2023 Illinois Compiled Statutes › Chapter 205 - FINANCIAL REGULATION › 205 ILCS 635/ - Residential Mortgage License Act of 1987. › Article III - Operations, Capitalization, Insurance

(205 ILCS 635/Art. III heading)
ARTICLE III
OPERATIONS, CAPITALIZATION, INSURANCE
(205 ILCS 635/3-1) (from Ch. 17, par. 2323-1)
Sec. 3-1. Bonds of licensees.
(a) Every licensee, with respect to any person appointed or elected
to any position requiring the receipt of payment, management, or use of money
belonging to a residential mortgage licensee engaged in the activities of
originating, servicing, or purchasing mortgage loans or whose duties permit him
or her to have access to or custody of any of its money or securities or
custody of any money or securities belonging to third parties or whose duties
permit him or her regularly to make entries in the books or other records of a
licensee, shall, before assuming his or her duties, maintain a fidelity bond in
the amount of $100,000 by some fidelity insurance company licensed to do
business in this State.
(b) Each bond shall be for any loss the licensee may sustain in money or
other property through the commission of any dishonest or criminal act or
omission by any person required to be bonded, whether committed alone or in
concert with another.  The bond shall be in the form and amount approved
by the Commissioner who may at any time require one or more additional
bonds.  A true copy of every bond, including all riders and endorsements
executed subsequent to the effective date of the bond, shall be filed at
all times with the Commissioner.  Each bond shall provide that a
cancellation thereof shall not become effective unless and until
30 days notice in writing first shall have been given to the Commissioner
unless he or she shall have approved the cancellation earlier.
If the Commissioner believes the licensee's business is being conducted in
an unsafe manner due to the lack of bonds or the inadequacy of bonds,
he or she may proceed against the licensee as provided for in Section 4-5.
(c) All licensees shall maintain a bond in accordance with this subsection.
Each bond shall be for the recovery of expenses, fines, or fees due to or
levied by the Commissioner in accordance with this Act.  The bond shall be
payable when the licensee fails to comply with any provisions of this Act and
shall be in the form of a surety or licensure bond in the amount and form as
prescribed by the Commissioner pursuant to rules and regulations.  The bond
shall be payable to the Office of Banks and Real Estate and shall be issued by some insurance company
authorized to do business in this State.  A copy of the bond, including any and
all riders and endorsements executed subsequent to the effective date of the
bond, shall be placed on file with the Office of Banks and Real Estate within 10 days of the
execution thereof.
(d) The Commissioner may promulgate rules with respect to bonding
requirements for residential mortgage licensees and their mortgage loan originators that are
reasonable and necessary to accomplish the purposes of this Act.
(Source: P.A. 96-112, eff. 7-31-09.)
(205 ILCS 635/3-2) (from Ch. 17, par. 2323-2)
Sec. 3-2. Annual audit.
(a) At the licensee's fiscal year-end, but in no
case more than 12 months after the last audit conducted pursuant to this
Section, except as otherwise provided in this Section, it shall be
mandatory for each residential mortgage licensee to
cause its books and accounts to be audited by a certified public accountant
not connected with such licensee.  The books and records of all licensees
under this Act shall be maintained on an accrual basis.  The audit must be
sufficiently comprehensive in scope to permit
the expression of an opinion on the financial statements, which must be
prepared in accordance with generally accepted accounting principles, and
must be performed in accordance with generally accepted auditing standards.  Notwithstanding
the requirements of this subsection, a licensee that is a subsidiary
may submit audited consolidated financial statements of its parent, intermediary parent, or ultimate parent as long as
the consolidated statements are supported by consolidating statements which include the licensee's financial statement.  If the consolidating statements are unaudited, the
licensee's chief financial officer shall attest to the licensee's financial
statements disclosed in the consolidating statements.
(b) As used herein, the term "expression of opinion" includes either
(1) an unqualified opinion, (2) a qualified opinion, (3) a disclaimer of
opinion, or (4) an adverse opinion.
(c) If a qualified or adverse opinion is expressed or if an opinion is
disclaimed, the reasons therefore must be fully explained.  An opinion,
qualified as to a scope limitation, shall not be acceptable.
(d) The most recent audit report shall be filed with the
Commissioner within 90 days after the end of the licensee's fiscal year, or with the Nationwide Multistate Licensing System and Registry, if applicable, pursuant to Mortgage Call Report requirements.  The report
filed with the Commissioner shall be certified by the certified public
accountant conducting the audit.  The Commissioner may promulgate rules
regarding late audit reports.
(e) (Blank).
