HB5231 EngrossedLRB103 37487 RTM 67610 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Residential Mortgage License Act of 1987 is
5amended by changing Section 1-4 and by adding Section 5-12.5
6as follows:
 
7    (205 ILCS 635/1-4)
8    Sec. 1-4. Definitions. The following words and phrases
9have the meanings given to them in this Section:
10    (a) "Residential real property" or "residential real
11estate" shall mean any real property located in Illinois, upon
12which is constructed or intended to be constructed a dwelling.
13Those terms include a manufactured home as defined in
14subdivision (53) of Section 9-102 of the Uniform Commercial
15Code which is real property as defined in Section 5-35 of the
16Conveyance and Encumbrance of Manufactured Homes as Real
17Property and Severance Act.
18    (b) "Making a residential mortgage loan" or "funding a
19residential mortgage loan" shall mean for compensation or
20gain, either directly or indirectly, advancing funds or making
21a commitment to advance funds to a loan applicant for a
22residential mortgage loan.
23    (c) "Soliciting, processing, placing, or negotiating a

 

 

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1residential mortgage loan" shall mean for compensation or
2gain, either directly or indirectly, accepting or offering to
3accept an application for a residential mortgage loan,
4assisting or offering to assist in the processing of an
5application for a residential mortgage loan on behalf of a
6borrower, or negotiating or offering to negotiate the terms or
7conditions of a residential mortgage loan with a lender on
8behalf of a borrower including, but not limited to, the
9submission of credit packages for the approval of lenders, the
10preparation of residential mortgage loan closing documents,
11including 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
25mean a person, partnership, association, corporation, or any
26other entity who or which is licensed pursuant to this Act to

 

 

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1engage in the activities regulated by this Act.
2    (f) "Mortgage loan", "residential mortgage loan", or "home
3mortgage loan" shall mean any loan primarily for personal,
4family, or household use that is secured by a mortgage, deed of
5trust, or other equivalent consensual security interest on a
6dwelling as defined in Section 103(v) of the federal Truth in
7Lending Act, or residential real estate upon which is
8constructed or intended to be constructed a dwelling.
9"Mortgage loan", "residential mortgage loan", or "home
10mortgage loan" includes a loan in which funds are advanced
11through a shared appreciation agreement.
12    (g) "Lender" shall mean any person, partnership,
13association, corporation, or any other entity who either lends
14or invests money in residential mortgage loans.
15    (h) "Ultimate equitable owner" shall mean a person who,
16directly or indirectly, owns or controls an ownership interest
17in a corporation, foreign corporation, alien business
18organization, trust, or any other form of business
19organization regardless of whether the person owns or controls
20the ownership interest through one or more persons or one or
21more proxies, powers of attorney, nominees, corporations,
22associations, partnerships, trusts, joint stock companies, or
23other entities or devices, or any combination thereof.
24    (i) "Residential mortgage financing transaction" shall
25mean the negotiation, acquisition, sale, or arrangement for or
26the offer to negotiate, acquire, sell, or arrange for, a

 

 

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1residential mortgage loan or residential mortgage loan
2commitment.
3    (j) "Personal residence address" shall mean a street
4address and shall not include a post office box number.
5    (k) "Residential mortgage loan commitment" shall mean a
6contract for residential mortgage loan financing.
7    (l) "Party to a residential mortgage financing
8transaction" shall mean a borrower, lender, or loan broker in
9a residential mortgage financing transaction.
10    (m) "Payments" shall mean payment of all or any of the
11following: principal, interest and escrow reserves for taxes,
12insurance and other related reserves, and reimbursement for
13lender advances.
14    (n) "Commissioner" shall mean the Commissioner of Banks
15and Real Estate, except that, beginning on April 6, 2009 (the
16effective date of Public Act 95-1047), all references in this
17Act to the Commissioner of Banks and Real Estate are deemed, in
18appropriate contexts, to be references to the Secretary of
19Financial and Professional Regulation, or his or her designee,
20including the Director of the Division of Banking of the
21Department of Financial and Professional Regulation.
22    (n-1) "Director" shall mean the Director of the Division
23of Banking of the Department of Financial and Professional
24Regulation, except that, beginning on July 31, 2009 (the
25effective date of Public Act 96-112), all references in this
26Act to the Director are deemed, in appropriate contexts, to be

 

 

