The Illinois legislature recently enacted legislation effective January 13, 2012 governing short sales. The Illinois Department of Financial and Professional Regulation (the “Department”) recently adopted amendments to the Illinois Residential Mortgage License Act (the “Act”) rules effective January 1, 2012. The amendments deleted registration requirements for loan originators.
ILLINOIS SENATE BILL 1259
“Short sale” means the sale of real estate that is subject to a mortgage for an amount that is less than the amount owed to the lender on the outstanding mortgage note.
In a foreclosure of residential real estate, if the following occur, the lender must respond to the borrower within 90 days after receipt of the written offer and written request:
- The borrower presents to the lender a bona fide written offer from a third party to purchase the property that is the subject of the foreclosure proceeding;
- The written offer to purchase is for an amount, which constitutes a short sale of the property; and
- The borrower makes a written request to the lender to approve the sale on the terms of the offer to purchase.
The lender must determine whether to accept the borrower’s short sale offer. Failure to accept the offer will not impair or jeopardize in any way the rights of the lender or affect the status of the foreclosure proceedings. The 90-day period will not operate as a stay of the proceedings.
38 ILLINOIS ADMINISTRATIVE CODE 1050.210 – 1050.2100
Fees
The licensee must pay a non-refundable fee of a $500 for each Notice of Change of Ownership or Control amended license.
An applicant for a mortgage loan originator license must pay a non-refundable fee of $200 (previously $125) for each individual licensed on the initial application and $150 (previously $100) annually for each individual renewal, plus an additional $75 (previously $50) late fee for any renewal that is received after the expiration date of the preceding license.
There must be paid by or on behalf of the mortgage loan originator a non-refundable fee of $50 (previously $35). There must be paid by or on behalf of the applicant a non-refundable fee of $150 (previously $100) for reactivating each license on Inactive or Inoperative Status.
Licensing of Mortgage Loan Originators
The Director of the Department (the “Director”) may withdraw any license application for which the applicant has failed or refused to provide a written response, including any required documentation to provide a written response, including any required documentation, within 21 business days after receiving a deficiency letter for the response and required documentation from the Director.
Upon approving an application for an original or renewed mortgage loan originator license, the Director may issue the mortgage loan originator license through electronic licensing systems such as the Nationwide Mortgage Licensing System and Registry (“NMLSR”) and maintain a public record of all licenses issued within those electronic licensing systems. The Director may make copies of licenses available to licensees through electronic or other methods. Mortgage loan originator licenses will be issued subject to the following conditions:
- The Director will use applicable license numbers and/or identifiers for each mortgage loan originator license, including unique identifiers.
- Each mortgage loan originator must provide notification to the Director through the NMLSR, within 10 calendar days after obtaining information that the mortgage loan originator has had his or her license revoked in any governmental jurisdiction, has been convicted of, or pled guilty or no contest to, a felony as defined under the Act, or has had an adverse judgment of $500 or more in any jurisdiction (as provided in the financial responsibility, character, and fitness requirements under the Act). The notification must describe fully all convictions, revocations, and adverse judgments. The Director may take disciplinary action against any mortgage loan originator based upon failure to comply with the licensing requirements and/or reporting requirements under the Act.
- Each employing licensee must provide notification to the Director through submitting a sponsor removal to the NMLSR, immediately, but no later than 30 calendar days after the termination of a mortgage loan originator’s employment. The employing licensee may notify the Director of the reasons for the termination, and if applicable, the employing licensee may also provide a report to the Director. The Director may take disciplinary action against an employing licensee that fails to comply with the reporting requirement or that files a frivolous, false, or misleading report.
- Each mortgage loan originator must notify the Director through the NMLSR, within 30 days if the mortgage loan originator’s information contained in the initial application or any renewal application is no longer current and must file accurate supplemental information. The Director may take disciplinary action against a mortgage loan originator who fails to notify the Director.
The Director may create categories of inactive or inoperative status. A mortgage loan originator license will be considered on inactive or inoperative status at any time a mortgage loan originator is not actively employed by a licensee prior to the expiration date of the license. A mortgage loan originator must apply to the Director through the NMLSR, and include the transfer fee, in order to transfer the sponsorship of his or her license to another employing licensee. A mortgage loan originator cannot conduct activities that require a license while on inactive or inoperative status or any time prior to the Director accepting the new sponsor in the NMLSR. When a mortgage loan originator has been on inactive or inoperative status for more than 90 calendar days, prior to resuming active status, the mortgage loan originator must pay to the Director a mortgage loan reactivation fee. A mortgage loan originator’s inactive or inoperative status expires with the expiration of the license and any subsequent licensing will require submission of a new license application and fee.
Annual Report of Purchasing Activity
On or before March 1 of each year, each licensee that purchases residential mortgage loans must file an annual report of purchasing activity, which must include the following:
- The names of originating entities;
- Dollar amounts for each loan by property address or dollar amounts of Illinois loans contained in a multi-state property portfolio, identifying the portfolio; and
- A total dollar amount of all Illinois loans purchased.
A notarized affidavit or oath, affirmation, or declaration under penalty of perjury, attesting to the accuracy and truthfulness of the report must accompany the annual report of purchasing activity.
Payment Processing
A licensee must process and properly credit to a mortgage loan account any payment from a borrower on the same calendar date the payment is physically delivered, either in person or via U.S. Mail, at the address designated. A late fee must not be imposed if the licensee has received the borrower’s payment in a readily identifiable form by 5:00 p.m. on the day on which the payment is due in the amount, manner, location, and time indicated by the lender to avoid imposition of late fees. Upon demand by the Department, the licensee must produce documentation as to the date on which any payment in question was received by the licensee.
Compliance with Other Laws
Servicing and foreclosure procedures of a licensee must comply with applicable federal and state statutes and regulations, including, but not limited to, the Illinois Mortgage Foreclosure Law.