§ 36a-261 — (Formerly Sec. 36-99). Mortgage loans.

Connecticut § 36a-261

• Jurisdiction: Connecticut
• Title 36a: The Banking Law of Connecticut
• Ch. 665: Powers, Loans and Investments

Text

(a) As used in this section, the term “mortgage loan” means a loan, line of credit or letter of credit secured wholly or substantially by a lien on or interest in real estate, including a leasehold interest, for which the lien or interest is central to the extension of credit, but does not include the following loan transactions: (1) Loans that are to be sold by the Connecticut bank promptly after origination by such bank, without extended recourse for payment default, to a financially responsible third party, provided such loans shall be considered mortgage loans for purposes of purchases and participations by a Connecticut bank if such loans otherwise qualify as mortgage loans under this subsection. (2) Loans for which a lien on or interest in real estate is taken as additional collateral through an abundance of caution by the Connecticut bank, including loans pursuant to which the bank takes a blanket lien on all or substantially all of the assets of the borrower, and the value of the real estate is low relative to the aggregate value of all collateral. (3) Loans made to manufacturing, industrial or commercial borrowers with a lien or interest in real estate taken as all or a portion of the collateral to directly or indirectly secure such loans, when the bank looks for repayment out of the operations of the borrower's business, relying on the borrower's general credit standing and the borrower's forecast of operations. (b) (1) The assets of Connecticut banks may be invested in mortgage loans, subject to the general limitations set forth in this section. (2) Any such mortgage loan shall be secured either by (A) a first mortgage which is a first lien or (B) a mortgage which is subordinate to another mortgage or other mortgages, provided, in the case of a loan secured by a mortgage which is subordinate to another mortgage or other mortgages, which other mortgage or mortgages are held by a person other than the Connecticut bank, the real estate securing such loan is (i) residential real estate, or (ii) nonresidential real estate provided the loan does not exceed, at the time of origination, a loan-to-value ratio of fifty per cent, or (iii) nonresidential real estate in a loan transaction which, at the time of origination, exceeds a loan-to-value ratio of fifty per cent, provided the aggregate amount of all such loans made pursuant to this subparagraph (B)(iii) does not exceed, at the time of origination, twenty-five per cent of the capital and surplus of the Connecticut bank. A loan which was included within the aggregate limit of subparagraph (B)(iii) of this subdivision subsequently may be excluded if the loan is repaid or if the applicable loan-to-value ratio is reduced to fifty per cent or below because of a reduction in principal or senior liens, additional contributions of real estate collateral, or an increase in equity value substantiated by a current suitable appraisal or evaluation. (c) “Real estate”, as used in this section, includes refrigerating equipment, dishwashing equipment, stoves and clothes washing machines, hereinafter called “household equipment”, used on the premises at the time of execution of the mortgage or substituted after the mortgage is executed if such equipment is specifically declared in the mortgage deed to be used as a part of the mortgaged realty, and if such mortgage declares that household equipment substituted for the original household equipment mentioned in such mortgage shall be part of the mortgaged realty. (d) The real estate shall be unencumbered, except to the extent that prior mortgages are permitted by subdivision (2) of subsection (b) of this section. A satisfactory certificate of title or other suitable form of title review issued by a suitable person approved by such Connecticut bank, or a satisfactory policy of title insurance, shall be filed with the lending bank until the loan is paid or until the loan is sold. The following are not encumbrances within the meaning of this section: (1) Reservations to the United States of America of fissionable materials, (2) leases, provided the impact of the lease is adequately reflected in the appraisal or evaluation required by subsection (e) of this section, and (3) easements, restrictions, interests and other rights (A) which do not materially adversely affect the marketability of the real estate, (B) which are otherwise adequately reflected in the appraisal or evaluation required by subsection (e) of this section, (C) where the attendant risks are satisfactorily insured under an acceptable policy of title insurance, or (D) which the bank otherwise reasonably determines do not present a material adverse risk after consideration of the relevant underwriting risks for the loan or class of loans. Connecticut banks shall adopt and