Title 7, Chapter 1, Section 286
( 7-1-286)
(a) Except as provided in subsection (b) of this Code section, a
bank shall make a loan secured by improved or unimproved real estate
(including a leasehold) only where such loan is: (1) Secured by a mortgage, deed of trust, security deed, or
similar instrument providing a first lien or a first security
title or is otherwise secured in accordance with regulations
prescribed by the department; (2) For not more than 75 percent of the fair market value of the
real estate in the case of a single maturity loan or for not more
than 95 percent of the fair market value of the real estate in the
case of loans that must be regularly amortized; provided, however,
that these limitations shall not apply to: (A) Any loan secured by real estate made to finance construction
of an improvement or development, in which case the amount of
the loan shall not exceed 100 percent of the estimated completed
value of the improvements; (B) Any loan which the federal housing administrator insures or
makes a commitment to insure; (C) Any loan which the secretary of veterans affairs guarantees
or makes a commitment to guarantee; (D) Any loan secured by a mortgage, deed of trust, security
deed, or similar instrument providing for a nonpurchase money
lien on residential real property owned and occupied by the
borrower, provided that such loan may not exceed 100 percent of
the fair market value of the real estate after deducting all
outstanding liens on the property; or (E) Any other type of loan or a portion thereof with respect to
which the department determines that banks may safely extend
loans in excess of the foregoing limitations; (3) Conforms with requirements as to duration, amortization,
appraisal, insurance, and documentation, as may be prescribed by
regulation of the department. (b) The limitations of subsection (a) of this Code section shall not
apply to: (1) An investment security acquired pursuant to Code Section 7-1-287; (2) A loan in connection with which the bank takes a real estate
lien as security in the exercise of banking prudence but as to
which it is relying for repayment on: (A) The general credit of the obligor or of an installment buyer
or of a lessee of the real estate; (B) Collateral other than the real estate lien; (C) A guaranty or an agreement to take over or purchase the
loan, in the event of default, by a financially responsible
person other than a person engaged in the business of
guaranteeing real estate loans; or (D) An agreement by a financially responsible person to take
over or purchase the loan, or to provide funds for payment
thereof, within a period of two years from the date of the loan; and there is documentation in the file setting forth the
applicable facts to support reliance on this paragraph. (c) For the purpose of this Code section, a "leasehold" shall mean
the interest, which is security for a loan, of a lessee of real
estate under a lease which on the date of the loan has an unexpired
term extending at least ten years beyond the maturity of the loan or
contains a right of renewal, which may be exercised by the bank,
extending at least ten years beyond the maturity of the loan. (d) Notwithstanding any other provisions of this chapter and
otherwise subject to regulations of the department, a bank or trust
company may acquire, directly or indirectly, an ownership interest
in real estate incidental to the financing of the purchase,
development, or improvement of such real estate, provided: (1) The amount of such ownership interest shall not exceed 25
percent of the appraised value of the real estate; (2) The amount of such ownership interest when aggregated with the amount financed shall not exceed the limitations prescribed by this Code section and Code Section 7-1-285; (3) The ownership interest shall be terminated upon substantial repayment of the financing in the manner prescribed in Code Section 7-1-263, relating to the divestiture of real estate interest; and (4) Any time real estate owned by a bank or trust company pursuant to this subsection is held or disposed of pursuant to the provisions of Code Section 7-1-263, said action to hold or dispose shall be reported in writing annually to the stockholders. Said report shall include disclosure of any real estate acquired by foreclosure or the taking by a deed in lieu of foreclosure and the name or names of the corporation or individuals from whom title was taken. |