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1the Secretary of Financial and Professional Regulation, or his
2or her designee, including the Director of the Division of
3Banking of the Department of Financial and Professional
4Regulation.
5    (o) "Loan brokering", "brokering", or "brokerage service"
6shall mean the act of helping to obtain from another entity,
7for a borrower, a loan secured by residential real estate
8situated in Illinois or assisting a borrower in obtaining a
9loan secured by residential real estate situated in Illinois
10in return for consideration to be paid by either the borrower
11or the lender including, but not limited to, contracting for
12the delivery of residential mortgage loans to a third party
13lender and soliciting, processing, placing, or negotiating
14residential mortgage loans.
15    (p) "Loan broker" or "broker" shall mean a person,
16partnership, association, corporation, or limited liability
17company, other than those persons, partnerships, associations,
18corporations, or limited liability companies exempted from
19licensing pursuant to Section 1-4, subsection (d), of this
20Act, who performs the activities described in subsections (c),
21(o), and (yy) of this Section.
22    (q) "Servicing" shall mean the collection or remittance
23for or the right or obligation to collect or remit for any
24lender, noteowner, noteholder, or for a licensee's own
25account, of payments, interests, principal, and trust items
26such as hazard insurance and taxes on a residential mortgage

 

 

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1loan in accordance with the terms of the residential mortgage
2loan; and includes loan payment follow-up, delinquency loan
3follow-up, loan analysis and any notifications to the borrower
4that are necessary to enable the borrower to keep the loan
5current and in good standing. "Servicing" includes management
6of third-party entities acting on behalf of a residential
7mortgage licensee for the collection of delinquent payments
8and the use by such third-party entities of said licensee's
9servicing records or information, including their use in
10foreclosure.
11    (r) "Full service office" shall mean an office, provided
12by the licensee and not subleased from the licensee's
13employees or independent contractors, and staff in Illinois
14reasonably adequate to handle efficiently communications,
15questions, and other matters relating to any application for,
16or an existing home mortgage secured by residential real
17estate situated in Illinois with respect to which the licensee
18is brokering, funding originating, purchasing, or servicing.
19The management and operation of each full service office must
20include observance of good business practices such as proper
21signage; adequate, organized, and accurate books and records;
22ample phone lines, hours of business, staff training and
23supervision, and provision for a mechanism to resolve consumer
24inquiries, complaints, and problems. The Commissioner shall
25issue regulations with regard to these requirements and shall
26include an evaluation of compliance with this Section in his

 

 

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1or her periodic examination of each licensee. "Full service
2office" does not include a remote location.
3    (s) "Purchasing" shall mean the purchase of conventional
4or government-insured mortgage loans secured by residential
5real estate situated in Illinois from either the lender or
6from the secondary market.
7    (t) "Borrower" shall mean the person or persons who seek
8the services of a loan broker, originator, or lender.
9    (u) "Originating" shall mean the issuing of commitments
10for and funding of residential mortgage loans.
11    (v) "Loan brokerage agreement" shall mean a written
12agreement in which a broker or loan broker agrees to do either
13of 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,
20dissemination, or circulation to induce, directly or
21indirectly, any person to enter into a residential mortgage
22loan agreement or residential mortgage loan brokerage
23agreement relative to a mortgage secured by residential real
24estate situated in Illinois.
25    (x) (Blank).
26    (y) "Government-insured mortgage loan" shall mean any

 

 

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1mortgage loan made on the security of residential real estate
2insured by the Department of Housing and Urban Development or
3Farmers Home Loan Administration, or guaranteed by the
4Veterans Administration.
5    (z) "Annual audit" shall mean a certified audit of the
6licensee's books and records and systems of internal control
7performed by a certified public accountant in accordance with
8generally accepted accounting principles and generally
9accepted auditing standards.
10    (aa) "Financial institution" shall mean a savings and loan
11association, savings bank, credit union, or a bank organized
12under the laws of Illinois or a savings and loan association,
13savings bank, credit union or a bank organized under the laws
14of the United States and headquartered in Illinois.
15    (bb) "Escrow agent" shall mean a third party, individual
16or entity charged with the fiduciary obligation for holding
17escrow funds on a residential mortgage loan pending final
18payout of those funds in accordance with the terms of the
19residential mortgage loan.
20    (cc) "Net worth" shall have the meaning ascribed thereto
21in 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
16regulation incorporating the comparable definitions used by
17the Office of the Comptroller of the Currency and the Illinois
18Commissioner of Banks and Real Estate.
19    (ff) "Gross delinquency rate" means the quotient
20determined by dividing (1) the sum of (i) the number of
21government-insured residential mortgage loans funded or
22purchased by a licensee in the preceding calendar year that
23are delinquent and (ii) the number of conventional residential
24mortgage loans funded or purchased by the licensee in the
25preceding calendar year that are delinquent by (2) the sum of
26(i) the number of government-insured residential mortgage

