Full Text of SB1692 97th General Assembly
SB1692enr 97TH GENERAL ASSEMBLY |
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| 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 Currency Exchange Act is amended by changing | 5 | | Section 3.1 as follows:
| 6 | | (205 ILCS 405/3.1) (from Ch. 17, par. 4805)
| 7 | | Sec. 3.1.
Nothing in this Act shall prevent a currency | 8 | | exchange from
rendering State or Federal income tax service; | 9 | | nor shall the rendering of
such service be considered a | 10 | | violation of this Act if such service be
rendered either by the | 11 | | proprietor, any of his employees, or a licensed, regulated tax | 12 | | service approved by the Internal Revenue Service. For the | 13 | | purpose of this Section, "tax service" does not mean to make or | 14 | | offer to make a refund anticipation loan as defined by the Tax | 15 | | Refund Anticipation Loan Reform Disclosure Act.
| 16 | | (Source: P.A. 97-315, eff. 1-1-12.)
| 17 | | Section 10. The Residential Mortgage License Act of 1987 is | 18 | | amended by changing Section 5-8 as follows: | 19 | | (205 ILCS 635/5-8) | 20 | | Sec. 5-8. Prepayment penalties. | 21 | | (a) No licensee may make, provide, or arrange a mortgage |
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| 1 | | loan with a prepayment
penalty unless the licensee offers the | 2 | | borrower a loan without a prepayment penalty, the
offer is in | 3 | | writing, and the borrower initials the offer to indicate that | 4 | | the borrower has
declined the offer. In addition, the licensee | 5 | | must disclose the discount in rate received in
consideration | 6 | | for a mortgage loan with the prepayment penalty. | 7 | | (b) If a borrower declines an offer required under | 8 | | subsection (a) of this Section, the licensee may include , | 9 | | except as prohibited by Section 30 of the High Risk Home Loan | 10 | | Act, a prepayment penalty that extends no longer than three | 11 | | years or the first change date or rate adjustment of a variable | 12 | | rate mortgage, whichever comes earlier, provided that, if a | 13 | | prepayment is made during the fixed rate period, the licensee | 14 | | shall receive an amount that is no more than: | 15 | | (1) 3% of the total loan amount if the prepayment is | 16 | | made within the first 12-month period following the date | 17 | | the loan was made; | 18 | | (2) 2% of the total loan amount if the prepayment is | 19 | | made within the second
12-month period following the date | 20 | | the loan was made; or | 21 | | (3) 1% of the total loan amount if the prepayment is | 22 | | made within the third 12-month period following the date | 23 | | the loan was made, if the fixed rate period
extends 3 | 24 | | years. | 25 | | (c) Notwithstanding any provision in this Section, | 26 | | prepayment penalties are prohibited in connection with the sale |
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| 1 | | or destruction of a dwelling secured by a residential mortgage | 2 | | loan.
| 3 | | (d) This Section applies to loans made, refinanced, | 4 | | renewed, extended, or modified on or after the effective date | 5 | | of this amendatory Act of the 95th General Assembly.
| 6 | | (Source: P.A. 95-691, eff. 6-1-08 .) | 7 | | Section 15. The High Risk Home Loan Act is amended by | 8 | | changing Sections 10, 30, 55, 80, and 145 and by adding | 9 | | Sections 35, 35.5, 80.5, 80.6, and 90.5 as follows:
| 10 | | (815 ILCS 137/10)
| 11 | | Sec. 10. Definitions. As used in this Act:
| 12 | | "Approved credit counselor" means a credit counselor | 13 | | approved by the
Director of Financial Institutions.
| 14 | | "Bona fide discount points" means loan discount points that | 15 | | are knowingly paid by the consumer for the purpose of reducing, | 16 | | and that in fact result in a bona fide reduction of, the
| 17 | | interest rate or time price differential applicable to the | 18 | | mortgage. | 19 | | "Borrower" means a natural person who seeks or obtains a | 20 | | high risk
home loan.
| 21 | | "Commissioner" means the Commissioner of the Office of | 22 | | Banks and Real
Estate.
| 23 | | "Department" means the Department of Financial | 24 | | Institutions.
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| 1 | | "Director" means the Director of Financial Institutions.
| 2 | | "Good faith" means honesty in fact in the conduct or | 3 | | transaction concerned.
