2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 425 - Reserves and Investments for Life Insurance Companies and Related Entities › Subchapter D. Authorized Investments and Transactions for Other Life, Health, and Accident Insurers › Section 425.214. Authorized Investments for All Funds: Loans Secured by Real Property

Sec. 425.214.  AUTHORIZED INVESTMENTS FOR ALL FUNDS: LOANS SECURED BY REAL PROPERTY.  (a)  Subject to this section, an insurer may loan any of the insurer's funds and accumulations and take as collateral a first lien on real property to which the title is valid.
(b)  The amount of a loan secured by a first lien on real property may exceed 75 percent of the property value only if:
(1)  the amount does not exceed 90 percent of the property value and the property contains only a dwelling designed exclusively for occupancy by not more than four families for residential purposes; or
(2)  the amount does not exceed 95 percent of the property value and:
(A)  the property contains only a dwelling designed exclusively for occupancy by not more than four families for residential purposes; and
(B)  the portion of the unpaid balance of the loan that exceeds 80 percent of the property value is guaranteed or insured by a mortgage guaranty insurer authorized to engage in business in this state.
(c)  An insurer may not originate a loan that exceeds 75 percent of the value of the real property securing the loan.
(d)  The aggregate amount of an insurer's loans secured by first liens on real property to any one corporation, company, partnership, individual, or any affiliated person or group may not exceed 10 percent of the insurer's admitted assets.  The amount of any single loan secured by a first lien on real property may not exceed five percent of the insurer's admitted assets.
(e)  The limitations imposed by Subsections (b)-(d) do not apply to a first lien on real property if the commissioner finds that:
(1)  the making or acquiring of the lien is beneficial to and protects the interest of the insurer; and
(2)  no substantial damage to the insurer's policyholders and creditors appears probable from the taking or acquiring of the lien.
(f)  Subject to Subsections (g)-(j), an insurer may loan any of the insurer's funds and accumulations and take as collateral a first lien on a leasehold estate in:
(1)  real property to which the title is valid; and
(2)  improvements located on the property to which the title is valid.
(g)  The term of a loan secured by first lien on a leasehold estate in real property may not, as of the date the loan is made, exceed a period equal to four-fifths of the unexpired term of the leasehold estate.  The term of the leasehold estate may not expire sooner than the 10th anniversary of the expiration of the term of the loan.
(h)  A loan secured by a first lien on a leasehold estate in real property must be payable in equal monthly, quarterly, semiannual, or annual installments on principal and interest during a period not to exceed four-fifths of the unexpired term, as of the date the loan is made, of the leasehold estate.
(i)  The restrictions imposed by this section on the value of the real property securing a loan compared to the amount of the loan, and on the duration of a loan secured by a leasehold estate in real property, do not apply to a loan if:
(1)  the entire amount of the indebtedness is insured or guaranteed in any manner by:
(A)  the United States;
(B)  the Federal Housing Administration under the National Housing Act (12 U.S.C. Section 1701 et seq.), as amended; or
(C)  this state; or
(2)  the difference between the entire amount of the indebtedness and the portion of the loan insured or guaranteed by an entity described by Subdivision (1) does not exceed the amount of a loan permitted by the applicable restriction.
(j)  If any part of the value of buildings is to be included in the value of real property or leasehold estate in real property to attain the minimum authorized value of the security for a loan under this section:
(1)  the buildings must be insured against loss by fire by:
(A)  an insurer authorized to engage in business in the state in which the real property is located; or
(B)  a company recognized as acceptable for that purpose by the insurance regulatory official of the state in which the real property is located;
(2)  the amount of insurance coverage may not be less than 50 percent of the value of the buildings, except that the insurance coverage is not required to exceed the outstanding balance owed to the insurer if the outstanding balance of the loan is less than 50 percent of the value of the buildings; and
(3)  the loss clause under the insurance must be payable to the insurer.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.