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FED ERAL R E SE R V E BANK
OF NEW YORK
T Circular N o. 3 6 5 4 "1
L February 14, 19S1 J

REGULATION X
As A m ended Effective February 15, 1951
R E A L E STA TE C R E D IT

To all Persons E ngaged in the Business o f E xtend in g R eal E state Credit
in th e Second Federal R eserve D istrict:

The Board o f Governors o f the Federal Reserve System released the following statement
for publication Thursday, February 15, 1951:
The B oard o f Governors has amended Regulation X covering real estate credit to include certain
nonresidential properties. The new amendments, which make no substantial change in the regulations
form erly issued covering residential credit, become effective F ebruary 15, 1951.
The amended regulation has been broadened to include in general new construction o f office build­
ings, warehouses, stores (including sales display and service facilities, whether wholesale or retail),
banks, hotels, motels, m otor courts, garages, automobile service stations, restaurants, theatres, clubs,
and other new structures used fo r nonresidential purposes.
The revised credit restrictions limit maximum loans on such structures to 50 per cent o f the value
o f the property, “ va lu e” being defined as the bona fide sale price in the case o f a sale. In respect to
any other extension o f credit, “ valu e” w ill be the appraised value as determined in good faith by the
lender extending credit. M aturities are limited to 25 years, and amortization is required.
M ajor additions and improvements to a nonresidential property, including any enlargement, recon­
struction, alteration, or repair o f an existing structure, are also covered by the amended regulation,
if the cost o f the m ajor addition or improvement exceeds 15 per cent o f the appraised value o f the
nonresidential structure.
A s in the case o f new nonresidential buildings, not more than 50 per cent o f the cost o f the m ajor
addition or improvement subject to the regulation may be borrowed.
Regulation X was first issued on October 12, 1950, when credit on one and two-fam ily homes
was restricted. On January 12, 1951, an amendment was issued placing limitations on credit fo r the
construction o f three and four-fam ilv houses, and for m ulti-unit residences.
Special provision has not been made in the regulation to facilitate new construction in areas
affected by the development o f the defense program . However, an amendment to the regulation will
be issued as soon as practicable under which different terms may be perm itted with respect to p ro ­
jects or structures, in limited areas, which m ay be designated by the appropriate authorities as
necessary in the defense program.
The extension o f the regulation is fo r the purpose o f adding further restraints to inflation by
lim iting the credit available fo r the financing o f nonresidential construction, and to bring about
a decrease in building to provide materials and labor for the defense program.
Most new nonresidential construction credit extended after February 15, 1951, will be subject
to the regulation. However, credits with respect to certain classes o f construction are exempt from




the credit restraints, including credits fo r schools, hospitals, churches, public utilities and property
constructed fo r use by the Government or any political subdivision.
In addition, new construction fo r use by m anufacturing or m ining businesses, or for various
farm uses is exempt if more than 80 per cent o f the floor space o f the new building is employed
( 1 ) in processing materials, goods, or articles into finished or partly finished manufactured
products,
( 2 ) in mining or otherwise extracting raw materials, or
(3 ) on farm property in the production, shelter, or storage incidental thereto, o f crops,
livestock or other agricultural commodities.
F or all types o f credit subject to the regulation, the lender, in determining the amount that may
be loaned, must take into account all credit previously extended in connection with the property and
still outstanding, as well as the amount o f additional credit being extended. A s in the previous regu­
lation, supplementary borrowing, as well as mortgage loans, continues to be within the scope o f the
regulation.
Construction loans made to subcontractors and other persons except the owners o f nonresidential
property are exempt when they have maturities not exceeding 24 months. Construction loans to owners
o f proposed nonresidential construction must conform to the regulation except that amortization is
not required fo r 24 months under certain conditions.
C redit extended pursuant to firm written agreements made prior to the effective date o f the new
amendments is exempt from the regulation.
In addition to provisions relating to nonresidential properties, a number o f other amendments
have been made fo r the purposes o f clarification.
Although the regulation provides that a person must be registered to engage in the business o f
extending real estate construction credit, all such persons will automatically be deemed to be registered
and no action on their part to register is now required. However, the regulation provides that the
Board may later, by public announcement, require registration statements to be filed by persons affected.
During the form ulation o f the new amendments to Regulation X , consultations and meetings were
held with representatives o f the various business groups affected. Such groups included m anufac­
turers o f and dealers in building supplies and materials, labor organizations, banks and trust
companies, savings banks, savings and loan associations, mortgage companies, insurance companies,
builders, real estate dealers, and others interested in construction and mortgage finance.
Inquiries in regard to Regulation X should be directed to one o f the twelve Federal Reserve
Banks and their tw enty-four branches through which the regulation is administered.

A printed copy o f Regulation X , as amended, is enclosed; additional copies o f this circular
and of the amended regulation may be obtained upon request.




A

llan

S

proul,

President.

BOARD OF GOVERNORS
o f the

FE D E R A L RESERVE SYSTEM

REAL ESTATE CREDIT
'W

REGU LATION X
As am en ded effective F ebruary 15,1951




IN QU IRIES R E G A R D IN G T H IS R E G U L A T IO N

Any inquiry relating to this regulation should be addressed
to the Federal Reserve Bank o r Federal
Reserve branch bank o f the district
in which the inquiry arises.




FO REW ORD
This regulation applies to real estate construction credit with respect
to property on which a new residence, multi-unit residence, or non­
residential structure, or a m ajor addition or m ajor improvement to
an existing residence, multi-unit residence, or nonresidential structure
is begun after 12 o ’clock meridian, August 3, 1950. The regulation
applies, in general, to banks, savings and loan associations, insurance
companies, mortgage companies, loan companies, finance companies,
real estate companies, or other institutions or individuals who are
engaged in the business o f extending real estate credit with respect to
residences, residential property, multi-unit residential property, or
nonresidential property. In order to determine whether a particular
institution or individual or a particular transaction is subject to this
regulation, reference should be made to the provisions o f the regu­
lation itself.




CONTENTS
Page
S e c . 1. S c o p e a n d A p p l i c a t i o n o f R e g u l a t i o n ........................................................................
S e c . 2 . D e f i n i t i o n s .................................................................................................................................................

(a)
(b)
(c)
(d)
(e)
(/)
(g)
(h)
(i)
(j )
(k )
(l)
(m)
(n)
(o)
(p )
(q)
(r)
(s)

Sec. 3.

G

“ P erson”
“ Registrant”
“ C redit”
“ Extending credit,” “ extension o f credit” and “ extends credit”
“ Real estate construction credit”
“ N ew construction”
“ M a jor addition” or “ m ajor im provem ent”
“ Real property”
“ M axim um loan value”
“ B on a fide sale price”
“ R esidence”
“ M ulti-unit residence”
“ Fam ily u n it”
“ Residential property”
“ Farm property”
“ M ulti-unit residential property”
“ Nonresidential property”
“ Nonresidential structure”
“ Public u tility”
e n e r a l R e q u i r e m e n t s a n d R e g i s t r a t i o n ..................................................
(а) General Requirements
(б) Registration
(c)
Suspension of Registration

1
1

S e c . 4. E x t e n s io n

(a)
(b)
(c)
(d)
Sec . 5.

Sec.

6.

and

E x c e p t i o n s ....................................................................................................

11

P r o v i s i o n s .........................................................................................................

15

Evasions
Outstanding Contracts and Obligations
R eal P roperty Outside the United States
Preservation o f R ecords; Inspections; Adm inistrative R eports
D efault and Foreclosure; Servicem an’s Preinduction D eb t
Veterans Program s under State Law
State H ousing Programs
Extension o f Credit for M ixed Purposes
Calculation o f M axim um M aturity
Three- and Four-U nit Residences
R igh t o f Registrant to Im pose Stricter Requirem ents
Reliance u pon Statement o f the Borrow er
False Statements
Statutory Penalties
E nforceability o f Contracts

S u p p l e m e n t ...................................................................................:• • • • ....................................................................