 

 

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1loans funded or purchased by the licensee in the preceding
2calendar year and (ii) the number of conventional residential
3mortgage loans funded or purchased by the licensee in the
4preceding calendar year.
5    (gg) "Delinquency rate factor" means the factor set by
6rule of the Commissioner that is multiplied by the average
7gross delinquency rate of licensees, determined annually for
8the immediately preceding calendar year, for the purpose of
9determining which licensees shall be examined by the
10Commissioner pursuant to subsection (b) of Section 4-8 of this
11Act.
12    (hh) (Blank).
13    (ii) "Confidential supervisory information" means any
14report of examination, visitation, or investigation prepared
15by the Commissioner under this Act, any report of examination
16visitation, or investigation prepared by the state regulatory
17authority of another state that examines a licensee, any
18document or record prepared or obtained in connection with or
19relating to any examination, visitation, or investigation, and
20any record prepared or obtained by the Commissioner to the
21extent that the record summarizes or contains information
22derived from any report, document, or record described in this
23subsection. "Confidential supervisory information" does not
24include any information or record routinely prepared by a
25licensee and maintained in the ordinary course of business or
26any information or record that is required to be made publicly

 

 

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1available pursuant to State or federal law or rule.
2    (jj) "Mortgage loan originator" means an individual who
3for compensation or gain or in the expectation of compensation
4or 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
9in loan modification activities as defined in subsection (yy)
10of this Section. A mortgage loan originator engaged in loan
11modification activities shall report those activities to the
12Department of Financial and Professional Regulation in the
13manner provided by the Department; however, the Department
14shall not impose a fee for reporting, nor require any
15additional qualifications to engage in those activities beyond
16those provided pursuant to this Act for mortgage loan
17originators.
18    "Mortgage loan originator" does not include an individual
19engaged solely as a loan processor or underwriter except as
20otherwise provided in subsection (d) of Section 7-1A of this
21Act.
22    "Mortgage loan originator" does not include a person or
23entity that only performs real estate brokerage activities and
24is licensed in accordance with the Real Estate License Act of
252000, unless the person or entity is compensated by a lender, a
26mortgage broker, or other mortgage loan originator, or by any

 

 

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1agent of that lender, mortgage broker, or other mortgage loan
2originator.
3    "Mortgage loan originator" does not include a person or
4entity solely involved in extensions of credit relating to
5timeshare plans, as that term is defined in Section 101(53D)
6of Title 11, United States Code.
7    (kk) "Depository institution" has the same meaning as in
8Section 3 of the Federal Deposit Insurance Act, and includes
9any credit union.
10    (ll) "Dwelling" means a residential structure or mobile
11home which contains one to 4 family housing units, or
12individual units of condominiums or cooperatives.
13    (mm) "Immediate family member" means a spouse, child,
14sibling, parent, grandparent, or grandchild, and includes
15step-parents, step-children, step-siblings, or adoptive
16relationships.
17    (nn) "Individual" means a natural person.
18    (oo) "Loan processor or underwriter" means an individual
19who performs clerical or support duties as an employee at the
20direction of and subject to the supervision and instruction of
21a person licensed, or exempt from licensing, under this Act.
22"Clerical or support duties" includes subsequent to the
23receipt 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"
15means a mortgage licensing system developed and maintained by
16the Conference of State Bank Supervisors and the American
17Association of Residential Mortgage Regulators for the
18licensing and registration of licensed mortgage loan
19originators.
20    (qq) "Nontraditional mortgage product" means any mortgage
21product other than a 30-year fixed rate mortgage.
22    (rr) "Person" means a natural person, corporation,
23company, limited liability company, partnership, or
24association.
25    (ss) "Real estate brokerage activity" means any activity
26that involves offering or providing real estate brokerage

 

 

