CHAPTER 150

An Act to amend and reenact § 6-78, as amended, of the Code of Virginia,
relating to limitation on bank loans secured by real estate; and to re-
peal §§ 6-79 and 6-79.1 of the Code of Virginia relating to the same
matters.
[H 482]

Approved March 2, 1964

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 deposits, * whichever is greater.

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, * secured by mortgage, trust deed, or other such instrument
upon real estate owned by the borrower, and upon which real estate the
bank relies as the principal security for the loan. When the bank reasonably
and prudently relies principally upon factors other than or in addition
to the real estate security (such as general credit standing, guarantees,
commitments, or tangible or intangible personal property security) and
enters in its records a written statement of the factors it relies on, the loan
does not constitute a real estate loan within the meaning of this section.
Loans made to finance the construction of business, residential or farm
buildings and having maturities of not to exceed eighteen months, if ac-
companied 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 * bank. whether
or not secured by a 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.

The appraisals herein required, if and when the loan shall exceed one
thousand dollars, shall be made by appraisers appointed by or by the au-
thority of the board of directors, shall be in writing, signed by the ap-
praisers, and shall be retained in the files of the bank, subject to examina-
tion 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. oo
2, That §§ 6-79 and 6-79.1 of the Code of Virginia be repealed.