Bill Text: IL HB4521 | 2011-2012 | 97th General Assembly | Chaptered

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

Spectrum: Partisan Bill (Democrat 11-0)

Status: (Passed) 2012-08-03 - Public Act . . . . . . . . . 97-0891 [HB4521 Detail]

Download: Illinois-2011-HB4521-Chaptered.html

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Public Act 097-0891
HB4521 Enrolled LRB097 19725 PJG 64984 b
AN ACT concerning residential mortgages.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Residential Mortgage License Act of 1987 is
amended by changing Sections 1-4, 2-2, 2-4, 3-2, 4-5, 4-8.2,
7-1A, 7-11, and 7-13 and by adding Section 2-3A as follows:
(205 ILCS 635/1-4)
Sec. 1-4. Definitions.
(a) "Residential real property" or "residential real
estate" shall mean any real property located in Illinois, upon
which is constructed or intended to be constructed a dwelling.
(b) "Making a residential mortgage loan" or "funding a
residential mortgage loan" shall mean for compensation or gain,
either directly or indirectly, advancing funds or making a
commitment to advance funds to a loan applicant for a
residential mortgage loan.
(c) "Soliciting, processing, placing, or negotiating a
residential mortgage loan" shall mean for compensation or gain,
either directly or indirectly, accepting or offering to accept
an application for a residential mortgage loan, assisting or
offering to assist in the processing of an application for a
residential mortgage loan on behalf of a borrower, or
negotiating or offering to negotiate the terms or conditions of

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

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

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

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

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

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

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

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

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

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

or negotiates a residential mortgage loan. This definition
applies only to Section 7-1 of this Act.
(ii) "Confidential supervisory information" means any
report of examination, visitation, or investigation prepared
by the Commissioner under this Act, any report of examination
visitation, or investigation prepared by the state regulatory
authority of another state that examines a licensee, any
document or record prepared or obtained in connection with or
relating to any examination, visitation, or investigation, and
any record prepared or obtained by the Commissioner to the
extent that the record summarizes or contains information
derived from any report, document, or record described in this
subsection. "Confidential supervisory information" does not
include any information or record routinely prepared by a
licensee and maintained in the ordinary course of business or
any information or record that is required to be made publicly
available pursuant to State or federal law or rule.
(jj) "Mortgage loan originator" means an individual who for
compensation or gain or in the expectation of compensation or
gain:
(i) takes a residential mortgage loan application; or
(ii) offers or negotiates terms of a residential
mortgage loan.
"Mortgage loan originator" includes an individual engaged
in loan modification activities as defined in subsection (yy)
of this Section. A mortgage loan originator engaged in loan

modification activities shall report those activities to the
Department of Financial and Professional Regulation in the
manner provided by the Department; however, the Department
shall not impose a fee for reporting, nor require any
additional qualifications to engage in those activities beyond
those provided pursuant to this Act for mortgage loan
originators.
"Mortgage loan originator" does not include an individual
engaged solely as a loan processor or underwriter except as
otherwise provided in subsection (d) of Section 7-1A of this
Act.
"Mortgage loan originator" does not include a person or
entity that only performs real estate brokerage activities and
is licensed in accordance with the Real Estate License Act of
2000, unless the person or entity is compensated by a lender, a
mortgage broker, or other mortgage loan originator, or by any
agent of that lender, mortgage broker, or other mortgage loan
originator.
"Mortgage loan originator" does not include a person or
entity solely involved in extensions of credit relating to
timeshare plans, as that term is defined in Section 101(53D) of
Title 11, United States Code.
(kk) "Depository institution" has the same meaning as in
Section 3 of the Federal Deposit Insurance Act, and includes
any credit union.
(ll) "Dwelling" means a residential structure or mobile

home which contains one to 4 family housing units, or
individual units of condominiums or cooperatives.
(mm) "Immediate family member" means a spouse, child,
sibling, parent, grandparent, or grandchild, and includes
step-parents, step-children, step-siblings, or adoptive
relationships.
(nn) "Individual" means a natural person.
(oo) "Loan processor or underwriter" means an individual
who performs clerical or support duties as an employee at the
direction of and subject to the supervision and instruction of
a person licensed, or exempt from licensing, under this Act.
"Clerical or support duties" includes subsequent to the receipt
of an application:
(i) the receipt, collection, distribution, and
analysis of information common for the processing or
underwriting of a residential mortgage loan; and
(ii) communicating with a consumer to obtain the
information necessary for the processing or underwriting
of a loan, to the extent that the communication does not
include offering or negotiating loan rates or terms, or
counseling consumers about residential mortgage loan rates
or terms. An individual engaging solely in loan processor
or underwriter activities shall not represent to the
public, through advertising or other means of
communicating or providing information, including the use
of business cards, stationery, brochures, signs, rate

lists, or other promotional items, that the individual can
or will perform any of the activities of a mortgage loan
originator.
(pp) "Nationwide Mortgage Licensing System and Registry"
means a mortgage licensing system developed and maintained by
the Conference of State Bank Supervisors and the American
Association of Residential Mortgage Regulators for the
licensing and registration of licensed mortgage loan
originators.
(qq) "Nontraditional mortgage product" means any mortgage
product other than a 30-year fixed rate mortgage.
(rr) "Person" means a natural person, corporation,
company, limited liability company, partnership, or
association.
(ss) "Real estate brokerage activity" means any activity
that involves offering or providing real estate brokerage
services to the public, including:
(1) acting as a real estate agent or real estate broker
for a buyer, seller, lessor, or lessee of real property;
(2) bringing together parties interested in the sale,
purchase, lease, rental, or exchange of real property;
(3) negotiating, on behalf of any party, any portion of
a contract relating to the sale, purchase, lease, rental,
or exchange of real property, other than in connection with
providing financing with respect to any such transaction;
(4) engaging in any activity for which a person engaged

in the activity is required to be registered or licensed as
a real estate agent or real estate broker under any
applicable law; or
(5) offering to engage in any activity, or act in any
capacity, described in this subsection (ss).
(tt) "Registered mortgage loan originator" means any
individual that:
(1) meets the definition of mortgage loan originator
and is an employee of:
(A) a depository institution;
(B) a subsidiary that is:
(i) owned and controlled by a depository
institution; and
(ii) regulated by a federal banking agency; or
(C) an institution regulated by the Farm Credit
Administration; and
(2) is registered with, and maintains a unique
identifier through, the Nationwide Mortgage Licensing
System and Registry.
(uu) "Unique identifier" means a number or other identifier
assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry.
(vv) "Residential mortgage license" means a license issued
pursuant to Section 1-3, 2-2, or 2-6 of this Act.
(ww) "Mortgage loan originator license" means a license
issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act.