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1services 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
19individual 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
7identifier assigned by protocols established by the Nationwide
8Multistate Licensing System and Registry.
9    (vv) "Residential mortgage license" means a license issued
10pursuant to Section 1-3, 2-2, or 2-6 of this Act.
11    (ww) "Mortgage loan originator license" means a license
12issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act.
13    (xx) "Secretary" means the Secretary of the Department of
14Financial and Professional Regulation, or a person authorized
15by the Secretary or by this Act to act in the Secretary's
16stead.
17    (yy) "Loan modification" means, for compensation or gain,
18either directly or indirectly offering or negotiating on
19behalf of a borrower or homeowner to adjust the terms of a
20residential mortgage loan in a manner not provided for in the
21original or previously modified mortgage loan.
22    (zz) "Short sale facilitation" means, for compensation or
23gain, either directly or indirectly offering or negotiating on
24behalf of a borrower or homeowner to facilitate the sale of
25residential real estate subject to one or more residential
26mortgage loans or debts constituting liens on the property in

 

 

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1which the proceeds from selling the residential real estate
2will fall short of the amount owed and the lien holders are
3contacted to agree to release their lien on the residential
4real estate and accept less than the full amount owed on the
5debt.
6    (aaa) "Bona fide nonprofit organization" means an
7organization that is described in Section 501(c)(3) of the
8Internal Revenue Code, is exempt from federal income tax under
9Section 501(a) of the Internal Revenue Code, does not operate
10in 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
2principal place of business or a full service office at which a
3mortgage loan originator of a licensee may conduct business.
4    (ccc) "Shared appreciation agreement" means a writing
5evidencing a transaction or any option, future, or any other
6derivative between a person and a consumer where the consumer
7receives money or any other item of value in exchange for an
8interest or future interest in a dwelling or residential real
9estate or a future obligation to repay a sum on the occurrence
10of 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
16terms used in this Act for the efficient and clear
17administration of this Act.
18(Source: P.A. 103-156, eff. 1-1-24.)
 
19    (205 ILCS 635/5-12.5 new)
20    Sec. 5-12.5. Shared appreciation agreement consumer
21counseling and disclosures.
22    (a) Notwithstanding any provision in this Act to the
23contrary, before taking any legally binding action on a shared
24appreciation agreement, the borrower or borrowers shall be
25provided counseling. The borrower may not waive counseling.

 

 

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1    (b) The Secretary may adopt rules relating to shared
2appreciation agreements, including, but not limited to, rules
3defining statutory terms; relating to disclosures to help
4consumers understand the cost, duration, and fees of the
5agreement, as well as potential alternatives; on the limits on
6the interest or other fees that may be charged to a borrower;
7and relating to counseling under subsection (a).
 
8    Section 10. The Residential Real Property Disclosure Act
9is amended by changing Section 70 as follows:
 
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
14mortgage transaction that allows adjustments of the loan
15interest 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
18subsection (p) of Section 1-4 of the Residential Mortgage
19License Act of 1987.
20    "Closing agent" means an individual assigned by a title
21insurance company or a broker or originator to ensure that the
22execution of documents related to the closing of a real estate
23sale or the refinancing of a real estate loan and the
24disbursement of closing funds are in conformity with the

 

 

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1instructions of the entity financing the transaction.
2    "Counseling" means in-person counseling provided by a
3counselor employed by a HUD-approved counseling agency to all
4borrowers. Counseling must be provided in the following
5manner:
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
20housing counseling agency.
21    "Credit score" means a credit risk score as defined by the
22Fair Isaac Corporation, or its successor, and reported under
23such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK
24SCORE" by one or more of the following credit reporting
25agencies or their successors: Equifax, Inc., Experian
26Information Solutions, Inc., and TransUnion LLC. If the

 

 

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1borrower's credit report contains credit scores from 2
2reporting agencies, then the broker or loan originator shall
3report the lower score. If the borrower's credit report
4contains credit scores from 3 reporting agencies, then the
5broker or loan originator shall report the middle score.
6    "Department" means the Department of Financial and
7Professional Regulation.
8    "Exempt person or entity" means that term as it is defined
9in subsection subsections (d)(1), (d)(1.5), and (d)(1.8) of
10Section 1-4 of the Residential Mortgage License Act of 1987.
11    "First-time homebuyer" means a borrower who has not held
12an ownership interest in residential property.
13    "HUD-approved counseling" or "counseling" means counseling
14given to a borrower by a counselor employed by a HUD-approved
15housing counseling agency.
16    "Interest only" means a closed-end loan that permits one
17or more payments of interest without any reduction of the
18principal balance of the loan, other than the first payment on
19the 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
221987.
23    "Licensee" means that term as it is defined in subsection
24(e) of Section 1-4 of the Residential Mortgage License Act of
251987.
26    "Mortgage loan" means that term as it is defined in

