10        (2) that any fact or condition exists that, if it had
11    existed at the time of the original application for the
12    license, would have warranted the Secretary in refusing
13    originally to issue the license; or
14        (3) that if a licensee is other than an individual, any
15    ultimate equitable owner, officer, director, or member of
16    the licensed partnership, association, corporation, or
17    other entity has acted or failed to act in a way that would
18    be cause for suspending or revoking a license to that party
19    as an individual.
20    (b) No license shall be suspended or revoked, except as
21provided in this Section, nor shall any licensee be fined
22without notice of his or her right to a hearing as provided in
23Section 20-65 of this Act.
24    (c) The Secretary, on good cause shown that an emergency
25exists, may suspend any license for a period not exceeding 180

 

 

10000SB1351sam002- 44 -LRB100 10505 SMS 25327 a

1days, pending investigation.
2    (d) The provisions of subsection (d) of Section 15-40 of
3this Act shall not affect a licensee's civil or criminal
4liability for acts committed prior to surrender of a license.
5    (e) No revocation, suspension, or surrender of any license
6shall impair or affect the obligation of any pre-existing
7lawful contract between the licensee and any person.
8    (f) Every license issued under this Act shall remain in
9force and effect until the license expires without renewal, is
10surrendered, is revoked, or is suspended in accordance with the
11provisions of this Act, but the Secretary shall have authority
12to reinstate a suspended license or to issue a new license to a
13licensee whose license has been revoked if no fact or condition
14then exists which would have warranted the Secretary in
15refusing originally to issue that license under this Act.
16    (g) Whenever the Secretary revokes or suspends a license
17issued pursuant to this Act or fines a licensee under this Act,
18he or she shall execute a written order to that effect. The
19Secretary shall post notice of the order on an agency Internet
20site maintained by the Secretary or on the Nationwide Mortgage
21Licensing System and Registry and shall serve a copy of the
22order upon the licensee. Any such order may be reviewed in the
23manner provided by Section 20-65 of this Act.
24    (h) If the Secretary finds any person in violation of the
25grounds set forth in subsection (i), he or she may enter an
26order imposing one or more of the following penalties:

 

 

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1        (1) revocation of license;
2        (2) suspension of a license subject to reinstatement
3    upon satisfying all reasonable conditions the Secretary
4    may specify;
5        (3) placement of the licensee or applicant on probation
6    for a period of time and subject to all reasonable
7    conditions as the Secretary may specify;
8        (4) issuance of a reprimand;
9        (5) imposition of a fine not to exceed $25,000 for each
10    count of separate offense; except that a fine may be
11    imposed not to exceed $75,000 for each separate count of
12    offense of paragraph (2) of subsection (i) of this Section;
13    or
14        (6) denial of a license.
15    (i) The following acts shall constitute grounds for which
16the disciplinary actions specified in subsection (h) may be
17taken:
18        (1) being convicted or found guilty, regardless of
19    pendency of an appeal, of a crime in any jurisdiction that
20    involves fraud, dishonest dealing, or any other act of
21    moral turpitude;
22        (2) fraud, misrepresentation, deceit, or negligence in
23    any student loan transaction;
24        (3) a material or intentional misstatement of fact on
25    an initial or renewal application;
26        (4) insolvency or filing under any provision of the

 

 

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1    federal Bankruptcy Code as a debtor;
2        (5) failure to account or deliver to any person any
3    property, such as any money, fund, deposit, check, draft,
4    or other document or thing of value, that has come into his
5    or her hands and that is not his or her property or that he
6    or she is not in law or equity entitled to retain, under
7    the circumstances and at the time which has been agreed
8    upon or is required by law or, in the absence of a fixed
9    time, upon demand of the person entitled to such accounting
10    and delivery;
11        (6) failure to disburse funds in accordance with
12    agreements;
13        (7) having a license, or the equivalent, to practice
14    any profession or occupation revoked, suspended, or
15    otherwise acted against, including the denial of licensure
16    by a licensing authority of this State or another state,
17    territory, or country for fraud, dishonest dealing, or any
18    other act of moral turpitude;
19        (8) failure to comply with an order of the Secretary or
20    rule made or issued under the provisions of this Act;
21        (9) engaging in activities regulated by this Act
22    without a current, active license unless specifically
23    exempted by this Act;
24        (10) failure to pay in a timely manner any fee, charge,
25    or fine under this Act;
26        (11) failure to maintain, preserve, and keep available

