0001| SENATE BILL 123 | 0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998 | 0003| INTRODUCED BY | 0004| BILLY J. McKIBBEN | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| AN ACT | 0011| RELATING TO BANKING; AMENDING SECTION 58-1-21 NMSA 1978 (BEING | 0012| LAWS 1963, CHAPTER 305, SECTION 21, AS AMENDED) TO AUTHORIZE | 0013| STATE BANKS TO MAKE NONCONFORMING LOANS USING A MORTGAGE | 0014| INSTRUMENT THAT PERMITS UNSCHEDULED PAYMENTS. | 0015| | 0016| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0017| Section 1. Section 58-1-21 NMSA 1978 (being Laws 1963, | 0018| Chapter 305, Section 21, as amended) is amended to read: | 0019| "58-1-21. LOANS.-- | 0020| A. A state bank may lend on the security of the | 0021| personal obligation of the borrower. | 0022| B. A state bank may lend on the security of | 0023| personal property but shall not make any loan on the security | 0024| of its own stock, of stock of another bank where the borrower | 0025| owns, controls or holds with the power to vote ten percent or | - 1 - 0001| more of the outstanding voting securities of both that bank | 0002| and the lending bank or of its obligation subordinate to | 0003| deposits. | 0004| C. ~[Any]~ |A| state bank may make real estate | 0005| loans secured by liens upon unimproved real estate, upon | 0006| improved real estate, including improved farmland and improved | 0007| business and residential properties, and upon real estate to | 0008| be improved by a building to be constructed or in the process | 0009| of construction in an amount that when added to the amount | 0010| unpaid upon prior mortgages, liens and encumbrances, if any, | 0011| upon the real estate does not exceed the respective | 0012| proportions of appraised value as provided in this section. A | 0013| loan secured by real estate within the meaning of this section | 0014| shall be in the form of an obligation secured by a mortgage, | 0015| trust deed or other instrument, which shall constitute a lien | 0016| on real estate in fee or under such rules and regulations as | 0017| may be prescribed by the director, and any state bank may | 0018| purchase or sell any obligations so secured in whole or in | 0019| part. The amount of any such loan made shall not exceed | 0020| sixty-six and two-thirds percent of the appraised value if the | 0021| real estate is unimproved; eighty percent of the appraised | 0022| value if the real estate is improved by off-site improvements | 0023| such as streets, water, sewers or other utilities; seventy- | 0024| five percent of the appraised value if the real estate is in | 0025| the process of being improved by a building to be constructed | - 2 - 0001| or in the process of construction; or ninety percent of the | 0002| appraised value if the real estate is improved by a building. | 0003| If any such loan exceeds sixty-six and two-thirds percent of | 0004| the appraised value of the real estate or if the real estate | 0005| is improved with a one- to four-family dwelling, installment | 0006| payments shall be required that are sufficient to amortize the | 0007| entire principal of the loan within a period of not more than | 0008| thirty years. However: | 0009| (1) the limitations and restrictions set | 0010| forth in this subsection shall not prevent the renewal or | 0011| extension of loans ~[heretofore made]~ and shall not apply to | 0012| real estate loans that are guaranteed or insured by the United | 0013| States or an agency thereof or by a state or agency or | 0014| instrumentality thereof; and | 0015| (2) loans that are guaranteed or insured as | 0016| described in Paragraph (1) of this subsection shall not be | 0017| taken into account in determining the amount of real estate | 0018| loans that a state bank may make in relation to its capital | 0019| and surplus or its time and savings deposits or in determining | 0020| the amount of real estate loans secured by other than first | 0021| liens ~[and]~. Where the collateral for any loan consists | 0022| partly of real estate ~[security]~ and partly of other | 0023| security, only the amount by which the loan exceeds the value | 0024| as collateral of such other security shall be considered a | 0025| loan upon the security of real estate ~[and]~. In no event | - 3 - 0001| shall a loan be considered as a real estate loan where there | 0002| is a valid and binding agreement that is entered into by a | 0003| financially responsible lender or other party ~[either]~ | 0004| directly with the bank that is |either| for the benefit of or | 0005| has been assigned to the bank and pursuant to which agreement | 0006| the lender or other party is required to advance to the bank | 0007| within sixty months from the date of the making of the loan | 0008| the full amount of the loan to be made by the bank upon the | 0009| security of real estate. The amount unpaid upon any real | 0010| estate loan secured by other than a first lien, when added to | 0011| the amount unpaid upon prior mortgages, liens and | 0012| encumbrances, shall not exceed in an aggregate sum twenty | 0013| percent of the amount of the capital stock of the bank paid in | 0014| and unimpaired plus twenty percent of the amount of its | 0015| unimpaired surplus fund. | 0016| D. ~[Any]~ |A| state bank may make real estate | 0017| loans secured by liens upon forest tracts that are properly | 0018| managed in all respects. The loans shall be in the form of an | 0019| obligation ~[or obligations]~ secured by mortgage, trust deed | 0020| or other such instrument, and ~[any]~ |a| state bank may | 0021| purchase or sell any obligations so secured in whole or in | 0022| part. The amount of any such loan, when added to the amount | 0023| unpaid upon prior mortgages, liens and encumbrances, if any, | 0024| shall not exceed sixty-six