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1 | | AN ACT concerning regulation.
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2 | | Be it enacted by the People of the State of Illinois, |
3 | | represented in the General Assembly:
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4 | | Section 5. The Residential Mortgage License Act of 1987 is |
5 | | amended by changing Section 1-4 and by adding Section 5-12.5 |
6 | | as follows:
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7 | | (205 ILCS 635/1-4) |
8 | | Sec. 1-4. Definitions. The following words and phrases |
9 | | have the meanings given to them in this Section: |
10 | | (a) "Residential real property" or "residential real |
11 | | estate" shall mean any real property located in Illinois, upon |
12 | | which is constructed or intended to be constructed a dwelling. |
13 | | Those terms include a manufactured home as defined in |
14 | | subdivision (53) of Section 9-102 of the Uniform Commercial |
15 | | Code which is real property as defined in Section 5-35 of the |
16 | | Conveyance and Encumbrance of Manufactured Homes as Real |
17 | | Property and Severance Act. |
18 | | (b) "Making a residential mortgage loan" or "funding a |
19 | | residential mortgage loan" shall mean for compensation or |
20 | | gain, either directly or indirectly, advancing funds or making |
21 | | a commitment to advance funds to a loan applicant for a |
22 | | residential mortgage loan. |
23 | | (c) "Soliciting, processing, placing, or negotiating a |
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1 | | residential mortgage loan" shall mean for compensation or |
2 | | gain, either directly or indirectly, accepting or offering to |
3 | | accept an application for a residential mortgage loan, |
4 | | assisting or offering to assist in the processing of an |
5 | | application for a residential mortgage loan on behalf of a |
6 | | borrower, or negotiating or offering to negotiate the terms or |
7 | | conditions of a residential mortgage loan with a lender on |
8 | | behalf of a borrower including, but not limited to, the |
9 | | submission of credit packages for the approval of lenders, the |
10 | | preparation of residential mortgage loan closing documents, |
11 | | including a closing in the name of a broker. |
12 | | (d) "Exempt person or entity" shall mean the following: |
13 | | (1) (i) Any banking organization or foreign banking |
14 | | corporation licensed by the Illinois Commissioner of Banks |
15 | | and Real Estate or the United States Comptroller of the |
16 | | Currency to transact business in this State; (ii) any |
17 | | national bank, federally chartered savings and loan |
18 | | association, federal savings bank, federal credit union; |
19 | | (iii) (blank); (iv) any bank, savings and loan |
20 | | association, savings bank, or credit union organized under |
21 | | the laws of this or any other state; (v) any Illinois |
22 | | Consumer Installment Loan Act licensee; (vi) any insurance |
23 | | company authorized to transact business in this State; |
24 | | (vii) any entity engaged solely in commercial mortgage |
25 | | lending; (viii) any service corporation of a savings and |
26 | | loan association or savings bank organized under the laws |
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1 | | of this State or the service corporation of a federally |
2 | | chartered savings and loan association or savings bank |
3 | | having its principal place of business in this State, |
4 | | other than a service corporation licensed or entitled to |
5 | | reciprocity under the Real Estate License Act of 2000; or |
6 | | (ix) any first tier subsidiary of a bank, the charter of |
7 | | which is issued under the Illinois Banking Act by the |
8 | | Illinois Commissioner of Banks and Real Estate, or the |
9 | | first tier subsidiary of a bank chartered by the United |
10 | | States Comptroller of the Currency and that has its |
11 | | principal place of business in this State, provided that |
12 | | the first tier subsidiary is regularly examined by the |
13 | | Illinois Commissioner of Banks and Real Estate or the |
14 | | Comptroller of the Currency, or a consumer compliance |
15 | | examination is regularly conducted by the Federal Reserve |
16 | | Board. |
17 | | (1.5) Any employee of a person or entity mentioned in |
18 | | item (1) of this subsection, when acting for such person |
19 | | or entity, or any registered mortgage loan originator when |
20 | | acting for an entity described in subsection (tt) of this |
21 | | Section. |
22 | | (1.8) Any person or entity that does not originate |
23 | | mortgage loans in the ordinary course of business, but |
24 | | makes or acquires residential mortgage loans with his or |
25 | | her own funds for his or her or its own investment without |
26 | | intent to make, acquire, or resell more than 3 residential |
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1 | | mortgage loans in any one calendar year. |
2 | | (2) (Blank). |
3 | | (2.1) A bona fide nonprofit organization. |
4 | | (2.2) An employee of a bona fide nonprofit |
5 | | organization when acting on behalf of that organization. |
6 | | (3) Any person employed by a licensee to assist in the |
7 | | performance of the residential mortgage licensee's |
8 | | activities regulated by this Act who is compensated in any |
9 | | manner by only one licensee. |
10 | | (4) (Blank). |
11 | | (5) Any individual, corporation, partnership, or other |
12 | | entity that originates, services, or brokers residential |
13 | | mortgage loans, as these activities are defined in this |
14 | | Act, and who or which receives no compensation for those |
15 | | activities, subject to the Commissioner's regulations and |
16 | | the federal Secure and Fair Enforcement for Mortgage |
17 | | Licensing Act of 2008 and the rules promulgated under that |
18 | | Act with regard to the nature and amount of compensation. |
19 | | (6) (Blank). |
20 | | (7) Any entity engaged solely in providing loan |
