|
||||||||||||||||||||
|
||||||||||||||||||||
| ||||||||||||||||||||
|
||||||||||||||||||||
| ||||||||||||||||||||
1 | AN ACT concerning financial regulation.
| |||||||||||||||||||
2 | Be it enacted by the People of the State of Illinois,
| |||||||||||||||||||
3 | represented in the General Assembly:
| |||||||||||||||||||
4 | Section 5. The Residential Mortgage License Act of 1987 is | |||||||||||||||||||
5 | amended by changing Section 1-4 as follows:
| |||||||||||||||||||
6 | (205 ILCS 635/1-4) (from Ch. 17, par. 2321-4)
| |||||||||||||||||||
7 | Sec. 1-4. Definitions.
| |||||||||||||||||||
8 | (a) "Residential real property" or "residential real | |||||||||||||||||||
9 | estate" means
shall mean
real property located in this State | |||||||||||||||||||
10 | improved by a one-to-four family
dwelling used or occupied, | |||||||||||||||||||
11 | wholly or partly, as the home or residence of
one or more | |||||||||||||||||||
12 | persons and may refer, subject to regulations of the
| |||||||||||||||||||
13 | Commissioner, to unimproved real property upon which those | |||||||||||||||||||
14 | kinds dwellings
are to be constructed.
| |||||||||||||||||||
15 | (b) "Making a residential mortgage loan" or "funding a | |||||||||||||||||||
16 | residential mortgage
loan" shall mean for compensation or gain, | |||||||||||||||||||
17 | either directly or indirectly,
advancing funds or making a | |||||||||||||||||||
18 | commitment to advance funds to a loan applicant
for a | |||||||||||||||||||
19 | residential mortgage loan.
| |||||||||||||||||||
20 | (c) "Soliciting, processing, placing, or negotiating a | |||||||||||||||||||
21 | residential
mortgage loan" shall mean for compensation or gain, | |||||||||||||||||||
22 | either directly or
indirectly, accepting or offering to accept | |||||||||||||||||||
23 | an application for a
residential mortgage loan, assisting or | |||||||||||||||||||
24 | offering to assist in the
processing of an application for a | |||||||||||||||||||
25 | residential mortgage loan on behalf of a
borrower, or | |||||||||||||||||||
26 | negotiating or offering to negotiate the terms or conditions
of | |||||||||||||||||||
27 | a residential mortgage loan with a lender on behalf of a | |||||||||||||||||||
28 | borrower
including, but not limited to, the submission of | |||||||||||||||||||
29 | credit packages for the
approval of lenders, the preparation of | |||||||||||||||||||
30 | residential mortgage loan closing
documents, including a | |||||||||||||||||||
31 | closing in the name of a broker.
| |||||||||||||||||||
32 | (d) "Exempt person or entity" shall mean the following:
|
| |||||||
|
|||||||
1 | (1) (i) Any banking organization or foreign banking | ||||||
2 | corporation
licensed by the Illinois Commissioner of Banks | ||||||
3 | and Real Estate or the
United States Comptroller of the | ||||||
4 | Currency to transact business in this
State; (ii) any | ||||||
5 | national bank, federally chartered savings and loan
| ||||||
6 | association, federal savings bank, federal credit union; | ||||||
7 | (iii) any pension
trust, bank trust, or bank trust company; | ||||||
8 | (iv) any savings and loan
association, savings bank, or | ||||||
9 | credit union organized under the laws of this
or any other | ||||||
10 | state; (v) any Illinois Consumer Installment Loan Act | ||||||
11 | licensee;
(vi) any insurance company authorized to | ||||||
12 | transact business in this State;
(vii) any entity engaged | ||||||
13 | solely in commercial mortgage lending; (viii) any
service | ||||||
14 | corporation of a savings and loan association or savings | ||||||
15 | bank organized
under the laws of this State or the service | ||||||
16 | corporation of a federally
chartered savings and loan | ||||||
17 | association or savings bank having
its principal place of | ||||||
18 | business in this State, other than a service
corporation | ||||||
19 | licensed or entitled to reciprocity under the Real Estate
| ||||||
20 | License Act of 2000; or (ix) any first tier subsidiary of a
| ||||||
21 | bank, the charter of which is issued under the Illinois | ||||||
22 | Banking Act
by the Illinois Commissioner of Banks and Real | ||||||
23 | Estate,
or the first tier subsidiary of a bank chartered by | ||||||
24 | the United States
Comptroller of the Currency and that has | ||||||
25 | its principal place of business
in this State, provided | ||||||
26 | that the first tier subsidiary is regularly
examined by the | ||||||
27 | Illinois Commissioner of Banks and Real Estate
or the | ||||||
28 | Comptroller of the Currency, or a consumer compliance | ||||||
29 | examination is
regularly conducted by the Federal Reserve | ||||||
30 | Board.
