Residential Real Estate Loans

PURPOSE: This rule authorizes the types of loans secured by real estate an association may make and prescribes the nature of security for loans and the terms and conditions of those loans. (1) An association may originate, invest in, sell, purchase, participate or otherwise deal in loans secured by residential real estate as follows: (A) First mortgage loans—Loans secured by a first lien on residential real estate, on the terms set out in this rule; (B) Second mortgage loans—Loans secured by a second lien on residential real estate in the same amount as if the loan were secured by a first lien, less the unpaid balance of the first lien indebtedness, on the terms set out in this rule; provided that the total of the unpaid balance of all loans secured by each deed of trust and the maximum advances authorized under the deed of trust do not exceed the value of the security; and (C) Advances—An association may make advances on an open-ended first deed of trust held by the association, not subject to any intervening security interest of another, if the total of the unpaid balance of all loans secured by each deed of trust and the maximum advances authorized under the deed of trust do not exceed the value of the security or the advance is made for the purpose of protecting the value of the security interest of the association. (2) Terms and Conditions. (A) All residential real estate loans shall be repayable within a period not to exceed forty (40) years from the date the loan is made. (B) Residential real estate loans may be fully amortized, partially amortized or nonamortized, provided that interest is payable at least semiannually. The loan contract may provide for the deferral and capitalization of all interest on residential real estate loans. Provisions for full amortization of the loan shall be required in the loan contract, to begin no later than five (5) years from the date of origination. (3) An association shall comply with the documentation requirements of 4 CSR 260-8.015 prior to funding a loan under this regulation. AUTHORITY: sections 369.144, 369.229, 369.249 and 369.299, RSMo 1994.* This rule originally filed as 4 CSR 260-8.031. This rule previously filed as 4 CSR 140-20.031. Original rule filed Nov. 4, 1986, effective Jan. 30, 1987. Changed to 4 CSR 14020.031, effective July 6, 1994. Moved to 20 CSR 1140-20.031, effective Aug. 28, 2006. *Original authority: 369.144, RSMo 1971, amended 1982, 1983, 1984, 1989, 1994; 369.229, RSMo 1971, amended 1983, 1994; and 369.249 and 369.299, RSMo 1971, amended 1994.