Title 38 Ill. Adm. Code — Financial Institutions

Chapter II Department of Financial and Professional Regulation

Part 100 Hearings Before the Division of Banking and Division of Financial Institutions

38 Ill. Adm. Code 100.5 Applicability

This part shall apply to all Hearings conducted by the Division pursuant to an Applicable Act under the jurisdiction of the Director.

38 Ill. Adm. Code 100.10 Definitions

The following words and phrases have the meanings ascribed to them in this Section unless the context clearly requires otherwise:

"Applicable Act" means the Residential Mortgage License Act of 1987 [205 ILCS 635], the Student Loan Servicing Rights Act [110 ILCS 992], the Illinois Banking Act [205 ILCS 5], the Electronic Fund Transfer Act [205 ILCS 616], the Corporate Fiduciary Act [205 ILCS 620], the Illinois Bank Holding Company Act of 1957 [205 ILCS 10], the Foreign Bank Representative Office Act [205 ILCS 650], the Pawnbroker Regulation Act of 2023 [205 ILCS 511], the Foreign Banking Office Act [205 ILCS 645], the Savings Bank Act [205 ILCS 205], the Digital Assets and Consumer Protection Act [205 ILCS 731], the Digital Asset Kiosks Act [205 ILCS 732, the Illinois Credit Union Act [205 ILCS 305], the Financial Institutions Code [20 ILCS 1205], the Title Insurance Act [215 ILCS 155], the Currency Exchange Act [205 ILCS 405], the Transmitters of Money Act [205 ILCS 657], the Uniform Money Transmission Modernization Act [205 ILCS 658], the Illinois Development Credit Corporation Act [805 ILCS 35], the Illinois Financial Services Development Act [205 ILCS 675], the Consumer Installment Loan Act [205 ILCS 670], the Payday Loan Reform Act [815 ILCS 122], the Sales Finance Agency Act [205 ILCS 660], the Debt Management Services Act [205 ILCS 665], the Debt Settlement Consumer Protection Act [225 ILCS 429], the Safety Deposit License Act [240 ILCS 5], the Interest Act [815 ILCS 205], the Consumer Legal Funding Act [815 ILCS 121], and any other statute under the jurisdiction of the Director.

"Administrative Decision" means an order, fine, revocation or suspension of licensure, or other regulatory action of the Director pursuant to an Applicable Act.

"Administrative Law Judge" or "ALJ" means an attorney licensed to practice law in the State of Illinois who has been designated by the Director to conduct any Hearings. For these purposes, "Administrative Law Judge" has the same meaning as "Hearing Officer."

"Applicant" means a Party seeking a license, charter, certificate, permit, or similar permission pursuant to an Applicable Act.

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director or Acting Director of the Division, with the authority delegated by the Secretary, or any person employed by or on behalf of the Department to whom the Director has delegated verbally or in writing authority to act on the Director's behalf.

"Division" means the Division of Banking or the Division of Financial Institutions within the Department, as the context indicates.

"Formal Hearing" means a formal proceeding that is conducted on the record before an Administrative Law Judge during which the Parties present evidence and make arguments regarding appropriate action on a contested matter.

"Hearing" means any hearing authorized to be held before an Administrative Law Judge, the Director, or the Secretary. "Hearing" does not include the Administrative Law Judge Reports, Orders of the Director, or any appeals under the Administrative Review Law.

"Indigent Person" has the meaning given in subdivision (a)(2) of Section 5-105 of the Code of Civil Procedure. [5 ILCS 100/10-25.1]

"Interpretive Assistance" means services that involve listening to a communication in one language and orally converting that communication into another language while retaining the same meaning. [5 ILCS 100/10-25.1]

"Language access services" means the full spectrum of language services available to provide meaningful access to the programs and services for limited English proficient persons, including, but not limited to, in-person interpreter services, telephonic and video remote interpreter services, translation of written materials, and bilingual staff services. [5 ILCS 100/10-25.1]

"Licensee" means a person or entity licensed by the Division.

"NMLS" shall mean the Nationwide Multistate Licensing System and Registry.

"Party" shall include, but not be limited to, Licensees, Applicants, and Unlicensed Persons, whether they are natural persons, corporations, partnerships, associations, cooperatives, trusts or other legal entities, and the Department.

"Petitioner" is a Party who, by written petition, seeks relief or licensure under an Applicable Act or an Administrative Decision of the Secretary or Director pursuant to an Applicable Act.

"Preliminary Hearing" means a proceeding that before an Administrative Law Judge during which the ALJ sets a date on which all Parties expect to be prepared to proceed with their cases and the ALJ rules on any preliminary motions that are presented.

"Recordkeeper" means the persons or units designated by the Secretary or Director to receive filings.

"Secretary" means the Secretary or Acting Secretary of the Department of Financial and Professional Regulation or any person employed by or on behalf of the Department to whom the Secretary has delegated verbally or in writing authority to act on the Secretary's behalf.

"Unlicensed Person" means any person who is not a Licensee and who is not an Applicant.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

38 Ill. Adm. Code 100.15 Interpretive and Translational Assistance

a) A self-represented litigant, a witness, or a litigant who is an indigent person has the right to request interpretive assistance to participate in or understand any formal proceeding conducted orally before an ALJ, and this person may make such request at any time during the proceeding.

b) If no request for interpretive assistance is made throughout the formal proceeding but the ALJ reasonably believes that the person is eligible to receive interpretive assistance and is of limited English proficiency, the ALJ shall inquire if the person needs assistance to participate or understand the proceeding.

c) The ALJ may require a person to provide reasonable information necessary to determine whether the person is an indigent person for purposes of determining eligibility for interpretive assistance. The ALJ shall determine whether, and the manner in which, interpretive assistance will be provided. The decision of the ALJ shall be made part of the record of the proceeding.

d) The Department shall provide interpretive assistance and do so in a manner consistent with Section 10-25.1(c) of the Illinois Administrative Procedure Act [5 ILCS 100], to a self-represented litigant, a witness, or litigant who is an indigent person that requests, or needs interpretive assistance in accordance with this Section. This applies to a formal proceeding conducted orally before an ALJ and concerns substantive issues other than those related to procedural rules, processes, or scheduling.

e) The Department may provide interpretive assistance and do so in a manner consistent with Section 10-25.1(d) of the Illinois Administrative Procedure Act, to a self-represented litigant, a witness, or a litigant who is an indigent person that requests, or needs, interpretive assistance in accordance with this Section when the formal proceeding conducted orally before an ALJ concerns only procedural rules, processes, or scheduling.

f) The ALJ shall ensure that all persons appointed to provide interpretive assistance pursuant to under this Section comply with the requirements of Section 10-25.1(e) of the Illinois Administrative Procedure Act. The ALJ shall hear any requests for the appointment of a different interpreter in accordance with Section 10-25.1(f) of the Illinois Administrative Procedure Act.

g) Every initial notice for which a person is entitled to a hearing under the applicable act, shall include an enclosure written in, at a minimum, English, Arabic, Cantonese, Gujarati, Korean, Mandarin, Polish, Russian, Spanish, Tagalog, Urdu, Ukrainian, and Vietnamese, which notifies the recipient of the ability for a party or the recipient's agent to request interpretive assistance to participate in or understand the hearing and to receive language access services for translating the contents of the notice. [5 ILCS 100/10-25] For Cantonese and Mandarin languages interpretation will be provided in Simplified Chinese or Traditional Chinese.

h) A request to receive a written or sight translation of the initial notice must be made within seven days after service of the notice. [5 ILCS 100/10-25(a)(6)]. The request for translation shall be construed as a request for hearing. The requirement of filing an Answer pursuant to Section 100.120 is stayed until a translation is provided.

i) If a request for written or sight translation of the initial notice is not received by the Department within seven days after service of the notice, it shall be deemed a suspension of the right to translate the contents of the initial notice. Thereafter, a request for interpretive assistance shall be made in a timely manner so as not to delay any proceeding. If the requestor for interpretive assistance fails to appear at the hearing after requesting interpretive assistance the request shall be deemed suspended unless reasserted. If the requestor fails to appear is the Petitioner or Respondent, the Division shall proceed pursuant to Section 100.100.

j) The Department need not provide interpretive assistance, sight translation, written translation, or other language access services to a person other than as stated in this Section, however nothing in this Section prevents the Department from providing those services within its discretion.

History

• Source: Added at 50 Ill. Reg. 10803, effective July 13, 2026

Chapter II Department of Financial and Professional Regulation

Part 100 Hearings Before the Division of Banking and Division of Financial Institutions

38 Ill. Adm. Code 100.20 Hearing Fee

Each Party that requests a Hearing pursuant to this Part shall pay a nonrefundable fee of $500, unless otherwise provided in an Applicable Act or in a rule adopted pursuant to an Applicable Act. The Director may waive the fee pursuant to this Section if, in the Director's sole discretion, the financial hardship imposed on the Party would be significant.

38 Ill. Adm. Code 100.30 Petition for Hearing

a) A person or entity subject to an Administrative Decision may file a Petition for Hearing when the person or entity is entitled to a Hearing under the Applicable Act. A third-party person or entity that is not the subject of an Administrative Decision may file a Petition for Hearing when the third-party person or entity is entitled to a Hearing under the Applicable Act.

b) A Petition for Hearing must be filed with the Recordkeeper within the time period required under the Applicable Act after service of an Administrative Decision upon the Petitioner. If the Applicable Act does not provide for this time period, then a Petition for Hearing must be filed with the Recordkeeper within 10 days after service of an Administrative Decision upon the Petitioner.

c) In a case in which a Petitioner licensed under Article VII of the Residential Mortgage License Act of 1987 [205 ILCS 635] is contesting a fine, revocation, suspension, cease and desist, probation, refusal to renew a license or any other disciplinary action, the Petition for Hearing shall be in writing, signed by the Petitioner, and shall set forth the:

1. Petitioner's license number, if applicable;

2. Docket number of the Administrative Decision that resulted in discipline, if applicable; and

3. Date of the contested Administrative Decision.

d) In a case in which the Petitioner, as:

1. an Applicant, seeks to contest an Administrative Decision to deny an application for licensure: or

2. an Unlicensed Person or Licensee of the Division of Banking or Division of Financial Institutions other than a Licensee subject to subsection (c) is contesting a fine, revocation, suspension, cease and desist, probation, refusal to renew a license or any other disciplinary action, the Petition for Hearing will be in writing, signed by the Petitioner, and will state with specificity the particular reasons why the Petitioner believes that the decision to deny licensure or impose other disciplinary action was incorrect.

e) Upon receipt by the Recordkeeper of a properly completed Petition for Hearing and completion of all the requirements of this Section and Section 100.200, a case will be docketed, and notice sent to the Petitioner setting forth the date, time, and place of the Hearing.

f) A request to receive a written or sight translation of administrative decision made within seven days after service of the Administrative Decision by a self-represented Petitioner or a Petitioner who is an indigent person shall automatically be construed as a Petition for Hearing notwithstanding that the request does not comply with this Section. Within 20 days after service of written translation of the Administrative Decision or 20 days after the Department provides sight translation of the Administrative Decision, the Petitioner must file a Petition for Hearing that complies with this Section or the Petition for Hearing shall be deemed withdrawn and the Administrative Decision of the Department will become final.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

Chapter II Department of Financial and Professional Regulation

Part 100 Hearings Before the Division of Banking and Division of Financial Institutions

38 Ill. Adm. Code 100.40 Joinder

In the interest of the efficient disposition of related cases, the Department may join cases so long as the cases involve issues of law or fact that are common to the Parties. A Party may contest the decision to join cases by filing a motion.

38 Ill. Adm. Code 100.50 Form and Filing of Documents

a) All documents filed or submitted to the Department in connection with a Hearing shall be typewritten on 8½ by 11-inch white paper or an electronic equivalent. The first page of each document shall set forth the names of the Parties and the docket number assigned to the case by the Department. Petitions for Hearing that are filed before a docket number is assigned shall contain a space for entry of the assigned number.

b) All petitions, notices, answers, motions, responses, replies and other papers in the nature of a pleading shall be filed with and date stamped by the Recordkeeper. A copy of any motion, response, reply, or similar document shall also be provided to all other Parties and/or all other Parties' counsel of record or the assigned Department counsel, as applicable.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

Chapter II Department of Financial and Professional Regulation

Part 100 Hearings Before the Division of Banking and Division of Financial Institutions

38 Ill. Adm. Code 100.60 Service

a) Service of any document may be by mail or by personal delivery upon any person or entity. Service of any document may also be made by email on a Party's counsel of record or an unrepresented Party if one or more email addresses are provided pursuant to subsections (a)(1) through (3). Service by email to the assigned Department counsel must be addressed to the counsel's email address appearing on any pleading and any secondary Department email addresses provided on any pleading.

1. At any time either before or after issuance of a Hearing notice, the Department may require a Party's counsel of record to provide one or more email addresses at which they will accept service of documents in connection with the Hearing.

2. At any time either before or after issuance of a Hearing notice, the Department may request, but not require, an unrepresented Party to accept service by email of documents in connection with the Hearing by designating one or email addresses at which they will accept service.

3. If any secondary email address is designated by a Party, the Department must serve the documents to both the designated primary and secondary email addresses.

b) Proof of service by mail or personal delivery will be attached to the original of any document served. Proof of service by email shall be the emailed notice to which the document is attached. In the absence of evidence to the contrary, the date shown on the proof of service shall be deemed the date of service. Proof of service may be verified by certification as provided for in Section 1-109 of the Code of Civil Procedure [735 ILCS 5].

c) If service is by email, the Department will maintain a copy of the sent email and will verify within one business day that the transmission of the email has not failed or been rejected. In the event of rejection or failure, absent correction of an erroneous email address, service shall be made by mail or personal delivery.

d) Any Party may provide an updated mailing address and/or email address for receipt of service of documents at any point during a proceeding by sending notice of the updated mailing address and/or email address to all Parties of record.

e) Documents containing information that could reasonably be deemed personal, proprietary, confidential, or trade secret information or containing any other information listed under 5 ILCS 100/10-75(b) will be served by mail, personal delivery, or a secure messaging or file transfer system approved by the Secretary.

38 Ill. Adm. Code 100.70 Notice of Preliminary Hearing

a) The Notice of Preliminary Hearing shall include:

1. A statement of the time, place, and nature of the Preliminary Hearing;

2. A statement of the legal authority and jurisdiction under which the Preliminary Hearing is to be held;

3. A reference to the particular sections of the substantive and procedural statutes and rules involved;

4. Except when a more detailed statement is otherwise provided for by law, a short and plain statement of the matters asserted, the consequences of a failure to respond, and the official file or other reference number.

5. To the extent such information is available, the names, phone numbers, email addresses, and mailing addresses of the Administrative Law Judge or designated agency contact, Parties, and all other persons to whom the agency gives notice of the Preliminary Hearing unless otherwise confidential by law. [5 ILCS 100/10-25(a)]

6. An enclosure written in, at a minimum, English, Arabic, Cantonese, Gujarati, Korean, Mandarin, Polish, Russian, Spanish, Tagalog, Urdu, Ukrainian, and Vietnamese, which notifies the recipient of the ability for a party or the recipient's agent to request interpretive assistance to participate in or understand the hearing and to receive language access services for translating the contents of the Notice of Preliminary Hearing. [5 ILCS 100/10-25] A request to receive a written or sight translation of the Notice of Preliminary Hearing must be made within seven days after service of the Notice of Preliminary Hearing.

7. A statement that the purpose of the Preliminary Hearing is to set a date on which all Parties expect to be prepared to proceed with their cases and to rule on any preliminary motions that are presented.

b) Except as otherwise provided by law, the Petitioner will be given at least 20 days' notice prior to the first date set for the Preliminary Hearing or status call. Once notice is given, it will thereafter be the responsibility of the Petitioner to know subsequent Hearing or status call dates.

c) Nothing in this Section shall prevent the Department from scheduling a Formal Hearing without a Preliminary Hearing and with less than 20 days' notice when the Secretary or Director summarily or temporarily suspends or revokes any license under the Applicable Act, issues a temporary order, or when necessary to comply with applicable law.

d) Any contention that improper notice was given will be deemed waived unless it is raised by the Petitioner prior to argument on any other motion or, if no other motions are presented, prior to the commencement of opening statements.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

Chapter II Department of Financial and Professional Regulation

Part 100 Hearings Before the Division of Banking and Division of Financial Institutions

38 Ill. Adm. Code 100.80 Negotiations and Agreed Dispositions

a) The Department and the Petitioner may stipulate to facts and that stipulation may be used or otherwise admitted at the Hearing.

b) The Department and the Petitioner may enter into a written agreement providing for disciplinary or non-disciplinary action against the Petitioner or the granting or restoration of a license as a settlement and disposition of the petition by stipulation, agreed settlement, or consent order. If the Secretary or Director approves the written agreement, it shall be entered in the same manner as an Administrative Decision of the Secretary or Director and shall constitute a final decision. If the Secretary or Director rejects the written agreement, the Petitioner shall then be entitled to a Hearing on the merits. A proposed written agreement not accepted by all Parties or rejected by the Secretary or Director shall be deemed confidential as an unsuccessful attempt to settle and shall not be referenced or included in any future pleading or proceeding.

c) Statements made during informal conferences are confidential, including proposed dispositions, and shall not be used or admitted in any proceeding regarding the allegations.

38 Ill. Adm. Code 100.90 Representation

a) A Party may be represented by an attorney who is licensed in Illinois or by an attorney otherwise permitted by law to practice in the State. Attorneys who appear in a representative capacity must file a written notice of appearance setting forth:

1. The name, address, email address, telephone number, and Supreme Court registration number of the attorney;

2. The name, address, and email address of the Party represented; and

3. An affirmative statement indicating that the attorney is licensed in Illinois or is appearing pro hac vice.

b) An attorney may withdraw from employment as a representative only upon filing a motion for leave to withdraw in writing stating the specific reasons for the withdrawal and providing notice to all parties. The motion shall state the last known address and email address of the party represented. The motion for withdrawal may be denied by the ALJ if the granting of it would delay the trial of the case or otherwise be inequitable. Upon entry of an order granting a motion for withdrawal, the withdrawing attorney shall provide the client with a copy of all orders and pleadings from the proceeding in their possession.

c) A law student licensed under Illinois Supreme Court Rule 711 may appear on behalf of any Party as permitted by Illinois Supreme Court Rule 711 and shall be subject to the same requirements as an attorney.

d) Attorneys admitted to practice in states or jurisdictions other than the State of Illinois may appear and be heard in a specific Hearing pro hac vice as authorized and in compliance with Illinois Supreme Court Rule 707. The attorney's appearance shall include documentation as to their eligibility or qualification under Illinois Supreme Court Rule 707.

e) Any individual may appear on their own behalf.

f) A corporation, limited liability company, professional limited liability company, or partnership must appear by legal counsel, licensed to practice in the State of Illinois or appearing pro hac vice.

g) Once an appearance is filed, a copy of all future filings shall be served upon the counsel of record, unless that counsel has withdrawn. In addition to that service, a copy may be served on the Party represented.

h) The standard of conduct shall be the same as before the Courts of Illinois. Attorneys appearing before the Department shall conform their conduct to the Illinois Rules of Professional Conduct. In participating in any hearing before the Department conduct:

1. A person shall not engage in any conduct that brings disorder or disruption to the hearing room or remote setting. Attorneys shall instruct their clients and witnesses appearing of the proper conduct expected and required in administrative hearings and, to the best of their ability, prevent their clients and witnesses from acting inappropriately;

2. A person shall not knowingly misrepresent, mischaracterize, misquote or miscite facts or authorities in any oral or written communication to the ALJ;

3. A person shall not interrupt the ALJ or opposing counsel, except when necessary to make an effective objection;

4. Unless specifically permitted or invited by the ALJ, parties shall not send copies of correspondence between themselves to the ALJ. This does not include transmission of courtesy copies of pleadings to the ALJ; and

5. Parties shall notify the other party and the ALJ at the earliest possible time when hearings or conferences are to be canceled or postponed. Early notice avoids unnecessary travel and expense and may enable the ALJ to use the previously reserved time for other matters.

i) Any failure to behave in a manner consistent with those standards of conduct or this Part will authorize an ALJ to take appropriate action, including, but not limited to:

1. Limitation of evidence;

2. Substitution of written argument in place of oral argument;

3. If warranted, report of an attorney's misbehavior to the Attorney Registration and Disciplinary Commission of the Illinois Supreme Court;

4. Exclusion of an attorney or other participant from the proceedings; or

5. Suspension of the attorney or other participant's ability to appear before the Administrative Law Judge.

j) If any of the actions authorized by subsection (i) are taken by the ALJ, it shall be done as a matter of record, and the ALJ shall state for the record the specific reasons for the action.

k) A Party sanctioned under this Section may request the decision be reviewed by the Director.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

38 Ill. Adm. Code 100.100 Failure to Appear

a) Failure of the Petitioner, even if represented by an attorney, to appear at the time and place set for the Formal Hearing may be deemed a waiver of the right to present evidence or provide grounds for dismissal of the Petition for Hearing, as reflected by order of the Administrative Law Judge. After presentation by the Department of proof that the Petitioner was given proper notice and the Department has been given an opportunity to present evidence, the ALJ shall make their recommendation. If the Petition for Hearing is dismissed, the contested Administrative Decision shall become final.

b) If a Respondent or Petitioner fails to appear at a hearing after requesting interpretive assistance pursuant to Section 100.15, the request for interpretive assistance shall be suspended until another request for interpretive assistance is made.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

Chapter II Department of Financial and Professional Regulation

Part 100 Hearings Before the Division of Banking and Division of Financial Institutions

38 Ill. Adm. Code 100.110 Amendment and Withdrawal

a) An Administrative Decision of the Secretary or Director may be withdrawn without prejudice or amended at any time, except in the course of the Formal Hearing, without leave or approval of the Administrative Law Judge. If an amended Administrative Decision is filed during the course of the Formal Hearing, it shall also be presented to the ALJ. A continuance shall be granted whenever the amendment materially alters the Administrative Decision and when the Petitioner demonstrates that they would otherwise be unable to properly prepare an Answer to the amended Administrative Decision or prepare the Petitioner's case.

b) A Petition for Hearing may be withdrawn at any time prior to the Formal Hearing by the Party who initiated it and the Administrative Decision of the Department will become final. After a Hearing has begun, a Petition may be withdrawn only with leave of the ALJ.

38 Ill. Adm. Code 100.120 Requirement of an Answer; Default

a) In contested cases, the Petitioner shall file an Answer to the Notice of Preliminary Hearing at least five days prior to the date of the Preliminary Hearing, unless otherwise provided by law or this Section. The Answer shall be in writing, signed by the Petitioner or their representative, and shall contain a specific response to each allegation in the Administrative Decision. The response to each allegation in the Complaint shall either admit or deny the allegation or shall state that the Petitioner has insufficient information to admit or deny the allegation. Any Answer not conforming to the requirements of this Section may be stricken.

b) Any Answer that states that the Petitioner has insufficient information to admit or deny the allegation shall be accompanied by an affidavit attesting to the truth of this assertion.

c) If the Petitioner does not file an Answer conforming with the requirements of this Section or otherwise does not file a responsive pleading, on motion by the Department, the Administrative Law Judge will cause to be issued a Notice to Plead or Be Held in Default. If, within 15 days after issuance of that notice, the Petitioner does not file an Answer conforming with the requirements of this Section or otherwise file a responsive pleading, the Petitioner will be held in default and the allegations of the Administrative Decision will be deemed to have been admitted. Even when an Answer has been filed, if a Petitioner fails to appear for any scheduled Hearing or proceeding without cause, the Petitioner may be held in default and the allegations of the Administrative Decision will be deemed to have been admitted.

d) An Answer is not required to be filed before the Preliminary Hearing if a request is made to receive a written or sight translation of Notice of Preliminary Hearing within seven days after service of the Notice of Preliminary Hearing by a self-represented Petitioner or a Petitioner who is an indigent person. The Administrative Law Judge will set the deadline for filing an Answer at the Preliminary Hearing or at a subsequent hearing.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

38 Ill. Adm. Code 100.130 Discovery

a) Discovery shall not be the subject of motions presented to the ALJ, except when a motion is made alleging failure to comply with this provision and requesting appropriate relief.

b) Upon a written request served on the opposing Party, or by order of the ALJ, a Party shall be entitled to:

1. The name and address of any witness who may be called to testify, including identification of any witness to be offered as an expert;

2. Copies of any document that may be offered as evidence;

3. A description of any other evidence that may be offered;

4. With respect to a request from the Petitioner of sufficient particularity to identify the evidence sought, nonprivileged and nonconfidential evidence in the Department's possession that tends to support the Petitioner's position or to demonstrate a potential conflict of interest of a Department witness; and

5. With respect to a request from the Petitioner, a copy of any nonprivileged and nonconfidential Division investigative report that purports to be a memorandum of interview of the Petitioner.

c) The information listed in subsection (b) shall be provided within 30 days after service of a request or as otherwise directed by an ALJ. In the event that the Division withholds any responsive and relevant evidence asserted to be privileged or confidential (see subsections (b)(4) and (b)(5)), the Division shall give notice to the other Party that it is doing so and provide a general description of the evidence withheld. Notwithstanding any provision of this Section, the other Party may file a motion regarding the Division's withholding of evidence asserted to be privileged or confidential.

d) Upon a written request served on the Petitioner, at any time after a Petition for Hearing is filed, or at any stage of the Hearing, the Petitioner will be required to produce documents, books, records, or other evidence that relate directly or indirectly to the Petitioner's conduct at issue in the contested Administrative Decision; provided, however, that nothing in this Section shall limit the Secretary's or Director's powers to request, demand, or subpoena information or testimony under applicable law.

e) Nothing in this Section shall prevent the Parties in a contested case from agreeing to a mutual exchange of information that is more extensive than what is provided for in this Section.

f) This provision will be construed to impose a continuing obligation upon the Parties to exchange new information as it becomes available.

g) No depositions will be taken, interrogatories submitted, or other discovery mechanism used without the mutual agreement of the Parties, unless provided for by this Section. However, subject to privilege as applied in civil cases in the circuit courts of this State and to grants of confidentiality under applicable law, a Party may serve on any other Party a written request for the admission of genuineness of any relevant document. The request shall be served and responded to in the manner set forth by Illinois Supreme Court Rule 216. The ALJ may provide additional time to respond for good cause.

h) Service of notice upon a Party's officers, directors or equivalent, employees, or agents of the Division's intention to take the Party's testimony or the testimony of any of its officers, directors or equivalent, employees, or agents at a Formal Hearing is sufficient to require the Party or its officer, director or equivalent, employee or agent's attendance at the Formal Hearing at the Party's own cost.

i) No file of a Division examiner, investigator, attorney, or any other employee shall be subject to discovery, except as provided in subsection (b).

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

38 Ill. Adm. Code 100.140 Subpoenas

a) Upon request by the Petitioner, the Chief Administrative Law Judge, or their designated ALJ, will issue subpoenas for the attendance of witnesses or production of books, records, documents or other evidence; provided, however, that nothing in this Section shall limit the Secretary's or Director's powers to request, demand or, subpoena information or testimony under applicable law.

b) Any Petitioner seeking issuance of a subpoena shall submit a request in writing to the Chief Administrative Law Judge and notify the assigned Department counsel of the request. A proposed subpoena shall be attached to the request.

1. The request shall set forth facts to demonstrate that the documents or testimony sought are relevant to the case pending before the Division and are not otherwise excludable by law or by rule.

2. A request for subpoena may be denied if insufficient information is provided in the request to make such a determination.

3. If the opposing party objects to any component of the subpoena request, a written response specifying the objections shall be filed within seven days after the date the subpoena request was filed.

4. Upon refusal by an Administrative Law Judge to issue any subpoena, the Respondent or Petitioner will be entitled to a hearing before another Administrative Law Judge, to be conducted as a matter of record. The Respondent or Petitioner shall be responsible for the court reporter's attendance.

c) Except for Division investigators and examiners who participated in the investigation of the case, the Chief Administrative Law Judge shall not generally issue subpoenas for the testimony of Department or Division officers or employees.

d) Service of subpoenas pursuant to this Section shall be done, and payment of witness fees and expenses after the appearance of the witness shall be calculated, in the same manner as prescribed by law in judicial proceedings in civil cases in circuit courts of this State.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

Chapter II Department of Financial and Professional Regulation

Part 100 Hearings Before the Division of Banking and Division of Financial Institutions

38 Ill. Adm. Code 100.150 Prehearings

a) After a case is instituted, upon the written motion of any Party, or on the Administrative Law Judge's own motion, the ALJ may direct the Parties to attend a prehearing.

b) Upon the request of any Party, the prehearing will be conducted as a matter of record. Participation by an ALJ will not affect his or her right to participate in a subsequent Hearing on the matter. The requesting Party shall be responsible for the court reporter's attendance and costs.

c) The purposes of the prehearing include:

1. Simplification of issues;

2. Limitation of issues;

3. Negotiating admissions or stipulations;

4. Limitation of witnesses or evidence;

5. Exchange of exhibits;

6. Discussion of any other matter that may aid in efficient disposition of the case; or

7. Agreed dispositions.

d) The Parties shall be fully prepared to participate in a prehearing, which shall include:

1. Presentation of any prehearing motions;

2. Witness and exhibit lists that list only those witnesses the Party in good faith intends to call;

3. Disclosure of expert witnesses; and

4. Any other materials directed by an ALJ.

38 Ill. Adm. Code 100.160 Remote Proceedings

a) Preliminary Hearings may be conducted remotely, either by teleconference or videoconference, provided that the Notice of Preliminary Hearing includes notice that the Preliminary Hearing will be conducted remotely and includes instructions for accessing the teleconference or videoconference system at the date and time set forth in the Notice of Preliminary Hearing.

b) By order of the Administrative Law Judge, any status hearing or prehearing may be conducted remotely, either by teleconference or videoconference. The Parties shall be provided instructions for accessing the teleconference or videoconference system for the date and time of the scheduled status hearing or prehearing.

c) Upon motion of any Party, the ALJ may determine whether the pending matter may be suitable for a Formal Hearing by teleconference or videoconference in whole or in part as an alternative to in-person proceedings.

d) The Parties may agree that the Formal Hearing will be conducted in its entirety by teleconference or videoconference or that a part or parts of the Formal Hearing will be conducted by teleconference or videoconference, including the testimony of a particular witness or witnesses. These agreements are subject to the approval of the ALJ by entry of an order.

e) In the absence of any such agreement of the Parties, the ALJ may determine whether the Formal Hearing will be conducted in its entirety by teleconference or videoconference or that a part or parts of the Formal Hearing will be conducted by teleconference or videoconference, including the testimony of a particular witness or witnesses, or whether the proceedings or any part thereof shall remain in-person. This determination shall be made by order of the ALJ. In making this determination, the ALJ may consider factors including but not limited to the following:

1. Preference of the Parties;

2. Capabilities of participants to participate via video or telephone;

3. Whether the selected method is accessible for persons with health risks or disabilities;

4. Whether the participants have access to the Internet;

5. Number of witnesses;

6. Volume of documents offered as exhibits;

7. Complexity of the Petition;

8. Expected duration of the Formal Hearing;

9. Extent to which the credibility of any witness will be at issue;

10. Extent to which exhibits will be used to examine any witness; and

11. Any other consideration which will impede or aid in the fair and efficient administration of the Formal Hearing process.

38 Ill. Adm. Code 100.170 Hearings

The sequence to be followed for all contested cases is as follows:

a) Status Calls and Preliminary Hearings. The purpose is to set a date on which all Parties expect to be prepared to proceed with their cases and to rule on any preliminary motions that are presented.

b) Prehearings – Optional. The purposes are set forth in Section 100.150.

c) Formal Hearings

1. Preliminary Matters – Motions, attempts to narrow issues or limit evidence.

2. Opening Statements – The Party bearing the burden of proof proceeds first.

3. Case in Chief – Evidence is presented by the Party bearing the burden of proof.

4. Defense – Evidence may be presented by the opposing Party.

5. Closing Statements – The Party bearing the burden of proof proceeds first, then the opposing Party, then a final word by the Party bearing the burden of proof.

38 Ill. Adm. Code 100.180 Administrative Law Judges

a) In any contested case, the Secretary or Director shall appoint and employ an attorney, licensed to practice in Illinois, to serve as Administrative Law Judge. The ALJ shall be empowered to conduct the Hearing, question witnesses, make rulings on motions and objections, and submit Findings of Fact, Conclusions of Law, and prepare a recommendation to the Secretary or Director at the conclusion of the case.

b) It shall not be a bar to employment as an ALJ that the attorney is also a Department employee.

38 Ill. Adm. Code 100.185 Disqualification of Administrative Law Judges

a) An Administrative Law Judge may, on their own motion, recuse themselves from presiding over a matter due to conflict of interest or bias.

b) At any time prior to the issuance of the ALJ's final decision or recommendation, a Party may file a motion to disqualify the ALJ for bias or conflict of interest. An adverse ruling made by an ALJ, in and of itself, shall not constitute bias or conflict of interest. The motion shall set forth the alleged grounds of bias or conflict of interest and shall include supporting affidavits. A different ALJ shall have 7 days after the motion was filed to enter a written ruling, which shall be served on all Parties. An adverse ruling or rulings rendered against the Party or its representative in any previous matter shall not, in and of themselves, constitute sufficient grounds for disqualification under this Section.

c) If the motion to disqualify is denied, the moving Party may request the decision be reviewed by the Secretary or Director.

38 Ill. Adm. Code 100.190 Examination by Administrative Law Judge

a) Any Administrative Law Judge may examine any witness.

b) Any Party may object to specific questions asked by the ALJ.

38 Ill. Adm. Code 100.200 Burden of Proof

a) The burden of proof rests with the Department in all cases except as provided in subsection (b) or as otherwise provided by law.

b) The burden of proof rests with the Petitioner in the following circumstances, unless otherwise provided by law:

1. When an Applicant, if permitted to do so under the Applicable Act, files a Petition for Hearing after they have been denied a license, charter, certificate, permit, or similar permission pursuant to an Applicable Act;

2. When a third-party person or entity that is not the subject of an Administrative Decision of the Secretary or Director, if permitted to do so under the Applicable Act, files a Petition for Hearing related to such Administrative Decision.

38 Ill. Adm. Code 100.210 Documents

a) Business records shall be admissible to the same extent they are admissible under the Illinois Administrative Procedure Act.

b) Any Party may prove the admissibility of business records by presentation of a sworn statement by an individual responsible for making or keeping those records.

c) Any Party seeking introduction of a document will be allowed to offer a mechanical reproduction or photocopy of the original without any showing that the original is unavailable, upon representation of the Party or attorney that the copy is a fair and accurate copy of the original.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

38 Ill. Adm. Code 100.220 Motions

a) Motions will be made in writing, unless otherwise allowed by the Administrative Law Judge prior to or during the course of a Hearing. Written motions are limited to the following:

1. To request dismissal of an Administrative Decision for failure to state facts that, if true, would form a sufficient basis for discipline.

2. To request sanctions in accordance with Section 100.90 (Representation).

3. To request sanctions in accordance with Section 100.130 (Discovery).

4. To request dismissal of a Petition for Hearing, for failure to comply with Section 100.30 (Petition for Hearing).

5. To request dismissal when the Party bearing the burden of proof has concluded their case without presenting sufficient evidence

6. To request a continuance or extension of time to comply with any provision of this Part.

7. To request that an Order entered by the ALJ be vacated or modified.

8. To request a prehearing.

9. To request separation of cases joined by the Department.

10. To request disqualification of an ALJ in accordance with Section 100.175 (Hearings).

11. To request a protective order to prevent exposure in the public domain of records or other information that is of a sensitive or confidential nature or to seal the record in accordance with Sections 100.230(f) (Evidence and Standard of Proof) and 100.255 (Confidentiality).

12. To request that a Notice to Plead or Be Held in Default be issued upon failure to file a complete Petition for Hearing, Answer, or other responsive pleading in accordance with Section 100.120 (Requirement of and Answer; Default).

13. To compel discovery.

b) When any motion is filed, the ALJ may allow oral argument if this is deemed necessary for a fuller understanding of the issues presented. When facts that are not part of the record in the case are alleged as a basis for the request, an affidavit will be attached to the motion setting forth those facts. Facts outside of the Administrative Decision cannot be used to support a motion to dismiss for failure to state facts that, if true, would form a sufficient basis for the Administrative Decision.

c) Motions and any responses or replies shall be filed in accordance with Sections 100.50 and 100.60 with copies to the ALJ and other Parties or their counsel. Unless otherwise directed by an ALJ, a Party shall have 20 days from the date of service to respond to a motion and 10 days from date of service to reply to a response.

38 Ill. Adm. Code 100.230 Evidence and Standard of Proof

a) Irrelevant, immaterial, or unduly repetitious evidence shall be excluded. The rules of evidence and privilege as applied in civil cases in the circuit courts of this State shall be followed. Evidence not admissible under those rules of evidence may be admitted, however, except when precluded by statute, if it is of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs. Objections to evidentiary offers may be made and shall be noted in the record. Subject to these requirements, when a Hearing will be expedited and the interests of the Parties will not be prejudiced, any part of the evidence may be received in written form. [5 ILCS 100/10-40(a)]

b) Testimony shall be taken only on oath or affirmation. Subject to the evidentiary requirements of this Section, a Party may conduct cross-examination required for a full and fair disclosure of the facts. [5 ILCS 100/10-40(b)]

c) All exhibits for any Party shall be clearly marked for identification. A sufficient number of copies shall be made prior to the commencement of the Hearing and when admitted into evidence by the ALJ.

d) Official notice may be taken of past Hearings and of any matter of which the Circuit Courts of Illinois may take judicial notice. In addition, official notice may be taken of generally recognized technical or scientific facts within the Department's specialized knowledge. Parties shall be notified either before or during the Hearing, or by reference in preliminary reports or otherwise, of the material noticed, including staff memoranda and data, and they shall be afforded an opportunity to contest the material so noticed. The Department's and the ALJ's experience, technical competence, and specialized knowledge may be utilized in the evaluation of the evidence.

e) If a person appears for a Hearing and refuses to testify on the grounds that any answer may tend to incriminate themself, the ALJ may take an adverse inference from the refusal to testify and shall consider the adverse inference in addition to other evidence. If a person appears and refuses to testify without asserting the right against self-incrimination, the ALJ shall enter any appropriate order as is required by the evidence and this Part.

f) The ALJ may, on their own initiative or at the request of any Party or

witness, enter a protective order to prevent exposure in the public domain of records or other information that is of a sensitive or confidential nature.

g) Unless otherwise required by law, the standard of proof in any contested case Hearing conducted by the Department will be the preponderance of the evidence.

Chapter II Department of Financial and Professional Regulation

Part 100 Hearings Before the Division of Banking and Division of Financial Institutions

38 Ill. Adm. Code 100.240 Adverse Witness

a) Any Party or witness may be called as an adverse witness. In such a case, examination of the witness will be allowed as if under cross-examination.

b) Upon a showing that a witness was called in good faith, and that the Party calling the witness is surprised by the witness' testimony, examination of the witness may proceed as if under cross-examination, and the testimony of the witness may be impeached by prior statements, or otherwise.

38 Ill. Adm. Code 100.250 Administrative Law Judge Reports and Orders of the Director

a) In every contested case, except for defaults, the ALJ will file a written Report and Recommendation that contains Findings of Fact and Conclusions of Law with respect to the allegations contained in the Administrative Decision or Notice of Preliminary Hearing, unless the Parties reach an agreed disposition.

b) When the recommendation is for discipline, the ALJ will include their specific recommendation as to type, duration, and/or amount.

c) After the ALJ forwards the report to the Secretary or Director, as applicable, all Parties will receive a copy of the ALJ's report. Within 20 days after the ALJ's report is sent to the Parties, either Party may request that a rehearing, or additional Hearings, be ordered by the Secretary or Director, as applicable. A rehearing shall be ordered by the Secretary or Director, as applicable, when the Secretary or Director determines that substantial justice has not been done.

d) When a rehearing or an additional Hearing is requested, the request shall be in the form of a motion and shall state with specificity the reasons for the request. If it is alleged that new evidence is available that was not available at the time of the Hearing, the affidavit shall describe the new evidence and reasons why it was not available for use at the Hearing. Any opposing Party may file a response, which shall be filed within 20 days after the date the motion is filed, and, if it does so, the requesting Party may reply, which shall be filed within 10 days after the responding Party filing its response.

e) After a motion for rehearing has been filed and a response and reply has been filed or the time therefor has passed, the Secretary or Director, as applicable, shall enter an Order ruling on any motion for rehearing. If the motion is denied, the Secretary or Director, as applicable, in the same Order, shall further adopt, reject or modify the Findings of Fact and Conclusions of Law of the ALJ, adopt or reject the recommendation of the ALJ, and enter a decision.

f) An Order of the Secretary or Director granting a rehearing is not a final order as defined by the Administrative Review Law [735 ILCS 5/Art. III]. An Order of the Secretary or Director denying a motion for rehearing and entering a decision on the merits of the case is a final Order as defined by the Administrative Review Law and is subject to judicial review.

g) The Secretary or Director, as applicable, will not consider motions to reconsider or modify a final decision made or Order entered. The proper avenue of relief is to file a complaint under the Administrative Review Law.

h) An Order imposing a summary or temporary suspension shall remain in effect until a final Order is entered on the merits, unless modified or stayed by the Department. A final Order imposing discipline shall terminate the summary or temporary suspension. If a final Order finds no violation of the applicable act or if the Department withdraws its Order, the Order imposing a summary or temporary suspension shall be vacated.

History

• Source: Amended at 50 Ill. Reg. 10803, effective July 13, 2026

Chapter II Department of Financial and Professional Regulation

Part 100 Hearings Before the Division of Banking and Division of Financial Institutions

38 Ill. Adm. Code 100.255 Confidentiality

a) Any Party may use initials or other identifiers to refer to any individual in any filing in place of that person's name. The Party so doing shall provide to the opposing Party and that Party's counsel and to the Administrative Law Judge a document identifying by name that person. The document shall not be a part of the official record of the proceeding and shall not be subject to disclosure to any non-Parties or subject to disclosure under the Freedom of Information Act [5 ILCS 140].

b) Any portion of the record including, but not limited to, pleadings, evidence, transcripts of the proceedings, an ALJ's Findings of Fact, Conclusions of Law, and Recommendation, and the Secretary's or Director's Order, is protected from disclosure under any federal or State law, including, but not limited to, the Freedom of Information Act [5 ILCS 140], shall be sealed from public view. Any portion so sealed shall not be subject to disclosure to any non-Parties or subject to disclosure under the FIOA Act.

c) Nothing in this Part shall supersede, limit, or subject to variance the applicability of, or authority of the Secretary pursuant to, any provisions regarding disclosure of privileged or confidential information under any Applicable Act or the rules promulgated thereunder, including, but not limited to, the following provisions, as amended: Section 48.3 of the Illinois Banking Act [205 ILCS 5]; Section 9012 of the Savings Bank Act [205 ILCS 205]; Sections 1-4(ii), 4-2(e), 4-8.1, and 4-8.1A of the Residential Mortgage License Act of 1987 [205 ILCS 635]; Section 5(d) of the Pawnbroker Regulation Act [205 ILCS 510]; Sections 20-15(e), 20-45, and 20-50 of the Student Loan Servicing Rights Act [110 ILCS 992]; Section 9.1 of the Illinois Credit Union Act [205 ILCS 305]; Section 2-15 of the Payday Loan Reform Act [815 ILCS 122]; Section 17.5 of the Consumer Installment Loan Act [205 ILCS 670]; Section 70 of the Transmitter of Money Act [205 ILCS 657]; Section 16 of the Currency Exchange Act [205 ILCS 405]; 38 Ill. Adm. Code Part 110, Sections 110.290 and 110.420; 38 Ill. Adm. Code Part 200, Section 200.280; 38 Ill. Adm. Code Part 325; 38 Ill. Adm. Code Part 1075, Subpart Q; and 50 Ill. Adm. Code Part 8100, Section 8100.3000.

38 Ill. Adm. Code 100.256 Record of Hearings

a) The record of the Hearing in a contested case shall include:

1. All pleadings presented before the Administrative Law Judge (including petitions, answers, all prehearing and Hearing notices, and responses, admissions, stipulations of fact, motions and rulings on these issuances);

2. All documentary evidence received;

3. A transcript of the proceedings;

4. The Findings of Fact, Conclusions of Law, and Recommendation of the ALJ;

5. Any motions and responses filed in response to the ALJ's report pursuant to Section 100.240; and

6. The Order of the Secretary or Director, which shall constitute a final Administrative Decision within the provisions of the Administrative Review Law.

b) The record shall be copied and assembled by the Department and certified by the Secretary or Director upon any complaint for administrative review. The plaintiff in the administrative review shall pay a copying fee of $1 per page and a certification fee of $1. An index of the record, with each page of the record numbered in sequence, shall be prepared by the Department.

38 Ill. Adm. Code 100.257 Costs of Hearing

Petitioner shall pay any applicable Hearing fee and costs authorized by this Part, and all expenses required by applicable law, including the cost of court reporting and a transcript of proceedings. All other Hearing expenses shall be paid pro rata by the Petitioner and the Division. If permitted by law, the Director in their sole discretion may waive a portion or all of the fees, costs, or expenses upon a showing of significant financial hardship by the Party.

38 Ill. Adm. Code 100.260 Severability

If any Section, subdivision, sentence, or clause of this Part shall be held by a court of competent jurisdiction to be invalid, such holding shall not affect the remaining parts thereof.

38 Ill. Adm. Code 100.270 Variances

The Secretary or Director may grant variances from this Part in individual cases in which they find that:

a) The provision from which the variance is granted is not statutorily mandated.

b) No Party will be injured by the granting of the variance.

c) The rule from which the variance is granted would, in the particular case, be unreasonable or unnecessarily burdensome.

Chapter I Department of Financial and Professional Regulation

Part 110 Consumer Installment Loan Act

38 Ill. Adm. Code 110.1 Definitions

"Act" means the Consumer Installment Loan Act [205 ILCS 670].

"Affiliate", for purposes of Section 1 of the Act, means any person or entity that directly or indirectly controls, is controlled by, or shares control with another person or entity. A person or entity has control over another if the person or entity has an ownership interest of 25% or more in the other.

"Annual percentage rate" or "APR" is the cost of the consumer credit expressed as an annual rate and shall be calculated in accordance with Section 16 of the Act.

"Controlling person" means a person, entity, or ultimate equitable owner that:

owns or controls, directly or indirectly, 10% or more of any class of stock of the license applicant;

is not a depository institution, as defined in Section 1007.50 of the Savings Bank Act [205 ILCS 205], that lends, provides, or infuses, directly or indirectly, in any way, funds to or into a license applicant in an amount equal to more than 10% of the license applicant's net worth;

controls, directly or indirectly, the election of 25% or more of the members of the board of directors of a license applicant; or

the Director finds influences management of the license applicant.

"Date of the loan" means the date on which the loan agreement is signed or accepted by the licensee.

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director or Acting Director of the Department of Financial and Professional Regulation-Division of Financial Institutions with the authority delegated by the Secretary or the Director's designee.

"Division" means the Department of Financial and Professional Regulation-Division of Financial Institutions.

"Generally accepted accounting procedures" or "GAAP" means those adopted by the American Institute of Certified Public Accountants and Federal Accounting Standards Board (401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116).

"Hypothecate" means to pledge a security instrument without transfer of title.

"Illinois Insurance Code" means 215 ILCS 5.

"Licensee" means a person, partnership, association, limited liability company, corporation or other legal entity licensed under the Act. Any person or entity who holds himself, herself, or itself out as a licensee or who is accused of unlicensed practice is considered a licensee for purposes of enforcement, investigation, hearings, and the Illinois Administrative Procedure Act [5 ILCS 100].

"Loan" means a loan governed by the Act. "Loan" does not include a retail installment contract, a motor vehicle retail installment contract, a retail charge agreement, or a revolving line of credit.

"Missed payment" means any failure to make a payment within 90 days of the due date.

"Net worth" means total assets minus total liabilities. (Section 2 of the Act)

"Obligor" means a consumer who is contractually obligated to make all principal repayments and interest payments on an outstanding loan.

"Predatory Loan Prevention Act" means the act codified at 815 ILCS 123.

"Predatory Loan Prevention Act Annual Percentage Rate" or "PLPA APR" is the cost of the consumer credit expressed as an annual rate and shall be calculated in accordance with 32 CFR 232.4(c), the Predatory Loan Prevention Act, and as incorporated in 38 Ill. Adm. Code 215.

"Person" means an individual, partnership, association, joint stock association, corporation, or any other form of business organization.

"Recording fee" is a fee paid to a government agency to record or release a security instrument.

"Sales Finance Agency Act" means 205 ILCS 660.

"Secretary" means the Secretary or Acting Secretary of Financial and Professional Regulation or the Secretary's designee.

"Uniform Commercial Code" means 810 ILCS 5.

History

• Source: Amended at 49 Ill. Reg. 3924, effective March 21, 2025

38 Ill. Adm. Code 110.2 Rate Cap Disclosure Notices

All loan contracts or agreements must include a separate disclosure signed by the consumer that states: "A lender shall not contract for or receive charges exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a loan, as calculated under the Illinois Predatory Loan Prevention Act (PLPA APR). Any loan with a PLPA APR over 36% is null and void, such that no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the loan. The annual percentage rate disclosed in any loan contract may be lower than the PLPA APR." This disclosure shall be clear and conspicuous and shall be substantially similar to the form in Appendix C. A lender shall provide all disclosures required by this section in English and in the same language as the loan agreement.

History

• Source: Added at 46 Ill. Reg. 6519, effective August 1, 2022

38 Ill. Adm. Code 110.5 Applicability

All rules in this Part, unless context indicates otherwise, apply only to loans made pursuant to the Consumer Installment Loan Act.

History

• Source: Added at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.10 Record Keeping

a) Every licensee shall keep the following records at the licensed location in any medium or format that accurately reproduces original documents or papers:

1. Loan register.

2. Individual account records, including transaction histories of obligors.

3. File of all original papers.

4. Cash book.

5. Alphabetical record of all co-makers, obligors, or sureties.

6. Permanent file.

b) Records for loans made under the Act shall be kept separate or readily identifiable from other types of business conducted in the office.

c) Electronic data processing, combination forms and special office systems may be used if in accordance with standard accounting procedures and if they contain the information enumerated in subsection (a).

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.15 Application for License; Controlling Person

a) An application for a license must be under oath and in the form the Director prescribes. The application shall contain the following:

1. The legal name of the applicant, including any other names the applicant does or intends to do business as, and the address of the proposed place of business;

2. The form of business organization of the applicant, including:

A) a copy of its filed articles of incorporation;

B) a copy of the filed articles of organization, if the applicant is a limited liability company;

C) a certified statement of the ownership of the partnership and any subsequent changes to the ownership, if the applicant is a partnership.

3. Information on Involved Individuals

A) The name, business and home address, credit report (except for a publicly traded company) and a chronological summary of the business experience, material litigation history and felony convictions over the preceding 10 years of:

i) the proprietor, if the applicant is an individual;

ii) every general partner, if the applicant is a partnership;

iii) President, Secretary, Executive and Senior Vice Presidents, Directors and individuals owning more than 25% of the corporate stock, if the applicant is a corporation;

iv) the manager, if the applicant is a limited liability company; and

v) any controlling person.

B) A licensee shall not submit the information required in subsections (a)(2) and (3) if the licensee has previously submitted the information to the Division in a previous license application within the last 5 years and there have been no material changes unless the licensee is requested by the Director to submit this information.

4. The most current year end financial statements, prepared in accordance with generally accepted accounting principles (as defined by the Financial Standards Accounting Board (401 Merritt 7, PO Box 5116, Norwalk Ct 06856-5116 (203/847-0700))) and a balance sheet and statement of operations as of the most recent quarterly report before the date of the application.

5. A list of all states in which the applicant is licensed as a lender or sales finance agency and whether the licenses of the applicant have ever been withdrawn, refused, cancelled, or suspended in any other state, with full details.

6. Bond as required by the Act.

7. Appointment of Attorney-in-Fact.

8. Business Plan, which shall at minimum detail the nature, amount, and term of loans to be made and types of security that will be taken.

9. Photographs of both the inside and outside of the proposed site.

10. Details of any other businesses that will be conducted within the licensed premises.

11. The applicable fees as required by the Act.

12. Any additional information the Director considers necessary.

b) A licensee that is a corporation must notify the Director within 15 days after a person becomes a controlling person. Upon notification, the Director may require all information they consider necessary to determine if a new application is required. A licensee that is an entity other than a corporation shall seek prior approval whenever a person proposes to become a controlling person. The request for approval shall be accompanied by an amendment fee of $1000.

c) Licensees shall file with the Department written reports as the Department may from time to time consider necessary in the form requested by the Department.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.16 Positive Net Worth

a) A licensee shall maintain a positive net worth of a minimum of $30,000 at all times.

b) A licensee shall provide a year-end balance sheet demonstrating that it has maintained a positive net worth of $30,000 no later than March 31 of the next year. The balance sheet shall be prepared in accordance with generally accepted accounting principles.

c) The Secretary may require a licensee to produce financial statements demonstrating that the licensee has maintained a positive net worth of a minimum of $30,000 at any other time when the Secretary has good cause to believe that the licensee may not have a positive net worth of a minimum of $30,000. Any such financial statements shall be prepared in accordance with generally accepted accounting principles.

History

• Source: Added at 49 Ill. Reg. 3924, effective March 21, 2025

38 Ill. Adm. Code 110.20 Loan Register

a) The loan register shall contain the original entry and shall be a permanent record, and shall show for every loan the account number, date of loan, amount of loan, name of obligor, nature of security by types, amount of fees, cost and type of any insurance, and amount of the note, including precomputed interest, the simple interest rate contracted for or amount of precomputed interest.

b) The loan register shall be kept numerically by number of loans in order made and shall have headings for each of the items required.

c) Loan Registers shall be maintained in a form accessible to the Department and a licensee may maintain these files in any medium or format which accurately reproduces original documents or papers.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.30 Individual Account Records

a) An individual account record shall be kept for each obligor. Individual account records shall show the name and address of the obligor, co-makers, or sureties, loan number, date of loan, the number of payments, the amount of payments and payment due dates, nature of security by type, type and cost of insurance and name of bank if the note is hypothecated. The record for an interest-bearing loan shall show the original principal amount of the loan, rates of interest and finance charge where applicable. The record for a precomputed loan shall show the original principal amount of the loan, excluding the precomputed interest and charges, the amount of the finance charge and the face amount of the note including the finance charge. The record shall also show the amount of official fees received and paid out for filing, recording, or releasing a financing statement or security agreement, including the fee required by the Secretary of State for perfecting a lien on a motor vehicle title.

b) The record for an interest-bearing loan shall show the amount and date of each payment of principal and interest, the balance due on principal, and the date to which interest is paid. If the amount paid is insufficient to meet the entire amount of interest due, the record shall be clearly marked to indicate the extent of credit given for such interest payment and the date to which interest is paid. Upon the Division's or obligor's request involving a specific account or accounts, the licensee shall provide the amount of interest deficient.

c) The account record for a precomputed loan shall show the amount and date of each payment applied to the loan, the unpaid balance of the loan after applying such payment, and the date and amount of any additional interest collected for delinquency, default, or deferment. If deferment interest is collected in whole or in part, the record shall indicate the deferred due date of the final installment and any uncollected portion of the deferment interest. The account record shall also show the original principal of the loan excluding the charge, the amount of the charge, the face amount of the note including the charge, and any additional charge made for extra days in the first installment period.

d) When a loan is prepaid in full, the account record shall show the date of prepayment, the amount paid to discharge the loan, the amount of the rebate on the finance charge, if any, and any deduction from the rebate for previously earned but uncollected delinquency, default, or deferment charges.

e) When a loan is prepaid in full, the amount of any unearned insurance premium for every policy shall be recorded on the account record.

f) If payment is made in any other way than in the ordinary course of business, it shall be so designated. (For example, payment by a third party, insurance claim or sale of security.)

g) If loan receivables are sold to another person the individual account record for such receivables shall show the name of the authorized person to whom sold and the date of such sale.

h) No erasures whatsoever shall be made in the payment and charge sections of any account record. In case of error, a line shall be drawn through the improper entry and the correct entry made on the following line. The entries on the record shall correspond with the receipts given the obligor.

i) Every licensee shall preserve the records of all loans, including the account record, for at least two years after making the final entry for such loan. Records shall be maintained in a form accessible to the Department. A licensee may maintain these files in any medium or format which accurately reproduces original documents or papers.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.40 File of Original Papers

a) Files

1. A separate file shall be maintained for each obligor and shall contain the note, security agreement, or financing statement, wage assignment, acknowledged copy of the disclosure statement of loan, insurance certificate, a separately signed statement indicating the borrower has received a copy of right to rescind (if required), or waiver, if any, and all other evidence of indebtedness or security pertaining to the loan, except when said documents are in the custody of a court or of an agent for collection, or are hypothecated as herein provided. Evidence of disclosure must be retained for two years from the date of the loan. A licensee may maintain these files in any medium or format which accurately reproduces original documents or papers.

2. When an obligor is also a co-maker or obligor on another loan, the file of such obligor shall be cross-referenced to the other, unless such cross-reference is included on the alphabetical record required by Section 110.60.

b) All legal instruments bearing evidence of indebtedness taken in connection with a loan and executed by an obligor including the disclosure statement of loan shall bear the loan number.

c) No licensee shall offer to or accept from an obligor any instruments that contain blank terms.

d) All spaces or sections not used in the preparation of legal documents shall be ruled out or designated as “none”, or “n/a”.

e) Any amendments to closed-end contracts shall be signed by the obligor and creditor.

f) The name and address of the licensee making the loan shall appear on any note, wage assignment, security agreement or other legal instrument taken from an obligor before the proceeds of the loan are delivered.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.50 Cash Book

a) All receipts and disbursements of any amount whatsoever shall be entered, on the day they occur, in the cash book or equivalent record. Separate headings shall be provided for payments on principal and interest and for fees collected from obligors for filing, recording, and releasing security agreements, financing statement for perfecting a lien on a motor vehicle, or for amounts received for any type of insurance coverage. In the case of precomputed loans, payments applied to the note may be shown as a total sum and need not be itemized between principal and precomputed charges. Additional charges collected for delinquency shall be itemized or otherwise separately indicated.

b) The cash book shall show all fees paid by the licensee for filing, recording, and releasing security agreements, for financing statements or for perfecting a lien on a motor vehicle, and the actual date of payment.

c) The cash book shall be a permanent record of all details of income and disbursements, including all entries to individual accounts of borrowers. A licensee may maintain these files in any medium or format which accurately reproduces original documents or papers.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.60 Alphabetical Record of Co-Makers, Obligors or Guarantors

The alphabetical record shall show the account number and the name of each co-maker, obligor, or guarantor who is currently indebted to the licensee, together with sufficient information to locate the account record. A licensee may maintain these files in any medium or format that accurately reproduces original documents or papers.

History

• Source: Amended at 41 Ill. Reg. 12380, effective October 6, 2017

38 Ill. Adm. Code 110.65 Permanent File

Each licensee must maintain a permanent file which includes the following:

a) A copy of all correspondence sent to or received from the Division within the past 24 months.

b) A copy of the last two examination exception reports and any related correspondence.

c) A copy of the Act and a copy of this Part.

History

• Source: Amended at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.70 Payments

a) All payments shall be credited on the account record as of the date received. Interest charges, as provided by the Act, shall be collected only from the date the proceeds of the loan are delivered to or expended on behalf of the obligor, even though the note shall bear a prior date.

b) A receipt shall be issued to the obligor for each payment received.

c) When the finance charge is precomputed, the receipt for each payment shall show the date of payment, the amount applied to the balance of the loan and the amount applied to any other charges permissible under the Act. Payments shall be applied in the order in which they become due.

d) The receipt for each payment on an interest-bearing account shall show the date of payment, amount applied to interest, amount applied to insurance, amount applied to principal, balance due on the account, amount applied to any other charges permissible under the Act, and any amount of interest earned but not collected.

e) No licensee may retain any portion of a payment processing fee.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.80 Interest-Bearing Loans

a) No payment shall be accepted on the principal balance unless interest is paid to date or is agreed to by the licensee, except a payment may be credited to principal if the amount of the payment is not sufficient to pay the interest due for one day.

b) A calendar month is the period from a given date in one month to the same numbered date in the following month, and if there is no same numbered date in the following month, to the last day of the following month.

c) Interest shall be computed on the basis of one month's interest for each calendar month and 1/30th of a month's interest for each day in a fraction of a month or, alternatively, 1/365th of the agreed annual rate for each day actually elapsed.

d) When an interest-bearing loan contract is refinanced, accrued but uncollected interest may be included in the principal amount of the new loan contract.

e) Loans must be fully amortizing and repayable in substantially equal and consecutive weekly, biweekly, semimonthly, or monthly installments. The first installment period shall be deemed to begin on the day that interest begins to accrue. No charge may be made for any days between the date of the loan and the beginning of the first installment period. Notwithstanding the foregoing, the days between the date of the loan and the commencement of the first installment period may exceed one weekly, biweekly, semimonthly, or monthly period by no more than the following:

1. For weekly payments, by 4 days;

2. For biweekly and semimonthly payments, by 7 days;

3. For monthly payments, by 15 days.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.90 Cancellation and Return of Documents

The contract and promissory note executed by the obligor bearing evidence of indebtedness shall be cancelled and returned to the obligor promptly following the renewal or paid in full date. Where prior written approval has been obtained from the Division and original documents are not available, a licensee shall substitute copies reproduced from any medium or format which accurately reproduces the original documents. On renewal, continuing security agreements may be retained until subsequent loans are paid in full. If an executed copy of a legal document is retained following payment in full or renewal, it must be clearly indicated by physical or digital method as "PAID" or "CANCELLED", indicating the date of payment or renewal. Copies clearly identified with the legend "COPY NOT NEGOTIABLE", or similar language, may be used in lieu of this requirement.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.100 Precomputed Loans

a) A standard payment schedule is one under which a precomputed loan is repayable in substantially equal and consecutive weekly, biweekly, semimonthly, or monthly installments of principal and charges combined, and the first installment is due one weekly, biweekly, semimonthly, or monthly period from the date of the note, except as provided in subsections (b)(1), (2) and (3).

1. The loan contract shall be drawn to reflect a standard payment schedule with payments to be made on a weekly, biweekly, semimonthly, or monthly basis, except that the first installment period may be longer than one month by not more than 15 days.

2. If a charge is made for extra days in the first installment period it may be added to the first installment payment. The interest for such period may be increased by 1/30 of the agreed monthly rate for each extra day. A charge for extra days in the first installment period does not change the amount of rebate required for prepayment in full on or after the first installment date.

3. If the first installment period is less than one month the loan charge shall be reduced by 1/30 of the agreed monthly rate for each day that the first installment period is less than one month, and the amount of the first installment shall be reduced by the same amount. This adjustment in the first installment period does not change the amount of rebate required for prepayment in full on or after the first installment date.

b) The obligor shall have the right to prepay a precomputed loan in full on any installment due date. When prepayment in full occurs on a date other than a scheduled installment due date, the rebate may be computed as of the next following scheduled installment due date.

c) When the contract is refinanced before maturity, or judgment is obtained before maturity, the same rebate is required as for prepayment in full.

d) Any required rebate of finance charge for a precomputed loan may be calculated using the actuarial method, defined by the federal Truth in Lending Act (15 U.S.C. 1601 et seq.) and Regulation Z, Appendix J (12 CFR 226) or any other method permitted by the Act. The required rebate is a fraction (or percentage) of the precomputed interest charge. The fraction differs for each number of months that the contract is prepaid in full.

e) When a precomputed interest loan contract is refinanced, accrued but uncollected interest may be included in the principal amount of the new loan contract.

f) If two or more installments are delinquent on any installment date the contract balance may be reduced as of that date by the rebate that would be required for prepayment in full on that date. Thereafter, the agreed contractual rate may be charged on the actual unpaid balances of the loan contract until the contract is fully paid. Interest received shall be in lieu of the rebated charges and any delinquency or default charge that would otherwise accrue after the date of which the rebate was made.

g) When a contract is prepaid in full, a statement or receipt shall be given to the obligor, showing the date of prepayment, the amount of the rebate, if any, and the amount paid to discharge the loan.

h) Fifteen days after the expiration date of the loan contract, interest may be charged at the contractually agreed rate, not to exceed the rate permitted in Section 15 of the Act on any balance remaining unpaid. At the time of final payment the licensee shall notify the obligor of the balance unpaid.

i) Deferment for Precomputed Loans

1. The maximum amount that may be charged for a one month's deferment is equal to the difference between the rebate that would be required for prepayment in full as of the scheduled due date of the deferred installment and the rebate that would be required for prepayment in full as of one month prior to the due date.

2. On a precomputed loan the rebate for prepayment in full after deferment interest has been charged shall be larger than the rebate that otherwise would be required.

3. If a rebate is required one month or more before the deferred due date of the first deferred installment, the licensee, at its option, may make a separate rebate of deferment interest for each unexpired month of the deferment period and then rebate the standard precomputed finance charge for the number of months to the original final installment date, plus one month for each month that deferment is retained.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.105 Delinquency or Default Charges

a) Delinquency charges may be assessed and collected and added to the balance of the note, but interest shall not be collected on charge.

b) Earned, but uncollected delinquency charges shall be recorded on the account record on the date the delinquent payment is received, if the licensee intends to collect the charges at a later date.

c) A licensee shall not directly or indirectly, to levy or collect any delinquency charge on a payment, which payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period when the only delinquency is attributable to late fees or delinquency charges assessed on earlier installments.

History

• Source: Added at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.110 Hypothecation at the Time of the Sale of Obligor's Notes

a) A licensee may pledge, hypothecate, or sell a note made under the provisions of the Act without the prior approval of the Director provided that said transaction is with another licensee under the Act, Sales Finance Agency Act, a bank, savings bank, savings and loan association or credit union created under the laws of this State or the United States and that the following conditions are satisfied:

1. the licensee notifies the Division in writing within ten days of the transaction indicating the name of the purchaser/pledgee, location where the related notes can be examined, and that the licensee shall be responsible for all examination costs.

2. the licensee will provide the Division with an executed agreement entered into by the licensee and the purchaser/pledgee authorizing the Director to conduct an examination of these notes.

b) All pledges, hypothecations, or sales to entities other than those listed in subsection (a) require the prior approval of the Director after submission of documents required in subsection (a).

c) Each instrument hypothecated must bear the following endorsement:

"This instrument is non-negotiable in form but may be pledged as collateral security. If so pledged, any payment made to the payee, either of principal or of interest, upon the debt evidenced by this obligation, shall be considered and construed as a payment on this instrument, the same as though it were still in the possession and under the control of the payee named herein; and the pledgee holding this instrument as collateral security hereby makes said payee its agent to accept and receive payments hereon, either of principal or of interest."

d) The licensee shall keep in the licensed office a record or list of all account records of all loans sold to another affiliated or non-affiliated licensee at the time of the sale. The account shall be maintained in such file until examined and released by the examiner. This record or list shall indicate the date of transaction, account name and number, and the names of the other buyer in the transaction.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.120 Legal Forms

a) Submission to the Division

1. All forms of notes, security agreements or assignments of wages or other forms used in connection with the making of loans shall be submitted to the Division prior to the conduct of the business in the licensed location; provided, however, where the licensee or affiliate is engaged in the same business and licensed by this Division, the use of forms in the new location identical to those being used in the existing location shall not require filing. Notice of intent to use identical forms (change of name excepted) should be provided the Division by the licensee.

2. Should the licensees at any time following submission of forms modify the forms previously submitted, the forms as modified shall be submitted to the Division.

3. All forms shall be submitted in the format requested by the Division.

b) Standard forms approved by the Division shall be used in the following cases:

1. Application for original license.

2. Application for annual renewal of license.

3. Change of location.

4. Annual Report.

5. Appointment of attorney-in-fact for service of process.

6. Bond.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.130 Judgments

a) When a note has been reduced to judgment, the face of the account record, in physical or digital form, shall show the amount and date of the judgment. When judgment is taken on a precomputed loan before maturity, the same rebate of interest is required that would be required for prepayment in full on the date of the entry of judgment.

b) All payments received shall be applied to the judgment balance and be properly identified. The rate of interest charged on a judgment balance must comply with applicable federal and State law. No higher rate of interest or charge shall be assessed or accepted.

c) The files of the licensee shall contain statements setting forth the following items:

1. Date of judgment.

2. Copy of the judgment.

3. Date suit was filed.

4. Amount of the judgment.

5. The amount of principal and the amount of interest for which judgment is taken.

6. In the case of a precomputed loan, the unpaid balance of note, the rebate of interest, subtracted therefrom, the resulting balance, plus the amount of any interest included in the judgment.

d) Court costs charged to the obligor shall be itemized and verified by receipts.

e) Where property is foreclosed or sold pursuant to any judgment or judicial process, the file must contain a copy of the decree or judicial sale.

f) If records related to the judgment are kept off-site, the licensee shall make these documents available from that site or return the records to the licensed location within 72 hours after the Division's request.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.140 Sale of Security

The following regulations shall be observed in the sale of security:

a) The account record shall give the following information:

1. When possession of the security was obtained, and whether by voluntary or involuntary action.

2. Public or private sale and date sold.

3. When part or all of the security is sold, the fact must be noted on the account record.

4. All credits from proceeds of the sale must be properly identified (whether by sale of security, etc.).

b) The files of the licensee shall contain:

1. Evidence of compliance by licensee with all applicable provisions of the Uniform Commercial Code in the sale and disposition by a secured party of collateral after default including copies of all notices directed to the obligor as required therein or as required by any other law, statute or regulation, state or federal.

2. Copy of notice of intended sale which must contain notice of default, balance owing, date, place and time of public sale or the date after which a private sale may occur. Such notice must be forwarded to the obligor by certified mail to the last known address of the obligor.

3. Signed receipts from the purchasers or auctioneer describing the collateral purchased, showing the amount paid for same, and, if a private sale, copies of any competitive bids.

4. Copy of statement of final accounting, original of which shall be sent to the obligor after the sale, which statement shall set forth the sale price of the collateral, itemization of the costs of sale, and any surplus or deficiency balance due on the account.

5. A report of condition of the collateral at the time of retaking.

c) No waiver of the provisions of the Uniform Commercial Code safeguarding the rights of the obligor shall be accepted by a licensee prior to default.

d) When the collateral is abandoned and the address of the obligor is unknown, notice of sale and statement of final accounting shall be sent to the last known address by registered or certified mail, return receipt requested.

e) In connection with the sale of collateral given as security for loans after default, the licensee shall make only such charges for expense incurred as are permitted by the applicable provision of the Uniform Commercial code which charges must be reasonable, taking into consideration the nature of the collateral, the circumstances surrounding the sale, the fair market value of the collateral and the amount of the indebtedness. Such charges must be substantiated by paid receipts.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.150 Trouble File (repealed)

History

• Source: Repealed at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.155 Schedule of Fines

a) The Department may assess fines on any licensee or unlicensed person or entity that violates, through any act or omission, any provision of the Act or this Part, and shall determine the amount of the fine pursuant to this Section:

1. Fine Schedule:

Tier

Conduct

Fine Amount

Tier 1

For each identified act or omission related to information disclosure, information reporting, advertising, document maintenance, or other similar statutory and regulatory requirements.

A fine not to exceed $1,000 per violation except as provided for in Tier 3.

Tier 2

For each identified act or omission related to the terms of a loan, additional fees, costs, or charges, ancillary products, security interests, underwriting, servicing, collection or any other act or omission not expressly covered by Tiers 1 or 3.

A fine not to exceed $5,000 per violation except as provided for in Tier 3.

Tier 3

Any action or omission that is an intentional or reckless violation of the Act regardless of type.

A fine not to exceed $10,000 per violation.

2. In determining the amount of any fine assessed under subsection (a)(1), the Department will take into account the totality of the circumstances, including, but not limited to:

A) Proactive consumer remediation provided by the licensee or unlicensed person or entity to address harm caused by the act or omission;

B) Frequency or pervasiveness of the act or omission;

C) Adequacy of compliance policies, procedures, and practices to avoid recurrence of the act or omission and/or agreement to alter compliance policies, procedures, and practices to avoid recurrence of the act or omission in the future;

D) History of compliant or non-compliant behavior, including past legal violations;

E) Cooperation with the Department in its regulatory and examination activities; and

F) Any other remedial measures the licensee or unlicensed person or entity has undertaken or has agreed to undertake in the future.

b) Nothing in this Section shall be construed as limiting the Department’s investigative powers or remedies under the Act, including, but not limited to, fines, suspension or revocation under Section 9 of the Act, cease and desist orders under Section 20.5 of the Act, and injunctive relief under Section 24.5 of the Act.

c) In accordance with Section 1 of the Act, the Department will follow the procedures established under Section 9 of the Act for unlicensed violators of the Act and this Part.

History

• Source: Added at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.160 Lien Charges

a) All official fees paid for the purpose of perfecting or releasing a security interest in property given as collateral for a loan may be collected by a licensee from the obligor.

b) As a prerequisite for a loan, the licensee may require the prospective obligor to provide evidence of ownership and condition of title.

History

• Source: Amended at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.170 Insurance and Other Products

a) Licensees may provide insurances to the obligor provided the obligor has indicated in a specific, dated and separately signed statement that the obligor desires the insurance coverage. The purchase of any policy of insurance from or through the licensee shall not be a condition precedent to a loan. The insurance shall comply with the Illinois Insurance Code and all lawful requirements of the Director of the Department of Insurance related to that insurance.

b) The licensee may provide joint credit life or joint credit accident and health insurance if both insureds are obligated for the loan; however, this coverage shall not be a requirement precedent to the extension of credit.

c) When a loan is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, the licensee shall, not later than the 60th day after a loan is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, refund or credit the unearned insurance premium or provide written instruction to the person able to refund or credit the unearned insurance premium. The licensee shall make all reasonable efforts to ensure that the person able to refund or credit the unearned insurance premium completes the refund or credit within 60 days of sending of the written instruction. The required refund or credit shall be computed in accordance with 50 Ill. Adm. Code 1053.10. When the refund of any insurance premium is less than $1.00, no refund is required. The licensee shall maintain records to demonstrate their compliance with this Section for at least two years from the date of refund, credit, or written instruction.

d) It shall be the licensee's responsibility to explain clearly to the obligor the benefits and limitations of any insurance requested in connection with any loan or loan extensions.

e) The licensee shall also deliver or cause to be delivered to the obligor a copy of the policy, or policies, certificate, or other evidence at the time the loan is made, and all obligors shall sign and receive a copy of a separate agreement clearly and conspicuously disclosing the limits of coverage.

f) No obligor shall be required to purchase any policy of insurance from any certain company, agent, broker, or person as a condition precedent to a loan. No licensee shall decline new or existing insurance that is approved by the Director of the Department of Insurance or prevent any obligor from obtaining the insurance from any other source.

g) When the loan is made, the insurance charges shall be computed for no more than the term of the loan contract on an amount that does not exceed the total amount required to pay the combined total of principal and interest charges.

h) The obligor's estate shall be paid the amount due between the unpaid balance and the insurance benefit paid. Evidence of this payment shall be maintained by the licensee.

i) In the case of a precomputed contract, the amount of the net unpaid balance shall be the unpaid balance of the note less any required rebate for prepayment in full on the date of the borrower's death, plus accrued but unpaid delinquency charges. In the case of an interest-bearing contract, the amount of the net unpaid balance shall be the principal balance plus accrued interest to the date of the borrower's death.

j) Account records shall indicate the date of death and the refunds of interest or loan charges and unearned insurance premiums paid to the estate. The refund check or voucher shall be available on demand.

k) Property damage insurance against loss or damage to real or personal property given as security for a loan or liability arising out of ownership may be required of an obligor. No licensee may require an obligor to purchase more than one form of property damage insurance against loss or damage to real or personal property. The purchase of such insurance through the licensee or from an agent, broker or insurer specified by the licensee shall not be a condition precedent to the granting of the loan. No licensee may require an obligor to purchase property damage insurance that the obligor cannot reasonably purchase from an agent, broker or insurer unrelated to and not specified by the licensee.

l) Property insurance provided by a licensee shall be consistent with the amount and term of the loan and shall not extend beyond the maturity of the loan unless the loan is delinquent when it may be extended 30 days beyond the original expiration date without charge to the obligor.

m) Upon cancellation of the loan by prepayment or refinancing, the obligor shall be entitled to a refund not less than the unearned insurance premium in any amount exceeding $1.00.

n) The licensee or affiliate may receive compensation for the sale of any insurance or debt cancellation contract or other such product purchased pursuant to the loan made or held by the licensee, provided the licensee discloses to the obligor that either the licensee or an affiliate may receive something of value in connection with the purchase by the obligor. This must be prominently disclosed in the loan contract.

o) In the event of a judgment prior to maturity, the judgment shall be decreased by the amount equal to any unearned insurance premium. Evidence of this decrease shall be maintained by the licensee.

p) If the Director has authorized a licensee to offer debt cancellation products or other credit-related ancillary products, and an obligor has purchased a debt cancellation product or other credit-related ancillary product, when a loan is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, the licensee shall, not later than the 60th day after a loan is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, refund or credit the unearned debt cancellation charge or other unearned credit-related ancillary product charge, as applicable, or provide written instruction to the person able to refund the unearned debt cancellation charge or other unearned credit-related ancillary product charge, as applicable. The licensee shall make all reasonable efforts to ensure that the person able to refund the unearned debt cancellation charge or credit-related ancillary product charge completes the refund or credit within 60 days of sending of a written instruction. The refund or credit shall be calculated according to a method at least as favorable to the obligor as the actuarial method. The licensee shall maintain records to demonstrate their compliance with this Section for at least two years from the date of refund, credit, or written instruction.

q) Vehicle service contracts as defined in 215 ILCS 152/5, and vehicle protection products or warranties as defined in 215 ILCS 5/155.39(a) are not subject to subsection (p) of this Section.

History

• Source: Amended at 49 Ill. Reg. 11640, effective September 5, 2025

Chapter I Department of Financial and Professional Regulation

Part 110 Consumer Installment Loan Act

38 Ill. Adm. Code 110.180 Office and Office Hours

Every licensee shall maintain a place of business or website to which the general public shall have free access and where all obligations entered into shall be payable.

a) Except as provided in subsection (c), or otherwise authorized by the Division, each licensed office shall be open not less three consecutive hours between 8:00 A.M. and 6:00 P.M. on every business day, except Saturdays, Sundays and legal holidays, during the term of the license, and the licensee shall file with the Division a schedule of the hours during which it elects to keep such office open, provided that any licensee may keep its office open for any period it sees fit in addition to the hours listed in such schedule.

b) Whenever a licensee desires to change the schedule of hours during which its office shall remain open then on file with the Division, it may do so upon filing with the Division a schedule setting forth such change of time at least three days before such change shall go into effect. The schedule of hours shall be prominently displayed in the place of business of the licensee.

c) If any payment of principal or interest, or both, shall be due on any obligations to such licensee on any closed day, then such payment shall be considered for all purposes, including the computation of interest, as having been received on the closed day, if such payment shall be received, whether through the mail or otherwise, at any time before the close of business on the next regular business day following the closed day.

d) The license of each licensee and the Annual License Fee Renewal Certificate shall be prominently displayed and be made available for easy reading by the public in the place of business and website of the licensee.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.190 Advertising

a) Licensees shall not advertise "No co-makers required", "No endorsers required", "Signature only" loans, "Loans made on your plain note" or the like, unless the loans constitute at least 50% of all loans made by the licensee.

b) Licensees shall not make reference, in any form of advertising such as newspapers, circulars, letters, radio, or other media, to "Low rates", or "Lower rates", or "Lowest rates", or "Lowest cost", or indicate by direct or indirect means through such expression as "Low cost", "Lower cost", or "Easier to repay", or by any device that the charges for a loan are low.

c) Licensees may advertise "New reduced rates" or "Reduced rates", or similar phrases for not more than 60 days after the effective date of the reduction in rates.

d) Upon specific request by the Division, licensees shall forward to the Supervisor of the Consumer Credit Section the complete text of all advertising copy, whether printed or broadcast, for which questions have been raised concerning compliance with the Act.

e) A licensee may indicate in advertising and otherwise that its business is "regulated" or "examined" or "supervised" or "licensed" by the State of Illinois. A licensee may not advertise in a false, misleading, or deceptive manner or imply or indicate that the rates or charges for loans made are "approved", "set" or "established" by the State government. [205 ILCS 670/18]

f) Should any advertisement by a licensee state the amount of any installment payment, dollar amount of any finance charge or number of installments, or period of repayment, the advertisement shall comply with the provisions of the federal Consumer Credit Protection Act (15 U.S.C. 41 et seq.) and the regulations applicable to that Act.

g) Any statement of the payment schedule for a loan in an advertisement must show the proceeds of the loan exclusive of the finance charge and indicate the number and amount of the weekly, biweekly, semimonthly, or monthly installments required to pay the loan contract. The total of the installments must be sufficient to pay the total of the proceeds and finance charge for the loan according to the payment schedule. When a payment schedule is used, it must disclose the Annual Percentage Rate for each amount of loan advertised, using that term.

h) If the advertisement includes an offer of insurance, the advertisement must disclose the type of insurance offered and whether or not the installments include the cost of the insurance.

i) The licensee shall not advertise the conduct of business other than at the license location or other location approved by the Director.

j) On a finding that an advertisement is false, misleading, or deceptive, the Director may issue a cease and desist order and may issue an order imposing a fine, suspension, or revocation.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.200 Business Practices

a) Unless otherwise authorized by the Act, no other business may be conducted at the licensed location unless authorized in writing by the Director. The Director’s authorization to conduct other businesses at the licensed location shall be referred to as an Other Business Authorization. The Director's authorization will be predicated upon the licensee's agreeing to the following:

1. That the authorization will not conceal nor facilitate concealment of an evasion of the Act;

2. To comply with any State or federal statute or regulation;

3. To obtain any license or registration required by a federal, State, or local government agency to engage in the other business authorized;

4. That the Division may examine all records and investigate any or all transactions of the licensee;

5. The Director retains the right, upon notice and opportunity to be heard, to alter, amend or revoke an Other Business Authorization;

6. That, if any federal or State statute or regulation enacted after the authorization prohibits the activity, the authorization shall become null and void immediately;

7. At the time of making the request for the authorization, the licensee shall pay to the Director a nonrefundable Other Business Authorization Request fee of $300;

8. At the time of renewing the annual license, the licensee shall pay to the Director the sum of $100 as a renewal fee for each Other Business Authorization. Regardless of the number of licensed locations, only one fee per Other Business Authorization is required to be remitted.

b) No person who is an obligor of a licensee may become a surety or co-maker for one or more obligors of the same licensee, if the obligor’s aggregate direct or contingent liability is in excess of maximum principal amounts specified in Section 15 of the Act.

c) Notary fees shall not be charged to or collected from the obligor, surety, or co-maker.

d) No penalty charge other than provided by the Act or this Part shall be imposed by the licensee in the event of prepayment of the principal of the obligation, in whole or in part.

e) Loans secured by real estate made under the Act shall disclose on the face of the contract that the loan is being made pursuant to the Consumer Installment Loan Act.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.210 Examinations

a) The Division may examine all records and investigate any or all transactions in the office of the licensee and shall charge the licensee $1,200 for each examiner day or portion of an examiner day.

b) The examination of the books and records of the licensee may be conducted concurrently with the examination of any other business conducted by the licensee that is regulated or licensed by the Division. A separate charge shall be made for each examiner day or portion of an examiner day.

c) The Division may conduct an examination for the purpose of verifying that the licensee has taken necessary actions to correct violations of the Act and/or this Part and shall charge the licensee $1,500 for each examiner day or portion of an examiner day.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.215 Remittances

a) Licensees shall forward all remittances to the Division, at any address designated by the Director.

b) All fees and charges shall be remitted in the form deemed acceptable by the Department.

History

• Source: Repealed at 46 Ill. Reg. 6519, effective August 1, 2022; added at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.216 Small Consumer Loans; Charges Permitted (repealed)

History

• Source: Repealed at 46 Ill. Reg. 6519, effective August 1, 2022

38 Ill. Adm. Code 110.220 Credit Practices

No licensee or agent of the licensee, while collecting or attempting to collect an alleged debt, shall engage in any of the following acts:

a) Using or threatening to use force violence or physical harm to an obligor, their family or their property;

b) Threatening arrest or criminal prosecution when no basis for that action lawfully exists;

c) Threatening the seizure, attachment, and sale of an obligor's property when that action can only be taken pursuant to court order, unless disclosure is made that prior court proceedings are required;

d) Disclosing or threatening to disclose information adversely affecting an obligor's reputation for credit worthiness with knowledge or reason to know the information is false;

e) Threatening to initiate or initiating communication with an obligor's employer unless there has been a default in the payment of the obligation and at least 5 days prior written notice is given to the last known address of the obligor of the intent to communicate with the employer and except as expressly permitted by statute or court order;

f) Communicating or threatening to communicate with an obligor or their family with such unreasonable frequency as to constitute harassment, or at times reasonably considered to be unusual hours or known to be inconvenient;

g) Using profane, obscene, or abusive language with an obligor or their family;

h) Disclosing or threatening to disclose information relating to an obligor's indebtedness to any other person, except when the other person has a legitimate business need for the information;

i) Disclosing or threatening to disclose information concerning the existence of a debt the licensee knows to be reasonably disputed by the obligor without disclosing the fact that the debt is disputed;

j) Attempting or threatening to attempt enforcement of a right or remedy with knowledge or reason to know that the right or remedy does not exist;

k) Use of any form of communication simulating legal or judicial process that gives the appearance of being authorized, issued, or approved by a governmental agency, official or attorney at law when it is not;

l) Use of badges, uniforms, or other indicia of any governmental agency or official, except as authorized by law;

m) Misrepresenting the amount of the debt alleged to be owed;

n) Representing that an alleged debt may be increased by the addition of attorney's fees, investigation fees or any other fees or charges when there is no contractual or statutory authorization for that addition.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.225 Verification of Amount Owing

Upon written request by either the obligor or the obligor's appointed designee to obtain the amount owing to satisfy the loan in full, the licensee shall provide the following information in a form agreed to in the loan contract no later than 3 business days after receiving the request:

a) Net amount owing as of the date of response;

b) For interest-bearing loans, the per diem interest that will accrue for every day after the response;

c) For precomputed loans, the date that the amount owing, as stated in the response, will expire.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.230 Wage Assignments

a) A wage assignment may only be taken from any employed obligor. An "obligor", as the word is used in this Part, includes co-makers or sureties as well as the person actually receiving the money. Any wage assignment must comply with all applicable federal and State law.

b) Any loan that is a transaction in which the licensee accepts a wage assignment must meet the requirements of this Act, the requirements of the Illinois Wage Assignment Act, and the requirements of 16 C.F.R. 444.2(a)(3)(i)(2003) (no subsequent amendments or editions are included). A violation of this Section constitutes a material violation of the Consumer Installment Loan Act.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.235 Relocation

a) Whenever a licensee desires to change the licensed place of business to a location other than that set forth in the license and the proposed site is 15 miles or less from the current location, the licensee shall provide the Director with the following at least ten days prior to the relocation in the format prescribed by the Director:

1. A written notice providing the complete address of the new location;

2. Photographs of both the exterior and interior of the new location;

3. A written sworn statement that the new location will not share the premises with that of another business and the exact distance in miles between the existing location and new location; and

4. A relocation fee of $500.

b) A relocation in excess of 15 miles requires the prior approval of the Director in addition to the information required in subsection (a).

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.236 Name Change

Whenever the licensee desires to amend the name of the licensed business, the licensee shall submit to the Division, within 15 days after amending the name, the following in the format prescribed by the Director:

a) $300 amended name change fee.

b) Amended Articles of Incorporation if the licensee is a corporation.

c) Amended organization papers, if the licensee is an entity other than a corporation.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.240 Hearing Procedures

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 17939, effective October 27, 2022

38 Ill. Adm. Code 110.250 Limited Purpose Branch

A licensee applying for a limited purpose branch shall submit to the Division the following:

a) A written application in the form prescribed by the Director.

b) Fee as prescribed by the Act.

c) Photograph of proposed site and a description of the location, including any other business conducted there.

d) Written statements:

1. that no other activity shall be conducted at the site, including, but not limited to, accepting payments, servicing the accounts, or collections; and

2. that the proposed site shall not be within 1,000 feet of a facility operated by an inter-track wagering licensee or an organization licensee subject to the Illinois Horse Racing Act of 1975, or casino or riverboat subject to the Illinois Gambling Act, or within 1,000 feet of the location at which the riverboat docks.

e) Any additional information that the Director may require.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.260 Off-Site Records

With the Director's prior written approval, the licensee may retain records at a location other than the licensed location. The licensee shall make a written request that shall include the following:

a) Address of off-site location.

b) Contact person and telephone number at the off-site location.

c) Statement that all books, records, and account information shall be made available within 72 hours after the Division's request at either the licensed location or the off-site location.

d) At the Director's discretion, the examination may be conducted at either the licensed location or the off-site location.

e) The licensee shall pay for all examination expenses in accordance with Section 10 of the Act.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.265 Servicing of Accounts by Contract

Upon prior approval of the Director, the licensee may contract for servicing of accounts. A request for the Director's approval shall be in writing and include the following:

a) Name and address of proposed servicer;

b) Executed contract, conditioned upon approval by the Director, between licensee and servicer;

c) Contact person and telephone number of the servicer;

d) A statement that the licensee will make all books, records, and account information readily available for examination by the Division;

e) A statement that the licensee will pay all examination expenses in accordance with Section 10 of the Act;

f) Written consent of servicer for the Division to conduct its examination; and

g) A list of all Illinois licensees held by the proposed servicer.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.270 Revocation or Suspension of License

If it is determined that the Director had the authority to issue the suspension or revocation of a license pursuant to Section 9 of the Act, the Director may issue orders reasonably necessary to correct, eliminate or remedy the situation. (Section 20.5 of the Act)

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.280 Gross Monthly Income Verification - Official Documentation (repealed)

History

• Source: Repealed at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.290 Consumer Service

a) For the purposes of this Part, "certified database" or "database" means the consumer reporting service database established pursuant to the Payday Loan Reform Act [815 ILCS 122].

b) The Division shall approve a database as a method of reporting loans as required by Section 17.5 of the Act and by the Payday Loan Reform Act. Upon approving a database, the Department shall provide reasonable notice to all lenders identifying the approved database.

c) Except as otherwise provided in this Section, all personally identifiable information regarding any prospective obligor or obligor obtained by way of the approved database and maintained by the Department is strictly confidential and shall be exempt from disclosure under Section 7(1)(c) of the Freedom of Information Act [5 ILCS 140].

d) The certified database shall comply with all requirements of the Payday Loan Reform Act and associated Payday Loan Reform Act rules (38 Ill. Adm. Code 210) and all requirements of the Consumer Installment Loan Act.

e) A lender may rely on the information contained in the approved database as accurate and is not subject to any administrative penalty or liability as a result of relying on inaccurate information contained in the database.

f) The database provider shall meet all qualifications outlined in the Payday Loan Reform Act.

g) The surety bond required by 815 ILCS 122/2-17 shall also secure the faithful performance of the database’s obligations under the Consumer Installment Loan Act.

h) For any loan other than a title-secured loan the licensee shall enter the following information into the certified database within 90 days after the loan is made:

1. Obligor's Social Security Number, Alien Identification Number, or other official identification number, as approved by the USA Patriot Act rules and regulations (see 31 CFR 1020.220(a)(2)(i)(A)(4)(ii)), issued by a foreign government or government in the United States;

2. Principal amount of the loan;

3. Total of payments;

4. Whether the loan is precomputed or interest-bearing;

5. Maturity date of the loan;

6. Date of the loan;

7. Number and amount of scheduled payments;

8. Zip code of obligor and any co-maker;

9. Security taken;

10. APR;

11. PLPA APR;

12. Whether the loan pays off any prior loan; and

13. Any additional information the Director may require.

i) The licensee shall update the certified database within 90 days if any of the following events occur:

1. Missed payment;

2. Late payment fee charged;

3. Licensee accelerates the loan or otherwise deems the loan immediately due in full;

4. Paying the loan in full;

5. Closing of the loan;

6. Writing off the loan;

7. Involuntary repossession of any security;

8. Voluntary surrender of any security;

9. Sale of any security;

10. Return of any security to consumer; or

11. Any other event as the Director may require.

j) The certified database provider shall indemnify the licensee against all claims and actions arising from illegal or willful or wanton acts on the part of the certified database provider. The certified database provider may charge a fee not to exceed $1 for each loan entered into the certified database under subsection (b). The database provider shall not charge any additional fees or charges to the licensee.

k) A licensee who submits information to a certified database provider in accordance with this Section shall not be liable to any person for any subsequent release or disclosure of that information by the certified database provider, the Department, or any other person acquiring possession of the information, regardless of whether the subsequent release or disclosure was lawful, authorized, or intentional.

l) To the extent the certified database becomes unavailable to a licensee as a result of some event or events outside the control of the licensee including, but not limited to, unavailability due to the certified database being unable to accept information from the licensee or the certified database is decertified, the requirements of this Section and Section 17.5 of the Act shall not be enforceable by the Department until such time as the certified database becomes available.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.300 Definitions

"Motor vehicle" shall mean a motor vehicle as defined in the Illinois Vehicle Code [625 ILCS 5/1-146].

"Title-secured lender" shall mean any licensee engaged in making any title-secured loans.

"Title-secured loan" shall mean a loan made pursuant to the Act and in which at commencement, an obligor provides to the licensee, as security for the loan, physical possession of the obligor's title to a motor vehicle. "Title-secured loan" means only a loan secured by a motor vehicle title which a consumer has possessed (physically or the electronic equivalent) at any time prior to the making of the loan, free and clear of any lienholder. "Title-secured loan" does not include:

Any loan or credit transaction that is expressly intended to finance the purchase of motor vehicle or other item.

Any loan or credit transaction that is expressly intended to re-finance a transaction which financed the purchase of a motor vehicle or other item.

"Title-secured loan" includes loan or credit transactions that include motor vehicle title as a security and is intended to refinance a prior title-secured loan. A licensee may rely on a consumer’s signed representation or certification that the motor vehicle title provided has never been held by the consumer free and clear. The certification that the motor vehicle title has never been held free and clear must include:

Date

State

City

Loan Number

Year and Make of Vehicle

Model of Vehicle

VIN

Certification from the consumer that:

The consumer has pledged to Lender the above Motor Vehicle as security for the requested loan; and

The consumer has never held the title to the above Motor Vehicle free and clear of any lienholder.

Signed acknowledgement that the consumer agrees that Lender will rely on the above certifications in connection with the requested loan.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.310 Applicability of Rule

This Subpart B, as well as Subpart A, shall apply to any title-secured lender as defined in Section 110.300 of this Part.

History

• Source: Amended at 33 Ill. Reg. 4142_____, effective__________

38 Ill. Adm. Code 110.320 Application for License (repealed)

History

• Source: Repealed at 45 Ill. Reg. 6519, effective August 1, 2022

38 Ill. Adm. Code 110.330 Renewal of License (repealed)

History

• Source: Repealed at 45 Ill. Reg. 6519, effective August 1, 2022

38 Ill. Adm. Code 110.340 Loan Terms

a) Beginning August 1, 2023, any required rebate of finance charge for a precomputed title-secured loan may be calculated using the actuarial method, defined by the federal Truth in Lending Act (15 U.S.C. 1601 et seq.) and Regulation Z, Appendix J (12 C.F.R. 226). The required rebate shall not be calculated using the Rule of 78s.

b) Title-secured loans must be fully amortized and repayable in substantially equal installments.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.350 Release of Lien

a) A title-secured lender must immediately take into possession the registered electronic or physical title evidencing the obligor's ownership in the motor vehicle and shall note on the face of the loan agreement the vehicle's make, model, year of manufacture and vehicle identification number.

b) Within 24 hours after payment in full of the amount due under the agreement, the licensee must move to release any filed or recorded liens, provide evidence of the release of lien to the obligor, and return the title to the obligor or cause the title to be returned to the obligor. If payment has been made by a personal or business check, the licensee may delay the release of lien or return of title by 5 business days for the purpose of confirming availability of funds.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.360 Availability of Debt Management Services

a) Before entering into a title-secured loan agreement, licensee must give to the obligor a pamphlet, approved by the Director, describing the availability of debt management services and the obligor's rights and responsibilities in the transaction.

b) Each title-secured loan agreement and refinancing agreement executed by a licensee shall include a statement, which shall be initialed by the obligor, as follows: "I have received from (name of lender) a toll free number from the Department of Financial and Professional Regulation-Division Financial Institutions that I can call for information regarding debt management services."

c) At the time a title-secured lender conveys any written notice to an obligor indicating the obligor is in arrears or that the obligor is in default, the lender shall include with the notice a statement indicating a toll free number of the Division that the obligor may contact for the purpose of the obligor receiving information from the Division regarding debt management services. The form and method of providing the information shall be subject to approval of the Division.

History

• Source: Amended at 33 Ill. Reg. 4142, effective April 1, 2009

38 Ill. Adm. Code 110.370 Lending Limits and Refinancing

a) No title-secured loan shall be made in an amount that the scheduled principal and interest payment for any one monthly payment on the loan exceeds 22.5% of the obligor's gross monthly income.

b) The loan agreement shall advise the obligor that matters involving improprieties in the making of the loan or in loan collection practices may be referred to the Division and shall prominently disclose the Division's address and telephone number, and website.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.380 Second Notice

At the time a title-secured lender conveys a second notice to an obligor indicating the obligor is in arrears or any notice that the obligor is in default for a debt issued by the lender under the Act, the licensee shall include with the notice a statement indicating a telephone number of the Division that the obligor may contact for the purpose of the obligor receiving information from the Division regarding debt management services for assisting the obligor. The form and method of the notice provided by lenders shall be subject to approval by the Director.

History

• Source: Amended at 33 Ill. Reg. 4142, effective April 1, 2009

38 Ill. Adm. Code 110.390 Possession of Vehicle

a) Unless otherwise provided for in the loan agreement, a lender shall not take or retain possession of the keys (or a copy of the keys) to a motor vehicle used to secure a title-secured loan.

b) No title-secured lender may take possession of a vehicle without first giving a minimum of 72 hours notice to the obligor, unless expressly prohibited by other law; affording the obligor the opportunity to make the vehicle available to the lender at a place, date, and time reasonably convenient to the lender and obligor; and permitting the obligor to remove any personal belongings from the vehicle without charge or additional cost to the obligor. Notice may be provided to an obligor in any form agreed to by an obligor for general loan communications, so long as the licensee reasonably believes the notice will provide the obligor adequate opportunity to act upon their rights under this subsection (b).

c) Possession measures shall be in accordance with Section 19.1 of the Consumer Installment Loan Act.

d) No title-secured lender may take possession of a motor vehicle for a loan default or delinquency and lease the vehicle back to the obligor.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.400 Loan Proceeds

A lender must issue the proceeds of a title-secured loan in the form of a check drawn on the licensee's bank account, in cash, by electric fund transfer or by money order. When the proceeds are issued in the form of a check drawn on the lender's bank account or by money order, the lender may not charge a fee for cashing the check or money order if cashing service is offered at the location. When the proceeds are issued in cash, the lender must provide the obligor with a written verification of the cash transaction and shall maintain a record of the transaction.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.410 Security Interest

a) A title-secured lender shall not take a security interest in any of the obligor's property other than the obligor's motor vehicle title, as tendered to the lender at the time of the making of the loan.

b) Notwithstanding subsection (a), a title-secured lender may accept an agreement for repayment by preauthorized electronic transfers but may not condition an extension of credit on repayment by preauthorized electronic transfer.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.420 Approved Database

a) Lender Input into Database

1. Within 90 days after a title-secured loan is made, the lender shall enter into the approved database the following information:

A) Obligor's Social Security Number, Alien Identification Number, or other official identification number, as approved by the USA Patriot Act rules and regulations (see 31 CFR 1020.220(a)(2)(i)(A)(4)(ii)), issued by a foreign government or government in the United States;

B) Principal amount of the loan;

C) Total of payments;

D) Term of the loan and the maturity date of the loan;

E) Date the loan was executed;

F) Scheduled number and amount of payments;

G) Zip code of obligor and any co-maker;

H) Any security taken;

I) APR;

J) PLPA APR;

K) Vehicle identification number of security;

L) Whether the loan pays off any prior loan;

M) Whether the loan is interest-bearing or precomputed; and

N) Any additional information the Director may require.

2. The lender shall update the approved database within 90 days if any of the following events occur:

A) Paying the loan in full;

B) Return of any security;

C) Closing the loan;

D) Writing off the loan;

E) Missed payment;

F) Late payment fee charged;

G) Voluntary surrender of any security;

H) Involuntary repossession of any security;

I) Sale of any security;

J) Licensee accelerates the loan or otherwise deems the loan immediately due in full; or

K) Any other transaction the Director may require.

b) All personally identifiable information regarding any consumer obtained by way of the certified database and maintained by the Department is strictly confidential and shall be exempt from disclosure under Section 7(1)(c) of the Freedom of Information Act.

History

• Source: Amended at 47 Ill. Reg. 9271, effective June 20, 2023

38 Ill. Adm. Code 110.430 Gross Monthly Income Verification

a) Prior to making a title-secured loan, the lender must obtain from the obligor one or more of the following types of documentation to verify the gross monthly income of the obligor as required by Section 110.370(a).

1. A copy of the prospective obligor's most recent official pay stub or official payroll receipt;

2. A copy of the prospective obligor's most recent W2 or tax return, along with reasonable evidence that the prospective obligor has access to the same income in the 30 days before the origination date of the loan;

3. Signed and verifiable documentation prepared by the provider of the income, dated no more than 30 days before the origination date of the loan;

4. A contract that provides for funds to have been paid to the prospective obligor within the 30 days prior to the origination date of the loan, and documentation reflecting that the funds have actually been paid;

5. A copy of the prospective obligor's most recent official receipt documenting payment of government or pension benefits to the obligor for the benefit of the obligor; or

6. A commercially reasonable method of income verification not prohibited, in writing, by the Department. A licensee may only use the commercially reasonable method of income verification for purposes of verifying an obligor’s gross monthly income or underwriting the loan requested.

b) A licensee may not use information collected in the process of income verification for any other purpose, including, but not limited to, marketing.

History

• Source: Amended at 46 Ill. Reg. 6519, effective August 1, 2022

38 Ill. Adm. Code 110.500 Definitions (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.505 Applicability of Rule (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.510 Good Faith Requirements (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.515 Fraudulent or Deceptive Practices (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.520 Prohibited Refinances (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.525 Negative Amortization (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.530 Negative Equity (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.535 Balloon Payments (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.540 Financing of Certain Points and Fees (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.545 Financing of Single Premium Insurance Products (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.550 Lending Without Due Regard to Ability to Repay (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.555 Verification of Ability to Repay (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.560 Payments to Contractors (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.565 Counseling Prior to Perfecting Foreclosure (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.570 Mortgage Awareness Program (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.575 Offer of Mortgage Awareness Program (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.580 Third Party Review (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.APPENDIX A Estimated Monthly Income and Expenses Worksheet (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.APPENDIX B Mortgage Ratio Worksheet (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.APPENDIX C Disclosure of 36% Rate Cap

DISCLOSURE OF 36% RATE CAP

A lender shall not contract for or receive charges exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a loan, as calculated under the Illinois Predatory Loan Prevention Act (PLPA APR)

Any loan with a PLPA APR over 36% is null and void, such that no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the loan.

The annual percentage rate disclosed in any loan contract may be lower than the PLPA APR.

---

Borrower Signature

---

Co-Borrower Signature (If Applicable)

History

• Source: Added at 46 Ill. Reg. 6519, effective August 1, 2022

38 Ill. Adm. Code 110.TABLE A Illinois Rule of 78 Fractions for Rebating Charges According to Number of Months Originally Contracted for and Number of Months Prepaid in Full for Contracts of 2 to 120 Months (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

38 Ill. Adm. Code 110.TABLE B Rule of 78 Percentage Rebate Table (repealed)

History

• Source: Repealed at 30 Ill. Reg. 12558, effective July 7, 2006

Part 120 Currency Exchange Act

38 Ill. Adm. Code 120.5 Definitions

"Act" means the Currency Exchange Act [205 ILCS 405].

"Ambulatory Currency Exchange" means any person, firm, association, partnership, limited liability company or corporation, except banks organized under the laws of this State and national banks organized pursuant to the laws of the United States, engaged in one or both of the businesses, or engaged in performing any one or more of the services authorized by the Act, solely on the premises of the employer whose employees are being served.

"Community Currency Exchange" means any person, firm, association, partnership, limited liability company or corporation, except an ambulatory currency exchange as defined in this Section, banks incorporated under the laws of this State and national banks organized pursuant to the laws of the United States, engaged in the business or service of, and providing facilities for, cashing checks, drafts, money orders or any other evidences of money acceptable to the community currency exchange, for a fee or service charge or other consideration, or engaged in the business of selling or issuing money orders under his/her or their or its name, or any other money orders (other than United States Post Office money orders, Postal Telegraph Company money orders, or Western Union Telegraph money orders), or engaged in both such businesses, or engaged in performing any one or more of the services authorized by the Act.

"Controlling Person" means an officer, director, or person owning or holding power to vote 10% or more of the outstanding voting securities of a licensee or the power to vote the securities of another controlling person of the licensee. For the purpose of determining the percentage of a licensee controlled by a controlling person, the person's interest shall be combined with the interest of any other person controlled, directly or indirectly, by that person or by a spouse, parent, or child of that person. [205 ILCS 405/1]

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director of the Division of Financial Institutions with the authority delegated by the Secretary.

"Division" means the Department of Financial and Professional Regulation-Division of Financial Institutions with the authority delegated by the Secretary.

"Licensed Location" means the premises at which a licensee is authorized to operate a community currency exchange to offer to the public services, products, or activities under the Act. [205 ILCS 405/1]

"Licensee" means any person, firm, association, partnership, limited liability company, or corporation issued one or more licenses by the Secretary under the Act. [205 ILCS 405/1]

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

History

• Source: Amended at 40 Ill. Reg. 9167, effective August 1, 2016

38 Ill. Adm. Code 120.10 Minimum Requirements for Office Records - Community Currency Exchanges

Every licensed location must maintain the following records in any medium or format that accurately reproduces original documents or papers:

a) Daily cash sheets (see Section 120.30) for the preceding 90 days.

b) Bank statements.

c) Money order register (see Section 120.50) of money order stating original issue amount.

d) General ledger and supporting journals.

e) Copy of the latest Annual Report filed with the Department.

f) Transmittal record for utility bills, vehicle licenses, certificates of title, vehicle stickers, stored value cards, and any other type of transmittal made for the benefit of a third party.

g) Record of daily transactions.

h) Check register (see Section 120.40).

i) Corporate records.

j) Copies of all contracts and business agreements entered into by the currency exchange.

History

• Source: Amended at 45 Ill. Reg. 9947, effective July 26, 2021

38 Ill. Adm. Code 120.20 Minimum Requirements for Office Records - Ambulatory Currency Exchanges

Every licensed location must maintain the following records in any medium or format that accurately reproduces original documents or papers:

a) Bank statements and itemized deposit slips.

b) Money order register or carbonized copy of money order.

c) General ledger and support journals.

d) Copy of the latest Annual Report filed with the Department.

e) All corporate records.

History

• Source: Amended at 41 Ill. Reg. 12387, effective October 6, 2017

38 Ill. Adm. Code 120.30 Cash Sheet

a) A cash sheet must be prepared daily for each day's business reflecting all transactions for that day. A fiscal day may be used. All items on the cash sheet must be balanced at the end of the day or prior to the opening of the next days business. The cash sheet may be maintained by the licensee in any medium or format that accurately reproduces original documents or papers.

b) The closing cash count must include all cash and cash items. Cash items include postage stamps and stamped envelopes sold in the currency exchange.

c) The beginning and ending number of money orders issued each day must be recorded on the cash sheet.

d) Returned checks must not be counted as part of the cash on hand.

e) Payment for utility bills and all other company bills must be remitted or transmitted to the respective utility or other company by the currency exchange before the end of the next business day.

History

• Source: Amended at 45 Ill. Reg. 9947, effective July 26, 2021

38 Ill. Adm. Code 120.40 Cashed Check Register

a) A check register must be maintained for all checks, drafts, money orders or other evidence of money that the licensed location cashes.

b) The check register must show for each instrument cashed: the maker, the payee, the date of the instrument, its amount and its number.

c) The foregoing check register requirements will not apply to those currency exchanges that maintain electronic copies of all checks, drafts, money orders or other evidence of money, provided that the electronic records are available to the Department upon request and the method of electronic storage is maintained in working order.

History

• Source: Amended at 45 Ill. Reg. 9947, effective July 26, 2021

38 Ill. Adm. Code 120.50 Issued Money Order Register

A money order register recording the date issued, money order number, amount and date paid, must be kept by each licensed location. This Section and all other provisions of this Part related to money orders apply to money orders sold under the name of the Currency Exchange, as well as second party money orders.

History

• Source: Amended at 45 Ill. Reg. 9947, effective July 26, 2021

38 Ill. Adm. Code 120.60 Money Orders

a) Paid money orders must be filed or searchable in numerical sequence.

b) No licensee shall issue any money order, except in payment of an obligation incurred by the licensee in the usual course of its Currency Exchange business, without concurrently receiving the face amount thereof in cash. Such cash may be the proceeds of the cashing by the licensee of a check, draft, money order, or other evidence of money.

c) No licensee shall issue any money order for the payment of any debt of obligation of the licensee incurred by it outside of the usual course of its Currency Exchange business nor as evidence of or security for such debt or obligation.

d) Money orders in each series sold by the Exchange must be issued in numerical order.

History

• Source: Amended at 45 Ill. Reg. 9947, effective July 26, 2021

38 Ill. Adm. Code 120.70 Checks Written by Exchange

All checks issued by the Currency Exchange must be made available at the time of examination to any authorized representative of the Department.

History

• Source: Amended at 9 Ill. Reg. 1358, effective January 17, 1985

38 Ill. Adm. Code 120.80 "nsf" Checks and Items for Collection

No licensee shall cash or place for collection any check, draft, money order, or other evidence of money if it has reason to believe or if upon the exercise of reasonable prudence it would find that on the date it is delivered to the licensee there are insufficient funds on deposit with the depository upon which it is drawn for its payment in full.

History

• Source: Amended at 9 Ill. Reg. 1358, effective January 17, 1985

38 Ill. Adm. Code 120.90 Returned Items Record

A currency exchange must maintain a trailing 12 log of all returned checks, drafts, money orders or other evidence of money. The log must include the maker, payee, check number, date of instrument, amount, reason for return, date of return, attempts to collect by the currency exchange, and any fees charged by the currency exchange.

History

• Source: Amended at 45 Ill. Reg. 9947, effective July 26, 2021

38 Ill. Adm. Code 120.100 Postdated Checks (repealed)

History

• Source: Repealed at 40 Ill. Reg. 9167, effective August 1, 2016

38 Ill. Adm. Code 120.110 Timely Deposits

Each check, draft, money order, or other evidence of money cashed by a licensee shall be deposited or transmitted for deposit within the ordinary course of business no later than the following business day after the instrument has been cashed. A deposit to an armored-car service satisfies this requirement.

History

• Source: Amended at 45 Ill. Reg. 9947, effective July 26, 2021

38 Ill. Adm. Code 120.120 Food Stamps Account (repealed)

History

• Source: Repealed at 9 Ill. Reg. 1358, effective January 17, 1985

38 Ill. Adm. Code 120.125 Supplemental Nutrition Assistance Program

Licensees shall comply with all applicable regulations promulgated by the Secretary of the Illinois Department of Human Services and the Secretary of the United States Department of Agriculture regarding distribution of Supplemental Nutrition Assistance Program benefits and any successor program.

History

• Source: Added at 36 Ill. Reg. 13851, effective September 7, 2012

38 Ill. Adm. Code 120.130 Reconciling Accounts

Each licensee must reconcile all Currency Exchange Accounts with the appropriate accounting records at least once each month.

History

• Source: Amended at 9 Ill. Reg. 1358, effective January 17, 1985

38 Ill. Adm. Code 120.140 Reference Material

Each licensed location will ensure its employees have access to an electronic or physical copy of the Act and its implementing rules and regulations at all times.

History

• Source: Amended at 45 Ill. Reg. 9947, effective July 26, 2021

38 Ill. Adm. Code 120.150 Annual Report Information

Each licensee shall maintain all transaction records necessary to provide the information requested by the Department on its Annual report forms.

38 Ill. Adm. Code 120.160 Retention of Records

In addition to those records required to be retained by Section 17 of the Act, all cash sheets, consumer initiated transactions, and utility transmittal sheets, must be preserved for not less than three years.

History

• Source: Amended at 45 Ill. Reg. 9947, effective July 26, 2021

38 Ill. Adm. Code 120.170 Physical Condition of Exchange Premises (repealed)

History

• Source: Repealed at 9 Ill. Reg. 1358, effective January 17, 1985

38 Ill. Adm. Code 120.180 Display of Fee Schedules

a) In the case of a community currency exchange, each licensed location must post, at all times, a complete, detailed and unambiguous schedule for all of its fees for the cashing of checks, money orders and other evidence of money; the sale or issuance of money orders; and the rendering of all services authorized by the Act in a conspicuous place on its premises so that it is clearly legible to its customers. The lettering and numerals on this schedule shall be no less than .5 inch in height. The format of the schedule must be approved, in writing, by the Secretary.

b) In the case of an ambulatory currency exchange, each licensed location must conspicuously post, in the location it is servicing, a complete, legible, detailed and unambiguous schedule for all of its fees for the cashing of checks, money orders or other evidences of money; the sale or issuance of money orders; and the rendering of all services authorized by the Act. The format of the schedule must be approved, in writing by the Secretary.

History

• Source: Amended at 40 Ill. Reg. 9167, effective August 1, 2016

38 Ill. Adm. Code 120.190 Continuity of Operations

When a Community Currency Exchange intends to cease operations for two or more consecutive business days, written notice shall be sent to this office at least ten (10) days prior to said closing.

38 Ill. Adm. Code 120.200 Out-of-Town Trips

If a licensee will be going out of town and be unavailable for matters relating to the Currency Exchange, all books and records pertaining to the Currency Exchange must be available to the Department for examination purposes.

38 Ill. Adm. Code 120.210 Bribery and Gratuities

No licensee, or employee of a licensee, may, directly or indirectly, give, offer or promise anything of value to any employee of the Department.

History

• Source: Amended at 36 Ill. Reg. 13851, effective September 7, 2012

38 Ill. Adm. Code 120.220 Conviction of Crime

If any stockholder, director, officer, owner or partner of a community or ambulatory currency exchange is convicted of a crime under any law for which the crime was punishable by imprisonment in excess of one year under the law under which he or she was convicted, the Secretary may order that he or she divest himself or herself of any interest that he or she may hold in any entity licensed by the Department.

History

• Source: Amended at 36 Ill. Reg. 13851, effective September 7, 2012

38 Ill. Adm. Code 120.230 Ambulatory License Application

Every applicant for an ambulatory currency exchange license must specify in the application the location where the service will be provided on the premises, as well as the day, time and type of service to be provided. Permanent changes cannot be made without written notification to the Secretary.

History

• Source: Amended at 36 Ill. Reg. 13851, effective September 7, 2012

38 Ill. Adm. Code 120.240 Ambulatory Office Records

The books and records pertaining to the business of an ambulatory licensee are to be available upon written request to representatives of the Department. The records are not to be moved from their permanent location unless the Secretary is notified, in writing, of the move. Removal for accounting or business purposes is allowed.

History

• Source: Amended at 36 Ill. Reg. 13851, effective September 7, 2012

38 Ill. Adm. Code 120.250 Sale of Capital Stock

No sale, transfer or assignment of capital stock of a corporate licensee shall be made without first obtaining the consent and approval of the Secretary. Any person contemplating the acquisition of these shares of stock shall first apply for consent and approval by filing with the Secretary an applicant's questionnaire, together with a personal sworn financial statement, credit report, investigation fee and any other information the Secretary may deem necessary, pursuant to Section 10 of the Act.

History

• Source: Amended at 36 Ill. Reg. 13851, effective September 7, 2012

38 Ill. Adm. Code 120.260 Corporate Officers and Directors

a) Controlling Persons of Licensees

1. The provisions of Sections 4 and 10 of the Act, relating to the qualifications of controlling persons of corporate licensees, shall apply to all officers and directors of corporate licensees without regard to the time of the election or to the designation of the officers or directors.

2. Investigation fees when the officer or director of a licensee or licensed location changes, in whole or in Part, are as follows:

A) $500 if the new officer or director is not current officer or director of a licensee or licensed location; or

B) $300 if the new officer or director is a current officer or director of a licensee or licensed location. (See Section 4 of the Act.)

b) When any corporate licensee elects or otherwise designates any person as an officer or director who is not then a controlling person of the corporate licensee, written notice of the fact of the election or designation of the new officer or director, certified by the secretary of the licensee, shall be promptly given to the Secretary. The new officer or director shall not assume the office to which that new officer or director has been elected or designated until that new officer or director has first complied with the provisions of Sections 4 and 10 of the Act, relating to the qualifications of controlling persons of community currency exchanges and ambulatory currency exchanges.

History

• Source: Amended at 46 Ill. Reg. 18503, effective November 1, 2022

38 Ill. Adm. Code 120.270 Fines, Suspension, or Revocation of License

a) The Director may impose any of the sanctions authorized by Section 15 of the Act if the Division finds that any community or ambulatory currency exchange has violated any of the requirements of the Act or this Part.

b) Violations

When any licensee violates any Section of the Act or this Part, the Department, except as allowed under subsection (c), will take the following steps to assess remedial action:

1. Category of Fines

A) For licensing violations relating to licensure, including, but not limited to, timely and accurate submission of annual renewals and annual reports, the violator may be assessed between $100 and $250;

B) For disclosure violations relating to representations required under the Act, including, but not limited to, posting of license and/or renewal certificates and posting of all fees charged by the licensee, the licensee may be assessed between $250 and $500;

C) For operational violations relating to nonpecuniary business, including, but not limited to, unauthorized additional services and record keeping requirements, the licensee may be assessed between $250 and $1,000; or

D) For pecuniary violations relating to monetary issues, including, but not limited to, minimum fund requirements, anti-money laundering requirements, cash sheet maintenance, check register maintenance, money orders issued in numerical order and rates charged to consumers in excess of those allowed by law, the licensee may be assessed between $500 and $1,000.

2. If a licensee commits the same violation or violations within the same category of fines listed in subsection (b)(1) at a licensed location more than once within 3 consecutive examination periods, the Department may assess fines that exceed the categories listed in subsection (b)(1) up to the statutory limit (see 205 ILCS 405/15) or take further remedial measures at the Secretary's discretion (see 205 ILCS 405/15).

c) Corrective Action

1. The Department will allow licensees an opportunity to correct any violation within 15 business days after the Notice for any violation identified in this Section. The licensee shall certify the corrective action to be taken, in writing delivered to the Secretary. The Secretary may then conduct a follow-up examination within 30 days after the certification. Except as proved in subsection (c)(2), if the Department deems that the violation has been corrected, the Department may reduce or dismiss the assessed fine or action and the Secretary may assess an examination fee not to exceed $175. Dismissal of an assessed fine through corrective action shall not remove repeat violations (see subsection (b)(2)).

2. Corrective action taken by licensees shall not serve to mitigate any fine or other remedial action if the violation is related to pecuniary issues or is the same as a prior violation within the last 3 consecutive examination periods.

d) Notwithstanding the provisions of subsections (b) and (c), if it is determined that the Secretary has the authority to suspend or revoke a license pursuant to Section 15 of the Act, he or she may issue orders as may be reasonably necessary to correct, eliminate or remedy the situation.

History

• Source: Amended at 40 Ill. Reg. 9167, effective August 1, 2016

38 Ill. Adm. Code 120.280 Cease and Desist

The Secretary may issue a cease and desist order to any currency exchange or other person doing business without the license required by Section 2 of the Act when, in the opinion of the Secretary, the currency exchange or other person is violating, or is about to violate, any provision of the Act or this Part or any requirement imposed in writing by the Department. If it is determined that the Secretary has the authority to suspend or revoke a license pursuant to Section 15 of the Act, he or she may issue orders as may be reasonably necessary to correct, eliminate or remedy the situation. [205 ILCS 405/29.5]

History

• Source: Added at 36 Ill. Reg. 13851, effective September 7, 2012

38 Ill. Adm. Code 120.290 Hearing Procedures

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 12507, effective July 8, 2022

Part 125 The Formulation and Issuance of Schedules of Maximum Rates for Check Cashing and the Writing of Money Orders of Community and Ambulatory Currency Exchanges

38 Ill. Adm. Code 125.10 Authority

This Part is issued by the Director of the Department of Financial Institutions (hereinafter referred to as the "Director") pursuant to Section 19.3 of "An Act in relation to the definitions, licensing and regulations of community currency exchanges and ambulatory currency exchanges and the operators and employees thereof, and to make an appropriation therefor, and to provide penalties and remedies for the violation thereof" (Ill. Rev. Stat. 1981, ch. 17, par. 4838), herinafter called the Act, and Sections 5-35, 5-145 and 1-65 of the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1991, ch. 127, pars. 1005-35, 1005-145 and 1001-65).

History

• Source: Amended at 9 Ill. Reg. 12284, effective July 30, 1985

38 Ill. Adm. Code 125.20 Purposes

Pursuant to the authority set forth in Section 125.10 these Rules accomplish the following purposes:

a) Establish the procedures and criteria to be followed by the Director in establishing maximum rate schedules for the cashing of checks and writing of money orders by community and ambulatory currency exchanges;

b) Establish the procedures to be followed for charging less than the applicable maximum fee schedule;

c) Establish the form and procedure for the submission, consideration and disposition of petitions filed by interested parties requesting an increase of the rates set forth in the maximum rate schedule;

d) Establish the form and procedure for the submission, consideration and disposition of petitions filed by interested parties requesting the promulgation of new Rules or the amendment of any of the Rules set forth hereafter.

38 Ill. Adm. Code 125.30 Procedure and Criteria for Rate Making

a) Types of Rates to be Established by the Director

The Director will establish maximum rate schedules for fees charged for check cashing and the issuance of money orders by community and ambulatory currency exchanges. Such schedules of maximum fees to be established by the Director may provide maximum fees for community currency exchanges which may be different than the maximum fees for ambulatory currency exchanges.

b) Criteria

In establishing the maximum rate schedules set forth in paragraph (a) above, the Director will consider the following criteria:

1. Rates charged in the past for the cashing of checks and the issuance of money orders by community and ambulatory currency exchanges;

2. Rates charged by banks or other business entities for rendering the same or similar services and the factors upon which those rates are based;

3. The income, cost and expense of the operation of currency exchanges;

4. Rates charged by currency exchanges or other similar entities located in other states for the same or similar services and the factors upon which those rates are based;

5. Rates charged by the United States Postal Service for the issuing of money orders and the factors upon which those rates are based;

6. A reasonable profit for a currency exchange operation.

c) Matters to be Considered in Setting Rates

1. In establishing the maximum rate schedules set forth in paragraph (a) above, the Director shall consider the oral and written submissions of interested parties as set forth in paragraph (e) herein. In addition, the Director may consider:

A) any of the files, records and documents on file at the Department of Financial Institutions which have been filed or submitted by community or ambulatory currency exchanges pursuant to Section 16 of the Act.

B) any audit or examination reports of currency exchanges on file at the Department prepared by the Department pursuant to Section 16 of the Act and

C) generally recognized technical facts within the Department's specialized knowledge relating to community and ambulatory currency exchanges.

2. All written information submitted to the Director, pursuant to this Section, will be made available for examination to any interested persons upon request and will be made available for copying by any interested persons at such person's expense. In supplying such information, the Director will take whatever precautions necessary to insure the anonymity and privacy of those entities submitting confidential information to the Department.

d) Submission of Additional Information Required by the Director

1. In addition to the matters set forth in paragraph (c) above if at any time the Director deems it appropriate to secure any further information from any community or ambulatory currency exchange in order to establish the maximum rate schedules set forth in paragraph (a) above, the Director may require any such currency exchange or exchanges to submit additional data or information. The Director may require that such additional information be submitted under oath, or on forms prescribed by the Director, or both.

2. The Director shall make such request if he or his designee finds that the material(s) originally filed are:

A) Ambiguous, or

B) Not accompanied with specific detail to support allegation(s), or

C) Not complete in substance, or

D) Otherwise do not afford sufficient information to enable the Director to determine whether a change in rates would be warranted.

e) Oral and Written Submissions Allowed

1. All interested persons shall submit data, views, comments or arguments with respect to the maximum rate schedules to be established pursuant to paragraph (a) above; and these submissions may be made either orally or in writing, or both, provided that such submissions comply with the requirements of these Rules.

2. All written submissions which set forth the information in the nature of expert testimony and/or opinions, including but not limited to statistical data, compilations, charts, diagrams, accounting procedures and/or computer printouts, must be filed with the Director at least 15 days prior to the first date for each annual rate hearing.

f) Procedure for Oral Submissions

1. Public Hearings

A) The Director shall conduct public hearings on the establishment, revision or modification of the maximum rate schedules described in paragraph (a) above. Upon written request by an interested party hearings will be conducted annually on the revision, modification or repeal of the maximum rate schedules provided that any request for an increase of the rates set forth in the maximum rate schedule must comply with the requirements of Section 19.3 of the Currency Exchange Act (Ill. Rev. Stat. 1983, ch. 17, par. 4838) and Section 125.50 of this Part.

B) Notification of the exact date or dates, times and location of the hearings must be published in a newspaper of general circulation in the State of Illinois at least forty-five (45) days prior to the commencement of the first day of the hearings.

2. Manner of Making Oral Submissions at Public Hearings

Any interested person who gives timely notice to the Director of his intention to do so as set forth in paragraph (f)(3) below may orally submit data, views, comments or arguments by testifying under oath at the public hearings with respect to the maximum rate schedules to be established by the Director.

3. Notice of Intention to Testify at Public Hearings

Any interested party wishing to testify under oath at the public hearings and submit data, views, comments or arguments on the maximum rate schedules to be established by the Director must give written notice to the Director of his or her intention to do so at least five (5) days prior to the commencement of rate-making hearings. Such notice shall be filed in person or by mail with the Director of the Department of Financial Institutions either at The State of Illinois Building, 100 W. Randolph Suite 15-700, Chicago, Illinois 60601, or at 421 East Capitol Street, Springfield, Illinois 62706. Such notice must be received by the Director no later than 5:00 PM on the fifth day preceding the commencement of the hearing. In the event that the deadline for the filing of such notice falls on a day when the Department is not open for business, then the deadline shall be extended to the next available date on which the Department is open for business. Any person failing to file timely notice under this Section will not be permitted to testify at the public hearings. However, any interested person who fails to file timely notice under this Section will not be precluded from submitting his or her views, comments, data or arguments in writing in accord with the requirements of paragraph (g). With respect to the rate-making hearings, any interested person wishing to orally offer views, comments, data or arguments by testifying under oath at said hearings must file notice of his or her intention to do so with the Director as previously set forth.

4. Availability of Transcript of Proceedings

The proceedings of the public rate-making hearings must be recorded and a transcript of the proceedings will be made available to any person at his or her cost and expense. Orders for such a transcript should be placed directly with the reporting service responsible for recording the proceedings.

5. Questioning of Persons Testifying

The Director, or any person designated by the Director to assist him in the conduct of the public hearings pursuant to paragraph(i) of this Section, may ask questions of persons testifying at said hearings.

g) Procedure for Filing Written Submissions

1. In addition to or in lieu of offering oral testimony as previously described, any interested person may submit his or her views, comments, data or arguments on the maximum rate schedules to be established by the Director in writing by filing said written submission with the Director by no later than 5:00 PM of the last day of the scheduled public hearings, except as to all written submissions which set forth information in the nature of expert testimony pursuant to paragraph (d) which written submissions must be submitted no later than 15 days prior to the first date for each annual rate hearing along with ten copies of each such written submission. Written submissions may be filed in person or by mail with the Director of the Department of Financial Institutions either at The State of Illinois Building, 100 W. Randolph Suite 15-700, Chicago, Illinois 60601, or 421 East Capitol Street, Springfield, Illinois 62706. Any written submission which is not timely filed will not be considered by the Director in establishing the maximum rate schedules.

2. Expert testimony shall be considered any testimony given by individuals with a specialized knowledge of the currency exchange business or of rate making in general.

h) Procedure for Filing Written Rebuttal Submissions

Any interested person wishing to respond to oral testimony presented at the public hearings and/or written submissions filed with the Director pursuant to paragraph (g) above, may submit his or her views, comments, data, or arguments in writing by filing said written submission with the Director by no later than 5:00 p.m. of the tenth day following the last day of the scheduled public hearings. Such written submissions may be filed in person or by mail with the Director of the Department of Financial Institutions either at the State of Illinois Building, 100 W. Randolph Suite 15-700, Chicago, Illinois 60601, or 421 East Capitol Street, Springfield, Illinois 62706. Any written submission which is not timely filed will not be considered by the Director in establishing the maximum rate schedules.

i) All Written Submissions Available for Public Inspection

All written submissions filed timely with the Director pursuant to paragraph (g) and (h) above will be available for public inspection at any time when the Department is open for business either at The State of Illinois Building, 100 W. Randolph Suite 15-700, Chicago, Illinois 60601, or at 421 East Capitol Street, Springfield, Illinois 62706.

j) Persons Authorized to Assist Director

The Director may seek and contract for legal or technical assistance and advice with persons, partnerships, corporations or businesses who are not employees of the Department in connection with the conduct of the rate-making hearings and the establishment of the maximum rate schedules. The Director may designate any such person or persons and one or more employees of the Department to assist him in the conduct of the public hearings as previously set forth and in the establishment of maximum rate schedules.

k) Filing and Effective Date of Maximum Rate Schedules

1. With respect to the rate-making hearings scheduled to take place, the Director will issue and adopt maximum rate schedules for check cashing and writing of money orders and file said rate schedules with the Administrative Code Unit of the Illinois State Library of the Secretary of State's Office in Springfield, Illinois expeditiously upon approval of said rules by the Joint Committee on Administrative Rules pursuant to the provisions of the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1991, ch. 127, pars. 1001-1 et seq.) Said rates will be effective ten (10) days after such filing.

2. With respect to the future revisions, modification, amendment or repeal of the maximum rate schedules pursuant to public hearings, the Director will file a certified copy of such revisions, modifications, amendments or repeals, as the case may be, with the Administrative Code Unit of the Illinois State Library of the Secretary of State's Office in Springfield pursuant to the requirements of Section 5-40(d) of the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1991, ch. 127, par. 1005-40(d)). Any revisions, modifications, amendments or repeals of the maximum rate schedules will be effective ten (10) days after such filing.

3. At the time the Director issues and adopts the maximum rate schedules, or emergency rates pursuant to this Section, or Section 125.30 (l), or with respect to the future revision, modification, amendment, or repeal of the maximum rate schedules, the Director will also publish in the Illinois Register a statement setting forth the Director's findings regarding the criteria established in Section 125.30(b) and the information upon which such findings are based.

l) Emergency Rates

In the event that the Director deems it appropriate, pursuant to the requirements of Section 5-45 of the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1991, ch. 127, par. 1005-45), the Director may adopt and issue emergency maximum rate schedules which may be effective for a period of not longer than 150 days.

m) Rates and Rules of Practice and Procedure Available for Public Inspection

These Rules and any maximum rate schedules, or any revisions, modifications, amendments or repeal thereof, will be available for public inspection at all times on any day the Department of Financial Institutions is open for business at the offices of the Department located either at The State of Illinois Building, 100 W. Randolph Suite 15-700, Chicago, Illinois 60601, or at 421 East Capitol Street, Springfield, Illinois 62706.

History

• Source: Amended at 9 Ill. Reg. 12284, effective July 30, 1985

38 Ill. Adm. Code 125.40 Procedure for Submission, Consideration and Disposition of Petitions Seeking the Promulgation, Amendment or Repeal of Part 125

a) Right to Petition

Any interested person may petition the Director requesting the promulgation of a Rule or Rules of Practice and Procedure for rate-making, or for an amendment, modification, revision or repeal of any of this Part regarding rate-making.

b) Form of Petition

1. Petitions to be in Writing and Signed

The petition must be in writing and signed by the party requesting the promulgation, amendment, modification, revision or repeal of any of this Part.

2. Contents of Petition

The petition must set forth the following:

A) A statement of whether the promulgation of a new Rule, or the amendment, modification, revision or repeal of a present Rule, is being sought, and

B) Petition Requirements for New, Amended or Repealed Rules

i) If the petition requests the promulgation of a new Rule, the petition must set forth the full text of the suggested new Rule; or

ii) If the petition requests the amendment, revision or modification of an existing Rule, the petition must identify the existing Rule as to which amendment, revision or modification is being requested and must set forth the full text of the Rule as amended, revised or modified; or

iii) If the petition requests the repeal of an existing Rule, the petition must identify the particular Rule as to which repeal is being requested; and

C) A statement of the petitioner's reasons for requesting the promulgation, amendment, revision, modification or repeal, as the case may be.

3. Filing of Petition

Such petition may be filed in person or by mail with the Director of the Department of Financial Institutions, either at The State of Illinois Building, 100 W. Randolph St. 15-700, Chicago, Illinois 60601, or at 421 East Capitol Avenue, Springfield, Illinois 62706.

c) Disposition of Petition

Within thirty (30) days of the receipt of the petition, the Director will notify the petitioner whether the Director will grant the petition and initiate rule-making proceedings in accord with Section 5-35 of the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1991, ch. 127, par. 1005-35). If, within thirty (30) days after receipt of the petition, the Director has not initiated such rule-making proceedings, the petition shall be deemed to have been denied. The Director will grant the petition if he determines that one or more of the following criteria are established:

1. The current rule or set of rules are outdated and do not reflect present currency exchange operations and serve the needs of the industry and the public.

2. Petition presents new and relevant information/data pertaining to the formulation of rates.

History

• Source: Amended at 12 Ill. Reg. 17834, effective October 24, 1988

38 Ill. Adm. Code 125.50 Form and Procedure for the Submission, Consideration and Disposition of Petitions Seeking an Increase of the Rates Set Forth in the Maximum Rate Schedule

a) Right to Petition

At least one-fourth of all community currency exchange licensees must join in a petition or, in the case of ambulatory currency exchanges, licensees authorized to serve at least 100 locations, must join in a petition requesting an increase of the rates set forth in the maximum rate schedule established by the Director pursuant to these Rules.

b) Form of Petition

1. Petitions to be in Writing and Signed

The petition must be in writing, signed and verified under oath by all of the licensees requesting an increase of the rates set forth in the maximum rate schedule.

2. Contents of Petition

The petition must set forth the following:

A) A statement identifying the particular rates as to which an increase is being requested and the proposed amounts by which the rates are to be increased; and

B) Allegations demonstrating reasonable cause to believe that the schedule of maximum rates previously issued and promulgated should be increased.

3. Filing of Petition

Such petition may be filed in person or by mail with the Director of the Department of Financial Institutions, either at The State of Illinois Building, 100 W. Randolph Suite 15-700, Chicago, Illinois 60601, or at 421 East Capitol Street, Springfield, Illinois 62706. No petition may be filed unless at least nine months have expired since the last promulgation of schedules of maximum rates.

c) Disposition of Petition

If the petition makes an initial showing that an increase in the maximum rate schedules is warranted under the standards contained in Section 19.3 (B)(1)(a-f) of the Currency Exchange Act, the Director will then grant the petition and conduct Maximum Rate Schedules Hearings. The Director will otherwise deny the petition. In either event the Director will notify the petitioner of his decision within ten (10) days of the making thereof.

History

• Source: Amended at 9 Ill. Reg. 12284, effective July 30, 1985

38 Ill. Adm. Code 125.60 Prohibition Against and Sanctions for Charging More Than Rates Set Forth in the Maximum Rate Schedule

a) Prohibition

Upon the effective date of the maximum rate schedules established by the Director pursuant to these Rules, each and every community or ambulatory currency exchange may not charge more than the applicable maximum rates set forth on said schedules.

b) Sanctions

1. The Director shall impose a fine up to $100 per violation, or suspension as authorized by Section 15 of the Currency Exchange Act if he finds that any community or ambulatory currency exchange has violated paragraph (a) of this Section.

2. For the first and second violations within a twelve month period the amount of the fine will be determined by duration of the violation and the compliance history of the currency exchange.

3. Any ambulatory or community currency exchange found to be charging over the maximum rates three times within the same twelve month period shall have its license suspended.

History

• Source: Amended at 9 Ill. Reg. 12284, effective July 30, 1985

38 Ill. Adm. Code 125.70 Procedure for Charging Less Than Applicable Maximum Rates

Any currency exchange may charge lower fees than those of the applicable maximum fee schedule after filing with the Director a schedule of the fees it proposes to use. That filing will be made in writing with the Director by email to FPR.CurrencyExchange@illinois.gov or by mail to any of the official addresses of the Illinois Department of Financial & Professional Regulation listed on https://www.idfpr.com. Upon receipt of the schedule of lower fees by the Director, the currency exchange submitting the schedule may not charge more than the fees set forth on the schedule; however, that currency exchange may revert to the maximum fee schedule upon notification to the Director in writing of its intention to do so as provided in this Section.

History

• Source: Amended at 45 Ill. Reg. 9954, effective July 26, 2021

38 Ill. Adm. Code 125.80 Prohibition Against Charging More Than Posted Fees

a) Prohibition

No community or ambulatory currency exchange may charge fees in excess of those posted pursuant to 38 Ill. Adm. Code 120 of the Rules of the State of Illinois, Department of Financial Institutions, Currency Exchange Division.

b) Sanctions

1. The Director shall impose a fine up to $100 per violation or suspension as authorized by Section 15 of the Currency Exchange Act if he finds that any community or ambulatory currency exchange has violated paragraph (a) of this Section.

2. For the first and second violations within a twelve month period the amount of the fine will be determined by the duration of the violation and the compliance history of the currency exchange.

3. Any ambulatory or community currency exchange found to be charging more than the posted fees three times within the same twelve month period shall have its license suspended.

History

• Source: Amended at 9 Ill. Reg. 12284, effective July 30, 1985

38 Ill. Adm. Code 125.90 Construction of Rules

These Rules shall not be construed to abrogate, modify or limit any rights, privileges or immunities granted or protected by the Constitution or laws of the United States or the Constitution or laws of the State of Illinois. If any provision of these Rules shall be declared unconstitutional or invalid by any court of competent jurisdiction, such declaration shall not invalidate the remaining provisions of these Rules.

History

• Source: Amended at 4 Ill. Reg. 17, p. 190, effective April 16, 1980

38 Ill. Adm. Code 125.100 Hearing Procedure

a) Authority of Director

Pursuant to Section 125.30(f)(1) of this Part and the Administrative Procedure Act (Ill. Rev. Stat 1991, ch. 127., par. 1010-25), the Director or his designee shall oversee the maximum rate schedules hearings. Any designee named by the Director shall be appointed in writing. The Director or his designee shall have those powers and duties necessary to accomplish this purpose including the following:

1. Scheduling hearings;

2. Administer oaths and affirmations;

3. The Director or his designee shall call upon Department personnel to testify as to information gathered pursuant to Section 19.3B1 of the Currency Exchange Act (Ill. Rev. Stat. 1983, ch. 17, par. 4838).

4. Subpoena Power

The Director or his designee will issue a subpoena upon request or when the Director determines that information otherwise unavailable is necessary to assist him in the ratemaking process. The Director, for purposes of maximum rate schedules hearing shall have the same subpoena power as in the Currency Exchange Act, (Ill. Rev. Stat. 1983, ch. 17, par. 4818).

b) Notice, Time and Place of Hearings

All hearings pursuant to this Part shall be open to the public. Notification of said hearings shall be done in accordance with Section 125.30(f)(1)(B) of this Part. There shall be one hearing held in Chicago and one held in Springfield and at such time and date designated by the Director so that persons affected by the outcome of the proceedings, such as currency exchange owners and currency exchange customers, may attend the hearing.

c) Recording Appearances

All parties and staff witnesses shall enter their appearances at the beginning of the hearing by giving their names, addresses, telephone numbers and whom they represent, in writing to the court reporter who will include the same in the record of the hearing. The Director or his designee shall require each witness to state his or her name.

d) Transcripts

Transcripts will be made pursuant to Section 125.30(f)(4) of this Part.

e) Testimony to be Under Oath or Affirmation

All testimony to be considered by the Director shall be sworn or affirmed testimony.

f) Conduct of Hearings

1. The Director or his designee shall open the hearing(s) by presenting for the record a copy of the petition requesting an increase in the maximum rate schedules, and shall continue the hearing if time does not permit all persons to be heard on the same day.

2. The Director or his designee shall call upon those persons who, in the manners set forth in Sections 125.30(e)(1), 125.30(f)(2) and 125.30(f)(3) of this Part, have given proper notice pursuant to these sections of their intention to give oral testimony at the hearing(s). Person testifying will be called in the following order:

A) Expert testimony; expert testimony being that defined in Section 125.30(g)(2) of this Part;

B) Consumer groups;

C) Any individual having an interest in a currency exchange and the general public including users of currency exchange services;

D) State and governmental Departments and/or agencies and private business entities;

E) Department of Financial Institutions staff;

F) The above order (A-E) will change in the event of any of the parties presenting testimony have time constraints due to distance travelled or medical restrictions.

3. Rebuttal will be done pursuant to Section 125.30(h) of this Part.

4. The Director and a designee to assist in the conduct of the hearings may ask questions of any person presenting oral testimony pursuant to Section 125.30(f) for the purpose of clarification and information.

5. Upon receipt of more than 30 written notices of intent to testify pursuant to Section 125.30(f)(3) on a particular day, the Director or his designee shall set time limitations for such testimony. This will ensure the opportunity for each individual having given notice pursuant to Section 125.30 to testify.

6. The Director or his designee shall halt testimony which is repetitious and which is not relevant to the ratemaking at issue.

g) Hearing Decorum

1. All parties to these hearing(s) shall conduct themselves in a manner such that all parties may make their presentation.

2. When there is a threat to a participant or to the proceedings, the hearings shall be recessed until the threat has been removed. A threat shall consist of a physical, verbal or written act.

3. The Director or his designee shall remove from the hearing any individual(s) who conduct themselves in such a manner as to prevent all parties from making their presentations.

h) Decision of Director

1. The final decision regarding the new rate shall be made only by the Director.

2. The decision by the Director will be in writing and will state the basis for the finding in accordance with the criteria listed in Section 19.3 B of the Currency Exchange Act.

i) Time Schedules

The Director shall adhere to the following time schedules with respect to the Rate Making Process.

1. When the petition as outlined in Section 125.50(c) of this Part is granted Maximum Rate Schedule Hearings must be conducted within 75 days of the Director granting said petition.

2. After the Maximum Rate Schedule Hearings have been completed and the Rebuttal period pursuant to Section 125.30(h) of this Part has occurred, the Director shall have 30 days to make his finding pursuant to Section 125.30(i)(2) of this Part.

3. The Director shall have 30 days after issuing his finding to initiate rulemaking for a modification and or change in rates. This rulemaking shall be conducted pursuant to the Illinois Administrative Procedure Act, Ill. Rev. Stat. 1991, ch. 127, par. 1001-1 et seq.

History

• Source: Added at 11 Ill. Reg. 686, effective December 20, 1986

Part 130 Schedules of Maximum Rates to Be Charged for Check Cashing and Writing of Money Orders by Community and Ambulatory Currency Exchanges

38 Ill. Adm. Code 130.10 Authority

These rates are issued by the Director of the Department of Financial and Professional Regulation-Division of Financial Institutions (hereinafter referred to as the "Director") pursuant to Sections 19.3 and 19.4 of the Currency Exchange Act [205 ILCS 405] (the Act) and Section 5-35 of the Illinois Administrative Procedure Act [5 ILCS 100].

History

• Source: Amended at 42 Ill. Reg. 6374, effective March 23, 2018

38 Ill. Adm. Code 130.20 Purposes

Pursuant to the authority set forth in Section 130.10, this Part establishes the maximum rates that can be charged by community and ambulatory currency exchanges for check cashing and writing money orders.

History

• Source: Amended at 42 Ill. Reg. 6374, effective March 23, 2018

38 Ill. Adm. Code 130.30 Maximum Rate - Check Cashing

a) The Maximum Rate. Through June 30, 2018, the maximum rate to be charged by community and ambulatory currency exchanges for cashing any check shall not exceed the following:

1. For all checks $100 or less, an amount equal to 1.4% of the face amount of the check plus a service charge of $1.00;

2. For all checks $100.01 or greater, an amount equal to 2.25% of the face amount of the check.

b) The rates established in this subsection (b) shall be effective beginning July 1, 2018.

1. Public Assistance Checks

For all public assistance checks, 1.5% of the face value of the check. For purposes of these rates, a public assistance check means a check issued by a federal or State government agency for payment to a recipient of federal or State monetary assistance, Social Security, Unemployment Compensation, Railroad Retirement, veteran's benefits, or housing assistance.

2. Government Checks

For purposes of these rates, government check includes a check issued by the federal government, State government, or local government, other than a public assistance check.

A) For government checks $100 or less, 2.40% of the face value of the check plus a service charge of $1.00.

B) For government checks between $100 and $1250, 2.33% of the face value of the check.

C) For government checks over $1250, 3.0% of the face amount of the check.

3. Personal Checks

For purposes of these rates, personal check is any check bearing the name of an individual as the maker of the check that is not a printed payroll check.

A) For personal checks $100 or less, 2.45% of the face value of the check plus a service charge of $1.00.

B) For personal checks between $100 and $1250, 3.0% of the face amount of the check.

C) For personal checks over $1250, 3.5% of the face amount of the check.

4. Printed Payroll Check

For purposes of these rates, a printed payroll check means a check for wages issued by an employer to an employee subject to withholding, other than a payroll check issued by the federal government, State government, or local government. Printed payroll checks must be typewritten, electronically generated, or computer generated.

A) For printed payroll checks $100 or less, 2.40% of the face value of the check plus a service charge of $1.00.

B) For printed payroll checks between $100 and $1250, 2.33% of the face amount of the check.

C) For printed payroll checks over $1250, 3.5% of the face amount of the check.

5. All Other Checks

A) For all other checks $100 or less, 2.40% of the face value of the check plus a service charge of $1.00.

B) For all other checks between $100 and $1250, 2.4% of the face amount of the check.

C) For all other checks over $1250, 3.5% of the face amount of the check.

c) Prohibition. No community or ambulatory currency exchange may charge a fee for cashing any check in excess of the maximum rate set forth in subsections (a) or (b).

History

• Source: Amended at 42 Ill. Reg. 6374, effective March 23, 2018

38 Ill. Adm. Code 130.40 Maximum Rate – Issuance of Money Orders

a) The Maximum Rate. The maximum rate to be charged by community and ambulatory currency exchanges for issuing any money order shall not exceed an amount equal to 1% of the face amount of the money order plus a service charge of $.75.

b) Prohibition. No community or ambulatory currency exchange may charge a fee for issuing any money order in excess of the maximum rate set forth in subsection (a).

History

• Source: Amended at 42 Ill. Reg. 6374, effective March 23, 2018

38 Ill. Adm. Code 130.50 Disclosure Requirements – Check Cashing and Money Orders

a) Charging by Means of Brackets – Definition. Charging by means of brackets is a method of establishing fees for cashing checks or issuing money orders in which a community or ambulatory currency exchange establishes a set fee to be charged uniformly for cashing all checks or issuing all money orders within a certain range of stated face amounts.

b) Checks – $500 or Less. For all checks of the face amount of $500 or less, each community and ambulatory currency exchange must post and display to the public the fees to be charged for cashing those checks by means of brackets as defined in subsection (a), provided that no fee charged within any bracket shall exceed the maximum rate set forth in Section 130.30(a), and provided further that all fees and brackets for all checks of the face amount of $500 or less must be fully and completely stated without resort to language such as "repeat" or its equivalent.

c) Checks in Excess of $500. For all checks of face amounts in excess of $500, community and ambulatory currency exchanges need not, but may, post and display to the public the fees to be charged by means of brackets set forth in subsections (a) and (b). They must post and display to the public a statement setting forth the rate of fees to be charged for cashing checks in excess of their posted and displayed bracketed fees, and the posting and display must be done without resort to language such as "repeat" or its equivalent. In no event shall the rate or fee to be charged exceed the maximum rate for cashing checks set forth in Section 130.30(a).

d) Money Orders – $500 or Less. For all money orders of the face amount of $500 or less, each community and ambulatory currency exchange must post and display to the public the fees to be charged to issue money orders by means of brackets as defined in subsection (a), provided that no fee charged within any bracket shall exceed the maximum rate as set forth in Section 130.40(a), and provided further that all fees and brackets for all money orders of the face amount of $500 or less must be fully and completely stated without resort to language such as "repeat" or its equivalent.

e) Money Orders in Excess of $500. For all money orders of face amounts in excess of $500, community and ambulatory currency exchanges need not, but may, post and display to the public the fees to be charged by means of brackets as set forth in subsections (a) and (d). They must post and display to the public a statement setting forth the rate or fees to be charged for issuing money orders in excess of their posted and displayed bracketed fees, and the posting and display must be done without resort to language such as "repeat" or its equivalent. In no event shall the rate or fee to be charged exceed the maximum rate for issuing money orders set forth in Section 130.40(a). Nothing in this Part shall be construed to modify, amend or abrogate any rule or regulation of the Department of Financial and Professional Regulation relating to the issuance of money orders.

f) Posting Requirements. The public posting and display required by subsections (b), (c) and (e) must be complete, detailed and unambiguous in lettering and numerals of no less than one-half inch in height and the posting or display must be in a conspicuous place on the premises of the community currency exchange or in the location being served by the ambulatory currency exchange in such a manner that the posting or display is unobstructed and is clearly and easily visible and legible to the customers of the community or ambulatory currency exchange.

g) Filing of Fees with Director. Within 30 days after licensure, each community and ambulatory currency exchange must file with the Director a full, complete and accurate statement of all charges and fees for rendering all services authorized by the Currency Exchange Act, including, but not limited to, all fees and charges for cashing checks and issuing money orders. Within 30 days after the effective date of either any increase or decrease in any fees or charges for rendering any service authorized by the Act, including, but not limited to, fees and charges for cashing checks and issuing money orders, community and ambulatory currency exchanges must file with the Director a full, complete and accurate statement of all such increases or decreases.

History

• Source: Amended at 42 Ill. Reg. 6374, effective March 23, 2018

38 Ill. Adm. Code 130.60 Effective Date (repealed)

History

• Source: Repealed at 42 Ill. Reg. 6374, effective March 23, 2018

Part 140 Debt Management Service Act

38 Ill. Adm. Code 140.10 Office Records

a) Required Files

1. Every licensee shall keep the following records or their equivalent in accord with generally accepted accounting principles as approved by the Department of Financial and Professional Regulation-Division of Financial Institutions (Division):

A) Client File

B) Client Activity Record

C) Payment Detail Report

D) Index System

2. If a computerized system is in use, licensee shall maintain a permanent file of back-up computer media for the end of each month.

3. All books and records shall be kept current and available for examination by the Division.

b) Client File

The client file shall contain the following: the original contract, a listing of total debtor income, a list of creditors including the balance owed to each and monthly payments due and a copy of the agreed-upon debt management plan.

c) Client Activity Record

The Client Activity Record shall contain the original entry and be a permanent record, and shall show the debtor's account number, name, address, date of contract, total indebtedness, monthly receipts, any fees charged, amounts disbursed to creditors and the estimated term of the contract to satisfy the amount owed.

1. If a contract is cancelled by a licensee or debtor and a fee is claimed but not paid, the debtor activity record shall show the reason for cancellation and the amount of any fee claimed to be owed.

2. If legal action is taken to collect an unpaid fee, the client activity record shall include a copy of the judgment or action taken.

3. A separate file of all litigation accounts shall be maintained in the office of the licensee.

d) Payment Detail Report

An individual Payment Detail Report shall be maintained for each debtor, including the account number, name and address, date of contract, total indebtedness, terms of payment and any fees charged. The report shall also show the monthly total of all receipts, disbursements, undisbursed or reserve funds and the distribution of any prorated fee.

1. A file shall be kept containing the paid or canceled Payment Detail Reports for a period of 5 years, showing the receipts and disbursement in full and the total amount of fees collected. In a non-computerized system, adding machine tapes verifying the receipts against all disbursements, including total fees, shall be attached to each client file.

2. The entries on the Payment Detail Report shall correspond with the receipt of periodic statements given to the debtor and shall reflect the disbursement made to creditors showing the net and gross amount.

3. In a non-computerized system, all entries shall be made in ink and no erasures whatsoever may made on the report. In case of error, a line should be drawn in ink through the improper entry and the correct entry made on the following line. No entries shall be masked, covered or rendered illegible.

e) Index System

An alphabetical index system shall be kept indicating name and address of clients, account number, date of contract and total indebtedness.

History

• Source: Amended at 35 Ill. Reg. 6350, effective March 29, 2011

38 Ill. Adm. Code 140.20 Bank Account

a) A separate trust bank account shall be maintained for the purpose of depositing customer's receipts and making disbursements to creditors or transferring earned fees to the general account. Funds shall be deposited within one business day after receipt.

b) Trust account bank statements and cancelled checks shall be retained at the office of the licensee for a period of 3 years.

c) Copies of the original trust account bank statement and canceled checks, either in hard copy, microfilm, microfiche, or by other electronic means, shall be kept at the office of the licensee, at licensee's headquarters, or at an off-site storage facility for a period of 5 years.

History

• Source: Amended at 22 Ill. Reg. 12550, effective July 6, 1998

38 Ill. Adm. Code 140.30 Dual Business (repealed)

History

• Source: Repealed at 35 Ill. Reg. 6350, effective March 29, 2011

38 Ill. Adm. Code 140.40 License

a) For purposes of determining an applicant's qualifications for a license, the Division shall find an applicant financially responsible if it has a positive net worth. Net worth means total assets minus total liabilities.

b) An applicant shall possess at least 6 months of relevant business experience.

c) In order to determine the applicant's general fitness and character, the Director of the Division of Financial Institutions with the authority delegated by the Secretary (Director) may require applicants to submit at least 2 letters of recommendation from persons familiar with the applicant or the applicant's business.

d) Any applicant applying for a license shall submit the required bond, the application for license and all required information at the time of application for a license.

History

• Source: Amended at 35 Ill. Reg. 6350, effective March 29, 2011

38 Ill. Adm. Code 140.50 General Operations

a) The licensee shall explain clearly and distinctly to each customer exactly the services to be rendered and the fees to be paid.

b) If, after analyzing the debtor's total income and expenses, it is determined that a payment plan should be developed, the licensee shall create a Debt Management Plan (DMP) that is considered feasible and practical to allow a payment of funds by the debtor for distribution to debtor's creditors as may be mutually agreed upon.

1. The licensee shall seek to obtain the consent of a majority of the creditors to accept the terms of the payment plan. Creditor acceptance may be determined by acceptance of a payment without written objection.

2. The debtor has the right to cancel the Debt Management Plan at any time by notifying the licensee, in writing, of debtor's desire to discontinue.

3. The cancellation will take effect on the first day of the month following receipt of the cancellation notice from the debtor.

c) When a contract is paid-in-full or satisfied, a statement shall be issued promptly to the debtor showing that the obligation has been satisfied. Licensee shall retain a copy of the contract marked "Paid" or "Satisfied" in the client file.

1. If the debtor terminates payment to the licensee for a period exceeding 30 days, the licensee shall not consider pro rata fees as having been earned beyond 30 days following the next monthly contract date.

2. The licensee is prohibited from charging a penalty for cancellation by either the debtor or the licensee except as provided in Section 12 of the Act.

d) Every contract between a licensee and debtor shall:

1. List every debt to be prorated, with the creditor's name, and disclose the total of all such debts;

2. Disclose in precise terms the rate and amount of the licensee's charge;

3. Disclose the approximate number and amount of installments required to pay the debts in full;

4. Disclose the name and address of the licensee and of the debtor;

5. Contain such other provisions or disclosures as the Director shall determine is necessary for the protection of the debtor and the proper conduct of business by a licensee;

6. Disclose the right of the debtor to cancel at any time;

7. Inform the debtor of any relationship that exists between the licensee and any creditor.

e) All contracts shall be originated at the office of the licensee or its agent.

f) When adjustments are needed to change the indebtedness listed in the contract, the licensee may execute a new contract using the revised figures or use a rider form executed in accordance with instructions provided in the rider.

g) All legal documents and other forms that a debtor shall be required to sign shall be filed with the Director prior to use.

h) A licensee shall deliver a copy of any contract, agreement, or Debt Management Plan between the licensee and the debtor to the debtor immediately after the debtor executes it, and the debtor's copy shall be executed by the licensee.

i) A calendar month is the period from the given date in one month to the same numbered date in the following month and if there is no same numbered date in the following month, to the last date in the following month. Not more than one month's service fee may be considered earned in any calendar month. A calendar month commences on the anniversary date of the contract.

j) A licensee shall deliver a receipt to the debtor for each cash payment.

k) The licensee shall make distribution to the debtor's creditors within 30 days after initial receipt of funds, and thereafter distributions shall be made to creditors within 30 days after receipt, less fees and costs, unless the reasonable payment of one or more of the debtor's obligations requires that such funds be held for a longer period to accumulate a certain sum, but in any case not to exceed an additional 30 days, or as authorized by the contract.

l) At least once each 3 months, the licensee shall render an accounting to the debtors which shall itemize the total amount received from the debtor, the total amount paid to each creditor, the total amount which any creditor has agreed to accept as payment in full on any debt owed him by the debtor, the amount of charges deducted, and any amounts held in reserve. A licensee shall render such an accounting to a debtor within 5 days after receipt of a written demand.

History

• Source: Amended at 35 Ill. Reg. 6350, effective March 29, 2011

38 Ill. Adm. Code 140.60 Fees

a) A printed schedule of fees charged by a licensee shall be given to the debtor prior to the initial counseling session.

b) A licensee shall not charge any fee in excess of those provided in Section 12 of the Act.

History

• Source: Amended at 22 Ill. Reg. 12550, effective July 6, 1998

38 Ill. Adm. Code 140.70 Prohibited Activities

a) A licensee shall not take:

1. Any contract, promise to pay, or other instrument which has any blank spaces when signed by a debtor;

2. Any negotiable instrument for the licensee's charges;

3. Any note, wage assignment, real estate or chattel mortgage, or other security to secure the licensee's charges;

4. Any confession of judgement or power of attorney to confess judgement against the debtor or to appear for the debtor in a judicial proceedings;

5. Any real or personal property as security for payment of a fee;

6. Concurrent with the signing of the contract or as part of the application for the contract a release of any obligation to be performed on the part of the licensee.

b) A licensee shall not take an appointment as attorney in fact or power of attorney.

c) Licensees shall not take any legal instrument from the debtor other than the service contract and authorized rider.

d) The licensee shall not accept a fee directly, or indirectly, from any person or other entity in exchange for referring potential customers.

e) No fees shall be paid directly, or indirectly, to an attorney, lending institutions, or any other source for the referral of customers.

f) A licensee shall not solicit or require a debtor to purchase, or agree to purchase, any policy of insurance.

g) A licensee shall not lend money or extend credit or include in the contract any debts not established prior to the execution of the contract.

h) No advance of the licensee's funds on the debtor's behalf shall be made by a licensee to any creditor or to the debtor.

History

• Source: Amended at 22 Ill. Reg. 12550, effective July 6, 1998

38 Ill. Adm. Code 140.80 Advertising

a) Advertising shall not be false, misleading or deceptive [205 ILCS 665/13]. No statement shall be permitted that states or implies that no financial problem is too great for the licensee to solve. No statement shall be permitted that states or implies that the licensee will use his own cash to pay the debtor's accounts. All advertisements shall contain the phrase, "we do not lend money".

b) Upon specific request by the Division, licensees shall forward to the Director the complete text of all advertising copy.

c) All advertising shall contain the true name and address of the licensee.

History

• Source: Amended at 35 Ill. Reg. 6350, effective March 29, 2011

38 Ill. Adm. Code 140.90 Availability of Act and Rules and Regulations

A copy of the Debt Management Service Act and this Part shall be kept in each office and branch.

History

• Source: Amended at 22 Ill. Reg. 12550, effective July 6, 1998

38 Ill. Adm. Code 140.100 Examination

a) The Director may make an examination of the office and records of each licensee and shall charge $400 for each examiner day or portion thereof.

b) All communications shall be addressed to the Director, Division of Financial Institutions, to any address designated by the Director. All fees shall be paid to the "Secretary of the Department of Financial and Professional Regulation".

c) The Division may conduct an examination for the purpose of verifying that the licensee has taken necessary actions to correct violations to the Act and/or related rules and shall charge the licensee $550 for each examiner day or portion thereof, when the Director determines the verification examination must be performed on site at any facility of the licensee.

History

• Source: Amended at 35 Ill. Reg. 6350, effective March 29, 2011

38 Ill. Adm. Code 140.110 Revocation – Suspension – Surrender of License

a) If it is determined that the Director had the authority to issue the suspension or revocation of a license pursuant to Section 10 of the Act, he or she may issue orders as may be reasonably necessary to correct, eliminate or remedy the situation.

b) A licensee may surrender any license by delivering to the Director written notice that it thereby surrenders the license, but the surrender shall not affect the licensee's civil or criminal liability for acts committed prior to surrender, or affect the liability on its bond or bonds, or entitle the licensee to a return of any part of the annual license fee.

History

• Source: Amended at 26 Ill. Reg. 14243, effective October 1, 2002

38 Ill. Adm. Code 140.120 Hearing Procedures

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 12514, effective July 8, 2022

38 Ill. Adm. Code 140.130 Proof of Payment

Upon completion of the contract, the licensee shall mail a statement to the debtor stating that the account has been closed and listing the name and address of each creditor paid in full and names and addresses of any creditors remaining unpaid.

History

• Source: Added at 22 Ill. Reg. 12550, effective July 6, 1998

38 Ill. Adm. Code 140.140 Penalties

a) The Director may penalize a licensee, or other person doing business without the required license, in an amount not exceeding $10,000 per violation, when in the opinion of the Director:

1. the licensee, or other person has failed to comply with any provision of the Act or any order, decision, finding, rule, regulation, or direction of the Director lawfully made pursuant to the authority of the Act; or

2. any fact or condition exists that, if it had existed at the time of the original application for the license, would have warranted the Director refusing to issue the license. [205 ILCS 665/16(c)]

b) The Director may penalize a licensee, or other person, prior to a hearing.

c) The Director shall serve notice of this penalty, including a statement of the reasons for the penalty, either personally or by certified mail, return receipt requested. Service by mail shall be deemed completed if the notice is deposited in the U.S. mail.

d) Within 10 days after service of the notice of penalty, the licensee or licensee's representative may request, in writing, a hearing.

e) All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 12514, effective July 8, 2022

38 Ill. Adm. Code 140.150 Disposal of Records

a) When disposing of records that contain personal information, including, but not limited to, social security numbers, driver's license numbers or non-driver identification card numbers, financial account numbers or codes, debit card numbers or codes, automated teller machine card numbers or codes, electronic serial numbers, or personal identification numbers, a debt settlement provider shall take all reasonable measures necessary to protect against unauthorized access to or use of the records.

b) Licensees must implement policies and procedures to implement this Section and the measures that may be taken to comply with this Section include the following:

1. implementing and monitoring compliance with policies and procedures that require the burning, pulverizing or shredding of paper documents containing personal information so that the personal information cannot practicably be read or reconstructed (for example, licensees must have a paper shredder at the licensed location or other location accessible to the licensee or contract with a third party to provide destruction or disposal of personal information);

2. implementing and monitoring compliance with policies and procedures that require the destruction or erasure of electronic media and other nonpaper media containing personal information so that the personal information cannot practicably be read or reconstructed (for example, licensees must have the technological resources to destroy or erase electronic or other nonpaper media or contract with a third party to provide destruction or erasure of electronic or other nonpaper media);

3. a licensee may enter into a written contract with a third party engaged in the business of record destruction to dispose of records containing personal information.

History

• Source: Added at 35 Ill. Reg. 6350, effective March 29, 2011

Part 145 Debt Settlement Consumer Protection Act

38 Ill. Adm. Code 145.5 Purpose and Definitions

a) Purpose

The purpose of the Act and this Part is to protect consumers who enter into agreements with debt settlement providers and to regulate debt settlement providers. [225 ILCS 429/5]

b) Definitions

"Act" means the Debt Settlement Consumer Protection Act [225 ILCS 429].

"Consumer", "customer" or "debtor" means any person who purchases or contracts for the purchase of debt settlement services. [225 ILCS 429/10]

"Debt settlement provider" or "provider" means any person or entity engaging in, or holding itself out as engaging in, the business of providing debt settlement service in exchange for any fee or compensation, or any person who solicits for or acts on behalf of any person or entity engaging in, or holding itself out as engaging in, the business of providing debt settlement service in exchange for any fee or compensation. "Debt settlement provider" does not include:

attorneys licensed, or otherwise authorized, to practice in Illinois who are engaged in the practice of law;

escrow agents, accountants, broker dealers in securities, or investment advisors in securities, when acting in the ordinary practice of their professions and through the entity used in the ordinary practice of their profession;

any bank, agent of a bank, operating subsidiary of a bank, affiliate of a bank, trust company, savings and loan association, savings bank, credit union, crop credit association, development credit corporation, industrial development corporation, title insurance company, title insurance agent, independent escrowee or insurance company operating or organized under the laws of a state or the United States, or any other person authorized to make loans under State law while acting in the ordinary practice of that business;

any person who performs credit services for his or her employer while receiving a regular salary or wage when the employer is not engaged in the business of offering or providing debt settlement service;

a collection agency licensed pursuant to the Collection Agency Act [225 ILCS 425] that is collecting a debt on its own behalf or on behalf of a third party; an organization that is described in 26 USC 501(c)(3) and subject to 26 USC 501(q) and exempt from tax under 26 USC 501(a) and governed by the Debt Management Service Act [205 ILCS 665];

public officers while acting in their official capacities and persons acting under court order;

any person while performing services incidental to the dissolution, winding up, or liquidating of a partnership, corporation, or other business enterprise; or

persons licensed under the Real Estate License Act of 2000 [225 ILCS 454] when acting in the ordinary practice of their profession and not holding themselves out as debt settlement providers. [225 ILCS 429/10]

"Debt settlement services" means:

offering to provide advice or service, or acting as an intermediary between or on behalf of a consumer and one or more of a consumer's creditors, when the primary purpose of the advice, service, or action is to obtain a settlement, adjustment, or satisfaction of the consumer's unsecured debt to a creditor in an amount less than the full amount of the principal amount of the debt or in an amount less than the current outstanding balance of the debt; or

offering to provide services related to or providing services advising, encouraging, assisting, or counseling a consumer to accumulate funds for the primary purpose of proposing or obtaining or seeking to obtain a settlement, adjustment, or satisfaction of the consumer's unsecured debt to a creditor in an amount less than the full amount of the principal amount of the debt or in an amount less than the current outstanding balance of the debt.

