Current through Register Vol. 54, No. 49, December 7, 2024
Section 31.5 - Alternatives to direct reduction loansLoans other than those set forth in section 915(b)-(f) of the Savings Association Code of 1967 (7 P. S. § 6020-155(b)-(f)) and any others which by statute demand, require or permit a specific method of payment shall be written on a direct reduction loan basis or may be written on any of the following terms and conditions on all of which cases interest shall be payable monthly:
(1) May be written for a period not exceeding 10 years provided not less than 1.0% per year of the principal of the loan is amortized within the term of the loan on a monthly basis and the entire balance of the loan is due and payable at the maturity date.(2) May be written to require interest payments only during the first 2 years of the mortgage loan and thereafter on a direct reduction basis.(3) May be written on a monthly payment basis to require interest and reduced payments of the principal, not less, however, than 1/2 of 1.0% of principal per year, for a period of 5 years and thereafter on a direct reduction loan basis.(4) A direct reduction loan may be written to require payment of the principal at any stated time. The loan documents may contain provisions for renegotiations or "rollovers" of the mortgage upon expiration of the term for which the mortgage was written or extended, subject to substantially the same terms, conditions, requirements, and consumer protective provisions which are applicable in the case of Federal savings and loan associations as set forth in 12 CFR 545.6-4 a, as published at 45 FR 24111 (April 9, 1980), in accordance with § 31.6 (relating to renegotiable rate mortgage loans).The provisions of this § 31.5 adopted May 19, 1972, effective 5/20/1972, 2 Pa.B. 897, amended June 27, 1980, effective 6/28/1980, 10 Pa.B. 2574.The provisions of this § 31.5 issued under section 202 of the Department of Banking and Securities Code (71 P. S. § 733-202); and sections 103, 701(a)(22), 901 and 915 of the act of December 14, 1967 (P. L. 746, No. 345) (7 P. S. §§ 6020-3, 6020-101(a)(22), 6020-141 and 6020-155).