2023 New York Laws › ISC - Insurance › Article 65 - Mortgage Guaranty Insurance Companies › 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.