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Rep. Lou Lang
Filed: 2/26/2014
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| 1 | | AMENDMENT TO HOUSE BILL 5342
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| 2 | | AMENDMENT NO. ______. Amend House Bill 5342 by replacing |
| 3 | | everything after the enacting clause with the following:
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| 4 | | "Section 5. The Illinois Credit Union Act is amended by |
| 5 | | changing Sections 1.1, 9, 30, 34, 39, and 46 and by adding |
| 6 | | Section 57.1 as follows:
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| 7 | | (205 ILCS 305/1.1) (from Ch. 17, par. 4402)
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| 8 | | Sec. 1.1. Definitions.
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| 9 | | Credit Union - The term "credit union" means
a cooperative, |
| 10 | | non-profit association, incorporated under this Act,
under the |
| 11 | | laws of the United States of America or under the laws
of |
| 12 | | another state, for the purposes of encouraging thrift among
its |
| 13 | | members, creating a source of credit at a reasonable rate of
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| 14 | | interest, and providing an opportunity for its members to use
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| 15 | | and control their own money in order to improve their economic |
| 16 | | and
social conditions. The membership of a credit union shall |
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| 1 | | consist
of a group or groups each having a common
bond as set |
| 2 | | forth in this Act.
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| 3 | | Common Bond - The term "common bond" refers to groups of |
| 4 | | people
who meet one of the following qualifications:
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| 5 | | (1) Persons belonging to a specific association, group |
| 6 | | or organization,
such as a church, labor union, club or |
| 7 | | society and members of their immediate
families which shall |
| 8 | | include any relative by blood or marriage or foster
and |
| 9 | | adopted children.
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| 10 | | (2) Persons who reside in a reasonably compact and well |
| 11 | | defined
neighborhood or community, and
members of their |
| 12 | | immediate families which shall include any relative
by |
| 13 | | blood or marriage or foster and adopted children.
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| 14 | | (3) Persons who have a common employer or who are |
| 15 | | members of an
organized labor union or an organized |
| 16 | | occupational or professional
group within a defined |
| 17 | | geographical area, and members of their
immediate families |
| 18 | | which shall include any relative by blood or
marriage or |
| 19 | | foster and adopted children.
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| 20 | | Shares - The term "shares" or "share accounts" means any |
| 21 | | form of shares
issued by a credit union and established by a |
| 22 | | member in accordance with
standards specified by a credit |
| 23 | | union, including but not limited to common
shares, share draft |
| 24 | | accounts, classes of shares, share certificates,
special |
| 25 | | purpose share accounts, shares issued in trust, custodial |
| 26 | | accounts,
and individual retirement accounts or other plans |
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| 1 | | established pursuant to
Section 401(d) or (f) or Section 408(a) |
| 2 | | of the Internal Revenue Code, as now
or hereafter amended, or |
| 3 | | similar provisions of any tax laws of the United
States that |
| 4 | | may hereafter exist.
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| 5 | | Credit Union Organization - The term "credit union |
| 6 | | organization" means
any organization established to serve the |
| 7 | | needs of credit unions, the business
of which relates to the |
| 8 | | daily operations of credit unions.
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| 9 | | Department - The term "Department" means the Illinois |
| 10 | | Department of Financial and Professional Regulation.
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| 11 | | Secretary - The term "Secretary" means the Secretary
of |
| 12 | | Financial and Professional Regulation or a person authorized by |
| 13 | | the Secretary or this Act to act in the Secretary's stead.
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| 14 | | Division of Financial Institutions - The term "Division of |
| 15 | | Financial Institutions" means the Division of Financial |
| 16 | | Institutions of the Department of Financial and Professional |
| 17 | | Regulation. |
| 18 | | Director - The term "Director of Financial Institutions" |
| 19 | | means the Director of the Division of Financial Institutions of |
| 20 | | the Department of Financial and Professional Regulation. |
| 21 | | Office - The term "office" means the Division of Financial |
| 22 | | Institutions of the Department of Financial and Professional |
| 23 | | Regulation. |
| 24 | | NCUA - The term "NCUA" means the National Credit Union |
| 25 | | Administration, an
agency of the United States Government |
| 26 | | charged with the supervision of
credit unions chartered under |
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| 1 | | the laws of the United States of America.
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| 2 | | Central Credit Union - The term "central credit union" |
| 3 | | means a credit union
incorporated primarily to receive shares |
| 4 | | from and make loans to credit unions
and directors, officers, |
| 5 | | committee members and employees of credit unions.
A central |
| 6 | | credit union may also accept as members persons who were |
| 7 | | members
of credit unions which were liquidated and persons from |
| 8 | | occupational groups
not otherwise served by another credit |
| 9 | | union.
