2006 Legislation
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HOUSE BILL NO. 447 – Insurers, loan to value ratio

HOUSE BILL NO. 447

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Bill Status



H0447...........................................................by BUSINESS
INSURERS - Amends existing law relating to investments by insurance
companies to delete provisions limiting the permissible amount of, or loan
to value ratio of, certain loans made by Idaho domiciled insurance
companies; to delete provisions limiting the permissible loan to value
ratio of commercial loans to seventy-five percent of the fair market value
of the property; and to provide that the permissible loan to value ratio of
eighty percent applies to commercial mortgage loans made by Idaho domiciled
insurance companies.
                                                                        
01/24    House intro - 1st rdg - to printing
01/25    Rpt prt - to Bus
02/10    Rpt out - rec d/p - to 2nd rdg
02/13    2nd rdg - to 3rd rdg
02/15    3rd rdg - PASSED - 62-0-8
      AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer, Bell,
      Bilbao, Block, Boe, Bolz, Brackett, Bradford, Cannon, Chadderdon,
      Clark, Collins, Crow, Denney, Edmunson, Ellsworth, Eskridge,
      Field(18), Field(23), Garrett, Hart(Jacobson), Harwood, Henbest,
      Henderson, Jaquet, Kemp, Lake, Loertscher, Martinez, Mathews,
      McGeachin, McKague, Miller, Moyle, Nielsen, Nonini, Pasley-Stuart,
      Pence, Raybould, Ring, Ringo, Roberts, Rusche, Rydalch, Sayler,
      Schaefer, Shepherd(2), Shepherd(8), Shirley, Skippen, Smith(30),
      Smith(24), Smylie, Snodgrass, Trail, Wills, Wood
      NAYS -- None
      Absent and excused -- Bedke, Black, Deal, LeFavour, Mitchell, Sali,
      Stevenson, Mr. Speaker
    Floor Sponsor - Snodgrass
    Title apvd - to Senate
02/16    Senate intro - 1st rdg - to Com/HuRes
02/22    Rpt out - rec d/p - to 2nd rdg
02/23    2nd rdg - to 3rd rdg
03/02    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
      Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
      Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough,
      Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce,
      Richardson, Schroeder, Stegner, Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Cameron
    Title apvd - to House
03/03    To enrol
03/06    Rpt enrol - Sp signed
03/07    Pres signed
03/08    To Governor
03/11    Governor signed
         Session Law Chapter 26
         Effective: 07/01/06

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   Second Regular Session - 2006
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 447
                                                                        
                                   BY BUSINESS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO INVESTMENTS BY INSURANCE COMPANIES; AMENDING SECTION 41-721, IDAHO
  3        CODE, TO DELETE PROVISIONS LIMITING THE PERMISSIBLE AMOUNT OF, OR LOAN  TO
  4        VALUE RATIO OF, CERTAIN LOANS MADE BY IDAHO DOMICILED INSURANCE COMPANIES;
  5        AND AMENDING SECTION 41-722, IDAHO CODE, TO DELETE PROVISIONS LIMITING THE
  6        PERMISSIBLE  LOAN  TO VALUE RATIO OF COMMERCIAL LOANS TO SEVENTY-FIVE PER-
  7        CENT OF THE FAIR VALUE OF THE PROPERTY, TO PROVIDE  THAT  THE  PERMISSIBLE
  8        LOAN TO VALUE RATIO OF EIGHTY PERCENT APPLIES TO COMMERCIAL MORTGAGE LOANS
  9        MADE  BY IDAHO DOMICILED INSURANCE COMPANIES, TO PROVIDE CORRECT CODE REF-
 10        ERENCES AND TO MAKE TECHNICAL CORRECTIONS.
                                                                        
 11    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 12        SECTION 1.  That Section 41-721, Idaho Code, be, and the  same  is  hereby
 13    amended to read as follows:
                                                                        
