CHAPTER 23

An Act to amend and reenact § 6-78, as amended, of the Code of Virginia,
relating to limitation on amount of loans made by banks upon. real
estate security.

[H 12]

Approved February 17, 1960

Be it enacted by the General Assembly of Virginia:
1. That § 6-78, as amended, of the Code of Virginia, be amended and
reenacted as follows:

§ 6-78. 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 twenty
years and be secured by an amortized mortgage, deed of trust or other
instrument 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 a
period in excess of ten years but not more than twenty years, in neither
of which events shall the amount of the loan, together with all prior liens
and encumbrances on such real estate exceed * seventy-five 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 seventy per centum
of the amount of its time and savings deposit at the election of the bank.

_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 instrument
upon real estate owned by the borrower. Loans made to finance the con-
struction of business, residential or farm buildings and having maturities
of not to exceed * eighteen months, if accompanied by a valid and binding
agreement to advance the full amount of the loan upon the completion of
the building entered into by an individual, partnership, association, or
corporation acceptable to the discounting bank, whether or not secured by
& mortgage or similar lien on the real estate upon which the business,
residential or farm building is being constructed, 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 * one hundred per centum of its capital and permanent surplus.

Loans made to finance existing construction, if accompanied by a
valid and binding agreement by an insurance company, authorized to do
business in this State, to advance the full amount of the loan, within a
period of sixty days, whether or not secured by a mortgage or similar lien
on real estate, and loans fully guaranteed or insured by a state or by a
state authority for the payment of the obligation of which the faith and
credit of the state is pledged, shall not be considered as loans secured by
real estate within the meaning of this or the preceding section but shall
be classed as ordinary commercial loans and shall not be subject to the
limitations and restrictions of this section.

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 exami-
nation 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 thou-
sand dollars, shall be made 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.