HB5755 EngrossedLRB099 20532 SMS 45074 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 4, 22, 33, 46, and 52 and by adding Section
664.7 as follows:
 
7    (205 ILCS 305/4)  (from Ch. 17, par. 4405)
8    Sec. 4. Amendments to articles of incorporation and bylaws.
9Amendments to the articles of incorporation or may be made by
10the members at any regular or special meeting, if the proposed
11amendment is set forth in the call of the meeting and is
12approved by at least two thirds of the members present at a
13meeting at which a quorum is present. Amendments to the bylaws
14may be made by the members at any regular or special meeting,
15if the proposed amendment is set forth in the call for the
16meeting and is approved by a majority of the members present at
17a meeting at which a quorum is present. Amendments to the
18articles of incorporation or bylaws may also be made by the
19board of directors at any regular or special meeting, if the
20proposed amendment is set forth in the call of the meeting and
21approved by at least two thirds of the directors present at a
22meeting at which a quorum is present. A report shall be made to
23the members at the next annual meeting of any amendments to the

 

 

HB5755 Engrossed- 2 -LRB099 20532 SMS 45074 b

1articles of incorporation or bylaws adopted by the board of
2directors. Any amendment to the articles of incorporation or
3bylaws of a credit union shall be approved by the Secretary
4before the amendment is effective. The Secretary shall approve
5or disapprove of any amendments within 60 days after submission
6to him or her.
7(Source: P.A. 97-133, eff. 1-1-12.)
 
8    (205 ILCS 305/22)  (from Ch. 17, par. 4423)
9    Sec. 22. Vacancies.
10    (a) The board of directors shall, by appointment from among
11the credit union members, fill any vacancies occurring on the
12board for the remainder of the director's unexpired term or
13until a successor is elected and qualified following completion
14of the term filled by the board. In the event the vacancy
15reduces the number of directors serving on the board to less
16than the statutory minimum set forth in subsection (1) of
17Section 20, then the board shall fill the vacancy no later than
18the next annual meeting of members or 90 days after the vacancy
19occurred, whichever occurs first. Upon written application to
20the Secretary, the board may request additional time in which
21to fill the vacancy. The application may be approved by the
22Secretary in his or her discretion. The board shall, by
23appointment from among the credit union members, fill vacancies
24in the membership committee, credit committee, or credit
25manager if no credit committee has been appointed, and

 

 

HB5755 Engrossed- 3 -LRB099 20532 SMS 45074 b

1supervisory committees.
2    (b) An office may be declared vacant by the board when a
3director or a committee member dies, resigns from the board or
4committee, is removed from the board or committee, is no longer
5a member of the credit union, is the owner of less than one
6share of the credit union, or fails to attend three consecutive
7regular meetings of the board without good cause.
8(Source: P.A. 97-133, eff. 1-1-12.)
 
9    (205 ILCS 305/33)  (from Ch. 17, par. 4434)
10    Sec. 33. Credit manager.
11    (1) The credit committee, board of directors, or chief
12management official may or, if no credit committee has been
13appointed, the board of directors or chief management official
14shall appoint a credit manager who shall be empowered to
15approve or disapprove loans and lines of credit under
16conditions prescribed by the board of directors. The credit
17committee or credit manager may appoint one or more loan
18officers with the power to approve loans and lines of credit,
19subject to such limitations or conditions as may be prescribed
20by the board of directors. The credit manager and any loan
21officers appointed by the credit committee or the credit
22manager shall keep written records of all transactions and
23shall report, in writing, to the credit committee if a credit
24committee has been appointed, otherwise to the directors at
25each board meeting.

 

 

HB5755 Engrossed- 4 -LRB099 20532 SMS 45074 b

1    (2) Applications for loans or lines of credit not approved
2by a loan officer shall be reviewed and acted upon by the
3credit committee or credit manager.
4    (3) The loan officers must keep written records of all
5loans or lines of credit granted or refused and any other
6transactions and submit a report to the credit committee or
7credit manager at least once each month.
8(Source: P.A. 97-133, eff. 1-1-12.)
 
9    (205 ILCS 305/46)  (from Ch. 17, par. 4447)
10    Sec. 46. Loans and interest rate.
11    (1) A credit union may make loans to its members for such
12purpose and upon such security and terms, including rates of
13interest, as the credit committee, credit manager, or loan
14officer approves. Notwithstanding the provisions of any other
15law in connection with extensions of credit, a credit union may
16elect to contract for and receive interest and fees and other
17charges for extensions of credit subject only to the provisions
18of this Act and rules promulgated under this Act, except that
19extensions of credit secured by residential real estate shall
20be subject to the laws applicable thereto. The rates of
21interest to be charged on loans to members shall be set by the
22board of directors of each individual credit union in
23accordance with Section 30 of this Act and such rates may be
24less than, but may not exceed, the maximum rate set forth in
25this Section. A borrower may repay his loan prior to maturity,