 

 

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1    for examination all books, accounts, or other documents
2    required by the provisions of this Act and the rules of the
3    Secretary;
4        (12) refusing, obstructing, evading, or unreasonably
5    delaying an investigation, information request, or
6    examination authorized under this Act, or refusing,
7    obstructing, evading, or unreasonably delaying compliance
8    with the Secretary's subpoena or subpoena duces tecum; and
9        (13) failure to comply with or a violation of any
10    provision of this Act.
11    (j) A licensee shall be subject to the disciplinary actions
12specified in this Act for violations of subsection (i) by any
13officer, director, shareholder, joint venture, partner,
14ultimate equitable owner, or employee of the licensee.
15    (k) A licensee shall be subject to suspension or revocation
16for unauthorized employee actions only if there is a pattern of
17repeated violations by employees or the licensee has knowledge
18of the violations or there is substantial harm to a consumer.
19    (l) Procedures for surrender of a license include the
20following:
21        (1) The Secretary may, after 10 days' notice by
22    certified mail to the licensee at the address set forth on
23    the license, stating the contemplated action and in general
24    the grounds for the contemplated action and the date, time,
25    and place of a hearing thereon, and after providing the
26    licensee with a reasonable opportunity to be heard prior to

 

 

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1    such action, fine such licensee an amount not exceeding
2    $25,000 per violation, or revoke or suspend any license
3    issued under this Act if he or she finds that:
4            (i) the licensee has failed to comply with any
5        provision of this Act or any order, decision, finding,
6        rule, regulation, or direction of the Secretary
7        lawfully made pursuant to the authority of this Act; or
8            (ii) any fact or condition exists that, if it had
9        existed at the time of the original application for the
10        license, clearly would have warranted the Secretary in
11        refusing to issue the license.
12        (2) Any licensee may submit an application to surrender
13    a license, but, upon the Secretary approving the surrender,
14    it shall not affect the licensee's civil or criminal
15    liability for acts committed prior to surrender or entitle
16    the licensee to a return of any part of the license fee.
 
17    Section 20-35. Investigation of complaints. The Secretary
18shall at all times maintain staff and facilities adequate to
19receive, record, and investigate complaints and inquiries made
20by any person concerning this Act and any licensees under this
21Act. Each licensee shall open its books, records, documents,
22and offices wherever situated to the Secretary or his or her
23appointees as needed to facilitate such investigations.
 
24    Section 20-40. Additional investigation and examination

 

 

10000SB1351sam002- 49 -LRB100 10505 SMS 25327 a

1authority. In addition to any authority allowed under this Act,
2the Secretary shall have the authority to conduct
3investigations and examinations as follows:
4        (1) For purposes of initial licensing, license
5    renewal, license suspension, license conditioning, license
6    revocation or termination, or general or specific inquiry
7    or investigation to determine compliance with this Act, the
8    Secretary shall have the authority to access, receive, and
9    use any books, accounts, records, files, documents,
10    information, or evidence, including, but not limited to,
11    the following:
12            (A) criminal, civil, and administrative history
13        information, including nonconviction data as specified
14        in the Criminal Code of 2012;
15            (B) personal history and experience information,
16        including independent credit reports obtained from a
17        consumer reporting agency described in Section 603(p)
18        of the federal Fair Credit Reporting Act; and
19            (C) any other documents, information, or evidence
20        the Secretary deems relevant to the inquiry or
21        investigation, regardless of the location, possession,
22        control, or custody of the documents, information, or
23        evidence.
24        (2) For the purposes of investigating violations or
25    complaints arising under this Act or for the purposes of
26    examination, the Secretary may review, investigate, or

 

 

