2005 North Carolina Code - General Statutes § 58-10-125. Minimum policyholders position.
§ 58‑10‑125. Minimum policyholders position.
(a) For the purpose of complying with G.S. 58‑7‑75, a mortgage guaranty insurer shall maintain at all times a minimum policyholders position in the amount required by this section. The policyholders position shall be net of reinsurance ceded but shall include reinsurance assumed.
(b) If a mortgage guaranty insurer does not have the minimum amount of policyholders position required by this section it shall cease transacting new business until the time that its policyholders position is in compliance with this section.
(c) If a policy of mortgage guaranty insurance insures individual loans with a percentage claim settlement option on those loans, a mortgage guaranty insurer shall maintain a policyholders position based on each one hundred dollars ($100.00) of the face amount of the mortgage, the percentage coverage, and the loan‑to‑value category. The minimum amount of policyholders position shall be calculated in the following manner:
(1) If the loan‑to‑value is greater than seventy‑five percent (75%), the minimum policyholders position per one hundred dollars ($100.00) of the face amount of the mortgage for the specific percent coverage shall be as shown in the schedule below:
Percent Policyholders Position Per Percent Policyholders Position Per
Coverage $100 of the Face Amount Coverage $100 of the Face Amount
of the Mortgage of the Mortgage
5 $0.20 55 $1.50
10 0.40 60 1.55
15 0.60 65 1.60
20 0.80 70 1.65
25 1.00 75 1.75
30 1.10 80 1.80
35 1.20 85 1.85
40 1.30 90 1.90
45 1.35 95 1.95
50 1.40 100 2.00
(2) If the loan‑to‑value is at least fifty percent (50%) and not more than seventy‑five percent (75%), the minimum amount of the policyholders position shall be fifty percent (50%) of the minimum of the amount calculated under subdivision (c)(1) of this section.
(3) If the loan‑to‑value is less than fifty percent (50%), the minimum amount of policyholders position shall be twenty‑five percent (25%) of the amount calculated under subdivision (c)(1) of this section.
(d) If a policy of mortgage guaranty insurance provides coverage on a group of loans subject to an aggregate loss limit, the policyholders position shall be:
(1) If the equity is not more than fifty percent (50%) and is at least twenty percent (20%), or equity plus prior insurance or a deductible is at least twenty‑five percent (25%) and not more than fifty‑five percent (55%), the minimum amount of policyholders position shall be calculated as follows:
Percent Policyholders Position Per Percent Policyholders Position Per
Coverage $100 of the Face Amount Coverage $100 of the Face Amount
of the Mortgage of the Mortgage
1 $0.30 50 $0.825
5 0.50 60 0.85
10 0.60 70 0.875
15 0.65 75 0.90
20 0.70 80 0.925
25 0.75 90 0.95
30 0.775 100 1.00
40 0.80
(2) If the equity is less than twenty percent (20%), or the equity plus prior insurance or a deductible is less than twenty‑five percent (25%), the minimum amount of policyholders position shall be two hundred percent (200%) of the amount required by subdivision (d)(1) of this section.
(3) If the equity is more than fifty percent (50%) or the equity plus prior insurance or a deductible is more than fifty‑five percent (55%), the minimum amount of policyholders position shall be fifty percent (50%) of the amount required by subdivision (d)(1) of this section.
(e) If a policy of mortgage guaranty insurance provides for layers of coverage, deductibles, or excess reinsurance, the minimum amount of policyholders position shall be computed by subtraction of the minimum position for the lower percentage coverage limit from the minimum position for the upper or greater coverage limit.
(f) If a policy of mortgage guaranty insurance provides for coverage on loans secured by junior liens, the policyholders position shall be:
(1) If the policy provides coverage on individual loans, the minimum amount of policyholders position shall be calculated as in subsection (c) of this section as follows:
a. The loan‑to‑value percent is the entire loan indebtedness on the property divided by the value of the property;
b. The percent coverage is the insured portion of the junior loan divided by the entire loan indebtedness on the collateral property; and
c. The face amount of the insured mortgage is the entire loan indebtedness on the property.
(2) If the policy provides coverage on a group of loans subject to an aggregate loss limit, the policyholders position shall be calculated according to subsection (d) of this section as follows:
a. The equity is the complement of the loan‑to‑value percent calculated as in subdivision (d)(1) of this section;
b. The percent coverage is calculated as in subdivision (d)(1) of this section; and
c. The face amount of the insured mortgage is the entire loan indebtedness on the property.
(g) If a policy of mortgage guaranty insurance provides for coverage on leases, the policyholders position shall be four dollars ($4.00) for each one hundred dollars ($100.00) of the insured amount of the lease.
(h) If a policy of mortgage guaranty insurance insures loans with a percentage loss settlement option coverage between any of the entries in the schedules in this section, then the factor for policyholders position per one hundred dollars ($100.00) of the face amount of the mortgage shall be prorated between the factors for the nearest percent coverage listed. (2001‑223, s. 11.)
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