There Is a Newer Version of the Illinois Compiled Statutes
2005 Illinois Code - 205 ILCS 635/ Residential Mortgage License Act of 1987. Article I - General Provisions
(205 ILCS 635/Art. I heading)ARTICLE I
GENERAL PROVISIONS
(205 ILCS 635/1‑1) (from Ch. 17, par. 2321‑1)
Sec. 1‑1.
This Act shall be known and may be cited as the
"Residential Mortgage License Act of 1987".
(Source: P.A. 85‑735.)
|
(205 ILCS 635/1‑2) (from Ch. 17, par. 2321‑2)
Sec. 1‑2.
Purpose of Act and Policy Statement.
(a) The origination,
funding, purchasing and brokering of residential mortgage loans and the
type of entities involved in residential mortgage lending have undergone
significant changes in recent years, due in part to developments in the
general economy, specifically interest rate volatility, the sophistication
of the national secondary market for mortgage loans and the market for
mortgage backed securities. The recent trend toward deregulation in the
financial services industry has accelerated the evolution of residential
mortgage lending, dramatically increasing the types of mortgage loans
offered and the manner in which they are advertised and marketed to
consumers. Depository institutions, traditionally the major source of
residential mortgage financing for individuals, now compete for capital
and customers with mortgage bankers and other financial service
organizations. Residential mortgage lenders of every type have
increasingly relied on nonfinancial intermediaries, such as mortgage
brokers, to find customers. These developments have raised questions as to
whether all entities engaging in this banking function operate under
appropriate regulatory scrutiny and as to whether all residential mortgage
lenders are conducting their business in the best interests of Illinois
homeowners and potential homeowners.
(b) The activities of lenders and their offering of financing for
residential real property have a direct and immediate impact upon the
housing industry, the neighborhoods and communities of this State, its
homeowners and potential homeowners. The General Assembly finds that it is
essential for the protection of the citizens of this State and the stability
of the State's economy that reasonable standards governing the business
practices of residential mortgage lenders and their agents be imposed. The
General Assembly further finds that the obligations of lenders and their agents
to consumers in connection with making, soliciting, processing, placing or
negotiating of residential mortgage loans are such as to warrant the
uniform regulation of the residential mortgage lending process, including
the application, solicitation, making and servicing of residential mortgage
loans. The purpose of this Act is to protect Illinois consumers seeking
residential mortgage loans and to ensure that the residential mortgage
lending industry is operating fairly, honestly and efficiently, free from
deceptive and anti‑competitive practices. The purpose of this Act is to
regulate residential mortgage lending to benefit our citizens by ensuring
availability of residential mortgage funding, to benefit responsible
providers of residential mortgage loans and services, and to avoid
requirements inconsistent with legitimate and responsible business
practices in the residential mortgage lending industry.
(Source: P.A. 85‑735.)
|
(205 ILCS 635/1‑3) (from Ch. 17, par. 2321‑3)
Sec. 1‑3. Necessity for License; Scope of Act.
(a) No person, partnership, association, corporation or other entity
shall engage in the business of brokering, funding, originating, servicing
or purchasing of residential mortgage loans without first obtaining a
license from the Commissioner in accordance with the licensing procedure
provided in this Article I and such regulations as may be promulgated by
the Commissioner. The licensing provisions of this Section shall not apply
to any entity engaged solely in commercial mortgage lending or
to any person, partnership association, corporation or other entity
exempted pursuant to Section 1‑4, subsection (d), of this Act or in accordance
with regulations promulgated by the Commissioner hereunder.
(b) No person, partnership, association, corporation, or other entity
except a licensee under this Act or an entity exempt from licensing
pursuant to Section 1‑4, subsection (d), of this Act shall do any business
under any name or title, or circulate or use any advertising or make any
representation or give any information to any person, which indicates or
reasonably implies activity within the scope
of this Act.
(c) The Commissioner may, through the Attorney General, request the circuit
court of either Cook or Sangamon County to issue an injunction to restrain
any person from violating or continuing to violate any of the foregoing
provisions of this Section.
(d) When the Commissioner has reasonable cause to believe that any
entity which has not submitted an application for licensure is conducting
any of the activities described in subsection (a) hereof, the Commissioner
shall have the power to examine all books and records of the entity and any
additional documentation necessary in order to determine whether such
entity should become licensed under this Act.
