Public Act 93-0561
SB1784 Enrolled LRB093 10148 BDD 11571 b
AN ACT concerning financial regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the High
Risk Home Loan Act.
Section 5. Purpose and construction. The purpose of
this Act is to protect borrowers who enter into high risk
home loans from abuse that occurs in the credit marketplace
when creditors and brokers are not sufficiently regulated in
Illinois. This Act is to be construed as a borrower
protection statute for all purposes. This Act shall be
liberally construed to effectuate its purpose.
Section 10. Definitions. As used in this Act:
"Approved credit counselor" means a credit counselor
approved by the Director of Financial Institutions.
"Borrower" means a natural person who seeks or obtains a
high risk home loan.
"Commissioner" means the Commissioner of the Office of
Banks and Real Estate.
"Department" means the Department of Financial
Institutions.
"Director" means the Director of Financial Institutions.
"Good faith" means honesty in fact in the conduct or
transaction concerned.
"High risk home loan" means a home equity loan in which
(i) at the time of origination, the annual percentage rate
exceeds by more than 6 percentage points in the case of a
first lien mortgage, or by more than 8 percentage points in
the case of a junior mortgage, the yield on U.S. Treasury
securities having comparable periods of maturity to the loan
maturity as of the fifteenth day of the month immediately
preceding the month in which the application for the loan is
received by the lender or (ii) the total points and fees
payable by the consumer at or before closing will exceed the
greater of 5% of the total loan amount or $800. The $800
figure shall be adjusted annually on January 1 by the annual
percentage change in the Consumer Price Index for All Urban
Consumers for all items published by the United States
Department of Labor. "High risk home loan" does not include a
loan that is made primarily for a business purpose unrelated
to the residential real property securing the loan or to an
open-end credit plan subject to 12 CFR 226 (2000, no
subsequent amendments or editions are included).
"Home equity loan" means any loan secured by the
borrower's primary residence where the proceeds are not used
as purchase money for the residence.
"Lender" means a natural or artificial person who
transfers, deals in, offers, or makes a high risk home loan.
"Lender" includes, but is not limited to, creditors and
brokers who transfer, deal in, offer, or make high risk home
loans. "Lender" does not include purchasers, assignees, or
subsequent holders of high risk home loans.
"Office" means the Office of Banks and Real Estate.
"Points and fees" means all items required to be
disclosed as points and fees under 12 CFR 226.32 (2000, no
subsequent amendments or editions included); the premium of
any single premium credit life, credit disability, credit
unemployment, or any other life or health insurance that is
financed directly or indirectly into the loan; and
compensation paid directly or indirectly to a mortgage
broker, including a broker that originates a loan in its own
name in a table-funded transaction, not otherwise included in
12 CFR 226.4.
"Reasonable" means fair, proper, just, or prudent under
the circumstances.
"Servicer" means any entity chartered under the Illinois
Banking Act, the Savings Bank Act, the Illinois Credit Union
Act, or the Illinois Savings and Loan Act of 1985 and any
person or entity licensed under the Residential Mortgage
License Act of 1987, the Consumer Installment Loan Act, or
the Sales Finance Agency Act who is responsible for the
collection or remittance for, or has the right or obligation
to collect or remit for, any lender, note owner, or note
holder or for a licensee's own account, of payments,
interest, principal, and trust items (such as hazard
insurance and taxes on a residential mortgage loan) in
accordance with the terms of the residential mortgage loan,
including loan payment follow-up, delinquency loan follow-up,
loan analysis, and any notifications to the borrower that are
necessary to enable the borrower to keep the loan current and
in good standing.
"Total loan amount" has the same meaning as that term is
given in 12 CFR 226.32 and shall be calculated in accordance
with the Federal Reserve Board's Official Staff Commentary to
that regulation.
Section 15. Ability to repay. A creditor or broker shall
not transfer, deal in, offer, or make a high risk home loan
if the creditor or broker does not believe at the time the
loan is consummated that the borrower will be able to make
the scheduled payments to repay the obligation based upon a
consideration of his or her current and expected income,
current obligations, employment status, and other financial
resources (other than the borrower's equity in the dwelling
that secures repayment of the loan). A borrower shall be
presumed to be able to repay the loan if, at the time the
loan is consummated, or at the time of the first rate
adjustment, in the case of a lower introductory interest
rate, the borrower's scheduled monthly payments on the loan
(including principal, interest, taxes, insurance, and
assessments), combined with the scheduled payments for all
other disclosed debts, do not exceed 50% of the borrower's
monthly gross income.
Section 20. Verification of ability to repay loan. The
lender shall verify the borrower's ability to repay the loan
in the case of a high risk home loan. The verification shall
require, at a minimum, the following:
(1) That the borrower prepare and submit to the
lender a personal income and expense statement in a form
prescribed by the Commissioner or the Director, who may
permit the use of other forms such as the URLA (Fannie
Mae Form 1003 (10/92), available from Fannie Mae, 3900
Wisconsin Avenue, NW, Washington, D.C. 20016-2892, and
Freddie Mac Form 85 (10/92), available from Freddie Mac
at 1101 Pennsylvania Avenue, NW, Suite 950, P.O. Box
37347, Washington, D.C. 20077-0001, no subsequent
amendments or editions) and Transmittal Summary (Fannie
Mae Form 1077 (3/97), available from Fannie Mae, 3900
Wisconsin Avenue, NW, Washington, D.C. 20016-2892, and
Freddie Mac Form 1008 (3/97), available from Freddie Mac
at 1101 Pennsylvania Avenue, NW, Suite 950, P.O. Box
37347, Washington, D.C. 20077-0001, no subsequent
amendments or editions).
(2) That the borrower's income is verified by means
of tax returns, pay stubs, accounting statements, or
other prudent means.
(3) That a credit report is obtained regarding the
borrower.
Section 25. Good faith dealings; fraudulent or deceptive
practices. A lender must act in good faith in all relations
with a borrower, including but not limited to, transferring,
dealing in, offering, or making a high risk home loan.
No lender shall employ fraudulent or deceptive acts or
practices in the making of a high risk home loan, including
deceptive marketing and sales efforts.
Section 30. Prepayment penalty. For any loan that is
subject to the provisions of this Act and is not subject to
the provisions of the Home Ownership and Equity Protection
Act of 1994, no lender shall make a high risk home loan that
includes a penalty provision for payment made: (i) after the
expiration of the 36-month period following the date the loan
was made; or (ii) that is more than:
(1) 3% of the total loan amount if the prepayment
is made within the first 12-month period following the
date the loan was made;
(2) 2% of the total loan amount if the prepayment
is made within the second 12-month period following the
date the loan was made; or
(3) 1% of the total loan amount if the prepayment
is made within the third 12-month period following the
date the loan was made.
Section 40. Pre-paid insurance products and warranties.
No lender shall transfer, deal in, offer, or make a high risk
home loan that finances a single premium credit life, credit
disability, credit unemployment, or any other life or health
insurance, directly or indirectly. Insurance calculated and
paid on a monthly basis shall not be considered to be
financed by the lender.
Section 45. Refinancing prohibited in certain cases. No
lender shall refinance any high risk home loan where such
refinancing charges additional points and fees within a
12-month period after the original loan agreement was signed,
unless the refinancing results in a tangible net benefit to
the borrower.
Section 55. Financing of points and fees. No lender
shall transfer, deal in, offer, or make a high risk home loan
that finances points and fees in excess of 6% of the total
loan amount.
Section 60. Payments to contractors. No lender shall
make a payment of any proceeds of a high risk home loan
directly to a contractor under a home improvement contract
other than:
(1) by instrument payable to the borrower or
payable jointly to the borrower and contractor; or
(2) at the election of the borrower, by a
third-party escrow agent in accordance with the terms
established in a written agreement that is signed by the
borrower, the lender, and the contractor before the date
of payment.
Section 65. Negative amortization. No lender shall
transfer, deal in, offer, or make a high risk home loan,
other than a loan secured only by a reverse mortgage, with
terms under which the outstanding balance will increase at
any time over the course of the loan because the regular
periodic payments do not cover the full amount of the
interest due, unless the negative amortization is the
consequence of a temporary forbearance sought by the
borrower.
Section 70. Negative equity. No lender shall transfer,
deal in, offer, or make a high risk home loan where the loan
amount exceeds the value of the property securing the loan.
Section 80. Late payment fee. A lender shall not
transfer, deal in, offer, or make a high risk home loan that
provides for a late payment fee, except under the following
conditions:
(1) the late payment fee shall not be in excess of
5% of the amount of the payment past due;
(2) the late payment fee shall only be assessed for
a payment past due for 15 days or more;
(3) the late payment fee shall not be imposed more
than once with respect to a single late payment;
(4) a late payment fee that the lender has
collected shall be reimbursed if the borrower presents
proof of having made a timely payment; and
(5) a lender shall treat each payment as posted on
the same business day as it was received by the lender,
servicer, or lender's agent or at the address provided to
the borrower by the lender, servicer, or lender's agent
for making payments.
Section 85. Payment compounding. No lender shall
transfer, deal in, offer, or make a high risk home loan that
includes terms under which more than 2 periodic payments
required under the loan are consolidated and paid in advance
from the loan proceeds provided to the borrower.
Section 90. Call provision. No lender shall transfer,
deal in, offer, or make a high risk home loan that contains a
provision that permits the lender, in its sole discretion, to
accelerate the indebtedness, provided that this provision
does not prohibit acceleration of a loan in good faith due to
a borrower's failure to abide by the material terms of the
loan.
Section 95. Disclosure prior to making a high risk home
loan. A lender shall not transfer, deal in, offer, or make a
high risk home loan unless the lender has given the following
notice or a substantially similar notice in writing, to the
borrower, acknowledged in writing and signed by the borrower
not later than the time the notice is required under the
notice provision contained in 12 CFR 226.31(c):
NOTICE TO BORROWER
YOU SHOULD BE AWARE THAT YOU MIGHT BE ABLE TO OBTAIN A LOAN
AT A LOWER COST. YOU SHOULD SHOP AROUND AND COMPARE LOAN
RATES AND FEES. LOAN RATES AND CLOSING COSTS AND FEES VARY
BASED ON MANY FACTORS, INCLUDING YOUR PARTICULAR CREDIT AND
FINANCIAL CIRCUMSTANCES, YOUR EMPLOYMENT HISTORY, THE
LOAN-TO-VALUE REQUESTED, AND THE TYPE OF PROPERTY THAT WILL
SECURE YOUR LOAN. THE LOAN RATE AND FEES COULD ALSO VARY
BASED ON WHICH LENDER OR BROKER YOU SELECT. IF YOU ACCEPT THE
TERMS OF THIS LOAN, THE LENDER WILL HAVE A MORTGAGE LIEN ON
YOUR HOME. YOU COULD LOSE YOUR HOME AND ANY MONEY YOU PUT
INTO IT IF YOU DO NOT MEET YOUR PAYMENT OBLIGATIONS UNDER THE
LOAN. YOU SHOULD CONSULT AN ATTORNEY-AT-LAW AND AN APPROVED
CREDIT COUNSELOR OR OTHER EXPERIENCED FINANCIAL ADVISOR
REGARDING THE RATE, FEES, AND PROVISIONS OF THIS LOAN BEFORE
YOU PROCEED. A LIST OF APPROVED CREDIT COUNSELORS IS
AVAILABLE BY CONTACTING EITHER THE ILLINOIS DEPARTMENT OF
FINANCIAL INSTITUTIONS OR THE ILLINOIS OFFICE OF BANKS AND
REAL ESTATE. YOU ARE NOT REQUIRED TO COMPLETE THIS LOAN
AGREEMENT MERELY BECAUSE YOU HAVE RECEIVED THIS DISCLOSURE OR
HAVE SIGNED A LOAN APPLICATION. ALSO, YOUR PAYMENTS ON
EXISTING DEBTS CONTRIBUTE TO YOUR CREDIT RATINGS. YOU SHOULD
NOT ACCEPT ANY ADVICE TO IGNORE YOUR REGULAR PAYMENTS TO YOUR
EXISTING LENDERS.
Section 100. Counseling prior to perfecting foreclosure
proceedings.
(a) If a high risk home loan becomes delinquent by more
than 30 days, the servicer shall send a notice advising the
borrower that he or she may wish to seek approved credit
counseling.
(b) The notice required in subsection (a) shall, at a
minimum, include the following language:
"YOUR LOAN IS OR WAS MORE THAN 30 DAYS PAST DUE. YOU MAY
BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY BE IN YOUR BEST
INTEREST TO SEEK APPROVED CREDIT COUNSELING. A LIST OF
APPROVED CREDIT COUNSELORS MAY BE OBTAINED FROM EITHER THE
ILLINOIS DEPARTMENT OF FINANCIAL INSTITUTIONS OR THE ILLINOIS
OFFICE OF BANKS AND REAL ESTATE."
(c) If, within 15 days after mailing the notice provided
for under subsection (b), a lender, servicer, or lender's
agent is notified in writing by an approved credit counselor
and the approved credit counselor advises the lender,
servicer, or lender's agent that the borrower is seeking
approved credit counseling, then the lender, servicer, or
lender's agent shall not institute legal action under Part 15
of Article XV of the Code of Civil Procedure for 30 days
after the date of that notice. Only one such 30-day period of
forbearance is allowed under this Section per subject loan.
(d) If, within the 30-day period provided under
subsection (c), the lender, servicer, or lender's agent, the
approved credit counselor, and the borrower agree to a debt
management plan, then the lender, servicer, or lender's agent
shall not institute legal action under Part 15 of Article XV
of the Code of Civil Procedure for as long as the debt
management plan is complied with by the borrower.
The agreed debt management plan must be in writing and
signed by the lender, servicer, or lender's agent, the
approved credit counselor, and the borrower. No modification
of an approved debt management plan can be made without the
mutual agreement of the lender, servicer, or lender's agent,
the approved credit counselor, and the borrower.
Upon written notice to the lender, servicer, or lender's
agent, the borrower may change approved credit counselors.
(e) If the borrower fails to comply with the agreed debt
management plan, then nothing in this Section shall be
construed to impair the legal right of the lender, servicer,
or lender's agent to enforce the contract.
Section 105. Right to cure.
(a) Before an action is filed to foreclose or collect
money due pursuant to a high risk home loan or before other
action is taken to seize or transfer ownership of property
subject to a high risk home loan, the lender or lender's
assignee of the loan shall deliver to the borrower a notice
of the right to cure the default, informing the borrower of
all of the following:
(1) The nature of the default.
(2) The borrower's right to cure the default by
paying the sum of money required, provided that a lender
or assignee shall accept any partial payment made or
tendered in response to the notice. If the amount
necessary to cure the default will change within 30 days
of the notice due to the application of a daily interest
rate or the addition of late fees, as allowed by the Act,
the notice shall give sufficient information to enable
the borrower to calculate the amount at any point within
the 30-day period.
(3) The date by which the borrower may cure the
default to avoid a court action, acceleration and
initiation of foreclosure, or other action to seize the
property, which date shall not be less than 30 days after
the date the notice is delivered, and the name, address,
and telephone number of a person to whom the payment or
tender shall be made.
(4) That if the borrower does not cure the default
by the date specified, the lender or assignee may file an
action for money due or take steps to terminate the
borrower's ownership in the property by requiring payment
in full of the high risk home loan and commencing a
foreclosure proceeding or other action to seize the
property.
(5) The name, address, and telephone number of a
person whom the borrower may contact if the borrower
disagrees with the assertion that a default has occurred
or the correctness of the calculation of the amount
required to cure the default.
(b) If a lender or assignee asserts that grounds for
acceleration exist and requires the payment in full of all
sums secured by the high risk home loan, the borrower or
anyone authorized to act on the borrower's behalf may, at any
time before the title is transferred by means of foreclosure,
by judicial proceeding and sale, or other means, cure the
default, and reinstate the high risk home loan. Cure of the
default shall reinstate the borrower to the same position as
if the default had not occurred and shall nullify, as of the
date of the cure, an acceleration of any obligation under the
high risk home loan arising from the default.
(c) To cure a default under this Section, a borrower
shall not be required to pay any charge, fee, or penalty
attributable to the exercise of the right to cure a default,
other than the fees specifically allowed by this subsection.
