6.1-63 - (Repealed effective October 1, 2010) Limitation on amount of loans secured by real estate generally.
§ 6.1-63. (Repealed effective October 1, 2010) Limitation on amount of loanssecured by real estate generally.
A. No bank shall make any loan secured by real estate when such loan,together with all prior liens or encumbrances on such real estate, exceeds 90percent of the appraised value of the real estate securing such loan.
B. The appraisals necessitated by this section shall be required if the loanshall equal or exceed an amount established from time to time by theCommissioner of Financial Institutions who, in establishing such amount,shall take into consideration the requirements imposed on banks underapplicable federal regulations. Such appraisals shall be in writing, signedby the appraisers, and shall be retained in the files of the bank, subject toexamination of bank examiners. The appraisers so appointed shall beexperienced persons competent to appraise real estate in the locality wherethe real estate is located.
C. Any bank may make loans secured by real estate that do not comply with thelimitations and restrictions in this section if the total unpaid amount ofsuch loans, exclusive of the loans which subsequently comply with suchlimitations and restrictions, does not exceed 10 percent of the total amountof loans secured by real estate.
D. The provisions of this section relating to ratio of loan to appraisedvalue and appraisal shall not relate to the case where:
1. The real estate security is taken solely as an abundance of caution onterms which are not more favorable than they would be in absence of such alien on real estate;
2. A real estate security conveyance is taken by or ancillary to theassignment of lease obligations upon which the bank is relying primarily andprudently;
3. A subsequent transaction results from an existing extension of creditproviding (i) that the borrower has performed satisfactorily, (ii) there isno advance of new money, except as formerly agreed, (iii) the credit standingof the borrower is not deteriorating, and (iv) there is no obvious andnoticeable deterioration of marketing conditions or the physical assets whichprovide collateral security to the bank; or
4. A lien upon real estate is taken to secure a prior advance which was notsecured by such real estate.
E. In cases where an appraisal by a state-certified or state-licensedappraiser is not required, under this or other sections of this chapter in areal estate-related financial transaction, the bank as a matter of prudencemay take and preserve a reasonable appraisal, valuation or analysis of realestate or real property in connection with such transaction.
F. The State Corporation Commission may by order or regulation eliminateloans or specific categories of loans from the requirements of this section.
(Code 1950, § 6-78; 1952, c. 25; 1956, c. 622; 1960, c. 23; 1964, c. 150;1966, c. 584; 1968, c. 549; 1972, c. 189; 1976, c. 487; 1978, c. 624; 1979,c. 375; 1981, c. 271; 1982, c. 263; 1984, c. 133; 1988, c. 170; 1991, c. 160;1992, c. 68; 1994, c. 501; 2005, c. 263.)