Bill Text: IL SB1351 | 2017-2018 | 100th General Assembly | Chaptered


Bill Title: Amends the Illinois School Student Records Act. Makes a technical change in a Section concerning the short title.

Spectrum: Partisan Bill (Democrat 61-0)

Status: (Passed) 2017-11-08 - Public Act . . . . . . . . . 100-0540 [SB1351 Detail]

Download: Illinois-2017-SB1351-Chaptered.html



Public Act 100-0540
SB1351 EnrolledLRB100 10505 MLM 20720 b
AN ACT concerning education.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
ARTICLE 1. GENERAL PROVISIONS
Section 1-1. Short title. This Act may be cited as the
Student Loan Servicing Rights Act.
Section 1-5. Definitions. As used in this Act:
"Applicant" means a person applying for a license pursuant
to this Act.
"Borrower" or "student loan borrower" means a person who
has received or agreed to pay a student loan for his or her own
educational expenses.
"Cosigner" means a person who has agreed to share
responsibility for repaying a student loan with a borrower.
"Department" means the Department of Financial and
Professional Regulation.
"Division of Banking" means the Division of Banking of the
Department of Financial and Professional Regulation.
"Federal loan borrower eligible for referral to a repayment
specialist" means a borrower who possesses any of the following
characteristics:
(1) requests information related to options to reduce
or suspend his or her monthly payment;
(2) indicates that he or she is experiencing or
anticipates experiencing financial hardship, distress, or
difficulty making his or her payments;
(3) has missed 2 consecutive monthly payments;
(4) is at least 75 days delinquent;
(5) is enrolled in a discretionary forbearance for more
than 9 of the previous 12 months;
(6) has rehabilitated or consolidated one or more loans
out of default within the past 12 months; or
(7) has not completed a course of study, as reflected
in the servicer's records, or the borrower identifies
himself or herself as not having completed a program of
study.
"Federal education loan" means any loan made, guaranteed,
or insured under Title IV of the federal Higher Education Act
of 1965.
"Income-driven payment plan certification" means the
documentation related to a federal student loan borrower's
income or financial status the borrower must submit to renew an
income-driven repayment plan.
"Income-driven repayment options" includes the
Income-Contingent Repayment Plan, the Income-Based Repayment
Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
Plan, the Revised Pay As You Earn Plan, and any other federal
student loan repayment plan that is calculated based on a
borrower's income.
"Licensee" means a person licensed pursuant to this Act.
"Other repayment plans" means the Standard Repayment Plan,
the Graduated Repayment Plan, the Extended Repayment Plan, or
any other federal student loan repayment plan not based on a
borrower's income.
"Private loan borrower eligible for referral to a repayment
specialist" means a borrower who possesses any of the following
characteristics:
(1) requests information related to options to reduce
or suspend his or her monthly payments; or
(2) indicates that he or she is experiencing or
anticipates experiencing financial hardship, distress, or
difficulty making his or her payments.
"Requester" means any borrower or cosigner that submits a
request for assistance.
"Request for assistance" means all inquiries, complaints,
account disputes, and requests for documentation a servicer
receives from borrowers or cosigners.
"Secretary" means 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.
"Servicing" means: (1) receiving any scheduled periodic
payments from a student loan borrower or cosigner pursuant to
the terms of a student loan; (2) applying the payments of
principal and interest and such other payments with respect to
the amounts received from a student loan borrower or cosigner,
as may be required pursuant to the terms of a student loan; and
(3) performing other administrative services with respect to a
student loan.
"Student loan" or "loan" means any federal education loan
or other loan primarily for use to finance a postsecondary
education and costs of attendance at a postsecondary
institution, including, but not limited to, tuition, fees,
books and supplies, room and board, transportation, and
miscellaneous personal expenses. "Student loan" includes a
loan made to refinance a student loan.
"Student loan" shall not include an extension of credit
under an open-end consumer credit plan, a reverse mortgage
transaction, a residential mortgage transaction, or any other
loan that is secured by real property or a dwelling.
"Student loan" shall not include an extension of credit
made by a postsecondary educational institution to a borrower
if one of the following apply:
(1) The term of the extension of credit is no longer
than the borrower's education program.
(2) The remaining, unpaid principal balance of the
extension of credit is less than $1,500 at the time of the
borrower's graduation or completion of the program.
(3) The borrower fails to graduate or successfully
complete his or her education program and has a balance due
at the time of his or her disenrollment from the
postsecondary institution.
"Student loan servicer" or "servicer" means any person
engaged in the business of servicing student loans.
"Student loan servicer" shall not include:
(1) a bank, savings bank, savings association, or
credit union organized under the laws of the State or any
other state or under the laws of the United States;
(2) a wholly owned subsidiary of any bank, savings
bank, savings association, or credit union organized under
the laws of the State or any other state or under the laws
of the United States;
(3) an operating subsidiary where each owner of the
operating subsidiary is wholly owned by the same bank,
savings bank, savings association, or credit union
organized under the laws of the State or any other state or
under the laws of the United States;
(4) the Illinois Student Assistance Commission and its
agents when the agents are acting on the Illinois Student
Assistance Commission's behalf;
(5) a public postsecondary educational institution or
a private nonprofit postsecondary educational institution
servicing a student loan it extended to the borrower;
(6) a licensed debt management service under the Debt
Management Service Act, except to the extent that the
organization acts as a subcontractor, affiliate, or
service provider for an entity that is otherwise subject to
licensure under this Act;
(7) any collection agency licensed under the
Collection Agency Act that is collecting post-default
debt;
(8) in connection with its responsibilities as a
guaranty agency engaged in default aversion, a State or
nonprofit private institution or organization having an
agreement with the U.S. Secretary of Education under
Section 428(b) of the Higher Education Act (20 U.S.C.
1078(B)); or
(9) a State institution or a nonprofit private
organization designated by a governmental entity to make or
service student loans, provided in each case that the
institution or organization services fewer than 20,000
student loan accounts of borrowers who reside in Illinois.
ARTICLE 5. STUDENT LOAN BILL OF RIGHTS
Section 5-5. General provisions.
(a) A servicer shall not engage in any unfair or deceptive
practice toward any borrower or cosigner or misrepresent or
omit any material information in connection with the servicing
of a student loan, including, but not limited to,
misrepresenting the amount, nature, or terms of any fee or
payment due or claimed to be due on a student loan, the terms
and conditions of the student loan agreement, or the borrower's
or cosigner's obligations under the student loan or the terms
of any repayment plans.
(b) A servicer shall not misapply payments made by a
borrower to the outstanding balance of a student loan.
(c) A servicer shall oversee third parties, including
subservicers, debt collectors, independent contractors,
subsidiaries, affiliates, or other agents, to ensure that those
companies comply with this Article 5 when working on behalf of
the servicer.
Section 5-10. Payment processing.
(a) A servicer shall credit borrower and cosigner payments
promptly and accurately.
(b) A servicer shall provide borrowers and cosigners with
prompt notice if the servicer changes the address to which the
borrower or cosigner needs to send payments.