| ||||||
31 | (1.5) Any employee of a person or entity mentioned in
| ||||||
32 | item (1) of this subsection.
| ||||||
33 | (2) Any person or entity that does not originate
| ||||||
34 | mortgage loans in the ordinary course of
business making or | ||||||
35 | acquiring residential mortgage loans
with his or her or its | ||||||
36 | own funds for his or her or its own investment
without |
| |||||||
|
|||||||
1 | intent to
make, acquire, or resell more than 10 residential | ||||||
2 | mortgage loans in
any one calendar year.
| ||||||
3 | (3) Any person employed by a licensee to assist in the | ||||||
4 | performance of
the activities regulated by this Act who is | ||||||
5 | compensated in any manner by
only one licensee.
| ||||||
6 | (4) Any person licensed pursuant to the Real Estate
| ||||||
7 | License Act of
2000, who engages only in the taking of | ||||||
8 | applications and credit
and
appraisal information to | ||||||
9 | forward to a licensee or an exempt entity under this
Act | ||||||
10 | and who is compensated by either a licensee or an exempt | ||||||
11 | entity under this
Act, but is not compensated by either the | ||||||
12 | buyer (applicant) or the seller.
| ||||||
13 | (5) Any individual, corporation, partnership, or other | ||||||
14 | entity that
originates, services, or brokers residential | ||||||
15 | mortgage loans, as these
activities are defined in this | ||||||
16 | Act, and who or which receives no
compensation for those | ||||||
17 | activities, subject to the Commissioner's
regulations with | ||||||
18 | regard to the nature and amount of compensation.
| ||||||
19 | (6) A person who prepares supporting documentation for | ||||||
20 | a residential
mortgage loan application taken by a licensee | ||||||
21 | and performs ministerial
functions pursuant to specific | ||||||
22 | instructions of the licensee who neither
requires nor | ||||||
23 | permits the preparer to exercise his or her discretion or
| ||||||
24 | judgment; provided that this activity is engaged in | ||||||
25 | pursuant to a binding,
written agreement between the | ||||||
26 | licensee and the preparer that:
| ||||||
27 | (A) holds the licensee fully accountable for the | ||||||
28 | preparer's action; and
| ||||||
29 | (B) otherwise meets the requirements of this | ||||||
30 | Section and this Act, does
not undermine the purposes | ||||||
31 | of this Act, and is approved by the
Commissioner.
| ||||||
32 | (e) "Licensee" or "residential mortgage licensee" shall | ||||||
33 | mean a person,
partnership, association, corporation, or any | ||||||
34 | other entity who or which is
licensed pursuant to this Act to | ||||||
35 | engage in the activities regulated by
this Act.
| ||||||
36 | (f) "Mortgage loan" "residential mortgage loan" or "home
|
| |||||||
|
|||||||
1 | mortgage loan" shall mean a loan to or for the benefit of any
| ||||||
2 | natural person made primarily for personal, family, or | ||||||
3 | household use,
primarily secured by either a mortgage on | ||||||
4 | residential real property or
certificates of stock or other | ||||||
5 | evidence of ownership interests in and
proprietary leases from, | ||||||
6 | corporations, partnerships, or limited
liability companies | ||||||
7 | formed for the purpose
of cooperative ownership of residential | ||||||
8 | real property, all located in Illinois.
| ||||||
9 | (g) "Lender" shall mean any person, partnership, | ||||||
10 | association,
corporation, or any other entity who either lends | ||||||
11 | or invests money in
residential mortgage loans.
| ||||||
12 | (h) "Ultimate equitable owner" shall mean a person who, | ||||||
13 | directly
or indirectly, owns or controls an ownership interest | ||||||
14 | in a corporation,
foreign corporation, alien business | ||||||
15 | organization, trust, or any other form
of business organization | ||||||
16 | regardless of whether the person owns or controls
the ownership | ||||||
17 | interest through one or more persons or one or more proxies,
| ||||||
18 | powers of attorney, nominees, corporations, associations, | ||||||
19 | partnerships,
trusts, joint stock companies, or other entities | ||||||
20 | or devices, or any
combination thereof.
| ||||||
21 | (i) "Residential mortgage financing transaction" shall | ||||||
22 | mean the negotiation,
acquisition, sale, or arrangement for or | ||||||
23 | the offer to negotiate, acquire,
sell, or arrange for, a | ||||||
24 | residential mortgage loan or residential mortgage
loan | ||||||
25 | commitment.
