Domestic incorporated insurers may invest in notes or bonds secured by a mortgage or other first lien upon unencumbered real property meeting the criteria of subdivision (e), if the secured obligation meets the conditions of subdivisions (a) and (b), as follows: (a) There exists no condition or right of reentry or of forfeiture under which the lien can be cut off, subordinated, or otherwise disturbed. (b) The secured obligation satisfies the conditions of paragraph (1), (2), (3), or (4), as follows: (1) The principal so loaned or the entire note or bond issue so secured, plus the amount of the liens of any public bond, assessment, or tax assessed upon the property loaned upon, does not exceed 80 percent of the market value of that real property, together with improvements which are taken as security at the date of investment. (2) Where the loan is insured by an admitted mortgage guaranty insurer conforming to the provisions of Chapter 2A (commencing with Section 12640.01) of Part 6 of Division 2, the unguaranteed portion of the loan, plus the amount of the liens of any public bond, assessment, or tax assessed upon the property loaned upon, does not exceed 80 percent of the market value of that real property, together with improvements which are taken as security at the date of investment. (3) Where the loan is made or the notes or bonds are issued for a building loan on real property, the principal so loaned, or the entire outstanding notes or bonds so issued, plus the amount of the lien of any public bond, assessment, or tax assessed upon the property loaned upon, at no time exceeds 80 percent of the market value of the real property together with the actual cost of the improvements thereon taken as security. (4) Where the loan is secured by a first mortgage or other first lien upon real property primarily improved with a residential building, or buildings, which for the purposes of this paragraph includes a condominium unit, designed for occupancy by not more than four families, the terms of the loan provide for monthly payments of principal and interest sufficient to effect full repayment of the loan within the remaining useful life of the building as estimated in the appraisal for the loan, or 40 years, whichever is less, and the principal so loaned or the entire note or bond issue so secured, plus the amount of the liens of any public bond, assessment, or tax assessed upon the property loaned, does not exceed 90 percent of the market value of that real property, or of that real property together with improvements which are taken as security on the date of investment. (c) Real property is not encumbered within the meaning of this section if subject only to one or more of the following: (1) The lien of taxes and assessments not delinquent at the time of investment. (2) The lien for delinquent taxes or assessments delinquent at the time of investment, which are being contested by any legal proceedings, if indemnity has been given pursuant to the indenture under which the bonds and notes are issued, or otherwise, for the payment of any amount which may be found to be due upon the final adjudication of that contest. (3) The lien of taxes and assessments becoming delinquent subsequent to the time of investment. (4) Outstanding mineral, oil or timber rights. (5) Easements or rights-of-way. (6) Sewer rights. (7) Rights in walls. (8) Building restrictions or other restrictive covenants, or conditions or regulations of use, or leases under which rents or profits are reserved to the owner. (d) For the purposes of this section, delinquent taxes funded on any deferred payment plan shall be deemed delinquent. (e) Only real property meeting the following criteria of paragraph (1), (2), or (3) may secure notes or bonds eligible for investment under this section: (1) There is an improvement on the real property with a value that is substantial in relation to the total value of the property. (2) There is no improvement on the real property
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