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bas-ket (bas'kit) n. 1. a container made of interwoven canes, rushes, strips of wood, etc. and often having a handle or handles 2. the amount that a basket will hold The above definition is how Webster's Dictionary describes a basket, but what does that have to do with the Iowa Division of Banking? It's a term that is often used by examiners, yet it does not appear anywhere in the Code of Iowa or Rules and Regulations.
This article will explain the basket provisions in the Banking Division's Rules and Regulations and how they can be utilized by bank management in extending credit.
DEFINITION
A "basket" is simply a regulatory term used to describe a group of credits that do not have to meet certain requirements when extending credit.
The Banking Division's Rules and Regulations contain two basket provisions: Chapter 9.2(10), which concerns real estate mortgage loans and Chapter 9.3(5), which concerns leases. These two sections spell out the documentation and procedures that can be eliminated if extending credit under the basket provision.
REQUIREMENTS THAT CAN BE EXEMPTED
Chapter 9.2(10) Real Estate Mortgage Loans As currently written, the following requirements can be exempted:
the loan-to-value requirements set forth in Chapter 9.2(4);
the need for a written attorney's opinion or title insurance;
a evidence of insurance in the file;
a the requirement that the real estate securing the credit be in a state contiguous to Iowa.
(Please note in the proposed revisions to the real estate rules, Chapter 9.2(7), which requires the real property to be in Iowa or a contiguous state, would be eliminated.)
Chapter 9.3(5) - Leases
Under this chapter, as currently written, the following requirements can be exempted:
the requirement that collateral values and original lease documentation be maintained in the bank or affiliated leasing company's credit files;
the need for a bank officer...