California Insurance Code 12520-12532
12520. A mortgage insurer may issue mortgage participation certificates pursuant to this chapter. Such certificates and any trust agreement under which the certificates are issued may also contain such provisions, not inconsistent with this chapter, as are agreed upon between the insurer issuing such mortgage participation certificates, the purchasers thereof, and the trustee. 12521. A mortgage insurer shall not issue mortgage participation certificates unless: (a) The securities, the right of participation in which is evidenced by such certificates, are insured, either singly or as a group, by a mortgage policy issued by it or by another mortgage insurer. (b) Such securities are segregated and assigned and transferred to a trustee, to be held as a mortgage participation trust for the common and equal benefit of the issuing insurer and the holders of all mortgage participation certificates evidencing participation in such particular segregated group. 12522. Every mortgage participation certificate issued by such mortgage insurer shall bear the certificate of the trustee to the effect that the aggregate face amount of mortgage participation certificates then outstanding, including both the one being certified and all others evidencing participation in the same group of securities, does not exceed the amount authorized by the agreement under which such certificate is issued. 12523. Each security set apart and assigned to a trustee to be held in a mortgage participation trust shall be accompanied by: (a) A copy of the appraisement of the property securing the same made in accordance with the provisions of this chapter. (b) A copy of the certificate required by the provisions of section 12602. 12524. Upon the segregation and assignment of each such security, copies of the appraisement and certificate shall be transmitted promptly to the commissioner and to the Commissioner of Financial Institutions. Each such copy of appraisement so transmitted shall bear an endorsement or certificate executed by the trustee of the trust in which each such security is held. Such certificate or endorsement shall set forth the unpaid amount of the unpaid principal named in the security which covers the property described in such appraisement. 12525. A mortgage insurer which issued mortgage participation certificates may at any time and may from time to time withdraw from any mortgage participation trust any asset held therein, upon the substitution therefor of other securities insured by any mortgage policy or of cash or of both, except that the group value of all the assets held in any such trust shall not be less than the aggregate face amount of mortgage participation certificates issued and outstanding under such trust. 12526. Upon the substitution of any securities in a mortgage participation trust the substituting insurer shall report the same with a full description of each security so substituted, together with an appraisement of each separate parcel of property securing each security made in accordance with the provisions of this chapter and together with the certificate required by the provisions of section 12602, to the commissioner in its monthly report next following such substitution. 12527. Every mortgage participation trust and the administration thereof shall at all times be and hereby is expressly made subject to the inspection, supervision and control of the Commissioner of Financial Institutions as fully and completely as if the same constituted a court trust under the provisions of the Banking Law (Division 1 (commencing with Section 99) of the Financial Code). 12528. Mortgage participation certificates and securities guaranteed by mortgage policies issued in conformity with the provisions of this chapter shall be legal investments for all trust funds held by any executor, administrator, guardian, conservator, trustee or other person holding trust funds, and for the funds of insurers, banks, banking institutions and trust companies. 12529. Such certificates and securities shall be accepted by this State and its officers and officials, as securities comprising any part of any fund or deposit required by law to be made with this State, or with any officer or official thereof, by an admitted insurer or a trust company doing business in this State. 12530. All premiums required to be paid according to the terms of any mortgage policy, may be charged to or paid out of the income from the security covered thereby. 12531. The right of substitution hereinbefore provided and the exercise thereof shall not alter or affect the status of any mortgage participation certificates as legal investments or as securities acceptable by the State of California, its officers and officials, as comprising or constituting any such fund or deposit. 12532. The legality or validity of mortgage policies, securities guaranteed thereby and of mortgage participation certificates heretofore issued which at the date of issuance fully conformed to and complied with the law then in force shall not be affected or impaired by the provisions of this chapter. Such securities guaranteed by mortgage policies and such mortgage participation certificates shall continue to be legal investments and to be acceptable by the State of California, its officers and officials, as deposits, to the extent and in the manner provided by the law in force at date of such issuance.