The borrower shall not be liable for any attorney fees
relating to the default that are incurred by the lender or
assignee prior to or during the 30-day period set forth in
subsection (a) of this Section, nor for any such fees in
excess of $100 that are incurred by the lender or assignee
after the expiration of the 30-day period but before the
lender or assignee files a foreclosure or other judicial
action or takes other action to seize or transfer ownership
of the real estate. After the lender or assignee files a
foreclosure or other judicial action or takes other action to
seize or transfer ownership of the real estate, the borrower
shall only be liable for attorney fees that are reasonable
and actually incurred by the lender or assignee, based on a
reasonable hourly rate and a reasonable number of hours.
(d) If a default is cured prior to the initiation of any
action to foreclose or to seize the residence, the lender or
assignee shall not institute a proceeding or other action for
that default. If a default is cured after the initiation of
any action, the lender or assignee shall take such steps as
are necessary to terminate the action.
(e) A lender or a lender's assignee of a high risk home
loan that has the legal right to foreclose shall use the
judicial foreclosure procedures provided by law. In such a
proceeding, the borrower may assert the nonexistence of a
default and any other claim or defense to acceleration and
foreclosure, including any claim or defense based on a
violation of the Act, though no such claim or defense shall
be deemed a compulsory counterclaim.
Section 110. Mortgage Awareness Program.
(a) The Mortgage Awareness Program is a counseling and
educational component that must be provided by the Director
and the Commissioner.
(b) The core curriculum of the Mortgage Awareness
Program shall include all of the following:
(1) Explanation of the amount financed.
(2) Explanation of the finance charge.
(3) Explanation of the annual percentage rate.
(4) Explanation of the total payments.
(5) Explanation of the loan costs, including
broker's fees, finance charges, points, and origination
fees.
(6) Explanation of the right of rescission.
(7) Explanation of foreclosure procedures.
(8) Explanation of the significant debt ratios,
including total debt to income, loan debt to income, and
loan debt to value of residence.
(9) Explanation of adjustable rate mortgage.
(10) Explanation of balloon payments.
(11) Explanation of credit options.
(12) Explanation of each item that appears on a
good faith estimate.
(13) Explanation of pre-payment penalties.
(c) Counseling session attendees must complete a
personal income and expense statement, as well as a balance
sheet, on forms provided by the Commissioner or the Director.
(d) Prior to signing a certificate of completion,
approved credit counselors shall privately discuss with each
attendee that attendee's income and expense statement and
balance sheet, as well as the terms of any loan the attendee
currently has or may be contemplating, and provide a third
party review to establish the affordability of the loan.
(e) Counseling session attendees must be given a
brochure that contains information covered by the Mortgage
Awareness Program.
(f) Any lender, prior to making a high risk home loan,
shall inform the borrower in writing of the right to
participate in the Mortgage Awareness Program.
(g) No lender shall offer less favorable loan terms to a
borrower due to a borrower's participation in the Mortgage
Awareness Program.
(h) Except as prohibited elsewhere in this Section, the
borrower may waive participation in the program, provided
that the waiver occurs no less than 2 business days after the
day that the borrower receives the notice required by
subsection (f) of this Section and that the waiver is in
writing in a form approved by the Commissioner and the
Director.
Section 115. Report of default and foreclosure rates on
conventional loans.
(a) On or before October 1 and April 1 of each year,
each servicer of Illinois residential mortgage loans shall
report to the Commissioner or the Director the default and
foreclosure data of conventional loans for the 6-month
periods ending June 30 and December 31, respectively.
(b) Each servicer shall report the following
information:
(1) The average quarterly dollar amount of
conventional one to 4 family mortgage loans secured by
Illinois real estate.
(2) The average quarterly number of conventional
one to 4 family mortgage loans secured by Illinois real
estate.
(3) The average quarterly dollar amount of
conventional one to 4 family mortgage loans secured by
Illinois real estate that are in default over 90 days.
(4) The average quarterly number of conventional
one to 4 family mortgage loans secured by Illinois real
estate that are in default over 90 days.
(5) The dollar amount of foreclosures on one to 4
family conventional loans completed during the reporting
period.
(6) The number of foreclosures on one to 4 family
conventional loans completed during the reporting period.
(7) Whether any of the loans where a foreclosure
was completed were originated less than 18 months before
the completed foreclosure.
(8) Whether any of the loans where a foreclosure
was completed had a note rate greater than 10% for first
lien mortgage loans or greater than 12% in the case of a
junior lien.
(c) An officer of the servicer shall sign the form.
Section 120. Review and analysis.
(a) The Commissioner or Director shall review and
analyze the default and foreclosure rate data reports
submitted under Section 115.
(b) The reports and their analyses may be used for the
following purposes:
(1) In setting the scope of a regularly scheduled
examination.
(2) In setting the scope of a special examination.
(3) In comparing the reported information of a
servicer.
(c) The Commissioner or the Director may correspond with
a servicer to seek clarification of information contained in
its report and to gather additional data concerning loans in
default or loans in foreclosure.
Section 125. Third party review of high risk home loans.
(a) In the case of any high risk home loan, the borrower
shall be afforded the opportunity to seek independent review
by the Office or the Department of the loan terms, in order
to determine affordability of the loan, when and if the
General Assembly appropriates adequate funding to the Office
or the Department specifically for this Section.
(b) The Office or the Department shall inform the
borrower of the amount the borrower has available for a
monthly mortgage payment based upon the borrower's budget.
(c) The Office or the Department shall review loan
information pertaining to balloon payments and adjustable
interest rates and other items disclosed by the loan
documents affecting amount of payment and shall inform the
borrower of such items.
(d) If, based upon the review, the borrower determines
that the loan is not in his or her best economic interest,
the reviewer shall so notify the lender. This determination
shall enable the borrower to withdraw from the contemplated
loan with no financial penalty.
Section 130. Circumstances voiding mandatory arbitration
provisions. Without regard to whether a borrower is acting
individually or on behalf of others similarly situated, a
mandatory arbitration provision of a high risk home loan
agreement that is oppressive, unfair, unconscionable, or
substantially in derogation of the rights of the borrower is
void.
Section 135. Remedies, enforcement, and limitations of
liability.
(a) The remedies provided in this Act are cumulative and
apply to persons or entities subject to this Act.
(b) Any knowing violation of this Act constitutes a
violation of the Consumer Fraud and Deceptive Business
Practices Act.
(c) If any provision of an agreement for a high risk
home loan violates this Act, then that provision is
unenforceable against the borrower.
(d)(1) Any natural or artificial person who purchases or
otherwise is assigned or subsequently holds a high risk home
loan shall be subject to all affirmative claims and defenses
with respect to the loan that the borrower could assert
against the lender or broker of the loan, provided that this
item (d)(1) shall not apply if the purchaser, assignee or
holder demonstrates by a preponderance of the evidence that
it:
(A) has in place, at the time of the purchase,
assignment or transfer of the loans, policies that
expressly prohibit its purchase, acceptance of assignment
or holding of any high risk home loans;
(B) requires by contract that a seller, assignor or
transferor of high risk home loans to the purchaser,
assignee or transferee represents and warrants to the
purchaser, assignee or transferee that either (i) the
seller, assignor or transferor will not sell, assign or
transfer any high risk home loans to the purchaser,
assignee or transferee, or (ii) the seller, assignor or
transferor is a beneficiary of a representation and
warranty from a previous seller, assignor or transferor
to that effect; and
(C) exercises reasonable due diligence at the time
of the purchase, assignment or transfer of high risk home
loans, or within a reasonable period of time after the
purchase, assignment or transfer of such home loans,
which is intended by the purchaser, assignee or
transferee to prevent the purchaser, assignee or
transferee from purchasing or taking assignment or
otherwise holding any high risk home loans, provided that
this reasonable due diligence requirement may be met by
sampling and need not require loan-by-loan review.
(2) Limited to the amount required to reduce or
extinguish the borrower's liability under the high cost home
loan plus the amount required to recover costs, including
reasonable attorney fees, a borrower acting only in an
individual capacity may assert claims that the borrower could
assert against a lender of the home loan against a subsequent
holder or assignee of the home loan as follows:
(A) within 5 years of the closing date of a high
risk home loan, a violation of this Act in connection
with the loan as an original action; and
(B) at any time during the term of a high risk home
loan, after an action to collect on the home loan or to
foreclose on the collateral securing the home loan has
been initiated, or the debt arising from the home loan
has been accelerated, or the home loan has become 60 days
in default, any defense, claim, counterclaim or action to
enjoin foreclosure or preserve or obtain possession of
the home that secures the loan.
(e) In addition to the limitation of liability afforded
to subsequent purchasers, assignees, or holders under
subsection (d) of this Section, a lender and a subsequent
purchaser, assignee, or holder of the high risk home loan is
not liable for a violation of this Act if:
(1) within 30 days of the loan closing and prior to
receiving any notice from the borrower of the violation,
the lender has made appropriate restitution to the
borrower and appropriate adjustments are made to the
loan; or
(2) the violation was not intentional and resulted
from a bona fide error in fact, notwithstanding the
maintenance of procedures reasonably adopted to avoid
such errors, and within 60 days of the discovery of the
violation and prior to receiving any notice from the
borrower of the violation, the borrower is notified of
the violation, appropriate restitution is made to the
borrower, and appropriate adjustments are made to the
loan.
Section 145. Subterfuge prohibited. No lender, with the
intent to avoid the application or provisions of this Act,
shall (i) divide a loan transaction into separate parts or
(ii) perform any other subterfuge.
Section 150. Preemption of administrative rules. Any
relevant administrative rule promulgated before the effective
date of this Act by the Department or the Office is
preempted.
Section 153. Reporting of violations. The Office and the
Department must report to the Attorney General all violations
of this Act of which they become aware.
Section 155. Rulemaking. The Office and the Department
may adopt reasonable rules to implement and administer this
Act.
Section 160. Judicial review. All final administrative
decisions under this Act are subject to judicial review
pursuant to the provisions of the Administrative Review Law
and any rules adopted pursuant thereto.
Section 165. Waiver prohibited. There shall be no waiver
of any provision of this Act, except as explicitly provided
in subsection (h) of Section 110.
Section 170. Superiority of Act. To the extent this Act
conflicts with any other Illinois State financial regulation
laws, except the Interest Act, this Act is superior and
supersedes those laws for the purposes of regulating high
risk home loans in Illinois.
Section 175. Severability. The provisions of this Act
are severable under Section 1.31 of the Statute on Statutes.
Section 800. The Deposit of State Moneys Act is amended
by changing Sections 11 and 11.1 as follows:
(15 ILCS 520/11) (from Ch. 130, par. 30)
Sec. 11. Protection of public deposits; eligible
collateral.
(a) For deposits not insured by an agency of the federal
government, the State Treasurer, in his or her discretion,
may accept as collateral any of the following classes of
securities, provided there has been no default in the payment
of principal or interest thereon:
(1) Bonds, notes, or other securities constituting
direct and general obligations of the United States, the
bonds, notes, or other securities constituting the direct
and general obligation of any agency or instrumentality
of the United States, the interest and principal of which
is unconditionally guaranteed by the United States, and
bonds, notes, or other securities or evidence of
indebtedness constituting the obligation of a U.S. agency
or instrumentality.
(2) Direct and general obligation bonds of the
State of Illinois or of any other state of the United
States.
(3) Revenue bonds of this State or any authority,
board, commission, or similar agency thereof.
(4) Direct and general obligation bonds of any
city, town, county, school district, or other taxing body
of any state, the debt service of which is payable from
general ad valorem taxes.
(5) Revenue bonds of any city, town, county, or
school district of the State of Illinois.
(6) Obligations issued, assumed, or guaranteed by
the International Finance Corporation, the principal of
which is not amortized during the life of the obligation,
but no such obligation shall be accepted at more than 90%
of its market value.
(7) Illinois Affordable Housing Program Trust Fund
Bonds or Notes as defined in and issued pursuant to the
Illinois Housing Development Act.
(8) In an amount equal to at least market value of
that amount of funds deposited exceeding the insurance
limitation provided by the Federal Deposit Insurance
Corporation or the National Credit Union Administration
or other approved share insurer: (i) securities, (ii)
mortgages, (iii) letters of credit issued by a Federal
Home Loan Bank, or (iv) loans covered by a State Guaranty
under the Illinois Farm Development Act.
(b) The State Treasurer may establish a system to
aggregate permissible securities received as collateral from
financial institutions in a collateral pool to secure State
deposits of the institutions that have pledged securities to
the pool.
(c) The Treasurer may at any time declare any particular
security ineligible to qualify as collateral when, in the
Treasurer's judgment, it is deemed desirable to do so.
(d) Notwithstanding any other provision of this Section,
as security the State Treasurer may, in his discretion,
accept a bond, executed by a company authorized to transact
the kinds of business described in clause (g) of Section 4 of
the Illinois Insurance Code, in an amount not less than the
amount of the deposits required by this Section to be
secured, payable to the State Treasurer for the benefit of
the People of the State of Illinois, in a form that is
acceptable to the State Treasurer.
(Source: P.A. 87-510; 87-575; 87-895; 88-93.)
(15 ILCS 520/11.1) (from Ch. 130, par. 30.1)
Sec. 11.1. The State Treasurer may, in his or her
discretion, accept as security for State deposits insured
certificates of deposit or share certificates issued to the
depository institution pledging them as security and may
require security in the amount of 125% of the value of the
State deposit. Such certificate of deposit or share
certificate shall:
(1) be fully insured by the Federal Deposit Insurance
Corporation, the Federal Savings and Loan Insurance
Corporation or the National Credit Union Share Insurance Fund
or issued by a depository institution which is rated within
the 3 highest classifications established by at least one of
the 2 standard rating services;
(2) be issued by a financial institution having assets
of $15,000,000 $30,000,000 or more; and
(3) be issued by either a savings and loan association
having a capital to asset ratio of at least 2%, by a bank
having a capital to asset ratio of at least 6% or by a credit
union having a capital to asset ratio of at least 4%.
The depository institution shall effect the assignment of
the certificate of deposit or share certificate to the State
Treasurer and shall agree, that in the event the issuer of
the certificate fails to maintain the capital to asset ratio
required by this Section, such certificate of deposit or
share certificate shall be replaced by additional suitable
security.
(Source: P.A. 85-803.)
Section 805. The Public Funds Deposit Act is amended by
changing Section 1 as follows:
(30 ILCS 225/1) (from Ch. 102, par. 34)
Sec. 1. Deposits. Any treasurer or other custodian of
public funds may deposit such funds in a savings and loan
association, savings bank, or State or national bank in this
State. When such deposits become collected funds and are not
needed for immediate disbursement, they shall be invested
within 2 working days at prevailing rates or better. The
treasurer or other custodian of public funds may require such
bank, savings bank, or savings and loan association to
deposit with him or her securities guaranteed by agencies and
instrumentalities of the federal government equal in market
value to the amount by which the funds deposited exceed the
federally insured amount. Any treasurer or other custodian of
public funds may accept as security for public funds
deposited in such bank, savings bank, or savings and loan
association any securities or other eligible collateral
authorized by Sections 11 and 11.1 of the Deposit of State
Moneys Act (15 ILCS 520/11 and 11.1) or Section 6 of the
Public Funds Investment Act (30 ILCS 235/6). Such treasurer
or other custodian is authorized to enter into an agreement
with any such bank, savings bank, or savings and loan
association, with any federally insured financial institution
or trust company, or with any agency of the U.S. government
relating to the deposit of such securities. Any such
treasurer or other custodian shall be discharged from
responsibility for any funds for which securities are so
deposited with him or her, and the funds for which securities
are so deposited shall not be subject to any otherwise
applicable limitation as to amount.
No bank, savings bank, or savings and loan association
shall receive public funds as permitted by this Section,
unless it has complied with the requirements established
pursuant to Section 6 of the Public Funds Investment Act.
(Source: P.A. 91-211, eff. 7-20-99.)
Section 810. The State Officers and Employees Money
Disposition Act is amended by changing Section 2c as follows:
(30 ILCS 230/2c) (from Ch. 127, par. 173a)
Sec. 2c. Every such officer, board, commission,
commissioner, department, institution, arm or agency is
authorized to demand and receive a bond and securities in
amount and kind satisfactory to him from any bank or savings
and loan association in which moneys held by such officer,
board, commission, commissioner, department, institution, arm
or agency for or on behalf of the State of Illinois, may be
on deposit, such securities to be held by the officer, board,
commission, commissioner, department, institution, arm or
agency for the period that such moneys are so on deposit and
then returned together with interest, dividends and other
accruals to the bank or savings and loan association. The
bond or undertaking and such securities shall be conditioned
for the return of the moneys deposited in conformity with the
terms of the deposit.