| 4 | | "High risk home loan"
means a consumer credit transaction, | 5 | | other than a reverse mortgage, that is secured by the | 6 | | consumer's principal dwelling if: home equity loan in which (i) | 7 | | at the time of origination, the annual
percentage rate
exceeds | 8 | | by more than 6 percentage points in the case of a first lien | 9 | | mortgage,
or
by more than 8 percentage points in the case of a | 10 | | junior mortgage, the average prime offer rate, as defined in | 11 | | Section 129C(b)(2)(B) of the federal Truth in Lending Act, for | 12 | | a comparable transaction as of the date on which the interest | 13 | | rate for the transaction is set, yield on
U.S. Treasury | 14 | | securities having comparable periods of maturity to the loan
| 15 | | maturity as of the fifteenth day of the month immediately | 16 | | preceding the month
in
which the application for the loan is | 17 | | received by the lender or (ii) the loan documents permit the | 18 | | creditor to charge or collect prepayment fees or penalties more | 19 | | than 36 months after the transaction closing or such fees | 20 | | exceed, in the aggregate, more than 2% of the amount prepaid, | 21 | | or (iii) the total
points
and fees payable in connection with | 22 | | the transaction, other than bona fide third-party charges not | 23 | | retained by the mortgage originator, creditor, or an affiliate | 24 | | of the mortgage originator or creditor, by the consumer at or | 25 | | before closing will exceed (1) the greater
of
5% of the total | 26 | | loan amount in the case of a transaction for $20,000 or more or |
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| 1 | | (2) the lesser of 8% of the total loan amount or $1,000 (or | 2 | | such other dollar amount as prescribed by federal regulation | 3 | | pursuant to the federal Dodd-Frank Act) in the case of a | 4 | | transaction for less than $20,000, except that, with respect to | 5 | | all transactions, bona fide loan discount points may be | 6 | | excluded as provided for in Section 35 of this Act. or $800. | 7 | | The $800 figure shall be adjusted annually
on January 1 by the | 8 | | annual percentage change in the Consumer Price Index for
All | 9 | | Urban Consumers for all items published by the United States | 10 | | Department of
Labor.
"High risk home loan"
does
not include a | 11 | | loan that is made primarily for a business purpose unrelated to
| 12 | | the
residential real property securing the loan or a consumer | 13 | | credit transaction made by a natural person who provides seller | 14 | | financing secured by a principal residence no more than 3 times | 15 | | in a 12-month period, provided such consumer credit transaction | 16 | | is not made by a person that has constructed or acted as a | 17 | | contractor for the construction of the residence in the | 18 | | ordinary course of business of such person or to an open-end | 19 | | credit plan
subject to
12 CFR 226 (2000, no subsequent | 20 | | amendments or editions are included) .
| 21 | | "Home equity loan" means any loan secured by the borrower's | 22 | | primary
residence where the proceeds are not used as purchase | 23 | | money for the
residence.
| 24 | | "Lender" means a natural or artificial person who | 25 | | transfers, deals in,
offers, or makes a high risk home loan. | 26 | | "Lender" includes, but is not limited
to,
creditors and
brokers |
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| 1 | | who transfer, deal in, offer, or make high risk home loans. | 2 | | "Lender"
does not include purchasers, assignees, or subsequent | 3 | | holders of high risk home
loans.
| 4 | | "Office" means the Office of Banks and Real Estate.
| 5 | | "Points and fees" means all items considered required to be | 6 | | disclosed as points and
fees under 12 CFR 226.32 (2000, or as | 7 | | initially amended pursuant to Section 1431 of the federal | 8 | | Dodd-Frank Act with no subsequent amendments or editions
| 9 | | included , whichever is later ); the premium of any single | 10 | | premium credit life, credit disability,
credit
unemployment, | 11 | | or any other life or health insurance that is financed directly
| 12 | | or
indirectly into the loan; and compensation paid directly or | 13 | | indirectly by a consumer or creditor to a
mortgage
broker from | 14 | | any source , including a broker that originates a loan in its | 15 | | own name in a
table-funded
transaction, not otherwise included | 16 | | in 12 CFR 226.4 ; the maximum prepayment fees and penalties that | 17 | | may be charged or collected under the terms of the credit | 18 | | transaction; all prepayment fees or penalties that are incurred | 19 | | by the consumer if the loan refinances a previous loan made or | 20 | | currently held by the same creditor or an affiliate of the | 21 | | creditor; and premiums or other charges payable at or before | 22 | | closing or financed directly or indirectly into the loan for | 23 | | any credit life, credit disability, credit unemployment, | 24 | | credit property, other accident, loss of income, life, or | 25 | | health insurance or payments directly or indirectly for any | 26 | | debt cancellation or suspension agreement or contract, except |
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| 1 | | that insurance premiums or debt cancellation or suspension fees | 2 | | calculated and paid in full on a monthly basis shall not be | 3 | | considered financed by the creditor. "Points and fees" does not | 4 | | include any insurance premium provided by an agency of the | 5 | | federal government or an agency of a state; any insurance | 6 | | premium paid by the consumer after closing; and any amount of a | 7 | | premium, charge, or fee that is not in excess of the amount | 8 | | payable under policies in effect at the time of origination | 9 | | under Section 203(c)(2)(A) of the National Housing Act (12 | 10 | | U.S.C. 1709(c)(2)(A)), provided that the premium, charge, or | 11 | | fee is required to be refundable on a pro-rated basis and the | 12 | | refund is automatically issued upon notification of the | 13 | | satisfaction of the underlying mortgage loan .
| 14 | | "Reasonable" means fair, proper, just, or prudent under the | 15 | | circumstances.
