340-176-0080 Notice of Default on a Guaranteed Loan (1) Any commercial lending institution wishing to obtain payment from the Department under the Department’s loan guarantee shall provide the following: (a) Written notice from the commercial lending institution in the form of a demand for payment of the loan guarantee, stating: (A) The guaranteed loan to the borrower is in default; (B) The commercial lending institution has made a good faith effort to work with the borrower, using the institution’s established procedures, to bring the loan back into good standing; (C) Demand for payment in full has been made to the borrower by the commercial lending institution; and (D) The borrower has not paid the loan in full. (b) The demand for payment of the loan guarantee shall include: (A) A copy of the demand letter to the borrower from the commercial lending institution; and (B) A statement showing the principal balance outstanding on the date the demand letter was sent to the borrower. (2) Subject to the availability of funds from the Underground Storage Tank Compliance and Corrective Action Fund, the Department, within 30 days after receipt of the default notice: (a) Shall institute procedures to pay to the commercial lending institution the lesser of: (A) The amount guaranteed by the Department; or (B) The principal balance outstanding on the date the commercial lending institution sent the default notice to the Department. (b) Where agreed upon by the commercial lending institution and where the borrower is unable to pay, the Department may make partial principal payments of the loan guarantee equal to the monthly loan principal payment for up to 12 monthly loan payments. If the loan is still in default after the Department has made 12 monthly payments, the Department will pay the loan guarantee, pursuant to subsection (2)(a) of this rule. (3) If the commercial lending institution receives payment of the loan, in whole or in part, after the date of the default notice, the commercial lending institution shall promptly notify the Department in writing of such payment. (4) Once the Department has paid the loan guarantee certificate in whole or in part, the commercial lending institution shall reimburse the Department for any collection of the principal portion on the unpaid loan at the guarantee percentage shown on the loan guarantee certificate. The reimbursement shall be in legal tender. The expenses of collection including interest accrued after default may be deducted from the reimbursement paid to the Department. (5) The Department understands that collection may consist of cash, securities, notes, personal property, real property or any other form of payment accepted by the commercial lending institution. The reimbursement to the Department shall be after the collection has been converted to legal tender. Payment to the Department by the commercial lending institution shall be made within 30 days after any collection is converted into legal tender. Statutory/Other Authority: ORS 466.706 - 466.895 & 466.995 Statutes/Other Implemented: OL 1989 & Ch. 1071 History: DEQ 14-1992, f. & cert. ef. 6-11-92 DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91