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| [ Introduced ] | [ Senate Amendment 006 ] |
91_SB1275sam002
LRB9107260JSpcam26
1 AMENDMENT TO SENATE BILL 1275
2 AMENDMENT NO. . Amend Senate Bill 1275, AS AMENDED,
3 by replacing the title with the following:
4 "AN ACT concerning the regulation of certain lending
5 practices."; and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 1. Short title. This Act may be cited as the
9 Short-term Loan Act.
10 Section 5. Definitions.
11 "Check" means a check, draft, or other negotiable
12 instrument used for payment of money.
13 "Department" means the Department of Financial
14 Institutions.
15 "Director" means the Director of the Department of
16 Financial Institutions.
17 "Interest-bearing loan" means a loan in which the debt is
18 expressed as a principal amount plus interest charged on
19 actual unpaid principal balances for the time actually
20 outstanding.
21 "Licensee" means an entity licensed under this Act to
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1 provide loan services.
2 "Local Government Authorization Form" means a form
3 prescribed by the Director and signed by the clerk or chief
4 executive officer of the county or municipality in which the
5 licensee is to be located certifying that the licensed
6 location complies with the zoning and all other applicable
7 county or municipal ordinances and regulations.
8 "Net worth" means total assets minus total liabilities.
9 "Refinance" means to renew or extend a loan beyond its
10 original term.
11 "Short-term loan" means a loan that has a term of not
12 more than 30 days or upon which interest is charged at an
13 annual percentage rate exceeding 36% and made by a lender
14 that does not accept insured deposits.
15 Section 10. License required; exemption.
16 (a) No person, partnership, association, limited
17 liability company, corporation, or other business combination
18 or entity may engage in the business of making short-term
19 loans except as authorized by this Act and while licensed
20 under this Act.
21 (b) This Act does not apply to lenders licensed under
22 the Consumer Installment Loan Act that do not:
23 (1) make loans wherein, at consummation, an obligor
24 provides to the licensee a post-dated check as payment on
25 or security for the loan;
26 (2) make loans wherein, at consummation, the
27 obligor provides to a licensee a check or other
28 authorization for immediate satisfaction of a future
29 scheduled payment, but which the licensee agrees to defer
30 deposit or initiation of until a later time, provided,
31 however, that nothing shall prohibit a licensee from
32 taking an authorization that an obligor's future payments
33 be made by electronic fund transfer or from processing a
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1 check electronically; or
2 (3) make loans wherein, at consummation, an obligor
3 provides to the licensee at that time, as security for
4 the loan, physical possession of the obligor's title to a
5 motor vehicle.
6 Section 15. Application; fees; net worth; bond.
7 (a) An applicant for a license under this Act shall apply
8 in writing in the form prescribed by the Director. At the
9 time of making the application, the applicant shall pay to
10 the Director $750 as a nonrefundable application fee and
11 $1,000 as an annual license fee for a period terminating on
12 the last day of the current calendar year. If the application
13 is filed after June 30th in any year, however, the license
14 fee shall be 50% of the annual license fee for the year.
15 (b) An applicant shall prove in form satisfactory to the
16 Director that the applicant has and will maintain net worth
17 of a minimum of $250,000 for an initial licensed location and
18 $10,000 for each additional licensed location not to exceed
19 $500,000 in the aggregate.
20 (c) A licensee shall maintain a surety bond in the
21 principal sum of $50,000 for an initial licensed location and
22 $10,000 for each additional licensed location. The bond must
23 be issued by a bonding company authorized to do business in
24 this State and approved by the Director. The bond shall run
25 to the Director and shall be for the benefit of any person
26 who is lawfully awarded damages pursuant to an appropriate
27 court order as a result of the actions of the licensee
28 arising out of a violation of this Act or for the payment of
29 any administrative fine. If the Director finds at any time
30 that a bond is of insufficient size or is insecure,
31 exhausted, or otherwise doubtful, an additional bond in such
32 amount as determined by the Director shall be filed by the
33 licensee within 30 days after written demand therefor by the
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1 Director.
2 (d) An applicant shall provide a completed Local
3 Government Authorization Form signed by the clerk or chief
4 executive officer of the county or municipality in which the
5 licensee is to be established with any application for a
6 license, license renewal, or relocation.
7 Section 20. Granting of license.
8 (a) The Director shall not issue a license for the
9 location described in the application if he or she finds any
10 of the following to exist:
11 (1) a director, managerial employee, collection
12 agent, partner, or officer of the applicant has been
13 convicted of a felony;
14 (2) the location fails to conform to local zoning
15 laws with respect to location, structural, aesthetic, or
16 other requirements;