| 16 | | "Servicer" means any entity chartered under the Illinois | 17 | | Banking Act, the
Savings Bank Act, the Illinois Credit Union | 18 | | Act, or the Illinois Savings and
Loan Act of 1985 and any | 19 | | person or entity licensed under the Residential
Mortgage | 20 | | License Act of 1987, the Consumer Installment Loan Act, or the | 21 | | Sales
Finance Agency Act who
is responsible for the collection | 22 | | or remittance for, or has the right or
obligation to collect or | 23 | | remit for, any lender, note owner, or note holder or
for a | 24 | | licensee's own account, of payments, interest, principal, and | 25 | | trust items
(such as hazard
insurance and taxes on a | 26 | | residential mortgage loan) in accordance with the
terms of the |
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| 1 | | residential mortgage loan, including loan payment follow-up,
| 2 | | delinquency loan follow-up, loan analysis, and any | 3 | | notifications to
the borrower that are necessary to enable the | 4 | | borrower to keep the loan current
and in good
standing.
| 5 | | "Total loan amount" has the same meaning as that term is | 6 | | given in 12
CFR 226.32 and shall be calculated in accordance | 7 | | with the Federal Reserve
Board's Official Staff Commentary to | 8 | | that regulation.
| 9 | | (Source: P.A. 93-561, eff. 1-1-04.)
| 10 | | (815 ILCS 137/30)
| 11 | | Sec. 30. No prepayment Prepayment penalty. A high risk home | 12 | | loan may not contain terms under which a consumer must pay a | 13 | | prepayment penalty for paying all or part of the principal | 14 | | before the date on which the principal is due. For purposes of | 15 | | this Section, any method of computing a refund of unearned | 16 | | scheduled interest is a prepayment penalty if it is less | 17 | | favorable to the consumer than the actuarial method as that | 18 | | term is defined by Section 933(d) of the federal Housing and | 19 | | Community Development Act of 1992, 15 U.S.C. 1615(d). For any | 20 | | loan that is subject to the
provisions of this Act and is not | 21 | | subject to the provisions of the Home
Ownership and Equity | 22 | | Protection Act of 1994, no lender shall make a high risk
home | 23 | | loan
that includes a penalty provision for payment made: (i) | 24 | | after the expiration of
the 36-month period following the date | 25 | | the loan was made; or (ii) that is more
than:
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| 1 | | (1) 3% of the total loan amount if the prepayment is | 2 | | made within the first
12-month period following the date | 3 | | the loan was made;
| 4 | | (2) 2% of the total loan amount if the prepayment is | 5 | | made within the
second 12-month period following the date | 6 | | the loan was made; or
| 7 | | (3) 1% of the total loan amount if the prepayment is | 8 | | made within the third
12-month period following the date | 9 | | the loan was made.
| 10 | | (Source: P.A. 93-561, eff. 1-1-04.)
| 11 | | (815 ILCS 137/35 new) | 12 | | Sec. 35. Bona fide discount points. For the purposes of | 13 | | determining whether the amount of points and fees meets the | 14 | | definition of "high risk home loan" under this Act, either the | 15 | | amounts described in paragraph (1) or (2) of this Section, but | 16 | | not both, shall be excluded: | 17 | | (1) Up to and including 2 bona fide discount points | 18 | | payable by the consumer in
connection with the mortgage, | 19 | | but only if the interest rate from which the mortgage's
| 20 | | interest rate will be discounted does not exceed by more | 21 | | than one percentage point: | 22 | | (A) the average prime offer rate, as defined in | 23 | | Section 129C of the federal
Truth in Lending Act (15 | 24 | | U.S.C. 1639); or | 25 | | (B) if secured by a personal property loan, the |
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| 1 | | average rate on a loan in
connection with which | 2 | | insurance is provided under Title I of the National | 3 | | Housing
Act (12 U.S.C. 1702 et seq.). | 4 | | (2) Unless 2 bona fide discount points have been | 5 | | excluded under paragraph (1), up
to and including one bona | 6 | | fide discount point payable by the consumer in connection | 7 | | with
the mortgage, but only if the interest rate from which | 8 | | the mortgage's interest rate will be
discounted does not | 9 | | exceed by more than 2 percentage points: | 10 | | (A) the average prime offer rate, as defined in | 11 | | Section 129C of the federal
Truth in Lending Act (15 | 12 | | U.S.C. 1639); or | 13 | | (B) if secured by a personal property loan, the | 14 | | average rate on a loan in
connection with which | 15 | | insurance is provided under Title I of the National | 16 | | Housing
Act (12 U.S.C. 1702 et seq.). | 17 | | Paragraphs (1) and (2) shall not apply to discount points | 18 | | used to purchase an interest rate reduction unless the amount | 19 | | of the interest rate reduction purchased is reasonably | 20 | | consistent with established industry norms and practices for | 21 | | secondary mortgage market transactions. | 22 | | (815 ILCS 137/35.5 new) | 23 | | Sec. 35.5. No balloon payments. No high risk home loan may | 24 | | contain a scheduled payment that is more than twice as large as | 25 | | the average of earlier scheduled payments. This Section does |
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| 1 | | not apply when the payment schedule is adjusted to the seasonal | 2 | | or irregular income of the consumer.