(d‑1) The Commissioner may issue orders against any person if the Commissioner has reasonable cause to believe that an unsafe, unsound, or unlawful practice has occurred, is occurring, or is about to occur, if any person has violated, is violating, or is about to violate any law, rule, or written agreement with the Commissioner, or for the purposes of administering the provisions of this Act and any rule adopted in accordance with this Act.
(e) Any person, partnership, association, corporation or other entity
who violates any provision of this Section commits a business offense and
shall be fined an amount not to exceed $25,000.
(f) Each person, partnership, association, corporation or other entity
conducting activities regulated by this Act shall be issued one license.
Each office, place of business or location at which a residential mortgage
licensee conducts any part of his or her business must
be recorded with the Commissioner pursuant to Section 2‑8 of this Act.
(g) Licensees under this Act shall solicit, broker, fund, originate,
service and purchase residential mortgage loans only in conformity with the
provisions of this Act and such rules and regulations as may be promulgated
by the Commissioner.
(h) This Act applies to all entities doing business in Illinois as
residential mortgage bankers, as defined by "An Act to provide for the
regulation of mortgage bankers", approved September 15, 1977, as amended,
regardless of whether licensed under that or any prior Act. Any existing
residential mortgage lender or residential mortgage broker in Illinois
whether or not previously licensed, must operate in accordance with this Act.
(i) This Act is a successor Act to and a continuance of the regulation
of residential mortgage bankers provided in, "An Act to provide for the
regulation of mortgage bankers", approved September 15, 1977, as amended.
Entities and persons subject to the predecessor Act shall be subject to
this Act from and after its effective date.
(Source: P.A. 93‑1018, eff. 1‑1‑05.)
|
(205 ILCS 635/1‑4) (from Ch. 17, par. 2321‑4)
Sec. 1‑4. Definitions.
(a) "Residential real property" or "residential real estate" shall mean
real property located in this State improved by a one‑to‑four family
dwelling used or occupied, wholly or partly, as the home or residence of
one or more persons and may refer, subject to regulations of the
Commissioner, to unimproved real property upon which those kinds dwellings
are to be constructed.
(b) "Making a residential mortgage loan" or "funding a residential mortgage
loan" shall mean for compensation or gain, either directly or indirectly,
advancing funds or making a commitment to advance funds to a loan applicant
for a residential mortgage loan.
(c) "Soliciting, processing, placing, or negotiating a residential
mortgage loan" shall mean for compensation or gain, either directly or
indirectly, accepting or offering to accept an application for a
residential mortgage loan, assisting or offering to assist in the
processing of an application for a residential mortgage loan on behalf of a
borrower, or negotiating or offering to negotiate the terms or conditions
of a residential mortgage loan with a lender on behalf of a borrower
including, but not limited to, the submission of credit packages for the
approval of lenders, the preparation of residential mortgage loan closing
documents, including a closing in the name of a broker.
(d) "Exempt person or entity" shall mean the following:
(1) (i) Any banking organization or foreign banking | ||
|
||
(1.5) Any employee of a person or entity mentioned | ||
|
||
(2) Any person or entity that does not originate | ||
|
||
(3) Any person employed by a licensee to assist in | ||
|
||
(4) Any person licensed pursuant to the Real Estate | ||
|
||
(5) Any individual, corporation, partnership, or | ||
|
||
(6) A person who prepares supporting documentation | ||
|
||
(A) holds the licensee fully accountable for the | ||
|
||
(B) otherwise meets the requirements of this | ||
|
||
(e) "Licensee" or "residential mortgage licensee" shall mean a person,
partnership, association, corporation, or any other entity who or which is
licensed pursuant to this Act to engage in the activities regulated by
this Act.
(f) "Mortgage loan" "residential mortgage loan" or "home
mortgage loan" shall mean a loan to or for the benefit of any
natural person made primarily for personal, family, or household use,
primarily secured by either a mortgage on residential real property or
certificates of stock or other evidence of ownership interests in and
proprietary leases from, corporations, partnerships, or limited
liability companies formed for the purpose
of cooperative ownership of residential real property, all located in Illinois.
(g) "Lender" shall mean any person, partnership, association,
corporation, or any other entity who either lends or invests money in
residential mortgage loans.
(h) "Ultimate equitable owner" shall mean a person who, directly
or indirectly, owns or controls an ownership interest in a corporation,
foreign corporation, alien business organization, trust, or any other form
of business organization regardless of whether the person owns or controls
the ownership interest through one or more persons or one or more proxies,
powers of attorney, nominees, corporations, associations, partnerships,
trusts, joint stock companies, or other entities or devices, or any
combination thereof.