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| 10 | | Corporate Credit Union - The term "corporate credit union" |
| 11 | | means a credit
union which is a cooperative, non-profit |
| 12 | | association, the membership of
which is limited primarily to |
| 13 | | other credit unions.
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| 14 | | Insolvent - "Insolvent" means the condition that results |
| 15 | | when
the total of all liabilities and shares exceeds net assets |
| 16 | | of the credit union.
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| 17 | | Danger of insolvency - For purposes of Section 61, a credit |
| 18 | | union is in
"danger of insolvency" if its net worth to
asset |
| 19 | | ratio falls below 2%. In calculating the danger of insolvency |
| 20 | | ratio,
secondary
capital shall be excluded. For purposes of |
| 21 | | Section 61, a credit union is also
in "danger of
insolvency" if |
| 22 | | the Department is unable to
ascertain, upon examination, the |
| 23 | | true financial
condition of the credit union.
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| 24 | | Net Worth - "Net worth" means the retained earnings balance |
| 25 | | of the credit
union, as determined under generally accepted |
| 26 | | accounting principles, and forms
of secondary capital approved |
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| 1 | | by the Secretary and the Director pursuant to rulemaking.
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| 2 | | Charitable Donation Account – The term "charitable |
| 3 | | donation account" means an account owned by a credit union that |
| 4 | | is held in a segregated custodial account or special purpose |
| 5 | | entity and specifically identified as a charitable donation |
| 6 | | account whereby, no less frequently than every 5 years and upon |
| 7 | | termination of the account, at least 51% of the total return on |
| 8 | | assets in the account is distributed to one or more charitable |
| 9 | | organizations or non-profit entities. |
| 10 | | (Source: P.A. 97-133, eff. 1-1-12.)
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| 11 | | (205 ILCS 305/9) (from Ch. 17, par. 4410)
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| 12 | | Sec. 9. Reports and examinations.
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| 13 | | (1) Credit unions shall report to
the Department on forms |
| 14 | | supplied by the Department, in accordance with a
schedule |
| 15 | | published by the Department. A recapitulation of the annual |
| 16 | | reports
shall be compiled and published annually by the |
| 17 | | Department, for the use
of the General Assembly, credit unions, |
| 18 | | various educational institutions
and other interested parties. |
| 19 | | A credit union which fails to file any report
when due shall |
| 20 | | pay to the Department a late filing fee for each
day the report |
| 21 | | is overdue as prescribed by rule. The Secretary may extend
the |
| 22 | | time for filing a
report.
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| 23 | | (2) The Secretary may require special examinations of and |
| 24 | | special
financial reports from a credit union or a credit
union |
| 25 | | organization in which a credit union loans, invests, or |
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| 1 | | delegates
substantially all
managerial duties and |
| 2 | | responsibilities when he determines that such
examinations
and |
| 3 | | reports are necessary to enable the Department
to determine the |
| 4 | | safety of a credit union's operation or its solvency.
The cost |
| 5 | | to the Department of the aforesaid special examinations shall |
| 6 | | be
borne by the credit union being examined as prescribed by |
| 7 | | rule.
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| 8 | | (3) All credit unions incorporated under this Act shall be |
| 9 | | examined at
least biennially by the Department or, at the |
| 10 | | discretion of
the Secretary,
by a public accountant registered |
| 11 | | by the Department of Financial and Professional
Regulation. The |
| 12 | | costs of an examination shall be paid by the
credit union. The |
| 13 | | scope of all examinations by a public accountant shall
be at |
| 14 | | least equal to the examinations made by the Department. The |
| 15 | | examiners
shall have full access to, and may compel the |
| 16 | | production of, all the books,
papers, securities and accounts |
| 17 | | of any credit union. A special examination
shall be made by the |
| 18 | | Department or by a public accountant approved by the
Department |
| 19 | | upon written request of 5 or more members, who guarantee the
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| 20 | | expense of the same. Any credit union refusing to submit to an |
| 21 | | examination
when ordered by the Department shall be reported to |
| 22 | | the Attorney General,
who shall institute proceedings to have |
| 23 | | its charter revoked. If the Secretary
determines that the |
| 24 | | examination of a credit
union is to be
conducted by a public |
| 25 | | accountant registered by the Department of Financial and
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| 26 | | Professional Regulation and the examination is
done in |
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| 1 | | conjunction
with the credit union's external independent audit |
| 2 | | of financial
statements, the requirements of this Section and |
| 3 | | subsection (3) of Section
34 shall be deemed met.
