Full Text of HB5755 99th General Assembly
HB5755 99TH GENERAL ASSEMBLY |
| | 99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016 HB5755 Introduced , by Rep. Lou Lang SYNOPSIS AS INTRODUCED: |
| 205 ILCS 305/4 | from Ch. 17, par. 4405 | 205 ILCS 305/22 | from Ch. 17, par. 4423 | 205 ILCS 305/33 | from Ch. 17, par. 4434 | 205 ILCS 305/46 | from Ch. 17, par. 4447 | 205 ILCS 305/52 | from Ch. 17, par. 4453 | 205 ILCS 305/64.7 new | |
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Amends the Illinois Credit Union Act. Provides that amendments to the articles of incorporation of a credit union may be made with the approval of a majority (rather than two-thirds) of the members or at least two-thirds of the directors. Requires that a report of any amendments to the articles of incorporation adopted by the board of directors be made to the members at the next annual meeting. Removes a credit manager as a vacancy that can be filled by the board of directors through appointment. Provides that the credit committee, board of directors, or chief management official (rather than just the credit committee) may appoint a credit manager. Provides that if no credit committee has been appointed, the board of directors or chief management official (rather than just the board of directors) shall appoint a credit manager. Provides that a prepayment penalty does not include a waived, bona fide third-party charge that the credit union imposes if the consumer prepays all of the transaction's principal sooner than 36 months after consummation of a closed-end credit transaction, a waived, bona fide third-party charge that the credit union imposes if the consumer terminates an open-end credit plan sooner than 36 months after account opening, or a yield maintenance fee imposed on a business transaction. Allows 2 or more credit unions that are merging to elect to request a network credit union designation for the surviving credit union. Sets forth provisions for network credit unions. Effective immediately.
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| | A BILL FOR |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Credit Union Act is amended by | 5 | | changing Sections 4, 22, 33, 46, and 52 and by adding Section | 6 | | 64.7 as follows:
| 7 | | (205 ILCS 305/4) (from Ch. 17, par. 4405)
| 8 | | Sec. 4. Amendments to articles of incorporation and bylaws. | 9 | | Amendments
to the articles of incorporation or may be made by | 10 | | the members at any regular
or special meeting, if the proposed | 11 | | amendment is set forth in the call of
the meeting and is | 12 | | approved by at least two thirds of the members present
at a | 13 | | meeting at
which a quorum is present. Amendments to the bylaws | 14 | | may be made by the members
at any regular or special meeting, | 15 | | if the proposed amendment is set forth
in the call for the | 16 | | meeting and is approved by a majority of the members
present at | 17 | | a meeting at which a quorum is present. Amendments to the | 18 | | articles of incorporation or bylaws
may also be made by the | 19 | | board of directors at any regular or special meeting,
if the | 20 | | proposed amendment is set forth in the call of the meeting and | 21 | | approved
by at least two thirds of the directors present at a | 22 | | meeting at which a
quorum is present. A report shall be made to | 23 | | the members at the next annual
meeting of any amendments to the |
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| 1 | | articles of incorporation or bylaws adopted by the board of | 2 | | directors.
Any amendment to the articles of incorporation or | 3 | | bylaws of a credit union
shall be approved by the Secretary | 4 | | before the amendment is effective. The Secretary
shall approve | 5 | | or disapprove of any amendments within 60 days after
submission | 6 | | to him or her.
| 7 | | (Source: P.A. 97-133, eff. 1-1-12.)
| 8 | | (205 ILCS 305/22) (from Ch. 17, par. 4423)
| 9 | | Sec. 22. Vacancies. | 10 | | (a) The board of directors shall, by appointment from
among | 11 | | the credit union members, fill any vacancies occurring on the | 12 | | board
for the remainder of the director's unexpired term or | 13 | | until a successor
is elected and qualified following completion | 14 | | of the term filled by the board. In the event the vacancy | 15 | | reduces the number of directors serving on the board to less | 16 | | than the statutory minimum set forth in subsection (1) of | 17 | | Section 20, then the board shall fill the vacancy no later than | 18 | | the next annual meeting of members or 90 days after the vacancy | 19 | | occurred, whichever occurs first. Upon written application to | 20 | | the Secretary, the board may request additional time in which | 21 | | to fill the vacancy. The application may be approved by the | 22 | | Secretary in his or her discretion. The board shall, by | 23 | | appointment from among the
credit union members, fill vacancies | 24 | | in the membership committee, credit
committee, or credit | 25 | | manager if no credit
committee has been appointed, and
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| 1 | | supervisory
committees. | 2 | | (b) An office may be declared vacant by the board when a | 3 | | director or a committee member dies, resigns from the board or | 4 | | committee, is removed from the board or committee, is no longer | 5 | | a member of the credit union, is the owner of less than one | 6 | | share of the credit union, or fails to attend three consecutive | 7 | | regular meetings of the board without good cause.