(c) A servicer shall not charge a penalty to a borrower or
cosigner if a student loan payment is received at an address
used for payments for a period of 90 days after the change in
address.
(d) A servicer shall not misrepresent the delinquent amount
of the loan on any call with a borrower or cosigner.
(e) A servicer shall allow a borrower or cosigner to
specify instructions as to how an overpayment should be applied
to the balance of the loan as consistent with the promissory
note.
Section 5-15. Fees.
(a) Unless otherwise provided by federal law, a servicer
may only charge late fees that are reasonable and proportional
to the cost it incurs related to a late payment.
(b) Unless otherwise provided by federal law, a servicer
shall not charge a borrower or cosigner any fee to modify,
defer, forbear, renew, extend, or amend the borrower's or
cosigner's loan.
Section 5-20. Billing statements.
(a) In any student loan billing statement, a servicer shall
not misrepresent the:
(1) fees assessed;
(2) total amount due for each loan;
(3) payment due date;
(4) date to avoid late fees;
(5) accrued interest during the billing cycle;
(6) default payment methodology;
(7) means to provide instructions for a payment; or
(8) procedure regarding escalated requests for
assistance.
(b) A servicer shall not misrepresent information
regarding the $0 bill and advancement of the due date on any
billing statement that reflects $0 owed.
Section 5-25. Payment histories. A servicer shall provide a
written payment history to a borrower or cosigner upon request
at no cost within 21 calendar days of receiving the request.
Section 5-30. Specialized assistance for student loan
borrowers.
(a) A servicer shall specially designate servicing and
collections personnel deemed repayment specialists who have
received enhanced training related to repayment options.
(b) A servicer shall refrain from presenting forbearance as
the sole or first repayment option to a student loan borrower
struggling with repayment unless the servicer has determined
that, based on the borrower's financial status, a short term
forbearance is appropriate.
(c) All inbound and outbound calls from a federal loan
borrower eligible for referral to a repayment specialist and a
private loan borrower eligible for referral to a repayment
specialist shall be routed to a repayment specialist.
(d) During each inbound or outbound communication with an
eligible federal loan borrower, a repayment specialist shall
first inform a federal loan borrower eligible for referral to a
repayment specialist that federal income-driven repayment
plans that can reduce the borrower's monthly payment may be
available, discuss such plans, and assist the borrower in
determining whether a particular repayment plan may be
appropriate for the borrower.
(e) A repayment specialist shall assess the long-term and
short-term financial situation and needs of a federal loan
borrower eligible for referral to a repayment specialist and
consider any available specific information from the borrower
as necessary to assist the borrower in determining whether a
particular income-driven repayment option may be available to
the borrower.
(f) In each discussion with a federal loan borrower
eligible for referral to a repayment specialist, a repayment
specialist shall present and explain the following options, as
appropriate:
(1) total and permanent disability discharge, public
service loan forgiveness, closed school discharge, and
defenses to repayment;
(2) other repayment plans;
(3) deferment; and
(4) forbearance.
(g) A repayment specialist shall assess the long-term and
short-term financial situation and needs of a private loan
borrower eligible for referral to a repayment specialist in
determining whether any private loan repayment options may be
appropriate for the borrower.
(h) A servicer shall present and explain all private loan
repayment options, including alternative repayment
arrangements applicable to private student loan borrowers.
(i) A servicer shall be prohibited from implementing any
compensation plan that has the intended or actual effect of
incentivizing a repayment specialist to violate this Act or any
other measure that encourages undue haste or lack of quality.
(j) The requirements of this Section shall not apply if a
repayment specialist has already conversed with a borrower
consistent with the requirements of this Section.
Section 5-35. Disclosures related to discharge and
cancellation. If a servicer is aware that a student loan
borrower attended a school the United States Department of
Education has made findings supporting a defense to repayment
claim or closed school discharge, or that a borrower may be
eligible to have his or her loans forgiven under a total and
permanent disability discharge program, the servicer's
personnel shall disclose information related to the Department
of Education's procedure for asserting a defense to repayment
claim, closed school discharge, or submitting an application
for a total and permanent disability discharge.
Section 5-40. Income-driven repayment plan certifications.
A servicer shall disclose the date that a borrower's
income-driven payment plan certification will expire and the
consequences to the borrower for failing to recertify by the
date, including the new repayment amount.
Section 5-45. Information to be provided to private
education loan borrowers.
(a) A servicer shall provide on its website a description
of any alternative repayment plan offered by the servicer for
private education loans.
(b) A servicer shall establish policies and procedures and
implement them consistently in order to facilitate evaluation
of private student loan alternative repayment arrangement
requests, including providing accurate information regarding
any private student loan alternative repayment arrangements
that may be available to the borrower through the promissory
note or that may have been marketed to the borrower through
marketing materials.
A private student loan alternative repayment arrangements
shall consider the affordability of repayment plans for a
distressed borrower, as well as investor, guarantor, and
insurer guidelines and previous outcome and performance
information.
(c) If a servicer offers private student loan repayment
arrangements, a servicer shall consistently present and offer
those arrangements to borrowers with similar financial
circumstances.
Section 5-50. Cosigner release. For private student loans,
a servicer shall provide information on its website concerning
the availability and criteria for a cosigner release.
Section 5-55. Payoff statements. A servicer shall indicate
on its website that a borrower may request a payoff statement.
A servicer shall provide the payoff statement within 10 days,
including information the requester needs to pay off the loan.
If a payoff is made, the servicer must send a paid-in-full
notice within 30 days.
Section 5-60. Requirements related to the transfer of
servicing.
(a) When acting as the transferor servicer, a servicer
shall provide to each borrower subject to the transfer a
written notice not less than 15 calendar days before the
effective date of the transfer. The transferee servicer and
transferor servicer may provide a single notice, in which case
the notice shall be provided not less than 15 calendar days
before the effective date of the transfer. The notice by the
transferor servicer or, if applicable, the combined notice of
transfer shall contain the following information:
(1) the effective date of the transfer of servicing;
(2) the name, address, and toll-free telephone number
for the transferor servicer's designated point of contact
that can be contacted by the borrower to obtain answers to
servicing inquiries;
(3) the name, address, and toll-free telephone number
for the transferee servicer's designated point of contact
that can be contacted by the borrower to obtain answers to
servicing inquiries;
(4) the date on which the transferor servicer will
cease to accept payments relating to the loan and the date
on which the transferee servicer will begin to accept such
payments; the dates shall either be the same or consecutive
days;
(5) a statement that the transfer of servicing does not
affect any term or condition of the loan other than terms
directly related to the servicing of a loan;
(6) information on whether the borrower's
authorization for recurring electronic fund transfers, if
applicable, will be transferred to the transferee
servicer; if any such recurring electronic funds transfers
cannot be transferred, the transferee servicer shall
provide information explaining how the borrower may
establish new recurring electronic funds transfers with
the transferee servicer; and
(7) a statement of the current loan balance, including
the current unpaid amount of principal, interest, and fees.
