§ 6501 — Definitions

§ 6501. Definitions. In this article:\n (a) "Mortgage guaranty insurance" means insurance against financial\nloss by reason of nonpayment of any sum required to be paid under the\nterms of any instrument of indebtedness secured by a lien on real\nestate.\n (b) "Mortgage insurer" means a person licensed to transact the\nbusiness of mortgage guaranty insurance in this state.\n (c) "Authorized real estate security" means:\n (1) an amortized instrument of indebtedness evidencing a loan secured\nby a first lien on real estate which at the time the loan is made is not\nless than eighty percent but not more than one hundred three percent of\nthe fair market value of the real estate with any percentage in excess\nof one hundred percent being used to finance the fees and closing costs\non such indebtedness, except, however, for reverse mortgage loans made\npursuant to sections two hundred eighty and two hundred eighty-a of the\nreal property law; provided that:\n (A) the loan is one which a regulated mortgage investor is authorized\nto make;\n (B) the improvement is a residential building or buildings designed\nfor occupancy by not more than four families or is a condominium unit;\n (C) the lien may be subordinate to:\n (i) the lien of any public bond, assessment, or tax, when no\ninstallment, call or payment of or under such bond, assessment or tax is\ndelinquent; and\n (ii) outstanding mineral, oil or timber rights, easements or other\nrestrictions on use, or leases under which rents or profits are\nreserved;\n (2) an amortized instrument of indebtedness evidencing a loan secured\nby a junior lien on real estate which, when combined with all existing\nmortgage loan amounts at the time the loan is made, is not more than one\nhundred percent of the fair market value of the real estate; provided\nthat:\n (A) in determining the foregoing one hundred percent limitation, if\nthe loan securing the junior lien is an equity line of credit loan, the\nfull amount of the line of credit to be secured by the junior lien shall\nbe considered the amount of the loan;\n (B) the loan is one which a regulated mortgage investor is authorized\nto make;\n (C) the improvement is a residential building or buildings designed\nfor occupancy by not more than four families or is a condominium unit;\n (D) in addition to any senior liens securing any amortized instruments\nof indebtedness on real estate, qualifying under paragraph one of this\nsubsection, the junior lien may be subordinate to:\n (i) the lien of any public bond, assessment, or tax, when no\ninstallment, call or payment of or under such bond, assessment or tax is\ndelinquent; and\n (ii) outstanding mineral, oil or timber rights, easements or other\nrestrictions on use, or leases under which rents or profits are\nreserved;\n (3) an amortized instrument of indebtedness evidencing a loan secured\nby an ownership interest in, and a proprietary lease from, a corporation\nor partnership formed for the purpose of the cooperative ownership of\nreal estate in this state and which at the time the loan is made is not\nless than eighty percent nor more than one hundred percent of the\npurchase price of the ownership interest and the proprietary lease, if\nthe loan is one which a regulated mortgage investor is authorized to\nmake. In this article unless the context clearly requires otherwise, any\nreference to a mortgagor shall include an owner of such an ownership\ninterest as described in this paragraph and any reference to a lien or\nmortgage shall include the security interest held by a lender in such an\nownership interest;\n (4) an amortized instrument of indebtedness, evidencing a loan which\notherwise conforms to the requirements of paragraph one or three of this\nsubsection, and which has been amortized to less than eighty percent of\nthe fair market value of the real estate at the time said loan was made;\nprovided the borrower is not obligated directly or indirectly to pay any\npremium for mortgage guaranty insurance authorized under this article,\nand the instrument would be ineligible for sale to the Federal National\nMortgage Association, the Government National Mortgage Association, the\nFederal Home Loan Mortgage Corporation or any other secondary mortgage\nmarket instrumentality or facility as the superintendent of financial\nservices determines, without such mortgage guaranty insurance; or\n (5) where a loan is being made as part of the state of New York\nmortgage agency's forward commitment program as defined in title\nseventeen of article eight of the public authorities law, the lesser\npercentage set forth in paragraphs one and three of this subsection\nshall be sixty percent and the range of such percentages shall apply to\nthe fair market value at the time the loan was made of the real estate\nor the ownership interest in a corporation or partnership formed for the\npurpose of cooperative ownership of real estate, as the case may be.\n (d) "Contingency reserve" means an additional premium reserve\nestablished to protect policyholders against the effect of adverse\neconomic cycles.\n (e) "Policyholders surplus" means the aggregate of capital, surplus\nand contingency reserve if a stock insurance company or, if a mutual\ninsurance company, the aggregate of surplus and contingency reserve.\n (f) "Regulated mortgage investor" means a bank, trust company, savings\nbank, savings and loan association or insurance company, which is\nsupervised by a department of this state or an agency of the federal\ngovernment and which invests in authorized real estate securities.\n (g) "Segregated trust" is a trust which:\n (1) is established by a reinsurer for the benefit of a mortgage\ninsurer;\n (2) has a trustee domiciled in the mortgage insurer's state of\ndomicile, domiciled in New York or approved by the superintendent;\n (3) is funded by assets permitted by article fourteen of this chapter\nfor the loss reserve required by paragraph three of subsection (a) of\nsection six thousand five hundred two of this article and for the\nunearned premium reserve required by section one thousand three hundred\nfive of this chapter;\n (4) is funded by either cash, the types of reserve investments\nspecified in paragraphs one and two of subsection (a) of section one\nthousand four hundred four of this chapter or by tax and loss bonds\npurchased pursuant to § 832(e) of the Internal Revenue Code, for the\ngreater of the amount of the contingency reserve required by paragraph\ntwo of subsection (a) of section six thousand five hundred two of this\narticle or paragraph one of subsection (b) of section six thousand five\nhundred two of this article;\n (5) makes quarterly and annual reports to the superintendent;\n (6) is subject to withdrawals only by, and under the control of, the\nceding mortgage insurer;\n (7) permits examination by the superintendent;\n (8) designates the superintendent for service of process;\n (9) is governed by an agreement which, together with all amendments,\nshall be approved by the commissioner or superintendent of insurance of\nthe mortgage insurer's domicile, and shall be provided to the\nsuperintendent, who shall have the right to disapprove of the agreement.\nSuch agreement shall be deemed approved by the superintendent unless\ndisapproved within thirty days from the date provided to the\nsuperintendent; and\n (10) is in compliance with any other regulations or requirements of\nthe superintendent relating to trust agreements.\n