implement a real estate lending policy which reflects, in accordance with safe and sound banking principles, consideration of acceptable standards for title review and title insurance. (e) The real estate shall be appraised or otherwise suitably evaluated, before any loan is made on its security, by one or more suitable persons who are familiar with real estate values in the community where the real estate is located. Such persons shall be approved by the governing board of the Connecticut bank making the loan, or by a management committee, board committee or agent appropriately designated by such governing board in accordance with the appraisal policy required by this subsection, provided, if the loan under consideration is a loan to be insured or guaranteed by a governmental agency, the appraiser may be one who appraised the property for the governmental agency. Such appraisal or evaluation shall be in writing, shall state the amount at which the property has been appraised or evaluated and shall be filed with the Connecticut bank until the loan is paid or until the loan is sold. Connecticut banks shall adopt and implement an appraisal policy which reflects, in accordance with safe and sound banking principles, consideration of appraiser qualifications, procedures for the approval and selection of appraisers, appraisal and evaluation standards, and the bank's administration of the appraisal and evaluation process. (f) Notwithstanding the provisions of subdivision (2) of subsection (h) of this section, the Connecticut bank, in its discretion and for such a period as it deems advisable, may excuse the borrower on a mortgage loan from amortization of the principal of such loan, provided the governing board of the Connecticut bank, or a management committee or board committee appropriately designated by such governing board, has reviewed the particular mortgage loan and has determined such action to be prudent under the circumstances. (g) Loans not exceeding fifty per cent of the value of the real estate may be made without further restriction than is set forth in subsections (a) to (f), inclusive, of this section. The requirements of this section relating to the relationship between the loan amount and the value of the real estate shall be calculated on the basis of the aggregate amount of such loan plus the unpaid amount of any obligation secured by any prior mortgages or liens and the amount of any advancements permissible under any loan secured by such prior mortgage or mortgages in relation to the value of the real estate interest. (h) Loans not exceeding ninety per cent of the value of the real estate may be made subject to the following additional limitations set forth in subdivisions (1) and (2) of this subsection. (1) No loan shall be made until the person or persons liable on the note have filed with the bank a satisfactory financial statement which shall be kept on file. (2) All such loans shall require repayment of principal and payment of interest in at least consecutive semiannual installments of principal and interest, such payments to be sufficient to pay the loan in full not later than forty-two years from the date of the first payment and the first payment to be made within twenty-four months of the date of the note. The requirements for semiannual principal payments pursuant to this subdivision are not applicable to: (A) Consumer revolving loan agreements made pursuant to subsection (c) of section 49-2 , (B) alternative mortgage loans made pursuant to section 36a-265 , (C) loans which may be demanded at any time and which are secured by residential real estate, and (D) any other loan or class of loans determined by the commissioner not to be subject to such requirements. (i) The following mortgage loans may be made without regard to the ninety per cent loan-to-value limit set forth in subsection (h) of this section: (1) Loans guaranteed or insured by the United States government or its agencies, provided the amount of the guaranty or insurance is at least equal to the portion of the loan that exceeds the applicable loan-to-value limit. (2) Loans backed by the full faith and credit of a state government, provided the amount of the assurance is at least equal to the portion of the loan that exceeds the applicable loan-to-value limit. (3) Loans guaranteed or insured by a state, municipal or local government, or its agency, provided (A) the amount of the guaranty or insurance is at least equal to the portion of the loan that exceeds the applicable loan-to-value limit, and (B) the bank has determined that the guarantor or insurer has the financial capacity and willingness to perform under the terms of the guaranty or insurance agreement. (4) Loans that are renewed, refinanced, or restructured without the advancement of new funds or an increase in a line of credit, except for reasonable closing costs. (5) Loans that are renewed, refinanced, or restructured in connection with a workout situation, either