093_SB1784ham001

 










                                     LRB093 10148 BDD 16603 a

 1                    AMENDMENT TO SENATE BILL 1784

 2        AMENDMENT NO.     .  Amend Senate Bill 1784 by  replacing
 3    the title with the following:
 4        "AN ACT concerning financial regulation."; and

 5    by  replacing  everything  after the enacting clause with the
 6    following:

 7        "Section 1. Short title. This Act may  be  cited  as  the
 8    High Risk Home Loan Act.

 9        Section  5.    Purpose  and  construction. The purpose of
10    this Act is to protect borrowers who  enter  into  high  risk
11    home  loans  from abuse that occurs in the credit marketplace
12    when creditors and brokers are not sufficiently regulated  in
13    Illinois.   This  Act  is  to  be  construed  as  a  borrower
14    protection statute  for  all  purposes.  This  Act  shall  be
15    liberally construed to effectuate its purpose.

16        Section 10.  Definitions. As used in this Act:
17        "Approved  credit  counselor"  means  a  credit counselor
18    approved by the Director of Financial Institutions.
19        "Borrower" means a natural person who seeks or obtains  a
20    high risk home loan.
 
                            -2-      LRB093 10148 BDD 16603 a
 1        "Commissioner"  means  the  Commissioner of the Office of
 2    Banks and Real Estate.
 3        "Department"   means   the   Department   of    Financial
 4    Institutions.
 5        "Director" means the Director of Financial Institutions.
 6        "Good  faith"  means  honesty  in  fact in the conduct or
 7    transaction concerned.
 8        "High risk home loan" means a home equity loan  in  which
 9    (i)  at  the  time of origination, the annual percentage rate
10    exceeds by more than 6 percentage points in  the  case  of  a
11    first  lien  mortgage, or by more than 8 percentage points in
12    the case of a junior mortgage, the  yield  on  U.S.  Treasury
13    securities  having comparable periods of maturity to the loan
14    maturity as of the fifteenth day  of  the  month  immediately
15    preceding  the month in which the application for the loan is
16    received by the lender or (ii)  the  total  points  and  fees
17    payable  by the consumer at or before closing will exceed the
18    greater of 5% of the total loan  amount  or  $800.  The  $800
19    figure  shall be adjusted annually on January 1 by the annual
20    percentage change in the Consumer Price Index for  All  Urban
21    Consumers  for  all  items  published  by  the  United States
22    Department of Labor. "High risk home loan" does not include a
23    loan that is made primarily for a business purpose  unrelated
24    to  the  residential real property securing the loan or to an
25    open-end  credit  plan  subject  to  12  CFR  226  (2000,  no
26    subsequent amendments or editions are included).
27        "Home  equity  loan"  means  any  loan  secured  by   the
28    borrower's  primary residence where the proceeds are not used
29    as purchase money for the residence.
30        "Lender"  means  a  natural  or  artificial  person   who
31    transfers,  deals in, offers, or makes a high risk home loan.
32    "Lender" includes, but  is  not  limited  to,  creditors  and
33    brokers.
34        "Office" means the Office of Banks and Real Estate.
 
                            -3-      LRB093 10148 BDD 16603 a
 1        "Points   and  fees"  means  all  items  required  to  be
 2    disclosed as points and fees under 12 CFR  226.32  (2000,  no
 3    subsequent  amendments  or editions included); the premium of
 4    any single premium credit  life,  credit  disability,  credit
 5    unemployment,  or  any other life or health insurance that is
 6    financed  directly  or  indirectly   into   the   loan;   and
 7    compensation  paid  directly  or  indirectly  to  a  mortgage
 8    broker,  including a broker that originates a loan in its own
 9    name in a table-funded transaction, not otherwise included in
10    12 CFR 226.4.
11        "Reasonable" means fair, proper, just, or  prudent  under
12    the circumstances.
13        "Servicer"  means any entity chartered under the Illinois
14    Banking Act, the Savings Bank Act, the Illinois Credit  Union
15    Act,  or  the  Illinois  Savings and Loan Act of 1985 and any
16    person or entity  licensed  under  the  Residential  Mortgage
17    License  Act  of  1987, the Consumer Installment Loan Act, or
18    the Sales Finance Agency  Act  who  is  responsible  for  the
19    collection  or remittance for, or has the right or obligation
20    to collect or remit for, any  lender,  note  owner,  or  note
21    holder   or  for  a  licensee's  own  account,  of  payments,
22    interest,  principal,  and  trust  items  (such   as   hazard
23    insurance  and  taxes  on  a  residential  mortgage  loan) in
24    accordance with the terms of the residential  mortgage  loan,
25    including loan payment follow-up, delinquency loan follow-up,
26    loan analysis, and any notifications to the borrower that are
27    necessary to enable the borrower to keep the loan current and
28    in good standing.
29        "Total  loan amount" has the same meaning as that term is
30    given in 12 CFR 226.32 and shall be calculated in  accordance
31    with the Federal Reserve Board's Official Staff Commentary to
32    that regulation.

33        Section   15.  Ability  to  repay.  A  lender  shall  not
 
                            -4-      LRB093 10148 BDD 16603 a
 1    transfer, deal in, offer, or make a high risk  home  loan  if
 2    the  lender  does  not  believe  at  the  time  the  loan  is
 3    consummated  that  the  borrower  will  be  able  to make the
 4    scheduled payments to  repay  the  obligation  based  upon  a
 5    consideration  of  his  or  her  current and expected income,
 6    current obligations, employment status, and  other  financial
 7    resources  (other  than the borrower's equity in the dwelling
 8    that secures repayment of the  loan).  A  borrower  shall  be
 9    presumed  to  be  able  to repay the loan if, at the time the
10    loan is consummated,  or  at  the  time  of  the  first  rate
11    adjustment,  in  the  case  of  a lower introductory interest
12    rate, the borrower's scheduled monthly payments on  the  loan
13    (including   principal,   interest,   taxes,  insurance,  and
14    assessments), combined with the scheduled  payments  for  all
15    other  disclosed  debts,  do not exceed 50% of the borrower's
16    monthly gross income.

17        Section 20.  Verification of ability to repay  loan.  The
18    lender  shall verify the borrower's ability to repay the loan
19    in the case of a high risk home loan. The verification  shall
20    require, at a minimum, the following:
21             (1)  That  the  borrower  prepare  and submit to the
22        lender a personal income and expense statement in a  form
23        prescribed  by  the Commissioner or the Director, who may
24        permit the use of other forms such as  the  URLA  (Fannie
25        Mae  Form  1003  (10/92), available from Fannie Mae, 3900
26        Wisconsin Avenue, NW, Washington,  D.C.  20016-2892,  and
27        Freddie  Mac  Form 85 (10/92), available from Freddie Mac
28        at 1101 Pennsylvania Avenue,  NW,  Suite  950,  P.O.  Box
29        37347,   Washington,   D.C.   20077-0001,  no  subsequent
30        amendments or editions) and Transmittal  Summary  (Fannie
31        Mae  Form  1077  (3/97),  available from Fannie Mae, 3900
32        Wisconsin Avenue, NW, Washington,  D.C.  20016-2892,  and
33        Freddie  Mac Form 1008 (3/97), available from Freddie Mac
 
                            -5-      LRB093 10148 BDD 16603 a
 1        at 1101 Pennsylvania Avenue,  NW,  Suite  950,  P.O.  Box
 2        37347,   Washington,   D.C.   20077-0001,  no  subsequent
 3        amendments or editions).
 4             (2)  That the borrower's income is verified by means
 5        of tax returns,  pay  stubs,  accounting  statements,  or
 6        other prudent means.
 7             (3)  That  a credit report is obtained regarding the
 8        borrower.

 9        Section 25.  Good faith dealings; fraudulent or deceptive
10    practices. A lender must act in good faith in  all  relations
11    with  a borrower, including but not limited to, transferring,
12    dealing in, offering, or making a high risk home loan.
13        No lender shall employ fraudulent or  deceptive  acts  or
14    practices  in  the making of a high risk home loan, including
15    deceptive marketing and sales efforts.

16        Section 40.  Pre-paid insurance products and  warranties.
17    No lender shall transfer, deal in, offer, or make a high risk
18    home  loan that finances a single premium credit life, credit
19    disability, credit unemployment, or any other life or  health
20    insurance,  directly  or indirectly. Insurance calculated and
21    paid on a  monthly  basis  shall  not  be  considered  to  be
22    financed by the lender.

23        Section  45.  Refinancing prohibited in certain cases. No
24    lender shall refinance any high risk  home  loan  where  such
25    refinancing  charges  additional  points  and  fees  within a
26    12-month period after the original loan agreement was signed,
27    unless the refinancing results in a tangible net  benefit  to
28    the borrower.

29        Section  55.  Financing  of  points  and fees.  No lender
30    shall transfer, deal in, offer, or make a high risk home loan

 
                            -6-      LRB093 10148 BDD 16603 a
 1    that finances points and fees in excess of 6%  of  the  total
 2    loan amount.

 3        Section  60.  Payments  to  contractors.  No lender shall
 4    make a payment of any proceeds  of  a  high  risk  home  loan
 5    directly  to  a  contractor under a home improvement contract
 6    other than:
 7             (1)  by  instrument  payable  to  the  borrower   or
 8        payable jointly to the borrower and contractor; or
 9             (2)  at   the   election   of  the  borrower,  by  a
10        third-party escrow agreement in accordance with the terms
11        established in a written agreement that is signed by  the
12        borrower,  the lender, and the contractor before the date
13        of payment.

14        Section  65.  Negative  amortization.  No  lender   shall
15    transfer,  deal  in,  offer,  or  make a high risk home loan,
16    other than a loan secured only by a  reverse  mortgage,  with
17    terms  under  which  the outstanding balance will increase at
18    any time over the course of  the  loan  because  the  regular
19    periodic  payments  do  not  cover  the  full  amount  of the
20    interest  due,  unless  the  negative  amortization  is   the
21    consequence   of   a  temporary  forbearance  sought  by  the
22    borrower.

23        Section 70.  Negative equity. No lender  shall  transfer,
24    deal  in, offer, or make a high risk home loan where the loan
25    amount exceeds the value of the property securing the loan.

26        Section  80.  Late  payment  fee.  A  lender  shall   not
27    transfer,  deal in, offer, or make a high risk home loan that
28    provides for a late payment fee, except under  the  following
29    conditions:
30             (1)  the  late payment fee shall not be in excess of
 
                            -7-      LRB093 10148 BDD 16603 a
 1        5% of the amount of the payment past due;
 2             (2)  the late payment fee shall only be assessed for
 3        a payment past due for 15 days or more;
 4             (3)  the late payment fee shall not be imposed  more
 5        than once with respect to a single late payment;
 6             (4)  a   late   payment  fee  that  the  lender  has
 7        collected shall be reimbursed if  the  borrower  presents
 8        proof of having made a timely payment; and
 9             (5)  a  lender shall treat each payment as posted on
10        the same business day as it was received by  the  lender,
11        servicer, or lender's agent or at the address provided to
12        the  borrower  by the lender, servicer, or lender's agent
13        for making payments.

14        Section  85.  Payment  compounding.   No   lender   shall
15    transfer,  deal in, offer, or make a high risk home loan that
16    includes terms under which  more  than  2  periodic  payments
17    required  under the loan are consolidated and paid in advance
18    from the loan proceeds provided to the borrower.

19        Section 90.  Call provision. No  lender  shall  transfer,
20    deal in, offer, or make a high risk home loan that contains a
21    provision that permits the lender, in its sole discretion, to
22    accelerate  the  indebtedness,  provided  that this provision
23    does not prohibit acceleration of a loan in good faith due to
24    a borrower's failure to abide by the material  terms  of  the
25    loan.

26        Section  95.  Disclosure prior to making a high risk home
27    loan. A lender shall not transfer, deal in, offer, or make  a
28    high risk home loan unless the lender has given the following
29    notice  or  a substantially similar notice in writing, to the
30    borrower, acknowledged in writing and signed by the  borrower
31    not  later  than  the  time  the notice is required under the
 
                            -8-      LRB093 10148 BDD 16603 a
 1    notice provision contained in 12 CFR 226.31(c):
 2    NOTICE TO BORROWER
 3    YOU SHOULD BE AWARE THAT YOU MIGHT BE ABLE TO OBTAIN  A  LOAN
 4    AT  A  LOWER  COST.  YOU  SHOULD SHOP AROUND AND COMPARE LOAN
 5    RATES AND FEES. LOAN RATES AND CLOSING COSTS  AND  FEES  VARY
 6    BASED  ON  MANY FACTORS, INCLUDING YOUR PARTICULAR CREDIT AND
 7    FINANCIAL  CIRCUMSTANCES,  YOUR   EMPLOYMENT   HISTORY,   THE
 8    LOAN-TO-VALUE  REQUESTED,  AND THE TYPE OF PROPERTY THAT WILL
 9    SECURE YOUR LOAN. THE LOAN RATE  AND  FEES  COULD  ALSO  VARY
10    BASED ON WHICH LENDER OR BROKER YOU SELECT. IF YOU ACCEPT THE
11    TERMS  OF  THIS LOAN, THE LENDER WILL HAVE A MORTGAGE LIEN ON
12    YOUR HOME. YOU COULD LOSE YOUR HOME AND  ANY  MONEY  YOU  PUT
13    INTO IT IF YOU DO NOT MEET YOUR PAYMENT OBLIGATIONS UNDER THE
14    LOAN.  YOU  SHOULD CONSULT AN ATTORNEY-AT-LAW AND AN APPROVED
15    CREDIT  COUNSELOR  OR  OTHER  EXPERIENCED  FINANCIAL  ADVISOR
16    REGARDING THE RATE, FEES, AND PROVISIONS OF THIS LOAN  BEFORE
17    YOU   PROCEED.  A  LIST  OF  APPROVED  CREDIT  COUNSELORS  IS
18    AVAILABLE BY CONTACTING EITHER  THE  ILLINOIS  DEPARTMENT  OF
19    FINANCIAL  INSTITUTIONS  OR  THE ILLINOIS OFFICE OF BANKS AND
20    REAL ESTATE. YOU ARE  NOT  REQUIRED  TO  COMPLETE  THIS  LOAN
21    AGREEMENT MERELY BECAUSE YOU HAVE RECEIVED THIS DISCLOSURE OR
22    HAVE  SIGNED  A  LOAN  APPLICATION.  ALSO,  YOUR  PAYMENTS ON
23    EXISTING DEBTS CONTRIBUTE TO YOUR CREDIT RATINGS. YOU  SHOULD
24    NOT ACCEPT ANY ADVICE TO IGNORE YOUR REGULAR PAYMENTS TO YOUR
25    EXISTING LENDERS.

26        Section  100.  Counseling prior to perfecting foreclosure
27    proceedings.
28        (a)  If a high risk home loan becomes delinquent by  more
29    than  30  days, the servicer shall send a notice advising the
30    borrower that he or she may  wish  to  seek  approved  credit
31    counseling.
32        (b)  The  notice  required  in subsection (a) shall, at a
33    minimum, include the following language:
 
                            -9-      LRB093 10148 BDD 16603 a
 1        "YOUR LOAN IS OR WAS MORE THAN 30 DAYS PAST DUE. YOU  MAY
 2    BE  EXPERIENCING FINANCIAL DIFFICULTY. IT MAY BE IN YOUR BEST
 3    INTEREST TO  SEEK  APPROVED  CREDIT  COUNSELING.  A  LIST  OF
 4    APPROVED  CREDIT  COUNSELORS  MAY BE OBTAINED FROM EITHER THE
 5    ILLINOIS DEPARTMENT OF FINANCIAL INSTITUTIONS OR THE ILLINOIS
 6    OFFICE OF BANKS AND REAL ESTATE."
 7        (c)  If, within 15 days after mailing the notice provided
 8    for under subsection (b), a  lender,  servicer,  or  lender's
 9    agent  is notified in writing by an approved credit counselor
10    and  the  approved  credit  counselor  advises  the   lender,
11    servicer,  or  lender's  agent  that  the borrower is seeking
12    approved credit counseling, then  the  lender,  servicer,  or
13    lender's agent shall not institute legal action under Part 15
14    of  Article  XV  of  the  Code of Civil Procedure for 30 days
15    after the date of that notice. Only one such 30-day period of
16    forbearance is allowed under this Section per subject loan.
17        (d)  If,  within  the  30-day   period   provided   under
18    subsection  (c), the lender, servicer, or lender's agent, the
19    approved credit counselor, and the borrower agree to  a  debt
20    management plan, then the lender, servicer, or lender's agent
21    shall  not institute legal action under Part 15 of Article XV
22    of the Code of Civil  Procedure  for  as  long  as  the  debt
23    management plan is complied with by the borrower.
24        The  agreed  debt  management plan must be in writing and
25    signed by  the  lender,  servicer,  or  lender's  agent,  the
26    approved  credit counselor, and the borrower. No modification
27    of an approved debt management plan can be made  without  the
28    mutual  agreement of the lender, servicer, or lender's agent,
29    the approved credit counselor, and the borrower.
30        Upon written notice to the lender, servicer, or  lender's
31    agent, the borrower may change approved credit counselors.
32        (e)  If the borrower fails to comply with the agreed debt
33    management  plan,  then  nothing  in  this  Section  shall be
34    construed to impair the legal right of the lender,  servicer,
 
                            -10-     LRB093 10148 BDD 16603 a
 1    or lender's agent to enforce the contract.

 2        Section 105.  Right to cure.
 3        (a)  Before  an  action  is filed to foreclose or collect
 4    money due pursuant to a high risk home loan or  before  other
 5    action  is  taken  to seize or transfer ownership of property
 6    subject to a high risk home  loan,  the  lender  or  lender's
 7    assignee  of  the loan shall deliver to the borrower a notice
 8    of the right to cure the default, informing the  borrower  of
 9    all of the following:
10             (1)  The nature of the default.
11             (2)  The  borrower's  right  to  cure the default by
12        paying the sum of money required, provided that a  lender
13        or  assignee  shall  accept  any  partial payment made or
14        tendered  in  response  to  the  notice.  If  the  amount
15        necessary to cure the default will change within 30  days
16        of  the notice due to the application of a daily interest
17        rate or the addition of late fees, as allowed by the Act,
18        the notice shall give sufficient  information  to  enable
19        the  borrower to calculate the amount at any point within
20        the 30-day period.
21             (3)  The date by which the  borrower  may  cure  the
22        default   to  avoid  a  court  action,  acceleration  and
23        initiation of foreclosure, or other action to  seize  the
24        property, which date shall not be less than 30 days after
25        the  date the notice is delivered, and the name, address,
26        and telephone number of a person to whom the  payment  or
27        tender shall be made.
28             (4)  That  if the borrower does not cure the default
29        by the date specified, the lender or assignee may file an
30        action for money due  or  take  steps  to  terminate  the
31        borrower's ownership in the property by requiring payment
32        in  full  of  the  high  risk  home loan and commencing a
33        foreclosure proceeding  or  other  action  to  seize  the
 
                            -11-     LRB093 10148 BDD 16603 a
 1        property.
 2             (5)  The  name,  address,  and telephone number of a
 3        person whom the borrower  may  contact  if  the  borrower
 4        disagrees  with the assertion that a default has occurred
 5        or the correctness  of  the  calculation  of  the  amount
 6        required to cure the default.
 7        (b)  If  a  lender  or  assignee asserts that grounds for
 8    acceleration exist and requires the payment in  full  of  all
 9    sums  secured  by  the  high  risk home loan, the borrower or
10    anyone authorized to act on the borrower's behalf may, at any
11    time before the title is transferred by means of foreclosure,
12    by judicial proceeding and sale, or  other  means,  cure  the
13    default,  and  reinstate the high risk home loan. Cure of the
14    default shall reinstate the borrower to the same position  as
15    if  the default had not occurred and shall nullify, as of the
16    date of the cure, an acceleration of any obligation under the
17    high risk home loan arising from the default.
18        (c)  To cure a default under  this  Section,  a  borrower
19    shall  not  be  required  to  pay any charge, fee, or penalty
20    attributable to the exercise of the right to cure a  default,
21    other  than the fees specifically allowed by this subsection.
22    The borrower shall  not  be  liable  for  any  attorney  fees
23    relating  to  the  default that are incurred by the lender or
24    assignee prior to or during the 30-day period  set  forth  in
25    subsection  (a)  of  this  Section,  nor for any such fees in
26    excess of $100 that are incurred by the  lender  or  assignee
27    after  the  expiration  of  the  30-day period but before the
28    lender or assignee files  a  foreclosure  or  other  judicial
29    action  or  takes other action to seize or transfer ownership
30    of the real estate. After the  lender  or  assignee  files  a
31    foreclosure or other judicial action or takes other action to
32    seize  or transfer ownership of the real estate, the borrower
33    shall only be liable for attorney fees  that  are  reasonable
34    and  actually  incurred by the lender or assignee, based on a
 
                            -12-     LRB093 10148 BDD 16603 a
 1    reasonable hourly rate and a reasonable number of hours.
 2        (d)  If a default is cured prior to the initiation of any
 3    action to foreclose or to seize the residence, the lender  or
 4    assignee shall not institute a proceeding or other action for
 5    that  default.  If a default is cured after the initiation of
 6    any action, the lender or assignee shall take such  steps  as
 7    are necessary to terminate the action.
 8        (e)  A  lender or a lender's assignee of a high risk home
 9    loan that has the legal right  to  foreclose  shall  use  the
10    judicial  foreclosure  procedures  provided by law. In such a
11    proceeding, the borrower may assert  the  nonexistence  of  a
12    default  and  any  other claim or defense to acceleration and
13    foreclosure, including  any  claim  or  defense  based  on  a
14    violation  of  the Act, though no such claim or defense shall
15    be deemed a compulsory counterclaim.

