Public Act 099-0614
 
HB5755 EnrolledLRB099 20532 SMS 45074 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Credit Union Act is amended by
changing Sections 4, 22, 33, 46, and 52 and by adding Section
64.7 as follows:
 
    (205 ILCS 305/4)  (from Ch. 17, par. 4405)
    Sec. 4. Amendments to articles of incorporation and bylaws.
Amendments to the articles of incorporation or may be made by
the members at any regular or special meeting, if the proposed
amendment is set forth in the call of the meeting and is
approved by at least two thirds of the members present at a
meeting at which a quorum is present. Amendments to the bylaws
may be made by the members at any regular or special meeting,
if the proposed amendment is set forth in the call for the
meeting and is approved by a majority of the members present at
a meeting at which a quorum is present. Amendments to the
articles of incorporation or bylaws may also be made by the
board of directors at any regular or special meeting, if the
proposed amendment is set forth in the call of the meeting and
approved by at least two thirds of the directors present at a
meeting at which a quorum is present. A report shall be made to
the members at the next annual meeting of any amendments to the
articles of incorporation or bylaws adopted by the board of
directors. Any amendment to the articles of incorporation or
bylaws of a credit union shall be approved by the Secretary
before the amendment is effective. The Secretary shall approve
or disapprove of any amendments within 60 days after submission
to him or her.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/22)  (from Ch. 17, par. 4423)
    Sec. 22. Vacancies.
    (a) The board of directors shall, by appointment from among
the credit union members, fill any vacancies occurring on the
board for the remainder of the director's unexpired term or
until a successor is elected and qualified following completion
of the term filled by the board. In the event the vacancy
reduces the number of directors serving on the board to less
than the statutory minimum set forth in subsection (1) of
Section 20, then the board shall fill the vacancy no later than
the next annual meeting of members or 90 days after the vacancy
occurred, whichever occurs first. Upon written application to
the Secretary, the board may request additional time in which
to fill the vacancy. The application may be approved by the
Secretary in his or her discretion. The board shall, by
appointment from among the credit union members, fill vacancies
in the membership committee, credit committee, or credit
manager if no credit committee has been appointed, and
supervisory committees.
    (b) An office may be declared vacant by the board when a
director or a committee member dies, resigns from the board or
committee, is removed from the board or committee, is no longer
a member of the credit union, is the owner of less than one
share of the credit union, or fails to attend three consecutive
regular meetings of the board without good cause.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/33)  (from Ch. 17, par. 4434)
    Sec. 33. Credit manager.
    (1) The credit committee, board of directors, or chief
management official may or, if no credit committee has been
appointed, the board of directors or chief management official
shall appoint a credit manager who shall be empowered to
approve or disapprove loans and lines of credit under
conditions prescribed by the board of directors. The credit
committee or credit manager may appoint one or more loan
officers with the power to approve loans and lines of credit,
subject to such limitations or conditions as may be prescribed
by the board of directors. The credit manager and any loan
officers appointed by the credit committee or the credit
manager shall keep written records of all transactions and
shall report, in writing, to the credit committee if a credit
committee has been appointed, otherwise to the directors at
each board meeting.
    (2) Applications for loans or lines of credit not approved
by a loan officer shall be reviewed and acted upon by the
credit committee or credit manager.
    (3) The loan officers must keep written records of all
loans or lines of credit granted or refused and any other
transactions and submit a report to the credit committee or
credit manager at least once each month.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/46)  (from Ch. 17, par. 4447)
    Sec. 46. Loans and interest rate.
