Effect of Delinquent Insurance Premium Payments on National Housing Act Mobile Home Loan Insurance

The agency requested a decision regarding the payment of a claim for reimbursement of a loss sustained on an insured mortgage loan. Timely payment by the insured lender of premiums for mobile home loan insurance is a prerequisite to continued insurance coverage, and there was no basis for the agency's implication that insurance coverage was unaffected by the nonpayment of premiums. Claims under the mobile home loan insurance program by a lending institution presently delinquent in insurance premium payments may be allowed if the default on the loan occurred while premium payments were current but not if the default occurred or was imminent after premium payments became delinquent. Past due premium charges may be set off against allowable claims if the lender agrees to such setoff. Alternatively, the remaining insurance coverage may be cancelled. In no event is a setoff of future premium charges appropriate.