Skip to main content


Local buyers hoping to finance their home purchases with a loan from a parent or other family member are going to need to change their plans. Quickly. Sellers offering financing to prospective buyers too.  As of January 1st, 2011, ONLY Illinois mortgage licensees, regulated/licensed banks, savings & loans, credit unions, insurance companies, and the like can make residential mortgages for gain or profit..

Non-interest bearing mortgage loans are still allowed.

The new rule was enacted to implement a Federal law intended to enhance consumer protection and reduce fraud in the mortgage industry. That protection it seems, comes at a cost. Consumers have no choice now. Licensed mortgage lenders are the only game in town. At least for residential transaction.

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), was passed on July 30, 2008.  The federal obligated each of the 50 states to enact their own laws requiring licensure of mortgage loan originators (lenders) according to national standards and to participate in the Nationwide Mortgage Licensing System and Registry (NMLS).  The Act sets minimum standards for licensing and registration of state-licensed mortgage loans.  The Department of Housing and Urban Development (HUD) is charged by the SAFE Act with establishing and implementing a system for mortgage loan originators in States that do not meet the minimum requirements

State-licensed loan originators must  
complete pre-licensure training,
pass written tests,
take annual continuing education courses,
be fingerprinted,
submitted to a national registry and to the FBI for a criminal background check;
provide authorization to the registry to obtain an independent credit reports, or provide appropriate surety bonds.

The SAFE Act required the states to have a licensing and registration system in place by either July 31, 2009 (for states whose legislatures meet annually) or July 31, 2010 (for states whose legislatures meet biennially). The federal registry itself just opened on January 31, 2011.


This law applies to  any individual who, for compensation or gain, takes a residential
mortgage loan application or offers or negotiates terms of a residential mortgage loan application. There are no apparent exceptions. This means that anyone who expects to collect interest on a mortgage loan, including say,  sellers wishing to give a buyer financing or parents intending to help a child out, are deemed to be receiving compensation or gain in the process. They must take the classes, tests and otherwise enter the federal registry.


Although Illinois law exempts individual who offer loans with immediate family members and who offer loans secured by their own residences from registration as loan originators, the Illinois Residential Mortgage License Act prohibits the funding, originating and servicing of residential mortgage loans without a license.


Last week, Senator Michael Frerichs introduced SB1603, seeking to exempt anyone who makes three or fewer residential mortgage loans a year from licensure. If and when this bill is enacted into law, seller financing, and intra-family secured mortgage lending may resume.


Popular posts from this blog

Do I HAVE to shovel? Chicago snow shoveling law and etiquette

Set aside any discussion of climate change for a moment. It’s winter. It’s Chicago. It snows. As a homeowner, you owe it to your friends, family, neighbors and delivery people to keep the sidewalks free of snow and ice.

The Equifax data breach and you — 6 steps to take now

Identity thieves hit a major credit reporting agency—hard. Millions of consumers’ confidential identity information has been compromised.

Equifax, one of the big three credit reporting agencies announced that a massive security breach took place earlier this year. Offenders accessed data sets of 143 million US consumers.

With federal tax reform looming, should I prepay 2017 Cook County property taxes?

By Michael H. Wasserman

Paying property tax bills before the end of the 2017 may help some owners save on their federal income tax liabilities.

The Tax Cuts and Jobs Act has been called the most sweeping tax reform bill in decades. Like it or
not, tax reform is coming. Others might wring their hands with glee or with worry. We are already working on ways to minimize the pain this reform might cause. 
One aspect of the pending tax reform plan presents a clear challenge for most Chicagoland home owners, the elimination of deductions for State and Local Taxes (SALT). The house and senate plans both limit deductibility to $10,000. Once the tax reform is signed into law, we will pay federal income taxes on the money we use to pay our local taxes exceeding that $10,000 threshold. Some homeowners who have the foresight (and lets face it, the savings) to act swiftly may want to pre-pay their first installment 2017 property tax bills this year before the tax laws kick in, so that those payments …