(1) An association may invest
any portion of its funds in loans to its members, secured by first lien trust deeds or
mortgages upon improved real estate; except that additional loans or advances on
the same property secured by additional encumbrances shall be deemed to be first
liens for the purposes of articles 40 to 46 of this title, unless an intervening lien has
been recorded, and upon the shares issued by such association, or upon both such
securities; and except that, only in the case of an association not subject to
regulation by the federal deposit insurance corporation or its successor, no one
loan can be made in excess of five percent of the gross assets of the association at
the close of the preceding month, nor in any event shall the total of loans in excess
of fifty thousand dollars exceed twenty percent of the gross assets of the
association at the close of the preceding month.
(2) An association may make loans on the security of its shares if the
association obtains a first lien upon, or a pledge of, such account as security
therefor. No such loan may exceed the withdrawal or repurchase value of the
account securing the loan, and no such loan shall be made when there is an
impairment of invested share capital or when the association has any application
for withdrawal which has been on file and unpaid more than thirty days. Upon any
default of such loan, the association may, after giving ten days' written notice to
the last address of the owner of such account appearing on the books of the
association, cancel such account, to the extent and in the amount sufficient to
repay said loan and accrued interest thereon. The commissioner may prescribe such
regulations concerning such certificate share loans as may be necessary.
(3) An association may make real estate loans, secured by encumbrances
provided for in subsection (1) of this section, repayable upon the following plans:
(a) (I) Installment loans. Loans may be made or purchased for an amount not
in excess of ninety-five percent of the appraised value of the tendered security,
repayable within forty years in consecutive monthly, quarterly, or annual
installments, equal or unequal. Lump-sum payments may be required in the initial
contract. The provisions and limitations of this paragraph (a) shall not apply if
authority is otherwise permitted by federal law, rule, or regulation.
(II) The initial contract may provide for changes in the interest rate based
upon an index agreed to by the borrower and the association. Such provision shall
specify that changes in the index shall apply equally to increases or decreases in
the interest rate. Decreases shall be mandatory and increases may be at the option
of the association. Interest changes may be implemented through changes in the
installment amount or the rate of amortization, or any combination thereof, as
provided in the initial contract. The installment amount may not be increased more
often than at the end of any consecutive twelve-month period of the loan term, and
shall be sufficient to amortize the remaining principal balance within forty years
from the initial date of the loan.
(b) Loans without amortization. Loans of any type that an association may
make on an installment basis may also be made without amortization of principal;
but interest shall be payable at least annually, and any such loan may be made for
an amount not in excess of eighty percent of the appraised value of the property
and for a term of not more than twenty years. The aggregate amount of such loans
shall not, at any time, exceed an amount equal to twenty percent of the
association's gross assets. In no case may an association provide a loan or loans
under this subsection (3) to any one borrower which exceeds five percent of the
association's gross assets.
(c) Construction loans. Loans may be made without full amortization of
principal if made for the purpose of construction; but any such loan may be made
for an amount not in excess of ninety percent of the appraised value of the
property, excluding cost of land, and for a term of not more than one year.
(d) Sinking fund loans. Loans made under this plan shall be repayable by
crediting to such loans the certificate value of pledged savings shares. Such
borrowing members shall be required to carry such monthly periodical savings
shares with the association as shall have a par value equal to the loan, and every
share issued shall be subject to a lien for any advance made thereon or other lawful
claims against the holder, and the payments on such pledged shares shall not be
less than thirty-five cents per share per month. At the beginning of foreclosure of
any mortgage or trust deed to an association securing such sinking fund loans,
credit shall be allowed on the mortgage indebtedness for the value of any pledged
shares held by the association as collateral for the loan, and the shares shall be
canceled at the conclusion of the foreclosure proceedings.
(e) Insured or guaranteed loans. An association may make such loans as may
be insured or guaranteed by an agency of the federal or state government in such
amounts and upon such terms as may be provided by the statutes and regulations
affecting such loans, and the proviso in paragraph (a) of this subsection (3) shall not
apply to such insured or guaranteed loans.
(4) Other loans. Any association operating under articles 40 to 46 of this
title, notwithstanding anything to the contrary contained therein, may make any
type or kind of loan and for any purpose that a federal savings and loan association
at any time may be authorized to make by any law, rule, regulation, decision, or
order which is or may be applicable to federal savings and loan associations. The
commissioner, by rule or regulation duly adopted and applicable to all associations,
may also authorize all associations organized and operating under articles 40 to 46
of this title to make any investment, in addition to those expressly permitted by said
articles 40 to 46, which federal savings and loan associations are authorized to
make by any laws, rules, regulations, decisions, or orders applicable to such federal
savings and loan associations; but any rule or regulation adopted by the
commissioner granting other investment authority shall, to the extent found by the
commissioner to be applicable, be subject to the same limitations, restrictions,
prohibitions, conditions, and provisions as are applicable in the case of federal
savings and loan associations. association.
