Bill Text: IL HB4011 | 2009-2010 | 96th General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Residential Mortgage License Act of 1987. States the purpose of the State's participation in the Nationwide Mortgage Licensing System and Registry. Contains provisions concerning (1) the application process, (2) the application form, and (3) averments of a licensee. Contains provisions concerning license issuance and renewal, including fees. Specifies the office and staff requirements for licensees. Provides that the Commissioner of Banks and Real Estate may enter into agreements in connection with the Nationwide Mortgage Licensing System and Registry. Prohibits the Commissioner from specified activities. Contains provisions concerning the suspension and revocation of licenses. Provides that the Director of the Division of Banking of the Department of Financial and Professional Regulation shall have additional investigation and examination authority. Contains provisions concerning the confidentiality of information associated with the Registry. Contains provisions concerning a mortgage loan originator license, its application, and issuance procedures. Contains provisions concerning pre-licensing education and testing of mortgage loan originators. Contains provisions concerning (1) license renewal standards and (2) continuing education of mortgage loan originators. Contains provisions concerning the duties, processes, discipline, bond requirements, and prohibited acts with respect to the Registry and mortgage loan originators. Makes other changes. Contains a severability clause. Effective immediately.

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Passed) 2009-07-31 - Public Act . . . . . . . . . 96-0112 [HB4011 Detail]

Download: Illinois-2009-HB4011-Introduced.html

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96TH GENERAL ASSEMBLY State of Illinois 2009 and 2010 HB4011 Introduced 2/26/2009, by Rep. Marlow H. Colvin SYNOPSIS AS INTRODUCED:
See Index
Amends the Residential Mortgage License Act of 1987. States the purpose of the State's participation in the Nationwide Mortgage Licensing System and Registry. Contains provisions concerning (1) the application process, (2) the application form, and (3) averments of a licensee. Contains provisions concerning license issuance and renewal, including fees. Specifies the office and staff requirements for licensees. Provides that the Commissioner of Banks and Real Estate may enter into agreements in connection with the Nationwide Mortgage Licensing System and Registry. Prohibits the Commission from specified activities. Contains provisions concerning the suspension and revocation of licenses. Provides that the Director of the Division of Banking of the Department of Financial and Professional Regulation shall have additional investigation and examination authority. Contains provisions concerning the confidentiality of information associated with the Registry. Contains provisions concerning a mortgage loan originator license, its application, and issuance procedures. Contains provisions concerning pre-licensing education and testing of mortgage loan originators. Contains provisions concerning (1) license renewal standards and (2) continuing education of mortgage loan originators. Contains provisions concerning the duties, processes, discipline, bond requirements, and prohibited acts with respect to the Registry and mortgage loan originators. Makes other changes. Contains a severability clause. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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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 Sections 1-2, 1-4, 2-2, 2-3, 2-4, 2-6, 3-1,
3-2, 3-4, 4-1, 4-2, 4-5, 4-8.3, 4-9.1, and the heading of
Article VII and by adding Sections 4-7, 4-8.1A, 7-1A, 7-2, 7-3,
7-4, 7-5, 7-6, 7-7, 7-8, 7-9, 7-10, 7-11, 7-12, 7-13, and 7-14
as follows:
(205 ILCS 635/1-2) (from Ch. 17, par. 2321-2)
Sec. 1-2. Purpose of Act and Policy Statement.
(a) The origination, funding, purchasing and brokering of
residential mortgage loans and the type of entities involved in
residential mortgage lending have undergone significant
changes in recent years, due in part to developments in the
general economy, specifically interest rate volatility, the
sophistication of the national secondary market for mortgage
loans and the market for mortgage backed securities. The recent
trend toward deregulation in the financial services industry
has accelerated the evolution of residential mortgage lending,
dramatically increasing the types of mortgage loans offered and
the manner in which they are advertised and marketed to
consumers. Depository institutions, traditionally the major

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source of residential mortgage financing for individuals, now
compete for capital and customers with mortgage bankers and
other financial service organizations. Residential mortgage
lenders of every type have increasingly relied on nonfinancial
intermediaries, such as mortgage brokers, to find customers.
These developments have raised questions as to whether all
entities engaging in this banking function operate under
appropriate regulatory scrutiny and as to whether all
residential mortgage lenders are conducting their business in
the best interests of Illinois homeowners and potential
homeowners.
(b) The activities of lenders and their offering of
financing for residential real property have a direct and
immediate impact upon the housing industry, the neighborhoods
and communities of this State, its homeowners and potential
homeowners. The General Assembly finds that it is essential for
the protection of the citizens of this State and the stability
of the State's economy that reasonable standards governing the
business practices of residential mortgage lenders and their
agents be imposed. The General Assembly further finds that the
obligations of lenders and their agents to consumers in
connection with making, soliciting, processing, placing or
negotiating of residential mortgage loans are such as to
warrant the uniform regulation of the residential mortgage
lending process, including the application, solicitation,
making and servicing of residential mortgage loans. The purpose

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of this Act is to protect Illinois consumers seeking
residential mortgage loans and to ensure that the residential
mortgage lending industry is operating fairly, honestly and
efficiently, free from deceptive and anti-competitive
practices. The purpose of this Act is to regulate residential
mortgage lending to benefit our citizens by ensuring
availability of residential mortgage funding, to benefit
responsible providers of residential mortgage loans and
services, and to avoid requirements inconsistent with
legitimate and responsible business practices in the
residential mortgage lending industry.
(c) The General Assembly finds that the provisions of this
amendatory Act of the 96th General Assembly that set forth the
authority and framework for State participation in a Nationwide
Mortgage Licensing System and Registry are consistent with the
purposes of this Section and for the purpose of complying with
the federal Secure and Fair Enforcement for Mortgage Licensing
Act of 2008.
(Source: P.A. 85-735.)
(205 ILCS 635/1-4) (from Ch. 17, par. 2321-4)
Sec. 1-4. Definitions.
(a) "Residential real property" or "residential real
estate" shall mean any real property located in Illinois, upon
which is constructed or intended to be constructed a dwelling
real property located in this State improved by a one-to-four

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family dwelling used or occupied, wholly or partly, as the home
or residence of one or more persons and may refer, subject to
regulations of the Commissioner, to unimproved real property
upon which those kinds dwellings are to be constructed.
(b) "Making a residential mortgage loan" or "funding a
residential mortgage loan" shall mean for compensation or gain,
either directly or indirectly, advancing funds or making a
commitment to advance funds to a loan applicant for a
residential mortgage loan.
(c) "Soliciting, processing, placing, or negotiating a
residential mortgage loan" shall mean for compensation or gain,
either directly or indirectly, accepting or offering to accept
an application for a residential mortgage loan, assisting or
offering to assist in the processing of an application for a
residential mortgage loan on behalf of a borrower, or
negotiating or offering to negotiate the terms or conditions of
a residential mortgage loan with a lender on behalf of a
borrower including, but not limited to, the submission of
credit packages for the approval of lenders, the preparation of
residential mortgage loan closing documents, including a
closing in the name of a broker.
(d) "Exempt person or entity" shall mean the following:
(1) (i) Any banking organization or foreign banking
corporation licensed by the Illinois Commissioner of Banks
and Real Estate or the United States Comptroller of the
Currency to transact business in this State; (ii) any

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national bank, federally chartered savings and loan
association, federal savings bank, federal credit union;
(iii) any pension trust, bank trust, or bank trust company;
(iv) any bank, savings and loan association, savings bank,
industrial 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 or subsidiary of a savings
and loan association or savings bank organized under the
laws of this State or the service corporation or subsidiary
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 or subsidiary
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 Division of Banking of the Illinois
Department of Financial and Professional Regulation, or
the charter of which is issued under the banking laws of
any other state 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

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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, or any
registered mortgage loan originator when acting for an
entity, mentioned in item (1) of this subsection.
(2) (Blank). Any person or entity that does not
originate mortgage loans in the ordinary course of business
making or acquiring residential mortgage loans with his or
her or its own funds for his or her or its own investment
without intent to make, acquire, or resell more than 10
residential mortgage loans in any one calendar year.
(3) Any person employed by a licensee to assist in the
performance of the activities regulated by this Act who is
compensated in any manner by only one licensee.
(4) (Blank). Any person licensed pursuant to the Real
Estate License Act of 2000, who engages only in the taking
of applications and credit and appraisal information to
forward to a licensee or an exempt entity under this Act
and who is compensated by either a licensee or an exempt
entity under this Act, but is not compensated by either the
buyer (applicant) or the seller.
(5) Any individual, corporation, partnership, or other
entity that originates, services, or brokers residential
mortgage loans, as these activities are defined in this

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Act, and who or which receives no compensation for those
activities, subject to the Commissioner's regulations with
regard to the nature and amount of compensation.
(6) (Blank). A person who prepares supporting
documentation for a residential mortgage loan application
taken by a licensee and performs ministerial functions
pursuant to specific instructions of the licensee who
neither requires nor permits the preparer to exercise his
or her discretion or judgment; provided that this activity
is engaged in pursuant to a binding, written agreement
between the licensee and the preparer that:
(A) holds the licensee fully accountable for the
preparer's action; and
(B) otherwise meets the requirements of this
Section and this Act, does not undermine the purposes
of this Act, and is approved by the Commissioner.
(e) "Licensee" or "residential mortgage licensee" shall
mean a person, partnership, association, corporation, or any
other entity who or which is licensed pursuant to this Act to
engage in the activities regulated by this Act.
(f) "Mortgage loan" "residential mortgage loan" or "home
mortgage loan" shall mean any loan primarily for personal,
family, or household use that is secured by a mortgage, deed of
trust, or other equivalent consensual security interest on a
dwelling as defined in Section 103(v) of the federal Truth in
Lending Act, or residential real estate upon which is

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constructed or intended to be constructed a dwelling a loan to
or for the benefit of any natural person made primarily for
personal, family, or household use, primarily secured by either
a mortgage on residential real property or certificates of
stock or other evidence of ownership interests in and
proprietary leases from, corporations, partnerships, or
limited liability companies formed for the purpose of
cooperative ownership of residential real property, all
located in Illinois.
(g) "Lender" shall mean any person, partnership,
association, corporation, or any other entity who either lends
or invests money in residential mortgage loans.
(h) "Ultimate equitable owner" shall mean a person who,
directly or indirectly, owns or controls an ownership interest
in a corporation, foreign corporation, alien business
organization, trust, or any other form of business organization
regardless of whether the person owns or controls the ownership
interest through one or more persons or one or more proxies,
powers of attorney, nominees, corporations, associations,
partnerships, trusts, joint stock companies, or other entities
or devices, or any combination thereof.
(i) "Residential mortgage financing transaction" shall
mean the negotiation, acquisition, sale, or arrangement for or
the offer to negotiate, acquire, sell, or arrange for, a
residential mortgage loan or residential mortgage loan
commitment.

