Full Text of HB4461 95th General Assembly
HB4461eng 95TH GENERAL ASSEMBLY
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| AN ACT concerning regulation.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Credit Union Act is amended by | 5 |
| changing Sections 34 and 46 and adding Section 42.1 as follows:
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| (205 ILCS 305/34) (from Ch. 17, par. 4435)
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| Sec. 34. Duties of Supervisory Committee. | 8 |
| (1) The Supervisory Committee
shall make or cause to be | 9 |
| made an annual internal audit of the books and
affairs of the | 10 |
| credit union to determine that the credit union's accounting
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| records and reports are prepared promptly and accurately | 12 |
| reflect operations
and results, that internal controls are | 13 |
| established and effectively
maintained to safeguard the assets | 14 |
| of the credit union, and that the
policies, procedures and | 15 |
| practices established by the Board of Directors
and management | 16 |
| of the credit union are being properly administered. The
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| Supervisory Committee shall submit a report of that audit to | 18 |
| the Board
of Directors and a summary of that report to the | 19 |
| members at the next annual
meeting of the credit union. It | 20 |
| shall make or cause to be made such
supplementary audits as it | 21 |
| deems necessary or as are required by the
Director or by the | 22 |
| Board of Directors, and submit reports of these
supplementary | 23 |
| audits to the Director or Board of Directors as applicable.
If |
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| the Supervisory Committee has not engaged a public accountant | 2 |
| registered
by the Department of Professional Regulation to make | 3 |
| the internal audit,
the Supervisory Committee or other | 4 |
| officials of the credit union shall not
indicate or in any | 5 |
| manner imply that such audit has been performed by a
public | 6 |
| accountant or that the audit represents the independent opinion | 7 |
| of a
public accountant. The Committee must retain its tapes and | 8 |
| working papers
of each internal audit for inspection by the | 9 |
| Department. The report of this
audit must be made on a form | 10 |
| approved by the Director. A copy of the report
must be promptly | 11 |
| mailed to the Director.
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| (2) The Supervisory Committee shall make or cause to be | 13 |
| made at least
once each year a reasonable percentage | 14 |
| verification of members' share and
loan accounts, consistent | 15 |
| with rules promulgated by the Director.
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| (3) The Supervisory Committee of a credit union with assets | 17 |
| of
$5,000,000 or more shall engage a public accountant | 18 |
| registered by the
Department of Professional Regulation to | 19 |
| perform an annual external
independent audit of the credit | 20 |
| union's financial statements in accordance
with generally | 21 |
| accepted auditing standards. The Supervisory Committee of a
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| credit union with assets of $3,000,000 or more, but less than | 23 |
| $5,000,000,
shall engage a public accountant registered by the | 24 |
| Department of
Professional Regulation to perform an external | 25 |
| independent audit of the
credit union's financial statements in | 26 |
| accordance with generally accepted
auditing standards at least |
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| once every 3 years. A copy of an external
independent audit | 2 |
| shall be mailed to the Director upon completion. If the
annual | 3 |
| internal audit of such a credit union is conducted by a public
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| accountant registered by the Department of Professional | 5 |
| Regulation and the
annual internal audit is done in conjunction | 6 |
| with the credit union's annual
external audit, the requirements | 7 |
| of subsection (1) of this Section shall
be deemed met.