17 (3) the location is within one mile of a facility
18 operated by an inter-track wagering location licensee or
19 an organization licensee subject to the Illinois Horse
20 Racing Act of 1975, is within one mile of a facility at
21 which gambling is conducted under the Riverboat Gambling
22 Act, is within one mile of the location at which a
23 riverboat subject to the Riverboat Gambling Act docks, or
24 is within one mile of the main or branch campus of a
25 public or private college or university that provides
26 student housing or student residences; or
27 (4) the applicant has failed to submit a completed
28 Local Government Authorization Form.
29 (b) A licensee must obtain written approval from the
30 Director before relocating a licensed office.
31 (c) A licensee shall prominently display in bold face
32 type of no less than 72 points in size at each licensed
33 location a notice disclosing that the licensee is regulated
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1 by the Department of Financial Institutions and that any
2 questions regarding such licensing or the availability of
3 debt management services should be directed to the Department
4 at an 800 or other toll-free telephone number specified in
5 the notice. The notice shall disclose a schedule of all fees
6 and interest to be charged, including the corresponding
7 interest rate, for loans payable in 14 days and for loans
8 payable in 30 days. The notice shall disclose that the
9 licensee may not pursue criminal penalties to collect a
10 short-term loan. The notice shall also disclose that the
11 licensee may take possession of a vehicle used to secure a
12 loan if the borrower fails to repay the loan. The borrower
13 shall be entitled to any proceeds from the sale of the
14 vehicle in excess of the amount owed on the loan.
15 Section 25. License renewal.
16 (a) A license under this Act expires on December 31 of
17 each year. At the time the licensee applies for license
18 renewal, the licensee shall submit to the Department, as part
19 of the license renewal application, an annual summary of the
20 following information:
21 (1) the number of loans made that were secured by
22 the title to a motor vehicle;
23 (2) the number of vehicle repossessions as a result
24 of default on a loan secured by a title to a motor
25 vehicle;
26 (3) the number of loans made that were secured by a
27 post-dated check;
28 (4) the number of loans made that were secured by a
29 post-dated check that resulted in default; and
30 (5) any other information the Department deems
31 appropriate.
32 (b) A license must be renewed on forms prescribed by the
33 Director no later than November 30 of each year.
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1 (c) A license not renewed by December 31 shall be
2 considered canceled without the licensee being entitled to a
3 hearing.
4 (d) The Director may not renew a license for a location
5 that since the original issuance or most recent renewal:
6 (1) has a director, managerial employee, collection
7 agent, partner, or officer of the applicant that has been
8 convicted of a felony;
9 (2) is within one mile of a facility operated by an
10 inter-track wagering location licensee or an organization
11 licensee subject to the Illinois Horse Racing Act of
12 1975, is within one mile of a facility at which gambling
13 is conducted under the Riverboat Gambling Act, is within
14 one mile of the location at which a riverboat subject to
15 the Riverboat Gambling Act docks, or is within one mile
16 of the main or branch campus of a public or private
17 college or university which provides student housing or
18 student residences; or
19 (3) fails to provide a completed Local Government
20 Authorization Form.
21 Section 30. Multiple licenses to same licensee. No more
22 than one place of business shall be maintained under the same
23 license, but the Director may issue more than one license to
24 the same licensee upon compliance with all of the provisions
25 of this Act governing the original issuance of a license.
26 Section 35. Lending limits and refinancing. A loan
27 secured by a post-dated check may not exceed $500 in
28 principal amount, and any other loan may not exceed $2,000 in
29 principal amount. A loan made under this Act may be
30 refinanced a maximum number of 2 times but only when the
31 loan's outstanding balance has been reduced by 25%. If a loan
32 is secured by a post-dated check, the post-dated check must
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1 name the lender as the payee.
2 Section 40. Investigation of conduct of business.
3 (a) For the purpose of discovering violations of this Act
4 or securing information lawfully required by it, the Director
5 may at any time investigate the loans and business and
6 examine the books, accounts, records, and files used therein,
7 of every licensee and of every person, partnership,
8 association, limited liability company, and corporation
9 engaged in the business of making short-term loans, whether
10 such person, partnership, association, limited liability
11 company, or corporation shall act or claim to act as
12 principal or agent or within or without the authority of this
13 Act. For such purpose, the Director shall have free access
14 to the offices and places of business, books, accounts,
15 papers, records, files, safes, and vaults of such persons,
16 partnerships, associations, limited liability companies, and
17 corporations. The Director may require the attendance of and
18 examine under oath all persons whose testimony he or she may
19 require relative to such loans or such business, and in such
20 cases, the Director shall have power to administer oaths to
21 all persons called as witnesses, and the Director may conduct
22 such examinations.
23 (b) The Director shall make an examination of the
24 affairs, business, office, and records of each licensee at
25 least once each year. The Director shall by rule set the fee
26 to be charged for each examination day. The fee shall
27 reasonably reflect actual costs. The Director shall also have
28 authority to examine the books and records, as the Director
29 deems necessary, of a former licensee that is being
30 liquidated and may charge the examination fees otherwise
31 required for licensees.
