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| [ Introduced ] | [ Engrossed ] | [ House Amendment 001 ] |
90_SB0670sam001
LRB9003309JSccam
1 AMENDMENT TO SENATE BILL 670
2 AMENDMENT NO. . Amend Senate Bill 670 by replacing
3 the title with the following:
4 "AN ACT to amend the Interest Act by changing Section
5 4."; and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 5. The Interest Act is amended by changing
9 Section 4 as follows:
10 (815 ILCS 205/4) (from Ch. 17, par. 6404)
11 Sec. 4. General interest rate.
12 (1) In all written contracts it shall be lawful for the
13 parties to stipulate or agree that 9% per annum, or any less
14 sum of interest, shall be taken and paid upon every $100 of
15 money loaned or in any manner due and owing from any person
16 to any other person or corporation in this state, and after
17 that rate for a greater or less sum, or for a longer or
18 shorter time, except as herein provided.
19 The maximum rate of interest that may lawfully be
20 contracted for is determined by the law applicable thereto at
21 the time the contract is made. Any provision in any
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1 contract, whether made before or after July 1, 1969, which
2 provides for or purports to authorize, contingent upon a
3 change in the Illinois law after the contract is made, any
4 rate of interest greater than the maximum lawful rate at the
5 time the contract is made, is void.
6 It is lawful for a state bank or a branch of an
7 out-of-state bank, as those terms are defined in Section 2 of
8 the Illinois Banking Act, to receive or to contract to
9 receive and collect interest and charges at any rate or rates
10 agreed upon by the bank or branch and the borrower.
11 It is lawful to receive or to contract to receive and
12 collect interest and charges as authorized by this Act and as
13 authorized by the Consumer Installment Loan Act and by the
14 "Consumer Finance Act", approved July 10, 1935, as now or
15 hereafter amended. It is lawful to charge, contract for, and
16 receive any rate or amount of interest or compensation with
17 respect to the following transactions:
18 (a) Any loan made to a corporation;
19 (b) Advances of money, repayable on demand, to an
20 amount not less than $5,000, which are made upon
21 warehouse receipts, bills of lading, certificates of
22 stock, certificates of deposit, bills of exchange, bonds
23 or other negotiable instruments pledged as collateral
24 security for such repayment, if evidenced by a writing;
25 (c) Any credit transaction between a merchandise
26 wholesaler and retailer; any business loan to a business
27 association or copartnership or to a person owning and
28 operating a business as sole proprietor or to any persons
29 owning and operating a business as joint venturers, joint
30 tenants or tenants in common, or to any limited
31 partnership, or to any trustee owning and operating a
32 business or whose beneficiaries own and operate a
33 business, except that any loan which is secured (1) by an
34 assignment of an individual obligor's salary, wages,
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1 commissions or other compensation for services, or (2) by
2 his household furniture or other goods used for his
3 personal, family or household purposes shall be deemed
4 not to be a loan within the meaning of this subsection;
5 and provided further that a loan which otherwise
6 qualifies as a business loan within the meaning of this
7 subsection shall not be deemed as not so qualifying
8 because of the inclusion, with other security consisting
9 of business assets of any such obligor, of real estate
10 occupied by an individual obligor solely as his
11 residence. The term "business" shall be deemed to mean a
12 commercial, agricultural or industrial enterprise which
13 is carried on for the purpose of investment or profit,
14 but shall not be deemed to mean the ownership or
15 maintenance of real estate occupied by an individual
16 obligor solely as his residence;
17 (d) Any loan made in accordance with the provisions
18 of Subchapter I of Chapter 13 of Title 12 of the United
19 States Code, which is designated as "Housing Renovation
20 and Modernization";
21 (e) Any mortgage loan insured or upon which a
22 commitment to insure has been issued under the provisions
23 of the National Housing Act, Chapter 13 of Title 12 of
24 the United States Code;
25 (f) Any mortgage loan guaranteed or upon which a
26 commitment to guaranty has been issued under the
27 provisions of the Veterans' Benefits Act, Subchapter II
28 of Chapter 37 of Title 38 of the United States Code;
29 (g) Interest charged by a broker or dealer
30 registered under the Securities Exchange Act of 1934, as
31 amended, or registered under the Illinois Securities Law
32 of 1953, approved July 13, 1953, as now or hereafter
33 amended, on a debit balance in an account for a customer
34 if such debit balance is payable at will without penalty
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1 and is secured by securities as defined in Uniform
2 Commercial Code-Investment Securities;
3 (h) Any loan made by a participating bank as part
4 of any loan guarantee program which provides for loans
5 and for the refinancing of such loans to medical
6 students, interns and residents and which are guaranteed
7 by the American Medical Association Education and
8 Research Foundation;
9 (i) Any loan made, guaranteed, or insured in
10 accordance with the provisions of the Housing Act of
11 1949, Subchapter III of Chapter 8A of Title 42 of the
12 United States Code and the Consolidated Farm and Rural
13 Development Act, Subchapters I, II, and III of Chapter 50
14 of Title 7 of the United States Code;
15 (j) Any loan by an employee pension benefit plan,
16 as defined in Section 3 (2) of the Employee Retirement
17 Income Security Act of 1974 (29 U.S.C.A. Sec. 1002), to
18 an individual participating in such plan, provided that
19 such loan satisfies the prohibited transaction exemption
20 requirements of Section 408 (b) (1) (29 U.S.C.A. Sec.