(xx) "Secretary" means the Secretary of the Department of
Financial and Professional Regulation, or a person authorized
by the Secretary or by this Act to act in the Secretary's
stead.
(yy) "Loan modification" means, for compensation or gain,
either directly or indirectly offering or negotiating on behalf
of a borrower or homeowner to adjust the terms of a residential
mortgage loan in a manner not provided for in the original or
previously modified mortgage loan.
(zz) "Short sale facilitation" means, for compensation or
gain, either directly or indirectly offering or negotiating on
behalf of a borrower or homeowner to facilitate the sale of
residential real estate subject to one or more residential
mortgage loans or debts constituting liens on the property in
which the proceeds from selling the residential real estate
will fall short of the amount owed and the lien holders are
contacted to agree to release their lien on the residential
real estate and accept less than the full amount owed on the
debt.
(Source: P.A. 96-112, eff. 7-31-09; 96-1000, eff. 7-2-10;
96-1216, eff. 1-1-11; 97-143, eff. 7-14-11.)
(205 ILCS 635/2-2)
Sec. 2-2. Application process; investigation; fee.
(a) The Secretary shall issue a license upon completion of
all of the following:

(1) The filing of an application for license with the
Director or the Nationwide Mortgage Licensing System and
Registry as approved by the Director.
(2) The filing with the Secretary of a listing of
judgments entered against, and bankruptcy petitions by,
the license applicant for the preceding 10 years.
(3) The payment, in certified funds, of investigation
and application fees, the total of which shall be in an
amount equal to $2,700 $2,043 annually. To comply with the
common renewal date and requirements of the Nationwide
Mortgage Licensing System and Registry, the term of initial
licenses may be extended or shortened with applicable fees
prorated or combined accordingly.
(4) Except for a broker applying to renew a license,
the filing of an audited balance sheet including all
footnotes prepared by a certified public accountant in
accordance with generally accepted accounting principles
and generally accepted auditing principles which evidences
that the applicant meets the net worth requirements of
Section 3-5.
(5) The filing of proof satisfactory to the
Commissioner that the applicant, the members thereof if the
applicant is a partnership or association, the members or
managers thereof that retain any authority or
responsibility under the operating agreement if the
applicant is a limited liability company, or the officers

thereof if the applicant is a corporation have 3 years
experience preceding application in real estate finance.
Instead of this requirement, the applicant and the
applicant's officers or members, as applicable, may
satisfactorily complete a program of education in real
estate finance and fair lending, as approved by the
Commissioner, prior to receiving the initial license. The
Commissioner shall promulgate rules regarding proof of
experience requirements and educational requirements and
the satisfactory completion of those requirements. The
Commissioner may establish by rule a list of duly licensed
professionals and others who may be exempt from this
requirement.
(6) An investigation of the averments required by
Section 2-4, which investigation must allow the
Commissioner to issue positive findings stating that the
financial responsibility, experience, character, and
general fitness of the license applicant and of the members
thereof if the license applicant is a partnership or
association, of the officers and directors thereof if the
license applicant is a corporation, and of the managers and
members that retain any authority or responsibility under
the operating agreement if the license applicant is a
limited liability company are such as to command the
confidence of the community and to warrant belief that the
business will be operated honestly, fairly and efficiently

within the purpose of this Act. If the Commissioner shall
not so find, he or she shall not issue such license, and he
or she shall notify the license applicant of the denial.
The Commissioner may impose conditions on a license if the
Commissioner determines that the conditions are necessary or
appropriate. These conditions shall be imposed in writing and
shall continue in effect for the period prescribed by the
Commissioner.
(b) All licenses shall be issued to the license applicant.
Upon receipt of such license, a residential mortgage
licensee shall be authorized to engage in the business
regulated by this Act. Such license shall remain in full force
and effect until it expires without renewal, is surrendered by
the licensee or revoked or suspended as hereinafter provided.
(Source: P.A. 95-1047, eff. 4-6-09; 96-112, eff. 7-31-09;
96-1000, eff. 7-2-10.)
(205 ILCS 635/2-3A new)
Sec. 2-3A. Residential mortgage license application and
issuance.
(a) Applicants for a license shall apply in a form
prescribed by the Director. Each form shall contain content as
set forth by rule, regulation, instruction, or procedure of the
Director and may be changed or updated as necessary by the
Director in order to carry out the purposes of this Act.
(b) In order to fulfill the purposes of this Act, the

Director is authorized to establish relationships or contracts
with the Nationwide Mortgage Licensing System and Registry or
other entities designated by the Nationwide Mortgage Licensing
System and Registry to collect and maintain records and process
transaction fees or other fees related to licensees or other
persons subject to this Act.
(c) In connection with an application for licensing, the
applicant may be required, at a minimum, to furnish to the
Nationwide Mortgage Licensing System and Registry information
concerning the applicant's identity, including:
(1) fingerprints for submission to the Federal Bureau
of Investigation or any governmental agency or entity
authorized to receive such information for a State,
national, and international criminal history background
check; and
(2) personal history and experience in a form
prescribed by the Nationwide Mortgage Licensing System and
Registry, including the submission of authorization for
the Nationwide Mortgage Licensing System and Registry and
the Director to obtain:
(A) an independent credit report obtained from a
consumer reporting agency described in Section 603(p)
of the Fair Credit Reporting Act (15 U.S.C. 1681a(p));
and
(B) information related to any administrative,
civil, or criminal findings by any governmental

jurisdiction.
(d) For the purposes of this Section, and in order to
reduce the points of contact that the Federal Bureau of
Investigation may have to maintain for purposes of subsection
(c) of this Section, the Director may use the Nationwide
Mortgage Licensing System and Registry as a channeling agent
for requesting information from and distributing information
to the Department of Justice or any governmental agency.
(e) For the purposes of this Section, and in order to
reduce the points of contact that the Director may have to
maintain for purposes of item (2) of subsection (c) of this
Section, the Director may use the Nationwide Mortgage Licensing
System and Registry as a channeling agent for requesting and
distributing information to and from any source so directed by
the Director.
(205 ILCS 635/2-4) (from Ch. 17, par. 2322-4)
Sec. 2-4. Averments of Licensee. Each application for
license or for the renewal of a license shall be accompanied by
the following averments stating that the applicant:
(a) Will maintain at least one full service office
within the State of Illinois pursuant to Section 3-4 of
this Act;
(b) Will maintain staff reasonably adequate to meet the
requirements of Section 3-4 of this Act;
(c) Will keep and maintain for 36 months the same