| 8 | | (Source: P.A. 97-133, eff. 1-1-12.)
| 9 | | (205 ILCS 305/33) (from Ch. 17, par. 4434)
| 10 | | Sec. 33. Credit manager.
| 11 | | (1) The credit committee , board of directors, or chief | 12 | | management official may or, if no credit committee has been | 13 | | appointed, the board of directors or chief management official | 14 | | shall appoint a credit
manager who shall be empowered to | 15 | | approve or disapprove loans and lines
of credit under | 16 | | conditions prescribed by the board of directors. The credit | 17 | | committee or credit manager may appoint one or more loan | 18 | | officers with the
power to approve loans and lines of credit, | 19 | | subject to such limitations
or conditions as may be prescribed | 20 | | by the board of directors. The credit
manager and any loan | 21 | | officers appointed by the credit committee or the credit
| 22 | | manager shall keep written records of all transactions and | 23 | | shall report,
in writing, to the credit committee if a credit | 24 | | committee has been appointed,
otherwise
to the directors at | 25 | | each board meeting.
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| 1 | | (2) Applications for loans or lines of credit not approved | 2 | | by a loan officer
shall be reviewed and acted upon by the | 3 | | credit committee or credit manager.
| 4 | | (3) The loan officers must keep written records of all | 5 | | loans or lines
of credit granted or refused and any other | 6 | | transactions and submit a report
to the credit committee or | 7 | | credit manager at least once each month.
| 8 | | (Source: P.A. 97-133, eff. 1-1-12.)
| 9 | | (205 ILCS 305/46) (from Ch. 17, par. 4447)
| 10 | | Sec. 46. Loans and interest rate.
| 11 | | (1) A credit union may make loans
to its members for such | 12 | | purpose and upon such security and terms, including
rates of | 13 | | interest, as the credit committee, credit manager, or loan | 14 | | officer
approves.
Notwithstanding the provisions of any other | 15 | | law in connection with extensions
of credit, a credit union may | 16 | | elect to
contract for and receive interest and fees and other | 17 | | charges for extensions of
credit subject only to the provisions | 18 | | of this Act and rules promulgated under
this Act, except that | 19 | | extensions of credit secured by residential real estate
shall | 20 | | be subject to the laws applicable thereto.
The rates of | 21 | | interest to be charged on loans to members shall be
set by the | 22 | | board of directors of each individual credit union in | 23 | | accordance with Section 30 of this Act and such
rates may be | 24 | | less than, but may not exceed, the maximum rate set forth in
| 25 | | this Section. A borrower may repay his loan prior to maturity, |
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| 1 | | in whole or
in part, without penalty. A prepayment penalty does | 2 | | not include a waived, bona fide third-party charge that the | 3 | | credit union imposes if the consumer prepays all of the | 4 | | transaction's principal sooner than 36 months after | 5 | | consummation of a closed-end credit transaction, a waived, bona | 6 | | fide third-party charge that the credit union imposes if the | 7 | | consumer terminates an open-end credit plan sooner than 36 | 8 | | months after account opening, or a yield maintenance fee | 9 | | imposed on a business transaction loan. The credit contract may | 10 | | provide for the payment
by the member and receipt by the credit | 11 | | union of all costs and
disbursements, including reasonable | 12 | | attorney's fees and collection agency
charges, incurred by the | 13 | | credit union to collect or enforce the debt in the
event of a | 14 | | delinquency by the member, or in the event of a breach of any
| 15 | | obligation of the member under the credit contract. A | 16 | | contingency or
hourly arrangement established under an | 17 | | agreement entered into by a credit
union with an attorney or | 18 | | collection agency to collect a loan of a member
in default | 19 | | shall be presumed prima facie reasonable.
| 20 | | (2) Credit unions may make loans based upon the security of | 21 | | any
interest or equity in real estate, subject to rules and | 22 | | regulations
promulgated by the Secretary. In any contract or | 23 | | loan which
is secured by a mortgage, deed of
trust, or | 24 | | conveyance in the nature of a mortgage, on residential real
| 25 | | estate, the interest which is computed, calculated, charged, or | 26 | | collected
pursuant to such contract or loan, or pursuant to any |
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| 1 | | regulation or rule
promulgated pursuant to this Act, may not be | 2 | | computed, calculated, charged
or collected for any period of | 3 | | time occurring after the date on which the
total indebtedness, | 4 | | with the exception of late payment penalties, is paid
in full.