"Debt settlement services" does not include:

the services of attorneys licensed, or otherwise authorized, to practice in Illinois who are engaged in the practice of law; or

debt management service as defined in the Debt Management Service Act. [225 ILCS 429/10]

"Department" means the Department of Financial and Professional Regulation.

"Division" means the Department of Financial and Professional Regulation-Division of Financial Institutions.

"Provider fee" means the fee charged by the provider in return for debt settlement services. Provider fees generally consist of:

enrollment or set up fees paid by the consumer in connection with establishing a contract or other agreement related to the provision of debt settlement service; and/or

maintenance fees paid by the consumer on a periodic basis for contractually outlined debt settlement service.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

38 Ill. Adm. Code 145.10 Office Records

a) Required Files

1. Every debt settlement provider shall keep the following records, if applicable, or their equivalent in accord with generally accepted accounting principles as approved by the Department of Financial and Professional Regulation-Division of Financial Institutions:

A) Client File

B) Client Activity Record

C) Payment Detail Report

D) Index System

2. If a computerized system is in use, debt settlement provider shall maintain a permanent file of back-up computer media for the end of each month.

3. All books and records shall be kept current and available for examination by the Division.

b) Client File

The client file shall contain the following: the original contract; a list of creditors, including the balance owed to each and any payments due; the total amount of any fees paid by the debtor; the amount held in trust (if applicable); any settlement offers made and received on each of the debtor's accounts; all evidence of any legally enforceable settlements with the debtor's creditors; a written analysis of the debtor's income and expenses to substantiate that the plan of payment is feasible and practical; and copies of all receipts issued for each payment made by the debtor.

c) Client Activity Record

The Client Activity Record shall contain the original entry, be a permanent record, and show the debtor's account number, name, address, date of contract, total indebtedness, monthly receipts, any fees charged, amounts disbursed to creditors, if applicable, and the estimated term of the contract to satisfy the amount owed.

1. If a contract is cancelled by a debt settlement provider or debtor and a fee is claimed but not paid, the debtor activity record shall show the reason for cancellation and the amount of any fee claimed to be owed.

2. If legal action is taken to collect an unpaid fee, the client activity record shall include a copy of the judgment or action taken.

3. A separate file of all litigation accounts shall be maintained in the office of the debt settlement provider.

d) Payment Detail Report

An individual Payment Detail Report shall be maintained for each debtor, corresponding to the monthly accounting provided to the debtor pursuant to Section 65(c) of the Act.

1. A file shall be kept containing the paid or canceled Payment Detail Reports for a period of 5 years, showing the receipts and disbursements, if applicable, in full and the total amount of fees collected. In a non-computerized system, adding machine tapes verifying the receipts against all disbursements, including total fees, shall be attached to each client file.

2. The entries on the Payment Detail Report shall correspond with the monthly accounting given to the debtor and shall reflect all funds submitted by the debtor during the month and all disbursements from those funds, showing all amounts retained by the licensee as provider fees and all amounts paid to creditors.

3. In a non-computerized system, all entries shall be made in ink and no erasures whatsoever may be made on the report. In case of error, a line should be drawn in ink through the improper entry and the correct entry made on the following line. No entries shall be masked, covered or rendered illegible.

e) Index System

An alphabetical index system shall be kept indicating name and address of clients, account number, date of contract and total indebtedness.

38 Ill. Adm. Code 145.20 Disposal of Records

a) When disposing of records that contain personal information, including, but not limited to, social security numbers, driver's license numbers or non-driver identification card numbers, financial account numbers or codes, debit card numbers or codes, automated teller machine card numbers or codes, electronic serial numbers, or personal identification numbers, a debt settlement provider shall take all reasonable measures necessary to protect against unauthorized access to or use of the records.

b) Compliance Methods

1. Debt settlement providers must maintain and enforce policies and procedures to implement this Section, and the measures that may be taken to comply with this Section include the following:

A) implementing and monitoring compliance with policies and procedures that require the burning, pulverizing or shredding of paper documents containing personal information so that the personal information cannot practicably be read or reconstructed;

B) implementing and monitoring compliance with policies and procedures that require the destruction or erasure of electronic media and other nonpaper media containing personal information so that the personal information cannot practicably be read or reconstructed.

2. A debt settlement provider may enter into a written contract with a third party engaged in the business of record destruction to dispose of records containing personal information.

38 Ill. Adm. Code 145.30 Bank Account, If Applicable

a) Trust account bank statements and cancelled checks shall be retained at the office of the debt settlement provider for a period of 3 years.

b) Copies of the original trust account bank statement and canceled checks, in hard copy, microfilm or microfiche, or by other electronic means, shall be kept at the office of the debt settlement provider, at debt settlement provider's headquarters, or at an off-site storage facility for a period of 5 years.

38 Ill. Adm. Code 145.40 Application for License

a) At the time of making an application, applicant shall pay to the Secretary the non-refundable sum of $350 as an application fee and the additional sum of $1,000 as an annual license fee. The applicant shall also, as required by Section 20 of the Act, submit to the Secretary a surety bond in the sum of $100,000.

b) An application for a license must be in writing, under oath, and in the form the Secretary prescribes.

1. The application shall contain the following:

A) The name of the applicant and the address of the proposed place of business;

B) The form of business organization of the applicant, including:

i) a copy of its filed articles of incorporation;

ii) a copy of the filed articles of organization, if the applicant is a limited liability company;

iii) a certified statement of the ownership of the partnership and any subsequent changes to the ownership, if the applicant is a partnership;

C) The name, business and home address, credit report (except for a publicly traded company) and a chronological summary of the business experience, material litigation history, and felony convictions over the preceding 10 years of:

i) the proprietor, if the applicant is an individual;

ii) every general partner, if the applicant is a partnership;

iii) president, secretary, executive and senior vice presidents, directors and individuals owning more than 25% of the corporate stock, if the applicant is a corporation; and

iv) the manager and members, if the applicant is a limited liability company.

2. Unless requested to do so by the Secretary, a licensee shall not submit the information required in subsections (b)(1)(B) and (C) if the licensee has submitted the information to the Division in a previous license application within the last 5 years and there have been no material changes.

3. The most current year end financial statements, prepared in accordance with generally accepted accounting principles, and a balance sheet and statement of operations as of the most recent quarterly report before the date of the application.

4. A list of all states in which the applicant is licensed as a debt settlement provider and whether the license of the applicant has ever been withdrawn, refused, cancelled or suspended in any other state, with full details.

c) The Secretary may not issue a license unless and until he or she makes the findings set forth in Section 25 of the Act. These findings include that the financial responsibility, experience, character and general fitness of the applicant are such as to command the confidence of the community and to warrant the belief that the business will be operated fairly, honestly and efficiently, and within the provisions and purposes of the Act. For purposes of this subsection, community means members of the public. Evidence of fairness, honesty and efficiency includes, but is not limited to, evidence that the applicant will conduct business in accordance with the Act, this Part and all federal and state statutes applicable to its business; that the applicant has no prior felony convictions within the past 10 years; that the applicant has no convictions of any crimes or findings of liability in civil actions involving dishonesty or deceit within the past 10 years; and that the applicant has no previous violations of any provision of the Act or any false statements or representations to the Secretary in applying for a license under this Section. Unless the Secretary makes these findings, he or she shall not issue a license, shall notify the applicant of the denial and shall return to the applicant the sum paid by the applicant as a license fee, but shall retain the $350 application fee. The Secretary shall approve or deny every application for license within 60 days from the filing of the application with the required fee.

d) Debt settlement providers have until June 14, 2011 in which to submit to the Division an application for a debt settlement provider license.

e) Debt settlement providers must be in good standing and in statutory compliance in the state of incorporation or, when the applicant is an entity other than a corporation, must be properly registered under the laws of this State or another state and, if required, the corporation or entity must be authorized to do business in the State of Illinois.

f) A debt settlement provider that is a corporation must notify the Secretary within 15 days after a person becomes a controlling person. Upon notification, the Secretary may require all information he or she considers necessary to determine if a new application is required. A debt settlement provider that is an entity other than a corporation shall submit a new application to the Secretary seeking prior approval whenever a person proposes to become a controlling person or acquire an ownership interest. Controlling person means a person owning or holding the power to vote 25% or more of the outstanding voting securities of a debt settlement provider or the power to vote the securities of another controlling person of the debt settlement provider. For purposes of determining the percentage of a debt settlement provider controlled by a controlling person, the person's interest shall be combined with the interest of any other person controlled, directly or indirectly, by that person or by a spouse, parent, or child of that person.

38 Ill. Adm. Code 145.45 Renewal

Each licensed debt settlement provider may make application to the Secretary for annual renewal of its license on the form prescribed by the Secretary, accompanied by the annual license fee of $1,000, together with a surety bond in the amount of $100,000 or an additional amount as required by the Secretary, considering the amount of disbursements made by the licensee in the previous year. The application must be received by the Department no later than December 1 of the year preceding the year for which the application is made.

38 Ill. Adm. Code 145.50 License

a) For purposes of determining an applicant's qualifications for a license as a debt settlement provider, the Division shall find an applicant financially responsible if it has a positive net worth of at least $30,000. Net worth means total assets minus total liabilities.

b) An applicant shall possess at least 6 months of relevant experience as a debt settlement provider attained prior to August 3, 2010, under a prior debt settlement provider license, as an employee of a licensee, or in another state, or other relevant business experience relating to the field of debt settlement, including but not limited to debt management and credit counseling.

c) Application Reputation

1. In order to determine the applicant's general fitness and character, the Secretary may require applicants to submit letters of recommendation from at least 2 persons familiar with the applicant or the applicant's business and setting forth that the applicant mentioned: is personally known to them to be trustworthy and reputable; has business experience qualifying the applicant to competently conduct, operate, own or become associated with a debt settlement provider; and has a good business reputation and is worthy of a license.

2. Evidence of a lack of trustworthiness, competency and good business reputation includes, but is not limited to, the applicant's record of having defaulted in the payment of money collected for others, discharge of debt through bankruptcy proceedings, any felony conviction or conviction of any crime involving dishonesty or deceit within the past 10 years, previous violations of any provision of the Act or any false statements or representations to the Secretary in applying for a license under this Section.

d) Any applicant applying as a debt settlement provider shall submit the required bond, the application for license and all required information at the time of application for a license.

38 Ill. Adm. Code 145.60 Examination

a) The Division will conduct an examination of a licensee's or license applicant's records and business practices when necessary to make a licensure determination or in investigation of a complaint. The Division will also conduct examinations as it deems necessary to determine compliance with the Act and this Part.

b) The Division shall charge $400 for each examiner day or part thereof and actual travel costs for any examination of records conducted pursuant to the Act.

c) The Division may conduct an examination for the purpose of verifying that the debt settlement provider has taken necessary actions to correct violations of the Act and/or this Part and shall charge the licensee $550 for each examiner day or portion of a day when the Secretary determines the verification examination must be performed on site at any facility of the debt settlement provider.

38 Ill. Adm. Code 145.70 Prohibited Activities

a) A debt settlement provider shall not take:

1. Any contract, promise to pay, or other instrument that has any blank spaces when signed by a debtor;

2. Any negotiable instrument for the debt settlement provider's charges;

3. Any note, wage assignment, real estate or chattel mortgage, or other security to secure the licensee's charges;

4. Any confession of judgment or power of attorney to confess judgment against the debtor or to appear for the debtor in a judicial proceeding;

5. Any real or personal property as security for payment of a fee;

6. Concurrent with the signing of the contract or as part of the application for the contract, a release of any obligation to be performed on the part of the debt settlement provider.

b) A debt settlement provider shall not take an appointment as attorney in fact or power of attorney.

c) A debt settlement provider shall not take any legal instrument from the debtor other than the service contract and authorized rider.

d) A debt settlement provider shall not accept a fee from any person or other entity in exchange for referring potential customers.

e) No fees shall be paid to an attorney, lending institution, or any other source for the referral of customers.

f) A debt settlement provider shall not solicit or require a debtor to purchase, or agree to purchase, any policy of insurance.

g) A debt settlement provider shall not lend money or extend credit or include in the contract any debts not established prior to the execution of the contract.

h) No advance of the debt settlement provider's funds on the debtor's behalf shall be made by a debt settlement provider to any creditor or to the debtor.

i) A debt settlement provider shall not charge any fees for providing account statements or proofs of payment.

38 Ill. Adm. Code 145.80 Revocation – Suspension – Surrender of License

a) If it is determined that the Secretary had the authority to issue the suspension or revocation of a license pursuant to Section 50 of the Act, the Secretary may issue orders as may be reasonably necessary to correct, eliminate or remedy the situation.

b) A debt settlement provider may surrender any license by delivering to the Secretary written notice that it surrenders the license, but the surrender shall not affect the debt settlement provider's civil or criminal liability for acts committed prior to the surrender, or affect the liability on its bond or bonds, or entitle the debt settlement provider to a return of any part of the annual license fee.

c) An applicant or licensee affected by a licensure action of the Secretary may request a hearing within 10 days after the date of service of the action or order. If an alternative time frame is set forth in the Act or applicable law, the applicant or licensee may request a hearing pursuant to that time frame. All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100. Final administrative decisions of the Secretary are subject to review under the Administrative Review Law [735 ILCS 5/Art. III].

History

• Source: Amended at 46 Ill. Reg. 12522, effective July 8, 2022

38 Ill. Adm. Code 145.90 Annual Report

a) A debt settlement provider must file an annual report with the Secretary pursuant to Section 33 of the Act on or before March 1 for the previous calendar year. The annual report must contain a declaration executed by an official authorized by the debt settlement provider under penalty of perjury that states that the report complies with Section 33 of the Act. The report shall be in a form prescribed by the Secretary. The Secretary will maintain the annual report form on the Division's website for a period of 2 years after submittal.

b) The annual report form must include all of the following data:

1. for each Illinois resident:

A) the number of accounts enrolled;

B) the principal amount of debt at the time each account was enrolled;

C) the status of each account (for example, active or terminated);

D) whether the account has been settled and, if so, the settlement amount and the corresponding principal amount of debt enrolled for that account;

E) the total amount of provider fees paid;

F) whether the creditor has filed suit on the account debt;

G) the date the resident is expected to complete the debt settlement program; and

H) the date the resident cancelled, terminated or became inactive in the program, if applicable;

2. for persons completing the program during the reporting period, the median and mean percentage of savings and the median and mean provider fees paid;

3. for persons who cancelled, became inactive, or terminated the program during the reporting period, the median and mean percentage of the savings and the median and mean provider fees;

4. the percentage of Illinois residents who cancelled, terminated, became inactive, or completed the program without the settlement of all of the enrolled debt; and

5. the total amount of fees collected from Illinois residents.

38 Ill. Adm. Code 145.100 Proof of Payment

Upon completion of the contract, the debt settlement provider shall mail a statement to the debtor stating that the account has been closed and listing the name and address of each creditor paid in full and names and addresses of any creditors remaining unpaid.

38 Ill. Adm. Code 145.105 Trust Funds

a) All funds received by a debt settlement provider or its agent from a debtor, for the purpose of paying bills, invoices or accounts of that debtor, shall constitute trust funds owned by and belonging to the debtor from whom they were received. All such funds received by the provider shall be separated from the funds of the provider not later than the end of the business day following receipt by the provider. All trust funds shall be kept separate and apart at all times from funds belonging to the provider or any of its officers, employees or agents and may be used for no purpose other than paying bills, invoices or accounts of the debtor and for provider fees. All debtor payments received at the main or branch offices of a provider shall be deposited, on or before the close of the business day following receipt, in a federally insured bank in trust for the benefit of the payor.

b) Funds segregated for the debtor are not subject to attachment, lien, levy of execution or sequestration by order of court as assets of the debt settlement provider.

c) A debt settlement provider shall maintain records of the amounts of all deposits into and payments out of the trust account for each consumer it services. The records shall be maintained for 5 years after the date of transaction.

d) At least once every month, the debt settlement provider shall render an accounting to the debtor that itemizes the total amount received from the debtor, the total amount paid each creditor, the amount of provider fees deducted, and any amount held in reserve, if applicable, and the status of each of the debtor's enrolled accounts. A debt settlement provider shall, in addition, provide an accounting to a debtor within 7 days after written demand, but not more than 3 times per 6 month period.

e) Nothing in the Act requires the establishment of a trust account if no consumer funds are held or controlled by the provider that are to be distributed to creditors, i.e., if the only funds received are in payment of provider fees.

38 Ill. Adm. Code 145.110 Advertising and Marketing Practices

a) Upon request of the Division, a debt settlement provider shall forward to the supervisor of the Consumer Credit Section the complete text of all advertising copy, whether printed or broadcast, for which questions have been raised concerning compliance with the Act.

b) A debt settlement provider may indicate in advertising and otherwise that its business is "regulated" or "examined" or "supervised" or "licensed" by the State of Illinois. A debt settlement provider may not advertise in a false, misleading or deceptive manner.

c) Should any advertisement by a debt settlement provider state the amount of any fees or charges, the advertisement shall comply with the provisions of the Act and this Part.

d) A debt settlement provider shall not advertise that business is conducted anywhere other than at the debt settlement providers' principal business location or other location approved by the Secretary.

e) A debt settlement provider must include in any advertisement a prominent statement that legal advice cannot be provided and that it is recommended that consumers consult with an attorney.

38 Ill. Adm. Code 145.120 Receipts

a) The receipt that a debt settlement provider issues shall include the following:

1. The name and address or other identifying information of the individual who submits the payment to the provider;

2. The amount of money received and the form of payment (cash, check number, money order, etc.);

3. The date the money was received by the provider;

4. The representative of the provider who accepted the payment; and

5. A transaction or confirmation number that can be matched with the office record of the provider.

b) A debt settlement provider shall not charge a fee for issuing any receipt.

38 Ill. Adm. Code 145.125 Hearing Procedures

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 12522, effective July 8, 2022

38 Ill. Adm. Code 145.130 Name Change

Whenever the licensee desires to amend the name of the licensed business, the licensee shall submit to the Division, within 15 days after amending the name, the following:

a) $300 amended name change fee.

b) Amended Articles of Incorporation, if the licensee is a corporation.

c) Amended organization papers, if the licensee is an entity other than a corporation.

Part 150 Collection Agency Act

38 Ill. Adm. Code 150.10 Definitions

The following definitions shall apply to this Part:

"Act" means the Collection Agency Act [205 ILCS 740].

"Agency" means a collection agency as defined in Section 2 of the Act.

"Board" means the Collection Agency Licensing and Disciplinary Board. (Section 2 of the Act)

"Branch Office" means another location with the same name and ownership as the main collection agency license.

"Creditor" means individual, sole proprietorship, partnership, limited liability company, or corporation that engages or retains the agency to collect debts due the individual, sole proprietorship, partnership, limited liability company, or corporation.

"Department" means the Department of Financial and Professional Regulation.

"Director" means Director of the Division of Financial Institutions and any authorized representative of the Director.

"Division" means the Department of Financial and Professional Regulation – Division of Financial Institutions.

"License" means any authorization issued to any licensee.

"Licensee" means any person or entity who is or comes to be licensed pursuant to the Act.

"Managerial or Administrative Control" means having authority to conduct the affairs of the agency and direct others in the conduct of the affairs or business of the agency.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation and any authorized representative of the Secretary. (Section 2 of the Act)

"Trust Account" means the special account that all licensees shall maintain in accordance with Section 8c of the Act.

38 Ill. Adm. Code 150.15 Administration and Enforcement of the Act

The Director and Division shall administer and enforce the Act on behalf of the Secretary. The provisions of the Financial Institutions Code [20 ILCS 1205] shall apply to licensees, applicants, and any person or entity engaged in an activity covered by the Act.

38 Ill. Adm. Code 150.20 Officer

a) If the collection agency is an association or a sole proprietorship, the owner of the agency or any person exercising managerial control shall be considered an officer.

b) If the collection agency is a partnership, any partner who has at least 10% ownership interest or any partner who exercises managerial control shall be considered an officer.

c) If the collection agency is a corporation, any officer of the corporation or director or any person who has at least 10% direct or indirect ownership interest in such corporation or who exercises managerial control shall be considered an officer.

d) If the collection agency is a limited liability company, any manager of the limited liability company or any person who has at least 10% direct or indirect ownership interest in such limited liability company shall be considered an officer.

38 Ill. Adm. Code 150.25 Application for License

a) All applications for license as a collection agency shall be submitted to the Division, on forms provided by the Division electronically or physically, and include:

1. Collection Agency Application

A) The name and address of all officers of the collection agency (as defined in Section 150.20). The address shall be an actual street address and shall include the city, state, and zip code. A post office box number is not acceptable as an address;

B) A copy of the Articles of Incorporation bearing the seal of the office, in the jurisdiction in which the corporation is organized, whose duty it is to register corporations under the laws of that jurisdiction. If it is a foreign corporation, a copy of the certificate of authority to transact business in this State issued by the Secretary of State is also required;

C) A copy of the authority to transact business under the Assumed Business Name Act [805 ILCS 405], issued by the Secretary of State or county clerk's office, if required by law;

D) Proof of a $25,000 surety bond;

E) The name of the bank, savings and loan association or other required depository in which the trust account shall be maintained;

F) The required fee set forth in Section 150.130; and

G) Any additional information required by the Director to evaluate the application.

2. Branch Office Application

A) The name and license number of the main collection agency office;

B) Name of the manager at that branch office;

C) The required fee set forth in Section 150.130; and

D) Any additional information required by the Director to evaluate the application.

b) If a collection agency intends to conduct business as a collection agency as defined in the Act at more than one office, the applicant shall also file an application for a branch office as referenced in subsection (a)(2).

c) A licensed collection agency shall notify the Division in the form required by the Division of a change in location of an existing office within 10 days after the change.

38 Ill. Adm. Code 150.30 Communication by Collection Agency

a) A collection agency shall use only the agency name or tradestyle exactly as it appears on the agency's license issued by the Division in all communication (e.g., ABC Collection Agency cannot use a name such as ABC Acceptance Company). Notwithstanding the foregoing, a different name may be used for skiptracing and envelopes if use of the agency name or tradestyle as it appears on the agency's license would violate other law (see 15 U.S.C. 1692b.(5)).

b) When a collection agency communicates with a debtor, the collection agency must state in a written or telephone communication the specific reason for the communication, the name of the current creditor, the name of the original creditor (if applicable), the registered name of the collection agency, the date of written communication, and, in oral communication, the identity of the individual making the contact.

38 Ill. Adm. Code 150.40 Use of Pseudonyms

The collection agency shall maintain a listing of all pseudonyms used by an office, employee, or agent of the collection agency in relation to collection agency activities. A listing of pseudonyms shall be maintained by the collection agency one year after termination of employment.

38 Ill. Adm. Code 150.50 Change of Ownership

When more than 50% of the assets, stock or equity of a collection agency are transferred, a new collection agency application shall be filed with the Division in accordance with Section 150.25.

38 Ill. Adm. Code 150.60 Expiration or Change in Licensure

a) The license shall expire:

1. When the collection agency ceases operation;

2. When the bond is nonrenewed or cancelled;

3. When the license is nonrenewed or surrendered; or

4. When the license is revoked.

b) The collection agency shall notify the Division in writing by certified mail or email within 10 days after the collection agency ceases to operate or ceases to operate under the name on the license. Notice of bond termination is set forth in Section 8 of the Act.

c) In the event of a change of the collection agency name, the licensee shall notify the Division, submit proof of the name change, and pay the fee required in Section 150.135.

d) All notices required by this Section shall be sent to the address designated by the Director on the notice. Any change of Department address shall be emailed to all licensees and posted on the Department's website.

38 Ill. Adm. Code 150.70 Records and Documents to Be Kept by Collection Agency

a) The current license shall be prominently displayed at each office where the collection agency conducts business.

b) At each office of a licensed collection agency, for each individual debtor's account, the collection agency shall keep the following:

1. Account records for each account in excess of $100 being processed.

A) These records shall contain:

i) Name, address, email address, and phone number, if available, of debtor and all individuals contacted at any time concerning the collection account, including debtor, debtor's employer and relatives;

ii) Dates and record of contents of all communications sent regarding debtor's account;

iii) Dates and accurate summary of each telephone contact with all individuals regarding debtor's account, including identification of individual who made the contact and to whom that individual spoke;

iv) Name of the original creditor, current creditor, date account was opened with the collection agency, the original amount of the account referred to the collection agency, and the current outstanding amount of the account. The address of the current creditor shall be maintained in the collection agency's records;

v) Docket information pertaining to all court suits concerning account;

vi) The date and amount of each payment received on each account; and

vii) Any additional charges assessed on the account, which are fees authorized by contract or by court of law. These charges shall be documented by court records or other records available for inspection by the Division.

B) This subsection does not apply to the report status of the accounts.

2. Correspondence files for each collection account, which shall contain:

A) Copies of all correspondence between the collection agency and creditor concerning accounts;

B) Copies of all correspondence between the collection agency and debtor, debtor's employer, debtor's family and debtor's attorney;

C) Instructions from debtor on disbursement of funds among multiple accounts; and

D) Copies of all correspondence concerning account between collection agency and collection agency's attorney.

c) When an account is closed by the collection agency, the account record shall be clearly and boldly marked that the account is closed, and all records shall be kept for a period of 36 months after the collection agency's last activity on the debt.

d) A collection agency may utilize an electronic data processing system that includes the information set forth in this Section in a format reviewable by the Department.

38 Ill. Adm. Code 150.80 Recording of Payments

All payments of any amount on any account processed by a collection agency shall be promptly entered on the debtor's account record.

38 Ill. Adm. Code 150.90 Multiple Creditors

a) When a debtor has multiple creditors, the collection agency shall maintain a separate account record for each creditor.

b) Checks, money orders, or drafts received by a collection agency from a debtor or on behalf of a debtor made payable to a specified creditor shall be applied to the specified creditor's account record.

c) When a collection agency is collecting two or more accounts from one debtor, the collection agency shall apply any payments received from the debtor according to the debtor's directions.

d) When the debtor overpays the total amount outstanding to a specific creditor, money due to the debtor for an overpayment to the specific creditor may not be applied by the collection agency against any other obligation owed by the debtor and must be refunded to the debtor unless the debtor has authorized the collection agency, in writing or by lawfully recorded verbal statement, to apply the money to another obligation owed by the debtor.

38 Ill. Adm. Code 150.100 Availability of Books, Records, Forms and Stationery

All books, records, forms, and stationery, whether kept physically or electronically, kept or used by a collection agency at each office of the collection agency shall be made available to agents of the Division upon request. Failure or refusal to make these records available by the collection agency shall be grounds for denial, suspension, fine, or revocation of the collection agency's license under Section 9 of the Act in accordance with 38 Ill. Adm. Code 100.

38 Ill. Adm. Code 150.110 Accounting and Remitting Collected Funds

a) Accounting and Remitting to Creditors

1. Unless otherwise authorized in writing by a creditor, a collection agency shall, within 60 days after any payment is received on any account, render an itemized statement of account to the creditor and remit all money then due to the creditor. After court costs, if any, are recovered on any claim or group of claims by a creditor against a debtor, payments shall be applied first to the reduction of principal, unless another priority has been authorized by the creditor.

2. If any creditor fails to advise the collection agency, in writing or orally, of all payments or credits paid directly to the creditor on any claim or account, within 30 days after receipt thereof, the collection agency may make written demand for a statement of the payments or credits, by certified mail with return receipt requested. The collection agency shall not be obliged to make any further remittance to the creditor until the creditor has rendered the statement. The failure or refusal of a creditor to render a statement of payments or credits shall not relieve the collection agency of the obligation to render and itemized statement of account.

b) Account and Remitting to Debtors. Within 45 days after an overpayment of one dollar or more on any claim is received from a debtor or it is determined that a refund of one dollar or more is due to a debtor on any claim that has been paid, the collection agency shall remit to the debtor any money due the debtor.

38 Ill. Adm. Code 150.120 Creditor Accounts

a) Each licensed collection agency office which collects funds for creditors shall maintain a current accounting system which shall show the monies due and owing to creditors as well as the funds in the trust account from which appropriate remittance may be made by the collection agency to creditors.

b) Accounts and records of each agency shall include:

1. A cash receipts journal, showing each payment made, the allocation of the payment and the monthly total.

2. A check register or record showing each check written on the trust account, as defined in Section 8c of the Act.

3. A general journal reflecting all adjustments to the check register and cash receipts records.

4. A general ledger or record to which all payments handled by a collection agency are recorded.

5. A creditor's record setting forth the details of the contractual arrangement in writing, of the collection agency with each creditor, and shall reflect full details of all collections made on behalf of the creditor, whether paid to the collection agency or directly to creditor, and full details on remittance made by the collection agency to the creditor.

c) The trust account shall be reconciled each month.

d) All accounts and records of each account referred to in this Section shall be kept for a period of four years after the account is closed.

e) A collection agency may employ an accounting system based on sound accounting principles which utilizes electronic data processing equipment and that includes the information set forth in Section 150.110(b).

38 Ill. Adm. Code 150.130 Renewals

a) Any license issued on or before October 31, 2024 shall expire on December 31, 2024. Thereafter, all licenses shall expire annually on December 31, except that any license issued on or after November 1 shall expire on December 31 of the next calendar year. A licensee may renew its license by submitting a license renewal application for the next calendar year and paying the required fee between November 1 and December 31 of the current year. A license shall be deemed not to have expired if its license renewal application is received by the Department before December 31. Licensees shall maintain sufficient proof to demonstrate receipt of the renewal application by the Department.

b) It is the responsibility of each licensee to notify the Division of any change of address. Failure to receive a renewal form from the Division shall not constitute an excuse for failure to pay the renewal fee or to renew one's license.

c) Practicing or offering to practice on a license that has expired shall be considered unlicensed activity and shall be grounds for discipline pursuant to Section 9 of the Act.

38 Ill. Adm. Code 150.135 Fees

a) The following fees are not refundable and shall be paid to the Department by a collection agency or collection agency applicant:

1. Application Fees

A) The fee for application for an original or new license as a collection agency shall be:

i) $1,200 in calendar year 2025;

ii) $1,350 in calendar year 2026; and

iii) $1,500 in calendar year 2027 and thereafter.

B) The fee for application for an original or new license to operate a branch office shall be:

i) $250 in calendar year 2025;

ii) $350 in calendar year 2026; and

iii) $500 in calendar year 2027 and thereafter.

2. Annual Renewal Fees

A) The fee for the annual renewal of a license as a collection agency shall be:

i) $500 in calendar year 2025;

ii) $750 in calendar year 2026; and

iii) $1,000 in calendar year 2027 and thereafter.

B) The fee for the annual renewal of a license for a branch office shall be:

i) $100 in calendar year 2025;

ii) $150 in calendar year 2026; and

iii) $250 in calendar year 2027 and thereafter.

3. General Fees

A) The fee for the restoration of a license is $500 plus payment of all unpaid renewal fees that were payable in the period between expiration of the license and restoration of the license.

B) The fee for a certification of a licensee's record is $50.

C) The fee for a roster of licensees shall be the actual cost of producing the roster.

b) All fees collected under the Act and this Part shall be deposited into the Financial Institution Fund. All monies in the fund shall be used by the Department, as appropriated, for the ordinary and contingent expenses of the Department. (See Section 8a of the Act.)

c) Any person who delivers a check or other payment to the Department that is returned to the Department unpaid by the financial institution upon which it is drawn shall pay to the Department, in addition to the amount already owed to Department, a fee of $50. [205 ILCS 740/35].

d) The fees imposed by this Section are in addition to any other discipline provided under the Act. The Department shall notify the person that fees shall be paid to the Department by certified check, money order, electronic payment which may include a processing fee, or any other method acceptable to the Department within 30 calendar days after that notification.

e) If, after expiration of 30 days after the date of notification, the person has failed to submit the necessary remittance, the Department shall automatically terminate the license or deny the application, without hearing. [205 ILCS 740/35].

f) Terminated or expired licenses may be restored or issued after the applicant pays all fees due to the Department.

g) The Director, in their sole discretion, may partially or fully waive the fees due under this Section in individual cases when the Director finds the fees would be unnecessarily burdensome and would not impair Department operations. (See 205 ILCS 740/35)

History

• Source: Amended at 49 Ill. Reg. 14388, effective October 21, 2025

Chapter I Department of Financial and Professional Regulation

Part 150 Collection Agency Act

38 Ill. Adm. Code 150.140 Granting Variances

a) The Director may grant variances from this Part in individual cases when the Director finds that:

1. The provision from which the variance is granted is not statutorily mandated;

2. No party will be injured by granting the variance; and

3. The rule from which the variance is granted would, in the particular case, be unreasonable or unnecessarily burdensome.

b) The Director shall notify the Board in writing of the granting of a variance, and the reasons for granting the variance, at the next meeting of the Board.

38 Ill. Adm. Code 150.150 Reports

When determined necessary by the Department, the Department may provide a licensee a 45-day notice, except in extraordinary circumstances determined by the Director which requires a response within a shorter time period, requiring a licensee to submit written reports specified within that notice.

38 Ill. Adm. Code 150.160 Investigations and Examinations

Licensees may be investigated or examined from time to time to ensure compliance with the Act. (See Section 16 of the Act.)

Part 160 Sales Finance Agency Act

38 Ill. Adm. Code 160.1 Definitions

"Act" means the Sales Finance Agency Act [205 ILCS 660].

"Controlling person" means a person, entity, or ultimate equitable owner that:

owns or controls, directly or indirectly, 10% or more of any class of stock of the license applicant;

is not a depository institution, as defined in Section 1007.50 of the Savings Bank Act [205 ILCS 205] that lends, provides, or infuses, directly or indirectly, in any way, funds to or into a license applicant, in an amount equal to or more than 10% of the license applicant's net worth;

controls, directly or indirectly, the election of 25% or more members of the board of directors of a license applicant; or

the Director finds influences management of the license applicant.

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director or Acting Director of the Department of Financial and Professional Regulation-Division of Financial Institutions with the authority delegated by the Secretary or the Director's designee.

"Division" means the Department of Financial and Professional Regulation-Division of Financial Institutions.

"Generally accepted accounting principles" or "GAAP" means those published by the Federal Accounting Standards Advisory Board (401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116).

"Licensee" means a person, partnership, association, limited liability company, corporation or other legal entity licensed under the Act. Any person or entity who holds himself, herself, or itself out as a licensee or who is accused of unlicensed practice is considered a licensee for purposes of enforcement, investigation, and hearings.

"Net worth" means total assets minus total liabilities. (Section 2 of the Act)

"Person" means an individual, corporation, partnership, limited liability company, joint venture, or any other form of business association. (Section 2 of the Act)

"Secretary" means the Secretary or Acting Secretary of Financial and Professional Regulation or the Secretary's designee.

History

• Source: Amended at 49 Ill. Reg. 3936, effective March 21, 2025

38 Ill. Adm. Code 160.2 Service by the Department

All notices by the Department required under the Act or this Part shall be deemed to be served when a copy is deposited in the United States mail.

History

• Source: Added at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.5 Definitions (repealed)

History

• Source: Repealed at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.10 Record Keeping

a) Every licensee shall keep the following records or their equivalent:

1. Transaction register.

2. Individual accounts cards of all obligors.

3. File of all original papers or copies which have been reproduced in any medium or format which accurately reproduces the original papers.

4. Cash Book.

5. Alphabetical record of all buyers, co-purchasers, and obligors on all obligations.

6. Permanent file.

b) Records pertaining to the conduct of business regulated by the Sales Finance Agency Act shall be kept at the licensed office, separate or readily identifiable from other types of business conducted in the office of the licensee.

c) Electronic data processing, combination forms and special office systems may be used to keep records if in accordance with standard accounting procedures and if they contain the information enumerated in subsection (a).

d) The licensee shall keep in the licensed office a record of all transactions purchased from or sold to another affiliated or non-affiliated licensee until examined and released by the examiner.

e) All books, records, files, and account cards required by applicable State and federal law and regulations shall at all times be kept current.

f) The Director may order a licensee to keep and maintain additional records as necessary to determine whether the licensee is complying with the Act or administrative rules promulgated pursuant to the Act.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.15 Application for License/Controlling Person

a) An application for a sales finance agency license must be under oath and in the form the Director prescribes. The application shall contain the following:

1. The name of the applicant, including any other names the applicant does or intends to do business as, and the address of the proposed place of business.

2. The form of business organization of the applicant, including:

A) a copy of its filed articles of incorporation;

B) a copy of the filed articles of organization, if the applicant is a limited liability company; and

C) a certified statement of the ownership of the partnership, if the applicant is a partnership. Any changes to the statement of ownership occurring after the application has been submitted shall be forwarded to the Director.

3. Information on Involved Individuals

A) The name, business and home address, credit report (except for a publicly traded company), and a chronological summary of the business experience, material litigation history, and felony convictions over the preceding 10 years of:

i) the proprietor, if the applicant is an individual;

ii) every general partner, if the applicant is a partnership;

iii) President, Secretary, Executive and Senior Vice Presidents, and Directors;

iv) the manager, if the applicant is a manager-managed limited liability company or the member if the applicant is a member-managed limited liability company; and

v) any controlling person.

B) A licensee shall not submit the information required in subsections (a)(2) and (3), if the licensee has previously submitted the information to the Department in a previous license application within the last 5 years and there have been no material changes, unless requested by the Director to submit this information.

4. The most current year end financial statements, prepared in accordance with generally accepted accounting principles and a balance sheet and statement of operations as of the most recent quarterly report before the date of the application.

5. A list of all states in which the applicant is licensed as a lender or sales finance agency and whether a license of the applicant has ever been withdrawn, refused, cancelled or suspended in any other state, with full details.

6. A business plan, which shall at minimum detail the nature, amount, and terms of the retail installment contracts, retail charge agreements or motor vehicle retail installment contracts that will be purchased, or loans secured by retail installment contracts, loans secured by motor vehicles retail installment contracts, or loans secured by retail charge agreements that will be made.

7. The applicable fees as required by the Act.

8. Any additional information the Director considers necessary to evaluate the application.

b) A licensee shall seek prior approval from the Division whenever a person proposes to become a controlling person of the licensee. The request for approval of added controlling persons shall be accompanied by an amendment fee of $1,000.

c) A licensee shall provide all information the Director requests to evaluate the license, in the form requested, at the time of renewal of license under Section 6 of the Act.

History

• Source: Added at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.20 Transaction Register

a) The Transaction Register shall contain the original entry and be a permanent record. It shall show for every transaction the account number, date of transaction, nature of security, type and cost of insurance and amount of fees.

b) It shall show the amount financed, finance charge, annual percentage rate, itemization of all other charges not specified in subsection (a), schedule of payments, and total of payments which will include all charges.

c) The Register shall be kept numerically by number of transactions in the order made and shall have proper headings for the items required.

d) The Transaction Register shall be maintained in a form accessible to the Department and a licensee may maintain these files in any medium or format which accurately reproduces original documents or papers.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.30 Individual Account Cards

An individual account card shall be kept for each transaction or appropriate combination of records with respect to each finance agreement, which the licensee acquires pursuant to Section 2(a) of the Sales Finance Agency Act.

a) Such account card or records shall show the name and address of buyer, names of co-purchasers or obligors, transaction number, date of transaction, nature of security, type and cost of insurance, official fees charged and paid, amount and date of each installment due and paid; the schedule of installments as set forth in the instrument purchased, total finance charge where applicable, and the name of holder if the instrument is hypothecated. The record shall also show the amount of official fees received and paid out for filing, recording or releasing a financing statement or security agreement, including the fee required by the Secretary of State for perfecting a lien on a motor vehicle title.

1. The record for an interest-bearing contract shall show the original principal amount of the contract, rates of interest, and finance charge where applicable.

2. The record for a precomputed contract shall show the original principal amount of the contract, excluding the precomputed interest and charges, the amount of the finance charge and the face amount of the contract including the finance charge.

b) The record for an interest-bearing contract shall show the amount and date of each payment of principal and interest, the balance due on principal, and the date to which interest is paid. If the amount paid is insufficient to meet the entire amount of interest due, the record shall be clearly marked to indicate the extent of credit given for such interest payment and the date to which interest is paid. Upon the Division’s or obligor’s request involving a specific account or accounts, the licensee shall provide the amount of accrued but unpaid interest.

c) The account record for a precomputed contract shall show the amount and date of each payment applied to the contract, the unpaid balance of the contract after applying such payment, and the date and amount of any additional interest collected for delinquency, default or deferment. If deferment interest is collected in whole or in part, the record shall indicate the deferred due date of the final installment and any uncollected portion of the deferment interest. The account record shall also show the original principal of the contract excluding the charge, the amount of the charge, the face amount of the note including the charge, and any additional charge made for extra days in the first installment process.

d) The card shall also show the date of purchase by licensee, the name of the seller, the amount financed, the amount and description of all charges to debtor not specified above and total of payments including all charges.

e) When a transaction is prepaid in full, the account card shall show the date of prepayment, the amount paid to discharge the debt, the amount of the rebate for each insurance and finance charge, if any, and any deduction from the rebate for previously earned but uncollected delinquency charges and insurance.

f) The card shall contain the date and amount of all late charges and extension charges collected indicating the period for which said charges are applicable.

g) If payment is made in any other way than in the ordinary course of business, it shall be so designated. (For example, payment by a third party, insurance claim or sale of collateral.)

h) If receivables are sold, the individual account cards or copies thereof for such receivables shall show the name of the purchaser and the date of such sale.

i) No erasures whatsoever may be made in the payment or charge section of any account card. In case of error, a line shall be drawn in ink through the improper entry and the correct entry made on the following line. The entries on the card shall correspond with the receipts given the borrower.

j) Every licensee shall preserve the account card for at least two years after final entry. Records shall be maintained in a form accessible to the Department. A licensee may maintain these files in any medium or format which accurately reproduces original documents or papers.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.40 File of Original Papers

a) A separate file shall be maintained for each obligor. Each such file shall contain the contract, security agreement or financing statement, wage assignment, evidence of compliance with the requirements of the federal Consumer Credit Protection Act (15 U.S.C. 41) and all other instruments which are evidence of indebtedness or security pertaining to the transaction, except when the documents are in the custody of a court or of an agent for collection or are hypothecated or sold as provided in this Part. Other papers relating to the obligor, or the obligor's debt may be kept in the same or a separate file in the same office. A licensee may maintain these files in any medium or format that accurately reproduces original documents or papers.

b) All legal instruments evidencing indebtedness in connection with a transaction and executed by an obligor, including a copy of the Disclosure Statement, if a separate instrument, must bear the transaction number.

c) Except for the account number, no licensees shall take the assignment or purchase any instruments in which the blanks are not filled in completely.

d) All spaces or sections not used in the preparation of legal documents shall be ruled out or designated as “non” or “n/a”.

e) Any amendments to the retail installment contract shall be signed by the obligor and creditor or assignee.

f) The name and address of the original seller must be incorporated into or appear on all legal instruments taken from an obligor and acquired by a licensee.

g) Every licensee shall preserve the records of all retail installment contracts , retail charge agreements, and/or loans secured by retail installment contracts for at least two years after making the final entry for such contract, agreement, or loan. Records shall be maintained in a form accessible to the Department.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.50 Cash Book

a) All receipts and disbursements of any amount whatsoever shall be entered on the day they occur in the cash book or equivalent record. Separate headings shall be provided for installments, charges, and for official fees collected and disbursed, and for amounts received and disbursed for any type of insurance coverage.

b) The cash book shall be a permanent record of all details of income and disbursements including all entries to individual accounts of obligors. A licensee may maintain these files in any medium or format which accurately reproduces original documents or papers.

c) For precomputed contracts, payments applied to a transaction may be shown as a total sum and need not be itemized between amount financed and finance charges, but additional charges collected for delinquency shall be itemized or otherwise separately indicated.

d) For interest-bearing contracts, payments applied to a transaction must be itemized between principal, interest, other charges and additional charges collected for delinquency.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.55 Permanent File

Each licensee shall maintain a permanent file which includes the following:

a) A copy of all correspondence sent to or received from the Department within the past 24 months.

b) A copy of the last two examination exception reports and any related correspondence.

c) A copy of the Sales Finance Agency Act, a copy of this Part, the Motor Vehicle Retail Installment Sales Act and the Retail Installment Sales Act.

d) A list of Business Source and Affiliates as prescribed in Section 160.200 of this Part.

History

• Source: Added at 22 Ill. Reg. 13699, effective July 6, 1998

38 Ill. Adm. Code 160.60 Alphabetical Record of Buyers, Co-Purchasers and Obligors

The alphabetical record shall show the name of each buyer, co-buyer and obligor who is currently indebted to the licensee, together with sufficient information to locate the account card. A licensee may maintain these files in any medium or format that accurately reproduces original documents or papers.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.70 Payments

a) All payments shall be credited on the account card as of the date received.

b) A receipt shall be issued to the obligor for each payment received.

c) When the finance charge is precomputed, the receipt for each payment shall show the date of payment, the amount applied to the balance of the contract and the amount applied to any other charges permissible under the applicable State law. Payments shall be applied in the order in which they become due.

d) The receipt for each payment on an interest-bearing account shall show the date of payment, amount applied to interest, amount applied to insurance, amount applied to principal, balance due on the account, amount applied to any other charges permissible under the applicable State law and any amount of interest earned by not collected.

e) No licensee may retain any portion of a payment processing fee.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.80 Delinquency Charges (default Charges)

All delinquency charges (Default Charges) shall comply with any requirements and provisions of applicable federal and State law under which the contract was made.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.90 Cancellation and Return of Documents

All original legal documents executed by the obligor evidencing indebtedness shall be cancelled and returned to the obligor promptly following the renewal or payment in full. Where original documents are not available, a licensee shall substitute copies reproduced from any medium or format which accurately reproduces the original documents. Continuing security agreements shall be retained until subsequent debts are paid in full. If an executed copy of a legal document is retained following payment in full or renewal, it must be clearly indicated by physical or digital method as "PAID" or "CANCELLED" or "RENEWED", indicating the date of payment, cancellation, or renewal. Copies clearly identified with the legend "COPY NOT NEGOTIABLE" or similar language, may be used in lieu of this requirement.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.100 Extensions – Renewals – Rebates

a) The obligor may prepay in full by cash, extension, renewal or otherwise at any time before maturity and shall be entitled to a refund in accordance with Section 7 of the Motor Vehicle Retail Installment Sales Act [815 ILCS 375] or in accordance with Section 7 of the Retail Installment Sales Act [815 ILCS 405], whichever is applicable.

b) The holder of the contract may, if the obligor requests, renew or extend the maturity date of all or part of the contract for which the licensee may charge and collect a refinance charge in accordance with Section 20 of the Retail Installment Sales Act or Section 19 of the Motor Vehicle Retail Installment Sales Act, whichever is applicable.

c) If the contract provides for precomputed interest, a deferment charge may be calculated as the difference between the rebate that would be required for prepayment in full as of the scheduled due date of the deferred installment and the rebate which would be required for prepayment in full as of one month prior to said date.

d) If the contract provides for precomputed interest, any required rebate of finance charge may be calculated using the actuarial method, defined by the federal Truth in Lending Act (15 U.S.C. 1601 et seq.) and Regulation Z, Appendix J (12 CFR 226) or any other method permitted by applicable State law. The rebate for prepayment in full after extension charges have been levied must be larger than the rebate which otherwise would be required. For the purpose of computing rebates, the number of elapsed months must be reduced by one month for each month for which an extension charge has been collected; and the number of months of prepayment must be increased by one month for each month for which an extension charge has been collected.

e) The licensee may not charge an acquisition cost in computing rebates on prepayment in full following extension or renewal if such cost was included as an item in arriving at the net balance to be extended or renewed when the account was at any prior time renewed or extended.

f) When a contract is prepaid in full, the obligor shall be advised as to the amount of the rebate of finance charge and unearned insurance premiums.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.110 Hypothecation of Security Instruments

a) All instruments held by licensees as evidence of indebtedness may be pledged without the prior consent of the Department, except the pledgee must provide the Department, in writing, in a form satisfactory to the Department that the Director or the Director's representatives may at any time examine the pledged instruments, and such pledgee shall also agree, in writing, to provide suitable working quarters for the examiner of the Department to make such examination.

b) Should the physical records or documents of the accounts pledged be located outside of the geographic boundaries of the State of Illinois, the licensee must pay all of the expense of examination by the representatives of this Department, in addition to the examination fees as specified in Section 160.210.

c) Each instrument hypothecated must bear the following endorsement or substantially similar language:

"This instrument is non-negotiable in form but may be pledged as collateral security. If so pledged, any payment made to the pledgor, upon the debt evidenced by this obligation, shall be considered and construed as a payment on this instrument, the same as though it were still in the possession and under the control of the pledgor named herein; and the pledgee holding this instrument as collateral security hereby makes said pledgor its agent to accept and receive payments hereon, either of installments or charges."

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.120 Legal Forms

a) All forms of contracts and assignments of wages furnished by the licensee to a retail seller in connection with a regulated transaction under the Sales Finance Agency Act are required to be submitted to the Department. Where the licensee or affiliate is engaged in the same business and licensed by this Department to engage in such business in another location, the use of identical forms in the new location is not required to be submitted to the Department.

b) Should the licensees at any time following submission of the forms modify the forms, the forms as modified shall be submitted to the Department.

c) All forms shall be submitted in the format requested by the Division.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.130 Judgments

a) When an account has been reduced to judgment, the face of the account card, in physical or digital form, shall show the amount and date of the judgment. When judgment is taken before maturity on a precomputed contract, the same rebate of finance charge is required that would be required for prepayment in full on the date of the entry of judgment.

b) All payments received shall be applied to the judgment balance and be properly identified. The rate of interest charged on a judgment balance must comply with current applicable federal and State law. No higher rate of interest or charge shall be assessed or accepted.

c) The files of the licensee must contain statements setting forth the following items:

1. Date of judgment.

2. Copy of judgment.

3. Date suit was filed.

4. The amount of principal and the amount of charges for which judgment was taken.

5. In the case of a precomputed contract, the unpaid balance of contract, the rebate of interest subtracted therefrom, the resulting balance, plus the amount of any interest included in the judgment.

6. Attorney’s fees if permitted by the terms of the instrument.

7. Court costs.

8. Amount of the judgment.

d) Court costs charged to the obligor must be itemized and verified by receipts.

e) Where property is foreclosed or sold pursuant to any judgment or judicial process, the file must contain a copy of the decree of judicial sale.

f) If records related to the judgment are kept off-site, the licensee shall make these documents available from that site or return the records to the licensed location within 72 hours after the Department's request.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.140 Sale of Security

a) When part or all of the collateral is repossessed or sold, the fact must be noted on the account card.

b) All credits from proceeds of the sale of security must be properly identified.

c) The files of the licensee must contain:

1. When possession of the security was obtained, and whether by voluntary or involuntary action.

2. Whether the collateral was sold by public or private sale and date of sale.

3. Evidence of compliance by licensee with the requirements of Article 9 of the Uniform Commercial Code, the Motor Vehicle Retail Installment Sales Act, the Retail Installment Sales Act and related statutes where applicable in the sale and disposition by a secured party of collateral after default, including copies of all notices directed to the obligor as required therein or as required by any other law, statute or regulation, State or federal.

4. A report of condition of property at time of retaking.

5. Copy of notice of intended sale which must contain notice of default, balance owing, date, place and time of public sale or the date after which a private sale may occur. Such notice must be forwarded to the obligor by certified mail to the last known address of the obligor.

6. Signed receipts from the purchasers (or from the auctioneer if the sale is public), describing the property purchased, showing the amount paid for same, and copies of any competitive bids if the sale is private.

7. Copy of the statement of final accounting, original of which shall be sent to the obligor after the sale, which statement shall set forth the sale price of the property, itemization of the costs of sale, and any surplus or deficiency balance due on the account.

8. When the property is abandoned and the address of the obligor is uncertain or unknown, notice of sale and a statement of final accounting shall be sent to the last known address by registered or certified mail, return receipt requested.

d) In connection with the sale after default of collateral for a debt, the licensee shall only make charges for expenses incurred as are permitted by the applicable provisions of the federal and State law which charges must be reasonable, taking into consideration the nature of the security, the circumstances surrounding retaking and the sale, the fair market value of the collateral and the amount of the indebtedness. Such charges must be substantiated by paid receipts. The licensee may charge any necessary expense in connection with the retaking and sale of collateral, including all expense incurred for required repairs to restore the collateral to a saleable condition, and for mechanic's liens, storage liens, and similar liens occasioned by the obligor.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.150 Trouble File (repealed)

History

• Source: Repealed at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.160 Lien Charges

All official fees paid for the purpose of perfecting or releasing a security interest in property which may be the subject of any sale contract may be collected from the obligor.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.170 Insurance and Other Products

a) Credit Life, Health and Accident:

Licensees, at their option, may provide, but not require, decreasing term credit life insurance and credit accident and health insurance and make a charge to the obligor, providing the obligor has indicated in a specific dated and separately signed statement that the coverage is not required by seller and obligor desires the insurance coverage which is included as a charge or paid by the obligor.

1. The licensee may provide joint credit life or joint credit accident and health insurance if both insured are obligated for the debt.

2. The maximum charge for credit life and credit accident and health insurance shall be as prescribed by the State of Illinois Department of Insurance.

3. When an account is prepaid in full, cancelled, renewed, refinanced, or reduced to judgement prior to maturity, the licensee shall, not later than the 60th day after an account is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, refund or credit the unearned insurance premium or provide written instruction to the person or entity able to refund premium. The licensee shall make all reasonable efforts to ensure that the person able to refund the unearned insurance premium completes the refund with 60 days of the licensee sending the written instruction. The required refund or credit shall be computed in accordance with 50 Ill. Admin. Code 1053.10. When the refund or credit due is less than $1.00, no refund or credit is required. The licensee shall maintain records to demonstrate its compliance with this Section for at least two years from the date of refund, credit, or written instruction for each account.

4. If the obligor dies during the term of the transaction, the life insurance, if any, shall pay the benefits due according to the terms of the policy. The obligor's estate shall be paid the difference between the net unpaid balance and the insurance benefit paid. Evidence of this payment shall be maintained by the licensee.

5. For death claims on account of credit life insurance, the account cards shall indicate the date of death and the refunds of finance charge and unearned insurance premiums paid to the estate. The refund check or voucher number shall be available on demand.

6. Credit life and credit accident and health insurance provided by a licensee may be cancelled within 15 days after the date of the loan by written request of all parties to the obligation. In the event of cancellation, the entire premium cost, if any, shall be refunded to the obligors and insurance shall then be void from its inception.

b) Property Insurance:

1. Insurance against loss or damage to property, or liability arising out of ownership may be required of an obligor by the licensee.

2. The amount of insurance shall be only in the amount sufficient to cover the cash price of the item being financed.

c) All insurance provided by a licensee for an obligor must be issued by insurance companies licensed to do business in the State of Illinois and in compliance with the applicable provisions of the Illinois Insurance Code and the administrative rules of the Department of Insurance.

1. No obligor shall be required to purchase any policy of insurance from any company, agent, broker or person as a condition precedent to the extension or renewal of an obligation.

2. Insurance for a period less than the full term may be agreed upon between the parties which agreement may be a part of the contract or separate instrument.

3. No licensee shall decline new or existing insurance which meets the standards set forth in the federal and State law or prevent any obligor from obtaining insurance coverage from other sources. If insurance is included in a transaction by the seller, the licensee shall upon prepayment by the obligor notify the obligor and seller of the possibility of rebate due by reason of such prepayment and the amount of rebate so due.

4. It shall be the licensee's responsibility to explain clearly to the obligor the type, cost, benefits and limitations of any insurance requested by licensee after acquisition of the account.

5. The licensee shall also deliver or cause to be delivered to the obligor a copy of the policy, or policies, certificate, or other evidence thereof acquired by the licensee in connection with the indebtedness.

d) In the event of a judgment prior to maturity of the loan, the judgment shall be decreased by the amount equal to any unearned premium. Evidence of this payment shall be maintained by the licensee.

e) If an obligor has purchased a debt cancellation product or other credit-related ancillary product, when an account is prepaid in full, cancelled, renewed, refinanced, or reduced to judgment prior to maturity, the licensee shall, not later than 60th day after the date an account is prepaid in full, canceled renewed, refinanced, or reduced to judgment prior to maturity, refund or credit the unearned debt cancellation charge or unearned charge or unearned credit-related ancillary product charge or provide written instruction to the person able to refund the unearned debt cancellation charge or unearned credit-related ancillary product charge. The licensee shall make all reasonable efforts to ensure that the person able to refund the unearned debt cancellation charges or credit-ancillary product charges completes the refund within 60 days of ending of the written instruction. The refund or credit shall be calculated according to a method at least as favorable to the obligor as the actuarial method. The licensee shall maintain records to demonstrate its compliance with this Section for at least two years from the date of refund, credit, or written instruction for each account.

f) Vehicle service contracts as defined in 215 ILCS 152/5, and vehicle protection products or warranties as defined in 215 ILCS 5/155.39(a) are not subject to subsection (e) of this Section.

History

• Source: Amended at 49 Ill. Reg. 11649, effective September 5, 2025

Chapter I Department of Financial and Professional Regulation

Part 160 Sales Finance Agency Act

38 Ill. Adm. Code 160.180 Office and Office Hours

Every licensee shall maintain a place of business or website to which the general public shall have free access and where all obligations shall be payable.

a) Except as authorized by the Department, each licensed office shall be open not less than three consecutive hours, between 8:00 A.M. and 6:00 P.M. on every business day, except Saturdays, Sundays and legal holidays, during the term of the license, and the licensee shall file with the Department a schedule of the hours during which the licensee elects to keep the office open, provided that any licensee may keep the office open for any period the licensee sees fit, in addition to the hours listed in such schedule.

b) Whenever a licensee desires to change the schedule of hours during which the office shall remain open, the licensee may do so upon filing with the Department a new schedule setting forth the changes at least three days before the change shall go into effect. The schedule of hours shall be prominently displayed in the licensee's place of business.

c) If any payment shall be due on any obligation to such licensee on any closed day, then such payment shall be considered for all purposes, including the computation of interest or charges, as having been received on any closed day, if such payment shall be received, whether through the mails or otherwise, at any time before the closing of business on the next regular business day following such closed day.

d) The license of each licensee and the license renewal certificate shall be prominently displayed in the licensee's place of business and website.

e) Whenever a licensee changes the place of business to a location other than that set forth in his license, he shall submit his license to the Department for change of address 10 days before he intends to occupy new quarters. The relocation fee of $500 shall accompany the license.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.190 Advertising

a) No licensee shall represent either orally or in writing, directly or indirectly, by any means whatsoever, including but not limited to, the use of any office sign (except its duly issued license) or the use and circulation of any letterheads, billheads, blank forms, notes, receipts, certificates, circulars or any written or printed matter that it is licensed by or subject to the supervision of the Department, or the State of Illinois, except by use of the following phrase:

"Licensed by the Illinois Department of Financial and Professional Regulation pursuant to the Sales Finance Agency Act."

Provided, however, that the use or circulation of any written or printed matter containing the foregoing phrase may only be in connection with the licensee's business as a Sales Finance Agency.

b) The licensee shall not advertise in a false, misleading or deceptive manner or imply or indicate that the rates or charges for loans or extensions of credit are "approved", "set", or "established" by the State of Illinois or the Department.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.200 Business Practices

a) Notary fees shall not be charged to or collected from the obligor, co-maker, or surety.

b) No licensee shall take any power of attorney except to cancel any policies of insurance financed by the licensee as permitted by the Act and to receive either rebate of unearned premiums or loss payments.

c) No licensee shall transact business licensed under the Sales Finance Agency Act under any other name or at any other place of business than that named in the license.

d) Interest charges shall be collected only from the date the proceeds of the contract are delivered to or expended on behalf of the obligor, even if the contract bears a prior date.

e) No licensee shall knowingly purchase contracts from one who does either of the following:

1. In the course of the seller’s business, employs a chain referral sales technique prohibited by the Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505].

2. Uses a contract, a security instrument or other document not in conformance with the provisions of the Retail Installment Sales Act [815 ILCS 405], Motor Vehicle Retail Installment Sales Act [815 ILCS 375], the federal Consumer Protection Act (15 U.S.C. 1601-1665b), or other applicable federal or State law.

f) Except as provided in this Part and as contained in the Act, the licensee may not charge the obligor a loan fee, points, finder’s fee, service fee, transaction fee, activity fee, appraisal fee, investigation fee, credit report form or any such similar charge or fee.

g) Contract Provisions

1. When a licensee owns a substantial interest in the business of a retail seller from whom the licensee purchases a contract, agreement or other evidence of indebtedness, the document shall clearly reflect the relationship in the following language:

“The retail buyer hereunder has been informed by the retail seller that his contract will be sold and assigned by the retail seller to _____________________ (a licensed Sales Finance Agency) and that the said Sales Finance Agency has a substantial interest in the business of the retail seller and that pursuant to the Sales Finance Agency Act [205 ILCS 660/8.12] the retail buyer may assert all defenses equally against the retail seller and said ______________________, Sales Finance Agency.”

2. The statement in subsection (g)(1) shall be printed, typed or otherwise placed on the sales contract, agreement or other evidence of indebtedness, in a size and style equal to 8 point bold type.

h) The licensee shall maintain in its permanent file the following:

1. A list of all entities with which the licensee transacts business as a Sales Finance Agency.

2. The name of any person or other entity that has a 10% or greater ownership interest in the licensee.

3. The name of any entity in which the licensee has a 50% or greater ownership interest.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.205 Name Change

Whenever the licensee desires to amend the name of the licensed business, the licensee shall submit to the Department, within 15 days after amending the name, the following:

a) $300 amended name change fee.

b) Amended Articles of Incorporation, if the licensee is a corporation.

c) Amended organization papers, if the licensee is an entity other than a corporation.

History

• Source: Added at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.210 Examinations

a) Licensees shall forward all examination remittances to the Division by any means designated by the Director.

b) All fees and charges shall be remitted in the form designated and communicated by the Director.

c) Examination

1. The Department may examine all records and investigate any transactions in any office of the licensee operating under the Act, or at any other location where records or instruments of the licensee are situated to determine that the business complies with all applicable laws and regulations. The Department will charge the licensee $1,200 for each examiner day or portion thereof required to make and complete an examination or investigation of the licensee.

2. The examination of the books and records of the licensee may be conducted concurrently with the examination of any other business conducted by the licensee which is regulated or licensed by the Department. A separate charge shall be made for each examiner day or portion thereof required to complete each examination as to each regulated or licensed business.

3. Should any part of the records or documents be located outside of the geographic boundaries of the State of Illinois, the licensee shall pay all the expenses the Department incurs to perform the examination.

4. The Department may conduct an examination for the purpose of verifying that the licensee has taken necessary actions to correct violations to the Act and/or related administrative rules and shall charge the licensee $1,500 for each examiner day or portion thereof.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.220 Credit Practices

No licensee or agent of the licensee while collecting or attempting to collect an alleged debt shall engage in any of the following acts:

a) Using or threatening to use force or violence to cause physical harm to an obligor, the obligor's family or the obligor's property.

b) Threatening arrest or criminal prosecution when no basis for such action lawfully exists.

c) Threatening the seizure, attachment and sale of an obligor's property when such action can only be taken pursuant to court order unless disclosure is made that prior court proceedings are required.

d) Disclosing or threatening to disclose information adversely affecting an obligor's reputation for credit worthiness with knowledge or reason to know such information is false.

e) Threatening to initiate or initiating communication with an obligor's employer unless there has been a default in the payment of the obligation and at least 5 days prior written notice to the last known address of the obligor of the intent to communicate with the employer and except as expressly permitted by statute or court order.

f) Communicating or threatening to communicate with an obligor or the obligor's family with such unreasonable frequency as to constitute harassment, or at times reasonably considered to be unusual hours or known to be inconvenient.

g) Using profane, obscene or abusive language with an obligor or the obligor's family.

h) Disclosing or threatening to disclose information relating to an obligor's indebtedness to any other person except when such other person has a legitimate business need for the information.

i) Disclosing or threatening to disclose information concerning the existence of a debt which the licensee knows to be reasonably disputed by the obligor without disclosing the fact that the debt is disputed.

j) Attempting or threatening to attempt enforcement of a right or remedy with knowledge or reason to know that the right or remedy does not exist.

k) Use of any form of communication simulating legal or judicial process which gives the appearance of being authorized, issued or approved by a governmental agency, official or attorney at law when it is not.

l) Use of badges, uniforms, or other indicia of any governmental agency or official except as authorized by law.

m) Misrepresenting the amount of the debt alleged to be owed.

n) Representing that an alleged debt may be increased by the addition of attorney's fees, investigation fees or any other fees or charges when there is no contractual or statutory authorization for such addition.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.230 Reports

a) Licensees shall file with the Department such written reports as the Department may from time to time consider necessary.

b) All applications, forms, and any other documents required to be filed or submitted under the Act or this Part shall be verified as to their truth and accuracy.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.240 Hearing Procedures

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 12529, effective July 8, 2022

38 Ill. Adm. Code 160.250 Servicing of Accounts by Contract

Upon prior approval of the Director, the licensee may contract for servicing of accounts. A request for the Director's approval shall be in writing and include the following:

a) Name and address of proposed servicer.

b) Executed contract, conditioned upon approval by the Director, between licensee and servicer.

c) Contact person and telephone number of the servicer.

d) A statement that the licensee will make all books, records and account information readily available for examination by the Department.

e) A statement that the licensee shall pay all examination expenses under Section 7 of the Act.

f) Written consent of servicer for the Department to conduct its examination.

g) A list of all Illinois licensees held by the proposed servicer.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.260 Off-Site Records

Upon prior written approval of the Director a licensee may retain physical records at a location other than the licensed facility. A request for the Director's approval shall be in writing and include the following:

a) Address of proposed off-site location.

b) Contact person and telephone number at the proposed off-site location.

c) Statement that all books, records and account information will be made available within 72 hours after the Department's request at either the licensed facility or the off-site location.

d) A statement that, at the Director's discretion, an examination may be conducted at either the licensed facility or the off-site facility.

e) A statement that the licensee shall pay for all examination expenses under Section 7 of the Act.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.270 Revocation or Suspension of License

If it is determined that the Director had the authority to issue the suspension or revocation of a license pursuant to Section 10 of the Act, the Director may issue orders as may be reasonably necessary to correct, eliminate or remedy the conduct at issue. (See Section 16.5(g) of the Act.)

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.280 Loan Sales

a) For purposes of this Section:

1. "Act" means the Sales Finance Agency Act [205 ILCS 660]; and

2. "Licensee" means licensees under the Act and the Consumer Installment Loan Act [205 ILCS 670].

3. "Transaction" means the pledge, hypothecation, sale, or other conveyance of contracts purchased, or loans made, under the provisions of the Act.

b) A licensee may not pledge, hypothecate, sell, or otherwise convey contracts purchased, or loans made, under the provisions of the Act, except as provided in this Section.

c) A licensee may not pledge, hypothecate, sell, or otherwise convey contracts purchased, or loans made, under the Act, except to:

1. another licensee under the Act;

2. a Consumer Installment Loan Act licensee;

3. a special purpose vehicle as defined by the Act;

4. a person or entity that lends against or purchases retail installment contracts, retail charge agreements, or the outstanding balances or any portion of the outstanding balances under those contracts or agreements from an Illinois licensed sales finance agency or Consumer Installment Loan Act licensee in connection with a securitization, private placement, or similar type of investment transaction. A licensee may pledge, hypothecate, sell, or otherwise convey contracts purchased, or loans made, under the Act to a person or entity described in this subsection (c)(4) only if the conveyor licensee retains servicing of the loan agreements or contracts and maintains the records for those loan agreements or contracts (see Section 17(b) of the Act);

5. the retail seller from which the conveyor licensee originally purchased the retail installment contracts or retail charge agreements; or

6. a credit union, bank, banking association, trust company, savings bank, or savings and loan association authorized to do business under the laws of this State or of the United States.

d) The conveyor licensee shall notify the Department in writing, no more than 10 days after the transaction, indicating the name of the purchaser/pledgee/recipient and evidence of their qualifications to purchase contracts under this Section.

History

• Source: Amended at 47 Ill. Reg. 9324, effective June 20, 2023

38 Ill. Adm. Code 160.300 Positive Net Worth

a) A licensee shall maintain a positive net worth of a minimum of $30,000 at all times.

b) A licensee shall provide a year-end balance sheet demonstrating that it has maintained a positive net worth of $30,000 no later than March 31 of the next year. The balance sheet shall be prepared in accordance with generally accepted accounting principles.

c) The Secretary may require a licensee to produce financial statements demonstrating that the licensee has maintained a positive net worth of a minimum of $30,000 at any other time when the Secretary has good cause to believe that the licensee may not have a positive net worth of a minimum of $30,000. Any such financial statements shall be prepared in accordance with generally accepted accounting principles.

History

• Source: Added at 49 Ill. Reg. 3936, effective March 21, 2025

38 Ill. Adm. Code 160.500 Definitions (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.505 Applicability of Rule (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.510 Good Faith Requirements (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.515 Fraudulent or Deceptive Practices (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.520 Prohibited Refinances (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.525 Negative Amortization (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.530 Negative Equity (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.535 Balloon Payments (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.540 Financing of Certain Points and Fees (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.545 Financing of Single Premium Insurance Products (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.550 Lending Without Due Regard to Ability to Repay (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.555 Verification of Ability to Repay (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.560 Payments to Contractors (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.565 Counseling Prior to Perfecting Foreclosure (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.570 Mortgage Awareness Program (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.575 Offer of Mortgage Awareness Program (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.580 Third Party Review (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.APPENDIX A Estimated Monthly Income and Expenses Worksheet (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

38 Ill. Adm. Code 160.APPENDIX B Mortgage Ratio Worksheet (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11289, effective August 28, 2017

Part 170 Consumer Legal Funding Act

38 Ill. Adm. Code 170.10 Purposes and Construction

This Part is intended to carry out the purposes of the Consumer Legal Funding Act. These rules shall be liberally construed to effectuate the purposes of the Act.

38 Ill. Adm. Code 170.20 Definitions

For purposes of this Part, the following definitions apply:

“Act” means the Consumer Legal Funding Act [815 ILCS 121].

“Advertise” means publishing or disseminating any written, electronic, or printed communication, or any communication by means of recorded telephone messages or transmitted on radio, television, the Internet, or similar communications media, including film strips, motion pictures, and videos, published, disseminated, circulated, or placed before the public, directly or indirectly, for the purpose of inducing a consumer to enter into a consumer legal funding. (Section 5 of the Act)

“Applicant” means a person or entity applying for a license pursuant to the Act.

“Cancellation Date” means the Resolution Date or if there is no Resolution Date, the date the licensee determines the consumer is not required to repay the company the consumer legal funding amount or charges.

“Charges” means the fees, as set forth in Section 25 of the Act, to be paid to the consumer legal funding company by or on behalf of the consumer above the funded amount provided by or on behalf of the company to an Illinois consumer pursuant to the Act. (Section 5 of the Act)

“Consumer” means a natural person who has a pending legal claim and who resides or is domiciled in Illinois. (Section 5 of the Act)

“Consumer legal funding” or “funding” means a nonrecourse transaction in which a company purchases and a consumer transfers to the company an unvested, contingent future interest in the potential net proceeds of a settlement or judgment obtained from the consumer’s legal claim; if no proceeds are obtained from the consumer’s legal claim, the consumer is not required to repay the company the consumer legal funding amount or charges. (Section 5 of the Act)

“Consumer legal funding company” or “company” means a person or entity that enters into, purchases, or services a consumer legal funding transaction with an Illinois consumer. “Consumer legal funding company” does not include:

an immediate family member of the consumer;

a bank, lender, financing entity, or other special purpose entity:

that provides financing to a consumer legal funding company; or

to which a consumer legal funding company grants a security interest or transfers any rights or interest in a consumer legal funding; or

an attorney or accountant who provides services to a consumer. (Section 5 of the Act)

“Controlling person” means

a person, entity, or ultimate equitable owner that owns or controls, directly or indirectly, 10% or more of any class of stock of the licensee or applicant;

a person, entity, or ultimate equitable owner that is not a depository institution, as defined in Section 1007.50 of the Savings Bank Act, that lends, provides, or infuses, directly or indirectly, in any way, funds to or into a licensee or applicant in an amount equal to or more than 10% of the license applicant’s net worth;

a person, entity, or ultimate equitable owner that controls, directly or indirectly, the election of 25% or more of the members of the board of directors of a licensee or applicant; or

a person, entity, or ultimate equitable owner that the Secretary finds influences management of the license or applicant, the provisions of this subpart shall not apply to a public official serving on the board of directors of a State guaranty agency.

“Department” means the Department of Financial and Professional Regulation. (Section 5 of the Act)

“Director” means the Director of the Department of Financial and Professional Regulation – Division of Financial Institutions or the Director’s designee.

“Division” means the Department of Financial and Professional Regulation – Division of Financial Institutions.

“Funded amount” means the amount of moneys provided to, or on behalf of, the consumer in the consumer legal funding. “Funded amount” does not include charges except for charges that are deducted from the funded amount. (Section 5 of the Act)

“Funding date” means the date on which the funded amount is transferred to the consumer by the consumer legal funding company either by:

personal delivery;

via wire, ACH, or other electronic means; or

mailed by insured, certified, or registered United States mail. (Section 5 of the Act)

“Immediate family member” means a parent; sibling; child by blood, adoption, or marriage; spouse; grandparent; or grandchild. (Section 5 of the Act)

“Licensee” means a person, partnership, association, limited liability company, corporation or other legal entity licensed under the Act. Any person or entity who holds himself, herself, or itself out as a licensee or who is accused of unlicensed practice is considered a licensee for purposes of enforcement, investigation, hearings, and the Illinois Administrative Procedure Act [5 ILCS 100].

“Net Proceeds” means the amount of proceeds of the consumer’s legal claim remaining after all liens of a higher priority on the consumer’s legal claim are paid.

“Other Business Authorization” means the authorization in writing as required by Section 105 of the Act to conduct another business in a location licensed under the Act.

“Resolution amount” means the funded amount plus the agreed-upon charges that are delivered to the consumer legal funding company on the resolution date. (Section 5 of the Act)

“Resolution date” means the date the resolution amount is delivered to the consumer legal funding company. (Section 5 of the Act)

“Secretary” means the Secretary of Financial and Professional Regulation or the Secretary’s designee. (Section 5 of the Act)

38 Ill. Adm. Code 170.30 Administration and Enforcement of the Act

The Director and Division shall administer and enforce the Act. The provisions of the Financial Institutions Code [20 ILCS 1205] shall apply to licensees, applicants, and any activity covered by the Act.

38 Ill. Adm. Code 170.40 Minimum Requirements for Office Records

a) Every licensee shall keep the following records at the licensed location in any medium or format, including electronic, that accurately reproduces original documents, records, or papers:

1. Register of all consumer legal fundings.

2. Individual account records.

3. File of all original papers.

4. Cash book if the licensee uses cash.

5. Alphabetical record of all consumers entering consumer legal fundings.

b) Records for fundings made under the Act shall be kept separate or readily identifiable from other types of business conducted in the office.

c) A licensee shall maintain a ledger of all commissions, referral fees, rebates, or any other forms of consideration paid to the licensee by any person or entity other than charges received from a consumer.

d) A licensee shall maintain a ledger of all commissions, referral fees, rebates, or any other forms of consideration paid to another person or entity other than its own employees or profits distributed to owners.

e) Electronic data processing, combination forms and special office systems may be used if in accordance with standard accounting procedures and if they contain the information enumerated in subsection (a).

38 Ill. Adm. Code 170.50 Individual Account Record

a) An individual account record shall be kept for each consumer who has a funding with the licensee. Such account record shall show the name and address of the consumer(s), account number, funding date, funding amount, resolution date (if applicable), resolution amount (if applicable), cancellation date (if applicable), and document preparation fee charged (if applicable).

b) Each funding shall have a unique account number.

c) Every licensee shall preserve the records of all fundings including the individual account record, for at least three years after making the final entry for such funding.

d) All legal instruments taken in connection with a funding and executed by a consumer including all disclosure statements shall bear the consumer’s account number and the name and address of the licensee.

e) All legal instruments taken in connection with a funding and executed by a consumer including all disclosure statements must be provided in English and in the language in which the funding was negotiated.

38 Ill. Adm. Code 170.60 Payments

a) All payments shall be credited on the individual account record as of the date received and a written receipt shall be provided to the consumer and the consumer’s attorney.

b) The receipt shall be provided to the consumer and consumer’s attorney in any manner authorized by the consumer in the consumer legal funding contract or in a later agreement. The licensee shall not be required to provide receipt to the consumer’s attorney if the consumer is not represented by an attorney on the date the payment is received by the licensee.

38 Ill. Adm. Code 170.70 Determination of Payment

a) Each licensee shall establish a reasonable written policy for making the determination that it will accept an amount lesser than the schedule resolution amount in full resolution of the funding and how the licensee will determine any such lesser amount. A licensee shall follow its written policy.

b) Each licensee shall establish a reasonable written policy for making the determination that no net proceeds are available from the legal claim and the consumer does not owe the licensee any of the funded amount or any charges otherwise due pursuant to the agreement. The written policy shall also include a process for making the determination that the consumer or consumer’s attorney has committed fraud against the licensee. The written policy shall include procedures for providing notification to the consumer and the consumer’s attorney. A licensee shall follow its written policy.

c) Each licensee shall provide a copy of the written policies described in this Section to the Department annually at renewal and at the time of any substantive updates.

d) A licensee shall notify the consumer’s attorney or, if the consumer is not represented by an attorney on the date notice is sent, the consumer within three calendar days of determining that the licensee will accept an amount lesser than the scheduled satisfaction amount in full resolution of the funding. The licensee’s notice to the consumer and attorney shall include the scheduled resolution amount, the amount the licensee will accept, the due date of the payment, and a statement that receipt of the payment will fully satisfy the funding. If the licensee receives the agreed upon amount identified in the notice on or before the due date, it must accept the amount identified in full satisfaction of the funding.

38 Ill. Adm. Code 170.71 Permanent File

Each licensee must maintain a permanent file which includes the following:

a) A copy of all correspondence sent to or received from the Department within the past 24 months.

b) A copy of the last two examination exception reports and any related correspondence.

c) A copy of all complaints received from consumers or consumers’ attorneys and the resolution of all such complaints.

38 Ill. Adm. Code 170.80 Return of Documents

All legal instruments taken in connection with a funding and executed by a consumer shall be returned to the consumer, physically or electronically, promptly following the resolution date or the satisfaction date. To satisfy the requirements of this Section, a licensee may substitute copies reproduced from any medium or format which accurately reproduces the original documents. Any executed copy of any legal instrument taken in connection with a funding retained by the licensee must be clearly marked “PAID” or “FULLY SATISFIED”.

38 Ill. Adm. Code 170.90 Advertising

a) Licensees shall not make reference, in any form of marketing or advertising, to “Low rates”, or “Lower rates”, or “Lowest rates”, or “Lowest cost”, or indicate by direct or indirect means through such expression as “Low cost”, “Lower cost”, or “Easier to repay”. Licensees shall not make reference or imply, by any device, that the charges for a funding are low.

b) Upon request by the Department, licensees shall forward to the Department all advertising.

c) A licensee may indicate in advertising and otherwise that its business is “licensed” by the State of Illinois. A licensee may not advertise in a false, misleading or deceptive manner or imply or indicate that the rates or charges for fundings made are “approved”, “set” or “established” by the Department, Division, or State of Illinois.

d) On a finding that an advertisement is false, misleading, or deceptive, the Secretary may issue a cease and desist order or any other order permitted by the Act.

e) The rules in this Section only apply to activity regulated pursuant to the Act.

38 Ill. Adm. Code 170.100 Other Business

Unless otherwise authorized by the Act, no other business may be conducted at the licensed location unless authorized in writing by the Secretary. The Secretary’s authorization will be predicated upon the licensee’s agreeing:

a) That the authorization will neither conceal nor facilitate concealment of an evasion of the Act;

b) To comply with all federal, State, and local laws;

c) To obtain any license or registration required by a federal, State or local government agency to engage in the other business authorized;

d) That the Department may examine all records and investigate any or all transactions of the licensee;

e) The Secretary retains the right, upon notice and opportunity to be heard, to alter, amend or revoke any other business authorization;

f) That if any law enacted after the authorization prohibits the activity, the authorization shall become null and void immediately;

g) To pay the Department a nonrefundable Other Business Authorization Request fee of $500 at the time of making the request for the authorization; and

h) To pay the Department the sum of $100 as a renewal fee for each Other Business Authorization at the time of renewing the annual license.

38 Ill. Adm. Code 170.110 Examinations

The Department may examine all licensees from time to time pursuant to Section 115 of the Act. The Department may examine a licensee at any time, with or without notice.

38 Ill. Adm. Code 170.120 Relocation

Whenever a licensee desires to change the licensed place of business to a location other than that set forth in the license and the licensee shall provide the Department with the following at least ten days prior to the relocation:

a) A relocation fee of $50;

b) A written notice providing the complete address of the new location;

c) Photographs of both the exterior and interior of the new location; and

d) A written sworn statement that the new location will not share the premises with another business.

38 Ill. Adm. Code 170.130 Name Change

Whenever the licensee desires to amend the name of the licensed business, including the addition of an Other Trade Name (DBA), the licensee shall submit to the Department, within 15 days after amending the name, a change of name fee of $50, the amended Articles of Incorporation, if the licensee is a corporation or amended organization papers, if the licensee is an entity other than a corporation.

38 Ill. Adm. Code 170.140 Verification of Resolution Amount

a) Upon written request by either the consumer or the consumer’s attorney, the licensee shall provide in writing the resolution amount due as of the date of the response no later than three business days after receiving the request.

b) The written statement shall clearly and conspicuously state that the resolution amount may only be paid from the net proceeds of a settlement or judgment obtained from the consumer’s legal claim and that if no proceeds are obtained from the consumer’s legal claim, the consumer is not required to repay the company the consumer legal funding amount or charges.

c) Upon written request by either the consumer or the consumer’s attorney, the licensee shall provide a copy of the original funding contract and any subsequent amendments no later than three business days after receiving the request.

38 Ill. Adm. Code 170.150 Off-Site Records

With the Secretary’s prior written approval, the licensee may retain physical records at a location other than the licensed location. Prior approval is not required to maintain records in an electronic processing system at any location. To retain physical records at a location other than the licensed location, the licensee shall make a written request that shall include the following:

a) Address of off-site location;

b) Contact person, email address, and telephone number for the off-site location;

c) Statement that all books, records, and account information shall be made available within 72 hours after the Secretary’s request at either the licensed location, the off-site location or electronically;

d) At the Secretary’s discretion, the examination may be conducted at either the licensed location, the off-site location, or remotely; and

e) The licensee will pay for all examination expenses.

38 Ill. Adm. Code 170.160 Servicing of Accounts by Contract

Upon prior approval of the Secretary, the licensee may contract for servicing of accounts. A request for the Secretary’s approval shall be in writing and include the name, address, and contact information for the proposed servicer.

38 Ill. Adm. Code 170.170 Transfer of Funding Contracts

A licensee shall notify the Department no more than 30 days after pledging, hypothecating, selling, or otherwise conveying any interest in a consumer legal funding contract, in whole or in part.

38 Ill. Adm. Code 170.180 Revocation or Suspension of License

If it is determined that the Secretary had the authority to issue the suspension or revocation of a license pursuant to Section 135 of the Act, the Secretary may issue orders reasonably necessary to correct, eliminate, or remedy the violations and/or harms that led to the suspension or revocation. (Section 180(d) of the Act)

38 Ill. Adm. Code 170.190 Office Hours

Each licensee shall maintain a website, email address, or telephone service. The website, email address, or telephone service shall, at a minimum, provide consumers with capabilities reasonably adequate for efficiently handling communications, questions, and other matters relating to an existing consumer legal funding. In determining whether the website and telephone service are provided in a reasonably adequate manner, the Secretary may consider consumer complaints received regarding the licensee and information obtained from examinations or investigations conducted and reports filed pursuant to the Act.

38 Ill. Adm. Code 170.200 Financial Coaching Disclosure

Each consumer legal funding contract shall include a separate disclosure page entitled “FINANCIAL COACHING INFORMATION” which will provide the consumer with information on accessing a financial coaching program. The disclosure shall be signed by the consumer and the disclosure shall be maintained as part of the individual account record.

38 Ill. Adm. Code 170.210 Refinancing

a) For purposes of this Section, the following definitions apply:

1. "Additional funding" means a consumer legal funding related to the same legal claim as an original funding that does not pay the outstanding balance of an existing funding or fundings.

2. "Funding date" means the date on which the funded amount is transferred to the consumer by the consumer legal funding company either by personal delivery; via wire, Automated Clearing House (ACH), or other electronic means; or mailed by insured, certified, or registered United State mail.

3. "Legal claim" means a bona fide civil claim or cause of action.

4. "Original funding" means the first consumer legal funding the consumer received under the Act related to a particular pending legal claim.

5. "Refinance funding" or "refinance" means a funding that fully pays the outstanding balance of an existing funding or fundings related to a particular legal claim.

b) No funding may be refinanced more than 24 months after the funding date of an original funding.

c) The consumer legal funding company offering a refinance funding shall provide disclosure of the terms of the refinancing in accordance with Section 30 of the Act. In addition to the requirements of Section 30 of the Act, the contract shall include completed tables substantially similar to the following:

MAXIMUM AMOUNT YOU COULD OWE IF YOU DO NOT REFINANCE

Original Funded Amount

Maximum Amount You Could Owe on Original Funded Amount

[Insert Amount]

[Insert Amount]

MAXIMUM AMOUNT YOU COULD OWE IF YOU REFINANCE

Additional Funded Amount:

Refinanced Amount Funded

Maximum Amount You Could Owe on Refinanced Amount

[Insert Amount]

[Insert Amount]

[Insert Amount]

d) A refinance funding may only be provided by a consumer legal funding company that does not have any interest in the original funding.

e) Any refinance funding shall comply with all legal requirements generally applicable to fundings as set forth by the Act and this Part.

f) Nothing in this Section permits an obligor to owe the license, an agent of the licensee, or an affiliate of the licensee, including a corporation owned or managed by the license, an aggregate principal amount in excess of $100,000 at any time for consumer legal fundings transacted pursuant to the Act. [815 ILCS 121/10(d)].

g) A consumer legal funding company shall not refinance any funding to a consumer who has received a refinance funding secured by the consumer's legal claim.

h) Upon written request of a consumer and a consumer's attorney, a consumer legal funding company shall provide all information and documentation necessary for another consumer legal funding company to refinance a funding and comply with this Section, including, but not limited to providing:

1. The date the original funding occurred;

2. The principal amount of the original funding;

3. The total amount currently due on the original funding;

4. The maximum total amount that could be owed on the original funding; and

5. Whether the funding was a refinance funding.

i) Nothing in this Section shall be construed as prohibiting a consumer from entering into an agreement for an additional funding with the original consumer legal funding company or from entering into an agreement for an additional funding with another consumer legal funding company pursuant to 815 ILCS 121/15(6).

History

• Source: Added at 49 Ill. Reg. 15967, effective December 3, 2025

38 Ill. Adm. Code 170.220 Pro Rata Fee

a) Each licensee shall pay to the Department its pro rata share of the cost for administration of the Act that exceeds other fees listed in this Section, as estimated by the Department, for the current year and any deficit actually incurred in the administration of the Act in prior years. [815 ILCS 121/95(f)(8)]

b) Each licensee's pro rata share shall be the percentage that the total dollar amount of consumer legal fundings originated in Illinois during the preceding calendar year by the licensee bears to the total dollar amount of consumer legal fundings originated in Illinois during the preceding calendar year by all licensees. The pro rata fee shall be paid by the licensee within 30 days from issuance of the invoice.

History

• Source: Added at 49 Ill. Reg. 15967, effective December 3, 2025

Chapter I Department of Financial and Professional Regulation

Part 170 Consumer Legal Funding Act

38 Ill. Adm. Code 170.310 Purpose and Scope

a) Purpose. The purpose of this Subpart is to establish the procedures and standard by which the Secretary shall determine whether to disclose confidential supervisory information in response to a request for discovery or disclosure of such information.

b) Scope. This part applies to requests, whether by subpoena, order, or other judicial or administrative process, for discovery or disclosure of confidential supervisory information prepared or obtained by the Secretary under the Act. This Subpart does not apply to:

1. a request made pursuant to the Freedom of Information Act [5 ILCS 140] (FOIA), provided that, if the information requested constitutes confidential supervisory information, it shall nonetheless be exempt from disclosure; or

2. a request made by a party to whom the Secretary may furnish confidential supervisory information pursuant to the Act.

38 Ill. Adm. Code 170.320 Definitions

For purposes of this Subpart:

“Compelling need” means that no other non-confidential source is available to obtain information of equal relevance.

“Complete request” means a request that provides all of the information required in Section 170.330 of this Subpart.

“Confidential supervisory information” shall mean any report of examination, visitation, or investigation prepared by the Secretary under the Act, any report of examination visitation, or investigation prepared by the state regulatory authority or another state that examines a licensee, any document or record prepared or obtained in connection with or relation to any examination, visitation, or investigation, and any record prepared or obtained by the Secretary to the extent that the record summarizes or contains information derived from any report, document, or record described in this subsection. “Confidential supervisory information” does not include any information or record routinely prepared by a licensee and maintained in the ordinary course of business or any information or record that is required to be made publicly available pursuant to State or federal law or rule.

“Person” or “persons” means individuals and bodies politic and corporate, including without limitation corporations, limited liability companies, general partnerships, limited partnerships and joint ventures; unless, from the context and facts, the intentions plainly apply only to individuals. Persons who reside in or live in a geographical area include non-natural persons located within the geographical area.

“Relevant” means the requests confidential supervisory information could substantially contribute to the resolution of the issues identified in the pleadings contained within the request.

“Requester” means any person who makes a request for the discovery or disclosure of confidential supervisory information, whether by subpoena, order, or other judicial or administrative process.

38 Ill. Adm. Code 170.330 Requests for Confidential Supervisory Information

Pursuant to Section 115 of the Act, a request for confidential supervisory information whether by subpoena, order, or other judicial or administrative process, shall be made to the Secretary. If the request is for a record, the requester must adequately describe the records sought by type and date. The request shall be accompanied by:

a) A copy of the formal complaint or pleading setting forth the assertions of the adversarial matter;

b) The caption and docket number assigned to the proceeding, if any;

c) The name, address, telephone number, and email of designated legal counsel to each party to the proceeding;

d) A statement detailing the relevance of the requested confidential supervisory information;

e) A statement detailing a compelling need for the requested confidential supervisory information;

f) A statement describing any prior judicial decisions or pending motions in the case that may bear on the asserted relevance of the requested information; and

g) A statement detailing why the requester believes that disclosure is required for the benefit of consumers in this State.

38 Ill. Adm. Code 170.340 Where to Submit a Request

A person requesting discovery or disclosure of confidential supervisory information under this Part shall:

a) email the request to FPR.DFI.Director@Illinois.gov and FPR.consumercredit@Illinois.gov; and

b) mail or hand deliver the request to:

Illinois Department of Financial and Profession Regulation – Division of Financial Institutions

Attn: Consumer Credit Supervisor and Deputy General Counsel of the

Division of Financial Institutions

555 West Monroe Street, 5th Floor

Chicago, IL 60661

38 Ill. Adm. Code 170.350 Consideration of Requests

a) Standards for the Disclosure of Confidential Supervisory Information.

1. When making a determination with respect to the disclosure of confidential supervisory information, the Secretary shall consider the following standards:

A) the confidential supervisory information identified in the request is relevant;

B) A compelling need exists;

C) If the requested confidential supervisory information is to be used in connection with an adversarial matter, whether the lawsuit or administrative action has been filed;

D) The production and disclosure of the confidential supervisory information is not unduly burdensome to the Department; and

E) Whether disclosure will benefit consumers.

2. In determining whether to disclose the requested confidential supervisory information, the Secretary may inquire into the circumstances of any case underlying the request and rely on sources of information other than the requester, including other parties.

b) Time Required by the Secretary to Respond. The Secretary, within 30 days, shall determine whether to disclose the requested confidential supervisory information. The 30-day time period shall not commence until the Secretary receives a complete request which complies with the requirements set forth in Section 170.330. If the request is not complete, the Secretary shall notify the requester of the required information that has not been previously provided.

c) Notice to Other Parties. Following receipt of a complete request for confidential supervisory information, the Secretary may notify the person that is the subject of the requested information, unless the Secretary determines that doing so would advantage or prejudice any of the parties in the matter at issue.

38 Ill. Adm. Code 170.360 Disclosure of Confidential Supervisory Information

a) Conditions and Limitations. The Secretary may impose any conditions and limitations on the disclosure of confidential supervisory information that are necessary to protect the confidentiality of such information. Except as authorized by the Secretary, no person obtaining access, whether physically or electronically, to confidential supervisory information under this Subpart may further disseminate the confidential supervisory information.

b) Restrictions on Dissemination of Confidential Supervisory Information. The Secretary may condition a decision to disclose confidential supervisory information on entry of a protective order by the court or administrative tribunal presiding in the particular case or on a written agreement of confidentiality. In a case in which a protective order or agreement has already been entered between parties other than the Secretary, the Secretary may nevertheless condition approval for release of confidential supervisory information upon the inclusion of additional or amended provisions in the protective order. The Secretary may authorize a party who obtained the records for use in one case to provide them to another case, subject to any conditions that the Secretary may impose on either or both parties.

c) Notification of Parties and Procedures for Sharing and Using Confidential Supervisory Information in Litigation. The requester shall promptly notify other parties to a case of the release of confidential supervisory information obtained pursuant to this Subpart and, upon entry of a protective order, shall provide copies of confidential supervisory information to the other parties.

38 Ill. Adm. Code 170.370 Retrieval and Destruction of Previously Disclosed Confidential Supervisory Information Used in Litigation

At the conclusion of an action:

a) The requester, and each party who may have subsequently received confidential supervisory information pursuant to a protective order, shall destroy, permanently erase or otherwise make permanently inaccessible the disclosed confidential supervisory information covered by the protective order; and

b) Each party shall certify to the Secretary that the disclosed confidential supervisory information covered by the protective order has been destroyed, permanently erased or made permanently inaccessible.

38 Ill. Adm. Code 170.380 Fees for Services

a) The Secretary, in their sole discretion, may charge the following fees for any record search or copying performed by the Secretary in connection with a request for confidential supervisory information:

1. Reproduction costs incurred in making copies of documents, including photocopies or converting physical documents into electronic or digital format, shall be reimbursed at $0.25 per page.

2. All other costs incurred in searching for and transporting data pursuant to a request for confidential supervisory information shall be reimbursed at actual costs.

b) The Secretary may require a requester to remit payment prior to providing the requested confidential supervisory information.

Chapter II Department of Financial and Professional Regulation

Part 185 Credit Union Community Reinvestment

38 Ill. Adm. Code 185.10 Authority, Purposes and Scope

a) The Illinois Community Reinvestment Act (ILCRA) [205 ILCS 735] authorizes this Part.

b) Purposes. This Part is intended to carry out the purposes of the Illinois Community Reinvestment Act (ILCRA) by establishing the framework and criteria by which the Secretary assesses a covered credit union's ILCRA record. These rules shall be liberally construed to effectuate their purpose. Without limiting the aforementioned purpose, specific purposes of this Part include:

1. Establishment of rules pursuant to Section 35-10(b) of the ILCRA, which requires that this Part incorporate federal rules promulgated under the federal Community Reinvestment Act (12 U.S.C. 2901; see also 12 CFR Part 345). Specifically, Section 35-10(b) of the ILCRA states, in relevant part: To assist in carrying out this Act, the Secretary shall adopt rules incorporating the regulations applicable to covered financial institutions under federal law, and the Secretary may make such adjustments and exceptions thereto as are deemed necessary. [205 ILCS 735/35-10(b)]

2. Accordingly, this Part

A) may include references to federal statutes or rules established pursuant to the federal Community Reinvestment Act; and

B) except where this Subpart A makes adjustments or exceptions to the administrative rules established pursuant to the federal Community Reinvestment Act or where inconsistent with the ILCRA or this Subpart, this Subpart shall be construed and interpreted consistently with the appropriate federal financial supervisory agency's construction and interpretation of the federal rules.

3. Establishment of rules as required by Section 35-10(c) of the ILCRA. These rules shall be liberally construed to effectuate their purpose.

4. Establishment of rules as the Secretary may deem appropriate as authorized by the Act under Section 35-15(a), Section 35-35, or otherwise.

c) Scope. This Part applies to credit unions. Except as context otherwise indicates, this Part does not apply to a bank chartered under the Illinois Banking Act [205 ILCS 5], a savings bank chartered under the Savings Bank Act [205 ILCS 205], an entity licensed under the Residential Mortgage License Act of 1987 [205 ILCS 635] which lent or originated 50 or more residential mortgage loans in the previous calendar year, and any other financial institution under the jurisdiction of the Department as designated by rule by the Secretary.

38 Ill. Adm. Code 185.20 Definitions

For purposes of this Part, the following definitions apply:

"Affiliate" means any company that controls, is controlled by, or is under common control with another company. The term "control" has the meaning given to that term in 12 U.S.C. 1841(a)(2), and a company is under common control with another company if both companies are directly or indirectly controlled by the same company.

"Alternative financial products or services" means financial products or services offered by persons other than an insured depository institution at a higher cost than comparable services offered by an insured depository institution.

"Area median income" means:

the median family income for the MSA/CBSA, if a person or geography is located in an MSA/CBSA; or

the statewide nonmetropolitan median family income, if a person or geography is located outside an MSA/CBSA.

"Assessment field" means the persons delineated in accordance with Section 400 as subject to the ILCRA evaluation.

"Automated teller machine" or "ATM" means an automated, unstaffed banking facility owned or operated by, or operated exclusively for, the credit union at which deposits are received, cash dispersed, or money lent.

"Branch" means a staffed facility established or acquired as a branch under Illinois law.

"CBSA" means a core based statistical area as defined by the Director of the Office of Management and Budget.

"Community development" means:

Affordable housing (including multifamily rental housing) for low- and moderate-income individuals;

Community services targeted to low- and moderate-income individuals;

Activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration's Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less; or

Activities that revitalize or stabilize –

low- or moderate-income geographies;

designated disaster areas; or

distressed or underserved nonmetropolitan middle-income geographies designated by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, based on −

rates of poverty, unemployment, and population loss; or

population size, density, and dispersion. Activities revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals; or

unbanked or underbanked geographies;

Activities targeted to directly and tangibly −

increase climate resilience in low-income to moderate-income neighborhoods; or

mitigate environmental harm in low-income to moderate-income neighborhoods; and

Any other such area as determined by the Secretary based on −

Rates of poverty, unemployment, and population loss; or

Population size, density, and dispersion. Activities revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals.

"Community development loan" means a loan that:

has as its primary purpose community development; and

except in the case of a wholesale or limited purpose credit union:

has not been reported or collected by the credit union or an affiliate for consideration in the credit union's assessment as a home mortgage or consumer loan, unless it is a multifamily dwelling loan (as described in Appendix A to 12 CFR 203, the Consumer Financial Protection Bureau's implementing regulations for the Home Mortgage Disclosure Act); and

directly or indirectly benefits the credit union's assessment field.

"Community development service" means a service that:

has as its primary purpose community development;

is related to the provision of financial services; and

has not been considered in the evaluation of the credit union's retail banking services under Section 185.240(d).

"Community Reinvestment Act" unless context indicates otherwise means the Illinois Community Reinvestment Act ("ILCRA").

"Consumer loan" means a loan to one or more individuals for household, family, or other personal expenditures. A consumer loan does not include a home mortgage or small business loan. Consumer loans include the following categories of loans:

Motor vehicle loan, a consumer loan extended for the purchase of and secured by a motor vehicle;

Credit card loan, a line of credit for household, family, or other personal expenditures that is accessed by a borrower's use of a "credit card", as this term is defined in 12 CFR 1026.2;

Other secured consumer loan, a secured consumer loan that is not included in one of the other categories of consumer loans; and

Other unsecured consumer loan, an unsecured consumer loan that is not included in one of the other categories of consumer loans.

"Credit union" means a corporation chartered as a cooperative, non-profit association, incorporated under the Illinois Credit Union Act [205 ILCS 305].

"Department" means the Illinois Department of Financial and Professional Regulation.

"Field of membership" means the members or persons eligible to join a credit union consisting of members or persons:

within one or more of the following common bonds: association, occupation or community as defined in 205 ILCS 305; and

as otherwise authorized under 205 ILCS 305.

"Fiscal year" means the fiscal year for the State of Illinois (starts July 1 and ends June 30).

"Geography" means a census tract or a block numbering area delineated by the United States Bureau of the Census in the most recent decennial census.

"Home mortgage loan" means a closed-end mortgage loan or an open-end line of credit as these terms are defined under 12 CFR 1003.2 and that is not an excluded transaction under 12 CFR 1003.3(c)(1) through (10) and (13).

"Income level" includes:

Low-income, an individual income that is less than 50% of the area median income, or a median family income that is less than 50%, in the case of a geography.

Moderate-income, an individual income that is at least 50% and less than 80% of the area median income, or a median family income that is at least 50% and less than 80%, in the case of a geography.

Middle-income, an individual income that is at least 80% and less than 120% of the area median income, or a median family income that is at least 80% and less than 120%, in the case of a geography.

Upper-income, an individual income that is 120% or more of the area median income, or a median family income that is 120% or more, in the case of a geography.

"Institution", unless context indicates otherwise, means a credit union.

"Limited purpose institution or limited purpose credit union" means an institution that offers only a narrow product line (such as credit card or motor vehicle loans) to a regional or broader market and for which a designation as a limited purpose institution is in effect, in accordance with Section 185.250(b).

"Loan location" means a loan is located as follows:

a consumer loan is located in the geography where the borrower resides;

a home mortgage loan is located in the geography where the property to which the loan relates is located; and

a small business loan is located in the geography where the main business facility or farm is located or where the loan proceeds otherwise will be applied, as indicated by the borrower.

"Loan production office" means a staffed facility of a credit union, other than a branch, that is open to the public or members and that provides lending-related services, such as loan information and applications.

"Metropolitan division" means a metropolitan division as defined by the United States Director of the Office of Management and Budget.

"MSA" means a metropolitan statistical area or a primary metropolitan statistical area as defined by the United States Director of the Office of Management and Budget.

"Person" means any individual, partnership, joint venture, trust, estate, firm, corporation, cooperative society or association, or any other form of business association or legal entity.

"Public lobby" means an area generally accessible to a credit union's members or some of a credit union's members which allows for easy reading of notices in the place of business.

"Qualified investment" means a lawful investment, deposit, membership share, or grant that has as its primary purpose community development, and lawful investments include the following:

corporations for the purpose of micro-lending in the area of small business and small farms;

corporations for the purpose of providing technical assistance to nonprofit housing corporations, small businesses and farms for the purpose of establishing creditworthiness;

contributions to any private nonprofit organization organized for improving the social and economic conditions, such as community development and redevelopment programs, small business technical assistance, and educational institutions, in communities in which the credit union has an office; and

contributions for the purpose of relieving suffering or distress resulting from disaster or other calamity, such as hurricane or flood, occurring in any part of the State; and

contributions to community development and redevelopment programs.

"Secretary" means the Secretary or Acting Secretary of the Financial and Professional Regulation and his or her authorized representatives.

"Small credit union" means a credit union that, as of December 31 of either of the prior two calendar years, had total assets of less than $391 million. "Intermediate small credit union" means a credit union with assets of at least $391 million as of December 31 of both of the prior two calendar years and less than $1.564 billion as of December 31 of either of the prior two calendar years. The asset-size thresholds (dollar figures) for small credit unions and intermediate small credit unions shall be automatically adjusted to remain consistent with the asset-size thresholds in effect for small banks and intermediate small banks as published by the Federal Deposit Insurance Corporation. The Secretary shall publish each adjustment of the asset-size thresholds for small credit unions and intermediate small credit unions on the Department's website. "Very Small Credit Union" means a credit union that is eligible for the Very Small Credit Union Examination Procedures set forth in 185.Appendix D pursuant to Section 185.450.

"Small business loan" means a loan to a business with gross annual revenues of $1,000,000.00 or less. For purposes of this Part, small business loan includes small farm loans.

"Special Credit Program" means any credit program offered by a credit union to meet special social needs which is in conformity with and explicitly authorized by the Equal Credit Opportunity Act, 15 U.S.C. 1691(c) and Regulation B, 12 CFR 1002.8, and the Illinois Human Rights Act [775 ILCS 5/4-104(C)].

"Substantial majority" means a portion of the credit union's lending activity so significant by number and dollar volume of loans that the lending test evaluation would not meaningfully reflect its lending performance if consumer loans were excluded.

"Unbanked person" means a person who does not have a checking or savings account with an insured bank, savings bank, or credit union.

"Underbanked person" means a person that has a checking or savings account with an insured depository institution but that used alternative financial products or services in the past 12 months.

"Wholesale credit union" means a credit union that is not in the business of extending home mortgage, small business, small farm, or consumer loans to retail customers, and for which a designation as a wholesale credit union is in effect, in accordance with Section 185.250(b).

History

• Source: Amended at 50 Ill. Reg. 9208, effective June 29, 2026

Chapter II Department of Financial and Professional Regulation

Part 185 Credit Union Community Reinvestment

38 Ill. Adm. Code 185.200 Assessment Factors

a) As used in this Part, "assessment factors" means the assessment of the following factors to determine whether a credit union is meeting the financial services needs of local communities:

1. activities to ascertain the financial services needs of the community, including communication with community members regarding the financial services provided;

2. extent of marketing to make members of the community aware of the financial services offered;

3. origination of mortgage loans including, but not limited to, home improvement and rehabilitation loans, and other efforts to assist existing low-income and moderate-income residents to be able to remain in affordable housing in their neighborhoods;

4. for small business lenders, the origination of loans to businesses with gross annual revenues of $1,000,000.00 or less, particularly those in low-income and moderate-income neighborhoods;

5. participation, including investments, in community development and redevelopment programs, small business technical assistance programs, minority-owned depository institutions, community development financial institutions, and mutually-owned financial institutions;

6. efforts working with delinquent customers to facilitate a resolution of the delinquency;

7. origination of loans that show an under concentration and a systemic pattern of lending resulting in the loss of affordable housing units;

8. evidence of discriminatory and prohibited practices; and

9. offering retail banking services to unbanked and underbanked persons.

b) In applying these factors, the Secretary shall account for a credit union's field of membership and any lending, investment, and other limitation or prohibition applicable to the credit union pursuant to law.

38 Ill. Adm. Code 185.210 Performance Tests, Standards, and Ratings, In General

a) Performance tests and standards. The Secretary assesses the ILCRA performance of a credit union in an examination as follows:

1. The Secretary shall apply the assessment factors, as provided in Section 185.200, and the lending and service tests, as provided in Section 185.220 and Section 185.240 in evaluating the performance of a credit union, except as provided in Section 185.210(a)(2), (a)(3) and (a)(4). The investment test, as provided in Section 185.230, does not apply to credit unions unless the credit union elects to be evaluated pursuant to the investment test at the start of an examination.

2. Community development test for wholesale or limited purpose credit unions. The Secretary applies the community development test for a wholesale or limited purpose credit union, as provided in Section 185.250, except as provided in Section 185.210(a)(4).

3. Small credit union and intermediate small credit union performance standards. The Secretary applies the small credit union and intermediate small credit union performance standards as provided in Section 185.260 in evaluating the performance of a small credit union or intermediate small credit union or a credit union that was a small credit union during the prior calendar year, unless the credit union elects to be assessed as provided in subsections (a)(1), (a)(2), or (a)(4) of this Section. A small credit union or intermediate small credit union may elect to be assessed as provided in subsection (a)(1) of this Section only if it collects and reports the data required for other credit unions under Section 185.410.

4. Strategic plan. The Secretary evaluates the performance of a credit union under a strategic plan if the credit union submits, and the Secretary approves, a strategic plan as provided in Section 185.270.

b) Performance context. The Secretary applies the tests and standards in subsection (a) and also considers whether to approve a proposed strategic plan in the context of:

1. demographic data on median income levels, distribution of household income, nature of housing stock, housing costs, and other relevant data pertaining to a credit union's assessment field;

2. any information about lending, investment, and service opportunities in the credit union's assessment field maintained by the credit union or obtained from community organizations, state, local, and tribal governments, economic development agencies, or other sources;

3. the credit union's product offerings and business strategy as determined from data provided by the credit union;

4. credit union capacity and constraints, including the size and financial condition of the credit union, the economic climate (national, regional, and local), safety and soundness limitations, and any other factors that significantly affect the credit union's ability to provide lending, investments, or services in its assessment field;

5. the credit union's past performance and the performance of similarly situated credit unions;

6. the credit union's ILCRA file, as described in Section 185.420, and any written comments about the credit union's ILCRA performance submitted to the credit union or the Secretary;

7. the credit union's field of membership and any lending, investment, and other limitation or prohibition applicable to the credit union pursuant to law; and

8. any other information deemed relevant by the Secretary.

c) Assigned ratings. The Secretary assigns to a credit union one of the following four ratings pursuant to Section 185.280 and 185.APPENDIX A (Ratings): "outstanding"; "satisfactory"; "needs to improve"; or "substantial noncompliance" as provided in 205 ILCS 735/35-15(c). The rating assigned by the Secretary reflects the credit union's record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the credit union, and consistent with its common bond. A credit union will be evaluated by how it serves its assessment field. A credit union's rating will not be negatively impacted by the composition of its assessment field, including without limitation the income and geographic demographic data of borrowers in the assessment field, so long as the assessment field is delineated in accordance with Section 185.400.

d) Safe and sound operations. This Part and the ILCRA does not require a credit union to make loans or investments or to provide services that are inconsistent with safe and sound operations, its size and financial condition, or inconsistent with its common bond. Credit unions are permitted and encouraged to develop and apply flexible underwriting standards for loans that benefit low- and moderate-income geographies or individuals and work with delinquent customers to facilitate a resolution of the delinquency, only if consistent with safe and sound operations and consistent with its common bond.

e) Low-cost education loans provided to low-income borrowers. In assessing and taking into account the record of a credit union under this Part, the Secretary shall consider, when applicable, low-cost education loans originated by the credit union to borrowers, particularly in its assessment field, who have an individual income that is less than 50 percent of the area median income. For purposes of this paragraph, "low-cost education loans" means any education loan, as defined in section 140(a)(7) of the Truth in Lending Act (15 U.S.C. 1650(a)(7)) (including a loan under a state or local education loan program), originated by the credit union for a student at an "institution of higher education", as that term is generally defined in sections 101 and 102 of the Higher Education Act of 1965 (20 U.S.C. 1001 and 1002) and the implementing regulations published by the U.S. Department of Education, with interest rates and fees no greater than those of comparable education loans offered directly by the U.S. Department of Education. Such rates and fees are specified in section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e). This subsection only applies to credit unions that offer education loans.

f) Activities in cooperation with Community Development Financial Institutions, Minority- or Women-Owned Financial Institutions and Low-Income Credit Unions. In assessing performance to this Part, the Secretary shall consider: capital investment, loan participation, and other ventures undertaken by the credit union in cooperation with Community Development Financial Institutions as defined in regulations issued by the U.S. Department of the Treasury, with minority- and women-owned financial institutions as defined in 12 U.S.C. 2907(b) and credit unions designated as low-income or minority depository institutions by the National Credit Union Administration. Activities must help meet the credit needs of local communities in which Community Development Financial Institution, the minority- and women-owned financial institutions or low income or minority credit unions are chartered. To be considered, activities need not also benefit the credit union's assessment field. This subsection does not apply to credit unions designated as low-income or minority credit unions.

g) Community Development Financial Institutions, Minority Depository Institutions and Low-Income Designated Credit Unions. In assessing performance pursuant to this Part, the Secretary shall consider whether a credit union is certified or designated as a Community Development Financial Institution, Minority Depository Institution and/or Low-Income Designated Credit Union. The Department may require documentation to confirm the credit union still meets the criteria for the certification or designation.

Chapter II Department of Financial and Professional Regulation

Part 185 Credit Union Community Reinvestment

38 Ill. Adm. Code 185.220 Lending Test

a) Scope of test.

1. The lending test evaluates a credit union's record of helping to meet the credit needs of its assessment field through its lending activities by considering a credit union's home mortgage, small business and community development lending as applicable. If consumer lending constitutes a substantial majority of a credit union's business, the Secretary will evaluate the credit union's consumer lending in one or more of the following categories: motor vehicle, credit card, other secured, and other unsecured loans in addition to home mortgage, small business and community development lending as applicable. At a credit union's option, the Secretary will also evaluate one or more categories of consumer lending, if the credit union has collected and maintained the data for each category that the credit union elects to have the Secretary evaluate as required in Section 185.410(c)(1) in addition to home mortgage, small business and community development lending as applicable.

2. The Secretary considers originations and initial purchases of loans. The Secretary will also consider any other loan data the credit union may choose to provide, including data on loans outstanding, commitments and letters of credit.

3. A credit union may ask the Secretary to consider loans originated or purchased by consortia in which the credit union participates or by third parties in which the credit union has invested only if the loans meet the definition of community development loans and only in accordance with subsection (d). The Secretary will not consider these loans under any criterion of the lending test except the community development lending criterion.

b) Performance criteria. The Secretary evaluates a credit union's lending performance considering all of the applicable assessment factors in Section 185.200 and pursuant to the following criteria:

1. Geographic distribution. The geographic distribution of the credit union's home mortgage small business, and consumer loans, if applicable, based on the loan location, including:

A) the dispersion of lending in the credit union's assessment field; and

B) the number and amount of loans in low-, moderate-, middle-, and upper-income geographies in the credit union's assessment fields.

2. Borrower characteristics. The distribution of the credit union's home mortgage, small business loans, if applicable, and consumer loans, if applicable, based on borrower characteristics, including the number and amount of:

A) home mortgage loans to low-, moderate-, middle-, and upper-income individuals, including loans to assist existing low- and moderate-income residents to be able to remain in affordable housing in their neighborhoods;

B) small business loans to businesses with gross annual revenues of $1 million or less;

C) small business loans by loan amount at origination; and

D) consumer loans, to low-, moderate-, middle-, and upper- income individuals.

3. Community development lending. The credit union's community development lending, including the number and amount of community development loans, and their complexity and innovativeness; and

4. Innovative or flexible lending practices. The credit union's use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- and moderate-income individuals or geographies. In assessing performance pursuant to this Part, the Secretary shall consider whether a credit union offers Special Credit Programs that are in conformity with and explicitly authorized by the Equal Credit Opportunity Act (15 U.S.C. 1691(c)), Regulation B of 12 CFR 1002.8, and the Illinois Human Rights Act [775 ILCS 5/4-104(C)]. The credit union must be able show that the program will fall under any of the following:

A) any credit assistance program expressly authorized by federal or state law for the benefit of an economically disadvantaged class of persons;

B) any credit assistance program offered by credit union for the benefit of its members or an economically disadvantaged class of persons; or

C) any special credit program offered by a credit union, or in which such an organization participates to meet special social needs, if it meets certain standards prescribed in 12 CFR 1002.8 (a)(3)(i).

c) Affiliate lending.

1. At a credit union's option, the Secretary will consider loans by an affiliate of the credit union, if the credit union provides data on the affiliate's loans pursuant to Section 185.410.

2. The Secretary considers affiliate lending subject to the following constraints:

A) no affiliate may claim a loan origination or loan purchase if another institution claims the same loan origination or purchase and in this regard the credit union shall monitor and keep records of whether such claims exist; and

B) if a credit union elects to have the Secretary consider loans within a particular lending category made by one or more of the credit union's affiliates in a particular assessment field, the credit union shall elect to have the Secretary consider, in accordance with subsection (c)(1), all the loans within that lending category in that particular assessment field made by all of the credit union's affiliates.

3. The Secretary does not consider affiliate lending in assessing a credit union's performance under subsection (b)(2)(A).

d) Lending by a consortium or a third party. Community development loans originated or purchased by a consortium in which the credit union participates or by a third party in which the credit union has invested:

1. will be considered, at the credit union's option, if the credit union reports the data pertaining to these loans under Section 185.410; and

2. may be allocated among participants or investors, as they choose, for purposes of the lending test, except that no participant or investor:

A) may claim a loan origination or loan purchase if another participant or investor claims the same loan origination or purchase and in this regard the credit union shall monitor and keep records of whether claims exist; or

B) may claim loans accounting for more than its percentage share (based on the level of its participation or investment) of the total loans originated by the consortium or third party.

e) Lending performance rating. The Secretary rates a credit union's lending performance as provided in 185.APPENDIX A (Ratings).

38 Ill. Adm. Code 185.230 Investment Test

a) Scope of test. The investment test evaluates a credit union's record of helping to meet the credit needs of its assessment field through qualified investments that benefit its assessment field.

b) Exclusion. Activities considered under the lending or service tests shall not be considered under the investment test.

c) Affiliate investment. At a credit union's option, the Secretary will consider, in the assessment of a credit union's investment performance, a qualified investment made by an affiliate of the credit union, if the qualified investment is not claimed by any other institution. If a credit union has established a foundation, the Secretary will consider, at the credit union's option, qualified investments and donations of any such foundation if those investments or donations have the primary purpose of community development.

d) Disposition of branch premises. Donating, selling on favorable terms, or making available on a rent-free basis a branch of the credit union that is located in a predominantly minority neighborhood to a minority depository institution or women's depository institution (as these terms are defined in 12 U.S.C. 2907(b)) or to credit unions designated by the National Credit Union Administration as low-income or minority depository institutions will be considered as a qualified investment.

e) Performance criteria. The Secretary evaluates the investment performance of a credit union considering all of the applicable assessment factors in Section 185.200 and pursuant to the following criteria:

1. the dollar amount of qualified investments;

2. the innovativeness or complexity of qualified investments;

3. the responsiveness of qualified investments to credit and community development needs;

4. the degree to which the qualified investments assist existing low- and moderate-income residents to be able to remain in affordable housing in their neighborhoods; and

5. the degree to which the qualified investments are not routinely provided by private investors.

f) Investment performance rating. The Secretary rates a credit union's investment performance as provided in 185.APPENDIX A (Ratings).

38 Ill. Adm. Code 185.240 Service Test

a) Scope of test. The service test evaluates a credit union's record of helping to meet the credit needs of its assessment field by analyzing both the availability and effectiveness of a credit union's systems for delivering retail banking services and the extent and innovativeness of its community development services. Credit unions that provide all or a majority of their services via mobile and other digital channels must fulfill their obligation to meet the financial service needs of their assessment fields, including low-income to moderate-income neighborhoods, consistent with their common bond.

b) Areas benefited. Community development services must benefit a credit union's assessment field.

c) Affiliate service. At a credit union's option, the Secretary will consider, in the assessment of a credit union's service performance, a community development service provided by an affiliate of the credit union, if the community development service is not claimed by any other institution and in this regard the credit union shall monitor and keep records of whether such claims exist.

d) Performance criteria − Retail Banking Services. The Secretary evaluates the availability and effectiveness of a credit union's systems for delivering retail banking services, considering all of the applicable assessment factors in Section 185.200 and pursuant to the following criteria:

1. the current distribution of the credit union's branches among low-, moderate-, middle-, and upper-income geographies, if applicable;

2. in the context of its current distribution of the credit union's branches, the credit union's record of opening and closing branches, particularly branches located in low- and moderate-income geographies or primarily serving low- and moderate- income individuals;

3. the availability and effectiveness of alternative systems for delivering retail banking services (e.g., ATMs, surcharge-free ATMs within its network, ATMs not owned or operated by or exclusively for the credit union, banking by telephone or computer, loan production offices, bank-at-work or bank-by-mail programs) in low- and moderate-income geographies and to low- and moderate-income individuals;

4. the range of services provided in low-, moderate-, middle-, and upper- income geographies, if applicable, and the degree to which the services are tailored to meet the needs of those geographies; and

5. The credit union's record of effectively marketing its retail banking services and products to unbanked or underbanked persons and offering retail banking services and products targeted to meet the needs of unbanked and underbanked persons. In determining whether a credit union offers retail banking services and products targeted to meet the needs of unbanked and underbanked persons, the Department shall consider:

A) whether the credit union is BankOn certified or offers accounts substantially and materially similar to BankOn certified accounts; or

B) whether the credit union offers financial services and products to users of alternative financial products or services, provided that, that the credit union has affirmatively and reasonably demonstrated that:

i) the credit union offers such accounts or such financial services and products in conjunction with focused and sustained marketing efforts reasonably designed to reach unbanked and underbanked persons;

ii) unbanked and underbanked persons may reasonably conveniently obtain or use such accounts or such financial services and products; and

iii) the credit union offers such accounts or such financial services and products at a cost to the unbanked and underbanked persons that is significantly lower than would otherwise be incurred by the users of alternative financial products or services.

e) Performance criteria − Community Development Services. The Secretary evaluates community development services considering all of the applicable assessment factors in Section 185.200 and pursuant to the following criteria:

1. the extent to which the credit union provides community development services; and

2. the innovativeness and responsiveness of community development services.

f) Service performance rating. The Secretary rates a credit union's service performance as provided in 185.APPENDIX A (Ratings).

Chapter II Department of Financial and Professional Regulation

Part 185 Credit Union Community Reinvestment

38 Ill. Adm. Code 185.250 Community Development Test for Wholesale or Limited Purpose Credit Unions

a) Scope of test. The Secretary assesses a wholesale or limited purpose credit union's record of helping to meet the credit needs of its assessment field under the community development test through its community development lending, qualified investments, or community development services.

b) Designation as a wholesale or limited purpose credit union. In order to receive a designation as a wholesale or limited purpose credit union, a credit union shall file a request, in writing, with the Secretary, at least six months prior to the proposed effective date of the designation. If the Secretary approves the designation, it remains in effect until the credit union requests revocation of the designation or until one year after the Secretary notifies the credit union that the Secretary has revoked the designation on the Secretary's own initiative.

c) Performance criteria. The Secretary evaluates the community development performance of a wholesale or limited purpose credit union considering all of the applicable assessment factors in Section 185.200 and pursuant to the following criteria:

1. the number and amount of community development loans (including originations and initial purchases of loans and other community development loan data provided by the credit union, such as data on loans outstanding, commitments, and letters of credit), qualified investments, or community development services;

2. the use of innovative or complex qualified investments, community development loans, or community development services and the extent to which the investments are not routinely provided by private investors; and

3. the credit union's responsiveness to credit and community development needs.

d) Indirect activities. At a credit union's option, the Secretary will consider in its community development performance assessment:

1. qualified investments or community development services provided by an affiliate of the credit union, if the investments or services are not claimed by any other institution; and

2. community development lending by affiliates, consortia and third parties, subject to the requirements and limitations in Sections 185.220(c) and (d).

e) Benefit to assessment field.

1. Benefit inside assessment field. The Secretary considers all qualified investments, community development loans, and community development services that benefit areas within the credit union's assessment field

2. Benefit outside assessment field. The Secretary considers the qualified investments, community development loans, and community development services that indirectly benefit the credit union's assessment field, if the credit union has adequately addressed the direct needs of its assessment field.

f) Community development performance rating. The Secretary rates a credit union's community development performance as provided in 185.APPENDIX A (Ratings).

38 Ill. Adm. Code 185.260 Small Credit Union and Intermediate Small Credit Union Performance Standards

a) Performance criteria.

1. Except as set forth in Section 185.450, the Secretary evaluates the record of a small credit union of helping to meet the credit needs of its assessment field pursuant to all of the applicable assessment factors in Section 185.200 and subsection (b).

2. The Secretary evaluates the record an intermediate small credit union, of helping to meet the credit needs of its assessment field pursuant to all of the applicable assessment factors in Section 185.200, subsections (b) and (c).

b) Lending test. A small credit union and intermediate small credit union's lending performance in home mortgage, small business, community development lending, consumer lending, or any other type of lending, as applicable is evaluated pursuant to the following criteria:

1. the credit union's loan-to-share ratio, adjusted for seasonal variation and, as appropriate, other lending-related activities, such as loan originations for sale to the secondary markets, community development loans, or qualified investments;

2. the credit union's record of lending to and, as appropriate, engaging in other lending-related activities for borrowers of different income levels and businesses of different sizes;

3. the geographic distribution of the credit union's loans in the context of its relevant field of membership;

4. the credit union's record of taking action, if warranted, in response to written complaints about its performance in helping to meet credit needs in its assessment field and its performance with regard to fair lending policies and practices; and

5. the origination of loans to businesses with gross annual revenues of $1,000,000 or less, particularly those in low-income and moderate-income neighborhoods. This subsection (b)(5) applies only to credit unions that make business loans.

c) Community development test. An intermediate small credit union's community development performance is also evaluated pursuant to the following criteria:

1. the number and amount of community development loans;

2. the extent to which the credit union provides community development services;

3. the credit union's responsiveness through such activities to community development lending, investment, and service needs; and

4. at the election of the credit union, the number and amount of qualified investments.

d) Small credit union and intermediate small credit union performance rating. The Secretary considers all of the applicable assessment factors in Section 185.200 and rates the performance of a credit union evaluated under this Section as provided in 185.APPENDIX A (Ratings).

History

• Source: Adopted at 48 Ill. Reg. 7004, effective May 1, 2024; expedited correction at 48 Ill. Reg. 13864, effective May 1, 2024

Chapter II Department of Financial and Professional Regulation

Part 185 Credit Union Community Reinvestment

38 Ill. Adm. Code 185.270 Strategic Plan

a) Alternative election. The Secretary will assess a credit union's record of helping to meet the credit needs of its assessment field considering all of the applicable assessment factors in Section 185.200 under a strategic plan if:

1. the credit union has submitted the plan to the Secretary as provided for in this Section;

2. the Secretary has approved the plan;

3. the plan is in effect; and

4. the credit union has been operating under an approved plan for at least one year.

b) Data reporting. The Secretary's approval of a plan does not affect the credit union's obligation, if any, to report data as required by Section 185.410.

c) Plans in general.

1. Term. A plan may have a term of no more than five years, and any multi-year plan must include annual interim measurable goals under which the Secretary will evaluate the credit union's performance.

2. Treatment of affiliates. Affiliated credit unions may prepare a joint plan if the plan provides measurable goals for each credit union. Activities may be allocated among credit unions at the credit union's option, provided that the same activities are not considered for more than one credit union.

d) Public participation in plan development. Before submitting a plan to the Secretary for approval, a credit union shall:

1. informally seek suggestions from members of the public in its assessment field covered by the plan while developing the plan;

2. once the credit union has developed a plan, formally solicit public comment on the plan for at least 30 days by publishing notice in at least one newspaper of general circulation in each assessment field covered by the plan and on the internet; and

3. during the period of formal public comment, make copies of the plan available for review by the public at no cost at all offices of the credit union in any assessment field covered by the plan and provide copies of the plan upon request for a reasonable fee to cover copying and mailing, if applicable.

e) Submission of plan. The credit union shall submit its plan to the Secretary at least six months prior to the proposed effective date of the plan. The credit union shall also submit with its plan a description of its informal efforts to seek suggestions from members of the public, any written public comment received, and, if the plan was revised in light of the comment received, the initial plan as released for public comment.

f) Plan content.

1. Measurable goals.

A) A credit union shall specify in its plan measurable goals for helping to meet the credit needs of each assessment field covered by the plan, particularly the needs of low- and moderate-income geographies and low- and moderate-income individuals, through lending, investment, and services, as appropriate and considering all of the applicable assessment factors in Section 185.200.

B) A credit union shall address in its plan all applicable performance categories and, unless the credit union has been designated as a wholesale or limited purpose credit union, shall emphasize lending and lending-related activities. Nevertheless, a different emphasis, including a focus on one or more performance categories, may be appropriate if responsive to the characteristics and credit needs of its assessment field, considering public comment and the credit union's capacity and constraints, product offerings, and business strategy.

2. Confidential information. A credit union may submit additional information to the Secretary on a confidential basis which shall not be deemed a public record as defined in 5 ILCS 140/2 or be subject to the public disclosure provisions of 5 ILCS 140/1, but the goals stated in the plan must be sufficiently specific to enable the public and the Secretary to judge the merits of the plan.

3. Satisfactory and outstanding goals. A credit union shall specify in its plan measurable goals that constitute "satisfactory" performance. A plan may specify measurable goals that constitute "outstanding" performance. If a credit union submits, and the Secretary approves, both "satisfactory" and "outstanding" performance goals, the Secretary will consider the credit union eligible for an "outstanding" performance rating.

4. Election if satisfactory goals not substantially met. A credit union may elect in its plan that, if the credit union fails to meet substantially its plan goals for a satisfactory rating, the Secretary will evaluate the credit union's performance under the lending, investment, and service tests, the community development test, or the small credit union performance standards, as appropriate.

g) Plan approval.

1. Timing. The Secretary will act upon a plan within 90 calendar days after the Secretary receives the complete plan and other material required under subsections (e) and (f). If the Secretary fails to act within this time period, the plan shall be deemed approved unless the Secretary extends the review period in writing.

2. Public participation. In evaluating the plan's goals, the Secretary considers the public's involvement in formulating the plan, written public comment on the plan, and any response by the credit union to public comment on the plan.

3. Criteria for evaluating plan. The Secretary considers all of the applicable assessment factors in Section 185.200 and evaluates a plan's measurable goals using the following criteria, as appropriate and applicable:

A) the extent and breadth of lending or lending-related activities, including, as appropriate, the distribution of loans among different geographies, businesses and farms of different sizes, and individuals of different income levels, the extent of community development lending, and the use of innovative or flexible lending practices to address credit needs;

B) the amount and innovativeness, complexity, and responsiveness of the credit union's qualified investments; and

C) the availability and effectiveness of the credit union's systems for delivering retail banking services and the extent and innovativeness of the credit union's community development services.

h) Plan amendment. During the term of a plan, a credit union may request the Secretary to approve an amendment to the plan on grounds that there has been a material change in circumstances. The credit union shall develop an amendment to a previously approved plan in accordance with the public participation requirements of subsection (d).

i) Plan assessment. The Secretary approves the goals and assesses performance under a plan as provided for in 185.APPENDIX A (Ratings).

38 Ill. Adm. Code 185.280 Assigned Ratings

a) Ratings in general. Subject to subsections (b) and (c), the Secretary assigns to a credit union a rating of "outstanding", "satisfactory", "needs to improve", or "substantial noncompliance" based on the credit union's performance under the lending, investment and service tests, the community development test, the small credit union's performance standards, the intermediate small credit union's standards, or an approved strategic plan, as applicable.

b) Lending, investment, and service tests. The Secretary assigns a rating for a credit union assessed under the lending, investment, and service tests in accordance with the following principles:

1. a credit union that receives an "outstanding" rating on the lending test receives an assigned rating of at least "satisfactory";

2. a credit union that receives an "outstanding" rating on both the service test and the investment test and a rating of at least "satisfactory" on the lending test receives an assigned rating of "outstanding"; and

3. no credit union may receive an assigned rating of "satisfactory" or higher unless it receives a rating of at least "satisfactory" on the lending test.

c) Effect of evidence of discriminatory or other illegal credit practices.

1. The Secretary's evaluation of a credit union's ILCRA performance is adversely affected by evidence of discriminatory or other illegal credit practices in any geography by the credit union or in any assessment field by any affiliate whose loans have been considered as part of the credit union's lending performance. In connection with any type of lending activity described in Section 185.220(a), evidence of discriminatory or other credit practices that violate an applicable law, rule, or regulation includes, but is not limited to:

A) Discrimination against applicants on a prohibited basis in violation, for example, of the Equal Credit Opportunity Act (15 U.S.C. 1691-1691f) or the Fair Housing Act (42 U.S.C. 3601-19), including, for example, relying on or giving force or effect to discriminatory appraisals to deny loan applications where the covered financial institution knew or should have known of the discrimination;

B) Violations of the Home Ownership and Equity Protection Act (15 U.S.C. 1601-02, 1639-41);

C) Violations of section 5 of the Federal Trade Commission Act (15 U.S.C. 45);

D) Violations of section 8 of the Real Estate Settlement Procedures Act (12 U.S.C. 2607);

E) Violations of the Truth in Lending Act (15 U.S.C. 1635) provisions regarding a consumer's right of rescission;

F) Violations of the Article 4 [Financial Credit] of Illinois Human Rights Act [775 ILCS 5/Art. 4];

G) Violations of the Illinois High Risk Home Loan Act [815 ILCS 137]; and

H) Violations of the Illinois Fairness in Lending Act [815 ILCS 120].

2. In determining the effect of evidence of practices described in subsection (c)(1) on the credit union's assigned rating, the Secretary considers the nature, extent, and strength of the evidence of the practices; the policies and procedures that the credit union (or affiliate, as applicable) has in place to prevent the practices; any corrective action that the credit union (or affiliate, as applicable) has taken or has committed to take, including voluntary corrective action resulting from self-assessment; and any other relevant information.

38 Ill. Adm. Code 185.290 Effect of ILCRA Performance on Applications

a) ILCRA Performance. Among other factors, the Secretary takes into account the record of performance under the ILCRA of each applicant credit union in considering an application for approval of:

1. The relocation of the credit union's main office or a branch, but only when express prior approval is otherwise required under applicable State law of administrative rule; and

2. The merger, consolidation, acquisition of assets, or assumption of liabilities.

b) New financial institutions. A newly chartered credit union shall submit with its application for a permit to organize a description of how it will meet its ILCRA objectives. The Secretary takes the description into account in considering the application and may deny or condition approval on that basis.

c) Interested parties. The Secretary takes into account any views submitted by interested parties in accordance with the public notice posted pursuant to Section 35-20 of ILCRA.

d) Denial or conditional approval of application. A credit union's record of ILCRA performance may be the basis for denying or conditioning approval of an application listed in subsection (a).

38 Ill. Adm. Code 185.400 Assessment Field Delineation

a) The Secretary does not evaluate the institution's delineation of its assessment field as a separate performance criterion, but the Secretary reviews the delineation for compliance with the requirements of this Section.

b) Except as otherwise set forth in subsection (f), a credit union shall delineate as its assessment field:

1. members from its occupational common bonds, if any;

2. members from its associational common bonds, if any;

3. members other than community common bond members admitted to membership under the Illinois Credit Union Act, if any; and

4. the geographic areas containing members and persons eligible for membership pursuant to its community common bonds or portions of the community common bonds, if any, that the credit union reasonably believes it can serve. In evaluating whether a credit union can reasonably serve persons eligible for membership pursuant to its community common bonds, the credit union shall consider its:

A) Size;

B) Financial health;

C) Ability to effectively promote and market membership and membership services and products throughout the community common bond in a cost-effective manner;

D) Applicable legal restrictions,

E) The location of its offices, branches, and other facilities; and

F) Other relevant considerations, including without limitation, the size, configuration and existence of political subdivisions and geographic barriers within the geographic areas.

c) A credit union may choose to include or exclude any community common bonds located outside of the State of Illinois from its assessment field. A credit union may choose to include or exclude any members for membership pursuant to its occupational or associational common bonds located outside of the State of Illinois from its assessment.

d) A credit union shall not arbitrarily exclude low-income and moderate-income neighborhoods, persons, and areas where there is a lack of access to safe and affordable banking and lending services from its assessment field. A credit union's assessment field shall not reflect illegal discrimination.

e) With respect to a community common bond, a credit union may delineate only its members as its assessment field with approval of the Secretary when inclusion of geographic areas containing persons eligible for membership pursuant to its community common bonds, if any, would be unreasonable or impractical in the credit union's specific case. In evaluating whether to approve such a request, the Secretary shall consider:

1. The size of the credit union;

2. The financial health of the credit union;

3. Applicable legal restrictions;

4. The ability to effectively promote and market membership and membership services and products throughout the community common bond in a cost-effective manner; and

5. Any other relevant considerations, including without limitation, the size, configuration and existence of political subdivisions and geographic barriers within the geographic areas presented by the credit union.

f) A credit union may delineate only the geographic areas containing members and persons eligible for membership pursuant to its community common bonds or portions thereof as its assessment field when such delineation is reasonable and consistent with a meaningful evaluation of the credit union's ILCRA record. In reviewing whether such delineation is reasonable, the Secretary shall consider:

1. The size of geographic areas designated by the credit union;

2. The number of Illinois residents living or working in the delineated geographic areas;

3. Whether the geographic area contains low-income and moderate-income neighborhoods, or areas where there is a lack of access to safe and affordable banking and lending services;

4. The size of the credit union;

5. The financial health of the credit union;

6. The ability to effectively promote and market membership and membership services and products throughout the community common bond in a cost-effective manner;

7. Applicable legal restrictions;

8. The location of its offices, branches, and other facilities; and

9. Any other relevant considerations, including without limitation, the size, configuration and existence of political subdivisions and geographic barriers within the geographic areas presented by the credit union.

g) The credit union shall memorialize the bases for its assessment field delineation at or before the end of the implementation period set forth in Section 185.490. The credit union shall memorialize the bases for its assessment field delineation in writing and provide a copy of the writing to the Secretary. The following governs a credit union changing its assessment field:

1. A credit union may choose to change the delineation of its assessment field at any time, except a credit union may not change the delineation of its assessment field after an examination has been scheduled; and

2. A credit union shall modify the delineation of its assessment field when there is a material modification to the credit union's field of membership or other material change in circumstances.

h) A credit union may request a written finding from the Secretary that its assessment field delineation complies with this Section prior to the initial ILCRA examination. The request shall include the credit union's bases for its assessment field delineation and any other documentation required by the Secretary to evaluate the request. The request shall be made no later than 90 days before the end of the applicable implementation period set forth in Section 185.490. No later than 90 days after receipt a complete request, the Secretary shall provide a written finding that the delineation is in compliance with the requirements of this Section or that the delineation is not in compliance together with the reasons. The time periods set forth in the Section may be extended for good cause shown or by agreement between the Secretary and credit union. A credit union may rely in good faith on the Secretary's written finding with respect to any subsequent efforts by the Secretary to reject or modify the prior assessment field delineation unless and until there has been a material modification to the credit union's field of membership or other material change in circumstances.

i) The Secretary uses the assessment field delineated by a credit union in its evaluation of the credit union's ILCRA performance unless the Secretary determines that the assessment field does not comply with the requirements of this Section. If the Secretary determines that the assessment field delineated by the credit union does not comply with this requirement of this Section, the Secretary shall provide the credit union at least one additional reasonable opportunity to delineate an assessment field in compliance with the requirements of this Section.

j) For purposes of this Section, a "material modification or material change in circumstances" shall be deemed to exist if there has been a significant change in the members served by the credit union or the geographic areas containing members and persons eligible for membership from its community common bonds or portions thereof, if any, that the credit union reasonably believes it can serve after considering the factors enumerated in subsections (b) or (f) as applicable.

k) For purposes of the Section, "members" means current members as reflected on the membership list of the credit union, as that membership list changes from time to time.

Chapter II Department of Financial and Professional Regulation

Part 185 Credit Union Community Reinvestment

38 Ill. Adm. Code 185.410 Data Collection, Reporting, and Disclosure

a) Credit unions shall comply with all data collection, reporting and disclosure requirements as required by applicable law.

b) A credit union, except a credit union that meets the definition of a small credit union or intermediate small credit union, which is subject to HMDA reporting requirements, shall report to the Department the location of each home mortgage loan application, origination, or purchase outside the credit union's assessment field in accordance with the requirements of 12 CFR 1003.

c) Optional data collection and maintenance.

1. Consumer Loans. A credit union may collect and maintain in machine readable form (as prescribed by the Secretary) data for consumer loans originated or purchased by the credit union for consideration under the lending test. A credit union may maintain data for one or more of the following categories of consumer loans: motor vehicle, credit card, other secured, and other unsecured. If the credit union maintains data for loans in a certain category, it shall maintain data for all loans originated or purchased within that category. The credit union shall maintain data separately for each category, including for each loan:

A) A unique number or alpha-numeric symbol that can be used to identify the relevant loan file;

B) The loan amount at origination or purchase;

C) The loan location; and

D) The gross annual income of the borrower that the credit union considered in making its credit decision.

2. Other loan data. At its option, a credit union may provide other information concerning its lending performance, including additional loan distribution data or any other data required or permitted to be reported by banks under federal or State banking regulations.

d) Data on affiliate lending. A credit union that elects to have the Secretary consider loans by an affiliate, for purposes of the lending or community development test or an approved strategic plan, shall collect, maintain, and report for those loans the data that the credit union would have collected, maintained, and reported had the loans been originated or purchased by the credit union. For home mortgage loans, the credit union shall also be prepared to identify the home mortgage loans reported under 12 CFR Part 1003 (Home Data Disclosure) by the affiliate.

e) Data on lending by a consortium or a third party. A credit union that elects to have the Secretary consider community development loans by a consortium or third party, for purposes of the lending or community development tests or an approved strategic plan, shall report for those loans the data that the credit union would have reported had the loans been originated or purchased by the credit union.

38 Ill. Adm. Code 185.420 Content and Availability of Ilcra File

a) Information available to the field of membership. A credit union shall maintain an ILCRA file for its field of membership that includes the following information:

1. all written comments received from the public for the current year and each of the prior two calendar years that specifically relate to the credit union's performance in helping to meet community credit needs, and any response to the comments by the credit union, if neither the comments nor the responses contain statements that reflect adversely on the good name or reputation of any persons other than the credit union or publication of which would violate specific provisions of law.

2. a copy of the public section of the credit union's most recent ILCRA Performance Evaluation prepared by the Secretary. The credit union shall place this copy in the ILCRA file within 30 business days after its receipt from the Secretary. A copy of the public section includes:

A) The assessment factors utilized to determine the credit union's descriptive rating;

B) The Secretary's conclusion with respect to each assessment factor;

C) A discussion of the facts supporting the conclusions;

D) The credit union's descriptive rating and the basis therefor;

E) The assigned overall rating;

F) Any other information the Secretary finds that the ends of justice and the public advantage will be served by the disclosure; and

G) A summary of public comments.

3. a list of the credit union's branches, their street addresses, and geographies;

4. a list of branches opened or closed by the credit union during the current year and each of the prior two calendar years, their street addresses, and geographies;

5. a list of services (including hours of operation, available loan and deposit products, and transaction fees) generally offered at the credit union's branches and descriptions of material differences in the availability or cost of services at particular branches, if any. At its option, a credit union may include information regarding the availability of alternative systems for delivering retail banking services (e.g., ATMs, ATMs not owned or operated by or exclusively for the credit union, banking by telephone or computer, loan production offices, bank-at-work or bank-by-mail programs);

6. the field of membership as defined in the credit union's Article of Incorporation and Article III of the bylaws;

7. its assessment field delineation; and

8. any other information the credit union chooses.

b) Additional information available to the field of membership.

1. Credit Unions other than small credit unions or intermediate small credit unions. A credit union, except a small credit union or intermediate small credit union or a credit union or a credit union that was a small credit union or intermediate small credit union the prior calendar year, shall include in its ILCRA file the following information pertaining to the credit union and its affiliates, if applicable, for each of the prior two calendar years. If the credit union has elected to have one or more categories of its consumer loans considered under the lending test, for each of these categories, the number and amount of loans:

A) to low-, moderate-, middle-, and upper-income individuals;

B) located in low-, moderate-, middle-, and upper-income census tracts; and

C) located inside the credit union's assessment field and outside the credit union's assessment field.

2. Credit Union required to report Home Mortgage Disclosure Act (HMDA) data. A credit union required to report home mortgage loan data pursuant 12 CFR Part 1003 (Home Disclosure Data) shall include in its ILCRA file a written notice that the institution's HMDA Disclosure Statement may be obtained on the Consumer Financial Protection Bureau's (Bureau's) Website at www.consumerfinance.gov/hmda. In addition, a credit union that elected to have the Secretary consider the mortgage lending of an affiliate for any of these years shall include in its ILCRA file the affiliate's HMDA Disclosure Statement for those years. The credit union shall place the statements in the ILCRA file within three business days after its receipt.

3. Small credit unions and intermediate small credit unions. A small credit union or intermediate small credit union or a credit union that was a small credit union or intermediate small credit union during the prior calendar year shall include in its ILCRA file the credit union's loan-to-share ratio by asset class for each quarter of the prior calendar year and, at its option, additional data on its loan-to-share ratio.

4. Credit unions with strategic plans. A credit union that has been approved to be assessed under a strategic plan shall include in its ILCRA file a copy of that plan. A credit union need not include information submitted to the Secretary on a confidential basis in conjunction with the plan.

5. Credit unions with less than satisfactory ratings. A credit union that received a less than satisfactory rating during its most recent examination shall include in its ILCRA file a description of its current efforts to improve its performance in helping to meet the credit needs of its entire community. The credit union shall update the description quarterly.

c) Location of information. A credit union shall make available to the field of membership for inspection upon request and at no cost the information required in this Section as follows:

1. at the main office and, if an interstate credit union, at one branch office in each state, all information in the ILCRA file; and

2. at each branch, if any:

A) a copy of the public section of the credit union's most recent ILCRA Performance Evaluation and a list of services provided by the branch; and

B) within five calendar days after the request, all the information in the ILCRA file relating to the assessment field in which the branch is located.

d) Copies. Upon request, a credit union shall provide copies, on paper, electronically, or in another form acceptable to the person making the request, of the information in its ILCRA file. The credit union may charge a reasonable fee not to exceed the cost of copying and mailing, if applicable. A credit union shall not charge a fee if the information is only provided electronically.

e) Updating. Except as otherwise provided in this Section, a credit union shall ensure that the information required by this Section is current as of April 1 of each year.

f) Notwithstanding subsections (a) through (e), this Section does not prohibit a credit union from establishing and implementing standards and procedures that a person must follow to obtain the ILCRA file. The standards and procedures shall provide reasonable access to the ILCRA file. In determining whether standards and procedures are reasonable, the Secretary shall consider:

1. The credit union's size and financial condition;

2. The location of the credit union and its hours of operation;

3. Whether the ILCRA file is available electronically; and

4. Any other unique circumstances presented by the credit union.

g) A credit union may request a written finding from the Secretary that its standards and procedures provide reasonable access to the file from the Secretary. Any credit union which relies on a finding shall not be subject to an enforcement action by the Department for a violation of this Section. Unless extended by the Secretary in writing, any finding shall expire at the end of the credit union's next examination.

h) The Department shall make the public section of the written evaluation available to all persons for inspection or copying pursuant to Section 35-15(b) of the ILCRA. Public comments, together with any response from a credit union will be considered by the Secretary in evaluating our ILCRA performance and may be made public.

38 Ill. Adm. Code 185.430 Public Notice by Credit Union

A credit union shall provide in the public lobby of its main office and each of its branches, if any, and on its website, the appropriate public notice set forth in 185.APPENDIX B. Only a branch of a credit union having more than one assessment field shall include the bracketed material in the notice for branch offices. Only a credit union that is an affiliate of a holding company shall include the second to the last sentence of the notices. A credit union shall include the last sentence of the notices only if it is an affiliate of a holding company that is not prevented by statute from acquiring additional credit unions.

38 Ill. Adm. Code 185.440 Publication of Planned Examination Schedule

The Secretary publishes at least 30 days in advance of the beginning of each calendar quarter a list of credit unions scheduled for ILCRA examinations in that quarter.

38 Ill. Adm. Code 185.450 Very Small Credit Union Examination Procedures

a) At the time of examination any credit union that satisfies either of the following eligibility standards as shown in its Year-end Call report and other related documentation may elect to use the Very Small Credit Union Examination Procedures set forth in 185.APPENDIX D:

1. Total assets less than $25,000,000; or

2. Total assets less than $100,000,000 that lent or originated less than 50 residential mortgage loans reportable under the Home Mortgage Disclosure Act in the previous calendar year. The $100,000,000 threshold shall be adjusted based on amendments made by the National Credit Union Administration from time to time in its definition of "small entity" for purposes of the federal Regulatory Flexibility Act (5 U.S.C. Section 601, et seq.). For purposes of this subsection (a)(2), "lent" or "originated" means the credit union was responsible for underwriting, making credit decisions for, issuing commitments for, or funding for the residential mortgage loan; "residential mortgage loan" means any loan primarily for personal, family or household use that is secured by a mortgage, deed or trust or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling; and "dwelling" means a residential structure or mobile home which contains one to four family housing units or individual units of condominiums or cooperatives. For purposes of this subsection (a)(2), "lent" or "originated" does not include the performance of brokerage or referral activities.

b) For any credit union which elects to use the Very Small Credit Union Examination Procedures set forth in 185.APPENDIX D, the Secretary shall apply the assessment factors, as provided in Section 185.200. The written evaluation shall comply with all requirements for a written evaluation set forth in Section 15(b) of the ILCRA.

c) Any credit union which receives an overall rating of "substantial noncompliance" on its last examination shall not be eligible to use the Very Small Credit Union Examination Procedures set forth in 185.APPENDIX D on its next examination.

d) Nothing contained in this Section, prohibits the Secretary from considering other sources of information including, but not limited to, evidence of discriminatory or other illegal credit practices, or public comments in assessing whether a credit union is meeting the financial services needs of local communities pursuant to Section 185.200.

e) The Very Small Credit Union Examination Procedures set forth in 185.APPENDIX D shall in no way limit public participation.

f) A credit union electing to use the Very Small Credit Union Examination Procedures set forth in 185.APPENDIX D does not affect the credit union's obligation, if any, to report data as required by Section 185.410.

g) A credit union electing to use the Very Small Credit Union Examination Procedures set forth in 185.APPENDIX D does not affect the credit union's obligation to maintain an ILCRA file as required by Section 185.420.

h) A credit union that elects to use the Very Small Credit Union Examination Procedures set forth in 185.APPENDIX D shall have at least three months to complete the examination. The credit union shall have the opportunity to review its proposed examination response with an examiner prior to the due date.

38 Ill. Adm. Code 185.460 Examination Authority and Cooperation

a) Pursuant to the Secretary's authority under the ILCRA, including, but not limited to, Sections 35-15 and 35-25 of the ILCRA. The Secretary or appointees may examine the entire books, records, documents, and operations of each credit union, affiliates, or agents, and may examine any credit union, its affiliates', or agents' officers, directors, employees, and agents under oath.

b) A credit union shall be required to fully cooperate in any examination conducted pursuant to this Part. Cooperation includes, but is not limited to:

1. timely and full production of books, records, and documents, in any reasonable format requested by the Department; and

2. ensuring all officers, directors, employees, and agents of the credit union are available for depositions or interviews upon reasonable notice.

3. Except as otherwise specified in ILCRA or this Part, examination related to this Part shall be conducted consistent with 205 ILCS 305/9(3.5), 38 Ill. Adm. Code 190.25, and accompanying regulatory guidelines (Guidelines for Regulatory Scope, Clarity and Resolution of Examination Items) found on the Department's website.

38 Ill. Adm. Code 185.470 Examination Schedule

a) The Secretary may conduct a discretionary ILCRA examination of a credit union at any time.

b) Initial CRA examinations of credit unions shall be conducted according to the following schedule:

1. Initial ILCRA examinations of credit unions with total assets of $1 billion or more, as shown by its Year-end Call Report, shall not be conducted until at least February 1, 2025 and shall be conducted within three years.

2. Initial ILCRA examinations of credit unions with total assets of $391,000,000 to less than $1 billion, as shown by its Year-end Call Report, shall not be conducted until at least February 1, 2025 and shall be conducted within four years.

3. Initial ILCRA examinations of credit unions with total assets of $10,000,000 but less than $391,000,000, as shown by its Year-end Call Report, shall not be conducted until at least August 1, 2025 and shall be conducted within five years.

4. Initial ILCRA examinations of credit unions with total assets of less than $10,000,000, as shown by its Year-end Call Report, shall not be conducted until at least August 1, 2025 and shall be conducted within six years.

c) Mandatory ILCRA examinations of credit unions shall be conducted according to the following schedule:

1. ILCRA examinations of credit unions with total assets of greater than or equal to $391,000,000, as shown by its Year-end Call Report, shall be conducted as follows:

A) For a credit union that is assigned an "outstanding" or "satisfactory" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within three years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

B) For a credit union that is assigned a "needs improvement" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within two years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

C) For a credit union that is assigned a "substantial noncompliance" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within one year of the issuance of the report of examination of its most recent prior examination under the ILCRA.

2. ILCRA examinations of credit unions with total assets of less than $391,000,000, as shown by its Year-end Call Report, shall be conducted as follows:

A) For a credit union that is assigned an "outstanding" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within five years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

B) For a credit union that is assigned a "satisfactory" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within four years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

C) For a credit union that is assigned a "needs improvement" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within two years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

D) For a credit union that is assigned a "substantial noncompliance" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within one year of the issuance of the report of examination of its most recent prior examination under the ILCRA.

d) A credit union may request reconsideration to evaluate whether a less than satisfactory ILCRA rating may be modified. The request for reconsideration shall be in writing and shall identify each aspect of the written evaluation and the Department's findings that the credit union requests the Department to reconsider. The credit union shall provide any evidence, analyses, or information the credit union believes justifies changing the credit union's ILCRA rating to the Department. Upon receipt of the request, pursuant to Section 185.460(b)(3), the Secretary shall adhere to the progressive steps of review set forth in 38 Ill. Adm. Code 190.25(d). A request for reconsideration shall be delivered in writing no later than 90 days after the date the Secretary publishes the public section of the written evaluation on the the Department's website. If the Secretary determines a change of rating is justified, the Secretary shall publish a supplemental written evaluation with the new ILCRA rating and all bases for changing the rating. A credit union may request reconsideration of an ILCRA rating and the Department's written ILCRA evaluation and findings only as set forth in this Section.

38 Ill. Adm. Code 185.480 Examination Fees

a) Examination Fees

1. Annual Fees. Each fiscal year, credit unions shall pay an annual ILCRA fee to the Department based upon its total assets as shown on its Year-end Call Report at the following rate:

TOTAL ASSETS

ILCRA ANNUAL FISCAL YEAR 2027

$1,000,000 or less

No Charge

Over $1,000,000 and not over $10,000,000

No Charge

Over $10,000,000 and not over $30,000,0000

$1,050

Over $30,000,000 and not over $50,000,000

$2,100

Over $50,000,000 and not over $100,000,000

$3,150

Over $100,000,000 and not over $350,000,000

$4,725

Over $350,000,000 and over $500,000,000

$9,450

Over $500,000,000 and not over $1,000,000,000

$13,650

Over $1,000,000,000 and not over $10,000,000,000

$18,900

Over $10,000,000,000

$25,000

2. When out-of-state travel occurs in the conduct of any examination, the credit union shall make arrangements to reimburse the Department all charges for services such as travel expenses, including airfare, hotel and per diem incurred by the employee. These expenses are to be in accord with applicable travel regulations published by the Department of Central Management Services and approved by the Governor's Travel Control Board (80 Ill. Adm. Code 2800).

b) All fees received pursuant to this Part shall be deposited in the Credit Union Fund and subject to Section 12(6) of the Illinois Credit Union Act [205 ILCS 305/12(6)].

c) Notwithstanding Section 185.490, the fee for fiscal year 2025 shall be due on September 1, 2024. The fee for each fiscal year thereafter shall be due within 30 days after the start of each fiscal year. For purposes if this Section, "fiscal year" means a period beginning on July 1 of any calendar year and ending on June 30 of the next calendar year.

History

• Source: Amended at 50 Ill. Reg. 9208, effective June 29, 2026

Chapter II Department of Financial and Professional Regulation

Part 185 Credit Union Community Reinvestment

38 Ill. Adm. Code 185.490 Implementation Period

a) Credit unions with total assets of $391,000,000 or more shall have until February 1, 2025 to comply with the requirements of this Part.

b) Credit unions with total assets less than $391,000,000 shall have until August 1, 2025 to comply with the requirements of this Part.

38 Ill. Adm. Code 185.500 Enforcement

a) Any failure to comply with a requirement of the ILCRA, this Part or other law referenced in ILCRA or this Part shall be grounds for enforcement actions as authorized under the ILCRA and under the Act, as applicable to the particular credit union.

b) Any failure to comply with a requirement of the ILCRA may also be grounds for referral to law enforcement or administrative authority with jurisdiction over the subject matter.

c) In addition to any other action authorized by law, the Secretary may enter agreed upon orders, stipulations, or settlement agreements for the purpose of resolving any failure to comply.

d) Except as otherwise specified in this Illinois Community Reinvestment Act or this Part, enforcement and supervision related to this Part shall be conducted consistent with 205 ILCS 305/9(3.5), 38 Ill. Adm. Code Section 190.25; and accompanying regulatory guidelines (Guidelines for Regulatory Scope, Clarity and Resolution of Examination Items) found on the Department's website.

38 Ill. Adm. Code 185.510 Provisions for Granting of Variance from Rules

The Secretary may grant variances in individual cases from this Part in individual cases where it is determined that in their sole discretion that:

a) The provision from which the variance is granted is not statutorily mandated;

b) No party will be injured by granting the variance; and

c) The rule from which the variance is granted would, in the particular case, be unnecessarily burdensome.

38 Ill. Adm. Code 185.APPENDIX A Ratings

a) Ratings in general.

1. In assigning a rating, the Secretary evaluates a credit union's performance under the applicable performance criteria in this Part, in accordance with Section 185.200, Section 185.210, and Section 185.280. Notwithstanding any contrary provision in this Part, the Secretary may consider as a basis to adjust a credit union's overall rating, the following:

A) Providing low-cost education loans to low-income borrowers;

B) Activities in cooperation with Community Development Financial Institutions, minority- or women-owned financial institutions;

C) Certification as a Community Development Financial Institution or designated as a Minority Depository Institution or Low-Income Designated credit union;

D) The offering of Special Credit Programs; and

E) The evidence of discriminatory or other illegal credit practices.

2. A credit union's performance need not fit each aspect of a particular rating profile in order to receive that rating, and exceptionally strong performance with respect to some aspects may compensate for weak performance in others. A credit union that does not have a community common bond shall not be evaluated according to any criteria that references geographies or geographic area. A credit union with a field of membership consisting of multiple common bonds that includes community common bonds shall not be evaluated according to any criteria that references geographies or geographic area, except with respect to its community common bonds. A rating shall take into consideration the credit union's defined membership by-law provisions, as prescribed in 205 ILCS 305/15, and the lending and investment authority restrictions and other limitations and restrictions under 205 ILCS 305. The credit union's overall performance, however, must be consistent with safe and sound banking practices and generally with the appropriate rating profile as follows. A credit union will be evaluated by how it serves its assessment field. A credit union's rating will not be negatively impacted by the composition of its assessment field including without limitation the income and geographic demographic data of borrowers in the assessment field so long as the assessment field is delineated in accordance with Section 185.400.

3. The Secretary may take a credit union's lack of previous experience with ILCRA examinations into account and the length of the implementation period into consideration while assessing the performance of the credit union during its first ILCRA examination.

b) Credit Unions evaluated under the Lending and Service Tests.

1. Lending Performance Rating. The Secretary assigns each credit union's lending performance one of the five following ratings.

A) Outstanding. The Secretary rates a credit union's lending performance "outstanding" if, in general, it demonstrates:

i) Excellent responsiveness to credit needs in its assessment field, taking into account the number and amount of home mortgage, and consumer loans, if applicable, in its assessment field;

ii) An excellent geographic distribution of loans in its assessment field, provided, however, a geographic analysis is relevant in the context of the credit union's membership by-law provisions;

iii) An excellent distribution, particularly in its assessment field, of loans among members of different income levels, given the product lines offered by the credit union;

iv) An excellent record of serving the credit needs of highly economically disadvantaged persons in its assessment field, and low-income members, including loans and other efforts to assist existing low- and moderate-income members to be able to remain in their neighborhoods, consistent with safe and sound operations;

v) Extensive use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- and moderate-income members or geographies;

vi) There is no evidence of loans that show an undue concentration and a systematic pattern of lending resulting in the loss of affordable housing units;

vii) An excellent record relative to fair lending policies and practices; and

viii) It is a leader in making community development loans.

B) High satisfactory. The Secretary rates a credit union's lending performance "high satisfactory" if, in general, it demonstrates:

i) Good responsiveness to credit needs in its assessment field, taking into account the number and amount of home mortgage, and consumer loans, if applicable, in its assessment field;

ii) A good geographic distribution of loans in its assessment field, provided, however, a geographic analysis is relevant in the context of the credit union's membership by-law provisions;

iii) A good distribution, particularly in its assessment field, of loans among members of different income levels, given the product lines offered by the credit union;

iv) A good record of serving the credit needs of highly economically disadvantaged persons in its assessment field, and low-income members, including loans and other efforts to assist existing low- and moderate-income members to be able to remain in their neighborhoods, consistent with safe and sound operations;

v) Use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- and moderate-income members or geographies;

vi) There is no evidence of loans that show an undue concentration and a systematic pattern of lending resulting in the loss of affordable housing units;

vii) A good record relative to fair lending policies and practices; and

viii) It has made a relatively high level of community development loans.

C) Low satisfactory. The Secretary rates a credit union's lending performance "low satisfactory" if, in general, it demonstrates:

i) Adequate responsiveness to credit needs in its assessment field, taking into account the number and amount of home mortgage, and consumer loans, if applicable, in its assessment field;

ii) An adequate geographic distribution of loans in its assessment field, provided, however, a geographic analysis is relevant in the context of the credit union's membership by-law provisions;

iii) An adequate distribution, particularly in its assessment field, of loans among members of different income levels, given the product lines offered by the credit union;

iv) An adequate record of serving the credit needs of highly economically disadvantaged persons in its assessment field, and low-income members, including loans and other efforts to assist existing low- and moderate-income members to be able to remain in their neighborhoods, consistent with safe and sound operations;

v) Limited use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- and moderate-income members or geographies;

vi) There is no evidence of loans that show an undue concentration and a systematic pattern of lending resulting in the loss of affordable housing units;

vii) An adequate record relative to fair lending policies and practices; and

viii) It has made an adequate level of community development loans.

D) Needs to improve. The Secretary rates a credit union's lending performance "needs to improve" if, in general, it demonstrates:

i) Poor responsiveness to credit needs in its assessment field, taking into account the number and amount of home mortgage, and consumer loans, if applicable, in its assessment field;

ii) A poor geographic distribution of loans, particularly to low- and moderate-income geographies, in its assessment field, provided, however, a geographic analysis is relevant in the context of the credit union's membership by-law provisions;

iii) A poor distribution, particularly in its assessment field, of loans among members of different income levels, given the product lines offered by the credit union;

iv) A poor record of serving the credit needs of highly economically disadvantaged persons in its assessment field, and low-income members, including loans and other efforts to assist existing low- and moderate-income members to be able to remain in their neighborhoods, consistent with safe and sound operations;

v) Little use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- and moderate-income members or geographies;

vi) There is possible evidence of loans that show an undue concentration and a systematic pattern of lending resulting in the loss of affordable housing units;

vii) A poor record relative to fair lending policies and practices; and

viii) It has made a low level of community development loans.

E) Substantial noncompliance. The Secretary rates a credit union's lending performance as being in "substantial noncompliance" if, in general, it demonstrates:

i) A very poor responsiveness to credit needs in its assessment field, taking into account the number and amount of home mortgage, and consumer loans, if applicable, in its assessment field;

ii) A very poor geographic distribution of loans, particularly to low- and moderate-income geographies, in its assessment field, provided, however, a geographic analysis is relevant in the context of the credit union's membership by-law provisions;

iii) A very poor distribution, particularly in its assessment field, of loans among members of different income levels, given the product lines offered by the credit union;

iv) A very poor record of serving the credit needs of highly economically disadvantaged persons in its assessment field, and low-income members, including loans and other efforts to assist existing low- and moderate-income members to be able to remain in their neighborhoods, consistent with safe and sound operations;

v) No use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- and moderate-income members or geographies;

vi) Origination of loans that show an undue concentration and a systematic pattern of lending resulting in the loss of affordable housing units;

vii) A very poor record relative to fair lending policies and practices; and

viii) It has made few, if any, community development loans.

2. Service performance rating. The Secretary assigns each credit union's service performance one of the five following ratings.

A) Outstanding. The Secretary rates a credit union's service performance "outstanding" if, in general, the credit union demonstrates:

i) Its service delivery systems are readily accessible to members and geographies of different income levels in its assessment field;

ii) To the extent changes have been made, its record of opening and closing branches has improved the accessibility of its delivery systems, particularly to low- and moderate-income members or in low- and moderate-income geographies;

iii) Its services (including, where appropriate, business hours) are tailored to the convenience and needs of its assessment field, particularly low- and moderate-income members or in low- and moderate-income geographies; and

iv) It is a leader in providing community development services.

B) High satisfactory. The Secretary rates a credit union's service performance "high satisfactory" if, in general, the credit union demonstrates:

i) Its service delivery systems are accessible to members and geographies of different income levels in its assessment field;

ii) To the extent changes have been made, its record of opening and closing branches has not adversely affected the accessibility of its delivery systems, particularly to low- and moderate-income members and in low- and moderate-income geographies;

iii) Its services (including, where appropriate, business hours) do not vary in a way that inconveniences its assessment field, particularly low- and moderate-income members and low- and moderate-income geographies; and

iv) It provides a relatively high level of community development services.

C) Low satisfactory. The Secretary rates a credit union's service performance "low satisfactory" if, in general, the credit union demonstrates:

i) Its service delivery systems are reasonably accessible to members and geographies of different income levels in its assessment area;

ii) To the extent changes have been made, its record of opening and closing branches has generally not adversely affected the accessibility of its delivery systems, particularly to low- and moderate-income members and in low- and moderate-income geographies;

iii) Its services (including, where appropriate, business hours) do not vary in a way that inconveniences its assessment field, particularly low- and moderate-income members and low- and moderate-income geographies; and

iv) It provides an adequate level of community development services.

D) Needs to improve. The Secretary rates a credit union's service performance "needs to improve" if, in general, the credit union demonstrates:

i) Its service delivery systems are unreasonably inaccessible to portions of its assessment field, particularly to low- and moderate-income members or to low- and moderate-income geographies;

ii) To the extent changes have been made, its record of opening and closing branches has adversely affected the accessibility its delivery systems, particularly to low- and moderate- income members or in low- and moderate-income geographies;

iii) Its services (including, where appropriate, business hours) vary in a way that inconveniences its assessment field, particularly low- and moderate-income members or low- and moderate-income geographies; and

iv) It provides a limited level of community development services.