written records as required by the federal Equal Credit
Opportunity Act, and any other information required by
regulations of the Commissioner regarding any home
mortgage in the course of the conduct of its residential
mortgage business;
(d) Will file with the Commissioner or Nationwide
Mortgage Licensing System and Registry as applicable, when
due, any report or reports which it is required to file
under any of the provisions of this Act;
(e) Will not engage, whether as principal or agent, in
the practice of rejecting residential mortgage
applications without reasonable cause, or varying terms or
application procedures without reasonable cause, for home
mortgages on real estate within any specific geographic
area from the terms or procedures generally provided by the
licensee within other geographic areas of the State;
(f) Will not engage in fraudulent home mortgage
underwriting practices;
(g) Will not make payment, whether directly or
indirectly, of any kind to any in house or fee appraiser of
any government or private money lending agency with which
an application for a home mortgage has been filed for the
purpose of influencing the independent judgment of the
appraiser with respect to the value of any real estate
which is to be covered by such home mortgage;
(h) Has filed tax returns (State and Federal) for the

past 3 years or filed with the Commissioner an accountant's
or attorney's statement as to why no return was filed;
(i) Will not engage in any discrimination or redlining
activities prohibited by Section 3-8 of this Act;
(j) Will not knowingly make any false promises likely
to influence or persuade, or pursue a course of
misrepresentation and false promises through agents,
solicitors, advertising or otherwise;
(k) Will not knowingly misrepresent, circumvent or
conceal, through whatever subterfuge or device, any of the
material particulars or the nature thereof, regarding a
transaction to which it is a party to the injury of another
party thereto;
(l) Will disburse funds in accordance with its
agreements;
(m) Has not committed a crime against the law of this
State, any other state or of the United States, involving
moral turpitude, fraudulent or dishonest dealing, and that
no final judgment has been entered against it in a civil
action upon grounds of fraud, misrepresentation or deceit
which has not been previously reported to the Commissioner;
(n) Will account or deliver to the owner upon request
any personal property such as money, fund, deposit, check,
draft, mortgage, other document or thing of value which it
is not in law or equity entitled to retain under the
circumstances;

(o) Has not engaged in any conduct which would be cause
for denial of a license;
(p) Has not become insolvent;
(q) Has not submitted an application for a license
under this Act which contains a material misstatement;
(r) Has not demonstrated by course of conduct,
negligence or incompetence in performing any act for which
it is required to hold a license under this Act;
(s) Will advise the Commissioner in writing, or the
Nationwide Mortgage Licensing System and Registry as
applicable, of any changes to the information submitted on
the most recent application for license within 30 days of
said change. The written notice must be signed in the same
form as the application for license being amended;
(t) Will comply with the provisions of this Act, or
with any lawful order, rule or regulation made or issued
under the provisions of this Act;
(u) Will submit to periodic examination by the
Commissioner as required by this Act;
(v) Will advise the Commissioner in writing of
judgments entered against, and bankruptcy petitions by,
the license applicant within 5 days of occurrence;
(w) Will advise the Commissioner in writing within 30
days of any request made to a licensee under this Act to
repurchase a loan in a manner that completely and clearly
identifies to whom the request was made, the loans

involved, and the reason therefor;
(x) Will advise the Commissioner in writing within 30
days of any request from any entity to repurchase a loan in
a manner that completely and clearly identifies to whom the
request was made, the loans involved, and the reason for
the request;
(y) Will at all times act in a manner consistent with
subsections (a) and (b) of Section 1-2 of this Act; and
(z) Will not knowingly hire or employ a loan originator
who is not registered, or mortgage loan originator who is
not licensed, with the Commissioner as required under
Section 7-1 or Section 7-1A, as applicable, of this Act; .
(aa) Will not charge or collect advance payments from
borrowers or homeowners for engaging in loan modification;
and
(bb) Will not structure activities or contracts to
evade provisions of this Act.
A licensee who fails to fulfill obligations of an averment,
to comply with averments made, or otherwise violates any of the
averments made under this Section shall be subject to the
penalties in Section 4-5 of this Act.
(Source: P.A. 95-331, eff. 8-21-07; 96-112, eff. 7-31-09.)
(205 ILCS 635/3-2) (from Ch. 17, par. 2323-2)
Sec. 3-2. Annual audit.
(a) At the licensee's fiscal year-end, but in no case more

than 12 months after the last audit conducted pursuant to this
Section, except as otherwise provided in this Section, it shall
be mandatory for each residential mortgage licensee to cause
its books and accounts to be audited by a certified public
accountant not connected with such licensee. The books and
records of all licensees under this Act shall be maintained on
an accrual basis. The audit must be sufficiently comprehensive
in scope to permit the expression of an opinion on the
financial statements, which must be prepared in accordance with
generally accepted accounting principles, and must be
performed in accordance with generally accepted auditing
standards. Notwithstanding the requirements of this
subsection, a licensee that is a first tier subsidiary may
submit audited consolidated financial statements of its parent
as long as the consolidated statements are supported by
consolidating statements. The licensee's chief financial
officer shall attest to the licensee's financial statements
disclosed in the consolidating statements.
(b) As used herein, the term "expression of opinion"
includes either (1) an unqualified opinion, (2) a qualified
opinion, (3) a disclaimer of opinion, or (4) an adverse
opinion.
(c) If a qualified or adverse opinion is expressed or if an
opinion is disclaimed, the reasons therefore must be fully
explained. An opinion, qualified as to a scope limitation,
shall not be acceptable.

(d) The most recent audit report shall be filed with the
Commissioner within 90 days after the end of the licensee's
fiscal year, or with the Nationwide Mortgage Licensing System
and Registry, if applicable, pursuant to Mortgage Call Report
requirements. The report filed with the Commissioner shall be
certified by the certified public accountant conducting the
audit. The Commissioner may promulgate rules regarding late
audit reports.
(e) If any licensee required to make an audit shall fail to
cause an audit to be made, the Commissioner shall cause the
same to be made by a certified public accountant at the
licensee's expense. The Commissioner shall select such
certified public accountant by advertising for bids or by such
other fair and impartial means as he or she establishes by
regulation.
(f) In lieu of the audit or compilation financial statement
required by this Section, a licensee shall submit and the
Commissioner may accept any audit made in conformance with the
audit requirements of the U.S. Department of Housing and Urban
Development.
(g) With respect to licensees who solely broker residential
mortgage loans as defined in subsection (o) of Section 1-4,
instead of the audit required by this Section, the Commissioner
may accept compilation financial statements prepared at least
every 12 months, and the compilation financial statement must
be prepared by an independent certified public accountant

licensed under the Illinois Public Accounting Act or by an
equivalent state licensing law with full disclosure in
accordance with generally accepted accounting principals and
must be submitted within 90 days after the end of the
licensee's fiscal year, or with the Nationwide Mortgage
Licensing System and Registry, if applicable, pursuant to
Mortgage Call Report requirements. If a licensee under this
Section fails to file a compilation as required, the
Commissioner shall cause an audit of the licensee's books and
accounts to be made by a certified public accountant at the
licensee's expense. The Commissioner shall select the
certified public accountant by advertising for bids or by such
other fair and impartial means as he or she establishes by
rule. A licensee who files false or misleading compilation
financial statements is guilty of a business offense and shall
be fined not less than $5,000.
(h) The workpapers of the certified public accountants
employed by each licensee for purposes of this Section are to
be made available to the Commissioner or the Commissioner's
designee upon request and may be reproduced by the Commissioner
or the Commissioner's designee to enable to the Commissioner to
carry out the purposes of this Act.
(i) Notwithstanding any other provision of this Section, if
a licensee relying on subsection (g) of this Section causes its
books to be audited at any other time or causes its financial
statements to be reviewed, a complete copy of the audited or

reviewed financial statements shall be delivered to the
Commissioner at the time of the annual license renewal payment
following receipt by the licensee of the audited or reviewed
financial statements. All workpapers shall be made available to
the Commissioner upon request. The financial statements and
workpapers may be reproduced by the Commissioner or the
Commissioner's designee to carry out the purposes of this Act.
(Source: P.A. 96-112, eff. 7-31-09; revised 11-18-11.)
(205 ILCS 635/4-5) (from Ch. 17, par. 2324-5)
Sec. 4-5. Suspension, revocation of licenses; fines.
(a) Upon written notice to a licensee, the Commissioner may
suspend or revoke any license issued pursuant to this Act if he
or she shall make a finding of one or more of the following in
the notice that:
(1) Through separate acts or an act or a course of
conduct, the licensee has violated any provisions of this
Act, any rule or regulation promulgated by the Commissioner
or of any other law, rule or regulation of this State or
the United States.
(2) Any fact or condition exists which, if it had
existed at the time of the original application for such
license would have warranted the Commissioner in refusing
originally to issue such license.
(3) If a licensee is other than an individual, any
ultimate equitable owner, officer, director, or member of

the licensed partnership, association, corporation, or
other entity has so acted or failed to act as would be
cause for suspending or revoking a license to that party as
an individual.
(b) No license shall be suspended or revoked, except as
provided in this Section, nor shall any licensee be fined
without notice of his or her right to a hearing as provided in
Section 4-12 of this Act.
(c) The Commissioner, on good cause shown that an emergency
exists, may suspend any license for a period not exceeding 180
days, pending investigation. Upon a showing that a licensee has
failed to meet the experience or educational requirements of
Section 2-2 or the requirements of subsection (g) of Section
3-2, the Commissioner shall suspend, prior to hearing as
provided in Section 4-12, the license until those requirements
have been met.
(d) The provisions of subsection (e) of Section 2-6 of this
Act shall not affect a licensee's civil or criminal liability
for acts committed prior to surrender of a license.
(e) No revocation, suspension or surrender of any license
shall impair or affect the obligation of any pre-existing
lawful contract between the licensee and any person.
(f) Every license issued under this Act shall remain in
force and effect until the same shall have expired without
renewal, have been surrendered, revoked or suspended in
accordance with the provisions of this Act, but the

Commissioner shall have authority to reinstate a suspended
license or to issue a new license to a licensee whose license
shall have been revoked if no fact or condition then exists
which would have warranted the Commissioner in refusing
originally to issue such license under this Act.
(g) Whenever the Commissioner shall revoke or suspend a
license issued pursuant to this Act or fine a licensee under
this Act, he or she shall forthwith execute a written order to
that effect. The Commissioner shall publish notice of such
order in the Illinois Register and post notice of the order on
an agency Internet site maintained by the Commissioner or on
the Nationwide Mortgage Licensing System and Registry and shall
forthwith serve a copy of such order upon the licensee. Any
such order may be reviewed in the manner provided by Section
4-12 of this Act.
(h) When the Commissioner finds any person in violation of
the grounds set forth in subsection (i), he or she may enter an
order imposing one or more of the following penalties:
(1) Revocation of license;
(2) Suspension of a license subject to reinstatement
upon satisfying all reasonable conditions the Commissioner
may specify;
(3) Placement of the licensee or applicant on probation
for a period of time and subject to all reasonable
conditions as the Commissioner may specify;
(4) Issuance of a reprimand;

(5) Imposition of a fine not to exceed $25,000 for each
count of separate offense, provided that a fine may be
imposed not to exceed $75,000 for each separate count of
offense of paragraph (2) of subsection (i) of this Section;
and
(6) Denial of a license.
(i) The following acts shall constitute grounds for which
the disciplinary actions specified in subsection (h) above may
be taken:
(1) Being convicted or found guilty, regardless of
pendency of an appeal, of a crime in any jurisdiction which
involves fraud, dishonest dealing, or any other act of
moral turpitude;
(2) Fraud, misrepresentation, deceit or negligence in
any mortgage financing transaction;
(3) A material or intentional misstatement of fact on
an initial or renewal application;
(4) Failure to follow the Commissioner's regulations
with respect to placement of funds in escrow accounts;
(5) Insolvency or filing under any provision of the
Bankruptcy Code as a debtor;
(6) Failure to account or deliver to any person any
property such as any money, fund, deposit, check, draft,
mortgage, or other document or thing of value, which has
come into his or her hands and which is not his or her
property or which he or she is not in law or equity

