1-A. Coinsurance. Notwithstanding subsection 1, paragraph A, and section 1026-D, subsection 2, with respect to mortgage loans securing revenue obligation securities of the authority issued under subchapter III, the authority may insure an amount not to exceed 50% of the original principal amount of the mortgage loan, plus 50% of accrued interest, and may provide that mortgage payments be applied so that the insured percentage of the loan increases and that proceeds of collateral are applied first to reduce the portion of the loan not insured by the authority, provided that that insurance shall not exceed $3,500,000 in original principal amount for any loan and that the authority shall not issue that insurance unless it determines that the applicant is financially strong and credit worthy and that the loan is adequately secured by collateral.

2. Loan eligibility. The authority may insure mortgage loan payments under this subchapter subject to the following requirements:

A. The mortgage shall loan must be secured by a lien on or a security interest in eligible collateral, subject to such encumbrances, including, without limitation, coordinate first liens, as are acceptable to the authority, except that, where the original principal amount of the mortgage insurance exceeds $1,000,000, the lien or security interest shall be a first lien or first security interest;

B. The eligible collateral shall must be owned, leased, used or held by or shall otherwise benefit an eligible enterprise;

C. The mortgage and related documents shall must contain provisions satisfactory to the authority pertaining to the payment of principal and interest and shall contain covenants and other provisions satisfactory to the authority pertaining to real estate taxes, assessments, repairs, maintenance, hazard insurance, mortgage insurance, default, remedies, transfer or alteration of eligible collateral, change in management or control of the mortgagor business and such other matters as the authority may determine; and