Current through Register Vol. 35, No. 18, September 24, 2024
A. An
association may make direct or indirect time-share loans provided that:
(1) at any one time the total investment made
under this sub-part [now part] and in any consumer loans in aggregate shall not
exceed 30 percent of any association's assets; and
(2) the requirements of this section are met.
The authority to make a time-share loan includes the authority to originate,
purchase, sell, service and participate in such loans provided that such loans
conform to the provisions of this sub-part [now part] and the association's
written underwriting standards.
B. If a loan that may be made under this
sub-part [now part] is also authorized to be made under another regulation or
statutory provision, which may have different percentage-of-assets and other
limitations or requirements, an association shall have the option of choosing
under which applicable provision the loan shall be made.
C. The total balances of all outstanding
time-share loans to one borrower, or on which any other person may become
obligated directly or indirectly, is limited to the lesser of ten percent of an
association's savings accounts or 100 percent of its net worth, reduced by the
amount of other loans to that same borrower.
D. In no event shall an association make,
purchase, sell, service or enter into any participation transaction, directly
or indirectly, in a time-share loan unless the association first obtains the
following:
(1) an individual credit analysis
of each time-share loan purchaser which establishes the purchaser's
creditworthiness;
(2) an analysis
of the time-share project which includes:
(a)
the identity of the developer; a report on the principals comprising the
developer, including resumes of the principals; previous time-share experience;
and financial statements of the principals and any guarantors of the
developer;
(b) sales history of the
project which includes a description of the sales program; copies of
advertising, mailers and brochures; sales projections for the next two years,
and pricing structure for units;
(c) a report on any litigation pending
against the project or developer;
(d) an independent appraisal of the value of
any time-share unit which is the security for the note or contract being
purchased;
(e) a title opinion from
an attorney in the state where the project is located that the time-share
estate being purchased by the purchaser meets the definition of "time-share
estate" provided herein;
(f) legal
documentation on the project which includes copies of the deed to the project
and any other documents indicating ownership; articles of incorporation or
partnership agreement; any condominium or time-share filings, if required, with
the state where the project is located; by-laws of the time-share owners'
association; and the project's management agreement.
(3) the original purchaser documents for each
loan including the purchase and sale agreement, note, deed of trust or
mortgage, credit application, any additional disclaimers or disclosures given
customers; or a non-negotiable trust receipt issued by a federally insured
institution indicating that the association is the true owner of the note and
the security instruments; or certified or conformed copies of documents where
the originals are required to be maintained in a public registry;
(4) an insurance policy issued by an
insurance company with at least an "A" rating as listed in a nationally
recognized insurance rating guide such as Best's. The policy shall insure with
no deductibles the unpaid balance of the notes or contracts against default by
the purchaser and against fraud, forgery and the mysterious disappearance of
said notes or contracts;
(5) proof
from the developer or dealer that it has a fidelity bond in excess of the total
amount of all notes or contracts transferred from said dealer or developer to
the association;
(6) a current
aging schedule on each note or contract reflecting collections experience by
month for the past twelve months. No association shall purchase any notes or
contracts which are less than 90 days old or are more than 30 days
delinquent;
(7) a copy or copies of
any collection and servicing agreements and contracts for any notes or
contracts which the association intends to purchase from, or take as security
for any loan to, a developer or dealer. Any servicing or collection agency
utilized by the association shall be independent from the developer or
dealer.
E. In no event
shall an association make, purchase, sell, service or enter into any
participation transaction, directly or indirectly, in a time-share loan unless
the time-share estate being purchased by the purchaser meets the definition of
"time-share estate" as provided herein.
F. Prior to making, purchasing, participating
in or accepting as security any time-share notes or contracts, the association
shall have established by resolution of its board of directors underwriting
standards which include, at a minimum, the requirements of Subsection 8.4 of
this Sub-part [now Subsection D of 12.20.38.8 NMAC].
G. An association shall not purchase or
accept as security any time-share notes or contracts unless a minimum of five
percent down payment has been made by the original purchaser.
H. In making, purchasing, selling,
participating in or obtaining as security any time-share notes or contracts, an
association shall comply with all applicable regulations of the supervisor, the
federal home loan bank board and the federal savings and loan insurance
corporation.
