                                 CODE OF VIRGINIA

POWER TO CREATE INSURANCE FUNDS AND FORM CORPORATIONS FOR THE PURPOSE OF
INSURING HDA MORTGAGE LOANS (§ 36-55.36:1)

HDA shall have the power to create one or more insurance funds and to form one
or more corporations for the purpose of providing replacement mortgage guaranty
insurance, upon such terms and conditions as HDA shall prescribe, on mortgage
loans made or financed by HDA pursuant to this chapter for which (i) mortgage
guaranty insurance is being provided by a company which, subsequent to the
provision of such coverage, has experienced a drop in rating by a nationally
recognized credit rating service which could result in a rating for the bonds
which would be in nonconformance with the rating covenants of the related bond
indenture; and (ii) the executive director of HDA executes an affidavit stating
that HDA was unable, after diligent effort, to procure replacement mortgage
guaranty insurance in a form and premium acceptable to HDA from another insurer
licensed in this Commonwealth to transact mortgage guaranty insurance business.
For purposes of this section, &#8220;diligent effort&#8221; means a good faith
search by HDA for mortgage guaranty insurance among admitted insurers resulting
in declinations of coverage, by three unaffiliated insurers licensed and
authorized in this Commonwealth to write the mortgage guaranty insurance
coverage sought, at a premium equal to or less than the premium in force for the
loans made or financed by HDA. HDA may provide financing and other funding to
any such fund or corporation and may exercise all necessary or convenient rights
and powers and perform all requisite duties and obligations relating thereto.
Any such fund or corporation shall be subject to the direction and control of
the commissioners of HDA and shall have such powers and duties as the
commissioners of HDA shall prescribe. Any such fund or corporation may charge
such premiums and may establish such reserves as HDA shall specify. HDA may
specify that any such reserves shall be assets of such fund or corporation and
shall not be subject to the claims of creditors of HDA. Any such fund or
corporation, its directors, officers and employees, its assets and operations,
and its policies of insurance and the premiums therefor shall not be subject to
the provisions of Title 38.2 and rules and regulations issued pursuant thereto.
The property of any such fund or corporation and its income and operations shall
be exempt from taxation or assessments of every kind by the Commonwealth and all
municipalities and other political subdivisions thereof. The provisions of §
36-55.36 shall not be applicable to mortgage guaranty insurance provided under
this section.

HISTORY: 1990, c. 956.