(a) An institution may submit a defaulted loan note to the Secretary for assignment to the United States if— (1) The institution has been unable tocollect on the loan despite complying with the diligence procedures, including at least a first level collection effort as described in § 674.45(a) and litigation, if required under § 674.46(a), to the extent these actions were required by regulations in effect on the date the loan entered default;