(f) In lieu of the audit or compilation financial statement
required by this Section, a licensee shall submit and the Commissioner may
accept any audit made in conformance with the audit
requirements of the U.S. Department of Housing and Urban Development.
(g) With respect to licensees who solely broker residential mortgage
loans as defined in subsection (o) of Section 1-4, instead of the audit
required by this Section, the Commissioner may
accept
compilation financial statements prepared at least every 12 months, and
the compilation financial statement must be submitted within 90 days after the end of
the licensee's fiscal year, or with the Nationwide Multistate Licensing System and Registry, if applicable, pursuant to Mortgage Call Report requirements.  A licensee who
files false or misleading compilation financial statements is guilty of a
business offense and shall be fined not less than $5,000.
(h) The workpapers of the certified public accountants employed
by each
licensee for purposes of this Section are to be made available to the
Commissioner or the Commissioner's designee upon request and may be
reproduced by the Commissioner or the Commissioner's designee to enable to
the Commissioner to carry out the purposes of this Act.
(i) Notwithstanding any other provision of this Section, if a licensee
relying on subsection (g) of this Section causes its books to be audited at any
other time or causes its financial statements to be reviewed, a complete copy
of the audited or reviewed financial statements shall be delivered to the
Commissioner at the time of the annual license renewal payment following
receipt by the licensee of the audited or reviewed financial statements.  All workpapers shall be made available to the
Commissioner upon request.  The financial statements and workpapers may be
reproduced by the Commissioner or the Commissioner's designee to carry out the
purposes of this Act.
(Source: P.A. 99-933, eff. 1-27-17; 100-1153, eff. 12-19-18.)
(205 ILCS 635/3-3) (from Ch. 17, par. 2323-3)
Sec. 3-3. Advertising. In addition to such other rules
and policies as the Secretary may adopt to effectuate the purpose of
this Act, the Secretary shall adopt rules governing the
advertising of mortgage loans, including without limitation, the following
requirements:
(a) Advertising for loans transacted under this Act     may not be false, misleading, or deceptive.  No entity whose activities are regulated under this Act may advertise in any manner so as to indicate or imply that its interest rates or charges for loans are in any way "recommended", "approved", "set", or "established" by the State or by this Act.  The Secretary may issue a cease and desist order for any violation of this Section.
(b) Mortgage loan advertisements must reference the     Nationwide Multistate Licensing System and Registry's Consumer Access website, except where exempted by the Secretary.
(c) No licensee shall advertise its services in     Illinois in any media, whether print or electronic, without including its unique identifier.
(Source: P.A. 100-795, eff. 8-10-18.)
(205 ILCS 635/3-4) (from Ch. 17, par. 2323-4)
Sec. 3-4. Office and staff within the State.
(a) A licensee whose principal place of business is located in the State
of Illinois shall
maintain at least one full service office with
staff reasonably adequate to handle efficiently communications, questions,
and all other matters relating to any application for a home mortgage or an
existing home mortgage with respect
to which such licensee is performing services, regardless of kind, for any
borrower or lender, note owner or holder, or for himself or herself while
engaged in the residential
mortgage business. Offices shall not be located in any real estate, retail, or financial business establishment, unless separated from the other business by a separate and distinct area within the establishment. The location and operation of a full service office shall be in compliance with any applicable zoning laws or ordinances and home office or business regulations. The Director may require a licensee operating from a home or residentially zoned office to provide another approved location that is suitable to conduct an examination under Sections 4-2 and 4-7 of the Act.  This subsection (a)  does not limit the Director's authority to examine at any other office, facility or location of the licensee as permitted by the Act.
(b) In lieu of maintaining a full service office in the State of
Illinois, and subject to the rules of the Department,
a licensee whose principal place of business is located outside the
State of Illinois may comply with all of the following requirements:
(1) provide, upon the Director's request and notice,     an approved location that is suitable to conduct an examination under Sections 4-2 and 4-7 of the Act.  This subsection (b) does not limit the Director's authority to examine at any other office, facility or location of the licensee as permitted by the Act.
(2)  submit a certified audit as required in Section     3-2 of this Act evidencing a minimum net worth of $150,000, which must be maintained at all times, and shall submit and maintain a fidelity bond in the amount of $100,000.
(Source: P.A. 96-112, eff. 7-31-09.)
(205 ILCS 635/3-5) (from Ch. 17, par. 2323-5)
Sec. 3-5. 
		Net worth requirement. 
		A licensee that holds a license on the
effective date of this amendatory Act of the 93rd General Assembly shall have and
maintain a net worth of not less than $100,000; however, no later than 2
years after the effective date of this amendatory
Act of the 93rd General Assembly, the licensee must maintain a net worth of not
less than $150,000. A licensee that first obtains a license after the effective
date of this amendatory Act of the 93rd General Assembly must have and maintain
a net worth of not less than $150,000.