| 3 | | (815 ILCS 137/55)
| 4 | | Sec. 55. Financing of points and fees. No lender shall | 5 | | transfer, deal in, offer, or make a high risk home loan that
| 6 | | finances , directly or indirectly, any points and fees . No | 7 | | lender shall transfer, deal in, offer, or make a high risk home | 8 | | loan that finances any prepayment fee or penalty payable by the | 9 | | consumer in a refinancing transaction if the creditor or an | 10 | | affiliate of the creditor is the noteholder of the note being | 11 | | refinanced in excess of 6% of the total loan amount .
| 12 | | (Source: P.A. 93-561, eff. 1-1-04.)
| 13 | | (815 ILCS 137/80)
| 14 | | Sec. 80. Late payment fee. A lender shall not transfer, | 15 | | deal in, offer,
or make a high risk home loan that provides for | 16 | | a late payment fee, except
under
the following conditions:
| 17 | | (1) the late payment fee shall not be in excess of 4% | 18 | | 5% of the amount
of the payment past due;
| 19 | | (2) the late payment fee shall only be assessed for a | 20 | | payment past
due for 15 days or more;
| 21 | | (3) the late payment fee shall not be imposed more than | 22 | | once with
respect to a single late payment;
| 23 | | (4) a late payment fee that the lender has collected | 24 | | shall be
reimbursed if the borrower presents proof of |
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| 1 | | having made a timely
payment; and
| 2 | | (5) a lender shall treat each payment as posted on the | 3 | | same
business day as it was received by the lender, | 4 | | servicer, or lender's agent
or at the address provided to | 5 | | the borrower by the lender, servicer, or
lender's agent for | 6 | | making payments.
| 7 | | (Source: P.A. 93-561, eff. 1-1-04.)
| 8 | | (815 ILCS 137/80.5 new) | 9 | | Sec. 80.5. Coordination with subsequent late fees. If a | 10 | | payment is otherwise a full payment for the applicable period, | 11 | | is paid on its due date or within an applicable grace period, | 12 | | and the only delinquency or insufficiency of payment is | 13 | | attributable to any late fee or delinquency charge assessed on | 14 | | any earlier payment, no late fee or delinquency charge may be | 15 | | imposed on the payment. | 16 | | (815 ILCS 137/80.6 new) | 17 | | Sec. 80.6. Failure to make installment payment. If, in the | 18 | | case of a loan agreement the terms of which provide that any | 19 | | payment shall first be applied to any past principal balance, | 20 | | the consumer fails to make an installment payment and the | 21 | | consumer subsequently resumes making installment payments but | 22 | | has not paid all past due installments, the creditor may impose | 23 | | a separate late payment charge or fee for any principal due | 24 | | (without deduction due to late fees or related fees) until the |
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| 1 | | default is cured. | 2 | | (815 ILCS 137/90.5 new) | 3 | | Sec. 90.5. Modification and deferral fees prohibited. A | 4 | | lender, successor in interest, assignee, or any agent of any of | 5 | | the foregoing may not charge a consumer any fee to modify, | 6 | | renew, extend, or amend a high risk home loan or to defer any | 7 | | payment due under the terms of the loan.
| 8 | | (815 ILCS 137/145)
| 9 | | Sec. 145. Subterfuge prohibited. No lender, with the intent | 10 | | to avoid the
application or provisions of this Act, shall (i) | 11 | | divide a loan transaction into
separate parts , or (ii) | 12 | | structure a loan transaction as an open-end credit plan or | 13 | | another form of loan, or (iii) perform any other subterfuge.
| 14 | | (Source: P.A. 93-561, eff. 1-1-04.)
| 15 | | Section 20. The Tax Refund Anticipation Loan Disclosure Act | 16 | | is amended by changing Sections 1, 5, 10, and 15 and by adding | 17 | | Sections 25, 30, 35, and 40 as follows:
| 18 | | (815 ILCS 177/1)
| 19 | | Sec. 1. Short title. This Act may be cited as the Tax | 20 | | Refund
Anticipation
Loan Reform
Disclosure Act.
| 21 | | (Source: P.A. 92-664, eff. 1-1-03.)
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| 1 | | (815 ILCS 177/5)
| 2 | | Sec. 5. Definitions. The following definitions apply in | 3 | | this Act:
| 4 | | "Consumer" means any natural person who, singly or jointly | 5 | | with another consumer, is solicited for, applies for, or | 6 | | receives the proceeds of a refund anticipation loan or refund | 7 | | anticipation check. | 8 | | "Creditor" means any person who makes a refund anticipation | 9 | | loan or who takes an assignment of a refund anticipation loan. | 10 | | "Facilitator" means a person who
individually or in | 11 | | conjunction or cooperation
with
another person : (i) solicits | 12 | | the execution of makes a refund anticipation loan , processes, | 13 | | receives, or
accepts for delivery an
application or agreement | 14 | | for a refund anticipation loan or refund anticipation check; | 15 | | (ii) services or collects
upon , issues a check in payment of | 16 | | refund
anticipation
loan or refund anticipation check; | 17 | | proceeds, or (iii) in any other manner facilitates acts to | 18 | | allow the making of a refund
anticipation loan or refund | 19 | | anticipation check . If there is no third party facilitator | 20 | | because a creditor directly solicits the execution of, | 21 | | receives, or accepts an application or agreement for a refund | 22 | | anticipation loan or refund anticipation check, that creditor | 23 | | shall be considered a facilitator.
