Illinois General Assembly - Full Text of SB1440
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Full Text of SB1440  99th General Assembly




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1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Reverse Mortgage Act.
6    Section 5. General definitions. As used in this Act, unless
7the context otherwise requires:
8    "Borrower" means a natural person who seeks or obtains a
9reverse mortgage.
10    "Business day" means any calendar day except Saturday,
11Sunday, or a State or federal holiday.
12    "Homestead property" means the domicile and contiguous
13real estate owned and occupied by the borrower. "Homestead
14property" includes a manufactured home as defined in
15subdivision (53) of Section 9-102 of the Uniform Commercial
16Code that is real property under Section 5-35 of the Conveyance
17and Encumbrance of Manufactured Homes as Real Property and
18Severance Act.
19    "Lender" means a natural or artificial person who
20transfers, deals in, offers, or makes a reverse mortgage.
21"Lender" includes, but is not limited to, creditors and brokers
22who transfer, deal in, offer, or make reverse mortgages.
23"Lender" does not include purchasers, assignees, or subsequent



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1holders of reverse mortgages.
2    "Real property" includes a manufactured home as defined in
3subdivision (53) of Section 9-102 of the Uniform Commercial
4Code that is real property under Section 5-35 of the Conveyance
5and Encumbrance of Manufactured Homes as Real Property and
6Severance Act.
7    "Reverse mortgage" means a non-recourse loan, secured by
8real property or a homestead property, that complies with all
9of the following:
10        (1) Provides cash advances to a borrower for the
11    purchase of the home or based on the equity in a borrower's
12    owner-occupied principal residence, provided that it is a
13    residence with not more than 4 units.
14        (2) Requires no payment of principal or interest until
15    the entire loan becomes due and payable.
16    Section 10. Reverse mortgages.
17    (a) Reverse mortgage loans shall be subject to all of the
18following provisions:
19        (1) Payment, in whole or in part, shall be permitted
20    without penalty at any time during the term of the
21    mortgage.
22        (2) A reverse mortgage may provide for an interest rate
23    that is fixed or adjustable and may provide for interest
24    that is contingent on appreciation in the value of the
25    property.



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1        (3) If a reverse mortgage provides for periodic
2    advances to a borrower, the advances may not be reduced in
3    amount or number based on any adjustment in the interest
4    rate.
5        (4) A reverse mortgage may be subject to any additional
6    terms and conditions imposed by a lender that are required
7    under the provisions of the federal Housing and Community
8    Development Act of 1987 to enable the lender to obtain
9    federal government insurance on the mortgage if a loan is
10    to be insured under that Act.
11    (b) The repayment obligation under a reverse mortgage is
12subject to all of the following:
13        (1) Temporary absences from the home not exceeding 60
14    consecutive days shall not cause the mortgage to become due
15    and payable.
16        (2) Temporary absences from the home exceeding 60 days,
17    but not exceeding one year, shall not cause the mortgage to
18    become due and payable, provided that the borrower has
19    taken action that secures the home in a manner satisfactory
20    to the lender.
21    (c) A reverse mortgage shall become due and payable upon
22the occurrence of any of the following events, unless the
23maturity date has been deferred under the Federal Housing
24Administration's Home Equity Conversion Mortgage Program:
25        (1) The property securing the loan is sold.
26        (2) All borrowers cease to occupy the home as a



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1    principal residence.
2        (3) A fixed maturity date agreed to by the lender and
3    the borrower is reached.
4        (4) Default by the borrower in the performance of its
5    obligations under the loan agreement.
6        (5) The death of the borrower or, for homestead
7    properties in joint tenancy, the death of the last
8    surviving joint tenant who had an interest in the property
9    at the time the loan was initiated.
10    Section 15. Reverse mortgage disclosures.
11    (a) The Office of the Attorney General shall develop the
12content and format of an educational document providing
13independent consumer information regarding reverse mortgages,
14potential alternatives to reverse mortgages, and the
15availability of independent counseling services, including
16services provided by nonprofit agencies certified by the
17federal government to provide required counseling for reverse
18mortgages insured by the U.S. Federal Government. The document
19shall also include a statement that the terms of a reverse
20mortgage may adversely affect the applicant's eligibility to
21obtain a tax deferral under the Senior Citizens Real Estate Tax
22Deferral Act. The document shall be updated and revised as
23often as deemed necessary by the Office of the Attorney
25    (b) Lenders are required to provide each borrower a