entitled to retain, under the circumstances and at the time
which has been agreed upon or is required by law or, in the
absence of a fixed time, upon demand of the person entitled
to such accounting and delivery;
(7) Failure to disburse funds in accordance with
agreements;
(8) Any misuse, misapplication, or misappropriation of
trust funds or escrow funds;
(9) Having a license, or the equivalent, to practice
any profession or occupation revoked, suspended, or
otherwise acted against, including the denial of licensure
by a licensing authority of this State or another state,
territory or country for fraud, dishonest dealing or any
other act of moral turpitude;
(10) Failure to issue a satisfaction of mortgage when
the residential mortgage has been executed and proceeds
were not disbursed to the benefit of the mortgagor and when
the mortgagor has fully paid licensee's costs and
commission;
(11) Failure to comply with any order of the
Commissioner or rule made or issued under the provisions of
this Act;
(12) Engaging in activities regulated by this Act
without a current, active license unless specifically
exempted by this Act;
(13) Failure to pay in a timely manner any fee, charge

or fine under this Act;
(14) Failure to maintain, preserve, and keep available
for examination, all books, accounts or other documents
required by the provisions of this Act and the rules of the
Commissioner;
(15) Refusing, obstructing, evading, or unreasonably
delaying an investigation, information request, or
examination authorized under this Act, or refusing,
obstructing, evading, or unreasonably delaying compliance
with the Director's subpoena or subpoena duces tecum;
(16) A pattern of substantially underestimating the
maximum closing costs;
(17) Failure to comply with or violation of any
provision of this Act; .
(18) Failure to comply with or violation of any
provision of Article 3 of the Residential Real Property
Disclosure Act.
(j) A licensee shall be subject to the disciplinary actions
specified in this Act for violations of subsection (i) by any
officer, director, shareholder, joint venture, partner,
ultimate equitable owner, or employee of the licensee.
(k) Such licensee shall be subject to suspension or
revocation for unauthorized employee actions only if there is a
pattern of repeated violations by employees or the licensee has
knowledge of the violations, or there is substantial harm to a
consumer.

(l) Procedure for surrender of license:
(1) The Commissioner may, after 10 days notice by
certified mail to the licensee at the address set forth on
the license, stating the contemplated action and in general
the grounds therefor and the date, time and place of a
hearing thereon, and after providing the licensee with a
reasonable opportunity to be heard prior to such action,
fine such licensee an amount not exceeding $25,000 per
violation, or revoke or suspend any license issued
hereunder if he or she finds that:
(i) The licensee has failed to comply with any
provision of this Act or any order, decision, finding,
rule, regulation or direction of the Commissioner
lawfully made pursuant to the authority of this Act; or
(ii) Any fact or condition exists which, if it had
existed at the time of the original application for the
license, clearly would have warranted the Commissioner
in refusing to issue the license.
(2) Any licensee may submit application to surrender a
license, but upon the Director approving the surrender, it
shall not affect the licensee's civil or criminal liability
for acts committed prior to surrender or entitle the
licensee to a return of any part of the license fee.
(Source: P.A. 96-112, eff. 7-31-09.)
(205 ILCS 635/4-8.2)

Sec. 4-8.2. Reports of violations. Any person licensed
under this Act or any other person may report to the
Commissioner any information to show that a person subject to
this Act is or may be in violation of this Act. A licensee who
files a report with the Department of Financial and
Professional Regulation that another licensee is engaged in one
or more violations pursuant to this Act shall not be the
subject of disciplinary action by the Department, unless the
Department determines, by a preponderance of the evidence
available to the Department, that the reporting person
knowingly and willingly participated in the violation that was
reported.
(Source: P.A. 93-561, eff. 1-1-04.)
(205 ILCS 635/7-1A)
Sec. 7-1A. Mortgage loan originator license.
(a) It is unlawful for any individual to act or assume to
act as a mortgage loan originator, as defined in subsection
(jj) of Section 1-4 of this Act, without obtaining a license
from the Director, unless the individual is exempt under
subsection (c) of this Section. It is unlawful for any
individual who holds a mortgage loan originator license to
provide short sale facilitation services unless he or she holds
a license under the Real Estate License Act of 2000. Each
licensed mortgage loan originator must register with and
maintain a valid unique identifier issued by the Nationwide

Mortgage Licensing System and Registry.
(b) In order to facilitate an orderly transition to
licensing and minimize disruption in the mortgage marketplace,
the operability date for subsection (a) of this Section shall
be as provided in this subsection (b). For this purpose, the
Director may require submission of licensing information to the
Nationwide Mortgage Licensing System and Registry prior to the
operability dates designated by the Director pursuant to items
(1) and (2) of this subsection (b).
(1) For all individuals other than individuals
described in item (2) of this subsection (b), the
operability date as designated by the Director shall be no
later than July 31, 2010, or any date approved by the
Secretary of the U.S. Department of Housing and Urban
Development, pursuant to the authority granted under
federal Public Law 110-289, Section 1508.
(2) For all individuals registered as loan originators
as of the effective date of this amendatory Act of the 96th
General Assembly, the operability date as designated by the
Director shall be no later than January 1, 2011, or any
date approved by the Secretary of the U.S. Department of
Housing and Urban Development, pursuant to the authority
granted under Public Law 110-289, Section 1508.
(3) For all individuals described in item (1) or (2) of
this subsection (b) who are loss mitigation specialists
employed by servicers, the operability date shall be July

31, 2011, or any date approved by the Secretary of the U.S.
Department of Housing and Urban Development pursuant to
authority granted under Public Law 110-289, Section 1508.
(c) The following, when engaged in the following
activities, are exempt from this Act:
(1) Registered mortgage loan originators, when acting
for an entity described in subsection (tt) of Section 1-4.
(2) Any individual who offers or negotiates terms of a
residential mortgage loan with or on behalf of an immediate
family member of the individual.
(3) Any individual who offers or negotiates terms of a
residential mortgage loan secured by a dwelling that served
as the individual's residence.
(4) A licensed attorney who negotiates the terms of a
residential mortgage loan on behalf of a client as an
ancillary matter to the attorney's representation of the
client, unless the attorney is compensated by a lender, a
mortgage broker, or other mortgage loan originator or by
any agent of a lender, mortgage broker, or other mortgage
loan originator.
(d) A loan processor or underwriter who is an independent
contractor may not engage in the activities of a loan processor
or underwriter unless he or she obtains and maintains a license
under subsection (a) of this Section. Each independent
contractor loan processor or underwriter licensed as a mortgage
loan originator must have and maintain a valid unique