"Facilitator" does not | 24 | | include a bank, savings bank, savings and loan association, or | 25 | | credit
union, or licensee under the Consumer Installment Loan | 26 | | Act operating under
the laws of the United States or this State |
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| 1 | | and does not include any person
who acts solely as an
| 2 | | intermediary and does not deal with the public in the making of | 3 | | the refund
anticipation loan.
| 4 | | "Person" means an individual, a firm, a partnership, an | 5 | | association, a corporation, or another entity. "Person" does | 6 | | not, however, mean a bank, savings bank, savings and loan | 7 | | association, or credit union operating under the laws of the | 8 | | United States or this State. | 9 | | "Refund anticipation check" means a check, stored value | 10 | | card, or other payment mechanism: (i) representing the proceeds | 11 | | of the consumer's tax refund; (ii) which was issued by a | 12 | | depository institution or other person that received a direct | 13 | | deposit of the consumer's tax refund or tax credits; and (iii) | 14 | | for which the consumer has paid a fee or other consideration | 15 | | for
such payment mechanism. | 16 | | "Borrower" means a person who receives the proceeds of a | 17 | | refund anticipation
loan.
| 18 | | "Refund anticipation loan" means a loan that is secured by | 19 | | or that the creditor arranges arranged to be repaid directly | 20 | | from
the proceeds
of the consumer's a borrower's income tax | 21 | | refund or tax credits refunds . "Refund anticipation loan" also | 22 | | includes any sale, assignment, or purchase of a consumer's tax | 23 | | refund at a discount or for a fee, whether or not the consumer | 24 | | is required to repay the buyer or assignee if the Internal | 25 | | Revenue Service denies or reduces the consumer's tax refund.
| 26 | | "Refund anticipation loan fee" means the charges, fees, or |
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| 1 | | other
consideration
charged or
imposed directly or indirectly | 2 | | by the creditor facilitator for the making of or in connection | 3 | | with a refund anticipation loan. This term includes any charge, | 4 | | fee, or other consideration for a deposit account, if the | 5 | | deposit account is used for receipt of the consumer's tax | 6 | | refund to repay the amount owed on the loan. A
"refund
| 7 | | anticipation loan
fee" does not include charges, fees, or other | 8 | | consideration charged or imposed
in the ordinary
course of | 9 | | business by a facilitator for services that do not result in
| 10 | | the making
of a loan,
including fees for tax return preparation | 11 | | and fees for electronic filing of tax
returns.
| 12 | | "Refund anticipation loan interest rate" means the | 13 | | interest rate for a refund anticipation loan calculated as | 14 | | follows: the total amount of refund anticipation loan fees | 15 | | divided by the loan amount (minus any loan fees), then divided | 16 | | by the number of days in the loan term, then multiplied by 365 | 17 | | and expressed as a percentage. The total amount of the refund | 18 | | anticipation loan fee used in this calculation shall include | 19 | | all refund anticipation loan fees as defined in this Section. | 20 | | If a deposit account is established or maintained in whole or | 21 | | in part for the purpose of receiving the consumer's tax refund | 22 | | to repay the amount owed on a refund anticipation loan: (i) the | 23 | | maturity of the loan for the purpose of determining the refund | 24 | | anticipation loan interest rate shall be assumed to be the | 25 | | estimated date when the tax refund will be deposited in the | 26 | | deposit account; and (ii) any fee charged to the consumer for |
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| 1 | | such deposit account shall be considered a loan fee and shall | 2 | | be included in the calculation of the refund anticipation loan | 3 | | interest rate.
If no deposit account is established or | 4 | | maintained for the repayment of the loan, the maturity of the | 5 | | loan shall be assumed to be the estimated date when the tax | 6 | | refund is received by the creditor. | 7 | | (Source: P.A. 92-664, eff. 1-1-03.)
| 8 | | (815 ILCS 177/10)
| 9 | | Sec. 10. Disclosure requirements. At the time a consumer | 10 | | borrower applies for a
refund
anticipation loan or check , a | 11 | | facilitator shall disclose to the consumer borrower on a
| 12 | | document that is separate from the loan application:
| 13 | | (1) the fee for the refund anticipation loan or refund | 14 | | anticipation check fee schedule ;
| 15 | | (1.5) for refund anticipation loans, disclosure of the | 16 | | refund anticipation loan interest rate. The refund | 17 | | anticipation loan interest rate shall be calculated as set | 18 | | forth in Section 5 the Annual Percentage Rate utilizing a | 19 | | 10-day time period ;
| 20 | | (2) the estimated fee for preparing and electronically | 21 | | filing a tax
return;
| 22 | | (2.5) for refund anticipation loans, the total cost to | 23 | | the consumer borrower for utilizing a refund
anticipation | 24 | | loan;
| 25 | | (3) for refund anticipation loans, the estimated date |
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| 1 | | that the loan proceeds will be paid to the consumer | 2 | | borrower
if the
loan
is approved;
| 3 | | (4) for refund anticipation loans, that the consumer | 4 | | borrower is responsible for repayment of the loan and | 5 | | related
fees
in the
event the tax refund is not paid or not | 6 | | paid in full; and
| 7 | | (5) for refund anticipation loans, the availability of | 8 | | electronic filing for the income tax return of the consumer
| 9 | | borrower and
the average time announced by the federal | 10 | | Internal Revenue Service within which
the consumer
| 11 | | borrower can expect to receive a refund if the consumer's | 12 | | borrower's return is filed
electronically and the consumer
| 13 | | borrower does not obtain a refund anticipation loan.