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1document regarding the availability of counseling services
2that shall be in at least 12-point font, containing contact
3information (including agency name, address, telephone number,
4and, if applicable, website) for agencies approved by the U.S.
5Department of Housing and Urban Development (HUD) to conduct
6reverse mortgage counseling. The agencies included on the list
7shall be in accordance with requirements for the Federal
8Housing Administration's Home Equity Conversion Mortgage
9Program. This document shall contain the following statement:
10    "IMPORTANT NOTICE: Under Illinois law, reverse mortgages
11are non-recourse loans secured by real or homestead property.
12Reverse mortgages insured by the U.S. Federal Government, known
13as Home Equity Conversion Mortgages or HECM loans, require
14people considering reverse mortgages to get counseling prior to
15submitting a completed application for the loan from an agency
16approved by the U.S. Department of Housing and Urban
17Development (HUD) to conduct reverse mortgage counseling.
18    The purpose of the counseling is to help the prospective
19borrower understand the financial implications, alternatives
20to securing a reverse mortgage, borrower obligations, costs of
21obtaining the loan, repayment conditions, and other issues.
22Counseling can also be a benefit to people considering reverse
23mortgages not insured by the federal government. There are
24advantages to receiving this counseling in person, as this
25method allows for greater participation by the prospective
26borrower, and also allows the counselor to more accurately



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1determine the prospective borrower's understanding of the
2program. However, counseling can also be conducted over the
4    In accordance with federal requirements, Illinois State
5law requires reverse mortgage lenders to provide potential
6reverse mortgage borrowers with a list, including contact
7information, of agencies that are approved by HUD to conduct
8reverse mortgage counseling. Contact information for
9additional approved counseling agencies is available from HUD
10or your lender.".
11    (c) At the time of the initial inquiry regarding a reverse
12mortgage or, if not practically feasible, after the borrower
13makes a request to apply for a reverse mortgage, a lender shall
14provide to the borrower the documents described in subsections
15(a) and (b) of this Section.
16    Section 20. Reverse mortgages cooling-off period.
17    (a) Any written commitment provided by the lender to the
18borrower must contain the material terms and conditions of the
19reverse mortgage. That commitment may be subject to a
20satisfactory appraisal and the borrower meeting standard
21closing conditions.
22    (b) A borrower shall not be bound for 3 full business days
23after the borrower's acceptance, in writing, of a lender's
24written commitment to make a reverse mortgage loan and may not
25be required to close or proceed with the loan during that time



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1period. A borrower may not waive the provisions of this
2subsection (b).
3    (c) At the time of making a written commitment, the lender
4shall provide the borrower a separate document in at least
512-point font that contains the following statement:
7State law requires a 3-day cooling-off period for reverse
8mortgage loans, during which time a potential borrower cannot
9be required to close or proceed with the loan. The purpose of
10this requirement is to provide potential borrowers with 3
11business days to consider their decision whether to secure a
12reverse mortgage or not. Potential borrowers may want to seek
13additional information from a reverse mortgage counselor
14during this 3-day period. The 3-day cooling-off period cannot
15be waived.".
16    Section 25. Reverse mortgages; restriction on
17cross-selling. No lender may:
18        (1) require the purchase of an annuity, investment,
19    life insurance, or long-term care insurance product as a
20    condition of obtaining a reverse mortgage loan; however,
21    nothing in this paragraph shall preclude a lender from
22    requiring the borrower to purchase property and casualty
23    insurance, title insurance, flood insurance, or other
24    products meant to insure or protect the value of the home
25    or the lender's lien and that are customary for residential



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1    mortgage or reverse mortgage transactions on the
2    borrower's residence securing the reverse mortgage loan;
3        (2) enter into any agreement to make a reverse mortgage
4    loan that obligates the borrower to purchase an annuity,
5    investment, life insurance, or long-term care insurance
6    product;
7        (3) offer an annuity to the borrower before the closing
8    of the reverse mortgage or before the expiration of the
9    right of the borrower to rescind the reverse mortgage
10    agreement;
11        (4) refer the borrower to anyone for the purchase of an
12    annuity before the closing of the reverse mortgage or
13    before the expiration of the right of the borrower to
14    rescind the reverse mortgage agreement; or
15        (5) provide marketing information or annuity sales
16    leads to anyone regarding the prospective borrower or
17    borrower before the closing of the reverse mortgage or
18    before the expiration of the right of the borrower to
19    rescind the reverse mortgage loan.
20    Section 30. Reverse mortgages; restriction on distribution
21of loan proceeds. No person, other than a borrower's spouse or
22partner, who directly or indirectly facilitates, processes,
23negotiates, assists, encourages, arranges, or otherwise
24induces consumers to take out a reverse mortgage with a lender
25may receive any portion of the loan proceeds for any service or