Schedule. I. One- to Four-U nit Residential Property and Farm
Residences
Schedule II. M ulti-unit Residential Property
Schedule I I I . Nonresidential Property •




8

M inim um Am ount
Short-Term Residential Construction Credits
Other Short-Term Construction Credits
M edical Expenses, etc.
Casualties
Contracts to Sell
Contem plated Construction
L abor and Material
Credits Secured b y Life Insurance Policies
Farm Property
Exem ption for Certain N ew Construction
Materials, Articles and Services Used in N ew Construction

M is c e l l a n e o u s

(a)
(b)
(c)
(d)
(e)
(f )
(g)
(Ji)
(i)
( j)
(k)
(I)
(m )
(n)
(o)

C r e d i t .......................................................................................................................

A m oun t; M a tu rity; Am ortization
Secondary Borrowing
Ascertaining Nature o f Credit
Statem ent o f the Borrower

E x e m p t io n s

(a)
(b)
(c)
(d)
(e)
( f)
(g)
(h)
(i)
(j)
(k)
(l)

of

7

20

R E G U L A T IO N X
As am ended effective February 15, 1951

REAL ESTATE CREDIT
SECTION 1. SCOPE AND APPLICATION OF REGULATION

This regulation is issued by the Board o f Governors o f the Federal
Reserve System (hereinafter called the “ B oard” ), with the concur­
rence o f the Housing and H om e Finance Administrator with respect
to provisions relating to real estate construction credit involving resi­
dential property and multi-unit residential property, under authority
o f the “ Defense Production A ct of 1950,” approved September 8, 1950
(hereinafter called the “ A ct” ), and Executive Order No. 10161, dated
September 9, 1950.
This regulation applies to any person who is engaged in the business
o f extending real estate credit with respect to residences, residential
property, multi-unit residential property, or nonresidential property,
including any person who acts as agent in arranging for such credit.
F or the purposes o f this regulation, a person shall be deemed to be
engaged in the business o f extending such real estate credit if, in his
own right or as agent or fiduciary, he either ( 1 ) extends or has ex­
tended such real estate credit more than three different times during
the current calendar year or during the preceding calendar year, or
( 2 ) extends or has extended such real estate credit in an amount
or amounts aggregating more than $50,000 during the current calendar
year or during the preceding calendar year. For the purposes o f this
section, such real estate credit shall be deemed to include credit with
respect to any residence, residential property, multi-unit residential
property, or nonresidential property, whether or not there is any new
construction thereon, and whether or not such credit is extended,
insured, or guaranteed by the Federal Housing Administration, the
Veterans’ Administration, or any other department, independent estab­
lishment or agency o f the United States, and whether or not such
credit is exempt from this regulation.
SECTION 2. DEFINITIONS

For the purposes o f this regulation, unless the context otherwise
requires:
(a)
A ct .1

“ Person” has the meaning given it in section 702(a) o f the

’ Section 702(a) o f the A ct provides: “ T h e w ord ‘ person’ includes an individual,
corporation, partnership, association, or any other organized group o f persons, or




1

2

REGULATION X

S ec. 2

(6 )
“ Registrant” means a person who is registered pursuant to
section 3 o f this regulation.
(c) “ C redit” has the meaning-given it in section 6 0 2 (d )(2 ) o f the
A ct .2
{d) “ Extending credit,” “ extension o f credit” and “ extends credit”
shall include extending or maintaining any credit, or renewing, revising,
consolidating, refinancing, purchasing, selling, discounting, or lending
or borrowing on, any obligation arising out o f any credit, or arranging
as agent for any of the foregoing, and also shall include a sale of,
or other transfer o f title to, real property if the vendee or transferee
assumes, or takes such property subject to, indebtedness secured by a
mortgage or other lien upon such property.
(e) “ Real estate construction credit” means any cre d it 3 which
(1 )
(2 )
(3)
(4)

is wholly or partly secured by, or
is for the purpose o f purchasing or carrying, or
is for the purpose o f financing, or
involves a right to acquire or use,

new construction on real property or real property on which there is
new construction, if such new construction is a residence, m ulti-unit
residence, or nonresidential structure, or a m ajor addition or m ajor
improvement to a residence, multi-unit residence, or nonresidential
structure, whether such credit is extended before or after such new
construction is begun; but the term “ real estate construction credit”
legal successor o r representative o f the foregoing, and includes the U nited States
or any agency thereof, or any oth er governm ent, or any o f its political subdivi­
sions, o r any agency o f a n y o f the foreg oin g : P rovided , T h a t no punishment
provided b y this A ct shall a p p ly t o the U nited States, or to any such governm ent,
political subdivision, or governm ent agency.”
1 Section 6 0 2 (d )(2 ) o f the A ct p rovid es: “ 'C red it’ means any loan, mortgage,
deed o f trust, advance, or discou n t; any conditional sale con tra ct; any contract
to sell o r sale o r con tract o f sale, o f property or services, either for present or
future delivery, under which part or all o f the price is payable subsequent to the
making o f such sale or con tra ct; any rental-purchase contract, or any con tract for
the bailm ent, leasing, or other use o f property under which the bailee, lessee, or
user has the option o f becom in g the owner thereof, obligates him self to pay as
com pensation a sum substantially equivalent to or in excess o f the value thereof,
or has the right to have all or part o f the paym ents required b y such contract
applied to the purchase price o f such property or similar p rop erty; any option,
dem and, lien, pledge, or sim ilar claim against, or for the delivery o f property or
m o n e y ; any purchase, discount, or oth er acquisition of, or any credit under the
security o f, any obligation or claim arising ou t o f any o f the foregoin g; and any
transaction or series o f transactions having a sim ilar purpose or effect.”
* Extended on or after O ctober 12, 1950, with respect to farm residences, resi­
dential property, and m a jor additions and m ajor im provem ents to residences;
or on or after January 12, 1951, w ith respect t o m ulti-unit residential property
and m a jor additions and m a jor im provem ents t o m ulti-unit residences; or on
o r after February 15, 1951, with respect to nonresidential property and m a jor
additions and m ajor im provem ents to nonresidential structures.




S ec. 2

REGULATION X

3

shall not include any loan or loans made, insured, or guaranteed, in
whole or in part, by the Federal Housing Administration, the V et­
erans’ Administration, or any other department, independent estab­
lishment or agency in the executive branch o f the United States,
or by any wholly owned Government corporation, or by any mixedownership Government corporation as defined in the Government
Corporation Control A ct, as amended (including any loan evidenced
by obligations o f any local public agency or public housing agency
which national banks may purchase pursuant to the provisions of
section 602(a) of the Housing A ct o f 1949).
( /) “ N ew construction” means any structure, or any m ajor addi­
tion or m ajor improvement to a structure, which is or has been begun
after 12 o ’clock meridian, August 3, 1950. Construction will be deemed
to have been “ begun” when any essential materials which are to be
an integral part o f the structure have been affixed to or incorporated
on the site in a permanent form.
(g )
“ M a jor addition” or “ m ajor im provem ent” means any enlarge­
ment, reconstruction, alteration, or repair of an existing structure ,4 or
any other addition or improvement which becomes or is to become
physically attached to and a part o f the structure ,4 if the cost or esti­
mated cost of such addition or improvement exceeds $2,500, and also
exceeds ( 1 ) if the structure is a residence or multi-unit residence, an
amount determined by multiplying $1,500 by the number o f family
units in such residence or multi-unit residence prior to such addition
or improvement, or ( 2 ) if the structure is a nonresidential structure,
an amount equal to 15 per cent of the appraised value o f the nonresi­
dential structure 5 as determined in good faith by the Registrant who
extends the credit .6
* N otw ithstanding this definition or any oth er provision o f this regulation,
an addition or im provem ent to any existing structure which will becom e a “ resi­
den ce,” “ m ulti-unit residence.” or “ nonresidential structure” b y reason o f such
addition o r im provem ent shall b e treated as an addition or im provem ent to an
existing “ residence,” “ m ulti-unit residence,” or “ nonresidential structure,” respec­
tiv e ly ; and, in determ ining whether the cost or estim ated cost o f an addition
or im provem ent to an existing structure w hich will b ecom e a “ residence” or
“ m ulti-unit residence” is such that it w ould be a m a jor addition or m ajor im prove­
ment within the meaning o f section 2 (g ), and in determ ining what the m axim um
loan value is. the determ ination shall be according to the num ber o f fam ily units
which will be in the structure after the addition or im provem ent has been
com pleted.
5 For this purpose, the value o f the land upon w hich the nonresidential structure
is located is n o t taken in to con sideration ; and the appraised value is the appraised
value o f the structure before the m ajor addition or m ajor im provem ent is m ade.
8 It should be n oted that section 2 (f) defines “ new construction” as including
“ any m a jor addition o r m a jor im provem ent” and that section 2 (e ) defines “ real
estate construction credit” as including certain credit with respect to “ real prop­
erty on which there is new construction.” ' A ccordin gly, if a m ajor addition or




