(a) An association may make loans or purchase participations in loans secured by a first and prior lien on commercial real estate, in the maximum amount of 90% of the appraised value of the security property or if the loan is for the purchase of the property, the purchase price, if less than 90% of the appraised value, on the terms set out in this section. (b) An association may make loans or purchase participations in loans secured by a second lien on commercial 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 and any authorized future advances thereon, on the terms set out in this section. Unless the association holds the prior lien, the second lien shall not be inferior to any open ended future advances under the first lien agreement to which the security property is subject, other than disbursements authorized under the Texas Savings and Loan Act, §64.061.
(c) All commercial real estate loans shall be repayable in the same manner provided for residential real estate loans in §65.5 of this title (relating to Residential Real Estate Loans), except that, provided the repayment period does not exceed 30 years, the loan may provide for graduated monthly payments only during a period not to exceed the first five years of the loan, if the payments are in an amount sufficient to pay all interest due on the loan and all pro-rated taxes, insurance and governmental charges assessable for the payment period; and any payments in excess of such amounts shall be credited to prepaid interest, principal, or escrow for taxes and insurance, at the borrower's option. (d) A loan made under this section may include amounts to pay interest on the loan, and other fees, if the loan amount conforms to this section, and provided a detailed, narrative underwriting report is prepared and included in the loan file
explaining the reasons relied upon by the association for including such amounts in the loan. In no event shall a loan include amounts to pay interest or fees, unless the association has recourse and the total amount of the loan, including any amounts to pay interest and fees, does not exceed 90% of the appraised value of the security property. Notwithstanding any recourse requirement, an association may elect to release the borrower or guarantor from liability, if the association determines that the security property has generated break even income. Any amount of the loan that represents interest shall not be disbursed until such interest is due. (e) Prior to funding a loan under this section, an association shall comply with the requirements of §65.17(a) of this title (relating to Loan Documentation).


Source Note: The provisions of this §65.6 adopted to be effective December 27, 1985, 10 TexReg 4795; amended to be effective January 17, 1989, 14 TexReg 53.