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1product, including for services that fall under the Home Repair
2and Remodeling Act, other than that for bona fide fees for
3origination of the loan. This Section shall not prohibit
4disbursements of loan proceeds in compliance with guidelines,
5including uses defined as mandatory obligations, under the
6Federal Housing Administration's Home Equity Conversion
7Mortgage Program, nor shall it prohibit a borrower from using
8the loan proceeds to purchase products or services from a
9lender that is a financial institution in the ordinary course
10of the financial institution's business.
11    Section 35. Reverse mortgages; certification requirements.
12    (a) No reverse mortgage commitment may be made unless all
13lenders involved in brokering and making the reverse mortgage
14loan certify, in writing, that:
15        (1) the borrower has received from the lender the
16    educational document prepared by the Office of the Attorney
17    General required in subsection (a) of Section 15 and the
18    document required in subsection (b) of Section 15 regarding
19    the availability of counseling services on reverse
20    mortgages;
21        (2) the borrower has received from the lender, at the
22    time a written commitment was made to the applicant to
23    provide a reverse mortgage loan, the disclosure document
24    required in Section 20 regarding the 3-day cooling-off
25    period and that at least 3 business days have passed since



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1    the document was provided; the certification shall also
2    include the date the cooling-off period disclosure was
3    provided;
4        (3) the reverse mortgage loan does not include any
5    current or future requirement for the applicant to purchase
6    an annuity, investment, life insurance, or long-term care
7    insurance product; however, nothing in this paragraph (3)
8    shall preclude a lender from requiring the borrower to
9    purchase property and casualty insurance, title insurance,
10    flood insurance, or other such products meant to insure or
11    protect the value of the home or the lender's lien and that
12    are customary for residential mortgage or reverse mortgage
13    transactions;
14        (4) no offer of an annuity was made to the borrower
15    before the closing of the reverse mortgage or will be
16    before the expiration of the right of the borrower to
17    rescind the reverse mortgage loan;
18        (5) the borrower was not referred to anyone for the
19    purchase of an annuity before the closing of the reverse
20    mortgage or will be before the expiration of the right of
21    the borrower to rescind the reverse mortgage loan;
22        (6) the borrower was not provided marketing
23    information or annuity sales leads to anyone regarding the
24    prospective borrower or borrower before the closing of the
25    reverse mortgage or will be before the expiration of the
26    right of the borrower to rescind the reverse mortgage loan;



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1    and
2        (7) to their knowledge, no person, other than a
3    borrower's spouse or partner, who directly or indirectly
4    facilitates, processes, negotiates, assists, encourages,
5    arranges, or otherwise induces consumers to take out a
6    reverse mortgage with a lender has received or will receive
7    any portion of the loan proceeds for any service or
8    product, including for services that fall under the Home
9    Repair and Remodeling Act, other than that for bona fide
10    fees for origination of the loan.
11    This Section shall not prohibit disbursements of loan
12proceeds in compliance with guidelines under the Federal
13Housing Administration's Home Equity Conversion Mortgage
14Program, including uses defined as mandatory obligations, nor
15shall it prohibit a borrower from using the loan proceeds to
16purchase products or services from a lender that is a financial
17institution in the ordinary course of the financial
18institution's business.
19    (b) The lender shall maintain the certification in an
20accurate, reproducible, and accessible format for the term of
21the reverse mortgage.
22    Section 40. Enforcement.
23    (a) Any violation of this Act shall also be considered an
24unlawful practice under the Consumer Fraud and Deceptive
25Business Practices Act. Only the Attorney General may enforce



