HB2477 EngrossedLRB099 06130 MGM 26186 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Credit Union Act is amended by
5changing Sections 7, 46, and 57.1 as follows:
 
6    (205 ILCS 305/7)  (from Ch. 17, par. 4408)
7    Sec. 7. Reciprocity; out-of-state Reciprocity - out of
8state credit unions.
9    (1) A credit union organized and duly chartered as a credit
10union in another state shall be permitted to conduct business
11as a credit union in this State state if and so long as a credit
12union chartered under the laws of this State state is permitted
13to do business in such other state, provided that:
14        (a) The credit union shall register with the office
15    prior to operating in this State, on a form specified by
16    the Secretary.
17        (b) The credit union may be required to pay a
18    registration fee in accordance with rules promulgated by
19    the Secretary and the Director.
20        (c) The credit union shall comply with rules
21    promulgated by the Secretary concerning the operation of
22    out-of-state out of state credit unions in this State.
23        (d) The credit union shall not conduct business in

 

 

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1    Illinois on terms that are less restrictive than the
2    standards applicable to its operation in its home
3    chartering state. In every instance with respect to its
4    activities and operations in Illinois, the credit union
5    shall comply with applicable Illinois law.
6        (e) Permission to operate in the State may be revoked
7    by the Secretary or the Director if the credit union
8    engages in any activity in the State that would constitute
9    (i) a violation of this Act or other applicable law, (ii) a
10    violation of any rule adopted in accordance with this Act
11    or other applicable law, (iii) a violation of any order of
12    the Secretary or Director issued under his or her authority
13    under this Act, or (iv) an unsafe or unsound practice in
14    the discretion of the Secretary or Director.
15    (1.5) The failure of a credit union chartered in another
16state to register with the Secretary shall not impair the
17collectability of a loan made to a resident of this State.
18    (2) It is intended that the legal existence of credit
19unions chartered under this Act be recognized beyond the limits
20of this State and that, subject to any reasonable registration
21requirements, any credit union transacting business outside of
22this State be granted the protection of full faith and credit
23under Section 1 of Article IV of the Constitution of the United
24States.
25(Source: P.A. 97-133, eff. 1-1-12.)
 

 

 

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1    (205 ILCS 305/46)  (from Ch. 17, par. 4447)
2    Sec. 46. Loans and interest rate.
3    (1) A credit union may make loans to its members for such
4purpose and upon such security and terms, including rates of
5interest, as the credit committee, credit manager, or loan
6officer approves. Notwithstanding the provisions of any other
7law in connection with extensions of credit, a credit union may
8elect to contract for and receive interest and fees and other
9charges for extensions of credit subject only to the provisions
10of this Act and rules promulgated under this Act, except that
11extensions of credit secured by residential real estate shall
12be subject to the laws applicable thereto. The rates of
13interest to be charged on loans to members shall be set by the
14board of directors of each individual credit union in
15accordance with Section 30 of this Act and such rates may be
16less than, but may not exceed, the maximum rate set forth in
17this Section. A borrower may repay his loan prior to maturity,
18in whole or in part, without penalty. The credit contract may
19provide for the payment by the member and receipt by the credit
20union of all costs and disbursements, including reasonable
21attorney's fees and collection agency charges, incurred by the
22credit union to collect or enforce the debt in the event of a
23delinquency by the member, or in the event of a breach of any
24obligation of the member under the credit contract. A
25contingency or hourly arrangement established under an
26agreement entered into by a credit union with an attorney or

 

 

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1collection agency to collect a loan of a member in default
2shall be presumed prima facie reasonable.
3    (2) Credit unions may make loans based upon the security of
4any interest or equity in real estate, subject to rules and
5regulations promulgated by the Secretary. In any contract or
6loan which is secured by a mortgage, deed of trust, or
7conveyance in the nature of a mortgage, on residential real
8estate, the interest which is computed, calculated, charged, or
9collected pursuant to such contract or loan, or pursuant to any
10regulation or rule promulgated pursuant to this Act, may not be
11computed, calculated, charged or collected for any period of
12time occurring after the date on which the total indebtedness,
13with the exception of late payment penalties, is paid in full.
14    For purposes of this subsection (2) of this Section 46, a
15prepayment shall mean the payment of the total indebtedness,
16with the exception of late payment penalties if incurred or
17charged, on any date before the date specified in the contract
18or loan agreement on which the total indebtedness shall be paid
19in full, or before the date on which all payments, if timely
20made, shall have been made. In the event of a prepayment of the
21indebtedness which is made on a date after the date on which
22interest on the indebtedness was last computed, calculated,
23charged, or collected but before the next date on which
24interest on the indebtedness was to be calculated, computed,
25charged, or collected, the lender may calculate, charge and
26collect interest on the indebtedness for the period which

 

 

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1elapsed between the date on which the prepayment is made and
2the date on which interest on the indebtedness was last
3computed, calculated, charged or collected at a rate equal to
41/360 of the annual rate for each day which so elapsed, which
5rate shall be applied to the indebtedness outstanding as of the
6date of prepayment. The lender shall refund to the borrower any
7interest charged or collected which exceeds that which the
8lender may charge or collect pursuant to the preceding
9sentence. The provisions of this amendatory Act of 1985 shall
10apply only to contracts or loans entered into on or after the
11effective date of this amendatory Act.
12    (3) Notwithstanding any other provision of this Act, a
13credit union authorized under this Act to make loans secured by
14an interest or equity in real estate may engage in making
15"reverse mortgage" loans to persons for the purpose of making
16home improvements or repairs, paying insurance premiums or
17paying real estate taxes on the homestead properties of such
18persons. If made, such loans shall be made on such terms and
19conditions as the credit union shall determine and as shall be
20consistent with the provisions of this Section and such rules
21and regulations as the Secretary shall promulgate hereunder.
22For purposes of this Section, a "reverse mortgage" loan shall
23be a loan extended on the basis of existing equity in homestead
24property and secured by a mortgage on such property. Such loans
25shall be repaid upon the sale of the property or upon the death
26of the owner or, if the property is in joint tenancy, upon the

