State Codes and Statutes

Statutes > Illinois > Chapter205 > 1180 > 020501050HArt_5


      (205 ILCS 105/Art. 5 heading)
ARTICLE 5. INVESTMENTS

    (205 ILCS 105/5‑1) (from Ch. 17, par. 3305‑1)
    Sec. 5‑1. No association shall make any loans authorized by this Article unless the association first has determined that the type, amount, purpose and repayment provisions of the loan in relation to the borrower's resources and credit standing support the reasonable belief that the loan will be financially sound and will be repaid according to its terms and that the loan is not otherwise unlawful.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑2) (from Ch. 17, par. 3305‑2)
    Sec. 5‑2. Investment in loans. An association may loan funds to members as follows:
    (a) On the security of withdrawable capital accounts, but no such loan shall exceed the withdrawal value of the pledged account;
    (b) On the security of real estate:
    (1) Of a value, determined in accordance with Section 5‑12 of this Act, sufficient to provide good and ample security for the loan;
    (2) With a fee simple title or a leasehold title of not less duration than 10 years beyond the maturity of the loan;
    (3) With the title established by such evidence of title as is consistent with sound lending practices in the locality;
    (4) With the security interest in such real estate evidenced by an appropriate written instrument and the loan evidenced by a note, bond or similar written instrument. A loan on the security of the whole of the beneficial interest in a land trust satisfies the requirements of this paragraph if the title to the land is held by a corporate trustee and if the real estate held in the land trust meets the other requirements of this subsection; and
    (5) With a mortgage loan not to exceed 40 years;
    (c) For the purpose of repair, improvement, rehabilitation, furnishing or equipment of real estate or any other purpose;
    (d) For the purpose of financing or refinancing an existing ownership interest in certificates of stock, certificates of beneficial interest or other evidence of an ownership interest in, and a proprietary lease from, a corporation, trust or partnership formed for the purpose of the cooperative ownership of real estate, secured by the assignment or transfer of such certificates or other evidence of ownership of the borrower;
    (e) Through the purchase of loans which at the time of purchase the association could make in accordance with this Section and the by‑laws;
    (f) Through the purchase of installment contracts for the sale of real estate, and title thereto which is subject to such contracts, but in each instance only if the association at the time of purchase could make a mortgage loan of the same amount and for the same length of time on the security of such real estate;
    (g) Through loans guaranteed or insured, wholly or in part by the United States or any of its instrumentalities, and without regard to the limits in amount and terms otherwise imposed by this Article;
    (h) Through secured or unsecured loans for business, corporate, personal, family, or household purposes, or for secured or unsecured loans for agricultural or commercial purposes to the same extent that such agricultural or commercial loans are authorized by federal law for any savings and loan association organized under federal law and authorized to do business in this State, except that loans to service corporations shall not be subject to the limitations of this paragraph;
    (i) For the purpose of mobile home financing subject, however, to the regulation of the Commissioner;
    (j) Through loans to its members secured by the cash surrender value of any life insurance policy or any collateral which would be a legal investment if made by such association pursuant to the terms of this Act; and
    (k) Any provision of this Act to the contrary notwithstanding, any association may make any loan to its members or investment which such association could make if it were incorporated and operating as an association organized under the laws of the United States.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑3) (from Ch. 17, par. 3305‑3)
    Sec. 5‑3. Other investments. If the board of directors determines at any time that funds are available in excess of the demands and needs of members for loans, maturities and withdrawals, an association may invest such funds as specified as follows:
    (a) Demand, time, or savings deposits shares or accounts, withdrawable capital, or other obligations of any financial institution the accounts of which are insured by a federal agency;
    (b) In participating interests in mortgage loans of a type which the association would be authorized to make, if the other participants are (1) associations organized under this Act, (2) banks and credit unions organized under the laws of this State, (3) associations or corporations insured by an instrumentality of the United States, (4) instrumentalities of or corporations owned wholly or in part by the United States or this State, or, (5) subject to regulations of the Commissioner, service corporations;
    (c) In obligations of or obligations that are fully guaranteed by the United States; and in stocks or obligations of any federal home loan bank, the Student Loan Market Association, the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Savings & Loan Insurance Corporation or any other agency of the United States;
    (d) In bonds or other direct obligations of or guaranteed as to principal and interest by this State;
    (e) In obligations which by the laws of this State are made legal investments for savings and loan associations;
    (f) In bonds or other evidences of indebtedness which are direct general obligations of any county, city, town, village, school district, sanitary district, park district or other political subdivision or municipal corporation of this State, or in bonds or other evidences of indebtedness which are payable from revenues or earnings specifically pledged therefor of a political subdivision or municipal corporation, but in no event shall the total amount of such securities of any one maker or obligor exceed 5% of the association's total assets, nor shall the aggregate amount of investments under this Section exceed 15% of such total assets;
    (g) With the approval of the Commissioner, an association may invest in the initial purchase and development, or the purchase or commitment to purchase after completion, of home sites and housing for sale or rental, including (without being limited to) projects for the reconstruction, rehabilitation or rebuilding of residential properties to meet the minimum standards of health and occupancy prescribed by appropriate local authorities, and the provision of accommodations for retail stores, shops and other community services which are reasonably incident to such housing projects; or in the shares of a corporation which owns one or more of such projects and which is wholly owned by one or more financial institutions whose investments are regulated by the laws of this State or of the United States. The association's aggregate investment under this Section may not exceed 20% of its total assets, and no association may make an investment of this type unless it has reserves and undivided profits, or permanent reserve capital, totaling at least 5% of the aggregate withdrawal value of the association's withdrawable capital. The Commissioner shall approve the investment only if the association shows:
        (1) That the association has adequate assets
     available for such an investment;
        (2) That the proposed investment does not exceed the
     reasonable normal value of the property or interest therein; and
        (3) That all other requirements of this Section have
     been met.
    Nothing contained in this Section prohibits an association from developing or building on land acquired by it under any other provision of this Act nor from completing the construction of buildings pursuant to any construction loan contract where the borrower has failed to comply with the terms of such contract;
    (h) In marketable investment securities, but in no event shall the total amount of such securities of any one maker or obligor exceed 5% of the association's total assets, nor shall the aggregate amount of investments under this Section exceed 15% of such total assets. As used in this Section the term "marketable investment securities" does not include stocks but means investment grade marketable obligations evidencing indebtedness of any person in the form of bonds, notes or debentures commonly known as investment securities, and of a type customarily sold on recognized exchanges or traded over the counter and investment grade marketable obligations of the International Bank for Reconstruction and Development, the Inter‑American Development Bank, the Asian Development Bank, the African Development Bank, or the International Finance Corporation. As used in this Section, the term "investment grade" means being rated in one of the 4 highest categories by at least one nationally recognized rating service;
    (i) In obligations of the State of Israel, or obligations fully guaranteed by the State of Israel as to payment of principal and interest, but in no event shall the total amount of such investment exceed 5% of the association's total assets;
    (j) In stocks or obligations of business development corporations chartered by this State or by the United States or an agency thereof, but in no event shall the aggregate amount of stock exceed 1/2% of the aggregate withdrawal value of the association's withdrawable capital or $250,000, whichever is less;
    (k) In obligations of urban renewal investment corporations chartered under the laws of this state, or the United States, or in certificates of beneficial interest of urban renewal investment trusts, but in no event shall the aggregate amount of such stock, obligations or beneficial interest certificates of any one maker exceed 2% of the association's total assets, nor shall the aggregate amount of investments under this Section exceed 5% of such total assets;
    (l) Subject to the regulations of the Commissioner, in loans deemed sufficiently secured by the board of directors of the association. However, if the security is stock or equity securities of any kind, other than those of a financial institution, the stock or securities must be listed on a national exchange or actively traded and quoted on an over the counter market or its value must be ascertainable in accordance with regulations promulgated by the Commissioner;
    (m) In commercial paper. As used in this Section, the term "commercial paper" means short term obligations having a maturity ranging from 2 to 270 days issued by banks, corporations or other borrowers. Investments in commercial paper under this Section must be in securities rated in one of the 2 highest categories by a nationally recognized rating service; and
    (n) Purchase of stock in insurance companies. Notwithstanding any provision of this Act to the contrary, an association may purchase shares of or otherwise acquire equity interests in insurance companies and insurance holding companies organized to provide insurance for savings institutions and corporations and individuals affiliated with savings institutions, provided ownership of equity interests is a prerequisite to obtaining directors and officers' and blanket bond insurance through such company or companies. The Commissioner may promulgate regulations concerning the size of each association's investment and manner of holding such investments.
(Source: P.A. 88‑481; 89‑317, eff. 8‑11‑95.)

