38 (1) A lender must take all of the measures described in subsection 37(3) that are applicable before submitting a claim to the Minister for loss sustained as a result of a loan.
(2) Regardless of the nature of the default, a lender must submit a claim for loss within 60 months after the day on which the last payment on the loan is received.
(3) The Minister is authorized to extend the 60-month period if the lender requests the extension before that period expires.
(4) A claim for loss must be certified by the lender and be accompanied by
(a) in the case of a loan referred to in any of paragraphs 5(1)(a) to (d), documentation that substantiates
(i) the cost and proof of payment of the purchase or improvement that was financed by the loan in an amount equal to or greater than 75% of the principal outstanding on the loan, and
(ii) the amount disbursed by the lender under the loan agreement;
(a.1) in the case of a loan referred to in paragraph 5(1)(e),
(i) an attestation signed by the borrower stating that
(A) the line of credit will only be used to pay for working capital costs, and
(B) the working capital costs paid through the line of credit were not incurred more than 365 days before the line of credit was authorized, and
(ii) documentation that substantiates the amount provided by the lender under the loan agreement;
(b) a copy of the loan record; and
(c) the loan approval and administration file, if requested by the Minister.
(5) A claim for loss must include the lender’s acknowledgement that it has acted with due diligence in applying the procedures referred to in section 8 and has taken the measures described in subsection 37(3).
(6) A claim for loss must include all documents that evidence the security taken by the lender in respect of the loan and all guarantees and suretyships taken by the lender in respect of the loan.
(7) A loss sustained by a lender in respect of a loan must be calculated by determining the aggregate of the following amounts and deducting from that aggregate amount the proceeds realized from the taking of any measures described in subsection 37(3) and any overcharges referred to in paragraph 27(2)(b) that have not been reimbursed to the borrower:
(a) the amount of principal outstanding on the loan;
(b) the amount of interest due and not paid pursuant to the loan agreement, calculated in accordance with subsection (8);
(c) uncollected taxed costs for, or incidental to, any legal proceedings in respect of the loan; and
(d) legal fees and disbursements, other than the costs referred to in paragraph (c), and other costs incurred by the lender for services rendered to it by persons other than its employees, for the purpose of collecting, or attempting to collect, the loan from the borrower or the guarantor or surety.
(8) The amount of interest referred to in paragraph (7)(b) is calculated as follows:
(a) in respect of the period beginning on the day after the last day on which interest is current and ending on the day of the first scheduled payment date after that day, at the rate of interest in effect under the loan agreement on the last day on which interest is current,
(b) in respect of the 12-month period immediately following the period referred to in paragraph (a), at the rate of interest in effect under the loan agreement on the first day of the 12-month period,
(c) in respect of the 12-month period immediately following the period referred to in paragraph (b), at a rate of interest equal to one half of the rate of interest referred to in that paragraph, and
(d) in respect of the 12-month period immediately following the period referred to in paragraph (c), at a rate of interest of 0%.
- SOR/2009-102, s. 22
- SOR/2014-7, s. 24
- SOR/2016-18, s. 10
- SOR/2022-157, s. 21
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