(b) When acting as the transferee servicer, a servicer
shall provide to each borrower subject to the transfer a
written notice not more than 15 calendar days after the
effective date of the transfer. The transferee servicer and
transferor servicer may provide a combined notice of transfer,
in which case the notice shall be provided not less than 15
days before the effective date of the transfer. The notice by
the transferee servicer or, if applicable, the combined notice
of transfer shall contain the following information:
(1) the effective date of the transfer of servicing;
(2) the name, address, and toll-free telephone number
for the transferee servicer's designated point of contact
that can be contacted by the borrower to obtain answers to
servicing inquiries;
(3) the date on which the transferor servicer will
cease to accept payments relating to the loan and the date
on which the transferee servicer will begin to accept such
payments; the dates shall either be the same or consecutive
days;
(4) a statement that the transfer of servicing does not
affect any term or condition of the student loan other than
terms directly related to the servicing of a loan;
(5) information on whether the borrower's
authorization for recurring electronic fund transfers, if
applicable, will be transferred to the transferee
servicer; if any such recurring electronic funds transfers
cannot be transferred, the transferee servicer shall
provide information explaining how the borrower may
establish new recurring electronic funds transfers with
the transferee servicer; and
(6) a statement of the current loan balance, including
the current unpaid amount of principal, interest, and fees.
(c) During the 60 calendar day period beginning on the
effective date of transfer of the servicing of any loan, a
payment timely made to the transferor servicer may not be
treated as late for any purpose by the transferee servicer,
including the assessment of late fees, accrual of additional
interest, and furnishing negative credit information.
(d) To the extent practicable, for at least 120 calendar
days beginning on the effective date of transfer of servicing
of any loan, when acting as the transferor servicer, a servicer
shall promptly transfer payments received to the transferee
servicer for application to the borrower's loan account.
(e) Unless a borrower's authorizations for recurring
electronic fund transfers are automatically transferred to the
transferee servicer, when acting as transferee servicer, a
servicer shall make available to a borrower whose loan
servicing is transferred an online process through which a
borrower may make a new authorization for recurring electronic
fund transfers. A servicer shall also provide a process through
which the borrower may make a new authorization for recurring
electronic funds transfers by phone or through written
approval.
Section 5-65. Requests for assistance; account dispute
resolution; appeals.
(a) A servicer shall implement reasonable policies and
procedures for accepting, processing, investigating, and
responding to requests for assistance in a timely and effective
manner, including, but not limited to, the following
requirements:
(1) A servicer shall provide readily accessible
methods for consumers to submit a request for assistance to
the servicer, including such methods as phone, email, and
U.S. mail.
(2) A servicer shall post on its website and disclose
on its billing statements:
(A) the toll-free telephone number, email address,
and mailing address for consumers to submit a requests
for assistance to the servicer; and
(B) the procedures for a requester to send a
written communication to the servicer regarding any
request for assistance.
(3) For any request for assistance that includes a
request for documentation or information, where a response
cannot be immediately provided, a servicer shall provide
the requested documentation or information to the
requester within 14 calendar days of the request; if a
servicer determines in good faith that it is unable to
provide the documentation or information within 14
calendar days, promptly after making the determination,
the servicer shall notify the requester of the expected
response period, which must be reasonable for the request
for assistance.
(b) A servicer shall implement a process by which a
requester can escalate any request for assistance. Such process
shall allow a requester who has made a request for assistance
on the phone and who receives a response during the call to
obtain immediate review of the response by an employee of the
servicer at a higher supervisory level.
(c) The following requirements shall apply when a requester
submits a written or oral request for assistance which contains
an account dispute to a servicer:
(1) Within 14 calendar days after its receipt of the
written communication or oral request for further
escalation, a servicer shall attempt to make contact,
including providing the requester with name and contact
information of the representative handling the account
dispute, by phone or in writing, to the requester and
document such attempt in the borrower's account.
(2) A servicer shall complete the following actions
within 30 calendar days of its receipt of the written
communication or oral request for further escalation,
subject to paragraph (3) of this subsection:
(A) conduct a thorough investigation of the
account dispute;
(B) make all appropriate corrections to the
account of the requester, including crediting any late
fees assessed and derogatory credit furnishing as the
result of any error, and, if any corrections are made,
sending the requester a written notification that
includes the following information:
(i) an explanation of the correction or
corrections to the requester's account that have
been made; and
(ii) the toll-free telephone number, email
address, and mailing address of the servicer's
personnel knowledgeable about the investigation
and resolution of the account dispute.
(3) If a servicer determines in good faith that it
cannot complete a thorough investigation of the account
dispute within 30 calendar days after receiving the written
communication or oral request for further escalation
regarding the account dispute, then, promptly after making
the determination, the servicer shall notify the requester
of the expected resolution time period, which must be
reasonable for the account dispute. A servicer must
complete the actions listed in the investigation and
resolution of account dispute within this time period.
(4) If a servicer determines as a result of its
investigation that the requested changes to a requester's
dispute will not be made, the servicer shall provide the
requester with a written notification that includes the
following information:
(A) a description of its determination and an
explanation of the reasons for that determination;
(B) the toll-free telephone number, email address,
and mailing address of the servicer's personnel
knowledgeable about the investigation and resolution
of the account dispute;
(C) instructions about how the requester can
appeal the servicer's determination in accordance with
paragraph (5) of this subsection; and
(D) information regarding the method by which a
borrower may request copies of documents a servicer
relied on to make a determination that no changes to a
requester's account will be made.
(5) After the requester receives a determination
regarding an account dispute in accordance with paragraph
(4) of this subsection, the servicer shall allow a process
by which the requester can appeal, in writing, the
determination. The appeals process shall include:
(A) a written acknowledgment notifying the
requester that the servicer has commenced the appeals
process; such acknowledgment shall be sent within 14
calendar days after receiving a written request for
appeal from the requester;
(B) an independent reassessment of the servicer's
determination regarding the account dispute, performed
by another employee of the servicer at an equal or
higher supervisory level than the employee or
employees involved in the initial account dispute
determination;
(C) investigation and resolution of appeals within
30 calendar days after a servicer's commencement of the
appeals process; and
(D) notification sent to the requester, in
writing, documenting the outcome of the appeal,
including any reason for denial.
(d) While a requester has a pending account dispute,
including any applicable appeal, a servicer shall take
reasonable steps to:
(1) prevent negative credit reporting with respect to
the borrower's or cosigner's account while the dispute is
under review; and
(2) suspend all collection activities on the account
while the account dispute is being researched or resolved,
if the account dispute is related to the delinquency.
ARTICLE 10. STUDENT LOAN OMBUDSMAN
Section 10-5. Student Loan Ombudsman.
(a) The position of Student Loan Ombudsman is created
within the Office of the Attorney General to provide timely
assistance to student loan borrowers.
