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90_SB0538
205 ILCS 305/46 from Ch. 17, par. 4447
205 ILCS 305/50 from Ch. 17, par. 4451
Amends the Illinois Credit Union Act. Provides that
extensions of credit made by credit unions, other than those
secured by residential real estate, need only comply with the
Illinois Credit Union Act. Provides that an advance under a
line of credit constitutes a loan. Effective immediately.
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1 AN ACT to amend the Illinois Credit Union Act by changing
2 Sections 46 and 50.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Credit Union Act is amended by
6 changing Sections 46 and 50 as follows:
7 (205 ILCS 305/46) (from Ch. 17, par. 4447)
8 Sec. 46. Loans and interest rate.
9 (1) A credit union may make loans to its members for
10 such purpose and upon such security and terms, including
11 rates of interest, as the Credit Committee, credit manager,
12 or loan officer approves. Notwithstanding the provisions of
13 any other law in connection with extensions of credit, a
14 credit union may elect to contract for and receive interest
15 and fees and other charges for extensions of credit subject
16 only to the provisions of this Act and rules promulgated
17 under this Act, except that extensions of credit secured by
18 residential real estate shall be subject to the laws
19 applicable thereto. The rates of interest to be charged on
20 loans to members shall be set by the Board of Directors of
21 each individual credit union and such rates may be less than,
22 but may not exceed, the maximum rate set forth in this
23 Section. A borrower may repay his loan prior to maturity, in
24 whole or in part, without penalty. The credit contract may
25 provide for the payment by the member and receipt by the
26 credit union of all costs and disbursements, including
27 reasonable attorney's fees and collection agency charges,
28 incurred by the credit union to collect or enforce the debt
29 in the event of a delinquency by the member, or in the event
30 of a breach of any obligation of the member under the credit
31 contract. A contingency or hourly arrangement established
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1 under an agreement entered into by a credit union with an
2 attorney or collection agency to collect a loan of a member
3 in default shall be presumed prima facie reasonable.
4 (2) Credit unions may make loans based upon the security
5 of any interest or equity in real estate, subject to rules
6 and regulations promulgated by the Director. In any contract
7 or loan which is secured by a mortgage, deed of trust, or
8 conveyance in the nature of a mortgage, on residential real
9 estate, the interest which is computed, calculated, charged,
10 or collected pursuant to such contract or loan, or pursuant
11 to any regulation or rule promulgated pursuant to this Act,
12 may not be computed, calculated, charged or collected for any
13 period of time occurring after the date on which the total
14 indebtedness, with the exception of late payment penalties,
15 is paid in full.
16 For purposes of this subsection (2) of this Section 46, a
17 prepayment shall mean the payment of the total indebtedness,
18 with the exception of late payment penalties if incurred or
19 charged, on any date before the date specified in the
20 contract or loan agreement on which the total indebtedness
21 shall be paid in full, or before the date on which all
22 payments, if timely made, shall have been made. In the event
23 of a prepayment of the indebtedness which is made on a date
24 after the date on which interest on the indebtedness was last
25 computed, calculated, charged, or collected but before the
26 next date on which interest on the indebtedness was to be
27 calculated, computed, charged, or collected, the lender may
28 calculate, charge and collect interest on the indebtedness
29 for the period which elapsed between the date on which the
30 prepayment is made and the date on which interest on the
31 indebtedness was last computed, calculated, charged or
32 collected at a rate equal to 1/360 of the annual rate for
33 each day which so elapsed, which rate shall be applied to the
34 indebtedness outstanding as of the date of prepayment. The
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1 lender shall refund to the borrower any interest charged or
2 collected which exceeds that which the lender may charge or
3 collect pursuant to the preceding sentence. The provisions
4 of this amendatory Act of 1985 shall apply only to contracts
5 or loans entered into on or after the effective date of this
6 amendatory Act. Any loan secured by a first mortgage on real
7 estate shall be contracted for at a rate of interest not to
8 exceed the maximum rate allowed by Section 4 of "An Act in
9 relation to the rate of interest and other charges in
10 connection with sales on credit and the lending of money",
11 approved May 24, 1879, as amended.
