§1492 Claims for Losses; Submission to Secretary; Reimbursement: Single and Aggregate Loss Limitations, Conditions; Assignment of Note or Judgment; Collection or Cancellation by Secretary; Interest or Charges Cessation Date

Summary

When a lender loses money on a loan insured under the program, including interest that has built up, the lender must send a claim to the Secretary. If the Secretary agrees a loss occurred, the government will pay part of it — up to 90% for any one loan and only for losses that do not exceed 15% of all the lender’s insured loans. The lender must first try all reasonable collection steps and sell or use any collateral, applying the proceeds to the debt. After the government pays, the lender gives the loan note or judgment to the United States and gives up any further claims against the borrower or the government. The Secretary can then try to collect more or cancel what cannot be collected, and may set a date when interest or fees stop accruing.