[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR115.70]

[Page 148]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 115--SURETY BOND GUARANTEE--Table of Contents
 
            Subpart C--Preferred Surety Bond (PSB) Guarantees
 
Sec. 115.70  Claims for reimbursement of Losses.

    (a) How claims are submitted. A PSB Surety must submit claims for 
reimbursement on a form approved by SBA no later than 1 year from the 
date the Surety paid the amount. Loss is determined as of the date of 
receipt by SBA of the claim for reimbursement, or as of such later date 
as additional information requested by SBA is received. Subject to the 
offset provisions of part 140, SBA pays its share of Loss within 90 days 
of receipt of the requisite information. Claims for reimbursement and 
any additional information submitted are subject to review and audit by 
SBA.
    (b) Surety responsibilities. The PSB Surety must take all necessary 
steps to mitigate Losses when legal action against a bond has been 
instituted, when the Obligee has declared a default, and when the Surety 
has established a claim reserve. The Surety may dispose of collateral at 
fair market value only. Unless SBA notifies the Surety otherwise, the 
Surety must take charge of all claims or suits arising from a defaulted 
bond, and compromise, settle or defend the suits. The Surety must handle 
and process all claims under the bond and all settlements and recoveries 
in the same manner as it does on non-guaranteed bonds.
    (c) Reservation of SBA's rights. The payment by SBA of a PSB 
Surety's claim does not waive or invalidate any of the terms of the PSB 
Agreement, the regulations in this part 115, or any defense SBA may have 
against the Surety. Within 30 days of receipt of notification that a 
claim or any portion of a claim should not have been paid by SBA, the 
Surety must repay the specified amounts to SBA.