N.Y. Insurance Law § 6501: Definitions

§ 6501. Definitions. In this article:

(a) "Mortgage guaranty insurance" means insurance against financial

loss by reason of nonpayment of any sum required to be paid under the

terms of any instrument of indebtedness secured by a lien on real

estate.

(b) "Mortgage insurer" means a person licensed to transact the

business of mortgage guaranty insurance in this state.

(c) "Authorized real estate security" means:

(1) an amortized instrument of indebtedness evidencing a loan secured

by a first lien on real estate which at the time the loan is made is not

less than eighty percent but not more than one hundred three percent of

the fair market value of the real estate with any percentage in excess

of one hundred percent being used to finance the fees and closing costs

on such indebtedness, except, however, for reverse mortgage loans made

pursuant to sections two hundred eighty and two hundred eighty-a of the

real property law; provided that:

(A) the loan is one which a regulated mortgage investor is authorized

to make;

(B) the improvement is a residential building or buildings designed

for occupancy by not more than four families or is a condominium unit;

(C) the lien may be subordinate to:

(i) the lien of any public bond, assessment, or tax, when no

installment, call or payment of or under such bond, assessment or tax is

delinquent; and

(ii) outstanding mineral, oil or timber rights, easements or other

restrictions on use, or leases under which rents or profits are

reserved;

(2) an amortized instrument of indebtedness evidencing a loan secured

by a junior lien on real estate which, when combined with all existing

mortgage loan amounts at the time the loan is made, is not more than one

hundred percent of the fair market value of the real estate; provided

that:

(A) in determining the foregoing one hundred percent limitation, if

the loan securing the junior lien is an equity line of credit loan, the

full amount of the line of credit to be secured by the junior lien shall

be considered the amount of the loan;

(B) the loan is one which a regulated mortgage investor is authorized

to make;

(C) the improvement is a residential building or buildings designed

for occupancy by not more than four families or is a condominium unit;

(D) in addition to any senior liens securing any amortized instruments

of indebtedness on real estate, qualifying under paragraph one of this

subsection, the junior lien may be subordinate to:

(i) the lien of any public bond, assessment, or tax, when no

installment, call or payment of or under such bond, assessment or tax is

delinquent; and

(ii) outstanding mineral, oil or timber rights, easements or other

restrictions on use, or leases under which rents or profits are

reserved;

(3) an amortized instrument of indebtedness evidencing a loan secured

by an ownership interest in, and a proprietary lease from, a corporation

or partnership formed for the purpose of the cooperative ownership of

real estate in this state and which at the time the loan is made is not

less than eighty percent nor more than one hundred percent of the

purchase price of the ownership interest and the proprietary lease, if

the loan is one which a regulated mortgage investor is authorized to

make. In this article unless the context clearly requires otherwise, any

reference to a mortgagor shall include an owner of such an ownership

interest as described in this paragraph and any reference to a lien or

mortgage shall include the security interest held by a lender in such an

ownership interest;

(4) an amortized instrument of indebtedness, evidencing a loan which

otherwise conforms to the requirements of paragraph one or three of this

subsection, and which has been amortized to less than eighty percent of

the fair market value of the real estate at the time said loan was made;

provided the borrower is not obligated directly or indirectly to pay any

premium for mortgage guaranty insurance authorized under this article,

and the instrument would be ineligible for sale to the Federal National

Mortgage Association, the Government National Mortgage Association, the

Federal Home Loan Mortgage Corporation or any other secondary mortgage

market instrumentality or facility as the superintendent of financial

services determines, without such mortgage guaranty insurance; or

(5) where a loan is being made as part of the state of New York

mortgage agency's forward commitment program as defined in title

seventeen of article eight of the public authorities law, the lesser

percentage set forth in paragraphs one and three of this subsection

shall be sixty percent and the range of such percentages shall apply to

the fair market value at the time the loan was made of the real estate

or the ownership interest in a corporation or partnership formed for the

purpose of cooperative ownership of real estate, as the case may be.

(d) "Contingency reserve" means an additional premium reserve

established to protect policyholders against the effect of adverse

economic cycles.

(e) "Policyholders surplus" means the aggregate of capital, surplus

and contingency reserve if a stock insurance company or, if a mutual

insurance company, the aggregate of surplus and contingency reserve.

(f) "Regulated mortgage investor" means a bank, trust company, savings

bank, savings and loan association or insurance company, which is

supervised by a department of this state or an agency of the federal

government and which invests in authorized real estate securities.

(g) "Segregated trust" is a trust which:

(1) is established by a reinsurer for the benefit of a mortgage

insurer;

(2) has a trustee domiciled in the mortgage insurer's state of

domicile, domiciled in New York or approved by the superintendent;

(3) is funded by assets permitted by article fourteen of this chapter

for the loss reserve required by paragraph three of subsection (a) of

section six thousand five hundred two of this article and for the

unearned premium reserve required by section one thousand three hundred

five of this chapter;

(4) is funded by either cash, the types of reserve investments

specified in paragraphs one and two of subsection (a) of section one

thousand four hundred four of this chapter or by tax and loss bonds

purchased pursuant to § 832(e) of the Internal Revenue Code, for the

greater of the amount of the contingency reserve required by paragraph

two of subsection (a) of section six thousand five hundred two of this

article or paragraph one of subsection (b) of section six thousand five

hundred two of this article;

(5) makes quarterly and annual reports to the superintendent;

(6) is subject to withdrawals only by, and under the control of, the

ceding mortgage insurer;

(7) permits examination by the superintendent;

(8) designates the superintendent for service of process;

(9) is governed by an agreement which, together with all amendments,

shall be approved by the commissioner or superintendent of insurance of

the mortgage insurer's domicile, and shall be provided to the

superintendent, who shall have the right to disapprove of the agreement.

Such agreement shall be deemed approved by the superintendent unless

disapproved within thirty days from the date provided to the

superintendent; and

(10) is in compliance with any other regulations or requirements of

the superintendent relating to trust agreements.