Sec. 05.06.01.22. Partial Claims

A. The Fund may accept and make payment on a partial claim if all of the following conditions are satisfied:

(1) The lender requests approval to file a partial claim;

(2) At the time the claim is paid the:

(a) Partial claim payment is applied by the lender to reduce the unamortized principal balance of the insured loan, or

(b) Fund receives collateral of the type described in Regulation .09B of this chapter in an amount equal to the partial claim payment;

(3) The loan balance remaining on the insured loan after application of the partial claim payment can be amortized over its remaining term of years on terms that are feasible and the loan will otherwise conform to the initial insurance requirements of these regulations;

(4) Payment of the partial claim will cure the default and the lender will withdraw the notice of default issued; and

(5) The borrower shall give a promissory note to the Fund, secured by a subordinate lien on the project for the full amount of the partial claim payment, that provides for repayment to the Fund over the remaining term of the insured loan or from a sale or refinancing of the project, at an interest rate not less than the rate on the insured loan or on terms otherwise acceptable to the Fund.

B. Instead of the Fund making payment for the amount of the partial claim, the lender may make an additional loan to the borrower to bring the original insured loan current and accept a note from the borrower, which the Fund may insure, if:

(1) The additional loan is secured equably with the original insured loan;

(2) The maximum insurable loan amount permitted under Regulation .09 of this chapter is not exceeded; and

(3) All other requirements of these regulations are satisfied.