Sec. 8-256. Default by mortgagor and subsequent action.
Sec. 8-256. Default by mortgagor and subsequent action. (a) In the event of
default by the mortgagor, the mortgagee shall notify the authority both of the default
and the mortgagee's proposed course of action. When it appears feasible, the authority
may for a temporary period upon default or threatened default by the mortgagor authorize
mortgage payments to be made by the authority to the mortgagee which payments shall
be repaid under such conditions as the authority may prescribe. The authority may also
agree to revised terms of financing when such appear prudent. The mortgagee shall be
entitled to receive the benefits of the insurance provided herein upon: (1) Any sale of
the mortgaged property by court order in foreclosure or a sale with the consent of the
authority by the mortgagor or a subsequent owner of the property or by the mortgagee
after foreclosure or acquisition by deed in lieu of foreclosure, provided all claims of the
mortgagee against the mortgagor or others arising from the mortgage, foreclosure, or
any deficiency judgment shall be assigned to the authority without recourse except such
claims as may have been released with the consent of the authority; or (2) the expiration
of six months after the mortgagee has taken title to the mortgaged property under judgment of strict foreclosure, foreclosure by sale or other judicial sale, or under a deed in
lieu of foreclosure if during such period the mortgagee has made a bona fide attempt to
sell the property, and thereafter conveys the property to the authority with an assignment,
without recourse, to the authority of all claims of the mortgagee against the mortgagor
or others arising out of the mortgage foreclosure, or deficiency judgment; or (3) the
acceptance by the authority of title to the property or an assignment of the mortgage,
without recourse, to the authority, in the event the authority determines it imprudent to
proceed under (1) or (2) above. Upon the occurrence of either (1), (2) or (3) hereof, the
obligation of the mortgagee to pay premium charges for insurance shall cease, and the
authority shall, within thirty days thereafter, pay to the mortgagee ninety-eight per cent
of the sum of (i) the then unpaid principal balance of the insured indebtedness, (ii) the
unpaid interest to the date of conveyance or assignment to the authority, as the case may
be, (iii) the amount of all payments made by the mortgagee for which it has not been
reimbursed for taxes, insurance, assessments and mortgage insurance premiums, and
(iv) such other necessary fees, costs or expenses of the mortgagee as may be approved
by the authority.
(b) Upon request of the mortgagee, the authority may at any time, under such terms
and conditions as it may prescribe, consent to the release of the mortgagor from his
liability or consent to the release of parts of the property from the lien of the mortgage,
or approve a substitute mortgagor or sale of the property or part thereof.
(c) No claim for the benefit of the insurance provided in this chapter shall be accepted by the authority except within one year after any sale or acquisition of title of
the mortgaged premises described in subdivision (1) or (2) of subsection (a) of this
section.
(1969, P.A. 795, S. 15.)