Virginia Code 6.2-1180: Appraisals; loan-to-value ratios.
A. A savings institution may make a real estate loan only after a qualified person designated by the savings institution has submitted a signed appraisal of the security property, except that an insured or guaranteed loan may be made on the basis of a valuation of the security property furnished to the savings institution by the insuring or guaranteeing agency.
Terms Used In Virginia Code 6.2-1180
- Appraisal: A determination of property value.
- Contract: A legal written agreement that becomes binding when signed.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Home loan: means a real estate loan the security for which is a lien on real estate comprising a single-family dwelling or a dwelling unit for four or fewer families in the aggregate. See Virginia Code 6.2-1100
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Person: means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or other legal or commercial entity. See Virginia Code 6.2-100
- real estate: includes lands, tenements and hereditaments, and all rights and appurtenances thereto and interests therein, other than a chattel interest. See Virginia Code 1-219
- Real estate loan: means :
1. See Virginia Code 6.2-1100
- Savings institution: means a savings and loan association, a building and loan association, or savings bank, whether organized as a capital stock corporation or a nonstock corporation, that is authorized by law to accept deposits and to hold itself out to the public as engaged in the savings institution business. See Virginia Code 6.2-1100
B. At the time of origination, a real estate loan may not exceed 100 percent of the appraised fair market value of the security property. During the term of the loan, the loan-to-value ratio may increase above the maximum permissible percentage if the increase results from an adjustment authorized by § 6.2-1182. In the case of a home loan secured by borrower-occupied property, the loan balance may not exceed 125 percent of the original appraised value of the property during the term of the loan, unless the loan contract provides that the payment shall be adjusted at least once every five years, beginning no later than the 10th year of the loan, to a level sufficient to amortize the loan at the then-existing interest rate and loan balance for the remaining term of the loan. The 125 percent limitation shall not apply to that portion of a loan balance that is interest received in the form of a percentage of the appreciation in value of the security property.
1985, c. 425, § 6.1-194.63; 1991, c. 230, § 6.1-194.151; 2010, c. 794.