4

REGULATION X

S ec. 2

(/i) “ R eal property” includes leaseholds and other interest in such
property.
(i)
The “ maximum loan value” o f any property 7 shall be the amount
which is computed in the manner prescribed in the Supplement to this
regulation. In making such computations:
(1) F or a m ajor addition or m ajor improvement to a residence,
multi-unit residence, or nonresidential structure, “ value” shall be
the cost or estimated c o s t 8 o f such m ajor addition or m ajor improve­
ment;
(2) For residential property, other than m ajor additions or m ajor
improvements:
(A ) In the case of an extension o f credit in connection with a
bona fide sale o f residential property, “ value” shall be the bona fide
sale price;
(B ) In the case of any other extension of credit with respect to
residential property:
(i) I f the entire cost of the property to the borrower has been
incurred by him not more than 12 months prior to the extension
o f credit or is to be incurred by him after such extension of
credit, “ value” shall be the bona fide cost of the property to the
borrower, including a bona fide estimate of the cost of completing
new construction on such property when the extension of credit
is for the purpose o f financing such new construction;
(ii) I f any part o f the cost o f the property to the borrower
has been incurred by him more than 12 months prior to the
extension of credit, or if any part of such property has been
acquired by gift, exchange, or inheritance, “ value” shall be the
appraised value as determined in good faith by the Registrant
who extends the credit;
m a jor im provem ent is made to an existing structure, even though such structure
was erected or begun prior to August 3, 1950. any subsequent extension o f credit
with respect to such structure or the property on which it is located is “ real
estate construction credit.”
H ow ever, in determ ining whether property has
becom e “ real property on which there is new construction” b y reason o f a
m ajor addition or m a jor im provem ent having been made to an existing structure,
there shall be considered on ly such costs as are or have been incurred during
any period o f 12 consecutive m onths (o r during a period n ot exceeding 12
m onths beginning January 12, 1951, if the structure is a residence or m ulti-unit
residence, or beginning February 15, 1951, if the structure is a nonresidential
structure).
7 A s used here, “ prop erty” means residential property, m ulti-unit residential
property, nonresidential property, a residence on farm property, or a m ajor addi­
tion o r m ajor im provem ent to a residence, a m ulti-unit residence, or nonresidential
structure, as the case m ay be.
8 Based on such evidence and supporting data as norm ally w ould be required
b y a prudent lender.




S ec . 2

REGULATION X

5

(3) For an extension o f credit which is for the purpose o f financ­
ing the construction o f a residence on farm property, “ value” shall
be the total of (A ) the cost or estimated cost o f such new construc­
tion, and (B ) 5 per cent of such cost or estimated cost .0
(4) For multi-unit residential property and nonresidential prop­
erty, other than m ajor additions or m ajor improvements:
(A ) In the case o f an extension o f credit in connection with a
bona fide sale o f multi-unit residential property or nonresidential
property, “ value” shall be the bona fide sale price;
(B ) In the case o f any other extension o f credit with respect to
multi-unit residential property or nonresidential property, “ value”
shall be the appraised value as determined in good faith by the
Registrant who extends the credit. Appraisals pursuant to this
provision and other provisions o f this regulation will be subject
to inspection by the Board and the Federal Reserve Banks in
accordance with section 6 (d) o f this regulation, and appraisals
found to be in excess o f those dictated by sound and established
practice in the community shall be deemed sufficient ground for
the suspension o f the Registrant pursuant to section 3 (c) o f this
regulation.
(j) “ Bona fide sale price” means the amount paid or to be paid by
the vendee in money or its equivalent. It includes, in addition to cash,
( 1 ) the value o f any property accepted in part paym ent, ( 2 ) the
unpaid principal amount o f any indebtedness incurred or assumed
by the vendee or to which the property remains subject, (3) the
amount o f any liens for taxes or special assessments which are in
default or currently due and payable, (4) the amount o f any m e­
chanics’ liens or other liens which the vendee is required to discharge,
(5) the amount which the vendee agrees to pay for any alteration or
other modification made or to be made to the property as an incident
to the sale thereof, and ( 6 ) any amounts paid by the vendee for closing
costs. It does not include any prepaid charges, or any accrued rents
which will be paid to the vendee.
(k ) “ R esidence” 10 means any structure which is used or designed
for permanent or transient dwelling purposes, and which include at
* T h e 5 per cen t is added w hen the extension o f credit is for the purpose o f
financing the construction o f a residence on farm property in order to take
accou n t o f the value o f the land u pon which the residence is to be constructed.
1 Structures such as hotels, m otels, room ing houses, club houses, fraternity or
0
sorority houses, rest hom es, and the like, in w hich m ore than on e-h alf o f the
floor space consists o f units w hich d o n ot contain kitchen facilities or space
designed for kitchen facilities shall n ot be deem ed to b e residences or m ulti­
unit residences. See section 2 (r ).




REGULATION X

6

S ec . 2

least one but not more than four fam ily units, if the floor space con­
tained in such fam ily units comprises at least one-half o f the floor
space o f such structure. Houses connected by common walls and
com m only known as “ row houses” or “ semidetached houses” shall be
considered separate structures.
(0 “ M ulti-unit residence” 10 means any structure such as an apart­
ment house or apartment hotel (whether owned cooperatively or other­
wise) which is used or designed for permanent or transient dwelling
purposes, and which includes more than four fam ily units, if the floor
space contained in such fam ily units comprises at least one-half of
the floor space o f such structure.
(m ) “ F am ily unit” means space which is used or designed for dwell­
ing purposes and which contains one or more rooms with kitchen
facilities (or space designed for kitchen facilities) in or appurtenant
to such rooms.
(n) “ Residential p rop erty” means any real property, other than
farm property, on which there is or is to be a residence or residences.
(o)
“ Farm, prop erty” means any real property, other than multi-unit
residential property or nonresidential property, located outside of
urban areas, which is principally used for the production o f crops,
livestock or other agricultural commodities.
(p) “ M ulti-unit residential prop erty” means any real property on
which there is or is to be a multi-unit residence or m ulti-unit resi­
dences.
(<7) “ Nonresidential prop erty” means any real property on which
there is or is to be a nonresidential structure or structures.
(r) “ Nonresidential structure” 11 means any structure other than
( 1 ) a residence,
( 2 ) a multi-unit residence,
(3) a school, hospital, or church,
(4) a structure exclusively used or designed for use
(i) by a public utility,
(ii) by any Government or political subdivision, or
(5) a structure more than 80 per cent o f the floor space o f which
is used or designed for use
(i) in processing materials, goods, or articles into finished or
partly finished manufactured products,
(ii) in mining or otherwise extracting raw materials, or
10 For footn ote, see preceding page.
u N onresidential structures ordinarily subject to this regulation include, am ong
others, the fo llo w in g : Office buildings, warehouses, stores (including sales display
and service facilities, whether w holesale or retail), banks, hotels, m otels, m otor
courts, garages, a u tom obile service stations, restaurants, and clubs.




REGULATION X

S bcs . 2 ,3

7

(iii)
on farm property in the production, shelter, or storage
incidental thereto, o f crops, livestock or other agricultural com ­
modities.
(s) “ Public u tility” means any transportation com pany, electric
light or power com pany, gas com pany, water com pany, pipe line com ­
pany, telephone com pany, telegraph com pany, or other similar business
which is operated for the convenience, service or accom modation of
the public if ( 1 ) the operations of such com pany are supervised by a
Federal or State agency, or (2) the members o f the public as such
are entitled as o f right to demand and use its facilities or services.
SECTION 3 .

GENERAL REQUIREMENTS AND REGISTRATION

(a) General Requirem ents.— N o person engaged in the business
of extending real estate credit with respect to residences, residential
property, multi-unit residential property or nonresidential property
shall extend real estate construction credit unless ( 1 ) he is registered
pursuant to this section, and ( 2 ) he has no knowledge of, and has no
reason to know, any fact by reason o f which such credit fails to com ­
ply with any applicable provision o f this regulation.

( b ) Registration.— Every person engaged in the business o f extend­
ing real estate credit with respect to residences, residential property,
multi-unit residential property or nonresidential property shall be
deemed to £>e registered pursuant to this regulation until such time
as the Board, by public announcement, m ay require registration state­
ments to be filed by all, or any specified classes of, such persons.
Should the Board require such registration statements, a person shall
continue to be registered after the time such statements are required
only if he shall have complied with the requirements of the B oard’s
announcement. Every person who is registered in accordance with
the provisions o f this subsection is referred to in this regulation as a
“ Registrant.”
(c) Suspension o f Registration.— Any Registrant m ay, after rea­
sonable notice and opportunity for a hearing, be suspended by the
Board, as to all or as to particular activities or particular offices and
for specified or indefinite periods, because o f any willful or negligent
failure to com ply with any provision of this regulation.
A suspension for a specified period will terminate upon the expira­
tion o f such period. A suspension for an indefinite period m ay be
terminated by the Board, in its discretion, if the B oard is satisfied
that its action would not lead to further violations o f this regulation




8

REGULATION X

S ecs . 3 ,4

by the suspended Registrant and would not be otherwise incompatible
with the public interest.
SECTION 4 . E X T E N SIO N OF CREDIT

(a)
A m ou n t; M aturity; Am ortization. — Except as otherwise per­
mitted by this regulation, no Registrant shall, either in connection
with a sale or otherwise:
(1) Extend real estate construction credit with respect to resi­
dential property, multi-unit residential property, or nonresidential
property (other than m ajor additions or m ajor improvements) if the
amount o f credit outstanding with respect to the property (includ­
ing any credit exempt from, or not subject to the prohibitions of,
this regulation) exceeds, or as a result o f such extension o f credit
would exceed, the applicable maximum loan value o f such property;
(2) Extend real estate construction credit for the purpose of
financing a m ajor addition or m ajor improvement to a residence,
multi-unit residence or nonresidential structure if the amount of
credit outstanding for the purpose o f financing the m ajor addition
or m ajor improvement (including any credit exempt from, or not
subject to the prohibitions of, this regulation) exceeds, or as a result
o f such extension of credit would exceed, the applicable maximum
loan value o f such m ajor addition or m ajor improvement;
(3) Extend real estate construction credit for the purpose of
financing the construction o f a residence on farm property if the
amount o f credit outstanding for the purpose o f financing the con­
struction o f the residence (including any credit exempt from, or
not subject to the prohibitions of, this regulation) exceeds, or as a
result o f such extension o f credit would exceed, the applicable m axi­
mum loan value o f such residence;
(4) Extend real estate construction credit if such credit would
have a maturity which exceeds the applicable maximum maturity
provisions, or would be repaid in any manner which does not con­
form with the applicable amortization provisions, set forth in the
Supplement to this regulation;
(5) Purchase, discount or lend on any credit instrument evidenc­
ing real estate construction credit which is subject to and not
exempt from this regulation, unless the terms o f such credit con­
formed with the provisions o f the Supplement to this regulation
when such credit was originally extended or conform with the pro­
visions o f the Supplement at the time o f such purchase, discount
or loan; but for the purposes o f this paragraph credit shall be con­




S ec . 4

REGULATION X

9

sidered to be subject to the regulation even though extended by a
person other than a Registrant;
(6 )
I f the Registrant is acting as principal— sell, or transfer title
to, residential property, multi-unit residential property or non­
residential property on which there is new construction (which is
a residence, multi-unit residence or nonresidential structure, or a
m ajor addition or m ajor improvement to a residence, multi-unit
residence or nonresidential structure) and with respect to which the
vendee or transferee assumes, or takes such property subject to,
indebtedness secured by a mortgage or other lien upon such property,
if the amount o f outstanding credit (including any credit exempt
from, or not subject to the prohibitions of, this regulation) which
was extended after October 12, 1950, (or after January 12, 1951, if
it is a sale or transfer o f multi-unit residential property or after
February 15, 1951, if it is a sale or transfer o f nonresidential
property) with respect to the property exceeds, or as a result o f such
sale or transfer would exceed, the applicable maximum loan value
o f such property, or if any outstanding real estate construction
credit (subject to and not exempt from this regulation) with respect
to such property does not conform with the provisions o f this regu­
lation and the Supplement thereto .12
(6)
Secondary B orrow ing. — Except as otherwise permitted by this
regulation, no Registrant shall extend real estate construction credit
if he knows or has reason to know that there is, or that there is to be,
any other credit extended with respect to the property 13 ( 1 ) which,
when added to the credit proposed to be extended by the Registrant,
would cause the total amount o f credit outstanding with respect to
the property 13 (including any credit exempt from, or not subject to
the prohibitions of, this regulation) to exceed the applicable maxi­
mum loan value o f such property, or ( 2 ) which, if it is real estate
construction credit subject to and not exempt from this regulation,
does not or would not com ply with the applicable maximum maturity
and amortization provisions set forth in the Supplement to this regu­
lation.
(c)
Ascertaining Nature o f Credit.— N o Registrant shall extend
any credit unless he is satisfied, and maintains records which reason­
ably demonstrate on their face, whether such credit is or is not real
1 F or application to three- and four-unit residences, see section 6(;‘).
2
1 As used here, “ property” means residential property, m ulti-unit residential
3
property, nonresidential property, a residence on farm property, or a m a jor addi­
tion or m ajor im provem ent to a residence, a m ulti-unit residence or nonresiden­
tial structure, as the case m ay be.




10

REGULATION X

S ec . 4

estate construction credit; provided, however, unless the Registrant
has actual knowledge that the credit is real estate construction credit,
the requirements o f this sentence shall not apply ( 1 ) to any exten­
sion o f credit which is made by a bank, savings and loan association,
or similar institution and which is to be repaid within six months and
is fully secured by withdrawable shares issued b y or savings accounts
held with the lender, or ( 2 ) to any extension o f credit in the ordinary
course o f business for a commercial, agricultural, or business purpose
where the Registrant, because o f a previous course o f dealings or
correspondence between himself and the borrower, has no reason to
believe that the credit is or will be real estate construction credit.
The preceding sentence does not require that a Registrant obtain a
signed statement from each borrower, and if the Registrant is satis­
fied that credit is not real estate construction credit, other kinds of
records may be used to demonstrate this fact. Such records m ay
include, among others, ( 1 ) any correspondence, memoranda, loan
applications or other documents o f any kind, whether or not originat­
ing in connection with the credit in question, which on the basis of
a reasonable interpretation show that the credit is not real estate
construction credit; or ( 2 ) a written endorsement or rubber stamp
legend, placed upon the credit instrument or upon other papers in
connection with the credit and signed by the Registrant or a respon­
sible officer o f the Registrant, stating that he is satisfied that the credit
in question is not real estate construction credit. If, however, a R egis­
trant desires to obtain, and accepts in good faith, a signed Statement
o f the Borrower stating that the credit is not w holly or partly secured
by, or for the purpose o f purchasing or carrying, or for the purpose
o f financing, or one which involves the right to acquire or use, new
construction on real property or real property on which there is new
construction (or that such new construction, if any, is not a resi­
dence, multi-unit residence or nonresidential structure, or a m ajor
addition or m ajor improvement to a residence, multi-unit residence
or nonresidential structure), such Statement shall be deemed to be
com pliance with the requirements o f this subsection.