32 (c) All books, accounts, records, and files of a
33 licensee relating to loans and transactions occurring after
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1 the effective date of this Act shall be available in a
2 computerized or electronic format and shall, at a minimum,
3 provide the following information:
4 (1) the customer's name and the original date of the
5 loan;
6 (2) an indication of whether the transaction
7 recorded is a new loan or a refinancing of an existing
8 loan and, if a refinancing, the date of the refinancing;
9 (3) the number of loan contracts obtained by the
10 borrower, including refinancings of prior loans;
11 (4) the total finance charges incurred by that
12 customer with respect to the loan transaction;
13 (5) a record of transactions in which the proceeds
14 of a loan were provided to a borrower in cash; and
15 (6) such other information as the Director may
16 require.
17 Section 45. Contractual disclosures and prohibitions.
18 (a) The loan contract must provide all disclosures
19 required by the federal Truth-In-Lending Act, including
20 Regulation Z. A copy of all loan documents must be given to
21 the borrower.
22 (b) Before entering into a short-term loan agreement, a
23 licensee must give to the borrower a pamphlet describing the
24 availability of debt management services and the borrower's
25 rights and responsibilities in the transaction and providing
26 an 800 or other toll-free number through which the borrower
27 can contact the Department of Financial Institutions
28 regarding questions, complaints, and debt management
29 services.
30 (c) The loan contract must include a separate statement
31 signed by the debtor attesting that the debtor has not had an
32 outstanding short-term loan within the preceding 30 days.
33 No loan other than the refinancing of an original loan
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1 may be provided to a borrower who has obtained a loan from a
2 licensee under this Act until 30 days have elapsed from the
3 date the loan or any refinanced loan has been repaid in full.
4 (d) A licensee who knowingly or recklessly makes a loan,
5 other than the refinancing of a loan, to a borrower who has
6 obtained a loan from a licensee under this Act sooner than 30
7 days after that loan has been repaid is guilty of a Class 4
8 felony.
9 It shall be an affirmative defense to a charge of
10 reckless violation of this subsection that the licensee has
11 established and maintained a system that provides a
12 reasonable method of identifying borrowers and utilized that
13 system in processing the loan. Any such system must, at a
14 minimum, allow the licensee to check the identification and
15 borrower files of all of its affiliates or subsidiaries.
16 A borrower who provides a false statement with respect to
17 outstanding loans made to the borrower under this Act within
18 the 30 days preceding the obtaining of a new loan and obtains
19 a new loan may not bring a civil action pursuant to Section
20 120 of this Act with respect to the new loan.
21 (e) No licensee may require binding arbitration or
22 mediation prior to the filing of a civil action pursuant to
23 Section 120 nor provide for arbitration or mediation in a
24 venue other than the county in which the loan was made. No
25 loan contract may contain a cognovit or confession of
26 judgment clause or provision. No short-term loan may require
27 the borrower to deposit a set of vehicle keys with the lender
28 or an agent of the lender as a condition of, or incident to,
29 the loan. No licensee may take possession of a vehicle
30 without first giving notice to the borrower; affording the
31 borrower the opportunity to make the vehicle available to the
32 lender at a place, date, and time reasonably convenient to
33 the lender and borrower; and permitting the borrower to
34 remove from the vehicle any personal belongings without
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1 charge or additional cost to the borrower. No licensee may
2 dispose of the vehicle without first giving at least 10 days
3 written notice to the borrower prior to the sale and the
4 opportunity to cure. The notice shall state the date, time,
5 and place of the sale and provide the borrower with a written
6 accounting of the amount owed on the loan. A loan contract
7 shall advise the borrower that matters involving
8 improprieties in the making of the loan or in loan collection
9 practices may be referred to the Department and shall
10 prominently disclose the Department's address and telephone
11 number. No licensee may take possession of a motor vehicle
12 for a loan default and lease the vehicle back to the
13 borrower. Any appraisal of the value of a motor vehicle that
14 has been used to secure a loan shall be limited to the
15 vehicle's Kelly Blue Book Used Car Guide value.
16 The contract shall include a notice printed in boldface
17 type that the licensee may not pursue criminal penalties to
18 collect a short-term loan.
19 Section 46. Advertising. Any advertising for a loan
20 transacted under this Act that states a rate or amount of
21 charge for a loan must state the rate as an annual percentage
22 rate. The annual percentage rate shall be conspicuously
23 disclosed.
24 Section 47. Debt management service; notice.
25 (a) At the time a licensee conveys a second notice to a
26 borrower indicating the borrower is in arrears or any notice
27 that the borrower is in default for a debt issued by the
28 licensee under this Act, the licensee shall include with the
29 notice a statement indicating an 800 or other toll-free
30 telephone number of the Department of Financial Institutions
31 which the borrower may contact for the purpose of the
32 borrower receiving information from the Department on how to
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1 contact a debt management service for assistance in resolving
2 debt problems of the borrower. The form and method of the
3 notice provided by licensees shall be subject to approval by
4 the Department.
5 (b) The Department is required to establish an 800 or
6 other toll-free telephone number as provided by subsection
7 (a) of this Section. This 800 or other toll-free number may
8 be the same as that disclosed under subsection (b) of Section
9 45. The Department shall, in cooperation with an
10 organization representing debt management services, establish
11 a listing of debt management service offices that the
12 Department shall provide to borrowers who are requesting the
13 services of those offices. The Department shall provide the
14 list on an approximate geographic basis as that relates to
15 the borrower's residence.
