093_HB1516 LRB093 05054 JLS 07768 b 1 AN ACT relating to certain financial institutions. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Credit Union Act is amended by 5 changing Sections 12, 15, 40, 46, 51, and 59 as follows: 6 (205 ILCS 305/12) (from Ch. 17, par. 4413) 7 Sec. 12. Regulatory fees. 8 (1) A credit union regulated by the Department shall pay 9 a regulatory fee to the Department based upon its total 10 assets as shown by its Year-end Call Report at the following 11 rates: 12 TOTAL ASSETS REGULATORY FEE 13 $25,000 or less .............. $100 14 Over $25,000 and not over 15 $100,000 ..................... $100 plus $4 per $1,000 of 16 assets in excess of $25,000 17 Over $100,000 and not over 18 $200,000 ..................... $400 plus $3 per $1,000 of 19 assets in excess of $100,000 20 Over $200,000 and not over 21 $500,000 ..................... $700 plus $2 per $1,000 of 22 assets in excess of $200,000 23 Over $500,000 and not over 24 $1,000,000 ................... $1,300 plus $1.40 per $1,000 25 of assets in excess of 26 $500,000 27 Over $1,000,000 and not 28 over $5,000,000............... $2,000 plus $0.50 per 29 $1,000 of assets in 30 excess of $1,000,000 31 Over $5,000,000 and not -2- LRB093 05054 JLS 07768 b 1 over $30,000,000 ............. $4,000 plus $0.35 2 per $1,000 assets 3 in excess of $5,000,000 4 Over $30,000,000 and not 5 over $100,000,000 ............ $12,750 plus $0.30 6 per $1,000 of assets in 7 excess of $30,000,000 8 Over $100,000,000 and not 9 over $500,000,000 ............ $33,750 plus $0.15 per 10 $1,000 of assets in excess 11 of $100,000,000 12 Over $500,000,000 ............ $93,750 plus $0.05 per 13 $1,000 of assets in excess 14 of $500,000,000 15 (2) The Director shall review the regulatory fee 16 schedule in subsection (1) and the projected earnings on 17 those fees on an annual basis and adjust the fee schedule no 18 more than 5% annually if necessary to defray the estimated 19 administrative and operational expenses of the Department as 20 defined in subsection (5). The Director shall provide credit 21 unions with written notice of any adjustment made in the 22 regulatory fee schedule. 23 (3) Not later than July 1March 1of each calendar year, 24 a credit union shall pay to the Department a regulatory fee 25 for that calendar year in accordance with the regulatory fee 26 schedule in subsection (1), on the basis of assets as of the 27 Year-end Call Report of the preceding year. The regulatory 28 fee shall not be less than $100 or more than $125,000, 29 provided that the regulatory fee cap of $125,000 shall be 30 adjusted to incorporate the same percentage increase as the 31 Director makes in the regulatory fee schedule from time to 32 time under subsection (2). No regulatory fee shall be 33 collected from a credit union until it has been in operation 34 for one year. -3- LRB093 05054 JLS 07768 b 1 (4) The aggregate of all fees collected by the 2 Department under this Act shall be paid promptly after they 3 are received, accompanied by a detailed statement thereof, 4 into the State Treasury and shall be set apart in the Credit 5 Union Fund, a special fund hereby created in the State 6 treasury. The amount from time to time deposited in the 7 Credit Union Fund and shall be used to offset the ordinary 8 administrative and operational expenses of the Department 9 under this Act. All earnings received from investments of 10 funds in the Credit Union Fund shall be deposited into the 11 Credit Union Fund and may be used for the same purposes as 12 fees deposited into that Fund. 13 (5) The administrative and operational expenses for any 14 calendar year shall mean the ordinary and contingent expenses 15 for that year incidental to making the examinations provided 16 for by, and for administering, this Act, including all 17 salaries and other compensation paid for personal services 18 rendered for the State by officers or employees of the State 19 to enforce this Act; all expenditures for telephone and 20 telegraph charges, postage and postal charges, office 21 supplies and services, furniture and equipment, office space 22 and maintenance thereof, travel expenses and other necessary 23 expenses; all to the extent that such expenditures are 24 directly incidental to such examination or administration. 