section_id,title_number,title_name,chapter,subchapter,part_number,part_name,subpart,subpart_name,section_number,section_heading,agency,authority,source_citation,amendment_citations,full_text 7:7:12.1.2.1.2.1.1.1,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,A,Subpart A—Real Property Insurance,,§ 1806.1 General.,RHS,,,"[41 FR 34571, Aug. 16, 1976, as amended at 61 FR 59777, Nov. 22, 1996; 72 FR 64121, Nov. 15, 2007; 80 FR 9864, Feb. 24, 2015]","(a) Authority. This subpart sets forth the policies and procedures regarding insurance requirements on real property which serves as security for a debt under the Multi-Family Housing Programs of the Rural Housing Service (RHS), herein referred to as the “Agency.” This subpart is inapplicable to Farm Service Agency, Farm Loan Programs. (b) Borrower to furnish insurance. The real estate mortgage executed by the borrower provides that he will furnish and continually maintain and pay for insurance on buildings situated or constructed on the property with companies, in amounts, and on terms and conditions satisfactory to RD until the loan is repaid. (c) Borrower's selection of company. The borrower may select the insurance company provided that the company and insurance policy comply with all the requirements set forth in this Instruction. (d) Responsibility. The County Supervisor is responsible for taking all actions in connection with insurance as may be necessary to protect the security interest of RD. Any unusual situation that may arise with respect to obtaining or servicing insurance should be referred to the State Director. The State Director will refer any questions of a legal nature to the Office of the General Counsel (OGC). (e) Use of Form RD 426-1, “Valuations of Buildings.” The minimum insurance required will be indicated in the appraisal report by the employee who makes the appraisal of property that includes insurable buildings. In the case where no real estate appraisal is required or the appraisal report does not indicate the minimum insurance coverage, Form RD 426-1 will be prepared by the County Supervisor. Reevaluation of the buildings will not be done on appraisal reports; however, when new buildings are constructed or values increase or decrease materially and reevaluation is necessary to properly reflect the buildings' security interest of RD, the County Supervisor will prepare or revise Form RD 426-1 as appropriate. Changes made on an existing Form RD 426-1 will be dated and initialed. The reason for any deletion will be noted on the Form." 7:7:12.1.2.1.2.1.1.2,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,A,Subpart A—Real Property Insurance,,§ 1806.2 Companies and policies.,RHS,,,"[41 FR 34571, Aug. 16, 1976, as amended at 41 FR 49990, Nov. 12, 1976; 42 FR 33262, June 30, 1977; 43 FR 56013, Nov. 30, 1978; 44 FR 45115, Aug. 1, 1979; 51 FR 17921, May 16, 1986; 54 FR 35869, Aug. 30, 1989; 56 FR 6945, Feb. 21, 1991; 80 FR 9864, Feb. 24, 2015]","Property insurance policies or other evidence of insurance will be accepted from borrowers when the requirements outlined herein are complied with fully. (a) Companies. It is desirable that companies be licensed to do business in the particular State or other jurisdiction where the property is located, or that they be otherwise authorized by law to transact business within such State or other jurisdiction (hereinafter called “State”). If the required insurance is not available locally at comparable rates from an insurance company licensed or otherwise authorized to do business in the State, insurance may be accepted from another company if (1) the OGC advises that policies issued by such company will not be rendered unenforceable by virtue of the company's failure to be licensed or otherwise authorized to transact business in the State and that the company is a legal entity which may be sued in the State where the insured property is located, and (2) the State Director determines that the company is reputable and financially sound. In making the above determinations, the State Director will consider all relevant available information such as that which may be obtained from financial statements, Best's Insurance Reports, State insurance authorities, and other lending institutions. (b) Insurance policies —(1) Standard policies. If a standard fire insurance policy has been adopted for the State, it should be used unless State statutes exempt the company from the regulations requiring its use. The standard policy is one containing substantially the same standard provisions adopted or recommended by legislative action or by order of the supervisory insurance authorities of the State in which the security is located. (2) Other policies. To be acceptable, any other insurance policies must conform to the requirements of this Instruction. (i) “Homeowner's” policies, “All Physical Loss” policies, “Broad Form” policies, and other such all-inclusive policies are acceptable if they otherwise meet the requirements of this Instruction. (ii) A builder's risk policy naming the borrower as the insured or a builder's risk endorsement for a policy issued to the borrower may be accepted during the period a building is under construction if the policy otherwise meets the requirements of this Instruction. If such a policy or endorsement does not automatically convert to full coverage when the building is completed, acceptable insurance must be obtained simultaneously with the expiration of the builder's isk provisions of the policy. (iii) A builder's risk insurance policy issued to a contractor only may not be substituted for the property insurance, the borrower is required to provide. (iv) Borrowers eligible for insurance under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Act of 1973, will be serviced in accordance with subpart B of this part. (3) State instructions. If the State Director and the OGC consider it advisable, a State Instruction may be issued to help County Supervisors identify standard insurance policies adopted for the State. The Instruction should also furnish a guide to assist in identifying other acceptable insurance policy forms that are commonly used by insurance companies in the State, recognizing that such information is not all inclusive. (4) Binders. Whenever there is a justifiable reason for not issuing a policy or endorsement, as required, a written binder will be acceptable for a period not to exceed 60 days from the effective date of the insurance. The written binder must have attached thereto the approved form of mortgage clause. Such a binder will be submitted to the County Supervisor in lieu of an insurance policy or endorsement and the insurance policy or endorsement will be submitted on or before the expiration date of the binder. The State Director, with the advice of the OGC and subject to prior approval of the National Office, may issue a State Instruction authorizing such binders to be accepted for periods longer than 60 days. (5) Submission of policies. (i) For Farmer Program (FP) loans secured by a first lien, the original policy or declaration page must be delivered to the County Supervisor. The original policy or declaration page will be returned to the borrower after one year using Form RD 426-4, “Notice of Expiration of Insurance.” (ii) For Single Family Housing (SFH) loans secured by a first lien, the original policy or declaration page must be delivered to the closing agent. (iii) In cases where an FP or SFH loan is secured by other than a first lien and the mortgage clauses include the names of the prior mortgagees, a certificate of insurance, copy of the policy, or other evidence of insurance is acceptable. (iv) The County Supervisor will process an advance to pay for insurance only in strict compliance with provisions of § 1806.6 of this subpart. (6) Master sets. If the master sets meet all of the requirements of this Instruction they may be accepted in lieu of an original policy for each Agency borrower. (i) One complete master set of the different insurance forms for policies issued by the insurance company must be on file in each County Office where the company insures property of Agency borrowers. (ii) The “Declaration Page” furnished by the insurance company for each borrower insured, in lieu of a complete policy, will be filed in the borrower's case folder. When a “Declaration Page” in the form of a computer printout is used by an insurance company an endorsement on every policy issued by that company or a letter from that company will be obtained and attached to the printout. However, a letter signed by an authorized official of the company and addressed to the State Director may cover all policies issued by that company in the State. Any such endorsements or letters should clearly state that the company considers the printout to be an original “Declaration Page”. Such endorsements or letters are not necessary if the printout itself clearly states that it is an original “Declaration Page.” (7) Name and location. The policy should contain names of all the borrowers who are owners of the property being insured, and it will be returned for correction if it does not do so. The location of the property should be so described in the policy that the property can easily be identified. The complete legal description of the property by metes and bounds is not required. Any deviation from the requirements of this paragraph must first be cleared with the National Office. (8) Loss or damage covered. Buildings must be insured against loss or damage by fire, lightning, windstorm, hail, explosion, riot, civil commotion, aircraft, vehicles, and smoke. (9) Effective date of insurance. If there are insurable buildings located on the property, the borrower will arrange with his agent or company to have adequate insurance in force at the time the loan, assumption, or credit sale is closed so that the policy will properly insure the borrower and the mortgagees. When new buildings are erected or major improvements are made to existing buildings, such insurance will be made effective as of the date materials are delivered to the property. The County Supervisor will make no payments from loan funds for labor or materials until the borrower has furnished adequate insurance to protect the interest of the Agency in the buildings being erected or improved. (10) Term. The borrower will be required to furnish insurance for a term of at least one year with evidence that a full year's premium is paid. The term “premium” as used herein includes any assessments which may be charged to the borrower. If the assessments are of the type imposed only after a loss occurs involving property insured by the insurance company, then the borrower must present evidence (such as a letter from the company) that he currently does not owe any such assessments. The borrower may receive a discount for insuring for a longer period such as three years or five years and with an annual premium. If the insurance contains an automatic renewal clause, its provision should be substantially the following to be acceptable to the Agency: This policy will be automatically extended for successive terms at expiration of the original term and of each extension thereof, upon payment of renewal premiums. It is a condition of this policy that if the policy expires or is canceled for nonpayment of premium, or for any other reason, the mortgagee will be given 10 days notice. This policy will be automatically extended for successive terms at expiration of the original term and of each extension thereof, upon payment of renewal premiums. It is a condition of this policy that if the policy expires or is canceled for nonpayment of premium, or for any other reason, the mortgagee will be given 10 days notice. (11) Mortgage clause. The standard mortgage clause adopted by the State must be attached to or printed in the policy, or Form RD 426-2, “Property Insurance Mortgage Clause (Without Contribution),” must be attached to or the provisions thereof printed in the policy. A letter signed by an authorized official of an insurance company to the State Director, stating that all insurance policies the company issues in the State and in which the Agency has a mortgage interest incorporates all of the provisions of Form RD426-2 may be accepted in lieu of attaching Form RD 426-2 to each policy. If such a blanket letter is used, the Agency will be named in the loss payable clause and a State Instruction will be issued, after prior approval is obtained from the National Office, authorizing the use of such method. (i) If the use of a mortgage clause, other than the standard mortgage clause (without contribution), has been made mandatory by State laws or insurance regulations, a State Instruction will be issued, after prior approval is obtained from the National Office, authorizing the use of such a form. (ii) When an approved mortgage clause is printed in the policy a “Loss Payable Clause” is acceptable provided the Agency, as mortgagee, would receive payment in case of loss even though the company would not be liable to the borrower. A “Loss Payable Clause” which contains the statement that the mortgagee is “subject to all terms and conditions of the policy” is not acceptable. (iii) Whenever a new mortgage clause including the interest of the Agency is issued after the policy has been in force, the new mortgage clause must be signed by an authorized agent or officer of the company that issued the policy. Form RD 426-6, “Transmittal of Property Insurance Mortgage Clause,” may be used to transmit the mortgage clause to the insurance official. (iv) The Agency and all other mortgagees whose interests are insured by the policy will be shown either in the mortgage clause or in the “Declaration Page” in the order of priority of their mortgages. (A) “United States of America (Rural Development)” will be named in the mortgage clause for direct and insured loan mortgages naming the Agency as mortgagee, whether in its own right or as trustee under a 2(f) or other agreement with a State Rural Rehabilitation Corporation. (B) “United States of America (Rural Development), as first mortgagee or as statutory agent and insurer of such mortgagee,” will be named in the mortgage clause for insured FO mortgages naming the lender as mortgagee, whether the mortgage is held by the original or a subsequent lender or by the insurance fund or by the Agency under a trust agreement or declaration of trust. (C) If the designation is not identical to that set forth in paragraphs (b)(11)(iv)(A) or (B) of this section, whichever is applicable, it will be sufficient if the mortgagee is readily identifiable as Rural Development. (c) Evidence of premium payment. (1) When Form RD 426-2 is attached to or the provisions thereof are printed in the policy, or a blanket letter from an insurance company incorporating the provisions of Form RD 426-2 in all policies in which the Agency has a mortgagee interest in effect, in accordance with paragraph (b)(11) of this section, no evidence of premium or assessment payment is required except for the first year of the loan. When a subsequent FP or section 502 RH loan is made to build, buy or rehabilitate essential buildings an endorsement to the existing policy including coverage for the property improved will be sufficient. (2) [Reserved] (d) Policy restrictions. (1) Any insurance on essential buildings as defined in § 1806.3 having restrictions which limit the amount of collectible insurance must meet the Agency requirements set forth below (except for the clause described in paragraph (d)(1)(iv) of this section which is never acceptable); otherwise, such restrictions must be eliminated or modified to afford the required protection. (i) Coinsurance clause. This clause generally provides that in consideration of a reduced rate, the borrower agrees to maintain insurance on his buildings up to a specified percentage (usually 80 percent) of their value and that the company will not be liable for a greater proportion of any partial loss than the amount of insurance bears to the specified percentage of either the undepreciated replacement value or the depreciated replacement value or the depreciated replacement value (actual cash value) of the buildings at the time of the loss. When the buildings are insured for the specified percentage of their value, the company, in the event of a partial loss, will be liable for the full amount of the loss not to exceed the amount of insurance. A coinsurance clause can be accepted only where the amount of insurance is at least equal to the specified percentage of either the undepreciated replacement value or the depreciated replacement value (actual cash value). For example, an 80 percent coinsurance clause can be accepted only where the amount of insurance on each insured building is at least equal to 80 percent of the appropriate replacement value of the insured building. (ii) Three-fourths' value clause. This clause provides that the liability of the company shall be limited to three-fourths of the depreciated replacement value of the buildings covered at the time of the loss, not to exceed the amount of insurance. This clause may be accepted if the unpaid balance of the loan is not greater than three-fourths of the depreciated replacement value of the building and the amount of insurance is at least equal to the unpaid balance of the loan and any prior liens and no building is insured for more than three-fourths of its depreciated replacement value. (iii) Loss deductible clause. (A) For all loans other than RRH, RCH, and LH organizations this clause generally provides that loss to each building to the extent of the limitation is not recoverable. The company is liable only for loss to each building in excess of such limitation stated in the clause. This clause may be accepted where the limitation does not exceed $150, or one percent of the insurance coverage whichever is greater. In no case, however, may the limitation on any one building exceed $500.00. (B) For RRH, RCH, and LH organization loans this clause generally provides that loss to each project to the extent of the limitation is not recoverable. The company is liable only for loss to each project in excess of such limitation stated in the clause. This clause may be accepted where the limitation does not exceed the option shown below that is chosen by the borrower and agreed to by the Loan Approving Official and properly annotated in the borrower file. The borrower and the Official should consider the economic impact to the project when selecting the appropriate option. ( 1 ) Option 1—Up to one-fourth of one percent (0.0025) of the insurable value. Maximum deductible $5,000. ( 2 ) Option 2—Up to a maximum deductible of $500 on any project with an insurable value not exceeding $200,000. ( 3 ) Option 3—Option 1 may be chosen and increased above the maximum deductible by an amount equivalent to funds specifically escrowed in the project replacement reserve account as an offset to the increased deductible. ( 4 ) Option 4—Option 2 may be chosen and increased above the maximum deductible by an amount equivalent to funds specifically escrowed in the project replacement reserve account as an offset to the increased deductible. ( 5 ) The funds used to increase the deductible in Option 3 or Option 4 may be from project funds if it does not create an unsecure financial situation for the project. Also, non-project funds may be used for Option 3 or 4 and then repaid by withdrawal from the project at the rate of 75 percent of the annual insurance premium savings earned by the amount of escrow deposit, up to the amount deposited. ( 6 ) The funds escrowed to increase the authorized deductible will be placed in the project reserve account as an increased amount in and above the amount required by the Loan Agreement/Resolution and so annotated in the borrower's accounting system. (iv) Three-fourths' loss clause. This clause provides that the company will not pay more than three-fourths of any loss, nor more than three-fourths of the amount of insurance in force. This clause is never acceptable and must be eliminated. (v) Deferred loss payable clause. This clause provides that, if the amount payable under the policy for any loss to any building insured shall be in excess of a specified portion, (usually 60 percent) of the amount of insurance on such building, the company will withhold from its initial loss payment any sum in excess of the specified portion of the amount of insurance on such building. If the building sustaining such loss is repaired or replaced within six months from the date of the fire and at or within 300 feet of the original location, as described in the policy, the company upon receipt of evidence to that effect from the insured will pay the full balance withheld from the initial payment, provided the amount expended in repairing or replacing the building damaged or destroyed will equal or exceed the amount of loss as determined under the terms of the policy. Failure to repair or replace any insured building within the time and manner provided will constitute acceptance of the initial payment as full and final settlement under the policy with respect to the loss. This clause may be accepted if the amount of insurance is for the full depreciated replacement value (actual cash value) of the building and the unpaid balance of the loan and any prior lien(s) is not greater than the initial loss payment made by the company. (vi) Construction specifications and use conditions. If the insurance policy contains clauses which specify certain standards of construction or prescribes certain uses of the property for the insurance to be valid, the policy is acceptable only if the property meets such specifications or conditions at the time of acceptance. For example, if the policy provides that the chimney be constructed of a certain type of material, the County Supervisor should be assured that the required material has been used, or if the policy provides that farming operations are not carried out on the premises he should be assured that this condition is met. (2) Policies generally will not be accepted if, under the terms of the policies or local laws, contributions or assessments may be made against the Agency. However, policies which impose assessments on the borrower may be accepted only if the Agency mortgage will be recorded prior to any failure of the borrower to pay any such assessments. Policies also will not be accepted if, by their terms or other conditions, loss payments are contingent upon collective action by the Board of Directors, or the stockholders, or the members. (e) Buildings on leaseholds. The policy will indicate that the insured is the lessee or tenant and not the owner of the buildings securing the Agency loan; or, if he is the owner of the building on the leased land, the policy will indicate that the insured is the owner of the building, but not of the land. State Directors, with the advice of the OGC will issue State Instructions to meet any other special requirements needed to conform with the insurance requirements of the State to enable leaseholders to obtain property insurance for buildings which are security for the Agency loans." 7:7:12.1.2.1.2.1.1.3,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,A,Subpart A—Real Property Insurance,,§ 1806.3 Coverage requirements.,RHS,,,"[41 FR 34571, Aug. 16, 1976, as amended at 56 FR 6945, Feb. 21, 1991; 80 FR 9865, Feb. 24, 2015]","The County Supervisor should encourage the borrower for his own protection to insure for their depreciated replacement value (actual cash value) all essential buildings. Essential buildings include the dwelling and any other buildings that are necessary for the operation of the property or that provide income to assure orderly repayment of the loan. If insurance is for less than the depreciated replacement value of all essential buildings, the County Supervisor will see that the coverage is obtained on one or more of the most essential buildings. The minimum amount of coverage will be furnished as prescribed below: (a) 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 replacement value of the essential buildings, or the cost of adequate essential buildings which can be constructed for amounts less than the depreciated replacement value of the existing buildings, the essential buildings will be insured, to the nearest multiple of insurance that is available, for the lesser of (i) their depreciated replacement value, or (ii) the cost of constructing adequate essential buildings. For example, if insurance is available in only multiples of $1,000, the minimum insurance required on an essential building valued at $6,600 would be $7,000, and that required on an essential building valued at $6,400 would be $6,000. (2) When the unpaid balance of the loan is less than the sum of the depreciated replacement value of the essential buildings to be insured, the total amount of insurance must be at least equal to the lesser of (i) the unpaid balance of the loan, or (ii) the cost of adequate 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 substantial improvements are made to essential buildings, the amount of insurance will be adjusted in accordance with paragraphs (a)(1) or (2) of this section, whichever is applicable. (b) Loans secured by other than first liens. The amount of insurance on buildings in the case of Agency loans secured by other than a first lien will be the same as required in paragraph (a) of this section, with the understanding that the unpaid balance of the loan will be deemed for this purpose to be the amount of the total real estate mortgage indebtedness owed all prior mortgagees named in the mortgage clause, plus the debt to the Agency which is secured by real estate mortgage. (c) Exception of buildings from insurance. (1) Insurance will not be required on a building: (i) That is not essential. (ii) In such a state of disrepair that the cost of insurance would be prohibitive. (iii) Which has a depreciated replacement value of $2,500 or less. (iv) Which is being or has been repaired with a section 504 loan of $7,500 or less. Families receiving section 504 loans should be encouraged but not required to carry insurance on their home. (v) On LH security property which was not built or repaired with Agency loan funds provided that the State Director determines that the land and other structures adequately secure the Agency loan and any prior liens. (vi) On which the hazards are so slight because of the character and construction of the building, or the cost of the insurance is so high in comparison with the value of the building that, according to common standards of judgment, it should not be insured, including but not limited to windmills, silos, and fire-cured tobacco barns. (vii) In cases where the unpaid balance of the Agency loans and any prior liens have been reduced to $2,500 or less, property insurance need not be required if the borrower wants to discontinue it, provided the County Supervisor determines that the value of the land security itself is sufficient to protect the Agency in its collection of the amount of the outstanding indebtedness. (viii) If insurance for windstorm and hail to meet all Agency requirements is not available in a hurricane area, the County Supervisor may accept from the borrower or applicant the windstorm and hail insurance policy that most nearly conforms to Agency requirements. If such an exception is made, the situation should be fully documented in the borrower's case file. However, if the best insurance policy a borrower or applicant can obtain at the time he receives a loan contains a loss deductible clause for windstorm and hail damage exceeding $250 or 10 percent of the actual cash value of the buildings, whichever amount is greater, the insurance policy, with an explanation of the reasons why more adequate insurance is not available will be submitted to the State Office for prior approval. (2) [Reserved]" 7:7:12.1.2.1.2.1.1.4,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,A,Subpart A—Real Property Insurance,,§ 1806.4 Examining and general servicing of insurance.,RHS,,,"[41 FR 34571, Aug. 16, 1976, as amended at 42 FR 33262, June 30, 1977; 50 FR 39638, Sept. 30, 1985; 54 FR 35869, Aug. 30, 1989; 57 FR 36590, Aug. 14, 1992; 69 FR 69103, Nov. 26, 2004; 80 FR 9865, Feb. 24, 2015]","(a) Examination by county office of policies, endorsements, binders, and other evidence of