(1) An association may make a loan or invest in a real estate contract described by ORS 722.322 (7) if the excess is guaranteed or insured against loss by a mortgage guarantee insurance company licensed to transact insurance in this state. When the excess does not exceed 95 percent of the appraised value, an association may, in lieu of such guarantee or insurance, establish an excess reserve account for the payment of losses.
(2) When an excess reserve account is established under subsection (1) of this section, the association shall from time to time place in the excess reserve account sums adequate to maintain a balance in the account equal to five percent of the entire unpaid balance on all such loans and contracts. Any losses on such loans and contracts shall be charged to the excess reserve account until it is exhausted and, after that, such losses may be charged to earned surplus or other reserve accounts. [1975 c.582 §99; 1979 c.863 §9]
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