25 (6) When the aggregate of all fees collected by the 26 Department under this Act and all earnings thereon for any 27 calendar year exceeds 150% of the total administrative and 28 operational expenses under this Act for that year, such 29 excess shall be credited to credit unions and applied against 30 their regulatory fees for the subsequent year. The amount 31 credited to a credit union shall be in the same proportion as 32 the fee paid by such credit union for the calendar year in 33 which the excess is produced bears to the aggregate of the 34 fees collected by the Department under this Act for the same -4- LRB093 05054 JLS 07768 b 1 year. 2 (7) Examination fees for the year 2000 statutory 3 examinations paid pursuant to the examination fee schedule in 4 effect at that time shall be credited toward the regulatory 5 fee to be assessed the credit union in calendar year 2001. 6 (8) Nothing in this Act shall prohibit the General 7 Assembly from appropriating funds to the Department from the 8 General Revenue Fund for the purpose of administering this 9 Act. 10 (Source: P.A. 91-755, eff. 1-1-01; 92-293, eff. 8-9-01.) 11 (205 ILCS 305/15) (from Ch. 17, par. 4416) 12 Sec. 15. Membership defined. 13 (1) The membership of a credit union shall be limited to 14 and consist of the subscribers to the articles of 15 incorporation and such other persons within the common bond, 16 as defined in this Act and as set forth in the credit union's 17 articles of incorporation, as have been duly admitted 18 members, have paid the required entrance fee or membership 19 fee, or both, if any, have subscribed for one or more shares, 20 and have paid the initial installment thereon, and have 21 complied with such other requirements as the articles of 22 incorporation or bylaws specify. Two or more persons within 23 the common bond who have jointly subscribed for one or more 24 shares under a joint account and have complied with all 25 membership requirements may each be admitted to membership. 26 The surviving spouse of a credit union member may, within 6 27 months of the member's death, become a member of the credit 28 union by paying the required entrance fee or membership fee 29 or both, if any, by subscribing for one or more shares and 30 paying the initial installment thereon, and by complying with 31 such other requirements as the articles of incorporation or 32 bylaws specify. 33 (2) Any member may withdraw from a credit union at any -5- LRB093 05054 JLS 07768 b 1 time upon giving notice of withdrawal as required by the 2 bylaws. 3 (3) Any member may be expelled by a 2/3 vote of the 4 members present at any regular or special meeting called to 5 consider the matter, but only after an opportunity has been 6 given to the member to be heard. 7 (4) A member who has caused a loss to the credit union, 8or who hasfailed to maintain one or more shares at the 9 credit union, or violated Board policy applicable to members 10 may be expelled by a majority vote of a quorum of directors 11 if the board has adopted a policy providing for expulsion 12 under those circumstances. In maintaining and enforcing a 13 policy based on loss, the board may consider, without 14 limitation, a member's failure to pay amounts due under a 15 loan, failure to provide collected funds to cover withdrawals 16 or personal share drafts or credit union drafts where the 17 member is a remitter, or failure to pay fees or charges due 18 the credit union. If a policy is adopted by the board 19 pursuant to this subsection (4), written notice of the policy 20 and the effective date of the policy shall be mailed to each 21 member of the credit union at the member's current address 22 appearing on the records of the credit union. The policy 23 shall be mailed to members not fewer than 30 days prior to 24 the effective date of the policy. In addition, new members 25 shall be provided written notice of the policy prior to or 26 upon applying for membership. 27 (5) All or any part of the amount paid on shares of a 28 withdrawing member or expelled member with any declared 29 dividends or interest on the date of withdrawal or expulsion 30 must, after deducting all amounts due from the member to the 31 credit union, be paid to him. The credit union may require 32 not more than 60 days' written notice of intention to 33 withdraw shares, but a notice of withdrawal does not entitle 34 the member to any preferred or prior claim in the event of -6- LRB093 05054 JLS 07768 b 1 liquidation. Withdrawing or expelled members have no further 2 rights in the credit union, but are not, by withdrawal or 3 expulsion, released from any obligation they owe to the 4 credit union. 5 (6) A member who has caused a loss to the credit union 6 or has violated Board policy applicable to members may be 7 denied any or all credit union services in accordance with 8 board policy, however, members who are denied services shall 9 be allowed to maintain a share account and to vote on all 10 issues put to a vote of the membership. 11 (Source: P.A. 91-929, eff. 12-15-00.) 