| 14 | | (Source: P.A. 92-664, eff. 1-1-03; 93-287, eff. 1-1-04.)
| 15 | | (815 ILCS 177/15)
| 16 | | Sec. 15. Posting of fee schedule and disclosures. Penalty. | 17 | | (a) A facilitator shall display a schedule showing the | 18 | | current fees for refund anticipation
loans, if refund | 19 | | anticipation loans are offered, or refund anticipation checks, | 20 | | if refund anticipation checks are offered, facilitated at the | 21 | | office. | 22 | | (b) A facilitator who offers refund anticipation loans | 23 | | shall display on each fee schedule examples of the refund | 24 | | anticipation loan
interest rates for refund anticipation loans | 25 | | of at least 5 different amounts, such as $300, $500, $1,000, |
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| 1 | | $1,500, $2,000, and $5,000. The refund anticipation loan | 2 | | interest rate shall be calculated as set forth in Section 5 of | 3 | | this Act. | 4 | | (c) A facilitator who offers refund anticipation loans | 5 | | shall also prominently display on each fee schedule: (i) a | 6 | | legend, centered,
in bold, capital letters, and in one-inch | 7 | | letters stating: "NOTICE CONCERNING REFUND
ANTICIPATION LOANS" | 8 | | and (ii) the following verbatim statement: "When you take out a
| 9 | | refund anticipation loan, you are borrowing money against your | 10 | | tax refund. If your tax refund is
less than expected, you will | 11 | | still owe the entire amount of the loan. If your refund is | 12 | | delayed,
you may have to pay additional costs. YOU CAN GET YOUR | 13 | | REFUND IN 8 TO 15 DAYS
WITHOUT PAYING ANY EXTRA FEES AND TAKING | 14 | | OUT A LOAN. You can have your
tax return filed electronically | 15 | | and your refund direct deposited into your own financial | 16 | | institution account
without obtaining a loan or paying fees for | 17 | | an extra product.". | 18 | | (d) The postings required by this Section shall be made in | 19 | | no less than 28-point type on a
document measuring no less than | 20 | | 16 inches by 20 inches. The postings required by this Section
| 21 | | shall be displayed in a prominent location at each office where | 22 | | the facilitator is facilitating
refund anticipation loans. | 23 | | (e) A facilitator may not facilitate a refund anticipation | 24 | | loan or refund anticipation check unless (i) the disclosures | 25 | | required by this Section are displayed and (ii) the fee | 26 | | actually charged for the
refund anticipation loan or refund |
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| 1 | | anticipation check is the same as the fee displayed on the
| 2 | | schedule. | 3 | | Any person who violates this Act is guilty of a petty
| 4 | | offense and shall be fined $500 for each offense. In addition, | 5 | | a facilitator who
violates this
Act shall be liable to any | 6 | | aggrieved borrower in an amount equal to 3 times
the refund
| 7 | | anticipation loan fee, plus a reasonable attorney's fee, in a | 8 | | civil action
brought in the
circuit court by the aggrieved | 9 | | borrower or by the Attorney General on behalf of
the aggrieved | 10 | | borrower.
| 11 | | (Source: P.A. 92-664, eff. 1-1-03.)
