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90_SB0670
815 ILCS 205/4.1a from Ch. 17, par. 6406
Amends the Interest Act. Adds a caption to a Section
concerning charges that are deemed not to be consideration
for a loan.
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1 AN ACT to amend the Interest Act by changing Section
2 4.1a.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Interest Act is amended by changing
6 Section 4.1a as follows:
7 (815 ILCS 205/4.1a) (from Ch. 17, par. 6406)
8 Sec. 4.1a. Charges for certain costs excluded. Charges
9 for and cost of the following items paid or incurred by any
10 lender in connection with any loan shall not be deemed to be
11 charges for or in connection with any loan of money referred
12 to in Section 6 of this Act, or charges by the lender as a
13 consideration for the loan referred to in this Section:
14 (a) hazard, mortgage or life insurance premiums,
15 survey, credit report, title insurance, abstract and
16 attorneys' fees, recording charges, escrow and appraisal
17 fees, and similar charges.
18 (b) in the case of construction loans, in addition
19 to the matters referred to in clause (a) above, the
20 actual cost incurred by the lender for services for
21 making physical inspections, processing payouts,
22 examining and reviewing contractors' and subcontractors'
23 sworn statements and waivers of lien and the like.
24 (c) in the case of any loan made pursuant to the
25 provisions of the Emergency Home Purchase Assistance Act
26 of 1974 (Section 313 of the National Housing Act, Chapter
27 B of Title 12 of the United States Code), in addition to
28 the matters referred to in paragraphs (a) and (b) of this
29 Section all charges required or allowed by the Government
30 National Mortgage Association, whether designated as
31 processing fees, commitment fees, loss reserve and
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1 marketing fees, discounts, origination fees or otherwise
2 designated.
3 (d) in the case of a single payment loan, made for
4 a period of 6 months or less, a regulated financial
5 institution or licensed lender may contract for and
6 receive a maximum charge of $15 in lieu of interest.
7 Such charge may be collected when the loan is made, but
8 only one such charge may be contracted for, received, or
9 collected for any such loan, including any extension or
10 renewal thereof.
11 (e) if the agreement governing the loan so
12 provides, a charge not to exceed the rate permitted under
13 Section 3-806 of the Uniform Commercial Code-Commercial
14 Paper for any check, draft or order for the payment of
15 money submitted in accordance with said agreement which
16 is unpaid or not honored by a bank or other depository
17 institution.
18 (f) if the agreement governing the loan so
19 provides, for each loan installment in default for a
20 period of not less than 10 days, a charge in an amount
21 not in excess of 5% of such loan installment. Only one
22 delinquency charge may be collected on any such loan
23 installment regardless of the period during which it
24 remains in default. Payments timely received by the
25 lender under a written extension or deferral agreement
26 shall not be subject to any delinquency charge.
27 Where there is a charge in addition to the stated rate of
28 interest payable directly or indirectly by the borrower and
29 imposed directly or indirectly by the lender as a
30 consideration for the loan, or for or in connection with the
31 loan of money, whether paid or payable by the borrower, the
32 seller, or any other person on behalf of the borrower to the
33 lender or to a third party, or for or in connection with the
34 loan of money, other than as hereinabove in this Section
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1 provided, whether denominated "points," "service charge,"
2 "discount," "commission," or otherwise, and without regard to
3 declining balances of principal which would result from any
4 required or optional amortization of the principal of the
5 loan, the rate of interest shall be calculated in the
6 following manner:
7 The percentage of the principal amount of the loan
8 represented by all of such charges shall first be computed,
9 which in the case of a loan with an interest rate in excess
10 of 8% per annum secured by residential real estate, other
11 than loans described in paragraphs (e) and (f) of Section 4,
12 shall not exceed 3% of such principal amount. Said
13 percentage shall then be divided by the number of years and
14 fractions thereof of the period of the loan according to its
15 stated maturity. The percentage thus obtained shall then be
16 added to the percentage of the stated annual rate of
17 interest.
18 The borrower in the case of nonexempt loan shall have the
19 right to prepay the loan in whole or in part at any time,
20 but, except as may otherwise be provided by Section 4, the
21 lender may require payment of not more than 6 months' advance
22 interest on that part of the aggregate amount of all
23 prepayments on a loan in one year, which exceeds 20% of the
24 original principal amount of the loan.
25 (Source: P.A. 87-496.)