16 (c) When an original loan made under this Act is
17 refinanced pursuant to Section 35 of this Act, the licensee
18 shall provide a copy of a statement to the borrower which
19 contains the information set forth in subsection (a) of this
20 Section. The statement shall be provided to the borrower
21 separately from the loan refinancing contract at the time the
22 loan refinancing contract is signed by the borrower.
23 (d) Each loan refinancing contract executed by a
24 licensee shall include a statement, which shall be initialed
25 by the borrower, as follows:
26 "I have received from (name of lender) a toll free number
27 for the Department of Financial Institutions that I can call
28 for information regarding debt management service.".
29 (e) The Department shall adopt rules to implement the
30 requirements of this Section. For the purposes of this
31 Section, "debt management service" has the meaning given that
32 term in the Debt Management Service Act.
33 Section 50. Loan proceeds. A licensee must issue the
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1 proceeds of a loan in the form of a check drawn on the
2 licensee's bank account, in cash, or by money order. When
3 the proceeds are issued in the form of a check drawn on the
4 licensee's bank account or by money order, the licensee may
5 not charge a fee for cashing the check or money order. When
6 the proceeds are issued in cash, the licensee must provide
7 the borrower with a written verification of the cash
8 transaction and shall maintain an electronic record
9 indicating a transaction pursuant to subsection (c) of
10 Section 40.
11 Section 55. Security interest. In making a short-term
12 loan, a licensee shall not take a security interest in any of
13 the debtor's property other than the post-dated check or the
14 debtor's motor vehicle title, which is tendered by the debtor
15 at the time of obtaining the loan. When a post-dated check
16 is taken as security for a loan, the licensee must stamp or
17 otherwise imprint on the back of the check a notation that
18 the check secures a deferred deposit loan made under this Act
19 and that any holder takes the check subject to the claims and
20 defenses of the maker.
21 Section 60. Other business. A licensee shall not engage
22 in any business other than that for which the license is
23 issued at the licensed location without the prior written
24 approval of the Director.
25 Section 70. Charging of interest.
26 (a) All loans must be interest-bearing.
27 (b) To compute time for the calculation of interest and
28 other purposes, the licensee shall calculate interest at the
29 rate of 1/365th of the agreed annual rate for each day
30 actually elapsed.
31 (c) Interest shall be computed on unpaid principal
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1 balances outstanding from time to time, for the time
2 outstanding, until fully paid. Each payment shall be applied
3 first to the accumulated interest and the remainder of the
4 payment applied to the unpaid principal balance; provided,
5 however, that if the amount of the payment is insufficient to
6 pay the accumulated interest, the unpaid interest continues
7 to accumulate to be paid from the proceeds of subsequent
8 payments and may not be added to the principal balance.
9 (d) Interest shall not be payable in advance or
10 compounded.
11 (e) Licensees may not assess charges unless expressly
12 permitted in this Act.
13 Section 75. Prepayment.
14 (a) At the debtor's option, a loan may be prepaid either
15 in part or in full with the licensee refunding the unearned
16 interest charge calculated on a prorata daily basis.
17 (b) A consumer shall be permitted to make partial
18 payments on the loan at any time without charge.
19 Section 80. Closing of business; surrender of license.
20 (a) At least 10 days prior to a licensee ceasing
21 operations or closing business, the licensee shall:
22 (1) notify the Department of its action in writing;
23 (2) surrender its license to the Director for
24 cancellation; and
25 (3) notify the Department of the location where the
26 books, accounts, contracts, and records will be
27 maintained and the procedure to ensure prompt return of
28 contracts, titles, and releases to the customers.
29 (b) The surrender of the license shall not affect the
30 licensee's civil or criminal liability for acts committed
31 prior to surrender nor entitle the licensee to a return of
32 any part of the annual license fee.
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1 (c) The accounts, books, records, and contracts shall be
2 maintained and serviced by the licensee or another licensee
3 under this Act, or an entity exempt from licensure under this
4 Act.
5 (d) The Department shall have the authority to conduct
6 examinations of the books, records, and loan documents at any
7 time after surrender of the license, filing of bankruptcy, or
8 the cessation of operations.
9 Section 85. Bankruptcy.
10 (a) On the date of filing for bankruptcy, the licensee
11 shall notify the Department in writing of the:
12 (1) date of bankruptcy;
13 (2) docket number;
14 (3) presiding judge; and
15 (4) name and address of the trustee.
16 (b) If the bankrupt entity elects to close its business,
17 the provisions in Section 80 must be satisfied.
18 Section 90. Returned checks.
19 (a) If a check received as payment for a loan is returned
20 to the licensee for nonpayment, the licensee may assess the
21 debtor a fee not exceeding $15 or the cost actually incurred
22 by the lender as an insufficient funds charge, whichever is
23 less. Only one such fee may be collected with respect to a
24 particular check even if it has been redeposited more than
25 once. A fee charged pursuant to this Section is a licensee's
26 exclusive charge for late payment.