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1violations of this Act. The Attorney General shall only find a
2violation of this Act if the conduct constitutes a pattern or
4    (b) Any violation of this Act by a licensee or residential
5mortgage licensee under the Residential Mortgage License Act of
61987 shall also be considered a violation of the Residential
7Mortgage License Act of 1987.
8    Section 900. The Illinois Act on the Aging is amended by
9changing Section 4.01 as follows:
10    (20 ILCS 105/4.01)  (from Ch. 23, par. 6104.01)
11    Sec. 4.01. Additional powers and duties of the Department.
12In addition to powers and duties otherwise provided by law, the
13Department shall have the following powers and duties:
14    (1) To evaluate all programs, services, and facilities for
15the aged and for minority senior citizens within the State and
16determine the extent to which present public or private
17programs, services and facilities meet the needs of the aged.
18    (2) To coordinate and evaluate all programs, services, and
19facilities for the Aging and for minority senior citizens
20presently furnished by State agencies and make appropriate
21recommendations regarding such services, programs and
22facilities to the Governor and/or the General Assembly.
23    (2-a) To request, receive, and share information
24electronically through the use of data-sharing agreements for



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1the purpose of (i) establishing and verifying the initial and
2continuing eligibility of older adults to participate in
3programs administered by the Department; (ii) maximizing
4federal financial participation in State assistance
5expenditures; and (iii) investigating allegations of fraud or
6other abuse of publicly funded benefits. Notwithstanding any
7other law to the contrary, but only for the limited purposes
8identified in the preceding sentence, this paragraph (2-a)
9expressly authorizes the exchanges of income, identification,
10and other pertinent eligibility information by and among the
11Department and the Social Security Administration, the
12Department of Employment Security, the Department of
13Healthcare and Family Services, the Department of Human
14Services, the Department of Revenue, the Secretary of State,
15the U.S. Department of Veterans Affairs, and any other
16governmental entity. The confidentiality of information
17otherwise shall be maintained as required by law. In addition,
18the Department on Aging shall verify employment information at
19the request of a community care provider for the purpose of
20ensuring program integrity under the Community Care Program.
21    (3) To function as the sole State agency to develop a
22comprehensive plan to meet the needs of the State's senior
23citizens and the State's minority senior citizens.
24    (4) To receive and disburse State and federal funds made
25available directly to the Department including those funds made
26available under the Older Americans Act and the Senior



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1Community Service Employment Program for providing services
2for senior citizens and minority senior citizens or for
3purposes related thereto, and shall develop and administer any
4State Plan for the Aging required by federal law.
5    (5) To solicit, accept, hold, and administer in behalf of
6the State any grants or legacies of money, securities, or
7property to the State of Illinois for services to senior
8citizens and minority senior citizens or purposes related
10    (6) To provide consultation and assistance to communities,
11area agencies on aging, and groups developing local services
12for senior citizens and minority senior citizens.
13    (7) To promote community education regarding the problems
14of senior citizens and minority senior citizens through
15institutes, publications, radio, television and the local
17    (8) To cooperate with agencies of the federal government in
18studies and conferences designed to examine the needs of senior
19citizens and minority senior citizens and to prepare programs
20and facilities to meet those needs.
21    (9) To establish and maintain information and referral
22sources throughout the State when not provided by other
24    (10) To provide the staff support that may reasonably be
25required by the Council.
26    (11) To make and enforce rules and regulations necessary



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1and proper to the performance of its duties.
2    (12) To establish and fund programs or projects or
3experimental facilities that are specially designed as
4alternatives to institutional care.
5    (13) To develop a training program to train the counselors
6presently employed by the Department's aging network to provide
7Medicare beneficiaries with counseling and advocacy in
8Medicare, private health insurance, and related health care
9coverage plans. The Department shall report to the General
10Assembly on the implementation of the training program on or
11before December 1, 1986.
12    (14) To make a grant to an institution of higher learning
13to study the feasibility of establishing and implementing an
14affirmative action employment plan for the recruitment,
15hiring, training and retraining of persons 60 or more years old
16for jobs for which their employment would not be precluded by
18    (15) To present one award annually in each of the
19categories of community service, education, the performance
20and graphic arts, and the labor force to outstanding Illinois
21senior citizens and minority senior citizens in recognition of
22their individual contributions to either community service,
23education, the performance and graphic arts, or the labor
24force. The awards shall be presented to 4 senior citizens and
25minority senior citizens selected from a list of 44 nominees
26compiled annually by the Department. Nominations shall be



