(a) In the case of default by the mortgagor or borrower, the mortgagee or lender shall take reasonable steps to correct any such default. In the case of a default which continues for more than sixty days, the mortgagee or lender shall take reasonable steps to effect an orderly disposition of the property, if any. If institution of foreclosure proceedings or of default proceedings under article 9 of title 42a or otherwise is requested by the corporation, the mortgagee or lender shall commence such action within thirty days after receipt of such request. If institution of foreclosure proceedings or of default proceedings under said article 9 of title 42a is determined by the mortgagee or lender, the mortgagee or lender shall give the corporation thirty days’ notice before it commences such action. When it appears feasible, the corporation may itself make payments to the mortgagee or lender of installments of principal or interest or both, and of taxes and insurance, which payments shall be repaid, under such conditions as the corporation may prescribe, for a temporary period upon default or threatened default by the mortgagor or borrower, and the corporation may also agree to revised terms of financing when such appears prudent. The mortgagee or lender shall be entitled to receive the benefit of the insurance as hereinafter provided, upon: (1) Any sale of the mortgaged property by court order in foreclosure or a sale with the consent of the corporation by the mortgagor or subsequent owner of the property or by the mortgagee after foreclosure or acquisition by deed in lieu of foreclosure, or a sale with the consent of the corporation pursuant to default proceedings under article 9 of title 42a, provided all claims of the mortgagee against the mortgagor or others arising from the mortgage, foreclosure, default proceedings or any deficiency judgment shall be assigned to the corporation without recourse, excepting such claims as may have been released with the consent of the corporation and claims relating to contracts of insurance insuring only a portion of the mortgage payments required by the mortgage; (2) the expiration of six months after the mortgagee has taken title to the mortgaged property under judgment of strict foreclosure, foreclosure or other judicial sale, or a deed in lieu of foreclosure or default proceedings under article 9 of title 42a, if during such period the mortgagee has made a bona fide attempt to sell such property, and, if and to the extent required by the corporation, upon the conveyance of the property to the corporation and the assignment without recourse to the corporation of all claims of the mortgagee against the mortgagor or others arising out of the mortgage, foreclosure, default proceedings or deficiency judgment; (3) the entering of a judgment against the borrower and the realization upon any assets of the borrower available to satisfy such judgment, provided all remaining claims of the lender against the borrower shall be assigned to the corporation; or (4) when the corporation determines it imprudent to have proceedings under (1), (2) and (3) above, the acceptance by the corporation of a conveyance of title to the property to the corporation or the acceptance of an assignment of the mortgage without recourse to the corporation in accordance with written procedures of the corporation in effect at the time the mortgage was insured or the assignment to the corporation of any remaining claims. The corporation may prescribe by written procedures or in a contract of insurance or in the advance commitment to insure variations to the applicability of subdivision (1), (2), (3) or (4) of this subsection because such contract or advance commitment insures only a part and not all of the payments required by a mortgage or loan. Such variations may include, but shall not be limited to, the assignment or conveyance of an interest in any claim of the mortgagee against the mortgagor or borrower, the property or the mortgage which is proportionate to the amount of the insurance provided under the contract or advance commitment. Upon the occurrence of either (1), (2), (3) or (4) hereof, the obligation of the mortgagee to pay premium charges for insurance shall cease, and the corporation shall, within thirty days thereafter, pay to the mortgagee or lender ninety-eight per cent or less than ninety-eight per cent if such lesser amount is provided for in the contract of insurance prepared pursuant to the procedures in effect at the time of issuance of the contract of insurance of the sum of (A) the then unpaid principal balance of the insured indebtedness, (B) all unpaid interest accruing with respect to the insured indebtedness at the rate approved by the corporation to the date of conveyance or assignment to the corporation, as the case may be, (C) the amount of all payments made by the mortgagee or lender for which it has not been reimbursed for taxes, insurance, assessments and insurance premiums, and (D) such other necessary fees, costs or expenses of the mortgagee or lender as may be approved by the corporation.

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(b) Upon request of the mortgagee, the corporation may at any time, under such equitable terms and conditions as it may prescribe, consent to the release of the mortgagor from his liability under the mortgage or consent to the release of parts of the mortgaged property from the lien of the mortgage.

(c) When vacancies in an economic development project are deemed by the corporation to prejudice mortgage payments insured by the corporation, the corporation may grant to the mortgagor or borrower permission to lease or rent the mortgaged property to a tenant for any use, such lease or rental to be temporary in nature and subject to such conditions as the corporation may prescribe.

(d) Upon the ultimate disposition of property acquired by the corporation under this section and of the claims assigned therewith, the net amount realized by the corporation shall be computed, taking into account all expenses incurred by the corporation in handling, dealing with and disposing of such property and in collecting such claims. If the net amount so realized exceeds the amount paid to the mortgagee or lender and the expenses of the corporation, such excess shall be retained by the corporation and added to the fund created under section 32-14 but, if the net amount realized is less than the amount paid to the mortgagee and the expenses of the corporation, the mortgagor or borrower shall remain liable therefor as upon a deficiency judgment.

(e) No claim for the benefit of the insurance provided in this chapter shall be accepted by the corporation except within one year after any sale or acquisition of title of the mortgaged property described in subdivision (1) or (2) of subsection (a) of this section or the entry of any judgment against the borrower as described in subdivision (3) of subsection (a) of this section.

(f) Any contract of insurance made by the corporation under the authorization of this chapter shall provide that claims payable under such contract shall first be paid from any amounts readily available in the Mortgage and Loan Insurance Fund, established under section 32-14, before any amounts available from the bond authorization contained in section 32-22 are utilized for claim payment. The faith and credit of the state is hereby pledged, pursuant to such bond authorization and in accordance with section 3-20, to provide to the insurance fund moneys as and when necessary to make timely payments of all amounts required to be paid under the terms of any insurance contract executed by the corporation pursuant to this chapter, but not in excess of the amount of bonds so authorized by the State Bond Commission for such purpose less the amounts paid by the state for deposit to such insurance fund. The obligation of the corporation to make payments under any such insurance contract shall be limited solely to such sources and shall not constitute a debt or liability of the corporation or the state. Any insurance contract and any rule or regulation of the corporation implementing the insurance program may contain such other terms, provisions or conditions as the corporation deems necessary or appropriate, including, but not limited to, the payment of insurance premiums, the giving of notice, claim procedures, the sources for payment of claims, the priority of competing claims for payment, the release or termination of loan security and borrower liability, the timing of payment, the maintenance and disposition of projects and the use of amounts received during periods of loan delinquency or upon default, and any other provisions concerning the rights of insured parties or conditions of the payment of insurance claims.