Current through Register Vol. 47, No. 38, September 22, 2023
savings bank may originate, invest in, sell, purchase, service, participate, or
otherwise deal in (including brokerage or warehousing) real estate loans or
interest in those loans.
determining compliance with the maximum loan-to-value limitations specified in
this Subpart, a savings bank shall add to the loan amount the total of all
other existing liens or other encumbrances on the security property having
priority over the savings bank lien (including the lien to be established by
the savings bank but excluding liens that will be released as the result of
payments made from the proceeds of the new loan).
c) At the time of origination, a real estate
secured loan granted under the provisions shall not exceed the maximum
loan-to-value ratio as follows.
respect to home loans originated or refinanced in excess of 90% of the
appraised value of the security property, that part of the unpaid balance that
exceeds 80% of the property's value shall be insured or guaranteed by mortgage
2) With respect to all
other loans on the security of real estate originated in excess of 90% of the
appraised value of the security property, a savings bank's board of directors,
or loan comittee, shall approve each loan before its origination and such
approval, or ratification of the loan committee approval, shall be recorded in
the minutes of its meeting.
determining compliance with the maximum loan-to-value ratio limitations for
real estate loans, at the time of making a loan a savings bank shall add
together the unpaid amount, or in the case of a line-of-credit loan the
approved credit limit, of all recorded loans secured by prior mortgages, liens
or other encumbrances on the security property that would have priority over
the savings bank's lien, and shall not make such a loan unless the total amount
of the loans (including the one to be made but excluding loans that will be
paid off out of the proceeds of the new loan) does not exceed the applicable
maximum loan-to-value ratio limitations prescribed in subsection (c). In
valuing the real estate security, a savings bank may use the current appraised
value of the security property, which may include any expected value of
improvements to be financed. "Value" for a real estate loan means the market
value of the real estate. For loans granted pursuant to Section 6002(3) of the
Act, alternative methods of valuation or other procedures that result in an
estimate of value may be used.
d) The loan-to-value limitations specified in
subsection (c) shall not apply to the following.
1) To loans guaranteed or insured wholly or
in part by the United States or any of its instrumentalities.
2) To loans or contracts made to finance the
purchase of real estate owned that has been acquired by the savings bank
through default on a prior investment provided that the minutes of organization
directors' meetings substantiate that the sale is made in compliance with the
A) the board of directors approved
the specific terms of the loan or contract before the savings bank's issuance
of a letter of commitment. If no letter of commitment is to be issued, such
approval shall be before the execution of a note, mortgage, or contract for
deed between the purchaser and the savings bank;
B) the board of directors' resolution of
approval of the respective sale specifically indicates why the sale is in the
best interest of the savings bank and that approval is given after duly
considering the provisions of this Subpart;
C) the resolution identifies the specific
documentation they have utilized in determining that the sale was in the best
interest of the savings bank; and
D) all documentation used in evidencing
compliance with this Subpart is retained as a part of the records of the
savings bank for so long as the savings bank has a direct or indirect interest
in the respective real estate.
3) Loans or contracts having additional
eligible collateral pledged in an amount equal to that part of the loan or
contract that is in excess of the lending limitations specified in subsection
(c). Eligible collateral means:
investment permissible for savings banks under the Act;
B) any savings or time deposit in a
commercial bank that is insured by the Federal Deposit Insurance Corporation
and not under control of any supervisory authority; or
C) the cash surrender value of a life
insurance policy validly assigned to the savings bank.
Amended at 30 Ill. Reg. 19068, effective December 1,