 

 

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1death of the last surviving joint tenant who had such an
2interest in the property at the time the loan was initiated,
3provided, however, that the credit union and its member may by
4mutual agreement, establish other repayment terms. A credit
5union, in making a "reverse mortgage" loan, may add deferred
6interest to principal or otherwise provide for the charging of
7interest or premiums on such deferred interest. "Homestead"
8property, for purposes of this Section, means the domicile and
9contiguous real estate owned and occupied by the mortgagor.
10    (4) Notwithstanding any other provisions of this Act, a
11credit union authorized under this Act to make loans secured by
12an interest or equity in real property may engage in making
13revolving credit loans secured by mortgages or deeds of trust
14on such real property or by security assignments of beneficial
15interests in land trusts.
16    For purposes of this Section, "revolving credit" has the
17meaning defined in Section 4.1 of the Interest Act.
18    Any mortgage or deed of trust given to secure a revolving
19credit loan may, and when so expressed therein shall, secure
20not only the existing indebtedness but also such future
21advances, whether such advances are obligatory or to be made at
22the option of the lender, or otherwise, as are made within
23twenty years from the date thereof, to the same extent as if
24such future advances were made on the date of the execution of
25such mortgage or deed of trust, although there may be no
26advance made at the time of execution of such mortgage or other

 

 

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1instrument, and although there may be no indebtedness
2outstanding at the time any advance is made. The lien of such
3mortgage or deed of trust, as to third persons without actual
4notice thereof, shall be valid as to all such indebtedness and
5future advances form the time said mortgage or deed of trust is
6filed for record in the office of the recorder of deeds or the
7registrar of titles of the county where the real property
8described therein is located. The total amount of indebtedness
9that may be so secured may increase or decrease from time to
10time, but the total unpaid balance so secured at any one time
11shall not exceed a maximum principal amount which must be
12specified in such mortgage or deed of trust, plus interest
13thereon, and any disbursements made for the payment of taxes,
14special assessments, or insurance on said real property, with
15interest on such disbursements.
16    Any such mortgage or deed of trust shall be valid and have
17priority over all subsequent liens and encumbrances, including
18statutory liens, except taxes and assessments levied on said
19real property.
20    (4-5) For purposes of this Section, "real estate" and "real
21property" include a manufactured home as defined in subdivision
22(53) of Section 9-102 of the Uniform Commercial Code which is
23real property as defined in Section 5-35 of the Conveyance and
24Encumbrance of Manufactured Homes as Real Property and
25Severance Act.
26    (5) Compliance with federal or Illinois preemptive laws or

 

 

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1regulations governing loans made by a credit union chartered
2under this Act shall constitute compliance with this Act.
3    (6) Credit unions may make residential real estate mortgage
4loans on terms and conditions established by the United States
5Department of Agriculture through its Rural Development
6Housing and Community Facilities Program. The portion of any
7loan in excess of the appraised value of the real estate shall
8be allocable only to the guarantee fee required under the
9program.
10    (7) For a renewal, refinancing, or restructuring of an
11existing loan at the credit union that is secured by an
12interest or equity in real estate, a new appraisal of the
13collateral shall not be required when (i) the transaction
14involves an existing extension of credit at the credit union,
15no new moneys are advanced other than funds necessary to cover
16reasonable closing costs, or (ii) and there has been no obvious
17or material change in market conditions or physical aspects of
18the real estate that threatens the adequacy of the credit
19union's real estate collateral protection after the
20transaction, even with the advancement of new moneys. The
21Department reserves the right to require an appraisal under
22this subsection (7) whenever the Department believes it is
23necessary to address safety and soundness concerns.
24(Source: P.A. 97-133, eff. 1-1-12; 98-749, eff. 7-16-14;
2598-784, eff. 7-24-14; revised 10-2-14.)
 

 

 

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1    (205 ILCS 305/57.1)
2    Sec. 57.1. Services to other credit unions.
3    (a) A credit union may act as a representative of and enter
4into an agreement with credit unions or other organizations for
5the purposes purpose of:
6        (1) sharing, utilizing, renting, leasing, purchasing,
7    selling, and joint ownership of fixed assets or engaging in
8    activities and services that relate to the daily operations
9    of credit unions; and
10        (2) providing correspondent services to other credit
11    unions that the service provider credit union is authorized
12    to perform for its own members or as part of its
13    operations, including, but not limited to, loan
14    processing, loan servicing, member check cashing services,
15    disbursing share withdrawals and loan proceeds, cashing
16    and selling money orders, ACH and wire transfer services,
17    implementation and administrative support services related
18    to the use of debit cards, payroll debit cards, and other
19    prepaid debit cards and credit cards, coin and currency
20    services, performing internal audits, and automated teller
21    machine deposit services.
22(Source: P.A. 98-784, eff. 7-24-14; revised 11-26-14.)
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.