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| 4 | | (3.5) Pursuant to Section 8, the Secretary shall adopt |
| 5 | | rules that ensure consistency and due process in the |
| 6 | | examination process. The Secretary may also establish |
| 7 | | guidelines that (i) define the scope of the examination process |
| 8 | | and (ii) clarify examination items to be resolved. The rules, |
| 9 | | formal guidance, interpretative letters, or opinions furnished |
| 10 | | to credit unions by the Secretary may be relied upon by the |
| 11 | | credit unions. |
| 12 | | (4) A copy of the completed report of examination and a |
| 13 | | review comment
letter, if any, citing exceptions revealed |
| 14 | | during the examination, shall
be submitted to the credit union |
| 15 | | by the Department. A detailed report stating
the corrective |
| 16 | | actions taken by the board of directors on each exception
set |
| 17 | | forth in the review comment letter shall be filed with the |
| 18 | | Department
within 40 days after the date of the review comment |
| 19 | | letter, or as otherwise
directed by the Department. Any credit |
| 20 | | union through its officers, directors,
committee members or |
| 21 | | employees, which willfully provides fraudulent or
misleading |
| 22 | | information regarding the corrective actions taken on |
| 23 | | exceptions
appearing in a review comment letter may have its |
| 24 | | operations restricted to
the collection of principal and |
| 25 | | interest on loans outstanding and the
payment of normal |
| 26 | | expenses and salaries until all exceptions are corrected
and |
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| 1 | | accepted by the Department.
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| 2 | | (Source: P.A. 97-133, eff. 1-1-12.)
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| 3 | | (205 ILCS 305/30) (from Ch. 17, par. 4431)
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| 4 | | Sec. 30. Duties of directors. |
| 5 | | (a) It shall be the duty of the directors to:
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| 6 | | (1) Review actions on applications
for membership. A |
| 7 | | record of the membership committee's approval or
denial of |
| 8 | | membership or management's approval or denial of |
| 9 | | membership if no membership committee
has been appointed |
| 10 | | shall be available to the board of
directors for |
| 11 | | inspection. A person denied membership by the membership |
| 12 | | committee or credit union management may appeal the denial |
| 13 | | to the board;
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| 14 | | (2) Provide adequate fidelity bond coverage for |
| 15 | | officers,
employees, directors and committee members, and |
| 16 | | for losses caused by
persons outside of the credit union, |
| 17 | | subject to rules and regulations
promulgated by the |
| 18 | | Secretary;
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| 19 | | (3) Determine from time to time the interest rates, not |
| 20 | | in excess of that
allowed under this Act, which shall be |
| 21 | | charged on loans to members and to
authorize interest |
| 22 | | refunds, if any, to members from income earned and received
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| 23 | | in proportion to the interest paid by them on such classes |
| 24 | | of loans and
under such conditions as the board prescribes. |
| 25 | | The directors may establish
different interest rates to be |
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| 1 | | charged on different classes of loans;
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| 2 | | (4) Within any limitations set forth in the credit |
| 3 | | union's bylaws, fix
the maximum amount which may be loaned |
| 4 | | with and without security to a member;
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| 5 | | (5) Declare dividends on various classes of shares in |
| 6 | | the manner and form
as provided in the bylaws;
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| 7 | | (6) Limit the number of shares which may be owned by a |
| 8 | | member;
such limitations to apply alike to all members;
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| 9 | | (7) Have charge of the investment of funds, except that |
| 10 | | the board of
directors may designate an investment |
| 11 | | committee or any qualified individual
or entity to have |
| 12 | | charge of making investments under policies established
by |
| 13 | | the board of directors;
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| 14 | | (8) Authorize the employment of or contracting with |
| 15 | | such persons or
organizations as may be necessary to carry |
| 16 | | on the
operations of the credit union, provided that prior |
| 17 | | approval is received from
the
Department before delegating |
| 18 | | substantially all managerial duties and
responsibilities |
| 19 | | to a credit union organization, and fix
the compensation, |
| 20 | | if any, of the officers and provide for compensation for
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| 21 | | other employees within
policies established by the board of
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| 22 | | directors;
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| 23 | | (9) Authorize the conveyance of property;
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| 24 | | (10) Borrow or lend money consistent with the |
| 25 | | provisions of this Act;
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| 26 | | (11) Designate a depository or depositories for the |
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| 1 | | funds of the credit
union and supervise the investment of |
| 2 | | funds;
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| 3 | | (12) Suspend or remove, or both, any or all officers or |
| 4 | | any
or all members of the membership, credit, or other |
| 5 | | committees
whenever, in the judgment of the board of
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| 6 | | directors, the best interests of the credit union will be |
| 7 | | served thereby; provided that members of the supervisory |
| 8 | | committee may not be suspended or removed except for |
| 9 | | failure to perform their duties; and provided that removal |
| 10 | | of any officer shall be without prejudice to the contract |
| 11 | | rights, if any, of the person so removed;
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| 12 | | (13) Appoint any special committees deemed necessary; |
| 13 | | and
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| 14 | | (14) Perform such other duties as the members may |
| 15 | | direct, and perform
or authorize any action not |
| 16 | | inconsistent with this Act and not specifically
reserved by |
| 17 | | the bylaws to the members. |
| 18 | | (b) The board of
directors may delegate to the chief |
| 19 | | management official, according to guidelines established by |
| 20 | | the board that may include the authority to further delegate |
| 21 | | one or more duties, all of the following duties: |
| 22 | | (1) determining the interest rates on loans; |
| 23 | | (2) determining the dividend rates on share accounts;
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| 24 | | and |
| 25 | | (3) hiring employees other than the chief management |
| 26 | | official and fixing their compensation.