with or without the advancement of new funds, where such action is consistent with safe and sound banking practices and is a part of a clearly defined and well documented program to achieve orderly liquidation of the debt, reduce risk of loss or maximize recovery of the loan. (6) Loans that facilitate the sale of real estate acquired by the Connecticut bank in the ordinary course of collecting a debt previously contracted in good faith. (7) Loans where the Connecticut bank does not rely principally on the real estate as security. (8) Loans where all or part of such loan is made in primary reliance upon the mortgage insurance policy of a private mortgage guaranty company, licensed by the Insurance Commissioner to do business in this state and approved by the commissioner. (9) Loans or loan programs which are determined by the governing board of the Connecticut bank, or by a management committee or board committee appropriately designated by such governing board, to be prudent under the circumstances after consideration of the relevant underwriting risks, provided (A) the aggregate amount of all such loans, calculated at the time of origination of each such loan, does not exceed one hundred per cent of the bank's capital and surplus, (B) the aggregate amount of all such loans, calculated at the time of origination of each such loan, other than loans secured by one-to-four-family residential property, does not exceed thirty per cent of the bank's capital and surplus, (C) the aggregate amount of all such loans is included in the percentage of assets limitation specified in subsection (s) of this section, and (D) the bank makes a notation of such determination and the reasons therefor in the applicable loan file. A loan which is included within the aggregate limits of this subsection may subsequently be excluded if the applicable loan-to-value limit is satisfied because of a reduction in principal or senior liens, additional contribution of real estate collateral or increases in equity value substantiated by a current suitable appraisal or evaluation. (j) Loans made under this section may be for the purpose of building upon or improving the property of the borrower, and may be made in installments advanced at the discretion of the lending institution as the work progresses; provided at no time shall the ratio of the amount loaned to the then total value exceed the ratio the final loan is to bear to the value of the completed property. Loans made to finance the construction of buildings and having a maturity of not more than twenty-four months or having a maturity of not more than thirty-six months if approved by the commissioner are not subject to the limitations imposed by this subsection. (k) Connecticut banks are authorized to make and invest in any mortgage loan, including construction and improvement loans, insured by the Federal Housing Administrator without regard to the limitations and restrictions of this section, except that such loans are subject to the following limitations: (1) In the case of loans secured by a first mortgage on real estate, the contract of insurance shall contain a provision that the debentures to be issued by the Federal Housing Administrator in settlement of such insurance, in the event of the foreclosure or default of any such loan or mortgage, shall be fully guaranteed as to payment of principal and interest by the government of the United States, (2) if the bank has a commitment for such insurance, issued by the Federal Housing Administration, it may grant a loan to a borrower for the purpose of building upon or improving the property of the borrower, the money so borrowed to be advanced at the discretion of the bank in installments as the work progresses, provided the total of all advances made does not exceed eighty per cent of the value of the property on the date of each advance or the proportion that the final loan is to bear to the final estimated value of the property, whichever is greater, except that the final advance may be in such an amount that the total of all advances made may equal but not exceed the amount of such commitment. The final advance shall not be made until the buildings or improvements have been inspected and approved by the Federal Housing Administration for an insured loan. (l) Subject to such regulations and restrictions as the commissioner finds necessary and proper, and subject to the limitations, restrictions and privileges contained in this subsection, Connecticut banks are authorized to make and invest in any loan which the Administrator of Veterans Affairs guarantees, makes a commitment to guarantee, or insures pursuant to Title III of an Act of Congress entitled “Servicemen's Readjustment Act of 1944”, as amended, without regard to the limitations and restrictions of this title. (1) Each such loan shall be subject to the provisions of this title prescribing the maximum limits, in amount, of: (A) A loan or loans to or total liability of any one