§ 6904. Limitations. (a) Financial guaranty insurance may be\ntransacted in this state only by a corporation licensed for such purpose\npursuant to section six thousand nine hundred two of this article.\n (b) Permissible guarantees. (1) The superintendent shall not permit\nthe writing of financial guaranty insurance except as defined in\nsubparagraph (A) of paragraph one of subsection (a) of section six\nthousand nine hundred one of this article, and a corporation may insure\nthe timely payment of United States dollar debt instruments, or other\nmonetary obligations, only in the following categories:\n (A) municipal obligation bonds;\n (B) special revenue bonds;\n (C) industrial development bonds;\n (D) obligations of corporations, trusts or other similar entities\nestablished under applicable law;\n (E) partnership obligations;\n (F) asset-backed securities, trust certificates and trust obligations\nother than mortgage-backed securities secured by first mortgages on real\nproperty which are insurable by a mortgage guaranty insurer authorized\nunder paragraph twenty-three of subsection (a) of section one thousand\none hundred thirteen of this chapter, unless:\n (i) such mortgages with loan-to-value ratios in excess of eighty\npercent are:\n (I) in the case of mortgages on property located in the state of New\nYork, insured by mortgage guaranty insurers authorized under paragraph\ntwenty-three of subsection (a) of section one thousand one hundred\nthirteen of this chapter;\n (II) in the case of mortgages on property located in a state other\nthan the state of New York, insured by mortgage guaranty insurers\nauthorized to do business in such other state; or\n (III) in an aggregate principal amount less than the single risk\nlimits prescribed in paragraph five of subsection (d) of this section;\nor\n (ii) additional mortgages with principal balances, other collateral\nwith a market value, or (provided the insured risk is investment grade)\nexcess spread in an amount, in each instance at least equal to the\ncoverage that would otherwise be provided by such mortgage guaranty\ninsurers in accordance with item (i) of this subparagraph are pledged as\nadditional security for the asset-backed securities;\n (G) installment purchase agreements executed as a condition of sale;\n (H) consumer debt obligations;\n (I) utility first mortgage obligations; and\n (J) any other debt instrument or financial obligation that the\nsuperintendent determines to be substantially similar to any of the\nforegoing or shall otherwise be approved by the superintendent.\n (2) An insurer may insure obligations enumerated in subparagraphs (A),\n(B), and (C) of paragraph one of this subsection that are not investment\ngrade so long as at least ninety-five percent of the insurer's aggregate\nnet liability on the kinds of obligations enumerated in subparagraphs\n(A), (B) and (C) of paragraph one of this subsection shall be investment\ngrade.\n (3) A corporation may insure the timely payment of monetary\nobligations in any category designated in this subsection\nnotwithstanding that such obligation may be insured by a financial\nguaranty insurance policy issued by another insurer. In the event that\nany obligation is insured by more than one financial guaranty insurance\npolicy, then each such insurance policy may by its terms specify its\npriority of payment in the event of a default under the obligation\ninsured or any other insurance policy; provided that an insurer shall be\nentitled to take into account payment under another policy insuring such\nobligation for purposes of establishing and maintaining loss reserves\nonly to the extent that the policy issued by such insurer provides for\npayment only in the event of payment default under both such obligation\nand the other policy.\n (4) A corporation may also write financial guaranty insurance as\ndefined in subparagraph (A) of paragraph one of subsection (a) of\nsection six thousand nine hun
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