Sen. Sara Feigenholtz

Filed: 3/15/2024

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 3551

2    AMENDMENT NO. ______. Amend Senate Bill 3551, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5    "Section 5. The Residential Mortgage License Act of 1987
6is amended by changing Section 1-4 and by adding Section
75-12.5 as follows:
 
8    (205 ILCS 635/1-4)
9    Sec. 1-4. Definitions. The following words and phrases
10have the meanings given to them in this Section:
11    (a) "Residential real property" or "residential real
12estate" shall mean any real property located in Illinois, upon
13which is constructed or intended to be constructed a dwelling.
14Those terms include a manufactured home as defined in
15subdivision (53) of Section 9-102 of the Uniform Commercial
16Code which is real property as defined in Section 5-35 of the

 

 

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1Conveyance and Encumbrance of Manufactured Homes as Real
2Property and Severance Act.
3    (b) "Making a residential mortgage loan" or "funding a
4residential mortgage loan" shall mean for compensation or
5gain, either directly or indirectly, advancing funds or making
6a commitment to advance funds to a loan applicant for a
7residential mortgage loan.
8    (c) "Soliciting, processing, placing, or negotiating a
9residential mortgage loan" shall mean for compensation or
10gain, either directly or indirectly, accepting or offering to
11accept an application for a residential mortgage loan,
12assisting or offering to assist in the processing of an
13application for a residential mortgage loan on behalf of a
14borrower, or negotiating or offering to negotiate the terms or
15conditions of a residential mortgage loan with a lender on
16behalf of a borrower including, but not limited to, the
17submission of credit packages for the approval of lenders, the
18preparation of residential mortgage loan closing documents,
19including a closing in the name of a broker.
20    (d) "Exempt person or entity" shall mean the following:
21        (1) (i) Any banking organization or foreign banking
22    corporation licensed by the Illinois Commissioner of Banks
23    and Real Estate or the United States Comptroller of the
24    Currency to transact business in this State; (ii) any
25    national bank, federally chartered savings and loan
26    association, federal savings bank, federal credit union;

 

 

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1    (iii) (blank); (iv) any bank, savings and loan
2    association, savings bank, or credit union organized under
3    the laws of this or any other state; (v) any Illinois
4    Consumer Installment Loan Act licensee; (vi) any insurance
5    company authorized to transact business in this State;
6    (vii) any entity engaged solely in commercial mortgage
7    lending; (viii) any service corporation of a savings and
8    loan association or savings bank organized under the laws
9    of this State or the service corporation of a federally
10    chartered savings and loan association or savings bank
11    having its principal place of business in this State,
12    other than a service corporation licensed or entitled to
13    reciprocity under the Real Estate License Act of 2000; or
14    (ix) any first tier subsidiary of a bank, the charter of
15    which is issued under the Illinois Banking Act by the
16    Illinois Commissioner of Banks and Real Estate, or the
17    first tier subsidiary of a bank chartered by the United
18    States Comptroller of the Currency and that has its
19    principal place of business in this State, provided that
20    the first tier subsidiary is regularly examined by the
21    Illinois Commissioner of Banks and Real Estate or the
22    Comptroller of the Currency, or a consumer compliance
23    examination is regularly conducted by the Federal Reserve
24    Board.
25        (1.5) Any employee of a person or entity mentioned in
26    item (1) of this subsection, when acting for such person

 

 

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1    or entity, or any registered mortgage loan originator when
2    acting for an entity described in subsection (tt) of this
3    Section.
4        (1.8) Any person or entity that does not originate
5    mortgage loans in the ordinary course of business, but
6    makes or acquires residential mortgage loans with his or
7    her own funds for his or her or its own investment without
8    intent to make, acquire, or resell more than 3 residential
9    mortgage loans in any one calendar year.
10        (2) (Blank).
11        (2.1) A bona fide nonprofit organization.
12        (2.2) An employee of a bona fide nonprofit
13    organization when acting on behalf of that organization.
14        (3) Any person employed by a licensee to assist in the
15    performance of the residential mortgage licensee's
16    activities regulated by this Act who is compensated in any
17    manner by only one licensee.
18        (4) (Blank).
19        (5) Any individual, corporation, partnership, or other
20    entity that originates, services, or brokers residential
21    mortgage loans, as these activities are defined in this
22    Act, and who or which receives no compensation for those
23    activities, subject to the Commissioner's regulations and
24    the federal Secure and Fair Enforcement for Mortgage
25    Licensing Act of 2008 and the rules promulgated under that
26    Act with regard to the nature and amount of compensation.

