Bill Text: IL SB3551 | 2023-2024 | 103rd General Assembly | Engrossed

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Bill Title: Amends the Residential Mortgage License Act of 1987. Provides that, prior to taking any legally binding action on a shared appreciation agreement, the borrower or borrowers shall be provided specified counseling regardless of the county in which the property is located. Provides that the borrower may not waive counseling. Provides that the Secretary of Financial and Professional Regulation may adopt rules relating to shared appreciation agreements. Defines "shared appreciation agreement", and includes shared appreciation agreements within the definition of "mortgage loan", "residential mortgage loan", or "home mortgage loan". Defines "shared appreciation agreement" as a writing evidencing a transaction or any option, future, or any other derivative between a person and a consumer is which the consumer receives money or any other item of value in exchange for an interest or future interest in a dwelling or residential real estate or a future obligation to repay a sum on the occurrence of an event, such as (i) the transfer of ownership, (ii) a repayment maturity date, (iii) the death of the consumer, or (iv) any other event contemplated by the writing. Amends the Residential Real Property Disclosure Act. Defines "counseling". Effective immediately.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Engrossed) 2024-04-24 - Assigned to Financial Institutions and Licensing Committee [SB3551 Detail]

Download: Illinois-2023-SB3551-Engrossed.html

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AN ACT concerning regulation.
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 Section 1-4 and by adding Section 5-12.5
as follows:
(205 ILCS 635/1-4)
Sec. 1-4. Definitions. The following words and phrases
have the meanings given to them in this Section:
(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.
Those terms include a manufactured home as defined in
subdivision (53) of Section 9-102 of the Uniform Commercial
Code which is real property as defined in Section 5-35 of the
Conveyance and Encumbrance of Manufactured Homes as Real
Property and Severance Act.
(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

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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) (blank); (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

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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

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mortgage loans in any one calendar year.
(2) (Blank).
(2.1) A bona fide nonprofit organization.
(2.2) An employee of a bona fide nonprofit
organization when acting on behalf of that organization.
(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).
(7) Any entity engaged solely in providing loan
processing services through the sponsoring of individuals
acting pursuant to subsection (d) of Section 7-1A of this
Act.
(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

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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.
"Mortgage loan", "residential mortgage loan", or "home
mortgage loan" includes a loan in which funds are advanced
through a shared appreciation agreement.
(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

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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

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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),
(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

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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 or independent contractors, 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

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or her periodic examination of each licensee. "Full service
office" does not include a remote location.
(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) (Blank).
(y) "Government-insured mortgage loan" shall mean any

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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;

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(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.
(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

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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) (Blank).
(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

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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

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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

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(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 Multistate 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

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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

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(C) an institution regulated by the Farm Credit
Administration; and
(2) is registered with, and maintains a unique
identifier through, the Nationwide Multistate Licensing
System and Registry.
(uu) "Unique identifier" means a number or other
identifier assigned by protocols established by the Nationwide
Multistate 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

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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.
(aaa) "Bona fide nonprofit organization" means an
organization that is described in Section 501(c)(3) of the
Internal Revenue Code, is exempt from federal income tax under
Section 501(a) of the Internal Revenue Code, does not operate
in a commercial context, and does all of the following:
(1) Promotes affordable housing or provides home
ownership education or similar services.
(2) Conducts its activities in a manner that serves
public or charitable purposes.
(3) Receives funding and revenue and charges fees in a
manner that does not create an incentive for itself or its
employees to act other than in the best interests of its
clients.
(4) Compensates its employees in a manner that does
not create an incentive for its employees to act other
than in the best interests of its clients.
(5) Provides to, or identifies for, the borrower
residential mortgage loans with terms favorable to the
borrower and comparable to residential mortgage loans and
housing assistance provided under government housing
assistance programs.

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(bbb) "Remote location" means a location other than a
principal place of business or a full service office at which a
mortgage loan originator of a licensee may conduct business.
(ccc) "Shared appreciation agreement" means a writing
evidencing a transaction or any option, future, or any other
derivative between a person and a consumer where the consumer
receives money or any other item of value in exchange for an
interest or future interest in a dwelling or residential real
estate or a future obligation to repay a sum on the occurrence
of an event, such as:
(1) the transfer of ownership;
(2) a repayment maturity date;
(3) the death of the consumer; or
(4) any other event contemplated by the writing.
The Commissioner may define by rule and regulation any
terms used in this Act for the efficient and clear
administration of this Act.
(Source: P.A. 103-156, eff. 1-1-24.)
(205 ILCS 635/5-12.5 new)
Sec. 5-12.5. Shared appreciation agreement consumer
counseling and disclosures.
(a) Notwithstanding any provision in this Act to the
contrary, before taking any legally binding action on a shared
appreciation agreement, the borrower or borrowers shall be
provided counseling. The borrower may not waive counseling.

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(b) The Secretary may adopt rules relating to shared
appreciation agreements, including, but not limited to, rules
defining statutory terms; relating to disclosures to help
consumers understand the cost, duration, and fees of the
agreement, as well as potential alternatives; on the limits on
the interest or other fees that may be charged to a borrower;
and relating to counseling under subsection (a).
Section 10. The Residential Real Property Disclosure Act
is amended by changing Section 70 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

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instructions of the entity financing the transaction.
"Counseling" means in-person counseling provided by a
counselor employed by a HUD-approved counseling agency to all
borrowers. Counseling must be provided in the following
manner:
(i) in person; or
(ii) by remote electronic or telephonic means, with
the permission of all borrowers, where the session can be
conducted in privacy, the counselor is able to verify the
identity of each borrower, and the counseling is
documented by the counselor, subject to any rules that may
be enacted by the Department , 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-approved housing counseling agency.
"Counselor" means a counselor employed by a HUD-approved
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

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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 or entity" means that term as it is defined
in subsection subsections (d)(1), (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-approved counseling" or "counseling" means counseling
given to a borrower by a counselor employed by a HUD-approved
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

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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 "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

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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 business 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

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Department by rule. Within 7 business 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
business days thereafter, the broker or originator shall
re-submit all of the information required under Section 72
and, within 4 business 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-approved
counseling agencies located within the State and, where

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applicable, nationally HUD-approved counseling agencies, and
direct the borrower to interview with a counselor associated
with one of those agencies. Within 10 business days after
receipt of the notice of HUD-approved counseling agencies, it
is the borrower's responsibility to select one of those
agencies and shall engage in an interview with a counselor
associated with that agency. The borrower must supply all
necessary documents, as set forth by the counselor, at least
72 hours before the scheduled interview. The selection must
take place and the appointment for the interview must be set
within 10 business days, although the interview may take place
beyond the 10 business day period. Within 7 business 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 and shall not
be charged back to, or recovered from, the borrower. 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

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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-approved counseling for the borrower in
accordance with subsection (c); or
(2) the Department issues a determination that
HUD-approved counseling is recommended for the borrower
and the counselor submits all required information to the
database in accordance with subsection (d).
(f) Within 10 business 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 transaction is exempt, the title insurance company or

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closing agent shall attach to the mortgage a certificate of
exemption, as generated by the database. Each certificate of
compliance or certificate of exemption must contain, at a
minimum, one of the borrower's names on the mortgage loan and
the property index number for the subject property. If the
title insurance company or closing agent fails to attach the
certificate of compliance or exemption, whichever is required,
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. A lis pendens
filed after July 1, 2016 shall be filed with the Department
electronically. 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

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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

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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.

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