E) Substantial noncompliance. The Secretary rates a credit union's service performance as being in "substantial noncompliance" if, in general, the credit union demonstrates:

i) Its service delivery systems are unreasonably inaccessible to significant portions of its assessment field, particularly to low- and moderate-income members or to low- and moderate-income geographies;

ii) To the extent changes have been made, its record of opening and closing branches has significantly adversely affected the accessibility of its delivery systems, particularly to low- and moderate-income members or in low- and moderate-income geographies;

iii) Its services (including, where appropriate, business hours) vary in a way that significantly inconveniences its assessment field, particularly low- and moderate-income members or low- and moderate-income geographies; and

iv) It provides few, if any, community development services.

c) Investment performance rating. The Secretary assigns each credit union's investment performance one of the five following ratings.

1. Outstanding. The Secretary rates a credit union's investment performance "outstanding" if, in general, it demonstrates:

A) An excellent level of qualified investments, particularly those that are not routinely provided by private investors, often in a leadership position;

B) Extensive use of innovative or complex qualified investments; and

C) Excellent responsiveness to credit and community development needs.

2. High Satisfactory. The Secretary rates a credit union's investment performance "high satisfactory" if, in general, it demonstrates:

A) A significant level of qualified investments, particularly those that are not routinely provided by private investors, although rarely in a leadership position;

B) Significant use of innovative or complex qualified investments; and

C) Good responsiveness to credit and community development needs.

3. Low satisfactory. The Secretary rates a credit union's investment performance "low satisfactory" if, in general, it demonstrates:

A) An adequate level of qualified investments, particularly those that are not routinely provided by private investors, although rarely in a leadership position;

B) Occasional use of innovative or complex qualified investments; and

C) Adequate responsiveness to credit and community development needs.

4. Needs to improve. The Secretary rates a credit union's investment performance "needs to improve" if, in general, it demonstrates:

A) A poor level of qualified investments, particularly those that are not routinely provided by private investors;

B) Rare use of innovative or complex qualified investments; and

C) Poor responsiveness to credit and community development needs.

5. Substantial noncompliance. The Secretary rates a credit union's investment performance as being in "substantial noncompliance" if, in general, it demonstrates:

A) Few, if any, qualified investments, particularly those that are not routinely provided by private investors;

B) No use of innovative or complex qualified investments; and

C) Very poor responsiveness to credit and community development needs.

d) Wholesale or limited purpose credit unions. The Secretary assigns each wholesale or limited purpose credit union's community development performance one of the four following ratings.

1. Outstanding. The Secretary rates a wholesale or limited purpose credit union's community development performance "outstanding" if, in general, it demonstrates:

A) A high level of community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;

B) Extensive use of innovative or complex qualified investments, community development loans, or community development services; and

C) Excellent responsiveness to credit and community development needs in its assessment field.

2. Satisfactory. The Secretary rates a wholesale or limited purpose credit union's community development performance "satisfactory" if, in general, it demonstrates:

A) An adequate level of community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;

B) Occasional use of innovative or complex qualified investments, community development loans, or community development services; and

C) Adequate responsiveness to credit and community development needs in its assessment field.

3. Needs to improve. The Secretary rates a wholesale or limited purpose credit union's community development performance as "needs to improve" if, in general, it demonstrates:

A) A poor level of community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;

B) Rare use of innovative or complex qualified investments, community development loans, or community development services; and

C) Poor responsiveness to credit and community development needs in its assessment field.

4. Substantial noncompliance. The Secretary rates a wholesale or limited purpose credit union's community development performance in "substantial noncompliance" if, in general, it demonstrates:

A) Few, if any, community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;

B) No use of innovative or complex qualified investments, community development loans, or community development services; and

C) Very poor responsiveness to credit and community development needs in its assessment field.

e) Credit Unions evaluated under the small credit union and intermediate small credit union performance standards.

1. Lending test ratings for small credit unions and intermediate small credit unions.

A) Eligibility for a satisfactory rating. The Secretary rates a small credit union or intermediate small credit union's performance "satisfactory" if, in general, the credit union demonstrates:

i) A reasonable loan-to-share ratio (considering seasonal variations) given the credit union's size, financial condition, the credit needs of its assessment field, and taking into account, as appropriate, lending-related activities such as loan originations for sale to the secondary markets and community development loans and qualified investments;

ii) A majority of its loans and, as appropriate, other lending-related activities are in its assessment field;

iii) A distribution of loans to and, as appropriate, other lending related-activities for individuals of different income levels (including low- and moderate-income individuals) and businesses and farms of different sizes that is reasonable given the demographics of the credit union's assessment field;

iv) A record of taking appropriate action, as warranted, in response to written complaints, if any, about the credit union's performance in helping to meet the credit needs of its assessment field and reasonable performance with regard to fair lending policies and practices; and

v) A reasonable geographic distribution of loans given the credit union's assessment field.

B) Eligibility for an outstanding rating. A small credit union or intermediate small credit union that meets each of the standards for a "satisfactory" rating under this paragraph and exceeds some or all of those standards may warrant consideration for an overall rating of "outstanding."

C) Needs to improve or substantial noncompliance ratings. A small credit union or intermediate small credit union also may receive a rating of "needs to improve" or "substantial noncompliance" depending on the degree to which its performance has failed to meet the standards for a "satisfactory" rating.

2. Community Development Test Ratings for Intermediate Small Credit Unions

A) Eligibility for a Satisfactory Community Development Test Rating. The Secretary rates an intermediate small credit union's community development performance "satisfactory" if the credit union demonstrates adequate responsiveness to the community development needs of its assessment field through community development loans, qualified investments, and community development services. The adequacy of the credit union's response will depend on its capacity for such community development activities, its assessment field's need for such community development activities, and the availability of such opportunities for community development in the credit union's assessment field.

B) Eligibility for an Outstanding Community Development Test Rating. The Secretary rates an intermediate small credit union's community development performance "outstanding" if the credit union demonstrates excellent responsiveness to community development needs in its assessment field through community development loans, qualified investments, and community development services, as appropriate, considering the credit union's capacity and the need and availability of such opportunities for community development in the credit union's assessment field.

C) Needs to Improve or Substantial Noncompliance Ratings. An intermediate small credit union may also receive a community development test rating of "needs to improve" or "substantial noncompliance" depending on the degree to which its performance has failed to meet the standards for a "satisfactory" rating

3. Optional Elections. A small or intermediate credit union may elect to be assessed as provided for in subsections (a)(1), (a)(2), or (a)(4) of Section 185.210 and, if such election is made, shall be evaluated pursuant to those performance standards.

f) Overall rating

1. Eligibility for a satisfactory overall rating. No intermediate small credit union may receive an assigned overall rating of "satisfactory" unless it receives a rating of at least "satisfactory" on both the lending test and community development test.

2. Eligibility for an outstanding overall rating.

A) An intermediate small credit union that receives an "outstanding" rating on one test and at least "satisfactory" on the other test may receive an assigned overall rating of "outstanding".

B) A small credit union that meets each of the standards for a "satisfactory" rating under the lending test and exceeds some or all of those standards may warrant consideration for an overall rating of "outstanding". In assessing whether a credit union's performance is "outstanding", the Secretary considers the extent to which the credit union exceeds each of the performance standards for a "satisfactory" rating and its performance in making qualified investments and its performance in providing branches and other services and delivery systems that enhance credit availability in its assessment field.

3. Needs to improve or substantial noncompliance overall rating. A small credit union may also receive a rating of "needs to improve" or "substantial noncompliance" depending on the degree to which its performance has failed to meet the standards for a "satisfactory" rating.

g) Strategic plan assessment and rating

1. Satisfactory goals. The Secretary approves as "satisfactory" measurable goals that adequately help to meet the credit needs of the credit union's assessment field.

2. Outstanding goals. If the plan identifies a separate group of measurable goals that substantially exceed the levels approved as "satisfactory", the Secretary will approve those goals as "outstanding".

3. Rating. The Secretary assesses the performance of a credit union operating under an approved plan to determine if the credit union has met its plan goals:

A) If the credit union substantially achieves its plan goals for a satisfactory rating, the Secretary will rate the credit union's performance under the plan as "satisfactory".

B) If the credit union exceeds its plan goals for a satisfactory rating and substantially achieves its plan goals for an outstanding rating, the Secretary will rate the credit union's performance under the plan as "outstanding".

C) If the credit union fails to meet substantially its plan goals for a satisfactory rating, the Secretary will rate the credit union as either "needs to improve" or "substantial noncompliance", depending on the extent to which it falls short of its plan goals, unless the credit union elected in its plan to be rated otherwise, as provided in Section 185.270(f)(4).

h) Other eligible criteria for an outstanding rating. A credit union that achieves at least a "satisfactory" rating under the lending and service tests may warrant consideration for an overall rating of "outstanding". In assessing whether a credit union 's performance is "outstanding", the Secretary will also consider the credit union's performance in making qualified investments and community development loans to the extent authorized under law.

i) Component test ratings. The Secretary may develop, by written policy or directive, a matrix system which sets forth the methodology for aggregating a credit union's scores on the lending, service, and investment tests to arrive at an assigned rating.

History

• Source: Amended at 50 Ill. Reg. 9208, effective June 29, 2026

Chapter II Department of Financial and Professional Regulation

Part 185 Credit Union Community Reinvestment

38 Ill. Adm. Code 185.APPENDIX B Ilcra Notice

a) Notice for main office. A credit union shall prominently display the following notice at its main office and on its website.

ILLINOIS COMMUNITY REINVESTMENT ACT NOTICE

Under the Illinois Community Reinvestment Act (ILCRA), the Secretary of the Department of Financial and Professional Regulation (Secretary) evaluates our record of helping to meet the credit needs of this community consistent with safe and sound operations, and consistent with our common bond. The Secretary also takes this record into account when deciding on certain applications submitted by us.

Your involvement is encouraged.

Members and persons eligible to join our credit union are entitled to certain information about our operations and our performance under the ILCRA, including, for example, information about our branches, such as their location and services provided at them; the public section of our most recent ILCRA Performance Evaluation, prepared by the Secretary; and comments received from the public relating to our performance in helping to meet community credit needs, as well as our responses to those comments. You may review this information today.

At least 30 days before the beginning of each quarter, the Secretary publishes a list of the credit unions that are scheduled for ILCRA examination by the Secretary in that quarter. This list is available from the Secretary at 320 West Washington Street, 3rd Floor Springfield, IL 62786 and 555 W. Monroe St., Suite 500, Chicago, IL 60661. You may send written comments about our performance in helping to meet community credit needs to (name and address of official at credit union) and to the Secretary at 320 West Washington Street, 3rd Floor Springfield, IL 62786 and 555 W. Monroe St., Suite 500, Chicago, IL 60661 or electronically at https://idfpr.illinois.gov/admin/cra.html. Your letter, together with any response by us, will be considered by the Secretary in evaluating our ILCRA performance and may be made public.

You may ask to look at any comments received by the Secretary. You may also request from the Secretary an announcement of our applications covered by the ILCRA filed with the Secretary. [We are an affiliate of (name of holding company), a bank holding company].

b) Notice for branch offices. A credit union shall prominently display the following notice at all branch offices and on its website.

ILLINOIS COMMUNITY REINVESTMENT ACT NOTICE

Under the Illinois Community Reinvestment Act (ILCRA), the Secretary of the Department of Financial and Professional Regulation (Secretary) evaluates our record of helping to meet the credit needs of this community consistent with safe and sound operations. The Secretary also takes this record into account when deciding on certain applications submitted by us.

Your involvement is encouraged.

Members and persons eligible to join our credit union are entitled to certain information about our operations and our performance under the ILCRA. You may review today the public section of our most recent ILCRA evaluation, prepared by Secretary, and a list of services provided at this branch. You may also have access to the following additional information, which we will make available to you at this branch within five calendar days after you make a request to us:

1. a map showing the assessment area containing this branch, which is the field in which the Secretary evaluates our ILCRA performance in this community or other documentation showing the assessment field;

2. information about our branches in this assessment field;

3. a list of services we provide at those locations;

4. data on our lending performance in this assessment field; and

5. copies of all written comments received by us that specifically relate to our ILCRA performance in this assessment field, and any responses we have made to those comments. If we are operating under an approved strategic plan, you may also have access to a copy of the plan.

If you would like to review information about our ILCRA performance in other communities served by us, the ILCRA file for our entire credit union is available at (name of office located in state), located at (address).

At least 30 days before the beginning of each quarter, the Secretary publishes a list of the credit unions that are scheduled for ILCRA examination by the Secretary in that quarter. This list is available from the Secretary at 320 West Washington Street, 3rd Floor Springfield, IL 62786 and 555 W. Monroe St., Suite 500, Chicago, IL 60661. You may send written comments about our performance in helping to meet community credit needs to (name and address of official at credit union) and to the Secretary at 320 West Washington Street, 3rd Floor Springfield, IL 62786 and 555 W. Monroe St., Suite 500, Chicago, IL 60661 or electronically at https://idfpr.illinois.gov/admin/cra.html. Your letter, together with any response by us, will be considered by the Secretary in evaluating our ILCRA performance and may be made public.

You may ask to look at any comments received by the Secretary. You may also request from the Secretary an announcement of our applications covered by the ILCRA filed with the Secretary. (We are an affiliate of (name of holding company), a holding company. You may request from (title of responsible official), Federal Reserve Bank of _______ (address) an announcement of applications covered by the ILCRA filed by holding companies.)

c) The Secretary may update the address or web address to be included on the required notices by posting a notice of the change of address to the Department's website at least 30 days prior to the change.

38 Ill. Adm. Code 185.APPENDIX C Examples of Community Development

Examples of services, programs, sponsorships, donations, lawful investments, deposits, memberships shares, grants, other activities which may be deemed to have the primary purpose of community development include, but are not limited to the following:

a) Establishment of or material support of charitable donation accounts and donor advised funds that benefit charitable organization which help meet the financial services needs of low-income and moderate-income neighborhoods or individuals within the credit union's assessment field;

b) Establishment of or material support of foundations and other affiliated companies that provide programs and services to meet the credit needs of low-income to moderate-income neighborhoods;

c) Material support of small credit unions as defined in Section 185.20 that provide programs, products and services to meet the credit needs of low-income to moderate-income individuals or families;

d) Offering products and services targeted to expand access to safe and affordable banking services;

e) Provision or support of community development services that directly and tangibly benefit the assessment field;

f) Offering products and services and/or provision of investments targeted to directly and tangibly increase climate resilience in low-income to moderate-income neighborhoods;

g) Offering products and services and or provision of investments targeted to directly and tangibly mitigate environmental harm in low-income to moderate-income neighborhoods;

h) Offering products and services and/or the provision of investments targeted to directly and tangibly mitigate the digital divide in low-income and moderate-income neighborhoods.

i) Participating in Invest in Illinois or other similar state or federal programs which have the primary purpose of community development; and

j) Participating in an activity listed on the Office of the Comptroller of the Currency's CRA Illustrative List of Qualifying Activities found on the Office's website. The Secretary shall post a link to the Office of the Comptroller of the Currency's CRA Illustrative List of Qualifying Activities on the Department's website.

38 Ill. Adm. Code 185.APPENDIX D Very Small Credit Union Examination Procedures

a) Describe your activities to ascertain the financial services needs of your assessment field, if any, and provide supporting documentation.

b) Describe the extent of marketing, if any, to your assessment field aware of the financial services offered and provide supporting documentation.

c) Describe efforts and successes, if any, to assist existing low-income and moderate-income residents in your assessment field to be able to remain in affordable housing in their neighborhoods including, but not limited to, origination of mortgage loans including and home improvement and rehabilitation loans. At the discretion of the Secretary, a credit union shall also be required to submit to the Department:

1. HMDA-LAR Quarterly Reports; or

2. The following applicant information:

A) Application date;

B) Loan Type;

C) Property Type;

D) Purpose;

E) Owner Occupancy;

F) Pre-approval;

G) Loan Action Taken (details and date);

H) Property Address;

I) Applicant's Ethnicity;

J) Applicant's Race;

K) Applicant's Sex; and

L) Gross Annual Income.

d) For small business lenders, the application and loan details regarding origination of loans to businesses in your assessment field with gross annual revenues of $1,000,000.00 or less, particularly those in low-income and moderate-income neighborhoods in your assessment field.

e) Describe your participation, if any, including investments, in community development and redevelopment programs, small business technical assistance programs, minority-owned depository institutions, community development financial institutions, and mutually-owned financial institutions, if any, and provide supporting documentation.

f) Describe your efforts and successes working with delinquent members in your assessment field to facilitate a resolution of the delinquency and provide supporting documentation. At the discretion of the Secretary, a credit union shall also be required submit to the Department:

1. A delinquency report for the last six months;

2. Collection notes for loans delinquent for sixty or more days; and

3. Current loan status.

g) Describe your efforts and successes, if any, to offer retail banking services to unbanked and underbanked persons in your assessment field and provide supporting documentation.

h) Provide a written response to any public comments, if any, received since your last ILCRA examination.

i) Provide any other information you believe is relevant to assessing whether you are meeting the financial services needs of your assessment field.

38 Ill. Adm. Code 185.APPENDIX E ILCRA Illustrative List of Qualifying Activities for Credit Unions

This list is a non-exhaustive, illustrative list of examples of activities that would meet the criteria for a community development qualifying activity under 38 Ill. Adm. Code 185 provided the appropriate documentation supports the activity and meets all requirements set forth in the ILCRA and its implementing rules. The Department is not endorsing any financial institution, fund, organization, program, non-profit, or any other entity. By listing activities that may qualify under 38 Ill. Adm. Code 185, the Department is not making any determination as to whether the activities listed are safe and sound activities, in general, or for any particular financial institution. Moreover, the Department is not making any determination as to whether the activities listed are/are not legally permissible, in general, or for any particular financial institution. Please read 38 Ill. Adm. Code 185 in its entirety for defined terms used in this list and for additional information.

Illustrative List Topic Category

Description

Topic A

Loans to low- or moderate-income individual or family.

A-1

A family residential construction loan, made to a low- or moderate-income (LMI) individual.

A-2

Closed-end loan or open-end line of credit for a 1-4 family residential property to an LMI individual.

A-3

Loan secured by a multifamily residential property to an LMI individual.

A-4

Home mortgage loan guaranteed by the Federal Housing Administration to an LMI individual.

A-5

Home mortgage loan guaranteed under the U.S. Department of Housing and Urban Development's (HUD) Indian Home Loan Guarantee Program (Section 184) to an LMI individual.

A-6

Home mortgage loan guaranteed by the U.S. Department of Agriculture's (USDA) Rural Housing Service to an LMI individual.

A-7

Home mortgage guaranteed by the U.S. Department of Veterans

Affairs (VA) to an LMI individual.

A-8

Low-cost education loan to an LMI individual, such as to fund school tuition and/or expenses.

A-9

Home equity line of credit to an LMI individual, such as for home improvement.

A-10

Non-credit card revolving credit line, such as for purchase of home appliances, to an LMI individual.

A-11

Consumer loan to an LMI individual for purposes other than purchasing an automobile, such as to fund unexpected medical expenses.

A-12

Automobile loan to an LMI individual to purchase a car.

A-13

Installment loan to an LMI individual to purchase home appliances.

A-14

Unsecured consumer loan to a moderate-income individual for household assistive technology products and vehicle modifications to improve accessibility.

A-15

Small dollar consumer loan to a low-income individual as part of a credit union program serving LMI populations.

Topic B

Small business loans to businesses.

B-1

Small business loan (including a line of credit) for a commercial and industrial purpose.

B-2

Small business loan (including a line of credit) secured by nonfarm nonresidential properties.

B-3

Small business loan under the U.S. Small Business Administration (SBA) 504 Certified Development Company program.

B-4

Small business loan to make improvements to its manufacturing facility under the SBA 7(a) loan program.

B-5

Small business loan to finance the purchase of machinery under the USDA's Rural Development Business and Industry Guarantee Loan Program.

B-6

Small business loan to improve accessibility of its facilities for disabled customers.

Topic C

Small business loans to farms.

C-1

Small business loan (including a line of credit) to finance agricultural production and other loans to farmers.

C-2

Small business loan to finance the purchase of farm equipment.

Topic D

Loans located in Indian country or other tribal and native lands.

D-1

A 1-4 family residential construction loan in Indian country or other tribal and native lands.

D-2

A loan secured by a 1-4 family residential property made in Indian country or other tribal and native lands.

D-3

A loan secured by a multifamily residential property made in Indian country or other tribal and native lands.

D-4

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed by the Federal Housing Administration.

D-5

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed under HUD's Indian Home Loan Guarantee Program (Section 184).

D-6

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed by the USDA's Rural Housing Service.

D-7

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed by the Veterans Administration.

D-8

Home equity line of credit extended in Indian country or other tribal and native lands, such as for home improvement.

D-9

Non-credit card revolving credit line, such as for purchase of home appliances, to an individual located in Indian country or other tribal and native lands.

D-10

Consumer loan made to an individual located in Indian country or other tribal and native lands for purposes other than purchasing an automobile, such as to fund unexpected medical expenses.

D-11

Automobile loan to an individual located in Indian country or other tribal and native lands to purchase a car.

D-12

Small business loan (including a line of credit) in Indian country or other tribal and native lands.

D-13

Small business loan (including a line of credit) located in Indian country or other tribal and native lands secured by nonfarm nonresidential properties.

D-14

Small business loan (including a line of credit) located in Indian country or other tribal and native lands made under the SBA Certified Development Company/504 Loan Program.

D-15

Small business loan (including a line of credit) located in Indian country or other tribal and native lands to make improvements to its manufacturing facility under the SBA 7(a) loan program.

D-16

Small business loan (including a line of credit) located in Indian country or other tribal and native lands to finance the purchase of machinery under the USDA's Rural Development Business and Industry Guarantee Loan Program.

D-17

Small business loan (including a line of credit) located in Indian country or other tribal and native lands to finance agricultural production and other loans to farmers.

Topic E

A small business loan to a business located in a low- or moderate- income census tract.

E-1

Small business loan to purchase inventory for its business located in a moderate-income census tract.

E-2

Small business loan to expand its manufacturing facility located in a low-income census tract.

Topic F

A small business loan to a farm located in a low- or moderate-income census tract.

F-1

Small business loan located in a low-income census tract to purchase farm equipment.

F-2

Small business located in a moderate-income census tract to refinance a construction loan used to expand dairy production facilities.

Topic G

Loans, investments, and services to facilitate affordable housing that is likely to be partially or primarily inhabited by low- or moderate-income individuals or families.

G-1

Loan to a non-profit organization for the purpose of providing affordable housing to LMI individuals.

G-2

Loan to a for-profit business for the purpose of providing affordable housing to LMI individuals.

G-3

Loan to a for-profit developer for construction of multi-family mixed- income rental housing that partially benefits LMI individuals.

G-4

Loan to a non-profit developer to build multi-family rental housing guaranteed under the USDA's Section 538 Guaranteed Loan Program.

G-5

Loan to a for-profit developer to build multi-family rental housing guaranteed under the USDA's Section 538 Guaranteed Loan Program.

G-6

Investment that will use tax credits from the Federal Historic Tax Credit Program to finance the adaptive reuse and renovation of a hotel into rental units in a moderate- income area.

G-7

Loan for a mixed-use property in an underserved area that will be used to help seasonal businesses provide affordable housing to seasonal LMI workers.

G-8

Loan to a for-profit developer for construction of multi-family mixed- income rental housing.

G-9

Investment that will finance the company's production of cost-effective modular housing, which will be used to supply affordable housing units.

G-10

Investment that supports the abatement of, or remediation to correct, lead-based paint, asbestos, mold, or radon that are present in a multi- family rental housing project.

Topic H

Loans, investments, and services that facilitate affordable housing that is partially or primarily inhabited by low- or moderate-income individuals or families as demonstrated by an affordable housing set-aside required by a federal, state, local, or tribal government.

H-1

Investment in a project with housing units made affordable to LMI individuals through local inclusionary zoning.

H-2

Loan to purchase a multifamily dwelling that will partially benefit LMI individuals, including renters who receive assistance under HUD's section 8 rental subsidy program.

H-3

An investment that provides financing for the construction of a rent-to-own affordable housing complex targeted to LMI individuals and families.

Topic I

Loans, investments, and services that facilitate affordable housing, in conjunction with an explicit federal, state, local, or tribal government affordable housing program for low- or moderate income individuals or families.

I-1

Investment in a limited partnership to develop and operate a Federal Low-Income Housing Tax Credit (LIHTC) multi-family housing project.

I-2

Investment to finance the conversion and rehabilitation of public housing using HUD's Rental Assistance Demonstration Program that uses a section 8 project-based contract to make the units affordable to LMI individuals and families.

I-3

Loan to a nursing home and assisted living facility that uses HUD's Section 232 loan guarantee and is defined by HUD as multifamily housing that primarily serves or assists LMI individuals or families.

I-4

Investment in a "green" retrofit initiative as part of an explicit local government program used to maintain the affordability of rental housing for LMI individuals through energy efficient measures.

I-5

Loan to facilitate the purchase of existing multifamily housing using a guarantee provided under the HUD Section 207/223(f) program to make the units affordable to LMI individuals and families.

I-6

Loan to facilitate the substantial rehabilitation of multifamily rental housing for moderate-income families, elderly and the handicapped using a guarantee provided under the HUD Section 221(d)(4) mortgage insurance program to make the units affordable to LMI individuals and families.

I-7

Loan to a Native American tribe to purchase land and construct infrastructure and affordable rental housing, as identified in the tribe's Indian Housing Plan, using a guarantee provided under the HUD Title VI Tribal Housing Activities Loan Guarantee Program to make the units affordable to LMI individuals and families.

I-8

Loan to a non-profit sponsor to rehabilitate multifamily rental housing for elderly persons (62 or older) and/or persons with disabilities using a guarantee provided under the HUD Program Section 231 to make the units affordable to LMI individuals.

I-9

Investment for Federal Historic Tax Credits to finance the adaptive reuse and renovation of a historic property that also receives financing using Federal Low-Income Housing Tax Credits.

I-10

Loan for the construction of a government-supported accessible rental housing facility for LMI disabled persons.

Topic J

Loans, investments, and services that facilitate affordable housing, such as Owner-occupied housing purchased, refinanced, or improved by or on behalf of low- or moderate-income individuals or families, except for home mortgage loans provided directly to individuals or families.

J-1

Investment in a mortgage-backed security that is primarily secured by loans to LMI borrowers.

J-2

Down payment and closing cost assistance grants on home purchase loans for LMI borrowers, including but not limited to, assisting borrowers in obtaining grants from the FHLBanks' regulatory Homeownership Set-Aside Programs.

Topic K

Intentionally blank.

Topic L

Loans, investments, and services that facilitate child care, education, workforce development and job training programs, health services, and housing services, that partially or primarily serve or assist low- or moderate-income individuals or families.

L-1

Investment in a fund that provides financing for a charter school that primarily serve LMI children.

L-2

Donation to a non-profit organization that provides transportation to medical treatments for LMI individuals.

L-3

Grant to a non-profit organization that provides housing assistance and counseling to LMI immigrants residing in the United States.

L-4

Providing mentoring/tutoring services to clients of a non-profit organization that serves LMI youth.

L-5

Investment that supports a non- profit that provides general education degrees that primarily serves to LMI individuals without a high school diploma.

L-6

Loan to a non-profit training center that provides workforce development and job training programs, which primarily serve unemployed, LMI individuals.

L-7

In-kind donation to a food pantry that provides services to unemployed, LMI families.

L-8

Loan to acquire a child care facility that serves LMI residents of a low- income neighborhood.

L-9

Credit union employees volunteer service with a non-profit that provides income tax assistance programs for LMI individuals.

L-10

Grant to a non-profit organization that runs a state-funded battered women's shelter for LMI individuals in an underserved area and as part of a statewide program.

L-11

Loan, investment, or service that supports an LMI-focused alcohol and drug recovery center.

L-12

Grant to a drug rehabilitation center that primarily serves low-income individuals.

L-13

Loan to a legal assistance program for LMI individuals.

L-14

Grant to an organization that provides resume writing services to LMI formerly incarcerated individuals.

L-15

Loan to a non-profit organization providing affordable child care services that primarily serve LMI individuals or families.

L-16

Grant to support a program that provides eyeglasses to low-income individuals.

L-17

In-kind contribution of rent-free office space to a local food bank.

L-18

Provision of technical assistance on financial matters to a non-profit organization supporting loan or grant activity under the Federal Home Loan Banks' (FHLBanks) Affordable Housing Program including, but not limited to, serving on a loan review committee, assisting in marketing financial services, furnishing financial services training for staff and management, assisting with or submitting applications, disbursing funds, or monitoring compliance activities.

L-19

Grant to a nonprofit community program which assists LMI individuals to find and enroll in free or low-cost home broadband internet services for which they are eligible.

L-20

Grant in support of a nonprofit program which refurbishes used computers in order to provide them to LMI individuals at no cost or at a very low cost.

L-21

Donations to a workforce development program designed to improve employment opportunities for LMI individuals with disabilities.

L-22

Loan to a skilled nursing facility that primarily serves low-income persons receiving Medicaid.

L-23

Donation to a school that primarily serves LMI students to purchase technology that enables it to conduct on-line classes for students affected by government mandated stay-at-home orders during a national health emergency.

Topic M

Loans, investments, and services that facilitate economic development such as activities that provide financing for or support businesses or farms including activities that promote job creation or job retention partially or primarily for low- or moderate-income individuals.

M-1

Loan to a business to expand its facility and add jobs held by LMI individuals.

M-2

Investment using New Markets Tax Credits that will allow the facility to expand and jobs that are held by LMI individuals.

Topic N

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including federal, state, local, or tribal government programs, projects, or initiatives that partially or primarily serve small businesses or small farms as those terms are defined in the programs, projects, or initiatives.

N-1

Credit union employees volunteer service providing technical assistance to small businesses on how to create business plans under a state program to support statewide business development.

N-2

Micro-loan for working capital to a small business that is a state- certified Historically Underutilized Business.

N-3

Grant to a non-profit that provides financing for small farms under a federal program to encourage new farm development.

N-4

Loan to a small business incubator that primarily benefits small businesses by providing supportive services to business start-ups and that is funded in part under a statewide community development initiative.

N-5

Loan to a small business under a tribal government loan guarantee program.

Topic O

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including retaining existing, or attracting new, businesses, farms, or residents to low- or moderate-income census tracts, underserved areas, distressed areas, designated disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands.

O-1

Loan to a business to replace equipment and restore its facilities, thereby retaining employees in a designated disaster area consistent with a disaster recovery plan.

O-2

Donation to an emergency/drought relief fund formed by a community foundation that provides grants to farms that are located in a distressed area to help sustain the farms.

O-3

A loan to finance the development of workforce housing located in an underserved area that is within close proximity to a warehouse owned by a multinational conglomerate.

Topic P

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including a Small Business Administration Certified Development Company, as that term is defined in 13 CFR 120.10, a Small Business Investment Company, as described 13 CFR part 107, a New Markets Venture Capital company, as described in 13 CFR part 108, a qualified Community Development Entity, as defined in 26 CFR 45D(c), or a U.S. Department of Agriculture Rural Business Investment Company, as defined in 7 CFR 4290.50

P-1

Investment in a New Markets Venture Capital company that finances businesses that meet the SBA's size standards used to define small business concerns.

P-2

Investment to provide financing for a food market to build a refrigerated warehouse and food distribution facility.

P-3

Investment in an SBA-certified Small Business Investment Company (SBIC) to finance businesses that meet the SBIC size standards.

P-4

Investment in a USDA Rural Business Investment Company (RBIC) to fund businesses and farms that meet the RBIC size standards.

P-5

Investment in a New Markets Tax Credit-eligible Community Development Entity to fund a mixed-use project that will include affordable housing for LMI individuals and families and retail space for a small business.

P-6

Investment eligible for Federal Historic Tax Credits to finance the adaptive reuse and renovation of a historic property that also receives New Markets Tax Credits.

P-7

Investment in a fund that purchases the debentures, guaranteed by the SBA, that are offered by the SBA-certified development companies.

P-8

Loan to a Community Development Financial Institution (CDFI) Fund- certified Community Development Entity that finances a small business' purchase of real estate related to a New Markets Tax Credit project, as provided for in 26 U.S.C. 45D.

Topic Q

Loans, investments, and services that facilitate economic development such as activities that provide financing for or support businesses or farms including technical assistance and supportive services, such as shared space, technology, or administrative assistance for businesses or farms that meet the size eligibility standards of the Small Business Investment Company program, as described in 13 CFR part 107.

Q-1

Grant to a non-profit that provides technical assistance to businesses that meet the stated size-eligibility standards.

Q-2

Loan to a non-profit entity that provides technical assistance to businesses that meet the size-eligibility standards for an SBA SBIC.

Q-3

Credit union employees volunteer through a local Chamber of Commerce to lead a workshop that provides technical assistance to the chamber's business members that meet the stated size-eligibility standards.

Q-4

Providing permanent office space rent-free at a branch for use by the local economic development organization that targets business development, predominantly among start-up and micro-businesses that meet the stated size-eligibility standards.

Q-5

Donation to a CDFI that is providing technical assistance and loans to small businesses adversely impacted by state-mandated business closures during a health emergency.

Topic R

Loans, investments and services that facilitate essential community facilities that partially or primarily serve low- or moderate-income individuals or families.

R-1

Construction loan to improve a hospital that is located in a middle- income census tract adjacent to a low-income census tract that partially benefits LMI individuals who will utilize hospital services.

R-2

Investment in a municipal bond to fund construction of a health center that will primarily serve residents of a moderate-income neighborhood.

R-3

Purchase of a local municipal bond, the proceeds of which will be used to construct a new high school that will partially serve students from LMI families.

R-4

Direct financing or investment in supportive housing for the chronically homeless incorporating eligible public funding programs, such as state-issued tax-exempt bonds, HUD's Supportive Housing Program, Section 8 Project-Based Rental Assistance, the LIHTC program, or the FHLBanks' Affordable Housing Program.

R-5

Loan to upgrade equipment at a public library to accommodate LMI disabled patrons.

R-6

Grant to an organization to purchase personal or other protective equipment for doctors and nurses treating in a Federally Qualified Health Care Center during a local health emergency.

Topic S

Loans, investments, and services that facilitate essential community facilities that partially or primarily serve low- or moderate-income census tracts, distressed areas, underserved areas, disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands

S-1

Loan to construct a new fire station located in Indian country or other tribal and native lands.

S-2

Loan to a company to build a health clinic in an underserved area, using the USDA's Community Facilities Guaranteed Loan Program.

S-3

Loan to build a police station in a distressed area.

S-4

Purchase of a local municipal bond with a purpose consistent with a local disaster recovery plan, the proceeds of which will be used to construct a new high school in a disaster area.

S-5

Loan to improve a hospital in a distressed area that serves the entire community, including LMI individuals.

S-6

Investment in a fund that finances community facilities in Indian country or other tribal and native lands, such as a community recreational facility.

Topic T

Loans, investments, and services that facilitate essential infrastructure that partially or primarily serves low- or moderate-income individuals or families.

T-1

Loan to finance construction of a road in a rural community that provides LMI residents of the area access to employment centers outside of the area.

T-2

Investment in a local cooperative to develop broadband infrastructure and expand access to LMI residents in the area.

T-3

Investment in a local municipal bond to improve city-wide water and wastewater systems with benefit to all residents, including LMI residents.

T-4

Loan for infrastructure improvements, including upgrading roads, water supply and sewer services, to a mobile home park that primarily rents space to LMI residents.

T-5

Financing of a community-wide solar plus energy storage system to reduce utility costs and help maintain affordability for a multifamily housing complex in an LMI community.

Topic U

Loans, investments, and services that facilitate essential infrastructure that partially or primarily serves low- or moderate-income census tracts, distressed areas, underserved areas, disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands.

U-1

Investment that will finance construction of a solar energy facility that uses federal renewable energy tax credits and will provide access to reduced cost electrical utilities to LMI census tracts.

U-2

Investment in a local municipal bond to refurbish a bridge that connects a low-income neighborhood with essential services without which residents would otherwise not have access to those services.

U-3

Investment in a state issued bond to reconstruct a tunnel in a disaster area, consistent with the area's disaster recovery plan.

U-4

Purchase of a local municipal bond, the proceeds of which will be used to upgrade a water pipeline that serves an underserved area.

U-5

Loan to a company to build a new flood control system as identified in the community's disaster recovery plan, such as a levee or storm drain that serves the disaster area.

U-6

Investment to finance the construction of a broadband network to develop reliable internet access in an LMI census tract.

U-7

Investment in a Special City Taxing District Bond with the purpose of renovating city sidewalks in a distressed area to comply with the Americans with Disabilities Act.

U-8

Purchase of a municipal bond issued to finance infrastructure improvements to enable a community to prevent flooding in LMI neighborhoods negatively impacted by rising water levels.

Topic V

Loans, investments, and services that facilitate a family farm's purchase or lease of farm land, equipment, and other farm- related inputs for the family farm's use in operating the farm.

V-1

Loan to a family farm to purchase a tractor.

V-2

Loan to a family farm to purchase additional land to increase production.

V-3

Loan to a vineyard that is a family farm to purchase additional acreage.

Topic W

Loans, investments, and services that facilitate a family farm's receipt of technical assistance and supportive services for the family farm's own production, such as shared space, technology, or administrative assistance through an intermediary.

W-1

Grant to a non-profit organization that provides technical assistance to family farms.

Topic X

Loans, investments, and services that facilitate a family farm's sale and trade of family farm products grown or produced by the family farm.

X-1

Loan to a family farm to construct a building from which to sell produce.

X-2

Loan to a family farm to market and sell its products statewide.

Topic Y

Loans, investments, and services that facilitate federal, state, local, or tribal government programs, projects, or initiatives that partially or primarily serve low- or moderate-income individuals or families

Y-1

Grant to a non-profit organization to provide a local government sponsored dress for success program for homeless women.

Y-2

Loan to a non-profit organization to provide a state government sponsored after-school program for students from LMI families.

Topic Z

Loans, investments, and services that facilitate federal, state, local, or tribal government programs, projects, or initiatives that are consistent with a bona fide government revitalization, stabilization, or recovery plan for a low- or moderate-income census tract; a distressed area; an underserved area; a disaster area; or Indian country or other tribal and native lands.

Z-1

Grant to a non-profit organization that receives funds from a statewide program to revitalize communities in Indian country or other tribal and native lands.

Z-2

Contribution of other real estate owned property to a local government- owned land bank whose primary purpose is consistent with a government revitalization plan that benefits LMI census tracts.

Z-3

Financing to support cleanup of industrial brownfields in a distressed area as part of a city-sponsored revitalization program.

Z-4

Investment in a Tax Increment Financing bond to finance infrastructure improvements consistent with a government revitalization plan in a distressed area.

Z-5

Loan through a state program to a company to purchase and replace equipment as well as rebuild the manufacturing facility that was damaged by flooding in a federally designated disaster area and supported by the community's disaster recovery plan.

Topic AA

Loans, investments, and services that facilitate financial literacy programs or education or homebuyer counseling.

AA-1

Financial counseling by credit union employees to participants in a workforce development program primarily benefiting LMI individuals or families.

AA-2

Credit union employees conduct first-time homebuyer counseling program for credit union customers primarily benefiting LMI individuals or families.

AA-3

Credit union employees teach financial education or literacy curricula at local community centers primarily benefiting LMI individuals or families.

AA-4

Credit union employees delivering the Federal Deposit Insurance Corporation's Money Smart Program curriculum to residents at a senior living facility primarily benefiting LMI individuals or families.

AA-5

Grant to a non-profit organization that provides financial literacy courses for a foreclosure prevention program.

AA-6

Activities supporting "train the trainer" programs that are designed to train teachers to provide financial literacy education to their students primarily benefiting LMI individuals or families.

AA-7

In-kind donation of computer equipment to a non-profit that conducts personal money management courses for LMI individuals.

AA-8

Credit union employees provide financial education in connection with a school savings program primarily benefiting LMI individuals or families.

AA-9

Loan to a non-profit credit counseling organization that conducts personal money management courses.

AA-10

Donation to an organization that conducts elder financial abuse and identity theft prevention programs.

AA-11

In-kind donation of computer equipment to a non-profit that provides financial literacy courses.

AA-12

Credit union employees assist in the preparation of tax filings under the Internal Revenue Service's Volunteer Income Tax Assistance Program.

AA-13

Credit union employees provide homebuyer education to potential buyers of single-family housing developed under a state program for middle- income individuals and families in high-cost areas.

AA-14

Credit union employees volunteer service to open savings accounts offered through a school-based banking program, including financial literacy, to students of a K- 12 school that is located in and serves residents of an LMI census tract.

AA-15

Financial support of a nonprofit community program that provides digital literacy training to residents of an LMI neighborhood, in order to increase their ability to use online banking services.

AA-16

Credit union employees provide financial capability training to individuals with disabilities.

Topic BB

Loans, investments, and services that facilitate owner-occupied and rental housing development, construction, rehabilitation, improvement, or maintenance in Indian country or other tribal and native lands

BB-1

Loan to develop housing in Indian country or other tribal and native lands that is guaranteed under HUD's Title VI Loan Guarantee Program.

BB-2

Loan to construct mixed-income housing under a tribal-government sponsored program in Indian country or other tribal and native lands.

BB-3

Loan to a for-profit developer to construct rental housing in Indian country or other tribal and native lands.

Topic CC

Loans, investments, and services that facilitate qualified opportunity funds, as defined in 26 U.S.C. 1400Z-2(d)(1), that benefit low- or moderate-income qualified opportunity zones, as defined in 26 U.S.C. 1400Z-1(a).

CC-1

Investment in a qualified opportunity fund, established to finance construction of a new manufacturing facility that creates jobs for local residents in an opportunity zone that is also an LMI census tract.

CC-2

Investment in a qualified opportunity fund, established to finance renovation of a vacant building into a cultural arts facility in an opportunity zone that is also an LMI census tract.

CC-3

Investment in a qualified opportunity fund, established to finance the rehabilitation of an acute care hospital facility, including the purchase of new medical equipment, in an opportunity zone that is also an LMI census tract.

CC-4

Investment in a qualified opportunity fund, established to finance improvements to an athletic facility owned and operated for community benefit by a local nonprofit in an opportunity zone that is also an LMI census tract.

CC-5

Investment in a qualified opportunity fund that finances construction of a grocery store in an LMI opportunity zone.

CC-6

Investment in a qualified opportunity fund that finances the construction of a commercial building intended for retail and restaurant use in an LMI opportunity zone.

Topic DD

Loans, investments, and services that facilitate other activities and ventures undertaken, including capital investments and loan participations, by a bank in cooperation with a minority depository institution, women's depository institution, Community Development Financial Institution, or low-income credit union, if the activity helps to meet the credit needs of local communities in which such institutions are chartered, including activities that indirectly help to meet community credit needs by promoting the sustainability and profitability of those institutions and credit unions.

DD-1

Credit union employee time spent facilitating a loan participation with a minority depository institution, which will help the minority depository institution to meet the credit needs of its local community.

DD-2

Credit union employees provide training to CDFI staff on underwriting small farm loans to help the CDFI expand its product offerings to its community.

DD-3

Credit union provides in-kind services in the form of free or discounted data processing systems that aids a minority depository credit unions in serving its members.

DD-4

Credit union donates branch space on a rent-free basis to a low-income credit union to better serve the credit union's customers.

DD-5

Share certificate of deposit in a minority depository institution.

DD-6

Loan to enable a minority- or women's depository institution, low- income credit union, or CDFI to partner with schools or universities to offer financial literacy education to members of the local communities in which such institutions are chartered.

DD-7

Credit union purchase or sale of a loan participation from or to a minority depository institution.

History

• Source: Added at 50 Ill. Reg. 9208, effective June 29, 2026

Chapter I Department of Financial and Professional Regulation

Part 190 Illinois Credit Union Act

38 Ill. Adm. Code 190.2 Definitions

For purposes of the Illinois Credit Union Act and this Part, the words and phrases defined in this Section shall have the meanings ascribed to them unless the context requires otherwise.

"Act" means the Illinois Credit Union Act [205 ILCS 305].

"Credit union" means a credit union chartered under the Illinois Credit Union Act, or, as the context permits, under the Federal Credit Union Act or the laws of any state.

"Department" means the Illinois Department of Financial and Professional Regulation.

"Director" means the Director of the Department of Financial and Professional Regulation-Division of Financial Institutions. As provided in Section 8(1) of the Act, the Director shall oversee the functions of the Division and report to the Secretary with respect to the Director's exercise of any of the rights, powers and duties vested by law in the Secretary under the Act or this Part.

"Division" means the Department of Financial and Professional Regulation-Division of Financial Institutions.

"GAAP" or "generally accepted accounting principles" means U.S. Generally Accepted Principles promulgated by the Financial Accounting Standards Board (see http://www.fasb.org).

"NCUA" means the National Credit Union Administration.

"Net worth" means retained earnings, as defined under GAAP, and secondary capital. Net worth does not include the allowance for loan losses account.

"Retained earnings" includes undivided earnings, regular reserve, other reserves, and any other appropriations designated by management or regulatory authorities.

"Secondary capital" means a secondary capital account or other form of non-share account, including without limitation a debt instrument, subject to the following conditions:

The maturity or the account shall not be less than three years and the account shall not be redeemable prior to maturity or the expiration of a minimum withdrawal notice period of three years.

The account shall not be insured by the National Credit Union Share Insurance Fund or any governmental or private entity.

The account holder's claim against the credit union must be subordinate to all other claims, including shareholders, creditors and the National Credit Union Share Insurance Fund.

Funds in the account, including interest accrued and paid into the account, must be available to cover operating losses realized by the credit union that exceed its net available reserves and undivided earnings. In lieu of being paid into the account, interest may be paid directly to the account holder or into a separate account from which the account holder may make withdrawals. Losses shall be distributed pro-rata among all secondary capital accounts held by the credit union at the time losses are realized.

The account may not be pledged or provided by the account holder as security on a loan or obligation with the credit union or any other party.

In the event of liquidation of the credit union, the accounts will, to the extent they are not needed to cover losses at the time of liquidation, be paid out to the account holder.

"Paid-in and unimpaired capital" or "unimpaired capital" means shares as defined in Section 1.1 of the Act.

"Person" or "persons" means individuals and bodies politic and corporate, including without limitation corporations, limited liability companies, general partnerships, limited partnerships and joint ventures; unless, from the context and facts, the intention is plain to apply only to individuals. Persons who reside in or live in a geographical area include non-natural persons located within the geographical area.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation or a person authorized by the Secretary, the Act or this Part to act in the Secretary's stead. As provided in Section 8(l) of the Act, all references in the Act or this Part to the Secretary shall be deemed to include the Director, as a person authorized by the Secretary or the Act to assume responsibility for the oversight of the functions of the Department relating to the regulatory supervision of credit unions under the Act and this Part.

"State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico and any of the several territories and possessions of the United States. When capitalized, the term "State" generally means the State of Illinois.

"Surplus" means undivided earnings.

"USPAP" means the Uniform Standards of Professional Appraisal Practice promulgated by the Appraisal Standards Board pursuant to Title XI of the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989 (12 USC 3331 et seq.) published biennially by the Appraisal Standards Board of The Appraisal Foundation, 1155 15th Street N.W., Suite 1111, Washington DC 20005 (effective January 1, 2016 through December 31, 2017; no later amendments or editions).

History

• Source: Amended at 41 Ill. Reg. 4764, effective May 1, 2017

38 Ill. Adm. Code 190.5 Credit Union Service Organizations

a) The provisions of this Section apply to credit unions investing in or lending to a Credit Union Service Organization (CUSO), which is a credit union organization as defined in Section 1.1 of the Act.

b) Prior to the initial investment in or loan to a CUSO, the records of the credit union shall contain the following information:

1. The name and location of the CUSO.

2. Services provided by the CUSO.

3. The names of the officers, employees and agents of the CUSO and their relationship to the credit union and the credit union's directors, officers, staff and members.

4. The form of organization under which the CUSO operates, including but not limited to corporation, limited partnership, general partnership, joint venture, limited liability company, or limited partnership.

5. The most recent financial statements of the credit union and the CUSO.

6. The customer base served by the CUSO.

7. The credit union's investments in or loans to other CUSOs.

8. The credit union's indebtedness to any other credit unions, corporations, financial institutions, credit union organizations, or other organizations.

c) A credit union and a CUSO must be operated in a manner that demonstrates to the public the separate corporate existence of the credit union and the CUSO.

1. Good business practices dictate that each must operate so that:

A) Its respective business transactions, accounts and records are not intermingled;

B) Each observes the formalities of its separate corporate procedures;

C) Each is adequately financed as a separate unit in the light of normal obligations reasonably foreseeable in a business of its size and character;

D) Each is held out to the public as a separate enterprise;

E) The credit union does not dominate the CUSO to the extent that the CUSO is treated as a department of the credit union; and

F) Unless the credit union has guaranteed a loan obtained by the CUSO, all borrowings by the CUSO indicate that the credit union is not liable.

2. Prior to a credit union investing in or making a loan to a CUSO, the credit union must obtain a written legal opinion as to whether the CUSO is established in a manner that will limit potential exposure of the credit union to no more than the loss of funds invested in, or loaned to, the CUSO. In addition, if a CUSO in which a credit union has made an investment or loan plans to change its form of organization under subsection (b)(4), the credit union must obtain a prior written legal opinion that the CUSO will remain established in a manner that will limit potential exposure of the credit union to no more than the loss of funds invested in, or loaned to, the CUSO. The legal opinion must address factors that have led courts to "pierce the corporate veil", such as inadequate capitalization, lack of separate corporate identity, common boards of directors and employees, control of one entity over another, and lack of separate books and records. The legal opinion may be provided by independent legal counsel of the credit union.

d) Additional Requirements

1. The CUSO must comply with the definition of a credit union organization as defined by Section 1.1 of the Act.

2. The amount a credit union may invest in and/or loan to a CUSO is subject to Board of Director approval and the following limitations:

A) Any loan to the CUSO does not cause aggregate loans to credit union organizations, per Section 51(4) of the Act, to exceed the greater of 6% of the paid-in and unimpaired capital and surplus of the credit union.

B) Any investment in the CUSO does not cause the aggregate investment in CUSOs to exceed the greater of 6% of the paid-in and unimpaired capital and surplus of the credit union in accordance with the statutory limitation on investments in CUSOs.

C) The limit on loans to CUSOs is independent and separate from the limit on investments in CUSOs.

D) "Paid-in and unimpaired capital and surplus" means shares, as defined in Section 1.1 of the Act, and undivided earnings.

E) If the investment limits described in this subsection (d)(2) are reached or exceeded because of the profitability of the CUSO and the related GAAP valuation of the investment under the equity method, without an additional cash outlay by the credit union, divestiture is not required. A credit union may continue to invest up to the authorized amount without regard to the increase in the GAAP valuation resulting from a CUSO's profitability.

3. Any CUSO in which a credit union invests or lends that directly or indirectly originates, purchases, facilitates, brokers, or services loans to consumers in Illinois shall not charge an interest rate that exceeds the applicable maximum rate established by the Predatory Loan Prevention Act [815 ILCS 123/15-5-5].

4. All dealings between the credit union's directors, officers, employees, their family members or any corporation, partnership, proprietorship or association in which these individuals hold interest and the CUSO are disclosed. Any agreements between these individuals, businesses or associations and the CUSO must be structured to project economic benefit, increased efficiencies and/or cost effective service to the credit union and must not project a detrimental effect on the earnings or sound operation of the credit union. For purposes of this subsection (d)(4) "family member" means a spouse or a child, parent, grandchild, grandparent, brother or sister, or the spouse of that individual.

5. All agreements between the credit union and the CUSO must be structured to project economic benefit, increased efficiencies and/or cost effective service to the credit union and must not project a detrimental effect on the earnings or sound operation of the credit union.

e) Prior to investing in or lending to the CUSO, the credit union must enter into a written agreement with the CUSO.

1. The written agreement must contain clauses that state the CUSO will:

A) Provide the Department with complete access to any books and records of the CUSO, with the costs of examining these records borne by the credit union served in accordance with the per diem rate set out in Section 12 of the Act.

B) Follow GAAP.

C) Provide the credit union with the financial statements of the CUSO on at least a quarterly basis and Certified Public Accountant (CPA) audited financial statements on an annual basis.

2. The agreement must also contain a clause reciting that the parties agree to terminate their contractual relationship:

A) Upon 90 days written notice to the parties by the Secretary that the safety and soundness of the credit union is threatened pursuant to the Department's cease and desist and suspension authority as outlined in Sections 8(4), 8(5) and 61 of the Act.

B) Immediately upon the parties' receipt of written notice from the Secretary when the Secretary reasonably concludes, based upon specific facts set forth in the notice to the parties, that the credit union will suffer immediate, substantial and irreparable injury or loss if it remains a party to the service contract.

3. The termination of the underlying agreement between the CUSO and the credit union shall in no way operate to relieve the CUSO of repaying any investment, indebtedness or other obligation due and owing the credit union at the time of termination.

f) In recording all transactions with the CUSO, GAAP shall be followed by the credit union.

History

• Source: Amended at 46 Ill. Reg. 18508, effective November 1, 2022

38 Ill. Adm. Code 190.10 Field of Membership Procedures

a) All requests to amend the field of membership of a credit union must be in writing and provide sufficient detail to establish conformance with a definition of common bond as specified in Section 1.1 of the Illinois Credit Union Act (the Act) [205 ILCS 305]. At a minimum this detail must include a definition of the common bond, number of individuals and demographics of potential members, and a letter of support from a sponsor organization, association, or employer if applicable.

b) To change field of membership a credit union must amend its by-laws and articles of incorporation on forms provided by the Division. These amendments require the Director's approval prior to becoming effective.

c) The Division, in administering the common bond requirement of the Act, will evaluate changes to existing or establishment of new fields of membership caused by new charters, conversion, or changes in existing by-laws in accordance with the following criteria:

1. Each credit union must have a field of membership consisting of one or more of the following common bonds: association, occupation or community. A central credit union or a corporate credit union may serve only those groups or persons specified in the Act and its by-laws and Statement of Incorporation.

2. The common bond must conform to the Act and include some unifying factor which links and distinguishes a field of membership from the general public. A generalized common belief, philosophy, or agreement, is not in itself a sufficient basis for a common bond.

3. In determining whether a change in a field of membership is appropriate, the Division also shall consider:

A) the specific circumstances which govern each request;

B) the original assumptions and circumstances of the common bond when the charter was granted;

C) the sponsoring organization's knowledge of and support for the request;

D) the credit union's demonstrated ability to fully serve its existing field in a safe and sound manner.

History

• Source: Amended at 30 Ill. Reg. 18919, effective December 4, 2006

38 Ill. Adm. Code 190.15 Civil Penalty

As provided in Section 8(6) of the Act, the amount of time specified by the Department, at the Secretary's or his or her designee's discretion, within which the credit union must remediate the specific violations shall depend on the nature and extent of the remedial action to be taken. All remedial actions must be performed to the satisfaction of the Secretary or his or her designee. Additional time for remediation may be granted at the Secretary's or his or her designee's discretion for good cause upon written request made in good faith by the credit union.

History

• Source: Added at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.19 Service of Orders

a) Unless otherwise provided for in the Act, the Department may serve orders, administrative actions, or regulatory decisions by personal delivery, certified mail or email.

b) Proof of service by email, mail or personal delivery will be attached to the original of any document served. Proof of service by email shall be the email notice to which the document is attached. Service by email is deemed complete on the day of transmission. Proof of service may be verified by certification as provided for in Section 1-109 of the Code of Civil Procedure [735 ILCS 5].

c) If service is by email, the Department shall maintain a copy of the sent email and shall verify within one business day that the transmission of the email has not failed or been rejected. In the event of rejection or failure, absent correction of an erroneous email address, service shall be made by certified mail or personal delivery.

d) Each credit union shall designate and file an email address of record with the Department. A credit union shall notify the Department prior to updating its designated email address and shall annually verify the email address of record with the Department. A credit union may designate up to two secondary email addresses of record, and if so designated, the Department shall be required to email both the email address of record and the secondary email addresses of record.

e) Documents containing information that could reasonably be deemed personal, proprietary, confidential, or trade secret information or containing other information listed under 5 ILCS 100/10-75(b) should be served by mail or personal delivery.

History

• Source: Added at 46 Ill. Reg. 12537, effective July 8, 2022

38 Ill. Adm. Code 190.20 Petition for Hearings

When a credit union or applicant has the right to request a hearing under the Act or other applicable law, a credit union shall have 90 days, unless otherwise specified in the Act or other applicable law, after service of any order, administrative action, or regulatory decision to file a Petition for Hearing pursuant to the requirements set forth in 38 Ill. Adm. Code 100.30. All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 12537, effective July 8, 2022

38 Ill. Adm. Code 190.25 Regulatory Examination Consistency and Due Process

To ensure consistency and due process, the Department shall make every reasonable effort to adhere to the following standards of performance in conducting its regulatory examinations of credit unions. To supplement this Part, the Department may establish guidelines that define the scope of the examination process and clarify the manner in which examination items shall be resolved. The scope of the guidelines shall include, but are not limited to: protocol in identifying and addressing examination findings; preparation of examination reports; delivery of examination reports; and procedures for enforcement actions and determining compliance with enforcement actions. The guidelines furnished to credit unions by the Department may be relied upon by the credit unions. The Department reserves the right to change these guidelines. The Department will provide reasonable notice when any change to the guidelines occurs.

a) Reasonable Notification

1. Prior to commencement of the examination, the Department shall mail or email a pre-examination memorandum to management and the board of directors (Board) of the credit union giving notification of the commencement date of the examination and the information the Department deems necessary to conduct the examination. Prior notification is not required if the Department suspects criminal activity or unsafe and unsound activity for which advance notice may compromise or otherwise interfere with the examination. Prior to and during the exam, the credit union shall provide timely information in response to requests by the Department for information.

2. During each stage of the examination, the Department shall make a reasonable effort to provide prior notification to management of the credit union of all joint conferences and the exit meeting. It shall be the responsibility of management to contact the Board and applicable committees of all joint conferences and the exit meeting.

b) Communication Protocol in Identifying and Addressing Examination Findings – The Department shall take reasonable steps to work with the credit unions it supervises to proactively identify problems and solutions during the examination process.

c) Delivery of Examination Reports

1. Definitions

A) An "exit meeting" is held when field work is completed and preliminary results are shared with management.

B) The "examination report meeting" with the Board and management customarily takes place after the exit meeting and is held with the Board and/or senior management. At the examination report meeting, any draft Document of Resolution (DOR) and any draft examiner's findings shall be presented to the Board and/or senior management.

C) The "final examination report" is delivered after the examination report meeting and is issued by the Department after the review examination process is finalized.

2. Examiners shall provide management and the Board with the examiner's draft findings and any draft DOR, with sufficient time to review these items before the examination report meeting with the credit union's senior management and/or Board.

3. At the exit meeting and/or at the examination report meeting, each Board member shall be permitted to participate in the meeting to fulfill his or her fiduciary duties.

4. The Department shall submit its final examination report to the credit union after the examination report meeting.

d) Examination Due Process: Enforcement Action Procedures

1. Background. The Department, acting through the Division of Financial Institutions, Credit Union Section, may determine it is prudent to take an enforcement action against a credit union. The enforcement action may either be specified by the Act or not.

A) Enforcement actions not specified by the Act are DORs and Letters of Understanding and Agreement (LUAs).Violations of the terms of a DOR or LUA may be enforced through administrative actions specified by the Act.

i) A DOR is set forth in the Examination Report and outlines an identified problem and corrective action plan to resolve the problem. A problem included in a DOR shall be significant enough that the Department may escalate the matter to the next level of elevated enforcement action for failure to correct the problem. Problems requiring attention that may be addressed in a DOR include, without limitation, unsafe or unsound practices that reasonably threaten the stability of the credit union.

ii) An LUA is an enforcement action presented to a credit union by the Department to initiate corrective action of identified material deficiencies or weaknesses in the credit union's administration or operations. The LUA shall be structured as an agreement between the Department and the credit union, pursuant to which the credit union agrees to the terms specified in the LUA.

B) Other enforcement actions are Cease and Desist Orders, Orders of Removal and Civil Penalty Orders. These enforcement actions are specified by the Act and may be unilaterally imposed on the credit union by the Department, provided that a credit union may appeal such actions to the extent provided by the Act and this Part. The Department may take enforcement actions for, among other things, significant and material violations of laws or rules, unsafe and unsound practices, breach of fiduciary duty, violations of orders and failure to implement or comply with previous regulatory actions.

2. Progressive Steps of Review. In connection with any request for reconsideration of any examination finding and/or examination corrective action item, the following procedures shall apply:

A) Examiner Level – Credit union management officials shall be encouraged to directly resolve disagreements, complaints or issues with the Examiners on-site during the regulatory examination, including the Examiner in Charge (EIC), or directly with any Examiner who otherwise identifies a deficiency or issue during any examination, visitation, investigation or review of the credit union.

B) Supervisory Level – In the event the credit union and Examiner are unable to reach a mutually acceptable resolution of the issue, the credit union may discuss the issue with the Assistant Supervisor or Supervisor of the Credit Union Section.

C) Director Level – If the credit union and Supervisor or Assistant Supervisor are unable to resolve the issue, either party may ask the Division Director to rule on the dispute. The Director may agree to do so or decline to do so.

D) Department Internal Review Committee − Irrespective of whether the Director renders a decision on the issue, the Director may elect to request that an internal panel of Department personnel consider the issue and render a final regulatory recommendation to the credit union. The internal review committee shall consist of the Director or his or her designee, Supervisor, Assistant Supervisor, Problem Case Officer and an Examiner not involved in the examination. In cases in which there is a vacancy in a designated office, the committee comprised of the other designated incumbents shall proceed to review the matter.

E) Nothing in this subsection (d)(2) shall be construed to impair or abrogate the right of a credit union to request a formal hearing under Section 190.20 to review the propriety of an administrative action or regulatory decision of the Department.

History

• Source: Added at 38 Ill. Reg. 19910, effective October 17, 2014

38 Ill. Adm. Code 190.30 Cease and Desist Procedures

a) If the Secretary issues a Cease and Desist Order pursuant to Section 8(4) of the Act, that Cease and Desist Order will be served on the credit union in the manner set forth in Section 190.19, with a copy sent to each member of the board of directors.

b) Within 90 days after service the Cease and Desist Order, the credit union may file a Petition for a Hearing pursuant to 38 Ill. Adm. Code 100.30. If no Petition for Hearing is filed, or the Cease and Desist Order is agreed to in writing, the credit union shall be deemed to have consented to the issuance of the Cease and Desist Order.

c) A cease and desist order shall become effective upon service and shall remain effective until it is terminated by action of the Secretary or a reviewing court.

History

• Source: Amended at 46 Ill. Reg. 12537, effective July 8, 2022

38 Ill. Adm. Code 190.40 Removal or Suspension Procedures

a) Under circumstances described in Section 8(5) of the Act, the Secretary or the Secretary's agent shall issue and serve upon a director, officer or committee member a written Order of Suspension to remove the named persons from office and/or to prohibit their further participation in any manner in the conduct of the affairs of the credit union.

b) The Order, which shall contain a statement of the facts constituting the grounds for the Order, shall be served on the credit union in the manner set forth in Section 190.19 and on the named persons by personal delivery or certified mail, with a copy to each member of the affected credit union's board of directors and the President, if not a director. The Order shall become effective upon service and, unless stayed by a court, shall remain in effect pending the completion of administrative proceedings as outlined in this Part.

c) Within 90 days after the service of the Order, the named persons may file a Petition for a Hearing pursuant to 38 Ill. Adm. Code 100.30 to request an administrative review of the Order. If no response is received or the Order is agreed to in writing, the persons shall be deemed to have consented to the issuance of an Order of Suspension, thereby prohibiting the named individuals from further participation in any manner in the conduct of affairs of any credit union chartered under the Act. The Order shall remain effective until it is terminated by action of the Secretary or reviewing court.

d) In the event that all of the directors of a credit union are suspended or removed, the Secretary, under authority of Section 61(4) of the Act, shall appoint a Manager-Trustee to manage the affairs of the credit union until the Secretary appoints interim successors to the directors to serve until the next annual members' meeting.

History

• Source: Amended at 46 Ill. Reg. 12537, effective July 8, 2022

38 Ill. Adm. Code 190.50 Fees

The schedule of annual regulatory fees is contained in Section 12 of the Act. In addition, pursuant to Sections 8 and 9 of the Act, the Secretary prescribes the following fees:

a) Service Fee Charges:

1)........ Investigation of application for permission to organize a new credit union.................................................................................... $250

2)........ Preparation and/or approval of an amendment to the Articles of Incorporation or to the By-Laws:

Other than to add or convert to a community common bond:

Credit unions with assets less

than $5 million...............................................................................................

$10

Credit unions with assets of $5 million

and less than $30 million...............................................................................

$15

Credit unions with assets of $30

million and greater.........................................................................................

$25

To add or convert to a community common bond (irrespective of credit union asset size) ........................................ $250

3. Preparation and/or approval of standard revised set of By-Laws........... $50

4. Preparation and/or approval of non-standard revised set of By-Laws (excluding individual or minor revisions)................................... $250

5. Photocopy of any documents per page...................................................... $1

6. Late filing of any report for each day late (excluding 5300 Reports):

Credit unions with assets less than $5 million...............................................................................

$15

Credit unions with assets of $5 million and less than $30 million...............................................................................

$25

Credit unions with assets of $30 million and greater...................................................................

$50

7. Late filing of any 5300 Report for any credit union for each day late:

Credit unions with assets less than $5 million........................

$25

Credit unions with assets of $5 million and greater.................

$50

Credit unions with assets of $50 million and greater...............

$100

8)........ Preparation of a list of credit unions by name and address................... $100

9)........ Credit Union Act, Rules & Regulations and standard By-Laws in hardback binder................................................................................. $200

Credit Union Act (no binder)..................................................................................................

$50

Rules & Regulations (no binder)..................................................................................................

$50

Standard By-Laws (no binder)..................................................................................................

$50

Hardback Binder..................................................................................................

$50

b) Mergers, Conversions, Investigations, Hearings and Failure to Maintain Books:

Supervision of merger or conversion, including completion of transfer of accounting records of merging credit union to surviving credit union's records (excluding involuntary or unsolicited mergers for which there shall be no fee)..................................................................................

$250

2. Special investigation or examination of a credit union when, in the opinion of the Secretary, there is reasonable cause to believe the credit union is engaged or has engaged, or is about to engage in an unsafe or unsound practice, or is violating or has violated a law, rule or regulation or any condition imposed in writing by the Division, or to enable the Secretary to determine the safety of a credit union's operation or its solvency.

Charge per examiner per day or part thereof assessed pursuant to the following scale based on total assets of credit union:*

$5,000,000 or less..............................................................................

$190

Greater than $5,000,000 - $100,000,000...........................................

$245

Greater than $100,000,000.................................................................

$380

• Provided that the charges may not exceed the annual regulatory fee provided in Section 12 of the Act for an annual examination.

3. The cost of any formal hearing requested by a credit union in accordance with Section 190.20 will be assessed by the Secretary.

4. A credit union failing to have its books and records available and currently posted* when contacted by the Division's examiner for examination, resulting in the Division's inability to conduct the examination, will be assessed a fee of:

Credit unions with assets of less than $1 million..

$65

Credit unions with assets of $1 million and less than $5 million...........................................

$130

Credit unions with assets of $5 million and less than $10 million....................................................

$325

Credit unions with assets of $10 million and less than $30 million....................................................

$650

Credit unions with assets of $30 million and less than $100 million..................................................

$1,300

Credit unions with assets of $100 million and less than $500 million..................................................

$3,250

Credit unions with assets of $500 million and greater....................................................................

$6,500

• Currently posted means that the accounts are posted by the 15th of the following month.

The fee authorized under this subsection (b)(4) shall not be assessed if an immaterial number of accounts is not posted by the 15th day of the following month, as determined under GAAP, or more frequently than annually.

c) Payment:

1. A credit union shall pay any fee listed in subsections (a) and (b) of this Section no later than 20 days after receipt of an invoice from the Division.

2. Individuals, partnerships or other corporations shall pay in advance any fee to be charged for the preparation of the work requested. The Division, upon request, shall provide an estimated cost of the work requested.

3. Fees shall be waived by the Secretary for forms and copies supplied to another agency of government or when the fee was not imposed according to the Act or this Part. Fees listed in subsections (a) and (b) may be waived, in whole or in part, by the Secretary, upon a showing by the credit union satisfactory to the Secretary that the imposition of the fee in the particular case would be inequitable or create a hardship for the credit union.

History

• Source: Amended at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.60 General Accounting Procedures

a) All credit unions will maintain their books and records in accordance with GAAP, and in such a manner as to provide an accurate report of financial condition, with the exception of the selection of the accounting method to be used or when otherwise directed by statutory requirements. In the event that a credit union is using the modified cash basis of accounting, and the Secretary determines that method causes a material misstatement of the financial condition of the credit union, the Secretary shall require that the credit union convert to the full accrual method of accounting, except when factors such as prohibitive cost or lack of expertise are evident. The Division will notify in writing any credit union required to convert to the full accrual method and provide 60 days to review and respond.

b) If the credit union does not concur with the Division's requirement, it may request a formal hearing under Section 190.20. The order to change accounting procedures is stayed pending the final outcome of the hearing.

c) Regardless of the method of accounting in use, the following items must be accrued or amortized:

1. Dividends on Classes of Shares;

2. Premiums and Discounts on purchased investments;

3. Depreciation of Fixed Assets; and

4. Interest on investments when paid less frequently than once a year.

d) If a credit union uses the accrual method to recognize interest income on consumer loans, the accrual must be stopped and income recognized on a cash basis whenever the borrower is three months or more delinquent in contractual payments.

e) All credit union charts of accounts must be kept in sufficient detail to allow accurate and full completion of all reports required by Section 9 of the Act.

f) Pursuant to the authority granted to the Secretary by Section 60(B) of the Act to decrease the reserve requirement set forth in Section 60(A) of the Act, a credit union is exempt from the reserve requirement of Section 60(A) if:

1. The credit union's net worth to asset ratio is 7% or greater; or

2. If the credit union's net worth to asset ratio at the end of a calendar quarter is less than 7%, the credit union transfers an amount equal to .1% of the credit union's assets from undivided earnings to regular reserve at the end of the next calendar quarter and quarterly thereafter until the net worth to assets ratio is equal to or greater than 7%.

3. Notwithstanding subsection (f)(2), a credit union with a net worth to asset ratio of greater than 6% is not required to make the earnings retention transfer of 0.1% from undivided earnings to regular reserve at the end of the next quarter until after the quarter ending 3/31/2023 unless the Secretary determines that a transfer is necessary to address safety and soundness concerns.

History

• Source: Amended at 46 Ill. Reg. 16221, effective September 6, 2022

38 Ill. Adm. Code 190.70 Loan Loss Accounting Procedures

a) For the purpose of absorbing and reporting loan losses, all credit unions must establish, at a minimum, the following accounts in the general ledger:

1. Allowance for Loan Losses (ALL) – A portion of the statutory Regular Reserve segregated and reported as a direct reduction of loans. The ALL shall fairly present the value of loans and probable losses for all categories of loans. Adjustments to the ALL shall be made prior to the distribution or posting of any dividend to the accounts of members.

2. Provision for Loan Losses (PLL) – An expense account, immediately preceding dividend expense, used to reflect the cost of losses on loans. Replenishment of the allowance for loan losses must be expensed using the PLL account.

b) The ALL shall be established and maintained subject to the following requirements:

1. The ALL shall be established based upon separate loss calculations reflecting loans secured by real estate and loans not secured by real estate. A credit union may further segment its loan portfolio, to recognize loss contingencies, by identifying risk characteristics that are common to groups of loans. Portfolio segmentation and impairment measurement may be based upon many factors, including without limitation major loan types and product line segments with differing risk characteristics.

2. The ALL shall be maintained at a level equivalent to an amount computed using an historical loan loss experience ratio and an individual classification of probable losses for all consumer and real estate loans. In determining the appropriate balance in the ALL, a credit union may determine its historical loss rate using a defined period of time of less than 5 years, provided that:

A) The credit union employs a certified public accountant to perform its annual external independent audit;

B) The methodology developed by the credit union to determine the defined period of time is formally documented in the credit union's policies and procedures or management memoranda, and is appropriate to the credit union's size, business strategy and loan portfolio characteristics, and the economic environment of the areas and employers served by the credit union;

C) Supporting documentation is maintained by the credit union for a period of no less than three audit cycles for the technique used to develop the credit union loss rates, including the period of time used to accumulate historical loss data and the factors considered in establishing the time frames; and

D) The external auditor conducting the credit union's financial statement audit has analyzed the methodology employed by the credit union and concludes that the financial statements, including the allowance for loan losses, are fairly stated in all material respects in accordance with U.S. Generally Accepted Accounting Principles, as promulgated by the Financial Accounting Standards Board. [205 ILCS 305/34(4)]

3. To the extent consistent with GAAP, the design and implementation of ALL methodologies and supporting documentation practices shall be in accordance with the National Credit Union Administration's Interpretive Ruling and Policy Statement (IRPS) 02-3 (NCUA, 1775 Duke Street, Alexandria VA 22314-3428, Allowance for Loan and Lease Losses Methodologies and Documentation for Federally-Insured Credit Unions, 67 Fed. Reg. 37445).

4. A credit union that does not employ a certified public accountant to perform an annual external independent audit shall utilize the five-year period preceding the subject fiscal period to compute its historical loan loss experience ratio. A credit union not employing a certified public accountant to perform its annual external independent audit may adjust the five-year historical time period to more accurately reflect its loan loss experience, upon application to and receipt of written approval from the Secretary.

5. Historical Loss Experience Ratio

A) The historical loss experience ratio is computed by dividing the total net loan losses for the appropriate period of time determined by the credit union under subsection (b)(2) or (b)(4), as applicable, by an amount representing the average loan balances for the defined period. The resulting ratio is multiplied by the total loans outstanding, less:

i) loans that have been classified individually; and

ii) pools of homogenous loans for which an estimated loss percentage has been utilized.

B) A new credit union will determine its historical loss experience ratio using available data. As used in this subsection (b)(5), "net loan losses" means loan chargeoffs, less loan recoveries, for the defined period of time.

6. If a pool consists of a large group of homogeneous loans, a credit union may utilize an estimated loss percentage on the pool to be determined by collectively evaluating the pool of loans for impairment in accordance with GAAP. The portion of the ALL attributable to the pool of loans may be determined by applying the estimated loss percentage to the total outstanding balance of the loans comprising the pool instead of individually classifying delinquent loans in the pool.

7. Notwithstanding anything to the contrary in this subsection (b), a credit union that employs a certified public accountant to perform its annual external independent audit must formally document its methodology to support:

A) Its utilization of any defined period of time in determining its historical loss rate; and

B) Its decision to change its defined period of time in determining its historical loss rate.

c) Delinquency is defined as the failure to make a required payment on or before the contractual due date. Loans delinquent more than 60 days, bankruptcy and loans that exhibit deficiencies that impair their full collectability shall be classified as either substandard, doubtful or loss.

1. Substandard Loans – A substandard loan is one that is inadequately protected by the current sound worth and paying capacity of the obligee or of the collateral pledged. Loans classified as substandard have a well defined weakness or weaknesses that jeopardized the liquidation of the debt. They are characterized by the distinct possibility that the credit union will sustain some loss if the deficiencies are not corrected. Loans in this category shall generally be listed in a range from zero to under 50 percent potential loss.

2. Doubtful Loans – A loan classified doubtful has all the weaknesses inherent in a loan classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until a more exact status may be determined. Loans in this category shall be listed at a minimum 50 percent potential loss.

3. Loss Loans – Loans classified as loss loans are considered uncollectible and shall be listed at 100 percent potential loss. Loans considered loss loans include, but are not limited to:

A) Any loan 180 days or more delinquent without a payment of at least 75% of the contractual payment within the last 90 days. Involuntary transfers from shares and proceeds from the sale of collateral and insurance settlement shall not be considered as payments.

B) Any loan that is 180 days or more delinquent and referred to an attorney or a collection agency.

C) Any loan that was previously 180 days or more delinquent, has been refinanced or extended and has subsequently become 90 days or more delinquent. In instances in which a delinquent loan is refinanced or extended and does not fully and fairly disclose the delinquency as determined in a statutory examination of the credit union, the loan shall be immediately classified as a loss loan.

D) Any loan with respect to which the borrower has filed a Chapter 7 bankruptcy petition and has been granted a discharge by the court.

E) Any loan with respect to which the borrower has filed a Chapter 13 bankruptcy and the credit union has not received a payment within 180 days or more after the confirmation of the plan, unless the plan stipulates repayment of the loan in full and the credit union has determined from the Trustee that plan payments are being made on a timely basis to the Trustee but have not yet been disbursed to the credit union.

F) Any loan with respect to which the borrower's whereabouts is unknown (a "skip"), unless there is a comaker whose whereabouts is known and the loan is less than 180 days delinquent.

G) Any loan where a "deficiency balance" has resulted from the sale of collateral or an insurance settlement unless there is documented evidence of periodic payments on a consistent basis in an amount sufficient to retire the deficiency balance in a reasonable time.

4. When there is evidence of collectability of loans meeting the loss loans criteria of subsection (c)(3), the credit union's records shall list the loans and classify them as substandard or doubtful and detail the evidence of collectability used to exclude each loan from the loss loan category. Evidence of collectability shall be the following collection activities and remedies:

A) Execution and filing of an enforceable reaffirmation agreement on the loan in a Chapter 7 bankruptcy proceeding prior to completion of the Division's loan analysis in any statutory examination of the credit union.

B) Voluntary repayment of the loan pursuant to section 524(f) of the federal Bankruptcy Code (11 USC 524(f)).

C) Collection of the loan pursuant to repossession of collateral without judicial process, or by replevin, detinue, forcible entry and detainer or mortgage foreclosure proceedings.

D) Collection of the loan pursuant to post-judgment enforcement remedies including wage deduction, garnishment and turnover orders entered in citation to discover assets supplementary proceedings.

E) The entry of a judgment pay plan order providing for repayment of the loan in a judicial proceeding.

F) Documented evidence of repayment of that portion of the loan covered by collateral protection or other insurance policies.

G) Documented evidence of periodic payments on a consistent basis in an amount sufficient to retire the loan balance in a reasonable time.

5. Before every dividend declaration or every closing date, all delinquent and bankrupt loans shall be individually classified as either substandard, doubtful or loss. All loans classified as losses must be charged off to the ALL.

d) Nothing in this Section shall be applicable to the establishment of an Allowance for Loan Losses account for business loans. Business loans shall be classified pursuant to Section 190.165.

History

• Source: Amended at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.80 Use of Electronic Data Processing

a) A credit union whose records or accounting system is maintained using electronic data processing (EDP) equipment must have such accounts and EDP programs to enable the credit union to complete in an accurate and timely manner all required reports and to maintain its books, records, all subsidiary accounts and management reports, as appropriate, in accordance with the Illinois Credit Union Act and Rules and Regulations promulgated thereunder. Delinquency listings should be completed in accordance with 38 Ill. Adm. Code 190.70.

b) A credit union must notify the Division in writing 45 days prior to implementation of data processing system or conversion to a different system. This notification must include the name of the system and the date of conversion.

History

• Source: Amended at 30 Ill. Reg. 18919, effective December 4, 2006

38 Ill. Adm. Code 190.90 Fixed Asset Investments

a) Definitions

"Fixed assets" means premises and furniture, fixtures and equipment, as those terms are defined in this Section:

"Premises" includes any office, branch office, suboffice, service center, parking lot, other facility, or real estate where the credit union transacts or will transact business.

"Furniture, fixtures and equipment" includes all office furnishings, office machines, computer hardware and software, automated terminals, and heating and cooling equipment.

"Investment in fixed assets" means:

any investment in real property (improved or unimproved) that is being used or is intended to be used as premises, excluding premises leased for five years or less;

any leasehold improvement on premises;

the present value of the aggregate of all capital lease payments pursuant to lease agreements for fixed assets, excluding lease payments for premises leased for five years or less;

any investment in the bonds, stock, debentures, or other obligations of a partnership or corporation or limited liability entity, including a credit union service organization, holding any fixed assets used by the credit union and any loans to that partnership or corporation or limited liability entity; and

any investment in furniture, fixtures and equipment.

"Retained earnings" includes undivided earnings, regular reserve, other reserves, and any other appropriations designated by management or regulatory authorities.

b) Investment in Fixed Assets

1. Credit unions with assets of less than $1,000,000 that choose to invest in premises must apply to the Division for approval.

2. Credit unions with assets of $1,000,000 or more may invest in fixed assets, without the prior approval of the Division.

c) Credit unions with assets of less than $1,000,000 seeking to invest in premises must submit to the Division an application for approval. The application for approval must contain the following minimum supporting documentation:

1. why the purchase and/or lease is necessary to serve the credit union's members;

2. details of the proposed transaction including:

A) location and full description of the fixed asset;

B) if a purchase of premises is involved, current valuation by an independent appraiser;

C) purchase price or lease details;

D) current owners and their relationship to the credit union or to any members of the credit union;

E) how the project will be financed;

F) if a purchase, lease or improvement of premises is involved, a summary of planned due diligence inspections to verify building, building line and use or occupancy restrictions; conditions and covenants on record; zoning laws and ordinances; easements for public utilities; and other matters pertinent to the transaction; and

G) evidence that the increase in operating expenses caused by the project can be supported after accounting for the current level of expenses and dividend commitments;

3. the credit union's latest balance sheet, income statement and loan delinquency report;

4. a certified copy of Board minutes that contain approval for the project.

d) The Division shall respond to applications for approval of fixed asset investments as follows:

1. The Division shall inform the credit union applicant, in writing, of the date the letter of application was received.

2. Approval of applications shall be given in writing once it is determined by the Division that the proposal will not adversely affect the credit union's financial position. The determination will be based on the past history, current financial condition, projections of the credit union, and whether the increase of operating expenses caused by the project can be supported after accounting for the current level of expense, dividend and reserve commitments.

3. An approval will state a dollar amount or percentage of retained earnings that may be invested in fixed assets by the credit union.

4. The Division shall provide to credit union applicants written notification of action taken within 45 calendar days after receipt of the complete package of supporting documentation from the credit union. If the credit union does not receive written notification of the action taken within 45 calendar days after the date the complete package of supporting documentation was received by the Division, the credit union may proceed with its proposed investment in fixed assets.

e) A credit union that has received approval for a specific fixed asset transaction from the Division prior to the date of promulgation of amendments to this Section shall continue to be eligible to consummate the transaction after the date of promulgation, without further Division approval.

f) In recording all transactions for fixed assets, GAAP shall be followed.

History

• Source: Amended at 41 Ill. Reg. 4764, effective May 1, 2017

38 Ill. Adm. Code 190.100 Classes of Share and Special Purpose Share Accounts

a) Any account which is not a common share account shall be considered as a class of share or special purpose share account as applicable. Section 38 of the Illinois Credit Union Act [205 ILCS 305/38] requires dividends to be declared and distributed ratably among holders of share accounts of the same class. Variable rate dividends can be declared on common shares with the dividend rates determined by share balance during the dividend period.

b) A credit union may offer class(es) of shares and special purpose share account programs to its members provided that:

1. All specific offerings shall be approved by a resolution of the Board of Directors.

2. Class of share and special purpose share accounts may be issued in the same forms of ownership as common share accounts.

3. The par value of all such classes and special purpose accounts shall be the same as common shares.

4. All such programs are described in writing and prominently displayed in the office(s) of the credit union. Classes shall be designated as Class ONE, TWO etc. All accounts must be made available to members on an equal basis.

5. The terms and conditions of each class or special account must be fully described in writing to the member upon opening an account. Such description shall include how ownership of the share(s) is evidenced, the basis for the calculation and payment of dividends, any applicable penalties, any renewal options and the alternatives for receipt of dividend payments.

6. The credit union's accounting records shall give detailed information on each class, which shall include general ledger accounts for each share account balance, the dividend expense and accrued dividends payable thereon. Consolidation of account detail on classes of shares for reporting on the financial statement is permitted.

7. If a credit union's financial condition prevents payment of dividends on common share accounts, dividends may not be credited or paid on classes or special purpose shares for the same period. In this event, members with class of share accounts may withdraw shares without penalty or loss of dividends which have been paid or credited.

History

• Source: Amended at 30 Ill. Reg. 18919, effective December 4, 2006

38 Ill. Adm. Code 190.110 Share Drafts

a) A credit union with total assets of $1 million or less may, upon resolution of the Board of Directors, request permission of the Division to offer share drafts to their members provided that:

1. the total assets of the credit union are at a sufficient level to support the additional costs of the program;

2. shares are insured by NCUA or other approved insurance programs;

3. the credit union has full time management or is serviced by a center with full time management;

4. has automated record keeping or is serviced by a center with such equipment; and

5. the financial trends of the credit union, including, but not limited to, the loan delinquency, liquidity, reserves, expense and growth ratios, demonstrate the credit union's ability to manage safely a Share Draft Program.

b) The Division will respond to all applications within 30 days after receipt. If the application is not approved, the disapproval will identify the financial and/or operation characteristics which must be improved before re-application can be made.

c) A credit union with total assets greater than $1 million may, upon resolution of the Board of Directors, offer share drafts to its members without permission of the Division.

d) If dividends on the proposed share draft accounts are to be paid at a different rate or calculated on a basis different from existing common share accounts, then in accordance with Section 37 of the Illinois Credit Union Act [205 ILCS 305/37], the share drafts must be established as a class of share.

History

• Source: Amended at 30 Ill. Reg. 18919, effective December 4, 2006

38 Ill. Adm. Code 190.120 Bond and Insurance Requirements

a) Bond:

1. The board of directors or liquidating agent of each credit union shall provide a fidelity bond in a form determined by the Secretary to meet the requirements of this Section and issued by a corporate surety authorized to do business in this State. The bond must provide coverage for the fraud and dishonesty of all employees, directors, officers and committee members (see Sections 20(2), (3) and (4) and 30(13) of the Act) and for losses caused by persons outside of the credit union due to theft, holdup, vandalism and other criminal acts. Coverage for the faithful performance of duty is an option the board of directors may provide for all or selected employees, directors, officers and committee members.

2. Each bond shall require the surety to give a minimum of 30 days written notice to the Credit Union Division of the Division prior to cancellation of any or all coverages set out in the bond.

3. Any form of rider or exclusion added to the bond must have prior approval from the Secretary, to insure that at least the minimum bond is in effect and not compromised.

4. A copy of the Declaration Page describing the coverage of the bond and any riders or exclusions are to be forwarded 10 days prior to the anniversary date or a change in coverage to the Division by the surety. The Declaration Page must show at least the following: the form number of the bond, the number of the bond, the name of the credit union, the rating period, or anniversary date, the term of the bond and the maximum limits of liability under the insuring clauses.

b) Bond Schedule:

1. The minimum principal amount of the bond shall be based on the total assets of the credit union, according to the following schedule:

Total Assets

Minimum Coverage

$0 to $10,000

Coverage equal to the credit union's assets

$10,001 to $1,000,000

$10,000 for each $100,000 or fraction thereof

$1,000,001 to $50,000,000

$100,000 plus $50,000 for each million or fraction thereof over $1,000,000

$50,000,001 to $295,000,000

$2,550,000 plus $10,000 for each million or fraction thereof over $50,000,000

Over $295,000,000

$5,000,000

2. Coverage in amounts in excess of the above minimum requirements may be purchased when the board of directors, in fulfilling its duty to provide adequate fidelity bond coverage, determines the additional coverage is needed. Minimum coverage limits must be extended to cover the additional risk when, aside from events that cannot be expected to recur, the total of cash on premise or in transit exceeds the minimum coverage limits. For purposes of this Section, the term cash shall include currency, coin, share drafts, checks, banknotes, Federal Reserve notes, revenue stamps, postage stamps and SNAP benefits.

3. The board of directors shall review the bond coverage at least once each year to determine that the bond coverage is adequate and at a minimum, is in compliance with the above scheduled requirements. The board of directors may, consistent with the requirements of this Section, elect to purchase bond coverage subject to a deductible.

4. The maximum amount of deductibles allowed shall be based on the total assets of the credit union according to the following:

Assets

Maximum Deductibles

$0 to $100,000

No deductibles allowed

$100,001 to $250,000

$1,000

$250,001 to $1,000,000

$2,000

Over $1,000,000

$2,000 plus 1/1000 of total assets up to a maximum deductible of $200,000.

5. No deductible shall exceed 10% of a credit union's Regular Reserve unless the credit union creates a segregated Contingency Reserve for the amount of the excess. The Reserve for Loan Losses account may not be considered part of the Regular Reserve when determining the maximum deductible. The deductible shall not exceed the maximum amounts listed in subsection (b)(4) unless approved by the Secretary in accordance with subsection (b)(6).

6. A deductible may be applied separately to one or more insuring clauses in a blanket bond. Deductibles in excess of those shown in this Section must have the written approval of the Secretary at least 20 days prior to the effective date of the deductibles. For purposes of this Section, the Secretary shall allow an excess deductible if the credit union will not be harmed. In making that determination, the Secretary shall consider, but is not limited to, the adequacy of reserves, the current financial condition of the credit union, financial trends and the credit union's lending record.

7. The Secretary will require increased bond requirements for any credit union when the Secretary determines that current coverage is insufficient. In making that determination, the Secretary shall consider the factors listed in subsection (b)(6). The board of directors of the credit union must obtain additional coverage within 30 days after the date of written notice from the Secretary.

History

• Source: Amended at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.130 Verification of Share and Loan Accounts

a) The Supervisory Committee must make or cause to be made at least once each year a reasonable percentage verification of members' share and loan accounts. Except when prior written permission is given by the Division, for good cause shown, the verification results are to be reported in the Supervisory Committee Report filed with the Division. The verification shall be conducted by the Committee, or by a registered public accountant, under the supervision of the Committee.

b) Verifications Conducted by the Supervisory Committee

1. The Committee must test 100% of the accounts at least once every two years; however, the Committee may submit a modified program using generally accepted auditing standards for approval by the Division. When conducting the verification, the Committee must establish the following controls:

A) The commencement of the verification must be on a surprise basis, including taking possession and control of books and records, or copies thereof, necessary for the audit.

B) All work is to be done by the Supervisory Committee or its designated agents; all credit union staff, employees and other directors shall not be involved, other than to explain exceptions.

C) General notice of the verification is to be publicized to the membership in the credit union offices and by other appropriate means.

D) Separate records of members' share and loan account trial balances are to be maintained by the Committee; the Committee must also maintain a separate list of members that is to be updated from the Board minutes for new and terminated members.

E) All responses and communications to the verifications by members must be to the Supervisory Committee or its agents.

F) All records supporting the verification are to be retained by the Supervisory Committee.

2. Verification requests may be of either the positive kind, which requires a direct reply or attestation by the member as to the correctness or the balances, or the negative kind, which require replies only if the information listed is, in the opinion of the member, incorrect. Provided however, that the following accounts must be verified using the positive method:

A) Inactive or dormant accounts – members' accounts that show no member initiated activity for at least 3 years.

B) Accounts with recent activity following a period of at least 3 years of dormancy.

C) Accounts that show unusually large share withdrawals.

D) Accounts that have delinquent loans.

E) Share and loan accounts closed or charged off since the last verification was conducted.

F) Accounts where negative requests are returned due to an inaccurate address.

G) Any other accounts with unusual or significant activity, or which, in the judgment of the Committee, should be done on a positive basis to verify the integrity of the negative verification requests.

3. All discrepancies reported should be resolved and, if known, the reason for the error shall be reported to the board, along with the results of the audit.

c) Verification Conducted by a CPA Firm or Individual Registered with the State of Illinois to Practice as a Public Accountant

1. When the Supervisory Committee's audit is performed by a CPA or a Registered Public Accountant, either positive or negative verification requests may be used. The extent and nature of all tests is to be decided jointly by the Committee and the CPA or Registered Public Accountant.

2. At the conclusion of the audit, a statement must be given that reflects the work performed and the responsibilities accepted by the firm or individual. This statement shall be signed by the person in charge of the audit, or by the person who accepts responsibility for the firm, and shall be attached to the audit report given to the board of directors.

History

• Source: Amended at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.140 Real Estate Lending

a) A credit union with total assets greater than $1 million may, following a resolution of its board, make loans secured by a lien on real estate, including an assignment of a beneficial interest in a land trust, subject to the following procedures:

Total Assets of a Credit Union

Maximum Amount of Loans Secured by Real Estate

Aggregate of All First Mortgage Loans Secured by Real Estate

Under $1 million

Lending Limits for Consumer Loans

0% of total assets

$1 - 2.5 million

$165,000*

25% of total assets

$2.5 - 5 million

$250,000*

30% of total assets

$5 - 10 million

$330,000

35% of total assets

$10 - 30 million

$580,000

40% of total assets

$30 - 100 million

$825,000

45% of total assets

Over $100 million

$1,000,000

50% of total assets

• The aggregate loans to one member may not exceed the aggregate limit referenced in subsection (e).

b) Credit unions with assets under $1 million may make home equity and second mortgage loans subject to the lending limits for consumer loans set forth in Section 190.160. Credit unions with assets under $1 million shall not make first mortgage real estate loans.

c) Credit unions shall not make first mortgage real estate loans for more than the estimated market value or appraised value of the real estate securing the loans. Real estate loans, other than first mortgage loans, shall be limited to the value of the member-borrower's equity in the real estate securing the loan, provided a credit union may consider as equity any outstanding loan amount secured by the real estate if the outstanding loan will be repaid with the proceeds of the credit union's loan.

d) The maximum individual lending limit and the maximum ratio of first mortgage real estate loans may be increased by obtaining written approval from the Secretary. Approval is to be based upon the need of the members and the credit union's real estate lending record.

e) The maximum limit on an individual loan by credit unions with assets greater than $1 million is in addition to the secured and unsecured lending limits of Section 190.160; provided, however, in no event shall all loans to any member exceed in the aggregate 10% of the credit union's unimpaired capital and surplus as defined in Section 190.2. Loans subject to the requirements for business loans shall be subject to the appraisal requirements set forth in subsection (h), but shall not be subject to the other provisions of this Section.

f) The maximum maturity of a loan secured by a first mortgage shall not exceed 40 years.

g) Procedures

1. All loans secured by a lien on real estate shall be made based upon prudent written lending policies and sound lending practices as documented in each member's loan file. Unless waived by the Secretary, lending policies shall include, without limitation, acceptable debt-to-income and loan-to-value ratios that will be considered the types of real estate security that will be accepted and any other prudent data considered necessary to determine the appropriateness of a loan request. All applicable Illinois and federal statutes shall be observed.

2. All accounting for real estate loan transactions shall be in accordance with GAAP.

h) Documentation

1. Any credit union granting loans secured by a lien in real estate must procure and retain the following documentation in its files:

A) A loan application that specifies the purpose of the loan (equity, purchase, construction, refinance, etc.). The application must contain sufficient information to support the approval of the loan. The information shall include without limitation: the amount of the loan requested; the purchase price (if applicable); a listing of the borrower's assets and liabilities; a statement of the borrower's income; a specific identification of the property; and an explanation of the source of the borrower's down payment. If the loan proceeds will be used for the purchase of the property, a copy of the real estate sale contract shall be included as an attachment to the application.

B) A legal opinion from the credit union's attorney, or a title insurance policy that identifies the credit union's lien position on the property used to secure the loan. In the case of home equity lines of credit, second mortgages, and non-purchase money first mortgage transactions, a title search prepared by a service provider capable of conducting a search shall be acceptable.

C) For transactions of $400,000 or less, a written estimate of market value of the property securing the loan, performed by an individual having no direct or indirect interest in the property and experienced to perform estimations of value for the type and amount of credit being considered. For transactions over $400,000, an appraisal by a state certified or licensed appraiser that estimates the market value of the property used as security for the loan.

D) A credit report prepared by the credit union or a credit reporting agency. The report, in conjunction with the information contained in subsection (h)(1)(A), must demonstrate the applicant's past history of repayment and ability to repay the loan in question.

E) A duly executed note and mortgage agreement that outline the borrower's agreement to repay the loan on the terms agreed, and the borrower's agreement to provide the credit union with a valid security interest in the subject property. The mortgage agreement must contain an accurate legal description of the subject property and be duly recorded in the office of the appropriate county recorder of deeds.

F) A settlement statement reflecting all costs of closing and all disbursements of funds at closing for real estate loans that require the use of a settlement statement under the federal Real Estate Settlement Procedures Act (RESPA) (12 USC 2601).

G) On any loan for which the lesser of the loan-to-value ratio or loan-to-purchase price ratio exceeds 80%, the credit union may require the borrower to obtain private mortgage insurance insuring the excess of the loan above the 80% factor.

H) In the event the subject loan is to be used for the construction of a residential dwelling that is or will be the principal residence of the member-borrower and the loan will be secured by a perfected first lien or first security interest in favor of the credit union, the credit union must obtain satisfactory evidence of the payment in full of the costs of furnishing labor and material in connection with the construction. The evidence shall include receipt of an owner's statement, under oath, setting forth the names of all parties with whom the owner has contracted for the furnishing of labor and material; a general contractor's sworn statement from each of the parties named in the owner's statement; a subcontractor's sworn statement from each subcontractor named in the general contractor's statement; and partial and final unconditional lien waivers from the general contractor and all subcontractors and materialmen indicating that they have completed their respective portion of the work and been paid in full. The credit union must inspect, or cause to be inspected by a third party, the completion of each phase of the work for which an advance of any portion of the loan proceeds is sought. Any such inspections must be clearly documented in the file as to the date of the inspection and a brief explanation of the work progression. Additionally, the credit union must obtain a borrower payment authorization, in connection with each payment to the general contractor. This subsection (h)(1)(H) shall not apply to a loan to finance the repair, alteration or improvement of a residential dwelling which is the residence of the member-borrower.

2. A loan secured by a lien on real estate is exempt from the requirements of subsections (h)(1)(B), (C) and (G) of this Section if the loan complies with the following criteria:

A) The loan is not used for the purchase or refinancing of the real estate securing the loan.

B) The lien on real estate is taken as collateral solely through an abundance of caution.

C) The terms of the transaction are not more favorable than they would have been in the absence of the lien on real estate.

D) The transaction complies with the lending limits and other requirements for consumer loans set forth in Section 190.160.

3. The completion of appraisals or written estimates of market value required by subsection (h)(1)(C) may be deferred up to 120 days from the date of closing. The deferrals authorized under this subsection (h)(3) apply to all residential and commercial real estate-secured transactions, excluding transactions for acquisition, development, and construction of real estate. The deferrals of appraisals or written estimates of market value authorized by this subsection (h)(3) only applies to transactions that close on December 31, 2020.

i) Sale of Real Estate Loans

1. A credit union may sell, in whole or in part, any loan secured by real estate to:

A) Federal National Mortgage Association (FNMA).

B) Government National Mortgage Association.

C) Federal Home Loan Mortgage Corporation.

D) The Federal Home Loan Bank of the Federal Home Loan Bank System district in which the credit union is located.

E) Federal, Illinois and Local Housing Authorities.

F) Credit Unions, Banks, Savings Banks and Savings and Loan Associations chartered under the laws of the United States, the State of Illinois or any other state.

G) Residential mortgage licensees properly registered with and licensed by the Department of Financial and Professional Regulation-Division of Banking.

H) Other institutions approved by the Secretary.

2. All such sales shall not be subject to recourse or repurchase that enables the credit union to retain control over the transferred assets. The credit union shall have surrendered control over the transferred assets if:

A) The transferred assets have been put presumptively beyond the reach of the credit union transferring the assets and its creditors;

B) The purchaser has the right to pledge or exchange the assets; and

C) The credit union does not maintain effective control over the transferred assets through an agreement that both entitles and obligates the credit union to repurchase the assets before their maturity.

3. A limited recourse provision in a sale agreement that obligates the credit union transferring assets to purchase the assets because of breach of warranty or misrepresentation shall be considered a sale.

History

• Source: Amended at 44 Ill. Reg. 18320, effective November 13, 2020

38 Ill. Adm. Code 190.150 Reverse Mortgage (repealed)

History

• Source: Repealed at 41 Ill. Reg. 4764, effective May 1, 2017

38 Ill. Adm. Code 190.160 Lending Limits – Consumer Loans

a) The board of directors of a credit union shall, for loans other than loans secured by an interest in real estate, establish the maximum lending limits that shall not exceed the limits in the following schedule. A credit union may request approval from the Secretary for an exception to these limits, which shall be in writing substantiating the need for higher limits, shall detail the credit union's record of lending activity, and shall include financial statements reflecting sound fiscal history. In no event shall all loans to any member exceed, in the aggregate, 10% of the credit union's unimpaired capital and surplus as defined in Section 190.2.

Total Credit

Union Assets

Maximum Unsecured Limit, Including Unsecured Credit Cards

Maximum

Secured Limit

$0

500,000

$4,000*$

$30,000*

$500,000

1 million

$8,000

$38,000

$1

5 million

$15,000

$60,000

$5

10 million

$18,000

$75,000

10

30 million

$24,000

$98,000

$30

100 million

$30,000

$120,000

Over

$100 million

$48,000

$180,000

• The aggregate loans to one member may not exceed the aggregate limit referenced in subsection (a).

b) The unsecured loan limits, including unsecured credit cards, and secured loan limits are separate limits for each member. Subject to the member aggregate loan limit referenced in subsection (a) and provided a member is credit worthy, the credit union may lend a total amount equal to the secured and unsecured loan limit in a single loan to any one member.

c) The above limits may be extended by the amount of the member's unencumbered share accounts, which must be pledged and frozen for the loan amount in excess of the limits.

d) All loans are to be granted based upon prudent lending practice and procedures and in accordance with written lending policies and procedures prescribed by the board of directors.

History

• Source: Amended at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.165 Business Loans

a) Purpose and Scope

1. This Section is intended to accomplish two broad objectives. First, it sets out policy and program responsibilities that an Illinois chartered credit union must adopt and implement as part of a safe and sound commercial lending program. Second, it incorporates the statutory limit on the aggregate amount of member business loans that a federally insured credit union may make pursuant to Section 107A of the Federal Credit Union Act (12 USC 1757a). This Section distinguishes between these two distinct objectives.

2. Credit Unions and Loans Covered by this Section

A) This Section applies to Illinois chartered natural person credit unions. However, an Illinois chartered natural person credit union is not subject to subsections (c) and (d) if it meets all of the following conditions:

i) The credit union's total assets are less than $250 million.

ii) The credit union's aggregate amount of outstanding commercial loan balances and unfunded commitments, plus any outstanding commercial loan balances and unfunded commitments of participations sold, plus any outstanding commercial loan balances and unfunded commitments sold and serviced by the credit union total less than 15% of the credit union's net worth.

iii) In a given calendar year the amount of originated and sold commercial loans the credit union does not continue to service total less than 15% of the credit union's net worth.

B) This Section does not apply to loans:

i) Made by a corporate credit union, as defined in Section 1.1 of the Act;

ii) Made by a federally insured credit union to another federally insured credit union;

iii) Made by a credit union to a credit union service organization, as defined in Section 190.5; or

iv) Fully secured by a lien on a 1 to 4 family residential property that is a member's primary residence.

3. Other Regulations that Apply

A) As required by section 741.203 of the NCUA regulations (12 CFR 741.203), a federally insured, State chartered credit union must comply with sections 701.21(c)(8) (prohibited fees) and (d)(5) (non-preferential loans) (12 CFR 701.21(c)(8) and (d)(5)).

B) When a credit union makes a commercial loan as part of a loan program in which a federal or state agency (or its political subdivision) insures repayment, guarantees repayment, or provides an advance commitment to purchase the loan in full and that program has requirements that are less restrictive than those required by this Section, the credit union may follow the loan requirements of the relevant guaranteed loan program.

C) The requirements of section 701.22 of the NCUA regulations (12 CFR 701.22) apply to a federally insured credit union's purchase of a participation interest in a commercial loan.

b) Definitions − For purposes of this Section, the following definitions apply:

1. "Associated borrower" means any other person or entity with a shared ownership, investment or other pecuniary interest in a business or commercial endeavor with the borrower. This means any person or entity named as a borrower or debtor in a loan or extension of credit, or any other person or entity, such as a drawer, endorser or guarantor, engaged in a common enterprise with the borrower, or deriving a direct benefit from the loan to the borrower. Exceptions to this definition for partnerships, joint ventures and associations are as follows:

A) If the borrower is a partnership, joint venture or association, and the other person with a shared ownership, investment or other pecuniary interest in a business or commercial endeavor with the borrower is a member or partner of the borrower, and neither a direct benefit nor a common enterprise exists, this other person is not an associated borrower.

B) If the borrower is a member or partner of a partnership, joint venture or association, the other entity is not an associated borrower if:

i) the other entity with a shared ownership, investment or other pecuniary interest in a business or commercial endeavor with the borrower is the partnership, joint venture or association;

ii) the borrower is a limited partner of that other entity; and

iii) by the terms of a partnership or membership agreement valid under applicable law, the borrower is not held generally liable for the debts or actions of that other entity.

C) If the borrower is a member or partner of a partnership, joint venture or association, the other person is not an associated borrower if:

i) the other person with a shared ownership, investment or other pecuniary interest in a business or commercial endeavor with the borrower is another member or partner of the partnership, joint venture or association; and

ii) neither a direct benefit nor a common enterprise exists.

2. "Commercial loan" means any loan, line of credit or letter of credit (including any unfunded commitments), and any interest a credit union obtains in loans made by another lender, to individuals, sole proprietorships, partnerships, corporations or other business enterprises for commercial, industrial, agricultural or professional purposes, but not for personal expenditure purposes. Excluded from this definition are loans:

A) made by a corporate credit union;

B) made by a federally insured credit union to another federally insured credit union;

C) made by a credit union to a credit union service organization;

D) made by a credit union not subject to section 107A of the Federal Credit Union Act (12 USC 1757a) to another credit union;

E) secured by a 1 to 4 family residential property (whether or not it is the borrower's primary residence);

F) fully secured by shares in the credit union making the extension of credit or deposits in other financial institutions;

G) secured by a vehicle manufactured for household use; and

H) that would otherwise meet the definition of commercial loan, when the aggregate outstanding balances plus unfunded commitments less any portion secured by shares in the credit union to a borrower or an associated borrower are less than $50,000.

3. "Common enterprise" means:

A) The expected source of repayment for each loan or extension of credit is the same for each borrower and no individual borrower has another source of income from which the loan (together with the borrower's other obligations) may be fully repaid. An employer will not be treated as a source of repayment because of wages and salaries paid to an employee, unless the standards described in subsection (b)(3)(B) are met;

B) Loans or extensions of credit are made:

i) To borrowers who are related directly or indirectly through common control, including when one borrower is directly or indirectly controlled by another borrower; and

ii) Substantial financial interdependence exists between or among the borrowers. Substantial financial interdependence means 50% or more of one borrower's gross receipts or gross expenditures (on an annual basis) are derived from transactions with another borrower. Gross receipts and expenditures include gross revenues or expenses, intercompany loans, dividends, capital contributions and similar receipts or payments; or

C) Separate borrowers obtain loans or extensions of credit to acquire a business enterprise of which those borrowers will own more than 50% of the voting securities or voting interests.

4. "Control" means a person or entity directly or indirectly, or acting through or together with one or more persons or entities:

A) Owns, controls or has the power to vote 25% or more of any class of voting securities of another person or entity;

B) Controls, in any manner, the election of a majority of the directors, trustees or other persons exercising similar functions of another person or entity; or

C) Has the power to exercise a controlling influence over the management or policies of another person or entity.

5. "Credit risk rating system" means a formal process that identifies and assigns a relative credit risk score to each commercial loan in a credit union's portfolio, using ordinal ratings to represent the degree of risk. The credit risk score is determined through an evaluation of quantitative factors based on financial performance and qualitative factors based on management, operational, market and business environmental factors.

6. "Direct benefit" means the proceeds of a loan or extension of credit to a borrower, or assets purchased with those proceeds, that are transferred to another person or entity, other than in a bona fide arm's-length transaction, when the proceeds are used to acquire property, goods or services.

7. "Financial statement quality" is determined by:

A) The level of assurance provided by the preparer and the required professional standards supporting the preparer's opinion. In many cases, tax returns and/or financial statements professionally prepared in accordance with generally accepted accounting principles (GAAP) will be sufficient for less complex borrowing relationships, such as those that are limited to a single operation of the borrower and principal with relatively low debt. For more complex and larger borrowing relationships, such as those involving borrowers or principals with significant loans outstanding or multiple or interrelated operations, the credit union should require borrowers and principals to provide either:

i) An auditor's review of the financial statements prepared consistent with GAAP to obtain limited assurance (i.e., a "review quality" financial statement); or

ii) an independent financial statement audit under generally accepted auditing standards (GAAS) for the expression of an opinion on the financial statements prepared in accordance with GAAP (i.e., an "audit quality" financial statement).

B) Credit unions should address the criteria and thresholds for the required financial reporting in their policies. Credit unions should allow exceptions in their credit policies if they determine the relationship does not require the same level of assurance and they are satisfied that the lesser quality still provides them with accurate reporting of the borrower's financial performance. Credit unions will be expected to address the issue of exceptions in their loan policies. Any exception should be documented by credit union staff and approved by the appropriate designated internal authority.

8. "Immediate family member" means a spouse or other family member living in the same household.

9. "Loan secured by a 1 to 4 family residential property" means a loan that, at origination, is secured wholly or substantially by a lien on a 1 to 4 family residential property for which the lien is central to the extension of the credit; that is, the borrower would not have been extended credit in the same amount or on terms as favorable without the lien. A loan is wholly or substantially secured by a lien on a 1 to 4 family residential property if the estimated value of the real estate collateral at origination (after deducting any senior liens held by others) is greater than 50% of the principal amount of the loan.

10. "Loan secured by a vehicle manufactured for household use" means a loan that, at origination, is secured wholly or substantially by a lien on a new or used passenger car or other vehicle such as a minivan, sport-utility vehicle, pickup truck or similar light truck or heavy-duty truck generally manufactured for personal, family or household use and not used as a fleet vehicle or to carry fare-paying passengers, for which the lien is central to the extension of credit. A lien is central to the extension of credit if the borrower would not have been extended credit in the same amount or on terms as favorable without the lien. A loan is wholly or substantially secured by a lien on a vehicle manufactured for household use if the estimated value of the collateral at origination (after deducting any senior liens held by others) is greater than 50% of the principal amount of the loan.

11. "Loan-to-value ratio" means, with respect to any item of collateral, the aggregate amount of all sums borrowed and secured by that collateral, including outstanding balances plus any unfunded commitment or line of credit from another lender that is senior to the credit union's lien position, divided by the current collateral value. The current collateral value must be established by prudent and accepted commercial lending practices and comply with all regulatory requirements. For a construction and development loan, the collateral value is the lesser of cost to complete or prospective market value, as determined in accordance with subsection (f).

12. "Net worth" means a credit union's net worth, as defined in Section 190.2.

13. "Readily marketable collateral" means a financial instrument or bullion that is salable under ordinary market conditions with reasonable promptness at a fair market value determined by quotations based upon actual transactions on an auction or similarly available daily bid and ask price market.

14. "Residential property" means a house, condominium unit, cooperative unit, manufactured home (whether completed or under construction) or unimproved land zoned for 1 to 4 family residential use. A boat or motor home, even if used as a primary residence, or timeshare property is not residential property.

c) Board of Directors and Management Responsibilities

Prior to engaging in commercial lending, a credit union must address the following board responsibilities and operational requirements:

1. Board of Directors. A credit union's board of directors, at a minimum, must:

A) Approve a commercial loan policy that complies with subsection (d). The board must review its policy on an annual basis, prior to any material change in the credit union's commercial lending program or related organizational structure, and in response to any material change in portfolio performance or economic conditions, and update it when warranted.

B) Ensure the credit union appropriately staffs its commercial lending program in compliance with subsection (c)(2).

C) Understand and remain informed, through periodic briefings from responsible staff and other methods, about the nature and level of risk in the credit union's commercial loan portfolio, including its potential impact on the credit union's earnings and net worth.

2. Required Expertise and Experience. A credit union making, purchasing or holding any commercial loan must internally possess the following experience and competencies:

A) Senior Executive Officers. A credit union's senior executive officers overseeing the commercial lending function must understand the credit union's commercial lending activities. At a minimum, senior executive officers must have a comprehensive understanding of the role of commercial lending in the credit union's overall business model and establish risk management processes and controls necessary to safely conduct commercial lending.

B) Qualified Lending Personnel. A credit union must employ qualified staff with experience in the following areas:

i) Underwriting and processing for the type of commercial lending in which the credit union is engaged;

ii) Overseeing and evaluating the performance of a commercial loan portfolio, including rating and quantifying risk through a credit risk rating system; and

iii) Conducting collection and loss mitigation activities for the type of commercial lending in which the credit union is engaged.

C) Options to Meet the Required Experience. A credit union may meet the experience requirements in subsections (c)(2)(A) and (c)(2)(B) by conducting internal training and development, hiring qualified individuals or using a third-party, such as an independent contractor or a credit union service organization. However, with respect to the qualified lending personnel requirements in subsection (c)(2)(B), use of a third-party is permissible only if the following conditions are met:

i) The third-party has no affiliation or contractual relationship with the borrower or any associated borrowers;

ii) The actual decision to grant a loan must reside with the credit union;

iii) Qualified credit union staff exercises ongoing oversight over the third party by regularly evaluating the quality of any work the third party performs for the credit union; and

iv) The third-party arrangement must otherwise comply with subsection (g).

d) Commercial Loan Policy

Prior to engaging in commercial lending, a credit union must adopt and implement a comprehensive written commercial loan policy and establish procedures for commercial lending. The board-approved policy must ensure the credit union's commercial lending activities are performed in a safe and sound manner by providing for ongoing control, measurement and management of the credit union's commercial lending activities. At a minimum, a credit union's commercial loan policy must address each of the following:

1. Type of commercial loans permitted.

2. Trade area.

3. Maximum amount of assets, in relation to net worth, allowed:

A) in secured, unsecured and unguaranteed commercial loans;

B) in any given category or type of commercial loan; and

C) to any one borrower or group of associated borrowers, provided:

i) the policy must specify that the aggregate dollar amount of commercial loans to any one borrower or group of associated borrowers may not exceed the greater of 15% of the credit union's net worth or $100,000, plus an additional 10% of the credit union's net worth if the amount that exceeds the credit union's 15% general limit is fully secured at all times with a perfected security interest by readily marketable collateral, as defined in subsection (b);

ii) any insured or guaranteed portion of a commercial loan made through a program in which a federal or state agency (or its political subdivision) insures repayment, guarantees repayment or provides an advance commitment to purchase the loan in full, is excluded from this limit; and

iii) the maximum limit on commercial loans is in addition to the secured and unsecured limits established in Sections 190.140 and 190.160; provided, however, in no event shall all loans to any borrower or group of associated borrowers exceed in the aggregate 10% of the credit union's unimpaired capital and surplus.

4. Qualifications and experience requirements for personnel involved in underwriting, processing, approving, administering and collecting commercial loans.

5. Loan approval processes, including establishing levels of loan approval authority commensurate with the individual's or committee's proficiency in evaluating and understanding commercial loan risk, when considered in terms of the level of risk the borrowing relationship poses to the credit union.

6. Underwriting standards commensurate with the size, scope and complexity of the commercial lending activities and borrowing relationships contemplated. The standards must, at a minimum, address the following:

A) The level and depth of financial analysis necessary to evaluate the financial trends and condition of the borrower and the ability of the borrower to meet debt service requirements;

B) Thorough due diligence of the principals to determine whether any related interests of the principals might have a negative impact or place an undue burden on the borrower and related interests with regard to meeting the debt obligations with the credit union;

C) Requirements of a borrower-prepared projection when historic performance does not support projected debt payments. The projection must be supported by reasonable rationale and, at a minimum, must include a projected balance sheet and income and expense statement;

D) The financial statement quality and the degree of verification sufficient to support an accurate financial analysis and risk assessment;

E) The methods to be used in collateral evaluation, for all types of collateral authorized, including loan-to-value ratio limits. These methods must be appropriate for the particular type of collateral. The means to secure various types of collateral, and the measures taken for environmental due diligence, must also be appropriate for all authorized collateral; and

F) Other appropriate risk assessment, including analysis of the impact of current market conditions on the borrower and associated borrowers.

7. Risk management processes commensurate with the size, scope and complexity of the credit union's commercial lending activities and borrowing relationships. These processes must, at a minimum, address the following:

A) Use of loan covenants, if appropriate, including frequency of borrower and guarantor financial reporting;

B) Periodic loan review, consistent with loan covenants, sufficient to conduct portfolio risk management. This review must include a periodic reevaluation of the value and marketability of any collateral;

C) A credit risk rating system. Credit risk ratings must be assigned to commercial loans at inception and reviewed as frequently as necessary to satisfy the credit union's risk monitoring and reporting policies and to ensure adequate reserves as required by GAAP; and

D) A process to identify, report and monitor loans approved as exceptions to the credit union's loan policy.

e) Collateral and Security

1. A credit union must require collateral commensurate with the level of risk associated with the size and type of any commercial loan. Collateral must be sufficient to ensure adequate loan balance protection, along with appropriate risk sharing with the borrower and principals. A credit union making an unsecured loan must determine and document in the loan file that mitigating factors sufficiently offset the relevant risk.

2. A credit union that does not require the full and unconditional personal guarantee from the principals of the borrower who has a controlling interest in the borrower must determine and document in the loan file that mitigating factors sufficiently offset the relevant risk.

f) Construction and Development Loans

In addition to the requirements of subsections (a) through (e), the following requirements apply to a construction and development loan made by any credit union.

1. For the purposes of this subsection (f), a construction or development loan means any financing arrangement enabling the borrower to acquire property or rights to property, including land or structures, with the intent to construct or renovate an income producing property, such as residential housing for rental or sale, or a commercial building, such as may be used for commercial, agricultural, industrial or other similar purposes. It also means a financing arrangement for the construction, major expansion or renovation of the property types referenced in this subsection (f). The collateral valuation for securing a construction or development loan depends on the satisfactory completion of the proposed construction or renovation when the loan proceeds are disbursed in increments as the work is completed. A loan to finance maintenance, repairs or improvements to an existing income producing property that does not change its use or materially impact the property is not a construction or development loan.

2. A credit union that elects to make a construction or development loan must ensure that its commercial loan policy includes adequate provisions by which the collateral value associated with the project is properly determined and established. For a construction or development loan, collateral value is the lesser of the project's cost to complete or its prospective market value.

A) For the purposes of this subsection (f), "cost to complete" means the sum of all qualifying costs necessary to complete a construction project and documented in an approved construction budget. Qualifying costs generally include on-site or off-site improvements, building construction, other reasonable and customary costs paid to construct or improve a project, including general contractor's fees, and other expenses normally included in a construction contract, such as bonding and contractor insurance. Qualifying costs include the value of the land, determined as the lesser of appraised market value or purchase price plus the cost of any improvements. Qualifying costs also include interest, a contingency account to fund unanticipated overruns, and other development costs such as fees and related pre-development expenses. Interest expense is a qualifying cost only to the extent it is included in the construction budget and is calculated based on the projected changes in the loan balance up to the expected "as-complete" date for owner-occupied non-income producing commercial real estate or the "as-stabilized" date for income producing real estate. Project costs for related parties, such as developer fees, leasing expenses, brokerage commissions and management fees, are included in qualifying costs only if reasonable in comparison to the cost of similar services from a third party. Qualifying costs exclude interest or preferred returns payable to equity partners or subordinated debt holders, the developer's general corporate overhead, and selling costs to be funded out of sales proceeds, such as brokerage commissions and other closing costs.

B) For the purposes of this subsection (f), "prospective market value" means the market value opinion determined by an independent appraiser in compliance with the relevant standards set forth in the USPAP. Prospective value opinions are intended to reflect the current expectations and perceptions of market participants, based on available data. Two prospective value opinions may be required to reflect the time frame during which development, construction and occupancy occur. The prospective market value "as-completed" reflects the property's market value as of the time that development is to be completed. The prospective market value "as-stabilized" reflects the property's market value as of the time the property is projected to achieve stabilized occupancy. For an income producing property, stabilized occupancy is the occupancy level that a property is expected to achieve after the property is exposed to the market for lease over a reasonable period of time and at comparable terms and conditions to other similar properties.

3. A credit union that elects to make a construction and development loan must also assure its commercial loan policy meets the following conditions:

A) Qualified personnel representing the interests of the credit union must conduct a review and approval of any line item construction budget prior to closing the loan;

B) A credit union approved requisition and loan disbursement process is established;

C) Release or disbursement of loan funds occurs only after on-site inspections, documented in a written report by qualified personnel representing the interests of the credit union, certifying that the work requisitioned for payment has been satisfactorily completed, and the remaining funds available to be disbursed from the construction and development loan are sufficient to complete the project; and

D) Each loan disbursement is subject to confirmation that no intervening liens have been filed.

g) Prohibited Activities

1. Ineligible Borrowers. A credit union shall not grant a commercial loan to the following:

A) Any senior management employee directly or indirectly involved in the credit union's commercial loan underwriting, servicing and collection process, and any of their immediate family members;

B) Any person meeting the definition of an associated borrower with respect to persons identified in subsection (g)(1)(A); or

C) Any compensated director, unless the credit union's board of directors approves granting the loan and the compensated director was recused from the board's decision making process.

2. Equity Agreements/Joint Ventures. A credit union shall not grant a commercial loan if any additional income received by the credit union or its senior management employees is tied to the profit or sale of any business or commercial endeavor that benefits from the proceeds of the loan.

3. Conflicts of Interest. Any third party used by a credit union to meet the requirements of this Section must be independent from the commercial loan transaction and shall not have a participation interest in a loan or an interest in any collateral securing a loan that the third party is responsible for reviewing, or an expectation of receiving compensation of any sort that is contingent on the closing of the loan, with the following exceptions:

A) A third party may provide a service to the credit union that is related to the transaction, such as loan servicing.

B) The third party may provide the requisite experience to a credit union and purchase a loan or a participation interest in a loan originated by the credit union that the third party reviewed.

C) A credit union may use the services of a credit union service organization that otherwise meets the requirements of subsection (c)(2)(C) even if the credit union service organization is not independent from the transaction, provided the credit union has a controlling financial interest in the credit union service organization as determined under GAAP.

h) Aggregate Member Business Loan Limit; Exclusions and Exceptions

This subsection (h) incorporates the statutory limits on the aggregate amount of member business loans that may be held by a federally insured credit union and establishes the method for calculating a federally insured credit union's net member business loan balance for purposes of the statutory limits and NCUA form 5300 reporting.

1. Statutory Limits. The aggregate limit on a federally insured credit union's net member business loan balances is the lesser of 1.75 times the actual net worth of the credit union, or 1.75 times the minimum net worth required under section 1790d(c)(l)(A) of the Federal Credit Union Act (12 USC 1790d(c)(1)(A)).

2. Definition. For the purposes of this subsection (h), "member business loan" means any commercial loan as defined in subsection (b), except that the following commercial loans are not member business loans and are not counted toward the aggregate limit on a federally insured credit union's member business loans:

A) Any loan in which a federal or state agency (or its political subdivision) fully insures repayment, fully guarantees repayment, or provides an advance commitment to purchase the loan in full;

B) Any non-member commercial loan or non-member participation interest in a commercial loan made by another lender, provided the federally insured credit union acquired the non-member loans and participation interests in compliance with all relevant laws and regulations and is not, in conjunction with one or more other credit unions, trading member business loans to circumvent the aggregate limit; and

C) Any loan that is fully secured by a lien on a 1 to 4 family dwelling.

3. Exceptions. Any loan secured by a vehicle manufactured for household use that will be used for a commercial, corporate or other business investment property or venture, or agricultural purpose, is not a commercial loan but is a member business loan (if the outstanding aggregate net member business loan balance is equal to or greater than $50,000) and must be counted toward the aggregate limit on a federally insured credit union's member business loans.

4. Statutory Exemptions. A federally insured credit union that has a low-income designation, or participates in the U.S. Department of the Treasury's Community Development Financial Institutions Program, or was chartered for the purpose of making member business loans, or that as of the date of enactment of the Credit Union Membership Access Act of 1998 (P.L. 105-219), had a history of primarily making commercial loans, is exempt from compliance with the aggregate member business loan limits in this subsection (h).

5. Method of Calculation for Net Member Business Loan Balance. For the purposes of NCUA form 5300 reporting, a federally insured credit union's net member business loan balance is determined by calculating the outstanding loan balance plus any unfunded commitments, reduced by any portion of the loan that is:

A) secured by shares in the credit union;

B) secured by shares or deposits in other financial institutions;

C) secured by a lien on a member's primary residence;

D) insured or guaranteed by any agency of the federal government, a state or any political subdivision of that state;

E) subject to an advance commitment to purchase by any agency of the federal government, a state or any political subdivision of that state; or

F) sold as a participation interest without recourse and qualifying for true sales accounting under GAAP.

i) Transitional Provisions

This subsection (i) governs circumstances in which, as of January 1, 2017, a credit union is operating in accordance with an approved waiver from the Division or NCUA or is subject to any enforcement constraint relative to its commercial lending activities.

1. Waivers. As of January 1, 2017, any waiver approved by the Division or NCUA concerning a credit union's commercial lending activity is rendered moot, except that waivers granted prior to January 1, 2017, for borrowing relationships (loans made to one borrower or group of associated borrowers), will be grandfathered. However, the debt associated with those relationships may not be increased.

2. Enforcement Constraints. Limitations or other conditions imposed on a credit union in any written directive from the Division or NCUA, including, but not limited to, items specified in any Document of Resolution, any published or unpublished Letter of Understanding and Agreement, Regional Director Letter, Preliminary Warning Letter, or formal enforcement action, are unaffected by the adoption of this Section. Included within this subsection (i)(2) are any constraints or conditions embedded within any waiver issued by the Division or NCUA. As of January 1, 2017, all these limitations or other conditions remain in place until they are modified by the Division or NCUA.

j) Allowance for Loan Losses for Business Loans

Allowance for loan losses for business loans will be determined in accordance with GAAP. The external auditor conducting the credit union's financial statement audit shall analyze the methodology employed by the credit union and conclude that the financial statements, including the allowance for loan losses, are fairly stated in all material respects in accordance with GAAP.

History

• Source: Amended at 43 Ill. Reg. 303, effective January 1, 2019

38 Ill. Adm. Code 190.170 Group Purchasing

A credit union may enter into cooperative marketing arrangements that are related to the promotion of thrift and to improve the economic and social conditions of its members under the following conditions:

a) that participation whether directly or indirectly, such as supplying a list of members for mail soliciting, has been approved by a Board resolution and that the terms of the activity are in writing between the credit union and the suppliers. Before approving any program to be available to the membership, the Board of Directors must satisfy itself as to the economic merits of the program and should make every effort to safeguard its membership against misrepresentation or deception by any program sponsor.

b) the participation in the program must be strictly voluntary by the member.

c) participation in the program shall not be directly or indirectly a condition of a loan, nor for the purchase of additional shares in the credit union.

d) in operating a cooperative program, the credit union may not at any time carry as inventory or as any other asset, merchandise, services or other form of product except to the extent that such product or service has already been ordered or purchased by a member.

History

• Source: Amended at 26 Ill. Reg. 17999, effective December 9, 2002

38 Ill. Adm. Code 190.180 Investments

The board of directors of a credit union shall use the following procedures in managing and investing funds not being used for loans to members.

a) The board must develop a written investment policy that includes, at a minimum:

1. persons authorized to take investment actions and the kinds of investments permitted the designated person or committee;

2. limits by amount and term of the investments;

3. procedure for approval of all broker or advisor relationships;

4. procedure for safekeeping of securities.

b) All investments are to be recorded on the books and records in accordance with GAAP and so as to enable the Division to readily ascertain the financial condition of the credit union.

c) Investments are limited to the direct purchase of securities listed in Section 59 of the Act, and common trust or mutual funds whose investment authority is limited solely to securities and investments listed in Section 59.

d) Credit unions may invest in privately issued collateralized mortgage obligations (CMOs). A CMO is a corporate bond secured by mortgage pass-through certificates of the Government National Mortgage Association or the Federal National Mortgage Association (FNMA), provided the obligations receive the highest rating (either AAA or AA) by Standard and Poors or another comparable rating service.

e) Credit unions are not authorized to engage in speculative investment activities or transactions, including but not limited to:

1. short sales of securities;

2. adjusted trades;

3. standby commitments;

4. cash forward agreements in excess of 120 days from the trade date;

5. futures contracts;

6. the buying and carrying of securities on margin through the use of borrowed funds; or

7. investment in fixed and variable annuities, except as provided in Section 59(c) of the Act.

History

• Source: Amended at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.185 Investment in "other Financial Institutions"

For purposes of Section 59(a)(7) of the Act, the term "other financial institution" means a bank established under the laws of this or any other state or established under the laws of the United States, a savings and loan association or savings bank established under the laws of this or any other state or established under the laws of the United States, a credit union established under the laws of this or any other state or established under the laws of the United States, a licensee under the Sales Finance Agency Act [205 ILCS 660] or an insurance company.

History

• Source: Added at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.190 Liquidation

A credit union may enter liquidation through actions initiated by its board of directors to voluntarily dissolve or by actions initiated by the Secretary of the Department to involuntarily dissolve and be liquidated by a Liquidating Agent of one person or a committee under the following procedures:

a) Voluntary Liquidation:

1. After completing the requirements in Section 62 of the Act, the Liquidating Agent must furnish a fidelity bond in compliance with section 190.120.

2. Upon receipt and approval of the fidelity bond, the Secretary shall issue a Certificate of Voluntary Dissolution attesting to compliance with Section 62 of the Act, stating the names of the Liquidating Agent and authorizing the taking of possession and control of the books, records and assets of the credit union for the purpose of conserving and collecting the assets, paying all indebtedness and distributing the remaining assets to the membership. Certified copies of the Certificate of Voluntary Dissolution shall be furnished to the Liquidating Agent for use in securing access to the credit union's funds in depositories, withdrawal of investments or for any other purpose to carry out the liquidation.

b) Involuntary Liquidation:

1. Under the provisions of Sections 61 and 62 of the Act, the Secretary shall issue to the credit union by certified mail, with a copy to each director, an order for Possession and Control for purpose of liquidation.

2. A Liquidating Agent (person or committee) shall be appointed by the Secretary to carry out liquidation under the direction and control of the Secretary. Except when the Liquidating Agent is the NCUA or other insurer or agent under the share insurance interest, the procedures listed in subsection (c) shall be followed.

c) The liquidation, whether voluntary or involuntary, shall be under the direction of the Secretary and shall proceed in the following manner:

1. The Certificate shall be promptly filed at the County Recorder's office in the county in which the main office of the credit union is located and the recording information shall be forwarded to the Division.

2. An itemized inventory, in duplicate, as of the date of the Certificate listing the following, shall be prepared to include:

A) all assets;

B) all known liabilities;

C) a list of all members accounts' by name, address, account numbers, share and loan balances, notes payable on file, and security offered;

D) a balance sheet as of the date of the Certificate;

E) a Statement of Income and Expenses as of the date of the Certificate;

F) the name and address of all depositories, including the credit union's account numbers and balance.

3. A signed and dated copy of the items listed in subsections (c)(1) and (c)(2) shall be forwarded to the Division. One copy of each of the items listed in subsections (c)(1) and (c)(2) is to be retained by the Liquidating Agent.

4. The books and records are to be kept posted currently throughout the liquidation.

5. All funds received shall be promptly deposited in the credit union's depositories. The Secretary shall approve a change in depositories upon receipt of written request from the agent stating the reason for the change.

6. All disbursement of funds shall have prior approval of the Division and be in accordance with the priority established in Section 62(7) of the Act. The Division shall approve in writing disbursement of funds during liquidation upon written request from the Liquidating Agent. Each request must contain a current financial statement and a total dollar amount to be distributed pro rata to the shareholders.

7. Monthly reports, consisting of a balance sheet, statement of income and expense, and an analysis of funds received and expended, shall be prepared on forms furnished by the Division as of each month's end and forwarded to the Division on or before the 15th of the subsequent month.

8. An initial report on all accounts turned over to an attorney and/or collection agency for collection is to be forwarded to the Division with subsequent periodic reports showing collection activity on these accounts.

9. Subject to the prior approval of the Secretary, the Liquidating Agent may prosecute and defend all suits or intervene and execute all necessary deeds, releases or other instruments necessary to consummate any sale of real estate or personal property, or compromise any debt or claim to the same effect as if the instruments were executed by the officers of the credit union. The agent shall request approval, in writing, detailing the specific instances. The Secretary shall base his or her approval on maximizing the return of funds and protecting the interests of the shareholders.

10. Compensation paid for the Liquidating Agent's services shall be determined by the Secretary, so as to maximize the return of shareholders' funds and to provide reasonable compensation for the professional services required.

11. All expenses incurred in the liquidation shall be paid out of the funds of the credit union.

12. Completion of the liquidation shall be in compliance with provisions of Section 62 of the Act.

History

• Source: Amended at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.200 Conversion of Charter

a) Conversion from a State of Illinois chartered credit union to a credit union chartered by NCUA or by a state regulatory authority of credit unions of another state shall be authorized subject to the following requirements:

1. The proposal for the conversion of charter is approved by resolution of the board of directors.

2. Written notification is given of the intent to convert to the Secretary at least 30 days prior to the mailing to the members of the Notice of Meeting at which the question of conversion is to be voted.

3. Evidence is furnished to the Secretary that NCUA or the state regulatory authority for credit unions in the other state is agreeable to the conversion proposal.

4. The conversion proposal is approved by ⅔ of the members present or voting. Notice of the meeting must be given in accordance with Section 19(1) of the Act and include:

A) the time, place and purpose of the meeting;

B) a brief and accurate statement of the reasons for or against the proposed conversion, including any effects it could have on the shareholdings of members and the policies and practices of the credit union;

C) a ballot and details of how the ballot may be voted.

5. Proxy voting is not permitted. Ballots will be distributed or mailed to the members and the returned ballots shall be counted with those ballots of members present at the meeting. Ballots must be distributed or mailed at least 7 days before the date of the meeting. All ballots postmarked on or before the date of the meeting shall be included in the final vote computation.

6. A notarized report attesting to the accuracy of the voting shall be forwarded to the Secretary within 10 days after the meeting and shall contain the following information:

A) date of mailing and/or posting notice of the meeting;

B) date of members' meeting or any adjourned meetings;

C) number of members;

D) number of members present at meeting;

E) number of members voting for the proposal in person at the meeting and the number of members not at the meeting voting for the proposal by ballot.

7. If ⅔ of the voting members approve the proposal, and the appropriate federal or other state regulatory agency approves the conversion, a request to convert the charter shall be sent to the Secretary within 10 days after the members' meeting. If the credit union is not subject to any formal supervisory restraints or other supervisory proceedings and if the conversion is in the best interests of the members, the Secretary shall issue a Certificate of Conversion approving the change of chartering authority.

8. The credit union shall return its Illinois charter and Articles of Incorporation to the Secretary and shall record the Certificate of Conversion in the County Recorder's Office in the Illinois county where the credit union's office is located and forward the recorded information to the Secretary. The converted credit union shall be merely a continuation of the State of Illinois credit union under a new name and new jurisdiction and with revision of its corporate structure necessary for its proper operation under the new jurisdiction. The effective date of the charter conversion will be the date that the Certificate of Conversion is recorded at the County Recorder's Office.

b) Conversion from a federally chartered credit union or from a credit union chartered by another state to a State of Illinois chartered credit union shall be authorized subject to the following requirements:

1. complying with all requirements of the Federal Credit Union Act or the applicable Act of the state under which it is organized;

2. filing with the Secretary evidence of that compliance, which shall include a copy of the most recent examination by the regulatory agency, correspondence on exceptions noted, and a statement that the credit union is not subject to any formal supervisory restraint or proceeding that would be circumvented by the conversion;

3. filing with the Secretary Articles of Incorporation and By-laws as required by Section 2 of the Act.

c) The Secretary may require that an examination of the credit union be conducted by the Division to verify the financial and operating condition of the credit union. The Secretary shall base his or her decision on the recency of the last examination, the nature of the exceptions noted, and the scope of the examination. A fee may be assessed for the examination not to exceed the limits set forth either in Section 12 of the Act or Section 190.50, as appropriate.

d) Upon receipt of the materials listed in subsections (b)(2) and (b)(3), the Secretary shall determine if all requirements for conversion of the credit union have been met and, if affirmative, the Secretary shall issue a Certificate of Approval that must be filed as provided under Section 2(4) of the Act. The effective date of the conversion will be the date, after the Certificate of Approval is recorded, that the credit union ceases to be a federal credit union or a credit union chartered by another state.

e) The converted credit union shall be vested with all of the assets and is responsible for all of the obligations of its predecessor.

History

• Source: Amended at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.210 Reimbursement for Financial Records

a) A credit union shall be reimbursed for costs that are reasonably necessary (including but not limited to personnel costs, reproduction costs and transportation costs) and that have been incurred in searching for, reproducing and transporting books, papers, records or other data of a member required or requested to be produced by a credit union pursuant to a lawful subpoena, summons, warrant or court order.

b) Reimbursement shall be made in accordance with the following rates:

1. Personnel costs incurred in locating, retrieving, reproducing and preparing financial records shall be reimbursed at the rate of $20 per hours per person.

2. Reproduction costs incurred in making photocopies of documents shall be reimbursed at 30 cents per exposure. Reproductions of microfilm, microfiche, photographs, films and other materials shall be reimbursed at actual cost.

3. Transportation costs incurred in transporting credit union personnel to locate and retrieve material, and to convey the material to the place of examination, shall be reimbursed at the standard mileage rate allowed by the Internal Revenue Service for vehicle expense deductions or, if a mail or courier service is used, at the actual costs of the service.

4. All other costs, including but not limited to telephone calls, telegrams and shipping costs, incurred in searching for, reproducing and transporting data pursuant to a request for financial records, shall be reimbursed at actual costs.

c) The credit union shall provide to the person requesting records an itemized invoice indicating in specific detail the costs for:

1. personnel;

2. reproduction;

3. transportation; and

4. all other cots incurred in searching for, reproducing and transporting data pursuant to a request for financial records.

d) At the credit union's option, it may prepare one or more reasonable estimates of the ultimate reimbursement of costs associated with a search for financial records in the form prescribed in subsection (c) and require one or more partial payments before proceeding with the work of locating and reproducing the requested documents. Delivery of the requested documents may be delayed until final reimbursement of all costs is received.

History

• Source: Added at 26 Ill. Reg. 17999, effective December 9, 2002

38 Ill. Adm. Code 190.220 Registration of Out of State Credit Unions

A credit union organized and duly chartered as a credit union in another state shall:

a) Register with the Secretary prior to operating in this State, on a form specified by the Secretary, which shall include or be accompanied by the following information:

1. the name of the credit union and the county or state under which it is organized;

2. the common bond or field of membership the credit union is authorized to serve;

3. the proposed location of any branch or service center within this State; and

4. the credit union's most recent examination report and audited financial statement.

b) Update the information provided under subsection (a)(2) within 30 days after receiving approval of a change in common bond or field of membership from the credit union's chartering agency, on a form specified by the Secretary.

c) Update the information provided under subsection (a)(3) as to any proposed change in location or additional location for any branch or service center within this State, on a form specified by the Secretary.

d) Pay to the Director an annual registration fee of $1000, plus $250 for each branch facility located in Illinois. The fee shall be payable to the Secretary by January 1 of each calendar year, for the current calendar year.

History

• Source: Amended at 37 Ill. Reg. 12450, effective July 16, 2013

38 Ill. Adm. Code 190.230 Remote Meetings

Unless expressly prohibited by the articles of incorporation or bylaws and subject to requirements of the Illinois Credit Union Act, the Board of Directors of a Credit Union may provide by resolution that members may attend, participate in, act, and vote at any annual meetings or special meetings through the use of a conference telephone or interactive technology, including but not limited to electronic transmission, internet usage, or remote communication, by means of which persons participating in the meeting can communicate with each other. Participation through the use of a conference telephone or interactive technology shall constitute attendance, presence, and representation in person at the annual meeting or special meeting of the person or persons so participating and count towards quorum.

History

• Source: Added at 45 Ill. Reg. 5829, effective April 23, 2021

38 Ill. Adm. Code 190.500 Definitions (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.505 Applicability of Rule (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.510 Good Faith Requirements (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.515 Fraudulent or Deceptive Practices (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.520 Prohibited Refinances (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.525 Negative Amortization (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.530 Negative Equity (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.535 Balloon Payments (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.540 Financing of Certain Points and Fees (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.545 Financing of Single Premium Insurance Products (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.550 Lending Without Due Regard to Ability to Repay (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.555 Verification of Ability to Repay (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.560 Payments to Contractors (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.565 Counseling Prior to Perfecting Foreclosure (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.570 Mortgage Awareness Program (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.575 Offer of Mortgage Awareness Program (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.580 Third Party Review (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.600 Definitions

"Payday Loan" or "loan" means a loan with a finance charge exceeding an annual percentage rate of 36% and with a term that does not exceed 120 days, including any transaction conducted via any medium whatsoever, including, but not limited to, paper, facsimile, Internet or telephone, in which:

A lender accepts one or more checks dated on the date written and agrees to hold them for a period of days before deposit or presentment, or accepts one or more checks dated subsequent to the date written and agrees to hold them for deposit; or

A lender accepts one or more authorizations to debit a consumer's bank account; or

A lender accepts an interest in a consumer's wages, including, but not limited to, a wage assignment.

"PLRA" means the Payday Loan Reform Act [815 ILCS 122]. Credit Unions are expressly exempt from the provisions of the PLRA.

History

• Source: Added at 30 Ill. Reg. 18919, effective December 4, 2006

38 Ill. Adm. Code 190.601 Purpose and Scope

This Subpart applies to credit unions as defined in Section 190.2.

History

• Source: Added at 30 Ill. Reg. 18919, effective December 4, 2006

38 Ill. Adm. Code 190.605 Applicability of Rule

This Subpart shall apply only to Payday Loans made by a credit union. Products and services offered by a credit union that are not offered by lenders governed by the PLRA shall not be subject to this Part.

History

• Source: Added at 30 Ill. Reg. 18919, effective December 4, 2006

38 Ill. Adm. Code 190.610 Issuance of Payday Loans by Credit Unions

a) A credit union making a payday loan shall satisfactorily address all safety and soundness considerations identified by the Division in its examination and supervision of the credit union. Safety and soundness considerations include, without limitation:

1. Risk-management practices for payday loan activities, particularly with regard to concentrations of payday loans;

2. Capital adequacy, depending on the level and volatility of risk;

3. Allowance for loan losses to ensure the allowance is adequate to absorb estimated credit losses within the payday loan portfolio;

4. Classification of payday loans, given the unsecured nature of the credit and weakness of repayment capacity inherent in payday loans; and

5. The establishment and maintenance of extension, deferral, renewal and rewrite standards consistent with the PLRA.

b) In the event the Division determines the credit union's management of safety and soundness risks relating to its payday loan portfolio is deficient, the Division may initiate informal or formal corrective enforcement action, pursuant to the applicable administrative enforcement provisions set forth in the Illinois Credit Union Act and this Part.

History

• Source: Added at 30 Ill. Reg. 18919, effective December 4, 2006

38 Ill. Adm. Code 190.700 Definitions

For purposes of this Subpart:

“Act” means the Illinois Credit Union Act [205 ILCS 305].

“Compelling need” means that no other non-confidential source is available to obtain information of equal relevance.

“Complete request” means a request that provides all of the information required in Section 190.710.

“Confidential supervisory information” shall have the same meaning ascribed to that term in Section 9.1 of the Act.

“Credit union” means a credit union chartered under the Illinois Credit Union Act, or, as the context permits, under the Federal Credit Union Act (12 U.S.C. 1751-1795k) or the laws of any state.

“Department" means the Illinois Department of Financial and Professional Regulation.

“Director” means the Director or Acting Director of the Division of Financial Institutions or their authorized representatives.

“Secretary” means the Secretary of the Department of Financial and Professional Regulation or a person authorized by the Secretary, the Act, or this Part to act in the Secretary’s stead. As provided in Section 8(1) of the Act, all references in the Act or this Part to the Secretary shall be deemed to include the Director, as a person authorized by the Secretary or the Act to assume responsibility for the oversight of the functions of the Department relating to the regulatory supervision of credit unions under the Act and this Part.

“Person” or “persons” means individuals and bodies politic and corporate, including without limitation corporations, limited liability companies, general partnerships, limited partnerships and joint ventures; unless, from the context and facts, the intentions plainly apply only to individuals. Persons who reside in or live in a geographical area include non-natural persons located within the geographical area.

“Relevant” means the requested confidential supervisory information could substantially contribute to the resolution of the issues identified in the pleadings contained within the request.

“Requester” means any person who makes a request for the discovery or disclosure of confidential supervisory information, whether by subpoena, order, or other judicial or administrative process.

History

• Source: Added at 46 Ill. Reg. 18508, effective November 1, 2022

38 Ill. Adm. Code 190.701 Purpose and Scope

a) Purpose. The purpose of this Subpart D is to establish the procedures and standard by which the Secretary shall determine whether to disclose confidential supervisory information in response to a request for discovery or disclosure of such information.

b) Scope. This Part applies to requests, whether by subpoena, order, or other judicial or administrative process, for discovery or disclosure of confidential supervisory information prepared or obtained by the Secretary under the Act. This Subpart does not apply to:

1. a request made pursuant to the Freedom of Information Act (FOIA) [5 ILCS 140], provided that, if the information requested constitutes confidential supervisory information, it shall nonetheless be exempt from disclosure; or

2. a request made by a party to whom the Secretary may furnish confidential supervisory information as permitted in Section 9.1(3) of the Act.

History

• Source: Added at 46 Ill. Reg. 18508, effective November 1, 2022

38 Ill. Adm. Code 190.710 Requests for Confidential Supervisory Information

Pursuant to Section 9.1 of the Act, a request for confidential supervisory information whether by subpoena, order, or other judicial or administrative process, shall be made to the Secretary. If the request is for a record, the requester must adequately describe the records sought by type and date. The request shall be accompanied by:

a) a copy of the formal complaint or pleading setting forth the assertions of the adversarial matter;

b) the caption and docket number assigned to the proceeding, if any;

c) the name, address, telephone number, and email of designated legal counsel to each party to the proceeding;

d) a statement detailing the relevance of the requested confidential supervisory information;

e) a statement detailing a compelling need for the requested confidential supervisory information;

f) a statement describing any prior judicial decisions or pending motions in the case that may bear on the asserted relevance of the requested information; and

g) a statement detailing why the requester believes that disclosure is required for the benefit of the credit union.

History

• Source: Added at 46 Ill. Reg. 18508, effective November 1, 2022

38 Ill. Adm. Code 190.720 Request Submission

A person requesting discovery or disclosure of confidential supervisory information under this Part shall mail or hand deliver the request to:

320 West Washington Street

Attn: Credit Union Section

3rd Floor

Springfield, IL 62786

and shall email the request to:

FPR.DFI.Director@Illinois.gov

FPR.CreditUnion@Illinois.gov

History

• Source: Amended at 46 Ill. Reg. 18508, effective November 1, 2022; expedited correction at 47 Ill. Reg. 7025, effective November 1, 2022

38 Ill. Adm. Code 190.730 Consideration of Requests

a) Standards for the Disclosure of Confidential Supervisory Information.

1. When making a determination with respect to the disclosure of confidential supervisory information, the Secretary will consider the following standards:

A) the confidential supervisory information identified in the request is relevant;

B) a compelling need exists;

C) if the requested confidential supervisory information is to be used in connection with an adversarial matter (filed lawsuit or administrative action) has been filed;

D) the production and disclosure of the confidential supervisory information is not unduly burdensome to the Department; and

E) whether disclosure will benefit the credit union.

2. In determining whether to disclose the requested confidential supervisory information, the Secretary may inquire into the circumstances of any case underlying the request and rely on sources of information other than the requester, including other parties.

b) Time Required by the Secretary to Respond. The Secretary, within 15 days after receipt of a complete request, will determine whether to disclose the requested confidential supervisory information. If the request is not complete, the Secretary shall notify the requester of the required information that has not been previously provided.

c) Notice to Other Parties. Following receipt of a complete request for confidential supervisory information, the Secretary may notify the person that is the subject of the requested information, unless the Secretary determines that doing so would advantage or prejudice any of the parties in the matter at issue.

History

• Source: Added at 46 Ill. Reg. 18508, effective November 1, 2022

38 Ill. Adm. Code 190.740 Disclosure of Confidential Supervisory Information

a) Conditions and Limitations. The Secretary may impose any conditions and limitations on the disclosure of confidential supervisory information that are necessary to protect the confidentiality of such information. Except as authorized by the Secretary, no person obtaining access, whether physically or electronically, to confidential supervisory information under this Subpart may further disseminate the confidential supervisory information.

b) Restrictions on Dissemination of Confidential Supervisory Information. The Secretary may condition a decision to disclose confidential supervisory information on entry of a protective order by the court or administrative tribunal presiding in the particular case or on a written agreement of confidentiality. In a case in which a protective order or agreement has already been entered between parties other than the Secretary, the Secretary may nevertheless condition approval for release of confidential supervisory information upon the inclusion of additional or amended provisions in the protective order. The Secretary may authorize a party who obtained the records for use in one case to provide them to another party in another case, subject to any conditions that the Secretary may impose on either or both parties.

c) Notification of Parties and Procedures for Sharing and Using Confidential Supervisory Information in Litigation. The requester shall promptly notify other parties to a case of the release of confidential supervisory information obtained pursuant to this Subpart and, upon entry of a protective order, shall provide copies of confidential supervisory information to the other parties.

History

• Source: Added at 46 Ill. Reg. 18508, effective November 1, 2022

38 Ill. Adm. Code 190.750 Retrieval and Destruction of Previously Disclosed Confidential Supervisory Information Used in Litigation

At the conclusion of an action:

a) the requester, and each party who may have subsequently received confidential supervisory information pursuant to a protective order, shall destroy, permanently erase or otherwise make permanently inaccessible the disclosed confidential supervisory information covered by the protective order; and

b) each party shall certify to the Secretary that the disclosed confidential supervisory information covered by the protective order has been destroyed, permanently erased or made permanently inaccessible.

History

• Source: Added at 46 Ill. Reg. 18508, effective November 1, 2022

38 Ill. Adm. Code 190.760 Fees for Services

a) The Secretary, in their sole discretion, may charge the following fees for any record search or copying performed by the Secretary:

1. Reproduction costs incurred in making copies of documents, including photocopies or converting physical documents into electronic or digital format, shall be reimbursed at $0.25 per page.

2. All other costs incurred in searching for and transporting data pursuant to a request for confidential supervisory information shall be reimbursed at actual costs.

b) The Secretary may require a requester to remit payment prior to providing the requested confidential supervisory information.

History

• Source: Added at 46 Ill. Reg. 18508, effective November 1, 2022

38 Ill. Adm. Code 190.APPENDIX A Estimated Monthly Income and Expenses Worksheet (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

38 Ill. Adm. Code 190.APPENDIX B Mortgage Ratio Worksheet (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11307, effective August 28, 2017

Chapter V Department of Financial and Professional Regulation

Part 195 Illinois Development Credit Corporation Act

38 Ill. Adm. Code 195.100 General

The provisions of Article 1 through Article 16 of the Business Corporation Act of 1983 (Ill. Rev. Stat. 1987, ch. 32, par. 1.01 et seq.) shall apply to Development Credit Corporations providing that in the event of a conflict the provision of the Illinois Development Credit Corporation Act (the "Act") (Ill. Rev. Stat. 1987, ch. 32, par. 1001 et seq.) shall apply.

38 Ill. Adm. Code 195.120 Articles of Incorporation

a) A statement of the purpose for which a Development Credit Corporation is formed, as required in the Articles of Incorporation, will include the boundaries of the region within which that corporation intends to pursue that purpose. The initial corporation to be approved will operate throughout the State of Illinois in order to maximize the availability of financing and business expertise.

1. Subsequent corporations may be approved to operate within a specific region of the State of Illinois providing the Director of Financial Institutions is satisfied of the need and the availability of adequate financing and business expertise in accordance with the purposes set forth in Section 4 of the Act.

2. The statement of purpose will further include the intention to pursue that purpose throughout the entire region defined and without prejudice or discrimination.

b) The requirements for the Director's approval of the Articles of Incorporation that the incorporators have the confidence of their respective communities includes the requirement of appropriate business and financial experience (e.g. bank lending officer, venture capitalist, self-employed businessman).

38 Ill. Adm. Code 195.140 Member Obligations

a) When called upon by a development credit corporation, a member shall make a reasonable loan to further the purpose of the corporation and subject to the maximum amount specified in Section 15 of the Act, but the corporation may not require a member to lend that maximum amount.

b) In accordance with Section 19 of the Act, a development credit corporation is required to maintain an earned surplus equal to the total of the outstanding capital and paid in capital. An increase in earned surplus may only be derived from net earnings and not by contribution from members or others.

38 Ill. Adm. Code 195.160 State Funds

The Board of Directors of a development credit corporation may accept grants or loans from, or sell non-voting stock to, a State agency but such agency will not become a voting stock holder or member of the corporation. The Director of the Department of Commerce and Community Affairs or its successor shall be given advance notice of all meetings of the Board of Directors for the purpose of suggesting prospects deserving financial help consistent with the purpose of the Act.

38 Ill. Adm. Code 195.180 Reports and Examinations

a) A Development Credit Corporation shall submit to the Director annually, on or before May 1, a complete statement of its financial condition in accordance with generally accepted accounting principles under the accounting standards of the Financial Accounting Standard Board of the American Institute of Certified Public Accountants, Stamford, Connecticut (1989, no later amendments or editions included), as of the preceding December 31, as audited by a certified public accountant, and attach to the statement a brief summary of the status of each active project with outstanding loans, including but not limited to the following:

1. information on the cost and sources of funds and capital and the total allowable maximum amount available from members, the maximum amount committed by each individual member, and the corporation's outstanding liabilities to members;

2. classification of firms in the corporation's portfolio by standard industrial code, including a breakdown of:

A) size of firms by sales and number of employees;

B) number and percentage of loans to manufacturing, service and wholesale businesses; and

C) number and percentage of loans to traditional industries and to high technology firms within the manufacturing sector;

3. information on the types of financing provided by the corporation, including guaranteed loans, the size and term of loans, and a breakdown of investments by senior debt, subordinated debt and equity financings;

4. information on interest rates of loans, including percentage of fixed rate and variable rate loans;

5. information on the use of capital provided by the corporation, including number of working capital loans, loans to assist leveraged buyouts by employees, management or others, and secured mortgages for plant expansion or new production facilities;

6. information on resources and actions taken to advance the corporation's marketing program; and

7. information on the corporation's regional offices, including a description of the volume of business and the nature of loan activity at each office.

b) The records of the corporation's regional offices shall be examined annually to determine:

1. compliance with the provisions of the Act; and

2. the accuracy of the information contained in each corporation's annual report.

c) The fee for the annual examination shall be $400 per examiner, per day or part thereof.

d) The Director shall, for good cause, initiate additional investigation of the corporation at any time.

e) The Department may conduct an examination for the purpose of verifying that the licensee has taken necessary actions to correct violations to the Act and/or related rules and shall charge the licensee $550 for each examiner day or portion thereof, when the Director determines the verification examination must be performed on site at any facility of the licensee.

History

• Source: Amended at 26 Ill. Reg. 14257, effective October 1, 2002

38 Ill. Adm. Code 195.200 Hearing Procedures

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 12550, effective July 8, 2022

Chapter I Department of Financial and Professional Regulation

Part 200 Financial Institutions Code

38 Ill. Adm. Code 200.100 Definition of Terms Used in This Part

As used in this Part, unless the context otherwise requires, the term:

"Act" means any Act the administration of which is vested in the Director or the Division, and the rules in this Part.

"Application" as used in this Part shall mean a request in writing and in the form required by the Department containing all the relevant facts upon which a decision can be made, and the specific relief or decision requested.

“Department” means the Illinois Department of Financial and Professional Regulation.

“Division” means the Department of Financial and Professional Regulation – Division of Financial Institutions.

“Director” means the Director of the Department of Financial and Professional Regulation – Division of Financial Institutions or any person employed by or on behalf of the Department to whom the Director has delegated verbally or in writing authority to act on the Director's behalf.

"License" means any certificate or authorization issued to any person, party or entity pursuant to any Act administered by the Division.

"Licensee" means any person, party or entity certified, registered, licensed or authorized by the Department pursuant to any Act administered by the Division.

"Notice" as used in this Part shall include, but not be limited to, a communication accomplished by telephone, United States Postal Service, private mail service, computer transaction or facsimile transmission.

"Party" as used in this Part shall include, but not be limited to, all holders of or applicants for any license, their agents, servants, and employees, whether they are natural persons, corporations, partnerships, associations, cooperatives, trusts or any other legal entities.

"Person" as used in this Part shall include, but not be limited to, all holders of or applicants for any license, their agents, servants and employees, whether they are natural person, corporations, partnership, associations, cooperatives, trusts or other legal entities.

"Summary action" means any order or notification issued by the Director, prior to the initiation of an administrative hearing, which is effective upon service.

History

• Source: Amended at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.200 Applicability

This Part shall apply to all Acts under the jurisdiction of the Division unless otherwise provided in an Act, or in a rule adopted pursuant to an Act which is more specific.

History

• Source: Amended at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.202 Notice of Summary Action

An order imposing summary action affecting any license or licensee is effective upon completion of service pursuant to the provisions prescribed in the specific Act. Where service is made by registered or certified mail, the Director will, if possible, notify by telephone, email, or by facsimile transmission the affected person or party of the suspension or revocation.

History

• Source: Amended at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.205 Notification of Noncompliance or Material Change

All holders of or applicants for any license issued pursuant to the Act shall submit written notification to the Director within 10 business days after becoming aware of any noncompliance with the provisions of the Act or this Part and any material change in condition (such as bankruptcy, regulatory order having been issued by another regulatory body having jurisdiction, loss of authority to do business by regulatory agency having jurisdiction) which places or tends to place any consumer or policyholder in jeopardy.

History

• Source: Amended at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.210 Display of Certificates or Registrations

Each holder of a license issued pursuant to the Act shall display it in a manner conspicuous to the public or maintain it at its principal place of business for inspection upon request by the public.

38 Ill. Adm. Code 200.215 Prohibition on Filing Application

No person or party whose application has been denied or refused or whose license has been revoked for a violation of the Act shall be entitled to file another application within one year from the effective date of such denial, refusal or revocation, or if judicial review of such denial, refusal or revocation is sought, within one year from the date of final court order or decree affirming such action unless the Director or Director's authorized representative has issued a variance as provided by Section 200.290 of this Part. Such application, when filed after one year, may be refused by the Director unless the person or party shows change(s) in condition or situation to establish why the denial, refusal or revocation of the license shall not be deemed a bar to the issuance of a new license.

38 Ill. Adm. Code 200.220 Computation of Time

The time within which an action required by the Act shall be done shall be computed by excluding the first day and including the last, unless the last day is a Saturday, Sunday or legal holiday, and then it shall also be excluded. If the date succeeding such Saturday, Sunday or legal holiday is also a Saturday, Sunday or legal holiday, then such succeeding day shall also be excluded.

38 Ill. Adm. Code 200.221 Requirements as to Proper Form

Any document filed with the Department pursuant to the Act shall be prepared in accordance with the form, if any, prescribed therefor by the Director. Any such document shall, after review by the Department, be deemed to be filed on the proper form, unless objection to the form is made in writing by the Department.

38 Ill. Adm. Code 200.225 Place of Filing

Unless otherwise specified applications and other papers may be filed with the office of the Department of Financial Institutions located in Chicago, Illinois or Springfield, Illinois. Such material may be filed by delivery to the Department, through the mails or otherwise.

38 Ill. Adm. Code 200.230 Additional Information

In addition to the information expressly required to be included in an application, there shall be added such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made, not misleading (see also Section 200.428).

38 Ill. Adm. Code 200.235 Additional Exhibits

Any licensee or applicant may file such exhibits as it may desire in addition to those required by the appropriate form. The exhibits shall be so marked as to indicate clearly the subject matters to which they refer.

38 Ill. Adm. Code 200.240 Information Unknown or Not Reasonably Available

Information required need be given only insofar as it is known or reasonably available to the licensee or applicant. If any required information is unknown and not reasonably available to it, either because the obtaining thereof would involve unreasonable effort or expense, or because it rests peculiarly within the knowledge of another person not affiliated with the licensee or applicant, the information may be omitted, subject to the following conditions:

a) The licensee or applicant shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense, together with the sources thereof.

b) The licensee or applicant shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to the person for the information.

38 Ill. Adm. Code 200.245 Requirements as to Paper, Printing and Language

a) Applications shall be filed on good quality, unglazed, white paper, 8½ by 11 inches in size, insofar as practicable. However, tables, charts, maps and financial statements may be on larger paper, if folded to that size, and the prospectus may be on smaller paper, if the registrant so desires, but not less than 7½ by 9 inches in size.

b) The application and, insofar as practicable, all papers and documents filed as a part thereof, shall be printed, lithographed, mimeographed or typewritten. However, the application or any portion thereof may be prepared by any similar process which in the opinion of the Department produces copies suitable for permanent record. Irrespective of the process used, all copies of the material shall be clear, easily readable and suitable for repeated photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies.

c) The application shall be in the English language. If any exhibit or other paper or document filed with the application is in a foreign language, it shall be accompanied by a translation into the English language.

38 Ill. Adm. Code 200.250 Number of Copies - Signatures

a) One copy of the completed application, manually signed by the applicant, including exhibits and all other papers and documents filed as a part of the application, shall be filed with the Department.

b) If any name is signed to the application pursuant to a power of attorney, copies of the power of attorney shall be filed with the application for registration. In addition, if the name of any officer signing on behalf of the applicant, or attesting the applicant's seal, is signed pursuant to a power of attorney, certified copies of a resolution of the applicant's board of directors authorizing the signature shall be filed with the application for registration.

38 Ill. Adm. Code 200.270 Extension of Date for Filing

The Director, for good cause, may, upon receipt of a written application, extend any filing deadline set forth in this Part or any Act under the jurisdiction of the Division.

History

• Source: Amended at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.275 Complete Application

Any time period for the Division to respond to any application shall commence only when the application is complete. An application shall be deemed complete when the person has provided all application fees, information, and documents required to be produced under applicable law or reasonably requested by the Division.

History

• Source: Added at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.276 Non-Sufficient Fund Fee

Any person who delivers a check or other payment to the Division that is returned to the Division unpaid by the financial institution upon which it is drawn shall pay to the Division, in addition to the amount already owed to the Division, a fee of $50.

History

• Source: Added at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.277 Release of Records

a) The Secretary, in their sole discretion, may charge the following fees for any record search or copying performed by the Secretary:

1. Reproduction costs incurred in making copies of documents, including photocopies or converting physical documents into electronic or digital format, shall be reimbursed at $0.25 per page.

2. All other costs incurred in searching for and transporting data pursuant to a request for records shall be reimbursed at actual costs.

b) The Secretary may require a requester to remit payment prior to providing the requested record.

History

• Source: Added at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.278 Multi-State Licensing System

The Director may require participation in a third-party, multi-state licensing system for licensing and/or examinations under any Act regulated by the Division. The multi-state licensing system may share regulatory information and maintain records in compliance with the provisions of the Act at issue. Licensees and applicants shall be responsible for any fees charged by the multi-state licensing system.

History

• Source: Added at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.280 Non-Public Distribution of Information

Information or documents obtained by employees of the Department in the course of any examination, audit, visit, registration, certification, review, licensing, investigation, or any other regulatory activity pursuant to any Act and any record prepared or obtained by the Director to the extent that the record summarizes or contains information derived from any report, document, or record described in this Section shall, unless made a matter of public record, be deemed confidential. Employees are hereby prohibited from making disclosure of such confidential information or production of documents or any other non-public records of the Department or other governmental agency, unless the Director or the Director's authorized representative authorizes the disclosure of such information or the production of such documents as not being contrary to the public interest. Disclosure of information or documents to other federal or state regulatory or law enforcement agencies shall not be deemed disclosure or production pursuant to this Section and shall not impact the confidentiality of any such information or documents pursuant to this Section.

History

• Source: Amended at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.290 Provisions for Granting of Variance from Rules

The Director may grant variances from this Part or any other Part promulgated pursuant to any Act under the jurisdiction of the Division in individual cases where it is determined that:

a) the provision from which the variance is granted is not statutorily mandated;

b) no party will be injured by granting the variance; and

c) the Rule from which the variance is granted would, in the particular case, be unnecessarily burdensome or there is other good cause to grant the variance.

History

• Source: Amended at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.310 Request for Non-Binding Statements

a) Required information and format

1. All requests for non-binding statements shall be in writing. The request shall be filed with the Department and shall contain the following:

A) a brief summary of the Sections of the Act and of the Sections of this Part to which the request pertains;

B) a detailed factual representation concerning every relevant aspect of the proposed transaction, event or circumstance. Requests should be limited to the particular situation and should not attempt to include every possible type of situation which may arise in the future;

C) a discussion of current statutes, rules and legal principles relevant to the facts set forth;

D) a statement by the person requesting the non-binding statement which states the person's own opinion in the matter and the basis for such opinion;

E) a representation that the transaction in question has not been commenced or, if it has commenced, the present status of the transaction; and

F) at the option of the submitting party, a request for confidential treatment, such as alteration of listed monetary amounts and identity in the public index maintained by the Department under subsection (c)(1).

2. The Department will not respond to requests for non-binding statements involving the anti-fraud provisions of the Act.

3. The Department will not respond to requests for non-binding statements with respect to transactions which have already taken place.

4. The Department will not respond to requests based upon hypothetical facts or involving unnamed parties.

b) Review procedure under the Act

1. The Department's review of requests for non-binding statements requires an in-depth examination of the information presented and the applicable law. Therefore a considerable time period may elapse before the statement is issued.

2. After a review of the relevant facts presented, in light of existing judicial, legislative and administrative history, the Department shall either decline to issue any findings or issue its finding as to the applicability of the Act to the situation presented in the form of a non-binding statement, stating that it will or will not recommend that enforcement action be initiated against the parties involved if all the facts are true and complete. Facts or conditions different than those presented will require different conclusions and persons other than those requesting the statement should not rely on the statement. Non-binding statements do not have precedent value.

c) Availability of non-binding statements issued by the Department

1. The Department will maintain an index by statutory Section(s) involved and chronologically of all non-binding statements issued.