 

 

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1        (6) (Blank).
2        (7) Any entity engaged solely in providing loan
3    processing services through the sponsoring of individuals
4    acting pursuant to subsection (d) of Section 7-1A of this
5    Act.
6    (e) "Licensee" or "residential mortgage licensee" shall
7mean a person, partnership, association, corporation, or any
8other entity who or which is licensed pursuant to this Act to
9engage in the activities regulated by this Act.
10    (f) "Mortgage loan", "residential mortgage loan", or "home
11mortgage loan" shall mean any loan primarily for personal,
12family, or household use that is secured by a mortgage, deed of
13trust, or other equivalent consensual security interest on a
14dwelling as defined in Section 103(v) of the federal Truth in
15Lending Act, or residential real estate upon which is
16constructed or intended to be constructed a dwelling.
17"Mortgage loan", "residential mortgage loan", or "home
18mortgage loan" includes a loan in which funds are advanced
19through a shared appreciation agreement.
20    (g) "Lender" shall mean any person, partnership,
21association, corporation, or any other entity who either lends
22or invests money in residential mortgage loans.
23    (h) "Ultimate equitable owner" shall mean a person who,
24directly or indirectly, owns or controls an ownership interest
25in a corporation, foreign corporation, alien business
26organization, trust, or any other form of business

 

 

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1organization regardless of whether the person owns or controls
2the ownership interest through one or more persons or one or
3more proxies, powers of attorney, nominees, corporations,
4associations, partnerships, trusts, joint stock companies, or
5other entities or devices, or any combination thereof.
6    (i) "Residential mortgage financing transaction" shall
7mean the negotiation, acquisition, sale, or arrangement for or
8the offer to negotiate, acquire, sell, or arrange for, a
9residential mortgage loan or residential mortgage loan
10commitment.
11    (j) "Personal residence address" shall mean a street
12address and shall not include a post office box number.
13    (k) "Residential mortgage loan commitment" shall mean a
14contract for residential mortgage loan financing.
15    (l) "Party to a residential mortgage financing
16transaction" shall mean a borrower, lender, or loan broker in
17a residential mortgage financing transaction.
18    (m) "Payments" shall mean payment of all or any of the
19following: principal, interest and escrow reserves for taxes,
20insurance and other related reserves, and reimbursement for
21lender advances.
22    (n) "Commissioner" shall mean the Commissioner of Banks
23and Real Estate, except that, beginning on April 6, 2009 (the
24effective date of Public Act 95-1047), all references in this
25Act to the Commissioner of Banks and Real Estate are deemed, in
26appropriate contexts, to be references to the Secretary of

 

 

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1Financial and Professional Regulation, or his or her designee,
2including the Director of the Division of Banking of the
3Department of Financial and Professional Regulation.
4    (n-1) "Director" shall mean the Director of the Division
5of Banking of the Department of Financial and Professional
6Regulation, except that, beginning on July 31, 2009 (the
7effective date of Public Act 96-112), all references in this
8Act to the Director are deemed, in appropriate contexts, to be
9the Secretary of Financial and Professional Regulation, or his
10or her designee, including the Director of the Division of
11Banking of the Department of Financial and Professional
12Regulation.
13    (o) "Loan brokering", "brokering", or "brokerage service"
14shall mean the act of helping to obtain from another entity,
15for a borrower, a loan secured by residential real estate
16situated in Illinois or assisting a borrower in obtaining a
17loan secured by residential real estate situated in Illinois
18in return for consideration to be paid by either the borrower
19or the lender including, but not limited to, contracting for
20the delivery of residential mortgage loans to a third party
21lender and soliciting, processing, placing, or negotiating
22residential mortgage loans.
23    (p) "Loan broker" or "broker" shall mean a person,
24partnership, association, corporation, or limited liability
25company, other than those persons, partnerships, associations,
26corporations, or limited liability companies exempted from

 

 

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1licensing pursuant to Section 1-4, subsection (d), of this
2Act, who performs the activities described in subsections (c),
3(o), and (yy) of this Section.
4    (q) "Servicing" shall mean the collection or remittance
5for or the right or obligation to collect or remit for any
6lender, noteowner, noteholder, or for a licensee's own
7account, of payments, interests, principal, and trust items
8such as hazard insurance and taxes on a residential mortgage
9loan in accordance with the terms of the residential mortgage
10loan; and includes loan payment follow-up, delinquency loan
11follow-up, loan analysis and any notifications to the borrower
12that are necessary to enable the borrower to keep the loan
13current and in good standing. "Servicing" includes management
14of third-party entities acting on behalf of a residential
15mortgage licensee for the collection of delinquent payments
16and the use by such third-party entities of said licensee's
17servicing records or information, including their use in
18foreclosure.
19    (r) "Full service office" shall mean an office, provided
20by the licensee and not subleased from the licensee's
21employees or independent contractors, and staff in Illinois
22reasonably adequate to handle efficiently communications,
23questions, and other matters relating to any application for,
24or an existing home mortgage secured by residential real
25estate situated in Illinois with respect to which the licensee
26is brokering, funding originating, purchasing, or servicing.

