Code of Maine Rules
94 - INDEPENDENT AGENCIES
457 - FINANCE AUTHORITY OF MAINE (FAME)
Chapter 101 - LOAN INSURANCE PROGRAM
Section 457-101-9 - Loan Insurance Agreement

Universal Citation: 94 ME Code Rules ยง 457-101-9

Current through 2024-38, September 18, 2024

No loan insurance shall be effective unless the lender and the chief executive officer have executed a loan insurance agreement in form acceptable to the chief executive officer setting forth the relative rights and responsibilities of the lender and the Authority for all insured loans. The loan insurance agreement shall include without limitation the following:

A. General Conditions. General conditions and provisions incorporating the requirements of the Act and this rule.

B. Responsibilities of the lender. Provisions setting forth the responsibility of the lender to:

(1) investigate the borrower's character and business ability;

(2) investigate the value and ownership of collateral;

(3) ensure that the loan documentation, including necessary recordings and filings, is prepared and executed in a manner which will ensure that the borrower and any guarantors have binding, enforceable obligations to repay the loan and that the lender has such valid and enforceable mortgages, security interests and assignments as may be necessary to protect the interests of the lender and Authority;

(4) ensure that any guarantors waive any right to contribution from the Authority and acknowledge that the Authority is not a coguarantor;

(5) ensure the loan is prudently serviced and administered;

(6) ensure records with respect to the loan are maintained and made available to the Authority;

(7) not assign, transfer or release any of its interest in the loan or loan documents without the consent of the Authority;

(8) supervise the use and disposition, if authorized, of collateral and loan proceeds;

(9) not assign any right or obligation under the insurance contract without the Authority's consent;

(10) exercise all such responsibilities and shall service insured loans at a minimum in such manner as would be the normal and customary practice of a prudent lender making or servicing a loan without relying on loan insurance.

C. Loan Charges. A prohibition of the imposition of charges on a borrower which would not have been imposed had the loan not been insured, except for the commitment fees and insurance premiums payable to the Authority.

D. Default. A requirement that the lender notify the Authority in writing within 10 business days after a payment is 60 days late and within 10 business days of any other default or event or condition which indicates the loan may be difficult to collect in full. Upon default, the lender shall take such action as may be prudent, including, with the consent of the Authority, repossessing and liquidating or foreclosing on collateral.

E. Authority Insurance. Subject to the limitations of Section VI(B), the Authority may insure principal, interest and reasonable and necessary expenses of enforcement and collection, provided that the insurance premiums are fully paid, and all other conditions hereof, of the loan insurance authorization or commitment, and of the Loan Insurance Agreement are met.

F. Cancellation. The Authority shall be entitled at its discretion to cancel or reduce its insurance obligation if the lender breaches its responsibilities under the loan insurance agreement.

Disclaimer: These regulations may not be the most recent version. Maine may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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