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Public Act 096-0141
Public Act 0141 96TH GENERAL ASSEMBLY
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Public Act 096-0141 |
HB0348 Enrolled |
LRB096 04653 MJR 14712 b |
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| AN ACT concerning financial regulation.
| Be it enacted by the People of the State of Illinois,
| represented in the General Assembly:
| Section 5. The Illinois Credit Union Act is amended by | changing Sections 34 and 46 and by adding Section 42.5 as | follows:
| (205 ILCS 305/34) (from Ch. 17, par. 4435)
| Sec. 34. Duties of Supervisory Committee. | (1) The Supervisory Committee
shall make or cause to be | made an annual internal audit of the books and
affairs of the | credit union to determine that the credit union's accounting
| records and reports are prepared promptly and accurately | reflect operations
and results, that internal controls are | established and effectively
maintained to safeguard the assets | of the credit union, and that the
policies, procedures and | practices established by the Board of Directors
and management | of the credit union are being properly administered. The
| Supervisory Committee shall submit a report of that audit to | the Board
of Directors and a summary of that report to the | members at the next annual
meeting of the credit union. It | shall make or cause to be made such
supplementary audits as it | deems necessary or as are required by the
Director or by the | Board of Directors, and submit reports of these
supplementary |
| audits to the Director or Board of Directors as applicable.
If | the Supervisory Committee has not engaged a public accountant | registered
by the Department of Professional Regulation to make | the internal audit,
the Supervisory Committee or other | officials of the credit union shall not
indicate or in any | manner imply that such audit has been performed by a
public | accountant or that the audit represents the independent opinion | of a
public accountant. The Committee must retain its tapes and | working papers
of each internal audit for inspection by the | Department. The report of this
audit must be made on a form | approved by the Director. A copy of the report
must be promptly | mailed to the Director.
| (2) The Supervisory Committee shall make or cause to be | made at least
once each year a reasonable percentage | verification of members' share and
loan accounts, consistent | with rules promulgated by the Director.
| (3) The Supervisory Committee of a credit union with assets | of
$5,000,000 or more shall engage a public accountant | registered by the
Department of Professional Regulation to | perform an annual external
independent audit of the credit | union's financial statements in accordance
with generally | accepted auditing standards. The Supervisory Committee of a
| credit union with assets of $3,000,000 or more, but less than | $5,000,000,
shall engage a public accountant registered by the | Department of
Professional Regulation to perform an external | independent audit of the
credit union's financial statements in |
| accordance with generally accepted
auditing standards at least | once every 3 years. A copy of an external
independent audit | shall be mailed to the Director upon completion. If the
annual | internal audit of such a credit union is conducted by a public
| accountant registered by the Department of Professional | Regulation and the
annual internal audit is done in conjunction | with the credit union's annual
external audit, the requirements | of subsection (1) of this Section shall
be deemed met.
| (4) In determining the appropriate balance in the allowance | for loan losses account, a credit union may determine its | historical loss rate using a defined period of time of less | than 5 years, provided that: | (A) the methodology used to determine the defined | period of time is formally documented in the credit union's | policies and procedures and is appropriate to the credit | union's size, business strategy, and loan portfolio | characteristics and the economic environment of the areas | and employers served by the credit union; | (B) supporting documentation is maintained for the | technique used to develop the credit union loss rates, | including the period of time used to accumulate historical | loss data and the factors considered in establishing the | time frames; and | (C) the external auditor conducting the credit union's | financial statement audit has analyzed the methodology | employed by the credit union and concludes that the |
| financial statements, including the allowance for loan | losses, are fairly stated in all material respects in | accordance with U.S. Generally Accepted Accounting | Principles, as promulgated by the Financial Accounting | Standards Board. | (5) A majority of the members of the Supervisory Committee
| shall constitute a quorum.
| (Source: P.A. 86-238.)
| (205 ILCS 305/42.5 new) | Sec. 42.5. Marketing of services. For purposes of | promoting its services to persons eligible for membership, a | credit union may sell to persons within its field of membership | negotiable checks, including travelers checks, money orders, | and similar money transfer instruments (including | international and domestic electronic fund transfers) and may | cash checks and money orders, and may receive international and | domestic electronic fund transfers for such persons for a fee. | (205 ILCS 305/46) (from Ch. 17, par. 4447)
| Sec. 46. Loans and interest rate.
| (1) A credit union may make loans
to its members for such | purpose and upon such security and terms, including
rates of | interest, as the Credit Committee, credit manager, or loan | officer
approves.
Notwithstanding the provisions of any other | law in connection with extensions
of credit, a credit union may |
| elect to
contract for and receive interest and fees and other | charges for extensions of
credit subject only to the provisions | of this Act and rules promulgated under
this Act, except that | extensions of credit secured by residential real estate
shall | be subject to the laws applicable thereto.