insurance. Upon receipt in the County Office of a policy, endorsement, binder, or other evidence of insurance, submitted by a borrower, it will be examined promptly for compliance with the requirements of this Instruction. If the evidence of insurance is found to be acceptable, it will be placed in the borrower's case folder. (1) Unacceptable policies. (i) When the borrower furnishes any policy or other evidence of insurance which does not meet the requirements of this Instruction such policy or other evidence of insurance will be returned to the borrower with the reasons why it is not acceptable. (ii) If the borrower does not furnish acceptable insurance by the date the previous policy expired or was canceled, the County Supervisor will proceed as provided in § 1806.6. (2) Expiration records and notices. (i) In cases other than those involving FP or section 502 RH borrowers, the County Supervisor will notify the borrower of the expiration of his insurance at least 30 days in advance of such expiration unless he has received written evidence that the insurance has been renewed. (ii) FP and Section 502 RH borrowers will be informed during the tenth month after the date of loan closing of their responsibility to carry insurance. Form RD 426-4 will be sent to these borrowers, regardless of whether there is evidence that the insurance has been renewed. Thereafter, the County Supervisor will not be required to further determine whether the borrower has adequately maintained insurance; however, if a further notice of expiration is received in the County Office, the County Supervisor will again notify the borrower by using RD 426-4 of his responsibility. (3) Release of mortgage interest. When the borrower's loan has been paid in full and the satisfaction or release of the mortgage has been executed, the County Supervisor or his delegate will execute the following Release of Mortgage Interest on the mortgage clause attached to the policy or other evidence of insurance and transmit it with the policy or other evidence of insurance, the paid-in-full note, and the satisfaction to the borrower: It is understood and agreed that the interest of the United States of America in the property insured hereunder ceased as of (Date of Final Payment), and that the Government shall have no interest in any loss or damage to such property occurring thereafter. It is understood and agreed that the interest of the United States of America in the property insured hereunder ceased as of (Date of Final Payment), and that the Government shall have no interest in any loss or damage to such property occurring thereafter. (4) Lost or misplaced policies. When an unexpired insurance policy or other evidence of insurance is lost or misplaced, it will be necessary to obtain a replacement policy or other evidence of insurance. The County Supervisor is authorized to sign a Lost Policy Receipt on behalf of the Agency. For FP and section 502 RH loans, this paragraph applies only during the period the policy is retained in the County Office. (5) Disposition of expired and canceled policies. An expired or canceled policy or other evidence of insurance will be returned to the borrower, unless there is a loss settlement pending. (b) Special servicing of insurance —(1) Vacancy or unoccupancy—tenant occupancy—increased hazard. If the County Supervisor has knowledge that insured property is vacant or unoccupied or that the ownership or occupancy has changed from owner to tenant, or that the hazards otherwise are increased, he will examine the policy to determine whether the policy permits such conditions. Unless the insurance permits such conditions, the County Supervisor will immediately notify the company or agent in writing. In any case where there is an additional premium due because of vacancy, unoccupancy, tenant occupancy, or other increased hazard, upon demand to the Agency from the company or agent because the borrower cannot, or will not, pay the additional premium, it may be paid in accordance with RD Instruction 2024-A, to the company or agent. For FP and section 502 RH borrowers, property insurance will not be obtained except in cases where an unusual and severe hazard exists and insurance is necessary to protect the interests of the Government. (2) Transfer of property. (i) When a borrower or transferee requests the consent of the Agency to a transfer of the security property which already has been made, or when the County Supervisor learns that any such transfer has been made, he will immediately inform the transferee that the mortgage requires the owner to provide and maintain adequate insurance acceptable to, and with loss payable to, the Agency as mortgagee. The transferee may obtain a new insurance policy or the transferor may have the insurance company or agent issue an endorsement to the current insurance policy changing the name of the assured to that of the transferee. If a new insurance policy is obtained, the old policy or other evidence of insurance will be returned to the transferor unless there is an unsettled loss. If there is an unsettled loss, the policy or other evidence of insurance will not be returned until the claim has been settled. The County Supervisor, with the concurrence of the State Director and the OGC, will notify the borrower and transferee that acceptance of the new policy or endorsement will not constitute consent by the Government to the transfer even though the Government is protected by a loss payable clause in such an insurance policy. (ii) In a transfer with assumption, insurance will be required in the same amount and according to the same provisions as for an initial loan of the same type. (3) Voluntary conveyance of property to the Government and foreclosure. Insurance will not be carried on buildings which the Government has acquired. After a foreclosure sale has been held, or after a deed of conveyance to the Government in lieu of foreclosure has been filed for record, insurance will not be maintained by the Government (whether or not subject to redemption)." 7:7:12.1.2.1.2.1.1.5,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,A,Subpart A—Real Property Insurance,,§ 1806.5 Losses.,RHS,,,"[41 FR 34571, Aug. 16, 1976, as amended at 50 FR 39638, Sept. 30, 1985; 80 FR 9865, Feb. 24, 2015]","(a) Protecting property. It is the responsibility of the borrower to immediately notify the County Supervisor and insurance company or agent of any loss or damage to insured property and collect the amount of the loss. When the County Supervisor learns of a loss to property which secures an Agency loan, he will: (1) Check the borrower's casefile for an insurance policy or other evidence of insurance. When a policy or other evidence of insurance has not been retained by the Agency, such as for FP and section 502 RH borrowers, the County Supervisor will determine whether the property was insured and whether the Agency was named as mortgagee in the insurance policy. (2) Determine that the borrower has taken such steps as are necessary to protect the interest of the Agency in the security property against further damage. When serious problems arise with respect to protecting the property from further damage, the borrower cannot or will not arrange adequate protection for the property, or when legal action appears to be necessary, the County Supervisor will arrange for emergency protection and immediately refer the case with complete information to the State Director. (b) Loss covered by insurance. (1) If the Agency is listed as mortgagee in the insurance policy, the County Supervisor will collect the amount of the loss and may consent to the borrower using funds to repair or replace damaged or destroyed property or to apply loss proceeds to his loan account or to any prior liens that might exist in the order of their priority. (2) If the Agency is not listed as mortgagee in the insurance policy, the County Supervisor will contact the borrower to determine whether he has received the loss proceeds. If the borrower has received the loss proceeds but not yet paid for improvements to repair or replace the property, or has not received the loss proceeds the County Supervisor will: (i) Notify the insurance company in writing of the Agency's interest in the security property and request that the loss proceeds be made payable jointly to the Agency and the borrower. (ii) Inform the borrower of his responsibility for repairing or replacing the damaged or destroyed property or for authorized disposition of the loss proceeds as outlined in paragraph (b)(1) of this section. (c) Loss drafts—when loan is secured by a first mortgage. (1) A loss draft which in the opinion of the County Supervisor represents a satisfactory adjustment of the loss will be endorsed immediately without recourse and deposited in a supervised bank account to be used in repairing or replacing the damaged building, except: (i) Where the amount of the loss is $1,000 or less and the borrower will use the funds for repairing or replacing an essential building, the loss draft may be endorsed without recourse and given to the borrower upon satisfactory proof that the repairs or replacements have been made, or upon satisfactory assurance that the work will be performed. (ii) When (A) the essential buildings are not to be repaired or replaced and other suitable buildings are not to be erected, or (B) a balance remains after all repairs, replacements, and other authorized disbursements have been made, such insurance funds will be applied on prior liens or as an extra payment to the borrower's loan accounts secured by the real estate or disposed of in accordance with the general principles applicable to the use of proceeds from the sale of a part of the security contained in applicable security servicing regulations for the type loan involved. (iii) An insurance payment for loss or damage to a nonessential building the borrower voluntarily insured will be (A) applied on prior liens, or to current delinquencies to the Agency or as an extra payment on the borrower's loan accounts secured by real estate, (B) disposed of as authorized by the State Director in accordance with the general principles applicable to the use of proceeds from the sale of a part of the security contained in applicable security servicing regulations for the type loan involved, or (C) used for other purposes as authorized by the State Director if the loan is adequately secured and the loan account is current. (iv) When the indebtedness secured by the insured property has been paid in full or the draft is in payment for loss of property on which the Agency has no claim, a loss draft which includes the Agency as a joint payee may be endorsed without recourse and delivered to the borrower. (2) [Reserved] (d) Loss drafts—When loan is secured by other than first mortgage. (1) When the loss draft does not include the interest of a prior mortgagee, it will be processed as provided in paragraph (c) of this section. (2) When the loss draft includes the interest of a prior mortgagee, the County Supervisor is authorized to endorse and process the draft as follows: (i) When the prior mortgagee will permit the use of such loss funds to repair or replace the damaged building, the draft may be endorsed without recourse upon satisfactory proof that the repairs or replacements have been made or upon satisfactory assurance that the work will be performed. (ii) When the amount of the draft does not exceed the amount of the indebtedness then secured by the prior mortgage as stated in writing by the holder of the prior mortgage, and the holder of the prior mortgage has agreed in a written statement to the County Supervisor that he will apply such funds as a payment on the borrower's prior mortgage indebtedness, the draft may be endorsed without recourse. (iii) When the amount of the draft exceeds the amount of the indebtedness then secured by the prior mortgage, as stated in writing by the holder, and he has agreed in writing to pay such indebtedness from the loss funds, the draft will be endorsed without recourse only after all parties named as payees in the draft have signed an agreement to deliver the draft “in escrow” to a bank acceptable to the named parties. The agreement will specify the manner in which the funds will be disbursed by the bank, as escrow agent, to the several mortgagees named in the draft. After the loss funds have been collected by the bank, it will issue cashier's checks in the manner prescribed in the escrow agreement (see exhibit A for suggested form). If this procedure is found to be impractical in an individual instance, the State Director may authorize an alternative method for disbursing the loss funds to protect the Government's financial interest. (iv) Drafts which have been endorsed by all other payees will be endorsed immediately without recourse. Such drafts or other loss funds will be processed in accordance with the methods described in paragraph (c) of this section. (e) Servicing insurance losses under special circumstances —(1) Foreclosures and voluntary conveyances. Losses on properties in process of foreclosure or voluntary conveyance will be handled with the advice of the OGC. If the necessary cooperation of the borrower cannot be obtained, the State Director, with the advice of the OGC, will determine the proper action to be taken. To the extent feasible from a legal and practical standpoint, all loss payments should be received for a damaged or destroyed building and applied on the borrower's real estate indebtedness before title to the property is taken by the Government through foreclosure sale, voluntary conveyance, or otherwise, unless absolute assignment has been made by the borrower to the Government of all loss funds due from the insurance company. (2) Subrogation agreements. When a company claims nonliability to the borrower and subrogation to the rights of the Agency, the County Supervisor will forward a full report of the facts in the case to the State Director. The State Director will upon advice from OGC, instruct the County Supervisor regarding further action to be taken. (f) Repairs and replacements. When any loss payments have been deposited in a supervised bank account, all repairs and replacements done by or under the direction of the borrower, or by contract, will be planned, performed, inspected, and paid for in the same manner as improvements financed with loan funds. (g) Completing adjustment. The borrower must complete the adjustment of the loss with the company or its authorized representatives. The County Supervisor, upon request of the borrower may consult with the borrower regarding the loss adjustment, but will not enter into negotiations with insurance adjusters or company representatives relative to the adjustment or settlement of losses on borrower property, or make any commitments, or sign any forms in connection with the adjustment of the loss. The Agency will not waive any rights which it may have against the company except when the borrower's account or the Agency claim has been paid-in-full. (1) The County Supervisor will maintain a proper followup on all losses until satisfactory settlement has been made by the company. (2) Where the County Supervisor has evidence that the adjustment agreed to by the borrower is significantly less than the amount of damage to which the borrower is entitled under the terms of the policy, the loss draft accompanied by a report will be sent to the State Director so that he may reopen the adjustment, if he considers it is in the interest of the Agency to do so. (3) When it appears evident that the amount of the loss is $1,000 or less, the County Supervisor may rely on estimates of contractors, building supply firms, reliable carpenters, or other evidence rather than personal inspection in determining whether the adjustment is equitable and the Government's interest is protected. (h) Reinstatement after loss. In cases where insurance in the amount of the loss is not reinstated automatically by the provisions of the policy, it will be the responsibility of the County Supervisor to have the borrower reinstate as much of the insurance as may be necessary to fulfill the requirements of the Agency. (i) Losses not covered by insurance. When a loss occurs and insurance is not in force, the County Supervisor will: (1) Inform the borrower that he has violated the security instrument by not providing insurance coverage and that it is his responsibility to make the needed replacements or repairs. (2) If the borrower is unable or unwilling to make needed repairs or replacements from his own resources, the County Supervisor will submit complete information to the Agency official authorized to determine whether the Agency will or will not continue with the loan. The County Supervisor's report will include recommendations on the following items: (i) The advisability and possibility of making a subsequent loan to pay for needed repairs. (ii) Subordination of the Agency real estate lien to permit the borrower to obtain funds for needed repairs from another source. (iii) The possibility of the borrower obtaining funds secured by a junior lien from another source. (iv) Whether an advance is needed to protect the Government's interest in the property. (3) If the loan will not be continued with the borrower, it must be serviced in accordance with the applicable Instructions. (4) If the borrower has improperly disposed of loss proceeds, the County Supervisor will refer the case with complete information and recommendations to the State Director. The State Director will consult the Regional Attorney when necessary and advise the County Supervisor as to appropriate servicing actions." 7:7:12.1.2.1.2.1.1.6,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,A,Subpart A—Real Property Insurance,,§ 1806.6 Failure of borrower to provide insurance.,RHS,,,"[41 FR 34571, Aug. 16, 1976, as amended at 42 FR 33263, June 30, 1977; 43 FR 34430, Aug. 4, 1978; 50 FR 39638, Sept. 30, 1985; 56 FR 6945, Feb. 21, 1991; 57 FR 36590, Aug. 14, 1992; 67 FR 78326, Dec. 24, 2002; 80 FR 9865, Feb. 24, 2015]","When a borrower fails to provide and maintain property insurance which meets the requirements set forth in § 1806.2 of this subpart, every effort will be made to have the borrower provide coverage acceptable to the Agency. It will be emphasized that under the terms of the security instrument, it is the borrower's responsibility to provide and maintain proper insurance coverage. Existing borrowers required to escrow will be notified by letter at least 90 days prior to initiating escrowing for insurance. Failure to provide insurance is a nonmonetary default and will be a consideration in determining if the loan is to be continued. For FP or SFH borrowers not required to escrow, the County Supervisor will obtain insurance coverage and voucher for the insurance premium only in cases where: An unusual and severe hazard, such as recurring fires or unstable ground conditions, exists, or, an SFH borrower on a moratorium is unable to pay the insurance premium and the borrower requests that the Agency pay the premium. For SFH borrowers required to escrow, force placed insurance will be obtained if the borrower fails to provide acceptable insurance. Borrowers being phased into escrow will be given at least 30 days to obtain coverage, after which force placed insurance will be obtained. If the escrow account contains insufficient funds to pay the insurance when due, the County Supervisor will request the borrower to pay an amount equal to the difference between the premium due and the escrow balance in a lump sum within 30 days after notification. If the borrower fails to remit the amount requested, the amount will be advanced and charged to the borrower's account as a recoverable cost. The amortization period for an advance due to an escrow shortage will be one year. Insurance coverage shall be provided continuously unless the property is acquired by the Agency. The cost of obtaining such a policy shall be advanced and charged to the borrower's account as a recoverable cost. Amortization of the charge will be handled in accordance with 7 CFR part 3550. If a borrower indebted for other than an FP or SFH loan fails to provide acceptable insurance, the Servicing Official will take the following action: (a) Expired policies. (1) The County Supervisor will request the insurance agency or broker who issued the expired policy to issue a new policy which is acceptable to the Agency. (i) The new policy will be effective as of the date of the County Supervisor's contact with the insurance agency or broker or as soon thereafter as possible, and will be for a term of one year. If State insurance regulations require a longer term, the State Director will issue a State Instruction authorizing County Supervisors to obtain policies for the minimum period permitted by State insurance regulations. (ii) The Agency will be shown in the loss payable clause and in the mortgage clause in the proper order of priority. (iii) Insurance coverage on each building usually will be the same as shown on the expired policy if it meets or exceeds Agency requirements. If the coverage shown on the expired policy does not meet Agency requirements, proper coverage will be obtained. (iv) The County Supervisor will, if possible, have an automatic renewal provision included in the policy. (v) If the borrower refuses to pay the insurance premium with his own funds or arrange with the agent for subsequent payment by premium not or otherwise, the County Supervisor will pay the amount of the insurance premium in accordance with RD Instruction 2024-A. The amount of the premium payment will be charged to the borrower's Agency account with the highest lien priority as a recoverable cost item. (vi) If the insurance agency or broker who issued the expired policy refuses to issue a new policy, the County Supervisor will have the borrower designate in writing another insurance agency or broker from whom the insurance can be obtained. (vii) After the County Supervisor and the borrower exhaust all efforts to obtain acceptable insurance, the County Supervisor will request advice from the State Office as to companies issuing acceptable policies in the State and from which the borrower might be able to obtain an acceptable policy. If the borrower still cannot obtain an acceptable policy from any such company, and the determination has been made to continue with the borrower, the County Supervisor will temporarily accept from the borrower the available insurance policy the Agency determines most nearly conforms to the requirements of § 1806.2 of this subpart. (A) In making this determination, the following deficiencies become more objectionable in the order from ( 1 ) to ( 5 ) paragraphs (a)(1)(vii)(A) of this section: ( 1 ) A policy written for an initial term of less than one year. ( 2 ) A policy which will insure the most essential buildings but will not cover all essential buildings. ( 3 ) A policy which covers major risks such as fire and lightning, but does not include one or more of the other risks specified in § 1806.2(8). ( 4 ) A policy for a lesser amount of insurance than is required by § 1806.3. ( 5 ) A policy that is issued by a company which is not licensed to do business in the State or otherwise does not meet the requirements of § 1806.3. (B) Whenever adequate insurance becomes available, the County Supervisor will require the borrower to deliver to the County Office an acceptable insurance policy. The temporary policy will be returned to the borrower for cancellation after all losses claimed under the policy have been settled. (C) If the borrower is unable to furnish a property insurance policy of any kind, he is still responsible for the debt in the event of loss. (D) If the County Supervisor accepts an inadequate insurance policy under these conditions or the borrower fails to furnish any insurance policy, the County Supervisor will include in his report to the State Director an explanation of the efforts he and the borrower made to obtain acceptable insurance and his justification for accepting an inadequate policy, or for not obtaining an insurance policy of any kind. (b) Insurance canceled for reasons other than nonpayment of insurance premium. (1) The County Supervisor, immediately upon receipt of a 10-day notice of cancellation for a policy, will urge the borrower to provide acceptable insurance. (2) If the borrower fails to provide acceptable insurance before the cancellation is effective, the County Supervisor will contact the insurance agency or broker who issued the insurance policy to determine the reasons for cancellation and, if possible, have the policy reinstated. (3) If the insurance company will not reinstate the policy, the County Supervisor will attempt to obtain an acceptable insurance policy from another agency or broker in accordance with the provisions of paragraph (a) of this section. (c) Insurance canceled for nonpayment of premium. (1) The County Supervisor, immediately upon receiving a 10-day cancellation notice for a policy, will, if possible, contact the borrower in an effort to have him pay the insurance premium from his own funds or arrange with the agent for subsequent payment by premium note, or otherwise. (2) If the borrower does not pay or arrange to pay the premium before the policy cancellation is effective, the County Supervisor will, before the cancellation becomes effective, notify the insurance company or broker by certified mail (return receipt requested), that the Agency as mortgagee (or trustee) will pay the premium for one year to continue the policy in effect for that period. The County Supervisor will, in accordance with RD Instruction 2024-A, pay the amount of the premium for a period of one year. The amount of the premium will be charged to the borrower's loan account as a recoverable cost item. (3) If a property insurance mortgage clause other than Form RD 426-2 is used in connection with the policy and the insurance company or broker refuses to accept payment from the Agency in this manner to reinstate or continue the policy, the County Supervisor will attempt to obtain an acceptable insurance policy from another insurance company or broker in accordance with the provisions of paragraph (a) of this section." 7:7:12.1.2.1.2.2.1.1,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,B,Subpart B—National Flood Insurance,,§ 1806.21 General.,RHS,,,"[39 FR 17093, May 13, 1974, as amended at 69 FR 69103, Nov. 26, 2004; 72 FR 64121, Nov. 15, 2007; 80 FR 9865, Feb. 24, 2015]","(a) Authority. This subpart prescribes the policies and procedures to be followed in implementing the National Flood Insurance Act of 1968 as amended by the Flood Disaster Protection Act of 1973. The provisions of these Acts are applicable to Rural Development and Farm Service Agency, herein referred to as the “Agency” authorities permitting financing of buildings of any type now located in or to be located in special flood or mudslide prone areas as designated by the Federal Insurance Administration (FIA) of the Department of Housing and Urban Development (HUD), and any machinery, equipment, fixtures and furnishings contained or to be contained therein. This subpart does not apply to Farm Service Agency, Farm Loan Programs and to Rural Rental Housing, Rural Cooperative Housing, or Farm Labor Housing programs of the Rural Housing Service. (b) Background. The Congress has found that annual losses throughout the nation caused by floods and mudslides are increasing at an alarming rate, largely as a result of the accelerated development and concentration of populations in areas subject to floods and mudslides. The availability of Federal funds in the form of loans, grants, guarantees, insurance and other forms of financial assistance are often determining factors in the utilization of land and the location and construction of industrial, commercial and residential facilities. (c) Scope. The National Flood Insurance Program (the program) was authorized and created because the private insurance industry has been unable to provide insurance coverage at reasonable prices for such natural disasters as floods and mudslides. Subsidized and affordable insurance has been made available under the Act through an agreement between the Federal Insurance Administration and the National Flood Insurers Association." 