Illinois Department of Financial & Professional Regulation Illinois Department of Financial & Professional Regulation
 
Mario Treto, Jr., Secretary  
JB Pritzker, Governor
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Bureau of Residential Finance

EVALUATION OF LO APPLICATION;
(For Criminal History, Civil Judgment, Credit History and Disciplinary Actions taken by Regulatory Agencies)

Section 7-1 of the Residential Mortgage License Act of 1987 (the “RMLA”) [205 ILCS 635/7-1] directs the Department of Financial and Professional Regulation, Division of Banking  (the “Division”) to promulgate rules prescribing the criteria for the registration and regulation of loan originators, including but not limited to, qualifications, fees, examination, education, supervision, and enforcement. Subpart R (Registration of Loan Originators) was added to the RMLA Rules [38 Ill. Adm. Code 1050.2110, et seq.] and provides for the collection of criminal background, civil judgment, credit history, and professional license information from which the Division will determine an applicant’s fitness for registration as a loan originator.

Section 1050.2112  Evaluation of Applications

I. Evaluation of applications – Criminal History

  1. For purposes of this policy, criminal history record information is defined as information collected by criminal justice agencies as defined in the Illinois Uniform Conviction Information Act [20 ILCS 2635] regarding individuals consisting of identifiable descriptions and notation of arrests, detention, indictments, information, or other formal criminal charges, and any disposition arising there from, sentencing, correctional supervision and release. The individual records must contain both information sufficient to identify the subject of the record and notations regarding any formal criminal justice transaction involving the identified individual.
  2. In determining whether an applicant for a loan originator certificate of registration is fit for such registration because of criminal history record information, the Division shall consider the following standards:
    1. Whether the crime was a felony;
    2. Whether the crime was financial in nature or involved monies, including but not limited to, fraud, embezzlement, forgery, counterfeiting, money laundering, and theft;
    3. Whether the crime was one of moral turpitude, breach of trust, or misfeasance or malfeasance, including but not limited to, drug offenses under the Illinois Controlled Substances Act [720 ILCS 570] and Federal Drug Enforcement Laws [21 U.S.C. 801], sex offenses listed in Article 11 of the Criminal Code of 1961 [720 ILCS 5/Art. XI] dishonesty, false statement or some other element of deceit, untruthfulness or falsification, and perjury or inducement to perjury;
    4. Whether in the case of a felony more than 10 years have elapsed since the date of completion of imposed sentence;
    5. Whether in the case of a misdemeanor related to finances or moral turpitude more than 5 years have elapsed since the date of completion of imposed sentence;
    6. Whether the conviction was from a city ordinance violation or conviction for which a jail sentence was not imposed; and
    7. Whether the applicant has been sufficiently rehabilitated to warrant public trust. The Division shall consider the following factors in considering whether an applicant has been presumed to be rehabilitated:
      1. Completion of probation;
      2. Completion of parole supervision;
      3. In the case of a felony, not subject to parole supervision, if more than 10 years have elapsed after final discharge or release from any term of imprisonment without any subsequent conviction; or
      4. In the case of a misdemeanor related to finances and moral turpitude and more than 5 years have elapsed after final discharge or release from any term of imprisonment without any subsequent conviction.
  3. If any one of the following factors exists, this may outweigh the presumption of rehabilitation as defined in subsection (b) above:
    1. Lack of compliance with terms of punishment (i.e., failure to pay fines or make restitution, violation of the terms of probation or parole);
    2. Unwillingness to undergo, or lack of cooperation in, medical or psychiatric treatment/counseling;
    3. Falsification of an application for registration with the Division; and
    4. Failure to furnish to the Division additional information or failure to appear for a conference with the Division in relation to the applicant’s application for registration.
  4. The following criminal history records shall not be considered in connection with an application for registration:
    1. Juvenile adjudications;
    2. Records of arrest not followed by a conviction;
    3. Convictions overturned by a higher court; and
    4. Convictions that have been the subject of a pardon or expungement.

II. Evaluation of applications – Civil Judgment & Credit History

In determining whether an applicant for a loan originator certificate of registration is fit for such registration because of civil judgments identified in the applicant’s credit history or otherwise that involve monies, breach of trust, moral turpitude, or misfeasance or malfeasance, the Division shall consider the totality of the circumstances of any outstanding and unpaid civil judgments against the applicant and any civil judgments where satisfaction of the judgment has occurred 5 years or less before the date of application.

III. Evaluation of applications - Disciplinary Actions taken by Regulatory Agencies

In determining whether an applicant for a loan originator certificate of registration is fit for such registration because of a discipline action taken by a regulatory agency, the Division shall consider the following standards:

  1. Whether a professional license or registration held by the applicant that is financially related, including but not limited to, residential mortgage, banking, securities, insurance, real estate, and appraisal, has been disciplined by a state or federal regulator.
  2. Whether the applicant has been barred, removed, and/or prohibited by the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, the U.S. Department of Housing and Urban Development or the Illinois Department of Financial and Professional Regulation, or appears on a list maintained by the Office of Foreign Asset Control.

IV. Determination and Hearing

If a determination is made that the applicant is unfit for registration, the applicant shall be so notified in writing that the Division intends to deny or intends to refuse to issue or renew the loan originator certificate of registration. The applicant/registrant shall be given an opportunity to appear at a Division conference regarding the matter. Failure to appear at the conference shall result in the denial or the refusal to issue or renew an applicant’s/registrant’s loan originator certificate of registration. If the applicant/registrant chooses not to attend the conference, he/she may request a formal hearing regarding such determination prior to final action by the Division in accordance with 38 Ill. Adm. Code 1050.

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