21 | | processing services through the sponsoring of individuals |
22 | | acting pursuant to subsection (d) of Section 7-1A of this |
23 | | Act. |
24 | | (e) "Licensee" or "residential mortgage licensee" shall |
25 | | mean a person, partnership, association, corporation, or any |
26 | | other entity who or which is licensed pursuant to this Act to |
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1 | | engage in the activities regulated by this Act. |
2 | | (f) "Mortgage loan" , "residential mortgage loan" , or "home |
3 | | mortgage loan" shall mean any loan primarily for personal, |
4 | | family, or household use that is secured by a mortgage, deed of |
5 | | trust, or other equivalent consensual security interest on a |
6 | | dwelling as defined in Section 103(v) of the federal Truth in |
7 | | Lending Act, or residential real estate upon which is |
8 | | constructed or intended to be constructed a dwelling. |
9 | | "Mortgage loan", "residential mortgage loan", or "home |
10 | | mortgage loan" includes a loan in which funds are advanced |
11 | | through a shared appreciation agreement. |
12 | | (g) "Lender" shall mean any person, partnership, |
13 | | association, corporation, or any other entity who either lends |
14 | | or invests money in residential mortgage loans. |
15 | | (h) "Ultimate equitable owner" shall mean a person who, |
16 | | directly or indirectly, owns or controls an ownership interest |
17 | | in a corporation, foreign corporation, alien business |
18 | | organization, trust, or any other form of business |
19 | | organization regardless of whether the person owns or controls |
20 | | the ownership interest through one or more persons or one or |
21 | | more proxies, powers of attorney, nominees, corporations, |
22 | | associations, partnerships, trusts, joint stock companies, or |
23 | | other entities or devices, or any combination thereof. |
24 | | (i) "Residential mortgage financing transaction" shall |
25 | | mean the negotiation, acquisition, sale, or arrangement for or |
26 | | the offer to negotiate, acquire, sell, or arrange for, a |
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1 | | residential mortgage loan or residential mortgage loan |
2 | | commitment. |
3 | | (j) "Personal residence address" shall mean a street |
4 | | address and shall not include a post office box number. |
5 | | (k) "Residential mortgage loan commitment" shall mean a |
6 | | contract for residential mortgage loan financing. |
7 | | (l) "Party to a residential mortgage financing |
8 | | transaction" shall mean a borrower, lender, or loan broker in |
9 | | a residential mortgage financing transaction. |
10 | | (m) "Payments" shall mean payment of all or any of the |
11 | | following: principal, interest and escrow reserves for taxes, |
12 | | insurance and other related reserves, and reimbursement for |
13 | | lender advances. |
14 | | (n) "Commissioner" shall mean the Commissioner of Banks |
15 | | and Real Estate, except that, beginning on April 6, 2009 (the |
16 | | effective date of Public Act 95-1047), all references in this |
17 | | Act to the Commissioner of Banks and Real Estate are deemed, in |
18 | | appropriate contexts, to be references to the Secretary of |
19 | | Financial and Professional Regulation, or his or her designee, |
20 | | including the Director of the Division of Banking of the |
21 | | Department of Financial and Professional Regulation. |
22 | | (n-1) "Director" shall mean the Director of the Division |
23 | | of Banking of the Department of Financial and Professional |
24 | | Regulation, except that, beginning on July 31, 2009 (the |
25 | | effective date of Public Act 96-112), all references in this |
26 | | Act to the Director are deemed, in appropriate contexts, to be |
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1 | | the Secretary of Financial and Professional Regulation, or his |
2 | | or her designee, including the Director of the Division of |
3 | | Banking of the Department of Financial and Professional |
4 | | Regulation. |
5 | | (o) "Loan brokering", "brokering", or "brokerage service" |
6 | | shall mean the act of helping to obtain from another entity, |
7 | | for a borrower, a loan secured by residential real estate |
8 | | situated in Illinois or assisting a borrower in obtaining a |
9 | | loan secured by residential real estate situated in Illinois |
10 | | in return for consideration to be paid by either the borrower |
11 | | or the lender including, but not limited to, contracting for |
12 | | the delivery of residential mortgage loans to a third party |
13 | | lender and soliciting, processing, placing, or negotiating |
14 | | residential mortgage loans. |
15 | | (p) "Loan broker" or "broker" shall mean a person, |
16 | | partnership, association, corporation, or limited liability |
17 | | company, other than those persons, partnerships, associations, |
18 | | corporations, or limited liability companies exempted from |
19 | | licensing pursuant to Section 1-4, subsection (d), of this |
20 | | Act, who performs the activities described in subsections (c), |
21 | | (o), and (yy) of this Section. |
22 | | (q) "Servicing" shall mean the collection or remittance |
23 | | for or the right or obligation to collect or remit for any |
24 | | lender, noteowner, noteholder, or for a licensee's own |
25 | | account, of payments, interests, principal, and trust items |
26 | | such as hazard insurance and taxes on a residential mortgage |
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1 | | loan in accordance with the terms of the residential mortgage |
2 | | loan; and includes loan payment follow-up, delinquency loan |
3 | | follow-up, loan analysis and any notifications to the borrower |
4 | | that are necessary to enable the borrower to keep the loan |
5 | | current and in good standing. "Servicing" includes management |
6 | | of third-party entities acting on behalf of a residential |