 

 

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1The management and operation of each full service office must
2include observance of good business practices such as proper
3signage; adequate, organized, and accurate books and records;
4ample phone lines, hours of business, staff training and
5supervision, and provision for a mechanism to resolve consumer
6inquiries, complaints, and problems. The Commissioner shall
7issue regulations with regard to these requirements and shall
8include an evaluation of compliance with this Section in his
9or her periodic examination of each licensee. "Full service
10office" does not include a remote location.
11    (s) "Purchasing" shall mean the purchase of conventional
12or government-insured mortgage loans secured by residential
13real estate situated in Illinois from either the lender or
14from the secondary market.
15    (t) "Borrower" shall mean the person or persons who seek
16the services of a loan broker, originator, or lender.
17    (u) "Originating" shall mean the issuing of commitments
18for and funding of residential mortgage loans.
19    (v) "Loan brokerage agreement" shall mean a written
20agreement in which a broker or loan broker agrees to do either
21of the following:
22        (1) obtain a residential mortgage loan for the
23    borrower or assist the borrower in obtaining a residential
24    mortgage loan; or
25        (2) consider making a residential mortgage loan to the
26    borrower.

 

 

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1    (w) "Advertisement" shall mean the attempt by publication,
2dissemination, or circulation to induce, directly or
3indirectly, any person to enter into a residential mortgage
4loan agreement or residential mortgage loan brokerage
5agreement relative to a mortgage secured by residential real
6estate situated in Illinois.
7    (x) (Blank).
8    (y) "Government-insured mortgage loan" shall mean any
9mortgage loan made on the security of residential real estate
10insured by the Department of Housing and Urban Development or
11Farmers Home Loan Administration, or guaranteed by the
12Veterans Administration.
13    (z) "Annual audit" shall mean a certified audit of the
14licensee's books and records and systems of internal control
15performed by a certified public accountant in accordance with
16generally accepted accounting principles and generally
17accepted auditing standards.
18    (aa) "Financial institution" shall mean a savings and loan
19association, savings bank, credit union, or a bank organized
20under the laws of Illinois or a savings and loan association,
21savings bank, credit union or a bank organized under the laws
22of the United States and headquartered in Illinois.
23    (bb) "Escrow agent" shall mean a third party, individual
24or entity charged with the fiduciary obligation for holding
25escrow funds on a residential mortgage loan pending final
26payout of those funds in accordance with the terms of the

 

 

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1residential mortgage loan.
2    (cc) "Net worth" shall have the meaning ascribed thereto
3in Section 3-5 of this Act.
4    (dd) "Affiliate" shall mean:
5        (1) any entity that directly controls or is controlled
6    by the licensee and any other company that is directly
7    affecting activities regulated by this Act that is
8    controlled by the company that controls the licensee;
9        (2) any entity:
10            (A) that is controlled, directly or indirectly, by
11        a trust or otherwise, by or for the benefit of
12        shareholders who beneficially or otherwise control,
13        directly or indirectly, by trust or otherwise, the
14        licensee or any company that controls the licensee; or
15            (B) a majority of the directors or trustees of
16        which constitute a majority of the persons holding any
17        such office with the licensee or any company that
18        controls the licensee;
19        (3) any company, including a real estate investment
20    trust, that is sponsored and advised on a contractual
21    basis by the licensee or any subsidiary or affiliate of
22    the licensee.
23    (ee) "First tier subsidiary" shall be defined by
24regulation incorporating the comparable definitions used by
25the Office of the Comptroller of the Currency and the Illinois
26Commissioner of Banks and Real Estate.

