20-1541

20-1541. Definitions

In this article, unless the context otherwise requires:

1. "Authorized real estate security" means either:

(a) Any amortized note, bond or other evidence of indebtedness that is secured by
both a mortgage, deed of trust or other instrument that constitutes or is equivalent to a
first lien or charge on real estate and the balance on any pledged cash account or
collateralized guaranty agreement that is contracted for by a parent, blood relative,
employer or nonprofit corporation for the benefit of the borrower if all of the following
apply:

(i) The loan amount does not exceed one hundred three per cent of the fair market
value of the combined security at the time that the loan is made where any percentage
greater than one hundred per cent is used to finance fees and closing costs on the
indebtedness.

(ii) The pledged cash account or collateralized guaranty agreement does not exceed
thirty-five per cent of the fair market value of the real estate at the time the loan is
made.

(iii) The lender has a first position lien on the pledged cash account or
collateralized guaranty agreement.

(iv) The loan amount does not exceed the fair market value of the real estate at
the time the loan is made plus three per cent for financing fees and closing costs.

(v) The requirements of subdivision (b) of this paragraph are met.

(b) Any amortized note, bond or other evidence of indebtedness that does not exceed
one hundred three per cent of the fair market value of the real estate and that is
secured by any mortgage, deed of trust or other instrument that constitutes, or is
equivalent to, a first lien or charge on real estate if:

(i) The real estate loan secured in such manner is one of a type which a bank, a
savings and loan association or an insurance company, which is supervised and regulated
by a department of this state or an agency of the federal government, is authorized to
make, or would be authorized to make, disregarding any requirement applicable to such an
institution that the amount of the loan not exceed a certain percentage of the value of
the real estate.

(ii) The improvement on such real estate is a building or buildings designed for
occupancy as specified by paragraph 4, subdivisions (a) and (b) of this section.

(iii) The lien on such real estate may be subject to and subordinate to the lien of
any public bond, assessment or tax, when no installment, call or payment of or under such
bond, assessment or tax is delinquent, or to any outstanding mineral, oil, water or
timber rights, rights-of-way, easements or rights-of-way of support, sewer rights,
building restrictions or other restrictions or covenants, conditions or regulations of
use or outstanding leases upon such real property under which rents or profits are
reserved to the owner of such real property.

2. "Contingency reserve" means an additional premium reserve established to protect
policyholders against the effect of adverse economic cycles.

3. "Minimum policyholder position" means the amount computed pursuant to section
20-1550.

4. "Mortgage guaranty insurance" means insurance against financial loss by reason
of nonpayment of:

(a) Principal, interest or other sums agreed to be paid under the terms of any note
or bond or other evidence of indebtedness secured by a mortgage, deed of trust or other
instrument constituting a lien or charge on real estate if the improvement on such real
estate is a residential building or a condominium unit or buildings designed for
occupancy by not more than four families.

(b) Principal, interest or other sums agreed to be paid under the terms of any
note, bond or other evidence of indebtedness secured by a mortgage, deed of trust or
other instrument constituting a lien or charge on real estate if the improvement on such
real estate is a building or buildings designed for occupancy by five or more families or
designed to be occupied for industrial or commercial purposes.

(c) Rent or other sums agreed to be paid under the terms of a written lease for the
possession, use or occupancy of real estate if the improvement on such real estate is a
building or buildings designed to be occupied for industrial or commercial purposes.

5. "Policyholder position" means the contingency reserve prescribed in section
20-1556 and surplus as regards policyholders.