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(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 or a person authorized by the Commissioner, the
Office of Banks and Real Estate Act, or this Act to act in the
Commissioner's stead.
(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,

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

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records; ample phone lines, hours of business, staff training
and supervision, and provision for a mechanism to resolve
consumer inquiries, complaints, and problems. The Commissioner
shall issue regulations with regard to these requirements and
shall include an evaluation of compliance with this Section in
his or her periodic examination of each licensee.
(s) "Purchasing" shall mean the purchase of conventional or
government-insured mortgage loans secured by residential real
estate situated in Illinois from either the lender or from the
secondary market.
(t) "Borrower" shall mean the person or persons who seek
the services of a loan broker, originator, or lender.
(u) "Originating" shall mean the issuing of commitments for
and funding of residential mortgage loans.
(v) "Loan brokerage agreement" shall mean a written
agreement in which a broker or loan broker agrees to do either
of the following:
(1) obtain a residential mortgage loan for the borrower
or assist the borrower in obtaining a residential mortgage
loan; or
(2) consider making a residential mortgage loan to the
borrower.
(w) "Advertisement" shall mean the attempt by publication,
dissemination, or circulation to induce, directly or
indirectly, any person to enter into a residential mortgage
loan agreement or residential mortgage loan brokerage

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agreement relative to a mortgage secured by residential real
estate situated in Illinois.
(x) "Residential Mortgage Board" shall mean the
Residential Mortgage Board created in Section 1-5 of this Act.
(y) "Government-insured mortgage loan" shall mean any
mortgage loan made on the security of residential real estate
insured by the Department of Housing and Urban Development or
Farmers Home Loan Administration, or guaranteed by the Veterans
Administration.
(z) "Annual audit" shall mean a certified audit of the
licensee's books and records and systems of internal control
performed by a certified public accountant in accordance with
generally accepted accounting principles and generally
accepted auditing standards.
(aa) "Financial institution" shall mean a savings and loan
association, savings bank, credit union, or a bank organized
under the laws of Illinois or a savings and loan association,
savings bank, credit union or a bank organized under the laws
of the United States and headquartered in Illinois.
(bb) "Escrow agent" shall mean a third party, individual or
entity charged with the fiduciary obligation for holding escrow
funds on a residential mortgage loan pending final payout of
those funds in accordance with the terms of the residential
mortgage loan.
(cc) "Net worth" shall have the meaning ascribed thereto in
Section 3-5 of this Act.

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(dd) "Affiliate" shall mean:
(1) any entity that directly controls or is controlled
by the licensee and any other company that is directly
affecting activities regulated by this Act that is
controlled by the company that controls the licensee;
(2) any entity:
(A) that is controlled, directly or indirectly, by
a trust or otherwise, by or for the benefit of
shareholders who beneficially or otherwise control,
directly or indirectly, by trust or otherwise, the
licensee or any company that controls the licensee; or
(B) a majority of the directors or trustees of
which constitute a majority of the persons holding any
such office with the licensee or any company that
controls the licensee;
(3) any company, including a real estate investment
trust, that is sponsored and advised on a contractual basis
by the licensee or any subsidiary or affiliate of the
licensee.
The Commissioner may define by rule and regulation any
terms used in this Act for the efficient and clear
administration of this Act.
(ee) "First tier subsidiary" shall be defined by regulation
incorporating the comparable definitions used by the Office of
the Comptroller of the Currency and the Illinois Commissioner
of Banks and Real Estate.

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(ff) "Gross delinquency rate" means the quotient
determined by dividing (1) the sum of (i) the number of
government-insured residential mortgage loans funded or
purchased by a licensee in the preceding calendar year that are
delinquent and (ii) the number of conventional residential
mortgage loans funded or purchased by the licensee in the
preceding calendar year that are delinquent by (2) the sum of
(i) the number of government-insured residential mortgage
loans funded or purchased by the licensee in the preceding
calendar year and (ii) the number of conventional residential
mortgage loans funded or purchased by the licensee in the
preceding calendar year.
(gg) "Delinquency rate factor" means the factor set by rule
of the Commissioner that is multiplied by the average gross
delinquency rate of licensees, determined annually for the
immediately preceding calendar year, for the purpose of
determining which licensees shall be examined by the
Commissioner pursuant to subsection (b) of Section 4-8 of this
Act.
(hh) "Loan originator" means any natural person who, for
compensation or in the expectation of compensation, either
directly or indirectly makes, offers to make, solicits, places,
or negotiates a residential mortgage loan.
(ii) "Confidential supervisory information" means any
report of examination, visitation, or investigation prepared
by the Commissioner under this Act, any report of examination

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

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mortgage broker, or other mortgage loan originator, or by any
agent of that lender, mortgage broker, or other mortgage loan
originator.
"Mortgage loan originator" does not include a person or
entity solely involved in extensions of credit relating to
timeshare plans, as that term is defined in Section 101(53D) of
Title 11, United States Code.
(kk) "Depository institution" has the same meaning as in
Section 3 of the Federal Deposit Insurance Act, and includes
any credit union.
(ll) "Dwelling" means a residential structure that
contains one to 4 units, whether or not that structure is
attached to real property. "Dwelling" includes an individual
condominium unit, cooperative unit, mobile home, or trailer, if
it is used as a residence.
(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:

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(i) the receipt, collection, distribution, and
analysis of information common for the processing or
underwriting of a residential mortgage loan; and
(ii) communicating with a consumer to obtain the
information necessary for the processing or underwriting
of a loan, to the extent that the communication does not
include offering or negotiating loan rates or terms, or
counseling consumers about residential mortgage loan rates
or terms. An individual engaging solely in loan processor
or underwriter activities shall not represent to the
public, through advertising or other means of
communicating or providing information, including the use
of business cards, stationery, brochures, signs, rate
lists, or other promotional items, that the individual can
or will perform any of the activities of a mortgage loan
originator.
(pp) "Nationwide Mortgage Licensing System and Registry"
means a mortgage licensing system developed and maintained by
the Conference of State Bank Supervisors and the American
Association of Residential Mortgage Regulators for the
licensing and registration of licensed mortgage loan
originators.
(qq) "Nontraditional mortgage product" means any mortgage
product other than a 30-year fixed rate mortgage.
(rr) "Person" means a natural person, corporation,
company, limited liability company, partnership, or

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association.
(ss) "Real estate brokerage activity" means any activity
that involves offering or providing real estate brokerage
services to the public, including:
(1) acting as a real estate agent or real estate broker
for a buyer, seller, lessor, or lessee of real property;
(2) bringing together parties interested in the sale,
purchase, lease, rental, or exchange of real property;
(3) negotiating, on behalf of any party, any portion of
a contract relating to the sale, purchase, lease, rental,
or exchange of real property, other than in connection with
providing financing with respect to any such transaction;
(4) engaging in any activity for which a person engaged
in the activity is required to be registered or licensed as
a real estate agent or real estate broker under any
applicable law; or
(5) offering to engage in any activity, or act in any
capacity, described in this subsection (ss).
(tt) "Registered mortgage loan originator" means any
individual that:
(1) meets the definition of mortgage loan originator
and is an employee of:
(A) a depository institution;
(B) a subsidiary that is:
(i) owned and controlled by a depository
institution; or

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(ii) regulated by a federal banking agency; or
(C) an institution regulated by the Farm Credit
Administration; or
(2) is registered with, and maintains a unique
identifier through, the Nationwide Mortgage Licensing
System and Registry.
(uu) "Unique identifier" means a number or other identifier
assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry.
(Source: P.A. 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)
(205 ILCS 635/2-2) (from Ch. 17, par. 2322-2)
Sec. 2-2. Application process; investigation; fee.
(a) The Commissioner shall issue a license upon completion
of all of the following:
(1) The filing of an application for license with the
Director or the Nationwide Mortgage Licensing System and
Registry as approved by the Director.
(2) The filing with the Commissioner of a listing of
judgments entered against, and bankruptcy petitions by,
the license applicant for the preceding 10 years.
(3) The payment, in certified funds, of investigation
and application fees, the total of which shall be in an
amount equal to $2,700 annually, however, the Commissioner
may increase the investigation and application fees by rule
as provided in Section 4-11.