(i) "Residential mortgage financing transaction" shall mean the negotiation,
acquisition, sale, or arrangement for or the offer to negotiate, acquire,
sell, or arrange for, a residential mortgage loan or residential mortgage
loan commitment.
(j) "Personal residence address" shall mean a street address and shall
not include a post office box number.
(k) "Residential mortgage loan commitment" shall mean a contract for
residential mortgage loan financing.
(l) "Party to a residential mortgage financing transaction" shall mean a
borrower, lender, or loan broker in a residential mortgage financing
transaction.
(m) "Payments" shall mean payment of all or any of the following:
principal, interest and escrow reserves for taxes, insurance and other related
reserves, and reimbursement for lender advances.
(n) "Commissioner" shall mean the Commissioner of Banks and Real Estate
or a person authorized by the Commissioner, the Office of Banks and Real Estate
Act, or this Act to act in the Commissioner's stead.
(o) "Loan brokering", "brokering", or "brokerage service" shall mean the act
of helping to obtain from another entity, for a borrower, a loan secured by
residential real estate situated in Illinois or assisting a borrower in
obtaining a loan secured by residential real estate situated in Illinois in
return for consideration to be paid by either the borrower or the lender
including, but not limited to, contracting for the delivery of residential
mortgage loans to a third party lender and soliciting, processing, placing,
or negotiating residential mortgage loans.
(p) "Loan broker" or "broker" shall mean a person, partnership,
association, corporation, or limited liability company, other than
those persons, partnerships,
associations, corporations, or limited liability companies exempted
from licensing pursuant to Section
1‑4, subsection (d), of this Act, who performs the activities described
in subsections (c) and (o) of this Section.
(q) "Servicing" shall mean the collection or remittance for or the
right or obligation to collect or remit for any lender, noteowner,
noteholder, or for a licensee's own account, of payments, interests,
principal, and trust items such as hazard insurance and taxes on a
residential mortgage loan in accordance with the terms of the residential
mortgage loan; and includes loan payment follow‑up, delinquency loan
follow‑up, loan analysis and any notifications to the borrower that are
necessary to enable the borrower to keep the loan current and in good standing.
(r) "Full service office" shall mean office and staff in Illinois
reasonably adequate to handle efficiently communications, questions, and
other matters relating to any application for, or an existing home mortgage
secured by residential real estate situated in Illinois
with respect to which the licensee is brokering, funding originating,
purchasing, or servicing. The management and operation of each full service
office must include observance of good business practices such as adequate,
organized, and accurate books and records; ample phone lines, hours of
business, staff training and supervision, and provision for a mechanism to
resolve consumer inquiries, complaints, and problems. The Commissioner
shall issue regulations with regard to these requirements and shall include
an evaluation of compliance with this Section in his or her periodic
examination of each licensee.
(s) "Purchasing" shall mean the purchase of conventional or
government‑insured mortgage loans secured by residential real estate
situated in Illinois from either the lender or from the secondary market.
(t) "Borrower" shall mean the person or persons who seek the services of
a loan broker, originator, or lender.
(u) "Originating" shall mean the issuing of commitments for and funding of
residential mortgage loans.
(v) "Loan brokerage agreement" shall mean a written agreement in which a
broker or loan broker agrees to do either of the following:
(1) obtain a residential mortgage loan for the | ||
|
||
(2) consider making a residential mortgage loan to | ||
|
||
(w) "Advertisement" shall mean the attempt by publication,
dissemination, or circulation to induce, directly or indirectly,
any person to enter into a residential mortgage loan agreement or
residential mortgage loan brokerage agreement relative to a
mortgage secured by residential real estate situated in Illinois.
(x) "Residential Mortgage Board" shall mean the Residential Mortgage
Board created in Section 1‑5 of this Act.
(y) "Government‑insured mortgage loan" shall mean any mortgage loan made
on the security of residential real estate insured by the Department of
Housing and Urban Development or Farmers Home Loan Administration, or
guaranteed by the Veterans Administration.
(z) "Annual audit" shall mean a certified audit of the licensee's books and
records and systems of internal control performed by a certified public
accountant in accordance with generally accepted accounting principles
and generally accepted auditing standards.
(aa) "Financial institution" shall mean a savings and loan
association, savings bank, credit union, or a bank organized under the
laws of Illinois or a savings and loan association, savings bank,
credit union or a bank organized under the laws of the United States and
headquartered in Illinois.
