Virginia Code Title 6.2. Financial Institutions and Services § 6.2-878. Loans secured by real estate generally

A. As used in this section, “loan secured by real estate” 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:

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.