We originate loans brokered by third party originators (TPOs) and also serve as a broker to other institutions. We only work with other banks. We require them to complete a loan brokerage agreement and disclosure statement. Does Illinois law require this form or any other forms?

No, we do not believe that banks must use the loan brokerage agreement and disclosure statement required by the Residential Mortgage License Act of 1987 (RMLA) in a brokerage relationship with another bank.

The RMLA requires licensed mortgage brokers to provide a loan brokerage disclosure statement and obtain a signed loan brokerage agreement before a mortgage applicant signs a completed residential mortgage loan application. Banks and their employees are exempt from the RMLA and are not required to use these forms, even when acting as a broker for another bank.

If your bank originated a loan brokered by a nonbank, that nonbank would be required to use the loan brokerage agreement and disclosure statement. But when brokering loans for or purchasing brokered loans from other banks, the RMLA's requirements do not apply.

For resources related to our guidance, please see:

Illinois Administrative Code, 38 Ill. Adm. Code 1050.1020 (“Before the borrower signs a loan brokerage agreement or gives the licensee any consideration, whichever comes first, the licensee shall give the borrower a written disclosure statement and shall obtain the customer’s signature on a duplicate of the disclosure statement near clear and conspicuous wording indicating that the customer has read and understands the disclosure statement or has had the contents explained to him or her by someone not connected with the licensee. . . .”)
Illinois Administrative Code, 38 Ill. Adm. Code 1050.1010 (“Before a mortgage loan applicant (also referred to in this Section as ‘borrower’ or ‘customer’) signs a completed residential mortgage loan application or gives the licensee any consideration, whichever comes first, a loan brokerage agreement shall be required and shall be in writing and signed by both the mortgage loan applicant and a licensee whose services to the customer shall be loan brokering as defined at Section 1-4(o) of the Act. . . .”)
Residential Mortgage License Act of 1987, 205 ILCS 635/1-3(a) (“No provision of this Act shall apply to an exempt person or entity as defined in items (1) and (1.5) of subsection (d) of Section 1-4 of this Act . . .”)
Residential Mortgage License Act of 1987, 205 ILCS 635/1-4(d)(1) (“(1) ‘Exempt person or entity’ shall mean the following: . . . (ii) any national bank, federally chartered savings and loan association, federal savings bank, federal credit union; . . . (iv) any bank, savings and loan association, savings bank, or credit union organized under the laws of this or any other state; . . .”)
Residential Mortgage License Act of 1987, 205 ILCS 635/1-4(d)(1.5) (“(1.5) ‘Exempt person or entity’ shall mean the following: . . . Any employee of a person or entity mentioned in item (1) of this subsection, when acting for such person or entity, or any registered mortgage loan originator when acting for an entity described in subsection (tt) of this Section.”)