CHAPTER 255

An Act to amend and reenact § 6.1-157, as amended, of the Code of
Virginia, relating to investments by savings and loan associations.

[H 559]
Approved April 1, 1968

Be it enacted by the General Assembly of Virginia:
1. That § 6.1-157, as amended, of the Code of Virginia, be amended and
reenacted, as follows:

§ 6.1-157. The assets of an association may be invested in the
following ways and in such ways only:
_(a) In real estate and in equipment necessary for the conduct of its
business. Such association may invest in an office building or buildings
and appurtenances for the transaction of such association’s business, or
for the transaction of such business and for rental, provided that no such
investment may be made without the prior approval of the Commission
if the total amount of the investment exceeds the aggregate amount of
the association’s general reserve and surplus. In the case of stock asso-
ciations, the capital stock account, to the extent that the capital has not
been impaired, shall be treated as a part of general reserve.

(b) In obligations of or obligations guaranteed as to principal and
interest by the United States or any agency thereof or of the State of
Virginia or any of its political subdivisions.

(c) In stock or obligations of Federal Home Loan Banks; in stock
or obligations of the Federal Savings and Loan Insurance Corporation;
in obligations of the Federal National Mortgage Association through mak-
ing nonrefundable contributions; in certificates of deposit, time deposits,
savings accounts, or demand deposits of banks insured by the Federal
Deposit Insurance Corporation; and, to the extent of not more than fifteen
percent of its total assets, in shares of other State associations or federal
associations.

(cl) In the purchase of stock or membership in industrial develop-
ment corporations and in loans to such corporations to the extent provided
by law at any time that the general reserves, surplus and undivided profits
of the association aggregate a sum in excess of five per centum of its
withdrawable accounts.

(c2) In the purchase of stock and other securities or obligations of
a service corporation in an amount not to exceed one percent of its assets;
provided that it may not invest in any such service corporation unless it
uses or intends to use the services of such service corporation. It may not
invest in more than one such service corporation without the consent of the
State Corporation Commission. For purposes of this section, a service cor-
poration is defined as one engaged primarily in rendering services, other
than the renting of the association’s premises or the furnishing of furniture
or fixtures, to two or more associations. Stock in a Federal Home Loan
Bank shall not be considered stock of a service corporation within the
meaning of this section.

(d) In loans fully secured by shares of the association.

(e) In loans secured by first liens on improved real estate. Except
as hereinafter provided, no such loans shall exceed forty thousand dollars
on each home or combination of home and business property securing the
same. No such loan shall exceed ninety percent of the value of the real
estate as appraised by a competent appraiser up to thirty-five thousand
dollars and eighty percent of such value on the amount in excess of
thirtv-five thousand dollars. Provided, that loans insured or guaranteed by
a federal agency may be made on such terms as are acceptable to the
insuring or guaranteeing agency. At least sixty percent of the assets shall
be invested in such loans unless, because of exceptional conditions in the
real estate market, the Commission permits an association to deviate from
this requirement.

Every such loan shall provide that the borrower shall make regular
periodic payments of principal and interest, in equal or unequal amounts,
the first payment being due not later than twelve (12) months from the
date of the first advance in the case of a loan made for the purpose of
financing the construction of a home or a combination home and business
structure and sixty (60) days from the date of the loan in the case of
other loans, until the mortgage indebtedness and the disbursements, if
any, made by the association for the payment of taxes, insurance pre-
miums, and other items, together with interest thereon, have been fully
paid; provided, however, that no subsequent periodic payment of principal
and interest shall be greater than any previous periodic payment of prin-
cipal and interest, and that no such loan shall be for a longer term than
thirty (30) years. Loans insured or guaranteed by a federal agency may
be repayable upon such terms as are acceptable to such agency. The asso-
ciation may compute, charge, and collect interest on monthly balances by
computing the same on the preceding monthly balance and adding such
interest to that balance plus advances for taxes, insurance and other lawful
charges accruing since the preceding balance, less credits for payments
made by the borrower.

An association may make a loan in excess of forty thousand dollars
under this subsection provided that it is included im the twenty percent
of assets limitation of subsection (g) for so long as the principal amount
of such loan exceeds forty thousand dollars.

(f) Up to twenty percent (20%) of the assets may be invested in
secured or unsecured loans for maintenance, repair, modernization, im-
provement and equipment of improved real estate or other improved real
estate. Such loans shall be payable monthly and shall not be for a term
longer than eight (8) years and shall not exceed five thousand dollars
($5,000.00).

An association may charge and collect in advance the legal rate of
interest upon the entire amount of such loan.

(zg) Up to twenty percent (20%) of the assets may be invested in
other loans secured by a first lien on improved real estate or other im-
proved real estate. No such loans shall be for a term longer than thirty
(30) years nor in excess of seventy-five percent (75%) of the value of
the real estate as appraised by a competent appraiser.

(h) Up to five percent (5%) of the assets may be invested in other
loans secured by a first lien on unimproved real estate.

(1) Up to five percent (5%) of the assets may be invested in loans,
obligations, and advances of credit made for the payment of expenses of
college or university education. Such loans may be secured, partly secured,
or unsecured, and the association may require a comaker or comakers,
insurance, guarantee under a governmental student loan guarantee plan,
or other protection against contingencies. The borrower shall certify to
the association that the proceeds of the loan are to be used by a full-time
student solely for the payment of expenses of college or university educa-
tion. For the purpose of this section, the term “college or university edu-
cation” means education at an institution which provides an educational
program for which it awards a bachelor’s degree, or provides not less
than a two-year program which is acceptable for full credit toward such
a degree.