2023 New York Laws › ISC - Insurance › Article 65 - Mortgage Guaranty Insurance Companies › 6503 - Limitations.

§ 6503. Limitations. (a) Mortgage guaranty insurance may be transacted
in  this  state only by a company licensed to do so and shall be written
only:
(1) to insure loans secured by authorized real estate securities; or
(2) to insure pools of loans secured  by  instruments  constituting  a
first  lien on real estate and evidenced by pass-through certificates or
other instruments, provided no part of the premiums for  such  insurance
shall  be  paid  directly  or  indirectly by the mortgagors and mortgage
guaranty insurance for such pools of loans shall not be subject  to  the
provisions of subsection (c) of this section; or
(3) to insure a portfolio of loans secured by instruments constituting
a junior lien on real estate.
(b)  A  mortgage insurer shall not insure exposure on loans secured by
liens on properties in a single housing tract or a contiguous  tract  in
excess  of ten percent of its policyholders surplus. In calculating such
exposure, the applicable claim settlement option shall  be  applied  and
applicable   reinsurance  shall  be  deducted.  "Contiguous"  means  not
separated by more than one-half mile.
(c) A mortgage insurer providing coverage on loans secured by a  first
lien  on  real  estate  may  elect to pay the entire indebtedness to the
insured and acquire title to the  authorized  real  estate  security.  A
mortgage insurer providing coverage on loans secured by a junior lien on
real  estate  may  elect  to  insure  a  portfolio  of  loans secured by
instruments constituting a junior lien on real estate.
(d) Except for loans made pursuant to the state of New  York  mortgage
agency's  forward  commitment  program  as defined in title seventeen of
article eight of the public authorities law, a mortgagor  shall  not  be
required to pay, directly or indirectly, the cost of continuing mortgage
guaranty insurance on a loan secured by a first lien on real estate when
the   unpaid  principal  amount  of  the  real  estate  loan  represents
seventy-five percent or less of the real estate's appraised value at the
time the loan was made or such higher percentage of such appraised value
as may be established from time to time by  general  regulation  of  the
superintendent of financial services, which shall consider:
(1) the cost to mortgagors and the necessity of maintaining insurance;
(2)  the  applicable  mortgage  insurance  requirements of the Federal
National  Mortgage  Association,  the   Government   National   Mortgage
Association  and the Federal Home Loan Mortgage Corporation to be met as
a precondition to the sale thereto by a regulated mortgage investor; and
(3) the need in light of prevailing economic conditions for  regulated
mortgage investors to resell such security.
(e) For loans made pursuant to the state of New York mortgage agency's
forward  commitment  program  as  defined  in title seventeen of article
eight of the public authorities law, a mortgagor shall not  be  required
to pay, directly or indirectly, the cost of continuing mortgage guaranty
insurance  on  a  loan  secured  by a first lien on real estate when the
unpaid principal amount of the real estate loan represents sixty percent
or less of the fair market value of the real estate at the time the loan
was made.
(f) A mortgagor shall not be required to pay, directly or  indirectly,
the  cost  of  mortgage guaranty insurance on a loan secured by a junior
lien on real estate when the indebtedness evidencing that loan, combined
with all existing mortgage loan amounts at the time the loan is made, is
less than sixty percent of the fair market value of the real  estate  at
the time the junior loan is made.
(g)  A mortgage insurer may not obtain a deficiency judgment against a
borrower in the event of foreclosure.
(h) This article shall not limit the right of any mortgage insurer  to
impose  reasonable requirements upon the lender with regard to the terms
of any note or bond or other  evidence  of  indebtedness  secured  by  a
mortgage or deed of trust.