and two-thirds percent of the | 0025| appraised fair market value of the growing timber, lands and | - 4 - 0001| improvements thereon offered as security ~[and]~. The loan | 0002| shall be made upon such terms and conditions as to assure that | 0003| at no time shall the loan balance, when added to the amount | 0004| unpaid upon prior mortgages, liens and encumbrances, if any, | 0005| exceed sixty-six and two-thirds percent of the original | 0006| appraised total value of the property then remaining. No such | 0007| loan shall be made for a longer term than three years, except | 0008| that a loan may be made for a term not longer than fifteen | 0009| years if the loan is secured by an amortized mortgage, deed of | 0010| trust or other such instrument under the terms of which the | 0011| installment payments are sufficient to amortize the principal | 0012| of the loan within a period of not more than fifteen years and | 0013| at a rate of at least six and two-thirds percent per year. | 0014| All such loans secured by liens upon forest tracts shall be | 0015| included in the permissible aggregate of all real estate loans | 0016| and, when secured by other than first liens, in the | 0017| permissible aggregate of all real estate loans secured by | 0018| other than first liens prescribed in Paragraph (2) of | 0019| Subsection C of this section, but no state bank shall make | 0020| forest tract loans in an aggregate sum in excess of fifty | 0021| percent of its capital stock paid in and unimpaired plus fifty | 0022| percent of its unimpaired surplus fund. | 0023| E. Loans made to finance the construction of a | 0024| building and having maturities of not to exceed sixty months | 0025| where there is a valid and binding agreement entered into by a | - 5 - 0001| financially responsible lender or other party to advance the | 0002| full amount of the bank's loan upon completion of the building | 0003| and loans made to finance the construction of residential or | 0004| farm buildings and having maturities of not to exceed forty- | 0005| two months may be considered as real estate loans if the loans | 0006| qualify under this section, or such loans may be classed as | 0007| commercial loans whether or not secured by a mortgage or | 0008| similar lien on the real estate upon which the building is | 0009| being constructed, at the option of each state bank that may | 0010| have an interest in the loan ~[provided that]~. No state bank | 0011| shall invest in or be liable on any such loans classed as | 0012| commercial loans under this subsection in an aggregate amount | 0013| in excess of one hundred percent of its actually paid-in and | 0014| unimpaired capital plus one hundred percent of its unimpaired | 0015| surplus fund. | 0016| F. Notes representing loans made ~[under]~ | 0017| |pursuant to provisions of| this section to finance the | 0018| construction of residential or farm buildings and having | 0019| maturities of not to exceed nine months shall be eligible for | 0020| discount as commercial paper if accompanied by a valid and | 0021| binding agreement to advance the full amount of the loan upon | 0022| the completion of the building, entered into by an individual, | 0023| partnership, association or corporation acceptable to the | 0024| discounting bank. | 0025| G. Loans made to any borrower where the bank looks | - 6 - 0001| for repayment by relying primarily on the borrower's general | 0002| credit standing and forecast of income, with or without other | 0003| security, or loans secured by an assignment of rents under a | 0004| lease and where the bank wishes to take a mortgage, deed of | 0005| trust or other instrument upon real estate, whether or not | 0006| constituting a first lien, as a precaution against | 0007| contingencies and loans in which the small business | 0008| administration cooperates through agreements to participate in | 0009| an immediate or deferred or guaranteed basis under the Small | 0010| Business Act shall not be considered as real estate loans | 0011| within the meaning of this section but shall be classed as | 0012| commercial loans. | 0013| H. A state bank may make loans upon the security | 0014| of real estate that do not comply with the limitations and | 0015| restrictions in this section if the total unpaid amount | 0016| loaned, exclusive of loans that subsequently comply with those | 0017| limitations and restrictions, does not exceed five percent of | 0018| the amount that a state bank may invest in real estate loans. | 0019| The total unpaid amount so loaned shall be included in the | 0020| aggregate sum that the bank may invest in real estate loans. | 0021| |I. A loan made by a state bank as a noncomplying | 0022| loan pursuant to Subsection H of this section may be evidenced | 0023| by a debt instrument and a security instrument consisting of a | 0024| mortgage, deed of trust, or similar instrument that contain | 0025| the following provisions: | - 7 - 0001| (1) either fixed rate or adjustable rate | 0002| interest accrual on the debt; | 0003| (2) an authorization for the borrower to make | 0004| unscheduled payments to reduce the principal amount of the | 0005| loan without relieving the borrower from continuing to make | 0006| payments of installments in the amounts specified in the | 0007| original debt and security instruments; | 0008| (3) the frequency of unscheduled payments | 0009| shall not exceed the frequency of scheduled payments; and | 0010| (4) authorization for the borrower to retrieve | 0011| by withdrawal part or all of the amount of an unscheduled | 0012| payment previously made.| | 0013| ~[I.]~ |J.| Loans made pursuant to this section | 0014| shall be subject to such conditions and limitations as the | 0015| director may prescribe by rule or regulation." | 0016|  |