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(6) A partially-amortized monthly installment loan may be made in an amount not in excess of 75 percent of the value of the real estate.

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(d) Documentation. The record each loan the security for which includes one or more dwelling units shall contain documentation showing the number of dwelling units covered by the loan, the number of bedrooms in each dwelling unit, and whether such dwelling units are in an elevator-type structure.

[23 F.R. 9899, Dec. 23, 1958, as amended at 28 F.R. 4839, May 15, 1963; 28 FR. 5414, June 1, 1963; 30 F.R. 214, Jan. 8, 1965; 30 FR. 14195, Nov. 11, 1965; 33 F.R. 10524, July 24, 1968; 36 F.R. 901, Jan. 20, 1971; 36 FR 2911, Feb. 12, 1971; 37 FR 5118, Mar. 10, 1972; 37 FR 6285, Mar. 28, 1972; 37 FR 14756, July 25, 1972; 38 FR 16029, June 20, 1973; 38 FR 19112, July 18, 1973; 39 FR 9429, Mar. 11, 1974; 39 FR 31625, Aug. 30, 1974]

§ 545.6-2 Lending powers under sections 11 and 12 of Charter E.

Any Federal association which has Charter E may, under sections 11 and 12 thereof, make monthly installment loans, repayable in not less than 5 nor more than 20 years, on the security of first liens on homes or combination of homes and business property for an amount not in excess of 75 percent of the value thereof, and on other improved real estate for an amount not in excess of 50 percent of the value thereof. [23 F.R. 9900, Dec. 23, 1958]

§ 545.6-3 Lending powers under other charter provisions.

Except as otherwise provided in paragraph (c) of this section any Federal association that has amended Charter K by the addition thereto of § 14.1 and any Federal association which has a charter in any other form not inconsistent with the provisions of §§ 545.6 to 545.6-13, may upon authorization by its board of directors and without further action by its members, make the following types of loans and the use by any such association of the applicable loan plans, practices, procedures, and maximum lending percentages is hereby approved by the Board:

(a) General. Any loan that a Federal association which has Charter K may make under § 545.6-1;

(b) Loans guaranteed at least 20 percent. Any loan (with or without security) at least 20 percent of which is guaranteed under chapter 37 of title 38, United States Code; and

(c) Loans on developed building lots and sites-(1) Loans to builders. Subject to the limitations of § 545.6-7, a Federal association which has a charter in the form of Charter N or Charter K (rev.) without any variation or amendment inconsistent with the provision of either paragraph (a) or paragraph (b) of § 544.1 of this chapter may, upon authorization by such association's board of directors and without further action by its members, make loans to builders of homes on the security of first liens on other improved real estate as defined in paragraph (b) of § 541.12 of this chapter, subject to the following requirements.

(i) No such loan shall be made to any person, partnership, corporation, or syndicate, hereinafter referred to as applicant, unless and until such Federal association has obtained from the applicant a signed statement by him showing his financial condition and has otbained a written report on his credit standing and evidence of his ability to undertake and to discharge all of the obligations involved in the loan; nor shall any such loan be made unless and until the association has obtained from the applicant a statement signed by him stating the purchase price of the security on which the loan is sought and representing to such association that, if such loan is made, the applicant will, within a period of not more than 6 months from the date of the security instrument, commence construction of a structure or structures designed for residential use for one family on the lot which is security for such loan, or on a specified number of such lots, and that within a period of not more than 3 years from the date of the security instrument the applicant will build to completion structures designed for residential use for one family on all of the lots or sites which are security for such loan;

(ii) No such loan shall be made in an amount equal to more than 75 percent of the value of the real estate security therefor;

(iii) Each such loan shall be repayable within a period not in excess of 3 years from the date of the security instrument, with or without amortization of principal prior to the expiration of such period but with interest payable at least semiannually commencing not more than 12 months after the date of the security instrument; however, the association's board of directors may approve the extension of the time for pay

ment for an additional period not in excess of 3 years, but no such extension may be approved unless (a) interest on the loan is current, (b) said board has before it a current independent appraisal of the security property, and (c) the outstanding principal balance of the loan is or has been reduced to an amount not in excess of 75 percent of the value of the security property; in addition, if such extension is effected by refinancing the original loan with a new loan, the principal amount of the new loan may not exceed the outstanding principal balance of the original loan at the time of such extension;

