Loans or investments limited to 5 percent of assets

Official source

The following loans or investments are permitted, but not to exceed 5 percent of assets of a Federal savings association for each subparagraph:

(A) Community development investments Investments in real property and obligations secured by liens on real property located within a geographic area or neighborhood receiving concentrated development assistance by a local government under title I of the Housing and Community Development Act of 1974 [ 42 U.S.C. 5301 et seq.]. No investment under this subparagraph in such real property may exceed an aggregate of 2 percent of the assets of the Federal savings association.

(B) Nonconforming loans Loans upon the security of or respecting real property or interests therein used for primarily residential or farm purposes that do not comply with the limitations of this subsection.

(C) Construction loans without security Loans— (i) the principal purpose of which is to provide financing with respect to what is or is expected to become primarily residential real estate; and (ii) with respect to which the association— (I) relies substantially on the borrower’s general credit standing and projected future income for repayment, without other security; or (II) relies on other assurances for repayment, including a guarantee or similar obligation of a third party. The aggregate amount of such investments shall not exceed the greater of the Federal savings association’s capital or 5 percent of its assets.

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Loans or investments limited to 5 percent of assets

Official source

The following loans or investments are permitted, but not to exceed 5 percent of assets of a Federal savings association for each subparagraph:

(A) Community development investments Investments in real property and obligations secured by liens on real property located within a geographic area or neighborhood receiving concentrated development assistance by a local government under title I of the Housing and Community Development Act of 1974 [ 42 U.S.C. 5301 et seq.]. No investment under this subparagraph in such real property may exceed an aggregate of 2 percent of the assets of the Federal savings association.

(B) Nonconforming loans Loans upon the security of or respecting real property or interests therein used for primarily residential or farm purposes that do not comply with the limitations of this subsection.

(C) Construction loans without security Loans— (i) the principal purpose of which is to provide financing with respect to what is or is expected to become primarily residential real estate; and (ii) with respect to which the association— (I) relies substantially on the borrower’s general credit standing and projected future income for repayment, without other security; or (II) relies on other assurances for repayment, including a guarantee or similar obligation of a third party. The aggregate amount of such investments shall not exceed the greater of the Federal savings association’s capital or 5 percent of its assets.