Public Act 93-0640
HB1516 Re-Enrolled LRB093 05054 JLS 07768 b
AN ACT relating to certain financial institutions.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Credit Union Act is amended by
changing Sections 15, 40, 46, 51, and 59 as follows:
(205 ILCS 305/15) (from Ch. 17, par. 4416)
Sec. 15. Membership defined.
(1) The membership of a credit union shall be limited to
and consist of the subscribers to the articles of
incorporation and such other persons within the common bond,
as defined in this Act and as set forth in the credit union's
articles of incorporation, as have been duly admitted
members, have paid the required entrance fee or membership
fee, or both, if any, have subscribed for one or more shares,
and have paid the initial installment thereon, and have
complied with such other requirements as the articles of
incorporation or bylaws specify. Two or more persons within
the common bond who have jointly subscribed for one or more
shares under a joint account and have complied with all
membership requirements may each be admitted to membership.
The surviving spouse of a credit union member may, within 6
months of the member's death, become a member of the credit
union by paying the required entrance fee or membership fee
or both, if any, by subscribing for one or more shares and
paying the initial installment thereon, and by complying with
such other requirements as the articles of incorporation or
bylaws specify.
(2) Any member may withdraw from a credit union at any
time upon giving notice of withdrawal as required by the
bylaws.
(3) Any member may be expelled by a 2/3 vote of the
members present at any regular or special meeting called to
consider the matter, but only after an opportunity has been
given to the member to be heard.
(4) A member who has caused a loss to the credit union,
or who has failed to maintain one or more shares at the
credit union, or violated Board policy applicable to members
may be expelled by a majority vote of a quorum of directors
if the board has adopted a policy providing for expulsion
under those circumstances. In maintaining and enforcing a
policy based on loss, the board may consider, without
limitation, a member's failure to pay amounts due under a
loan, failure to provide collected funds to cover withdrawals
or personal share drafts or credit union drafts where the
member is a remitter, or failure to pay fees or charges due
the credit union. If a policy is adopted by the board
pursuant to this subsection (4), written notice of the policy
and the effective date of the policy shall be mailed to each
member of the credit union at the member's current address
appearing on the records of the credit union. The policy
shall be mailed to members not fewer than 30 days prior to
the effective date of the policy. In addition, new members
shall be provided written notice of the policy prior to or
upon applying for membership.
(5) All or any part of the amount paid on shares of a
withdrawing member or expelled member with any declared
dividends or interest on the date of withdrawal or expulsion
must, after deducting all amounts due from the member to the
credit union, be paid to him. The credit union may require
not more than 60 days' written notice of intention to
withdraw shares, but a notice of withdrawal does not entitle
the member to any preferred or prior claim in the event of
liquidation. Withdrawing or expelled members have no further
rights in the credit union, but are not, by withdrawal or
expulsion, released from any obligation they owe to the
credit union.
(6) A member who has caused a loss to the credit union
or has violated Board policy applicable to members may be
denied any or all credit union services in accordance with
board policy, however, members who are denied services shall
be allowed to maintain a share account and to vote on all
issues put to a vote of the membership.
(Source: P.A. 91-929, eff. 12-15-00.)
(205 ILCS 305/40) (from Ch. 17, par. 4441)
Sec. 40. Shares to Minors. Shares may be issued in the
name of a minor or in the name of a custodian under the
Illinois Uniform Transfers to Minors Act, as amended. If
shares are issued in the name of a minor, redemption of any
part or all of the shares by payment to the minor or upon
order of the minor of the amount of the shares and any
declared dividends releases the credit union from all
obligations to the minor as to the shares redeemed. Further,
if shares are issued in the name of a minor, the minor shall
be considered as being of the age of majority and having
contractual capacity.
(Source: P.A. 84-915.)
(205 ILCS 305/46) (from Ch. 17, par. 4447)
Sec. 46. Loans and interest rate.
(1) A credit union may make loans to its members for
such purpose and upon such security and terms, including
rates of interest, as the Credit Committee, credit manager,
or loan officer approves. Notwithstanding the provisions of
any other law in connection with extensions of credit, a
credit union may elect to contract for and receive interest
and fees and other charges for extensions of credit subject
only to the provisions of this Act and rules promulgated
under this Act, except that extensions of credit secured by
residential real estate shall be subject to the laws
applicable thereto. The rates of interest to be charged on
loans to members shall be set by the Board of Directors of
each individual credit union and such rates may be less than,
but may not exceed, the maximum rate set forth in this
Section. A borrower may repay his loan prior to maturity, in
whole or in part, without penalty. The credit contract may
provide for the payment by the member and receipt by the
credit union of all costs and disbursements, including
reasonable attorney's fees and collection agency charges,
incurred by the credit union to collect or enforce the debt
in the event of a delinquency by the member, or in the event
of a breach of any obligation of the member under the credit
contract. A contingency or hourly arrangement established
under an agreement entered into by a credit union with an
attorney or collection agency to collect a loan of a member
in default shall be presumed prima facie reasonable.
