My interpretation is that portion of it is intended to address FHA loans where MI is required when the LTV is less than 80%. please refer to the sentence that comes before it:
an amortized instrument of indebtedness, evidencing a loan which otherwise conforms to the requirements of paragraph one or three of this subsection, and which has been amortized to less than eighty percent of the fair market value of the real estate at the time said loan was made; provided the borrower is not obligated directly or indirectly to pay any premium for mortgage guaranty insurance authorized under this article, and the instrument would be ineligible for sale to the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation or any other secondary mortgage market instrumentality or facility as the superintendent of financial services determines, without such mortgage guaranty insurance
Last edited by CMSIngenue; 06/18/21 03:30 PM.