Louisiana Administrative Code › Title 10 - FINANCIAL INSTITUTIONS, CONSUMER CREDIT, INVESTMENT SECURITIES AND UCC › Part III - Banking › Chapter 3 - Powers › Subchapter B - Legal Lending Limit Exception-Real Estate Financing › Section III-315 - Regulation

Current through Register Vol. 50, No. 6, June 20, 2024
A. Any state bank
				  may provide financing to facilitate the sale of other real estate, in excess of
				  lending limits as established in
				  R.S.
				  6:415(A), provided prior
				  written approval of the commissioner has been obtained and, subject to
				  compliance with provisions of this regulation, the extension of credit will be
				  in accordance with all other applicable state or federal laws.
B. Submission of requests for the
				  commissioner's approval must be in writing. Requests must have the prior
				  approval of, and be detailed in the minutes of a meeting held by, the bank's
				  board of directors. Approved transactions shall apply only to purchase money
				  mortgages taken by a state bank in consideration for the sale of other real
				  estate owned by the bank.
C.
				  Approval of requests will be based on all relevant factors surrounding
				  individual transactions; however, the following shall be required and will
				  receive consideration.
1. A demonstration by
				  the requesting bank that attempts to participate the proposed loan portion that
				  is in excess of the bank's current lending limit have proven
				  unsuccessful.
2. Copies of the
				  original record of acquisition must be given. Should acquisition of other real
				  estate have originated from a partnership or corporation, the state bank shall
				  provide the names of the partnership or corporation principals.
3. Proposed transactions must be accompanied
				  by documentation, which shall include accounting entries, indicating that the
				  accounting treatment to be employed has been reviewed and approved by a
				  certified public accountant for compliance with generally accepted accounting
				  principles.
4. Other real estate to
				  be used as supporting collateral for proposed transactions should be appraised,
				  and copies of current appraisals (less than one year old) shall be submitted
				  with each request. The buyer's anticipated use of the property must be
				  indicated.
5. Before approval by
				  the bank's directors, the bank shall have performed an appropriate credit
				  analysis which shall indicate the potential borrower's ability to repay the
				  extension of credit. A copy of the analysis shall be provided with each
				  request, along with the bank's stated justification for engaging in the
				  proposed transaction. The analysis must include a written summary of findings
				  and disclose the names and financial information of the borrower(s) and any
				  guarantor or endorser, as well as the terms of the proposed transaction.
				  Directors, executive officers, and principal shareholders of the originating
				  bank, and of other corporations, partnerships, associations, joint ventures, or
				  other unincorporated entities, having related interests in the proposed
				  extension of credit must be revealed. Previous business relationships with the
				  potential borrower shall be disclosed, with a summary of the borrower's current
				  and related debts, if any, given. All prior losses, renegotiations, or
				  delinquencies related to the potential borrower must be shown.
6. The structure of any proposed transaction
				  shall conform with prudent underwriting standards. Justification of all special
				  terms and lending policy exceptions must be disclosed.
7. If other real estate proposed for sale has
				  been marketed, the bank should provide information detailing how, and for how
				  long, the property has been offered, including original and subsequent asking
				  prices. Additional information should be given listing all offers received and
				  details of subsequent counter-offers made. The bank must disclose if potential
				  buyers have withdrawn offers. If offers were rejected by the bank, the bank
				  shall provide its reasons for the rejection.
8. Changes in the book value and a history of
				  the bank's expenses and income associated with the other real estate identified
				  for sale must be provided.
9. Each
				  bank shall be subject to requests for additional information, as needed, in
				  order to facilitate an appropriate review of all transactions presented for the
				  commissioner's approval.