7 | | mortgage licensee for the collection of delinquent payments |
8 | | and the use by such third-party entities of said licensee's |
9 | | servicing records or information, including their use in |
10 | | foreclosure. |
11 | | (r) "Full service office" shall mean an office, provided |
12 | | by the licensee and not subleased from the licensee's |
13 | | employees or independent contractors, and staff in Illinois |
14 | | reasonably adequate to handle efficiently communications, |
15 | | questions, and other matters relating to any application for, |
16 | | or an existing home mortgage secured by residential real |
17 | | estate situated in Illinois with respect to which the licensee |
18 | | is brokering, funding originating, purchasing, or servicing. |
19 | | The management and operation of each full service office must |
20 | | include observance of good business practices such as proper |
21 | | signage; adequate, organized, and accurate books and records; |
22 | | ample phone lines, hours of business, staff training and |
23 | | supervision, and provision for a mechanism to resolve consumer |
24 | | inquiries, complaints, and problems. The Commissioner shall |
25 | | issue regulations with regard to these requirements and shall |
26 | | include an evaluation of compliance with this Section in his |
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1 | | or her periodic examination of each licensee. "Full service |
2 | | office" does not include a remote location. |
3 | | (s) "Purchasing" shall mean the purchase of conventional |
4 | | or government-insured mortgage loans secured by residential |
5 | | real estate situated in Illinois from either the lender or |
6 | | from the secondary market. |
7 | | (t) "Borrower" shall mean the person or persons who seek |
8 | | the services of a loan broker, originator, or lender. |
9 | | (u) "Originating" shall mean the issuing of commitments |
10 | | for and funding of residential mortgage loans. |
11 | | (v) "Loan brokerage agreement" shall mean a written |
12 | | agreement in which a broker or loan broker agrees to do either |
13 | | of the following: |
14 | | (1) obtain a residential mortgage loan for the |
15 | | borrower or assist the borrower in obtaining a residential |
16 | | mortgage loan; or |
17 | | (2) consider making a residential mortgage loan to the |
18 | | borrower. |
19 | | (w) "Advertisement" shall mean the attempt by publication, |
20 | | dissemination, or circulation to induce, directly or |
21 | | indirectly, any person to enter into a residential mortgage |
22 | | loan agreement or residential mortgage loan brokerage |
23 | | agreement relative to a mortgage secured by residential real |
24 | | estate situated in Illinois. |
25 | | (x) (Blank). |
26 | | (y) "Government-insured mortgage loan" shall mean any |
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1 | | mortgage loan made on the security of residential real estate |
2 | | insured by the Department of Housing and Urban Development or |
3 | | Farmers Home Loan Administration, or guaranteed by the |
4 | | Veterans Administration. |
5 | | (z) "Annual audit" shall mean a certified audit of the |
6 | | licensee's books and records and systems of internal control |
7 | | performed by a certified public accountant in accordance with |
8 | | generally accepted accounting principles and generally |
9 | | accepted auditing standards. |
10 | | (aa) "Financial institution" shall mean a savings and loan |
11 | | association, savings bank, credit union, or a bank organized |
12 | | under the laws of Illinois or a savings and loan association, |
13 | | savings bank, credit union or a bank organized under the laws |
14 | | of the United States and headquartered in Illinois. |
15 | | (bb) "Escrow agent" shall mean a third party, individual |
16 | | or entity charged with the fiduciary obligation for holding |
17 | | escrow funds on a residential mortgage loan pending final |
18 | | payout of those funds in accordance with the terms of the |
19 | | residential mortgage loan. |
20 | | (cc) "Net worth" shall have the meaning ascribed thereto |
21 | | in Section 3-5 of this Act. |
22 | | (dd) "Affiliate" shall mean: |
23 | | (1) any entity that directly controls or is controlled |
24 | | by the licensee and any other company that is directly |
25 | | affecting activities regulated by this Act that is |
26 | | controlled by the company that controls the licensee; |
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1 | | (2) any entity: |
2 | | (A) that is controlled, directly or indirectly, by |
3 | | a trust or otherwise, by or for the benefit of |
4 | | shareholders who beneficially or otherwise control, |
5 | | directly or indirectly, by trust or otherwise, the |
6 | | licensee or any company that controls the licensee; or |
7 | | (B) a majority of the directors or trustees of |
8 | | which constitute a majority of the persons holding any |
9 | | such office with the licensee or any company that |
10 | | controls the licensee; |
11 | | (3) any company, including a real estate investment |
12 | | trust, that is sponsored and advised on a contractual |
13 | | basis by the licensee or any subsidiary or affiliate of |
14 | | the licensee. |
15 | | (ee) "First tier subsidiary" shall be defined by |
16 | | regulation incorporating the comparable definitions used by |
17 | | the Office of the Comptroller of the Currency and the Illinois |
18 | | Commissioner of Banks and Real Estate. |
19 | | (ff) "Gross delinquency rate" means the quotient |
20 | | determined by dividing (1) the sum of (i) the number of |
21 | | government-insured residential mortgage loans funded or |
22 | | purchased by a licensee in the preceding calendar year that |
23 | | are delinquent and (ii) the number of conventional residential |
24 | | mortgage loans funded or purchased by the licensee in the |
25 | | preceding calendar year that are delinquent by (2) the sum of |
26 | | (i) the number of government-insured residential mortgage |