    (205 ILCS 105/5‑4) (from Ch. 17, par. 3305‑4)
    Sec. 5‑4. Lending plans. (a) The board of directors shall specify the terms on which loans will be made.
    (b) In any contract or loan which is secured by a mortgage, deed of trust, or conveyance in the nature of a mortgage, on residential real estate, the interest which is computed, calculated, charged, or collected pursuant to such contract or loan, or pursuant to any regulation or rule promulgated pursuant to this Act, may not be computed, calculated, charged or collected for any period of time occurring after the date on which the total indebtedness, with the exception of late payment penalties, is paid in full.
    For purposes of this subsection (b), a prepayment shall mean the payment of the total indebtedness, with the exception of late payment penalties if incurred or charged, on any date before the date specified in the contract or loan agreement on which the total indebtedness shall be paid in full, or before the date on which all payments, if timely made, shall have been made. In the event of a prepayment of the indebtedness which is made on a date after the date on which interest on the indebtedness was last computed, calculated, charged, or collected but before the next date on which interest on the indebtedness was to be calculated, computed, charged, or collected, the lender may calculate, charge and collect interest on the indebtedness for the period which elapsed between the date on which the prepayment is made and the date on which interest on the indebtedness was last computed, calculated, charged or collected at a rate equal to 1/360 of the annual rate for each day which so elapsed, which rate shall be applied to the indebtedness outstanding as of the date of prepayment. The lender shall refund to the borrower any interest charged or collected which exceeds that which the lender may charge or collect pursuant to the preceding sentence. The provisions of this subsection (b) shall apply only to contracts or loans entered into on or after January 1, 1986.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑5) (from Ch. 17, par. 3305‑5)
    Sec. 5‑5. General loan contract provisions. (a) Each loan, and any agreement for securing the same, shall be evidenced by one or more written instruments, consistent with sound lending practices in the locality; and whenever recording of such an agreement is necessary to establish priority over the claim of any third party, the agreement shall be recorded.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑6) (from Ch. 17, par. 3305‑6)
    Sec. 5‑6. Modification agreements. The association at any time may enter into a written agreement with the borrower to modify, in any manner not inconsistent with the provisions of this Act, the terms of a loan as to the amount, time or method of the payments to be made, the interest rate and any other provision of the loan contract; and the loan contract and the security instrument shall not be prejudiced by the making of any such modification, even if such a modification was not provided for in the loan contract.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑7) (from Ch. 17, par. 3305‑7)
    Sec. 5‑7. Sale, assignment and servicing of loans and contracts. (a) Any association may sell any loan or a participating interest in a loan at any time, in the usual and regular course of business. All loans sold shall be sold without recourse except as may otherwise be provided by regulations of the Commissioner. The Commissioner may, by regulation, adopt limitations upon the sale of loans. The provisions of this paragraph (a) do not apply to the sale of loans to agencies of the United States or the State of Illinois or such other government sponsored agencies as may be approved by the Commissioner.
    (b) An association may contract to service a loan or a participating interest in a loan, but such a contract shall conform to the pertinent regulations prescribed by the Commissioner and shall require sufficient compensation to reimburse the association for all expenses incurred under such contract.
    (c) An association may sell and assign without recourse any master's certificate of sale, defaulted loan or defaulted real estate contract to any person eligible to purchase the same, for an amount not less than the fair cash market value thereof.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑8) (from Ch. 17, par. 3305‑8)
    Sec. 5‑8. Purchase of real estate at forced sale. An association may purchase, at any sheriff's or other judicial sale, either public or private, any real estate upon which the association has any mortgage, lien or other encumbrance, or in which the association has any other interest. The association thereafter may repair, improve, sell, convey, lease, mortgage, exchange or otherwise dispose of real estate so acquired, in the best interests of the association, without limitation.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑9) (from Ch. 17, par. 3305‑9)
    Sec. 5‑9. Purchase of real estate for office and rental purposes. An association may acquire and hold real estate in fee simple, or leaseholds on which a building or buildings exist or are to be erected, suitable for the transaction of the association's business, and from portions of which, not required for the association's own use, revenue may be derived; or may own all or part of the capital stock, shares or interest in any corporation, association or trust engaged solely in holding all or part of such real estate. However, the amount so invested may not exceed the association's total net worth unless the Commissioner, upon a proper showing, approves a larger amount consistent with the needs of the association's business and its immediate future expansion.
    Unless prior written approval of the Commissioner is obtained, no association may purchase, lease or otherwise acquire a site for an office building or interest in real estate from any officer, director, employee or permanent reserve shareholder holding more than 15% of the aggregate permanent reserve capital of the association or any firm, corporation, entity or family in which any officer, director, employee or permanent reserve shareholder holding more than 15% of the aggregate permanent reserve capital of an association has any direct or indirect interest.
    An acquisition prohibited by this Section includes the purchase, lease or acquisition of property in which any of the persons described in this Section held any interest in for a period of 10 years preceding the purchase, lease or acquisition, but does not include the acquisition of an option for such a site or real estate where the option is assignable and exercised by the association in its own name and for its own benefit.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑10) (from Ch. 17, par. 3305‑10)
    Sec. 5‑10. Usury law inapplicable. No interest, premium, or interest on such interest or premium, or charge which may accrue to an association under the provisions of this Act shall be deemed to be usurious; and the same may be collected in the same manner as other debts in accordance with the laws of this State.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑11) (from Ch. 17, par. 3305‑11)
    Sec. 5‑11. Prohibited loans. No loan may be made by any association to any person owning 10% or more of the permanent reserve shares, any affiliated person, agent or attorney of that association either for himself or as agent, or as partner of another, except upon real estate occupied by such shareholder, affiliated person, agent or attorney as a homestead, or upon the security of withdrawable capital or upon the security of his personal automobile. No loan may be made by an association to any corporation, trust or other legal entity of which any interest is owned or controlled, directly or indirectly, individually or collectively, by any one or more of the affiliated persons, agents, attorneys or shareholders of the association, except upon real estate occupied by such shareholder, affiliated person, agent or attorney as a homestead, or upon the security of withdrawable capital.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑12) (from Ch. 17, par. 3305‑12)
    Sec. 5‑12. Effect of unauthorized investments; liability of officers. (a) Every loan or other investment made in violation of this Act shall be due and payable according to its terms, and the obligation thereof shall not be impaired.
    (b) Every director or officer of an association who knowingly shall violate, participate in or assent to, or who knowingly shall permit any of the officers or agents of the association to make, investments not authorized by this Act shall be liable individually for all damage which the association or its members sustain in consequence of such violation, in addition to any criminal penalties prescribed by this Act.
    (c) The Commissioner may require every director or officer of an association who knowingly shall violate, participate in or assent to, or who knowingly shall permit any of the officers or agents of the association to make, investments not authorized by this Act to deposit with the association an indemnity bond, insurance or collateral of a kind and amount sufficient to indemnify the association against damages which the association or its members may sustain in consequence of such violation. The amount considered sufficient to indemnify the association shall, in the case of an unauthorized investment, be the difference between the book value and the market value of the investment at the time the Commissioner makes his determination that such investment is unauthorized. The amount considered sufficient to indemnify the association, in the case of an unauthorized loan, shall be the difference between the book value of the loan and the amount that could have been made under the provisions of this Act. Whenever an unauthorized investment has been sold or disposed of without recourse, the Commissioner shall release all or such part of the indemnity after deducting any loss. Whenever the balance of an unauthorized loan has been reduced to an amount which would permit such loan to be made under the provisions of this Act, the indemnity shall be released, provided that the Commissioner in making such determination may require an independent appraisal of the security.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑13) (from Ch. 17, par. 3305‑13)
    Sec. 5‑13. Appraisals. (a) Every appraisal or reappraisal of property which an association is required to make shall be made as follows:
    (1) By an independent qualified appraiser designated by the board of directors;
    (2) By the association's appraisal committee appointed by the board of directors; or
    (3) In the case of an insured or guaranteed loan, by any appraiser appointed by any lending, insuring or guaranteeing agency of the United States or the State of Illinois which insures or guarantees such loan, wholly or in part.
    (b) Each appraisal shall be in writing, prepared at the request of the lender for the lender's use, disclose the market value of the security offered, contain sufficient information and data concerning the appraised property to substantiate the market value thereof, be certified and signed by the appraiser or appraisers and state that he or they have personally examined the described property; which appraisal shall be filed and preserved by the association.
    (c) If appraisals of real estate securing an association's loans are obtained as part of an examination by the Commissioner, the cost of such appraisals shall promptly be paid by the association directly to the appraiser or appraisers.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑14) (from Ch. 17, par. 3305‑14)
    Sec. 5‑14. Acknowledgments. No acknowledgment of a deed, mortgage or other instrument shall be invalid because such acknowledgment was taken before an officer authorized by the laws of this State to acknowledge conveyances who is also a member, director, employee or officer of an association which is a party to such deed, mortgage or other instrument.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑15) (from Ch. 17, par. 3305‑15)
    Sec. 5‑15. Commissioner's regulations. (a) The Commissioner may from time to time promulgate such rules and regulations with respect to investments, loans or lending plans as may be reasonably necessary to assure that such loans are in keeping with sound lending practice and will promote the purposes of this Act.
    (b) Violations of any of the provisions of this Article 5, "Investments", shall constitute unsafe and unsound practice and shall subject any officer, director or employee of an association who knowingly violates provisions of this Article 5 to removal as provided in Section 3‑6(e) of this Act.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑16) (from Ch. 17, par. 3305‑16)
    Sec. 5‑16. Limitation on loans to a single borrower. Except for loans to its wholly owned service corporations, an association may not at any one time hold, directly or indirectly, loans to any one corporation or person in a total amount equal to or in excess of 10% of the association's total withdrawable accounts or an amount equal to the total net worth of the association, whichever is less. An association may make loans to a wholly owned service corporation in an amount equal to the association's net worth or in an amount that exceeds an association's net worth if such excess amount is secured by collateral, of a type upon which the association itself could lend, of a value determined in accordance with rules and regulations promulgated by the Commissioner.
    (a) In computing the total mortgage loans made by an association to an individual, there shall be included all mortgage loans made by the association to a partnership or other unincorporated association of which he is a member, the unpaid balance of mortgage loans made either for his benefit or for the benefit of such partnership or other unincorporated association and all mortgage loans to or for the benefit of a corporation of which he owns or controls 25% or more of the capital stock.
    (b) In computing the total mortgage loans made by an association to a partnership or other unincorporated association, there shall be included the unpaid balance of mortgage loans to its individual members, the unpaid balance of mortgage loans made for the benefit of such partnership or other unincorporated association, or of any member thereof, and all mortgage loans to or for the benefit of any corporation of which the partnership or unincorporated association, or any member thereof, owns or controls 25% or more of the capital stock.
    (c) In computing the total mortgage loans made by an association to a corporation, there shall be included the unpaid balance of mortgage loans made for the benefit of the corporation and all mortgage loans to or for the benefit of any individual who owns or controls 25% or more of the capital stock of such corporation.
    (d) This Section does not apply to the obligations as endorser, whether with or without recourse, or as guarantor, whether conditional or unconditional, of negotiable or nonnegotiable installment consumer paper of the person transferring the same if the association's files or the knowledge of its officers of the financial condition of each maker of those obligations is reasonably adequate and if an officer of the association, designated for that purpose by the board of directors of the association, certifies that the responsibility of each maker of the obligations has been evaluated and that the association is relying primarily upon each maker for the payment of the obligations. The certification shall be in writing and shall be retained as part of the records of the association.
(Source: P.A. 92‑483, eff. 8‑23‑01.)