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| 1 | | (c) Each director shall have a working familiarity with |
| 2 | | basic finance and accounting practices consistent with the size |
| 3 | | and complexity of the credit union operation they serve, |
| 4 | | including the ability to read and understand the credit union's |
| 5 | | balance sheet and income and expense statements and the ability |
| 6 | | to ask, when appropriate, substantive questions of management |
| 7 | | and auditors. For the purposes of this subsection (c), |
| 8 | | substantive questions include queries concerning financial |
| 9 | | services and products offered to the membership; how those |
| 10 | | activities generate revenue for the credit union; the credit, |
| 11 | | liquidity, interest rate, compliance, strategic, transaction, |
| 12 | | and reputation risks associated with those activities; and the |
| 13 | | internal control structures maintained by the credit union that |
| 14 | | limit and manage those risks. |
| 15 | | A director who was elected or appointed on or after January |
| 16 | | 1, 2015 and who comes to the position without the requisite |
| 17 | | financial skills shall have until 6 months after the date of |
| 18 | | election or appointment to acquire the enumerated skills. |
| 19 | | An incumbent director who was elected or appointed before |
| 20 | | January 1, 2015 and does not possess the requisite financial |
| 21 | | skills shall have until July 1, 2015 to acquire the enumerated |
| 22 | | skills. |
| 23 | | An incumbent director or a director who is elected or |
| 24 | | appointed on or after January 1, 2015 who already understands |
| 25 | | his or her credit union's financial statements shall not be |
| 26 | | required to do anything further to satisfy the financial skills |
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| 1 | | requirement set forth in subsection (c). |
| 2 | | It is the intent of the Department that all credit union |
| 3 | | directors possess a basic understanding of their credit union's |
| 4 | | financial condition. It is not the intent of the Department to |
| 5 | | subject credit union directors to examiner scrutiny of their |
| 6 | | financial skills. Rather, the Department shall evaluate |
| 7 | | whether the credit union has in place a policy to make |
| 8 | | available to their directors appropriate training to enhance |
| 9 | | their financial knowledge of the credit union. Directors may |
| 10 | | receive the training through internal credit union training, |
| 11 | | external training offered by the credit union's retained |
| 12 | | auditors, trade associations, vendors, regulatory agencies, or |
| 13 | | any other sources or on-the-job experience, or a combination of |
| 14 | | those activities. The training may be received through any |
| 15 | | medium, including, but not limited to, conferences, workshops, |
| 16 | | audit closing meetings, seminars, teleconferences, webinars, |
| 17 | | and other internet based delivery channels. |
| 18 | | (Source: P.A. 97-133, eff. 1-1-12.)
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| 19 | | (205 ILCS 305/34) (from Ch. 17, par. 4435)
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| 20 | | Sec. 34. Duties of supervisory committee. |
| 21 | | (1) The supervisory committee
shall make or cause to be |
| 22 | | made an annual internal audit of the books and
affairs of the |
| 23 | | credit union to determine that the credit union's accounting
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| 24 | | records and reports are prepared promptly and accurately |
| 25 | | reflect operations
and results, that internal controls are |
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| 1 | | established and effectively
maintained to safeguard the assets |
| 2 | | of the credit union, and that the
policies, procedures and |
| 3 | | practices established by the board of directors
and management |
| 4 | | of the credit union are being properly administered. The |
| 5 | | supervisory committee
shall submit a report of that audit to |
| 6 | | the board of directors and a summary of that report to the |
| 7 | | members at the next annual
meeting of the credit union. It |
| 8 | | shall make or cause to be made such
supplementary audits as it |
| 9 | | deems necessary or as are required by the Secretary
or by the |
| 10 | | board of directors, and submit reports of these
supplementary |
| 11 | | audits to the Secretary or board of directors as applicable.
