Page:United States Statutes at Large Volume 100 Part 2.djvu/293

 PUBLIC LAW 99-498—OCT. 17, 1986

100 STAT. 1395

to the holder of the rehabilitated loan a special allowance pursuant to section 438. "(3) PROCEEDS OF SALES OFFSET AGAINST DEFAULT CLAIMS.—

Amounts received by the Secretary pursuant to the sale of rehabilitated loans by a guaranty agency under this paragraph shall be deducted from the calculations of the amount of claims for reimbursement filed by the agency under section 428(c)(1) for the fiscal year in which the amount was received, notwithstanding the fact that the default occurred in a prior fiscal year. "(4) EFFECT OF REHABILITATION ON BORROWER ELIGIBILITY.—

Any borrower whose loan is rehabilitated under this subsection shall not be precluded by section 484 from receiving additional assistance under this title (for which he or she is otherwise eligible) on the basis of defaulting on the loan prior to rehabilitation. "(5) APPLICABILITY OF OTHER TERMS, CONDITIONS, AND BENE-

FITS.—A loan which is rehabilitated under this paragraph shall be subject to the same terms and conditions and qualify for the same benefits and privileges as other loans made under this part. "CERTIFICATE OF FEDERAL LOAN INSURANCE—EFFECTIVE DATE OF INSURANCE 'SEC. 429. (a) LOAN-BY-LOAN INSURANCE.— "(1) AUTHORITY TO ISSUE CERTIFICATES ON APPLICATION.—If,

upon application by an eligible lender, made upon such form, containing such information, and supported by such evidence as the Secretary may require, and otherwise in conformity with this section, the Secretary finds that the applicant has made a loan to an eligible student which is insurable under the provisions of this part, he may issue to the applicant a certificate of insurance covering the loan and setting forth the amount and terms of the insurance. "(2) EFFECTIVENESS OF CERTIFICATE.—Insurance evidenced by a

certificate of insurance pursuant to subsection (a)(1) shall become effective upon the date of issuance of the certificate, except that the Secretary is authorized, in accordance with regulations, to issue commitments with respect to proposed loans, or with respect to lines (or proposed lines) of credit, submitted by eligible lenders, and in that event, upon compliance with subsection (a)(1) by the lender, the certificate of insurance may be issued effective as of the date when any loan, or any payment by the lender pursuant to a line of credit, to be covered by such insurance was made. Such insurance shall cease to be effective upon 60 days' default by the lender in the payment of any installment of the premiums payable pursuant to subsection (c). "(3) CONTENTS OF APPLICATIONS.—An application submitted pursuant to subsection (a)(l) shall contain (A) an agreement by the applicant to pay, in accordance with regulations, the premiums fixed by the Secretary pursuant to subsection (c), and (B) an agreement by the applicant that if the loan is covered by insurance the applicant will submit such supplementary reports and statement during the effective period of the loan agreement, upon such forms, at such times, and containing such

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 * QL. 3 Part 2

20 USC 1079.

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