identifier issued by the Nationwide Mortgage Licensing System
and Registry.
(e) For the purposes of implementing an orderly and
efficient licensing process, the Director may establish
licensing rules or regulations and interim procedures for
licensing and acceptance of applications. For previously
registered or licensed individuals, the Director may establish
expedited review and licensing procedures.
(Source: P.A. 96-112, eff. 7-31-09.)
(205 ILCS 635/7-11)
Sec. 7-11. Mortgage loan originator suspension or
revocation of registration; refusal to renew; fines.
(a) In addition to any other action authorized by this Act
or any other applicable law, rule or regulation, the Director
may do the following:
(1) Suspend, revoke, or refuse to renew a license or
reprimand, place on probation or otherwise discipline a
licensee if the Director finds that the mortgage loan
originator has violated this Act or any other applicable
law or regulation or has been convicted of a criminal
offense.
(2) Impose a fine of not more than $1,000 or, for
engaging in an act prohibited by item (1) of Section 7-13,
not more than $3,000 for each day for each violation of
this Act or any other applicable law or regulation that is

committed. If the Mortgage Loan Originator engages in a
pattern of repeated violations, the Director may impose a
fine of not more than $2,000 or, for engaging in an act
prohibited by item (1) of Section 7-13, not more than
$6,000 for each day for each violation committed. In
determining the amount of a fine to be imposed pursuant to
this Act or any other applicable law or regulation, the
Director shall consider all of the following:
(A) The seriousness of the violation;
(B) The mortgage loan originator's good faith
efforts to prevent the violation; and
(C) The mortgage loan originator's history of
violations and compliance with orders.
(b) In addition to any other action authorized by this Act
or any other applicable law, rule or regulation, the Director
may investigate alleged violations of the Act or any other
applicable law, rule or regulation and complaints concerning
any such violation. The Director may seek a court order to
enjoin the violation.
(c) In addition to any other action authorized by this Act
or any other applicable law, rule or regulation, if the
Director determines that a mortgage loan originator is engaged
in or is believed to be engaged in activities that may
constitute a violation of this Act or any other applicable law,
rule or regulation, the Director may issue a cease and desist
order to compel the mortgage loan originator to comply with

this Act or any other applicable law, rule or regulation or,
upon a showing that an emergency exists, may suspend the
mortgage loan originator's license for a period not exceeding
180 calendar days, pending investigation.
(Source: P.A. 96-112, eff. 7-31-09.)
(205 ILCS 635/7-13)
Sec. 7-13. Prohibited acts and practices for mortgage loan
originators. It is a violation of this Act for an individual
subject to this Act to:
(1) Directly or indirectly employ any scheme, device,
or artifice to defraud or mislead borrowers or lenders or
to defraud any person.
(2) Engage in any unfair or deceptive practice toward
any person.
(3) Obtain property by fraud or misrepresentation.
(4) Solicit or enter into a contract with a borrower
that provides in substance that the person or individual
subject to this Act may earn a fee or commission through
"best efforts" to obtain a loan even though no loan is
actually obtained for the borrower.
(5) Solicit, advertise, or enter into a contract for
specific interest rates, points, or other financing terms
unless the terms are actually available at the time of
soliciting, advertising, or contracting.
(6) Conduct any business covered by this Act without

holding a valid license as required under this Act, or
assist or aid and abet any person in the conduct of
business under this Act without a valid license as required
under this Act.
(7) Fail to make disclosures as required by this Act
and any other applicable State or federal law, including
regulations thereunder.
(8) Fail to comply with this Act or rules or
regulations promulgated under this Act, or fail to comply
with any other state or federal law, including the rules
and regulations thereunder, applicable to any business
authorized or conducted under this Act.
(9) Make, in any manner, any false or deceptive
statement or representation of a material fact, or any
omission of a material fact, required on any document or
application subject to this Act.
(10) Negligently make any false statement or knowingly
and willfully make any omission of material fact in
connection with any information or report filed with a
governmental agency or the Nationwide Mortgage Licensing
System and Registry or in connection with any investigation
conducted by the Director or another governmental agency.
(11) Make any payment, threat or promise, directly or
indirectly, to any person for the purpose of influencing
the independent judgment of the person in connection with a
residential mortgage loan, or make any payment threat or

promise, directly or indirectly, to any appraiser of a
property, for the purpose of influencing the independent
judgment of the appraiser with respect to the value of the
property.
(12) Collect, charge, attempt to collect or charge, or
use or propose any agreement purporting to collect or
charge any fee prohibited by this Act, including advance
fees for loan modification.
(13) Cause or require a borrower to obtain property
insurance coverage in an amount that exceeds the
replacement cost of the improvements as established by the
property insurer.
(14) Fail to truthfully account for monies belonging to
a party to a residential mortgage loan transaction.
(15) Engage in conduct that constitutes dishonest
dealings.
(16) Knowingly instruct, solicit, propose, or cause a
person other than the borrower to sign a borrower's
signature on a mortgage related document, or solicit,
accept or execute any contract or other document related to
the residential mortgage transaction that contains any
blanks to be filled in after signing or initialing the
contract or other document, except for forms authorizing
the verification of application information.
(17) Discourage any applicant from seeking or
participating in housing or financial counseling either

before or after the consummation of a loan transaction, or
fail to provide information on counseling resources upon
request.
(18) Charge for any ancillary products or services, not
essential to the basic loan transaction for which the
consumer has applied, without the applicant's knowledge
and written authorization, or charge for any ancillary
products or services not actually provided in the
transaction.
(19) Fail to give reasonable consideration to a
borrower's ability to repay the debt.
(20) Interfere or obstruct an investigation or
examination conducted pursuant to this Act.
(21) Structure activities or contracts to evade
provisions of this Act.
(Source: P.A. 96-112, eff. 7-31-09.)
Section 10. The Title Insurance Act is amended by changing
Section 23 as follows:
(215 ILCS 155/23) (from Ch. 73, par. 1423)
Sec. 23. Violation; penalties.
(a) Any violation of any of the provisions of this Act and,
beginning January 1, 2013, any violation of any of the
provisions of Article 3 of the Residential Real Property
Disclosure Act shall constitute a business offense and shall

subject the party violating the same to a penalty of $1000 for
each offense.
(b) Nothing contained in this Section shall affect the
right of the Secretary to revoke or suspend a title insurance
company's or independent escrowee's certificate of authority
or a title insurance agent's registration under any other
Section of this Act.
(Source: P.A. 94-893, eff. 6-20-06.)
Section 15. The Residential Real Property Disclosure Act is
amended by changing Sections 70 and 72 as follows:
(765 ILCS 77/70)
Sec. 70. Predatory lending database program.
(a) As used in this Article:
"Adjustable rate mortgage" or "ARM" means a closed-end
mortgage transaction that allows adjustments of the loan
interest rate during the first 3 years of the loan term.
"Borrower" means a person seeking a mortgage loan.
"Broker" means a "broker" or "loan broker", as defined in
subsection (p) of Section 1-4 of the Residential Mortgage
License Act of 1987.
"Closing agent" means an individual assigned by a title
insurance company or a broker or originator to ensure that the
execution of documents related to the closing of a real estate
sale or the refinancing of a real estate loan and the