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1    examine any licensee, individual, or person subject to this
2    Act as often as necessary in order to carry out the
3    purposes of this Act. The Secretary may direct, subpoena,
4    or order the attendance of and examine under oath all
5    persons whose testimony may be required about the loans or
6    the business or subject matter of any such examination or
7    investigation, and may direct, subpoena, or order the
8    person to produce books, accounts, records, files, and any
9    other documents the Secretary deems relevant to the
10    inquiry.
11        (3) Each licensee, individual, or person subject to
12    this Act shall make available to the Secretary upon request
13    the books and records relating to the operations of the
14    licensee, individual, or person subject to this Act. The
15    Secretary shall have access to those books and records and
16    interview the officers, principals, employees, independent
17    contractors, agents, and customers of the licensee,
18    individual, or person subject to this Act concerning their
19    business.
20        (4) Each licensee, individual, or person subject to
21    this Act shall make or compile reports or prepare other
22    information as directed by the Secretary in order to carry
23    out the purposes of this Section, including, but not
24    limited to:
25            (A) accounting compilations;
26            (B) information lists and data concerning loan

 

 

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1        transactions in a format prescribed by the Secretary;
2        or
3            (C) other information deemed necessary to carry
4        out the purposes of this Section.
5        (5) In making any examination or investigation
6    authorized by this Act, the Secretary may control access to
7    any documents and records of the licensee or person under
8    examination or investigation. The Secretary may take
9    possession of the documents and records or place a person
10    in exclusive charge of the documents and records in the
11    place where they are usually kept. During the period of
12    control, no person shall remove or attempt to remove any of
13    the documents or records, except pursuant to a court order
14    or with the consent of the Secretary. Unless the Secretary
15    has reasonable grounds to believe the documents or records
16    of the licensee have been, or are at risk of being altered
17    or destroyed for purposes of concealing a violation of this
18    Act, the licensee or owner of the documents and records
19    shall have access to the documents or records as necessary
20    to conduct its ordinary business affairs.
21        (6) In order to carry out the purposes of this Section,
22    the Secretary may:
23            (A) retain attorneys, accountants, or other
24        professionals and specialists as examiners, auditors,
25        or investigators to conduct or assist in the conduct of
26        examinations or investigations;

 

 

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1            (B) enter into agreements or relationships with
2        other government officials or regulatory associations
3        in order to improve efficiencies and reduce regulatory
4        burden by sharing resources, standardized or uniform
5        methods or procedures, and documents, records,
6        information, or evidence obtained under this Section;
7            (C) use, hire, contract, or employ public or
8        privately available analytical systems, methods, or
9        software to examine or investigate the licensee,
10        individual, or person subject to this Act;
11            (D) accept and rely on examination or
12        investigation reports made by other government
13        officials, within or outside this State; or
14            (E) accept audit reports made by an independent
15        certified public accountant for the licensee,
16        individual, or person subject to this Act in the course
17        of that part of the examination covering the same
18        general subject matter as the audit and may incorporate
19        the audit report in the report of the examination,
20        report of investigation, or other writing of the
21        Secretary.
22        (7) The authority of this Section shall remain in
23    effect, whether such a licensee, individual, or person
24    subject to this Act acts or claims to act under any
25    licensing or registration law of this State or claims to
26    act without the authority.

 

 

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1        (8) No licensee, individual, or person subject to
2    investigation or examination under this Section may
3    knowingly withhold, abstract, remove, mutilate, destroy,
4    or secrete any books, records, computer records, or other
5    information.
 
6    Section 20-45. Confidential information. In hearings
7conducted under this Act, information presented into evidence
8that was acquired by the licensee when serving any individual
9in connection with a student loan, including all financial
10information of the individual, shall be deemed strictly
11confidential and shall be made available only as part of the
12record of a hearing under this Act or otherwise (i) when the
13record is required, in its entirety, for purposes of judicial
14review or (ii) upon the express written consent of the
15individual served, or in the case of his or her death or
16disability, the consent of his or her personal representative.
 
