CHAPTER 25

An Act to amend and reenact § 6-78 of the Code of Virginia, relating to
bank loans on real estate security. [H 82]

Approved February 12, 1952

Be it enacted by the General Assembly of Virginia:

: That § 6-78 of the Code of Virginia be amended and reenacted as
ollows:

§ 6-78. Limitation on amount of loans made upon real estate
security——No bank shall make any loan secured by real estate when such
loan together with all prior liens and encumbrances on such real estate
exceeds fifty per centum of the appraised value of the real estate offered
as security, unless such loan be for a term not longer than fifteen years
and be secured by an amortized mortgage, deed of trust or other instru-
ment under the terms of which the annual installment payments are not
less than four per centum per annum of the principal of the loan when
such loan is for a period of not more than ten years, and not less than five
per centum per annum of the principal of the loan when such loan is for
& period in excess of ten years but not more than fifteen years, in neither
of which events shall the amount of the loan, together with all prior liens
and encumbrances on such real estate exceed sixty per centum of the
appraised value of the real estate offered as security.

No bank shall make such loans in an aggregate sum in excess of
the amount of its capital stock actually paid in and unimpaired plus the
amount of its unimpaired surplus fund, or in excess of sixty per centum
of the amount of its time and savings deposits at the election of the bank;
provided, that any such bank may, with the written consent and approval
of the State Corporation Commission, make such loans in an aggregate
amount up to, but not in excess of, seventy per centum of the amount of
its time and savings deposits.

* A loan secured by real estate within the meaning of this section
shall be in the form of an obligation or obligations executed or assumed
by the borrower and secured by mortgage, trust deed, or other such instru-
ment upon real estate owned by the borrower. Loans made to finance the
construction of business, residential or farm buildings and having matur-
ties of not to exceed nine months shall not be considered as loans secured
by real estate within the meaning of this section but shall be classed as
ordinary commercial loans, provided that no bank shall invest in, or be
liable on, any such loans in an aggregate amount in excess of fifty per
centum of its capital and permanent surplus.
The appraisals herein required, if and when the loan shall exceed one
thousand dollars, shall be made by appraisers appointed by or by the
authority of the board of directors, shall be in writing, signed by the
appraisers and shall be retained in the files of the bank, subject to
examination of bank examiners. The appraisers so appointed shall be
experienced persons competent to appraise real estate in the locality in
which the real estate is, and each appraisal, if and when the loan shall
exceed five thousand dollars, shall be mdde by at least two appraisers.

The provisions of this section shall not be construed * to prohibit
any bank from accepting as security for a loan made in good faith without
security or upon security since found to be inadequate * an obligation or
obligations secured by mortgage, trust deed, or other such instrument
upon real estate.