(b) The Student Loan Ombudsman, in consultation with the
Secretary, shall:
(1) receive, review, and attempt to resolve any
complaints from student loan borrowers, including, but not
limited to, attempts to resolve complaints in
collaboration with institutions of higher education,
student loan servicers, and any other participants in
student loan lending;
(2) compile and analyze data on student loan borrower
complaints;
(3) assist student loan borrowers to understand their
rights and responsibilities under the terms of student
education loans;
(4) provide information to the public, agencies,
legislators, and others regarding the problems and
concerns of student loan borrowers and make
recommendations for resolving those problems and concerns;
(5) analyze and monitor the development and
implementation of federal, State, and local laws,
regulations, and policies relating to student loan
borrowers and recommend any changes the Student Loan
Ombudsman deems necessary;
(6) review the complete student education loan history
for any student loan borrower who has provided written
consent for such review;
(7) disseminate information concerning the
availability of the Student Loan Ombudsman to assist
student loan borrowers and potential student loan
borrowers, as well as public institutions of higher
education, student loan servicers, and any other
participant in student education loan lending, with any
student loan servicing concerns; and
(8) take any other actions necessary to fulfill the
duties of the Student Loan Ombudsman as set forth in this
subsection.
ARTICLE 15. LICENSURE
Section 15-5. Scope; requirement for student loan
servicing license.
(a) It shall be unlawful for any person to operate as a
student loan servicer in Illinois except as authorized by this
Act and without first having obtained a license in accordance
with this Act.
(b) The provisions of this Act do not apply to any of the
following:
(1) a bank, savings bank, savings association, or
credit union organized under the laws of the State or any
other state or under the laws of the United States;
(2) a wholly owned subsidiary of any bank, savings
bank, savings association, or credit union organized under
the laws of the State or any other state or under the laws
of the United States;
(3) an operating subsidiary where each owner of the
operating subsidiary is wholly owned by the same bank,
savings bank, savings association, or credit union
organized under the laws of the State or any other state or
under the laws of the United States;
(4) the Illinois Student Assistance Commission and its
agents when the agents are acting on the Illinois Student
Assistance Commission's behalf;
(5) a public postsecondary educational institution or
a private nonprofit postsecondary educational institution
servicing a student loan it extended to the borrower;
(6) a licensed debt management service under the Debt
Management Service Act, except to the extent that the
organization acts as a subcontractor, affiliate, or
service provider for an entity that is otherwise subject to
licensure under this Act;
(7) any collection agency licensed under the
Collection Agency Act that is collecting post-default
debt;
(8) in connection with its responsibilities as a
guaranty agency engaged in default aversion, a State or
nonprofit private institution or organization having an
agreement with the U.S. Secretary of Education under
Section 428(b) of the Higher Education Act (20 U.S.C.
1078(B); or
(9) a State institution or a nonprofit private
organization designated by a governmental entity to make or
service student loans, provided in each case that the
institution or organization services fewer than 20,000
student loan accounts of borrowers who reside in Illinois.
Section 15-10. Licensee name. No person, partnership,
association, corporation, limited liability company, or other
entity engaged in the business regulated by this Act shall
operate such business under a name other than the real names of
the entity and individuals conducting such business. Such
business may in addition operate under an assumed corporate
name pursuant to the Business Corporation Act of 1983, an
assumed limited liability company name pursuant to the Limited
Liability Company Act, or an assumed business name pursuant to
the Assumed Business Name Act.
Section 15-15. Application process; investigation; fees.
(a) The Secretary shall issue a license upon completion of
all of the following:
(1) the filing of an application for license with the
Secretary or the Nationwide Mortgage Licensing System and
Registry as approved by the Secretary;
(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 $1,000 for an initial application and $800
for a background investigation;
(4) 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 standards; notwithstanding
the requirements of this subsection, an applicant that is a
subsidiary may submit audited consolidated financial
statements of its parent, intermediary parent, or ultimate
parent as long as the consolidated statements are supported
by consolidating statements that include the applicant's
financial statement; if the consolidating statements are
unaudited, the applicant's chief financial officer shall
attest to the applicant's financial statements disclosed
in the consolidating statements; and
(5) an investigation of the averments required by
Section 15-30, which investigation must allow the
Secretary 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
Secretary does not so find, he or she shall not issue the
license, and he or she shall notify the license applicant
of the denial.
The Secretary may impose conditions on a license if the
Secretary determines that those conditions are necessary or
appropriate. These conditions shall be imposed in writing and
shall continue in effect for the period prescribed by the
Secretary.
(b) All licenses shall be issued to the license applicant.
Upon receipt of the license, a student loan servicing licensee
shall be authorized to engage in the business regulated by this
Act. The 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.
Section 15-20. Application form.
(a) Application for a student loan servicer license must be
made in accordance with Section 15-40 and, if applicable, in
accordance with requirements of the Nationwide Mortgage
Licensing System and Registry. The application shall be in
writing, under oath, and on a form obtained from and prescribed
by the Secretary, or may be submitted electronically, with
attestation, to the Nationwide Mortgage Licensing System and
Registry.
(b) The application shall contain the name and complete
business and residential address or addresses of the license
applicant. If the license applicant is a partnership,
association, corporation, or other form of business
organization, the application shall contain the names and
complete business and residential addresses of each member,
director, and principal officer thereof. The application shall
also include a description of the activities of the license
applicant in such detail and for such periods as the Secretary
may require, including all of the following:
(1) an affirmation of financial solvency noting such
capitalization requirements as may be required by the
Secretary and access to such credit as may be required by
the Secretary;
(2) an affirmation that the license applicant or its
members, directors, or principals, as may be appropriate,
are at least 18 years of age;
(3) information as to the character, fitness,
financial and business responsibility, background,
experience, and criminal record of any (i) person, entity,
or ultimate equitable owner that owns or controls, directly
or indirectly, 10% or more of any class of stock of the
license applicant; (ii) person, entity, or ultimate
equitable owner that is not a depository institution, as
defined in Section 1007.50 of the Savings Bank Act, that
lends, provides, or infuses, directly or indirectly, in any
way, funds to or into a license applicant in an amount
equal to or more than 10% of the license applicant's net
worth; (iii) person, entity, or ultimate equitable owner
that controls, directly or indirectly, the election of 25%
or more of the members of the board of directors of a
license applicant; or (iv) person, entity, or ultimate
equitable owner that the Secretary finds influences
management of the license applicant; the provisions of this
subsection shall not apply to a public official serving on
the board of directors of a State guaranty agency;
(4) upon written request by the licensee and
notwithstanding the provisions of paragraphs (1), (2), and
(3) of this subsection, the Secretary may permit the
licensee to omit all or part of the information required by
those paragraphs if, in lieu of the omitted information,
the licensee submits an affidavit stating that the
information submitted on the licensee's previous renewal
application is still true and accurate; the Secretary may
adopt rules prescribing the form and content of the
affidavit that are necessary to accomplish the purposes of
this Section; and
(5) such other information as required by rules of the
Secretary.
Section 15-25. Student loan servicer license application
and issuance.
(a) Applicants for a license shall apply in a form
prescribed by the Secretary. Each form shall contain content as
set forth by rule, regulation, instruction, or procedure of the
Secretary and may be changed or updated as necessary by the
Secretary in order to carry out the purposes of this Act.