2. Copies of such statements can be reviewed in the Department's Springfield office and copies thereof obtained upon payment of the cost of duplication as set forth in 2 Ill. Adm. Code 901.80.

38 Ill. Adm. Code 200.320 Request for Declaratory Rulings (repealed)

History

• Source: Repealed at 47 Ill. Reg. 784, effective January 5, 2023

38 Ill. Adm. Code 200.400 Hearings

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.402 Qualifications and Duties of the Administrative Law Judge (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.404 Notice of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.406 Institution of a Contested Case by the Department (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.408 Requirement to File an Answer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.410 Amendment or Withdrawal of the Notice of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.412 Representation (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.414 Special Appearance (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.416 Substitution of Parties (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.418 Failure to Appear (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.420 Motions (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.422 Requirements Relating to Continuances (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.424 Rules of Evidence (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.425 Standard of Proof (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.426 Form of Papers (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.428 Bill of Particulars (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.430 Discovery (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.432 Examination of Witnesses (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.434 Subpoenas (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.436 Pre-Hearing Conferences (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.438 Record of a Pre-Hearing Conference (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.440 Hearings (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.442 Record of Proceedings (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.444 Record of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.446 Orders (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.448 Stipulations (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.450 Open Hearings (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

38 Ill. Adm. Code 200.452 Corrections to the Transcript (repealed)

History

• Source: Repealed at 46 Ill. Reg. 12554, effective July 8, 2022

Part 205 Transmitters of Money Act

38 Ill. Adm. Code 205.5 Definitions

"Authorized delegate" means a person a licensee designates to engage in money transmission on behalf of the licensee. [205 ILCS 658/2-1] The term "authorized delegate" includes an authorized seller pursuant to the Transmitters of Money Act.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation, the acting Secretary, or a person authorized by the Secretary. [205 ILCS 658/2-1]

History

• Source: Added at 48 Ill. Reg. 17546, effective November 20, 2024

38 Ill. Adm. Code 205.10 Average Daily Money Transmission

"Average daily money transmission liability" shall be calculated by taking the amount of the licensee's outstanding money transmission obligations in this State at the end of each day in a given period of time, added together, and divided by the total number of days in the given period of time. For purposes of calculating average daily money transmission liability under the Act for any licensee required to do so, the given period of time shall be the quarters ending March 31, June 30, September 30, and December 31. [205 ILCS 658/2-1].

History

• Source: Amended at 48 Ill. Reg. 17546, effective November 20, 2024

38 Ill. Adm. Code 205.20 Authorized Delegates

a) A licensee shall report to the Secretary, on a quarterly basis, the addition, removal or termination of operations of an authorized delegate location on forms presented by the Secretary.

b) A licensee must provide a copy of the written contract entered into between the licensee and authorized delegate to the Department.

History

• Source: Amended at 48 Ill. Reg. 17546, effective November 20, 2024

38 Ill. Adm. Code 205.30 Examinations

Examination Reports

a) The following definitions apply to this Section.

1. "Safety and soundness examination" means an examination that includes, but is not limited to, a determination of the financial condition of the licensee based on generally accepted accounting principles.

2. "Banking authority of the United States, of this State or of any other state" means the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of Thrift Supervision, Office of the Comptroller of the Currency, National Credit Union Administration or any other supervisory agency of the United States, of this State or of any other state responsible for regulating financial institutions, including, but not limited to, banks, savings associations, saving banks, and credit unions.

b) For any licensee subject to a safety and soundness examination performed by a banking authority of the United States, of this State or of any other state, the Secretary may, at their discretion, accept the safety and soundness examination report of a banking authority of the United States, of this State or of any other state in lieu of a safety and soundness examination performed by the Department.

History

• Source: Amended at 48 Ill. Reg. 17546, effective November 20, 2024

38 Ill. Adm. Code 205.35 Fees

Fees shall be assessed as follows:

a) Application Fee. For applying for a license, an application fee of $2,500 and a license fee of $0.

b) Renewal Fee. For renewal of a license, a fee will be calculated based on the total dollar volume of transactions, including transactions by authorized delegates, reported by the licensee in its annual renewal application. The renewal fee shall be calculated in the following manner based on the licensee's reported Illinois volume:

Transactions of $1,000,000 or less

$1,000 renewal fee

Transactions over $1,000,000 but less than $10,000,000

$1,000 plus an additional amount equal to a rate of .0004 for each dollar in volume more than $1,000,000 but less than $10,000,000

Transactions over $10,000,000 but less than $100,000,000

$4,600 plus an additional amount equal to a rate of .0002 for each dollar in volume more than $10,000,000 but less than $100,000,000

Transactions over $100,000,000

$22,600 plus an additional amount equal to a rate of .0001 for each dollar in volume more than $100,000,000 up to a maximum fee of $50,000

c) Late Renewal Fee. For an application for renewal of a license received by the Department after December 1, a penalty fee of $50 per day for each day after December 1, in addition to any other fees required under this Section, unless an extension of time has been applied for and approved prior to December 1.

d) Late Financial Statement Fee. For failure to submit required financial statements, a penalty fee of $50 per day for each day after the date the financial statements are required to be submitted to the Department unless an extension of time has been applied for and approved prior to the date financial statements are due.

e) Examination Fees. The Department shall charge $400 for each examiner day or part thereof and actual travel costs for any examination records.

f) Other Fees. All other fees authorized by applicable law including, but not limited to, the Transmitters of Money Act [205 ILCS 657] or Uniform Money Transmission Modernization Act [205 ILCS 658] shall be collected in the amount and manner authorized by such applicable law.

History

• Source: Amended at 48 Ill. Reg. 17546, effective November 20, 2024

38 Ill. Adm. Code 205.40 Enforcement

If, after the opportunity for a hearing, the Secretary determines they had the authority to issue the suspension or revocation of a license or a cease and desist order, the Secretary may issue orders as may be reasonably necessary to correct, eliminate or remedy the situation.

History

• Source: Amended at 48 Ill. Reg. 17546, effective November 20, 2024

38 Ill. Adm. Code 205.50 Reports/Documents

a) Any reports or documents the Secretary may require from a licensee must be transmitted by mail or electronic format at the option of the Secretary.

b) A licensee shall require and its authorized delegates must preserve for at least three years all documents relating to money transmission activities unless the data embodied in those documents has been transmitted for recordation by the licensee. [205 ILCS 658/7-6]

History

• Source: Amended at 48 Ill. Reg. 17546, effective November 20, 2024

38 Ill. Adm. Code 205.60 Permissible Investments

Digital currency shall not constitute a permissible investment. For the purposes of this Section, "digital currency" means a digital representation of value that:

a) is used as a medium of exchange, unit of account, or store of value; and

b) is not a medium of exchange that is authorized or adopted by the United States or a foreign government as part of its currency and that is customarily used and accepted as a medium of exchange in the country of issuance or a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments. [205 ILCS 658/2-1]

History

• Source: Amended at 48 Ill. Reg. 17546, effective November 20, 2024

38 Ill. Adm. Code 207.50 Definitions

The following definitions shall apply to this Part:

"Department" means the Department of Financial and Professional Regulation.

"Director" means Director of the Department of Financial and Professional Regulation − Division of Financial Institutions, the Acting Director of the Department of Financial and Professional Regulation − Division of Financial Institutions and any authorized representative of the Director.

"Division" means the Division of Financial Institutions of the Department of Financial and Professional Regulation

"Secretary" means the Secretary of Financial and Professional Regulation, the acting Secretary, or a person authorized by the Secretary. [205 ILCS 658/2-1]

History

• Source: Added at 49 Ill. Reg. 14598, effective October 29, 2025

Chapter II Department of Financial and Professional Regulation

Part 207 Uniform Money Transmission Modernization Act

38 Ill. Adm. Code 207.100 Conformity with Transmitters of Money Act Rules

All rules set forth in 38 Ill. Adm. Code 205 as amended from time to time shall apply to licensees, authorized delegates, and all persons and entities subject to the Uniform Money Transmission Modernization Act.

38 Ill. Adm. Code 207.105 Administration and Enforcement of the Act

The Division and Director shall administer and enforce the Act on behalf of the Secretary of Financial and Professional Regulation. The provisions of the Financial Institutions Act [20 ILCS 1205] shall apply to licensees, authorized delegates, applicants, and any person or entity engaged in an activity covered by the Uniform Money Transmission Modernization Act.

History

• Source: Added at 49 Ill. Reg. 14598, effective October 29, 2025

38 Ill. Adm. Code 207.110 Cease and Desist Orders, Civil Penalty Orders and Administrative Penalty Orders

a) The Secretary shall issue a formal written notice of the cease and desist order, civil penalty order, or administrative penalty order setting forth the specific reasons for the order and serve the licensee or the authorized delegate or other person, either personally or by certified mail. Service by certified mail shall be deemed completed when the notice is deposited in U.S. Mail.

b) A licensee or authorized delegate or other person or entity who is subject to a cease and desist order, civil penalty order, or administrative penalty order may request a hearing, in writing, within 10 days after the date of service. The Secretary shall schedule a hearing after the request for a hearing is received unless otherwise agreed to by the parties.

c) The Secretary shall conduct hearings pursuant to this Section and in accordance with 38 Ill. Adm. Code 100 as amended or recodified from time to time.

History

• Source: Added at 49 Ill. Reg. 14598, effective October 29, 2025

Chapter I Department of Financial and Professional Regulation

Part 210 Payday Loan Reform Act

38 Ill. Adm. Code 210.1 Definitions

"Act" means the Payday Loan Reform Act [815 ILCS 122].

"Affiliate" means any person or entity that directly or indirectly controls, is controlled by, or shares control with another person or entity. A person or entity has control over another if the person or entity has an ownership interest of 25% or more in the other.

"Allotment" means a portion of military pay that is regularly deducted or set-aside.

"Annual percentage rate" or "APR" is the cost of the consumer credit expressed as an annual rate which is disclosed to the consumer under applicable law.

"Calendar month" means that period from a given date in one month to the same numbered date the following month, and if there is no same numbered date, to the last day of the following month. When a period of time includes a month and a fraction of a month, the fraction of the month is considered to follow the whole month.

"Controlling Person" means a person, entity, or ultimate equitable owner that:

owns or controls, directly or indirectly, 10% or more of any class of stock of the license applicant;

is not a depository institution, as defined in Section 1007.50 of the Savings Bank Act [205 ILCS 205], that lends, provides, or infuses, directly or indirectly, in any way, funds to or into a license applicant, in an amount equal to or more that 10% of the license applicant's net worth;

controls, directly or indirectly, the election of 25% or more of the members of the board of directors of a license applicant; or

the Director finds influences management of the license applicant.

"Covered Dependent" with respect to a covered member, means the covered member's spouse; the covered member's child (as defined in 38 USC 101(4)); or an individual for whom the covered member provided more than one-half of the individual's support for 180 days immediately preceding an extension of consumer credit covered.

"Covered Military Member" or "Covered Member" means a member of the armed forces who is on active duty under a call or order that does not specify a period of 30 days or less or is on active Guard and Reserve Duty.

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director of the Division of Financial Institutions with the authority delegated by the Secretary.

"Division" means the Department of Financial and Professional Regulation-Division of Financial Institutions.

"Generally Accepted Accounting Principles" or "GAAP" means those adopted by the American Institute of Certified Public Accountants and Federal Accounting Standards Board and incorporated by reference in Section 210.15.

"Gross Monthly Income" means monthly income as demonstrated by official documentation of the income, including, but not limited to, a consumer's pay stub or receipt reflecting payment of government benefits, for the period 30 days prior to the date on which the loan was made.

"Hypothecate" means to pledge a security instrument without transfer of title.

"John Warner Act" or "Warner Act" means 10 USC 987.

"Lender and Licensee" means a lender and licensee as defined in Section 1-10 of the Act.

"Loan Receivables" means the outstanding balances due on the loans of the licensee.

"Other Business Authorization" means the authorization in writing required by Section 3-5(g) of the Act to conduct another business in a location licensed under the Act that would not be contrary to the best interest of consumers.

"Missed payment" means any failure to make a payment within ten days of the due date.

"Payday Lender License" means a license issued pursuant to the Act.

"Person" means an individual, partnership, association, joint stock association, corporation, or any other form of business organization.

"Predatory Loan Prevention Act Annual Percentage Rate" or "PLPA APR" is the cost of the consumer credit expressed as an annual rate and shall be calculated in accordance with 32 CFR 232.4(c), the Predatory Loan Prevention Act [815 ILCS 123], and as incorporated in 38 Ill. Adm. Code 215.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

History

• Source: Amended at 46 Ill. Reg. 6550, effective August 1, 2022

38 Ill. Adm. Code 210.2 Rate Cap Disclosure Notices

All loan contracts or agreements must include a separate disclosure signed by the consumer that states: "A lender shall not contract for or receive charges exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a loan, as calculated under the Illinois Predatory Loan Prevention Act (PLPA APR). Any loan with a PLPA APR over 36% is null and void, such that no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the loan. The annual percentage rate disclosed in any loan contract may be lower than the PLPA APR." This disclosure shall be clear and conspicuous and shall be substantially similar to the form in Appendix A. A lender shall provide all disclosures required by this section in English and in the same language as the loan agreement.

History

• Source: Added at 46 Ill. Reg. 6550, effective August 1, 2022

38 Ill. Adm. Code 210.10 Minimum Requirements for Office Records

a) Every licensee shall keep the following records at the licensed location in any medium or format that accurately reproduces original documents or papers:

1. Loan register.

2. Individual account records, including transaction histories of consumers.

3. File of all original papers.

4. Cash book.

5. Alphabetical record of all co-makers, consumers or sureties.

6. Permanent file.

7. Information required by Section 2-55 of the Act.

b) Records for loans made under the Act shall be kept separate or readily identifiable from other types of business conducted in the office, if allowed.

c) Electronic data processing, combination forms and special office systems may be used if in accordance with standard accounting procedures and if they contain the information enumerated in subsection (a).

History

• Source: Amended at 41 Ill. Reg. 12400, effective October 6, 2017

38 Ill. Adm. Code 210.15 Application for Payday Lender License; Controlling Person

a) An application for a license must be under oath in the form the Director prescribes and available on the agency's website. The Director may not issue a license unless and until the findings as set forth in Section 3-5(b) of the Act are made. These findings include that the financial responsibility, experience, character, and general fitness of the applicant are such as to command the confidence of the public and to warrant the belief that the business will be operated lawfully and fairly and within the provisions and purposes of the Act. [815 ILCS 122/3-5(b)(1)] The application shall contain the following:

1. The name of the applicant and the address of the proposed place of business;

2. The form of business organization of the applicant, including:

A) a copy of its filed articles of incorporation;

B) a copy of the filed articles of organization, if the applicant is a limited liability company;

C) a certified statement of the ownership of the partnership and any subsequent changes in ownership, if the applicant is a partnership.

3. The name, business and home address, credit report (except for a publicly traded company) and a chronological summary of the business experience, material litigation history, and felony convictions over the preceding 10 years of:

A) the proprietor, if the applicant is an individual;

B) every general partner, if the applicant is a partnership;

C) President, Secretary, Executive and Senior Vice Presidents, Directors and individuals owning more than 25% of the corporate stock, if the applicant is a corporation;

D) the manager, if the applicant is a limited liability company; and

E) any controlling person.

4. A licensee shall not submit the information required in subsections (a)(2) and (3) if the licensee has previously submitted the information to the Division in a previous license application within the last 5 years and there have been no material changes, unless the licensee is requested by the Director to submit this information.

5. The most current year end financial statements, prepared in accordance with generally accepted accounting principles (as defined by the Financial Standards Accounting Board (401 Merritt 7, PO Box 5116, Norwalk CT 06856-5116 (203/847-0700))) and a balance sheet and statement of operations as of the most recent quarterly report before the date of the application.

6. A list of all states in which the applicant is licensed as a payday lender or short-term lender, or under a similar license, and whether the licenses of the applicant have ever been withdrawn, refused, cancelled or suspended in any other state, with full details.

7. Bond as required by the Act.

8. Appointment of attorney-in-fact.

9. Business plan, which shall only detail the nature, amount and term of loans to be made and types of security that will be taken.

10. Photographs of both the inside and outside of the proposed site.

11. Details of any other businesses that will be conducted within the licensed premises, if allowed.

12. The applicable fees as required by Section 3-5(e) of the Act.

13. Any additional information the Director considers necessary (for example, clarification of credit report, additional documentation clarifying business plan, clarification or additional documentation regarding financial statements, etc.).

b) A licensee that is a corporation must notify the Director within 15 days after a person becomes a controlling person. Upon notification, the Director may require all information he or she considers necessary to determine if a new application is required. A licensee that is an entity other than a corporation shall seek prior approval whenever a person proposes to become a controlling person. The request for approval shall be accompanied by an amendment fee of $1000.

History

• Source: Amended at 45 Ill. Reg. 4467, effective March 24, 2021

38 Ill. Adm. Code 210.16 Dual Licensure Limitation

In accordance with Section 3-5(g) of the Act, a licensee may obtain a license under the Consumer Installment Loan Act (CILA) for the exclusive purpose and use of making title secured loans, as defined in Section 15(a) of CILA and governed by 38 Ill. Adm. Code 110.300.

History

• Source: Amended at 46 Ill. Reg. 6550, effective August 1, 2022

38 Ill. Adm. Code 210.20 Loan Register

a) The loan register shall contain the original entry and be a permanent record, and shall show for every loan the account number, date of loan, name of consumer, nature of security, amount of fees, and total loan amount.

b) The loan register shall be kept numerically by number of loans in order made, and shall have headings for each of the items required by subsection (a).

38 Ill. Adm. Code 210.30 Individual Account Records

a) An individual account record, that may be maintained in electronic form, shall be kept for each consumer. The account record shall show the name and address of the consumer, co-makers, or sureties, loan number, date of loan, the number of payments, the amount of payments and payment due dates, nature of security by type, and name of the financial institution if the loan agreement is hypothecated.

b) If payment is made in any other way than in the ordinary course of business, it shall be so designated. (For example, payment by a third party.)

c) If loan receivables are sold to another person, the individual account record for receivables shall show the name of the authorized person to whom sold and the date of sale.

d) No erasures whatsoever shall be made in the payment and charge sections of any account record. In case of error, a line shall be drawn in ink through the improper entry and the correct entry made on the following line. The entries on the record shall correspond with the receipts given the consumer.

e) Every licensee shall preserve the records of all loans, including the account record, for at least two years after making the final entry for the loan.

38 Ill. Adm. Code 210.40 File of Original Papers

a) Files

1. A separate file shall be maintained for each consumer and shall contain the loan agreement, security agreement, wage assignment, acknowledged copy of the disclosure statement of loan, a separately signed statement indicating the borrower has received a copy of the lender's right to rescind, and all other evidence of indebtedness or security pertaining to the loan, except when these documents are in the custody of a court or of an agent for collection, or are hypothecated as provided in Section 210.90. Evidence of disclosure must be retained for two years from the date of the loan. A licensee may maintain these files in any medium or format that accurately reproduces original documents or papers.

2. When a consumer is also a co-maker or consumer on another loan, the file of that consumer shall be cross-referenced to the other, unless a cross-reference is included on the alphabetical record required by Section 210.60.

b) All legal instruments bearing evidence of indebtedness taken in connection with a loan and executed by a consumer, including the disclosure statement of the loan, shall bear the loan number.

c) No licensee shall offer to or accept from a consumer any instruments that contain blank terms. All spaces or sections not used in the preparation of legal documents shall be ruled out or designated as "none" or "n/a", and any amendments shall be signed by the consumer and licensee.

d) The name and address of the licensee making the loan shall appear on any loan agreement, wage assignment, security agreement or other legal instrument taken from a consumer, before the proceeds of the loan are delivered.

38 Ill. Adm. Code 210.50 Cash Book

a) All receipts and disbursements of any amount whatsoever shall be entered on the day they occur in the cash book or equivalent record. Separate headings shall be provided for payments on principal and for fees collected from consumers.

b) The cash book shall be a permanent record of all details of income and disbursements, including all entries to individual accounts of borrowers.

38 Ill. Adm. Code 210.60 Alphabetical Record of Co-Makers, Consumers or Guarantors

The alphabetical record shall show the account number and the name of each co-maker, consumer or guarantor who is currently indebted to the licensee, together with sufficient information to locate the account record. A licensee may maintain these files in any medium or format that accurately reproduces original documents or papers.

History

• Source: Amended at 41 Ill. Reg. 12400, effective October 6, 2017

38 Ill. Adm. Code 210.65 Permanent File

Each licensee must maintain a permanent file that includes the following:

a) A copy of all correspondence sent to or received from the Division within the past 24 months.

b) A copy of the last two examination exception reports and any related correspondence.

c) A copy of the Act and a copy of this Part.

38 Ill. Adm. Code 210.70 Payments and Refunds

a) All payments shall be credited on the account record as of the date received.

b) When a payment is made in cash, the licensee shall give a receipt to the consumer. A receipt is not required for payment by check or money order unless requested by the consumer.

c) When any loan contract is paid in full, the licensee shall refund any unearned finance charge. The unearned finance charge that is refunded shall be calculated based on a method that is at least as favorable to the consumer as the actuarial method, as defined by the federal Truth in Lending Act (15 USC 1601 et seq.) and Regulation Z, Appendix J (12 CFR 226 (2011); this incorporation by reference includes no subsequent dates or editions). The Department will post to its website a method of rebate calculation that conforms with Appendix J. Licensees may submit to the Department requests for approval of additional methods of rebate calculation that conform to Appendix J. All methods approved by the Department will be posted on the Department's website. The Department shall make its best efforts to respond to all licensee requests for use of a method. The use of any posted method will constitute compliance with the requirements of this subsection (c). The sum of the digits or rule of 78 method of calculating prepaid interest refunds is prohibited.

History

• Source: Amended at 46 Ill. Reg. 6550, effective August 1, 2022

38 Ill. Adm. Code 210.72 Loan Terms

a) No lender may make a payday loan to a consumer if the total of all payday loan payments coming due within the first calendar month of the loan, when combined with the payment amount of all of the consumer's other outstanding payday loans coming due within the same month, exceeds the lesser of:

1. $1,000; or

2. in the case of one or more payday loans, 25% of the consumer's gross monthly income;

b) A lender shall not contract for or receive charges exceeding a 36% PLPA APR on the unpaid balance of the amount financed for a payday loan. Any loan with a PLPA APR over 36% is null and void, such that no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the loan.

c) A lender may not take or attempt to take an interest in any of the consumer's personal property to secure a payday loan.

d) A consumer has the right to redeem a check or any other item described in the definition of payday loan under Section 1-10 of the Act issued in connection with a payday loan from the lender holding the check or other item at any time before the payday loan becomes payable by paying the full amount of the check or other item, except that, if the item is a check or an ACH debit that could not be cancelled before it was negotiated, the consumer shall be entitled to a full refund of the amount obtained by the check or ACH debit within 5 business days after the date of redemption.

History

• Source: Amended at 46 Ill. Reg. 6550, effective August 1, 2022

38 Ill. Adm. Code 210.75 Installment Payday Loans (repealed)

History

• Source: Repealed at 46 Ill. Reg. 6550, effective August 1, 2022

38 Ill. Adm. Code 210.80 Cancellation and Return of Documents

The loan agreement executed by the consumer bearing evidence of indebtedness shall be cancelled and returned to the consumer promptly following the paid in full date or upon cancellation of future payment obligations pursuant to Section 2-25 of the Act. Where original documents are not available, a licensee shall substitute copies reproduced from any medium or format that accurately reproduces the original documents. If an executed copy of a legal document is retained following payment in full or renewal, it must be clearly marked "PAID", "CANCELLED" or "RENEWED", indicating the date of payment or renewal. Copies clearly identified with the legend "COPY NOT NEGOTIABLE" or similar language may be used in lieu of this requirement.

38 Ill. Adm. Code 210.90 Hypothecation at the Time of the Sale of Consumer's Loan Agreement

a) A licensee may pledge, hypothecate or sell a loan agreement made under the provisions of the Act under the following conditions:

1. the licensee notifies the Division in writing within 10 days after the transaction indicating the name of the purchaser/pledgee, location where the related loan agreements can be examined, and that the licensee shall be responsible for all examination costs.

2. the licensee will provide the Division with an executed agreement entered into by the licensee and the purchaser/pledgee authorizing the Director to conduct an examination of these loan agreements.

b) Each instrument hypothecated must bear the following endorsement:

"This instrument is non-negotiable in form but may be pledged as collateral security. If so pledged, any payment made to the payee, either of principal or of interest, upon the debt evidenced by this obligation, shall be considered and construed as a payment on this instrument, the same as though it were still in the possession and under the control of the payee named herein; and the pledgee holding this instrument as collateral security hereby makes said payee its agent to accept and receive payments hereon, either of principal or of interest."

c) The licensee shall keep in the licensed office a record or list of all account records of all loans sold to another affiliated or non-affiliated licensee at the time of the sale. The account shall be maintained in the record or list until examined and released by the examiner. This record or list shall indicate the date of transaction, the account name and number, and the names of the other buyer in the transaction.

38 Ill. Adm. Code 210.100 Legal Forms

a) Submission to the Division

1. All forms of loan agreements, security agreements or assignments of wages or other forms used in connection with the making of loans shall be submitted to the Division prior to the conduct of business in the licensed location; provided, however, where the licensee or affiliate is engaged in the same business and licensed by this Division, the use of forms in the new location identical to those being used in the existing location shall not require filing. Notice of intent to use identical forms (change of name excepted) should be provided the Division by the licensee.

2. Should the licensees at any time following submission of forms modify the forms previously submitted, the forms as modified shall be submitted to the Division.

b) Standard forms approved by the Division, that are available on the agency's website, shall be used in the following cases:

1. Application for original license.

2. Application for annual renewal of license.

3. Change of location.

4. Annual report.

5. Appointment of attorney-in-fact for service of process.

6. Bond.

38 Ill. Adm. Code 210.110 Judgments

a) When a loan agreement has been reduced to judgment, the face of the account record shall show the amount and date of the judgment.

b) All payments received shall be applied to the judgment balance and be properly identified. The rate of interest charged on a judgment balance must comply with current applicable statutes. No higher rate of interest or charge shall be assessed or accepted.

c) The files of the licensee shall contain statements setting forth the following items:

1. Date of judgment.

2. Copy of the judgment.

3. Date suit was filed.

4. Amount of the judgment.

d) If records related to the judgment are kept off-site as approved by the Director pursuant to Section 210.220 of this Part, the licensee shall make these documents available from that site or return the records to the licensed location within 72 hours after the Division's request.

38 Ill. Adm. Code 210.120 Trouble File

A separate and complete file shall be kept containing all records pertaining to judgments and sales. These records shall be filed alphabetically under the name of the consumer or by account number.

38 Ill. Adm. Code 210.125 Schedule of Fines

a) The Department may assess fines on any licensee or unlicensed person or entity that violates, through any act or omission, any provision of the Act or the Act’s implementing regulations, and shall determine the amount of the fine pursuant to this Section:

1. Fine Schedule:

Tier

Conduct

Fine Amount

Tier 1

For each identified act or omission related to information disclosure, information reporting, advertising, document maintenance, or other similar statutory and regulatory requirements.

A fine not to exceed $1,000 per violation except as provided for in Tier 3.

Tier 2

For each identified act or omission related to the terms of a loan, fees, costs, or charges, ancillary products, security interests, underwriting, servicing, collection or any other act or omission not expressly covered by Tiers 1 or 3.

A fine not to exceed $5,000 per violation except as provided for in Tier 3.

Tier 3

For each identified act or omission that is prohibited under Section 122/4-5 of the Act or any action or omission that is an intentional or reckless violation of the Act regardless of type.

A fine not to exceed $10,000 per violation.

2. In determining the amount of any fine assessed under subsection (a)(1), if any, the Department will take into account the totality of the circumstances, including, but not limited to:

A) Proactive consumer remediation provided by the licensee or unlicensed person or entity to address harm caused by the act or omission;

B) Extent of direct consumer harm;

C) Frequency or pervasiveness of the act or omission;

D) Adequacy of compliance policies, procedures, and practices to avoid recurrence of the act or omission and/or agreement to alter compliance policies, procedures, and practices to avoid recurrence of the act or omission in the future;

E) History of compliant or non-compliant behavior, including past legal violations;

F) Cooperation with the Department in its regulatory and examination activities; and

G) Any other remedial measures the licensee or unlicensed person or entity has undertaken or has agreed to undertake in the future.

b) Nothing in this Section shall be construed as limiting the Department’s investigative powers or remedies under the Act, including, but not limited to, any remedy detailed in Section 4-10 of the Act in addition to, or in lieu of, assessing fines in accordance with subsection (a).

c) In accordance with Section 4-5 of the Act, the Department will follow the procedures established under 4-10(f) of the Act for unlicensed violators of the Act and this Part.

History

• Source: Added at 47 Ill. Reg. 9363, effective June 20, 2023

38 Ill. Adm. Code 210.130 Office and Office Hours

Every licensee shall maintain a place of business to which the general public shall have free access and where all obligations entered into shall be payable.

a) Except as provided in subsection (c), or otherwise authorized by the Division, each licensed office shall be open not less than three consecutive hours between 8:00 A.M. and 6:00 P.M. on every business day, except Saturdays, Sundays and legal holidays, during the term of the license, and the licensee shall file with the Division a schedule of the hours during which it elects to keep the office open, provided that any licensee may keep its office open for any period it sees fit in addition to the hours listed in the schedule.

b) Whenever a licensee desires to change its schedule of office hours on file with the Division, it may do so upon filing with the Division a schedule setting forth the change of time at least three days before the change shall go into effect. The schedule of hours shall be prominently displayed in the place of business of the licensee.

c) If any payment shall be due on any obligations to a licensee on any closed day, then the payment shall be considered, for all purposes, as having been received on the closed day, if the payment is received, whether through the mail or otherwise, at any time before the close of business on the next regular business day following the closed day.

d) The license of each licensee and the annual license fee renewal certificate shall be prominently displayed and be made available for easy reading by the public in the place of business of the licensee.

38 Ill. Adm. Code 210.140 Advertising

a) Licensees shall not make reference in any form of advertising, such as newspapers, circulars, letters, radio, or other media, to "low rates", "lower rates", "lowest rates" or "lowest cost", nor shall licensees indicate, by direct or indirect means, through such expression as "low cost", "lower cost", "low payments", "lower payments" or "easier to repay", that the charges or payments for a loan are low.

b) Upon specific request by the Division, licensees shall forward to the Supervisor of the Consumer Credit Section the complete text of all advertising copy, whether printed or broadcast, that is the subject of questions raised concerning compliance with the Act.

c) A licensee may indicate in advertising and otherwise that its business is "regulated", "examined", "supervised" or "licensed" by the State of Illinois. A licensee may not advertise in a false, misleading or deceptive manner or imply or indicate that the rates or charges for loans made are "approved", "set" or "established" by the State or by the Act.

d) The licensee shall not advertise the conduct of business other than at the licensed location or other location approved by the Director.

38 Ill. Adm. Code 210.150 Other Business

No other business, except one licensed by the Department, may be conducted within any office suite, room or place of business in which any other business is solicited or engaged in unless authorized in writing by the licensed location unless authorized in writing by the Director. [815 ILCS 122/3-5(g)] If written authorization is required pursuant to Section 3-5(g) of the Act, the Director's authorization will be predicated upon the licensee agreeing to the following:

a) That the authorization will not conceal nor facilitate concealment of an evasion of the Act;

b) To comply with any State or federal statute or regulation;

c) To obtain any license or registration required by a federal, State or local government agency to engage in the other business authorized;

d) That the Division may examine all records and investigate any or all transactions of the licensee;

e) The Director retains the right, upon notice and opportunity to be heard, to alter, amend or revoke an other business authorization;

f) That, if any federal or State statute or regulation, regardless of when enacted, prohibits the activity, the authorization shall become null and void immediately;

g) At the time of making a request, the licensee shall pay to the Director a nonrefundable other business authorization request fee of $100;

h) At the time of renewing the annual license, the licensee shall pay to the Director the sum of $25 for each other business authorization. Regardless of the number of licensed locations, only one fee per other business authorization is required.

38 Ill. Adm. Code 210.160 Examination Remittances

a) Licensees shall forward all examination remittances, as provided in Section 3-5(e) of the Act, to the Division at any address designated by the Director.

b) All fees and charges shall be remitted in the form of a check, draft or money order to the Department of Financial and Professional Regulation.

38 Ill. Adm. Code 210.170 General

a) Notary fees shall not be charged to or collected from the consumer.

b) Examination of Records

1. The Division may examine all records and investigate any or all transactions in the office of the licensee and shall charge the licensee $400 for each examiner day or portion of an examiner day.

2. The examination of the books and records of the licensee may be conducted concurrently with the examination of any other business conducted by the licensee that is regulated or licensed by the Division. A separate charge shall be made for each examiner day or portion of an examiner day.

3. The Division may conduct an examination for the purpose of verifying that the licensee has taken necessary actions to correct violations of the Act or this Part and shall charge the licensee $550 for each examiner day or portion of an examiner day, when the Director determines the verification examination must be performed on site at any facility of the licensee.

c) For the purpose of any reports required by the Division, expenses of all businesses conducted in the licensed office shall be allocated to each separate business at the end of each year. The Division shall require information as to all the businesses in the licensee's annual report.

d) A lender may charge a borrower a fee not to exceed $1 for the verification required under Section 2-15 of the Act. Only one such fee may be collected by the lender with respect to a particular loan.

History

• Source: Amended at 35 Ill. Reg. 7343, effective April 21, 2011

38 Ill. Adm. Code 210.180 Relocation

a) Whenever a licensee desires to change the licensed place of business to a location other than that set forth in the license and the proposed site is 15 miles or less from the current location, the licensee shall provide the Division with the following at least 10 days prior to the relocation:

1. A written notice providing the complete address of the new location;

2. Photographs of both the exterior and interior of the new location;

3. A written sworn statement that the new location will not share the premises with that of another business and the exact distance in miles between the existing location and new location;

4. A relocation fee of $300; and

5. The original license for endorsement.

b) A relocation in excess of 15 miles requires the prior approval of the Director in addition to the information required in subsection (a) of this Section.

38 Ill. Adm. Code 210.190 Name Change

Whenever the licensee desires to amend the name of the licensed business, the licensee shall submit to the Division, within 15 days after amending the name, the following:

a) $300 amended name change fee.

b) Amended Articles of Incorporation, if the licensee is a corporation, or amended organization papers, if the licensee is an entity other than a corporation.

38 Ill. Adm. Code 210.200 Hearing Procedures

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 17948, effective October 27, 2022

38 Ill. Adm. Code 210.210 Off-Site Records

With the Director's prior written approval, the licensee may retain records at a location other than the licensed location. The licensee shall make a written request that shall include the following:

a) Address of off-site location.

b) Contact person and telephone number at the off-site location.

c) Statement that all books, records and account information shall be made available within 72 hours after the Division's request at either the licensed location or the off-site location.

d) At the Director's discretion, the examination may be conducted at either the licensed location or the off-site location.

e) The licensee will pay for all examination expenses.

38 Ill. Adm. Code 210.220 Servicing of Accounts by Contract

Upon prior approval of the Director, the licensee may contract with a third party provider for servicing of accounts (e.g., processing of payments, collections, etc.). A request for the Director's approval shall be in writing and shall include the following:

a) Name and address of proposed servicer;

b) Executed contract, conditioned upon approval by the Director, between licensee and servicer;

c) Contact person and telephone number of the servicer;

d) A statement that the licensee will make all books, records, and account information readily available for examination by the Division;

e) A statement that the licensee will pay all examination expenses; and

f) Written consent of servicer for the Division to conduct its examination.

38 Ill. Adm. Code 210.230 Revocation or Suspension of License

If it is determined that the Director had the authority to issue the suspension or revocation of a license pursuant to Section 4-10(f) of the Act, he or she may issue orders as may be reasonably necessary to correct, eliminate or remedy the situation.

38 Ill. Adm. Code 210.240 Consumer Written Verification of Compliance with Act

a) Prior to the implementation of a certified database and in the absence of the availability of a certified database, a consumer written verification form must be completed to verify that a proposed loan agreement is permissible under the Act.

b) The written verification must be in a form approved by the Director.

c) The consumer must complete and sign the form attesting that the consumer understands that the lender making the loan under the Act is relying on the verification to determine whether the loan for which the consumer applied is permissible under the Act.

History

• Source: Amended at 35 Ill. Reg. 7343, effective April 21, 2011

38 Ill. Adm. Code 210.250 Gross Monthly Income Verification

a) Prior to making a loan under the Act, the licensee must obtain from the consumer one or more of the following types of documentation to verify the gross monthly income of the consumer as required by Section 2-5(e) of the Act.

1. A copy of the consumer's official pay stub or official payroll receipt, for the period 30 days prior to the date on which the loan is made.

2. A copy of the consumer's official receipt documenting payment of government benefits, for the period 30 days prior to the date on which the loan is made.

3. A contract that provides for funds to have been paid to the consumer within the 30 days prior to the date on which the loan is made, and documentation reflecting that the funds have actually been paid.

4. Other documentation as approved by the Director.

b) If two or more persons jointly apply for credit, each must list income on the application, and the aggregate of all borrowers' income may be taken into account when calculating the maximum gross monthly income under Section 2-5(e) of the Act. The licensee must obtain documentation of gross monthly income pursuant to this Section with respect to all applicants.

History

• Source: Amended at 46 Ill. Reg. 6550, effective August 1, 2022

38 Ill. Adm. Code 210.260 Certified Database/Commercially Reasonable Method of Verification

a) Certified Database. In order to certify a consumer reporting service as a commercially reasonable database pursuant to the Act, the provider must comply with the following provisions:

1. Single, centralized consumer reporting service to track payday loan transactions made by licensees under the Act on a real time basis.

2. Real time access by the Division and licensees to verify that individual consumers are eligible for a loan pursuant to the requirements of the Act.

3. All requirements in Section 2-15 of the Act regarding verification.

4. Customer support to licensees and consumers during regular business hours.

5. Develop and provide training to Division staff and licensees under the Act prior to implementation and on an ongoing basis.

6. Provide a charge-back methodology to licensees not to exceed $1 for each search to determine eligibility of the consumer for a loan under the Act.

7. All requirements of Section 2-17 of the Act regarding qualifications and bonding.

8. All confidentiality and privacy requirements of the Act and required by law.

b) The certified consumer reporting service may charge a verification fee not to exceed $1 upon a loan being made or entered into the database. The certified consumer reporting service shall not charge any additional fees or charges.

c) Additional Database Providers. As technology advances permit, the Division may certify additional database providers in the future. Any additional database provider must guarantee, to the satisfaction of the Director, that the additional database can interface with any other certified database to provide a single point of verification for licensees and the Division to determine consumer eligibility for a loan pursuant to the Act and to provide a single source for reporting purposes.

d) Licensee Input into Database

1. The licensee shall input the following information into the certified database to determine whether the consumer is eligible for a loan pursuant to the requirements of the Act:

A) Consumer's Social Security Number or Alien Identification Number or other official identification number, as approved by the USA Patriot Act rules and regulations (see 31 CFR 103.12(b)(2)(i)(4)(ii)), issued by a foreign government or government in the United States;.

B) Consumer's gross monthly income.

C) Any additional information required by the Director.

2. On the same day the payday loan is made, the licensee shall update the certified database with the following information:

A) Consumer's identification number under subsection (d)(1)(A);

B) Principal amount of the loan;

C) Total of payments;

D) Term of the loan;

E) Security accepted for the loan;

F) Zip code of consumer;

G) Date of the loan;

H) APR;

I) PLPA APR;

J) Whether the loan is a rollover or a prior loan; and

K) Any additional information required by the Director.

3. On the same day any loan transaction is made, the licensee shall input the information into the certified database, including, but not limited to, the following transactions:

A) Electing a repayment plan;

B) Paying the loan in full;

C) Closing of the loan;

D) Depositing a check used as security for the loan;

E) Canceling a loan within 48 hours as allowed by the Act;

F) Recording an NSF return on a previously closed transaction;

G) Return of security;

H) Writing of the loan;

I) Any missed payment;

J) Any default other than a missed payment; and

K) Any other transaction as required by the Director.

e) Beginning June 1, 2011, licensees must comply with the requirements of subsection (d) of this Section.

f) All personally identifiable information regarding any consumer obtained by way of the certified database and maintained by the Department is strictly confidential and shall be exempt from disclosure under Section 7(c) of the Freedom of Information Act.

History

• Source: Amended at 46 Ill. Reg. 6550, effective August 1, 2022

38 Ill. Adm. Code 210.270 Violation of Federal Law – Section 670 of the John Warner National Defense Authorization Act

Payday Loans to Covered Military Members and Covered Dependents

The following requirements are substantially taken from Section 670 of the Warner Act, with the Warner Act's references to "covered member" substituted with "covered military members" and the Warner Act's references to "dependent" substituted with "covered dependent". The substitutions of the above-referenced terms are meant to more clearly identify the targeted group (military personnel and their dependents) of potential payday loan borrowers to whom the Warner Act provisions apply:

a) Annual Percentage Rate

A lender may not impose an annual percentage rate of interest greater than 36% with respect to any loan extended to a covered military member or a covered dependent of a covered member. (See 10 USC 987(b).)

b) Mandatory Loan Disclosures − Information Required

With respect to any payday loan made to a covered military member or a covered dependent, a lender shall provide to the covered military member or a covered dependent the following information, orally and in writing, before the issuance of the loan:

1. A statement of the annual percentage rate of interest applicable to the loan (see 10 USC 987(c)(1)(A));

2. Any disclosures required under the Truth in Lending Act (15 USC 1601 et seq.) (see 10 USC 987(c)(1)(B));

3. A clear description of the payment obligations of the covered military member or a covered dependent, as applicable (see 10 USC 987(c)(1)(C)).

c) A lender shall not:

1. Roll over, renew, repay, refinance or consolidate any loan made to a covered member or dependent by the same lender with the proceeds of any other loan made to the same covered member or dependent (see 10 USC 987(e)(1));

2. Require the covered member's or dependent to waive the covered member's or dependent's right to legal recourse under any otherwise applicable provision of State or federal law, including any provision of the Servicemembers Civil Relief Act (50 USC App. 501 et seq.) (see 10 USC 987(e)(2));

3. Require the covered member or dependent to submit to arbitration or impose onerous legal notice provisions in the case of a dispute (see 10 USC 987(e)(3));

4. Demand unreasonable notice from a covered member or dependent (see 10 USC 987(e)(4));

5. Use a check or other method of access to a deposit, savings or other financial account maintained by the covered member or dependent or the title of a vehicle as security for the obligation (see 10 USC 987(e)(5));

6. Require as a condition for the loan that the covered member or dependent establish an allotment to repay an obligation (see 10 USC 987(e)(6));

7. Prohibit a covered member or dependent from prepaying the loan or charge a penalty or fee for prepaying all or part of the loan (see 10 USC 987(e)(7)).

d) Forms Provided by Licensee

All loans made pursuant to the Act must include a signed form by the debtor stating that the debtor is either a covered military member or a covered dependent, or that the debtor is not considered a covered military member or covered dependent as defined in Section 210.1. Licensees need not seek form approval from the Department when using language identical to the covered borrower identification statement contained in the Warner Act Regulations (32 CFR 232.5(a)(1) (2012)). Department approval is required if a licensee seeks to use any other form language.

History

• Source: Added at 37 Ill. Reg. 216, effective February 19, 2013

38 Ill. Adm. Code 210.APPENDIX A Disclosure of 36% Rate Cap

DISCLOSURE OF 36% RATE CAP

A lender shall not contract for or receive charges exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a loan, as calculated under the Illinois Predatory Loan Prevention Act (PLPA APR)

Any loan with a PLPA APR over 36% is null and void, such that no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the loan.

The annual percentage rate disclosed in any loan contract may be lower than the PLPA APR.

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Borrower Signature

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Co-Borrower Signature (If Applicable)

History

• Source: Added at 46 Ill. Reg. 6550, effective August 1, 2022

Part 215 Predatory Loan Prevention Act

38 Ill. Adm. Code 215.10 Definitions

"Act" means the Predatory Loan Prevention Act [815 ILCS 123].

"Billing cycle" means the interval between the days or dates of regular periodic statements. Intervals are equal and no longer than a quarter of a year and are considered equal if the number of days in the cycle does not vary more than four days from the regular day or date of the periodic statement.

"Bureau" means the federal Consumer Financial Protection Bureau or the Bureau of Consumer Financial Protection.

"Consumer" means any natural person, including those persons acting jointly. [815 ILCS 123/15-1-10]

"Closed-end credit" means consumer credit other than open-end credit.

"Finance charge" means the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the lender as an incident to or a condition of the extension of credit. It does not include any charge of a type payable in a comparable cash transaction.

"Lender" means any person or entity, including any affiliate or subsidiary of a lender, that:

offers or makes a loan;

buys a whole or partial interest in a loan;

arranges a loan for a third party, or acts as an agent for a third party in making a loan, regardless of whether approval, acceptance, or ratification by the third party is necessary to create a legal obligation for the third party; or

the Department determines that the person or entity is engaged in a transaction that is in substance a disguised loan or a subterfuge for the purpose of avoiding the Act. [815 ILCS 123/15-1-10]

"Loan" means money or credit provided to a consumer in exchange for the consumer’s agreement to a certain set of terms, including, but not limited to, any finance charges, interest, or other conditions. "Loan" includes closed-end and open-end credit, retail installment sales contracts, motor vehicle retail installment sales contracts, and any transaction conducted via any medium (e.g., paper, facsimile, Internet, telephone). "Loan" does not include a commercial loan. [815 ILCS 123/15-1-10]

"Open-end credit" means consumer credit extended by a lender under a plan in which:

"Person" means any natural person.

"Predatory Loan Prevention Act APR" or "PLPA APR" is the cost of the consumer credit expressed as an annual rate, and is calculated in accordance with 32 CFR. 232.4(c), as in effect on the effective date of the Act and as incorporated in 38 Ill. Adm. Code 215.

The lender reasonably contemplates repeated transactions;

The lender may impose a finance charge from time to time on an outstanding unpaid balance; and

The amount of credit that may be extended to the consumer during the term of the plan (up to any limit set by the lender) is generally made available to the extent that any outstanding balance is repaid.

"Regulation Z" means 12 CFR 1026 and has the same meaning ascribed in 32 CFR 232, as in effect on March 23, 2021.

Words that are not defined in this part have the same meanings ascribed in Regulation Z (12 CFR 1026), including any interpretation by the Bureau or an official or employee of the Bureau duly authorized by the Bureau to issue those interpretations.

Words that are not defined in this Part or Regulation Z, or any interpretation of Regulation Z, have the same meanings ascribed in applicable State or federal law.

38 Ill. Adm. Code 215.20 Terms of Loans Extended to Consumers

a) General conditions. A lender who extends a loan to a consumer may not require the consumer to pay a PLPA APR for the loan with respect to the extension of a loan, except as:

1. Agreed to under the terms of the loan agreement or promissory note;

2. Authorized by applicable State or federal law; and

3. Not specifically prohibited by this Part.

b) Limit on cost of a loan. A lender may not impose a PLPA APR greater than 36% in connection with an extension of a loan that is closed-end credit or in any billing cycle for open-end credit.

c) Calculation of the PLPA APR

1. Charges included in the PLPA APR. The charges for the PLPA APR shall include, as applicable to the extension of the loan:

A) Any credit insurance premium or fee, any charge for single premium credit insurance, any fee for a debt cancellation contract, or any fee for a debt suspension agreement;

B) Any fee for a credit-related ancillary product sold in connection with the credit transaction for closed-end credit or an account for open-end credit; and

C) Except for a bona fide fee (other than a periodic rate), which may be excluded under subsection (d):

i) Finance charges associated with the loan;

ii) Any application fee charged to a consumer who applies for a loan; and

iii) Any fee imposed for participation in any plan or arrangement for a loan, subject to subsection (c)(2)(B)(ii).

D) Certain exclusions of Regulation Z inapplicable. Any charge set forth in subsections (c)(1)(A) through (C) shall be included in the calculation of the PLPA APR even if that charge would be excluded from the finance charge under Regulation Z.

2. Computing the PLPA APR

A) Closed-end credit. For closed-end credit, the PLPA APR shall be calculated following the rules for calculating and disclosing the "Annual Percentage Rate (APR)" for credit transactions under Regulation Z based on the charges set forth in subsection (c)(1).

B) Open-end credit

i) In General. Except as provided in subsection (c)(2)(B)(ii), for open-end credit, the PLPA APR shall be calculated following the rules for calculating the effective annual percentage rate for a billing cycle as set forth in Section 1026.14(c) and (d) of Regulation Z (as if a lender must comply with that Section) based on the charges set forth in subsection (c)(1). Notwithstanding Section 1026.14(c) and (d) of Regulation Z, the amount of charges related to opening, renewing, or continuing an account must be included in the calculation of the PLPA APR to the extent those charges are set forth in subsection (c)(1).

ii) No balance during a billing cycle. For open-end credit, if the PLPA APR cannot be calculated in a billing cycle because there is no balance in the billing cycle, a lender may not impose any fee or charge during that billing cycle, except that the lender may impose a fee for participation in any plan or arrangement for that open-end credit so long as the participation fee does not exceed $100 per annum, regardless of the billing cycle in which the participation fee is imposed; provided, however, that the $100-per annum limitation on the amount of the participation fee does not apply to a bona fide participation fee imposed in accordance with subsection (d).

d) Bona Fide Fee Charged to a Credit Card Account

1. In General. For a loan extended in a credit card account under an open-end (not home-secured) loan plan, a bona fide fee, other than a periodic rate, is not a charge required to be included in the PLPA APR pursuant to subsection (c)(1). The exclusion provided for any bona fide fee under this subsection (d) applies only to the extent that the charge by the lender is a bona fide fee and must be reasonable for that type of fee.

2. Ineligible items. The exclusion for bona fide fees in subsection (d)(1) does not apply to:

A) Any credit insurance premium or fee, including any charge for single premium credit insurance, any fee for a debt cancellation contract, or any fee for a debt suspension agreement; or

B) Any fee for a credit-related ancillary product sold in connection with the credit transaction for closed-end credit or an account for open-end credit.

3. Standards Relating to Bona Fide Fees

A) Like-kind fees. To assess whether a bona fide fee is reasonable under subsection (d)(1), the fee must be compared to fees typically imposed by other lenders for the same or a substantially similar product or service. For example, when assessing a bona fide cash advance fee, that fee must be compared to fees charged by other lenders for transactions in which consumers receive extensions of credit in the form of cash or its equivalent. Conversely, when assessing a foreign transaction fee, that fee may not be compared to a cash advance fee because the foreign transaction fee involves the service of exchanging the consumer’s currency (e.g., a reserve currency) for the local currency demanded by a merchant for a good or service, and does not involve the provision of cash to the customer.

B) Safe harbor. A bona fide fee is reasonable under subsection (d)(1) if the amount of the fee is less than or equal to an average amount of a fee for the same or a substantially similar product or service charged by 5 or more lenders each of whose U.S. credit cards in force is at least $3 billion in an outstanding balance (or at least $3 billion in loans on U.S. credit card accounts initially extended by the lender) at any time during the 3-year period preceding the time such average is computed.

C) Reasonable fee. A bona fide fee that is higher than an average amount, as calculated under subsection (d)(3)(B), also may be reasonable under subsection (d)(1) depending on other factors relating to the credit card account. A bona fide fee charged by a lender is not unreasonable solely because other lenders do not charge a fee for the same or a substantially similar product or service.

D) Indicia of reasonableness for a participation fee. An amount of a bona fide fee for participation in a credit card account may be reasonable under subsection (d)(1) if that amount reasonably corresponds to the credit limit in effect or credit made available when the fee is imposed, to the services offered under the credit card account, or to other factors relating to the credit card account. For example, even if other lenders typically charge $100 per annum for participation in credit card accounts, a $400 fee nevertheless may be reasonable if (relative to other accounts carrying participation fees) the credit made available to the consumer is significantly higher or additional services or other benefits are offered under that account.

4. Effect of Charging Fees on Bona Fide Fees

A) Bona fide fees treated separately from charges for credit insurance products or credit-related ancillary products. If a lender imposes a fee described in subsection (c)(1) and imposes a finance charge to a consumer, the total amount of the fees and finance charges shall be included in the PLPA APR pursuant to subsection (c), and the imposition of any fee or finance charge described in subsection (c)(1) shall not affect whether another type of fee may be excluded as a bona fide fee under this subsection (d).

B) Effect of charges for non-bona fide fees. If a lender imposes any fee (other than a periodic rate or a fee that must be included in the PLPA APR pursuant to subsection (c)(1)) that is not a bona fide fee and imposes a finance charge to a consumer, the total amount of those fees, including any bona fide fees, and other finance charges shall be included in the PLPA APR pursuant to subsection (c).

Part 216 Retail Installment Sales Act

38 Ill. Adm. Code 216.100 Rate Cap Disclosure Notices

All retail installment contracts or agreements must include a separate disclosure signed by the consumer that states: "A retailer shall not contract for or receive charges exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a retail installment contract, as calculated under the Illinois Predatory Loan Prevention Act (PLPA APR). Any retail installment contract with a PLPA APR over 36% is null and void, such that no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the retail installment contract. The annual percentage rate disclosed in any retail installment contract may be lower than the PLPA APR." This disclosure shall be clear and conspicuous, and shall be substantially similar to the form in Appendix A. A retailer shall provide all disclosures required by this section in English and in the same language as the retail installment contract agreement.

38 Ill. Adm. Code 216.APPENDIX A Disclosure of 36% Rate Cap

DISCLOSURE OF 36% RATE CAP

A retailer shall not contract for or receive charges exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a retail installment contract, as calculated under the Illinois Predatory Loan Prevention Act (PLPA APR)

Any retail installment contract with a PLPA APR over 36% is null and void, such that no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the retail installment contract.

The annual percentage rate disclosed in any retail installment contract may be lower than the PLPA APR.

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Borrower Signature

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Co-Borrower Signature (If Applicable)

Part 217 Motor Vehicle Retail Installment Sales Act

38 Ill. Adm. Code 217.100 Rate Cap Disclosure Notices

All retail installment contracts or agreements must include a separate disclosure signed by the consumer that states: "A retailer shall not contract for or receive charges exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a retail installment contract, as calculated under the Illinois Predatory Loan Prevention Act (PLPA APR). Any retail installment contract with a PLPA APR over 36% is null and void, such that no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the retail installment contract. The annual percentage rate disclosed in any retail installment contract may be lower than the PLPA APR." This disclosure shall be clear and conspicuous, and shall be substantially similar to the form in Appendix A. A retailer shall provide all disclosures required by this section in English and in the same language as the retail installment contract agreement.

38 Ill. Adm. Code 217.APPENDIX A Disclosure of 36% Rate Cap

DISCLOSURE OF 36% RATE CAP

A retailer shall not contract for or receive charges exceeding a 36% annual percentage rate on the unpaid balance of the amount financed for a retail installment contract, as calculated under the Illinois Predatory Loan Prevention Act (PLPA APR)

Any retail installment contract with a PLPA APR over 36% is null and void, such that no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the retail installment contract.

The annual percentage rate disclosed in any retail installment contract may be lower than the PLPA APR.

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Borrower Signature

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Co-Borrower Signature (If Applicable)

Chapter II Office of Banks and Real Estate

Part 302 Blacklist Discrimination

38 Ill. Adm. Code 302.10 Scope

This Part is promulgated pursuant to Section 6(e) of the Office of Banks and Real Estate Act [20 ILCS 3205/6(e)] and applies to all state banks.

38 Ill. Adm. Code 302.20 Definitions

For purposes of this Part the following definitions shall apply:

"Act" means the Illinois Banking Act [205 ILCS 5].

"Blacklist" means a list of persons marked by those who prepare the list or those among whom the list is intended to circulate with the intention that persons on the list may not avail themselves of goods or services, but shall not include lists prepared by the federal government or federal administrative agencies pursuant to federal law.

"Discrimination" means, upon a prohibited basis:

denying any person any of the services normally offered by the state bank to other persons similarly situated; or

providing any person, to their disadvantage, with any service which differs from, or is provided in a different manner from, that service as provided to other persons similarly situated; or

denying or varying the terms of a loan to any person from loans approved or offered to other persons similarly situated.

"Person" means any individual, corporation, partnership, association or other entity.

"State bank" means a state bank as defined by the Act.

38 Ill. Adm. Code 302.30 Guidelines

No state bank shall discriminate against any person because that person appears upon a blacklist issued by any domestic or foreign corporate or government entity.

38 Ill. Adm. Code 302.40 Implementation

All state banks shall forbid discrimination by bank directors, officers or employees against any person because that person appears upon a blacklist.

Chapter II Department of Financial and Professional Regulation

Part 305 Bank Branches and Subsidiaries

38 Ill. Adm. Code 305.10 Definitions

"Act" means the Illinois Banking Act [205 ILCS 5].

"Appropriate Federal Banking Agency " means the Federal Deposit Insurance Corporation, the Federal Reserve Bank of Chicago or the Federal Reserve Bank of St. Louis.

"Branch Notice" means a copy of the state bank's application to its appropriate federal banking agency for approval to establish a branch.

"Controlling Interest" means at least 50% plus 1 share, or more than 50% membership interest for a limited liability company.

"Debt Previously Contracted" means real estate, including capitalized and operating leases, acquired by a state bank through any means in full or partial satisfaction of a debt.

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director of the Division of Banking with the authority delegated by the Secretary.

"Division" means the Department of Financial and Professional Regulation‑Division of Banking with the authority delegated by the Secretary.

"Eligible Bank" means a state bank as defined in 38 Ill. Adm. Code 380.20.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

"State Bank" means a bank that has a banking charter issued under the Act.

"Subsidiary Notice" means a copy of the state bank's written notice pursuant to Section 5(12) of the Act.

History

• Source: Amended at 39 Ill. Reg. 14509, effective October 22, 2015

38 Ill. Adm. Code 305.20 Procedure to Establish and Maintain a Bank Branch

A state bank that is not an eligible bank as defined in Section 305.10 and that seeks to establish and maintain a bank branch inside the United States or any state bank that seeks to establish a branch outside the United States must file a Notice with the Division not less than 30 calendar days before the bank enters into any contract or expends funds on a temporary or permanent branch facility.

History

• Source: Amended at 36 Ill. Reg. 6814, effective May 4, 2012

38 Ill. Adm. Code 305.30 Acknowledgment by the Office of Banks and Real Estate (repealed)

History

• Source: Repealed at 21 Ill. Reg. 8367, effective June 24, 1997

38 Ill. Adm. Code 305.40 Date a Branch Is Established and Maintained (repealed)

History

• Source: Repealed at 21 Ill. Reg. 8367, effective June 24, 1997

38 Ill. Adm. Code 305.100 Procedure to Establish and Maintain a Subsidiary to Manage Real Estate Obtained in Satisfaction of Debt Previously Contracted

A state bank that seeks to establish and maintain a subsidiary in order to manage, market and dispose of real estate obtained in satisfaction of debt previously contracted need not submit notice pursuant to Section 5(12) of the Act when the bank has a controlling interest in the subsidiary.

History

• Source: Amended at 39 Ill. Reg. 14509, effective October 22, 2015

Part 310 Minimum Organizational Capital Requirements for Banks and Trust Companies

38 Ill. Adm. Code 310.100 Scope and Authority

Pursuant to Section 7 of the Illinois Banking Act [205 ILCS 5/7] and Section 2-7 of the Corporate Fiduciary Act [205 ILCS 620/2-7], this Part establishes the minimum organizational capital requirements that must be met in order for proposed State banks and State banks to exercise the powers conferred by the Illinois Banking Act and for proposed Illinois trust companies and Illinois trust companies to exercise the powers conferred by the Corporate Fiduciary Act. The Commissioner shall use these minimum organizational capital requirements in reviewing the applications of proposed or existing State banks or proposed or existing Illinois trust companies in applications for: a permit to organize a State bank under Section 10 of the Illinois Banking Act [205 ILCS 5/10]; a certificate of authority under Section 2-5 of the Corporate Fiduciary Act [205 ILCS 620/2-5]; a change in the location of a State bank’s main banking premises under Section 13 of the Illinois Banking Act [205 ILCS 5/13]; a merger resulting in a State bank under Section 22 or 30 of the Illinois Banking Act [205 ILCS 5/22 or 30]; a merger or consolidation resulting in a trust company under Section 3-1 of the Corporate Fiduciary Act [205 ILCS 620/3-1]; and a conversion resulting in a State bank under Section 26 or 30 of the Illinois Banking Act [205 ILCS 5/26 or 30].

38 Ill. Adm. Code 310.110 Definitions

“Chicago, Illinois central business district” is generally considered as that part of the city of Chicago bounded by a line beginning with Lake Shore Drive on the east, thence south to Balbo Drive, thence west to Michigan Avenue, thence north to Harrison Street, thence west to Clinton Street, thence north to Lake Street, thence east to Wacker Drive, and thence on Wacker Drive north and east to Orleans Street, thence north to Chicago Avenue and thence east to Lake Shore Drive. However, certain locations (e.g., areas within close proximity or areas with similar market characteristics) within the city of Chicago may also require the same minimum capital requirements.

“Chicago, Illinois metropolitan area” is generally considered as the geographical area encompassing the counties of Cook, DuPage, Kane, Lake, McHenry and Will, except that part within Cook county defined in this Section as the Chicago, Illinois central business district. However, an entity may organize or locate a State bank within this geographical area by meeting the minimum organizational capital requirements for banks located outside of the Chicago, Illinois metropolitan area based upon the market characteristics of the proposed location.

“Commissioner” means the Commissioner of Banks and Real Estate or a person authorized by the Commissioner to act in the Commissioner’s stead.

38 Ill. Adm. Code 310.200 Minimum Organizational Capital Requirements for Banks

The minimum organizational capital requirements that must be met to exercise the powers conferred in the Illinois Banking Act are as follows:

a) $6,000,000 for a bank that is located in the Chicago, Illinois central business district;

b) $4,000,000 for a bank that is located in the Chicago, Illinois metropolitan area;

c) $3,000,000 for a bank that is located outside of the Chicago, Illinois central business district and metropolitan area; and

d) $3,500,000 for a banker’s bank that is owned exclusively by other banks or bank holding companies and that has been exclusively organized to provide services to other banks, bank holding companies, and the officers, directors and employees of such institutions.

38 Ill. Adm. Code 310.210 When Greater Capital Requirements May Be Necessary

a) Greater capital requirements may be required by the Commissioner if the condition and operations or the proposed scope of operations of the proposed or existing State bank require additional capital to achieve or maintain a safe and sound condition.

b) If the Commissioner determines that the proposed or existing bank requires capital in addition to the minimum organizational capital requirements set forth in Section 310.200, the bank shall be informed by the Office of Banks and Real Estate and afforded the opportunity to amend the related application.

c) In determining if additional capital in excess of the minimum organizational capital requirements is necessary for a proposed or existing bank, the Commissioner shall consider the size and scope of the bank’s operations. The review of the proposed or existing bank’s scope of operations may consist of an assessment of the percentage of investment to be made in fixed assets, the proposed or existing bank’s projections for future growth, future earnings prospects, the amount of organizational expenses incurred by the proposed bank, access to readily available sources of additional capital, the capability of management, and any other factors deemed appropriate by the Commissioner. Instances when additional capital may be required include, but are not limited to, those situations where the business plan contemplates aggressive future growth or a higher risk activity such as transactional internet activity, or where the proposed bank incurs significant organizational expenses.

38 Ill. Adm. Code 310.220 Exceptions to Minimum Organizational Capital Requirements for Banks

a) In applications involving a merger resulting in a State bank pursuant to Section 22 or Section 30 of the Illinois Banking Act, a conversion resulting in a State bank pursuant to Section 26 or 30 of the Illinois Banking Act, or a change in location of a State bank pursuant to Section 13 of the Illinois Banking Act, a lesser amount of capital than specified in Section 310.200 may be approved if the Commissioner determines that such lesser amount of capital is sufficient to enable the bank to operate in a safe and sound manner. For example, the Commissioner may authorize a lesser amount of capital than that prescribed in Section 310.200 if the applicant is an existing bank operating with capital levels below the minimum capital requirements prescribed in that Section and operating in a safe and sound manner and the application contemplates an activity that the bank will be able to conduct in a safe and sound manner at the current capital levels following approval of the application.

b) A bank organized to assume the assets and liabilities of an existing bank or insured savings association that has failed, or is in default or in danger of default, shall have a minimum tier 1 capital, as defined by the Federal Deposit Insurance Corporation, of 5% of total assets. The Commissioner hereby incorporates by reference the definition of tier 1 captial found in 12 CFR 325, Minimum Capital Requirements, as effective April 1, 2002 (no later amendments or editions). Copies of 12 CFR 325 are available at the Commissioner's Springfield or Chicago office. Copies may also be obtained on the Federal Deposit Insurance Corporation web site.

38 Ill. Adm. Code 310.300 Minimum Organizational Capital Requirements for Trust Companies

The minimum organizational capital requirement that must be met by an applicant for a certificate of authority under the Corporate Fiduciary Act to become an Illinois trust company is $3,000,000. The minimum organizational capital requirement prescribed in this subsection shall be in addition to and separate from the amount pledged or surety bond held pursuant to Section 6-13.5 of the Corporate Fiduciary Act.

38 Ill. Adm. Code 310.310 When Greater Capital Requirements May Be Necessary

a) Greater capital requirements may be required by the Commissioner if the condition and operations or the proposed scope of operations of the proposed or existing trust company require additional capital to achieve or maintain a safe and sound condition. Instances when additonal capital may be required include but are not limited to those situations where the business plan contemplates high risk activity or where the trust company incurs significant organizational expenses.

b) If the Commissioner determines that the proposed or existing trust company requires capital in addition to the minimum organization capital requirements set forth in Section 310.300, the trust company shall be informed by the Office of Banks and Real Estate and afforded the opportunity to amend the related application.

38 Ill. Adm. Code 310.320 Exceptions to Minimum Organizational Capital Requirements for Trust Companies

An Illinois trust company organized before January 1, 2003, when a lower capital requirement may have been in effect, may continue to operate under that lower capital requirement unless the Commissioner has increased the required capital for that trust company under Section 2-7 of the Corporate Fiduciary Act.

38 Ill. Adm. Code 310.330 Merger or Consolidation of Trust Companies

In any merger or consolidation resulting in a trust company made pursuant to Section 3-1 of the Corporate Fiduciary Act, the resulting trust company must meet the minimum organizational capital requirement in effect at the time of the merger or consolidation. In such cases, the current capital requirement must be met even if a lower capital requirement previously had applied to any or all of the merging or consolidating parties.

38 Ill. Adm. Code 310.340 Adequacy of Capital Investments of Trust Companies (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11328, effective August 28, 2017

Part 315 Electronic Fund Transfers

38 Ill. Adm. Code 315.110 Definitions

The words and phrases used in this Part and not defined in this Section shall have the meanings ascribed to them in the Electronic Fund Transfer Act [205 ILCS 616].

"Act" means the Electronic Fund Transfer Act [205 ILCS 616].

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

History

• Source: Amended at 42 Ill. Reg. 2266, effective February 2, 2018

38 Ill. Adm. Code 315.210 Scope and Authority (repealed)

History

• Source: Repealed at 28 Ill. Reg. 1053, effective January 5, 2004

38 Ill. Adm. Code 315.220 Statement of Claim, Response and Reply (repealed)

History

• Source: Repealed at 28 Ill. Reg. 1053, effective January 5, 2004

38 Ill. Adm. Code 315.230 Motions (repealed)

History

• Source: Repealed at 28 Ill. Reg. 1053, effective January 5, 2004

38 Ill. Adm. Code 315.240 Appearances (repealed)

History

• Source: Repealed at 28 Ill. Reg. 1053, effective January 5, 2004

38 Ill. Adm. Code 315.250 Appointment of Hearing Officer (repealed)

History

• Source: Repealed at 28 Ill. Reg. 1053, effective January 5, 2004

38 Ill. Adm. Code 315.260 Service (repealed)

History

• Source: Repealed at 28 Ill. Reg. 1053, effective January 5, 2004

38 Ill. Adm. Code 315.270 Procedures (repealed)

History

• Source: Repealed at 28 Ill. Reg. 1053, effective January 5, 2004

38 Ill. Adm. Code 315.310 Fees and Charges

The Secretary is authorized by Section 25 of the Act to examine any network and any switch as to any transaction by, with, or involving a financial institution that has established a terminal in this State. The Secretary shall charge a fee of no more than $750 per examiner per day to cover the costs of such an examination. The Secretary reserves the right to charge less than the fee stated in this Section. The same fee will be charged equally to all networks examined under this Part, unless the examination costs of a particular network justify an additional amount (i.e., out-of-state or out-of-country travel or use of contract personnel).

History

• Source: Amended at 42 Ill. Reg. 2266, effective February 2, 2018

38 Ill. Adm. Code 315.410 Requirements for Surcharge and Contact Information Signage

a) No person operating a terminal in this State shall impose any surcharge on a consumer for the usage of that terminal unless that surcharge is clearly disclosed to the consumer by display screen disclosures clearly visible to the consumer that comply with the following requirements:

1. Be at least 4" x 4" and bear the heading "FEE NOTICE" in at least 18-point type centered at the top of the notice with the remaining text of the disclosure in at least 14-point type.

2. Clearly state the following:

A) Name of the terminal operator;

B) Explanation that transactions will receive a surcharge that will be deducted from the consumer's account in addition to any fees imposed by the access device issuer;

C) Amount or calculation of the surcharge fee; and

D) The surcharge is assessed by the terminal operator and not the access device issuer.

3. The display screen must:

A) be displayed for a reasonable duration;

B) clearly state the amount or calculation of the surcharge fee; and

C) clearly give the consumer the unconditional right to cancel the transaction without incurring the surcharge fee.

b) Any cash-dispensing terminal operating in this State that is owned or established by a person other than a financial institution or an affiliate of a financial institution must provide signage physically attached to the terminal or provide display screen disclosures clearly visible to the consumer with contact information to report any issues with the terminal to the operator of the terminal or to the Secretary, meeting the following requirements:

1. Be at least 4" x 4" and bear the heading "CONTACT INFORMATION" in at least 18-point type centered at the top of the notice, with the text of the disclosure in at least 14-point type; and

2. Clearly state the following:

A) The name of the operator;

B) The telephone number and website address (if applicable) of the operator;

C) The name, website address, and telephone number of the Division as follows:

Illinois Department of Financial and Professional Regulation-

Division of Banking

(844) 768-1713

www.idfpr.com.

c) This Section does apply to a point-of-sale purchase transaction at a terminal.

History

• Source: Amended at 42 Ill. Reg. 2266, effective February 2, 2018

38 Ill. Adm. Code 315.420 Acceptance of Deposits

In order to maintain parity, any financial institution, the deposits in which are insured by an agency or instrumentality of the federal government, may establish or own a terminal in this State that accepts deposits of funds to an account if the main office of such financial institution is located in a state that would permit, under terms no more restrictive than those imposed in Illinois, a financial institution organized under the Illinois Banking Act to establish or own a terminal in that state that accepts deposits of funds to an account.

History

• Source: Added at 28 Ill. Reg. 14789, effective October 27, 2004

38 Ill. Adm. Code 315.430 Reverse Order Personal Identification Number Programming

Pursuant to subsection (i) of Section 50 of the Act [205 ILCS 5/50(i)], an owner or operator of a terminal in this State may, but is not required to, design and program the terminal so that when a consumer enters his or her personal identification number in reverse order, the terminal automatically sends an alarm to the local law enforcement agency in whose jurisdiction the terminal is located. An owner or operator of a terminal that chooses to program their terminal in this manner shall inform their customers and local law enforcement of the location of the terminal and its programming. This notice shall be given at the time an access device is issued and on an annual basis thereafter. The notice may be included with other disclosures that must be furnished to customer, such as disclosures under the federal Electronic Fund Transfer Act or the Consumer Deposit Account Act. For purposes of this Section, customer includes any individual who has obtained an access device from the owner or operator.

History

• Source: Added at 28 Ill. Reg. 14789, effective October 27, 2004

Chapter II Office of Banks and Real Estate

Part 320 Powers Incidental and Germane to Carrying on a General Banking Business

38 Ill. Adm. Code 320.10 Purpose

The powers of a state bank in Illinois are established and governed by the provisions of the Illinois Banking Act (the "Act") [205 ILCS 5]. Section 3 of the Act authorizes the establishment of banks for the purpose of doing a general banking business. Section 5 of the Act further enumerates the corporate powers of a state bank. This Part establishes factors which may be relevant in determining whether an activity is within a state bank's power to do a general banking business or incidental and germane to its power to do a general banking business.

38 Ill. Adm. Code 320.20 General Banking Business

A state bank has the power to do a general banking business and the power to engage in activities which are incidental and germane to carrying on a general banking business (Corbett v. Devon Bank, 299 N.E. 2d 521, 529 (1973)).

38 Ill. Adm. Code 320.30 Factors to Be Considered

a) The following factors are relevant, if applicable, in determining whether an activity is incidental and germane to carrying on a general banking business.

1. Is the activity convenient or useful in connection with the performance of one of the bank's established activities pursuant to its express powers under the Act (i.e., selling traveler's checks, issuing credit cards, issuing license plates)?

2. Is the activity related to ordinary, traditional bank functions (i.e., lending money, paying checks and accepting deposits)?

3. To what extent do other banks participate in this activity?

4. Has the Board of Governors of the Federal Reserve System found the activity appropriate for non-bank subsidiaries of a bank holding company pursuant to 12 U.S.C. 1843(c)(8)?

b) In addition to the above-stated factors, the state bank may offer any other information to support a finding that a particular activity is incidental and germane to carrying on a general banking business.

38 Ill. Adm. Code 320.40 Procedure

A state bank may request a declaratory ruling pursuant to Section 5-150(a) of the Illinois Administrative Procedure Act [5 ILCS 100/5-150(a)] from this Agency that an activity is incidental and germane to carrying on a general banking business by submitting a written request to the Commissioner which describes the proposed activity and contains information addressing the factors set forth in this Part and an analysis of the financial risks associated with this activity.

Part 325 Disclosure of Confidential Supervisory Information

38 Ill. Adm. Code 325.10 Definitions

For purposes of this Part:

"Act" means the Illinois Banking Act [205 ILCS 5].

"Commissioner" means the Commissioner of Banks and Real Estate, or a person authorized by the Commissioner to act in the Commissioner's stead.

"Compelling need" means that no other non-confidential source is available to obtain information of equal relevance.

"Complete request" means a request that provides all of the information required in Section 325.30 of this Part.

"Confidential supervisory information" shall have the same meaning ascribed to that term in Section 48.3 of the Act [205 ILCS 5/48.3].

"Person" shall have the same meaning ascribed to that term in Section 2 of the Act [205 ILCS 5/2].

"Relevant" means the requested confidential supervisory information could substantially contribute to the resolution of the issues identified in the pleadings contained within the request.

"Requester" means any person who makes a request for the discovery or disclosure of confidential supervisory information, whether by subpoena, order, or other judicial or administrative process.

38 Ill. Adm. Code 325.20 Purpose and Scope

a) Purpose. The purpose of this Part is to establish the procedures and standards by which the Commissioner shall determine whether to disclose confidential supervisory information in response to a request for discovery or disclosure of such information.

b) Scope. This Part applies to requests, whether by subpoena, order, or other judicial or administrative process, for discovery or disclosure of confidential supervisory information prepared or obtained by the Commissioner under the Act, the Electronic Fund Transfer Act, the Corporate Fiduciary Act, the Illinois Bank Holding Company Act of 1957, the Foreign Banking Office Act and any report of examination, visitation or investigation prepared by the state regulatory authority of another state that examines a branch of an Illinois bank in that state. This Part does not apply to:

1. a request made pursuant to the Freedom of Information Act [5 ILCS 140] (FOIA), provided that, if the information requested constitutes confidential supervisory information, it shall nonetheless be exempt from disclosure pursuant to Section 7(l)(x) of FOIA;

2. a request made by a party to whom the Commissioner may furnish confidential supervisory information as permitted in Section 48.3 of the Act [205 ILCS 5/48.3]; or

3. a request made by a party to whom a bank or other financial institution may furnish confidential supervisory information as permitted in Section 48.3(b) of the Act [205 ILCS 5/48.3].

38 Ill. Adm. Code 325.30 Requests for Confidential Supervisory Information

Pursuant to Section 48.3 of the Act [205 ILCS 5/48.3], a request for confidential supervisory information arising from an adversarial matter, whether by subpoena, order, or other judicial or administrative process, shall be made to the Commissioner. If the request is for a record, the requester must adequately describe the records sought by type and date. Such request shall be accompanied by:

a) a copy of the formal complaint or pleading setting forth the assertions of the adversarial matter;

b) the caption and docket number assigned to the adversarial proceeding;

c) the name, address, and telephone number of designated legal counsel to each party named in the adversarial proceeding;

d) a statement detailing the relevance of the requested confidential supervisory information;

e) a statement detailing a compelling need for the requested confidential supervisory information;

f) a statement describing any prior judicial decisions or pending motions in the case that may bear on the asserted relevance of the requested information; and

g) a statement detailing why the requester believes that the compelling need outweighs the public interest considerations in maintaining confidentiality and why the compelling need outweighs the burden on the Office of Banks and Real Estate to produce the requested confidential supervisory information.

38 Ill. Adm. Code 325.40 Where to Submit a Request

A person requesting discovery or disclosure of confidential supervisory information under this Part shall mail, or hand deliver, the request to:

Office of Banks and Real Estate

Bureau of Banks and Trust Companies

500 East Monroe Street

Springfield, Illinois 62701-1509

Attention: Legal Section

38 Ill. Adm. Code 325.50 Consideration of Requests

a) Standards for the Disclosure of Confidential Supervisory Information. When making a determination with respect to the disclosure of confidential supervisory information, the Commissioner shall consider the following standards:

1. the confidential supervisory information identified in the request is relevant;

2. a compelling need exists;

3. if the requested confidential supervisory information is to be used in connection with an adversarial matter, the lawsuit or administrative action has been filed; and

4. the production and disclosure of the confidential supervisory information is not unduly burdensome to the Office of Banks and Real Estate.

In determining whether to disclose the requested confidential supervisory information, the Commissioner may inquire into the circumstances of any case underlying the request and rely on sources of information other than the requester, including other parties.

b) Time Required by the Commissioner to Respond. The Commissioner, within 15 days, shall determine whether to disclose the requested confidential supervisory information. The 15-day time period shall not commence until the Commissioner receives a complete request. If the request is not complete, the Commissioner shall notify the requester of the required information that has not previously been provided.

c) Notice to Other Parties. Following receipt of a complete request for confidential supervisory information, the Commissioner may notify the state bank, the electronic fund transfer network or switch, the corporate fiduciary, the Illinois bank holding company or the foreign banking office that is the subject of the requested information, unless the Commissioner determines that to do so would advantage or prejudice any of the parties in the matter at issue.

38 Ill. Adm. Code 325.60 Disclosure of Confidential Supervisory Information

a) Conditions and Limitations. The Commissioner may impose any conditions and limitations on the disclosure of confidential supervisory information that are necessary to protect the confidentiality of such information. Except as authorized by the Commissioner, no person obtaining access to confidential supervisory information under this Part may make a copy of the confidential supervisory information.

b) Restrictions on Dissemination of Confidential Supervisory Information. The Commissioner may condition a decision to disclose confidential supervisory information on entry of a protective order by the court or administrative tribunal presiding in the particular case or on a written agreement of confidentiality. In a case in which a protective order or agreement has already been entered between parties other than the Commissioner, the Commissioner may nevertheless condition approval for release of confidential supervisory information upon the inclusion of additional or amended provisions in the protective order. The Commissioner may authorize a party who obtained the records for use in one case to provide them to another party in another case, subject to any conditions that the Commissioner may impose on either or both parties.

c) Notification of Parties and Procedures for Sharing and Using Confidential Supervisory Information in Litigation. The requester shall promptly notify other parties to a case of the release of confidential supervisory information obtained pursuant to this Part and, upon entry of a protective order, shall provide copies of confidential supervisory information to the other parties.

38 Ill. Adm. Code 325.70 Retrieval and Destruction of Previously Disclosed Confidential Supervisory Information Used in Litigation

At the conclusion of an action:

a) the requester shall retrieve the disclosed confidential supervisory information from the judicial or administrative file as soon as the presiding judicial or administrative authority no longer requires the information;

b) the requester, and each party who may have subsequently received confidential supervisory information pursuant to a protective order, shall destroy the disclosed confidential supervisory information covered by the protective order; and

c) each party shall certify to the Commissioner that the disclosed confidential supervisory information covered by the protective order has been destroyed.

38 Ill. Adm. Code 325.80 Fees for Services

The Commissioner may charge the following fees for any record search or copying performed by the Commissioner:

a) Reproduction costs incurred in making photocopies of documents shall be reimbursed at $.25 per exposure.

b) All other costs, including but not limited to telephone costs, telegrams, and shipping costs, incurred in searching for and transporting data pursuant to a request for confidential supervisory information shall be reimbursed at actual costs.

The Commissioner may require a requester to remit payment prior to providing the requested confidential supervisory information.

Chapter II Department of Financial and Professional Regulation

Part 330 Lending Limits

38 Ill. Adm. Code 330.10 Definitions

"Act" means the Illinois Banking Act [205 ILCS 5].

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director of the Division of Banking with the authority delegated by the Secretary.

"Division" means the Department of Financial and Professional Regulation-Division of Banking with the authority delegated by the Secretary.

"Loan or Extension of Credit" means any direct or indirect advance of funds that results in a liability of any person for money borrowed or otherwise. An indirect advance of funds shall include, but not be limited to, a purchase by a bank of a note or obligation from another person.

"Person" shall have the meaning ascribed to it in Section 2 of the Act.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

History

• Source: Amended at 37 Ill. Reg. 5807, effective April 22, 2013

38 Ill. Adm. Code 330.20 Renewals of Loans or Extensions of Credit

A renewal of a loan or extension of credit shall not be deemed to be a new loan or extension of credit except in instances when interest on the renewed loan or extension of credit is capitalized.

38 Ill. Adm. Code 330.100 Purpose

Section 32 of the Act is intended to prevent one person or a relatively small group of persons, from borrowing an unduly large amount of a bank's funds. It is also intended to safeguard a bank's depositors by diversifying the risk of loan losses among a relatively large number of persons engaged in different types of businesses.

38 Ill. Adm. Code 330.110 Combining Loans to Separate Persons

a) A loan or extension of credit to one person shall be considered a loan or extension of credit to a second person if the credit worthiness of the one person does not justify the loan or extension of credit without reliance on the credit worthiness of the second person.

b) Factors which may be relevant in determining whether a loan or extension of credit to one person can be justified without reliance on the credit worthiness of a second person incude the following:

1. Will the credit analysis and documentation on file at the bank at the time the loan or extension of credit was made substantiate that the one person has or will have the financial capacity to generate sufficient funds from his or her own assets and operations to repay the loan or extension of credit or is the source of repayment the second person?;

2. Were the proceeds of the loan or extension of credit to one person used for the primary benefit of the one person or was a substantial portion of the proceeds used for the benefit of the second person without a corresponding economic benefit to the one person?;

3. In instances involving a guaranty or other secondary liability, is the liability of the second person that an accommodation party pursuant to Section 32(5) of the Act, namely a person who becomes obligated on the loan or extension of credit to one person and does not receive any of the proceeds thereof, or is the purpose of the guaranty or other secondary liability to enhance the loan or extension of credit for reasons other than repayment, such as to obtain an investment grade rating or to reduce the rate of interest charged on the loan or extension of credit, or would the loan or extension of credit to one person not have been made without the second person's guaranty or other secondary liability?

c) This Section shall not apply to loan combination questions involving loans or extensions of credit to a partnership and its general partner(s) or to a joint venture and its member(s). These lending situations are governed by Section 32 of the Act.

38 Ill. Adm. Code 330.120 Good Faith Reliance

When determining whether a loan combination question exists, the directors, officers, employees and agents of a state bank shall be entitled to rely and shall be protected in relying in good faith upon the books and records of the bank and upon credit applications, representations, certifications and other disclosures furnished by the borrower, guarantor and other related persons with respect to the purpose, use and source of repayment for a given loan or extension of credit, interrelationships among the various parties at interest and other pertinent factual considerations, provided careful attention and effort are given to reviewing such information.

History

• Source: Amended at 12 Ill. Reg. 17280, effective October 12, 1988

38 Ill. Adm. Code 330.200 Definitions

For purposes of this Subpart, the following definitions apply:

"Appropriate Federal Banking Agency" means the Federal Deposit Insurance Corporation, the Federal Reserve Bank of Chicago or the Federal Reserve Bank of St. Louis.

"Borrower" means a person who is named as a borrower or debtor in a loan or extension of credit; a person to whom a state bank has credit exposure arising from a derivative transaction entered by the bank or any other person, including a drawer, endorser or guarantor, who is deemed to be a borrower under Section 32 of the Act, Section 6013 of the Savings Bank Act [205 ILCS 205], or this Part.

"Contractual Commitment to Advance Funds" includes a bank's obligation to:

Make payment (directly or indirectly) to a third person contingent upon default by a customer of the bank in performing an obligation and to make the payment in keeping with the agreed upon terms of the customer's contract with the third person, or to make payments upon some other stated condition;

Guarantee or act as surety for the benefit of a person;

Advance funds under a qualifying commitment to lend; and

Advance funds under a standby letter of credit, a put or other similar arrangement.

The term does not include commercial letters of credit and similar instruments when the issuing bank expects the beneficiary to draw on the issuer, that do not guarantee payment, and that do not provide for payment in the event of a default by a third party.

"Credit Derivative" means a financial contract executed under standard industry credit derivative documentation that allows one party (the protection purchaser) to transfer the credit risk of one or more exposures (reference exposure, e.g., currency interest or equities exposure) to another party (the protection provider).

"Derivative Transaction" includes any transaction that is a contract, agreement, swap, warrant, note or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices or other assets.

"Effective Margining Arrangement" means a master legal agreement governing derivative transactions between a bank or savings association and a counterparty that requires the counterparty to post, on a daily basis, the variation margin to fully collateralize that amount of the bank's net credit exposure to the counterparty that exceeds $1,000,000 created by the derivative transactions covered by the agreement.

"Eligible Credit Derivative" means a single-name credit derivative or a standard, non-tranched index credit derivative provided that:

The derivative contract meets the requirements of an eligible guarantee, as defined in Section 32 of the Act, Section 6013 of the Savings Bank Act, or this Part and has been confirmed by the protection purchaser and the protection provider;

Any assignment of the derivative contract has been confirmed by all relevant parties;

If the credit derivative is a credit default swap, the derivative contract includes the following credit events:

Failure to pay any amount due under the terms of the reference exposure, subject to any applicable minimal payment threshold that is consistent with standard market practice and with a grace period that is closely in line with the grace period of the reference exposure; and

Bankruptcy, insolvency or inability of the obligor on the reference exposure to pay its debts, or its failure or admission in writing of its inability generally to pay its debts as they become due, and similar events;

The terms and conditions dictating the manner in which the derivative contract is to be settled are incorporated into the contract;

If the derivative contract allows for cash settlement, the contract incorporates a robust valuation process to estimate loss with respect to the derivative reliably and specifies a reasonable period for obtaining post-credit event valuations of the reference exposure;

If the derivative contract requires the protection purchaser to transfer an exposure to the protection provider at settlement, the terms of at least one of the exposures that is permitted to be transferred under the contract provides that any required consent to transfer may not be unreasonably withheld; and

If the credit derivative is a credit default swap, the derivative contract clearly identifies the parties responsible for determining whether a credit event has occurred, specifies that this determination is not the sole responsibility of the protection provider, and gives the protection purchaser the right to notify the protection provider of the occurrence of a credit event.

"Eligible Guarantee" means a guarantee that:

Is written and unconditional;

Covers all, or a pro rata portion of, all contractual payments of the obligor on the reference exposure;

Gives the beneficiary a direct claim against the protection provider;

Is not unilaterally cancelable by the protection provider for reasons other than the breach of the contract by the beneficiary;

Is legally enforceable against the protection provider in a jurisdiction where the protection provider has sufficient assets against which a judgment may be attached and enforced;

Requires the protection provider to make payment to the beneficiary on the occurrence of a default (as defined in the guarantee) of the obligor on the reference exposure in a timely manner without the beneficiary first having to take legal actions to pursue the obligor for payment;

Does not increase the beneficiary's cost of credit protection on the guarantee in response to deterioration in the credit quality of the reference exposure; and

Is not provided by an affiliate of the bank, unless the affiliate is an insured depository institution, bank, securities broker or dealer, or insurance company that:

Does not control the bank; and

Is subject to consolidated supervision and regulation comparable to that imposed on U.S. depository institutions, securities broker-dealers, or insurance companies (as the case may be).

"Eligible Protection Provider" means:

A sovereign entity (a central government, including the U.S. government, an agency, department, ministry or central bank);

The Bank for International Settlements, the International Monetary Fund, the European Central Bank, the European Commission or a multilateral development bank;

A Federal Home Loan Bank;

The Federal Agricultural Mortgage Corporation;

A depository institution, as defined in Section 3 of the Federal Deposit Insurance Act (12 USC 1813(c));

A federal bank holding company, as defined in Section 2 of the Bank Holding Company Act, as amended (12 USC 1841);

A savings and loan holding company, as defined in Section 10 of the federal Home Owners' Loan Act (12 USC 1467a);

A securities broker or dealer registered with the SEC under the Securities Exchange Act of 1934 (15 USC 78o);

An insurance company that is subject to the supervision of a state insurance regulator;

A foreign banking organization;

A non-US-based securities firm or a non-US-based insurance company that is subject to consolidated supervision and regulation comparable to that imposed on U.S. depository institutions, securities broker-dealers, or insurance companies; and

A qualifying central counterparty.

"Extension of Credit" shall have the same meaning as ascribed to Letter of Credit in Section 5-102 of Uniform Commercial Code [810 ILCS 5/5-102] and any credit exposure, as determined pursuant to Section 330.230, arising from a derivative transaction.

Loans or extensions of credit, for purposes of this Part, include a contractual commitment to advance funds.

The following items do not constitute loans or extensions of credit for purposes of Section 32 of the Act, Section 6013 of the Savings Bank Act, or this Part:

Additional funds advanced for the benefit of a borrower by a bank for payment of taxes, insurance, utilities, security and maintenance and operating expenses necessary to preserve the value of real property securing the loan, consistent with safe and sound banking practices, but only if the advance is for the protection of the bank's interest in the collateral, and provided that the amounts must be treated as an extension of credit if a new loan or extension of credit is made to the borrower;

Accrued and discounted interest on an existing loan or extension of credit, including interest that has been capitalized from prior notes and interest that has been advanced under terms and conditions of a loan agreement;

Financed sales of a bank's own assets, including other real estate owned, if the financing does not put the bank in a worse position than when the bank held title to the assets;

Amounts paid against uncollected funds in the normal process of collection; and

That portion of a loan or extension of credit sold as a participation by a bank on a nonrecourse basis, provided that the participation results in a pro rata sharing of credit risk proportionate to the respective interests of the originating and participating lenders. When a participation agreement provides that repayment must be applied first to the portions sold, a pro rata sharing will be deemed to exist only if the agreement also provides that, in the event of a default or comparable event defined in the agreement, participants must share in all subsequent repayments and collections in proportion to their percentage participation at the time of the occurrence of the event.

When an originating bank funds the entire loan, it must receive funding from the participants before the close of business of its next business day. If the participating portions are not received within that period, then the portions funded will be treated as a loan by the originating bank to the borrower. If the portions so attributed to the borrower exceed the originating bank's lending limit, the loan may be treated as nonconforming, rather than a violation of Section 32 of the Act or Section 6013 of the Savings Bank Act, as applicable, if:

The originating bank had a valid and unconditional participation agreement with a participant or participants that was sufficient to reduce the loan to within the originating bank's lending limit;

The participant reconfirmed its participation and the originating bank had no knowledge of any information that would permit the participant to withhold its participation; and

The participation was to be funded by close of business of the originating bank's next business day.

"Notice" means a copy of the state bank's application to its appropriate federal banking agency for approval to establish a branch.

"Qualifying Master Netting Agreement" means any written, legally enforceable, bilateral agreement, provided that:

The agreement creates a single legal obligation for all individual transactions covered by the agreement upon an event of default, including bankruptcy, insolvency or similar proceeding, of the counterparty;

The agreement provides the bank the right to accelerate, terminate and close-out on a net basis all transactions under the agreement and to liquidate or set off collateral promptly upon an event of default, including upon an event of bankruptcy, insolvency or similar proceeding, of the counterparty, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions;

The bank has conducted sufficient legal review to conclude with a well-founded basis, and maintains sufficient written documentation of that legal review, that:

The agreement meets the requirements of this definition; and

In the event of a legal challenge, including one resulting from default or from bankruptcy, insolvency or similar proceeding, the relevant court and administrative authorities would find the agreement to be legal, valid, binding and enforceable under the law of the relevant jurisdictions;

The bank establishes and maintains procedures to monitor possible changes in relevant law and to ensure that the agreement continues to satisfy the requirements of this definition; and

The agreement does not contain a walk-away clause (that is, a provision that permits a non-defaulting counterparty to make a lower payment than it would make otherwise under the agreement, or no payment at all, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is a net creditor under the agreement).

"State Bank" or "Bank" means a bank that has a banking charter issued under the Act, or a savings bank that has a charter issued under Section 1001 of the Savings Bank Act.

History

• Source: Added at 37 Ill. Reg. 5807, effective April 22, 2013

38 Ill. Adm. Code 330.210 Lending Limits; Derivatives

For purposes of Section 32 of the Act and Section 6013 of the Savings Bank Act, derivative transactions shall be included in the calculation of lending limits.

a) The calculation of derivatives as applied to lending limits for purposes of Section 32 of the Act and Section 6013 of the Savings Bank Act shall be determined pursuant to Section 330.230.

b) Intraday credit exposures arising from a derivative transaction are not subject to the lending limits of Section 32 of the Act and Section 6013 of the Savings Bank Act, as applicable, or this Part.

History

• Source: Added at 37 Ill. Reg. 5807, effective April 22, 2013

38 Ill. Adm. Code 330.220 Nonconforming Loans and Extensions of Credit

a) A loan or extension of credit, within a state bank's legal lending limit when made, will not be deemed a violation but will be treated as nonconforming if the loan or extension of credit is no longer in conformity with the state bank's lending limit because:

1. The bank's capital has declined, borrowers have subsequently merged or formed a common enterprise, lenders have merged, or the lending limit or capital rules have changed;

2. Collateral securing the loan to satisfy the requirements of a lending limit exception as defined in Sections 32, 33 and 35 of the Act, or in Sections 6003 or 6013 of the Savings Bank Act, as applicable, has declined in value.

b) A state bank must use reasonable efforts to bring a loan or extension of credit that is nonconforming as a result of subsection (a)(1) into conformity with the bank's lending limit unless to do so would be inconsistent with safe and sound banking practices.

c) A state bank must bring a loan that is nonconforming as a result of circumstances described in subsection (a)(2) into conformity with the bank's lending limit within 30 calendar days, except when judicial proceedings, regulatory actions or other extraordinary circumstances beyond the bank's control prevent it from taking action.

History

• Source: Added at 37 Ill. Reg. 5807, effective April 22, 2013

38 Ill. Adm. Code 330.230 Credit Exposure Arising from Derivative Transactions

a) Scope. This Section sets forth the standards for calculating the credit exposure arising from a derivative transaction entered into by a state bank for purposes of determining the bank's lending limit pursuant to Section 32 of the Act, Section 6013 of the Savings Bank Act or, as applicable, this Part.

b) Derivative Transactions

1. Non-Credit Derivatives

Subject to subsections (b)(2) and (b)(3), a state bank shall calculate the non-credit derivative exposure (e.g., a contract regarding performance at a point in time unrelated to specific credit risk, such as, but not limited to, interest rates or future delivery, such as forwards, futures, options, caps or floors) to a counterparty arising from a derivative transaction by one of the methods described in this subsection (b)(1). Subject to subsection (b)(3), a state bank shall use the same method for calculating counterparty credit exposure arising from all of its derivative transactions.

Conversion Factor Matrix Method

The credit exposure arising from a derivative transaction under the Conversion Factor Matrix Method shall equal and remain fixed at the potential future credit exposure of the derivative transaction as determined at the execution of the transaction by reference to the following table, which is based on the following formula:

Credit exposure = (notional amount) x (conversion factor)

Conversion Factor Matrix for Calculating Potential Future Credit Exposure*

Original Maturity**

Interest Rate

Foreign Exchange Rate and Gold

Equity

Other***

(includes commodities and precious metals except gold)

1 year or less

.015

.015

.20

.06

Over 1 to 3 years

.03

.03

.20

.18

Over 3 to 5 years

.06

.06

.20

.30

Over 5 to 10 years

.12

.12

.20

.60

Over 10 years

.30

.30

.20

1.00

2. Credit Derivatives

A) A state bank shall calculate the counterparty credit exposure arising from credit derivatives entered by the bank or savings association by adding the net notional value of all protection purchased from the counterparty on each reference entity.

B) A state bank shall calculate the credit exposure to a reference entity arising from credit derivatives entered by the bank by adding the notional value of all protection sold on the reference entity. However, the bank may reduce its exposure to a reference entity by the amount of any eligible credit derivative purchased on that reference entity from an eligible protection provider.

3. Mandatory Use of a Certain Method

A) Upon request by a state bank, the Department may allow a state bank to use any method the Department deems appropriate to calculate the credit exposure of derivative transactions if the Department finds that the method is necessary to promote the safety and soundness of the bank.

B) A state bank may elect to determine credit exposure on the basis of such other method of determining credit exposure as may be permitted by 12 CFR 32.9 (June 12, 2012) for national banks by the Office of the Comptroller of Currency.

• For an OTC derivative contract with multiple exchanges of principal, the conversion factor is multiplied by the number of remaining payments in the derivative contract.

** For an OTC derivative contract that is structured so that, on specified dates, any outstanding exposure is settled and the terms are reset so that the market value of the contract is zero, the remaining maturity equals the time until the next reset date. For an interest rate derivative contract with a remaining maturity of greater than one year that meets these criteria, the minimum conversion factor is 0.005.

*** Transactions not explicitly covered by any other column in the Table are to be treated as "Other".

History

• Source: Added at 37 Ill. Reg. 5807, effective April 22, 2013

Chapter II Office of Banks and Real Estate

Part 335 Unimpaired Capital and Unimpaired Surplus

38 Ill. Adm. Code 335.10 Purpose

Section 2 of the Illinois Banking Act defines "unimpaired capital and unimpaired surplus" as including a bank's "Tier 1 Capital and Tier 2 Capital plus such other shareholder equity as may be included by regulation of the Commissioner." "Unimpaired capital and unimpaired surplus" is used as the basis for determining a state bank's legal lending and investment limits. The purpose of the Rule is to add the balance of a state bank's allowance for loan and lease losses, otherwise excluded from Tier 1 Capital and Tier 2 Capital, as additional shareholder equity included in "unimpaired capital and unimpaired surplus." This addition is consistent with the objective of P.A. 88-546 to permit state banks to use the same elements that national banks use in calculating lending and investment limits, and it will provide needed clarity and consistency regarding the calculation and application of lending and investment limits by state banks.

38 Ill. Adm. Code 335.20 Definitions

"Allowance for loan and lease losses" are reserves that have been established through a charge against earnings to absorb future losses on loans or lease financing receivables. Allowance for loan and lease losses exclude allocated transfer risk reserves, and reserves created against identified losses.

"Allocated transfer risk reserves" are reserves that have been established in accordance with Section 905(a) of the International Lending Supervision Act of 1983, 12 U.S.C. 3904 (1993), against certain assets whose value has been found by the United States supervisory authorities to have been significantly impaired by protracted transfer risk problems.

"Appropriate federal banking agency" shall have the meaning as defined in Section 2 of the Illinois Banking Act [205 ILCS 5/2] (see P.A. 88-546, effective June 29, 1994).

"Tier 1 Capital" and "Tier 2 Capital" shall have the meanings as defined in Section 2 of the Illinois Banking Act [205 ILCS 5/2] (see P.A. 88-546, effective June 29, 1994).

38 Ill. Adm. Code 335.30 General Rule

For the purposes of Section 2 of the Illinois Banking Act, "unimpaired capital and unimpaired surplus" shall include the balance of the state bank's allowance for loan and lease losses not included in the state bank's Tier 1 Capital and Tier 2 Capital.

Part 340 Loans to Bank Officers, Employees, Directors or to Corporations or Firms Controlled by Them

38 Ill. Adm. Code 340.10 Scope and Authority

The Illinois Commissioner of Banks and Real Estate is responsible for the administration of the Illinois Banking Act (the Act) [205 ILCS 5]. Section 37(1) of the Act requires the Commissioner to prescribe by rule limits on loans made by a state bank to any of its officers, employees, directors or to corporations or firms controlled by them or in the management of which any of them are actively engaged without receiving the prior approval of the bank's board of directors.

38 Ill. Adm. Code 340.20 Definitions

For purposes of this Part:

"actively engaged" means direct involvement in the policies of a corporation or firm;

"control" means:

the ownership of or the power to vote 10% or more of any class of voting securities of a corporation; or

the ability to direct in any manner the election of a majority of a corporation's board of directors.

"director" means any individual elected or appointed to serve on a bank's board of directors, whether or not such individual receives compensation. An advisory director is not considered a director for purposes of this Part. An individual is an advisory director if he:

is not elected by the bank's shareholders;

is not authorized to vote on matters before the board of directors; and

provides solely general policy advice to the bank's board of directors.

"firm" means a general or limited partnership.

"he" includes the feminine as well as the masculine form.

"loan or extension of credit" shall include all direct or indirect advances of funds made on the basis of an obligation to repay the funds. Such term shall also include any obligation of a state bank to advance funds pursuant to a contractual commitment, such as a letter of credit.

"officer" means a president, vice president or other salaried officer of the lending bank.

"person" means a bank officer, employee or director.

History

• Source: Amended at 11 Ill. Reg. 812, effective December 24, 1986

38 Ill. Adm. Code 340.30 Limits

Any loan or extension of credit by a state bank to any of its officers, employees, directors or to corporations or firms controlled by them or in the management of which any of them are actively engaged must receive the prior approval of the board of directors of the bank if such loan or extension of credit exceeds the higher of $25,000 or 5% of the bank's capital, surplus and undivided profits when aggregated with all other loans or extensions of credit then outstanding by the bank to that person or to any corporation or firm controlled by that person or in the management of which that person is actively engaged. In no event shall a state bank make any loan or extension of credit to any of its officers, employees, directors or to corporations or firms controlled by them or in the management of which any of them are actively engaged in an amount that, when aggregated with all other loans or extensions of credit then outstanding by the bank to that person or to any corporation or firm controlled by that person or in the management of which that person is actively engaged, exceeds $500,000, except with the prior approval of the board of directors of the bank. When the bank's board of directors votes on a specific loan or extension of credit to the bank's officer, employee, director or to a corporation or firm controlled by them or in the management of which any of them are actively engaged, that officer, employee or director shall not be present during the discussion of such loan or extension of credit and shall abstain from participating in the vote.

Chapter II Department of Financial and Professional Regulation

Part 345 Bank Community Reinvestment

38 Ill. Adm. Code 345.10 Authority, Purposes, and Scope

a) The Illinois Community Reinvestment Act (ILCRA) [205 ILCS 735] authorizes this Part.

b) Purposes. This Part is intended to carry out the purposes of the Illinois Community Reinvestment Act (ILCRA) by establishing the framework and criteria by which the Secretary assesses the ILCRA record of a bank, as defined by Section 345.10. Without limiting the aforementioned purpose, specific purposes of this Part include:

1. Establishment of rules pursuant to Section 35-10(b) of the ILCRA, which requires that this Part incorporate federal rules promulgated under the federal Community Reinvestment Act [12 U.S.C. 2901; see also 12 CFR 345]. Specifically, Section 35-10(b) of the ILCRA states, in relevant part: To assist in carrying out this Act, the Secretary shall adopt rules incorporating the regulations applicable to covered financial institutions under federal law, and the Secretary may make such adjustments and exceptions thereto as are deemed necessary. [205 ILCS 735/35-10(b)]

2. Accordingly, this Part:

A) may include references to federal statutes or administrative rules established pursuant to the federal Community Reinvestment Act; and

B) except where this Subpart makes adjustments or exceptions to the federal rules established pursuant to the federal Community Reinvestment Act or where inconsistent with the ILCRA or this Subpart, this Subpart shall be construed and interpreted consistently with the appropriate federal financial supervisory agency's construction and interpretation of the federal rules.

3. Establishment of rules as required by Section 35-10(c) of the ILCRA.

4. Establishment of rules as the Secretary may deem appropriate as authorized by the Act under Section 35-15(a), Section 35-35, or otherwise. These rules shall be liberally construed to effectuate their purpose.

c) Scope.

1. General. Except for certain special purpose banks described in subsection (c)(3), this Part applies to all State banks and savings banks.

2. Foreign Bank Corporations. In the case of banking offices of a foreign banking corporation, as defined in Section 2 of the Foreign Banking Office Act [205 ILCS 645/2], references in this Part to "main office" mean the principal branch within the State and the term "branch" or "branches" refers to any branch or branches located within the State. The "assessment area" of a banking office is the community or communities located within the State served by the branch as described in Section 345.400.

3. Certain special purpose banks. This Part does not apply to special purpose banks that do not perform commercial or retail banking services by granting credit to the public in the ordinary course of business, other than as incident to their specialized operations. These banks include banker's banks, as defined in Section 5c of the Illinois Banking Act [205 ILCS 5/5c], and banks that engage only in one or more of the following activities: providing cash management controlled disbursement services or serving as correspondent banks, trust companies, or clearing agents.

38 Ill. Adm. Code 345.20 Definitions

For purposes of this Part, the following definitions apply:

"Affiliate" means any company that controls, is controlled by, or is under common control with another company. The term "control" has the meaning given to that term in 12 U.S.C. 1841(a)(2), and a company is under common control with another company if both companies are directly or indirectly controlled by the same company.

"Alternative financial products or services" means financial products or services offered by persons other than an insured depository institution at a higher cost than comparable services offered by an insured depository institution.

"Area median income" means:

the median family income for the Metropolitan Statistical Area (MSA), if a person or geography is located in an MSA, or for the metropolitan division, if a person or geography is located in an MSA that has been subdivided into metropolitan divisions; or

the statewide nonmetropolitan median family income, if a person or geography is located outside an MSA.

"Assessment area" means a geographic area delineated in accordance with Section 345.400.

"Bank" means a bank that has a charter issued under the Illinois Banking Act [205 ILCS 5], a savings bank that has a charter issued under the Savings Bank Act [205 ILCS 205], and an FDIC-insured banking office of a foreign banking corporation issued a certificate of authority under the Foreign Banking Office Act [205 ILCS 645].

"Branch" means a staffed banking facility defined as a branch under Section 2 of the Illinois Banking Act [205 ILCS 5/2] or Section 1007.20 of the Illinois Savings Bank Act [205 ILCS 205/1007.20], and a branch of a banking office of a foreign banking corporation issued a certificate of authority under the Foreign Banking Office Act [205 ILCS 645], whether shared or unshared, including, for example, a mini-branch in a grocery store or a branch operated in conjunction with any other local business or nonprofit organization.

"Community development" means:

Affordable housing (including multifamily rental housing) for low- or moderate-income individuals;

Community services targeted to low- or moderate-income individuals;

Activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration's Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less; or

Activities that revitalize or stabilize −

Low-or moderate-income geographies;

Designated disaster areas;

Distressed or underserved nonmetropolitan middle-income geographies designated by the Board of Governors of the Federal Reserve System, FDIC, and Office of the Comptroller of the Currency, based on −

Rates of poverty, unemployment, and population loss; or

Population size, density, and dispersion. Activities revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals; or

Unbanked or underbanked geographies; and

Activities targeted to directly and tangibly −

Increase climate resilience in low-income to moderate-income neighborhoods; or

Mitigate environmental harm in low-income to moderate-income neighborhoods.

"Community development loan" means a loan that:

Has as its primary purpose community development; and

Except in the case of a wholesale or limited purpose bank:

Has not been reported or collected by the bank or an affiliate for consideration in the bank's assessment as a home mortgage, small business, small farm, or consumer loan, unless the loan is for a multifamily dwelling (as defined in 12 CFR 1003.2(n)); and

Benefits the bank's assessment area or a broader statewide or regional area that includes the bank's assessment area.

"Community development service" means a service that:

Has as its primary purpose community development;

Is related to the provision of financial services; and

Has not been considered in the evaluation of the bank's retail banking services under Section 345.240(d).

"Consumer loan" means a loan to one or more individuals for household, family, or other personal expenditures. A consumer loan does not include a home mortgage, small business, or small farm loan. Consumer loans include the following categories of loans:

Motor vehicle loan, which is a consumer loan extended for the purchase of and secured by a motor vehicle;

Credit card loan, which is a line of credit for household, family, or other personal expenditures that is accessed by a borrower's use of a "credit card," as this term is defined in 12 CFR 1026.2;

Other secured consumer loan, which is a secured consumer loan that is not included in one of the other categories of consumer loans; and

Other unsecured consumer loan, which is an unsecured consumer loan that is not included in one of the other categories of consumer loans.

"Department" means the Illinois Department of Financial and Professional Regulation.

"FDIC" means the Federal Deposit Insurance Corporation.

"Geography" means a census tract delineated by the United States Bureau of the Census in the most recent decennial census.

"Home mortgage loan" means a closed-end mortgage loan or an open-end line of credit as these terms are defined under Section 1003.2 and that is not an excluded transaction under 12 CFR 1003.3(c)(1) through (10) and (13).

"Income level" includes:

Low-income, which means an individual income that is less than 50 percent of the area median income or a median family income that is less than 50 percent in the case of a geography.

Moderate-income, which means an individual income that is at least 50 percent and less than 80 percent of the area median income or a median family income that is at least 50 and less than 80 percent in the case of a geography.

Middle-income, which means an individual income that is at least 80 percent and less than 120 percent of the area median income or a median family income that is at least 80 and less than 120 percent in the case of a geography.

Upper-income, which means an individual income that is 120 percent or more of the area median income or a median family income that is 120 percent or more in the case of a geography.

"Limited purpose bank" means a bank that offers only a narrow product line (such as credit card or motor vehicle loans) to a regional or broader market and for which a designation as a limited purpose bank is in effect, in accordance with Section 345.250(b).

"Loan location" means a loan is located as follows:

A consumer loan is located in the geography where the borrower resides;

A home mortgage loan is located in the geography where the property to which the loan relates is located; and

A small business or small farm loan is located in the geography where the main business facility or farm is located or where the loan proceeds otherwise will be applied, as indicated by the borrower.

"Loan production office" means a staffed facility of a bank, other than a branch, that is open to the public and that provides lending-related services, such as loan information and applications.

"Metropolitan division" means a metropolitan division as defined by the United States Director of the Office of Management and Budget.

"Metropolitan Statistical Area" or "MSA" means a metropolitan statistical area as defined by the United States Director of the Office of Management and Budget.

"Nonmetropolitan area" means any area that is not located in an MSA.

"Qualified investment" means a lawful investment, deposit, membership share, or grant that has as its primary purpose community development.

"Remote Service Facility" or "RSF" means an automated, unstaffed banking facility owned or operated by, or operated exclusively for, the bank, such as an automated teller machine, cash dispensing machine, point-of-sale terminal, or other remote electronic facility, at which deposits are received, cash dispersed, or money lent.

"Small Bank" means a bank that is a small bank under federal administrative rules established by the bank's primary federal financial supervisory agency pursuant to the federal Community Reinvestment Act and an intermediate small bank means a bank that is an intermediate small bank under federal administrative rules established by the bank's primary federal financial supervisory agency pursuant to the federal Community Reinvestment Act.

"Small business loan" means a loan included in "loans to small businesses" as defined in the instructions for preparation of the Consolidated Report of Condition and Income (Federal Financial Institution Examination Council (FFIEC) 031 and 041).

"Small farm loan" means a loan included in "loans to small farms" as defined in the instructions for preparation of the Consolidated Report of Condition and Income (FFIEC 031 and 041).

"Special credit program" means any credit program offered by a bank to meet special social needs which is in conformity with and explicitly authorized by the Equal Credit Opportunity Act (15 U.S.C. 1691(c)) and Regulation B (12 C.F.R. 1002.8).

"Substantial majority" means a portion of the bank's lending activity so significant by number and dollar volume of loans that the lending test evaluation would not meaningfully reflect its lending performance if consumer loans were excluded.

"Unbanked person" means an individual that does not have a checking or savings account with an insured depository institution.

"Underbanked person" means an individual that has a checking or saving account with an insured depository institution but that used financial products or services from a person other than an insured depository institution in the past 12 months.

"Very Small Bank" means a bank that is eligible for the Very Small Bank Examination Procedure set forth in Section 345.450(b).

"Wholesale bank" means a bank that is not in the business of extending home mortgage, small business, small farm, or consumer loans to retail customers, and for which a designation as a wholesale bank is in effect, in accordance with Section 345.250(b).

38 Ill. Adm. Code 345.200 Assessment Factors

As used in this Part, "assessment factors" means the assessment of the following factors to determine whether a bank is meeting the financial services needs of local communities:

a) activities to ascertain the financial services needs of the community, including communication with community members regarding the financial services provided;

b) extent of marketing to make members of the community aware of the financial services offered;

c) origination of mortgage loans including, but not limited to, home improvement and rehabilitation loans, and other efforts to assist existing low-income and moderate-income resident to be able to remain in affordable housing in their neighborhoods;

d) for small business lenders, the origination of loans to businesses with gross annual revenues of $1,000,000.00 or less, particularly those in low-income and moderate-income neighborhoods;

e) participation, including investments, in community development and redevelopment programs, small business technical assistance programs, minority-owned depository institutions, community development financial institutions, and mutually owned financial institutions;

f) efforts working with delinquent customers to facilitate a resolution of the delinquency;

g) origination of loans that show an under concentration and a systemic pattern of lending resulting in the loss of affordable housing units;

h) evidence of discriminatory and prohibited practices; and

i) offering retail banking services to unbanked and underbanked persons.

38 Ill. Adm. Code 345.210 Performance Tests, Standards, and Ratings, in General

a) Performance tests and standards. The Secretary assesses the ILCRA performance of a bank in an examination as follows:

1. Lending, investment, and service tests. The Secretary applies the assessment factors, as provided in Section 345.200, and lending, investment, and service tests, as provided in Section 345.220 through 345.240, in evaluating the performance of a bank, except as provided in subsections (a)(2), (a)(3), and (a)(4) of this Section.

2. Community development test for wholesale or limited purpose banks. The Secretary applies the community development test for a wholesale or limited purpose bank, as provided in Section 345.250, except as provided in subsection (a)(4) of this Section.

3. Small bank performance standards. The Secretary applies the small bank performance standards as provided in Section 345.260 in evaluating the performance of a small bank or a bank that was a small bank during the prior calendar year, unless the bank elects to be assessed as provided in subsections (a)(1), (a)(2), or (a)(4) of this Section. The bank may elect to be assessed as provided in subsection (a)(1) of this Section only if it collects and reports the data required for other banks under Section 345.410.

4. Strategic plan. The Secretary evaluates the performance of a bank under a strategic plan if the bank submits, and the Secretary approves, a strategic plan as provided in Section 345.270.

b) Performance context. The Secretary applies the tests and standards in subsection (a) and also considers whether to approve a proposed strategic plan in the context of:

1. Demographic data on median income levels, distribution of household income, nature of housing stock, housing costs, and other relevant data pertaining to a bank's assessment area;

2. Any information about lending, investment, and service opportunities in the bank's assessment area maintained by the bank or obtained from community organizations, state, local, and tribal governments, economic development agencies, or other sources;

3. The bank's product offerings and business strategy as determined from data provided by the bank;

4. Institutional capacity and constraints, including the size and financial condition of the bank, the economic climate (national, regional, and local), safety and soundness limitations, and any other factors that significantly affect the bank's ability to provide lending, investments, or services in its assessment area;

5. The bank's past performance and the performance of similarly situated lenders;

6. The bank's public file, as described in Section 345.420, and any written comments about the bank's ILCRA performance submitted to the bank or the Secretary;

7. The bank's public file, as described in 12 CFR 345.43, and any written comments about the bank's federal Community Reinvestment Act performance submitted to the bank or its federal regulator; and

8. Any other information deemed relevant by the Secretary.

c) Assigned ratings. The Secretary assigns to a bank one of the following four ratings pursuant to Section 345.280 and 345.APPENDIX A: "outstanding"; "satisfactory"; "needs to improve"; or "substantial noncompliance" as provided in Section 35-15(c) of the ILCRA. The rating assigned by the Secretary reflects the bank's record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the bank.

d) Safe and sound operations. This Part and the ILCRA do not require a bank to make loans or investments or to provide services that are inconsistent with safe and sound operations. To the contrary, the Secretary anticipates banks can meet the standards of this Part with safe and sound loans, investments, and services on which the banks expect to make a profit. Banks are permitted and encouraged to develop and apply flexible underwriting standards for loans that benefit low- or moderate-income geographies or individuals, only if consistent with safe and sound operations.

e) Low-cost education loans provided to low-income borrowers. In assessing and taking into account the record of a bank under this Part, the Secretary considers, as a factor, low-cost education loans originated by the bank to borrowers, particularly in its assessment area, who have an individual income that is less than 50 percent of the area median income. For purposes of this subsection (e), "low-cost education loans" means any education loan, as defined in section 140(a)(7) of the Truth in Lending Act (15 U.S.C. 1650(a)(7)) (including a loan under a state or local education loan program), originated by the bank for a student at an "institution of higher education", as that term is generally defined in sections 101 and 102 of the Higher Education Act of 1965 (20 U.S.C. 1001 and 1002) and the implementing regulations published by the U.S. Department of Education, with interest rates and fees no greater than those of comparable education loans offered directly by the U.S. Department of Education. Such rates and fees are specified in section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e).

f) Activities in cooperation with minority- or women-owned financial institutions and low-income credit unions. In assessing and taking into account the record of a nonminority-owned and nonwomen-owned bank under this Part, the Secretary considers as a factor capital investment, loan participation, and other ventures undertaken by the bank in cooperation with minority- and women-owned financial institutions and low-income credit unions, and the Secretary may consider favorably whether the minority- and women-owned financial institutions and low-income credit unions are organized under the laws of Illinois and/or are mutually-owned. Such activities must help meet the credit needs of local communities in which the minority- and women-owned financial institutions and low-income credit unions are chartered. To be considered, activities need not also benefit the bank's assessment area or the broader Statewide or regional area that includes the bank's assessment area.

38 Ill. Adm. Code 345.220 Lending Test

a) Scope of test.

1. The lending test evaluates a bank's record of helping to meet the credit needs of its assessment area through its lending activities by considering a bank's home mortgage, small business, small farm, and community development lending. If consumer lending constitutes a substantial majority of a bank's business, the Secretary will evaluate the bank's consumer lending in one or more of the following categories: motor vehicle, credit card, other secured, and other unsecured loans. In addition, at a bank's option, the Secretary will evaluate one or more categories of consumer lending, if the bank has collected and maintained, as required in Section 345.410(c)(1), the data for each category that the bank elects to have the Secretary evaluate.

2. The Secretary considers originations and initial purchases of loans. The Secretary will also consider any other loan data the bank may choose to provide, including data on loans outstanding, commitments and letters of credit.

3. A bank may ask the Secretary to consider loans originated or purchased by consortia in which the bank participates or by third parties in which the bank has invested only if the loans meet the definition of community development loans and only in accordance with subsection (d). The Secretary will not consider these loans under any criterion of the lending test except the community development lending criterion.

b) Performance criteria. The Secretary evaluates a bank's lending performance considering the assessment factors in Section 345.200 and pursuant to the following criteria:

1. Lending activity. The number and amount of the bank's home mortgage, small business, small farm, and consumer loans, if applicable, in the bank's assessment area;

2. Geographic distribution. The geographic distribution of the bank's home mortgage, small business, small farm, and consumer loans, if applicable, based on the loan location, including:

A) The proportion of the bank's lending in the bank's assessment area;

B) The dispersion of lending in the bank's assessment area; and

C) The number and amount of loans in low-, moderate-, middle-, and upper-income geographies in the bank's assessment area.

3. Borrower characteristics. The distribution, particularly in the bank's assessment area, of the bank's home mortgage, small business, small farm, and consumer loans, if applicable, based on borrower characteristics, including the number and amount of:

A) Home mortgage loans to low-, moderate-, middle-, and upper-income individuals;

B) Small business and small farm loans to businesses and farms with gross annual revenues of $1 million or less;

C) Small business and small farm loans by loan amount at origination; and

D) Consumer loans, if applicable, to low-, moderate-, middle-, and upper-income individuals.

4. Community development lending. The bank's community development lending, including the number and amount of community development loans, and their complexity and innovativeness; and

5. Innovative or flexible lending practices. The bank's use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies. Innovative or flexible lending practices may include efforts working with delinquent customers to facilitate a resolution of the delinquency, in which case the bank shall maintain written loss mitigation/workout policies and procedures. In assessing performance pursuant to this Part, the Secretary shall consider whether a bank offers special credit programs. The bank must be able to show that the program will fall under any of the following:

A) Any credit assistance program expressly authorized by federal or state law for the benefit of an economically disadvantaged class of persons;

B) Any credit assistance program offered by a not-for-profit organization for the benefit of its members or an economically disadvantaged class of persons; or

C) Any special credit program offered by a for-profit organization, or in which the organization participates to meet special social needs, if it meets certain standards prescribed in 12 CFR 1002.8(a)(3)(i).

c) Affiliate lending.

1. At a bank's option, the Secretary will consider loans by an affiliate of the bank, if the bank provides data on the affiliate's loans pursuant to Section 345.410.

2. The Secretary considers affiliate lending subject to the following constraints:

A) No affiliate may claim a loan origination or loan purchase if another institution claims the same loan origination or purchase and in this regard the bank shall monitor and keep records of whether such claims exist; and

B) If a bank elects to have the Secretary consider loans within a particular lending category made by one or more of the bank's affiliates in a particular assessment area, the bank shall elect to have the Secretary consider, in accordance with subsection (c)(1), all the loans within that lending category in that particular assessment area made by all of the bank's affiliates.

3. The Secretary does not consider affiliate lending in assessing a bank's performance under subsection (b)(2)(A).

d) Lending by a consortium or a third party. Community development loans originated or purchased by a consortium in which the bank participates or by a third party in which the bank has invested:

1. Will be considered, at the bank's option, if the bank reports the data pertaining to these loans under Section 345.410(b)(2); and

2. May be allocated among participants or investors, as they choose, for purposes of the lending test, except that no participant or investor:

A) May claim a loan origination or loan purchase if another participant or investor claims the same loan origination or purchase and in this regard the bank shall monitor and keep records of whether such claims exist; or

B) May claim loans accounting for more than its percentage share (based on the level of its participation or investment) of the total loans originated by the consortium or third party.

e) Lending performance rating. The Secretary rates a bank's lending performance as provided in Section 345.APPENDIX A.

38 Ill. Adm. Code 345.230 Investment Test

a) Scope of test. The investment test evaluates a bank's record of helping to meet the credit needs of its assessment area through qualified investments that benefit its assessment area or a broader statewide or regional area that includes the bank's assessment area.

b) Exclusion. Activities considered under the lending or service tests may not be considered under the investment test.

c) Affiliate investment. At a bank's option, the Secretary will consider, in its assessment of a bank's investment performance, a qualified investment made by an affiliate of the bank, if the qualified investment is not claimed by any other institution. If a bank has established a foundation, the Secretary will consider, at the bank's option, qualified investments and donations of the foundation if those investments or donations have the primary purpose of community development.

d) Disposition of branch premises. Donating, selling on favorable terms, or making available on a rent-free basis a branch of the bank that is located in a predominantly minority neighborhood to a minority depository institution or women's depository institution (as these terms are defined in 12 U.S.C. 2907(b)) will be considered as a qualified investment.

e) Performance criteria. The Secretary evaluates the investment performance of a bank considering the assessment factors in Section 345.200 and pursuant to the following criteria:

1. The dollar amount of qualified investments;

2. The innovativeness or complexity of qualified investments;

3. The responsiveness of qualified investments to credit and community development needs; and

4. The degree to which the qualified investments are not routinely provided by private investors.

f) Investment performance rating. The Secretary rates a bank's investment performance as provided in Section 345.APPENDIX A.

38 Ill. Adm. Code 345.240 Service Test

a) Scope of test. The service test evaluates a bank's record of helping to meet the credit needs of its assessment area by analyzing both the availability and effectiveness of a bank's systems for delivering retail banking services and the extent and innovativeness of its community development services.

b) Area benefited. Community development services must benefit a bank's assessment area or a broader Statewide or regional area that includes the bank's assessment area.

c) Affiliate service. At a bank's option, the Secretary will consider, in its assessment of a bank's service performance, a community development service provided by an affiliate of the bank, if the community development service is not claimed by any other institution and in this regard the bank shall monitor and keep records of whether such claims exist.

d) Performance criteria − retail banking services. The Secretary evaluates the availability and effectiveness of a bank's systems for delivering retail banking services, considering the assessment factors in Section 345.200 and pursuant to the following criteria:

1. The current distribution of the bank's branches among low-, moderate-, middle-, and upper-income geographies;

2. In the context of its current distribution of the bank's branches, the bank's record of opening and closing branches, particularly branches located in low- or moderate-income geographies or primarily serving low- or moderate-income individuals;

3. The availability and effectiveness of alternative systems for delivering retail banking services (e.g., RSFs, surcharge-free RSFs within its network, RSFs not owned or operated by or exclusively for the bank, banking by telephone or computer, loan production offices, bank-at-work or bank-by-mail programs) in low- and moderate-income geographies and to low- and moderate-income individuals;

4. The range of services provided in low-, moderate-, middle-, and upper-income geographies and the degree to which the services are tailored to meet the needs of those geographies; and

5. The bank's record of effectively marketing its retail banking services to unbanked or underbanked persons and offering retail banking services targeted to meet the needs of unbanked and underbanked persons. In determining whether a bank offers retail banking products and services targeted to meet the needs of unbanked and underbanked persons, the Department shall consider:

A) whether the bank offers accounts substantially and materially similar to BankOn certified accounts; or

B) whether the bank offers financial services and products to users of alternative financial products or services, provided that, that the bank has affirmatively and reasonably demonstrated that:

i) the bank offers such accounts or such financial services and products in conjunction with focused and sustained marketing efforts reasonably designed to reach unbanked and underbanked persons;

ii) unbanked and underbanked persons may reasonably conveniently obtain or use such accounts or such financial services and products; and

iii) the bank offers such accounts or such financial services and products at a cost to the unbanked and underbanked persons that is significantly lower than would otherwise be incurred by the users of alternative financial products or services.

e) Performance criteria − community development services. The Secretary evaluates community development services considering the assessment factors in Section 345.200 and pursuant to the following criteria:

1. The extent to which the bank provides community development services; and

2. The innovativeness and responsiveness of community development services.

f) Service performance rating. The Secretary rates a bank's service performance as provided in Section 345.APPENDIX A.

38 Ill. Adm. Code 345.250 Community Development Test for Wholesale or Limited Purpose Banks

a) Scope of test. The FDIC assesses a wholesale or limited purpose bank's record of helping to meet the credit needs of its assessment area under the community development test through its community development lending, qualified investments, or community development services.

b) Designation as a wholesale or limited purpose bank. In order to receive a designation as a wholesale or limited purpose bank, a bank shall file a request, in writing, with the Department, at least three months prior to the proposed effective date of the designation. If the Department approves the designation, it remains in effect until the bank requests revocation of the designation or until one year after the Department notifies the bank that the Department has revoked the designation on its own initiative.

c) Performance criteria. The Secretary evaluates the community development performance of a wholesale or limited purpose bank considering the assessment factors in Section 345.200 and pursuant to the following criteria:

1. The number and amount of community development loans (including originations and initial purchases of loans and other community development loan data provided by the bank, such as data on loans outstanding, commitments, and letters of credit), qualified investments, or community development services;

2. The use of innovative or complex qualified investments, community development loans, or community development services and the extent to which the investments are not routinely provided by private investors; and

3. The bank's responsiveness to credit and community development needs.

d) Indirect activities. At a bank's option, the Secretary will consider in its community development performance assessment:

1. Qualified investments or community development services provided by an affiliate of the bank, if the investments or services are not claimed by any other institution; and

2. Community development lending by affiliates, consortia and third parties, subject to the requirements and limitations in Section 345.220(c) and (d).

e) Benefit to assessment area.

1. Benefit inside assessment area. The Secretary considers all qualified investments, community development loans, and community development services that benefit areas within the bank's assessment area or a broader Statewide or regional area that includes the bank's assessment area.

2. Benefit outside assessment area. The Secretary considers the qualified investments, community development loans, and community development services that benefit areas outside the bank's assessment area, if the bank has adequately addressed the needs of its assessment area.

f) Community development performance rating. The Secretary rates a bank's community development performance as provided in Section 345.APPENDIX A.

Chapter II Department of Financial and Professional Regulation

Part 345 Bank Community Reinvestment

38 Ill. Adm. Code 345.260 Small Bank Performance Standards

a) Performance criteria.

1. Small banks that are not intermediate small banks. The Secretary evaluates the record of a small bank that is not, or that was not during the prior calendar year, an intermediate small bank, of helping to meet the credit needs of its assessment area by considering the assessment factors in Section 345.200 and pursuant to the criteria set forth in subsection (b) of this Section.

2. Intermediate small banks. The Secretary evaluates the record of a small bank that is, or that was during the prior calendar year, an intermediate small bank, of helping to meet the credit needs of its assessment area by considering the assessment factors in Section 345.200 and pursuant to the criteria set forth in subsections (b) and (c) of this Section.

b) Lending test. A small bank's lending performance is evaluated pursuant to the following criteria:

1. The bank's loan-to-deposit ratio, adjusted for seasonal variation, and, as appropriate, other lending-related activities, such as loan originations for sale to the secondary markets, community development loans, or qualified investments;

2. The percentage of loans, and as appropriate, other lending-related activities located in the bank's assessment area;

3. The bank's record of lending to and, as appropriate, engaging in other lending-related activities for borrowers of different income levels and businesses and farms of different sizes;

4. The geographic distribution of the bank's loans; and

5. The bank's record of taking action, if warranted, in response to written complaints about its performance in helping to meet credit needs in its assessment area.

c) Community development test. An intermediate small bank's community development performance also is evaluated pursuant to the following criteria:

1. The number and amount of community development loans;

2. The number and amount of qualified investments;

3. The extent to which the bank provides community development services; and

4. The bank's responsiveness to community development needs through activities addressing community development lending, investment, and services needs.

d) Small bank performance rating. The Secretary considers the assessment factors in Section 345.200 and rates the performance of a bank evaluated under this Section as provided in Section 345.APPENDIX A.

38 Ill. Adm. Code 345.270 Strategic Plan

a) Alternative election. The Secretary will assess a bank's record of helping to meet the credit needs of its assessment area considering the assessment factors in Section 345.200 under a strategic plan if:

1. The bank has submitted the plan to the Secretary as provided for in this Section;

2. The Secretary has approved the plan;

3. The plan is in effect; and

4. The bank has been operating under an approved plan for at least one year.

b) Data reporting. The Secretary's approval of a plan does not affect the bank's obligation, if any, to report data as required by Section 345.410.

c) Plans in general.

1. Term. A plan may have a term of no more than five years, and any multi-year plan must include annual interim measurable goals under which the Secretary will evaluate the bank's performance.

2. Multiple assessment areas. A bank with more than one assessment area may prepare a single plan for all of its assessment areas or one or more plans for one or more of its assessment areas.

3. Treatment of affiliates. Affiliated institutions may prepare a joint plan if the plan provides measurable goals for each institution. Activities may be allocated among institutions at the institutions' option, provided that the same activities are not considered for more than one institution.

d) Public participation in plan development. Before submitting a plan to the Secretary for approval, a bank shall:

1. Informally seek suggestions from members of the public in its assessment areas covered by the plan while developing the plan;

2. Once the bank has developed a plan, formally solicit public comment on the plan for at least 30 days by publishing notice in at least one newspaper of general circulation in each assessment area covered by the plan; and

3. During the period of formal public comment, make copies of the plan available for review by the public at no cost at all offices of the bank in any assessment area covered by the plan and provide copies of the plan upon request for a reasonable fee to cover copying and mailing, if applicable.

e) Submission of plan. The bank shall submit its plan to the Secretary at least four months prior to the proposed effective date of the plan. The bank shall also submit with its plan a description of its informal efforts to seek suggestions from members of the public, any written public comment received, and, if the plan was revised in light of the comment received, the initial plan as released for public comment.

f) Plan content.

1. Measurable goals.

A) A bank shall specify in its plan measurable goals for helping to meet the credit needs of each assessment area covered by the plan, particularly the needs of low- and moderate-income geographies and low- and moderate-income individuals, through lending, investment, and services as appropriate and considering the assessment factors in Section 345.200.

B) A bank shall address in its plan all three performance categories and, unless the bank has been designated as a wholesale or limited purpose bank, shall emphasize lending and lending-related activities. Nevertheless, a different emphasis, including a focus on one or more performance categories, may be appropriate if responsive to the characteristics and credit needs of its assessment areas, considering public comment and the bank's capacity and constraints, product offerings, and business strategy.

2. Confidential information. A bank may submit additional information to the Secretary on a confidential basis, but the goals stated in the plan must be sufficiently specific to enable the public and the Secretary to judge the merits of the plan.

3. Satisfactory and outstanding goals. A bank shall specify in its plan measurable goals that constitute "satisfactory" performance. A plan may specify measurable goals that constitute "outstanding" performance. If a bank submits, and the Secretary approves, both "satisfactory" and "outstanding" performance goals, the Secretary will consider the bank eligible for an "outstanding" performance rating.

4. Election if satisfactory goals not substantially met. A bank may elect in its plan that, if the bank fails to meet substantially its plan goals for a satisfactory rating, the Secretary will evaluate the bank's performance under the lending, investment, and service tests, the community development test, or the small bank performance standards, as appropriate.

g) Plan approval.

1. Timing. The Secretary will act upon a plan within 90 calendar days after the Secretary receives the complete plan and other material required under subsection (e). If the Secretary fails to act within this time period, the plan shall be deemed approved unless the Secretary extends the review period in writing.

2. Public participation. In evaluating the plan's goals, the Secretary considers the public's involvement in formulating the plan, written public comment on the plan, and any response by the bank to public comment on the plan.

3. Criteria for evaluating plan. The Secretary considers the assessment factors in Section 345.200 and evaluates a plan's measurable goals using the following criteria, as appropriate:

A) The extent and breadth of lending or lending-related activities, including, as appropriate, the distribution of loans among different geographies, businesses and farms of different sizes, and individuals of different income levels, the extent of community development lending, and the use of innovative or flexible lending practices to address credit needs;

B) The amount and innovativeness, complexity, and responsiveness of the bank's qualified investments; and

C) The availability and effectiveness of the bank's systems for delivering retail banking services and the extent and innovativeness of the bank's community development services.

h) Plan amendment. During the term of a plan, a bank may request the Secretary to approve an amendment to the plan on grounds that there has been a material change in circumstances. The bank shall develop an amendment to a previously approved plan in accordance with the public participation requirements of subsection (d).

i) Plan assessment. The Secretary approves the goals and assesses performance under a plan as provided for in Section 345.APPENDIX A.

38 Ill. Adm. Code 345.280 Assigned Ratings

a) Ratings in general. Subject to subsections (b) and (c), the Secretary assigns to a bank a rating of "outstanding", "satisfactory", "needs to improve", or "substantial noncompliance" based on the bank's performance under the lending, investment and service tests, the community development test, the small bank performance standards, or an approved strategic plan, as applicable.

b) Lending, investment, and service tests. The Secretary assigns a rating for a bank assessed under the lending, investment, and service tests in accordance with the following principles:

1. A bank that receives an "outstanding" rating on the lending test receives an assigned rating of at least "satisfactory";

2. A bank that receives an "outstanding" rating on both the service test and the investment test and a rating of at least "high satisfactory" on the lending test receives an assigned rating of "outstanding"; and

3. No bank may receive an assigned rating of "satisfactory" or higher unless it receives a rating of at least "low satisfactory" on the lending test.

c) Effect of evidence of discriminatory or other illegal credit practices.

1. The Secretary's evaluation of a bank's ILCRA performance is adversely affected by evidence of discriminatory or other illegal credit practices in any geography by the bank or in any assessment area by any affiliate whose loans have been considered as part of the bank's lending performance. In connection with any type of lending activity described in Section 345.220(a), evidence of discriminatory or other credit practices that violate an applicable law, rule, or regulation includes, but is not limited to:

A) Discrimination against applicants on a prohibited basis in violation, for example, of the Equal Credit Opportunity Act (15 U.S.C. 1691-1691f) or the Fair Housing Act (42 U.S.C. 3601-19), including, for example, relying on or giving force or effect to discriminatory appraisals to deny loan applications where the covered financial institution knew or should have known of the discrimination;

B) Violations of the Home Ownership and Equity Protection Act (15 U.S.C. 1639 and 1648);

C) Violations of section 5 of the Federal Trade Commission Act (15 U.S.C. 45);

D) Violations of section 8 of the Real Estate Settlement Procedures Act (12 U.S.C. 2607);

E) Violations of the Truth in Lending Act provisions regarding a consumer's right of rescission (15 U.S.C. 1635);

F) Violations of Article 4 (Financial Credit) of the Illinois Human Rights Act [775 ILCS 5/Art. 4];

G) Violations of the Illinois High Risk Home Loan Act [815 ILCS 137]; and

H) Violations of the Illinois Fairness in Lending Act [815 ILCS 120].

2. In determining the effect of evidence of practices described in subsection (c)(1) on the bank's assigned rating, the Secretary considers the nature, extent, and strength of the evidence of the practices; the policies and procedures that the bank (or affiliate, as applicable) has in place to prevent the practices; any corrective action that the bank (or affiliate, as applicable) has taken or has committed to take, including voluntary corrective action resulting from self-assessment; and any other relevant information.

Chapter II Department of Financial and Professional Regulation

Part 345 Bank Community Reinvestment

38 Ill. Adm. Code 345.290 Effect of Ilcra Performance on Applications

a) ILCRA performance. Among other factors, the Secretary takes into account the record of performance under the ILCRA of each applicant bank in considering an application for approval of:

1. The relocation of the bank's main office or a branch, but only when express prior approval is otherwise required under applicable State law or administrative rule; and

2. The merger, consolidation, acquisition of assets, or assumption of liabilities.

b) New financial institutions. A newly chartered bank shall submit with its application for a permit to organize a description of how it will meet its ILCRA objectives. The Secretary takes the description into account in considering the application and may deny or condition approval on that basis.

c) Interested parties. The Secretary takes into account any views submitted by interested parties in accordance with the public notice posted pursuant to Section 35-20 of ILCRA.

d) Denial or conditional approval of application. A bank's record of performance may be the basis for denying or conditioning approval of an application listed in subsection (a).

38 Ill. Adm. Code 345.400 Assessment Area Delineation

a) In general. A bank shall delineate one or more assessment areas within which the Secretary evaluates the bank's record of helping to meet the credit needs of its community. The Secretary does not evaluate the bank's delineation of its assessment area as a separate performance criterion, but the Secretary reviews the delineation for compliance with the requirements of this Section.

b) Geographic areas for wholesale or limited purpose banks. The assessment area for a wholesale or limited purpose bank must consist generally of one or more MSAs or metropolitan divisions (using the MSA or metropolitan division boundaries that were in effect as of January 1 of the calendar year in which the delineation is made) or one or more contiguous political subdivisions, such as counties, cities, or towns, in which the bank has its main office, branches, and deposit-taking Automated Teller Machines (ATMs).

c) Geographic areas for other banks. The assessment area for a bank other than a wholesale or limited purpose bank must:

1. Consist generally of one or more MSAs or metropolitan divisions (using the MSA or metropolitan division boundaries that were in effect as of January 1 of the calendar year in which the delineation is made) or one or more contiguous political subdivisions, such as counties, cities, or towns; and

2. Include the geographies in which the bank has its main office, its branches, and its deposit-taking RSFs, as well as the surrounding geographies in which the bank has originated or purchased a substantial portion of its loans (including home mortgage loans, small business and small farm loans, and any other loans the bank chooses, such as those consumer loans on which the bank elects to have its performance assessed).

d) Adjustments to geographic areas. A bank may adjust the boundaries of its assessment area to include only the portion of a political subdivision that it reasonably can be expected to serve. An adjustment is particularly appropriate in the case of an assessment area that otherwise would be extremely large, of unusual configuration, or divided by significant geographic barriers.

e) Limitations on the delineation of an assessment area. Each bank's assessment area:

1. Must consist only of whole geographies;

2. May not reflect illegal discrimination;

3. May not arbitrarily exclude low- or moderate-income geographies, taking into account the bank's size and financial condition; and

4. May not extend substantially beyond an MSA boundary or beyond a state boundary unless the assessment area is located in a multistate MSA. If a bank serves a geographic area that extends substantially beyond a state boundary, the bank shall delineate separate assessment areas for the areas in each state. If a bank serves a geographic area that extends substantially beyond an MSA boundary, the bank shall delineate separate assessment areas for the areas inside and outside the MSA.

f) Banks serving military personnel. Notwithstanding the requirements of this Section, a bank whose business predominantly consists of serving the needs of military personnel or their dependents who are not located within a defined geographic area may delineate its entire deposit customer base as its assessment area.

g) Use of assessment areas. The Secretary uses the assessment area delineated by a bank in its evaluation of the bank's ILCRA performance unless the Secretary determines that the assessment areas do not comply with the requirements of this Section.

38 Ill. Adm. Code 345.410 Data Collection, Reporting, and Disclosure

a) Loan information required to be collected and maintained. A bank, except a small bank, shall collect, and maintain in machine readable form (as prescribed by the Secretary) until the completion of its next ILCRA examination, the following data for each small business or small farm loan originated or purchased by the bank:

1. A unique number or alpha-numeric symbol that can be used to identify the relevant loan file;

2. The loan amount at origination;

3. The loan location; and

4. An indicator whether the loan was to a business or farm with gross annual revenues of $1 million or less.

b) Loan information required to be reported. A bank, except a small bank or a bank that was a small bank during the prior calendar year, shall report annually by March 1 to the Secretary in machine readable form (as prescribed by the Secretary) the following data for the prior calendar year:

1. Small business and small farm loan data. For each geography in which the bank originated or purchased a small business or small farm loan, the aggregate number and amount of loans:

A) With an amount at origination of $100,000 or less;

B) With an amount at origination of more than $100,000 but less than or equal to $250,000;

C) With an amount at origination of more than $250,000; and

D) To businesses and farms with gross annual revenues of $1 million or less (using the revenues that the bank considered in making its credit decision);

2. Community development loan data. For each geography in which the bank originated or purchased a community development loan, the aggregate number and aggregate amount of loans; and

3. Home mortgage loans. If the bank is subject to reporting under 12 CFR 1003 (Home Data Disclosure), the location of each home mortgage loan application, origination, or purchase outside the MSAs in which the bank has a home or branch office (or outside any MSA) in accordance with the requirements of 12 CFR 1003 (Home Data Disclosure).

c) Optional data collection and maintenance.

1. Consumer loans. A bank may collect and maintain in machine readable form (as prescribed by the Secretary) data for consumer loans originated or purchased by the bank for consideration under the lending test. A bank may maintain data for one or more of the following categories of consumer loans: motor vehicle, credit card, other secured, and other unsecured. If the bank maintains data for loans in a certain category, it shall maintain data for all loans originated or purchased within that category. The bank shall maintain data separately for each category, including for each loan:

A) A unique number or alpha-numeric symbol that can be used to identify the relevant loan file;

B) The loan amount at origination or purchase;

C) The loan location; and

D) The gross annual income of the borrower that the bank considered in making its credit decision.

2. Other loan data. At its option, a bank may provide other information concerning its lending performance, including additional loan distribution data.

d) Data on affiliate lending. A bank that elects to have the Secretary consider loans by an affiliate, for purposes of the lending or community development test or an approved strategic plan, shall collect, maintain, and report for those loans the data that the bank would have collected, maintained, and reported pursuant to subsections (a), (b), and (c) had the loans been originated or purchased by the bank. For home mortgage loans, the bank shall also be prepared to identify the home mortgage loans reported under 12 CFR 1003 (Home Data Disclosure) by the affiliate.

e) Data on lending by a consortium or a third party. A bank that elects to have the Secretary consider community development loans by a consortium or third party, for purposes of the lending or community development tests or an approved strategic plan, shall report for those loans the data that the bank would have reported under subsection (b)(2) had the loans been originated or purchased by the bank.

f) Small banks electing evaluation under the lending, investment, and service tests. A bank that qualifies for evaluation under the small bank performance standards but elects evaluation under the lending, investment, and service tests shall collect, maintain, and report the data required for other banks pursuant to subsections (a) and (b).

g) Assessment area data. A bank, except a small bank or a bank that was a small bank during the prior calendar year, shall collect and report to the Secretary by March 1 of each year a list for each assessment area showing the geographies within the area.

38 Ill. Adm. Code 345.420 Content and Availability of Public File

a) Information available to the public. A bank shall maintain a public file that includes the following information:

1. All written comments received from the public for the current year and each of the prior two calendar years that specifically relate to the bank's performance in helping to meet community credit needs, and any response to the comments by the bank, if neither the comments nor the responses contain statements that reflect adversely on the good name or reputation of any persons other than the bank or publication of which would violate specific provisions of law;

2. A copy of the public section of the bank's most recent ILCRA Performance Evaluation prepared by the Secretary. The bank shall place this copy in the public file within 30 business days after its receipt from the Secretary;

3. A list of the bank's branches, their street addresses, and geographies;

4. A list of branches opened or closed by the bank during the current year and each of the prior two calendar years, their street addresses and geographies;

5. A list of services (including hours of operation, available loan and deposit products, and transaction fees) generally offered at the bank's branches and descriptions of material differences in the availability or cost of services at particular branches, if any. At its option, a bank may include information regarding the availability of alternative systems for delivering retail banking services (e.g., RSFs, RSFs not owned or operated by or exclusively for the bank, banking by telephone or computer, loan production offices, bank-at-work or bank-by-mail programs);

6. A map of each assessment area showing the boundaries of the area and identifying the geographies contained within the area, either on the map or in a separate list; and

7. Any other information the bank chooses.

b) Additional information available to the public.

1. Banks other than small banks. A bank, except a small bank or a bank that was a small bank during the prior calendar year, shall include in its public file the following information pertaining to the bank and its affiliates, if applicable, for each of the prior two calendar years:

A) If the bank has elected to have one or more categories of its consumer loans considered under the lending test, for each of these categories, the number and amount of loans:

i) To low-, moderate-, middle-, and upper-income individuals;

ii) Located in low-, moderate-, middle-, and upper-income census tracts; and

iii) Located inside the bank's assessment area and outside the bank's assessment area; and

B) The bank's federal Community Reinvestment Act Disclosure Statement. The bank shall place the statement in the public file within three business days after its receipt from its appropriate federal financial supervisory agency.

2. Banks required to report Home Mortgage Disclosure Act (HMDA) data. A bank required to report home mortgage loan data pursuant 12 CFR 1003 (Home Disclosure Data) shall include in its public file a written notice that the institution's HMDA Disclosure Statement may be obtained on the Consumer Financial Protection Bureau's (Bureau's) website at www.consumerfinance.gov/hmda. In addition, a bank that elected to have the Secretary consider the mortgage lending of an affiliate shall include in its public file the name of the affiliate and a written notice that the affiliate's HMDA Disclosure Statement may be obtained at the Bureau's website. The bank shall place the written notice in the public file within three business days after receiving notification from the Federal Financial Institutions Examination Council of the availability of the disclosure statement.

3. Small banks. A small bank or a bank that was a small bank during the prior calendar year shall include in its public file:

A) The bank's loan-to-deposit ratio for each quarter of the prior calendar year and, at its option, additional data on its loan-to-deposit ratio; and

B) The information required for other banks by subsection (b)(1), if the bank has elected to be evaluated under the lending, investment, and service tests.

4. Banks with strategic plans. A bank that has been approved to be assessed under a strategic plan shall include in its public file a copy of that plan. A bank need not include information submitted to the Secretary on a confidential basis in conjunction with the plan.

5. Banks with less than satisfactory ratings. A bank that received a less than satisfactory rating during its most recent examination shall include in its public file a description of its current efforts to improve its performance in helping to meet the credit needs of its entire community. The bank shall update the description quarterly.

c) Location of public information. A bank shall make available to the public for inspection upon request and at no cost the information required in this Section as follows:

1. At the main office and, if an interstate bank, at one branch office in each state, all information in the public file; and

2. At each branch:

A) A copy of the public section of the bank's most recent ILCRA Performance Evaluation and a list of services provided by the branch; and

B) Within five calendar days after the request, all the information in the public file relating to the assessment area in which the branch is located.

d) Copies. Upon request, a bank shall provide copies, either on paper or in another form acceptable to the person making the request, of the information in its public file. The bank may charge a reasonable fee not to exceed the cost of copying and mailing (if applicable).

e) Updating. Except as otherwise provided in this Section, a bank shall ensure that the information required by this Section is current as of April 1 of each year.

Chapter II Department of Financial and Professional Regulation

Part 345 Bank Community Reinvestment

38 Ill. Adm. Code 345.430 Public Notice by Banks

A bank shall provide in the public lobby of its main office and each of its branches, if any, and on its website the appropriate public notice set forth in Section 345.APPENDIX B. Only a branch of a bank having more than one assessment area shall include the bracketed material in the notice for branch offices. Only a bank that is an affiliate of a holding company shall include the next to the last sentence of the notices. A bank shall include the last sentence of the notices only if it is an affiliate of a holding company that is not prevented by statute from acquiring additional banks.

38 Ill. Adm. Code 345.440 Publication of Planned Examination Schedule

The Secretary will publish, at least 30 days in advance of the beginning of each calendar quarter, a list of banks scheduled for ILCRA examinations in that quarter.

38 Ill. Adm. Code 345.450 Alternative Examination Procedures

a) The Secretary may establish alternative examination procedures for banks which were rated "outstanding" as of their most recent ILCRA or federal Community Reinvestment Act examination. The purpose of the alternative procedures shall be to reduce the cost to these banks. The alternative procedures shall in no way limit public participation.

b) At the time of examination any bank that satisfies either of the following eligibility standards as shown in its Year-end Call report and other related documentation may elect to use the Very Small Bank Examination Procedures set forth in subsection (j):

1. Total assets less than $25,000,000; or

2. Total assets less than $100,000,000 that lent or originated less than 50 residential mortgage loans reportable under the Home Mortgage Disclosure Act (HMDA) (12 U.S.C. 461) in the previous calendar year. The $100,000,000 threshold shall be adjusted so that it is equivalent to the corresponding threshold for state-chartered credit unions based on amendments made by the National Credit Union Administration from time to time in its definition of "small entity" for purposes of the federal Regulatory Flexibility Act (5 U.S.C. 601(6)). For purposes of this subsection (b), "lent" or "originated" means the bank was responsible for underwriting, making credit decisions for, issuing commitments for, or funding for the residential mortgage loan; "residential mortgage loan" means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling; and "dwelling" means a residential structure or mobile home which contains one to four family housing units or individual units of condominiums or cooperatives. For purposes of this subsection (b), "lent" or "originated" does not include the performance of brokerage or referral activities.

c) For any bank which elects to use the Very Small Bank Examination Procedures set forth in subsection (j) of this Section, the Secretary shall apply the assessment factors, as provided in Section 345.200. The written evaluation shall comply with all requirements for a written evaluation set forth in Section 15(b) of the ILCRA.

d) Any bank which receives an overall rating of "substantial noncompliance" on its last examination shall not be eligible to use the Very Small Bank Examination Procedures set forth in subsection (j) on its next examination.

e) Nothing contained in this Section prohibits the Secretary from considering other sources of information including, but not limited to, evidence of discriminatory or other illegal credit practices, or public comments in assessing whether a bank is meeting the financial services needs of local communities pursuant to Section 345.200.

f) The Very Small Bank Examination Procedures set forth in subsection (j) shall in no way limit public participation.

g) A bank electing to use the Very Small Bank Examination Procedures set forth in subsection (j) does not affect the bank’s obligation, if any, to report data as required by Section 345.410.

h) A bank electing to use the Very Small Bank Examination Procedures set forth in subsection (j) does not affect the bank’s obligation to maintain an ILCRA file as required by Section 345.420.

i) A bank that elects to use the Very Small Bank Examination Procedures set forth in subsection (j) shall have at least three months to complete the examination. The bank shall have the opportunity to review its proposed examination response with an examiner prior to the due date.

j) Very Small Bank Examination Procedures. A bank qualifying under subsection (b) that elects to use the Very Small Bank Examination Procedures set forth in this subsection (j) shall submit to the Secretary in writing:

1. Description of the bank's efforts to ascertain the financial services needs of the bank's assessment area, if any, and provide supporting documentation.

2. Description of the extent of marketing, if any, to make the bank's assessment area aware of the financial services offered and provide supporting documentation.

3. Description of the bank's efforts and successes, if any, to assist existing low-income and moderate-income residents in the bank's assessment area to be able to remain in affordable housing in their neighborhoods including, but not limited to, origination of mortgage loans including home improvement and rehabilitation loans. At the discretion of the Secretary, a bank shall also be required to submit to the Department:

A) HMDA-LAR Quarterly Reports; or

B) The following applicant information:

i) Application date;

ii) Loan type;

iii) Property type;

iv) Purpose;

v) Owner occupancy;

vi) Pre-approval;

vii) Loan action taken (details and date);

viii) Property address;

ix) Applicant's ethnicity;

x) Applicant's race;

xi) Applicant's sex; and

xii) Gross annual income.

C) For small business lenders, the application and loan details regarding origination of loans to businesses in the bank's assessment area with gross annual revenues of $1,000,000.00 or less, particularly those in low-income and moderate-income neighborhoods in the bank's assessment area.

D) Description of the bank's participation, if any, including investments, in community development and redevelopment programs, small business technical assistance programs, minority-owned depository institutions, community development financial institutions, and mutually-owned financial institutions, if any, and provide supporting documentation.

E) Description of the bank's efforts and successes working with delinquent customers in the bank's assessment area to facilitate a resolution of the delinquency and provide supporting documentation. At the discretion of the Secretary, a credit union shall also be required submit to the Department:

i) A delinquency report for the last six months;

ii) Collection notes for loans delinquent for sixty or more days; and

iii) Current loan status.

F) Description of the bank's efforts and successes, if any, to offer retail banking services to unbanked and underbanked persons in the bank's assessment area and provide supporting documentation.

G) Provide a written response to any public comments, if any, received since the bank's last ILCRA examination.

H) Provide any other information the bank believes is relevant to assessing whether the bank is meeting the financial services needs of the bank's assessment area.

38 Ill. Adm. Code 345.460 Examination Authority and Cooperation

a) Pursuant to the Secretary's authority under the ILCRA, including, but not limited to, Sections 35-15 and 35-25 of ILCRA, the Secretary or the Secretary's appointees may examine the entire books, records, documents, and operations of each bank or its affiliates or agents, and may examine any banks' or affiliates' or agents' officers, directors, employees, and agents under oath.

b) A bank shall be required to fully cooperate in any examination conducted pursuant to this Part. Cooperation includes, but is not limited to:

1. timely and full production of books, records, and documents, in any reasonable format requested by the Department; and

2. ensuring all officers, directors, employees, and agents of the bank are available for depositions or interviews upon reasonable notice.

c) Except as otherwise specified in ILCRA or this Part, examination related to this Part shall be conducted consistent with Section 48(2.1) of the Illinois Banking Act [205 ILCS 5], 38 Ill. Adm. Code 381, and accompanying guidelines.

38 Ill. Adm. Code 345.470 Examination Frequency and Coordination

a) Subject to the provisions of this Section, the Secretary shall conduct examinations under the ILCRA or this Part in coordination with a bank's primary federal financial supervisory agency.

b) Initial ILCRA examinations of banks shall be conducted according to the following schedule.

1. Initial ILCRA examinations of banks with total assets of $1 billion or more, as shown by its Year-end Call Report, shall not be conducted until at least February 1, 2025 and shall be conducted within three years.

2. Initial ILCRA examinations of banks with total assets of $391,000,000 to less than $1 billion, as shown by its Year-end Call Report, shall not be conducted until at least February 1, 2025 and shall be conducted within four years.

3. Initial ILCRA examinations of banks with total assets of $10,000,000 but less than $391,000,000, as shown by its Year-end Call Report, shall not be conducted until at least August 1, 2025 and shall be conducted within five years.

4. Initial ILCRA examinations of banks with total assets of less than $10,000,000, as shown by its Year-end Call Report, shall not be conducted until at least August 1, 2025 and shall be conducted within six years.

c) For banks with total assets greater than $391 million, and notwithstanding subsection (a), the Secretary shall conduct examinations under the ILCRA with the following frequency:

1. For a bank that is assigned an "outstanding" or "satisfactory" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within three years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

2. For a bank that is assigned a "needs to improve" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within two years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

3. For a bank that is assigned a "substantial noncompliance" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within one year of the issuance of the report of examination of its most recent prior examination under the ILCRA.

d) For banks with total assets of $391 million or less, and notwithstanding subsection (a), the Secretary shall conduct examinations under the ILCRA with the following frequency:

1. For a bank that is assigned an "outstanding" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within five years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

2. For a bank that is assigned a "satisfactory" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within four years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

3. For a bank that is assigned a "needs to improve" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within two years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

4. For a bank that is assigned "substantial noncompliance" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within one year of the issuance of the report of examination of its most recent prior examination under the ILCRA.

e) Notwithstanding the provisions of this Section, the Secretary may:

1. conduct an examination at any time upon finding:

A) a bank's primary federal financial supervisory agency has rated the bank, as of its most recent examination, in "substantial noncompliance" with the federal Community Reinvestment Act;

B) substantial evidence of discriminatory or other illegal credit practices; or

C) the Secretary otherwise finds sufficient cause; or

2. notwithstanding subsections (b)(1) and (c)(1), extend by one year the time between examination of any bank or banks with an "outstanding" or "satisfactory" rating if the Secretary finds that an extension is necessitated by:

A) the need to examine or investigate a bank or banks with a "needs to improve" or "substantial noncompliance" rating; or

B) the need to examine or investigate a bank or banks showing substantial evidence of illegal credit practices.

f) Notwithstanding any other provision of this Section, the Secretary may examine a bank at any time as authorized by the ILCRA. In the case of an examination pursuant to this Section 345.470(e)(1), the procedures in Section 345.450(b)-(j) shall not apply.

g) For purposes of this Section, a bank's total assets shall be as reported on the bank's Consolidated Report of Condition and Income contemporaneous with the bank's most recent prior examination.

History

• Source: Amended at 50 Ill. Reg. 9258, effective June 29, 2026

38 Ill. Adm. Code 345.480 Examination Fees

a) Annual fees. Each fiscal year, banks shall pay an annual ILCRA fee to the Department based upon its total assets as shown by its Consolidated Report of Condition and Income for the quarter ending March 31, at the following rates:

TOTAL ASSETS

ILCRA ANNUAL FISCAL YEAR 2025 FEE

ILCRA ANNUAL FISCAL

YEAR 2026 FEE

ILCRA ANNUAL FISCAL

YEAR 2027 FEE

$1,000,000 or less

No charge

No charge

No charge

Over $1,000,000 and not over $10,000,000

No charge

No charge

No charge

Over $10,000,000 and not over $30,000,0000

$1,000

$1,050

$1,050

Over $30,000,000 and not over $50,000,000

$2,000

$2,100

$2,100

Over $50,000,000 and not over $100,000,000

$3,000

$3,150

$3,150

Over $100,000,000 and not over $350,000,000

$4,500

$4,725

$4,725

Over $350,000,000 and over $500,000,000

$9,000

$9,450

$9,450

Over $500,000,000 and not over $1,000,000,000

$13,000

$13,650

$13,650

Over $1,000,000,000 and not over $10,000,000,000

$18,000

$18,900

$18,900

Over $10,000,000,000

$24,000

$25,000

$25,000

b) Out-of-state travel expenses. When out-of-state travel occurs in the conduct of any examination, the bank shall make arrangements to reimburse the Department all charges for services such as travel expenses, including airfare, hotel and per diem incurred by the employee. These expenses are to be in accord with applicable travel regulations published by the Department of Central Management Services and approved by the Governor's Travel Control Board (80 Ill. Adm. Code 2800).

c) All fees received pursuant to this Part shall be deposited in the Bank and Trust Company Fund and subject to Section 48(3) of the Illinois Banking Act.

d) Notwithstanding Section 345.490, the fee for fiscal year 2025 shall be due on September 1, 2024. The fee for each fiscal year thereafter shall be due within 30 days after the start of each fiscal year. For purposes of this Section, "fiscal year" means a period beginning on July 1 of any calendar year and ending on June 30 of the next calendar year.

History

• Source: Amended at 50 Ill. Reg. 9258, effective June 29, 2026

Chapter II Department of Financial and Professional Regulation

Part 345 Bank Community Reinvestment

38 Ill. Adm. Code 345.490 Implementation Period

a) Banks with total assets of $391,000,000 or more shall comply with this Part by February 1, 2025.

b) Banks with total assets of less than $391,000,000 shall comply with this Part by August 1, 2025.

c) The Secretary may conduct an examination at any time upon finding:

1. a bank's primary federal financial supervisory agency has rated the bank, as of its most recent examination, in "substantial noncompliance" with the federal Community Reinvestment Act;

2. substantial evidence of discriminatory or other illegal credit practices; or

3. the Secretary otherwise finds sufficient cause.

d) For purposes of Section 345.470, with regard to the timing of the initial examination of a bank under ILCRA, the "most recent prior exam under the ILCRA" shall be read as the most recent examination under the federal Community Reinvestment Act.

38 Ill. Adm. Code 345.500 Enforcement

Failure to comply with any requirement under the ILCRA, this Part or other law referenced in the ILCRA, shall be grounds for enforcement actions as authorized under the ILCRA and under the Illinois Banking Act, Savings Bank Act, or Foreign Banking Office Act, as applicable to the particular bank. Any failure to comply with a requirement of the ILCRA may also be grounds for referral to law enforcement or an administrative authority with jurisdiction over the subject matter. In addition to any other action authorized by law, the Secretary may enter agreed orders, stipulations, or settlement agreements for the purpose of resolving any failure to comply.

38 Ill. Adm. Code 345.APPENDIX A Ratings

a) Ratings in general.

1. In assigning a rating, the Secretary evaluates a bank's performance under the applicable performance criteria in this part, in accordance with Sections 345.210 and 345.280. This includes consideration of low-cost education loans provided to low-income borrowers activities in cooperation with minority- or women-owned financial institutions and low-income credit unions, and the offering of Special Credit Programs, as well as adjustments on the basis of evidence of discriminatory or other illegal credit practices.

2. A bank's performance need not fit each aspect of a particular rating profile in order to receive that rating, and exceptionally strong performance with respect to some aspects may compensate for weak performance in others. The bank's overall performance, however, must be consistent with safe and sound banking practices and generally with the appropriate rating profile as follows.

b) Banks evaluated under the lending, investment, and service tests.

1. Lending performance rating. The Secretary assigns each bank's lending performance one of the five following ratings.

A) Outstanding. The Secretary rates a bank's lending performance "outstanding" if, in general, it demonstrates:

i) Excellent responsiveness to credit needs in its assessment area, taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area;

ii) A substantial majority of its loans are made in its assessment area;

iii) An excellent geographic distribution of loans in its assessment area;

iv) An excellent distribution, particularly in its assessment area, of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;

v) An excellent record of serving the credit needs of highly economically disadvantaged areas in its assessment area, low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;

vi) Extensive use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and

vii) It is a leader in making community development loans.

B) High satisfactory. The Secretary rates a bank's lending performance "high satisfactory" if, in general, it demonstrates:

i) Good responsiveness to credit needs in its assessment area, taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area;

ii) A high percentage of its loans are made in its assessment area;

iii) A good geographic distribution of loans in its assessment area;

iv) A good distribution, particularly in its assessment area, of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;

v) A good record of serving the credit needs of highly economically disadvantaged areas in its assessment area, low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;

vi) Use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and

vii) It has made a relatively high level of community development loans.

C) Low satisfactory. The Secretary rates a bank's lending performance "low satisfactory" if, in general, it demonstrates:

i) Adequate responsiveness to credit needs in its assessment area, taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area;

ii) An adequate percentage of its loans are made in its assessment area;

iii) An adequate geographic distribution of loans in its assessment area;

iv) An adequate distribution, particularly in its assessment area, of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;

v) An adequate record of serving the credit needs of highly economically disadvantaged areas in its assessment area, low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;

vi) Limited use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and

vii) It has made an adequate level of community development loans.

D) Needs to improve. The Secretary rates a bank's lending performance "needs to improve" if, in general, it demonstrates:

i) Poor responsiveness to credit needs in its assessment area, taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area;

ii) A small percentage of its loans are made in its assessment area;

iii) A poor geographic distribution of loans, particularly to low- or moderate-income geographies, in its assessment area;

iv) A poor distribution, particularly in its assessment area, of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;

v) A poor record of serving the credit needs of highly economically disadvantaged areas in its assessment area, low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;

vi) Little use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and

vii) It has made a low level of community development loans.

E) Substantial noncompliance. The Secretary rates a bank's lending performance as being in "substantial noncompliance" if, in general, it demonstrates:

i) A very poor responsiveness to credit needs in its assessment area, taking into account the number and amount of home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area;

ii) A very small percentage of its loans are made in its assessment area;

iii) A very poor geographic distribution of loans, particularly to low- or moderate-income geographies, in its assessment area;

iv) A very poor distribution, particularly in its assessment area, of loans among individuals of different income levels and businesses (including farms) of different sizes, given the product lines offered by the bank;

v) A very poor record of serving the credit needs of highly economically disadvantaged areas in its assessment area, low-income individuals, or businesses (including farms) with gross annual revenues of $1 million or less, consistent with safe and sound operations;

vi) No use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- or moderate-income individuals or geographies; and

vii) It has made few, if any, community development loans.

2. Investment performance rating. The Secretary assigns each bank's investment performance one of the five following ratings:

A) Outstanding. The Secretary rates a bank's investment performance "outstanding" if, in general, it demonstrates:

i) An excellent level of qualified investments, particularly those that are not routinely provided by private investors, often in a leadership position;

ii) Extensive use of innovative or complex qualified investments; and

iii) Excellent responsiveness to credit and community development needs.

