Article - Insurance

5-511.

(g) (1) The reserve investments of a life insurer may include loans secured
by first mortgages, or deeds of trust, on unencumbered fee-simple or improved
leasehold real estate in a state or a province of Canada in an amount not exceeding
85% of the fair market value of the real estate.

(2) A life insurer may not include an amount from an investment made
under paragraph (1) of this subsection that exceeds 75% of the fair market value of
the real estate in reserve and capital stock investments under this subtitle unless the
real estate:

(i) is primarily improved by a residence; or

(ii) is farm property used for farming purposes and the loan amount
on any one farm property does not exceed $500,000.

(3) (I) NOTWITHSTANDING PARAGRAPH (1) OF THIS SUBSECTION, BUT
SUBJECT TO SUBPARAGRAPH (II) OF THIS PARAGRAPH, A LIFE INSURER MAY
INCLUDE AN AMOUNT FROM AN INVESTMENT MADE UNDER PARAGRAPH (1) OF THIS
SUBSECTION NOT EXCEEDING 95% OF THE FAIR MARKET VALUE OF THE REAL
ESTATE IF:

(I) 1. THE REAL ESTATE IS IMPROVED BY A DWELLING
PRIMARILY INTENDED FOR OCCUPANCY BY NOT MORE THAN FOUR FAMILIES; AND

(II) 2. A LICENSED MORTGAGE INSURANCE COMPANY
AUTHORIZED TO DO BUSINESS IN THIS STATE AND NOT AFFILIATED WITH THE
ENTITY MAKING THE LOAN GUARANTEES OR INSURES THAT PART OF THE LOAN IN
EXCESS OF 85% OF THE FAIR MARKET VALUE OF THE REAL ESTATE.

(II) A LIFE INSURER MAY NOT PLACE MORE THAN 3% OF ITS
ADMITTED ASSETS IN LOANS IN WHICH THE AMOUNT OF THE LOAN EXCEEDS 90% OF
THE FAIR MARKET VALUE OF THE SECURITY OF THE LOAN.

[(3)] (4) A loan authorized by this subsection must provide for the
amortization of principal over a period of not more than 30 years, with payments to be
made at least annually.

[(4)] (5) (i) If a loan is made on real estate improved by a building, the
improvements must be insured against loss by fire.

(ii) The fire insurance policy required by subparagraph (i) of this
paragraph shall:

1. contain the New York or Massachusetts standard
mortgage clause or its equivalent; and

2. be delivered to the mortgagee as additional security for

the loan.