KRS 99A.060: Special endorsements on policies of mortgage guaranty insurance.

(1) The commissioner of the Department of Insurance shall approve the issuance of

special endorsements on policies of mortgage guaranty insurance by an insurer

pursuant to this section. The commissioner of the Department of Insurance within

ten (10) days of ap proval shall notify the executive director of the Kentucky

Housing Corporation of the name of the insurer.

(2) No insurer shall be authorized to issue special endorsements except upon

submission of an application to and approval of such application by the

commissioner of the Department of Insurance. In granting such applications the

commissioner of the Department of Insurance shall consider:

(a) The financial condition of the insurer;

(b) The percentage of defaulted loans insured by the insurer within the p ast five

(5) years; and

(c) Such other standards as prescribed by the commissioner of the Department of

Insurance.

(3) Upon approval by the commissioner of the Department of Insurance, the insurer

may issue special endorsements on policies of mortgage guar anty insurance

covering that portion of a mortgage or rehabilitation loan which exceeds ninety

percent (90%) but is less than one hundred twenty -five percent (125%) of the

appraised value of the residential building and the property on which it is located

after completion of the rehabilitation.

(4) An insurer shall issue a special endorsement only upon certification by the

mortgagee that:

(a) The residential property subject to the mortgage or rehabilitation loan is

located within the boundaries of a neighb orhood development zone

established pursuant to KRS 99A.020;

(b) The mortgagor is unable to secure the necessary funds for rehabilitation upon

reasonable terms and conditions without the guaranty provided by the special

endorsement;

(c) The loan is an acce ptable risk, taking into consideration the need for the

rehabilitation, the security for the loan or loans, and the ability of the

mortgagor to repay the mortgage or rehabilitation loan; and

(d) The mortgage or rehabilitation loan transaction complies with such other

terms, conditions and restrictions as may be prescribed by the executive

director of the Kentucky Housing Corporation.

(5) Each mortgagee who holds a mortgage covered by a policy of mortgage guaranty

insurance with a special endorsement pursuan t to this section shall submit a

quarterly report to the executive director of the Kentucky Housing Corporation

listing each mortgage or rehabilitation loan covered by such special endorsement

and the status of such mortgage or rehabilitation loan.

(6) The commissioner of the Department of Insurance in his discretion or when

requested by the executive director of the Kentucky Housing Corporation as needed

to protect the mortgage guaranty fund may withdraw the approval to an insurer to

issue special endorsements on policies of mortgage guaranty insurance.

(7) Any insurer subject to approval by the commissioner of the Department of

Insurance may charge a premium for the special endorsement issued pursuant to this

section, of which sixty-six percent (66%) shall be remitted to the executive director

of the Kentucky Housing Corporation to be used pursuant to KRS 99A.080.