(iv) No such loan shall be made if the aggregate amount of such loan and of the unpaid balance of all outstanding loans made pursuant to the provisions of this paragraph (c) exceeds 5 percent of such Federal association's assets; and no such loan shall be made to any applicant if the aggregate amount of such loan and of the unpaid balances of all outstanding loans made to such applicant pursuant to the provisions of this paragraph (c), including the balances of all outstanding loans made under this paragraph (c) to any partnership, corporation, or syndicate of which any partner, stockholder, owner, participant, or officer, is the applicant or is a partner, stockholder, owner, participant or officer of the applicant, exceeds 1 percent of such Federal association's assets;

(v) No such loan shall be made on the security of real estate located beyond such Federal association's regular lending area; and

(vi) No lot or site may be released from the security for any such loan unless and until the ratio of the unpaid balance of the loan to the value, as determined at the time the loan was made, of the security remaining after such release is no greater than the ratio of the original amount of the loan to the value of the total security as determined at the time the loan was made.

(2) Loans to individuals. Subject to the limitations of § 545.6-7, a Federal association which has a charter in the form of Charter N or Charter K (rev.) may. upon authorization by such association's board of directors, make a loan to an individual on the security of a first lien on other improved real estate as defined in paragraph (b) of § 541.12 of this chapter, subject to the following requirements:

(1) No such loan may be made in an amount equal to more than 75 percent of the value of the real estate security therefor;

(1) Each such loan shall be repayable in full within not more than 5 years from the date of the loan, and the loan contract shall provide for equal, or substantially equal, monthly payments of principal and interest, or equal monthly payments of principal with interest payable monthly on the unpaid balance, beginning within not more than 60 days after disbursement of the loan, sufficient to amortize at least 40 percent of the original principal amount of the loan prior to the end of the loan term;

(iii) The Federal association shall require that the borrower, including a purchaser who assumes the loan, execute a certification in writing stating that no lien or charge on such property, other than the lien of the association or liens or charges which will be discharged from the proceeds of the loan, has been given or executed by the borrower or has been contracted or agreed to be so given or executed;

(iv) If the loan is sought or assumed for the purpose of enabling a purchaser to acquire the security property, the Federal association shall require that the vendor or vendors execute a certification in writing stating that no lien or charge upon such property, other than the lien of the association or liens or charges which will be discharged from the proceeds of the loan, has been given or executed to the vendor or vendors by the purchaser or has been contracted or agreed to be so given or executed;

(v) No such loan shall be made on the security of real estate located beyond such Federal association's regular lending area; and

(vi) The Federal association shall require that the borrower execute a certification in writing stating that (a) it is the intention of the borrower that the lot which is security for the loan will be the site for construction of his permanent home and is not a site for a seasonal or vacation home, and (b) such borrower does not own and is not purchasing any other lot intended to be the site for construction of his permanent home.

[26 F.R. 3273, Apr. 18, 1961, as amended at 36 F.R. 8507, May 7, 1971; 37 F.R. 12485, June 24, 1972]

§ 545.6-4 Participations.

(a) General.-(1) Authority for participation. Subject to the provisions of

§ 545.6-7, a Federal association may participate in the making of a loan on the security of real estate with, or purchase a participation interest in such a loan from, an approved lender or lenders (as defined in paragraph (g) of § 563.9 of this chapter) if the loan qualifies as a loan in which the association is otherwise authorized to invest, but only the amount of the association's participation interest is required to be counted toward any percentage-of-assets limitation or other percentage limitation in this chapter. A Federal association may sell a participation interest in a loan upon the security of real estate. A Federal association shall comply with the provisions of Part 563 of this chapter with respect to the making of loans in participation with other approved lenders and with respect to the purchase and sale of participation interests in loans on the security of real estate.

(2) Exception for urban renewal loans. Investments in urban renewal loans pursuant to § 545.6-18(b) may be made in participation with other than approved lenders, as permitted by $545.6-18(e).

(b) Board approval for other transactions. A Federal association may engage in a participation transaction other than one permitted by paragraph (a) of this section only if it has obtained prior written approval of the Board with respect to such transaction. Any loan in which a Federal association participates or in which it purchases a participation interest pursuant to such approval may be repayable on such basis and within such period as the Board may authorize in such approval, without regard to any other provisions of this part.

