Appeals court upheld Illinois refusal to renew license to mortgage broker pursuant to SAFE Act

“This outcome is unquestionably harsh,” the Court agrees, despite affirming the decision to deny the renewal of an Illinois mortgage broker whose past felony conviction blocked his present and future due to provisions of the SAFE Act written to amend minimum requirements for practice.[i] The SAFE Act is a federal law imposing compliance policy on the Illinois Department of Financial and Professional Regulation (“Department”). Following the 2006 housing bubble burst, Congress enacted the SAFE Act and its uniform national standards in response to predatory lending and bad practices, generally.

Amendments to the SAFE Act prohibit the issuance or renewal of a mortgage broker license under circumstances including a conviction for fraud, and courts must follow the Act.

Appellate Court: "The 2009 amendment has changed the minimum requirements for practice and Vali Mohammad does not meet the amended requirements."
Appellate Court: “The 2009 amendment has changed the minimum requirements for practice and Vali Mohammad does not meet the amended requirements.”

The purpose of the 2009 enacted SAFE Act is to “impose uniform national standards in order to curb predatory lending practices and [to use] required fingerprinting and issuance of unique, life-time identifiers to prevent unscrupulous mortgage loan originators simply moving from jurisdiction.”[ii] Note that this is Federal law and the Department, overseeing mortgage brokers in Illinois, must follow the licensing standards imposed by the SAFE Act. Effective July 31, 2009, an amendment to the Act imposed on the Department that its licensed mortgage brokers comply with Section 7-3 that prohibits licensing of any applicants with felony convictions for fraud, among other criteria.[iii]

In this case, Mohammad became a mortgage broker in 2001, a new career for him. “By 2006, he had five employees, owned his commercial building and five rental homes, and was the recipient of two awards from the Chicago Association of Realtors and one from the chamber of commerce for the communities of Green Oaks, Libertyville, Mundelein, and Vernon Hills, Illinois.[iv] Despite his success as a loan originator and real estate, an unrelated past conviction stopped Mohammad from continuing business as usual when he received a letter from the Department, refusing to renew his license to practice mortgage brokerage in Illinois.

When Mohammad applied to renew is license in 2005 or 2006, according to the Court in Mohammad, he disclosed to the Department that he had a mail fraud conviction from the year 2000. The fraud conviction was the end of a drawn out battle with a previous company and had nothing to do with Mohammad’s career in lending as overseen by the Department who on June 30, 2010, notified him that his license could not be renewed because he did satisfy the requirements for the license pursuant to the SAFE Act as amended.

The trial court and the appellate court considered many arguments and facts concerning Mohammad and his career, but there was no provision in the Act for exceptions, and therefore the strict application of the law caused Mohammad to be ineligible to practice mortgage brokerage in Illinois. The Court, “Unfortunately, the applicable law of the State of Illinois is very clear on this matter. A felony conviction involving fraud or dishonesty is a clear violation of 205 ILCS 635/7-3(2) and a complete bar to holding a loan originator license.”[v]

Mohammad’s counsel made several legal arguments regarding the facts in this case and the application of the laws that affected his license. Michael V. Favia & Associates offers tips on dealing with the IDFPR located on their Illinois Licensing website. From the website, you can also submit your name and email to receive a more detailed article titled, “Summary of the Disciplinary Process and 10 Tips for Responding to an IDFPR Inquiry.”

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[ii] Mohammed at ¶ 11, citing Bryce Gray, The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, 31 Rev. Banking & Fin. L. 51 (2011) (discussing the circumstances that led to passage of the SAFE Act and explaining the law’s components).

[iii] Mohammed at ¶ 6.

[iv] Mohammed at ¶ 4.

[v] Mohammed at ¶ 8