I was reading some threads in the lending section and it stated that some states have laws against charging loan doc prep fees. I do not believe Illinois has such a law? Anyone know for sure?

Illinois does not have such a law. This issue has arisen in a number of states due to class action lawsuits that have sought to recover document preparation fees assessed by mortgage lenders. The claims made were that preparing mortgage documents by non-attornyes (the lenders) coupled with the charge of a document preparation fee constituted the unauthorized practice of law.

On April 21, 2005, the Illinois Supreme Court ruled in 38 consolidated cases (King, et al. v. First Capital Financial Services Corp. and Jenkins, et al. v. Concord Acceptance Corporation) that a mortgage lender is not engaged in the unauthorized practice of law when it drafts mortgage documents for its own use and then charges borrowers a "document preparation fee" for the service. The Court held that it is the character of the conduct--in this case, preparing documents for the drafter's own benefit--and not the fee, that controls whether the conduct is viewed as the unauthorized practice of law.

We would like to encourage all Illinois bank compliance officers to consider attending our annual IBA COMPLIANCE CONFERENCE, which will be held on June 22, 2007, in Springfield, Illinois. We discuss the latest legal developments in Illinois, such as the one above, at this conference. You can read more about it here: http://www.ilbanker.com/Adobe/Education/Compliance_Conference.pdf

Bruce Jay Baker, Executive Vice President & General Counsel, Illinois Bankers Association
Visit us at http://www.ilbanker.com