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286.3-250 Operation of real estate mortgage investment fund.
(1)
(2)
(3)
To provide for losses that might occur in an investment fund established by a trust
company or bank under KRS 286.3-240, such trust company or bank may reserve
from the interest collected on the mortgages held in the fund, not over one-half of
one percent (0.5%) per annum on the principal of such mortgages. The reserved
amount shall be set aside in a separate reserved account, and used primarily for the
purpose of covering any losses that might be sustained in connection with any of the
mortgages, or in foreclosing any of the mortgages, or from actual outlays in
connection with any mortgaged property or property acquired under any foreclosure
proceedings. Such reserve account, or the balance thereof after the payment of any
such losses, shall belong entirely to the beneficial owners of the investment fund.
All income earned by the investment fund, except that amount reserved in the
manner and for the purposes set out in subsection (1), shall be periodically, and at
least semiannually, distributed ratably to the holders of participation certificates
issued against the investment fund. Principal cash that accumulates in the
investment fund by reason of payments on mortgages may be used in the
redemption and cancellation of participation certificates, or may be used in making
further mortgage loans. The trust company or bank may advance cash to the
investment fund to be used in making additional desirable mortgage loans in
anticipation of trust funds becoming available for investment in participation
certificates, but in no event shall the trust company or bank be entitled to any profit
on any such transactions other than the interest earned on its advancements.
If any participation certificates issued under the provisions of KRS 286.3-240
should become distributable by reason of the termination or removal of a trust, the
trust company or bank may at its option either distribute such certificates in kind, or
redeem and cancel such certificates for the account of the investment fund, or
purchase such certificates for the account of other trust estates in its hands.
Effective: October 1, 1942
History: Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky.
Stat. sec. 4706.
Formerly codified as KRS 287.250.
Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts
ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the
Kentucky Financial Services Code, KRS Chapter 286, and KRS references within
this statute have been adjusted to conform with the 2006 renumbering of that code.
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