SECTIONS 12520-12532 - California Statutes

INSURANCE CODE

SECTION 12520-12532

12520. A mortgage insurer may issue mortgage participation
certificates pursuant to this chapter. Such certificates and any
trust agreement under which the certificates are issued may also
contain such provisions, not inconsistent with this chapter, as are
agreed upon between the insurer issuing such mortgage participation
certificates, the purchasers thereof, and the trustee.

12521. A mortgage insurer shall not issue mortgage participation
certificates unless:
(a) The securities, the right of participation in which is
evidenced by such certificates, are insured, either singly or as a
group, by a mortgage policy issued by it or by another mortgage
insurer.
(b) Such securities are segregated and assigned and transferred to
a trustee, to be held as a mortgage participation trust for the
common and equal benefit of the issuing insurer and the holders of
all mortgage participation certificates evidencing participation in
such particular segregated group.

12522. Every mortgage participation certificate issued by such
mortgage insurer shall bear the certificate of the trustee to the
effect that the aggregate face amount of mortgage participation
certificates then outstanding, including both the one being certified
and all others evidencing participation in the same group of
securities, does not exceed the amount authorized by the agreement
under which such certificate is issued.

12523. Each security set apart and assigned to a trustee to be held
in a mortgage participation trust shall be accompanied by:
(a) A copy of the appraisement of the property securing the same
made in accordance with the provisions of this chapter.
(b) A copy of the certificate required by the provisions of
section 12602.

12524. Upon the segregation and assignment of each such security,
copies of the appraisement and certificate shall be transmitted
promptly to the commissioner and to the Commissioner of Financial
Institutions. Each such copy of appraisement so transmitted shall
bear an endorsement or certificate executed by the trustee of the
trust in which each such security is held. Such certificate or
endorsement shall set forth the unpaid amount of the unpaid principal
named in the security which covers the property described in such
appraisement.

12525. A mortgage insurer which issued mortgage participation
certificates may at any time and may from time to time withdraw from
any mortgage participation trust any asset held therein, upon the
substitution therefor of other securities insured by any mortgage
policy or of cash or of both, except that the group value of all the
assets held in any such trust shall not be less than the aggregate
face amount of mortgage participation certificates issued and
outstanding under such trust.

12526. Upon the substitution of any securities in a mortgage
participation trust the substituting insurer shall report the same
with a full description of each security so substituted, together
with an appraisement of each separate parcel of property securing
each security made in accordance with the provisions of this chapter
and together with the certificate required by the provisions of
section 12602, to the commissioner in its monthly report next
following such substitution.

12527. Every mortgage participation trust and the administration
thereof shall at all times be and hereby is expressly made subject to
the inspection, supervision and control of the Commissioner of
Financial Institutions as fully and completely as if the same
constituted a court trust under the provisions of the Banking Law
(Division 1 (commencing with Section 99) of the Financial Code).

12528. Mortgage participation certificates and securities
guaranteed by mortgage policies issued in conformity with the
provisions of this chapter shall be legal investments for all trust
funds held by any executor, administrator, guardian, conservator,
trustee or other person holding trust funds, and for the funds of
insurers, banks, banking institutions and trust companies.

12529. Such certificates and securities shall be accepted by this
State and its officers and officials, as securities comprising any
part of any fund or deposit required by law to be made with this
State, or with any officer or official thereof, by an admitted
insurer or a trust company doing business in this State.

12530. All premiums required to be paid according to the terms of
any mortgage policy, may be charged to or paid out of the income from
the security covered thereby.

12531. The right of substitution hereinbefore provided and the
exercise thereof shall not alter or affect the status of any mortgage
participation certificates as legal investments or as securities
acceptable by the State of California, its officers and officials, as
comprising or constituting any such fund or deposit.

12532. The legality or validity of mortgage policies, securities
guaranteed thereby and of mortgage participation certificates
heretofore issued which at the date of issuance fully conformed to
and complied with the law then in force shall not be affected or
impaired by the provisions of this chapter. Such securities
guaranteed by mortgage policies and such mortgage participation
certificates shall continue to be legal investments and to be
acceptable by the State of California, its officers and officials, as
deposits, to the extent and in the manner provided by the law in
force at date of such issuance.