    (1) A credit union may make loans to its members for such
purpose and upon such security and terms, including rates of
interest, as the credit committee, credit manager, or loan
officer approves. Notwithstanding the provisions of any other
law in connection with extensions of credit, a credit union may
elect to contract for and receive interest and fees and other
charges for extensions of credit subject only to the provisions
of this Act and rules promulgated under this Act, except that
extensions of credit secured by residential real estate shall
be subject to the laws applicable thereto. The rates of
interest to be charged on loans to members shall be set by the
board of directors of each individual credit union in
accordance with Section 30 of this Act and such rates may be
less than, but may not exceed, the maximum rate set forth in
this Section. A borrower may repay his loan prior to maturity,
in whole or in part, without penalty. A prepayment penalty does
not include a waived, bona fide third-party charge that the
credit union imposes if the borrower prepays all of the
transaction's principal sooner than 36 months after
consummation of a closed-end credit transaction, a waived, bona
fide third-party charge that the credit union imposes if the
borrower terminates an open-end credit plan sooner than 36
months after account opening, or a yield maintenance fee
imposed on a business loan transaction. The credit contract may
provide for the payment by the member and receipt by the credit
union of all costs and disbursements, including reasonable
attorney's fees and collection agency charges, incurred by the
credit union to collect or enforce the debt in the event of a
delinquency by the member, or in the event of a breach of any
obligation of the member under the credit contract. A
contingency or hourly arrangement established under an
agreement entered into by a credit union with an attorney or
collection agency to collect a loan of a member in default
shall be presumed prima facie reasonable.
    (2) Credit unions may make loans based upon the security of
any interest or equity in real estate, subject to rules and
regulations promulgated by the Secretary. In any contract or
loan which is secured by a mortgage, deed of trust, or
conveyance in the nature of a mortgage, on residential real
estate, the interest which is computed, calculated, charged, or
collected pursuant to such contract or loan, or pursuant to any
regulation or rule promulgated pursuant to this Act, may not be
computed, calculated, charged or collected for any period of
time occurring after the date on which the total indebtedness,
with the exception of late payment penalties, is paid in full.
    For purposes of this subsection (2) of this Section 46, a
prepayment shall mean the payment of the total indebtedness,
with the exception of late payment penalties if incurred or
charged, on any date before the date specified in the contract
or loan agreement on which the total indebtedness shall be paid
in full, or before the date on which all payments, if timely
made, shall have been made. In the event of a prepayment of the
indebtedness which is made on a date after the date on which
interest on the indebtedness was last computed, calculated,
charged, or collected but before the next date on which
interest on the indebtedness was to be calculated, computed,
charged, or collected, the lender may calculate, charge and
collect interest on the indebtedness for the period which
elapsed between the date on which the prepayment is made and
the date on which interest on the indebtedness was last
computed, calculated, charged or collected at a rate equal to
1/360 of the annual rate for each day which so elapsed, which
rate shall be applied to the indebtedness outstanding as of the
date of prepayment. The lender shall refund to the borrower any
interest charged or collected which exceeds that which the
lender may charge or collect pursuant to the preceding
sentence. The provisions of this amendatory Act of 1985 shall
apply only to contracts or loans entered into on or after the
effective date of this amendatory Act.
    (3) (Blank).
    (4) Notwithstanding any other provisions of this Act, a
credit union authorized under this Act to make loans secured by
an interest or equity in real property may engage in making
revolving credit loans secured by mortgages or deeds of trust
on such real property or by security assignments of beneficial
interests in land trusts.
    For purposes of this Section, "revolving credit" has the
meaning defined in Section 4.1 of the Interest Act.
    Any mortgage or deed of trust given to secure a revolving
credit loan may, and when so expressed therein shall, secure
not only the existing indebtedness but also such future
advances, whether such advances are obligatory or to be made at
the option of the lender, or otherwise, as are made within
twenty years from the date thereof, to the same extent as if
such future advances were made on the date of the execution of
such mortgage or deed of trust, although there may be no
advance made at the time of execution of such mortgage or other
instrument, and although there may be no indebtedness
outstanding at the time any advance is made. The lien of such
mortgage or deed of trust, as to third persons without actual
notice thereof, shall be valid as to all such indebtedness and
future advances form the time said mortgage or deed of trust is
filed for record in the office of the recorder of deeds or the
registrar of titles of the county where the real property
described therein is located. The total amount of indebtedness
that may be so secured may increase or decrease from time to
time, but the total unpaid balance so secured at any one time
shall not exceed a maximum principal amount which must be
specified in such mortgage or deed of trust, plus interest
thereon, and any disbursements made for the payment of taxes,
special assessments, or insurance on said real property, with
interest on such disbursements.
    Any such mortgage or deed of trust shall be valid and have
priority over all subsequent liens and encumbrances, including
statutory liens, except taxes and assessments levied on said
real property.
