Section 20-553 - Mortgages on real estate; definitionsA. An insurer may invest any of its funds in bonds, notes or other evidences of indebtedness that are secured by first mortgages or deeds of trust on improved, unencumbered real property located in the United States, or that are secured by first mortgages or deeds of trust on leasehold estates having an unexpired term of not less than twenty-one years, inclusive of the term that may be provided by an enforceable option of renewal, in improved, unencumbered real property located in the United States.B. Real property shall not be deemed to be encumbered within the meaning of this section by reason of the existence of instruments reserving mineral, oil or timber rights, rights-of-way, sewer rights, rights in walls, nor by reason of any liens for taxes or assessments not delinquent, nor by reason of building restrictions or other restrictive covenants, nor when such real property is subject to lease under which rents or profits are reserved to the owner, if in any event the security for the loan is a first lien on the real property and if there is no condition or right of reentry or forfeiture under which, in the case of real property other than leaseholds, the lien can be cut off, subordinated or otherwise disturbed, or under which, in the case of leaseholds, the insurer is unable to continue the lease in force for the duration of the loan.C. No mortgage loan or loans made or acquired by an insurer on any one property shall, at the time of investment by the insurer, exceed eighty per cent of the value of the real property or leasehold securing the loan, except that the loan or loans may equal the amount of any guaranty by the United States or any agency or instrumentality of the United States.D. An insurer shall not make or acquire a mortgage loan or loans except after an appraisal made by a qualified appraiser for the purpose of the investment.E. An insurer may invest any of its funds in an undivided interest or participation in any bond, note or other evidence of indebtedness secured by a first mortgage or deed of trust that would be eligible as an investment by the insurer pursuant to subsection A if the following requirements are met:1. The mortgagee or beneficiary of the deed of trust is a trustee specifically designated by a participation agreement or otherwise who is required to act as trustee for all persons or institutions owning an interest in or participating in the bonds, notes or other evidences of indebtedness that are secured by the mortgage or deed of trust. The trustee may be one of the participants in the bonds, notes or other evidences of indebtedness secured by the mortgage or deed of trust.2. The participant in or co-owner of any of the bonds, notes or other evidences of indebtedness does not have any interest in the mortgage or deed of trust superior to that of the insurer.3. The trustee is under an obligation to distribute all payments, proceeds and recoveries from the notes, bonds, evidences of indebtedness, mortgages and deeds of trust ratably without preference among all participants.F. No mortgage loan on a leasehold shall be made or acquired pursuant to this section unless the terms of the loan provide for amortization payments to be made by the borrower on the principal of the loan at least once in each year in amounts sufficient completely to amortize the loan within a period of four-fifths of the term of the leasehold, inclusive of the term which may be provided by an enforceable option of renewal, that is unexpired at the time the loan is made, but in no event exceeding thirty-five years.G. An insurer may invest in construction loans pursuant to this section and the accounting practices and procedures manual adopted by the national association of insurance commissioners, if the real property is improved or will be improved with the proceeds of the construction loan. The insurer shall not report the construction loan in an amount that is more than eighty per cent of the fair value of the property. The appraisal prescribed in subsection D may take into consideration the improvements to be constructed. However, the appraisal shall take into consideration the percentage of completion of the property in determining the fair value of the property securing the amount advanced under the construction loan.H. At any one time, an insurer shall not invest more than two per cent of its assets in construction loans allowed pursuant to this article.I. For the purposes of this section: 1. "Construction loan" means a mortgage loan that is less than three years in term, that is made for financing the cost of construction of any building or other improvement to real estate and that is secured by the real estate.2. "Improved real property" includes all land that has been reclaimed and that is used for the purpose of husbandry, whether for tillage or pasture.