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| (4) In determining the appropriate balance in the allowance | 9 |
| for loan losses account, a credit union may determine its | 10 |
| historical loss rate using a defined period of time of less | 11 |
| than 5 years, provided: | 12 |
| (A) the methodology used to determine the defined | 13 |
| period of time is formally documented in the credit union's | 14 |
| policies and procedures and is appropriate to the credit | 15 |
| union's size, business strategy, and loan portfolio | 16 |
| characteristics and the economic environment of the areas | 17 |
| and employers served by the credit union; | 18 |
| (B) supporting documentation is maintained for the | 19 |
| technique used to develop the credit union loss rates, | 20 |
| including the period of time used to accumulate historical | 21 |
| loss data and the factors considered in establishing the | 22 |
| time frames; and | 23 |
| (C) the external auditor conducting the credit union's | 24 |
| financial statement audit has analyzed the methodology | 25 |
| employed by the credit union and concludes that the | 26 |
| financial statements, including the allowance for loan |
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| losses, are fairly stated in all material respects in | 2 |
| accordance with U.S. Generally Accepted Accounting | 3 |
| Principles, as promulgated by the Financial Accounting | 4 |
| Standards Board. | 5 |
| Notwithstanding any other rulemaking authority that may | 6 |
| exist, neither the Governor nor any agency or agency head under | 7 |
| the jurisdiction of the Governor has any authority to make or | 8 |
| promulgate rules to implement or enforce the provisions of this | 9 |
| amendatory Act of the 95th General Assembly. If, however, the | 10 |
| Governor believes that rules are necessary to implement or | 11 |
| enforce the provisions of this amendatory Act of the 95th | 12 |
| General Assembly, the Governor may suggest rules to the General | 13 |
| Assembly by filing them with the Clerk of the House and the | 14 |
| Secretary of the Senate and by requesting that the General | 15 |
| Assembly authorize such rulemaking by law, enact those | 16 |
| suggested rules into law, or take any other appropriate action | 17 |
| in the General Assembly's discretion. Nothing contained in this | 18 |
| amendatory Act of the 95th General Assembly shall be | 19 |
| interpreted to grant rulemaking authority under any other | 20 |
| Illinois statute where such authority is not otherwise | 21 |
| explicitly given. For the purposes of this amendatory Act of | 22 |
| the 95th General Assembly, "rules" is given the meaning | 23 |
| contained in Section 1-70 of the Illinois Administrative | 24 |
| Procedure Act, and "agency" and "agency head" are given the | 25 |
| meanings contained in Sections 1-20 and 1-25 of the Illinois | 26 |
| Administrative Procedure Act to the extent that such |
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| definitions apply to agencies or agency heads under the | 2 |
| jurisdiction of the Governor. | 3 |
| (5) A majority of the members of the Supervisory Committee
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| shall constitute a quorum.
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| (Source: P.A. 86-238.)
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| (205 ILCS 305/42.1 new)
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| Sec. 42.1. Marketing of services. For purposes of | 8 |
| promoting its services to persons eligible for membership, a | 9 |
| credit union may sell to persons within its field of membership | 10 |
| negotiable checks, including travelers checks, money orders, | 11 |
| and similar money transfer instruments (including | 12 |
| international and domestic electronic fund transfers) and may | 13 |
| cash checks and money orders, and may receive international and | 14 |
| domestic electronic fund transfers for such persons for a fee. | 15 |
| (205 ILCS 305/46) (from Ch. 17, par. 4447) | 16 |
| Sec. 46. Loans and interest rate.
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| (1) A credit union may make loans
to its members for such | 18 |
| purpose and upon such security and terms, including
rates of | 19 |
| interest, as the Credit Committee, credit manager, or loan | 20 |
| officer
approves.
Notwithstanding the provisions of any other | 21 |
| law in connection with extensions
of credit, a credit union may | 22 |
| elect to
contract for and receive interest and fees and other | 23 |
| charges for extensions of
credit subject only to the provisions | 24 |
| of this Act and rules promulgated under
this Act, except that |
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| extensions of credit secured by residential real estate
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| be subject to the laws applicable thereto.
The rates of | 3 |
| interest to be charged on loans to members shall be
set by the | 4 |
| Board of Directors of each individual credit union in | 5 |
| accordance with Section 30 of this Act and such
rates may be | 6 |
| less than, but may not exceed, the maximum rate set forth in
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| this Section. A borrower may repay his loan prior to maturity, | 8 |
| in whole or
in part, without penalty. The credit contract may | 9 |
| provide for the payment
by the member and receipt by the credit | 10 |
| union of all costs and
disbursements, including reasonable | 11 |
| attorney's fees and collection agency
charges, incurred by the | 12 |
| credit union to collect or enforce the debt in the
event of a | 13 |
| delinquency by the member, or in the event of a breach of any
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| obligation of the member under the credit contract. A | 15 |
| contingency or
hourly arrangement established under an | 16 |
| agreement entered into by a credit
union with an attorney or | 17 |
| collection agency to collect a loan of a member
in default | 18 |
| shall be presumed prima facie reasonable.
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| (2) Credit unions may make loans based upon the security of | 20 |
| any
interest or equity in real estate, subject to rules and | 21 |
| regulations
promulgated by the Director. In any contract or | 22 |
| loan which
is secured by a mortgage, deed of
trust, or | 23 |
| conveyance in the nature of a mortgage, on residential real
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| estate, the interest which is computed, calculated, charged, or | 25 |
| collected
pursuant to such contract or loan, or pursuant to any | 26 |
| regulation or rule
promulgated pursuant to this Act, may not be |
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| computed, calculated, charged
or collected for any period of | 2 |
| time occurring after the date on which the
total indebtedness, | 3 |
| with the exception of late payment penalties, is paid
in full.
