Indiana Code Title 5. State and Local Administration § 5-28-29-32

Sec. 32. (a) If the payment of a claim has fully covered the lender's loss on an enrolled loan or if the payment of a claim when combined with any recovery from the borrower has fully covered the lender's loss, the corporation, upon request, is subrogated to the rights of the lender with respect to any collateral, security, or other right of recovery in connection with the loan that has not been realized by the lender.  The lender thereafter shall assign to the corporation any right, title, or interest to any collateral, security, or other right of recovery in connection with the loan.

(b) If an assignment has been made under subsection (a), the corporation is not required to undertake the obligations of the lender under the lender's loan documents, except for obligations directly related to the corporation's assigned rights of recovery in connection with the loan.  The lender shall fulfill any other obligations the lender has under the loan documents in the same manner and to the same degree as would be required if the assignment had not been made.  The lender shall provide the corporation with all reasonable assistance the corporation requests in proceeding with respect to any collateral, security, or other right of recovery, except that the lender does not need to incur any out-of-pocket expenses.

(c) If the corporation desires to exercise the right of subrogation in connection with an enrolled loan, and would be entitled to exercise that right except that the lender's loss has not been fully covered, the corporation, at the corporation's option, may pay from funds in the reserve fund an amount sufficient to result in the lender's loss being fully covered.  A payment under this subsection may cover a principal amount not covered under the program or not included in the lender's claim.  Upon making a payment under this subsection, the corporation is subrogated to the rights of the lender in accordance with subsection (a).

(d) Notwithstanding any other provision of this section, the corporation may not exercise the right of subrogation unless the corporation determines, in the corporation's discretion, that the lender has not exercised reasonable care and diligence in collection activities with respect to the loan, or that there is a reasonable basis for believing that the lender will not exercise reasonable care and diligence in the future with respect to those collection activities.