individual, and (B) a loan upon the security of real estate, with relation to the appraised value of such real estate. (2) Each such loan shall be secured by a mortgage on real estate, except that a loan pursuant to Section 501, 502 or 503 of the Servicemen's Readjustment Act of 1944, as amended, for the purpose of repairing, altering or improving a building or buildings, and a loan pursuant to Section 505(a) of said act, need not be secured by a lien on real property. (m) (1) Additional sums, as evidenced by a note or notes signed by the then owner of record of the mortgaged premises, may be advanced by a Connecticut bank to such owner and shall be a part of the mortgage debt due the mortgagee, provided (A) such advancements shall not exceed the difference between the indebtedness at the time of the advance and the original mortgage debt, (B) the original mortgage deed shall have been recorded after October 1, 1951, and shall contain specific provisions granting this right, and (C) the terms of repayment of such advancements shall not extend the time of repayment beyond the maturity of the original mortgage debt. If the then owner of record is other than the original mortgagor, neither the original mortgagor nor any other former owner of the mortgaged premises is liable on such advancements. (2) Advancements may also be made by writing open-end mortgages in accordance with the provisions of section 49-2 . (n) (1) Connecticut banks may participate with other lenders, which may be corporations, business trusts, pension trusts, governments or government agencies, in mortgage loans which Connecticut banks are permitted to invest in under this section, but the amount of the participating interest of any Connecticut bank in any one such loan shall not exceed the amount which such bank would be permitted to invest individually in any one loan of the same class under this section, and the amount of the participating interests shall be included in determining whether or not such bank is exceeding its loan limits. (2) Connecticut banks may participate in mortgage loans only pursuant to a written agreement between all the participating lenders and the servicing agent for such loan and the servicing agent may impose a service charge therefor. (o) Any Connecticut bank may grant a loan secured by a first mortgage on property of the borrower without regard to the limitations and restrictions on loans imposed by this section, if the borrower has an agreement with a housing authority created under section 8-40 , secured by a commitment of the United States Department of Housing and Urban Development, pursuant to which the borrower is to construct housing upon the property and the housing authority is to purchase the property upon completion of construction, the money so borrowed to be advanced at the discretion of the bank as construction progresses, provided the ratio of the total of all advances made to the amount of the agreed purchase price at no time exceeds ninety per cent of the ratio of the value of the property to the expected value of the property upon completion of construction. (p) If a loan made under this section is secured by a mortgage on income-producing real estate and if the Connecticut bank relies upon such real estate or income production as primary security for the loan, the bank need not require that any person be personally liable on the note, in which case the bank shall retain in its files, in lieu of the financial statements required by subdivision (1) of subsection (h) of this section, such income projection statements, tenants' financial statements and other credit information as the bank deems necessary. (q) Subject to such regulations as the commissioner may adopt, Connecticut banks may make mortgage loans secured by leasehold interests, provided the leasehold estate securing such mortgage loan has a remaining term at the time such mortgage loan is originated by the bank which does not expire prior to the maturity of the mortgage loan obligation. The term of the leasehold estate shall not include any period for which the lease may grant an option of renewal. (r) Any Connecticut bank may, in connection with any mortgage loan made by it, contract with the mortgagor for interest to be paid currently or to accrue, and, if such interest is to accrue, for the interest to be added to the mortgage debt on which interest may be charged and collected. Accrued interest which is added to the mortgage debt shall be secured by the mortgage to the same extent as the principal of the mortgage debt. (s) The assets of a Connecticut bank may be invested in mortgage loans which do not conform to the requirements of this section, provided the governing board of the Connecticut bank, or a management committee or board committee appropriately designated by such governing board, has reviewed the nonconforming aspects of the particular mortgage loan or mortgage loan program and has determined such mortgage loan or mortgage loan program to be prudent under the circumstances and all such mortgage loans outstanding at the time of origination when combined with the loans made pursuant to subdivision (9) of subsection (i) of this section, do not exceed eight per cent of the assets of the bank. The bank shall make a notation of the prudence determination and the reasons for such determination in the applicable loan file. A loan which was included within the percentage of assets limitation of this subsection subsequently may be excluded if the loan is repaid or if the nonconforming aspects are eliminated or otherwise cease to exist. See Sec. 36a-759 re minority of veterans, spouses and widows for purposes of Servicemen's Readjustment Act.

