If the amount of a loan under the Single-Family Mortgage
Program is greater than 80 percent of the original acquisition cost or, if
lower, its value according to an appraisal acceptable to the Department, the
borrower shall obtain and maintain in force mortgage insurance or a guarantee
of the program loan by a qualified mortgage insurer. The following requirements
apply to the mortgage insurance policy or guarantee:
(1) The policy must be in effect at the time
of sale of the Program Loan to the Department;
(2) The Department must be named as the
mortgagee insured or guaranteed; and
(3) The amount, terms and extent of coverage
of the insurance or guaranty must meet the requirements of the indenture of
trust and the bond indenture declaration governing the bonds used for the
acquisition of the residence as determined by the Department to provide
reasonable security against loss in the event of default.