(bb) "Escrow agent" shall mean a third party, individual or entity
charged with the fiduciary obligation for holding escrow funds on a
residential mortgage loan pending final payout of those funds
in accordance with the terms of the residential mortgage loan.
(cc) "Net worth" shall have the meaning ascribed thereto in Section 3‑5
of this Act.
(dd) "Affiliate" shall mean:
(1) any entity that directly controls or is | ||
|
||
(2) any entity:
(A) that is controlled, directly or indirectly, | ||
|
||
(B) a majority of the directors or trustees of | ||
|
||
(3) any company, including a real estate investment | ||
|
||
The Commissioner may define by rule and regulation any terms used
in this Act for the efficient and clear administration of this Act.
(ee) "First tier subsidiary" shall be defined by regulation
incorporating the comparable definitions used by the Office of the
Comptroller of the Currency and the Illinois Commissioner of Banks
and Real Estate.
(ff) "Gross delinquency rate" means the quotient determined by dividing
(1) the sum of (i) the number of government‑insured residential mortgage loans
funded or purchased by a licensee in the preceding calendar year that are
delinquent and (ii) the number of conventional residential mortgage loans
funded or purchased by the licensee in the preceding calendar year that are
delinquent by (2) the sum of (i) the number of government‑insured residential
mortgage loans funded or purchased by the licensee in the preceding calendar
year and (ii) the number of conventional residential mortgage loans funded or
purchased by the licensee in the preceding calendar year.
(gg) "Delinquency rate factor" means the factor set by rule of the
Commissioner that is multiplied by the average gross delinquency rate of
licensees, determined annually for the immediately preceding calendar year, for
the purpose of determining which licensees shall be examined by the
Commissioner pursuant to subsection (b) of Section 4‑8 of this Act.
(hh) "Loan originator" means any natural person who, for compensation or in
the expectation of compensation, either directly or indirectly makes, offers to
make, solicits, places, or negotiates a residential mortgage loan.
(ii) "Confidential supervisory information" means any report of examination, visitation, or investigation prepared by the Commissioner under this Act, any report of examination visitation, or investigation prepared by the state regulatory authority of another state that examines a licensee, any document or record prepared or obtained in connection with or relating to any examination, visitation, or investigation, and any record prepared or obtained by the Commissioner to the extent that the record summarizes or contains information derived from any report, document, or record described in this subsection. "Confidential supervisory information" does not include any information or record routinely prepared by a licensee and maintained in the ordinary course of business or any information or record that is required to be made publicly available pursuant to State or federal law or rule.
(Source: P.A. 93‑561, eff. 1‑1‑04; 93‑1018, eff. 1‑1‑05.)
|
(205 ILCS 635/1‑5) (from Ch. 17, par. 2321‑5)
Sec. 1‑5. Residential Mortgage Board.
(a) Board composition, compensation. There is created the Residential
Mortgage Board composed of 5 members appointed by the Commissioner of Banks
and Real Estate. The majority of persons
on the Board shall have no financial interest in any residential mortgage
business and one member shall be a representative of the Mortgage Banking Trade
Association and one member shall be a representative of the Mortgage Broker
Trade Association. Members of the Board serving on the effective
date of this amendatory Act of 1996 shall continue to serve their
unexpired terms as members of the Residential Mortgage Board. Thereafter, on
or before January 15 of each year, the Commissioner shall appoint one or more
board members, as shall be necessary to maintain a 5 member Board, whose terms
shall be for 3 years commencing February 1 of the year in which they are
respectively appointed.
If a vacancy occurs on the Residential Mortgage Board, the Commissioner
shall within 60 days appoint a new member who shall hold office for the
remainder of the vacated term.
The Board shall meet at the call of the chairman, who along with a
Secretary, shall be selected by the Board from among its members.
The members of the Board serve at the pleasure of the
Commissioner.
(b) Duties of Board. The Residential Mortgage Board shall assist the
Commissioner by:
(1) submitting recommendations to the Commissioner | ||
|
||
(2) performing other duties as are prescribed by the | ||
|
||
(c) Conflict of interest declarations. Each member of the Residential
Mortgage Board shall file annually, no later than February 1, with the
Commissioner a statement of his or her current business transactions or
other affiliations with any licensee under this Act.
The Commissioner may adopt rules to avoid conflicts of interest on the
part of members of the Residential Mortgage Board in connection with their
position on the Board.
(Source: P.A. 93‑1018, eff. 1‑1‑05.)
|
Disclaimer: These codes may not be the most recent version. Illinois may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
