Public Act 90-0222 of the 90th General Assembly
Public Act 90-0222
SB538 Enrolled LRB9002845JSgc
AN ACT to amend the Illinois Credit Union Act by changing
Sections 46 and 50.
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 46 and 50 as follows:
(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. Any loan secured by a first mortgage on real
estate shall be contracted for at a rate of interest not to
exceed the maximum rate allowed by Section 4 of "An Act in
relation to the rate of interest and other charges in
connection with sales on credit and the lending of money",
approved May 24, 1879, as amended.
(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 "An Act in
relation to the rate of interest and other charges in
connection with sales on credit and the lending of money",
approved May 24, 1879, as amended.
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.
(Source: P.A. 85-427.)
(205 ILCS 305/50) (from Ch. 17, par. 4451)
Sec. 50. Line of credit.
(1) A credit union may grant a self-replenishing line of
credit to a member up to a stated maximum amount. The terms
and conditions upon which a line of credit is extended to any
member may be different from the terms and conditions
established for another member. Where a line of credit has
been approved, no additional loan applications are required
as long as the total outstanding advances under the line of
credit do not exceed the maximum amount as stated in the line
of credit agreement.
(2) The term "line of credit" means a type of credit
agreement including, without limitation, a credit card
agreement. Each line of credit advance constitutes a loan,
and provisions in this Act regarding loans are equally
applicable to lines of credit.
(Source: P.A. 81-329.)
Section 99. Effective date. This Act takes effect upon
becoming law.