State Codes and Statutes

Statutes > Illinois > Chapter205 > 1180 > 020501050HArt_5


      (205 ILCS 105/Art. 5 heading)
ARTICLE 5. INVESTMENTS

    (205 ILCS 105/5‑1) (from Ch. 17, par. 3305‑1)
    Sec. 5‑1. No association shall make any loans authorized by this Article unless the association first has determined that the type, amount, purpose and repayment provisions of the loan in relation to the borrower's resources and credit standing support the reasonable belief that the loan will be financially sound and will be repaid according to its terms and that the loan is not otherwise unlawful.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑2) (from Ch. 17, par. 3305‑2)
    Sec. 5‑2. Investment in loans. An association may loan funds to members as follows:
    (a) On the security of withdrawable capital accounts, but no such loan shall exceed the withdrawal value of the pledged account;
    (b) On the security of real estate:
    (1) Of a value, determined in accordance with Section 5‑12 of this Act, sufficient to provide good and ample security for the loan;
    (2) With a fee simple title or a leasehold title of not less duration than 10 years beyond the maturity of the loan;
    (3) With the title established by such evidence of title as is consistent with sound lending practices in the locality;
    (4) With the security interest in such real estate evidenced by an appropriate written instrument and the loan evidenced by a note, bond or similar written instrument. A loan on the security of the whole of the beneficial interest in a land trust satisfies the requirements of this paragraph if the title to the land is held by a corporate trustee and if the real estate held in the land trust meets the other requirements of this subsection; and
    (5) With a mortgage loan not to exceed 40 years;
    (c) For the purpose of repair, improvement, rehabilitation, furnishing or equipment of real estate or any other purpose;
    (d) For the purpose of financing or refinancing an existing ownership interest in certificates of stock, certificates of beneficial interest or other evidence of an ownership interest in, and a proprietary lease from, a corporation, trust or partnership formed for the purpose of the cooperative ownership of real estate, secured by the assignment or transfer of such certificates or other evidence of ownership of the borrower;
    (e) Through the purchase of loans which at the time of purchase the association could make in accordance with this Section and the by‑laws;
    (f) Through the purchase of installment contracts for the sale of real estate, and title thereto which is subject to such contracts, but in each instance only if the association at the time of purchase could make a mortgage loan of the same amount and for the same length of time on the security of such real estate;
    (g) Through loans guaranteed or insured, wholly or in part by the United States or any of its instrumentalities, and without regard to the limits in amount and terms otherwise imposed by this Article;
    (h) Through secured or unsecured loans for business, corporate, personal, family, or household purposes, or for secured or unsecured loans for agricultural or commercial purposes to the same extent that such agricultural or commercial loans are authorized by federal law for any savings and loan association organized under federal law and authorized to do business in this State, except that loans to service corporations shall not be subject to the limitations of this paragraph;
    (i) For the purpose of mobile home financing subject, however, to the regulation of the Commissioner;
    (j) Through loans to its members secured by the cash surrender value of any life insurance policy or any collateral which would be a legal investment if made by such association pursuant to the terms of this Act; and
    (k) Any provision of this Act to the contrary notwithstanding, any association may make any loan to its members or investment which such association could make if it were incorporated and operating as an association organized under the laws of the United States.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑3) (from Ch. 17, par. 3305‑3)
    Sec. 5‑3. Other investments. If the board of directors determines at any time that funds are available in excess of the demands and needs of members for loans, maturities and withdrawals, an association may invest such funds as specified as follows:
    (a) Demand, time, or savings deposits shares or accounts, withdrawable capital, or other obligations of any financial institution the accounts of which are insured by a federal agency;
    (b) In participating interests in mortgage loans of a type which the association would be authorized to make, if the other participants are (1) associations organized under this Act, (2) banks and credit unions organized under the laws of this State, (3) associations or corporations insured by an instrumentality of the United States, (4) instrumentalities of or corporations owned wholly or in part by the United States or this State, or, (5) subject to regulations of the Commissioner, service corporations;
    (c) In obligations of or obligations that are fully guaranteed by the United States; and in stocks or obligations of any federal home loan bank, the Student Loan Market Association, the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Savings & Loan Insurance Corporation or any other agency of the United States;
    (d) In bonds or other direct obligations of or guaranteed as to principal and interest by this State;
    (e) In obligations which by the laws of this State are made legal investments for savings and loan associations;
    (f) In bonds or other evidences of indebtedness which are direct general obligations of any county, city, town, village, school district, sanitary district, park district or other political subdivision or municipal corporation of this State, or in bonds or other evidences of indebtedness which are payable from revenues or earnings specifically pledged therefor of a political subdivision or municipal corporation, but in no event shall the total amount of such securities of any one maker or obligor exceed 5% of the association's total assets, nor shall the aggregate amount of investments under this Section exceed 15% of such total assets;
    (g) With the approval of the Commissioner, an association may invest in the initial purchase and development, or the purchase or commitment to purchase after completion, of home sites and housing for sale or rental, including (without being limited to) projects for the reconstruction, rehabilitation or rebuilding of residential properties to meet the minimum standards of health and occupancy prescribed by appropriate local authorities, and the provision of accommodations for retail stores, shops and other community services which are reasonably incident to such housing projects; or in the shares of a corporation which owns one or more of such projects and which is wholly owned by one or more financial institutions whose investments are regulated by the laws of this State or of the United States. The association's aggregate investment under this Section may not exceed 20% of its total assets, and no association may make an investment of this type unless it has reserves and undivided profits, or permanent reserve capital, totaling at least 5% of the aggregate withdrawal value of the association's withdrawable capital. The Commissioner shall approve the investment only if the association shows:
        (1) That the association has adequate assets
     available for such an investment;
        (2) That the proposed investment does not exceed the
     reasonable normal value of the property or interest therein; and
        (3) That all other requirements of this Section have
     been met.
    Nothing contained in this Section prohibits an association from developing or building on land acquired by it under any other provision of this Act nor from completing the construction of buildings pursuant to any construction loan contract where the borrower has failed to comply with the terms of such contract;
    (h) In marketable investment securities, but in no event shall the total amount of such securities of any one maker or obligor exceed 5% of the association's total assets, nor shall the aggregate amount of investments under this Section exceed 15% of such total assets. As used in this Section the term "marketable investment securities" does not include stocks but means investment grade marketable obligations evidencing indebtedness of any person in the form of bonds, notes or debentures commonly known as investment securities, and of a type customarily sold on recognized exchanges or traded over the counter and investment grade marketable obligations of the International Bank for Reconstruction and Development, the Inter‑American Development Bank, the Asian Development Bank, the African Development Bank, or the International Finance Corporation. As used in this Section, the term "investment grade" means being rated in one of the 4 highest categories by at least one nationally recognized rating service;
    (i) In obligations of the State of Israel, or obligations fully guaranteed by the State of Israel as to payment of principal and interest, but in no event shall the total amount of such investment exceed 5% of the association's total assets;
    (j) In stocks or obligations of business development corporations chartered by this State or by the United States or an agency thereof, but in no event shall the aggregate amount of stock exceed 1/2% of the aggregate withdrawal value of the association's withdrawable capital or $250,000, whichever is less;
    (k) In obligations of urban renewal investment corporations chartered under the laws of this state, or the United States, or in certificates of beneficial interest of urban renewal investment trusts, but in no event shall the aggregate amount of such stock, obligations or beneficial interest certificates of any one maker exceed 2% of the association's total assets, nor shall the aggregate amount of investments under this Section exceed 5% of such total assets;
    (l) Subject to the regulations of the Commissioner, in loans deemed sufficiently secured by the board of directors of the association. However, if the security is stock or equity securities of any kind, other than those of a financial institution, the stock or securities must be listed on a national exchange or actively traded and quoted on an over the counter market or its value must be ascertainable in accordance with regulations promulgated by the Commissioner;
    (m) In commercial paper. As used in this Section, the term "commercial paper" means short term obligations having a maturity ranging from 2 to 270 days issued by banks, corporations or other borrowers. Investments in commercial paper under this Section must be in securities rated in one of the 2 highest categories by a nationally recognized rating service; and
    (n) Purchase of stock in insurance companies. Notwithstanding any provision of this Act to the contrary, an association may purchase shares of or otherwise acquire equity interests in insurance companies and insurance holding companies organized to provide insurance for savings institutions and corporations and individuals affiliated with savings institutions, provided ownership of equity interests is a prerequisite to obtaining directors and officers' and blanket bond insurance through such company or companies. The Commissioner may promulgate regulations concerning the size of each association's investment and manner of holding such investments.
(Source: P.A. 88‑481; 89‑317, eff. 8‑11‑95.)