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(4) Except for a broker applying to renew a license,
the filing of an audited balance sheet including all
footnotes prepared by a certified public accountant in
accordance with generally accepted accounting principles
and generally accepted auditing principles which evidences
that the applicant meets the net worth requirements of
Section 3-5.
(5) The filing of proof satisfactory to the
Commissioner that the applicant, the members thereof if the
applicant is a partnership or association, the members or
managers thereof that retain any authority or
responsibility under the operating agreement if the
applicant is a limited liability company, or the officers
thereof if the applicant is a corporation have 3 years
experience preceding application in real estate finance.
Instead of this requirement, the applicant and the
applicant's officers or members, as applicable, may
satisfactorily complete a program of education in real
estate finance and fair lending, as approved by the
Commissioner, prior to receiving the initial license. The
Commissioner shall promulgate rules regarding proof of
experience requirements and educational requirements and
the satisfactory completion of those requirements. The
Commissioner may establish by rule a list of duly licensed
professionals and others who may be exempt from this
requirement.

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(6) An investigation of the averments required by
Section 2-4, which investigation must allow the
Commissioner to issue positive findings stating that the
financial responsibility, experience, character, and
general fitness of the license applicant and of the members
thereof if the license applicant is a partnership or
association, of the officers and directors thereof if the
license applicant is a corporation, and of the managers and
members that retain any authority or responsibility under
the operating agreement if the license applicant is a
limited liability company are such as to command the
confidence of the community and to warrant belief that the
business will be operated honestly, fairly and efficiently
within the purpose of this Act. If the Commissioner shall
not so find, he or she shall not issue such license, and he
or she shall notify the license applicant of the denial.
The Commissioner may impose conditions on a license if the
Commissioner determines that the conditions are necessary or
appropriate. These conditions shall be imposed in writing and
shall continue in effect for the period prescribed by the
Commissioner.
(b) All licenses shall be issued in duplicate with one copy
being transmitted to the license applicant and the second being
retained with the Commissioner.
Upon receipt of such license, a residential mortgage
licensee shall be authorized to engage in the business

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regulated by this Act. Such license shall remain in full force
and effect until it expires without renewal, is surrendered by
the licensee or revoked or suspended as hereinafter provided.
(Source: P.A. 93-32, eff. 7-1-03; 93-1018, eff. 1-1-05.)
(205 ILCS 635/2-3) (from Ch. 17, par. 2322-3)
Sec. 2-3. Application form.
(a) Application for a residential mortgage license must be
made in accordance with Section 2-6 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 Commissioner, 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. Such application shall
also include a description of the activities of the license
applicant, in such detail and for such periods, as the
Commissioner may require, including all of the following:
(1) An affirmation of financial solvency noting such

HB4011 - 23 - LRB096 05294 MJR 15360 b
capitalization requirements as may be required by the
Commissioner, and access to such credit as may be required
by the Commissioner.
(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 Commissioner finds influences
management of the license applicant.
(4) Upon written request by the licensee and
notwithstanding the provisions of paragraphs (1), (2), and
(3) of this subsection, the Commissioner may permit the

HB4011 - 24 - LRB096 05294 MJR 15360 b
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 Commissioner
may promulgate rules prescribing the form and content of
the affidavit that are necessary to accomplish the purposes
of this Section.
(5) Such other information as required by regulations
of the Commissioner.
(Source: P.A. 89-355, eff. 8-17-95.)
(205 ILCS 635/2-4) (from Ch. 17, par. 2322-4)
Sec. 2-4. Averments of Licensee. Each application for
license or for the renewal of a license shall be accompanied by
the following averments stating that the applicant:
(a) Will maintain at least one full service office
within the State of Illinois pursuant to Section 3-4 of
this Act;
(b) Will maintain staff reasonably adequate to meet the
requirements of Section 3-4 of this Act;
(c) Will keep and maintain for 36 months the same
written records as required by the federal Equal Credit
Opportunity Act, and any other information required by
regulations of the Commissioner regarding any home
mortgage in the course of the conduct of its residential

HB4011 - 25 - LRB096 05294 MJR 15360 b
mortgage business;
(d) Will file with the Commissioner or Nationwide
Mortgage Licensing System and Registry as applicable, when
due, any report or reports which it is required to file
under any of the provisions of this Act;
(e) Will not engage, whether as principal or agent, in
the practice of rejecting residential mortgage
applications without reasonable cause, or varying terms or
application procedures without reasonable cause, for home
mortgages on real estate within any specific geographic
area from the terms or procedures generally provided by the
licensee within other geographic areas of the State;
(f) Will not engage in fraudulent home mortgage
underwriting practices;
(g) Will not make payment, whether directly or
indirectly, of any kind to any in house or fee appraiser of
any government or private money lending agency with which
an application for a home mortgage has been filed for the
purpose of influencing the independent judgment of the
appraiser with respect to the value of any real estate
which is to be covered by such home mortgage;
(h) Has filed tax returns (State and Federal) for the
past 3 years or filed with the Commissioner an accountant's
or attorney's statement as to why no return was filed;
(i) Will not engage in any discrimination or redlining
activities prohibited by Section 3-8 of this Act;

HB4011 - 26 - LRB096 05294 MJR 15360 b
(j) Will not knowingly make any false promises likely
to influence or persuade, or pursue a course of
misrepresentation and false promises through agents,
solicitors, advertising or otherwise;
(k) Will not knowingly misrepresent, circumvent or
conceal, through whatever subterfuge or device, any of the
material particulars or the nature thereof, regarding a
transaction to which it is a party to the injury of another
party thereto;
(l) Will disburse funds in accordance with its
agreements;
(m) Has not committed a crime against the law of this
State, any other state or of the United States, involving
moral turpitude, fraudulent or dishonest dealing, and that
no final judgment has been entered against it in a civil
action upon grounds of fraud, misrepresentation or deceit
which has not been previously reported to the Commissioner;
(n) Will account or deliver to the owner upon request
any person any personal property such as money, fund,
deposit, check, draft, mortgage, other document or thing of
value, which has come into its possession, and which is not
its property, or which it is not in law or equity entitled
to retain under the circumstances, 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;

HB4011 - 27 - LRB096 05294 MJR 15360 b
(o) Has not engaged in any conduct which would be cause
for denial of a license;
(p) Has not become insolvent;
(q) Has not submitted an application for a license
under this Act which contains a material misstatement;
(r) Has not demonstrated by course of conduct,
negligence or incompetence in performing any act for which
it is required to hold a license under this Act;
(s) Will advise the Commissioner in writing, or the
Nationwide Mortgage Licensing System and Registry as
applicable, of any changes to the information submitted on
the most recent application for license within 30 days of
said change. The written notice must be signed in the same
form as the application for license being amended;
(t) Will comply with the provisions of this Act, or
with any lawful order, rule or regulation made or issued
under the provisions of this Act;
(u) Will submit to periodic examination by the
Commissioner as required by this Act;
(v) Will advise the Commissioner in writing of
judgments entered against, and bankruptcy petitions by,
the license applicant within 5 days of occurrence;
(w) Will advise the Commissioner in writing within 30
days of any request made to when the license applicant
requests a licensee under this Act to repurchase a loan in
a manner that completely and clearly identifies to whom the

HB4011 - 28 - LRB096 05294 MJR 15360 b
request was made, the loans involved, and the reason , and
the circumstances therefor;
(x) Will advise the Commissioner in writing within 30
days of any request from any entity when the license
applicant is requested by another entity to repurchase a
loan in a manner that completely and clearly identifies to
whom the request was made, the loans involved, and the
reason for the request , and the circumstances therefor;
(y) Will at all times act in a manner consistent with
subsections (a) and (b) of Section 1-2 of this Act; and
(z) Will not knowingly hire or employ a loan originator
who is not registered, or mortgage loan originator who is
not licensed, with the Commissioner as required under
Section 7-1 or Section 7-1A, as applicable, of this Act.
A licensee who fails to fulfill obligations of an averment,
to comply with averments made, or otherwise violates any of the
averments made under this Section shall be subject to the
penalties in Section 4-5 of this Act.
(Source: P.A. 95-331, eff. 8-21-07.)
(205 ILCS 635/2-6) (from Ch. 17, par. 2322-6)
Sec. 2-6. License issuance and renewal; fee.
(a) Beginning July 1, 2003, licenses shall be renewed every
year on the anniversary of the date of issuance of the original
license, or the common renewal date of the Nationwide Mortgage
Licensing System and Registry as approved by the Director.

HB4011 - 29 - LRB096 05294 MJR 15360 b
Properly completed renewal application forms and filing fees
must be received by the Commissioner 60 days prior to the
renewal date.
(b) It shall be the responsibility of each licensee to
accomplish renewal of its license; failure of the licensee to
receive renewal forms absent a request sent by certified mail
for such forms will not waive said responsibility. Failure by a
licensee to submit a properly completed renewal application
form and fees in a timely fashion, absent a written extension
from the Commissioner, will result in the assessment of
additional fees, as follows:
(1) A fee of $750 will be assessed to the licensee 30
days after the proper renewal date and $1,500 each month
thereafter, until the license is either renewed or expires
pursuant to Section 2-6, subsections (c) and (d), of this
Act.
(2) Such fee will be assessed without prior notice to
the licensee, but will be assessed only in cases wherein
the Commissioner has in his or her possession documentation
of the licensee's continuing activity for which the
unrenewed license was issued.
(c) A license which is not renewed by the date required in
this Section shall automatically become inactive. No activity
regulated by this Act shall be conducted by the licensee when a
license becomes inactive. The Commissioner may require the
licensee to provide a plan for the disposition of any

HB4011 - 30 - LRB096 05294 MJR 15360 b
residential mortgage loans not closed or funded when the
license becomes inactive. The Commissioner may allow a licensee
with an inactive license to conduct activities regulated by
this Act for the sole purpose of assisting borrowers in the
closing or funding of loans for which the loan application was
taken from a borrower while the license was active. An inactive
license may be reactivated by the Commissioner upon payment of
the renewal fee, and payment of a reactivation fee equal to the
renewal fee.
(d) A license which is not renewed within one year of
becoming inactive shall expire.
(e) A licensee ceasing an activity or activities regulated
by this Act and desiring to no longer be licensed shall so
inform the Commissioner in writing and, at the same time,
convey the license 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 of the Director. Upon receipt of such written
notice, the Commissioner shall post the cancellation or issue a
certified statement canceling the license.
(Source: P.A. 93-32, eff. 7-1-03; 93-561, eff. 1-1-04; 93-1018,
eff. 1-1-05.)
(205 ILCS 635/3-1) (from Ch. 17, par. 2323-1)
Sec. 3-1. Bonds of licensees.

HB4011 - 31 - LRB096 05294 MJR 15360 b
(a) Every licensee, with respect to any person appointed or
elected to any position requiring the receipt of payment,
management, or use of money belonging to a residential mortgage
licensee engaged in the activities of originating, servicing,
or purchasing mortgage loans or whose duties permit him or her
to have access to or custody of any of its money or securities
or custody of any money or securities belonging to third
parties or whose duties permit him or her regularly to make
entries in the books or other records of a licensee, shall,
before assuming his or her duties, maintain a fidelity bond in
the amount of $100,000 by some fidelity insurance company
licensed to do business in this State.
(b) Each bond shall be for any loss the licensee may
sustain in money or other property through the commission of
any dishonest or criminal act or omission by any person
required to be bonded, whether committed alone or in concert
with another. The bond shall be in the form and amount approved
by the Commissioner who may at any time require one or more
additional bonds. A true copy of every bond, including all
riders and endorsements executed subsequent to the effective
date of the bond, shall be filed at all times with the
Commissioner. Each bond shall provide that a cancellation
thereof shall not become effective unless and until 30 days
notice in writing first shall have been given to the
Commissioner unless he or she shall have approved the
cancellation earlier. If the Commissioner believes the

HB4011 - 32 - LRB096 05294 MJR 15360 b
licensee's business is being conducted in an unsafe manner due
to the lack of bonds or the inadequacy of bonds, he or she may
proceed against the licensee as provided for in Section 4-5.
(c) All licensees shall maintain a bond in accordance with
this subsection. Each bond shall be for the recovery of
expenses, fines, or fees due to or levied by the Commissioner
in accordance with this Act. The bond shall be payable when the
licensee fails to comply with any provisions of this Act and
shall be in the form of a surety or licensure bond in the
amount and form as prescribed by the Commissioner pursuant to
rules and regulations. The bond shall be payable to the Office
of Banks and Real Estate and shall be issued by some insurance
company authorized to do business in this State. A copy of the
bond, including any and all riders and endorsements executed
subsequent to the effective date of the bond, shall be placed
on file with the Office of Banks and Real Estate within 10 days
of the execution thereof.
(d) The Commissioner may promulgate rules with respect to
bonding requirements for residential mortgage licensees and
their mortgage loan originators that are reasonable and
necessary to accomplish the purposes of this Act.
(Source: P.A. 89-508, eff. 7-3-96.)
(205 ILCS 635/3-2) (from Ch. 17, par. 2323-2)
Sec. 3-2. Annual audit.
(a) At the licensee's fiscal year-end, but in no case more

HB4011 - 33 - LRB096 05294 MJR 15360 b
than 12 months after the last audit conducted pursuant to this
Section, except as otherwise provided in this Section, it shall
be mandatory for each residential mortgage licensee to cause
its books and accounts to be audited by a certified public
accountant not connected with such licensee. The books and
records of all licensees under this Act shall be maintained on
an accrual basis. The audit must be sufficiently comprehensive
in scope to permit the expression of an opinion on the
financial statements, which must be prepared in accordance with
generally accepted accounting principles, and must be
performed in accordance with generally accepted auditing
standards. Notwithstanding the requirements of this
subsection, a licensee that is a first tier subsidiary may
submit audited consolidated financial statements of its parent
as long as the consolidated statements are supported by
consolidating statements. The licensee's chief financial
officer shall attest to the licensee's financial statements
disclosed in the consolidating statements.
(b) As used herein, the term "expression of opinion"
includes either (1) an unqualified opinion, (2) a qualified
opinion, (3) a disclaimer of opinion, or (4) an adverse
opinion.
(c) If a qualified or adverse opinion is expressed or if an
opinion is disclaimed, the reasons therefore must be fully
explained. An opinion, qualified as to a scope limitation,
shall not be acceptable.

HB4011 - 34 - LRB096 05294 MJR 15360 b
(d) The most recent audit report shall be filed with the
Commissioner within 90 days after the end of the licensee's
fiscal year, or with the Nationwide Mortgage Licensing System
and Registry, if applicable, pursuant to Mortgage Call Report
requirements. The report filed with the Commissioner shall be
certified by the certified public accountant conducting the
audit. The Commissioner may promulgate rules regarding late
audit reports.
(e) If any licensee required to make an audit shall fail to
cause an audit to be made, the Commissioner shall cause the
same to be made by a certified public accountant at the
licensee's expense. The Commissioner shall select such
certified public accountant by advertising for bids or by such
other fair and impartial means as he or she establishes by
regulation.
(f) In lieu of the audit or compilation financial statement
required by this Section, a licensee shall submit and the
Commissioner may accept any audit made in conformance with the
audit requirements of the U.S. Department of Housing and Urban
Development.
(g) With respect to licensees who solely broker residential
mortgage loans as defined in subsection (o) of Section 1-4,
instead of the audit required by this Section, the Commissioner
may accept compilation financial statements prepared at least
every 12 months, and the compilation financial statement must
be prepared by an independent certified public accountant

HB4011 - 35 - LRB096 05294 MJR 15360 b
licensed under the Illinois Public Accounting Act or by an
equivalent state licensing law with full disclosure in
accordance with generally accepted accounting principals and
must be submitted within 90 days after the end of the
licensee's fiscal year, or with the Nationwide Mortgage
Licensing System and Registry, if applicable, pursuant to
Mortgage Call Report requirements. If a licensee under this
Section fails to file a compilation as required, the
Commissioner shall cause an audit of the licensee's books and
accounts to be made by a certified public accountant at the
licensee's expense. The Commissioner shall select the
certified public accountant by advertising for bids or by such
other fair and impartial means as he or she establishes by
rule. A licensee who files false or misleading compilation
financial statements is guilty of a business offense and shall
be fined not less than $5,000.
(h) The workpapers of the certified public accountants
employed by each licensee for purposes of this Section are to
be made available to the Commissioner or the Commissioner's
designee upon request and may be reproduced by the Commissioner
or the Commissioner's designee to enable to the Commissioner to
carry out the purposes of this Act.
(i) Notwithstanding any other provision of this Section, if
a licensee relying on subsection (g) of this Section causes its
books to be audited at any other time or causes its financial
statements to be reviewed, a complete copy of the audited or

HB4011 - 36 - LRB096 05294 MJR 15360 b
reviewed financial statements shall be delivered to the
Commissioner at the time of the annual license renewal payment
following receipt by the licensee of the audited or reviewed
financial statements. All workpapers shall be made available to
the Commissioner upon request. The financial statements and
workpapers may be reproduced by the Commissioner or the
Commissioner's designee to carry out the purposes of this Act.
(Source: P.A. 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)
(205 ILCS 635/3-4) (from Ch. 17, par. 2323-4)
Sec. 3-4. Office and staff within the State.
(a) A licensee whose principal place of business is located
in the State of Illinois shall maintain at least one full
service office with staff reasonably adequate to handle
efficiently communications, questions, and all other matters
relating to any application for a home mortgage or an existing
home mortgage with respect to which such licensee is performing
services, regardless of kind, for any borrower or lender, note
owner or holder, or for himself or herself while engaged in the
residential mortgage business. Offices shall be located in
commercial locations, and shall not be located in any real
estate, retail, or financial business establishment, unless
separated from the other business by a separate and distinct
area within the establishment. The location and operation of a
full service office shall be in compliance with any applicable
zoning laws or ordinances and home office or business

HB4011 - 37 - LRB096 05294 MJR 15360 b
regulations.
(b) In lieu of maintaining a full service office in the
State of Illinois, and subject to the rules of the Department,
a licensee whose principal place of business is located outside
the State of Illinois, and for which mortgage loan originator
activities, if applicable, are only initiated from outside the
State, may comply with all of the following requirements:
(1) provide, upon the Director's request and notice, a
limited service office in Illinois that is adequate to
accommodate a full-scope examination of the licensee's
books and records as they relate to activity in Illinois,
as determined by the Department;
(2) must submit a certified audit as required in
Section 3-2 of this Act evidencing a minimum net worth of
$150,000 $100,000, which must be maintained at all times,
and shall submit and maintain a fidelity bond in the amount
of $100,000.
(Source: P.A. 93-1018, eff. 1-1-05.)
(205 ILCS 635/4-1) (from Ch. 17, par. 2324-1)
Sec. 4-1. Commissioner of Banks and Real Estate; functions,
powers, and duties. The functions, powers, and duties of the
Commissioner of Banks and Real Estate shall include the
following:
(a) To issue or refuse to issue any license as provided by
this Act;

