093_HB1516ren

 
HB1516 Re-Enrolled                   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 15, 40, 46, 51, and 59 as follows:

 6        (205 ILCS 305/15) (from Ch. 17, par. 4416)
 7        Sec. 15.  Membership defined.
 8        (1)  The membership of a credit union shall be limited to
 9    and   consist   of   the   subscribers  to  the  articles  of
10    incorporation and such other persons within the common  bond,
11    as defined in this Act and as set forth in the credit union's
12    articles   of  incorporation,  as  have  been  duly  admitted
13    members, have paid the required entrance  fee  or  membership
14    fee, or both, if any, have subscribed for one or more shares,
15    and  have  paid  the  initial  installment  thereon, and have
16    complied with such other  requirements  as  the  articles  of
17    incorporation  or bylaws specify.  Two or more persons within
18    the common bond who have jointly subscribed for one  or  more
19    shares  under  a  joint  account  and  have complied with all
20    membership requirements may each be admitted  to  membership.
21    The  surviving  spouse of a credit union member may, within 6
22    months of the member's death, become a member of  the  credit
23    union  by  paying the required entrance fee or membership fee
24    or both, if any, by subscribing for one or  more  shares  and
25    paying the initial installment thereon, and by complying with
26    such  other  requirements as the articles of incorporation or
27    bylaws specify.
28        (2)  Any member may withdraw from a credit union  at  any
29    time  upon  giving  notice  of  withdrawal as required by the
30    bylaws.
31        (3)  Any member may be expelled by  a  2/3  vote  of  the
 
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 1    members  present  at any regular or special meeting called to
 2    consider the matter, but only after an opportunity  has  been
 3    given to the member to be heard.
 4        (4)  A  member who has caused a loss to the credit union,
 5    or who has failed to maintain  one  or  more  shares  at  the
 6    credit  union, or violated Board policy applicable to members
 7    may be expelled by a majority vote of a quorum  of  directors
 8    if  the  board  has  adopted a policy providing for expulsion
 9    under those circumstances.  In maintaining  and  enforcing  a
10    policy  based  on  loss,  the  board  may  consider,  without
11    limitation,  a  member's  failure  to pay amounts due under a
12    loan, failure to provide collected funds to cover withdrawals
13    or personal share drafts or credit  union  drafts  where  the
14    member  is  a remitter, or failure to pay fees or charges due
15    the credit union.  If  a  policy  is  adopted  by  the  board
16    pursuant to this subsection (4), written notice of the policy
17    and  the effective date of the policy shall be mailed to each
18    member of the credit union at the  member's  current  address
19    appearing  on  the  records  of the credit union.  The policy
20    shall be mailed to members not fewer than 30  days  prior  to
21    the  effective  date of the policy.  In addition, new members
22    shall be provided written notice of the policy  prior  to  or
23    upon applying for membership.
24        (5)  All  or  any  part of the amount paid on shares of a
25    withdrawing member  or  expelled  member  with  any  declared
26    dividends  or interest on the date of withdrawal or expulsion
27    must, after deducting all amounts due from the member to  the
28    credit  union,  be paid to him.  The credit union may require
29    not more  than  60  days'  written  notice  of  intention  to
30    withdraw  shares, but a notice of withdrawal does not entitle
31    the member to any preferred or prior claim in  the  event  of
32    liquidation.  Withdrawing or expelled members have no further
33    rights  in  the  credit  union, but are not, by withdrawal or
34    expulsion, released from  any  obligation  they  owe  to  the
 
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 1    credit union.
 2        (6)  A  member  who has caused a loss to the credit union
 3    or has violated Board policy applicable  to  members  may  be
 4    denied  any  or  all credit union services in accordance with
 5    board policy, however, members who are denied services  shall
 6    be  allowed  to  maintain  a share account and to vote on all
 7    issues put to a vote of the membership.
 8    (Source: P.A. 91-929, eff. 12-15-00.)

