California · Financial Code

FIN §7450: (a) An association may make any loan authorized by this division, but the association shall first determine that the type, amount, purpose, and repayment provisions of the loan in relation to the borr

Civil

What this law says, in plain English

An association must determine a loan is financially sound and repayable before issuing it. Loans to directors and officers are permitted subject to regulatory oversight.

Read the full statutory text

(a) An association may make any loan authorized by this division, but the association shall first determine that the type, amount, purpose, and repayment provisions of the loan in relation to the borrower’s resources and credit standing support the reasonable belief that the loan will be financially sound and will be repaid according to its terms, and that the loan is not otherwise unlawful. (b) Subject to any regulations of the commissioner, an association may make or acquire loans directly or indirectly to or from any director, officer, affiliated person, or any parent or subsidiary. Loans made or acquired, directly or indirectly, the proceeds of which are intended to inure or have inured to the benefit of these parties are subject to the same regulations.

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This page is legal information, not legal advice. Code text is sourced from official publications and may lag amendments — always confirm at the official source linked above. Plain-English summaries and relationship data are AI-derived and reviewed on an ongoing basis; verify with a licensed attorney before acting.