2023 Colorado Revised Statutes › Title 10 - INSURANCE (§§ 10-1-101 — 10-23-110) › REGULATION OF INSURANCE COMPANIES (§§ 10-3-101 — 10-3.5-111) › Article 3 - REGULATION OF INSURANCE COMPANIES (§§ 10-3-101 — 10-3-1716) › Part 2 - FINANCIAL AFFAIRS (§§ 10-3-201 — 10-3-244) › Section 10-3-216 - Mortgage loans

(1)
A domestic insurance company may acquire, either directly or indirectly, obligations secured by mortgages on real estate located in the United States or Canada, but the company shall not acquire a mortgage loan that is not secured by a first lien unless the company is the holder of the first lien. Authority to acquire a mortgage loan is subject to the following:
(a)
(I)
At the time of acquisition, no such loan shall exceed:
(A)
Ninety percent of the value of the real property if the mortgage loan is secured by a purchase-money mortgage or like security received by the insurer upon disposition of the real property;
(B)
Eighty percent of the value of the real property if the mortgage loan is secured by commercial real property or by real property that is improved with a residential building designed for occupancy by five or more dwelling units and if the mortgage loan: Requires immediate scheduled payment in periodic installments of principal and interest; has an amortization period of thirty years or less; and requires periodic payments to be made no less frequently than annually. In addition, each periodic payment must be sufficient to assure that, at all times, the outstanding principal balance of the mortgage loan does not exceed the outstanding principal balance that would be outstanding under a mortgage loan with the same original principal balance, with the same interest rate, and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans permitted under this sub-subparagraph (B) are permitted notwithstanding the fact that they provide for a payment of the principal balance prior to the end of the period of amortization of the loan. If the loan meets all other requirements of this sub-subparagraph (B), acceptable private mortgage insurance has been obtained, and the mortgage loan is secured by real property that is improved with a residential building, including a condominium, designed for occupancy by not more than four dwelling units, the loan may be up to ninety-seven percent of the value of the real property.
(C)
Seventy-five percent of the value of the real property if the mortgage loan is secured by a mortgage that does not meet the requirements set forth in sub-subparagraph (A) or (B) of this subparagraph (I).
(II)
In all cases, value must be evidenced by the written appraisal of a qualified real estate appraiser, who may be an employee of the company; except that, in the case of property used for the production of oil, of gas, or of other minerals, the appraisal must be made by an engineer or geologist qualified in the relevant field. For commercial properties of over one hundred thousand dollars in value, the appraiser must be a member of an institute of real estate appraisers, or its equivalent.
(b) and (c)
Repealed.
(d)
Any improvements must be insured against casualty loss, for the benefit of the lending company, by a reliable property and casualty insurance company for an amount not less than the unpaid balance of the obligation or the insurable value of the property, whichever is less.
(e)
The company must hold the documents necessary to evidence the company's ownership of the company's liens. If, under the law of the jurisdiction where the real property is situated, it is necessary to the validity of the lien to record a mortgage or assignment of the lien, the company must record the mortgage or assignment in compliance with such law.
(f)
The entire mortgage loan obligation must be owned by the company; except that the company may own this type of obligation in common with other participants if, at the time of the company's investment, each participant is:
(I)
A bank whose depositors are insured by the federal deposit insurance corporation;
(II)
A savings and loan association whose members are insured by the federal deposit insurance corporation or any successor agency thereto;
(III)
A trust for a pension or other benefit plan for employees qualified under section 401 of the federal "Internal Revenue Code of 1986", as amended;
(IV)
An insurance company organized in any state of the United States, the District of Columbia, or any province of Canada; or
(V)
A corporation or association owned wholly by one or more of the entities or one or more wholly owned subsidiaries of the entities specified in subparagraph (I), (II), or (IV) of this paragraph (f).
(g)
Repealed.
(h)
If before a loan is paid the value of the real property, including any improvements thereon, securing the loan depreciates, the loan may nevertheless be carried as an admitted asset, but not for an amount exceeding seventy-five percent of the current value of the real property.
(i)
The maximum amount of a loan made, directly or indirectly, to any one obligor that may be an admitted asset of the company under this section must not exceed two percent of the company's admitted assets.
(j)
The aggregate amount of investments of a company that may be admitted assets under this section must not exceed fifty percent of the company's admitted assets.
(2)
(a)
A domestic insurance company may acquire a mortgage loan secured by a mortgage on real estate located in a foreign jurisdiction having a sovereign debt rating of "1" from the securities valuation office of the National Association of Insurance Commissioners if the mortgage loan otherwise meets the requirements of subsection (1) of this section; except that the aggregate amount of foreign mortgage loans that may be admitted assets under this subsection (2)(a) must not exceed ten percent of the company's admitted assets.
(b)
This subsection (2) does not apply to a jurisdiction described in subsection (1) of this section.
Amended by 2020 Ch. 87,§2, eff. 9/14/2020.
Amended by 2014 Ch. 396,§1, eff. 8/6/2014.
L. 69: p. 492, § 5. C.R.S. 1963: § 72-2-22. L. 71: p. 708, § 1. L. 73: pp. 839, 840, §§ 1, 2. L. 75: (1)(j) amended, p. 339, § 1, effective June 26; (1)(f) R&RE, p. 335, § 2, effective July 1. L. 81: (1)(a) amended, p. 532, § 1, effective April 1; (1)(f) and (1)(j) amended, p. 528, § 3, effective July 1. L. 93: (1)(f)(II) amended, p. 1772, § 25, effective June 6; (1)(i) and (1)(j) amended, p. 574, § 2, effective July 1. L. 2000: (1)(f)(III) amended, p. 1839, § 7, effective August 2. L. 2004: (1)(f)(II) amended, p. 148, § 51, effective July 1. L. 2014: IP(1), (1)(a), and (1)(e) amended and (1)(b) and (1)(g) repealed, (SB 14-209), ch. 1995, p. 1995, § 1, effective August 6. L. 2020: IP(1), (1)(a)(II), (1)(d), (1)(e), IP(1)(f), (1)(i), and (1)(j) amended, (1)(c) repealed, and (2) added, (HB 20-1136), ch. 348, p. 348, § 2, effective September 14.
(1) Section 10 of chapter 87 (HB 20-1136), Session Laws of Colorado 2020, provides that:
(a) The act changing this section applies to investments made on or after September 14, 2020; and
(b) On or after January 1, 2021, the act changing this section applies to all investments of an insurer.