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286.5-441 Real estate loans, requirements -- Purposes for which made -- Additional
payments.
(1)
(2)
(3)
(4)
(5)
Real estate loans may be made only as authorized by this subtitle. No real estate
loan shall be made until a qualified person or persons selected by the board of
directors shall have submitted a signed appraisal of the real estate securing such
loan.
Every loan shall be evidence by a note or bond for the amount of the loan. The note
or bond shall specify the amount, rate of interest, terms of repayment including any
penalty or charge for late payment, and may contain all other terms of the loan
contract.
Every real estate loan shall be secured by a mortgage or other instrument
constituting to a first lien, upon the real estate securing the loan, according to any
lawful or well-recognized practice which is best suited to the transaction. Any such
instrument, constituting a first lien, is herein termed a "mortgage." Such mortgage
shall provide specifically for full protection to the association with respect to such
loan and additional advances and the usual insurance risks, taxes, assessments,
other governmental levies, maintenance, and repairs. It may provide for an
assignment of rents, which assignment shall be absolute upon the borrower's
default, becoming operative upon written demand made by the association. All such
mortgages shall be recorded in accordance with the law of this Commonwealth.
Any mortgage that can be made by an association under the provisions of this
subtitle may be made to secure existing debts or obligations, to secure debts or
obligations created simultaneously with the execution of the mortgage, to secure
future advances to be made at the option of the parties up to a total amount stated in
the mortgage, and all such debts, obligations, and future advances shall, from and as
of the time the mortgage is filed for record as provided by the law of this state, be
secured by such mortgage equally with, and have the same priority over the rights of
all persons who subsequent to the recording of such mortgage acquire any rights in
or liens upon the mortgaged real estate as the debts and obligations secured thereby
at the time of the filing of the mortgage for record.
An association may pay taxes, assessments, insurance premiums, and other similar
charges for the protection of its real estate loans. All such payments shall be added
to the unpaid balance of the loan and shall be equally secured by the first lien on the
property as provided in subsection (3) of this section. An association may require
life insurance to be assigned as additional collateral upon any real estate loan. In
such event, the association shall obtain a first lien upon such policy and may
advance premiums thereon, and such premium advances shall be added to the
unpaid balance of the loan and shall be equally secured by the first lien on the
property as provided in subsection (3) of this section.
Effective: June 18, 1964
History: Created 1964 Ky. Acts ch. 138, sec. 26, effective June 18, 1964.
Formerly codified as KRS 289.441.
Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts
ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the
Kentucky Financial Services Code, KRS Chapter 286, and KRS references within
this statute have been adjusted to conform with the 2006 renumbering of that code.
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