Springfield, IL… Today State Representative Margo McDermed (R-Mokena) unanimously advanced House Bill 4404 to remove unduly burdensome regulations on mortgage loan workers applied by Illinois and only Illinois. “Illinois’ Residential Mortgage License Act was enacted to protect consumers in residential mortgage loan transactions, but its license requirements lack any distinction for an independent loan processor who merely handles paperwork.” Rep. McDermed said. “We’re putting an unnecessary onus on these workers and consequently discouraging these jobs in Illinois.”
Mortgage loan processors handle clerical paperwork involved in taking out a mortgage and verify wages and employment among other loan indicators. They do not handle the mortgage itself and do not have an incentive to issue or procure mortgages. After the housing bubble burst in 2008, the U.S. Congress passed the SAFE Act, which required states to increase their regulations on mortgage loans. Illinois’ legislation regulates processors in the same way as mortgage loan brokers. The latter position must meet stringent licensing requirements from IDFPR and has resulted in significant outsourcing of mortgage loan processing work to other states. Rep. McDermed worked with the Illinois Department of Financial and Professional Regulation (IDFPR) and the Illinois Attorney General’s Office over the course of three years to come to a compromise.
HB4404 removes the stricter requirements on processors while still ensuring they are regulated by the IDFPR and supervised by mortgage loan officers. HB4404 passed the Illinois House of Representatives on a 110-0 vote. It now heads to the Illinois Senate.