[38 FR 15621, June 14, 1973]

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(a) General provisions. A Federal association may purchase any loan that it may make, unless expressly prohibited by other provisions of this part, and may also purchase any insured loan secured by a home or combination of home and business property located outside of the State (including the District of Columbia, the Commonwealth of Puerto Rico, and the possessions of the United States) in which such association's home office is located at an investment not exceeding the sum of (1) $55,000 for each single-family dwelling, or $82,500 with respect to each such dwelling in Alaska, Guam or Hawaii, (2) an amount per

dwelling unit within the limits set forth in section 207(c)(3) of the National Housing Act, with such increases therein as may be made from time to time by the Federal Housing Commissioner in accordance therewith, and (3) the percentage of value acceptable to the insuring agency of such part of the property as is not attributable to dwelling use. No loan may be purchased by a Federal association from an affiliated institution without the prior approval of the Board, or from a director, officer or employee of such association, or from any person or firm regularly serving such association in the capacity of attorney-at-law. If a Federal association increases its savings accounts as a part of the purchase of any loan, it shall obtain such approval as is required by the rules and regulations for insurance of accounts.

(b) Purchase from Federal Savings and Loan Insurance Corporation. A Federal association may purchase from the Federal Savings and Loan Insurance Corporation any loan that such association may make; and, without regard to any other provision of this part except § 545.6-7, may purchase from such Corporation any loan on the security of a first lien on improved real estate if a portion of the loan is guaranteed by such Corporation under a guaranty contract made by such Corporation with the purchasing association.

[30 FR 11714, Sept. 14, 1965, as amended at 39 FR 31625, Aug. 30, 1974]

§ 545.6-6 Lending area.

The regular lending area of a Federal association consists of the area: (a) Within the State in which such association's home office is located; (b) within any portion of a circle with a radius of 100 miles from such association's home office which is outside of the State in which such association's home office is located; and (c) in the case of a Federal association which is converted from a State-chartered institution, beyond the areas specified in paragraphs (a) and (b) of this section but within which area such association made loans while operting under State charter. Each converted association that desires to continue to make loans beyond the areas specified in paragraph (a) and (b) of this section but in the areas in which it made loans while operating under State charter shall file with the Board a map showing the areas within which such association made loans while operating under State

charter. For the purpose of this section, the term "State" shall include the District of Columbia, the Commonwealth of Puerto Rico, and the possessions of the United States; and a county, parish, or similar political subdivision of a State is the unit of "area" in which a converted association made loans beyond the areas specified in paragraphs (a) and (b) of this section while operating under State charter.

[38 FR 26711, Sept. 25, 1973]

§ 545.6-7 Percentage limitations on real estate loan investments.

(a) Loan investments not subject to percentage limitations. The following investments by a Federal association in loans on the security of real estate shall not be subject to any percentage-ofassets or percentage-of-savings-accounts limitation:

(1) A loan on the security of a singlefamily dwelling, or on the security of a home or combination of home and business property except, however, any such loan which is:

(1) On the security of any such property located beyond the association's regular lending area;

(ii) in excess of $55,000 for any singlefamily dwelling;

(iii) In excess of the amount prescribed in or under section 207(c) (3) of the National Housing Act for any dwelling unit in a home or combination of home and business property which is not a single-family dwelling;

(iv) A loan to facilitate trade-in or exchange of homes made under § 545.6-1 (a) (iii);

(v) a loan on a single-family dwelling made under § 545.6-1 (a) (4) or (5), as long as such loan is in excess of 80 percent of the value or purchase price of the security property, whichever is less, determined at the time the loan was made;

(2) A guaranteed loan (without regard to the location of the security property) in any amount if at least 20 percent of the loan is guaranteed.

(3) An insured loan which is purchased (without regard to the location of the security property) and which does not exceed (1) $55,000 on the security of a single-family dwelling, or (ii) the amount prescribed in or under section 207 (c)(3) of the National Housing Act for any dwelling unit in any home or combination of home and business property which is not a single-family dwelling;

(4) An insured loan to finance land development made under § 545.6-14a;

(5) A loan guaranteed pursuant to the New Communities Act of 1968 made under § 545.6-22; and

(6) A participation interest in any insured or guaranteed loan (without regard to the location or type of the security property), and a participation interest in any loan specified in subparagraphs (1) through (5) of this paragraph as not subject to any percentage limitation.