| 5 | | For purposes of this subsection (2) of this Section 46, a | 6 | | prepayment
shall mean the payment of the total indebtedness, | 7 | | with the exception of
late payment penalties if incurred or | 8 | | charged, on any date before the date
specified in the contract | 9 | | or loan agreement on which the total indebtedness
shall be paid | 10 | | in full, or before the date on which all payments, if timely
| 11 | | made, shall have been made. In the event of a prepayment of the
| 12 | | indebtedness which is made on a date
after the date on which | 13 | | interest on the indebtedness was last computed,
calculated, | 14 | | charged, or collected but before the next date on which | 15 | | interest
on the indebtedness was to be calculated, computed, | 16 | | charged, or collected,
the lender may calculate, charge and | 17 | | collect interest on the indebtedness
for the period which | 18 | | elapsed between the date on which the prepayment is
made and | 19 | | the date on which interest on the indebtedness was last | 20 | | computed,
calculated, charged or collected at a rate equal to | 21 | | 1/360 of the annual
rate for each day which so elapsed, which | 22 | | rate shall be applied to the
indebtedness outstanding as of the | 23 | | date of prepayment. The lender shall
refund to the borrower any | 24 | | interest charged or collected which exceeds that
which the | 25 | | lender may charge or collect pursuant to the preceding | 26 | | sentence.
The provisions of this amendatory Act of 1985 shall |
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| 1 | | apply only to contracts
or loans entered into on or after the | 2 | | effective date of this amendatory
Act.
| 3 | | (3) (Blank).
| 4 | | (4) Notwithstanding any other provisions of this Act, a | 5 | | credit union
authorized under this Act to make loans secured by | 6 | | an interest or equity
in real property may engage in making | 7 | | revolving credit loans secured by
mortgages or deeds of trust | 8 | | on such real property or by security
assignments of beneficial | 9 | | interests in land trusts.
| 10 | | For purposes of this Section, "revolving credit" has the | 11 | | meaning defined
in Section 4.1 of the Interest Act.
| 12 | | Any mortgage or deed of trust given to secure a revolving | 13 | | credit loan may,
and when so expressed therein shall, secure | 14 | | not only the existing indebtedness
but also such future | 15 | | advances, whether such advances are obligatory or to
be made at | 16 | | the option of the lender, or otherwise, as are made within | 17 | | twenty
years from the date thereof, to the same extent as if | 18 | | such future advances
were made on the date of the execution of | 19 | | such mortgage or deed of trust,
although there may be no | 20 | | advance made at the time of execution of such mortgage
or other | 21 | | instrument, and although there may be no indebtedness | 22 | | outstanding
at the time any advance is made. The lien of such | 23 | | mortgage or deed of trust,
as to third persons
without actual | 24 | | notice thereof, shall be valid as to all such indebtedness
and | 25 | | future advances form the time said mortgage or deed of trust is | 26 | | filed
for record in the office of the recorder of deeds or the |
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| 1 | | registrar of titles
of the county where the real property | 2 | | described therein is located. The
total amount of indebtedness | 3 | | that may be so secured may increase or decrease
from time to | 4 | | time, but the total unpaid balance so secured at any one time
| 5 | | shall not exceed a maximum principal amount which must be | 6 | | specified in such
mortgage or deed of trust, plus interest | 7 | | thereon, and any disbursements
made for the payment of taxes, | 8 | | special assessments, or insurance on said
real property, with | 9 | | interest on such disbursements.
| 10 | | Any such mortgage or deed of trust shall be valid and have | 11 | | priority over
all subsequent liens and encumbrances, including | 12 | | statutory liens, except
taxes and assessments levied on said | 13 | | real property.
| 14 | | (4-5) For purposes of this Section, "real estate" and "real | 15 | | property" include a manufactured home as defined in subdivision | 16 | | (53) of Section 9-102 of the Uniform Commercial Code which is | 17 | | real property as defined in Section 5-35 of the Conveyance and | 18 | | Encumbrance of Manufactured Homes as Real Property and | 19 | | Severance Act. | 20 | | (5) Compliance with federal or Illinois preemptive laws or | 21 | | regulations
governing loans made by a credit union chartered | 22 | | under this Act shall
constitute compliance with this Act.