| 12 | | (815 ILCS 177/25 new) | 13 | | Sec. 25. Prohibited activities. No person, including any | 14 | | officer, agent, employee, or representative, shall: | 15 | | (a) Charge or impose any fee, charge, or other | 16 | | consideration in the making or facilitating of a refund | 17 | | anticipation loan or refund anticipation check apart from the | 18 | | fee charged by the creditor or financial institution that | 19 | | provides the loan or check. This prohibition does not include | 20 | | any charge or fee imposed by the facilitator to all of its | 21 | | customers, such as fees for tax return preparation, if the same | 22 | | fee in the same amount is charged to the customers who do not | 23 | | receive refund anticipation loans, refund anticipation checks, | 24 | | or any other tax related financial product. | 25 | | (b) Fail to comply with any provision of this Act. |
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| 1 | | (c) Directly or indirectly arrange for any third party to | 2 | | charge any interest, fee, or charge related to a refund | 3 | | anticipation loan or refund anticipation check, other than the | 4 | | refund anticipation loan or refund anticipation check fee | 5 | | imposed by the creditor, including but not limited to: (i) | 6 | | charges for insurance; (ii) attorneys fees or other collection | 7 | | costs; or (iii) check cashing. | 8 | | (d) Include any of the following provisions in any document | 9 | | provided or signed in connection with a refund anticipation | 10 | | loan or refund anticipation check, including the loan | 11 | | application or agreement: | 12 | | (i) A hold harmless clause; | 13 | | (ii) A waiver of the right to a jury trial, if | 14 | | applicable, in any action brought by or
against the | 15 | | consumer; | 16 | | (iii) Any assignment of wages or of other compensation | 17 | | for services; | 18 | | (iv) A provision in which the consumer agrees not to | 19 | | assert any claim or defense arising out of the contract, or | 20 | | to seek any remedies pursuant to Section 35 of this Act; | 21 | | (v) A waiver of any provision of this Act. Any such | 22 | | waiver shall be deemed null, void, and of no effect; | 23 | | (vi) A waiver of the right to injunctive, declaratory, | 24 | | or other equitable relief; or | 25 | | (vii) A provision requiring that any aspect of a | 26 | | resolution of a dispute between the
parties to the |
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| 1 | | agreement be kept confidential. This provision shall not | 2 | | affect the right of the parties to agree that certain | 3 | | specified information is a trade secret or otherwise | 4 | | confidential, or to later agree, after the dispute arises, | 5 | | to keep a resolution confidential. | 6 | | (e) Take or arrange for a creditor to take a security | 7 | | interest in any property of the consumer other than the | 8 | | proceeds of the consumer's tax refund to secure payment of a | 9 | | refund anticipation loan. | 10 | | (f) Directly or indirectly, individually or in conjunction | 11 | | or cooperation with another person, engage in the collection of | 12 | | an outstanding or delinquent refund anticipation loan for any | 13 | | creditor or assignee, including soliciting the execution of, | 14 | | processing, receiving, or accepting an application or | 15 | | agreement for a refund anticipation loan or refund anticipation | 16 | | check that contains a provision permitting the creditor to | 17 | | repay, by offset or other means, an outstanding or delinquent | 18 | | refund anticipation loan for that creditor or any creditor from | 19 | | the proceeds of the consumer's tax refund. | 20 | | (g) Facilitate any loan that is secured by or that the | 21 | | creditor arranges to be repaid directly from the proceeds of | 22 | | the consumer's State tax refund from the Illinois State | 23 | | treasury. | 24 | | (815 ILCS 177/30 new) | 25 | | Sec. 30. Rate limits for non-bank refund anticipation |
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| 1 | | loans. | 2 | | (a) No person shall make or facilitate a refund | 3 | | anticipation loan for which the refund anticipation loan | 4 | | interest rate is greater than 36% per annum. The refund | 5 | | anticipation loan interest rate shall be calculated as set | 6 | | forth in Section 5. Any refund anticipation loan for which the | 7 | | refund anticipation loan interest rate exceeds 36% per annum | 8 | | shall be void ab initio. | 9 | | (b) This Section does not apply to persons facilitating for | 10 | | or doing business as a bank, savings bank, savings and loan | 11 | | association, or credit union chartered under the laws of the | 12 | | United States or this State. | 13 | | (815 ILCS 177/35 new) | 14 | | Sec. 35. Applicability to certain entities. No obligation | 15 | | or prohibition imposed upon a creditor, a person, or a | 16 | | facilitator by this Act shall apply to a bank, savings bank, | 17 | | savings and loan association, or credit union operating under | 18 | | the laws of the United States or this State. | 19 | | (815 ILCS 177/40 new) | 20 | | Sec. 40. Violation. A violation of this Act constitutes an | 21 | | unlawful practice under the Consumer Fraud and Deceptive | 22 | | Business Practices Act. | 23 | | Section 25. The Interest Act is amended by changing Section |
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| 1 | | 4.1a as follows:
| 2 | | (815 ILCS 205/4.1a) (from Ch. 17, par. 6406)
| 3 | | Sec. 4.1a. Charges for and cost of the following items paid | 4 | | or
incurred by any lender in connection with any loan shall not | 5 | | be deemed
to be charges for or in connection with any loan of | 6 | | money referred to in
Section 6 of this Act, or charges by the | 7 | | lender as a consideration for
the loan referred to in this | 8 | | Section:
| 9 | | (a) hazard, mortgage or life insurance premiums, | 10 | | survey, credit
report, title insurance, abstract and | 11 | | attorneys' fees, recording
charges, escrow and appraisal | 12 | | fees, and similar charges.
| 13 | | (b) in the case of construction loans, in addition to | 14 | | the matters
referred to in clause (a) above, the actual | 15 | | cost incurred by the lender
for services for making | 16 | | physical inspections, processing payouts,
examining and | 17 | | reviewing contractors' and subcontractors' sworn
| 18 | | statements and waivers of lien and the like.
| 19 | | (c) in the case of any loan made pursuant to the | 20 | | provisions of the
Emergency Home Purchase Assistance Act of | 21 | | 1974 (Section 313 of the
National Housing Act, Chapter B of | 22 | | Title 12 of the United States Code),
in addition to the | 23 | | matters referred to in paragraphs (a) and (b) of this
| 24 | | Section all charges required or allowed by the Government | 25 | | National
Mortgage Association, whether designated as |
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| 1 | | processing fees, commitment
fees, loss reserve and | 2 | | marketing fees, discounts, origination fees or
otherwise | 3 | | designated.