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1 | | loans funded or purchased by the licensee in the preceding |
2 | | calendar year and (ii) the number of conventional residential |
3 | | mortgage loans funded or purchased by the licensee in the |
4 | | preceding calendar year. |
5 | | (gg) "Delinquency rate factor" means the factor set by |
6 | | rule of the Commissioner that is multiplied by the average |
7 | | gross delinquency rate of licensees, determined annually for |
8 | | the immediately preceding calendar year, for the purpose of |
9 | | determining which licensees shall be examined by the |
10 | | Commissioner pursuant to subsection (b) of Section 4-8 of this |
11 | | Act. |
12 | | (hh) (Blank). |
13 | | (ii) "Confidential supervisory information" means any |
14 | | report of examination, visitation, or investigation prepared |
15 | | by the Commissioner under this Act, any report of examination |
16 | | visitation, or investigation prepared by the state regulatory |
17 | | authority of another state that examines a licensee, any |
18 | | document or record prepared or obtained in connection with or |
19 | | relating to any examination, visitation, or investigation, and |
20 | | any record prepared or obtained by the Commissioner to the |
21 | | extent that the record summarizes or contains information |
22 | | derived from any report, document, or record described in this |
23 | | subsection. "Confidential supervisory information" does not |
24 | | include any information or record routinely prepared by a |
25 | | licensee and maintained in the ordinary course of business or |
26 | | any information or record that is required to be made publicly |
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1 | | available pursuant to State or federal law or rule. |
2 | | (jj) "Mortgage loan originator" means an individual who |
3 | | for compensation or gain or in the expectation of compensation |
4 | | or gain: |
5 | | (i) takes a residential mortgage loan application; or |
6 | | (ii) offers or negotiates terms of a residential |
7 | | mortgage loan. |
8 | | "Mortgage loan originator" includes an individual engaged |
9 | | in loan modification activities as defined in subsection (yy) |
10 | | of this Section. A mortgage loan originator engaged in loan |
11 | | modification activities shall report those activities to the |
12 | | Department of Financial and Professional Regulation in the |
13 | | manner provided by the Department; however, the Department |
14 | | shall not impose a fee for reporting, nor require any |
15 | | additional qualifications to engage in those activities beyond |
16 | | those provided pursuant to this Act for mortgage loan |
17 | | originators. |
18 | | "Mortgage loan originator" does not include an individual |
19 | | engaged solely as a loan processor or underwriter except as |
20 | | otherwise provided in subsection (d) of Section 7-1A of this |
21 | | Act. |
22 | | "Mortgage loan originator" does not include a person or |
23 | | entity that only performs real estate brokerage activities and |
24 | | is licensed in accordance with the Real Estate License Act of |
25 | | 2000, unless the person or entity is compensated by a lender, a |
26 | | mortgage broker, or other mortgage loan originator, or by any |
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1 | | agent of that lender, mortgage broker, or other mortgage loan |
2 | | originator. |
3 | | "Mortgage loan originator" does not include a person or |
4 | | entity solely involved in extensions of credit relating to |
5 | | timeshare plans, as that term is defined in Section 101(53D) |
6 | | of Title 11, United States Code. |
7 | | (kk) "Depository institution" has the same meaning as in |
8 | | Section 3 of the Federal Deposit Insurance Act, and includes |
9 | | any credit union. |
10 | | (ll) "Dwelling" means a residential structure or mobile |
11 | | home which contains one to 4 family housing units, or |
12 | | individual units of condominiums or cooperatives. |
13 | | (mm) "Immediate family member" means a spouse, child, |
14 | | sibling, parent, grandparent, or grandchild, and includes |
15 | | step-parents, step-children, step-siblings, or adoptive |
16 | | relationships. |
17 | | (nn) "Individual" means a natural person. |
18 | | (oo) "Loan processor or underwriter" means an individual |
19 | | who performs clerical or support duties as an employee at the |
20 | | direction of and subject to the supervision and instruction of |
21 | | a person licensed, or exempt from licensing, under this Act. |
22 | | "Clerical or support duties" includes subsequent to the |
23 | | receipt of an application: |
24 | | (i) the receipt, collection, distribution, and |
25 | | analysis of information common for the processing or |
26 | | underwriting of a residential mortgage loan; and |
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1 | | (ii) communicating with a consumer to obtain the |
2 | | information necessary for the processing or underwriting |
3 | | of a loan, to the extent that the communication does not |
4 | | include offering or negotiating loan rates or terms, or |
5 | | counseling consumers about residential mortgage loan rates |
6 | | or terms. An individual engaging solely in loan processor |
7 | | or underwriter activities shall not represent to the |
8 | | public, through advertising or other means of |
9 | | communicating or providing information, including the use |
10 | | of business cards, stationery, brochures, signs, rate |
11 | | lists, or other promotional items, that the individual can |
12 | | or will perform any of the activities of a mortgage loan |
13 | | originator. |
14 | | (pp) "Nationwide Multistate Licensing System and Registry" |
15 | | means a mortgage licensing system developed and maintained by |
16 | | the Conference of State Bank Supervisors and the American |
17 | | Association of Residential Mortgage Regulators for the |
18 | | licensing and registration of licensed mortgage loan |
19 | | originators. |
