R 390.1412 Lenders, policies; loan practices.

Rule 12. (1) A lender may determine its own lending policies, except as prescribed by these rules, federal or state legislation, and regulations concerning state and federal banking and credit practices. (2) A lender shall comply with the secretary's requirements, as set forth in the provisions of 34 C.F.R. SS682.205 to 682.208, in the making, disbursing, and servicing of a loan. These provisions are adopted by reference in R 390.1491. (3) A lender shall comply with the secretary's due diligence requirements, as specified in the provisions of 34 C.F.R. SS682.208 to 682.213 and 682.411, which are adopted by reference in R 390.1491 in the collection of loans and comply with both of the following provisions: (a) A lender shall exercise reasonable care and diligence in the collection of loans insured by the authority with regard to borrowers. If the lender has obtained a cosigner, collection effort beyond notifying the cosigner if the loan becomes delinquent is not mandatory. If the loan is subsequently filed with the authority as a default, the cosigner shall be notified and advised that collection shall be pursued by a state agency or private agency. (b) The due diligence procedures and collection efforts shall be employed and documented by the lender.