Print Friendly SENATE BILL NO. 1378 – Mortgage loan limitation
SENATE BILL NO. 1378
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S1378.......................................by COMMERCE AND HUMAN RESOURCES
INSURERS - INVESTMENTS - Amends existing law relating to investments by
insurers to distinguish between mortgage loan limitation for commercial
property and residential property; and to provide inclusion of real estate
subject to a plan of development as a potential asset.
02/06 Senate intro - 1st rdg - to printing
02/07 Rpt prt - to Com/HuRes
02/14 Rpt out - rec d/p - to 2nd rdg
02/15 2nd rdg - to 3rd rdg
02/21 3rd rdg - PASSED - 30-0-5
AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
Burtenshaw, Cameron, Darrington, Davis, Deide, Dunklin, Geddes,
Goedde, Hill, Ingram, Ipsen, Keough, King-Barrutia, Little, Lodge,
Noh, Richardson, Risch(Risch), Schroeder, Sims, Sorensen, Stegner,
Stennett, Thorne, Wheeler
NAYS -- None
Absent and excused -- Frasure, Hawkins, Marley, Sandy, Williams
Floor Sponsor - Hill
Title apvd - to House
02/22 House intro - 1st rdg - to Bus
03/06 Rpt out - rec d/p - to 2nd rdg
03/07 2nd rdg - to 3rd rdg
03/08 3rd rdg - PASSED - 59-0-11
AYES -- Barraclough, Bedke, Bell, Bieter, Black, Block, Boe, Bolz,
Bradford, Bruneel, Callister, Campbell, Collins, Crow, Deal, Denney,
Ellis, Ellsworth, Eskridge, Field(13), Field(20), Gagner, Hadley,
Hammond, Harwood, Henbest, Jaquet, Kellogg(Duncan), Kunz, Lake,
Langford, Loertscher, Mader, Martinez, McKague, Meyer, Montgomery,
Mortensen, Moyle, Pearce, Pischner, Pomeroy, Ridinger, Robison, Sali,
Schaefer, Sellman, Shepherd, Smith(33), Smith(23), Smylie, Stevenson,
Stone, Tilman, Trail, Wheeler, Wood, Young, Mr. Speaker
NAYS -- None
Absent and excused -- Aikele, Barrett, Clark, Cuddy, Gould, Higgins,
Hornbeck, Jones, Kendell, Raybould, Roberts
Floor Sponsor - Collins
Title apvd - to Senate
03/11 To enrol
03/12 Rpt enrol - Pres signed - Sp signed
03/13 To Governor
03/27 Governor signed
Session Law Chapter 364
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-sixth Legislature Second Regular Session - 2002
IN THE SENATE
SENATE BILL NO. 1378
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO INVESTMENTS BY INSURERS; AMENDING SECTION 41-722, IDAHO CODE, TO
3 DISTINGUISH BETWEEN MORTGAGE LOAN LIMITATION FOR COMMERCIAL PROPERTY AND
4 RESIDENTIAL PROPERTY AND TO MAKE TECHNICAL CORRECTIONS; AND AMENDING SEC-
5 TION 41-728, IDAHO CODE, TO PROVIDE INCLUSION OF REAL ESTATE SUBJECT TO A
6 PLAN OF DEVELOPMENT AS A POTENTIAL ASSET AND GOVERN THE QUALIFYING CONDI-
7 TIONS AND TO MAKE TECHNICAL CORRECTIONS.
8 Be It Enacted by the Legislature of the State of Idaho:
9 SECTION 1. That Section 41-722, Idaho Code, be, and the same is hereby
10 amended to read as follows:
11 41-722. MORTGAGE LOAN LIMITED BY PROPERTY VALUE. (1) No commercial mort-
12 gage loan or investment therein upon any one (1) parcel of real property shall
13 exceed in amount, at the time of acquisition, seventy-five per cent percent
14 (75%) of the fair value of the property and the loan is required to be amor-
15 tized within not more than thirty (30) years by payment of installments of
16 principal and interest thereon at regular intervals not less frequent than
17 every year.
18 (2) No residential mortgage loan or investment therein upon any one (1)
19 parcel of real property shall exceed in amount, at the time of acquisition,
20 eighty percent (80%) of the fair value of the property and the loan is
21 required to be amortized within not more than thirty (30) years by payment of
22 installments of principal and interest thereon at regular intervals not less
23 frequent than every year.
24 (3) The extent to which a mortgage loan made under subdivision subsection
25 (4) or (5) of section 41-721, Idaho Code, is guaranteed by the administrator
26 of veterans ' affairs may be deducted before application of the limitations
27 contained in subsection (1) above of this section.
