Session Law

Identifying Information:L. 2002 ch. 040
Other Identifying Information:2002 House Bill 2639
Tax Type:Other
Brief Description:An Act concerning mortgage guaranty insurance companies; relating to the requirements on authorized real estate security; amending K.S.A. 40-3502 and repealing the existing section.
Keywords:


Body:

CHAPTER 40

HOUSE BILL No. 2639


An Act concerning mortgage guaranty insurance companies; relating to the requirements

on authorized real estate security; amending K.S.A. 40-3502 and repealing the existing


section.


Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 40-3502 is hereby amended to read as follows: 40-

3502. As used in this act the following terms shall have the meanings

respectively ascribed to them herein:

(a) ``Mortgage guaranty insurance company'' means any corporation,

company, association, reciprocal exchange, persons or partnerships writ-

ing contracts of mortgage guaranty insurance and shall be governed by

the provisions of this act and the other provisions of chapter 40 of the

Kansas Statutes Annotated applicable to companies organized or oper-

ating under the provisions of K.S.A. 40-1101 et seq., and amendments

thereto, to the extent such other provisions are not inconsistent with the

requirements of this act.

(b) ``Mortgage guaranty insurance'' means and includes: (1) Insur-

ance against financial loss by reason of nonpayment of principal, interest

or other sums agreed to be paid under the terms of any note or bond or

other evidence of indebtedness secured by a mortgage, deed of trust, or

other instrument constituting a lien or charge on real estate, when the

improvement on such real estate is a residential building or a condomin-

ium or townhouse unit or buildings designed for occupancy by not more

than four families;

(2) insurance against financial loss by reason of nonpayment of prin-

cipal, interest or other sums agreed to be paid under the terms of any

note or bond or other evidence of indebtedness secured by a mortgage,

deed of trust or other instrument constituting a lien or charge on real

estate, when the improvement on such real estate is a building or build-

ings designed for occupancy by five or more families or designed to be

occupied for industrial or commercial purposes; or

(3) insurance against financial loss by reason of nonpayment of rent

or other sums agreed to be paid under the terms of a written lease for

the possession, use or occupancy of real estate, when the improvement

on such real estate is a building or buildings designed to be occupied for

industrial or commercial purposes.

(c) ``Authorized real estate security'' means an amortized note, bond

or other evidence of indebtedness, not exceeding (100%) 105% of the

fair market value of the real estate, secured by a mortgage, deed of trust,

or other instrument which constitutes, or is equivalent to, a first lien or

charge on real estate, when: (1) The real estate loan secured in such

manner is one of a type which a bank, savings and loan association, or an

insurance company, which is supervised and regulated by a department

of this state or an agency of the federal government, is authorized to make,

or would be authorized to make, disregarding any requirement applicable

to such an institution that the amount of the loan not exceed a certain

percentage of the value of the real estate;

(2) the improvement on such real estate is a building or buildings

designed for occupancy as specified by paragraphs (1) or (2) of subsection

(b); and

(3) the lien on such real estate may be subject to and subordinate to

the following:

(i) The lien of any public bond, assessment or tax, when no install-

ment, call or payment of or under such bond, assessment or tax is delin-

quent; and

(ii) outstanding mineral, oil, water or timber rights, rights-of-way,

easements or rights-of-way of support, sewer rights, building restrictions

or other restrictions or covenants, conditions or regulations of use, or

outstanding leases upon such real property under which rents or profits

are reserved to the owner thereof.

(d) ``Contingency reserve'' means an additional premium reserve es-

tablished to protect policyholders against the effect of adverse economic

cycles.

(e) ``Single risk'' means the insurance provided with respect to each

separate loan or lease covered by an individual policy of mortgage guar-

anty insurance or an individual certificate issued pursuant to K.S.A. 40-

3511, and amendments thereto.

Sec. 2. K.S.A. 40-3502 is hereby repealed.

Sec. 3. This act shall take effect and be in force from and after its

publication in the statute book.

Approved April 8, 2002.


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Date Composed: 10/10/2002 Date Modified: 10/10/2002