12 (205 ILCS 305/40) (from Ch. 17, par. 4441) 13 Sec. 40. Shares to Minors. Shares may be issued in the 14 name of a minor or in the name of a custodian under the 15 Illinois Uniform Transfers to Minors Act, as amended. If 16 shares are issued in the name of a minor, redemption of any 17 part or all of the shares by payment to the minor or upon 18 order of the minor of the amount of the shares and any 19 declared dividends releases the credit union from all 20 obligations to the minor as to the shares redeemed. Further, 21 if shares are issued in the name of a minor, the minor shall 22 be considered as being of the age of majority and having 23 contractual capacity. 24 (Source: P.A. 84-915.) 25 (205 ILCS 305/46) (from Ch. 17, par. 4447) 26 Sec. 46. Loans and interest rate. 27 (1) A credit union may make loans to its members for 28 such purpose and upon such security and terms, including 29 rates of interest, as the Credit Committee, credit manager, 30 or loan officer approves. Notwithstanding the provisions of 31 any other law in connection with extensions of credit, a 32 credit union may elect to contract for and receive interest -7- LRB093 05054 JLS 07768 b 1 and fees and other charges for extensions of credit subject 2 only to the provisions of this Act and rules promulgated 3 under this Act, except that extensions of credit secured by 4 residential real estate shall be subject to the laws 5 applicable thereto. The rates of interest to be charged on 6 loans to members shall be set by the Board of Directors of 7 each individual credit union and such rates may be less than, 8 but may not exceed, the maximum rate set forth in this 9 Section. A borrower may repay his loan prior to maturity, in 10 whole or in part, without penalty. The credit contract may 11 provide for the payment by the member and receipt by the 12 credit union of all costs and disbursements, including 13 reasonable attorney's fees and collection agency charges, 14 incurred by the credit union to collect or enforce the debt 15 in the event of a delinquency by the member, or in the event 16 of a breach of any obligation of the member under the credit 17 contract. A contingency or hourly arrangement established 18 under an agreement entered into by a credit union with an 19 attorney or collection agency to collect a loan of a member 20 in default shall be presumed prima facie reasonable. 21 (2) Credit unions may make loans based upon the security 22 of any interest or equity in real estate, subject to rules 23 and regulations promulgated by the Director. In any contract 24 or loan which is secured by a mortgage, deed of trust, or 25 conveyance in the nature of a mortgage, on residential real 26 estate, the interest which is computed, calculated, charged, 27 or collected pursuant to such contract or loan, or pursuant 28 to any regulation or rule promulgated pursuant to this Act, 29 may not be computed, calculated, charged or collected for any 30 period of time occurring after the date on which the total 31 indebtedness, with the exception of late payment penalties, 32 is paid in full. 33 For purposes of this subsection (2) of this Section 46, a 34 prepayment shall mean the payment of the total indebtedness, -8- LRB093 05054 JLS 07768 b 1 with the exception of late payment penalties if incurred or 2 charged, on any date before the date specified in the 3 contract or loan agreement on which the total indebtedness 4 shall be paid in full, or before the date on which all 5 payments, if timely made, shall have been made. In the event 6 of a prepayment of the indebtedness which is made on a date 7 after the date on which interest on the indebtedness was last 8 computed, calculated, charged, or collected but before the 9 next date on which interest on the indebtedness was to be 10 calculated, computed, charged, or collected, the lender may 11 calculate, charge and collect interest on the indebtedness 12 for the period which elapsed between the date on which the 13 prepayment is made and the date on which interest on the 14 indebtedness was last computed, calculated, charged or 15 collected at a rate equal to 1/360 of the annual rate for 16 each day which so elapsed, which rate shall be applied to the 17 indebtedness outstanding as of the date of prepayment. The 18 lender shall refund to the borrower any interest charged or 19 collected which exceeds that which the lender may charge or 20 collect pursuant to the preceding sentence. The provisions 21 of this amendatory Act of 1985 shall apply only to contracts 22 or loans entered into on or after the effective date of this 23 amendatory Act. 24 (3) Notwithstanding any other provision of this Act, a 25 credit union authorized under this Act to make loans secured 26 