28 SECTION 2. That Section 41-728, Idaho Code, be, and the same is hereby
29 amended to read as follows:
30 41-728. REAL ESTATE. (1) An insurer may acquire, invest in, own, main-
31 tain, alter, furnish, improve, manage, lease and convey the following real
32 estate only:
33 (a) Land and buildings used for home office purposes, together with such
34 other real estate as is required for its accommodation in the convenient
35 transaction of its business.
36 (b) Real estate acquired in satisfaction in full or in part of or through
37 foreclosure of or judgment obtained upon, loans, mortgages, liens or other
38 evidences of indebtedness previously owing to the insurer in the regular
39 course of its business.
40 (c) Real estate acquired in part payment of the consideration in the sale
41 of other real estate owned by the insurer.
1 (d) Real estate acquired by gift or devise.
2 (e) Real estate acquired through a lawful merger or consolidation of
3 another insurer and not required for its accommodation as provided in
4 paragraph (a) of this subsection.
5 (f) Real estate for the production of income, under lease, or being con-
6 structed under a definite agreement providing for lease, to solvent insti-
7 tutions for commercial or industrial purposes, other than primarily for
8 agricultural, horticultural, ranch, mining, mineral, oil, recreational,
9 amusement, club, motel, or hotel purposes.
10 (g) Real estate subject to a plan of development other than primarily for
11 agricultural, horticultural, ranch, mining, mineral, oil, recreational,
12 amusement, club, motel, or hotel purposes as limited by subsection (2)(c)
13 of this section.
14 (2) The aggregate amount so invested by the insurer shall not exceed:
15 (a) If for home office and its other purposes pursuant to paragraph sub-
16 section (1)(a) of this subsection, ten percent (10%) of the insurer's
17 assets, subject to the right of the director to approve an additional
18 amount after hearing and for good cause shown.
19 (b) If for income purposes pursuant to paragraph subsection (1)(f) of
20 this subsection, five ten percent ( 510%) of the insurer's admitted assets.
21 (c) If for properties subject to a plan of development pursuant to sub-
22 section (1)(g) of this section, not more than five percent (5%) of its
23 admitted assets of which not more than two percent (2%) of its admitted
24 assets may be in any one (1) parcel or group of contiguous parcels. The
25 director may disapprove the property as an admitted asset if the plan of
26 development is not being pursued in good faith. Factors for review may
27 include, but are not limited to, progress with regard to zoning, roads,
28 utilities, plats and completed development by the insurer of properties.
29 (d) In all categories and for all purposes, not to exceed twenty percent
30 (20%) of the insurer's assets.
31 ( de) Notwithstanding the provisions of paragraphs (a) through ( cd) of
32 this subsection, the aggregate amount invested by a domestic reciprocal
33 insurer which is comprised of and exclusively insures members who are
34 political subdivisions of the state, as defined in section 6-902 2., Idaho
35 Code, shall not exceed:
36 (i) Twenty-five percent (25%) from July 1, 2001, to June 30, 2003;
37 (ii) Twenty percent (20%) from July 1, 2003, to June 30, 2004; and
38 (iii) Fifteen percent (15%) on July 1, 2004, and each year thereaf-
40 (3) An insurer may lease to others part of real property otherwise occu-
41 pied by it for home office and other purposes under subsection (1)(a) of this
42 section, but the value of the entire property must be included for the pur-
43 poses of the limitation upon aggregate real estate investments provided in
44 subsection (2)(a) of this section.
STATEMENT OF PURPOSE
One of the purposes of this legislation is to increase the allowed
fair value-to-loan ratio for residential mortgages from 75% to 80%.
Second, the legislation will clarify that to qualify as an admitted
asset, mortgage loans must require payment of installments of
principal and interest at regular intervals. Third, the legislation
permits investments in real estate for the production of income to
include, as a secondary purpose, investments in agriculture,
horticulture, ranch, mining, mineral, oil, recreational, amusement,
club, motel or hotel. The aggregate amount that may be invested in
real estate for the production of income is being increased from 5%
to 10% of an insurer’s admitted assets. A further purpose is to
allow insurers to invest in real estate subject to a plan of
development in an amount up to 5% of the insurer’s admitted assets,
of which not more than 2% may be in any one parcel or group of
contiguous parcels. The final purpose is to provide a list of some
of the factors the Director may consider in deciding whether to
disapprove property subject to a plan of development as an admitted
There should be no fiscal impact resulting from this proposed
Name: Woody Richards, Old Standard Life Insurance Company
STATEMENT OF PURPOSE/FISCAL NOTE S 1378