27 (b) No licensee, nor any person claiming directly or
28 indirectly through the licensee for a loan made pursuant to
29 this Act, may pursue or threaten to pursue criminal penalties
30 against a debtor for any returned or dishonored check.
31 (c) A violation of this Section is a Class B misdemeanor.
32 In addition to all other criminal and administrative
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1 enforcement and penalties, a claim of violation of this
2 Section may be asserted pursuant to Section 120 of this Act.
3 Section 95. Recording or releasing lien.
4 (a) Upon making a loan secured by a title to a motor
5 vehicle, the licensee must immediately take into possession
6 evidence of the debtor's ownership in the motor vehicle that
7 has been registered with the Office of the Illinois Secretary
8 of State and shall note on the face of the loan contract the
9 vehicle's make, model, year of manufacture, and vehicle
10 identification number.
11 (b) Within 24 hours after payment in full, the licensee
12 must release any filed liens, provide evidence of the release
13 to the debtor, and return the title to the debtor or cause
14 the title to be returned to the debtor.
15 (c) The licensee may not charge, directly or indirectly,
16 fees associated with the repossession of a motor vehicle.
17 Section 100. Sale or hypothecation of a loan. No licensee
18 may sell, hypothecate, pledge, or assign any loan made under
19 this Act without prior approval of the Director.
20 Section 103. Prohibited practices. In addition to any
21 other practice or action prohibited by this Act, no licensee
22 making loans under this Act shall commit, or have committed
23 on its behalf, any of the following prohibited practices:
24 (1) Altering the date or any other information on a
25 post-dated check used to secure a loan.
26 (2) Engaging in unfair, deceptive, or fraudulent
27 practices in the making or collecting of a short-term
28 loan.
29 (3) Including any of the following provisions in
30 loan documents:
31 (A) a hold harmless clause;
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1 (B) an assignment of or order for payment of
2 wages or other compensation for services;
3 (C) a provision in which the borrower agrees
4 not to assert any claim or defense arising out of
5 the contract; and
6 (D) a waiver of any provision of this Act.
7 (4) Offering for sale any credit related insurance.
8 (5) Using or threatening criminal prosecution or
9 multiple damages under Section 17-1a of the Criminal Code
10 of 1961 in collecting a loan.
11 Section 105. Financial Institution Fund; deposits. All
12 moneys received by the Department under this Act shall be
13 deposited in the Financial Institution Fund created under
14 Section 6z-26 of the State Finance Act.
15 Section 110. Penalties for violation; cease and desist
16 orders.
17 (a) Any entity engaging in the business of making
18 short-term loans without the requisite license is guilty of a
19 Class 4 felony.
20 (b) A license issued under this Act may be revoked if the
21 licensee or any director, manager of a limited liability
22 company, partner, or officer thereof is convicted of a
23 felony.
24 (c) No provision of this Section imposing any liability
25 shall apply to any act done or omitted in conformity with any
26 rule or written interpretation thereof by the Department of
27 Financial Institutions, notwithstanding that after that act
28 or omission has occurred, the rule or interpretation is
29 amended, rescinded, or determined by judicial or other
30 authority to be invalid for any reason. All interpretations
31 relied upon must be written and signed by the Department's
32 Chief Counsel and approved by the Director.
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1 (d) The Director may issue a cease and desist order to
2 any licensee, or person doing business without the required
3 license, when, in the opinion of the Director, the licensee
4 or other person is violating or is about to violate any
5 provision of this Act or any rule or requirement imposed in
6 writing by the Department as a condition of granting any
7 authorization permitted by this Act.
8 (e) The Director may issue a cease and desist order prior
9 to holding a hearing.
10 (f) The Director shall serve notice of his or her action,
11 designated as a cease and desist order made pursuant to this
12 Section, including a statement of the reasons for the action,
13 either personally or by certified mail, return receipt
14 requested. Service by certified mail shall be deemed
15 completed when the notice is deposited in the U.S. mail.
16 (g) Within 15 days after service of the cease and desist
17 order, the licensee or other person may request, in writing,
18 a hearing.
19 (h) The Director shall schedule a hearing within 30 days
20 after receiving the request for a hearing unless otherwise
21 agreed to by the parties.
22 (i) The Director shall have the authority to prescribe
23 rules for the administration of this Section.
24 (j) If it is determined that the Director had the
25 authority to issue the cease and desist order, he or she may
26 issue such orders as may be reasonably necessary to correct,
27 eliminate, or remedy such conduct.
28 (k) The powers vested in the Director by this Section are
29 additional to any and all other powers and remedies vested in
30 the Director by law, and nothing in this Section shall be
31 construed as requiring that the Director shall employ the
32 power conferred in this Section instead of or as a condition
33 precedent to the exercise of any other power or remedy vested
34 in the Director.
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1 (l) The cost for the administrative hearing shall be set
2 by rule.