 

 

HB5755 Engrossed- 5 -LRB099 20532 SMS 45074 b

1in whole or in part, without penalty. A prepayment penalty does
2not include a waived, bona fide third-party charge that the
3credit union imposes if the borrower prepays all of the
4transaction's principal sooner than 36 months after
5consummation of a closed-end credit transaction, a waived, bona
6fide third-party charge that the credit union imposes if the
7borrower terminates an open-end credit plan sooner than 36
8months after account opening, or a yield maintenance fee
9imposed on a business loan transaction. The credit contract may
10provide for the payment by the member and receipt by the credit
11union of all costs and disbursements, including reasonable
12attorney's fees and collection agency charges, incurred by the
13credit union to collect or enforce the debt in the event of a
14delinquency by the member, or in the event of a breach of any
15obligation of the member under the credit contract. A
16contingency or hourly arrangement established under an
17agreement entered into by a credit union with an attorney or
18collection agency to collect a loan of a member in default
19shall be presumed prima facie reasonable.
20    (2) Credit unions may make loans based upon the security of
21any interest or equity in real estate, subject to rules and
22regulations promulgated by the Secretary. In any contract or
23loan which is secured by a mortgage, deed of trust, or
24conveyance in the nature of a mortgage, on residential real
25estate, the interest which is computed, calculated, charged, or
26collected pursuant to such contract or loan, or pursuant to any

 

 

HB5755 Engrossed- 6 -LRB099 20532 SMS 45074 b

1regulation or rule promulgated pursuant to this Act, may not be
2computed, calculated, charged or collected for any period of
3time occurring after the date on which the total indebtedness,
4with the exception of late payment penalties, is paid in full.
5    For purposes of this subsection (2) of this Section 46, a
6prepayment shall mean the payment of the total indebtedness,
7with the exception of late payment penalties if incurred or
8charged, on any date before the date specified in the contract
9or loan agreement on which the total indebtedness shall be paid
10in full, or before the date on which all payments, if timely
11made, shall have been made. In the event of a prepayment of the
12indebtedness which is made on a date after the date on which
13interest on the indebtedness was last computed, calculated,
14charged, or collected but before the next date on which
15interest on the indebtedness was to be calculated, computed,
16charged, or collected, the lender may calculate, charge and
17collect interest on the indebtedness for the period which
18elapsed between the date on which the prepayment is made and
19the date on which interest on the indebtedness was last
20computed, calculated, charged or collected at a rate equal to
211/360 of the annual rate for each day which so elapsed, which
22rate shall be applied to the indebtedness outstanding as of the
23date of prepayment. The lender shall refund to the borrower any
24interest charged or collected which exceeds that which the
25lender may charge or collect pursuant to the preceding
26sentence. The provisions of this amendatory Act of 1985 shall

 

 

HB5755 Engrossed- 7 -LRB099 20532 SMS 45074 b

1apply only to contracts or loans entered into on or after the
2effective date of this amendatory Act.
3    (3) (Blank).
4    (4) Notwithstanding any other provisions of this Act, a
5credit union authorized under this Act to make loans secured by
6an interest or equity in real property may engage in making
7revolving credit loans secured by mortgages or deeds of trust
8on such real property or by security assignments of beneficial
9interests in land trusts.
10    For purposes of this Section, "revolving credit" has the
11meaning defined in Section 4.1 of the Interest Act.
12    Any mortgage or deed of trust given to secure a revolving
13credit loan may, and when so expressed therein shall, secure
14not only the existing indebtedness but also such future
15advances, whether such advances are obligatory or to be made at
16the option of the lender, or otherwise, as are made within
17twenty years from the date thereof, to the same extent as if
18such future advances were made on the date of the execution of
19such mortgage or deed of trust, although there may be no
20advance made at the time of execution of such mortgage or other
21instrument, and although there may be no indebtedness
22outstanding at the time any advance is made. The lien of such
23mortgage or deed of trust, as to third persons without actual
24notice thereof, shall be valid as to all such indebtedness and
25future advances form the time said mortgage or deed of trust is
26filed for record in the office of the recorder of deeds or the

 

 

