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| Public Act 103-1015
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| SB3551 Enrolled | LRB103 37488 RTM 67611 b |
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AN ACT concerning regulation.
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Be it enacted by the People of the State of Illinois, |
represented in the General Assembly:
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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:
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(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.)
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(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).
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Section 10. The Residential Real Property Disclosure Act |
is amended by changing Section 70 as follows:
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