This amendment repeals private mortgage insurance limits until 2018.

Insurance Code §12640.09

Amended and Added by S.B. 1450
Effective date: January 1, 2013

Currently, a private mortgage insurer may only insure a mortgage lender for up to 30% of a first lien secured by a one-to-four unit residential property. A mortgage insurer may only exceed the 30% cap by obtaining a secondary policy from a different private mortgage insurer.

From January 1, 2013 to December 31, 2017, private mortgage insurers will be able to exceed the existing 30% threshold without obtaining reinsurance from another private mortgage insurer.

Editor’s note — Initially, this cap was meant to give private mortgage insurers another source of profit (the secondary reinsurance policies). However, the cost and the complication of involving a competing insurer quickly caused the program to fizzle. This law removes the cap to encourage increased lending.