(205 ILCS 635/Art. III heading)

(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.)