Kan. Admin. Regs. § 38-5-1

Current through Register Vol. 43, No. 49, December 5, 2024

Section 38-5-1 - Conditions under which loans may be made

Any association may, on adoption of such a loan plan by its board of directors, make or purchase secured or unsecured line of credit real estate loans subject to the limitations set forth by K.S.A. 1978 Supp. 17-5501(t)(C) and acts amendatory thereof, and the following additional prohibitions, limitations and conditions:

(a) Only those associations with general reserve accounts in compliance with K.S.A. 17-5409, and acts amendatory thereof, may make or purchase such loans.

(b) The real property must be located in the association's regular lending area.

(c) Such loans shall be fully documented to establish

(1) the purpose of the loan;

(2) the source and reliability of repayment;

(3) the reputation and proven capacity of the borrower;

(4) the quality of the security interest in any security other than real estate that is used as support;

(5) if the loan is for a business purpose, full financial statements of the borrower or the borrower's predecessor for three (3) years prior to the loan;

(6) if the loan is for a business purpose, income forecasts, projections, cash flow statements, and budgets;

(7) anything else necessary to establish the soundness of the loan;

(8) controls employed to ensure that actions on which the association relies are proceeding as scheduled.

(d) Such loans shall not be sold or assigned to other associations for servicing.

Kan. Admin. Regs. § 38-5-1

Authorized by K.S.A. 1978 Supp. 17-5501(t)(C); effective May 1, 1979.