(d)
Statement o f the B orrow er. — N o Registrant shall extend real
estate construction credit unless he has accepted in good faith a
signed Statement o f the Borrower (1) stating whether the credit is
with respect to property 14 subject to the regulation, and ( 2 ) stating,
14 As used here, “ property” means residential property, m ulti-unit residential
property, nonresidential property, a residence on farm property, or a m a jor addi­
tion or m a jor im provem ent to a residence, m ulti-unit residence, or nonresidential
structure, as the case m ay be.




REGULATION X

S ecs . 4, 5

11

if the Registrant claims that such credit is exempt from this regula­
tion, the reason for such exemption; and, if the credit is not exempt,
(3) stating the amount o f credit previously extended and outstand­
ing, and the amount o f any other credit to be extended, with respect
to the property ,14 (4) stating, if the Registrant in computing “ value”
relies upon cost or estimated cost to the borrower (where such cost
or estimated cost may be used for this purpose), the bona fide amount
o f such cost or estimated cost to the borrower, and (5) stating, if
the extension o f credit is in connection with a sale, the sale price,
that the sale price was bona fide, and the value and a brief descrip­
tion o f any property accepted in part payment. I f the extension of
credit is in connnection with a sale, such Statement shall state that
the vendor o f the property has or will have no financial interest in
such property or in the proceeds o f any subsequent disposition thereof,
except such interest as may be fully disclosed to the Registrant. The
amount o f any such financial interest o f the vendor retained in the
property or any proceeds o f the disposition thereof shall be deemed
to be real estate construction credit extended with respect to such
property. The Statement o f the Borrower m ay be made, if desired,
on a form a sample o f which is obtainable at any Federal Reserve
Bank or branch.
SECTION

S. E XE M P TIO N S AN D EXC E PTIO N S

(a) M inim um Am ount. — The prohibitions o f subsections (a) and
(b) o f section 4 o f this regulation shall not apply to any extension of
credit if the total amount thereof, including all outstanding credit
which was granted after October 12, 1950, with respect to the same
property ,15 is not in excess o f $2,500.
(b) Short-Term Residential Construction Credits.— The prohibi­
tions o f subsections (a) and ( 6 ) o f section 4 o f this regulation shall
not apply to any credit which is for the purpose o f financing the con­
struction o f a residence or residences or a m ajor addition or major
improvement to a residence, if the maturity o f such credit is not
more than 18 months; provided, that this exemption shall not be
construed to permit any renewal, revision, consolidation, or refinancing
o f such credit except on terms which conform with the provisions of
this regulation and the Supplement thereto. I f (1) the initial purpose
o f an extension o f credit having a maturity exceeding 18 months is
1 F o r footn o te , see preceding page.
4
13 A s used here, “ property” means residential property, m ulti-unit residential
property, nonresidential property, a residence on farm property, or a m a jor addi­
tion or m ajor im provem ent to a residence, m ulti-unit residence, or nonresidential
structure, as the case m ay be.




12

REGULATION X

S ec . 5

the financing o f the construction o f a residence or residences or a m ajor
addition or m ajor improvement to a residence and ( 2 ) the credit instru­
ment provides, or an agreement with respect to the credit requires,
that within 32 days after completion o f such construction or upon a
specified date when the Registrant estimates in good faith the construc­
tion will be completed, which in either case shall be not more than
18 months after the extension o f the credit, the terms o f the credit
shall conform thereafter with the applicable maximum loan value and
the applicable maturity and amortization provisions set forth in
Schedule I o f the Supplement to this regulation, then in such event
the prohibitions o f subsections (a) and ( 6 ) o f section 4 o f this regu­
lation shall not apply to such credit until after the lapse o f the time
so described or specified, but if at any time after the date o f the
extension o f such credit, a Registrant sells or transfers title to the
property with respect to which the credit is extended, such sale or
transfer o f title must conform to the provisions o f this regulation and
Schedule I o f the Supplement thereto .16
(c)
O ther Short-Term Construction Credits.— The prohibitions of
subsections (a) and ( 6 ) of section 4 of this regulation shall not apply
to any credit which is for the purpose of financing the construction
o f a multi-unit residence or nonresidential structure or a m ajor addi­
tion or m ajor improvement to a multi-unit residence or nonresidential
structure and which is extended to any person other than the owner
o f the property and has a maturity o f not more than 24 m onths; pro­
vided, that this exemption shall not be construed to permit any re­
newal, revision, consolidation, or refinancing o f such credit except on
terms which conform with the provisions of this regulation and the
Supplement thereto. Extensions o f credit for the purpose o f financ­
ing the construction o f a multi-unit residence or nonresidential struc­
ture or a m ajor addition or m ajor improvement to a multi-unit
residence or nonresidential structure may not be made to the
owner o f the property in a total amount exceeding the maximum
loan value o f the p roperty; but any such credit extended to the owner
o f the property shall be exempt from the amortization provision in
Schedule III o f the Supplement to this regulation if (1) such credit
has a maturity o f not more than 24 months, or (2) the initial purpose
o f credit having a maturity exceeding 24 months is the financing o f
the construction of a nonresidential structure or nonresidential struc­
“ It should be noted that this exem ption does n ot a pply to any credit which
is fo r the purpose o f financing the construction o f a m ulti-unit residence or
nonresidential structure or a m ajor addition or m ajor im provem ent to a m ulti­
unit residence or nonresidential structure. H ow ever, see section 5 (c ).




S ec . 5

REGULATION X

13

tures or a m ajor addition or m ajor improvement to a nonresidential
structure, and the credit instrument provides, or an agreement with
respect to the credit requires, that within 32 days after completion
of such construction or upon a specified date when the Registrant
estimates in good faith the construction will be completed, which in
either case shall be not more than 24 months after the extension of
the credit, the terms o f the credit shall conform thereafter with the
applicable maturity and amortization provisions set forth in Schedule
III o f the Supplement to this regulation; but if at any time after the
date o f the extension o f such credit, a Registrant sells or transfers
title to the property with respect to which the credit is extended,'such
sale or transfer of title must conform to the provisions of this regu­
lation and Schedule II I o f the Supplement thereto.

( d ) Medical Expenses, Etc.— The prohibitions of subsections (a)
and ( 6 ) of section 4 of this regulation shall not apply to any exten­
sion o f real estate construction credit as to which the Registrant ac­
cepts in good faith a signed Statement o f the Borrower certifying that
the proceeds thereof are to be used for bona fide medical, hospital,
dental, or funeral expenses, or to pay debts incurred for such expenses,
and that the proceeds of the extension are to be paid over in amounts
specified in such Statement to persons whose names, addresses and
occupations are stated therein.
(e) Casualties.— The prohibitions o f subsections (a) and (b ) of
section 4 o f this regulation shall not apply to any extension o f real
estate construction credit as to which the Registrant accepts in good
faith a signed Statement o f the Borrower certifying that the proceeds
thereof are to be used solely for the replacement, reconstruction or
repair of a residence, multi-unit residence or nonresidential structure
destroyed or substantially damaged by flood, fire or other similar
casualty.

(/) Contracts to Sell. — N one o f the provisions o f this regulation
shall apply to a contract to sell real property ( 1 ) which does not provide
for the payment o f any part o f the purchase price, or o f any amount
to be subsequently applied to such price, except a deposit o f earnest
money, before the transfer o f title to such property, ( 2 ) which is to
be performed by a transfer o f title to such property within six months
after the date on which the contract was entered into, and (3) which
provides for the subsequent transfer o f title to such property on terms
which conform to the provisions o f this regulation and the Supplement
thereto in effect on the date the contract was entered into.




