§5-16-48. Engaging in mortgage brokerage business; purchase of loans; origination, purchase and sale of mortgages.

(a) No association shall engage in the mortgage brokerage business.

(b) Every association shall primarily use its funds in making home loans originated by it rather than in purchasing loans, but may incidentally purchase loans of any type which it is permitted to make; provided, that no association may purchase bulk property in excess of 10 percent of its assets or $50,000.00, whichever is greater, without the approval of the commissioner; and provided further, that no association may purchase any real estate loan or other property from an affiliated institution or from an institution in liquidation without the approval of the commissioner. An "affiliated institution" means:

(1) An institution in which the purchasing association has a substantial investment,

(2) An institution which has a substantial investment in the purchasing association, or

(3) An institution of which the majority of the board of directors are the same persons who constitute a majority of the board of directors of the purchasing association.

An "institution in liquidation" means:

(1) An institution which has been taken over for liquidation pursuant to law, or

(2) An institution which in conformity with law has determined to dissolve.

(c) Associations may originate and sell mortgages insured under Title II of the National Housing Act; provided, that a charge is made and collected by the association sufficient to reimburse it for the expense incurred in originating such business. Each mortgage sold by an association, whether so insured or not, shall be sold without recourse and, if under a contract to service the same, on a basis which will reimburse the association adequately for the cost of such servicing.

(d) Except as provided in subsection (c) of this section, no association shall make the purchase and sale of mortgages a substantial or routine part of its business. No association which holds a mortgage or other instrument securing a debt which is a first lien upon real estate and which simultaneously holds one or more additional mortgages or other instruments securing a debt and constituting liens inferior to the first lien upon the same real estate shall sell or otherwise dispose of any such mortgage or other instrument unless it shall simultaneously sell or otherwise dispose of all mortgages or other instruments constituting inferior liens upon the same real estate.

(Acts 1939, No. 459, p. 616; Code 1940, T. 5, §256.)