by an interest or equity in real estate may engage in making 27 "reverse mortgage" loans to persons for the purpose of making 28 home improvements or repairs, paying insurance premiums or 29 paying real estate taxes on the homestead properties of such 30 persons. If made, such loans shall be made on such terms and 31 conditions as the credit union shall determine and as shall 32 be consistent with the provisions of this Section and such 33 rules and regulations as the Director shall promulgate 34 hereunder. For purposes of this Section, a "reverse -9- LRB093 05054 JLS 07768 b 1 mortgage" loan shall be a loan extended on the basis of 2 existing equity in homestead property and secured by a 3 mortgage on such property. Such loans shall be repaid upon 4 the sale of the property or upon the death of the owner or, 5 if the property is in joint tenancy, upon the death of the 6 last surviving joint tenant who had such an interest in the 7 property at the time the loan was initiated, provided, 8 however, that the credit union and its member may by mutual 9 agreement, establish other repayment terms. A credit union, 10 in making a "reverse mortgage" loan, may add deferred 11 interest to principal or otherwise provide for the charging 12 of interest or premiums on such deferred interest. 13 "Homestead" property, for purposes of this Section, means the 14 domicile and contiguous real estate owned and occupied by the 15 mortgagor. The Director shall promulgate rules and 16 regulations under this Section; provided that such rules and 17 regulations need not be promulgated jointly with any other 18 administrative agency of this State. 19 (4) Notwithstanding any other provisions of this Act, a 20 credit union authorized under this Act to make loans secured 21 by an interest or equity in real property may engage in 22 making revolving credit loans secured by mortgages or deeds 23 of trust on such real property or by security assignments of 24 beneficial interests in land trusts. 25 For purposes of this Section, "revolving credit" has the 26 meaning defined in Section 4.1 of the Interest Act. 27 Any mortgage or deed of trust given to secure a revolving 28 credit loan may, and when so expressed therein shall, secure 29 not only the existing indebtedness but also such future 30 advances, whether such advances are obligatory or to be made 31 at the option of the lender, or otherwise, as are made within 32 twenty years from the date thereof, to the same extent as if 33 such future advances were made on the date of the execution 34 of such mortgage or deed of trust, although there may be no -10- LRB093 05054 JLS 07768 b 1 advance made at the time of execution of such mortgage or 2 other instrument, and although there may be no indebtedness 3 outstanding at the time any advance is made. The lien of 4 such mortgage or deed of trust, as to third persons without 5 actual notice thereof, shall be valid as to all such 6 indebtedness and future advances form the time said mortgage 7 or deed of trust is filed for record in the office of the 8 Recorder of Deeds or the Registrar of Titles of the county 9 where the real property described therein is located. The 10 total amount of indebtedness that may be so secured may 11 increase or decrease from time to time, but the total unpaid 12 balance so secured at any one time shall not exceed a maximum 13 principal amount which must be specified in such mortgage or 14 deed of trust, plus interest thereon, and any disbursements 15 made for the payment of taxes, special assessments, or 16 insurance on said real property, with interest on such 17 disbursements. 18 Any such mortgage or deed of trust shall be valid and 19 have priority over all subsequent liens and encumbrances, 20 including statutory liens, except taxes and assessments 21 levied on said real property. 22 (5) Compliance with preemptive laws or regulations 23 governing loans shall constitute compliance with the Illinois 24 Credit Union Act. 25 (Source: P.A. 90-222, eff. 7-25-97.) 26 (205 ILCS 305/51) (from Ch. 17, par. 4452) 27 Sec. 51. Other Loan Programs. 28 (1) Subject to such rules and regulations as the 29 Director may promulgate, a credit union may participate in 30 loans to credit union members jointly with other credit 31 unions, corporations, or financial institutions. An 32 originating credit union may originate loans only to its own 33 members. A participating credit union that is not the -11- LRB093 05054 JLS 07768 b 1 originating lender may participate in loans made to its own 2 members or to members of another participating credit union. 