Current through April 3, 2024
(1) DEFAULTS: A
notice of default must be submitted to the Corporation on the appropriate THRC
form within ten (10) days after the account is sixty (60) days in default as
defined in Rule 0775-1-.02(8) hereof. Each thirty (30) days thereafter, the
mortgagee shall submit a monthly default status report while the loan continues
in default or until proceedings to acquire title have been initiated.
(2) FORBEARANCE: The mortgagee shall advise
the Corporation as to the possibility of loan modification agreements,
recasting, or other methods of forbearance which may be appropriate. All
efforts to rehabilitate a delinquent account shall be exhausted prior to
commencing foreclosure action or accepting a voluntary conveyance of the deed
in lieu of foreclosure. The Corporation shall be kept advised of such efforts
and the results thereof and may, as its own discretion and after consultation
with the mortgagee and mortgagor, provide interest assistance pursuant with
T.C.A. 13-2211 and 13-2212 to assist in the reinstatement of the delinquent
account. Generally, the Corporation will follow the mortgagee's recommendation.
The Corporation may require the institution of foreclosure proceedings pursuant
to T.C.A. 13-2204(15) at any time the account is a total of three (3) months in
default.
(3) FORECLOSURE: If all
efforts to cure the default or to establish forbearance by means of loan
modification, recasting, etc., fail, the mortgagee shall attempt to obtain a
voluntary conveyance of the deed in lieu of foreclosure. "If such conveyance is
not practicable, or where foreclosure action is recommended by the Corporation,
the mortgagee may proceed with foreclosure action." The following requirements
shall be complied with as conditions for submitting a claim to the Corporation:
(a) The mortgagee shall conduct a title
search prior to accepting a deed in lieu of foreclosure.
(b) Prior to instituting foreclosure, the
mortgagee shall notify the Corporation, in writing, that the alternative
remedies to reinstate the account have been exhausted.
(c) Once foreclosure proceedings have been
instituted. the mortgage shall be diligently pursue such actions as are
necessary to minimize costs and expenses.
(d) Copies of all documents pertaining to the
foreclosure proceedings, including pleadings and decrees, shall be forwarded to
the Corporation.
(e) The property
shall be sold free from dower, homestead, and the equity of
redemption.
(f) Pursuant to T.C.A.
Section 13-2204(14),(15),(16), the Corporation shall be kept advised of all
other matters with regard to obtaining a clear and unencumbered title including
settlement with mortgagor, the form of deed, grantee in deed, appointment of
receiver, and third party bidders.
(g) When a clear and unencumbered title has
been acquired, written notice shall be given to the Corporation.
(4) CLAIMS:
(a) Claim period: The insured mortgagee is
required to file a claim for loss on the appropriate THRC form within a sixty
(60) day period. If title is acquired by voluntary conveyance, the sixty (60)
day period begins when mortgagor executes deed in lieu of foreclosure. If
foreclosure is used the sixty (60) day period begins upon expiration of any
redemption rights or, if none, as of the date of trustee's sale. Failure to
file a claim for loss within the sixty (60) day period constitutes a waiver of
any right to claim payment under the pertinent contract of THRC mortgage
insurance.
(b) Computation of loss:
For purposes of computing the loss of the insured mortgagee pursuant to the
subject insured mortgage and thereby establishing the basis for a claim, the
mortgagee shall certify to the following:
1.
The unpaid principal balance due.
2. Mortgage interest due (i.e., in arrears)
as of the date of title acquisition.
3. Attorney's fees charged in acquisition of
title. Such fees shall not exceed a percentage of the total principal balance
due. Said percentage shall be established in the Rules of Practice.
4. Property taxes actually due and payable or
paid by the mortgagee since the of the initial notice of default.
5. Hazard insurance premium necessarily
advanced by the mortgagee.
6.
Expenses ordinary and necessary to the preservation and maintenance of the
subject property, as approved by the Corporation.
7. Other expenses ordinary and necessary to
acquisition of title, including costs, as approved by the
Corporation.
8. All amounts
received by the mortgagee on account of the mortgage after the institution of
foreclosure proceedings or the acquisition of the mortgaged property by direct
conveyance or otherwise by default.
9. All amounts received by the mortgagee from
any source relating to the mortgaged property on account of rent or other
income after deducting reasonable expenses incurred in handling the mortgaged
property.
10. All cash retained by
the mortgagee, including amounts held or deposited for the account of the
mortgagor or to which he is entitled under the mortgage transaction that have
not been applied in reduction of the mortgage indebtedness.
(c) Exhibits: The Corporation
shall require, as set forth in its Rules of Practice, exhibits to be submitted
as a part of any claim. Such exhibits may include evidence of title, mortgage
transaction history, receipts for all disbursements and income, most recently
paid tax bills, and receivers account if a receiver was appointed during
foreclosure proceedings.
(5) EXCLUDED HAZARDS OR RISKS: THRC mortgage
insurance coverage does not protect from loss due to casualty or title risk.
Expenses incurred for property repair resulting from such causes, accidental or
otherwise, as negligence, flood, fire, termites, vandalism, defective or
incomplete construction, etc. are not eligible for claim computation as
distinguished from expenses incurred in the preservation and normal maintenance
of the property.
(6) METHODS OF
SETTLEMENT: At the sole option of the Corporation, settlement of claims will be
made through one of the following three (3) methods:
(a) Acquisition settlement: Pay the claim as
approved by the Corporation and in return, take merchantable title to the
property in the name of the Corporation.
(b) Direct loss settlement: The amount of
reimbursement to the insured mortgagee will be determined by subtracting the
net proceeds of the sale of the subject property from the approved claim,
(prior approval by the Corporation is required before property resale for
reimbursement under direct loss settlement).
(c) Declared percentage settlement: Pay the
percentage of the approved claim declared in the subject THRC mortgage
insurance certificate covering the subject mortgage with the title being vested
in the mortgagee.
(7)
PAYMENT OF CLAIM: The Corporation shall pay the claim on the basis of the
optional settlement method chosen by the Corporation, within sixty (60) days
after the claim has been properly filed and all conditions of the claim
procedure complied with. In no event shall a claim paid under options .13(6)(b)
and (c) exceed the declared percentage of the insured mortgage balance as of
the date said insurance certificate was issued. insurance premiums paid shall
be fully earned upon settlement of a claim and no refund shall be
made.
(8) SUBROGATION: If the
Corporation, pursuant to the terms and conditions of a contract of mortgage
insurance, or of a commitment to insure, makes any payment upon a defaulted
loan to the mortgagee thereof, the Corporation shall be subrogated to all
rights of the mortgagee.
Authority: T.C.A. Section 13-2204(4).
