New Mexico § 58-1-21 - Loans

§ 58-1-21. Loans

A. A state bank may lend on the security of the personal obligation of the borrower. B. A state bank may lend on the security of personal property but shall not make any

loan on the security of its own stock, of stock of another bank where the borrower

owns, controls or holds with the power to vote ten percent or more of the outstanding

voting securities of both that bank and the lending bank or of its obligation subordinate

to deposits. C. As used in this subsection, “ improved farm land ” means any land used for crop or livestock production. A state bank may make real estate loans secured by liens upon unimproved real estate,

upon improved real estate, including improved farmland and improved business and residential

properties, and upon real estate to be improved by a building to be constructed or

in the process of construction in an amount that when added to the amount unpaid upon

prior mortgages, liens and encumbrances, if any, upon the real estate does not exceed

the respective proportions of appraised value as provided in this section. A loan secured by real estate within the meaning of this section shall be in the

form of an obligation secured by a mortgage, trust deed or other instrument, which

shall constitute a lien on real estate in fee or under such rules and regulations

as may be prescribed by the director, on a leasehold under a lease that does not expire

for at least ten years beyond the maturity date of both and a state bank may purchase

or sell obligations so secured in whole or in part. The amount of any such loan made shall not exceed sixty-six and two-thirds percent

of the appraised value if the real estate is unimproved; eighty percent of the appraised

value if the real estate is improved farmland or is improved by off-site improvements

such as streets, water, sewers or other utilities; seventy-five percent of the appraised

value if the real estate is in the process of being improved by a building to be constructed

or in the process of construction; or ninety percent of the appraised value if the

real estate is improved by a building. If any such loan exceeds sixty-six and two-thirds percent of the appraised value

of the real estate or if the real estate is improved with a one- to four-family dwelling,

installment payments shall be required that are sufficient to amortize the entire

principal of the loan within a period of not more than thirty years. However: (1) the limitations and restrictions set forth in this subsection shall not prevent

the renewal or extension of loans and shall not apply to real estate loans that are

guaranteed or insured by the United States or an agency thereof or by a state or agency

or instrumentality thereof; and (2) loans that are guaranteed or insured as described in Paragraph (1) of this subsection

shall not be taken into account in determining the amount of real estate loans that

a state bank may make in relation to its capital and surplus or its time and savings

deposits or in determining the amount of real estate loans secured by other than first

liens. Where the collateral for a loan consists partly of real estate and partly of other

security, only the amount by which the loan exceeds the value as collateral of such

other security shall be considered a loan upon the security of real estate. In no event shall a loan be considered as a real estate loan where there is a valid

and binding agreement that is entered into by a financially responsible lender or

other party directly with the bank that is either for the benefit of or has been assigned

to the bank and pursuant to which agreement the lender or other party is required

to advance to the bank within sixty months from the date of the making of the loan

the full amount of the loan to be made by the bank upon the security of real estate. The amount unpaid upon any real estate loan secured by other than a first lien,

when added to the amount unpaid upon prior mortgages, liens and encumbrances, shall

not exceed in an aggregate sum twenty percent of the amount of the capital stock of

the bank paid in and unimpaired plus twenty percent of the amount of its unimpaired

surplus fund. D. A state bank may make real estate loans secured by liens upon forest tracts that

are properly managed in all respects. The loans shall be in the form of an obligation secured by mortgage, trust deed

or other such instrument, and a state bank may purchase or sell obligations so secured

in whole or in part. The amount of any such loan, when added to the amount unpaid upon prior mortgages,

liens and encumbrances, if any, shall not exceed sixty-six and two-thirds percent

of the appraised fair market value of the growing timber, lands and improvements thereon

offered as security. The loan shall be made upon such terms and conditions as to assure that at no time

shall the loan balance, when added to the amount unpaid upon prior mortgages, liens

and encumbrances, if any, exceed sixty-six and two-thirds percent of the original

appraised total value of the property then remaining. No such loan shall be made for a longer term than three years, except that a loan

may be made for a term not longer than fifteen years if the loan is secured by an

amortized mortgage, deed of trust or other such instrument under the terms of which

the installment payments are sufficient to amortize the principal of the loan within

a period of not more than fifteen years and at a rate of at least six and two-thirds

percent per year. All such loans secured by liens upon forest tracts shall be included in the permissible

aggregate of all real estate loans and, when secured by other than first liens, in

the permissible aggregate of all real estate loans secured by other than first liens

prescribed in Paragraph (2) of Subsection C of this section, but no state bank shall

make forest tract loans in an aggregate sum in excess of fifty percent of its capital

stock paid in and unimpaired plus fifty percent of its unimpaired surplus fund. E. Loans made to finance the construction of a building and having maturities of not

to exceed sixty months where there is a valid and binding agreement entered into by

a financially responsible lender or other party to advance the full amount of the

bank's loan upon completion of the building and loans made to finance the construction

of residential or farm buildings and having maturities of not to exceed forty-two

months may be considered as real estate loans if the loans qualify under this section,

or such loans may be classed as commercial loans whether or not secured by a mortgage

or similar lien on the real estate upon which the building is being constructed, at

the option of each state bank that may have an interest in the loan. No state bank shall invest in or be liable on any such loans classed as commercial

loans under this subsection in an aggregate amount in excess of one hundred percent

of its actually paid-in and unimpaired capital plus one hundred percent of its unimpaired

surplus fund. F. Notes representing loans made pursuant to provisions of this section to finance

the construction of residential or farm buildings and having maturities of not to

exceed nine months shall be eligible for discount as commercial paper if accompanied

by a valid and binding agreement to advance the full amount of the loan upon the completion

of the building, entered into by an individual, partnership, association or corporation

acceptable to the discounting bank. G. Loans made to any borrower where the bank looks for repayment by relying primarily

on the borrower's general credit standing and forecast of income, with or without

other security, or loans secured by an assignment of rents under a lease and where

the bank wishes to take a mortgage, deed of trust or other instrument upon real estate,

whether or not constituting a first lien, as a precaution against contingencies and

loans in which the small business administration cooperates through agreements to

participate in an immediate or deferred or guaranteed basis under the federal Small

Business Act 1 shall not be considered as real estate loans within the meaning of this section but

shall be classed as commercial loans. H. A state bank may make loans upon the security of real estate that do not comply

with the limitations and restrictions in this section if the total unpaid amount loaned,

exclusive of loans that subsequently comply with those limitations and restrictions,

does not exceed five percent of the amount that a state bank may invest in real estate

loans. The total unpaid amount so loaned shall be included in the aggregate sum that the

bank may invest in real estate loans. I. A loan made by a state bank as a noncomplying loan pursuant to Subsection H of

this section may be evidenced by a debt instrument and a security instrument consisting

of a mortgage, deed of trust or similar instrument that contain [contains] the following

provisions: (1) either fixed rate or adjustable rate interest accrual on the debt; (2) an authorization for the borrower to make unscheduled payments to reduce the principal

amount of the loan without relieving the borrower from continuing to make payments

of installments in the amounts specified in the original debt and security instruments; (3) the frequency of unscheduled payments shall not exceed the frequency of scheduled

payments; and (4) authorization for the borrower to retrieve by withdrawal part or all of the amount

of an unscheduled payment previously made. J. Loans made pursuant to this section shall be subject to such conditions and limitations

as the director may prescribe by rule or regulation. 1

15 U.S.C.A. § 631 et seq.