 

 

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1subsection (f) of Section 1-4 of the Residential Mortgage
2License Act of 1987.
3    "Negative amortization" means an amortization method under
4which the outstanding balance may increase at any time over
5the course of the loan because the regular periodic payment
6does not cover the full amount of interest due.
7    "Originator" means a "mortgage loan originator" as defined
8in subsection (jj) of Section 1-4 of the Residential Mortgage
9License Act of 1987, except an exempt person.
10    "Points and fees" has the meaning ascribed to that term in
11Section 10 of the High Risk Home Loan Act.
12    "Prepayment penalty" means a charge imposed by a lender
13under a mortgage note or rider when the loan is paid before the
14expiration of the term of the loan.
15    "Refinancing" means a loan secured by the borrower's or
16borrowers' primary residence where the proceeds are not used
17as purchase money for the residence.
18    "Title insurance company" means any domestic company
19organized under the laws of this State for the purpose of
20conducting the business of guaranteeing or insuring titles to
21real estate and any title insurance company organized under
22the laws of another State, the District of Columbia, or a
23foreign government and authorized to transact the business of
24guaranteeing or insuring titles to real estate in this State.
25    (a-5) A predatory lending database program shall be
26established within Cook County. The program shall be

 

 

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1administered in accordance with this Article. The inception
2date of the program shall be July 1, 2008. A predatory lending
3database program shall be expanded to include Kane, Peoria,
4and Will counties. The inception date of the expansion of the
5program as it applies to Kane, Peoria, and Will counties shall
6be July 1, 2010. Until the inception date, none of the duties,
7obligations, contingencies, or consequences of or from the
8program shall be imposed. The program shall apply to all
9mortgage applications that are governed by this Article and
10that are made or taken on or after the inception of the
11program.
12    (b) The database created under this program shall be
13maintained and administered by the Department. The database
14shall be designed to allow brokers, originators, counselors,
15title insurance companies, and closing agents to submit
16information to the database online. The database shall not be
17designed to allow those entities to retrieve information from
18the database, except as otherwise provided in this Article.
19Information submitted by the broker or originator to the
20Department may be used to populate the online form submitted
21by a counselor, title insurance company, or closing agent.
22    (c) Within 10 business days after taking a mortgage
23application, the broker or originator for any mortgage on
24residential property within the program area must submit to
25the predatory lending database all of the information required
26under Section 72 and any other information required by the

 

 

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1Department by rule. Within 7 business days after receipt of
2the information, the Department shall compare that information
3to the housing counseling standards in Section 73 and issue to
4the borrower and the broker or originator a determination of
5whether counseling is recommended for the borrower. The
6borrower may not waive counseling. If at any time after
7submitting the information required under Section 72 the
8broker or originator (i) changes the terms of the loan or (ii)
9issues a new commitment to the borrower, then, within 5
10business days thereafter, the broker or originator shall
11re-submit all of the information required under Section 72
12and, within 4 business days after receipt of the information
13re-submitted by the broker or originator, the Department shall
14compare that information to the housing counseling standards
15in Section 73 and shall issue to the borrower and the broker or
16originator a new determination of whether re-counseling is
17recommended for the borrower based on the information
18re-submitted by the broker or originator. The Department shall
19require re-counseling if the loan terms have been modified to
20meet another counseling standard in Section 73, or if the
21broker has increased the interest rate by more than 200 basis
22points.
23    (d) If the Department recommends counseling for the
24borrower under subsection (c), then the Department shall
25notify the borrower of all participating HUD-approved
26counseling agencies located within the State and, where

 

 

