Or. Admin. R. 123-021-3100

Current through Register Vol. 63, No. 8, August 1, 2024

Section 123-021-3100 - Collateral Support Insurance Program

(1) Collateral Support Insurance is only intended to mitigate a collateral shortfall at the maturity of an existing loan secured by real estate and is not available to mitigate other or additional credit deficiencies. Collateral Support Insurance will only be provided to the extent necessary to facilitate the loan's qualification under the Financial Institution's lending guidelines. Loans covered by Collateral Support Insurance must satisfy a participating Financial Institution's credit underwriting criteria with the sole exception of collateral adequacy. Insured loans must be amortized during the term of the Collateral Support Insurance to adequately reduce the principal balance of the insured loan in order to comply with the Financial Institution's current advance rate policy based upon the collateral's appraised value at the time of loan approval at or before the maturity of the Collateral Support Insurance.

(2) Loan proceeds may be used to pay off an existing loan only when the collateral value is no longer adequate to secure the loan due to a decline in the collateral's value and the Borrower does not qualify for a loan that is less than fully secured at origination.

(3) Under Collateral Support Insurance, the Department's maximum liability, up to a maximum of 100 percent of the Deficiency of a loan, shall be the lesser of:

(a) $1,500,000;

(b) 20% of the insured loan; or,

(c) The insured percentage times the authorized and insured loan amount.

(4) Collateral Support Insurance may not exceed a term of 5 years.

(5) Borrowers with loans covered by Collateral Support Insurance must:

(a) Demonstrate significant current and historical cash flow coverage;

(b) Demonstrate strong credit history;

(c) Demonstrate strong personal and corporate guarantee strength;

(d) Provide personal guarantees of Principals of the Borrower;

(e) May not have already had, or currently have, a loan covered by Collateral Support Insurance; and

(f) Meet such other criteria as determined by the Department.

(6) Unless otherwise specified by rule, Collateral Support Insurance is available for all types of non-revolving loans with regular periodic payments of principal and interest no less than annually for eligible purposes. To be eligible, regular periodic payments of principal and interest must commence within 60 days of the loan closing date.

Or. Admin. R. 123-021-3100

OBDD 28-2023, temporary adopt filed 10/13/2023, effective 10/13/2023 through 4/5/2024; OBDD 2-2024, adopt filed 03/06/2024, effective 3/8/2024

Statutory/Other Authority: ORS 285A.075 & ORS 285B.200 - ORS 285B.218

Statutes/Other Implemented: ORS 285B.200 - ORS 285B.218