(b) In order to fulfill the purposes of this Act, the
Secretary 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 Secretary 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 Secretary may use the Nationwide
Mortgage Licensing System and Registry as a channeling agent
for requesting information from and distributing information
to the federal 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 Secretary may have to
maintain for purposes of paragraph (2) of subsection (c) of
this Section, the Secretary may use the Nationwide Mortgage
Licensing System and Registry as a channeling agent for
requesting and distributing information to and from any source
as directed by the Secretary.
(f) The provisions of this Section shall not apply to a
public official serving on the board of directors of a State
guaranty agency.
Section 15-30. Averments of licensee. Each application for
license shall be accompanied by the following averments stating
that the applicant:
(1) will file with the Secretary or Nationwide Mortgage
Licensing System and Registry, as applicable, when due, any
report or reports that it is required to file under any of
the provisions of this Act;
(2) has not committed a crime against the law of this
State, any other state, or of the United States involving
moral turpitude or 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 that has not been previously reported to the
Secretary;
(3) has not engaged in any conduct that would be cause
for denial of a license;
(4) has not become insolvent;
(5) has not submitted an application for a license
under this Act that contains a material misstatement;
(6) 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;
(7) will advise the Secretary 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 or averments of
record within 30 days of the change; the written notice
must be signed in the same form as the application for the
license being amended;
(8) will comply with the provisions of this Act and
with any lawful order, rule, or regulation made or issued
under the provisions of this Act;
(9) will submit to periodic examination by the
Secretary as required by this Act; and
(10) will advise the Secretary in writing of judgments
entered against and bankruptcy petitions by the license
applicant within 5 days after the occurrence.
A licensee who fails to fulfill the obligations of an
averment, fails to comply with averments made, or otherwise
violates any of the averments made under this Section shall be
subject to the penalties of this Act.
Section 15-35. Refusal to issue license. The Secretary
shall refuse to issue or renew a license if:
(1) it is determined that the applicant is not in
compliance with any provisions of this Act;
(2) there is substantial continuity between the
applicant and any violator of this Act; or
(3) the Secretary cannot make the findings specified in
subsection (a) of Section 15-15 of this Act.
Section 15-40. License issuance and renewal; fees.
(a) Licenses shall be renewed every year using the common
renewal date of the Nationwide Mortgage Licensing System and
Registry, as adopted by the Secretary. Properly completed
renewal application forms and filing fees may be received by
the Secretary 60 days prior to the license expiration date,
but, to be deemed timely, the completed renewal application
forms and filing fees must be received by the Secretary no
later than 30 days prior to the license expiration date.
(b) It shall be the responsibility of each licensee to
accomplish renewal of its license. Failure by a licensee to
submit a properly completed renewal application form and fees
in a timely fashion, absent a written extension from the
Secretary, shall result in the license becoming inactive.
(c) No activity regulated by this Act shall be conducted by
the licensee when a license becomes inactive. An inactive
license may be reactivated by the Secretary upon payment of the
renewal fee and payment of a reactivation fee equal to the
renewal fee.
(d) A licensee ceasing an activity or activities regulated
by this Act and desiring to no longer be licensed shall so
inform the Secretary in writing and, at the same time, convey
any license issued and all other symbols or indicia of
licensure. The licensee shall include a plan for the withdrawal
from regulated business, including a timetable for the
disposition of the business, and comply with the surrender
guidelines or requirements of the Secretary. Upon receipt of
such written notice, the Secretary shall post the cancellation
or issue a certified statement canceling the license.
(e) The expenses of administering this Act, including
investigations and examinations provided for in this Act, shall
be borne by and assessed against entities regulated by this
Act. Subject to the limitations set forth in Section 15-15 of
this Act, the Secretary shall establish fees by rule in at
least the following categories:
(1) investigation of licensees and license applicant
fees;
(2) examination fees;
(3) contingent fees; and
(4) such other categories as may be required to
administer this Act.
ARTICLE 20. SUPERVISION
Section 20-5. Functions; powers; duties. The functions,
powers, and duties of the Secretary shall include the
following:
(1) to issue or refuse to issue any license as provided
by this Act;
(2) to revoke or suspend for cause any license issued
under this Act;
(3) to keep records of all licenses issued under this
Act;
(4) to receive, consider, investigate, and act upon
complaints made by any person in connection with any
student loan servicing licensee in this State;
(5) to prescribe the forms of and receive:
(A) applications for licenses; and
(B) all reports and all books and records required
to be made by any licensee under this Act, including
annual audited financial statements and annual reports
of student loan activity;
(6) to adopt rules necessary and proper for the
administration of this Act;
(7) to subpoena documents and witnesses and compel
their attendance and production, to administer oaths, and
to require the production of any books, papers, or other
materials relevant to any inquiry authorized by this Act;
(8) to issue orders against any person if the Secretary
has reasonable cause to believe that an unsafe, unsound, or
unlawful practice has occurred, is occurring, or is about
to occur; if any person has violated, is violating, or is
about to violate any law, rule, or written agreement with
the Secretary; or for the purpose of administering the
provisions of this Act and any rule adopted in accordance
with this Act;
(9) to address any inquiries to any licensee, or the
officers thereof, in relation to its activities and
conditions, or any other matter connected with its affairs,
and it shall be the duty of any licensee or person so
addressed to promptly reply in writing to those inquiries;
the Secretary may also require reports from any licensee at
any time the Secretary may deem desirable;
(10) to examine the books and records of every licensee
under this Act;
(11) to enforce provisions of this Act;
(12) to levy fees, fines, and charges for services
performed in administering this Act; the aggregate of all
fees collected by the Secretary on and after the effective
date of this Act shall be paid promptly after receipt,
accompanied by a detailed statement thereof, into the Bank
and Trust Company Fund under Section 20-10; the amounts
deposited into that Fund shall be used for the ordinary and
contingent expenses of the Department; nothing in this Act
shall prevent the continuation of the practice of paying
expenses involving salaries, retirement, social security,
and State-paid insurance of State officers by
appropriation from the General Revenue Fund;
(13) to appoint examiners, supervisors, experts, and
special assistants as needed to effectively and
efficiently administer this Act;
(14) to conduct hearings for the purpose of:
(A) appeals of orders of the Secretary;
(B) suspensions or revocations of licenses, or
fining of licensees;
(C) investigating:
(i) complaints against licensees; or
(ii) annual gross delinquency rates; and
(D) carrying out the purposes of this Act;
(15) to exercise exclusive visitorial power over a
licensee unless otherwise authorized by this Act or as
vested in the courts, or upon prior consultation with the
Secretary, a foreign student loan servicing regulator with
an appropriate supervisory interest in the parent or
affiliate of a licensee;
(16) to enter into cooperative agreements with state
regulatory authorities of other states to provide for
examination of corporate offices or branches of those
states and to accept reports of such examinations;
(17) to assign an examiner or examiners to monitor the
affairs of a licensee with whatever frequency the Secretary
determines appropriate and to charge the licensee for
reasonable and necessary expenses of the Secretary if in
the opinion of the Secretary an emergency exists or appears
likely to occur;
(18) to impose civil penalties of up to $50 per day
against a licensee for failing to respond to a regulatory
request or reporting requirement; and
(19) to enter into agreements in connection with the
Nationwide Mortgage Licensing System and Registry.
