No loan authorization shall be effective unless the financial institution and the Department have executed a loan insurance agreement in a form acceptable to the Department setting forth the relative rights and responsibilities of the financial institution and the Department for all insured loans. The loan insurance agreement shall include without limitation the following:
General conditions and provisions incorporating the requirements of this division of the rules and ORS 285.466 to 285.481.
Provisions setting forth the responsibilities of the financial institution to prudently underwrite and service insured loans in such a manner as would be the normal and customary practice of a prudent lender making or servicing a loan without relying on loan insurance.
A requirement that the financial institution notify the Department in writing within 5 business days after a borrower’s payment is 30 days late and within fifteen business days of any other default or event or condition which indicates the loan may be difficult to collect in full. Upon default, the financial institution and/or Department shall take such action as may be prudent, including without limitation foreclosing on and liquidating collateral.
A description of the Department’s insurance programs and the method for paying insurance claims.
The Department shall be entitled at its discretion to cancel or reduce its insurance obligation if the financial institution breaches its responsibilities under the loan insurance agreement.