7:7:12.1.2.1.2.2.1.2,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,B,Subpart B—National Flood Insurance,,§ 1806.22 Areas of responsibility.,RHS,,,"[39 FR 17093, May 13, 1974, as amended at 80 FR 9865, Feb. 24, 2015]","(a) Federal Insurance Administration ( FIA ). (1) Identify and publish information with respect to all areas in the country which are subject to floods and mudslides and designate those areas on Flood Hazard Boundary maps. (2) Notify affected communities of their designations and encourage them to adopt and enforce land use and other control measures and to adopt ordinances or laws which will regulate and control construction in areas designated as having special flood or mudslide hazards. (3) Make flood insurance available at reasonable rates in sufficient amounts, within the statutory limits, to adequately protect owners against loss to their buildings and contents when those buildings are located in or will be located in designated special flood and mudslide prone areas in communities participating in the National Flood Insurance Program. (b) The Agency. The State Director, after being notified by the National Office or FIA of designated flood or mudslide hazard areas and receiving flood hazard boundary maps identifying the hazard areas, FIA insurance rate charts, or other information concerning the program, will inform the appropriate County Supervisors and provide them the maps, rate charts, and other relevant information concerning the program in areas they serve. Permanent records indicating the date a community was notified as containing identified flood hazard areas, communities participating in the program, and communities eligible to participate but not participating in the program will be maintained in the State Office. County Supervisors will notify, in writing, those borrowers whose insurable buildings are located in designated flood or mudslide hazard areas of the availability of national flood insurance and encourage them to obtain flood insurance to protect their and the Government's financial interest. (c) Community. Communities are required to participate in the National Flood Insurance Program within 1 year after notification of its formal identification as a community containing one or more special flood and mudslide prone areas, or by July 1, 1975, whichever is later, or be denied Federal financial assistance or Federally-related financial assistance for acquisition or construction purposes in such areas. Communities wishing to qualify for the program may submit a completed application to: Administrator, Federal Insurance Administration, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410. (d) Lender. The lender must determine whether real property is located in an area identified as having special flood or mudslide hazards and cannot discharge the responsibility merely by obtaining a self-certification from the applicant that the property is not located in an area having special flood hazards." 7:7:12.1.2.1.2.2.1.3,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,B,Subpart B—National Flood Insurance,,§ 1806.23 Definitions.,RHS,,,"[39 FR 17093, May 13, 1974, as amended at 80 FR 9865, Feb. 24, 2015]","For the purpose of this subpart, the following definitions apply: (a) Financial assistance means any form of direct, insured or guaranteed loan, including reamortization and assumption on new terms of any loan, any form of grant, or other form of direct or indirect assistance extended by the Agency. (b) Financial assistance for acquisition or construction purposes means any form of Federal financial assistance which is intended in whole or in part for the acquisition, construction, reconstruction, or substantial improvement of any building and for any machinery, equipment, fixtures and furnishings contained or to be contained in such buildings. (c) Community means any state or political subdivision thereof, such as county, parish, township, city or other local government which has zoning and building code jurisdiction over a particular area having special flood hazards. (d) Eligible community means a community in which the Administrator of FIA has authorized the sale of flood insurance under the program. (e) Designated special flood or mudslide prone area means those areas in a community subject to flood or mudslide which have been identified by flood hazard boundary maps or those areas not identified by maps but where, due to emergency, the FIA Administrator has authorized the sale of flood insurance. (f) Flood means a general and temporary condition of partial or complete inundation of normally dry land areas from the overflow of streams, rivers, or other inland water, the collapse or subsidence of land along the shore of a lake or other body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels, or abnormally high tidal water or rising coastal waters resulting from severe storms, hurricanes, or tidal waves resulting from volcano eruptions or earthquakes. (g) Mudslide or mudflow means a major occurrence involving the appearance of a large river or flow of “liquid mud” down a hillside, usually as a result of earlier brushfires followed by heavy rains over a widespread area. (h) Flood insurance means insurance coverage for floods and/or mudslides under the program or otherwise acceptable to FIA. (i) Building means any walled and roofed structure, other than a gas or liquid tank, that is principally above ground and affixed to a permanent site. Residential and most types of industrial, commercial, and agricultural buildings, such as lumber sheds, machinery storage sheds, grain storage bins, and silos, are included in this definition. (j) Substantial improvement means any repair, reconstruction or improvement of a structure, the cost of which equals or exceeds 50 percent of the actual cash value of the structure either before the improvement is started or, if the structure has been damaged and is being restored, before the damage occurred." 7:7:12.1.2.1.2.2.1.4,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,B,Subpart B—National Flood Insurance,,§ 1806.24 Eligibility.,RHS,,,,"In addition to an applicant meeting the requirements for the type of financial assistance requested, the following requirements for eligibility of applicants for financial assistance for acquisition and construction purposes in designated special flood and mudslide prone areas must be met: (a) If flood insurance is available, to be eligible after March 1, 1974, the applicant must have purchased a flood insurance policy at the time the loan or grant is closed. (b) Applicants will not receive financial assistance in those communities that have been notified as having special flood and mudslide prone areas and where flood insurance is not available within 1 year after such notification or by July 1, 1975, whichever is later." 7:7:12.1.2.1.2.2.1.5,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,B,Subpart B—National Flood Insurance,,§ 1806.25 Conditions.,RHS,,,"[39 FR 17093, May 13, 1974, as amended at 52 FR 8002, Mar. 13, 1987; 56 FR 6945, Feb. 21, 1991; 80 FR 9865, Feb. 24, 2015]","The Agency financial assistance may be extended to eligible applicants meeting the eligibility requirements of § 1806.24 of this subpart, provided the following conditions are also met: (a) Dwelling and multi-unit housing facilities. (1) If the financial assistance is to buy a dwelling or multi-unit housing facility: (i) The first floor elevation of the habitable space of the dwelling or housing unit must be above the 100-year flood level. (ii) The housing must be served by public utilities and facilities, such as sewer, gas, electrical and water systems that are located and constructed to minimize or eliminate flood damage, or have an onsite water supply system and waste disposal system located so as to avoid impairment of such systems and contamination from the waste disposal system to the water supply system from flooding. (2) If the financial assistance is to build or provide substantial improvement, the requirements of paragraph (a)(1) of this section must be met and all construction must meet requirements of the applicable development standards, and: (i) A building permit must be issued by the appropriate governing officials having jurisdiction in the area and compliance must be had with the zoning code or other established legal requirements of the area for reducing or eliminating flood or mudslide damage. (ii) The structure must be designed and anchored to prevent flotation, collapse or lateral movement of the structure. (iii) Construction materials and utility equipment that are resistant to flood damage must be used. (iv) Construction methods and practices that will minimize flood damage must be followed. (3) If the financial assistance is to make minor repairs, the conditions of paragraphs (a)(1) (i) and (ii) and (2) (i), (ii) and (iii) of this section must be met or the building must have existed on the site prior to the date the area was identified as having special flood or mudslide hazards and the loan approval official must determine that the dwelling is suitable as a residence. (4) When applications for financial assistance are received in areas identified as having special flood and mudslide hazards, the loan approval official will consider the expected severity and frequency of floods and mudslides in determining whether any housing loans should be made in the area. He should be sure, if loans are made, that the objectives of the loans can be accomplished and the Government's financial interest will be adequately protected. (b) Nonresidential buildings. Construction plans and specifications for new buildings or improvements to existing buildings must comply with flood plain area management or control laws, regulations or ordinances. (c) Flood insurance coverage. (1) Any property on which flood insurance is required must be covered by such insurance during its anticipated economic and useful life in an amount at least equal to its development or replacement cost (except estimated land cost), or to the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Program, whichever is less. However, if the financial assistance provided is in the form of a loan, the amount of flood insurance required need not exceed the outstanding principal balance of the loan and need not be required beyond the term of the loan. (2) The contents of a building must be insured separately from a building but coverage cannot be written on the contents of a three-walled machinery shed or similar type open building. (3) Flood insurance shall not be required on any state owned property that is covered under an adequate state policy of self-insurance satisfactory to the Secretary of HUD, who will publish a list of states with such policies. (4) It will be emphasized that under the terms of the security instrument it is the borrower's responsibility to provide and maintain proper flood insurance coverage. If flood insurance is not provided on any property for which it is required, the flood insurance premium will be paid to protect the Government's security interest. For borrowers required to escrow for flood insurance, payment of the premium will be handled in accordance with § 1806.28 of this subpart. Existing borrowers required to escrow will be notified by letter at least 90 days prior to initiating escrowing for flood insurance. If the Agency pays the flood insurance premium for borrowers not required to escrow, the cost will be charged to the borrower's account as a recoverable cost. Failure to provide flood insurance is a nonmonetary default and will be a consideration in determining if the loan is to be continued." 7:7:12.1.2.1.2.2.1.6,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,B,Subpart B—National Flood Insurance,,§ 1806.26 Coverage and premium rates.,RHS,,,,Exhibit A sets forth limits of coverage and chargeable premium rates under the program. Insurance policies under the program can be obtained from any licensed property insurance agent or broker serving the eligible community or from the National Flood Insurers Association Serving Company (Serving Company) for the state. The Servicing Company for each state is shown in exhibit B. 7:7:12.1.2.1.2.2.1.7,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,B,Subpart B—National Flood Insurance,,§ 1806.27 Acceptable policies and servicing.,RHS,,,,"The general acceptance of policies and servicing of insurance will be performed in accordance with Subpart A of this part. Any unusual situations that may arise with respect to obtaining or servicing flood insurance should be referred to the State Director. The State Director will attempt to resolve any problems concerning the flood insurance program in the state with the Servicing Company. Flood hazard boundary maps, insurance rate tables, the insurability of specific structures, and other information concerning the program may be obtained from the Servicing Company. Difficulties in administering the program which the State Director is unable to resolve should be referred to the National Office for Assistance." 7:7:12.1.2.1.2.2.1.8,7,Agriculture,XVIII,A,1806,PART 1806—INSURANCE,B,Subpart B—National Flood Insurance,,§ 1806.28 Borrowers required to escrow.,RHS,,,"[56 FR 6946, Feb. 21, 1991, as amended at 67 FR 78326, Dec. 24, 2002]","For borrowers required to use escrow accounts for the payment of real estate taxes and insurance, the flood insurance premium will be paid when due from funds contained in the escrow account. If the escrow account contains insufficient funds to pay the flood insurance premium when due, the County Supervisor will request the borrower to pay an amount equal to the difference between the premium due and the escrow balance in a lump sum within 30 days after notification. If the borrower fails to remit the amount requested, the amount will be advanced and charged to the borrower's account as a recoverable cost. The amortization period for an advance due to an escrow shortage will be one year. Amortization of the charge will be handled in accordance with7 CFR part 3550. When a borrower has more than one loan secured by the real estate on which the flood insurance premium is being paid, the advance will be charged to the initial or lowest numbered loan." 7:7:12.1.2.1.4.1.1.1,7,Agriculture,XVIII,A,1810,"PART 1810—INTEREST RATES, TERMS, CONDITIONS, AND APPROVAL AUTHORITY",A,"Subpart A—Interest Rates, Amortization, Guarantee Fee, Annual Charge, and Fixed Period",,"§ 1810.1 Information concerning interest rates, amortization, guarantee fee, annual charge, and fixed period.",RHS,,,"[56 FR 11503, Mar. 19, 1991, as amended at 80 FR 9865, Feb. 24, 2015]","(a) Tables for computing the interest rates (including the annual charge rates and length of fixed period for initial repurchase agreement for insured loans), tables for use in determining the amounts of interest on loans at different rates, tables providing factors in amortizing loans, and the guarantee fee for guaranteed loans, may be obtained from any County, District, or State Office of the Agency (Rural Business-Cooperative Service and Rural Housing Service of the U.S. Department of Agriculture) or from its National Office at 14th and Independence Avenue SW., Washington, DC 20250. (b) In the event that the tables provided for in paragraph (a) of this section do not furnish adequate information, questions should be directed to the Assistant Administrator, Finance Office, U.S. Department of Agriculture, 1520 Market Street, St. Louis, Missouri 63103." 7:7:12.1.2.1.4.1.1.2,7,Agriculture,XVIII,A,1810,"PART 1810—INTEREST RATES, TERMS, CONDITIONS, AND APPROVAL AUTHORITY",A,"Subpart A—Interest Rates, Amortization, Guarantee Fee, Annual Charge, and Fixed Period",,§ 1810.2 Adjustment of interest rates for certain loans involving use of or construction on prime or unique farmland.,RHS,,,"[46 FR 47763, Sept. 30, 1981, as amended at 56 FR 11503, Mar. 19, 1991; 80 FR 9866, Feb. 24, 2015]","(a) For essential community facility loans, insured farm ownership loans for recreation or non-farm enterprises, insured farm operating loans for recreation enterprises, soil and water loans for recreation purposes, individual recreation loans, and insured business and industry loans, the interest rate will be increased by two per centum per annum if the project being financed will involve the use of, or construction on, prime or unique farmland. Prime or unique farmland is as defined in § 657.5 (a) and (b) of title 7, Code of Federal Regulations (1980). (b) The two per centum interest rate increase will not apply if the applicant/borrower is a public body or Indian tribe and has demonstrated to the Agency that there are no suitable options for locating the proposed essential community facility project on land that is not prime or unique farmland. (c) For each essential community facility loan and insured business and industry loan the District Director, after consultation with the Soil Conservation Service (SCS), will determine whether the proposed project will involve the use of, or construction on, prime or unique farmland. For each insured farm ownership loan for a recreation or non-farm enterprise, insured farm operating loan for a recreation enterprise, soil and water loan for a recreational purpose, or individual recreation loan, the County Supervisor, after consultation with SCS, will determine whether the proposed project will involve the use of, or construction on, prime or unique farmland. The determination will be documented by the Agency and made a part of the official case file." 7:7:12.1.2.2.5.2.1.1,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.261 General.,RHS,,,"[35 FR 16087, July 1, 1970, as amended at 58 FR 224, Jan. 5, 1993; 80 FR 9866, Feb. 24, 2015]","This subpart sets forth the policies and procedures and delegates authority for making Rural Housing Site (RHS) loans under sections 523 and 524 of the Housing Act of 1949. Any processing or servicing activity conducted pursuant to this subpart involving authorized Rural Development (RD) employees, members of their families, known close relatives, or business or close personal associates, is subject to the provisions of subpart D of part 1900 of this chapter. Applicants for this assistance are required to identify any known relationship or association with an RD employee. Section 523 loans are direct loans for the purchase and development of building sites for housing to be built by the self-help method; they have additional requirements which are contained in § 1822.278." 7:7:12.1.2.2.5.2.1.10,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,"§ 1822.270 Technical, legal, and other services.",RHS,,,"[35 FR 16087, July 1, 1970, as amended at 51 FR 6733, Feb. 26, 1986; 56 FR 67471, Dec. 31, 1991; 80 FR 9866, Feb. 24, 2015]","(a) Appraisals. The property will be appraised by an RD employee authorized to make real estate appraisals. The appraisal will consist of a narrative statement prepared and signed by the authorized employee describing in detail the items considered in arriving at the value of the property. Two values will be established by the appraiser: (1) The fair market value of the total property “as is”. (2) The aggregate fair market value of the building sites after development. (i) In determining the value of the property, the appraiser will consider the value and selling prices of similar building sites in the area. The selling prices of similar sites must be fully documented. (ii) [Reserved] (b) Title clearance and legal services. For a loan to a public nonprofit organization, title clearance and legal services will be obtained in accordance with instructions from the OGC, observing the provisions of subpart B of part 1927 of this chapter to the extent feasible. For a loan to a private nonprofit organization, the provisions of subpart B of part 1927 of this chapter regarding title clearance and legal services will apply. The applicant will be encouraged to have the same approved closing agent, where practical, perform the title clearance work in connection with the purchase of the land and the sale of the individual sites. (c) Contracts for legal services. On projects requiring more legal services than are customarily required for title clearance alone, the applicant will be required to have a written contract when loan funds will be used for legal services. All such contracts will be subject to review and approval by the State director and therefore should be submitted to the State Director before execution by the applicant. Contracts will provide for the types of service to be performed and the amount of fees to be paid either in lump sum on the completion of all services or in installments as services are performed. (d) Engineering services. On projects requiring engineering services, a written contract will be required between the engineer and the borrower. All such contracts will be subject to review and approval by the State director and therefore should be submitted to the State Director before execution by the applicant. The form of contract must conform with standard professional practices and describe the types of services to be performed and fees to be paid." 7:7:12.1.2.2.5.2.1.11,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.271 Processing applications.,RHS,,,"[35 FR 16087, July 1, 1970, as amended at 41 FR 7487, Feb. 19, 1976; 41 FR 20392, May 18, 1976; 43 FR 24264, June 5, 1978; 44 FR 4435, Jan. 22, 1979; 50 FR 8583, Mar. 4, 1985; 52 FR 19283, May 22, 1987; 54 FR 29330, July 12, 1989; 69103, Nov. 26, 2004; 80 FR 9866, Feb. 24, 2015]","(a) Application. The application will be in the form of a letter to the county supervisor with the following information included in or attached to the letter: (1) Name and address of applicant. (2) A copy of, or an accurate citation to, the specific provisions of State law under which the applicant is organized; a copy of the applicant's articles of incorporation, bylaws, and other authorizing documents; the names and addresses of the applicant's members, directors, and officers; and if another organization is a member of the applicant organization its name, address, and principal business. (3) A current, dated, and signed financial statement showing assets, and liabilities, together with information on the repayment schedule and status of each debt. (4) Evidence of inability to obtain credit from other sources. (5) General description of the project. (i) Location and size of tract or tracts to be bought and/or developed. (ii) Number and size of individual sites planned together with a detailed plot plan. (iii) Preliminary engineering plans, if available. (6) Estimated cost and amount of loan needed. (7) Explanation of applicant's financial contribution to the project. (8) A map showing the location of and other supporting information on neighborhood and existing facilities such as distance to shopping area, neighborhood churches, available transportation, drainage, sanitation facilities, water supply available or planned, and access to essential services such as doctors, dentists, and hospitals. (9) If facilities such as water and sewage systems, paved streets, and utilities are not currently available, information on when and how they will be provided. (10) Evidence of the need for the proposed sites in the locality by low- and moderate-income families and other qualified applicants that are likely to be able to obtain financing for a home. (11) Written evidence of any State, county, or local planning, zoning, or other ordinances imposing additional restrictions or requirements upon the proposed sites. (b) County supervisor's review and evaluation of applications. The county supervisor will: (1) Determine that the applicant meets the eligibility requirements of § 1822.264. (2) Verify that the information provided is accurate and complete. (3) Determine that: (i) The sites will be located in a good residential area and that essential facilities and services will be provided. (ii) The lots will be reasonable in cost and of a type Rural Development can appropriately finance. (iii) There is an immediate and ready market for the proposed sites in the planned location. (iv) The total number of sites planned does not exceed the number of loans the county supervisor can reasonably expect to include in the rural housing program or for which other credit is reasonably assured when the sites are developed. (v) Proposed subdivisions will comply with the local codes and ordinances and also meet the requirements of subpart C of part 1924 of this chapter. (4) Evaluate the manner in which the applicant plans to conduct its business and financial affairs. (5) Comment on the background of the members, directors and officials. (6) If he has questions about the proposal, send the incomplete docket to the State office for advice. (7) If for any reason the loan cannot be made, inform the applicant. (c) Completion of the docket. If the county supervisor determines that the applicant is eligible and the loan will be sound and proper, he should request the applicant to make any needed revisions. In addition to the items required in the application the docket must include: (1) A plot plan and detailed preliminary plans and specifications for development of the building sites. (2) A detailed cost breakdown of the project for such items as land and rights-of-way, utility installations or connections, on-site improvements, engineering and legal services, and estimated interest. (3) If water and sanitary facilities are not publicly owned, a complete statement as to how they will be provided and details about their ownership and operation. (4) Satisfactory evidence of review and approval of the proposed development by applicable State and local officials whose approval is required by State or local laws, ordinances, or regulations. (5) Satisfactory evidence that the appropriate public bodies will accept and maintain all public facilities, including common areas, playgrounds, and tot lots, when dedicated to such bodies. (d) Preparation of docket forms —(1) Request for obligation of funds and fund analysis. Form RD 3560-51, “Multiple Family Housing Obligation Fund Analysis” will be completed in accordance with the Forms Manual Insert (FMI). (2) County committee certification or recommendation. County committees will not be used to review RHS loan applications. (e) Assembly, review and distribution of complete loan docket items. When all items required for the complete loan docket have been furnished, they will be examined thoroughly to make sure they are properly and accurately prepared and are complete in all respects, including dates and signatures. The loan docket items will be assembled in the following order and distributed as follows: 1 Data input to Finance Office through field office terminals. (f) Submission of complete docket. The complete docket will be sent to the State office together with the District Director's comments and recommendations and a draft for a press release. (g) Loan approval authority and State Office action. The State Director is authorized to approve loans in accordance with this subpart and subpart A of part 1901 of this chapter. As soon as it is evident that a loan will be approved, the State Director will complete exhibit A to subpart C of part 2015 of this chapter. The State Director may redelegate approval authority to qualified State Office employees. When a docket or preliminary application is received in the State Office, the State Director will: (1) Utilize the services of technicians on his staff and from other agencies in evaluating the application. (2) Review the applicant's articles of incorporation and bylaws. If they conform to approved forms for the State as provided in § 1822.264(a)(1)(ii), the State director need not obtain a preliminary opinion from the OGC. In all other cases the State director will, and in any case may, submit the docket with any comments or questions to the OGC for a preliminary opinion as to whether the applicant and the proposed loan meet or can meet the requirements of State law and this subpart. (3) If additional information is needed to adequately evaluate the application, return the loan docket to the District Director with any comments and recommendations for further processing. (4) If the docket is sufficiently complete to enable the State Director to determine that the applicant is eligible and the loan would be sound and proper, issue a proposed memorandum of approval listing any specific conditions that must be met before loan closing. (5) If the applicant is not eligible or the loan would not be sound and proper and the deficiencies cannot be corrected, inform the District Director accordingly." 