14

REGULATION X

Sec. 5

(g) < o lemplated Construction. — A ny builder or other person who
had made substantial commitments or undertakings before August 3,
1950, with a view to the building o f new construction which is a resi­
dence or a m ajor addition or m ajor improvement to a residence and
who asserts that his inability to obtain credit to finance such new
construction on the basis contemplated by him and by the Registrant
prior to August 3, 1950, would cause him substantial hardship, may
apply to the Federal Reserve Bank o f the district in which the new
construction is contemplated for an exemption from this regulation
for such new construction, showing all the facts and submitting all
necessary supporting documents with respect to his commitments or
undertakings and why compliance with the regulation would cause
him substantial hardship. I f such Federal Reserve Bank after con­
sideration of the application and supporting documents determines
that substantial commitments were made prior to August 3, 1950, and
that substantial hardship would result from the application o f this
regulation in such case, it may issue to such builder or other person
a certificate approving such application and thereupon any extension
o f credit to such builder or other person by the Registrant named in
such certificate with respect to the new construction that m ay be speci­
fied in such certificate shall be exempt from the prohibitions o f sub­
sections (a) and (b) o f section 4 o f this regulation. Applications under
this subsection must be sent to the Federal Reserve Bank prior to
M arch 15, 1951.

( h ) Labor and Material.— N o person shall be required to register
pursuant to section 3 o f this regulation because o f the fact that he
performs labor or furnishes material for new construction on an open
account, unless he shall be otherwise engaged in the business o f ex­
tending real estate credit.
(i) Credits Secured by Life Insurance Policies. — N one of the pro­
visions o f this regulation shall apply to an extension o f real estate
construction credit which is fully secured by the loan value or cash
surrender value o f a life insurance p olicy; and, notwithstanding any
other provisions o f this regulation, a Registrant in determining the
amount o f credit which he may extend under the provisions o f section
4 o f the regulation need not take into account any credit which is
secured in the manner specified in this subsection.
( ;) Farm Property. — The prohibitions of subsections (a) and (b)
o f section 4 o f this regulation shall not apply to any extension o f real
estate construction credit with respect to farm property unless the




REGULATION X

S ecs . 5 ,6

15

extension o f credit is for the purpose of financing the construction of
a residence on farm property or a m ajor addition or m ajor improvement
to a residence on farm property .17
( k) Exem ption fo r Certain New Construction. — The prohibitions
o f subsections (a) and ( 6 ) o f section 4 o f this regulation shall not
apply to any real estate construction credit extended prior to M a y 1 ,
1951, with respect to new construction (1) begun prior to October 12,
1950, if such new construction is a residence or a m ajor addition or
m ajor improvement to a residence, (2) begun prior to January 12, 1951,
if such new construction is a multi-unit residence or a m ajor addition
or m ajor improvement to a multi-unit residence ,18 or (3) begun prior
to February 15, 1951, if such new construction is a nonresidential
structure or a m ajor addition or m ajor improvement to a nonresiden­
tial structure.
(I) Materials, Articles and Services Used in New Construction.—
None of the provisions o f this regulation shall apply to an extension
o f credit which is for the purpose o f purchasing, or is in connection
with a sale of, materials, articles and services for new construction if
the credit is extended on terms which provide for a minimum down
payment o f 10 per cent, or a maximum loan value o f 90 per cent, and
for repayment within 30 months by (1) substantially equal monthly or
weekly payments covering principal and interest or ( 2 ) substantially
equal monthly or weekly payments o f principal .19
SECTION 6.

M ISCELLANEOUS PROVISIONS

(a)
Evasions.— N o extension of real estate construction credit com ­
plies with the requirements o f this regulation if at the time it is made
there is any agreement, arrangement, or understanding, o f which the
Registrant knows or has reason to know, by which credit is or is to be
extended in violation o f this regulation, even though such extension
o f credit is or is to be made indirectly, or which would otherwise evade
or circumvent, or conceal any evasion or circumvention of, any pro­
vision o f this regulation or the Supplement thereto. N o Registrant
1
1 It is to be n oted that the term “ farm property” as defined in section 2 (o )
does not include m ulti-unit residential property or nonresidential p rop erty;
accordingly, the location o f m ulti-unit residential property or nonresidential
property does n ot affect the question whether extensions o f credit with respect
to such property are subject to the regulation.
1 For applicaion t o three- and four-unit residences, see section 6 ( j ) .
8
19 It should be noted that in certain circum stances m ore restrictive terms w ould
be required b y R egu lation W .




16

REGULATION X

S ec . 6

extending credit subject to this regulation shall divide such credit into
two or more parts, or enter into any agreement or understanding with
any other person as a result o f which two or more credits are extended,
when the purpose or effect o f such action is to circumvent or avoid the
amortization or maturity provisions o f this regulation or the Supple­
ment thereto.

(b )
Outstanding Contracts and Obligations. — The prohibitions of
subsections (a) and ( 6 ) o f section 4 o f this regulation shall not apply
to or affect (i) any credit with respect to residential property or a
m ajor addition or m ajor improvement to a residence if extended prior
to October 12, 1950, or pursuant to any firm commitment to extend
credit made prior to such date, (ii ) any credit with respect to multi-unit
residential property or a m ajor addition or m ajor improvement to a
multi-unit residence if extended prior to January 12, 1951, or pursuant
to any firm commitment to extend credit made prior to such date, or
(iii) any credit with respect to nonresidential property or a m ajor
addition or m ajor improvement to a nonresidential structure if ex­
tended prior to February 15, 1951, or pursuant to any firm com mit­
ment to extend credit made prior to such date, if such firm commitment
complies with Clause (1) of the next succeeding sentence. For this
purpose, a firm commitment means either ( 1 > a written agreement
under which the Registrant is required without option or discretion
on his part to extend credit upon demand by the borrower or upon
com pliance by the borrower with one or more conditions referred to
in such agreement; or (21 any other agreement to extend credit with
respect to residential property, a residence, or a m ajor addition or
m ajor improvement to a residence which has been entered into in good
faith by the parties and in reliance upon which the prospective borrower
or builder has taken specific action prior to October 12. 1950. if the
Registrant prior to January 1, 1951, shall have sent to the Federal
Reserve Bank o f the district in which he does business a letter or other
statement reciting the facts with respect to such agreement and the
specific action taken by the prospective borrower or builder prior to
October 12, 1950; or (3) any other agreement to extend credit with
respect to multi-unit residential property or a m ajor addition or m ajor
improvement to a multi-unit residence which has been entered into in
good faith by the parties and in reliance upon which the prospective
borrower or builder has taken specific action prior to January 12, 1951,
if the Registrant prior to M arch 15, 1951, shall have sent to the Federal
Reserve Bank o f the district in which he does business a letter or other
statement reciting the facts with respect to such agreement and the




Se c . 6

REGULATION X

17

specific action taken by the prospective borrower or builder prior to
January 12, 1951.20
(c)
Real Property Outside the United States.— None o f the pro­
hibitions o f this regulation shall apply to any extension o f real estate
construction credit with respect to real property in Alaska, the Panama
Canal Zone, or any territory or possession outside the continental
United States.
{d) Preservation o f R ecord s; Inspections; Administrative Re*
ports. — For the purpose of determining whether or not there has been
compliance with the provisions o f this regulation, every person ex­
tending real estate credit with respect to residences, residential prop­
erty, multi-unit residential property or nonresidential property shall
preserve for the period hereinafter specified such accounts, correspond­
ence, memoranda, papers, books, and other records, or photostats or
other copies thereof, as are relevant to establishing whether such
person is engaged in the business o f extending such real estate credit;
whether each credit extended is or is not real estate construction credit
with respect to a farm residence, residential property, multi-unit resi­
dential property, nonresidential property, or a m ajor addition or major
improvement to a residence, multi-unit residence, or nonresidential
structure; and whether each extension o f real estate construction credit
conform ed with the provisions o f this regulation and the Supplement
thereto. Every such person shall preserve such records for three years
after the extension o f such credit, or until the repayment of the credit,
whichever period is shorter, provided, however, that if such person
sells or transfers an obligation evidencing a credit (or releases collateral
held as security for such credit) and delivers his records relevant to
such credit to the purchaser or transferee, such person need not there­
after maintain such records with respect to the credit but shall keep
a record o f the identity o f the purchaser or transferee and the date
o f such sale or transfer (or such release). Every such person shall
permit the Board or a Federal Reserve Bank, by its duly authorized
representative, to inspect such records and business operations as the
Board or a Federal Reserve Bank m ay deem necessary or appropriate;
and when ordered to do so, shall furnish, under oath or otherwise, such
reports, information, or records relevant to extensions o f credit as the
Board or a Federal Reserve Bank may deem necessary or appropriate
for the enforcement and administration o f this regulation .21
“ For application to three- and four-unit residences, see section 6 0 ’).
2 T h e reporting and record-keeping requirements o f this regulation have boon
1
approved b y the Bureau o f the Budget in accordance with the Federal R eports
A ct o f 1942.




