August 2011 Vol. 4, No. 7

Legislative Updates


Mortgage License Act

PA 97-0143, Senate Bill 1603. Amends 205 ILCS 635/1-3 and 1-4. Effective Date: Immediately (July 14, 2011).

This bill amends the Residential Mortgage License Act of 1987 by adding to the definition of an "exempt person or entity." The purpose of this Act is to regulate the residential mortgage lending industry to protect consumers seeking residential mortgage loans. Section 635/1-3 requires a person, partnership, association, corporation or other entity to first obtain a license from the commissioner before engaging in the business of brokering, funding, originating, servicing or purchasing of residential mortgage loans. However, the licensing requirements do not apply to any person, partnership, association, corporation or other entity exempted under section 635/1-4(d).

Section 635/1-4(d) defines an "exempt person or entity." A new section 635/1-4(d)(1.8) adds another entity that is also exempt from the licensing requirement of section 635/1-3. Specifically, "[a]ny person or entity that does not originate mortgage loans in the ordinary course of business, but makes or acquires residential mortgage loans with his or her own funds for his or her own or its own investment without intent to make, acquire, or resell more than 3 residential mortgage loans in any one calendar year" is exempt from the licensing requirement.

The Act provides that notwithstanding anything to the contrary regarding exempted persons or entities, an individual acting as a mortgage loan originator who is not employed by and acting for a "registered mortgage loan originator" as defined by section 635/1-4(tt) is still subject to the mortgage loan originator licensing requirements. Additionally, those acting as a mortgage loan originator under section 635/1-4(d)(1.8) is "further subject to a determination by the U.S. Department of Housing and Urban Development through final rulemaking or other authorized agency determination under the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008."

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[Last update: 8-15-11]