HB4011 - 38 - LRB096 05294 MJR 15360 b
(b) To revoke or suspend for cause any license issued under
this Act;
(c) To keep records of all licenses issued under this Act;
(d) To receive, consider, investigate, and act upon
complaints made by any person in connection with any
residential mortgage licensee in this State;
(e) To consider and act upon any recommendations from the
Residential Mortgage Board;
(f) To prescribe the forms of and receive:
(1) applications for licenses; and
(2) 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
mortgage activity;
(g) To adopt rules and regulations necessary and proper for
the administration of this Act;
(h) 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;
(h-1) To issue orders against any person, if the
Commissioner 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
Commissioner, or for the purpose of administering the

HB4011 - 39 - LRB096 05294 MJR 15360 b
provisions of this Act and any rule adopted in accordance with
the Act;
(h-2) 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 such inquiries. The Commissioner may also
require reports from any licensee at any time the Commissioner
may deem desirable;
(i) To require information with regard to any license
applicant as he or she may deem desirable, with due regard to
the paramount interests of the public as to the experience,
background, honesty, truthfulness, integrity, and competency
of the license applicant as to financial transactions involving
primary or subordinate mortgage financing, and where the
license applicant is an entity other than an individual, as to
the honesty, truthfulness, integrity, and competency of any
officer or director of the corporation, association, or other
entity, or the members of a partnership;
(j) To examine the books and records of every licensee
under this Act at intervals as specified in Section 4-2;
(k) To enforce provisions of this Act;
(l) To levy fees, fines, and charges for services performed
in administering this Act; the aggregate of all fees collected
by the Commissioner on and after the effective date of this Act
shall be paid promptly after receipt of the same, accompanied

HB4011 - 40 - LRB096 05294 MJR 15360 b
by a detailed statement thereof, into the Savings and
Residential Finance Regulatory Fund; the amounts deposited
into that Fund shall be used for the ordinary and contingent
expenses of the Office of Banks and Real Estate. Nothing in
this Act shall prevent continuing the practice of paying
expenses involving salaries, retirement, social security, and
State-paid insurance of State officers by appropriation from
the General Revenue Fund.
(m) To appoint examiners, supervisors, experts, and
special assistants as needed to effectively and efficiently
administer this Act;
(n) To conduct hearings for the purpose of:
(1) appeals of orders of the Commissioner;
(2) suspensions or revocations of licenses, or fining
of licensees;
(3) investigating:
(i) complaints against licensees; or
(ii) annual gross delinquency rates; and
(4) carrying out the purposes of this Act;
(o) 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 Commissioner, a
foreign residential mortgage regulator with an appropriate
supervisory interest in the parent or affiliate of a licensee;
(p) To enter into cooperative agreements with state
regulatory authorities of other states to provide for

HB4011 - 41 - LRB096 05294 MJR 15360 b
examination of corporate offices or branches of those states
and to accept reports of such examinations;
(q) To assign an examiner or examiners to monitor the
affairs of a licensee with whatever frequency the Commissioner
determines appropriate and to charge the licensee for
reasonable and necessary expenses of the Commissioner, if in
the opinion of the Commissioner an emergency exists or appears
likely to occur; and
(r) To impose civil penalties of up to $50 per day against
a licensee for failing to respond to a regulatory request or
reporting requirement.
(s) To enter into agreements in connection with the
Nationwide Mortgage Licensing System and Registry.
(Source: P.A. 93-1018, eff. 1-1-05.)
(205 ILCS 635/4-2) (from Ch. 17, par. 2324-2)
Sec. 4-2. 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
Commissioner deems necessary and proper. The Commissioner
shall promulgate rules with respect to the frequency and manner
of examination. The Commissioner shall appoint a suitable
person to perform such examination. The Commissioner and his
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

HB4011 - 42 - LRB096 05294 MJR 15360 b
subsidiary's, affiliate's, or agent's officers, directors,
employees and agents under oath. For purposes of this Section,
"agent" includes service providers such as accountants,
closing services providers, providers of outsourced services
such as call centers, marketing consultants, and loan
processors, even if exempt from licensure under this Act.
(b) The Commissioner 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 Commissioner 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
Commissioner as established by regulation.
(e) Upon completion of the examination, the Commissioner
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
Commissioner's office and may not be disclosed to anyone other
than the licensee, law enforcement officials or other

HB4011 - 43 - LRB096 05294 MJR 15360 b
regulatory agencies that have an appropriate regulatory
interest as determined by the Commissioner, or to a party
presenting a lawful subpoena to the Office of the Commissioner.
The Commissioner may 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
Commissioner under this Act and results of examinations
performed by the Commissioner under this Act shall be the
property of only the Commissioner, but may be shared with the
licensee. Access under this Act to the books and records of
each licensee shall be limited to the Commissioner and his
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 Commissioner of the demand, at which time the
Commissioner 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 Commissioner
may impose any conditions and limitations on the disclosure of
confidential supervisory information that are necessary to

HB4011 - 44 - LRB096 05294 MJR 15360 b
protect the confidentiality of such information. Except as
authorized by the Commissioner, no person obtaining access to
confidential supervisory information may make a copy of the
confidential supervisory information. The Commissioner 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 Commissioner, the Commissioner may
nevertheless condition approval for release of confidential
supervisory information upon the inclusion of additional or
amended provisions in the protective order. The Commissioner
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 Commissioner may impose on either or
both parties. The requestor 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 Commissioner, deputy commissioners, and employees
of the Office of Banks and Real Estate shall be subject to the
restrictions provided in Section 2.5 of the Office of Banks and
Real Estate Act including, without limitation, the
restrictions on (i) owning shares of stock or holding any other

HB4011 - 45 - LRB096 05294 MJR 15360 b
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.
(g) After the initial examination for those licensees whose
only mortgage activity is servicing fewer than 1,000 Illinois
residential loans, the examination required in subsection (a)
may be waived upon submission of a letter from the licensee's
independent certified auditor that the licensee serviced fewer
than 1,000 Illinois residential loans during the year in which
the audit was performed.
(Source: P.A. 93-1018, eff. 1-1-05.)
(205 ILCS 635/4-5) (from Ch. 17, par. 2324-5)
Sec. 4-5. Suspension, revocation of licenses; fines.
(a) Upon written notice to a licensee, the Commissioner may
suspend or revoke any license issued pursuant to this Act if he
or she shall make a finding of one or more of the following in
the notice that:
(1) Through separate acts or an act or a course of
conduct, the licensee has violated any provisions of this
Act, any rule or regulation promulgated by the Commissioner
or of any other law, rule or regulation of this State or
the United States.

HB4011 - 46 - LRB096 05294 MJR 15360 b
(2) Any fact or condition exists which, if it had
existed at the time of the original application for such
license would have warranted the Commissioner in refusing
originally to issue such license.
(3) If a licensee is other than an individual, any
ultimate equitable owner, officer, director, or member of
the licensed partnership, association, corporation, or
other entity has so acted or failed to act as would be
cause for suspending or revoking a license to that party as
an individual.
(b) No license shall be suspended or revoked, except as
provided in this Section, nor shall any licensee be fined
without notice of his or her right to a hearing as provided in
Section 4-12 of this Act.
(c) The Commissioner, on good cause shown that an emergency
exists, may suspend any license for a period not exceeding 180
days, pending investigation. Upon a showing that a licensee has
failed to meet the experience or educational requirements of
Section 2-2 or the requirements of subsection (g) of Section
3-2, the Commissioner shall suspend, prior to hearing as
provided in Section 4-12, the license until those requirements
have been met.
(d) The provisions of subsection (e) of Section 2-6 of this
Act shall not affect a licensee's civil or criminal liability
for acts committed prior to surrender of a license.
(e) No revocation, suspension or surrender of any license

HB4011 - 47 - LRB096 05294 MJR 15360 b
shall impair or affect the obligation of any pre-existing
lawful contract between the licensee and any person.
(f) Every license issued under this Act shall remain in
force and effect until the same shall have expired without
renewal, have been surrendered, revoked or suspended in
accordance with the provisions of this Act, but the
Commissioner shall have authority to reinstate a suspended
license or to issue a new license to a licensee whose license
shall have been revoked if no fact or condition then exists
which would have warranted the Commissioner in refusing
originally to issue such license under this Act.
(g) Whenever the Commissioner shall revoke or suspend a
license issued pursuant to this Act or fine a licensee under
this Act, he or she shall forthwith execute in duplicate a
written order to that effect. The Commissioner shall publish
notice of such order in the Illinois Register and post notice
of the order on an agency Internet site maintained by the
Commissioner and shall forthwith serve a copy of such order
upon the licensee. Any such order may be reviewed in the manner
provided by Section 4-12 of this Act.
(h) When the Commissioner finds any person in violation of
the grounds set forth in subsection (i), he or she may enter an
order imposing one or more of the following penalties:
(1) Revocation of license;
(2) Suspension of a license subject to reinstatement
upon satisfying all reasonable conditions the Commissioner

HB4011 - 48 - LRB096 05294 MJR 15360 b
may specify;
(3) Placement of the licensee or applicant on probation
for a period of time and subject to all reasonable
conditions as the Commissioner may specify;
(4) Issuance of a reprimand;
(5) Imposition of a fine not to exceed $25,000 for each
count of separate offense; and
(6) Denial of a license.
(i) The following acts shall constitute grounds for which
the disciplinary actions specified in subsection (h) above may
be taken:
(1) Being convicted or found guilty, regardless of
pendency of an appeal, of a crime in any jurisdiction which
involves fraud, dishonest dealing, or any other act of
moral turpitude;
(2) Fraud, misrepresentation, deceit or negligence in
any mortgage financing transaction;
(3) A material or intentional misstatement of fact on
an initial or renewal application;
(4) Failure to follow the Commissioner's regulations
with respect to placement of funds in escrow accounts;
(5) Insolvency or filing under any provision of the
Bankruptcy Code as a debtor;
(6) Failure to account or deliver to any person any
property such as any money, fund, deposit, check, draft,
mortgage, or other document or thing of value, which has

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

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

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

HB4011 - 52 - LRB096 05294 MJR 15360 b
(Source: P.A. 93-561, eff. 1-1-04; 93-1018, eff. 1-1-05.)
(205 ILCS 635/4-7 new)
Sec. 4-7. Additional investigation and examination
authority. In addition to any authority allowed under this Act,
the Director shall have the authority to conduct investigations
and examinations as follows:
(a) 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 Commissioner 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:
(1) criminal, civil, and administrative history
information, including nonconviction data as specified in
the Criminal Code of 1961;
(2) 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
(3) any other documents, information, or evidence the
Commissioner deems relevant to the inquiry or
investigation regardless of the location, possession,
control, or custody of the documents, information, or
evidence.

