0001| SENATE BILL 123
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0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003| INTRODUCED BY
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0004| BILLY J. McKIBBEN
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0006|
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0007|
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0008|
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0009|
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0010| AN ACT
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0011| RELATING TO BANKING; AMENDING SECTION 58-1-21 NMSA 1978 (BEING
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0012| LAWS 1963, CHAPTER 305, SECTION 21, AS AMENDED) TO AUTHORIZE
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0013| STATE BANKS TO MAKE NONCONFORMING LOANS USING A MORTGAGE
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0014| INSTRUMENT THAT PERMITS UNSCHEDULED PAYMENTS.
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0015|
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0016| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0017| Section 1. Section 58-1-21 NMSA 1978 (being Laws 1963,
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0018| Chapter 305, Section 21, as amended) is amended to read:
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0019| "58-1-21. LOANS.--
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0020| A. A state bank may lend on the security of the
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0021| personal obligation of the borrower.
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0022| B. A state bank may lend on the security of
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0023| personal property but shall not make any loan on the security
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0024| of its own stock, of stock of another bank where the borrower
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0025| owns, controls or holds with the power to vote ten percent or
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0001| more of the outstanding voting securities of both that bank
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0002| and the lending bank or of its obligation subordinate to
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0003| deposits.
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0004| C. [Any] A state bank may make real estate
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0005| loans secured by liens upon unimproved real estate, upon
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0006| improved real estate, including improved farmland and improved
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0007| business and residential properties, and upon real estate to
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0008| be improved by a building to be constructed or in the process
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0009| of construction in an amount that when added to the amount
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0010| unpaid upon prior mortgages, liens and encumbrances, if any,
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0011| upon the real estate does not exceed the respective
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0012| proportions of appraised value as provided in this section. A
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0013| loan secured by real estate within the meaning of this section
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0014| shall be in the form of an obligation secured by a mortgage,
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0015| trust deed or other instrument, which shall constitute a lien
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0016| on real estate in fee or under such rules and regulations as
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0017| may be prescribed by the director, and any state bank may
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0018| purchase or sell any obligations so secured in whole or in
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0019| part. The amount of any such loan made shall not exceed
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0020| sixty-six and two-thirds percent of the appraised value if the
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0021| real estate is unimproved; eighty percent of the appraised
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0022| value if the real estate is improved by off-site improvements
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0023| such as streets, water, sewers or other utilities; seventy-
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0024| five percent of the appraised value if the real estate is in
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0025| the process of being improved by a building to be constructed
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0001| or in the process of construction; or ninety percent of the
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0002| appraised value if the real estate is improved by a building.
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0003| If any such loan exceeds sixty-six and two-thirds percent of
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0004| the appraised value of the real estate or if the real estate
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0005| is improved with a one- to four-family dwelling, installment
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0006| payments shall be required that are sufficient to amortize the
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0007| entire principal of the loan within a period of not more than
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0008| thirty years. However:
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0009| (1) the limitations and restrictions set
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0010| forth in this subsection shall not prevent the renewal or
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0011| extension of loans [heretofore made] and shall not apply to
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0012| real estate loans that are guaranteed or insured by the United
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0013| States or an agency thereof or by a state or agency or
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0014| instrumentality thereof; and
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0015| (2) loans that are guaranteed or insured as
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0016| described in Paragraph (1) of this subsection shall not be
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0017| taken into account in determining the amount of real estate
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0018| loans that a state bank may make in relation to its capital
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0019| and surplus or its time and savings deposits or in determining
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0020| the amount of real estate loans secured by other than first
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0021| liens [and]. Where the collateral for any loan consists
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0022| partly of real estate [security] and partly of other
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0023| security, only the amount by which the loan exceeds the value
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0024| as collateral of such other security shall be considered a
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0025| loan upon the security of real estate [and]. In no event
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0001| shall a loan be considered as a real estate loan where there
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0002| is a valid and binding agreement that is entered into by a
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0003| financially responsible lender or other party [either]
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0004| directly with the bank that is either for the benefit of or
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0005| has been assigned to the bank and pursuant to which agreement
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0006| the lender or other party is required to advance to the bank
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0007| within sixty months from the date of the making of the loan
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0008| the full amount of the loan to be made by the bank upon the
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0009| security of real estate. The amount unpaid upon any real
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0010| estate loan secured by other than a first lien, when added to
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0011| the amount unpaid upon prior mortgages, liens and
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0012| encumbrances, shall not exceed in an aggregate sum twenty
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0013| percent of the amount of the capital stock of the bank paid in
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0014| and unimpaired plus twenty percent of the amount of its
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0015| unimpaired surplus fund.