 

 

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1    (ff) "Gross delinquency rate" means the quotient
2determined by dividing (1) the sum of (i) the number of
3government-insured residential mortgage loans funded or
4purchased by a licensee in the preceding calendar year that
5are delinquent and (ii) the number of conventional residential
6mortgage loans funded or purchased by the licensee in the
7preceding calendar year that are delinquent by (2) the sum of
8(i) the number of government-insured residential mortgage
9loans funded or purchased by the licensee in the preceding
10calendar year and (ii) the number of conventional residential
11mortgage loans funded or purchased by the licensee in the
12preceding calendar year.
13    (gg) "Delinquency rate factor" means the factor set by
14rule of the Commissioner that is multiplied by the average
15gross delinquency rate of licensees, determined annually for
16the immediately preceding calendar year, for the purpose of
17determining which licensees shall be examined by the
18Commissioner pursuant to subsection (b) of Section 4-8 of this
19Act.
20    (hh) (Blank).
21    (ii) "Confidential supervisory information" means any
22report of examination, visitation, or investigation prepared
23by the Commissioner under this Act, any report of examination
24visitation, or investigation prepared by the state regulatory
25authority of another state that examines a licensee, any
26document or record prepared or obtained in connection with or

 

 

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1relating to any examination, visitation, or investigation, and
2any record prepared or obtained by the Commissioner to the
3extent that the record summarizes or contains information
4derived from any report, document, or record described in this
5subsection. "Confidential supervisory information" does not
6include any information or record routinely prepared by a
7licensee and maintained in the ordinary course of business or
8any information or record that is required to be made publicly
9available pursuant to State or federal law or rule.
10    (jj) "Mortgage loan originator" means an individual who
11for compensation or gain or in the expectation of compensation
12or gain:
13        (i) takes a residential mortgage loan application; or
14        (ii) offers or negotiates terms of a residential
15    mortgage loan.
16    "Mortgage loan originator" includes an individual engaged
17in loan modification activities as defined in subsection (yy)
18of this Section. A mortgage loan originator engaged in loan
19modification activities shall report those activities to the
20Department of Financial and Professional Regulation in the
21manner provided by the Department; however, the Department
22shall not impose a fee for reporting, nor require any
23additional qualifications to engage in those activities beyond
24those provided pursuant to this Act for mortgage loan
25originators.
26    "Mortgage loan originator" does not include an individual

 

 

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1engaged solely as a loan processor or underwriter except as
2otherwise provided in subsection (d) of Section 7-1A of this
3Act.
4    "Mortgage loan originator" does not include a person or
5entity that only performs real estate brokerage activities and
6is licensed in accordance with the Real Estate License Act of
72000, unless the person or entity is compensated by a lender, a
8mortgage broker, or other mortgage loan originator, or by any
9agent of that lender, mortgage broker, or other mortgage loan
10originator.
11    "Mortgage loan originator" does not include a person or
12entity solely involved in extensions of credit relating to
13timeshare plans, as that term is defined in Section 101(53D)
14of Title 11, United States Code.
15    (kk) "Depository institution" has the same meaning as in
16Section 3 of the Federal Deposit Insurance Act, and includes
17any credit union.
18    (ll) "Dwelling" means a residential structure or mobile
19home which contains one to 4 family housing units, or
20individual units of condominiums or cooperatives.
21    (mm) "Immediate family member" means a spouse, child,
22sibling, parent, grandparent, or grandchild, and includes
23step-parents, step-children, step-siblings, or adoptive
24relationships.
25    (nn) "Individual" means a natural person.
26    (oo) "Loan processor or underwriter" means an individual

 

 

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1who performs clerical or support duties as an employee at the
2direction of and subject to the supervision and instruction of
3a person licensed, or exempt from licensing, under this Act.
4"Clerical or support duties" includes subsequent to the
5receipt of an application:
6        (i) the receipt, collection, distribution, and
7    analysis of information common for the processing or
8    underwriting of a residential mortgage loan; and
9        (ii) communicating with a consumer to obtain the
10    information necessary for the processing or underwriting
11    of a loan, to the extent that the communication does not
12    include offering or negotiating loan rates or terms, or
13    counseling consumers about residential mortgage loan rates
14    or terms. An individual engaging solely in loan processor
15    or underwriter activities shall not represent to the
16    public, through advertising or other means of
17    communicating or providing information, including the use
18    of business cards, stationery, brochures, signs, rate
19    lists, or other promotional items, that the individual can
20    or will perform any of the activities of a mortgage loan
21    originator.
22    (pp) "Nationwide Multistate Licensing System and Registry"
23means a mortgage licensing system developed and maintained by
24the Conference of State Bank Supervisors and the American
25Association of Residential Mortgage Regulators for the
26licensing and registration of licensed mortgage loan

 

 