7:7:12.1.2.2.5.2.1.12,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.272 Approval or disapproval of a loan.,RHS,,,"[69 FR 69103, Nov. 26, 2004]","The provisions of 7 CFR part 3560, subpart B will be followed." 7:7:12.1.2.2.5.2.1.13,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.273 Actions subsequent to loan approval.,RHS,,,"[69 FR 69103, Nov. 26, 2004]","After the loan is approved, actions to be taken will be in accordance with 7 CFR part 3560, subpart B." 7:7:12.1.2.2.5.2.1.14,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.274 Loan closing.,RHS,,,"[35 FR 16087, July 1, 1970, as amended at 42 FR 4408, Jan. 25, 1977; 50 FR 8584, Mar. 4, 1985; 56 FR 67472, Dec. 31, 1991; 69 FR 69104, Nov. 26, 2004; 80 FR 9866, Feb. 24, 2015]","(a) Applicable instructions. The complete loan docket will be sent to the OGC for loan closing instructions. RHS loans will be closed in accordance with applicable provisions of subpart B of part 1927 of this chapter, and State Instructions which supplement this Instruction, and closing instructions of the OGC, and with the assistance of the approved attorney, representatives of the title insurance company, or local attorney, whichever is appropriate. (b) Mortgage. Unless the OGC determines the Form to be inappropriate, real estate mortgage Form RD 3550-14, “Real Estate Mortgage or Deed of Trust for (state),” will be used for all RHS section 524 loans modified as prescribed by or with the advice of the OGC with respect to the name, address, and other identification of the borrower, the style of execution, and the acknowledgement. Additional paragraphs will be included in the mortgage to read as follows: The borrower agrees not to discriminate in the sale of the dwelling financed under this mortgage due to a prospective purchaser's race, color, national origin, sex, religion, age, marital status, or handicap. The borrower further agrees to comply with all Federal, State, or local laws and ordinances prohibiting discrimination in the sale of housing. The borrower's failure or refusal to comply with this agreement will be a basis for Rural Development to deny future requests for participation in its rural housing programs and activities. This instrument also secures the obligations and covenants of borrower set forth in Borrower's Loan Resolution of __________ (date), which is hereby incorporated herein by reference. The borrower agrees not to discriminate in the sale of the dwelling financed under this mortgage due to a prospective purchaser's race, color, national origin, sex, religion, age, marital status, or handicap. The borrower further agrees to comply with all Federal, State, or local laws and ordinances prohibiting discrimination in the sale of housing. The borrower's failure or refusal to comply with this agreement will be a basis for Rural Development to deny future requests for participation in its rural housing programs and activities. This instrument also secures the obligations and covenants of borrower set forth in Borrower's Loan Resolution of __________ (date), which is hereby incorporated herein by reference. (c) Promissory note. Form RD 3560-52, “Promissory Note,” will be used. Instructions for preparation will be in accordance with the FMI and the following: (1) The total amount to be shown in the note will be the amount of the loan shown on Form RD 3560-51. The note will be dated the date of the loan closing. (2) The note will be signed in accordance with subpart B of part 1927 of this chapter and the forms manual insert for Form RD 3560-52 (available in RD office). (3) Payments shall not be deferred. (d) Recorded mortgage. When the real estate mortgage is returned by the recording official, the county supervisor will retain the original in the borrower's case folder. If the original is retained by the recording official for the county records, a conformed copy including the recording data showing the date and place of recordation and book and page number will be prepared and filed in the borrower's case folder. A copy of the mortgage will be delivered to the borrower but will be conformed only if required by State law or if it is the custom of other lenders in the area. (e) Date of loan closing. An RHS loan is considered closed when the mortgage is filed of record." 7:7:12.1.2.2.5.2.1.15,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.275 Actions after sites are developed.,RHS,,,"[35 FR 16087, July 1, 1970, as amended at 51 FR 4135, Feb. 3, 1986; 67 FR 78326, Dec. 24, 2002; 80 FR 9866, Feb. 24, 2015]","The building sites will be sold on a nonprofit basis to eligible families or organizations as described in § 1822.266(c). (a) An option, RD 440-34, “Option to Purchase Real Property,” will be executed. The site will be clearly identified by a land survey. (b) The sale price of each individual site will not be more than a sufficient amount to pay a proportionate part of the RHS loan and any other actual costs of buying, developing, and selling the building site. (c) The proceeds from sale of the building sites will be applied on the RHS loan and any prior lien or, with the prior approval of the National Office, used in a manner consistent with the purpose of the loan and the security interest of the Government. The sites will be released from the mortgage in accordance with 7 CFR part 3550, subpart D or otherwise in accordance with prior approval of the National Office." 7:7:12.1.2.2.5.2.1.16,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.276 Subsequent RHS loans.,RHS,,,,A subsequent RHS loan is an RHS loan to an applicant indebted for an initial RHS loan. Subsequent RHS loans will be made on the same basis as initial RHS loans. 7:7:12.1.2.2.5.2.1.17,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.277 Complaints regarding discrimination in opportunity to buy developed sites.,RHS,,,"[56 FR 67472, Dec. 31, 1991, as amended at 69 FR 69104, Nov. 26, 2004]","Any applicant wishing to purchase a site financed by an RHS loan who believes he or she has been discriminated against because of race, color, national origin, religion, sex, handicap, or age, may file a complaint with the County Supervisor or State Director. Any such complaint will be handled in accordance with 7 CFR 3560.2." 7:7:12.1.2.2.5.2.1.18,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.278 Special requirements for RHS section 523 loans (loans to organizations providing sites for self-help housing).,RHS,,,"[35 FR 16087, July 1, 1970, as amended at 42 FR 4408, Jan. 25, 1977; 50 FR 8584, Mar. 4, 1985; 56 FR 67472, Dec. 31, 1991; 69 FR 69104, Nov. 26, 2004; 80 FR 9866, Feb. 24, 2015]","Loans to organizations which will provide sites for self-help housing (RHS sec. 523 loans) will be made under the provisions of this subpart with the following exceptions: (a) Eligibility. The applicant must be a nonprofit organization engaged in assisting self-help projects. (b) Interest. The interest rate will be 3 percent per annum on the unpaid principal balance. (c) Source of funds. These will be direct loans made from the self-help fund. (d) Evidence of need. Loans to newly formed organizations will be made on the basis of the applicant's providing firm information as to the number of sites to be developed and the names of eligible bona fide prospective purchasers who are assured of available home financing. Loans to organizations currently involved in mutual self-help housing projects may be made without submitting a list of the names of prospective site purchasers. There must, however, be definite evidence that enough families are available who are eligible and who will buy the sites when they are developed. (e) Multiple advances. These loans may be disbursed over a period not to exceed 18 months from the date of the first advance. (f) Note forms. Form RD 3560-52, “Multiple Family Housing Promissory Note,” will be used. See § 1822.274 (c). (g) Mortgage. Unless the OGC determines the Form to be inappropriate, real estate mortgage Form RD 3550-14, “Real Estate Mortgage or Deed of Trust for (state),” will be used modified as prescribed by or with the advice of the OGC with respect to the name, address, and other identification of the borrower, the style of execution, and the acknowledgement. Additional paragraphs will be included in the mortgage to read as follows: The borrower agrees not to discriminate in the sale of the dwelling financed under this mortgage due to a prospective purchaser's race, color, national origin, sex, religion, age, marital status, or handicap. The borrower further agrees to comply with all Federal, State, or local laws and ordinances prohibiting discrimination in the sale of housing. The borrower's failure or refusal to comply with this agreement will be a basis for Rural Development to deny future requests for participation in its rural housing programs and activities. This instrument also secures the obligations and covenants of borrower set forth in Borrower's Loan Resolution of ________ ( date ), which is hereby incorporated herein by reference. The borrower agrees not to discriminate in the sale of the dwelling financed under this mortgage due to a prospective purchaser's race, color, national origin, sex, religion, age, marital status, or handicap. The borrower further agrees to comply with all Federal, State, or local laws and ordinances prohibiting discrimination in the sale of housing. The borrower's failure or refusal to comply with this agreement will be a basis for Rural Development to deny future requests for participation in its rural housing programs and activities. This instrument also secures the obligations and covenants of borrower set forth in Borrower's Loan Resolution of ________ ( date ), which is hereby incorporated herein by reference." 7:7:12.1.2.2.5.2.1.19,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.279 Loan supervision and servicing.,RHS,,,"[69 FR 69104, Nov. 26, 2004]",Loan supervision and loan servicing will be provided according to 7 CFR part 3560. 7:7:12.1.2.2.5.2.1.2,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.262 Objective.,RHS,,,,"The basic objective of RHS loans is to assist public or private nonprofit organizations interested in providing sites for housing, to acquire and develop land in rural areas. This land will be subdivided into adequate building sites and sold on a nonprofit basis to (a) families eligible for low and moderate income section 502 Rural Housing (RH) loans, including self-help housing; (b) cooperative Rural Cooperative Housing (RCH) applicants and broadly based nonprofit Rural Rental Housing (RRH) applicants; and (c) applicants eligible for Housing and Urban Development (HUD) sections 235 and 236 insured mortgages." 7:7:12.1.2.2.5.2.1.3,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.263 Definitions.,RHS,,,"[35 FR 10687, July 1, 1970, as amended at 40 FR 52837, Nov. 13, 1975; 46 FR 61989, Dec. 21, 1981; 67 FR 78326, Dec. 24, 2003]","As used in this subpart: (a) A private nonprofit organization is a corporation which: is owned and controlled by private persons; is organized and operated for purposes other than making gains or profits for the corporation or members; and, is legally precluded from distributing to its members any gains or profits. (b) A public nonprofit organization is a nonprofit corporation other than a private nonprofit corporation, including a municipal corporation or other corporate agency of a State or local government. (c) Rural area is open country or rural places as defined in 7 CFR part 3550, subpart A. (d) Development cost means the cost of purchasing and developing the sites including engineering and legal fees, streets, roads, utilities, minimum essential administrative costs, necessary equipment and estimated interest which the borrower cannot pay from other sources. (e) RHS section 523 loan means a loan to an organization which will provide sites for housing to be built by the self-help method. (f) RHS section 524 loan means a loan to an organization which will provide sites for housing to be built with no limitation as to the method of construction that will be used. (g) OGC means the Office of the General Counsel, including the regional attorney or attorney in charge serving the State in which the RHS project is located." 7:7:12.1.2.2.5.2.1.4,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.264 Eligibility requirements.,RHS,,,"[35 FR 16087, July 1, 1970, as amended at 80 FR 9866, Feb. 24, 2015]","(a) Eligibility of applicant. To be eligible for an RHS loan, the applicant must be a private or public nonprofit organization as defined in § 1822.263 (a) or (b) which is authorized to provide housing sites on a nonprofit basis. (1) If it is a private nonprofit organization as defined in § 1822.263(a), it should also: (i) Have a membership of at least 10 community leaders. (ii) Plan to adopt, if it is being newly organized, articles of incorporation and bylaws that generally conform to model articles and bylaws provided by the State director which will be consistent with State law and with changes appropriate to the purposes and powers of an eligible applicant under this subpart. (2) [Reserved] (b) Authorized representative of applicant. RHS will deal only with the applicant or bona fide representative or the applicant or the representative's technical advisors. An authorized representative of the applicant must have no pecuniary interest in the award of the engineering, architectural or construction contracts, necessary equipment, or the purchase or development of the land." 7:7:12.1.2.2.5.2.1.5,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.265 Loan purposes.,RHS,,,"[35 FR 16087, July 1, 1970, as amended at 43 FR 24264, June 5, 1978; 80 FR 9866, Feb. 24, 2015]","RHS loans may be made to qualified applicants: (a) For the purchase and development of adequate sites, including the construction of essential access roads, streets, utility lines, and necessary equipment which will become a permanent part of the development. If public water and waste disposal facilities are not available and cannot reasonably be provided on a community basis with other financing, including Water and Waste Disposal Association loans, funds may be included for this purpose. (b) For the payment of necessary engineering fees, legal fees, and closing costs. (c) For the payment of actual cash cost of incidental administrative expenses such as postage, telephone, advertising, and temporary secretarial help, if funds to pay these expenses are not otherwise available. The estimated cost of these items should be identified and shown in the budget. (d) To provide for needed landscaping, planting, seeding, or sodding, or other necessary facilities related to buildings such as walks, parking areas, and driveways. (e) When legally required by proper local, county, and State Governmental bodies as a condition for subdivision approval, RHS loan funds may be used to provide common areas playgrounds and tot lots, provided such facilities are dedicated to, and maintained by, a public body." 7:7:12.1.2.2.5.2.1.6,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.266 Limitations.,RHS,,,"[35 FR 10687, July 1, 1970, as amended at 40 FR 6951, Feb. 18, 1975; 80 FR 9866, Feb. 24, 2015]","(a) Loan limits. No RHS loan(s) will be made to any applicant which will result in the applicant's owning an unpaid principal balance of more than $100,000 on such loan(s) unless prior authorization for a larger loan is obtained from the national office. No such loan will exceed the development cost as defined in § 1822.263(d), or the value of the property as improved with the loan. These limitations also apply to cases in which the same persons hold a majority of the membership interests or constitute a majority of the directors of two or more applicants. (b) Limitations of use of loan funds. Loans will not be made for: (1) The purchase of land in excess of the immediate and identified needs in the locality. (2) The purchase of land from a member of an applicant-organization, or from another organization in which any member of the applicant-organization has an interest, without prior consent of the national office. (3) Refinancing of debts, except in accordance with paragraph (e) of this section. (4) Payment of any fee, charge, or commission to any broker, negotiator, or other person for the referral of a prospective applicant or solicitation of a loan. (5) Payment of any fee, salary, commission, profit, or compensation to an applicant, or to any officer, director, trustee, stockholder, member or agent of an applicant, except as provided in § 1822.265(b). No contract or agreement for services to be paid for with loan funds should be executed by the applicant without prior approval by the State director. (c) Sale of developed sites. The sites developed with a section 524 loan must be for housing low- and moderate-income families and may be sold to families, nonprofit organizations, public agencies, and cooperatives eligible for assistance under any section of title V of the Housing Act of 1949, or under any other law which provides financial assistance. For example, this may include: (1) Individuals with low and moderate incomes eligible for HUD mortgages. (2) Individuals with low and moderate incomes eligible for VA guaranteed loans. (3) Individuals with low or moderate incomes eligible for a loan from any private lender which is authorized by law to provide financial assistance for housing. (4) Nonprofit organizations funded by Federal, State, or local governments carrying out programs for low- and moderate-income families to obtain housing. (5) State or local public agencies such as a housing authority or a housing finance development agency carrying out programs for low- and moderate-income families to obtain housing. (d) Suitability of sites. Sites will meet the requirements of the planned use; for example, individual housing or multiple housing or any combination thereof. Building sites must be well located and designed to provide a desirable living environment. Generally a loan will not be made for the development of less than 10 units, but they need not be contiguous. (e) Obligations incurred before loan closing. When an applicant files an application for a loan, the county supervisor will advise the applicant that development work must not be started and obligations for work, materials, or land purchase must not be incurred before the loan is closed. If, nevertheless, the applicant incurs obligations for work, materials, or land purchase before the loan is closed, the State director may authorize the use of loan funds to pay such obligations only when he finds that all the following conditions exist: (1) The obligations were incurred after the applicant filed a written application for a loan. (2) The applicant is unable to pay such obligations from its own resources or to obtain credit from other sources, and failure to authorize the use of loan funds to pay such debts would impair the applicant's financial position. (3) The obligations were incurred for authorized loan purposes. (4) Contracts, materials, development and any land purchase meet RD standards and requirements. (5) Payment of the obligations will remove any liens which have attached, and any basis for liens that may attach, to the property on account of such obligations or such work, materials, or land purchase." 7:7:12.1.2.2.5.2.1.7,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.267 Special conditions.,RHS,,,"[35 FR 16087, July 1, 1970, as amended at 41 FR 47460, Oct. 29, 1976; 42 FR 44669, Sept. 6, 1977; 43 FR 24264, June 5, 1978; 44 FR 1702, Jan. 8, 1979; 45 FR 39793, June 12, 1980; 46 FR 36106, July 14, 1981; 46 FR 61989, Dec. 21, 1981; 52 FR 8002, Mar. 13, 1987; 52 FR 19283, May 22, 1987; 67 FR 78326, Dec. 24, 2002; 80 FR 9866, Feb. 24, 2015]","(a) Evidence of need. Loans will be made on the basis of the applicant providing firm information as to the number of sites to be developed and evidence of a need for the proposed building sites in the locality. (b) Nondiscrimination. The borrower will be required to agree not to discriminate or permit discrimination, in accordance with section 3 of the loan resolution form “(‘Rural Housing Site’ Loan to Nonprofit Corporation),” available at all RD offices. (c) Supervisory assistance. Supervision will be provided borrowers to the extent necessary to achieve the objectives of the loan and to protect the interests of the Government. County supervisors will counsel with applicants in selecting locations that will provide essential services and facilities and will result in the development of desirable residential communities. (d) Loan resolution. A Loan Resolution will be adopted by the applicant's Board of Directors or similar governing body. If any provisions are not appropriate to a particular case, proposed substitute language should be submitted to the national office with the recommendations of the State director. (e) Development policies. Development will be planned and performed in accordance with subparts A and C of part 1924 of this chapter. (f) Water and waste disposal facilities. If public water and waste disposal facilities are not available and these facilities will be provided on a community basis with funds included in the RHS loan or with other financing, provision should be made to form an organization with members who will provide continuing maintenance and management of facilities. The cost of the facilities should be considered as a cost of developing the sites and included in the price charged for the lots when they are sold. (g) Compliance with local codes and regulations. Planning and development of sites will comply with all State, county, and local planning and zoning requirements, and will be for housing that will conform with any applicable laws, ordinances, codes, and regulations governing such matters as construction, heating, plumbing, electrical installation, fire prevention, health, and sanitation. (h) Optioning of land. If a loan includes funds to purchase real estate, the applicable provisions of subpart A of part 1943 regarding options will be followed. After the loan is approved, the county supervisor will have Form RD, “Form Letter—Acceptance of Option,” or other appropriate form of acceptance, completed, signed by the applicant, and mailed to the seller. (i) Use of and accountability for loan funds. Supervised bank accounts will not be used except when their requirement is made or authorized by the State director for cases where adequate bonding is not available. If a supervised bank account is used, collateral for deposits of funds will be pledged when the supervised bank account exceeds $100,000. All loan funds and funds from other sources to be used to pay the development costs of the site, as well as proceeds from the sale of any sites, will be deposited in accordance with part 1902, subpart A of this chapter. The county supervisor will see that funds for land purchase are paid to the seller simultaneously with loan closing. After the loan is closed, monthly reports will be provided to Rural Development of all disbursements made and income received by the borrower. Reports for each month will be submitted to the Rural Development county office during the first 10 days of the next month. No expenditures will be made without prior Rural Development consent for items which are not included in the Rural Development approved development cost estimate or for amounts greater than those set forth in such estimate. (j) Insurance. The State director will determine the minimum amounts and types of insurance the applicant will carry. (1) Suitable workman's compensation insurance will be carried by the applicant for all its employees. (2) The applicant will be advised of the possibility of incurring liability and encouraged, or required when appropriate, to obtain liability insurance. (k) Bonding. (1) Approved corporate surety bonds will be required in all cases involving a development contract in excess of $20,000, unless an exception is made by the national office. In other cases, the county supervisor will determine whether a surety bond is required. (2) The applicant will provide fidelity bond coverage for its officers and employees entrusted with the receipt, custody, and disbursement of its funds and the custody of any other negotiable or readily saleable personal property. The amount of the bond will be at least equal to the maximum amount of such funds including funds in bank accounts, and property that the applicant will have in its possession or control at any one time. If permitted by State law, the United States will be named coobligee in the bond. Form RD, “Position Fidelity Schedule Bond,” may be used if permitted by State law. (l) Conditional commitments for construction of homes on developed sites. Conditional commitments may be issued on sites developed with an RHS section 524 loan to permit homes to be constructed on sites prior to the sale of the site to an eligible purchaser in accordance with the following: (1) The requirements of 7 CFR 3550.70 must be met and a conditional commitment issued prior to the start of construction of the home. (2) The conditional commitment must be issued to an RHS borrower who can legally provide the proposed housing and has the experience and training in construction to the extent necessary to assure that the housing will be built or jointly to the RHS loan borrower and a builder who has the legal capacity, training and experience necessary to construct the housing. In all cases the following language will be added under “other conditions” on Form RD 1944-11, “Conditional Commitment”: (i) “Not withstanding the other provisions of this commitment the sale of completed homes on sites developed with section 524 Rural Housing Site loans will be limited to families eligible for assistance under any section of title V of the Housing Act of 1949 or under any other law which provides financial assistance for housing low- and moderate-income families. The approval of Rural Development will be obtained prior to the sale of each home. The request for approval shall be submitted to the local Rural Development office along with an application for an RH 502 loan or a financial statement from the purchaser and verification of the other credit that is available.” (ii) The benefits of the nonprofit development of the site(s) must be passed on to the purchaser. This will result in this site being sold for $______ (price to be determined as provided for in (§ 1822.275(b))). (3) In arriving at the commitment price for the site and the completed home, the value will be based on the present market value of the house only, plus the nonprofit selling price of the lot. (4) If in order to obtain interim financing for the construction of the homes, the RHS loan borrower requests a subordination by Rural Development on individual lots, the State Director may approve the subordination by completing and executing a subordination in the format of exhibit C of this subpart. (5) The government's lien on any lot will be released only at the time of sale to an eligible purchaser. (6) The County Supervisor should provide the necessary supervision to assure that the RHS loan borrower takes the necessary action to assure that all qualified builders in the area are aware of the availability of rural housing sites and are given an equal opportunity to participate in this conditional commitment program. As a minimum, the borrower will be required to submit a signed statement indicating the actions taken including names and dates of contacts with builders." 7:7:12.1.2.2.5.2.1.8,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,"§ 1822.268 Rates, terms, and source of funds.",RHS,,,"[35 FR 10687, July 1, 1970, as amended at 51 FR 6733, Feb. 26, 1986; 80 FR 9866, Feb. 24, 2015]","(a) Interest rate. Upon request of the applicant, the interest rate charged by Rural Development will be the lower of the interest rates in effect at the time of loan approval or loan closing. If an applicant does not indicate a choice, the loan will be closed at the interest rate in effect at the time of loan approval. Interest rates are specified in exhibit B of RD Instruction 440.1 (available in any RD office) for the type assistance involved. (b) Repayment period. Final payment will be due 2 years after the date of the loan. When necessary to carry out the loan purposes, the national office may authorize extension of maturity dates. As lots are sold before the final due date of the note, the proceeds of the sales will be applied on the account or any prior lien, or, with the prior approval of the national office, used in a manner consistent with the purposes of the loan and the security interest of the Government. (c) Source of funds. Loans under this subpart will be made as insured loans, except that loans under § 1822.278 to develop building sites for sale in connection with self-help projects will be made as direct loans." 