Public Act 097-0849
 
SB1692 EnrolledLRB097 06688 AEK 46774 b

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