    (205 ILCS 105/5‑4) (from Ch. 17, par. 3305‑4)
    Sec. 5‑4. Lending plans. (a) The board of directors shall specify the terms on which loans will be made.
    (b) In any contract or loan which is secured by a mortgage, deed of trust, or conveyance in the nature of a mortgage, on residential real estate, the interest which is computed, calculated, charged, or collected pursuant to such contract or loan, or pursuant to any regulation or rule promulgated pursuant to this Act, may not be computed, calculated, charged or collected for any period of time occurring after the date on which the total indebtedness, with the exception of late payment penalties, is paid in full.
    For purposes of this subsection (b), a prepayment shall mean the payment of the total indebtedness, with the exception of late payment penalties if incurred or charged, on any date before the date specified in the contract or loan agreement on which the total indebtedness shall be paid in full, or before the date on which all payments, if timely made, shall have been made. In the event of a prepayment of the indebtedness which is made on a date after the date on which interest on the indebtedness was last computed, calculated, charged, or collected but before the next date on which interest on the indebtedness was to be calculated, computed, charged, or collected, the lender may calculate, charge and collect interest on the indebtedness for the period which elapsed between the date on which the prepayment is made and the date on which interest on the indebtedness was last computed, calculated, charged or collected at a rate equal to 1/360 of the annual rate for each day which so elapsed, which rate shall be applied to the indebtedness outstanding as of the date of prepayment. The lender shall refund to the borrower any interest charged or collected which exceeds that which the lender may charge or collect pursuant to the preceding sentence. The provisions of this subsection (b) shall apply only to contracts or loans entered into on or after January 1, 1986.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑5) (from Ch. 17, par. 3305‑5)
    Sec. 5‑5. General loan contract provisions. (a) Each loan, and any agreement for securing the same, shall be evidenced by one or more written instruments, consistent with sound lending practices in the locality; and whenever recording of such an agreement is necessary to establish priority over the claim of any third party, the agreement shall be recorded.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑6) (from Ch. 17, par. 3305‑6)
    Sec. 5‑6. Modification agreements. The association at any time may enter into a written agreement with the borrower to modify, in any manner not inconsistent with the provisions of this Act, the terms of a loan as to the amount, time or method of the payments to be made, the interest rate and any other provision of the loan contract; and the loan contract and the security instrument shall not be prejudiced by the making of any such modification, even if such a modification was not provided for in the loan contract.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑7) (from Ch. 17, par. 3305‑7)
    Sec. 5‑7. Sale, assignment and servicing of loans and contracts. (a) Any association may sell any loan or a participating interest in a loan at any time, in the usual and regular course of business. All loans sold shall be sold without recourse except as may otherwise be provided by regulations of the Commissioner. The Commissioner may, by regulation, adopt limitations upon the sale of loans. The provisions of this paragraph (a) do not apply to the sale of loans to agencies of the United States or the State of Illinois or such other government sponsored agencies as may be approved by the Commissioner.
    (b) An association may contract to service a loan or a participating interest in a loan, but such a contract shall conform to the pertinent regulations prescribed by the Commissioner and shall require sufficient compensation to reimburse the association for all expenses incurred under such contract.
    (c) An association may sell and assign without recourse any master's certificate of sale, defaulted loan or defaulted real estate contract to any person eligible to purchase the same, for an amount not less than the fair cash market value thereof.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑8) (from Ch. 17, par. 3305‑8)
    Sec. 5‑8. Purchase of real estate at forced sale. An association may purchase, at any sheriff's or other judicial sale, either public or private, any real estate upon which the association has any mortgage, lien or other encumbrance, or in which the association has any other interest. The association thereafter may repair, improve, sell, convey, lease, mortgage, exchange or otherwise dispose of real estate so acquired, in the best interests of the association, without limitation.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑9) (from Ch. 17, par. 3305‑9)
    Sec. 5‑9. Purchase of real estate for office and rental purposes. An association may acquire and hold real estate in fee simple, or leaseholds on which a building or buildings exist or are to be erected, suitable for the transaction of the association's business, and from portions of which, not required for the association's own use, revenue may be derived; or may own all or part of the capital stock, shares or interest in any corporation, association or trust engaged solely in holding all or part of such real estate. However, the amount so invested may not exceed the association's total net worth unless the Commissioner, upon a proper showing, approves a larger amount consistent with the needs of the association's business and its immediate future expansion.
    Unless prior written approval of the Commissioner is obtained, no association may purchase, lease or otherwise acquire a site for an office building or interest in real estate from any officer, director, employee or permanent reserve shareholder holding more than 15% of the aggregate permanent reserve capital of the association or any firm, corporation, entity or family in which any officer, director, employee or permanent reserve shareholder holding more than 15% of the aggregate permanent reserve capital of an association has any direct or indirect interest.
    An acquisition prohibited by this Section includes the purchase, lease or acquisition of property in which any of the persons described in this Section held any interest in for a period of 10 years preceding the purchase, lease or acquisition, but does not include the acquisition of an option for such a site or real estate where the option is assignable and exercised by the association in its own name and for its own benefit.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑10) (from Ch. 17, par. 3305‑10)
    Sec. 5‑10. Usury law inapplicable. No interest, premium, or interest on such interest or premium, or charge which may accrue to an association under the provisions of this Act shall be deemed to be usurious; and the same may be collected in the same manner as other debts in accordance with the laws of this State.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑11) (from Ch. 17, par. 3305‑11)
    Sec. 5‑11. Prohibited loans. No loan may be made by any association to any person owning 10% or more of the permanent reserve shares, any affiliated person, agent or attorney of that association either for himself or as agent, or as partner of another, except upon real estate occupied by such shareholder, affiliated person, agent or attorney as a homestead, or upon the security of withdrawable capital or upon the security of his personal automobile. No loan may be made by an association to any corporation, trust or other legal entity of which any interest is owned or controlled, directly or indirectly, individually or collectively, by any one or more of the affiliated persons, agents, attorneys or shareholders of the association, except upon real estate occupied by such shareholder, affiliated person, agent or attorney as a homestead, or upon the security of withdrawable capital.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑12) (from Ch. 17, par. 3305‑12)