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1applicable, nationally HUD-approved counseling agencies, and
2direct the borrower to interview with a counselor associated
3with one of those agencies. Within 10 business days after
4receipt of the notice of HUD-approved counseling agencies, it
5is the borrower's responsibility to select one of those
6agencies and shall engage in an interview with a counselor
7associated with that agency. The borrower must supply all
8necessary documents, as set forth by the counselor, at least
972 hours before the scheduled interview. The selection must
10take place and the appointment for the interview must be set
11within 10 business days, although the interview may take place
12beyond the 10 business day period. Within 7 business days
13after interviewing the borrower, the counselor must submit to
14the predatory lending database all of the information required
15under Section 74 and any other information required by the
16Department by rule. Reasonable and customary costs not to
17exceed $300 associated with counseling provided under the
18program shall be paid by the broker or originator and shall not
19be charged back to, or recovered from, the borrower. The
20Department shall annually calculate to the nearest dollar an
21adjusted rate for inflation. A counselor shall not recommend
22or suggest that a borrower contact any specific mortgage
23origination company, financial institution, or entity that
24deals in mortgage finance to obtain a loan, another quote, or
25for any other reason related to the specific mortgage
26transaction; however, a counselor may suggest that the

 

 

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1borrower seek an opinion or a quote from another mortgage
2origination company, financial institution, or entity that
3deals in mortgage finance. A counselor or housing counseling
4agency that in good faith provides counseling shall not be
5liable to a broker or originator or borrower for civil
6damages, except for willful or wanton misconduct on the part
7of the counselor in providing the counseling.
8    (e) The broker or originator and the borrower may not take
9any legally binding action concerning the loan transaction
10until 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
19insurance company or closing agent must submit to the
20predatory lending database all of the information required
21under Section 76 and any other information required by the
22Department by rule.
23    (g) The title insurance company or closing agent shall
24attach to the mortgage a certificate of compliance with the
25requirements of this Article, as generated by the database. If
26the transaction is exempt, the title insurance company or

 

 

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1closing agent shall attach to the mortgage a certificate of
2exemption, as generated by the database. Each certificate of
3compliance or certificate of exemption must contain, at a
4minimum, one of the borrower's names on the mortgage loan and
5the property index number for the subject property. If the
6title insurance company or closing agent fails to attach the
7certificate of compliance or exemption, whichever is required,
8then the mortgage is not recordable. In addition, if any lis
9pendens for a residential mortgage foreclosure is recorded on
10the property within the program area, a certificate of service
11must be simultaneously recorded that affirms that a copy of
12the lis pendens was filed with the Department. A lis pendens
13filed after July 1, 2016 shall be filed with the Department
14electronically. If the certificate of service is not recorded,
15then the lis pendens pertaining to the residential mortgage
16foreclosure in question is not recordable and is of no force
17and effect.
18    (h) All information provided to the predatory lending
19database under the program is confidential and is not subject
20to disclosure under the Freedom of Information Act, except as
21otherwise provided in this Article. Information or documents
22obtained by employees of the Department in the course of
23maintaining and administering the predatory lending database
24are deemed confidential. Employees are prohibited from making
25disclosure of such confidential information or documents. Any
26request for production of information from the predatory

 

 

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1lending database, whether by subpoena, notice, or any other
2source, shall be referred to the Department of Financial and
3Professional Regulation. Any borrower may authorize in writing
4the release of database information. The Department may use
5the information in the database without the consent of the
6borrower: (i) for the purposes of administering and enforcing
7the program; (ii) to provide relevant information to a
8counselor providing counseling to a borrower under the
9program; or (iii) to the appropriate law enforcement agency or
10the applicable administrative agency if the database
11information demonstrates criminal, fraudulent, or otherwise
12illegal activity.
13    (i) Nothing in this Article is intended to prevent a
14borrower from making his or her own decision as to whether to
15proceed with a transaction.
16    (j) Any person who violates any provision of this Article
17commits an unlawful practice within the meaning of the
18Consumer Fraud and Deceptive Business Practices Act.
19    (j-1) A violation of any provision of this Article by a
20mortgage banking licensee or licensed mortgage loan originator
21shall constitute a violation of the Residential Mortgage
22License Act of 1987.
23    (j-2) A violation of any provision of this Article by a
24title insurance company, title agent, or escrow agent shall
25constitute a violation of the Title Insurance Act.
26    (j-3) A violation of any provision of this Article by a

 

 

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1housing counselor shall be referred to the Department of
2Housing and Urban Development.
3    (k) During the existence of the program, the Department
4shall submit semi-annual reports to the Governor and to the
5General Assembly by May 1 and November 1 of each year detailing
6its findings regarding the program. The report shall include,
7by county, at least the following information for each
8reporting 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.

 

 

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1(Source: P.A. 99-660, eff. 7-28-16; 100-509, eff. 9-15-17.)