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1originators.
2    (qq) "Nontraditional mortgage product" means any mortgage
3product other than a 30-year fixed rate mortgage.
4    (rr) "Person" means a natural person, corporation,
5company, limited liability company, partnership, or
6association.
7    (ss) "Real estate brokerage activity" means any activity
8that involves offering or providing real estate brokerage
9services to the public, including:
10        (1) acting as a real estate agent or real estate
11    broker for a buyer, seller, lessor, or lessee of real
12    property;
13        (2) bringing together parties interested in the sale,
14    purchase, lease, rental, or exchange of real property;
15        (3) negotiating, on behalf of any party, any portion
16    of a contract relating to the sale, purchase, lease,
17    rental, or exchange of real property, other than in
18    connection with providing financing with respect to any
19    such transaction;
20        (4) engaging in any activity for which a person
21    engaged in the activity is required to be registered or
22    licensed as a real estate agent or real estate broker
23    under any applicable law; or
24        (5) offering to engage in any activity, or act in any
25    capacity, described in this subsection (ss).
26    (tt) "Registered mortgage loan originator" means any

 

 

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1individual that:
2        (1) meets the definition of mortgage loan originator
3    and is an employee of:
4            (A) a depository institution;
5            (B) a subsidiary that is:
6                (i) owned and controlled by a depository
7            institution; and
8                (ii) regulated by a federal banking agency; or
9            (C) an institution regulated by the Farm Credit
10        Administration; and
11        (2) is registered with, and maintains a unique
12    identifier through, the Nationwide Multistate Licensing
13    System and Registry.
14    (uu) "Unique identifier" means a number or other
15identifier assigned by protocols established by the Nationwide
16Multistate Licensing System and Registry.
17    (vv) "Residential mortgage license" means a license issued
18pursuant to Section 1-3, 2-2, or 2-6 of this Act.
19    (ww) "Mortgage loan originator license" means a license
20issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act.
21    (xx) "Secretary" means the Secretary of the Department of
22Financial and Professional Regulation, or a person authorized
23by the Secretary or by this Act to act in the Secretary's
24stead.
25    (yy) "Loan modification" means, for compensation or gain,
26either directly or indirectly offering or negotiating on

 

 

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1behalf of a borrower or homeowner to adjust the terms of a
2residential mortgage loan in a manner not provided for in the
3original or previously modified mortgage loan.
4    (zz) "Short sale facilitation" means, for compensation or
5gain, either directly or indirectly offering or negotiating on
6behalf of a borrower or homeowner to facilitate the sale of
7residential real estate subject to one or more residential
8mortgage loans or debts constituting liens on the property in
9which the proceeds from selling the residential real estate
10will fall short of the amount owed and the lien holders are
11contacted to agree to release their lien on the residential
12real estate and accept less than the full amount owed on the
13debt.
14    (aaa) "Bona fide nonprofit organization" means an
15organization that is described in Section 501(c)(3) of the
16Internal Revenue Code, is exempt from federal income tax under
17Section 501(a) of the Internal Revenue Code, does not operate
18in a commercial context, and does all of the following:
19        (1) Promotes affordable housing or provides home
20    ownership education or similar services.
21        (2) Conducts its activities in a manner that serves
22    public or charitable purposes.
23        (3) Receives funding and revenue and charges fees in a
24    manner that does not create an incentive for itself or its
25    employees to act other than in the best interests of its
26    clients.

 

 

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1        (4) Compensates its employees in a manner that does
2    not create an incentive for its employees to act other
3    than in the best interests of its clients.
4        (5) Provides to, or identifies for, the borrower
5    residential mortgage loans with terms favorable to the
6    borrower and comparable to residential mortgage loans and
7    housing assistance provided under government housing
8    assistance programs.
9    (bbb) "Remote location" means a location other than a
10principal place of business or a full service office at which a
11mortgage loan originator of a licensee may conduct business.
12    (ccc) "Shared appreciation agreement" means a writing
13evidencing a transaction or any option, future, or any other
14derivative between a person and a consumer where the consumer
15receives money or any other item of value in exchange for an
16interest or future interest in a dwelling or residential real
17estate or a future obligation to repay a sum on the occurrence
18of an event, such as:
19        (1) the transfer of ownership;
20        (2) a repayment maturity date;
21        (3) the death of the consumer; or
22        (4) any other event contemplated by the writing.
23    The Commissioner may define by rule and regulation any
24terms used in this Act for the efficient and clear
25administration of this Act.
26(Source: P.A. 103-156, eff. 1-1-24.)
 