    Sec. 5‑12. Effect of unauthorized investments; liability of officers. (a) Every loan or other investment made in violation of this Act shall be due and payable according to its terms, and the obligation thereof shall not be impaired.
    (b) Every director or officer of an association who knowingly shall violate, participate in or assent to, or who knowingly shall permit any of the officers or agents of the association to make, investments not authorized by this Act shall be liable individually for all damage which the association or its members sustain in consequence of such violation, in addition to any criminal penalties prescribed by this Act.
    (c) The Commissioner may require every director or officer of an association who knowingly shall violate, participate in or assent to, or who knowingly shall permit any of the officers or agents of the association to make, investments not authorized by this Act to deposit with the association an indemnity bond, insurance or collateral of a kind and amount sufficient to indemnify the association against damages which the association or its members may sustain in consequence of such violation. The amount considered sufficient to indemnify the association shall, in the case of an unauthorized investment, be the difference between the book value and the market value of the investment at the time the Commissioner makes his determination that such investment is unauthorized. The amount considered sufficient to indemnify the association, in the case of an unauthorized loan, shall be the difference between the book value of the loan and the amount that could have been made under the provisions of this Act. Whenever an unauthorized investment has been sold or disposed of without recourse, the Commissioner shall release all or such part of the indemnity after deducting any loss. Whenever the balance of an unauthorized loan has been reduced to an amount which would permit such loan to be made under the provisions of this Act, the indemnity shall be released, provided that the Commissioner in making such determination may require an independent appraisal of the security.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑13) (from Ch. 17, par. 3305‑13)
    Sec. 5‑13. Appraisals. (a) Every appraisal or reappraisal of property which an association is required to make shall be made as follows:
    (1) By an independent qualified appraiser designated by the board of directors;
    (2) By the association's appraisal committee appointed by the board of directors; or
    (3) In the case of an insured or guaranteed loan, by any appraiser appointed by any lending, insuring or guaranteeing agency of the United States or the State of Illinois which insures or guarantees such loan, wholly or in part.
    (b) Each appraisal shall be in writing, prepared at the request of the lender for the lender's use, disclose the market value of the security offered, contain sufficient information and data concerning the appraised property to substantiate the market value thereof, be certified and signed by the appraiser or appraisers and state that he or they have personally examined the described property; which appraisal shall be filed and preserved by the association.
    (c) If appraisals of real estate securing an association's loans are obtained as part of an examination by the Commissioner, the cost of such appraisals shall promptly be paid by the association directly to the appraiser or appraisers.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑14) (from Ch. 17, par. 3305‑14)
    Sec. 5‑14. Acknowledgments. No acknowledgment of a deed, mortgage or other instrument shall be invalid because such acknowledgment was taken before an officer authorized by the laws of this State to acknowledge conveyances who is also a member, director, employee or officer of an association which is a party to such deed, mortgage or other instrument.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑15) (from Ch. 17, par. 3305‑15)
    Sec. 5‑15. Commissioner's regulations. (a) The Commissioner may from time to time promulgate such rules and regulations with respect to investments, loans or lending plans as may be reasonably necessary to assure that such loans are in keeping with sound lending practice and will promote the purposes of this Act.
    (b) Violations of any of the provisions of this Article 5, "Investments", shall constitute unsafe and unsound practice and shall subject any officer, director or employee of an association who knowingly violates provisions of this Article 5 to removal as provided in Section 3‑6(e) of this Act.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑16) (from Ch. 17, par. 3305‑16)
    Sec. 5‑16. Limitation on loans to a single borrower. Except for loans to its wholly owned service corporations, an association may not at any one time hold, directly or indirectly, loans to any one corporation or person in a total amount equal to or in excess of 10% of the association's total withdrawable accounts or an amount equal to the total net worth of the association, whichever is less. An association may make loans to a wholly owned service corporation in an amount equal to the association's net worth or in an amount that exceeds an association's net worth if such excess amount is secured by collateral, of a type upon which the association itself could lend, of a value determined in accordance with rules and regulations promulgated by the Commissioner.
    (a) In computing the total mortgage loans made by an association to an individual, there shall be included all mortgage loans made by the association to a partnership or other unincorporated association of which he is a member, the unpaid balance of mortgage loans made either for his benefit or for the benefit of such partnership or other unincorporated association and all mortgage loans to or for the benefit of a corporation of which he owns or controls 25% or more of the capital stock.
    (b) In computing the total mortgage loans made by an association to a partnership or other unincorporated association, there shall be included the unpaid balance of mortgage loans to its individual members, the unpaid balance of mortgage loans made for the benefit of such partnership or other unincorporated association, or of any member thereof, and all mortgage loans to or for the benefit of any corporation of which the partnership or unincorporated association, or any member thereof, owns or controls 25% or more of the capital stock.
    (c) In computing the total mortgage loans made by an association to a corporation, there shall be included the unpaid balance of mortgage loans made for the benefit of the corporation and all mortgage loans to or for the benefit of any individual who owns or controls 25% or more of the capital stock of such corporation.
    (d) This Section does not apply to the obligations as endorser, whether with or without recourse, or as guarantor, whether conditional or unconditional, of negotiable or nonnegotiable installment consumer paper of the person transferring the same if the association's files or the knowledge of its officers of the financial condition of each maker of those obligations is reasonably adequate and if an officer of the association, designated for that purpose by the board of directors of the association, certifies that the responsibility of each maker of the obligations has been evaluated and that the association is relying primarily upon each maker for the payment of the obligations. The certification shall be in writing and shall be retained as part of the records of the association.
(Source: P.A. 92‑483, eff. 8‑23‑01.)