16        Section 110.  Mortgage Awareness Program.
17        (a)  The Mortgage Awareness Program is a  counseling  and
18    educational  component  that must be provided by the Director
19    and the Commissioner.
20        (b)  The  core  curriculum  of  the  Mortgage   Awareness
21    Program shall include all of the following:
22             (1)  Explanation of the amount financed.
23             (2)  Explanation of the finance charge.
24             (3)  Explanation of the annual percentage rate.
25             (4)  Explanation of the total payments.
26             (5)  Explanation   of   the  loan  costs,  including
27        broker's fees, finance charges, points,  and  origination
28        fees.
29             (6)  Explanation of the right of rescission.
30             (7)  Explanation of foreclosure procedures.
31             (8)  Explanation  of  the  significant  debt ratios,
32        including total debt to income, loan debt to income,  and
33        loan debt to value of residence.
 
                            -13-     LRB093 10148 BDD 16603 a
 1             (9)  Explanation of adjustable rate mortgage.
 2             (10)  Explanation of balloon payments.
 3             (11)  Explanation of credit options.
 4             (12)  Explanation  of  each  item  that appears on a
 5        good faith estimate.
 6             (13)  Explanation of pre-payment penalties.
 7        (c)  Counseling  session  attendees   must   complete   a
 8    personal  income  and expense statement, as well as a balance
 9    sheet, on forms provided by the Commissioner or the Director.
10        (d)  Prior  to  signing  a  certificate  of   completion,
11    approved  credit counselors shall privately discuss with each
12    attendee that attendee's income  and  expense  statement  and
13    balance  sheet, as well as the terms of any loan the attendee
14    currently has or may be contemplating, and  provide  a  third
15    party review to establish the affordability of the loan.
16        (e)  Counseling   session   attendees  must  be  given  a
17    brochure that contains information covered  by  the  Mortgage
18    Awareness Program.
19        (f)  Any  lender,  prior to making a high risk home loan,
20    shall inform the borrower in writing of  the  requirement  to
21    participate in the Mortgage Awareness Program.
22        (g)  No lender shall offer less favorable loan terms to a
23    borrower  due  to  a borrower's participation in the Mortgage
24    Awareness Program.
25        (h)  The borrower may  not  waive  participation  in  the
26    Mortgage Awareness Program.

27        Section  115.  Report of default and foreclosure rates on
28    conventional loans.
29        (a)  On or before October 1 and April  1  of  each  year,
30    each  servicer  of  Illinois residential mortgage loans shall
31    report to the Commissioner the default and  foreclosure  data
32    of  conventional loans for the 6-month periods ending June 30
33    and December 31, respectively.
 
                            -14-     LRB093 10148 BDD 16603 a
 1        (b)  Each   servicer   shall   report    the    following
 2    information:
 3             (1)  The   average   quarterly   dollar   amount  of
 4        conventional one to 4 family mortgage  loans  secured  by
 5        Illinois real estate.
 6             (2)  The  average  quarterly  number of conventional
 7        one to 4 family mortgage loans secured by  Illinois  real
 8        estate.
 9             (3)  The   average   quarterly   dollar   amount  of
10        conventional one to 4 family mortgage  loans  secured  by
11        Illinois real estate that are in default over 90 days.
12             (4)  The  average  quarterly  number of conventional
13        one to 4 family mortgage loans secured by  Illinois  real
14        estate that are in default over 90 days.
15             (5)  The  dollar  amount of foreclosures on one to 4
16        family conventional loans completed during the  reporting
17        period.
18             (6)  The  number  of foreclosures on one to 4 family
19        conventional loans completed during the reporting period.
20             (7)  Whether any of the loans  where  a  foreclosure
21        was  completed were originated less than 18 months before
22        the completed foreclosure.
23             (8)  Whether any of the loans  where  a  foreclosure
24        was  completed had a note rate greater than 10% for first
25        lien mortgage loans or greater than 12% in the case of  a
26        junior lien.
27        (c)  An officer of the servicer shall sign the form.

28        Section 120.  Commissioner's review and analysis.
29        (a)  The   Commissioner  shall  review  and  analyze  the
30    default and foreclosure rate  data  reports  submitted  under
31    Section 115.
32        (b)  The  reports  and their analyses may be used for the
33    following purposes:
 
                            -15-     LRB093 10148 BDD 16603 a
 1             (1)  In setting the scope of a  regularly  scheduled
 2        examination.
 3             (2)  In setting the scope of a special examination.
 4             (3)  In comparing the reported information of a bank
 5        to other banks subject to the Illinois Banking Act.
 6             (4)  In  comparing  the  reported  information  of a
 7        servicer.
 8        (c)  The Commissioner may correspond with a  servicer  to
 9    seek clarification of information contained in its report and
10    to  gather  additional  data  concerning  loans in default or
11    loans in foreclosure.

12        Section 125.  Third party review of high risk home loans.
13        (a)  In the case of any high risk home loan, the borrower
14    shall be afforded the opportunity to seek independent  review
15    by  the  Office or the Department of the loan terms, in order
16    to determine affordability of  the  loan,  when  and  if  the
17    General  Assembly appropriates adequate funding to the Office
18    or the Department specifically for this Section.
19        (b)  The  Office  or  the  Department  shall  inform  the
20    borrower of the amount  the  borrower  has  available  for  a
21    monthly mortgage payment based upon the borrower's budget.
22        (c)  The  Office  or  the  Department  shall  review loan
23    information pertaining to  balloon  payments  and  adjustable
24    interest   rates  and  other  items  disclosed  by  the  loan
25    documents affecting amount of payment and  shall  inform  the
26    borrower of such items.
27        (d)  If,  based  upon the review, the borrower determines
28    that the loan is not in his or her  best  economic  interest,
29    the  reviewer  shall so notify the lender. This determination
30    shall enable the borrower to withdraw from  the  contemplated
31    loan with no financial penalty.

32        Section 130.  Circumstances voiding mandatory arbitration
 
                            -16-     LRB093 10148 BDD 16603 a
 1    provisions.  Without  regard  to whether a borrower is acting
 2    individually or on behalf of  others  similarly  situated,  a
 3    mandatory  arbitration  provision  of  a  high risk home loan
 4    agreement that  is  oppressive,  unfair,  unconscionable,  or
 5    substantially  in derogation of the rights of the borrower is
 6    void.

 7        Section 135.  Enforcement and remedies.
 8        (a)  The remedies provided in this Act are cumulative and
 9    apply to persons or entities subject to this Act.
10        (b)  Any violation of this Act constitutes a violation of
11    the Consumer Fraud and Deceptive Business Practices Act.
12        (c)  If any provision of an agreement  for  a  high  risk
13    home   loan   violates  this  Act,  then  that  provision  is
14    unenforceable against the borrower.
15        (d)  Any action brought against a lender for a  violation
16    under  this  Act  is  also  assertable against any subsequent
17    holder of the high risk home loan that is the subject of  the
18    action  unless  the  subsequent  holder  demonstrates,  by  a
19    preponderance of the evidence, that a reasonable person would
20    not determine that, prior to becoming a holder of the loan, a
21    violation of the Act has been undertaken relative to the high
22    risk home loan.

23        Section  140.  Limitation of lender's liability. A lender
24    and subsequent holder of the high risk loan is not liable for
25    a violation of this Act if:
26             (1)  within 30 days of the loan closing and prior to
27        receiving any notice from the borrower of the  violation,
28        the  lender  has  made  appropriate  restitution  to  the
29        borrower  and  appropriate  adjustments  are  made to the
30        loan; or
31             (2)  the violation was not intentional and  resulted
32        from  a  bona  fide  error  in  fact, notwithstanding the
 
                            -17-     LRB093 10148 BDD 16603 a
 1        maintenance of procedures  reasonably  adopted  to  avoid
 2        such  errors,  and within 60 days of the discovery of the
 3        violation and prior to  receiving  any  notice  from  the
 4        borrower  of  the  violation, the borrower is notified of
 5        the violation, appropriate restitution  is  made  to  the
 6        borrower,  and  appropriate  adjustments  are made to the
 7        loan.

 8        Section 145.  Subterfuge prohibited. No lender, with  the
 9    intent  to  avoid  the application or provisions of this Act,
10    shall (i) divide a loan transaction into  separate  parts  or
11    (ii) perform any other subterfuge.

12        Section  150.  Preemption  of  administrative  rules. Any
13    relevant administrative rule promulgated before the effective
14    date  of  this  Act  by  the  Department  or  the  Office  is
15    preempted.

16        Section 153.  Reporting of violations. The Office and the
17    Department must report to the Attorney General all violations
18    of this Act of which they become aware.

19        Section 155.  Rulemaking. The Office and  the  Department
20    may  adopt  reasonable rules to implement and administer this
21    Act.

22        Section 160.  Judicial review. All  final  administrative
23    decisions  under  this  Act  are  subject  to judicial review
24    pursuant to the provisions of the Administrative  Review  Law
25    and any rules adopted pursuant thereto.

26        Section 165.  Waiver prohibited. There shall be no waiver
27    of any provision of this Act.
 
                            -18-     LRB093 10148 BDD 16603 a
 1        Section  170.  Superiority of Act. To the extent this Act
 2    conflicts with any other Illinois State financial  regulation
 3    laws,  this Act is superior and supersedes those laws for the
 4    purposes of regulating high risk home loans in Illinois.

 5        Section 175.  Severability.  The provisions of  this  Act
 6    are severable under Section 1.31 of the Statute on Statutes.

 7        Section  180.  Home rule. It is declared to be the public
 8    policy of this State, pursuant to subsection (h) of Section 6
 9    of Article VII of the Illinois Constitution of 1970, that any
10    power or function set forth in this Act to  be  exercised  by
11    the State is an exclusive State power or function. Such power
12    or  function  shall  not  be  exercised  concurrently, either
13    directly or indirectly, by  any  unit  of  local  government,
14    including  home  rule  units, except as otherwise provided in
15    this Act.

16        Section 800.  The Deposit of State Moneys Act is  amended
17    by changing Sections 11 and 11.1 as follows:

18        (15 ILCS 520/11) (from Ch. 130, par. 30)
19        Sec.   11.    Protection  of  public  deposits;  eligible
20    collateral.
21        (a)  For deposits not insured by an agency of the federal
22    government, the State Treasurer, in his  or  her  discretion,
23    may  accept  as  collateral  any  of the following classes of
24    securities, provided there has been no default in the payment
25    of principal or interest thereon:
26             (1)  Bonds, notes, or other securities  constituting
27        direct  and general obligations of the United States, the
28        bonds, notes, or other securities constituting the direct
29        and general obligation of any agency  or  instrumentality
30        of the United States, the interest and principal of which
 
                            -19-     LRB093 10148 BDD 16603 a
 1        is  unconditionally  guaranteed by the United States, and
 2        bonds,  notes,  or  other  securities  or   evidence   of
 3        indebtedness constituting the obligation of a U.S. agency
 4        or instrumentality.
 5             (2)  Direct  and  general  obligation  bonds  of the
 6        State of Illinois or of any other  state  of  the  United
 7        States.
 8             (3)  Revenue  bonds  of this State or any authority,
 9        board, commission, or similar agency thereof.
10             (4)  Direct and  general  obligation  bonds  of  any
11        city, town, county, school district, or other taxing body
12        of  any  state, the debt service of which is payable from
13        general ad valorem taxes.
14             (5)  Revenue bonds of any  city,  town,  county,  or
15        school district of the State of Illinois.
16             (6)  Obligations  issued,  assumed, or guaranteed by
17        the International Finance Corporation, the  principal  of
18        which is not amortized during the life of the obligation,
19        but no such obligation shall be accepted at more than 90%
20        of its market value.
21             (7)  Illinois  Affordable Housing Program Trust Fund
22        Bonds or Notes as defined in and issued pursuant  to  the
23        Illinois Housing Development Act.
24             (8)  In  an amount equal to at least market value of
25        that amount of funds deposited  exceeding  the  insurance
26        limitation  provided  by  the  Federal  Deposit Insurance
27        Corporation or the National Credit  Union  Administration
28        or  other  approved  share  insurer: (i) securities, (ii)
29        mortgages, (iii) letters of credit issued  by  a  Federal
30        Home Loan Bank, or (iv) loans covered by a State Guaranty
31        under the Illinois Farm Development Act.
32        (b)  The  State  Treasurer  may  establish  a  system  to
33    aggregate  permissible securities received as collateral from
34    financial institutions in a collateral pool to  secure  State
 
                            -20-     LRB093 10148 BDD 16603 a
 1    deposits  of the institutions that have pledged securities to
 2    the pool.
 3        (c)  The Treasurer may at any time declare any particular
 4    security ineligible to qualify as  collateral  when,  in  the
 5    Treasurer's judgment, it is deemed desirable to do so.
 6        (d)  Notwithstanding any other provision of this Section,
 7    as  security  the  State  Treasurer  may,  in his discretion,
 8    accept a bond, executed by a company authorized  to  transact
 9    the kinds of business described in clause (g) of Section 4 of
10    the  Illinois  Insurance Code, in an amount not less than the
11    amount of  the  deposits  required  by  this  Section  to  be
12    secured,  payable  to  the State Treasurer for the benefit of
13    the People of the State  of  Illinois,  in  a  form  that  is
14    acceptable to the State Treasurer.
15    (Source: P.A. 87-510; 87-575; 87-895; 88-93.)

16        (15 ILCS 520/11.1) (from Ch. 130, par. 30.1)
17        Sec.  11.1.   The  State  Treasurer  may,  in  his or her
18    discretion, accept as security  for  State  deposits  insured
19    certificates  of  deposit or share certificates issued to the
20    depository institution pledging  them  as  security  and  may
21    require  security  in  the amount of 125% of the value of the
22    State  deposit.   Such  certificate  of  deposit   or   share
23    certificate shall:
24        (1)  be  fully  insured  by the Federal Deposit Insurance
25    Corporation,  the  Federal   Savings   and   Loan   Insurance
26    Corporation or the National Credit Union Share Insurance Fund
27    or  issued  by a depository institution which is rated within
28    the 3 highest classifications established by at least one  of
29    the 2 standard rating services;
30        (2)  be  issued  by a financial institution having assets
31    of $15,000,000 $30,000,000 or more; and
32        (3)  be issued by either a savings and  loan  association
33    having  a  capital  to  asset ratio of at least 2%, by a bank
 
                            -21-     LRB093 10148 BDD 16603 a
 1    having a capital to asset ratio of at least 6% or by a credit
 2    union having a capital to asset ratio of at least 4%.
 3        The depository institution shall effect the assignment of
 4    the certificate of deposit or share certificate to the  State
 5    Treasurer  and  shall  agree, that in the event the issuer of
 6    the certificate fails to maintain the capital to asset  ratio
 7    required  by  this  Section,  such  certificate of deposit or
 8    share certificate shall be replaced  by  additional  suitable
 9    security.
10    (Source: P.A. 85-803.)

11        Section  805.  The Public Funds Deposit Act is amended by
12    changing Section 1 as follows:

13        (30 ILCS 225/1) (from Ch. 102, par. 34)
14        Sec. 1. Deposits. Any treasurer  or  other  custodian  of
15    public  funds  may  deposit  such funds in a savings and loan
16    association, savings bank, or State or national bank in  this
17    State.  When such deposits become collected funds and are not
18    needed  for  immediate  disbursement,  they shall be invested
19    within 2 working days at prevailing  rates  or  better.   The
20    treasurer or other custodian of public funds may require such
21    bank,  savings  bank,  or  savings  and  loan  association to
22    deposit with him or her securities guaranteed by agencies and
23    instrumentalities of the federal government equal  in  market
24    value  to  the amount by which the funds deposited exceed the
25    federally insured amount. Any treasurer or other custodian of
26    public  funds  may  accept  as  security  for  public   funds
27    deposited  in  such  bank,  savings bank, or savings and loan
28    association  any  securities  or  other  eligible  collateral
29    authorized by Sections 11 and 11.1 of the  Deposit  of  State
30    Moneys  Act  (15  ILCS  520/11  and 11.1) or Section 6 of the
31    Public Funds Investment Act (30 ILCS 235/6).  Such  treasurer
32    or  other  custodian is authorized to enter into an agreement
 
                            -22-     LRB093 10148 BDD 16603 a
 1    with any  such  bank,  savings  bank,  or  savings  and  loan
 2    association, with any federally insured financial institution
 3    or  trust  company, or with any agency of the U.S. government
 4    relating  to  the  deposit  of  such  securities.  Any   such
 5    treasurer   or  other  custodian  shall  be  discharged  from
 6    responsibility for any funds  for  which  securities  are  so
 7    deposited with him or her, and the funds for which securities
 8    are  so  deposited  shall  not  be  subject  to any otherwise
 9    applicable limitation as to amount.
10        No bank, savings bank, or savings  and  loan  association
11    shall  receive  public  funds  as  permitted by this Section,
12    unless it has  complied  with  the  requirements  established
13    pursuant to Section 6 of the Public Funds Investment Act.
14    (Source: P.A. 91-211, eff. 7-20-99.)

15        Section  810.  The  State  Officers  and  Employees Money
16    Disposition Act is amended by changing Section 2c as follows:

17        (30 ILCS 230/2c) (from Ch. 127, par. 173a)
18        Sec.  2c.  Every   such   officer,   board,   commission,
19    commissioner,  department,  institution,  arm  or  agency  is
20    authorized  to  demand  and  receive a bond and securities in
21    amount and kind satisfactory to him from any bank or  savings
22    and  loan  association  in which moneys held by such officer,
23    board, commission, commissioner, department, institution, arm
24    or agency for or on behalf of the State of Illinois,  may  be
25    on deposit, such securities to be held by the officer, board,
26    commission,  commissioner,  department,  institution,  arm or
27    agency for the period that such moneys are so on deposit  and
28    then  returned  together  with  interest, dividends and other
29    accruals to the bank or savings  and  loan  association.  The
30    bond  or undertaking and such securities shall be conditioned
31    for the return of the moneys deposited in conformity with the
32    terms of the deposit.
 
                            -23-     LRB093 10148 BDD 16603 a
 1        Whenever funds deposited with a bank or savings and  loan
 2    association  exceed  the  amount of federal deposit insurance
 3    coverage, a bond, or pledged securities,  or  other  eligible
 4    collateral shall be obtained. Only the types of securities or
 5    other  eligible  collateral which the State Treasurer may, in
 6    his or her discretion, accept for amounts not insured by  the
 7    Federal  Deposit Insurance Corporation or the Federal Savings
 8    and Loan Insurance Corporation under Section 11 of "An Act in
 9    relation  to  State  moneys",  approved  June  28,  1919,  as
10    amended, may be accepted as pledged  securities.  The  market
11    value of the bond or pledged securities shall at all times be
12    equal to or greater than the uninsured portion of the deposit
13    unless  the  funds deposited are collateralized pursuant to a
14    system  established  by  the  State  Treasurer  to  aggregate
15    permissible securities received as collateral from  financial
16    institutions in a collateral pool to secure State deposits of
17    the institution that have pledged securities to the pool.
18        All  securities  deposited  by a bank or savings and loan
19    association under the provisions of this Section shall remain
20    the property of the depositary and  may  be  stamped  by  the
21    depositary  so  as  to  indicate  that  such  securities  are
22    deposited  as collateral. Should the bank or savings and loan
23    association fail or refuse to pay over  the  moneys,  or  any
24    part   thereof,   deposited  with  it,  the  officer,  board,
25    commission, commissioner,  department,  institution,  arm  or
26    agency  may sell such securities upon giving 5 days notice to
27    the depositary of his intention to so sell  such  securities.
28    Such sale shall transfer absolute ownership of the securities
29    so  sold to the vendee thereof. The surplus, if any, over the
30    amount due to the State and the expenses of the sale shall be
31    paid to the bank or savings and loan association. Actions may
32    be brought in the name of the People of the State of Illinois
33    to enforce the claims  of  the  State  with  respect  to  any
34    securities   deposited   by   a  bank  or  savings  and  loan
 
                            -24-     LRB093 10148 BDD 16603 a
 1    association.
 2        No bank or savings and  loan  association  shall  receive
 3    public  funds  as  permitted  by  this Section, unless it has
 4    complied  with  the  requirements  established  pursuant   to
 5    Section  6  of  "An  Act  relating  to certain investments of
 6    public funds by public agencies", approved July 23, 1943,  as
 7    now or hereafter amended.
 8    (Source: P.A. 85-257.)