3 Section 115. Fines; suspension or revocation of license.
4 (a) The Director may, after 10 days notice by registered
5 mail to the licensee at the address set forth in the license
6 stating the contemplated action and in general the grounds
7 therefor, fine the licensee an amount not exceeding $10,000
8 per violation. In addition to any fine, the Director may
9 revoke or suspend any license issued under this Act if the
10 Director finds that:
11 (1) the licensee has failed to comply with any
12 provision of this Act or any order, decision, finding,
13 rule, or direction of the Director lawfully made pursuant
14 to the authority of this Act; or
15 (2) any fact or condition exists that, if it had
16 existed at the time of the original application for the
17 license, clearly would have warranted the Director in
18 refusing to issue the license.
19 (b) The Director may fine, suspend, or revoke only the
20 particular license with respect to which grounds for the
21 fine, revocation, or suspension occur or exist, but if the
22 Director finds that grounds for revocation are of general
23 application to all offices or to more than one office of the
24 licensee, the Director shall fine, suspend, or revoke every
25 license to which the grounds apply.
26 (c) No revocation, suspension, or surrender of any
27 license shall impair or affect the obligation of any
28 pre-existing lawful contract between the licensee and any
29 obligor.
30 (d) The Director may issue a new license to a former
31 licensee whose license has been revoked when facts or
32 conditions that clearly would warrant the Director in
33 refusing to issue the license do not exist.
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1 (e) In every case in which a license is suspended or
2 revoked or an application for a license or renewal of a
3 license is denied, the Director shall serve the licensee with
4 notice of that action, including a statement of the reasons
5 for the action, either personally or by certified mail,
6 return receipt requested. Service by certified mail shall be
7 deemed completed when the notice is deposited in the U.S.
8 Mail.
9 (f) An order assessing a fine, an order revoking or
10 suspending a license, or an order denying renewal of a
11 license shall take effect upon service of the order unless
12 the licensee requests, in writing, within 10 days after the
13 date of service, a hearing. If a hearing is requested, the
14 order shall be stayed until a final administrative order is
15 entered.
16 (g) If the licensee requests a hearing, the Director
17 shall schedule a hearing within 30 days after the request for
18 a hearing is received unless otherwise agreed to by the
19 parties.
20 (h) The hearing shall be held at the time and place
21 designated by the Director. The Director and any
22 administrative law judge designated by him or her shall have
23 the power to administer oaths and affirmations, subpoena
24 witnesses and compel their attendance, take evidence, and
25 require the production of books, papers, correspondence, and
26 other records or information that he or she considers
27 relevant or material to the inquiry.
28 (i) The costs for the administrative hearing shall be set
29 by rule.
30 (j) The Director shall have the authority to prescribe
31 rules for the administration of this Section.
32 Section 120. Civil action. A claim of violation of this
33 Act by a short-term lender may be asserted in a civil action,
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1 including a class action, by any aggrieved person, for which
2 punitive damages, costs, and reasonable attorney fees may be
3 awarded. A borrower who falsely attests to not having an
4 outstanding loan made by a licensee under this Act within the
5 preceding 30 days, as required under Section 45, in order to
6 obtain a new loan may not bring a civil action under this
7 Section with respect to the new loan. No loan contract may
8 require binding arbitration or mediation prior to filing a
9 civil action pursuant to this Section unless the binding
10 arbitration or mediation is required by court rule.
11 Section 125. Rules. The Department may make and enforce
12 such reasonable rules, directions, orders, decisions, and
13 findings as the execution and enforcement of the provisions
14 of this Act require and as are not inconsistent therewith.
15 Section 130. Judicial review. All final administrative
16 decisions of the Department under this Act shall be subject
17 to judicial review pursuant to the provisions of the
18 Administrative Review Law, all amendments and modifications
19 thereof, and any rules adopted pursuant thereto.
20 Section 135. Injunction; civil penalty; costs. If it
21 appears to the Director that a person or any entity has
22 committed or is about to commit a violation of this Act, a
23 rule promulgated under this Act, or an order of the Director,
24 the Director may apply to the circuit court for an order
25 enjoining the person or entity from violating or continuing
26 to violate this Act, the rule, or order and for injunctive or
27 other relief that the nature of the case may require and may,
28 in addition, request the court to assess a civil penalty up
29 to $1,000 along with costs and attorney's fees.
30 Section 145. Local ordinances.
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1 (a) A county or municipality may, by ordinance, require a
2 short-term lender to conduct its business within a described
3 geographic zone and may require that the licensed building or
4 premises conform to described aesthetic standards.
5 (b) A county or municipality may, by ordinance, require a
6 short-term lender to make all required disclosures,
7 pamphlets, and posted notices in languages other than English
8 as required to meet the needs of the community in which the
9 short-term lender is located, including but not limited to
10 notice of interest rates and fees, and that use of the
11 criminal justice system to collect a loan after default is
12 prohibited. A local ordinance may also require the posting
13 of a schedule in English and an appropriate foreign language
14 indicating all fees and interest to be charged on a loan
15 payable in 14 days and on a loan payable in 30 days.
