A. As used in this section, "loan secured by real estate" means an obligation executed or assumed by the borrower that is secured by mortgage, deed of trust, or similar instrument, encumbering real estate that is owned by the borrower and upon which the bank relies as the principal security for the loan.
B. No bank shall make any loan secured by real estate when such loan, together with all prior liens or encumbrances on such real estate, exceeds 90 percent of the appraised value of the real estate securing such loan.
C. The appraisals necessitated by this section shall be required if the loan shall equal or exceed an amount established from time to time by the Commissioner. In establishing such amount, the Commissioner shall take into consideration the requirements imposed on banks under applicable federal regulations. Such appraisals shall be in writing, signed by the appraisers, and shall be retained in the files of the bank, subject to examination of bank examiners. The appraisers so appointed shall be experienced persons competent to appraise real estate in the locality where the real estate is located.
D. Any bank may make loans secured by real estate that do not comply with the limitations and restrictions in this section if the total unpaid amount of such loans, exclusive of the loans that subsequently comply with such limitations and restrictions, does not exceed 10 percent of the total amount of loans secured by real estate.
E. The provisions of this section relating to ratio of loan to appraised value and appraisal shall not apply if:
1. The real estate security is taken solely as an abundance of caution on terms which are not more favorable than they would be in absence of such a lien on real estate;
2. A real estate security conveyance is taken by or ancillary to the assignment of lease obligations upon which the bank is relying primarily and prudently;
3. A subsequent transaction results from an existing extension of credit providing (i) that the borrower has performed satisfactorily, (ii) there is no advance of new money, except as formerly agreed, (iii) the credit standing of the borrower is not deteriorating, and (iv) there is no obvious and noticeable deterioration of marketing conditions or the physical assets which provide collateral security to the bank; or
4. A lien upon real estate is taken to secure a prior advance which was not secured by such real estate.
F. In cases where an appraisal by a state-certified or state-licensed appraiser is not required, under this section or other sections of this chapter in a real estate-related financial transaction, the bank as a matter of prudence may take and preserve a reasonable appraisal, valuation, or analysis of real estate or real property in connection with such transaction.
G. The Commission may by order or regulation eliminate loans or specific categories of loans from the requirements of this section.
H. The provisions of this section shall not be construed to prohibit any bank from accepting, as security for a loan that it had made in good faith without security or upon security since found to be inadequate, an obligation or obligations secured by mortgage, deed of trust, or other such instrument upon real estate.
Code 1950, § 6-78; 1952, c. 25; 1956, c. 622; 1960, c. 23; 1964, c. 150; 1966, c. 584, §§ 6.1-63, 6.1-65; 1968, c. 549; 1972, c. 189; 1976, c. 487; 1978, c. 624; 1979, c. 375; 1981, c. 271; 1982, c. 263; 1984, c. 133; 1988, c. 170; 1991, c. 160; 1992, c. 68; 1994, c. 501; 2005, c. 263; 2010, c. 794.
Structure Code of Virginia
Title 6.2 - Financial Institutions and Services
§ 6.2-801. Application of chapter
§ 6.2-802. Effect of chapter on certain banks
§ 6.2-803. Entities authorized to engage in banking business
§ 6.2-804. Amendment of powers of state banks by regulation of the Commission
§ 6.2-806. Saturday closing of banks
§ 6.2-807. Discoverability or admissibility of compliance review committee documents
§ 6.2-808. Incorporation; corporate powers
§ 6.2-810. Effect of chapter on charter powers
§ 6.2-811. Membership in Federal Reserve Bank System or Federal Home Loan Bank System
§ 6.2-812. Inspection of records, reports, and information of insured banks
§ 6.2-813. Participation by banks in school thrift or savings plans
§ 6.2-815. Suspension of business during emergency
§ 6.2-816. Banks to obtain certificate of authority
§ 6.2-817. Capital stock subscriptions
§ 6.2-818.1. Virtual currency custody services by banks
§ 6.2-819. Authority to engage in trust business; permission of Commission required
§ 6.2-820. Powers of national banks as fiduciaries
§ 6.2-821. Separation of banking and trust functions; establishment of trust department
§ 6.2-822. Merger and share exchange by state banks
§ 6.2-823. Conversion of national banking association to state bank; certificate of authority
§ 6.2-824. Status of converted bank
§ 6.2-825. State bank becoming national bank; notice required; effect on liabilities
§ 6.2-826. Effect of conversion of state bank to national bank
§ 6.2-827. Rights of national bank stockholders dissenting from conversion
§ 6.2-828. Conversion of state bank to federal savings institution
§ 6.2-830. Conversion from stock association to bank; conversion from bank to stock association
§ 6.2-831. Establishment of branch banks; redesignation of main office
§ 6.2-832. Establishment of automated teller machines and electronic terminals