3 "Originating lender" means the participating credit union 4 with which the member contracts. A master participation 5 agreement must be properly executed, and the agreement must 6 include provisions for identifying, either through documents 7 incorporated by reference or directly in the agreement, the 8 participation loan or loans prior to their sale. 9 (2) Any credit union with assets of $500,000 or more may 10 loan to its members under the State Scholarships Law or other 11 scholarship programs which are subject to a federal or state 12 law providing 100% repayment guarantee. 13 (3) A credit union may purchase the conditional sales 14 contracts, notes and similar instruments which evidence an 15 indebtedness of its members. 16 (4) With approval of the Board of Directors, a credit 17 union may make loans, either on its own or jointly with other 18 credit unions, corporations or financial institutions, to 19 credit union organizations; provided, that the aggregate 20 amount of all such loans outstanding shall not at any time 21 exceed the greater of 3%1%of the paid-in and unimpaired 22 capital and surplus of the credit union or the amount 23 authorized for federal credit unions. 24 (Source: P.A. 92-293, eff. 8-9-01.) 25 (205 ILCS 305/59) (from Ch. 17, par. 4460) 26 Sec. 59. Investment of Funds. Funds not used in loans to 27 members may be invested, pursuant to subsection (7) of 28 Section 30 of this Act, and subject to Departmental rules and 29 regulations: 30 (1) In securities, obligations or other instruments of 31 or issued by or fully guaranteed as to principal and interest 32 by the United States of America or any agency thereof or in 33 any trust or trusts established for investing directly or -12- LRB093 05054 JLS 07768 b 1 collectively in the same; 2 (2) In obligations of any state of the United States, 3 the District of Columbia, the Commonwealth of Puerto Rico, 4 and the several territories organized by Congress, or any 5 political subdivision thereof; however, a credit union may 6 not invest more than 10% of its unimpaired capital and 7 surplus in the obligations of one issuer, exclusive of 8 general obligations of the issuer, and investments in 9 municipal securities must be limited to securities rated in 10 one of the 4 highest rating categories by a nationally 11 recognized statistical rating organization; 12 (3) In certificates of deposit or passbook type accounts 13 issued by a state or national bank, mutual savings bank or 14 savings and loan association; provided that such institutions 15 have their accounts insured by the Federal Deposit Insurance 16 Corporation or the Federal Savings and Loan Insurance 17 Corporation; but provided, further, that a credit union's 18 investment in an account in any one institution may exceed 19 the insured limit on accounts; 20 (4) In shares, classes of shares or share certificates 21 of other credit unions, including, but not limited to 22 corporate credit unions; provided that such credit unions 23 have their members' accounts insured by the NCUA or other 24 approved insurers, and that if the members' accounts are so 25 insured, a credit union's investment may exceed the insured 26 limit on accounts; 27 (5) In shares of a cooperative society organized under 28 the laws of this State or the laws of the United States in 29 the total amount not exceeding 10% of the unimpaired capital 30 and surplus of the credit union; provided that such 31 investment shall first be approved by the Department; 32 (6) In obligations of the State of Israel, or 33 obligations fully guaranteed by the State of Israel as to 34 payment of principal and interest; -13- LRB093 05054 JLS 07768 b 1 (7) In shares, stocks or obligations of other financial 2 institutions in the total amount not exceeding 5% of the 3 unimpaired capital and surplus of the credit union; 4 (8) In federal funds and bankers' acceptances; 5 (9) In shares or stocks of Credit Union Service 6 Organizations in the total amount not exceeding the greater 7 of 3%1%of the unimpaired capital and surplus of the credit 8 union or the amount authorized for federal credit unions. 9 As used in this Section, "political subdivision" 10 includes, but is not limited to, counties, townships, cities, 11 villages, incorporated towns, school districts, educational 12 service regions, special road districts, public water supply 13 districts, fire protection districts, drainage districts, 14 levee districts, sewer districts, housing authorities, park 15 districts, and any agency, corporation, or instrumentality of 16 a state or its political subdivisions, whether now or 17 hereafter created and whether herein specifically mentioned 18 or not. 19 (Source: P.A. 92-293, eff. 8-9-01.) 20 Section 99. Effective date. This Act takes effect upon 21 becoming law.