In no event shall an association make a loan, purchase or sell a note or lien or enter into any participation transaction authorized in the Savings and Loan Act in violation of any regulation promulgated by the supervisor, and no association shall:

A. make a real estate loan [on real estate] on which is located, or on which, from the proceeds of the loan, will be located a home, or homes, or combination of home and business property that exceeds eighty percent of the appraised valuation of the real estate plus the value of any savings account in the association or any first mortgage real estate loan pledged as additional collateral to secure the loan; provided that an association may make loans on single-family dwellings in an amount not to exceed ninety percent of the appraised valuation of the real estate plus the value of any savings account in the association or any first mortgage real estate loan pledged as additional collateral to secure the loan, if:

(1) the net worth of the association is not less than three percent of total assets; and

(2) the aggregate of the ninety percent loans does not exceed twenty percent of the total assets of the association; and

(3) the principal obligation of the ninety percent loans does not exceed the amount established by the supervisor. As used in this subsection, "home" means a dwelling for not more than four families, and "appraised valuation of the real estate" may include the value of any lease or contract on the real estate;

B. make a real estate loan other than the type described in Subsection A that exceeds seventy-five percent of the appraised valuation of the real estate plus the value of any additional collateral of the type described in Subsection A pledged to secure the loan;

C. make a real estate loan for a term in excess of thirty years;

D. make a real estate loan to an officer or director of the association unless the loan is first approved by its board of directors and the approval recorded in the minutes of the meeting of the board at which the loan was approved;

E. make a real estate loan unless the property has been appraised:

(1) by one or more qualified real estate appraisers designated by the board of directors. Each appraisal shall be in writing with a certificate signed by the appraisers stating that they have personally examined the described property, setting forth the value of the land and, separately the nature, condition and value of the improvements, or improvements to be made, if any. The appraisal shall be filed and preserved by the association;

(2) in the case of an insured or guaranteed loan, the appraisal may be made by any appraiser appointed by any lending, insuring or guaranteeing agency of the United States or of this state which insures or guarantees the loan, wholly or in part. A copy of any appraisal, or of the commitment or certificate of the insuring or guaranteeing agency, shall be filed and preserved by the association;

(3) in any case in which a loan is secured by real estate with part or all of the loan being made in reliance upon the mortgage guaranty or insurance of a private mortgage guaranty firm licensed and qualified to do business in New Mexico, only that part of the loan, if any, which is not made in reliance upon the guaranty or insurance is subject to limitations with respect to the ratio of the amount of loan to the value of the property;

(4) the supervisor may, when good cause exists, cause an independent appraisal to be made of any property upon which a loan has been made, and the reasonable travel and subsistence expenses and compensation to the appraisers, not in excess of comparable fees paid for the same or similar appraisals in the same area, shall be paid by the association owning or holding the property as mortgagee;

F. make a real estate loan which is not secured by a first and prior lien upon the property described in the mortgage, deed of trust or other instrument creating or constituting the lien unless every prior lien of record thereon is owned by or subordinated to the association. The first and prior lien shall be evidenced by an attorney's title opinion or mortgagee's title insurance policy;

G. make a real estate loan unless the insurable improvements thereon are insured against loss by a fire and extended coverage policy or its equivalent issued by an insurance company authorized to do business in this state;

H. sell or transfer a prior lien held by the association while retaining a junior lien on the same security to secure an unsatisfied obligation due the association unless the junior lien or liens were created in connection with a loan made under Sections 38 [58-10-38 NMSA 1978] or 39 [58-10-39 NMSA 1978] of the Savings and Loan Act; or

I. make collateral loans secured by the assignment of other loans, except where:

(1) each assigned loan is one which the association could itself make or purchase at par under applicable law and regulations, based on a current association appraisal;

(2) the amount of the collateral loan does not exceed at any time ninety percent of the aggregate unpaid balance of the assigned loans;

(3) the assignment to the association provides that:

(a) all payments of principal and interest on the assigned loans shall be made directly to the association and applied to the outstanding unpaid balance of the collateral loan; and

(b) a default on any assigned loan constitutes a default on the collateral loan and permits acceleration of the maturity of the collateral loan; and

(4) the assignment is properly recorded and is prior to any other lien of record on the assignor's interest in the assigned loans.

History: 1953 Comp., § 48-15-83, enacted by Laws 1967, ch. 61, § 39.

Cross references. — For meaning of "supervisor", see 58-10-2J NMSA 1978.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 10 Am. Jur. 2d Banks §§ 683 to 688, 692, 693.

What constitutes "business or commercial" purpose within meaning of § 104(1) of Truth in Lending Act (15 USCS § 1603(1)), exempting business or commercial credit transactions from act, 54 A.L.R. Fed. 491.

Award of attorney's fees under § 130 (a) of Truth in Lending Act (15 USCS § 1640 (a)), 140 A.L.R. Fed. 557.

9 C.J.S. Banks and Banking § 606; 12 C.J.S. Building and Loan Associations § 4.