| ||||||
26 | (j) "Personal residence address" shall mean a street | ||||||
27 | address and shall
not include a post office box number.
| ||||||
28 | (k) "Residential mortgage loan commitment" shall mean a | ||||||
29 | contract for
residential mortgage loan financing.
| ||||||
30 | (l) "Party to a residential mortgage financing | ||||||
31 | transaction" shall mean a
borrower, lender, or loan broker in a | ||||||
32 | residential mortgage financing
transaction.
| ||||||
33 | (m) "Payments" shall mean payment of all or any of the | ||||||
34 | following:
principal, interest and escrow reserves for taxes, | ||||||
35 | insurance and other related
reserves, and reimbursement for | ||||||
36 | lender advances.
|
| |||||||
|
|||||||
1 | (n) "Commissioner" shall mean the Commissioner of Banks and | ||||||
2 | Real Estate
or a person authorized by the Commissioner, the | ||||||
3 | Office of Banks and Real Estate
Act, or this Act to act in the | ||||||
4 | Commissioner's stead.
| ||||||
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 in
| ||||||
10 | return for consideration to be paid by either the borrower or | ||||||
11 | the lender
including, but not limited to, contracting for the | ||||||
12 | delivery of residential
mortgage loans to a third party lender | ||||||
13 | 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 Act, | ||||||
20 | who performs the activities described
in subsections (c) and | ||||||
21 | (o) of this Section.
| ||||||
22 | (q) "Servicing" shall mean the collection or remittance for | ||||||
23 | or the
right or obligation to collect or remit for any lender, | ||||||
24 | noteowner,
noteholder, or for a licensee's own account, of | ||||||
25 | payments, interests,
principal, and trust items such as hazard | ||||||
26 | insurance and taxes on a
residential mortgage loan in | ||||||
27 | accordance with the terms of the residential
mortgage loan; and | ||||||
28 | includes loan payment follow-up, delinquency loan
follow-up, | ||||||
29 | loan analysis and any notifications to the borrower that are
| ||||||
30 | necessary to enable the borrower to keep the loan current and | ||||||
31 | in good standing.
| ||||||
32 | (r) "Full service office" shall mean office and staff in | ||||||
33 | Illinois
reasonably adequate to handle efficiently | ||||||
34 | communications, questions, and
other matters relating to any | ||||||
35 | application for, or an existing home mortgage
secured by | ||||||
36 | residential real estate situated in Illinois
with respect to |
| |||||||
|
|||||||
1 | which the licensee is brokering, funding originating,
| ||||||
2 | purchasing, or servicing. The management and operation of each | ||||||
3 | full service
office must include observance of good business | ||||||
4 | practices such as adequate,
organized, and accurate books and | ||||||
5 | records; ample phone lines, hours of
business, staff training | ||||||
6 | and supervision, and provision for a mechanism to
resolve | ||||||
7 | consumer inquiries, complaints, and problems. The Commissioner
| ||||||
8 | shall issue regulations with regard to these requirements and | ||||||
9 | shall include
an evaluation of compliance with this Section in | ||||||
10 | his or her periodic
examination of each licensee.
| ||||||
11 | (s) "Purchasing" shall mean the purchase of conventional or
| ||||||
12 | government-insured mortgage loans secured by residential real | ||||||
13 | estate
situated in Illinois from either the lender or from the | ||||||
14 | secondary market.
| ||||||
15 | (t) "Borrower" shall mean the person or persons who seek | ||||||
16 | the services of
a loan broker, originator, or lender.
| ||||||
17 | (u) "Originating" shall mean the issuing of commitments for | ||||||
18 | and funding of
residential mortgage loans.
| ||||||
19 | (v) "Loan brokerage agreement" shall mean a written | ||||||
20 | agreement in which a
broker or loan broker agrees to do either | ||||||
21 | of the following:
| ||||||
22 | (1) obtain a residential mortgage loan for the borrower | ||||||
23 | or assist the
borrower in obtaining a residential mortgage | ||||||
24 | loan; or
| ||||||
25 | (2) consider making a residential mortgage loan to the | ||||||
26 | borrower.
| ||||||
27 | (w) "Advertisement" shall mean the attempt by publication,
| ||||||
28 | dissemination, or circulation to induce, directly or | ||||||
29 | indirectly,
any person to enter into a residential mortgage | ||||||
30 | loan agreement or
residential mortgage loan brokerage | ||||||
31 | agreement relative to a
mortgage secured by residential real | ||||||
32 | estate situated in Illinois.
| ||||||
33 | (x) "Residential Mortgage Board" shall mean the | ||||||
34 | Residential Mortgage
Board created in Section 1-5 of this Act.