(2) Credit unions may make loans based upon the security
of any interest or equity in real estate, subject to rules
and regulations promulgated by the Director. In any contract
or loan which is secured by a mortgage, deed of trust, or
conveyance in the nature of a mortgage, on residential real
estate, the interest which is computed, calculated, charged,
or collected pursuant to such contract or loan, or pursuant
to any regulation or rule promulgated pursuant to this Act,
may not be computed, calculated, charged or collected for any
period of time occurring after the date on which the total
indebtedness, with the exception of late payment penalties,
is paid in full.
For purposes of this subsection (2) of this Section 46, a
prepayment shall mean the payment of the total indebtedness,
with the exception of late payment penalties if incurred or
charged, on any date before the date specified in the
contract or loan agreement on which the total indebtedness
shall be paid in full, or before the date on which all
payments, if timely made, shall have been made. In the event
of a prepayment of the indebtedness which is made on a date
after the date on which interest on the indebtedness was last
computed, calculated, charged, or collected but before the
next date on which interest on the indebtedness was to be
calculated, computed, charged, or collected, the lender may
calculate, charge and collect interest on the indebtedness
for the period which elapsed between the date on which the
prepayment is made and the date on which interest on the
indebtedness was last computed, calculated, charged or
collected at a rate equal to 1/360 of the annual rate for
each day which so elapsed, which rate shall be applied to the
indebtedness outstanding as of the date of prepayment. The
lender shall refund to the borrower any interest charged or
collected which exceeds that which the lender may charge or
collect pursuant to the preceding sentence. The provisions
of this amendatory Act of 1985 shall apply only to contracts
or loans entered into on or after the effective date of this
amendatory Act.
(3) Notwithstanding any other provision of this Act, a
credit union authorized under this Act to make loans secured
by an interest or equity in real estate may engage in making
"reverse mortgage" loans to persons for the purpose of making
home improvements or repairs, paying insurance premiums or
paying real estate taxes on the homestead properties of such
persons. If made, such loans shall be made on such terms and
conditions as the credit union shall determine and as shall
be consistent with the provisions of this Section and such
rules and regulations as the Director shall promulgate
hereunder. For purposes of this Section, a "reverse
mortgage" loan shall be a loan extended on the basis of
existing equity in homestead property and secured by a
mortgage on such property. Such loans shall be repaid upon
the sale of the property or upon the death of the owner or,
if the property is in joint tenancy, upon the death of the
last surviving joint tenant who had such an interest in the
property at the time the loan was initiated, provided,
however, that the credit union and its member may by mutual
agreement, establish other repayment terms. A credit union,
in making a "reverse mortgage" loan, may add deferred
interest to principal or otherwise provide for the charging
of interest or premiums on such deferred interest.
"Homestead" property, for purposes of this Section, means the
domicile and contiguous real estate owned and occupied by the
mortgagor. The Director shall promulgate rules and
regulations under this Section; provided that such rules and
regulations need not be promulgated jointly with any other
administrative agency of this State.
(4) Notwithstanding any other provisions of this Act, a
credit union authorized under this Act to make loans secured
by an interest or equity in real property may engage in
making revolving credit loans secured by mortgages or deeds
of trust on such real property or by security assignments of
beneficial interests in land trusts.
For purposes of this Section, "revolving credit" has the
meaning defined in Section 4.1 of the Interest Act.
Any mortgage or deed of trust given to secure a revolving
credit loan may, and when so expressed therein shall, secure
not only the existing indebtedness but also such future
advances, whether such advances are obligatory or to be made
at the option of the lender, or otherwise, as are made within
twenty years from the date thereof, to the same extent as if
such future advances were made on the date of the execution
of such mortgage or deed of trust, although there may be no
advance made at the time of execution of such mortgage or
other instrument, and although there may be no indebtedness
outstanding at the time any advance is made. The lien of
such mortgage or deed of trust, as to third persons without
actual notice thereof, shall be valid as to all such
indebtedness and future advances form the time said mortgage
or deed of trust is filed for record in the office of the
Recorder of Deeds or the Registrar of Titles of the county
where the real property described therein is located. The
total amount of indebtedness that may be so secured may
increase or decrease from time to time, but the total unpaid
balance so secured at any one time shall not exceed a maximum
principal amount which must be specified in such mortgage or
deed of trust, plus interest thereon, and any disbursements
made for the payment of taxes, special assessments, or
insurance on said real property, with interest on such
disbursements.