 

 

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1    (205 ILCS 635/5-12.5 new)
2    Sec. 5-12.5. Shared appreciation agreement consumer
3counseling and disclosures.
4    (a) Notwithstanding any provision in this Act to the
5contrary, before taking any legally binding action on a shared
6appreciation agreement, the borrower or borrowers shall be
7provided counseling. The borrower may not waive counseling.
8    (b) The Secretary may adopt rules relating to shared
9appreciation agreements, including, but not limited to, rules
10defining statutory terms; relating to disclosures to help
11consumers understand the cost, duration, and fees of the
12agreement, as well as potential alternatives; on the limits on
13the interest or other fees that may be charged to a borrower;
14and relating to counseling under subsection (a).
 
15    Section 10. The Residential Real Property Disclosure Act
16is amended by changing Section 70 as follows:
 
17    (765 ILCS 77/70)
18    Sec. 70. Predatory lending database program.
19    (a) As used in this Article:
20    "Adjustable rate mortgage" or "ARM" means a closed-end
21mortgage transaction that allows adjustments of the loan
22interest rate during the first 3 years of the loan term.
23    "Borrower" means a person seeking a mortgage loan.

 

 

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1    "Broker" means a "broker" or "loan broker", as defined in
2subsection (p) of Section 1-4 of the Residential Mortgage
3License Act of 1987.
4    "Closing agent" means an individual assigned by a title
5insurance company or a broker or originator to ensure that the
6execution of documents related to the closing of a real estate
7sale or the refinancing of a real estate loan and the
8disbursement of closing funds are in conformity with the
9instructions of the entity financing the transaction.
10    "Counseling" means in-person counseling provided by a
11counselor employed by a HUD-approved counseling agency to all
12borrowers. Counseling must be provided in the following
13manner:
14         (i) in person; or
15        (ii) by remote electronic or telephonic means, with
16    the permission of all borrowers, where the session can be
17    conducted in privacy, the counselor is able to verify the
18    identity of each borrower, and the counseling is
19    documented by the counselor, subject to any rules that may
20    be enacted by the Department , or documented telephone
21    counseling where a hardship would be imposed on one or
22    more borrowers. A hardship shall exist in instances in
23    which the borrower is confined to his or her home due to
24    medical conditions, as verified in writing by a physician,
25    or the borrower resides 50 miles or more from the nearest
26    participating HUD-approved housing counseling agency.

 

 

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1    "Counselor" means a counselor employed by a HUD-approved
2housing counseling agency.
3    "Credit score" means a credit risk score as defined by the
4Fair Isaac Corporation, or its successor, and reported under
5such names as "BEACON", "EMPIRICA", and "FAIR ISAAC RISK
6SCORE" by one or more of the following credit reporting
7agencies or their successors: Equifax, Inc., Experian
8Information Solutions, Inc., and TransUnion LLC. If the
9borrower's credit report contains credit scores from 2
10reporting agencies, then the broker or loan originator shall
11report the lower score. If the borrower's credit report
12contains credit scores from 3 reporting agencies, then the
13broker or loan originator shall report the middle score.
14    "Department" means the Department of Financial and
15Professional Regulation.
16    "Exempt person or entity" means that term as it is defined
17in subsection subsections (d)(1), (d)(1.5), and (d)(1.8) of
18Section 1-4 of the Residential Mortgage License Act of 1987.
19    "First-time homebuyer" means a borrower who has not held
20an ownership interest in residential property.
21    "HUD-approved counseling" or "counseling" means counseling
22given to a borrower by a counselor employed by a HUD-approved
23housing counseling agency.
24    "Interest only" means a closed-end loan that permits one
25or more payments of interest without any reduction of the
26principal balance of the loan, other than the first payment on

 

 

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1the loan.
2    "Lender" means that term as it is defined in subsection
3(g) of Section 1-4 of the Residential Mortgage License Act of
41987.
5    "Licensee" means that term as it is defined in subsection
6(e) of Section 1-4 of the Residential Mortgage License Act of
71987.
8    "Mortgage loan" means that term as it is defined in
9subsection (f) of Section 1-4 of the Residential Mortgage
10License Act of 1987.
11    "Negative amortization" means an amortization method under
12which the outstanding balance may increase at any time over
13the course of the loan because the regular periodic payment
14does not cover the full amount of interest due.
15    "Originator" means a "mortgage loan originator" as defined
16in subsection (jj) of Section 1-4 of the Residential Mortgage
17License Act of 1987, except an exempt person.
18    "Points and fees" has the meaning ascribed to that term in
19Section 10 of the High Risk Home Loan Act.
20    "Prepayment penalty" means a charge imposed by a lender
21under a mortgage note or rider when the loan is paid before the
22expiration of the term of the loan.
23    "Refinancing" means a loan secured by the borrower's or
24borrowers' primary residence where the proceeds are not used
25as purchase money for the residence.
26    "Title insurance company" means any domestic company

