Illinois Mortgage Company Originated Loans Without License
An Illinois home mortgage company is facing disciplinary action from state regulators after allegedly failing to have a licensed loan originator in place when it made 25 home loans.
According to the Alton Telegraph, Mainline Mortgage Group originated the loans without a registered loan originator. A spokeswoman for the Illinois Department of Financial and Professional Regulation said that’s against the law and that the state will prosecute the offenders.
Spokeswoman Susan Hofer said the citation arises from a 2003 law signed by Gov. Rod Blagojevich that requires testing, criminal background checks and licensing for people involved in originating Illinois home loans.
The law was passed to cut back on fraud involving first and second mortgages. While Mainline is not being accused of fraud, but rather failing to have loan origination officials go through the required licensing procedures.
“We want to be sure that people who go in for an Illinois home loan know the originator is supposed to have a license, and we want a loan officer to know licensing is required,” Hofer said.
The citation at Mainline is a result of an unannounced visit by examiners from the department of regulation. Hofer said loan origination requires detailed knowledge of the loan process and allows originators access to detailed financial and personal data.
The testing is required to ensure the originators know what they’re doing, and the background checks are a measure of whether the originator may misuse information for criminal purposes. The need for the program is evidenced by the fact that 40 percent of the applicants have failed the test, and 800 applicants were denied licenses as a result of criminal background checks.
The firm is actually a Missouri home loan company based in St. Louis. It has since surrendered its Illinois license. The people cited in the latest crackdown are entitled to a hearing, and the amount of fine, which could range up to $2,500 per offense, is yet to be determined.
Joe Droege, a spokesman for Mainline, flatly denied the firm issued loans without a licensed originator. He said the man who operated the Alton office died, and the firm gave up its Illinois license. The state must be mistaken, he said. But Hofer said there was no mistake in the citation, and the company will have a chance to explain its position at a hearing.
Blagojevich said 45 individuals and companies statewide are slated for discipline under the act. Six firms in the Chicago and Metro East areas used unlicensed loan originators to process more than 700 home loans, he said.
“We have worked hard to protect families from mortgage fraud and abuse, and through inspections across the state, we’ve put companies on notice that we won’t tolerate activities that harm homeowners,” the governor said.