§ 2510.14. Assumption or Substitution of Borrowers.

Assumption without the release of the original borrower is permitted. Any assumption that leads to the release of the original borrower and substitution of a new borrower shall be considered a termination of the insurance coverage extended under the pool insurance policy as to that particular loan unless all of the following conditions are met:

(a) At the time of substitution, the loan is for no greater than the amount of outstanding balance on the original loan insured;

(b) It is limited to the same property as originally insured;

(c) The interest rate is the same as the interest rate on the original loan if fixed, or if it is a variable interest rate, it does not exceed the maximum interest rate allowable under law on the original mortgage loan insured;

(d) The criteria applied in the underwriting and credit evaluation of the substituted borrower is not less favorable to the insurer than that criteria applied to the original borrower;

(e) The substitution is made subject to the prior approval of the mortgage guaranty insurer;

(f) The existing coverage is not, in whole or in part, changed or affected as to the individual insured mortgage loan to be substituted or as to the overall pool insurance policy, and

(g) No substitution mortgage loan in any one pool shall remain covered under the pool insurance policy if its remaining principal balance at the time the substitution occurs, when added to the then current remaining principal balances of all previously substituted mortgage loans, exceeds the unexhausted and available aggregate ceiling of loss under the same pool insurance policy at the time of such calculation.

HISTORY

1. New section filed 8-23-78; effective thirtieth day thereafter (Register 78, No. 34).