16 Section 147. Home rule. This Act is a limitation under
17 subsection (i) of Section 6 of Article VII of the Illinois
18 Constitution on the concurrent exercise by home rule units of
19 powers and functions exercised by the State. A county or
20 municipality may charge a licensee a fee to cover the costs
21 and expenses reasonably associated with any inspection,
22 clerical, and other costs incurred in verifying and providing
23 information required by a Local Government Authorization Form
24 or otherwise associated with local regulations.
25 Section 150. Severability. The provisions of this Act are
26 severable under Section 1.31 of the Statute on Statutes.
27 Section 190. The Interest Act is amended by changing
28 Section 4 as follows:
29 (815 ILCS 205/4) (from Ch. 17, par. 6404)
30 Sec. 4. General interest rate.
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1 (1) In all written contracts it shall be lawful for the
2 parties to stipulate or agree that 9% per annum, or any less
3 sum of interest, shall be taken and paid upon every $100 of
4 money loaned or in any manner due and owing from any person
5 to any other person or corporation in this state, and after
6 that rate for a greater or less sum, or for a longer or
7 shorter time, except as herein provided.
8 The maximum rate of interest that may lawfully be
9 contracted for is determined by the law applicable thereto at
10 the time the contract is made. Any provision in any
11 contract, whether made before or after July 1, 1969, which
12 provides for or purports to authorize, contingent upon a
13 change in the Illinois law after the contract is made, any
14 rate of interest greater than the maximum lawful rate at the
15 time the contract is made, is void.
16 It is lawful for a state bank or a branch of an
17 out-of-state bank, as those terms are defined in Section 2 of
18 the Illinois Banking Act, to receive or to contract to
19 receive and collect interest and charges at any rate or rates
20 agreed upon by the bank or branch and the borrower.
21 It is lawful to receive or to contract to receive and
22 collect interest and charges as authorized by this Act and as
23 authorized by the Short-term Loan Act, by the Consumer
24 Installment Loan Act, and by the "Consumer Finance Act",
25 approved July 10, 1935, as now or hereafter amended. It is
26 lawful to charge, contract for, and receive any rate or
27 amount of interest or compensation with respect to the
28 following transactions:
29 (a) Any loan made to a corporation;
30 (b) Advances of money, repayable on demand, to an
31 amount not less than $5,000, which are made upon
32 warehouse receipts, bills of lading, certificates of
33 stock, certificates of deposit, bills of exchange, bonds
34 or other negotiable instruments pledged as collateral
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1 security for such repayment, if evidenced by a writing;
2 (c) Any credit transaction between a merchandise
3 wholesaler and retailer; any business loan to a business
4 association or copartnership or to a person owning and
5 operating a business as sole proprietor or to any persons
6 owning and operating a business as joint venturers, joint
7 tenants or tenants in common, or to any limited
8 partnership, or to any trustee owning and operating a
9 business or whose beneficiaries own and operate a
10 business, except that any loan which is secured (1) by an
11 assignment of an individual obligor's salary, wages,
12 commissions or other compensation for services, or (2) by
13 his household furniture or other goods used for his
14 personal, family or household purposes shall be deemed
15 not to be a loan within the meaning of this subsection;
16 and provided further that a loan which otherwise
17 qualifies as a business loan within the meaning of this
18 subsection shall not be deemed as not so qualifying
19 because of the inclusion, with other security consisting
20 of business assets of any such obligor, of real estate
21 occupied by an individual obligor solely as his
22 residence. The term "business" shall be deemed to mean a
23 commercial, agricultural or industrial enterprise which
24 is carried on for the purpose of investment or profit,
25 but shall not be deemed to mean the ownership or
26 maintenance of real estate occupied by an individual
27 obligor solely as his residence;
28 (d) Any loan made in accordance with the provisions
29 of Subchapter I of Chapter 13 of Title 12 of the United
30 States Code, which is designated as "Housing Renovation
31 and Modernization";
32 (e) Any mortgage loan insured or upon which a
33 commitment to insure has been issued under the provisions
34 of the National Housing Act, Chapter 13 of Title 12 of
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1 the United States Code;
2 (f) Any mortgage loan guaranteed or upon which a
3 commitment to guaranty has been issued under the
4 provisions of the Veterans' Benefits Act, Subchapter II
5 of Chapter 37 of Title 38 of the United States Code;
6 (g) Interest charged by a broker or dealer
7 registered under the Securities Exchange Act of 1934, as
8 amended, or registered under the Illinois Securities Law
9 of 1953, approved July 13, 1953, as now or hereafter
10 amended, on a debit balance in an account for a customer
11 if such debit balance is payable at will without penalty
12 and is secured by securities as defined in Uniform
13 Commercial Code-Investment Securities;
14 (h) Any loan made by a participating bank as part
15 of any loan guarantee program which provides for loans
16 and for the refinancing of such loans to medical
17 students, interns and residents and which are guaranteed
18 by the American Medical Association Education and
19 Research Foundation;
20 (i) Any loan made, guaranteed, or insured in
21 accordance with the provisions of the Housing Act of
22 1949, Subchapter III of Chapter 8A of Title 42 of the
23 United States Code and the Consolidated Farm and Rural
24 Development Act, Subchapters I, II, and III of Chapter 50
25 of Title 7 of the United States Code;
26 (j) Any loan by an employee pension benefit plan,
27 as defined in Section 3 (2) of the Employee Retirement
28 Income Security Act of 1974 (29 U.S.C.A. Sec. 1002), to
29 an individual participating in such plan, provided that
30 such loan satisfies the prohibited transaction exemption
31 requirements of Section 408 (b) (1) (29 U.S.C.A. Sec.