12 (3) Notwithstanding any other provision of this Act, a
13 credit union authorized under this Act to make loans secured
14 by an interest or equity in real estate may engage in making
15 "reverse mortgage" loans to persons for the purpose of making
16 home improvements or repairs, paying insurance premiums or
17 paying real estate taxes on the homestead properties of such
18 persons. If made, such loans shall be made on such terms and
19 conditions as the credit union shall determine and as shall
20 be consistent with the provisions of this Section and such
21 rules and regulations as the Director shall promulgate
22 hereunder. For purposes of this Section, a "reverse
23 mortgage" loan shall be a loan extended on the basis of
24 existing equity in homestead property and secured by a
25 mortgage on such property. Such loans shall be repaid upon
26 the sale of the property or upon the death of the owner or,
27 if the property is in joint tenancy, upon the death of the
28 last surviving joint tenant who had such an interest in the
29 property at the time the loan was initiated, provided,
30 however, that the credit union and its member may by mutual
31 agreement, establish other repayment terms. A credit union,
32 in making a "reverse mortgage" loan, may add deferred
33 interest to principal or otherwise provide for the charging
34 of interest or premiums on such deferred interest.
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1 "Homestead" property, for purposes of this Section, means the
2 domicile and contiguous real estate owned and occupied by the
3 mortgagor. The Director shall promulgate rules and
4 regulations under this Section; provided that such rules and
5 regulations need not be promulgated jointly with any other
6 administrative agency of this State.
7 (4) Notwithstanding any other provisions of this Act, a
8 credit union authorized under this Act to make loans secured
9 by an interest or equity in real property may engage in
10 making revolving credit loans secured by mortgages or deeds
11 of trust on such real property or by security assignments of
12 beneficial interests in land trusts.
13 For purposes of this Section, "revolving credit" has the
14 meaning defined in Section 4.1 of the Interest Act "An Act in
15 relation to the rate of interest and other charges in
16 connection with sales on credit and the lending of money",
17 approved May 24, 1879, as amended.
18 Any mortgage or deed of trust given to secure a revolving
19 credit loan may, and when so expressed therein shall, secure
20 not only the existing indebtedness but also such future
21 advances, whether such advances are obligatory or to be made
22 at the option of the lender, or otherwise, as are made within
23 twenty years from the date thereof, to the same extent as if
24 such future advances were made on the date of the execution
25 of such mortgage or deed of trust, although there may be no
26 advance made at the time of execution of such mortgage or
27 other instrument, and although there may be no indebtedness
28 outstanding at the time any advance is made. The lien of
29 such mortgage or deed of trust, as to third persons without
30 actual notice thereof, shall be valid as to all such
31 indebtedness and future advances form the time said mortgage
32 or deed of trust is filed for record in the office of the
33 Recorder of Deeds or the Registrar of Titles of the county
34 where the real property described therein is located. The
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1 total amount of indebtedness that may be so secured may
2 increase or decrease from time to time, but the total unpaid
3 balance so secured at any one time shall not exceed a maximum
4 principal amount which must be specified in such mortgage or
5 deed of trust, plus interest thereon, and any disbursements
6 made for the payment of taxes, special assessments, or
7 insurance on said real property, with interest on such
8 disbursements.
9 Any such mortgage or deed of trust shall be valid and
10 have priority over all subsequent liens and encumbrances,
11 including statutory liens, except taxes and assessments
12 levied on said real property.
13 (Source: P.A. 85-427.)
14 (205 ILCS 305/50) (from Ch. 17, par. 4451)
15 Sec. 50. Line of credit.
16 (1) A credit union may grant a self-replenishing line of
17 credit to a member up to a stated maximum amount. The terms
18 and conditions upon which a line of credit is extended to any
19 member may be different from the terms and conditions
20 established for another member. Where a line of credit has
21 been approved, no additional loan applications are required
22 as long as the total outstanding advances under the line of
23 credit do not exceed the maximum amount as stated in the line
24 of credit agreement.
25 (2) The term "line of credit" means a type of credit
26 agreement including, without limitation, a credit card
27 agreement. Each line of credit advance constitutes a loan,
28 and provisions in this Act regarding loans are equally
29 applicable to lines of credit.
30 (Source: P.A. 81-329.)
31 Section 99. Effective date. This Act takes effect upon
32 becoming law.