 9        Section  815.  The Public Funds Investment Act is amended
10    by changing Section 6 as follows:

11        (30 ILCS 235/6) (from Ch. 85, par. 906)
12        Sec. 6. Report of financial institutions.
13        (a)  No bank shall receive any public funds unless it has
14    furnished  the  corporate  authorities  of  a  public  agency
15    submitting a deposit  with  copies  of  the  last  two  sworn
16    statements  of  resources  and  liabilities which the bank is
17    required to furnish to the Commissioner  of  Banks  and  Real
18    Estate  or  to  the  Comptroller  of the Currency.  Each bank
19    designated as a depository  for  public  funds  shall,  while
20    acting  as such depository, furnish the corporate authorities
21    of a public agency with a copy of all statements of resources
22    and liabilities which  it  is  required  to  furnish  to  the
23    Commissioner  of  Banks and Real Estate or to the Comptroller
24    of the Currency; provided, that if such funds or  moneys  are
25    deposited  in  a  bank,  the  amount of all such deposits not
26    collateralized  or  insured  by  an  agency  of  the  federal
27    government shall not exceed 75%  of  the  capital  stock  and
28    surplus  of  such  bank,  and  the corporate authorities of a
29    public agency submitting a deposit shall  not  be  discharged
30    from  responsibility for any funds or moneys deposited in any
31    bank in excess of such limitation.
32        (b)  No savings bank  or  savings  and  loan  association
 
                            -25-     LRB093 10148 BDD 16603 a
 1    shall  receive  public  funds  unless  it  has  furnished the
 2    corporate authorities of a public agency submitting a deposit
 3    with copies of the last 2 sworn statements of  resources  and
 4    liabilities  which  the  savings  bank  or  savings  and loan
 5    association is required to furnish  to  the  Commissioner  of
 6    Banks  and  Real  Estate  or  the  Federal  Deposit Insurance
 7    Corporation.   Each  savings  bank  or   savings   and   loan
 8    association  designated  as  a  depository  for  public funds
 9    shall, while acting as such depository, furnish the corporate
10    authorities of a public agency with a copy of all  statements
11    of  resources and liabilities which it is required to furnish
12    to the Commissioner of Banks and Real Estate or  the  Federal
13    Deposit  Insurance  Corporation; provided, that if such funds
14    or moneys are deposited in a savings bank or savings and loan
15    association,  the   amount   of   all   such   deposits   not
16    collateralized  or  insured  by  an  agency  of  the  federal
17    government  shall  not  exceed  75%  of the net worth of such
18    savings bank or savings and loan association  as  defined  by
19    the  Federal Deposit Insurance Corporation, and the corporate
20    authorities of a public agency submitting a deposit shall not
21    be discharged from responsibility for  any  funds  or  moneys
22    deposited in any savings bank or savings and loan association
23    in excess of such limitation.
24        (c)  No credit union shall receive public funds unless it
25    has  furnished  the  corporate authorities of a public agency
26    submitting a share  deposit  with  copies  of  the  last  two
27    reports  of  examination  prepared  by  or  submitted  to the
28    Illinois Department of Financial Institutions or the National
29    Credit Union Administration.  Each credit union designated as
30    a depository for public funds shall,  while  acting  as  such
31    depository,  furnish  the  corporate  authorities of a public
32    agency with a copy of all reports of examination prepared  by
33    or   furnished   to  the  Illinois  Department  of  Financial
34    Institutions or the  National  Credit  Union  Administration;
 
                            -26-     LRB093 10148 BDD 16603 a
 1    provided  that  if  such  funds  or  moneys are invested in a
 2    credit union account, the amount of all such investments  not
 3    collateralized  or  insured  by  an  agency  of  the  federal
 4    government  or  other approved share insurer shall not exceed
 5    50% of the unimpaired capital  and  surplus  of  such  credit
 6    union,  which  shall  include  shares, reserves and undivided
 7    earnings and the corporate authorities  of  a  public  agency
 8    making   an   investment   shall   not   be  discharged  from
 9    responsibility for any funds or moneys invested in  a  credit
10    union in excess of such limitation.
11        (d)  Whenever  a  public agency deposits any public funds
12    in a financial institution, the public agency may enter  into
13    an  agreement  with  the  financial institution requiring any
14    funds  not  insured  by   the   Federal   Deposit   Insurance
15    Corporation  or  the  National Credit Union Administration or
16    other approved share insurer to be collateralized by  any  of
17    the  following classes of securities, provided there has been
18    no default in the payment of principal or interest thereon:
19             (1)  Bonds, notes, or other securities  constituting
20        direct  and general obligations of the United States, the
21        bonds, notes, or other securities constituting the direct
22        and general obligation of any agency  or  instrumentality
23        of the United States, the interest and principal of which
24        is  unconditionally  guaranteed by the United States, and
25        bonds,  notes,  or  other  securities  or   evidence   of
26        indebtedness constituting the obligation of a U.S. agency
27        or instrumentality.
28             (2)  Direct  and  general  obligation  bonds  of the
29        State of Illinois or of any other  state  of  the  United
30        States.
31             (3)  Revenue  bonds  of this State or any authority,
32        board, commission, or similar agency thereof.
33             (4)  Direct and  general  obligation  bonds  of  any
34        city, town, county, school district, or other taxing body
 
                            -27-     LRB093 10148 BDD 16603 a
 1        of  any  state, the debt service of which is payable from
 2        general ad valorem taxes.
 3             (5)  Revenue bonds of any  city,  town,  county,  or
 4        school district of the State of Illinois.
 5             (6)  Obligations  issued,  assumed, or guaranteed by
 6        the International Finance Corporation, the  principal  of
 7        which is not amortized during the life of the obligation,
 8        but no such obligation shall be accepted at more than 90%
 9        of its market value.
10             (7)  Illinois  Affordable Housing Program Trust Fund
11        Bonds or Notes as defined in and issued pursuant  to  the
12        Illinois Housing Development Act.
13             (8)  In  an amount equal to at least market value of
14        that amount of funds deposited  exceeding  the  insurance
15        limitation  provided  by  the  Federal  Deposit Insurance
16        Corporation or the National Credit  Union  Administration
17        or  other  approved  share  insurer: (i) securities, (ii)
18        mortgages, (iii) letters of credit issued  by  a  Federal
19        Home Loan Bank, or (iv) loans covered by a State Guaranty
20        under the Illinois Farm Development Act.
21             (9)  Certificates  of  deposit or share certificates
22        issued to the depository  institution  pledging  them  as
23        security.  The  public agency may require security in the
24        amount of 125% of the value of the public agency deposit.
25        Such certificate of deposit or share certificate shall:
26                  (i)  be fully insured by  the  Federal  Deposit
27             Insurance  Corporation, the Federal Savings and Loan
28             Insurance Corporation, or the National Credit  Union
29             Share  Insurance  Fund  or  issued  by  a depository
30             institution which is  rated  within  the  3  highest
31             classifications established by at least one of the 2
32             standard rating services;
33                  (ii)  be  issued  by  a  financial  institution
34             having assets of $15,000,000 or more; and
 
                            -28-     LRB093 10148 BDD 16603 a
 1                  (iii)  be  issued  by either a savings and loan
 2             association having a capital to asset  ratio  of  at
 3             least  2%, by a bank having a capital to asset ratio
 4             of at least 6% or by a credit union having a capital
 5             to asset ratio of at least 4%.
 6        The depository institution shall effect the assignment of
 7    the certificate of deposit or share certificate to the public
 8    agency and shall agree that, in the event the issuer  of  the
 9    certificate  fails  to  maintain  the  capital to asset ratio
10    required by this Section,  such  certificate  of  deposit  or
11    share  certificate  shall  be replaced by additional suitable
12    security.
13        (e)  The public agency may accept a system established by
14    the  State  Treasurer  to  aggregate  permissible  securities
15    received as  collateral  from  financial  institutions  in  a
16    collateral pool to secure public deposits of the institutions
17    that have pledged securities to the pool.
18        (f)  The  public  agency  may  at  any  time  declare any
19    particular security ineligible to qualify as collateral when,
20    in the public agency's judgment, it is deemed desirable to do
21    so.
22        (g)  Notwithstanding any other provision of this Section,
23    as security a public agency may, at its discretion, accept  a
24    bond,  executed by a company authorized to transact the kinds
25    of business described in clause  (g)  of  Section  4  of  the
26    Illinois  Insurance  Code,  in  an  amount  not less than the
27    amount of  the  deposits  required  by  this  Section  to  be
28    secured,  payable to the public agency for the benefit of the
29    People  of  the  unit  of  government,  in  a  form  that  is
30    acceptable  to  the  public  agency  securities,   mortgages,
31    letters  of  credit  issued  by  a Federal Home Loan Bank, or
32    loans covered by a State Guaranty  under  the  Illinois  Farm
33    Development  Act  in an amount equal to at least market value
34    of that amount of funds  deposited  exceeding  the  insurance
 
                            -29-     LRB093 10148 BDD 16603 a
 1    limitation   provided   by   the  Federal  Deposit  Insurance
 2    Corporation or the National Credit  Union  Administration  or
 3    other approved share insurer.
 4        (h) (e)  Paragraphs (a), (b), (c), and (d), (e), (f), and
 5    (g)  of  this  Section  do  not  apply  to  the University of
 6    Illinois,  Southern  Illinois   University,   Chicago   State
 7    University,  Eastern  Illinois  University,  Governors  State
 8    University,  Illinois State University, Northeastern Illinois
 9    University, Northern Illinois  University,  Western  Illinois
10    University,   the  Cooperative  Computer  Center  and  public
11    community colleges.
12    (Source: P.A. 91-324, eff. 1-1-00; 91-773, eff. 6-9-00.)

13        Section 820.  The Illinois  Banking  Act  is  amended  by
14    changing  Sections 2, 5, and 17 and by adding Section 13.6 as
15    follows:

16        (205 ILCS 5/2) (from Ch. 17, par. 302)
17        Sec. 2.  General definitions.  In this  Act,  unless  the
18    context  otherwise  requires, the following words and phrases
19    shall have the following meanings:
20        "Accommodation party" shall have the meaning ascribed  to
21    that term in Section 3-419 of the Uniform Commercial Code.
22        "Action"  in  the sense of a judicial proceeding includes
23    recoupments, counterclaims, set-off, and any other proceeding
24    in which rights are determined.
25        "Affiliate facility" of  a  bank  means  a  main  banking
26    premises  or  branch of another commonly owned bank. The main
27    banking premises or any branch of a bank may be an "affiliate
28    facility" with respect to one or more  other  commonly  owned
29    banks.
30        "Appropriate  federal  banking  agency" means the Federal
31    Deposit Insurance Corporation, the Federal  Reserve  Bank  of
32    Chicago,  or  the  Federal  Reserve  Bank  of  St.  Louis, as
 
                            -30-     LRB093 10148 BDD 16603 a
 1    determined by federal law.
 2        "Bank" means any person doing a banking business  whether
 3    subject to the laws of this or any other jurisdiction.
 4        A  "banking  house",  "branch",  "branch bank" or "branch
 5    office" shall mean any place of business of a bank  at  which
 6    deposits  are received, checks paid, or loans made, but shall
 7    not include any place at which only records thereof are made,
 8    posted, or kept.  A place of business at which  deposits  are
 9    received,  checks  paid, or loans made shall not be deemed to
10    be a branch, branch bank, or branch office if  the  place  of
11    business  is  adjacent to and connected with the main banking
12    premises, or  if  it  is  separated  from  the  main  banking
13    premises  by not more than an alley; provided always that (i)
14    if the place of business is separated by an  alley  from  the
15    main  banking  premises there is a connection between the two
16    by public or private  way  or  by  subterranean  or  overhead
17    passage,  and  (ii) if the place of business is in a building
18    not wholly occupied by the bank, the place of business  shall
19    not  be within any office or room in which any other business
20    or service of any kind or nature other than the  business  of
21    the  bank  is conducted or carried on. A place of business at
22    which deposits are received, checks paid, or loans made shall
23    not be deemed to be a branch, branch bank, or  branch  office
24    (i)  of  any  bank if the place is a terminal established and
25    maintained in accordance with paragraph (17) of Section 5  of
26    this  Act,  or  (ii)  of  a  commonly owned bank by virtue of
27    transactions conducted at that place on behalf of  the  other
28    commonly owned bank under paragraph (23) of Section 5 of this
29    Act if the place is an affiliate facility with respect to the
30    other bank.
31        "Branch   of   an   out-of-state  bank"  means  a  branch
32    established or maintained in Illinois by an out-of-state bank
33    as a result of a merger between  an  Illinois  bank  and  the
34    out-of-state  bank  that  occurs on or after May 31, 1997, or
 
                            -31-     LRB093 10148 BDD 16603 a
 1    any branch established by the out-of-state bank following the
 2    merger.
 3        "Bylaws" means the bylaws of a bank that are  adopted  by
 4    the  bank's  board  of  directors  or  shareholders  for  the
 5    regulation  and management of the bank's affairs. If the bank
 6    operates as a limited liability  company,  however,  "bylaws"
 7    means the operating agreement of the bank.
 8        "Call  report  fee"  means  the  fee  to  be  paid to the
 9    Commissioner by each State bank pursuant to paragraph (a)  of
10    subsection (3) of Section 48 of this Act.
11        "Capital"  includes  the aggregate of outstanding capital
12    stock and preferred stock.
13        "Cash flow reserve account" means the account within  the
14    books  and  records  of  the  Commissioner  of Banks and Real
15    Estate  used  to  record  funds  designated  to  maintain   a
16    reasonable  Bank  and Trust Company Fund operating balance to
17    meet agency obligations on a timely basis.
18        "Charter"  includes  the   original   charter   and   all
19    amendments thereto and articles of merger or consolidation.
20        "Commissioner"  means  the Commissioner of Banks and Real
21    Estate or a person authorized by the Commissioner, the Office
22    of Banks and Real Estate Act, or  this  Act  to  act  in  the
23    Commissioner's stead.
24        "Commonly  owned  banks"  means 2 or more banks that each
25    qualify as a bank subsidiary of the same bank holding company
26    pursuant to Section 18 of the Federal Deposit Insurance  Act;
27    "commonly  owned  bank"  refers to one of a group of commonly
28    owned banks but only with respect to one or more of the other
29    banks in the same group.
30        "Community" means a city, village, or  incorporated  town
31    and also includes the area served by the banking offices of a
32    bank,  but  need not be limited or expanded to conform to the
33    geographic boundaries of units of local government.
34        "Company" means a corporation, limited liability company,
 
                            -32-     LRB093 10148 BDD 16603 a
 1    partnership,  business   trust,   association,   or   similar
 2    organization  and,  unless  specifically excluded, includes a
 3    "State bank" and a "bank".
 4        "Consolidating bank" means a party to a consolidation.
 5        "Consolidation" takes place when 2 or more  banks,  or  a
 6    trust  company  and  a bank, are extinguished and by the same
 7    process a new bank is created, taking  over  the  assets  and
 8    assuming  the  liabilities  of  the  banks  or  trust company
 9    passing out of existence.
10        "Continuing bank" means a merging bank,  the  charter  of
11    which becomes the charter of the resulting bank.
12        "Converting bank" means a State bank converting to become
13    a  national  bank,  or a national bank converting to become a
14    State bank.
15        "Converting  trust  company"  means   a   trust   company
16    converting to become a State bank.
17        "Court" means a court of competent jurisdiction.
18        "Director"  means a member of the board of directors of a
19    bank. In the case  of  a  manager-managed  limited  liability
20    company, however, "director" means a manager of the bank and,
21    in  the  case  of a member-managed limited liability company,
22    "director" means a member of the bank.  The  term  "director"
23    does  not  include  an  advisory director, honorary director,
24    director emeritus, or similar person, unless  the  person  is
25    otherwise  performing  functions similar to those of a member
26    of the board of directors.
27        "Eligible  depository  institution"  means   an   insured
28    savings  association  that  is in default, an insured savings
29    association that is in danger of default, a State or national
30    bank that is in default or a State or national bank  that  is
31    in  danger  of  default,  as  those terms are defined in this
32    Section, or a new bank as that term defined in Section  11(m)
33    of the Federal Deposit Insurance Act or a bridge bank as that
34    term  is  defined  in  Section  11(n)  of the Federal Deposit
 
                            -33-     LRB093 10148 BDD 16603 a
 1    Insurance Act or a new federal savings association authorized
 2    under Section 11(d)(2)(f) of the  Federal  Deposit  Insurance
 3    Act.
 4        "Fiduciary"     means     trustee,    agent,    executor,
 5    administrator, committee, guardian  for  a  minor  or  for  a
 6    person   under   legal   disability,   receiver,  trustee  in
 7    bankruptcy, assignee for creditors, or any holder of  similar
 8    position of trust.
 9        "Financial  institution"  means  a bank, savings and loan
10    association, credit union, or any licensee under the Consumer
11    Installment Loan Act or the Sales Finance Agency Act and, for
12    purposes of Section  48.3,  any  proprietary  network,  funds
13    transfer  corporation,  or  other entity providing electronic
14    funds transfer services,  or  any  corporate  fiduciary,  its
15    subsidiaries,  affiliates,  parent  company,  or  contractual
16    service provider that is examined by the Commissioner.
17        "Foundation" means the Illinois Bank Examiners' Education
18    Foundation.
19        "General  obligation"  means  a  bond,  note,  debenture,
20    security, or other instrument evidencing an obligation of the
21    government entity that is the issuer that is supported by the
22    full  available  resources  of  the issuer, the principal and
23    interest of which is payable in whole or in part by taxation.
24        "Guarantee" means an undertaking or promise to answer for
25    payment of another's debt or performance of  another's  duty,
26    liability,  or  obligation  whether  "payment  guaranteed" or
27    "collection guaranteed".
28        "In danger of default" means a State or national bank,  a
29    federally   chartered   insured  savings  association  or  an
30    Illinois state chartered  insured  savings  association  with
31    respect  to which the Commissioner or the appropriate federal
32    banking agency has  advised  the  Federal  Deposit  Insurance
33    Corporation that:
34             (1)  in  the  opinion  of  the  Commissioner  or the
 
                            -34-     LRB093 10148 BDD 16603 a
 1        appropriate federal banking agency,
 2                  (A)  the State  or  national  bank  or  insured
 3             savings association is not likely to be able to meet
 4             the  demands  of  the  State  or  national bank's or
 5             savings  association's  obligations  in  the  normal
 6             course of business; and
 7                  (B)  there is no reasonable prospect  that  the
 8             State   or   national   bank   or   insured  savings
 9             association will be able to meet  those  demands  or
10             pay those obligations without federal assistance; or
11             (2)  in  the  opinion  of  the  Commissioner  or the
12        appropriate federal banking agency,
13                  (A)  the State  or  national  bank  or  insured
14             savings  association  has  incurred  or is likely to
15             incur losses that will deplete all or  substantially
16             all of its capital; and
17                  (B)  there  is  no reasonable prospect that the
18             capital of the State or  national  bank  or  insured
19             savings  association  will  be  replenished  without
20             federal assistance.
21        "In  default"  means, with respect to a State or national
22    bank or an insured savings association, any  adjudication  or
23    other  official  determination  by  any  court  of  competent
24    jurisdiction,   the  Commissioner,  the  appropriate  federal
25    banking agency, or other public authority pursuant to which a
26    conservator, receiver, or other legal custodian is  appointed
27    for   a   State  or  national  bank  or  an  insured  savings
28    association.
29        "Insured savings association" means any  federal  savings
30    association  chartered  under  Section  5 of the federal Home
31    Owners' Loan Act and any State savings association  chartered
32    under  the  Illinois  Savings  and  Loan  Act  of  1985  or a
33    predecessor Illinois  statute,  the  deposits  of  which  are
34    insured  by  the  Federal Deposit Insurance Corporation.  The
 
                            -35-     LRB093 10148 BDD 16603 a
 1    term also includes a  savings  bank  organized  or  operating
 2    under the Savings Bank Act.
 3        "Insured   savings  association  in  recovery"  means  an
 4    insured  savings  association  that  is   not   an   eligible
 5    depository  institution  and  that  does not meet the minimum
 6    capital requirements applicable with respect to  the  insured
 7    savings association.
 8        "Issuer"  means  for  purposes of Section 33 every person
 9    who shall have issued or  proposed  to  issue  any  security;
10    except  that  (1)  with  respect  to certificates of deposit,
11    voting trust certificates, collateral-trust certificates, and
12    certificates of  interest  or  shares  in  an  unincorporated
13    investment  trust not having a board of directors (or persons
14    performing similar functions), "issuer" means the  person  or
15    persons  performing  the  acts  and  assuming  the  duties of
16    depositor or manager pursuant to the provisions of the trust,
17    agreement, or  instrument  under  which  the  securities  are
18    issued; (2) with respect to trusts other than those specified
19    in  clause  (1)  above,  where  the  trustee is a corporation
20    authorized to accept and execute trusts, "issuer"  means  the
21    entrusters,  depositors,  or  creators  of  the trust and any
22    manager or committee charged with the  general  direction  of
23    the  affairs  of  the trust pursuant to the provisions of the
24    agreement or instrument creating  the  trust;  and  (3)  with
25    respect  to  equipment trust certificates or like securities,
26    "issuer" means the person to whom the equipment  or  property
27    is or is to be leased or conditionally sold.
28        "Letter of credit" and "customer" shall have the meanings
29    ascribed  to  those  terms  in  Section  5-102 of the Uniform
30    Commercial Code.
31        "Main  banking  premises"  means  the  location  that  is
32    designated in a bank's charter as its main office.
33        "Maker or obligor" means for purposes of Section  33  the
34    issuer  of  a  security, the promisor in a debenture or other
 