 14        41-721.  MORTGAGE  LOANS  AND  CONTRACTS. An insurer may invest any of its
 15    funds in:
 16        (1)  Bonds or evidences of debt which are secured by  first  mortgages  or
 17    deeds  of  trust  on improved unencumbered real property located in the United
 18    States.
 19        (2)  The equity of the seller of any such property in the contract  for  a
 20    deed, covering the entire balance due on a bona fide sale of such property, in
 21    an amount not to exceed ten thousand dollars ($10,000) or the amount permissi-
 22    ble  under  section  41-706,  Idaho Code, whichever is greater, in any one (1)
 23    such contract for deed; nor in any amount in excess  of  seventy-five  percent
 24    (75%) of the actual sale price or fair value of the property, whichever is the
 25    smaller.
 26        (3)  Purchase  money  mortgages or like securities received by it upon the
 27    sale or exchange of real property acquired pursuant to section  41-728,  Idaho
 28    Code.
 29        (43)  Bonds  or  notes  secured  by  mortgage  or trust deed guaranteed or
 30    insured by the federal housing administration under the terms  of  an  act  of
 31    Ccongress  of  the  United  States  for  June twenty-seventh, nineteen hundred
 32    thirty-four, entitled the "National Housing Act," as amended.
 33        (54)  Bonds or notes secured by  mortgage  or  trust  deed  guaranteed  or
 34    insured  as to principal in whole or in part by the administrator of veterans'
 35    affairs pursuant to the provisions of title III of an act of Ccongress of  the
 36    United States of June twenty-second, nineteen hundred forty-four, entitled the
 37    "Servicemen's  Readjustment  Act of 1944," as amended, or by any other similar
 38    agency of the government of the United States.
 39        (65)  Evidences of debt secured by first mortgages or deeds of trust  upon
 40    leasehold  estates,  running  for  a  term of not less than fifteen (15) years
 41    beyond the maturity of the loan as made or as extended, in improved real prop-
 42    erty, otherwise unencumbered, and if the mortgagee is entitled  to  be  subro-
 43    gated to all the rights under the leasehold.
                                                                        
                                           2
                                                                        
  1        (76)  Bonds or notes secured by mortgage and insured by mortgage guarantee
  2    insurance as provided by chapter 26A, title 41, Idaho Code.
  3        (87)  Participation  interests  in any bond, note or evidence of indebted-
  4    ness if the entire indebtedness would qualify as an investment  under  subsec-
  5    tions (1) through (76) of this section, and:
  6        (a)  Such  participation  is senior and gives the holder substantially the
  7        rights of a first mortgagee; or
  8        (b)  Such participation is of equal priority, to the extent of such inter-
  9        est, with other interests therein.
                                                                        
 10        SECTION 2.  That Section 41-722, Idaho Code, be, and the  same  is  hereby
 11    amended to read as follows:
                                                                        
 12        41-722.  MORTGAGE  LOAN LIMITED BY PROPERTY VALUE. (1) No commercial mort-
 13    gage loan or investment therein upon any one (1) parcel of real property shall
 14    exceed in amount, at the time of acquisition, seventy-five  percent  (75%)  of
 15    the fair value of the property and the loan is required to be amortized within
 16    not  more  than  thirty (30) years by payment of installments of principal and
 17    interest thereon at regular intervals not less frequent than every year.
 18        (2)  No commercial or residential mortgage loan or investment therein upon
 19    any one (1) parcel of real property shall exceed in amount,  at  the  time  of
 20    acquisition,  eighty  percent  (80%) of the fair value of the property and the
 21    loan is required to be amortized within not more than  thirty  (30)  years  by
 22    payment of installments of principal and interest thereon at regular intervals
 23    not less frequent than every year.
 24        (32)  The extent to which a mortgage loan made under subsection (3) or (4)
 25    or  (5)  of  section 41-721, Idaho Code, is guaranteed by the administrator of
 26    veterans affairs may be deducted before application of  the  limitations  con-
 27    tained in subsection (1) of this section.

Statement of Purpose / Fiscal Impact


                                                  
                       STATEMENT OF PURPOSE

                             RS 15459

     Under current Idaho law, insurance companies may make
commercial loans on a seventy five percent (75%) loan to value
ratio.  In the commercial lending field, however, most lenders
are able to loan at an eighty percent (80%) loan value to ratio. 
Furthermore, certain states bordering Idaho allow domestic
insurers to lend at up to an eighty percent (80%) loan to value
ratio.  Idaho-domiciled insurers are therefore at a disadvantage
in the commercial lending field.  This legislation would even the
playing field for Idaho-domiciled insurers who are active in the
commercial lending field.  In addition, this legislation would
amend Section 41-721, Idaho Code, to remove a reference to
investments made by insurers in a "contract for a deed," on the
basis that "contracts for a deed" are outdated real estate
conveyance instruments that are no longer used in the State of
Idaho.


                          FISCAL IMPACT
     None.





Contact
Name:     John Mackey, United Heritage
Phone:    322-2685


STATEMENT OF PURPOSE/FISCAL NOTE                         H 447   


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