(a) A mortgage guaranty insurer shall maintain a policyholders surplus in an amount not less than the amount required by this section. The policyholders surplus shall be the calculated net of reinsurance ceded, but shall include reinsurance assumed. âFace amount of an insured mortgageâ means the outstanding principal balance computed without any reduction because of an insurerâs option limiting its coverage, but shall exclude the outstanding principal balance of any loan that is in default and for which the insurer has established a loss reserve, provided that the loss reserve established for that loan is equal to or greater than the policyholders surplus the insurer would otherwise be required to establish with respect to that loan, pursuant to this section. Nothing in this subdivision limits the commissionerâs authority under Section 12640.04. (b) If a policy of mortgage guaranty insurance insures individual loans with a percentage claim settlement option on such loans, the insurer shall maintain a policyholders surplus based on each one hundred dollars ($100) of the face amount of the mortgage, the percentage coverage or claim settlement option, and the loan-to-value category. The required amount of policyholders surplus shall be calculated in the following manner: (1) If the total indebtedness is greater than 75 percent of the value of the collateral property at the date of the insurance: Policyholders Policyholders Surplus per $100 Surplus per $100 of the Face of the Face Percent Amount of the Percent Amount of the Coverage Mortgage Coverage Mortgage 5% $ .20 55% $1.50 10 .40 60 1.55 15 .60 65 1.60 20 .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 If the percent coverage is between any five-point increment, then the factor for policyholders surplus per one hundred dollars ($100) of the face amount of the mortgage shall be prorated. (2) If the total indebtedness is at least 50 percent and not more than 75 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be 50 percent of the amount required by paragraph (1) of subdivision (b). (3) If the total indebtedness is less than 50 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be 25 percent of the amount required by paragraph (1) of subdivision (b). (c) If a policy of mortgage guaranty insurance provides coverage on a group of loans subject to an aggregate loss limit, the policyholders surplus shall be: (1) If the equity is not more than 50 percent and is at least 20 percent, or equity plus prior insurance or a deductible equals 25 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be calculated as follows: Policyholders Policyholders Surplus per $100 Surplus per $100 of the Face of the Face Percent Amount of the Percent Amount of the Coverage Mortgage Coverage Mortgage 1% $ .30 50% $ .825 5 .50 60 .85 10 .60 70 .875 15 .65 75 .90 20 .70 80 .925 25 .75 90 .95 30 .775 100 1.00 40 .80 If the percent coverage is between any specified increment, then the factor for policyholders surplus per one hundred dollars ($100) of the face amount of the mortgage shall be prorated. (2) If the equity is less than 20 percent or the equity plus prior insurance or a deductible is less than 25 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be 200 percent of the amount required by paragraph (1) of subdivision (c). (3) If the equity is more than 50 percent or the equity plus prior insurance or a deductible is more than 55 percent of the value of the collateral property at the date of insurance, the required amount of policyholders surplus shall be 50 percent of the amount of policyholders surplus required by paragraph (1) of subdivision
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