Section 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:
    (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  shall  limit  its  coverage  net  of  applicable
  reinsurance  to  a  maximum  of  twenty-five  percent  of   the   entire
  indebtedness  to the insured, or in lieu thereof, a mortgage insurer 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 shall limit
  its coverage net of applicable reinsurance to a maximum  of  twenty-five
  percent  of  the  combined  indebtedness  of  all existing mortgage loan
  amounts at the time the loan is made secured by all liens or charges  on
  the  real  estate,  or  in lieu thereof, a mortgage insurer may elect to
  insure a portfolio of loans secured by instruments constituting a junior
  lien on real estate, provided that the total amount at risk in  any  one
  pool  shall  not  at  any  time  exceed  twenty  percent of the original
  principal mortgage loans insured.
    (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 eight 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
  banking board, 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
  eight 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.