17    Section 20-50. Confidentiality.
18    (a) In order to promote more effective regulation and
19reduce regulatory burden through supervisory information
20sharing, except as otherwise provided in federal Public Law
21110-289, Section 1512, the requirements under any federal law
22or State law regarding the privacy or confidentiality of any
23information or material provided to the Nationwide Mortgage
24Licensing System and Registry, and any privilege arising under

 

 

10000SB1351sam002- 54 -LRB100 10505 SMS 25327 a

1federal or State law, including the rules of any federal or
2State court, with respect to such information or material,
3shall continue to apply to information or material after the
4information or material has been disclosed to the Nationwide
5Mortgage Licensing System and Registry. The information and
6material may be shared with all State and federal regulatory
7officials with student loan industry oversight authority
8without the loss of privilege or the loss of confidentiality
9protections provided by federal law or State law.
10    (b) In order to promote more effective regulation and
11reduce regulatory burden through supervisory information
12sharing, the Secretary is authorized to enter agreements or
13sharing arrangements with other governmental agencies, the
14Conference of State Bank Supervisors or other associations
15representing governmental agencies as established by rule,
16regulation, or order of the Secretary. The sharing of
17confidential supervisory information or any information or
18material described in subsection (a) of this Section pursuant
19to an agreement or sharing arrangement shall not result in the
20loss of privilege or the loss of confidentiality protections
21provided by federal law or State law.
22    (c) In order to promote more effective regulation and
23reduce regulatory burden through supervisory information
24sharing, information or material that is subject to a privilege
25or confidentiality under subsection (a) of this Section shall
26not be subject to the following:

 

 

10000SB1351sam002- 55 -LRB100 10505 SMS 25327 a

1        (1) disclosure under any State law governing the
2    disclosure to the public of information held by an officer
3    or an agency of the State; or
4        (2) subpoena or discovery, or admission into evidence,
5    in any private civil action or administrative process,
6    unless with respect to any privilege held by the Nationwide
7    Mortgage Licensing System and Registry with respect to the
8    information or material, the person to whom such
9    information or material pertains waives, in whole or in
10    part, in the discretion of that person, that privilege.
11    (d) In order to promote more effective regulation and
12reduce regulatory burden through supervisory information
13sharing, any other law relating to the disclosure of
14confidential supervisory information or any information or
15material described in subsection (a) of this Section that is
16inconsistent with subsection (a) of this Section shall be
17superseded by the requirements of this Section to the extent
18the other law provides less confidentiality or a weaker
19privilege.
 
20    Section 20-55. Reports of violations. Any person licensed
21under this Act or any other person may report to the Secretary
22any information to show that a person subject to this Act is or
23may be in violation of this Act. A licensee who files a report
24with the Department that another licensee is engaged in one or
25more violations pursuant to this Act shall not be the subject

 

 

10000SB1351sam002- 56 -LRB100 10505 SMS 25327 a

1of disciplinary action by the Department, unless the Department
2determines, by a preponderance of the evidence available to the
3Department, that the reporting person knowingly and willingly
4participated in the violation that was reported.
 
5    Section 20-60. Rules and regulations of the Secretary.
6    (a) In addition to such powers as may be prescribed by this
7Act, the Secretary is hereby authorized and empowered to adopt
8rules consistent with the purposes of this Act, including, but
9not limited to:
10        (1) rules in connection with the activities of
11    licensees as may be necessary and appropriate for the
12    protection of consumers in this State;
13        (2) rules as may be necessary and appropriate to define
14    improper or fraudulent business practices in connection
15    with the activities of licensees in servicing student
16    loans;
17        (3) rules that define the terms used in this Act and as
18    may be necessary and appropriate to interpret and implement
19    the provisions of this Act; and
20        (4) rules as may be necessary for the enforcement of
21    this Act.
22    (b) The Secretary is hereby authorized and empowered to
23make specific rulings, demands, and findings that he or she
24deems necessary for the proper conduct of the student loan
25servicing industry.

