; 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 shall prescribe explicit standards for use in periodically assessing the credit risk of new and existing direct loans or guaranteed loans. (10) 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 ). (11) The Corporation shall rely upon specific standards to assess the developmental and strategic value of projects for which it provides support and should only provide the minimum level of support necessary in order to support such projects. (12) Any loan or loan guaranty made by the Corporation should be provided on a senior basis or pari passu with other senior debt unless there is a substantive policy rationale to provide such support otherwise. 1423. 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