New Mexico Administrative Code › Title 12 - TRADE, COMMERCE AND BANKING › Chapter 20 - SAVINGS AND LOAN ASSOCIATIONS › Part 44 - ACCOUNTING PROCEDURES › Section 12.20.44.8 - ACCOUNTING PROCEDURES

Current through Register Vol. 35, No. 13, July 16, 2024
A. A
				premium paid by an association in connection with the acquisition of a mortgage
				loan may be charged off when paid or may be capitalized; if capitalized, a
				proportionate amount thereof shall be charged to expense, at least
				semiannually, over the remaining term of the loan.
B. If an association purchases a loan at a
				discount, such discount shall be deferred and credited to an account
				descriptive of deferred discount income, and a proportionate amount of such
				discount shall be credited to income, at least semiannually, over a period of
				seven years. For the purpose of this sub-part [now part], a loan shall be
				deemed to have been purchased by an association at a discount if the price paid
				by such institution for such loan is less than the amount of the loan
				balance.
C. All acquisition
				charges, as hereinafter, in connection with the making or acquisition of a
				mortgage loan by an association shall be charged to such association's expense
				for the accounting period in which such charges are incurred and shall not be
				deferred beyond the end of such accounting period.
D. Any acquisition credits, as hereinafter
				defined, in connection with the making or acquisition of any mortgage loan by
				an association, not treated as provided in Subsection 8.5 of this sub-part [now
				Subsection E of 12.20.44.8 NMAC], shall be deferred and shall be credited to an
				account descriptive of deferred income, and a proportionate amount of all
				acquisition credits so deferred shall be credited to income, at least
				semiannually, over a period of seven years.
E. If, during any fiscal year, in connection
				with the making or acquisition of any mortgage loan, any acquisition credits
				are not deferred in the manner provided in Subsection 8.4 of this Sub-part [now
				Subsection D of 12.20.44.8 NMAC], an association shall credit from its net
				income for such fiscal year, to a reserve account that shall be established for
				losses and entitled "Reserve for Losses", an amount equal to the amount of
				acquisition credits applicable to such loan. Credits to such reserve account
				shall be in addition to and not a part of reserve credits required to be made;
				and such reserve account shall not be considered a part of such association's
				reserve account, shall not receive credit from any source other than that
				provided in this Subsection 8.5 [now Subsection E of 12.20.44.8 NMAC] and shall
				not receive any charges except as set forth in Subsection 8.6 of this sub-part
				[ now Subsection F of 12.20.44.8 NMAC].
F. In each fiscal year one-seventh part of
				the credits required to be made during such fiscal year and during past fiscal
				years to the reserve account provided for in Subsection 8.5 [now Subsection E
				of 12.20.44.8 NMAC] shall become available for credit from such account to such
				association's reserve account. Charges for the purpose of absorbing losses may
				be made in any fiscal year for the reserve account provided for in Subsection
				8.5 [now Subsection E of 12.20.44.8 NMAC] shall become available for credit
				from such account to such association's reserve account. Charges for the
				purpose of absorbing losses may be made in any fiscal year for the reserve
				account provided for in Subsection 8.5 [now Subsection E of 12.20.44.8 NMAC],
				provided the reserve account of such association and all its other reserve
				accounts established for the purpose of absorbing losses shall first have been
				exhausted by losses.
G. If a
				mortgage loan owned by an association is sold without recourse at a premium,
				such premium shall be credited to such association's income for the accounting
				period in which the loan is sold. If a mortgage loan owned by an association is
				sold without recourse at a loss or at a discount, such loss or discount shall
				be charged to the balance of any acquisition credits or purchase discount
				applicable to such loan that remains deferred at the time of such sale; any
				loss or discount in excess of such balance shall be charged to such
				association's expense for the accounting period in which the loan is
				sold.
H. When an association sells
				real estate owned by it, such association's records shall disclose the book
				value of such real estate at the time of such sale and the price at which it is
				sold. If such sale results in a profit, such part of the profit as is
				proportionate to the part of the sale price not received by the association in
				cash at the time of sale shall be deferred and credited to an account
				descriptive of unearned profit on real estate sold; thereafter such unearned
				profit shall be deemed to have been realized to no greater extent than is
				proportionate to the reduction of the unpaid balance of the sale contract or
				purchase money mortgage.
I. Every
				association shall maintain all major income and expense accounts on a full
				accrual basis.