New Mexico Administrative Code › Title 12 - TRADE, COMMERCE AND BANKING › Chapter 20 - SAVINGS AND LOAN ASSOCIATIONS › Part 35 - REAL ESTATE AND OTHER LOANS › Section 12.20.35.10 - OTHER RESIDENTIAL REAL ESTATE LOANS

Current through Register Vol. 35, No. 13, July 16, 2024
A. Home loans:
(1) Authorization: An association may make,
				sell, purchase, participate, or otherwise deal in loans on the security of
				homes or combinations of homes and business property and on farm residences and
				combinations of farm residences and commercial farm real estate,. including
				nonamortized, partially-amortized, and line-of-credit loans, on which the
				interest rate, the payment, the loan balance or the term to maturity may vary
				as provided in this paragraph (a) [now Subsection A of 12.20.35.10 NMAC]. Such
				loans shall be repayable in at least semiannual installments over a term not
				exceeding 40 years, with interest payable at least semiannually except as
				expressly authorized in this paragraph (a) [now Subsection A of 12.20.35.10
				NMAC]. An association making a home loan shall possess only such rights and
				powers as are expressly set forth, by incorporation or otherwise, in the loan
				documents and as are provided by operation of law.
(2) Adjustments to rate, payment, balance or
				term; refinancing: Subject to such limitations on adjustment as are set forth
				in the loan contract:
(a) Adjustments to the
				interest rate shall correspond directly to the movement of an interest-rate
				index or of an index that measures the rate of inflation or the rate of change
				in consumer disposable income, which index is readily available to and
				verifiable by the borrower and is beyond the control of the association:
				provided, that an association may decrease the interest rate at any
				time.
(b) Adjustments to the
				payment and the loan balance that do not reflect an interest-rate adjustment
				may be made if (i) the adjustments reflect a change in a national or regional
				index that measures the rate of inflation or the rate of change in consumer
				disposable income, is readily available to and verifiable by the borrower, and
				is beyond the control of the association, or (ii) in the case of a payment
				adjustment, the adjustment reflects a change in the loan balance or is made
				pursuant to a formula, or to a schedule specifying the percentage or dollar
				change in the payment and set forth in the contract.
(c) Any combination of indices or a moving
				average of index values may be used as an index, and an association may use
				more than one index during the term of a loan.
(d) A loan contract may provide for the
				deferral and capitalization of a portion of interest, and may provide that a
				portion of the consideration to be received by the association in return for
				making the loan shall be interest in the form of a percentage of the amount by
				which the current market value of the property, during the loan term or at
				maturity, exceeds the original appraised value.
(e) At least 30 but not more than-120 days
				prior to an adjustment and at least 90 but not more than 120 days prior to the
				expected maturity of a non-or partially-amortized loan (including a -loan with
				a "call" provision pursuant to subparagraph (2) (vi) of this paragraph (a))
				[now Subparagraph (f) of Paragraph (2) of Subsection A of 12.20.35.10 NMAC], an
				association shall provide the borrower with notice of the adjustment or of
				maturity. However, where the-loan contract provides that changes in the
				interest rate shall occur more frequently than changes in the payment, the
				association need not notify the borrower of changes in the rate, nor of changes
				in the loan balance or term resulting from a rate change, until notice of a
				payment adjustment. is given. (For purposes of notification, a payment
				adjustment is considered to occur as of the date of the interest-rate change
				immediately preceding the due date of the adjusted payment). In addition, where
				the loan contract sets out a schedule of payment adjustments, notice need not
				be given of payment changes made pursuant to that schedule.
(f) The loan term may be adjusted only to
				reflect a change in the interest rate, the payment or the loan balance.. A loan
				contract may provide an association with the right to call the loan due and
				payable either after a specified number of years has elapsed following closing
				or upon the occurrence of a specified event external to the loan; and
(g) If at maturity of a loan that provides
				for adjustments pursuant to this subparagraph (a)(2) [now Paragraph (2) of
				Subsection A of 12.20.35.10 NMAC] the ratio of the loan balance to the current
				market value of the security property exceeds 95 percent, the association may
				offer to refinance the loan, subject to the requirements of subparagraphs
				(3)(i) and (3)(iii) of this paragraph (a) [now Subparagraphs (a) and (c) of
				Paragraph (3) of Subsection A of 12.20.35.10 NMAC] and other applicable
				provisions of this regulation.
