Loans secured by a first lien. (1) When the unpaid balance of the Agency loan secured by a first lien is equal to or greater than the depreciated re- placement value of the essential build- ings, or the cost of adequate essential buildings which can be constructed for
Loans secured by a first lien. (1) When the unpaid balance of the Agency loan secured by a first lien is equal to or greater than the depreciated re- placement value of the essential build- ings, or the cost of adequate essential buildings which can be constructed for amounts less than the depreciated re- placement value of the existing build- ings, the essential buildings will be in- sured, to the nearest multiple of insur- ance that is available, for the lesser of
(i) their depreciated replacement value, or (ii) the cost of constructing xxx- xxxxx essential buildings. For example, if insurance is available in only mul- tiples of $1,000, the minimum insurance required on an essential building val- ued at $6,600 would be $7,000, and that required on an essential building val- ued at $6,400 would be $6,000.
(2) When the unpaid balance of the loan is less than the sum of the depre- ciated replacement value of the essen- tial buildings to be insured, the total amount of insurance must be at least equal to the lesser of (i) the unpaid bal- ance of the loan, or (ii) the cost of xxx- xxxxx essential buildings which can be constructed for amounts less than the depreciated replacement value of the existing buildings to be insured.
(3) When, by the use of loan funds or otherwise, buildings are erected or sub- stantial improvements are made to es- sential buildings, the amount of insur- ance will be adjusted in accordance with paragraphs (a)(1) or (2) of this sec- tion, whichever is applicable.
