§ 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 superintendent of financial
services 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.