Full Text of SB1118 96th General Assembly
SB1118enr 96TH GENERAL ASSEMBLY
|
|
|
SB1118 Enrolled |
|
LRB096 07197 KTG 17283 b |
|
| 1 |
| AN ACT concerning business.
| 2 |
| Be it enacted by the People of the State of Illinois,
| 3 |
| represented in the General Assembly:
| 4 |
| Section 5. The Interest Act is amended by changing Section | 5 |
| 4 as follows: | 6 |
| (815 ILCS 205/4) (from Ch. 17, par. 6404) | 7 |
| Sec. 4. General interest rate. | 8 |
| (1) Except as otherwise provided in Section 4.05, in all | 9 |
| written contracts it shall be lawful for the parties to
| 10 |
| stipulate or agree that 9% per annum, or any less sum of | 11 |
| interest, shall be
taken and paid upon every $100 of money | 12 |
| loaned or in any manner due and
owing from any person to any | 13 |
| other person or corporation in this state, and
after that rate | 14 |
| for a greater or less sum, or for a longer or shorter time,
| 15 |
| except as herein provided. | 16 |
| The maximum rate of interest that may lawfully be | 17 |
| contracted for is
determined by the law applicable thereto at | 18 |
| the time the contract is
made. Any provision in any contract, | 19 |
| whether made before or after July
1, 1969, which provides for | 20 |
| or purports to authorize, contingent upon a
change in the | 21 |
| Illinois law after the contract is made, any rate of
interest | 22 |
| greater than the maximum lawful rate at the time the contract
| 23 |
| is made, is void. |
|
|
|
SB1118 Enrolled |
- 2 - |
LRB096 07197 KTG 17283 b |
|
| 1 |
| It is lawful for a state bank or a branch of an | 2 |
| out-of-state bank, as those
terms are defined in Section 2 of | 3 |
| the Illinois Banking Act, to receive or to
contract to receive
| 4 |
| and collect interest and charges at any rate or rates agreed | 5 |
| upon by
the bank or branch and the borrower.
It is lawful for a | 6 |
| savings bank chartered under the Savings Bank Act or a
savings | 7 |
| association chartered under the Illinois Savings and Loan Act | 8 |
| of 1985
to receive or contract to receive and collect interest | 9 |
| and charges at any rate
agreed upon by the savings bank or | 10 |
| savings association and the borrower. | 11 |
| It is lawful to receive or to contract to receive and | 12 |
| collect
interest and charges as authorized by this Act and as | 13 |
| authorized by the
Consumer Installment Loan Act and by the | 14 |
| "Consumer Finance Act", approved July
10,
1935, as now or | 15 |
| hereafter amended, or by the Payday Loan Reform Act. It is | 16 |
| lawful to charge, contract
for, and receive any rate or amount | 17 |
| of interest or compensation with
respect to the following | 18 |
| transactions: | 19 |
| (a) Any loan made to a corporation; | 20 |
| (b) Advances of money, repayable on demand, to an | 21 |
| amount not less
than $5,000, which are made upon warehouse | 22 |
| receipts, bills of lading,
certificates of stock, | 23 |
| certificates of deposit, bills of exchange, bonds
or other | 24 |
| negotiable instruments pledged as collateral security for | 25 |
| such
repayment, if evidenced by a writing; | 26 |
| (c) Any credit transaction between a merchandise |
|
|
|
SB1118 Enrolled |
- 3 - |
LRB096 07197 KTG 17283 b |
|
| 1 |
| wholesaler and
retailer; any business loan to a business | 2 |
| association or copartnership
or to a person owning and | 3 |
| operating a business as sole proprietor or to
any persons | 4 |
| owning and operating a business as joint venturers, joint
| 5 |
| tenants or tenants in common, or to any limited | 6 |
| partnership, or to any
trustee owning and operating a | 7 |
| business or whose beneficiaries own and
operate a business, | 8 |
| except that any loan which is secured (1) by an
assignment | 9 |
| of an individual obligor's salary, wages, commissions or
| 10 |
| other compensation for services, or (2) by his household | 11 |
| furniture or
other goods used for his personal, family or | 12 |
| household purposes shall be
deemed not to be a loan within | 13 |
| the meaning of this subsection; and
provided further that a | 14 |
| loan which otherwise qualifies as a business
loan within | 15 |
| the meaning of this subsection shall not be deemed as not | 16 |
| so
qualifying because of the inclusion, with other security | 17 |
| consisting of
business assets of any such obligor, of real | 18 |