(3) Loan-to-value ratio: A home loan shall
				not at the time of origination exceed 90 percent of the value of the security
				property, except as provided in subparagraph (2)(vii) of this paragraph (a)
				[now Subparagraph (g) of Paragraph (2) of Subsection A of 12.20.35.10 NMAC] and
				below. During the term of the loan, the loan-to-value ratio may increase above
				90 percent if the increase results from a change authorized by subparagraph (2)
				of this paragraph (a) [now Paragraph (2) of Subsection A of 12.20.35.10 NMAC].
				The supervisor will assume continued compliance with the loan-to-value ratio
				limitations where the original ratio met the requirements of this subparagraph
				(3) [now Paragraph (3) of Subsection A of 12.20.35.10 NMAC], but in no event
				may the loan balance exceed 125 percent of the original appraised value of the
				property during the term of the loan unless pursuant to subparagraph (2)(ii)(a)
				of this paragraph (a) [now Subparagraph (a) of Paragraph (2) of Subsection A of
				12.20.35.10 NMAC] or unless the loan contract provides that the payment shall
				be adjusted at least once each five years, beginning no later than the tenth
				year of the loan, to a level sufficient to amortize the loan at the
				then-existing interest rate and loan balance over the remaining term of the
				loan. The 125-percent limitation shall not apply to that portion of a loan
				balance that is interest received in the form of a percentage of the
				appreciation in value of the security property pursuant to subparagraph (2)(iv)
				of this paragraph (a) [now Subparagraph (d) of Paragraph (2) of Subsection A of
				12.20.35.10 NMAC]. Notwithstanding the foregoing, the loan-to-value ratio at
				the time of origination may be up to 95 percent if:
(a) the loan contract requires that, in
				addition to full or partial amortization of the loan, the pro rata portion,
				based on the number of installments due annually, of estimated annual taxes and
				assessments on the security property be paid in advance to the association with
				each installment payment;
(b) the
				borrower, including a purchaser who assumes the loan, has executed a
				certificate stating that the borrower' , occupies, or in good faith intends to
				occupy the property (or one dwelling on the property) as the borrower's
				principal residence; and
(c) during
				the time that the unpaid balance of the loan exceeds 90 percent of the value of
				the security property, determined at the time of origination, the part of such
				balance exceeding 80 percent of value is guaranteed or insured by a mortgage
				insurance company which the federal home loan mortgage corporation has
				determined to be a "qualified private insurer"; provided, however, that any
				unpaid loan balance sedured by a pledged savings account shall not be required
				to be guaranteed or insured under this provision.
(4) Loan to facilitate trade-in or exchange:
				Loans made to facilitate the trade-in or exchange of security property shall
				not exceed 90 percent of value and shall be repayable within 18
				months.
(5) Pledged-account loans:
				Loans made on the. combined security of real estate and savings accounts may be
				made in excess of the maximum loan-to-value ratios specified in this paragraph
				(a) [now Subsection A of 12.20.35.10 NMAC], with such excess secured by savings
				accounts: provided, that loans that exceed 90 percent of the value of the
				combined security are subject to the following restrictions:
(a) the loan shall not exceed the appraised
				value of the real estate;
(b) the
				savings account shall consist only of funds belonging to the borrower, members
				of his family, or his employer; and
(c) the association shall fully disclose to
				the prospective borrower the differences (including interest, private-mortgage
				insurance costs, and equity interest) between a loan secured by real estate and
				savings and a loan secured by real estate alone.
(6) Loans on cooperatives: Such loans may be
				made under this paragraph (a) [now Subsection A of 12.20.35.10 NMAC], subject
				to the following requirements:
(a) Loans on
				the security of cooperative housing developments ("blanket" loans): The
				association shall require that the cooperative housing development maintain
				reserves at least equal to those required for comparable developments insured
				by the federal housing administration.
(b) Loans on individual cooperative units:
				Such loans may be made on the security of (i) a security interest in stock
				membership certificate, or other evidence of ownership issued to a stockholder
				or member by a cooperative housing organization and (ii) an assignment of the
				borrower's interest in the proprietary lease or occupancy agreement issued by
				such organization.