North Dakota Administrative Code › Title 13 - Department of Financial Institutions › Article 13-02 - Banking and Savings and Loan Associations › Chapter 13-02-20 - Loans Secured Primarily by Real Estate › Section 13-02-20-02 - Definitions

Current through Supplement No. 393, July, 2024
1. "Construction loan" means an extension of credit for the
				  purpose of erecting or rehabilitating buildings or other structures, including
				  any infrastructure necessary for development.
2. "Extension of
				  credit" or "loan" means the total amount of any loan, line of credit, or other
				  legally binding lending commitment with respect to real property; and the total
				  amount, based on the amount of consideration paid, of any loan, line of credit,
				  or other legally binding lending commitment acquired by a lender by purchase,
				  assignment, or otherwise.
3. "Improved property loan" means an
				  extension of credit secured by one of the following types of real property:
a. Farmland, ranchland, or timberland committed to ongoing
				  management and agricultural production;
b. One-to-four family
				  residential property that is not owner-occupied;
c. Residential
				  property containing five or more individual dwelling units;
d.
				  Completed commercial property; or
e. Other income-producing
				  property that has been completed and is available for occupancy and use, except
				  income-producing owner-occupied one-to-four family residential property.
4. "Land development loan" means an extension of credit for the
				  purpose of improving unimproved real property prior to the erection of
				  structures. The improvement of unimproved real property may include laying
				  placement of sewers, water pipes, utility cables, streets, and other
				  infrastructure necessary for future development.
5. "Loan
				  origination" means the time of inception of the obligation to extend credit, or
				  when the last event or prerequisite, controllable by the lender, occurs causing
				  the lender to become legally bound to fund an extension of credit.
6. "Loan-to-value" or "loan-to-value ratio" means the percentage
				  or ratio that is derived at the time of loan origination by dividing an
				  extension of credit by the total value of the property or properties, securing
				  or being improved by the extension of credit, plus the amount of any readily
				  marketable collateral or other acceptable collateral that secures the extension
				  of credit. The total amount of all senior liens on or interests in such
				  property or properties should be included in determining the loan-to-value
				  ratio. When mortgage insurance or collateral is used in the calculation of the
				  loan-to-value ratio, and such mortgage insurance or collateral is later
				  released or replaced, the loan-to-value ratio should be recalculated.
7. "One-to-four family residential property" means property
				  containing fewer than five individual dwelling units, including manufactured
				  homes permanently affixed to the underlying property.
8. "Other
				  acceptable collateral" means any collateral in which the lender has a perfected
				  security interest, that has a quantifiable value, and is accepted by the letter
				  in accordance with safe and sound lending practices. Other acceptable
				  collateral should be appropriately discounted by the lender consistent with the
				  lender's usual practices for making loans secured by such collateral. Other
				  acceptable collateral includes unconditional irrevocable standby letters of
				  credit for the benefit of the lender.
9. "Owner-occupied" means,
				  when used in conjunction with the term one-to-four family residential property,
				  that the owner of the underlying real property occupies at least one unit of
				  the real property as a principal residence of the owner.
10.
				  "Readily marketable collateral" means insured deposits, financial instruments,
				  and bullion in which the lender has a perfected interest. Financial instruments
				  and bullion must be saleable under ordinary circumstances with reasonable
				  promptness at a fair market value determined by quotations based on actual
				  transactions, on an auction or similarly available daily bid and ask price
				  market. Readily marketable collateral should be appropriately discounted by the
				  lender consistent with the lender's usual practices for making loans secured by
				  such collateral.
11. "Value" means an opinion or estimate, set
				  forth in an appraisal or evaluation, whichever may be appropriate, of the
				  market value of real property prepared in accordance with North Dakota Century
				  Code section
				   6-03-05. For loans to purchase an
				  existing property, the term "value" means the lesser of the actual acquisition
				  cost or the estimate of value.
General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-03-05