Section 20-10. Bank and Trust Company Fund. All moneys
received by the Secretary under this Act in conjunction with
the provisions relating to student loan servicers shall be paid
into and all expenses incurred by the Secretary under this Act
in conjunction with the provisions relating to student loan
servicers shall be paid from the Bank and Trust Company Fund.
Section 20-15. Examination; prohibited activities.
(a) The business affairs of a licensee under this Act shall
be examined for compliance with this Act as often as the
Secretary deems necessary and proper. The Secretary may adopt
rules with respect to the frequency and manner of examination.
The Secretary shall appoint a suitable person to perform such
examination. The Secretary and his or her appointees may
examine the entire books, records, documents, and operations of
each licensee and its subsidiary, affiliate, or agent, and may
examine any of the licensee's or its subsidiary's, affiliate's,
or agent's officers, directors, employees, and agents under
oath.
(b) The Secretary shall prepare a sufficiently detailed
report of each licensee's examination, shall issue a copy of
such report to each licensee's principals, officers, or
directors, and shall take appropriate steps to ensure
correction of violations of this Act.
(c) Affiliates of a licensee shall be subject to
examination by the Secretary on the same terms as the licensee,
but only when reports from or examination of a licensee
provides for documented evidence of unlawful activity between a
licensee and affiliate benefiting, affecting, or deriving from
the activities regulated by this Act.
(d) The expenses of any examination of the licensee and
affiliates shall be borne by the licensee and assessed by the
Secretary as may be established by rule.
(e) Upon completion of the examination, the Secretary shall
issue a report to the licensee. All confidential supervisory
information, including the examination report and the work
papers of the report, shall belong to the Secretary's office
and may not be disclosed to anyone other than the licensee, law
enforcement officials or other regulatory agencies that have an
appropriate regulatory interest as determined by the
Secretary, or to a party presenting a lawful subpoena to the
Department. The Secretary may, through the Attorney General,
immediately appeal to the court of jurisdiction the disclosure
of such confidential supervisory information and seek a stay of
the subpoena pending the outcome of the appeal. Reports
required of licensees by the Secretary under this Act and
results of examinations performed by the Secretary under this
Act shall be the property of only the Secretary, but may be
shared with the licensee. Access under this Act to the books
and records of each licensee shall be limited to the Secretary
and his or her agents as provided in this Act and to the
licensee and its authorized agents and designees. No other
person shall have access to the books and records of a licensee
under this Act. Any person upon whom a demand for production of
confidential supervisory information is made, whether by
subpoena, order, or other judicial or administrative process,
must withhold production of the confidential supervisory
information and must notify the Secretary of the demand, at
which time the Secretary is authorized to intervene for the
purpose of enforcing the limitations of this Section or seeking
the withdrawal or termination of the attempt to compel
production of the confidential supervisory information. The
Secretary may impose any conditions and limitations on the
disclosure of confidential supervisory information that are
necessary to protect the confidentiality of that information.
Except as authorized by the Secretary, no person obtaining
access to confidential supervisory information may make a copy
of the confidential supervisory information. The Secretary may
condition a decision to disclose confidential supervisory
information on entry of a protective order by the court or
administrative tribunal presiding in the particular case or on
a written agreement of confidentiality. In a case in which a
protective order or agreement has already been entered between
parties other than the Secretary, the Secretary may
nevertheless condition approval for release of confidential
supervisory information upon the inclusion of additional or
amended provisions in the protective order. The Secretary may
authorize a party who obtained the records for use in one case
to provide them to another party in another case, subject to
any conditions that the Secretary may impose on either or both
parties. The requester shall promptly notify other parties to a
case of the release of confidential supervisory information
obtained and, upon entry of a protective order, shall provide
copies of confidential supervisory information to the other
parties.
(f) The Secretary and employees of the Department shall be
subject to the restrictions provided in Section 2.5 of the
Division of Banking Act, including, without limitation, the
restrictions on (i) owning shares of stock or holding any other
equity interest in an entity regulated under this Act or in any
corporation or company that owns or controls an entity
regulated under this Act; (ii) being an officer, director,
employee, or agent of an entity regulated under this Act; and
(iii) obtaining a loan or accepting a gratuity from an entity
regulated under this Act.
Section 20-20. Subpoena power of the Secretary.
(a) The Secretary shall have the power to issue and to
serve subpoenas and subpoenas duces tecum to compel the
attendance of witnesses and the production of all books,
accounts, records, and other documents and materials relevant
to an examination or investigation. The Secretary, or his or
her duly authorized representative, shall have power to
administer oaths and affirmations to any person.
(b) In the event of noncompliance with a subpoena or
subpoena duces tecum issued or caused to be issued by the
Secretary, the Secretary may, through the Attorney General,
petition the circuit court of the county in which the person
subpoenaed resides or has its principal place of business for
an order requiring the subpoenaed person to appear and testify
and to produce such books, accounts, records, and other
documents as are specified in the subpoena duces tecum. The
court may grant injunctive relief restraining the person from
advertising, promoting, soliciting, entering into, offering to
enter into, continuing, or completing any student loan
servicing transaction. The court may grant other relief,
including, but not limited to, the restraint, by injunction or
appointment of a receiver, of any transfer, pledge, assignment,
or other disposition of the person's assets or any concealment,
alteration, destruction, or other disposition of books,
accounts, records, or other documents and materials as the
court deems appropriate, until the person has fully complied
with the subpoena or subpoena duces tecum and the Secretary has
completed an investigation or examination.
(c) If it appears to the Secretary that the compliance with
a subpoena or subpoena duces tecum issued or caused to be
issued by the Secretary pursuant to this Section is essential
to an investigation or examination, the Secretary, in addition
to the other remedies provided for in this Act, may, through
the Attorney General, apply for relief to the circuit court of
the county in which the subpoenaed person resides or has its
principal place of business. The court shall thereupon direct
the issuance of an order against the subpoenaed person
requiring sufficient bond conditioned on compliance with the
subpoena or subpoena duces tecum. The court shall cause to be
endorsed on the order a suitable amount of bond or payment
pursuant to which the person named in the order shall be freed,
having a due regard to the nature of the case.
(d) In addition, the Secretary may, through the Attorney
General, seek a writ of attachment or an equivalent order from
the circuit court having jurisdiction over the person who has
refused to obey a subpoena, who has refused to give testimony,
or who has refused to produce the matters described in the
subpoena duces tecum.
Section 20-25. Report required of licensee. In addition to
any reports required under this Act, every licensee shall file
any other report the Secretary requests.
Section 20-30. Suspension; revocation of licenses; fines.
(a) Upon written notice to a licensee, the Secretary may
suspend or revoke any license issued pursuant to this Act if,
in the notice, he or she makes a finding of one or more of the
following:
(1) that through separate acts or an act or a course of
conduct, the licensee has violated any provisions of this
Act, any rule adopted by the Secretary, or any other law,
rule, or regulation of this State or the United States;
(2) that any fact or condition exists that, if it had
existed at the time of the original application for the
license, would have warranted the Secretary in refusing
originally to issue the license; or
(3) that 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 acted or failed to act in a way that 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 20-65 of this Act.