                            -36-     LRB093 10148 BDD 16603 a
 1    debt security, or the mortgagor or grantor of a trust deed or
 2    similar conveyance of a security interest in real or personal
 3    property.
 4        "Merged bank" means  a  merging  bank  that  is  not  the
 5    continuing,  resulting,  or surviving bank in a consolidation
 6    or merger.
 7        "Merger" includes consolidation.
 8        "Merging bank" means a party to a bank merger.
 9        "Merging trust company" means a trust company party to  a
10    merger with a State bank.
11        "Mid-tier  bank holding company" means a corporation that
12    (a) owns 100% of the issued and outstanding  shares  of  each
13    class   of   stock   of  a  State  bank,  (b)  has  no  other
14    subsidiaries, and (c) 100%  of  the  issued  and  outstanding
15    shares  of the corporation are owned by a parent bank holding
16    company.
17        "Municipality"   means   any   municipality,    political
18    subdivision, school district, taxing district, or agency.
19        "National  bank"  means  a  national  banking association
20    located in this  State  and  after  May  31,  1997,  means  a
21    national banking association without regard to its location.
22        "Out-of-state bank" means a bank chartered under the laws
23    of  a  state  other  than Illinois, a territory of the United
24    States, or the District of Columbia.
25        "Parent bank holding company" means a corporation that is
26    a bank holding  company  as  that  term  is  defined  in  the
27    Illinois  Bank  Holding  Company Act of 1957 and owns 100% of
28    the issued and outstanding shares of a mid-tier bank  holding
29    company.
30        "Person"   means   an  individual,  corporation,  limited
31    liability company, partnership, joint venture, trust, estate,
32    or unincorporated association.
33        "Public agency" means the State of Illinois, the  various
34    counties,   townships,   cities,   towns,   villages,  school
 
                            -37-     LRB093 10148 BDD 16603 a
 1    districts,  educational   service   regions,   special   road
 2    districts,  public  water  supply  districts, fire protection
 3    districts,  drainage  districts,   levee   districts,   sewer
 4    districts,  housing authorities, the Illinois Bank Examiners'
 5    Education Foundation, the  Chicago  Park  District,  and  all
 6    other  political corporations or subdivisions of the State of
 7    Illinois, whether now or hereafter  created,  whether  herein
 8    specifically  mentioned  or  not,  and shall also include any
 9    other state or any political corporation  or  subdivision  of
10    another state.
11        "Public  funds" or "public money" means current operating
12    funds, special funds, interest and sinking funds,  and  funds
13    of  any kind or character belonging to, in the custody of, or
14    subject to the control or regulation of the United States  or
15    a  public  agency.   "Public  funds"  or "public money" shall
16    include funds  held  by  any  of  the  officers,  agents,  or
17    employees  of  the United States or of a public agency in the
18    course of their official duties and, with respect  to  public
19    money  of  the  United  States,  shall include Postal Savings
20    funds.
21        "Published" means, unless the context requires otherwise,
22    the publishing of the notice or  instrument  referred  to  in
23    some  newspaper  of  general  circulation in the community in
24    which the bank is located at  least  once  each  week  for  3
25    successive  weeks.   Publishing shall be accomplished by, and
26    at the expense of,  the  bank  required  to  publish.   Where
27    publishing   is  required,  the  bank  shall  submit  to  the
28    Commissioner  that  evidence  of  the  publication   as   the
29    Commissioner shall deem appropriate.
30        "Qualified   financial   contract"   means  any  security
31    contract, commodity  contract,  forward  contract,  including
32    spot  and  forward  foreign  exchange  contracts,  repurchase
33    agreement,  swap  agreement,  and  any similar agreement, any
34    option to  enter  into  any  such  agreement,  including  any
 
                            -38-     LRB093 10148 BDD 16603 a
 1    combination  of  the  foregoing, and any master agreement for
 2    such  agreements.  A  master  agreement,  together  with  all
 3    supplements  thereto,  shall  be  treated  as  one  qualified
 4    financial contract.   The  contract,  option,  agreement,  or
 5    combination  of  contracts,  options,  or agreements shall be
 6    reflected upon the books, accounts, or records of  the  bank,
 7    or a party to the contract shall provide documentary evidence
 8    of such agreement.
 9        "Recorded" means the filing or recording of the notice or
10    instrument  referred  to in the office of the Recorder of the
11    county wherein the bank is located.
12        "Resulting bank" means the bank resulting from  a  merger
13    or conversion.
14        "Securities"  means  stocks, bonds, debentures, notes, or
15    other similar obligations.
16        "Stand-by letter of credit"  means  a  letter  of  credit
17    under  which  drafts  are  payable  upon  the  condition  the
18    customer  has  defaulted in performance of a duty, liability,
19    or obligation.
20        "State bank" means any banking  corporation  that  has  a
21    banking charter issued by the Commissioner under this Act.
22        "State  Banking  Board"  means the State Banking Board of
23    Illinois.
24        "Subsidiary" with respect to a specified company means  a
25    company  that  is  controlled  by the specified company.  For
26    purposes of paragraphs (8) and (12) of Section 5 of this Act,
27    "control" means the exercise  of  operational  or  managerial
28    control  of  a  corporation  by  the  bank,  either  alone or
29    together with other affiliates of the bank.
30        "Surplus" means the aggregate  of  (i)  amounts  paid  in
31    excess of the par value of capital stock and preferred stock;
32    (ii)  amounts  contributed  other  than for capital stock and
33    preferred stock and allocated to  the  surplus  account;  and
34    (iii) amounts transferred from undivided profits.
 
                            -39-     LRB093 10148 BDD 16603 a
 1        "Tier  1  Capital" and "Tier 2 Capital" have the meanings
 2    assigned to those terms in regulations  promulgated  for  the
 3    appropriate  federal banking agency of a state bank, as those
 4    regulations are now or hereafter amended.
 5        "Trust company" means  a  limited  liability  company  or
 6    corporation  incorporated  in  this  State for the purpose of
 7    accepting and executing trusts.
 8        "Undivided profits"  means  undistributed  earnings  less
 9    discretionary transfers to surplus.
10        "Unimpaired  capital  and  unimpaired  surplus",  for the
11    purposes of paragraph (21) of Section 5 and Sections 32,  33,
12    34, 35.1, 35.2, and 47 of this Act means the sum of the state
13    bank's  Tier  1  Capital  and  Tier 2 Capital plus such other
14    shareholder equity as may be included by  regulation  of  the
15    Commissioner.   Unimpaired  capital  and  unimpaired  surplus
16    shall  be  calculated  on  the  basis of the date of the last
17    quarterly call report filed with the  Commissioner  preceding
18    the  date  of  the  transaction  for which the calculation is
19    made, provided that: (i) when a material event  occurs  after
20    the  date  of  the  last quarterly call report filed with the
21    Commissioner that reduces or increases the bank's  unimpaired
22    capital  and  unimpaired  surplus  by  10%  or more, then the
23    unimpaired capital and unimpaired surplus shall be calculated
24    from the  date  of  the  material  event  for  a  transaction
25    conducted  after  the date of the material event; and (ii) if
26    the Commissioner determines for safety and soundness  reasons
27    that  a  state  bank  should calculate unimpaired capital and
28    unimpaired surplus more  frequently  than  provided  by  this
29    paragraph,  the Commissioner may by written notice direct the
30    bank to calculate unimpaired capital and  unimpaired  surplus
31    at  a  more  frequent  interval.  In the case of a state bank
32    newly chartered under Section 13 or a  state  bank  resulting
33    from a merger, consolidation, or conversion under Sections 21
34    through  26  for which no preceding quarterly call report has
 
                            -40-     LRB093 10148 BDD 16603 a
 1    been filed with  the  Commissioner,  unimpaired  capital  and
 2    unimpaired surplus shall be calculated for the first calendar
 3    quarter  on  the  basis of the effective date of the charter,
 4    merger, consolidation, or conversion.
 5    (Source: P.A. 92-483, eff. 8-23-01.)

 6        (205 ILCS 5/5) (from Ch. 17, par. 311)
 7        Sec. 5.  General  corporate  powers.   A  bank  organized
 8    under  this  Act  or subject hereto shall be a body corporate
 9    and politic and shall, without specific  mention  thereof  in
10    the  charter,  have  all the powers conferred by this Act and
11    the following additional general corporate powers:
12        (1)  To sue and be sued,  complain,  and  defend  in  its
13    corporate name.
14        (2)  To  have  a  corporate seal, which may be altered at
15    pleasure, and to use the same by causing it  or  a  facsimile
16    thereof   to  be  impressed  or  affixed  or  in  any  manner
17    reproduced, provided that the affixing of a corporate seal to
18    an instrument shall not give the instrument additional  force
19    or effect, or change the construction thereof, and the use of
20    a corporate seal is not mandatory.
21        (3)  To  make,  alter,  amend,  and  repeal  bylaws,  not
22    inconsistent   with   its   charter  or  with  law,  for  the
23    administration of the affairs of the bank. If this  Act  does
24    not   provide  specific  guidance  in  matters  of  corporate
25    governance, the provisions of the Business Corporation Act of
26    1983 may be used if so provided in the  bylaws,  and  if  the
27    bank  is  a  limited liability company, the provisions of the
28    Limited Liability Company Act shall be used.
29        (4)  To elect or appoint and remove officers  and  agents
30    of   the   bank   and  define  their  duties  and  fix  their
31    compensation.
32        (5)  To  adopt  and  operate  reasonable   bonus   plans,
33    profit-sharing  plans, stock-bonus plans, stock-option plans,
 
                            -41-     LRB093 10148 BDD 16603 a
 1    pension plans and similar incentive plans for its  directors,
 2    officers and employees.
 3        (5.1)  To  manage,  operate and administer a fund for the
 4    investment of funds by a public agency or agencies, including
 5    any unit of local  government  or  school  district,  or  any
 6    person.   The  fund  for  a public agency shall invest in the
 7    same  type  of  investments  and  be  subject  to  the   same
 8    limitations provided for the investment of public funds.  The
 9    fund  for  public  agencies  shall maintain a separate ledger
10    showing the amount of investment for each  public  agency  in
11    the  fund. "Public funds" and "public agency" as used in this
12    Section shall have the meanings ascribed to them in Section 1
13    of the Public Funds Investment Act.
14        (6)  To make reasonable donations for the public  welfare
15    or  for  charitable,  scientific,  religious  or  educational
16    purposes.
17        (7)  To  borrow or incur an obligation; and to pledge its
18    assets:
19             (a)  to secure its borrowings, its lease of personal
20        or real property or its other nondeposit obligations;
21             (b)  to enable it to act as agent for  the  sale  of
22        obligations of the United States;
23             (c)  to  secure  deposits  of  public  money  of the
24        United States, whenever  required  by  the  laws  of  the
25        United   States,  including  without  being  limited  to,
26        revenues and funds the deposit of which is subject to the
27        control or regulation of the United States or any of  its
28        officers, agents, or employees and Postal Savings funds;
29             (d)  to secure deposits of public money of any state
30        or  of  any  political corporation or subdivision thereof
31        including, without being limited to, revenues  and  funds
32        the  deposit  of  which  is  subject  to  the  control or
33        regulation of any state or of any  political  corporation
34        or  subdivisions  thereof  or  of  any of their officers,
 
                            -42-     LRB093 10148 BDD 16603 a
 1        agents, or employees;
 2             (e)  to secure deposits of money  whenever  required
 3        by the National Bankruptcy Act;
 4             (f)  (blank); and
 5             (g)  to  secure  trust  funds  commingled  with  the
 6        bank's  funds,  whether  deposited  by  the  bank  or  an
 7        affiliate  of  the  bank,  pursuant to Section 2-8 of the
 8        Corporate Fiduciary Act.
 9        (8)  To own, possess, and carry as assets all or part  of
10    the  real estate necessary in or with which to do its banking
11    business, either directly or indirectly through the ownership
12    of all or part of the capital stock, shares or  interests  in
13    any  corporation,  association,  trust engaged in holding any
14    part or parts or all of the bank premises,  engaged  in  such
15    business  and  in  conducting  a safe deposit business in the
16    premises or part of them, or engaged in any activity that the
17    bank is permitted to conduct  in  a  subsidiary  pursuant  to
18    paragraph (12) of this Section 5.
19        (9)  To  own,  possess,  and  carry  as assets other real
20    estate to which it may obtain title in the collection of  its
21    debts  or  that  was  formerly  used  as  a  part of the bank
22    premises, but title to  any  real  estate  except  as  herein
23    permitted  shall not be retained by the bank, either directly
24    or by or through a subsidiary,  as  permitted  by  subsection
25    (12) of this Section for a total period of more than 10 years
26    after acquiring title, either directly or indirectly.
27        (10)  To  do any act, including the acquisition of stock,
28    necessary to  obtain  insurance  of  its  deposits,  or  part
29    thereof, and any act necessary to obtain a guaranty, in whole
30    or  in part, of any of its loans or investments by the United
31    States or any agency thereof, and any act necessary  to  sell
32    or  otherwise  dispose  of any of its loans or investments to
33    the United States or any agency thereof, and to  acquire  and
34    hold membership in the Federal Reserve System.
 
                            -43-     LRB093 10148 BDD 16603 a
 1        (11)  Notwithstanding any other provisions of this Act or
 2    any  other  law, to do any act and to own, possess, and carry
 3    as assets property of the character, including stock, that is
 4    at the time authorized or permitted to national banks  by  an
 5    Act  of  Congress, but subject always to the same limitations
 6    and restrictions as are applicable to national banks  by  the
 7    pertinent federal law and subject to applicable provisions of
 8    the Financial Institutions Insurance Sales Law.
 9        (12)  To  own,  possess, and carry as assets stock of one
10    or more corporations that is, or are, engaged in one or  more
11    of the following businesses:
12             (a)  holding   title  to  and  administering  assets
13        acquired as a result of the collection or liquidating  of
14        loans, investments, or discounts; or
15             (b)  holding  title  to  and  administering personal
16        property acquired by the  bank,  directly  or  indirectly
17        through  a  subsidiary,  for  the  purpose  of leasing to
18        others, provided the lease or leases and  the  investment
19        of  the  bank,  directly or through a subsidiary, in that
20        personal property otherwise comply with Section  35.1  of
21        this Act; or
22             (c)  carrying   on   or  administering  any  of  the
23        activities excepting  the  receipt  of  deposits  or  the
24        payment  of  checks  or  other  orders for the payment of
25        money in which a bank  may  engage  in  carrying  on  its
26        general banking business; provided, however, that nothing
27        contained in this paragraph (c) shall be deemed to permit
28        a  bank organized under this Act or subject hereto to do,
29        either directly or indirectly through any subsidiary, any
30        act, including the making of any loan or  investment,  or
31        to  own, possess, or carry as assets any property that if
32        done by or owned, possessed, or carried by the State bank
33        would be in violation of or prohibited by  any  provision
34        of this Act.
 
                            -44-     LRB093 10148 BDD 16603 a
 1        The provisions of this subsection (12) shall not apply to
 2    and  shall  not be deemed to limit the powers of a State bank
 3    with respect to the ownership, possession,  and  carrying  of
 4    stock  that  a  State  bank  is permitted to own, possess, or
 5    carry under this Act.
 6        Any bank intending to establish a subsidiary  under  this
 7    subsection (12) shall give written notice to the Commissioner
 8    60  days prior to the subsidiary's commencing of business or,
 9    as the case may be, prior to acquiring stock in a corporation
10    that has already commenced  business.   After  receiving  the
11    notice,  the  Commissioner may waive or reduce the balance of
12    the 60 day notice period.  The Commissioner may  specify  the
13    form  of  the notice and may promulgate rules and regulations
14    to administer this subsection (12).
15        (13)  To  accept  for  payment  at  a  future  date   not
16    exceeding  one year from the date of acceptance, drafts drawn
17    upon it by its customers; and to issue,  advise,  or  confirm
18    letters  of  credit  authorizing  the holders thereof to draw
19    drafts upon it or its correspondents.
20        (14)  To own and lease personal property acquired by  the
21    bank  at  the  request  of  a prospective lessee and upon the
22    agreement of that  person  to  lease  the  personal  property
23    provided  that the lease, the agreement with respect thereto,
24    and the amount of the investment of the bank in the  property
25    comply with Section 35.1 of this Act.
26        (15) (a)  To  establish  and maintain, in addition to the
27        main banking  premises,  branches  offering  any  banking
28        services  permitted  at  the  main  banking premises of a
29        State bank.
30             (b)  To establish and maintain, after May 31,  1997,
31        branches  in  another state that may conduct any activity
32        in that state that is authorized  or  permitted  for  any
33        bank  that  has  a  banking charter issued by that state,
34        subject to the same limitations and restrictions that are
 
                            -45-     LRB093 10148 BDD 16603 a
 1        applicable to banks chartered by that state.
 2        (16)  (Blank).
 3        (17)  To establish and maintain terminals, as  authorized
 4    by the Electronic Fund Transfer Act.
 5        (18)  To  establish and maintain temporary service booths
 6    at any  International  Fair  held  in  this  State  which  is
 7    approved by the United States Department of Commerce, for the
 8    duration  of  the  international fair for the sole purpose of
 9    providing a convenient place for foreign trade  customers  at
10    the  fair  to  exchange  their  home countries' currency into
11    United States currency or the converse. This power shall  not
12    be  construed  as  establishing  a  new  place  or  change of
13    location for the bank providing the service booth.
14        (19)  To indemnify its  officers,  directors,  employees,
15    and agents, as authorized for corporations under Section 8.75
16    of the Business Corporation Act of 1983.
17        (20)  To  own,  possess, and carry as assets stock of, or
18    be or become a member of, any  corporation,  mutual  company,
19    association,  trust,  or  other entity formed exclusively for
20    the purpose of providing directors' and  officers'  liability
21    and bankers' blanket bond insurance or reinsurance to and for
22    the  benefit  of the stockholders, members, or beneficiaries,
23    or their assets or businesses, or their officers,  directors,
24    employees,  or  agents,  and not to or for the benefit of any
25    other person or entity or the public generally.
26        (21)  To make debt or equity investments in  corporations
27    or  projects,  whether for profit or not for profit, designed
28    to promote the development of the community and its  welfare,
29    provided  that  the  aggregate  investment  in  all  of these
30    corporations and in all of these projects does not exceed 10%
31    of the unimpaired capital and unimpaired surplus of the  bank
32    and   provided  that  this  limitation  shall  not  apply  to
33    creditworthy loans by  the  bank  to  those  corporations  or
34    projects.   Upon  written  application to the Commissioner, a
 
                            -46-     LRB093 10148 BDD 16603 a
 1    bank may make an investment that would, when aggregated  with
 2    all  other  such  investments,  exceed  10% of the unimpaired
 3    capital and unimpaired surplus of the bank. The  Commissioner
 4    may  approve the investment if he is of the opinion and finds
 5    that the proposed investment will not have a material adverse
 6    effect on the safety and soundness of the bank.
 7        (22)  To own, possess, and carry as assets the stock of a
 8    corporation engaged in the ownership or operation of a travel
 9    agency or to operate  a  travel  agency  as  a  part  of  its
10    business.
11        (23)  With respect to affiliate facilities:
12             (a)  to  conduct  at affiliate facilities for and on
13        behalf of another commonly owned bank, if  so  authorized
14        by  the  other bank, all transactions that the other bank
15        is authorized or permitted to perform; and
16             (b)  to authorize a commonly owned bank  to  conduct
17        for  and  on  behalf  of it any of the transactions it is
18        authorized  or  permitted  to  perform  at  one  or  more
19        affiliate facilities.
20        Any bank intending to conduct or to authorize a  commonly
21    owned  bank  to  conduct  at an affiliate facility any of the
22    transactions specified in  this  paragraph  (23)  shall  give
23    written  notice  to  the Commissioner at least 30 days before
24    any such transaction is conducted at the affiliate facility.
25        (24)  To act as the agent for any fire,  life,  or  other
26    insurance  company  authorized  by  the State of Illinois, by
27    soliciting and selling insurance and collecting  premiums  on
28    policies  issued by such company; and to receive for services
29    so rendered such fees or commissions as may  be  agreed  upon
30    between  the  bank and the insurance company for which it may
31    act as agent; provided, however, that no such bank  shall  in
32    any  case  assume  or guarantee the payment of any premium on
33    insurance  policies  issued  through  its   agency   by   its
34    principal;  and  provided  further,  that  the bank shall not
 
                            -47-     LRB093 10148 BDD 16603 a
 1    guarantee the truth of any statement made by  an  assured  in
 2    filing his application for insurance.
 3        (25)  Notwithstanding any other provisions of this Act or
 4    any other law, to offer any product or service that is at the
 5    time   authorized   or   permitted  to  any  insured  savings
 6    association or out-of-state bank by applicable law,  provided
 7    that powers conferred only by this subsection (25):
 8             (a)  shall always be subject to the same limitations
 9        and  restrictions  that  are  applicable  to  the insured
10        savings association or out-of-state bank for the  product
11        or service by such applicable law;
12             (b)  shall  be  subject  to applicable provisions of
13        the Financial Institutions Insurance Sales Law;
14             (c)  shall not include the right to own or conduct a
15        real estate brokerage business for which a license  would
16        be required under the laws of this State; and
17             (d)  shall   not   be   construed   to  include  the
18        establishment or maintenance of a branch, nor shall  they
19        be construed to limit the establishment or maintenance of
20        a branch pursuant to subsection (11).
21        Not  less  than  30  days before engaging in any activity
22    under the authority of this subsection, a bank shall  provide
23    written notice to the Commissioner of its intent to engage in
24    the activity.  The notice shall indicate the specific federal
25    or  state  law,  rule, regulation, or interpretation the bank
26    intends to use as authority to engage in the activity.
27    (Source: P.A. 91-330, eff.  7-29-99;  91-849,  eff.  6-22-00;
28    92-483, eff. 8-23-01; 92-811, eff. 8-21-02.)

29        (205 ILCS 5/13.6 new)
30        Sec. 13.6. Banks as limited liability companies.
31        (a)  A  bank  may  be  organized  as  a limited liability
32    company, may convert to a limited liability company,  or  may
33    merge  with  and  into  a limited liability company under the
 
                            -48-     LRB093 10148 BDD 16603 a
 1    applicable laws of this  State  and  of  the  United  States,
 2    including  any rules promulgated thereunder. A bank organized
 3    as a limited  liability  company  shall  be  subject  to  the
 4    provisions  of  the Limited Liability Company Act in addition
 5    to this Act, provided that if  a  provision  of  the  Limited
 6    Liability  Company Act conflicts with a provision of this Act
 7    or with any rule of the Commissioner, the provision  of  this
 8    Act or the rule of the Commissioner shall apply.
 9        (b)  Any  filing  required  to  be made under the Limited
10    Liability Company Act shall  be  made  exclusively  with  the
11    Commissioner,   and   the   Commissioner  shall  possess  the
12    exclusive authority to regulate the bank as provided in  this
13    Act.
14        (c)  Any  organization as, conversion to, and merger with
15    or into a limited liability company shall be subject  to  the
16    prior approval of the Commissioner.
17        (d)  A  bank that is a limited liability company shall be
18    subject to all of the provisions of  this  Act  in  the  same
19    manner as a bank that is organized in stock form.
20        (e)  The Commissioner may promulgate rules to ensure that
21    a bank that is a limited liability company (i)  is  operating
22    in  a  safe  and  sound  manner  and  (ii)  is subject to the
23    Commissioner's authority in the same manner as a bank that is
24    organized in stock form.

25        (205 ILCS 5/17) (from Ch. 17, par. 324)
26        Sec. 17.  Changes in charter.
27        (a)  By compliance with the  provisions  of  this  Act  a
28    State bank may:
29             (1)  (blank);
30             (2)  increase, decrease or change its capital stock,
31        whether  issued  or  unissued,  provided  that in no case
32        shall the capital be diminished to the prejudice  of  its
33        creditors;
 
                            -49-     LRB093 10148 BDD 16603 a
 1             (3)  provide  for  authorized  but  unissued capital
 2        stock reserved for  issuance  for  one  or  more  of  the
 3        purposes  provided  for  in  subsection (5) of Section 14
 4        hereof;
 5             (4)  authorize   preferred   stock,   or   increase,
 6        decrease  or  change  the  preferences,   qualifications,
 7        limitations,  restrictions  or special or relative rights
 8        of its preferred stock, whether issued  or  unissued,  or
 9        delegate  authority to its board of directors as provided
10        in subsection (d), provided that in  no  case  shall  the
11        capital be diminished to the prejudice of its creditors;
12             (5)  increase,  decrease  or change the par value of
13        its shares of  its  capital  stock  or  preferred  stock,
14        whether  issued or unissued, or delegate authority to its
15        board of directors as provided in subsection (d);
16             (6)  (blank);
17             (7)  eliminate cumulative voting rights under all or
18        specified  circumstances,  or  eliminate  voting   rights
19        entirely,  as  to any class or classes or series of stock
20        of the bank pursuant to  paragraph  (3)  of  Section  15,
21        provided that one class of shares or series thereof shall
22        always have voting in respect to all matters in the bank,
23        and  provided further that the proposal to eliminate such
24        voting rights receives the approval of the holders of 70%
25        of the outstanding shares of stock entitled  to  vote  as
26        provided  in  paragraph  (7)  of  subsection  (b) of this
27        Section 17;
28             (8)  increase, decrease, or change its capital stock
29        or preferred stock, whether issued or unissued,  for  the
30        purpose  of eliminating fractional shares or avoiding the
31        issuance of fractional shares, provided that in  no  case
32        shall  the  capital be diminished to the prejudice of its
33        creditors; or
34             (9)  make such other change in its charter as may be
 
                            -50-     LRB093 10148 BDD 16603 a
 1        authorized in this Act.
 2        (b)  To effect a change or  changes  in  a  State  bank's
 3    charter as provided for in this Section 17:
 4             (1)  The board of directors shall adopt a resolution
 5        setting  forth  the proposed amendment and directing that
 6        it be submitted to a vote at a meeting  of  stockholders,
 7        which may be either an annual or special meeting.
 8             (2)  If the meeting is a special meeting, written or
 9        printed  notice  setting  forth the proposed amendment or
10        summary thereof shall be given  to  each  stockholder  of
11        record  entitled to vote at such meeting at least 30 days
12        before such meeting and in the manner  provided  in  this
13        Act for the giving of notice of meetings of stockholders.
14             (3)  At   such   special  meeting,  a  vote  of  the
15        stockholders entitled to  vote  shall  be  taken  on  the
16        proposed  amendment.  Except as provided in paragraph (7)
17        of this subsection (b), the proposed amendment  shall  be
18        adopted  upon  receiving  the  affirmative  vote  of  the
19        holders  of at least two-thirds of the outstanding shares
20        of stock entitled to vote at such meeting, unless holders
21        of preferred stock are entitled to vote  as  a  class  in
22        respect  thereof,  in  which event the proposed amendment
23        shall be adopted upon receiving the affirmative  vote  of
24        the  holders  of  at  least two-thirds of the outstanding
25        shares of each class of shares  entitled  to  vote  as  a
26        class  in  respect  thereof  and of the total outstanding
27        shares entitled to vote at such meeting.  Any  number  of
28        amendments may be submitted to the stockholders and voted
29        upon  by  them  at  one  meeting.   A  certificate of the
30        amendment, or amendments, verified by the president, or a
31        vice-president,  or   the   cashier,   shall   be   filed
32        immediately in the office of the Commissioner.
33             (4)  At  any  annual meeting without a resolution of
34        the board of directors and without  a  notice  and  prior
 
                            -51-     LRB093 10148 BDD 16603 a
 1        publication, as hereinabove provided, a proposition for a
 2        change  in  the  bank's  charter  as provided for in this
 3        Section 17 may be submitted to a vote of the stockholders
 4        entitled to vote at the annual meeting,  except  that  no
 5        proposition  for  authorized  but  unissued capital stock
 6        reserved for issuance for one or  more  of  the  purposes
 7        provided for in subsection (5) of Section 14 hereof shall
 8        be  submitted  without  complying  with the provisions of
 9        said subsection.  The proposed amendment shall be adopted
10        upon receiving the affirmative vote of the holders of  at
11        least  two-thirds  of  the  outstanding  shares  of stock
12        entitled to vote  at  such  meeting,  unless  holders  of
13        preferred  stock  are  entitled  to  vote  as  a class in
14        respect thereof, in which event  the  proposed  amendment
15        shall  be  adopted upon receiving the affirmative vote of
16        the holders of at least  two-thirds  of  the  outstanding
17        shares  of  each  class  of  shares entitled to vote as a
18        class in respect thereof and the total outstanding shares
19        entitled to vote at such meeting.  A certificate  of  the
20        amendment, or amendments, verified by the president, or a
21        vice-president  or cashier, shall be filed immediately in
22        the office of the Commissioner.
23             (5)  If an amendment or amendments shall be approved
24        in  writing  by  the  Commissioner,  the   amendment   or
25        amendments   so   adopted   and   so  approved  shall  be
26        accomplished  in  accordance  with  the   vote   of   the
27        stockholders.  The Commissioner may impose such terms and
28        conditions on the approval of the amendment or amendments
29        as  he  deems necessary or appropriate.  The Commissioner
30        shall revoke such approval in the event such amendment or
31        amendments are not effected within one year from the date
32        of the issuance of  the  Commissioner's  certificate  and
33        written  approval except for transactions permitted under
34        subsection (5) of Section 14 of this Act.
 
                            -52-     LRB093 10148 BDD 16603 a
 1             (6)  No amendment or amendments shall  affect  suits
 2        in  which  the  bank  is  a  party,  nor affect causes of
 3        action, nor affect rights of persons in  any  particular,
 4        nor shall actions brought against such bank by its former
 5        name be abated by a change of name.
 6             (7)  A  proposal  to  amend the charter to eliminate
 7        cumulative  voting  rights   under   all   or   specified
 8        circumstances, or to eliminate voting rights entirely, as
 9        to  any  class  or  classes or series or stock of a bank,
10        pursuant to paragraph (3) of Section 15 and paragraph (7)
11        of subsection (a) of this Section 17,  shall  be  adopted
12        only  upon  such  proposal  receiving the approval of the
13        holders  of  70%  of  the  outstanding  shares  of  stock
14        entitled to vote at the meeting  where  the  proposal  is
15        presented for approval, unless holders of preferred stock
16        are  entitled  to  vote as a class in respect thereof, in
17        which event the proposed amendment shall be adopted  upon
18        receiving  the  approval  of  the  holders  of 70% of the
19        outstanding shares of each class of  shares  entitled  to
20        vote  as  a  class  in  respect  thereof and of the total
21        outstanding shares entitled to vote at the meeting  where
22        the  proposal is presented for approval.  The proposal to
23        amend the charter pursuant to this paragraph (7)  may  be
24        voted upon at the annual meeting or a special meeting.
25             (8)  Written  or  printed  notice of a stockholders'
26        meeting to vote on a proposal to  increase,  decrease  or
27        change  the  capital stock or preferred stock pursuant to
28        paragraph (8) of subsection (a) of this Section 17 and to
29        eliminate fractional shares  or  avoid  the  issuance  of
30        fractional  shares  shall be given to each stockholder of
31        record entitled to vote at the meeting at least  30  days
32        before the meeting and in the manner provided in this Act
33        for the giving of notice of meetings of stockholders, and
34        shall include all of the following information:
 
                            -53-     LRB093 10148 BDD 16603 a
 1                  (A)  A statement of the purpose of the proposed
 2             reverse stock split.
 3                  (B)  A statement of the amount of consideration
 4             being offered for the bank's stock.
 5                  (C)  A  statement  that  the bank considers the
 6             transaction  fair  to  the   stockholders,   and   a
 7             statement  of  the  material  facts  upon which this
 8             belief is based.
 9                  (D)  A statement that the bank has  secured  an
10             opinion  from  a  third  party  with  respect to the
11             fairness, from a financial point  of  view,  of  the
12             consideration   to   be   paid,   the  identity  and
13             qualifications of the third  party,  how  the  third
14             party  was  selected,  and any material relationship
15             between the third party and the bank.
16                  (E)  A summary of  the  opinion  including  the
17             basis  for  and  the  methods  of  arriving  at  the
18             findings  and  any limitation imposed by the bank in
19             arriving at fair value and a  statement  making  the
20             opinion  available  for  reviewing or copying by any
21             stockholder.
22                  (F)  A statement  that  objecting  stockholders
23             will  be  entitled to the fair value of those shares
24             that are voted against the charter amendment,  if  a
25             proper   demand   is   made  on  the  bank  and  the
26             requirements are  satisfied  as  specified  in  this
27             Section.
28    If a stockholder shall file with the bank, prior to or at the
29    meeting   of  stockholders  at  which  the  proposed  charter
30    amendment is submitted to a vote, a written objection to  the
31    proposed  charter  amendment  and  shall  not  vote  in favor
32    thereof,  and  if  the  stockholder,  within  20  days  after
33    receiving written notice of the date  the  charter  amendment
34    was  accomplished pursuant to paragraph (5) of subsection (a)
 
                            -54-     LRB093 10148 BDD 16603 a
 1    of this Section 17, shall make written demand on the bank for
 2    payment of the fair value of the stockholder's shares  as  of
 3    the  day  prior  to  the  date  on  which  the vote was taken
 4    approving the charter amendment, the bank shall  pay  to  the
 5    stockholder,   upon   surrender   of   the   certificate   or
 6    certificates  representing the stock, the fair value thereof.
 7    The demand shall state the number  of  shares  owned  by  the
 8    objecting stockholder.  The bank shall provide written notice
 9    of  the  date on which the charter amendment was accomplished
10    to all stockholders who  have  filed  written  objections  in
11    order that the objecting stockholders may know when they must
12    file written demand if they choose to do so.  Any stockholder
13    failing  to  make  demand  within  the 20-day period shall be
14    conclusively  presumed  to  have  consented  to  the  charter
15    amendment and shall be bound by the terms thereof.  If within
16    30 days after the date  on  which  a  charter  amendment  was
17    accomplished  the  value of the shares is agreed upon between
18    the objecting stockholders and  the  bank,  payment  therefor
19    shall  be  made  within  90  days after the date on which the
20    charter amendment was accomplished, upon the surrender of the
21    stockholder's certificate or  certificates  representing  the
22    shares.  Upon  payment  of  the  agreed  value  the objecting
23    stockholder shall cease to have any interest in the shares or
24    in  the  bank.   If  within  such  period  of  30  days   the
25    stockholder  and the bank do not so agree, then the objecting
26    stockholder may, within 60 days after the expiration  of  the
27    30-day  period,  file a complaint in the circuit court asking
28    for a finding and determination of  the  fair  value  of  the
29    shares,  and  shall  be entitled to judgment against the bank
30    for the amount of the fair value as of the day prior  to  the
31    date  on  which  the  vote  was  taken  approving the charter
32    amendment with interest thereon to the date of the  judgment.
33    The practice, procedure and judgment shall be governed by the
34    Civil  Practice  Law. The judgment shall be payable only upon
 
                            -55-     LRB093 10148 BDD 16603 a
 1    and simultaneously with the surrender  to  the  bank  of  the
 2    certificate  or  certificates  representing the shares.  Upon
 3    payment of the  judgment,  the  objecting  stockholder  shall
 4    cease  to  have  any interest in the shares or the bank.  The
 5    shares may be held and disposed of by the bank.   Unless  the
 6    objecting  stockholder  shall  file such complaint within the
 7    time herein limited, the stockholder and all persons claiming
 8    under the stockholder shall be conclusively presumed to  have
 9    approved  and  ratified  the  charter amendment, and shall be
10    bound by  the  terms  thereof.  The  right  of  an  objecting
11    stockholder  to  be  paid the fair value of the stockholder's
12    shares of stock as herein provided shall cease  if  and  when
13    the bank shall abandon the charter amendment.
14        (c)  The   purchase  and  holding  and  later  resale  of
15    treasury stock of a state bank pursuant to the provisions  of
16    subsection  (6)  of  Section 14 may be accomplished without a
17    change in its charter reflecting any decrease or increase  in
18    capital stock.
19        (d)  A  State  bank may amend its charter for the purpose
20    of authorizing its board  of  directors  to  issue  preferred
21    stock;  to  increase,  decrease,  or  change the par value of
22    shares of its preferred stock, whether issued or unissued; or
23    to   increase,   decrease,   or   change   the   preferences,
24    qualifications,  limitations,  restrictions,  or  special  or
25    relative rights of its preferred  stock,  whether  issued  or
26    unissued;  provided  that  in  no  case  shall the capital be
27    diminished to the  prejudice  of  the  bank's  creditors.  An
28    amendment to the bank's charter granting such authority shall
29    establish  ranges,  limits,  or  restrictions  that  must  be
30    observed  when  the board exercises the discretion authorized
31    by the amendment.
32        Once  such  an  amendment  is  adopted  and  approved  as
33    provided in this subsection, and without  further  action  by
34    the bank's stockholders, the board may exercise its delegated
 
                            -56-     LRB093 10148 BDD 16603 a
 1    authority  by  adopting  a  resolution specifying the actions
 2    that it is taking with respect to the  preferred  stock.  The
 3    board  may fully exercise its delegated authority through one
 4    resolution or it may exercise its delegated authority through
 5    a series of resolutions, provided that  the  board's  actions
 6    remain  at  all  times  within  the  ranges, limitations, and
 7    restrictions  specified  in  the  amendment  to  the   bank's
 8    charter.
 9        A  resolution  adopted  by the board under this authority
10    shall be submitted to  the  Commissioner  for  approval.  The
11    Commissioner  shall  approve  the  resolution,  or  state any
12    objections to  the  resolution,  within  30  days  after  the
13    receipt  of  the  resolution  adopted  by  the  board.  If no
14    objections are specified by the Commissioner within that time
15    frame, the resolution will be deemed to be  approved  by  the
16    Commissioner.   Once   approved,   the  resolution  shall  be
17    incorporated as an addendum to the  bank's  charter  and  the
18    board  may  proceed  to  effect  the changes set forth in the
19    resolution.
20    (Source: P.A. 91-322, eff. 1-1-00; 92-483, eff. 8-23-01.)

21        Section 825.  The Savings Bank Act is amended by changing
22    Sections 1007.55 and 1008 and by adding Section  1007.125  as
23    follows:

24        (205 ILCS 205/1007.55) (from Ch. 17, par. 7301-7.55)
25        Sec. 1007.55.  "Director" means any director, trustee, or
26    other person performing similar functions with respect to any
27    organization  whether  incorporated or unincorporated. In the
28    case of a manager-managed limited liability company, however,
29    "director" means a manager of the savings bank,  and  in  the
30    case   of   a   member-managed   limited  liability  company,
31    "director" means a member  of  the  savings  bank.  The  term
32    "director"  does  not  include an advisory director, honorary
 
                            -57-     LRB093 10148 BDD 16603 a
 1    director, director emeritus, or similar  person,  unless  the
 2    person  is otherwise performing functions similar to those of
 3    a director.

 4        (205 ILCS 205/1007.125 new)
 5        Sec. 1007.125.  "Bylaws" means the bylaws  of  a  savings
 6    bank  that  are  adopted  by  the  savings  bank's  board  of
 7    directors  or  shareholders for the regulation and management
 8    of the savings bank's affairs. If the savings  bank  operates
 9    as  a  limited liability company, however, "bylaws" means the
10    operating agreement of the savings bank.
11    (Source: P.A. 86-1213.)

12        (205 ILCS 205/1008) (from Ch. 17, par. 7301-8)
13        Sec. 1008. General corporate powers.
14        (a)  A savings bank operating under this Act shall  be  a
15    body  corporate  and politic and shall have all of the powers
16    conferred by this Act including,  but  not  limited  to,  the
17    following powers:
18             (1)  To sue and be sued, complain, and defend in its
19        corporate  name  and  to have a common seal, which it may
20        alter or renew at pleasure.
21             (2)  To obtain and maintain insurance by  a  deposit
22        insurance corporation as defined in this Act.
23             (3)  To act as a fiscal agent for the United States,
24        the  State of Illinois or any department, branch, arm, or
25        agency of the State or any unit of  local  government  or
26        school  district  in  the State, when duly designated for
27        that  purpose,  and  as  agent  to   perform   reasonable
28        functions as may be required of it.
29             (4)  To   become  a  member  of  or  deal  with  any
30        corporation or agency of the United States or  the  State
31        of  Illinois,  to  the  extent that the agency assists in
32        furthering or facilitating its purposes or powers and  to
 
                            -58-     LRB093 10148 BDD 16603 a
 1        that  end  to  purchase  stock  or  securities thereof or
 2        deposit money therewith, and to  comply  with  any  other
 3        conditions of membership or credit.
 4             (5)  To make donations in reasonable amounts for the
 5        public  welfare or for charitable, scientific, religious,
 6        or educational purposes.
 7             (6)  To  adopt  and  operate  reasonable  insurance,
 8        bonus, profit sharing, and retirement plans for  officers
 9        and  employees  and  for  directors  including,  but  not
10        limited  to,  advisory, honorary, and emeritus directors,
11        who are not officers or employees.
12             (7)  To reject any application  for  membership;  to
13        retire   deposit   accounts  by  enforced  retirement  as
14        provided in this Act and the bylaws;  and  to  limit  the
15        issuance  of,  or payments on, deposit accounts, subject,
16        however, to contractual obligations.
17             (8)  To purchase stock in service  corporations  and
18        to  invest  in  any  form  of indebtedness of any service
19        corporation  as  defined  in   this   Act,   subject   to
20        regulations of the Commissioner.
21             (9)  To   purchase  stock  of  a  corporation  whose
22        principal purpose is to operate a safe deposit company or
23        escrow service company.
24             (10)  To  exercise  all  the  powers  necessary   to
25        qualify  as a trustee or custodian under federal or State
26        law, provided that the authority to  accept  and  execute
27        trusts  is  subject  to  the  provisions of the Corporate
28        Fiduciary Act and to the supervision of those  activities
29        by the Commissioner.
30             (11)  (Blank).
31             (12)  To  establish, maintain, and operate terminals
32        as authorized by the Electronic Fund Transfer Act.
33             (13)  To pledge its assets:
34                  (A)  to enable it to act as agent for the  sale
 
                            -59-     LRB093 10148 BDD 16603 a
 1             of obligations of the United States;
 2                  (B)  to secure deposits;
 3                  (C)  to   secure  deposits  of  money  whenever
 4             required by the National Bankruptcy Act;
 5                  (D)  (blank); and
 6                  (E)  to secure trust funds commingled with  the
 7             savings  bank's  funds,  whether  deposited  by  the
 8             savings bank or an affiliate of the savings bank, as
 9             required   under   Section   2-8  of  the  Corporate
10             Fiduciary Act.
11             (14)  To accept for payment at a future date not  to
12        exceed one year from the date of acceptance, drafts drawn
13        upon  it  by  its  customers;  and  to  issue, advise, or
14        confirm letters of credit authorizing holders thereof  to
15        draw drafts upon it or its correspondents.
16             (15)  Subject    to    the    regulations   of   the
17        Commissioner, to own and lease personal property acquired
18        by the savings bank  at  the  request  of  a  prospective
19        lessee  and,  upon the agreement of that person, to lease
20        the personal property.
21             (16)  To establish temporary service booths  at  any
22        International  Fair in this State that is approved by the
23        United States Department of Commerce for the duration  of
24        the  international  fair  for  the purpose of providing a
25        convenient place for foreign trade customers to  exchange
26        their   home   countries'  currency  into  United  States
27        currency or the converse.  To provide temporary  periodic
28        service  to persons residing in a bona fide nursing home,
29        senior  citizens'  retirement  home,  or  long-term  care
30        facility.   These  powers  shall  not  be  construed   as
31        establishing  a  new  place or change of location for the
32        savings bank providing the service booth.
33             (17)  To   indemnify   its   officers,    directors,
34        employees,  and  agents,  as  authorized for corporations
 
                            -60-     LRB093 10148 BDD 16603 a
 1        under Section 8.75 of the Business  Corporations  Act  of
 2        1983.
 3             (18)  To  provide data processing services to others
 4        on a for-profit basis.
 5             (19)  To  utilize  any  electronic   technology   to
 6        provide customers with home banking services.
 7             (20)  Subject    to    the    regulations   of   the
 8        Commissioner, to enter into an  agreement  to  act  as  a
 9        surety.
10             (21)  Subject    to    the    regulations   of   the
11        Commissioner,  to  issue  credit  cards,  extend   credit
12        therewith,  and  otherwise  engage  in  or participate in
13        credit card operations.
14             (22)  To purchase for  its  own  account  shares  of
15        stock  of  a bankers' bank, described in Section 13(b)(1)
16        of the Illinois  Banking  Act,  on  the  same  terms  and
17        conditions  as  a  bank  may purchase such shares.  In no
18        event shall the total amount of  such  stock  held  by  a
19        savings  bank  in  such  bankers'  bank exceed 10% of its
20        capital and surplus (including undivided profits) and  in
21        no event shall a savings bank acquire more than 5% of any
22        class of voting securities of such bankers' bank.
23             (23)  With respect to affiliate facilities:
24                  (A)  to  conduct at affiliate facilities any of
25             the following transactions for and on behalf of  any
26             affiliated  depository institution, if so authorized
27             by the affiliate or affiliates: receiving  deposits;
28             renewing   deposits;  cashing  and  issuing  checks,
29             drafts, money orders, travelers checks,  or  similar
30             instruments;  changing  money; receiving payments on
31             existing indebtedness;  and  conducting  ministerial
32             functions   with   respect   to  loan  applications,
33             servicing  loans,   and   providing   loan   account
34             information; and
 
                            -61-     LRB093 10148 BDD 16603 a
 1                  (B)  to   authorize  an  affiliated  depository
 2             institution to conduct for and on behalf of it,  any
 3             of the transactions listed in this subsection at one
 4             or more affiliate facilities.
 5             A  savings bank intending to conduct or to authorize
 6        an affiliated depository institution  to  conduct  at  an
 7        affiliate  facility  any of the transactions specified in
 8        this  subsection  shall  give  written  notice   to   the
 9        Commissioner at least 30 days before any such transaction
10        is conducted at an affiliate facility.  All conduct under
11        this  subsection  shall  be on terms consistent with safe
12        and sound banking practices and applicable law.
13             (24)  Subject  to  Article  XLIV  of  the   Illinois
14        Insurance  Code,  to act as the agent for any fire, life,
15        or other insurance company authorized  by  the  State  of
16        Illinois,   by   soliciting  and  selling  insurance  and
17        collecting premiums on policies issued by  such  company;
18        and  may  receive  for  services so rendered such fees or
19        commissions as  may  be  agreed  upon  between  the  said
20        savings  bank  and the insurance company for which it may
21        act as agent; provided, however,  that  no  such  savings
22        bank shall in any case assume or guarantee the payment of
23        any  premium  on  insurance  policies  issued through its
24        agency by its principal; and provided further,  that  the
25        savings  bank  shall  not  guarantee  the  truth  of  any
26        statement  made  by  an assured in filing his application
27        for insurance.
28             (25)  To become a member of the  Federal  Home  Loan
29        Bank  and  to  have  the  powers  granted  to  a  savings
30        association organized under the Illinois Savings and Loan
31        Act  of 1985 or the laws of the United States, subject to
32        regulations of the Commissioner.
33             (26)  To offer any product or service that is at the
34        time authorized or permitted to a bank by applicable law,
 
                            -62-     LRB093 10148 BDD 16603 a
 1        but  subject  always  to   the   same   limitations   and
 2        restrictions  that  are  applicable  to  the bank for the
 3        product or service by such applicable law and subject  to
 4        the  applicable  provisions of the Financial Institutions
 5        Insurance Sales Law and rules of the Commissioner.
 6        (b)  If this Act or the regulations  adopted  under  this
 7    Act fail to provide specific guidance in matters of corporate
 8    governance, the provisions of the Business Corporation Act of
 9    1983  may  be  used,  or  if  the  savings  bank is a limited
10    liability company, the provisions of  the  Limited  Liability
11    Company shall be used.
12        (c)  A  savings  bank  may  be  organized  as  a  limited
13    liability   company,  may  convert  to  a  limited  liability
14    company, or may merge  with  and  into  a  limited  liability
15    company,  under  the applicable laws of this State and of the
16    United States, including any rules promulgated thereunder.  A
17    savings  bank  organized as a limited liability company shall
18    be subject to the provisions of the Limited Liability Company
19    Act in addition to this Act, provided that if a provision  of
20    the  Limited Liability Company Act conflicts with a provision
21    of this Act  or  with  any  rule  of  the  Commissioner,  the
22    provision  of  this Act or the rule of the Commissioner shall
23    apply.
24        Any  filing  required  to  be  made  under  the   Limited
25    Liability  Company  Act  shall  be  made exclusively with the
26    Commissioner,  and  the  Commissioner   shall   possess   the
27    exclusive  authority to regulate the savings bank as provided
28    in this Act.
29        Any organization as, conversion to, and  merger  with  or
30    into  a  limited  liability  company  shall be subject to the
31    prior approval of the Commissioner.
32        A savings bank that is a limited liability company  shall
33    be  subject  to all of the provisions of this Act in the same
34    manner as a savings bank that is organized in stock form.
 
                            -63-     LRB093 10148 BDD 16603 a
 1        The Commissioner may promulgate rules to  ensure  that  a
 2    savings  bank  that  is  a  limited  liability company (i) is
 3    operating in a safe and sound manner and (ii) is  subject  to
 4    the  Commissioner's authority in the same manner as a savings
 5    bank that is organized in stock form.
 6    (Source: P.A.  91-97,  eff.  7-9-99;  91-357,  eff.  7-29-99;
 7    92-483, eff. 8-23-01.)

 8        Section  830.   The  Residential  Mortgage License Act of
 9    1987 is amended by changing Sections 1-4, 2-4, 2-6, 3-2, 3-5,
10    and 4-5 and by adding Sections 4-8.1, 4-8.2, and Article 7 as
11    follows:

12        (205 ILCS 635/1-4) (from Ch. 17, par. 2321-4)
13        Sec. 1-4.  Definitions.
14        (a)  "Residential real  property"  or  "residential  real
15    estate"  shall  mean  real  property  located  in  this State
16    improved by a one-to-four family dwelling used  or  occupied,
17    wholly  or  partly,  as  the home or residence of one or more
18    persons  and  may  refer,  subject  to  regulations  of   the
19    Commissioner,  to  unimproved  real property upon which those
20    kinds dwellings are to be constructed.
21        (b)  "Making a residential mortgage loan" or  "funding  a
22    residential  mortgage  loan"  shall  mean for compensation or
23    gain, either  directly  or  indirectly,  advancing  funds  or
24    making  a commitment to advance funds to a loan applicant for
25    a residential mortgage loan.
26        (c)  "Soliciting, processing, placing, or  negotiating  a
27    residential  mortgage  loan"  shall  mean for compensation or
28    gain, either directly or indirectly, accepting or offering to
29    accept  an  application  for  a  residential  mortgage  loan,
30    assisting or offering to  assist  in  the  processing  of  an
31    application  for  a  residential mortgage loan on behalf of a
32    borrower, or negotiating or offering to negotiate  the  terms
 
                            -64-     LRB093 10148 BDD 16603 a
 1    or conditions of a residential mortgage loan with a lender on
 2    behalf  of  a  borrower  including,  but  not limited to, the
 3    submission of credit packages for the  approval  of  lenders,
 4    the   preparation   of   residential  mortgage  loan  closing
 5    documents, including a closing in the name of a broker.
 6        (d)  "Exempt person or entity" shall mean the following:
 7             (1) (i)  Any banking organization or foreign banking
 8        corporation licensed  by  the  Illinois  Commissioner  of
 9        Banks and Real Estate or the United States Comptroller of
10        the Currency to transact business in this State; (ii) any
11        national  bank,  federally  chartered  savings  and  loan
12        association,  federal savings bank, federal credit union;
13        (iii) any  pension  trust,  bank  trust,  or  bank  trust
14        company;  (iv)  any savings and loan association, savings
15        bank, or credit union organized under the laws of this or
16        any other state; (v) any  Illinois  Consumer  Installment
17        Loan  Act licensee; (vi) any insurance company authorized
18        to transact business in  this  State;  (vii)  any  entity
19        engaged solely in commercial mortgage lending; (viii) any
20        service  corporation of a savings and loan association or
21        savings bank organized under the laws of  this  State  or
22        the  service corporation of a federally chartered savings
23        and loan association or savings bank having its principal
24        place of business in this State,  other  than  a  service
25        corporation licensed or entitled to reciprocity under the
26        Real  Estate  License Act of 2000; or (ix) any first tier
27        subsidiary of a bank, the  charter  of  which  is  issued
28        under   the   Illinois   Banking   Act  by  the  Illinois
29        Commissioner of Banks and Real Estate, or the first  tier
30        subsidiary  of  a  bank  chartered  by  the United States
31        Comptroller of the Currency and that  has  its  principal
32        place  of business in this State, provided that the first
33        tier subsidiary is regularly  examined  by  the  Illinois
34        Commissioner  of Banks and Real Estate or the Comptroller
 
                            -65-     LRB093 10148 BDD 16603 a
 1        of the Currency, or a consumer compliance examination  is
 2        regularly conducted by the Federal Reserve Board.
 3             (1.5)  Any  employee of a person or entity mentioned
 4        in item (1) of this subsection.
 5             (2)  Any person or entity  that  either  (i)  has  a
 6        physical  presence in Illinois or (ii) does not originate
 7        mortgage loans in the ordinary course of business  making
 8        or  acquiring  residential mortgage loans with his or her
 9        or its own funds for his or her  or  its  own  investment
10        without  intent  to make, acquire, or resell more than 10
11        residential mortgage loans in any one calendar year.
12             (3)  Any person employed by a licensee to assist  in
13        the  performance  of the activities regulated by this Act
14        who is compensated in any manner by only one licensee.
15             (4)  Any person licensed pursuant to the Real Estate
16        License Act of 2000, who engages only in  the  taking  of
17        applications  and  credit  and  appraisal  information to
18        forward to a licensee or an exempt entity under this  Act
19        and  who is compensated by either a licensee or an exempt
20        entity under this Act, but is not compensated  by  either
21        the buyer (applicant) or the seller.
22             (5)  Any  individual,  corporation,  partnership, or
23        other  entity  that  originates,  services,  or   brokers
24        residential  mortgage  loans,  as  these  activities  are
25        defined  in  this  Act,  and  who  or  which  receives no
26        compensation  for  those  activities,  subject   to   the
27        Commissioner's  regulations with regard to the nature and
28        amount of compensation.
29             (6)  A person who prepares supporting  documentation
30        for  a  residential  mortgage loan application taken by a
31        licensee and performs  ministerial functions pursuant  to
32        specific   instructions   of  the  licensee  who  neither
33        requires nor permits the preparer to exercise his or  her
34        discretion  or  judgment;  provided that this activity is
 
                            -66-     LRB093 10148 BDD 16603 a
 1        engaged in  pursuant  to  a  binding,  written  agreement
 2        between the licensee and the preparer that:
 3                  (A)  holds  the  licensee fully accountable for
 4             the preparer's action; and
 5                  (B)  otherwise meets the requirements  of  this
 6             Section   and  this  Act,  does  not  undermine  the
 7             purposes  of  this  Act,  and  is  approved  by  the
 8             Commissioner.
 9        (e)  "Licensee" or "residential mortgage licensee"  shall
10    mean  a person, partnership, association, corporation, or any
11    other entity who or which is licensed pursuant to this Act to
12    engage in the activities regulated by this Act.
13        (f)  "Mortgage loan" "residential mortgage loan" or "home
14    mortgage loan" shall mean a loan to or for the benefit of any
15    natural  person  made  primarily  for  personal,  family,  or
16    household use, primarily secured  by  either  a  mortgage  on
17    residential  real  property or certificates of stock or other
18    evidence of ownership interests  in  and  proprietary  leases
19    from,   corporations,   partnerships,  or  limited  liability
20    companies formed for the purpose of cooperative ownership  of
21    residential real property, all located in Illinois.
22        (g)  "Lender"   shall   mean   any  person,  partnership,
23    association, corporation, or  any  other  entity  who  either
24    lends or invests money in residential mortgage loans.
25        (h)  "Ultimate  equitable owner" shall mean a person who,
26    directly  or  indirectly,  owns  or  controls  an   ownership
27    interest   in   a  corporation,  foreign  corporation,  alien
28    business organization, trust, or any other form  of  business
29    organization   regardless  of  whether  the  person  owns  or
30    controls the ownership interest through one or  more  persons
31    or  one  or  more  proxies,  powers  of  attorney,  nominees,
32    corporations, associations, partnerships, trusts, joint stock
33    companies,  or  other entities or devices, or any combination
34    thereof.
 
                            -67-     LRB093 10148 BDD 16603 a
 1        (i)  "Residential mortgage financing  transaction"  shall
 2    mean  the  negotiation, acquisition, sale, or arrangement for
 3    or the offer to negotiate, acquire, sell, or arrange  for,  a
 4    residential   mortgage  loan  or  residential  mortgage  loan
 5    commitment.
 6        (j)  "Personal residence address"  shall  mean  a  street
 7    address and shall not include a post office box number.
 8        (k)  "Residential  mortgage loan commitment" shall mean a
 9    contract for residential mortgage loan financing.
10        (l)  "Party   to   a   residential   mortgage   financing
11    transaction" shall mean a borrower, lender, or loan broker in
12    a residential mortgage financing transaction.
13        (m)  "Payments" shall mean payment of all or any  of  the
14    following: principal, interest and escrow reserves for taxes,
15    insurance  and  other related reserves, and reimbursement for
16    lender advances.
17        (n)  "Commissioner" shall mean the Commissioner of  Banks
18    and  Real  Estate or a person authorized by the Commissioner,
19    the Office of Banks and Real Estate Act, or this Act  to  act
20    in the Commissioner's stead.
21        (o)  "Loan   brokering",   "brokering",   or   "brokerage
22    service" shall mean the act of helping to obtain from another
23    entity,  for  a  borrower, a loan secured by residential real
24    estate situated  in  Illinois  or  assisting  a  borrower  in
25    obtaining  a loan secured by residential real estate situated
26    in Illinois in return for consideration to be paid by  either
27    the  borrower  or  the  lender including, but not limited to,
28    contracting for the delivery of residential mortgage loans to
29    a third party lender and soliciting, processing, placing,  or
30    negotiating residential mortgage loans.
31        (p)  "Loan  broker"  or  "broker"  shall  mean  a person,
32    partnership, association, corporation, or  limited  liability
33    company,    other    than    those   persons,   partnerships,
34    associations, corporations, or  limited  liability  companies
 
                            -68-     LRB093 10148 BDD 16603 a
 1    exempted  from  licensing pursuant to Section 1-4, subsection
 2    (d), of this Act, who performs the  activities  described  in
 3    subsections (c) and (o) of this Section.
 4        (q)  "Servicing"  shall mean the collection or remittance
 5    for or the right or obligation to collect or  remit  for  any
 6    lender,  noteowner,  noteholder,  or  for  a  licensee's  own
 7    account,  of  payments, interests, principal, and trust items
 8    such as hazard insurance and taxes on a residential  mortgage
 9    loan in accordance with the terms of the residential mortgage
10    loan;  and  includes loan payment follow-up, delinquency loan
11    follow-up,  loan  analysis  and  any  notifications  to   the
12    borrower  that  are  necessary to enable the borrower to keep
13    the loan current and in good standing.
14        (r)  "Full service office" shall mean office and staff in
15    Illinois   reasonably   adequate   to   handle    efficiently
16    communications,  questions, and other matters relating to any
17    application for, or an  existing  home  mortgage  secured  by
18    residential  real estate situated in Illinois with respect to
19    which  the  licensee  is  brokering,   funding   originating,
20    purchasing,  or  servicing.   The management and operation of
21    each full service office  must  include  observance  of  good
22    business  practices such as adequate, organized, and accurate
23    books and records; ample  phone  lines,  hours  of  business,
24    staff training and supervision, and provision for a mechanism
25    to resolve consumer inquiries, complaints, and problems.  The
26    Commissioner  shall  issue  regulations  with regard to these
27    requirements and shall include an  evaluation  of  compliance
28    with  this Section in his or her periodic examination of each
29    licensee.
30        (s)  "Purchasing" shall mean the purchase of conventional
31    or government-insured mortgage loans secured  by  residential
32    real  estate  situated  in Illinois from either the lender or
33    from the secondary market.
34        (t)  "Borrower" shall mean the person or persons who seek
 
                            -69-     LRB093 10148 BDD 16603 a
 1    the services of a loan broker, originator, or lender.
 2        (u)  "Originating" shall mean the issuing of  commitments
 3    for and funding of residential mortgage loans.
 4        (v)  "Loan  brokerage  agreement"  shall  mean  a written
 5    agreement in which a broker  or  loan  broker  agrees  to  do
 6    either of the following:
 7             (1)  obtain  a  residential  mortgage  loan  for the
 8        borrower  or  assist  the   borrower   in   obtaining   a
 9        residential mortgage loan; or
10             (2)  consider  making a residential mortgage loan to
11        the borrower.
12        (w)  "Advertisement"   shall   mean   the   attempt    by
13    publication,   dissemination,   or   circulation  to  induce,
14    directly  or  indirectly,  any  person  to   enter   into   a
15    residential  mortgage  loan agreement or residential mortgage
16    loan brokerage agreement relative to a  mortgage  secured  by
17    residential real estate situated in Illinois.
18        (x)  "Residential   Mortgage   Board"   shall   mean  the
19    Residential Mortgage Board created in  Section  1-5  of  this
20    Act.
21        (y)  "Government-insured  mortgage  loan"  shall mean any
22    mortgage loan made on the security of residential real estate
23    insured by the Department of Housing and Urban Development or
24    Farmers  Home  Loan  Administration,  or  guaranteed  by  the
25    Veterans Administration.
26        (z)  "Annual audit" shall mean a certified audit  of  the
27    licensee's  books and records and systems of internal control
28    performed by a certified public accountant in accordance with
29    generally  accepted  accounting  principles   and   generally
30    accepted auditing standards.
31        (aa)  "Financial  institution"  shall  mean a savings and
32    loan association, savings  bank,  credit  union,  or  a  bank
33    organized  under  the  laws of Illinois or a savings and loan
34    association, savings bank, credit union or a  bank  organized
 
                            -70-     LRB093 10148 BDD 16603 a
 1    under  the  laws  of  the  United States and headquartered in
 2    Illinois.
 3        (bb)  "Escrow agent" shall mean a third party, individual
 4    or entity charged with the fiduciary obligation  for  holding
 5    escrow  funds  on  a  residential mortgage loan pending final
 6    payout of those funds in accordance with  the  terms  of  the
 7    residential mortgage loan.
 8        (cc)  "Net worth" shall have the meaning ascribed thereto
 9    in Section 3-5 of this Act.
10        (dd)  "Affiliate" shall mean:
11             (1)  any   entity   that  directly  controls  or  is
12        controlled by the licensee and any other company that  is
13        directly  affecting activities regulated by this Act that
14        is controlled by the company that controls the licensee;
15             (2)  any entity:
16                  (A)  that   is    controlled,    directly    or
17             indirectly,  by  a trust or otherwise, by or for the
18             benefit  of   shareholders   who   beneficially   or
19             otherwise  control, directly or indirectly, by trust
20             or otherwise,  the  licensee  or  any  company  that
21             controls the licensee; or
22                  (B)  a majority of the directors or trustees of
23             which  constitute  a majority of the persons holding
24             any such office with the  licensee  or  any  company
25             that controls the licensee;
26             (3)  any company, including a real estate investment
27        trust,  that  is  sponsored  and advised on a contractual
28        basis by the licensee or any subsidiary or  affiliate  of
29        the licensee.
30        The  Commissioner  may  define by rule and regulation any
31    terms  used  in  this  Act  for  the  efficient   and   clear
32    administration of this Act.
33        (ee)  "First   tier   subsidiary"  shall  be  defined  by
34    regulation incorporating the comparable definitions  used  by
 
                            -71-     LRB093 10148 BDD 16603 a
 1    the  Office  of  the  Comptroller  of  the  Currency  and the
 2    Illinois Commissioner of Banks and Real Estate.
 3        (ff)  "Gross  delinquency  rate"   means   the   quotient
 4    determined  by  dividing  (1)  the  sum  of (i) the number of
 5    government-insured  residential  mortgage  loans  funded   or
 6    purchased  by  a licensee in the preceding calendar year that
 7    are  delinquent  and  (ii)   the   number   of   conventional
 8    residential   mortgage  loans  funded  or  purchased  by  the
 9    licensee in the preceding calendar year that  are  delinquent
10    by  (2)  the  sum  of  (i)  the  number of government-insured
11    residential  mortgage  loans  funded  or  purchased  by   the
12    licensee  in  the preceding calendar year and (ii) the number
13    of  conventional  residential  mortgage   loans   funded   or
14    purchased by the licensee in the preceding calendar year.
15        (gg)  "Delinquency  rate  factor" means the factor set by
16    rule of the Commissioner that is multiplied  by  the  average
17    gross  delinquency rate of licensees, determined annually for
18    the immediately preceding calendar year, for the  purpose  of
19    determining   which   licensees  shall  be  examined  by  the
20    Commissioner pursuant to subsection (b)  of  Section  4-8  of
21    this Act.
22        (hh)  "Loan originator" means any natural person who, for
23    compensation or in the expectation  of  compensation,  either
24    directly  or  indirectly  makes,  offers  to  make, solicits,
25    places, or negotiates a residential mortgage loan.
26    (Source: P.A. 90-772, eff. 1-1-99; 91-245, eff. 12-31-99.)

27        (205 ILCS 635/2-4) (from Ch. 17, par. 2322-4)
28        Sec. 2-4.  Averments of Licensee.  Each  application  for
29    license  or for the renewal of a license shall be accompanied
30    by the following averments stating that the applicant:
31        (a)  Will maintain  at  least  one  full  service  office
32    within  the State of Illinois pursuant to Section 3-4 of this
33    Act;
 
                            -72-     LRB093 10148 BDD 16603 a
 1        (b)  Will maintain staff reasonably adequate to meet  the
 2    requirements of Section 3-4 of this Act;
 3        (c)  Will  keep  and  maintain  for  36  months  the same
 4    written records as  required  by  the  federal  Equal  Credit
 5    Opportunity  Act,  and  any  other  information  required  by
 6    regulations  of  the Commissioner regarding any home mortgage
 7    in the course of the  conduct  of  its  residential  mortgage
 8    business;
 9        (d)  Will  file  with  the  Commissioner,  when  due, any
10    report or reports which it is required to file under  any  of
11    the provisions of this Act;
12        (e)  Will  not  engage, whether as principal or agent, in
13    the practice of rejecting residential  mortgage  applications
14    without  reasonable  cause,  or  varying terms or application
15    procedures without reasonable cause, for  home  mortgages  on
16    real  estate  within  any  specific  geographic area from the
17    terms or procedures generally provided by the licensee within
18    other geographic areas of the State;
19        (f)  Will  not  engage  in   fraudulent   home   mortgage
20    underwriting practices;
21        (g)  Will   not   make   payment,   whether  directly  or
22    indirectly, of any kind to any in house or fee  appraiser  of
23    any  government or private money lending agency with which an
24    application for a  home  mortgage  has  been  filed  for  the
25    purpose  of  influencing  the  independent  judgment  of  the
26    appraiser  with respect to the value of any real estate which
27    is to be covered by such home mortgage;
28        (h)  Has filed tax returns (State and  Federal)  for  the
29    past  3  years or filed with the Commissioner an accountant's
30    or attorney's statement as to why no return was filed;
31        (i)  Will not engage in any discrimination  or  redlining
32    activities prohibited by Section 3-8 of this Act;
33        (j)  Will not knowingly make any false promises likely to
34    influence    or    persuade,    or   pursue   a   course   of
 
                            -73-     LRB093 10148 BDD 16603 a
 1    misrepresentation  and   false   promises   through   agents,
 2    solicitors, advertising or otherwise;
 3        (k)  Will   not  knowingly  misrepresent,  circumvent  or
 4    conceal, through whatever subterfuge or device,  any  of  the
 5    material  particulars  or  the  nature  thereof,  regarding a
 6    transaction to which it is a party to the injury  of  another
 7    party thereto;
 8        (l)  Will   disburse   funds   in   accordance  with  its
 9    agreements;
10        (m)  Has not committed a crime against the  law  of  this
11    State,  any  other  state  or of the United States, involving
12    moral turpitude, fraudulent or dishonest dealing, and that no
13    final judgment has been entered against it in a civil  action
14    upon  grounds of fraud, misrepresentation or deceit which has
15    not been previously reported to the Commissioner;
16        (n)  Will account or deliver to any person  any  personal
17    property   such   as  money,  fund,  deposit,  check,  draft,
18    mortgage, other document or thing of value,  which  has  come
19    into  its possession, and which is not its property, or which
20    it is not in law or  equity  entitled  to  retain  under  the
21    circumstances,  at  the time which has been agreed upon or is
22    required by law, or, in the absence of  a  fixed  time,  upon
23    demand   of  the  person  entitled  to  such  accounting  and
24    delivery;
25        (o)  Has not engaged in any conduct which would be  cause
26    for denial of a license;
27        (p)  Has not become insolvent;
28        (q)  Has not submitted an application for a license under
29    this Act which contains a material misstatement;
30        (r)  Has   not   demonstrated   by   course  of  conduct,
31    negligence or incompetence in performing any act for which it
32    is required to hold a license under this Act;
33        (s)  Will advise  the  Commissioner  in  writing  of  any
34    changes  to  the  information  submitted  on  the most recent
 
                            -74-     LRB093 10148 BDD 16603 a
 1    application for license within 30 days of said  change.   The
 2    written  notice  must  be  signed  in  the  same  form as the
 3    application for license being amended;
 4        (t)  Will comply with the provisions of this Act, or with
 5    any lawful order, rule or regulation made or issued under the
 6    provisions of this Act;
 7        (u)  Will  submit  to   periodic   examination   by   the
 8    Commissioner as required by this Act;
 9        (v)  Will advise the Commissioner in writing of judgments
10    entered  against,  and  bankruptcy  petitions by, the license
11    applicant within 5 days of occurrence;
12        (w)  Will advise the Commissioner in  writing  within  30
13    days  when  the  license  applicant requests a licensee under
14    this  Act  to  repurchase  a  loan,  and  the   circumstances
15    therefor; and
16        (x)  Will  advise  the  Commissioner in writing within 30
17    days when the  license  applicant  is  requested  by  another
18    entity to repurchase a loan, and the circumstances therefor.
19        (y)  Will  at  all  times act in a manner consistent with
20    subsections (a) and (b) of Section 1-2 of this Act.
21        (x) Will not knowingly hire or employ a  loan  originator
22    who is not registered with the Commissioner as required under
23    Section 7-1 of this Act.
24        A  licensee  who  fails  to  fulfill  obligations  of  an
25    averment,   to  comply  with  averments  made,  or  otherwise
26    violates any of the averments made under this  Section  shall
27    be subject to the penalties in Section 4-5 of this Act.
28    (Source: P.A. 90-301, eff. 8-1-97.)

29        (205 ILCS 635/2-6) (from Ch. 17, par. 2322-6)
30        Sec. 2-6.  License issuance and renewal; fee.
31        (a)  Beginning   May  1,  1992,  licenses  issued  before
32    January 1, 1988, shall be renewed every 2  years  on  May  1.
33    Beginning May 1, 1992, licenses issued on or after January 1,
 
                            -75-     LRB093 10148 BDD 16603 a
 1    1988,  shall  be  renewed every 2 years on the anniversary of
 2    the date of the issuance of the original  license.   Licenses
 3    issued  for  first  time  applicants on or after May 1, 1992,
 4    shall be renewed on the first anniversary of  their  issuance
 5    and  every  2  years thereafter.   Properly completed renewal
 6    application forms and filing fees must  be  received  by  the
 7    Commissioner 60 45 days prior to the renewal date.
 8        (b)  It  shall  be the responsibility of each licensee to
 9    accomplish renewal of its license; failure of the licensee to
10    receive renewal forms absent a request sent by certified mail
11    for such forms will not waive said responsibility. Failure by
12    a licensee to submit a properly completed renewal application
13    form and fees in a timely fashion, absent a written extension
14    from the Commissioner,  will  result  in  the  assessment  of
15    additional fees, as follows:
16             (1)  A  fee of $500 will be assessed to the licensee
17        30 days after the proper renewal  date  and  $1,000  each
18        month  thereafter, until the license is either renewed or
19        expires pursuant to Section 2-6, subsections (c) and (d),
20        of this Act.
21             (2)  Such fee will be assessed without prior  notice
22        to  the  licensee,  but  will  be  assessed only in cases
23        wherein the Commissioner has in  his  or  her  possession
24        documentation  of  the licensee's continuing activity for
25        which the unrenewed license was issued.
26        (c)  A license which is not renewed by the date  required
27    in  this  Section  shall  automatically  become inactive.  No
28    activity regulated by this Act  shall  be  conducted  by  the
29    licensee  when  a  license  becomes  inactive.   An  inactive
30    license may be reactivated by filing a completed reactivation
31    application  with  the  Commissioner,  payment of the renewal
32    fee, and payment of a reactivation fee equal to  the  renewal
33    fee.
34        (d)  A  license  which  is not renewed within one year of
 
                            -76-     LRB093 10148 BDD 16603 a
 1    becoming inactive shall expire.
 2        (e)  A  licensee  ceasing  an  activity   or   activities
 3    regulated  by  this Act and desiring to no longer be licensed
 4    shall so inform the Commissioner in writing and, at the  same
 5    time,  convey the license and all other symbols or indicia of
 6    licensure.   The  licensee  shall  include  a  plan  for  the
 7    withdrawal from regulated business, including a timetable for
 8    the disposition  of  the  business.   Upon  receipt  of  such
 9    written  notice,  the  Commissioner  shall  issue a certified
10    statement canceling the license.
11    (Source: P.A. 90-301, eff. 8-1-97.)

12        (205 ILCS 635/3-2) (from Ch. 17, par. 2323-2)
13        Sec. 3-2.  Annual audit.
14        (a)  At the licensee's fiscal year-end, but  in  no  case
15    more  than  12 months after the last audit conducted pursuant
16    to  this  Section,  except  as  otherwise  provided  in  this
17    Section, it shall be mandatory for each residential  mortgage
18    licensee  to  cause its books and accounts to be audited by a
19    certified public accountant not connected with such licensee.
20    The books and records of all licensees under this  Act  shall
21    be  maintained  on  an  accrual  basis.   The  audit  must be
22    sufficiently comprehensive in scope to permit the  expression
23    of  an  opinion  on  the  financial statements, which must be
24    prepared in accordance  with  generally  accepted  accounting
25    principles,   and   must  be  performed  in  accordance  with
26    generally accepted auditing standards.   Notwithstanding  the
27    requirements  of  this subsection, a licensee that is a first
28    tier subsidiary may  submit  audited  consolidated  financial
29    statements   of  its  parent  as  long  as  the  consolidated
30    statements are supported by  consolidating  statements.   The
31    licensee's  chief  financial  officer  shall  attest  to  the
32    licensee's    financial    statements    disclosed   in   the
33    consolidating statements.
 
                            -77-     LRB093 10148 BDD 16603 a
 1        (b)  As used herein, the  term  "expression  of  opinion"
 2    includes  either  (1) an unqualified opinion, (2) a qualified
 3    opinion, (3) a disclaimer  of  opinion,  or  (4)  an  adverse
 4    opinion.
 5        (c)  If a qualified or adverse opinion is expressed or if
 6    an opinion is disclaimed, the reasons therefore must be fully
 7    explained.   An  opinion, qualified as to a scope limitation,
 8    shall not be acceptable.
 9        (d)  The most recent audit report shall be filed with the
10    Commissioner within 90 days after the end of  the  licensee's
11    fiscal  year  at  the  time  of  the  annual  license renewal
12    payment.  The report filed with  the  Commissioner  shall  be
13    certified  by  the certified public accountant conducting the
14    audit.  The Commissioner may promulgate rules regarding  late
15    audit reports.
16        (e)  If any licensee required to make an audit shall fail
17    to  cause  an  audit to be made, the Commissioner shall cause
18    the same to be made by a certified public accountant  at  the
19    licensee's  expense.   The  Commissioner  shall  select  such
20    certified  public  accountant  by  advertising for bids or by
21    such other fair and impartial means as he or she  establishes
22    by regulation.
23        (f)  In  lieu  of the audit required by this Section, the
24    Commissioner may accept any audit made  in  conformance  with
25    the  audit requirements of the U.S. Department of Housing and
26    Urban Development.
27        (g)  With  respect  to  licensees   who   solely   broker
28    residential  mortgage  loans  as defined in subsection (o) of
29    Section 1-4, instead of the audit required by  this  Section,
30    the  Commissioner may accept compilation financial statements
31    prepared at  least  every  12  months,  and  the  compilation
32    financial  statement  must  be  prepared  by  an  independent
33    certified  public  accountant  licensed  under  the  Illinois
34    Public Accounting Act with full disclosure in accordance with
 
                            -78-     LRB093 10148 BDD 16603 a
 1    generally  accepted  accounting  principals and must shall be
 2    submitted within 90 days after  the  end  of  the  licensee's
 3    fiscal  year  at  the  time  of  the  annual  license renewal
 4    payment.  If a licensee under this Section fails  to  file  a
 5    compilation  as  required,  the  Commissioner  shall cause an
 6    audit of the licensee's books and accounts to be  made  by  a
 7    certified  public  accountant at the licensee's expense.  The
 8    Commissioner shall select the certified public accountant  by
 9    advertising  for  bids  or  by  such other fair and impartial
10    means as he or she establishes by rule.  A licensee who files
11    false  or  misleading  compilation  financial  statements  is
12    guilty of a business offense and shall be fined not less than
13    $5,000.
14        (h)  The workpapers of the certified  public  accountants
15    employed by each licensee for purposes of this Section are to
16    be  made  available to the Commissioner or the Commissioner's
17    designee  upon  request  and  may  be   reproduced   by   the
18    Commissioner  or the Commissioner's designee to enable to the
19    Commissioner to carry out the purposes of this Act.
20        (i)  Notwithstanding any other provision of this Section,
21    if a licensee relying  on  subsection  (g)  of  this  Section
22    causes  its  books  to be audited at any other time or causes
23    its financial statements to be reviewed, a complete  copy  of
24    the   audited  or  reviewed  financial  statements  shall  be
25    delivered to the Commissioner  at  the  time  of  the  annual
26    license  renewal payment following receipt by the licensee of
27    the audited or reviewed financial statements.  All workpapers
28    shall be made available to  the  Commissioner  upon  request.
29    The  financial statements and workpapers may be reproduced by
30    the Commissioner or the Commissioner's designee to carry  out
31    the purposes of this Act.
32    (Source:  P.A.  89-74,  eff.  6-30-95;  89-355, eff. 8-17-95;
33    90-772, eff. 1-1-99.)
 
                            -79-     LRB093 10148 BDD 16603 a
 1        (205 ILCS 635/3-5) (from Ch. 17, par. 2323-5)
 2        Sec. 3-5.  Net worth requirement. A licensee that holds a
 3    license on the effective date of this amendatory Act  of  the
 4    93rd  General Assembly Every licensee shall have and maintain
 5    a net worth of not less than $100,000; however, no later than
 6    2 years after the effective date of this  amendatory  Act  of
 7    the  93rd  General Assembly, the licensee must maintain a net
 8    worth of not  less  than  $150,000.  A  licensee  that  first
 9    obtains a license after the effective date of this amendatory
10    Act of the 93rd General Assembly must have and maintain a net
11    worth  of  not  less  than  $150,000.  Notwithstanding  other
12    requirements of this Section, the net worth requirement for a
13    residential mortgage licensee licensees whose only licensable
14    activity  is that of brokering residential mortgage loans and
15    that holds a license on the effective date of this amendatory
16    Act of the 93rd General Assembly shall be  $35,000;  however,
17    no  later  than  2  years  after  the  effective date of this
18    amendatory Act of the 93rd  General  Assembly,  the  licensee
19    must  maintain  a  net worth of not less than $50,000. Such a
20    licensee that first obtains a  license  after  the  effective
21    date of this amendatory Act of the 93rd General Assembly must
22    have  and  maintain a net worth of not less than $50,000. Net
23    worth shall be evidenced by a balance  sheet  prepared  by  a
24    certified  public  accountant  in  accordance  with generally
25    accepted  accounting  principles   and   generally   accepted
26    auditing standards or by the compilation financial statements
27    authorized   under   subsection  (g)  of  Section  3-2.   The
28    Commissioner may promulgate rules with respect to  net  worth
29    definitions   and   requirements   for  residential  mortgage
30    licensees as necessary to accomplish  the  purposes  of  this
31    Act.   In  lieu  of  the net worth requirement established by
32    this  Section,  the  Commissioner  may  accept  evidence   of
33    conformance  by  the licensee with the net worth requirements
34    of  the  United  States  Department  of  Housing  and   Urban
 
                            -80-     LRB093 10148 BDD 16603 a
 1    Development.
 2    (Source: P.A. 89-355, eff. 8-17-95; 89-508, eff. 7-3-96.)

 3        (205 ILCS 635/4-5) (from Ch. 17, par. 2324-5)
 4        Sec. 4-5.  Suspension, revocation of licenses; fines.
 5        (a)  Upon  written notice to a licensee, the Commissioner
 6    may suspend or revoke any license issued pursuant to this Act
 7    if he or she shall make a finding  of  one  or  more  of  the
 8    following in the notice that:
 9             (1)  Through  separate acts or an act or a course of
10        conduct, the licensee has violated any provisions of this
11        Act,  any  rule  or   regulation   promulgated   by   the
12        Commissioner  or  of any other law, rule or regulation of
13        this State or the United States.
14             (2)  Any fact or condition exists which, if  it  had
15        existed  at the time of the original application for such
16        license would have warranted the Commissioner in refusing
17        originally to issue such license.
18             (3)  If a licensee is other than an individual,  any
19        ultimate equitable owner, officer, director, or member of
20        the  licensed  partnership,  association, corporation, or
21        other entity has so acted or failed to act  as  would  be
22        cause  for suspending or revoking a license to that party
23        as an individual.
24        (b)  No license shall be suspended or revoked, except  as
25    provided  in  this  Section,  nor shall any licensee be fined
26    without notice of his or her right to a hearing  as  provided
27    in Section 4-12 of this Act.
28        (c)  The  Commissioner,  on  good  cause  shown  that  an
29    emergency  exists,  may  suspend any license for a period not
30    exceeding 180 days, pending investigation.   Upon  a  showing
31    that  a  licensee  has  failed  to  meet  the  experience  or
32    educational  requirements  of Section 2-2 or the requirements
33    of subsection (g) of  Section  3-2,  the  Commissioner  shall
 
                            -81-     LRB093 10148 BDD 16603 a
 1    suspend,  prior  to  hearing as provided in Section 4-12, the
 2    license until those requirements have been met.
 3        (d)  The provisions of subsection (e) of Section  2-6  of
 4    this  Act  shall  not  affect  a licensee's civil or criminal
 5    liability for acts committed prior to surrender of a license.
 6        (e)  No  revocation,  suspension  or  surrender  of   any
 7    license   shall  impair  or  affect  the  obligation  of  any
 8    pre-existing lawful contract between  the  licensee  and  any
 9    person.
10        (f)  Every  license issued under this Act shall remain in
11    force and effect until the same shall  have  expired  without
12    renewal,  have  been  surrendered,  revoked  or  suspended in
13    accordance  with  the  provisions  of  this  Act,   but   the
14    Commissioner  shall  have  authority to reinstate a suspended
15    license or to issue a new license to a licensee whose license
16    shall have been revoked if no fact or condition  then  exists
17    which  would  have  warranted  the  Commissioner  in refusing
18    originally to issue such license under this Act.
19        (g)  Whenever the Commissioner shall revoke or suspend  a
20    license  issued pursuant to this Act or fine a licensee under
21    this Act, he or she shall forthwith execute  in  duplicate  a
22    written order to that effect.  The Commissioner shall publish
23    notice of such order in the Illinois Register and a newspaper
24    of  general circulation in the county in which the license is
25    located and shall forthwith serve a copy of such  order  upon
26    the  licensee.   Any such order may be reviewed in the manner
27    provided by Section 4-12 of this Act.
28        (h)  When the Commissioner finds any person in  violation
29    of  the  grounds  set  forth in subsection (i), he or she may
30    enter  an  order  imposing  one  or  more  of  the  following
31    penalties:
32             (1)  Revocation of license;
33             (2)  Suspension   of   a    license    subject    to
34        reinstatement  upon  satisfying all reasonable conditions
 
                            -82-     LRB093 10148 BDD 16603 a
 1        the Commissioner may specify;
 2             (3)  Placement  of  the  licensee  or  applicant  on
 3        probation for  a  period  of  time  and  subject  to  all
 4        reasonable conditions as the Commissioner may specify;
 5             (4)  Issuance of a reprimand;
 6             (5)  Imposition  of  a  fine  not  to exceed $25,000
 7        $10,000 for each count of separate offense; and
 8             (6)  Denial of a license.
 9        (i)  The following  acts  shall  constitute  grounds  for
10    which  the  disciplinary  actions specified in subsection (h)
11    above may be taken:
12             (1)  Being convicted or found guilty, regardless  of
13        pendency  of  an  appeal,  of a crime in any jurisdiction
14        which involves fraud, dishonest dealing, or any other act
15        of moral turpitude;
16             (2)  Fraud, misrepresentation, deceit or  negligence
17        in any mortgage financing transaction;
18             (3)  A  material or intentional misstatement of fact
19        on an initial or renewal application;
20             (4)  Failure   to    follow    the    Commissioner's
21        regulations  with respect to placement of funds in escrow
22        accounts;
23             (5)  Insolvency or filing under any provision of the
24        Bankruptcy Code as a debtor;
25             (6)  Failure to account or deliver to any person any
26        property such as any money, fund, deposit, check,  draft,
27        mortgage,  or other document or thing of value, which has
28        come into his or her hands and which is not  his  or  her
29        property  or  which  he  or  she  is not in law or equity
30        entitled to retain, under the circumstances  and  at  the
31        time which has been agreed upon or is required by law or,
32        in the absence of a fixed time, upon demand of the person
33        entitled to such accounting and delivery;
34             (7)  Failure  to  disburse  funds in accordance with
 
                            -83-     LRB093 10148 BDD 16603 a
 1        agreements;
 2             (8)  Any misuse, misapplication, or misappropriation
 3        of trust funds or escrow funds;
 4             (9)  Having  a  license,  or  the   equivalent,   to
 5        practice any profession or occupation revoked, suspended,
 6        or  otherwise  acted  against,  including  the  denial of
 7        licensure by a  licensing  authority  of  this  State  or
 8        another  state, territory or country for fraud, dishonest
 9        dealing or any other act of moral turpitude;
10             (10)  Failure to issue a  satisfaction  of  mortgage
11        when  the  residential  mortgage  has  been  executed and
12        proceeds  were  not  disbursed  to  the  benefit  of  the
13        mortgagor  and  when  the  mortgagor   has   fully   paid
14        licensee's costs and commission;
15             (11)  Failure  to  comply  with  any  order  of  the
16        Commissioner  or rule made or issued under the provisions
17        of this Act;
18             (12)  Engaging in activities regulated by  this  Act
19        without  a  current,  active  license unless specifically
20        exempted by this Act;
21             (13)  Failure to pay in a  timely  manner  any  fee,
22        charge or fine under this Act;
23             (14)  Failure   to   maintain,  preserve,  and  keep
24        available for examination, all books, accounts  or  other
25        documents required by the provisions of this  Act and the
26        rules of the Commissioner;
27             (15)  Refusal   to   permit   an   investigation  or
28        examination of the licensee's or  its  affiliates'  books
29        and  records or refusal to comply with the Commissioner's
30        subpoena or subpoena duces tecum;
31             (16)  A pattern of substantially underestimating the
32        maximum closing costs;
33             (17)  Failure to comply with  or  violation  of  any
34        provision of this Act.
 
                            -84-     LRB093 10148 BDD 16603 a
 1        (j)  A  licensee  shall  be  subject  to the disciplinary
 2    actions specified in this Act for  violations  of  subsection
 3    (i)  by  any  officer,  director, shareholder, joint venture,
 4    partner,  ultimate  equitable  owner,  or  employee  of   the
 5    licensee.
 6        (k)  Such  licensee  shall  be  subject  to suspension or
 7    revocation for employee actions only if there is a pattern of
 8    repeated  violations  by  employees  or  the   licensee   has
 9    knowledge of the violations.
10        (l)  Procedure for surrender of license:
11             (1)  The  Commissioner  may, after 10 days notice by
12        certified mail to the licensee at the address  set  forth
13        on  the  license,  stating the contemplated action and in
14        general the grounds therefor and the date, time and place
15        of a hearing thereon, and after  providing  the  licensee
16        with  a  reasonable opportunity to be heard prior to such
17        action,  fine  such  licensee  an  amount  not  exceeding
18        $10,000 per violation, or revoke or suspend  any  license
19        issued hereunder if he or she finds that:
20                  (i)  The licensee has failed to comply with any
21             provision  of  this  Act  or  any  order,  decision,
22             finding,   rule,  regulation  or  direction  of  the
23             Commissioner lawfully made pursuant to the authority
24             of this Act; or
25                  (ii)  Any fact or condition exists which, if it
26             had existed at the time of the original  application
27             for  the  license,  clearly would have warranted the
28             Commissioner in refusing to issue the license.
29             (2)  Any  licensee  may  surrender  a   license   by
30        delivering  to the Commissioner written notice that he or
31        she thereby surrenders such license, but surrender  shall
32        not affect the licensee's civil or criminal liability for
33        acts committed prior to surrender or entitle the licensee
34        to a return of any part of the license fee.
 
                            -85-     LRB093 10148 BDD 16603 a
 1    (Source: P.A. 89-355, eff. 8-17-95.)

 2        (205 ILCS 635/4-8.1 new)
 3        Sec.   4-8.1.   Confidential   information.  In  hearings
 4    conducted under this Act, information presented into evidence
 5    that was acquired by the licensee when serving any individual
 6    in connection with  a  residential  mortgage,  including  all
 7    financial  information  of  the  individual,  shall be deemed
 8    strictly confidential and shall be  made  available  only  as
 9    part  of  the record of a hearing under this Act or otherwise
10    (i) when  the  record  is  required,  in  its  entirety,  for
11    purposes  of judicial review or (ii) upon the express written
12    consent of the individual served, or in the case  of  his  or
13    her  death  or disability, the consent of his or her personal
14    representative.

15        (205 ILCS 635/4-8.2 new)
16        Sec. 4-8.2. Reports of violations.  Any  person  licensed
17    under  this  Act  or  any  other  person  may  report  to the
18    Commissioner any information to show that a person subject to
19    this Act is or may be in violation of this Act.

20        (205 ILCS 635/Art. VII heading new)

21            ARTICLE VII. REGISTRATION OF LOAN ORIGINATORS

22        (205 ILCS 635/7-1 new)
23        Sec. 7-1. Registration required; rules  and  regulations.
24    Beginning   6   months  after  the  effective  date  of  this
25    amendatory Act of the 93rd General Assembly, it  is  unlawful
26    for  any  natural  person  to  act or assume to act as a loan
27    originator, as defined in subsection  (hh)  of  Section  1-4,
28    without  being  registered  with  the Commissioner unless the
29    natural person is exempt under subsection (d) of Section  1-4
30    of   this   Act.  The  Commissioner  shall  promulgate  rules
 
                            -86-     LRB093 10148 BDD 16603 a
 1    prescribing the criteria for the registration and  regulation
 2    of   loan   originators,   including   but  not  limited  to,
 3    qualifications, fees,  examination,  education,  supervision,
 4    and enforcement.

 5        Section  835.   The  Limited  Liability  Company  Act  is
 6    amended by changing Sections 1-25, 5-5, 5-55, 37-5, and 37-35
 7    as follows:

 8        (805 ILCS 180/1-25)
 9        Sec.  1-25.   Nature  of  business.  A  limited liability
10    company may be formed for  any  lawful  purpose  or  business
11    except:
12             (1)  (Blank)   banking,   exclusive  of  fiduciaries
13        organized for the  purpose  of  accepting  and  executing
14        trusts;
15             (2)  insurance  unless,  for the purpose of carrying
16        on business as a member of a group including incorporated
17        and individual unincorporated underwriters, the  Director
18        of  Insurance finds that the group meets the requirements
19        of subsection (3) of Section 86 of the Illinois Insurance
20        Code and the limited liability company, if insolvent,  is
21        subject to liquidation by the Director of Insurance under
22        Article XIII of the Illinois Insurance Code;
23             (3)  the   practice  of  dentistry  unless  all  the
24        members and managers are licensed as dentists  under  the
25        Illinois Dental Practice Act; or
26             (4)  the   practice   of  medicine  unless  all  the
27        managers, if any, are licensed to practice medicine under
28        the Medical Practice Act of 1987 and any of the following
29        conditions apply:
30                  (A)  the member  or  members  are  licensed  to
31             practice  medicine under the Medical Practice Act of
32             1987; or
 
                            -87-     LRB093 10148 BDD 16603 a
 1                  (B)  the member or  members  are  a  registered
 2             medical   corporation   or   corporations  organized
 3             pursuant to the Medical Corporation Act; or
 4                  (C)  the member or members are  a  professional
 5             corporation  organized  pursuant to the Professional
 6             Service Corporation Act of  physicians  licensed  to
 7             practice medicine in all its branches; or
 8                  (D)  the   member  or  members  are  a  medical
 9             limited liability company or companies.
10    (Source: P.A. 91-593, eff. 8-14-99; 92-144, eff. 7-24-01.)

11        (805 ILCS 180/5-5)
12        Sec. 5-5.  Articles of organization.
13        (a)  The articles of organization shall set forth all  of
14    the following:
15             (1)  The  name  of the limited liability company and
16        the address of its principal place of business which may,
17        but need not be a place of business in this State.
18             (2)  The purposes for which  the  limited  liability
19        company  is  organized,  which may be stated to be, or to
20        include, the transaction of any or all lawful  businesses
21        for  which  limited  liability companies may be organized
22        under this Act.
23             (3)  The  name  of  its  registered  agent  and  the
24        address of its registered office.
25             (4)  If the  limited  liability  company  is  to  be
26        managed  by a manager or managers, the names and business
27        addresses of the initial manager or managers.
28             (5)  If management of the limited liability  company
29        is  to  be vested in the members under Section 15-1, then
30        the names and addresses of the initial member or members.
31             (6)  The latest date, if any, upon which the limited
32        liability company is to  dissolve  and  other  events  of
33        dissolution,  if  any,  that  may  be  agreed upon by the
 
                            -88-     LRB093 10148 BDD 16603 a
 1        members under Section 35-1 hereof.
 2             (7)  The name and address of each organizer.
 3             (8)  Any other provision, not inconsistent with law,
 4        that the members elect to set  out  in  the  articles  of
 5        organization  for  the regulation of the internal affairs
 6        of  the  limited   liability   company,   including   any
 7        provisions   that,   under  this  Act,  are  required  or
 8        permitted to be set out in the operating agreement of the
 9        limited liability company.
10        (b)  A limited liability company is organized at the time
11    articles of organization are filed by the Secretary of  State
12    or  at any later time, not more than 60 days after the filing
13    of the articles of organization, specified in the articles of
14    organization.
15        (c)  Articles of organization for the organization  of  a
16    limited  liability  company  for the purpose of accepting and
17    executing trusts shall not be filed by the Secretary of State
18    until there is delivered to him or her a  statement  executed
19    by  the  Commissioner  of the Office of Banks and Real Estate
20    that the organizers of the  limited  liability  company  have
21    made  arrangements  with  the  Commissioner  of the Office of
22    Banks and Real Estate to comply with the Corporate  Fiduciary
23    Act.
24        (d)  Articles  of  organization for the organization of a
25    limited liability company as a bank or a savings bank must be
26    filed with the Commissioner of Banks and Real Estate  or,  if
27    the bank or savings bank will be organized under federal law,
28    with the appropriate federal banking regulator.
29    (Source: P.A. 90-424, eff. 1-1-98.)

30        (805 ILCS 180/5-55)
31        Sec. 5-55.  Filing in Office of Secretary of State.
32        (a)  Whenever  any  provision  of  this  Act  requires  a
33    limited  liability  company  to  file  any  document with the
 
                            -89-     LRB093 10148 BDD 16603 a
 1    Office of the Secretary of State, the requirement means that:
 2             (1)  the original document, executed as described in
 3        Section 5-45, and, if required by this Act to be filed in
 4        duplicate, one copy (which may  be  a  signed  carbon  or
 5        photocopy)  shall  be  delivered  to  the  Office  of the
 6        Secretary of State;
 7             (2)  all fees and charges authorized by  law  to  be
 8        collected  by  the  Secretary of State in connection with
 9        the filing of the  document  shall  be  tendered  to  the
10        Secretary of State; and
11             (3)  unless  the  Secretary  of State finds that the
12        document does not conform to law, he or she  shall,  when
13        all fees have been paid:
14                  (A)  endorse  on  the  original and on the copy
15             the word "Filed" and the month, day, and year of the
16             filing thereof;
17                  (B)  file in his or her office the original  of
18             the document; and
19                  (C)  return the copy to the person who filed it
20             or to that person's representative.
21        (b)  If   another   Section   of  this  Act  specifically
22    prescribes a manner of filing or signing a specified document
23    that  differs  from  the  corresponding  provisions  of  this
24    Section, then the  provisions  of  the  other  Section  shall
25    govern.
26        (c) Whenever any provision of this Act requires a limited
27    liability  company  that  is a bank or a savings bank to file
28    any document, that requirement means that the filing shall be
29    made exclusively with the  Commissioner  of  Banks  and  Real
30    Estate  or,  if  the  bank or savings bank is organized under
31    federal law, with the appropriate federal  banking  regulator
32    at  such  times  and  in  such  manner  as  required  by  the
33    Commissioner or federal regulator.
34    (Source: P.A. 92-33, eff. 7-1-01.)
 
                            -90-     LRB093 10148 BDD 16603 a
 1        (805 ILCS 180/37-5)
 2        Sec. 37-5.  Definitions.  In this Article:
 3        "Corporation"  means (i) a corporation under the Business
 4    Corporation Act of 1983, a predecessor law, or comparable law
 5    of another jurisdiction or (ii) a bank or savings bank.
 6        "General partner" means a partner in a partnership and  a
 7    general partner in a limited partnership.
 8        "Limited  partner"  means  a limited partner in a limited
 9    partnership.
10        "Limited partnership" means a limited partnership created
11    under  the  Revised  Uniform  Limited  Partnership   Act,   a
12    predecessor law, or comparable law of another jurisdiction.
13        "Partner"  includes  a  general  partner  and  a  limited
14    partner.
15        "Partnership"  means  a  general  partnership  under  the
16    Uniform Partnership Act, a predecessor law, or comparable law
17    of another jurisdiction.
18        "Partnership  agreement"  means  an  agreement  among the
19    partners concerning the partnership or limited partnership.
20        "Shareholder" means a shareholder in a corporation.
21    (Source: P.A. 90-424, eff. 1-1-98.)

22        (805 ILCS 180/37-35)
23        Sec. 37-35.  Article not exclusive. This Article does not
24    preclude an entity from being converted or merged under other
25    law. A bank or savings bank that converts to or  merges  with
26    and  into a limited liability company shall be subject to the
27    provisions of this Article or to other applicable law to  the
28    extent  that  those provisions do not conflict with the State
29    or federal law pursuant to which the conversion or merger  of
30    the bank or savings bank is authorized.
31    (Source: P.A. 90-424, eff. 1-1-98.)

32        Section  840.   The  Illinois  Fairness in Lending Act is
 
                            -91-     LRB093 10148 BDD 16603 a
 1    amended by changing Sections 2, 3, and 5 as follows:

 2        (815 ILCS 120/2) (from Ch. 17, par. 852)
 3        Sec. 2. As used in this Act:
 4        (a)  "Financial  Institution"  means  any  bank,   credit
 5    union,  insurance  company, mortgage banking company, savings
 6    bank, or savings and loan association, or  other  residential
 7    mortgage  lender which operates or has a place of business in
 8    this State.
 9        (b)  "Person" means any natural person.
10        (c)  "Varying the terms of a loan" includes, but  is  not
11    limited to the following practices:
12        (1)  Requiring  a  greater than average down payment than
13    is usual for the particular type of a loan involved.
14        (2)  Requiring a shorter period of amortization  than  is
15    usual for the particular type of loan involved.
16        (3)  Charging  a  higher  interest rate than is usual for
17    the particular type of loan involved.
18        (4)  An underappraisal of real estate or  other  item  of
19    property offered as security.
20        (d)  "Equity  stripping"  means  to  assist  a  person in
21    obtaining a loan secured by the person's principal  residence
22    for  the  primary  purpose  of  receiving fees related to the
23    financing when (i) the loan decreased the person's equity  in
24    the  principal  residence  and  (ii)  at the time the loan is
25    made, the financial institution does not  reasonably  believe
26    that  the  person will be able to make the scheduled payments
27    to repay  the  loan.  "Equity  stripping"  does  not  include
28    reverse  mortgages  as  defined in Section 5a of the Illinois
29    Banking Act.
30        (e)  "Loan  flipping"  means  to  assist  a   person   in
31    refinancing   a   loan  secured  by  the  person's  principal
32    residence for the primary purpose of receiving  fees  related
33    to  the  refinancing  when  (i)  the  refinancing of the loan
 
                            -92-     LRB093 10148 BDD 16603 a
 1    results in no tangible benefit to the person and (ii) at  the
 2    time  the  loan  is  made, the financial institution does not
 3    reasonably believe that the  refinancing  of  the  loan  will
 4    result in a tangible benefit to the person.
 5        (f)   "Principal  residence"  means  a  person's  primary
 6    residence that is a dwelling consisting of 4 or fewer  family
 7    units  or  that is in a dwelling consisting of condominium or
 8    cooperative units.
 9    (Source: P.A. 81-1391.)

10        (815 ILCS 120/3) (from Ch. 17, par. 853)
11        Sec. 3. No financial institution, in connection  with  or
12    in contemplation of any loan to any person, may:
13        (a)  Deny or vary the terms of a loan on the basis that a
14    specific parcel of real estate offered as security is located
15    in a specific geographical area.
16        (b)  Deny  or  vary  the  terms  of a loan without having
17    considered all of the regular and dependable income  of  each
18    person who would be liable for repayment of the loan.
19        (c)  Deny  or  vary the terms of a loan on the sole basis
20    of  the  childbearing  capacity  of  an   applicant   or   an
21    applicant's spouse.
22        (d)  Utilize  lending  standards  that  have  no economic
23    basis and which are discriminatory in effect.
24        (e)  Engage in equity stripping or loan flipping.
25    (Source: P.A. 81-1391.)

26        (815 ILCS 120/5) (from Ch. 17, par. 855)
27        Sec.  5.  (a)  Subject  to  the  limitation  imposed   by
28    subsection (b), any person who has been aggrieved as a result
29    of a violation of this Act may bring an action in the circuit
30    court  of  the  county  in  which  the  particular  financial
31    institution involved is located or doing business.
32        Upon a finding that a financial institution has committed
 
                            -93-     LRB093 10148 BDD 16603 a
 1    a  violation of this Act, the court may award actual damages,
 2    and may in its discretion award court costs.
 3        (b)  If the same events or circumstances would constitute
 4    the basis for an action under this Act or an action under any
 5    other  Act,  the  aggrieved  person  may  elect  between  the
 6    remedies proposed by the two Acts but may not bring  actions,
 7    either administrative or judicial, under more than one of the
 8    two Acts in relation to those same events or circumstances.
 9    (Source: P.A. 81-1391.)

10        Section  845.  The  Consumer Fraud and Deceptive Business
11    Practices Act is amended by changing Section 2Z as follows:

12        (815 ILCS 505/2Z) (from Ch. 121 1/2, par. 262Z)
13        Sec. 2Z.  Violations  of  other  Acts.   Any  person  who
14    knowingly violates the Automotive Repair Act, the Home Repair
15    and  Remodeling  Act,  the  Dance  Studio  Act,  the Physical
16    Fitness  Services  Act,  the  Hearing   Instrument   Consumer
17    Protection  Act,  the  Illinois  Union  Label  Act,  the  Job
18    Referral  and  Job  Listing Services Consumer Protection Act,
19    the Travel Promotion  Consumer  Protection  Act,  the  Credit
20    Services  Organizations  Act, the Automatic Telephone Dialers
21    Act, the Pay-Per-Call Services Consumer Protection  Act,  the
22    Telephone  Solicitations  Act, the Illinois Funeral or Burial
23    Funds Act, the Cemetery Care Act, the Safe and  Hygienic  Bed
24    Act, the Pre-Need Cemetery Sales Act, the High Risk Home Loan
25    Act,  subsection  (a) or (b) of Section 3-10 of the Cigarette
26    Tax Act, subsection  (a)  or  (b)  of  Section  3-10  of  the
27    Cigarette  Use Tax Act, the Electronic Mail Act, or paragraph
28    (6) of subsection  (k)  of  Section  6-305  of  the  Illinois
29    Vehicle  Code commits an unlawful practice within the meaning
30    of this Act.
31    (Source: P.A. 91-164,  eff.  7-16-99;  91-230,  eff.  1-1-00;
32    91-233,  eff.  1-1-00;  91-810,  eff.  6-13-00;  92-426, eff.
 
                            -94-     LRB093 10148 BDD 16603 a
 1    1-1-02.)

 2        Section 999.  Effective date. This Act  takes  effect  on
 3    January 1, 2004.".