| estate occupied by an
individual obligor solely as his | 19 |
| residence. The term "business" shall
be deemed to mean a | 20 |
| commercial, agricultural or industrial enterprise
which is | 21 |
| carried on for the purpose of investment or profit, but | 22 |
| shall
not be deemed to mean the ownership or maintenance of | 23 |
| real estate
occupied by an individual obligor solely as his | 24 |
| residence; | 25 |
| (d) Any loan made in accordance with the provisions of | 26 |
| Subchapter I
of Chapter 13 of Title 12 of the United States |
|
|
|
SB1118 Enrolled |
- 4 - |
LRB096 07197 KTG 17283 b |
|
| 1 |
| Code, which is designated
as "Housing Renovation and | 2 |
| Modernization"; | 3 |
| (e) Any mortgage loan insured or upon which a | 4 |
| commitment to insure
has been issued under the provisions | 5 |
| of the National Housing Act,
Chapter 13 of Title 12 of the | 6 |
| United States Code; | 7 |
| (f) Any mortgage loan guaranteed or upon which a | 8 |
| commitment to
guaranty has been issued under the provisions | 9 |
| of the Veterans' Benefits
Act, Subchapter II of Chapter 37 | 10 |
| of Title 38 of the United States Code; | 11 |
| (g) Interest charged by a broker or dealer registered | 12 |
| under the
Securities Exchange Act of 1934, as amended, or | 13 |
| registered under the
Illinois Securities Law of 1953, | 14 |
| approved July 13, 1953, as now or
hereafter amended, on a | 15 |
| debit balance in an account for a customer if
such debit | 16 |
| balance is payable at will without penalty and is secured | 17 |
| by
securities as defined in Uniform Commercial | 18 |
| Code-Investment Securities; | 19 |
| (h) Any loan made by a participating bank as part of | 20 |
| any loan
guarantee program which provides for loans and for | 21 |
| the refinancing of
such loans to medical students, interns | 22 |
| and residents and which are
guaranteed by the American | 23 |
| Medical Association Education and Research
Foundation; | 24 |
| (i) Any loan made, guaranteed, or insured in accordance | 25 |
| with the
provisions of the Housing Act of 1949, Subchapter | 26 |
| III of Chapter 8A of
Title 42 of the United States Code and |
|
|
|
SB1118 Enrolled |
- 5 - |
LRB096 07197 KTG 17283 b |
|
| 1 |
| the Consolidated Farm and Rural
Development Act, | 2 |
| Subchapters I, II, and III of Chapter 50 of Title 7 of
the | 3 |
| United States Code; | 4 |
| (j) Any loan by an employee pension benefit plan, as | 5 |
| defined in Section
3 (2) of the Employee Retirement Income | 6 |
| Security Act of 1974 (29 U.S.C.A.
Sec. 1002), to an | 7 |
| individual participating in such plan, provided that such
| 8 |
| loan satisfies the prohibited transaction exemption | 9 |
| requirements of Section
408 (b) (1) (29 U.S.C.A. Sec. 1108 | 10 |
| (b) (1)) or Section 2003 (a) (26 U.S.C.A.
Sec. 4975 (d) | 11 |
| (1)) of the Employee Retirement Income Security Act of | 12 |
| 1974; | 13 |
| (k) Written contracts, agreements or bonds for deed | 14 |
| providing for
installment purchase of real estate; | 15 |
| (1) Loans secured by a mortgage on real estate; | 16 |
| (m) Loans made by a sole proprietorship, partnership, | 17 |
| or corporation to
an employee or to a person who has been | 18 |
| offered employment by such sole
proprietorship, | 19 |
| partnership, or corporation made for the sole purpose of
| 20 |
| transferring an employee or person who has been offered | 21 |
| employment to another
office maintained and operated by the | 22 |
| same sole proprietorship, partnership,
or corporation; | 23 |
| (n) Loans to or for the benefit of students made by an | 24 |
| institution of
higher education. | 25 |
| (2) Except for loans described in subparagraph (a), (c), | 26 |
| (d),
(e), (f) or (i) of subsection (1) of this Section, and |
|
|
|
SB1118 Enrolled |
- 6 - |
LRB096 07197 KTG 17283 b |
|
| 1 |
| except to the
extent permitted by the applicable statute for | 2 |
| loans made pursuant to
Section 4a or pursuant to the Consumer | 3 |
| Installment Loan Act: | 4 |
| (a) Whenever the rate of interest exceeds 8% per annum | 5 |
| on any
written contract, agreement or bond for deed | 6 |
| providing for the installment
purchase of residential real | 7 |
| estate, or on any loan secured by a mortgage
on residential | 8 |
| real estate, it shall be unlawful to provide for a
| 9 |
| prepayment penalty or other charge for prepayment. | 10 |