7:7:12.1.2.2.5.2.1.9,7,Agriculture,XVIII,B,1822,PART 1822—RURAL HOUSING LOANS AND GRANTS,G,"Subpart G—Rural Housing Site Loan Policies, Procedures, and Authorizations",,§ 1822.269 Security.,RHS,,,,"Each loan will be secured by a mortgage on the property purchased or improved with the loan, and a security interest in the funds held by the corporation in trust for the Government, in accordance with the provisions of the required Loan Resolution." 7:7:12.1.2.7.10.1.1.1,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,A,Subpart A—Delegations of Authority,,§ 1900.1 General.,RHS,,,"[44 FR 18162, Mar. 27, 1979, as amended at 80 FR 9866, Feb. 24, 2015]","The authorities contained in this subpart apply to all assets, functions, and programs now or hereafter administered or serviced by the Rural Development, including but not limited to those relating to indebtedness, security, and other assets obtained or contracted through the Secretary of Agriculture, Resettlement Administration, Farm Security Administration, or Emergency Crop and Feed Loan Offices of the Farm Credit Administration, the Soil Conservation Service in connection with water conservation and utilization projects; the Puerto Rico Hurricane Relief Commission and successor agencies in connection with Puerto Rico Hurricane relief loans to individuals; State Rural Rehabilitation Corporations, the United States of America or its officials as trustees of the assets of State Rural Rehabilitation Corporations, Regional Agricultural Credit Corporations, Defense Relocation Corporations, land leasing and purchasing associations, corporations, and agencies, and whether the interest of the United States in the indebtedness, instrument of debt, security, security instrument, or other assets is that of obligee, owner, holder, insurer, assignee, mortgagee, beneficiary, trustee or other interest. This subpart is inapplicable to Farm Service Agency, Farm Loan Programs." 7:7:12.1.2.7.10.1.1.2,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,A,Subpart A—Delegations of Authority,,§ 1900.2 National office staff and state directors.,RHS,,,"[44 FR 18162, Mar. 27, 1979, as amended at 47 FR 5700, Feb. 8, 1982; 50 FR 23901, June 7, 1985; 52 FR 44375, Nov. 19, 1987; 56 FR 6946, Feb. 21, 1991; 80 FR 9867, Feb. 24, 2015]","The following officials of the Rural Development, in accordance with applicable laws, and the regulations implementing these laws, are severally authorized, for and on behalf of and in the name of the United States of America or the Rural Development, to do and perform all acts necessary in connection with making and insuring loans, making grants and advances, servicing loans and other indebtedness and obtaining, servicing and enforcing security and other instruments related thereto: The Deputy Administrator Program Operations, the Assistant Administrators for Farmer Programs, Housing, and Community and Business Programs, the Assistant Administrator Accounting and Director Finance Office; each Director and the Insured Loan Officer, Finance Office; the Directors for the Water and Waste Disposal Division, the Community Facilities Division, the Business and Industry Division, the Multi-Family Housing Processing Division, the Multi-Family Housing Servicing and Property Management Division, the Single Family Housing Processing Division, the Single Family Housing Servicing and Property Management Division, the Farm Real Estate and Production Division, the Emergency Division; and each State Director within the area of that State Director's jurisdiction; and in the absence or disability of any such official, the person acting in that official's position; and the delegates of any such official. The authority includes, but is not limited to, the authority to: (a) Effect the assignment of, or the declaration of trust with respect to, insured security instruments to place them in trust with the United States of America as trustee for the benefit of any holder of the promissory note or bond secured by such security instrument. (b) Acknowledge receipt of notice of sale or assignment of insured loans and security instruments. (c) Appoint or request the appointment of substitute trustees in deeds of trust. (d) Execute proofs of claim in bankruptcy, death, and other cases. (e) Consent to sale or assignment of, or sell or assign, direct or insured loans and security instruments (except that in the case of Agency asset sales, District Directors and County Supervisors are delegated the authority to assign security instruments), endorsements, reinsurance agreements, or other instruments in connection therewith; and execute agreements to insure and reinsure, and to purchase and repurchase insured loans and security instruments. (f) Compromise, adjust, cancel or charge off indebtedness (except that County Supervisors are delegated authority to approve all settlements of sections 502 and 504 single family housing debt(s)). (g) Modify contracts and other instruments and compromise claims owed to the Rural Development and covered by the Federal Claims Collection Act of 1966 and the joint regulations issued under it by the Attorney General and the Comptroller General as provided for in applicable program regulations. (h) Perform all actions pertaining to the sale (or other disposal) of real or chattel property or interests therein and to execute and deliver bills of sale or other instruments to effect such sale (or disposition), which includes but is not limited to offering property for sale; advertising; receiving and accepting offers or bids; and closing sale transactions, including the collection of sale proceeds, and delivery of quitclaim deeds, easements, and right-of-way conveyances after those documents have been executed. The authority to execute any deeds of conveyance of inventory real property, including quitclaim deeds, easements, rights-of-way, or sale of any use rights is reserved to the State Director, and this authority may not be redelegated. (i) Approve and consent to transfers of security property to other parties with or without assumption of debts; and approve and accept transfers of security property or interests therein to the United States of America, and execute release from liability after determination is made in accordance with applicable program regulations. (j) Execute and deliver, or approve in writing, suspensions, releases or terminations of assignments, of income, renewals, extensions, partial and full releases and satisfactions of security, and personal or indemnity liability for indebtedness, waivers, subordination agreements, severance agreements, affidavits, acknowlegements, certificates of residence, evidence of consent, and other instruments or documents. (k) Accelerate and declare entire real estate or chattel indebtedness due and payable, foreclose or request foreclosure of real estate security instruments by exercise of power of sale or otherwise, and bid for and purchase at any foreclosure or other sale or otherwise acquire real property pledged, mortgaged, conveyed, attached, or levied upon to collect indetedness, and accept title to any property so purchased or acquired. (l) Require and accept further or additional security. (m) Accelerate and declare entire non-real estate indebtedness due and payable, and foreclose or request foreclosure of chattel security instruments by exercise of power of sale or otherwise. (n) Bid for and purchase at any foreclosure or other sale, or otherwise acquire personal property pledged, mortgaged, conveyed, attached, or levied upon to collect indebtedness, and accept title to any property so purchased or acquired. (o) Take possession of, maintain, and operate security or acquired real or personal property or interests therein, sell or otherwise dispose of such personal property, and execute and deliver contracts, caretaker's agreements, leases, and other instruments in connection therewith, as appropriate. (p) Execute proofs of loss on insurance contracts and endorse without recourse loss payment drafts and checks. (q) Issue, publish and serve notices and other instruments. (r) File or record instruments, whether separate instruments, or by making marginal entries, or by use of other methods permissible under State law." 7:7:12.1.2.7.10.1.1.3,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,A,Subpart A—Delegations of Authority,,"§ 1900.3 State, district, and county office employees.",RHS,,,"[50 FR 23902, June 7, 1985, as amended at 55 FR 43325, Oct. 29, 1990; 80 FR 9867, Feb. 24, 2015]","The following officials and employees of the Rural Development, in accordance with applicable laws, and the regulations implementing these laws, for and on behalf of, and in the name of the United States of America or the Rural Development, are also severally authorized within the area of their respective jurisdictions to perform the acts specified in paragraphs (g) through (r) of § 1900.2; and within their loan approval authority to sell or otherwise dispose of real or chattel property or interests therein and to execute and deliver bills of sale or other instruments to effect such sale or disposition: Chief, Farmer Programs/Specialist; Chief, Rural Housing/Specialist; Chief, Community Programs/Specialist; Chief, Business and Industry/Specialist; Chief, Community and Business Programs/Specialist; Chief, Appraisal Staff/Appraiser; Chief, Underwriting Staff/Underwriter; Chief, Underwriting and Appraisal Staff; Chief, Servicing and Inventory Staff/Credit Management Specialist/Realty Specialist; each District Director, Assistant District Director, Loan Specialist General, County (including Parish) Supervisor, Emergency Loan Supervisor, Assistant Emergency Loan Supervisor, or other supervisor or assistant supervisor, and in the absence or disability of any such official or employee, the person acting in the position." 7:7:12.1.2.7.10.1.1.4,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,A,Subpart A—Delegations of Authority,,§ 1900.4 Ratification.,RHS,,,"[44 FR 18162, Mar. 27, 1979]","All written instruments affecting title to real or personal property, including but not limited to deeds, releases, satisfactions, subordination agreements, severance agreements, consents, waivers, assignments, declarations of trust, and heretofore executed by officials or employees of the agencies or other entities referred to in § 1900.1 to carry out any purpose authorized by law, incident to the administration of programs under the jurisdiction of said agencies or other entities, are hereby approved, confirmed, and ratified." 7:7:12.1.2.7.10.1.1.5,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,A,Subpart A—Delegations of Authority,,§ 1900.5 Assignment of cases.,RHS,,,"[55 FR 43325, Oct. 29, 1990, as amended at 80 FR 9867, Feb. 24, 2015]","The State Director may, in writing, assign responsibilities and functions to a different office or staff position within the Rural Development State organizational structure other than that referred to in regulations, provided no benefits, rights, or opportunities of the public are changed." 7:7:12.1.2.7.10.1.1.6,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,A,Subpart A—Delegations of Authority,,"§ 1900.6 Chair, Loan Resolution Task Force.",RHS,,,"[59 FR 43441, Aug. 24, 1994, as amended at 80 FR 9867, Feb. 24, 2015]","The Chair, Loan Resolution Task Force is delegated the following authorities, to be exercised until September 30, 1996: (a) The responsibility for, under applicable Rural Development regulations, collecting and settling all delinquent direct Farmer Program loans as defined in the Consolidated Farm and Rural Development Act, as amended, that have received all primary servicing rights and pre-acceleration homestead and preservation loan servicing rights under 7 CFR part 1951, subpart S; (b) The responsibility for making and directing the making of loan servicing decisions, under applicable Rural Development regulations, concerning delinquent direct Farmer Programs loans for which accrued principal and interest equals or exceeds one million dollars, to extend to borrowers their remaining primary servicing rights and pre-acceleration homestead and preservation loan servicing rights under 7 CFR part 1951, subpart S; (c) Authority for approving the grant of exceptions pursuant to §§ 1951.916, 1955.21, 1956.99 and 1965.35 of this chapter, to the extent necessary to carry out the responsibilities described in paragraphs (a) and (b) of this section." 7:7:12.1.2.7.10.1.1.7,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,A,Subpart A—Delegations of Authority,,§ 1900.7 Effect on other regulations.,RHS,,,"[44 FR 18162, Mar. 27, 1979. Redesignated at 55 FR 43325, Oct. 29, 1990, and further redesignated at 59 FR 43441, Aug. 24, 1994, as amended at 80 FR 9867, Feb. 24, 2015]","This subpart does not revoke or modify any other delegation or redelegation, instruction, procedure, or regulation issued by, or under authority of, the Under Secretary for Rural Development." 7:7:12.1.2.7.10.2.1.1,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,B,Subpart B—Adverse Decisions and Administrative Appeals,,§ 1900.51 Definitions.,RHS,,,,"Act means the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994, Public Law No. 103-354 (7 U.S.C. 6991 et seq. ). Agency means the Rural Utilities Service (RUS), the Rural Housing Service (RHS), and the Rural Business-Cooperative Development Service (RBS), or their successor agencies. Refer to 7 CFR 11.1 for other definitions applicable to appeals of adverse decisions covered by this subpart." 7:7:12.1.2.7.10.2.1.2,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,B,Subpart B—Adverse Decisions and Administrative Appeals,,§ 1900.52 General.,RHS,,,,This subpart specifies procedures for use by USDA personnel and program participants to ensure that full and complete consideration is given to program participants who are affected by an agency adverse decision. 7:7:12.1.2.7.10.2.1.3,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,B,Subpart B—Adverse Decisions and Administrative Appeals,,§ 1900.53 Applicability.,RHS,,,,"(a) Appeals of adverse decisions covered by this subpart will be governed by 7 CFR part 11. (b) The provisions of this subpart apply to adverse decisions concerning direct loans, loan guarantees, and grants under the following programs: RUS Water and Waste Disposal Facility Loans and Grants Program; RHS Housing and Community Facilities Loan Programs; RBS Loan, Grant, and Guarantee Programs and the Intermediary Relending Program; and determinations of the Rural Housing Trust 1987-1 Master Servicer. (c) This subpart does not apply to decisions made by parties outside an agency even when those decisions are used as a basis for decisions falling within paragraph (b) of this section, for example: decisions by state governmental construction standards-setting agencies (which may determine whether RHS will finance certain houses); Davis-Bacon wage rates; flood plain determinations; archaeological and historical areas preservation requirements; and designations of areas inhabited by endangered species." 7:7:12.1.2.7.10.2.1.4,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,B,Subpart B—Adverse Decisions and Administrative Appeals,,§ 1900.54 Effect on assistance pending appeal.,RHS,,,,"(a) Assistance will not be discontinued pending the outcome of an appeal of a complete or partial adverse decision. (b) Notwithstanding the provisions of paragraph (a) of this section, administrative offsets initiated under subpart C of part 1951 will not be stayed pending the outcome of an appeal and any further review of the decision to initiate the offset." 7:7:12.1.2.7.10.2.1.5,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,B,Subpart B—Adverse Decisions and Administrative Appeals,,§ 1900.55 Adverse action procedures.,RHS,,,,"(a) If an applicant, guaranteed lender, a holder, borrower or grantee is adversely affected by a decision covered by this subpart, the decision maker will inform the participant of the adverse decision and whether the adverse decision is appealable. A participant has the right to request the Director of NAD to review the agency's finding of nonappealability in accordance with 7 CFR 11.6(a). In cases where the adverse decision is based on both appealable and nonappealable actions, the adverse action is not appealable. (b) A participant affected by an adverse decision of an agency is entitled under section 275 of the Act to an opportunity for a separate informal meeting with the agency before commencing an appeal to NAD under 7 CFR part 11. (c) Participants also have the right under section 275 of the Act to seek mediation involving any adverse decision appealable under this subpart if the mediation program of the State in which the participant's farming operation giving rise to the decision is located has been certified by the Secretary for the program involved in the decision. An agency shall cooperate in such mediation. Any time limitation for appeal will be stayed pending completion of the mediation process (7 CFR 11.5(c))." 7:7:12.1.2.7.10.2.1.6,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,B,Subpart B—Adverse Decisions and Administrative Appeals,,§ 1900.56 Non-appealable decisions.,RHS,,,,"The following are examples of decisions which are not appealable: (a) Decisions which do not fall within the scope of this subpart as set out in § 1900.53. (b) Decisions that do not meet the definition of an “adverse decision” under 7 CFR part 11. (c) Decisions involving parties who do not meet the definition of “participant” under 7 CFR part 11. (d) Decisions with subject matters not covered by 7 CFR part 11. (e) Interest rates as set forth in agency procedures, except for appeals alleging application of an incorrect interest rate. (f) The State RECD Director's refusal to request an administrative waiver provided for in agency program regulations. (g) Denials of assistance due to lack of funds or authority to guarantee." 7:7:12.1.2.7.10.2.1.7,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,B,Subpart B—Adverse Decisions and Administrative Appeals,,§ 1900.57 [Reserved],RHS,,,, 7:7:12.1.2.7.10.3.1.1,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,C,Subpart C—Applicability of Federal Law,,§ 1900.101 General.,RHS,,,"[44 FR 10979, Feb. 26, 1979, as amended at 45 FR 8934, Feb. 11, 1980; 80 FR 9867, Feb. 24, 2015]","This subpart provides Rural Development policy concerning: (a) The applicability of Federal rather than State Law in the conduct of Rural Development operations, and (b) The liability of an auctioneer for conversion of personal property mortgaged to Rural Development." 7:7:12.1.2.7.10.3.1.2,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,C,Subpart C—Applicability of Federal Law,,§ 1900.102 Applicable law.,RHS,,,"[44 FR 10979, Feb. 26, 1979, as amended at 80 FR 9867, Feb. 24, 2015]","Loans made by Rural Development are authorized and executed pursuant to Federal programs adopted by Congress to achieve national purposes of the U.S. Government. (a) Instruments evidencing or securing a loan payable to or held by the Rural Development, such as promissory notes, bonds, guaranty agreements, mortgages, deeds of trust, financing statements, security agreements, and other evidences of debt or security shall be construed and enforced in accordance with applicable Federal law. (b) Instruments evidencing a guarantee, conditional commitment to guarantee, or a grant, such as contracts of guarantee, grant agreements or other evidences of an obligation to guarantee or make a grant, executed by the Rural Development, shall be construed and enforced in accordance with applicable Federal law. (c) In order to implement and facilitate these Federal loan programs, the application of local procedures, especially for recordation and notification purposes, may be utilized to the fullest extent feasible and practicable. However, the use of local procedures shall not be deemed or construed to be any waiver by Rural Development of Federal immunity from any local control, penalty, or liability, or to subject Rural Development to any State required acts or actions subsequent to the delivery by Rural Development officials of the instrument to the appropriate local or State official. (d) Any person, corporation, or organization that applies for and receives any benefit or assistance from Rural Development that offers any assurance or security upon which Rural Development relies for the granting of such benefit or assistance, shall not be entitled to claim or assert any local immunity, privilege, or exemption to defeat the obligation such party incurred in obtaining or assuring such Federal benefit or assistance. (e) The liability of an auctioneer for conversion of personal property mortgaged to Rural Development shall be determined and enforced in acceptance with the applicable Federal law. “Auctioneer” for the purposes of this subpart includes a commission merchant, market agency, factor or agent. In all cases in which there has been a disposition without authorization by Rural Development of personal property mortgaged to that agency, any auctioneer involved in said disposition shall be liable to the Government for conversion—notwithstanding any State statute or decisional rule to the contrary." 7:7:12.1.2.7.10.4.1.1,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,D,"Subpart D—Processing and Servicing Rural Development Assistance to Employees, Relatives, and Associates",,§ 1900.151 General.,RHS,,,"[58 FR 224, Jan. 5, 1993, as amended at 71 FR 38979, July 11, 2006; 80 FR 9867, Feb. 24, 2015]","(a) The Standards of Ethical Conduct for Employees of the Executive Branch requires the maintenance of high standards of honesty, integrity, and impartiality by employees. To reduce the potential for employee conflict of interest, any processing, approval, servicing or review activity, including access through automated information systems, is conducted only by authorized Rural Development employees who: (1) Are not themselves the recipient. (2) Are not members of the family or known close relatives of the recipient. (3) Do not have an immediate working relationship with the recipient, the employee related to the recipient, or the employee who would normally conduct the activity. (4) Do not have a business or close personal association with the recipient. (b) No provision of this subpart takes precedence over individual program requirements or restrictions relating to eligibility for Rural Development assistance to Rural Development employees, members of families of employees, close relatives, or business or close personal associates of employees. (c) The determination of a case's need for special handling under the provisions of this subpart is not an adverse action and, therefore, is not subject to appeal. (d) The provisions of this subpart do not apply to the Farm Service Agency. The relevant regulations applicable to the Farm Service Agency can be found at 5 CFR parts 2635 and 8301." 7:7:12.1.2.7.10.4.1.2,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,D,"Subpart D—Processing and Servicing Rural Development Assistance to Employees, Relatives, and Associates",,§ 1900.152 Definitions.,RHS,,,"[58 FR 224, Jan. 5, 1993, as amended at 80 FR 9867, Feb. 24, 2015]","Applicant or borrower. All persons or organizations, individually or collectively, applying for or receiving insured or guaranteed loan or grant assistance from or through Rural Development. Referred to as recipient. Assistance. Loans or grants made, insured or guaranteed, or serviced by Rural Development. Associates. All persons with whom an employee has a business or close personal association or immediate working relationship. Business association. Business relationship between those with an identity of financial interest; including but not limited to a business partnership, being an officer, director, trustee, partner or employee of an organization, or other long-term contractual relationship. Close personal association. Social relationship between unrelated residents of the same household. Close relatives. The spouse, relatives and step-relatives of an employee or the employee's spouse, including Grandmother, Grandfather, Mother, Father, Aunt, Uncle, Sister, Brother, Daughter, Son, Niece, Nephew, Granddaughter, Grandson, and First Cousin. Conflict of interest. A situation (or the appearance of one) in which one could reasonably conclude that a Rural Development employee's private interest conflicts with his or her Government duties and responsibilities, even though there may not actually be a conflict. Employee. All Rural Development personnel, including gratuitous employees and those negotiating for or having arrangements for prospective employment, except as otherwise specifically stated. For the purposes of this instruction only, the term also refers to county or area committee members, elected or appointed, and to closing agents who, although they are not employees, have a special relationship to Rural Development and therefore should be subject to these provisions. Immediate working relationship. A relationship between a subordinate and a supervisor in a direct line, or between co-workers in the same office. For the purposes of this subpart, the relationships among a County Supervisor and members of the local County Committee are immediate working relationships. Members of family. Blood and in-law relatives (such as by marriage or adoption) who are residents of the employee's household. Recipient. One who has applied for or received Rural Development financial assistance in the form of a loan or grant. See definition of applicant or borrower." 7:7:12.1.2.7.10.4.1.3,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,D,"Subpart D—Processing and Servicing Rural Development Assistance to Employees, Relatives, and Associates",,§ 1900.153 Identifying and reporting an employee relationship.,RHS,,,"[80 FR 9867, Feb. 24, 2015]","(a) Responsibility of applicant. When an application for assistance is filed, the processing official asks if there is any known relationship or association with a Rural Development employee. The applicant is required to disclose the requested information under pertinent program regulations. (b) Responsibility of the Rural Development employee. A Rural Development employee who knows he or she is related to or associated with an applicant or recipient, regardless of whether the relationship or association is known to others, is required to notify the Rural Development official who is processing or servicing the assistance, in writing. RD Guide Letter 1900-D-1 (available in any RD office) may be used as the notice. If the appropriate official is not known, the State Director should be notified. Regardless of whether the relationship or association is defined in § 1900.152, if the employee believes there may be a potential conflict of interest, the Rural Development official who is processing or servicing the assistance may be notified and special handling requested. An employee's request that the case receive special handling is usually honored. (c) Responsibility of the Rural Development official. When any relationship or association is identified, the Rural Development official completes and submits RD Guide Letter 1900-D-2 to the State Director (or Administrator, under paragraph (e) of this section or § 1900.155(a)). When completed, RD Guide Letter 1900-D-3 is returned by the State Director, the processing official; (d) Relationship or association established after application for Rural Development assistance. If a relationship or association is established after an application has been filed or assistance has been provided, both recipient and employee are required to notify the Rural Development official as described in paragraphs (a) and (b) of this section. (e) Relationship or association with a State Office, Finance Office or National Office employee. If an identified relationship or association is with an employee at a State Office (other than a State Director), Finance Office or National Office, the processing/servicing official completes and submits RD Guide Letter 1900-D-2 to the State Director in the normal manner. The State Director reviews the information, determines the need for special handling, designates the processing/servicing official, completes and submits RD Guide Letter 1900-D-3 to the Administrator for written concurrence. When the Administrator's concurrence is received, the State Director returns completed RD Guide Letter 1900-D-3 to the original official who completes the action described in paragraph (c) of this section. (f) Relationship or association with a State Director. If an identified relationship or association is with a State Director, the processing/servicing official completes and submits RD Guide Letter 1900-D-2 to the Administrator. The Administrator reviews, determines the need for special handling, designates the processing/servicing official, completes and returns RD Guide Letter 1900-D-3 to the original official who completes the action described in paragraph (c) of this section. (g) Change in relationship or association, status of Rural Development assistance, or employee's duty station. If the relationship or association has changed, the application denied or the assistance otherwise terminated, or Rural Development employee's duty station changed, the designated processing/servicing official completes RD Guide Letter 1900-D-2 with the new information and submits it. The review process takes place as described in paragraphs (a) through (e) of this section to determine if processing/servicing activity may return to normal or requires another change. If the assistance is denied or otherwise terminated, the designated official notifies the original official." 