21 1108 (b) (1)) or Section 2003 (a) (26 U.S.C.A. Sec. 4975
22 (d) (1)) of the Employee Retirement Income Security Act
23 of 1974;
24 (k) Written contracts, agreements or bonds for deed
25 providing for installment purchase of real estate;
26 (1) Loans secured by a mortgage on real estate;
27 (m) Loans made by a sole proprietorship,
28 partnership, or corporation to an employee or to a person
29 who has been offered employment by such sole
30 proprietorship, partnership, or corporation made for the
31 sole purpose of transferring an employee or person who
32 has been offered employment to another office maintained
33 and operated by the same sole proprietorship,
34 partnership, or corporation;
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1 (n) Loans to or for the benefit of students made by
2 an 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
5 except to the extent permitted by the applicable statute for
6 loans made pursuant to Section 4a or pursuant to the Consumer
7 Installment Loan Act:
8 (a) Whenever the rate of interest exceeds 8% per
9 annum on any written contract, agreement or bond for deed
10 providing for the installment purchase of residential
11 real estate, or on any loan secured by a mortgage on
12 residential real estate, it shall be unlawful to provide
13 for a prepayment penalty or other charge for prepayment.
14 (b) No agreement, note or other instrument
15 evidencing a loan secured by a mortgage on residential
16 real estate, or written contract, agreement or bond for
17 deed providing for the installment purchase of
18 residential real estate, may provide for any change in
19 the contract rate of interest during the term thereof.
20 However, if the Congress of the United States or any
21 federal agency authorizes any class of lender to enter,
22 within limitations, into mortgage contracts or written
23 contracts, agreements or bonds for deed in which the rate
24 of interest may be changed during the term of the
25 contract, any person, firm, corporation or other entity
26 not otherwise prohibited from entering into mortgage
27 contracts or written contracts, agreements or bonds for
28 deed in Illinois may enter into mortgage contracts or
29 written contracts, agreements or bonds for deed in which
30 the rate of interest may be changed during the term of
31 the contract, within the same limitations.
32 (c) For any home equity line of credit secured by
33 residential real estate of a borrower, it shall be lawful
34 to charge a cancellation fee not exceeding $500 to the
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1 borrower in the event the borrower cancels the line of
2 credit.
3 (3) In any contract or loan which is secured by a
4 mortgage, deed of trust, or conveyance in the nature of a
5 mortgage, on residential real estate, the interest which is
6 computed, calculated, charged, or collected pursuant to such
7 contract or loan, or pursuant to any regulation or rule
8 promulgated pursuant to this Act, may not be computed,
9 calculated, charged or collected for any period of time
10 occurring after the date on which the total indebtedness,
11 with the exception of late payment penalties, is paid in
12 full.
13 For purposes of this Section, a prepayment shall mean the
14 payment of the total indebtedness, with the exception of late
15 payment penalties if incurred or charged, on any date before
16 the date specified in the contract or loan agreement on which
17 the total indebtedness shall be paid in full, or before the
18 date on which all payments, if timely made, shall have been
19 made. In the event of a prepayment of the indebtedness which
20 is made on a date after the date on which interest on the
21 indebtedness was last computed, calculated, charged, or
22 collected but before the next date on which interest on the
23 indebtedness was to be calculated, computed, charged, or
24 collected, the lender may calculate, charge and collect
25 interest on the indebtedness for the period which elapsed
26 between the date on which the prepayment is made and the date
27 on which interest on the indebtedness was last computed,
28 calculated, charged or collected at a rate equal to 1/360 of
29 the annual rate for each day which so elapsed, which rate
30 shall be applied to the indebtedness outstanding as of the
31 date of prepayment. The lender shall refund to the borrower
32 any interest charged or collected which exceeds that which
33 the lender may charge or collect pursuant to the preceding
34 sentence. The provisions of this amendatory Act of 1985 shall
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1 apply only to contracts or loans entered into on or after the
2 effective date of this amendatory Act, but shall not apply to
3 contracts or loans entered into on or after that date that
4 are subject to Section 4a of this Act, the Consumer
5 Installment Loan Act, or the Retail Installment Sales Act, or
6 that provide for the refund of precomputed interest on
7 prepayment in the manner provided by such Act.
8 (Source: P.A. 89-208, eff. 9-29-95.)".