; and (C) but for fraud or material misrepresentation by the holder of the guaranty, the guaranty is presumed to be valid, legal, and enforceable. (9) The Corporation may not make a loan or loan guaranty unless the Corporation determines that there is a reasonable assurance of repayment on the loan. (10) The Corporation shall prescribe explicit standards for use in periodically assessing the credit risk of new and existing direct loans or guaranteed loans. (11) The Corporation may not make loans or loan guaranties except to the extent that budget authority to cover the costs of the loans or guaranties is provided in advance in an appropriations Act, as required by section 504 of the Federal Credit Reform Act of 1990 ( 2 U.S.C. 661c ). 203. Payment of losses (a) Payments for defaults on guaranteed loans (1) In general If the Corporation determines that the holder of a loan guaranteed by the Corporation suffers a loss as a result of a default by a borrower on the loan, the Corporation shall pay to the holder the percent of the loss, as specified in the guaranty contract after the holder of the loan has made such further collection efforts and instituted such enforcement proceedings as the Corporation may require. (2) Subrogation Upon making a payment described in paragraph (1), the Corporation shall ensure the Corporation will be subrogated to all the rights of the recipient of the payment. (3) Recovery efforts The Corporation shall pursue recovery from the borrower of the amount of any payment made under paragraph (1) with respect to the loan. (b) Limitation on payments (1) In general Except as provided by paragraph (2), compensation for insurance, reinsurance, or a guaranty issued under this title shall not exceed the dollar value of the insurance, reinsurance, or guaranty, as of the date of its issuance, made in the project with the approval of the Corporation, plus interest, earnings, or profits actually accrued on the insurance, reinsurance, or guaranty, to the extent provided by such insurance, reinsurance,