Loans

(a)A commercial bank may lend at a lawful rate of interest on the security of the personal obligation of the borrower.

(b)A commercial bank may lend on the security of personal property but shall not make any loan on the security of its own stock or of its obligations subordinate to deposits. A loan made on the security of the stock or obligations subordinate to deposits of another banking institution must be for a stipulated period not longer than 3 years and require full amortization by approximately equal or diminishing payments, including both principal and interest, at regular intervals of not more than 3 months.

(c)A bank may lend at a lawful rate of interest on the security of a first mortgage on improved real estate, when:

(1)The loan is fully guaranteed or insured by the United States or an agency thereof whether the insurance is payable in cash or in obligations of the United States; or

(2)The real estate is located within Guam and the loan (excluding any portion thereof guaranteed by the Administrator of Veterans Affairs pursuant to any law of the United States or guaranteed by any other agency of the United States), together with all prior liens upon the property, is not more than 100% of the appraised value of the property; or

(3)The security of real estate is not more than 100% of the appraised market value of the real estate over and above all taxes due and bonded indebtedness for public improvements due. No commercial bank shall loan in the aggregate more than the sum of 75% of its savings deposits, if it also transacts the business of a savings bank, and 25% of the total of its capital, surplus, and commercial deposits on obligations secured by real estate. These provisions, however, shall not prevent any bank from taking another and immediately subsequent mortgage or deed of trust thereon when it already holds a first mortgage or deed of trust on the real estate, nor from accepting a second lien on real estate to secure the repayment of a debt previously contracted in good faith; nor shall it prevent subsequent liens of any kind from being taken to secure the payment of a debt previously contracted in good faith when the subsequent liens are necessary further to secure the payment of any debt and to save then bank from loss. There shall be on file at the bank in support of such real estate CH. 106 BANKS obligation such appraisal, evidence of merchantable title, and insurance as may be required by the Commissioner.

(d)A bank may lend at a lawful rate of interest upon a mortgage or pledge of a leasehold interest in unencumbered real estate when the loan is not more than 100% of the total rent reserved in the lease or the appraised value of the property, whichever is less, and provides for complete amortization within 90% of the term of the lease by equal or diminishing payments.

(e)A bank may make the following loans which shall not be deemed loans on the security of real estate or leasehold interests therein within the meaning of this Title:

(1)A loan to provide working capital to an industrial or commercial enterprise.

(2)A loan under Title I of the National Housing Act.

(3)A loan on a lease hold mortgage, payment of which is guaranteed under the National Housing Act or any Act of Congress.

(4)A loan for a period not longer than 18 months to finance the construction of residential or farm building; and a loan otherwise proper is not made a loan upon real estate or a leasehold therein by the taking of a security interest therein as additional security.