Insurance reserves.

Existing law requires a mortgage guaranty insurer to maintain a policyholders surplus at all times in an amount not less than that determined pursuant to specified provisions, and defines "face amount of an insured mortgage" for these purposes. Existing law requires a mortgage guaranty insurer to cease new business if the insurer does not have the amount of policyholders surplus required, as specified. This bill would revise the definition of "face amount of an insured mortgage" to exclude the outstanding principal balance of any loan that is in default and for which the insurer has established a loss reserve, as specified. The bill would provide that if a mortgage guaranty insurer will not have the amount of policyholders surplus required, it shall cease transacting new business, as specified, until its policyholders surplus is in compliance. The bill requires that the insurer notify the commissioner at least 60 days prior to the time the policyholders surplus is estimated to fall below the amount required and may at that time request a waiver of the requirements. If the commissioner fails to issue an order in response to the waiver request within 60 days, the insurer may continue transacting new business in California until the commissioner issues an order. The insurer would bear the commissioner's cost of retaining consultants reasonably necessary to evaluate the waiver request, and reimburse the commissioner for the cost of a hearing held, as specified.