§601.9. Mortgage loans
A.An insurer may acquire, either directly, indirectly through limited partnership
interests and general partnership interests not otherwise prohibited, joint ventures, stock of
an investment subsidiary or membership interests in a limited liability company, trust
certificates, or other similar instruments, obligations secured by mortgages on real estate,
including leasehold estates in improved unencumbered immovable property having an
unexpired term of not less than twenty-one years inclusive of the term which may be
provided by an enforceable option of renewal, situated within the United States. A mortgage
loan which is secured by other than a first lien is authorized under this Section if the insurer
is the holder of the first lien. The obligations held by the ins
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§601.9. Mortgage loans
A. An insurer may acquire, either directly, indirectly through limited partnership
interests and general partnership interests not otherwise prohibited, joint ventures, stock of
an investment subsidiary or membership interests in a limited liability company, trust
certificates, or other similar instruments, obligations secured by mortgages on real estate,
including leasehold estates in improved unencumbered immovable property having an
unexpired term of not less than twenty-one years inclusive of the term which may be
provided by an enforceable option of renewal, situated within the United States. A mortgage
loan which is secured by other than a first lien is authorized under this Section if the insurer
is the holder of the first lien. The obligations held by the insurer and any obligations with an
equal lien priority, shall not, at the time of acquisition of the obligation, exceed:
(1) Eighty percent of the fair market value of the real estate, 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 periodic payments made no less frequently
than annually. Each periodic payment shall be sufficient to assure that at all times the
outstanding principal balance of the mortgage loan shall be not greater than 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 pursuant to this Subsection 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.
(a) The fair market value of the real estate shall be substantiated with an appraisal by
a recognized and experienced real estate appraiser who is a member of a recognized appraisal
organization, which the commissioner of insurance may accept if he is satisfied that the
appraiser is competent and disinterested.
(b) The amount of an obligation required to be included in the calculation of the
loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal
Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their
successors.
(2) As used in this Subsection, "improved unencumbered immovable property" means
all farmland which has been reclaimed and is used for the purpose of husbandry, whether for
tillage, pasture, or improved forestation, and all other immovable property on which
permanent buildings suitable for residence or commercial use are situated, including but not
limited to condominium property, as defined in R.S. 9:1121.101 et seq.
B. These structures shall be insured for an amount not less than the appraised value
of the structures, and the proceeds of the policy shall be payable to and held by the company
or a trustee for its benefit. The insurance shall be continued in force for the duration of the
loan.
C. A mortgage loan that is held by an insurer under R.S. 22:601.2(D) or acquired
pursuant to this Section and is restructured in a manner that meets the requirements of a
restructured mortgage loan in accordance with the NAIC Accounting Practices and
Procedures Manual or its successor publication shall continue to qualify as a mortgage loan
under this Subpart.
D. An insurer shall not acquire an investment pursuant to this Section if, as a result
of and after giving effect to the investment, the aggregate amount of all investments then held
by the insurer pursuant to this Section would exceed five percent of its admitted assets in
mortgage loans covering any one secured location.
E. No insurer shall acquire an investment pursuant to this Section or R.S.
22:601.10(B) if, as a result of and after giving effect to the investment and any guarantees
made by the insurer in connection with the investment, the aggregate amount of all
investments then held by the insurer pursuant to this Section and R.S. 22:601.10(B) plus the
guarantees then outstanding would exceed forty-five percent of its admitted assets.
F. Notwithstanding any other provision of law to the contrary, a domestic insurer is
entitled to the same benefits and exemptions relative to state usury laws, specifically R.S.
9:3500 and 3503, granted to banks and savings and loan associations pursuant to the
Depository Institutions Deregulation and Monetary Control Act of 1980, 12 U.S.C. 1735f-7,
as amended. The rate of interest shall be fixed in writing, and testimonial proof of it shall not
be admitted in any case.