Whenever funds deposited with a bank or savings and loan
association exceed the amount of federal deposit insurance
coverage, a bond, or pledged securities, or other eligible
collateral shall be obtained. Only the types of securities or
other eligible collateral which the State Treasurer may, in
his or her discretion, accept for amounts not insured by the
Federal Deposit Insurance Corporation or the Federal Savings
and Loan Insurance Corporation under Section 11 of "An Act in
relation to State moneys", approved June 28, 1919, as
amended, may be accepted as pledged securities. The market
value of the bond or pledged securities shall at all times be
equal to or greater than the uninsured portion of the deposit
unless the funds deposited are collateralized pursuant to a
system established by the State Treasurer to aggregate
permissible securities received as collateral from financial
institutions in a collateral pool to secure State deposits of
the institution that have pledged securities to the pool.
All securities deposited by a bank or savings and loan
association under the provisions of this Section shall remain
the property of the depositary and may be stamped by the
depositary so as to indicate that such securities are
deposited as collateral. Should the bank or savings and loan
association fail or refuse to pay over the moneys, or any
part thereof, deposited with it, the officer, board,
commission, commissioner, department, institution, arm or
agency may sell such securities upon giving 5 days notice to
the depositary of his intention to so sell such securities.
Such sale shall transfer absolute ownership of the securities
so sold to the vendee thereof. The surplus, if any, over the
amount due to the State and the expenses of the sale shall be
paid to the bank or savings and loan association. Actions may
be brought in the name of the People of the State of Illinois
to enforce the claims of the State with respect to any
securities deposited by a bank or savings and loan
association.
No bank or savings and loan association shall receive
public funds as permitted by this Section, unless it has
complied with the requirements established pursuant to
Section 6 of "An Act relating to certain investments of
public funds by public agencies", approved July 23, 1943, as
now or hereafter amended.
(Source: P.A. 85-257.)
Section 815. The Public Funds Investment Act is amended
by changing Section 6 as follows:
(30 ILCS 235/6) (from Ch. 85, par. 906)
Sec. 6. Report of financial institutions.
(a) No bank shall receive any public funds unless it has
furnished the corporate authorities of a public agency
submitting a deposit with copies of the last two sworn
statements of resources and liabilities which the bank is
required to furnish to the Commissioner of Banks and Real
Estate or to the Comptroller of the Currency. Each bank
designated as a depository for public funds shall, while
acting as such depository, furnish the corporate authorities
of a public agency with a copy of all statements of resources
and liabilities which it is required to furnish to the
Commissioner of Banks and Real Estate or to the Comptroller
of the Currency; provided, that if such funds or moneys are
deposited in a bank, the amount of all such deposits not
collateralized or insured by an agency of the federal
government shall not exceed 75% of the capital stock and
surplus of such bank, and the corporate authorities of a
public agency submitting a deposit shall not be discharged
from responsibility for any funds or moneys deposited in any
bank in excess of such limitation.
(b) No savings bank or savings and loan association
shall receive public funds unless it has furnished the
corporate authorities of a public agency submitting a deposit
with copies of the last 2 sworn statements of resources and
liabilities which the savings bank or savings and loan
association is required to furnish to the Commissioner of
Banks and Real Estate or the Federal Deposit Insurance
Corporation. Each savings bank or savings and loan
association designated as a depository for public funds
shall, while acting as such depository, furnish the corporate
authorities of a public agency with a copy of all statements
of resources and liabilities which it is required to furnish
to the Commissioner of Banks and Real Estate or the Federal
Deposit Insurance Corporation; provided, that if such funds
or moneys are deposited in a savings bank or savings and loan
association, the amount of all such deposits not
collateralized or insured by an agency of the federal
government shall not exceed 75% of the net worth of such
savings bank or savings and loan association as defined by
the Federal Deposit Insurance Corporation, and the corporate
authorities of a public agency submitting a deposit shall not
be discharged from responsibility for any funds or moneys
deposited in any savings bank or savings and loan association
in excess of such limitation.
(c) No credit union shall receive public funds unless it
has furnished the corporate authorities of a public agency
submitting a share deposit with copies of the last two
reports of examination prepared by or submitted to the
Illinois Department of Financial Institutions or the National
Credit Union Administration. Each credit union designated as
a depository for public funds shall, while acting as such
depository, furnish the corporate authorities of a public
agency with a copy of all reports of examination prepared by
or furnished to the Illinois Department of Financial
Institutions or the National Credit Union Administration;
provided that if such funds or moneys are invested in a
credit union account, the amount of all such investments not
collateralized or insured by an agency of the federal
government or other approved share insurer shall not exceed
50% of the unimpaired capital and surplus of such credit
union, which shall include shares, reserves and undivided
earnings and the corporate authorities of a public agency
making an investment shall not be discharged from
responsibility for any funds or moneys invested in a credit
union in excess of such limitation.
(d) Whenever a public agency deposits any public funds
in a financial institution, the public agency may enter into
an agreement with the financial institution requiring any
funds not insured by the Federal Deposit Insurance
Corporation or the National Credit Union Administration or
other approved share insurer to be collateralized by any of
the following classes of securities, provided there has been
no default in the payment of principal or interest thereon:
(1) Bonds, notes, or other securities constituting
direct and general obligations of the United States, the
bonds, notes, or other securities constituting the direct
and general obligation of any agency or instrumentality
of the United States, the interest and principal of which
is unconditionally guaranteed by the United States, and
bonds, notes, or other securities or evidence of
indebtedness constituting the obligation of a U.S. agency
or instrumentality.
(2) Direct and general obligation bonds of the
State of Illinois or of any other state of the United
States.
(3) Revenue bonds of this State or any authority,
board, commission, or similar agency thereof.
(4) Direct and general obligation bonds of any
city, town, county, school district, or other taxing body
of any state, the debt service of which is payable from
general ad valorem taxes.
(5) Revenue bonds of any city, town, county, or
school district of the State of Illinois.
(6) Obligations issued, assumed, or guaranteed by
the International Finance Corporation, the principal of
which is not amortized during the life of the obligation,
but no such obligation shall be accepted at more than 90%
of its market value.
(7) Illinois Affordable Housing Program Trust Fund
Bonds or Notes as defined in and issued pursuant to the
Illinois Housing Development Act.
(8) In an amount equal to at least market value of
that amount of funds deposited exceeding the insurance
limitation provided by the Federal Deposit Insurance
Corporation or the National Credit Union Administration
or other approved share insurer: (i) securities, (ii)
mortgages, (iii) letters of credit issued by a Federal
Home Loan Bank, or (iv) loans covered by a State Guaranty
under the Illinois Farm Development Act.
(9) Certificates of deposit or share certificates
issued to the depository institution pledging them as
security. The public agency may require security in the
amount of 125% of the value of the public agency deposit.
Such certificate of deposit or share certificate shall:
(i) be fully insured by the Federal Deposit
Insurance Corporation, the Federal Savings and Loan
Insurance Corporation, or the National Credit Union
Share Insurance Fund or issued by a depository
institution which is rated within the 3 highest
classifications established by at least one of the 2
standard rating services;
(ii) be issued by a financial institution
having assets of $15,000,000 or more; and
(iii) be issued by either a savings and loan
association having a capital to asset ratio of at
least 2%, by a bank having a capital to asset ratio
of at least 6% or by a credit union having a capital
to asset ratio of at least 4%.
The depository institution shall effect the assignment of
the certificate of deposit or share certificate to the public
agency and shall agree that, in the event the issuer of the
certificate fails to maintain the capital to asset ratio
required by this Section, such certificate of deposit or
share certificate shall be replaced by additional suitable
security.
(e) The public agency may accept a system established by
the State Treasurer to aggregate permissible securities
received as collateral from financial institutions in a
collateral pool to secure public deposits of the institutions
that have pledged securities to the pool.
(f) The public agency may at any time declare any
particular security ineligible to qualify as collateral when,
in the public agency's judgment, it is deemed desirable to do
so.
(g) Notwithstanding any other provision of this Section,
as security a public agency may, at its discretion, accept a
bond, executed by a company authorized to transact the kinds
of business described in clause (g) of Section 4 of the
Illinois Insurance Code, in an amount not less than the
amount of the deposits required by this Section to be
secured, payable to the public agency for the benefit of the
People of the unit of government, in a form that is
acceptable to the public agency securities, mortgages,
letters of credit issued by a Federal Home Loan Bank, or
loans covered by a State Guaranty under the Illinois Farm
Development Act in an amount equal to at least market value
of that amount of funds deposited exceeding the insurance
limitation provided by the Federal Deposit Insurance
Corporation or the National Credit Union Administration or
other approved share insurer.
(h) (e) Paragraphs (a), (b), (c), and (d), (e), (f), and
(g) of this Section do not apply to the University of
Illinois, Southern Illinois University, Chicago State
University, Eastern Illinois University, Governors State
University, Illinois State University, Northeastern Illinois
University, Northern Illinois University, Western Illinois
University, the Cooperative Computer Center and public
community colleges.
(Source: P.A. 91-324, eff. 1-1-00; 91-773, eff. 6-9-00.)
Section 820. The Illinois Banking Act is amended by
changing Sections 2, 5, and 17 and by adding Section 13.6 as
follows:
(205 ILCS 5/2) (from Ch. 17, par. 302)
Sec. 2. General definitions. In this Act, unless the
context otherwise requires, the following words and phrases
shall have the following meanings:
"Accommodation party" shall have the meaning ascribed to
that term in Section 3-419 of the Uniform Commercial Code.
"Action" in the sense of a judicial proceeding includes
recoupments, counterclaims, set-off, and any other proceeding
in which rights are determined.
"Affiliate facility" of a bank means a main banking
premises or branch of another commonly owned bank. The main
banking premises or any branch of a bank may be an "affiliate
facility" with respect to one or more other commonly owned
banks.
"Appropriate federal banking agency" means the Federal
Deposit Insurance Corporation, the Federal Reserve Bank of
Chicago, or the Federal Reserve Bank of St. Louis, as
determined by federal law.
"Bank" means any person doing a banking business whether
subject to the laws of this or any other jurisdiction.
A "banking house", "branch", "branch bank" or "branch
office" shall mean any place of business of a bank at which
deposits are received, checks paid, or loans made, but shall
not include any place at which only records thereof are made,
posted, or kept. A place of business at which deposits are
received, checks paid, or loans made shall not be deemed to
be a branch, branch bank, or branch office if the place of
business is adjacent to and connected with the main banking
premises, or if it is separated from the main banking
premises by not more than an alley; provided always that (i)
if the place of business is separated by an alley from the
main banking premises there is a connection between the two
by public or private way or by subterranean or overhead
passage, and (ii) if the place of business is in a building
not wholly occupied by the bank, the place of business shall
not be within any office or room in which any other business
or service of any kind or nature other than the business of
the bank is conducted or carried on. A place of business at
which deposits are received, checks paid, or loans made shall
not be deemed to be a branch, branch bank, or branch office
(i) of any bank if the place is a terminal established and
maintained in accordance with paragraph (17) of Section 5 of
this Act, or (ii) of a commonly owned bank by virtue of
transactions conducted at that place on behalf of the other
commonly owned bank under paragraph (23) of Section 5 of this
Act if the place is an affiliate facility with respect to the
other bank.
"Branch of an out-of-state bank" means a branch
established or maintained in Illinois by an out-of-state bank
as a result of a merger between an Illinois bank and the
out-of-state bank that occurs on or after May 31, 1997, or
any branch established by the out-of-state bank following the
merger.
"Bylaws" means the bylaws of a bank that are adopted by
the bank's board of directors or shareholders for the
regulation and management of the bank's affairs. If the bank
operates as a limited liability company, however, "bylaws"
means the operating agreement of the bank.
"Call report fee" means the fee to be paid to the
Commissioner by each State bank pursuant to paragraph (a) of
subsection (3) of Section 48 of this Act.
"Capital" includes the aggregate of outstanding capital
stock and preferred stock.
"Cash flow reserve account" means the account within the
books and records of the Commissioner of Banks and Real
Estate used to record funds designated to maintain a
reasonable Bank and Trust Company Fund operating balance to
meet agency obligations on a timely basis.
"Charter" includes the original charter and all
amendments thereto and articles of merger or consolidation.
"Commissioner" means the Commissioner of Banks and Real
Estate or a person authorized by the Commissioner, the Office
of Banks and Real Estate Act, or this Act to act in the
Commissioner's stead.
"Commonly owned banks" means 2 or more banks that each
qualify as a bank subsidiary of the same bank holding company
pursuant to Section 18 of the Federal Deposit Insurance Act;
"commonly owned bank" refers to one of a group of commonly
owned banks but only with respect to one or more of the other
banks in the same group.
"Community" means a city, village, or incorporated town
and also includes the area served by the banking offices of a
bank, but need not be limited or expanded to conform to the
geographic boundaries of units of local government.
"Company" means a corporation, limited liability company,
partnership, business trust, association, or similar
organization and, unless specifically excluded, includes a
"State bank" and a "bank".
"Consolidating bank" means a party to a consolidation.
"Consolidation" takes place when 2 or more banks, or a
trust company and a bank, are extinguished and by the same
process a new bank is created, taking over the assets and
assuming the liabilities of the banks or trust company
passing out of existence.
"Continuing bank" means a merging bank, the charter of
which becomes the charter of the resulting bank.
"Converting bank" means a State bank converting to become
a national bank, or a national bank converting to become a
State bank.
"Converting trust company" means a trust company
converting to become a State bank.
"Court" means a court of competent jurisdiction.
"Director" means a member of the board of directors of a
bank. In the case of a manager-managed limited liability
company, however, "director" means a manager of the bank and,
in the case of a member-managed limited liability company,
"director" means a member of the bank. The term "director"
does not include an advisory director, honorary director,
director emeritus, or similar person, unless the person is
otherwise performing functions similar to those of a member
of the board of directors.
"Eligible depository institution" means an insured
savings association that is in default, an insured savings
association that is in danger of default, a State or national
bank that is in default or a State or national bank that is
in danger of default, as those terms are defined in this
Section, or a new bank as that term defined in Section 11(m)
of the Federal Deposit Insurance Act or a bridge bank as that
term is defined in Section 11(n) of the Federal Deposit
Insurance Act or a new federal savings association authorized
under Section 11(d)(2)(f) of the Federal Deposit Insurance
Act.
"Fiduciary" means trustee, agent, executor,
administrator, committee, guardian for a minor or for a
person under legal disability, receiver, trustee in
bankruptcy, assignee for creditors, or any holder of similar
position of trust.
"Financial institution" means a bank, savings and loan
association, credit union, or any licensee under the Consumer
Installment Loan Act or the Sales Finance Agency Act and, for
purposes of Section 48.3, any proprietary network, funds
transfer corporation, or other entity providing electronic
funds transfer services, or any corporate fiduciary, its
subsidiaries, affiliates, parent company, or contractual
service provider that is examined by the Commissioner.
"Foundation" means the Illinois Bank Examiners' Education
Foundation.
"General obligation" means a bond, note, debenture,
security, or other instrument evidencing an obligation of the
government entity that is the issuer that is supported by the
full available resources of the issuer, the principal and
interest of which is payable in whole or in part by taxation.
"Guarantee" means an undertaking or promise to answer for
payment of another's debt or performance of another's duty,
liability, or obligation whether "payment guaranteed" or
"collection guaranteed".
"In danger of default" means a State or national bank, a
federally chartered insured savings association or an
Illinois state chartered insured savings association with
respect to which the Commissioner or the appropriate federal
banking agency has advised the Federal Deposit Insurance
Corporation that:
(1) in the opinion of the Commissioner or the
appropriate federal banking agency,
(A) the State or national bank or insured
savings association is not likely to be able to meet
the demands of the State or national bank's or
savings association's obligations in the normal
course of business; and
(B) there is no reasonable prospect that the
State or national bank or insured savings
association will be able to meet those demands or
pay those obligations without federal assistance; or
(2) in the opinion of the Commissioner or the
appropriate federal banking agency,
(A) the State or national bank or insured
savings association has incurred or is likely to
incur losses that will deplete all or substantially
all of its capital; and
(B) there is no reasonable prospect that the
capital of the State or national bank or insured
savings association will be replenished without
federal assistance.
"In default" means, with respect to a State or national
bank or an insured savings association, any adjudication or
other official determination by any court of competent
jurisdiction, the Commissioner, the appropriate federal
banking agency, or other public authority pursuant to which a
conservator, receiver, or other legal custodian is appointed
for a State or national bank or an insured savings
association.