32 1108 (b) (1)) or Section 2003 (a) (26 U.S.C.A. Sec. 4975
33 (d) (1)) of the Employee Retirement Income Security Act
34 of 1974;
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1 (k) Written contracts, agreements or bonds for deed
2 providing for installment purchase of real estate;
3 (1) Loans secured by a mortgage on real estate;
4 (m) Loans made by a sole proprietorship,
5 partnership, or corporation to an employee or to a person
6 who has been offered employment by such sole
7 proprietorship, partnership, or corporation made for the
8 sole purpose of transferring an employee or person who
9 has been offered employment to another office maintained
10 and operated by the same sole proprietorship,
11 partnership, or corporation;
12 (n) Loans to or for the benefit of students made by
13 an institution of higher education.
14 (2) Except for loans described in subparagraph (a), (c),
15 (d), (e), (f) or (i) of subsection (1) of this Section, and
16 except to the extent permitted by the applicable statute for
17 loans made pursuant to Section 4a or pursuant to the Consumer
18 Installment Loan Act:
19 (a) Whenever the rate of interest exceeds 8% per
20 annum on any written contract, agreement or bond for deed
21 providing for the installment purchase of residential
22 real estate, or on any loan secured by a mortgage on
23 residential real estate, it shall be unlawful to provide
24 for a prepayment penalty or other charge for prepayment.
25 (b) No agreement, note or other instrument
26 evidencing a loan secured by a mortgage on residential
27 real estate, or written contract, agreement or bond for
28 deed providing for the installment purchase of
29 residential real estate, may provide for any change in
30 the contract rate of interest during the term thereof.
31 However, if the Congress of the United States or any
32 federal agency authorizes any class of lender to enter,
33 within limitations, into mortgage contracts or written
34 contracts, agreements or bonds for deed in which the rate
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1 of interest may be changed during the term of the
2 contract, any person, firm, corporation or other entity
3 not otherwise prohibited from entering into mortgage
4 contracts or written contracts, agreements or bonds for
5 deed in Illinois may enter into mortgage contracts or
6 written contracts, agreements or bonds for deed in which
7 the rate of interest may be changed during the term of
8 the contract, within the same limitations.
9 (3) In any contract or loan which is secured by a
10 mortgage, deed of trust, or conveyance in the nature of a
11 mortgage, on residential real estate, the interest which is
12 computed, calculated, charged, or collected pursuant to such
13 contract or loan, or pursuant to any regulation or rule
14 promulgated pursuant to this Act, may not be computed,
15 calculated, charged or collected for any period of time
16 occurring after the date on which the total indebtedness,
17 with the exception of late payment penalties, is paid in
18 full.
19 For purposes of this Section, a prepayment shall mean the
20 payment of the total indebtedness, with the exception of late
21 payment penalties if incurred or charged, on any date before
22 the date specified in the contract or loan agreement on which
23 the total indebtedness shall be paid in full, or before the
24 date on which all payments, if timely made, shall have been
25 made. In the event of a prepayment of the indebtedness which
26 is made on a date after the date on which interest on the
27 indebtedness was last computed, calculated, charged, or
28 collected but before the next date on which interest on the
29 indebtedness was to be calculated, computed, charged, or
30 collected, the lender may calculate, charge and collect
31 interest on the indebtedness for the period which elapsed
32 between the date on which the prepayment is made and the date
33 on which interest on the indebtedness was last computed,
34 calculated, charged or collected at a rate equal to 1/360 of
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1 the annual rate for each day which so elapsed, which rate
2 shall be applied to the indebtedness outstanding as of the
3 date of prepayment. The lender shall refund to the borrower
4 any interest charged or collected which exceeds that which
5 the lender may charge or collect pursuant to the preceding
6 sentence. The provisions of this amendatory Act of 1985 shall
7 apply only to contracts or loans entered into on or after the
8 effective date of this amendatory Act, but shall not apply to
9 contracts or loans entered into on or after that date that
10 are subject to Section 4a of this Act, the Consumer
11 Installment Loan Act, or the Retail Installment Sales Act, or
12 that provide for the refund of precomputed interest on
13 prepayment in the manner provided by such Act.
14 (Source: P.A. 89-208, eff. 9-29-95.)
15 Section 199. Effective date. This Act takes effect on
16 September 1, 2000.".