B) High satisfactory. The Secretary rates a bank's investment performance "high satisfactory" if, in general, it demonstrates:

i) A significant level of qualified investments, particularly those that are not routinely provided by private investors, occasionally in a leadership position;

ii) Significant use of innovative or complex qualified investments; and

iii) Good responsiveness to credit and community development needs.

C) Low satisfactory. The Secretary rates a bank's investment performance "low satisfactory" if, in general, it demonstrates:

i) An adequate level of qualified investments, particularly those that are not routinely provided by private investors, although rarely in a leadership position;

ii) Occasional use of innovative or complex qualified investments; and

iii) Adequate responsiveness to credit and community development needs.

D) Needs to improve. The Secretary rates a bank's investment performance "needs to improve" if, in general, it demonstrates:

i) A poor level of qualified investments, particularly those that are not routinely provided by private investors;

ii) Rare use of innovative or complex qualified investments; and

iii) Poor responsiveness to credit and community development needs.

E) Substantial noncompliance. The Secretary rates a bank's investment performance as being in "substantial noncompliance" if, in general, it demonstrates:

i) Few, if any, qualified investments, particularly those that are not routinely provided by private investors;

ii) No use of innovative or complex qualified investments; and

iii) Very poor responsiveness to credit and community development needs.

3. Service performance rating. The Secretary assigns each bank's service performance one of the five following ratings.

A) Outstanding. The Secretary rates a bank's service performance "outstanding" if, in general, the bank demonstrates:

i) Its service delivery systems are readily accessible to geographies and individuals of different income levels in its assessment area;

ii) To the extent changes have been made, its record of opening and closing branches has improved the accessibility of its delivery systems, particularly in low- or moderate-income geographies or to low- or moderate-income individuals;

iii) Its services (including, where appropriate, business hours) are tailored to the convenience and needs of its assessment area, particularly low- or moderate-income geographies or low- or moderate-income individuals; and

iv) It is a leader in providing community development services.

B) High satisfactory. The Secretary rates a bank's service performance "high satisfactory" if, in general, the bank demonstrates:

i) Its service delivery systems are accessible to geographies and individuals of different income levels in its assessment area;

ii) To the extent changes have been made, its record of opening and closing branches has not adversely affected the accessibility of its delivery systems, particularly in low- and moderate-income geographies and to low- and moderate-income individuals;

iii) Its services (including, where appropriate, business hours) do not vary in a way that inconveniences its assessment area, particularly low- and moderate-income geographies and low- and moderate-income individuals; and

iv) It provides a relatively high level of community development services.

C) Low satisfactory. The Secretary rates a bank's service performance "low satisfactory" if, in general, the bank demonstrates:

i) Its service delivery systems are reasonably accessible to geographies and individuals of different income levels in its assessment area;

ii) To the extent changes have been made, its record of opening and closing branches has generally not adversely affected the accessibility of its delivery systems, particularly in low- and moderate-income geographies and to low- and moderate-income individuals;

iii) Its services (including, where appropriate, business hours) do not vary in a way that inconveniences its assessment area, particularly low- and moderate-income geographies and low- and moderate-income individuals; and

iv) It provides an adequate level of community development services.

D) Needs to improve. The Secretary rates a bank's service performance "needs to improve" if, in general, the bank demonstrates:

i) Its service delivery systems are unreasonably inaccessible to portions of its assessment area, particularly to low- or moderate-income geographies or to low- or moderate-income individuals;

ii) To the extent changes have been made, its record of opening and closing branches has adversely affected the accessibility its delivery systems, particularly in low- or moderate-income geographies or to low- or moderate-income individuals;

iii) Its services (including, where appropriate, business hours) vary in a way that inconveniences its assessment area, particularly low- or moderate-income geographies or low- or moderate-income individuals; and

iv) It provides a limited level of community development services.

E) Substantial noncompliance. The Secretary rates a bank's service performance as being in "substantial noncompliance" if, in general, the bank demonstrates:

i) Its service delivery systems are unreasonably inaccessible to significant portions of its assessment area, particularly to low- or moderate-income geographies or to low- or moderate-income individuals;

ii) To the extent changes have been made, its record of opening and closing branches has significantly adversely affected the accessibility of its delivery systems, particularly in low- or moderate-income geographies or to low- or moderate-income individuals;

iii) Its services (including, where appropriate, business hours) vary in a way that significantly inconveniences its assessment area, particularly low- or moderate-income geographies or low- or moderate-income individuals; and

iv) It provides few, if any, community development services.

c) Wholesale or limited purpose banks. The Secretary assigns each wholesale or limited purpose bank's community development performance one of the four following ratings.

1. Outstanding. The Secretary rates a wholesale or limited purpose bank's community development performance "outstanding" if, in general, it demonstrates:

A) A high level of community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;

B) Extensive use of innovative or complex qualified investments, community development loans, or community development services; and

C) Excellent responsiveness to credit and community development needs in its assessment area.

2. Satisfactory. The Secretary rates a wholesale or limited purpose bank's community development performance "satisfactory" if, in general, it demonstrates:

A) An adequate level of community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;

B) Occasional use of innovative or complex qualified investments, community development loans, or community development services; and

C) Adequate responsiveness to credit and community development needs in its assessment area.

3. Needs to improve. The Secretary rates a wholesale or limited purpose bank's community development performance as "needs to improve" if, in general, it demonstrates:

A) A poor level of community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;

B) Rare use of innovative or complex qualified investments, community development loans, or community development services; and

C) Poor responsiveness to credit and community development needs in its assessment area.

4. Substantial noncompliance. The Secretary rates a wholesale or limited purpose bank's community development performance in "substantial noncompliance" if, in general, it demonstrates:

A) Few, if any, community development loans, community development services, or qualified investments, particularly investments that are not routinely provided by private investors;

B) No use of innovative or complex qualified investments, community development loans, or community development services; and

C) Very poor responsiveness to credit and community development needs in its assessment area.

d) Banks evaluated under the small bank performance standards −

1. Lending test ratings.

A) Eligibility for a satisfactory lending test rating. The Secretary rates a small bank's lending performance "satisfactory" if, in general, the bank demonstrates:

i) A reasonable loan-to-deposit ratio (considering seasonal variations) given the bank's size, financial condition, the credit needs of its assessment area, and taking into account, as appropriate, other lending-related activities such as loan originations for sale to the secondary markets and community development loans and qualified investments;

ii) A majority of its loans and, as appropriate, other lending-related activities, are in its assessment area;

iii) A distribution of loans to and, as appropriate, other lending-related activities for individuals of different income levels (including low- and moderate-income individuals) and businesses and farms of different sizes that is reasonable given the demographics of the bank's assessment area;

iv) A record of taking appropriate action, when warranted, in response to written complaints, if any, about the bank's performance in helping to meet the credit needs of its assessment area; and

v) A reasonable geographic distribution of loans given the bank's assessment area.

B) Eligibility for an "outstanding" lending test rating. A small bank that meets each of the standards for a "satisfactory" rating under this subsection and exceeds some or all of those standards may warrant consideration for a lending test rating of "outstanding."

C) Needs to improve or substantial noncompliance ratings. A small bank may also receive a lending test rating of "needs to improve" or "substantial noncompliance depending on the degree to which its performance has failed to meet the standard for a "satisfactory" rating.

2. Community development test ratings for intermediate small banks.

A) Eligibility for a satisfactory community development test rating. The Secretary rates an intermediate small bank's community development performance "satisfactory" if the bank demonstrates adequate responsiveness to the community development needs of its assessment area through community development loans, qualified investments, and community development services. The adequacy of the bank's response will depend on its capacity for such community development activities, its assessment area's need for such community development activities, and the availability of such opportunities for community development in the bank's assessment area.

B) Eligibility for an outstanding community development test rating. The Secretary rates an intermediate small bank's community development performance "outstanding" if the bank demonstrates excellent responsiveness to community development needs in its assessment area through community development loans, qualified investments, and community development services, as appropriate, considering the bank's capacity and the need and availability of such opportunities for community development in the bank's assessment area.

C) Needs to improve or substantial noncompliance ratings. An intermediate small bank may also receive a community development test rating of "needs to improve" or "substantial noncompliance" depending on the degree to which its performance has failed to meet the standards for a "satisfactory" rating.

3. Overall rating.

A) Eligibility for a satisfactory overall rating. No intermediate small bank may receive an assigned overall rating of "satisfactory" unless it receives a rating of a least "satisfactory" on both the lending test and the community development test.

B) Eligibility for an outstanding overall rating.

i) An intermediate small bank that receives an "outstanding" rating on one test and at least "satisfactory" on the other test may receive an assigned overall rating of "outstanding."

ii) A small bank that is not an intermediate small bank that meets each of the standards for a "satisfactory" rating under the lending test and exceeds some or all of those standards may warrant consideration for an overall rating of "outstanding." In assessing whether a bank's performance is "outstanding," the Secretary considers the extent to which the bank exceeds each of the performance standards for a "satisfactory" rating and its performance in making qualified investments and its performance in providing branches and other services and delivery systems that enhance credit availability in its assessment area.

C) Needs to improve or substantial noncompliance overall ratings. A small bank may also receive a rating of "needs to improve" or "substantial noncompliance" depending on the degree to which its performance has failed to meet the standards for a "satisfactory" rating.

e) Strategic plan assessment and rating.

1. Satisfactory goals. The Secretary approves as "satisfactory" measurable goals that adequately help to meet the credit needs of the bank's assessment area.

2. Outstanding goals. If the plan identifies a separate group of measurable goals that substantially exceed the levels approved as "satisfactory," the Secretary will approve those goals as "outstanding."

3. Rating. The Secretary assesses the performance of a bank operating under an approved plan to determine if the bank has met its plan goals:

A) If the bank substantially achieves its plan goals for a satisfactory rating, the Secretary will rate the bank's performance under the plan as "satisfactory."

B) If the bank exceeds its plan goals for a satisfactory rating and substantially achieves its plan goals for an outstanding rating, the Secretary will rate the bank's performance under the plan as "outstanding."

C) If the bank fails to meet substantially its plan goals for a satisfactory rating, the Secretary will rate the bank as either "needs to improve" or "substantial noncompliance," depending on the extent to which it falls short of its plan goals, unless the bank elected in its plan to be rated otherwise, as provided in Section 345.270(f)(4).

38 Ill. Adm. Code 345.APPENDIX B ILCRA Notice

a) Notice for main offices and, if an interstate bank, one branch office in each state.

Community Reinvestment Act Notice

Under the Illinois Community Reinvestment Act (ILCRA), the Secretary of the Department of Financial and Professional Regulation (Secretary) evaluates our record of helping to meet the credit needs of this community consistent with safe and sound operations. The Secretary also takes this record into account when deciding on certain applications submitted by us.

Your involvement is encouraged.

You are entitled to certain information about our operations and our performance under the ILCRA, including, for example, information about our branches, such as their location and services provided at them; the public section of our most recent ILCRA Performance Evaluation, prepared by the Secretary; and comments received from the public relating to our performance in helping to meet community credit needs, as well as our responses to those comments. You may review this information today.

At least 30 days before the beginning of each quarter, the Secretary publishes a list of the banks that are scheduled for ILCRA examination in that quarter. This list is available from the Secretary at 320 West Washington Street, 3rd Floor Springfield, IL 62786 and 555 West Monroe Street, Suite 500 Chicago, IL 60661. You may send written comments about our performance in helping to meet community credit needs to (name and address of official at bank) and Secretary. You may also submit comments electronically through the Department's website at https://idfpr.illinois.gov/admin/cra.html. Your letter, together with any response by us, will be considered by the Secretary in evaluating our ILCRA performance and may be made public.

You may ask to look at any comments received by the Secretary. You may also request from the Secretary an announcement of our applications covered by the ILCRA filed with the Secretary.

We are an affiliate of (name of holding company), a bank holding company. You may request from the (title of responsible official), Federal Reserve Bank of _______ (address) an announcement of applications covered by the ILCRA filed by bank holding companies.

b) Notice for branch offices.

Illinois Community Reinvestment Act Notice

Under the Illinois Community Reinvestment Act (ILCRA), the Secretary evaluates our record of helping to meet the credit needs of this community consistent with safe and sound operations. The Secretary also takes this record into account when deciding on certain applications submitted by us.

Your involvement is encouraged.

You are entitled to certain information about our operations and our performance under the ILCRA. You may review today the public section of our most recent ILCRA evaluation, prepared by the Secretary, and a list of services provided at this branch. You may also have access to the following additional information, which we will make available to you at this branch within five calendar days after you make a request to us:

1. a map showing the assessment area containing this branch, which is the area in which the Secretary evaluates our ILCRA performance in this community;

2. information about our branches in this assessment area;

3. a list of services we provide at those locations;

4. data on our lending performance in this assessment area; and

5. copies of all written comments received by us that specifically relate to our ILCRA performance in this assessment area, and any responses we have made to those comments. If we are operating under an approved strategic plan, you may also have access to a copy of the plan.

(If you would like to review information about our ILCRA performance in other communities served by us, the public file for our entire bank is available at (name of office located in state), located at (address).)

At least 30 days before the beginning of each quarter, the Secretary publishes a list of the banks that are scheduled for ILCRA examination in that quarter. This list is available from the Secretary (address). You may send written comments about our performance in helping to meet community credit needs to (name and address of official at bank) and the Secretary. You may also submit comments electronically through the Department's website at https://idfpr.illinois.gov/admin/cra.html. Your letter, together with any response by us, will be considered by the Secretary in evaluating our ILCRA performance and may be made public.

You may ask to look at any comments received by the Secretary. You may also request from the Secretary an announcement of our applications covered by the ILCRA filed with the Secretary. We are an affiliate of (name of holding company), a bank holding company. You may request from the (title of responsible official), Federal Reserve Bank of _______ (address) an announcement of applications covered by the ILCRA filed by bank holding companies.

History

• Source: Amended at 50 Ill. Reg. 9258, effective June 29, 2026

38 Ill. Adm. Code 345.APPENDIX C Examples of Community Development

Examples of services, programs, sponsorships, donations, lawful investments, deposits, membership shares, grants, and other activities which may be deemed to have the primary purpose of community development include, but are not limited to the following:

a) Establishment of or material support of charitable donation accounts and donor advised funds that benefit charitable organizations which help meet the financial services needs of low-income and moderate-income neighborhoods or individuals within the bank's assessment area;

b) Establishment of or material support of foundations and other affiliated companies that provide programs and services to meet the credit needs of low-income to moderate- income neighborhoods;

c) Material support of small banks as defined in Section 345.20 that provide programs, products and services to meet the credit needs of low-income to moderate-income individuals or families;

d) Offering products and services targeted to expand access to safe and affordable banking services;

e) Provision or support of community development services that directly and tangibly benefit the assessment area;

f) Offering products and services and/or provision of investments targeted to directly and tangibly increase climate resilience in low-income to moderate- income neighborhoods;

g) Offering products and services and or provision of investments targeted to directly and tangibly mitigate environmental harm in low-income to moderate- income neighborhoods;

h) Offering products and services and/or the provision of investments targeted to directly and tangibly mitigate the digital divide in low-income and moderate-income neighborhoods;

i) Participating in Invest in Illinois or other similar state or federal programs which have the primary purpose of community development;

j) Participating in an activity listed in Section 345.APPENDIX D, ILCRA Illustrative List of Qualifying Activities for Banks.

History

• Source: Amended at 50 Ill. Reg. 9258, effective June 29, 2026

38 Ill. Adm. Code 345.APPENDIX D ILCRA Illustrative List of Qualifying Activities for Banks

This list a non-exhaustive, illustrative list of examples of activities that would meet the criteria for a community development qualifying activity under 38 Ill. Adm. Code Part 345 provided the appropriate documentation supports the activity and meets all requirements set forth in the ILCRA and its implementing rules. The Department is not endorsing any financial institution, fund, organization, program, non-profit, or any other entity. By listing activities that may qualify under 38 Ill. Adm. Code Part 345, the Department is not making any determination as to whether the activities listed are safe and sound activities, in general, or for any particular financial institution. Moreover, the Department is not making any determination as to whether the activities listed are/are not legally permissible, in general, or for any particular financial institution. Please read 38 Ill. Adm. Code Part 345 in its entirety for defined terms used in this list and for additional information.

Illustrative List Topic Category

Description

Topic A

Loans to a low- or moderate-income individual or family.

A-1

Loan classified on the bank's Call Report as a 1-4 family residential construction loan to a low- or moderate-income (LMI) individual.

A-2

Closed-end loan or open-end line of credit classified on the bank's Call Report as a loan secured by a 1-4 family residential property to an LMI individual.

A-3

Loan classified on the bank's Call Report as secured by a multifamily residential property to an LMI individual.

A-4

Home mortgage loan guaranteed by the Federal Housing Administration to an LMI individual.

A-5

Home mortgage loan guaranteed under the U.S. Department of Housing and Urban Development's (HUD) Indian Home Loan Guarantee Program (Section 184) to an LMI individual.

A-6

Home mortgage loan guaranteed by the U.S. Department of Agriculture's (USDA) Rural Housing Service to an LMI individual.

A-7

Home mortgage guaranteed by the U.S. Department of Veterans Affairs (VA) to an LMI individual.

A-8

Low-cost education loan to an LMI individual, such as to fund school tuition and/or expenses.

A-9

Home equity line of credit to an LMI individual, such as for home improvement.

A-10

Non-credit card revolving credit line, such as for purchase of home appliances, to an LMI individual.

A-11

Consumer loan to an LMI individual for purposes other than purchasing an automobile, such as to fund unexpected medical expenses.

A-12

Automobile loan to an LMI individual to purchase a car.

A-13

Installment loan to an LMI individual to purchase home appliances.

A-14

Unsecured consumer loan to a moderate-income individual for household assistive technology products and vehicle modifications to improve accessibility.

A-15

Small dollar consumer loan to a low-income individual made under a bank's affordable small dollar loan program.

Topic B

Small business loans to businesses.

B-1

Small business loan (including a line of credit) when the loan is classified on the bank's Call Report as a commercial and industrial loan.

B-2

Small business loan (including a line of credit) when the loan is classified on the bank's Call Report as a loan secured by nonfarm nonresidential properties.

B-3

Small business loan under the U.S. Small Business Administration (SBA) 504 Certified Development Company program.

B-4

Small business loan to make improvements to its manufacturing facility under the SBA 7(a) loan program.

B-5

Small business loan to finance the purchase of machinery under the USDA's Rural Development Business and Industry Guarantee Loan Program.

B-6

Small business loan to improve accessibility of its facilities for disabled customers.

B-7

Small business loan under the SBA Paycheck Protection Program.

Topic C

Small business loans to farms.

C-1

Small business loan (including a line of credit) when the loan is classified on the bank's Call Report as a loan to finance agricultural production and other loans to farmers.

C-2

Small business loan to finance the purchase of farm equipment.

Topic D

Loans made in or to an individual or business located in Indian country or other tribal and native lands.

D-1

Loan or line of credit made in Indian country or other tribal and native lands and classified on the bank's Call Report as a 1-4 family residential construction loan.

D-2

Closed-end loan or open-end line of credit made in Indian country or other tribal and native lands and classified on the bank's Call Report as a loan secured by a 1-4 family residential property.

D-3

Loan made in Indian country or other tribal and native lands and classified on the bank's Call Report as secured by a multifamily residential property.

D-4

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed by the Federal Housing Administration.

D-5

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed under HUD's Indian Home Loan Guarantee Program (Section 184).

D-6

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed by the USDA's Rural Housing Service.

D-7

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed by the Veterans Administration.

D-8

Home equity line of credit extended in Indian country or other tribal and native lands, such as for home improvement.

D-9

Non-credit card revolving credit line, such as for purchase of home appliances, to an individual located in Indian country or other tribal and native lands.

D-10

Consumer loan made to an individual located in Indian country or other tribal and native lands for purposes other than purchasing an automobile, such as to fund unexpected medical expenses.

D-11

Automobile loan to an individual located in Indian country or other tribal and native lands to purchase a car.

D-12

Small business loan (including a line of credit) in Indian country or other tribal and native lands when the loan is classified on the bank's Call Report as a commercial and industrial loan.

D-13

Small business loan (including a line of credit) located in Indian country or other tribal and native lands when the loan is classified on the bank's Call Report as a loan secured by nonfarm nonresidential properties.

D-14

Small business loan (including a line of credit) located in Indian country or other tribal and native lands made under the SBA Certified Development Company/504 Loan Program.

D-15

Small business loan (including a line of credit) located in Indian country or other tribal and native lands to make improvements to its manufacturing facility under the SBA 7(a) loan

program.

D-16

Small business loan (including a line of credit) located in Indian country or other tribal and native lands to finance the purchase of machinery under the USDA's Rural Development Business and Industry Guarantee Loan Program.

D-17

Small business loan (including a line of credit) located in Indian country or other tribal and native lands when the loan is classified on the bank's Call Report as a loan to finance agricultural

production and other loans to farmers.

Topic E

A small business loan to a business located in a low- or moderate- income census tract.

E-1

Small business loan to purchase inventory for its business located in a moderate-income census tract.

E-2

Small business loan to expand its manufacturing facility located in a low-income census tract.

Topic F

A small business loan to a farm located in a low- or moderate-income census tract.

F-1

Small business loan located in a low-income census tract to purchase farm equipment.

F-2

Small business loan located in a moderate-income census tract to refinance a construction loan used to expand dairy production facilities.

Topic G

Loans, investments, and services to facilitate affordable housing that is likely to be partially or primarily inhabited by low- or moderate-income individuals or families.

G-1

Loan to a non-profit organization for the purpose of providing affordable housing to LMI individuals.

G-2

Loan to a for-profit business for the purpose of providing affordable housing to LMI individuals.

G-3

Loan to a for-profit developer for construction of multi-family mixed- income rental housing that partially benefits LMI individuals because some units will meet the median rent standard.

G-4

Loan to a non-profit developer to build multi-family rental housing guaranteed under the USDA's Section 538 Guaranteed Loan Program where median rents will meet the median rent standard.

G-5

Loan to a for-profit developer to build multi-family rental housing guaranteed under the USDA's Section 538 Guaranteed Loan Program where median rents will meet the median rent standard.

G-6

Investment that will use tax credits from the Federal Historic Tax Credit Program to finance the adaptive reuse and renovation of a hotel into rental units in a moderate- income area, and many of the units will meet the median rent standard.

G-7

Loan for a mixed-use property in an underserved area that will be used to help seasonal businesses provide affordable housing to seasonal LMI workers at rents that meet the median rent standard.

G-8

Loan to a for-profit developer for construction of multi-family mixed- income rental housing, where many of the units will meet the median rent standard.

G-9

Investment that will finance the company's production of cost-effective modular housing, which will be used to supply affordable housing units where rents will meet the median rent standard.

G-10

Investment that supports the abatement of, or remediation to correct, lead-based paint, asbestos, mold, or radon that are present in a multi- family rental housing project where rents meet the median rent standard.

Topic H

Loans, investments, and services that facilitate affordable housing that is partially or primarily inhabited by low- or moderate-income individuals or families as demonstrated by an affordable housing set-aside required by a federal, state, local, or tribal government.

H-1

Investment in a project with housing units made affordable to LMI individuals through local inclusionary zoning.

H-2

Loan to purchase a multifamily dwelling that will partially benefit LMI individuals, including renters who receive assistance under HUD's section 8 rental subsidy program.

H-3

Investment that provides financing for the construction of a rent-to-own affordable housing complex targeted to LMI individuals and families.

Topic I

Loans, investments, and services that facilitate affordable housing, in conjunction with an explicit federal, state, local, or tribal government affordable housing program for low- or moderate-income individuals or families.

I-1

Investment in a limited partnership to develop and operate a Federal Low-Income Housing Tax Credit (LIHTC) multi-family housing project.

I-2

Investment to finance the conversion and rehabilitation of public housing using HUD's Rental Assistance Demonstration Program that uses a section 8 project-based contract to make the units affordable to LMI individuals and families.

I-3

Loan to a nursing home and assisted living facility that uses HUD's Section 232 loan guarantee and is defined by HUD as multifamily housing that primarily serves or assists LMI individuals or families.

I-4

Investment in a "green" retrofit initiative as part of an explicit local government program used to maintain the affordability of rental housing for LMI individuals through energy efficient measures.

I-5

Loan to facilitate the purchase of existing multifamily housing using a guarantee provided under the HUD Section 207/223(f) program to make the units affordable to LMI individuals and families.

I-6

Loan to facilitate the substantial rehabilitation of multifamily rental housing for moderate-income families, elderly and the handicapped using a guarantee provided under the HUD Section 221(d)(4) mortgage insurance program to make the units affordable to LMI individuals and families.

I-7

Loan to a Native American tribe to purchase land and construct infrastructure and affordable rental housing, as identified in the tribe's Indian Housing Plan, using a guarantee provided under the HUD Title VI Tribal Housing Activities Loan Guarantee Program to make the units affordable to LMI individuals and families.

I-8

Loan to a non-profit sponsor to rehabilitate multifamily rental housing for elderly persons (62 or older) and/or persons with disabilities using a guarantee provided under the HUD Program Section 231 to make the units affordable to LMI individuals.

I-9

Investment for Federal Historic Tax Credits to finance the adaptive reuse and renovation of a historic property that also receives financing using Federal Low-Income Housing Tax Credits.

I-10

Loan for the construction of a government-supported accessible rental housing facility for LMI disabled persons.

Topic J

Loans, investments, and services that facilitate affordable housing, such as owner-occupied housing purchased, refinanced, or improved by or on behalf of low- or moderate-income individuals or families, except for home mortgage loans provided directly to individuals or families.

J-1

Investment in a mortgage-backed security that is primarily secured by loans to LMI borrowers.

J-2

Down payment and closing cost assistance grants on home purchase loans for LMI borrowers, including but not limited to, assisting borrowers in obtaining grants from the FHLBanks' regulatory Homeownership Set-Aside Programs.

Topic K

Loans, investments, and services that facilitate another bank's community development loans, investments, or services.

K-1

Bank employees volunteer to provide technical assistance to another bank to establish a loan program targeted to LMI individuals and families.

Topic L

Loans, investments, and services that facilitate child care, education, workforce development and job training programs, health services, and housing services, that partially or primarily serve or assist low- or moderate-income individuals or families.

L-1

Investment, in a fund that provides financing for a charter school that will primarily serve LMI children.

L-2

Monetary donation to a non-profit organization that provides transportation to medical treatments for LMI individuals.

L-3

Grant to a non-profit organization that provides housing assistance and counseling to LMI immigrants residing in the United States.

L-4

Providing mentoring/tutoring services to clients of a non-profit organization that serves LMI youth.

L-5

Investment, that supports a non- profit that provides general education degrees that primarily serves LMI individuals without a high school diploma.

L-6

Loan to a non-profit training center that provides workforce development and job training programs, which primarily serve unemployed, LMI individuals.

L-7

In-kind donation to a food pantry that provides services to unemployed, LMI families.

L-8

Loan to acquire a child care facility that serves LMI residents of a low- income neighborhood.

L-9

Bank employees volunteer service with a non-profit that provides income tax assistance programs for LMI individuals.

L-10

Grant to a non-profit organization that runs a state-funded battered women's shelter for LMI individuals in an underserved area and as part of a statewide program.

L-11

Loan, investment, or service that supports an LMI-focused alcohol and drug recovery center.

L-12

Grant to a drug rehabilitation center that primarily serves low-income individuals.

L-13

Loan to a legal assistance program for LMI individuals.

L-14

Grant to an organization that provides resume writing services to LMI formerly incarcerated individuals.

L-15

Loan to a non-profit organization providing affordable child care services that primarily serve LMI individuals or families.

L-16

Grant to support a program that provides eyeglasses to low-income individuals.

L-17

In-kind contribution of rent-free office space to a local food bank.

L-18

Provision of technical assistance on financial matters to a non-profit organization supporting loan or grant activity under the Federal Home Loan Banks' (FHLBanks) Affordable Housing Program including, but not limited to, serving on a loan review committee, assisting in marketing financial services, furnishing financial services training for staff and management, assisting with or submitting applications, disbursing funds, or monitoring compliance activities.

L-19

Grant to a nonprofit community program which assists LMI individuals to find and enroll in free or low-cost home broadband internet services for which they are eligible.

L-20

Grant in support of a nonprofit program which refurbishes used computers in order to provide them to LMI individuals at no cost or at a very low cost.

L-21

Monetary donations to a workforce development program designed to improve employment opportunities for LMI individuals with disabilities.

L-22

Bank loan to a skilled nursing facility that primarily serves low-income persons receiving Medicaid.

L-23

Monetary donation to a school that primarily serves LMI students to purchase technology that enables it to conduct on-line classes for students affected by government mandated stay-at-home orders during a national health emergency.

Topic M

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including activities that promote job creation or job retention partially or primarily for low- or moderate-income individuals.

M-1

Loan to a business to expand its facility and add jobs held by LMI individuals.

M-2

Investment using New Markets Tax Credits that will allow the facility to expand and jobs held by LMI individuals.

Topic N

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including federal, state, local, or tribal government programs, projects, or initiatives that partially or primarily serve small businesses or small farms as those terms are defined in the programs, projects, or initiatives.

N-1

Bank employees volunteer service providing technical assistance to small businesses on how to create business plans under a state program to support statewide business development.

N-2

Micro-loan for working capital to a small business that is a state- certified Historically Underutilized Business.

N-3

Grant to a non-profit that provides financing for small farms under a federal program to encourage new farm development.

N-4

Loan to a small business incubator that primarily benefits small businesses by providing supportive services to business start-ups and that is funded in part under a statewide community development initiative.

N-5

Loan to a small business under a tribal government loan guarantee program.

Topic O

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including retaining existing, or attracting new, businesses, farms, or residents to low- or moderate-income census tracts, underserved areas, distressed areas, designated disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands.

O-1

Loan to a business to replace equipment and restore its facilities, thereby retaining employees in a designated disaster area consistent with a disaster recovery plan.

O-2

Monetary donation to an emergency/drought relief fund formed by a community foundation that provides grants to farms that are located in a distressed area to help sustain the farms.

O-3

A loan to finance the development of workforce housing located in an underserved area that is within close proximity to a warehouse owned by a multinational conglomerate.

Topic P

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including a Small Business Administration Certified Development Company, as that term is defined in 13 CFR 120.10, a Small Business Investment Company, as described 13 CFR part 107, a New Markets Venture Capital company, as described in 13 CFR part 108, a qualified Community Development Entity, as defined in 26 CFR 45D(c), or a U.S. Department of Agriculture Rural Business Investment Company, as defined in 7 CFR 4290.50.

P-1

Investment in a New Markets Venture Capital company that finances businesses that meet the SBA's size standards used to define small business concerns.

P-2

Investment in a qualified Community Development Entity that will provide financing for a food market to build a refrigerated warehouse and food distribution facility.

P-3

Investment in an SBA-certified Small Business Investment Company (SBIC) to finance businesses that meet the SBIC size standards.

P-4

Investment in a USDA Rural Business Investment Company (RBIC) to fund businesses and farms that meet the RBIC size standards.

P-5

Investment in a New Markets Tax Credit-eligible Community Development Entity to fund a mixed-use project that will include affordable housing for LMI individuals and families and retail space for a small business.

P-6

Investment eligible for Federal Historic Tax Credits to finance the adaptive reuse and renovation of a historic property that also receives New Markets Tax Credits.

P-7

Investment in a fund that purchases the debentures, guaranteed by the SBA, that are offered by the SBA-certified development companies.

P-8

Loan to a Community Development Financial Institution (CDFI) Fund- certified Community Development Entity that finances a small business' purchase of real estate related to a New Markets Tax Credit project, as provided for in 26 U.S.C. 45D.

Topic Q

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including technical assistance and supportive services, such as shared space, technology, or administrative assistance for businesses or farms that meet the size eligibility standards of the Small Business Investment Company program, as described in 13 CFR part 107.

Q-1

Grant to a non-profit that provides technical assistance to businesses that meet the stated size-eligibility standards.

Q-2

Loan to a non-profit entity that provides technical assistance to businesses that meet the size-eligibility standards for an SBA SBIC.

Q-3

Bank employees volunteer through a local Chamber of Commerce to lead a workshop that provides technical assistance to the chamber's business members that meet the stated size-eligibility standards.

Q-4

Providing permanent office space rent-free at a branch for use by the local economic development organization that targets business development, predominantly among start-up and micro-businesses that meet the stated size-eligibility standards.

Q-5

Monetary donation to a CDFI that is providing technical assistance and loans to small businesses adversely impacted by state-mandated business closures during a health emergency.

Topic R

Loans, investments, and services that facilitate essential community facilities that partially or primarily serve low- or moderate-income individuals or families.

R-1

Construction loan to improve a hospital that is located in a middle- income census tract adjacent to a low-income census tract that partially benefits LMI individuals who will utilize hospital services.

R-2

Investment in a municipal bond to fund construction of a health center that will primarily serve residents of a moderate-income neighborhood.

R-3

Purchase of a local municipal bond, the proceeds of which will be used to construct a new high school that will partially serve students from LMI families.

R-4

Direct financing or investment in supportive housing for the chronically homeless incorporating eligible public funding programs, such as state-issued tax-exempt bonds, HUD's Supportive Housing Program, Section 8 Project-Based Rental Assistance, the LIHTC program, or the FHLBanks' Affordable Housing Program.

R-5

Loan to upgrade equipment at a public library to accommodate LMI disabled patrons.

R-6

Grant to an organization to purchase personal or other protective equipment for doctors and nurses treating in a Federally Qualified Health Care Center during a local health emergency.

Topic S

Loans, investments, and services that facilitate essential community facilities that partially or primarily serve low- or moderate-income census tracts, distressed areas, underserved areas, disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands.

S-1

Loan to construct a new fire station located in Indian country or other tribal and native lands.

S-2

Loan to a company to build a health clinic in an underserved area, using the USDA's Community Facilities Guaranteed Loan Program.

S-3

Loan to build a police station in a distressed area.

S-4

Purchase of a local municipal bond with a purpose consistent with a local disaster recovery plan, the proceeds of which will be used to construct a new high school in a disaster area.

S-5

Loan to improve a hospital in a distressed area that serves the entire community, including LMI individuals.

S-6

Investment in a fund that finances community facilities in Indian country or other tribal and native lands, such as a community recreational facility.

Topic T

Loans, investments, and services that facilitate essential infrastructure that partially or primarily serves low- or moderate-income individuals or families.

T-1

Loan to finance construction of a road in a rural community that provides LMI residents of the area access to employment centers outside of the area.

T-2

Investment in a local cooperative to develop broadband infrastructure and expand access to LMI residents in the area.

T-3

Investment in a local municipal bond to improve city-wide water and wastewater systems with benefit to all residents, including LMI residents.

T-4

Loan for infrastructure improvements, including upgrading roads, water supply and sewer services, to a mobile home park that primarily rents space to LMI residents.

T-5

Financing of a community-wide solar plus energy storage system to reduce utility costs and help maintain affordability for a multifamily housing complex in an LMI community.

Topic U

Loans, investments, and services that facilitate essential infrastructure that partially or primarily serves low- or moderate-income census tracts, distressed areas, underserved areas, disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands.

U-1

Investment that will finance construction of a solar energy facility that uses federal renewable energy tax credits and will provide access to reduced cost electrical utilities to LMI census tracts.

U-2

Investment in a local municipal bond to refurbish a bridge that connects a low-income neighborhood with essential services without which residents would otherwise not have access to those services.

U-3

Investment in a state issued bond to reconstruct a tunnel in a disaster area, consistent with the area's disaster recovery plan.

U-4

Purchase of a local municipal bond, the proceeds of which will be used to upgrade a water pipeline that serves an underserved area.

U-5

Loan to a company to build a new flood control system as identified in the community's disaster recovery plan, such as a levee or storm drain that serves the disaster area.

U-6

Investment to finance the construction of a broadband network to develop reliable internet access in an LMI census tract.

U-7

Investment in a Special City Taxing District Bond with the purpose of renovating city sidewalks in a distressed area to comply with the Americans with Disabilities Act.

U-8

Purchase of a municipal bond issued to finance infrastructure improvements to enable a community to prevent flooding in LMI neighborhoods negatively impacted by rising water levels.

Topic V

Loans, investments, and services that facilitate a family farm's purchase or lease of farmland, equipment, and other farm-related inputs for the family farm's use in operating the farm.

V-1

Loan to a family farm to purchase a tractor.

V-2

Loan to a family farm to purchase additional land to increase production.

V-3

Loan to a vineyard that is a family farm to purchase additional acreage.

Topic W

Loans, investments, and services that facilitate a family farm's receipt of technical assistance and supportive services for the family farm's own production, such as shared space, technology, or administrative assistance through an intermediary.

W-1

Grant to a non-profit organization that provides technical assistance to family farms.

Topic X

Loans, investments, and services that facilitate a family farm's sale and trade of family farm products grown or produced by the family farm.

X-1

Loan to a family farm to construct a building from which to sell produce.

X-2

Loan to a family farm to market and sell its products statewide.

Topic Y

Loans, investments, and services that facilitate federal, state, local, or tribal government programs, projects, or initiatives that partially or primarily serve low- or moderate-income individuals or families.

Y-1

Grant to a non-profit organization to provide a local government sponsored dress for success program for homeless women.

Y-2

Loan to a non-profit organization to provide a state government sponsored after-school program for students from LMI families.

Topic Z

Loans, investments, and services that facilitate federal, state, local, or tribal government programs, projects, or initiatives that are consistent with a bona fide government revitalization, stabilization, or recovery plan for a low- or moderate-income census tract; a distressed area; an underserved area; a disaster area; or Indian country or other tribal and native lands.

Z-1

Grant to a non-profit organization that receives funds from a statewide program to revitalize communities in Indian country or other tribal and native lands.

Z-2

Contribution of other real estate owned property to a local government- owned land bank whose primary purpose is consistent with a government revitalization plan that benefits LMI census tracts.

Z-3

Financing to support cleanup of industrial brownfields in a distressed area as part of a city-sponsored revitalization program.

Z-4

Investment in a Tax Increment Financing bond to finance infrastructure improvements consistent with a government revitalization plan in a distressed area.

Z-5

Loan through a state program to a company to purchase and replace equipment as well as rebuild the manufacturing facility that was damaged by flooding in a federally designated disaster area and supported by the community's disaster recovery plan.

Topic AA

Loans, investments, and services that facilitate financial literacy programs or education or homebuyer counseling.

AA-1

Financial counseling by bank employees to participants in a workforce development program primarily benefiting LMI individuals or families.

AA-2

Bank employees conduct first-time homebuyer counseling program for bank customers primarily benefitting LMI individuals or families.

AA-3

Bank employees teach financial education or literacy curricula at local community centers primarily benefitting LMI individuals or families.

AA-4

Bank employees delivering the Federal Deposit Insurance Corporation's Money Smart Program curriculum to residents at a senior living facility primarily benefitting LMI individuals or families.

AA-5

Grant to a non-profit organization that provides financial literacy courses for a foreclosure prevention program.

AA-6

Activities supporting "train the trainer" programs that are designed to train teachers to provide financial literacy education to their students primarily benefitting LMI individuals or families.

AA-7

In-kind donation of computer equipment to a non-profit that conducts personal money management courses for LMI individuals.

AA-8

Bank employees provide financial education in connection with a school savings program primarily benefitting LMI individuals or families.

AA-9

Loan to a non-profit credit counseling organization that conducts personal money management courses.

AA-10

Monetary donation to an organization that conducts elder financial abuse and identity theft prevention programs.

AA-11

In-kind donation of computer equipment to a non-profit that provides financial literacy courses.

AA-12

Bank employees assist in the preparation of tax filings under the Internal Revenue Service's Volunteer Income Tax Assistance Program.

AA-13

Bank employees provide homebuyer education to potential buyers of single-family housing developed under a state program for middle- income individuals and families in high-cost areas.

AA-14

Volunteer service to open savings accounts offered through a school- based banking program, including financial literacy, to students of a K- 12 school that is located in and serves residents of an LMI census tract.

AA-15

Financial support of a nonprofit community program that provides digital literacy training to residents of an LMI neighborhood, in order to increase their ability to use online banking services.

AA-16

Bank employees provide financial capability training to individuals with disabilities.

Topic BB

Loans, investments, and services that facilitate owner-occupied and rental housing development, construction, rehabilitation, improvement, or maintenance in Indian country or other tribal and native lands.

BB-1

Loan to develop housing in Indian country or other tribal and native lands that is guaranteed under HUD's Title VI Loan Guarantee Program.

BB-2

Loan to construct mixed-income housing under a tribal-government sponsored program in Indian country or other tribal and native lands.

BB-3

Loan to a for-profit developer to construct rental housing in Indian country or other tribal and native lands.

Topic CC

Loans, investments, and services that facilitate qualified opportunity funds, as defined in 26 U.S.C. 1400Z-2(d)(1), that benefit low- or moderate-income qualified opportunity zones, as defined in 26 U.S.C. 1400Z-1(a).

CC-1

Investment in a qualified opportunity fund, established to finance construction of a new manufacturing facility that creates jobs for local residents in an opportunity zone that is also an LMI census tract.

CC-2

Investment in a qualified opportunity fund, established to finance renovation of a vacant building into a cultural arts facility in an opportunity zone that is also an LMI census tract.

CC-3

Investment in a qualified opportunity fund, established to finance the rehabilitation of an acute care hospital facility, including the purchase of new medical equipment, in an opportunity zone that is also an LMI census tract.

CC-4

Investment in a qualified opportunity fund, established to finance improvements to an athletic facility owned and operated for community benefit by a local nonprofit in an opportunity zone that is also an LMI census tract.

CC-5

Investment in a qualified opportunity fund that finances construction of a grocery store in an LMI opportunity zone.

CC-6

Investment in a qualified opportunity fund that finances the construction of a commercial building intended for retail and restaurant use in an LMI opportunity zone.

Topic DD

Loans, investments, and services that facilitate other activities and ventures undertaken, including capital investments and loan participations, by a bank in cooperation with a minority depository institution, women's depository institution, Community Development Financial Institution, or low-income credit union, if the activity helps to meet the credit needs of local communities in which such institutions are chartered, including activities that indirectly help to meet community credit needs by promoting the sustainability and profitability of those institutions and credit unions.

DD-1

Bank employee time spent facilitating a loan participation with a minority depository institution, which will help the minority depository institution to meet the credit needs of its local community.

DD-2

Bank employees provide training to CDFI staff on underwriting small farm loans to help the CDFI expand its product offerings to its community.

DD-3

Bank provides in-kind services in the form of free or discounted data processing systems that aids a minority depository institution in serving its customers.

DD-4

Bank donates branch space on a rent-free basis to a low-income credit union to better serve the credit union's customers.

DD-5

Bank certificate of deposit in a minority depository institution.

DD-6

Loan to enable a minority- or women's depository institution, low- income credit union, or CDFI to partner with schools or universities to offer financial literacy education to members of the local communities in which such institutions are chartered.

DD-7

A bank's purchase of common stock for an ownership interest in a minority depository institution to help meet the credit needs of the minority-owned bank's local community.

DD-8

Bank purchase or sale of a loan participation from or to a minority depository institution.

History

• Source: Added at 50 Ill. Reg. 9258, effective June 29, 2026

Chapter II Department of Financial and Professional Regulation

Part 346 Banking Development District Act

38 Ill. Adm. Code 346.10 Authority for Rulemaking

The authority for adoption of these rules is provided by Section 35 of the Illinois Banking Development District Act [205 ILCS 745].

38 Ill. Adm. Code 346.20 Definitions

For the purposes of this Part:

"Act" shall mean Public Act 102-0802, the Banking Development District Act.

"Banking branch" shall mean a full-service branch of a depository institution that provides most or all banking services at a physical location and maintains ordinary and routine business hours.

"Banking development district" shall mean a proposed or approved banking development district as provided for under the Act.

"Banking services" shall mean services provided by a depository institution and shall include, but not be limited to, deposit taking, check-cashing, sale of money orders, money transmittal, origination of residential or commercial mortgages, consumer loans, and commercial loans.

"Community Based Organization (CBO)" shall mean a not-for-profit organization with offices or significant membership within the boundaries of the proposed banking development district and whose statement of purpose includes development of services to the underbanked or unbanked populations with the proposed banking development district or other services sufficiently similar as determined by the Secretary.

"Department" shall mean the Department of Financial and Professional Regulation.

"Depository institution" shall mean a bank, savings bank, savings and loan association, or credit union organized or chartered under the laws of this State or any other state or under the laws of the United States.

"Division" shall mean the Department of Financial and Professional Regulation-Division of Banking, with the authority delegated by the Secretary.

"Local government" shall mean a municipality, county, township, or other unit of local government. [205 ILCS 745/5]

"Reasonable distance" means the travel distance to available full-service banking facilities to the unbanked or underbanked community that may be conveniently accessed by means of private transportation or safe, affordable and reliable public transportation.

"Remote Service Facility (RSF)" means an automated, unstaffed banking facility owned or operated by, or operated exclusively for, the bank, such as an automated teller machine, cash dispensing machine, point-of-sale terminal, or other remote electronic facility, at which deposits are received, cash dispersed, or money lent.

"State Treasurer" shall mean the State Treasurer or the State Treasurer's designee as identified by the State Treasurer.

"Unbanked person" means an individual that does not have a checking or savings account with an insured depository institution.

"Underbanked person" means an individual that has a checking or savings account with an insured depository institution but that used financial products or services other than those offered by an insured depository institution within the past 12 months.

38 Ill. Adm. Code 346.30 Application for Creation of a Banking Development District

The governing board of a local government, in conjunction with a depository institution, may submit an application to the Department for the designation of a banking development district. Each application shall be submitted to the Secretary on a form, which is to be prescribed by the Secretary following consultation with the State Treasurer, and shall include all of the following information:

a) identification of the depository institution and of any unit of local government or portion thereof submitting the application along with documentation of the approval of the application by the governing board of the unit of local government;

b) a map, a legal description of the property, and description of geographic boundaries of the proposed banking development district which specifically identifies the location of the proposed banking branch within the proposed banking development district;

c) documentation of all current zoning classifications within the proposed banking development district and the boundaries of each identified zoning area;

d) the number of residents of the proposed banking development district along with detailed demographic information describing the members of the population, including persons that are unbanked or underbanked as identified in the application form to be provided;

e) an identification of the specific needed banking services which are not being provided within the proposed banking development district at the time of the application;

f) an identification of the number, location of existing sites of banking services within the proposed banking development district and within a reasonable distance of the proposed banking development district which identification shall include, but not be limited to:

1. the identification and location of all full-service branches of all depository banking institutions;

2. the identification and location of all sites which offer deposit-taking ATMs;

3. the identification and location of all existing alternatives to providers of banking services including, but not limited to, currency exchanges, money transmitters, payday lenders or pawnbrokers;

4. the identification and location of deposit-taking RSFs (other than those sited at full-service branches); and

5. the identification and location of non-deposit-taking RSFs (other than those sited at full-service branches);

g) income measures of the proposed banking development district, including, but not limited to, per capita annual income and median household annual income utilizing either the most recent United States Census Bureau data or the most recent Department of Housing and Urban Development ("HUD") annual income estimates;

h) other economic indicators, where readily available, including, but not limited to, unemployment data, percentage of the population at or below the poverty level, percentage of the population at or below 200% of the poverty level, and percentage of the population receiving public assistance within the proposed banking development district. Unemployment data may be submitted for a political subdivision in which the proposed banking development district is located;

i) description of the public transportation systems and major roadways, if any, in the proposed banking development district maps and/or diagrams may be included in the description;

j) narrative establishing that a branch would be economically viable within the banking development district if a deposit of public funds as identified by Section 25 of the Act is provided, along with a statement of any limitations on the types of public funds the branch would be willing to accept;

k) specification of whether the proposed banking development district, or any portion thereof, lies within an area which has been designated an enterprise or empowerment zone or has received similar designation from any federal, State, or local government entity;

l) a narrative description of the natural and man-made geographic barriers, if any, that may impede physical access to existing banking services;

m) a narrative description of the distances and travel times from the applicant's proposed site to banking institutions and alternative providers of banking services both within the proposed banking development district and within the reasonable distance specified in subsection (f);

n) affirmation by the applicant depository institution that it will not establish the proposed banking development district branch with the intention of closing or relocating any existing nearby branch or branches;

o) an identification of all CBOs that are in favor of the establishment of the proposed District along with all written statements of support, if any, from all supporting CBOs;

p) a description of all banking and financial educational programs that will be provided by the branch directly or in cooperation with a CBO;

q) documentation of the most recent rating given to the depository institution under the Illinois Community Reinvestment Act [205 ILCS 735/35-1], if any;

r) a description of the criteria generally employed to determine whether to continue maintaining a branch in operation and whether the branch proposed in the application would be evaluated under any different criteria; if any different criteria would apply, state them;

s) a statement describing any preliminary or final understanding or agreement between the municipality and the applicant depository institution as to the anticipated duration of the proposed branch; and

t) such other documents or information as the Secretary may deem necessary to determine the applicants' fitness for a banking development district.

38 Ill. Adm. Code 346.35 Mandatory Pre-Application Conference

An application for approval and creation of a banking development district shall be preceded by a pre-application conference to be attended by representatives of the municipal corporation and the depository institution applicants, the Division and any other parties as agreed to by the parties. The purpose of the pre-application conference is to promote open communication between prospective applicants and the Division regarding the specifics of the application, regulatory expectations, and the application review process. Prior to the pre-application, the representatives of the municipal corporation and the depository institution applicants shall submit an outline of their proposed discussion regarding the topics listed below. The Secretary will consult with the State Treasurer as needed. The topics to be discussed at the pre-application conference shall include, but are not limited to:

a) availability and sources of demographic, geographic, financial and other relevant information necessary for completion of the application;

b) the means of measurement of the anticipated economic development benefits of the banking development district should the application be approved;

c) the support for the proposed banking development district being offered by CBOs;

d) the process the Division will employ in its review of the application; and

e) such other topics as agreed to in advance of the pre-application conference.

38 Ill. Adm. Code 346.40 Review and Disposition of Applications

a) In determining whether to approve an application for the designation of a proposed banking development district, the Secretary, in consultation with the State Treasurer, which consultation may include sending a copy of the application to the State Treasurer and seeking comment from the State Treasurer, shall take into consideration the following criteria:

1. the location, number, and proximity to applicant's proposed site or sites where banking services are available within the proposed banking development district;

2. the location, number, and proximity to applicant's proposed site or sites where banking services are available within a reasonable distance of the proposed banking development district;

3. the identification of consumer needs for banking services within the proposed banking development district;

4. the economic viability and local credit need of the community within the proposed banking development district;

5. the existing commercial development within the proposed banking development district;

6. the impact additional banking services would have on potential economic development in the proposed banking development district;

7. the physical size of the proposed banking development district;

8. the nature of the community to be served, including, but not limited to, the demographic and economic characteristics of the proposed banking development district;

9. the financial condition and managerial ability of the applicant depository institution as determined by the appropriate bank regulator or other reliable sources;

10. compliance with all other applicable branching statutes and regulations;

11. history of prolonged lack of service to the proposed banking development district;

12. the likelihood that an existing branch will remain open if the application is not approved, if applicable;

13. the importance and benefits of preserving the banking services offered by the existing branch, if applicable; and

14. such other criteria which the Secretary, in consultation with the State Treasurer, identifies as appropriate.

b) The Secretary, in consultation with the State Treasurer, shall issue a determination on the application within 60 days after receiving the application. [205 ILCS 745/15]

38 Ill. Adm. Code 346.45 Availability of Illinois Community Reinvestment Act Credit

An approved and operational banking development district shall be considered by the Department under any assessment of the depository institution's performance in meeting its obligations under the Illinois Community Reinvestment Act [205 ILCS 735].

38 Ill. Adm. Code 346.60 Reporting Requirements

The local government applicant and the depository institution shall submit a report of the operations of the banking development district to the Secretary and the Treasurer each year on the anniversary of the banking development district being approved by the Secretary. Each report shall provide the following information:

a) an identification of each new product or service specifically designed for the banking development district community to address the needs for banking services identified in the application to create the banking development district;

b) the number of customers residing in the banking development district who are first-time consumers of the new banking services;

c) the number of customers for each specific type of banking services including, but not limited to, check cashing services, low-cost checking accounts, money transfer services or any other such program created or designed to address the needs for banking services as identified herein;

d) a description of each educational program or service provided, including, but not limited to, an identification of the local government employee, depository institution employee, CBO employee or consultant who provided the educational program, the frequency of the program being held and the number of persons attending each program;

e) a description of the mechanisms employed by the local government and the depository institution to evaluate the success of the banking development district in meeting the identified unmet needs for banking services along with a description of intended changes to more thoroughly meet the unmet needs for banking services in the banking development district; and

f) copies of all reports, memoranda, correspondence or analyses prepared by or received by the banking development district which evaluate, comment upon or otherwise discuss the banking development district's activities to address the unmet banking needs within the banking development district.

38 Ill. Adm. Code 346.70 Fees for Applications and Other Services

a) The fee for an Application for Approval of a Banking Development District is $2,000.

b) Application fees shall be submitted to the Division at the time of submission of any application. All fees filed in connection with an application are nonrefundable, regardless of whether the application is ultimately approved, denied, withdrawn, or abandoned.

c) Pursuant to Section 35(2) of the Act, the Secretary, in consultation with the State Treasurer, may from time to time review the amount of the above fees.

38 Ill. Adm. Code 346.80 Enforcement

a) If the Secretary determines after an examination of the activities of a banking development district that some or all of the banking services identified in the approved application for the banking development district have not been performed, the Secretary may take the following actions after notice to the approved applicant and an opportunity to be heard at an administrative hearing:

1. require the approved applicant to make such modifications to the banking development district's banking services to achieve the goals identified in the application for approval of a banking development district; or

2. suspend the approved applicant's participation in the banking development district program for a stated period of time; or

3. terminate the approved applicant's participation in the banking development program.

b) All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100. The Secretary shall notify the State Treasurer of any actions taken pursuant to subsections (a)(1) through (3), and the outcome of any related administrative hearing.

Chapter II Office of Banks and Real Estate

Part 350 Loan Agreements Providing for a Bank to Share in Profits, Income or Earnings

38 Ill. Adm. Code 350.10 Purpose

A method of financing real estate acquisition, development or construction projects is through lending transactions in which the state bank shares in profits, income or earnings generated by the ultimate sale or use of the real estate. These lending transactions are often structured in such a manner that they are in essence an investment in real estate or a joint venture in which the state bank has virtually the same risks and potential rewards as those of an investor or a joint venturer. Investments in real estate or a joint venture are not authorized under Sections 3 or 5 of the Illinois Banking Act ("the Act") [205 ILCS 5/3 and 5]. This Part sets forth the general criteria for determining whether acquisition, development or construction lending transactions are an investment in real estate, a joint venture or a loan.

38 Ill. Adm. Code 350.20 Definitions

"ADC" means acquisition, development or construction.

"ADC lending transaction" means a loan or extension of credit for the purpose of real estate acquisition, development or construction.

"Commissioner" means the Commissioner of Banks and Real Estate.

"creditworthy" means having the financial capacity to issue an irrevocable letter of credit, take-out commitment, non-cancellable sales contract or lease commitment.

"substantial assets" means tangible, saleable assets other than the acquisition, development and construction project which have a determinable sales value and are not pledged as collateral for other loans.

"substantial equity investment" means any of the following:

cash payments;

contribution of land or other assets; or

value added by future development or construction as a result of the borrower's efforts.

38 Ill. Adm. Code 350.30 Permissible Adc Lending Transactions by State Banks

State banks may engage in or purchase participations in ADC lending transactions unless such transactions are structured in such a manner that the state bank has the same risks and potential rewards as those of an investor or a joint venturer in real estate.

38 Ill. Adm. Code 350.40 Characteristics of Adc Lending Transactions Implying Unauthorized Investments in Real Estate or a Joint Venture

Factors which are relevant, if applicable, in determining whether the risks and rewards to the state bank as a result of an ADC lending transaction are similar to those associated with an unauthorized investment in real estate or a joint venture include the following:

a) The state bank agrees to provide more than 90% of the necessary funds to acquire and develop the property. Although the borrower has title to the property, its equity interest is less than 10% of the funds needed to acquire and develop the property;

b) The state bank funds the interest and fees during the term of the loan by adding interest and fees to the loan balance;

c) The state bank funds the loan commitment or origination fees or both by including them in the amount of the loan;

d) The loan is secured only by the acquisition, development or construction project. The state bank has no legal right to liquidate other assets of the borrower and the borrower does not guarantee the loan;

e) The ADC lending transaction will not generate income for the state bank unless the property is sold to independent third parties, the borrower obtains refinancing from another source or the property is put to productive use and generates sufficient net cash flow to service debt principal and interest; and

f) The ADC lending transaction is structured so that foreclosure during the project's development is not possible because the borrower is not required to make any loan payments until the project is complete and therefore the loan cannot become delinquent.

38 Ill. Adm. Code 350.50 Characteristics of Adc Lending Transactions Implying Loans

Factors which are relevant, if applicable, in determining whether the risks and rewards to the state bank as a result of an ADC lending transaction are similar to those associated with a loan include the following:

a) The borrower has a substantial equity investment in the acquisition, development or construction project that is not funded by the state bank;

b) The borrower has provided an irrevocable letter of credit to the state bank from a creditworthy third party for the full amount of the loan and the entire term of the loan;

c) A take-out commitment for the full amount of the loan has been obtained from a creditworthy third party;

d) Non-cancellable sales contracts or lease commitments from creditworthy third parties are currently in effect and will provide sufficient net cash flow upon completion of the project to service principal and interest; and

e) Upon default, the state bank has a legal right to liquidate substantial assets of the borrower in satisfaction of the debt.

38 Ill. Adm. Code 350.60 Procedure

A state bank may request a declaratory ruling pursuant to Section 5-150(a) of the Illinois Administrative Procedure Act [5 ILCS 100/5-150(a)] from the Commissioner that an ADC lending transaction is permissible by submitting a written request to the Commissioner which describes the proposed transaction and addresses the factors set forth in Section 350.50.

Part 354 Administration of Assets Obtained in Collection of a Debt

38 Ill. Adm. Code 354.10 Purpose

Section 3 of the Illinois Banking Act (the Act) authorizes a state bank to loan money on personal or real estate security [205 ILCS 5/3]. Section 5(12) of the Act further authorizes a state bank to establish a subsidiary to hold title to and administer assets acquired as a result of the collection of loans. Included in these express powers is the incidental right to maintain assets that a state bank acquires in collection of a debt in preparation for their disposal.

38 Ill. Adm. Code 354.20 General Rule

a) A state bank and its subsidiaries may take actions that are necessary to administer assets obtained in the collection of a debt, provided such actions are in conjunction with ongoing efforts to dispose of the assets by sale or liquidation.

b) A state bank and its subsidiaries shall adopt a written policy for the disposition of assets obtained in the collection of a debt.

c) A state bank and its subsidiaries shall document in each loan file any deviation from the written policy for the disposition of assets obtained in the collection of a debt.

d) When making a request for an extension of the period for which assets may be retained, whether pursuant to Section 5(9) of the Act or otherwise, a state bank or its subsidiary shall furnish the following information to the Commissioner:

1. the good faith actions the bank has taken to dispose of the assets;

2. why further retention of the assets is in the best interests of the bank;

3. the bank's estimate of time frame for ultimate disposition of the assets;

4. the cost for administering the assets during the interim; and

5. such other pertinent information as the Commissioner may request.

Part 355 Statutory Bad Debts

38 Ill. Adm. Code 355.10 Definitions

"Act" means the Illinois Banking Act [205 ILCS 5] as now or hereafter amended.

"Bad debt" shall mean all debts due to a state bank on which interest is past due and unpaid for a period of six months or more, unless the same are well secured and in the process of collection.

"Process of collection" means the collection is proceeding in due course, either through legal action (e.g. judgment enforcement proceedings) or any other means expected to result in repayment of a debt (e.g., contacting a debtor or referral to a collection agency).

"Well secured" means:

secured by collateral in the form of liens on or pledges of real or personal property having a value sufficient to discharge the debt in full; or

secured by a written guarantee of a financially responsible party.

38 Ill. Adm. Code 355.20 Purpose

Pursuant to Section 14(8) of the Act a state bank shall not pay dividends in an amount greater than its net profits then on hand without first deducting therefrom its losses and bad debts. This Part establishes guidelines for determining when an obligation is well secured and in the process of collection.

38 Ill. Adm. Code 355.30 Plan for Collection

A bank must have a written plan for collection of a debt setting forth the following:

a) the reason for the selected method of collection;

b) the procedures the bank must follow to effect the collection; and

c) the expected date of repayment of the debt.

38 Ill. Adm. Code 355.40 Documentation

A bank must maintain in its files documentation to support its evaluation of the security for a debt (i.e. appraisal). In addition, a bank must maintain progress reports on its collection efforts, noting and explaining any deviation from the written plan for collection.

Part 356 Reimbursement to Banks and Corporate Fiduciaries for Financial Records

38 Ill. Adm. Code 356.10 General Rule for Reimbursement of Costs

A bank or corporate fiduciary shall be reimbursed for costs which are reasonably necessary (including but not limited to personnel costs, reproduction costs and transportation costs) and which have been incurred in searching for, reproducing and transporting books, papers, records or other data of a customer which have been requested to be produced pursuant to a lawful subpoena, summons, warrant or court order. (Section 48.1(g) of the Illinois Banking Act [205 ILCS 5/48.1(g)] and Section 5-11 of the Corporate Fiduciary Act [205 ILCS 620/5-1].

History

• Source: Amended at 14 Ill. Reg. 11183, effective July 15, 1990

38 Ill. Adm. Code 356.20 Rates of Reimbursement

a) Personnel costs incurred in locating, retrieving, reproducing and preparing financial records shall be reimbursed at the rate of $20 per hour per person.

b) Reproduction costs incurred in making photocopies of documents shall be reimbursed at 30 cents per exposure. Reproductions of microfilm, microfiche, photographs, films and other materials shall be reimbursed at actual cost.

c) Transportation costs incurred in transporting bank personnel to locate and retrieve material, and to convey the material to the place of examination, shall be reimbursed at the rate of 31.5 cents per mile or, if a mail or courier service is used, at the actual cost of such service.

d) All other costs, including, but not limited to, telephone calls, telegrams and shipping costs, incurred in searching for, reproducing and transporting data pursuant to a request for financial records, shall be reimbursed at actual cost.

History

• Source: Amended at 22 Ill. Reg. 14729, effective July 28, 1998

38 Ill. Adm. Code 356.30 Documentation of Costs

The bank or corporate fiduciary shall provide to the person requesting such records an itemized invoice indicating in specific detail the costs for:

a) personnel;

b) reproduction;

c) transportation; and

d) all other costs incurred in searching for, reproducing and transporting data pursuant to a request for financial records.

History

• Source: Amended at 14 Ill. Reg. 11183, effective July 15, 1990

38 Ill. Adm. Code 356.40 Payment of Costs

At the bank's or corporate fiduciary's option, it may prepare one or more reasonable estimates of the ultimate reimbursement of costs associated with a search for financial records in the form prescribed in Section 356.30 of this Part and require one or more partial payments before proceeding with the work of locating and reproducing the requested documents. Delivery of the requested documents may be delayed until final reimbursement of all costs is received.

History

• Source: Amended at 14 Ill. Reg. 11183, effective July 15, 1990

Part 357 Reduction in the Number of Required Directors

38 Ill. Adm. Code 357.10 Factors to Be Considered

a) In determining whether to allow a Bank to reduce the minimum number of its directors, the Commissioner of Banks and Real Estate ("Commissioner") shall consider the following factors in addition to those set forth in Section 16(2)(b) of the Illinois Banking Act [205 ILCS 5/16(2)(b)].

1. the reason for the reduction in the number of directors;

2. the current number of directors for the Bank as fixed by its stockholders in relation to the size of the Bank;

3. the number of vacancies, if any, on the Board of Directors ("Board");

4. the reason for the vacancies (i.e. death, resignation or removal);

5. the length of time the vacancies have existed;

6. the number of individuals who have been asked by the Bank to serve on the Board and have refused; and

7. the education and experience of the individuals who are candidates for directors.

b) The Commissioner shall provide a form for a bank seeking to reduce the number of required directors pursuant to this Part.

38 Ill. Adm. Code 357.20 Annual Review

a) When annually reviewing a grant of authority to reduce the number of required directors, the Commissioner shall consider the following factors:

1. the performance of the Bank since the reduction in the number of required directors as determined by the Commissioner's annual report of examination pursuant to Section 48(2) of the Illinois Banking Act, [205 ILCS 5/48(2)]; and

2. the feasibility of the Bank obtaining additional directors to serve on the Board.

b) If the Commissioner shall revoke his approval, such action shall constitute an administrative decision subject to review under 38 Ill. Adm. Code 392 (Hearings Before the Commissioner of Banks and Real Estate).

38 Ill. Adm. Code 360.10 Definitions

For purposes of this Part:

"Act" means the Pawnbroker Regulation Act of 2023 [205 ILCS 511].

"Applicant" means a person applying for a license pursuant to this Act. [205 ILCS 511/1-5]

"Department" means the Department of Financial and Professional Regulation. [205 ILCS 511/1-5]

"Director" means the Director of the Division of Banking with the authority delegated by the Secretary.

"Division" means the Department of Financial and Professional Regulation-Division of Banking.

"License" means the authority to operate a pawnshop as issued by the Secretary.

"Licensee" means a person licensed pursuant to this Act. [205 ILCS 511/1-5]

"NMLS" means the Nationwide Multistate Licensing System and Registry.

"Pawn" means the advance of money on the deposit or pledge of physically delivered personal property, other than property the ownership of which is subject to a legal dispute or other exempt property or instruments. [205 ILCS 511/1-5]

"Pawnbroker" means every individual or business entity that:

advances money on the pledge of tangible personal property, other than securities, printed evidence of indebtedness, or printed evidence of ownership of the personal property; or

deals in the purchase of personal property on the condition of selling the property back again at a stipulated price. [205 ILCS 511/1-5]

"Pledger" means any person who has pledged tangible personal property as collateral for a pawn transaction.

"Principal party" means any officer or director of a pawnshop or a corporation that owns or seeks to own a pawnshop; any manager or member that retains any authority or responsibility under the operating agreement of a limited liability company that is a pawnshop or that owns or seeks to own a pawnshop; any shareholder or member owning 10% or more of the outstanding stock or membership interests of a pawnshop or a business entity that owns or seeks to own a pawnshop; or any member of a partnership or association that is a pawnshop or that owns or seeks to own a pawnshop.

"Respondent" means the person named in an administrative decision.

"Responsible Pawnbroker Training" or "Program" means a Department approved training course or module offered by an approved vendor that provides at least four hours of class, seminar, or internet-based instruction on topics outlined in Section 360.820.

"Secretary" means the Secretary of Financial and Professional Regulation, or his or her designee, including the Director of the Division of Banking of the Department of Financial and Professional Regulation. [205 ILCS 511/1-5]

"Vendor" means an individual or entity approved as a provider of Responsible Pawnbroker Training.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.20 Fees

a) The following fees listed in this subsection (a) shall be payable to the Department or to the Nationwide Mortgage Licensing System and Registry for transfer to the Department as approved by the Director. The Director may specify the form of payment to the Department or to the NMLS, which may include certified check, money order, credit card, or other forms authorized by the Director. The Director may specify that fees be paid separately or combined, and may pro-rate fees for implementation of the NMLS. The NMLS shall be authorized to collect and process transaction fees or other fees related to licensees or other persons subject to the Act.

1. Pawnshop License Application and Renewal. For each application of an initial license and each application for an annual renewal of a license, the applicant shall pay a nonrefundable application fee of $2,000.

2. Investigation Fee. For the initial application of a pawnshop license, the applicant shall pay a non-refundable investigation fee of $800.

3. Change in Control or Form of Ownership. The licensee shall pay a nonrefundable fee of $300 for each application for change of control or form of ownership filed pursuant to Section 360.150.

4. Change of Name. The licensee shall pay a nonrefundable fee of $50 for each application for change of name filed pursuant to Section 360.150.

5. Change of Location. The licensee shall pay a nonrefundable fee of $50 for each application for change of location filed pursuant to Section 360.150.

6. Annual Examination Fee.

A) Each fiscal year, a licensee shall pay an annual examination fee to the Department based upon the total dollar amount financed for all pawns during the previous calendar year, as reported to the Department pursuant to Section 10-60 of the Act [205 ILCS 511/10-60(a)(2)], at the following rates:

TOTAL DOLLAR AMOUNT FINANCED

FISCAL YEAR 2026 EXAM FEE

FISCAL YEAR 2027 EXAM FEE AND BEYOND

$0-249,999

$280

$280

$250,000 and above

$530

$530

B) For purposes of this subsection, "fiscal year" means a period beginning on July 1 of any calendar year and ending on June 30 of the next calendar year. All fees received pursuant to this Part shall be deposited in the Pawnbroker Regulation Fund. [205 ILCS 511/10-10] The fee for each fiscal year shall be due within 30 days after the start of each fiscal year.

b) A comprehensive fees schedule will be available on the NMLS website at www.nmls.org and/or on the Department website at www.idfpr.illinois.gov and can also be provided in hardcopy upon written request.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.100 Purpose

This Part sets forth:

a) where required applications and notices must be filed;

b) the contents of the application package;

c) the locations where the application package may be obtained;

d) the procedures to be followed by both the Secretary and the applicant during the processing of an application or notice;

e) the fee which will be levied for each type of application or notice;

f) the standards for licensure;

g) the procedures to be followed by both the Secretary and a licensee relating to a change in location or name of a pawnshop;

h) the procedures to be followed by the Secretary, a licensee and an acquiring party relating to a change in control or form of ownership of a pawnshop;

i) the procedures to be followed by both the Secretary and a licensee relating to the renewal of a license;

j) requirements relating to the display of a license;

k) responsible pawnbroker training requirements; and

l) standards to be an approved vendor.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.110 Application for License

a) A license applicant must submit all of the following:

1. An application for license filed with the Nationwide Multistate Licensing System and Registry as approved by the Secretary;

2. A listing filed with the Secretary of judgments entered against, and bankruptcy petitions by, the license applicant for the preceding 10 years; and

3. Payment through NMLS of the investigation and application fees specified in Section 5-10(a)(3) of the Act [205 ILCS 511/5-10(a)(3)].

b) A separate license is required for each pawnshop location.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.120 Processing of Application

a) Initial Review. The Secretary shall evaluate all applications within 30 business days after receipt and acknowledge completeness, identify deficiencies, and request additional information, if necessary. A completed application is one that conforms to the instructions provided in the application package and for which all fees have been paid. The Secretary may reject an incomplete application.

b) Failure to Complete Application. If a complete application has not been filed with the Secretary promptly after the Secretary's request for additional information, the application shall be denied and the applicable fee shall be forfeited, unless a further extension of time has been granted by the Secretary.

c) Consideration of Completed Application. Upon receipt of a completed application and all required fees, a determination will be made by the Secretary within 30 business days to approve or deny the application request, unless the Secretary determines additional time is necessary (e.g., pending background investigations). A written notice of the Secretary's decision will be submitted to the NMLS. If the Secretary is unable to issue positive findings stating that the financial responsibility, experience, character, and general fitness of the license applicant and each principal party, the Secretary shall not issue the license, and the Secretary shall notify the license applicant of the denial in writing and mailed to the applicant. The written notice for all denied applications will also include the reasons for denial. The investigation and application fees for all denied applications will not be refunded to the applicant.

d) Review of a License Denial. An applicant whose application is denied by the Secretary may obtain review of that decision within the Department [205 ILCS 511/10-75(a)] pursuant to 38 Ill. Adm. Code Part 100.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.130 Standards for Licensure

a) Unless otherwise authorized by the Secretary, in order to be eligible for a license to operate a pawnshop, each applicant and principal party must:

1. if an individual, be 18 years of age or older;

2. not have been convicted of a felony or of any criminal offense relating to dishonesty or breach of trust, subject to subsection (b);

3. possess the financial responsibility, experience, character and general fitness necessary to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purpose of the Act.

b) In determining whether to grant a license, the Secretary shall consider the nature of the offense, the amount of time since the conviction, and any other mitigating factors the Secretary may deem appropriate with regards to an applicant or principal party who has been convicted of a felony or any criminal offense relating to dishonesty or breach of trust.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

Chapter II Department of Financial and Professional Regulation

Part 360 Licensing and Regulation of Pawnbrokers

38 Ill. Adm. Code 360.135 Licensing Requirements for Pawnbroker Managers (repealed)

History

• Source: Repealed at 41 Ill. Reg. 15771, effective December 18, 2017

38 Ill. Adm. Code 360.140 Initial Applications for License from Persons Operating or Who Have Operated a Pawnshop for the Two Years Preceding July 1, 1998

a) Unless otherwise authorized by the Secretary, for persons who have operated a pawnshop at any time between July 1, 1996 through June 30, 1998, in order to be eligible for a license to operate a pawnshop, each applicant and principal party must:

1. not have been convicted of a felony or of any criminal offense relating to dishonesty or breach of trust in connection with the operations of a pawnshop;

2. provide the Secretary with satisfactory evidence (e.g., a copy of a license issued from a municipality or copy of pages from a standard record book) that business activities were being conducted within the time period stated above.

b) In determining whether to grant a license, the Secretary shall consider the nature of the offense, the amount of time since the conviction, and any other mitigating factors the Secretary may deem appropriate with regards to an applicant or principal party who has been convicted of a felony or any criminal offense relating to dishonesty or breach of trust in connection with the operations of a pawnshop.

History

• Source: Amended at 35 Ill. Reg. 14957, effective September 9, 2011

38 Ill. Adm. Code 360.150 Change in Control or Form of Ownership, Change in Location, Change in Name of Pawnshop, Voluntary Surrender of License; Fees

a) Change in Control or Form of Ownership. An application must be filed, by the acquiring party, not less than 30 days prior to the anticipated change in control or change in the form of ownership of a pawnshop. As used in this Section, "control" means a change involving the sale, assignment or transfer of a pawnshop; the addition or elimination of any general or limited partner; or a 10 percent or more change in the ownership of the outstanding stock, or membership interest, of a corporation that owns a pawnshop. A change in the form of ownership is considered to be a change from one type of business entity to another type of business entity (e.g., sole proprietorship to a corporation, partnership to sole proprietorship). The application must be submitted on the form prescribed in Section 360.210, in accordance with the Secretary's instructions. The payment of the applicable Change in Control or Form of Ownership Fee must accompany the application. No change in control or form of ownership shall occur until approved by the Secretary. The Secretary may prohibit a change in control or form of ownership from occurring if the licensee does not meet the license standards set forth in Section 360.130. The processing of the application shall be conducted in the same manner as provided in Section 360.120. The Change of Control or Form of Ownership Fee is set forth in Section 360.20.

b) Gift, Bequest, or Inheritance. Any person who, by gift, bequest, or inheritance, obtains ownership rights to an existing pawnshop or ownership rights in a company that controls the pawnshop such that ownership rights would constitute control of the pawnshop or company, may obtain title and ownership rights, but may not exercise management or control of the business and affairs of the pawnshop or vote so as to exercise management or control unless and until the Secretary approves an application for the change in control as provided in this Section, unless such person has requested, in writing, and received an exemption from the Secretary.

c) Change in Location

1. An application to change the location of a pawn shop must be filed not less than 45 days prior to the anticipated date of relocation. The application must be submitted on the form prescribed in Section 360.210 of this Part, in accordance with the Secretary's instructions, and the processing of the application shall be conducted in the same manner as provided in Section 360.120 of this Part. The payment of the applicable Change in Location Fee must accompany the application. At a minimum, the application shall include: the present name and address of the licensed pawnshop, the address and phone number of the proposed new location, the anticipated date of relocation, a list of the addresses of all pledgers with open pawns, and a sample copy of the written notice that shall be provided to the pledgers of open pawns. No relocation of a pawnshop may occur until approved by the Secretary. The Secretary may prohibit a relocation if it adversely affects the ability of pledgers to redeem pledged goods due to the distance between the locations. Upon approval of a change in location by the Secretary, the licensee shall provide notification to all pledgers with open pawns by signs and written notice. The written notice shall be mailed to all pledgers with open pawns of record, at their last known mailing address, not less than 15 days prior to the anticipated date of relocation. The written notice must include the name of the pawnshop as well as identify both the old and the new locations, the telephone number of the new location, and the anticipated date of relocation. At a minimum, two signs, of reasonable size and visibility, shall be posted on the outside of the pawnshop for 15 business days prior to the relocation. The signs shall include the information provided in substantially the following form:

NOTICE OF CHANGE IN LOCATION (centered, in caps and bold) (DATE)

(Name of Pawnshop) WILL BE MOVING TO (new address)

THE TELEPHONE NUMBER AT THE NEW LOCATION IS (telephone number)

THE ANTICIPATED DATE OF RE-LOCATION IS (date of relocation)

2. The Secretary may waive the notification to pledgers by mail if a determination has been made that no pledgers will be adversely affected by the relocation (e.g., the pawnshop relocates to a building within close proximity of the former location). Upon receipt of the completed form, payment of the applicable fee, and the Secretary's approval, a new license shall be issued to the licensee. The licensee must surrender its former license to the Secretary not less than 10 business days after the relocation has occurred, unless an exemption has been granted by the Secretary. The Change of Location Fee is set forth in Section 360.20 of this Part.

d) Change in Name of Pawnshop. Prior to the change in the name of a pawnshop, the licensee shall provide written notice to the Secretary, not less than 30 days prior to the anticipated change, and pay the applicable fee, as established by the Secretary. Upon receipt of the written notice and applicable fee, the Secretary shall issue a new license. At such time, the licensee must surrender its former license to the Secretary. The Change in Name Fee is set forth in Section 360.20 of this Part.

e) Voluntary Surrender of License. Any licensee may submit an application to surrender a license, but, upon the Secretary approving the surrender, it shall not affect the licensee's civil or criminal liability for acts committed before surrender or entitle the licensee to a return of any part of the license fee. [205 ILCS 511/10-30] Prior to the voluntary surrender of a license, the licensee shall provide not less than 60 days written notice to the Secretary. The licensee shall also provide all pledgers with open pawns, at their last known mailing address, with 60 days written notice and shall publish a notice in two consecutive issues of a local newspaper of general circulation. At a minimum, the notice shall contain: the name and address of the pawnshop, the telephone number of the pawnshop, and the anticipated date on which business operations will cease. Prior to the cancellation of any license, the licensee shall certify to the Secretary, in the manner prescribed by the Secretary, that the pawnshop has no open pawns and that no further pawns shall be made.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.160 Expiration and Renewal of Licenses; Fees (Repealed)

History

• Source: Repealed at 49 Ill. Reg. 14602, effective October 29, 2025

Chapter II Department of Financial and Professional Regulation

Part 360 Licensing and Regulation of Pawnbrokers

38 Ill. Adm. Code 360.170 Display of License; Duplicate License (repealed)

History

• Source: Repealed at 41 Ill. Reg. 15771, effective December 18, 2017

38 Ill. Adm. Code 360.180 Examination of Pawnbrokers

a) All licensees shall be subject to examination by the Director. The Director may enter into cooperative agreements with other state or federal regulatory authorities and the Director may accept examination reports from those regulatory authorities that meet the requirements of this Section.

b) The Director shall administer examinations in-person. In its discretion, the Director may administer a virtual pawnbroker examination if:

1. the pawnbroker's most recent examination had no findings of compliance, financial or operational weaknesses; or

2. despite any prior findings, in the Director's opinion, a virtual examination of the pawnbroker would result in cost savings that outweigh the need for an in-person examination.

c) If no findings of compliance, financial or operational weaknesses are made and no other agency has made such a request, a pawnbroker shall be subject to an examination by the Director no more than once every 3 years.

d) Notwithstanding subsections (b) and (c) of this Section, the Director may conduct a virtual or in-person examination at any time based on one or more of the following:

1. an allegation or evidence that a licensee is engaged in fraudulent, unsafe, unsound, or unlawful activities;

2. receipt of one or more complaints regarding a licensee;

3. a change in ownership of a licensee;

4. other governmental inquiries; or

5. vendor complaints.

History

• Source: Added at 49 Ill. Reg. 14602, effective October 29, 2025

Chapter II Department of Financial and Professional Regulation

Part 360 Licensing and Regulation of Pawnbrokers

38 Ill. Adm. Code 360.200 Purpose and Scope

This Subpart sets forth the forms required to be filed by statute or rule for reports, applications, and other requests. The forms and instructions can be obtained from the Division.

History

• Source: Amended at 35 Ill. Reg. 14957, effective September 9, 2011

38 Ill. Adm. Code 360.210 Forms

a) Pawnshop Disclosure Of Business Activities Report (Disclosure Report). This form is an annual report that shall be completed, by each pawnshop to disclose such information, for the preceding calendar year, as required by the Secretary pursuant to Section 10-25(c) of the Act. The Secretary, as often as the Secretary shall deem necessary or proper, may require a pawnshop to submit a full and detailed report of its operations, including, but not limited to, the number of pawns made, the amount financed on pawn transactions, and the number and amount of pawns surrendered to law enforcement. The licensee must file the Disclosure Report with the Secretary no later than 30 calendar days following the end of each calendar year.

b) Application For A Change In Control Or A Change In The Form Of Ownership Of An Illinois Pawnshop. This form shall be completed, according to the Secretary's instructions, in order to apply for the approval of a change in control or a change in the form of ownership of a pawnshop as required in Section 360.150. All requests for an application may be directed to the Department of Financial and Professional Regulation-Division of Banking, Pawnbroker Regulation Section, 320 W. Washington Street, Springfield IL 62786, Telephone (217) 785-2900, or can be found on the NMLS website at www.nmls.org and/or the Department website at www.idfpr.illinois.gov.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.300 Scope

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.310 Procedure for Hearings before the Secretary (Repealed)

History

• Source: Repealed at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.400 Scope

The rules and procedures in this Subpart shall apply to proceedings in connection with an order issued by the Secretary pursuant to Section 10-5, 10-30, or 10-40 of the Act [205 ILCS 511/10-5, 10-30, 10-40]. The Secretary may issue an order to a licensee, applicant, principal party, employee, agent, person subject to the Act, or other entity doing business without the required license.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.410 Grounds for an Order (Repealed)

History

• Source: Repealed at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.420 Effective Date of Order; Service

An order issued by the Secretary is effective when served upon the licensee, applicant, principal party, employee, agent, person subject to the Act, or other entity doing business without the required license. All orders shall remain effective and enforceable when served, except to the extent they are stayed, modified, terminated, or set aside by the Secretary. Service of an order shall be made upon every party of record by certified mail, return receipt requested. Delivery to the United States Postal Service shall be presumed to constitute delivery to the respondent, agent, or other entity doing business without the required license.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.500 Scope

The rules and procedures of this Subpart shall apply to proceedings to assess and collect fines and penalties. The Secretary has the power to assess fines and penalties pursuant to Section 10-5(12) & (17) and 10-30(h)(5) of the Act.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.510 Assessment of Penalties (Repealed)

History

• Source: Repealed at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.520 Payment under and Service of an Order to Pay

a) Payment. All fines and penalties collected under this Subpart shall be paid by certified check, money order, or other method of payment determined by the Division and be made payable to the Division through NMLS, where feasible.

b) Service. Service of an order assessing a fine or penalty shall be made upon each respondent by certified mail, return receipt requested. Delivery to the United States Postal Service shall be presumed to constitute delivery to the respondent.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.600 Scope

The rules and procedures in this Subpart shall apply to proceedings in connection with the suspension or revocation of license of a pawnshop pursuant to Section 10-30 of the Act. The revocation or suspension of license shall not impair or affect the obligation of either the pawnbroker or the pledger to fulfill the terms of any preexisting memorandum, contract, or note.

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.610 Grounds for Suspension of License (Repealed)

History

• Source: Repealed at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.620 Grounds for Revocation of License (Repealed)

History

• Source: Repealed at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.630 Notice to Customers

If the Secretary enters an order revoking the license of a pawnshop, the Secretary shall, on the day the order becomes final, or such other day as the order prescribes, mail a written notification of revocation of license to all persons who have things in pledge at the most recent address listed on the pawn ticket. The Secretary shall also publish the notification in two consecutive issues of a local newspaper of general circulation. The Secretary shall be reimbursed by the licensee for all expenses incurred in connection with the notification. The Notification of License Revocation shall include the information provided in substantially the following form:

NOTIFICATION OF LICENSE REVOCATION (centered, in caps and bold)

(DATE)

1. Pursuant to Section 10-30(a) of the Pawnbroker Regulation Act of 2023 [205 ILCS 511/10-30(a)], the license of (name of pawnshop) has been revoked as of (the date the order becomes final).

2. (Name and address of pawnshop) is no longer permitted to engage in the business of receiving property in pledge or as security for money or other thing advanced.

3. The revocation of license shall not impair or affect the obligation of either the pawnbroker or the pledger to fulfill the terms of any preexisting memorandum, contract, or note.

4. If you have a current business transaction with (name and address of pawnshop), you should contact (address and phone number of Secretary's agent) within 30 business days to make arrangements for the disposition of any business transaction.

5. The grounds for the license revocation are (list all grounds as stated in the order).

History

• Source: Amended at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.640 Effective Date of Revocation or Suspension; Service (Repealed)

History

• Source: Repealed at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.700 Definitions (Repealed)

History

• Source: Repealed at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.710 Temporary Buying Location Registration Fees (Repealed)

History

• Source: Repealed at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.800 Application and Approval Process

a) Before any person or entity can offer responsible pawnbroker training, it shall first apply to and receive approval as a vendor from the Department and pay the applicable fee. The application submission window is the period between August 1st and August 31st of every fourth year beginning in 2024, during which the Department will receive applications to be approved as a responsible pawnbroker provider. If the date falls on a holiday or weekend, the window is extended to the next business day. The application submission window shall close at 5 PM Central Time on the final day on which applications are accepted.

b) Applications for approval shall be submitted on forms provided by the Department and shall include:

1. The first and last name of each responsible pawnbroker trainer currently employed by the program and the following document for each current trainer:

A) A resume and/or a curriculum vitae;

B) A written statement detailing the trainer's relevant experience; and

2. A general outline of the Responsible Pawnbroker Training program;

3. All training materials and curriculum consistent with Section 360.810;

4. The application fee of $2,000 payable to the NMLS or to the Department in a form specified by the Director, which may include certified check, money order, or credit card.

c) The application shall be signed by a representative of the entity applying to be a vendor certifying that all information contained in the application is true and accurate.

d) All required materials shall be submitted during the application submission window. The Department will not accept applications any other time. Early or late applications will not be accepted.

e) The Department will refuse to issue an approval to any applicant:

1. Who is unqualified to perform the duties required of a vendor as specified in Section 10-65(a) of the Act;

2. Who fails to disclose or makes misrepresentations of any information called for in the application;

3. Who fails to provide all required application materials; or

4. Who does not demonstrate knowledge of the rules and laws applicable to pawnbrokers in Illinois or demonstrates a misunderstanding of the rules and laws.

f) If an application is submitted in the application window, the Department may inform the applicant of any deficiencies in the application. An applicant may modify their training materials to meet the requirements of this Section for 30 days following such notice. If the applicant is unable or unwilling to meet the requirements of this Section, then the Department shall deny the approval. If the Department denies the approval, it shall provide a detailed description of the reasons for the denial.

g) The Department will send approval notices to successful applicants who meet the requirements of this Section, as well as non-approval notices to unsuccessful applicants. Approved vendors may begin offering training upon receipt of its approval notice. Only vendors approved by the Department can provide Responsible Pawnbroker Training.

h) An approval for a vendor shall be valid only for the vendor named in the application. An approval is not transferable or assignable.

i) A vendor may not subcontract or engage with an outside third-party to offer any of its training without prior Department approval.

j) If the vendor hires new trainers who were not previously disclosed at the time of the vendor's original application under subsection (b)(1), the vendor shall promptly submit the required information and documents of any such new trainers to the Department.

k) The Department may rescind its approval of a vendor that allows an individual or entity that has not been disclosed to the Department to offer its training course.

l) All vendor approvals will expire on September 30 of each even-numbered year. Applications for re-approval must be submitted between August 1 and August 31 of each even-numbered year and are subject to a $2,000 non-refundable fee.

History

• Source: Added at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.810 Curriculum Requirements

a) Subject to final approval of the Department, the curriculum for a responsible pawnbroker training program must include five or more of the following topics:

1. Federal, State, and local laws, administrative rules, and regulations that pertain to the business of being a licensed pawnbroker under the Act;

2. Procedures for identifying possible fraudulent transactions;

3. Anti-money laundering;

4. Store operations, maintenance of records, inventory management, recording and reporting of serial numbers;

5. General product knowledge, including, but not limited to, jewelry and firearms;

6. Identification, verification, and weighing of precious metals;

7. Inspections by State and local licensing and law enforcement authorities, including hold order procedures;

8. The federal Military Lending Act;

9. Pawn forfeits;

10. Security, risk, and crisis management; or

11. Proper maintenance of records required by the Department. [205 ILCS 511/10-65]

b) Vendors have a continuing obligation to update the approved curriculum within 30 calendar days after the effective date of any amendment to the Act or this Part that alters the accuracy of the curriculum. Any updates to the curriculum shall be submitted to the Department for approval before the vendor includes the amended curriculum in its course.

c) After a vendor has been approved, it may update the approved curriculum to reflect changes in the industry, scientific knowledge, or for any other reason. Any updates to the curriculum must be submitted to the Department for approval before the vendor includes the amended curriculum in its course.

d) Failure to submit any updated materials as required in subsections (b) and (c) shall, absent good cause, result in the Department withdrawing its approval of the vendor.

History

• Source: Added at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.820 Programmatic Requirements

a) To maintain approval by the Department, a Responsible Pawnbroker Training vendor must meet the following requirements:

1. Provide a minimum of four hours of classroom or Internet-based online instruction time for individuals who are required to complete Responsible Pawnbroker Training. Classroom instruction must be held in a safe and secure environment.

A) For purposes of this Section, "classroom instruction" shall mean instruction that takes place in a setting where those individuals receiving the training learn through lectures, study papers, class discussion, textbook study, or other means of organized formal education techniques, as distinguished from on-the-job training. Upon approval by the Department, classroom instruction may include remote real-time online instruction. Classroom instruction does not include pre-recorded video instruction.

B) For purposes of this Section, "Internet-based online instruction" shall mean either live or pre-recorded video instruction that is delivered through the Internet, as distinguished from on-the-job training, and for which an individual's attendance is recorded in increments of no less than 15 minutes.

2. Maintain a roster of individuals who have completed Responsible Pawnbroker Training. The roster shall include the participant's name, address, telephone number, employer, and date of birth of each individual who completed the program, including those who passed and failed the program, and the date each individual completed the program. The roster shall be made available to the Department upon request.

3. Issue a certification of completion to each individual who successfully completes the training indicating that the individual has completed an approved Department Responsible Pawnbroker Training program. The certification must include:

A) Individual's first and last name;

B) Number of completed hours of instruction;

C) Trainer's name;

D) Date of completion; and

E) Name of the approved vendor.

4. Submit an annual report to the Department within 180 days after the beginning of the calendar year. Each report shall contain the following information:

A) The number of participants trained during the reporting period;

B) The number of classes scheduled and completed during the reporting period and the locations of each class;

C) The total fees charged by the vendor during the reporting period; and

D) The number of pawnbrokers represented by participants completing a responsible pawnbroker program and the respective counties of those pawnbrokers.

5. Submit a fee schedule indicating the cost of the program, if any. The vendor must notify the Department within five business days after any change to the fee schedule.

6. Notify the Department before a new trainer begins providing instruction of the vendor's responsible pawnbroker training. The notification shall include:

A) The name of the vendor;

B) The name of the trainer;

C) The trainer's resume and/or a curriculum vitae; and

D) A written statement detailing the trainer's relevant experience.

b) The Department may attend any in-person or remote, real time online video instruction at any time. Upon a request, a vendor must make any login information or class places and times available to the Department.

c) Failure to comply with this Section or any other provisions of the Act or this Part will result in the Department withdrawing its approval.

d) The Division shall conduct audits to verify compliance with this Section.

History

• Source: Added at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.830 Responsible Pawnbroker Training Recordkeeping

a) A vendor's records shall be maintained electronically and be available for inspection by the Department upon request. The Department may audit any records held by the responsible pawnbroker at any time.

b) A vendor shall develop recordkeeping policies and procedures consistent with this Part.

c) A vendor shall retain all records for at least five years from the date of creation and shall include, but not be limited to, the following:

1. Program training materials;

2. Enrollment rosters and training records for registrants. Records must include registrants who successfully completed the program and those who did not complete or failed the Program;

3. Completed program certificates for each successful individual;

4. Storage and transfer of records. If a vendor ceases operations due to insolvency, revocation, bankruptcy or for any other reason, all records must be preserved at the expense of the responsible pawnbroker for at least five years in a form and location in Illinois acceptable to the Department. The provider shall retain the records longer if requested by the Department. The provider shall notify the Department of the location where the records are stored or transferred.

5. Approval notifications from the Department; and

6. All other records, policies, and procedures required by the Act and this Part.

History

• Source: Added at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.840 Closure of an Approved Program

The following procedures shall be followed for closure of an approved Responsible Pawnbroker Training vendor and removal from the approved list. The vendor shall:

a) Notify the Department, in writing, postmarked or emailed at least 30 calendar days in advance of the closing date.

b) Notify the individuals who have completed or are in the process of completing the program of the closure at least 15 calendar days in advance of the closing date and of the location where completion records will be maintained for at least three years from the closing date.

c) Stop enrolling individuals immediately and provide refunds in the full amount of the program's fee to individuals who will be unable to complete the program.

d) Notify the Department in writing the names of the persons responsible for the maintenance of records for at least three years from the date of closure.

History

• Source: Added at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.900 Pawnbroker Annual Report

The Department shall, in conjunction with advice from a professional association that represents 50 or more licensees, issue an annual report, via an Internet-based program, of aggregate pawnbroker activity within 180 days after the beginning of the calendar year. The report shall contain at a minimum:

a) The number of licensed pawnbrokers;

b) The total dollar amount financed;

c) The total number of pawns for each value threshold set forth in subsection (c) of Section 15-10 [205 ILCS 511/15-10(c)];

d) The total dollar amount of extensions;

e) The total number of extensions for each value threshold set forth in subsection (c) of Section 15-10 [205 ILCS 511/15-10(c)];

f) The average pawn dollar amount for each value threshold set forth in subsection (c) of Section 15-10 [205 ILCS 511/15-10(c)];

g) The average monthly finance charge for each value threshold set forth in subsection (c) of Section 15-10 [205 ILCS 511/15-10(c)];

h) The percentage of pawns surrendered to law enforcement;

i) The percentage of total pawns surrendered to law enforcement by dollar amount;

j) The percentage of pawns redeemed;

k) The percentage of pawns extended;

l) The total number of pawnbroker employees;

m) The total number of licensees reporting;

n) The total number of complaints received and resolved by the Department;

o) The total number of defaulted pawn transactions reported to a credit bureau;

p) The total number of defaulted pawn transactions sent to a collection agency;

q) The total number of defaulted pawn transactions resulting in wage garnishment or legal action to collect; and

r) The total number of pawn transactions reported to law enforcement. [205 ILCS 511/10-60]

History

• Source: Added at 49 Ill. Reg. 14602, effective October 29, 2025

38 Ill. Adm. Code 360.910 Semiannual Report

Beginning on April 1, 2026, on or before October 1 and April 1 of each calendar year, the Director shall submit a written report to the Secretary regarding expenses and activities of the Pawnbroker Section of the Division of Banking. The report shall contain at a minimum:

a) Documentation sufficient to identify the direct administrative and operational expenses and allocable indirect costs of the Pawnbroker Section of the Division of Banking incidental to regulating the pawnbroker industry;

b) The number of virtual examinations completed since the most recent report;

c) The number of in-person examinations required, requested, and completed since the most recent report;

d) The number of persons or entities identified by the Department as having violated Section 5-1(a) [205 ILCS 511/5-1(a)], Section 5-5(b) [205 ILCS 511/5-5(b)], or Section 15-5(a) [205 ILCS 511/15-5(a)] of the Act; and

e) The number of persons or entities identified by the Department as having violated Article 15 [205 ILCS 511/15] of the Act.

History

• Source: Added at 49 Ill. Reg. 14602, effective October 29, 2025

Chapter II Department of Financial and Professional Regulation

Part 365 Banks Engaging in Payday Lending

38 Ill. Adm. Code 365.10 Purpose and Scope

This Part applies to all banks chartered under provisions of the Illinois Banking Act [205 ILCS 5].

38 Ill. Adm. Code 365.20 Definitions

"Bank" means a state-chartered bank chartered under the provisions of the Illinois Banking Act [205 ILCS 5].

"Department" means the Illinois Department of Financial and Professional Regulation.

"Division" means the Illinois Department of Financial and Professional Regulation-Division of Banking.

"Payday Loan" or "loan" means a loan with a finance charge exceeding an annual percentage rate of 36% and with a term that does not exceed 120 days, including any transaction conducted via any medium whatsoever, including, but not limited to, paper, facsimile, Internet, or telephone, in which:

A lender accepts one or more checks dated on the date written and agrees to hold them for a period of days before deposit or presentment, or accepts one or more checks dated subsequent to the date written and agrees to hold them for deposit; or

A lender accepts one or more authorizations to debit a consumer's account; or

A lender accepts an interest in a consumer's wages, including, but not limited to, a wage assignment.

"PLRA" means the Payday Loan Reform Act [815 ILCS 122]. Banks are expressly exempt from the provisions of the PLRA.

38 Ill. Adm. Code 365.30 Applicability of Rule

This Part shall apply only to payday loans made by a bank. Products and services offered by a bank that are not offered by lenders governed by the PLRA shall not be subject to this Part.

38 Ill. Adm. Code 365.40 Issuance of Payday Loans by Banks

a) A bank making a payday loan shall satisfactorily address all safety and soundness considerations identified by the Division in its examination and supervision of the bank. Safety and soundness considerations include, without limitation:

1. Risk-management practices for payday loan activities, particularly with regard to concentrations of payday loans;

2. Capital adequacy, depending on the level and volatility of risk;

3. Allowance for loan losses to ensure the allowance is adequate to absorb estimated credit losses within the payday loan portfolio;

4. Classification of payday loans, given the unsecured nature of the credit and weakness of repayment capacity inherent in payday loans; and

5. The establishment and maintenance of extension, deferral, renewal and rewrite standards consistent with the PLRA.

b) In the event the Division determines the bank's management of safety and soundness risks relating to its payday loan portfolio is deficient, the Division

may initiate corrective enforcement action, as authorized under Section 48 of the Illinois Banking Act.

Part 370 Corporate Applications for Banks and Corporate Fiduciaries

38 Ill. Adm. Code 370.10 Purpose and Scope

This Part prescribes certain fee schedules and guidelines for the processing of corporate applications required by the Illinois Banking Act [205 ILCS 5], the Corporate Fiduciary Act [205 ILCS 620], the Foreign Banking Office Act [205 ILCS 645], the Foreign Bank Representative Office Act [205 ILCS 650], and the rules prescribed in accordance with those Acts.

38 Ill. Adm. Code 370.20 Definitions

"Act" means the Illinois Banking Act [205 ILCS 5].

"Department" means the Department of Financial and Professional Regulation.

"Division" means the Department of Financial and Professional Regulation- Division of Banking with the authority delegated by the Secretary.

"Director" means the Director of the Division of Banking with the authority delegated by the Secretary.

History

• Source: Amended at 42 Ill. Reg. 4558, effective March 9, 2018

38 Ill. Adm. Code 370.30 Fee Schedule; Administration of Corporate Application Fees

a) Fees shall be submitted to the Division at the time of submission of any application or notice. All fees filed in connection with an application or notice are nonrefundable, regardless of whether the application or notice is ultimately approved, denied, withdrawn, or abandoned.

b) While certain fees are set by statute and paid on a regular, cyclical basis, others are "fees for service" and are billed as the services are provided. Pursuant to Section 48(3)(f) of the Illinois Banking Act, Section 5-10 of the Corporate Fiduciary Act [205 ILCS 620], Section 17 of the Foreign Banking Office Act [205 ILCS 645], and Section 4 of the Foreign Bank Representative Office Act, the Director has set the following as fees for corporate activities and applications:

DOMESTIC COMMERCIAL BANKS

Application for a Permit to Organize a State Bank

(pursuant to 20 ILCS 3205/5, 205 ILCS 5/9 and 10, and 12 USC 1815(a) and 1816)

$10,000

Application for Approval of an Interim Bank Merger

(pursuant to 20 ILCS 3205/5 and 205 ILCS 5/10, 13.5 and 22)

$ 2,000

Application for a Permit to Organize a State Bank and a Purchase and Assumption or Merger – Section 31

(pursuant to 20 ILCS 3205/5, 205 ILCS 5/9, 10, and 31)

$ 500

Application for Purchase and Assumption – Section 31

(pursuant to 205 ILCS 5/31 and 12 CFR 325.103)

No Fee

Application for Merger – Section 31

(pursuant to 205 ILCS 5/31 and 12 CFR 325.103)

No Fee

Application for Approval of a Merger − Affiliated Entities (per merging institution)

(pursuant to 20 ILCS 3205/5 and 205 ILCS 5/10, 22, 27, and 29)

$ 2,000

Application for Approval of a Merger − Non-Affiliated Entities (per merging institution)

(pursuant to 20 ILCS 3205/5 and 205 ILCS 5/10, 22, 27, and 29)

$ 4,000

Application for Approval to Convert to a State Bank

$ 1,000

(pursuant to 20 ILCS 3205/5 and 205 ILCS 5/10, 25, 26, and 27)

Notice of Change in Control

(pursuant to 20 ILCS 3205/5, 205 ILCS 5/18, 205 ILCS 10/3.02, and 12 USC 1817(j))

$ 1,500

Change in Director or Senior Executive Officer

(pursuant to 20 ILCS 3205/5 and 205 ILCS 5/10 and 13)

$ 100

Application to Reduce Number of Bank Directors

(pursuant to 205 ILCS 5/16 and 38 Ill. Adm. Code 357.10)

$ 200

Application to Purchase Treasury Stock

(pursuant to 205 ILCS 5/14)

$ 200

Notice of Intent to Establish a Bank Branch

(pursuant to 38 Ill. Adm. Code 305.10 and 305.20 and 12 USC 1828(d))

$ 250

Notice of Intent to Establish a Bank Subsidiary or Acquire Stock in a Corporation

(pursuant to 205 ILCS 5/48(2)(a))

$ 250

Application for Relocation of Main Banking Premises

(pursuant to 205 ILCS 5/13)

$ 250

Conversion of an Illinois Trust Company into a State Bank

(pursuant to 20 ILCS 3205/5, 205 ILCS 5/10, 29, and 30)

$ 5,000

Certification of Charter

(pursuant to 205 ILCS 5/48(3)(e))

$ 100

Application to Reduce the Number of Authorized Board Meetings

(pursuant to 205 ILCS 5/16)

$ 100

Reverse Stock Split

(pursuant to 205 ILCS 5/17(8))

$ 1,000

Charter Amendments Other Than Reverse Stock Splits

(pursuant to 205 ILCS 5/17)

$ 500

Certificate of Corporate Existence

(pursuant to 205 ILCS 5/48(3)(e))

$ 100

Application for a Certificate of Authority Pursuant to Section 21.4 of the Illinois Banking Act

(pursuant to 205 ILCS 5/21.4)

$ 250

FIDUCIARY ACTIVITIES

Application to Form an Illinois Trust Company

(pursuant to 20 ILCS 3205/5, 205 ILCS 620/2-5 and 2-6)

$ 8,000

Application to Exercise Fiduciary Powers for State Banks, Savings and Loan Associations, State Savings Banks, and Foreign Banking Offices

(pursuant to 20 ILCS 3205/5, 205 ILCS 620/2-5 and 2-6)

$ 1,500

Application to Amend a Certificate of Authority to Accept and Execute Trusts for State Banks, State Savings and Loan Associations, State Savings Banks, and Foreign Banking Offices

(pursuant to 20 ILCS 3205/5, 205 ILCS 620/2-5 and 2-6)

$ 250

Application for Approval of a Change in the Control of a Corporate Fiduciary

(pursuant to 20 ILCS 3205/5 and 205 ILCS 620/3-2)

$ 1,500

Application for Approval of the Purchase of Substantially All the Trust Assets or the Assumption of Substantially All the Trust Liabilities of an Illinois Trust Company

(pursuant to 20 ILCS 3205/5 and 205 ILCS 620/3-2 and 7-1)

$ 1,500

Application to Establish a Corporate Fiduciary Branch Office by an Illinois Trust Company

(pursuant to 205 ILCS 620/1-7 and 38 Ill. Adm. Code 396)

$ 250

Application for Approval of a Corporate Fiduciary Merger

(pursuant to 20 ILCS 3205/5 and 205 ILCS 620/2-6 and 3-1)

$ 1,500

Application to Establish a Subsidiary of a Corporate Fiduciary

(pursuant to 205 ILCS 620/1-7 and 5-1(h))

$ 500

Application for a Certificate of the Authority to be Authorized as a Foreign Corporate Fiduciary in the State of Illinois

(pursuant to 205 ILCS 620/4-2 and 4-5)

$ 750

Application to Amend a Certificate of Authority of a Foreign Corporate Fiduciary to Authorize Additional Powers

(pursuant to 205 ILCS 620/4-2 and 4-5)

$ 250

Notice of Intent to Establish a Foreign Trust Office in Illinois

(pursuant to 205 ILCS 620/4A-5)

$ 750

Certified Copy of a Certificate of Authority or a Certificate of Corporate Existence

(pursuant to 205 ILCS 5/48(3)(e))

$ 100

CSBS Interstate Trust Activities Application:

Representative Office in Host State

$ 250

Full Service Branch in Host State

$ 250

Trust Office in Host State

$ 250

INTERNATIONAL BANKING

Application for License to Establish a Foreign Bank Representative Office

(pursuant to 205 ILCS 650/4)

$ 700

Foreign Bank Representative Office Annual License Fee

(pursuant to 205 ILCS 650/4 and 38 Ill. Adm. Code 375.36)

$ 300

Application for Certificate of Authority to Establish a Foreign Banking Office

(pursuant to 205 ILCS 645/4 and 5)

$ 8,000

Amendment of Certificate of Authority to Establish a Foreign Banking Office

(pursuant to 205 ILCS 645/7 and 8)

$ 500

Notice of Intent to Establish a Bank Branch – Foreign Banking Office

(pursuant to 38 Ill. Adm. Code 305.10 and 305.20 and 12 USC 1828(d))

$ 250

Certification of Certificate of Authority and License

(pursuant to 205 ILCS 5/48(3)(e))

$ 100

Certificate of Corporate Existence

(pursuant to 205 ILCS 5/48(3)(e))

$ 100

History

• Source: Amended at 42 Ill. Reg. 4558, effective March 9, 2018

38 Ill. Adm. Code 370.40 Special Examinations or Investigations

a) Applications and notices submitted to the Director are subject to a special investigation or examination as considered necessary, in the Director's discretion, in order to make an informed decision regarding the application or notice.

b) The cost for a special examination or investigation performed in connection with the review of an application or notice is $900 per day, per examiner.

c) The Director may consider the following factors in determining whether to require an investigation or examination of one or more of the entities to the transaction:

1. A question exists regarding the solvency or potential solvency of the applicant or one or more of the financial institutions or other entities involved in the transaction;

2. A financial institution involved in the transaction has not been examined by a state, federal or foreign regulatory agency within the 18-month period immediately preceding the date of submission of the application or notice;

3. A financial institution involved in the proposed transaction had substantive violations cited in its most recent examination report, or has a less than satisfactory regulatory rating;

4. A question exists regarding the experience, ability, standing, trustworthiness, or integrity of the existing or proposed officers, directors, managers or managing participants of a party involved in the proposed transaction;

5. A question exists as to whether the resulting institution will operate in compliance with the law;

6. A question exists as to whether the resulting institution will be free from improper or unlawful influence or interference from its principal shareholders with respect to operation in compliance with the law;

7. A question exists as to whether the resulting institution will have adequate capitalization;

8. One or more of the entities to the transaction is under a regulatory restriction or subject to an enforcement action or supervisory agreement;

9. Such other factors as determined in the discretion of the Director.

38 Ill. Adm. Code 370.50 Forms

a) Forms and instructions for submitting applications and notices may be obtained from the Department's website or by contacting the Division's Corporate Activities Section. Information that is required by another regulatory authority that is also needed as part of a Division application or notice may be provided to the Division by appending a copy of the information to the Division application or notice. Use of the Division's form is optional; however, the material submitted to the Division must contain all information requested in the Division's forms. In addition, if the applicable Division application or notice requires the filing of an Authorization for Release of Personal Information for necessary background checks or a certification page, the applicant must sign and submit the Authorization for Release of Personal Information and the certification page of the application or notice, even if the Division form itself is not being used.

b) If no form is prescribed, the application or notice should be in writing, be signed by the applicant or a duly authorized agent, and contain a concise statement of the action requested.

History

• Source: Amended at 42 Ill. Reg. 4558, effective March 9, 2018

38 Ill. Adm. Code 370.60 Request for Confidential Treatment

a) Under the provisions of the Illinois Freedom of Information Act [5 ILCS 140], an application or notice filed with the Division is considered a public document and available to the public upon request.

b) If the applicant is of the opinion that disclosure of commercial or financial information would likely result in substantial harm to the competitive position of the applicant or that disclosure of information of a personal nature would result in a clearly unwarranted invasion of personal privacy, a request for confidential treatment must be submitted in writing concurrently with the submission of the application or notice and must discuss in detail the justification for confidential treatment. The justification must be provided for each response or exhibit for which confidential treatment is requested.

c) The applicant's reasons for requesting confidentiality should demonstrate specifically the harm that would result from public release of the information. A statement simply indicating that the information would result in competitive harm or that it is personal in nature is not sufficient. A claim that disclosure would violate the law or policy of another state is not, in and of itself, sufficient to exempt information from disclosure. The applicant's demonstration that disclosure would cause competitive harm or would result in an unwarranted invasion of personal privacy must be sufficient to allow the Division to conclude that a Freedom of Information Act [5 ILCS 140] disclosure exemption (e.g., 5 ILCS 140/7(1)(b) or 5 ILCS 140/7(1)(g)) is applicable to the information for which confidential treatment is sought.

d) Information for which confidential treatment is requested should be:

1. specifically referenced in the public portion of the application or notice by reference to the confidential section;

2. separately bound; and

3. labeled "Confidential".

e) The applicant should follow this same confidentiality procedure when filing any supplemental information to the application.

f) The Division will determine whether information submitted as confidential will be so regarded and, when practicable, will advise the applicant of any decision to make available to the public information labeled "Confidential". However, the Division, without prior notice to the applicant, may disclose or comment on any of the contents of the application in the approval issued by the Director in connection with the Division's decision on the application or notice.

38 Ill. Adm. Code 370.70 Processing of Applications or Notices; Acceptance; Abandonment

a) On or before the 15th business day after initial submission of an application, the Director shall issue a written notice informing the applicant either that the application is complete and accepted for processing or that the application is deficient and specific additional information is required. All required information necessary for the Director to declare that a submission is an accepted filing, including the filing fee, shall be provided to the Director on or before the 31st calendar day after the date of the Director's written information request. However, if, within the 30 day timeframe prescribed in the information request letter, the applicant submits a written request for an extension, the Director may grant an additional 30 days within which to submit the information, upon a finding of good and sufficient cause. If the applicant fails to submit the required information within the specified timeframe, the Director shall determine the application to be abandoned, without prejudice to the right to refile.

b) After the Director accepts an application, he or she may request additional information in order to make any required statutory findings and to make a fully informed decision. This request for additional information shall be in writing. All requested information shall be provided to the Director on or before the 31st calendar day after the date of the Director's letter. However, if, within the 30 day timeframe prescribed in the letter, the applicant submits a written request for an extension, the Director may grant an additional 30 days within which to submit the information, upon a finding of good and sufficient cause. If the applicant fails to submit the requested information within the specified timeframe, the Director shall determine the application to be abandoned, without prejudice to the right to refile.

c) The Director shall give written notice of any submitted or accepted filing determined to be abandoned. Notice of abandonment shall be effective upon the Director's mailing.

Part 375 Calculation, Assessment and Collection of Periodic Fees

38 Ill. Adm. Code 375.10 Purpose

This Part sets forth the manner in which the Office of Banks and Real Estate shall calculate, assess and collect Call Report Fees, Electronic Data Processing Fees, Foreign Bank Representative Office Regulatory Fees, and Corporate Fiduciary Regulatory Fees payable by state banks, foreign bank representative offices, and corporate fiduciaries pursuant to Section 48(3) of the Illinois Banking Act, Section 17 of the Foreign Banking Office Act, Section 4 of the Foreign Bank Representative Office Act, and Section 5-10 of the Corporate Fiduciary Act. Nothing in this Part is to be construed as limiting or being applicable to other fees that the Office of Banks and Real Estate may assess pursuant to the Illinois Banking Act, Foreign Banking Office Act, Foreign Bank Representative Office Act, Corporate Fiduciary Act, or other State laws or rules.

History

• Source: Amended at 27 Ill. Reg. 487, effective December 27, 2002

38 Ill. Adm. Code 375.20 Definitions

"Call Report Fee" means the fee to be paid to the Commissioner by each state bank pursuant to Section 48(3)(a) of the Act.

"Commissioner" means the Commissioner of the Office of Banks and Real Estate or a person authorized by the Commissioner to act in the Commissioner's stead.

"Corporate fiduciary" shall have the meaning ascribed to that term in Section 1-5.05 of the Corporate Fiduciary Act [205 ILCS 620/1-5.05].

"Corporate Fiduciary Regulatory Fee" means the fee to be paid to the Commissioner by each corporate fiduciary pursuant to Section 5-10(a) of the Corporate Fiduciary Act.

"Electronic Data Processing Fee" means the fee to be paid to the Commissioner by each state bank pursuant to Section 48(3)(a-2) of the Act.

"Foreign bank representative office" shall mean those entities subject to the Foreign Bank Representative Office Act [205 ILCS 650].

"State bank" means a banking corporation that has a banking charter issued by the Commissioner under the Act, and shall include a foreign banking office holding a certificate of authority pursuant to the Foreign Banking Office Act [205 ILCS 645].

History

• Source: Amended at 27 Ill. Reg. 487, effective December 27, 2002

38 Ill. Adm. Code 375.30 Call Report Fees (repealed)

History

• Source: Repealed at 41 Ill. Reg. 15093, effective December 15, 2017

38 Ill. Adm. Code 375.31 Electronic Data Processing Fee

Each state bank shall pay to the Commissioner an Electronic Data Processing (EDP) Fee equal to 16% of the state bank's Call Report Fee. The EDP Fee shall be calculated by the Commissioner and billed to state banks for remittance with the Call Report Fee.

History

• Source: Amended at 27 Ill. Reg. 487, effective December 27, 2002

38 Ill. Adm. Code 375.32 Assessment of 3, 4, or 5 Rated State Banks

If a state bank has received a Uniform Financial Institution Rating System (UFIRS) composite rating of 3, 4, or 5 on its last state or federal examination, the state bank's total quarterly fee shall be increased by 25% for a 3 rated bank and 50% for a 4 or 5 rated bank on the bank's subsequent quarter billing. This assessment shall stay in effect until the quarter following the state bank's receipt of a UFIRS composite rating of 1 or 2 at the next state or federal examination.

History

• Source: Amended at 27 Ill. Reg. 487, effective December 27, 2002

38 Ill. Adm. Code 375.33 Foreign Banking Office Minimum Quarterly Fee

The minimum quarterly fee for a foreign banking office holding a certificate of authority pursuant to the Foreign Banking Office Act [205 ILCS 645] shall be $2,500.

History

• Source: Amended at 27 Ill. Reg. 487, effective December 27, 2002

38 Ill. Adm. Code 375.34 Corporate Fiduciary Regulatory Fees

a) Each corporate fiduciary shall pay to the Commissioner a Corporate Fiduciary Regulatory Fee that shall be paid in quarterly installments equal to one-fourth of the sum of an annual fixed fee plus a variable exam-day fee.

b) The annual fixed fee shall be $200 for a trust department and for individuals or partnerships that possess a certificate of authority to accept and execute trusts. The annual fixed fee for a trust company shall be $500. The variable exam-day fee shall be calculated at the rate of $450 for each one-half examiner-day of work expended by the Commissioner's examination personnel in performing the most recent statutorily required examination of the corporate fiduciary, subject to a minimum one-day charge.

c) The Corporate Fiduciary Regulatory Fee shall be calculated by the Commissioner and billed to the corporate fiduciaries on the last day of each calendar quarter, with payment due within 30 calendar days after the billing date.

History

• Source: Amended at 28 Ill. Reg. 773, effective December 29, 2003

38 Ill. Adm. Code 375.36 Foreign Bank Representative Office Regulatory Fees

a) An applicant for a foreign bank representative office license shall submit a completed application, in a form prescribed by the Commissioner, along with an application fee of $700.

b) The Commissioner shall annually send a foreign bank representative office licensee an annual license renewal notice. The annual renewal fee shall be $300.

c) When the Commissioner’s examination personnel conduct an examination of a foreign bank representative office, the variable exam-day fee shall be calculated at the rate of $350 for each one-half examiner-day of work expended in performing the examination, subject to a minimum one-day charge. The variable exam-day fee shall be calculated by the Commissioner and billed to the foreign bank representative office on the last day of the calendar quarter following the calendar quarter in which the examination occurred.

d) Payment of the fees prescribed in subsections (b) and (c) of this Section shall be due within 30 calendar days of the billing date. Any foreign bank representative office that has failed to submit any required fee within 60 calendar days after the billing date may incur an additional late fee of $100 per day.

e) Unless otherwise permitted by the Commissioner, payment of the application fee and annual renewal fee provided for in this Section shall be made to the Commissioner by certified check, money order, an electronic transfer of funds, or an automatic debit of an account. Certified checks or money orders shall be made payable to the Office of Banks and Real Estate.

History

• Source: Added at 27 Ill. Reg. 487, effective December 27, 2002

38 Ill. Adm. Code 375.40 Calculation of Call Report and Electronic Data Processing Fees for Resulting State Banks

a) When a state bank results from a conversion by any financial institution other than a state bank and no statement of condition for such resulting state bank for the preceding quarter was submitted to the Commissioner pursuant to Section 47 of the Act, the Call Report Fee and EDP Fee shall be calculated for such resulting state bank in the same manner set forth in Section 375.30 and 375.31 of this Part based on the most recent periodic report of condition submitted by the converted financial institution to its primary regulator.

b) When a state bank results from a merger of one or more financial institutions into the resulting state bank, the Call Report Fee and EDP fee shall be calculated for such resulting state bank in the manner set forth in Section 375.30 and 375.31 of this Part based on the aggregate of the total assets reported in the most recent periodic reports of conditions submitted by the merged financial institutions to their primary regulators.

History

• Source: Amended at 24 Ill. Reg. 225, effective December 31, 1999

38 Ill. Adm. Code 375.41 Calculation of Corporate Fiduciary Regulatory Fees for Resulting Corporate Fiduciaries

When a corporate fiduciary results from a merger of one or more financial institutions into the resulting corporate fiduciary, the Corporate Fiduciary Regulatory Fee shall be calculated for the resulting corporate fiduciary in the manner set forth in Section 375.34 of this Part. If a statutorily required examination is not performed on the resulting corporate fiduciary prior to a quarter end, the variable exam-day fee will be based on the aggregate number of exam days expended by the Commissioner in performing the most recent statutorily required examination for each corporate fiduciary involved in the merger.

History

• Source: Amended at 27 Ill. Reg. 487, effective December 27, 2002

38 Ill. Adm. Code 375.50 Assessment of Accrued Fees Against a Converting or Merging State Bank

When a state bank converts to a national bank, merges into a resulting national bank, dissolves, surrenders its certificate of authority or in any other manner ceases to be a state bank, such state bank shall be liable on a pro rata basis to the Commissioner for any accumulated Call Report Fee and EDP fee up to, and including, the date that the state bank ceases to be a state bank.

History

• Source: Amended at 24 Ill. Reg. 225, effective December 31, 1999

38 Ill. Adm. Code 375.51 Assessment of Accrued Fees Against a Corporate Fiduciary

When a corporate fiduciary surrenders its certificate of authority, that corporate fiduciary shall be liable on a pro rata basis to the Commissioner for the accumulated Corporate Fiduciary Regulatory Fee up to, and including, the date of surrender.

History

• Source: Added at 24 Ill. Reg. 225, effective December 31, 1999

38 Ill. Adm. Code 375.60 Credits and Additional Assessments Not Applicable to Resulting National Banks

A financial institution other than a state bank that results from a conversion by, or merger with, a state bank shall not be eligible for any credit and shall not be liable for any additional assessments described in Section 48(3)(d-1) of the Act [205 ILCS 5/48(3)(d-1)].

History

• Source: Amended at 24 Ill. Reg. 225, effective December 31, 1999

38 Ill. Adm. Code 375.70 Payment by Electronic Transfer or Automatic Debit

Payment of all fees assessed by the Commissioner pursuant to Section 48(3) of the Act [205 ILCS 5/48(3)], Section 17 of the Foreign Banking Office Act [205 ILCS 645/17], and Section 5-10 of the Corporate Fiduciary Act [205 ILCS 620/5-10] shall be made by each state bank and corporate fiduciary to the Commissioner by means of electronic transfer of funds from, or automatic debit of, an account of the state bank or corporate fiduciary, unless the Commissioner authorizes a state bank or corporate fiduciary to submit payment by some other means.

History

• Source: Amended at 27 Ill. Reg. 487, effective December 27, 2002

Part 380 Eligible State Bank and Savings Bank

38 Ill. Adm. Code 380.10 Purpose

The applicable Act, as defined in Section 380.20, requires the Secretary to examine, at least once within each time period specified in the applicable Act, the affairs of every state bank, as defined in Section 380.20, except that an examination conducted by an eligible state bank's appropriate federal banking agency may suffice as a substitute for the Secretary's own examination during alternating time periods, provided the appropriate federal banking agency has made such an examination. The purpose of Section 380.20 is to define "eligible state bank" in a manner that enables identification of those state banks for which an examination conducted by the appropriate federal banking agency may be acceptable in lieu of the Secretary's own examination on an alternating basis.

History

• Source: Amended at 40 Ill. Reg. 16747, effective January 1, 2017

38 Ill. Adm. Code 380.20 Definitions

"Applicable Act" means Section 48(2)(a) of the Illinois Banking Act (IBA) [205 ILCS 5] in the case of state banks chartered under the IBA, and also means Section 9004 of the Savings Bank Act (SBA) [205 ILCS 205] in the case of a savings bank chartered under the SBA.

"Appropriate federal banking agency" means the Federal Deposit Insurance Corporation, the Federal Reserve Bank of Chicago or the Federal Reserve Bank of St. Louis, as determined by federal law (12 USC 1813(q)).

"CAMELS Rating" means the rating assigned to a state bank by the Secretary or by the state bank's appropriate federal banking agency, based on a composite evaluation of the following six individual performance components: Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Sensitivity to Market Risk. The composite CAMELS Rating, and the rating assigned to each individual performance component, will be assigned a number from a range of 1 through 5, with 1 being the highest possible rating and 5 being the lowest possible rating.

"Eligible state bank" means an Illinois state bank that, at its last examination, was assigned a composite CAMELS Rating of 1 or 2, or stable and improving composite 3-rated institutions if the composite rating is confirmed by an offsite review in which no adverse trends are noted from other available information; except that, unless otherwise determined by the Secretary, the following shall not be an eligible state bank:

A newly chartered state bank, for the first three years after receiving its charter;

A state bank that results from the merger of a state bank with a financial institution other than a state bank, for the first examination period after the merger;

A state bank that results from the merger of a state bank with another state bank that was assigned a CAMELS Rating of 3, 4 or 5 at its last regular examination, for the first examination period after the merger;

A state bank that results from the conversion of a financial institution other than a state bank, for the first examination period after the conversion;

A state bank that has undergone a change of control pursuant to the applicable Act that results in new ownership or control of more than 50% of the outstanding voting stock of the state bank, for the first examination period after the change of control;

A state bank whose management or board of directors has requested an examination by the Secretary;

A state bank that, in the opinion of the Secretary, is:

operating in an unsafe manner;

operating in an unsound condition;

conducting its business in violation of applicable laws, rules or regulations; or

conducting its business in a fraudulent manner;

A state bank concerning which the appropriate federal banking agency has communicated to the Secretary that the federal banking agency will not alternate in conducting examinations of the particular bank or class of banks; and

A state bank that is subject to an administrative order or other regulatory or enforcement action issued by the Secretary or the appropriate federal banking agency.

"Examination period" means the time frame within which the Secretary must conduct a regular examination of each state bank pursuant to the applicable Act.

"Regular examination" means a full scope, on-site examination of a state bank conducted by the Secretary or by the state bank's appropriate federal banking agency within each examination period.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

"State bank" means, for purposes of this Part only, a state bank chartered under the Illinois Banking Act or a savings bank chartered under the Savings Bank Act, as the case may be.

History

• Source: Amended at 40 Ill. Reg. 16747, effective January 1, 2017

38 Ill. Adm. Code 380.30 General Rule (repealed)

History

• Source: Repealed at 21 Ill. Reg. 8380, effective June 24, 1997

Part 381 Examination Consistency and Due Process

38 Ill. Adm. Code 381.10 Authority and Purpose

Section 48(2.1) of the Illinois Banking Act [205 ILCS 5] and Section 9004(f) of the Illinois Savings Bank Act [205 ILCS 205] require the Secretary of the Department of Financial and Professional Regulation to adopt rules that ensure consistency and due process in the examination process for banks. The statutes also permit the Secretary to establish guidelines that define the scope of the examination process and clarify examination items to be resolved. The statutes provide that the rules, formal guidance, interpretive letters, or opinions furnished to banks by the Secretary may be relied upon by the banks. Guidance or a letter based on specific circumstances affecting one particular bank that is furnished only to that bank may not be relied upon by banks generally unless that guidance or letter states otherwise.

38 Ill. Adm. Code 381.20 Definitions

Unless specified otherwise in this Part, the following terms shall have the following meanings:

"Bank" means, for purposes of this Part only, a State bank chartered under the Illinois Banking Act or a savings bank chartered under the Illinois Savings Bank Act.

"Division" means the Illinois Department of Financial and Professional Regulation, Division of Banking.

"Examination" means, except as otherwise stated in this Part, an examination conducted pursuant to Section 48(2) of the Illinois Banking Act or an examination conducted pursuant to Section 9004 of the Illinois Savings Bank Act.

"Examination" does not include any action the Division is authorized to take on an emergency basis.

"Examination report meeting" means the meeting, at which the Division provides any draft examination findings, with the bank's board of directors and/or the bank's management. The examination report meeting customarily takes place after the exit meeting.

"Exit meeting" means the meeting at which the Division shares the preliminary results of the examination with the bank's board of directors and/or the bank's management. The exit meeting customarily occurs upon completion of an examination's field work.

"Federal financial institution regulators" means the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve (including Federal Reserve Banks of Chicago and Saint Louis), and the United States Office of the Comptroller of the Currency.

"Final examination report" means the report of the examination issued by the Division upon completion of the Division examination review process and that is delivered to the bank's board of directors and/or the bank's management after the examination report meeting.

38 Ill. Adm. Code 381.30 Examination Consistency and Due Process

To ensure consistency and due process, the Division will make every reasonable effort to adhere to the following standards of performance in conducting its examinations of banks.

a) Guidelines

1. To supplement this Part, the Division may establish, and publish on the Division's website, guidelines that define the scope of the examination process and clarify the manner in which examination items shall be resolved. These guidelines may include:

A) protocol in identifying and addressing examination findings;

B) preparation of examination reports;

C) delivery of examination reports; and

D) other relevant subjects in accordance with Section 48(2.1) of the Illinois Banking Act.

2. Banks may rely upon the guidelines furnished by the Division. Whenever the Division establishes guidelines, the Division shall give due consideration to maintaining consistency with the existing guidelines (and any interpretations of those guidelines) established by federal financial institution regulators. The Division may change or withdraw established guidelines upon reasonable prior notice.

b) Reasonable Notification and Requests for Information

1. Prior to commencement of the examination, the Division will mail or email a pre-examination memorandum to the bank's management and the board of directors of the bank giving notification of the commencement date of the examination and the information the Division deems necessary to conduct the examination. Prior notification is not required if the Division suspects criminal activity or unsafe and unsound activity for which advance notice may compromise or otherwise interfere with the examination.

2. Prior to and during the exam, the bank shall provide timely information in response to requests by the Division for information.

3. During each stage of the examination, the Division will make a reasonable effort to provide prior notification to management of the bank of all joint conferences and the exit meeting. It shall be the responsibility of the bank's management to contact the board of directors of the bank and applicable committees inform them of all joint conferences and the exit meeting.

c) Communication Protocol in Identifying and Addressing Examination Findings. The Division will take reasonable steps to work with the banks it supervises to proactively identify problems and solutions during the examination process.

d) Delivery of Examination Reports

1. Examiners shall provide the bank's management and the bank's board of directors with the examiner's draft findings and any draft board resolution for corrective action, with sufficient time to review these items before the examination report meeting with the bank's management and/or the bank's board of directors.

2. The Division will submit its final examination report to the bank after the examination report meeting.

Chapter II Office of Banks and Real Estate

Part 385 Rules Governing the Request for Reconsideration of Examination Findings

38 Ill. Adm. Code 385.10 Applicability

This Part shall apply to requests by Regulated Financial Institutions for reconsideration of Material Supervisory Determinations. The reconsideration process provides the management of these Regulated Financial Institutions with an informal procedure for review of Material Supervisory Determinations that they believe to be incorrect or based upon erroneous information. Enforcement actions and the appointment of a receiver are not subject to reconsideration under this Part.

Chapter II Department of Financial and Professional Regulation

Part 385 Rules Governing the Request for Reconsideration of Examination Findings

38 Ill. Adm. Code 385.20 Definitions

"Assistant Commissioner" means the Assistant Commissioner of Banks and Real Estate, Bureau of Banks and Trust Companies.

"Commissioner" means the Commissioner of Banks and Real Estate or a person authorized by the Commissioner, the Office of Banks and Real Estate Act [20 ILCS 3205], or the Illinois Banking Act [205 ILCS 5].

"Chief Counsel" means the individual appointed by the Commissioner to serve as the Chief Counsel to the Office of Banks and Real Estate, Bureau of Banks and Trust Companies, or his or her delegated representative.

"Division Director" means the individual appointed by the Commissioner to directly manage and supervise the examination and regulation of specific Regulated Financial Institutions. Division Directors include, but are not limited to, the Administrator of Pawnbroker Regulation; the Director of Commercial Bank Supervision-Springfield; the Director of Commercial Bank Supervision-Chicago; the Director of International Bank Supervision; and the Director of Specialized Activities Supervision.

"Material Supervisory Determinations" include, but are not limited to, material determinations related to UFIRS Ratings assigned to a State bank, ROCA/ROC Ratings assigned to a Foreign Banking Office or Foreign Banking Representative Office, UITRS Ratings assigned to a corporate fiduciary, and URSIT Ratings assigned to Information Technology; rating assigned to a State bank or savings bank pursuant to the Illinois Community Reinvestment Act [205 ILCS 735] the adequacy of loan reserve provisions; loan classifications; and findings resulting from an examination of a pawnshop.

"ROCA/ROC Rating" means the rating assigned to a Foreign Banking Office and a Foreign Bank Representative Office, respectively, by the Commissioner based upon a composite evaluation of the following performance components: Risk Management; Operational Controls; Compliance; and Asset Quality. The rating assigned to each individual performance component will be assigned a range of 1 through 5, with 1 being the highest possible rating and 5 being the lowest possible rating.

"Regulated Financial Institution" means a pawnshop, bank, savings bank, corporate fiduciary, foreign banking office, foreign bank representative office, or a subsidiary, affiliate, parent company, or contractual service provider of the bank, savings bank, corporate fiduciary, foreign banking office, or foreign bank representative office, subject to examination by the Commissioner.

"UFIRS Rating" means the rating assigned to a State bank by the Commissioner based upon a composite evaluation of the following six individual performance components of the Uniform Financial Institutions Rating System: Capital; Asset Quality; Management; Earnings; Liquidity; and Sensitivity to Market Risk. The UFIRS Rating and the rating assigned to each individual performance component will be assigned a range of 1 through 5, with 1 being the highest possible rating and 5 being the lowest possible rating.

"UITRS Rating" means the rating assigned to a corporate fiduciary by the Commissioner based upon a composite evaluation of the following performance components of the Uniform Interagency Trust Rating System: Management; Operations, Internal Controls and Auditing; Earnings; Compliance; and Asset Management. The rating assigned to each individual performance component will be assigned a range of 1 through 5, with 1 being the highest possible rating and 5 being the lowest possible rating.

"URSIT Rating" means the rating assigned to a Regulated Financial Institution's information systems by the Commissioner based upon a risk evaluation of the following components of the Uniform Rating System for Information Technology: Audit; Management; Development and Acquisition; and Support and Delivery. The rating assigned to each individual performance component will be assigned a range of 1 through 5, with 1 being the highest possible rating and 5 being the lowest possible rating.

History

• Source: Amended at 48 Ill. Reg. 7167, effective May 1, 2024

Chapter II Office of Banks and Real Estate

Part 385 Rules Governing the Request for Reconsideration of Examination Findings

38 Ill. Adm. Code 385.30 Request for Reconsideration

A Regulated Financial Institution may submit a request for a reconsideration of a Material Supervisory Determination (request for reconsideration) with respect to any Material Supervisory Determination but it first should make a good faith effort to resolve the dispute with the Examiner in Charge either during the course of the examination or as soon as possible following completion of the examination. Although an informal resolution of the dispute over the Material Supervisory Determination is encouraged, it is not a condition of filing a request for reconsideration. A request for reconsideration shall be initiated no later than 45 calendar days from the receipt of a Final Report of Examination, unless the time is extended at the discretion of the Commissioner. The board of directors of a bank, corporate fiduciary, or incorporated business entity, the local management of a foreign banking organization, or senior management in the case of an unincorporated business entity shall approve any request for reconsideration. Any request for reconsideration shall be in writing and shall be made to the Office of Banks and Real Estate to the attention of the appropriate Division Director.

38 Ill. Adm. Code 385.40 Form of Request for Reconsideration

A written request for reconsideration shall:

a) clearly state the Material Supervisory Determination submitted for reconsideration;

b) provide all documents or other evidence and information that the Regulated Financial Institution believes will support the request for reconsideration; and

c) clearly state the relief requested.

38 Ill. Adm. Code 385.50 Initial Reconsideration Review

a) The appropriate Division Director shall consider the written request for reconsideration and all documents, evidence, and information submitted by the Regulated Financial Institution, provided that the documents, evidence, and information are limited to facts and circumstances that existed prior to or at the time of the Material Supervisory Determination. The Division Director may also consider facts or circumstances that existed prior to or at the time of the Material Supervisory Determination but that may have been discovered or come to the attention of the Regulated Financial Institution after the Material Supervisory Determination.

b) The appropriate Division Director shall also consider documents, evidence, and information submitted or prepared by the Division examination staff, including but not limited to the Final Report of Examination and any work papers associated with the Final Report of Examination. The documents, evidence, and information that the Division Director may consider are limited to facts and circumstances that existed prior to or at the time of the Material Supervisory Determination. The Division Director may consider facts or circumstances that existed prior to or at the time of the Material Supervisory Determination but that may have been discovered or come to the attention of the examination staff after the Material Supervisory Determination.

c) The appropriate Division Director shall prepare and deliver to the Regulated Financial Institution a written disposition of initial review within 30 calendar days from receipt by the Office of Banks and Real Estate of a request for reconsideration. The written disposition of initial review may sustain, modify, or overturn any Material Supervisory Determination.

d) If the Division Director conducted the examination that resulted in the Material Supervisory Determination that the Regulated Financial Institution is appealing, the initial review provided under this Section shall be waived. The written disposition of initial review shall direct the Regulated Financial Institution to proceed to a final review as provided in Section 385.60 of this Part.

38 Ill. Adm. Code 385.60 Final Review

a) If the Regulated Financial Institution disagrees with the Division Director’s written disposition of initial review or if the initial review is waived pursuant to Section 385.50(d), it may seek a final review before the Assistant Commissioner.

b) Any request by a Regulated Financial Institution for final review of a Material Supervisory Determination shall be initiated no later than 15 calendar days from the receipt of the written disposition of initial review, unless the time is extended at the discretion of the Commissioner. The Regulated Financial Institution’s board of directors, local management, or senior management, as applicable, shall approve any request for final review of a Material Supervisory Determination. Any request for final review of a Material Supervisory Determination shall be in writing and shall be made to the Assistant Commissioner.

c) The Assistant Commissioner may select a final review panel consisting of Division Directors and the Chief Counsel or their designated representatives. In addition, the Assistant Commissioner may appoint others, including but not limited to examiners, attorneys, or outside experts, to sit on the final review panel. The Assistant Commissioner may also choose to sit on the final review panel. Neither the Division Director responsible for the written disposition of initial review nor his designated representative shall be selected as a member of the final review panel. In addition, the Assistant Commissioner may not select as a member of the final review panel a Division Director who conducted the examination that is the basis for the Material Supervisory Determination being appealed. If the Assistant Commissioner appoints a final review panel, the Assistant Commissioner shall notify the Regulated Financial Institution of the appointment and of the time frame within which the final review panel will make its recommendation and the Assistant Commissioner will act on it.

d) The Assistant Commissioner, or the final review panel if one is appointed, shall review all documents, evidence, and information considered in connection with the written disposition of initial review. Additional evidence, documents, or information not previously submitted may be reviewed at the discretion of the Assistant Commissioner or final review panel, if one is appointed, provided that the documents, evidence, and information that may be considered are limited to facts and circumstances that existed prior to or at the time of the Material Supervisory Determination. The provisions of this subsection are subject to the provisions of Section 48.3 of the Illinois Banking Act and Section 5-2 of the Corporate Fiduciary Act regarding confidential supervisory information.

e) If the Assistant Commissioner appoints a final review panel, within 30 calendar days from the receipt by the Assistant Commissioner of a request for final review, that panel shall make a written recommendation to the Assistant Commissioner to sustain, modify, or overturn any Material Supervisory Determination.

f) Within 15 calendar days from the receipt of the written recommendation of the final review panel, the Assistant Commissioner shall provide written notification to the Regulated Financial Institution of his or her final decision related to the request for reconsideration. The Assistant Commissioner may accept, reject, or modify the recommendation received from the final review panel.

g) If the Assistant Commissioner does not appoint a final review panel, within 30 calendar days after his or her receipt of a request for final review, he or she shall provide written notification to the Regulated Financial Institution of his or her final decision to sustain, modify, or overturn the Material Supervisory Determination at issue.

38 Ill. Adm. Code 385.70 Effect of Filing a Request

A Material Supervisory Determination shall remain in effect while under review for reconsideration and until such time as it is either sustained, modified, or overturned. Any request for reconsideration shall not prevent the Commissioner from taking any supervisory or enforcement action he or she deems appropriate or necessary under any statutory provision.

Part 392 Hearings Before the Office of Banks and Real Estate Bureau of Banks and Trust Companies

38 Ill. Adm. Code 392.10 Hearings

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code. 100.

History

• Source: Amended at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.20 Definitions (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.30 Request for a Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.40 Form of Request for a Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.50 Hearing Officer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.60 Notice of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.70 Motions (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.80 Answer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.90 Form of Pleadings (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.100 Service (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.110 Appearances (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.120 Consolidation of Hearing Proceeding (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.130 Authority of Hearing Officer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.140 Prehearing Conferences (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.150 Subpoenas (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.160 Discovery (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.170 Evidence Depositions (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.180 Conduct of a Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.190 Evidence (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.200 Record of Hearing Proceedings (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.210 Briefs (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.220 Hearing Officer's Recommendation (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.230 Commissioner's Determination (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

38 Ill. Adm. Code 392.240 Construction of Rules (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17971, effective October 27, 2022

Chapter II Department of Financial and Professional Regulation

Part 396 Corporate Fiduciary Applications and Notices

38 Ill. Adm. Code 396.5 Purpose

The Office of Banks and Real Estate is authorized to promulgate rules setting the terms and conditions for approval of corporate fiduciary applications and notices. The purpose of this Part is to set forth those terms and conditions under one heading to facilitate easy reference by the corporate fiduciaries affected.

History

• Source: Added at 20 Ill. Reg. 10825, effective August 1, 1996

38 Ill. Adm. Code 396.10 Definitions

"Commissioner" means the Secretary of the Department of Financial and Professional Regulation.

"Corporate fiduciary" shall have the meaning ascribed to it in Section 1-5.05 of the Corporate Fiduciary Act [205 ILCS 620].

"Corporate fiduciary subsidiary" means a subsidiary of a corporation organized for the purposes of accepting and executing trusts which has received a Certificate of Authority from the Commissioner to accept and execute trusts, but shall not include a state bank, a state savings and loan association, a state savings bank or any subsidiary thereof.

History

• Source: Amended at 44 Ill. Reg. 6272, effective April 24, 2020

38 Ill. Adm. Code 396.20 Purpose (renumbered)

History

• Source: Section 396.20 renumbered to Section 396.110 at 20 Ill. Reg. 10825, effective August 1, 1996

38 Ill. Adm. Code 396.30 Factors to Be Considered by the Commissioner (renumbered)

History

• Source: Section 396.30 renumbered to Section 396.120 at 20 Ill. Reg. 10825, effective August 1, 1996

38 Ill. Adm. Code 396.110 Purpose

A corporate fiduciary which proposes to establish a subsidiary, whether by incorporating the subsidiary or by acquiring the subsidiary, shall apply, on an application specified by the Commissioner, for approval from the Commissioner, not less than 90 days prior to commencing business by the subsidiary if newly incorporated, or prior to its acquisition if it is acquired.

History

• Source: Section 396.110 renumbered from Section 396.20 at 20 Ill. Reg. 10825, effective August 1, 1996

38 Ill. Adm. Code 396.120 Factors to Be Considered by the Commissioner

When reviewing an application to establish a corporate fiduciary subsidiary, the following factors are relevant:

a) the types of activities to be conducted by the corporate fiduciary subsidiary (i.e., title insurance, employee benefit services, and bookkeeping services);

b) the earnings potential of the corporate fiduciary subsidiary (i.e., the earnings are sufficient to meet the current and anticipated needs of the subsidiary as identified in the business plan);

c) the general character and experience of the management of the corporate fiduciary subsidiary (i.e., background, formal education, and practical experience in the types of services to be provided by the subsidiary); and

d) the effect of the corporate fiduciary subsidiary upon the financial condition of the corporate fiduciary.

History

• Source: Section 396.120 renumbered from Section 396.30 at 20 Ill. Reg. 10825, effective August 1, 1996

38 Ill. Adm. Code 396.210 Purpose

Section 1-7(a) of the Corporate Fiduciary Act requires any corporate fiduciary that is a trust company to apply for and obtain approval from the Commissioner for the establishment of a branch office. This Subpart sets forth the terms and conditions a trust company must satisfy in order for the Commissioner to approve its application for the establishment of a branch office.

History

• Source: Amended at 44 Ill. Reg. 6272, effective April 24, 2020

38 Ill. Adm. Code 396.220 Terms and Conditions for Approval

A trust company must demonstrate the following in order for the Commissioner to approve its application to establish a branch office:

a) That the trust company's aggregate direct and indirect fixed asset investment, including lease obligations, will be reasonable in relation to its projected earnings, capital, surplus and reserves, and liquidity (i.e., generally not greater than 50%).

b) That the expense of establishing and operating the branch office will not have an undue effect on the trust company's earnings (i.e., the establishment will not result in negative net earnings and will not bring capital below that required for safe and sound operation).

c) That the management of the trust company and the branch has demonstrated or will demonstrate the ability to operate the trust company branch office in a safe and sound manner (i.e., proposed management has the appropriate level of experience commensurate with the accounts to be administered, the prior conduct of management was conducted in a safe and sound manner and appropriate internal controls are in place to adequately supervise management actions).

d) That the trust company has developed procedures for operations, controls and audits at the branch office, including but not limited to facilities for safekeeping and recordkeeping.

e) That the types of activities proposed to be performed at the branch office are consistent with and within the scope of the activities performed by the trust company and authorized by the trust company's certificate of authority.

History

• Source: Added at 20 Ill. Reg. 10825, effective August 1, 1996

38 Ill. Adm. Code 396.230 Application Procedures

a) A trust company that intends to establish a branch office shall file an application for approval with the Commissioner on forms prescribed by the Commissioner.

b) The application shall be deemed filed when the Commission has received the applicable filing fee and a completed application form, including all of the supporting documentation necessary to determine that the terms and conditions set forth in this rule have been satisfied.

History

• Source: Added at 20 Ill. Reg. 10825, effective August 1, 1996

38 Ill. Adm. Code 396.310 Purpose (repealed)

History

• Source: Repealed at 44 Ill. Reg. 6272, effective April 24, 2020

38 Ill. Adm. Code 396.320 Notice Requirements (repealed)

History

• Source: Repealed at 44 Ill. Reg. 6272, effective April 24, 2020

38 Ill. Adm. Code 396.330 Notice Procedures (repealed)

History

• Source: Repealed at 44 Ill. Reg. 6272, effective April 24, 2020

Chapter II Office of Banks and Real Estate

Part 397 Corporate Fiduciary Receivership Account

38 Ill. Adm. Code 397.10 Purpose

This Part establishes the manner of assessing fees to fund the Corporate Fiduciary Receivership Account to the amount established by Section 5-10 of the Corporate Fiduciary Act and of replenishing the account following any disbursement.

History

• Source: Amended at 26 Ill. Reg. 1677, effective January 23, 2002

38 Ill. Adm. Code 397.20 Definitions

"A" means the total number of corporate fiduciaries.

"Account" means the Corporate Fiduciary Receivership Account.

"Act" means the Corporate Fiduciary Act [205 ILCS 620].

"B" means the number of examiner days expended in the most recent examination of the Illinois Trust Company that was completed prior to the end of the calendar quarter preceding the quarter for which the fee is being assessed.

"Balance" means the amount in the account, adjusted for any accounts receivable and any accounts payable, as of the last day of the calendar quarter preceding the quarter for which a fee may be assessed.

"C" means the total number of examiner days expended in the most recent examinations of all Illinois Trust Companies, calculated as of the last day of the calendar quarter preceding the quarter for which the fee is being assessed.

"Corporate Fiduciary" means any trust company, trust department, or other entity that holds a certificate of authority issued under Article II of the Act authorizing the exercise of trust powers in Illinois.

"D" means the amount necessary to raise the balance in the Account to the maximum amount established by Section 5-10 of the Act.

"Illinois Trust Company" means a non-depository corporation, limited liability company, or other entity organized in this State that has been given a certificate of authority to accept and execute trusts by the Commissioner of Banks and Real Estate pursuant to Article II of the Act.

History

• Source: Amended at 26 Ill. Reg. 1677, effective January 23, 2002

38 Ill. Adm. Code 397.30 Quarterly Fee to Fund the Account

a) Each corporate fiduciary will be assessed a quarterly fee of $200 until the balance of the account reaches the maximum amount established by Section 5-10 of the Act.

b) Each Illinois trust company will be assessed an additional quarterly fee until the balance of the account reaches the maximum amount established by Section 5-10 of the Act. The additional quarterly fee will be based on the following formula:

Additional quarterly fee to be paid by each Illinois trust company

=

(4,000,000 – 8,000A)

x

B

(40)

C

History

• Source: Amended at 26 Ill. Reg. 1677, effective January 23, 2002

38 Ill. Adm. Code 397.40 Restoring the Account

If expenditures are made from the Account, assessments under Section 397.30 will be continued or reinstituted until the balance in the Account is restored to the maximum amount established by Section 5-10 of the Act.

History

• Source: Amended at 26 Ill. Reg. 1677, effective January 23, 2002

38 Ill. Adm. Code 397.50 Alternate Fee Assessment to Avoid Excess Accumulation in Account

Notwithstanding any other Section of this Part, if for any quarter, the balance of the Account is at a level that fees to be collected under Section 397.30(a) of this Part would cause the balance to exceed the maximum amount established by Section 5-10 of the Act, a fee will be assessed on all corporate fiduciaries instead of the fees set forth in Section 397.30, based on the following formula:

Fee to be paid by each corporate fiduciary

=

D

A

History

• Source: Amended at 26 Ill. Reg. 1677, effective January 23, 2002

Chapter II Department of Financial and Professional Regulation

Part 398 Pledging Requirements for Illinois Trust Companies

38 Ill. Adm. Code 398.5 Definitions

"Act" means the Corporate Fiduciary Act [205 ILCS 620/5].

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director of the Division of Banking with the authority delegated by the Secretary.

"Division" means the Department of Financial and Professional Regulation-Division of Banking with the authority delegated by the Secretary.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

History

• Source: Added at 36 Ill. Reg. 8373, effective June 1, 2012

38 Ill. Adm. Code 398.10 Pledging Requirements for Illinois Trust Companies

a) Pursuant to Section 6-13.5 of the Act, each Illinois trust company holding a certificate of authority under Article II of the Act shall pledge to the Secretary a surety bond running to the Secretary or securities or combination thereof in the amount of $2,000,000. The surety bond or pledged securities must be reducible to cash by the Secretary without regard to any priorities, preferences or adverse claims in order to cover costs associated with a receivership of the Illinois trust company. The surety bond or pledged securities shall be utilized only to cover costs associated with a receivership of the pledging Illinois trust company.

b) To the extent the trust company pledges a surety bond, the surety bond shall be issued by a bonding company authorized to do business in the State of Illinois that has a rating in one of the top three rating categories as determined by a national rating service. The surety bond must clearly show that it runs to the benefit of the Secretary. The surety bond must also state that, if the trust company is placed in receivership and the Secretary acts as receiver or appoints a receiver, the Secretary may reduce the bond to cash in order to pay for any costs associated with the receivership. The trust company may not obtain a surety bond from any entity in which the trust company has a financial interest or of which the trust company is an affiliate. Any fees associated with obtaining and maintaining a surety bond shall be the responsibility of the trust company.

c) To the extent the trust company pledges securities, the securities shall be held at a Federal Reserve Bank or at a depository institution that is a state or national bank, a state or federal savings bank, or a state or federal savings and loan association approved by the Secretary. The trust company shall not be an affiliate of, or have a financial interest in, the depository institution. The securities pledged pursuant to this subsection shall be securities that qualify as authorized investments for public agencies under Section 2 of the Public Funds Investment Act [30 ILCS 235/2]. Securities pledged pursuant to this subsection shall be in addition to any securities required as part of the trust company's capital. Any fees associated with holding securities pursuant to this subsection shall be the responsibility of the trust company. A trust company choosing to pledge securities shall enter into a single deposit agreement with the Secretary and the Federal Reserve Bank or depository institution that is holding the securities. The deposit agreement shall contain provisions requiring the depository institution and the trust company to meet the requirements set forth in subsections (c)(1) through (3):

1. The depository institution shall segregate on its books and records all accounts of the trust company as assets that the trust company pledges as a part of the assets to be kept by the trust company in Illinois pursuant to the required pledge amount. These accounts shall be held by the depository institution in trust in the name of the Secretary;

2. The depository institution shall provide the Secretary with reports, receipts, confirmation or other documentation that the Secretary may request of the depository institution to determine the trust company's compliance with the requirements of Section 6-13.5 of the Act and this Section; and

3. The trust company shall pledge the securities required under Section 6-13.5 of the Act exclusively to the Secretary.

d) No trust company shall engage in the trust business under the Act unless it is in compliance continuously with this Section.

e) For purposes of this Section, a trust company is an "affiliate of" or has a "financial interest" in:

1. any company that controls the trust company and any other company that is controlled by the company that controls the trust company;

2. a subsidiary of the trust company; or

3. any company:

A) controlled, directly or indirectly, by a trust or otherwise, by or for the benefit of shareholders who beneficially or otherwise control, directly or indirectly, by trust or otherwise, the trust company or any company that controls the trust company; or

B) a majority of the directors or trustees of which constitute a majority of the persons holding any such office with the trust company or any company that controls the trust company.

f) For purposes of this Section, a company or shareholder has control over another company if:

1. the company or shareholder, directly or indirectly, or acting through one or more other persons, owns, controls, or has power to vote 25% or more of any class of voting securities of the other company;

2. the company or shareholder controls in any manner the election of a majority of the directors or trustees of the other company; or

3. the Secretary determines, after notice and opportunity for hearing, that the company or shareholder, directly or indirectly, exercises a controlling influence over the management or policies of the other company.

History

• Source: Amended at 36 Ill. Reg. 8373, effective June 1, 2012

Chapter II Office of Banks and Real Estate

Part 399 Standards for Operation and Conduct of Affairs of Corporate Fiduciaries

38 Ill. Adm. Code 399.10 Purpose

The Commissioner of Banks and Real Estate is authorized to promulgate reasonable rules setting forth standards for the operation and conduct of the affairs of corporate fiduciaries to ensure their safe and sound operation. The purpose of this Part is to set forth those standards under one heading to facilitate easy reference by the corporate fiduciaries affected.

38 Ill. Adm. Code 399.20 Definitions

"Banking Act" means the Illinois Banking Act [205 ILCS 5].

"Commissioner" means the Commissioner of Banks and Real Estate.

"Corporate fiduciary" shall have the meaning ascribed to it in Section 1-5.05 of the Corporate Fiduciary Act.

"Corporate Fiduciary Act" means the Corporate Fiduciary Act [205 ILCS 620].

"State bank" shall have the meaning ascribed to it in Section 2 of the Banking Act.

"Trust company" shall have the meaning ascribed to it in Section 1-5.11 of the Corporate Fiduciary Act.

38 Ill. Adm. Code 399.110 Purpose

The Commissioner is authorized to determine the minimum capital, surplus and reserves required for the safe and sound operation of corporate fiduciaries. Corporate fiduciaries that are state banks are subject to the investment limitations contained in the Banking Act. The purpose of this Subpart is to set forth the limitations on the authority of a trust company to invest for its own account in order to safeguard the condition of such trust company.

38 Ill. Adm. Code 399.120 Investments

For purposes of determining the adequacy of capital, surplus and reserves, a trust company, when purchasing, selling and holding investments for its own accounts, shall be subject to the same limitations and conditions with respect to such investments as are permitted for state banks by the Banking Act. The Commissioner shall disallow any investments that are not so permitted from the calculation of adequate capital, surplus and reserves.

Chapter V Comptroller

Part 600 Cemetery Care

38 Ill. Adm. Code 600.10 Definitions

As used in this Part, the following terms are used as hereinafter defined unless the context requires a different meaning.

The term "Act" means The Cemetery Care Act (Ill. Rev. Stat. 1983, ch. 21, pars. 64.1 et seq.).

The term "Care Funds" is defined as in Section 2 of said Act.

The term "Comptroller" is defined as in Section 2 of said Act.

The term "Investment Company" is defined as in Section 2 of said Act.

38 Ill. Adm. Code 600.20 Agreement to Be Entered Into by an Investment Company Under Section 2 of the Act to Be in Form Prescribed by the Comptroller

An investment company desiring to enter into an agreement with the Comptroller as in Section 2 of the Act provided shall submit an application prepared in accordance with the form prescribed therefor by the Comptroller as in effect on the date of filing. The form of application shall require the investment company to represent that: it is an open end diversified management investment company registered under the Investment Company Act of 1940; its securities are purchasable only with care funds or similar trust funds; its securities are registered for sale under the Securities Act of 1933 and the Illinois Securities Law of 1953; it will furnish the Comptroller certain information with respect to the holders of its securities; it will furnish the Comptroller copies of all reports sent to holders of its securities; it will furnish the Comptroller copies of all statements filed with the Securities and Exchange Commission. The form of application shall also contain: a consent to service of process; the name and address of its trustee or custodian; the names and addresses of all of its directors and executive officers; a schedule of exhibits required to be filed with the application which schedule shall relate to the registration of the investment company under the Investment Company Act of 1940 and its shares under the Federal Securities Act of 1933 as well as to the internal management and the operation of the investment company and, such other matters as the Comptroller shall reasonably require. Any application shall be deemed to be filed on the proper form unless objection to the form is made by the Comptroller.

38 Ill. Adm. Code 600.30 Number of Copies – Signatures

a) Four copies of the completed application, including exhibits and all other papers and documents filed as a part of the application, shall be filed with the Comptroller.

b) At least one copy of every application shall be manually signed by the applicant. If the application is typewritten, the original "ribbon" copy shall be signed. Unsigned copies shall be conformed.

c) If any name is signed to the application pursuant to a power of attorney, copies of such power of attorney shall be filed with the application. In addition, if the name of any officer signing on behalf of the applicant or attesting the applicant's seal, is signed pursuant to a power of attorney, certified copies of a resolution of the applicant's board of directors authorizing such signature shall also be filed with the application.

38 Ill. Adm. Code 600.40 Requirements as to Paper, Printing, and Language

a) The application shall be filed on good quality, unglazed, white paper 8½ by 13 inches in size, insofar as practicable. Exhibits may be on paper of a different size if the applicant so desires.

b) The application and, insofar as practicable, all papers and documents filed as a part thereof, shall be printed, lithographed, mimeographed, or typewritten. However, the application or any portion thereof may be prepared by an similar process which, in the opinion of the Comptroller produces copies suitable for permanent record. Irrespective of the process used, all copies of any such material shall be clear, easily readable and suitable for repeated photocopying.

Part 610 Illinois Funeral or Burial Funds Act

38 Ill. Adm. Code 610.10 Statutory Authority

a) Form and Review of Pre-Need Contracts.

1. All pre-need contracts must be in writing. Any use or attempted use of any oral pre-need contract or any written pre-need contract in a form that does not meet the requirements of the Illinois Funeral or Burial Funds Act [225 ILCS 45] shall be deemed a violation of the Act. [225 ILCS 45/1a-1(d)]

2. No pre-need contract shall be sold in this State unless the seller distributes to the purchaser, prior to the sale, a booklet promulgated or approved for use by the State Comptroller; the seller explains to the purchaser the terms of the pre-need contract prior to the purchaser signing; and the purchaser initials a statement in the contract confirming that the seller has explained the terms of the contract prior to the purchaser signing. [225 ILCS 45/1a-1(e)]

b) For pre-need contracts funded by life insurance or a tax-deferred annuity, the cost of an examination shall be borne by the licensee if $10,000 or more of funeral goods and services have been funded by life insurance or annuities during the preceding calendar year. The fee schedule for such examination shall be established in rules promulgated by the Comptroller. [225 ILCS 45/3]

History

• Source: Amended at 26 Ill. Reg. 5772, effective April 10, 2002

38 Ill. Adm. Code 610.20 Application

This Part applies to any Seller of pre-need contracts sold in this State as provided in the Illinois Funeral or Burial Funds Act.

38 Ill. Adm. Code 610.30 Definitions

For the purposes of this Part, the following definitions shall apply:

"Act", the Illinois Funeral or Burial Funds Act [225 ILCS 45].

"Contract Beneficiary", the person specified in the pre-need contract upon whose death funeral services or merchandise shall be provided or delivered. [225 ILCS 45/1a]

"Funeral Goods, Funeral Merchandise, or Funeral Services", those services and items of merchandise the pre-need sale of which is governed by the Illinois Funeral or Burial Funds Act.

"Income", amounts earned through investments or interest.

"Licensee", a seller of a pre-need contract who has been licensed by the Comptroller. [225 ILCS 45/1a]

"Parent Company", a corporation owning more than 12 cemeteries or funeral homes in more than one state. [225 ILCS 45/1a]

"Pre-need Contract", any agreement or contract, or any series or combination of agreements or contracts, whether funded by trust deposits or life insurance policies or annuities, which has for a purpose the furnishing or performance of funeral services or the furnishing or delivery of any personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body. [225 ILCS 45/1a]

"Provider", a person who is obligated for furnishing or performing funeral services or the furnishing or delivery of any personal property, merchandise or services of any nature in connection with the final disposition of a dead human body. [225 ILCS 45/1a]

"Purchaser", the person who provides for the payment of money under or in connection with a pre-need contract. [225 ILCS 45/1a]

"Sales Proceeds", the entire amount paid to a seller, exclusive of sales taxes paid by the seller, finance charges paid by the purchaser, and credit life, accident or disability insurance premiums, upon any agreement or contract, or series or combination of agreements or contracts, for the purpose of performing funeral services or furnishing personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body, including, but not limited to, the retail price paid for such services and personal property and merchandise. [225 ILCS 45/1a]

"Seller", the person who sells or offers to sell the pre-need contract to a purchaser, whether funded by a trust agreement, life insurance policy, or tax-deferred annuity. [225 ILCS 45/1a]

"Trustee", a person authorized to hold funds under the Act. [225 ILCS 45/1a]

"Trust Funds", all sales proceeds, including interest earned thereon, paid to any person, partnership, association or corporation upon any agreement or contract, or any series or combination of agreements or contracts, which has for a purpose the furnishing or performance of funeral services, or the furnishing or delivery of any personal property, merchandise, or services of any nature in connection with the final disposition of a dead human body, including, but not limited to, outer burial containers, urns, combination casket-vault units, caskets and clothing, for future use at a time determined by the death of the person or persons whose body or bodies are to be disposed of. [225 ILCS 45/1]

History

• Source: Amended at 26 Ill. Reg. 5772, effective April 10, 2002

38 Ill. Adm. Code 610.40 Classification of Pre-Need Contract by Funding Methods

a) For the purposes of this Part, pre-need contracts shall be classified as follows:

1. Pre-need contracts funded by trust deposits.

2. Pre-need contracts funded by life insurance or a tax-deferred annuity.

b) Pre-need contracts funded by trust agreements. In addition to complying with the requirements of Section 610.50, pre-need contracts funded by trust agreements must also contain:

1. Unless the pre-need contract has been made irrevocable, a statement that the purchaser, prior to the death of the persons for whose funeral or burial such funds were paid, has the right to cancel the pre-need contract and receive a refund as authorized or required by the Illinois Funeral or Burial Funds Act.

2. A statement that all refunds required under the Act will be made within 30 days after written demand.

c) Pre-need contracts funded by life insurance or tax-deferred annuity. In addition to complying with the requirements of Section 610.50, pre-need contracts funded by life insurance or a tax-deferred annuity must also contain:

1. A statement that the seller or provider may not be named as the owner or beneficiary of the policy or the annuity.

2. A statement that the assignment of the ownership of the insurance policy is revocable, except that a purchaser may irrevocably assign ownership of an insurance policy or annuity used to fund a guaranteed price pre-need contract to a person or trust for the purpose of obtaining favorable consideration for Supplemental Social Security Income benefits (SSI), Medicaid or other public assistance. For this purpose, the seller or contract provider may be named a nominal owner of the life insurance policy only for such time as it takes to immediately transfer the policy into trust. The assignment provision in the pre-need contract must contain the following statement on irrevocability in 12 point bold type:

This assignment may be revoked by the assignor or assignor's successor or, if the assignor is also the insured and deceased, by the representative of the insured's estate before the rendering of the cemetery services or goods or funeral services or goods. If the assignment is revoked, the death benefit under the life insurance policy or annuity contract shall be paid in accordance with the beneficiary designation under the insurance policy or annuity contract. [225 ILCS 45/2a(d)]

3. A statement that all refunds required under the Act will be made within 30 days after written demand.

History

• Source: Amended at 26 Ill. Reg. 5772, effective April 10, 2002

38 Ill. Adm. Code 610.50 Requirements for All Pre-Need Contracts

a) Pre-need contracts required to be filed with the Comptroller must meet the criteria set forth in this Section. All pre-need contracts submitted between January 1, 1994 and July 3, 1996 shall be deemed to have been submitted on the effective date of this Part.

b) Required Contents:

1. Name and address of the principal office of the seller and, if applicable, the parent company of the seller.

2. Name of purchaser and contract beneficiary, if different from the purchaser and known.

3. Name and address of provider's principal office, but if the provider has branch locations, the name and address of the branch at which the funeral will be performed, if specified by the purchaser.

4. Complete description and price of funeral merchandise and services.

5. Disclosure of whether the contract is guaranteed or non-guaranteed as to the price or if the contract contains both guaranteed price items and non-guaranteed price items a clear statement of which goods and services are guaranteed and which are not.

A) Each contract for goods and services for which the price is guaranteed, or which contains both guaranteed and non-guaranteed items, shall contain the following statement in 12 point bold type:

THIS CONTRACT GUARANTEES THE BENEFICIARY THE SPECIFIC GOODS AND SERVICES CONTRACTED FOR. NO ADDITIONAL CHARGES MAY BE REQUIRED FOR DESIGNATED GOODS AND SERVICES. ADDITIONAL CHARGES MAY BE INCURRED FOR UNEXPECTED EXPENSES INCLUDING, BUT NOT LIMITED TO, CASH ADVANCES, SHIPPING OF REMAINS FROM A DISTANT PLACE, OR DESIGNATED HONORARIA ORDERED OR DIRECTED BY SURVIVORS. [225 ILCS 45/1a-1(a)(3)(A)]

B) Except as provided in subsection (b)(5)(C), each contract for goods or services for which the price is not guaranteed, or which contains both guaranteed and non-guaranteed items, shall contain the following statement in 12 point bold type:

THIS CONTRACT DOES NOT GUARANTEE THE PRICE THE BENEFICIARY WILL PAY FOR ANY SPECIFIC GOODS OR SERVICES. ANY FUNDS PAID UNDER THIS CONTRACT ARE ONLY A DEPOSIT TO BE APPLIED TOWARD THE FINAL PRICE OF THE GOODS OR SERVICES CONTRACTED FOR. ADDITIONAL CHARGES MAY BE REQUIRED. [225 ILCS 45/1a-1(a)(3)(B)]

C) If a non-guaranteed price contract may subsequently become guaranteed, the contract shall clearly disclose the nature of the guarantee and the time, occurrence, or event upon which the contract shall become a guaranteed price contract.

6. Where the particular goods and services specified are unavailable at the time of delivery, the contract shall state that supplies and services similar in style and equal quality will be provided.

7. Any penalties or restrictions in performing the contract must be fully stated.

8. The method of funding the pre-need contract must be stated along with the following information:

A) The relationship among the funding person, the provider, and the seller.

B) The impact on the pre-need contract if the following occurs:

i) Changes in the funding arrangements or use of funds.

ii) Penalties to be incurred if the purchaser fails to make payments.

iii) Penalties to be incurred or moneys or refunds to be received as a result of the cancellation.

iv) A difference between the proceeds of the funding arrangement and the amount actually needed for the funeral at-need.