7:7:12.1.2.7.10.4.1.4,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,D,"Subpart D—Processing and Servicing Rural Development Assistance to Employees, Relatives, and Associates",,§ 1900.154 Determining the need for special handling.,RHS,,,,"The State Director (or Administrator, under § 1900.153(e) or § 1900.155(a) of this subpart): (a) [Reserved] (b) Determines whether the reported relationship or association is defined in § 1900.152 of this subpart and would violate the provisions of § 1900.151(a) of this subpart, (c)-(f) [Reserved]" 7:7:12.1.2.7.10.4.1.5,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,D,"Subpart D—Processing and Servicing Rural Development Assistance to Employees, Relatives, and Associates",,§ 1900.155 Designating the processing/servicing official.,RHS,,,"[58 FR 224, Jan. 5, 1993, as amended at 80 FR 9868, Feb. 24, 2015]","(a) Designating an official with equivalent authority. The State Director (or Administrator, under § 1900.253(e) of this subpart or this paragraph) designates a nonrelated or nonassociated Rural Development official authorized to conduct the activity under program regulations, established delegation of authority and approval authority under subpart A of part 1901 of this chapter, and whose duty station is most convenient to the recipient and to the security property. A type and/or amount of assistance processed or serviced by a County Supervisor or at a County Office should be assigned only to another County Supervisor or County Office. A type and/or amount of assistance processed or serviced by a District Director or at a District Office should be assigned only to another District Director or District Office. (b) County Committee. For processing or servicing decisions to be made by a County Committee, if the recipient is a member, a different County Committee is designated. If the recipient is related to or associated with the member, notwithstanding the provisions of § 1900.151(a)(3) of this subpart, the State Director may permit the decision to be made by the local committee, if the related/associated member abstains. (c) [Reserved]" 7:7:12.1.2.7.10.4.1.6,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,D,"Subpart D—Processing and Servicing Rural Development Assistance to Employees, Relatives, and Associates",,§ 1900.156 Special handling—processing.,RHS,,,"[58 FR 224, Jan. 5, 1993, as amended at 80 FR 9868, Feb. 24, 2015]","(a) [Reserved] (b) Eligibility determination. The designated processing official reviews the application and develops additional data as necessary. Upon determination of whether the assistance will be provided, the designated processing official notifies the applicant of the decision in writing under program regulations, subpart A of part 1910 of this chapter, and subpart B of part 1900. If the determination is favorable, unless otherwise designated, the complete application is returned to the original processing official for docket preparation. If the determination is unfavorable, the designated processing official as decisionmaker participates in the appeal process to its conclusion. (c)-(e) [Reserved] (f) Closing agent. Unless there is a clear or apparent conflict of interest, closing will be at a location and by a closing agent chosen by the recipient. (g) Supervised bank account. Unless there is a clear or apparent conflict of interest, any supervised bank account (or construction account) is established at a financial institution chosen by the recipient under subpart A of part 1902 of this chapter. Countersignature authority is delegated only to a nonrelated or nonassociated Rural Development official. (h) Construction inspection. Construction inspections are delegated to a nonrelated or nonassociated employee authorized to conduct inspections, whose duty station is nearest the construction site. The designated processing/servicing official notifies the builder (or architect/engineer) in writing of how and from whom to request inspections." 7:7:12.1.2.7.10.4.1.7,7,Agriculture,XVIII,H,1900,PART 1900—GENERAL,D,"Subpart D—Processing and Servicing Rural Development Assistance to Employees, Relatives, and Associates",,§§ 1900.157-1900.200 [Reserved],RHS,,,, 7:7:12.1.2.7.11.2.1.1,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,E,Subpart E—Civil Rights Compliance Requirements,,§ 1901.201 Purpose.,RHS,,,"[41 FR 40112, Sept. 17, 1976]","This subpart contains policies and procedures for implementing the regulations of the Department of Agriculture issued pursuant to Title VI of the Civil Rights Act of 1964, title VIII of the Civil Rights Act of 1968, Executive Order 11246 and the Equal Credit Opportunity Act of 1974, as they relate to the Farmers Home Administration (FmHA) or its successor agency under Public Law 103-354. Nothing herein shall be interpreted to prohibit preference to American Indians on Indian Reservations." 7:7:12.1.2.7.11.2.1.2,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,E,Subpart E—Civil Rights Compliance Requirements,,§ 1901.202 Nondiscrimination in FmHA or its successor agency under Public Law 103-354 programs.,RHS,,,"[41 FR 40112, Sept. 17, 1976]","(a) Nondiscrimination by recipients of FmHA or its successor agency under Public Law 103-354 assistance. (1) No recipient of FmHA or its successor agency under Public Law 103-354 financial assistance will directly or through contractual or other arrangements subject any person or cause any person to be subjected to discrimination on the ground of race, color, or national origin, with respect to any program or facility. This prohibition applies but is not restricted to unequal treatment in priority, quality, quantity, methods, or charges for service, use, occupancy or benefit, participation in the service or benefit available, or in the use, occupancy or benefit of any structure, facility, or improvement provided with FmHA or its successor agency under Public Law 103-354 financial assistance. (2) Specifically, and without limiting the general applicability of this subpart, such recipient will not on the grounds of race, color, or national origin: (i) Deny any person the use, occupancy, or enjoyment of the whole or any part of real or personal property or service, financial aid, or other benefit under any program or facility. (ii) Provide any person with any service, use, occupancy, or other benefit different from that provided others by the program or facility. (iii) Subject any person to segregation or separate treatment in any matter related to his or her receipt of any service or other benefit. (iv) Restrict in any way any person's enjoyment of any right, privilege, or advantage enjoyed by others through the facility or activity. (v) Treat any person differently from others in determining whether he or she satisfies any requirements or conditions for any admission or membership in the recipient or in any other organization. (vi) Deny any person an opportunity or restrict opportunity to participate in a program or facility by: (A) Refusing or failing to provide notice or services provided others for the purpose of encouraging participation in the program or facility; or (B) Providing any person with such notice or services different from the notice or services provided others. (vii) Utilize criteria or methods of administration that have the effect of subjecting a person to discrimination with respect to any program or facility or defeating or substantially impairing the achievement of the objectives of a program or facility. (viii) Select sites or locate facilities with the purpose or effect of: (A) Excluding individuals from, denying them the benefits of, or subjecting them to discrimination under any programs to which the regulations in this subpart apply; or (B) Defeating or substantially impairing the achievement of the objectives of the regulations in this subpart. (ix) Continue any previous or existing discriminatory practices, but will take affirmative action to overcome the effects of such discrimination. (x) Deny any person the opportunity to participate as a member of a planning or advisory body which is an integral part of the program. (b) Nondiscrimination by FmHA or its successor agency under Public Law 103-354 employees. (1) No. FmHA or its successor agency under Public Law 103-354 employee will exclude from participation in, or deny the benefits of, any program or activity administered by FmHA or its successor agency under Public Law 103-354, or subject to discrimination any person in the United States on the ground of race, color, religion, sex, national origin, or marital status. (2) No FmHA or its successor agency under Public Law 103-354 employee will: (i) Be limited in the discharge of his or her responsibilities to working with applicants solely on the basis of race, color, religion, sex, national origin, or marital status. (ii) Obstruct equal access to buildings, facilities, structures, or lands under the control of FmHA or its successor agency under Public Law 103-354. (iii) Deny under any program or activity of FmHA or its successor agency under Public Law 103-354 equal opportunity for employment; for participation in meetings, demonstrations, training activities or programs; for receiving awards; for receipt of information disseminated by publication, news, radio, and other media; for obtaining contracts, grants, loans or other financial assistance, or for selection to assist in the administration of programs or activities of FmHA or its successor agency under Public Law 103-354. (3) No FmHA or its successor agency under Public Law 103-354 employee will, while conducting official business, participate in or attend any segregated meetings or meetings held in a segregated facility from which persons are excluded because of race, color, religion, sex, national origin, or marital status. (c) Intimidating or retaliatory acts. No recipient or other person will intimidate, threaten, coerce, or discriminate against any person for the purpose of interfering with any right or privilege under this subpart, or because a person has made a complaint or has testified, assisted, or participated in any manner in an investigation, proceeding, or hearing related to a complaint. The identity of complainants will be kept confidential except to the extent necessary to carry out the purposes of this subpart. (d) Nondiscrimination Agreement. The County Supervisor will, at the time FmHA or its successor agency under Public Law 103-354 assistance is requested, give all applicants for loans and grants listed in § 1901.204(a) a copy of Form FmHA or its successor agency under Public Law 103-354 400-4, “Nondiscrimination Agreement,” and inform the applicant that assistance will be conditioned upon executing this form and complying with the requirements of this subpart. (e) Covenants. Each instrument of conveyance for loans subject to title VI of the Civil Rights Act of 1964, as outlined in § 1901.204, must contain the following covenant: “The property described herein was obtained or improved through Federal financial assistance. This property is subject to the provisions of title VI of the Civil Rights Act of 1964 and the regulations issued pursuant thereto for so long as the property continues to be used for the same or similar purpose for which financial assistance was extended or for so long as the purchaser owns it, whichever is longer.” (f) Posters. The nondiscrimination poster, “And Justice For All,” will be displayed at the facilities and/or office of any borrower or grantee if the facilities have been financed by an FmHA or its successor agency under Public Law 103-354 loan or grant and are subject to title VI of the Civil Rights Act of 1964. This poster also will be displayed in all FmHA or its successor agency under Public Law 103-354 State and County Offices. (g) Racial and ethnic data. Recipients should maintain, for review by FmHA or its successor agency under Public Law 103-354 and other appropriate agencies, racial and ethnic data showing the extent to which members of minority groups are beneficiaries of FmHA or its successor agency under Public Law 103-354-assisted programs. The data should identify recipients as White, Negro or Black, American Indian, Spanish Surname, Oriental and Other. (h) Discrimination complaints. (1) Any person or any specific class of persons, if they believe they have been subject to discrimination prohibited by this subpart, may file a written complaint with any FmHA or its successor agency under Public Law 103-354 office, or, if they prefer with the Secretary of Agriculture. Persons who complain of discrimination will be advised of their rights to file complaints. A complaint must be filed not later than 180 days after the date of the alleged discrimination, unless the time for filing is extended by the Secretary of Agriculture. (2) A complaint filed with the County Supervisor or the State Director will be referred promptly to the Administrator, Attention: Equal Opportunity Officer. Attached to the complaint should be a statement by the County Supervisor or State Director identifying the recipient and type of assistance provided by FmHA or its successor agency under Public Law 103-354, indicating whether a nondiscrimination agreement has been signed, and giving any other available pertinent information about the complaint." 7:7:12.1.2.7.11.2.1.3,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,E,Subpart E—Civil Rights Compliance Requirements,,§ 1901.203 Title VIII of the Civil Rights Act of 1968.,RHS,,,"[41 FR 40112, Sept. 17, 1976, as amended at 42 FR 45894, Sept. 13, 1977; 42 FR 58737, Nov. 11, 1977; 50 FR 23903, June 7, 1985; 53 FR 27825, July 25, 1988; 55 FR 13503, Apr. 11, 1990]","FmHA or its successor agency under Public Law 103-354 employees, FmHA or its successor agency under Public Law 103-354 borrowers, contractors, packagers, and others who provide housing for sale or rent, are obligated under the provisions of title VIII of the Civil Rights Act of 1968 to provide fair housing to all persons regardless of race, color, religion, sex, or national origin. (a) Coverage. The prohibitions against discrimination in the sale, rental, or financing of housing contained in title VIII apply to: (1) All dwellings financed by loans made by the Federal Government and, therefore, to all RH borrowers. (2) Any person in the business of selling or renting dwellings defined as: (i) The owner of a dwelling intended for occupancy by five or more families. (ii) Any person who has participated as principal in the sale or rental of three or more dwellings in the past year. (iii) Any person who has served as sale or rental agent in two or more transactions in the past year. (b) Discrimination acts prohibited. Title VIII prohibits FmHA or its successor agency under Public Law 103-354 employees, multiple housing borrowers, and those with whom FmHA or its successor agency under Public Law 103-354 does business (contractors, realtors, packagers) from: (1) Refusing to sell or rent a particular dwelling because of a person's race, color, religion, or national origin. The following actions constitute violations of this provision: (i) Refusing to package an RH loan application. (ii) Refusing or failing to show a particular dwelling or home in a particular subdivision. (iii) Directing persons only to areas populated by those of similar race, color, religion, or national origin when housing is available in other areas. (iv) Representing unsold dwellings or sites as sold to prospective buyers. (2) Requiring applicants for services to meet different terms or conditions because of their race, color, religion, or national origin; for example, requiring larger rents or downpayments from minority applicants. (3) Including in any advertising either directly or through visual representation a preference for applicants of a particular race or ethnic origin. (i) Words indicative of the race or ethnic background of the dwelling or landlord such as “White private home,” or “all Black subdivision,” may not be used in advertising housing financed or to be financed by FmHA or its successor agency under Public Law 103-354. (ii) Selection of advertising media and the areas to be covered by any advertising must be made to reach potential applicants of all races or ethnic origins. (c) FmHA or its successor agency under Public Law 103-354 affirmative action. (1) It is the policy of the Farmers Home Administration or its successor agency under Public Law 103-354 to administer its housing program affirmatively so individuals of similar income levels in the housing market area have housing choices available to them regardless of their race, color, religion, sex, or national origin. Each participant in FmHA or its successor agency under Public Law 103-354 housing program shall pursue affirmative fair housing marketing policies in soliciting buyers and tenants, in determining their eligibility and in concluding sales and rental transactions. (2) Applicability. The affirmative fair housing marketing requirements shall apply as follows: (i) Participants in FmHA or its successor agency under Public Law 103-354 housing programs who request approval for subdivision development involving five or more sites, multi-family projects with five or more units including self-help technical assistance grantees assisting five or more families or five or more conditional commitments for single family dwelling units during a 12-month period must submit an affirmative marketing plan. (ii) An Affirmative Fair Housing Marketing Plan is required to be prepared and submitted to FmHA or its successor agency under Public Law 103-354 by the contractor when: (A) A real estate broker is offering five or more single-family dwellings located in the same subdivision for sale under an exclusive listing contract with FmHA or its successor agency under Public Law 103-354. (B) An auctioneer under contract with FmHA or its successor agency under Public Law 103-354 is offering five or more single-family dwellings located in the same subdivision for sale by public auction. (C) A contractor under a contract with FmHA or its successor agency under Public Law 103-354 is managing a multiple-family housing project of five or more units or five or more single-family dwellings located in the same subdivision. (3) Affirmative fair housing marketing plans will be submitted on form HUD 935.2(3-76) or the participant must be a signatory to a voluntary affirmative marketing agreement approved by the Department of Housing and Urban Development. The plan, if submitted on form HUD 935.2(3-76) shall describe an affirmative program which will meet the following requirements: (i) Reaching those prospective buyers or tenants, regardless of sex, of majority and minority groups in the marketing area who traditionally would not be expected to apply for such housing without special outreach efforts because of existing racial or socio-economic patterns. (ii) Undertaking and/or maintaining a non-discriminatory hiring policy in recruiting from both majority and minority groups including both sexes, for staff engaged in the sale or rental of properties. (iii) Training and instructing employees engaged in the sale or rental properties in the policy and application of nondiscrimination and fair housing. (iv) Displaying in all sales and rental offices the “Fair Housing” poster. (v) Posting in a conspicuous position on each property and FmHA or its successor agency under Public Law 103-354 construction site a sign displaying the equal opportunity logo or the following statement: We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, or national origin. We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, or national origin. (vi) Undertaking efforts to publicize the availability of housing opportunities to minority persons through the type of media customarily used by the applicant or participant, including minority publications and other minority outlets available in the housing market area. As part of these efforts all advertising must include either the equal housing opportunity logo or statement. When illustrations or persons are included they shall depict persons of both sexes and of majority and minority groups. (4) The affirmative fair housing marketing plans or evidence that the participant is covered by an approved voluntary affirmative marketing agreement must be submitted as follows: (i) For subdivisions with the preliminary submission of plans and specifications. (ii) For multi-family projects, including rural rental housing, labor housing, cooperative housing, technical assistance grants and site development loans with SF 424.1, “Application for Federal Assistance (For Non-construction)”, or SF 424.2, “Application for Federal Assistance (For Construction)”, or with the letter of application. Subsequent loans or grants extended to the participant will necessitate a new or updated plan. (iii) For conditional commitments for five or more individual dwelling units in a 12-month period with the application for the fifth conditional commitment. (iv) For real estate brokers listing housing properties on an exclusive basis, at any time more than 5 properties are listed for sale by FmHA or its successor agency under Public Law 103-354 in the same subdivision. (5) Affirmative fair housing marketing plans will cover the following time periods: (i) For subdivision, from time of application until all lots are sold. (ii) For multi-family projects from time of application until the loan is paid in full or for so long as the project is being used for the same or a similar purpose for which the funds were extended. (iii) For conditional commitments involving individual dwelling units, one year or until all units built through conditional commitments issued within the one year period have been sold. (iv) For real estate brokers who list acquired rural housing properties under an exclusive listing contract, one year or until all properties covered under the plan have been sold, whichever is later. (6) Affirmative fair housing marketing plans will be reviewed and approved by the official authorized to approve the assistance requested. The County Supervisor will review and submit with comments to the official authorized to approve the assistance requested, those fair housing marketing plans where the assistance requested exceeds his approval authority. Any participant covered by this section must have an approved affirmative fair housing marketing plan for any assistance approved 90 or more days after the issuance of these regulations. (7) Approved affirmative fair housing marketing plans will be made available by the participant for public inspection at the participant's place of business and at each sales or rental office. Participants who fulfill the requirements of this section by filing a Form HUD 9352(3-76) will maintain records to reflect their efforts in fulfilling the affirmative fair housing marketing plan. These records will be made available for review by FmHA or its successor agency under Public Law 103-354 personnel. Affirmative fair housing marketing plans will be reviewed by FmHA or its successor agency under Public Law 103-354 personnel in accordance with section 2006-M of this chapter. (8) Applicants failing to comply with these requirements will be liable to sanctions authorized by regulations, rules or policies governing the program in which they are participating including but not limited to denial of further participation in FmHA or its successor agency under Public Law 103-354 programs and referral to the Department of Justice for suit by the United States for injunctive or other appropriate relief. (d) Discrimination complaints. (1) Complaints against FmHA or its successor agency under Public Law 103-354 employees or borrowers under title VIII of the Civil Rights Act of 1968 received by the County Office will be sent to the State Director. The State Director will forward the complaints to the Administrator, Attention: Equal Opportunity Officer. (2) Complaints of discrimination against packagers, contractors or others with whom FmHA or its successor agency under Public Law 103-354 deals should be filed with the Department of Housing and Urban Development. However, these complaints may be accepted by FmHA or its successor agency under Public Law 103-354 employees and routed through the State Director to the Administrator, Attention: Equal Opportunity Officer. (e) Relations to other regulations. Nothing in this section in any way interferes with the administration of the nondiscrimination requirements of Title VI of the Civil Rights Act of 1964 or the “Equal Opportunity in Housing Certification,” signed by all packagers." 