New Illinois Licensing Amendment Addresses Mortgage Fraud, Raises Licensing Fee by Nearly $700

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New amendments to the Residential Mortgage License Act of 1987 of Illinois address mortgage fraud, predatory lending and short sales.

By Peter Ricci

Governor Pat Quinn signed an amendment to the Residential Mortgage License Act of 1987 on Friday, which reforms several aspects of Illinois real estate while tweaking others in an effort to combat mortgage fraud.

In addition to defining “loan modification” and “short sale facilitation” for the state, the amendment also contained new regulations for agents, anti-fraud measures, and, perhaps most notably, an increase of the state mortgage licensing fee from $2,042 to $2,700.

Residential Real Estate Regulations

The full text of the amendment can be viewed here, but here are some of its main features (in case you don’t feel like reading all 14,779 words!):

  • The Director of the Division of Banking of the Department of Financial and Professional Regulation is now authorized to establish relationships or contracts with the Nationwide Mortgage Licensing System and Registry.
  • In addition, residential mortgage license applicants may now be required to provide information to the Nationwide Mortgage Licensing System and Registry.
  • All applications for a license, or renewal of a license, now feature an averment that applicants will “not charge or collect advance payments from borrowers or homeowners for engaging in loan modification or short sale facilitation.”
  • The Residential Real Property Disclosure Act is now amended to provide that, for each loan, the broker or loan originator must submit the borrower’s debt to income ratio into the predatory lending database.
  • And finally, the maximum penalty for mortgage fraud violations has been increased from $25,000 to $75,000.

IAR and CAR Respond to the New Regulations

Jon Broadbooks, the director of communication for the Illinois Association of Realtors (IAR), said that though IAR was neutral on the amendment, said the new protections to homeowners from predatory lending make sense.

“Given the complexity and the dynamics of the mortgage market today, it makes sense to ensure due diligence to protect homebuyers,” he said. “The penalties in this law should give pause to those who operate in a predatory manner.”

Zeke Morris, the president of the Chicago Association of Realtors, also spoke to the added consumer protections in the amendment.

“The state of Illinois has likely seen an added need to increase protection of consumer transactions and the lending process,” he said. “Such heightened measures can be seen as a positive step toward ensuring the industry’s professionals are practicing at its best.”

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