9. The method for changing the designation of the provider must be fully described.

10. Unless the pre-need contract provides for more liberal cancellation terms, every pre-need contract sold outside of the seller's principal place of business is subject to the Federal Trade Commission rule (16 CFR 429) concerning the Cooling-Off Period for Door-to-Door Sales. The FTC Rule provides that with any door-to-door sale the seller must furnish the purchaser a completed receipt or copy of any contract pertaining to the sale at the time the contract is signed. The seller must comply with the following terms:

A) A completed receipt or copy of the pre-need contract at the time of signing must be furnished to the purchaser.

B) The same language must be used in both the oral sales presentation and the written contract to the purchaser.

C) Notice of purchaser's right to cancel within 3 days after signing pre-need contract. The notice must be as follows:

i) Located close to the signature line.

ii) Printed in 12 point bold type.

iii) State that "YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION."

D) All monies must be refunded without penalty within 10 days after cancellation.

11. In addition to the cancellation provisions of subsection (b)(10) of this Section, each pre-need contract shall include a statement that the purchaser has the right to cancel the pre-need contract prior to need and receive a refund as authorized or required by the Illinois Funeral or Burial Funds Act within 30 days after written demand. Nothing in this Section shall prohibit a purchaser who is or may become eligible for public assistance from making a guaranteed price contract irrevocable in an amount prescribed by rule of the Illinois Department of Public Aid to the extent that federal law or regulations require that such a contract be irrevocable for purposes of the purchaser's eligibility for Supplemental Social Security Income benefits, Medicaid, or other public assistance program, as permitted under federal law.

c) Where a pre-need contract has been made irrevocable in an amount prescribed by rule by the Illinois Department of Public Aid for the purpose of maintaining eligibility for Supplemental Security Income benefits (SSI), Medicaid or other public assistance, a licensee is required to provide written notification to the Illinois Department of Public Aid whenever the licensee knows or reasonably should know that the amount in trust or the death benefit under a life insurance policy or annuity contract exceeds the cost of the funeral merchandise or services by more than 25%, at the time the merchandise is provided and the services are performed.

History

• Source: Amended at 26 Ill. Reg. 5772, effective April 10, 2002

38 Ill. Adm. Code 610.60 Trust Investment in Life Insurance or Annuities

a) A Trustee of a trust account shall not invest trust funds in life insurance policies or tax deferred annuities unless the following requirements are met:

1. The company issuing the life insurance policies or tax-deferred annuities is licensed by the Illinois Department of Insurance and the insurance producer or annuity seller is licensed to do business in the State of Illinois;

2. Prior to the investment, the purchaser approves, in writing, the investment in life insurance policies or tax-deferred annuities;

3. Prior to the investment, the purchaser is notified by the seller in writing about the disclosures required for all pre-need contracts under Section 1a-1 of the Act, and the purchase of life insurance or a tax-deferred annuity is subject to the requirements of Section 2a of the Act;

4. Prior to the investment, the trustee informs the comptroller that trust funds shall be removed from the trust account to purchase life insurance or a tax-deferred annuity upon the written consent of the purchaser;

5. The purchaser retains the right to refund provided for in the Act, unless the pre-need contract is sold on an irrevocable basis as provided in Section 4 of the Act; and

6. Notice must be given in writing that the cash surrender value of a life insurance policy may be less than the amount provided for by the refund provisions of the trust account.

38 Ill. Adm. Code 610.70 Requirements for Pre-Need Booklet

After the adoption of a rule prescribing a pre-need booklet, no pre-need contract may be sold in this State unless it is accompanied by a booklet that contains the following requirements:

a) Requirements for pre-need contracts as set forth in Section 1a-1 of the Act.

b) All disclosures in accordance with Sections 1a-1, 1b, 2a, 4, and 4a of the Act.

c) The funding mechanism as set forth in Section 1a-1(6)(a) of the Act.

d) Any other statutory requirements under the Act.

38 Ill. Adm. Code 610.80 Licensing of Sellers of Pre-Need Contracts Funded by Life Insurance or Tax-Deferred Annuity

a) Any seller of pre-need contract which is funded by life insurance or a tax-deferred annuity shall obtain an individual license unless the seller is an employee of a licensee. An insurance producer, annuity seller, or any individual who serves in that capacity shall not be considered an employee unless the employment relationship indicates otherwise for purposes of this Part.

b) The annual report required to be filed by the licensee with the Office of the Comptroller may be filed by the company with which the insurance producer, annuity seller, or any individual acting in that capacity is affiliated so long as all books, records and other information as required under this Act are provided. The licensee shall remain responsible for the timely filing of the annual report and shall acknowledge in writing that the annual report is true and accurate.

38 Ill. Adm. Code 610.90 Schedule of Charges for Examinations for Licensee of Pre-Need Contracts Funded by Life Insurance or Tax-Deferred Annuity

a) The charge made by the Comptroller for an examination shall be based upon the total amount of premiums received during the previous calendar year from life insurance or tax-deferred annuities for which the report is required under the Act.

b) The following fee schedule establishes the cost to be paid by licensees for the examination of books and records of the licensee:

Less than $10,000............................................................................... no charge

$10,000 or more but less than $50,000........................................................ $10

$50,000 or more but less than $100,000...................................................... $40

$100,000 or more but less than $250,000.................................................... $80

$250,000 or more....................................................................................... $100

38 Ill. Adm. Code 610.EXHIBIT A Illinois Consumer Guide to Pre-Need Funeral and Burial Purchases

ILLINOIS CONSUMER GUIDE TO PRE-NEED

FUNERAL AND BURIAL PURCHASES

What Is the Funeral or Burial Funds Act?

The Illinois Funeral or Burial Funds Act [225 ILCS 45] (the law), gives consumers certain rights and protections when they purchase funeral or burial services and merchandise in advance of need (pre-need). The State Comptroller has the duty to administer and enforce this law.

What is "Pre-Need" Funeral or Burial Purchasing?

The purchase of pre-need funeral or burial merchandise and services occurs when you enter into an agreement to acquire and pay for funeral or burial merchandise and services before you need them.

What Is a Pre-Need Sales Contract?

A pre-need funeral or burial sales contract is a legal agreement between a consumer and a funeral home, or a cemetery (seller) for funeral or burial merchandise and services. The merchandise and services will be supplied at a future date by a funeral home or a cemetery (provider).

Sellers of Pre-Need Services and Merchandise Must Be Licensed.

Sellers of pre-need services and/or merchandise must be licensed by the State of Illinois through the Office of the Comptroller. You should verify that the person with whom you are doing business is licensed to sell pre-need services and merchandise before you make your purchase. You may contact the Comptroller's Office to verify whether a seller is licensed.

What Services and Merchandise are Covered by the Funeral or Burial Funds Act?

The law covers the purchase of funeral services, clothing, caskets, grave boxes, grave liners, burial vaults and urns. Sales of cemetery services, such as the preparation of a plot or the placement of a headstone, or cemetery merchandise, such as grave markers and mausoleums, are not covered by the law. The purchase of cemetery services and merchandise may be covered by the Illinois Pre-Need Cemetery Sales Act [815 ILCS 390] and Cemetery Care Act [760 ILCS 100]. If you have any questions about which law applies to your purchase, you may contact the Comptroller's Office for assistance.

What Must the Seller Tell You in a Pre-Need Contract?

All pre-need contracts sold in Illinois must contain certain disclosures to help you the consumer understand your rights. Always check your contract for the following information:

• The seller's name and address;

• The provider's name and address;

• When a provider has branch locations, a place in the contract where the consumer may select the branch where the funeral or burial will be performed;

• The buyer and the beneficiary;

• A complete description of the merchandise and/or services purchased;

• Whether the contract is for a guaranteed or non-guaranteed price;

• How the merchandise and/or services will be funded (i.e., through a trust account, life insurance policy or annuity);

• The name of the trustee or the insurance provider;

• The governmental body that regulates the trustee or the insurance provider; and

• The seller's policy and penalties if the buyer cancels the contract or defaults on payment.

What are Guaranteed and Non-Guaranteed Contracts?

A "guaranteed contract" means that you are guaranteed the services and/or merchandise you selected for the amount of money stated in the contract. You or your estate will not be required to pay any additional costs for the items guaranteed unless unexpected charges are incurred.

A "non-guaranteed" contract means that the price of the services or merchandise you select will be determined at the time they are needed. Any payments you make under the contract act like a deposit to reduce the out-of-pocket expense at the time of need. If the "deposit" does not cover the entire cost of the merchandise or services, you or your estate pay the difference at the time of need. If your contract does not guarantee a price, it must clearly state "non-guaranteed contract". Be sure to read your contract carefully.

Some non-guaranteed price contracts are set up to later become guaranteed price contracts. In these cases, the contract must clearly state the time or event when the price becomes guaranteed and the nature of the guarantee.

Pre-Need Contracts Funded by Life Insurance Policies and Annuities vs. Pre-Need Contracts Funded by Trusts.

Under Illinois law, all pre-need contracts must be funded through an insurance policy, a tax deferred annuity, or a trust. Your contract must clearly state which of these three funding mechanisms applies to it.

a. Life Insurance Policies and Annuities

Pre-need contracts funded by life insurance policies or tax-deferred annuities are planning tools offered by insurance companies. The contracts may be purchased directly from an insurance company or through a licensed insurance agent working on behalf of the funeral home or cemetery. If you buy through a licensed insurance agent working on behalf of the funeral home or cemetery, any payments you make to the funeral home or cemetery must be mailed to the insurance company within 30 days after receipt of the contract.

Your insurance policy will provide the details of the coverage, including the cost, payout provisions and cancellation fees. Be sure to read both the contract and the insurance policy carefully.

b. Trust Accounts

When funeral homes or cemeteries sell pre-need contracts funded by a trust, the seller must send a certain percentage of your payments to a trustee for deposit in a trust account. The trustee is an independent company that must hold this money until the merchandise or services are actually needed (or until you cancel your contract and seek a refund). Review your contract for the name of the trustee and the trustee's contact information.

Sellers must send 85% of the purchase price of outer burial containers (burial vaults) and 95% of the purchase price of all other merchandise and services to the trustee within 30 days after receipt of the contract. Each year you will receive a trust account statement (much like a bank account statement) from the trustee. This is an important consumer protection, so be sure to watch for your annual statement. If you do not receive an annual statement, contact the trustee named on your contract. If the trustee cannot be located or cannot assist you, contact the Comptroller.

Can I Get My Money Back If I Change My Mind?

Yes, unless a pre-need contract is made irrevocable, you may cancel at any time. The penalties for cancelling a pre-need contract will be different depending upon when the contract is cancelled and the funding method used.

a. Contracts Sold Outside the Seller's Place of Business

If you did not purchase your contract at the seller's place of business, including but not limited to door-to-door sales, then the contract is subject to the Federal Trade Commission's "Cooling-Off Period for Door-to-Door Sales" rule. Under this rule, you have the right to cancel the contract within three business days after signing it without any penalty.

b. Paid in Full Contracts Cancelled Before the Time of Need

If you cancel a contract for services or merchandise funded by a trust after it is paid in full but before the time of need, the seller must refund 95% of the purchase price plus net earnings. For contracts for outer burial containers funded by a trust, the seller must refund 85% of the purchase price plus net earnings.

If you cancel a contract funded by an insurance policy or annuity, you are entitled to the cash surrender value of the insurance policy or annuity. (Cancellation of an insurance policy does not necessarily cancel the pre-need contract.)

c. Paid in Full Contracts Cancelled After the Time of Need

If a contract is paid in full but it is decided at the time of need that the funeral or burial will be held elsewhere or that the merchandise or services will not be used, the seller may keep 10% of the payments made under the contract or $300, whichever is less. The remainder of the trust funds or insurance or annuity proceeds will be provided to the legal heirs or according to a probate action.

d. Partially Paid Contracts

If you cancel before your contract is paid in full or if you default on payments, the seller may keep 25% of the payments made under the contract or $300, whichever is less.

The Illinois Pre-Need Funeral Consumer Protection Fund

If you are not provided the funeral or burial merchandise promised in the contract and are not provided a refund, you or your estate may be able to recover your losses from the State's Pre-need Funeral Consumer Protection Fund. Contact the Comptroller's Office to apply for consumer protection funds.

What Can You Do If You Believe You Were Treated Unfairly?

If you think that you have been a victim of unfair or illegal practices in the handling of pre-need funds, you may file a written complaint with the Office of the Comptroller, Pre-Need Licensing and Certification Enforcement (PLACE) Division, James R. Thompson Center, Suite 15-500, 100 West Randolph Street, Chicago, Illinois 60601. In addition, the State Attorney General can seek a court order for restitution and issuance of fines. If you believe that improprieties exist in connection with the sale of insurance or annuities used to fund a pre-need contract, you can file a complaint with the Illinois Department of Insurance, 320 West Washington, Floor 4, Springfield, Illinois 62767.

Questions or Concerns?

If you have questions or concerns about your pre-need contract, please call the Comptroller's toll-free consumer hotline at (877)203-3401; mail your inquiry to the Illinois Office of the Comptroller, PLACE Division, 100 West Randolph Street, Suite 15-500, Chicago, Illinois 60601; or visit our PLACE webpage at http://www.ioc.state.il.us/office/place/.

History

• Source: Amended at 37 Ill. Reg. 15365, effective September 9, 2013

Chapter VI Department of Human Rights

Part 800 Discrimination Involving Credit

38 Ill. Adm. Code 800.10 Scope and Purpose (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6659, effective March 27, 1998

38 Ill. Adm. Code 800.20 Coverage (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6659, effective March 27, 1998

38 Ill. Adm. Code 800.30 Other Definitions

As used in the Act and these regulations, the following terms have the meanings indicated:

Age − the chronological age of a person.

Disability − a determinable physical or mental characteristic of a person (including a characteristic requiring the person's use of a guide or hearing dog), or the history of the characteristic, or the perception of the characteristic by the person complained against, which characteristic results from disease, injury, congenital condition of birth or functional disorder but is unrelated to the person's ability to repay the indebtedness in question.

Marital Status − the legal status of being married, single, separated, divorced or widowed.

Prohibited Characteristic − any characteristic, or combination of characteristics, the consideration of which constitutes "unlawful discrimination" under Section 1-103(Q) of the Act.

History

• Source: Amended at 32 Ill. Reg. 13475, effective August 1, 2008

38 Ill. Adm. Code 800.40 Permissible Inquiries of Credit Applicants.

a) Generally. Except as expressly authorized in this Section, or in Section 800.50 or 800.60 of this Part, or under any law of the United States or the State of Illinois, a financial institution or credit card offeror may not inquire of any applicant for a loan or credit card regarding any characteristic the consideration of which would constitute unlawful discrimination under the Act. This shall not mean, however, that a mortgage lender is prohibited from inquiring of applicants regarding their race, national origin, age, sex and marital status, to the extent required for federal monitoring purposes under Section 202.13 of Regulation B of the Board of Governors of the Federal Reserve System, (12 CFR 202.13), as long as the inquiry is made in conformity with the requirements of that regulation.

b) Pertinent Elements of Credit-Worthiness.

Section 4-104(B)(1) of the Act provides that financial institutions and credit card offerors are not precluded from: making an inquiry of the applicant's age, permanent residence,immigration status, or any additional information if such inquiry is for the purpose of determining the amount and probable continuance of income levels, credit history, or other pertinent element of credit-worthiness as provided in regulations of the Department. Under this exemption, the following inquiries are permissible for the purposes and under the circumstances indicated:

1. Age. A creditor may inquire into an applicant's age to ensure that the applicant has the legal capacity to enter into a binding contract; to assess, from the applicant's occupation and probable length of time to retirement, whether the applicant's income (including retirement income) will support the extension of credit to its maturity; to weigh the adequacy of any collateral offered to secure the transaction against the life expectancy of the applicant; or to evaluate the significance of the applicant's length of employment or residence. A creditor may also inquire of an applicant's age in connection with an application for credit insurance, to determine the conditions on which insurance may be available to the applicant.

2. Permanent Residence and Immigration Status. A creditor may inquire into an applicant's permanent residence and immigration status to determine its rights and remedies regarding repayment, provided the inquiry is made uniformly of all applicants without regard to race, national origin or other prohibited characteristic.

3. Sex and Marital Status. A creditor may not request the sex of an applicant, but may request the designation of a title from among "Ms.", "Miss", "Mr." or "Mrs.", if the designation is clearly denominated as optional with the applicant. If the application is for individual unsecured credit and the applicant does not reside in a community property state, the creditor may not request the applicant's marital status; otherwise, the applicant may be required to disclose marital status from among "Married", "Unmarried" and "Separated", and the creditor may explain that "Unmarried" applies to single, divorced and widowed persons. A creditor may not request information regarding an applicant's childbearing capacity or intentions, or birth control practices. A creditor may, however, inquire about the number and ages of an applicant's dependents, about dependent-related financial obligations (e.g., medical and educational expenses attributable to the applicant's responsibility for a dependent) and about the applicant's liability to pay alimony or child support, if the information is requested uniformly of all applicants without regard to sex or marital status or any other prohibited characteristic. A creditor may request the sex and marital status of an applicant in connection with an application for credit insurance, for purposes of determining the conditions on which insurance may be available to the applicant. A creditor may also request the marital status of an applicant for the limited purpose of ascertaining its rights and remedies regarding repayment.

4. Spousal Information.

A) A creditor may not request information concerning an applicant's spouse or former spouse unless:

i) the spouse will be permitted to use the account or will be contractually liable upon it;

ii) the applicant relies on the spouse's income or on alimony or kindred payments (e.g., separate maintenance, child support) from the spouse to repay the indebtedness; or

iii) the applicant resides in, or property securing the indebtedness is located in, a community property state.

B) When any of the criteria contained in subsection (b)(4)(A) of this Section is satisfied, the creditor may request information regarding the applicant's spouse only to the extent that the information may be requested about an applicant under this Section.

5. Source of Income. A creditor shall advise applicants, before inquiring generally into their available income, that they need not disclose income derived from alimony, child support or separate maintenance payments if they do not desire that income considered in evaluating their creditworthiness. This advice is not required, however, if the terms of the inquiry are sufficiently specific (e.g., focused exclusively on employment income) as to reasonably preclude disclosure of alimony, child support or separate maintenance. A creditor may inquire whether any of an applicant's listed income is derived from a public assistance program to evaluate the likely continuation and future reliability of those payments, and to ascertain its rights and remedies regarding repayment, if the inquiry is made uniformly of all applicants without regard to a prohibited characteristic.

6. Disability. A creditor may not inquire whether an applicant has a disability. If any income listed by the applicant is derived from disability or public assistance benefits occasioned by a disability, however, the creditor may request information regarding the nature and duration of the condition for purposes of evaluating the probable continuation and future reliability of that income. A creditor may also inquire into an applicant's physical condition in connection with an application for credit insurance to determine the conditions on which insurance may be available to the applicant.

History

• Source: Amended at 32 Ill. Reg. 13475, effective August 1, 2008

38 Ill. Adm. Code 800.50 Empirically Derived Credit Systems

a) The exemption in Section 4-104(B)(2) of the Act [775 ILCS 5/4-104(B)(2)] does not authorize the consideration of any prohibited characteristic, other than age under an empirically derived credit system, and allows for the consideration of age only if the system is "demonstrably and statistically sound". A system shall be deemed "demonstrably and statistically sound" if each of the following standards is satisfied:

1. Data Base. The data used in developing the system, if not consisting of the complete population of all credit applicants, must be drawn from the file of credit applicants using accepted statistical sampling principles.

2. Purpose. The system must be developed with the purpose of predicting positively the actual creditworthiness of applicants.

3. Validation. The system must be validated, according to accepted statistical principles, as distinguishing between creditworthy and non-creditworthy applicants at a statistically significant rate.

4. Revalidation. The system must be periodically revalidated as to its predictive ability using appropriate statistical principles, and be adjusted as necessary to maintain its predictive ability.

b) A creditor may adopt a credit system used by another creditor, or use data from another creditor in developing its own system, as long as the system otherwise meets the requirements of this Section. If the creditor is unable to validate the system based on its own credit experience in accordance with subsection (a)(3) of this Section, it must validate the system as soon after implementation as sufficient credit experience becomes available. If the system fails this validity test, its use must immediately be suspended.

History

• Source: Amended at 22 Ill. Reg. 6659, effective March 27, 1998

38 Ill. Adm. Code 800.60 Special Credit Programs

a) Requisite Standards. A special credit program is exempt from coverage of the Act under Section 4-104(C)(3) of the Act [775 ILCS 5/4-104(C)(3)] only if it satisfies each of the following requirements:

1. Written Plan. The program is established and administered pursuant to a written plan which identifies the classes of persons it is designed to benefit and sets forth the procedures and standards for extending credit.

2. Class Benefiting. The program is established and administered to extend credit to a class of persons who, under the standards of creditworthiness customarily used by the lender, either would not receive such credit or would receive it on less favorable terms than those available to other applicants for similar types and amounts of credit.

3. Nondiscrimination. The program is established and administered so as not to discriminate against applicants on the basis of any characteristic prohibited under the Act, except to the extent that the class of persons benefiting from the program may share one or more such characteristic(s) and that requirement is not a subterfuge for evading the purposes of the Act.

b) Inquiries into Common Characteristics. If a special credit program is established to benefit a class of persons sharing one or more characteristic(s) prohibited under the Act, the lender may inquire of any applicant for credit under that program regarding such prohibited characteristic(s), notwithstanding the provisions of Section 800.40 of this Part.

c) Inquiries into Financial Need. If financial need is one of the criteria for the extension of credit under a special credit program, the lender may inquire regarding marital status, spousal income and income from alimony, child support or separate maintenance, notwithstanding the provisions of Section 800.40 of this Part.

History

• Source: Amended at 22 Ill. Reg. 6659, effective March 27, 1998

Chapter II Department of Financial and Professional Regulation

Part 1010 Student Loan Servicing Rights Act

38 Ill. Adm. Code 1010.100 Definitions

"Act" means the Student Loan Servicing Rights Act [110 ILCS 992].

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director of the Division of Banking, with the authority delegated by the Secretary.

"Division" means the Department of Financial and Professional Regulation-Division of Banking, with the authority delegated by the Secretary.

"Licensee" means a person licensed pursuant to the Act.

"NMLS" means the Nationwide Multistate Licensing System and Registry.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

38 Ill. Adm. Code 1010.120 Fees

a) The fees listed in this Section shall be payable to the Department, or to NMLS for transfer to the Division, as approved by the Director. The Director will specify the form of payment to the Division or to NMLS, which may include certified check, money order, credit card, or other forms authorized by the Director. NMLS shall be authorized to collect and process transaction fees or other fees related to licensees or other persons subject to the Act.

b) License Fees

1. Application and Investigation. For each application for an initial license, the applicant shall pay a nonrefundable initial application fee of $1000 (see Sections 15-15 and 20-80 of the Act) and a nonrefundable background investigation fee of $800, or the amount authorized by Sections 15-15 and 20-80 of the Act.

2. License Renewal. For each application for an annual renewal of a license, the applicant shall pay a nonrefundable renewal fee of $1,000 (see Section 20-80 of the Act). In the case of an inactive license, the applicant shall pay the nonrefundable renewal fee and an additional nonrefundable reactivation fee equal to the renewal fee, pursuant to Section 15-40(c) of the Act.

3. Notice of Change of Ownership or Control. The licensee shall pay a nonrefundable fee of $500 for each notice of change of ownership or control filed pursuant to Section 1010.130.

4. Notice of Change of Officers or Directors or Change of Name or Address. The licensee shall pay a nonrefundable fee of $50 for each notice of change of officers or directors or change of name or address filed pursuant to Section 1010.130.

c) Returned Payment. Any licensee or person who delivers a check or other payment to the Department that is returned unpaid by the financial institution upon which it is drawn shall pay to the Department, in addition to the amount already owed, a fee of $50.

d) Examination Fees

1. Time expended in the conduct of any examination of the affairs of any licensee or its affiliates pursuant to Section 15-40 of the Act shall be billed by the Department at a rate of $510 per examiner day. Fees will be billed following completion of the examination and shall be paid within 30 days after receipt of the billing.

2. Out-of-State Travel. When out-of-state travel occurs in the conduct of any examination, the licensee shall make arrangements to reimburse the Department all charges for services such as travel expenses, including airfare, hotel and per diem incurred by the employee. These expenses are to be in accord with applicable travel regulations published by the Department of Central Management Services and approved by the Governor's Travel Control Board (80 Ill. Adm. Code 2800).

e) Hearings. Each party that requests a hearing pursuant to Sections 20-30 and 20-65 of the Act shall pay a nonrefundable fee of $500, unless the fee is waived by the Director. In determining whether to waive the fee, the Director shall consider the financial hardship imposed on the party.

f) Assessments. Each licensee shall pay to the Division its pro rata share of the cost for administration of the Act that exceeds other fees listed in this Section, as estimated by the Division, for the current year and any deficit actually incurred in the administration of the Act in prior years. Each licensee's pro rata share shall be the percentage that the number of borrowers serviced in Illinois by the licensee bears to the total number of borrowers serviced by all licensees in Illinois.

38 Ill. Adm. Code 1010.130 Notice of Changes by Licensee

a) Each licensee shall, upon any change in the information contained in its application for license, file an amendment to that application setting forth the changed information. The amendments shall be filed within 10 business days after the occurrence of the event that results in the information becoming inaccurate or incomplete.

b) Any amendment that cannot be submitted through NMLS shall be filed directly with the Division.

38 Ill. Adm. Code 1010.140 Licensee Website and Toll-Free Telephone Service

Each licensee shall maintain a secured-access website and toll-free telephone service consistent with the provisions of Sections 5-55 and 5-65 of the Act. The secured-access website and toll-free telephone service shall, at a minimum, provide borrowers and cosigners with capabilities reasonably adequate for efficiently handling communications, questions, and other matters relating to an existing loan. In determining whether the secured-accessed website and toll-free telephone service are provided in a reasonably adequate manner, the Director will consider consumer complaints received regarding the licensee and information obtained from examinations conducted and reports filed pursuant to the Act.

38 Ill. Adm. Code 1010.150 Alternative Repayment and Loan Forgiveness Options

Licensees must provide complete information to borrowers about alternative repayment and loan forgiveness options, the application processes for those options, the differences between those options and forbearance, and the consequences of those options and forbearance, consistent with Sections 5-30, 5-35, 5-40, and 5-45 of the Act.

38 Ill. Adm. Code 1010.160 Account Information, Payment Processing, Cosigner Payments

a) Licensees must maintain detailed account information for each student loan borrower and cosigner, on the licensee's website, accessible to the borrower and cosigner, as applicable, through a secure login system. The licensee must maintain account history for each loan serviced and a report of all loans for each borrower serviced by the licensee.

b) Licensees must credit borrower and cosigner payments promptly and accurately, including, but not limited to, by providing same-day crediting of electronic payments, if made before the posted cut-off time for same-day crediting, and crediting of paper check payments on the date received by the licensee.

c) Licensees must apply payments made by cosigners only to a loan for which the payor has cosigned, unless specifically directed otherwise by the cosigner/payor.

38 Ill. Adm. Code 1010.170 Books and Records

a) Licensees must maintain a general ledger, maintain a cash receipt and disbursement journal, and reconcile bank accounts at least monthly.

b) Licensees shall maintain, for each student loan serviced, the following information:

1. the student loan application, if available;

2. disclosure statements sent to the borrower;

3. the promissory note or loan agreement;

4. the complete loan history;

5. qualified written requests;

6. instructions from the borrower, if any, on how to apply overpayments;

7. statements of account sent to the borrower;

8. call recordings with borrowers; and

9. any additional records the Director may designate.

c) Each licensee must maintain books and records (see subsections (a) and (b)) at a location designated by the licensee.

History

• Source: Amended at 50 Ill. Reg. 11447, effective July 27, 2026

Chapter II Department of Financial and Professional Regulation

Part 1010 Student Loan Servicing Rights Act

38 Ill. Adm. Code 1010.180 Record Retention

Licensees must maintain all applicable records required by the Act and this Part for a minimum of 3 years after a serviced loan has been paid in full or assigned to collection, or the servicing rights have been sold, assigned, or transferred, unless prohibited by contract with the lender.

38 Ill. Adm. Code 1010.190 Electronic Records

Electronic records must be maintained by licensees in a commonly used format and be readily accessible, readable, and printable by the Director and Division staff.

38 Ill. Adm. Code 1010.210 Preparation of Independent Audit Report

a) Each licensee shall annually cause its books and accounts to be audited by a certified public accountant not connected with the licensee. The audit shall be filed with the Division within 105 days after the end of the licensee's fiscal year. The audit shall be sufficiently comprehensive in scope to permit the expression of an opinion on the financial statements, which shall be prepared in accordance with generally accepted accounting principles and shall be conducted in accordance with generally accepted auditing standards.

b) Audit reports not filed with the Division within 105 days after the end of a licensee's fiscal year as specified in subsection (a), unless extended for cause by the Director, shall cause the licensee to pay a fee at the rate of $50 per calendar day for up to three months. To qualify for an extension of time, a licensee shall apply to the Director in writing before the audit report filing deadline with an explanation of the licensee's need for an extension. In determining whether to grant an extension of time, the Director shall consider whether the extension of time is based on conditions beyond the control of the licensee.

c) The Director may appoint an independent auditor at the expense of the licensee at any time after a licensee has failed to timely file a required audit report.

History

• Source: Amended at 49 Ill. Reg. 176, effective December 18, 2024

38 Ill. Adm. Code 1010.220 Examination

a) Licensees shall be examined from time to time pursuant to Section 20-15(a) of the Act. As part of each regularly scheduled examination, the Director shall evaluate and rate licensees in accordance with uniform rating factors.

b) Ratings include, but are not limited to:

1. The highest rating of 1 is assigned to a licensee that maintains a strong compliance management system (CMS) and takes active steps to prevent any violations of law and consumer harm.

2. The rating of 2 is assigned to a licensee that maintains a CMS that is satisfactory at managing consumer compliance risk in the licensee's products and services and substantially limiting violations of law and consumer harm.

3. The rating of 3 reflects a CMS deficient at managing consumer compliance risk in the licensee's products and services and at limiting violations of law and consumer harm.

4. The rating of 4 reflects a CMS seriously deficient at managing consumer compliance risk in the licensee's products and services and/or at preventing violations of law and consumer harm.

5. The rating of 5 reflects a CMS critically deficient at managing consumer compliance risk in the licensee's products and services and/or at preventing violations of law and consumer harm.

c) All licensees shall be subject to examination by the Director. The Director may enter into cooperative agreements with other regulatory authorities and contract with others to provide examinations. The Director may accept examination reports from those regulatory authorities and under contracts that meet the requirements of this Section. The examination shall result in a rating under subsection (b) and will be charged at the rate referenced.

Part 1050 Residential Mortgage License Act of 1987

38 Ill. Adm. Code 1050.100 High Risk Home Loan Definitions; Applicability

Pursuant to Section 150 of the High Risk Home Loan Act (Act) [815 ILCS 137/150], Sections 1050.155, 1050.190, 1050.195, 1050.197, 1050.198 and 1050.199 of this Part do not apply to loans closed on or after January 1, 2004.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.110 Definitions

"Act" means the Residential Mortgage License Act of 1987 [205 ILCS 635].

"Administrative decision" means an order or action of the Director, such as assessment of a fine, denial of a license, suspension, or revocation of a license.

"Approved credit counselor" means a credit counselor approved by the Director of the Department of Financial and Professional Regulation-Division of Financial Institutions.

"Assisting" as used in Section 1-4(o) of the Act shall not include the following activities or services when undertaken by a person in an otherwise licensed profession or occupation provided such activities or services are undertaken by such person in pursuit of such persons licensed profession or occupation including, but not limited to insurance producer, attorney at law, certified public accountant, land surveyor, or professional engineer:

Activities or services of, or incidental to, the licensed occupation or profession;

Delivery of surveys, abstracts of title, title commitments, opinions of title, draft deeds, mortgage forms or lender sales material;

Coordinating the activities associated with the borrower's completion or submission of a loan application;

Contracting or conferring with a licensed attorney, title insurance company, insurance producer, or lender as to the status of the loan application, loan commitment, title commitment, fire or extended coverage insurance, or closing requirements.

"Control" means the power to, directly or indirectly, whether acting through one or more persons, effect the voting interest of 10 percent or more of any class of the outstanding voting shares, or partnership interest, of an entity subject to the Act.

"Conviction" or "convicted" means, with respect to a criminal charge, the final judgment, or the act of receiving final judgment, on a verdict or finding of guilty, a plea of guilty, or a plea of nolo contendere.

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director of the Department of Financial and Professional Regulation-Division of Banking.

"Division" means the Department of Financial and Professional Regulation-Division of Banking, with the authority delegated by the Secretary.

"Document", for purposes of Section 6-2(2) of the Act, shall include all business and financial documents and all books and records, such as, but not limited to in either type, characteristics, or function, tax returns, signature cards, writings that engage or provide information to accountants, consultants, or other agents, applications, authorizations to do business, licenses or certificates, and submissions for insurance endorsements.

"Employee" and "person employed":

As used in Section 1-4(d)(1.5) of the Act, "employee" means:

any natural person who performs activity subject to licensure or registration under the Act for an exempt entity under Section 1-4(d)(1) of the Act, provided that the exempt entity:

expressly, in a writing submitted to and approved by the Director, assumes full and direct legal responsibility for the activity of the natural person that is performed on behalf of or in the name of the exempt entity or that benefits or is intended to benefit the exempt entity; or

submits to the Director for approval a written opinion of counsel stating that the relationship between the exempt entity and the natural person is one in which the exempt entity assumes full and direct responsibility for the activity of the natural person that is performed on behalf of or in the name of the exempt entity or that benefits or is intended to benefit the exempt entity; or

any natural person who performs activity subject to licensure or registration under the Act for an exempt entity under Section 1-4(d)(1) of the Act, provided that the natural person's performance of the activity is otherwise under statute or administrative rule, subject to comprehensive regulation and supervision, regular examination of books and records and activities and administrative agency sanctions for violation of regulatory, supervisory, or examination requirements by the State of Illinois or by a federal depository institution regulator.

As used in Section 1-4(d)(3) of the Act, "person employed" means any natural person who performs activity licensable under the Act exclusively for one licensee under the Act, provided that the licensee, expressly in writing on a form approved by the Director, assumes full and direct legal responsibility for the licensable activity performed on behalf of or in the name of the licensee or that benefits or is intended to benefit the licensee.

"First tier subsidiary", as used in Section 1-4 of the Act, means a subsidiary the stock of which is directly owned by the parent corporation, without any intervening layer of ownership by another corporation.

"Hearing Officer" means an attorney licensed in the State of Illinois, other than an attorney who is a regular employee of the Division, who is the presiding official appointed by the Director to conduct a hearing.

"High risk home loan" means a home equity loan on residential real property in which:

at the time of origination, the APR exceeds by more than 6 percentage points in the case of a first lien mortgage, or by more than 8 percentage points in the case of a junior mortgage, the yield on U.S. Treasury securities having comparable periods of maturity to the loan maturity as of the 15th day of the month immediately preceding the month in which the application for the loan is received by the lender; or

the total points and fees payable by the consumer at or before closing will exceed the greater of 5% of the total loan amount or $800. The $800 figure shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index.

However, this Part shall not apply to a loan that is made primarily for a business purpose unrelated to the residential real property securing the loan or to an open-end credit plan subject to 12 CFR 226 (2000, no subsequent amendments or editions are included).

"Home equity loan" means any loan secured by the borrower's primary residence when the proceeds are not used as purchase money for the residence.

"Independent loan processing entity" means an entity engaged solely in providing loan processing services through the sponsoring of individuals acting pursuant to Section 7-1A(d) of the Act.

"Licensee" means a person or entity licensed under the Act.

"Material", as used in Section 6-2(2) of the Act, shall include, but not be limited to, a misstatement or omission of fact that, if it had not been misstated or omitted, would have altered the decision, approval, determination, or finding made by the Director or his or her agent in reliance upon the misstatement or omission. "Material" shall also include a misstatement or omission of fact that, if it had not been misstated or omitted, would have caused the Director or his or her agent to act or consider acting pursuant to any of the powers vested in the Director or his or her agents or in the Department or the Division by the Act or the rules promulgated under the Act.

"NMLS" means the Nationwide Multistate Licensing System and Registry.

"Other regulatory agencies", as used in Section 4-2(e) of the Act, shall include the United States Department of Housing and Urban Development, state insurance commissions, any state or Federal agency having jurisdiction over the licensee, state and federal securities regulators, and the United States Department of Labor.

"Party" means any person, including the Director, named on a pleading or affected by an administrative decision.

"Petitioner" means a person affected by an administrative decision of the Division or the Department who files a request for hearing, or the Director when he or she initiates a notice for hearing to a named respondent.

"Principal place of business", as used in Section 1-4(d)(1)(ix) of the Act, shall mean the principal place of business of the subsidiary's parent bank, which must be chartered by the Comptroller of the Currency of the United States.

"Repurchase a loan":

As used in Section 2-4(w) of the Act, means those instances in which:

the licensee has demanded that another licensee repurchase a loan and the first scheduled loan payment has not been received by the licensee making the demand; or

the licensee has demanded that another licensee repurchase a loan as a result of the determination, after reasonable investigation, by the licensee making the demand, that materially false representations, documentation or information may have been provided to any person in connection with the origination or transfer of the loan.

As used in Section 2-4(x) of the Act, means those instances in which:

the licensee has received a demand that it repurchase a loan and the first scheduled loan payment has not been received by the person making the demand; or

the licensee has received a demand that it repurchase a loan as a result of the determination, after reasonable investigation, by the person making the demand, that materially false representations, documentation or information may have been provided to any person in connection with the origination or transfer of the loan.

"Points and fees" means:

all items required to be disclosed as points and fees under 12 CFR 226.32 (2000, no subsequent amendments or editions included);

the premium of any single premium credit life, credit disability, credit unemployment, or any other life or health insurance that is financed directly or indirectly into the loan;

all compensation paid directly or indirectly to a mortgage broker, including a broker that originates a loan in its own name in a table funded transaction, not otherwise included in the points and fees disclosed under 12 CFR 226.32.

"Respondent" means a person who is named in the notice of hearing when the notice is initiated by the Director, or the Director when a petitioner files a request for hearing.

"Secretary" means the Secretary of the Department of Financial and Professional Regulation.

"Servicer" means any entity licensed under the Act who is responsible for the collection or remittance for, or the right or obligation to collect or remit for, any lender, noteowner, or noteholder, or for a licensee's own account, of payments, interest, principal, and trust items such as hazard insurance and taxes on a residential mortgage loan in accordance with the terms of the residential mortgage loan; and includes loan payment follow-up, delinquency loan follow-up, loan analysis and any notifications to the borrower that are necessary to enable the borrower to keep the loan current and in good standing.

"Shared appreciation agreement" means a writing evidencing a transaction or any option, future, or any other derivative between a person and a consumer where the consumer receives money or any other item of value in exchange for an interest or future interest in a dwelling or residential real estate or a future obligation to repay a sum on the occurrence of an event, such as:

the transfer of ownership;

a repayment maturity date;

the death of the consumer; or

any other event contemplated by the writing. [205 ILCS 635/1-4(ccc)]

"State" means the State of Illinois.

"Total loan amount" is the same as the term used in 12 CFR 226.32, and shall be calculated in accordance with the Federal Reserve Board's Official Staff Commentary to that regulation.

History

• Source: Amended at 50 Ill. Reg. 8010, effective June 1, 2026

38 Ill. Adm. Code 1050.115 Administrative Decision (Repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

Chapter II Department of Financial and Professional Regulation

Part 1050 Residential Mortgage License Act of 1987

38 Ill. Adm. Code 1050.120 Assisting (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.125 Commissioner (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.130 Control (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.132 Conviction or Convicted (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.135 Document (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.140 Employee (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.145 First Tier Subsidiary (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.150 Hearing Officer (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.155 High Risk Home Loan (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.157 Licensee (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.160 Material (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.165 Other Regulatory Agencies (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.170 Party (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.175 Principal Place of Business (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.180 Repurchase a Loan (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.185 State (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.190 Servicer (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.195 Points and Fees (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.197 Total Loan Amount (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.198 Approved Credit Counselor (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.199 Home Equity Loan (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.210 Fees

a) Method of Payment of Fees

The fees listed in this Section shall be payable to the Department, or to the Nationwide Mortgage Licensing System and Registry for transfer to the Department as approved by the Director. The Director may specify the form of payment to the Department or to the NMLS, which may include certified check, money order, credit card, or other forms authorized by the Director. The Director may specify that fees be paid separately or combined, and may pro-rate fees for implementation of the NMLS. The NMLS shall be authorized to collect and process transaction fees or other fees related to licensees or other persons subject to the Act.

b) Residential Mortgage License

1. Investigation Fee: The applicant shall pay a non-refundable fee of $1,500 or such non-refundable amount as authorized by the Director that, when combined with the license fee set forth in subsection (b)(2)(A), totals an amount equal to $2,700 annually or the amount authorized by Section 2-2 of the Act.

2. License Fee:

A) Initial Licensure: For each application for an initial Illinois Residential Mortgage License on which the Director has made the findings that a license shall be issued, the applicant shall pay a non-refundable license fee of $1,200, plus the investigation fee set forth in subsection (b)(1), or such non-refundable amount as authorized by the Director that, when combined with the investigation fee set forth in subsection (b)(1), totals an amount equal to $2,700 annually or the amount authorized by Section 2-2 of the Act.

B) License Renewal: For each application for an annual renewal of an Illinois Residential Mortgage License, the applicant shall pay a non-refundable license fee of $2,700, or the total amount set forth in subsections (b)(1) and (b)(2)(A).

C) Amended License: The licensee shall pay a non-refundable fee of $500 for each Notice of Change of Ownership or Control amended license that is required by Subpart D.

D) Notice of Change: The licensee shall pay a non-refundable fee of $50 with each Notice of Change of Officers or Directors or Change of Name or Address or Change of Activity.

E) Duplicate License: The licensee shall pay a non-refundable fee of $50 for each duplicate original license issued.

F) Returned Payment: Any licensee or person who delivers a check or other payment to the Department that is returned unpaid by the financial institution upon which it is drawn shall pay to the Department, in addition to the amount already owed, a fee of $50.

3. Exempt Registration Fee: For each application for initial registration or annual renewal of registration as authorized by Section 1-3(a-1) of the Act, the applicant or registrant shall pay the Department a non-refundable registration fee of $2,700.

c) Mortgage Loan Originator License

1. Application Fee: An applicant for a Mortgage Loan Originator license shall pay a non-refundable fee of $200 for each individual licensed on the initial application and $150 annually for each individual renewal, plus an additional $75 late fee for any renewal that is received after the expiration date of the preceding license.

2. License Transfer Fee: There shall be paid by or on behalf of the Mortgage Loan Originator a non-refundable fee of $50 for each license transferred.

3. License Reactivation Fee: There shall be paid by or on behalf of the applicant a non-refundable fee of $150 for reactivating each or license on Inactive or Inoperative Status.

4. Duplicate Documents: The licensee shall pay a non-refundable fee of $50 for each duplicate document.

5. Returned Payment: Any person who delivers a check or other payment to the Department that is returned to the Department unpaid by the financial institution upon which it is drawn shall pay to the Department, in addition to the amount already owed to the Department, a fee of $50.

d) Examination

1. Fees: Time expended in the conduct of any examination of the affairs of any licensee or its affiliates pursuant to the provision of Section 4-2 of the Act shall be billed by the Department at a rate of $510 per examiner day. Fees will be billed following completion of the examination and shall be paid within 30 days after receipt of the billing.

2. Out-of-State Travel: When out-of-state travel occurs in the conduct of any examination, the licensee shall make arrangements to reimburse the Department all charges for services such as travel expenses, including airfare, hotel and per diem incurred by the employee. These expenses are to be in accord with applicable travel regulations published by the Department of Central Management Services and approved by the Governor's Travel Control Board (80 Ill. Adm. Code 2800).

e) Additional Full-Service Office:

1. Initial Fee: The licensee shall pay a non-refundable fee of $250 for each Notice of Intent to Establish an Additional Full-Service Office required by Subpart C.

2. Annual Fee: After the notice filed under subsection (e)(1), the licensee shall pay an annual non-refundable Additional Full-Service Office fee of $250 on the initial license anniversary date.

f) Hearing Fees: Each party that requests a hearing pursuant to Section 4-1(n) of the Act shall pay a non-refundable fee of $500, except that a Mortgage Loan Originator requesting a hearing shall pay a non-refundable fee of $250, unless the fee is waived by the Director. In determining whether to waive the fee, the Director shall consider the financial hardship imposed on the party.

History

• Source: Amended at 43 Ill. Reg. 5272, effective May 10, 2019

38 Ill. Adm. Code 1050.220 License Fees (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.230 Amended License Fees - Corporate Changes (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.240 Duplicate Original License Fees (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.245 Loan Originator Registration Application Fee (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.246 Loan Originator Registration Transfer Fee (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.247 Loan Originator Registration Reactivation Fee (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.248 Duplicate Loan Originator Certificate of Registration or Pocket Card Fee (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.250 Examination Fees (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.255 Direct Expenses of Out-of-State Examinations (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.260 Additional Full-Service Office Fees (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.270 Hearing Fees (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.280 Late Fees (repealed)

History

• Source: Repealed at 15 Ill. Reg. 8580, effective May 28, 1991

38 Ill. Adm. Code 1050.290 Manner of Payment (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.310 Application for an Illinois Residential Mortgage License

a) Any person, association, corporation or partnership (other than those entities exempt by Section 1-4(d) of the Act) that intends to operate as a licensee shall file an application for an Illinois license on a form prescribed by the Director. Each application shall be accompanied by an investigation fee, as set forth in Section 1050.210 of this Part. Upon completion of an investigation that the findings set forth in Section 2-2 of the Act have been met, a license fee, as set forth in Section 1050.210 of this Part shall be paid to the Department.

b) Notwithstanding any other provision of this Part, failure to perfect an application, i.e., meet a second request for information within 10 business days after the request, shall automatically require the Director to issue a denial of the application, except that the Director may upon good cause shown grant an extension. An example of good cause may include, but shall not be limited to, death or incapacitating illness of the preparer, or catastrophic occurrence. Denial under such circumstances shall not affect new applications filed after the denial. Upon submission of an additional investigation fee, an applicant for a new license or renewal may reapply following denial.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.320 Application for Renewal of an Illinois Residential Mortgage License (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.330 Waiver of License Fee

Each applicant for a new Illinois Residential Mortgage License and each applicant for a renewal of an Illinois Residential Mortgage License that intends to request a waiver of the licensing fee under Section 2-7 of the Act shall file a request on a form prescribed by the Director.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.340 Full-Service Office

a) Each licensee shall maintain a full-service office consistent with the provisions of Sections 3-4 and 1-4(r) of the Act. At a minimum, each licensee shall:

1. Maintain a registered agent in Illinois; and

2. Provide a person or persons reasonably adequate to handle efficiently communications, questions, and other matters relating (Section 3-4 of the Act) to an application for a loan or existing loan and provide a toll-free telephone arrangement for doing so. In determining whether a licensee handles such matters in a reasonably adequate manner, the Director shall consider consumer complaints received regarding the licensees and information obtained from examinations conducted and reports filed pursuant to the Act. In addition, the Director shall consider whether the licensee has:

A) Provided facilities and personnel adequate to accommodate a borrower who wishes to bring all documents applicable to his or her application for or existing home mortgage to the full-service office for examination in conjunction with an inquiry, complaint or concern.

B) Maintained a supply of all documents required under Subparts G, H, I, J, K, and L of this Part, when those Subparts apply to the licensee.

b) If the Director determines that a licensee is not in compliance with Sections 3-4 and 1-4(r) of the Act, the Director shall notify the licensee, in writing, detailing the requirements for bringing the licensee into compliance. The Director may require a licensee to demonstrate compliance with this Section in instances in which personnel are conducting licensable activities in Illinois without adequate facilities and/or licensed offices in Illinois. The Director, at his or her discretion, may require documentation from licensees and hold hearings to take testimony from owners, officers, directors and employees of a licensee, as selected by the Director, and compel attendance of those so selected for the purpose of determining compliance with this Section.

History

• Source: Amended at 36 Ill. Reg. 250, effective January 1, 2012

38 Ill. Adm. Code 1050.350 Additional Full-Service Office

Each licensee that intends to operate and maintain an additional full-service office shall file a Notice of Intent to Establish an Additional Full-Service Office, on a form prescribed by the Director, 30 days prior to the proposed operation of the additional office. The notice shall be accompanied by the fee set forth in Section 1050.210 of this Part. Additionally, an annual fee shall be paid upon approval of the Application for Renewal of an Illinois Residential Mortgage License pursuant to Section 1050.320 of this Subpart.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.360 Continuing Education Requirements for Certain Employees (repealed)

History

• Source: Repealed at 28 Ill. Reg. 10352, effective June 29, 2004

38 Ill. Adm. Code 1050.370 Licensing of Mortgage Loan Originators

a) License Applications

The Director may withdraw any license application for which the applicant has failed or refused to provide a written response, including any required documentation, within 21 business days after receiving a deficiency letter for this response and required documentation from the Director.

b) Licenses

1. Issuance of License; Conditions and Reports. Upon approving an application for an original or renewed Mortgage Loan Originator License pursuant to Article VII of the Act and this Part, the Director may issue the Mortgage Loan Originator License through electronic licensing systems such as the NMLS and maintain a public record of all licenses issued within those electronic licensing systems. The Director may make copies of licenses available to licensees through electronic or other methods. Mortgage Loan Originator Licenses shall be issued subject to the following conditions:

A) The Director shall use applicable license numbers and/or identifiers for each Mortgage Loan Originator License, including unique identifiers as authorized by Section 7-14 of the Act.

B) Each Mortgage Loan Originator shall provide notification to the Director through the NMLS, within 10 calendar days after obtaining information that the Mortgage Loan Originator has had his or her license revoked in any governmental jurisdiction (see Section 7-3(1) of the Act), has been convicted of, or pled guilty or nolo contendere to, a felony (see Section 7-3(2) of the Act), or has had an adverse judgment of $500 or more in any jurisdiction (see the financial responsibility, character and general fitness requirements of Section 7-3(3) of the Act). The notification shall describe fully all convictions, revocations and adverse judgments. The Director may take disciplinary action against any Mortgage Loan Originator for convictions, revocations and adverse judgments based upon failure to comply with Sections 7-3(1), (2), or (3) of the Act and may take disciplinary action against a Mortgage Loan Originator who fails to comply with the reporting requirement of this subsection (b)(1)(B).

C) Each employing licensee or registrant shall provide notification to the Director through submitting a sponsor removal to the NMLS, immediately, but no later than 30 calendar days after the termination of a Mortgage Loan Originator's employment. The employing licensee or registrant may notify the Director of the reasons for the termination and, if applicable, the employing licensee or registrant also shall provide a report to the Director pursuant to Section 6-2(4) of the Act. The Director may take disciplinary action against an employing licensee or registrant that fails to comply with the reporting requirement of this subsection (b)(1)(C) or files a frivolous, false or misleading report under Section 6-2(4) of the Act.

D) Each Mortgage Loan Originator shall notify the Director through the NMLS, within 30 days if the Mortgage Loan Originator's information contained in the initial application or any renewal application is no longer current and must file accurate supplemental information. The Director may take disciplinary action against a Mortgage Loan Originator who fails to notify the Director as required by this subsection (b)(1)(D).

2. Inactive or Inoperative Status and Reactivation; Transfers

The Director may create categories of inactive or inoperative status. A Mortgage Loan Originator License shall be considered on inactive or inoperative status at any time a Mortgage Loan Originator is not actively employed by a licensee or registrant prior to the expiration date of the license. A Mortgage Loan Originator shall apply to the Director through the NMLS, and include the transfer fee set forth in Section 1050.210, in order to transfer the sponsorship of his or her license to another employing licensee. A Mortgage Loan Originator cannot conduct licensable activities while on inactive or inoperative status or any time prior to the Director accepting the new sponsor in the NMLS. When a Mortgage Loan Originator has been on inactive or inoperative status for more than 90 calendar days, prior to resuming active status, the Mortgage Loan Originator shall pay to the Director a Mortgage Loan Originator Reactivation Fee in the amount set forth in Section 1050.210. A Mortgage Loan Originator's inactive or inoperative status expires with the expiration of the license and any subsequent licensing shall require submission of a new license application and fee in the amount set forth in Section 1050.210.

3. Independent Loan Processors

An independent loan processor entity must employ one or more individuals licensed as a Mortgage Loan Originator to provide supervision and instruction to one or more individuals performing loan processing services. If only one loan processor is providing services for an independent loan processing entity, that individual must be licensed as a Mortgage Loan Originator to meet the supervision and instruction requirement set forth in the Act and this Part.

History

• Source: Amended at 43 Ill. Reg. 5272, effective May 10, 2019

38 Ill. Adm. Code 1050.410 Net Worth

a) Amount. Except as provided in subsection (c) of this Section, each licensee shall maintain net worth of not less than $150,000.

b) Calculation. Net worth shall be defined as total assets minus total liabilities, except that total assets shall not include the following:

1. That portion of a licensee's assets pledged to secure obligation of any person or entity other than that of the mortgagee;

2. Any asset (except construction loans receivable, secured by first mortgages from related companies) due from officers or stockholders having an interest;

3. That portion of any marketable security (listed or unlisted) not shown at the lower of cost or market, except for any shares of Federal National Mortgage Association stock required to be held under a servicing agreement, which shall be carried at cost;

4. Any real estate held for sale or investment if development will not start within 2 years from date of acquisition;

5. Any amount in excess of the lower of the cost or market value of mortgages in foreclosure, construction loans, or foreclosed property acquired through foreclosures;

6. Any amount shown on the books for investment in and advances to joint ventures, subsidiaries, affiliates, and selected companies that is greater than the value of the assets at equity;

7. Goodwill or value placed on insurance renewals or property management contract renewals or other similar intangibles;

8. Organization costs;

9. Any leasehold improvements not being amortized over the lesser of the expected life of the asset or the remaining term of the lease;

10. Commitment fees paid that are not recoverable through the closing or selling of loans;

11. The value of any servicing contracts not determined in accordance with Financial Accounting Standards Board Statement No. 65 and Financial Accounting Standards Board Technical Bulletin 87-3; and

12. Any asset may be excluded from the calculation of the licensee's net worth upon the Director's finding that including the asset undermines or may undermine, in whole or in part, any purpose of the Act, as identified at Section 1-2 of the Act. Any report or finding made under this subsection (b)(12) shall, in writing, identify which of the Act's purposes is or may be undermined and how including the asset results in that effect.

c) A licensee that engages solely in loan brokering as defined in Section 1-4(o) of the Act is excepted from complying with the net worth requirements of subsection (a) of this Section provided the licensee provides written evidence to the Director of the licensee's conformance with a net worth of $50,000, as required by Section 3-5 of the Act. The allowable components of the $50,000 net worth shall conform pro rata with the net worth requirements of the United States Department of Housing and Urban Development, as set forth in the Audit Guide for Audits of HUD Approved Nonsupervised Mortgagees for Use by Independent Public Accountants and be subject to subsection (b)(12) of this Section. The audit guide for audits of HUD approved non-supervised mortgagees for use by independent public accountants can be obtained by contacting the U.S. Department of Housing and Urban Development, Office of Inspector General, 451 Seventh Street SW, Washington, D.C. 20410. This handbook was last issued August 25, 1997 (no subsequent dates or editions), under the title: Handbook 2000.04 REV-2, Consolidated Audit Guide for Audits of HUD Programs.

History

• Source: Amended at 34 Ill. Reg. 17339, effective October 29, 2010

38 Ill. Adm. Code 1050.420 Line of Credit (repealed)

History

• Source: Repealed at 13 Ill. Reg. 17056, effective October 20, 1989

38 Ill. Adm. Code 1050.425 Examination

a) As part of each regularly scheduled examination, the Director shall evaluate and rate licensees, for purposes of scheduling the next regular examination, in accordance with uniform rating factors.

b) Composite ratings shall include but not be limited to:

1. Composite "1". Licensees in this group had no violations noted during the examination; any findings or comments were of a minor nature. Such licensees evidence strong financial condition and management skills.

2. Composite "2". Licensees in this group had violations noted that are correctable in the normal course of business.

3. Composite "3". Licensees in this category exhibit either compliance, financial or operational weaknesses that give cause for remedial action to correct the weaknesses.

4. Composite "4". Licensees in this group have compliance violations that are not being addressed or resolved by the licensee. Licensees in this category require urgent and decisive corrective measures.

5. Composite "5". This category is reserved for licensees with deficiencies or uncorrected violations critical enough to support conservatorship, suspension, or revocation. Some examples might include, but are not limited to: ability to demonstrate net worth, failure to procure required bonds, fraudulent mortgage practices, fraudulent application for licensure, and being subject to other regulators' disciplinary or enforcement actions.

c) All licensees shall be subject to examination by the Director. The Director may enter into cooperative agreements with other regulatory authorities and contract with others to provide for examinations and the Director may accept examination reports from those regulatory authorities and under such contracts as meet the requirements of this Section. The examination shall result in a rating as referenced in subsection (b) and will be charged at the rate referenced. Thereafter, licensees shall have a frequency of regular examinations at least as follows:

Rating

Frequency of Examination

At least once every

1

36 months

2

36 months

3

24 months

4

12 months

5

Continual monitoring for immediate remedial action

d) The Director may conduct an examination at any time at the Director's sole discretion. In determining whether to conduct an examination, the Director may consider information such as an allegation or evidence that a licensee is engaged in fraudulent, unsafe, unsound, or unlawful activities, evidence of loan repurchase demands made upon the licensee, receipt of complaints regarding a licensee, a change in ownership of a licensee, other governmental inquiries, failure to maintain or demonstrate net worth, notice of cancellation of surety bond or fidelity bond, and vendor complaints.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.430 Late Audit Reports

Audit reports not delivered within 90 days after the date specified in Section 3-2 of the Act, unless extended for cause by the Director, shall cause the licensee to pay a fee at the rate of $50 per calendar day for up to three months. An independent auditor may be appointed by the Director at the expense of the licensee at any time after the 90th day. To qualify for an extension of time, a licensee shall apply to the Director in writing at least 15 days prior to the deadline. In determining whether to grant an extension of time, the Director shall consider whether the extension of time is based on conditions beyond the control of the licensee. The Director shall appoint an independent auditor when the licensee is engaged in the activities of residential mortgage lending and has failed after the 90th day to submit the required certified annual audited financial statements, and has not been granted an extension by the Director.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.440 Escrow

a) Escrow funds shall be disclosed as a part of the licensee's financial statement package. Escrow funds collected pursuant to Section 1050.1335 and for payment of real property taxes or any other purpose authorized by the mortgage contract shall be maintained in a depository institution as described in subsection (b) and may not be commingled with any licensee funds. If no funds are to be escrowed in a shared appreciation agreement, no disclosure is required to be part of the licensee's financial statement package.

b) When escrow funds have been collected pursuant to Section 1050.1335, or when servicing includes maintenance of an escrow (impound) account for payment of tax bills and/or hazard insurance premiums, the funds collected for the account shall be placed in a federally insured depository institution, or a Federal Home Loan Bank, or a Federal Reserve Bank, or other similar government-sponsored enterprise, to be removed and used only for:

1. authorized payments from the related escrow (impound) account for tax bills and/or hazard insurance premiums;

2. refunds to the mortgagor;

3. transferring to another institution as described in subsection (b);

4. forwarding to the appropriate servicer in case of a transfer of servicing;

5. any other purpose authorized by the mortgage contract;

6. compliance with a regulatory or court order; or

7. payment to a licensee pursuant to the provisions of Section 1050.1335.

c) All escrow funds are subject to examination by agents of the Director.

History

• Source: Amended at 50 Ill. Reg. 8010, effective June 1, 2026

Chapter II Department of Financial and Professional Regulation

Part 1050 Residential Mortgage License Act of 1987

38 Ill. Adm. Code 1050.450 Audit Workpapers

Upon request from the Director, a licensee shall forward authorization to release workpapers of the licensee's independent auditor to the Director within two days after receipt of the request.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.460 Selection of Independent Auditor (repealed)

History

• Source: Repealed at 34 Ill. Reg. 17339, effective October 29, 2010

38 Ill. Adm. Code 1050.470 Proceedings Affecting a License

Each licensee shall be required to provide notification to the Director within two days after the licensee becomes the subject of any other Federal or State governmental agency's proceedings that which could affect the licensee's authority to do business as a licensee.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.475 Change in Business Activities

Each licensee shall be required to provide advance written notice to the Director at least 10 business days prior to:

a) Closing a full-service office; or

b) Discontinuing brokering, originating, or servicing, as defined under the Act.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.480 Change of Ownership, Control or Name or Address of Licensee

Prior to a change of ownership or control, a change of name or address or a change of officers or directors, a licensee shall complete and file the appropriate application and the appropriate fee as set forth in Section 1050.210 of this Part so that the Director may determine whether such a change would alter the findings for issuance of a new license as set forth in Section 2-2(a) of the Act or would change materially any of the information in the licensee's new license application or license renewal application.

a) Change of Ownership or Control. A completed application for a new Illinois Residential Mortgage License shall be submitted to the Director, along with payment of the appropriate fee as set forth in Section 1050.210 of this Part, by the prospective purchaser at least 10 days prior to the proposed date of the change. The Director shall issue either a new license or a finding that the proposed change of ownership or control does not require a new license.

b) Change of Name or Address. At least 10 days before the proposed effective date of the change, a licensee shall file with the Director a completed Application for Change of Name or Address on a form prescribed by the Director and accompanied by the fee set forth in Section 1050.210 of this Part. The Director shall approve the name change unless the Director finds the proposed name is the same as, or deceptively similar to, another licensee's name. In determining whether a name is deceptively similar, the Director shall consider the geographic area in which each licensee operates. If the Director denies an Application for Change of Name or Address, the Director shall inform both the applicant licensee and the licensee that has the deceptively similar or same name. Upon approval of the application and upon receipt of payment of the appropriate fee as set forth in Section 1050.210 of this Part, the Director shall issue an amended license.

c) Change of Officers or Directors. Whenever one or more of a licensee's principal officers or directors resign, or are replaced, or whenever additional principal officers or directors are installed, the change shall be reported to the Director within 30 days, or by the end of the calendar month in which the change occurred, whichever is later, of the effective date of the change. The change shall be reported on a form prescribed by the Director, accompanied by the appropriate fee set forth in Section 1050.210 of this Part. For purposes of this Section, "principal officers or directors" shall mean those officers who engage in activities covered by the Act.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.490 Bonding Requirements

a) In lieu of a paper surety bond, each licensee shall file and maintain an electronic surety bond in the NMLS in conformance with Section 3-1 of the Act. The amount of the bond shall be not less than $25,000 and in an amount according to the scale in subsection (b).

b) Each Mortgage Loan Originator must be covered by the electronic surety bond filed and maintained by his or her employing licensee pursuant to subsection (a). Registered exempt companies or entities shall file and maintain electronic surety bonds in the same manner as subsection (a) for the purpose of covering their Mortgage Loan Originator employees or sponsored individuals. Licensed mortgage brokers and mortgage bankers and exempt company or entity registrants must file and maintain an electronic surety bond that provides coverage for each sponsored Mortgage Loan Originator in an amount that reflects the dollar amount of Illinois mortgage loans applied for or originated by its Mortgage Loan Originators during the preceding calendar year. Exempt independent loan processing entity registrants must file and maintain an electronic surety bond in the same manner as subsection (a) that provides coverage for each sponsored Mortgage Loan Originator in the amount of $50,000. The surety bond amount will be set for each licensed mortgage broker and mortgage banker and registered exempt company or entity in accordance with the following scale, or, for exempt independent loan processing entity registrants, the $50,000, based upon Illinois residential mortgage loans brokered, processed, underwritten, funded, originated, serviced or purchased, as the case may be, during the preceding calendar year:

Loans

Bond Amount

$0 - $5,000,000

$25,000

$5,000,001 - $20,000,000

$50,000

$20,000,001 - $50,000,000

$75,000

$50,000,001 - $100,000,000

$100,000

Over $100,000,000

$150,000

The Director may require licensed mortgage brokers and mortgage bankers and registered exempt companies to file reports of Illinois mortgage loan volumes with the Director or NMLS for purposes of determining that the bond is in an amount that complies with the scale in this subsection (b). Based upon these reports, the Director may cause licensed mortgage brokers and mortgage bankers and registered exempt companies to adjust the amount of the bonds to an amount that complies with the scale in subsection (b).

c) Each electronic surety bond required pursuant to Section 3-1 of the Act and this Section shall be for a perpetual term.

History

• Source: Amended at 43 Ill. Reg. 5272, effective May 10, 2019

38 Ill. Adm. Code 1050.610 Filing Requirements

On or before March 1 of each year, each licensee, except entities engaged solely in loan brokering activities and entities engaged solely in servicing activities, shall file an Annual Report of Mortgage Activity. On or before March 1 of each year, each licensee that brokers loans must file an Annual Report of Mortgage Brokerage Activity. On or before March 1 of each year, each licensee that services residential mortgage loans shall file an Annual Report of Mortgage Servicing Activity. On or before March 1 of each year, each licensee that purchases residential mortgage loans shall file an annual report of purchasing activity set forth in Section 1050.655. The Director may require reporting by licensees of mortgage, mortgage brokerage, and mortgage servicing activities to the NMLS, upon the dates established by the NMLS.

History

• Source: Amended at 43 Ill. Reg. 5272, effective May 10, 2019

38 Ill. Adm. Code 1050.620 Reporting Forms

The reports required by Section 1050.610 must be filed with the Director on forms prescribed by and obtained from the Director and in accordance with the instructions for filing included with the forms.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.630 Annual Report of Mortgage Activity

a) Each licensee shall report the number and aggregate dollar amount of application for, and the number granted and the aggregate dollar amount of, loans pursuant to Section 4-8.3 of the Act. This report shall be categorized by: residential mortgage loans; construction loans; and home improvement and rehabilitation loans. The reporting shall be made by census tract. If the U.S. Department of Commerce Census Bureau has not assigned census tracts, the reporting shall be by zip code.

b) Each licensee shall report the information regarding residential mortgage loans pursuant to Section 4-8.3 of the Act by census tract. If the U.S. Department of Commerce Census Bureau has not assigned census tracts, then reporting shall be by zip code. In addition to the information required to be reported under Section 4-8.3 of the Act, each licensee shall furnish the name of any loan broker who has had any connection with such loans.

c) Service corporations of savings and loan associations and subsidiaries or affiliates of certain banks and foreign banking corporations exempted from licensing at Section 1-4(d)(1)(viii) and (ix) of the Act (except those that only service or only broker loans), are required to file Annual Reports of Mortgage Activity as though they are licensees. They shall so file on forms prescribed by and obtained from the Director. In lieu of the information required by subsection (a), the service corporations of savings and loan associations may submit Federal Home Loan Bank Board (FHLBB) Form 1154-0 "Loan Application Register of Mortgage Loans".

History

• Source: Amended at 29 Ill. Reg. 19187, effective November 10, 2005

38 Ill. Adm. Code 1050.640 Annual Report of Brokerage Activity

a) Each licensee and service corporation of savings and loan associations and subsidiaries or affiliates of certain banks and foreign banking organizations exempted from licensing by Section 1-4(d)(viii) and (ix) of the Act, which broker residential mortgage loans, shall file an Annual Report of Brokerage Activity.

b) The Annual Report of Brokerage Activity shall include the names of the loan funders, dollar amount of the loans and with whom the licensee had mortgage brokerage agreements including any specific loan programs and any aggregate dollar limits.

History

• Source: Amended at 29 Ill. Reg. 19187, effective November 10, 2005

38 Ill. Adm. Code 1050.650 Annual Report of Servicing Activity

Each licensee that services home loan mortgages and reports any of these loans as being in default or foreclosure pursuant to Section 4-8.3 of the Act shall furnish, in addition to other information requested by the Director the names of the lenders who funded the loan.

History

• Source: Amended at 29 Ill. Reg. 19187, effective November 10, 2005

38 Ill. Adm. Code 1050.655 Annual Report of Purchasing Activity

Each licensee that purchases residential mortgage loans shall file an Annual Report of Purchasing Activity. The Annual Report of Purchasing Activity shall include the names of originating entities, dollar amounts for each loan by property address or dollar amount of Illinois loans contained in a multi-state property portfolio, identifying the portfolio, and a total dollar amount for all Illinois loans purchased.

History

• Source: Added at 36 Ill. Reg. 250, effective January 1, 2012

38 Ill. Adm. Code 1050.660 Verification

A notarized affidavit or oath, affirmation or declaration under penalty of perjury, attesting to the accuracy and truthfulness of the report must accompany each Annual Report of Mortgage Activity, Annual Report of Brokerage Activity and Annual Servicing Report, and Annual Report of Purchasing Activity submitted to the Director. This verification must be signed by the owner, if the licensee is a sole proprietorship; by all partners, if the licensee is a partnership; by two officers or all directors, if the licensee is a corporation; or by all members, if the licensee is an association.

History

• Source: Amended at 36 Ill. Reg. 250, effective January 1, 2012

38 Ill. Adm. Code 1050.710 Computation of National Residential Mortgage Foreclosure Rate (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.720 Computation of Illinois Residential Mortgage Foreclosure Rate (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.730 Excess Foreclosure Rate (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.740 Loan Delinquency Hearing

a) Authority. The Director may hold public hearings concerning a licensee that is subject to examination pursuant to Section 4-8 of the Act. The hearing shall be held in accordance with Section 4-8(c) of the Act.

b) Notice. Written notice of the time, place, date and subject of the hearing shall be posted in both the Springfield and Chicago offices of the Division at least 10 days prior to the hearing. The Director may distribute such notice to other interested persons upon request.

c) Testimony. Testimony at the public hearings shall be taken in accordance with Section 4-8(c) of the Act. Testimony may be either oral or written. If oral, the party proposing to testify must complete a witness slip that shall be provided at the hearing. If written, the proposed testimony must be received by the Director prior to the hearing. Notwithstanding the foregoing, testimony shall be permitted at the hearing only if the party proposing to testify has completed, and the Director has received, either a written letter of complaint or a consumer complaint form as prescribed by the Director.

d) Hearings. Hearings held under this Section shall be for informational purposes only and shall not be subject to 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.750 Director's Authority - Unusually High Rate (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.810 New Loans

When a borrower is required to make monthly payments, payment instructions shall be issued in time to reasonably assure receipt by the customer at least 15 days before the first payment is due and shall include, but not be limited to the following:

a) The name, address and telephone number of the entity to whom payments are to be made and the name of the person to whom inquiries should be directed. Phone numbers shall be toll free to the customer;

b) The exact amount of the monthly payment and a plain English explanation of the method of calculation; and

c) A clear and conspicuous statement as to monthly date of each payment, regardless of interval between due date and assessment of any late-payment penalty.

History

• Source: Amended at 50 Ill. Reg. 8010, effective June 1, 2026

Chapter II Department of Financial and Professional Regulation

Part 1050 Residential Mortgage License Act of 1987

38 Ill. Adm. Code 1050.820 Transfer of Servicing

a) No licensee shall sell or transfer servicing to, or accept or purchase servicing from, any entity other than a licensee or an entity exempt from licensing pursuant to Section 1-4(d) of the Act unless specifically authorized by the Director.

b) Any licensee who is a party to an arrangement for large transfers of servicing shall make certain that sufficient staff and facilities are dedicated to the transfers to prevent inconvenience to mortgagors.

c) Notice to Mortgagor of Transfer. Licensee shall comply with the notice requirement set forth in 12 CFR 1024.33 (Mortgage Servicing Transfers) (2017, no subsequent dates or editions included).

d) Responsibilities of Transferring Licensee. Responsibilities of a licensee who transfers or sells servicing on a residential mortgage loan shall:

1. Promptly providing the insurance carrier or agent with a notice of transfer identifying both the policy number and loan number when servicing includes payment of hazard insurance premiums;

2. Promptly notifying the tax-bill service or taxing authority of the transfer when servicing includes payment of real property taxes;

3. Forward to the buying or accepting servicer:

A) Escrow (impound) balances;

B) Correspondence, bills, receipts and documents relating to the transferred loans;

C) Mortgage payments daily, for a period of at least 60 days.

e) In addition to the notice described in subsection (c), responsibilities of a licensee buying or accepting transfer of servicing of a residential mortgage loan shall include but not be limited to:

1. Promptly furnishing to the customer payment identification materials required by the licensee for efficient processing of customer remittances. Examples of such items are payment coupon books and preprinted envelopes;

2. Promptly responding to each mortgagor's questions regarding payoffs, assumptions, statements of account and general servicing procedures;

3. Practicing forbearance with the mortgagor when sorting out transfer-related problems, including but not limited to delinquency and assessment of late charges.

History

• Source: Amended at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.830 Real Property Tax and Hazard Insurance Payments

Where servicing includes maintenance of an escrow (impound) account for payment of tax bills and hazard insurance premiums, the licensee shall make a good faith effort to comply with the following guidelines:

a) Tax bills received 30 days before discount or penalty dates should be paid on or before those dates;

b) Hazard insurance premium bills received 30 days before the due date should be paid on or before the due date;

c) To ensure accrual of sufficient funds to pay taxes and insurance premiums, a complete analysis of each mortgage escrow (impound) account shall be performed at least once every year. No later than 30 days before the effective date of a change in payment, the customer shall receive the analysis, along with a plain English explanation of how the new payment amount has been calculated.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.840 Payment Processing

A licensee shall process and properly credit to a mortgage loan account any payment from a mortgagor on the same calendar date the payment is physically delivered, either in person or via United States Mail, at the address designated by the licensee for payments. No late fee shall be imposed if the licensee has received the mortgagor's payment in readily identifiable form by 5:00 p.m. on the day on which the payment is due in the amount, manner, location and time indicated by the mortgagee to avoid the imposition of late fees. Upon demand by the Department, the licensee shall produce documentation as to the date on which any payment in question was received by the licensee.

History

• Source: Amended at 36 Ill. Reg. 250, effective January 1, 2012

38 Ill. Adm. Code 1050.850 Toll-Free Telephone Arrangement

Telephone calls, regarding a mortgage loan account, to a licensee with a telephone area code other than that of the customer shall not be at the customer's expense. When a licensee is not required by the Act or this Part to maintain an Illinois-dedicated "800" telephone number, it still shall be the responsibility of the licensee to provide some form of toll-free telephone arrangement for customer contacts to the licensee during normal business hours.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.860 Payoff of Outstanding Mortgage Loan

a) When a check or other negotiable instrument received in final payment is deposited in a financial institution, the licensee's refund policy shall conform to Section 4-213 of the Uniform Commercial Code [810 ILCS 5/4-213] time requirements on making those funds available for withdrawal by the licensee.

b) Payoff Letter. Within seven business days of receipt of a written request from an entity authorized by the borrower, a licensee shall furnish a written notice of the total amount required to pay in full on an outstanding mortgage loan, as of a specified date. Payoff letters shall itemize and explain all charges included in the total figure stated.

c) For shared appreciation agreements, the licensee shall furnish within five business days after receipt of a written request from a borrower or an entity authorized by the borrower an initial estimate of the total amount required for the borrower to pay at the termination or settlement of the shared appreciation agreement. The licensee shall furnish a final written notice of the total amount required for the borrower to pay at the termination or settlement of the shared appreciation agreement within three business days after the licensee receives the valuations on which the Ending Home Value and Final Settlement Payment Amount are based. The final written notice shall be provided to the borrower no more than 30 days after the licensee receives the request.

History

• Source: Amended at 50 Ill. Reg. 8010, effective June 1, 2026

Chapter II Department of Financial and Professional Regulation

Part 1050 Residential Mortgage License Act of 1987

38 Ill. Adm. Code 1050.870 Compliance with Other Laws

Servicing and foreclosure procedures of a licensee shall comply with applicable federal and State statutes and regulations, including but not limited to, Section 15-1502.5 of the Illinois Mortgage Foreclosure Law [735 ILCS 5/15-1502.5].

History

• Source: Added at 36 Ill. Reg. 250, effective January 1, 2012

38 Ill. Adm. Code 1050.910 General Prohibition

No person, partnership, association, corporation or other, entity except a licensee or an entity exempt from licensing pursuant to Section 1-4(d) of the Act, shall cause to be circulated or use any advertising appearing in the State of Illinois or make any representation or give any information to any person that indicates or reasonably implies activity involving the making, servicing or brokering of loans secured by residential real estate located in Illinois.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.920 Definition of Advertisement

a) An advertisement is any message, except as provided in subsection (b) of this Section, conveyed in any format, including, but not limited to, the Internet, and attempting to induce, directly or indirectly, any person to enter into a residential mortgage loan or residential mortgage loan brokerage agreement as defined in Section 1-4(w) of the Act.

b) Small items bearing only the name, address and telephone number of the distributing entity shall not be considered messages intended to induce any person to enter into a residential mortgage loan agreement or residential loan brokerage agreement as defined in the Act and shall not be considered advertisements. Examples of these items are pencils, pens, buttons, pins, pocket calendars, and balloons. Business cards shall be considered an advertisement.

History

• Source: Amended at 43 Ill. Reg. 5272, effective May 10, 2019

38 Ill. Adm. Code 1050.930 Compliance with Other Laws

Every advertisement shall comply with Sections 1-3(b) and 3-3 of the Act, as well as applicable Federal and State statutes and regulations, including, but not limited, to the Consumer Credit Protection Act (15 USC 1601, et seq.) including Title VII (Equal Credit Opportunity Act) and Title I (Truth in Lending Act) of that Act and the Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505].

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.940 Requirements

Any advertisement appearing in Illinois by a licensee regarding residential mortgage loans, whether via electronic or print media, including mailings to individual potential residential mortgage loan customers, shall include, in a manner that is clear and conspicuous to the consumer:

a) The NMLS Consumer Access homepage (www.nmlsconsumeraccess.org). For electronic media, the licensee shall use the phrase "For licensing information, go to: www.nmlsconsumeraccess.org."

b) The NMLS Unique Identifier of the licensee. If a Mortgage Loan Orignator (MLO) is advertised, the licensee must include its MLO employee's individual NMLS Unique Indentifier, in addition to the licensee's NMLS Unique Indentifier.

History

• Source: Amended at 43 Ill. Reg. 5272, effective May 10, 2019

38 Ill. Adm. Code 1050.950 Misleading and Deceptive Advertising Prohibition

Advertisements by licensees shall not be false, misleading or deceptive. Examples of prohibited advertising include but are not limited to the following:

a) No advertisement regarding residential mortgage lending or brokering may indicate or imply that interest rates or charges for loans are in any way "recommended", "approved", "set" or "established" by the State or the Act;

b) The NMLS Unique Identifier of the licensee shall not appear in any advertisement relating to activities other than residential mortgage lending or brokering, unless wording relating to the licensee's residential mortgage services also appears in the such advertisements and in prominence equal to or greater than the language regarding its other activities.

History

• Source: Amended at 43 Ill. Reg. 5272, effective May 10, 2019; expedited correction at 43 Ill. Reg. 9197, effective May 10, 2019

38 Ill. Adm. Code 1050.1010 Loan Brokerage Agreement

Before a mortgage loan applicant (also referred to in this Section as "borrower" or "customer") signs a completed residential mortgage loan application or gives the licensee any consideration, whichever comes first, a loan brokerage agreement shall be required and shall be in writing and signed by both the mortgage loan applicant and a licensee whose services to the customer shall be loan brokering as defined at Section 1-4(o) of the Act.

a) The loan brokerage agreement shall carry a clear and conspicuous statement that, upon request, a copy of the agreement shall be made available to the borrower or the borrower's attorney for review prior to signing.

b) Both the licensee's authorized representative and the borrower shall sign and date the loan brokerage agreement, and a copy of the executed agreement shall be given to the customer.

c) The loan brokerage agreement shall contain an explicit description of the services the licensee agrees to perform for the borrower and an accounting of estimated loan costs and fees paid to the licensee that may be provided through reference to, or be taken from, a good faith estimate or TILA-RESPA Integrated Loan Estimate. The loan brokerage agreement shall contain language of prominence equal to or greater than the estimate, listing the types of situations or conditions that could materially affect the amounts indicated as a result of details that could not be known by the licensee at the time of signing the loan brokerage agreement. Examples of such situations or conditions include, but are not limited to, an appraised value different from that estimated by the borrower or credit obligations that the borrower fails to report.

d) The loan brokerage agreement shall carry a clear and conspicuous statement as to the conditions under which the borrower is obligated to pay the licensee.

e) The loan brokerage agreement shall provide that, if the licensee makes false or misleading statements in the agreement, the borrower may, upon written notice:

1. void the agreement;

2. recover monies paid to the broker for which no services have been performed; and

3. recover actual costs, including attorney fees for enforcing the borrower's rights under the loan brokerage agreement.

f) The loan brokerage agreement shall incorporate by reference the Loan Brokerage Disclosure Statement described in Section 1050.1020.

g) Except for a Rate-Lock Fee Agreement in accordance with Section 1050.1335, the loan brokerage agreement shall be the only agreement between the borrower and licensee with respect to a single loan; provider, however, that the licensee also shall provide to the customer any disclosure statement necessary to comply with Federal and State requirements, including, but not limited to, the Consumer Protection Credit Act (15 USC 1601), Equal Credit Opportunity Act (Title VII), and Truth in Lending Act (Title I) and Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505].

h) The loan brokerage agreement shall contain the name and Unique Identifier in the Nationwide Multistate Licensing System and Registry of any licensee and Mortgage Loan Originator assisting the licensee in performing services for the borrower.

History

• Source: Amended at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.1020 Loan Brokerage Disclosure Statement

Before the borrower signs a loan brokerage agreement or gives the licensee any consideration, whichever comes first, the licensee shall give the borrower a written disclosure statement and shall obtain the customer's signature on a duplicate of the disclosure statement near clear and conspicuous wording indicating that the customer has read and understands the disclosure statement or has had the contents explained to him or her by someone not connected with the licensee. The disclosure statement shall prominently display the following material, in the order presented:

a) In the case of a licensee who only brokers as defined in the Act, a clear and conspicuous statement that:

1. the licensee does not make loans, and

2. actual funds are provided by another entity that may affect availability of funds;

b) The name under which the entity is licensed under the Act, any other names under which the licensee has engaged in activities regulated by the Act, even if not licensed under the current or predecessor Act, during the preceding 10 years and, if applicable, the name of the parent or affiliated company;

c) Whether the licensee does business as an individual, partnership, association, corporation or any other organization form;

d) If the licensee brokers loans to only one entity, disclosure of that fact.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1030 Prohibited Practice

No licensee shall knowingly provide, or offer to provide, for any borrower any loan brokerage services, as defined by the Act, under any arrangement with any entity other than a licensee or an entity exempt from licensing by Section 1-4(d) of the Act.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1100 High Risk Home Loan Application Practices; Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], Sections 1050.1180, 1050.1185, 1050.1186 and 1050.1187 of this Subpart J do not apply to loans closed on or after January 1, 2004.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1110 Borrower Information Document

Borrower Information Document. Before a mortgage loan applicant, also referred to in this Subpart as "borrower" or "customer", signs a completed residential mortgage loan application or gives the licensee any consideration, whichever comes first, the licensee shall give the customer a Borrower Information Document. The document may be incorporated into or appended to the material as is necessary for compliance with relative Federal requirements, including, but not limited to, Regulation Z (12 CFR 226). Except for the explicit wording required by subsection (a) of this Section, the following format is for illustrative purposes only; however, all of the following information shall be included in the document:

a) Regulatory Disclosure Statement: The following statement: "This document is being provided to you pursuant to the Residential Mortgage License Act of 1987 and Rules promulgated thereunder (38 Ill. Adm. Code 1050). The purpose of this document is to set forth those exhibits and materials you should receive or be receiving in connection with your (residential mortgage loan or shared appreciation agreement) application with (name of licensee), holder of License (license number) and regulated by the State of Illinois, Division of Banking, under the aforesaid Act".

b) Significant information: Significant information on the types of situations that could affect the processing of the loan but that may not be known by the licensee at the time the application was taken. Examples of those situations include, but are not limited to:

1. An appraisal value different from that estimated by the borrower;

2. Credit obligations the borrower fails to report;

3. A change in the borrower's financial circumstances that would result in the borrower's ineligibility for the loan; or

4. A material change or discontinuation of a loan program by an investor or other entity, such as the U.S. Department of Housing and Urban Development, the Veterans' Administration or a private investor.

c) "Your Home Loan Toolkit": If the mortgage relates to the purchase of the security real estate, a "Your Home Loan Toolkit" as required by the federal Consumer Financial Protection Bureau that describes the home buying process. The "Your Home Loan Toolkit" may be obtained at the CFPB website: consumerfinance.gov, or from the United States Government Printing Office (GPO) at the GPO website: bookstore.gpo.gov. This toolkit, released on March 31, 2015 and effective October 3, 2015, is hereby incorporated by reference with no subsequent dates or editions included. A licensee that makes a shared appreciation agreement and provides the required disclosures in compliance with Section 1050.2310 shall be deemed to have complied with this subsection.

d) Good Faith or Loan Estimate of Costs:

1. For any residential mortgage loan, regardless of whether it represents a position of first or junior lien against the security real estate, a good faith estimate or TILA-RESPA Integrated Loan Estimate of the costs that will be paid in connection with the financing as outlined in Regulation Z (12 CFR 226).

2. If the mortgage relates to the purchase of the security real estate, a good faith estimate or TILA-RESPA Integrated Loan Estimate of the amount and nature of charges discussed at Section 1050.1320(b).

3. A licensee that makes a shared appreciation agreement and provides the required disclosures in compliance with Section 1050.2310 shall be deemed to have complied with this subsection.

e) Loan Application: A copy of the loan application or equivalent form that will have to be signed and delivered to the lender in order to obtain the loan.

f) Mortgage Escrow Account Act, Related Document: If the mortgage is not FHA-insured or VA-guaranteed and relates to the purchase of owner-occupied, single-family security real estate, unless there is a certainty that the lender will not require maintenance on an escrow account for payment of taxes, a copy of the Mortgage Escrow Account Act [765 ILCS 910], along with a copy of the document to be executed by the applicant at closing with respect to use of a pledged time deposit account in lieu of an escrow account pursuant to that Act.

g) "Consumer Handbook on Adjustable Rate Mortgages": If the mortgage is an adjustable rate mortgage representing a first-lien position with respect to the security real estate, the "Consumer Handbook on Adjustable Rate Mortgages", as required by Federal regulations (12 CFR 535.33), that describes the special features of adjustable rate mortgages.

h) Documents upon Request: Upon request by the applicant, the following information shall be provided:

1. A sample of the form of note and mortgage that will be executed if the loan applied for is approved; and

2. A general description of underwriting standards that will be considered in evaluating the application.

i) Dated Customer Acknowledgment: A provision for an applicant to acknowledge receipt of each of the above-listed disclosures, showing the date of receipt.

History

• Source: Amended at 50 Ill. Reg. 8010, effective June 1, 2026

Chapter II Department of Financial and Professional Regulation

Part 1050 Residential Mortgage License Act of 1987

38 Ill. Adm. Code 1050.1120 Description of Required Documentation

A licensee shall provide an applicant, at the time of application, with an accurate and complete description of the exhibits and documentation the applicant is reasonably required to provide in order for the licensee to underwrite the loan.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1130 Maintenance of Records (repealed)

History

• Source: Repealed at 15 Ill. Reg. 8580, effective May 28, 1991

38 Ill. Adm. Code 1050.1140 Loan Application Procedures

Loan application procedures shall comply with the Act as well as applicable Federal and State law and regulations, including, but not limited to, the Consumer Credit Protection Act (15 USC 1601 et seq.), including Title VII (Equal Credit Opportunity Act) and Title I (Truth in Lending Act) of that Act, and the Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505].

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1150 Copies of Signed Documents

The customer shall be provided, at the time of signing, a copy of each document he or she signs, except for releases for credit information and verifications of employment, bank accounts and current mortgage history. Forms furnished for application by mail shall carry a clear and conspicuous statement that it is the responsibility of the customer to obtain machine copies before mailing the signed documents back to the licensee.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1160 Confirmation of Statements

Upon a customer's written request, a licensee shall, within 3 days after receiving the request, confirm in writing any specific oral statements or promises made to the customer or the customer's agent or attorney.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1170 Cancellation of Application

If a residential mortgage loan applicant delivers to a licensee written cancellation of his or her application on the same day application was received by the licensee, the licensee shall refund all sums paid by the applicant, except the licensee may, at its discretion, retain $25.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1175 Loan Log

a) Broker/Origination Loan Log. Each licensee engaged in loan brokerage or loan origination shall maintain a Broker/Origination Loan Log that contains the following for each loan application received, except that a Broker/Origination Log for reverse mortgages shall contain the information in subsection (c) and a Broker/Origination Loan Log for shared appreciation agreements shall contain the information in subsection (f)(1):

1. Application date (sort loan log by application date);

2. Borrower name or names;

3. Borrower or borrowers employer name;

4. Borrower or borrowers employer address;

5. Property seller name or names (indicate NA in the event of a refinance);

6. Property address;

7. Loan amount;

8. APR loan program;

9. Mortgage Loan Originator name;

10. Mortgage Loan Originator Unique Identifier (Nationwide Mortgage Licensing System);

11. Processor name or names;

12. Appraiser name or names;

13. Appraiser or appraisers license number;

14. Statement of whether the loan application was cancelled, rejected or closed or is pending and, if the loan application was closed, the closing date and name of the owner and servicer of the loan;

15. Loan closer name and employer name; and

16. Loan closing location.

b) Servicer Loan Log. Each licensee engaged in loan servicing shall maintain a Servicer Loan Log that contains the following for each loan serviced, except that a Servicer Loan Log for shared appreciation agreements shall contain the information in subsection (f)(2):

1. Loan number;

2. Note date;

3. Borrower name or names;

4. Property address;

5. Loan type;

6. Lien position;

7. Original principal balance;

8. Unpaid principal balance;

9. Total monthly payment;

10. Principal/interest;

11. Property tax; and

12. Hazard insurance.

c) Reverse Mortgage Loan Log shall include the information in subsection (a) for items 1, 2 (add ages), 6, 8 (add lump sum, monthly payment, line of credit), 9, 10, 11, 12, and add information for new items of appraised value, loan to value, and counseling (yes or no; if yes, add name of agency and HUD approval status).

d) Secondary Market Loan Log. Each licensee that sells, assigns or purchases any loans on the secondary market shall maintain a Secondary Market Loan Log that contains the following for each loan sold, assigned or purchased:

1. Name of loan seller or assignor;

2. Name of loan buyer or assignee;

3. Date of transaction;

4. Name of borrower or borrowers for underlying property;

5. Amount financed on underlying loan; and

6. Name of Loan Servicer.

e) High Risk Home Loans. If a licensee performs licensable acts with respect to a loan subject to the High Risk Home Loan Act, then the licensee shall maintain a separate High Risk Home Loan Log with the information required in subsection (a) with respect to each loan application received during the previous 60 months and shall maintain the respective loan files for 60 months from the date of closing or other termination of loan processing.

f) Shared Appreciation Agreement Loan Logs: A licensee that performs licensable acts with respect to shared appreciation agreements shall separately maintain a Shared Appreciation Agreement Broker/Origination Loan Log and a Shared Appreciation Agreement Servicer Loan Log.

1. A Shared Appreciation Agreement Broker/Origination Loan Log shall include the information in subsection (a) for items 1, 2, 5,6, 7, 9, 10, 11, 12, 13, 14, 15, 16, and add information for new items of starting value, starting value calculation method, share percentage, counseling date, and counseling provider.

2. A Shared Appreciation Agreement Servicer Loan Log shall include the information in subsection (b) for items 1, 2, 3, 4, 5, 6, 7, 11, 12, and add information for new items of starting value, starting value calculation method, share percentage, counseling date, and counseling provider.

History

• Source: Amended at 50 Ill. Reg. 8010, effective June 1, 2026

Chapter II Department of Financial and Professional Regulation

Part 1050 Residential Mortgage License Act of 1987

38 Ill. Adm. Code 1050.1176 Record Retention

a) Record Retention. Pursuant to Section 2-4(c) of the Act, each licensee shall retain all records prepared or received in the course of its residential mortgage business for 36 months.

1. For records pertaining to the activities of loan brokering or originating, the 36 month period shall begin on the date of the loan closing or other termination date of the loan process.

2. For records pertaining to buying/selling loans on the secondary market, the 36 month period shall begin on the date the loan was sold.

3. For records pertaining to the servicing of loans, the 36 month period shall begin on the date the loan was paid off or on the date the servicing rights were sold.

b) Format of Retention. Records pertaining to the activities of loan brokering, loan originating, or buying/selling loans on the secondary market may be retained for the 36 month period:

1. In hard copy or paper-based form; or

2. In electronic or digital form. The electronic or digital form must be capable of legible hard copy reproduction and the licensee must accurately and authentically preserve any alterations, erasures or similar indications of changes on the documents. The licensee must also retain documentation that explains the process used to convert hard copy or paper-based documents to electronic or digital formats and specifies the date of conversion, the method of conversion, and the disposition of the original hard copy or paper-based document.

History

• Source: Amended at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.1177 Required Loan Application File Documents

For licensees engaged in loan brokering or originating, each licensee shall maintain a loan application file for each loan application. Each loan application file shall include:

a) the Loan Brokerage Agreement and Loan Brokerage Disclosure Statement, if any mortgage loan brokerage services were utilized by the borrower;

b) the Borrower Information Document;

c) all documents signed by the borrower or borrowers, including, but not limited to, the initial loan application, disclosure documents and closing documents;

d) the appraisal and credit report, as well as other third-party documents relating to the loan; and

e) all other documents in or related to the loan file.

History

• Source: Added at 34 Ill. Reg. 17339, effective October 29, 2010

38 Ill. Adm. Code 1050.1180 Ability to Repay

A lender shall not make a high risk home loan if the lender does not believe, at the time the loan is consummated, that the borrower or borrowers will be able to make the scheduled payments to repay the obligation based upon a consideration of their current and expected income, current obligations, employment status and other financial resources (other than the borrower's equity in the dwelling that secures repayment of the loan). A borrower shall be presumed to be able to repay the loan if, at the time the loan is consummated, or at the time of the first rate adjustment in the case of a lower introductory interest rate, the borrower's scheduled monthly payments on the loan (including principal, interest, taxes, insurance and assessments), combined with the scheduled payments for all other disclosed debts, do not exceed 50% of the borrower's monthly gross income.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1185 Verification of Ability to Pay Loan

The lender shall verify the borrower's ability to repay the loan in the case of high risk home loans. The verification shall require, at a minimum, the following:

a) The borrower prepares and submits to the lender a personal income and expense statement in a form prescribed by the Director who may permit the use of other forms such as the URLA (Fannie Mae Form 1003 (10/92), available from Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, DC 20016-2892 and Freddie Mac Form 85 (10/92), available from Freddie Mac at 1101 Pennsylvania Avenue, NW, Suite 950, PO Box 37347, Washington, DC 20077-0001, no subsequent amendments or editions) and Transmittal Summary (Fannie Mae Form 1077 (3/97), available from Fannie Mae, 3900 Wisconsin Avenue, NW, Washington, DC 20016-2892 and Freddie Mac Form 1008 (3/97), available from Freddie Mac at 1101 Pennsylvania Avenue, NW, Suite 950, PO Box 37347, Washington, DC 20077-0001, no subsequent amendments or editions).

b) Income is verified by means of tax returns, pay stubs, accounting statements or other prudent means.

c) A credit report is obtained regarding the borrower.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1186 Fraudulent or Deceptive Practices

No lender shall employ fraudulent or deceptive acts or practices in the making of a high risk home loan, including deceptive marketing and sales efforts.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1187 Prepayment Penalty

No lender shall make a high risk home loan that includes a penalty provision for payment made:

a) after the expiration of the 36 month period following the date the loan was made; or

b) that is more than:

1. 3% of the total loan amount, if the prepayment is made within the first 12 month period following the date the loan was made;

2. 2% of the total loan amount, if the prepayment is made within the second 12 month period after the date the loan was made; or

3. 1% of the total loan amount, if the prepayment is made within the third 12 month period following the date the loan was made.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1200 High Risk Home Loan Lending Practices; Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], Section 1050.1250, to the extent it applies to high risk home loans, and Sections 1050.1260, 1050.1270, 1050.1272, 1050.1275, 1050.1276; 1050.1277, 1050.1278 and 1050.1280 of this Subpart do not apply to loans closed on or after January 1, 2004.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1210 Notice to Joint Borrowers

Any notice required by this Subpart to be given to a residential mortgage loan applicant, also referred to as "borrower" or "customer", needs be given only to any one of any joint applicants, borrowers or customers.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1220 Inaccuracy of Disclosed Information

If any information disclosed in accordance with this Part is subsequently rendered inaccurate as a result of any act or occurrence beyond the control of any party to the transaction, the inaccuracy shall not constitute a violation of this Part.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1230 Changes Affecting Loans in Process (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.1240 Prohibition of Unauthorized Lenders

With respect to loans secured by mortgages on residential real estate located in the State of Illinois, no licensee shall knowingly utilize the services of any loan broker or lender, other than a licensee or an entity exempt from licensing pursuant to Section 1-4(d) of the Act.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1250 Good Faith Requirements

a) For the purpose of this Part, "good faith" means honesty in fact in the conduct of the transaction.

b) Any disclosure or action required by the Act or this Part shall be made in good faith.

c) A licensee shall not accept a fee or charge for a residential mortgage loan application, unless the licensee is able to demonstrate to the Director that, if its normal residential mortgage loan requirements are met, there is a reasonable likelihood that a loan commitment will be issued for the loan for the amount, term, rate, charges and other conditions set forth in the loan application and the applicable disclosures and document required by this Part and that the loan has a reasonable likelihood of being paid by the applicant based on his or her ability to pay.

d) A licensee who has accepted an application for a loan to purchase residential real estate shall make a good faith effort to process the application within the time specified in the residential mortgage loan application.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1260 Pre-Paid Insurance Products and Warranties

No lender shall make a high risk home loan that finances a single premium credit life, credit disability, credit unemployment or any other life or health insurance, directly or indirectly. Insurance calculated and paid on a monthly basis shall not be considered to be financed by the lender.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1270 Refinancing Prohibited in Certain Cases

No lender shall refinance any high risk home loan, if the refinancing charges additional points and fees, within a 12 month period after the original loan agreement was signed, unless the refinancing results in a financial benefit to the borrower.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1272 Balloon Payments

No lender shall make a high risk home loan that contains a scheduled final payment that is more than twice as large as the average of earlier scheduled monthly payments unless the balloon payment becomes due and payable at least 15 years after the loan's origination. This prohibition does not apply when the payment schedule is adjusted to account for the seasonal or irregular income of the borrower or if the purpose of the loan is a "bridge" loan connected with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1275 Financing of Certain Points and Fees

No lender shall make a high risk home loan if that loan finances points and fees in excess of 6% of the total loan amount.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1276 Payments to Contractors

No lender shall make a payment of any proceeds of a high risk home loan to a contractor under a home improvement contract other than:

a) by instrument payable to the borrower or payable jointly to the borrower and the contractor; or

b) at the election of the borrower, by a third party escrow agent in accordance with the terms established in a written agreement signed by the borrower, the lender, and the contractor before the date of payment.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1277 Negative Amortization

Other than a loan secured only by a reverse mortgage, no lender shall make a high risk home loan with terms under which the outstanding balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of the interest due, unless the negative amortization is the consequence of a temporary forbearance sought by the borrower.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1278 Negative Equity

No lender shall make a high risk home loan when the loan amount exceeds the value of the property securing the loan plus reasonable closing costs not to exceed 5% of the total loan amount.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1280 Counseling Prior to Perfecting Foreclosure Proceedings

a) In the event that a high risk home loan becomes delinquent by more than 30 days, the servicer shall send a notice advising the borrower that he or she may wish to seek consumer credit counseling.

b) The notice required in subsection (a) shall, at a minimum, include the following language:

"YOUR LOAN IS OR WAS MORE THAN 30 DAYS PAST DUE. YOU MAY BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY BE IN YOUR BEST INTEREST TO SEEK APPROVED CONSUMER CREDIT COUNSELING. A LIST OF APPROVED CREDIT COUNSELORS MAY BE OBTAINED FROM THE ILLINOIS DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION-DIVISION OF BANKING."

c) If, within 15 days after mailing the notice provided for under subsection (b), a lender or its agent is notified in writing by an approved consumer credit counselor and the approved consumer credit counselor advises the lender or its agent that the borrower is seeking approved consumer credit counseling, then the lender and its agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for 30 days from the date of that notice. Only one such 30-day period of forbearance is allowed under this Section per subject loan.

d) If, within the 30-day period provided under subsection (c), the lender or its agent, the approved consumer credit counselor, and the borrower agree to a debt management plan, then the lender and its agent shall not institute legal action under Part 15 of Article XV of the Code of Civil Procedure for so long as the debt management plan is complied with by the borrower.

1. The agreed debt management plan must be in writing and signed by the lender or its agent, the approved consumer credit counselor, and the borrower. No modification of an approved debt management plan can be made without the mutual agreement of the lender or its agent, the approved consumer credit counselor, and the borrower.

2. Upon written notice to the lender or its agent, the borrower may change approved consumer credit counselors.

e) If the borrower fails to comply with the agreed debt management plan, then nothing in this Subpart K shall be construed to impair the legal right of the lender or its agent to enforce contracts or mortgage agreements.

f) This Section applies only to high risk home loans as defined by Section 1050.155.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1305 Approval Notice (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.1310 Inconsistent Conditions Prohibited

No residential mortgage loan commitment shall contain conditions inconsistent with those required by this Part in effect at the time of application, unless those conditions are less onerous to the borrower.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1315 Avoidance of Commitment

If a residential mortgage loan applicant and the subject residential real estate meet a licensee's normal standards, the licensee shall not refuse to make a residential mortgage loan to the applicant in order to avoid complying with terms stated in written agreements between the licensee and borrower or in written disclosures required by this Part.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1320 Charges to Seller

a) Except for FHA-insured or VA-guaranteed residential mortgage loans, no licensee shall:

1. impose any charges upon a seller under a borrower's purchase contract;

2. condition any commitment for a residential mortgage loan upon the agreement of the seller to pay such charges; or

3. incur any charges on behalf of the seller, unless specifically authorized by that seller to do so.

b) With respect to FHA-insured or VA-guaranteed residential mortgage loans, the licensee shall provide, at time of application, a written good faith estimate or TILA-RESPA Integrated Loan Estimate Disclosure of the amounts and nature of charges to be paid that are disallowed by the applicable Federal agency for payment by the buyer. A clear and conspicuous statement shall disclose that such charges are disallowed by the applicable Federal agency for payment by the borrower. Examples of such charges may include, but are not limited to, tax service fee, assignment fee, underwriter fee.

c) For purposes of this Section, "seller" refers to the vendor of real estate that is the subject of the residential mortgage loan.

History

• Source: Amended at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.1325 Intentional Delay

Any licensee that intentionally delays the processing of an application during periods of interest rate fluctuations so that the delay causes a borrower to incur higher costs regarding a residential mortgage loan shall be liable to the borrower for such costs.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1330 No Duplication to Borrower of Seller's Costs

No licensee may require a borrower to furnish, or charge a borrower for, items that are inconsistent with the licensee's usual standards for residential mortgage loans. Those items may include, but are not limited to, a survey or title commitment.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1335 Fees and Charges

a) Except as prohibited by federal statute or regulation, a licensee shall not require a borrower to pay any fees or charges prior to the loan closing, except charges to be incurred by the licensee on behalf of the borrower for services from third parties necessary to process the application, such as for credit reports and appraisals, and:

1. Loan Fees

A) Loan fees, such as origination or commitment fees, including fees detailed in the Loan Brokerage Agreement, may be charged prior to closing only if a licensee is able to demonstrate either that:

i) The loan commitment is provided in writing by the funding entity and accepted in writing by the borrower; or

ii) The loan commitment provided in writing is consistent with a Loan Brokerage Agreement provided to the borrower pursuant to Section 1050.1010 of this Part and signed by the borrower.

B) The loan fee, including fees detailed in the Loan Brokerage Agreement, collected prior to closing shall be deposited in escrow by the licensee in accordance with the requirements of Section 1050.440 of this Part.

C) If the loan commitment provided by the funding entity pursuant to subsection (a)(1) is subject to any condition or conditions, and any condition is not met due to an action or lack of action on the part of the borrower, the licensee may retain the loan fee. In all other cases, if the loan does not close as agreed by the licensee and the borrower, the licensee shall refund the loan fee to the borrower.

D) A loan fee, including fees detailed in the Loan Brokerage Agreement, may be collected by a licensee even if a loan does not close if:

i) Either the fee was provided for in the loan commitment accepted in writing by the borrower or the fee was disclosed in the Loan Brokerage Agreement provided to a borrower pursuant to Section 1050.1010 of this Part and signed by the borrower, and a loan commitment was obtained by the licensee consistent with the Loan Brokerage Agreement; and

ii) The borrower withdraws the loan application; or the borrower has made a material misrepresentation on the loan application; or the borrower has failed to provide documentation necessary to the processing or closing of the loan.

2. Rate-Lock Fee

A) A Rate-Lock Fee Agreement shall be in writing and signed by both the licensee and prospective borrower and provided to prospective borrowers regardless of whether a fee is collected or the interest rate is locked or floating.

B) The Rate-Lock Fee Agreement shall state all of the following:

i) The expiration date of the Rate-Lock Fee Agreement;

ii) The amount of the loan;

iii) The maximum interest rate of the loan;

iv) The term of the loan;

v) The maximum discount (points) to be paid; and

vi) That the interest rate is locked or the interest rate is floating.

C) The licensee shall be able to demonstrate to the Director that:

i) The licensee is able to perform under the terms of the Rate-Lock Fee Agreement;

ii) Subject to verification, the information submitted by the borrower indicates that the loan will be approved in accordance with the Rate-Lock Fee Agreement; and

iii) The Rate-Lock Fee will be credited to the borrower at closing.

D) The Rate-Lock Fee shall be deposited in escrow by the licensee in accordance with the requirements of Section 1050.440 of this Part.

E) A Rate-Lock fee may be collected by a licensee even if a loan does not close if:

i) The fee was disclosed in the Rate-Lock Fee Agreement provided to a borrower and signed by the borrower; and

ii) A Rate-Lock was obtained by the licensee consistent with the Rate-Lock Fee Agreement and the borrower withdraws the loan application; or the borrower has made a material misrepresentation on the loan application; or the borrower has failed to provide documentation necessary to the processing or closing of the loan.

3. Assumption Fee

A licensee may charge a borrower an Assumption Fee for a Federal Housing Administration (FHA) or Department of Veterans Affairs (VA) loan assumption that, by regulation, requires full credit approval prior to closing, subject to the following requirements:

A) The applicant must qualify for the extension of credit as required under:

i) The terms and conditions of mortgages given on property in Illinois that are insured by the Federal Housing Administration and dated on or after December 15, 1989 requiring prior credit approval of the Secretary of Housing and Urban Development.

ii) The terms and conditions of mortgages given on property located in Illinois that are guaranteed by the U.S. Department of Veterans Affairs (VA) dated on or after March 1, 1988 and requiring approval of VA or its authorized agent.

B) An Assumption Fee may be collected by a licensee even if a loan does not close if:

i) The fee was disclosed in an Assumption Fee Agreement provided to a borrower and signed by the borrower; and

ii) An Assumption Fee Agreement was obtained by the licensee consistent with the Assumption Fee Agreement and the borrower withdraws the loan application; or the borrower has made a material misrepresentation on the loan application; or the borrower has failed to provide documentation necessary to the processing or closing of the loan.

b) Nothing in this Section shall be interpreted to limit the right of a licensee to recover from a borrower any fee that the borrower has agreed to pay pursuant to a Loan Brokerage Agreement, a loan commitment or other written agreement entered into between the borrower and the licensee. This subsection shall not abridge Section 1050.1010(g) so as to permit an agreement or agreements in addition to the Rate-Lock Fee Agreement or the Loan Brokerage Agreement.

c) For each violation of this Section, the Director may fine a licensee up to $500 in addition to all other actions authorized under the Act and this Part.

History

• Source: Amended at 34 Ill. Reg. 17339, effective October 29, 2010

38 Ill. Adm. Code 1050.1340 Refunds on Failure to Close

If a residential mortgage loan is not closed, all the licensee's charges as described in Section 1050.1335(a)(1) shall be refunded to the borrower, except:

a) To the extent a written agreement between the borrower and licensee or a written notification required by this Part specifies that they are nonrefundable; and

b) To the extent the charges were incurred by the licensee on behalf of the borrower for services from third parties necessary to process the application, such as credit reports and appraisals.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1345 Representative at Closing

No licensee may require a borrower to be present personally at the closing of a residential mortgage loan, if the borrower is willing to execute all the loan documents in advance and will be represented at the closing by an attorney. A licensee shall make reasonable efforts to accommodate a borrower who makes a request to execute the loan documents in advance. A borrower who chooses not be at the closing personally may be charged reasonable additional fees, such as a document preparation fee to cover additional expenses.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1350 Compliance with Other Laws

Commitment and closing procedures, including those involving TILA-RESPA Intergrated Disclosures set forth at 12 CFR 1024 (2017) and 12 CFR 1026 (2017), of a licensee shall comply with applicable Federal and State statutes and regulations, including but not limited to the following:

a) The Interest Act [815 ILCS 205];

b) Mortgage Escrow Account Act [765 ILCS 910];

c) Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505];

d) The Truth in Lending Act (15 USC 1601) as implemented by Regulation Z (12 CFR 1026) (2017));

e) The Real Estate Settlement Procedure Act of 1974 d (12 USC 2601) as implemented by Regulation X (12 CFR 1024) (2017).

History

• Source: Amended at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.1355 Failure to Close – Disclosure

If a residential mortgage loan fails to close within a specified commitment period, the licensee shall provide detailed written notification, in plain English, to the applicant as to why the residential mortgage loan failed to close and specifying any resulting conditions that will affect the availability of the loan.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1360 Escrow Account Agreements at Closing

a) If the mortgage is not FHA-insured or VA-guaranteed and relates to the purchase of owner-occupied, single-family security real estate:

1. A document shall be executed by the residential mortgage loan applicant at closing to indicate his or her acceptance or rejection of the use of a pledged time deposit account in lieu of an escrow account pursuant to the Mortgage Escrow Account Act [205 ILCS 910]; or

2. In the case of a lender who is not required by law to comply with the Mortgage Escrow Account Act, the licensee shall furnish a written explanation, including citations, to the authority for noncompliance to be given to the mortgage loan applicant at closing, with a copy to be signed by the applicant acknowledging receipt.

b) If the mortgage represents a first-lien position and provides for an escrow account to be maintained for payment of taxes and/or insurance premiums, an Escrow Account Disclosure Agreement shall be required between the licensee and the residential mortgage loan applicant. The agreement shall be in writing and executed at the closing. The agreement shall describe the procedures for adjustment to the escrow account and shall provide that, if there is an increase in the amount of the escrow account, the applicant shall receive written notice from the licensee at least 30 days prior to the date of the increase. The agreement may be amended from time to time as agreed upon by the parties, except that the 30 day notice requirement shall not be amended.

c) This Section does not apply to any mortgage for which the lender elects not to require maintenance of an escrow account or other specific arrangement for the payment of taxes.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1410 General

The exemption provision of Section 1-4(d) of the Act shall be construed to avoid duplication of licensing and regulatory supervision of the same or similar activity by State and Federal agencies. To the extent that the specific conduct or business activity is not otherwise separately licensed or regulated, the provisions of Section 1-4(d) shall be strictly construed.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1420 Interpretative Guidelines

Any person may request an interpretative ruling of the Director on the question of whether that person is an exempt entity within the meaning of the Act. Such requests shall be in writing and contain sufficient information as to reasonably inform the Director of the basis for the exemption.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1510 Hearings

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1520 Definitions (repealed)

History

• Source: Repealed at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1530 Filing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1540 Form of Documents (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1550 Computation of Time (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1560 Appearances (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1570 Request for Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1580 Notice of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1590 Service of the Notice of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1595 Bill of Particulars or Motion for More Definite Statement (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1600 Motion and Answer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1610 Consolidation and Severance of Matters – Additional Parties (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1620 Intervention (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1630 Postponement or Continuance of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1640 Authority of Hearing Officer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1650 Bias or Disqualification of Hearing Officer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1660 Prehearing Conferences (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1670 Discovery (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1680 Subpoenas (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1690 Conduct of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1700 Default (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1710 Evidence (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1720 Hostile Witnesses (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1730 Record of Proceedings (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1740 Briefs (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1750 Hearing Officer's Recommendation (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1760 Order of the Director (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1770 Rehearings and Reopening of Hearings (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1790 Costs of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 17985, effective October 27, 2022

38 Ill. Adm. Code 1050.1800 Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], this Subpart O does not apply to loans closed on or after January 1, 2004.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1810 General

The Mortgage Awareness Program is a counseling and educational component that is provided by the Department of Financial and Professional Regulation-Division of Financial Institutions.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1820 Guidelines

a) The core curriculum of the Mortgage Awareness Program shall include an explanation of:

1. the amount financed;

2. the finance charge;

3. the annual percentage rate;

4. the total payments;

5. the loan costs, including broker's fees, finance charges, points, origination fees;

6. the right of recission;

7. the foreclosure procedures;

8. the significant debt ratios, including total debt to income, loan debt to income, and loan debt to value of residence;

9. adjustable rate mortgage;

10. balloon payments;

11. credit options;

12. each item that appears on a good faith estimate;

13. pre-payment penalties.

b) Counseling session attendees must also complete a personal income and expense statement, as well as a balance sheet on forms provided by the Division of Financial Institutions.

c) Prior to signing a certificate of completion, counselors shall privately discuss with each attendee that attendee's income and expense statement and balance sheet, as well as the terms of any loan the attendee currently has or may be contemplating and provide a third party review to establish the affordability of the loan.

d) Counseling session attendees must also be given a brochure that contains information covered by the Mortgage Awareness Program.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1830 Offer of Mortgage Awareness Program

a) Any lender, prior to making a high risk home loan, shall inform the borrower in writing of the right to participate in the Mortgage Awareness Program.

b) No lender shall offer less favorable loan terms to a borrower due to a borrower's participation in a Mortgage Awareness Program.

c) Except as prohibited elsewhere in this Part, the borrower may waive participation in the program, provided that the waiver occurs no less than 2 business days after the day that the borrower receives the written notice required by subsection (a) and that the waiver is in writing in a form approved by the Director.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1900 Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], this Subpart P does not apply to loans closed on or after January 1, 2004.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1910 Report of Default and Foreclosure Rates on Conventional Loans

a) On or before October 1 and April 1 of each year, each licensee that is a servicer of Illinois residential mortgage loans shall report to the Director the default and foreclosure data of conventional loans for the six month periods ending June 30 and December 31, respectively.

b) Each licensee shall report:

1. The average quarterly dollar amount of conventional 1-4 family mortgage loans secured by Illinois real estate.

2. The average quarterly number of conventional 1-4 family mortgage loans secured by Illinois real estate.

3. The average quarterly dollar amount of conventional 1-4 family mortgage loans secured by Illinois real estate that are in default over 90 days.

4. The average quarterly number of conventional 1-4 family mortgage loans secured by Illinois real estate that are in default over 90 days.

5. The dollar amount of foreclosures on 1-4 family conventional loans completed during the reporting period.

6. The number of foreclosures on 1-4 family conventional loans completed during the reporting period.

7. Whether any of the loans where a foreclosure was completed were originated less than 18 months before the completed foreclosure.

8. Whether any of the loans where a foreclosure was completed had a note rate greater than 10% for first lien mortgage loans or greater than 12% in the case of a junior lien.

c) An officer of the licensee shall sign the form.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.1920 Director's Review and Analysis

a) The Director shall review and analyze the default and foreclosure rate data reports submitted under Section 1050.1910.

b) The reports and their analyses may be used:

1. In setting the scope of a regularly scheduled examination.

2. In setting the scope of a special examination.

3. In comparing the reported information of a licensee to other licensees subject to the Act.

4. In comparing the reported information of a licensee to the reports submitted by licensees and charters under other Acts.

c) The Director may correspond with a licensee to seek clarification of information contained in its report and to gather additional data concerning loans in default or loans in foreclosure.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.2000 Applicability

Pursuant to Section 150 of the High Risk Home Loan Act [815 ILCS 137/150], this Subpart Q does not apply to loans closed on or after January 1, 2004.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.2010 Third Party Review of High Risk Home Loans

In the case of any high risk home loan, the borrower shall be afforded the opportunity to seek independent review by the Division of the loan terms, in order to determine affordability of the loan, when and if the General Assembly appropriates adequate funding to the Division specifically for this program.

a) Every borrower who chooses to participate in the independent review provided in this Section shall submit information requested on the worksheets outlined in Appendix A and Appendix B.

b) The Division shall provide the borrower with a review of the worksheets and shall also inform the borrower of the amount the borrower has available for a monthly mortgage payment based upon the borrower's budget.

c) In addition, the Division shall review loan information pertaining to balloon payments and adjustable interest rates and other items disclosed by the loan documents affecting amount of payment and shall inform the borrower of such items.

d) The borrower shall receive a copy of the completed forms and shall sign the forms acknowledging receipt. A copy of the written and signed forms shall be submitted to the lender prior to the closing of the loan and shall become a part of the permanent file for the loan.

e) If, based upon the review, the borrower determines that the loan is not in his or her best economic interest, the reviewer shall so note this in the completed forms sent to the lender. This determination shall enable the borrower to withdraw from the contemplated loan with no financial penalty.

History

• Source: Amended at 29 Ill. Reg. 14808, effective September 26, 2005

38 Ill. Adm. Code 1050.2100 Mortgage Loan Originators; Applicability (Repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

Chapter II Department of Financial and Professional Regulation

Part 1050 Residential Mortgage License Act of 1987

38 Ill. Adm. Code 1050.2110 Application for Registration (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2112 Evaluation of Applications (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2115 Examination (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2120 Continuing Education Requirements for Loan Originators (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2125 Certificate of Registration Issuance (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2130 Roster of Registered Loan Originators (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2135 Pocket Card (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2140 Certificate of Registration Renewal (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2145 Certificate of Registration Transfer Application or Inactive Notice (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2150 Inactive Registration Status; Reactivation (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2155 Temporary Permits (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2160 Confidential Information (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2165 Averments (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2170 Suspension or Revocation of Registration, Refusal to Renew, Fines (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2175 Loan Originator Hearings; Fees and Costs (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2180 Criminal Proceedings (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2185 Violations of Tax Acts (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2190 Disciplinary Action for Educational Loan Defaults (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2195 Nonpayment of Child Support (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2200 Purpose (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2210 Definitions (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2220 Registration Required (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2230 Exemptions (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2240 Application for Provisional Certificate of Registration; Contents; Amendment (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2250 Issuance of Provisional Certificate of Registration; Effective Date; Conditions (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2260 Loan Origination Practices (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2270 Enforcement (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.2300 Definitions

"Actual change in value" means, with respect to each scenario included on the disclosure form found in Appendix C of this chapter, the average annual change in value for homes in the State of Illinois over the most recent number of years used in that scenario.

"Annual percentage rate" has the meaning stated in 12 CFR 1026.22(a), as amended from time to time.

"Annualized cost" means a measure of the cost of credit, expressed as a yearly rate, provided to allow a borrower to compare the cost of a shared appreciation agreement with the cost of other forms of credit.

"Arms-length sale" means a transaction for the sale of property between two unrelated and unaffiliated parties of equal bargaining power acting independently and in their respective self-interests.

"Automated valuation model" or "AVM" means a statistically based estimate of a property's value based on publicly available information such as comparable sales, property characteristics, and price trends.

"Borrower" means a person who receives funds under a shared appreciation agreement.

"Broker price opinion" or "BPO" means an estimate, provided by a real estate broker licensed by the State or another qualified professional, of the price for which a property is likely to sell.

"Commitment" shall mean a contract for residential mortgage loan financing.

"Ending Home Value" means the value of the property at the termination of the shared appreciation agreement as calculated using the estimated fair market value of the property, or, in an arms-length sale, the sale price of the property.

"Estimated fair market value" means:

an estimate of value determined through either:

the use of an appraisal from an appraiser licensed by the State; or

the average of two distinct non-appraisal valuation methods, which may include an automated valuation model, a broker price opinion, or another valuation method approved by the Department; or

an estimate of value provided by the borrower, if a disclosure is provided before the lender obtains an estimated fair market value by appraisal, or the average of two distinct non-appraisal valuation methods.

"Final Settlement Payment Amount" means the amount a borrower is required to pay the lender at the termination of the shared appreciation agreement.

"Lender" shall mean any person, partnership, association, corporation, or any other entity who either lends or invests money in residential mortgage loans. [205 ILCS 635/1-4(g)]

"Share percentage" means the lender's share of the property's appreciation or value, based on the Ending Home Value, at the termination of the shared appreciation agreement as calculated without regard to any contractual limit on the repayment amount.

"Starting Home Value" means the estimated fair market value of a property as calculated under Section 1050.2320 of this Part.

"Truth in Lending Act" refers to 15 U.S.C. 1601, and its implementing regulations under 12 CFR 1026.

History

• Source: Added at 50 Ill. Reg. 8010, effective June 1, 2026

38 Ill. Adm. Code 1050.2310 Required Disclosures

a) Financing Agreements and Commitments

1. In addition to providing any other disclosures required by the Uniform Commercial Code [810 ILCS 5] or the Consumer Installment Loan Act [205 ILCS 670], a lender receiving an application for a shared appreciation agreement shall, regardless of lien position, provide the applicant with a financing agreement.

2. The lender shall satisfy the requirement to provide a financing agreement for a mortgage loan made under a shared appreciation agreement in the following manner:

A) By providing an estimate disclosure on the form prescribed in Appendix C of this Part, or a substantially similar form, within 3 business days after the date an application for a shared appreciation agreement is received by the lender; and

B) By calculating the annualized cost based on the term in each scenario within the form in Appendix C of this Part using the method prescribed in 12 CFR Part 1026 Appendix J for calculating an annual percentage rate.

3. If the terms of an estimate disclosure provided to an applicant under subsection (a)(2)(A) of this Section materially change or become materially inaccurate, including with respect to the Starting Home Value, transaction amount, share percentage, cost cap, origination fee, agreement expiration date, closing costs, or expenses, the lender shall provide a revised estimate disclosure with all changed terms to the applicant. The applicant shall receive the revised estimate disclosure within three business days after the lender receives information sufficient to establish that it is required under this subsection (a)(3), and at least four business days prior to consummation of the transaction. A lender shall not provide a revised estimate disclosure required under this subsection (a)(3) on or after the date on which the lender provides the closing disclosure required under subsection (a)(5)(A).

4. If the terms of the disclosure provided by the lender under subsection (a)(2) are subject to change, a lender offering a shared appreciation agreement, regardless of lien position, shall provide the applicant with a commitment.

5. The lender shall satisfy the requirement to provide a commitment for a mortgage loan made under a shared appreciation agreement in the following manner:

A) By providing a closing disclosure on the form prescribed in Appendix C of this Part, or a substantially similar form, with a statement that the terms therein are not subject to change, at least 72 hours before the consummation of the transaction; and

B) By calculating the annualized cost based on the term in each scenario within the form in Appendix C of this Part using the method prescribed in 12 CFR Part 1026 Appendix J for calculating an annual percentage rate.

b) Compliance with Disclosures in Appendix C of this Part

1. A form will be considered substantially similar to the one in Appendix C of this Part if it includes all information required in this Section and included in Appendix C.

2. A lender shall disclose the following information regarding the estimated fair market value of the property:

A) The methods used to calculate the estimated fair market value;

B) The estimated fair market value of the property; and

C) When funds from the agreement are utilized for approved home improvement projects, including details of eligible improvements and the terms of how they will be deducted from the Ending Home Value.

c) Disclosure Obligations for Lenders Offering Shared Appreciation Agreements

1. Lenders must issue a notice to a prospective borrower with the following statement, which shall be clear and conspicuous on the first page of the disclosures required by this Section: "You are not required to complete a shared appreciation agreement transaction just because you have received these disclosures or have signed a loan application. If you proceed with this transaction, the shared appreciation agreement provider will have a lien on your home and you would agree to pay the provider a portion of your home's value or the future increase in your home's value at the end of the agreement. If you complete the transaction and do not meet your obligations under the agreement, you could lose your home, and any money you have put into it. The information in this disclosure is based on the shared appreciation agreement for which you have applied and provides examples of the amounts you may be required to pay at the end of the agreement. If the agreement ends in connection with the sale of your home, your obligation to the provider may include some or all of the sale proceeds. The terms of a shared appreciation agreement are different from those of a traditional mortgage loan. Please carefully read this disclosure, the shared appreciation agreement transaction documents, and all other materials from the provider. You are required to complete a counseling session from an independent, HUD-certified housing counselor before completing a shared appreciation agreement and you may wish to speak with a financial professional or an attorney before proceeding. A shared appreciation agreement may also affect your taxes, so you may also wish to speak with a qualified tax advisor."

2. Borrowers must seek independent counseling from a HUD-certified counselor.

d) Foreclosure and Usage Restrictions: Lenders must disclose any restrictions on property use or conditions that could lead to foreclosure.

e) Cap on Repayment Amount: The total repayment amount must be capped at a rate not exceeding the rate cap provided in Section 15-5-5 of the Predatory Loan Prevention Act [815 ILCS 123/15-5-5]. Contracts lacking a cap or exceeding this statutory limit shall be deemed null and void.

f) Settlement Examples and Cost Scenario Tables: Lenders must explain how the Final Settlement Payment Amount under a shared appreciation agreement will be calculated and, if example calculations are provided, at least one example must be based on a decrease in home value. The lender shall also provide cost scenario tables with illustrative examples detailing repayment scenarios for 5-year, 10-year, and maximum agreement durations. For each duration, the lender shall provide the Ending Home Value, the Final Settlement Payment Amount, whether the Final Settlement Payment Amount is share-based or capped, and the annualized cost for each of the following changes from the Starting Home Value:

1. Average Annual Change in Value as described in Section 1050.2330(a);

2. 5.5% annual appreciation;

3. 3.5% annual appreciation;

4. no change in value; and

5. 10% total depreciation.

g) Short Summary of Terms: Lenders must provide a concise summary of key terms and conditions for the borrower's understanding, ensuring clarity and transparency.

h) The borrower has a right to be represented by an independent attorney of the borrower's choice at closing.

i) A borrower may be responsible for any fees or costs of counseling required under Section 5-12.5(a) of the Act [205 ILCS 635/5-12.5(a)] only if the borrower elects to close, and does not rescind, the transaction. If a borrower receives counseling and elects not to close or timely rescinds the transaction, the shared appreciation agreement provider shall be responsible for any fees or costs of the counseling.

History

• Source: Added at 50 Ill. Reg. 8010, effective June 1, 2026

38 Ill. Adm. Code 1050.2320 Calculation of Property Value

a) Means of Calculating the Property Value.

1. The lender shall use the estimated fair market value to determine the Starting Home Value of the property.

2. The lender shall use the same method for calculating the Starting Home Value and the Final Home Value. Nothing in this subsection (a)(2) shall limit a borrower's ability to obtain and use additional valuations to determine the estimated fair market value, Starting Home Value, or Ending Home Value pursuant to the terms of the shared appreciation agreement.

3. The Starting Home Value shall be calculated using either an appraisal or the average of at least two distinct non-appraisal valuation methods, which may include an AVM, a BPO, or another method approved by the Department.

4. In complying with the requirements of subsection (a)(2), a lender may use a value stipulated by the borrower as the Starting Home Value on an initial estimate disclosure provided under Section 1050.2310(a)(2) if the lender has not yet obtained an appraisal, AVM, or BPO and the terms of the disclosure are subject to change.

b) Sale of Property. If a shared appreciation agreement terminates with the sale of the property, the Ending Home Value may not exceed the sale price if:

1. The sale was an arms-length sale;

2. The property was not sold as part of a foreclosure; and

3. The borrower did not retain an interest in the property, including an interest as a life estate.

History

• Source: Added at 50 Ill. Reg. 8010, effective June 1, 2026

38 Ill. Adm. Code 1050.2330 Calculating Values in Appendix C of this Part

a) Average Annual Change in Value for purposes of Section 1050.2310(f)(1) shall be the average annual change in value in Illinois over the prior 5 years based on the All-Transactions House Price Index as published by the Federal Reserve Bank of St. Louis.

b) The Final Settlement Payment Amount shall be the lender's share of appreciation or equity, plus, if applicable under the terms of the agreement, any other amounts payable by the borrower at termination of the agreement, minus any amount over any repayment limit to which the lender and the borrower have agreed or set by law.

History

• Source: Added at 50 Ill. Reg. 8010, effective June 1, 2026

38 Ill. Adm. Code 1050.2340 Ability to Repay

A lender offering a shared appreciation agreement is deemed to have given due regard to a borrower's ability to repay if disclosures are provided by the lender to the borrower in compliance with Section 1050.2310, provided that:

a) The shared appreciation agreement does not require periodic payments prior to termination of the agreement; and

b) The term of the shared appreciation agreement is no less than five years.

History

• Source: Added at 50 Ill. Reg. 8010, effective June 1, 2026

38 Ill. Adm. Code 1050.2350 Counseling

a) Counselor Qualifications

1. Any individual providing counseling services related to shared appreciation agreements shall be a housing counselor providing counseling through a HUD-approved housing counseling agency under 12 C.F.R. Part 214.

2. The counselor providing guidance on shared appreciation mortgages must be independent of the shared appreciation agreement provider to ensure unbiased and objective advice to borrowers.

3. Other than where a shared appreciation agreement provider is responsible for payment of fees and costs of counseling, including under Section 1050.2310(i), a counselor shall not receive any direct or indirect compensation, financial incentive, or referral fee from the shared appreciation agreement provider being considered by the borrower.

4. If a counselor has any financial, professional, or personal interest in the shared appreciation agreement provider or transaction, the counselor must disclose that interest to the borrower and recuse themselves from providing counseling services for that specific transaction.

5. A counselor who is employed by or affiliated with a shared appreciation agreement provider may not provide counseling services to a borrower who is considering an agreement offered by that provider.

b) Content of Counseling Session:

1. General Explanation of Shared Appreciation Agreements. The counseling session shall provide a comprehensive overview of shared appreciation agreements, including, but not limited to:

A) The fundamental principles and structure of a shared appreciation agreement;

B) Definitions of key terms used by the shared appreciation agreement originator;

C) The legal and financial implications for homeowners;

D) The calculation and determination of appreciation sharing upon home sale or refinancing;

E) The borrower's loan amount, terms, and how their final repayment amount will be calculated;

F) The borrower's financial situation (e.g., budget, final payment strategies);

G) Disclosure form Settlement Examples and Cost Scenario Tables that outline the borrower's possible repayment amounts given varying term lengths and changes in home value;

H) The borrower's rights and obligations under a shared appreciation agreement;

I) The potential risks and benefits associated with entering into a shared appreciation agreement;

J) Other options available to the borrower such as deferred payment loans, property tax deferral programs, social services programs, and reverse mortgages;

K) Usage of home restrictions and events that could trigger foreclosure;

L) Tax implications; and

M) An overview of how shared appreciation agreement impacts their rights to refinance.

2. Differences Between Shared Appreciation Agreements and Traditional & Reverse Mortgages. The counseling session shall ensure that borrowers fully understand the distinctions between shared appreciation agreements from other home financing options to be able to make an informed decision, including by distinguishing shared appreciation agreements from:

A) Traditional mortgages, including:

i) Traditional mortgages involve periodic repayment of principal and interest, whereas shared appreciation agreements do not require monthly payments;

ii) In a mortgage, the borrower retains full equity ownership subject to loan repayment, whereas in a shared appreciation agreement the provider shares in future home appreciation; and

iii) The impact of interest rates on mortgage payments compared to the equity-based return structure of shared appreciation agreements.

B) Reverse Mortgages, including:

i) Reverse mortgages allow homeowners, typically seniors, to access home equity through loan disbursements, requiring repayment upon sale, move-out, or death, whereas shared appreciation agreements involve repayment of a share in future appreciation of the property's value by a set date;

ii) Reverse mortgages accrue interest, whereas shared appreciation agreements require a share of appreciation upon exit;

iii) Differences in eligibility, such as age restrictions for reverse mortgages versus eligibility for shared appreciation agreements; and

iv) Counselors shall ensure that borrowers fully understand these distinctions to make an informed decision regarding their home equity options.

c) Counseling Recordkeeping.

1. Each counseling session shall be documented by the counselor. A counselor's records shall be maintained electronically and be available for inspection by the Department upon request. The Department may audit any records held by the responsible counselor at any time.

2. A counselor shall develop recordkeeping policies and procedures consistent with this Section.

3. A counselor shall retain all records for at least three years from the date of creation and shall include, but not be limited to, the following:

A) Counseling program materials;

B) A list of borrowers for whom counseling was provided and counseling program materials used in each counseling session;

C) Completed counseling certificates for each borrower; and

D) All other records, policies, and procedures required by the Act and this Subpart T.

4. Storage and transfer of records. If a counselor ceases operations due to insolvency, revocation, bankruptcy or for any other reason, all records must be preserved at the expense of the counselor for at least three years in a form and location in Illinois acceptable to the Department. The counselor shall retain the records longer if requested by the Department. The counselor shall notify the Department of the location where the records are stored or transferred.

5. A counselor shall provide the shared appreciation agreement provider with the following information regarding each counseling session:

A) Counseling session materials; and

B) Completed counseling certificate for each borrower.

6. A shared appreciation agreement provider shall develop and adopt recordkeeping policies and procedures, maintain electronic records of completed counseling sessions, and make them available for inspection at the Department's request. If a shared appreciation agreement provider ceases operations due to insolvency, revocation, bankruptcy or for any other reason, all records must be preserved at the expense of the shared appreciation agreement provider for at least 3 years in a form and location in Illinois acceptable to the Department. The shared appreciation agreement provider shall retain the records longer if requested by the Department. The shared appreciation agreement provider shall notify the Department of the location where the records are stored or transferred.

d) Counseling must be provided in the following manner:

1. In person; or

2. By remote electronic or telephonic means, with the permission of all borrowers, where the session can be conducted in privacy, the counselor is able to verify the identity of each borrower, and the counseling is documented by the counselor. For remote counseling sessions, the counselor shall provide the Department with access to any remote, real-time online video counseling upon request, including login credentials and schedules.

History

• Source: Added at 50 Ill. Reg. 8010, effective June 1, 2026

Chapter II Department of Financial and Professional Regulation

Part 1050 Residential Mortgage License Act of 1987

38 Ill. Adm. Code 1050.APPENDIX A Estimated Monthly Income and Expenses Worksheet (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.APPENDIX B Mortgage Ratio Worksheet (repealed)

History

• Source: Repealed at 41 Ill. Reg. 12405, effective October 6, 2017

38 Ill. Adm. Code 1050.APPENDIX C Form of Shared Appreciation Agreement Disclosure

---

Provider Name

---

Provider Address

Illinois Shared Appreciation Agreement (Estimate/Closing) Disclosure

Closing Information

Transaction Parties

Investment Information

DATE ISSUED

APPLICANTS

OCCUPANCY

XX/XX/XXXX

(Homeowner Name)

(Occupancy type)

CLOSING DATE

AGREEMENT #

XX/XX/XXXX

(Address)

XXXX

SETTLEMENT AGENT

ORIGINATOR

PREPAYMENT PENALTY

(Name)

(Provider Name)

□ No

□ Yes

FILE #

(Describe)

XXXX

PROPERTY

(Address)

(Address)

Agreement Type:

(e.g., "Shares Home Value", "Shares Change In Home Value", or other including description)

IMPORTANT

You are not required to complete a shared appreciation agreement transaction just because you have received this disclosure or completed an application. If you proceed with this transaction, the shared appreciation agreement provider will have a lien on your home, and you would agree to pay the provider a portion of your home's value or the future increase in your home's value at the end of the agreement. If you complete the transaction and do not meet your obligations under the shared appreciation agreement, you could lose your home and any money you have put into it.

The information in this disclosure is based on the shared appreciation agreement for which you have applied and provides examples of the amounts you may be required to pay at the end of the agreement. If the agreement is terminated or settled in connection with the sale of your home, your obligation to your provider may include some or all of the sale proceeds. The terms of a shared appreciation agreement are different from those of a traditional mortgage loan. Please read this disclosure, the shared appreciation agreement transaction documents, and all other materials from your provider carefully. You are required to complete a counseling session from an independent, HUD-certified housing counselor before completing a shared appreciation agreement and may wish to speak with a financial professional or an attorney before proceeding. Your agreement may affect your taxes, so you may also wish to speak with a qualified tax advisor.

Investment Terms

Explanation

Starting Home Value

[dollar amount]

Current estimated fair market value of your home. Determined by:

□ Appraisal or

□ Average of two distinct non-appraisal valuation methods:

(□ AVM □ BPO □ Other (describe ______________)

See "Appraisal Considerations" on Page X for more information

Transaction Amount

[dollar amount]

The gross amount invested in your home up front by your provider.

Transaction Percentage

[XX.XX%]

Transaction Amount expressed as a % of Starting Home Value.

Multiplier

[X.XX]

A multiplier used to price your shared appreciation agreement.

Share Percentage

[XX.XX%]

Percentage of the Ending Home Value that your provider will receive when the agreement ends. (Transaction Percentage of XX.XX% x Multiplier of X.XX = XX.XX%).

Share Percentage Modifier Description

[XXX]

If the Share Percentage can change during the term of the shared appreciation agreement, provide details here.

Cost Cap

[XX.XX%]

Maximum cost of your shared appreciation agreement per year from start to end, expressed as a percentage. Limits the amount of your Settlement Payment if your home's value rises more significantly or the agreement ends in the early years. If the law sets a more restrictive limit, including the limit in Section 15-5-5 of the Predatory Loan Prevention Act [815 ILCS 123/15-5-5], that limit will apply.

Origination Fee

[dollar amount]

This fee, equal to X.XX% of your Transaction Amount, will be paid to your provider at closing by deducting it from the Transaction Amount.

Expiration Date, Term and Settlement

[XX/XX/XXXX]

You will be required to settle your shared appreciation agreement on or before the Expiration Date. The Expiration Date of your agreement is exactly XX years from the Effective Date. You can settle your agreement by selling your home or buying your provider out, at a time of your choosing, subject to the maximum XX year term.

Net Closing Proceeds

Closing Costs, Expenses And Credits

[dollar amount]

$X,XXX.XX Origination Fee + $X,XXX.XX in Third Party Transaction

Expenses + $X,XXX.XX in Other Expenses - $X,XXX.XX in Credits.

Net Cash To You At Closing

[dollar amount]

Transaction Amount of $XX,XXX.XX - $X,XXX.XX in Closing Costs,

Expenses And Credits - $X,XXX.XX in Payoffs to Third Parties. See the Net Closing Proceeds calculation on Page X.

Settlement Information

Settlement

A shared appreciation agreement works differently from a traditional mortgage loan. With a mortgage loan, you make monthly payments that gradually reduce your loan balance until it's paid off. With a shared appreciation agreement, there are no monthly payments, and your total cost is not known up front. Instead, the total cost of a shared appreciation agreement depends on your home's future value at the end of the agreement.

A shared appreciation agreement typically will end when you sell your home, or at your option, you choose to end the agreement without a home sale by buying out the agreement prior to or at the agreement's maximum term.

At settlement, you will make a lump sum Settlement Payment, either from the proceeds of the sale of your home or separately if no home sale occurs. The payment amount is based on the value of your home at the end of the agreement and at the time of settlement. The cost of a shared appreciation agreement typically grows over time, so at the end of the agreement you will likely need to make a single payment that will be much larger than the Transaction Amount and the Net Cash To You at closing of the agreement. Settlement details are provided in the agreement.

Ending Home Value

The Ending Home Value is the value of your home at the time your shared appreciation agreement ends. If your agreement ends in connection with a sale of your home, the Ending Home Value will typically equal the sale price. If your agreement ends without a sale of your home, the Ending Home Value will be determined by a professional third-party valuation method that is consistent with generally accepted property valuation standards in use at that time, which may include one or more of the following: appraisal, AVM, BPO, or another method that has been approved by the Illinois Department of Financial and Professional Regulation.

Final Settlement Payment

Equals the lesser of the following two amounts:

1. Ending Home Value multiplied by the Share Percentage (this is the uncapped amount).

2. Cost Cap applied to the Transaction Amount over the term length (the exact number of days that have elapsed from the Effective Date to the Settlement Date), compounded annually (this is the capped amount). If the law sets a more restrictive limit, including the limit in Section 15-5-5 of the Predatory Loan Prevention Act [815 ILCS 123/15-5-5], that limit will apply.

If you owe your provider other amounts for things like unreimbursed protective advances or unpaid administrative fees, those amounts will be added to the Final Settlement Payment at termination. You will also pay typical transaction expenses for things like appraisal, reconveyance, and/or recording fees.

Because the Share Percentage is greater than the Transaction Percentage, your Final Settlement Payment can exceed your Transaction Amount even if the Ending Home Value is less than the Starting Home Value. Your Final Settlement Payment will exceed the Transaction Amount if the Ending Home Value exceeds $[X,XXX,XXX.XX].

Annualized Cost

The cost of a shared appreciation agreement expressed as an investment percentage return from start to end. It is calculated exclusive of the Origination Fee and all transaction expenses. Although a shared appreciation agreement has no interest rate, Annualized Cost can provide a useful way to compare the cost of a shared appreciation agreement to the interest rate on a traditional mortgage loan. Calculating Annualized Cost also provides the means by which the Cost Cap is applied.

Cost Is Unknown Up Front

The Ending Home Value and the date that a shared appreciation agreement ends at settlement are unknown up front. Therefore, the Final Settlement Payment and the Annualized Cost of your shared appreciation agreement cannot be determined up front. Because the total cost of a shared appreciation agreement cannot be known up front, and because there is no interest rate, cost cannot be disclosed as a single percentage number, as is customary with an APR disclosure for a traditional mortgage loan. Instead, a scenario-based approach is used to disclose cost under various scenarios for future home value and time to settlement.

Settlement Examples

Settlement Example 1

This example provides full details of the calculations needed to determine the Final Settlement Payment and Annualized Cost. There are five simple steps. The example demonstrates a scenario where the home value increases and the term is longer, resulting in a share-based Final Settlement Payment.

Step 1: Determine ending assumptions:

Agreement outstanding for 10 Years

Ending Home Value: $X,XXX,XXX (approximately 4% annual price appreciation)

Step 2: Calculate the share-based settlement payment

Ending Home Value X Share Percentage = share-based settlement payment

$X,XXX,XXX X XX.XX% = $XXX,XXX

Step 3: Calculate the capped settlement payment*

Transaction Amount X (1 + Cost Cap) ^ (Term Days / 365) = capped settlement payment

$XXX,XXX X (1 + XX.XX%) ^ (3,650 / 365) = $XXX,XXX

Step 4: Final Settlement Payment = lower of the calculations in Step 2 and Step 3, above = $XXX,XXX

In this example, the Final Settlement Payment is: □ Share-Based □ Capped

Step 5: Calculate Annualized Cost*

(Settlement Payment / Transaction Amount) ^{(365 / Term Days) - 1 = Annualized Cost ($XXX,XXX / $XXX,XXX)} (365 / 3,650) - 1 = XX.X%

*Term Days = exact number of days that passed between the Effective Date of your agreement and Settlement Date. This is a 10-year example. Assuming 365 days per year results in 3,650 Term Days.

Settlement Example 2

This example demonstrates a scenario where the home value increases and the term is shorter. It results in a capped outcome.

Step 1: Determine ending assumptions:

Agreement outstanding for 2 Years

Ending Home Value: $X,XXX,XXX (approximately 4% annual price appreciation)

Step 2. Share-based settlement payment = $X,XXX,XXX X XX.XX% = $XXX,XXX

Step 3. Capped settlement payment = $XXX,XXX (see example 1 for calculation method)

Step 4. Final Settlement Payment = $XXX,XXX Settlement Payment is: □ Share-Based □ Capped

Step 5. Annualized Cost = XX.X% (see example 1 for calculation method)

Settlement Example 3

This example demonstrates a scenario where the home value decreases.

Step 1: Determine ending assumptions:

Agreement outstanding for 2 Years

Ending Home Value: $X,XXX,XXX (approximately 25% annual price decline)

Step 2. Share-based settlement payment = $X,XXX,XXX X XX.XX% = $XXX,XXX

Step 3. Capped settlement payment = $XXX,XXX (see example 1 for calculation method)

Step 4. Final Settlement Payment = $XXX,XXX Settlement Payment is: □ Share-Based □ Capped

Step 5. Annualized Cost = XX.X% (see example 1 for calculation method)

IMPORTANT

Because the Share Percentage is greater than the Transaction Percentage, your Settlement Payment can exceed your Transaction Amount even if the Ending Home Value is less than the Starting Home Value.

Your Settlement Payment will exceed the Transaction Amount if the Ending Home Value exceeds $X,XXX,XXX.XX.

Settlement Examples

Cost Scenario Tables

The tables below contain examples of Final Settlement Payment Amounts that may be required to satisfy your obligation at the end of a shared appreciation agreement based on a range of Ending Home Values for scenarios where the agreement ends after 1 year, 5 years, 10 years, and at the Expiration Date of the agreement. Ending Home Values are shown based on hypothetical changes in the change in your home's value of X.X% (the actual average annual change in value in Illinois over the prior 5 years based on the All-Transactions House Price Index as Published by the Federal Reserve Bank of St. Louis, available at: https://fred.stlouisfred.org/series/ILSTHPI), as well as for 5.5% annual appreciation, 3.5% annual appreciation, no change in value, and 10% total depreciation. THESE ARE EXAMPLES ONLY. THE ACTUAL FINAL SETTLEMENT PAYMENT AMOUNTS COULD BE HIGHER OR LOWER THAN SHOWN HERE. ACTUAL HOME PRICES COULD RISE MORE THAN SHOWN, WHICH WOULD RESULT IN LARGER SETTLEMENT PAYMENTS AND HIGHER ANNUALIZED COSTS.

The tables help you see how cost changes with longer or shorter terms and with varying home price increases or decreases. Dark shaded cells indicate where the Cost Cap applies. The Cost Cap usually applies in the early years or when home prices rise sharply.

5-Year End Date Table

Change in Home Value

Ending Home Value

Final Settlement Payment Amount

Share-Based or Capped

Annualized Cost (For Comparison to an APR)

X.X% 5-Year Average Annual Illinois Change in Value

5.5% Annual Appreciation

3.5% Annual Appreciation

No Change in Value

10% Total Depreciation

10-Year End Date Table

Change in Home Value

Ending Home Value

Final Settlement Payment Amount

Share-Based or Capped

Annualized Cost (For Comparison to an APR)

X.X% 5-Year Average Annual Illinois Change in Value

5.5% Annual Appreciation

3.5% Annual Appreciation

No Change in Value

10% Total Depreciation

X-Year End Date (Expiration Date) Table

Change in Home Value

Ending Home Value

Final Settlement Payment Amount

Share-Based or Capped

Annualized Cost (For Comparison to an APR)

X.X% 5-Year Average Annual Illinois Change in Value

5.5% Annual Appreciation

3.5% Annual Appreciation

No Change in Value

10% Total Depreciation

Closing Statement Details

Investment Costs

Homeowner Paid

At Closing Before Closing

Paid by Others

A. Origination Charges

01

02

03

04

05

06

07

08

B. Third Party Transaction Expenses

01

to

02

to

03

to

04

to

05

to

06

to

07

to

08

to

C. TOTAL INVESTMENT COSTS (Homeowner Paid

Investment Costs Subtotals (A + B)

Other Expenses

D. Taxes and Other Government Fees

01

to

02

to

03

to

04

to

E. Other

01

02

03

04

F. TOTAL OTHER EXPENSES (Homeowner Paid)

Other Expenses Subtotals (D + E)

G. CREDITS

H. TOTAL COSTS, EXPENSES AND CREDITS (C + F + G)

Payoffs

TO

AMOUNT

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

TOTAL PAYOFFS (l)

Net Closing Proceeds

Use this table to see what has changed from your Investment Estimate

Investment Estimate

Final

Did this change?

Transaction Amount

Costs, Expenses And Credits (H)

Closing Costs Paid Before Closing

Total Payoffs (I)

Net Closing Proceeds

Other Important Terms

Provisions Related To Future Borrowing Against Your Home

Your shared appreciation agreement may contain provisions that limit your ability to borrow more money against your home as long as the agreement remains outstanding. This restriction may apply to "cash out" or "rate/term" refinance loans, home equity lines of credits or loans, or new loans. You should review the shared appreciation agreement transaction documents to make sure you fully understand the impact of these provisions.

It is also possible that a lender will not lend on a property that is subject to a lien from a shared appreciation agreement to the same extent or on the same terms as they would for a property that is not subject to such a lien. Therefore, even in a situation in which a shared appreciation agreement provider does not restrict a certain future loan, it is possible that you will need to end a shared appreciation agreement in order to complete another loan.

Appraisal Considerations

Appraisals, AVMs (Automated Valuation Models) and BPOs (Broker Price Opinions) are professional third-party estimates of value but may not represent the actual value that your home would sell for. Unlike a traditional mortgage loan, Starting Home Value and Ending Home Value are directly used to determine the final cost of your shared appreciation agreement. As a result, the Final Settlement Payment Amount that you would owe at the end of the agreement may be affected if a professional estimate of your home's value differs from actual value.

Information About Default And Foreclosure

In the case of a material and uncured breach of the terms of a shared appreciation agreement, the provider may have the right to take action to protect its investment, including by initiating a foreclosure proceeding on your home in accordance with applicable law. IF YOU DO NOT CURE THE DEFAULT WITHIN THE TIME PERIODS PROVIDED UNDER APPLICABLE LAW YOU COULD LOSE YOUR HOME.

Events of default include the following:

Falling behind on mortgage payments, property taxes, property insurance or other home-related obligations.

Allowing the condition of your home to deteriorate significantly or failing to restore your home to its previous condition after damage occurs.

Taking on additional debt in violation of the provisions of your shared appreciation agreement.

Violating home usage laws.

Becoming insolvent or declaring bankruptcy.

Misrepresenting or omitting material facts when communicating with your shared appreciation agreement provider.

Attempting to sell or transfer your property except as permitted under your shared appreciation agreement.

Failing to settle your shared appreciation agreement at the end of its term.

Special Calculation Provisions

[If the agreement contains any special calculation provisions, such as floors or lockout periods, describe here.]

Other Important Terms

Important Term 1

Description

Important Term 2

Description

Important Term 3

Description

Important Term 4

Description

Important Term 5

Description

Important Term 6

Description

Contact Information

Shared Appreciation Agreement Provider

Shared Appreciation Agreement Broker

Real Estate Broker (Buyer)

Real Estate Broker (Seller)

Settlement Agent

[Other Interest Party]

Name

Address

NMLS ID

______________ License ID

Contact

Contact NMLS ID

Contact License ID _______

Email

Phone

Acceptance of Terms

By signing, you are confirming that:

1 You have received and thoroughly reviewed this shared appreciation agreement [Estimate/Closing] Disclosure, and you intend to proceed with the closing of this transaction under the terms presented herein.

2. Before your transaction can close, you MUST complete a mandatory counseling session with an authorized independent HUD-certified housing counselor who will provide you with counseling on the proposed transaction. You will be responsible for the cost of such counseling only if you elect to close, and not rescind, this transaction.

3. You have been advised to review your shared appreciation agreement with your family and professional advisors, including your tax, legal and financial advisors and estate planner, and that your provider was available to speak with any of them and did so upon your request.

4. Additional Acknowledgement

5. Additional Acknowledgement

6. Additional Acknowledgement

7. Additional Acknowledgement

This Shared Appreciation Agreement [Estimate/Closing] Disclosure is non-binding.

Applicant Signature

Date

Co-Applicant Signature

Date

History

• Source: Added at 50 Ill. Reg. 8010, effective June 1, 2026

Chapter II Department of Financial and Professional Regulation

Part 1055 Mortgage Community Reinvestment

38 Ill. Adm. Code 1055.10 Authority, Purposes and Scope

a) The Illinois Community Reinvestment Act (ILCRA) [205 ILCS 735] authorizes this Part.

b) Purposes. This Part is intended to carry out the mortgage lender community investment purposes of [205 ILCS 735] by establishing the framework and criteria by which the Secretary assesses a covered mortgage licensee's record of helping to meet the mortgage credit needs of the State, including low- and moderate-income neighborhoods and individuals, consistent with the safe and sound operation of the covered mortgage licensee, and by providing that the Secretary takes that record into account in considering certain applications pursuant to Section 1055.250.

c) Scope. This Part applies to all covered mortgage licensees as defined in Section 1055.20.

38 Ill. Adm. Code 1055.20 Definitions

For purposes of this Part, the following definitions apply:

"Area median income" means:

the median family income for the Metropolitan Statistical Area (MSA), if a person or geography is located in an MSA; or

the Statewide nonmetropolitan median family income, if a person or geography is located outside an MSA.

"Additional full-service office" means any office established or maintained by a covered mortgage licensee under 205 ILCS 635/1-3(f) and 2-8.

"Community development" means:

Mortgage products and other efforts to assist low- and moderate-income individuals to acquire or remain in affordable housing;

Community services targeted to low- and moderate-income individuals;

Activities that revitalize or stabilize:

Low- or moderate-income geographies;

Designated disaster areas; or

Distressed or underserved nonmetropolitan middle-income geographies designated by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency; or

Any other area as determined by the Secretary based on:

Rates of poverty, unemployment, and population loss; or

Population Size, Density, and Dispersion. Activities revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community and economic development needs, including needs of low- and moderate-income individuals.

"Community development loan" means a loan that:

Has as its primary purpose community development; and

Has not been reported or collected by the covered mortgage licensee for consideration in the covered mortgage licensee's assessment as a home mortgage loan, unless it is a multifamily dwelling loan (as described in Appendix A to 12 CFR 203, the Consumer Financial Protection Bureau's implementing regulations for the Home Mortgage Disclosure Act); and

Benefits the State or a broader regional area that includes the State.

"Community development service" means a service that:

Has as its primary purpose community development; and

Is related to the provision of financial services, including technical services.

"Covered mortgage licensee" means a mortgage lender, licensed under [205 ILCS 635], that has lent or originated 50 or more home mortgage loans in the State in the last calendar year reportable under the Home Mortgage Disclosure Act and also is responsible for underwriting, making credit decisions for, or issuing of commitments for the home mortgage loans.

"Department" means the Illinois Department of Financial and Professional Regulation.

"Geography" means a census tract, or a block numbering area delineated by the United States Bureau of the Census in the most recent decennial census.

"Highly economically disadvantaged areas" means economically distressed areas designated pursuant to 26 U.S.C. 1391.

"Home Mortgage Disclosure Act" or "HMDA" means the Consumer Financial Protection Bureau's implementing regulations found at 12 CFR 1003.

"Home mortgage loan" means a "home improvement loan", or a "home purchase loan" as defined in 12 CFR 1003.2 of HMDA or a home equity loan or any other extension of credit, including but not limited to a refinance, secured by a residence of the borrower for personal, family, or household purposes.

"Income level" means:

Low-income, an individual income that is less than 50% of the area median income, or a median family income that is less than 50%, in the case of a geography.

Moderate-income, an individual income that is at least 50% and less than 80% of the area median income, or a median family income that is at least 50% and less than 80%, in the case of a geography.

Middle-income, an individual income that is at least 80% and less than 120% of the area median income, or a median family income that is at least 80% and less than 120%, in the case of a geography.

Upper-income, an individual income that is 120% or more of the area median income, or a median family income that is 120% or more, in the case of a geography.

"Loan location" means a home mortgage loan is located in the geography where the property to which the loan relates is situated.

"MSA" means a metropolitan statistical area as defined by the United States Director of the Office of Management and Budget.

"Qualified investment" means a lawful investment, deposit, donation, membership share, or grant that has as its primary purpose community development, and lawful investments in the following:

corporations for the purpose of providing technical assistance to nonprofit housing corporations for the purpose of establishing creditworthiness;

contributions to any private nonprofit organization organized for improving the social and economic conditions, such as community development programs, foreclosure prevention initiatives, and educational institutions focusing on financial literacy initiatives, in communities in the State;

contributions for the purpose of relieving suffering or distress resulting from disaster or other calamity, such as hurricane or flood, occurring in any part of the State; and

contributions to any private nonprofit organization organized for fair housing and fair lending education and training.

"Special Credit Program" means any credit program offered by a covered mortgage licensee to meet special social needs which is in conformity with and explicitly authorized by the Equal Credit Opportunity Act (15 U.S.C. 1691(c)) and Regulation B (12 CFR 1002.8).

"Unbanked person" means an individual that does not have a checking or savings account with an insured depository institution.

"Underbanked person" means an individual that has a checking or saving account with an insured depository institution but that used financial products or services from a person other than an insured depository institution in the past 12 months.

38 Ill. Adm. Code 1055.200 Assessment Factors

As used in this Part, "assessment factors" means the assessment of the following factors to determine whether a covered mortgage licensee is meeting the financial services needs of local communities:

a) activities to ascertain the financial services needs of the community, including communication with community members regarding the financial services provided;

b) extent of marketing to make members of the community aware of the financial services offered;

c) origination of mortgage loans including, but not limited to, home improvement and rehabilitation loans, and other efforts to assist existing low-income and moderate-income residents to be able to remain in affordable housing in their neighborhoods;

d) for small business lenders, the origination of loans to businesses with gross annual revenues of $1,000,000.00 or less, particularly those in low-income and moderate-income neighborhoods;

e) participation, including investments, in community development and redevelopment programs, small business technical assistance programs, minority-owned depository institutions, community development financial institutions, and mutually-owned financial institutions;

f) efforts working with delinquent customers to facilitate a resolution of the delinquency;

g) origination of loans that show an under concentration and a systemic pattern of lending resulting in the loss of affordable housing units;

h) evidence of discriminatory and prohibited practices; and

i) offering mortgage lending to unbanked and underbanked persons.

38 Ill. Adm. Code 1055.210 Performance Tests, Standards, and Ratings, in General

a) Performance tests and standards. The Secretary assesses the performance of a covered mortgage licensee in an examination as outlined in this Section. The Secretary applies the assessment factors, as provided in Section 1055.200, and lending and service tests, as provided in Sections 1055.220 and 1055.230 in evaluating the performance of a covered mortgage licensee. However, a covered mortgage licensee that achieves at least a "satisfactory" rating under both the lending and service tests may warrant consideration for an overall rating of "outstanding" depending on the covered mortgage licensee's performance in making qualified investments and community development loans to the extent authorized under law, in accordance with Section 1055.APPENDIX A(b)(3).

b) Performance context. The Secretary applies the tests and standards in subsection (a) in the context of:

1. demographic data on median income levels, distribution of household income, nature of housing stock, housing costs, and other relevant data pertaining to the State;

2. any information about lending and service opportunities in the State maintained by the covered mortgage licensee or obtained from community organizations, state, local, and tribal governments, economic development agencies, or other sources;

3. the covered mortgage licensee's product offerings and business strategy as determined from data provided by the covered mortgage licensee in the State;

4. the covered mortgage licensee's capacity and constraints, including the size and financial condition of the covered mortgage licensee, the economic climate (national, regional, and local), safety and soundness limitations, and any other factors that significantly affect the covered mortgage licensee's ability to provide lending or services in the State;

5. the covered mortgage licensee's past performance and the performance of similarly situated lenders in the State; and

6. any other information deemed relevant by the Secretary.

c) Assigned ratings. The Secretary assigns to a covered mortgage licensee one of the following four ratings pursuant to Sections 1055.240 and 1055.APPENDIX A: "outstanding"; "satisfactory"; "needs to improve"; or "substantial noncompliance" as provided in 205 ILCS 735/35-15(c). The rating assigned by the Secretary reflects the covered mortgage licensee's record of helping to meet the mortgage credit needs of the State, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the covered mortgage licensee.

d) Safe and sound operations. This Part does not require a covered mortgage licensee to make loans or investments or to provide services that are inconsistent with safe and sound operations. To the contrary, the Secretary anticipates covered mortgage licensees can meet the standards of this Part with safe and sound loans, investments, and services on which the covered mortgage licensee can expect to make a profit. Covered mortgage licensees are permitted and encouraged to develop and apply flexible underwriting standards for loans that benefit and are suitable for low- and moderate-income geographies or individuals, only if consistent with safe and sound operations.

38 Ill. Adm. Code 1055.220 Lending Test

a) Scope of test.

1. The lending test evaluates a covered mortgage licensee's record of helping to meet the mortgage credit needs of the State through its lending activities by considering a covered mortgage licensee's home mortgage and community development lending.

2. The Secretary considers originations and initial purchases of loans as reported by the covered mortgage licensee under HMDA. The Secretary will also consider any other loan data the covered mortgage licensee may choose to provide.

b) Performance criteria. The Secretary evaluates a covered mortgage licensee's performance considering the assessment factors in Section 1055.200 and pursuant to the following criteria:

1. Geographic distribution. The geographic distribution of the covered mortgage licensee's home mortgage loans, based on the loan location, including:

A) the dispersion of lending in the State and whether lending arbitrarily excludes low- and moderate-income geographies; and

B) the number and amount of loans in low-, moderate-, middle-, and upper-income geographies in the State.

2. Borrower characteristics. The distribution of the covered mortgage licensee's home mortgage loans based on borrower characteristics, including the number and amount of home mortgage loans to low-, moderate-, middle-, and upper-income individuals, including loans to assist existing low- and moderate-income residents to be able to acquire or remain in affordable housing in their neighborhoods at rates and terms that are reasonable considering the covered mortgage licensee's history with similarly situated borrowers.

3. Innovative or flexible lending practices. The covered mortgage licensee's use of innovative or flexible lending practices in a safe and sound manner to address the credit needs of low- and moderate-income individuals or geographies, including loans and other products to assist delinquent home mortgage borrowers to be able to remain in their homes. The Secretary shall also consider the availability of mortgage loan products that are suitable for low- and moderate-income individuals, including loans specifically approved for low- and moderate-income individuals by Federal Housing Administration, Veteran's Administration, federal Rural Housing Service, or a government-sponsored enterprise. In assessing performance pursuant to this Part, the Secretary shall consider whether a covered mortgage licensee offers special credit programs. The covered mortgage licensee must be able show that the program will fall under any of the following:

A) any credit assistance program expressly authorized by federal or state law for the benefit of an economically disadvantaged class of persons;

B) any credit assistance program offered by a not-for-profit organization for the benefit of its members or an economically-disadvantaged class of persons; or

C) any special purpose credit program offered by a for-profit organization, or in which that organization participates to meet special social needs, if it meets certain standards prescribed in 12 CFR 1002.8(a)(3)(i);

4. Loss mitigation efforts. The covered mortgage licensee's efforts to work with delinquent home mortgage loan borrowers to facilitate a resolution of the delinquency, including the number of loan modifications, the timeliness of the modifications, and the extent to which the modifications are effective in preventing subsequent defaults or foreclosures;

5. Fair lending. The covered mortgage licensee's performance relative to fair lending policies and practices pursuant to written policies and directives issued by the Secretary; and

6. Loss of affordable housing. The covered mortgage licensee's number and amount of loans that show an undue concentration and a systematic pattern of lending resulting in the loss of affordable housing units, including a pattern of early payment defaults.

c) Third-party lending. No covered mortgage licensee may include a loan origination or loan purchase for consideration if another covered mortgage licensee or depository institution claims the same loan origination or the same purchase under this Part or the State or federal Community Reinvestment Act.

d) Lending performance rating. The Secretary rates a covered mortgage licensee's performance as provided in Section 1055.APPENDIX A.

38 Ill. Adm. Code 1055.230 Service Test

a) Scope of test. The service test evaluates a covered mortgage licensee's record of helping to meet the mortgage credit needs in the State by analyzing both the availability and effectiveness of a covered mortgage licensee's systems for delivering mortgage loan products and the extent and innovativeness of its community development services. A covered mortgage licensee that has made fewer than 200 home mortgage loans in the State in the last calendar year is not subject to the service test outlined in this Section.

b) Areas benefited. Community development services must benefit the State or a broader regional area that includes the State.

c) Performance criteria − community development services. The Secretary evaluates community development services pursuant to the following criteria:

1. the extent to which the covered mortgage licensee provides community development services; and

2. the innovativeness and responsiveness of community development services.

d) Performance criteria − mortgage lending services. The Secretary evaluates the availability and effectiveness of a covered mortgage licensee's systems for delivering mortgage lending services considering the assessment factors in Section 1055.200 and, pursuant to the following criteria:

1. the availability and effectiveness of systems for delivering mortgage lending services (e.g., internet, telephone solicitation, direct mail) in low- and moderate-income geographies and to low- and moderate-income individuals, including, to the extent applicable, the current distribution of the covered mortgage licensee's additional full-service office among low-, moderate-, middle-, and upper-income geographies; and

2. the range of services provided in low-, moderate-, middle-, and upper-income geographies and the degree to which the services are tailored to meet the needs of those geographies.

e) Service performance rating. The Secretary rates a covered mortgage licensee's service performance as provided in Section 1055.APPENDIX A.

f) Examples of community development. Examples of services, programs, sponsorships, donations, lawful investments, deposits, membership shares, grants, other activities which may be deemed to have the primary purpose of community development include, but are not limited to, the following:

1. Establishment of or material support of charitable donation accounts and donor advised funds that benefit charitable organizations which help meet the financial services needs of low-income and moderate-income neighborhoods or individuals within the community;

2. Establishment of or material support of foundations and other affiliated companies that provide programs and services to meet the credit needs of low-income to moderate-income neighborhoods;

3. Offering products and services targeted to expand access to safe and affordable banking services;

4. Provision or support of community development services that directly and tangibly benefit the community;

5. Offering products and services and/or provision of investments targeted to directly and tangibly increase climate resilience in low-income to moderate-income neighborhoods;

6. Offering products and services and/or provision of investments targeted to directly and tangibly mitigate environmental harm in low-income to moderate-income neighborhoods;

7. Participating in Invest in Illinois or other similar state or federal programs which have the primary purpose of community development;

8. Participating in an activity listed in Section 1055.APPENDIX C, ILCRA Illustrative List of Qualifying Activities for Covered Mortgage Licensees.

