Document ID: chunk:federal_register_of_legislation:F2024C01285:reg:29h
Version: federal_register_of_legislation:F2024C01285
Segment Type: reg
Provision Reference: reg 29H
Character Range: 96916–99164

29H  Form of guarantee

When guarantee becomes payable
 (1) A guarantee issued by Housing Australia may only cover a payment where there is a balance owing on the guaranteed loan following the application of the proceeds of sale by the lender that was as a consequence of the default by the borrower under the terms of the loan contract.

Limit on amount of guarantee
 (2) Where subsection (1) applies, the amount payable under a guarantee issued by Housing Australia is an amount equal to the lesser of:
 (a) the money owed to the lender under the loan agreement after the proceeds of the sale of the residential property that is the subject of the loan have been applied; and
 (b) the amount worked out using the following formula:

              A – B

              where:

            A is 20 per cent of the value of the residential property that is the subject of the eligible loan.

            B is the deposit paid by the borrower or borrowers under the loan agreement.

Cessation of guarantee
 (3) Subject to subsection (4), the terms of a guarantee issued by Housing Australia under this Part must provide for the guarantee to cease when the balance of the loan becomes less than 80 per cent of the value of the residential property.
 (4) However, subsection (3) does not require the guarantee to cease where the proceeds of the sale by the lender that was as a consequence of default by the borrower are applied against the loan resulting in the balance of the loan being 80 per cent or less than the value of the residential property.
 (5) The terms of a guarantee issued by Housing Australia under this Part must provide for the guarantee to cease if:
 (a) the residential property the subject of the loan is used other than as an owner-occupied premises, unless paragraphs 29K(3)(a), (b), (c) and (d) apply in relation to the loan and the property; or
 (b) the person:
 (i) is an eligible single parent as a result of sub-subparagraph 29D(3)(a)(ii)(A) or an eligible single legal guardian as a result of sub-sub paragraph 29D(3A)(a)(ii)(A); and
 (ii) more than 4 weeks from when they became the registered owner of the property that was purchased with the loan, still holds a freehold interest in other real property in Australia.