§219-7  Loans insured by the department.

(1)  The department of agriculture may insure up toninety per cent of the principal balance of a loan, plus interest due thereon,made to a qualified aquaculturist by a private lender who is unable otherwiseto lend the applicant sufficient funds at reasonable rates;

(2)  Loans insured under this section shall be limitedby the provisions of section 219-6;

(3)  Interest charged on an insured loan made underthe provisions of this section shall be determined by the board;

(4)  When the application for an insured loan has beenapproved by the department, the department shall issue to the lender a guarantyfor that percentage of the loan on which it insures payment of principal andinterest.  The lender shall collect all payments from the borrower andotherwise service the loan;

(5)  In return for the department's guaranty, thelender shall remit a one-time insurance fee of two per cent on the principalamount of the insured portion of the loan, at the time the loan is booked,except that:

(A)  On loans of $75,000 or less with amaturity exceeding twelve months, a reduced fee of one per cent; and

(B)  On all guaranteed loans with a maturity oftwelve months or less, a reduced fee of one per cent;

shall be paid.

This fee may be paid by the borrower as a costfor the loan;

(6)  When any installment of principal and interesthas been due for sixty days and has not been paid by the borrower, thedepartment shall issue, on request of the lender, a check for the percentage ofthe overdue payment guaranteed, thereby acquiring a division of interest in thecollateral pledged by the borrower in proportion to the amount of the payment. The department shall be reimbursed for any amounts so paid plus the applicableinterest rate, where payment is collected from the borrower;

(7)  Under conditions specified in rules of thedepartment, the lender may request that a portion or all of the guaranteedpercentage of the principal balance of the loan be converted to a participatingshare held by the department subject to this section;

(8)  Should the lender deem that foreclosureproceedings are necessary to collect moneys due from the borrower, it shall sonotify the department.  Within thirty days of the notification, the departmentmay request an assignment of the loan on payment in full to the lender of theprincipal balance and interest due.  Foreclosure proceedings shall be held inabeyance in the interim; and

(9)  The lender may reduce the percentage of theprincipal balance insured under this section at any time. [L 1977, c 212, pt of§2; am L 1995, c 79, §2; am L 2001, c 55, §8(2)]