Illinois Governor Blagojevich Announces Results of Increased Crackdown On Unlicensed Mortgage Loan Originators

CHICAGO – Building on efforts to protect homebuyers from fraudulent practices, Governor Rod R. Blagojevich announced today the results of the State’s increased crackdown on unlicensed mortgage loan originators.

The latest inspections conducted by the Governor’s Mortgage Fraud Task Force (MFTF), found that six residential mortgage firms in the Chicago and East St. Louis regions used unlicensed loan originators to process more than 700 home loans.  Today’s announcement brings the total of companies and individuals slated for discipline by the Illinois Department of Financial and Professional Regulations (IDFPR) to more than 45, since unannounced inspections across the state began last March.

“We have worked hard to protect families from fraud and abuse, and through these inspections across the state we’ve put mortgage companies on notice that we will not tolerate activities that could harm homeowners,” said Gov. Blagojevich.

The task force was established by Gov. Blagojevich to ensure that mortgage companies comply with the strict standards of conduct established for loan originators in the 2003 High Risk Home Loan Act. 

One of the most important provisions of the law requires people who process mortgages to undergo training and background screening before being entrusted with borrowers’ financial and personal information. 

Loan originators must also pass a rigorous screening test to make sure they understand loan processing.  During the initial registration of loan originators, 29,000 people applied for registration.  Forty percent of those applicants failed the Loan Originator Exam and almost 800 applicants were denied licenses after background checks were completed. 

There are approximately 16,000 registered loan originators in Illinois. The MFTF has cracked down on unregistered loan originators in the State of Illinois.  Most recently its efforts have been focused in the Chicago metropolitan area.  In its summer sweep, the MFTF inspected mortgage licensees in the Metro East area. 

IDFPR has the authority to issue fines of $2,500 for the first unlicensed loan originator it finds at any licensed residential mortgage company, and $500 for each additional unregistered loan originator.  Individuals working as loan originators without the proper registration are subject to fines of $950 and a permanent notation on their file should they decide to register in the future.

The MFTF found problems after inspections at the following licensees. (click here) These potential violations may result in disciplinary or other actions including revocation, suspension, fines or surrender of license: