HB1519 EngrossedLRB103 24976 BMS 51310 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Student Loan Servicing Rights Act is
5amended by changing Sections 1-5 and 25-5 and by adding
6Article 7 as follows:
7    (110 ILCS 992/1-5)
8    Sec. 1-5. Definitions. As used in this Act:
9    "Applicant" means a person applying for a license pursuant
10to this Act.
11    "Borrower" or "student loan borrower" means a person who
12has received or agreed to pay a student loan for his or her own
13educational expenses.
14    "Cosigner" means a person who has agreed to share
15responsibility for repaying a student loan with a borrower.
16    "Department" means the Department of Financial and
17Professional Regulation.
18    "Division of Banking" means the Division of Banking of the
19Department of Financial and Professional Regulation.
20    "Federal loan borrower eligible for referral to a
21repayment specialist" means a borrower who possesses any of
22the following characteristics:
23        (1) requests information related to options to reduce



HB1519 Engrossed- 2 -LRB103 24976 BMS 51310 b

1    or suspend his or her monthly payment;
2        (2) indicates that he or she is experiencing or
3    anticipates experiencing financial hardship, distress, or
4    difficulty making his or her payments;
5        (3) has missed 2 consecutive monthly payments;
6        (4) is at least 75 days delinquent;
7        (5) is enrolled in a discretionary forbearance for
8    more than 9 of the previous 12 months;
9        (6) has rehabilitated or consolidated one or more
10    loans out of default within the past 12 months; or
11        (7) has not completed a course of study, as reflected
12    in the servicer's records, or the borrower identifies
13    himself or herself as not having completed a program of
14    study.
15    "Federal education loan" means any loan made, guaranteed,
16or insured under Title IV of the federal Higher Education Act
17of 1965.
18    "Income-driven payment plan certification" means the
19documentation related to a federal student loan borrower's
20income or financial status the borrower must submit to renew
21an income-driven repayment plan.
22    "Income-driven repayment options" includes the
23Income-Contingent Repayment Plan, the Income-Based Repayment
24Plan, the Income-Sensitive Repayment Plan, the Pay As You Earn
25Plan, the Revised Pay As You Earn Plan, and any other federal
26student loan repayment plan that is calculated based on a



HB1519 Engrossed- 3 -LRB103 24976 BMS 51310 b

1borrower's income.
2    "Licensee" means a person licensed pursuant to this Act.
3    "Other repayment plans" means the Standard Repayment Plan,
4the Graduated Repayment Plan, the Extended Repayment Plan, or
5any other federal student loan repayment plan not based on a
6borrower's income.
7    "Private loan borrower eligible for referral to a
8repayment specialist" means a borrower who possesses any of
9the following characteristics:
10        (1) requests information related to options to reduce
11    or suspend his or her monthly payments; or
12        (2) indicates that he or she is experiencing or
13    anticipates experiencing financial hardship, distress, or
14    difficulty making his or her payments.
15    "Requester" means any borrower or cosigner that submits a
16request for assistance.
17    "Request for assistance" means all inquiries, complaints,
18account disputes, and requests for documentation a servicer
19receives from borrowers or cosigners.
20    "Secretary" means the Secretary of Financial and
21Professional Regulation, or his or her designee, including the
22Director of the Division of Banking of the Department of
23Financial and Professional Regulation.
24    "Servicing" means: (1) receiving any scheduled periodic
25payments from a student loan borrower or cosigner pursuant to
26the terms of a student loan; (2) applying the payments of



HB1519 Engrossed- 4 -LRB103 24976 BMS 51310 b

1principal and interest and such other payments with respect to
2the amounts received from a student loan borrower or cosigner,
3as may be required pursuant to the terms of a student loan; and
4(3) performing other administrative services with respect to a
5student loan.
6    "Student loan" or "loan" means any federal education loan
7or other loan primarily for use to finance a postsecondary
8education and costs of attendance at a postsecondary
9institution, including, but not limited to, tuition, fees,
10books and supplies, room and board, transportation, and
11miscellaneous personal expenses. "Student loan" includes a
12loan made to refinance a student loan.
13    "Student loan" shall not include an extension of credit
14under an open-end consumer credit plan, a reverse mortgage
15transaction, a residential mortgage transaction, or any other
16loan that is secured by real property or a dwelling.
17    "Student loan" shall not include an extension of credit
18made by a postsecondary educational institution to a borrower
19if one of the following apply:
20        (1) The term of the extension of credit is no longer
21    than the borrower's education program.
22        (2) The remaining, unpaid principal balance of the
23    extension of credit is less than $1,500 at the time of the
24    borrower's graduation or completion of the program.
25        (3) The borrower fails to graduate or successfully
26    complete his or her education program and has a balance



HB1519 Engrossed- 5 -LRB103 24976 BMS 51310 b

1    due at the time of his or her disenrollment from the
2    postsecondary institution.
3    "Student loan servicer" or "servicer" means any person
4engaged in the business of servicing student loans. "Student
5loan servicer" or "servicer" includes persons or entities
6acting on behalf of the State Treasurer. "Student loan
7servicer" includes an income share agreement provider as set
8forth under Article 7 of this Act.
9    "Student loan servicer" shall not include:
10        (1) a bank, savings bank, savings association, or
11    credit union organized under the laws of the State or any
12    other state or under the laws of the United States;
13        (2) a wholly owned subsidiary of any bank, savings
14    bank, savings association, or credit union organized under
15    the laws of the State or any other state or under the laws
16    of the United States;
17        (3) an operating subsidiary where each owner of the
18    operating subsidiary is wholly owned by the same bank,
19    savings bank, savings association, or credit union
20    organized under the laws of the State or any other state or
21    under the laws of the United States;
22        (4) the Illinois Student Assistance Commission and its
23    agents when the agents are acting on the Illinois Student
24    Assistance Commission's behalf;
25        (5) a public postsecondary educational institution or
26    a private nonprofit postsecondary educational institution



HB1519 Engrossed- 6 -LRB103 24976 BMS 51310 b

1    servicing a student loan it extended to the borrower;
2        (6) a licensed debt management service under the Debt
3    Management Service Act, except to the extent that the
4    organization acts as a subcontractor, affiliate, or
5    service provider for an entity that is otherwise subject
6    to licensure under this Act;
7        (7) any collection agency licensed under the
8    Collection Agency Act that is collecting post-default
9    debt;
10        (8) in connection with its responsibilities as a
11    guaranty agency engaged in default aversion, a State or
12    nonprofit private institution or organization having an
13    agreement with the U.S. Secretary of Education under
14    Section 428(b) of the Higher Education Act (20 U.S.C.
15    1078(B));
16        (9) a State institution or a nonprofit private
17    organization designated by a governmental entity to make
18    or service student loans, provided in each case that the
19    institution or organization services fewer than 20,000
20    student loan accounts of borrowers who reside in Illinois;
21        (10) a law firm or licensed attorney that is
22    collecting post-default debt; or
23        (11) the State Treasurer.
24(Source: P.A. 100-540, eff. 12-31-18; 100-635, eff. 12-31-18;
25101-586, eff. 8-26-19.)