History

• Source: Amended at 50 Ill. Reg. 9291, effective June 29, 2026

Chapter II Department of Financial and Professional Regulation

Part 1055 Mortgage Community Reinvestment

38 Ill. Adm. Code 1055.240 Assigned Ratings

a) Ratings in general. Subject to subsections (a) and (b), the Secretary assigns to a covered mortgage licensee a rating of "outstanding", "satisfactory", "needs to improve", or "substantial noncompliance" based on the covered mortgage licensee's performance under the lending and service tests.

b) Lending test. No covered mortgage licensee may receive an assigned overall rating of "satisfactory" or higher unless it receives a rating of at least "satisfactory" on the lending test.

c) Effect of evidence of discriminatory or other illegal credit practices. Evidence of discriminatory or other illegal credit practices adversely affects the Secretary's evaluation of covered mortgage licensee's performance. In determining the effect on the covered mortgage licensee's assigned rating, the Secretary considers the nature and extent of the evidence, the policies and procedures that the covered mortgage licensee has in place to prevent discriminatory or other illegal credit practices, any corrective action that the covered mortgage licensee has taken or has committed to take, particularly voluntary corrective action resulting from self-assessment, the covered mortgage licensee's compliance with written policies and directives with regard to fair lending, and other relevant information. In connection with any type of lending activity described in Section 1055.220, evidence of discriminatory or other credit practices that violate an applicable law, rule, or regulation includes, but is not limited to:

1. Discrimination against applicants on a prohibited basis in violation, for example of the Equal Credit Opportunity Act (15 U.S.C. 1691-1691f) or Fair Housing Act (42 U.S.C. 3601-19), including, for example, relying on or giving force or effect to discriminatory appraisals to deny loan applications where the covered mortgage licensee knew or should have known of the discrimination;

2. Violations of section 5 of the Federal Trade Commission Act (15 U.S.C. 45)

3. Violations of section 8 of the Real Estate Settlement Procedures Act (12 U.S.C. 2607);

4. Violations of the Truth in Lending Act provisions regarding a consumer's right of rescission (15 U.S.C. 1635);

5. Violations of the Home Ownership and Equity Protection Act (15 U.S.C. 1639 and 1648);

6. Violations of the Residential Real Property Disclosure Act [765 ILCS 77];

7. Violations of the Illinois High Risk Home Loan Act [815 ILCS 137];

8. Violations of the Illinois Fairness in Lending Act [815 ILCS 120]; and

9. Violations of Article 4 (Financial Credit) of the Illinois Human Rights Act [775 ILCS 5/Art. 4].

38 Ill. Adm. Code 1055.250 Effect of Record of Performance on Applications

a) Performance. Among other factors, the Secretary takes into account the record of performance of each covered mortgage licensee, under the covered mortgage licensee community investment provisions of the Illinois Community Reinvestment Act when submitting applications for the following:

1. renewal of a license to conduct business in the State by all covered mortgage licensees;

2. establishment or renewal of any additional full-service office by all covered mortgage licensees;

3. any merger with or acquisition of a covered mortgage licensee or mortgage broker by a covered mortgage licensee or any other proposed change in control of a covered mortgage licensee; and

4. any other approval of the Secretary, provided that there are no other countervailing financial safety and soundness or other policy considerations.

b) Interested parties. In considering a record of performance in applications described in subsection (a), the Secretary takes into account any views expressed by interested parties that are submitted.

c) Denial, deferral, or conditional approval of application. A covered mortgage licensee's record of performance may be the basis for denying, deferring, or conditioning approval of an application listed in subsection (a).

38 Ill. Adm. Code 1055.400 Data Collection and Reporting

a) As part of its examination, the Secretary shall require a covered mortgage licensee to collect and report for examination purposes the data fields required under HMDA. The covered mortgage licensee shall be expected to test its data collection and reporting as part of its routine internal controls to ensure compliance with all data reporting requirements as well as its own policies and procedures.

b) Optional data collection and maintenance. At its option, a covered mortgage licensee may provide other information concerning its lending performance, including additional loan distribution data.

38 Ill. Adm. Code 1055.410 Content and Availability of Public Information

a) Information available to the public. A covered mortgage licensee shall maintain the following information to be made available to the public upon request:

1. all written comments received from the public for the current year and each of the prior two calendar years that specifically relate to the covered mortgage licensee's performance in helping to meet the mortgage credit needs of the State, and any response to the comments by the covered mortgage licensee, if neither the comments nor the responses contain statements that reflect adversely on the good name or reputation of any persons other than the covered mortgage licensee or publication of which would violate specific provisions of law;

2. a copy of the public section of the covered mortgage licensee's most recent performance evaluation prepared by the Secretary; and

3. a copy of the HMDA Disclosure Statement provided by the Federal Financial Institutions Examination Council pertaining to the covered mortgage licensee for each of the prior two calendar years.

b) Copies. Upon request, a covered mortgage licensee shall provide within five business days of the request, copies, either on paper or in another form acceptable to the person making the request, of the information required under Section 1055.410(a)(1). The covered mortgage licensee may charge a reasonable fee not to exceed the cost of copying and mailing, if applicable.

38 Ill. Adm. Code 1055.420 Publication of Planned Examination Schedule

The Secretary publishes at least 30 days in advance of the beginning of each calendar quarter a list of covered mortgage licensees scheduled for ILCRA examinations in that quarter.

38 Ill. Adm. Code 1055.430 Alternative Examination Procedures

The Secretary may establish alternative examination procedures for institutions that were rated "outstanding" as of their most recent ILCRA compliance examination. The purpose of such alternative procedures shall be to reduce the cost to institutions. The alternative procedures shall in no way limit public participation.

38 Ill. Adm. Code 1055.440 Examination Authority and Cooperation

a) Pursuant to the Secretary's authority under the ILCRA, including, but not limited to, Sections 35-15 and 35-25 of the ILCRA, the Secretary and the Secretary's appointees may examine the entire books, records, documents, and operations of each covered mortgage licensee or its directors, employees, and agents under oath.

b) A covered mortgage licensee shall be required to fully cooperate in any examination conducted pursuant to this Part. Cooperation includes, but is not limited to:

1. timely and full production of books, records, and documents, in any reasonable format requested by the Department; and

2. ensuring all officers, directors, employees, and agents of the covered mortgage licensee are available for depositions or interviews upon reasonable notice.

38 Ill. Adm. Code 1055.450 Examination Frequency

a) Subject to the provisions of this Section, the Secretary may conduct examinations under the ILCRA or this Part in coordination with authorities from other states with the authority to regulate institutions and individuals engaged in the offering and provision of home mortgage loans ("other state regulators").

b) For covered mortgage licensees that made more than 100 home mortgage loans in the State in the last calendar year; the Secretary shall conduct examinations under the ILCRA with the following frequency:

1. For a covered mortgage licensee that is assigned an "outstanding" or "satisfactory" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within three years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

2. For a covered mortgage licensee that is assigned a "needs to improve" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within two years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

3. For a covered mortgage licensee that is assigned a "substantial noncompliance" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within one year of the issuance of the report of examination of its most recent prior examination under the ILCRA.

c) For covered mortgage licensees that made less than 100 home mortgage loans in the State in the last calendar year, the Secretary shall conduct examinations under the ILCRA with the following frequency:

1. For a covered mortgage licensee that is assigned an "outstanding" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within five years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

2. For a covered mortgage licensee that is assigned a "satisfactory" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within four years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

3. For a covered mortgage licensee that is assigned a "needs to improve" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within two years of the issuance of the report of examination of its most recent prior examination under the ILCRA.

4. For a covered mortgage licensee that is assigned "substantial noncompliance" rating in its most recent prior examination under the ILCRA, the next examination shall be initiated within one year of the issuance of the report of examination of its most recent prior examination under the ILCRA.

d) Notwithstanding the provisions of this Section, the Secretary may:

1. conduct an examination at any time upon finding:

A) an other state regulator has rated the covered mortgage licensee, as of its most recent examination, in "substantial noncompliance" or equivalent rating with that state's Community Reinvestment Act;

B) substantial evidence of discriminatory or other illegal credit practices; or

C) the Secretary otherwise finds sufficient cause.

2. notwithstanding subsections (b)(1) and (c)(1), extend by one year the time between examination of any covered mortgage licensee or covered mortgage licensees with an "outstanding" or "satisfactory" rating if the Secretary finds that an extension is necessitated by:

A) the need to examine or investigate a covered mortgage licensee or covered mortgage licensees with a "needs to improve" or "substantial noncompliance" rating; or

B) the need to examine or investigate a covered mortgage licensee or covered mortgage licensees showing substantial evidence of illegal credit practices.

3. examine a covered mortgage licensee at any time as authorized by the ILCRA.

e) For purposes of this Section, covered mortgage licensees will report the number of home loans as reported on the Mortgage Call Report for the last calendar year.

38 Ill. Adm. Code 1055.460 Examination Fees

a) Annual fees. Each fiscal year, a covered mortgage licensee pursuant to Section 35-15 of the ILCRA shall pay an annual ILCRA fee to the Department based upon its total number of Illinois mortgage loans as shown by its Mortgage Call Reports for the previous calendar year, at the following rates:

NO. OF ILLINOIS MORTGAGE LOANS

ILCRA ANNUAL FISCAL YEAR 2025 FEE

ILCRA ANNUAL FISCAL YEAR 2026 FEE

ILCRA ANNUAL FISCAL YEAR 2027 FEE

50-99

$2,000

$2,250

$2,250

100-199

$2,250

$2,500

$2,500

200-299

$2,500

$3,000

$3,000

300-399

$3,000

$3,750

$3,750

400-499

$3,250

$4,750

$4,750

500-749

$3,500

$5,750

$5,750

750-999

$4,000

$7,000

$7,000

1000-1999

$4,500

$8,250

$8,250

2000-2999

$5,000

$9,750

$9,750

3000-3999

$5,500

$11,250

$11,250

4000-4999

$6,000

$13,000

$13,000

5000-5999

$6,500

$14,750

$14,750

6000-6999

$7,500

$16,750

$16,750

7000-7999

$10,000

$19,000

$19,000

Over 8000

$14,000

$22,000

$22,000

b) Out-of-state travel expenses

1. When out-of-state travel occurs in the conduct of any examination, the covered mortgage licensee shall make arrangements to reimburse the Department all charges for services such as travel expenses, including airfare, hotel and per diem incurred by the employee. These expenses are to be in accord with applicable travel regulations published by the Department of Central Management Services and approved by the Governor's Travel Control Board (80 Ill. Adm. Code 2800).

2. For purposes of this Section, "fiscal year" means a period beginning on July 1 of any calendar year and ending on June 30 of the next calendar year.

c) All fees received pursuant to this Part shall be deposited in the Residential Finance Regulatory Fund.

d) The fee for fiscal year 2025 shall be due on January 1, 2025. The fee for each fiscal year thereafter shall be due within 30 days after the start of each fiscal year.

History

• Source: Amended at 50 Ill. Reg. 9291, effective June 29, 2026

Chapter II Department of Financial and Professional Regulation

Part 1055 Mortgage Community Reinvestment

38 Ill. Adm. Code 1055.470 Implementation Period

a) Covered mortgage licensees shall comply with the requirements of this Part by November 1, 2024.

b) For covered mortgage licensees that made fewer than 100 home mortgage loans in the State in the last calendar year, the Secretary shall not cause an examination to be initiated under the ILCRA or this Part until November 1, 2025; provided that, the Secretary may conduct an examination at any time upon finding:

1. the covered mortgage licensee has been found to be in "substantial noncompliance" with another state's Community Reinvestment Act;

2. substantial evidence of discriminatory or other illegal credit practices; or

3. the Secretary otherwise finds sufficient cause.

c) For covered mortgage licensees that made at least 100 home mortgage loans in the State in the last calendar year, the Secretary shall not cause an examination to be initiated under the ILCRA or this Part until February 1, 2025.

d) For purposes of Section 1055.450, with regard to the timing of the initial examination of a covered mortgage licensee under ILCRA, the "most recent prior exam under the ILCRA" shall be read as the most recent examination by another state regulator pursuant to that state's Community Reinvestment Act.

History

• Source: Amended at 48 Ill. Reg. 17558, effective November 25, 2024

38 Ill. Adm. Code 1055.480 Enforcement

Failure to comply with any requirement under the ILCRA, this Part or other law referenced in the ILCRA, shall be grounds for enforcement actions as authorized under the ILCRA and under the Residential Mortgage License Act of 1987 [205 ILCS 635]. Any failure to comply with a requirement of the ILCRA may also be grounds for referral to law enforcement or an administrative authority with jurisdiction over the subject matter. In addition to any other action authorized by law, the Secretary may enter agreed orders, stipulations or settlement agreements for the purpose of resolving any such failure to comply.

38 Ill. Adm. Code 1055.APPENDIX A Ratings

a) Ratings in general.

1. In assigning a rating, the Secretary evaluates a covered mortgage licensee's performance under the applicable performance criteria in this Part, in accordance with Sections 1055.210 and 1055.240, which provide for adjustments on the basis of evidence of discriminatory or other illegal credit practices.

2. A covered mortgage licensee's performance need not fit each aspect of a particular rating profile in order to receive that rating, and exceptionally strong performance with respect to some aspects may compensate for weak performance in others. The covered mortgage licensee's overall performance, however, must be consistent with safe and sound lending practices and generally with the appropriate rating profile as follows.

b) Covered mortgage licensees evaluated under the lending and service tests.

1. Lending performance rating. The Secretary assigns each covered mortgage licensee's lending performance one of the four following ratings.

A) Outstanding. The Secretary rates a covered mortgage licensee's performance "outstanding" if, in general, it demonstrates:

i) An excellent geographic distribution of loans in the State;

ii) An excellent distribution of loans among individuals of different income levels, given the product lines offered by the covered mortgage licensee;

iii) An excellent record of serving the mortgage credit needs of highly economically disadvantaged areas in the State and low-income individuals, including loans to assist existing low- and moderate-income residents to be able to acquire or remain in affordable housing in their neighborhoods at rates and terms that are reasonable considering the covered mortgage licensee's history with similarly situated borrowers, consistent with safe and sound operations;

iv) Extensive use of innovative or flexible lending practices in a safe and sound manner to address the mortgage credit needs of low- and moderate-income individuals or geographies, including loans and other products to assist delinquent home mortgage borrowers to be able to remain in their homes;

v) Mortgage products demonstrate an excellent suitability for low- and moderate-income individuals;

vi) It plays a leadership role in working with delinquent mortgage loan borrowers to facilitate a successful resolution of the delinquency, including a substantial number of loan modifications in a timely manner and which are effective in preventing subsequent defaults or foreclosures;

vii) There is no evidence of loans that show an undue concentration and a systematic pattern of lending, including early payment defaults, resulting in the loss of affordable housing units; and

viii) An excellent record relative to fair lending policies and practices.

B) Satisfactory. The Secretary rates a covered mortgage licensee's performance "satisfactory" if, in general, it demonstrates:

i) An adequate geographic distribution of loans in the State;

ii) An adequate distribution of loans among individuals of different income levels, given the product lines offered by the covered mortgage licensee;

iii) An adequate record of serving the mortgage credit needs of highly economically disadvantaged areas in the State and low-income individuals, including loans to assist existing low- and moderate-income residents to be able to acquire or remain in affordable housing in their neighborhoods at rates and terms that are reasonable considering the covered mortgage licensee's history with similarly situated borrowers consistent with safe and sound operations;

iv) Limited use of innovative or flexible lending practices in a safe and sound manner to address the mortgage credit needs of low- and moderate-income individuals or geographies, including loans and other products to assist delinquent home mortgage borrowers to be able to remain in their homes;

v) Mortgage products demonstrate an adequate suitability for low- and moderate-income individuals;

vi) Its efforts are adequate in working with delinquent mortgage loan borrowers to facilitate a successful resolution of the delinquency, including an adequate number of loan modifications completed in a prompt manner and which are effective in preventing subsequent defaults or foreclosures;

vii) There is no evidence of loans that show an undue concentration and a systematic pattern of lending, including early payment defaults, resulting in the loss of affordable housing units; and

viii) An adequate record relative to fair lending policies and practices.

C) Needs to improve. The Secretary rates a covered mortgage licensee's performance "needs to improve" if, in general, it demonstrates:

i) A poor geographic distribution of loans, particularly to low- and moderate-income geographies, in the State;

ii) A poor distribution of loans among individuals of different income levels, given the product lines offered by the covered mortgage licensee;

iii) A poor record of serving the mortgage credit needs of highly economically disadvantaged areas in the State and low-income individuals, including loans to assist existing low- and moderate-income residents to be able to acquire or remain in affordable housing in their neighborhoods at rates and terms that are reasonable considering the covered mortgage licensee's history with similarly situated borrowers consistent with safe and sound operations;

iv) Little use of innovative or flexible lending practices in a safe and sound manner to address the mortgage credit needs of low- and moderate-income individuals or geographies, including loans and other products to assist delinquent home mortgage borrowers to be able to remain in their homes;

v) Mortgage products demonstrate a poor suitability for low- and moderate-income individuals;

vi) Its efforts are poor in working with delinquent mortgage loan borrowers to facilitate a successful resolution of the delinquency, including slow responses to requests for modification with few loan modifications completed or for which modifications are not effective in preventing subsequent defaults or foreclosures;

vii) There is possible evidence of loans that show an undue concentration and a systematic pattern of lending, including early payment defaults, resulting in the loss of affordable housing units; and

viii) A poor record relative to fair lending policies and practices.

D) Substantial noncompliance. The Secretary rates a covered mortgage licensee's performance as being in "substantial noncompliance" if, in general, it demonstrates:

i) A very poor geographic distribution of loans, particularly to low- and moderate-income geographies, in the State;

ii) A very poor distribution of loans among individuals of different income levels given the product lines offered by the covered mortgage licensee;

iii) A very poor record of serving the mortgage credit needs of highly economically disadvantaged areas in the State and low-income individuals, including loans to assist existing low- and moderate-income residents to be able to acquire or remain in affordable housing in their neighborhoods, at rates and terms that are reasonable considering the covered mortgage licensee's history with similarly situated borrowers consistent with safe and sound operations;

iv) No use of innovative or flexible lending practices in a safe and sound manner to address the mortgage credit needs of low- and moderate-income individuals or geographies, including loans and other products to assist delinquent home mortgage borrowers to be able to remain in their homes;

v) Mortgage products are unsuitable for low- and moderate-income individuals;

vi) It fails to work with delinquent mortgage loan borrowers to facilitate a successful resolution of the delinquency, including no response to requests for loan modifications or modifications which are ineffective in preventing subsequent defaults or foreclosures;

vii) Origination of loans that show an undue concentration and a systematic pattern of lending, including early payment defaults, resulting in the loss of affordable housing units; and

viii) A very poor record relative to fair lending policies and practices.

2. Service performance rating. The Secretary assigns each covered mortgage licensee's service performance one of the four following ratings.

A) Outstanding. The Secretary rates a covered mortgage licensee's service performance "outstanding" if, in general, the covered mortgage licensee demonstrates:

i) It is a leader in providing community development services;

ii) Its service delivery systems are readily accessible to geographies and individuals of different income levels in the State;

iii) To the extent changes have been made, its record of opening and closing additional full-service offices has improved the accessibility of its delivery systems, particularly in low- and moderate-income geographies or to low- and moderate-income individuals; and

iv) Its services (including, where appropriate, business hours) are tailored to the convenience and needs of the State, particularly low- and moderate-income geographies or low- and moderate-income individuals.

B) Satisfactory. The Secretary rates a covered mortgage licensee's service performance "satisfactory" if, in general, the covered mortgage licensee demonstrates:

i) It provides an adequate level of community development services;

ii) Its service delivery systems are reasonably accessible to geographies and individuals of different income levels in the State;

iii) To the extent changes have been made, its record of opening and closing additional full-service offices has generally not adversely affected the accessibility of its delivery systems, particularly in low- and moderate-income geographies and to low- and moderate-income individuals; and

iv) Its services (including, where appropriate, business hours) do not vary in a way that inconveniences geographies or individuals, particularly low- and moderate-income geographies and low- and moderate-income individuals.

C) Needs to improve. The Secretary rates a covered mortgage licensee's service performance "needs to improve" if, in general, the covered mortgage licensee demonstrates:

i) It provides a limited level of community development services;

ii) Its service delivery systems are unreasonably inaccessible to portions of the State, particularly to low- and moderate-income geographies or to low- and moderate-income individuals;

iii) To the extent changes have been made, its record of opening and closing additional full-service offices has adversely affected the accessibility of its delivery systems, particularly in low- and moderate-income geographies or to low- and moderate- income individuals; and

iv) Its services (including, where appropriate, business hours) vary in a way that inconveniences geographies or individuals, particularly low- and moderate-income geographies or low- and moderate-income individuals.

D) Substantial noncompliance. The Secretary rates a covered mortgage licensee's service performance as being in "substantial noncompliance" if, in general, the covered mortgage licensee demonstrates:

i) It provides few, if any, community development services;

ii) Its service delivery systems are unreasonably inaccessible to significant portions of the State, particularly to low- and moderate-income geographies or to low- and moderate-income individuals;

iii) To the extent changes have been made, its record of opening and closing additional full-service offices has significantly adversely affected the accessibility of its delivery systems, particularly in low- and moderate-income geographies or to low- and moderate-income individuals; and

iv) Its services (including, where appropriate, business hours) vary in a way that significantly inconveniences geographies or individuals, particularly low- and moderate-income geographies or low- and moderate-income individuals.

3. Other eligible criteria for an outstanding rating. A covered mortgage licensee that achieves at least a "satisfactory" rating under both the lending and service tests may warrant consideration for an overall rating of "outstanding". In assessing whether a covered mortgage licensee's performance is "outstanding", the Secretary will also consider the covered mortgage licensee's performance in making qualified investments and community development loans to the extent authorized under law.

38 Ill. Adm. Code 1055.APPENDIX B Cra Notice

a) Notice for main offices of covered mortgage licensees.

Community Reinvestment Act Notice

Under the Illinois Community Reinvestment Act (ILCRA), the Secretary of the Department of Financial and Professional Regulation (Secretary) evaluates our record of helping to meet the lending needs of this community consistent with safe and sound operations. The Secretary also takes this record into account when deciding on certain applications submitted by us.

Your involvement is encouraged.

You are entitled to certain information about our operations and our performance under the ILCRA, including, for example, information about our additional full-service office(s), such as their location and services provided at them; the public section of our most recent ILCRA Performance Evaluation, prepared by the Secretary; and comments received from the public relating to our performance in helping to meet community credit needs, as well as our responses to those comments. You may review this information today.

At least 30 days before the beginning of each quarter, the Secretary publishes a nationwide list of the covered mortgage licensees that are scheduled for ILCRA examination in that quarter. This list is available from the Secretary at 320 West Washington Street, 3rd Floor, Springfield, IL 62786 and at 555 West Monroe Street, Suite 500, Chicago, IL 60661. You may send written comments about our performance in helping to meet community lending needs to (name and address of official at covered mortgage licensee) and the Secretary. You may also submit comments electronically through the Department's Web site at https://idfpr.illinois.gov/admin/cra.html. Your letter, together with any response by us, will be considered by the Secretary in evaluating our ILCRA performance and may be made public.

You may ask to look at any comments received by the Secretary. You may also request from the Secretary an announcement of our applications covered by the ILCRA filed with the Secretary.

b) Notice for additional full-service offices.

Illinois Community Reinvestment Act Notice

Under the Illinois Community Reinvestment Act (ILCRA), the Secretary evaluates our record of helping to meet the lending needs of this community consistent with safe and sound operations. The Secretary also takes this record into account when deciding on certain applications submitted by us.

Your involvement is encouraged.

You are entitled to certain information about our operations and our performance under the ILCRA. You may review today the public section of our most recent ILCRA evaluation, prepared by the Secretary, and a list of services provided at this additional full-service office. You may also have access to the following additional information, which we will make available to you at this additional full-service office within five calendar days after you make a request to us:

1. a map showing the assessment area containing this additional full-service office, which is the area in which the Secretary evaluates our ILCRA performance in this community;

2. information about our additional full-service offices in this assessment area;

3. a list of services we provide at those locations;

4. data on our lending performance in this assessment area; and

5. copies of all written comments received by us that specifically relate to our ILCRA performance in this assessment area, and any responses we have made to those comments. If we are operating under an approved strategic plan, you may also have access to a copy of the plan.

At least 30 days before the beginning of each quarter, the Secretary publishes a nationwide list of the covered mortgage licensees that are scheduled for ILCRA examination in that quarter. This list is available from the Secretary. You may send written comments about our performance in helping to meet community credit needs to (name and address of official at covered mortgage licensee) and the Secretary. You may also submit comments electronically through the Department's Web site at https://idfpr.illinois.gov/admin/cra.html. Your letter, together with any response by us, will be considered by the Secretary in evaluating our ILCRA performance and may be made public.

You may ask to look at any comments received by the Secretary. You may also request from the Secretary an announcement of our applications covered by the ILCRA filed with the Secretary.

38 Ill. Adm. Code 1055.APPENDIX C ILCRA Illustrative List of Qualifying Activities for Covered Mortgage Licensees

This list is a non-exhaustive, illustrative list of examples of activities, where applicable to covered mortgage licensees, that would meet the criteria for a community development qualifying activity under 38 Ill. Adm. Code Part 1055 provided the appropriate documentation supports the activity and meets all requirements set forth in the ILCRA and its implementing rules. The Department is not endorsing any financial institution, fund, organization, program, non-profit, or any other entity. By listing activities that may qualify under 38 Ill. Adm. Code Part 1055, the Department is not making any determination as to whether the activities listed are safe and sound activities, in general, or for any particular financial institution. Moreover, the Department is not making any determination as to whether the activities listed are/are not legally permissible, in general, or for any particular financial institution. Please read 38 Ill. Adm. Code Part 1055 in its entirety for defined terms used in this list and for additional information.

Illustrative List Topic Category

Description

Topic A

Loans to a low- or moderate-income individual or family.

A-1

Loan classified on the covered mortgage licensee's Mortgage Call Report as a 1-4 family residential construction loan to a low- or moderate-income (LMI) individual.

A-2

Closed-end loan or open-end line of credit classified on the covered mortgage licensee's Mortgage Call Report as a loan secured by a 1-4 family residential property to an LMI individual.

A-3

Loan classified on the covered mortgage licensee's Mortgage Call Report as secured by a multifamily residential property to an LMI individual.

A-4

Home mortgage loan guaranteed by the Federal Housing Administration to an LMI individual.

A-5

Home mortgage loan guaranteed under the U.S. Department of Housing and Urban Development's (HUD) Indian Home Loan Guarantee Program (Section 184) to an LMI individual.

A-6

Home mortgage loan guaranteed by the U.S. Department of Agriculture's (USDA) Rural Housing Service to an LMI individual.

A-7

Home mortgage guaranteed by the U.S. Department of Veterans Affairs (VA) to an LMI individual.

A-8

Low-cost education loan to an LMI individual, such as to fund school tuition and/or expenses.

A-9

Home equity line of credit to an LMI individual, such as for home improvement.

A-10

Non-credit card revolving credit line, such as for purchase of home appliances, to an LMI individual.

A-11

Consumer loan to an LMI individual for purposes other than purchasing an automobile, such as to fund unexpected medical expenses.

A-12

Automobile loan to an LMI individual to purchase a car.

A-13

Installment loan to an LMI individual to purchase home appliances.

A-14

Unsecured consumer loan to a moderate-income individual for household assistive technology products and vehicle modifications to improve accessibility.

A-15

Small dollar consumer loan to a low-income individual made under a covered mortgage licensee's affordable small dollar loan program.

Topic B

Small business loans to businesses.

B-1

Small business loan (including a line of credit) when the loan is classified on the covered mortgage licensee's Mortgage Call Report as a commercial and industrial loan.

B-2

Small business loan (including a line of credit) when the loan is classified on the covered mortgage licensee's Mortgage Call Report as a loan secured by nonfarm nonresidential properties.

B-3

Small business loan under the U.S. Small Business Administration (SBA) 504 Certified Development Company program.

B-4

Small business loan to make improvements to its manufacturing facility under the SBA 7(a) loan program.

B-5

Small business loan to finance the purchase of machinery under the USDA's Rural Development Business and Industry Guarantee Loan Program.

B-6

Small business loan to improve accessibility of its facilities for disabled customers.

B-7

Small business loan under the SBA Paycheck Protection Program.

Topic C

Small business loans to farms.

C-1

Small business loan (including a line of credit) when the loan is classified on the covered mortgage licensee's Mortgage Call Report as a loan to finance agricultural production and other loans to farmers.

C-2

Small business loan to finance the purchase of farm equipment.

Topic D

Loans made in or to an individual or business located in Indian country or other tribal and native lands.

D-1

Loan or line of credit made in Indian country or other tribal and native lands and classified on the covered mortgage licensee's Mortgage Call Report as a 1-4 family residential construction loan.

D-2

Closed-end loan or open-end line of credit made in Indian country or other tribal and native lands and classified on the covered mortgage licensee's Mortgage Call Report as a loan secured by a 1-4 family residential property.

D-3

Loan made in Indian country or other tribal and native lands and classified on the covered mortgage licensee's Mortgage Call Report as secured by a multifamily residential property.

D-4

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed by the Federal Housing Administration.

D-5

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed under HUD's Indian Home Loan Guarantee Program (Section 184).

D-6

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed by the USDA's Rural Housing Service.

D-7

Home mortgage loan made in Indian country or other tribal and native lands and guaranteed by the Veterans Administration.

D-8

Home equity line of credit extended in Indian country or other tribal and native lands, such as for home improvement.

D-9

Non-credit card revolving credit line, such as for purchase of home appliances, to an individual located in Indian country or other tribal and native lands.

D-10

Consumer loan made to an individual located in Indian country or other tribal and native lands for purposes other than purchasing an automobile, such as to fund unexpected medical expenses.

D-11

Automobile loan to an individual located in Indian country or other tribal and native lands to purchase a car.

D-12

Small business loan (including a line of credit) in Indian country or other tribal and native lands when the loan is classified on the covered mortgage licensee's Mortgage Call Report as a commercial and industrial loan.

D-13

Small business loan (including a line of credit) located in Indian country or other tribal and native lands when the loan is classified on the covered mortgage licensee's Mortgage Call Report as a loan secured by nonfarm nonresidential properties.

D-14

Small business loan (including a line of credit) located in Indian country or other tribal and native lands made under the SBA Certified Development Company/504 Loan Program.

D-15

Small business loan (including a line of credit) located in Indian country or other tribal and native lands to make improvements to its manufacturing facility under the SBA 7(a) loan program.

D-16

Small business loan (including a line of credit) located in Indian country or other tribal and native lands to finance the purchase of machinery under the USDA's Rural Development Business and Industry Guarantee Loan Program.

D-17

Small business loan (including a line of credit) located in Indian country or other tribal and native lands when the loan is classified on the covered mortgage licensee's Mortgage Call Report as a loan to finance agricultural production and other loans to farmers.

Topic E

A small business loan to a business located in a low- or moderate- income census tract.

E-1

Small business loan to purchase inventory for its business located in a moderate-income census tract.

E-2

Small business loan to expand its manufacturing facility located in a low-income census tract.

Topic F

A small business loan to a farm located in a low- or moderate-income census tract.

F-1

Small business loan located in a low-income census tract to purchase farm equipment.

F-2

Small business loan located in a moderate-income census tract to refinance a construction loan used to expand dairy production facilities.

Topic G

Loans, investments, and services to facilitate affordable housing that is likely to be partially or primarily inhabited by low- or moderate-income individuals or families.

G-1

Loan to a non-profit organization for the purpose of providing affordable housing to LMI individuals.

G-2

Loan to a for-profit business for the purpose of providing affordable housing to LMI individuals.

G-3

Loan to a for-profit developer for construction of multi-family mixed- income rental housing that partially benefits LMI individuals because some units will meet the median rent standard.

G-4

Loan to a non-profit developer to build multi-family rental housing guaranteed under the USDA's Section 538 Guaranteed Loan Program where median rents will meet the median rent standard.

G-5

Loan to a for-profit developer to build multi-family rental housing guaranteed under the USDA's Section 538 Guaranteed Loan Program where median rents will meet the median rent standard.

G-6

Investment that will use tax credits from the Federal Historic Tax Credit Program to finance the adaptive reuse and renovation of a hotel into rental units in a moderate- income area, and many of the units will meet the median rent standard.

G-7

Loan for a mixed-use property in an underserved area that will be used to help seasonal businesses provide affordable housing to seasonal LMI workers at rents that meet the median rent standard.

G-8

Loan to a for-profit developer for construction of multi-family mixed- income rental housing, where many of the units will meet the median rent standard.

G-9

Investment that will finance the company's production of cost-effective modular housing, which will be used to supply affordable housing units where rents will meet the median rent standard.

G-10

Investment that supports the abatement of, or remediation to correct, lead-based paint, asbestos, mold, or radon that are present in a multi- family rental housing project where rents meet the median rent standard.

Topic H

Loans, investments, and services that facilitate affordable housing that is partially or primarily inhabited by low- or moderate-income individuals or families as demonstrated by an affordable housing set-aside required by a federal, state, local, or tribal government.

H-1

Investment in a project with housing units made affordable to LMI individuals through local inclusionary zoning.

H-2

Loan to purchase a multifamily dwelling that will partially benefit LMI individuals, including renters who receive assistance under HUD's section 8 rental subsidy program.

H-3

Investment that provides financing for the construction of a rent-to-own affordable housing complex targeted to LMI individuals and families.

Topic I

Loans, investments, and services that facilitate affordable housing, in conjunction with an explicit federal, state, local, or tribal government affordable housing program for low- or moderate-income individuals or families.

I-1

Investment in a limited partnership to develop and operate a Federal Low-Income Housing Tax Credit (LIHTC) multi-family housing project.

I-2

Investment to finance the conversion and rehabilitation of public housing using HUD's Rental Assistance Demonstration Program that uses a section 8 project-based contract to make the units affordable to LMI individuals and families.

I-3

Loan to a nursing home and assisted living facility that uses HUD's Section 232 loan guarantee and is defined by HUD as multifamily housing that primarily serves or assists LMI individuals or families.

I-4

Investment in a "green" retrofit initiative as part of an explicit local government program used to maintain the affordability of rental housing for LMI individuals through energy efficient measures.

I-5

Loan to facilitate the purchase of existing multifamily housing using a guarantee provided under the HUD Section 207/223(f) program to make the units affordable to LMI individuals and families.

I-6

Loan to facilitate the substantial rehabilitation of multifamily rental housing for moderate-income families, elderly and the handicapped using a guarantee provided under the HUD Section 221(d)(4) mortgage insurance program to make the units affordable to LMI individuals and families.

I-7

Loan to a Native American tribe to purchase land and construct infrastructure and affordable rental housing, as identified in the tribe's Indian Housing Plan, using a guarantee provided under the HUD Title VI Tribal Housing Activities Loan Guarantee Program to make the units affordable to LMI individuals and families.

I-8

Loan to a non-profit sponsor to rehabilitate multifamily rental housing for elderly persons (62 or older) and/or persons with disabilities using a guarantee provided under the HUD Program Section 231 to make the units affordable to LMI individuals.

I-9

Investment for Federal Historic Tax Credits to finance the adaptive reuse and renovation of a historic property that also receives financing using Federal Low-Income Housing Tax Credits.

I-10

Loan for the construction of a government-supported accessible rental housing facility for LMI disabled persons.

Topic J

Loans, investments, and services that facilitate affordable housing, such as owner-occupied housing purchased, refinanced, or improved by or on behalf of low- or moderate-income individuals or families, except for home mortgage loans provided directly to individuals or families.

J-1

Investment in a mortgage-backed security that is primarily secured by loans to LMI borrowers.

J-2

Down payment and closing cost assistance grants on home purchase loans for LMI borrowers, including, but not limited to, assisting borrowers in obtaining grants from the FHLBanks' regulatory Homeownership Set-Aside Programs.

Topic K

Loans, investments, and services that facilitate another covered mortgage licensee's community development loans, investments, or services.

K-1

Covered mortgage licensee employees volunteer to provide technical assistance to another covered financial institution to establish a loan program targeted to LMI individuals and families.

Topic L

Loans, investments, and services that facilitate child care, education, workforce development and job training programs, health services, and housing services, that partially or primarily serve or assist low- or moderate-income individuals or families.

L-1

Investment, in a fund that provides financing for a charter school that will primarily serve LMI children.

L-2

Monetary donation to a non-profit organization that provides transportation to medical treatments for LMI individuals.

L-3

Grant to a non-profit organization that provides housing assistance and counseling to LMI immigrants residing in the United States.

L-4

Providing mentoring/tutoring services to clients of a non-profit organization that serves LMI youth.

L-5

Investment, that supports a non- profit that provides general education degrees that primarily serves LMI individuals without a high school diploma.

L-6

Loan to a non-profit training center that provides workforce development and job training programs, which primarily serve unemployed, LMI individuals.

L-7

In-kind donation to a food pantry that provides services to unemployed, LMI families.

L-8

Loan to acquire a child care facility that serves LMI residents of a low- income neighborhood.

L-9

Covered mortgage licensee employees volunteer service with a non-profit that provides income tax assistance programs for LMI individuals.

L-10

Grant to a non-profit organization that runs a state-funded battered women's shelter for LMI individuals in an underserved area and as part of a statewide program.

L-11

Loan, investment, or service that supports an LMI-focused alcohol and drug recovery center.

L-12

Grant to a drug rehabilitation center that primarily serves low-income individuals.

L-13

Loan to a legal assistance program for LMI individuals.

L-14

Grant to an organization that provides resume writing services to LMI formerly incarcerated individuals.

L-15

Loan to a non-profit organization providing affordable child care services that primarily serve LMI individuals or families.

L-16

Grant to support a program that provides eyeglasses to low-income individuals.

L-17

In-kind contribution of rent-free office space to a local food bank.

L-18

Provision of technical assistance on financial matters to a non-profit organization supporting loan or grant activity under the Federal Home Loan Banks' (FHLBanks) Affordable Housing Program including, but not limited to, serving on a loan review committee, assisting in marketing financial services, furnishing financial services training for staff and management, assisting with or submitting applications, disbursing funds, or monitoring compliance activities.

L-19

Grant to a nonprofit community program which assists LMI individuals to find and enroll in free or low-cost home broadband internet services for which they are eligible.

L-20

Grant in support of a nonprofit program which refurbishes used computers in order to provide them to LMI individuals at no cost or at a very low cost.

L-21

Monetary donations to a workforce development program designed to improve employment opportunities for LMI individuals with disabilities.

L-22

Covered mortgage licensee loan to a skilled nursing facility that primarily serves low-income persons receiving Medicaid.

L-23

Monetary donation to a school that primarily serves LMI students to purchase technology that enables it to conduct on-line classes for students affected by government mandated stay-at-home orders during a national health emergency.

Topic M

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including activities that promote job creation or job retention partially or primarily for low- or moderate-income individuals.

M-1

Loan to a business to expand its facility and add jobs held by LMI individuals.

M-2

Investment using New Markets Tax Credits that will allow the facility to expand and jobs held by LMI individuals.

Topic N

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including federal, state, local, or tribal government programs, projects, or initiatives that partially or primarily serve small businesses or small farms as those terms are defined in the programs, projects, or initiatives.

N-1

Covered mortgage licensee employees volunteer service providing technical assistance to small businesses on how to create business plans under a state program to support statewide business development.

N-2

Micro-loan for working capital to a small business that is a state- certified Historically Underutilized Business.

N-3

Grant to a non-profit that provides financing for small farms under a federal program to encourage new farm development.

N-4

Loan to a small business incubator that primarily benefits small businesses by providing supportive services to business start-ups and that is funded in part under a statewide community development initiative.

N-5

Loan to a small business under a tribal government loan guarantee program.

Topic O

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including retaining existing, or attracting new, businesses, farms, or residents to low- or moderate-income census tracts, underserved areas, distressed areas, designated disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands.

O-1

Loan to a business to replace equipment and restore its facilities, thereby retaining employees in a designated disaster area consistent with a disaster recovery plan.

O-2

Monetary donation to an emergency/drought relief fund formed by a community foundation that provides grants to farms that are located in a distressed area to help sustain the farms.

O-3

A loan to finance the development of workforce housing located in an underserved area that is within close proximity to a warehouse owned by a multinational conglomerate.

Topic P

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including a Small Business Administration Certified Development Company, as that term is defined in 13 CFR 120.10, a Small Business Investment Company, as described 13 CFR part 107, a New Markets Venture Capital company, as described in 13 CFR part 108, a qualified Community Development Entity, as defined in 26 CFR 45D(c), or a U.S. Department of Agriculture Rural Business Investment Company, as defined in 7 CFR 4290.50.

P-1

Investment in a New Markets Venture Capital company that finances businesses that meet the SBA's size standards used to define small business concerns.

P-2

Investment in a qualified Community Development Entity that will provide financing for a food market to build a refrigerated warehouse and food distribution facility.

P-3

Investment in an SBA-certified Small Business Investment Company (SBIC) to finance businesses that meet the SBIC size standards.

P-4

Investment in a USDA Rural Business Investment Company (RBIC) to fund businesses and farms that meet the RBIC size standards.

P-5

Investment in a New Markets Tax Credit-eligible Community Development Entity to fund a mixed-use project that will include affordable housing for LMI individuals and families and retail space for a small business.

P-6

Investment eligible for Federal Historic Tax Credits to finance the adaptive reuse and renovation of a historic property that also receives New Markets Tax Credits.

P-7

Investment in a fund that purchases the debentures, guaranteed by the SBA, that are offered by the SBA-certified development companies.

P-8

Loan to a Community Development Financial Institution (CDFI) Fund- certified Community Development Entity that finances a small business' purchase of real estate related to a New Markets Tax Credit project, as provided for in 26 U.S.C. 45D.

Topic Q

Loans, investments, and services that facilitate economic development, such as activities that provide financing for or support businesses or farms including technical assistance and supportive services, such as shared space, technology, or administrative assistance for businesses or farms that meet the size eligibility standards of the Small Business Investment Company program, as described in 13 CFR part 107.

Q-1

Grant to a non-profit that provides technical assistance to businesses that meet the stated size-eligibility standards.

Q-2

Loan to a non-profit entity that provides technical assistance to businesses that meet the size-eligibility standards for an SBA SBIC.

Q-3

Covered mortgage licensee employees volunteer through a local Chamber of Commerce to lead a workshop that provides technical assistance to the chamber's business members that meet the stated size-eligibility standards.

Q-4

Providing permanent office space rent-free at a branch for use by the local economic development organization that targets business development, predominantly among start-up and micro-businesses that meet the stated size-eligibility standards.

Q-5

Monetary donation to a CDFI that is providing technical assistance and loans to small businesses adversely impacted by state-mandated business closures during a health emergency.

Topic R

Loans, investments, and services that facilitate essential community facilities that partially or primarily serve low- or moderate-income individuals or families.

R-1

Construction loan to improve a hospital that is located in a middle- income census tract adjacent to a low-income census tract that partially benefits LMI individuals who will utilize hospital services.

R-2

Investment in a municipal bond to fund construction of a health center that will primarily serve residents of a moderate-income neighborhood.

R-3

Purchase of a local municipal bond, the proceeds of which will be used to construct a new high school that will partially serve students from LMI families.

R-4

Direct financing or investment in supportive housing for the chronically homeless incorporating eligible public funding programs, such as state-issued tax-exempt bonds, HUD's Supportive Housing Program, Section 8 Project-Based Rental Assistance, the LIHTC program, or the FHLBanks' Affordable Housing Program.

R-5

Loan to upgrade equipment at a public library to accommodate LMI disabled patrons.

R-6

Grant to an organization to purchase personal or other protective equipment for doctors and nurses treating in a Federally Qualified Health Care Center during a local health emergency.

Topic S

Loans, investments, and services that facilitate essential community facilities that partially or primarily serve low- or moderate-income census tracts, distressed areas, underserved areas, disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands.

S-1

Loan to construct a new fire station located in Indian country or other tribal and native lands.

S-2

Loan to a company to build a health clinic in an underserved area, using the USDA's Community Facilities Guaranteed Loan Program.

S-3

Loan to build a police station in a distressed area.

S-4

Purchase of a local municipal bond with a purpose consistent with a local disaster recovery plan, the proceeds of which will be used to construct a new high school in a disaster area.

S-5

Loan to improve a hospital in a distressed area that serves the entire community, including LMI individuals.

Investment in a fund that finances community facilities in Indian country or other tribal and native lands, such as a community recreational facility.

Topic T

Loans, investments, and services that facilitate essential infrastructure that partially or primarily serves low- or moderate-income individuals or families.

T-1

Loan to finance construction of a road in a rural community that provides LMI residents of the area access to employment centers outside of the area.

T-2

Investment in a local cooperative to develop broadband infrastructure and expand access to LMI residents in the area.

T-3

Investment in a local municipal bond to improve city-wide water and wastewater systems with benefit to all residents, including LMI residents.

T-4

Loan for infrastructure improvements, including upgrading roads, water supply and sewer services, to a mobile home park that primarily rents space to LMI residents.

T-5

Financing of a community-wide solar plus energy storage system to reduce utility costs and help maintain affordability for a multifamily housing complex in an LMI community.

Topic U

Loans, investments, and services that facilitate essential infrastructure that partially or primarily serves low- or moderate-income census tracts, distressed areas, underserved areas, disaster areas consistent with a disaster recovery plan, or Indian country or other tribal and native lands.

U-1

Investment that will finance construction of a solar energy facility that uses federal renewable energy tax credits and will provide access to reduced cost electrical utilities to LMI census tracts.

U-2

Investment in a local municipal bond to refurbish a bridge that connects a low-income neighborhood with essential services without which residents would otherwise not have access to those services.

U-3

Investment in a state issued bond to reconstruct a tunnel in a disaster area, consistent with the area's disaster recovery plan.

U-4

Purchase of a local municipal bond, the proceeds of which will be used to upgrade a water pipeline that serves an underserved area.

U-5

Loan to a company to build a new flood control system as identified in the community's disaster recovery plan, such as a levee or storm drain that serves the disaster area.

U-6

Investment to finance the construction of a broadband network to develop reliable internet access in an LMI census tract.

U-7

Investment in a Special City Taxing District Bond with the purpose of renovating city sidewalks in a distressed area to comply with the Americans with Disabilities Act.

U-8

Purchase of a municipal bond issued to finance infrastructure improvements to enable a community to prevent flooding in LMI neighborhoods negatively impacted by rising water levels.

Topic V

Loans, investments, and services that facilitate a family farm's purchase or lease of farmland, equipment, and other farm-related inputs for the family farm's use in operating the farm.

V-1

Loan to a family farm to purchase a tractor.

V-2

Loan to a family farm to purchase additional land to increase production.

V-3

Loan to a vineyard that is a family farm to purchase additional acreage.

Topic W

Loans, investments, and services that facilitate a family farm's receipt of technical assistance and supportive services for the family farm's own production, such as shared space, technology, or administrative assistance through an intermediary.

W-1

Grant to a non-profit organization that provides technical assistance to family farms.

Topic X

Loans, investments, and services that facilitate a family farm's sale and trade of family farm products grown or produced by the family farm.

X-1

Loan to a family farm to construct a building from which to sell produce.

X-2

Loan to a family farm to market and sell its products statewide.

Topic Y

Loans, investments, and services that facilitate federal, state, local, or tribal government programs, projects, or initiatives that partially or primarily serve low- or moderate-income individuals or families.

Y-1

Grant to a non-profit organization to provide a local government sponsored dress for success program for homeless women.

Y-2

Loan to a non-profit organization to provide a state government sponsored after-school program for students from LMI families.

Topic Z

Loans, investments, and services that facilitate federal, state, local, or tribal government programs, projects, or initiatives that are consistent with a bona fide government revitalization, stabilization, or recovery plan for a low- or moderate-income census tract; a distressed area; an underserved area; a disaster area; or Indian country or other tribal and native lands.

Z-1

Grant to a non-profit organization that receives funds from a statewide program to revitalize communities in Indian country or other tribal and native lands.

Z-2

Contribution of other real estate owned property to a local government- owned land bank whose primary purpose is consistent with a government revitalization plan that benefits LMI census tracts.

Z-3

Financing to support cleanup of industrial brownfields in a distressed area as part of a city-sponsored revitalization program.

Z-4

Investment in a Tax Increment Financing bond to finance infrastructure improvements consistent with a government revitalization plan in a distressed area.

Z-5

Loan through a state program to a company to purchase and replace equipment as well as rebuild the manufacturing facility that was damaged by flooding in a federally designated disaster area and supported by the community's disaster recovery plan.

Topic AA

Loans, investments, and services that facilitate financial literacy programs or education or homebuyer counseling.

AA-1

Financial counseling by covered mortgage licensee employees to participants in a workforce development program primarily benefiting LMI individuals or families.

AA-2

Covered mortgage licensee employees conduct first-time homebuyer counseling program for covered mortgage licensee customers primarily benefitting LMI individuals or families.

AA-3

Covered mortgage licensee employees teach financial education or literacy curricula at local community centers primarily benefitting LMI individuals or families.

AA-4

Covered mortgage licensee employees delivering the Federal Deposit Insurance Corporation's Money Smart Program curriculum to residents at a senior living facility primarily benefitting LMI individuals or families.

AA-5

Grant to a non-profit organization that provides financial literacy courses for a foreclosure prevention program.

AA-6

Activities supporting "train the trainer" programs that are designed to train teachers to provide financial literacy education to their students primarily benefitting LMI individuals or families.

AA-7

In-kind donation of computer equipment to a non-profit that conducts personal money management courses for LMI individuals.

AA-8

Covered mortgage licensee employees provide financial education in connection with a school savings program primarily benefitting LMI individuals or families.

AA-9

Loan to a non-profit credit counseling organization that conducts personal money management courses.

AA-10

Monetary donation to an organization that conducts elder financial abuse and identity theft prevention programs.

AA-11

In-kind donation of computer equipment to a non-profit that provides financial literacy courses.

AA-12

Covered mortgage licensee employees assist in the preparation of tax filings under the Internal Revenue Service's Volunteer Income Tax Assistance Program.

AA-13

Covered mortgage licensee employees provide homebuyer education to potential buyers of single-family housing developed under a state program for middle- income individuals and families in high-cost areas.

AA-14

Volunteer service to open savings accounts offered through a school- based banking program, including financial literacy, to students of a K- 12 school that is located in and serves residents of an LMI census tract.

AA-15

Financial support of a nonprofit community program that provides digital literacy training to residents of an LMI neighborhood, in order to increase their ability to use online banking services.

AA-16

Covered mortgage licensee employees provide financial capability training to individuals with disabilities.

Topic BB

Loans, investments, and services that facilitate owner-occupied and rental housing development, construction, rehabilitation, improvement, or maintenance in Indian country or other tribal and native lands.

BB-1

Loan to develop housing in Indian country or other tribal and native lands that is guaranteed under HUD's Title VI Loan Guarantee Program.

BB-2

Loan to construct mixed-income housing under a tribal-government sponsored program in Indian country or other tribal and native lands.

BB-3

Loan to a for-profit developer to construct rental housing in Indian country or other tribal and native lands.

Topic CC

Loans, investments, and services that facilitate qualified opportunity funds, as defined in 26 U.S.C. 1400Z-2(d)(1), that benefit low- or moderate-income qualified opportunity zones, as defined in 26 U.S.C. 1400Z-1(a).

CC-1

Investment in a qualified opportunity fund, established to finance construction of a new manufacturing facility that creates jobs for local residents in an opportunity zone that is also an LMI census tract.

CC-2

Investment in a qualified opportunity fund, established to finance renovation of a vacant building into a cultural arts facility in an opportunity zone that is also an LMI census tract.

CC-3

Investment in a qualified opportunity fund, established to finance the rehabilitation of an acute care hospital facility, including the purchase of new medical equipment, in an opportunity zone that is also an LMI census tract.

CC-4

Investment in a qualified opportunity fund, established to finance improvements to an athletic facility owned and operated for community benefit by a local nonprofit in an opportunity zone that is also an LMI census tract.

CC-5

Investment in a qualified opportunity fund that finances construction of a grocery store in an LMI opportunity zone.

CC-6

Investment in a qualified opportunity fund that finances the construction of a commercial building intended for retail and restaurant use in an LMI opportunity zone.

Topic DD

Loans, investments, and services that facilitate other activities and ventures undertaken, including capital investments and loan participations, by a covered mortgage licensee in cooperation with a minority depository institution, women's depository institution, Community Development Financial Institution, or low-income credit union, if the activity helps to meet the credit needs of local communities in which such institutions are chartered, including activities that indirectly help to meet community credit needs by promoting the sustainability and profitability of those institutions and credit unions.

DD-1

Covered mortgage licensee employee time spent facilitating a loan participation with a minority depository institution, which will help the minority depository institution to meet the credit needs of its local community.

DD-2

Covered mortgage licensee employees provide training to CDFI staff on underwriting small farm loans to help the CDFI expand its product offerings to its community.

DD-3

Covered mortgage licensee provides in-kind services in the form of free or discounted data processing systems that aids a minority depository institution in serving its customers.

DD-4

Covered mortgage licensee donates branch space on a rent-free basis to a low-income credit union to better serve the credit union's customers.

DD-5

Covered mortgage licensee certificate of deposit in a minority depository institution.

DD-6

Loan to enable a minority- or women's depository institution, low- income credit union, or CDFI to partner with schools or universities to offer financial literacy education to members of the local communities in which such institutions are chartered.

DD-7

A covered mortgage licensee purchase of common stock for an ownership interest in a minority depository institution to help meet the credit needs of the minority-owned depository institution's local community.

DD-8

Covered mortgage licensee purchase or sale of a loan participation from or to a minority depository institution.

History

• Source: Added at 50 Ill. Reg. 9291, effective June 29, 2026

Chapter II Department of Financial and Professional Regulation

Part 1075 Savings Bank Act

38 Ill. Adm. Code 1075.100 Filings

Filings pertaining to matters named hereafter shall be subject to the indicated fee pursuant to the Savings Bank Act (the Act) [205 ILCS 205]. Such fee or fees shall be paid at the Department of Financial and Professional Regulation-Division of Banking (Division) at the time of filing. Payment shall be by check, draft or money order made payable to the Department of Financial and Professional Regulation (Department).

a)

Permit to Organize

(Section 3001 of the Act)....................................................................................................

$ 1,000

b)

Merger

(Section 8005 of the Act)....................................................................................................

$ 1,000

c)

Sale of Assets

(Section 8010 of the Act)....................................................................................................

$ 1,000

d)

Amendment to Articles of Incorporation Providing for the Issuance of Permanent Reserve Shares

(Section 5004 of the Act) (Section 1075.400 of this Part).................................................................................................... ....................................................................................................

$ 1,000

e)

Conversion from Savings Bank Charter to any Federal Charter

(Section 8001 of the Act)...........................................................

One times the last total annual Supervisory Fee calculated and assessed against the Savings Bank as set forth in Section 1075.130(a) and (b).

f)

Hearing or Oral Argument – each applicant requesting a hearing or oral argument and/or each objector requesting a hearing or oral argument and/or each adversary participating in a hearing or oral argument (Section 9018 of the Act, 38 Ill. Adm. Code 100, and Section 1075.725 of this Part)................

$ 500

Each applicant requesting a hearing or oral argument and/or each objector requesting a hearing or oral argument and/or each adversary participating in a hearing or oral argument shall bear its pro rata share of all expense incurred in said proceedings.

g)

Application for Subsidiary Acquisition Fee

(Section 2004 of the Act)...........................................................

$ 250

h)

Conversion from Mutual to Capital Stock Form of Ownership

(Section 5004 of the Act) (Subpart O of this Part)....................................................................................................

$10,000

i)

Acquisition of Control of a Savings Bank

(Sections 5002, 5004 and 5006 of the Act) (Subpart N of this Part)....................................................................................................

$ 500

j)

Photocopy and Duplication Fees

Photocopies (per page)........................................................................................

$ .25

Savings Bank Act (bound edition)........................................................................................

$ 25

Rules (bound edition)........................................................................................

$ 25

Annual Report (additional copies)........................................................................................

$ 25

Mailing Labels..............................................................

$ 35

k)

Holding Company Registration Fee

(Section 2002 of the Act)....................................................................................................

$ 1,000

l)

Application for Subsidiary Acquisition Fee, Illinois Savings Bank Holding Company

(Section 2004 of the Act)....................................................................................................

$ 250

m)

The following fees apply to mutual holding company transactions:

Mutual Holding Company Reorganization with resulting savings bank stock offered to party other than the mutual holding company

(Section 2007 of the Act)........................................................................................

$10,000

Mutual Holding Company Reorganization with no resulting savings bank stock offered to any party except the mutual holding company

(Section 2007 of the Act)........................................................................................

$ 3,000

Subsequent Offerings:

A)

First offering of resulting savings bank stock to a party other than the mutual holding company after reorganization described in subsection (m)(2) of this Section.........................................................................

$ 7,000

B)

All other offerings to a party other than the mutual holding company.........................................................................

$ 1,000

Conversion of Mutual Holding Company to Stock Holding Company

(Section 2007 of the Act)........................................................................................

$10,000

History

• Source: Amended at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.110 Conditions

a) No submission subject to a fee shall be considered complete without the stipulated fee.

b) The fee shall be non-refundable regardless of the subsequent action with respect to the submission.

c) The Director may waive the payment of the applicable fee otherwise required by this Section and Section 1075.100 of this Part when:

1. the Director determines that the respective merger or bulk sale of assets avoids the need for the Director to take custody of the respective savings bank pursuant to Section 10001 of the Act; or

2. the establishment of a branch office is at the location of the home office of the savings bank which ceases to exist as the result of a merger or bulk sale of assets which avoids the need for the Director to take custody of the respective savings bank pursuant to Section 10001 of the Act; or

3. the termination of operation and closing of a branch office pertains to a branch office of a savings bank which ceases to exist as the result of a merger or bulk sale of assets which avoids the need for the Director to take custody of the respective savings bank pursuant to Section 10001 of the Act and the closing of the respective branch office is a condition stipulated in the plan of the respective merger or bulk sale of assets.

d) Should a person desire to submit any information it considers to be of a confidential nature as part of a submission, such information shall be separately bound and labeled in capital letters, "CONFIDENTIAL", and a statement shall be submitted with the bound copy briefly setting forth the grounds on which such information should be treated as confidential. Only general reference need be made of that "CONFIDENTIAL" portion in the portion of the submission that the applicant considers not to be confidential. If any material has been granted confidential treatment under State or federal law or by a government agency or a court, those circumstances should be described. All materials filed are available for inspection, except for portions that are bound and labeled in capital letters, "CONFIDENTIAL", and that the Director determines to hold from public availability because of their confidential nature. The Director's determination to hold material from public inspection shall be based on considerations of safety and soundness of the applicant, the propriety nature of the material, privacy of the applicants or their organization directors, officers, employees or customers, or on the treatment of the material by other government agencies or by the courts. The Director will not permit public inspection or copying of any material that is or would be confidential under State or federal law. The Director will advise the party filing the submission of any decision to make available to the public information labeled in capital letters, "CONFIDENTIAL". It should be understood that it may be necessary for the Director to release materials previously given confidential treatment. It should be further understood that even though parts of the submission are considered confidential as far as public inspection is concerned, the Director may comment on the confidential portions of submissions, without prior notice, in any public statement in connection with the Director's decision on the submission.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.120 Examination Fees (repealed)

History

• Source: Repealed at 42 Ill. Reg. 16507, effective August 23, 2018

38 Ill. Adm. Code 1075.130 Regulatory Fees

a) Each savings bank shall pay fees as set forth in Section 9002.5(a) of the Act.

b) When service corporations and/or finance subsidiaries are owned by the savings bank, the owned assets may be consolidated with the assets of the savings bank for calculation of the fee under Section 9002.5(a) of the Act.

c) Each savings bank shall pay to the Secretary an electronic data processing fee equal to 16% of the savings bank's fee set forth in Section 9002.5(a) of the Act. The electronic data processing fee shall be calculated by the Secretary and billed to the savings bank for remittance with the fee set forth in Section 9002.5(a) of the Act. Each savings bank shall pay fees as set forth in Section 9002.5(c) of the Act.

d) If a savings bank has received a Uniform Financial Institution Rating System (UFIRS) composite rating of 3, 4 or 5 on its last State or federal examination, the savings bank's quarterly fee shall be increased by 25% for a 3 rated savings bank and 50% for a 4 or 5 rated savings bank on the savings bank's subsequent quarter billing. This assessment shall stay in effect until the quarter following the savings bank's receipt of a UFIRS composite rating of 1 or 2 at the next State or federal examination.

e) When a conversion or merger results in a savings bank, and no statement of condition for the resulting savings bank for the preceding quarter was submitted to the Secretary, fees shall be calculated in the same manner set forth in subsections (a), (b) and (c) based on the most recent period report of the condition submitted by the former depository institution to its primary regulator.

f) When a savings bank ceases to be a savings bank, the former savings bank shall remain liable to the Secretary for accumulated fees under the Act or this Section up to and including the date, as determined by the Secretary, that savings bank ceases to be a savings bank. The former savings bank shall not be eligible for any credit or be liable for any assessment described in Section 9002.1(b) of the Act.

g) Nothing in this Section is to be construed as limiting or being applicable to other fees that the Department may assess pursuant to the Act or other State laws or rules. The dates of billings shall not prejudice the validity of an invoice for any fees billed at a later date.

History

• Source: Amended at 42 Ill. Reg. 16507, effective August 23, 2018

38 Ill. Adm. Code 1075.140 Adjusted Supervisory Fees (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.141 Special Credit (repealed)

History

• Source: Repealed at 24 Ill. Reg. 73, effective December 16, 1999

38 Ill. Adm. Code 1075.150 Withdrawal of Applications or Other Filings

a) Unless otherwise specified in the Savings Bank Act [205 ILCS 205] or this Part, an application or other filing submitted under the Savings Bank Act or this Part shall be deemed withdrawn if the person making the filing fails to respond within 120 days after a request by the Director for additional documents or information related to the filing. All withdrawn applications or other filings shall be terminated and shall be ineffective. The Director may agree to extend the time in which the application or other filing shall be deemed withdrawn unless the Savings Bank Act or this Part requires otherwise.

b) Notwithstanding subsection (a) of this Section, applications or other filings submitted on or before September 15, 2002 shall not be deemed withdrawn unless the person making the filings fails to respond within 120 days after that date to a request by the Director for additional documents or information related to the filing.

c) Nothing in this Section requires the Director to reissue requests for additional documents or information made prior to September 15, 2002.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.200 Definitions

Words or terms that are defined in the Act shall retain the same meaning when used in this Part.

"Act" means the Savings Bank Act [205 ILCS 205].

"Company" means any corporation, partnership, business trust, association, or similar organization, or any other trust unless by its terms it must terminate within 25 years or not later than 21 years and 10 months after the death of individuals living on the effective date of the trust, but shall not include any corporation the majority of the shares of which are owned by the United States or by any state.

"Controlling Interest" means a person, or company has a controlling interest in a proposed savings bank, a lender, or a company, if the person, or company:

directly or indirectly or acting through one or more other persons or companies owns, controls, or has power to vote 25% or more of any class of voting securities at the proposed savings bank, lender, or company; or

controls in any manner the election of the majority of the directors or trustees of the proposed savings bank, lender, or company; or

the Director determines, after a hearing, that the company directly or indirectly exercises a controlling influence over the management policies of the proposed savings bank, lender, or company; or

directly or indirectly, or acting through one or more other persons or companies, owns, controls, or has power to vote 25% or more of any class of securities that invests the owner, controller, or voter with the right to vote to approve or disapprove of voluntary corporate changes and amendment of the Articles of Incorporation and bylaws.

"Department" means the Department of Financial and Professional Regulation.

"Director" means the Director of the Department of Financial and Professional Regulation-Division of Banking.

"Division" means the Department of Financial and Professional Regulation-Division of Banking.

"Lender" means a secured or unsecured creditor or creditors named as such in the debt obligation and documents, creating any security interest.

"Organization Director" means any person defined as a Director by Section 1007.55 of the Act.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.300 Contracts

a) Except employment contracts, loans on savings accounts, or contracts with consideration of less than $25,000, a savings bank shall file with the Director, within 10 days after the contract's execution, a copy of any contract with the following:

1. any person owning 10% or more of the outstanding shares of stock of the savings bank, if that savings bank issues stock;

2. any organization director, officer, employee, agent, or attorney of the savings bank;

3. any representative, partner or immediate relative of an officer, organization director or 10% shareholder of the savings bank or savings bank holding company;

4. any corporation in which any of the persons listed in this subsection have a 10% interest; or

5. any trust in which any of the persons listed in this subsection has an interest.

b) Any savings bank knowingly entering into a contract with a organization director, officer, or a 10% or more shareholder of any other financial institution either directly or with a corporation or trust in which the organization director, officer, or 10% or more shareholder owns 10% or more of the voting stock of that corporation, or has a beneficial interest in that trust, shall file with the Director a copy of the contract within 10 days after its execution.

c) Every contract entered into by a savings bank of a kind or nature stated in subsection (a) or (b) shall be approved by the board of directors of that savings bank, and that approval shall be reflected in the minutes of the meeting of the board of directors and kept on file at the savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.310 Financial Reports

Each savings bank shall file quarterly financial reports on forms prescribed by the Director. Such reports shall be delivered to the Director by the last day of the month following the quarter end for which the report applies. Any savings bank that fails to submit required reports in the time prescribed by this Section shall be subject to fine as provided for in the Act.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.400 Capital Stock (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.410 Minimum Capital Requirement

a) The Director may establish a minimum capital level for a savings bank at such amount or at such ratio of capital-to-assets as the Director determines to be necessary or appropriate in consideration of the circumstances of the savings bank.

b) For a financial institution applying to convert to a savings bank charter, the Director may accept as being in full compliance with Section 5001 of the Act a financial institution with less than the minimum capital required in Section 5001 if the financial institution has an approved capital plan under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (12 USC1464(5)(s)(5)), and the Director finds that the financial institution is otherwise being operated in a safe and sound manner. The Director's determination shall be made after review of financial reports and statements, reports of examination and other information as the Director shall consider necessary for making a determination that the financial institution is being operated in a safe and sound manner.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.415 Conflicting Federal Powers, Law and Regulations

With regard to the exercise of any power derived from Section 1006(a) of The Act, and in case of conflict between The Act and any other statute or regulation from which a power is derived under Section 1006(a) of The Act, or in cases where clarification is sought regarding the manner of exercising a derived power, its context or the limits to be observed in its exercise, The Act, the Federal Deposit Insurance Act (12 C.F.R. 300 et seq.) and the Federal Deposit Insurance Corporation Rules (12 U.S.C. 1811 et seq.) shall prevail.

History

• Source: Amended at 26 Ill. Reg. 13483, effective September 13, 2002

38 Ill. Adm. Code 1075.420 Advertising

If a savings bank advertises a rate of return on any class of deposit account and there are restrictions or conditions which must be complied with in order for the investor to be entitled to receive such rate, such advertising shall clearly set forth such restrictions or conditions. The terminology shall be consistent with Section 7001 of The Act.

38 Ill. Adm. Code 1075.430 Maintenance of Records

To enable the Director to examine a savings bank, holding company, service corporation or affiliate of a savings bank pursuant to Section 9004 of the Act, each savings bank shall establish and maintain accounting and other records of all business transacted, and the documents, files and other material comprising such records shall at all times be available for examination wherever any of such files, documents or materials may be. At a minimum, a savings bank and service corporations shall establish and maintain the following records.

a) Disbursement Records

A savings bank's funds shall be disbursed in accordance with a resolution adopted by the board of directors and reviewed at least annually. Each disbursement shall be documented to show the date, the amount and the purpose of the disbursement and the names of the person or persons or other entities receiving such disbursements whether paid directly, indirectly or through an escrow.

b) Record Retention

1. Before approving any loan or issuing any commitment, a savings bank shall determine that every person that proposes to become liable to the savings bank has the financial ability to service the proposed debt. The procedure for determining the financial capacity of every person that proposes to become liable to the savings bank shall be in accordance with procedures adopted by the board of directors and reviewed at least annually. Thereafter, a savings bank shall retain the application and other documentation supporting each loan, as well as the complete servicing record, as part of the records of the savings bank throughout the duration of the savings bank's investment in the respective loan.

2. A savings bank shall retain each rejected loan application and the information in support thereof for a period of thirty-six (36) months following such rejection.

c) The savings bank shall:

1. require every borrower that is:

A) a trust to provide a certification by the trustee listing the current beneficiaries of the trust;

B) a corporation to provide a certification by the corporate secretary listing the names and percentage of ownership of all 10% or more shareholders; and

C) a partnership to provide a certified list of partners.

2. retain such documents as a part of the savings bank's records and that shall be maintained throughout the duration of the savings bank's investment in the respective loan.

d) Loan Registers

1. A savings bank shall maintain one or more loan registers which shall contain the original entry and be a permanent record, and shall show for every loan the account number, date of the loan, amount of the loan, name of the borrower, nature of security by types, the amount of fees, the amount of the note, including precomputed loans, rate of interest, the term of the loan, and such other information as desired by the savings bank.

2. All loan registers shall be kept numerically by number of loans in order made.

e) Loans Secured by Real Estate

1. An application for the loan, signed by the borrower or its agent, in such form and containing information as will disclose the purpose for the loan, that is construction, purchase, refinancing, and the identity of any security property.

2. A note evidencing the borrower's debt to repay the amount of the loan, executed by the borrower or its agent.

3. A copy of the deed of trust or mortgage instrument on the real estate or other document customarily used in the jurisdiction in which the real estate security is located, evidencing the creation of a security interest in the real estate for the benefit of the lender, which deed of trust, mortgage instrument, or other document has been signed by the borrower or the borrower's agent; and, if the loan is made to finance the purchase of the real estate security for the loan, a signed statement by the borrower or its agent, as part of or as an attachment to the application for the loan, disclosing the purchase price of such real estate security.

4. One or more written appraisal reports, prepared at the request of the lender or its agent and for the lender's use, and signed before the approval of the application (except in the case of an approval conditioned upon obtaining an appraisal) or, if the loan is an insured loan or a guaranteed loan, a certification of the valuation assigned to real estate security by the appraiser accepted by the insuring or guaranteeing agency and furnished to the lender by the agency. Loans of less than $250,000 may be supported by estimates of value other than an appraisal, such as in-house appraisals and valuations, previous appraisals, tax assessments, tax assessment valuations, and insurance evaluations.

5. Documentation showing the financial ability of the borrower to repay the loan, or a written credit report prepared by the savings bank or by others at the request of the savings bank.

6. Documentation showing when and by whom the loan was approved and any terms of the approval.

7. Documentation showing the date, amount, purpose, the recipient of every disbursement of the proceeds of the loan, and to the best of the lender's knowledge, any actual recipient of any proceeds when the stated recipient is acting as an agent or intermediary for another.

8. An opinion signed by the lender's attorney, a title insurance policy, or other documentary evidence customarily used in the jurisdiction in which the real estate security is located, affirming the quality and validity of the lender's lien on the real estate security for the loan.

9. Documentation showing that the savings bank, upon the closing of the loan, furnished to the borrower, a loan settlement statement setting forth in detail the charges or fees the borrower has paid or is obligated to pay to such savings bank or to any other concern or person in connection with the loan, which documentation shall include a copy of the loan settlement statement.

10. A record showing the status and current payment of taxes, assessments, insurance premiums, other charges on the security for the loan, and documenting any loss incurred on the loan security, as well as any amounts recovered pursuant to an insurance settlement of the loss.

11. Documentation evidencing any modifications of the original documents by which a security interest for the benefit of the lender was created, showing appropriate approval of each party to the modification.

12. Documentation evidencing any release of any portion of the collateral pledged to secure the loan, showing the portion of the collateral released, the consideration, if any, paid to effect the release, and a record of the appropriate approval of each release.

f) Loans Not Secured by Real Estate

The records with respect to each unsecured loan or loan not secured by real estate that the savings bank makes shall include the documents referred to in subsection (g) that are relevant to the loan. If the loan is secured by collateral other than real estate, the lender's records also shall include documents evidencing the creation and perfection of a security interest in the collateral, including any financing statement. In addition, if the loan is made to a business entity, the records shall include documentation showing whether the obligor on the loan can generate sufficient cash flow to meet scheduled interest and debt reduction payments, and if not sufficient, the records shall include documentation demonstrating the anticipated source of the borrower's payments.

g) Transfer of Records

A savings bank shall not transfer the location of any of its general accounting or control records from its home office to a branch or other office, or from a branch or other office to its home office or to another branch or office unless the savings bank has sent prior written notice of the transfer to the Director.

h) Data Processing

1. A savings bank that maintains it records by a data processing service shall, before establishing such service, notify the Director in writing. The notice shall be delivered at least 90 days before the date on which the maintenance of records will begin. The notification shall include identification of the records to be maintained by data processing services and a statement as to the location at which the information will be maintained. Any contract shall expressly provide that the records to be maintained by the services shall at all times be available for examination by the Director.

2. A savings bank's data processing service center shall provide, annually, a copy of the third party audit review, if performed.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.440 Business Plan

a) All savings banks whose operations are considered unsafe or unsound by the Director pursuant to the Act or who have total capital less than the amount required under Section 5007 of the Act, or any condition that would endanger the ongoing viability of the savings bank, shall develop a business plan and have the same available for review by the examiners. The period covered by the business plan shall not be less than one year, but may be for any greater number of periods that the Director may require. Each plan shall contain the following:

1. introduction;

2. mission statement;

3. corporate objectives;

4. corporate strategies; and

5. financial projections for the period covered by the business plan.

b) The savings bank's business plan shall be reviewed to determine its continued viability in accordance with current economic conditions and approved or revised, as determined by the board of directors, at least annually.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.450 Excess Insurance

a) Section 1005 of the Act allows savings banks to secure deposit insurance in excess of the amounts available under federally sponsored programs. The excess insurance may be obtained only through an entity authorized to do business in this State and which is under the regulation of the Division. Providers of excess insurance must be preapproved by the Director. Each approved insurer shall be found to be financially sound and to employ approved actuarial practices.

b) Before entering into an agreement to obtain excess insurance a savings bank must notify the Director of its intent. The notice shall include a copy of the proposed contract and sufficient information regarding the proposed insurer to allow the Director to determine as to the financial stability of the proposed insurer. The Director shall have 30 days in which to notify the savings bank of any objections that the Director may have. Any request for additional information that the Director may make shall be made within 20 days after receipt of the notice. Failure of the Director to notify the savings bank within the 30 days as prescribed in this subsection shall constitute a finding of no objection.

c) To obtain approval from the Director, any prospective provider of excess insurance shall agree to provide the Director with any information he or she considers necessary to determine as to the current and continuing financial condition of the proposed insurer. This information shall include but not be limited to the following:

1. quarterly financial reports;

2. report of audit conducted by an independent certified public accountant;

3. copies of minutes of board of directors' meetings; and

4. copies of examination reports made by examiners for any regulatory agency.

d) Any insurer shall agree as a condition of approval to submit to examination by the Director. The cost of any such examination shall be paid by the insurer. The cost of the examination shall be based on the same fee schedule that applies to savings banks.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.455 Vacancies in the Board of Directors

If one or more vacancies occur on a board of directors of a savings bank, the remaining organization directors may continue management of the savings bank, including consenting to any enforcement actions or any other regulatory or supervisory requirements. If the number of organization directors falls below 5, the remaining organization directors or the officers of the savings bank shall so inform the Director within 5 business days after the loss of the fifth organization director. The remaining organization directors shall elect temporary organization directors at the next regular or special meeting of the board of directors. Temporary organization directors' terms shall expire at the next regular or special meeting of voting members of the savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.460 Bond of Officers, Organization Directors, Employees and Agents

Every savings bank shall maintain bond coverage with a bonding company acceptable to the Director for every officer, organization director, employee and agent of the savings bank or such other persons in positions requiring the receipt, payment, management or use of money belonging to the savings bank or whose duties permit or require access to or custody of a savings bank's assets or require the making of entries on the books and records of the savings bank.

a) Bond Schedule. The minimum amount of bond shall be based on total consolidated assets of the savings bank and its subsidiaries in accordance with the following schedule:

Total Assets

Minimum Coverage

Less than $1,000,000

$135,000.

$1,000,001 to $10,000,000

$135,000 plus $25,000 for each $1,000,000 or fraction thereof over $1,000,000.

$10,000,001 to $50,000,000

$360,000 plus $50,000 for each $5,000,000 or fraction thereof over $10,000,000.

$50,000,001 to $500,000,000

$760,000 plus $75,000 for each $25,000,000 or fraction thereof over $50,000,000.

Over $500,000,000

$2,110,000 plus $100,000 for each $50,000,000 over $500,000,000.

b) No savings bank shall be required to maintain bond coverage in an amount greater than $3,000,000.

c) Coverage in excess of the above minimum requirements is optional at the discretion of the board of directors of the savings bank.

d) The bond shall not provide for more than one deductible from all losses caused by the same person or caused by the same persons acting in collusion or combination in cases in which the losses result from dishonesty. A deductible shall not exceed an amount determined in accordance with the following schedule:

Total Capital

Permissible Deductible

Less than 4% of total assets

10% of total capital.

Greater than 4% but less than 6% of total assets

15% of total capital.

Greater than 6% of total assets

20% of total capital.

e) The bond shall be in the form known as Standard Form No. 22, Standard Form No. 24 or an equivalent as determined by the Director.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.465 Indemnification of Officers, Organization Directors, Employees and Agents

a) No officer, organization director, employee, or agent of a savings bank may be indemnified by a savings bank against any expense incurred, if the officer, organization director, employee or agent:

1. is subject to an Order of Removal, Suspension or Industrywide Prohibition under the Act or this Part; or

2. is subject to a final order assessing civil money penalties or requiring affirmative action by an individual or individuals in the form of payments to the savings bank.

b) In accordance with supervisory responsibilities, the Director may, in his or her discretion, review the threat to bank safety and soundness posed by any indemnification or proposed indemnification of officers, organization directors, employees, or agents by a savings bank or for the consistency of any such indemnification with the standards adopted by that savings bank in its articles. Based upon this review, the Director may direct a modification of a specific indemnification by a savings bank through administrative action.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.470 Deceptively Similar Names

a) No savings bank may adopt or use any name deceptively similar to that of another current existing savings bank or financial institution that is located within the area as defined as follows:

1. within the counties of Cook, Lake, DuPage, McHenry, Kane and Will, a radius of one mile of the main office of another savings bank or other financial institution; and

2. within all other counties of the State, excluding those specifically identified in subsection (a), a radius of 50 miles of a savings bank or other financial institution.

b) For purposes of Subpart D of this Part, the determination of the deceptive similarity of a name shall be made by the Director or other person or persons as are authorized to act on the Director's behalf.

c) A savings bank chartered under the Act must use the words "Savings Bank" or the initials "SB" in its name.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.480 Manner of Display of Annual Meeting Notice

Notice as required pursuant to Section 4003(a) of the Act shall be prominently displayed and located in plain view of customers at each business location with at least one copy on or near each door or entrance accessible to the general public.

History

• Source: Amended at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.490 Procedures for Exercise of Dissenters Rights

Pursuant to Section 4012(c) of the Act, the procedures to be used by savings banks and dissenters in arriving at a value and price for dissenters' shares, as well as how distribution shall be made shall be as follows.

a) Within 10 days after the date on which the action giving rise to the right to dissent is effective or 30 days after the shareholder delivers to the savings bank the written demand for payment, whichever is later, the savings bank shall send each shareholder who has delivered a written demand for payment a statement setting forth the opinion of the savings bank as to the estimated value of the shares, the savings bank's latest balance sheet as of the end of a fiscal year ending not earlier than 16 months before the delivery of the statement, together with the statement of income for that year and the latest available interim financial statements, and either a commitment to pay for the shares of the dissenting shareholder at the estimated value thereof upon transmittal to the savings bank of the certificate or certificates, or other evidence of ownership, with respect to such shares, or instructions to the dissenting shareholder to sell his or her shares within 10 days after delivery of the savings bank's statement to the shareholder. The savings bank may instruct the shareholder to sell only if there is a public market for the shares at which the shares may be readily sold. If the shareholder does not sell within the 10 day period after being so instructed by the savings bank, for purposes of this Section the shareholder shall be deemed to have sold his or her shares at the average closing price of such shares, if listed on a national exchange, or the average of the bid and asked price with respect to such shares quoted by a principal market maker, if not listed on a national exchange, during the 10 day period.

b) If the shareholder does not agree with the opinion of the savings bank as to the estimated value of the shares, the shareholder, within 30 days from the delivery of the savings bank's statement of value, shall notify the savings bank in writing of the shareholder's estimate of value and demand payment for the difference between the shareholder's estimate of value and the amount of the payment by the savings bank or the proceeds of sale by the shareholder, whichever applies because of the procedure for which the savings bank opted pursuant to subsection (a).

c) If, within 60 days from delivery to the savings bank of the shareholder notification of estimate of value of the shares, the savings bank and the dissenting shareholder have not agreed in writing upon the value of the shares, the savings bank shall either pay the difference in value demanded by the shareholder or file a petition in the circuit court of the county in which either the registered office or the principal office of the savings bank is located, requesting the court to determine the fair value of the shares. The savings bank shall make all dissenters, whether or not residents of this State, whose demands remain unsettled parties to the proceeding as an action against their shares and all parties should be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law. Failure of the savings bank to commence an action pursuant to this Section shall not limit or affect the right of the dissenting shareholders to otherwise commence an action as permitted by law.

d) The jurisdiction of the court in which the proceeding is commenced under subsection (c) by a savings bank is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the power described in the order appointing them, or in any amendment to it.

e) Each dissenter made a party to the proceeding is entitled to judgment for the amount, if any, by which the court finds that the fair value of his or her share exceeds the amount paid by the savings bank or the proceeds of sale by the shareholder, whichever amount applies. The judgment shall include an allowance for interest at such rate as the court may find to be fair and equitable in all the circumstances, from the date on which the corporate action giving rise to the right to dissent is approved to the date of payment.

f) The court, in an appraisal proceeding commenced under subsection (c), shall determine all costs of the proceeding, including the reasonable compensation and expenses of the appraisers, if any, and experts employed by any party, but shall exclude the fees and expenses of counsel for any party. If the fair value of the shares as determined by the court materially exceeds the amount the savings bank offered to pay for those shares, or if no offer was made, then all or any part of the expenses may be assessed against the savings bank. Except as otherwise provided in this Section, the practice, procedure, judgment and costs shall be governed by the Code of Civil Procedure [735 ILCS 5].

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.500 Prudent Person Rule

a) When making an authorized investment of savings bank funds, the board of directors, all officers, employees, and agents of any kind must exercise the judgment and care under circumstances then prevailing that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital.

b) A violation of The Act shall constitute an unsafe and unsound practice. Any person who knowingly violates any provision of The Act shall be subject to enforcement action or civil money penalties as provided for in The Act.

38 Ill. Adm. Code 1075.505 Investment Underwriting Practice

A savings bank may grant a loan or invest in other authorized assets under the Act.

a) For all types of secured and unsecured loans granted, and other investments entered into, a savings bank's board of directors shall establish and approve, at least annually, written loan underwriting and other investment policies and procedures. These policies and procedures shall set forth criteria sufficient to allow a decision to be made in accordance with Section 1075.500 of this Part.

b) A loan or other investment may be apportioned among appropriate categories, and may be moved, in whole or part, from one category to another as follows.

1. To classify a loan as a real estate loan, a savings bank must rely substantially upon the real estate as the primary security for the loan.

2. For purposes of determining whether aggregate investments under this Part exceed an applicable percentage-of-assets limitation, a loan commitment shall be counted as an investment and shall be included in total assets of a savings bank only to the extent that funds have been advanced (and not repaid) pursuant to the commitment. The term "loan commitment" used in the preceding sentence includes a loan in process, a letter of credit, or any other commitment to extend credit.

3. Loans sold to a third party shall be included in calculation of a percentage-of-assets investment limitation only to the extent they are sold with recourse.

4. A savings bank may make a loan secured by assignment of loans to the extent that it could, under applicable law and regulations, make or purchase the underlying assigned loans.

c) The written policies and procedures pertaining to loans secured by collateral other than real estate, mobile home chattel paper, or the cash surrender value of life insurance shall provide specific procedures for determining the value of the respective collateral.

History

• Source: Amended at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.510 Discrimination and Redlining

a) It shall be considered discriminatory to refuse to grant loans or to vary the terms of loans or the application procedures for loans because of:

1. the proposed borrower's race, color, religion, national origin, age, sex, physical disability or marital status; or

2. the geographic location of the proposed mortgage loan security.

b) A presumption of discrimination shall be attached to any inquiry regarding a loan authorized by the savings bank's board of directors when:

1. a savings bank refused to accept a written application; or

2. a loan application is rejected and not supported by adequate documentation which includes information sufficient to permit an informed non-interested party to reach the same conclusion as the lender concerning the disposition of the application.

c) In cases of a savings bank's non-compliance with this Subpart, the Director, by written notice, shall require that all inquiries for loans received from proposed borrowers be accepted in writing on application forms that provide information sufficient to make an informed decision concerning the final disposition of the respective loan application. Thereafter, the savings bank shall submit a copy of each rejected application to the Director with a written statement setting forth the reason for rejecting the application and a copy of each document supporting the decision.

d) A savings bank shall be required to comply with the Director's directive issued pursuant to subsection (c) for a minimum of 6 months. Should a presumption of discrimination exist at the close of the six-month period, the respective savings bank shall be required to continue reporting until the Director, by examination, determines that discriminatory practices have ceased and the savings bank is so notified.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.515 Loans Secured by Real Estate

a) A savings bank may originate, invest in, sell, purchase, service, participate, or otherwise deal in (including brokerage or warehousing) real estate loans or interest in those loans.

b) In determining compliance with the maximum loan-to-value limitations specified in this Subpart, a savings bank shall add to the loan amount the total of all other existing liens or other encumbrances on the security property having priority over the savings bank lien (including the lien to be established by the savings bank but excluding liens that will be released as the result of payments made from the proceeds of the new loan).

c) At the time of origination, a real estate secured loan granted under the provisions shall not exceed the maximum loan-to-value ratio as follows.

1. With respect to home loans originated or refinanced in excess of 90% of the appraised value of the security property, that part of the unpaid balance that exceeds 80% of the property's value shall be insured or guaranteed by mortgage insurance.

2. With respect to all other loans on the security of real estate originated in excess of 90% of the appraised value of the security property, a savings bank's board of directors, or loan comittee, shall approve each loan before its origination and such approval, or ratification of the loan committee approval, shall be recorded in the minutes of its meeting.

3. In determining compliance with the maximum loan-to-value ratio limitations for real estate loans, at the time of making a loan a savings bank shall add together the unpaid amount, or in the case of a line-of-credit loan the approved credit limit, of all recorded loans secured by prior mortgages, liens or other encumbrances on the security property that would have priority over the savings bank's lien, and shall not make such a loan unless the total amount of the loans (including the one to be made but excluding loans that will be paid off out of the proceeds of the new loan) does not exceed the applicable maximum loan-to-value ratio limitations prescribed in subsection (c). In valuing the real estate security, a savings bank may use the current appraised value of the security property, which may include any expected value of improvements to be financed. "Value" for a real estate loan means the market value of the real estate. For loans granted pursuant to Section 6002(3) of the Act, alternative methods of valuation or other procedures that result in an estimate of value may be used.

d) The loan-to-value limitations specified in subsection (c) shall not apply to the following.

1. To loans guaranteed or insured wholly or in part by the United States or any of its instrumentalities.

2. To loans or contracts made to finance the purchase of real estate owned that has been acquired by the savings bank through default on a prior investment provided that the minutes of organization directors' meetings substantiate that the sale is made in compliance with the following:

A) the board of directors approved the specific terms of the loan or contract before the savings bank's issuance of a letter of commitment. If no letter of commitment is to be issued, such approval shall be before the execution of a note, mortgage, or contract for deed between the purchaser and the savings bank;

B) the board of directors' resolution of approval of the respective sale specifically indicates why the sale is in the best interest of the savings bank and that approval is given after duly considering the provisions of this Subpart;

C) the resolution identifies the specific documentation they have utilized in determining that the sale was in the best interest of the savings bank; and

D) all documentation used in evidencing compliance with this Subpart is retained as a part of the records of the savings bank for so long as the savings bank has a direct or indirect interest in the respective real estate.

3. Loans or contracts having additional eligible collateral pledged in an amount equal to that part of the loan or contract that is in excess of the lending limitations specified in subsection (c). Eligible collateral means:

A) any investment permissible for savings banks under the Act;

B) any savings or time deposit in a commercial bank that is insured by the Federal Deposit Insurance Corporation and not under control of any supervisory authority; or

C) the cash surrender value of a life insurance policy validly assigned to the savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.520 Construction Loans

Construction lending policies and procedures shall provide that

a) No disbursements shall be made unless in conformity with a contractor's statement or amended statement, which statement or amended statement shall comply with the mechanics' lien laws of the State in which the collateral property is located and shall be kept on file at the savings bank throughout the duration of the savings bank's investment in the respective loan.

b) No construction funds shall be disbursed before receipt of a written statement indicating that the work for which payment is being requested has been completed. Such written statement shall be furnished by a person authorized by the board of directors.

c) No construction funds shall be disbursed unless approved by the borrower or the borrower's authorized agent. A blanket authorization may be accepted.

d) The savings bank shall at all times retain construction funds sufficient to complete the improvements in accordance with the contractor's statement or amended statement. A savings bank may take into consideration equity provided by the borrower in the form of labor.

e) Waivers of mechanics' liens shall be required and shall be delivered to the savings bank or its agent before each disbursement of construction funds unless a lien free form of title insurance policy is obtained before such disbursement.

History

• Source: Amended at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.525 Mobile Home Financing (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.530 Overdraft Loans

A savings bank may extend secured or unsecured credit to cover the payment of checks, drafts, or other funds transfer orders in excess of the available balance of an account on which they are drawn.

History

• Source: Amended at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.535 Education Loans

A savings bank may invest in loans, debts, and advances of credit made for the financing of primary, secondary, undergraduate or post-graduate education.

History

• Source: Amended at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.540 Vehicle/Automobile Loans

A savings bank may invest in loans, debts and advances of credit made for the purpose of financing vehicle/automobile purchases.

For the purposes of this Section, vehicles/automobiles shall include all motorized forms of transportation which the board of directors of a savings bank shall by written policy consider to be adequate collateral.

38 Ill. Adm. Code 1075.545 Home Equity Loans

Savings banks are permitted, without limitation on the percentage of total assets, to establish revolving lines of credit on the security of a first or junior lien on the borrower's personal residence, based primarily on the borrower's equity. The proceeds of such loan may be used for any purpose.

38 Ill. Adm. Code 1075.550 Letter of Credit

A savings bank is permitted to issue letters of credit provided that the total funds advanced plus secured and unsecured loans for business, corporate, commercial, agricultural, or overdraft purposes does not exceed 15 percent of total assets.

a) The letter of credit must clearly indicate it as a letter of credit, that the issuer's debt to pay is solely dependent upon conforming documents, that the account party must have an unqualified obligation to reimburse the issuer for payments made, and include a specified expiration date or definite term.

b) The underwriting and documentation for a letter of credit must be in conformance with Section 1075.505 of this Part.

c) All documentation used in evidencing compliance with this Section is retained as part of the records of the savings bank for the term of the letter of credit.

d) Nothwithstanding any provision of this Section, a savings bank may issue letters of credit to the same extent and manner as permitted to any other type of depository institution.

History

• Source: Amended at 26 Ill. Reg. 13483, effective September 13, 2002

38 Ill. Adm. Code 1075.555 Other Investments

Pursuant to Section 6003 of the Act, a savings bank is permitted to invest in loans secured by stock or equity securities, other than stock or equity securities of a depository institution, if the stock or equity security has a readily available market. Such investment shall not exceed 1 percent of the total assets of the savings bank. Notwithstanding any provision of this Section, a savings bank may invest in loans secured by stock or equity securities to the same extent and manner as permitted to any other type of depository institution.

History

• Source: Amended at 26 Ill. Reg. 13483, effective September 13, 2002

38 Ill. Adm. Code 1075.560 Commercial Paper

a) A savings bank is permitted to invest in commercial paper to the extent that the total of loans for business, corporate, commercial, overdrafts and agriculture, plus corporate debt securities and commercial paper does not exceed 30 percent of the total assets of the savings bank.

b) Investments in commercial paper are limited as follows:

1. up to 1 percent of assets, or $1,000,000, whichever is more, in commercial paper of any one issuer rated, as of the date of purchase, in the highest category by a national rating service;

2. up to ½ of 1 percent of assets, or $500,000, whichever is more, in commercial paper of any one issuer rated, as of the date of purchase, in one of the two highest categories by a national rating service; or

3. up to ¼ of 1 percent of assets, or $250,000, whichever is more, in commercial paper of any one issuer rated, as of the date of purchase, in one of the four highest categories by a national rating service.

Notwithstanding any provision of this Section, a savings bank may invest in commercial paper to the same extent and manner as permitted any other type of depository institution.

History

• Source: Amended at 26 Ill. Reg. 13483, effective September 13, 2002

38 Ill. Adm. Code 1075.565 Financial Futures

a) Definitions as used in this Section apply unless the context otherwise requires.

"Financial Futures Transaction" means the purchase or sale of a financial futures contract.

"Forward Commitment" means a written commitment to make, purchase or issue mortgage loans or mortgage-related securities at a price and on or before a date specified in the commitment.

"Long Position" means the purchase of a financial futures contract to take delivery of a financial instrument.

"Mortgage-Related Securities" means securities based on and backed by mortgages, including mortgage-backed securities guaranteed by the Government National Mortgage Association (GNMA's), Mortgage Participation Certificates of the Federal Home Loan Mortgage Corporation, and similar obligations issued by a private issuer or in which the savings bank shall invest.

"Offset" means to cancel an obligation to make or take delivery of securities under a financial instrument under a financial futures contract. A futures contract to purchase a financial instrument is offset by a futures contract to sell a financial instrument of the same type for the same delivery month. A futures contract to sell a financial instrument is offset by a futures contract to purchase a financial instrument of the same type for the same delivery month.

"Short Position" means the holding of a financial futures contract to make delivery of a financial instrument.

b) Permitted Transactions – to the extent that it has legal power to do so, a savings bank may engage in interest rate futures transactions to reduce its net interest rate risk exposure as provided in this subsection. For purposes of this Section, net interest rate risk exposure is the volatility in a savings bank's earnings that can arise from the mismatching of the maturities of assets and liabilities. A savings bank may enter into short positions that are appropriate for reducing its net interest-risk exposure. A savings bank may enter into long positions, other than those that offset short positions, only under the following conditions.

1. The futures position must be matched against a firm forward commitment to sell mortgages not yet originated or to issue mortgage-related securities to be based on mortgages not yet originated. For purposes of subsection (b), a firm forward commitment is a written commitment obligating the seller to make delivery, and the buyer to take delivery of mortgage loans not yet originated or mortgage-related securities to be based on mortgages not yet originated, at a price and on or before a date specified in the commitment.

2. The futures position may be entered into and maintained only to the extent that the savings bank's firm forward commitments exceed 10% of long-term assets with fixed interest rates. For purposes of this Section, long-term assets are those having remaining terms to maturity in excess of 5 years.

c) Authorized Contracts – savings banks may engage in interest rate futures transactions using any interest rate futures contracts designated by the Commodity Futures Trading Commission (CFTC) and based upon a financial instrument in which the savings bank has authority to invest or to issue.

d) Board of Directors' Authorization – before engaging in interest rate futures transactions, a savings bank's board of directors must authorize such activity. In authorizing futures trading, the board of directors shall consider any plan to engage in financial futures transactions, shall endorse specific written policies, and shall require the establishment of internal control procedures. Policy objectives must be specific enough to outline permissible contract strategies, taking into account price and yield correlations between assets or liabilities and the financial futures contracts with which they are matched; the relationship of the strategies to the savings bank's operations; and how such strategies reduce the savings bank's net interest rate risk exposure. Internal control procedures shall include, at a minimum, periodic reports to management, segregation of duties and internal review procedures. In addition, the minutes of the meeting of the board of directors shall set forth limits applicable to futures transactions, identify personnel authorized to engage in futures transactions, and set forth the duties, responsibilities and limits of authority of such personnel. The board of directors shall review the position limit, all outstanding positions, and the unrelated gains or losses on those positions at each regular meeting of the board.

e) Notification – a savings bank engaging in financial futures transactions shall notify the Director that it is engaging in those transactions. The savings bank shall report its gross outstanding long and short financial futures positions on its monthly report.

f) Record Keeping Requirements – a savings bank engaging in financial futures transactions shall maintain records of those transactions sufficient to document how the transactions reduce the net interest rate risk exposure of the savings bank in accordance with the following requirements.

1. Contract Register – the savings bank shall maintain a contract register adequate to identify and control all financial futures contracts and including, at a minimum, the type and amount of each contract, the maturity date of each contract, the cost of each contract, the dollar amount and description of the asset or liability with which the futures contract is matched, and the date and manner in which a contract is closed out. The register shall be prepared in a manner sufficient to indicate at any time the savings bank's total outstanding long and short financial futures positions.

2. Other Documentation – the savings bank shall maintain, as part of the documentation of its financial futures strategy, a schedule of the assets and the liabilities for which net interest rate risk exposure is being reduced and the purpose of each contract entered.

3. Maintenance of Records – the records designated in this subsection (f) shall be maintained for all futures transactions closed-out during the preceding 2 years.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.570 Financial Options

a) Definitions as used in this Section apply unless the context otherwise requires.

1. "Call" means an option which gives the holder the right to purchase a financial instrument at a price and on or before the expiration date specified in the option contract.

2. "Deliverable Instrument" means a financial instrument whose terms satisfy the requirements for fulfilling delivery obligations of an option.

3. "Effective Exercise Price" means the yield equivalent price of an instrument whose coupon rate differs from the standard instrument specified in the option,

4. "Financial Options Contract" means an agreement (other than an optional delivery forward commitment contract to purchase and sell mortgages or mortgage-backed securities when used as part of the mortgage loan origination process) to make or take delivery of a financial instrument upon demand by the holder of the contract at any time before the expiration date specified in the agreement, under terms established either by:

A) a board of trade designated as a contract market for the trading of option contracts by the CFTC or a national securities exchange registered with the Securities Exchange Commission (SEC); or

B) the savings bank and a "permissible counterparty," as defined in subsection (a)(10), that are counterparties in an over-the-counter option transaction (other than an over-the-counter commodity optional transaction subject to the jurisdiction of the CFTC that is not otherwise authorized under the Commodity Exchange Act (7 USC 1) and the regulations under that Act).

5. "Financial Options Transaction" means the purchase or sale of a financial options contract.

6. "Immediate Exercise Value" means the market value gained by exercising an option with the lowest cost deliverable instrument at its effective exercise price compared to purchasing (or selling) an identical instrument with the same coupon rate in the cash market.

7. "Long Position" means the holding of a financial options contract with the option to make or take delivery of a financial instrument.

8. "Option Commitment Fee" means the option premium minus the immediate exercise value of the option.

9. "Option Premium" means the price paid or received for establishing an option position.

10. "Permissible Counterparty" means any entity that is:

A) a primary dealer as defined in subsection (a)(11) of this Section;

B) a bank subject to the regulation and supervision of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the Board of Governors of the Federal Reserve System and that is in compliance with applicable regulatory capital requirements;

C) a savings bank that is subject to the regulation and supervision of the Division and is in compliance with applicable regulatory capital requirements or subject to the regulation and supervision of the Division;

D) a broker or dealer registered with the Securities and Exchange Commission (SEC) and subject to regulation and supervision by a Registered Securities Association (registered pursuant to section 15A of the Securities and Exchange Act of 1934 (15 USC 78(o)) (Exchange Act) or a National Securities Exchange (registered pursuant to sections 6 and 19(a) of the Exchange Act) and that is in compliance with applicable capital requirements;

E) a government securities broker or dealer registered with the SEC that is subject to examination and supervision by a Registered Securities Association (registered pursuant to section 15A of the Exchange Act) or National Securities Exchange (registered pursuant to sections 6 and 19(a) of the Exchange Act) and that is in compliance with applicable capital requirements;

F) a futures commission merchant registered with the CFTC and that is in compliance with applicable capital requirements;

G) the Federal Home Loan Banks;

H) the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or the Government National Mortgage Association or the Government National Mortgage Association; or

I) any other entity that the Director , upon application, determines to be adequately regulated, capitalized, and audited or examined such that acting as a counterparty in an over-the-counter options transaction with a savings bank would not entail substantial credit risks for the savings bank.

11. "Primary Dealer in Government Securities" means any member of the Association of Primary Dealers in United States Government Securities and any parent, subsidiary, or affiliated entity of such primary dealer: provided, that the member guarantees (to the satisfaction of the Division) the over-the-counter financial options transactions between its parent, subsidiary, or affiliated entity with a savings bank, and provided further that the parent, subsidiary, or affiliated entity is substantially engaged in similar activities.

12. "Put" means an option that gives the holder the right to sell a financial instrument at a price on or before the expiration date specified in the financial options contract.

13. "Short Position" means a commitment through a financial options contract to stand ready during the term of the contract to make or take delivery of a financial instrument.

b) Permitted Transactions – to the extent that it has legal power to do so, a savings bank may engage in financial options transactions as follows:

1. Long Positions – a savings bank may enter into long positions without numerical limit.

2. Short Positions – a savings bank may enter into short call positions without numerical limit. If a savings bank meets its capital requirement, it may enter into short put options to the extent that the aggregate amount of its short put options and forward commitments to purchase securities does not exceed 15% of total assets. If capital requirements are not met, the savings bank may enter into short put options only with prior written approval from the Director. Permission shall be granted if the Director finds the investment is not for speculative purposes and that the investment is made in accordance with a well-defined hedging program adopted by the savings bank board of directors.

c) Authorized Contracts – a savings bank may engage in financial options transactions using any financial options contracts either:

1. designated by the CFTC or approved by the SEC; or

2. entered into with a "permissible counter-party", as defined in subsection (a)(10), and based upon a financial instrument that the savings bank has authority to invest in or to issue.

d) Board of Directors' Authorization – before engaging in financial options transactions, a savings bank's board of directors must authorize such activity. In authorizing options, the board of directors shall consider any plan to engage in writing or purchasing financial options contracts, shall endorse specific written policies, and shall require the establishment of internal control procedures. For options positions that will be matched with cash or forward market positions, policy objectives must be specific enough to outline permissible options contract strategies, taking into account price and yield correlations between assets or liabilities and the financial options contracts; the relationship of the strategies to the savings bank's operations; the rationale for the ratio of the value of options positions to the value of the matched cash market positions; and how the options strategy reduces the savings bank's interest rate risk exposure. For unmatched option positions, policy objectives must specify the relationship of the strategy to the savings bank's operations. Prudent business judgment shall be exercised by participating savings banks engaging in financial options transactions to maintain a safe and sound financial position. Internal control procedures shall include, at a minimum, periodic reports to management, segregation of duties and internal review procedures. In addition, the minutes of the meeting of the board of directors shall set forth limits applicable to financial options transactions, identify personnel authorized to engage in financial options transactions, and set forth the duties, responsibilities and limits of authority of such personnel. The board of directors shall review the position limit, all outstanding options contract positions, and the unrealized gains or losses on those positions at each regular meeting of the board.

e) Notification, Reporting, and Approval

1. A savings bank shall notify the Director immediately following authorization of its board of directors to engage in financial options transactions. The savings bank shall report its outstanding positions, together with the total unrealized gain or loss from those positions to the Director monthly.

2. A savings bank shall not engage in over-the-counter financial option transactions with any permissible counterparty unless the counterparty agrees to notify the Director. A savings bank shall not continue to engage in over-the-counter financial option transactions with any permissible counterparty that has failed to so notify the Director with respect to previous over-the-counter financial option transactions with that savings bank. Notwithstanding the foregoing, no savings bank shall engage in a long over-the-counter financial option transaction with a specific permissible counterparty, without obtaining the prior approval of the Director, whenever the aggregate exercise value of all long over-the-counter financial option positions with the counterparty exceeds the limitations contained in Section 6013 of the Act. The Director may approve any financial option transaction whenever it determines that such transaction does not subject the savings bank to undue risk. In making such determinations, the Director shall consider:

A) the credit worthiness of the specific counterparty;

B) the savings bank's experience with the counterparty and with transacting in financial option and futures contracts generally;

C) the nature of the subject contracts (e.g., matched or unmatched); and

D) any other circumstances considered relevant by the Director. An application to enter into a financial option transaction under this Section shall be considered approved if the Director does not deny the application within 10 calendar days from the date the application was filed.

f) Record Keeping Requirements – a savings bank engaging in financial options transactions shall maintain records of those transactions in accordance with the following requirements.

1. Contract Register – the savings bank shall maintain a contract register adequate to identify and control all financial options contracts and sufficient to indicate at any time the amounts of financial options contracts required to be reported on its monthly report. At a minimum, the register shall list the type, amount, expiration date and the cost of income from each contract.

2. Other Documentation – the savings bank shall maintain as part of the documentation of its financial options strategy a schedule of any cash market or forward commitment position with which the option is matched and the purpose of each contract.

3. Maintenance of Records – the records designated in this Section shall be maintained for all financial options closed out during the preceding 2 years.

g) Accounting

1. Purchase or Sale – upon initial purchase or sale of a financial options contract, a memorandum entry of the information specified in this Section shall be made and appropriate margin accounts shall be established.

2. Option Commitment Fee

A) The option commitment fee paid for a long position or received from the sale of a short put option shall be amortized to income or expense over the term of the option, except as provided in this Section.

B) The option commitment fee received from the sale of a matched short call option shall be deferred until the option position is terminated. The option commitment fee received from the sale of an unmatched short call option shall be amortized to income over the term of the option.

3. Options Contracts

A) Gains or losses on options contracts that are matched with assets or liabilities carried at the lower of cost or market value, or carried at market value shall be considered in determining the market value of the asset or liability.

B) Options positions that are matched with assets or liabilities carried at cost or to be carried at cost shall be accounted for as follows.

i) If a commitment fee will be or has been received with respect to the matched asset, the option commitment fee shall be treated as an adjustment of such fee. The adjusted commitment fee shall then be treated as a fee paid or received in connection with the matched asset.

ii) If a commitment fee has not been received with respect to a matched asset, the option commitment fee (except if received for the sale of a short call option) shall be amortized to income or expense over the commitment period by the straight line method.

iii) Any resulting gain or loss from an option position (except from a short call option) shall be treated as a discount or premium on the matched asset or liability.

iv) Any resulting gain or loss from a short call option position shall be recognized as income or expense upon termination of the option position.

v) If an option position is not matched with a cash-market or forward-commitment position or the cash-market or forward-commitment position with which an option is matched is sold or will not occur, the option shall be marked to market.

C) The immediate exercise value of short puts and other unmatched option positions shall be carried at their current market value.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.575 Finance Leasing

Savings banks may engage in leasing activities that are the functional equivalent of lending, subject to the limitations of this Section.

a) A savings bank may become the legal or beneficial owner of tangible personal property or real property to lease such property, may obtain an assignment of a lessor's interest in a lease of such property, and may incur obligations incidental to its position as the legal or beneficial owner and lessor of the leased property, if:

1. the lease is a net, full-payout lease representing a non-cancelable obligation of the lessee, not-withstanding the possible early termination of the lease; and

2. at the expiration of the lease, the savings bank's interest in the property shall be liquidated or released on a net basis as soon as practicable.

b) A lease of tangible personal property made to a natural person for personal, family or household purposes pursuant to this Section shall be subject to all limitations applicable to the amount of a savings bank's investment in similar loans. A lease made for commercial, corporate, business or agricultural purposes pursuant to this Section shall be subject to all limitations applicable to the amount of a savings bank's investment in commercial loans. A lease of residential or nonresidential real property made pursuant to this Section shall be subject to all limitations applicable to the amount of a savings bank's investment in real estate loans.

c) Definitions − for the purposes of this Section shall be the following.

1. The term "net lease" means a lease under which the savings bank will not, directly or indirectly provide or be obligated to provide for:

A) the servicing, repair or maintenance of the leased property during the lease term;

B) the purchasing of parts and accessories for the leased property, except that improvements and additions to the leased property may be leased to the lessee upon its request in accordance with the full-payout requirements of this Section;

C) the loan of replacement or substitute property while the leased property is being serviced;

D) the purchasing of insurance for the lessee, except where the lessee has failed to discharge a contractual obligation to purchase or maintain insurance; or

E) the renewal of any license, registration of filing for the property unless such action by the savings bank is necessary to protect its interest as an owner or financier of the property.

2. The term "full-payout" lease means one from which the lessor can reasonably expect to realize a return of its full investment in the leased property, plus the estimated cost of financing the property over the term of the lease, from rentals, estimated tax benefits, guarantees and other sources, and the estimated residual value of the property at the expiration of the initial term of the lease. Provided that no more than 20 percent of the return may be realized from the residual value of the property at the expiration of the initial term of the lease, both the estimated residual value of the property and that portion of the estimated residual value relied upon by the lessor to satisfy the requirements of a full-payout lease must be reasonable in light of the nature of the leased property and all relevant circumstances so that realization of the lessor's full investment plus the cost of financing the property depends primarily on the credit worthiness of the lessee, and not on the residual market value of the leased property. The maximum term of a full-payout lease shall be 20 years.

d) Salvage Powers − if, in good faith, a savings bank believes that there has been an unanticipated change in conditions that threatens its financial position by significantly increasing its exposure to loss, this Section shall not prevent the savings bank:

1. as the owner and lessor under a net, full-payout lease, from taking reasonable and appropriate action to salvage or protect the value of the property and its interest arising under the lease;

2. as the assignee of a lessor's interest in a lease, from becoming the owner and lessor of the leased property pursuant to its contractual right, or from taking any reasonable and appropriate action to salvage or protect the value of the property or its interest arising under the lease; or

3. from including any provisions in a lease, or from making any additional agreements, to protect its financial position or investment in the circumstances set forth in this Section.

e) Notwithstanding any limitation of this Section, a savings bank may engage in leasing activities to the same extent and manner permitted to any other type of depository institution.

History

• Source: Amended at 26 Ill. Reg. 13483, effective September 13, 2002

38 Ill. Adm. Code 1075.580 Suretyship

A savings bank may enter into an agreement to act as a surety subject to the following provisions.

a) A savings bank operating under the Act may exercise surety powers only to the extent authorized by the Federal Deposit Insurance Corporation.

b) A savings bank may enter into a suretyship agreement only if the agreement would create an obligation authorized for investment by a savings bank. A savings bank's obligation under the suretyship agreement shall be treated as a loan to its principal for purposes of Sections 6010 and 6013 of the Act and Section 1075.500 of this Part.

c) A savings bank must take and maintain a security interest in real estate or marketable investment securities, as defined at Section 1007.85 of the Act, of its principal having a market value, determined in accordance with the provisions of the Act and this Part, of at least 110 percent of the savings bank's total suretyship obligations. In determining compliance with the 110 percent collateralization requirement, the savings bank shall consider the value available above prior mortgages or liens, except those held by the party for whose protection the suretyship agreement is made. If marketable investment securities, the savings bank shall provide for the maintenance of the collateral value at the required level throughout the term of the suretyship agreement.

d) To the extent that a savings bank is required to meet its obligations under a suretyship agreement, the amount expended shall be treated as an extension of credit subject to the limitations imposed on similar loans under the various provisions of the Act and this Part.

e) Notwithstanding any provision of this Section, a savings bank may act as a surety to the same extent and manner as permitted to any other type of depository institution.

History

• Source: Amended at 26 Ill. Reg. 13483, effective September 13, 2002

38 Ill. Adm. Code 1075.585 Asset Reserves

a) Scope

The classification system described in this Section applies to all assets or portions of assets held by a savings bank.

b) Classifications

1. Substandard – assets classified substandard are inadequately protected by the current paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses. They are characterized by the distinct possibility that the savings bank will sustain some loss if the deficiencies are not corrected.

2. Doubtful – assets classified doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that collection of the asset in full, on the basis of currently existing facts, conditions, and values, is highly questionable and improbable.

3. Loss – assets classified loss are considered uncollectible and of such little value that their continuance as assets without establishment of a reserve is not warranted. This classification does not mean that an asset has absolutely no recovery or salvage value, but, rather, that it is not practical or desirable to defer writing off a basically worthless asset even though partial recovery may be effected in the future.

c) Implementation of Classification System

1. In connection with examinations of a savings bank or its affiliates, the examiner shall have authority to identify problem assets and, if appropriate, classify them.

2. Each savings bank shall classify its own assets on a regular basis. In addition to any other remedies available to the Division under applicable statutes and regulations, a savings bank's failure to set aside prudent valuation allowances, or to monitor portfolio risk with an effective self-classification procedure, will be considered by the examiner in determining the amount of valuation allowances to be established by the savings bank.

3. In its reports to the Division , each savings bank shall include aggregate totals of assets that the savings bank has classified in each of the 3 asset classification categories, and the aggregate general and specific valuation allowances established. To the extent a savings bank's specific valuation allowances have decreased from the previous reporting period, the savings bank shall identify the amount of the decrease attributable to a savings bank's between examination upgrading of classifications.

d) Effect of Classification

1. When, pursuant to this Section, a savings bank has classified one or more assets, or portions of assets, substandard or doubtful, the savings bank shall establish prudent general allowances for loan losses. When, pursuant to this Section, an examiner has classified one or more assets or portions of assets substandard or doubtful and has determined that the existing valuation allowances are inadequate, the savings bank shall establish general allowances for loan losses in an appropriate amount as determined by the examiner, subject to approval of the Director.

2. When, pursuant to this Section, either a savings bank or an examiner has classified one or more assets or portions of assets loss, the savings bank shall either establish allowances for losses in the amount of 100% of the portion of the assets classified loss, or charge off that amount against current income.

3. Adequate valuation allowances consistent with generally accepted accounting principles shall be established for classified assets. Asset evaluations (and the corresponding allowances) that are consistent with the practice of the federal banking agencies may be used for supervisory purposes.

e) Assets Deserving "Special Mention"

Assets that do not currently expose a savings bank to a sufficient degree of risk to warrant classification under this Section but do have credit deficiencies or potential weaknesses deserving management's close attention shall be designated "special mention" by either the savings bank or the examiner. Special mention assets have a potential weakness or pose an unwarranted financial risk that, if not corrected, could weaken the asset and increase risk in the future.

f) Delegations and Interpretations

1. The Director or designee may approve, disapprove, or modify any classifications of assets made pursuant to this Section and any amounts of allowances for loan losses established by a savings bank or required by examiners pursuant to this Section.

2. When an appraisal is required or made in connection with any reevaluation of assets, the Director may approve or reject the appraisal and any valuation related to it.

3. The Division shall, from time to time, issue supervisory interpretations and other informational material regarding classification of assets.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.590 Asset Composition Test

As an alternative asset test prescribed pursuant to Section 1009 of the Act, the composition of the assets, including loans and investments, of a savings bank is permitted to consist of any type, and in any amount, authorized by the Act and this Part, provided that the savings bank:

a) is a member of a Federal Home Loan Bank as a Federal Home Loan Bank qualified thrift lender or community financial institution under the Federal Home Loan Bank Act (12 USC 1421 et seq.);

b) has at least 10 percent of its total assets in residential mortgage loans as of the most recent fiscal year-end; or

c) has total average assets for the three preceding fiscal years of less than $500,000,000.

This Section does not require membership in a Federal Home Loan Bank.

History

• Source: Added at 26 Ill. Reg. 13483, effective September 13, 2002

38 Ill. Adm. Code 1075.600 Requirements

a) No savings bank shall invest in or lend to a service corporation, as defined in Section 1007.105 of the Act, unless the service corporation has been approved by the Director.

b) Subpart F of this Part shall not apply to investments in single purpose corporations authorized under Sections 1008(9) and 6009 of the Act.

c) Savings banks may designate a service corporation or other subsidiary as an operating subsidiary as follows:

1. Upon approval of the Director, a subsidiary of a savings bank that is majority owned and controlled by the savings bank may be designated as an operating subsidiary provided that the subsidiary engages solely in activities that are permitted for a depository institution or an operating subsidiary of a depository association.

2. An operating subsidiary shall be subject to the provisions of this Subpart except that a savings bank's total investment, including equity and debt securities and loans, in its first-tier operating subsidiary is not limited by this Subpart. Loans made by the savings bank to its operating subsidiary shall not be subject to Section 6013 of the Act.

3. Upon approval of the Director, a subsidiary of a first-tier operating subsidiary may be designated as an operating subsidiary; provided that the lower tier subsidiary is wholly-owned and controlled by the first-tier operating subsidiary and engages solely in activities that are permitted for a depository institution or an operating subsidiary of a depository association. The total investment, including equity and debt securities and loans, by the savings bank or its first-tier operating subsidiary in the wholly-owned and controlled lower-tier operating subsidiary is not limited by this Subpart or Section 6013 of the Act.

4. The total investment, including equity and debt securities and loans, by the savings bank and its first-tier operating subsidiary in a service corporation or an operating subsidiary that is not wholly-owned and controlled by the savings bank's first-tier operating subsidiary is subject to the same limitations under this Subpart that apply to the savings bank's investment in a service corporation that is not an operating subsidiary.

5. As used in this subsection (c):

"Subsidiary" means a corporation, limited liability company, partnership, business trust, joint venture, pool, syndicate or other similar business organization.

"Majority-owned" means the savings bank owns more than 50% of the voting interest or equivalent ownership interest of the subsidiary.

"Control" means effective operating control.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.610 Approval by the Director

a) Except as provided in subsection (b) of this Section, an application for approval of a service corporation shall be approved by the Director provided that:

1. its purpose or purposes are reasonably incident to the accomplishment of the powers conferred upon savings banks by the Act, or are purposes granted or allowed to service corporations organized or owned by savings and loan associations; or its sole purpose is to operate as a finance subsidiary of a savings bank to the extent authorized for finance subsidiaries of savings and loan associations under the Illinois Savings and Loan Act of 1985 [205 ILCS 105]; and

2. the application for approval of a service corporation includes: the appropriate fee; a copy of the service corporation's Articles of Incorporation; a list of proposed shareholders; the fiscal year-end date; and an undertaking by the service corporation with the continuing conditions specified in subsection (c) of this Section and in a form prescribed by the Director.

b) An application for approval of a service corporation shall be denied by the Director in writing if the Director finds that any proposed shareholder is conducting business in an unsafe manner.

c) Continuing Conditions

1. A service corporation shall not amend its Articles of Incorporation nor adopt an assumed corporate name without the prior written approval of the Director. A proposed amendment to Articles of Incorporation not involving a name change shall be approved unless it is in non-compliance with subsection (a)(1). A proposed name change shall be approved unless such proposed name is either deceptively similar to that of a savings bank as specified in Section 3005(b)(3) of the Act or of a nature which might imply that the entity is a savings bank.

2. Each service corporation shall cause its affairs to be audited by a licensed public accountant at least once each fiscal year, and cause the accountant to deliver a copy of the certified statement to the Director simultaneously with the delivery of the statement to the service corporation.

3. Each service corporation shall be examined in conjunction with the examination of its parent savings banks. The Director shall require additional reports and/or examinations if the Director, or his or her staff members engaged in examination of the savings bank's monthly report, determine that more information is needed to determine the viability of the service corporation.

4. A service corporation shall not acquire any classified items as defined in Section 1075.585(b) from any financial institution, except that a service corporation may acquire real estate owned by any savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.620 Investment Limitations

a) A savings bank may make investments in capital stock of service corporations that are 90% or more owned by one or more savings banks in an amount that shall not exceed 10% of the savings bank's total assets. A savings bank that has met and maintained the capital levels required for a savings bank, the deposit accounts of which are insured by the Federal Deposit Insurance Corporation, may invest an additional 50% of the excess capital provided that in no event shall a savings bank's maximum investment in service corporations exceed 20% of its total assets.

b) A savings bank may make investments in capital stock of service corporations that are at least 51% but less than 90% owned by one or more savings banks, in an amount not to exceed 1% of the savings bank's total assets.

c) All loans to service corporations shall be subject to all lending limitations contained in the Act and this Part, except that:

1. a savings bank may make loans to a wholly owned service corporation in an amount equal to the savings bank's total capital or in an amount that exceeds the savings bank's total capital if the excess amount is fully secured by collateral, of a type upon which the savings bank itself could lend, of a value determined in accordance with the Act and with rules promulgated by the Director; and

2. loans shall not be subject to the percentage of asset limitations of Section 6002(8) of the Act.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.630 Investments by Service Corporations

a) A service corporation may invest its assets in any manner not expressly prohibited by law, provided the investments are made in the exercise of reasonable judgment and care under the circumstances then prevailing that persons of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital.

b) If a service corporation has not been approved, or if approval is withdrawn, all loans to or investments in the service corporation shall constitute an unauthorized investment. However, the savings bank shall be granted a reasonable time within which to dispose of the loans or investments.

c) A basis for withdrawal of approval of a service corporation exists if:

1. the service corporation is subject to involuntary dissolution for failure to file annual reports or pay fees pursuant to the Business Corporation Act [805 ILCS 5]; or

2. the service corporation fails to pay, within 60 days after the billing date, supervisory fees or examination fees due the Director;

3. the service corporation fails to file, when due, those reports required by Sections 1075.670 and 1075.680 of this Part;

4. the Director determines that the service corporation is engaged in activities that are not reasonably incidental to the accomplishment of the powers conferred upon savings banks by the Act;

5. the investment of any parent savings bank in the respective service corporations is in excess of the investment limitations set forth at Section 1075.620 of this Part; or

6. the Director determines that the service corporation is conducting business in a fraudulent, illegal, or unsafe manner.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.640 Ownership of Capital Stock of Service Corporation

a) A minimum of 51% of all classes of capital stock of a first-tier service corporation shall be owned by one or more savings banks, bank, or savings and loan associations. First-tier service corporation means any corporation which is 51% or more owned by one or more savings banks, bank, or savings and loan associations whose purpose or purposes are reasonably incident to the accomplishment of the powers conferred upon savings banks by the Act.

b) Subject to approval by the Director, an amount not to exceed 49% of all classes of capital stock of a service corporation may be owned by a person or persons other than a savings bank. The ownership shall be approved if the Director finds:

1. the sale or issuance of stock is at no less than the book value of the stock;

2. if no sale is involved, that the stock issuance to employees or officers is part of the compensation program documented by a written employment contract; and

3. the ownership of the stock is subject to a repurchase agreement that provides that the service corporation has the right of first refusal to reacquire the stock from the person or persons or the estate of the person or persons at book value at the time of death or termination of employment.

c) The book value of the stock shall be determined in accordance with generally accepted accounting principles by the independent auditor of the service corporation.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.650 Prohibited Transactions

a) Without prior approval of the Director, no service corporation shall enter into any contract (except an employment contract), grant any loan, directly or indirectly, to any officer, organization director, individual stockholder or employee of the service corporation or of its parent savings banks except upon real estate occupied as a homestead or on the security of a personal automobile. A service corporation may, without prior approval, enter into a contract for the sale of real estate to be occupied by any of the foregoing persons as their bona fide homestead.

b) A service corporation may enter into a contract to purchase an insurance agency or brokerage in which any of the foregoing persons have an interest.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.660 Disclosure to Service Corporation

a) Service corporations shall require as a condition of any contract, loan, joint venture agreement or partnership agreement, that the party entering into such relationship with the service corporation disclose the names and true identity:

1. in the case of trusts, owners of beneficial interests of said trusts;

2. in the case of corporations, the names and addresses of all shareholders owning 10 percent or more of the capital stock; and

3. in the case of partnerships, a list of names and addresses of all partners.

b) Such disclosure shall be certified by the respective trustee, secretary or general partner. This certification shall become a permanent part of the file of each such contract, loan, joint venture or partnership agreement.

38 Ill. Adm. Code 1075.670 Reporting Requirements

a) Within 45 days after the close of each calendar year, each service corporation shall submit to the Director a report, in such form as the Director shall prescribe, setting forth complete and true statements of condition and operations of the service corporation and of every partnership, joint venture or corporation in which the service corporation has a cash and/or equity interest of 50% or more.

b) All corporate subsidiaries, partnerships and joint ventures in which the service corporation has a cash and/or equity interest of 50% or more shall, within 15 days after a request by the Director, submit true and correct copies of all contracts, mortgages, partnership agreements, joint ventures and loan commitments.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.680 Audit Requirements

a) Each service corporation shall cause its books and records to be audited at least once annually by an independent licensed public accountant. Except as provided after this, the report of audit shall be separate from the report of audit of any parent savings bank.

b) The report of audit of a wholly-owned service corporation may be consolidated with the report of audit of the parent savings bank provided that the report sets forth:

1. the auditor's opinion that the activity of the service corporation does not materially affect the financial position of the parent savings bank; and

2. all details of consolidation.

c) The auditor shall test compliance with the Act and this Part and determine the effect that the service corporation has on the financial position of the parent savings banks.

d) The auditor shall determine and report any facts relating to any direct or indirect self-dealing by any service corporation officer, organization director, employee or shareholder other than a savings bank. The auditor shall also determine and report any facts relating to any direct or indirect conflict of interest of any officer, organization director, employee or shareholder of a savings bank holding stock in the service corporation.

e) Any noncompliance with the Act or this Part, self-dealing or conflict of interest which are discovered during the audit shall be set forth in the report of audit delivered to the service corporation's board of directors. The service corporation's board of directors shall promptly report the noncompliance to the Director and to the board of directors of the parent savings banks.

f) A copy of the audit report shall be filed with the Director within 90 days after the audit date, except upon receipt of written notice setting forth the reason delivery of the report of audit is delayed by circumstances beyond the control of the service corporation, the Director may extend the filing date for up to 60 additional days.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.700 General

a) A branch office of a savings bank is any office other than its home office, drive-in facility, pedestrian facility, agency office, or a remote service unit.

b) Any business of a savings bank may be transacted at a branch office. When a branch office provides any product, it must have all the resources necessary to support that product offering at the branch location.

c) A savings bank shall not establish a branch office nor change the location of its home office unless its respective application has been approved by the Director. An application shall be approved only if the Director finds that:

1. the office can be established at the proposed location without undue injury to properly conducted existing savings banks;

2. the policies and financial condition of the applicant are not a basis for supervisory objection; and

3. the proposed office will open within 12 months of approval unless occupancy is delayed by circumstances beyond the control of the applicant and, consequently, additional time is allowed by the Director.

d) A savings bank proposing a change of location of its home office or branch office may request a waiver of the otherwise applicable requirements of this Subpart G. The request will be approved only if:

1. the Director can make the same findings as those required at subsection (c);

2. the applicant demonstrates that the area to be served from the proposed location is essentially the same as that served from the present location;

3. the applicant gives the reasons for the change of location; and

4. the applicant submits a request that sets forth information sufficient to allow the making of all determinations required by subsection (d).

e) If requested by the applicant, the Director shall approve a temporary location of a home office or a branch office if the temporary location is:

1. in the immediate vicinity of the approved permanent location; and

2. not more competitive to any other properly conducted existing savings bank than the approved permanent location.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.705 Application

a) A savings bank may apply for a branch office or for a change of location of its home office provided that the applicant obtains the prescribed form of application and form of notice and related instructions from the Director unless waived pursuant to Section 1075.700(d) of this Part.

b) An application is considered complete and a priority filing date is established when the Director determines that all required information has been submitted.

c) Changes to all but material information of the application may be made up to the time the approval/denial is determined. For purposes of this Section, material information is defined as but is not limited to:

1. savings bank name;

2. savings bank address;

3. nature and purpose of application; and

4. any other information which if changed, would likely cause the approval or denial decision to be reversed.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.710 Request for Preliminary Determination

a) A savings bank that intends to file an application for a branch office or for a change of location of its home office may, before the filing of the application, submit to the Director written advice of intent to file the application and request a preliminary determination as to whether supervisory objection will be raised on the basis of the applicant's policies and financial condition. Within 30 days following receipt of the advice of intent, the applicant shall be advised of the Director's decision, and if applicable, the reason for supervisory objection.

b) If at any time subsequent to preliminary determination the Director determines that a basis for supervisory objection exists, further processing of the respective application shall be denied.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.715 Public Notice and Inspection

a) At the time of the filing of the application, the applicant shall publish notice of intent to relocate or establish a branch office. The notice shall be in form and content as prescribed by the Director. The applicant shall publish notice in a newspaper printed in the English language having a general circulation in the applicant's home office community and in the community to be served from the proposed location.

b) Within 10 days following the date of publication, the applicant shall furnish the Director with one copy each of the required notices and the publisher's affidavits of publication.

c) Subject to Section 1075.110(d) of this Part, the application shall be available for public inspection at the Division, by appointment.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.720 Protest

Protests, answers to protests and other related communications shall be in writing and submitted only as provided in this Section.

a) Within 10 calendar days following the date of publication of Notice of Application (or 20 calendar days after the date of publication if extension is requested in writing within the 10 day period) any person may file a communication in favor or protest of the application with the Director. Any person filing a communication shall simultaneously furnish a copy to the applicant.

b) Within 15 calendar days after receipt of a protest, the objector and the applicant shall be advised in writing whether the Director considers the protest to be substantial.

c) No protest shall be considered "substantial" unless it is in writing, filed on time, and contains at least the following:

1. a summary of the reasons for the protest;

2. the specific matters in the application to which objection is raised and the reasons for each objection;

3. facts supporting the protest, including relevant economic or financial data; and

4. adverse effects on the objector that may result from approval of the application.

d) The Director's determination as to whether a protest is "substantial" shall be made on the basis of data showing undue injury to properly conducted existing savings banks and/or data disputing the propriety of information set forth in the respective application.

e) Within 20 calendar days following the date of notice that a protest has been considered substantial, the applicant may file an answer to the protest with the Director.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.725 Oral Argument

a) Oral argument on the merits of an application shall be heard if:

1. the applicant, or a person who has filed a protest considered to be substantial, so requests and the request is received by the Director within 10 calendar days after the time for filing answers to all protests has expired; and

2. the Director, after reviewing the application and other pertinent information, considers oral argument desirable because of protests that dispute the propriety of information set forth in the application.

b) Any hearing of oral argument shall be subject to the appropriate fee and expenses prescribed in Section 1075.100 of this Part. A transcript of any hearing of oral argument shall be taken and made a part of the record in the matter.

c) The Director shall mail notice of the date (which shall be at least 10 calendar days after the mailing), time and place of oral argument to the applicant and persons who filed protests or other communications. The Director shall ensure that the time and place of any oral argument are reasonably convenient to the applicant and the objectors.

d) The Director or any person designated by the Director shall hear oral argument and determine all matters relating to the conduct of the hearing. Arguments shall be made in person or by authorized representatives. A maximum of one hour of oral argument shall be allowed in favor of and against the application. In hearing oral arguments, the person presiding shall determine the order of presentation. The parties may agree on a division of time; otherwise, the person presiding shall make the determination. Arguments may be consolidated. In the event of multiple substantial protests, the person presiding may permit additional time for argument and rebuttal. Arguments shall be based only on the facts and information on file; however, a party may introduce newly discovered matter by giving a written memorandum of same to the person presiding when the hearing commences. The memorandum shall include an affidavit as to why the matter was not previously known and not previously filed. No party to an oral argument shall be permitted more than one filing of new matter. If the person presiding rules that there is in fact substantive new matter, the party introducing it shall be required to provide copies of the memorandum of the new matter to all parties. If the parties agree to argue on the basis of the new matter, the hearing shall continue.

e) If any party wishes to file a rebuttal, 10 calendar days shall be allowed for the submission of the rebuttal, and the person presiding shall adjourn the hearing and set a date, time and place for it to be reconvened. Rebuttal to new matter shall not be considered a filing of new matter.

f) If oral argument is heard by a person other than the Director, that person's findings shall be submitted to the Director, in writing, within 25 calendar days after final adjournment of the hearing. Within 10 calendar days following receipt of the findings the parties shall be advised, in writing, of the Director's decision. If the Director presides at the hearing, the parties to the hearing shall be advised of the decision within 25 calendar days after the final adjournment of the hearing.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.730 Application for the Maintenance of Branch Office After Conversion, Consolidation, Purchase of Assets or Merger

a) With written approval of the Director, a savings bank that acquires an office or offices through merger, purchase, purchase of all assets or consolidation shall assume the operation of any acquired offices. An existing depository institution that converts to a savings bank shall maintain all of its offices existing or approved before the conversion.

b) If the Director has approved a Plan of Conversion from a savings bank charter for a savings bank or has evidence of a savings bank's intent to file a Plan of Conversion, he or she shall deny an application for a branch office.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.735 Redesignation of Offices

A savings bank may designate an existing branch office as its main business office and designate its existing main business office as a branch office by submitting an appropriate bylaw amendment for approval. No other Sections in Subpart G of this Part shall apply to redesignation of offices.

38 Ill. Adm. Code 1075.740 Termination of Operation and/or Closing of a Branch Office

a) A savings bank may offer to sell branch offices to another savings bank or other depository institution.

1. Before any such sale, a copy of the proposed agreement shall be submitted to the Director. Within 30 calendar days the Director shall notify the proposed seller, in writing, as to whether there is supervisory objection to the proposed sale, or the Director may advise the proposed seller of any additional information or further review considered necessary to make such a determination. The Director in considering supervisory objection shall review the policies and financial condition of the selling savings bank and the acquiring financial institution.

2. The selling savings bank and, if applicable, the acquiring financial institution shall submit an appropriate bylaw amendment for the Director's approval.

b) A savings bank showing justification for termination of operation and the closing of branch offices may do so with the prior written approval of the Director. Any request for the closing of any office shall be subject to the publication requirements of Section 1075.715(a) of this Part.

c) The filing of a request for termination of operation and the closing of branch offices shall constitute authority for the Director to seek a successor to assume operation of the branch offices.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.745 Agency Offices

a) A savings bank may establish or maintain agency offices which only service and originate (but do not approve) loans and contracts and/or manage or sell real estate owned by the savings bank.

b) An agency office shall maintain records of all business it transacts and transmit copies to a branch or home office of the savings bank.

38 Ill. Adm. Code 1075.750 Remote Drive-in and/or Remote Pedestrian Facilities

a) A savings bank may, without prior approval of the Director, establish a remote drive-in and/or remote pedestrian facility in conjunction with each savings bank business office. Each facility may be designed to simultaneously accommodate more than one customer.

b) The term "business office" means the business office premises, including non-remote drive-in and/or non-remote pedestrian facilities that are those facilities within the boundaries of real estate on which a home office or any branch office is located and the areas contiguous to the facility, that the savings bank has the exclusive right as owner or lessee to use or maintain for ingress or egress or for parking in connection with that business office.

c) Remote drive-in and remote pedestrian facilities are defined as follows:

1. A remote drive-in facility is a facility that is not located on the premises of a business office as defined in subsection (b) and at which the customer transacts business from a vehicle.

2. A remote pedestrian facility is a facility that is not located on the premises of a business office as defined in subsection (b) and at which the customer need not enter an office but may remain outside the structure and transact business with a teller located inside the structure.

d) Remote drive-in and remote pedestrian facilities may be placed in a store or location of some other business if the savings bank's quarters are used exclusively for the conduct of the savings bank's business. There will be no objection to a remote pedestrian facility that faces on an enclosed mall and serves pedestrians who remain in the mall while transacting business with the savings bank.

e) Functions that are routinely performed by the establishing savings bank's tellers at its business offices may be performed at a remote drive-in and/or remote pedestrian facility.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.800 Approval

No savings bank may issue and sell its capital notes or debentures without the prior written approval of the Director, subject to any conditions the Director may impose with regard to safety and soundness and maintenance of adequate financial condition, especially in areas of preservation of capital, quality of earnings and adequacy of reserves. A stock savings bank shall also have the prior approval of a majority of the shareholders owning a majority of the issued and outstanding shares of the savings bank to issue convertible capital notes or debentures.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.810 Conversion to Stock

Capital notes or debentures issued by a stock savings bank may be converted into shares in accordance with provisions approved by the Director and contained in the capital notes or debentures. Convertible capital notes or debentures may be issued without preemptive rights to existing shareholders if provided by the Articles of Incorporation of the savings bank and authorized by the Director.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.820 Priority of Claim

Capital notes and debentures shall be an unsecured indebtedness of the savings bank and shall be subordinate to the claims of account holders and all other creditors of the savings bank, regardless of whether the claims of account holders or other creditors arose before or after the issuance of such debentures or capital notes. In the event of liquidation, all account holders and other creditors of the savings bank shall be entitled to be paid in full before any payment shall be made on account of principal or interest on capital notes or debentures. Capital notes and debentures shall contain a statement of the rights and priorities of the lenders.

38 Ill. Adm. Code 1075.900 Hearings

All administrative hearings shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.905 Definitions (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.910 Early Neutral Evaluation (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.915 Conference Adjudicative Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.920 Filing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.925 Form of Documents (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.930 Computation of Time (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.935 Appearances (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.940 Notice of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.945 Service of the Notice of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.950 Motion and Answer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.955 Consolidation and Severance of Matters – Additional Parties (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.960 Intervention (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.965 Postponement or Continuance of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.970 Authority of Hearing Officer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.975 Bias or Disqualification of Hearing Officer (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.980 Prehearing Conferences (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.985 Discovery (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.990 Subpoenas (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.995 Conduct of the Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1000 Default (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1005 Evidence (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1010 Official Notice (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1015 Hostile Witnesses (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1020 Transcription of Proceedings (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1025 Briefs (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1030 Hearing Officer's Findings, Opinions and Recommendations (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1035 Order of the Director (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1040 Rehearings (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1045 Existing Statutory or Division Procedures and Practices (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1050 Costs of Hearing (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1055 Emergency Adjudication (repealed)

History

• Source: Repealed at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1100 Applicability

a) Subpart J of this Part shall apply to stock holding companies or savings banks that directly or indirectly own or control or seek to own or control 25% or more of the voting shares or rights of any insured institution in any manner and to mutual holding companies and mutual savings banks reorganizing as mutual holding companies. This Subpart does not apply when the ownership arises in the regular course of business as set forth in Section 2001.05 of the Act.

b) Except with the permission of the Director, no company shall become a savings bank holding company.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1105 Definitions

"Acquiree savings bank" means any subsidiary savings bank, other than a resulting savings bank, that is acquired by a mutual holding company as part of, and concurrently with, a mutual holding company reorganization and is in mutual form immediately prior to such acquisition.

"Affiliate" means any company that controls, is controlled by, or is under common control with a person.

"Assets" means the total assets of the savings bank minus goodwill and any other intangible assets, including but not limited to, purchased deposit base and branch network, and leasehold improvements net of accumulated depreciation.

"Capital stock" includes permanent stock, guaranty stock, permanent reserve stock, any similar certificate evidencing non-withdrawable capital, preferred stock, or convertible preferred stock of a savings bank created or acquired under this Subpart or of a subsidiary, institution or holding company.

"Charter" includes articles of incorporation, articles of reincorporation, or any similar instrument, as amended, effecting (either with or without filing with any government agency) the organization or creation of an incorporated or unincorporated person.

"Company" means a corporation or partnership, a savings bank, a joint stock company, a trust or an unincorporated organization.

"Control" is defined as it is in Section 1007.35 of the Act.

"Eligible account holder" means any person holding a qualifying deposit as of a given date.

"Eligibility record date" shall mean the record date for determining eligible account holders of an institution.

"Employee" does not include an organization director or an officer.

"Equity security" means any stock or similar security or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase a security, or any warrant or right.

"Member" means any person qualifying as a member of an insured institution pursuant to its charter or bylaws.

"Mutual savings bank" means a mutual savings bank organized and operating under the Act.

"Net worth" means the aggregate of capital stock accounts, capital surplus and retained earnings accounts and all other reserve accounts except valuation reserves and specific reserves that are in the nature of valuation reserves.

"Person" means an individual, a company, or a government or political subdivision.

"Pre-existing depository institution" means a subsidiary depository institution that is not an acquiree savings bank, a resulting savings bank or a savings bank in mutual form when acquired.

"Purchase" or "Buy" includes every contract to purchase, buy, or otherwise acquire a security or interest in a security for value.

"Qualifying deposit" means a deposit determined pursuant to Section 1075.1935 of this Part.

"Reorganizing savings bank" means a mutual savings bank that proposes to reorganize to become a mutual holding company pursuant to this Subpart.

"Resulting savings bank" means a savings bank in stock form that is organized as a subsidiary of a reorganizing savings bank to receive the substantial portion of the assets, all the insured deposits, and part or all of the other liabilities of the reorganizing savings bank.

"Sale" or "Sell" includes every contract to sell or otherwise dispose of a security or interest in a security for value; but these terms do not include an exchange of securities in connection with a merger or acquisition approved by the Director.

"Security" includes any stock, note, treasury stock, bond, debenture, transferrable share, investment contract, voting trust certificate, or, in general, any instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant, or right to subscribe to or purchase any of the foregoing.

"Stock" means common or preferred stock, or any other type of equity, security, including (without limitation) warrants or options to acquire common or preferred stock, or other securities that are convertible into common or preferred stock.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1110 Mutual Holding Company Reorganizations

A mutual savings bank may reorganize to become a mutual holding company, or join in a mutual holding company reorganization or thereafter as an acquiree savings bank or a pre-existing depository institution, only upon satisfaction of the following conditions:

a) A Reorganization Plan is approved by a majority of the board of directors of the reorganizing savings bank and any acquiree savings bank or pre-existing depository institution.

b) A Reorganization Notice is filed with the Director and the Director has given written notice of its approval of the proposed reorganization as being in accordance with applicable law.

c) The Reorganization Plan is submitted to the members of the reorganizing savings bank and any acquiree pursuant to a proxy statement cleared in advance by the Director and the Reorganization Plan is approved by a majority of the total votes of the members of each savings bank eligible to be cast at a meeting held at the call of each savings bank's directors in accordance with the procedures prescribed by each savings bank's charter and bylaws. When the Reorganization Plan involves acquiring a pre-existing depository institution, the Plan is submitted to the stockholders of the pre-existing depository institution and is approved by the majority of the total votes of the shareholders eligible to be cast at a meeting held at the call of the institution's directors in accordance with the institution's charter and bylaws.

d) All necessary regulatory approvals have been obtained and all requirements of this Subpart are met.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1111 Subsidiary Holding Company

As part of a mutual holding company reorganization or thereafter, a mutual holding company may establish a subsidiary stock holding company which shall wholly own and control the resulting savings bank and any acquiree savings banks. A subsidiary holding company shall be subject to Sections 1075.1225 and 1075.1330 as if it were a resulting savings bank. The subsidiary holding company shall be subject to Section 1075.1275(c) as if it were the mutual holding company and the mutual holding company shall remain subject to Section 1075.1275(c). The Director may impose other requirements to ensure that the members of the resulting savings bank and any acquiree savings bank have the same rights, opportunities, and protection as if no subsidiary stock holding company been established.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1115 Prohibition Against Approval of Certain Applications for Reorganization

No application for reorganization may be approved by the Director if:

a) The plan of reorganization adopted by the applicant's board of directors is not in accordance with this Subpart;

b) The reorganization reasonably could be expected to result in a resulting or acquiree savings bank or pre-existing depository institution with capital below requirements established by the Director and by Federal law;

c) The reorganization results in a taxable reorganization under the United States Internal Revenue Code of 1986 (26 USC 1 et seq.) and the Director upon a written finding determines that the reorganization will endanger the safety and soundness of a resulting or acquiree or pre-existing savings bank; or

d) A resulting savings bank does not secure insurance of its deposit accounts backed by the full faith and credit of the United States government before reorganization.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1120 Contents of Reorganization Plans

Each Reorganization Plan shall contain a complete description of all the significant terms of the proposed reorganization, shall attach and incorporate any Stock Issuance Plan proposed in connection with the Reorganization Plan, and shall:

a) Provide for amendment of the charter and bylaws of the reorganizing savings bank in accordance with this Subpart and attach and incorporate the charter and bylaws;

b) Provide for the incorporation and organization of the resulting savings bank in accordance with this Subpart and attach and incorporate all required material;

c) Provide for amendment of the charter and bylaws of any acquiree savings bank to read in the form of the charter and bylaws of a stock savings bank and attach and incorporate the charter and bylaws;

d) Provide for the transfer of assets and liabilities pursuant to Section 2007(a)(2) of the Act and this Subpart from the reorganizing savings bank to the resulting savings bank;

e) Provide that all assets, rights, obligations, and liabilities of whatever nature of the reorganizing savings bank that are not expressly retained by the mutual holding company shall be deemed transferred to the resulting savings bank;

f) Provide that each depositor in the reorganizing savings bank, any acquiree savings bank, or any pre-existing depository institution immediately prior to the reorganization shall upon consummation of the reorganization receive without payment, an identical account in the resulting savings bank or the acquiree savings bank, as the case may be (appropriate modifications shall be made to this provision if a merger is a part of the reorganization);

g) Provide that the Reorganization Plan as adopted by the boards of directors of the reorganizing savings bank, any acquiree savings bank and any pre-existing depository institution may be substantively amended by those boards of directors as a result of comments from regulatory authorities or otherwise prior to the solicitation of proxies from the members of the reorganizing savings bank and any acquiree savings bank or stockholders of any pre-existing depository institution to vote on the Reorganization Plan and at any time thereafter with the concurrence of the Director; and that the reorganization may be terminated by the board of directors of the reorganizing savings bank, any acquiree savings bank or any pre-existing depository institution at any time prior to the meeting of the members or stockholders called to consider the Reorganization Plan and at any time thereafter with the concurrence of the Director; the Director shall concur with an amendment or termination under this Section unless he or she finds that to do so would be inequitable to members or injurious to a savings bank;

h) Provide that the Reorganization Plan shall be terminated if not completed within a specified period of time. The time period shall not be more than 24 months from the date upon which the members of the reorganizing savings bank or the date upon which the members of any acquiree savings bank, or stockholder of any pre-existing depository institution, whichever is earlier, approve the Reorganization Plan and may not be extended by the reorganizing or acquiree savings bank or the pre-existing depository institution; and

i) Provide that the expenses incurred in connection with the reorganization shall be reasonable.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1125 Capital Stock (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1130 Charter (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1135 Control (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1140 Eligible Account Holder (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1145 Eligibility Record Date (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1150 Employee (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1155 Equity Security (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1160 Insured Institution (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1165 Member (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1170 Net Worth (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1175 Officer (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1180 Person (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1185 Qualifying Deposit (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1190 Sale (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1195 Security (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1200 Source Documents (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1205 Subsidiary (repealed)

History

• Source: Repealed at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1210 Liquidation Account and Proxies

a) Each mutual savings bank converting to form a holding company must establish a "liquidation account" for members of the mutual savings bank before conversion. The liquidation account may be maintained at a holding company level or by the savings bank. The total amount allocated to the liquidation account shall be equivalent to the amount of stock issued to the holding company by the stock subsidiary upon infusion of assets and liabilities to the stock subsidiary.

b) Each member of the liquidation account who maintains an account in the stock subsidiary savings banks shall be entitled, upon liquidation of the mutual holding company, to a fractional share of the value of the mutual holding company. The numerator of the fractional share shall be the amount of qualifying deposits in the member's account on the record eligibility date, which date shall be set by the board of directors in their Plan of Conversion and/or application to form a mutual holding company, and/or the supplemental eligibility record date and the denominator of the fractional share shall be the total amount of qualifying deposits of all eligible and supplemental eligible account holders in the converting mutual savings bank on the eligibility record date. Any plan to liquidate the mutual holding company must be approved by the Director and must satisfy all claims of creditors, including liquidation account holders. Any remaining value in the mutual holding company shall be transferred to the capital accounts of the subsidiary stock savings banks.

c) All proxies previously executed and assigned by members of the mutual savings bank converting to form a holding company shall remain valid and effective without impairment as long as the member maintains an account in the new stock savings bank.

d) A liquidation account need not be established under this Section if one is established under Section 1075.1225 and Subpart O of this Part.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1215 Mutual Holding Company Ceasing to Be a Depository Institution

a) Each mutual savings bank that converts to holding company status in conjunction with the chartering of a stock subsidiary shall be issued a "restated or amended charter" as a mutual holding company by the Director and the organization directors shall either return the original charter, insurance undertakings and certificate of insurance to the issuing authority, as evidence of ceasing to be an insured depository institution or may transfer them to the stock subsidiary with permission of the Director. The Director's permission shall be given upon successful completion of an examination to assure conformance with regulatory and statutory requirements.

b) Upon the issuance of the charter of a stock savings bank by the Director, a mutual holding company shall cease to be a savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1220 Directors of a Mutual Holding Company

a) Each new board of directors for the mutual holding company shall be selected by vote of members, in a process to be determined by the bylaws of each entity.

b) Each board of directors shall have at least five members.

c) Sections 4008, 4009, 4010, and Article 11 of the Act shall apply to a mutual holding company with regard to organization directors' vacancies, organization directors' attendance at meetings, qualifications to be an organization director, enforcement powers, and similar matters, except that the mutual holding company may file a written request for waiver of compliance with any provision with the Director. The request must provide detailed discussion of the grounds for the request. In determining whether to grant a waiver of compliance, the Director shall consider the following factors, including, but not limited to:

1. whether applications of those provision to mutual holding companies would be inappropriate because the provisions are drafted for savings banks;

2. whether a mutual holding company and its subsidiary meet or exceed all applicable capital requirements and are not in violation of any statutes or rules;

3. whether there are pending contested regulatory matters; and

4. whether waiver would work undue hardship or result in undue advantage or risk, prejudicing a situation currently or in the future.

d) Upon creation of the resulting savings bank, the board of directors of the reorganizing savings bank shall nominate a board of directors for the resulting savings bank.

e) A mutual holding company may provide for cumulative voting for organization directors in its bylaws.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1225 Stock Issuance Plan

If the reorganizing savings bank offers stock to any party other than the mutual holding company, it shall submit a stock issuance plan that meets the following conditions:

a) At all times, a mutual holding company shall own and control more than 50% of each class of common stock and more than 50% of the capital stock in the aggregate, issued by the resulting savings bank, any acquiree savings bank, or any savings bank, in the mutual form when acquired. The foregoing restriction shall not apply to an acquisition by a mutual holding company of a pre-existing depository institution.

b) Any capital stock issued and offered for sale by a subsidiary savings bank as described in subsection (a) of this Section, to persons other than the mutual holding company, shall be offered in accordance with Subpart O of this Part, but subject to subsection (d) of this Part except that:

1. the words "mutual savings bank" shall refer to resulting savings banks or acquiree savings banks;

2. references to conversion from mutual to stock form shall refer to mutual holding company reorganization;

3. the words "plan of conversion" shall refer to the Reorganization Plan;

4. the words "total offering', and "offering" shall refer to the minority portion of the capital stock issuance that may be offered and purchased by persons other than the mutual holding company;

5. Sections 1075.1990 and 1075.2170 of this Part shall not apply;

6. At Section 1075.2110 of this Part, the reference to Section 1075.2160 of this Part shall not apply and the words "converted savings bank" shall refer to the resulting stock savings bank;

7. Nothing in Section 1075.2150 of this Part shall interfere with the requirements of subsection (a) of this Section; and

8. At Section 1075.1950 of this Part, receipt of a liquidation distribution from the liquidation account shall be in the event of a complete liquidation of the mutual holding company rather than the converted savings bank.

c) To the extent the pricing materials submitted pursuant to Subpart O of this Part include any discount due to the minority status of the stock to be offered, the materials must indicate the amount of the discount and how that amount was determined. Furthermore, if the plan calls for a waiver of dividends for the shares owned by the mutual holding company, the materials should indicate whether this waiver results in an ability to pay higher dividends to minority shareholders and, if so, why the discount is nonetheless warranted.

d) The Director may waive a requirement of Subpart O of this Part upon a finding that the waiver would not work an injury on the mutual holding company or its subsidiaries, that it would be inequitable to members and eligible account holders, that the reorganization, if the waiver is granted, provides protections and opportunities equivalent to those that would exist if no waiver were granted, and that no other course of action that fully complies with Subpart O of this Part and this Subpart exists.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1230 Stock of a Subsidiary of a Mutual Holding Company

a) A resulting savings bank shall issue shares to the holding company only after sufficient assets to match transferred deposit liabilities are transferred to the resulting savings bank and, if applicable, an acquiree savings bank and after written confirmation of continuation of insurance of accounts is received from the deposit insurance corporation.

b) Stock issuance shall initially be only common stock, but other classes of stock may be issued upon application to and approval by the Director.

c) Each share of common stock shall entitle its owner to one vote.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1235 Stock Subsidiary Formation

In conjunction with the formation of a resulting savings bank of a mutual holding company, the requirements of Article 3, Incorporation and Organization, of the Act shall apply with the following additions.

a) In the case of a change of corporate form, which does not alter the assets and liabilities of the reorganizing savings bank, or any acquiree savings bank, as transferred to the resulting savings bank with regard to their amount or quality, the "minimum initial capital...which would be required to obtain insurance of accounts by the Federal Deposit Insurance Corporation" shall mean the amount of minimum capital which the reorganizing savings bank, or any acquiree savings bank, was required to have to maintain its federal insurance of accounts.

b) The application to organize shall be made by the organization directors of the reorganizing savings bank. Copies of organization directors' and officers' affidavits and statements of personal interest from the last 5 years' examination reports may be submitted to the Director to the extent that they provide business and financial information on affiliations with any other financial institutions. Each applicant shall submit amendments to these materials to provide omitted, but required, information.

c) Exhibits and maps shall display the original and new savings bank's customer area, and provide quarterly Federal and/or State reports for the four quarters preceding application, as well as the reorganizing savings bank's last 2 audited financial statements.

d) The Director may require information as to:

1. how stock shall be distributed. Such reports shall be required upon formation of the holding company, before issuance or marketing of stock and at any other time necessary to ensure fundamental fairness to stockholders, members, depositors and for reasons related to the safe and sound financial operation of any resulting savings bank, acquiree savings bank, or pre-existing depository institution;

2. the form and manner of expressing ownership; and

3. the amount of treasury stock that shall be held and any planned issuances of capital stock or equity securities, with projected dates and amounts.

e) Once the resulting savings bank is formed, if the reorganizing savings bank no longer retains any deposits, it shall no longer be required to maintain insurance of accounts.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1240 Net Worth Maintenance Agreement (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.1245 Members' Rights

Rights of members of the resulting savings bank, acquiree savings bank, any savings banks in the mutual form when acquired shall be transferred to the mutual holding company, except that a savings bank may eliminate borrowers' rights in the process of forming the holding company by incorporating a new definition of membership in the holding company's and subsidiaries' Articles of Incorporation. Each depositor in the resulting savings bank, an acquiree savings bank, and any savings banks in the mutual form when acquired shall be a member of the mutual holding company and shall have one vote for each $100 of value of each account; notwithstanding the foregoing restriction, a mutual holding company may upon giving notice to the Director limit the number of votes cast by any persons to 1000 votes unless the Director finds upon review of relevant law and facts, the limitation is inequitable to depositors.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1250 Investment

A mutual holding company may invest in the stock of or other forms of equity ownership of any company or entity which the board of directors determines to be in the best interests of stock owners and depositors, and such investment shall be documented in the holding company's minutes with reference to items such as price/earnings rates, future prospects, sources of income, level of risk, compatibility with the overall business plan of the holding company and complete disclosure of any organization directors', officers', employees' or 5% or more stockholders' interests in the entity.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1255 Notice Requirement/Corrective Action

A holding company shall give immediate written notice to the Director of any corrective action ordered or requested by a governmental agency, relative to the financial affairs of the holding company, except those actions ordered by the Director. A holding company shall give written notice before acting upon such orders or requests, except when such order is effective immediately upon receipt. The method of transmittal shall be by messenger mail, private messenger service or telefax transmittal. Any such corrective actions required to be performed immediately shall be reported to the Director within 24 hours after receipt.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1260 Insider Abuses

Matters or issues resulting from apparent wrongdoing, including insider abuses, shall be brought to the Director's attention within 10 business days after discovery, by the appropriate management personnel of the holding company. Copies of any required reports, including police and Federal Bureau of Investigation reports, shall be included with the notification to the Director.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1265 Determination of the Qualification and Condition of an Out-of-State Acquisition

When requested, the Director shall review the laws of any state to determine whether the laws of that state expressly authorize an Illinois savings bank holding company to acquire a savings bank or savings bank holding company in that state. The Director shall issue a finding that such other state law either does or does not provide qualifications and conditions that are unduly restrictive for the acquisition when compared to those imposed by the laws of Illinois.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1270 Acquisition and Disposal of Subsidiaries

a) As permitted by the Act, this Part, and applicable federal law, a mutual holding company, with approval of its board of directors, the Director, and its members, may:

1. acquire control of, or make non-controlling investments in the stock of, a stock depository institution or stock depository institution holding company;

2. acquire a mutual savings bank, upon approval of acquiree's board of directors and members, pursuant to a merger into the resulting savings bank, into an acquiree savings bank, or into another savings bank that was in the mutual form when acquired or with a bridge charter;

3. acquire a mutual savings bank or savings bank holding company, upon approval of the acquiree's board of directors and members, by merging with the mutual savings bank holding company;

4. acquire control of, or make non-controlling investments in the stock of, other corporations.

b) A stock holding company may make acquisitions or investments or enter into mergers as permitted by the Act, this Part, and applicable federal law with approval of its board of directors, the Director and its stockholders.

c) Each holding company disposing of a subsidiary shall give not less than 30 days prior notice of the planned disposition to the Director. Disposal of a subsidiary must be approved by the Director.

d) The Director shall approve a transaction contemplated by this Section upon finding that the transaction complies with applicable law, has received necessary approvals under federal law, and is not inequitable to members or injurious to a savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1275 Dividend Limitations and Waivers

a) No subsidiary savings bank may declare or pay a cash dividend on or repurchase any of its capital stock unless the declaration or payment of the dividend or repurchase would be in accordance with the requirements of Section 5008 of the Act and would not reduce the capital of the converted savings bank below the greatest of:

1. the amount required for the liquidation account;

2. the amount required by the Director; or

3. the amount required by federal law.

b) A converted mutual savings bank may pay dividends on preferred stock at the rate or rates agreed in connection with the issuance of preferred stock, if such issuance has been approved by the Director. However, the Director shall approve no issuance or payment that would reduce the capital of the converted savings bank below the greatest of:

1. the amount required for the liquidation account;

2. the amount required by the Director; or

3. the amount required by federal law.

c) No mutual holding company may waive its right to receive any dividend declared by a subsidiary unless:

1. No insider of the mutual holding company, associate of an insider, or tax-qualified or non-tax-qualified employee stock benefit plan of the mutual holding company holds any share of stock in the class of stock to which the waiver would apply; or

2. The mutual holding company provides the Director with written notice of its intent to waive its right to receive dividends 30 days prior to the proposed date of payment of the dividend and the Director does not object. The Director shall not object to a notice of intent to waive dividends if:

A) the waiver would not be detrimental to the safe and sound operation of the savings bank; and

B) the board of directors of the mutual holding company expressly determines that waiver of the dividend by the mutual holding company is consistent with the organization directors' fiduciary duties to the mutual members of the company. A dividend waiver notice shall include a copy of the resolution of the board of directors of the mutual holding company, in form and substance satisfactory to the Director, together with any supporting materials relied upon by the board, concluding that the proposed dividend waiver is consistent with the board's fiduciary duties to the mutual members of the mutual holding company.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1280 Officers and Organization Directors List

The secretary of each holding company shall submit to the Director a list of all officers and organization directors of the holding company. This list shall be submitted within 10 days after the election of the holding company's board of directors, and any changes or additions in the list shall be submitted to the Director within 10 days after the occurrence of the change or addition. Along with the list there shall also be submitted an affidavit executed by each officer and organization director containing a statement that shall set forth details as to the present and, for the 5 years preceding, the business of every officer and organization director and the nature of their prior affiliations with any financial institution and its subsidiaries, holding company or subsidiary of a financial institution holding company.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1285 Access to Books and Records

The Director shall have access to subsidiaries' and holding companies' books and records.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1290 Annual Audit Requirements

Every holding company shall cause its books and records to be audited at least once annually by an independent licensed public accountant. The Director shall receive a copy of the licensed public accountant's annual audit report, along with all supporting documentation. The report of audit shall be on a consolidated basis unless, in the auditor's opinion, certain subsidiaries or parent entities should be reported on separately. If separate reports are prepared, they should be prepared on the same basis as the report on the holding company.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1295 Maintenance of Records

Every holding company shall maintain such corporate books and records as may be necessary to facilitate a full, complete examination of the activities of the entity. While the books and records will be primarily of an accounting nature, certain other records such as minutes of meetings shall be required to document review and approval of activities and plans.

a) All accounting records shall be maintained in accordance with The Act.

b) All stock entities shall at a minimum maintain or cause to be maintained on their behalf full, complete lists of stockholders including address, state of residence, taxpayer identification number, amount of stock owned, and any other data necessary to determine the principals and ownership of the entity.

c) All holding companies shall prepare and maintain a full, complete book of minutes for meetings of the board of directors, executive management committees, and other meetings wherein business of a substantial nature is contemplated or transacted. This requirement shall be in effect for all subsidiary entities of the holding companies as well.

d) Primary records such as books of record and source documents shall be maintained by the individual holding company for a period of not less than seven (7) years, provided that if a longer retention period is prescribed by another regulatory body having jurisdiction over the holding company, that longer period shall be followed.

History

• Source: Amended at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.1300 Notice of Appointment of Independent Accountants

a) Notice shall be made to the Director of the appointment of the licensed public accountant not less than 60 days before the fiscal year-end of the holding companies. Any change in the licensed public accountants shall be forwarded to the Director within 60 days after the change along with a letter from the replaced accountant stating whether the change, was the result of a dispute over the accounting treatment of a material matter.

b) Copies of the Annual Audit shall be filed, in triplicate, with the Division of Banks and Real Estate within 90 days after the fiscal year-end of the registrant.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1305 Holding Company Filing Fees (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.1310 Holding Company Supervisory Fees (repealed)

History

• Source: Repealed at 42 Ill. Reg. 16507, effective August 23, 2018

38 Ill. Adm. Code 1075.1315 Examination Fees (repealed)

History

• Source: Repealed at 42 Ill. Reg. 16507, effective August 23, 2018

38 Ill. Adm. Code 1075.1320 Conditions (repealed)

History

• Source: Repealed at 42 Ill. Reg. 16507, effective August 23, 2018

38 Ill. Adm. Code 1075.1325 Manner of Payment (repealed)

History

• Source: Repealed at 42 Ill. Reg. 16507, effective August 23, 2018

38 Ill. Adm. Code 1075.1330 Conversion of Mutual Holding Companies

With approval of the Director, upon a finding by the Director that the conversion complies with applicable law, has received necessary approvals under federal law, and is not inequitable to members or injurious to a savings bank, a mutual holding company may convert to a capital stock holding company. Any capital stock issued and offered for sale by a converting holding company shall be offered in accordance with Subpart O of this Part except that:

a) The words "mutual savings bank" shall refer to mutual holding company.

b) Section 1075.2170 of this Part shall not apply unless a subsidiary depository institution does not meet applicable capital requirement and the mutual holding company is unable to meet the requirements of the applicable net worth agreement entered into under Section 1075.1240 of this Part.

c) Requirements in Subpart O of this Part for filing presentation or disclosure of financial, regulatory operations or management information shall apply to either the mutual holding company or its subsidiaries, or both, whichever filing, presentation or disclosure provides, as determined by the Director, the most complete description of the mutual holding company and its subsidiaries.

d) Stock issued pursuant to Section 1075.1225 of this Subpart may be exchanged for stock issued by the mutual holding company in a conversion of the mutual holding company to stock form under this Section if the mutual holding company demonstrates that the exchange is equitable to the subsidiary depository institution and the mutual holding company members.

e) The Director may waive a requirement of Subpart O of this Part upon a finding that the waiver is not injurious or inequitable to the mutual holding company or its subsidiaries, that it is not inequitable to members or eligible account holders, that the conversion, if the waiver is granted, provides the equivalent protections and opportunities as a conversion that fully complies with Subpart O of this Part and this Section, and that no other course of action that fully complies with Subpart O of this Part and this Section exists.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1400 Scope of Rules

No existing depository institution shall convert to an Illinois savings bank without the written approval of the Director pursuant to this Subpart.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1405 Definitions

Words or terms that are defined in The Act shall retain the same meaning when used in these regulations.

"APPLICANT" means an existing depository institution that has applied to convert to an Illinois savings bank pursuant to these provisions.

"CONVERSION PLAN" means a plan adopted by an existing depository institution in order to convert into an Illinois savings bank pursuant to these regulations.

"CONVERTING DEPOSITORY INSTITUTION" or "CONVERTING INSTITUTION" means an existing depository institution that is in the process of converting to an Illinois savings bank.

"RESULTING SAVINGS BANK" means an existing depository institution that has converted to an Illinois savings bank pursuant to these regulations.

38 Ill. Adm. Code 1075.1410 General Rules for Conversion Plan

a) An application for conversion shall be approved only if the Director finds that:

1. the conversion plan adopted by the applicant's board of directors or trustees (board), and all documentation submitted in support of the application for conversion complies with the provisions of this Part, the Act, and other applicable provisions of law;

2. the resulting savings bank will operate in a safe, sound and prudent manner;

3. the conversion plan will result in a savings bank that has adequate capital, and satisfactory management and earnings prospects as prescribed in the Act;

4. the owners and organization directors of the converting depository institution and of the resulting savings bank are qualified by character and financial responsibility to legally and properly control and operate the proposed savings bank to be formed as a result of the conversion plan;

5. the converting depository institution has taken steps to obtain insurance of accounts from the deposit insurance corporation;

6. the conversion plan is equitable to account holders, borrowers, creditors, employees or stockholders and is in the public interest; and

7. the converting institution has paid all outstanding bills for supervisory fees, examination fees, and penalties associated with its original charter.

b) The experience and the performance record of the persons to be in control or in key management positions shall be evaluated by the Director as to the probability of sound operation of the resulting savings bank.

c) The Director shall make the same investigation and determine the same questions as would be required by law to make and determine in the case of the submission to the Director of an Articles of Incorporation for a proposed new Illinois savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1415 Adopting and Filing of a Conversion Plan

a) The board of directors of an existing depository institution desiring to convert in accordance with this Part shall adopt a conversion plan at a meeting of the board of directors.

b) Upon the adoption of the conversion plan as provided in subsection (a), an existing depository institution shall file with the Director 3 copies of the application for approval of a Plan of Conversion, which shall include the conversion plan and each document required to be part of the conversion plan. The application shall be in the form required by the Director.

c) An application for approval of a conversion plan shall be on forms prescribed by the Director.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1420 Conversion Plan Requirements (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.1425 Vote by Shareholders and Members (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.1430 Issuance of Certificate of Approval

The Director, upon approving a conversion plan, shall issue a certificate of approval of the conversion plan which shall authorize the applicant to proceed with its conversion plan. The Director may add such conditions to the certificate of approval as he or she considers necessary.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1435 Final Approval of the Conversion

a) Upon a determination by the Director that all applicable requirements of law have been met, including the surrender of the original charter, the Director shall issue to the applicant a Certificate of Authority to Operate. The savings bank shall then file its amended charter and Articles of Incorporation as an Illinois savings bank with the County Recorder in the county in which the savings bank is headquartered.

b) Upon filing, the applicant shall be an Illinois savings bank under sole supervision of the Director and of the Federal Deposit Insurance Corporation.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1440 Powers of Resulting Savings Bank

The resulting savings bank shall have all the rights, privileges, and powers granted by its amended charter and by the statutes applicable to savings banks holding such charters, and the entire assets, business, and goodwill of the converting depository institution shall be vested in the resulting savings bank without deed or transfer, provided such resulting savings bank may execute such deeds or instruments of conveyances as may be convenient to confirm such transfer, and such resulting savings bank shall assume and be liable for all debts, accounts, undertakings, contractual obligations, and liabilities of the converting depository institution.