If |
| 12 | | the supervisory committee has not engaged a public accountant |
| 13 | | registered
by the Department of Financial and Professional |
| 14 | | Regulation to make the internal audit,
the supervisory |
| 15 | | committee or other officials of the credit union shall not
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| 16 | | indicate or in any manner imply that such audit has been |
| 17 | | performed by a
public accountant or that the audit represents |
| 18 | | the independent opinion of a
public accountant. The supervisory |
| 19 | | committee must retain its tapes and working papers
of each |
| 20 | | internal audit for inspection by the Department. The report of |
| 21 | | this
audit must be made on a form approved by the Secretary. A |
| 22 | | copy of the report
must be promptly mailed to the Secretary.
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| 23 | | (2) The supervisory committee shall make or cause to be |
| 24 | | made at least
once each year a reasonable percentage |
| 25 | | verification of members' share and
loan accounts, consistent |
| 26 | | with rules promulgated by the Secretary.
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| 1 | | (3) The supervisory committee of a credit union with assets |
| 2 | | of
$5,000,000 or more shall engage a public accountant |
| 3 | | registered by the
Department of Financial and Professional |
| 4 | | Regulation to perform an annual external
independent audit of |
| 5 | | the credit union's financial statements in accordance
with |
| 6 | | generally accepted auditing standards. The supervisory |
| 7 | | committee of a
credit union with assets of $3,000,000 or more, |
| 8 | | but less than $5,000,000,
shall engage a public accountant |
| 9 | | registered by the Department of Financial and
Professional |
| 10 | | Regulation to perform an external independent audit of the
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| 11 | | credit union's financial statements in accordance with |
| 12 | | generally accepted
auditing standards at least once every 3 |
| 13 | | years. A copy of an external
independent audit shall be |
| 14 | | completed and mailed to the Secretary no later than 90 days |
| 15 | | after December 31 of each year; provided that a credit union or |
| 16 | | group of credit unions may obtain an extension of the due date |
| 17 | | upon application to and receipt of written approval from the |
| 18 | | Secretary. If the
annual internal audit of such a credit union |
| 19 | | is conducted by a public
accountant registered by the |
| 20 | | Department of Financial and Professional Regulation and the
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| 21 | | annual internal audit is done in conjunction with the credit |
| 22 | | union's annual
external audit, the requirements of subsection |
| 23 | | (1) of this Section shall
be deemed met.
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| 24 | | (4) In determining the appropriate balance in the allowance |
| 25 | | for loan losses account, a credit union may determine its |
| 26 | | historical loss rate using a defined period of time of less |
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| 1 | | than 5 years, provided that: |
| 2 | | (A) the methodology used to determine the defined |
| 3 | | period of time is formally documented in the credit union's |
| 4 | | policies and procedures and is appropriate to the credit |
| 5 | | union's size, business strategy, and loan portfolio |
| 6 | | characteristics and the economic environment of the areas |
| 7 | | and employers served by the credit union; |
| 8 | | (B) supporting documentation is maintained for the |
| 9 | | technique used to develop the credit union loss rates, |
| 10 | | including the period of time used to accumulate historical |
| 11 | | loss data and the factors considered in establishing the |
| 12 | | time frames; and |
| 13 | | (C) the external auditor conducting the credit union's |
| 14 | | financial statement audit has analyzed the methodology |
| 15 | | employed by the credit union and concludes that the |
| 16 | | financial statements, including the allowance for loan |
| 17 | | losses, are fairly stated in all material respects in |
| 18 | | accordance with U.S. Generally Accepted Accounting |
| 19 | | Principles, as promulgated by the Financial Accounting |
| 20 | | Standards Board. |
| 21 | | (5) A majority of the members of the supervisory committee
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| 22 | | shall constitute a quorum.
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| 23 | | (6) On an annual basis commencing January 1, 2015, the |
| 24 | | members of the supervisory committee shall receive training |
| 25 | | related to their statutory duties. Supervisory committee |
| 26 | | members may receive the training through internal credit union |
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| 1 | | training, external training offered by the credit union's |
| 2 | | retained auditors, trade associations, vendors, regulatory |
| 3 | | agencies, or any other sources or on-the-job experience, or a |
| 4 | | combination of those activities. The training may be received |
| 5 | | through any medium, including, but not limited to, conferences, |
| 6 | | workshops, audit closing meetings, seminars, teleconferences, |
| 7 | | webinars, and other Internet-based delivery channels. |
| 8 | | (Source: P.A. 96-141, eff. 8-7-09; 96-963, eff. 7-2-10; 97-133, |
| 9 | | eff. 1-1-12.)
