Oregon Statutes 742.282 – Limitations on issuance of mortgage insurance
(1) No mortgage insurer shall provide insurance with respect to an obligation which exceeds, solely or in combination with liens existing at the time the insured loan is made:
Terms Used In Oregon Statutes 742.282
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
- Mortgagee: The person to whom property is mortgaged and who has loaned the money.
- Mortgagor: The person who pledges property to a creditor as collateral for a loan and who receives the money.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
(a) Ninety-five percent of the fair market value of the securing property at the time the loan is made, or such higher percentage as may be authorized by the Director of the Department of Consumer and Business Services and permitted by the insurer’s domicile, if the obligation insured is secured by a mortgage, deed of trust or other instrument constituting a first lien or first charge.
(b) Ninety percent of the fair market value of the securing property at the time the loan is made, or such higher percentage as may be authorized by the director and permitted by the insurer’s domicile, if the obligation insured is secured by a mortgage, deed of trust or other instrument constituting a junior lien or junior charge. In determining the 90 percent limitation, the full amount of a line of credit to be secured by a junior lien shall be considered the amount of the loan.
(2) A mortgage insurer at its option may limit its coverage net of reinsurance to a maximum of 25 percent of the amount of the obligation insured if the obligation insured is secured by a mortgage, deed of trust or other instrument constituting a first lien or first charge. In such event, the mortgage insurer may, in lieu of acquiring title to the property securing the obligation and paying the entire obligation, elect to pay its coverage percent of the obligation. In computing the aggregate amount of insured obligations under ORS § 731.516, only the percent of the coverage net of reinsurance on the insured obligation shall be included in the aggregate amount.
(3) A mortgage insurer may insure an obligation secured by a mortgage, deed of trust or other instrument constituting a junior lien or junior charge, subject to the following provisions:
(a) The mortgage insurer shall limit its coverage net of reinsurance to a maximum of 25 percent of the amount of the obligation insured and all liens existing at the time the insured loan is made. In computing the aggregate amount of insured obligations under ORS § 731.516, only the percent of the coverage net of reinsurance shall be included in the aggregate amount.
(b) Notwithstanding paragraph (a) of this subsection, the mortgage insurer may elect to insure a portfolio of loans secured by instruments constituting a junior lien on real estate, provided that the total amount at risk in any one portfolio shall not at any time exceed 20 percent of the original principal mortgage loans insured.
(c) In lieu of acquiring title to the property securing an obligation to which this subsection applies and paying the entire obligation, the mortgage insurer may elect to pay its coverage percent of the obligation.
(4) A mortgagor shall not be required to pay, directly or indirectly, the cost of mortgage insurance on a loan secured by a junior lien when the indebtedness evidencing that loan, combined with all existing mortgage loan amounts at the time the loan is made, is less than 60 percent of the fair market value of the real estate at the time the junior loan is made. No mortgagee or financial institution shall be required to obtain mortgage insurance or junior lien mortgage insurance by reason of this section.
(5) No mortgage insurer shall issue a policy of lease insurance with respect to real property not improved by a building or buildings designed to be occupied for industrial or commercial purposes. [Formerly 746.030 and then 743.705; 1991 c.67 § 197; 1995 c.582 § 2]