disbursement of closing funds are in conformity with the
instructions of the entity financing the transaction.
"Counseling" means in-person counseling provided by a
counselor employed by a HUD-certified counseling agency to all
borrowers, or documented telephone counseling where a hardship
would be imposed on one or more borrowers. A hardship shall
exist in instances in which the borrower is confined to his or
her home due to medical conditions, as verified in writing by a
physician, or the borrower resides 50 miles or more from the
nearest participating HUD-certified housing counseling agency.
In instances of telephone counseling, the borrower must supply
all necessary documents to the counselor at least 72 hours
prior to the scheduled telephone counseling session.
"Counselor" means a counselor employed by a HUD-certified
housing counseling agency.
"Credit score" means a credit risk score as defined by the
Fair Isaac Corporation, or its successor, and reported under
such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK SCORE"
by one or more of the following credit reporting agencies or
their successors: Equifax, Inc., Experian Information
Solutions, Inc., and TransUnion LLC. If the borrower's credit
report contains credit scores from 2 reporting agencies, then
the broker or loan originator shall report the lower score. If
the borrower's credit report contains credit scores from 3
reporting agencies, then the broker or loan originator shall
report the middle score.

"Department" means the Department of Financial and
Professional Regulation.
"Exempt person" means that term as it is defined in
subsections (d)(1), and (d)(1.5), and (d)(1.8) of Section 1-4
of the Residential Mortgage License Act of 1987.
"First-time homebuyer" means a borrower who has not held an
ownership interest in residential property.
"HUD-certified counseling" or "counseling" means
counseling given to a borrower by a counselor employed by a
HUD-certified housing counseling agency.
"Interest only" means a closed-end loan that permits one or
more payments of interest without any reduction of the
principal balance of the loan, other than the first payment on
the loan.
"Lender" means that term as it is defined in subsection (g)
of Section 1-4 of the Residential Mortgage License Act of 1987.
"Licensee" means that term as it is defined in subsection
(e) of Section 1-4 of the Residential Mortgage License Act of
1987.
"Mortgage loan" means that term as it is defined in
subsection (f) of Section 1-4 of the Residential Mortgage
License Act of 1987.
"Negative amortization" means an amortization method under
which the outstanding balance may increase at any time over the
course of the loan because the regular periodic payment does
not cover the full amount of interest due.

"Originator" means a "loan originator" as defined in
subsection (hh) of Section 1-4 of the Residential Mortgage
License Act of 1987, except an exempt person, and means a
"mortgage loan originator" as defined in subsection (jj) of
Section 1-4 of the Residential Mortgage License Act of 1987,
except an exempt person.
"Points and fees" has the meaning ascribed to that term in
Section 10 of the High Risk Home Loan Act.
"Prepayment penalty" means a charge imposed by a lender
under a mortgage note or rider when the loan is paid before the
expiration of the term of the loan.
"Refinancing" means a loan secured by the borrower's or
borrowers' primary residence where the proceeds are not used as
purchase money for the residence.
"Title insurance company" means any domestic company
organized under the laws of this State for the purpose of
conducting the business of guaranteeing or insuring titles to
real estate and any title insurance company organized under the
laws of another State, the District of Columbia, or a foreign
government and authorized to transact the business of
guaranteeing or insuring titles to real estate in this State.
(a-5) A predatory lending database program shall be
established within Cook County. The program shall be
administered in accordance with this Article. The inception
date of the program shall be July 1, 2008. A predatory lending
database program shall be expanded to include Kane, Peoria, and

Will counties. The inception date of the expansion of the
program as it applies to Kane, Peoria, and Will counties shall
be July 1, 2010. Until the inception date, none of the duties,
obligations, contingencies, or consequences of or from the
program shall be imposed. The program shall apply to all
mortgage applications that are governed by this Article and
that are made or taken on or after the inception of the
program.
(b) The database created under this program shall be
maintained and administered by the Department. The database
shall be designed to allow brokers, originators, counselors,
title insurance companies, and closing agents to submit
information to the database online. The database shall not be
designed to allow those entities to retrieve information from
the database, except as otherwise provided in this Article.
Information submitted by the broker or originator to the
Department may be used to populate the online form submitted by
a counselor, title insurance company, or closing agent.
(c) Within 10 days after taking a mortgage application, the
broker or originator for any mortgage on residential property
within the program area must submit to the predatory lending
database all of the information required under Section 72 and
any other information required by the Department by rule.
Within 7 days after receipt of the information, the Department
shall compare that information to the housing counseling
standards in Section 73 and issue to the borrower and the

broker or originator a determination of whether counseling is
recommended for the borrower. The borrower may not waive
counseling. If at any time after submitting the information
required under Section 72 the broker or originator (i) changes
the terms of the loan or (ii) issues a new commitment to the
borrower, then, within 5 days thereafter, the broker or
originator shall re-submit all of the information required
under Section 72 and, within 4 days after receipt of the
information re-submitted by the broker or originator, the
Department shall compare that information to the housing
counseling standards in Section 73 and shall issue to the
borrower and the broker or originator a new determination of
whether re-counseling is recommended for the borrower based on
the information re-submitted by the broker or originator. The
Department shall require re-counseling if the loan terms have
been modified to meet another counseling standard in Section
73, or if the broker has increased the interest rate by more
than 200 basis points.
(d) If the Department recommends counseling for the
borrower under subsection (c), then the Department shall notify
the borrower of all participating HUD-certified counseling
agencies located within the State and direct the borrower to
interview with a counselor associated with one of those
agencies. Within 10 days after receipt of the notice of
HUD-certified counseling agencies, the borrower shall select
one of those agencies and shall engage in an interview with a