    (4-5) For purposes of this Section, "real estate" and "real
property" include a manufactured home as defined in subdivision
(53) of Section 9-102 of the Uniform Commercial Code which is
real property as defined in Section 5-35 of the Conveyance and
Encumbrance of Manufactured Homes as Real Property and
Severance Act.
    (5) Compliance with federal or Illinois preemptive laws or
regulations governing loans made by a credit union chartered
under this Act shall constitute compliance with this Act.
    (6) Credit unions may make residential real estate mortgage
loans on terms and conditions established by the United States
Department of Agriculture through its Rural Development
Housing and Community Facilities Program. The portion of any
loan in excess of the appraised value of the real estate shall
be allocable only to the guarantee fee required under the
program.
    (7) For a renewal, refinancing, or restructuring of an
existing loan at the credit union that is secured by an
interest or equity in real estate, a new appraisal of the
collateral shall not be required when (i) no new moneys are
advanced other than funds necessary to cover reasonable closing
costs, or (ii) there has been no obvious or material change in
market conditions or physical aspects of the real estate that
threatens the adequacy of the credit union's real estate
collateral protection after the transaction, even with the
advancement of new moneys. The Department reserves the right to
require an appraisal under this subsection (7) whenever the
Department believes it is necessary to address safety and
soundness concerns.
(Source: P.A. 98-749, eff. 7-16-14; 98-784, eff. 7-24-14;
99-78, eff. 7-20-15; 99-149, eff. 1-1-16; 99-331, eff. 1-1-16;
revised 10-16-15.)
 
    (205 ILCS 305/52)  (from Ch. 17, par. 4453)
    Sec. 52. Loans to directors, officers, credit committee,
credit manager, and supervisory committee members. A credit
union may make loans to its directors, officers, credit
committee members, credit manager, and supervisory committee
members, provided that the loan complies with all lawful
requirements under this Act with respect to loans to other
borrowers. No loan may be made to or cosigned by any director,
officer, credit committee member, credit manager if no credit
committee has been appointed, or supervisory committee member
which would cause the aggregate amount of all loans then
outstanding to or cosigned by all directors, officers, credit
committee members, credit manager if no credit committee has
been appointed, or supervisory committee members to exceed 20%
of the unimpaired capital and surplus of the credit union.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/64.7 new)
    Sec. 64.7. Network credit unions.
    (a) Two or more credit unions merging pursuant to Section
63 of this Act may elect to request a network credit union
designation for the surviving credit union from the Secretary.
The request shall be set forth in the plan of merger and
certificate of merger executed by the credit unions and
submitted to the Secretary pursuant to subsection (4) of
Section 63. The Secretary's approval of a certificate of merger
containing a network credit union designation request shall
constitute approval of the use of the network designation as a
brand or other identifier of the surviving credit union. If the
surviving credit union desires to include the network
designation in its legal name, make any other change to its
legal name, or both, it shall proceed with an amendment to the
articles of incorporation and bylaws of the surviving credit
union pursuant to Section 4 of this Act.
    (b) A network credit union is a cooperative business
structure comprised of 2 or more merging credit unions with a
collective goal of efficiently serving their combined
membership and gaining economies of scale through common
vision, strategy and initiative. The merging credit unions
shall be identified as divisional credit unions, branches, or
units of the network credit union or by other descriptive
references that ensure the members understand they are dealing
with one credit union rather than multiple credit unions. Each
divisional credit union shall have its own advisory board of
directors and chief management official to assist in
maintaining and leveraging its respective local identity for
the benefit of the surviving credit union. The divisional
credit union advisory boards shall be appointed by the network
credit union board of directors. Each divisional credit union's
board of directors shall appoint its divisional credit union
chief management official and may also appoint one of its
directors to serve on the network credit union's nominating
committee.
    (c) The network credit union is the surviving legal entity
in the merger and supervision, examination, audit, reporting,
governance, and management shall be conducted or performed at
the network credit union level. All share insurance, safety and
soundness, and statutory and regulatory requirements and
limitations shall be evaluated at the network credit union
level.
 
    Section 99. Effective date. This Act takes effect upon
becoming law.