Sec. 05.13.04.20. Withdrawal from Reserve Account by Lender; Effect of Insufficient Funds

A. Upon receipt by the Department of a claim filed by the lender, the Department shall, within 10 business days, pay from the reserve account, or authorize the lender to withdraw from the reserve account, the amount of the claim as submitted, unless the Department reasonably determines that the lender:

(1) Provided information to the Department under this chapter that the lender knew to be false; or

(2) Is not otherwise in substantial compliance with this chapter or with the participation agreement with the Department.

B. Result of Insufficient Money in Reserve Account.

(1) If there is insufficient money in the reserve account to cover the entire amount of the lender's claim, the Department shall pay to the lender, or authorize the lender to withdraw an amount equal to, the current balance in the reserve account.

(2) For the purposes of §B(1) of this regulation, the following shall apply:

(a) If the enrolled loan for which the claim has been filed is not an early loan, the payment fully satisfies the claim, and the lender has no right to receive any further amount from the reserve account with respect to that claim; or

(b) If the enrolled loan for which the claim has been filed is an early loan, the Department, upon request of the lender, shall, out of any future funds that are transferred into the reserve account on subsequently enrolled loans, pay the remaining balance of the claim, upon a finding that:

(i) The partial payment has not satisfied the lender's claim, and

(ii) The remaining balance of the claim is not greater than 75 percent of the balance in the reserve account at the time the request for payment is received by the Department.

C. The Department and the Fund are not liable for any claim if there is insufficient money in the reserve account to cover the entire amount of the claim.