(a) An association may make loans or purchase participations in loans secured by perfected first lien security interests in personal property as provided in the Texas Business and Commerce Code, in the maximum amount of 95% of the appraised or market value of the security property, or if the loan is for the purchase of the property, the purchase price if less than 95% of the appraised or market value. The loan must be on the terms set out in this section. (b) The aggregate amount of any such loans to one borrower shall not exceed $100,000 or 15% of the association's net worth, whichever is greater. (c) Any such loan in an amount less than $15,000 must mature and become payable within 60 months from the date the loan is made, and interest must be payable at least semi-annually. Any such loan in an amount of $15,000 to $30,000 must mature and become payable within 120 months from the date the loan is made, and interest must be
payable at least semi-annually and principal payable at least annually in an amount sufficient to fully amortize the loan. Any such loan in an amount over $30,000 must mature and become payable within 180 months from the date the loan is made, and interest must be payable at least semi-annually and principal payable at least annually in an amount sufficient to fully amortize the loan. (d) A loan made under this section may include add-on interest as authorized by the Texas Credit Code, Title 4 of the Finance Code. (e) Except for add-on interest, a loan made under this section may include amounts to pay interest on the loan, and other fees, only if the loan amount conforms to this section, and provided a detailed, narrative underwriting report is prepared and filed in the loan file explaining the reasons and justifications the association relied upon to include such amounts in the loan. However, the loan shall not include amounts to pay interest on
the loan, unless the association has full recourse against the borrower for repayment of the loan and the amount of the loan does not exceed 80% of the appraised value of the security property. Any amount of the loan which represents interest shall not be disbursed until earned. (f) The association shall monitor the security property to insure that the unpaid balance of the loan does not exceed value of the property during the term of the loan. (g) Prior to funding a loan under this section, an association shall comply with the requirements of §65.17(a)(1)-(8),(12), and (13) of this title (relating to Loan Documentation). If other property (for example, residential or commercial real estate) is provided as additional security for the loan, the loan is not required to meet the requirements of this chapter for loans secured by such property, so long as all requirements of this section are met.
Source Note: The provisions of this §65.8 adopted to be effective December 27, 1985, 10 TexReg 4795; amended to be effective January 17, 1989, 14 TexReg 53.