18

REGULATION X

S ec . 6

(e) Default and F oreclosu re; Serviceman’ s Preinduction Debt.—
Nothing in this regulation shall be construed to prevent any Registrant
from taking such action as he shall deem necessary in good faith ( 1 )
with respect to any extension o f credit to any member or former
member o f the armed forces o f the United States which was made to
him prior to his induction into such service and assignment to active
duty, or (2) for the Registrant’s own protection in connection with any
credit which is in default and is the subject o f a bona fide collection
effort by the Registrant. The prohibitions o f subsections (a) and (b)
of section 4 o f this regulation shall not apply to an extension o f credit
by a Registrant in connection with a sale o f property acquired by him
through foreclosure proceedings if such credit does not exceed the
unpaid principal amount of the foreclosed credit, the costs o f acqui­
sition through foreclosure, and the costs incurred in the rehabilitation
and repair o f the property prior to the sale.

(/) Veterans Program s under State Law.— Nothing in this regu­
lation shall be construed as prohibiting a State (as distinguished from
any other person affected by this regulation) from according rights
and preferences to eligible veterans by extending, guaranteeing or
insuring, in whole or in part, real estate construction credit pursuant
to State legislation similar in purpose or effect to Title III o f the Serv­
icemen’s Readjustment A ct o f 1944, as amended, provided that the
terms o f the credit are no more liberal than are currently permitted
in the case o f comparable loans insured or guaranteed under that A ct.
( g ) State H ousing Program s. — Nothing in this regulation shall
prohibit extensions o f credit to public corporations created pursuant
to a public housing program of a State or m unicipality where such
credit is extended, insured, or guaranteed by the State or municipality
or the State or municipality has made commitments to furnish funds
to assure repayment.
(h) Extension o f Credit fo r Mixed Purposes. — In the case o f an
extension o f credit which is partly subject to one provision o f this
regulation and partly subject to another provision, whether by reason
o f the types o f property involved, or otherwise, the amount and tenns
o f such credit shall be such as would result if the credit were divided
into two or more parts and each part were treated as if it stood alone.
In the case of an extension of credit which is partly subject to this
regulation and partly not subject to (or exempt from) the regulation,
the amount and terms o f the extension o f credit will com ply with this
regulation if they satisfy the requirements o f this regulation applicable
to the subject portion.




S ec . 6

REGULATION X

19

(i)
Calculation o f Maximum Maturity.— In calculating the m ax­
imum maturity of credits which are subject to maximum maturity
provisions in the Supplement to this regulation, a Registrant may use,
at his option, as “ the date such credit is extended,” any date not more
than 32 days subsequent to the actual date such credit is extended.
(;) Three- and Four-Unit Residences. — Notwithstanding any other
provisions o f this regulation, the provisions o f sections 4 (a ) ( 6 ), 5 (fc),
and 6 ( 6 ) o f this regulation which are applicable to multi-unit resi­
dences shall be applicable to residences containing three or four fam ily
units.

(fc) Right o f Registrant to Im pose Stricter Requirem ents. — Any
Registrant, if he desires, may refuse to extend credit, extend less credit
than the amount permitted by this regulation, or require that repay­
ment be made within a shorter period or in larger instalments than
prescribed in the Supplement to this regulation.
(i)
Reliance u pon Statement o f the B orrow er. — The facts set
forth in any signed Statement o f the Borrower which a Registrant
accepts and relies upon in good faith shall be deemed to be correct for
the purposes o f the Registrant.
(m ) False Statements.— The making or submission by any person
o f any false, fictitious or fraudulent statement or representation pur­
suant to, or which is intended to conform to, or show compliance with,
any requirement or provision o f this regulation, shall be a violation
o f this regulation.
(n) Statutory Penalties.— The A ct provides that “ A ny person who
willfully violates any provision o f section * * * 602 (relating to real
estate construction credit) or any regulation or order issued there­
under, upon conviction thereof, shall be fined not more than $5,000
or imprisoned not more than one year, or both.”
(o)
Enforceability o f Contracts. — N othing in this regulation shall
affect the enforceability o f any contract.




SU PPL E M E N T T O R E G U L A T IO N X
As am ended effective February 15, 1951
SCHEDULE I. O N E - TO F O U R -U N IT RESIDENTIAL PROPERTY AND FARM
RESIDENCES

Maximum Loan Value.— For the purposes o f Regulation X , maxi­
mum loan values for all residential property, farm residences, and
m ajor additions and m ajor improvements to residences shall be deter­
mined as follows: (1) Determine the “ value” o f the residential prop­
erty, farm residence, or m ajor addition or m ajor improvement to a
residence, as the case m ay be, in accordance with section 2 (il of the
regulation; ( 2 ) divide this “ value” by the number o f fam ily units in
order to determine the “ value per fam ily unit” ; (3) determine the
“ maximum loan value per fam ily unit” from the table below; (4)
multiply the “ maximum loan value per fam ily unit” by the number
o f family units in order to determine the maximum loan value o f the
residential property, farm residence, or m ajor addition or m ajor
improvement, as the case may be. Where a m ajor addition or m ajor
improvement will change the number o f fam ily units, the “ value per
fam ily unit” shall be computed on the basis o f the number o f fam ily
units which the residence will contain after the addition or im prove­
ment has been completed. In the case o f credit extended with respect
to residential property or farm residences involving more than one
structure, the maximum loan value may be applied separately with
respect to each such structure or with respect to the entire property
or all such residences, at the election o f the Registrant.
The “ maximum loan value per
family unit” is

If the “ value per family unit” is
N ot more than $5,000
M ore than $5,000 but not more
than $9,000

9 0 % o f “ value per family unit”
$4,500 plus 6 5 % o f excess of
“ value per fam ily unit” over
$5,000
$7,100 plus 6 0% o f excess of
“ value per family unit” over
$9,000
$10,700 plus 2 0 % o f excess of
“ value per fam ily unit” over
$15,000
$11,700 plus 10% of excess of
“ value per family unit” over
$ 20,000

M ore than $9,000 but not more
than $15,000
M ore than $15,000 but not more
than $ 20,000
M ore than $20,000 but not more
than $24,250