| 4 | | (d) in the case of a single payment loan, made for a | 5 | | period of 6 months
or less, a regulated financial | 6 | | institution or licensed lender may contract
for and receive | 7 | | a maximum charge of $15 in lieu of interest. Such charge
| 8 | | may be collected when the loan is made, but only one such | 9 | | charge may be
contracted for, received, or collected for | 10 | | any such loan, including any
extension or renewal thereof.
| 11 | | (e) if the agreement governing the loan so provides, a | 12 | | charge not to
exceed the rate permitted under Section 3-806 | 13 | | of the Uniform Commercial
Code-Commercial Paper for any | 14 | | check, draft or order for the payment of
money submitted in | 15 | | accordance with said agreement which is unpaid or not
| 16 | | honored by a bank or other depository institution.
| 17 | | (f) if the agreement governing the loan so provides, | 18 | | for each loan
installment in default for a period of not | 19 | | less than 10 days, a charge in
an amount not in excess of | 20 | | 5% of such loan installment. Only one
delinquency charge | 21 | | may be collected on any such loan installment regardless
of | 22 | | the period during which it remains in default. Payments | 23 | | timely received
by the lender under a written extension or | 24 | | deferral agreement shall not be
subject to any delinquency | 25 | | charge.
| 26 | | Notwithstanding items (k) and (l) of subsection (1) of |
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| 1 | | Section 4 of this Act, the lender, in the case of any nonexempt | 2 | | residential mortgage loan, as defined in Section 1-4 of the | 3 | | Residential Mortgage License Act of 1987, other than a high | 4 | | risk home loan as defined in Section 10 of the High Risk Home | 5 | | Loan Act, shall have the right to include a prepayment penalty | 6 | | that extends no longer than the fixed rate period of a variable | 7 | | rate mortgage provided that, if a prepayment is made during the | 8 | | fixed rate period and not in connection with the sale or | 9 | | destruction of the dwelling securing the loan, the lender shall | 10 | | receive an amount that is no more than: | 11 | | (1) 3% of the total loan amount if the prepayment is | 12 | | made within the first 12-month period following the date | 13 | | the loan was made; | 14 | | (2) 2% of the total loan amount if the prepayment is | 15 | | made within the second
12-month period following the date | 16 | | the loan was made; or | 17 | | (3) 1% of the total loan amount if the prepayment is | 18 | | made within the third 12-month period following the date | 19 | | the loan was made, if the fixed rate period
extends 3 | 20 | | years.
| 21 | | This Section applies to loans made, refinanced, renewed, | 22 | | extended, or modified on or after the effective date of this | 23 | | amendatory Act of the 95th General Assembly.
| 24 | | Where there is a charge in addition to the stated rate of | 25 | | interest
payable directly or indirectly by the borrower and | 26 | | imposed directly or
indirectly by the lender as a consideration |
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| 1 | | for the loan, or for or in
connection with the loan of money, | 2 | | whether paid or payable by the
borrower, the seller, or any | 3 | | other person on behalf of the borrower to
the lender or to a | 4 | | third party, or for or in connection with the loan of
money, | 5 | | other than as hereinabove in this Section provided, whether
| 6 | | denominated "points," "service charge," "discount," | 7 | | "commission," or
otherwise, and without regard to declining | 8 | | balances of principal which
would result from any required or | 9 | | optional amortization of the principal
of the loan, the rate of | 10 | | interest shall be calculated in the following
manner:
| 11 | | The percentage of the principal amount of the loan | 12 | | represented by all
of such charges shall first be computed, | 13 | | which in the case of a loan
with an interest rate in excess of | 14 | | 8% per annum secured by residential
real estate, other than | 15 | | loans described in paragraphs (e) and (f) of
Section 4, shall | 16 | | not exceed 3% of such principal amount. Said
percentage shall | 17 | | then be divided by the number of years and fractions
thereof of | 18 | | the period of the loan according to its stated maturity. The
| 19 | | percentage thus obtained shall then be added to the percentage | 20 | | of the
stated annual rate of interest.
| 21 | | (Source: P.A. 95-691, eff. 6-1-08 .)
| 22 | | Section 30. The Consumer Fraud and Deceptive Business | 23 | | Practices Act is amended by adding Section 2NNN as follows: | 24 | | (815 ILCS 505/2NNN new) |
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| 1 | | Sec. 2NNN. Violations of the Tax Refund Anticipation Loan | 2 | | Reform Act. Any person who violates the Tax Refund Anticipation | 3 | | Loan Reform Act commits an unlawful practice within the meaning | 4 | | of this Act. | 5 | | Section 97. Severability. The provisions of this Act are | 6 | | severable under Section 1.31 of the Statute on Statutes.
| 7 | | Section 99. Effective date. This Act takes effect on | 8 | | January 1, 2013.
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