CHAPTER 328

AN ACT TO AMEND TITLE 5; PART III, DELAWARE CODE, RELATING TO BUILDING AND LOAN ASSOCIATIONS; IN ORDER TO MODERNIZE THE BUILDING AND LOAN ASSOCIATIONS CODE TO CONFORM WITH CURRENT BUSINESS PRACTICES.

Be it enacted by the General Assembly of the State of Delaware:

Section 1, Section 1701, Title 5, Delaware Code, is hereby amended by adding to the list of definitions contained therein between the definition of "Association" and the definition of "Building and Loan Association", the following new definition:

" 'Borrower' means one who borrows from a Building and Loan Association and may include a stockholder of such association or a non-stockholder."

Section 2. Section 1701, Title 5, Delaware Code, is further amended by striking the semicolon at the end of the definition of "Building and Loan Association" and adding the following: "and includes Savings and Loan Associations;"

Section 3. Section 1902, Title 5, Delaware Code, is hereby amended by striking said section and substituting in lieu thereof a new Section 1902 as follows:

§ 1902. Special powers of domestic association

Building and Loan Associations organized under Title 8, may, in addition to the other powers granted in such Title and this chapter, make loans to and among their stockholders and also to and among non-stockholders, at a rate of interest not exceeding the legal rate or any higher contract rate as permitted by law, and for such premium as is authorized under this chapter.

Building and Loan Associations may also make loans secured by shares of their own capital stock, but such loans shall be limited to the legal rate of interest.

Section 4. Section 1906, Title 5, Delaware Code, is hereby amended by striking subsection (b) and substituting in lieu thereof a new subsection (b) as follows:

(b) A building and loan association may lend funds of the association either with or without charging the borrower a premium for the privilege of being granted such loan, but an association shall not charge any premium unless the borrower agrees in writing to pay such premium. Any premium charged shall not exceed three per centum of the original amount of the loan and may be deducted by the association in advance, or paid separately by the borrower at settlement, or if the association consents, may be paid in three equal annual installments with the first installment payable at settlement and the other two installments on the first and second anniversaries of the date of settlement.

A premium paid, pursuant to the provisions of this section, by a borrower from an association, shall not be deemed usurious, although when it is added to any interest paid upon such loan, it exceeds the legal or the contract rate of interest.

Section 5. Section 1911, Title 5, Delaware Code, is hereby amended by striking said section and substituting a new Section 1911 as follows:

§ 1911. Power to borrow generally

Any building and loan association doing business in this State may borrow money from sources other than a Federal Home Loan Bank, and may secure the same by the assignment or pledge of any mortgage, mortgages, or other assets held by the building and loan association, but the amount borrowed from all such other sources shall not at any time exceed in the aggregate 30 percent of the shareholders' invested capital in said association. The amount borrowed from all sources shall at all times, irrespective of whether or not the same are secured, constitute a preferred claim superior to all claims on account of the shares of the building and loan association.

Section 6. Section 1912, Title 5, Delaware Code, is hereby amended by striking said section and substituting in lieu thereof a new Section 1912 as follows:

§ 1912. Limitation on loans not secured by first mortgage on real estate

Not more than 50 percent of the shareholders' invested capital in any building and loan association doing business in this State shall be loaned on real estate security on other than first liens.

Approved June 21, 1968.