"Insured savings association" means any federal savings
association chartered under Section 5 of the federal Home
Owners' Loan Act and any State savings association chartered
under the Illinois Savings and Loan Act of 1985 or a
predecessor Illinois statute, the deposits of which are
insured by the Federal Deposit Insurance Corporation. The
term also includes a savings bank organized or operating
under the Savings Bank Act.
"Insured savings association in recovery" means an
insured savings association that is not an eligible
depository institution and that does not meet the minimum
capital requirements applicable with respect to the insured
savings association.
"Issuer" means for purposes of Section 33 every person
who shall have issued or proposed to issue any security;
except that (1) with respect to certificates of deposit,
voting trust certificates, collateral-trust certificates, and
certificates of interest or shares in an unincorporated
investment trust not having a board of directors (or persons
performing similar functions), "issuer" means the person or
persons performing the acts and assuming the duties of
depositor or manager pursuant to the provisions of the trust,
agreement, or instrument under which the securities are
issued; (2) with respect to trusts other than those specified
in clause (1) above, where the trustee is a corporation
authorized to accept and execute trusts, "issuer" means the
entrusters, depositors, or creators of the trust and any
manager or committee charged with the general direction of
the affairs of the trust pursuant to the provisions of the
agreement or instrument creating the trust; and (3) with
respect to equipment trust certificates or like securities,
"issuer" means the person to whom the equipment or property
is or is to be leased or conditionally sold.
"Letter of credit" and "customer" shall have the meanings
ascribed to those terms in Section 5-102 of the Uniform
Commercial Code.
"Main banking premises" means the location that is
designated in a bank's charter as its main office.
"Maker or obligor" means for purposes of Section 33 the
issuer of a security, the promisor in a debenture or other
debt security, or the mortgagor or grantor of a trust deed or
similar conveyance of a security interest in real or personal
property.
"Merged bank" means a merging bank that is not the
continuing, resulting, or surviving bank in a consolidation
or merger.
"Merger" includes consolidation.
"Merging bank" means a party to a bank merger.
"Merging trust company" means a trust company party to a
merger with a State bank.
"Mid-tier bank holding company" means a corporation that
(a) owns 100% of the issued and outstanding shares of each
class of stock of a State bank, (b) has no other
subsidiaries, and (c) 100% of the issued and outstanding
shares of the corporation are owned by a parent bank holding
company.
"Municipality" means any municipality, political
subdivision, school district, taxing district, or agency.
"National bank" means a national banking association
located in this State and after May 31, 1997, means a
national banking association without regard to its location.
"Out-of-state bank" means a bank chartered under the laws
of a state other than Illinois, a territory of the United
States, or the District of Columbia.
"Parent bank holding company" means a corporation that is
a bank holding company as that term is defined in the
Illinois Bank Holding Company Act of 1957 and owns 100% of
the issued and outstanding shares of a mid-tier bank holding
company.
"Person" means an individual, corporation, limited
liability company, partnership, joint venture, trust, estate,
or unincorporated association.
"Public agency" means the State of Illinois, the various
counties, townships, cities, towns, villages, school
districts, educational service regions, special road
districts, public water supply districts, fire protection
districts, drainage districts, levee districts, sewer
districts, housing authorities, the Illinois Bank Examiners'
Education Foundation, the Chicago Park District, and all
other political corporations or subdivisions of the State of
Illinois, whether now or hereafter created, whether herein
specifically mentioned or not, and shall also include any
other state or any political corporation or subdivision of
another state.
"Public funds" or "public money" means current operating
funds, special funds, interest and sinking funds, and funds
of any kind or character belonging to, in the custody of, or
subject to the control or regulation of the United States or
a public agency. "Public funds" or "public money" shall
include funds held by any of the officers, agents, or
employees of the United States or of a public agency in the
course of their official duties and, with respect to public
money of the United States, shall include Postal Savings
funds.
"Published" means, unless the context requires otherwise,
the publishing of the notice or instrument referred to in
some newspaper of general circulation in the community in
which the bank is located at least once each week for 3
successive weeks. Publishing shall be accomplished by, and
at the expense of, the bank required to publish. Where
publishing is required, the bank shall submit to the
Commissioner that evidence of the publication as the
Commissioner shall deem appropriate.
"Qualified financial contract" means any security
contract, commodity contract, forward contract, including
spot and forward foreign exchange contracts, repurchase
agreement, swap agreement, and any similar agreement, any
option to enter into any such agreement, including any
combination of the foregoing, and any master agreement for
such agreements. A master agreement, together with all
supplements thereto, shall be treated as one qualified
financial contract. The contract, option, agreement, or
combination of contracts, options, or agreements shall be
reflected upon the books, accounts, or records of the bank,
or a party to the contract shall provide documentary evidence
of such agreement.
"Recorded" means the filing or recording of the notice or
instrument referred to in the office of the Recorder of the
county wherein the bank is located.
"Resulting bank" means the bank resulting from a merger
or conversion.
"Securities" means stocks, bonds, debentures, notes, or
other similar obligations.
"Stand-by letter of credit" means a letter of credit
under which drafts are payable upon the condition the
customer has defaulted in performance of a duty, liability,
or obligation.
"State bank" means any banking corporation that has a
banking charter issued by the Commissioner under this Act.
"State Banking Board" means the State Banking Board of
Illinois.
"Subsidiary" with respect to a specified company means a
company that is controlled by the specified company. For
purposes of paragraphs (8) and (12) of Section 5 of this Act,
"control" means the exercise of operational or managerial
control of a corporation by the bank, either alone or
together with other affiliates of the bank.
"Surplus" means the aggregate of (i) amounts paid in
excess of the par value of capital stock and preferred stock;
(ii) amounts contributed other than for capital stock and
preferred stock and allocated to the surplus account; and
(iii) amounts transferred from undivided profits.
"Tier 1 Capital" and "Tier 2 Capital" have the meanings
assigned to those terms in regulations promulgated for the
appropriate federal banking agency of a state bank, as those
regulations are now or hereafter amended.
"Trust company" means a limited liability company or
corporation incorporated in this State for the purpose of
accepting and executing trusts.
"Undivided profits" means undistributed earnings less
discretionary transfers to surplus.
"Unimpaired capital and unimpaired surplus", for the
purposes of paragraph (21) of Section 5 and Sections 32, 33,
34, 35.1, 35.2, and 47 of this Act means the sum of the state
bank's Tier 1 Capital and Tier 2 Capital plus such other
shareholder equity as may be included by regulation of the
Commissioner. Unimpaired capital and unimpaired surplus
shall be calculated on the basis of the date of the last
quarterly call report filed with the Commissioner preceding
the date of the transaction for which the calculation is
made, provided that: (i) when a material event occurs after
the date of the last quarterly call report filed with the
Commissioner that reduces or increases the bank's unimpaired
capital and unimpaired surplus by 10% or more, then the
unimpaired capital and unimpaired surplus shall be calculated
from the date of the material event for a transaction
conducted after the date of the material event; and (ii) if
the Commissioner determines for safety and soundness reasons
that a state bank should calculate unimpaired capital and
unimpaired surplus more frequently than provided by this
paragraph, the Commissioner may by written notice direct the
bank to calculate unimpaired capital and unimpaired surplus
at a more frequent interval. In the case of a state bank
newly chartered under Section 13 or a state bank resulting
from a merger, consolidation, or conversion under Sections 21
through 26 for which no preceding quarterly call report has
been filed with the Commissioner, unimpaired capital and
unimpaired surplus shall be calculated for the first calendar
quarter on the basis of the effective date of the charter,
merger, consolidation, or conversion.
(Source: P.A. 92-483, eff. 8-23-01.)
(205 ILCS 5/5) (from Ch. 17, par. 311)
Sec. 5. General corporate powers. A bank organized
under this Act or subject hereto shall be a body corporate
and politic and shall, without specific mention thereof in
the charter, have all the powers conferred by this Act and
the following additional general corporate powers:
(1) To sue and be sued, complain, and defend in its
corporate name.
(2) To have a corporate seal, which may be altered at
pleasure, and to use the same by causing it or a facsimile
thereof to be impressed or affixed or in any manner
reproduced, provided that the affixing of a corporate seal to
an instrument shall not give the instrument additional force
or effect, or change the construction thereof, and the use of
a corporate seal is not mandatory.
(3) To make, alter, amend, and repeal bylaws, not
inconsistent with its charter or with law, for the
administration of the affairs of the bank. If this Act does
not provide specific guidance in matters of corporate
governance, the provisions of the Business Corporation Act of
1983 may be used if so provided in the bylaws, and if the
bank is a limited liability company, the provisions of the
Limited Liability Company Act shall be used.
(4) To elect or appoint and remove officers and agents
of the bank and define their duties and fix their
compensation.
(5) To adopt and operate reasonable bonus plans,
profit-sharing plans, stock-bonus plans, stock-option plans,
pension plans and similar incentive plans for its directors,
officers and employees.
(5.1) To manage, operate and administer a fund for the
investment of funds by a public agency or agencies, including
any unit of local government or school district, or any
person. The fund for a public agency shall invest in the
same type of investments and be subject to the same
limitations provided for the investment of public funds. The
fund for public agencies shall maintain a separate ledger
showing the amount of investment for each public agency in
the fund. "Public funds" and "public agency" as used in this
Section shall have the meanings ascribed to them in Section 1
of the Public Funds Investment Act.
(6) To make reasonable donations for the public welfare
or for charitable, scientific, religious or educational
purposes.
(7) To borrow or incur an obligation; and to pledge its
assets:
(a) to secure its borrowings, its lease of personal
or real property or its other nondeposit obligations;
(b) to enable it to act as agent for the sale of
obligations of the United States;
(c) to secure deposits of public money of the
United States, whenever required by the laws of the
United States, including without being limited to,
revenues and funds the deposit of which is subject to the
control or regulation of the United States or any of its
officers, agents, or employees and Postal Savings funds;
(d) to secure deposits of public money of any state
or of any political corporation or subdivision thereof
including, without being limited to, revenues and funds
the deposit of which is subject to the control or
regulation of any state or of any political corporation
or subdivisions thereof or of any of their officers,
agents, or employees;
(e) to secure deposits of money whenever required
by the National Bankruptcy Act;
(f) (blank); and
(g) to secure trust funds commingled with the
bank's funds, whether deposited by the bank or an
affiliate of the bank, pursuant to Section 2-8 of the
Corporate Fiduciary Act.
(8) To own, possess, and carry as assets all or part of
the real estate necessary in or with which to do its banking
business, either directly or indirectly through the ownership
of all or part of the capital stock, shares or interests in
any corporation, association, trust engaged in holding any
part or parts or all of the bank premises, engaged in such
business and in conducting a safe deposit business in the
premises or part of them, or engaged in any activity that the
bank is permitted to conduct in a subsidiary pursuant to
paragraph (12) of this Section 5.
(9) To own, possess, and carry as assets other real
estate to which it may obtain title in the collection of its
debts or that was formerly used as a part of the bank
premises, but title to any real estate except as herein
permitted shall not be retained by the bank, either directly
or by or through a subsidiary, as permitted by subsection
(12) of this Section for a total period of more than 10 years
after acquiring title, either directly or indirectly.
(10) To do any act, including the acquisition of stock,
necessary to obtain insurance of its deposits, or part
thereof, and any act necessary to obtain a guaranty, in whole
or in part, of any of its loans or investments by the United
States or any agency thereof, and any act necessary to sell
or otherwise dispose of any of its loans or investments to
the United States or any agency thereof, and to acquire and
hold membership in the Federal Reserve System.
(11) Notwithstanding any other provisions of this Act or
any other law, to do any act and to own, possess, and carry
as assets property of the character, including stock, that is
at the time authorized or permitted to national banks by an
Act of Congress, but subject always to the same limitations
and restrictions as are applicable to national banks by the
pertinent federal law and subject to applicable provisions of
the Financial Institutions Insurance Sales Law.
(12) To own, possess, and carry as assets stock of one
or more corporations that is, or are, engaged in one or more
of the following businesses:
(a) holding title to and administering assets
acquired as a result of the collection or liquidating of
loans, investments, or discounts; or
(b) holding title to and administering personal
property acquired by the bank, directly or indirectly
through a subsidiary, for the purpose of leasing to
others, provided the lease or leases and the investment
of the bank, directly or through a subsidiary, in that
personal property otherwise comply with Section 35.1 of
this Act; or
(c) carrying on or administering any of the
activities excepting the receipt of deposits or the
payment of checks or other orders for the payment of
money in which a bank may engage in carrying on its
general banking business; provided, however, that nothing
contained in this paragraph (c) shall be deemed to permit
a bank organized under this Act or subject hereto to do,
either directly or indirectly through any subsidiary, any
act, including the making of any loan or investment, or
to own, possess, or carry as assets any property that if
done by or owned, possessed, or carried by the State bank
would be in violation of or prohibited by any provision
of this Act.
The provisions of this subsection (12) shall not apply to
and shall not be deemed to limit the powers of a State bank
with respect to the ownership, possession, and carrying of
stock that a State bank is permitted to own, possess, or
carry under this Act.
Any bank intending to establish a subsidiary under this
subsection (12) shall give written notice to the Commissioner
60 days prior to the subsidiary's commencing of business or,
as the case may be, prior to acquiring stock in a corporation
that has already commenced business. After receiving the
notice, the Commissioner may waive or reduce the balance of
the 60 day notice period. The Commissioner may specify the
form of the notice and may promulgate rules and regulations
to administer this subsection (12).
(13) To accept for payment at a future date not
exceeding one year from the date of acceptance, drafts drawn
upon it by its customers; and to issue, advise, or confirm
letters of credit authorizing the holders thereof to draw
drafts upon it or its correspondents.
(14) To own and lease personal property acquired by the
bank at the request of a prospective lessee and upon the
agreement of that person to lease the personal property
provided that the lease, the agreement with respect thereto,
and the amount of the investment of the bank in the property
comply with Section 35.1 of this Act.
(15) (a) To establish and maintain, in addition to the
main banking premises, branches offering any banking
services permitted at the main banking premises of a
State bank.
(b) To establish and maintain, after May 31, 1997,
branches in another state that may conduct any activity
in that state that is authorized or permitted for any
bank that has a banking charter issued by that state,
subject to the same limitations and restrictions that are
applicable to banks chartered by that state.
(16) (Blank).
(17) To establish and maintain terminals, as authorized
by the Electronic Fund Transfer Act.
(18) To establish and maintain temporary service booths
at any International Fair held in this State which is
approved by the United States Department of Commerce, for the
duration of the international fair for the sole purpose of
providing a convenient place for foreign trade customers at
the fair to exchange their home countries' currency into
United States currency or the converse. This power shall not
be construed as establishing a new place or change of
location for the bank providing the service booth.
(19) To indemnify its officers, directors, employees,
and agents, as authorized for corporations under Section 8.75
of the Business Corporation Act of 1983.
(20) To own, possess, and carry as assets stock of, or
be or become a member of, any corporation, mutual company,
association, trust, or other entity formed exclusively for
the purpose of providing directors' and officers' liability
and bankers' blanket bond insurance or reinsurance to and for
the benefit of the stockholders, members, or beneficiaries,
or their assets or businesses, or their officers, directors,
employees, or agents, and not to or for the benefit of any
other person or entity or the public generally.
(21) To make debt or equity investments in corporations
or projects, whether for profit or not for profit, designed
to promote the development of the community and its welfare,
provided that the aggregate investment in all of these
corporations and in all of these projects does not exceed 10%
of the unimpaired capital and unimpaired surplus of the bank
and provided that this limitation shall not apply to
creditworthy loans by the bank to those corporations or
projects. Upon written application to the Commissioner, a
bank may make an investment that would, when aggregated with
all other such investments, exceed 10% of the unimpaired
capital and unimpaired surplus of the bank. The Commissioner
may approve the investment if he is of the opinion and finds
that the proposed investment will not have a material adverse
effect on the safety and soundness of the bank.
(22) To own, possess, and carry as assets the stock of a
corporation engaged in the ownership or operation of a travel
agency or to operate a travel agency as a part of its
business.
(23) With respect to affiliate facilities:
(a) to conduct at affiliate facilities for and on
behalf of another commonly owned bank, if so authorized
by the other bank, all transactions that the other bank
is authorized or permitted to perform; and
(b) to authorize a commonly owned bank to conduct
for and on behalf of it any of the transactions it is
authorized or permitted to perform at one or more
affiliate facilities.
Any bank intending to conduct or to authorize a commonly
owned bank to conduct at an affiliate facility any of the
transactions specified in this paragraph (23) shall give
written notice to the Commissioner at least 30 days before
any such transaction is conducted at the affiliate facility.