Over $24,250




5 0 % of “ value per family unit”
20

REGULATION X

21

Maturity.— For the purposes of Regulation X , the following maturity
requirements are prescribed for credit with respect to residential prop­
erty, farm residences, and m ajor additions and m ajor improvements to
residences: N o such credit subject to the regulation shall have a
maturity o f more than 20 years from the date such credit is extended
except that a credit extended with respect to property having a value
(determined as provided in section 2 (i) o f the regulation! o f $7,000
or less may have a maturity of not more than 25 years if it is to be
fully repaid at or before the date o f maturity through amortization
on the basis prescribed in clause ( 2 ) o f the following paragraph
relating to amortization:
Am ortization.— F or the purposes of Regulation X , the following
amortization requirements are prescribed for credit with respect
to residential property, farm residences, and m ajor additions and
m ajor improvements to residences:
W ith respect to every such
credit subjcct to the regulation, amortization payments shall be
required which either ( 1 ) will annually reduce the original principal
amount o f such credit by not less than 5 per cent until the outstanding
balance of such credit has been reduced to an amount equal to or
less than 50 per cent o f the value o f the property with respect to
which such credit was extended or ( 2 ) will fully liquidate the original
principal amount of such credit not later than the date o f the maturity
o f the credit through substantially equal monthly, quarterly, semi­
annual, or annual payments covering principal and interest or through
substantially equal monthly, quarterly, semiannual, or annual p a y ­
ments o f principal. The value referred to in the preceding sentence
shall be determined as o f the date the credit was extended in the
manner provided in section 2 (i) o f the regulation. I f the amount of
the credit when extended is not more than 50 per cent o f such value,
such credit shall not be subject to the amortization provisions o f this
paragraph.
SCHEDULE II. M U L T I-U N IT RESIDENTIAL PROPERTY

Maximum Loan Value.— F or the purposes of Regulation X , maxi­
mum loan values for all multi-unit residential property and m ajor
additions and m ajor improvements to multi-unit residences shall be
determined as follows: ( 1 ) determine the “ value” o f the multi-unit
residential property, or m ajor addition or m ajor improvement to a
multi-unit residence, as the case may be, in accordance with section
2 (t) o f the regulation; ( 2 ) divide this “ value” by the number of
fam ily units in order to determine the “ value per fam ily unit” ; (3)




REGULATION X

22

determine the “ maximum loan value per fam ily unit” from the table
below ; (4) m ultiply the “ maximum loan value per fam ily unit” by
the number o f fam ily units in order to determine the maximum loan
value o f the multi-unit residential property, or the m ajor addition or
m ajor improvement, as the case may be. Where a m ajor addition or
m ajor improvement will change the number o f fam ily units, the “ value
per fam ily unit” shall be computed on the basis o f the number of
family units which the multi-unit residence will contain after the
addition or improvement has been completed. In the case o f credit
extended with respect to multi-unit residential property involving
more than one such multi-unit residence, the maximum loan value shall
be applied separately with respect to each such multi-unit residence or
with respect to the entire property, at the election o f the Registrant.

I f the “ value per family unit” is

The “ maximum loan value per
family unit” is

N ot more than $7,000

8 3 % of “ value per family unit"

M ore than $7,000 but not more
than $15,000

$5,810 plus 5 3 % of excess of
“ value per family unit” over
$7,000

M ore than $15,000 but not more
than $23,500

$10,050 plus 2 0 % of excess of
“ value per family unit” over
$15,000

Over $23,500

5 0 % of “ value per family unit”
SCHEDULE III.

N ONRESIDENTIAL PROPERTY

Maximum Loan Value.— For the purposes o f Regulation X , the
maximum loan value o f any nonresidential property or m ajor addition
or m ajor improvement to a nonresidential structure shall be 50 per
cent of the “ value” o f the property, or the m ajor addition or m ajor
improvement, determined in accordance with section 2 (i) o f this regu­
lation. In the case o f credit extended with respect to nonresidential
property involving more than one nonresidential structure, the maxi­
mum loan value may be applied separately with respect to each such
structure, or with respect to the entire property, at the election of the
Registrant.
Maturity.— For the purposes o f Regulation X , the following maturity
requirement is prescribed for credit with respect to nonresidential
property and m ajor additions and m ajor improvements to nonresiden-




R E G U L A T IO N

X

23

tial structures: N o such credit subject to the regulation shall have a
maturity of more than 25 years from the date such credit is extended.
Amortization.— For the purposes o f Regulation X , the following
amortization requirement is prescribed for credit with respect to non­
residential property and major additions and m ajor improvements to
nonresidential structures: W ith respect to every such credit subject to
the regulation, amortization payments shall be required which will
fully liquidate the original principal amount of such credit not later
than the date o f the maturity o f the credit through substantially equal
monthly, quarterly, semiannual, or annual payments covering prin­
cipal and interest or through substantially equal monthly, quarterly,
semiannual, or annual payments o f principal.




L IST O F F E D E R A L R E S E R V E B AN KS AND BRAN CHES
Address

F ederal R eserv e Bank o f
B O ST O N

30 Pearl Street. B oston 6. Massachusetts

NEW YORK
Buffalo Branch

33 L iberty Street. N ew Y ork 45. N ew Y ork
270-276 M ain Street. Buffalo 5. N ew Y ork

P H IL A D E L P H IA

925 Chestnut Street. Philadelphia 1. Pennsylvania

CLEVELAND

East 6th Street and Superior Avenue. C leveland 1.
O hio
4th and R a ce Streets, Cincinnati 1. O hio
717 Grant Street. Pittsburgh 19. Pennsylvania

Cincinnati Branch
Pittsburgh Branch

C H IC A G O
D etroit Branch

9th and Franklin Streets, R ich m on d 13. Virginia
Calvert and L exington Streets, B altim ore 3. M aryland
South T ryon and 2nd Streets. Charlotte 1, N oH h
Carolina
104 M arietta Street. Atlanta 3. G eorgia
18th Street and 5th Avenue, N orth, Birm ingham 2,
Alabama
Church and H ogan Streets. Jacksonville 1. Florida
228 3rd Avenue. N orth, Nashville 3. Tennessee
C arondelet and C om m on Streets. N ew Orleans 11,
Louisiana
230 South LaSalle Street. C h icago 90, Illinois
160 Fort Street. W est. D etroit 31, M ichigan

ST . LO UIS
Little R o ck Branch
Louisville Branch
M em phis Branch

411
121
5th
3rd

M IN N E A P O L IS
H elena Branch

73 South 5th Street. M inneapolis 2. M innesota
Park Avenue and Lawrence Street, H elena, M ontana

K A N SA S C IT Y

10th Street and Grand Avenue. Kansas C ity 18, M is­
souri
17th and Arapahoe, D enver 17. C olora d o
226 W est 3rd Street, Oklahom a C ity 1. Oklahom a
1701-5 D odge Street, Omaha 2. Nebraska

R IC H M O N D
Baltim ore Branch
Charlotte Branch
ATLANTA
Birm ingham Branch
Jacksonville Branch
Nashville Branch
N ew Orleans Branch

D enver Branch
O klahom a C ity Branch
Omaha Branch

Locust Street, St. Louis 2. M issouri
W est 3rd Street. Little R ock . Arkansas
and M arket Streets. Louisville 1. K entucky
and Jefferson Streets. M em phis 1, Tennessee

DALLAS
El Paso Branch
H ouston Branch
San A n ton io Branch

W o o d and Akard Streets. D allas 13. Texas
351 M yrtle Avenue. E l Paso. Texas
1301 Texas Avenue. H ouston 1, Texas
N avarro and V illita Streets. San A n ton io 6. Texas

S A N F R A N C IS C O

Sacram ento and Sansom e Streets, San Francisco 20,
California
409 W est O lym pic Boulevard. Loe Angeles 54. C ali­
fornia
6th and Oak Streets, Portland 8. Oregon
70 East South T em p le Street. Salt Lake C ity 9. Utah
2nd A venue and Spring Street. Seattle 14, W ashington

Los Angeles Branch
Portland Branch
Salt Lake C ity Branch
Seattle Branch




FEDERAL RESERVE SYSTEM
BOUNDARIES OF F E D E R A L R E S E R V E D IS T R IC T 9
AND T H E I R B R A N C H T E R R I T O R I E S

E = 3 ---BOUNDARIES OF FE DE RAL RESERVE DISTRICTS
------------BOUNDARIES OF FED ERAL RESERVE BRANCH TERRITORIES
•

BOARD OF GOVERNORS OF T H E FE DE RAL RESERVE SY STEM

•

FE D ER A L RESER VE BANK OTIES

•

FEDERAL RESERVE BRANCH CfTKS




octo t e n t n i l
moa no o r to v tm o f t o r Tu t r r o r m i n t s t t r t t r m H


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102