HB1519 Engrossed- 7 -LRB103 24976 BMS 51310 b

1    (110 ILCS 992/Art. 7 heading new)

3    (110 ILCS 992/7-1 new)
4    Sec. 7-1. Purpose and Construction. This Article shall be
5construed as a consumer protection law for all purposes. This
6Article shall be liberally construed to effectuate its
8    (110 ILCS 992/7-5 new)
9    Sec. 7-5. Definitions. As used in this Article:
10    "Amount financed" means the amounts advanced by the income
11share agreement provider to the consumer or on behalf of the
12consumer or, if the income share agreement provider is a
13merchant financing the sale of goods or services to the
14consumer using an income share agreement, "amount financed"
15means the amount credited by the income share agreement
16provider toward the purchase of such goods and services on
17behalf of the consumer.
19    "Annual percentage rate" or "APR" means the percentage
20rate calculated according to the Federal Reserve Board's
21methodology as set forth under Regulation Z, 12 CFR Part 1026.
22The "annual percentage rate" of an income share agreement is
23the measure of the cost of the income share agreement,
24expressed as a yearly rate, that relates to the amount and



HB1519 Engrossed- 8 -LRB103 24976 BMS 51310 b

1timing of value received by the consumer to the amount and
2timing of payments made. The "annual percentage rate" is
3determined in accordance with either the actuarial method or
4the United States rule method.
5    "Cash price" means the price that the consumer would pay
6for the goods or services for which the educational income
7share agreement proceeds are advanced in an equivalent cash
8transaction between the consumer and the provider of goods or
9services. The Cash price excludes any amounts paid by the
10consumer as a down payment to the income share agreement
12    "Consumer" means a natural person who enters into an
13Educational Income Share Agreement for educational purposes.
14    "Disposable earnings" means that part of the earnings of
15an individual remaining after the deduction from total
16earnings of amounts required by law to be withheld.
17    "Educational Income Share Agreement" means an income share
18agreement that:
19        (1) is not made, insured, or guaranteed under Title IV
20    of the Higher Education Act of 1965, 20 U.S.C. 1070 et
21    seq., or another federally subsidized educational finance
22    program; and
23        (2) is extended to a consumer expressly, in whole or
24    in part, for postsecondary educational expenses, tuition,
25    or other obligations of, or pays amounts to, or on behalf
26    of, such individual for costs associated with a



HB1519 Engrossed- 9 -LRB103 24976 BMS 51310 b

1    postsecondary training program or any other program
2    designed to increase the individual's human capital,
3    employability, or earning potential, and is not limited to
4    programs eligible to participate as programs under Title
5    IV of the Higher Education Act of 1965, 20 U.S.C. 1070 et
6    seq., as well as any personal expenses, such as books,
7    supplies, transportation, and living costs, incurred by
8    the individual while enrolled in such a program and any
9    other costs or expenses included in the definition of a
10    "qualified higher education expense" as specified in 26
11    U.S.C. 529(e)(3)(A), including refinancing of loans or
12    income share agreements used for the purposes described in
13    this paragraph, and regardless of whether the income share
14    agreement is provided by the educational institution that
15    the consumer attends.
16    "Federal poverty guidelines" means the poverty guidelines
17published by the federal Department of Health and Human
18Services under the authority of 42 U.S.C. 9902(2) in the
19Federal Register.
20    "Garnishment" means any legal or equitable procedure
21through which earnings of an individual are required to be
22withheld for payment of obligations to an income share
23agreement provider as set forth in the Code of Civil
25    "Income share agreement" or "ISA" means an agreement
26between a consumer and an ISA provider under which:



HB1519 Engrossed- 10 -LRB103 24976 BMS 51310 b

1        (1) the ISA provider credits or advances a sum of
2    money to the consumer or to a third party on the consumer's
3    behalf or, if the ISA provider is a seller of goods or
4    services to the consumer, the ISA provider credits or
5    advances toward the purchase of such goods or services;
6        (2) the consumer is obligated to make periodic
7    payments, if any become due, to the ISA provider
8    calculated, based upon, or determined by the consumer's
9    income;
10        (3) the consumer only incurs an obligation in each
11    payment period if the individual's income in that period
12    is above an income threshold specified in the ISA
13    agreement;
14        (4) there is an ISA duration after which the
15    obligation is complete regardless of how much has been
16    paid, as long as the consumer has paid any prior amounts
17    due; and
18        (5) each of these elements is available at the time of
19    contracting of the income share agreement. For purposes of
20    this definition, an income share agreement shall be
21    treated as "credit", within the meaning of that term under
22    15 U.S.C. 1602(f), and as a "private education loan",
23    within the meaning of that term under 15 U.S.C.
24    1650(a)(8), to the extent the proceeds of the ISA are used
25    for postsecondary educational expenses in a manner
26    consistent with the definition of that term.



HB1519 Engrossed- 11 -LRB103 24976 BMS 51310 b

1    "Income threshold" means a fixed dollar amount that is the
2minimum income per payment period that an ISA recipient is
3required to earn before the ISA recipient is required to make a
4payment on an income share agreement for such payment period.
5    "Index" means the Consumer Price Index for Urban Wage
6Earners and Clerical Workers: U.S. City Average, All Items,
71967=100, compiled by the Bureau of Labor Statistics, United
8States Department of Labor.
9    "ISA duration" means the maximum time during which a
10consumer could remain obligated on the income share agreement,
11other than periods when an income share agreement provider is
12attempting to collect past-due amounts and absent periods of
13payment relief pauses, forbearance, military service
14suspension, or other suspension of obligations at the request
15of the consumer, regardless of whether the consumer's income
16is greater than the minimum income.
17    "ISA maximum number of payments" means the maximum number
18of ISA payments during ISA payment periods in which the
19consumer's income is equal to or greater than the income
20threshold that a consumer could be required to make pursuant
21to the terms of the income share agreement. "ISA maximum
22number of payments" does not include periods of payment relief
24    "ISA payment" means a calculated monthly payment in excess
25of $0.00 that counts toward the maximum income-based payments
26under the ISA. An "ISA payment" is required only for income



HB1519 Engrossed- 12 -LRB103 24976 BMS 51310 b

1earned during an ISA payment period in which the consumer's
2income was equal to or greater than the income threshold.
3    "ISA payment calculation method" means the mechanism,
4formula, percentage, dollar figure, or other means of
5calculating a student's payment obligation, based on the
6student's income, under the terms of the income share
8    "ISA payment cap" means the maximum amount of money a
9consumer must pay to satisfy the terms of an income share
10agreement, which may be expressed as a dollar value, a
11multiple of the amount funded to the student or on the
12student's behalf, or as a maximum effective annual percentage
14    "ISA payment cap" does not include charges related to
15default or other charges and fees that are due under the income
16share agreement.
17    "Income share agreement provider" means:
18        (1) a person that provides money, payments, or credits
19    to or on behalf of a consumer pursuant to the terms of an
20    income share agreement; or
21        (2) any other person engaged in the business of
22    soliciting, making, funding, or extending income share
23    agreements. This subsection does not apply to an entity
24    that either: (A) has no direct interactions with the
25    consumer and is not responsible for making credit
26    decisions regarding the consumer, or (B) is the provider



HB1519 Engrossed- 13 -LRB103 24976 BMS 51310 b

1    of the educational services to the consumer, even if these
2    entities may qualify under subsection (1), or (C) whose
3    role is solely limited to the marketing or advertising of
4    the income share agreement to the consumer on behalf of a
5    licensed income share agreement provider.
6    An income share agreement provider who is a student loan
7servicer as defined in the Student Loan Servicing Rights Act
8shall also comply with the provisions of this Article 7.
9    "Payment relief pause" means a period of time that is
10requested by the consumer during which the consumer is not
11required to make payments despite the consumer's income
12exceeding the income threshold.
13    "Sales price" means, for an educational income share
14agreement, the sum of the cash price and any other amounts
15financed by the educational income share agreement.
16    (110 ILCS 992/7-10 new)
17    Sec. 7-10. Monthly payment affordability.
18    (a) Maximum ISA income obligation. Each income share
19agreement shall specify the ISA payment calculation method
20applicable to the income share agreement and shall comply with
21the following:
22        (1) An income share agreement provider shall not enter
23    into an ISA with a consumer if the consumer would be
24    committing more than a total of 20% of the consumer's
25    future income toward the payment of the ISA.



HB1519 Engrossed- 14 -LRB103 24976 BMS 51310 b

1        (2) An income share agreement provider shall not enter
2    into an educational ISA with a consumer if the consumer
3    would be committing to pay more than 20% of his or her
4    income at any time during the ISA duration, based on
5    information available to the income share agreement
6    provider at the time of the projection, inclusive of any
7    payment obligations that the income share agreement
8    provider knows will arise in the future for other
9    educational ISAs and education loans upon which the
10    consumer is obligated at the time of the projection. The
11    ISA provider must confirm a consumer's educational ISA and
12    education loan liabilities through a verifiable
13    third-party source. At a minimum, the income share
14    agreement provider must confirm such liabilities using
15    information maintained by a nationwide consumer reporting
16    agency, as defined by 15 U.S.C. 1681a(f), and doing so is
17    sufficient for meeting the requirement in this paragraph;
18    however, nothing in this paragraph shall prohibit an
19    income share agreement provider from using other sources
20    to provide additional verification. For the purposes of
21    calculating the portion of a student's future income that
22    would be consumed by the educational ISA for which the
23    student has applied and other educational ISAs and
24    education loans known at the time, the ISA provider shall
25    calculate the aggregate future burden of all such
26    obligations, including the educational ISA for which the



HB1519 Engrossed- 15 -LRB103 24976 BMS 51310 b

1    student is applying, at hypothetical future income levels
2    ranging from the income threshold of the ISA for which the
3    student has applied up to $70,000, with such number
4    adjusting for inflation each year, in increments of
5    $10,000. The terms of the educational ISA for which the
6    student has applied cannot cause the student's aggregate
7    future burden to exceed the limit in subsection (b) at any
8    of the income increments stated in this paragraph. For the
9    purpose of calculating the percentage burden of an
10    educational ISA at a given future income level, the ISA
11    provider shall use the ISA payment amount that would be
12    applicable for the ISA at such income level. For the
13    purpose of calculating the percentage burden of an
14    educational loan at a given future income level, the ISA
15    provider shall divide the annual payment obligation by
16    income level using the most affordable payment plan or
17    option which would yield the lowest monthly payments that
18    would be available to the student at such income level
19    under such loan. For students enrolled in a Title IV
20    program, as part of this analysis the ISA provider shall
21    assume a federal loan balance equal to the larger of (1)
22    the student's existing federal loan balance, and (2) the
23    aggregate maximum amount the student is eligible to borrow
24    under Federal Direct Stafford Loans for his or her status,
25    dependent or independent.
26    (b) Protections during periods of low earnings. The income



HB1519 Engrossed- 16 -LRB103 24976 BMS 51310 b

1share agreement must state that when a consumer has income
2that is equal to or below the income threshold set forth in the
3income share agreement that the consumer's payment obligation
4is zero dollars. The income threshold at the time of
5origination must be high enough such that the consumer's gross
6income minus any income share agreement obligation must leave
7the consumer with gross income equal to at least 200% of the
8federal poverty guidelines for a single person.
9    (c) Required payment relief pauses. An income share
10agreement must offer at least 3 months of voluntary payment
11relief pauses, so long as a consumer's current income at the
12time of requesting the payment relief pause is equal to or less
13than 400% of the federal poverty guidelines for a single
14individual, for every 30 income-determined payments required
15under the income share agreement.
16    (110 ILCS 992/7-15 new)
17    Sec. 7-15. Maximum effective annual percentage rate. An
18income share agreement must specify that the maximum amount
19that a consumer could be required to pay under the income share
20agreement will not result in a consumer ever being required to
21pay an effective annual percentage rate that is greater than
2236%. If at any time the provider accepts a payment of an amount
23that would cause the limit in this Section to apply, the
24provider shall refund any amounts, within 20 calendar days,
25necessary to ensure that the consumer's payments do not result



HB1519 Engrossed- 17 -LRB103 24976 BMS 51310 b

1in an effective annual percentage rate that is greater than
2the limit specified in this Section.
3    (110 ILCS 992/7-20 new)
4    Sec. 7-20. Limits on duration of income share agreements.
5    (a) ISA maximum number of payments shall not exceed 180
6monthly payments.
7    (b) The ISA duration shall not exceed 240 months,
8excluding any months in which a consumer has requested and
9received a payment relief pause.
10    (110 ILCS 992/7-25 new)
11    Sec. 7-25. Risk sharing.
12    (a) An income share agreement provider may not contract
13for income share agreement terms that would result in a
14consumer having income that is less than or equal to 300% of
15the federal poverty guidelines for a single person for the ISA
16duration being required to make a stream of ISA payments that
17would yield an effective APR greater than 8%, or the high yield
18of the 10-year United States Constant Maturity Treasury Notes
19auctioned at the final auction held before the current
20calendar year in which an ISA offering is made plus 7%,
21whichever is greater.
22    (b) An income share agreement provider may not contract
23for income share agreement terms that would result in a
24consumer having income that is less than or equal to 400% of



HB1519 Engrossed- 18 -LRB103 24976 BMS 51310 b

1the federal poverty guidelines for a single person for the ISA
2duration being required to make a stream of ISA payments that
3would yield an effective APR greater than 12%, or the high
4yield of the 10-year United States Constant Maturity Treasury
5Notes auctioned at the final auction held before the current
6calendar year in which an ISA offering is made plus 11%,
7whichever is greater.
8    (c) An income share agreement provider may not contract
9for income share agreement terms that would result in a
10consumer having income that is less than or equal to 500% of
11the federal poverty guidelines for a single person for the ISA
12duration being required to make a stream of ISA payments that
13would yield an effective APR greater than 15%, or the high
14yield of the 10-year United States Constant Maturity Treasury
15Notes auctioned at the final auction held before the current
16calendar year in which an ISA offering is made plus 14%,
17whichever is greater.
18    (d) An income share agreement provider may not contract
19for income share agreement terms that would result in a
20consumer having income that is less than or equal to 600% of
21the federal poverty guidelines for a single person for the ISA
22duration being required to make a stream of ISA payments that
23would yield an effective APR greater than 18%, or the high
24yield of the 10-year United States Constant Maturity Treasury
25Notes auctioned at the final auction held before the current
26calendar year in which an ISA offering is made plus 17%,



HB1519 Engrossed- 19 -LRB103 24976 BMS 51310 b

1whichever is greater.
2    (e) For the purposes of determining the various tiers set
3forth in this Section, an income share agreement provider
4shall calculate the effective APR by determining the various
5federal poverty guidelines tiers at the time the consumer's
6income share agreement is originated and assuming such amounts
7are fixed through the ISA duration.
8    (f) For the purposes of determining ISA duration in this
9Section: in the case of an educational ISA, an income share
10agreement provider shall assume the ISA duration started after
11a period equal to the expected length of the program for which
12a consumer is enrolling; or in the case of a non-educational
13ISA, an income share agreement provider shall assume the ISA
14duration started immediately.
15    (110 ILCS 992/7-30 new)
16    Sec. 7-30. Limits on covered income. An income share
17agreement must specify the definition of income to be used for
18the purposes of calculating a consumer's payment obligation
19under the income share agreement. No income share agreement
20shall include any of the following in its definition of
22        (1) The income of the consumer's spouse, party to a
23    civil union under the Illinois Religious Freedom and Civil
24    Union Act, children or dependents.
25        (2) Any amount paid by the consumer under Title II or



HB1519 Engrossed- 20 -LRB103 24976 BMS 51310 b

1    XVI of the Social Security Act, 42 U.S.C. 401 et seq., 42
2    U.S.C. 1381 et seq.; or under a State program funded by
3    Title IV of the Social Security Act, 42 U.S.C. 601 et seq.
4        (3) Individual retirement account distributions.
5        (4) Pensions and annuities.
6        (5) Social security benefits.
7        (6) Other sources of federal or State aid provided to
8    individuals through any of the following:
9            (A) unemployment programs;
10            (B) disaster relief programs;
11            (C) Medicare or Medicaid benefits;
12            (D) benefits received through the Supplemental
13        Nutrition Assistance Program; (E)economic impact
14        payments;
15            (E) the earned income tax credit or child tax
16        credit;
17            (F) other income excluded from the definition of
18        taxable income set forth by the Internal Revenue
19        Service; or
20            (G) passive income that is not derived as a result
21        of a consumer's active participation in any trade or
22        business.
23    (110 ILCS 992/7-35 new)
24    Sec. 7-35. Fees permitted. In addition to the ISA
25obligation permitted by this Act, an income share agreement



HB1519 Engrossed- 21 -LRB103 24976 BMS 51310 b

1provider may contract for and receive the following additional
3        (1) government fees and taxes;
4        (2) a fee, which shall not exceed the sum of $25, for
5    failure to provide documentation to the income share
6    agreement provider for the confirmation and reconciliation
7    of the consumer's income;
8        (3) a fee for processing any forms to confirm the
9    consumer's income with the United States Internal Revenue
10    Service or a State department of revenue or taxation on a
11    dollar-for-dollar, pass-through basis of the expenses
12    incurred by the income share agreement provider;
13        (4) a late payment fee in an amount of $20 or 5% of the
14    late payment, whichever is greater, for any payment that
15    is more than 15 days past due; no late payment fee may be
16    charged more than once per late payment;
17        (5) an amount not exceeding $25, plus any actual
18    expenses incurred in connection with a check or draft that
19    is not honored because of insufficient or uncollected
20    funds or because no such account exists;
21        (6) other fees authorized by the Secretary. In
22    determining whether to authorize a charge, the Secretary
23    shall consider whether the charge benefits the consumer
24    and is reasonable;
25        (7) before or after default in payment of a scheduled
26    payment of an income share agreement, the parties to the



HB1519 Engrossed- 22 -LRB103 24976 BMS 51310 b

1    income share agreement may agree in writing to a deferral
2    of all or part of one or more unpaid payments and the
3    income share agreement provider may make, at the time of
4    deferral and receive at that time or at any time
5    thereafter, a deferral charge not exceeding an amount
6    equal to 10% of the missed payment. Provided this
7    subsection shall not apply to voluntary payment relief
8    pauses.
9    (110 ILCS 992/7-40 new)
10    Sec. 7-40. Restriction on security interest. Under no
11circumstances shall an income share agreement provider take a
12security interest in any collateral in connection with an
13income share agreement.
14    (110 ILCS 992/7-45 new)
15    Sec. 7-45. Discharge of obligations.
16    (a) All further obligations under an income share
17agreement, shall terminate if the consumer is deemed totally
18and permanently disabled by the applicable governmental
20    (b) All further obligations under the income share
21agreement, except those accruing before the consumer's death,
22shall terminate upon the death of the consumer.
23    (110 ILCS 992/7-50 new)



HB1519 Engrossed- 23 -LRB103 24976 BMS 51310 b

1    Sec. 7-50. Prohibition on co-signers. No income share
2agreement shall include or permit the use of a co-signer in
3connection with any obligation related to an income share
5    (110 ILCS 992/7-55 new)
6    Sec. 7-55. Limitation on acceleration.
7    (a) Income share agreement providers shall not attempt to
8accelerate or otherwise liquidate a future payment stream
9under an income share agreement.
10    (b) Notwithstanding subsection (a), nothing in this
11Section shall prevent an income share agreement provider from
12collecting or pursuing any other remedy available to the
13income share agreement provider for the collection of amounts
14that were due from the consumer under an income share
15agreement that were not paid or properly remitted to the
16income share agreement provider. Nothing in this Section shall
17prevent an income share agreement provider from calculating a
18projected future income for a consumer and calculating a
19consumer's payment obligation using that projection if the
20consumer does not provide contractually obligated
21documentation of income.
22    (c) Notwithstanding subsection (a), an income share
23agreement may contain a provision that allows a consumer to
24terminate his or her income share agreement before the events
25terminating further obligations under the income share



HB1519 Engrossed- 24 -LRB103 24976 BMS 51310 b

1agreement. The early termination mechanisms, such as total
2caps on payments due to the income share agreement provider or
3other rights to partially or fully terminate further
4obligations under the income share agreement, must be optional
5to the consumer and within the consumer's control. In such
6circumstances, such mechanisms will not be deemed a form of
7acceleration, early termination penalty, or prepayment
9    (110 ILCS 992/7-60 new)
10    Sec. 7-60. No assignment of wages.
11    (a) An income share agreement provider may not take an
12assignment of earnings of the consumer for payment or as
13security for payment of a debt arising out of an income share
14agreement. An assignment of earnings in violation of this
15Section is unenforceable by the assignee of the earnings and
16revocable by the consumer. This Section does not prohibit a
17consumer from authorizing deductions from his or her earnings
18in favor of a licensee if the authorization complies with the
19Illinois Wage Assignment Act.
20    (b) A sale of unpaid earnings made in consideration of the
21payment of money to or for the account of the seller of the
22earnings is deemed to be a loan to the seller secured by an
23assignment of earnings.
24    (110 ILCS 992/7-65 new)



HB1519 Engrossed- 25 -LRB103 24976 BMS 51310 b

1    Sec. 7-65. Limitations on garnishment. Before entry of
2judgment in an action against a consumer for a payment arising
3from an income share agreement, a licensee may not attach
4unpaid earnings of the consumer by garnishment or like
6    (110 ILCS 992/7-70 new)
7    Sec. 7-70. Use of multiple agreements. An income share
8agreement provider shall not use multiple agreements with
9respect to a single income share agreement with intent to
10violate any limitations of this Act.
11    (110 ILCS 992/7-75 new)
12    Sec. 7-75. Required disclosures.
13    (a) An income share agreement provider shall disclose the
14following information to each consumer, clearly and
15conspicuously, in a form that the consumer can keep at the time
16the transaction is consummated:
17        (1) The date of the income share agreement.
18        (2) The dollar amount of the amount financed.
19        (3) The sales price of the transaction if different
20    from the amount financed;
21        (4) The ISA payment calculation method. Any
22    percentages used in the ISA payment calculation method
23    shall be rounded to the nearest one-hundredth of 1% if the
24    percentage is not a whole number.



HB1519 Engrossed- 26 -LRB103 24976 BMS 51310 b

1        (5) The maximum number of payments expressed as a
2    whole number.
3        (6) The maximum duration expressed as a whole number
4    of the period of time.
5        (7) The income threshold expressed as a dollar amount
6    and a statement that payments will only be required during
7    periods when the consumer's income is equal to or exceeds
8    the income threshold.
9        (8) An itemization of the amount financed; if the ISA
10    provider is a seller of goods or services, then the amount
11    of any down payment and any additional fees or costs shall
12    be itemized.
13        (9) The definition of income to be used for the
14    purposes of calculating the consumer's obligations under
15    the income share agreement.
16        (10) A description of the terms under which the
17    obligations of the consumer under the income share
18    agreement will be extinguished before the full ISA
19    duration.
20        (11) A payment schedule that shows the date on which
21    the first payment will be due and reflecting each date
22    thereafter during the ISA duration that a payment may be
23    due.
24        (12) An itemization of any permissible fees associated
25    with the ISA.
26        (13) A description of the methods used by the ISA



HB1519 Engrossed- 27 -LRB103 24976 BMS 51310 b

1    provider to engage in a process of reconciliation and
2    verification to determine if the consumer's payments are
3    more than, equal to, or less than the payments owed by the
4    consumer under his or her income share agreement; this
5    description shall include the following:
6            (i) a description of the frequency or triggers for
7        the commencement of the income verification process;
8            (ii) a description of the requirements and timing
9        of the process in which the consumer must participate
10        in order for the ISA provider to verify the consumer's
11        income; and
12            (iii) a description of any records or forms,
13        including tax records, that the consumer may be
14        required to execute or submit.
15        (14) The name and address of the ISA provider.
16        (15) A table displaying the dollar amounts of each
17    payment, the number of payments, the effective annual
18    percentage rate, and the total of all payments that a
19    consumer would be required to pay under the income share
20    agreement at a range of annual income levels based on the
21    ISA duration. The comparison table shall include a
22    statement that "This comparison table is for illustrative
23    purposes only and may not reflect the amounts that you are
24    likely to pay under this income share agreement. This
25    table assumes you have the same income over the entire
26    term of your income share agreement. It does not take into



HB1519 Engrossed- 28 -LRB103 24976 BMS 51310 b

1    account changes in income. Your income will likely change
2    over time. This table does not represent the income or
3    range of incomes that you are likely to earn in the
4    future.". In computing the APR, the ISA provider shall use
5    the amount financed and may assume that the income share
6    agreement will be disbursed in the amount and with the
7    disbursement schedule that it reasonably expects to follow
8    for such income share agreement and that payments would
9    commence on the date set forth in the income share
10    agreement. The income used in this disclosure shall
11    include, at minimum, the obligations at the following
12    incomes:
13            (i) no income;
14            (ii) income equal to the annual equivalent of the
15        income threshold;
16            (iii) various income scenarios with at least
17        calculations at annual incomes of $40,000, $60,000,
18        $80,000, $100,000, $125,000, $150,000, $175,000, and
19        $200,000; and
20            (iv) if known by the ISA provider, the consumer's
21        current income.
22        (16) A statement that the income share agreement is
23    not a fixed payment installment loan and that the amount
24    the consumer will be required to pay under the income
25    share agreement:
26            (i) may be more or less than the amount financed by



HB1519 Engrossed- 29 -LRB103 24976 BMS 51310 b

1        the ISA provider; and
2            (ii) will vary in proportion with the consumer's
3        income.
4    (b) The disclosures required by this Section shall be
5grouped together and segregated from all other information.
6    (c) The disclosures required by this Section may be
7provided to a consumer in electronic form, subject to
8compliance with the consumer's consent and other applicable
9provisions of the Electronic Signatures in Global and National
10Commerce Act, 15 U.S.C. 7001 et seq., and applicable State
12    (d) If model documents are established pursuant to any
13federal law covering income share agreements, compliance with
14those forms shall be considered compliance with this Act with
15respect to the disclosure requirements contained in this Act.
16    (110 ILCS 992/7-80 new)
17    Sec. 7-80. Early completion. An income share agreement
18shall specify the terms and conditions by which the consumer
19may extinguish his or her obligations under the income share
20agreement before the end of the income share agreement's
21duration. An income share agreement may include any method to
22determine the early completion payment; however, a consumer
23may always cancel an income share agreement by making
24aggregate payments, excluding payments to fees, equal to the
25ISA payment cap. The consumer is entitled to this early