(24) To act as the agent for any fire, life, or other
insurance company authorized by the State of Illinois, by
soliciting and selling insurance and collecting premiums on
policies issued by such company; and to receive for services
so rendered such fees or commissions as may be agreed upon
between the bank and the insurance company for which it may
act as agent; provided, however, that no such bank shall in
any case assume or guarantee the payment of any premium on
insurance policies issued through its agency by its
principal; and provided further, that the bank shall not
guarantee the truth of any statement made by an assured in
filing his application for insurance.
(25) Notwithstanding any other provisions of this Act or
any other law, to offer any product or service that is at the
time authorized or permitted to any insured savings
association or out-of-state bank by applicable law, provided
that powers conferred only by this subsection (25):
(a) shall always be subject to the same limitations
and restrictions that are applicable to the insured
savings association or out-of-state bank for the product
or service by such applicable law;
(b) shall be subject to applicable provisions of
the Financial Institutions Insurance Sales Law;
(c) shall not include the right to own or conduct a
real estate brokerage business for which a license would
be required under the laws of this State; and
(d) shall not be construed to include the
establishment or maintenance of a branch, nor shall they
be construed to limit the establishment or maintenance of
a branch pursuant to subsection (11).
Not less than 30 days before engaging in any activity
under the authority of this subsection, a bank shall provide
written notice to the Commissioner of its intent to engage in
the activity. The notice shall indicate the specific federal
or state law, rule, regulation, or interpretation the bank
intends to use as authority to engage in the activity.
(Source: P.A. 91-330, eff. 7-29-99; 91-849, eff. 6-22-00;
92-483, eff. 8-23-01; 92-811, eff. 8-21-02.)
(205 ILCS 5/13.6 new)
Sec. 13.6. Banks as limited liability companies.
(a) A bank may be organized as a limited liability
company, may convert to a limited liability company, or may
merge with and into a limited liability company under the
applicable laws of this State and of the United States,
including any rules promulgated thereunder. A bank organized
as a limited liability company shall be subject to the
provisions of the Limited Liability Company Act in addition
to this Act, provided that if a provision of the Limited
Liability Company Act conflicts with a provision of this Act
or with any rule of the Commissioner, the provision of this
Act or the rule of the Commissioner shall apply.
(b) Any filing required to be made under the Limited
Liability Company Act shall be made exclusively with the
Commissioner, and the Commissioner shall possess the
exclusive authority to regulate the bank as provided in this
Act.
(c) Any organization as, conversion to, and merger with
or into a limited liability company shall be subject to the
prior approval of the Commissioner.
(d) A bank that is a limited liability company shall be
subject to all of the provisions of this Act in the same
manner as a bank that is organized in stock form.
(e) The Commissioner may promulgate rules to ensure that
a bank that is a limited liability company (i) is operating
in a safe and sound manner and (ii) is subject to the
Commissioner's authority in the same manner as a bank that is
organized in stock form.
(205 ILCS 5/17) (from Ch. 17, par. 324)
Sec. 17. Changes in charter.
(a) By compliance with the provisions of this Act a
State bank may:
(1) (blank);
(2) increase, decrease or change its capital stock,
whether issued or unissued, provided that in no case
shall the capital be diminished to the prejudice of its
creditors;
(3) provide for authorized but unissued capital
stock reserved for issuance for one or more of the
purposes provided for in subsection (5) of Section 14
hereof;
(4) authorize preferred stock, or increase,
decrease or change the preferences, qualifications,
limitations, restrictions or special or relative rights
of its preferred stock, whether issued or unissued, or
delegate authority to its board of directors as provided
in subsection (d), provided that in no case shall the
capital be diminished to the prejudice of its creditors;
(5) increase, decrease or change the par value of
its shares of its capital stock or preferred stock,
whether issued or unissued, or delegate authority to its
board of directors as provided in subsection (d);
(6) (blank);
(7) eliminate cumulative voting rights under all or
specified circumstances, or eliminate voting rights
entirely, as to any class or classes or series of stock
of the bank pursuant to paragraph (3) of Section 15,
provided that one class of shares or series thereof shall
always have voting in respect to all matters in the bank,
and provided further that the proposal to eliminate such
voting rights receives the approval of the holders of 70%
of the outstanding shares of stock entitled to vote as
provided in paragraph (7) of subsection (b) of this
Section 17;
(8) increase, decrease, or change its capital stock
or preferred stock, whether issued or unissued, for the
purpose of eliminating fractional shares or avoiding the
issuance of fractional shares, provided that in no case
shall the capital be diminished to the prejudice of its
creditors; or
(9) make such other change in its charter as may be
authorized in this Act.
(b) To effect a change or changes in a State bank's
charter as provided for in this Section 17:
(1) The board of directors shall adopt a resolution
setting forth the proposed amendment and directing that
it be submitted to a vote at a meeting of stockholders,
which may be either an annual or special meeting.
(2) If the meeting is a special meeting, written or
printed notice setting forth the proposed amendment or
summary thereof shall be given to each stockholder of
record entitled to vote at such meeting at least 30 days
before such meeting and in the manner provided in this
Act for the giving of notice of meetings of stockholders.
(3) At such special meeting, a vote of the
stockholders entitled to vote shall be taken on the
proposed amendment. Except as provided in paragraph (7)
of this subsection (b), the proposed amendment shall be
adopted upon receiving the affirmative vote of the
holders of at least two-thirds of the outstanding shares
of stock entitled to vote at such meeting, unless holders
of preferred stock are entitled to vote as a class in
respect thereof, in which event the proposed amendment
shall be adopted upon receiving the affirmative vote of
the holders of at least two-thirds of the outstanding
shares of each class of shares entitled to vote as a
class in respect thereof and of the total outstanding
shares entitled to vote at such meeting. Any number of
amendments may be submitted to the stockholders and voted
upon by them at one meeting. A certificate of the
amendment, or amendments, verified by the president, or a
vice-president, or the cashier, shall be filed
immediately in the office of the Commissioner.
(4) At any annual meeting without a resolution of
the board of directors and without a notice and prior
publication, as hereinabove provided, a proposition for a
change in the bank's charter as provided for in this
Section 17 may be submitted to a vote of the stockholders
entitled to vote at the annual meeting, except that no
proposition for authorized but unissued capital stock
reserved for issuance for one or more of the purposes
provided for in subsection (5) of Section 14 hereof shall
be submitted without complying with the provisions of
said subsection. The proposed amendment shall be adopted
upon receiving the affirmative vote of the holders of at
least two-thirds of the outstanding shares of stock
entitled to vote at such meeting, unless holders of
preferred stock are entitled to vote as a class in
respect thereof, in which event the proposed amendment
shall be adopted upon receiving the affirmative vote of
the holders of at least two-thirds of the outstanding
shares of each class of shares entitled to vote as a
class in respect thereof and the total outstanding shares
entitled to vote at such meeting. A certificate of the
amendment, or amendments, verified by the president, or a
vice-president or cashier, shall be filed immediately in
the office of the Commissioner.
(5) If an amendment or amendments shall be approved
in writing by the Commissioner, the amendment or
amendments so adopted and so approved shall be
accomplished in accordance with the vote of the
stockholders. The Commissioner may impose such terms and
conditions on the approval of the amendment or amendments
as he deems necessary or appropriate. The Commissioner
shall revoke such approval in the event such amendment or
amendments are not effected within one year from the date
of the issuance of the Commissioner's certificate and
written approval except for transactions permitted under
subsection (5) of Section 14 of this Act.
(6) No amendment or amendments shall affect suits
in which the bank is a party, nor affect causes of
action, nor affect rights of persons in any particular,
nor shall actions brought against such bank by its former
name be abated by a change of name.
(7) A proposal to amend the charter to eliminate
cumulative voting rights under all or specified
circumstances, or to eliminate voting rights entirely, as
to any class or classes or series or stock of a bank,
pursuant to paragraph (3) of Section 15 and paragraph (7)
of subsection (a) of this Section 17, shall be adopted
only upon such proposal receiving the approval of the
holders of 70% of the outstanding shares of stock
entitled to vote at the meeting where the proposal is
presented for approval, unless holders of preferred stock
are entitled to vote as a class in respect thereof, in
which event the proposed amendment shall be adopted upon
receiving the approval of the holders of 70% of the
outstanding shares of each class of shares entitled to
vote as a class in respect thereof and of the total
outstanding shares entitled to vote at the meeting where
the proposal is presented for approval. The proposal to
amend the charter pursuant to this paragraph (7) may be
voted upon at the annual meeting or a special meeting.
(8) Written or printed notice of a stockholders'
meeting to vote on a proposal to increase, decrease or
change the capital stock or preferred stock pursuant to
paragraph (8) of subsection (a) of this Section 17 and to
eliminate fractional shares or avoid the issuance of
fractional shares shall be given to each stockholder of
record entitled to vote at the meeting at least 30 days
before the meeting and in the manner provided in this Act
for the giving of notice of meetings of stockholders, and
shall include all of the following information:
(A) A statement of the purpose of the proposed
reverse stock split.
(B) A statement of the amount of consideration
being offered for the bank's stock.
(C) A statement that the bank considers the
transaction fair to the stockholders, and a
statement of the material facts upon which this
belief is based.
(D) A statement that the bank has secured an
opinion from a third party with respect to the
fairness, from a financial point of view, of the
consideration to be paid, the identity and
qualifications of the third party, how the third
party was selected, and any material relationship
between the third party and the bank.
(E) A summary of the opinion including the
basis for and the methods of arriving at the
findings and any limitation imposed by the bank in
arriving at fair value and a statement making the
opinion available for reviewing or copying by any
stockholder.
(F) A statement that objecting stockholders
will be entitled to the fair value of those shares
that are voted against the charter amendment, if a
proper demand is made on the bank and the
requirements are satisfied as specified in this
Section.
If a stockholder shall file with the bank, prior to or at the
meeting of stockholders at which the proposed charter
amendment is submitted to a vote, a written objection to the
proposed charter amendment and shall not vote in favor
thereof, and if the stockholder, within 20 days after
receiving written notice of the date the charter amendment
was accomplished pursuant to paragraph (5) of subsection (a)
of this Section 17, shall make written demand on the bank for
payment of the fair value of the stockholder's shares as of
the day prior to the date on which the vote was taken
approving the charter amendment, the bank shall pay to the
stockholder, upon surrender of the certificate or
certificates representing the stock, the fair value thereof.
The demand shall state the number of shares owned by the
objecting stockholder. The bank shall provide written notice
of the date on which the charter amendment was accomplished
to all stockholders who have filed written objections in
order that the objecting stockholders may know when they must
file written demand if they choose to do so. Any stockholder
failing to make demand within the 20-day period shall be
conclusively presumed to have consented to the charter
amendment and shall be bound by the terms thereof. If within
30 days after the date on which a charter amendment was
accomplished the value of the shares is agreed upon between
the objecting stockholders and the bank, payment therefor
shall be made within 90 days after the date on which the
charter amendment was accomplished, upon the surrender of the
stockholder's certificate or certificates representing the
shares. Upon payment of the agreed value the objecting
stockholder shall cease to have any interest in the shares or
in the bank. If within such period of 30 days the
stockholder and the bank do not so agree, then the objecting
stockholder may, within 60 days after the expiration of the
30-day period, file a complaint in the circuit court asking
for a finding and determination of the fair value of the
shares, and shall be entitled to judgment against the bank
for the amount of the fair value as of the day prior to the
date on which the vote was taken approving the charter
amendment with interest thereon to the date of the judgment.
The practice, procedure and judgment shall be governed by the
Civil Practice Law. The judgment shall be payable only upon
and simultaneously with the surrender to the bank of the
certificate or certificates representing the shares. Upon
payment of the judgment, the objecting stockholder shall
cease to have any interest in the shares or the bank. The
shares may be held and disposed of by the bank. Unless the
objecting stockholder shall file such complaint within the
time herein limited, the stockholder and all persons claiming
under the stockholder shall be conclusively presumed to have
approved and ratified the charter amendment, and shall be
bound by the terms thereof. The right of an objecting
stockholder to be paid the fair value of the stockholder's
shares of stock as herein provided shall cease if and when
the bank shall abandon the charter amendment.
(c) The purchase and holding and later resale of
treasury stock of a state bank pursuant to the provisions of
subsection (6) of Section 14 may be accomplished without a
change in its charter reflecting any decrease or increase in
capital stock.
(d) A State bank may amend its charter for the purpose
of authorizing its board of directors to issue preferred
stock; to increase, decrease, or change the par value of
shares of its preferred stock, whether issued or unissued; or
to increase, decrease, or change the preferences,
qualifications, limitations, restrictions, or special or
relative rights of its preferred stock, whether issued or
unissued; provided that in no case shall the capital be
diminished to the prejudice of the bank's creditors. An
amendment to the bank's charter granting such authority shall
establish ranges, limits, or restrictions that must be
observed when the board exercises the discretion authorized
by the amendment.
Once such an amendment is adopted and approved as
provided in this subsection, and without further action by
the bank's stockholders, the board may exercise its delegated
authority by adopting a resolution specifying the actions
that it is taking with respect to the preferred stock. The
board may fully exercise its delegated authority through one
resolution or it may exercise its delegated authority through
a series of resolutions, provided that the board's actions
remain at all times within the ranges, limitations, and
restrictions specified in the amendment to the bank's
charter.
A resolution adopted by the board under this authority
shall be submitted to the Commissioner for approval. The
Commissioner shall approve the resolution, or state any
objections to the resolution, within 30 days after the
receipt of the resolution adopted by the board. If no
objections are specified by the Commissioner within that time
frame, the resolution will be deemed to be approved by the
Commissioner. Once approved, the resolution shall be
incorporated as an addendum to the bank's charter and the
board may proceed to effect the changes set forth in the
resolution.
(Source: P.A. 91-322, eff. 1-1-00; 92-483, eff. 8-23-01.)
Section 825. The Savings Bank Act is amended by changing
Sections 1007.55 and 1008 and by adding Section 1007.125 as
follows:
(205 ILCS 205/1007.55) (from Ch. 17, par. 7301-7.55)
Sec. 1007.55. "Director" means any director, trustee, or
other person performing similar functions with respect to any
organization whether incorporated or unincorporated. In the
case of a manager-managed limited liability company, however,
"director" means a manager of the savings bank, and in the
case of a member-managed limited liability company,
"director" means a member of the savings bank. The term
"director" does not include an advisory director, honorary
director, director emeritus, or similar person, unless the
person is otherwise performing functions similar to those of
a director.
(205 ILCS 205/1007.125 new)
Sec. 1007.125. "Bylaws" means the bylaws of a savings
bank that are adopted by the savings bank's board of
directors or shareholders for the regulation and management
of the savings bank's affairs. If the savings bank operates
as a limited liability company, however, "bylaws" means the
operating agreement of the savings bank.
(Source: P.A. 86-1213.)
(205 ILCS 205/1008) (from Ch. 17, par. 7301-8)
Sec. 1008. General corporate powers.
(a) A savings bank operating under this Act shall be a
body corporate and politic and shall have all of the powers
conferred by this Act including, but not limited to, the
following powers:
(1) To sue and be sued, complain, and defend in its
corporate name and to have a common seal, which it may
alter or renew at pleasure.
(2) To obtain and maintain insurance by a deposit
insurance corporation as defined in this Act.
(3) To act as a fiscal agent for the United States,
the State of Illinois or any department, branch, arm, or
agency of the State or any unit of local government or
school district in the State, when duly designated for
that purpose, and as agent to perform reasonable
functions as may be required of it.
(4) To become a member of or deal with any
corporation or agency of the United States or the State
of Illinois, to the extent that the agency assists in
furthering or facilitating its purposes or powers and to
that end to purchase stock or securities thereof or
deposit money therewith, and to comply with any other
conditions of membership or credit.
(5) To make donations in reasonable amounts for the
public welfare or for charitable, scientific, religious,
or educational purposes.
(6) To adopt and operate reasonable insurance,
bonus, profit sharing, and retirement plans for officers
and employees and for directors including, but not
limited to, advisory, honorary, and emeritus directors,
who are not officers or employees.
(7) To reject any application for membership; to
retire deposit accounts by enforced retirement as
provided in this Act and the bylaws; and to limit the
issuance of, or payments on, deposit accounts, subject,
however, to contractual obligations.
(8) To purchase stock in service corporations and
to invest in any form of indebtedness of any service
corporation as defined in this Act, subject to
regulations of the Commissioner.
