Effective on October 6, 2017, the Illinois Department of Financial and Professional Regulation extensively amended the Residential Mortgage License Act of 1987 (the RMLA) to update a number of Illinois specific licensing requirements, and also to amend rules to fall in line with recent regulations issued by the CFPB (the Amendments). Chief portions of the Amendments include: changes in application filing deadlines; clarifications that licensing in Illinois now generally reflects the standards and processes required by the NMLS; the facilitation of the NMLS’s new electronic surety bond feature; the repeal of certain foreclosure rate provisions in lieu of a new “delinquency data” provision; the repeal of certain consumer notice provisions that were preempted by Regulation Z; several updates related to the CFPB’s adopted TRID form and associated notifications; and the elimination of certain paper-recording keeping requirements.
Changes in Licensing
The Amendments clarify that to be deemed “timely,” renewal applications of an Illinois Residential Mortgage License must be received by the Director of the Division of Banking of the Department of Financial and Professional Regulation no later than 30 days prior to the application deadline. The Amendments also repeal the loan originator registration and provisional registration provisions and clarify that mortgage loan originator licensing is governed by Section 7-1A of the RMLA, which generally reflects the licensing and registration process under the NMLS registry. Information concerning Illinois and NMLS requirements is available here.
Changes to Paper Record Retention
The Amendments cover two issues with respect to paper records. First, in lieu of paper surety bonds, licensee must now file and maintain electronic surety bonds in the NMLS registry. The minimum bond requirement has also increased from $20,000 to $25,000. Information concerning the NMLS surety bond registry is available here. Illinois also no longer requires servicers to maintain paper records pertaining to the activity of loan servicing. Servicers may now maintain such records electronically. Note however, that the paper copy requirement of 36 months remains in effect for activity related to loan brokering, originating, and loans sold or bought on the secondary market. Also, regardless of whether a record is required to be maintained in paper or electronic form, the 36 month retention period remains in effect.
Consumer Notice Provisions Preempted by Regulation Z
The Amendments clarify that several Illinois consumer notice provisions have been preempted by Regulation Z provisions, which were originally implemented on January 1, 2014. While many of these notice provisions overlap with federal requirements, some do not. For example, Regulation Z has no requirement that servicing transfer notices must include “the amount of transfer of each payment required for the next three months,” which Illinois formerly required. Federal law, however, does require a general statement that “the transfer of servicing does not affect any term or condition of the mortgage loan other than terms directly related to the servicing of the loan.” Moreover, as set forth in Regulation Z, only state law concerning “notice to the borrower at the time of application or at the time of transfer of servicing” is preempted. Thus, Illinois’ additional requirements concerning notice to insurance carriers and taxing authorities remain in effect.
Several changes to the RMLA have been made to align with the CFPB’s TRID rules. These include requirements that:
- Loan brokerage agreements must include a reference to estimated loan costs and fees paid to the licensee, that may be taken from reference to a Good Faith Estimate, or the TILA-RESPA Integrated Loan Estimate;
- The RMLA’s “Borrower Information Document”:
- must now include the CFPB’s “Your Home Loan Toolkit”; and
- may include TILA-RESPA Integrated Loan Estimate, in lieu of a GFE.
- Illinois’ entire provision concerning “changes affecting loans in process” have been superseded by CFPB-required notifications to consumer of loan term changes; and
- The TILA-RESPA Integrated Loan Estimate Disclosure may now be used to disclose fees to the seller that may not be paid for by the buyer.
All of the Amendments may be found at the following link, beginning on page 12405: http://www.cyberdriveillinois.com/departments/index/register/volume41/register_volume41_issue40.pdf.