Legislative History

(1949 Rev., S. 5818, 5819; 1949, S. 516a–519a; 1951, 1953, 1955, S. 2679d; 1957, P.A. 89; 1959, P.A. 11, S. 1; 14; 74, S. 1; 1961, P.A. 81; 82; 93; 101, S. 1–3; 1963, P.A. 70; 94; 119, S. 1, 2; February, 1965, P.A. 76, S. 1; 99; 135; 163, S. 1; 209, S. 1; 222; 359, S. 1; 1967, P.A. 67, S. 1; 357; 427, S. 2; 434, S. 2; 461, S. 22; 1969, P.A. 87; 223, S. 1–3; 255; 265, S. 2; 504, S. 13–15; 1971, P.A. 310, S. 1; 1972, P.A. 114, S. 2; P.A. 73-167, S. 1, 2; 73-224, S. 1, 2; 73-669, S. 1, 2; P.A. 74-62, S. 1, 2; 74-101, S. 1, 2; P.A. 75-56, S. 2, 3; 75-200, S. 1–4; P.A. 76-28, S. 1, 2; 76-33, S. 2, 3; P.A. 77-74, S. 2, 3; 77-614, S. 161, 163, 610; P.A. 78-121, S. 97, 98, 113; P.A. 79-75; 79-126; P.A. 80-482, S. 247, 345, 348; P.A. 81-120, S. 6–10, 13; 81-391, S. 4; P.A. 85-368, S. 1–3, 5; 85-379, S. 20, 53; P.A. 86-268, S. 2, 7; P.A. 87-9, S. 2, 3; P.A. 90-21; P.A. 91-357, S. 24, 78; P.A. 92-12, S. 37; P.A. 94-122, S. 118, 340; P.A. 95-70, S. 2, 8; P.A. 96-44, S. 3; P.A. 11-50, S. 5; P.A. 12-96, S. 22; P.A. 16-167, S. 41; P.A. 23-126, S. 18.) History: 1959 acts made the following changes: In Subsec. (5), the loan limit was changed from $10,000 to $15,000, in Subsec. (11)(a) the limit was changed from $15,000 to $20,000, in Subsec. (11)(d) the maximum term of loans was changed from 20 to 25 years and in Subsec. (15) the loan limit was changed from 10% to 15%; 1961 acts made the following changes: In Subsec. (6) (b) was added, in Subsec. (7) the investment limit was changed from 70% to 85% and the exception added, in Subsec. (8) the amount of principal indebtedness was changed from 40% to 50%, in Subsec. (13) the opening clause is new, in Subsec. (14) the reference to Subsec. (7) is new and former clause c. of Subdiv. (1) was deleted, in Subsec. (15) the provision re guarantee by the administrator of veterans' affairs was changed from a 50% minimum guarantee and the maximum amount of loan changed from $15,000 to $20,000; 1963 acts added Subsec. (17), added proviso re loans secured by mortgage accepted by administrator of veterans' affairs in Subsec. (15) and raised limit from 15% to 25% of assets in that Subsec., increased loan limit from 66.66% to 75% of real estate's value in Subsec. (10) and changed wording slightly in provision re due date of loan and changed per cent of loan which must be current balance to avoid classification as loan in Subsec. (11) from 66.66% to 75% of property's value; 1965 acts changed mile limit on loans outside state from 25 to 50 from home office of lending institution in Subsec. (1) and added Subdiv. (b) in that Subsec. re first mortgages, increased dollar limit on loans from $20,000 to $30,000 and bank's loan limit from 25% to 35% of assets in Subsec. (15) and deleted requirement that loan be approved by administrator of veterans' affairs beforehand, substituted “partially guaranteed” loans for “portions of loans guaranteed” in Subsec. (7), allowed loans for 90% rather than 80% of real estate's value in Subsec. (11) and increased maximum amount from $20,000 to $25,000 in Subdiv. (a), added provision re copy of sales agreement in Subdiv. (c) and required owner's residency in Subdiv. (e) of that Subsec., deleted requirement in Subsec. (17) that bank commissioner approve agreements between participating banks and allowed any “qualified” bank to be servicing agent “whether or not it is a participating bank”, deleted limit on individual loan of the greater of $20,000 or 0.5% of bank's assets and, in Subsec. (5) replaced $15,000 limit on loan to one entity with new limits depending on whether loan is to one entity or for parcel of land; 1967 acts repealed Subsec. (6) re guaranties for loans, renumbering as necessary, made Subsec. (11)(e) applicable with respect to condominiums, substituted “greater” for “less” in provision re total of advances under Subsec. (13) and deleted references to state bank and trust companies and their savings departments throughout section; 1969 acts included savings and loan associations and building and loan associations as qualified banks in Subsec. (16)(d)(2), deleted requirement that loans exceeding 70% of assets be insured by FHA or guaranteed under Servicemen's Readjustment Act of 1944 in Subsec. (6), changed period for final payment