(c) The Secretary, on good cause shown that an emergency
exists, may suspend any license for a period not exceeding 180
days, pending investigation.
(d) The provisions of subsection (d) of Section 15-40 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 license expires without renewal, is
surrendered, is revoked, or is suspended in accordance with the
provisions of this Act, but the Secretary shall have authority
to reinstate a suspended license or to issue a new license to a
licensee whose license has been revoked if no fact or condition
then exists which would have warranted the Secretary in
refusing originally to issue that license under this Act.
(g) Whenever the Secretary revokes or suspends a license
issued pursuant to this Act or fines a licensee under this Act,
he or she shall execute a written order to that effect. The
Secretary shall post notice of the order on an agency Internet
site maintained by the Secretary or on the Nationwide Mortgage
Licensing System and Registry and shall serve a copy of the
order upon the licensee. Any such order may be reviewed in the
manner provided by Section 20-65 of this Act.
(h) If the Secretary 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 Secretary
may specify;
(3) placement of the licensee or applicant on probation
for a period of time and subject to all reasonable
conditions as the Secretary may specify;
(4) issuance of a reprimand;
(5) imposition of a fine not to exceed $25,000 for each
count of separate offense; except 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;
or
(6) denial of a license.
(i) The following acts shall constitute grounds for which
the disciplinary actions specified in subsection (h) may be
taken:
(1) being convicted or found guilty, regardless of
pendency of an appeal, of a crime in any jurisdiction that
involves fraud, dishonest dealing, or any other act of
moral turpitude;
(2) fraud, misrepresentation, deceit, or negligence in
any student loan transaction;
(3) a material or intentional misstatement of fact on
an initial or renewal application;
(4) insolvency or filing under any provision of the
federal Bankruptcy Code as a debtor;
(5) failure to account or deliver to any person any
property, such as any money, fund, deposit, check, draft,
or other document or thing of value, that has come into his
or her hands and that is not his or her property or that 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;
(6) failure to disburse funds in accordance with
agreements;
(7) 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;
(8) failure to comply with an order of the Secretary or
rule made or issued under the provisions of this Act;
(9) engaging in activities regulated by this Act
without a current, active license unless specifically
exempted by this Act;
(10) failure to pay in a timely manner any fee, charge,
or fine under this Act;
(11) 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
Secretary;
(12) 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 Secretary's subpoena or subpoena duces tecum; and
(13) failure to comply with or a violation of any
provision of this 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) A 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) Procedures for surrender of a license include the
following:
(1) The Secretary 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 for the contemplated action 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 under this Act 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 Secretary
lawfully made pursuant to the authority of this Act; or
(ii) any fact or condition exists that, if it had
existed at the time of the original application for the
license, clearly would have warranted the Secretary in
refusing to issue the license.
(2) Any licensee may submit an application to surrender
a license, but, upon the Secretary 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.
Section 20-35. Investigation of complaints. The Secretary
shall at all times maintain staff and facilities adequate to
receive, record, and investigate complaints and inquiries made
by any person concerning this Act and any licensees under this
Act. Each licensee shall open its books, records, documents,
and offices wherever situated to the Secretary or his or her
appointees as needed to facilitate such investigations.
Section 20-40. Additional investigation and examination
authority. In addition to any authority allowed under this Act,
the Secretary shall have the authority to conduct
investigations and examinations as follows:
(1) For purposes of initial licensing, license
renewal, license suspension, license conditioning, license
revocation or termination, or general or specific inquiry
or investigation to determine compliance with this Act, the
Secretary shall have the authority to access, receive, and
use any books, accounts, records, files, documents,
information, or evidence, including, but not limited to,
the following:
(A) criminal, civil, and administrative history
information, including nonconviction data as specified
in the Criminal Code of 2012;
(B) personal history and experience information,
including independent credit reports obtained from a
consumer reporting agency described in Section 603(p)
of the federal Fair Credit Reporting Act; and
(C) any other documents, information, or evidence
the Secretary deems relevant to the inquiry or
investigation, regardless of the location, possession,
control, or custody of the documents, information, or
evidence.
(2) For the purposes of investigating violations or
complaints arising under this Act or for the purposes of
examination, the Secretary may review, investigate, or
examine any licensee, individual, or person subject to this
Act as often as necessary in order to carry out the
purposes of this Act. The Secretary may direct, subpoena,
or order the attendance of and examine under oath all
persons whose testimony may be required about the loans or
the business or subject matter of any such examination or
investigation, and may direct, subpoena, or order the
person to produce books, accounts, records, files, and any
other documents the Secretary deems relevant to the
inquiry.
(3) Each licensee, individual, or person subject to
this Act shall make available to the Secretary upon request
the books and records relating to the operations of the
licensee, individual, or person subject to this Act. The
Secretary shall have access to those books and records and
interview the officers, principals, employees, independent
contractors, agents, and customers of the licensee,
individual, or person subject to this Act concerning their
business.
(4) Each licensee, individual, or person subject to
this Act shall make or compile reports or prepare other
information as directed by the Secretary in order to carry
out the purposes of this Section, including, but not
limited to:
(A) accounting compilations;
(B) information lists and data concerning loan
transactions in a format prescribed by the Secretary;
or
(C) other information deemed necessary to carry
out the purposes of this Section.
(5) In making any examination or investigation
authorized by this Act, the Secretary may control access to
any documents and records of the licensee or person under
examination or investigation. The Secretary may take
possession of the documents and records or place a person
in exclusive charge of the documents and records in the
place where they are usually kept. During the period of
control, no person shall remove or attempt to remove any of
the documents or records, except pursuant to a court order
or with the consent of the Secretary. Unless the Secretary
has reasonable grounds to believe the documents or records
of the licensee have been, or are at risk of being altered
or destroyed for purposes of concealing a violation of this
Act, the licensee or owner of the documents and records
shall have access to the documents or records as necessary
to conduct its ordinary business affairs.
(6) In order to carry out the purposes of this Section,
the Secretary may:
(A) retain attorneys, accountants, or other
professionals and specialists as examiners, auditors,
or investigators to conduct or assist in the conduct of
examinations or investigations;
(B) enter into agreements or relationships with
other government officials or regulatory associations
in order to improve efficiencies and reduce regulatory
burden by sharing resources, standardized or uniform
methods or procedures, and documents, records,
information, or evidence obtained under this Section;
(C) use, hire, contract, or employ public or
privately available analytical systems, methods, or
software to examine or investigate the licensee,
individual, or person subject to this Act;
(D) accept and rely on examination or
investigation reports made by other government
officials, within or outside this State; or
(E) accept audit reports made by an independent
certified public accountant for the licensee,
individual, or person subject to this Act in the course
of that part of the examination covering the same
general subject matter as the audit and may incorporate
the audit report in the report of the examination,
report of investigation, or other writing of the
Secretary.
(7) The authority of this Section shall remain in
effect, whether such a licensee, individual, or person
subject to this Act acts or claims to act under any
licensing or registration law of this State or claims to
act without the authority.