HB4011 - 53 - LRB096 05294 MJR 15360 b
(b) For the purposes of investigating violations or
complaints arising under this Act, or for the purposes of
examination, the Commissioner 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 Commissioner 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
Commissioner deems relevant to the inquiry.
(c) Each licensee, individual, or person subject to this
Act shall make available to the Commissioner upon request the
books and records relating to the operations of such licensee,
individual, or person subject to this Act. The Commissioner
shall have access to such books and records and interview the
officers, principals, mortgage loan originators, employees,
independent contractors, agents, and customers of the
licensee, individual, or person subject to this Act concerning
their business.
(d) Each licensee, individual, or person subject to this
Act shall make or compile reports or prepare other information
as directed by the Commissioner in order to carry out the
purposes of this Section including, but not limited to:
(1) accounting compilations;

HB4011 - 54 - LRB096 05294 MJR 15360 b
(2) information lists and data concerning loan
transactions in a format prescribed by the Commissioner; or
(3) other information deemed necessary to carry out the
purposes of this Section.
(e) In making any examination or investigation authorized
by this Act, the Commissioner may control access to any
documents and records of the licensee or person under
examination or investigation. The Commissioner 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
individual or person shall remove or attempt to remove any of
the documents and records except pursuant to a court order or
with the consent of the Commissioner. Unless the Commissioner
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.
(f) In order to carry out the purposes of this Section, the
Commissioner may:
(1) retain attorneys, accountants, or other
professionals and specialists as examiners, auditors, or
investigators to conduct or assist in the conduct of
examinations or investigations;

HB4011 - 55 - LRB096 05294 MJR 15360 b
(2) 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;
(3) 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;
(4) accept and rely on examination or investigation
reports made by other government officials, within or
without this State; or
(5) 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 Commissioner.
(g) 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.
(h) No licensee, individual, or person subject to
investigation or examination under this Section may knowingly

HB4011 - 56 - LRB096 05294 MJR 15360 b
withhold, abstract, remove, mutilate, destroy, or secrete any
books, records, computer records, or other information.
(205 ILCS 635/4-8.1A new)
Sec. 4-8.1A. 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 mortgage 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 Director is authorized to enter agreements or
sharing arrangements with other governmental agencies, the
Conference of State Bank Supervisors, the American Association

HB4011 - 57 - LRB096 05294 MJR 15360 b
of Residential Mortgage Regulators or other associations
representing governmental agencies as established by rule,
regulation or order of the Director. 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, other law relating to the disclosure of confidential

HB4011 - 58 - LRB096 05294 MJR 15360 b
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.
(e) In order to promote more effective regulation and
reduce regulatory burden through supervisory information
sharing, this Section shall not apply to the employment history
of a mortgage loan originator, and the record of publicly
adjudicated disciplinary and enforcement actions against a
mortgage loan originator.
(205 ILCS 635/4-8.3)
Sec. 4-8.3. Annual report of mortgage brokering and
servicing activity. On or before March 1 of each year or the
date selected for Mortgage Call Reports under Section 4-9 of
this Act, each licensee, except residential mortgage brokers,
shall file a report with the Commissioner that shall disclose
such information as the Commissioner requires. Exempt entities
as defined in subsection (d) of Section 1-4 shall not file the
annual report of mortgage and servicing activity required by
this Section.
(Source: P.A. 93-1018, eff. 1-1-05.)
(205 ILCS 635/4-9.1 new)

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Sec. 4-9.1. Mortgage call reports. Each residential
mortgage licensee shall submit to the Nationwide Mortgage
Licensing System and Registry reports of condition, which shall
be in the form and shall contain the information that the
Nationwide Mortgage Licensing System and Registry may require.
(205 ILCS 635/Art. VII heading)
ARTICLE VII.
MORTGAGE LOAN ORIGINATOR LICENSE REQUIRED
REGISTRATION OF LOAN ORIGINATORS
(205 ILCS 635/7-1A new)
Sec. 7-1A. Mortgage loan originator license.
(a) It is unlawful for any individual to act or assume to
act as a mortgage loan originator, as defined in subsection
(jj) of Section 1-4 of this Act, without obtaining a license
from the Director, unless the individual is exempt under
subsection (c) of this Section. Each licensed mortgage loan
originator must register with and maintain a valid unique
identifier issued by the Nationwide Mortgage Licensing System
and Registry.
(b) In order to facilitate an orderly transition to
licensing and minimize disruption in the mortgage marketplace,
the operability date for subsection (a) of this Section shall
be as follows:
(1) For all individuals other than individuals

HB4011 - 60 - LRB096 05294 MJR 15360 b
described in item (2) of this subsection (b), the
operability date shall be July 31, 2010, or any later date
approved by the Secretary of the U.S. Department of Housing
and Urban Development, pursuant to the authority granted
under federal Public Law 110-289, Section 1508(a).
(2) For all individuals registered as mortgage loan
originators as of the effective date of this amendatory Act
of the 96th General Assembly, the operability date shall be
January 1, 2011, or any later date approved by the
Secretary of the U.S. Department of Housing and Urban
Development, pursuant to the authority granted under
Public Law 110-289, Section 1508(a).
(c) The following are exempt from this Act:
(1) Registered mortgage loan originators, when acting
for an entity described in subsection (jj) of Section 1-4.
(2) Any individual who offers or negotiates terms of a
residential mortgage loan with or on behalf of an immediate
family member of the individual.
(3) Any individual who offers or negotiates terms of a
residential mortgage loan secured by a dwelling that served
as the individual's residence.
(4) A licensed attorney who negotiates the terms of a
residential mortgage loan on behalf of a client as an
ancillary matter to the attorney's representation of the
client, unless the attorney is compensated by a lender, a
mortgage broker, or other mortgage loan originator or by

HB4011 - 61 - LRB096 05294 MJR 15360 b
any agent of a lender, mortgage broker, or other mortgage
loan originator.
(d) A loan processor or underwriter who is an independent
contractor may not engage in the activities of a loan processor
or underwriter unless he or she obtains and maintains a license
under subsection (a) of this Section. Each independent
contractor loan processor or underwriter licensed as a mortgage
loan originator must have and maintain a valid unique
identifier issued by the Nationwide Mortgage Licensing System
and Registry.
(e) For the purposes of implementing an orderly and
efficient licensing process, the Director may establish
licensing rules or regulations and interim procedures for
licensing and acceptance of applications. For previously
registered or licensed individuals, the Director may establish
expedited review and licensing procedures.
(205 ILCS 635/7-2 new)
Sec. 7-2. State license application and issuance.
(a) Applicants for a license shall apply in a form
prescribed by the Director. Each form shall contain content as
set forth by rule, regulation, instruction, or procedure of the
Director and may be changed or updated as necessary by the
Director in order to carry out the purposes of this Act.
(b) In order to fulfill the purposes of this Act, the
Director is authorized to establish relationships or contracts

HB4011 - 62 - LRB096 05294 MJR 15360 b
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 as a
mortgage loan originator, the applicant shall, at a minimum,
furnish to the Nationwide Mortgage Licensing System and
Registry information concerning the applicant's identity,
including the following:
(1) Fingerprints for submission to the Federal Bureau
of Investigation, and any governmental agency or entity
authorized to receive such information for a state,
national and international criminal history background
check.
(2) Personal history and experience in a form
prescribed by the Nationwide Mortgage Licensing System and
Registry, including the submission of authorization for
the Nationwide Mortgage Licensing System and Registry and
the Director to obtain:
(A) an independent credit report obtained from a
consumer reporting agency described in Section 603(p)
of the Fair Credit Reporting Act; and
(B) information related to any administrative,
civil, or criminal findings by any governmental
jurisdiction.