from 25 to 30 years and first payment from 18 to 24 months after issuance in Subsec. (9), changed loan limit from $25,000 to $35,000, total limit on bank loans from 10% to 25% of assets, period for final payment from 25 to 30 years and first payment from 1 year to 24 months in all cases (where previously first payment date depended on type of loan) in Subsec. (10), inserted new Subsec. (12) and renumbered as necessary and added Subsecs. (18) and (19), inserting references as necessary in Subsecs. (9) and (10); 1971 act changed maturity date in Subsec. (1)(b) to 10 years; 1972 act applied Subsec. (17) to “lenders” rather than qualified banks and qualified participating banks and increased limit in Subdiv. (b) from 5% to 10% of assets, restricting savings bank interests above 5% of assets to residential real estate; P.A. 73-167 rephrased Subsec. (15) and deleted $30,000 limit on individual loans; P.A. 73-224 increased limit in Subsec. (10)(a) from $35,000 to $45,000; P.A. 73-669 specified permission to invest in loans secured by first mortgage which savings banks may invest in under Subsec. (15); P.A. 74-62 deleted requirement that residential property be “detached” dwellings in Subsec. (10)(e); P.A. 74-101 changed percentage of assets which may be lent in Subsec. (5) from 1% to 2%; P.A. 75-56 deleted $45,000 limit on loans in Subsec. (10) and provision requiring that loans be secured by mortgage on fully-completed, single-family residence within 50 miles of association's place of business; P.A. 75-200 changed loan limit from 75% to 80% of real estate's value and period for final payment from 30 to 42 years in Subsec. (9), similarly changed final payment period in Subsec. (10) and changed 10% and 5% limits in Subsec. (17)(b) to 25% and 10%, respectively; P.A. 76-28 changed percentage of property's value in Subsec. (10)(a) from 75% to 80%; P.A. 76-33 repealed Subsec. (6) re total investment limit; P.A. 77-74 allowed appraisal by one person where previously at least two were required in Subsecs. (2) and (4); P.A. 77-614 placed banking commissioner and insurance commissioner within the department of business regulation and made their respective departments divisions within that department, effective January 1, 1979; P.A. 78-121 made technical changes, deleting reference to repealed Subsec. (6) in Subsec. (18) and revising reference to Subsec. (10) in Subsec. (19); P.A. 79-75 changed limit on interests of savings banks in Subsec. (17)(b) from 25% to 60% of assets and deleted restriction re savings banks' interests in mortgage loans whereby all amounts over 10% of assets must be in residential real estate; P.A. 79-126 added “notwithstanding” clause in Subsec. (7) and removed provision limiting deferral of amortization to cases where, after reappraisal, principal indebtedness is 50% or less of property's value; P.A. 80-482 restored banking and insurance divisions as independent departments and abolished the department of business regulation; P.A. 81-120 amended Subsec. (1) to delete the requirement that loans must be secured by a first mortgage and to permit loans to be secured by a mortgage subordinate to another mortgage if the real estate is residential and the amount of the loan does not exceed certain limits, amended Subsec. (3) to provide that the real estate may be encumbered by permissible prior mortgages, amended Subsec. (14) to delete the requirement that loans pursuant to the Servicemen's Readjustment Act be secured by a first or second mortgage, amended Subsec. (15) to delete the requirement that loans secured by mortgages on real estate outside the state must be secured by first mortgages, and amended Subsec. (17) to delete the requirement that participation loans secured by a mortgage on real estate located anywhere in the United States must be secured by a first mortgage; P.A. 81-391 added Subsec. (20) permitting the accrual of interest on mortgage loans and the addition of such accrued interest to the mortgage debt; P.A. 85-368 and P.A. 85-379 amended Subsec. (10) to increase from 25% to 35% the aggregate amount of assets a savings bank may invest in uninsured mortgage loans up to 90% of real estate value; P.A. 85-368 also added Subsec. (21) re the granting of unrestricted mortgage loans up to 90% of real estate value, amending Subsec. (11) to refer to Subsec. (21), and P.A. 85-379 also repealed Subsec. (5); P.A. 86-268 amended Subsec. (9) and (10) to authorize and validate mortgage payment schedules provided such schedule required at least semiannual payments; (Revisor's note: Pursuant to P.A. 87-9 “banking department” was changed editorially by the Revisors to “department of banking”); P.A. 90-21 amended Subsec. (15) to require loans secured by a mortgage on real estate located outside of the state which exceed 10% of the assets of the savings bank and exceed 80% of the value of the real estate to be insured or guaranteed; P.A. 91-357 made technical changes; P.A. 92-12 redesignated Subsecs., Subdivs. and