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| 10 | | (205 ILCS 305/39) (from Ch. 17, par. 4440)
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| 11 | | Sec. 39. Special purpose share accounts; charitable |
| 12 | | donation accounts. |
| 13 | | (1) If provided for in and consistent
with the bylaws, |
| 14 | | Christmas clubs, vacation clubs and other special purpose
share |
| 15 | | accounts may be established and offered under conditions and |
| 16 | | restrictions
established by the board of directors.
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| 17 | | (2) Pursuant to a policy adopted by the board of directors, |
| 18 | | which may be amended from time to time, a credit union may |
| 19 | | establish one or more charitable donation accounts. The |
| 20 | | investments and purchases to fund a charitable donation account |
| 21 | | are not subject to the investment limitations of this Act, |
| 22 | | provided the charitable donation account is structured in |
| 23 | | accordance with this Act. At their time of purchase, the book |
| 24 | | value of the investments in all charitable donation accounts, |
| 25 | | in the aggregate, shall not exceed 5% of the credit union's net |
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| 1 | | worth. |
| 2 | | (a) If a credit union chooses to establish a charitable |
| 3 | | donation account using a trust vehicle, the trustee must be |
| 4 | | an entity regulated by the Office of the Comptroller of the |
| 5 | | Currency, the U.S. Securities and Exchange Commission, |
| 6 | | another federal regulatory agency, or a State financial |
| 7 | | regulatory agency. A regulated trustee or other person who |
| 8 | | is authorized to make investment decisions for a charitable |
| 9 | | donation account, other than the credit union itself, shall |
| 10 | | either be registered with the U.S. Securities and Exchange |
| 11 | | Commission as an investment advisor or regulated by the |
| 12 | | Office of the Comptroller of the Currency. |
| 13 | | (b) The parties to the charitable donation account must |
| 14 | | document the terms and conditions controlling the account |
| 15 | | in a written operating agreement, trust agreement, or |
| 16 | | similar instrument. The terms of the agreement shall be |
| 17 | | consistent with the requirements and conditions set forth |
| 18 | | in this Section. The agreement, if applicable, and policies |
| 19 | | must document the investment strategies of the charitable |
| 20 | | donation account trustee or other manager in administering |
| 21 | | the charitable donation account and provide for the |
| 22 | | accounting of all aspects of the account, including its |
| 23 | | distributions and liquidation, in accordance with |
| 24 | | generally accepted accounting principles. |
| 25 | | (c) A credit union's charitable donation account |
| 26 | | agreement, if applicable, and policies shall provide that |
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| 1 | | the charitable organization or non-profit entity |
| 2 | | recipients of any charitable donation account funds must be |
| 3 | | identified in the policy and be exempt from taxation under |
| 4 | | Section 501(c)(3) of the Internal Revenue Code. |
| 5 | | (d) Upon termination of a charitable donation account, |
| 6 | | the credit union may receive a distribution of the |
| 7 | | remaining assets in cash, or a distribution in kind of the |
| 8 | | remaining assets, but only if those assets are permissible |
| 9 | | investments for credit unions pursuant to this Act. |
| 10 | | (Source: P.A. 97-133, eff. 1-1-12.)
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| 11 | | (205 ILCS 305/46) (from Ch. 17, par. 4447)
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| 12 | | Sec. 46. Loans and interest rate.
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| 13 | | (1) A credit union may make loans
to its members for such |
| 14 | | purpose and upon such security and terms, including
rates of |
| 15 | | interest, as the credit committee, credit manager, or loan |
| 16 | | officer
approves.
Notwithstanding the provisions of any other |
| 17 | | law in connection with extensions
of credit, a credit union may |
| 18 | | elect to
contract for and receive interest and fees and other |
| 19 | | charges for extensions of
credit subject only to the provisions |
| 20 | | of this Act and rules promulgated under
this Act, except that |
| 21 | | extensions of credit secured by residential real estate
shall |
| 22 | | be subject to the laws applicable thereto.
The rates of |
| 23 | | interest to be charged on loans to members shall be
set by the |
| 24 | | board of directors of each individual credit union in |
| 25 | | accordance with Section 30 of this Act and such
rates may be |
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| 1 | | less than, but may not exceed, the maximum rate set forth in
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| 2 | | this Section. A borrower may repay his loan prior to maturity, |
| 3 | | in whole or
in part, without penalty. The credit contract may |
| 4 | | provide for the payment
by the member and receipt by the credit |
| 5 | | union of all costs and
disbursements, including reasonable |
| 6 | | attorney's fees and collection agency
charges, incurred by the |
| 7 | | credit union to collect or enforce the debt in the
event of a |
| 8 | | delinquency by the member, or in the event of a breach of any
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| 9 | | obligation of the member under the credit contract. A |
| 10 | | contingency or
hourly arrangement established under an |
| 11 | | agreement entered into by a credit
union with an attorney or |
| 12 | | collection agency to collect a loan of a member
in default |
| 13 | | shall be presumed prima facie reasonable.
