Rhode Island General Laws 19-3-2. Loans for which financial institution is liable
No financial institution shall make any loan or advance whereby it is liable directly, indirectly, or contingently for the repayment of the loan or advance in whole or in part. This restriction shall not impair the right of a financial institution:
(1) To accept, under its letters of credit or other authorization, drafts or bills of exchange arising out of actual commercial transactions or issued or drawn for agricultural, industrial, or commercial purposes, at sight or on time; or
(2) To purchase from and sell mortgage loans with or without recourse to the Rhode Island housing and mortgage finance corporation or other secondary market investors.
History of Section.
P.L. 1995, ch. 82, § 40.
Terms Used In Rhode Island General Laws 19-3-2
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC