2006 Code of Virginia § 38.2-1437 - Limitations on mortgages

38.2-1437. Limitations on mortgages.

A. The amount of any loan secured by a mortgage or deed of trust referred toin 38.2-1434 through 38.2-1436 shall not exceed the following percentagesof the fair market value of the real estate:

1. Seventy-five percent for a leasehold loan made pursuant to subdivision 2of 38.2-1434;

2. Ninety percent for a loan made to an employee of the insurer, other than adirector or trustee thereof, whether such loan be made in connection with theinitial employment of the employee or in connection with the transfer of theplace of employment of the employee; or

3. Eighty percent for all other loans.

However, the percentage limits specified in this subsection may be exceededif the excess is (i) insured or guaranteed or is to be insured or guaranteedby the United States, any state or any agency of either or (ii) insured by aninsurer licensed to insure mortgage guaranty risks in this Commonwealth.

B. Any loan made pursuant to 38.2-1434 through 38.2-1436 not in compliancewith the requirements of subsection A of this section shall be classified asa Category 2 investment in its entirety.

C. The fair market value of the real estate interest mortgaged shall bedetermined by a written appraisal of at least one competent real estateappraiser as of the date of the initial loan commitment, which appraisershall not be an employee of the insurer nor an employee of any companycontrolled by or under common control with the insurer. If the loancommitment is revised to reflect a change in the value of the real estate,the fair market value shall be determined as of the date of that revision.

D. Buildings and other improvements on the mortgaged premises shall beinsured against fire loss for the benefit of the mortgagee in an amount notless than the lesser of their insurable value or the unpaid principal balanceof the obligation.

E. The maximum term of any mortgage or deed of trust referred to in 38.2-1434 through 38.2-1436 secured by real property primarily improved by asingle-family residence shall not exceed thirty years.

F. A domestic insurer shall not invest, under 38.2-1434 through 38.2-1436,more than two percent of its admitted assets, directly or indirectly, inmortgages covering any one secured location, nor more than four percent inthe mortgages of any one obligor.

(1983, c. 457, 38.1-217.40; 1986, c. 562; 1992, c. 588.)