The old law exempted from licensure any person or entity that made or acquired ten loans with his/her own funds and without intent to make, acquire or resell within one year.

The amendment exempts persons or entities that either have a physical presence in Illinois or do not originate mortgage loans in the ordinary course of business, to make or acquire ten residential loans with his/her own funds and without intent to make, acquire or resell within one year.

The basic change is that to avail oneself of this exemption, the person or entity must have a physical presence in Illinois, or if the person or entity does not have this physical presence, then the loan origination must not be in the ordinary course of business. This prevents out-of-state residential mortgage entities, including mortgage brokers, from utilizing this exemption to originate or broker even one loan secured by Illinois real estate.

Please remember that anyone can originate or broker a residential mortgage loan if no compensation is involved [Section 1-4 (d)(5)]. The amendment to Section 1-4(d)(2) does not affect this Section 1-4 (d)(5) in any manner.

The old law required all licensees, both mortgage bankers and mortgage brokers, to file their annual audit, or compilation, whichever was appropriate, with the Commissioner's office within 90 days of their fiscal year end.

The new law requires all licensees, whether mortgage banker or mortgage broker, to file their respective financial audit or compilation, whichever is appropriate, with their check for the license renewal fee. Section 2-6 (a) requires that properly completed renewal application forms and filing fees must be received by the Commissioner 45 days prior to renewal date.

Therefore and PLEASE READ CAREFULLY, licensee financial statements are due 45 days prior to the renewal date of the license. Failure to file the annual licensure renewal package (and check) and the financial statements in this timely manner, will trigger the imposition of both the late audit fee (Section 1050.430) AND late renewal fee [Section 2-6(b)(1)].

In some cases, the data contained in the financial statements will be outdated; we realize this but believe that the benefit of the combined filing will outweigh the timeliness of the data. This time factor; however, does not relieve the licensee of the obligation to have its yearly audit or compilation prepared within twelve months of its last audit or compilation Section 3-2 (a), nor of its obligation to maintain net worth at all times (Section 3-5).

The old law required that all out-of-state licensees originating, advertising or brokering residential mortgage loans within the State of Illinois maintain a full-service office with the State of Illinois.

The amendment allows an out of state licensee to forgo an Illinois physical presence if the licensee maintains a net worth of $ 100,000, submits a certified audit and obtains a fidelity bond.

In other words, out-of-state brokers must still maintain a physical presence in Illinois with a full-service office or meet the criteria of a mortgage banker.

The new law allows the Commissioner to issue a notice of intent to issue an order of removal or prohibition, or issue an order of removal and prohibition from participating in the affairs of a licensee either permanently or for a period of time, upon a finding that an employee of a licensee knowingly submitted any document that contained willful and material misstatements of fact used in connection with any licensable activity as defined in Section 1-3(a) of the Act.

The rules governing this provision have not been drafted but a committee composed of staff from the Commissioner's office and two representatives from each trade association will be convening in the fall to draft these rules.

The Commissioner wishes to thank both Marve Stockert, Executive Director of the Illinois Association of Mortgage Brokers and Jeff Warren of Burke, Warren, Mackay and Serritella, PC and chair of the legislative committee of the Illinois Mortgage Bankers Association and their respective committee members for invaluable help and guidance received in making these amendments to the licensing statute.