California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 3 - Insurers
Article 2 - Valuation of Properties and Securities
Section 2283 - Mortgages: General Rules Relating to Mortgages Purchased at a Premium or at a Discount and Which Are Not More than Three Months in Default
Current through Register 2024 Notice Reg. No. 38, September 20, 2024
Notes secured by mortgage or deed of trust on real property which are not more than three months in arrears of either principal or interest, and on the property securing which no taxes, assessments or other charges constituting liens are in arrears or have been advanced by the reporting insurer or an affiliate thereof, shall be valued at amounts equal to the unpaid principal of such notes (but not in excess of the amount permitted by law to be loaned on or invested in such notes) with the following exceptions:
(a) FHA and VA Mortgages. Premiums may be amortized and discounts accrued on FHA and VA mortgages over a five-year period from date of acquisition. Companies may adjust the asset values of these mortgages to the face amounts thereof, but any excess of aggregate value over aggregate permissive amortized value (cost of mortgages less repayments of principal, adjusted for amortization of premiums and accrual of discounts on a five-year basis) shall be treated as a "not admitted asset."
(b) Mortgages (Insured or Guaranteed by the Federal Housing Administration or the Veterans Administration) Received in Exchange for 2 3/4% Treasury Bonds, Investment Series "B"--1975-1980, Nontransferable. Acquisition cost to insurers shall be equal to the amortized value of the bonds surrendered in the exchange at the date of exchange, provided, however, that in no event shall such acquisition cost exceed the principal amount owing upon the mortgage at the time of acquisition by the insurer.
(c) Mortgages (Other Than FHA and VA Mortgages). The book value of real estate mortgages acquired at a premium may be reported at values reflecting write-offs of such premiums over a three-year period from date of acquisition. Real estate mortgages purchased at a discount should be carried at cost.