HB5755 Engrossed- 8 -LRB099 20532 SMS 45074 b

1registrar of titles of the county where the real property
2described therein is located. The total amount of indebtedness
3that may be so secured may increase or decrease from time to
4time, but the total unpaid balance so secured at any one time
5shall not exceed a maximum principal amount which must be
6specified in such mortgage or deed of trust, plus interest
7thereon, and any disbursements made for the payment of taxes,
8special assessments, or insurance on said real property, with
9interest on such disbursements.
10    Any such mortgage or deed of trust shall be valid and have
11priority over all subsequent liens and encumbrances, including
12statutory liens, except taxes and assessments levied on said
13real property.
14    (4-5) For purposes of this Section, "real estate" and "real
15property" include a manufactured home as defined in subdivision
16(53) of Section 9-102 of the Uniform Commercial Code which is
17real property as defined in Section 5-35 of the Conveyance and
18Encumbrance of Manufactured Homes as Real Property and
19Severance Act.
20    (5) Compliance with federal or Illinois preemptive laws or
21regulations governing loans made by a credit union chartered
22under this Act shall constitute compliance with this Act.
23    (6) Credit unions may make residential real estate mortgage
24loans on terms and conditions established by the United States
25Department of Agriculture through its Rural Development
26Housing and Community Facilities Program. The portion of any

 

 

HB5755 Engrossed- 9 -LRB099 20532 SMS 45074 b

1loan in excess of the appraised value of the real estate shall
2be allocable only to the guarantee fee required under the
3program.
4    (7) For a renewal, refinancing, or restructuring of an
5existing loan at the credit union that is secured by an
6interest or equity in real estate, a new appraisal of the
7collateral shall not be required when (i) no new moneys are
8advanced other than funds necessary to cover reasonable closing
9costs, or (ii) there has been no obvious or material change in
10market conditions or physical aspects of the real estate that
11threatens the adequacy of the credit union's real estate
12collateral protection after the transaction, even with the
13advancement of new moneys. The Department reserves the right to
14require an appraisal under this subsection (7) whenever the
15Department believes it is necessary to address safety and
16soundness concerns.
17(Source: P.A. 98-749, eff. 7-16-14; 98-784, eff. 7-24-14;
1899-78, eff. 7-20-15; 99-149, eff. 1-1-16; 99-331, eff. 1-1-16;
19revised 10-16-15.)
 
20    (205 ILCS 305/52)  (from Ch. 17, par. 4453)
21    Sec. 52. Loans to directors, officers, credit committee,
22credit manager, and supervisory committee members. A credit
23union may make loans to its directors, officers, credit
24committee members, credit manager, and supervisory committee
25members, provided that the loan complies with all lawful

 

 

HB5755 Engrossed- 10 -LRB099 20532 SMS 45074 b

1requirements under this Act with respect to loans to other
2borrowers. No loan may be made to or cosigned by any director,
3officer, credit committee member, credit manager if no credit
4committee has been appointed, or supervisory committee member
5which would cause the aggregate amount of all loans then
6outstanding to or cosigned by all directors, officers, credit
7committee members, credit manager if no credit committee has
8been appointed, or supervisory committee members to exceed 20%
9of the unimpaired capital and surplus of the credit union.
10(Source: P.A. 97-133, eff. 1-1-12.)
 
11    (205 ILCS 305/64.7 new)
12    Sec. 64.7. Network credit unions.
13    (a) Two or more credit unions merging pursuant to Section
1463 of this Act may elect to request a network credit union
15designation for the surviving credit union from the Secretary.
16The request shall be set forth in the plan of merger and
17certificate of merger executed by the credit unions and
18submitted to the Secretary pursuant to subsection (4) of
19Section 63. The Secretary's approval of a certificate of merger
20containing a network credit union designation request shall
21constitute approval of the use of the network designation as a
22brand or other identifier of the surviving credit union. If the
23surviving credit union desires to include the network
24designation in its legal name, make any other change to its
25legal name, or both, it shall proceed with an amendment to the

 

 

HB5755 Engrossed- 11 -LRB099 20532 SMS 45074 b

1articles of incorporation and bylaws of the surviving credit
2union pursuant to Section 4 of this Act.
3    (b) A network credit union is a cooperative business
4structure comprised of 2 or more merging credit unions with a
5collective goal of efficiently serving their combined
6membership and gaining economies of scale through common
7vision, strategy and initiative. The merging credit unions
8shall be identified as divisional credit unions, branches, or
9units of the network credit union or by other descriptive
10references that ensure the members understand they are dealing
11with one credit union rather than multiple credit unions. Each
12divisional credit union shall have its own advisory board of
13directors and chief management official to assist in
14maintaining and leveraging its respective local identity for
15the benefit of the surviving credit union. The divisional
16credit union advisory boards shall be appointed by the network
17credit union board of directors. Each divisional credit union's
18board of directors shall appoint its divisional credit union
19chief management official and may also appoint one of its
20directors to serve on the network credit union's nominating
21committee.
22    (c) The network credit union is the surviving legal entity
23in the merger and supervision, examination, audit, reporting,
24governance, and management shall be conducted or performed at
25the network credit union level. All share insurance, safety and
26soundness, and statutory and regulatory requirements and

 

 

HB5755 Engrossed- 12 -LRB099 20532 SMS 45074 b

1limitations shall be evaluated at the network credit union
2level.
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.