Loans to one borrower.
1. An association shall not make at one time loans to any one borrower, or under any one transaction, or applicable to any one project, or tract, if the loans in the aggregate are in excess of whichever of the following is the lesser:
(a) Ten percent of its total savings accounts, unless that requirement is waived by written approval of the Commissioner.
(b) An amount equal to the sum of its capital, surplus, undivided profits, loan reserve, federal insurance reserve, capital notes and such other reserves as the Commissioner may prescribe.
2. For the purpose of this section, the term “one borrower” means:
(a) Any person or entity that is, or that upon the making of a loan will become, obligor on a loan.
(b) Nominees of the obligor.
(c) All persons, trusts, partnerships, syndicates and corporations of which the obligor is a nominee or a beneficiary, partner, member, or stockholder of record or beneficial interest stockholder owning 10 percent or more of the capital stock of any corporation.
(d) If the obligor is a trust, partnership, syndicate or corporation, all trusts, partnerships, syndicates and corporations of which any beneficiary, partner, member, or stockholder of record or beneficial interest stockholder owning 10 percent or more of the capital stock is also a beneficiary, partner, member or stockholder of record or beneficial interest stockholder owning 10 percent or more of the capital stock of the association.
3. For the purpose of this section, the term “loans to any one borrower” means the amount of the new loan plus the total balances of all outstanding loans owed to the association by the borrower. Notwithstanding any other limitations of this section, the loan may be made if the new loan when added to the total balances of all outstanding loans owed to the association by the borrower does not exceed $250,000.
4. For the purpose of this section, the term “balances of all outstanding loans” means the original amounts loaned by the association plus any additional advances and interest due and unpaid, less repayments and participating interests sold and exclusive of any loan on the security of real estate the title to which has been conveyed to a bona fide purchaser of the real estate.
5. If an association makes a loan to any one borrower in an amount which, when added to the total balances of all outstanding loans owed to the association by the borrower, exceeds $250,000, the records of the association with respect to the loan must include documentation showing that the loan was made within the limitations of this chapter. For the purpose of that documentation, the association may require, and may accept in good faith, a certification by the borrower identifying the persons, entities and interests described in the definition of one borrower in subsection 2.
Last modified: February 26, 2006