There are very few limitations on late charges under Illinois law for consumer loans or consumer mortgage loans, provided that your customers have agreed to such charges in the loan agreements.

The Illinois Banking Act permits banks to charge fees, interest and other charges, provided that the bank sets these charges based on its “prudent business judgment and safe and sound operating standards.” Additionally, the Interest Act authorizes a bank to collect interest and charges at any rate agreed on by the bank and the borrower. For loans secured by real estate in particular, the Illinois Supreme Court has confirmed that the Interest Act’s previous restrictions on interest and fee charges have been removed, insofar as they apply to real estate loans made by banks.

For resources related to our guidance, please see below:

• Illinois Banking Act — 205 ILCS 5/5e (“[n]otwithstanding the provisions of any other law in connection with extensions of credit,” banks may charge “interest, fees, and other charges . . . subject only to the provisions of subsection (1) of Section 4 of the Interest Act” and the laws applicable to real estate loans, provided that the bank sets fees based on its “prudent business judgment and safe and sound operating standards.”)

• Interest Act — 815 ILCS 205/4(1) (authorizes a bank “to receive or contract to receive and collect interest and charges at any rate or rates agreed upon by the bank or branch and the borrower.”)

• United States Bank Nat’l Ass’n v. Clark, 216 Ill.2d 334, 349 (2005) (the Interest Act implicitly repealed previous restrictions on interest and fee charges on real estate loans)

• IDFPR Interpretive Letter 98-01 (Section 4(1)(l) of the Interest Act implicitly repealed previous restrictions on interest and fee charges on real estate loans made by banks)