KRS 154.20-530: Mortgage insurance corporation -- Trust account.

The authority may cause to be established, by any number of natural persons not in excess

of fifteen (15), a Kentucky nonprofit corporation which shall have as its purpose the

insurance of mortgage loans entered into by and between lenders and persons or

corporations located in Kentucky and offering gainful employment to the inhabitants of

the Commonwealth. The mortgage insurance corporation shall not be deemed to have

been established for the purposes of this chapter unless and until its articles of

incorporation shall have been approved by the authority, and if so approved, no approval

by the Department of Insurance shall be required. Such articles of incorporation, in order

to secure such approval, shall contain, inter alia, the following provisions:

(1) The corporation shall be designated "Kentucky Mortgage Insurance and Guarantee

Corporation;"

(2) No member of the board of directors of the insurance corporation shall receive any

emoluments for his services thereon, except that he may be reimbursed for

expenditures incurred by him in the performance of duties for the insurance

corporation;

(3) All assistance fees received by the insurance corporation shall be held in a trust

account in one or more banks and trust companies having a principal place of

business in the Commonwealth;

(4) The trust account shall be held for the security of the holders of mortgage loans or

bonds guaranteed by the insurance corporation, except that provision may be made

for the payment of expenses of the insurance corporation from the trust account or a

segregated portion thereof;

(5) The trust account shall be governed by a trust agreement entered into by and

between the insurance corporation and the trustee or trustees. Said trust agreement

shall contain such lawful provisions an d limitations as may be deemed appropriate,

and may include a pledge of premiums and other moneys deposited in the fund to

the payment of the obligations insured by the insurance corporation; and

(6) The trust agreement shall make appropriate provisions fo r the investment by the

trustee or trustees of funds in the trust account for the benefit of the insurance

corporation and of any claimants against the trust account. The moneys so pledged

and thereafter received by the trust account shall be subject to th e lien of such

pledge without any further act, and the lien of such pledge shall be valid and

binding against all parties in accordance with the terms of the trust agreement.