(b) Percentage limitations for specific types of loans. Real estate loan investments made under the authority of § 545.6-14 (land acquisition and development loans), § 545.6-16 (loans for housing for the aging), § 545.6–18 (urban renewal loans), § 545.6-20 (Foreign Assistance Act loans), § 545.6-3 (c) (developed building lot loans), § 545.6-1(a) (4) and (5) (loans on single-family dwellings in excess of 80 percent of value), or § 545.6-1 (a) (3) (iii) (loans to facilitate trade-in or exchange of homes) shall be subject to the respective percentage limitations contained in such sections. However, whenever the terms of a loan investment under § 545.6-16 or 8545.6-18 would meet the requirements for a loan under § 545.6-1, it may be released from the percentage-limitation category in § 545.6-16 or § 545.6-18 and, unless it is a loan specified in paragraph (a) of this section as not subject to any percentage limitation, allocated within an applicable percentage-limitation category in paragraph (c) of this section. A loan investment under § 545.6-1(a) (4) or (5) on a single-family dwelling within the association's regular lending area may be released from any percentagelimitation category when the loan balance has been reduced to not more than 80 percent of value.

(c) Percentage limitations for other loans. Except as specified in paragraphs (a) and (b) of this section, no Federal association may make any investment in a real estate loan unless the amount of such investment can be allocated within one or more of the 3 percentage-limitation categories specified in this paragraph. In the case of a loan investment which is specified as allocable to more than one of the 3 categories, all or part of any allocation to any one of such categories may be reallocated at any time to another one of such categories, if applicable.

(1) General 20-percent-of-assets category. The following investments, not to

exceed at any one time an amount equal to 20 percent of the association's assets, are allocable to this category:

(i) Any loan on the security of other improved real estate, other dwelling units, or a combination of dwelling units, including homes, and business property involving only minor or incidental business use, without regard to the location of the security property;

(ii) Any loan on the security of a single-family dwelling, if either

(a) such loan exceeds $55,000, or (b) The security property is located beyond the association's regular lending area;

(iii) Any loan on the security of a home or combination of home and business property if either

(a) The amount of such loan exceeds, for any dwelling unit in any such security property which is not a single-family dwelling, an amount prescribed in or under section 207(c) (3) of the National Housing Act; or

(b) The security property is located beyond the association's regular lending area;

(iv) Any participation interest in any of the loans specified in this subparagraph (1).

(2) Special 20-percent-of-assets category. The following investments, not to exceed at any one time an amount equal to 20 percent of the association's assets, are allocable to this category: any loan, or participation interest in a loan, on the security of other dwelling units or a combination of dwelling units, including homes, and business property involving only minor or incidental business use, if—

(i) The security property is located within the association's regular lending area;

(ii) The amount of such loan does not exceed, for any dwelling unit therein, an amount prescribed in or under section 207(c)(3) of the National Housing Act; and

(iii) At the time of the allocation to this category, the association's net worth (as defined in § 561.13 of this chapter) meets the net worth requirement of § 563.13 of this chapter.

(3) Participation 20-percent-of-assets category. The following investments, not to exceed at any one time an amount equal to 20 percent of the association's assets, are allocable to this category:

(i) Any participation interest in a loan on the security of other dwelling units or a combination of dwelling units, including homes, and business property involving only minor or incidental business use, without regard to the location of the security property;

(ii) Any participation interest in a loan on the security of a single-family dwelling, if either—

(a) such loan exceeds $55,000, or

(b) The security property is located beyond the association's regular lending area; and

(iii) Any participation interest in a loan on the security of a home or combination of home and business property, if either

(a) Such loan exceeds, for any dwelling unit in any such security property which is not a single-family dwelling, an amount prescribed in or under section 207 (c)(3) of the National Housing Act,

or

(b) The security property is located beyond the association's regular lending

area.

(d) Inclusion of REO in percentage limitations. Any real estate security for an investment which is allocated to a percentage-limitation category specified in paragraphs (b) or (c) of this section, or participation interest in such security, which is acquired by a Federal association, by foreclosure or otherwise, shall continue to be allocated to a percentagelimitation category to which the original investment could have been allocated, until it is disposed of for cash. Any investment in an extension of credit in connection with its disposition shall also continue to be allocated to such percentage-limitation category unless and until such extension of credit constitutes a loan investment specified in paragraph (a) of this section as free from allocation to percentage-limitation categories.

(e) Records. Each Federal association shall earmark all real estate loan investments specified in paragraphs (b) and (c) of this section, and all investments in real estate specified in paragraph (d) of this section, so that it will be able to determine the total investments allocable to any percentage-limitation category in paragraph (b) or (c) of this section.

(f) Relationship to rules and regulations for insurance of accounts. In addition to compliance with the provisions of this section, each Federal association shall also comply with the provisions of the rules and regulations for insur

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