Notwithstanding other requirements of this Section, the net worth
requirement for a residential mortgage licensee whose
only licensable
activity is that of brokering residential mortgage loans and that holds a
license on the effective date of this amendatory Act of the 93rd General
Assembly shall be $35,000; however, no later than 2 years after the
effective date of this amendatory
Act of the 93rd General Assembly, the licensee must maintain a net worth of
not less than $50,000. Such a licensee that first obtains a license after the
effective date of this amendatory Act of the 93rd General Assembly
must have and maintain a net worth of not less than $50,000.
Net worth shall be evidenced by a balance sheet prepared by a certified
public accountant in accordance with generally accepted accounting principles
and generally accepted auditing standards or by the compilation financial
statements authorized under subsection (g) of Section 3-2.  The Commissioner
may promulgate
rules with respect to net worth definitions
and requirements for residential mortgage licensees as necessary to
accomplish the purposes of this Act.  In lieu of the net worth requirement
established by this Section, the Commissioner may accept evidence of
conformance by the licensee with the net worth requirements of the United
States Department of Housing and Urban Development.
(Source: P.A. 93-561, eff. 1-1-04.)
(205 ILCS 635/3-7) (from Ch. 17, par. 2323-7)
Sec. 3-7. 
		Transfer of Servicing; Notices. 
		Whenever the servicing
of a residential mortgage is transferred or sold by a licensee,
notice shall be given to the mortgagor simultaneous with such
transfer and shall include, at the minimum, where and to
whom to address the mortgagor's questions relating to the residential
mortgage, the exact name, address and telephone number to whom at
least the next 3 months payments are to be submitted and the total
amount required of the mortgagor by the servicer for each of the
months referred to herein.
(Source: P.A. 86-137.)
(205 ILCS 635/3-8) (from Ch. 17, par. 2323-8)
Sec. 3-8. Discrimination and redlining prohibited. It shall be
considered discriminatory to refuse to grant loans or to vary the terms of
loans or the application procedures for loans because of:
(i) in the case of the proposed borrower, said     borrower's race, color, religion, national origin, age, gender or marital status; or
(ii) in the case of a mortgage loan, solely the     geographic location of the proposed security.
(Source: P.A. 100-863, eff. 8-14-18.)
(205 ILCS 635/3-9) (from Ch. 17, par. 2323-9)
Sec. 3-9. 
		Escrow Funds. 
		The Commissioner may promulgate rules with
respect to placement in escrow accounts by any licensee of any money, fund,
deposit, check or draft entrusted to it by any persons dealing with it as a
residential mortgage licensee.
(Source: P.A. 85-735.)
(205 ILCS 635/3-10) (from Ch. 17, par. 2323-10)
Sec. 3-10. 
		(Repealed).
(Source: P.A. 90-772, eff. 1-1-99.  Repealed by P.A. 90-772, eff. 1-1-99.)
(205 ILCS 635/3-11)
Sec. 3-11. Remote location operations. Licensees may allow mortgage loan originators to work from a remote location if:
(1) the licensee has written policies and procedures     for the supervision of mortgage loan originators working from a remote location;
(2) access to company platforms and customer     information is in accordance with the licensee's comprehensive written information security plan;
(3) no in-person customer interaction occurs at a     mortgage originator's residence unless that residence is a licensed location;
(4) physical records are not maintained at a remote     location;
(5) customer interactions and conversations about     consumers will be in compliance with federal and State information security requirements, including applicable provisions under the federal Gramm-Leach-Bliley Act and the Safeguards Rule established by the Federal Trade Commission and set forth in 16 CFR Part 314, as such requirements may be amended from time to time;
(6) mortgage loan originators working at a remote     location access the company's secure systems, including a cloud-based system, directly from any out-of-office device the mortgage loan originator uses, including, but not limited to, a laptop, phone, desktop computer, or tablet, via a virtual private network or comparable system that ensures secure connectivity and requires passwords or other forms of authentication to access;
(7) the licensee ensures that appropriate security     updates, patches, or other alterations to the security of all devices used at remote locations are installed and maintained;
(8) the licensee has an ability to remotely lock or     erase company-related contents of any device or otherwise remotely limit all access to a company's secure systems; and
(9) the Nationwide Multistate Licensing System and     Registry record of a loan originator that works from a remote location designates the principal place of business as the loan originator's registered location unless the loan originator elects another licensed branch office as a registered location.(Source: P.A. 103-156, eff. 1-1-24.)