(9) To purchase stock of a corporation whose
principal purpose is to operate a safe deposit company or
escrow service company.
(10) To exercise all the powers necessary to
qualify as a trustee or custodian under federal or State
law, provided that the authority to accept and execute
trusts is subject to the provisions of the Corporate
Fiduciary Act and to the supervision of those activities
by the Commissioner.
(11) (Blank).
(12) To establish, maintain, and operate terminals
as authorized by the Electronic Fund Transfer Act.
(13) To pledge its assets:
(A) to enable it to act as agent for the sale
of obligations of the United States;
(B) to secure deposits;
(C) to secure deposits of money whenever
required by the National Bankruptcy Act;
(D) (blank); and
(E) to secure trust funds commingled with the
savings bank's funds, whether deposited by the
savings bank or an affiliate of the savings bank, as
required under Section 2-8 of the Corporate
Fiduciary Act.
(14) To accept for payment at a future date not to
exceed one year from the date of acceptance, drafts drawn
upon it by its customers; and to issue, advise, or
confirm letters of credit authorizing holders thereof to
draw drafts upon it or its correspondents.
(15) Subject to the regulations of the
Commissioner, to own and lease personal property acquired
by the savings bank at the request of a prospective
lessee and, upon the agreement of that person, to lease
the personal property.
(16) To establish temporary service booths at any
International Fair in this State that is approved by the
United States Department of Commerce for the duration of
the international fair for the purpose of providing a
convenient place for foreign trade customers to exchange
their home countries' currency into United States
currency or the converse. To provide temporary periodic
service to persons residing in a bona fide nursing home,
senior citizens' retirement home, or long-term care
facility. These powers shall not be construed as
establishing a new place or change of location for the
savings bank providing the service booth.
(17) To indemnify its officers, directors,
employees, and agents, as authorized for corporations
under Section 8.75 of the Business Corporations Act of
1983.
(18) To provide data processing services to others
on a for-profit basis.
(19) To utilize any electronic technology to
provide customers with home banking services.
(20) Subject to the regulations of the
Commissioner, to enter into an agreement to act as a
surety.
(21) Subject to the regulations of the
Commissioner, to issue credit cards, extend credit
therewith, and otherwise engage in or participate in
credit card operations.
(22) To purchase for its own account shares of
stock of a bankers' bank, described in Section 13(b)(1)
of the Illinois Banking Act, on the same terms and
conditions as a bank may purchase such shares. In no
event shall the total amount of such stock held by a
savings bank in such bankers' bank exceed 10% of its
capital and surplus (including undivided profits) and in
no event shall a savings bank acquire more than 5% of any
class of voting securities of such bankers' bank.
(23) With respect to affiliate facilities:
(A) to conduct at affiliate facilities any of
the following transactions for and on behalf of any
affiliated depository institution, if so authorized
by the affiliate or affiliates: receiving deposits;
renewing deposits; cashing and issuing checks,
drafts, money orders, travelers checks, or similar
instruments; changing money; receiving payments on
existing indebtedness; and conducting ministerial
functions with respect to loan applications,
servicing loans, and providing loan account
information; and
(B) to authorize an affiliated depository
institution to conduct for and on behalf of it, any
of the transactions listed in this subsection at one
or more affiliate facilities.
A savings bank intending to conduct or to authorize
an affiliated depository institution to conduct at an
affiliate facility any of the transactions specified in
this subsection shall give written notice to the
Commissioner at least 30 days before any such transaction
is conducted at an affiliate facility. All conduct under
this subsection shall be on terms consistent with safe
and sound banking practices and applicable law.
(24) Subject to Article XLIV of the Illinois
Insurance Code, to act as the agent for any fire, life,
or other insurance company authorized by the State of
Illinois, by soliciting and selling insurance and
collecting premiums on policies issued by such company;
and may receive for services so rendered such fees or
commissions as may be agreed upon between the said
savings bank and the insurance company for which it may
act as agent; provided, however, that no such savings
bank shall in any case assume or guarantee the payment of
any premium on insurance policies issued through its
agency by its principal; and provided further, that the
savings bank shall not guarantee the truth of any
statement made by an assured in filing his application
for insurance.
(25) To become a member of the Federal Home Loan
Bank and to have the powers granted to a savings
association organized under the Illinois Savings and Loan
Act of 1985 or the laws of the United States, subject to
regulations of the Commissioner.
(26) To offer any product or service that is at the
time authorized or permitted to a bank by applicable law,
but subject always to the same limitations and
restrictions that are applicable to the bank for the
product or service by such applicable law and subject to
the applicable provisions of the Financial Institutions
Insurance Sales Law and rules of the Commissioner.
(b) If this Act or the regulations adopted under this
Act fail to provide specific guidance in matters of corporate
governance, the provisions of the Business Corporation Act of
1983 may be used, or if the savings bank is a limited
liability company, the provisions of the Limited Liability
Company shall be used.
(c) A savings bank may be organized as a limited
liability company, may convert to a limited liability
company, or may merge with and into a limited liability
company, under the applicable laws of this State and of the
United States, including any rules promulgated thereunder. A
savings bank organized as a limited liability company shall
be subject to the provisions of the Limited Liability Company
Act in addition to this Act, provided that if a provision of
the Limited Liability Company Act conflicts with a provision
of this Act or with any rule of the Commissioner, the
provision of this Act or the rule of the Commissioner shall
apply.
Any filing required to be made under the Limited
Liability Company Act shall be made exclusively with the
Commissioner, and the Commissioner shall possess the
exclusive authority to regulate the savings bank as provided
in this Act.
Any organization as, conversion to, and merger with or
into a limited liability company shall be subject to the
prior approval of the Commissioner.
A savings bank that is a limited liability company shall
be subject to all of the provisions of this Act in the same
manner as a savings bank that is organized in stock form.
The Commissioner may promulgate rules to ensure that a
savings bank that is a limited liability company (i) is
operating in a safe and sound manner and (ii) is subject to
the Commissioner's authority in the same manner as a savings
bank that is organized in stock form.
(Source: P.A. 91-97, eff. 7-9-99; 91-357, eff. 7-29-99;
92-483, eff. 8-23-01.)
Section 830. The Residential Mortgage License Act of
1987 is amended by changing Sections 1-4, 2-4, 2-6, 3-2, 3-5,
and 4-5 and by adding Sections 4-8.1, 4-8.2, and Article 7 as
follows:
(205 ILCS 635/1-4) (from Ch. 17, par. 2321-4)
Sec. 1-4. Definitions.
(a) "Residential real property" or "residential real
estate" shall mean real property located in this State
improved by a one-to-four family dwelling used or occupied,
wholly or partly, as the home or residence of one or more
persons and may refer, subject to regulations of the
Commissioner, to unimproved real property upon which those
kinds dwellings are to be constructed.
(b) "Making a residential mortgage loan" or "funding a
residential mortgage loan" shall mean for compensation or
gain, either directly or indirectly, advancing funds or
making a commitment to advance funds to a loan applicant for
a residential mortgage loan.
(c) "Soliciting, processing, placing, or negotiating a
residential mortgage loan" shall mean for compensation or
gain, either directly or indirectly, accepting or offering to
accept an application for a residential mortgage loan,
assisting or offering to assist in the processing of an
application for a residential mortgage loan on behalf of a
borrower, or negotiating or offering to negotiate the terms
or conditions of a residential mortgage loan with a lender on
behalf of a borrower including, but not limited to, the
submission of credit packages for the approval of lenders,
the preparation of residential mortgage loan closing
documents, including a closing in the name of a broker.
(d) "Exempt person or entity" shall mean the following:
(1) (i) Any banking organization or foreign banking
corporation licensed by the Illinois Commissioner of
Banks and Real Estate or the United States Comptroller of
the Currency to transact business in this State; (ii) any
national bank, federally chartered savings and loan
association, federal savings bank, federal credit union;
(iii) any pension trust, bank trust, or bank trust
company; (iv) any savings and loan association, savings
bank, or credit union organized under the laws of this or
any other state; (v) any Illinois Consumer Installment
Loan Act licensee; (vi) any insurance company authorized
to transact business in this State; (vii) any entity
engaged solely in commercial mortgage lending; (viii) any
service corporation of a savings and loan association or
savings bank organized under the laws of this State or
the service corporation of a federally chartered savings
and loan association or savings bank having its principal
place of business in this State, other than a service
corporation licensed or entitled to reciprocity under the
Real Estate License Act of 2000; or (ix) any first tier
subsidiary of a bank, the charter of which is issued
under the Illinois Banking Act by the Illinois
Commissioner of Banks and Real Estate, or the first tier
subsidiary of a bank chartered by the United States
Comptroller of the Currency and that has its principal
place of business in this State, provided that the first
tier subsidiary is regularly examined by the Illinois
Commissioner of Banks and Real Estate or the Comptroller
of the Currency, or a consumer compliance examination is
regularly conducted by the Federal Reserve Board.
(1.5) Any employee of a person or entity mentioned
in item (1) of this subsection.
(2) Any person or entity that either (i) has a
physical presence in Illinois or (ii) does not originate
mortgage loans in the ordinary course of business making
or acquiring residential mortgage loans with his or her
or its own funds for his or her or its own investment
without intent to make, acquire, or resell more than 10
residential mortgage loans in any one calendar year.
(3) Any person employed by a licensee to assist in
the performance of the activities regulated by this Act
who is compensated in any manner by only one licensee.
(4) Any person licensed pursuant to the Real Estate
License Act of 2000, who engages only in the taking of
applications and credit and appraisal information to
forward to a licensee or an exempt entity under this Act
and who is compensated by either a licensee or an exempt
entity under this Act, but is not compensated by either
the buyer (applicant) or the seller.
(5) Any individual, corporation, partnership, or
other entity that originates, services, or brokers
residential mortgage loans, as these activities are
defined in this Act, and who or which receives no
compensation for those activities, subject to the
Commissioner's regulations with regard to the nature and
amount of compensation.
(6) A person who prepares supporting documentation
for a residential mortgage loan application taken by a
licensee and performs ministerial functions pursuant to
specific instructions of the licensee who neither
requires nor permits the preparer to exercise his or her
discretion or judgment; provided that this activity is
engaged in pursuant to a binding, written agreement
between the licensee and the preparer that:
(A) holds the licensee fully accountable for
the preparer's action; and
(B) otherwise meets the requirements of this
Section and this Act, does not undermine the
purposes of this Act, and is approved by the
Commissioner.
(e) "Licensee" or "residential mortgage licensee" shall
mean a person, partnership, association, corporation, or any
other entity who or which is licensed pursuant to this Act to
engage in the activities regulated by this Act.
(f) "Mortgage loan" "residential mortgage loan" or "home
mortgage loan" shall mean a loan to or for the benefit of any
natural person made primarily for personal, family, or
household use, primarily secured by either a mortgage on
residential real property or certificates of stock or other
evidence of ownership interests in and proprietary leases
from, corporations, partnerships, or limited liability
companies formed for the purpose of cooperative ownership of
residential real property, all located in Illinois.
(g) "Lender" shall mean any person, partnership,
association, corporation, or any other entity who either
lends or invests money in residential mortgage loans.
(h) "Ultimate equitable owner" shall mean a person who,
directly or indirectly, owns or controls an ownership
interest in a corporation, foreign corporation, alien
business organization, trust, or any other form of business
organization regardless of whether the person owns or
controls the ownership interest through one or more persons
or one or more proxies, powers of attorney, nominees,
corporations, associations, partnerships, trusts, joint stock
companies, or other entities or devices, or any combination
thereof.
(i) "Residential mortgage financing transaction" shall
mean the negotiation, acquisition, sale, or arrangement for
or the offer to negotiate, acquire, sell, or arrange for, a
residential mortgage loan or residential mortgage loan
commitment.
(j) "Personal residence address" shall mean a street
address and shall not include a post office box number.
(k) "Residential mortgage loan commitment" shall mean a
contract for residential mortgage loan financing.
(l) "Party to a residential mortgage financing
transaction" shall mean a borrower, lender, or loan broker in
a residential mortgage financing transaction.
(m) "Payments" shall mean payment of all or any of the
following: principal, interest and escrow reserves for taxes,
insurance and other related reserves, and reimbursement for
lender advances.
(n) "Commissioner" shall mean the Commissioner of Banks
and Real Estate or a person authorized by the Commissioner,
the Office of Banks and Real Estate Act, or this Act to act
in the Commissioner's stead.
(o) "Loan brokering", "brokering", or "brokerage
service" shall mean the act of helping to obtain from another
entity, for a borrower, a loan secured by residential real
estate situated in Illinois or assisting a borrower in
obtaining a loan secured by residential real estate situated
in Illinois in return for consideration to be paid by either
the borrower or the lender including, but not limited to,
contracting for the delivery of residential mortgage loans to
a third party lender and soliciting, processing, placing, or
negotiating residential mortgage loans.
(p) "Loan broker" or "broker" shall mean a person,
partnership, association, corporation, or limited liability
company, other than those persons, partnerships,
associations, corporations, or limited liability companies
exempted from licensing pursuant to Section 1-4, subsection
(d), of this Act, who performs the activities described in
subsections (c) and (o) of this Section.
(q) "Servicing" shall mean the collection or remittance
for or the right or obligation to collect or remit for any
lender, noteowner, noteholder, or for a licensee's own
account, of payments, interests, principal, and trust items
such as hazard insurance and taxes on a residential mortgage
loan in accordance with the terms of the residential mortgage
loan; and includes loan payment follow-up, delinquency loan
follow-up, loan analysis and any notifications to the
borrower that are necessary to enable the borrower to keep
the loan current and in good standing.
(r) "Full service office" shall mean office and staff in
Illinois reasonably adequate to handle efficiently
communications, questions, and other matters relating to any
application for, or an existing home mortgage secured by
residential real estate situated in Illinois with respect to
which the licensee is brokering, funding originating,
purchasing, or servicing. The management and operation of
each full service office must include observance of good
business practices such as adequate, organized, and accurate
books and records; ample phone lines, hours of business,
staff training and supervision, and provision for a mechanism
to resolve consumer inquiries, complaints, and problems. The
Commissioner shall issue regulations with regard to these
requirements and shall include an evaluation of compliance
with this Section in his or her periodic examination of each
licensee.
(s) "Purchasing" shall mean the purchase of conventional
or government-insured mortgage loans secured by residential
real estate situated in Illinois from either the lender or
from the secondary market.
(t) "Borrower" shall mean the person or persons who seek
the services of a loan broker, originator, or lender.
(u) "Originating" shall mean the issuing of commitments
for and funding of residential mortgage loans.
(v) "Loan brokerage agreement" shall mean a written
agreement in which a broker or loan broker agrees to do
either of the following:
(1) obtain a residential mortgage loan for the
borrower or assist the borrower in obtaining a
residential mortgage loan; or
(2) consider making a residential mortgage loan to
the borrower.
(w) "Advertisement" shall mean the attempt by
publication, dissemination, or circulation to induce,
directly or indirectly, any person to enter into a
residential mortgage loan agreement or residential mortgage
loan brokerage agreement relative to a mortgage secured by
residential real estate situated in Illinois.
(x) "Residential Mortgage Board" shall mean the
Residential Mortgage Board created in Section 1-5 of this
Act.
(y) "Government-insured mortgage loan" shall mean any
mortgage loan made on the security of residential real estate
insured by the Department of Housing and Urban Development or
Farmers Home Loan Administration, or guaranteed by the
Veterans Administration.
(z) "Annual audit" shall mean a certified audit of the
licensee's books and records and systems of internal control
performed by a certified public accountant in accordance with
generally accepted accounting principles and generally
accepted auditing standards.
(aa) "Financial institution" shall mean a savings and
loan association, savings bank, credit union, or a bank
organized under the laws of Illinois or a savings and loan
association, savings bank, credit union or a bank organized
under the laws of the United States and headquartered in
Illinois.
(bb) "Escrow agent" shall mean a third party, individual
or entity charged with the fiduciary obligation for holding
escrow funds on a residential mortgage loan pending final
payout of those funds in accordance with the terms of the
residential mortgage loan.
(cc) "Net worth" shall have the meaning ascribed thereto
in Section 3-5 of this Act.
(dd) "Affiliate" shall mean:
(1) any entity that directly controls or is
controlled by the licensee and any other company that is
directly affecting activities regulated by this Act that
is controlled by the company that controls the licensee;
(2) any entity:
(A) that is controlled, directly or
indirectly, by a trust or otherwise, by or for the
benefit of shareholders who beneficially or
otherwise control, directly or indirectly, by trust
or otherwise, the licensee or any company that
controls the licensee; or
(B) a majority of the directors or trustees of
which constitute a majority of the persons holding
any such office with the licensee or any company
that controls the licensee;
(3) any company, including a real estate investment
trust, that is sponsored and advised on a contractual
basis by the licensee or any subsidiary or affiliate of
the licensee.
