Section 51658 Of Chapter 4. Loan Insurance From California Health And Safety Code >> Division 31. >> Part 4. >> Chapter 4.
51658
. (a) The agency shall establish procedures to be followed by
approved lending institutions in the event of default on a loan
insured under this part. The agency may require that, prior to
submitting a claim, an approved lending institution shall foreclose
or exercise a power of sale and take possession of the property or
otherwise acquire title and possession of the property within the
time specified by the agency. The agency may, upon submission of the
claim, pursue one of the following alternatives:
(1) Pay the approved lending institution the benefit of the
insurance.
(2) Upon conveyance to the agency of all the right, title, and
interest of the approved lending institution in the foreclosed
property and the assignment of all claims of the approved lending
institution against the defaulting borrower to the agency, pay to the
qualified mortgage lender the sum of the unpaid principal balance of
the loan, foreclosure costs, accrued interest, and other costs
defined by contract.
(3) Pay a partial claim prior to foreclosure by agreement with the
insured.
(b) In any case in which the agency has insured only a portion of
the outstanding principal indebtedness of a loan, it may further
provide that not more than an equivalent percentage of the total
accrued interest and costs shall be payable by the agency pursuant to
this section in the event of a default.