20 | | (qq) "Nontraditional mortgage product" means any mortgage |
21 | | product other than a 30-year fixed rate mortgage. |
22 | | (rr) "Person" means a natural person, corporation, |
23 | | company, limited liability company, partnership, or |
24 | | association. |
25 | | (ss) "Real estate brokerage activity" means any activity |
26 | | that involves offering or providing real estate brokerage |
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1 | | services to the public, including: |
2 | | (1) acting as a real estate agent or real estate |
3 | | broker for a buyer, seller, lessor, or lessee of real |
4 | | property; |
5 | | (2) bringing together parties interested in the sale, |
6 | | purchase, lease, rental, or exchange of real property; |
7 | | (3) negotiating, on behalf of any party, any portion |
8 | | of a contract relating to the sale, purchase, lease, |
9 | | rental, or exchange of real property, other than in |
10 | | connection with providing financing with respect to any |
11 | | such transaction; |
12 | | (4) engaging in any activity for which a person |
13 | | engaged in the activity is required to be registered or |
14 | | licensed as a real estate agent or real estate broker |
15 | | under any applicable law; or |
16 | | (5) offering to engage in any activity, or act in any |
17 | | capacity, described in this subsection (ss). |
18 | | (tt) "Registered mortgage loan originator" means any |
19 | | individual that: |
20 | | (1) meets the definition of mortgage loan originator |
21 | | and is an employee of: |
22 | | (A) a depository institution; |
23 | | (B) a subsidiary that is: |
24 | | (i) owned and controlled by a depository |
25 | | institution; and |
26 | | (ii) regulated by a federal banking agency; or |
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1 | | (C) an institution regulated by the Farm Credit |
2 | | Administration; and |
3 | | (2) is registered with, and maintains a unique |
4 | | identifier through, the Nationwide Multistate Licensing |
5 | | System and Registry. |
6 | | (uu) "Unique identifier" means a number or other |
7 | | identifier assigned by protocols established by the Nationwide |
8 | | Multistate Licensing System and Registry. |
9 | | (vv) "Residential mortgage license" means a license issued |
10 | | pursuant to Section 1-3, 2-2, or 2-6 of this Act. |
11 | | (ww) "Mortgage loan originator license" means a license |
12 | | issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act. |
13 | | (xx) "Secretary" means the Secretary of the Department of |
14 | | Financial and Professional Regulation, or a person authorized |
15 | | by the Secretary or by this Act to act in the Secretary's |
16 | | stead. |
17 | | (yy) "Loan modification" means, for compensation or gain, |
18 | | either directly or indirectly offering or negotiating on |
19 | | behalf of a borrower or homeowner to adjust the terms of a |
20 | | residential mortgage loan in a manner not provided for in the |
21 | | original or previously modified mortgage loan. |
22 | | (zz) "Short sale facilitation" means, for compensation or |
23 | | gain, either directly or indirectly offering or negotiating on |
24 | | behalf of a borrower or homeowner to facilitate the sale of |
25 | | residential real estate subject to one or more residential |
26 | | mortgage loans or debts constituting liens on the property in |
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1 | | which the proceeds from selling the residential real estate |
2 | | will fall short of the amount owed and the lien holders are |
3 | | contacted to agree to release their lien on the residential |
4 | | real estate and accept less than the full amount owed on the |
5 | | debt. |
6 | | (aaa) "Bona fide nonprofit organization" means an |
7 | | organization that is described in Section 501(c)(3) of the |
8 | | Internal Revenue Code, is exempt from federal income tax under |
9 | | Section 501(a) of the Internal Revenue Code, does not operate |
10 | | in a commercial context, and does all of the following: |
11 | | (1) Promotes affordable housing or provides home |
12 | | ownership education or similar services. |
13 | | (2) Conducts its activities in a manner that serves |
14 | | public or charitable purposes. |
15 | | (3) Receives funding and revenue and charges fees in a |
16 | | manner that does not create an incentive for itself or its |
17 | | employees to act other than in the best interests of its |
18 | | clients. |
19 | | (4) Compensates its employees in a manner that does |
20 | | not create an incentive for its employees to act other |
21 | | than in the best interests of its clients. |
22 | | (5) Provides to, or identifies for, the borrower |
23 | | residential mortgage loans with terms favorable to the |
24 | | borrower and comparable to residential mortgage loans and |
25 | | housing assistance provided under government housing |
26 | | assistance programs. |
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1 | | (bbb) "Remote location" means a location other than a |
2 | | principal place of business or a full service office at which a |
3 | | mortgage loan originator of a licensee may conduct business. |
4 | | (ccc) "Shared appreciation agreement" means a writing |
5 | | evidencing a transaction or any option, future, or any other |
6 | | derivative between a person and a consumer where the consumer |
7 | | receives money or any other item of value in exchange for an |
8 | | interest or future interest in a dwelling or residential real |
9 | | estate or a future obligation to repay a sum on the occurrence |
10 | | of an event, such as: |
11 | | (1) the transfer of ownership; |
12 | | (2) a repayment maturity date; |
13 | | (3) the death of the consumer; or |
14 | | (4) any other event contemplated by the writing. |
15 | | The Commissioner may define by rule and regulation any |
16 | | terms used in this Act for the efficient and clear |
17 | | administration of this Act. |
18 | | (Source: P.A. 103-156, eff. 1-1-24 .)