(5) (a) A loan secured by a first-lien trust deed or mortgage upon improved
real estate shall not be made until:
(I) A signed application for the loan has been submitted;
(II) A signed appraisal has been submitted; and
(III) The loan has been approved by the board of directors or by a committee
authorized by the board of directors.
(b) Appraisals may be made by any two of the association's directors,
officers, employees, or attorneys or by an independent appraiser who is not a
director, officer, employee, or attorney of the association; except that an officer, a
director, an employee, or an attorney shall not act as an appraiser or act on any
committee approving a loan if the officer, director, employee, or attorney has an
interest in either the property tendered as security or the sale of the property.
(c) Upon the closing of the loan, the association shall furnish to each
borrower a loan settlement statement that indicates in detail the charges or fees
the borrower has paid or obligated the borrower to pay to the association or to any
other person in connection with the loan, and the association shall retain a copy of
the statement.
(6) Every real estate loan shall be evidenced by a proper instrument in
writing obligating the borrower to repay the full amount of the loan and shall be
secured by a mortgage or deed of trust constituting a first lien upon real estate
securing the loan or, if an additional advance, by a deed of trust or mortgage
properly providing for such additional advance. An encumbrance shall provide
specifically for full protection to the association with respect to usual insurance
risks, taxes, special assessments, other governmental levies, and maintenance and
repairs and may provide for an assignment of rents and the appointment of a
receiver upon any default.
(7) An association may pay taxes, special assessments, insurance premiums,
repairs, and other charges for the protection of the real estate security. All such
payments may be charged to a special account or may be added to the unpaid
principal balance of the loan and shall be equally secured by the first lien on the
real property. An association may require life insurance to be assigned as additional
security upon any real estate loan; in such event, the association shall obtain a first
lien upon such policy and may advance premiums thereon, and such premium
advances may be added to the unpaid principal of the loan and shall be equally
secured by the first lien on the security property.
(8) An association may require the borrower to pay monthly in advance, in
addition to interest or interest and principal payments, a prorated portion of the
estimated annual taxes, assessments, insurance premiums, and other charges upon
the real estate securing the loan, or any of such charges, so as to enable the
association to pay such charges as they become due from the funds so received.
The amount of such monthly charges may be adjusted by the association as the
need therefor arises. Every association shall keep an accurate record of the status
of taxes, assessments, insurance premiums, and other charges on all real estate
securing its loans and on all real and other property owned by it.
(9) Payment on the principal indebtedness of all loans on real estate security
shall be applied directly to the reduction of such indebtedness. Payments on all
monthly installment loans, other than construction loans, insured loans, and
guaranteed loans, shall begin not later than sixty days after the date of the note.
Insured loans and guaranteed loans may be repayable upon terms acceptable to
the insuring or guaranteeing agency. An association may charge, for the privilege of
prepayment in part or in full of a loan relating to an owner-occupied single family
residence, if the original contract so provides, an amount not greater than ninety
days' interest on the amount prepaid. An association may charge, for the privilege
of prepayment in part or in full for any loan not otherwise specifically provided for
in this subsection (9), an amount specified in the original contract. Any loan
contract may be modified by the parties by written agreement and within the
limitations of this section as the need therefor may arise.
(10) An association may make additional advances secured by the original
encumbrance if the original loan contract makes proper provision therefor.
(11) An association may purchase loans of any type that it may make, and it
may also purchase insured or guaranteed loans made on homes wherever located;
but no loan may be purchased from an affiliated company or an officer, director,
employee, or attorney of the association without prior approval of the board of
directors.
(12) If additional collateral is encumbered on any loan as additional security,
an association may invest in said loan for an amount in excess of the percentage
provided in paragraph (c) of subsection (3) of this section. Said association may
accept as such additional collateral any security it is authorized to invest in as set
forth in section 11-41-114; but such encumbered additional security shall not
increase the maximum percentage of said loan beyond the actual value of such
additional security.
(13) An association may lend on the security of a first security interest on
stock or a membership certificate issued to a tenant-stockholder or resident-member by a cooperative housing corporation organized under article 33.5 of title
38, C.R.S., and as defined by section 216 of the federal Internal Revenue Code of
1986, as amended, and the assignment by way of security of the borrower's
interest in the proprietary lease or right of tenancy in property covered by such
cooperative housing corporation, if all of the real property owned by such
corporation is located within the state and if such loan is made subject to the same
limitations, restrictions, prohibitions, conditions, and provisions as are applicable in
the case of federal savings and loan associations.