Illinois Compliance (50%)

Question 1

The RMLA prohibits any individual, partnership, corporation, or other entity that is required to have a license under the RMLA from participating in any of the following activities without first obtaining a license:

Answer 1

o Brokering residential mortgage loans
o Originating residential mortgage loans
o Funding residential mortgage loans
o Servicing residential mortgage loans
o Purchasing residential mortgage loans
o Circulating any advertising indicating or implying that he/she/it takes part in any of the activities regulated by the RMLA

Question 2

If the borrower declines a loan that does not include prepayment penalties, the penalties must be:

Answer 2

o Limited to the first three years of the loan term
o No more than 3% of the total loan amount if the prepayment occurs during the first 12-month period after the loan is made
o No more than 2% of the total loan amount if the prepayment occurs during the second 12-month period after the loan is made
o No more than 1% of the total loan amount if the prepayment occurs during the third 12-month period after the loan is made

Question 3

For adjustable-rate loans, prepayment penalties are limited to:

Answer 3

the first three years, or the date of the first interest rate adjustment, whichever comes earlier

Question 4

Displaying Unique Identifier:

Answer 4

MLOs are required to clearly show their unique identifier on all loan application forms, solicitations, advertisements, business cards, and websites

Question 5

How many days? Providing the Borrower with Appraisal:

Answer 5

Within three business days of receipt of the appraisal, but in no event less than 24 hours prior to closing, RMLS licensees must provide the borrower with a copy of the appraisal used by the lender when underwriting the residential mortgage loan.

Question 6

What is the definition of “timely notice”?

Answer 6

Notice is timely if the licensee advises the borrower of the fee increase no later than three days of learning of the increase, or within twenty-four hours of the closing, whichever is earlier.

Question 7

Mortgage brokers and loan applicants must sign this agreement before the loan applicant signs an application for a mortgage loan (38 Ill. Adm. Code 1150.1010). The agreement must include the following information:

Answer 7

 A “clear and conspicuous” statement that the loan applicant and/or his/her attorney can review the agreement prior to signing it
 Signatures of the licensee and the loan applicant
 An “explicit description” of the services that the licensee agrees to provide for the loan applicant with a good faith estimate of the costs of the services, including ”with prominence equal to or greater than the estimate,” a description of the conditions or situations that can result in an increase in the estimates provided in the agreement
 Statement of the conditions under which a borrower must pay the licensee
 Statement that false or misleading statements by the licensee are a basis for voiding the agreement, recovering money paid to the licensee for which no services were performed, and recovering actual costs
 The Loan Brokerage Disclosure Statement (discussed below)
 The name and license number of the MLO that is working with the loan applicant

Question 8

Before signing the loan brokerage agreement, loan applicants must receive a “loan brokerage disclosure statement,” which must include the following information in the following order:

Answer 8

 A “clear and conspicuous statement” that the licensee does not make loans, but obtains funds from another entity that may affect the availability of funds
 The name under which the licensee is licensed and other names under which it has engaged in activities regulated by the RMLA
 Whether the licensee conducts business as an individual, partnership, corporation, or other organizational form
 If applicable, disclosure of the fact that the licensee brokers loans for only one entity

Question 9

Disclosures required by the RMLA include the following:

Answer 9

 Special Disclosure for a Reverse Mortgage:
 Timely Notice of a Change in Lending Terms:
 Disclosure of Refinancing Options:
 Failure to Close Disclosure: