Section 457-202-14 - Credit Enhanced/ section 1053 BondsA. Where an applicant requests that revenue obligation securities be secured pursuant to 10 M.R.S.A. §1053, or otherwise requests Authority credit enhancement for securities, the applicant shall submit an application. If the project seeks credit enhancement solely from the Loan Insurance Reserve Fund or Mortgage Insurance Fund, the applicant shall submit an application pursuant to the Authority's Mortgage Insurance Program Rule (Chapter 101), and the provisions of that rule shall apply in addition to those of this rule, except where expressly contradicted by this rule in which case the provisions of this rule shall govern. For all other requests for credit enhancement, the applicant shall submit an application providing all of the materials required for an application for Loan Insurance under Chapter 101, and any other materials required under this rule. For all credit enhanced projects, the criteria set forth in Section 5 of Rule 101, and Section 7 of this Rule shall apply to consideration of the application. In addition, for applications related to Major Business Expansion projects, the criteria in Section 10, above, and for Energy Distribution System Projects, the criteria in Section 10-A above, shall apply. B. Pursuant to the capital reserve contract or other documentation, the Authority will require the applicable trustee or bond purchaser to notify the Authority of any default by the borrower. After passage of a period of time specified in the capital reserve contract or other documentation and upon performance of such obligations by the trustee as the Authority may by contract require, the Authority may require that it have the following options:1 Cure one or more defaults up to a stated limit;2 Purchase the entire loan on the terms specified in the contract and call the applicable bonds;3 Arrange for payment of the remaining balance of the capital reserve fund liability, either in one lump sum or over the original term of the defaulted loan;4 Such other options as the contract or documentation may provideC. The Authority may select an insurer or letter of credit issuer to provide credit enhancement for a bond issue, with or without the backing of the Authority's authority under 10 M.R.S.A. §1053. Borrowers shall be required to pay any fees and expenses charged by the provider of credit enhancement.D. In exercising the debt management powers of the Authority, the chief executive officer of the Authority shall be authorized to commit the Authority to enter into transactions or agreements in the form of interest rate swaps, rate exchanges, and such other such transactions or agreements as are necessary or desirable, in the opinion of the chief executive officer of the Authority, to reduce financing costs or to reduce the risk of price changes or interest rate fluctuations, including, but not limited to the purchase of financial futures contracts, options or other transactions which constitute offsetting positions with respect to such interest rate swaps or rate exchanges, all as shall not be inconsistent with the purposes of the Act.E. A borrower shall also reimburse the Authority for its out-of-pocket expenses in connection with processing and underwriting an application for credit enhancement, including capital reserve fund security or with the capital reserve fund, including any fee payable in connection with servicing the loan, and all expenses in connection with the bond issue, including without limitation charges of consultants and counsel and costs of sale of bonds, copying, mailing, phone calls, advertising and travel.F. Where application is made after issuance to obtain the Authority's and/or trustee's consent to transfer of collateral, if any, alteration of rights or other matters, the Authority may charge the borrower for the cost of the Authority's staff and trustee's staff utilized to review the application and for the Authority's and trustee's out-of-pocket expenses in connection with the application, including without limitation, charges of counsel.G. Where the credit enhanced loan is projected in whole or in material part to finance a project involving construction or substantial renovation of a facility, and where such facility is a substantial part of the collateral for the insured Loan or is required to be functional to generate cash flow necessary to repay the loan, credit enhancement shall not be effective until construction is completed and all costs of construction are paid, unless the Loan is otherwise adequately secured or the completion of construction is adequately ensured by a Performance Bond, such that the Authority determines, in its discretion, that the risk of loss on account of construction related issues is de minimus>.94- 457 C.M.R. ch. 202, § 14