The Commissioner may define by rule and regulation any
terms used in this Act for the efficient and clear
administration of this Act.
(ee) "First tier subsidiary" shall be defined by
regulation incorporating the comparable definitions used by
the Office of the Comptroller of the Currency and the
Illinois Commissioner of Banks and Real Estate.
(ff) "Gross delinquency rate" means the quotient
determined by dividing (1) the sum of (i) the number of
government-insured residential mortgage loans funded or
purchased by a licensee in the preceding calendar year that
are delinquent and (ii) the number of conventional
residential mortgage loans funded or purchased by the
licensee in the preceding calendar year that are delinquent
by (2) the sum of (i) the number of government-insured
residential mortgage loans funded or purchased by the
licensee in the preceding calendar year and (ii) the number
of conventional residential mortgage loans funded or
purchased by the licensee in the preceding calendar year.
(gg) "Delinquency rate factor" means the factor set by
rule of the Commissioner that is multiplied by the average
gross delinquency rate of licensees, determined annually for
the immediately preceding calendar year, for the purpose of
determining which licensees shall be examined by the
Commissioner pursuant to subsection (b) of Section 4-8 of
this Act.
(hh) "Loan originator" means any natural person who, for
compensation or in the expectation of compensation, either
directly or indirectly makes, offers to make, solicits,
places, or negotiates a residential mortgage loan.
(Source: P.A. 90-772, eff. 1-1-99; 91-245, eff. 12-31-99.)
(205 ILCS 635/2-4) (from Ch. 17, par. 2322-4)
Sec. 2-4. Averments of Licensee. Each application for
license or for the renewal of a license shall be accompanied
by the following averments stating that the applicant:
(a) Will maintain at least one full service office
within the State of Illinois pursuant to Section 3-4 of this
Act;
(b) Will maintain staff reasonably adequate to meet the
requirements of Section 3-4 of this Act;
(c) Will keep and maintain for 36 months the same
written records as required by the federal Equal Credit
Opportunity Act, and any other information required by
regulations of the Commissioner regarding any home mortgage
in the course of the conduct of its residential mortgage
business;
(d) Will file with the Commissioner, when due, any
report or reports which it is required to file under any of
the provisions of this Act;
(e) Will not engage, whether as principal or agent, in
the practice of rejecting residential mortgage applications
without reasonable cause, or varying terms or application
procedures without reasonable cause, for home mortgages on
real estate within any specific geographic area from the
terms or procedures generally provided by the licensee within
other geographic areas of the State;
(f) Will not engage in fraudulent home mortgage
underwriting practices;
(g) Will not make payment, whether directly or
indirectly, of any kind to any in house or fee appraiser of
any government or private money lending agency with which an
application for a home mortgage has been filed for the
purpose of influencing the independent judgment of the
appraiser with respect to the value of any real estate which
is to be covered by such home mortgage;
(h) Has filed tax returns (State and Federal) for the
past 3 years or filed with the Commissioner an accountant's
or attorney's statement as to why no return was filed;
(i) Will not engage in any discrimination or redlining
activities prohibited by Section 3-8 of this Act;
(j) Will not knowingly make any false promises likely to
influence or persuade, or pursue a course of
misrepresentation and false promises through agents,
solicitors, advertising or otherwise;
(k) Will not knowingly misrepresent, circumvent or
conceal, through whatever subterfuge or device, any of the
material particulars or the nature thereof, regarding a
transaction to which it is a party to the injury of another
party thereto;
(l) Will disburse funds in accordance with its
agreements;
(m) Has not committed a crime against the law of this
State, any other state or of the United States, involving
moral turpitude, fraudulent or dishonest dealing, and that no
final judgment has been entered against it in a civil action
upon grounds of fraud, misrepresentation or deceit which has
not been previously reported to the Commissioner;
(n) Will account or deliver to any person any personal
property such as money, fund, deposit, check, draft,
mortgage, other document or thing of value, which has come
into its possession, and which is not its property, or which
it is not in law or equity entitled to retain under the
circumstances, at the time which has been agreed upon or is
required by law, or, in the absence of a fixed time, upon
demand of the person entitled to such accounting and
delivery;
(o) Has not engaged in any conduct which would be cause
for denial of a license;
(p) Has not become insolvent;
(q) Has not submitted an application for a license under
this Act which contains a material misstatement;
(r) Has not demonstrated by course of conduct,
negligence or incompetence in performing any act for which it
is required to hold a license under this Act;
(s) Will advise the Commissioner in writing of any
changes to the information submitted on the most recent
application for license within 30 days of said change. The
written notice must be signed in the same form as the
application for license being amended;
(t) Will comply with the provisions of this Act, or with
any lawful order, rule or regulation made or issued under the
provisions of this Act;
(u) Will submit to periodic examination by the
Commissioner as required by this Act;
(v) Will advise the Commissioner in writing of judgments
entered against, and bankruptcy petitions by, the license
applicant within 5 days of occurrence;
(w) Will advise the Commissioner in writing within 30
days when the license applicant requests a licensee under
this Act to repurchase a loan, and the circumstances
therefor; and
(x) Will advise the Commissioner in writing within 30
days when the license applicant is requested by another
entity to repurchase a loan, and the circumstances therefor.
(y) Will at all times act in a manner consistent with
subsections (a) and (b) of Section 1-2 of this Act.
(x) Will not knowingly hire or employ a loan originator
who is not registered with the Commissioner as required under
Section 7-1 of this Act.
A licensee who fails to fulfill obligations of an
averment, to comply with averments made, or otherwise
violates any of the averments made under this Section shall
be subject to the penalties in Section 4-5 of this Act.
(Source: P.A. 90-301, eff. 8-1-97.)
(205 ILCS 635/2-6) (from Ch. 17, par. 2322-6)
Sec. 2-6. License issuance and renewal; fee.
(a) Beginning May 1, 1992, licenses issued before
January 1, 1988, shall be renewed every 2 years on May 1.
Beginning May 1, 1992, licenses issued on or after January 1,
1988, shall be renewed every 2 years on the anniversary of
the date of the issuance of the original license. Licenses
issued for first time applicants on or after May 1, 1992,
shall be renewed on the first anniversary of their issuance
and every 2 years thereafter. Properly completed renewal
application forms and filing fees must be received by the
Commissioner 60 45 days prior to the renewal date.
(b) It shall be the responsibility of each licensee to
accomplish renewal of its license; failure of the licensee to
receive renewal forms absent a request sent by certified mail
for such forms will not waive said responsibility. Failure by
a licensee to submit a properly completed renewal application
form and fees in a timely fashion, absent a written extension
from the Commissioner, will result in the assessment of
additional fees, as follows:
(1) A fee of $500 will be assessed to the licensee
30 days after the proper renewal date and $1,000 each
month thereafter, until the license is either renewed or
expires pursuant to Section 2-6, subsections (c) and (d),
of this Act.
(2) Such fee will be assessed without prior notice
to the licensee, but will be assessed only in cases
wherein the Commissioner has in his or her possession
documentation of the licensee's continuing activity for
which the unrenewed license was issued.
(c) A license which is not renewed by the date required
in this Section shall automatically become inactive. No
activity regulated by this Act shall be conducted by the
licensee when a license becomes inactive. An inactive
license may be reactivated by filing a completed reactivation
application with the Commissioner, payment of the renewal
fee, and payment of a reactivation fee equal to the renewal
fee.
(d) A license which is not renewed within one year of
becoming inactive shall expire.
(e) A licensee ceasing an activity or activities
regulated by this Act and desiring to no longer be licensed
shall so inform the Commissioner in writing and, at the same
time, convey the license and all other symbols or indicia of
licensure. The licensee shall include a plan for the
withdrawal from regulated business, including a timetable for
the disposition of the business. Upon receipt of such
written notice, the Commissioner shall issue a certified
statement canceling the license.
(Source: P.A. 90-301, eff. 8-1-97.)
(205 ILCS 635/3-2) (from Ch. 17, par. 2323-2)
Sec. 3-2. Annual audit.
(a) At the licensee's fiscal year-end, but in no case
more than 12 months after the last audit conducted pursuant
to this Section, except as otherwise provided in this
Section, it shall be mandatory for each residential mortgage
licensee to cause its books and accounts to be audited by a
certified public accountant not connected with such licensee.
The books and records of all licensees under this Act shall
be maintained on an accrual basis. The audit must be
sufficiently comprehensive in scope to permit the expression
of an opinion on the financial statements, which must be
prepared in accordance with generally accepted accounting
principles, and must be performed in accordance with
generally accepted auditing standards. Notwithstanding the
requirements of this subsection, a licensee that is a first
tier subsidiary may submit audited consolidated financial
statements of its parent as long as the consolidated
statements are supported by consolidating statements. The
licensee's chief financial officer shall attest to the
licensee's financial statements disclosed in the
consolidating statements.
(b) As used herein, the term "expression of opinion"
includes either (1) an unqualified opinion, (2) a qualified
opinion, (3) a disclaimer of opinion, or (4) an adverse
opinion.
(c) If a qualified or adverse opinion is expressed or if
an opinion is disclaimed, the reasons therefore must be fully
explained. An opinion, qualified as to a scope limitation,
shall not be acceptable.
(d) The most recent audit report shall be filed with the
Commissioner within 90 days after the end of the licensee's
fiscal year at the time of the annual license renewal
payment. The report filed with the Commissioner shall be
certified by the certified public accountant conducting the
audit. The Commissioner may promulgate rules regarding late
audit reports.
(e) If any licensee required to make an audit shall fail
to cause an audit to be made, the Commissioner shall cause
the same to be made by a certified public accountant at the
licensee's expense. The Commissioner shall select such
certified public accountant by advertising for bids or by
such other fair and impartial means as he or she establishes
by regulation.
(f) In lieu of the audit required by this Section, the
Commissioner may accept any audit made in conformance with
the audit requirements of the U.S. Department of Housing and
Urban Development.
(g) With respect to licensees who solely broker
residential mortgage loans as defined in subsection (o) of
Section 1-4, instead of the audit required by this Section,
the Commissioner may accept compilation financial statements
prepared at least every 12 months, and the compilation
financial statement must be prepared by an independent
certified public accountant licensed under the Illinois
Public Accounting Act with full disclosure in accordance with
generally accepted accounting principals and must shall be
submitted within 90 days after the end of the licensee's
fiscal year at the time of the annual license renewal
payment. If a licensee under this Section fails to file a
compilation as required, the Commissioner shall cause an
audit of the licensee's books and accounts to be made by a
certified public accountant at the licensee's expense. The
Commissioner shall select the certified public accountant by
advertising for bids or by such other fair and impartial
means as he or she establishes by rule. A licensee who files
false or misleading compilation financial statements is
guilty of a business offense and shall be fined not less than
$5,000.
(h) The workpapers of the certified public accountants
employed by each licensee for purposes of this Section are to
be made available to the Commissioner or the Commissioner's
designee upon request and may be reproduced by the
Commissioner or the Commissioner's designee to enable to the
Commissioner to carry out the purposes of this Act.
(i) Notwithstanding any other provision of this Section,
if a licensee relying on subsection (g) of this Section
causes its books to be audited at any other time or causes
its financial statements to be reviewed, a complete copy of
the audited or reviewed financial statements shall be
delivered to the Commissioner at the time of the annual
license renewal payment following receipt by the licensee of
the audited or reviewed financial statements. All workpapers
shall be made available to the Commissioner upon request.
The financial statements and workpapers may be reproduced by
the Commissioner or the Commissioner's designee to carry out
the purposes of this Act.
(Source: P.A. 89-74, eff. 6-30-95; 89-355, eff. 8-17-95;
90-772, eff. 1-1-99.)
(205 ILCS 635/3-5) (from Ch. 17, par. 2323-5)
Sec. 3-5. Net worth requirement. A licensee that holds a
license on the effective date of this amendatory Act of the
93rd General Assembly Every licensee shall have and maintain
a net worth of not less than $100,000; however, no later than
2 years after the effective date of this amendatory Act of
the 93rd General Assembly, the licensee must maintain a net
worth of not less than $150,000. A licensee that first
obtains a license after the effective date of this amendatory
Act of the 93rd General Assembly must have and maintain a net
worth of not less than $150,000. Notwithstanding other
requirements of this Section, the net worth requirement for a
residential mortgage licensee licensees whose only licensable
activity is that of brokering residential mortgage loans and
that holds a license on the effective date of this amendatory
Act of the 93rd General Assembly shall be $35,000; however,
no later than 2 years after the effective date of this
amendatory Act of the 93rd General Assembly, the licensee
must maintain a net worth of not less than $50,000. Such a
licensee that first obtains a license after the effective
date of this amendatory Act of the 93rd General Assembly must
have and maintain a net worth of not less than $50,000. Net
worth shall be evidenced by a balance sheet prepared by a
certified public accountant in accordance with generally
accepted accounting principles and generally accepted
auditing standards or by the compilation financial statements
authorized under subsection (g) of Section 3-2. The
Commissioner may promulgate rules with respect to net worth
definitions and requirements for residential mortgage
licensees as necessary to accomplish the purposes of this
Act. In lieu of the net worth requirement established by
this Section, the Commissioner may accept evidence of
conformance by the licensee with the net worth requirements
of the United States Department of Housing and Urban
Development.
(Source: P.A. 89-355, eff. 8-17-95; 89-508, eff. 7-3-96.)
(205 ILCS 635/4-5) (from Ch. 17, par. 2324-5)
Sec. 4-5. Suspension, revocation of licenses; fines.
(a) Upon written notice to a licensee, the Commissioner
may suspend or revoke any license issued pursuant to this Act
if he or she shall make a finding of one or more of the
following in the notice that:
(1) Through separate acts or an act or a course of
conduct, the licensee has violated any provisions of this
Act, any rule or regulation promulgated by the
Commissioner or of any other law, rule or regulation of
this State or the United States.
(2) Any fact or condition exists which, if it had
existed at the time of the original application for such
license would have warranted the Commissioner in refusing
originally to issue such license.
(3) If a licensee is other than an individual, any
ultimate equitable owner, officer, director, or member of
the licensed partnership, association, corporation, or
other entity has so acted or failed to act as would be
cause for suspending or revoking a license to that party
as an individual.
(b) No license shall be suspended or revoked, except as
provided in this Section, nor shall any licensee be fined
without notice of his or her right to a hearing as provided
in Section 4-12 of this Act.
(c) The Commissioner, on good cause shown that an
emergency exists, may suspend any license for a period not
exceeding 180 days, pending investigation. Upon a showing
that a licensee has failed to meet the experience or
educational requirements of Section 2-2 or the requirements
of subsection (g) of Section 3-2, the Commissioner shall
suspend, prior to hearing as provided in Section 4-12, the
license until those requirements have been met.
(d) The provisions of subsection (e) of Section 2-6 of
this Act shall not affect a licensee's civil or criminal
liability for acts committed prior to surrender of a license.
(e) No revocation, suspension or surrender of any
license shall impair or affect the obligation of any
pre-existing lawful contract between the licensee and any
person.
(f) Every license issued under this Act shall remain in
force and effect until the same shall have expired without
renewal, have been surrendered, revoked or suspended in
accordance with the provisions of this Act, but the
Commissioner shall have authority to reinstate a suspended
license or to issue a new license to a licensee whose license
shall have been revoked if no fact or condition then exists
which would have warranted the Commissioner in refusing
originally to issue such license under this Act.
(g) Whenever the Commissioner shall revoke or suspend a
license issued pursuant to this Act or fine a licensee under
this Act, he or she shall forthwith execute in duplicate a
written order to that effect. The Commissioner shall publish
notice of such order in the Illinois Register and a newspaper
of general circulation in the county in which the license is
located and shall forthwith serve a copy of such order upon
the licensee. Any such order may be reviewed in the manner
provided by Section 4-12 of this Act.
(h) When the Commissioner finds any person in violation
of the grounds set forth in subsection (i), he or she may
enter an order imposing one or more of the following
penalties:
(1) Revocation of license;
(2) Suspension of a license subject to
reinstatement upon satisfying all reasonable conditions
the Commissioner may specify;
(3) Placement of the licensee or applicant on
probation for a period of time and subject to all
reasonable conditions as the Commissioner may specify;
(4) Issuance of a reprimand;
(5) Imposition of a fine not to exceed $25,000
$10,000 for each count of separate offense; and
(6) Denial of a license.