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| 14 | | (2) Credit unions may make loans based upon the security of |
| 15 | | any
interest or equity in real estate, subject to rules and |
| 16 | | regulations
promulgated by the Secretary. In any contract or |
| 17 | | loan which
is secured by a mortgage, deed of
trust, or |
| 18 | | conveyance in the nature of a mortgage, on residential real
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| 19 | | estate, the interest which is computed, calculated, charged, or |
| 20 | | collected
pursuant to such contract or loan, or pursuant to any |
| 21 | | regulation or rule
promulgated pursuant to this Act, may not be |
| 22 | | computed, calculated, charged
or collected for any period of |
| 23 | | time occurring after the date on which the
total indebtedness, |
| 24 | | with the exception of late payment penalties, is paid
in full.
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| 25 | | For purposes of this subsection (2) of this Section 46, a |
| 26 | | prepayment
shall mean the payment of the total indebtedness, |
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| 1 | | with the exception of
late payment penalties if incurred or |
| 2 | | charged, on any date before the date
specified in the contract |
| 3 | | or loan agreement on which the total indebtedness
shall be paid |
| 4 | | in full, or before the date on which all payments, if timely
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| 5 | | made, shall have been made. In the event of a prepayment of the
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| 6 | | indebtedness which is made on a date
after the date on which |
| 7 | | interest on the indebtedness was last computed,
calculated, |
| 8 | | charged, or collected but before the next date on which |
| 9 | | interest
on the indebtedness was to be calculated, computed, |
| 10 | | charged, or collected,
the lender may calculate, charge and |
| 11 | | collect interest on the indebtedness
for the period which |
| 12 | | elapsed between the date on which the prepayment is
made and |
| 13 | | the date on which interest on the indebtedness was last |
| 14 | | computed,
calculated, charged or collected at a rate equal to |
| 15 | | 1/360 of the annual
rate for each day which so elapsed, which |
| 16 | | rate shall be applied to the
indebtedness outstanding as of the |
| 17 | | date of prepayment. The lender shall
refund to the borrower any |
| 18 | | interest charged or collected which exceeds that
which the |
| 19 | | lender may charge or collect pursuant to the preceding |
| 20 | | sentence.
The provisions of this amendatory Act of 1985 shall |
| 21 | | apply only to contracts
or loans entered into on or after the |
| 22 | | effective date of this amendatory
Act.
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| 23 | | (3) Notwithstanding any other provision of this Act, a |
| 24 | | credit union
authorized under this Act to make loans secured by |
| 25 | | an interest or equity in
real estate may engage in making |
| 26 | | "reverse mortgage" loans to persons for
the purpose of making |
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| 1 | | home improvements or repairs, paying insurance
premiums or |
| 2 | | paying real estate taxes on the homestead properties
of such |
| 3 | | persons. If made, such loans shall be made on such terms and
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| 4 | | conditions as the credit union shall determine and as shall be |
| 5 | | consistent
with the provisions of this Section and such rules |
| 6 | | and regulations as the Secretary
shall promulgate hereunder. |
| 7 | | For purposes of this Section, a
"reverse mortgage" loan shall |
| 8 | | be a loan extended on the basis of existing
equity in homestead |
| 9 | | property and secured by a mortgage on such property.
Such loans |
| 10 | | shall be repaid upon the sale of the property or upon the death
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| 11 | | of the owner or, if the property is in joint tenancy, upon the |
| 12 | | death of the
last surviving joint tenant who had such an |
| 13 | | interest in the property at the
time the loan was initiated, |
| 14 | | provided, however, that the credit union and
its member may by |
| 15 | | mutual agreement, establish other repayment terms. A
credit |
| 16 | | union, in making a "reverse mortgage" loan, may add deferred
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| 17 | | interest to principal or otherwise provide for the charging of |
| 18 | | interest or
premiums on such deferred interest. "Homestead" |
| 19 | | property, for purposes of
this Section, means the domicile and |
| 20 | | contiguous real estate owned and
occupied by the mortgagor.