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19 | | (205 ILCS 635/5-12.5 new) |
20 | | Sec. 5-12.5. Shared appreciation agreement consumer |
21 | | counseling and disclosures. |
22 | | (a) Notwithstanding any provision in this Act to the |
23 | | contrary, before taking any legally binding action on a shared |
24 | | appreciation agreement, the borrower or borrowers shall be |
25 | | provided counseling. The borrower may not waive counseling. |
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1 | | (b) The Secretary may adopt rules relating to shared |
2 | | appreciation agreements, including, but not limited to, rules |
3 | | defining statutory terms; relating to disclosures to help |
4 | | consumers understand the cost, duration, and fees of the |
5 | | agreement, as well as potential alternatives; on the limits on |
6 | | the interest or other fees that may be charged to a borrower; |
7 | | and relating to counseling under subsection (a).
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8 | | Section 10. The Residential Real Property Disclosure Act |
9 | | is amended by changing Section 70 as follows:
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10 | | (765 ILCS 77/70) |
11 | | Sec. 70. Predatory lending database program. |
12 | | (a) As used in this Article: |
13 | | "Adjustable rate mortgage" or "ARM" means a closed-end |
14 | | mortgage transaction that allows adjustments of the loan |
15 | | interest rate during the first 3 years of the loan term. |
16 | | "Borrower" means a person seeking a mortgage loan. |
17 | | "Broker" means a "broker" or "loan broker", as defined in |
18 | | subsection (p) of Section 1-4 of the Residential Mortgage |
19 | | License Act of 1987. |
20 | | "Closing agent" means an individual assigned by a title |
21 | | insurance company or a broker or originator to ensure that the |
22 | | execution of documents related to the closing of a real estate |
23 | | sale or the refinancing of a real estate loan and the |
24 | | disbursement of closing funds are in conformity with the |
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1 | | instructions of the entity financing the transaction. |
2 | | "Counseling" means in-person counseling provided by a |
3 | | counselor employed by a HUD-approved counseling agency to all |
4 | | borrowers . Counseling must be provided in the following |
5 | | manner: |
6 | | (i) in person; or |
7 | | (ii) by remote electronic or telephonic means, with |
8 | | the permission of all borrowers, where the session can be |
9 | | conducted in privacy, the counselor is able to verify the |
10 | | identity of each borrower, and the counseling is |
11 | | documented by the counselor, subject to any rules that may |
12 | | be enacted by the Department , or documented telephone |
13 | | counseling where a hardship would be imposed on one or |
14 | | more borrowers. A hardship shall exist in instances in |
15 | | which the borrower is confined to his or her home due to |
16 | | medical conditions, as verified in writing by a physician, |
17 | | or the borrower resides 50 miles or more from the nearest |
18 | | participating HUD-approved housing counseling agency . |
19 | | "Counselor" means a counselor employed by a HUD-approved |
20 | | housing counseling agency. |
21 | | "Credit score" means a credit risk score as defined by the |
22 | | Fair Isaac Corporation, or its successor, and reported under |
23 | | such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK |
24 | | SCORE" by one or more of the following credit reporting |
25 | | agencies or their successors: Equifax, Inc., Experian |
26 | | Information Solutions, Inc., and TransUnion LLC. If the |
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1 | | borrower's credit report contains credit scores from 2 |
2 | | reporting agencies, then the broker or loan originator shall |
3 | | report the lower score. If the borrower's credit report |
4 | | contains credit scores from 3 reporting agencies, then the |
5 | | broker or loan originator shall report the middle score. |
6 | | "Department" means the Department of Financial and |
7 | | Professional Regulation. |
8 | | "Exempt person or entity" means that term as it is defined |
9 | | in subsection subsections (d) (1), (d)(1.5), and (d)(1.8) of |
10 | | Section 1-4 of the Residential Mortgage License Act of 1987. |
11 | | "First-time homebuyer" means a borrower who has not held |
12 | | an ownership interest in residential property. |
13 | | "HUD-approved counseling" or "counseling" means counseling |
14 | | given to a borrower by a counselor employed by a HUD-approved |
15 | | housing counseling agency. |
16 | | "Interest only" means a closed-end loan that permits one |
17 | | or more payments of interest without any reduction of the |
18 | | principal balance of the loan, other than the first payment on |
19 | | the loan. |
20 | | "Lender" means that term as it is defined in subsection |
21 | | (g) of Section 1-4 of the Residential Mortgage License Act of |
22 | | 1987. |
23 | | "Licensee" means that term as it is defined in subsection |
24 | | (e) of Section 1-4 of the Residential Mortgage License Act of |
25 | | 1987. |
26 | | "Mortgage loan" means that term as it is defined in |
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1 | | subsection (f) of Section 1-4 of the Residential Mortgage |
2 | | License Act of 1987. |
3 | | "Negative amortization" means an amortization method under |
4 | | which the outstanding balance may increase at any time over |
5 | | the course of the loan because the regular periodic payment |
6 | | does not cover the full amount of interest due. |
7 | | "Originator" means a "mortgage loan originator" as defined |
8 | | in subsection (jj) of Section 1-4 of the Residential Mortgage |
9 | | License Act of 1987, except an exempt person. |
10 | | "Points and fees" has the meaning ascribed to that term in |
11 | | Section 10 of the High Risk Home Loan Act. |
12 | | "Prepayment penalty" means a charge imposed by a lender |
13 | | under a mortgage note or rider when the loan is paid before the |
14 | | expiration of the term of the loan. |
15 | | "Refinancing" means a loan secured by the borrower's or |
16 | | borrowers' primary residence where the proceeds are not used |
