Sec. 05.13.04.22. Right of Subrogation by Department; Effect of Assignment

A. If the payment of a claim has fully covered the lender's loss on an enrolled loan, or if the payment of a claim when combined with any recovery from the borrower has fully covered the lender's loss, the Department, upon its own request, is subrogated to the rights of the lender with respect to any collateral, security, or other right of recovery in connection with the loan that has not been realized by the lender. The lender thereafter shall assign to the Department any right, title, or interest in or to any collateral, security, or other right of recovery in connection with the loan.

B. If an assignment has been made under §A of this regulation, the Department is not required to undertake the obligations of the lender under the lender's loan documents, except for obligations directly related to the Department's assigned rights of recovery in connection with the loan. The lender shall fulfill any other obligations the lender has under the loan documents in the same manner and to the same degree as would be required if the assignment had not been made. The lender shall provide the Department with all reasonable assistance the Department requests in proceeding with respect to any collateral, security, or other right of recovery, except that the lender does not need to incur any out-of-pocket expenses.