- (a) An approved loan must be secured by a mortgage, deed of trust, or other lien on the land prior to any disbursement of funds. All paperwork associated with the note and lien shall be deposited for safekeeping with the board, or as the board may direct.
(b) The security for the board's loan will be provided by:
- (1) A first lien mortgage with the board as mortgagee, or the board and a participating lending institution joining as mortgagees, each receiving the payment as provided by its note.
- (2) Mortgage insurance providing for repayment of at least 50% of the total outstanding principal balances of all loans, or repayment of at least 50% of all anticipated losses, based upon an analysis and forecast of potential losses shown by the actual experience of the mortgage lending industry on similar types of loans. The board may contract with a mortgage insurance company for pooled coverage or with individual companies for insurance on each loan, or the board may elect to be self insured in part or in whole.
- (3) Hazard insurance on any improvements securing the loan. The policy must name the board loss payee in at least the amount of the board's loan.
Source Note:The provisions of this §175.54 adopted to be effective January 8, 2002, 27 TexReg 286.