§ 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:

Terms Used In N.Y. Insurance Law 6503

  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Deed: The legal instrument used to transfer title in real property from one person to another.
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
  • Mortgagor: The person who pledges property to a creditor as collateral for a loan and who receives the money.
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.

(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 8 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 8 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.

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