OAR 123-021-3600: Insurance Premiums

(1) The Department shall charge a one-time, up-front, insurance premium for each loan insured under a Lender Agreement pursuant to a Loan Insurance Authorization. The premium is due within 30 days of the date that the Department and the Financial Institution execute a Loan Insurance Authorization under the applicable Lender Agreement. The Department's insurance is not effective until the premium is paid. Premiums, expressed as a percentage of the Department’s maximum liability, shall be charged in accordance with the schedule made available by the Department. (2) Insurance premiums for each insurance program , including examples of how those premiums are calculated, are as follows: (a) The premium for Conventional Insurance, with a maximum term of 10 years, shall be 2.0% of the insured portion of the loan. As an example, the premium due on a $1,000,000, ten-year loan with 80% Conventional Insurance is $16,000 ($1,000,000 x 0.80 x 0.02). (b) The premium for Collateral Support Insurance, with a maximum term of 5 years, shall be 5.0% of the insured portion of the loan. As an example, the premium for a $1,000,000 five-year loan with 20% Collateral Support Insurance is $10,000 ($1,000,000 x 0.20 x 0.05). (c) The premium for Evergreen Insurance, with a maximum term of 1 year, shall be 1.5% of the insured portion of the line of credit. The premium is calculated as the product of the Department’s maximum liability multiplied by the maximum principal amount available to the Borrower under the subject line of credit, regardless of whether or not the line of credit is fully drawn down. As an example, the premium for a $1,000,000 loan with 80% Evergreen Insurance is $12,000 ($1,000,000 x 0.80 x 0.015); this amount would be due every year thereafter for up to four additional years, assuming that the loan is renewed each year for the maximum term permitted under the Evergreen Entrants Program (5 years). (d) The premium for Construction Loan Insurance, with a minimum term of one year, shall be 1.0% of the insured portion of the loan. For each additional one year of Construction Loan Insurance approved by the Department the additional non-prorated premium shall be of 0.50% of the insured portion of the construction loan. A one-time, additional twelve-month extension may be granted for 1.0% of the insured portion of the loan. (A) Example 1: The premium for a $1,000,000 12-month loan with 80% Construction Loan Insurance is $8,000 ($1,000,000 x 0.80 x 0.01). (B) Example 2: The premium for a $1,000,000 30-month loan with 80% Construction Loan Insurance is $16,000 ($1,000,000 x 0.80 x 0.02). (C) Example 3: The premium for a $1,000,000 9-month loan extension with 80% Construction Loan Insurance is $8,000 ($1,000,000 x 0.80 x 0.01). (3) In its sole discretion, the Department may charge an additional fee for changes to an insured loan that requires modifying an existing Loan Insurance Authorization. This fee may be up to one half of the amount of the insurance premium charged at loan origination.