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| For purposes of this subsection (2) of this Section 46, a | 5 |
| prepayment
shall mean the payment of the total indebtedness, | 6 |
| with the exception of
late payment penalties if incurred or | 7 |
| charged, on any date before the date
specified in the contract | 8 |
| or loan agreement on which the total indebtedness
shall be paid | 9 |
| in full, or before the date on which all payments, if timely
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| made, shall have been made. In the event of a prepayment of the
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| indebtedness which is made on a date
after the date on which | 12 |
| interest on the indebtedness was last computed,
calculated, | 13 |
| charged, or collected but before the next date on which | 14 |
| interest
on the indebtedness was to be calculated, computed, | 15 |
| charged, or collected,
the lender may calculate, charge and | 16 |
| collect interest on the indebtedness
for the period which | 17 |
| elapsed between the date on which the prepayment is
made and | 18 |
| the date on which interest on the indebtedness was last | 19 |
| computed,
calculated, charged or collected at a rate equal to | 20 |
| 1/360 of the annual
rate for each day which so elapsed, which | 21 |
| rate shall be applied to the
indebtedness outstanding as of the | 22 |
| date of prepayment. The lender shall
refund to the borrower any | 23 |
| interest charged or collected which exceeds that
which the | 24 |
| lender may charge or collect pursuant to the preceding | 25 |
| sentence.
The provisions of this amendatory Act of 1985 shall | 26 |
| apply only to contracts
or loans entered into on or after the |
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| effective date of this amendatory
Act.
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| (3) Notwithstanding any other provision of this Act, a | 3 |
| credit union
authorized under this Act to make loans secured by | 4 |
| an interest or equity in
real estate may engage in making | 5 |
| "reverse mortgage" loans to persons for
the purpose of making | 6 |
| home improvements or repairs, paying insurance
premiums or | 7 |
| paying real estate taxes on the homestead properties
of such | 8 |
| persons. If made, such loans shall be made on such terms and
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| conditions as the credit union shall determine and as shall be | 10 |
| consistent
with the provisions of this Section and such rules | 11 |
| and regulations as the
Director shall promulgate hereunder. For | 12 |
| purposes of this Section, a
"reverse mortgage" loan shall be a | 13 |
| loan extended on the basis of existing
equity in homestead | 14 |
| property and secured by a mortgage on such property.
Such loans | 15 |
| shall be repaid upon the sale of the property or upon the death
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| of the owner or, if the property is in joint tenancy, upon the | 17 |
| death of the
last surviving joint tenant who had such an | 18 |
| interest in the property at the
time the loan was initiated, | 19 |
| provided, however, that the credit union and
its member may by | 20 |
| mutual agreement, establish other repayment terms. A
credit | 21 |
| union, in making a "reverse mortgage" loan, may add deferred
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| interest to principal or otherwise provide for the charging of | 23 |
| interest or
premiums on such deferred interest. "Homestead" | 24 |
| property, for purposes of
this Section, means the domicile and | 25 |
| contiguous real estate owned and
occupied by the mortgagor. The | 26 |
| Director shall promulgate rules and
regulations under this |
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| Section; provided that such rules and regulations
need not be | 2 |
| promulgated jointly with any other administrative agency of | 3 |
| this State.
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| (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.
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| For purposes of this Section, "revolving credit" has the | 11 |
| meaning defined
in Section 4.1 of the Interest Act.
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| 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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| 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
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| 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.
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| 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.
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| (5) Compliance with federal or Illinois preemptive laws or | 15 |
| regulations
governing loans made by a credit union chartered | 16 |
| under this Act shall
constitute compliance with this Act.
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| (6) Credit unions may make residential real estate mortgage | 18 |
| loans on terms and conditions established by the United States | 19 |
| Department of Agriculture through its Rural Development | 20 |
| Housing and Community Facilities Program. The portion of any | 21 |
| loan in excess of the appraised value of the real estate shall | 22 |
| be allocable only to the guarantee fee required under the | 23 |
| program. | 24 |
| (Source: P.A. 95-98, eff. 8-13-07.)
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| Section 99. Effective date. This Act takes effect upon | 26 |
| becoming law.
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