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0016| D. [Any] A state bank may make real estate
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0017| loans secured by liens upon forest tracts that are properly
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0018| managed in all respects. The loans shall be in the form of an
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0019| obligation [or obligations] secured by mortgage, trust deed
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0020| or other such instrument, and [any] a state bank may
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0021| purchase or sell any obligations so secured in whole or in
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0022| part. The amount of any such loan, when added to the amount
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0023| unpaid upon prior mortgages, liens and encumbrances, if any,
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0024| shall not exceed sixty-six and two-thirds percent of the
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0025| appraised fair market value of the growing timber, lands and
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0001| improvements thereon offered as security [and]. The loan
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0002| shall be made upon such terms and conditions as to assure that
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0003| at no time shall the loan balance, when added to the amount
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0004| unpaid upon prior mortgages, liens and encumbrances, if any,
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0005| exceed sixty-six and two-thirds percent of the original
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0006| appraised total value of the property then remaining. No such
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0007| loan shall be made for a longer term than three years, except
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0008| that a loan may be made for a term not longer than fifteen
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0009| years if the loan is secured by an amortized mortgage, deed of
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0010| trust or other such instrument under the terms of which the
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0011| installment payments are sufficient to amortize the principal
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0012| of the loan within a period of not more than fifteen years and
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0013| at a rate of at least six and two-thirds percent per year.
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0014| All such loans secured by liens upon forest tracts shall be
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0015| included in the permissible aggregate of all real estate loans
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0016| and, when secured by other than first liens, in the
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0017| permissible aggregate of all real estate loans secured by
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0018| other than first liens prescribed in Paragraph (2) of
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0019| Subsection C of this section, but no state bank shall make
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0020| forest tract loans in an aggregate sum in excess of fifty
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0021| percent of its capital stock paid in and unimpaired plus fifty
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0022| percent of its unimpaired surplus fund.
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0023| E. Loans made to finance the construction of a
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0024| building and having maturities of not to exceed sixty months
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0025| where there is a valid and binding agreement entered into by a
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0001| financially responsible lender or other party to advance the
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0002| full amount of the bank's loan upon completion of the building
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0003| and loans made to finance the construction of residential or
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0004| farm buildings and having maturities of not to exceed forty-
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0005| two months may be considered as real estate loans if the loans
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0006| qualify under this section, or such loans may be classed as
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0007| commercial loans whether or not secured by a mortgage or
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0008| similar lien on the real estate upon which the building is
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0009| being constructed, at the option of each state bank that may
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0010| have an interest in the loan [provided that]. No state bank
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0011| shall invest in or be liable on any such loans classed as
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0012| commercial loans under this subsection in an aggregate amount
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0013| in excess of one hundred percent of its actually paid-in and
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0014| unimpaired capital plus one hundred percent of its unimpaired
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0015| surplus fund.
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0016| F. Notes representing loans made [under]
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0017| pursuant to provisions of this section to finance the
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0018| construction of residential or farm buildings and having
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0019| maturities of not to exceed nine months shall be eligible for
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0020| discount as commercial paper if accompanied by a valid and
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0021| binding agreement to advance the full amount of the loan upon
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0022| the completion of the building, entered into by an individual,
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0023| partnership, association or corporation acceptable to the
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0024| discounting bank.
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0025| G. Loans made to any borrower where the bank looks
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0001| for repayment by relying primarily on the borrower's general
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0002| credit standing and forecast of income, with or without other
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0003| security, or loans secured by an assignment of rents under a
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0004| lease and where the bank wishes to take a mortgage, deed of
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0005| trust or other instrument upon real estate, whether or not
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0006| constituting a first lien, as a precaution against
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0007| contingencies and loans in which the small business
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0008| administration cooperates through agreements to participate in
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0009| an immediate or deferred or guaranteed basis under the Small
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0010| Business Act shall not be considered as real estate loans
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0011| within the meaning of this section but shall be classed as
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0012| commercial loans.
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0013| H. A state bank may make loans upon the security
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0014| of real estate that do not comply with the limitations and
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0015| restrictions in this section if the total unpaid amount
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0016| loaned, exclusive of loans that subsequently comply with those
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0017| limitations and restrictions, does not exceed five percent of
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0018| the amount that a state bank may invest in real estate loans.
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0019| The total unpaid amount so loaned shall be included in the
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0020| aggregate sum that the bank may invest in real estate loans.
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0021| I. A loan made by a state bank as a noncomplying
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0022| loan pursuant to Subsection H of this section may be evidenced
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0023| by a debt instrument and a security instrument consisting of a
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0024| mortgage, deed of trust, or similar instrument that contain
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0025| the following provisions:
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0001| (1) either fixed rate or adjustable rate
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0002| interest accrual on the debt;
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0003| (2) an authorization for the borrower to make
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0004| unscheduled payments to reduce the principal amount of the
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0005| loan without relieving the borrower from continuing to make
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0006| payments of installments in the amounts specified in the
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0007| original debt and security instruments;
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0008| (3) the frequency of unscheduled payments
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0009| shall not exceed the frequency of scheduled payments; and
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0010| (4) authorization for the borrower to retrieve
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0011| by withdrawal part or all of the amount of an unscheduled
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0012| payment previously made.
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0013| [I.] J. Loans made pursuant to this section
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0014| shall be subject to such conditions and limitations as the
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0015| director may prescribe by rule or regulation."
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0016|
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