The following is a summary
of significant banking related legislation enacted by the Illinois General
Assembly and subsequently approved by Governor Ryan. This summary is provided
for your general reference. For specific guidance concerning the applicability
or effect of legislation on your institution, you should seek the advice
of your legal counsel.
119) amends Section 48.1 of the Illinois
Banking Actand authorizes disclosure of certain customer financial
records and information to a private label credit program. However,
the new law limits the information that may be disclosed to outstanding
balance, available credit, payment and performance and account history,
product references, purchase information, and information related to
the identity of the customer. The effective date was June 12, 2002.
Increases Made To Accommodation Party Lending Limit & Bank Investment
In Leased Personal Property
92-573 (HB 4952)amends Section 32 (5) of the Illinois
Banking Act to provide that the total liability to a state bank
of a person as an accommodation party shall not exceed 25% of the bank's
unimpaired capital and unimpaired surplus. In addition, the Act amends
Section 35.1 of the Illinois Banking Act to increase the amount that
a Bank may invest in personal property that will be leased to a requesting
party. Now, the personal property owned, together with all liabilities
of the party who will lease the personal property, may not exceed 25%
of the Bank's unimpaired capital and unimpaired surplus. The Act became
effective on June 26, 2002.
Reverse Mortgage Disclosure
92-577 (HB 5742) adds a new section 6.2 to the Illinois
Banking Act and requires that when a lender or broker makes
a reverse mortgage loan, the lender or broker must inform the mortgagor
that eligibility to obtain a tax deferral under the Senior
Citizens Real Estate Tax Deferral Act may be adversely affected.
This new addition to the Illinois Banking Act was effective on June
5822) adds a new provision to Section 5 of the Illinois
Banking Act and amends various other financial service provider
statutes to allow customer financial transactions to be conducted in
a language other than English through an employee or agent acting as
interpreter or through an interpreter provided by the customer. The
bill is intended to clarify that the forms for non-English "retail
transactions" required under the Consumer
Fraud and Deceptive Practices Act do not apply to transactions
involving the financial services industry. This new provision of the
Illinois Banking Act became effective on June 26, 2002.
False Access To Deposit Accounts
92-646 (SB 1713)amends the Criminal
Code of 1961 to provide that any person who makes a false statement
or misrepresentation or possesses, transfers, negotiates, or presents
a check, draft, or other item purported to direct a financial institution
to make payment without authorization from the account holder, with
intent to obtain access to the account holder's funds and with knowledge
that such access is unauthorized, is guilty of a Class A misdemeanor.
The amendment deletes an older requirement that the party to obtain
access act with intent to defraud and is now broad enough to cover the
fraudulent use of electronic and ACH transfers. In addition, the amendment
now provides that a financial institution may require the account holder
to provide an affidavit attesting to the fact that the payment was unauthorized
before the financial institution is required to credit the customer's
account. The amendment to the Criminal Code was effective on July 11,
Trust Company Audits
5860) amends the Corporate
Fiduciary Act to retain the applicability of audits by independent
licensed public accountants for independent trust companies. The bill
deletes the requirement for banks with trust departments to obtain the
independent audit. A trust company that is directly or indirectly owned
by a bank holding company, a financial holding company or a savings
and loan holding company may comply with the audit requirement if the
holding company obtains a consolidated audit by an independent licensed
public accountant that includes the trust company; meets the OBRE Commissioner's
prescribed scope of audit, and if within 45 days after receipt of the
audit report the holding company causes the independent licensed public
accountant to directly file with the Commissioner the portion of the
audit report relating to the trust company. The audit amendment became
effective on July 16, 2002.
OBRE Authorized To Accept Payment By Credit Card
2188) amends the Office
of Banks and Real Estate Act and authorizes OBRE to accept payment
by credit card for any fee, fine, or other charge that it is authorized
by law to collect. PA 92-741 further authorizes OBRE to adopt rules
and procedures, and enter into agreements, governing the acceptance
of payment by credit card. OBRE is specifically authorized to enter
into agreements with one or more financial institutions, Internet companies,
or other business entities to act as third-party payment agents for
the payment of fees, fines, or other charges to OBRE. These agreements
may authorize the third-party payment agent to retain a service fee
out of the payments collected. The bill became effective on July 25,
Mortgage Certificate Of Release Act Created
2207) creates the Mortgage Certificate of Release Act. The new Act provides that an officer or duly appointed agent of a title
insurance company may, on behalf of a mortgagor or person acquiring
title to a one-to-four family residential real property with an original
principal loan amount of less than $500,000, execute a certificate of
release and record the certificate of release with the recorder. The
recorded certificate of release operates as a release of the mortgage,
but contains penalties and restrictions for wrongful or erroneous filings.
The new Act requires that prior to recording the certificate of release,
a mortgagee or mortgage servicer must receive notice and have an opportunity
to object to the release. A written objection will block the title insurance
company or title insurance agent from recording a certificate of release.
The new Act provides statutory forms for certificate of release documents.
The Act was effective on August 6, 2002, but also contains a "sunset'
provision that will repeal the Act on January 1, 2004, unless further
legislation is enacted.
OBRE Omnibus Changes To Financial Institutions Laws
4409) is primarily an OBRE initiative amending various financial
institutions laws. Each of the provisions discussed below became effective
on August 21, 2002.