38 Ill. Adm. Code 1075.1445 Obligations of Resulting Savings Bank

The resulting savings bank shall be subject to the duties, relations, obligations, trusts, and liabilities of the converting depository institution, whether as debtor, depository, registrar, transfer agent, executor, administrator, trustee, or otherwise, and shall be liable to pay and discharge all such debts and liabilities, to perform all such duties, and to administer all such trusts in the same manner and to the same extent as if such resulting savings bank had itself incurred the obligation or liability or assumed the duty, relation, or trust; and all rights of creditors and all liens upon the property of such resulting savings bank shall be entitled to receive, accept, collect, hold, and enjoy any and all gifts, bequests, devises, conveyances, trusts, and appointments in favor of or in the name of such converting depository institution, whether made or created to take effect before or after the conversion.

38 Ill. Adm. Code 1075.1450 Organization Directors of Resulting Savings Bank

The persons named as organization directors in the Plan of Conversion shall be the organization directors of the resulting savings bank until the first election of organization directors thereafter, or until the expiration of their terms as organization directors, and shall have the power to take all necessary measures and to adopt regulations concerning the business and management of the resulting converted savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1500 Sale of Offices or Facilities

a) Except the sale of a branch office under Section 1075.740 of this Part, a savings bank contemplating sale of any office or facility must provide 90 days notice to the Director of its intent to do so. A copy of a signed letter of intent to purchase must be received by the Director at least 30 days before the closing date of the contemplated sale.

b) Notice to the Director shall include:

1. addresses of the facilities and offices to be sold;

2. analyses of the accounts, loans and obligations of the facilities' and offices' business;

3. a draft of notifications to be sent to all parties who would be affected by the sale, including depositors, creditors, account holders, and borrowers;

4. notifications must detail names and addresses of the seller and buyer, what business will be transferred to the buyer, if anything shall remain with the seller, when business remaining with the seller will be administered;

5. all final notifications under this Section must be registered mail, certified mail, or personally delivered. A time schedule for notifications must be included; and

6. an analysis of the effect on the selling savings bank's financial condition, including discussion of any accounting issues, and pro forma financial statements for before and after the transaction. Specific discussion must be included about the manner of payment and deviation of pricing.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1510 Purchase of Offices (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.1520 Bridge Charters

a) A savings bank may apply to the Director for authority to form a "bridge charter" to facilitate a corporate restructuring or voluntary change, only on condition that an additional savings bank is not created. Organization of a bridge charter shall not be subject to the requirements of Article 3 of the Act.

b) The Director may only authorize the formation of an interim savings bank charter under this Section. An applicant desiring another type of financial institution charter shall apply for same to the regulator appropriate to that charter.

c) Each application shall specify the purpose of the interim charter, the required end result, the ownership size, capital business plan, management structure, and duration of the initial, interim and final savings bank.

d) An applicant for an interim charter under this Section shall inform the Director of any transaction contemplating use of an interim charter at least 90 days before the closing date of the transaction.

e) Except to the extent established by the original savings bank, no interim charter may do retail business with the public; advertise; make purchases; or pay salaries, bonuses or fees, obligate to hire, or contract.

f) An interim charter may exist for no more than 3 days, which may not be business days. On a normal business day, an interim charter may not be in existence for more than the time required to sign or otherwise finalize documents.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1530 Unsafe and Unsound Practices

If the Director receives notice of failure to renew or of cancellation of the bond required by Section 4009(a) of the Act, or if such bond is determined, from examination or from reports made by the savings bank, to be inadequate when compared with the amounts of the bond carried by savings banks of comparable capital size, pursuing similar investment policies and similar management capabilities, or with amounts required by its federal insurer of accounts, he or she shall immediately pursue one of the remedies enumerated in Articles 9 and 10 of the Act.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1540 Failure to Comply with Report of Examination

If the Director determines that a savings bank has failed to comply with recommendations made in or as the result of a report of examination within 45 days after the date the report is transmitted, then he or she may poll the savings bank's officers and board of directors personally concerning his or her recommendations, and, absent convincing or compelling changes of information, market conditions or financial condition of the savings bank, he or she shall summarily issue a temporary suspension in writing to officers and organization directors who refused or prevented taking the recommended steps. The suspension shall bar the specified individual until the Order is modified or vacated by the Director.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1550 Publication

a) Publication shall be made once in a general or legal newspaper of the largest general circulation in:

1. the county of the savings bank's headquarters; and

2. in Sangamon County; or

3. in Cook County.

b) The notice shall:

1. cite Section 9005 of The Act;

2. provide the names of the savings bank, its officers and its board of directors; and

3. quote the particular directive, summarizing any explanatory material of more than 25 words.

38 Ill. Adm. Code 1075.1600 Scope

The Director, in accordance with the Act and this Part, may remove or suspend any officer, organization director, employee or agent of a savings bank operating under the Act or prohibit an individual from further participation in any manner in the affairs at any savings bank operating under the Act.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1610 Notice of Intention and Answer

a) Subject to Section 1075.1630 of this Part, proceedings to remove or suspend an officer, organization director, employee or agent of a savings bank operating under the Act or to prohibit an individual from further participation in any manner in the affairs of any savings bank operating and regulated under the Act shall commence upon service of Notice of Intention to Remove, Suspend or Prohibit.

b) The notice shall:

1. state the grounds for the action;

2. recite the statutory basis for the action;

3. be signed by the Director;

4. contain a notice of hearing on the matter that sets a hearing date within 30 days after service of the notice of intention and names a hearing officer who shall conduct the hearing; and

5. include a copy of the Director's rules pertaining to hearings.

c) Hearing shall be conducted in accordance with 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1620 Removal and Prohibition by Order

In the event of consent, or, if upon the record submitted by the presiding hearing officer pursuant to 38 Ill. Adm. Code 100, and subject to Section 1075.1630 of this Part, the Director finds that any of the charges have been established, the Director may issue an Order of removal or suspension from office or of prohibition from participation in any manner in the affairs of a savings bank operating under the Act. The Order is effective upon service (except in the case of an Order issued upon consent that is effective at the time specified in the Order) and shall remain effective and enforceable unless stayed, modified, terminated or set aside by action of the Director or a reviewing court.

History

• Source: Amended at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1630 Suspension by Notice

a) Upon determination that suspension is necessary for the protection of a savings bank operating under the Act or for depositors and in accordance with the Act and this Part, the Director may by notice suspend an officer, organization director, employee or agent of a savings bank operating under the Act and suspend the individual from participation in any manner in the affairs of any savings bank operating under the Act.

b) A suspension Order by the Director issued pursuant to this Section shall be in effect and enforceable upon service and, unless stayed by a reviewing court, shall remain in effect until the charges are dismissed and the administrative proceedings are completed, or until the effective date of any final Order of removal, suspension or prohibition that is issued by the Director.

c) A suspension Order by the Director issued pursuant to this Section shall:

1. contain findings of fact sufficient to support imposition of a suspension by notice;

2. recite the statutory basis for the Order;

3. appoint a hearing officer;

4. impose an immediate suspension of participation in any manner in the affairs of any savings bank operating under the Act;

5. be signed by the Director or by a person authorized to act in her or his stead; and

6. be with a notice of suspension that:

A) sets a hearing date within 30 days after the date on which the Order takes effect;

B) names the hearing officer who shall conduct the hearing; and

C) includes a copy of the Director's rules pertaining to hearings.

d) Subject to this Subpart M, hearing shall be pursuant to 38 Ill. Adm. Code 100.

History

• Source: Amended at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.1640 Industrywide Prohibition

a) Any person subject to an Order of removal or suspension or prohibited from participation in any manner in the affairs of a savings bank operating under the Act upon an Order of the Director, without hearing on the matter, shall be prohibited from participation in any manner in the conduct of affairs of a savings bank regulated by the State of Illinois, another insured depository institution regulated by the State of Illinois, or any other financial services entity regulated by the State of Illinois.

b) An Order for industrywide prohibition shall:

1. state the grounds for the industrywide prohibition;

2. recite the statutory basis for the action;

3. include the Order of removal, suspension or prohibition to which the party is subject; and

4. be signed by the Director.

c) Notwithstanding subsection (a), a prohibition from participation shall cease to apply to the party, but only to the extent that consent is granted, if, on or after the date an Order is issued under this Section a party receives the written consent of:

1. the Director; and

2. all other regulatory bodies of the insured depository institution or financial services entity to which the party proposes to participate in the conduct of affairs.

d) Request for consent of the Director shall be made in writing to the Director. The decision of the Director is not reviewable. The request shall include:

1. a written statement of the consent that is requested;

2. a written statement of the proposed participation in the conduct of affairs of an insured depository institution financial or financial services entity; and

3. a written statement, supported by all relevant documentation, of the reasons why the party believes consent should be granted.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1650 Unauthorized Participation of Convicted Individual

a) Upon a finding by the Director, without hearing on the matter, that a current or proposed officer, organization director, agent or employee of a savings bank operating under the Act has been convicted of any criminal offense involving dishonesty or a breach of trust, the Director shall Order that such person shall not participate in any manner, at the conduct of affairs at a savings bank operating under the Act.

b) The Order of the Director shall:

1. state the grounds for the Order;

2. recite the statutory basis for the Order;

3. include true copy of the final judgment of the conviction of the individual; and

4. be signed by the Director.

c) Notwithstanding subsection (a), the Director, upon prior request, may grant written consent to participate in a savings bank operated under the Act. A request must be made in writing to the Director. The decision of the Director is not reviewable.

d) Request for consent of the Director shall be made in writing to the Director. The request shall include:

1. a written statement of the consent that is requested;

2. a written statement of proposed participation in the conduct of affairs of an insured depository institution or financial services entity; and

3. a written statement, supported by all relevant documentation, of the reasons why the party believes consent should be granted.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1700 Acquisition of Control of Savings Bank

a) As used in this Section, the following definitions apply:

1. "Affiliate" means any company that controls, is controlled by, or is under common control with a person.

2. "Company" means a corporation, a partnership, an association, a joint stock company, a trust or an unincorporated organization.

3. "Control" means the ability of any person, entity, persons, or entities acting alone or in concert with one or more persons or entities, to own, hold, or direct with power to vote, or to hold proxies representing, 10% or more of the voting shares or rights of a savings bank, savings bank subsidiary, savings bank affiliate, or savings bank holding company, or the ability to achieve in any manner the election or appointment of a majority of the directors of a savings bank. This definition shall not apply to the voting of proxies obtained from depositors if the proxies are voted as directed by a majority of the board of directors of the savings bank or of a committee of organization directors when the committee's composition and powers may be revoked by a majority vote of the board of directors.

4. "Person" means an individual, a company or a group acting in concert.

5. "Associate", when used to indicate relationship with any person, means:

A) any corporation or organization (other than the applicant or a wholly owned subsidiary of the applicant) of which the person is an officer or partner or is, directly or indirectly, either alone or together with one or more members of his or her immediate family, the beneficial owner of 10% or more of any class of securities;

B) any trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity;

C) any relative or spouse of the person or any relative of the spouse, who has the same home as the person or who is an organization director or officer of the savings bank or a related entity; or

D) anyone who has an agreement, arrangement, or understanding, with the person, the purpose or effect of which is to enable the person to enter into and consummate any transaction described in subsection (m) on terms more advantageous than had the transaction been entered into or consummated by a person who was not a party to the agreement, arrangement, or understanding.

6. "Savings Bank Holding Company" means any company defined by Section 2001.35 of the Act.

b) It is unlawful for any person to acquire control of a savings bank or related entity unless acquired pursuant to this Section. Any acquisition of control in violation of this Section shall be ineffective and void.

c) Application to acquire control of a savings bank shall be made to the Director. The application shall be under oath or affirmation, and shall contain substantially all the following information, plus any additional information that the Director may prescribe as necessary or appropriate to protect depositors, borrowers, stockholders, creditors, or the public interest.

1. The identity and banking and business experience of each person by whom or on whose behalf the acquisition is to be made, including, but not limited to, his or her business activities and affiliations during the past 10 years, and a description of any pending legal or administrative proceedings in which he or she is a party and any criminal indictment or any conviction of such person by any state or federal court.

2. If not entirely described in subsection (c)(1), for each person by whom or on whose behalf the acquisition is to be made, any past (for the past 10 years), present or proposed affiliation with an insured depository institution, including, but not limited to, any past, present or proposed employment and all affiliation or connection of the kind described under the definition of "affiliated person of a savings bank or insured institution" as defined in this Section.

3. Financial Statements

A) A statement of the assets and liabilities, including contingent liabilities, of each person by whom or on whose behalf the acquisition is to be made, as of the end of the fiscal year for each of the 5 years immediately preceding the date of the notice, including statements of income and source and application of funds for each of the fiscal years then concluded, all prepared in accordance with generally accepted accounting principles consistently applied.

B) An interim statement of the assets and liabilities, including contingent liabilities, for each person by whom or on whose behalf the acquisition is to be made, including related statements of income and source and application of funds, as of a date not more than 90 days before the date of the filing of the notice.

4. The terms of the proposed acquisition and the manner in which the acquisition is to be made.

5. The identity, source and amount of the funds or other consideration used, or to be used, in making the acquisition. If any part of these funds or other consideration has been or is to be borrowed or otherwise obtained to make the acquisition, a description of the transaction, the names of the parties, and any arrangements, agreements, or understandings with those parties.

6. Any plans or proposals that any acquiring party may have to liquidate the bank, to sell its assets or merge it with any company or to make any other major change in its business or corporate structure or management.

7. The identity of any person employed, retained, or to be compensated by the acquiring party, or by any person on his or her behalf, to make solicitations or recommendations to stockholders to assist in the acquisition, and a brief description of the terms of the employment, retainer, or arrangement for compensation.

8. Copies of all invitations or tenders or advertisements making a tender offer to stockholders for purchase of their stock to be used in connection with the proposed acquisition.

9. In lieu of the application and information required by subsections (c)(1) through (8), the Director may accept a certified true and accurate copy of notice or application filed with the federal depository institution regulator for the purpose of gaining approval of the proposed change in control or acquisition transaction; provided that the federal application or notice is filed in compliance with the 60 day notice period prescribed by Section 8015 of the Act. Nothing in this subsection (c)(9) precludes the Director from requiring the applicant to file additional information as permitted by this Section.

d) When a person, other than an individual or corporation, is required to file an application under this Section, the Director may require that the information required by subsections (c)(1), (2), (3), and (7) be given with respect to each person, as defined in subsection (a)(3), who has an interest in or controls a person filing an application under this Section.

e) When a corporation is required to file an application under this Section, the Director may require that information required by subsections (c)(1), (2), (3), and (7) be given for the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of 25% or more of the outstanding voting securities of the corporation.

f) If any tender offer, request, or invitation for tenders or other agreements to acquire control is proposed to be made by a registration statement under the Securities Act of 1933 (15 USC 77a et seq.), or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934 (15 USC 78a et seq.), the registration statement or application may be filed with the Director instead of the requirements of this Section.

g) Any acquiring party shall deliver a copy of any notice or application required by this Section to the savings bank proposed to be acquired within 2 days after the notice or application is filed with the Director.

h) Any person who willfully or intentionally violates this Section is subject to Section 11006(1) of the Act. Each day's violation shall be considered a separate violation. This subsection in no way limits investigation, examination, prosecution, conviction, levying of fines, or any other legal action or remedy carried out pursuant to any other applicable state or federal law.

i) The Director may disapprove the acquisition of a savings bank after the filing of a complete application if:

1. The poor financial condition of any acquiring party may adversely affect the financial stability of the savings bank or may adversely affect the interest of depositors, borrowers, creditors, or stockholders;

2. The plan or proposal of the acquiring party to liquidate the savings bank, to sell its assets, to merge it with any person, or to make any other major change in its business, corporate structure, or management may adversely affect the financial stability of the savings bank, is not fair and reasonable to its depositors, borrowers, creditors, or stockholders or is not otherwise in the public interest;

3. Insufficient banking and business experience or a lack of competence or integrity of any acquiring party may adversely affect the savings bank or the savings bank's depositors, borrowers, creditors, or stockholders;

4. The information provided by the application is insufficient for the Director to determine whether the acquisition should be approved or the Director is unable to verify the information provided or to examine the qualifications of the acquiring party; or

5. The acquisition is not otherwise in the public interest.

j) The Director shall set forth the basis for disapproval of any proposed acquisition in writing and shall provide a copy of the findings and order to the applicants and to the bank involved. The findings and order shall not be disclosed to any other party and shall not be subject to public disclosure unless the findings or order are appealed and subject to hearing.

k) Whenever a change in control occurs, each party to the transaction shall report promptly to the Director any changes or replacement of its chief executive officer or of any organization director occurring in the next 12 month period, including in its report a statement of the past and current business and professional affiliations of the new chief executive officers or organization directors.

l) For a period of 10 years following the acquisition of control by any person, neither the acquiring party nor any associate or affiliate of the acquiring party or the acquired savings bank shall receive any loan or the use of any of the funds of, nor purchase, lease, or otherwise receive any property from, nor receive any consideration from the sale, lease, or any other conveyance of property to, any savings bank in which the acquiring party has control; except that:

1. the provisions of this subsection (l) shall not apply to transactions permitted under sections 22(g), 22(h), 23A or 23B of the Federal Reserve Act (12 USC 375a, 375b, 371c and 371c-1), or transactions with any person (including such person's affiliates and associates) after the person ceases to be in control of the savings bank, or ceases to be an affiliate or associate of a person in control of a savings bank; and

2. upon application by any acquiring party or associate or affiliate or affiliated person of a savings bank or insured institution subject to this subsection (l), the Director may approve a transaction between a savings bank and the acquiring party, person, or associate or affiliate or affiliated person of a savings bank or insured institution, upon finding that the terms of the transaction are at least as advantageous to the savings bank as the savings bank would obtain in a comparable transaction with any person that is not an acquiring party or an associate or affiliate of the acquiring party.

m) To enable any person to purchase any or all shares of its capital stock, no savings bank shall make a loan to, pledge or otherwise transfer any of its assets as security for a loan to such person or to any associate or affiliate or affiliated person of a savings bank or insured institution, or except as otherwise permitted in this subsection, pay any dividends to any such person or associate or affiliate or affiliated person of a savings bank or insured institution except upon a finding by the Director that such transactions are fair to stockholders, depositors, borrowers, and creditors and does not otherwise violate any provision of the Act. Nothing in this Section shall prohibit a dividend among shareholders in proportion to their shareholdings.

n) The accuracy and completeness of any information submitted by the applicants may be determined by the Director pursuant to the Director's examination authority.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1710 Anti-Takeover Provisions

a) With approval of the Director, a savings bank may amend its articles of incorporation with regard to the acquisition by any person or persons of its equity securities. The savings bank shall file with its application for approval an opinion, acceptable to the Director, of counsel independent from the savings bank that the proposed amendments would be permitted to be adopted by a corporation chartered by Illinois pursuant to the Business Corporation Act of 1983 [805 ILCS 5].

b) No amendments of a savings bank's articles of incorporation pursuant to subsection (a) may be made or approved by the Director if the savings bank's capital is below requirements established by the Director or by federal law or if the savings bank's most recent composite rating (CAMEL) is composite 4 or composite 5. This subsection shall not be construed to grant automatic approval of applications that do not fall within the restrictions of this subsection.

c) Other than specified in subsections (a) and (b), a savings bank shall amend its articles of incorporation in accordance with Section 7308-2 of the Act.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1800 Subpart Exclusive – Prohibition on Conversion Without Approval – Waiver of Requirements

This Subpart shall exclusively govern the conversion of mutual savings banks to capital stock savings banks. No mutual savings bank may convert to the capital stock form of organization without the prior written approval of the Director pursuant to this Subpart. Notwithstanding any provision of this Subpart, the Director may waive a requirement of this Subpart if:

a) waiver is required by applicable federal law or regulation;

b) waiver avoids, ameliorates, or corrects a condition enumerated in Section 10001 of the Act or serves a purpose enumerated in Section 10002 of the Act;

c) waiver is due to unforeseen circumstances that leave no other reasonable course of action that complies with the requirement and waiver is not injurious to the converting savings bank and not inequitable to its members; or

d) waiver permits the converting savings bank to convert to stock form under terms or conditions available to a state or federal savings association or under terms or conditions permitted by the deposit insurance corporation.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1805 Forms

The Director may prescribe under this Subpart forms for use by a mutual savings bank seeking to convert to a capital stock savings bank pursuant to this Subpart.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1810 Request of Noncompliance Requirements (repealed)

History

• Source: Repealed at 22 Ill. Reg. 6719, effective March 30, 1998

38 Ill. Adm. Code 1075.1815 Definitions

Terms defined in other Subparts of this Part, when used in this Subpart, shall have the meanings given in those definitions, to the extent those definitions are not inconsistent with the definitions contained in this Subpart unless the context otherwise requires. As used in this Subpart, the following definitions apply, unless the context otherwise requires:

"Acting in Concert" means knowing participation in a joint activity or interdependent conscious parallel action toward a common goal whether pursuant to an express agreement, or a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise; a person or company that acts in concert with another person or company (other party) shall also be considered to be acting in concert with any person or company who is also acting in concert with that other party, except that any employee stock benefit plan as defined in this Section will not be considered to be acting in concert with its trustee or a person who serves in a similar capacity solely to determine whether stock held by the trustee and stock held by the plan will be aggregated.

"Affiliate" means any company that controls, is controlled by, or is under common control with a person.

"Amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to shares of common or preferred stock, and the number of units if relating to any other kind of security.

"Applicant" is a mutual savings bank that has applied to convert pursuant to this Subpart.

"Broker" means any person engaged in the business of effecting transactions in securities for the account of others.

"Capital Stock" includes permanent stock, guaranty stock, permanent reserve stock, any similar certificate evidencing nonwithdrawable capital, preferred stock, or convertible preferred stock of a savings bank converted under this Subpart or of a subsidiary, institution or holding company.

"Charter" includes articles of incorporation, articles of reincorporation, and certificates of incorporation, as amended, effecting (either with or without filing with any governmental agency) the organization or creation of an incorporated person.

"Company" means a corporation, a partnership, an association, a joint stock company, a trust or an unincorporated organization.

"Control" is defined as it is defined in Section 1007.35 of the Act.

"Dealer" means any person who engages either for all or part of his or her time, directly or indirectly, as agent, broker, or principal, in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another person.

"Department" means the Department of Financial and Professional Regulation.

"Deposit Accounts" means any account defined as a deposit account at Section 7001 of the Act.

"Director" means the Director of the Department of Financial and Professional Regulation-Division of Banking.

"Division" means the Department of Financial and Professional Regulation-Division of Banking.

"Eligibility Record Date" means the record date for determining eligible account holders of a converting mutual savings bank.

"Eligible Account Holder" means any person holding a qualifying deposit as determined in accordance with Section 1075.1935.

"Employee" does not include an organization director or officer.

"Employee Stock Benefit Plan" means any defined benefit plan or defined contribution plan, such as an employee stock ownership plan, employee stock purchase plan, stock bonus plan, profit-sharing plan or other plan and its related trust.

"Equity Security" means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right.

"Market Maker" means a dealer who, with respect to a particular security:

regularly publishes bona fide, competitive bid and offer quotations in a recognized interdealer quotation system; or furnishes bona fide competitive bid and offer quotations on request; and

is ready, willing, and able to effect a transaction in reasonable quantities at his or her quoted prices with other brokers or dealers.

"Mutual Savings Bank" means a mutual savings bank organized and operating under the Act.

"Offer of Sale" shall include "offer", "offer to sell", or "offer of sale" and shall include every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value. These terms shall not include preliminary negotiations or agreements between an applicant and any underwriter or among underwriters who are or are to be in privity of contract with an applicant.

"Officer", for purposes of the purchase of stock in a conversion under this Subpart or the sale of this stock, means the chairman of the board, president, vice president, secretary, treasurer or principal financial officer, comptroller or principal accounting officer, and any other person performing similar functions with respect to any organization, whether incorporated or unincorporated.

"Organization Director" means any person defined as a director by Section 1007.55 of the Act.

"Person" means an individual, a company, or a government or political subdivision.

"Principal Underwriter" means an underwriter, as defined in this Section, in privity of contract with the applicant or other issuer of securities as to which that person is the underwriter.

"Proxy" includes every form of authorization by which a person is or may be designated to act for a stockholder in the exercise of his or her voting rights in the affairs of an institution. The authorization may take the form of failure to dissent or object.

"Purchase" or "Buy" includes every contract to purchase, buy, or otherwise acquire a security or interest in a security for value.

"Sale" or "Sell" includes every contract to sell or otherwise dispose of a security or interest in a security for value; but these terms do not include an exchange of securities in connection with a merger or acquisition approved by the Director.

"Security" includes any note, stock, treasury stock, bond, debenture, transferable share, investment contract, voting-trust certificate, or in general, any instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase any of the foregoing.

"Subsidiary" of a specified person is a company controlled by the person, directly or indirectly through one or more intermediaries.

"Supplemental Eligibility Record Date" means the supplemental record date for determining supplemental eligible account holders of a converting savings bank required by Section 1075.1845. The date shall be the last day of the calendar quarter preceding Director approval of the application for conversion.

"Supplemental Eligible Account Holder" means any person holding a qualifying deposit, as of the supplemental eligibility record date, excluding officers, organization directors and their associates, except as provided in Section 1075.1845.

"Underwriter" means any person who has purchased from an applicant with a view to, or offers or sells for the applicant in connection with, the distribution of any security, or participates or has a direct or indirect participation in the direct or indirect underwriting of any such undertaking; but the term does not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributor's or seller's commission.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1820 Prohibition on Approval of Certain Applications for Conversion

No application for conversion may be approved by the Director if:

a) The plan of conversion adopted by the applicant's board of directors is not in accordance with this Subpart;

b) The conversion reasonably could be expected to result in a reduction of the applicant's capital below requirements established by the Director and by Federal law;

c) The conversion may result in a taxable reorganization of the applicant under the United States Internal Revenue Code of 1986 (26 USC 1 et seq.), and the Director upon a written finding determines that the reorganization will endanger the safety and soundness of the converting savings bank;

d) The converted savings bank does not secure insurance of its deposit accounts backed by the full faith and credit of the United States government before commencing business; or

e) Where a holding company is contemplated, the holding company will not be either a bank holding company registered with the Federal Reserve Board under the Bank Holding Company Act (12 USC 1841 et seq.) or a savings and loan holding company registered with the Office of Thrift Supervision under the Home Owners' Loan Act (12 USC 1461 et seq.).

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1825 Requirements of Plan of Conversion

The plan of conversion shall contain all the provisions set forth in Sections 1075.1830 through 1075.1905.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1830 Issuance of Capital Stock – Price

A converted savings bank shall issue and sell capital stock at a total price at least equal to the estimated pro forma market value of the stock issued in connection with the conversion, based on an independent valuation, as provided in Section 1075.2070.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1835 Stock Purchase Subscription Rights – Eligible Account Holders

a) Each eligible account holder shall receive, without payment, nontransferable subscription rights to purchase capital stock in an amount ranging from .1% to 5% of the total offering, with each receiving subscription rights to the same percentage of capital stock, or in an amount that reflects a proportioned amount that is based on the amount of the eligible account holder's qualifying deposit relative to the total amount of qualifying deposits. The allocation of subscription rights to purchase shares of capital stock under this subsection shall not give the organization directors in the aggregate subscriptions equal to more than 20% of the total offering.

b) When a conversion plan is effected pursuant to Section 1075.2170, the total number of shares refers to that number of shares not sold to the acquiror or acquirors designated in the plan.

c) Allotment

1. If the allotment made in this Section results in an oversubscription, the plan of conversion may provide that shares be allocated first to organization directors, officers and employees who have been account holders for the entire 5 years before the conversion. However, the Director may waive the 5 year requirement for an individual upon a written finding that the individual who has not been a 5 year account holder participated in and greatly contributed to rehabilitating the savings bank or that the waiver is necessary to maintain the savings bank's independent ownership. Any shares not allocated to the organization directors, officers and employees shall be allocated among other subscribing eligible account holders on an equitable basis, related to the amounts of their qualifying deposits, as may be provided in the plan of conversion.

2. For the purposes of shares allocated pursuant to subsection (c)(1), organization directors may be allocated additional shares in the same manner as other eligible account holders.

d) If the allotment in this Section results in an undersubscription, the plan of conversion may provide that the directors, officers and employees of the savings bank who are eligible account holders receive, without payment, nontransferable subscription rights to purchase unallocated shares of capital stock. The subscription rights shall be allocated among organization directors, officers and employees on an equitable basis such as by giving weight to period of service, compensation, or position.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1840 Stock Purchase Subscription Rights – Received by Officers, Organization Directors, and Their Associates – Subordination

Nontransferable subscription rights to purchase capital stock received by officers and organization directors and affiliated persons of the converting savings bank based on their increased deposits in the converting savings bank in the one-year period preceding the eligibility record date shall be subordinated to all other subscriptions involving the exercise of nontransferable subscription rights to purchase shares pursuant to Section 1075.1835.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1845 Supplemental Share Purchase Subscription Rights – Supplemental Eligible Account Holder – Conditions

a) In plans with an eligibility record date that is more than 15 months before the date of the latest amendment to the application for conversion filed before the Director's approval, a supplemental eligibility record date shall be determined in which each supplemental eligible account holder of the converting savings bank shall receive, without payment, nontransferable subscription rights to purchase shares in an amount ranging from .1% to 5% of the total offering, with each receiving subscription rights to the same percentage of capital stock, or in an amount that is based on a proportioned amount that is based on the amount of the eligible account holder's qualifying deposit relative to the total amount of qualifying deposits in the converting savings bank on the supplemental eligibility record date. When a conversion plan is effected pursuant to Section 1075.2170, the total number of shares refers to that number of shares not sold to the acquiror or acquirors designated in the plan.

b) Subscription rights received pursuant to this Section shall be subordinated to all rights received by eligible account holders to purchase shares pursuant to Sections 1075.1835 and 1075.1840.

c) Any nontransferable subscription rights to purchase shares received by an eligible account holder in accordance with Sections 1075.1835 and 1075.1840 shall be applied in partial satisfaction of the subscription rights to be distributed pursuant to this Section.

d) In the event of an oversubscription for supplemental shares pursuant to this Section, shares shall be allocated among the subscribing supplemental eligible account holders on such equitable basis, related to the amounts of their respective qualifying deposits, as may be provided in the plan of conversion.

e) An organization director or officer of the converting savings bank shall be entitled to subscription rights as a supplemental eligible account holder only if:

1. the person is not also an eligible account holder entitled to subscription rights under Section 1075.1835; and

2. the person became a director or officer of the converting savings bank after the eligibility record date established under Section 1075.1875.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1850 Voting Members Who Are Not Eligible Account Holders

a) Voting members who are not either eligible account holders or supplemental eligible account holders may receive, without payment, nontransferable subscription rights to purchase capital stock in an amount equal to the greater of the maximum purchase limitation established for the public offering or direct community offering, or one-tenth of one percent of the total offering of shares.

1. Subscription rights received pursuant to this Section shall be subordinated to all rights received by employee stock benefit plans, eligible account holders and supplemental account holders to purchase shares pursuant to Sections 1075.1835, 1075.1840, and 1075.1845.

2. In the event of an oversubscription to capital stock pursuant to this Section, shares shall be allocated among the subscribing voting members on such equitable basis as may be provided in the plan of conversion.

b) When a conversion plan is effected pursuant to Section 1075.2170, the total number of shares refers to that number of shares not sold to the acquiror or acquirors designated in the plan.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1855 Sale of Shares Not Sold in Subscription Offering – Methods – Conditions

Any shares of the converting savings bank not sold in the subscription offering shall either be sold in a public offering through an underwriter or directly by the converting savings bank in a direct community marketing, subject to the applicant demonstrating to the Director the feasibility of the method of sale and to such conditions as may be provided in the plan of conversion. The conditions shall include, but not be limited to, the following.

a) A condition that any direct community offering by the converting savings bank shall give a preference to natural persons residing in the counties in which the savings bank has an office. The methods by which preference shall be given shall be approved by the Director.

b) A condition requiring the stock to be offered and sold in the public offering or the direct community offering, to be offered and sold in a manner that will achieve the widest distribution of the stock.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1860 Uniform Sales Price of Shares Required – Application to Specify Arrangements on Sale of Shares Not Sold in Subscription Offering

a) The sales price of the shares of capital stock to be sold in the conversion shall be a uniform price determined in accordance with Sections 1075.2055, 1075.2070, and 1075.2090. The applicant shall specify in its conversion application the underwriting and other marketing arrangements to be made to assure the sale of all shares not sold in the subscription offering.

b) In a conversion of a mutual savings bank that is in the process of acquisition by a depository institution holding company or in the process of merger or consolidation with a depository institution, the pricing requirements of subsection (a) may be waived by the Director with respect to sales of shares of capital stock during the subscription offering to persons entitled to subscription rights under Sections 1075.1835, 1075.1845, 1075,1850, 1075.1910 and 1075.1925(b) and (c). Waiver shall be granted only upon a written finding by the Director that the provision is not inequitable to members and would not injure the converting savings bank and, in the case of a waiver for sales to employee stock benefit plans or management recognition plans under Section 1075.1910, only if employees of the converting savings bank are, or upon consummation of the acquisition, merger or consolidation, will be, eligible to participate in those plans. The finding of the Director shall include grounds as to why the provision is not inequitable or injurious.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1865 Savings Account Holder to Receive Withdrawable Savings Accounts – Amount

Each deposit account holder of the converting savings bank shall receive, without payment, a deposit account or accounts in the converted savings bank equal in amount, rate of return and general terms, to the withdrawable account holder's deposit account or accounts in the pre-conversion mutual savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1870 Liquidation Account – Establishment and Maintenance Required

A converting savings bank shall establish and maintain a liquidation account for the benefit of eligible account holders and supplemental eligible account holders in the event of a subsequent complete liquidation of the converted savings bank, in accordance with Sections 1075.1940 through 1075.1960.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1875 Establishment of Eligibility Record Date Required

The applicant shall establish an eligibility record date, which shall not be less than 90 days before the date of adoption of the plan by the converting savings bank's board of directors.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1880 Voting Rights

Stockholders of the converted savings bank shall have exclusive voting rights as prescribed in Section 4005 of The Act.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1885 Amendment and Termination of Plan of Conversion

The plan of conversion adopted by the applicant's board of directors may be amended or withdrawn by the board of directors at any time before final approval of the Director and solicitation of proxies from the applicant's members to vote on the plan, provided that no such amendment or withdrawal shall be effective unless the Director is notified of the amendment or withdrawal and the Director acknowledges receipt of notification. The plan of conversion adopted by the applicant's board of directors may be amended or withdrawn by the board of directors after final approval of the Director and solicitation of proxies from the applicant's members to vote on the plan only with the approval of the Director.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1890 Restriction on Sale of Shares of Stock by Organization Directors and Officers

a) All shares of capital stock purchased by organization directors on original issue in the conversion either directly from the savings bank (by subscription or otherwise) or from an underwriter of the shares shall be subject to the restriction that the shares shall not be sold for a period ranging from one year to 5 years following the date of purchase, except in the event of death of the organization director. Within the one-to-5 year range, the length of the restriction shall be determined by the savings bank.

b) Notwithstanding the sales restriction of subsection (a), after an organization director has owned such capital stock purchased on original issuance for a period of not less than one year from the date of purchase, an organization director may request the Director's permission to sell the stock. The Director may grant permission to sell the stock upon a written finding that:

1. the sale would substantially contribute to averting otherwise unavoidable injury to the savings bank; or

2. due to a change in the organization director's financial or personal circumstances that was unforeseen at the time of purchase of the stock, disallowing the sale would result in substantial, imminent and otherwise unavoidable hardship.

c) All shares of capital stock purchased by officers on original issue in the conversion either directly from the savings bank (by subscription or otherwise) or from an underwriter of the shares shall be subject to the restriction that the shares shall not be sold for a period of not less than one year following the date of purchase, except in the event of death of the officer.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1895 Conditions on Shares of Stock Subject to Restriction on Sale

In connection with shares of capital stock subject to restriction on sale:

a) each certificate for the stock shall bear a legend giving appropriate notice of the restriction;

b) appropriate instructions shall be issued to the transfer agent for the capital stock with respect to applicable restrictions on transfer of any such restricted stock; and

c) any shares issued as a stock dividend, stock split, or otherwise with respect to any such restricted stock shall be subject to the same restrictions as may apply to the restricted stock.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1900 Registration of Securities – Marketing of Securities – Listing of Shares on Securities Exchange or Nasdaq Quotation System

A converted savings bank or savings bank holding company shall:

a) promptly register securities issued in its conversion pursuant to the Securities and Exchange Act of 1934 (15 USC 78a et seq.) and undertake not to deregister the securities for a period of 3 years thereafter;

b) use its best efforts to encourage and assist a market maker to establish and maintain a market for the securities issued in connection with the conversion; and

c) use its best efforts to list those shares issued in connection with the conversion on a national or regional securities exchange or on the National Association of Securities Dealers Automated Quotations (NASDAQ) system.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1905 Reasonable Expenses Required

The expenses incurred in the conversion shall be reasonable.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1910 Employee Stock Benefit Plan – Priority.

a) Employee stock benefit plans in the aggregate have priority to purchase up to 15 percent of the total offering of shares of capital stock before eligible and supplemental eligible account holders and voting members who have subscription rights.

b) In addition to the subscription rights of employee stock benefit plans under subsection (a), management recognition plans and benefit income plans in the aggregate have priority to purchase up to 5% of the total offering of shares of capital stock before eligible and supplemental eligible account holders and voting members who have subscription rights.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1915 Employee Stock Benefit Plan – Contributions

Scheduled discretionary contributions to an employee stock benefit plan may be made if the contributions do not cause the savings bank to fail to meet capital requirements established by the Director or by federal law.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1920 Plan of Conversion – Prohibited Provisions

a) The plan of conversion shall contain no provision that the Director determines to be inequitable or detrimental to the applicant, its account holders, or other savings banks or to be contrary to the public interest.

b) Except for loans to eligible account holders and supplemental eligible account holders that are fully secured by certificates of deposit with the converting savings bank of the account holders, the plan of conversion shall contain no provision that permits or requires the applicant to extend credit of any kind in any way or to distribute assets of any kind in any way to any person or entity to purchase the applicant's capital stock before or during the conversion.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1925 Optional Provisions in Plan of Conversion

The plan of conversion may provide any or all the following:

a) That the converting savings bank may begin the direct community offering or the public offering, or both, concurrently with or at any time during the subscription offering. The subscription offering may begin concurrently with or at any time after the mailing to savings bank members, pursuant to Section 1075.2040(b), of the proxy statement authorized for use by the Director. The subscription offering may be closed before the meeting of the savings bank members held to vote on the plan of conversion only if the offer and the sale of the capital stock shall be conditioned upon the approval of the plan of conversion by the savings bank members as provided in Section 1075.2040.

b) That the directors, officers and employees of the converting savings bank shall receive, without payment, non-transferable subscription rights to purchase shares of capital stock that are available after satisfying the subscriptions provided for under Sections 1075.1835, 1075.1845, 1075.1855 and 1075.1910, subject to such conditions as may be provided in the plan of conversion. In the event of an oversubscription by organization directors, officers and employees, the shares available shall be allocated among the subscribing organization directors, officers and employees on an equitable basis, such as by giving weight to period of service, compensation or position.

c) That any account holder receiving rights to purchase stock in the subscription offering shall also receive, without payment, non-transferable subscription rights to purchase up to 1% of the total offering of shares of capital stock, to the extent that the shares are available after satisfying the subscriptions provided for under subsection (b) and Sections 1075.1835, 1075.1845, 1075.1850 and 1075.1910, subject to such conditions as may be provided in the plan of conversion. In the event of an oversubscription for additional shares, the shares available shall be allocated among the subscribing eligible account holders, supplemental eligible account holders and voting members on an equitable basis, related to the amounts of their respective subscriptions, as may be provided in the plan of conversion.

d) That the converting savings bank may require savings bank members to return by a reasonable date certain a postage-paid written communication provided by the converting savings bank requesting receipt of a subscription offering circular, or a preliminary or final offering circular in an offering pursuant to subsection (h), in order to be entitled to receive an offering circular from the converting savings bank. The subscription offering or the offering pursuant to subsection (h) shall not be closed until the expiration of 30 days after the mailing by the converting savings bank to bank members of the postage-paid written communication. If the subscription offering or the offering pursuant to subsection (h) is not started within 45 days after the meeting of savings bank members, the converting savings bank that has adopted this optional provision shall transmit no more than 30 days before the start of the subscription offering or the offering pursuant to subsection (h) to each savings bank member who has been furnished with proxy soliciting materials, written notice of the start of the offering, which notice shall state that the converting savings bank is not required to furnish an offering circular to a savings bank member unless the savings bank member returns by a reasonable date certain the postage-paid written communication provided by the converting savings bank requesting receipt of an offering circular.

e) That the converting savings bank may require eligible account holders and supplemental eligible account holders who are not voting members to return by a reasonable date certain a postage-paid written communication provided by the converting savings bank requesting the receipt of a subscription offering circular, or a preliminary or final offering circular in an offering pursuant to subsection (i), in order to be entitled to receive an offering circular from the converting savings bank. The subscription offering or the offering pursuant to subsection (i) shall not be closed until the expiration of 30 days after the mailing by the converting savings bank to the non-voting eligible account holders and supplemental eligible account holders of the postage-paid written communication. If the subscription offering or the offering pursuant to subsection (i) is not started within 45 days after the meeting of savings bank members, the converting savings bank that has adopted this optional provision shall transmit no more than 30 days before the start of the subscription offering or the offering pursuant to subsection (i) written notice of the start of the offering, which notice shall state that the converting savings bank is not required to furnish an offering circular to a non-voting eligible account holder or supplemental eligible account holder unless the eligible account holder or supplemental eligible account holder returns by a reasonable date certain the postage-paid written communications provided by the converting savings bank requesting receipt of an offering circular.

f) That any shares of the converting savings bank not sold in the subscription offering or in a public offering referred to in Section 1075.1855 may be sold in another manner provided in the plan with the Director's approval.

g) That the converted savings bank shall issue and sell, instead of shares of its capital stock, units of securities consisting of capital stock and warrants or other equity securities, in which event any reference in this Subpart to capital stock shall apply to the units of equity securities unless the context otherwise requires.

h) That, instead of a separate subscription offering, all subscription rights issued in connection with the conversion shall be exercisable by delivery of properly completed and executed order form to the underwriters or selling group for the public offering or pursuant to any other procedure, subject to the applicant demonstrating to the Director the feasibility of the method of exercising those rights and to conditions provided in the plan of conversion. The conditions shall include, but not be limited to, requiring that orders for stock in the public offering or direct community offering shall first be filled, in the order of priority set forth in this Subpart by orders of persons exercising subscription rights.

i) Any person exercising subscription rights to purchase capital stock may be required to purchase a minimum number of shares to the extent the shares are available, but the aggregate price for any minimum share purchase requirement shall not exceed $500.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1930 Approval of Other Provisions

The Director may approve other provisions upon a written finding that the provision is not inequitable to members and will not injure the converting savings bank. The written findings shall include grounds as to why the provision is not inequitable or injurious.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1935 Amount of Qualifying Deposit of Eligible Account Holder or Supplemental Eligible Account Holder

a) Unless otherwise provided in the plan of conversion, the amount of the qualifying deposit of an eligible account holder or supplemental eligible account holder shall be the total of the deposit balances in the eligible account holder's or supplemental eligible account holder's deposit accounts in the converting savings bank as of the close of business on the eligibility record date or supplemental eligibility record date. However, the plan of conversion may provide that any deposit accounts with total deposit balances of less than $1000 (or any lesser amount) shall not constitute a qualifying deposit.

b) As used in this Section, the term "deposit account" includes a predecessor or successor account of a given savings account which is held only in the same right and capacity and on the same terms as the given deposit account. However, the plan of conversion may provide for lesser requirements for determining predecessor or successor accounts.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1940 Liquidation Account – Establishment Required – Amount – Function

Each converted savings bank shall, at the time of conversion, establish a liquidation account in an amount equal to the amount of net worth of the converting savings bank as of the latest practicable date before conversion. For purposes of this Section, the savings bank, in the final offering circular, shall use the net worth figure stated in its most recent audited statement of financial condition, prepared according to Generally Accepted Accounting Principles ("Accounting Standards Current Text General Standards", June 1, 1992, no subsequent dates or editions. Financial Accounting Standards Board, 401 Merritt 7, P. O. Box 5116, Norwalk, CT 06856-5116). The function of the liquidation account is to establish a priority to be followed on liquidation and, except as provided in Section 1075.1970, the existence of the liquidation account shall not operate to restrict the use or application of any of the capital accounts of the converted savings bank.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1945 Liquidation Account – Maintenance Required – Subaccounts

The liquidation account shall be maintained by the converted savings bank for the benefit of eligible account holders and supplemental eligible account holders who maintain their savings accounts in the bank. Each such eligible account holder and supplemental eligible account holder shall, with respect to each savings account, have a related inchoate interest in a portion of the liquidation account balance ("subaccount").

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1950 Liquidation Account – Distribution Upon Complete Liquidation

In the event of a complete liquidation of the converted savings bank (and only in this event), each eligible account holder and supplemental eligible account holder shall be entitled to receive a liquidation distribution from the liquidation account, in the amount of the then current adjusted subaccount balances for savings accounts then held, before any liquidation distribution may be made with respect to capital stock. No merger, consolidation, purchase of bulk assets with assumption of savings accounts and other liabilities, or similar transaction, in which the converted savings bank is not the survivor, is considered to be a complete liquidation for this purpose. In these transactions, the liquidation account shall be assumed by the surviving institution.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1955 Liquidation Account – Determination of Subaccount Balances

The initial subaccount balance for a savings account held by an eligible account holder or supplemental eligible account holder shall be determined by multiplying the opening balance in the liquidation account by a fraction of which the numerator is the amount of qualifying deposits in the savings account on the eligibility record date or the supplemental eligibility record date and the denominator is the total amount of qualifying deposits of all eligible account holders and supplemental eligible account holders in the converting savings bank on these dates. For savings accounts in existence at both dates, separate subaccounts shall be determined on the basis of the qualifying deposits in these savings accounts on these record dates. The initial subaccount balances shall not be increased, and it shall be subject to downward adjustment as provided in Section 1075.1960.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1960 Reduction of Subaccount Balance

If the deposit balance in any deposit account of an eligible account holder or supplemental eligible account holder at the close of business on any annual closing date subsequent to the respective record dates is less than the lesser of:

a) the deposit balance in the deposit account at the close of business on any other annual closing date subsequent to the eligibility record date; or

b) the amount of qualifying deposit as of the eligibility record date or the supplemental eligibility record date, the subaccount balance for the deposit account shall be adjusted by reducing the subaccount balance in an amount proportionate to the reduction in the deposit balance. In the event of such a downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit balance of the related deposit account. If any such deposit account is closed, the related subaccount balance shall be reduced to zero.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1965 Converted Savings Bank Prohibited from Repurchasing Its Stock Without Approval

A converted savings bank shall not, for a period of one year from the date of the completion of the conversion, repurchase any of its capital stock, except that capital stock repurchases of no greater than 5% of the capital stock issued in the conversion may be repurchased during this one-year period if the Director finds that:

a) the repurchase would not adversely affect the financial condition of the savings bank;

b) the repurchase would not reduce the savings bank's capital below requirements established by the Director or federal law;

c) the repurchase would be equitable to shareholders;

d) the repurchase would be undertaken for legitimate business reason; and

e) the information submitted by the savings bank is sufficient upon which to base the findings required by this Section.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1970 Limitation on Cash Dividends

No converted savings bank may declare or pay a cash dividend on, or repurchase any of, its capital stock unless the declaration or payment repurchase dividend or repurchase would be in accordance with the requirements of Section 5001(c) of the Act and would not reduce the capital of the converted savings bank below the greatest of:

a) the amount required for the liquidation account;

b) the amount required by the Director; or

c) the amount required by federal law.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1975 Dividends on Preferred Stock

A converted mutual savings bank may pay dividends on preferred stock at the rate or rates agreed in connection with the issuance of preferred stock, if such issuance has been approved by the Director. However, the Director shall approve no issuance or payment that would reduce the capital of the converted savings bank below the greatest of:

a) the amount required for the liquidation account,

b) the amount required by the Director, or

c) the amount required by federal law.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1980 Prohibitions on Offer, Sale, or Purchase of Securities

a) In the offer, sale, or purchase of securities issued incident to its conversion, no savings bank or any organization director, officer, attorney, agent, or employee thereof may:

1. employ any device, scheme or artifice to defraud;

2. obtain money or property by any untrue statement of a material fact or any omission to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading; or

3. engage in any act, transaction, practice, or course of business that operates or would operate as a fraud or deceit upon a purchaser or seller.

b) In addition, any act that the U.S. Securities Exchange Commission finds violates section 10 of the Securities Exchange Act of 1934 (15 USC 78j) or Rule 10b-5, as promulgated by the U.S. Securities Exchange Act of 1934 (17 CFR 240.10b-5) shall be considered a violation of this Section. A violation found by the Securities Exchange Commission includes, regardless of pending of appeal, any violation found by the Commission, any violation admitted within a plea agreement or in a plea of nolo contendere, any violation proved or admitted with respect to an unindicted co-conspirator, any conviction for violation of the Securities Exchange Act of 1934 (15 USC 78j) or Rule (17 CFR 240.10b-5), as promulgated by the U.S. Securities Exchange Commission, and any violation found by any body of competent jurisdiction of the Securities Exchange Act of 1934 (15 USC 78); or Rule (17 CFR 240.10b-5), as promulgated by the U.S. Securities Exchange Commission.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1985 Acquisitions of Control of a Converted Savings Bank

Acquisition of control of a converted savings bank shall be ineffective and void unless in accordance with Section 8015 of The Act and Section 1075.1700.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.1990 Articles of Incorporation – Restrictions Permitted

a) A converting savings bank's articles of incorporation may include the following provision:

1. Certain Provisions Applicable for 5 Years. Notwithstanding anything contained in the savings bank's charter article, articles of incorporation, or bylaws to the contrary, for a period of (specify number of years up to 5) years from the date of completion of the conversion of the savings bank from mutual to stock form, the following provisions shall apply:

A) Beneficial Ownership Limitation. Except for sales of stock required by the federal insurer of accounts or the Director, no person shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of an equity security of the savings bank. This limitation shall not apply to a transaction in which the savings bank forms a holding company without change in the respective beneficial ownership interests of its stockholders other than pursuant to the exercise of any dissenter and appraisal rights, the purchase of shares by underwriters in connection with a public offering, or the purchase of shares by a employee stock benefit plan. In the event shares are acquired in violation of this Section, all shares beneficially owned by any person in excess of 10% shall be considered "excess shares" and shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in connection with any matters submitted to the stockholders for a vote. For purposes of this provision, the following definitions apply: the term "person" includes an individual, a group acting in concert, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed to acquire, hold or dispose of the equity securities of the savings bank; the term "offer" includes every offer to buy or otherwise acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value; the term "acquire" includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise; and the term "acting in concert" means knowing participation in a joint activity or conscious parallel action towards a common goal whether pursuant to an express agreement, or a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangements, whether written or otherwise.

B) Cumulative Voting Limitation. Stockholders shall not be permitted to cumulate their votes for election of organization directors.

C) Call for Special Meetings. Special meetings of stockholders relating to changes in control of the association or amendments to its charter shall be called only upon direction of the board of directors.

2. If the savings bank chooses to include the provisions allowed pursuant to this subsection (a), the language in subsection (a)(1) constitutes the exact language that shall be used in the savings bank's articles of incorporation, except that in the subsection (a)(1), a number of years, up to 5 years, shall be substituted for the language, "(specify number of years up to 5)".

b) There may also be included in the articles of incorporation any provision that could be approved as an amendment pursuant to Section 1075.1710. Such provisions must be approved by the Director. Application for such approval must include independent counsel's opinion that the proposed provision would be permitted to be adopted in a corporation chartered by Illinois pursuant to the Business Corporation Act of 1983.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.1995 Confidentiality of Consideration to Convert – Remedial Measures for Breach

A savings bank that is considering converting pursuant to this Subpart and its organization directors, officers, and employees shall keep this consideration in the strictest confidence and shall only discuss the potential conversion as would be consistent with the need to prepare information for filing an application for conversion. Should this confidence be breached, the Director may require remedial measures including:

a) a public statement by the savings bank that its board of directors is currently considering converting pursuant to this Subpart;

b) providing for an eligibility record date that shall be a date before the adoption of the plan by the converting savings bank's board of directors as to assure that the conversion is equitable;

c) limitation of the subscription rights of any person violating or aiding the violation of this Section; and

d) any other actions the Director may consider appropriate and necessary to assure the fairness and equitability of the conversion.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2000 Public Statement Authorized

If it should become essential as a result of rumors before the adoption of a plan of conversion by the applicant's board of directors, a public statement limited to that purpose may be made by the applicant.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2005 Adoption of Plan of Conversion – Notice to and Inspection by Account Holders – Statement and Letter – Press Release Authorized

a) Promptly after the adoption of a plan of conversion by not less than two-thirds of its board of directors, the savings bank shall:

1. Notify, its account holders of the action by publishing a statement in a newspaper having general circulation in each community in which an office of the savings bank is located or by mailing a letter to each of its account holders; and

2. Have copies of the adopted plan of conversion available for inspection by its account holders at each office of the savings bank.

b) The savings bank may also issue a press release with respect to the action. Copies of the proposed statement, letter, and press release are not required to be filed with the Director but may be submitted to the Director for comment. Copies of the definitive statement, letter, and press release shall be filed with the Director as part of the application for conversion.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2010 Statement, Letter and Press Release – Content Permitted

The statement, letter, and press release of the applicant issued pursuant to Section 1075.2005, unless otherwise authorized by the Director, shall contain only (but need not contain all of) the following:

a) A statement that the board of directors has adopted a plan to convert the savings bank from a mutual savings bank to a capital stock savings bank;

b) A statement that the plan of conversion is subject to approval by the Director and by the appropriate federal regulatory authority or authorities (naming such an authority or authorities) before the plan can become effective and that account holders of the applicant will have an opportunity to file written comments including objections and materials supporting the objections with the Director;

c) A statement that the plan of conversion is contingent upon obtaining favorable tax rulings from the Internal Revenue Service or an appropriate tax opinion;

d) A statement that there is no assurance that the approval of the Director or the approval of any appropriate federal authority or authorities will be obtained, and also no assurance that the favorable tax rulings or tax opinion will be received;

e) The proposed record date for determining the eligible account holders entitled to receive nontransferable subscription rights to purchase capital stock of the applicant;

f) A brief statement describing the circumstances that would require supplemental eligible account holders to receive nontransferable subscription rights to purchase capital stock of the applicant;

g) A brief description of the plan of conversion;

h) The par value and approximate number of shares of capital stock to be issued and sold under the plan of conversion;

i) A brief statement as to the extent to which organization directors, officers, and employees will participate in the conversion;

j) A statement that savings account holders will continue to hold accounts in the converted savings bank identical as to dollar amount, rate of return, and general terms and that their accounts will continue to be insured by the Federal Deposit Insurance Corporation;

k) A statement that borrowers' loans will be unaffected by conversion and that the amount, rate, maturity, security, and other conditions will remain contractually fixed as they existed before conversion;

l) A statement that the normal business of the savings bank in accepting savings and making loans will continue without interruption; that the converted savings bank will continue after conversion to conduct its present services to savings account holders and borrowers under current policies to be carried on in existing offices and by the present management and staff;

m) A statement that the plan of conversion may be substantively amended or ended by the board of directors with the concurrence of the Director; and

n) A statement that questions of account holders may be answered by telephoning or writing to the savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2015 Statement, Letter and Press Release – Contents Prohibited – Inquiries

The statement, letter, and press release of the applicant issued pursuant to Section 1075.2005 shall not include financial statements or describe the benefits of conversion or the value of the capital stock of the savings bank upon conversion. In replying to inquiries, the savings bank should limit its answers to the matters listed in Section 1075.2010.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2020 Notices of Filing of Application – Requests for Subscription Offering Circular

a) Upon determination that an application for conversion is properly executed and is not materially incomplete, the Director shall advise the applicant, in writing, to publish notices of the filing of the application. Promptly after receipt of the advice, the applicant shall prominently post the notice in each of its offices and publish a notice of the filing in a newspaper printed in the English language and having general circulation in each community in which an office of the applicant is located.

b) The first notice shall be entitled: "Notice of Filing of an Application for Approval to Convert to a Stock Savings Bank".

c) The first paragraph under the title shall read as follows:

"Notice is hereby given that, pursuant to 38 Ill. Adm. Code 1075.2020, (fill in name of applicant), has filed an application with the Director of Banking for approval to convert to the stock form of organization. Copies of the application have been delivered to the Division of Banking in Chicago and Springfield, Illinois."

d) The second paragraph under the title shall read as follows:

"Written comments, including objections to the plan of conversion and materials supporting the objections, from any account holder of the applicant or aggrieved person, will be considered by the Director if filed within 20 business days after the date of this notice. Failure to make written comments in objection may preclude the pursuit of any administrative or judicial remedies. Three copies of the comments should be sent to the aforementioned. The proposed plan of conversion and any comments thereon will be available for inspection by any account holder of the applicant at the Division of Banking in Chicago and Springfield, Illinois. A copy of the plan may also be inspected at each office of the applicant.

e) If a significant number of the applicant's account holders speak a language other than English and a newspaper in that language is published in the area served by the applicant, an appropriate translation of the notice shall also be published in that newspaper. A copy of the notice may be sent by mail to the converting savings bank's depositors with a statement that the converting institution will not mail a subscription offering circular to an eligible account holder or a supplemental eligible account holder unless the eligible account holder or the supplemental eligible account holder, before the beginning of the subscription offering, requests the subscription offering circular by returning a postcard. The issuer of stock in the conversion shall pay the postage of this postcard and shall inform the eligible account holder or supplemental eligible holder that the postage is paid.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2025 Filing of Notice and Affidavit of Publication Required

Promptly after publication of the notices prescribed in Section 1075.2020 in this Part, the applicant shall file with the Director the notice and affidavit of publication from each newspaper publisher in the manner the Director shall require.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2030 Application Available for Public Inspection – Confidential Information

Should the applicant desire to submit any information it considers to be of a confidential nature regarding any portion of the application under this Subpart, such information may be submitted pursuant to Section 1075.2220(k).

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2035 Solicitation of Proxies; Proxy Statements

a) Solicitations to which this Section applies – this Section applies to every solicitation of a proxy from a member of a savings bank for the meeting at which a plan of conversion will be voted upon, except the following:

1. any solicitation made otherwise than on behalf of the management of the savings bank where the total number of persons solicited is not more than 50;

2. any solicitation through the medium of a newspaper advertisement which informs members, following approval of the plan of conversion, of a source from which they may obtain copies of a proxy statement, form of proxy, or any other solicitation material and does no more than;

A) name the savings bank,

B) state the reason for the advertisement,

C) identify the proposal or proposals to be acted upon by members, and

D) urge members to vote at the meeting.

b) Use of Proxy Soliciting Material To Be Authorized – no proxy solicitation material required to be filed with the Director before use shall be furnished to members or otherwise released for distribution until the use of that material has been authorized in writing by the Director. Proxy material authorized for use by the Director shall be mailed to the members within 10 days after such authorization unless extended by the Director in writing upon a showing that adherence to the 10 day rule would work a hardship upon the savings bank and that the delay, if approved, would not be disadvantageous to any interested party.

c) Information To Be Furnished Members – no solicitation shall be made unless each person solicited is concurrently furnished, or has previously been furnished, a written proxy statement the use of which has been authorized in writing by the Director.

d) Requirements As To Proxy:

1. The form of proxy shall:

A) indicate in bold face type whether the proxy is solicited on behalf of management;

B) provide specifically designated blank spaces for dating and signing the proxy;

C) identify clearly and impartially each matter or group of related matters intended to be acted upon;

D) be clearly labeled "Revocable Proxy" in bold face type of at least 18 point;

E) describe any charter or state law requirement restricting or conditioning voting by proxy;

F) contain an acknowledgement by the person giving the proxy that the person has received a proxy statement before signing the form of proxy;

G) contain the date, time, and place of meeting, if practicable;

H) provide, by a box or otherwise, a means whereby the person solicited is afforded an opportunity to specify by ballot a choice between approval or disapproval of each matter intended to be acted upon; and

I) indicate in bold face type how the proxy shall be voted on each such matter if no choice is specified.

2. No proxy obtained pursuant to the conversion shall confer authority to vote at any meeting other than the meeting, or any adjournment of the meeting, to vote on the plan of conversion. A proxy may be considered to confer authority to vote with respect to matters incident to the conduct of the meeting. If the plan of conversion is considered at an annual meeting, existing proxies may be voted with respect to matters not related to the plan of conversion or in accordance with subsection (d)(4).

3. The proxy statement or form of proxy shall provide that the votes represented by the proxy will be voted. Where the person solicited specifies by a ballot provided pursuant to subsection (d)(1)(H) a choice with respect to any matter to be acted upon, the votes will be voted in accordance with the specifications. If no choice is specified, the votes will be cast as indicated in bold face type on the form of proxy.

4. Notwithstanding any other provisions of this subsection, the proxy may be in a form previously obtained from a voting member and conferring general authority to vote on all matters at any meeting of the members or other authority to vote on matters to be presented at the special meeting if the voting member has been furnished a proxy statement conforming with Sections 1075.2300 through 1075.2460 and has been notified that a previously obtained proxy will be exercised if the voting member does not grant a later-dated proxy to vote at the meeting to consider the plan of conversion or attend the meeting and vote in person.

e) Material Required To Be Filed:

1. Applicants shall file a preliminary copy of the proxy materials required by Sections 1075.2300 through 1075.2460.

2. A preliminary copy of any additional solicitation material including press release and radio or television scripts, to be used or furnished to members subsequent to furnishing the proxy statement, shall be filed with the Director at least 5 business days before the date on which the Director is requested to authorize the use of the material. Speeches may, but need not, be filed with the Commissioner before use.

3. A copy of the proxy statement and a copy of the form of proxy and all other solicitation material, in the form in which the material is furnished to members, shall be filed with or mailed for filing to the Director not later than the date the material is first sent or given to members. All materials filed pursuant to this subsection (e)(3) shall be with a statement of the date on which copies of the materials are to be released to members.

4. If the solicitation is to be made in whole or in part by personal solicitation, a preliminary copy of all written instructions or other material that discusses or reviews, or comments upon the merits of, any matter to be acted upon and that is to be furnished to the individuals making the actual solicitation for their use directly or indirectly in connection with the solicitation shall be filed with the Director at least 5 business days before the date on which the Director is requested to authorize the use of the material.

5. All preliminary copies of material filed pursuant to subsections (e)(1), (2), and (4) shall be clearly marked on the cover page "Preliminary Copy". The preliminary copies shall be for the information of the Director only and shall not be available for public inspection except that the material may be disclosed to any department or agency of the United States, this State, or any other state that has concurrent jurisdiction over the applicant. The Director may make inquiries or investigations in regard to the material as may be necessary for an adequate review.

6. Unless requested by the Director, copies of replies to inquiries from members and copies of communications that do no more than request that forms of proxy previously solicited be signed and returned need not be filed pursuant to this subsection (e).

7. When any proxy statement, form of proxy or other material filed pursuant to this subsection (e) is amended or revised, a copy of the amended or revised material filed with the Director shall be marked to indicate clearly and precisely the changes effected subsequent to the previous filing.

f) Mailing Communications for Member – If the applicant has adopted a plan of conversion, the applicant shall perform such of the following acts as may be duly requested in writing with respect to a matter to be considered at the meeting to vote on the plan of conversion by any member who will defray the reasonable expenses to be incurred by the applicant in the performance of the act or acts requested:

1. The applicant shall mail or otherwise furnish to the member the following information as promptly as practicable after the receipt of the request:

A) a statement of the approximate number of members who have been or are to be solicited on behalf of management, or any group of members the member shall designate;

B) an estimate of the cost of mailing a specified proxy statement, form of proxy, or the communication to the members.

2. Copies of any proxy statement, form of proxy, or other communication furnished by the member and as approved by the Director shall be mailed by the applicant to any of the members specified in subsection (f)(1)(A) as the member may designate.

3. Any material that is furnished by the member shall be mailed with reasonable promptness by the applicant after receipt of the material to be mailed, including envelopes or other containers, and the appropriate postage or payment for postage.

4. Neither management nor the applicant shall be responsible for the proxy statement, form of proxy, or other communication.

g) False and Misleading Statements:

1. No solicitation of a proxy by the applicant, its management, or any other person for the meeting to vote on the plan of conversion shall be made by any proxy statement, form of proxy, notice of meeting, or other communication, written or oral, containing any statement that, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or that omits any material fact necessary in order to make the statements in the communication not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the meeting that has become false or misleading.

2. The fact that a proxy statement, form of proxy, or other solicitation material has been filed with or examined by the Director and authorized for use shall not be considered a finding by the Director that the material is accurate or complete or not false or misleading, or that the Director has passed upon the merits of or approved any proposal contained in the material. No representation to the contrary shall be made by any person.

3. If a solicitation by management violates any provision of this Section, the Director may require remedial measures including:

A) correction of any violation by a retraction and new solicitation;

B) rescheduling of the meeting for a vote on the plan of conversion; and

C) any other actions the Director finds appropriate under the circumstances in order to ensure a fair vote.

h) Prohibition of Certain Solicitations – No person soliciting a proxy from a member for the meeting to vote on the plan of conversion shall solicit:

1. any undated or post-dated proxy; or

2. any proxy that provides that it shall be dated as of any date subsequent to the date on which it is signed by the members; or

3. any proxy that is not revocable at will by the member giving it; or

4. any proxy that is part of any other document or instrument, such as an account card.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2040 Vote by Members

a) Following approval of the plan of conversion by the Director, the plan of conversion shall be submitted for consideration to an annual or special meeting of members.

b) Notice of the meeting to consider a plan of conversion shall be given by the proxy statement authorized for use by the Director. For the purposes of this subsection (b), the proxy statement may be in summary form, provided:

1. A statement is made in bold-face type on the notice to members required under this subsection (b) that a more detailed description of the proposed transaction may be obtained by returning an attached postage-paid postcard or other written communication requesting a supplemental information statement that, together with the summary proxy statement, complies with the requirements of this Subpart;

2. The last date on which the summary proxy statement is mailed to members will be considered the date on which notice is given for the purposes of this subsection (b). Without prior approval by the Director, the special meeting of members shall not be held fewer than 20 days after the last date on which the supplemental information statement is mailed to requesting members;

3. The supplemental information statement required to be furnished to members may be combined with any form prescribed under Sections 1075.2500 through 1075.2580, if the subscription offering is started concurrently with or during the proxy solicitation period pursuant to Section 1075.1925(a);

4. The summary proxy statement shall be prepared in accordance with the following requirements:

A) All the requirements of Sections 1075.2300 through 1075.2460, except:

i) Section 1075.2360;

ii) Section 1075.2370(c) through (m) and (o);

iii) Section 1075.2440; and

iv) Section 1075.2450(b).

B) The disclosure requirements of Sections 1075.2380(j), 1075.2390 and 1075.2430 may be prepared in summary form.

C) The disclosure requirements of Section 1075.2350 may be met through disclosure of the names, ages, and present occupations of all organization directors and executive officers.

D) The plan of conversion shall not be required to be attached to the summary proxy statement under Section 1075.2460.

c) The plan of conversion shall be approved by a vote of at least a majority of the total outstanding votes.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2045 Offers and Sales of Securities – Prohibitions

No offer to sell securities of an applicant pursuant to a plan of conversion may be made before approval by the Director of the application for conversion and before any approval necessary to maintain federal deposit insurance. No sale of these securities in the subscription offering may be made except by the final offering circular for the subscription offering. No sale of unsubscribed securities may be made except by the final offering circular for the public offering or direct community marketing. The offering of shares in the direct community marketing may begin during the subscription offering upon the declaration of effectiveness by the Director of the offering circular proposed for the community offering. This Section shall not apply to preliminary negotiations or agreements between an applicant and any underwriter or among underwriters who are to be in privity of contract with the applicant.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2050 Distribution of Offering Circulars Authorized

Any preliminary offering circular for the subscription offering, the public offering, or the direct community marketing which has been filed with the Director may be distributed to eligible account holders or supplemental eligible account holders and to others in connection with the offering after the Director has advised the applicant in writing that the application is properly executed and is not materially incomplete under Section 1075.2020. No final offering circular may be distributed until the offering circular has been declared effective by the Director.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2055 Preliminary Offering Circular for Subscription Offering – Estimated Subscription Price Range Required

With respect to the capital stock of the applicant to be sold under the plan of conversion, any preliminary offering circular for the subscription offering may set forth the estimated subscription price which may be stated as the pro forma market value.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2060 Review of Price Information by the Director

The Director shall review the price information required under Section 1075.2055 in determining whether to give approval to an application for conversion. No representations may be made in any manner that the price information has been approved by the Director or that the shares of capital stock sold pursuant to the plan of conversion have been approved or disapproved by the Director or that the Director has passed upon the accuracy or adequacy of an offering circular covering the shares.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2065 Underwriting Commission

Underwriting commissions shall not exceed an amount or percentage per share accepted as reasonable by the Director. No underwriting commission may be allowed or paid with respect to shares of capital stock sold in the subscription offering; however, an underwriter may be reimbursed for accountable expenses in connection with the subscription offering. In the case in which no public offering occurs, an underwriter may be paid a consulting fee reasonable under the circumstances as the Director shall accept. The term "underwriting commissions" includes underwriting discounts.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2070 Consideration of Pricing Information by the Director – Guidelines

In considering the pricing information required under Section 1075.2055, the Director shall apply the following guidelines.

a) The materials shall be prepared by persons independent of the applicant, experienced and expert in the area of corporate appraisal, and acceptable to the Director.

b) The materials shall contain data which are sufficient to support the conclusions reached in the materials.

c) The materials shall contain a complete and detailed description of the appraisal methodology employed.

d) To the extent that the appraisal is based on a capitalization of the pro forma income of the converted savings bank, the materials shall indicate the basis for determination of the income to be derived from the proceeds of the sale of stock and demonstrate the appropriateness of the earnings multiple used, including assumptions made as to future earnings growth. To the extent that the appraisal is based on comparison of the capital stock of the applicant with outstanding capital stock of existing stock savings banks or stock savings and loan associations, the materials shall demonstrate the appropriate comparability of the form and substance of the outstanding capital stock and of the existing stock savings banks and stock savings and loan associations in terms of such factors as size, market area, competitive conditions, profit history, and expected future earnings.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2075 Submission of Information by Applicant

a) In addition to the information required in Section 1075.2070, the applicant shall submit information demonstrating to the satisfaction of the Director the independence and expertise of any person preparing materials under Section 1075.2070. However, a person will not be considered as lacking independence because the person will participate in effecting the sale of capital stock under the plan of conversion or will receive a fee from the applicant for services given in connection with the appraisal only if the person provides full and accurate disclosure of the fact of participation and receipt of fee to the Director and in the offering circular. The Director shall find no disclosure full and adequate unless the following information is clearly and prominently stated:

1. the extent to which the person is directly or indirectly involved in preparing material required by Section 1075.2070 and in effecting the sale of capital stock under the conversion plan; and

2. an itemized statement of fees received for preparing information required by Section 1075.2070 and for all other services given.

b) The Director may require additional disclosures where necessary to ensure the integrity and accuracy of the information presented pursuant to Section 1075.2070.

c) No information provided pursuant to Section 1075.2070 shall be approved by the Director unless the Director finds that full and adequate disclosure required by this Section has been made.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2080 Subscription Offering – Distribution of Order Forms for the Purchase of Shares

Promptly after the Director has declared the offering circular for the subscription offering effective, the applicant shall distribute order forms for the purchase of shares of capital stock, in the subscription offering to all eligible account holders, supplemental eligible account holders (if applicable), and other persons who may subscribe for the shares under the plan of conversion.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2085 Order Forms – Final Offering Circular and Detailed Instructions

Each order form distributed pursuant to Section 1075.2080 shall be accompanied or preceded by the final offering circular for the subscription offering and a set of detailed instructions explaining how to properly complete the order forms.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2090 Subscription Price

The maximum subscription price stated on each order form distributed pursuant to Section 1075.2080 shall be the amount to be paid when the order form is returned.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2095 Order Form – Contents

Each order form distributed pursuant to Section 1075.2080 shall be prepared so as to indicate to the person receiving it, in as simple, clear, and intelligible a manner as possible, the actions which are required or available to the person with respect to the form and the capital stock offered for purchase thereby. Specifically, each order form shall:

a) Indicate the maximum number of shares that may be purchased pursuant to the subscription offering;

b) Indicate the time within which the subscription rights must be exercised, which time shall not be less than 20 days following the date of the mailing of the order form;

c) State the maximum subscription price per share of capital stock;

d) Indicate any requirements as to the minimum number of shares of capital stock which may be purchased;

e) Provide a specifically designated blank space or spaces for indicating the number of shares of capital stock which the eligible account holder or other person wishes to purchase;

f) Indicate that payment may be made by cash if delivered in person or by check or by withdrawal from an account holder's savings account. If payment is to be made by withdrawal, a box to check should be provided;

g) Provide specifically designated blank spaces for dating and signing the order form;

h) Contain an acknowledgement by the account holder or other person signing the order form that the person has received the final offering circular for the subscription offering before signing; and

i) Indicate the consequences of failing to properly complete and return the order form, including a statement that the subscription rights are nontransferable and will become void at the end of the subscription period. The order form may, and the set of instructions shall, indicate the place or places to which the order forms are to be returned and when the applicant will consider order forms received, such as by date and time of actual receipt in the applicant's offices or by date and time of postmark.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2100 Order Form – Additional Provision Authorized – Payment by Withdrawal

The order form distributed pursuant to Section 1075.2080 may provide that it may not be modified without the applicant's consent after its receipt as set forth in the order form. If payment is to be made by withdrawal from a savings account the applicant may, but need not, cause the withdrawal to be made upon receipt of the order form. If the withdrawal is made at any time before the closing date of the public offering, the applicant shall pay interest to the account holder on the amount withdrawn as if the amount had remained in the account from which it was withdrawn until the closing date. If the withdrawal is not made until the closing date, the amount to be withdrawn on the closing date is unavailable for withdrawal by account holder.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2105 Time Period for Completion of Sale of All Shares of Capital Stock

The sale of all shares of capital stock of the converting savings bank to be made under the plan of conversion, including any sale in public offering or direct community marketing, shall be completed as promptly as possible and within 45 calendar days after the last date of the subscription period, unless extended by the Director.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2110 Continuity of Corporate Existence

Upon the filing of the articles of incorporation of a converted savings bank with the Director in accordance with Section 1075.2160, the corporate existence of the mutual savings bank converting to a stock savings bank pursuant to this Subpart shall not discontinue, but the converted savings bank shall be a continuation of the entity of the mutual savings bank so converted and shall have the same rights and obligations as it had before the conversion.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2115 Application to Furnish Information

Every application shall furnish information in accordance with this Subpart. If applicable, the applicant shall furnish information in accordance with Section 1075.1700.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2120 Additional Filing Requirements

An applicant whose plan of conversion has been approved by the Director shall fulfill the following requirements.

a) The applicant shall file with the Director promptly after the meeting of members called to consider the plan of conversion a certified copy of each resolution adopted at the meeting relating to the plan of conversion, together with the following statements:

1. The total number of votes eligible to be cast;

2. The total number of votes represented in person or by proxy at the meeting;

3. The total number of votes cast in favor of and against each matter (the compilation of the votes cast at the meeting may be prepared for the savings bank by an independent public accountant, or by an independent transfer agent); and

4. The percentage of votes necessary to approve each matter.

b) The applicant shall file with the Director promptly after the meeting of savings bank members called to consider the plan of conversion an opinion of counsel to the effect that:

1. The meeting of members was duly held in accordance with all requirements of applicable law and this Part;

2. All requirements of State law applicable to the conversion have been complied with; and

3. If the savings bank has used proxies executed before the proxy solicitation required by Section 1075.2035, the authority conferred by the proxies includes authority to vote on the plan of conversion.

c) Each offering circular for the offering shall be prepared in compliance with this Subpart. The applicant shall file with the Director 5 copies of each preliminary offering circular and 10 copies of each final offering circular.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2125 Availability for Conferences in Advance of Filing of Application – Refusal of Prefiling Review

a) The Division shall be available for conferences with prospective applicants or their representatives in advance of filing an application to convert. These conferences may be held to discuss generally the problems confronting an applicant in effective conversion or to resolve specific problems of an unusual nature.

b) Prefiling review of an application may be refused by the staff of the Director if the review would delay the examination and processing of material that has already been filed or would favor certain applicants at the expense of others.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2130 Appeal from Refusal to Approve Application

From the Director's refusal to approve an application for conversion, the applicant may, within 30 days after the date of the mailing by the Director of notice of refusal to approve, appeal pursuant to 38 Ill. Adm. Code 100 and the Illinois Administrative Procedure Act [5 ILCS 100].

History

• Source: Amended at 46 Ill. Reg. 18013, effective October 27, 2022

38 Ill. Adm. Code 1075.2135 Postconversion Reports

The applicant shall file postconversion reports concerning its conversion as the Director may require.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2140 Certain Agreement to Transfer and Transfers of Ownership in Rights or Securities Prohibited

Before completion of a conversion, no person may transfer or enter into any agreement or understanding to transfer the legal or beneficial ownership of conversion subscription rights, or the underlying securities, to the account of another.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2145 Certain Offers and Announcements on Securities Prohibited

Before completion of a conversion, no person may make any offer, or announcement of an offer or intent to make an offer, for any security of a converting savings bank issued or to be issued in connection with the conversion. Nor shall any person knowingly acquire securities of the converted savings bank issued in connection with the conversion in excess of the maximum purchase limitations established in the savings bank's approved plan of conversion.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2150 Certain Offers and Acquisitions Prohibited

a) Except as required by the federal insurer of accounts or the Director, for 3 years following the date of the conversion, no person may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of an equity security of any savings bank converted in accordance with this Subpart without the prior written approval of the board of directors and of the Director. Where any person, directly or indirectly, acquires beneficial ownership of more than 10% of any class of any equity security of a savings bank converted in accordance with this Subpart, without prior written approval of the Director as required by this Section, the securities beneficially owned by such person in excess of 10% shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in connection with any matter submitted to the stockholders for a vote. For the purposes of this Section, a person shall be considered to have acquired beneficial ownership of more than 10% of a class of equity security of a savings bank where the person holds any combination of stock or revocable or irrevocable proxies of the savings bank. In obtaining prior written approval of the Director under this Section, the criteria for approval under subsection (d) may be addressed, if applicable, by the filing required by Section 1075.1700 of this Part. Notwithstanding the immediately preceding sentence, acquisitions under this Section require approval of both the board of directors of the converting savings bank and of the Director.

b) A conversion shall be complete on the date all the converting savings bank's conversion stock was sold.

c) An acquisition of shares shall be presumed to have been made if the acquiror entered into a binding written agreement for the transfer of shares. An offer shall be considered made when communicated.

d) The Director shall not approve an application involving an offer for, an announcement , or an acquisition of any security of a converted savings bank if the Director finds that the offer frustrates the purposes of this Subpart, is manipulative or deceptive, subverts the fairness of the conversion, is likely to result in injury to the savings bank, is not consistent with the Act, is otherwise violative of law or regulation, or would not contribute to the prudent deployment of the savings bank's conversion proceeds.

e) Subsection (a) shall not apply to any offer with a view toward public resale made exclusively to the savings bank or to the underwriters or a selling group acting on its behalf.

f) Unless made applicable by the Director by prior advice in writing, the restriction contained in subsection (a) shall not apply to any offer or announcement of an offer which if consummated would result in the acquisition by a person, together with all other acquisitions by the person of the same class of securities during the preceding 12-month period, of not more than 1% of the class of securities.

g) Subsection (a) shall not apply to the acquisition of securities of a savings bank or holding company of a savings bank by any one or more employee stock benefit plans of such savings bank or holding company if the plan or plans do not have beneficial ownership in the aggregate of more than 25% of any class of equity security of the converted savings bank or holding company.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2155 Definitions – Certain Transfers, Offers and Acquisitions Prohibited

For Sections 1075.2140, 1075.2145 and 1075.2150, the following definitions apply:

a) The term "person" includes an individual, a group acting in concert, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed to acquire, hold or dispose of securities of a savings bank.

b) The term "offer" includes every offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value except that the term "offer" shall not include:

1. Inquiries directed solely to the management of a savings bank and not intended to be communicated to stockholders, designed to elicit an indication of management's receptivity to the basic structure of a potential acquisition with respect to the amount of securities, manner of acquisition and formula for determining price, or

2. Non-binding expressions of understanding or letters of intent with the management of a savings bank regarding the basic structure of a potential acquisition with respect to the amount of securities, manner of acquisition, and formula for determining price.

c) The term "acquire" includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise.

d) The term "security" includes nontransferable subscription rights issued pursuant to a plan of conversion as well as a "security" as defined in the Securities Exchange Act of 1934 (15 USC 78c(a)(10)).

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2160 Amendments to Charter Required in Application – Articles of Incorporation – Filing of Certificate Required – Contents – Issuance and Filing of Authorization Certificate

a) An application for conversion under this Subpart shall include amendments to the articles of incorporation of the converting savings bank.

b) When all the stock of a converting savings bank has been subscribed for in accordance with the plan and any amendments to the plan, the board of directors shall issue the stock and shall cause to be filed with the Director, in triplicate, a certificate subscribed and acknowledged by the persons who are to be directors of the converted savings bank, stating:

1. That all the stock of the converted savings bank has been issued;

2. That the attached articles of incorporation have been executed by all the persons who are to be directors of the converted savings bank;

3. The place where the bank is to be located and its business transacted, naming the city, or town and county, which city or town shall be the same as that where the principal place of business of the predecessor mutual savings bank has been located;

4. The name, occupation, residence, and post office address of each signer of the certificate;

5. The amount of the assets of the predecessor mutual savings bank, the amount of its liabilities and undivided profits as of the first day of the current calendar month; and

6. A declaration that each signer will accept the responsibilities and faithful discharge the duties of a director of the converted savings bank and is free from all the disqualifications specified in the laws applicable to converted savings banks.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2165 Conversion Incident to Acquisition by Savings Bank Holding Company or Merger or Consolidation with Savings Bank Holding Company Subsidiary – Restriction on Sale of Shares of Stock by Organization Directors and Officers

a) In a conversion of a mutual savings bank that is in the process of acquisition by a depository institution holding company, or in the process of merger or consolidation with another depository institution, the restrictions imposed by Section 1075.1890 on resale of stock apply to shares of the holding company purchased on original issue by any director or officer of the converting savings bank that is in the process of acquisition, merger, or consolidation, and the restrictions imposed by this Subpart apply to the ownership of capital stock in the depository institution holding company or other depository institution with the same force and effect as they would apply to the ownership of capital stock of the unconverted mutual savings bank, if shares of this savings bank were offered to depositors or the public pursuant to this Subpart.

b) The tender of shares by directors and officers of a converted savings bank in exchange for shares of another converted savings bank, or for shares of a holding company, do not constitute a sale for purposes of Section 1075.1890. However, the shares received in such an exchange shall not be sold for a period of one year following the date of such purchase on original issue, except that the Director may waive this restriction upon a finding that allowing a sale would substantially contribute to averting otherwise unavoidable injury to a savings bank.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2170 Sale of Control in Connection with the Conversion of a Mutual Savings Bank to Capital Stock Savings Bank - Undercapitalized Mutual Savings Bank

a) A mutual savings bank not meeting an applicable capital requirement as of the end of the most recent period for which the savings bank has prepared audited financial statements, may seek approval to convert to stock form pursuant to a plan of conversion that provides for the sale of its capital stock directly to acquirors, who may be a person, company, depository institution, holding company, who will be in control of the savings bank upon the purchase of the capital stock. If in accordance with applicable laws and regulations, the conversion may result in the converting savings bank being merged into or consolidated with an existing or newly created depository institution.

b) The provisions of this Section shall govern a conversion authorized by subsection (a). All other Sections of this Subpart shall not apply to the conversion unless provided in the plan of conversion adopted by the board of directors of the converting savings bank or required by the Director.

c) A majority of the converting savings bank board of directors must adopt a plan of conversion that complies with this Section. The members of the association have no rights or approval or participation in a conversion under this Section or to the continuance of any legal or beneficial ownership interests in the converted savings bank, unless otherwise provided by the Director. The members shall have an interest in a liquidation account established pursuant to Section 1075.1940 of this Subpart if one is established pursuant to subsection (h).

d) In connection with approval under this Section, the Director may impose conditions and restrictions on the converting or resulting institution, the acquiror, and controlling parties, organization directors and officers of either, to prevent unsafe and unsound practices, to protect the deposit insurance fund and the public interest, and to prevent potential injury or detriment to the converting or resulting institution.

e) The Director may deny a savings bank's conversion if he or she determines that the converting or resulting institution, the acquiror, or controlling parties or organization directors or officers of either, have engaged in unsafe or unsound practices in connection with the conversion, or that the conversion is detrimental to or would cause potential injury to the converting or resulting institution, deposit insurance funds, or is contrary to the public interest.

f) For 3 years following the date of completion of a conversion under this Section, neither any controlling shareholder nor the resulting institution may acquire shares from minority shareholders without prior approval of the Director.

g) An application for conversion under this Section shall, at a minimum, include:

1. A plan of conversion adopted by a majority of the directors of the savings bank, which shall contain at a minimum the name and address of the savings bank; the names, addresses, dates and places of birth, and social security numbers of the proposed purchasers of conversion stock and their relationship to the savings bank; the title, per-unit par value, number, and per-unit and aggregate offering price of shares of conversion stock to be authorized and issued; the number and percentage of shares of conversion stock to be purchased by each investor, the aggregate number and percentage of shares of conversion stock to be purchased by organization directors, officers and their affiliates and associates; a description of the liquidation account, if required under subsection (h), or if otherwise established; and certified copies of all resolutions of the board of directors relating to the plan of conversion;

2. A copy of any agreements between the savings bank and the proposed conversion stock purchasers;

3. An opinion of qualified, independent counsel or an independent, certified public accountant regarding the tax consequences to the savings bank arising from the conversion;

4. A business plan, which shall contain a description of the proposed operating policies of the savings bank or the resulting savings bank following the conversion, including a statement as to how the conversion proceeds will be used, and a projection of the savings bank's results of operations for the 3 year period following completion of the conversion. The projections should show the continuing ability of the converted savings bank to meet applicable capital requirements. The savings bank shall specify the assumptions on which its projections are based;

5. An application under Section 1075.1700 of Subpart N of this Part;

6. The proposed charter and bylaws of the converted savings bank;

7. The proposed stock certificate form;

8. A description of all existing and proposed employment contracts, if applicable;

9. All findings required under the securities offering rules of this Subpart;

10. Applications for permission to organize a stock savings bank and for approval of a merger, if applicable, and FDIC insurance of accounts, if applicable;

11. Information to support the value of any non-cash assets to be contributed to the savings bank in connection with the conversion, if applicable. Appraisals submitted in this connection must be acceptable to the Director;

12. A description of the estimated expenses of the conversion to the savings bank;

13. The savings bank's most recent audited financial statements with an appropriate explanation to support the determination that the savings bank's current capital levels qualify it to undertake a supervisory conversion;

14. "Pro forma" financial statements to reflect the effects of the transaction. These pro forma financial statements should be supplemented to identify the converting or resulting capital levels and show the appropriate adjustments necessary to compute such capital levels;

15. A specific description of any of the features of the savings bank's application that do not conform to the requirements of this Subpart;

16. A specific description of and detailed justification for any waivers or supervisory forbearances that are requested as part of the conversion;

17. A statement of all other applications required pursuant to federal law for all transactions related to the savings bank's conversion, copies of all decisions, orders, opinions, and other similar dispositive documents issued by regulatory authorities relating to such applications, and, if requested, copies of such applications and related documents; and

18. Opinion of financial advisor:

A) The savings bank shall be required to retain a reputable financial advisor with expertise in valuing depository institutions to advise it as to the fairness or the consideration to be paid by the proposed acquiror. The financial advisor shall furnish a written opinion specifically informing the converting savings bank as to the fairness from a financial point of view to the converting savings bank of the proposed consideration.

B) The written opinion shall specifically disclose in reasonable detail:

i) the professional standards employed by the financial advisor in arriving at its conclusions; and

ii) the factual basis upon which the conclusions were reached.

C) The opinion shall specifically state whether the financial advisor, in arriving at his or her conclusions as to the fairness of the proposed consideration, has made efforts to determine whether, in his or her judgment, there is the reasonable significant probability that financially able purchasers of the character generally capable of securing regulatory approval other than the proposed acquiror, given an opportunity, might have made good faith offers to purchase control of the converting savings bank for a consideration materially greater than that proposed to be paid by the proposed acquiror, and has compared the consideration to be paid by the proposed acquiror with the consideration paid in the purchase of other savings banks or savings and loan associations of comparable size, market area, profit history, competitive conditions and projected future earnings.

D) If the financial advisor has made any such efforts or comparisons, the nature and scope of the efforts and comparisons shall be discussed in detail. The written opinion shall state whether and on what basis the financial advisor believes that the consideration to be paid by the proposed acquiror exceeds the aggregate amount of net proceeds which the converting savings bank could have realized if the capital stock to be sold to the proposed acquiror had been sold in a subscription offering followed by an underwritten public offering. The written opinion shall be delivered to the Director before any approval of the application for conversion will be granted by the Director.

h) A liquidation account must be established in accordance with Section 1075.1940 of this Subpart; however, the Director may waive this requirement upon a written finding that the savings bank's net worth is zero or less than zero, or for other good cause upon a written finding that specifies the existence of good cause.

i) No solicitation of proxies in connection with a conversion pursuant to this Section shall be made unless the person so solicited is concurrently furnished with or has been previously furnished with a proxy statement or a short-form proxy statement complying with this Subpart. If the persons to whom capital stock is offered or sold pursuant to a conversion effected in compliance with this Section shall exceed 20 in number, each of the persons shall be furnished with an offering circular complying with this Subpart before the consummation of any sale.

j) Upon the Director's approval of the plan of conversion, the mutual savings bank charter shall be surrendered to the Director and a stock charter issued by the Director.

k) The corporate existence of a mutual savings bank converting to stock savings bank shall not terminate and shall be considered to be a continuation of the savings bank so converted.

l) The Director's approval of a conversion under this Section shall be conditioned upon the following:

1. Completion of the sale of conversion stock within 3 months after the Director approves the application, or within an additional period as the Director may for good cause grant;

2. Compliance with all filing requirements of this Subpart, subject to subsection (b); and

3. Satisfaction of any other requirements or conditions the Director may impose.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2175 Conversion of a Savings Bank in Connection with the Formation of a Holding Company

A savings bank may convert to the stock form pursuant to this Subpart as part of a transaction in which a holding company is organized to acquire upon issuance all the capital stock of the converted savings bank. In such a transaction eligible account holders, supplemental eligible account holders, and voting members of the converting savings association shall receive, without payment, nontransferable rights under Sections 1075.1835, 1075.1845 and 1075.1850 of this Part to purchase capital stock of the newly formed holding company in lieu of capital stock of the converting association. Unless clearly inapplicable, all of the requirements of this Subpart shall apply to a conversion under this Section.

History

• Source: Added at 18 Ill. Reg. 15094, effective September 26, 1994

38 Ill. Adm. Code 1075.2200 Application – Application Requirements

An application to convert from a mutual savings bank to a capital stock savings bank shall contain information as required by this Subpart. In addition to the information expressly required to be included in any application under this Subpart, there shall be added such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made, not misleading.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2210 Application – Filing the Application and Fees

a) An application shall be prepared by a mutual savings bank that proposes to convert to a stock owned savings bank. The application must demonstrate that the applicant complies with the Act and this Part. Not including copies filed pursuant to Section 1075.2020, 3 completed manually signed copies with all exhibits, with an application fee of $10,000, shall be filed with the Director, Division of Banking, Department of Financial and Professional Regulation, 310 South Michigan Avenue, Suite 2130, Chicago, Illinois 60604-4278. The date a document is actually received by the Director shall be the date of filing.

b) Any application for approval that is improperly executed, or that does not contain copies of a plan of conversion, amendments to the charter of the applicant in the form of new articles of incorporation, proxy materials, and preliminary offering circulars for the subscription offering and for the public offering or direct community marketing, shall not be accepted for filing and shall be returned to the applicant. Any application for approval containing a materially incomplete plan of conversion, offering circular, or proxy statement shall be returned by the Director to the applicant. Applicants for conversions effected pursuant to Section 1075.2170 need not file documents or information to the extent that Section 1075.2170(d) allows.

c) Signature page:

1. Every application and every amendment to an application filed shall include a signature page that shall be manually signed by:

A) A duly authorized representative of the applicant on its behalf;

B) Its principal executive officer;

C) Its principal financial officer;

D) Its principal accounting officer; and

E) At least two-thirds of its organization directors.

2. Those signing the application shall attest on the signature page as follows:

A) In submitting an application, the applicant understands and agrees that if further examinations, investigations, or appraisals are required by the Director, they will be conducted by, or as approved by, the Director at the expense of the applicant and applicant will pay the costs thereof as computed by the Director.

B) The application has been approved by at least two-thirds of the board of directors of the applicant. In accordance with the Act and this Part by the filing of this application, the applicant by its duly authorized representative, the undersigned officers and each member of the applicant's board of directors severally represent:

i) that each person has read this application; and

ii) that in the opinion of each person, he or she has made such examination and investigation as is necessary to enable him or her to express an informed opinion that this application complies to the best of his or her knowledge and belief with the application requirements of the Act and this Part.

3. If any name is signed to an application or any amendment to an application pursuant to a power of attorney, a manually signed copy of the power of attorney shall be filed with each copy of the application.

d) Except as provided in subsection (e), the filing of any application or amendment to any application under this Subpart shall constitute a representation of the applicant by its duly authorized representative, the applicant's principal executive officer, the applicant's principal financial officer, and the applicant's principal accounting officer, and each member of the applicant's board of directors (whether the organization director has signed the application or any amendment to an application) severally that:

1. he or she has read the application or amendment,

2. in the opinion of each person he or she has made such examination and investigation as is necessary to enable him or her to express an informed opinion that the application or amendment complies to the best of his or her knowledge and belief with the applicable requirements of this Subpart, and

3. each person holds this informed opinion.

e) The representations specified in subsection (d) shall not be considered to have been made by any organization director of the applicant who did not sign the application or any amendment to the application, if, and only to the extent that, the organization director files with the Director within 10 business days after the filing of the application or amendment a statement describing those portions of the filing as to which he or she does not so represent.

f) If applicable, the applicant shall furnish information in accordance with Subpart N of this Part.

g) Consent of experts:

1. If any accountant, attorney, investment banker, appraiser, financial advisor, or other person whose profession gives authority to a statement made in any application under this Subpart is named as having prepared, reviewed, passed upon, or certified any part of the application, or any report or valuation for use in connection with the application, the written consent of the person shall be filed with the application. If any portion of an expert's report is quoted or summarized as such in any filing under this Subpart, the written consent of the expert shall expressly state that the expert consents to this quotation or summarization.

2. All written consents filed pursuant to this Section shall be dated and signed manually. A list of the consents shall be filed with the application. Where the consent of the expert is contained in the expert's report, the list shall state that the report contains the consent.

h) After the Division has reviewed the filed materials, the applicant may be required to furnish additional information as an amendment to the application. Further, the applicant may amend the application at its discretion. All amendments shall be clearly identified as such, numbered consecutively, and shall comply with all pertinent requirements of the application, including signature.

i) Whenever the Director prohibits by order or otherwise the use of any filing under this Part, the form and contents of any filing used after the prohibition shall conform to the requirements of the order and the applicable regulations in effect at the time the prohibition is no longer effective.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2220 Application – Preparing the Application

a) Requirements as to paper and printing:

1. Applications shall be filed on good quality, unglazed, white paper approximately 8½ by 12 or 8½ by 11 inches in size, as is practicable. However, tables, charts, maps and financial statements may be on larger paper if folded to those sizes, and the plan of conversion, proxy statement and offering circular may be on a smaller paper if the applicant so desires.

2. Applications and, as is practicable, all papers and documents filed as a part those applications, shall be printed, lithographed, mimeographed or typewritten. However, applications or any portion of the applications may be prepared by any similar process that, in the opinion of the Director, produces copies suitable for a permanent record. Irrespective of the process used, all copies of the material shall be clear, easily readable and suitable for repeated photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable on photocopies.

b) Every application shall include a cross reference sheet showing the location in the proxy statement and offering circular of the response to the appropriate Section of this Part. If any item is inapplicable, or the answer is in the negative and is omitted, a statement to that effect shall be made in the cross reference sheet.

c) The body of all printed plans of conversion, proxy statements, and offering circulars, including all notes to financial statements and other tabular data included in the statements, shall be in Roman type at least as large and as legible as 10-point modern type. However, to the extent necessary for convenient presentation, financial statements and other tabular data, including tabular data in notes, may be in Roman type at least as large and as legible as 8-point modern type. All the type shall be leaded at least 2 points.

d) Interpretation of requirements:

1. Unless the context indicates otherwise, the information required is only as to the applicant.

2. Whenever words relate to the future, they have reference solely to present intention.

3. Any words indicating the holder of a position or office include persons, by whatever titles designated, whose duties are those ordinarily performed by holders of those positions or offices.

e) Incorporation of certain information by reference:

1. Where an item in an application calls for information not required to be included in the proxy statement or offering circular, matter contained in any other part of the application, including exhibits, may be incorporated by reference in answer, or partial answer, to the items.

2. No information may be incorporated by reference in a proxy statement or offering circular, unless the document containing that information is attached to the statement or circular or is summarized or outlined as provided in subsection (f). However, an offering circular may incorporate by reference the information contained in a proxy statement previously delivered, without need of summary or outline.

3. Material incorporated by reference shall be clearly identified in the reference. An express statement that the specified matter is incorporated by reference shall be made at the particular place in the application where the information is required. Material shall not be incorporated by reference in any case where the incorporation would make the statement incomplete, unclear or confusing.

f) Where a summary or outline of the provisions of any document is required, only a brief statement shall be made, in succinct and condensed form, as to the most important provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular items, sections or paragraphs of any exhibit and may be included in its entirety by the reference.

g) Presentation of information:

1. The information required in a proxy statement or offering circular need not follow the order of its presentation or other requirements in the appropriate sections. The information shall not, however, be set forth in a fashion as to obscure any of the required information or any information necessary to keep the required information from being incomplete or misleading. Where a section requires information to be given in tabular form it shall be given in substantially the tabular form specified in the section.

2. All information contained in a plan of conversion, proxy statement or offering circular shall be set forth under appropriate captions or headings reasonably indicative of the principal subject matter set forth in the plan, statement or circular. Except as to financial statements and other tabular data, all information set forth in any form under this Subpart shall be divided into reasonably short paragraphs or sections.

3. Every proxy statement and offering circular shall include in its forepart a reasonably detailed table of contents showing the subject matter of its various sections or subdivisions and the page number on which each section or subdivision begins.

4. All information required to be included in a proxy statement or offering circular shall be clearly understandable without the necessity of referring to the particular Section of this Subpart. Except as to financial statements and information required in tabular form, the information set forth in a proxy statement or offering circular may be expressed in condensed or summarized form.

5. Financial statements are to be set forth in comparative form and shall include any notes and the accountants' certificate or certificates.

h) All amendments to an application under this Subpart shall be filed under cover of an appropriate facing sheet, shall be numbered consecutively in the order in which filed, and shall conform to all pertinent requirements of this Subpart.

i) Information required needs to be given only insofar as it is known or reasonably available to the applicant. The applicant may not omit information that is in fact known regardless of whether the information was reasonably available. If any required information is unknown and not reasonably available to the applicant, either because the obtaining thereof would involve unreasonable effort or expense or because it rests peculiarly within the knowledge of another person not affiliated with the applicant, the information may be omitted, subject to the following conditions:

1. The applicant shall give any information on the subject as it has or can acquire without unreasonable effort or expense, together with the sources of the information; and

2. The applicant shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to the person for the information.

j) The information provided should be presented in such a manner that the reader does not have to refer to the applicable Section of this Subpart to understand what is being conveyed. It is not necessary that the applicant restate the text of any section, but the applicant should structure responses in such a manner as to clearly indicate to which Section the response applies. The nonapplicability of any item should be affirmatively noted. The following shall be also applicable:

1. Include an index of Sections and subsections.

2. Exhibits and inserts are permissible if referenced under the appropriate Section, with identification tabs attached.

3. If required information is not reasonably or economically available to the applicant, explanation for its omission should be included.

4. Material available for public inspection may be incorporated by reference in response to any Section, but specified, including item, page, and paragraph number, if applicable.

k) Should the applicant desire to submit any information it considers to be of a confidential nature regarding the response to any part of an application, the information shall be separately bound and labeled in capital letters, "CONFIDENTIAL" and a statement shall be submitted therewith briefly setting forth the grounds on which such information should be treated as confidential. Only general reference need be made of that confidential portion in the portion of the application which the applicant considers not to be confidential. If any material has been granted confidential treatment under State or federal law, or by a government agency, or the New York Stock Exchange, the circumstances should be described. All materials filed as part of this application are available for inspection, except for portions that are bound and labeled in capital letters, "CONFIDENTIAL" and that the Director determines to hold from public availability because of their confidential nature. The Director will not permit public inspection or copying of any material that is or would be confidential under State law. The Director will advise the applicant of any decision to make available to the public information labeled in capital letters, "CONFIDENTIAL". It should be understood that it may be necessary for the Director to release materials heretofore given confidential treatment. It should be further understood that even though parts of the application are considered "confidential" as far as public inspection is concerned, the Director may comment on the confidential submissions in any public statement in connection with the Director's decision on the application without prior notice to the applicant.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2230 Application – Application Contents

The application shall include:

a) The complete formal written plan adopted by the board of directors for conversion of the applicant to the stock form of organization. The terms of the plan submitted pursuant to this subsection will be a basis for the Director's approval, and the plan as approved will be distributed as an attachment to the proxy statement and the offering circular;

b) Preliminary copies of the proxy statement and offering circular. The proxy statement and offering circular should be prepared in accordance with Sections 1075.2300 through 1075.2460 and 1025.2500 through 1025.2580 respectively, that are attached to the application;

c) Preliminary copies of the form of proxy to be distributed to members by management of the applicant;

d) The expected chronological order of the events connected with the plan of conversion beginning with the filing of this application through completion of the sale of all the capital stock under the Conversion Plan (Indicate the expected timing of any requisite approvals by other regulatory authorities. Indicate the proposed timing of all aspects of the subscription offering. If there will be an underwritten public or direct community marketing of the applicant's securities as part of the Conversion Plan, indicate the proposed timing of all aspects of the offering.);

e) If the applicant's Conversion Plan contains an eligibility record date substantially earlier than 90 days before the date of adoption of the Conversion Plan by the board of directors, state the reason for the selection of the earlier date. Indicate the circumstances that will require the use of a supplemental eligibility record date;

f) In substantially the tabular form indicated below, the estimated expense of the conversion to the applicant:

Legal..................................................................................

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Postage and Mailing..........................................................

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Printing..............................................................................

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Escrow or Agent Fees.......................................................

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Underwriting Fees.............................................................

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Appraisal Fees...................................................................

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Transfer Agent Fees..........................................................

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Auditing and Accounting..................................................

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Proxy Solicitation Fees.....................................................

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Advertising........................................................................

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Other Expenses..................................................................

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Total.......................................................................

................

1. The applicant may exclude costs represented by salaries and wages of regular employees and officers if a statement to that effect is made. The cost of solicitation by specially engaged employees or paid solicitors under Section 1075.2330(b) shall be stated under "Proxy Solicitation Fees".

2. If the applicant has any category of expenses exceeding $10,000 that is not specified in this Section, the expense shall be itemized rather than including it under the category "Other Expenses".

3. If the solicitation is conducted other than by management of the applicant, the information required in this Section shall be provided with respect to the cost of such solicitation, and

g) A statement of the general effect of any charter provision, bylaw, contract, arrangement, statute, or regulation to be in effect during or after the conversion under which any underwriter, appraiser, lawyer, accountant or expert, or organization director or officer of the applicant will be insured or indemnified in any manner against any liability that he or she may incur in his or her capacity as such.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2240 Application – Application Exhibits

The following exhibits shall be attached to the application:

a) The following documents, contracts and agreements:

1. Proposed certificates for capital stock and any other securities to be issued;

2. Proposed order forms with respect to the subscription rights;

3. Any proposed stock option plan and form of stock option agreement;

4. Any proposed management employment contracts;

5. Any contract described in complying with Section 1075.2360;

6. Contracts or agreements with paid solicitors described in complying with Section 1075.2330(b);

7. Any material loan agreements relating to borrowing by the applicant other than from a Federal Home Loan Bank and other than subordinated debt securities approved by the Director;

8. Any appraisal agreement or proposed agreement, underwriting contracts or agreements among underwriters;

9. Any proposed contracts or agreements among members of a group regarding the purchase of unsubscribed shares;

10. Any required undertaking or affidavits by officers or organization directors purchasing shares in the conversion that they are acting independently;

11. Any documents referred to in complying with Section 1075.2230(g);

12. Any trustee agreements or indentures;

13. Any agreements for the making of markets or the listing on exchanges of the stock of the converted savings bank. Documents, contracts and agreements that are furnished in proposed form under this exhibit shall be furnished in final form immediately after the meeting of members to consider the plan of conversion, except for documents that by their nature cannot be practically expected until a later time required by subsections (a)(8) and (9) in which case they shall be furnished in substantially final form; and

14. Any documents referred to in complying with Section 1075.2230(g).

b) An opinion of counsel for the applicant regarding each of the following matters:

1. The legal sufficiency of the applicant's proposed certificate and order forms for capital stock and any other securities;

2. Whether State and, if applicable, federal law, requirements will be fulfilled by the Conversion Plan;

3. The legal sufficiency of the applicant's proposed charter and bylaws;

4. The continuation of insurance of the applicant's accounts by the Federal Deposit Insurance Corporation after conversion; and

5. The type and extent of each class of voting rights in the applicant after conversion;

c) An opinion of:

1. the applicant's tax advisor or an Internal Revenue ruling as to the federal income tax consequences of the Conversion Plan to the applicant and to the various account holders who receive nontransferable subscription rights to purchase capital stock; and

2. the applicant's tax advisor or, if applicable, a ruling from the appropriate State taxing authority as to any tax consequences of the Conversion Plan under State law. The opinion should relate to the applicant and to eligible account holders;

d) Any materials required to be filed by Section 1075.2105 regarding the valuation of the applicant's capital stock. An applicant is not required to file these materials if the offering of capital stock will not begin before the meeting of members to vote on the Conversion Plan;

e) The notices to the applicant's members required by Sections 1075.2005 through 1075.2020;

f) Additional exhibits:

1. If information required pursuant to a relevant Section of this Part is not given for the reasons specified in Section 1075.2220(i), the statement required for each such omission;

2. All consents required to be filed by Sections 1075.2210(g) and 1075.2520;

3. If applicable, the statement required by Section 1075.2350 regarding events which occurred within the last 10 years to organization directors of the applicant;

4. Any powers of attorney employed pursuant to Section 1075.2210(c); and

5. The cross-reference sheet referred to in Section 1075.2220(b).

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2300 Proxy Statement – Information Required in Conversion Proxy Statement

a) The conversion proxy statement shall conform to the requirements of this Section 1075.2300 through Section 1075.2460.

b) Except as otherwise specifically provided, where any Section calls for information for a specified period in regard to organization directors, officers or other persons holding specified positions or relationships, the information shall be given in regard to any person who held any of the specified positions or relationships at any time during the period. However, information need not be included for any portion of the period during which the person did not hold any such position or relationship provided a statement to that effect is made.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2310 Proxy Statement – Notice of Meeting

a) The cover page of the proxy statement shall give notice of the meeting of the members called by the board of directors to act upon the Plan of Conversion. The cover page shall include the date, time, and place of the meeting, a brief description of each matter to be acted upon at the meeting, the date of record for members entitled to vote at the meeting, the date of the statement, and the full address, ZIP code and telephone number of the applicant.

b) If the applicant intends to use previously obtained proxies at the meeting in accordance with Section 1075.2035(d)(4), the notice of the meeting shall include the following bold-face legend:

The institution may use your previously-executed proxies to vote for the Plan of Conversion in the event you do not execute another proxy for this meeting, attend and vote in person, or otherwise revoke your previously-executed proxies.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2320 Proxy Statement – Revocability of Proxy

State that the person giving the proxy has the power to revoke it before the proxy is exercised at the meeting. If the right or revocation is subject to compliance with any formal procedure, briefly describe such procedure. Briefly describe any charter, bylaw or applicable federal or State law requirements otherwise restricting voting by proxy. State that the proxy is solicited for that meeting, and any adjournment thereof, and will not be used for any other meeting.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2330 Proxy Statement – Persons Making the Solicitations

a) State whether the solicitation is made by the management of the applicant. Give the name of any organization director or the applicant who has informed the management in writing that he or she intends to oppose any action intended to be taken by the management and indicate the action which he or she intends to oppose.

b) If the solicitation is to be made otherwise than by the use of the mails, describe the methods to be employed. If the solicitation is to be made by specially engaged employees or paid solicitors, state the material features of any contract or arrangement for such solicitation and identify the parties.

c) If the solicitation is made otherwise than by the management of the applicant, so state and give the names of the persons by whom and on whose behalf it is made. The solicitation normally need not respond to Sections 1075.2330 through 1075.2460, but must include such information as to make such solicitation comply with Section 1075.2035(d)(3).

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2340 Proxy Statement - Voting Rights and Vote Required for Approval

a) Describe briefly the voting rights of each class of members, state the approximate total number of votes entitled to be cast at the meeting, and the approximate number of votes to which each class is entitled. Discuss the voting rights of beneficiaries of accounts held in a fiduciary capacity such as IRA accounts.

b) As part of the description, give the date of record for members entitled to vote at the meeting.

c) As to each matter which will be submitted to a vote of members, state the vote required for its approval.

d) If the applicant intends to use previously executed proxies to vote on the plan of conversion in accordance with Section 1075.2035(d)(4), discuss how such proxies were obtained, the circumstances in which such proxies may be used, and how such proxies will be voted.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2350 Proxy Statement – Organization Directors and Executive Officers

a) Furnish the information regarding organization directors and executive officers and certain relationships and related transactions required to be disclosed in a registration or proxy statement filed under the Securities Exchange Act of 1934 (15 USC 78a et seq.), as amended to July 1, 1991. In particular, see Items 401 and 404 of the "General Rules Regarding Disclosures: Regulations S-K – Standard Instructions for Filing Forms under Securities Act of 1933 and the Securities Exchange Act of 1934" (17 CFR 229.401 and 404, November, 1992, no subsequent dates or editions), and Item 6 of Regulation 14A of the "Rules and Regulations Under Securities Exchange Act of 1934 (17 CFR 240.14a-101, October, 1992, no subsequent dates or editions). Unless the context otherwise requires, the words "registrant" and "issuer" in those regulations shall refer to the applicant and the word "Commission" shall refer to the Director.

b) State whether control of the applicant has been exercised through the use of proxies and the nature of the control.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2360 Proxy Statement – Management Remuneration

Furnish the information regarding management remuneration required to be disclosed in a registration or proxy statement filed under the Securities Exchange Act of 1934. In particular, see Item 402 of the "General Rules Regarding Disclosures: Regulations S-K - Standard Instructions for Filing Forms under Securities Act of 1933", no subsequent dates or editions, U.S. Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549, as of the effective date of this Section 1075.2360, and the Securities Exchange Act of 1934" (17 CFR 229.402 and 404, 1992, no subsequent dates or editions), and Item 7 of Regulation 14A of the "Rules and Regulations Under Securities Exchange Act of 1934 (17 CFR 240.14a-101) as of the effective date of this Section 1075.2360, no subsequent dates or editions. Unless the context otherwise requires, the words "registrant" and "Commission" in those regulations shall refer to the applicant and to the Director, respectively.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2370 Proxy Statement – Business of the Applicant

a) Narrative description of business.

1. Discuss briefly the organizational history of the applicant, including the year of organization, the identity of the chartering authority, and any charter conversions.

2. Describe the business conducted and intended to be conducted by the applicant and its subsidiaries. This should include a description of the general development of the business of the applicant and any predecessors during the past 5 years, or a shorter period as the applicant may have been engaged in business. Information shall be disclosed for earlier periods if material to an understanding of the general development of the business. Any material changes in the mode of conducting the business should be discussed.

3. Consideration should be given to inclusion of a description of the applicant's historical practices, including the average remaining term to maturity of its portfolio of mortgage loans, and present intention regarding the making of loans, whether real estate or other, the nature of security received, the terms of loans, whether carrying fixed or variable interest rates, and the retention of loans or their resale in secondary mortgage markets. Historical description might require a general identification of the magnitude of various activities.

4. Explain any significant impact to the institution as a result of any material acquisitions.

b) Selected financial data – Furnish in comparative columnar form a summary of selected financial data for the applicant for:

1. each of the last 5 fiscal years of the applicant (or for the life of the applicant and its predecessors, if less); and

2. any additional fiscal years necessary to keep the summary from being misleading.

3. In furnishing the information required by this subsection, the following shall apply:

A) The purpose of the summary of selected financial data shall be to supply in convenient and readable format selected data that highlight significant trends in the applicant's financial condition and results of operations.

B) Subject to appropriate variation to conform to the nature of the applicant's business, the following items, as a minimum, shall be included in the summary: Total interest income; total interest expense; income (loss) from continuing operations; net income; total loans; total investments; total assets; total savings; total borrowings; total capital; and total number of customer service facilities indicating the number which provide full service. Applicants may include additional items which they believe would enhance understanding and highlight trends in their financial condition and results of operation. Briefly describe, or cross-reference to a discussion of, factors such as accounting changes, business combinations, or dispositions of business operations that materially affect the comparability of the information reflected in selected financial data. Discussion of, or reference to, any material uncertainties should also be included where those matters might cause the data reflected not to be indicative of the applicant's future financial condition or results of operations.

C) Those applicants that elect to provide 5 year summary information in accordance with Section C28 of the Financial Accounting Standards Board's Statement of Financial Accounting Standards (FASB Statement 89), "Financial Reporting and Changing Prices", (Accounting Standards Current Text General Standards as of June 1, 1992, no subsequent date or addition, Financial Accounting Standards Board, 401 Merritt 7, P.O. Box 5116, Norwalk CT 06856-5116), may combine the information with the selected financial data appearing pursuant to this Section.

D) All references to the applicant in the summary and in these instructions shall mean the applicant and its consolidated subsidiaries.

E) If interim-period financial statements are included, or are required to be included by Section 1075.2450, applicants should update the selected financial data for the interim period to reflect any material change in the trends indicated; when updating information is necessary, applicants should provide the information on a comparative basis unless not necessary to an understanding of the updating information.

c) Management's discussion and analysis of financial condition and results of operation.

1. Discuss the applicant's financial condition, and results of operations. The discussion shall provide information as specified in subsection (c)(1)(A), (B), and (C) with respect to liquidity, capital resources, and results of operations and also should provide all other information that the applicant believes to be necessary to an understanding of its financial condition, changes in financial condition, and results of operations. Significant business combinations should be discussed. Discussion of liquidity and capital resources may be combined whenever the 2 topics are interrelated. Where in the applicant's judgment a discussion of subdivisions of the applicant's business would be appropriate to an understanding of the business, the discussion should focus on each relevant, reportable segment or other subdivision of the business and on the applicant as a whole.

A) Liquidity – Identify any known trends or any known demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in the applicant's liquidity increasing or decreasing in any material way. If a material deficiency is identified, indicate the course of action that the applicant has taken or proposes to take to remedy the deficiency. Identify and separately describe internal and external sources of liquidity, and briefly discuss any material unused sources of liquid assets. Comment on maturity imbalances between assets and liabilities and planned activities in the secondary mortgage market.

B) Committed resources.

i) Describe the applicant's material commitments for loan fundings or other expenditures as of the end of the latest fiscal period and indicate the general purpose of the commitments and the anticipated source of funds needed to fulfill the commitments.

ii) Describe any known material trends, favorable or unfavorable, in the applicant's committed resources. Indicate any expected material changes in the mix and the relative cost of the resources. This discussion should consider changes between savings, equity, debt, and any off-balance-sheet financing arrangements.

C) Results of operations.

i) Describe any unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from continuing operations and, in each case, indicate the extent to that income was affected. In addition, describe any other significant components of revenues or expenses which, in the applicant's judgment, should be described in order to understand the applicant's results of operations.

ii) Describe any known trends and uncertainties that have had, or that the applicant reasonably expects will have, a materially favorable or unfavorable impact on net sales or revenues or income from continuing operations. If the applicant knows of events that will cause a material change in the relationship between costs and revenues (such as known future increases in costs of money or interest rates), the change in the relationship should be disclosed.

iii) To the extent that the financial statements disclose material increases in interest expense, provide a narrative discussion of the extent to which the increases are attributable to increases in rates or to increases in volume.

iv) For the 3 most recent fiscal years of the applicant, discuss the impact of inflation and changing prices on the applicant's revenues and on income from continuing operations.

v) For the most recent financial statement presented, discuss any unusual risk characteristics in the assets of the applicant. This would include real estate development, significant amounts of commercial real estate as loan collateral, and any other significant risk factors inherent in the applicant's lending or investment portfolios, including significant increases in amounts of non-accrual, past due, restructured, and potential problem loans (U.S. Securities and Exchange Commission's Securities Act Industry Guide 3, Section III C 1992, no subsequent dates or editions, U.S. Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549).

D) In completing subsection (c)(1), the following shall apply:

i) The applicant's discussion and analysis shall be of the financial statements and of other statistical data that the applicant believes will enhance a reader's understanding of its financial condition, changes in financial condition, and results of operations. Generally, the discussion should cover the 3 year period covered by the financial statements and should use year-to-year comparisons or other formats that, in the applicant's judgment, enhance a reader's understanding. However, where trend information is relevant, reference to the 5 year selected financial data appearing in subsection (b) may be necessary.

ii) The purpose of the discussion and analysis should be to provide to investors and other users information relevant to an assessment of the financial condition and results of operations of the applicant as determined by evaluating the amounts and certainty of cash flows from operations and from outside sources. The information provided in this subsection need only include that which is available to the applicant without undue effort or expense and does not clearly appear in the applicant's financial statements.

iii) The discussion and analysis should specifically focus on material events and uncertainties known to management that would cause reported financial information not to be necessarily indicative of future operating results or future financial condition. This would include description and amounts of matters that would have an impact on future operations and have not had an impact in the past, and matters that have had an impact on reported operations and are not expected to have an impact upon future operations.

iv) Where the consolidated financial statements reveal material changes from year to year in one or more line items, the causes for the changes should be described to the extent necessary to an understanding of the applicant's business as a whole; provided, however, if the causes for a change in one line item also relate to other line items, no repetition is required and a line-by-line analysis of the financial statements as a whole is not required or generally appropriate. Applicants need not recite the amount of changes from year to year that are readily computable from the financial statements. The discussion should not merely repeat numerical data contained in the consolidated financial statements.

v) The term "liquidity" as used in subsection (c)(1)(A) refers to the ability of an enterprise to generate adequate amounts of cash to meet the enterprises' needs for cash. Except where it is otherwise clear from the discussion, the applicant should indicate those balance sheet conditions or income or cash flow items that the applicant believes may be indicators of the liquidity condition. Liquidity generally should be discussed on both a long-term and short-term basis. The issue of liquidity should be discussed in the context of the applicant's own business or businesses.

vi) Applicants are encouraged, but not required, to supply forward-looking information. This is to be distinguished from presently known data that will have an impact upon future operating results, such as known future increases in rates or other costs. This latter data is required to be disclosed.

vii) Applicants that elect to provide narrative explanations of supplementary information disclosed in accordance with SFAS 89, as referred to in subsection (b)(3)(C), may combine the explanations with their discussion and analysis required pursuant to this provision or they may supply the information separately. If the information is combined, it shall be located in reasonable proximity to the discussion and analysis. If the information is not combined, the discussion of the impact of inflation otherwise required by this subsection may be omitted if there is an appropriate cross-reference to the explanations provided pursuant to SFAS 89, as referred to in subsection 1075.2370(b)(3)(C).

viii) Applicants which elect not to provide explanations of supplementary information disclosed in accordance with SFAS 89 may discuss the effects of inflation and changes in prices in whatever manner appears appropriate under the circumstances. Although voluntary compliance with SFAS 89 is encouraged, all that is required is a brief textual presentation of management's views. No specific numerical financial data need be presented.

ix) All references to the applicant in the discussion and in these instructions shall mean the applicant and its consolidated subsidiaries.

2. If interim-period financial statements are included or are required to be included by Section 1075.2440, a management's discussion and analysis of the financial condition and results of operations shall be provided to enable the reader to assess material changes in financial condition and results of operations between the period specified in subsection (c)(2)(A) and (B). The discussion and analysis shall include a discussion of material changes in those items specifically listed in subsection (c)(1), except that the impact of inflation and changing prices on operations for interim periods need not be addressed.

A) Material changes in financial condition. Discuss any material changes in financial condition from the end of the preceding fiscal year to the date of the most recent interim balance sheet provided. If the interim financial statements include an interim balance sheet as of the corresponding interim date of the preceding fiscal year, any material change in financial condition from that date to the date of the most recent interim balance sheet provided shall also be discussed. If discussions of changes from both the end and the corresponding interim date of the preceding fiscal year are required, the discussions may be combined at the discretion of the applicant.

B) Material changes in results of operations. Discuss any material changes in the applicant's results of operations with respect to the most recent fiscal year-to-date period for which an income statement is provided and the corresponding year-to-date period of the preceding fiscal year. If the applicant is required to or has elected to provide an income statement for the most recent fiscal year quarter, the discussion also shall cover material changes with respect to that fiscal quarter and the corresponding fiscal quarter in the preceding fiscal year. In addition, if the applicant has elected to provide an income statement for the 12-month period ended as of the date of the most recent interim balance sheet provided, the discussions shall also cover material changes with respect to that 12-month period and the 12-month period ended as of the corresponding interim balance sheet date of the preceding fiscal year.

C) In completing subsection (c)(2), the following instructions shall apply:

i) If interim financial statements are presented together with financial statements for full fiscal years, the discussion of the interim financial information shall be prepared pursuant to subsection (c)(2) and the discussion of the full fiscal year information shall be prepared pursuant to subsection (c)(1). Such discussions may be combined.

ii) The discussion and analysis required by subsection (c)(2) is required to focus only on material changes. Where the interim financial statements reveal material change from period to period in one or more significant line items, the causes for the changes should be described if they have not already been disclosed; however, if the causes for a change in one line item also relate to other line items, no repetition is required. Applicants need not recite the amounts of changes from period to period that are readily computable from the financial statements. This discussion should not merely repeat numerical date contained in the financial statements. The information provided should include that which is available to the applicant without undue effort or expense and does not clearly appear in the applicant's interim financial statements.

iii) The applicant's discussion of material changes in results of operations should identify any significant elements of the applicant's income or loss from continuing operations that do not arise from, or are not necessarily representative of, the applicant's ongoing business.

iv) Applicants are encouraged, but are not required, to discuss forward-looking information.

d) Lending activities.

1. Briefly describe the applicable federal and State restrictions on the lending activities of the applicant, including applicable laws affecting mortgage loan interest rates. Also briefly describe the applicant's general policy concerning loan-to-value ratios; customary methods of obtaining loan originations, such as the use of loan consultants; approval of properties as security for loans; the use of a loan committee, if any; and policies as to requiring title, fire insurance, and casualty insurance on security properties. Indicate the applicant's general future intentions with respect to activities in secondary mortgage markets, including transactions with the Federal Home Loan Mortgage Corporation or mortgage bankers. If significant, indicate loan service fee income as a percentage of net interest income for the years required by Section 1075.2440(b).

2. As to the lending area of the applicant, describe briefly:

A) the lending area restrictions, if any, applicable to the applicant;

B) the areas in which the applicant normally lends; and

C) any material loan concentration areas of the applicant. The descriptions may include maps illustrating one or more of these areas. Furnish an estimate of the housing vacancy rates in areas where the applicant's loan concentrations are located, if practicable.

3. Describe briefly the general long-term nature of investment in mortgage loans and the consequent effect upon the earnings spread of savings institutions. State the normal maturity of loans made by the applicant on the security of single-family dwellings and furnish an estimate as to the average length of time the loans are outstanding.

4. For each of the periods required by Section 1075.2440(b), set forth in tabular form, excluding fees that are not considered adjustments of yield, the following:

A) Average yield during the period, computed on no greater than a monthly basis, on:

i) loan portfolio;

ii) investment portfolio;

iii) other interest-earning assets; and

iv) all interest earning assets.

B) Average rate paid during the period, computed on no greater than a monthly basis, on:

i) deposits;

ii) borrowings and Federal Home Loan Bank advances;

iii) other interest-bearing liabilities; and

iv) all interest-bearing liabilities (subsection (d)(4)(A)(i), (ii), and (iii)).

C) Weighted-average yield at end of the latest required period, for the items in subsection (d)(4)(A) and (B).

D) The net yield on average interest-earning assets (net interest earnings divided by average interest-earning assets with net interest earnings equaling the difference between the dollar amount of interest earned and paid). Average interest-earning assets should be determined on an interval no more frequent than monthly.

E) For each of the periods required by Section 1075.2440(b), set forth in tabular form:

i) the dollar amount of change in interest income, and

ii) the dollar amount of change in interest expense. The changes should be segregated for each major category of interest-earning asset and interest-bearing liability (as stated in subsection (d)(4)(A) and (B)) into amount attributable to changes in volume change (change in volume multiplied by old rate), and changes in rates (change in rate multiplied by old volume), and changes in rate-volume (change in rate multiplied by the change in volume). The rate/volume variances should be allocated on a consistent basis between rate and volume variance and the basis of allocation disclosed in a note to the table.

5. For each of the periods required by Section 1075.2440(b), present the following:

A) Return on assets (net income divided by average total assets).

B) Return on equity (net income divided by average equity).

C) Equity-to-assets ratio (average equity divided by average total assets).

D) Applicants should supply any additional ratios necessary to explain their operations.

6. Loans:

A) As of the end of the latest fiscal year reported on, present separately the amounts of loans in the categories of real estate mortgages, real estate construction, installment, and commercial, financial and agricultural that are due:

i) In each of the 3 years following the balance sheet;

ii) after 3 through 5 years;

iii) after 5 through 10 years;

iv) after 10 through 15 years; and

v) after 15 years. In addition, present separately the total amount of all such loans due after one year that have predetermined interest rates and floating or adjustable interest rates.

B) In completing subsection (d)(6)(A), the following shall apply:

i) Scheduled principal repayments should be reported in that maturity category in which the payment is due.

ii) Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts should be reported as due in one year or less.

iii) Determinations of maturities should be based upon contract terms. However, the terms may vary due to the applicant's "rollover policy," in which case the maturity should be revised as appropriate and the rollover policy should be briefly discussed.

7. Describe briefly the risk elements within the loan and investment portfolios including the applicant's customary procedures regarding delinquent loans. As of the end of each of the periods covered by the statements of operation required by Section 1075.2440(b)(1) and as of the date of the latest statement of financial condition required by Section 1075.2440(a), set forth in tabular form the amounts and categories of non-accrual, past due, restructured, and potential problem loans (see Securities and Exchange Commission's Securities Act Industry Guide 3, Section III C) and the ratio of such loans to total assets. Where the amount of real estate that has been in substance foreclosed, acquired by foreclosure, or by deed in lieu of foreclosure is significant, include a brief description of the major properties and a statement as to the applicant's probable losses, if any, upon disposition of such properties.

e) Savings activities.

1. State whether the maximum rate of interest that the applicant may pay is established by regulatory authorities. State that, in the event of liquidations of the applicant after conversion, savings account holders will be entitled to full payment of their accounts before payment to shareholders. Also indicate the percentage of total savings accounts that are from out-of-state sources, if the total is significant.

2. Set forth in tabular form the amounts of time deposit accounts by categories of interest rates as of the dates of each balance sheet filed. Each interest-rate category should not be more than 200 basis points. As of the date of the latest balance sheet, set forth in tabular form for each interest-rate category, the amounts of savings maturing during each of the three years following the balance sheet date and the total maturing thereafter.

3. Disclose the weighted-average rate and general terms (as well as formal provisions for the extension of the maturity) of each category of short-term borrowings, along with the maximum amount of borrowings in each category outstanding at any month-end during each period for which an end-of-period balance sheet is required. In addition, disclose the approximate average short-term borrowings outstanding during the period and the approximate weighted-average interest rate (and a brief description of the means used to compute such average) for the aggregate short-term borrowings. The disclosure required by this subsection need not be furnished as regards borrowings in each particular category when the aggregate amount of such borrowings at the balance sheet date does not exceed one percent of assets at that date. Notwithstanding this reporting threshold, if the weighted average of the borrowings at year-end, the disclosure called by this subsection should be furnished. This information is not required to be given for any category of short-term borrowings for which the average balance outstanding during the period was less than 30% of stockholders equity at the end of the period.

f) Federal regulation. Describe briefly, to the extent not otherwise covered by other items, federal regulation of the applicant and the conduct of its operations. In particular, describe briefly the insurance of accounts and the general regulatory authority of the Federal Deposit Insurance Corporation, and federal regulatory capital requirements; the results of failure to meet those requirements; and the applicant's regulatory capital position in relation to those requirements. Also, describe the assessment authority and requirements of the Federal Deposit Insurance Corporation, the Financing Corporation, and the Resolution Funding Corporation.

g) Federal Home Loan Bank System. If a member, describe briefly the Federal Home Loan Bank System and state that the applicant is a member. The description shall include:

1. Limitations on borrowings;

2. Recent loan policies of the applicant's Federal Home Loan Bank and current interest rates; and

3. Federal Home Loan Bank stock purchase requirements and the applicant's position with respect to those requirements.

h) State regulation. Describe briefly, to the extent not otherwise covered by other items, State regulation of the applicant and the conduct of its operations. In particular, describe briefly the general regulatory authority of the Director, and State regulatory capital requirements, the results of failure to meet those requirements, and the applicant's regulatory capital position in relation to those requirements (Section 5001 of the Act and Section 1075.410). Also describe the supervisory fee assessment authority and requirements of the Director.

i) Federal and state taxation. Describe briefly the federal income tax laws applicable to the applicant including:

1. Permissible bad debt reserves;

2. The applicant's position with respect to the maximum bad debt reserve limitations as of the date of the latest statement of financial condition required under Section 1075.2440(a);

3. Future increases in the effective income tax rate;

4. The date through which the applicant's federal income tax returns have been audited by the Internal Revenue Service; and

5. The tax effect to the applicant of the payment of cash dividends on capital stock of the applicant after conversion. Also describe briefly the State taxation of the applicant.

j) Competition. Describe the material sources of competition for savings banks generally and indicate to the extent practicable the applicant's position in its principal lending and deposit markets. In answering this subsection, give to the extent known the applicant's deposit and mortgage product market shares by county in its geographic market. Also indicate its rank and any material changes or trends in its competitive standing.

k) Office and other material properties.

1. Furnish the location of the applicant's home office and each existing and approved branch office and other office facilities (such as mobile or satellite offices). State the total net book value of all its offices as of the date of the latest statement of financial condition required by Section 1075.2440(a). If any office is leased, state the expiration dates of those leases.

2. Describe briefly undeveloped land owned by the applicant, including location, net book value, and prospective use and holding period. If the applicant or a subsidiary owns or leases electronic data processing equipment principally for its own use, describe briefly the equipment indicating net book value if owned or the principal lease terms if leased.

l) Employees. State the number of persons employed full time by the applicant including executive officers listed under Section 1075.2350. State whether employees are represented by a collective bargaining group and whether the applicant's relations with its employees is satisfactory. Summarize briefly any loans, profit sharing, retirement, medical, hospitalization or other remuneration plans provided for employees not already included pursuant to Section 1075.2360.

m) Service corporations. Describe briefly the applicant's investment in any subsidiary and the major lines of business (including any joint ventures) of the subsidiary that are material to its operations.

n) Legal proceedings. Furnish the information regarding legal proceedings required to be disclosed in a registration statement filed under the Securities Exchange Act of 1934 (15 USC 78a et seq., as amended to July 1, 1991, no subsequent dates or editions). In particular, see Item 103 of the "General Rules Regarding Disclosures: Regulations S-K – Standard Instructions for Filing Forms under Securities Act of 1933 and the Securities Exchange Act of 1934" (17 CFR 229.103) November 1992, no subsequent dates or editions, U.S. Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC 20549. Unless the context otherwise requires, the word "registrant" in that regulation shall refer to the applicant.

o) Additional information. The Director may upon the request of applicant, and where consistent with the protection of account holders and others, permit the omission of any of the information required by this Section or the furnishing in substitution therefor of appropriate information of comparable character. The Director may also require the furnishing of other information in addition to, or in substitution for, the information required by this Section in any case in which the information is necessary or appropriate for an adequate description of the applicant's business done or intended to be done.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2380 Proxy Statement – Description of the Plan of Conversion

a) A statement to the following effect shall be inserted in the proxy statement immediately preceding the information required by this Section: "The Director of Banks and Real Estate has given approval to the plan of conversion, subject to its approval by members and the satisfaction of certain other conditions. However, approval by the Director does not constitute a recommendation or endorsement of the plan by the Director ".

b) The proxy statement shall contain a description of the plan of conversion. The description shall contain the information required by subsections (c) through (j) and additional information as may be necessary to accurately describe the material provisions of the plan.

c) Briefly describe the effects of conversion from a mutual institution to a stock institution including the following information:

1. State that deposit accounts of the applicant will not be affected by the conversion with respect to such matters as balances in the accounts and the extent of insurance of accounts by the Savings Association Insurance Fund or the Bank Insurance Fund, as the case may be;

2. State that deposit and borrowing members of the applicant will not continue to have voting rights in the applicant after conversion and that the members of the stock savings bank shall be only the owners of its capital stock;

3. State the present liquidation rights of account holders and describe the liquidation account to be established and maintained by the applicant, including the conditions under which the account will be paid, the interest of eligible account holders in the account and the formula by which the account will be adjusted;

4. State that the rights and obligations of borrowers from the applicant will not be changed in any manner;

5. State that capital stock to be sold by the applicant will not be insured by the Savings Association Insurance Fund or the Bank Insurance Fund, as the case may be;

6. State that none of the assets of the applicant will be distributed in order to effect the conversion other than to pay expenses incident to the conversion; and

7. State briefly the reasons why management is recommending the conversion, including any advantages to the community served by the applicant.

d) With respect to the subscription rights of members, furnish the following information:

1. The formula to be used for determining the subscription rights of account holders to purchase shares;

2. Any optional provisions included in the plan of conversion pursuant to Section 1075.1925 for the purchase of shares of capital stock;

3. The allocation formulas to be used when there is an oversubscription of shares at any time during the sale of stock under the plan of conversions; and

4. The use and time of the order forms with respect to the exercise of subscription rights.

e) Offering price range:

1. Set forth on a per-share basis the estimated public offering price range of the shares of capital stock to be sold pursuant to the plan of conversion, except that an estimated price range is not required to be stated if the offering of stock is not to begin until after the meeting of members to vote on the plan of conversion;

2. State that the offering price will be the "pro forma" market value of the shares as determined by the applicant's management and the underwriter, as the case may be; and

3. State that all the shares are required to be sold.

f) Earning and book value per share:

1. Unless the offering of stock is not to begin until after the meeting of members to vote on the plan of conversion, discuss:

A) the earnings per share of the capital stock to be sold on a "pro forma" basis as of the most recent year-end and interim period required by Section 1075.2440(a); and

B) the book value per share on a "pro forma" basis as of the most recent year-end and interim period required by Section 1075.2440(a).

2. In completing subsection (f)(1), the following shall apply:

A) Earnings and book value per share shall be furnished without giving effect to the estimated net proceeds from the sale of the capital stock and then after giving effect to those proceeds, with all assumptions used clearly stated.

B) In computing "pro forma" earnings, the applicant shall use the arithmetic average of the:

i) average yield on all interest-earning assets (Section 1075.2370(d)(4)(A)(iv)); and

ii) average rate paid on deposits (Section 1075.2370(d)(4)(B)(i)).

C) If significant changes in interest rates occur during the period presented, the Director will consider permitting alternative computations proposed by an applicant that are properly supported.

D) An appropriate statement should be included which explains that the "pro forma" data should not be relied upon as indicative of the actual financial position or results of continuing operations that will be experienced by the applicant after its conversion.

g) State the proposed beginning and ending dates of the subscription period and describe any provisions in the plan of conversion related to the timing or extension of the subscription period. Also, state:

1. That a maximum subscription price will be set forth in the offering circular used for offering of subscription rights,

2. That the actual subscription price will be the public offering price;

3. That the actual subscription price will not exceed the maximum subscription price shown on the order form; and

4. That any difference between the maximum and actual subscription prices will be refunded unless the subscribers affirmatively elect to have the differences applied to the purchase of additional shares of capital stock.

h) Furnish the following information:

1. Describe to the extent practicable the applicant's present intentions with respect to listing the capital stock on an exchange or otherwise providing a market for the purchase and sale of the capital stock in the future;

2. Describe briefly the tax effect of the conversion both to the applicant and to the various classes of account holders receiving nontransferable subscription rights to purchase capital stock in the conversion; and

3. State that the plan of conversion is attached as an exhibit to the proxy statement (or will be made available on request if the summary proxy statement provided for by Section 1075.1925 is being used) and should be consulted for further information.

i) State whether the plan of conversion provides for:

1. unsubscribed capital stock to be offered to the public through underwriters or directly by the converting savings bank. If this is the case, provide the information to the extent known required by Section 1075.2580 and indicate the estimated timing of the proposed offering; and

2. the purchase by any person or group of any insignificant residue of shares remaining at the conclusion of the offering.

j) Furnish the following information in tabular form regarding proposed purchases of capital stock involving organization directors and officers of the applicant:

1. State the total number of shares proposed to be purchased by all officers, directors and their affiliates as a group without naming them.

2. As to each officer and organization director named in Section 1075.2350(a), name him or her, state his or her position, and the number of shares proposed to be purchased by him or her.

3. As to any officer, organization director or affiliate of the organization who proposes to purchase 1% or more of the total number of shares of capital stock of the applicant to be outstanding, name him or her, state his or her position, and the number of shares proposed to be purchased by him or her.

4. With respect to the information required by subsections (j)(1), (2) and (3), indicate separately the number of shares proposed to be purchased in each offering category.

5. With respect to the information requested as to affiliates of officers, the information is required only to the extent known. In a case where the confirmation is not obtainable, only the number of shares that the affiliate is given subscription rights to purchase need be disclosed.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2390 Proxy Statement – Description of Capital Stock

a) Furnish the information regarding capital stock of the applicant required to be disclosed in a registration statement filed under the Securities Exchange Act of 1934. In particular, see Item 202 of the "General Rules Regarding Disclosures: Regulations S-K – Standard Instructions for Filing Forms under Securities Act of 1933 and the Securities Exchange Act of 1934" (17 CFR 229.202), November, 1992 no subsequent dates or editions). Unless the context otherwise requires the term "registrant" in the regulation shall refer to the applicant.

b) An undertaking should be included in the proxy statement that the applicant where practical will use its best efforts to encourage and assist a professional market maker in establishing and maintaining a market for the capital stock of the applicant.

c) Trading market:

1. Outline briefly the trading market that is expected to exist for the capital stock following the conversion including the estimated number of market makers and stockholders, and the anticipated success of the applicant in listing the stock.

2. Any discussion of the listing of the applicant's stock should include the basic requirements that must be met for such listing.

d) If the rights evidenced by the capital stock will be materially limited or qualified by the rights of savings account holders or borrowers, include the information regarding the limitations or qualifications necessary to enable investors to understand the rights evidenced by the capital stock.

History

• Source: Expedited correction at 17 Ill. Reg. 18223, effective June 7, 1993

38 Ill. Adm. Code 1075.2400 Proxy Statement – Capitalization

a) Set forth in substantially the tabular form indicated below the dollar amounts of the capitalization of the applicant. Captions in the following form may be modified as appropriate.

(A)

(B)

(C)

Capitalization

as of Most Recent Balance Sheet Date

Pro forma adjustments

as a Result of Conversion

Pro forma Capitalization, After Giving Effect to the Conversion

Deposits

FHL bank advances.............................................

Other.............................................

Borrowings

Capital Stock.............................................

Preferred stock

Paid-in capital.............................................

Retained earnings:

Restricted.............................................

Unrestricted.............................................

Total............

b) In furnishing the information required by subsection (a), the following shall apply:

1. With respect to capital stock, indicate in the table or in a footnote the total number of shares to be authorized, the par or stated value of such shares, and the number of shares to be sold as part of the conversion.

2. With respect to the funds to be received by the applicant from the sale of its capital stock, indicate in the table the estimated total amount of funds to be obtained, and in a footnote, state the price per share used in making the estimate. The total amount and price per share shall be clearly identified as being estimates.

3. With respect to Column A, the applicant should use the most recent balance sheet date required by Section 1075.2450.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2410 Proxy Statement – Use of New Capital

a) State the principal purposes for which the net proceeds to the applicant from the capital stock to be sold are intended to be invested or otherwise used and the approximate amount intended for each such purpose.

b) Detail of proposed investments are not to be given. There needs be furnished, for example, only a brief statement of any investment or other activity of the applicant which will be affected materially by availability of the proceeds. Examples of such activities may include expanded secondary market activities, larger scale lending projects, loan portfolio diversification, increased liquidity investments, repayment of debt, additional branch offices and other facilities, service corporation investments, and acquisitions.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2420 Proxy Statement – New Charter, Bylaws, or Other Documents

Describe briefly any material differences between the existing charter, bylaws, and any similar documents of the applicant and those which will take effect after conversion. This Section requires only a brief summary of the provisions which are permitted from both an investment standpoint and a voting standpoint. A complete legal description of the provisions referred to is not required and should not be given. Do not set forth the provisions verbatim; only a succinct resume is required.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2430 Proxy Statement – Other Matters

If applicable, state that the applicant will register its capital stock under Section 12(g) of the Securities Exchange Act of 1934, and that it will not deregister such stock for a period of three years. It should be noted that upon such registration, the proxy rules, insider trading reporting and restrictions, annual and periodic reporting and other requirements of the Securities Exchange Act of 1934 will be applicable.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2440 Proxy Statement – Financial Statements

This Section specifies the consolidated balance sheets, the consolidated statements of income, the consolidated statements of cash flows, and stockholders' equity required to be included in the proxy statement. If the applicant has previously used an audit period in connection with its certified financial statements that does not coincide with its fiscal year, that audit period may be used in place of any fiscal year requirements provided it covers a full 12 months' operations and is used consistently.

a) Consolidated balance sheets.

1. There shall be furnished for the applicant and its subsidiaries consolidated, audited balance sheets as of the end of each of the 2 most recent fiscal years.

2. If the latest balance sheets furnished under subsection (a)(1) are in excess of 135 days before the date of the Director's approval of the conversion, there shall be furnished an interim balance sheet as of a date within 135 days after this approval. This interim balance sheet need not be audited.

b) Consolidated statements of income and cash flows.

1. There shall be furnished for the applicant and its subsidiaries and predecessors consolidated, audited statements of income and cash flows for each of the 3 fiscal years preceding the date of the most recent balance sheet furnished. Nothwithstanding the requirement of submitting consolidated statements for the preceding 3 fiscal years, if the applicant would qualify as a "Small Business Issuer" under U.S. Securities and Exchange Commission Regulation S-B, 17 CFR 226, the applicant may furnish consolidated statements for the periods that would be required of a small business issuer if the applicant complies with all other provisions of Sections 1075.2370 and 1075.2440 and includes a 2-year balance sheet in its proxy statement and offering circular.

2. In addition, for any interim period between the latest audited balance sheet and the date of the most recent interim balance sheet being filed, and for the corresponding period of the preceding fiscal year, statements of income and cash flows shall be furnished. The interim financial statements may be unaudited.

c) Changes in stockholders' equity. An analysis of the changes in each caption of stockholders' equity presented in the balance sheets shall be given in a note or separate statement. This analysis shall be presented in the form of a reconciliation of the beginning balance to the ending balance for each period for which an income statement is required to be furnished, with all significant reconciling items described by appropriate captions.

d) Financial statements of business acquired or to be acquired. There shall be furnished the information required by 17 CFR 210.3-05 and 17 CFR 210.11-01 to 210.11-03, 1992, no subsequent dates or editions, regarding business acquired or to be acquired.

e) Separate financial statements of subsidiaries not consolidated and 50% or less owned persons. There shall be furnished the information required by 17 CFR 210.3-09 regarding separate financial statements of subsidiaries not consolidated and 50% or less owned persons.

f) Filing of other statements in certain cases. The Director may, upon the request of the applicant, and where consistent with the protection of account holders and others, permit the omission of one or more of the statements required or the filing of substitute appropriate statements of comparable character. The Director may also require the inclusion of other statements in addition to, or in substitution for, the statements required in any case in which the statements are necessary or appropriate for an adequate presentation of the financial condition of any person whose financial statements are required, or whose statements are otherwise necessary for the protection of account holders and others.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2450 Proxy Statement – Consents of Experts and Reports

a) The proxy statement shall briefly describe all consents of experts filed pursuant to Section 1075.2210(g).

b) The statement shall contain a report of the independent public accountants who have certified the financial statements and other matters in the statement.

c) Subsections (a) and (b) require only a brief summary of the provisions that are permitted from an investment standpoint and a voting standpoint. A complete legal description of the provision referred to is not required and should not be given. Do not set forth the provision verbatim; only a succinct resume is required.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2460 Proxy Statement – Attachments

There shall be attached to the proxy statement distributed to members and others a copy of the applicant's plan of conversion as approved by the Director unless the proxy statement contains a provision indicating that the plan of conversion will not be provided unless the recipient so requests within a specified period by a postage-paid postcard or other written communication.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2500 Offering Circular

An offering circular shall conform to the requirements of Sections 1075.2500 through 1075.2580.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2510 Offering Circular – Certain Manner of Presentation of Required Information Prohibited

The information required in an offering circular shall not be set forth in such fashion as to obscure any of the required information or any information necessary to keep the required information from being incomplete or misleading.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2520 Offering Circular – Certain Named Persons – Filing of Written Consent Required

If any person who has not signed an application is named in the offering circular as about to become an organization director, the written consent of this person shall be filed with the Director in the form the Director prescribes.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2530 Offering Circular – Information Required

a) The offering circular shall be dated as of the date of its issuance. The offering circular shall contain substantially the same information required to be included in the proxy statement of the applicant distributed to members to vote upon the plan of conversion. Information of the type required to be included in the proxy statement may be omitted from the offering circular only to the extent that it is clearly inapplicable. The offering circular may be in "wrap around" form with the proxy statement attached. The term "offering circular" refers to both the offering circular for the subscription offering and the offering circular for the public offering through an underwriter or the direct community marketing by the converting savings bank of the unsubscribed shares, unless otherwise indicated.

b) An offering circular for the subscription offering in "wrap around" form distributed to members and other persons who have previously been furnished a copy of the proxy statement need not contain the proxy statement as an attachment provided such offering circular states that a copy of the proxy statement has previously been furnished to such persons and that an additional copy thereof will be furnished promptly upon request to the applicant (with the telephone number and mailing address of the applicant stated).

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2540 Offering Circular – Additional Current Information Required

Each offering circular shall, as of its respective dates of issuance, include, to the extent available, the following additional current information to the extent that such information is not already included in the proxy statement:

a) Information with respect to the vote of members upon the plan of conversion and any other proposals considered at the meeting of members.

b) Information with respect to any recent material developments in the business or affairs of the applicant.

c) Information with respect to the trading market that is expected to exist for the capital stock following the conversion.

d) Information, on the outside front cover page, summarizing the results of any separate subscription offering including the number of shares sold to eligible account holders, voting members and others, the price at which the shares were sold, and the number of unsubscribed shares.

e) The information required by Section 1075.2380(e)(1) and (f).

f) Any other information necessary to make such offering circular current, including full financial statements of the applicant within 6 months before the date of issuance of such offering circular. In addition, a subscription offering circular shall contain any more recent financial statements which, at the time the subscription offering begins, it can be determined will be required to be included in an offering circular to be used in the direct community offering or public offering pursuant to this subsection.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2550 Offering Circular – Statement Required in Offering Circulars

There shall be set forth on the outside cover page of every offering circular the following statement in capital letters printed in bold-face Roman type at least as large as 10-point modern type and at least 2 points leaded: "These shares have not been approved or disapproved by the Director of the Division of Banking, nor has the Director passed upon the accuracy or adequacy of this offering circular. Any representation to the contrary is unlawful."

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2560 Offering Circular – Preliminary Offering Circular

The outside front cover page of any preliminary offering circular shall bear, in red ink, the caption "Preliminary Offering Circular", the date of its issuance, and the following statement printed in type as large as that used generally in the body of the offering circular:

"This offering circular has been filed with the Director of Banks and Real Estate, but has not been authorized for use in final form. Information contained in this offering circular is subject to completion or amendment. The shares covered may not be sold, nor may offers to buy be accepted, before the time the offering circular is declared effective by the Director. The offering circular shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of theses shares in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the securities laws of that state."

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.2570 Offering Circular – Information with Respect to Exercise of Subscription Rights

Any offering circular which is required to be delivered to subscribers shall describe all material terms of the offering relating to the exercise of subscription rights to the extent that such description is not already in the proxy statement. Such terms include the expiration date, any subscription agent, method of exercising subscription rights, payment for shares, delivery of stock certificates for shares purchased, maximum subscription prices, possible reduction of subscription price, relationship of subscription price to public offering price, requirements that all unsubscribed shares be sold, and any other material conditions relating to the exercise of subscription rights.

History

• Source: Added at 17 Ill. Reg. 8894, effective June 7, 1993

38 Ill. Adm. Code 1075.2580 Offering Circular – Information with Respect to Public Offering or Direct Community Offering

Each offering circular shall describe the material terms of the plan or plans of distribution for all unsubscribed shares of capital stock to the extent the description is not already in the proxy statement, including the following:

a) If the shares are to be offered through underwriters, the outside front cover page of both offering circulars shall give the information called for by this subsection. In the case of the offering circular for any public offering, the information shall be given in substantially the tabular form set forth in this subsection. In any other case, the information may be given in narrative form. If the information is not known at the time of the subscription offering, so state and estimate.

Price to

Public

Underwriting Discounts and Commissions

Proceeds to

Applicant

Per Share

$

$

$

Total

$

$

$

b) An offering circular for a public offering or direct community marketing, where the plan of conversion does not contain the optional provision permitted by Section 1075.1925(g), may omit the description relating to the exercise of subscription rights required by Section 1075.2570.

c) If any shares are to be offered through underwriters, the offering circular for the public offering shall state the names of the principal underwriters and the respective amounts underwritten by each. The names of the principal underwriters other than the managing underwriters and the respective amounts to be underwritten may be omitted from the offering circular for the subscription offering, unless the plan of conversion contains the optional provision permitted by Section 1075.2935(g). Each offering circular shall identify each principal underwriter having a material relationship to the applicant and state the nature of the relationship. Each offering circular shall state briefly the nature of the underwriter's obligation to take the unsubscribed shares.

d) The offering circular for the public offering shall state briefly the discounts and commissions to be allowed or paid to dealers in connection with the sale of the unsubscribed shares. This information may be omitted from the offering circular for any subscription offering, unless the plan of conversion contains the optional provision permitted by Section 1075.1925(g).

e) If any shares are to be offered through underwriters, the offering circular for the public offering shall identify any principal underwriter that intends to confirm sales to any accounts over which it exercises discretionary authority and include an estimate of the number of shares so intended to be confirmed. The information may be omitted from the offering circular for any subscription offering. With respect to this subsection, the following shall apply:

1. Commissions include all cash, securities, contracts, or anything else of value, paid, to be set aside, disposed of, or understandings made with or for the benefit of any persons in which any underwriter or dealer is interested, in connection with the sale of the shares.

2. Only commissions paid by the applicant in cash are to be included in the table. Any other consideration to the underwriters shall be set forth following the table with a reference in the second column of the table. Any finder's fees or similar payments shall be appropriately disclosed.

3. All that is required as to the nature of the underwriters' obligation is whether the underwriters are, or will be, committed to take and to pay for all the shares if any are taken, or whether it is merely an agency of "best efforts" arrangement under which the underwriters are required to take and pay for only the shares they may sell to the public. Conditions precedent to the underwriters' taking the shares, including customary "market outs," need not be described. If a "best efforts" arrangement is used, describe any standby commitments for shares not sold.

f) If any shares are to be sold by the converting savings bank through a direct community marketing, indicate the timing of the offering, the geographical area where the offering will be made, the method to be employed to market the shares, including the frequency and nature of communications or contracts with potential purchasers, any preferences that will be given any such geographical area or class of potential purchasers, and the limitations on purchases by potential purchasers.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.3000 Definitions (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3100 Ability to Repay (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3150 Verification of Ability to Pay Loan (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3200 Fraudulent or Deceptive Practices (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3225 Prepayment Penalty (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3250 Pre-Paid Insurance Products and Warranties (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3300 Refinancing Prohibited in Certain Cases (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3325 Balloon Payments (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3350 Financing of Certain Points and Fees (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3400 Payments to Contractors (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3450 Negative Amortization (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3500 Negative Equity (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3550 Counseling Prior to Perfecting Foreclosure Proceedings (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3600 Mortgage Awareness Program (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3650 Report of Default and Foreclosure Rates on Conventional Loans (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3700 The Director's Authority – Unusually High Rate on Conventional Loans (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.3750 Third Party Review of High Risk Home Loans (repealed)

History

• Source: Repealed at 41 Ill. Reg. 11336, effective August 28, 2017

38 Ill. Adm. Code 1075.4010 Definitions

For purposes of this Subpart:

"Act" means the Savings Bank Act [205 ILCS 205].

"Director " means the Director of Banks and Real Estate, or a person authorized by the Director to act in the Director's stead.

"Compelling need" means that no other non-confidential source is available to obtain information of equal relevance.

"Complete request" means a request that provides all of the information required in Section 1075.4030 of this Subpart.

"Confidential supervisory information" shall have the same meaning ascribed to that term in Section 9012 of the Act [205 ILCS 205/9012].

"Person" shall have the same meaning ascribed to that term in Section 1007.90 of the Act [205 ILCS 205/1007.90].

"Relevant" means the requested confidential supervisory information could substantially contribute to the resolution of the issues identified in the pleadings contained within the request.

"Requester" means any person who makes a request for the discovery or disclosure of confidential supervisory information, whether by subpoena, order, or other judicial or administrative process.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.4020 Purpose and Scope

a) Purpose. The purpose of this Subpart is to establish the procedures and standards by which the Director shall determine whether to disclose confidential supervisory information in response to a request for discovery or disclosure of this information.

b) Scope. This Subpart applies to requests, whether by subpoena, order, or other judicial or administrative process, for discovery or disclosure of confidential supervisory information prepared or obtained by the Director under the Act and any report of examination, visitation or investigation prepared by the state regulatory authority of another state that examines a branch of an Illinois savings bank in that state. This Subpart does not apply to:

1. a request made pursuant to the Freedom of Information Act [5 ILCS 140] (FOIA), provided that, if the information requested constitutes confidential supervisory information, it shall nonetheless be exempt from disclosure pursuant to Section 7(l)(x) of FOIA;

2. a request made by a party to whom the Director may furnish confidential supervisory information as permitted in Section 9012 of the Act [205 ILCS 205/9012]; or

3. a request made by a party to whom a savings bank or other financial institution may furnish confidential supervisory information as permitted in Section 9012(b) of the Act [205 ILCS 205/9012].

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.4030 Requests for Confidential Supervisory Information

Pursuant to Section 9012 of the Act [205 ILCS 205/9012], a request for confidential supervisory information arising from an adversarial matter, whether by subpoena, order, or other judicial or administrative process, shall be made to the Director. If the request is for a record, the requester must adequately describe the records sought by type and date. The request shall be accompanied by:

a) a copy of the formal complaint or pleading setting forth the assertions of the adversarial matter;

b) the caption and docket number assigned to the adversarial proceeding;

c) the name, address, and telephone number of designated legal counsel to each party named in the adversarial proceeding;

d) a statement detailing the relevance of the requested confidential supervisory information;

e) a statement detailing a compelling need for the requested confidential supervisory information;

f) a statement describing any prior judicial decisions or pending motions in the case that may bear on the asserted relevance of the requested information; and

g) a statement detailing why the requester believes that the compelling need outweighs the public interest considerations in maintaining confidentiality and why the compelling need outweighs the burden on the Division of Banks and Real Estate to produce the requested confidential supervisory information.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.4040 Where to Submit a Request

A person requesting discovery or disclosure of confidential supervisory information under this Subpart shall mail, or hand deliver, the request to:

Division of Banks and Real Estate

Department of Financial and Professional Regulation

Bureau of Residential Finance/Thrift Division

310 South Michigan Avenue, Suite 2130

Chicago, Illinois 60604-4278

Attention: Thrift Legal Counsel

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.4050 Consideration of Requests

a) Standards for the Disclosure of Confidential Supervisory Information. When making a determination with respect to the disclosure of confidential supervisory information, the Director shall consider the following standards:

1. the confidential supervisory information identified in the request is relevant;

2. a compelling need exists;

3. if the requested confidential supervisory information is to be used in connection with an adversarial matter, the lawsuit or administrative action has been filed; and

4. the production and disclosure of the confidential supervisory information is not unduly burdensome to the Division of Banks and Real Estate.

b) Director Inquiries. In determining whether to disclose the requested confidential supervisory information, the Director may inquire into the circumstances of any case underlying the request and rely on sources of information other than the requester, including other parties.

c) Time Required by the Director to Respond. The Director, within 15 days, shall determine whether to disclose the requested confidential supervisory information. The 15-day time period shall not commence until the Director receives a complete request. If the request is not complete, the Director shall notify the requester of the required information that has not previously been provided.

d) Notice to Other Parties. Following receipt of a complete request for confidential supervisory information, the Director may notify the savings bank or Illinois savings bank holding company office that is the subject of the requested information, unless the Director determines that to do so would advantage or prejudice any of the parties in the matter at issue.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.4060 Disclosure of Confidential Supervisory Information

a) Conditions and Limitations. The Director may impose any conditions and limitations on the disclosure of confidential supervisory information that are necessary to protect the confidentiality of this information. Except as authorized by the Director, no person obtaining access to confidential supervisory information under this Subpart may make a copy of the confidential supervisory information.

b) Restrictions on Dissemination of Confidential Supervisory Information. The Director may condition a decision to disclose confidential supervisory information on entry of a protective order by the court or administrative tribunal presiding in the particular case or on a written agreement of confidentiality. In a case in which a protective order or agreement has already been entered between parties other than the Director, the Director may nevertheless condition approval for release of confidential supervisory information upon the inclusion of additional or amended provisions in the protective order. The Director may authorize a party who obtained the records for use in one case to provide them to another party in another case, subject to any conditions that the Director may impose on either or both parties.

c) Notification of Parties and Procedures for Sharing and Using Confidential Supervisory Information in Litigation. The requester shall promptly notify other parties to a case of the release of confidential supervisory information obtained pursuant to this Subpart and, upon entry of a protective order, shall provide copies of confidential supervisory information to the other parties.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.4070 Retrieval and Destruction of Previously Disclosed Confidential Supervisory Information Used in Litigation

At the conclusion of an action:

a) the requester shall retrieve the disclosed confidential supervisory information from the judicial or administrative file as soon as the presiding judicial or administrative authority no longer requires the information;

b) the requester, and each party who may have subsequently received confidential supervisory information pursuant to a protective order, shall destroy the disclosed confidential supervisory information covered by the protective order; and

c) each party shall certify to the Director that the disclosed confidential supervisory information covered by the protective order has been destroyed.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.4080 Fees for Services

a) The Director may charge the following fees for any record search or copying performed by the Director:

1. Reproduction costs incurred in making photocopies of documents shall be reimbursed at $.25 per exposure.

2. All other costs, including, but not limited to, the cost of telephone calls, telegrams, and shipping incurred in searching for and transporting data pursuant to a request for confidential supervisory information shall be reimbursed at actual costs.

b) The Director may require a requester to remit payment prior to providing the requested confidential supervisory information.

History

• Source: Amended at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.5000 Purpose and Scope

This Subpart applies to savings banks chartered under the Savings Bank Act [205 ILCS 205/1001].

History

• Source: Added at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.5010 Definitions

"Payday Loan" or "loan" means a loan with a finance charge exceeding an annual percentage rate of 36% and with a term that does not exceed 120 days, including any transaction conducted via any medium whatsoever, including, but not limited to, paper, facsimile, Internet, or telephone, in which:

A lender accepts one or more checks dated on the date written and agrees to hold them for a period of days before deposit or presentment, or accepts one or more checks dated subsequent to the date written and agrees to hold them for deposit; or

A lender accepts one or more authorizations to debit a consumer's account; or

A lender accepts an interest in a consumer's wages, including, but not limited to, a wage assignment.

"PLRA" means the Payday Loan Reform Act [815 ILCS 122]. Savings Banks are expressly exempt from the provisions of the PLRA.

"Savings Bank" means a savings bank chartered under the Savings Bank Act [205 ILCS 205/1001].

History

• Source: Added at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.5020 Applicability of Subpart

This Subpart shall apply only to payday loans made by a savings bank. Products and services offered by a savings bank that are not offered by lenders governed by the PLRA shall not be subject to this Subpart.

History

• Source: Added at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.5030 Issuance of Payday Loans by Savings Banks

a) A savings bank making a payday loan shall satisfactorily address all safety and soundness considerations identified by the Division of Banking in its examination and supervision of the savings bank. Safety and soundness considerations include, without limitation:

1. Risk-management practices for payday loan activities, particularly with regard to concentrations of payday loans;

2. Capital adequacy, depending on the level and volatility of risk;

3. Allowance for loan losses to ensure the allowance is adequate to absorb estimated credit losses within the payday loan portfolio;

4. Classification of payday loans, given the unsecured nature of the credit and weakness of repayment capacity inherent in payday loans; and

5. The establishment and maintenance of extension, deferral, renewal and rewrite standards consistent with the PLRA.

b) In the event the Division of Banking determines the savings bank's management of safety and soundness risks relating to its payday loan portfolio is deficient, the Division of Banking may initiate corrective enforcement action, as authorized under the Savings Bank Act.

History

• Source: Added at 30 Ill. Reg. 19068, effective December 1, 2006

38 Ill. Adm. Code 1075.APPENDIX A Estimated Monthly Income and Expenses Worksheet

ESTIMATED MONTHLY INCOME:

Paycheck (Net/"Take Home")

$

Interest/Dividends

Social Security/Pension

Alimony/Child Support

Other

Total Estimated Monthly Income

$

(Add Lines 1 through 5)

ESTIMATED MONTHLY EXPENSES:

Mortgages/Rent

$

Homeowner's/Renter's Insurance

Real Estate Taxes

Water & Sewer

House Repairs

Groceries

Telephone

Gas (House)

Electric

Credit Cards

Car Payments

Car Insurance

Licenses (Car)

Gas (Car)

Car Repairs/Maintenance

Clothing

Medical/Dental

Medical Insurance

Prescriptions

Loan Payments

(Not included in Line 2 or 17)

Tuition

Contribution

Cellular Telephone

Pager

Recreation/Vacation

Other Insurance (Life, etc.)

Income Taxes

Alimony/Child Support

Transportation

Miscellaneous

Other

Total Estimated Monthly Expenses

$

(Add Lines 7 through 37)

*Excess/Deficit

$

(Subtract Line 38 from Line 6)

*If Line 38 is greater than Line 6, your estimated monthly expenses exceed your estimated monthly income.

History

• Source: Added at 25 Ill. Reg. 6197, effective May 17, 2001

38 Ill. Adm. Code 1075.APPENDIX B Mortgage Ratio Worksheet

Part I

LOAN-TO-VALUE-RATIO

Mortgage Amounts

$

Appraised Value

$

Line 1 divided by Line 2

Note: This is the Percentage of the purchase price appraised value of your home that will be allocated to your total mortgage. A percentage rate over 80% may result in you incurring additional costs.

Borrower's Signature

Part II

INCOME RATIO

MONTHLY HOUSING EXPENSES:

Principal and Interest Payment

$

Homeowner's Insurance

Real Estate Tax

Mortgage Insurance Premium

Homeowner's Assoc. Fee

Ground Rents

Payments on Existing or Proposed

2nd Mortgage

Total Housing Expense

(Add Lines 1 through 7)

$

MONTHLY GROSS INCOME:

Gross Salary

$

Dividends/Interest

Social Security/Pension

Alimony/Child Support

Other

Total Gross Income

$

Divide Line 8 by Line 14

Note: This is the percentage of your gross monthly income that will be allocated to your mortgage expenses.

Part III

LONG-TERM DEBT RATIO

MONTHLY EPXNESES:

Total Housing Expense (Part II, Line 8)

$

Credit Cards

Car Payments

Loans

(Not Included on Line 1 or Line 3)

Alimony/Child Support

Total Expenses

$

(Lines 1 through 5)

MONTHLY INCOME:

Total Gross Income

(Part II, Line 14)

$

Divided Line 6 by Line 7

Note: This is the percentage of your gross monthly income that will be allocated to your mortgage expenses and other debt that you pay on a monthly basis.

Borrower's Signature

History

• Source: Added at 25 Ill. Reg. 6197, effective May 17, 2001