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Do you know of any Illinois Banking Act provision that would limit the loan amount (i.e., $5,000) for a Home Equity Line of Credit? – IBA Compliance Connection

IBA Compliance Connection

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Do you know of any Illinois Banking Act provision that would limit the loan amount (i.e., $5,000) for a Home Equity Line of Credit?

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There is no such limitation in the Illinois Banking Act. You may be thinking of the Illinois Interest Act, which prohibits a lender from taking a security interest in real property for a revolving line unless the line of credit is in excess of $5,000.
 
However, the Illinois Financial Services Development Act exempts any “financial institution,” including Illinois banks, from that requirement. The law applies “notwithstanding the provisions of any other laws in connection with revolving credit plans” and expressly permits banks to offer revolving credit plans (including HELOCs) and to “take real and personal property as security therefor.”
 
We are not aware of any other limitations regarding HELOC loan amounts.
 
For resources related to our guidance, please see:
  • Illinois Interest Act, 815 ILCS 205/4.1 (“A revolving credit arrangement which grants the debtor a line of credit in excess of $5,000 may include provisions granting the lender a security interest in real property or in a beneficial interest in a land trust to secure amounts of credit extended by the lender.”)
  • Illinois Financial Services Development Act, 205 ILCS 675/4 (“Notwithstanding the provisions of any other laws in connection with revolving credit plans, any financial institution may, subject to the other provisions of this Section 4 offer and extend credit under a revolving credit plan to a borrower and in connection therewith may charge and collect interest and other charges, may take real and personal property as security therefor and may provide in the agreement governing the revolving credit plan for such other terms and conditions as the financial institution and borrower may agree upon from time to time.”)