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205 ILCS 305/46
(205 ILCS 305/46)
(from Ch. 17, par. 4447)
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
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 Secretary. 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
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
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
(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 Secretary
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.
(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. 96-141, eff. 8-7-09; 97-133, eff. 1-1-12.)