17 | | as purchase money for the residence. |
18 | | "Title insurance company" means any domestic company |
19 | | organized under the laws of this State for the purpose of |
20 | | conducting the business of guaranteeing or insuring titles to |
21 | | real estate and any title insurance company organized under |
22 | | the laws of another State, the District of Columbia, or a |
23 | | foreign government and authorized to transact the business of |
24 | | guaranteeing or insuring titles to real estate in this State. |
25 | | (a-5) A predatory lending database program shall be |
26 | | established within Cook County. The program shall be |
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1 | | administered in accordance with this Article. The inception |
2 | | date of the program shall be July 1, 2008. A predatory lending |
3 | | database program shall be expanded to include Kane, Peoria, |
4 | | and Will counties. The inception date of the expansion of the |
5 | | program as it applies to Kane, Peoria, and Will counties shall |
6 | | be July 1, 2010. Until the inception date, none of the duties, |
7 | | obligations, contingencies, or consequences of or from the |
8 | | program shall be imposed. The program shall apply to all |
9 | | mortgage applications that are governed by this Article and |
10 | | that are made or taken on or after the inception of the |
11 | | program. |
12 | | (b) The database created under this program shall be |
13 | | maintained and administered by the Department. The database |
14 | | shall be designed to allow brokers, originators, counselors, |
15 | | title insurance companies, and closing agents to submit |
16 | | information to the database online. The database shall not be |
17 | | designed to allow those entities to retrieve information from |
18 | | the database, except as otherwise provided in this Article. |
19 | | Information submitted by the broker or originator to the |
20 | | Department may be used to populate the online form submitted |
21 | | by a counselor, title insurance company, or closing agent. |
22 | | (c) Within 10 business days after taking a mortgage |
23 | | application, the broker or originator for any mortgage on |
24 | | residential property within the program area must submit to |
25 | | the predatory lending database all of the information required |
26 | | under Section 72 and any other information required by the |
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1 | | Department by rule. Within 7 business days after receipt of |
2 | | the information, the Department shall compare that information |
3 | | to the housing counseling standards in Section 73 and issue to |
4 | | the borrower and the broker or originator a determination of |
5 | | whether counseling is recommended for the borrower. The |
6 | | borrower may not waive counseling. If at any time after |
7 | | submitting the information required under Section 72 the |
8 | | broker or originator (i) changes the terms of the loan or (ii) |
9 | | issues a new commitment to the borrower, then, within 5 |
10 | | business days thereafter, the broker or originator shall |
11 | | re-submit all of the information required under Section 72 |
12 | | and, within 4 business days after receipt of the information |
13 | | re-submitted by the broker or originator, the Department shall |
14 | | compare that information to the housing counseling standards |
15 | | in Section 73 and shall issue to the borrower and the broker or |
16 | | originator a new determination of whether re-counseling is |
17 | | recommended for the borrower based on the information |
18 | | re-submitted by the broker or originator. The Department shall |
19 | | require re-counseling if the loan terms have been modified to |
20 | | meet another counseling standard in Section 73, or if the |
21 | | broker has increased the interest rate by more than 200 basis |
22 | | points. |
23 | | (d) If the Department recommends counseling for the |
24 | | borrower under subsection (c), then the Department shall |
25 | | notify the borrower of all participating HUD-approved |
26 | | counseling agencies located within the State and, where |
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1 | | applicable, nationally HUD-approved counseling agencies, and |
2 | | direct the borrower to interview with a counselor associated |
3 | | with one of those agencies. Within 10 business days after |
4 | | receipt of the notice of HUD-approved counseling agencies, it |
5 | | is the borrower's responsibility to select one of those |
6 | | agencies and shall engage in an interview with a counselor |
7 | | associated with that agency. The borrower must supply all |
8 | | necessary documents, as set forth by the counselor, at least |
9 | | 72 hours before the scheduled interview. The selection must |
10 | | take place and the appointment for the interview must be set |
11 | | within 10 business days, although the interview may take place |
12 | | beyond the 10 business day period. Within 7 business days |
13 | | after interviewing the borrower, the counselor must submit to |
14 | | the predatory lending database all of the information required |
15 | | under Section 74 and any other information required by the |
16 | | Department by rule. Reasonable and customary costs not to |
17 | | exceed $300 associated with counseling provided under the |
18 | | program shall be paid by the broker or originator and shall not |
19 | | be charged back to, or recovered from, the borrower. The |
20 | | Department shall annually calculate to the nearest dollar an |
21 | | adjusted rate for inflation. A counselor shall not recommend |
22 | | or suggest that a borrower contact any specific mortgage |
23 | | origination company, financial institution, or entity that |
24 | | deals in mortgage finance to obtain a loan, another quote, or |
25 | | for any other reason related to the specific mortgage |
26 | | transaction; however, a counselor may suggest that the |
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1 | | borrower seek an opinion or a quote from another mortgage |
2 | | origination company, financial institution, or entity that |
3 | | deals in mortgage finance. A counselor or housing counseling |
4 | | agency that in good faith provides counseling shall not be |