HB4011 - 63 - LRB096 05294 MJR 15360 b
(d) For the purpose of this Section, and in order to reduce
the points of contact which the Federal Bureau of Investigation
may have to maintain for purposes of subsection (c) of this
Section, the Director may use the Nationwide Mortgage Licensing
System and Registry as a channeling agent for requesting
information from and distributing information to the
Department of Justice or any governmental agency.
(e) For the purposes of this Section and in order to reduce
the points of contact which the Director may have to maintain
for purposes of item (2) of subsection (c) of this Section, the
Director may use the Nationwide Mortgage Licensing System and
Registry as a channeling agent for requesting and distributing
information to and from any source so directed by the Director.
(205 ILCS 635/7-3 new)
Sec. 7-3. Issuance of license. The Director shall not issue
a mortgage loan originator license unless the Director makes at
a minimum the following findings:
(1) The applicant has never had a mortgage loan originator
license revoked in any governmental jurisdiction, except that a
subsequent formal vacation of such revocation shall not be
deemed a revocation.
(2) The applicant has not been convicted of, or pled guilty
or nolo contendere to, a felony in a domestic, foreign, or
military court:
(A) during the 7-year period preceding the date of the

HB4011 - 64 - LRB096 05294 MJR 15360 b
application for licensing and registration; or
(B) at any time preceding such date of application, if
such felony involved an act of fraud, dishonesty, or a
breach of trust, or money laundering;
provided that any pardon of a conviction shall not be a
conviction for purposes of this item (2).
(3) The applicant has demonstrated financial
responsibility, character, and general fitness so as to command
the confidence of the community and to warrant a determination
that the mortgage loan originator will operate honestly,
fairly, and efficiently within the purposes of this Act. For
purposes of this item (3) a person has shown that he or she is
not financially responsible when he or she has shown a
disregard for the management of his or her own financial
condition. A determination that an individual has not shown
financial responsibility may include, but is not limited to,
consideration of:
(A) current outstanding judgments, except judgments
solely as a result of medical expenses;
(B) current outstanding tax liens or other government
liens and filings, educational loan defaults, and
non-payment of child support;
(C) foreclosures within the past 3 years; and
(D) a pattern of seriously delinquent accounts within
the past 3 years.
(4) The applicant has completed the pre-licensing

HB4011 - 65 - LRB096 05294 MJR 15360 b
education requirement described in Section 7-4 of this Act.
(5) The applicant has passed a written test that meets the
test requirement described in Section 7-5 of this Act.
(6) The applicant has met the surety bond requirement as
required pursuant to Section 7-11 of this Act.
(205 ILCS 635/7-4 new)
Sec. 7-4. Pre-licensing and education of mortgage loan
originators.
(a) In order to meet the pre-licensing education
requirement referred to in item (4) of Section 7-3 of this Act
an individual shall complete at least 20 hours of education
approved in accordance with subsection (b) of this Section,
which shall include at least:
(1) 3 hours of Federal law and regulations;
(2) 3 hours of ethics, which shall include instruction
on fraud, consumer protection, and fair lending issues; and
(3) 2 hours of training related to lending standards
for the nontraditional mortgage product marketplace.
(b) For purposes of subsection (a) of this Section,
pre-licensing education courses shall be reviewed and approved
by the Nationwide Mortgage Licensing System and Registry based
upon reasonable standards. Review and approval of a
pre-licensing education course shall include review and
approval of the course provider.
(c) Nothing in this Section shall preclude any

HB4011 - 66 - LRB096 05294 MJR 15360 b
pre-licensing education course, as approved by the Nationwide
Mortgage Licensing System and Registry, that is provided by the
employer of the applicant or an entity which is affiliated with
the applicant by an agency contract, or any subsidiary or
affiliate of such an employer or entity.
(d) Pre-licensing education may be offered in a classroom,
online, or by any other means approved by the Nationwide
Mortgage Licensing System and Registry.
(e) The pre-licensing education requirements approved by
the Nationwide Mortgage Licensing System and Registry for the
subjects listed in items (1) through (3) of subsection (a) for
any state shall be accepted as credit towards completion of
pre-licensing education requirements in Illinois.
(f) An individual previously registered under this Act who
is applying to be licensed after the effective date of this
amendatory Act of the 96th General Assembly must prove that he
or she has completed all of the continuing education
requirements for the year in which the registration or license
was last held.
(205 ILCS 635/7-5 new)
Sec. 7-5. Testing of mortgage loan originators.
(a) In order to meet the written test requirement referred
to in item (5) of Section 7-3, an individual shall pass, in
accordance with the standards established under this
subsection (a), a qualified written test developed by the

HB4011 - 67 - LRB096 05294 MJR 15360 b
Nationwide Mortgage Licensing System and Registry and
administered by a test provider approved by the Nationwide
Mortgage Licensing System and Registry based upon reasonable
standards.
(b) A written test shall not be treated as a qualified
written test for purposes of subsection (a) of this Section
unless the test adequately measures the applicant's knowledge
and comprehension in appropriate subject areas, including:
(1) ethics;
(2) federal law and regulation pertaining to mortgage
origination;
(3) State law and regulation pertaining to mortgage
origination; and
(4) federal and State law and regulation, including
instruction on fraud, consumer protection, the
nontraditional mortgage marketplace, and fair lending
issues.
(c) Nothing in this Section shall prohibit a test provider
approved by the Nationwide Mortgage Licensing System and
Registry from providing a test at the location of the employer
of the applicant or the location of any subsidiary or affiliate
of the employer of the applicant, or the location of any entity
with which the applicant holds an exclusive arrangement to
conduct the business of a mortgage loan originator.
(d) An individual shall not be considered to have passed a
qualified written test unless the individual achieves a test

HB4011 - 68 - LRB096 05294 MJR 15360 b
score of not less than 75% correct answers to questions.
An individual may retake a test 3 consecutive times with
each consecutive taking occurring at least 30 days after the
preceding test.
After failing 3 consecutive tests, an individual shall wait
at least 6 months before taking the test again.
A licensed mortgage loan originator who fails to maintain a
valid license for a period of 5 years or longer shall retake
the test, not taking into account any time during which such
individual is a registered mortgage loan originator.
(205 ILCS 635/7-6 new)
Sec. 7-6. Standards for license renewal.
(a) The minimum standards for license renewal for mortgage
loan originators shall include the following:
(1) The mortgage loan originator continues to meet the
minimum standards for license issuance under Section 7-3.
(2) The mortgage loan originator has satisfied the
annual continuing education requirements described in
Section 7-7.
(3) The mortgage loan originator has paid all required
fees for renewal of the license.
(b) The license of a mortgage loan originator failing to
satisfy the minimum standards for license renewal shall expire.
The Director may adopt procedures for the reinstatement of
expired licenses consistent with the standards established by

HB4011 - 69 - LRB096 05294 MJR 15360 b
the Nationwide Mortgage Licensing System and Registry.
(205 ILCS 635/7-7 new)
Sec. 7-7. Continuing education for mortgage loan
originators.
(a) In order to meet the annual continuing education
requirements referred to in Section 7-6, a licensed mortgage
loan originator shall complete at least 8 hours of education
approved in accordance with subsection (b) of this Section,
which shall include at least:
(1) 3 hours of Federal law and regulations;
(2) 2 hours of ethics, which shall include instruction
on fraud, consumer protection, and fair lending issues; and
(3) 2 hours of training related to lending standards
for the nontraditional mortgage product marketplace.
(b) For purposes of this subsection (a), continuing
education courses shall be reviewed and approved by the
Nationwide Mortgage Licensing System and Registry based upon
reasonable standards. Review and approval of a continuing
education course shall include review and approval of the
course provider.
(c) Nothing in this Section shall preclude any education
course, as approved by the Nationwide Mortgage Licensing System
and Registry, that is provided by the employer of the mortgage
loan originator or an entity which is affiliated with the
mortgage loan originator by an agency contract, or any

HB4011 - 70 - LRB096 05294 MJR 15360 b
subsidiary or affiliate of the employer or entity.
(d) Continuing education may be offered either in a
classroom, online, or by any other means approved by the
Nationwide Mortgage Licensing System and Registry.
(e) A licensed mortgage loan originator:
(1) Except as provided in Section 7-6 and subsection
(i) of this Section, may only receive credit for a
continuing education course in the year in which the course
is taken; and
(2) May not take the same approved course in the same
or successive years to meet the annual requirements for
continuing education.
(f) A licensed mortgage loan originator who is an
approved instructor of an approved continuing education course
may receive credit for the licensed mortgage loan originator's
own annual continuing education requirement at the rate of 2
hours credit for every one hour taught.
(g) A person having successfully completed the education
requirements approved by the Nationwide Mortgage Licensing
System and Registry for the subjects listed in subsection (a)
of this Section for any state shall be accepted as credit
towards completion of continuing education requirements in
this State.
(h) A licensed mortgage loan originator who subsequently
becomes unlicensed must complete the continuing education
requirements for the last year in which the license was held

HB4011 - 71 - LRB096 05294 MJR 15360 b
prior to issuance of a new or renewed license.
(i) A person meeting the requirements of Section 7-6 may
make up any deficiency in continuing education as established
by rule or regulation of the Director.
(205 ILCS 635/7-8 new)
Sec. 7-8. Authority to require license. In addition to any
other duties imposed upon the Director by law, the Director
shall require mortgage loan originators to be licensed and
registered through the Nationwide Mortgage Licensing System
and Registry. In order to carry out this requirement the
Director is authorized to participate in the Nationwide
Mortgage Licensing System and Registry. For this purpose, the
Director may establish by agreement, order or rule requirements
as necessary, including, but not limited to, the following:
(1) Background checks for:
(A) criminal history through fingerprint or other
databases;
(B) civil or administrative records;
(C) credit history; or
(D) any other information as deemed necessary by
the Nationwide Mortgage Licensing System and Registry.
(2) The payment of fees to apply for or renew licenses
through the Nationwide Mortgage Licensing System and
Registry;
(3) The setting or resetting as necessary of renewal or