7:7:12.1.2.7.11.2.1.4,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,E,Subpart E—Civil Rights Compliance Requirements,,§ 1901.204 Compliance reviews.,RHS,,,"[41 FR 40112, Sept. 17, 1976, as amended at 52 FR 41949, Nov. 2, 1987; 53 FR 3860, Feb. 10, 1988; 55 FR 5962, Feb. 21, 1990; 57 FR 11559, Apr. 6, 1992; 58 FR 5565, Jan. 22, 1993; 58 FR 58643, Nov. 3, 1993; 59 FR 41389, Aug. 12, 1994; 61 FR 3781, Feb. 2, 1996; 62 FR 16468, Apr. 7, 1997; 62 FR 33510, June 19, 1997; 62 FR 42387, Aug. 7, 1997; 68 FR 69952, Dec. 16, 2003; 80 FR 15667, Mar. 25, 2015]","(a) Recipients subject to reviews. Recipients of the following kinds of loans and/or grants who received their loans or advances of funds on or after January 3, 1965, will be reviewed for compliance in accordance with Title VI of the Civil Rights Act of 1964. Guaranteed loans are not covered by Title VI and, therefore, are not subject to compliance reviews. (1) Economic Opportunity loans to individuals for nonagricultural enterprises. (2) Loans for Water and Waste Disposal facilities, including Resource Conservation and Development loans for this purpose. (3) Community Facility loans. (4) Watershed loans and advances. (5) Recreation Association loans including those made from Resource Conservation and Development funds. (6) Economic Opportunity loans to incorporated cooperative associations (Compliance reviews on unincorporated Economic Opportunity cooperatives subject to title VI will be conducted only as the need arises or as directed by either the State Director or the Administrator). (7) Loans to Timber Development organizations. (8) Rural Renewal loans and advances. (9) Rural Rental Housing (formerly Senior Citizen rental) and Rural Cooperative Housing loans. (10) Labor Housing loans and/or grants. (11) Rural Housing Site loans. (12) Business and Industrial Insured loans or grants. (13) Technical Assistance grants. (14) Development grants for water and waste disposal. (15) Technical Assistance and Training grants in accordance with Title XIII of Pub. L. 99-198. (16) Rural Business Development Grants. (17) Section 601 Energy Impacted Area Development Assistance grants. (18) Nonprofit National Corporations grants. (19) System for Delivery of Certain Rural Development Programs Panel Grants. (20) Emergency Community Water Assistance grants. (21) Section 306C WWD loans and grants. (22) Housing Application Packaging Grants. (23) Rural and Cooperative Development Grants in subpart F of part 4284 of this title. (24) Community Facilities Grants in part 3570, subpart B, of this title. (b) Duration of obligation for conducting reviews. Compliance reviews will be conducted on recipients of loans and grants listed in paragraph (a) of this section: (1) Until the loan is paid in full or otherwise satisfied; or sold through the sale of FmHA or its successor agency under Public Law 103-354's assets; or (2) Until the last advance of grant funds is made for the grants listed in paragraph (a) of this section. (c) Compliance reviews of loans and grants to individuals —(1) Compliance Review Officer. The County Supervisor will conduct compliance reviews of loans made to individuals. (2) Type of review. If the borrower is currently receiving loan supervision, the County Supervisor may complete the compliance review based on his knowledge of the borrower's operations from other visits. Otherwise the County Supervisor must visit the borrower's facilities. Before completing the compliance review, the County Supervisor should be aware of: (i) The borrower's operating regulations, for example, the grounds for eviction from a Rural Rental Housing Project. (ii) The borrower's method of advertising the facility to the public, if there is any advertising, including how well these methods reach the minority community. (iii) Any records of request for use of the borrower's facility. (3) Recording results of review. The County Supervisor's determination that the borrower is or is not in compliance with title VI, together with information such as that outlined in paragraph (b)(2) of this section, will be recorded in the running record. Review of individual Rural Rental Housing borrowers will be recorded on Form FmHA or its successor agency under Public Law 103-354 400-8, “Compliance Review (Nondiscrimination by Recipients of Financial Assistance Through FmHA or its successor agency under Public Law 103-354.)” (4) Reporting results of review. If the borrower is in compliance, the County Supervisor will report his findings to the State Director. Exhibit A is a sample report. In the case of Rural Rental Housing borrowers, a copy of Form FmHA or its successor agency under Public Law 103-354 400-8 will be filed in the borrower's County Office loan docket, and the original will be sent to the State Director. If the borrower is not in compliance, the borrower's name, location, type of loan involved, and the reasons for the finding of noncompliance will be sent to the State Director. (5) Forwarding report of noncompliance. The State Director will see that all compliance review reports are complete. If the recipient was found in noncompliance, the State Director will immediately send a copy of the compliance review report to the Administrator, Attention: Equal Opportunity Officer, with recommended action to take to bring the recipient into compliance. (d) Review of loans or grants to organizations (any borrower or grantee other than an individual) —(1) Designation of compliance review officer. The State Director, except for Technical Assistance and Training grants (Pub. L. 99-198) and Nonprofit National Corporations grants, will designate the Compliance Review Officer for recipient organization. County Supervisors may be designated only if they have received approved compliance review training. Otherwise, the Compliance Review Officer must be a member of the State staff. For Technical Assistance and Training grants and Nonprofit National Corporations grants, the Assistant Administrator for Community and Business Programs will designate the Compliance Review Officer for recipient organizations. (2) Type of review. Compliance reviews may be completed in connection with regular supervision visits to organizations and must include an inspection of the FmHA or its successor agency under Public Law 103-354-financed facility. Before determining that the recipient is or is not complying with the provisions in Form FmHA or its successor agency under Public Law 103-354 400-4, the Compliance Review Officer will: (i) Observe the recipient's records, including records on the present membership by race, the handling of applications for use of the facility, the user rates and membership fees or dues, and the facility's operating regulations. (ii) Determine if the recipient advertises for members or users. If so, observe the effectiveness of the recipient's methods of advertising the availability of the facility to the public, and especially the effectiveness of this advertising in reaching the minority community. (iii) Interview organization officials, members, and employees. In reviews of recipients of Technical Assistance grants, members of the self-help housing groups should be interviewed to determine the way in which they were recruited. (iv) Interview informed local community leaders, including minority leaders, if any to determine if the facility is operating without discrimination because of race, color, or national origin. (3) Recording results of reviews —(i) Association, Watershed, Resource Conservation and Development, and Rural Renewal loans involving recreation facilities. Reviews will be recorded on Form FmHA or its successor agency under Public Law 103-354 400-7, “Compliance Reviews for Recreational Loans to Associations (FmHA or its successor agency under Public Law 103-354 Borrowers).” If the organization is found in compliance with title VI, the original of the form will be sent to the State Director, and a copy will be filed in the borrower's County Office loan docket. If the organization is found in noncompliance, any additional information which led to the finding will be sent with the form. (ii) Loans and/or grants for Water and Waste Disposal systems, incorporated Economic Opportunity cooperatives, Grazing associations, Rural Rental Housing, Labor Housing, and Rural Housing Sites. Reviews will be completed on Form FmHA or its successor agency under Public Law 103-354 400-8. The original of the form will be sent to the State Director and a copy filed in the borrower's County Office loan docket. If the organization is found in noncompliance, any additional information which led to the finding will be sent with the form. (iii) Timber Development organizations, Rural Cooperative Housing loans, and Technical Assistance grants. The information obtained during the compliance review as well as the Compliance Review Officer's determination of the borrower's compliance or noncompliance will be recorded in the running record. If the organization is found in compliance, a report (see exhibit A) will be sent to the State Director. If the organization is not in compliance, the organization's name, location, type of loan received, and all information which led to the finding will be sent to the State Director. (iv) Technical Assistance and Training grants (Pub. L. 99-198) and Nonprofit National Corporations grants. The Compliance Review Officer will record in the running record information obtained during the compliance review and the determination of recipient's compliance or noncompliance. A report will be prepared and sent to the Assistant Administrator, Community and Business Programs, for each recipient. (4) Mandatory hook-up ordinance. Compliance reviews of public entity borrowers or grantees for water and waste disposal facilities who are operating under the provisions of a mandatory hook-up ordinance will consist of a certification by the borrower or grantee that the ordinance is still in effect and is being enforced. (5) Forwarding noncompliance report. The State Director will see that the reports are complete. If the recipient was found in noncompliance, the State Director will immediately send a copy of the report to the Administrator, Attention: Equal Opportunity Officer, with action proposed to bring the recipient into compliance. For Technical Assistance and Training grants and Nonprofit National Corporations grants, the Assistant Administrator, Community and Business Programs, will send a copy of the report to the Equal Opportunity Officer. (e) Timing of reviews —(1) Reporting year. The State Director will schedule Civil Rights compliance reviews from November 1 to October 31 of each year. For example, compliance reviews scheduled during 1976 should be conducted after November 1, 1975, but before October 31, 1976. (2) Initial reviews —(i) Water and Waste Disposal loan and/or grant. The initial compliance review will be conducted before loan or grant closing or before the construction begins, whichever occurs first. (ii) Technical Assistance grants, Technical Assistance and Training grants (Pub. L. 99-198) and Nonprofit National Corporations grants. The initial compliance review will be conducted before the grant is closed. (iii) Rural Housing Site loan. The initial compliance review will be conducted at the beginning of the sale of the sites developed with the FmHA or its successor agency under Public Law 103-354 loan. (iv) Watershed loans for future water supply. The initial compliance review will be made when usage of the stored water begins. (v) All other loans and/or grants. The initial compliance review of loans and/or grants listed in paragraph (a) of this section will be conducted within the first reporting year after the loan or grant is closed or after Form FmHA or its successor agency under Public Law 103-354 400-4 is signed. (3) Subsequent reviews. The State Director is responsible for requiring subsequent compliance reviews at intervals not less than 90 days, or more than 3 years, after the previous compliance review. (i) For Water and Waste Disposal organizations with loans that have had at least two compliance reviews after loan closing covering a six-year period, and where no discriminatory practices are indicated, the frequency of subsequent reviews may be reduced to six years. (ii) If Water and Waste Disposal organizations have merged to form a new organization, two reviews will be conducted at 3-year intervals after the merger and one every 6 years thereafter, provided no discriminatory practices are noted. (f) State Office summary reports. The State Director will keep a list of all compliance reviews conducted during the reporting year so as to schedule each year's reviews. The State Director will submit a copy of this list to the Administrator, Attention: Equal Opportunity Office, no later than July 31 of each year. Recipients found in noncompliance will also be listed on the summary report. Exhibit B is a sample report. For Technical Assistance and Training grants and Nonprofit National Corporations grants, the Assistant Administrator, Community and Business Programs, will submit a summary report, using exhibit B of this subpart as a guide, to the Equal Opportunity Officer by July 31 of each year." 7:7:12.1.2.7.11.2.1.5,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,E,Subpart E—Civil Rights Compliance Requirements,,§ 1901.205 Nondiscrimination in construction financed with FmHA or its successor agency under Public Law 103-354 loan or grant.,RHS,,,"[43 FR 58356, Dec. 14, 1978, as amended at 44 FR 24852, Apr. 27, 1979; 52 FR 8002, Mar. 13, 1987]","Executive Order 11246 provides for equal employment opportunity without regard to race, color, religion, sex, or national origin and the elimination of all facilities segregated on the basis of race, color, religion, or national origin on construction work financed by FmHA or its successor agency under Public Law 103-354 involving a construction contract of more than $10,000. (a) Compliance. This section applies to Federal or federally assisted construction contracts or subcontracts in excess of $10,000 for on-site construction. It also applies to invitations for bids published for such construction. If construction work of over $10,000 is partially financed by another Federal Agency, the County Supervisor will try to reach an agreement as to which agency will administer the nondiscrimination requirements. If unable to reach an agreement, the County Supervisor will refer the case to the State Director. (b) Requirements of applicants, contractors, or subcontractors and responsible FmHA or its successor agency under Public Law 103-354 officials —(1) Applicant. The applicant will be required to execute Form FmHA or its successor agency under Public Law 103-354 400-1, “Equal Opportunity Agreement,” at the time the loan is closed or before construction is started, whichever occurs first. If the applicant is an incorporated association, a resolution of the governing body will authorize execution of the form. Municipalities or other public bodies will have to incorporate references to this form in the loan resolution before it is adopted. If the applicant wants to publish for bids, the applicant must obtain Form FmHA or its successor agency under Public Law 103-354 1924-5, “Invitation for Bid (Construction Contract)” which is in compliance with Executive Order 11246, from the local FmHA or its successor agency under Public Law 103-354 County Supervisor. (2) Contractor or Subcontractor. (i) The prospective contractor or subcontractor must submit Form FmHA or its successor agency under Public Law 103-354 400-6, “Compliance Statement,” to the County Supervisor before contract bid negotiations, and comply with the requirements of Executive Order 11246, which are included with Form FmHA or its successor agency under Public Law 103-354 1924-6, “Construction Contract,” during the performance of the contract. The contract will contain the required “Standard Federal Equal Employment Opportunity Construction Contract Specifications” goals and timetables as set forth in exhibit D. (ii) The contractor or subcontractor will prepare and submit Form Contract Compliance (CC) 257, “Monthly Employment Utilization Report” to the appropriate regional office of the U.S. Department of Labor (USDL) (see exhibit E, “List of Regional Offices”) by the fifth of each month through completion of the contract. (3) The County Supervisor or the responsible FmHA or its successor agency under Public Law 103-354 official will: (i) Deliver to the contractor the following forms, as appropriate: (A) Form FmHA or its successor agency under Public Law 103-354 400-3, “Notice to Contractors and Applicants,” with an attached Equal Employment Opportunity Poster. Posters in Spanish will be provided when appropriate, (B) Form FmHA or its successor agency under Public Law 103-354 400-6, and (C) Form CC 257. (ii) Deliver to the applicant Form FmHA or its successor agency under Public Law 103-354 1924-5 when contractors are to be invited to submit bids, and Form FmHA or its successor agency under Public Law 103-354 1924-6 to contract for construction. (iii) Explain to applicant and contractor the requirements of Executive Order 11246, when needed. However, inquiries concerning compliance must be addressed to the appropriate regional office of USDL (see exhibit E). (iv) Submit a report similar in form and content to exhibit C (“FmHA or its successor agency under Public Law 103-354 Financed Contract”) of this Instruction to the appropriate regional office of USDL (Exhibit E) within 10 calendar days of the date a contract or subcontract in excess of $10,000 is awarded. (c) Contractors with 100 or more employees and contract over $10,000. Contractors with 100 or more employees and contract over $10,000, will file the following with the Joint Reporting Committee, 1800 G Street NW., Washington, DC 20006: (1) SF-100 “Employer Information Report EEO-1,” within 30 days of contract award unless the report has been submitted within the past 12 months, and (2) An annual report by March 31, so long as the contractor holds any FmHA or its successor agency under Public Law 103-354 financed contract in excess of $10,000. (d) Contractor with at least 50 employees and contract of $50,000 or more. Each contractor or subcontractor with at least 50 employees and contract of $50,000 or more, must develop a written affirmative action compliance program for each project. This must be on file in each contractor's or subcontractor's personnel file within 120 days after the beginning of the contract. Form AD-425 provides guidelines for developing compliance programs. (e) Compliance during construction. The County Supervisor will: (1) Check to see that: (i) Required posters are displayed. (ii) There is no evidence of discrimination in employment. (2) Record findings on Form FmHA or its successor agency under Public Law 103-354 1924-12, “Inspection Report.” (3) If there is any evidence of noncompliance, the County Supervisor will report all the facts to the appropriate office of USDL (see exhibit E). (f) Hometown Plans. All construction contracts and subcontracts in excess of $10,000, financed by FmHA or its successor agency under Public Law 103-354, in areas which have Hometown Plans regarding affirmative action and equal employment, are subject to the conditions set forth in the applicable plan. Each State Director should seek the advice of the OGC as to compliance with any such plans in the State Director's jurisdiction. (g) Discrimination complaints. (1) Complaints alleging discriminatory acts may be filed directly with the appropriate regional office of USDL (see exhibit E) or with the County Supervisor or the State Director for subsequent forwarding to the above address, by any employee or applicant for employment with a contractor or subcontractor. (2) Each complaint must be in writing and signed by the complainant (The FmHA or its successor agency under Public Law 103-354 official receiving the complaint will assist complainant when necessary). The complaint will include: (i) Name, address, and telephone number of complainant. (ii) Name and address of the person allegedly discriminating. (iii) Date and place of the discrimination. (iv) Description of the discrimination. (v) Any other information that will assist in investigating and resolving the complaint. (3) Complaints must be filed not later than 180 days after the alleged act unless the State Director extends the time, for good cause shown by the complainant." 7:7:12.1.2.7.11.3.1.1,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§ 1901.251 Purpose.,RHS,,,"[42 FR 62141, Dec. 9, 1977, as amended at 72 FR 64121, Nov. 15, 2007]","This subpart prescribes Farmers Home Administration (FmHA) or its successor agency under Public Law 103-354 policies, procedures, and guidelines for compliance with section 106 of the National Historic Preservation Act of 1966 (Pub. L. 89-665), the Reservoir Salvage Act of 1960 (Pub. L. 86-523), as amended May 24, 1974, by the Archeologic and Historic Preservation Act (Pub. L. 93-291), and section 1(3) of Executive Order 11593. This subpart is inapplicable to Farm Service Agency, Farm Loan Programs." 7:7:12.1.2.7.11.3.1.10,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§ 1901.262 State supplement.,RHS,,,,"(a) The State Director shall be responsible for preparing a list of all properties included in the National Register in his area of jurisdiction and issuing such list as a part of a State supplement. Such a list will be updated as needed to reflect changes in the National Register. (b) State Directors may also supplement this subpart and its exhibit as appropriate to meet State and local laws and regulations." 7:7:12.1.2.7.11.3.1.2,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§ 1901.252 Policy.,RHS,,,,"(a) The FmHA or its successor agency under Public Law 103-354 recognizes that significant scientific, prehistorical, historical and archeological (HA) resources are an important part of our National Heritage. (b) The FmHA or its successor agency under Public Law 103-354 will consult with appropriate Federal, State, and local Agencies; other organizations; the State Historic Preservation Officer (SHPO) and individuals to assess the impact of any proposed FmHA or its successor agency under Public Law 103-354 undertaking on properties having historical or archeological significance in order to avoid or mitigate any adverse effects on the properties. (c) The procedures in this subpart have been developed in accordance with section 1(3) of Executive Order 111593." 7:7:12.1.2.7.11.3.1.3,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§ 1901.253 Definitions.,RHS,,,,"(a) Undertaking means any new or continuing projects or program activities supported in whole or in part through FmHA or its successor agency under Public Law 103-354 contracts, grants, subsidies, loans, or other forms of funding assistance. This does not include any actual construction by FmHA or its successor agency under Public Law 103-354. (b) National Historic Preservation Act. The National Register means the National Register of Historic Places, which is a register of districts, sites, buildings, structures, and objects, significant in American history, architecture, archeology, and culture maintained by the Secretary of the Interior under the authority of section 2(b) of the Historic Sites Act of 1935 and section 101(a)(1) of the National Preservation Act. The National Register is published in its entirety in the Federal Register each year in February. Addenda are published on the first Tuesday of each month. (c) National Register Property means a district, site, building, structure, or object included in the National Register. (d) Property eligible for inclusion in the National Register means any district, site, building, structure, or object which the Secretary of the Interior determines is likely to meet the National Register criteria. (e) State Historic Preservation Officer (SHPO) means the official within each State, designated by the Governor at the request of the Secretary of the Interior, to administer the National Register and historic preservation grants program and to coordinate preservation planning within the State. (f) Criteria of effect means when any condition of an undertaking causes or may cause any change, beneficial or adverse, in the scientific, historical, architectural, archeological, or cultural character of a National Register property that qualifies the property under the National Register criteria. (g) Historical and archeological assessment means a determination by the FmHA or its successor agency under Public Law 103-354 State Director using the criteria of effect as a guide, as to whether a proposed undertaking may have an effect upon any properties located within the project area which are included or eligible for inclusion in the National Register. (h) National Register criteria means the following criteria established by the Secretary of the Interior for use in evaluating and determining the eligibility of properties for listing in the National Register: The quality of significance in American History, Architecture, Archeology, and the culture is present in districts, sites, buildings, structures, and objects of State and local importance, that possess integrity of location, design, setting, materials, workmanship, feeling, and association; and (1) That are associated with events that have made a significant contribution to the broad patterns of our history; or (2) That are associated with the lives of persons significant in our past; or (3) That embody the distinctive characteristics of a type, period, or method of construction, or that represent the work of a master, or that possess high artistic values, or that represent a significant and distinguishable entity whose components may lack individual distinction; or (4) That have yielded, or may be likely to yield, information important in prehistory or history. (i) FmHA or its successor agency under Public Law 103-354 official means the FmHA or its successor agency under Public Law 103-354 County Supervisor, the FmHA or its successor agency under Public Law 103-354 State Director or his designated representative. (j) Project area means those geographical or legally defined areas directly under or to be under the applicants control that are affected by the undertaking such as building sites, easements, rights-of-way, leasehold interests and those areas which are directly and significantly impacted by the undertaking. (k) Advisory council means the Advisory Council on Historic Preservation, Suite 430, 1522 K Street NW., Washington, DC 20005, created by title II of Pub. L. 89-665 and charged with the responsibility of advising the President, Congress, and others on matters relating to historic preservation. (l) HA as used in this regulation is an abbreviation of the term “scientific, prehistorical, historical, and archeological.”" 7:7:12.1.2.7.11.3.1.4,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§ 1901.254 Scope.,RHS,,,,"FmHA or its successor agency under Public Law 103-354 will evaluate all undertakings for possible HA significance. This subpart covers the following types of undertakings: (a) Undertakings requiring a historical and archeological assessment. Although the following undertakings are presumed to involve nonfederally owned lands, they may have an effect on properties having HA significance and, therefore, will require a historical and archeological assessment: (1) Loans and grants for the development of business and industry including guaranteed loans. (2) Loans and grants for multiple family housing projects of 25 or more dwelling units. (3) Subdivision plans submitted for approval having 25 or more building sites. (4) Loans and grants in rural areas to construct, enlarge, extend, or otherwise improve: (i) Community water, sanitary sewage, solid waste disposal, and storm waste water disposal systems. (ii) Other essential community facilities such as fire and rescue, health, safety, public buildings, schools, transportation, traffic, and law enforcement. (5) Loans to develop community irrigation, drainage, and other soil and water conservation and use facilities. (6) Loans to acquire and develop grazing land for livestock of an association of members. (7) Loans in areas designated by the Soil Conservation Service (SCS), U.S. Department of Agriculture (USDA), to conserve and develop natural resources and to contribute to economic improvement of the area. (8) Loans to protect and develop land and water resources in small watersheds. (9) Loans to permit Indian tribes to buy land within their reservations. (b) Undertakings presumed not to require a historical and archeological assessment. The following undertakings are generally presumed to involve nonfederally owned lands and not to have an effect on properties of historical and archeological value and will therefore not usually require a historical and archeological assessment. However, when the State Director or County Supervisor finds or has had communication or obtains information from a recognized historical and archeological authority that a specific undertaking may have an effect on a property included or eligible for inclusion in the National Register, a historical and archeological assessment will be made. (1) Loans to farmers and ranchers in rural areas for the purchase, development, and operation of farms and ranches. (2) Loans to individual families in rural areas for the purchase, construction, or improvement of single family residences. (3) Loans and grants for multiple family housing projects of not more than 24 family dwelling units. (4) Subdivision plans submitted for approval having 24 or less building sites. (5) Loans to farmers, ranchers, and other rural residents to develop land, water, and other related resources for increased production of food and other crops, improved pastures, feed crops, water facilities for livestock, and improved habitats for fish and wildlife. (6) Emergency and disaster loans to farmers, ranchers and other rural residents in declared or designated areas as a result of a major or national disaster." 