HB1519 Engrossed- 30 -LRB103 24976 BMS 51310 b

1completion regardless of whether the consumer makes this early
2completion payment by making regularly scheduled payments or
3by making a single lump sum payment in the amount of the early
4completion payment.
5    (110 ILCS 992/7-85 new)
6    Sec. 7-85. Assumption of increase in future income.
7    (a) If a consumer fails to provide income documentation as
8reasonably required by an income share agreement, an income
9share agreement provider may assign an amount of income to the
10consumer and compute the consumer's monthly payment amount by
11any of the following methods, to the extent disclosed in the
12income share agreement:
13        (1) assigning an income amount obtained from a
14    reasonably reliable third party or a credit reporting
15    agency;
16        (2) if the consumer previously provided income
17    documentation or has had an income assigned in the prior
18    12-month period that has increased by an amount not to
19    exceed 10%, but such increase may not be applied more than
20    once per 12-month period;
21        (3) contacting the consumer's employer, or any person
22    or entity reasonably believed to represent the consumer's
23    employer, to obtain, verify, or update the consumer's
24    income information;
25        (4) contacting the Department of Revenue or the



HB1519 Engrossed- 31 -LRB103 24976 BMS 51310 b

1    Internal Revenue Service to obtain the most recent
2    information available about the student's income; or
3        (5) for income share agreement providers providing
4    educational income share agreements, assigning a
5    reasonable qualified income based on the incomes of:
6            (A) the nearest reasonably relevant quantile of
7        income for individuals working in the profession for
8        which the consumer's educational program was intended
9        to prepare the participant, as determined by
10        information published by the Bureau of Labor
11        Statistics or other reasonably reliable publicly
12        available data sources; or
13            (B) the nearest reasonably relevant quantile of
14        income of consumers who attended the same or a
15        reasonably comparable covered educational program or
16        course of study, as determined by information
17        published by the Bureau of Labor Statistics or other
18        reasonably reliable publicly available data sources.
19    (b) If an income share agreement provider assigns an
20income to a consumer's income share agreement, then it shall
21notify the consumer in the monthly billing statement, and in
22each billing statement thereafter while the assigned income
23remains applicable to the consumer's income share agreement,
24that income has been assigned and of the consumer's rights
25under this Section.
26    (c) If the consumer does provide income information as



HB1519 Engrossed- 32 -LRB103 24976 BMS 51310 b

1reasonably required by the income share agreement within one
2year of the date on which the income share agreement provider
3notified the consumer that assigned income will be applied to
4the income share agreement, then, within 15 days after the
5income share agreement provider's receipt of such information,
6the income share agreement provider shall update each prior
7instance in which assigned income was applied using the income
8information provided by the consumer; if the consumer provides
9income information more than one year after the income share
10agreement provider first assigned income to the consumer's
11income share agreement, then the income share agreement
12provider may, but is not obligated to, update each prior
13instance in which assigned income was applied using the income
14information provided by the consumer.
15    (d) An income share agreement provider that assigns income
16to an income share agreement shall retain all applicable
17records relating to the method and data sources used to make
18such estimation for 3 years after the end of that income share
20    (110 ILCS 992/7-90 new)
21    Sec. 7-90. Receipts; statements of account; evidence of
23    (a) The income share agreement provider shall deliver or
24mail to the consumer, without request, a written receipt for
25each payment made pursuant to an income share agreement. A



HB1519 Engrossed- 33 -LRB103 24976 BMS 51310 b

1periodic statement showing a payment received by mail complies
2with this subsection.
3    (b) Upon written request of a consumer, the income share
4agreement provider shall provide a written statement of the
5dates and amounts of payments made within the 12 months
6preceding the month in which the request is received. The
7statement shall be provided without charge once during each
8year of the term of the obligation. If additional statements
9are requested, the income share agreement provider may charge
10an amount not to exceed $5.00 for each additional statement.
11    (c) After a consumer has fulfilled all obligations with
12respect to an income share agreement, the income share
13agreement provider, upon request of the consumer, shall
14deliver or mail to the consumer written evidence acknowledging
15termination of all obligations with respect to the income
16share agreement.
17    (110 ILCS 992/7-95 new)
18    Sec. 7-95. Adjustment of dollar amounts.
19    (a) From time to time the dollar amounts in this Act
20designated as subject to change shall change, as provided in
21this Section, according to and to the extent of changes in the
23    (b) The index for December of the year preceding the year
24in which this Act becomes effective is the reference base



HB1519 Engrossed- 34 -LRB103 24976 BMS 51310 b

1    (c) The designated dollar amounts shall change on July 1
2of each even-numbered year if the percentage of change,
3calculated to the nearest whole percentage point, between the
4index and the end of the preceding year and the reference base
5index is 10% or more, but:
6        (1) the portion of the percentage change in the index
7    in excess of a multiple of 10% shall be disregarded and the
8    dollar amounts shall change only in multiples of 10% of
9    the amounts provided in this Act on the date of enactment;
10    and
11        (2) the dollar amounts shall not change if the amounts
12    required by this Section are those currently in effect
13    pursuant to this Act as a result of earlier application of
14    this Section.
15    (d) If the index is revised, the percentage of change
16pursuant to this Section shall be calculated on the basis of
17the revised index. If a revision of the index changes the
18reference base index, a revised reference base index shall be
19determined by multiplying the reference base index then
20applicable by the rebasing factor furnished by the Bureau of
21Labor Statistics. If the index is superseded, the index
22referred to in this Section is the one represented by the
23Bureau of Labor Statistics as reflecting most accurately
24changes in the purchasing power of the dollar for consumers.
25    (e) The Department shall adopt a rule setting forth, on or
26before April 30 of each year in which dollar amounts are to



HB1519 Engrossed- 35 -LRB103 24976 BMS 51310 b

1change, the changes in dollar amounts required by this
2Section. As soon as practical after the changes occur, the
3Department shall adopt a rule setting forth the changes in the
4index required by subsection (d), including, if applicable,
5the numerical equivalent of the reference base index under a
6revised reference base index and the designation or title of
7any index superseding the index.
8    (f) A person does not violate this Act with respect to a
9transaction otherwise complying with this Act if he or she
10relies on dollar amounts either determined according to
11subsection (c) or appearing in the last rule of the Department
12announcing the then-current dollar amounts.
13    (110 ILCS 992/7-100 new)
14    Sec. 7-100. Construction against implicit authority. This
15Act is a general Act intended as a unified coverage of its
16subject matter; no part of this Act shall be construed to be
17impliedly repealed by subsequent legislation if that
18construction can reasonably be avoided.
19    (110 ILCS 992/7-105 new)
20    Sec. 7-105. Application of other Acts. Income share
21agreements and income share agreement providers are subject to
22other Articles of this Act, the Know Before You Owe Private
23Education Loan Act, and the Predatory Loan Prevention Act and
24shall comply with their requirements and any rules adopted by



