Section 6501. Definitions

In this article:
    (a) "Mortgage  guaranty  insurance"  means insurance against financial
  loss by reason of nonpayment of any sum required to be  paid  under  the
  terms  of  any  instrument  of  indebtedness  secured  by a lien on real
  estate.
    (b) "Mortgage  insurer"  means  a  person  licensed  to  transact  the
  business of mortgage guaranty insurance in this state.
    (c) "Authorized real estate security" means:
    (1)  an amortized instrument of indebtedness evidencing a loan secured
  by a first lien on real estate which at the time the loan is made is not
  less than eighty percent but not more than one hundred three percent  of
  the  fair  market value of the real estate with any percentage in excess
  of one hundred percent being used to finance the fees and closing  costs
  on  such  indebtedness, except, however, for reverse mortgage loans made
  pursuant to sections two hundred eighty and two hundred eighty-a of  the
  real property law; provided that:
    (A)  the loan is one which a regulated mortgage investor is authorized
  to make;
    (B) the improvement is a residential building  or  buildings  designed
  for occupancy by not more than four families or is a condominium unit;
    (C) the lien may be subordinate to:
    (i)  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; and
    (ii) outstanding mineral, oil or timber  rights,  easements  or  other
  restrictions  on  use,  or  leases  under  which  rents  or  profits are
  reserved;
    (2) an amortized instrument of indebtedness evidencing a loan  secured
  by  a  junior lien on real estate which, when combined with all existing
  mortgage loan amounts at the time the loan is made, is not more than one
  hundred percent of the fair market value of the  real  estate;  provided
  that:
    (A)  in  determining  the foregoing one hundred percent limitation, if
  the loan securing the junior lien is an equity line of credit loan,  the
  full amount of the line of credit to be secured by the junior lien shall
  be considered the amount of the loan;
    (B)  the loan is one which a regulated mortgage investor is authorized
  to make;
    (C) the improvement is a residential building  or  buildings  designed
  for occupancy by not more than four families or is a condominium unit;
    (D) in addition to any senior liens securing any amortized instruments
  of  indebtedness  on real estate, qualifying under paragraph one of this
  subsection, the junior lien may be subordinate to:
    (i) 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; and
    (ii)  outstanding  mineral,  oil  or timber rights, easements or other
  restrictions on  use,  or  leases  under  which  rents  or  profits  are
  reserved;
    (3)  an amortized instrument of indebtedness evidencing a loan secured
  by an ownership interest in, and a proprietary lease from, a corporation
  or partnership formed for the purpose of the  cooperative  ownership  of
  real  estate in this state and which at the time the loan is made is not
  less than eighty percent nor  more  than  one  hundred  percent  of  the
  purchase  price  of the ownership interest and the proprietary lease, if
  the loan is one which a regulated mortgage  investor  is  authorized  to
  make. In this article unless the context clearly requires otherwise, any
  reference  to  a  mortgagor  shall include an owner of such an ownership

  interest as described in this paragraph and any reference to a  lien  or
  mortgage shall include the security interest held by a lender in such an
  ownership interest;
    (4)  an  amortized instrument of indebtedness, evidencing a loan which
  otherwise conforms to the requirements of paragraph one or three of this
  subsection, and which has been amortized to less than eighty percent  of
  the fair market value of the real estate at the time said loan was made;
  provided the borrower is not obligated directly or indirectly to pay any
  premium  for  mortgage guaranty insurance authorized under this article,
  and the instrument would be ineligible for sale to the Federal  National
  Mortgage  Association, the Government National Mortgage Association, the
  Federal Home Loan Mortgage Corporation or any other  secondary  mortgage
  market  instrumentality  or  facility  as  the banking board determines,
  without such mortgage guaranty insurance; or
    (5) where a loan is being made as  part  of  the  state  of  New  York
  mortgage  agency's  forward  commitment  program  as  defined  in  title
  seventeen of article eight of the public  authorities  law,  the  lesser
  percentage  set  forth  in  paragraphs  one and three of this subsection
  shall be sixty percent and the range of such percentages shall apply  to
  the  fair  market value at the time the loan was made of the real estate
  or the ownership interest in a corporation or partnership formed for the
  purpose of cooperative ownership of real estate, as the case may be.
    (d) "Contingency  reserve"  means  an   additional   premium   reserve
  established  to  protect  policyholders  against  the  effect of adverse
  economic cycles.
    (e) "Policyholders surplus" means the aggregate  of  capital,  surplus
  and  contingency  reserve  if  a stock insurance company or, if a mutual
  insurance company, the aggregate of surplus and contingency reserve.
    (f) "Regulated mortgage investor" means a bank, trust company, savings
  bank, savings and  loan  association  or  insurance  company,  which  is
  supervised  by  a  department  of this state or an agency of the federal
  government and which invests in authorized real estate securities.
    (g) "Segregated trust" is a trust which:
    (1) is established by a  reinsurer  for  the  benefit  of  a  mortgage
  insurer;
    (2)  has  a  trustee  domiciled  in  the  mortgage  insurer's state of
  domicile, domiciled in New York or approved by the superintendent;
    (3) is funded by assets permitted by article fourteen of this  chapter
  for  the  loss  reserve required by paragraph three of subsection (a) of
  section six thousand five hundred  two  of  this  article  and  for  the
  unearned  premium reserve required by section one thousand three hundred
  five of this chapter;
    (4) is funded  by  either  cash,  the  types  of  reserve  investments
  specified  in  paragraphs  one  and two of subsection (a) of section one
  thousand four hundred four of this chapter or  by  tax  and  loss  bonds
  purchased  pursuant  to  §  832(e) of the Internal Revenue Code, for the
  greater of the amount of the contingency reserve required  by  paragraph
  two  of  subsection (a) of section six thousand five hundred two of this
  article or paragraph one of subsection (b) of section six thousand  five
  hundred two of this article;
    (5) makes quarterly and annual reports to the superintendent;
    (6)  is  subject to withdrawals only by, and under the control of, the
  ceding mortgage insurer;
    (7) permits examination by the superintendent;
    (8) designates the superintendent for service of process;
    (9) is governed by an agreement which, together with  all  amendments,
  shall  be approved by the commissioner or superintendent of insurance of
  the  mortgage  insurer's  domicile,  and  shall  be  provided   to   the

  superintendent, who shall have the right to disapprove of the agreement.
  Such  agreement  shall  be  deemed approved by the superintendent unless
  disapproved  within  thirty  days  from  the  date   provided   to   the
  superintendent; and
    (10)  is  in  compliance with any other regulations or requirements of
  the superintendent relating to trust agreements.