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1solicited from senior citizens' service providers, area
2agencies on aging, senior citizens' centers, and senior
3citizens' organizations. The Department shall establish a
4central location within the State to be designated as the
5Senior Illinoisans Hall of Fame for the public display of all
6the annual awards, or replicas thereof.
7    (16) To establish multipurpose senior centers through area
8agencies on aging and to fund those new and existing
9multipurpose senior centers through area agencies on aging, the
10establishment and funding to begin in such areas of the State
11as the Department shall designate by rule and as specifically
12appropriated funds become available.
13    (17) (Blank). To develop the content and format of the
14acknowledgment regarding non-recourse reverse mortgage loans
15under Section 6.1 of the Illinois Banking Act; to provide
16independent consumer information on reverse mortgages and
17alternatives; and to refer consumers to independent counseling
18services with expertise in reverse mortgages.
19    (18) To develop a pamphlet in English and Spanish which may
20be used by physicians licensed to practice medicine in all of
21its branches pursuant to the Medical Practice Act of 1987,
22pharmacists licensed pursuant to the Pharmacy Practice Act, and
23Illinois residents 65 years of age or older for the purpose of
24assisting physicians, pharmacists, and patients in monitoring
25prescriptions provided by various physicians and to aid persons
2665 years of age or older in complying with directions for



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1proper use of pharmaceutical prescriptions. The pamphlet may
2provide space for recording information including but not
3limited to the following:
4        (a) name and telephone number of the patient;
5        (b) name and telephone number of the prescribing
6    physician;
7        (c) date of prescription;
8        (d) name of drug prescribed;
9        (e) directions for patient compliance; and
10        (f) name and telephone number of dispensing pharmacy.
11    In developing the pamphlet, the Department shall consult
12with the Illinois State Medical Society, the Center for
13Minority Health Services, the Illinois Pharmacists Association
14and senior citizens organizations. The Department shall
15distribute the pamphlets to physicians, pharmacists and
16persons 65 years of age or older or various senior citizen
17organizations throughout the State.
18    (19) To conduct a study of the feasibility of implementing
19the Senior Companion Program throughout the State.
20    (20) The reimbursement rates paid through the community
21care program for chore housekeeping services and home care
22aides shall be the same.
23    (21) From funds appropriated to the Department from the
24Meals on Wheels Fund, a special fund in the State treasury that
25is hereby created, and in accordance with State and federal
26guidelines and the intrastate funding formula, to make grants



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1to area agencies on aging, designated by the Department, for
2the sole purpose of delivering meals to homebound persons 60
3years of age and older.
4    (22) To distribute, through its area agencies on aging,
5information alerting seniors on safety issues regarding
6emergency weather conditions, including extreme heat and cold,
7flooding, tornadoes, electrical storms, and other severe storm
8weather. The information shall include all necessary
9instructions for safety and all emergency telephone numbers of
10organizations that will provide additional information and
12    (23) To develop guidelines for the organization and
13implementation of Volunteer Services Credit Programs to be
14administered by Area Agencies on Aging or community based
15senior service organizations. The Department shall hold public
16hearings on the proposed guidelines for public comment,
17suggestion, and determination of public interest. The
18guidelines shall be based on the findings of other states and
19of community organizations in Illinois that are currently
20operating volunteer services credit programs or demonstration
21volunteer services credit programs. The Department shall offer
22guidelines for all aspects of the programs including, but not
23limited to, the following:
24        (a) types of services to be offered by volunteers;
25        (b) types of services to be received upon the
26    redemption of service credits;



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1        (c) issues of liability for the volunteers and the
2    administering organizations;
3        (d) methods of tracking service credits earned and
4    service credits redeemed;
5        (e) issues of time limits for redemption of service
6    credits;
7        (f) methods of recruitment of volunteers;
8        (g) utilization of community volunteers, community
9    service groups, and other resources for delivering
10    services to be received by service credit program clients;
11        (h) accountability and assurance that services will be
12    available to individuals who have earned service credits;
13    and
14        (i) volunteer screening and qualifications.
15The Department shall submit a written copy of the guidelines to
16the General Assembly by July 1, 1998.
17    (24) To function as the sole State agency to receive and
18disburse State and federal funds for providing adult protective
19services in a domestic living situation in accordance with the
20Adult Protective Services Act.
21    (25) To hold conferences, trainings, and other programs for
22which the Department shall determine by rule a reasonable fee
23to cover related administrative costs. Rules to implement the
24fee authority granted by this paragraph (25) must be adopted in
25accordance with all provisions of the Illinois Administrative
26Procedure Act and all rules and procedures of the Joint