HB1519 Engrossed- 36 -LRB103 24976 BMS 51310 b

1the Department of Financial and Professional Regulation
2pursuant to those Acts. Nothing herein is intended to imply
3that an education ISA: (i) is not a credit transaction or (ii)
4that, upon an obligation accruing, does not create a debt.
5    (110 ILCS 992/25-5)
6    Sec. 25-5. Enforcement; Consumer Fraud and Deceptive
7Business Practices Act. The Attorney General may enforce a
8violation of Article 5 or 7 of this Act as an unlawful practice
9under the Consumer Fraud and Deceptive Business Practices Act.
10(Source: P.A. 100-540, eff. 12-31-18.)
11    Section 10. The Consumer Installment Loan Act is amended
12by changing Section 1 as follows:
13    (205 ILCS 670/1)  (from Ch. 17, par. 5401)
14    Sec. 1. License required to engage in business. No person,
15partnership, association, limited liability company, or
16corporation shall engage in the business of making loans of
17money and charge, contract for, or receive on any such loan a
18greater annual percentage rate than 9% except as authorized by
19this Act after first obtaining a license from the Director of
20Financial Institutions (hereinafter called the Director). No
21licensee, or employee or affiliate thereof, that is licensed
22under the Payday Loan Reform Act shall obtain a license under
23this Act except that a licensee under the Payday Loan Reform



HB1519 Engrossed- 37 -LRB103 24976 BMS 51310 b

1Act may obtain a license under this Act for the exclusive
2purpose and use of making title-secured loans, as defined in
3subsection (a) of Section 15 of this Act and governed by Title
438, Section 110.300 of the Illinois Administrative Code. For
5the purpose of this Section, "affiliate" means any person or
6entity that directly or indirectly controls, is controlled by,
7or shares control with another person or entity. A person or
8entity has control over another if the person or entity has an
9ownership interest of 25% or more in the other. A person or
10entity licensed as an Income Share Agreement provider is
11exempt from the requirements of this Act to the extent of their
12operation as an Income Share Agreement under Article 7 of the
13Student Loan Servicing Rights Act. In addition, Educational
14Income Share Agreements as provided under Article 7 of the
15Student Loan Servicing Rights Act are not subject to the
16requirements of this Act.
17    In this Act, "Director" means the Director of Financial
18Institutions of the Department of Financial and Professional
20(Source: P.A. 101-658, eff. 3-23-21.)
21    Section 15. The Interest Act is amended by changing
22Section 4 as follows:
23    (815 ILCS 205/4)  (from Ch. 17, par. 6404)
24    Sec. 4. General interest rate.



HB1519 Engrossed- 38 -LRB103 24976 BMS 51310 b

1    (1) Except as otherwise provided in Section 4.05, in all
2written contracts it shall be lawful for the parties to
3stipulate or agree that an annual percentage rate of 9%, or any
4less sum, shall be taken and paid upon every $100 of money
5loaned or in any manner due and owing from any person to any
6other person or corporation in this state, and after that rate
7for a greater or less sum, or for a longer or shorter time,
8except as herein provided.
9    The maximum rate of interest that may lawfully be
10contracted for is determined by the law applicable thereto at
11the time the contract is made. Any provision in any contract,
12whether made before or after July 1, 1969, which provides for
13or purports to authorize, contingent upon a change in the
14Illinois law after the contract is made, any rate of interest
15greater than the maximum lawful rate at the time the contract
16is made, is void.
17    It is lawful for a state bank or a branch of an
18out-of-state bank, as those terms are defined in Section 2 of
19the Illinois Banking Act, to receive or to contract to receive
20and collect interest and charges at any rate or rates agreed
21upon by the bank or branch and the borrower. It is lawful for a
22savings bank chartered under the Savings Bank Act or a savings
23association chartered under the Illinois Savings and Loan Act
24of 1985 to receive or contract to receive and collect interest
25and charges at any rate agreed upon by the savings bank or
26savings association and the borrower.



HB1519 Engrossed- 39 -LRB103 24976 BMS 51310 b

1    It is lawful to receive or to contract to receive and
2collect interest and charges as authorized by this Act and as
3authorized by the Consumer Installment Loan Act, the Payday
4Loan Reform Act, the Retail Installment Sales Act, the
5Illinois Financial Services Development Act, the Motor Vehicle
6Retail Installment Sales Act, or the Consumer Legal Funding
7Act, or the Student Loan Servicing Rights Act. It is lawful to
8charge, contract for, and receive any rate or amount of
9interest or compensation, except as otherwise provided in the
10Predatory Loan Prevention Act, with respect to the following
12        (a) Any loan made to a corporation;
13        (b) Advances of money, repayable on demand, to an
14    amount not less than $5,000, which are made upon warehouse
15    receipts, bills of lading, certificates of stock,
16    certificates of deposit, bills of exchange, bonds or other
17    negotiable instruments pledged as collateral security for
18    such repayment, if evidenced by a writing;
19        (c) Any credit transaction between a merchandise
20    wholesaler and retailer; any business loan to a business
21    association or copartnership or to a person owning and
22    operating a business as sole proprietor or to any persons
23    owning and operating a business as joint venturers, joint
24    tenants or tenants in common, or to any limited
25    partnership, or to any trustee owning and operating a
26    business or whose beneficiaries own and operate a



HB1519 Engrossed- 40 -LRB103 24976 BMS 51310 b

1    business, except that any loan which is secured (1) by an
2    assignment of an individual obligor's salary, wages,
3    commissions or other compensation for services, or (2) by
4    his household furniture or other goods used for his
5    personal, family or household purposes shall be deemed not
6    to be a loan within the meaning of this subsection; and
7    provided further that a loan which otherwise qualifies as
8    a business loan within the meaning of this subsection
9    shall not be deemed as not so qualifying because of the
10    inclusion, with other security consisting of business
11    assets of any such obligor, of real estate occupied by an
12    individual obligor solely as his residence. The term
13    "business" shall be deemed to mean a commercial,
14    agricultural or industrial enterprise which is carried on
15    for the purpose of investment or profit, but shall not be
16    deemed to mean the ownership or maintenance of real estate
17    occupied by an individual obligor solely as his residence;
18        (d) Any loan made in accordance with the provisions of
19    Subchapter I of Chapter 13 of Title 12 of the United States
20    Code, which is designated as "Housing Renovation and
21    Modernization";
22        (e) Any mortgage loan insured or upon which a
23    commitment to insure has been issued under the provisions
24    of the National Housing Act, Chapter 13 of Title 12 of the
25    United States Code;
26        (f) Any mortgage loan guaranteed or upon which a