 

 

10000SB1351sam002- 57 -LRB100 10505 SMS 25327 a

1    (c) A person or entity may make a written application to
2the Department for a written interpretation of this Act. The
3Department may then, in its sole discretion, choose to issue a
4written interpretation. To be valid, a written interpretation
5must be signed by the Secretary, or his or her designee, and
6the Department's General Counsel. A written interpretation
7expires 2 years after the date that it was issued.
8    (d) No provision in this Act that imposes liability or
9establishes violations shall apply to any act taken by a person
10or entity in conformity with a written interpretation of this
11Act that is in effect at the time the act is taken,
12notwithstanding whether the written interpretation is later
13amended, rescinded, or determined be judicial or other
14authority to be invalid for any reason.
 
15    Section 20-65. Appeal and review.
16    (a) Any person or entity affected by a decision of the
17Secretary under any provision of this Act may obtain review of
18that decision within the Department.
19    (b) The Secretary may, in accordance with the Illinois
20Administrative Procedure Act, adopt rules to provide for review
21within the Department of his or her decisions affecting the
22rights of entities under this Act. The review shall provide
23for, at a minimum:
24        (1) appointment of a hearing officer other than a
25    regular employee of the Department;

 

 

10000SB1351sam002- 58 -LRB100 10505 SMS 25327 a

1        (2) appropriate procedural rules, specific deadlines
2    for filings, and standards of evidence and of proof; and
3        (3) provision for apportioning costs among parties to
4    the appeal.
5    (c) All final agency determinations of appeals to decisions
6of the Secretary may be reviewed in accordance with and under
7the provisions of the Administrative Review Law. Appeals from
8all final orders and judgments entered by a court in review of
9any final administrative decision of the Secretary or of any
10final agency review of a decision of the Secretary may be taken
11as in other civil cases.
 
12    Section 20-70. Violations of this Act; Secretary's orders.
13If the Secretary finds, as the result of examination,
14investigation, or review of reports submitted by a licensee,
15that the business and affairs of a licensee are not being
16conducted in accordance with this Act, the Secretary shall
17notify the licensee of the correction necessary. If a licensee
18fails to correct such violations, the Secretary shall issue an
19order requiring immediate correction and compliance with this
20Act, specifying a reasonable date for performance.
21    The Secretary may adopt rules to provide for an orderly and
22timely appeal of all orders within the Department. The rules
23may include provision for assessment of fees and costs.
 
24    Section 20-75. Collection of compensation. Unless exempt

 

 

10000SB1351sam002- 59 -LRB100 10505 SMS 25327 a

1from licensure under this Act, no person engaged in or offering
2to engage in any act or service for which a license under this
3Act is required may bring or maintain any action in any court
4of this State to collect compensation for the performance of
5the licensable services without alleging and proving that he or
6she was the holder of a valid student loan servicing license
7under this Act at all times during the performance of those
8services.
 
9    Section 20-80. Licensure fees.
10    (a) The fees for licensure shall be a $1,000 application
11fee and an additional $800 fee for investigation performed in
12conjunction with Section 15-5. The fees are nonrefundable.
13    (b) The fee for an application renewal shall be $1,000. The
14fee is nonrefundable.
 
15    Section 20-85. Injunction. The Secretary, through the
16Attorney General, may maintain an action in the name of the
17people of the State of Illinois and may apply for an injunction
18in the circuit court to enjoin a person from engaging in
19unlicensed student loan servicing activity.
 
20
ARTICLE 25. CONSUMER FRAUD AND DECEPTIVE BUSINESS
21
PRACTICES ACT

 
22    Section 25-5. Enforcement; Consumer Fraud and Deceptive

 

 

10000SB1351sam002- 60 -LRB100 10505 SMS 25327 a

1Business Practices Act. The Attorney General may enforce a
2violation of Article 5 of this Act as an unlawful practice
3under the Consumer Fraud and Deceptive Business Practices Act.
 
4
ARTICLE 99. SEVERABILITY; EFFECTIVE DATE

 
5    Section 99-1. Severability. The provisions of this Act are
6severable under Section 1.31 of the Statute on Statutes.
 
7    Section 99-99. Effective date. This Act takes effect
8December 31, 2018.".