 9        (205 ILCS 305/40) (from Ch. 17, par. 4441)
10        Sec. 40.  Shares to Minors.  Shares may be issued in  the
11    name  of  a  minor  or  in  the name of a custodian under the
12    Illinois Uniform Transfers to Minors  Act,  as  amended.   If
13    shares  are  issued in the name of a minor, redemption of any
14    part or all of the shares by payment to  the  minor  or  upon
15    order  of  the  minor  of  the  amount  of the shares and any
16    declared  dividends  releases  the  credit  union  from   all
17    obligations to the minor as to the shares redeemed.  Further,
18    if  shares are issued in the name of a minor, the minor shall
19    be considered as being of the  age  of  majority  and  having
20    contractual capacity.
21    (Source: P.A. 84-915.)

22        (205 ILCS 305/46) (from Ch. 17, par. 4447)
23        Sec. 46.  Loans and interest rate.
24        (1)  A  credit  union  may  make loans to its members for
25    such purpose and upon  such  security  and  terms,  including
26    rates  of  interest, as the Credit Committee, credit manager,
27    or loan officer approves. Notwithstanding the  provisions  of
28    any  other  law  in  connection  with extensions of credit, a
29    credit union may elect to contract for and  receive  interest
30    and  fees  and other charges for extensions of credit subject
31    only to the provisions of  this  Act  and  rules  promulgated
32    under  this  Act, except that extensions of credit secured by
 
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 1    residential  real  estate  shall  be  subject  to  the   laws
 2    applicable  thereto.  The  rates of interest to be charged on
 3    loans to members shall be set by the Board  of  Directors  of
 4    each individual credit union and such rates may be less than,
 5    but  may  not  exceed,  the  maximum  rate  set forth in this
 6    Section.  A borrower may repay his loan prior to maturity, in
 7    whole or in part, without penalty. The  credit  contract  may
 8    provide  for  the  payment  by  the member and receipt by the
 9    credit  union  of  all  costs  and  disbursements,  including
10    reasonable attorney's fees  and  collection  agency  charges,
11    incurred  by  the credit union to collect or enforce the debt
12    in the event of a delinquency by the member, or in the  event
13    of  a breach of any obligation of the member under the credit
14    contract.  A contingency or  hourly  arrangement  established
15    under  an  agreement  entered  into by a credit union with an
16    attorney or collection agency to collect a loan of  a  member
17    in default shall be presumed prima facie reasonable.
18        (2)  Credit unions may make loans based upon the security
19    of  any  interest  or equity in real estate, subject to rules
20    and regulations promulgated by the Director. In any  contract
21    or  loan  which  is  secured by a mortgage, deed of trust, or
22    conveyance in the nature of a mortgage, on  residential  real
23    estate,  the interest which is computed, calculated, charged,
24    or collected pursuant to such contract or loan,  or  pursuant
25    to  any  regulation or rule promulgated pursuant to this Act,
26    may not be computed, calculated, charged or collected for any
27    period of time occurring after the date on  which  the  total
28    indebtedness,  with  the exception of late payment penalties,
29    is paid in full.
30        For purposes of this subsection (2) of this Section 46, a
31    prepayment shall mean the payment of the total  indebtedness,
32    with  the  exception of late payment penalties if incurred or
33    charged, on  any  date  before  the  date  specified  in  the
34    contract  or  loan  agreement on which the total indebtedness
 
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 1    shall be paid in full,  or  before  the  date  on  which  all
 2    payments, if timely made, shall have been made.  In the event
 3    of  a  prepayment of the indebtedness which is made on a date
 4    after the date on which interest on the indebtedness was last
 5    computed, calculated, charged, or collected  but  before  the
 6    next  date  on  which  interest on the indebtedness was to be
 7    calculated, computed, charged, or collected, the  lender  may
 8    calculate,  charge  and  collect interest on the indebtedness
 9    for the period which elapsed between the date  on  which  the
10    prepayment  is  made  and  the  date on which interest on the
11    indebtedness  was  last  computed,  calculated,  charged   or
12    collected  at  a  rate  equal to 1/360 of the annual rate for
13    each day which so elapsed, which rate shall be applied to the
14    indebtedness outstanding as of the date of  prepayment.   The
15    lender  shall  refund to the borrower any interest charged or
16    collected which exceeds that which the lender may  charge  or
17    collect  pursuant  to the preceding sentence.  The provisions
18    of this amendatory Act of 1985 shall apply only to  contracts
19    or  loans entered into on or after the effective date of this
20    amendatory Act.
21        (3)  Notwithstanding any other provision of this  Act,  a
22    credit  union authorized under this Act to make loans secured
23    by an interest or equity in real estate may engage in  making
24    "reverse mortgage" loans to persons for the purpose of making
25    home  improvements  or  repairs, paying insurance premiums or
26    paying real estate taxes on the homestead properties of  such
27    persons.  If made, such loans shall be made on such terms and
28    conditions  as  the credit union shall determine and as shall
29    be consistent with the provisions of this  Section  and  such
30    rules  and  regulations  as  the  Director  shall  promulgate
31    hereunder.    For   purposes  of  this  Section,  a  "reverse
32    mortgage" loan shall be a  loan  extended  on  the  basis  of
33    existing  equity  in  homestead  property  and  secured  by a
34    mortgage on such property.  Such loans shall be  repaid  upon
 