HB1519 Engrossed- 41 -LRB103 24976 BMS 51310 b

1    commitment to guaranty has been issued under the
2    provisions of the Veterans' Benefits Act, Subchapter II of
3    Chapter 37 of Title 38 of the United States Code;
4        (g) Interest charged by a broker or dealer registered
5    under the Securities Exchange Act of 1934, as amended, or
6    registered under the Illinois Securities Law of 1953,
7    approved July 13, 1953, as now or hereafter amended, on a
8    debit balance in an account for a customer if such debit
9    balance is payable at will without penalty and is secured
10    by securities as defined in Uniform Commercial
11    Code-Investment Securities;
12        (h) Any loan made by a participating bank as part of
13    any loan guarantee program which provides for loans and
14    for the refinancing of such loans to medical students,
15    interns and residents and which are guaranteed by the
16    American Medical Association Education and Research
17    Foundation;
18        (i) Any loan made, guaranteed, or insured in
19    accordance with the provisions of the Housing Act of 1949,
20    Subchapter III of Chapter 8A of Title 42 of the United
21    States Code and the Consolidated Farm and Rural
22    Development Act, Subchapters I, II, and III of Chapter 50
23    of Title 7 of the United States Code;
24        (j) Any loan by an employee pension benefit plan, as
25    defined in Section 3 (2) of the Employee Retirement Income
26    Security Act of 1974 (29 U.S.C.A. Sec. 1002), to an



HB1519 Engrossed- 42 -LRB103 24976 BMS 51310 b

1    individual participating in such plan, provided that such
2    loan satisfies the prohibited transaction exemption
3    requirements of Section 408 (b) (1) (29 U.S.C.A. Sec. 1108
4    (b) (1)) or Section 2003 (a) (26 U.S.C.A. Sec. 4975 (d)
5    (1)) of the Employee Retirement Income Security Act of
6    1974;
7        (k) Written contracts, agreements or bonds for deed
8    providing for installment purchase of real estate,
9    including a manufactured home as defined in subdivision
10    (53) of Section 9-102 of the Uniform Commercial Code that
11    is real property as defined in the Conveyance and
12    Encumbrance of Manufactured Homes as Real Property and
13    Severance Act;
14        (l) Loans secured by a mortgage on real estate,
15    including a manufactured home as defined in subdivision
16    (53) of Section 9-102 of the Uniform Commercial Code that
17    is real property as defined in the Conveyance and
18    Encumbrance of Manufactured Homes as Real Property and
19    Severance Act;
20        (m) Loans made by a sole proprietorship, partnership,
21    or corporation to an employee or to a person who has been
22    offered employment by such sole proprietorship,
23    partnership, or corporation made for the sole purpose of
24    transferring an employee or person who has been offered
25    employment to another office maintained and operated by
26    the same sole proprietorship, partnership, or corporation;



HB1519 Engrossed- 43 -LRB103 24976 BMS 51310 b

1        (n) Loans to or for the benefit of students made by an
2    institution of higher education.
3    (2) Except for loans described in subparagraph (a), (c),
4(d), (e), (f) or (i) of subsection (1) of this Section, and
5except to the extent permitted by the applicable statute for
6loans made pursuant to Section 4a or pursuant to the Consumer
7Installment Loan Act:
8        (a) Whenever the rate of interest exceeds an annual
9    percentage rate of 8% on any written contract, agreement
10    or bond for deed providing for the installment purchase of
11    residential real estate, or on any loan secured by a
12    mortgage on residential real estate, it shall be unlawful
13    to provide for a prepayment penalty or other charge for
14    prepayment.
15        (b) No agreement, note or other instrument evidencing
16    a loan secured by a mortgage on residential real estate,
17    or written contract, agreement or bond for deed providing
18    for the installment purchase of residential real estate,
19    may provide for any change in the contract rate of
20    interest during the term thereof. However, if the Congress
21    of the United States or any federal agency authorizes any
22    class of lender to enter, within limitations, into
23    mortgage contracts or written contracts, agreements or
24    bonds for deed in which the rate of interest may be changed
25    during the term of the contract, any person, firm,
26    corporation or other entity not otherwise prohibited from



HB1519 Engrossed- 44 -LRB103 24976 BMS 51310 b

1    entering into mortgage contracts or written contracts,
2    agreements or bonds for deed in Illinois may enter into
3    mortgage contracts or written contracts, agreements or
4    bonds for deed in which the rate of interest may be changed
5    during the term of the contract, within the same
6    limitations.
7    (3) In any contract or loan which is secured by a mortgage,
8deed of trust, or conveyance in the nature of a mortgage, on
9residential real estate, the interest which is computed,
10calculated, charged, or collected pursuant to such contract or
11loan, or pursuant to any regulation or rule promulgated
12pursuant to this Act, may not be computed, calculated, charged
13or collected for any period of time occurring after the date on
14which the total indebtedness, with the exception of late
15payment penalties, is paid in full.
16    (4) For purposes of this Section, a prepayment shall mean
17the payment of the total indebtedness, with the exception of
18late payment penalties if incurred or charged, on any date
19before the date specified in the contract or loan agreement on
20which the total indebtedness shall be paid in full, or before
21the date on which all payments, if timely made, shall have been
22made. In the event of a prepayment of the indebtedness which is
23made on a date after the date on which interest on the
24indebtedness was last computed, calculated, charged, or
25collected but before the next date on which interest on the
26indebtedness was to be calculated, computed, charged, or



HB1519 Engrossed- 45 -LRB103 24976 BMS 51310 b

1collected, the lender may calculate, charge and collect
2interest on the indebtedness for the period which elapsed
3between the date on which the prepayment is made and the date
4on which interest on the indebtedness was last computed,
5calculated, charged or collected at a rate equal to 1/360 of
6the annual rate for each day which so elapsed, which rate shall
7be applied to the indebtedness outstanding as of the date of
8prepayment. The lender shall refund to the borrower any
9interest charged or collected which exceeds that which the
10lender may charge or collect pursuant to the preceding
11sentence. The provisions of this amendatory Act of 1985 shall
12apply only to contracts or loans entered into on or after the
13effective date of this amendatory Act, but shall not apply to
14contracts or loans entered into on or after that date that are
15subject to Section 4a of this Act, the Consumer Installment
16Loan Act, the Payday Loan Reform Act, the Predatory Loan
17Prevention Act, or the Retail Installment Sales Act, or that
18provide for the refund of precomputed interest on prepayment
19in the manner provided by such Act.
20    (5) For purposes of items (a) and (c) of subsection (1) of
21this Section, a rate or amount of interest may be lawfully
22computed when applying the ratio of the annual interest rate
23over a year based on 360 days. The provisions of this
24amendatory Act of the 96th General Assembly are declarative of
25existing law.
26    (6) For purposes of this Section, "real estate" and "real



HB1519 Engrossed- 46 -LRB103 24976 BMS 51310 b

1property" include a manufactured home, as defined in
2subdivision (53) of Section 9-102 of the Uniform Commercial
3Code that is real property as defined in the Conveyance and
4Encumbrance of Manufactured Homes as Real Property and
5Severance Act.
6(Source: P.A. 101-658, eff. 3-23-21; 102-987, eff. 5-27-22.)
7    Section 97. Severability. The provisions of this Act are
8severable under Section 1.31 of the Statute on Statutes.
9    Section 99. Effective date. This Act takes effect upon
10becoming law.