99- 346 C.M.R. ch. 7, § 7

Current through 2024-50, December 11, 2024

Section 346-7-7 - Default

A. The Lender shall document its efforts to collect any unpaid amounts due under a Loan. All notices of default and other material delivered to a borrower in connection with a Loan in default and copies of any other documentation prepared in connection with a Loan in default shall be delivered to the IHA and the Authority. The Lender shall use its best collection efforts and exercise that degree of diligence customary in its business to collect any unpaid amounts due under a Loan.

B. Notwithstanding a Lender's efforts to collect unpaid amounts due under a Loan as set forth in Section 7(A) of this Rule, no Loan shall be allowed to remain delinquent for more than 90 days. If, upon the 90th day, the borrower has not cured a default, the Lender shall deliver to the Authority a Demand for Insurance Payment.

C. Upon receipt of a Demand for Insurance Payment, the Authority shall pay an amount from the Fund to the Lender equal to the sum of the outstanding principal of the Loan, accrued interest, and accrued fire insurance premiums, if any.

D. Upon receipt of such payment, the Lender shall deliver the following documents to the IHA or the Authority, as applicable:

1. Original Loan closing documents including an assignment to the IHA of the mortgage and / or other security documents and an endorsement to the IHA of the promissory note and / or other documents evidencing the indebtedness due under the Loan;

2. A release to the Authority of all the Lender's claims arising out of or based upon the applicable Loan Insurance Certificate;

3. The fire insurance policy and all endorsements, with evidence acceptable to the IHA that it has been substituted as loss payee.

E. Within one month of the receipt of the original closing documents as assigned or endorsed to the IHA, the IHA shall either:

1. Accept a conveyance of the Property from the Borrower. In return, the IHA may release the Borrower from any or all obligations under the Loan documents but only with the written consent of the Authority;

2. Lease the Property for a term of no more than one year. A lease to the borrower or the borrower's family members may only be for a term, rental amount, and on other conditions acceptable to the Authority; or

3. Institute legal proceedings to collect unpaid amounts and / or realize upon the collateral securing the Loan. All such proceedings must be commenced and prosecuted in recognition of the jurisdictional constraints and the rights and duties set forth in "An Act to Implement the Maine Indian Claims Settlement", 30 M.R.S.A. §6201etseq. and in particular, Title 30 M.R.S.A. §§6202, 6204, 6205(5), and 6206(2); the federal Maine Indian Claims Settlement law, codified at 25 U.S.C. §§ 1721etseq.; and the applicable regulations of the Bureau of Indian Affairs of the U. S. Department of the Interior, codified at 25 C.F.R. Part 152.

F. Any amount received by the IHA on account of the disposition or lease of Property shall be remitted to the Authority promptly after receipt and shall be deposited by the Authority in the Fund for additional uses consistent with this Rule. The IHA may deduct the following from any amount prior to its remittance to the Authority:

1. Legal fees and costs;

2. Property insurance premiums;

3. The cost of any repairs approved in advance by the Authority; and

4. Other reasonable expenses related to the disposition, lease, or management of the Property that are itemized and approved by the Authority prior to their incurrence.

G. The IHA may sell the Property. The Property may not be sold for less than the amount due under the Loan without the Authority's consent. The proceeds of the sale shall be remitted to the Authority, except that the IHA may deduct all foreclosure, Property management, and sale expenses not previously deducted.

H. If the IHA shall fail to follow the procedures set forth in this Section 7 with respect to any one or more defaulted Loans for Properties on a particular reservation, or if there is outstanding for 12 or more consecutive months $50,000 or more paid from the Fund on account of defaulted Loans on a particular reservation, then no further Loans shall be made for properties on that reservation, until such compliance or until the amount paid from the Fund is reduced to below $50,000.

99- 346 C.M.R. ch. 7, § 7