Sec. 36a-370. Mortgages.
Sec. 36a-370. Mortgages. If mortgages are held in a common trust fund, the fiduciary may, but is not required to, take any one or more of the following actions:
(1) A fiduciary may transfer up to five per cent of the net income derived by a
common trust fund from mortgages held by such fund during any regular accounting
period to a reserve account, provided no such transfer shall be made which would cause
the amount in such account to exceed one per cent of the outstanding principal amount
of all mortgages held in the fund. If established, the amount of such reserve account
shall be deducted from the assets of the fund in determining the fair market value of the
fund for the purposes of admissions and withdrawals. If a reserve account is established,
at the end of each accounting period all interest payments which are due but unpaid
with respect to mortgages in the fund shall be charged against the reserve account to
the extent available and credited to income distributed to participants. In the event of
subsequent recovery of such payments by the fund, the reserve account shall be credited
with the amount recovered.
(2) A fiduciary may withdraw a defaulted mortgage from a common trust fund and
segregate it for the benefit of all participants in the fund at the time of such withdrawal.
In such event, the segregated mortgage shall be administered or realized upon for the
benefit ratably of all participants in the common trust fund at the time of withdrawal.
(3) A fiduciary may purchase for its own account from a common trust fund any
defaulted mortgage held by such fund, if in the judgment of its board of directors the
cost of segregation of such mortgage would be greater than the difference between its
market value and its principal amount plus interest and penalty charges due. If a fiduciary
elects to so purchase the mortgage, it shall do so at its market value or at the sum of
principal, interest and penalty charges, whichever is greater.
(P.A. 94-122, S. 171, 340.)
History: P.A. 94-122 effective January 1, 1995.