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Statutes > Illinois > Chapter205 > 1180 > 020501050HArt_5


      (205 ILCS 105/Art. 5 heading)
ARTICLE 5. INVESTMENTS

    (205 ILCS 105/5‑1) (from Ch. 17, par. 3305‑1)
    Sec. 5‑1. No association shall make any loans authorized by this Article unless the association first has determined that the type, amount, purpose and repayment provisions of the loan in relation to the borrower's resources and credit standing support the reasonable belief that the loan will be financially sound and will be repaid according to its terms and that the loan is not otherwise unlawful.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑2) (from Ch. 17, par. 3305‑2)
    Sec. 5‑2. Investment in loans. An association may loan funds to members as follows:
    (a) On the security of withdrawable capital accounts, but no such loan shall exceed the withdrawal value of the pledged account;
    (b) On the security of real estate:
    (1) Of a value, determined in accordance with Section 5‑12 of this Act, sufficient to provide good and ample security for the loan;
    (2) With a fee simple title or a leasehold title of not less duration than 10 years beyond the maturity of the loan;
    (3) With the title established by such evidence of title as is consistent with sound lending practices in the locality;
    (4) With the security interest in such real estate evidenced by an appropriate written instrument and the loan evidenced by a note, bond or similar written instrument. A loan on the security of the whole of the beneficial interest in a land trust satisfies the requirements of this paragraph if the title to the land is held by a corporate trustee and if the real estate held in the land trust meets the other requirements of this subsection; and
    (5) With a mortgage loan not to exceed 40 years;
    (c) For the purpose of repair, improvement, rehabilitation, furnishing or equipment of real estate or any other purpose;
    (d) For the purpose of financing or refinancing an existing ownership interest in certificates of stock, certificates of beneficial interest or other evidence of an ownership interest in, and a proprietary lease from, a corporation, trust or partnership formed for the purpose of the cooperative ownership of real estate, secured by the assignment or transfer of such certificates or other evidence of ownership of the borrower;
    (e) Through the purchase of loans which at the time of purchase the association could make in accordance with this Section and the by‑laws;
    (f) Through the purchase of installment contracts for the sale of real estate, and title thereto which is subject to such contracts, but in each instance only if the association at the time of purchase could make a mortgage loan of the same amount and for the same length of time on the security of such real estate;
    (g) Through loans guaranteed or insured, wholly or in part by the United States or any of its instrumentalities, and without regard to the limits in amount and terms otherwise imposed by this Article;
    (h) Through secured or unsecured loans for business, corporate, personal, family, or household purposes, or for secured or unsecured loans for agricultural or commercial purposes to the same extent that such agricultural or commercial loans are authorized by federal law for any savings and loan association organized under federal law and authorized to do business in this State, except that loans to service corporations shall not be subject to the limitations of this paragraph;
    (i) For the purpose of mobile home financing subject, however, to the regulation of the Commissioner;
    (j) Through loans to its members secured by the cash surrender value of any life insurance policy or any collateral which would be a legal investment if made by such association pursuant to the terms of this Act; and
    (k) Any provision of this Act to the contrary notwithstanding, any association may make any loan to its members or investment which such association could make if it were incorporated and operating as an association organized under the laws of the United States.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑3) (from Ch. 17, par. 3305‑3)
    Sec. 5‑3. Other investments. If the board of directors determines at any time that funds are available in excess of the demands and needs of members for loans, maturities and withdrawals, an association may invest such funds as specified as follows:
    (a) Demand, time, or savings deposits shares or accounts, withdrawable capital, or other obligations of any financial institution the accounts of which are insured by a federal agency;
    (b) In participating interests in mortgage loans of a type which the association would be authorized to make, if the other participants are (1) associations organized under this Act, (2) banks and credit unions organized under the laws of this State, (3) associations or corporations insured by an instrumentality of the United States, (4) instrumentalities of or corporations owned wholly or in part by the United States or this State, or, (5) subject to regulations of the Commissioner, service corporations;
    (c) In obligations of or obligations that are fully guaranteed by the United States; and in stocks or obligations of any federal home loan bank, the Student Loan Market Association, the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Savings & Loan Insurance Corporation or any other agency of the United States;
    (d) In bonds or other direct obligations of or guaranteed as to principal and interest by this State;
    (e) In obligations which by the laws of this State are made legal investments for savings and loan associations;
    (f) In bonds or other evidences of indebtedness which are direct general obligations of any county, city, town, village, school district, sanitary district, park district or other political subdivision or municipal corporation of this State, or in bonds or other evidences of indebtedness which are payable from revenues or earnings specifically pledged therefor of a political subdivision or municipal corporation, but in no event shall the total amount of such securities of any one maker or obligor exceed 5% of the association's total assets, nor shall the aggregate amount of investments under this Section exceed 15% of such total assets;
    (g) With the approval of the Commissioner, an association may invest in the initial purchase and development, or the purchase or commitment to purchase after completion, of home sites and housing for sale or rental, including (without being limited to) projects for the reconstruction, rehabilitation or rebuilding of residential properties to meet the minimum standards of health and occupancy prescribed by appropriate local authorities, and the provision of accommodations for retail stores, shops and other community services which are reasonably incident to such housing projects; or in the shares of a corporation which owns one or more of such projects and which is wholly owned by one or more financial institutions whose investments are regulated by the laws of this State or of the United States. The association's aggregate investment under this Section may not exceed 20% of its total assets, and no association may make an investment of this type unless it has reserves and undivided profits, or permanent reserve capital, totaling at least 5% of the aggregate withdrawal value of the association's withdrawable capital. The Commissioner shall approve the investment only if the association shows:
        (1) That the association has adequate assets
     available for such an investment;
        (2) That the proposed investment does not exceed the
     reasonable normal value of the property or interest therein; and
        (3) That all other requirements of this Section have
     been met.
    Nothing contained in this Section prohibits an association from developing or building on land acquired by it under any other provision of this Act nor from completing the construction of buildings pursuant to any construction loan contract where the borrower has failed to comply with the terms of such contract;
    (h) In marketable investment securities, but in no event shall the total amount of such securities of any one maker or obligor exceed 5% of the association's total assets, nor shall the aggregate amount of investments under this Section exceed 15% of such total assets. As used in this Section the term "marketable investment securities" does not include stocks but means investment grade marketable obligations evidencing indebtedness of any person in the form of bonds, notes or debentures commonly known as investment securities, and of a type customarily sold on recognized exchanges or traded over the counter and investment grade marketable obligations of the International Bank for Reconstruction and Development, the Inter‑American Development Bank, the Asian Development Bank, the African Development Bank, or the International Finance Corporation. As used in this Section, the term "investment grade" means being rated in one of the 4 highest categories by at least one nationally recognized rating service;
    (i) In obligations of the State of Israel, or obligations fully guaranteed by the State of Israel as to payment of principal and interest, but in no event shall the total amount of such investment exceed 5% of the association's total assets;
    (j) In stocks or obligations of business development corporations chartered by this State or by the United States or an agency thereof, but in no event shall the aggregate amount of stock exceed 1/2% of the aggregate withdrawal value of the association's withdrawable capital or $250,000, whichever is less;
    (k) In obligations of urban renewal investment corporations chartered under the laws of this state, or the United States, or in certificates of beneficial interest of urban renewal investment trusts, but in no event shall the aggregate amount of such stock, obligations or beneficial interest certificates of any one maker exceed 2% of the association's total assets, nor shall the aggregate amount of investments under this Section exceed 5% of such total assets;
    (l) Subject to the regulations of the Commissioner, in loans deemed sufficiently secured by the board of directors of the association. However, if the security is stock or equity securities of any kind, other than those of a financial institution, the stock or securities must be listed on a national exchange or actively traded and quoted on an over the counter market or its value must be ascertainable in accordance with regulations promulgated by the Commissioner;
    (m) In commercial paper. As used in this Section, the term "commercial paper" means short term obligations having a maturity ranging from 2 to 270 days issued by banks, corporations or other borrowers. Investments in commercial paper under this Section must be in securities rated in one of the 2 highest categories by a nationally recognized rating service; and
    (n) Purchase of stock in insurance companies. Notwithstanding any provision of this Act to the contrary, an association may purchase shares of or otherwise acquire equity interests in insurance companies and insurance holding companies organized to provide insurance for savings institutions and corporations and individuals affiliated with savings institutions, provided ownership of equity interests is a prerequisite to obtaining directors and officers' and blanket bond insurance through such company or companies. The Commissioner may promulgate regulations concerning the size of each association's investment and manner of holding such investments.
(Source: P.A. 88‑481; 89‑317, eff. 8‑11‑95.)