HB4011 - 72 - LRB096 05294 MJR 15360 b
reporting dates; and
(4) Requirements for amending or surrendering a
license or any other such activities as the Director deems
necessary for participation in the Nationwide Mortgage
Licensing System and Registry.
(205 ILCS 635/7-9 new)
Sec. 7-9. Report to Nationwide Mortgage Licensing System
and Registry. Subject to State privacy laws, the Director is
required to report regularly violations of this Act, as well as
enforcement actions and other relevant information, to the
Nationwide Mortgage Licensing System and Registry subject to
the provisions contained in Section 4-8.1A of this Act.
(205 ILCS 635/7-10 new)
Sec. 7-10. Nationwide Mortgage Licensing System and
Registry information challenge process. The Director shall
establish a process whereby mortgage loan originators may
challenge information entered into the Nationwide Mortgage
Licensing System and Registry by the Director.
(205 ILCS 635/7-11 new)
Sec. 7-11. Mortgage loan originator suspension or
revocation of registration; refusal to renew; fines.
(a) In addition to any other action authorized by this Act
or any other applicable law, rule or regulation, the Director

HB4011 - 73 - LRB096 05294 MJR 15360 b
may do the following:
(1) Suspend, revoke, or refuse to renew a license or
reprimand, place on probation or otherwise discipline a
licensee if the Director finds that the mortgage loan
originator has violated this Act or any other applicable
law or regulation or has been convicted of a criminal
offense.
(2) Impose a fine of not more than $1,000 for each day
for each violation of this Act or any other applicable law
or regulation that is committed. If the Mortgage Loan
Originator engages in a pattern of repeated violations, the
Director may impose a fine of not more than $2,000 for each
day for each violation committed. In determining the amount
of a fine to be imposed pursuant to this Act or any other
applicable law or regulation, the Director shall consider
all of the following:
(A) The seriousness of the violation;
(B) The mortgage loan originator's good faith
efforts to prevent the violation; and
(C) The mortgage loan originator's history of
violations and compliance with orders.
(b) In addition to any other action authorized by this Act
or any other applicable law, rule or regulation, the Director
may investigate alleged violations of the Act or any other
applicable law, rule or regulation and complaints concerning
any such violation. The Director may seek a court order to

HB4011 - 74 - LRB096 05294 MJR 15360 b
enjoin the violation.
(c) In addition to any other action authorized by this Act
or any other applicable law, rule or regulation, if the
Director determines that a mortgage loan originator is engaged
in or is believed to be engaged in activities that may
constitute a violation of this Act or any other applicable law,
rule or regulation, the Director may issue a cease and desist
order to compel the mortgage loan originator to comply with
this Act or any other applicable law, rule or regulation or,
upon a showing that an emergency exists, may suspend the
mortgage loan originator's license for a period not exceeding
180 calendar days, pending investigation.
(205 ILCS 635/7-12 new)
Sec. 7-12. Surety bond required.
(a) Each mortgage loan originator shall be covered by a
surety bond in accordance with this Section. In the event that
the mortgage loan originator is an employee or exclusive agent
of a person subject to this Act, the surety bond of such person
subject to this Act can be used in lieu of the mortgage loan
originator's surety bond requirement. The surety bond shall
provide coverage for each mortgage loan originator in an amount
prescribed under subsection (b) of this Section. The surety
bond shall be in a form prescribed by the Director. The
Director may promulgate rules or regulations with respect to
the requirements for such surety bonds as necessary to

HB4011 - 75 - LRB096 05294 MJR 15360 b
accomplish the purposes of this Act.
(b) The penal sum of the surety bond shall be maintained in
an amount that reflects the dollar amount of loans originated
as determined by the Director.
(c) When an action is commenced on a licensee's bond the
Director may require the filing of a new bond.
(d) Immediately upon recovery upon any action on the bond
the licensee shall file a new bond.
(205 ILCS 635/7-13 new)
Sec. 7-13. Prohibited acts and practices for mortgage loan
originators. It is a violation of this Act for an individual
subject to this Act to:
(1) Directly or indirectly employ any scheme, device,
or artifice to defraud or mislead borrowers or lenders or
to defraud any person.
(2) Engage in any unfair or deceptive practice toward
any person.
(3) Obtain property by fraud or misrepresentation.
(4) Solicit or enter into a contract with a borrower
that provides in substance that the person or individual
subject to this Act may earn a fee or commission through
"best efforts" to obtain a loan even though no loan is
actually obtained for the borrower.
(5) Solicit, advertise, or enter into a contract for
specific interest rates, points, or other financing terms

HB4011 - 76 - LRB096 05294 MJR 15360 b
unless the terms are actually available at the time of
soliciting, advertising, or contracting.
(6) Conduct any business covered by this Act without
holding a valid license as required under this Act, or
assist or aid and abet any person in the conduct of
business under this Act without a valid license as required
under this Act.
(7) Fail to make disclosures as required by this Act
and any other applicable State or federal law, including
regulations thereunder.
(8) Fail to comply with this Act or rules or
regulations promulgated under this Act, or fail to comply
with any other state or federal law, including the rules
and regulations thereunder, applicable to any business
authorized or conducted under this Act.
(9) Make, in any manner, any false or deceptive
statement or representation of a material fact, or any
omission of a material fact, required on any document or
application subject to this Act.
(10) Negligently make any false statement or knowingly
and willfully make any omission of material fact in
connection with any information or report filed with a
governmental agency or the Nationwide Mortgage Licensing
System and Registry or in connection with any investigation
conducted by the Director or another governmental agency.
(11) Make any payment, threat or promise, directly or

HB4011 - 77 - LRB096 05294 MJR 15360 b
indirectly, to any person for the purpose of influencing
the independent judgment of the person in connection with a
residential mortgage loan, or make any payment threat or
promise, directly or indirectly, to any appraiser of a
property, for the purpose of influencing the independent
judgment of the appraiser with respect to the value of the
property.
(12) Collect, charge, attempt to collect or charge, or
use or propose any agreement purporting to collect or
charge any fee prohibited by this Act.
(13) Cause or require a borrower to obtain property
insurance coverage in an amount that exceeds the
replacement cost of the improvements as established by the
property insurer.
(14) Fail to truthfully account for monies belonging to
a party to a residential mortgage loan transaction.
(15) Engage in conduct that constitutes dishonest
dealings.
(16) Knowingly instruct, solicit, propose, or cause a
person other than the borrower to sign a borrower's
signature on a mortgage related document, or solicit,
accept or execute any contract or other document related to
the residential mortgage transaction that contains any
blanks to be filled in after signing or initialing the
contract or other document, except for forms authorizing
the verification of application information.

HB4011 - 78 - LRB096 05294 MJR 15360 b
(17) Discourage any applicant from seeking or
participating in housing or financial counseling either
before or after the consummation of a loan transaction, or
fail to provide information on counseling resources upon
request.
(18) Charge for any ancillary products or services, not
essential to the basic loan transaction for which the
consumer has applied, without the applicant's knowledge
and written authorization, or charge for any ancillary
products or services not actually provided in the
transaction.
(19) Fail to give reasonable consideration to a
borrower's ability to repay the debt.
(20) Interfere or obstruct an investigation or
examination conducted pursuant to this Act.
(205 ILCS 635/7-14 new)
Sec. 7-14. Unique identifier shown. The unique identifier
of any person originating a residential mortgage loan shall be
clearly shown on all residential mortgage loan application
forms, solicitations, and advertisements, including business
cards and websites, and any other documents as established by
rule, regulation, or order of the Commissioner.
Section 97. Severability. The provisions of this Act are
severable under Section 1.31 of the Statute on Statutes.

HB4011 - 79 - LRB096 05294 MJR 15360 b
Section 99. Effective date. This Act takes effect upon
becoming law.
HB4011 - 80 - LRB096 05294 MJR 15360 b
INDEX
Statutes amended in order of appearance
205 ILCS 635/1-2 from Ch. 17, par. 2321-2
205 ILCS 635/1-4 from Ch. 17, par. 2321-4
205 ILCS 635/2-2 from Ch. 17, par. 2322-2
205 ILCS 635/2-3 from Ch. 17, par. 2322-3
205 ILCS 635/2-4 from Ch. 17, par. 2322-4
205 ILCS 635/2-6 from Ch. 17, par. 2322-6
205 ILCS 635/3-1 from Ch. 17, par. 2323-1
205 ILCS 635/3-2 from Ch. 17, par. 2323-2
205 ILCS 635/3-4 from Ch. 17, par. 2323-4
205 ILCS 635/4-1 from Ch. 17, par. 2324-1
205 ILCS 635/4-2 from Ch. 17, par. 2324-2
205 ILCS 635/4-5 from Ch. 17, par. 2324-5
205 ILCS 635/4-7 new
205 ILCS 635/4-8.1A new
205 ILCS 635/4-8.3
205 ILCS 635/4-9.1 new
205 ILCS 635/Art. VII
heading
205 ILCS 635/7-1A new
205 ILCS 635/7-2 new
205 ILCS 635/7-3 new
205 ILCS 635/7-4 new
205 ILCS 635/7-5 new
HB4011 - 81 - LRB096 05294 MJR 15360 b
205 ILCS 635/7-6 new
205 ILCS 635/7-7 new
205 ILCS 635/7-8 new
205 ILCS 635/7-9 new
205 ILCS 635/7-10 new
205 ILCS 635/7-11 new
205 ILCS 635/7-12 new
205 ILCS 635/7-13 new
205 ILCS 635/7-14 new