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1Committee on Administrative Rules; any purported rule not so
2adopted, for whatever reason, is unauthorized.
3(Source: P.A. 98-8, eff. 5-3-13; 98-49, eff. 7-1-13; 98-380,
4eff. 8-16-13; 98-756, eff. 7-16-14.)
5    (205 ILCS 5/5a rep.)
6    (205 ILCS 5/6.1 rep.)
7    (205 ILCS 5/6.2 rep.)
8    Section 905. The Illinois Banking Act is amended by
9repealing Sections 5a, 6.1, and 6.2.
10    (205 ILCS 205/1010 rep.)
11    Section 910. The Savings Bank Act is amended by repealing
12Section 1010.
13    Section 915. The Illinois Credit Union Act is amended by
14changing Section 46 as follows:
15    (205 ILCS 305/46)  (from Ch. 17, par. 4447)
16    Sec. 46. Loans and interest rate.
17    (1) A credit union may make loans to its members for such
18purpose and upon such security and terms, including rates of
19interest, as the credit committee, credit manager, or loan
20officer approves. Notwithstanding the provisions of any other
21law in connection with extensions of credit, a credit union may
22elect to contract for and receive interest and fees and other



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1charges for extensions of credit subject only to the provisions
2of this Act and rules promulgated under this Act, except that
3extensions of credit secured by residential real estate shall
4be subject to the laws applicable thereto. The rates of
5interest to be charged on loans to members shall be set by the
6board of directors of each individual credit union in
7accordance with Section 30 of this Act and such rates may be
8less than, but may not exceed, the maximum rate set forth in
9this Section. A borrower may repay his loan prior to maturity,
10in whole or in part, without penalty. The credit contract may
11provide for the payment by the member and receipt by the credit
12union of all costs and disbursements, including reasonable
13attorney's fees and collection agency charges, incurred by the
14credit union to collect or enforce the debt in the event of a
15delinquency by the member, or in the event of a breach of any
16obligation of the member under the credit contract. A
17contingency or hourly arrangement established under an
18agreement entered into by a credit union with an attorney or
19collection agency to collect a loan of a member in default
20shall be presumed prima facie reasonable.
21    (2) Credit unions may make loans based upon the security of
22any interest or equity in real estate, subject to rules and
23regulations promulgated by the Secretary. In any contract or
24loan which is secured by a mortgage, deed of trust, or
25conveyance in the nature of a mortgage, on residential real
26estate, the interest which is computed, calculated, charged, or



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1collected pursuant to such contract or loan, or pursuant to any
2regulation or rule promulgated pursuant to this Act, may not be
3computed, calculated, charged or collected for any period of
4time occurring after the date on which the total indebtedness,
5with the exception of late payment penalties, is paid in full.
6    For purposes of this subsection (2) of this Section 46, a
7prepayment shall mean the payment of the total indebtedness,
8with the exception of late payment penalties if incurred or
9charged, on any date before the date specified in the contract
10or loan agreement on which the total indebtedness shall be paid
11in full, or before the date on which all payments, if timely
12made, shall have been made. In the event of a prepayment of the
13indebtedness which is made on a date after the date on which
14interest on the indebtedness was last computed, calculated,
15charged, or collected but before the next date on which
16interest on the indebtedness was to be calculated, computed,
17charged, or collected, the lender may calculate, charge and
18collect interest on the indebtedness for the period which
19elapsed between the date on which the prepayment is made and
20the date on which interest on the indebtedness was last
21computed, calculated, charged or collected at a rate equal to
221/360 of the annual rate for each day which so elapsed, which
23rate shall be applied to the indebtedness outstanding as of the
24date of prepayment. The lender shall refund to the borrower any
25interest charged or collected which exceeds that which the
26lender may charge or collect pursuant to the preceding



