093_HB1516eng

 
HB1516 Engrossed                     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
 
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 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 1 March 1 of 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.
 
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 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
 
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 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
 
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 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,
 8    or  who  has  failed  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
 
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 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
 
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 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,
 
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 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
 
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 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
 
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 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 federal or Illinois preemptive laws
23    or  regulations  governing  loans  made  by  a  credit  union
24    chartered under this Act  shall  constitute  compliance  with
25    this Act.
26    (Source: P.A. 90-222, eff. 7-25-97.)

27        (205 ILCS 305/51) (from Ch. 17, par. 4452)
28        Sec. 51.  Other Loan Programs.
29        (1)  Subject   to  such  rules  and  regulations  as  the
30    Director may promulgate, a credit union  may  participate  in
31    loans  to  credit  union  members  jointly  with other credit
32    unions,  corporations,   or   financial   institutions.    An
33    originating  credit union may originate loans only to its own
 
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 1    members.  A  participating  credit  union  that  is  not  the
 2    originating  lender  may participate in loans made to its own
 3    members or to members of another participating credit  union.
 4    "Originating  lender"  means  the  participating credit union
 5    with which the  member  contracts.   A  master  participation
 6    agreement  must  be properly executed, and the agreement must
 7    include provisions for identifying, either through  documents
 8    incorporated  by  reference or directly in the agreement, the
 9    participation loan or loans prior to their sale.
10        (2)  Any credit union with assets of $500,000 or more may
11    loan to its members under the State Scholarships Law or other
12    scholarship programs which are subject to a federal or  state
13    law providing 100% repayment guarantee.
14        (3)  A  credit  union  may purchase the conditional sales
15    contracts, notes and similar instruments  which  evidence  an
16    indebtedness of its members.
17        (4)  With  approval  of  the Board of Directors, a credit
18    union may make loans, either on its own or jointly with other
19    credit unions, corporations  or  financial  institutions,  to
20    credit  union  organizations;  provided,  that  the aggregate
21    amount of all such loans outstanding shall not  at  any  time
22    exceed  the  greater  of  3% 1% of the paid-in and unimpaired
23    capital and  surplus  of  the  credit  union  or  the  amount
24    authorized for federal credit unions.
25    (Source: P.A. 92-293, eff. 8-9-01.)

26        (205 ILCS 305/59) (from Ch. 17, par. 4460)
27        Sec. 59.  Investment of Funds. Funds not used in loans to
28    members  may  be  invested,  pursuant  to  subsection  (7) of
29    Section 30 of this Act, and subject to Departmental rules and
30    regulations:
31        (1)  In securities, obligations or other  instruments  of
32    or issued by or fully guaranteed as to principal and interest
33    by  the  United States of America or any agency thereof or in
 
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 1    any trust or trusts established  for  investing  directly  or
 2    collectively in the same;
 3        (2)  In  obligations  of  any state of the United States,
 4    the District of Columbia, the Commonwealth  of  Puerto  Rico,
 5    and  the  several  territories  organized by Congress, or any
 6    political subdivision thereof; however, a  credit  union  may
 7    not  invest  more  than  10%  of  its  unimpaired capital and
 8    surplus in  the  obligations  of  one  issuer,  exclusive  of
 9    general   obligations  of  the  issuer,  and  investments  in
10    municipal securities must be limited to securities  rated  in
11    one  of  the  4  highest  rating  categories  by a nationally
12    recognized statistical rating organization;
13        (3)  In certificates of deposit or passbook type accounts
14    issued by a state or national bank, mutual  savings  bank  or
15    savings and loan association; provided that such institutions
16    have  their accounts insured by the Federal Deposit Insurance
17    Corporation  or  the  Federal  Savings  and  Loan   Insurance
18    Corporation;  but  provided,  further,  that a credit union's
19    investment in an account in any one  institution  may  exceed
20    the insured limit on accounts;
21        (4)  In  shares,  classes of shares or share certificates
22    of  other  credit  unions,  including,  but  not  limited  to
23    corporate credit unions; provided  that  such  credit  unions
24    have  their  members'  accounts  insured by the NCUA or other
25    approved insurers, and that if the members' accounts  are  so
26    insured,  a  credit union's investment may exceed the insured
27    limit on accounts;
28        (5)  In shares of a cooperative society  organized  under
29    the  laws  of  this State or the laws of the United States in
30    the total amount not exceeding 10% of the unimpaired  capital
31    and   surplus   of  the  credit  union;  provided  that  such
32    investment shall first be approved by the Department;
33        (6)  In  obligations  of  the   State   of   Israel,   or
34    obligations  fully  guaranteed  by  the State of Israel as to
 
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 1    payment of principal and interest;
 2        (7)  In shares, stocks or obligations of other  financial
 3    institutions  in  the  total  amount  not exceeding 5% of the
 4    unimpaired capital and surplus of the credit union;
 5        (8)  In federal funds and bankers' acceptances;
 6        (9)  In  shares  or  stocks  of  Credit   Union   Service
 7    Organizations  in  the total amount not exceeding the greater
 8    of 3% 1% of the unimpaired capital and surplus of the  credit
 9    union or the amount authorized for federal credit unions.
10        As   used   in   this  Section,  "political  subdivision"
11    includes, but is not limited to, counties, townships, cities,
12    villages, incorporated towns, school  districts,  educational
13    service  regions, special road districts, public water supply
14    districts, fire  protection  districts,  drainage  districts,
15    levee  districts,  sewer districts, housing authorities, park
16    districts, and any agency, corporation, or instrumentality of
17    a  state  or  its  political  subdivisions,  whether  now  or
18    hereafter created and whether herein  specifically  mentioned
19    or not.
20    (Source: P.A. 92-293, eff. 8-9-01.)

21        Section  99.  Effective date.  This Act takes effect upon
22    becoming law.