W. Va. Code R. § 106-16-5

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 106-16-5 - Residual Value

5.1. Maximum Estimated Residual Value.

(a) Any unguaranteed portion of the estimated residual value relied upon by the bank to yield a return of its full investment shall not exceed twenty-five percent (25%) of the original cost of the property to the lessor. The amount of the estimated residual value guaranteed by the manufacturer, the lessee or a third party may exceed twenty-five percent (25%) of the original cost of the property, where the bank has determined, and can provide full, supporting documentation, that the guarantor, which is not an affiliate, as that term is defined by 12 USC 371 C, has the resources to meet the guarantee.

(b) A bank may base calculations of estimated residual value on leases of personal property to federal, state or local governments entities may be based on reasonably anticipated future transactions or renewals.

(c) In all cases, the estimated residual value of the property and that portion of the estimated residual value relied upon by the lessor to satisfy the requirements of subsection 3.1.(b) of this rule must be reasonable in light of the nature of the leased property and all relevant circumstances so that realization of the bank's full investment plus the cost of financing the property depends on the creditworthiness of the lessee and any guarantor of the residual value, and not on the residual market value of the leased property.

W. Va. Code R. § 106-16-5