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1sentence. The provisions of this amendatory Act of 1985 shall
2apply only to contracts or loans entered into on or after the
3effective date of this amendatory Act.
4    (3) (Blank). Notwithstanding any other provision of this
5Act, a credit union authorized under this Act to make loans
6secured by an interest or equity in real estate may engage in
7making "reverse mortgage" loans to persons for the purpose of
8making home improvements or repairs, paying insurance premiums
9or paying real estate taxes on the homestead properties of such
10persons. If made, such loans shall be made on such terms and
11conditions as the credit union shall determine and as shall be
12consistent with the provisions of this Section and such rules
13and regulations as the Secretary shall promulgate hereunder.
14For purposes of this Section, a "reverse mortgage" loan shall
15be a loan extended on the basis of existing equity in homestead
16property and secured by a mortgage on such property. Such loans
17shall be repaid upon the sale of the property or upon the death
18of the owner or, if the property is in joint tenancy, upon the
19death of the last surviving joint tenant who had such an
20interest in the property at the time the loan was initiated,
21provided, however, that the credit union and its member may by
22mutual agreement, establish other repayment terms. A credit
23union, in making a "reverse mortgage" loan, may add deferred
24interest to principal or otherwise provide for the charging of
25interest or premiums on such deferred interest. "Homestead"
26property, for purposes of this Section, means the domicile and



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



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



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2    (7) For a renewal, refinancing, or restructuring of an
3existing loan that is secured by an interest or equity in real
4estate, a new appraisal of the collateral shall not be required
5when the transaction involves an existing extension of credit
6at the credit union, no new moneys are advanced other than
7funds necessary to cover reasonable closing costs, and there
8has been no obvious or material change in market conditions or
9physical aspects of the real estate that threatens the adequacy
10of the credit union's real estate collateral protection after
11the transaction.
12(Source: P.A. 97-133, eff. 1-1-12; 98-749, eff. 7-16-14;
1398-784, eff. 7-24-14; revised 10-2-14.)
14    (205 ILCS 305/46.1 rep.)
15    (205 ILCS 305/46.2 rep.)
16    Section 920. The Illinois Credit Union Act is amended by
17repealing Sections 46.1 and 46.2.
18    Section 925. The Residential Mortgage License Act of 1987
19is amended by adding Section 5-5A as follows:
20    (205 ILCS 635/5-5A new)
21    Sec. 5-5A. Violations of the Reverse Mortgage Act. Any
22violation of the Reverse Mortgage Act by a residential mortgage
23licensee shall be considered a violation of this Act.



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1    (205 ILCS 635/5-5 rep.)
2    Section 930. The Residential Mortgage License Act of 1987
3is amended by repealing Section 5-5.
4    Section 935. The Consumer Fraud and Deceptive Business
5Practices Act is amended by changing Section 2Z as follows:
6    (815 ILCS 505/2Z)  (from Ch. 121 1/2, par. 262Z)
7    Sec. 2Z. Violations of other Acts. Any person who knowingly
8violates the Automotive Repair Act, the Automotive Collision
9Repair Act, the Home Repair and Remodeling Act, the Dance
10Studio Act, the Physical Fitness Services Act, the Hearing
11Instrument Consumer Protection Act, the Illinois Union Label
12Act, the Job Referral and Job Listing Services Consumer
13Protection Act, the Travel Promotion Consumer Protection Act,
14the Credit Services Organizations Act, the Automatic Telephone
15Dialers Act, the Pay-Per-Call Services Consumer Protection
16Act, the Telephone Solicitations Act, the Illinois Funeral or
17Burial Funds Act, the Cemetery Oversight Act, the Cemetery Care
18Act, the Safe and Hygienic Bed Act, the Pre-Need Cemetery Sales
19Act, the High Risk Home Loan Act, the Payday Loan Reform Act,
20the Mortgage Rescue Fraud Act, subsection (a) or (b) of Section
213-10 of the Cigarette Tax Act, subsection (a) or (b) of Section
223-10 of the Cigarette Use Tax Act, the Electronic Mail Act, the
23Internet Caller Identification Act, paragraph (6) of



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1subsection (k) of Section 6-305 of the Illinois Vehicle Code,
2Section 11-1431, 18d-115, 18d-120, 18d-125, 18d-135, 18d-150,
3or 18d-153 of the Illinois Vehicle Code, Article 3 of the
4Residential Real Property Disclosure Act, the Automatic
5Contract Renewal Act, the Reverse Mortgage Act, or the Personal
6Information Protection Act commits an unlawful practice within
7the meaning of this Act.
8(Source: P.A. 96-863, eff. 1-19-10; 96-1369, eff. 1-1-11;
996-1376, eff. 7-29-10; 97-333, eff. 8-12-11.)