(8) No licensee, individual, or person subject to
investigation or examination under this Section may
knowingly withhold, abstract, remove, mutilate, destroy,
or secrete any books, records, computer records, or other
information.
Section 20-45. Confidential information. In hearings
conducted under this Act, information presented into evidence
that was acquired by the licensee when serving any individual
in connection with a student loan, including all financial
information of the individual, shall be deemed strictly
confidential and shall be made available only as part of the
record of a hearing under this Act or otherwise (i) when the
record is required, in its entirety, for purposes of judicial
review or (ii) upon the express written consent of the
individual served, or in the case of his or her death or
disability, the consent of his or her personal representative.
Section 20-50. Confidentiality.
(a) In order to promote more effective regulation and
reduce regulatory burden through supervisory information
sharing, except as otherwise provided in federal Public Law
110-289, Section 1512, the requirements under any federal law
or State law regarding the privacy or confidentiality of any
information or material provided to the Nationwide Mortgage
Licensing System and Registry, and any privilege arising under
federal or State law, including the rules of any federal or
State court, with respect to such information or material,
shall continue to apply to information or material after the
information or material has been disclosed to the Nationwide
Mortgage Licensing System and Registry. The information and
material may be shared with all State and federal regulatory
officials with student loan industry oversight authority
without the loss of privilege or the loss of confidentiality
protections provided by federal law or State law.
(b) In order to promote more effective regulation and
reduce regulatory burden through supervisory information
sharing, the Secretary is authorized to enter agreements or
sharing arrangements with other governmental agencies, the
Conference of State Bank Supervisors or other associations
representing governmental agencies as established by rule,
regulation, or order of the Secretary. The sharing of
confidential supervisory information or any information or
material described in subsection (a) of this Section pursuant
to an agreement or sharing arrangement shall not result in the
loss of privilege or the loss of confidentiality protections
provided by federal law or State law.
(c) In order to promote more effective regulation and
reduce regulatory burden through supervisory information
sharing, information or material that is subject to a privilege
or confidentiality under subsection (a) of this Section shall
not be subject to the following:
(1) disclosure under any State law governing the
disclosure to the public of information held by an officer
or an agency of the State; or
(2) subpoena or discovery, or admission into evidence,
in any private civil action or administrative process,
unless with respect to any privilege held by the Nationwide
Mortgage Licensing System and Registry with respect to the
information or material, the person to whom such
information or material pertains waives, in whole or in
part, in the discretion of that person, that privilege.
(d) In order to promote more effective regulation and
reduce regulatory burden through supervisory information
sharing, any other law relating to the disclosure of
confidential supervisory information or any information or
material described in subsection (a) of this Section that is
inconsistent with subsection (a) of this Section shall be
superseded by the requirements of this Section to the extent
the other law provides less confidentiality or a weaker
privilege.
Section 20-55. Reports of violations. Any person licensed
under this Act or any other person may report to the Secretary
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 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.
Section 20-60. Rules and regulations of the Secretary.
(a) In addition to such powers as may be prescribed by this
Act, the Secretary is hereby authorized and empowered to adopt
rules consistent with the purposes of this Act, including, but
not limited to:
(1) rules in connection with the activities of
licensees as may be necessary and appropriate for the
protection of consumers in this State;
(2) rules as may be necessary and appropriate to define
improper or fraudulent business practices in connection
with the activities of licensees in servicing student
loans;
(3) rules that define the terms used in this Act and as
may be necessary and appropriate to interpret and implement
the provisions of this Act; and
(4) rules as may be necessary for the enforcement of
this Act.
(b) The Secretary is hereby authorized and empowered to
make specific rulings, demands, and findings that he or she
deems necessary for the proper conduct of the student loan
servicing industry.
(c) A person or entity may make a written application to
the Department for a written interpretation of this Act. The
Department may then, in its sole discretion, choose to issue a
written interpretation. To be valid, a written interpretation
must be signed by the Secretary, or his or her designee, and
the Department's General Counsel. A written interpretation
expires 2 years after the date that it was issued.
(d) No provision in this Act that imposes liability or
establishes violations shall apply to any act taken by a person
or entity in conformity with a written interpretation of this
Act that is in effect at the time the act is taken,
notwithstanding whether the written interpretation is later
amended, rescinded, or determined by judicial or other
authority to be invalid for any reason.
Section 20-65. Appeal and review.
(a) Any person or entity affected by a decision of the
Secretary under any provision of this Act may obtain review of
that decision within the Department.
(b) The Secretary may, in accordance with the Illinois
Administrative Procedure Act, adopt rules to provide for review
within the Department of his or her decisions affecting the
rights of entities under this Act. The review shall provide
for, at a minimum:
(1) appointment of a hearing officer other than a
regular employee of the Department;
(2) appropriate procedural rules, specific deadlines
for filings, and standards of evidence and of proof; and
(3) provision for apportioning costs among parties to
the appeal.
(c) All final agency determinations of appeals to decisions
of the Secretary may be reviewed in accordance with and under
the provisions of the Administrative Review Law. Appeals from
all final orders and judgments entered by a court in review of
any final administrative decision of the Secretary or of any
final agency review of a decision of the Secretary may be taken
as in other civil cases.
Section 20-70. Violations of this Act; Secretary's orders.
If the Secretary finds, as the result of examination,
investigation, or review of reports submitted by a licensee,
that the business and affairs of a licensee are not being
conducted in accordance with this Act, the Secretary shall
notify the licensee of the correction necessary. If a licensee
fails to correct such violations, the Secretary shall issue an
order requiring immediate correction and compliance with this
Act, specifying a reasonable date for performance.
The Secretary may adopt rules to provide for an orderly and
timely appeal of all orders within the Department. The rules
may include provision for assessment of fees and costs.
Section 20-75. Collection of compensation. Unless exempt
from licensure under this Act, no person engaged in or offering
to engage in any act or service for which a license under this
Act is required may bring or maintain any action in any court
of this State to collect compensation for the performance of
the licensable services without alleging and proving that he or
she was the holder of a valid student loan servicing license
under this Act at all times during the performance of those
services.
Section 20-80. Licensure fees.
(a) The fees for licensure shall be a $1,000 application
fee and an additional $800 fee for investigation performed in
conjunction with Section 15-5. The fees are nonrefundable.
(b) The fee for an application renewal shall be $1,000. The
fee is nonrefundable.
Section 20-85. Injunction. The Secretary, through the
Attorney General, may maintain an action in the name of the
people of the State of Illinois and may apply for an injunction
in the circuit court to enjoin a person from engaging in
unlicensed student loan servicing activity.
ARTICLE 25. CONSUMER FRAUD AND DECEPTIVE BUSINESS
PRACTICES ACT
Section 25-5. Enforcement; Consumer Fraud and Deceptive
Business Practices Act. The Attorney General may enforce a
violation of Article 5 of this Act as an unlawful practice
under the Consumer Fraud and Deceptive Business Practices Act.
ARTICLE 99. SEVERABILITY; EFFECTIVE DATE
Section 99-1. Severability. The provisions of this Act are
severable under Section 1.31 of the Statute on Statutes.
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