 

 

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1organized under the laws of this State for the purpose of
2conducting the business of guaranteeing or insuring titles to
3real estate and any title insurance company organized under
4the laws of another State, the District of Columbia, or a
5foreign government and authorized to transact the business of
6guaranteeing or insuring titles to real estate in this State.
7    (a-5) A predatory lending database program shall be
8established within Cook County. The program shall be
9administered in accordance with this Article. The inception
10date of the program shall be July 1, 2008. A predatory lending
11database program shall be expanded to include Kane, Peoria,
12and Will counties. The inception date of the expansion of the
13program as it applies to Kane, Peoria, and Will counties shall
14be July 1, 2010. Until the inception date, none of the duties,
15obligations, contingencies, or consequences of or from the
16program shall be imposed. The program shall apply to all
17mortgage applications that are governed by this Article and
18that are made or taken on or after the inception of the
19program.
20    (b) The database created under this program shall be
21maintained and administered by the Department. The database
22shall be designed to allow brokers, originators, counselors,
23title insurance companies, and closing agents to submit
24information to the database online. The database shall not be
25designed to allow those entities to retrieve information from
26the database, except as otherwise provided in this Article.

 

 

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1Information submitted by the broker or originator to the
2Department may be used to populate the online form submitted
3by a counselor, title insurance company, or closing agent.
4    (c) Within 10 business days after taking a mortgage
5application, the broker or originator for any mortgage on
6residential property within the program area must submit to
7the predatory lending database all of the information required
8under Section 72 and any other information required by the
9Department by rule. Within 7 business days after receipt of
10the information, the Department shall compare that information
11to the housing counseling standards in Section 73 and issue to
12the borrower and the broker or originator a determination of
13whether counseling is recommended for the borrower. The
14borrower may not waive counseling. If at any time after
15submitting the information required under Section 72 the
16broker or originator (i) changes the terms of the loan or (ii)
17issues a new commitment to the borrower, then, within 5
18business days thereafter, the broker or originator shall
19re-submit all of the information required under Section 72
20and, within 4 business days after receipt of the information
21re-submitted by the broker or originator, the Department shall
22compare that information to the housing counseling standards
23in Section 73 and shall issue to the borrower and the broker or
24originator a new determination of whether re-counseling is
25recommended for the borrower based on the information
26re-submitted by the broker or originator. The Department shall

 

 

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1require re-counseling if the loan terms have been modified to
2meet another counseling standard in Section 73, or if the
3broker has increased the interest rate by more than 200 basis
4points.
5    (d) If the Department recommends counseling for the
6borrower under subsection (c), then the Department shall
7notify the borrower of all participating HUD-approved
8counseling agencies located within the State and, where
9applicable, nationally HUD-approved counseling agencies, and
10direct the borrower to interview with a counselor associated
11with one of those agencies. Within 10 business days after
12receipt of the notice of HUD-approved counseling agencies, it
13is the borrower's responsibility to select one of those
14agencies and shall engage in an interview with a counselor
15associated with that agency. The borrower must supply all
16necessary documents, as set forth by the counselor, at least
1772 hours before the scheduled interview. The selection must
18take place and the appointment for the interview must be set
19within 10 business days, although the interview may take place
20beyond the 10 business day period. Within 7 business days
21after interviewing the borrower, the counselor must submit to
22the predatory lending database all of the information required
23under Section 74 and any other information required by the
24Department by rule. Reasonable and customary costs not to
25exceed $300 associated with counseling provided under the
26program shall be paid by the broker or originator and shall not

 

 

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1be charged back to, or recovered from, the borrower. The
2Department shall annually calculate to the nearest dollar an
3adjusted rate for inflation. A counselor shall not recommend
4or suggest that a borrower contact any specific mortgage
5origination company, financial institution, or entity that
6deals in mortgage finance to obtain a loan, another quote, or
7for any other reason related to the specific mortgage
8transaction; however, a counselor may suggest that the
9borrower seek an opinion or a quote from another mortgage
10origination company, financial institution, or entity that
11deals in mortgage finance. A counselor or housing counseling
12agency that in good faith provides counseling shall not be
13liable to a broker or originator or borrower for civil
14damages, except for willful or wanton misconduct on the part
15of the counselor in providing the counseling.
16    (e) The broker or originator and the borrower may not take
17any legally binding action concerning the loan transaction
18until the later of the following:
19        (1) the Department issues a determination not to
20    recommend HUD-approved counseling for the borrower in
21    accordance with subsection (c); or
22        (2) the Department issues a determination that
23    HUD-approved counseling is recommended for the borrower
24    and the counselor submits all required information to the
25    database in accordance with subsection (d).
26    (f) Within 10 business days after closing, the title