| (b) No agreement, note or other instrument evidencing a | 11 |
| loan
secured by a mortgage on residential real estate, or | 12 |
| written contract,
agreement or bond for deed providing for | 13 |
| the installment purchase of
residential real estate, may | 14 |
| provide for any change in the contract rate of
interest | 15 |
| during the term thereof. However, if the Congress of the | 16 |
| United
States or any federal agency authorizes any class of | 17 |
| lender to enter, within
limitations, into mortgage | 18 |
| contracts or written contracts, agreements or
bonds for | 19 |
| deed in which the rate of interest may be changed during | 20 |
| the
term of the contract, any person, firm, corporation or | 21 |
| other entity
not otherwise prohibited from entering into | 22 |
| mortgage contracts or
written contracts, agreements or | 23 |
| bonds for deed in Illinois may enter
into mortgage | 24 |
| contracts or written contracts, agreements or bonds
for | 25 |
| deed in which the rate of interest may be changed during | 26 |
| the term
of the contract, within the same limitations. |
|
|
|
SB1118 Enrolled |
- 7 - |
LRB096 07197 KTG 17283 b |
|
| 1 |
| (3) In any contract or loan which is secured by a mortgage, | 2 |
| deed of
trust, or conveyance in the nature of a mortgage, on | 3 |
| residential real
estate, the interest which is computed, | 4 |
| calculated, charged, or collected
pursuant to such contract or | 5 |
| loan, or pursuant to any regulation or rule
promulgated | 6 |
| pursuant to this Act, may not be computed, calculated, charged
| 7 |
| or collected for any period of time occurring after the date on | 8 |
| which the
total indebtedness, with the exception of late | 9 |
| payment penalties, is paid
in full. | 10 |
| (4) For purposes of this Section, a prepayment shall mean | 11 |
| the payment of the
total indebtedness, with the exception of | 12 |
| late payment penalties if
incurred or charged, on any date | 13 |
| before the date specified in the contract
or loan agreement on | 14 |
| which the total indebtedness shall be paid in full, or
before | 15 |
| the date on which all payments, if timely made, shall have been
| 16 |
| made. In the event of a prepayment of the indebtedness which is | 17 |
| made on a
date after the date on which interest on the | 18 |
| indebtedness was last
computed, calculated, charged, or | 19 |
| collected but before the next date on
which interest on the | 20 |
| indebtedness was to be calculated, computed, charged,
or | 21 |
| collected, the lender may calculate, charge and collect | 22 |
| interest on the
indebtedness for the period which elapsed | 23 |
| between the date on which the
prepayment is made and the date | 24 |
| on which interest on the indebtedness was
last computed, | 25 |
| calculated, charged or collected at a rate equal to 1/360 of
| 26 |
| the annual rate for each day which so elapsed, which rate shall |
|
|
|
SB1118 Enrolled |
- 8 - |
LRB096 07197 KTG 17283 b |
|
| 1 |
| be applied
to the indebtedness outstanding as of the date of | 2 |
| prepayment. The lender
shall refund to the borrower any | 3 |
| interest charged or collected which
exceeds that which the | 4 |
| lender may charge or collect pursuant to the
preceding | 5 |
| sentence. The provisions of this amendatory Act of 1985 shall
| 6 |
| apply only to contracts or loans entered into on or after the | 7 |
| effective
date of this amendatory Act, but shall not apply to | 8 |
| contracts or loans
entered into on or after that date that are | 9 |
| subject to Section 4a of this
Act, the Consumer Installment | 10 |
| Loan Act, the Payday Loan Reform Act, or the Retail Installment | 11 |
| Sales
Act, or that provide for the refund of precomputed | 12 |
| interest on prepayment
in the manner provided by such Act. | 13 |
| (5) For purposes of items (a) and (c) of subsection (1) of | 14 |
| this Section, a rate or amount of interest may be lawfully | 15 |
| computed when applying the ratio of the annual interest rate | 16 |
| over a year based on 360 days. The provisions of this | 17 |
| amendatory Act of the 96th General Assembly are declarative of | 18 |
| existing law. | 19 |
| (Source: P.A. 94-13, eff. 12-6-05; 94-635, eff. 8-22-05; | 20 |
| 95-331, eff. 8-21-07.)
| 21 |
| Section 99. Effective date. This Act takes effect upon | 22 |
| becoming law. |
|