counselor associated with that agency. Within 7 days after
interviewing the borrower, the counselor must submit to the
predatory lending database all of the information required
under Section 74 and any other information required by the
Department by rule. Reasonable and customary costs not to
exceed $300 associated with counseling provided under the
program shall be paid by the broker or originator. The
Department shall annually calculate to the nearest dollar an
adjusted rate for inflation. A counselor shall not recommend or
suggest that a borrower contact any specific mortgage
origination company, financial institution, or entity that
deals in mortgage finance to obtain a loan, another quote, or
for any other reason related to the specific mortgage
transaction; however, a counselor may suggest that the borrower
seek an opinion or a quote from another mortgage origination
company, financial institution, or entity that deals in
mortgage finance. A counselor or housing counseling agency that
in good faith provides counseling shall not be liable to a
broker or originator or borrower for civil damages, except for
willful or wanton misconduct on the part of the counselor in
providing the counseling.
(e) The broker or originator and the borrower may not take
any legally binding action concerning the loan transaction
until the later of the following:
(1) the Department issues a determination not to
recommend HUD-certified counseling for the borrower in

accordance with subsection (c); or
(2) the Department issues a determination that
HUD-certified counseling is recommended for the borrower
and the counselor submits all required information to the
database in accordance with subsection (d).
(f) Within 10 days after closing, the title insurance
company or closing agent must submit to the predatory lending
database all of the information required under Section 76 and
any other information required by the Department by rule.
(g) The title insurance company or closing agent shall
attach to the mortgage a certificate of compliance with the
requirements of this Article, as generated by the database. If
the title insurance company or closing agent fails to attach
the certificate of compliance, then the mortgage is not
recordable. In addition, if any lis pendens for a residential
mortgage foreclosure is recorded on the property within the
program area, a certificate of service must be simultaneously
recorded that affirms that a copy of the lis pendens was filed
with the Department. If the certificate of service is not
recorded, then the lis pendens pertaining to the residential
mortgage foreclosure in question is not recordable and is of no
force and effect.
(h) All information provided to the predatory lending
database under the program is confidential and is not subject
to disclosure under the Freedom of Information Act, except as
otherwise provided in this Article. Information or documents

obtained by employees of the Department in the course of
maintaining and administering the predatory lending database
are deemed confidential. Employees are prohibited from making
disclosure of such confidential information or documents. Any
request for production of information from the predatory
lending database, whether by subpoena, notice, or any other
source, shall be referred to the Department of Financial and
Professional Regulation. Any borrower may authorize in writing
the release of database information. The Department may use the
information in the database without the consent of the
borrower: (i) for the purposes of administering and enforcing
the program; (ii) to provide relevant information to a
counselor providing counseling to a borrower under the program;
or (iii) to the appropriate law enforcement agency or the
applicable administrative agency if the database information
demonstrates criminal, fraudulent, or otherwise illegal
activity.
(i) Nothing in this Article is intended to prevent a
borrower from making his or her own decision as to whether to
proceed with a transaction.
(j) Any person who violates any provision of this Article
commits an unlawful practice within the meaning of the Consumer
Fraud and Deceptive Business Practices Act.
(j-1) A violation of any provision of this Article by a
mortgage banking licensee or licensed mortgage loan originator
shall constitute a violation of the Residential Mortgage

License Act of 1987.
(j-2) A violation of any provision of this Article by a
title insurance company, title agent, or escrow agent shall
constitute a violation of the Title Insurance Act.
(j-3) A violation of any provision of this Article by a
housing counselor shall be referred to the Department of
Housing and Urban Development.
(k) During the existence of the program, the Department
shall submit semi-annual reports to the Governor and to the
General Assembly by May 1 and November 1 of each year detailing
its findings regarding the program. The report shall include,
by county, at least the following information for each
reporting period:
(1) the number of loans registered with the program;
(2) the number of borrowers receiving counseling;
(3) the number of loans closed;
(4) the number of loans requiring counseling for each
of the standards set forth in Section 73;
(5) the number of loans requiring counseling where the
mortgage originator changed the loan terms subsequent to
counseling;
(6) the number of licensed mortgage brokers and loan
originators entering information into the database;
(7) the number of investigations based on information
obtained from the database, including the number of
licensees fined, the number of licenses suspended, and the

number of licenses revoked;
(8) a summary of the types of non-traditional mortgage
products being offered; and
(9) a summary of how the Department is actively
utilizing the program to combat mortgage fraud.
(Source: P.A. 95-691, eff. 6-1-08; 96-328, eff. 8-11-09;
96-856, eff. 12-31-09.)
(765 ILCS 77/72)
Sec. 72. Originator; required information. As part of the
predatory lending database program, the broker or originator
must submit all of the following information for inclusion in
the predatory lending database for each loan for which the
originator takes an application:
(1) The borrower's name, address, social security
number or taxpayer identification number, date of birth,
and income and expense information, including total
monthly consumer debt, contained in the mortgage
application.
(2) The address, permanent index number, and a
description of the collateral and information about the
loan or loans being applied for and the loan terms,
including the amount of the loan, the rate and whether the
rate is fixed or adjustable, amortization or loan period
terms, and any other material terms.
(3) The borrower's credit score at the time of

application.
(4) Information about the originator and the company
the originator works for, including the originator's
license number and address, fees being charged, whether the
fees are being charged as points up front, the yield spread
premium payable outside closing, and other charges made or
remuneration required by the broker or originator or its
affiliates or the broker's or originator's employer or its
affiliates for the mortgage loans.
(5) Information about affiliated or third party
service providers, including the names and addresses of
appraisers, title insurance companies, closing agents,
attorneys, and realtors who are involved with the
transaction and the broker or originator and any moneys
received from the broker or originator in connection with
the transaction.
(6) All information indicated on the Good Faith
Estimate and Truth in Lending statement disclosures given
to the borrower by the broker or originator.
(7) Annual real estate taxes for the property, together
with any assessments payable in connection with the
property to be secured by the collateral and the proposed
monthly principal and interest charge of all loans to be
taken by the borrower and secured by the property of the
borrower.
(8) Information concerning how the broker or

originator obtained the client and the name of its referral
source, if any.
(9) Information concerning the notices provided by the
broker or originator to the borrower as required by law and
the date those notices were given.
(10) Information concerning whether a sale and
leaseback is contemplated and the names of the lessor and
lessee, seller, and purchaser.
(11) Any and all financing by the borrower for the
subject property within 12 months prior to the date of
application.
(12) Loan information, including interest rate, term,
purchase price, down payment, and closing costs.
(13) Whether the buyer is a first-time homebuyer or
refinancing a primary residence.
(14) Whether the loan permits interest only payments.
(15) Whether the loan may result in negative
amortization.
(16) Whether the total points and fees payable by the
borrowers at or before closing will exceed 5%.
(17) Whether the loan includes a prepayment penalty,
and, if so, the terms of the penalty.
(18) Whether the loan is an ARM.
(Source: P.A. 94-280, eff. 1-1-06; 95-691, eff. 6-1-08.)