7-7-33 - Investments in loans -- Payments to protect real estate loans -- Requiring borrower to pay taxes, insurance, and other charges on real estate in advance.
7-7-33. Investments in loans -- Payments to protect real estate loans -- Requiringborrower to pay taxes, insurance, and other charges on real estate in advance.
(1) An association may invest in or otherwise acquire loans and interests in loans,secured or unsecured, of any type, amount, and for any purpose, including:
(a) loans evidenced by a participation certificate, mortgage-backed bond or note, ormortgage pass-through certificate;
(b) personal loans evidenced by promissory notes;
(c) loans containing variable, renegotiable, graduated payment, shared appreciation, orother alternative payment features or any combinations of those features;
(d) loans secured by the pledge of policies of life insurance;
(e) loans which are callable upon transfer of the security therefor;
(f) loans to financial institutions, brokers and dealers, secured by loans, obligations orinvestments in which the association could invest directly or unsecured loans to subsidiarycorporations whether or not those corporations are controlled by the association;
(g) loans for the payment of expenses of college or applied technology education;
(h) loans on the security of its savings accounts and loans specifically related tonegotiable order-of-withdrawal accounts;
(i) loans secured by deeds of trust, mortgages or real estate contracts on interests in realproperty whether for the acquisition or improvement of homes or of real property or for otherpurposes, subject only to the conditions specified in Subsections (2) and (3); and
(j) commercial loans to partnerships, corporations, or trusts which are operated for profit.
(2) No association shall make a loan to one person if the sum of (a) the amount of theloan and (b) the total balance of all outstanding loans owed to the association and its servicecorporation subsidiaries by that person exceeds an amount equal to 15% of the association'sequity capital.
(3) No association shall make any loan authorized by this section unless it first hasdetermined that the type, amount, purpose, and repayment provisions of the loan in relation to theborrower's resources and credit standing support the reasonable belief that the loan will befinancially sound and will be repaid according to its terms, and that the loan is not otherwiseunlawful.
(4) (a) An association may pay taxes, assessments, ground rents, insurance premiums,and other similar charges for the protection of its real estate loans.
(b) All such payments shall be added to the unpaid balance of the loan and shall beequally secured by the first lien on the property as the original amounts advanced.
(c) An association may require life insurance to be assigned as additional collateral uponany real estate loan, and if it does so require, the association shall obtain a first lien upon thepolicy and may advance premiums thereon, and the premium advances shall be added to theunpaid balance of the loan and shall be equally secured by the first lien on the property as theoriginal amount advanced.
(5) (a) An association may require, subject to the provisions of the Interest on MortgageLoan Reserve Accounts Act, Sections 7-17-1 through 7-17-10, that a borrower pay monthly inadvance, in addition to interest or interest and principal payments, the equivalent of 1/12 of theestimated annual taxes, assessments, insurance premiums, ground rents, and other charges uponthe real estate securing a loan, or any of those charges, so as to enable the association to pay thecharges as they become due from the funds so received.
(b) The amount of the monthly payments may be increased or decreased to providereasonably for the payment of the estimated annual taxes, assessments, insurance premiums, andother charges.
(c) If the association advances its own funds for the purposes stated, that amount shall besecured by the association's mortgage or trust deed, if any, with the same priority as the originalamount advanced under the mortgage or trust deed.
Amended by Chapter 378, 2010 General Session