                                 CODE OF VIRGINIA

LOANS SECURED BY REAL ESTATE GENERALLY (§ 6.2-878)

A. As used in this section, &#8220;loan secured by real estate&#8221; means an
obligation executed or assumed by the borrower that is secured by mortgage, deed
of trust, or similar instrument, encumbering real estate that is owned by the
borrower and upon which the bank relies as the principal security for the loan.

B. No bank shall make any loan secured by real estate when such loan, together
with all prior liens or encumbrances on such real estate, exceeds 90 percent of
the appraised value of the real estate securing such loan.

C. The appraisals necessitated by this section shall be required if the loan
shall equal or exceed an amount established from time to time by the
Commissioner. In establishing such amount, the Commissioner shall take into
consideration the requirements imposed on banks under applicable federal
regulations. Such appraisals shall be in writing, signed by the appraisers, and
shall be retained in the files of the bank, subject to examination of bank
examiners. The appraisers so appointed shall be experienced persons competent to
appraise real estate in the locality where the real estate is located.

D. Any bank may make loans secured by real estate that do not comply with the
limitations and restrictions in this section if the total unpaid amount of such
loans, exclusive of the loans that subsequently comply with such limitations and
restrictions, does not exceed 10 percent of the total amount of loans secured by
real estate.

E. The provisions of this section relating to ratio of loan to appraised value
and appraisal shall not apply if:

   1. The real estate security is taken solely as an abundance of caution on
   terms which are not more favorable than they would be in absence of such a
   lien on real estate;

   2. A real estate security conveyance is taken by or ancillary to the
   assignment of lease obligations upon which the bank is relying primarily and
   prudently;

   3. A subsequent transaction results from an existing extension of credit
   providing (i) that the borrower has performed satisfactorily, (ii) there is no
   advance of new money, except as formerly agreed, (iii) the credit standing of
   the borrower is not deteriorating, and (iv) there is no obvious and noticeable
   deterioration of marketing conditions or the physical assets which provide
   collateral security to the bank; or

   4. A lien upon real estate is taken to secure a prior advance which was not
   secured by such real estate.

F. In cases where an appraisal by a state-certified or state-licensed appraiser
is not required, under this section or other sections of this chapter in a real
estate-related financial transaction, the bank as a matter of prudence may take
and preserve a reasonable appraisal, valuation, or analysis of real estate or
real property in connection with such transaction.

G. The Commission may by order or regulation eliminate loans or specific
categories of loans from the requirements of this section.

H. The provisions of this section shall not be construed to prohibit any bank
from accepting, as security for a loan that it had made in good faith without
security or upon security since found to be inadequate, an obligation or
obligations secured by mortgage, deed of trust, or other such instrument upon
real estate.

HISTORY: Code 1950, § 6-78; 1952, c. 25; 1956, c. 622; 1960, c. 23; 1964, c.
150; 1966, c. 584, §§ 6.1-63, 6.1-65; 1968, c. 549; 1972, c. 189; 1976, c.
487; 1978, c. 624; 1979, c. 375; 1981, c. 271; 1982, c. 263; 1984, c. 133; 1988,
c. 170; 1991, c. 160; 1992, c. 68; 1994, c. 501; 2005, c. 263; 2010, c. 794.