The following provisions shall apply to any loan granted by
any association on the security of real or leasehold property:
(a) Application. An association shall, in
every such loan, obtain a written application, signed by or on behalf of the
person for whose benefit the loan is to be made, which application shall
contain such necessary and pertinent information with respect to the borrower
and the security as the circumstances may require. All applications shall
contain at least the following:
The name, address and occupation of the applicant for the
loan. The name and address of the employer of the applicant, if the applicant
is employed. The location of the property, character of the improvements
thereon, and, if leasehold, the amount of the ground rent thereon.. If the
applicant does not have title at the time of the application, the actual
consideration to be paid therefor.
If the applicant has purchased the property within one year
prior to the application, the actual consideration paid therefor.
The purpose for which the loan is sought.
(b) Before an association %hall make a loan
to be secured by mortgage on real or leasehold property, it shall first obtain
a written appraisal of such property from at least two qualified persons, which
written appraisal shall state the market value of such property in dollars, and
be signed by all appraisers. The qualified persons making such appraisal may be
members of the association's Board of Directors: provided, however, that such
written appraisal may be made by one person if such person be the holder of a
certificate evidencing the prior attainment of the minimum qualifications of a
real estate appraiser according to the predetermined standards of the American
Institute of Real Estate Counselors, the Senior Member Society of Real Estate
Appraisers, the American Society of Appraisers, or be a member in good standing
of an appraisal committee of a Real Estate Board situated in the State of
Tennessee.
(c) Title Certification.
Before an association, its agent or attorney, shall pay out any money upon a
mortgage loan, it shall secure proper assurance that, upon closing, it will
receive a title certification from its attorney, or a title insurance policy
from a qualified title company, to the effect that:
1. Title is good and merchantable in the
mortgagor; and
2. The association
has a first lien, or that it has a second lien if the association already holds
the first lien.
In the event that there are liens or encumbrances on the
property prior to settlement, the association shall satisfy itself (i) that the
encumbrances do not affect the marketability of its security or the amount of
its appraisal, and (ii) that all prior liens will be discharged, or appropriate
provisions made therefor. Promptly after settlement the association shall
secure the written title certification, or the final title insurance policy, as
set forth above, together with a statement of the steps taken to protect the
association against any prior liens not then released of record.
(d) Affidavit of Seller
and Borrower. At settlement, the seller, if any, and the borrower shall state
in writing, under oath, whether any money or other thing of value has been or
is to be paid to any corporation or persons, other than the association, as a
fee, commission, or gift for procuring or for endeavoring to procure such loan
from the association, or for any services in connection with such loans, aside
from those set forth on the Memorandum of Settlement, and, if so, the amount or
value of such fee, commission, or gift and to whom it has been, or is to be
paid.
(e) Insurance.
1. An association shall require the mortgagor
to maintain at the mortgagor's expense, so long as his loan may be outstanding,
fire and extended coverage insurance upon the improvements on the real or
leasehold property securing such loan, in an amount at least sufficient to
protect the interest of the association, in a company qualified to do business
in the State of Tennessee, and approved by the association. Such insurance
shall be appropriately endorsed to reflect the interest of the association in
any proceeds payable under such policy; and further provided that an
association shall be exempt from the earlier provisions hereof as to any loan
or loans where the appraised value of unimproved land upon which its lien is
secured equals or exceeds the unpaid principal balance on said loan.
2. Loans Secured by Non-withdrawable
Permanent Stock - No loans shall be made upon the security of non-withdrawable
permanent stock pledged to the association.
(f) Insured or Guaranteed Loan. Any such loan
which is, or will be insured or guaranteed by the United States or any
instrumentality thereof, or the State of Tennessee, or any instrumentality
thereof, may be made for an amount in excess of the restrictions imposed by
Statute, but only to the extent that such loan is insured or guaranteed or for
a longer term than is permitted by Statute.