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| 21 | | (4) Notwithstanding any other provisions of this Act, a |
| 22 | | credit union
authorized under this Act to make loans secured by |
| 23 | | an interest or equity
in real property may engage in making |
| 24 | | revolving credit loans secured by
mortgages or deeds of trust |
| 25 | | on such real property or by security
assignments of beneficial |
| 26 | | interests in land trusts.
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| 1 | | For purposes of this Section, "revolving credit" has the |
| 2 | | meaning defined
in Section 4.1 of the Interest Act.
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| 3 | | Any mortgage or deed of trust given to secure a revolving |
| 4 | | credit loan may,
and when so expressed therein shall, secure |
| 5 | | not only the existing indebtedness
but also such future |
| 6 | | advances, whether such advances are obligatory or to
be made at |
| 7 | | the option of the lender, or otherwise, as are made within |
| 8 | | twenty
years from the date thereof, to the same extent as if |
| 9 | | such future advances
were made on the date of the execution of |
| 10 | | such mortgage or deed of trust,
although there may be no |
| 11 | | advance made at the time of execution of such mortgage
or other |
| 12 | | instrument, and although there may be no indebtedness |
| 13 | | outstanding
at the time any advance is made. The lien of such |
| 14 | | mortgage or deed of trust,
as to third persons
without actual |
| 15 | | notice thereof, shall be valid as to all such indebtedness
and |
| 16 | | future advances form the time said mortgage or deed of trust is |
| 17 | | filed
for record in the office of the recorder of deeds or the |
| 18 | | registrar of titles
of the county where the real property |
| 19 | | described therein is located. The
total amount of indebtedness |
| 20 | | that may be so secured may increase or decrease
from time to |
| 21 | | time, but the total unpaid balance so secured at any one time
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| 22 | | shall not exceed a maximum principal amount which must be |
| 23 | | specified in such
mortgage or deed of trust, plus interest |
| 24 | | thereon, and any disbursements
made for the payment of taxes, |
| 25 | | special assessments, or insurance on said
real property, with |
| 26 | | interest on such disbursements.
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| 1 | | Any such mortgage or deed of trust shall be valid and have |
| 2 | | priority over
all subsequent liens and encumbrances, including |
| 3 | | statutory liens, except
taxes and assessments levied on said |
| 4 | | real property.
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| 5 | | (5) Compliance with federal or Illinois preemptive laws or |
| 6 | | regulations
governing loans made by a credit union chartered |
| 7 | | under this Act shall
constitute compliance with this Act.
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| 8 | | (6) Credit unions may make residential real estate mortgage |
| 9 | | loans on terms and conditions established by the United States |
| 10 | | Department of Agriculture through its Rural Development |
| 11 | | Housing and Community Facilities Program. The portion of any |
| 12 | | loan in excess of the appraised value of the real estate shall |
| 13 | | be allocable only to the guarantee fee required under the |
| 14 | | program. |
| 15 | | (7) For a renewal, refinancing, or restructuring of an |
| 16 | | existing loan that is secured by an interest or equity in real |
| 17 | | estate, a new appraisal of the collateral shall not be required |
| 18 | | when the transaction involves an existing extension of credit |
| 19 | | at the credit union, no new moneys are advanced other than |
| 20 | | funds necessary to cover reasonable closing costs, and there |
| 21 | | has been no obvious or material change in market conditions or |
| 22 | | physical aspects of the real estate that threatens the adequacy |
| 23 | | of the credit union's real estate collateral protection after |
| 24 | | the transaction. |
| 25 | | (Source: P.A. 96-141, eff. 8-7-09; 97-133, eff. 1-1-12.)
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| 1 | | (205 ILCS 305/57.1 new) |
| 2 | | Sec. 57.1. Services to other credit unions. |
| 3 | | (a) A credit union may act as a representative of and enter |
| 4 | | into an agreement with credit unions or other organizations for |
| 5 | | the purpose of: |
| 6 | | (1) sharing, utilizing, renting, leasing, purchasing, |
| 7 | | selling, and joint ownership of fixed assets or engaging in |
| 8 | | activities and services that relate to the daily operations |
| 9 | | of credit unions; and |
| 10 | | (2) providing correspondent services to other credit |
| 11 | | unions that the service provider credit union is authorized |
| 12 | | to perform for its own members or as part of its |
| 13 | | operations, including, but not limited to, loan |
| 14 | | processing, loan servicing, member check cashing services, |
| 15 | | disbursing share withdrawals and loan proceeds, cashing |
| 16 | | and selling money orders, ACH and wire transfer services, |
| 17 | | coin and currency services, performing internal audits, |
| 18 | | and automated teller machine deposit services.
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| 19 | | Section 99. Effective date. This Act takes effect upon |
| 20 | | becoming law.".
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