The rates of | interest to be charged on loans to members shall be
set by the | Board of Directors of each individual credit union in | accordance with Section 30 of this Act and such
rates may be | less than, but may not exceed, the maximum rate set forth in
| this Section. A borrower may repay his loan prior to maturity, | in whole or
in part, without penalty. The credit contract may | provide for the payment
by the member and receipt by the credit | union of all costs and
disbursements, including reasonable | attorney's fees and collection agency
charges, incurred by the | credit union to collect or enforce the debt in the
event of a | delinquency by the member, or in the event of a breach of any
| obligation of the member under the credit contract. A | contingency or
hourly arrangement established under an | agreement entered into by a credit
union with an attorney or | collection agency to collect a loan of a member
in default | shall be presumed prima facie reasonable.
| (2) Credit unions may make loans based upon the security of | any
interest or equity in real estate, subject to rules and | regulations
promulgated by the Director. In any contract or | loan which
is secured by a mortgage, deed of
trust, or | conveyance in the nature of a mortgage, on residential real
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| estate, the interest which is computed, calculated, charged, or | collected
pursuant to such contract or loan, or pursuant to any | regulation or rule
promulgated pursuant to this Act, may not be | computed, calculated, charged
or collected for any period of | time occurring after the date on which the
total indebtedness, | with the exception of late payment penalties, is paid
in full.
| For purposes of this subsection (2) of this Section 46, a | prepayment
shall mean the payment of the total indebtedness, | with the exception of
late payment penalties if incurred or | charged, on any date before the date
specified in the contract | or loan agreement on which the total indebtedness
shall be paid | in full, or before the date on which all payments, if timely
| made, shall have been made. In the event of a prepayment of the
| indebtedness which is made on a date
after the date on which | interest on the indebtedness was last computed,
calculated, | charged, or collected but before the next date on which | interest
on the indebtedness was to be calculated, computed, | charged, or collected,
the lender may calculate, charge and | collect interest on the indebtedness
for the period which | elapsed between the date on which the prepayment is
made and | the date on which interest on the indebtedness was last | computed,
calculated, charged or collected at a rate equal to | 1/360 of the annual
rate for each day which so elapsed, which | rate shall be applied to the
indebtedness outstanding as of the | date of prepayment. The lender shall
refund to the borrower any | interest charged or collected which exceeds that
which the |
| lender may charge or collect pursuant to the preceding | sentence.
The provisions of this amendatory Act of 1985 shall | apply only to contracts
or loans entered into on or after the | effective date of this amendatory
Act.
| (3) Notwithstanding any other provision of this Act, a | credit union
authorized under this Act to make loans secured by | an interest or equity in
real estate may engage in making | "reverse mortgage" loans to persons for
the purpose of making | home improvements or repairs, paying insurance
premiums or | paying real estate taxes on the homestead properties
of such | persons. If made, such loans shall be made on such terms and
| conditions as the credit union shall determine and as shall be | consistent
with the provisions of this Section and such rules | and regulations as the
Director shall promulgate hereunder. For | purposes of this Section, a
"reverse mortgage" loan shall be a | loan extended on the basis of existing
equity in homestead | property and secured by a mortgage on such property.
Such loans | shall be repaid upon the sale of the property or upon the death
| of the owner or, if the property is in joint tenancy, upon the | death of the
last surviving joint tenant who had such an | interest in the property at the
time the loan was initiated, | provided, however, that the credit union and
its member may by | mutual agreement, establish other repayment terms. A
credit | union, in making a "reverse mortgage" loan, may add deferred
| interest to principal or otherwise provide for the charging of | interest or
premiums on such deferred interest. "Homestead" |
| property, for purposes of
this Section, means the domicile and | contiguous real estate owned and
occupied by the mortgagor. The | Director shall promulgate rules and
regulations under this | Section; provided that such rules and regulations
need not be | promulgated jointly with any other administrative agency of | this State.
| (4) Notwithstanding any other provisions of this Act, a | credit union
authorized under this Act to make loans secured by | an interest or equity
in real property may engage in making | revolving credit loans secured by
mortgages or deeds of trust | on such real property or by security
assignments of beneficial | interests in land trusts.
| For purposes of this Section, "revolving credit" has the | meaning defined
in Section 4.1 of the Interest Act.
| Any mortgage or deed of trust given to secure a revolving | credit loan may,
and when so expressed therein shall, secure | not only the existing indebtedness
but also such future | advances, whether such advances are obligatory or to
be made at | the option of the lender, or otherwise, as are made within | twenty
years from the date thereof, to the same extent as if | such future advances
were made on the date of the execution of | such mortgage or deed of trust,
although there may be no | advance made at the time of execution of such mortgage
or other | instrument, and although there may be no indebtedness | outstanding
at the time any advance is made. The lien of such | mortgage or deed of trust,
as to third persons
without actual |
| notice thereof, shall be valid as to all such indebtedness
and | future advances form the time said mortgage or deed of trust is | filed
for record in the office of the Recorder of Deeds or the | Registrar of Titles
of the county where the real property | described therein is located. The
total amount of indebtedness | that may be so secured may increase or decrease
from time to | time, but the total unpaid balance so secured at any one time
| shall not exceed a maximum principal amount which must be | specified in such
mortgage or deed of trust, plus interest | thereon, and any disbursements
made for the payment of taxes, | special assessments, or insurance on said
real property, with | interest on such disbursements.
| Any such mortgage or deed of trust shall be valid and have | priority over
all subsequent liens and encumbrances, including | statutory liens, except
taxes and assessments levied on said | real property.
| (5) Compliance with federal or Illinois preemptive laws or | regulations
governing loans made by a credit union chartered | under this Act shall
constitute compliance with this Act.
| (6) Credit unions may make residential real estate mortgage | loans on terms and conditions established by the United States | Department of Agriculture through its Rural Development | Housing and Community Facilities Program. The portion of any | loan in excess of the appraised value of the real estate shall | be allocable only to the guarantee fee required under the | program. |
| (Source: P.A. 95-98, eff. 8-13-07.)
| Section 99. Effective date. This Act takes effect upon | becoming law.
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Effective Date: 8/7/2009
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