Section 4.09. Secondary loan program.

 

(1)   Title evidence and property insurance. When the department is notified of the cancellation, lapse or non-renewal of a fire and extended coverage, homeowners or fire and windstorm insurance policy insuring a property in which it has a mortgage interest, or when the mortgagor fails to obtain and pay for this insurance in an amount at least equal to appraised value of the improvements at time of application on property mortgaged to the department, the mortgagor involved shall be notified that it is such mortgagor's responsibility to obtain and pay for adequate insurance coverage and shall be instructed to submit a memorandum of such insurance coverage to the department. Until the memorandum is received, the department shall insure its interest in the property with the state insurance fund.

(2)   Payment distribution. Payments shall be applied first to interest, then to mortgage cancellation life insurance premiums, and then to principal.

(3)   Reduction in monthly payments. The terms of the contract between the mortgagor and the department shall be complied with by the mortgagor after the note and mortgage have been executed, but the department may change the time and manner of repaying the obligation at the request of the mortgagor when a change is justified by circumstances not in existence at the time the loan was made.

(4)   Subordination agreement and partial release of mortgage. The department may execute a subordination agreement or release a portion of the property providing security for its mortgage if the mortgagor's equity in the property secured by the mortgage is verified by the department to be greater than 15 percent after the execution of the subordination agreement or partial release, the applicant is current on the loan, the applicant meets current underwriting criteria, and the repayment history for the 6 months immediately preceding the request has been satisfactory on the loan.

(5)   Release of satisfaction. The department's satisfaction of mortgage, the mortgage and mortgage note may not be released for a period of 3 weeks following receipt of final payment, unless final payment is received in the form of cash, bank draft bank money order, cashier's check, certified check, savings and loan or building and loan association check, credit union check, insurance check, finance company check, mortgage banker's check, or real estate broker's or attorney's trust account check.

History: Cr. Register, May, 2000, No. 533 , eff. 6-1-00; CR 05-008 : am. (4) Register May 2005 No. 593 , eff. 6-1-05; 2013 Wis. Act 189 : am. (4) Register April 2014 No. 700 , eff. 5-1-14.