Subparas. and made technical changes; P.A. 94-122 added a new Subsec. (a) defining “mortgage loan”, renumbered former Subsec. (a) as Subsec. (b), deleted former Subsec. (a)(2) re savings banks' mortgage loans, deleted former Subsec. (a)(3) referring to leaseholds as mortgages, renumbered former Subsec. (a)(4) as Subdiv. (2) and allowed subordinate liens in connection with all residential loans, nonresidential loans with a loan-to-value ratio of less than 50% and other nonresidential loans as long as all such loans do not in the aggregate exceed 25% of the bank's equity capital and loss reserves, renumbered former Subsec. (b) as Subsec. (c) and included “dishwashing equipment” as qualifying household equipment, renumbered former Subsec. (c) as Subsec. (d) and broadened and made uniform the exemptions to the requirement that real estate be unencumbered and required a satisfactory certificate of title or other suitable form of title review for all mortgage loans, renumbered former Subsec. (d) as Subsec. (e) and allowed real estate to be “otherwise suitably evaluated” before a loan is made and required all banks to adopt an appraisal policy, renumbered former Subsecs. (e) and (f) as Subsecs. (f) and (g) and clarified that the calculation of all loan-to-value ratios must include any prior mortgages or liens, deleted former Subsec. (g) re restrictions for savings banks' mortgage loans, deleted the requirements that savings banks' escrow tax and insurance payments on loans between 80% and 90% and that loans with between 80% and 90% loan-to-value ratios make up no more than 35% of the banks' assets in Subsec. (h), added exemptions (A) through (D) to the requirement that mortgage loans be amortized in Subsec. (h), consolidated existing exemptions to loan-to-value limits for government guaranteed loans and added exemptions parallel to those allowed under FDIC rules in new Subsec. (i), renumbered former Subsec. (i) as Subsec. (j) and made uniform the provisions for construction loans, deleted former Subsec. (j), made uniform the provisions re loans insured by the FHA in Subsec. (k), made uniform the provisions re veterans' loans and deleted references to savings banks' geographic limits and an outdated aggregate limit on residential loans in Subsec. (l), deleted Subsec. (m) re a 35% of assets limit on savings banks' out-of-state mortgage loans and other limits, renumbered former Subsec. (n) as Subsec. (m) and made uniform powers concerning future advances, renumbered former Subsec. (o) as Subsec. (n) and removed the limit on savings banks' participations of 60% of assets, removed geographic limits on savings banks' participation loans, deleted the requirement that there be no subordinate interests in savings banks' participation loans and clarified that a service charge is optional, renumbered former Subsecs. (p) and (q) as Subsecs. (o) and (p), added new Subsec. (q), deleted former Subsec. (s) re loan leeway provisions, added new Subsec. (s), and made technical changes, effective January 1, 1995; Sec. 36-99 transferred to Sec. 36a-261 in 1995; P.A. 95-70 amended Subsec. (b)(2) re mortgages held by a person other than a Connecticut bank, re the subsequent exclusions from the aggregate limit, and to make a technical correction in Subpara. (B)(iii), added Subsec. (d)(3)(D) re material adverse risk, amended Subsec. (e) to require approval of appraisers, to add the reference to management and board committees and agent, and to require the appraisal policy to include procedures for approving and selecting appraisers, amended Subsec. (i)(9) to add “or loan programs”, to add the reference to management and board committees, and to add “real estate” before “collateral” and amended Subsec. (s) to add the reference to management and board committees and to add provision re exclusion from the percentage of asset limitations, effective May 31, 1995; P.A. 96-44 amended Subsec. (i)(9)(C) to reference the percentage of assets limitation in Subsec. (s), amended Subsec. (s) re certain loans limited to 8% of the bank's assets, and made other changes re bank investments; P.A. 11-50 amended Subsec. (j) to delete “fifty per cent or” and “whichever is the greater” re maximum ratio of amount loaned to then total value; P.A. 12-96 amended Subsec. (f) by adding provision re review of mortgage loan and determination of prudency by governing board or committee, effective June 8, 2012; P.A. 16-167 amended Subsec. (l) to replace “Administrator of Veterans' Affairs” with “Administrator of Veterans Affairs”, effective July 1, 2016; P.A. 23-126 replaced “equity capital and reserves for loan and lease losses” with “capital and surplus” in Subsecs. (b)(2), (i)(9)(A) and (i)(9)(B) and made a technical change in Subsecs. (h) and (i)(3). Annotations to former section 36-99: Meaning of “unencumbered”. 112 C. 656. Cited. 119 C. 128. Only person qualified to issue certificate of title would be attorney at law. 128 C. 332. Cited. 150 C. 339. Cited. 30 CS 56.