| 23 | | (6) Credit unions may make residential real estate mortgage | 24 | | loans on terms and conditions established by the United States | 25 | | Department of Agriculture through its Rural Development | 26 | | Housing and Community Facilities Program. The portion of any |
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| 1 | | loan in excess of the appraised value of the real estate shall | 2 | | be allocable only to the guarantee fee required under the | 3 | | program. | 4 | | (7) For a renewal, refinancing, or restructuring of an | 5 | | existing loan at the credit union that is secured by an | 6 | | interest or equity in real estate, a new appraisal of the | 7 | | collateral shall not be required when (i) no new moneys are | 8 | | advanced other than funds necessary to cover reasonable closing | 9 | | costs, or (ii) there has been no obvious or material change in | 10 | | market conditions or physical aspects of the real estate that | 11 | | threatens the adequacy of the credit union's real estate | 12 | | collateral protection after the transaction, even with the | 13 | | advancement of new moneys. The Department reserves the right to | 14 | | require an appraisal under this subsection (7) whenever the | 15 | | Department believes it is necessary to address safety and | 16 | | soundness concerns. | 17 | | (Source: P.A. 98-749, eff. 7-16-14; 98-784, eff. 7-24-14; | 18 | | 99-78, eff. 7-20-15; 99-149, eff. 1-1-16; 99-331, eff. 1-1-16; | 19 | | revised 10-16-15.)
| 20 | | (205 ILCS 305/52) (from Ch. 17, par. 4453)
| 21 | | Sec. 52. Loans to directors, officers, credit committee, | 22 | | credit manager,
and supervisory
committee members. A credit | 23 | | union may make loans to its directors,
officers, credit | 24 | | committee members, credit manager, and supervisory
committee | 25 | | members, provided
that the loan complies with all lawful |
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| 1 | | requirements under this Act with
respect to loans to other | 2 | | borrowers. No loan may be made to or cosigned
by any director, | 3 | | officer, credit committee member, credit manager if no credit | 4 | | committee
has been appointed, or supervisory
committee
member | 5 | | which would cause the aggregate amount of all loans then | 6 | | outstanding
to or cosigned by all directors, officers, credit | 7 | | committee members, credit
manager if no credit committee has | 8 | | been appointed, or supervisory
committee
members to exceed 20% | 9 | | of the unimpaired capital and
surplus of the credit union.
| 10 | | (Source: P.A. 97-133, eff. 1-1-12.)
| 11 | | (205 ILCS 305/64.7 new) | 12 | | Sec. 64.7. Network credit unions. | 13 | | (a) Two or more credit unions merging pursuant to Section | 14 | | 63 of this Act may elect to request a network credit union | 15 | | designation for the surviving credit union from the Secretary. | 16 | | The request shall be set forth in the plan of merger and | 17 | | certificate of merger executed by the credit unions and | 18 | | submitted to the Secretary pursuant to subsection (4) of | 19 | | Section 63. The Secretary's approval of a certificate of merger | 20 | | containing a network credit union designation request shall | 21 | | constitute an amendment to the legal name of the surviving | 22 | | credit union as set forth in its articles of incorporation and | 23 | | bylaws, to include the reference to network. Any other change | 24 | | to the legal name of the surviving credit union shall require | 25 | | an amendment to the articles of incorporation and bylaws of the |
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| 1 | | surviving credit union pursuant to Section 4 of this Act. | 2 | | (b) A network credit union is a cooperative business | 3 | | structure comprised of 2 or more merging credit unions with a | 4 | | collective goal of efficiently serving their combined | 5 | | membership and gaining economies of sale through common vision, | 6 | | strategy and initiative. The merging credit unions shall be | 7 | | identified as divisional credit unions, branches, or units of | 8 | | the network credit union. Each divisional credit union shall | 9 | | have its own advisory board of directors and chief management | 10 | | official to assist in maintaining and leveraging its respective | 11 | | local identity for the benefit of the surviving credit union. | 12 | | The divisional credit union advisory boards shall be appointed | 13 | | by the network credit union board of directors. Each divisional | 14 | | credit union's board of directors shall appoint its divisional | 15 | | credit union chief management official and may also appoint one | 16 | | of its directors to serve on the network credit union's | 17 | | nominating committee. | 18 | | (c) The network credit union is the surviving legal entity | 19 | | in the merger and supervision, examination, audit, reporting, | 20 | | governance, and management shall be conducted or performed at | 21 | | the network credit union level. All share insurance, safety and | 22 | | soundness, and statutory and regulatory requirements and | 23 | | limitations shall be evaluated at the network credit union | 24 | | level.
| 25 | | Section 99. Effective date. This Act takes effect upon | 26 | | becoming law.
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