§ 6.2-833. Bank agent for depository institution
§ 6.2-834. Operation of branch office under different name; civil penalty
§ 6.2-835. Banking facilities in certain hospitals or federal areas
§ 6.2-837. Interstate branching by Virginia state banks
§ 6.2-838. Interstate branching
§ 6.2-839. Interstate branching through the acquisition of a branch
§ 6.2-840. Filing requirements
§ 6.2-843. Examination; periodic reports; cooperative agreements; assessment of fees
§ 6.2-845. Additional branches
§ 6.2-847. Notice of subsequent merger or other transaction
§ 6.2-850. Authority to branch outside the Commonwealth by merger
§ 6.2-851. Interstate merger transactions and branching permitted
§ 6.2-852. Filing requirements
§ 6.2-853. Conditions for interstate merger
§ 6.2-855. Examinations and periodic reports
§ 6.2-856. Cooperative agreements; assessment of fees
§ 6.2-859. Notice of subsequent merger
§ 6.2-860. Bank to be managed by board of directors; number of directors
§ 6.2-861. Application of Virginia Stock Corporation Act
§ 6.2-862. Directors to own stock in bank
§ 6.2-864. Report to Commission of election of director
§ 6.2-865. Removal of director or officer; appeals; penalty
§ 6.2-866. Meetings of board of directors
§ 6.2-867. Discount by officer, director, or employee of paper refused by bank
§ 6.2-868. Bonds required of officers and employees; blanket bond
§ 6.2-869. Dividends; surplus; undivided profits
§ 6.2-870. Limitation of amount invested in bank premises
§ 6.2-871. Investment in stock or securities of bank service corporations
§ 6.2-872. For what purpose banks may purchase, hold, and convey real estate
§ 6.2-873. Additional permissible investments in real estate
§ 6.2-874. Prohibited uses of bank's own stock; other investments or loans
§ 6.2-875. Limitations on obligations of borrowers
§ 6.2-876. Loans to executive officers or directors
§ 6.2-877. Overdrafts by bank officer or director
§ 6.2-878. Loans secured by real estate generally
§ 6.2-879. Certain loans not considered loans secured by real estate
§ 6.2-881. Investment in reverse annuity mortgages
§ 6.2-882. Bank borrowing money or rediscounting its notes
§ 6.2-883. Acceptance of drafts or bills of exchange; issuance of letters of credit
§ 6.2-884. Ownership and lease of personal property
§ 6.2-885. Investment in stock or securities of controlled subsidiary corporations
§ 6.2-886. Regulation of controlled subsidiary corporations by Commission
§ 6.2-887. Insurance business of controlled subsidiary
§ 6.2-888. Real estate brokerage business of controlled subsidiary
§ 6.2-890. Preferences by pledging assets
§ 6.2-891. Perfection of certain security interests
§ 6.2-892. Federal deposit insurance a credit towards certain required bonds
§ 6.2-893. Payment of balance of deceased person or person under disability
§ 6.2-894. Deposits in and withdrawals from accounts of convicts
§ 6.2-897. Bank need not inquire as to fiduciary funds deposited in fiduciary's personal account
§ 6.2-899. Examination of affiliates
§ 6.2-900. Special examinations
§ 6.2-901. Assistance in making examinations
§ 6.2-902. Notice of examination
§ 6.2-903. Revaluation of assets after examination
§ 6.2-904. Report of examination; inspection and dissemination to directors
§ 6.2-905. Communications to board or executive committee
§ 6.2-906. Disclosure of irregularities; Commission's powers
§ 6.2-907. Reports of condition and other statements
§ 6.2-908. Fees for supervision and regulation and for certain examinations and investigations
§ 6.2-909. Assessment and payment of fees; lien
§ 6.2-911. Examination of national banks
§ 6.2-913. Closing bank; appointment of receiver
§ 6.2-914. Merger or transfer of assets of insolvent bank
§ 6.2-915. Protection of state deposits upon insolvency
§ 6.2-916. Appointment of receiver
§ 6.2-917. Execution of powers of sale by receivers
§ 6.2-918. Rights and powers of receivers generally
§ 6.2-919. Interest on deposits; distribution of surplus remaining after payment of depositors
§ 6.2-920. Proceedings to bar certain claims against banks in liquidation
§ 6.2-921. When publication of list of creditors unnecessary
§ 6.2-922. When publication once in two newspapers sufficient
§ 6.2-924. Power of receivers to contract for loans and make investments
§ 6.2-926. Appointment of FDIC as receiver
§ 6.2-927. Transfer of title to bank assets
§ 6.2-928. Posting of notice; effect of posting notice
§ 6.2-930. Emergency sale of assets
§ 6.2-931. Notice and proof of claim; notice of rejection of claim; petition for hearing
§ 6.2-932. Payment of claims filed after prescribed period
§ 6.2-933. Distribution of assets
§ 6.2-934. Receivership procedures involving assets held by closed bank as fiduciary
§ 6.2-936. Subrogation to rights of bank depositors
§ 6.2-937. Destruction of records
§ 6.2-939. Unlawful use of terms indicating that business is bank; penalty
§ 6.2-940. Making derogatory statements affecting banks; penalty
§ 6.2-941. Use of bank name, logo, or symbol for marketing purposes; penalty
§ 6.2-942. False certification of checks; penalty
§ 6.2-943. Offenses by officer, director, agent, or employee of bank; penalties
§ 6.2-945. Receiving deposit knowing bank to be insolvent; penalty
§ 6.2-946. Civil penalties for violation of Commission's orders
§ 6.2-948. Privilege for self-assessment reports
§ 6.2-949. Exceptions from self-evaluation privilege
§ 6.2-950. Effect on other privileges