    (205 ILCS 105/5‑4) (from Ch. 17, par. 3305‑4)
    Sec. 5‑4. Lending plans. (a) The board of directors shall specify the terms on which loans will be made.
    (b) In any contract or loan which is secured by a mortgage, deed of trust, or conveyance in the nature of a mortgage, on residential real estate, the interest which is computed, calculated, charged, or collected pursuant to such contract or loan, or pursuant to any regulation or rule promulgated pursuant to this Act, may not be computed, calculated, charged or collected for any period of time occurring after the date on which the total indebtedness, with the exception of late payment penalties, is paid in full.
    For purposes of this subsection (b), a prepayment shall mean the payment of the total indebtedness, with the exception of late payment penalties if incurred or charged, on any date before the date specified in the contract or loan agreement on which the total indebtedness shall be paid in full, or before the date on which all payments, if timely made, shall have been made. In the event of a prepayment of the indebtedness which is made on a date after the date on which interest on the indebtedness was last computed, calculated, charged, or collected but before the next date on which interest on the indebtedness was to be calculated, computed, charged, or collected, the lender may calculate, charge and collect interest on the indebtedness for the period which elapsed between the date on which the prepayment is made and the date on which interest on the indebtedness was last computed, calculated, charged or collected at a rate equal to 1/360 of the annual rate for each day which so elapsed, which rate shall be applied to the indebtedness outstanding as of the date of prepayment. The lender shall refund to the borrower any interest charged or collected which exceeds that which the lender may charge or collect pursuant to the preceding sentence. The provisions of this subsection (b) shall apply only to contracts or loans entered into on or after January 1, 1986.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑5) (from Ch. 17, par. 3305‑5)
    Sec. 5‑5. General loan contract provisions. (a) Each loan, and any agreement for securing the same, shall be evidenced by one or more written instruments, consistent with sound lending practices in the locality; and whenever recording of such an agreement is necessary to establish priority over the claim of any third party, the agreement shall be recorded.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑6) (from Ch. 17, par. 3305‑6)
    Sec. 5‑6. Modification agreements. The association at any time may enter into a written agreement with the borrower to modify, in any manner not inconsistent with the provisions of this Act, the terms of a loan as to the amount, time or method of the payments to be made, the interest rate and any other provision of the loan contract; and the loan contract and the security instrument shall not be prejudiced by the making of any such modification, even if such a modification was not provided for in the loan contract.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑7) (from Ch. 17, par. 3305‑7)
    Sec. 5‑7. Sale, assignment and servicing of loans and contracts. (a) Any association may sell any loan or a participating interest in a loan at any time, in the usual and regular course of business. All loans sold shall be sold without recourse except as may otherwise be provided by regulations of the Commissioner. The Commissioner may, by regulation, adopt limitations upon the sale of loans. The provisions of this paragraph (a) do not apply to the sale of loans to agencies of the United States or the State of Illinois or such other government sponsored agencies as may be approved by the Commissioner.
    (b) An association may contract to service a loan or a participating interest in a loan, but such a contract shall conform to the pertinent regulations prescribed by the Commissioner and shall require sufficient compensation to reimburse the association for all expenses incurred under such contract.
    (c) An association may sell and assign without recourse any master's certificate of sale, defaulted loan or defaulted real estate contract to any person eligible to purchase the same, for an amount not less than the fair cash market value thereof.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑8) (from Ch. 17, par. 3305‑8)
    Sec. 5‑8. Purchase of real estate at forced sale. An association may purchase, at any sheriff's or other judicial sale, either public or private, any real estate upon which the association has any mortgage, lien or other encumbrance, or in which the association has any other interest. The association thereafter may repair, improve, sell, convey, lease, mortgage, exchange or otherwise dispose of real estate so acquired, in the best interests of the association, without limitation.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑9) (from Ch. 17, par. 3305‑9)
    Sec. 5‑9. Purchase of real estate for office and rental purposes. An association may acquire and hold real estate in fee simple, or leaseholds on which a building or buildings exist or are to be erected, suitable for the transaction of the association's business, and from portions of which, not required for the association's own use, revenue may be derived; or may own all or part of the capital stock, shares or interest in any corporation, association or trust engaged solely in holding all or part of such real estate. However, the amount so invested may not exceed the association's total net worth unless the Commissioner, upon a proper showing, approves a larger amount consistent with the needs of the association's business and its immediate future expansion.
    Unless prior written approval of the Commissioner is obtained, no association may purchase, lease or otherwise acquire a site for an office building or interest in real estate from any officer, director, employee or permanent reserve shareholder holding more than 15% of the aggregate permanent reserve capital of the association or any firm, corporation, entity or family in which any officer, director, employee or permanent reserve shareholder holding more than 15% of the aggregate permanent reserve capital of an association has any direct or indirect interest.
    An acquisition prohibited by this Section includes the purchase, lease or acquisition of property in which any of the persons described in this Section held any interest in for a period of 10 years preceding the purchase, lease or acquisition, but does not include the acquisition of an option for such a site or real estate where the option is assignable and exercised by the association in its own name and for its own benefit.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑10) (from Ch. 17, par. 3305‑10)
    Sec. 5‑10. Usury law inapplicable. No interest, premium, or interest on such interest or premium, or charge which may accrue to an association under the provisions of this Act shall be deemed to be usurious; and the same may be collected in the same manner as other debts in accordance with the laws of this State.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑11) (from Ch. 17, par. 3305‑11)
    Sec. 5‑11. Prohibited loans. No loan may be made by any association to any person owning 10% or more of the permanent reserve shares, any affiliated person, agent or attorney of that association either for himself or as agent, or as partner of another, except upon real estate occupied by such shareholder, affiliated person, agent or attorney as a homestead, or upon the security of withdrawable capital or upon the security of his personal automobile. No loan may be made by an association to any corporation, trust or other legal entity of which any interest is owned or controlled, directly or indirectly, individually or collectively, by any one or more of the affiliated persons, agents, attorneys or shareholders of the association, except upon real estate occupied by such shareholder, affiliated person, agent or attorney as a homestead, or upon the security of withdrawable capital.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑12) (from Ch. 17, par. 3305‑12)
    Sec. 5‑12. Effect of unauthorized investments; liability of officers. (a) Every loan or other investment made in violation of this Act shall be due and payable according to its terms, and the obligation thereof shall not be impaired.
    (b) Every director or officer of an association who knowingly shall violate, participate in or assent to, or who knowingly shall permit any of the officers or agents of the association to make, investments not authorized by this Act shall be liable individually for all damage which the association or its members sustain in consequence of such violation, in addition to any criminal penalties prescribed by this Act.
    (c) The Commissioner may require every director or officer of an association who knowingly shall violate, participate in or assent to, or who knowingly shall permit any of the officers or agents of the association to make, investments not authorized by this Act to deposit with the association an indemnity bond, insurance or collateral of a kind and amount sufficient to indemnify the association against damages which the association or its members may sustain in consequence of such violation. The amount considered sufficient to indemnify the association shall, in the case of an unauthorized investment, be the difference between the book value and the market value of the investment at the time the Commissioner makes his determination that such investment is unauthorized. The amount considered sufficient to indemnify the association, in the case of an unauthorized loan, shall be the difference between the book value of the loan and the amount that could have been made under the provisions of this Act. Whenever an unauthorized investment has been sold or disposed of without recourse, the Commissioner shall release all or such part of the indemnity after deducting any loss. Whenever the balance of an unauthorized loan has been reduced to an amount which would permit such loan to be made under the provisions of this Act, the indemnity shall be released, provided that the Commissioner in making such determination may require an independent appraisal of the security.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑13) (from Ch. 17, par. 3305‑13)
    Sec. 5‑13. Appraisals. (a) Every appraisal or reappraisal of property which an association is required to make shall be made as follows:
    (1) By an independent qualified appraiser designated by the board of directors;
    (2) By the association's appraisal committee appointed by the board of directors; or
    (3) In the case of an insured or guaranteed loan, by any appraiser appointed by any lending, insuring or guaranteeing agency of the United States or the State of Illinois which insures or guarantees such loan, wholly or in part.
    (b) Each appraisal shall be in writing, prepared at the request of the lender for the lender's use, disclose the market value of the security offered, contain sufficient information and data concerning the appraised property to substantiate the market value thereof, be certified and signed by the appraiser or appraisers and state that he or they have personally examined the described property; which appraisal shall be filed and preserved by the association.
    (c) If appraisals of real estate securing an association's loans are obtained as part of an examination by the Commissioner, the cost of such appraisals shall promptly be paid by the association directly to the appraiser or appraisers.
(Source: P.A. 86‑137.)