5 | | liable to a broker or originator or borrower for civil |
6 | | damages, except for willful or wanton misconduct on the part |
7 | | of the counselor in providing the counseling. |
8 | | (e) The broker or originator and the borrower may not take |
9 | | any legally binding action concerning the loan transaction |
10 | | until the later of the following: |
11 | | (1) the Department issues a determination not to |
12 | | recommend HUD-approved counseling for the borrower in |
13 | | accordance with subsection (c); or |
14 | | (2) the Department issues a determination that |
15 | | HUD-approved counseling is recommended for the borrower |
16 | | and the counselor submits all required information to the |
17 | | database in accordance with subsection (d). |
18 | | (f) Within 10 business days after closing, the title |
19 | | insurance company or closing agent must submit to the |
20 | | predatory lending database all of the information required |
21 | | under Section 76 and any other information required by the |
22 | | Department by rule. |
23 | | (g) The title insurance company or closing agent shall |
24 | | attach to the mortgage a certificate of compliance with the |
25 | | requirements of this Article, as generated by the database. If |
26 | | the transaction is exempt, the title insurance company or |
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1 | | closing agent shall attach to the mortgage a certificate of |
2 | | exemption, as generated by the database. Each certificate of |
3 | | compliance or certificate of exemption must contain, at a |
4 | | minimum, one of the borrower's names on the mortgage loan and |
5 | | the property index number for the subject property. If the |
6 | | title insurance company or closing agent fails to attach the |
7 | | certificate of compliance or exemption, whichever is required, |
8 | | then the mortgage is not recordable. In addition, if any lis |
9 | | pendens for a residential mortgage foreclosure is recorded on |
10 | | the property within the program area, a certificate of service |
11 | | must be simultaneously recorded that affirms that a copy of |
12 | | the lis pendens was filed with the Department. A lis pendens |
13 | | filed after July 1, 2016 shall be filed with the Department |
14 | | electronically. If the certificate of service is not recorded, |
15 | | then the lis pendens pertaining to the residential mortgage |
16 | | foreclosure in question is not recordable and is of no force |
17 | | and effect. |
18 | | (h) All information provided to the predatory lending |
19 | | database under the program is confidential and is not subject |
20 | | to disclosure under the Freedom of Information Act, except as |
21 | | otherwise provided in this Article. Information or documents |
22 | | obtained by employees of the Department in the course of |
23 | | maintaining and administering the predatory lending database |
24 | | are deemed confidential. Employees are prohibited from making |
25 | | disclosure of such confidential information or documents. Any |
26 | | request for production of information from the predatory |
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1 | | lending database, whether by subpoena, notice, or any other |
2 | | source, shall be referred to the Department of Financial and |
3 | | Professional Regulation. Any borrower may authorize in writing |
4 | | the release of database information. The Department may use |
5 | | the information in the database without the consent of the |
6 | | borrower: (i) for the purposes of administering and enforcing |
7 | | the program; (ii) to provide relevant information to a |
8 | | counselor providing counseling to a borrower under the |
9 | | program; or (iii) to the appropriate law enforcement agency or |
10 | | the applicable administrative agency if the database |
11 | | information demonstrates criminal, fraudulent, or otherwise |
12 | | illegal activity. |
13 | | (i) Nothing in this Article is intended to prevent a |
14 | | borrower from making his or her own decision as to whether to |
15 | | proceed with a transaction. |
16 | | (j) Any person who violates any provision of this Article |
17 | | commits an unlawful practice within the meaning of the |
18 | | Consumer Fraud and Deceptive Business Practices Act. |
19 | | (j-1) A violation of any provision of this Article by a |
20 | | mortgage banking licensee or licensed mortgage loan originator |
21 | | shall constitute a violation of the Residential Mortgage |
22 | | License Act of 1987. |
23 | | (j-2) A violation of any provision of this Article by a |
24 | | title insurance company, title agent, or escrow agent shall |
25 | | constitute a violation of the Title Insurance Act. |
26 | | (j-3) A violation of any provision of this Article by a |
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1 | | housing counselor shall be referred to the Department of |
2 | | Housing and Urban Development. |
3 | | (k) During the existence of the program, the Department |
4 | | shall submit semi-annual reports to the Governor and to the |
5 | | General Assembly by May 1 and November 1 of each year detailing |
6 | | its findings regarding the program. The report shall include, |
7 | | by county, at least the following information for each |
8 | | reporting period: |
9 | | (1) the number of loans registered with the program; |
10 | | (2) the number of borrowers receiving counseling; |
11 | | (3) the number of loans closed; |
12 | | (4) the number of loans requiring counseling for each |
13 | | of the standards set forth in Section 73; |
14 | | (5) the number of loans requiring counseling where the |
15 | | mortgage originator changed the loan terms subsequent to |
16 | | counseling; |
17 | | (6) the number of licensed mortgage brokers and loan |
18 | | originators entering information into the database; |
19 | | (7) the number of investigations based on information |
20 | | obtained from the database, including the number of |
21 | | licensees fined, the number of licenses suspended, and the |
22 | | number of licenses revoked; |
23 | | (8) a summary of the types of non-traditional mortgage |
24 | | products being offered; and |
25 | | (9) a summary of how the Department is actively |
26 | | utilizing the program to combat mortgage fraud. |