(2) Loans shall be secured by note specifying the fund from which the loan is made and mortgage to the Department of State Lands on improved land within this state, or upon range or grazing land therein. Except as provided in ORS 273.815, the security for a secured loan shall be not less than twice the value of the amount loaned, and, except as otherwise provided in subsection (3) of this section, shall be of unexceptional title and free from all encumbrances. A secured loan may be secured by a deposit of obligations of the United States or of bonds or warrants of this state of a face value of not less than 25 percent in excess of such loans.
(3) The department is not prohibited by subsection (2) of this section from making a secured loan merely because the land securing the loan is:
(a) Situated in an irrigation district, taking into consideration the amount of bonded indebtedness of the district as compared with the valuation of the real property of the district.
(b) Subject to a reservation of mineral rights.
(c) Subject to a lease of any kind.
(d) Subject to a statutory lien for public improvements.
(e) Subject to an easement. [Amended by 1955 c.352 §1; 1959 c.90 §1; 1963 c.326 §1; 1963 c.517 §6; 1965 c.229 §1; 1965 c.532 §6; 2015 c.513 §11]