    (205 ILCS 105/5‑14) (from Ch. 17, par. 3305‑14)
    Sec. 5‑14. Acknowledgments. No acknowledgment of a deed, mortgage or other instrument shall be invalid because such acknowledgment was taken before an officer authorized by the laws of this State to acknowledge conveyances who is also a member, director, employee or officer of an association which is a party to such deed, mortgage or other instrument.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑15) (from Ch. 17, par. 3305‑15)
    Sec. 5‑15. Commissioner's regulations. (a) The Commissioner may from time to time promulgate such rules and regulations with respect to investments, loans or lending plans as may be reasonably necessary to assure that such loans are in keeping with sound lending practice and will promote the purposes of this Act.
    (b) Violations of any of the provisions of this Article 5, "Investments", shall constitute unsafe and unsound practice and shall subject any officer, director or employee of an association who knowingly violates provisions of this Article 5 to removal as provided in Section 3‑6(e) of this Act.
(Source: P.A. 84‑543.)

    (205 ILCS 105/5‑16) (from Ch. 17, par. 3305‑16)
    Sec. 5‑16. Limitation on loans to a single borrower. Except for loans to its wholly owned service corporations, an association may not at any one time hold, directly or indirectly, loans to any one corporation or person in a total amount equal to or in excess of 10% of the association's total withdrawable accounts or an amount equal to the total net worth of the association, whichever is less. An association may make loans to a wholly owned service corporation in an amount equal to the association's net worth or in an amount that exceeds an association's net worth if such excess amount is secured by collateral, of a type upon which the association itself could lend, of a value determined in accordance with rules and regulations promulgated by the Commissioner.
    (a) In computing the total mortgage loans made by an association to an individual, there shall be included all mortgage loans made by the association to a partnership or other unincorporated association of which he is a member, the unpaid balance of mortgage loans made either for his benefit or for the benefit of such partnership or other unincorporated association and all mortgage loans to or for the benefit of a corporation of which he owns or controls 25% or more of the capital stock.
    (b) In computing the total mortgage loans made by an association to a partnership or other unincorporated association, there shall be included the unpaid balance of mortgage loans to its individual members, the unpaid balance of mortgage loans made for the benefit of such partnership or other unincorporated association, or of any member thereof, and all mortgage loans to or for the benefit of any corporation of which the partnership or unincorporated association, or any member thereof, owns or controls 25% or more of the capital stock.
    (c) In computing the total mortgage loans made by an association to a corporation, there shall be included the unpaid balance of mortgage loans made for the benefit of the corporation and all mortgage loans to or for the benefit of any individual who owns or controls 25% or more of the capital stock of such corporation.
    (d) This Section does not apply to the obligations as endorser, whether with or without recourse, or as guarantor, whether conditional or unconditional, of negotiable or nonnegotiable installment consumer paper of the person transferring the same if the association's files or the knowledge of its officers of the financial condition of each maker of those obligations is reasonably adequate and if an officer of the association, designated for that purpose by the board of directors of the association, certifies that the responsibility of each maker of the obligations has been evaluated and that the association is relying primarily upon each maker for the payment of the obligations. The certification shall be in writing and shall be retained as part of the records of the association.
(Source: P.A. 92‑483, eff. 8‑23‑01.)

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