Filter Results CategoriesCart
Highlight Updates

12.2.6.3 Insurance

Just Updated

Within its section on Customer service and Loan Servicing, HB-1-3550 Handbook Appendix 10 contains subsections entitled “Insured Losses” and “Uninsured Losses.” The “Insured Losses” section provides:

If security property is to be repaired, the borrower’s Rural Development loan account must be current before insurance proceeds can be released. An authorized field office employee may release insurance proceeds less than $10,000 to the borrower when presented with the insurance company’s repair list. Insurance proceeds of $10,000 or more must be forwarded to NFAOC, Hazard Insurance Section, according to current claims handling procedures. A field office employee will inspect repairs when completed as required under 7 CFR 3550.110(d) (3) and RD Instruction 1924-A. If security property is not going to be repaired, insurance proceeds must be applied to pay off the loan.235

The “Uninsured Losses” section provides:

A borrower who sustains an uninsured loss is covered by the moratorium authority below but is in default of the mortgage by failing to keep the property insured. If a borrower incurs an uninsured loss, the field office will notify NFAOC through Task 285 of the estimated amount of damage to the property and the date of loss. If a borrower is unable to pay off the debt or repair the house with personal resources or other credit, the debt must be settled under 7 CFR 3550.253.236

Footnotes

  • 235 U.S. Dep’t of Agriculture, Rural Development, HB-1-3550 Direct Single Family Housing Loans and Grants Field Office Handbook, Appendix 10, VIII, Customer Service and Loan Servicing.

  • 236 U.S. Dep’t of Agriculture, Rural Development, HB-1-3550 Direct Single Family Housing Loans and Grants Field Office Handbook, Appendix 10, VIII, Customer Service and Loan Servicing.