Any such mortgage or deed of trust shall be valid and
have priority over all subsequent liens and encumbrances,
including statutory liens, except taxes and assessments
levied on said real property.
(5) Compliance with federal or Illinois preemptive laws
or regulations governing loans made by a credit union
chartered under this Act shall constitute compliance with
this Act.
(Source: P.A. 90-222, eff. 7-25-97.)
(205 ILCS 305/51) (from Ch. 17, par. 4452)
Sec. 51. Other Loan Programs.
(1) Subject to such rules and regulations as the
Director may promulgate, a credit union may participate in
loans to credit union members jointly with other credit
unions, corporations, or financial institutions. An
originating credit union may originate loans only to its own
members. A participating credit union that is not the
originating lender may participate in loans made to its own
members or to members of another participating credit union.
"Originating lender" means the participating credit union
with which the member contracts. A master participation
agreement must be properly executed, and the agreement must
include provisions for identifying, either through documents
incorporated by reference or directly in the agreement, the
participation loan or loans prior to their sale.
(2) Any credit union with assets of $500,000 or more may
loan to its members under the State Scholarships Law or other
scholarship programs which are subject to a federal or state
law providing 100% repayment guarantee.
(3) A credit union may purchase the conditional sales
contracts, notes and similar instruments which evidence an
indebtedness of its members.
(4) With approval of the Board of Directors, a credit
union may make loans, either on its own or jointly with other
credit unions, corporations or financial institutions, to
credit union organizations; provided, that the aggregate
amount of all such loans outstanding shall not at any time
exceed the greater of 3% 1% of the paid-in and unimpaired
capital and surplus of the credit union or the amount
authorized for federal credit unions.
(Source: P.A. 92-293, eff. 8-9-01.)
(205 ILCS 305/59) (from Ch. 17, par. 4460)
Sec. 59. Investment of Funds. Funds not used in loans to
members may be invested, pursuant to subsection (7) of
Section 30 of this Act, and subject to Departmental rules and
regulations:
(1) In securities, obligations or other instruments of
or issued by or fully guaranteed as to principal and interest
by the United States of America or any agency thereof or in
any trust or trusts established for investing directly or
collectively in the same;
(2) In obligations of any state of the United States,
the District of Columbia, the Commonwealth of Puerto Rico,
and the several territories organized by Congress, or any
political subdivision thereof; however, a credit union may
not invest more than 10% of its unimpaired capital and
surplus in the obligations of one issuer, exclusive of
general obligations of the issuer, and investments in
municipal securities must be limited to securities rated in
one of the 4 highest rating categories by a nationally
recognized statistical rating organization;
(3) In certificates of deposit or passbook type accounts
issued by a state or national bank, mutual savings bank or
savings and loan association; provided that such institutions
have their accounts insured by the Federal Deposit Insurance
Corporation or the Federal Savings and Loan Insurance
Corporation; but provided, further, that a credit union's
investment in an account in any one institution may exceed
the insured limit on accounts;
(4) In shares, classes of shares or share certificates
of other credit unions, including, but not limited to
corporate credit unions; provided that such credit unions
have their members' accounts insured by the NCUA or other
approved insurers, and that if the members' accounts are so
insured, a credit union's investment may exceed the insured
limit on accounts;
(5) In shares of a cooperative society organized under
the laws of this State or the laws of the United States in
the total amount not exceeding 10% of the unimpaired capital
and surplus of the credit union; provided that such
investment shall first be approved by the Department;
(6) In obligations of the State of Israel, or
obligations fully guaranteed by the State of Israel as to
payment of principal and interest;
(7) In shares, stocks or obligations of other financial
institutions in the total amount not exceeding 5% of the
unimpaired capital and surplus of the credit union;
(8) In federal funds and bankers' acceptances;
(9) In shares or stocks of Credit Union Service
Organizations in the total amount not exceeding the greater
of 3% 1% of the unimpaired capital and surplus of the credit
union or the amount authorized for federal credit unions.
As used in this Section, "political subdivision"
includes, but is not limited to, counties, townships, cities,
villages, incorporated towns, school districts, educational
service regions, special road districts, public water supply
districts, fire protection districts, drainage districts,
levee districts, sewer districts, housing authorities, park
districts, and any agency, corporation, or instrumentality of
a state or its political subdivisions, whether now or
hereafter created and whether herein specifically mentioned
or not.
(Source: P.A. 92-293, eff. 8-9-01.)
Section 99. Effective date. This Act takes effect upon
becoming law.