X97-11107. Capital Maintenance

[Federal Register Volume 62, Number 216 (Friday, November 7, 1997)]
[Rules and Regulations]
[Page 60161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X97-11107]


=======================================================================
-----------------------------------------------------------------------

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 325


Capital Maintenance

CFR Correction

    In Title 12 of the Code of Federal Regulations, parts 300 to 499, 
revised as of Jan. 1, 1997, page 174, Part 325, Appendix A, section II. 
C is corrected by adding paragraphs 1 through 4 after the first 
paragraph under Category 3 as follows:

Appendix A to Part 325--Statement of Policy on Risk-Based Capital

* * * * *
    II. * * *
    C. * * *
    Category 3-50 Percent Risk Weight. * * *
    (1) The purchaser is an individual(s) who intends to occupy the 
residence and is not a partnership, joint venture, trust, corporation, 
or any other entity (including an entity acting as a sole 
proprietorship) that is purchasing one or more of the homes for 
speculative purposes;
    (2) The builder must incur at least the first ten percent of the 
direct costs (i.e., actual costs of the land, labor, and material) 
before any drawdown is made under the construction loan and the 
construction loan may not exceed 80 percent of the sales price of the 
presold home;
    (3) The purchaser has made a substantial ``earnest money deposit'' 
of no less than three percent of the sales price of the home and the 
deposit must be subject to forfeiture if the purchaser terminates the 
sales contract; and
    (4) The earnest money deposit must be held in escrow by the bank 
financing the builder or by an independent party in a fiduciary 
capacity and the escrow agreement must provide that, in the event of 
default arising from the cancellation of the sales contract by the 
buyer, the escrow funds must first be used to defray any costs incurred 
by the bank.
 * * * * * 

BILLING CODE 1505-01-D