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 1    the  sale  of the property or upon the death of the owner or,
 2    if the property is in joint tenancy, upon the  death  of  the
 3    last  surviving  joint tenant who had such an interest in the
 4    property at  the  time  the  loan  was  initiated,  provided,
 5    however,  that  the credit union and its member may by mutual
 6    agreement, establish other repayment terms.  A credit  union,
 7    in  making  a  "reverse  mortgage"  loan,  may  add  deferred
 8    interest  to  principal or otherwise provide for the charging
 9    of  interest  or  premiums   on   such   deferred   interest.
10    "Homestead" property, for purposes of this Section, means the
11    domicile and contiguous real estate owned and occupied by the
12    mortgagor.    The   Director   shall   promulgate  rules  and
13    regulations under this Section; provided that such rules  and
14    regulations  need  not  be promulgated jointly with any other
15    administrative agency of this State.
16        (4)  Notwithstanding any other provisions of this Act,  a
17    credit  union authorized under this Act to make loans secured
18    by an interest or equity  in  real  property  may  engage  in
19    making  revolving  credit loans secured by mortgages or deeds
20    of trust on such real property or by security assignments  of
21    beneficial interests in land trusts.
22        For  purposes of this Section, "revolving credit" has the
23    meaning defined in Section 4.1 of the Interest Act.
24        Any mortgage or deed of trust given to secure a revolving
25    credit loan may, and when so expressed therein shall,  secure
26    not  only  the  existing  indebtedness  but  also such future
27    advances, whether such advances are obligatory or to be  made
28    at the option of the lender, or otherwise, as are made within
29    twenty  years from the date thereof, to the same extent as if
30    such future advances were made on the date of  the  execution
31    of  such  mortgage or deed of trust, although there may be no
32    advance made at the time of execution  of  such  mortgage  or
33    other  instrument,  and although there may be no indebtedness
34    outstanding at the time any advance is  made.   The  lien  of
 
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 1    such  mortgage  or deed of trust, as to third persons without
 2    actual  notice  thereof,  shall  be  valid  as  to  all  such
 3    indebtedness and future advances form the time said  mortgage
 4    or  deed  of  trust  is filed for record in the office of the
 5    Recorder of Deeds or the Registrar of Titles  of  the  county
 6    where  the  real  property described therein is located.  The
 7    total amount of indebtedness  that  may  be  so  secured  may
 8    increase  or decrease from time to time, but the total unpaid
 9    balance so secured at any one time shall not exceed a maximum
10    principal amount which must be specified in such mortgage  or
11    deed  of  trust, plus interest thereon, and any disbursements
12    made for  the  payment  of  taxes,  special  assessments,  or
13    insurance  on  said  real  property,  with  interest  on such
14    disbursements.
15        Any such mortgage or deed of trust  shall  be  valid  and
16    have  priority  over  all  subsequent liens and encumbrances,
17    including  statutory  liens,  except  taxes  and  assessments
18    levied on said real property.
19        (5)  Compliance with federal or Illinois preemptive  laws
20    or  regulations  governing  loans  made  by  a  credit  union
21    chartered  under  this  Act  shall constitute compliance with
22    this Act.
23    (Source: P.A. 90-222, eff. 7-25-97.)

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

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

18        Section 99.  Effective date.  This Act takes effect  upon
19    becoming law.