40-2b26. Mortgage related securities.
40-2b26
40-2b26. Mortgage related securities.Any life insurance company heretofore or hereafter organized under any law ofthis state may invest with the direction or approval of a majority of its boardof directors or authorized committee thereof, any of its funds, or any partthereof in:
(a) Mortgage related securities issued or guaranteed by the federal homeloan mortgage corporation and federal national mortgage association but theamount invested in any one such issue shall not exceed the greater of $750,000or two percent of the admitted assets of the company as shown by its lastannual report or a more recent quarterly financial statement filed with thecommissioner of insurance;
(b) mortgage related securities issued by or in the name of any privateentity which are designated "1" or "2" by the national association of insurancecommissioners in their most recently published valuations of securities manualor supplement thereto or are rated investment grade by Standard and Poor's (atleast BBB-) or Moody's (at least Baa3) at the time of acquisition. Theinvestment in any one such issue shall not exceed two percent of the admittedassets of the company as shown by its last annual report or a more recentquarterly financial statement filed with the commissioner of insurance;
(c) for purposes of this section "mortgage related securities" shall mean asecurity that either:
(1) Represents ownership of one or more promissory notes or certificates ofinterest or participation in such notes (including any rights designed toassure servicing of, or the receipt or timeliness of receipt by the holders ofsuch notes, certificates, or participations of amounts payable under, suchnotes, certificates, or participations), which notes:
(A) Are directly secured by a first lien on a single parcel of real estate,including stock allocated to a dwelling unit in a residential cooperativehousing corporation, upon which is located a dwelling or mixed residential andcommercial structure, or on a residential manufactured home as defined inU.S.C. §5402(6) of title 42, whether such manufactured home is consideredreal or personal property under the laws of the state in which it is to belocated; and
(B) were originated by a savings and loan association, savings bank,commercial bank, credit union, insurance company, or similar institution whichis supervised and examined by a federal or state authority, or by a mortgageeapproved by the secretary of housing and urban development pursuant to U.S.C.§§1709 and 1715b of title 12, or, where such notes involve a lienonthe manufactured home, by any such institution or by any financial institutionapproved for insurance by the secretary of housing and urban developmentpursuant to U.S.C. §1703 of title 12; or
(2) is secured by one or more promissory notes or certificates of interestor participations in such notes (with or without recourse to the issuerthereof) and, by its terms, provides for payments of principal in relation topayments, or reasonable projections of payments, on notes meeting therequirements of subparagraphs (1)(A) and (B) or certificates of interest orparticipations in promissory notes meeting such requirements.
For the purposes of this paragraph, the term "promissory note", when used inconnection with a manufactured home, shall also include a loan, advance, orcredit sale as evidenced by a retail installment sales contract or otherinstrument; or
(3) involve offers or sales of one or more promissory notes directly securedby a first lien on a single parcel of real estate upon which is located adwelling or other residential or commercial structure, and participationinterests in such notes:
(A) Where such securities are originated by a savings and loan association,savings bank, commercial bank, or similar banking institution which issupervised and examined by a federal or state authority, and are offered andsold subject to the following conditions:
(i) The minimum aggregate sales price per purchaser shall not be less than$250,000;
(ii) the purchaser shall pay cash either at the time of the sale or within60 days thereof; and
(iii) each purchaser shall buy for such purchaser's own account only; or
(B) where such securities are originated by a mortgagee approved by thesecretary of housing and urban development pursuant to U.S.C. §§ 1709and 1715b of title 12 and are offered or sold subject to the three conditionsspecified in subparagraph (3)(A) to any institution described in suchsubparagraph or to any insurance company subject to the supervision of theinsurance commissioner, or any agency or officer performing like function, ofany state or territory of the United States or the District of Columbia, or thefederal home loan mortgage corporation, the federal national mortgageassociation, or the government national mortgage association.
Transactions between any of the entities described in subparagraph (3)(A) or(3)(B) involving nonassignable contracts to buy or sell the foregoingsecurities which are to be completed within two years, where the seller of theforegoing securities pursuant to any such contract is one of the partiesdescribed in subparagraph (3)(A) or (3)(B) who may originate such securitiesand the purchaser of such securities pursuant to any such contract is anyinstitution described in subparagraph (3)(A) or any insurance company describedin subparagraph (3)(B), the federal home loan mortgage corporation, federalnational mortgage association, or the government national mortgage associationand where the foregoing securities are subject to the three conditions for saleset forth in subparagraphs (3)(A)(i) through (iii).
History: L. 1992, ch. 118, § 2; July 1.