(i) The following acts shall constitute grounds for
which the disciplinary actions specified in subsection (h)
above may be taken:
(1) Being convicted or found guilty, regardless of
pendency of an appeal, of a crime in any jurisdiction
which involves fraud, dishonest dealing, or any other act
of moral turpitude;
(2) Fraud, misrepresentation, deceit or negligence
in any mortgage financing transaction;
(3) A material or intentional misstatement of fact
on an initial or renewal application;
(4) Failure to follow the Commissioner's
regulations with respect to placement of funds in escrow
accounts;
(5) Insolvency or filing under any provision of the
Bankruptcy Code as a debtor;
(6) Failure to account or deliver to any person any
property such as any money, fund, deposit, check, draft,
mortgage, or other document or thing of value, which has
come into his or her hands and which is not his or her
property or which he or she is not in law or equity
entitled to retain, under the circumstances and at the
time which has been agreed upon or is required by law or,
in the absence of a fixed time, upon demand of the person
entitled to such accounting and delivery;
(7) Failure to disburse funds in accordance with
agreements;
(8) Any misuse, misapplication, or misappropriation
of trust funds or escrow funds;
(9) Having a license, or the equivalent, to
practice any profession or occupation revoked, suspended,
or otherwise acted against, including the denial of
licensure by a licensing authority of this State or
another state, territory or country for fraud, dishonest
dealing or any other act of moral turpitude;
(10) Failure to issue a satisfaction of mortgage
when the residential mortgage has been executed and
proceeds were not disbursed to the benefit of the
mortgagor and when the mortgagor has fully paid
licensee's costs and commission;
(11) Failure to comply with any order of the
Commissioner or rule made or issued under the provisions
of this Act;
(12) Engaging in activities regulated by this Act
without a current, active license unless specifically
exempted by this Act;
(13) Failure to pay in a timely manner any fee,
charge or fine under this Act;
(14) Failure to maintain, preserve, and keep
available for examination, all books, accounts or other
documents required by the provisions of this Act and the
rules of the Commissioner;
(15) Refusal to permit an investigation or
examination of the licensee's or its affiliates' books
and records or refusal to comply with the Commissioner's
subpoena or subpoena duces tecum;
(16) A pattern of substantially underestimating the
maximum closing costs;
(17) Failure to comply with or violation of any
provision of this Act.
(j) A licensee shall be subject to the disciplinary
actions specified in this Act for violations of subsection
(i) by any officer, director, shareholder, joint venture,
partner, ultimate equitable owner, or employee of the
licensee.
(k) Such licensee shall be subject to suspension or
revocation for employee actions only if there is a pattern of
repeated violations by employees or the licensee has
knowledge of the violations.
(l) Procedure for surrender of license:
(1) The Commissioner may, after 10 days notice by
certified mail to the licensee at the address set forth
on the license, stating the contemplated action and in
general the grounds therefor and the date, time and place
of a hearing thereon, and after providing the licensee
with a reasonable opportunity to be heard prior to such
action, fine such licensee an amount not exceeding
$10,000 per violation, or revoke or suspend any license
issued hereunder if he or she finds that:
(i) The licensee has failed to comply with any
provision of this Act or any order, decision,
finding, rule, regulation or direction of the
Commissioner lawfully made pursuant to the authority
of this Act; or
(ii) Any fact or condition exists which, if it
had existed at the time of the original application
for the license, clearly would have warranted the
Commissioner in refusing to issue the license.
(2) Any licensee may surrender a license by
delivering to the Commissioner written notice that he or
she thereby surrenders such license, but surrender shall
not affect the licensee's civil or criminal liability for
acts committed prior to surrender or entitle the licensee
to a return of any part of the license fee.
(Source: P.A. 89-355, eff. 8-17-95.)
(205 ILCS 635/4-8.1 new)
Sec. 4-8.1. Confidential information. In hearings
conducted under this Act, information presented into evidence
that was acquired by the licensee when serving any individual
in connection with a residential mortgage, including all
financial information of the individual, shall be deemed
strictly confidential and shall be made available only as
part of the record of a hearing under this Act or otherwise
(i) when the record is required, in its entirety, for
purposes of judicial review or (ii) upon the express written
consent of the individual served, or in the case of his or
her death or disability, the consent of his or her personal
representative.
(205 ILCS 635/4-8.2 new)
Sec. 4-8.2. Reports of violations. Any person licensed
under this Act or any other person may report to the
Commissioner any information to show that a person subject to
this Act is or may be in violation of this Act.
(205 ILCS 635/Art. VII heading new)
ARTICLE VII. REGISTRATION OF LOAN ORIGINATORS
(205 ILCS 635/7-1 new)
Sec. 7-1. Registration required; rules and regulations.
Beginning 6 months after the effective date of this
amendatory Act of the 93rd General Assembly, it is unlawful
for any natural person to act or assume to act as a loan
originator, as defined in subsection (hh) of Section 1-4,
without being registered with the Commissioner unless the
natural person is exempt under items (1) and (1.5) of
subsection (d) of Section 1-4 of this Act. The Commissioner
shall promulgate rules prescribing the criteria for the
registration and regulation of loan originators, including
but not limited to, qualifications, fees, examination,
education, supervision, and enforcement.
Section 835. The Limited Liability Company Act is
amended by changing Sections 1-25, 5-5, 5-55, 37-5, and 37-35
as follows:
(805 ILCS 180/1-25)
Sec. 1-25. Nature of business. A limited liability
company may be formed for any lawful purpose or business
except:
(1) (Blank) banking, exclusive of fiduciaries
organized for the purpose of accepting and executing
trusts;
(2) insurance unless, for the purpose of carrying
on business as a member of a group including incorporated
and individual unincorporated underwriters, the Director
of Insurance finds that the group meets the requirements
of subsection (3) of Section 86 of the Illinois Insurance
Code and the limited liability company, if insolvent, is
subject to liquidation by the Director of Insurance under
Article XIII of the Illinois Insurance Code;
(3) the practice of dentistry unless all the
members and managers are licensed as dentists under the
Illinois Dental Practice Act; or
(4) the practice of medicine unless all the
managers, if any, are licensed to practice medicine under
the Medical Practice Act of 1987 and any of the following
conditions apply:
(A) the member or members are licensed to
practice medicine under the Medical Practice Act of
1987; or
(B) the member or members are a registered
medical corporation or corporations organized
pursuant to the Medical Corporation Act; or
(C) the member or members are a professional
corporation organized pursuant to the Professional
Service Corporation Act of physicians licensed to
practice medicine in all its branches; or
(D) the member or members are a medical
limited liability company or companies.
(Source: P.A. 91-593, eff. 8-14-99; 92-144, eff. 7-24-01.)
(805 ILCS 180/5-5)
Sec. 5-5. Articles of organization.
(a) The articles of organization shall set forth all of
the following:
(1) The name of the limited liability company and
the address of its principal place of business which may,
but need not be a place of business in this State.
(2) The purposes for which the limited liability
company is organized, which may be stated to be, or to
include, the transaction of any or all lawful businesses
for which limited liability companies may be organized
under this Act.
(3) The name of its registered agent and the
address of its registered office.
(4) If the limited liability company is to be
managed by a manager or managers, the names and business
addresses of the initial manager or managers.
(5) If management of the limited liability company
is to be vested in the members under Section 15-1, then
the names and addresses of the initial member or members.
(6) The latest date, if any, upon which the limited
liability company is to dissolve and other events of
dissolution, if any, that may be agreed upon by the
members under Section 35-1 hereof.
(7) The name and address of each organizer.
(8) Any other provision, not inconsistent with law,
that the members elect to set out in the articles of
organization for the regulation of the internal affairs
of the limited liability company, including any
provisions that, under this Act, are required or
permitted to be set out in the operating agreement of the
limited liability company.
(b) A limited liability company is organized at the time
articles of organization are filed by the Secretary of State
or at any later time, not more than 60 days after the filing
of the articles of organization, specified in the articles of
organization.
(c) Articles of organization for the organization of a
limited liability company for the purpose of accepting and
executing trusts shall not be filed by the Secretary of State
until there is delivered to him or her a statement executed
by the Commissioner of the Office of Banks and Real Estate
that the organizers of the limited liability company have
made arrangements with the Commissioner of the Office of
Banks and Real Estate to comply with the Corporate Fiduciary
Act.
(d) Articles of organization for the organization of a
limited liability company as a bank or a savings bank must be
filed with the Commissioner of Banks and Real Estate or, if
the bank or savings bank will be organized under federal law,
with the appropriate federal banking regulator.
(Source: P.A. 90-424, eff. 1-1-98.)
(805 ILCS 180/5-55)
Sec. 5-55. Filing in Office of Secretary of State.
(a) Whenever any provision of this Act requires a
limited liability company to file any document with the
Office of the Secretary of State, the requirement means that:
(1) the original document, executed as described in
Section 5-45, and, if required by this Act to be filed in
duplicate, one copy (which may be a signed carbon or
photocopy) shall be delivered to the Office of the
Secretary of State;
(2) all fees and charges authorized by law to be
collected by the Secretary of State in connection with
the filing of the document shall be tendered to the
Secretary of State; and
(3) unless the Secretary of State finds that the
document does not conform to law, he or she shall, when
all fees have been paid:
(A) endorse on the original and on the copy
the word "Filed" and the month, day, and year of the
filing thereof;
(B) file in his or her office the original of
the document; and
(C) return the copy to the person who filed it
or to that person's representative.
(b) If another Section of this Act specifically
prescribes a manner of filing or signing a specified document
that differs from the corresponding provisions of this
Section, then the provisions of the other Section shall
govern.
(c) Whenever any provision of this Act requires a limited
liability company that is a bank or a savings bank to file
any document, that requirement means that the filing shall be
made exclusively with the Commissioner of Banks and Real
Estate or, if the bank or savings bank is organized under
federal law, with the appropriate federal banking regulator
at such times and in such manner as required by the
Commissioner or federal regulator.
(Source: P.A. 92-33, eff. 7-1-01.)
(805 ILCS 180/37-5)
Sec. 37-5. Definitions. In this Article:
"Corporation" means (i) a corporation under the Business
Corporation Act of 1983, a predecessor law, or comparable law
of another jurisdiction or (ii) a bank or savings bank.
"General partner" means a partner in a partnership and a
general partner in a limited partnership.
"Limited partner" means a limited partner in a limited
partnership.
"Limited partnership" means a limited partnership created
under the Revised Uniform Limited Partnership Act, a
predecessor law, or comparable law of another jurisdiction.
"Partner" includes a general partner and a limited
partner.
"Partnership" means a general partnership under the
Uniform Partnership Act, a predecessor law, or comparable law
of another jurisdiction.
"Partnership agreement" means an agreement among the
partners concerning the partnership or limited partnership.
"Shareholder" means a shareholder in a corporation.
(Source: P.A. 90-424, eff. 1-1-98.)
(805 ILCS 180/37-35)
Sec. 37-35. Article not exclusive. This Article does not
preclude an entity from being converted or merged under other
law. A bank or savings bank that converts to or merges with
and into a limited liability company shall be subject to the
provisions of this Article or to other applicable law to the
extent that those provisions do not conflict with the State
or federal law pursuant to which the conversion or merger of
the bank or savings bank is authorized.
(Source: P.A. 90-424, eff. 1-1-98.)
Section 840. The Illinois Fairness in Lending Act is
amended by changing Sections 2, 3, and 5 as follows:
(815 ILCS 120/2) (from Ch. 17, par. 852)
Sec. 2. As used in this Act:
(a) "Financial Institution" means any bank, credit
union, insurance company, mortgage banking company, savings
bank, or savings and loan association, or other residential
mortgage lender which operates or has a place of business in
this State.
(b) "Person" means any natural person.
(c) "Varying the terms of a loan" includes, but is not
limited to the following practices:
(1) Requiring a greater than average down payment than
is usual for the particular type of a loan involved.
(2) Requiring a shorter period of amortization than is
usual for the particular type of loan involved.
(3) Charging a higher interest rate than is usual for
the particular type of loan involved.
(4) An underappraisal of real estate or other item of
property offered as security.
(d) "Equity stripping" means to assist a person in
obtaining a loan secured by the person's principal residence
for the primary purpose of receiving fees related to the
financing when (i) the loan decreased the person's equity in
the principal residence and (ii) at the time the loan is
made, the financial institution does not reasonably believe
that the person will be able to make the scheduled payments
to repay the loan. "Equity stripping" does not include
reverse mortgages as defined in Section 5a of the Illinois
Banking Act, Section 1-6a of the Illinois Savings and Loan
Act of 1985, or subsection (3) of Section 46 of the Illinois
Credit Union Act.
(e) "Loan flipping" means to assist a person in
refinancing a loan secured by the person's principal
residence for the primary purpose of receiving fees related
to the refinancing when (i) the refinancing of the loan
results in no tangible benefit to the person and (ii) at the
time the loan is made, the financial institution does not
reasonably believe that the refinancing of the loan will
result in a tangible benefit to the person.
(f) "Principal residence" means a person's primary
residence that is a dwelling consisting of 4 or fewer family
units or that is in a dwelling consisting of condominium or
cooperative units.
(Source: P.A. 81-1391.)
(815 ILCS 120/3) (from Ch. 17, par. 853)
Sec. 3. No financial institution, in connection with or
in contemplation of any loan to any person, may:
(a) Deny or vary the terms of a loan on the basis that a
specific parcel of real estate offered as security is located
in a specific geographical area.
(b) Deny or vary the terms of a loan without having
considered all of the regular and dependable income of each
person who would be liable for repayment of the loan.
(c) Deny or vary the terms of a loan on the sole basis
of the childbearing capacity of an applicant or an
applicant's spouse.
(d) Utilize lending standards that have no economic
basis and which are discriminatory in effect.
(e) Engage in equity stripping or loan flipping.
(Source: P.A. 81-1391.)
(815 ILCS 120/5) (from Ch. 17, par. 855)
Sec. 5. (a) Subject to the limitation imposed by
subsection (b), any person who has been aggrieved as a result
of a violation of this Act may bring an individual action in
the circuit court of the county in which the particular
financial institution involved is located or doing business.
Upon a finding that a financial institution has committed
a violation of this Act, the court may award actual damages,
and may in its discretion award court costs.
(b) If the same events or circumstances would constitute
the basis for an action under this Act or an action under any
other Act, the aggrieved person may elect between the
remedies proposed by the two Acts but may not bring actions,
either administrative or judicial, under more than one of the
two Acts in relation to those same events or circumstances.
(c) An action to enjoin any person subject to this Act
from engaging in activity in violation of this Act may be
maintained in the name of the people of the State of Illinois
by the Attorney General or by the State's Attorney of the
county in which the action is brought. This remedy shall be
in addition to other remedies provided for any violation of
this Act.
(Source: P.A. 81-1391.)
Section 845. The Consumer Fraud and Deceptive Business
Practices Act is amended by changing Section 2Z as follows:
(815 ILCS 505/2Z) (from Ch. 121 1/2, par. 262Z)
Sec. 2Z. Violations of other Acts. Any person who
knowingly violates the Automotive Repair Act, the Home Repair
and Remodeling Act, the Dance Studio Act, the Physical
Fitness Services Act, the Hearing Instrument Consumer
Protection Act, the Illinois Union Label Act, the Job
Referral and Job Listing Services Consumer Protection Act,
the Travel Promotion Consumer Protection Act, the Credit
Services Organizations Act, the Automatic Telephone Dialers
Act, the Pay-Per-Call Services Consumer Protection Act, the
Telephone Solicitations Act, the Illinois Funeral or Burial
Funds Act, the Cemetery Care Act, the Safe and Hygienic Bed
Act, the Pre-Need Cemetery Sales Act, the High Risk Home Loan
Act, subsection (a) or (b) of Section 3-10 of the Cigarette
Tax Act, subsection (a) or (b) of Section 3-10 of the
Cigarette Use Tax Act, the Electronic Mail Act, or paragraph
(6) of subsection (k) of Section 6-305 of the Illinois
Vehicle Code commits an unlawful practice within the meaning
of this Act.
(Source: P.A. 91-164, eff. 7-16-99; 91-230, eff. 1-1-00;
91-233, eff. 1-1-00; 91-810, eff. 6-13-00; 92-426, eff.
1-1-02.)
Section 900. Severability. The provisions of this Act are
severable under Section 1.31 of the Statute on Statutes.