 

 

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1insurance company or closing agent must submit to the
2predatory lending database all of the information required
3under Section 76 and any other information required by the
4Department by rule.
5    (g) The title insurance company or closing agent shall
6attach to the mortgage a certificate of compliance with the
7requirements of this Article, as generated by the database. If
8the transaction is exempt, the title insurance company or
9closing agent shall attach to the mortgage a certificate of
10exemption, as generated by the database. Each certificate of
11compliance or certificate of exemption must contain, at a
12minimum, one of the borrower's names on the mortgage loan and
13the property index number for the subject property. If the
14title insurance company or closing agent fails to attach the
15certificate of compliance or exemption, whichever is required,
16then the mortgage is not recordable. In addition, if any lis
17pendens for a residential mortgage foreclosure is recorded on
18the property within the program area, a certificate of service
19must be simultaneously recorded that affirms that a copy of
20the lis pendens was filed with the Department. A lis pendens
21filed after July 1, 2016 shall be filed with the Department
22electronically. If the certificate of service is not recorded,
23then the lis pendens pertaining to the residential mortgage
24foreclosure in question is not recordable and is of no force
25and effect.
26    (h) All information provided to the predatory lending

 

 

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1database under the program is confidential and is not subject
2to disclosure under the Freedom of Information Act, except as
3otherwise provided in this Article. Information or documents
4obtained by employees of the Department in the course of
5maintaining and administering the predatory lending database
6are deemed confidential. Employees are prohibited from making
7disclosure of such confidential information or documents. Any
8request for production of information from the predatory
9lending database, whether by subpoena, notice, or any other
10source, shall be referred to the Department of Financial and
11Professional Regulation. Any borrower may authorize in writing
12the release of database information. The Department may use
13the information in the database without the consent of the
14borrower: (i) for the purposes of administering and enforcing
15the program; (ii) to provide relevant information to a
16counselor providing counseling to a borrower under the
17program; or (iii) to the appropriate law enforcement agency or
18the applicable administrative agency if the database
19information demonstrates criminal, fraudulent, or otherwise
20illegal activity.
21    (i) Nothing in this Article is intended to prevent a
22borrower from making his or her own decision as to whether to
23proceed with a transaction.
24    (j) Any person who violates any provision of this Article
25commits an unlawful practice within the meaning of the
26Consumer Fraud and Deceptive Business Practices Act.

 

 

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1    (j-1) A violation of any provision of this Article by a
2mortgage banking licensee or licensed mortgage loan originator
3shall constitute a violation of the Residential Mortgage
4License Act of 1987.
5    (j-2) A violation of any provision of this Article by a
6title insurance company, title agent, or escrow agent shall
7constitute a violation of the Title Insurance Act.
8    (j-3) A violation of any provision of this Article by a
9housing counselor shall be referred to the Department of
10Housing and Urban Development.
11    (k) During the existence of the program, the Department
12shall submit semi-annual reports to the Governor and to the
13General Assembly by May 1 and November 1 of each year detailing
14its findings regarding the program. The report shall include,
15by county, at least the following information for each
16reporting period:
17        (1) the number of loans registered with the program;
18        (2) the number of borrowers receiving counseling;
19        (3) the number of loans closed;
20        (4) the number of loans requiring counseling for each
21    of the standards set forth in Section 73;
22        (5) the number of loans requiring counseling where the
23    mortgage originator changed the loan terms subsequent to
24    counseling;
25        (6) the number of licensed mortgage brokers and loan
26    originators entering information into the database;

 

 

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1        (7) the number of investigations based on information
2    obtained from the database, including the number of
3    licensees fined, the number of licenses suspended, and the
4    number of licenses revoked;
5        (8) a summary of the types of non-traditional mortgage
6    products being offered; and
7        (9) a summary of how the Department is actively
8    utilizing the program to combat mortgage fraud.
9(Source: P.A. 99-660, eff. 7-28-16; 100-509, eff. 9-15-17.)".