| ||||||
35 | (y) "Government-insured mortgage loan" shall mean any | ||||||
36 | mortgage loan made
on the security of residential real estate |
| |||||||
|
|||||||
1 | insured by the Department of
Housing and Urban Development or | ||||||
2 | Farmers Home Loan Administration, or
guaranteed by the Veterans | ||||||
3 | Administration.
| ||||||
4 | (z) "Annual audit" shall mean a certified audit of the | ||||||
5 | licensee's books and
records and systems of internal control | ||||||
6 | performed by a certified public
accountant in accordance with | ||||||
7 | generally accepted accounting principles
and generally | ||||||
8 | accepted auditing standards.
| ||||||
9 | (aa) "Financial institution" shall mean a savings and loan
| ||||||
10 | association, savings bank, credit union, or a bank organized | ||||||
11 | under the
laws of Illinois or a savings and loan association, | ||||||
12 | savings bank,
credit union or a bank organized under the laws | ||||||
13 | of the United States and
headquartered in Illinois.
| ||||||
14 | (bb) "Escrow agent" shall mean a third party, individual or | ||||||
15 | entity
charged with the fiduciary obligation for holding escrow | ||||||
16 | funds on a
residential mortgage loan pending final payout of | ||||||
17 | those funds
in accordance with the terms of the residential | ||||||
18 | mortgage loan.
| ||||||
19 | (cc) "Net worth" shall have the meaning ascribed thereto in | ||||||
20 | Section 3-5
of this Act.
| ||||||
21 | (dd) "Affiliate" shall mean:
| ||||||
22 | (1) any entity that directly controls or is controlled | ||||||
23 | by the licensee
and any other company that is directly | ||||||
24 | affecting activities regulated by
this Act that is | ||||||
25 | controlled by the company that controls the licensee;
| ||||||
26 | (2) any entity:
| ||||||
27 | (A) that is controlled, directly or indirectly, by | ||||||
28 | a trust or otherwise,
by or for the benefit of | ||||||
29 | shareholders who beneficially or otherwise
control, | ||||||
30 | directly or indirectly, by trust or otherwise, the | ||||||
31 | licensee or any
company that controls the licensee; or
| ||||||
32 | (B) a majority of the directors or trustees of | ||||||
33 | which constitute a
majority of the persons holding any | ||||||
34 | such office with the licensee or any
company that | ||||||
35 | controls the licensee;
| ||||||
36 | (3) any company, including a real estate investment |
| |||||||
|
|||||||
1 | trust, that is
sponsored and advised on a contractual basis | ||||||
2 | by the licensee or any
subsidiary or affiliate of the | ||||||
3 | licensee.
| ||||||
4 | The Commissioner may define by rule and regulation any | ||||||
5 | terms used
in this Act for the efficient and clear | ||||||
6 | administration of this Act.
| ||||||
7 | (ee) "First tier subsidiary" shall be defined by regulation
| ||||||
8 | incorporating the comparable definitions used by the Office of | ||||||
9 | the
Comptroller of the Currency and the Illinois Commissioner | ||||||
10 | of Banks
and Real Estate.
| ||||||
11 | (ff) "Gross delinquency rate" means the quotient | ||||||
12 | determined by dividing
(1) the sum of (i) the number of | ||||||
13 | government-insured residential mortgage loans
funded or | ||||||
14 | purchased by a licensee in the preceding calendar year that are
| ||||||
15 | delinquent and (ii) the number of conventional residential | ||||||
16 | mortgage loans
funded or purchased by the licensee in the | ||||||
17 | preceding calendar year that are
delinquent by (2) the sum of | ||||||
18 | (i) the number of government-insured residential
mortgage | ||||||
19 | loans funded or purchased by the licensee in the preceding | ||||||
20 | calendar
year and (ii) the number of conventional residential | ||||||
21 | mortgage loans funded or
purchased by the licensee in the | ||||||
22 | preceding calendar year.
| ||||||
23 | (gg) "Delinquency rate factor" means the factor set by rule | ||||||
24 | of the
Commissioner that is multiplied by the average gross | ||||||
25 | delinquency rate of
licensees, determined annually for the | ||||||
26 | immediately preceding calendar year, for
the purpose of | ||||||
27 | determining which licensees shall be examined by the
| ||||||
28 | Commissioner pursuant to subsection (b) of Section 4-8 of this | ||||||
29 | Act.
| ||||||
30 | (hh) "Loan originator" means any natural person who, for | ||||||
31 | compensation or in
the expectation of compensation, either | ||||||
32 | directly or indirectly makes, offers to
make, solicits, places, | ||||||
33 | or negotiates a residential mortgage loan.
| ||||||
34 | (Source: P.A. 93-561, eff. 1-1-04.)
|