Mortgage Insurance Programs:

(1) INSURANCE PLANS: The Corporation will offer mortgage insurance plans based on the loan-to-value ratio of properties eligible for mortgage insurance hereunder. As provided in Rule .09 (1)(j), a mortgage loan of up to, and including one-hundred percent (100% ) of the 11 cost of rehabilitation" is eligible for mortgage insurance hereunder. However, the mortgage loan shall in no event exceed a specified percentage of the appraised value of the property as of the date the insurance certificate is issued or a maximum mortgage loan balance as established in the Rules of Practice. Insurance coverage shall be restricted to a portion or declared percentage of the outstanding mortgage balance and other approved costs as provided in Rule .13(4)(b) hereof. (2) APPLICATION: Application for THRC mortgage insurance may be made to the Corporation by forwarding a copy of the approved lender's processing file containing the appropriate exhibits together RULES AND REGULATIONS CHAPTER 0775-1 with the appropriate THRC application form and fee and such other documentation or information as the Corporation may specify from time to time in the Rules of Practice. The application fee is non-refundable. (3) PROCESSING: The Corporation will underwrite the subject application upon receipt of the fully completed application file. Should there be need for additional information, or if the application is not approved, the lender will be so notified. If the application is approved for THRC mortgage insurance, a commitment to insure will be forwarded to the lender. Pursuant to T.C.A. 13-2205 (2)(b) the Corporation shall regulate all fees and charges which are to be paid by or charged to the mortgagor. (4) COMMITMENT TO INSURE: A "commitment to insure" will be issued upon completion of processing and approval, contingent upon satisfaction of all terms and conditions contained therein, for THRC mortgage insurance. Such commitment will remain in force for a minimum period of forty-five (45) days from the date it is issued. If all terms and conditions under which the commitment to insure has been issued are satisfied and the certificate of THRC mortgage insurance issued prior to termination of the forty-five (45) day minimum commitment period, no additional application or commitment fee will be required. If the certificate of THRC mortgage insurance is not issued prior to the expiration of said forty-five (45) dav minimum commitment period, the commitment to insure is terminated. However, a "commitment to insure" may initially be for a period greater than the forty-five (45) day minimum and/or may be extended upon request by the mortgage and the payment of the commitment fee: in the case of an extension, prior to the expiration of the forty-five (45) day period. Such commitment fee shall be based upon the commitment period applied for, the mortgage balance to he insured and, where applicable, insurance of interim financing pursuant to Rule .12(5) hereof. The Corporation may require periodic verification of the factual circumstances of the approved application and upon closing of the mortgage loan. A commitment to insure may be terminated by the Corporation where the factual circumstances under which the application was approved have substantially changed. Commitment fees are non-refundable. (5) INSURANCE OF INTERIM FINANCING: In accordance with T.C.A. 13-2202(2) a commitment to insure a mortgage loan for a housing accommodation wherein code violations or substandard conditions exist may include provisions for the insuring of work progress payments or draws paid out for the "cost of rehabilitation" as the work progresses in such manner as to protect the interests of the mortgagor and mortgagee. The mortgagee shall retain a specified percentage of each certified payment request approved by the Corporation. Insurance so provided by the Corporation during the commitment period will cover a portion of each pa., -ment made by the mortgagee. The percentage of each payment to be retained by the mortgagee and the portion or declared percentage of said payment to insured shall be set forth in the subject commitment to insure with other terms and conditions of said commitment in accordance with the Rules of Practice of the Corporation. (6) PREMIUMS AND RENEWAL: The THRC mortgage insurance coverage shall be for a minimum term of one (1) year and may be renewed annually for the remaining term of the subject mortgage. Premiums charged shall be based on the insurance program selected as set forth in the Rules of Practice and the outstanding mortgage balance as of the date the insurance certificate is issued (effective date of coverage) for the initial one (1) year policy period or each annual anniversary date thereafter so long as the insurance is in force. (7) EFFECTIVE DATE OF COVERAGE: -THRC mortgage insurance" shall become effective as of the date the "THRC mortgage insurance" certificate is issued, the Date of Mortgage Loan Consummation. Renewal premiums, return of premiums, cancellation and all other matters regarding a subject insurance Certificate shall refer to the "effective date of coverage" for computation. The Certificate of Insurance will not be issued prior to conformance with all terms and conditions of the subject Commitment to Insure, the return of the executed Commitment to Insure form and payment of the required premium. (8) RISK DISTRIBUTION: To avoid risk concentration, the Corporation shall have the right to regulate the aggregate outstanding insured mortgage balance, or commitments to insure, held bv any one RULES AND REGULATIONS CHAPTER 0775-1 mortgagee or concentrated in any specific geographic area. as determined bv the Corporation. Such regulation may be based on the number of insured mortgage loans, and/or the aggregate insured balance, or commitments to insure, as a percent of the Corporation's total aggregate insured balance or commitments to insure. (9) CHANGE OF MORTGAGOR: In the event the property securing an insured mortgage is transferred, sold, or assigned, coverage will continue on the insured mortgage provided: (a) The original mortgagor is not released from the mortgage liability by the lender or the new owner is approved, in writing, by the Corporation: and (b) The existing mortgage loan balance at the time of assumption is not increased with- out prior written approval of the Corporation. (10) CHANGE OF MORTGAGEE (assignment and sale of mortgages): Assignment or sale of an insured mortgage does not impair coverage, but the Corporation must be promptly advised on the appropriate THRC form of the sale, the assignee and address, date of sale, Certificate and Master Policy number of the mortgage sold, and name of mortgagor. Servicing shall be retained by the originating/selling mortgagee unless the subject mortgage is assigned or sold to another approved mortgagee which will provide mortgage servicing, (11) INTERIM CHANGES: Any loan modification, "add-on" or "open-end" advance, or refinance of existing mortgages will require prior review and written approval by the Corporation for continued coverage. (12) TERMINATION OF COVERAGE: (a) During the initial one (1) year policy period coverage may be terminated by the mortgagee only if the subject mortgage loan is paid in full; (b) During any subsequent annual renewal period coverage shall be terminated specified premium is not paid as required, if the terms and conditions of the Master Policy. the Commitment to Insure, and the Certificate are not fully complied with, or if the mortgagee requests cancellation; and (c) Where coverage is terminated or cancelled and the mortgagor is not released from the mortgage obligation the Corporation shall notify the mortgagor and the mortgagee that the THRC mortgage insurance is no longer in force for the mortgage. (13) RETURN OF PREMIUM: Any premium to.be refunded will be calculated upon a "short-rate" basis according to the schedule set forth in the Rules of Practice of the Corporation which shall also specify the "minimum retained premiums" where applicable. Where a claim is pending or satisfied, or during the Initial Policy Period, if termination is due to any cause other than payment of the mortgage loan in full, the premium is earned in full and no refund of premium will be made. Refunds will be forwarded to the mortgagor unless the mortgagee specifically states, in writing, that the premium was not paid by the mortgagor and such refund should be made to another party. (14) MAXIMUM AGGREGATE INSURANCE LIMIT: The Corporation shall not exceed the limit established in T.C.A. 13-2210 in issuing commitments to insure mortgage loans or certificates of mortgage insurance. The Board of Directors may, in its discretion, vary the maximum aggregate insurance limit from time to time, consistent with the provisions of the Act.