7:7:12.1.2.7.11.3.1.5,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§ 1901.255 Historical and archeological assessments.,RHS,,,,"(a) The FmHA or its successor agency under Public Law 103-354 official, normally the FmHA or its successor agency under Public Law 103-354 County Supervisor, who receives a preapplication or application for loan or grant assistance on an undertaking that may have an effect on HA properties will, as part of the process, take the following actions: (1) Carefully review the State supplements issued by the State Director pursuant to § 1901.262(a) to determine whether there are any properties within the project area that appear in the National Register. (2) Document the following: (i) A brief narrative report of the findings and conclusions of an on-site reconnaissance of the project area. (ii) Any “in-house” knowledge of known or suspected HA sites in the project area. (3) Submit the information outlined in paragraph (a)(2) of this section to the FmHA or its successor agency under Public Law 103-354 State Director as part of the preapplication or application. (b) Upon receipt of the preapplication/application the FmHA or its successor agency under Public Law 103-354 State Director will, as a concurrent part of the preapplication/application review, prepare a historical and archeological assessment of the undertaking. In making the assessment the State Director will consider information from the following sources: (1) State and Regional Clearinghouse comments. (2) Information submitted by the County Supervisor pursuant to paragraph (a)(2) of this section. (3) Factual comments or recommendations of the SHPO or other responsible Federal, State, or local officials. (4) Any other reliable information concerning properties in the project area having HA significance. (c) Upon completion of the preapplication or application review, the State Director will take the following actions: (1) When his assessment indicates that no properties of HA significance will be effected by the proposed undertaking, he will proceed with processing of the preapplication or application. (2) When his assessment indicates that there are properties included in the National Register that may be effected by the proposed undertaking, he will in consultation with the SHPO, the applicant and its representatives, and other appropriate historical and archeological authorities plan appropriate measures to avoid or mitigate any adverse effects. He will also notify the Advisory Council and Secretary of the Interior of the proposed undertaking, and of its possible effect on the National Register properties and provide them with a copy of the proposed plan in order to afford them a reasonable opportunity for comment. Comments that are received with 45 calendar days of notification in accordance with the requirements for comment as outlined in section 106 of the National Historic Preservation Act of 1966, will be considered in further development of the undertaking. (3) When his assessment indicates that there are properties thay may be eligible for inclusion in the National Register, based on his application of the National Register criteria, he will request the Regional Director of the National Park Service, U.S. Department of the Interior, Attention: Interagency Archeological Services, in writing, to cause a survey of the project area to be made to determine the significance of the properties in accordance with section 3(b) of Pub. L. 93-291. The State Director's letter to the Regional Director should request a response within 45 calendar days as to whether the National Park Service intends to cause a survey to be made, declines to undertake a survey, or that a survey is not warranted based on available data. The addresses of the Regional Offices of the National Park Service are listed in exhibit A of this subpart. If no response is received within the 45-day period, the State Director will proceed as outlined in paragraph (c)(7) of this section. (4) The State Director will cooperate fully with the National Park Service in the conduct of a survey should one be undertaken to assure that: (i) The professional archeologist/historian conducting the survey provides his written opinion as to the eligibility of any identified properties for inclusion in the National Register. (ii) When the professional archeologist/historian recommends recovery, protection, or preservation of identified properties, the National Park Service is requested to undertake this project. (5) When the survey made in paragraph (c)(3) of this section does not identify any historical and archeological properties that may be eligible for inclusion in the National Register, or the National Park Service is not going to undertake activity pursuant to paragraph (c)(4)(ii) of this section, the State Director, after consultation with the SHPO and the National Park Service, will document the findings and proceed with processing of the application. (6) When the survey identifies properties that may be eligible for inclusion in the National Register, the State Director will request the SHPO to proceed with the nomination of such properties. The State Director will then proceed as outlined in paragraph (c)(2) of this section for any properties accepted for inclusion in the National Register. (7) When the National Park Service declines to cause a survey to be made or determines that one is not warranted, the State Director will document such facts and proceed with processing of the application." 7:7:12.1.2.7.11.3.1.6,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§§ 1901.256-1901.258 [Reserved],RHS,,,, 7:7:12.1.2.7.11.3.1.7,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§ 1901.259 Actions to be taken when archeological properties are discovered during construction.,RHS,,,,"(a) When properties of significant HA value are discovered during construction, the State Director will immediately consult with the applicant, the SHPO and the Regional Director of the National Park Service to determine whether there is sufficient factual evidence to warrant a decision to stop construction and undertake detailed survey and recovery. (b) When the consultations in paragraph (a) of this section result in a determination by the National Park Service to request the applicant to stop construction, such stop action should be taken so that the Park Service can initiate measures for immediate recovery within 60 days after notification of a discovery. (c) When the consultations in paragraph (a) of this section do not result in a determination by the National Park Service to stop construction and to undertake a survey and recovery, construction should be permitted to proceed with caution. In the event that the National Park Service determines that recovery is necessary, the FmHA or its successor agency under Public Law 103-354 applicant/borrower and the Park Service should determine that the consent of all persons, associations, or public entities having legal interests in the property involved has been secured. Also, the applicant should be informed that the Secretary of the Interior is authorized to compensate any person, association, or public entity damaged as a result of delay in construction or as a result of the temporary loss of the use of public or any nonfederally owned land. (d) No survey or recovery work will be required which in the determination of the State Director would seriously impede FmHA or its successor agency under Public Law 103-354 actions in providing assistance where the State Director determines that immediate action is required to avoid loss or damage of life or property. Nevertheless, appropriate measures will be taken to the extent practical to preserve, protect, or mitigate any damage to properties having HA significance." 7:7:12.1.2.7.11.3.1.8,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§ 1901.260 Coordination with other agencies.,RHS,,,,"(a) When other Agencies are directly involved in any undertaking that requires a historical and archeological assessment, the State Director will contact the Agencies concerned to determine if a joint assessment will be prepared and whether a single lead Agency will assume primary responsibility for preparing the assessment. (b) When a lead Agency is agreed upon other than FmHA or its successor agency under Public Law 103-354, FmHA or its successor agency under Public Law 103-354 will provide that Agency with information about its respective areas of responsibility. Assessments will indicate Agency participation and concurrence. (c) When FmHA or its successor agency under Public Law 103-354 program activities are planned that primarily supplement those of the SCS, USDA, such as watershed projects, resource conservation and development measures, and irrigation and drainage projects, the SCS will be designated as the lead Agency." 7:7:12.1.2.7.11.3.1.9,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,F,Subpart F—Procedures for the Protection of Historical and Archeological Properties,,§ 1901.261 [Reserved],RHS,,,, 7:7:12.1.2.7.11.5.1.1,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,K,Subpart K—Certificates of Beneficial Ownership and Insured Notes,,§ 1901.501 Purpose.,RHS,,,"[41 FR 51799, Nov. 24, 1976, as amended at 72 FR 64121, Nov. 15, 2007; 80 FR 9868, Feb. 24, 2015]","This subpart prescribes policies and procedures for Rural Development certificates of beneficial ownership and insured notes. This subpart is inapplicable to Farm Service Agency, Farm Loan Programs." 7:7:12.1.2.7.11.5.1.2,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,K,Subpart K—Certificates of Beneficial Ownership and Insured Notes,,§ 1901.502 Policy.,RHS,,,"[51 FR 24301, July 3, 1986]","It is the current policy to sell all certificates of beneficial ownership to the Federal Financing Bank for financing activities from the Agricultural Credit Insurance Fund and the Rural Development Insurance Fund. Sales from the Rural Housing Insurance Fund will be made to the Federal Financing Bank to the extent necessary to service certificates of beneficial ownership held by the Federal Financing Bank. Sales in excess of those needed for servicing requirements will be made to the public. In addition to sales, this subpart provides policy for the servicing of outstanding certificates of beneficial ownership, insurance contracts, and insured notes held by investors." 7:7:12.1.2.7.11.5.1.3,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,K,Subpart K—Certificates of Beneficial Ownership and Insured Notes,,§ 1901.503 Definitions.,RHS,,,"[41 FR 51799, Nov. 24, 1976, as amended at 80 FR 9868, Feb. 24, 2015]","(a) As used in §§ 1901.505, 1901.507, 1901.508 and 1901.509 the following definitions will apply: (1) Announcement of sale. Any notice of terms and conditions respecting a sale of certificates. (2) Certificate. A certificate of beneficial ownership issued by Rural Development under this subpart. (3) Director, Finance Office. The Director or the Insured Loan Officer of the Finance Office of Rural Development. (4) Rural Development. The United States acting through the Rural Housing Service, the Rural Utilities Service, or the Rural Business-Cooperative Service or their successor agencies. (5) Finance Office. The office which maintains the Rural Development finance records. It is located at 1520 Market Street, St. Louis, Missouri 63103. (Phone: 314-425-4400) (6) Fixed period. Any time interval (preceding an option period) during which the insured holder is not entitled to require Rural Development to purchase the insured note, as specified in the insurance agreement. (7) Insurance agreement. The entire contract evidencing and setting forth the terms and conditions of Rural Development insurance of the payment for the insured note. The insurance agreement with respect to any particular loan may be evidenced by Form RD 440-5, “Insurance Endorsement (Insured Loan),” RD 440-30, “Insurance Endorsement (Insure Loans),” or any other form or forms prescribed by the National Office and executed by an authorized official of Rural Development. It may include such provisions as, for example, an agreement of Rural Development to purchase or repurchase the loan, or to make supplementary payments from the insurance fund. (8) Insurance fund. The Agricultural Credit Insurance Fund authorized by section 309 of the Consolidated Farm and Rural Development Act, the Rural Development Insurance Fund authorized by section 309A of the Consolidated Farm and Rural Development Act, or the Rural Housing Insurance Fund authorized by section 517 of title V of the Housing Act of 1949. (9) Insured holder. The current owner of an insured note other than Rural Development, according to the records of Rural Development as insurer of the note. (10) Insured note. Any promissory note or bond evidencing an insured loan regardless of whether it is held by Rural Development in the insurance fund, by a private holder, or by Rural Development as trustee. (11) Loan. Loans made and held in the Agricultural Credit Insurance Fund, Rural Development Insurance Fund, or the Rural Housing Insurance Fund. (12) National Office. The Administrator or other authorized officer of Rural Development in Washington, DC. (13) Option period. Any period during which the insured holder has the optional right to require Rural Development to purchase the insured note, as specified in the insurance agreement. (14) Par value. The total amount to which the insured holder is entitled under the terms of the insurance agreement. (15) Private buyer. A buyer of an insured note other than Rural Development. (16) Private holder. An insured holder other than Rural Development. (17) Repurchase agreement. A provision in the insurance agreement obligating Rural Development to buy the insured note at the option of the holders. (18) Sale, or seller, and buyer. The transfer of ownership (including possession or the right of possession), the transferor, and the transferee respectively. (19) State Director. The State Director of Rural Development for the State in which is located the real estate improved, purchased, or refinanced with the loan evidenced by the insured note. (b) As used in § 1901.506 the following definitions will apply: (1) Reserve bank. The Federal Reserve Bank of New York (and any other Federal Reserve Bank which agrees to issue securities in book-entry form) as fiscal agent of the United States acting on behalf of Rural Development and, when indicated, acting in its individual capacity. (2) Rural Development security. A certificate representing beneficial ownership of notes, bonds, debentures, or other similar obligations held by Rural Development under the Consolidated Farm and Rural Development Act and title V of the Housing Act of 1949, issued in the form of a definitive Rural Development security or a book-entry Rural Development security. (3) Definitive Rural Development security. A Rural Development security in engraved on printed form. (4) Book-entry Rural Development security. A Rural Development security in the form of an entry made as prescribed in this subpart on the records of a Reserve bank. (5) Pledge. A pledge of, or any other security interest in, Rural Development securities as collateral for loans or advances, or to secure deposits of public moneys or the performance of an obligation. (6) Date of call. The date fixed in the official notice of call published in the Federal Register on which Rural Development will make payment of the security before maturity in accordance with its terms. (7) Member bank. Any national bank, state bank, or bank or trust company which is a member of a Reserve bank." 7:7:12.1.2.7.11.5.1.4,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,K,Subpart K—Certificates of Beneficial Ownership and Insured Notes,,§ 1901.504 Authorities and responsibilities.,RHS,,,"[41 FR 51799, Nov. 24, 1976, as amended at 80 FR 9868, Feb. 24, 2015]","The Administrator will approve all methods of Rural Development financing and major changes in existing methods. The Director, Finance Office, is responsible for servicing of all certificates of beneficial ownership and insured notes issued by the Finance Office, the Federal Reserve Bank of New York for the servicing of insurance contracts, and the Federal Reserve banks for certificates of beneficial ownership for which the Reserve banks are Rural Development's fiscal agents." 7:7:12.1.2.7.11.5.1.5,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,K,Subpart K—Certificates of Beneficial Ownership and Insured Notes,,§ 1901.505 Certificates of beneficial ownership in Rural Development loans.,RHS,,,"[41 FR 51799, Nov. 24, 1976, as amended at 80 FR 9868, Feb. 24, 2015]","(a) Special trust of loans —(1) Establishment of special trusts. From time to Rural Development will place in special trusts unmature loans evidenced by notes or other instruments. Loans may be placed into or removed from a special trust, but there will always be maintained in such trusts loans on which the unpaid amount is at least equal to the face value of the outstanding unmature certificates evidencing beneficial ownership in such special trust as provided in paragraph (a)(2) of this section. (2) Beneficial ownership of special trusts. To permit interested persons to acquire a beneficial ownership of loans comprising a special trust established under paragraph (a)(1) of this section, Rural Development will sell certificates which will evidence beneficial ownership of an interest in the special trust to the extent of the face value of such certificates. Rural Development will own an interest in special trusts equal to the amount by which the unpaid principal amount of loans comprising the trusts exceeds the face value of all outstanding certificates evidencing beneficial ownership in such trusts. (b) Sale of certificates. Rural Development will offer certificates for sale from time to time on such terms and conditions it may deem appropriate. Sales made by the Finance Office shall be made by its Director. No sale in excess of $1 million will be made to any one investor without prior approval of the Associate Administrator or his designee. The terms and limitations of sales are subject to change from time to time, and may be obtained from the Finance Office. (1) Form of certificates. The certificates may be interest-bearing or non-interest-bearing. The certificates may be made payable to the bearer or registered holder thereof, and will be negotiable. The certificates will be issued in denominations specified in the invitations for bid or other announcement of sale. (2) Issue date and maturity date of certificates. The certificates will be issued on such dates and mature on such dates as specified in the invitation for bids or other announcement of sale. Such dates will appear on the face of the certificates." 7:7:12.1.2.7.11.5.1.6,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,K,Subpart K—Certificates of Beneficial Ownership and Insured Notes,,§ 1901.506 Book-entry procedure for Rural Development securities—issuance and redemption of certificate by Reserve bank.,RHS,,,"[41 FR 51799, Nov. 24, 1976, as amended at 80 FR 9868, Feb. 24, 2015]","(a) Authority of Reserve bank. Each Reserve bank is hereby authorized in accordance with the provisions of this subpart to: (1) Issue book-entry Rural Development securities by means of entries on its records which shall include the name of the depositor, the amount, the securities title (or series) and maturity date. (2) Effect conversions between book-entry Rural Development securities and definitive Rural Development securities. (3) Otherwise service and maintain book-entry Rural Development securities. (4) Issue a confirmation of transaction in the form of a written advice (serially numbered or otherwise) which specifies the amount and description of any securities (that is, the securities title (or series) and the maturity date) sold or transferred and the date of the transaction. (b) Scope and effect of book-entry procedure. (1) A Reserve bank as fiscal agent of the United States acting on behalf of Rural Development may apply the book-entry procedure provided for in this subpart to any Rural Development securities which have been or are hereafter deposited for any purpose in accounts with it in its individual capacity under terms and conditions which indicate that the Reserve bank will continue to maintain such deposit accounts in its individual capacity, notwithstanding application of the book-entry procedure to such securities. This paragraph shall be applicable but not limited to Rural Development securities deposited: (i) As collateral pledged to a Reserve bank (in its individual capacity) for advances by it. (ii) By a member bank for its sole account. (iii) By a member bank held for the account of its customers. (iv) In connection with deposits in a member bank of funds of States, Municipalities, or other political subdivisions. (v) In connection with the performance of an obligation or duty under Federal, State, Municipal, or local law, or judgments or decrees of courts. (2) The application of the book-entry procedure under paragraph (b)(1) of this section shall not detract from or adversely affect the relationships that would otherwise exist between a Reserve bank in its individual capacity and its depositors concerning any deposit under this paragraph. Whenever the book-entry procedure is applied to such Rural Development securities, the Reserve bank is authorized to take all action necessary in respect of the book-entry procedure to enable such Reserve bank in its individual capacity to perform its obligation as depositary with respect to such Rural Development securities. (3) A Reserve bank as fiscal agent of the United States acting on behalf of Rural Development may apply the book-entry procedure to Rural Development securities deposited as collateral pledged to the United States under Treasury Department Circular Nos. 92 and 176, both as revised and amended, and may apply the book-entry procedure, with the approval of the Secretary of the Treasury, to any other Rural Development securities deposited with a Reserve bank as fiscal agent of the United States. (4) Any person having an interest in Rural Development securities which are deposited with a Reserve bank (in either its individual capacity or as fiscal agent of the United States) for any purpose shall be deemed to have consented to their conversion to book-entry Rural Development securities pursuant to the provisions of this subpart and in the manner and under the procedure prescribed by the Reserve bank. (5) No deposits shall be accepted under this section on or after the date of maturity or call of Rural Development securities. (c) Transfer or pledge. (1) A transfer or pledge of book-entry Rural Development securities to a Reserve bank (in its individual capacity or as fiscal agent of the United States), or to the United States, or to any transferee or pledgee eligible to maintain an appropriate book-entry account in its name with a Reserve bank under this subpart is effected and perfected, notwithstanding any provision of law to the contrary, by a Reserve bank making an appropriate entry in its records of the securities transferred or pledged. The making of such an entry in the records of a Reserve bank shall: (i) Have the effect of a delivery in bearer form of definitive Rural Development securities. (ii) Have the effect of a taking of delivery by the transferee or pledgee. (iii) Constitute the transferee or pledgee a holder. (iv) If a pledge, effect a perfected security interest therein in favor of the pledgee. A transfer or pledge of book-entry Rural Development securities effected under this paragraph shall have priority over any transfer, pledge, or other interest, theretofore or thereafter effected or perfected under paragraph (c)(2) of this section or any other manner. (2) A transfer or pledge of transferable Rural Development securities, or any interest therein, which is maintained by a Reserve bank (in its individual capacity or as fiscal agent of the United States) in a book-entry account under this subpart, including securities in book-entry form under § 1901.506(b)(1)(iii) is effected, and a pledge is perfected by any means that would be effective under applicable law to effect a transfer or to effect and perfect a pledge of Rural Development securities, or any interest therein, if the securities were maintained by the Reserve bank in bearer definitive form. For purposes of transfer or pledge hereunder, book-entry Rural Development securities maintained by a Reserve bank shall, notwithstanding any provision of law to the contrary, be deemed to be maintained in bearer definitive form. A Reserve bank maintaining book-entry Rural Development securities, either in its individual capacity or as fiscal agent of the United States, is not a bailee for the purposes of notification of pledges of these securities under this paragraph, or a third person in possession for the purposes of acknowledgment of transfers thereof under this paragraph. Where transferable Rural Development securities are recorded on the books of a depositary (a bank, banking institution, financial firm, or similar party, which regularly accepts in the course of its business Rural Development securities as a custodial service for customers, and maintains accounts in the names of such customers reflecting ownership of or interest in such securities) for account of the pledgor or transferor thereof and such securities are on deposit with a Reserve bank in a book-entry account hereunder, such depositary shall, for purposes of perfecting a pledge of such securities or effecting delivery of such securities to a purchaser under applicable provisions of law, be the bailee to which notification of the pledge of the securities may be given or the third person in possession from which acknowledgment of the holding of the securities for the purchaser may be obtained. A Reserve bank will not accept notice or advice of a transfer or pledge effected or perfected under this paragraph and any such notice or advice shall have no effect. A Reserve bank may continue to deal with its depositor in accordance with the provisions of this subpart, notwithstanding any transfer or pledge effected or perfected under this paragraph. (3) No filing or recording with a public recording office or officer shall be necessary or effective with respect to any transfer or pledge of book-entry Rural Development securities or any interest therein. (4) A Reserve bank shall, upon receipt of appropriate instructions, convert book-entry Rural Development securities into definitive Rural Development securities and deliver them in accordance with such instructions. No such conversion shall affect existing interest in such Rural Development securities. (5) A transfer of book-entry Rural Development securities within a Federal Reserve Bank shall be made in accordance with procedures established by the Reserve bank not inconsistent with this subpart. The transfer of book-entry Rural Development securities by a Reserve bank may be made through a telegraphic transfer procedure. (6) All requests for transfer or withdrawal must be made prior to the maturity or date of call of the securities. (d) Withdrawal of Rural Development securities. (1) A depositor of book-entry Rural Development securities may withdraw them from a Reserve bank by requesting delivery of like definitive Rural Development securities to itself or on its order to a transferee. (2) Rural Developmentsecurities which are actually to be delivered upon withdrawal may be issued in bearer or registered form. (e) Delivery of Rural Development securities. A Reserve bank which has received Rural Development securities and effected pledges, made entries regarding them, or transferred or delivered them according to the instructions of its depositor is not liable for conversion or for participation in breach of fiduciary duty even though the depositor had no right to dispose of or take other action in respect of the securities. A Reserve bank shall be fully discharged of its obligations under this subpart by the delivery of Rural Development securities in definitive form to its depositor or upon the order of such depositor. Customers of a member bank or other depositary (other than a Reserve bank) may obtain Rural Development securities in definitive form only by causing the depositor of the Reserve bank to order the withdrawal thereof from the Reserve bank. (f) Registered securities. (1) No formal assignment shall be required for the conversion to book-entry Rural Development securities of registered Rural Development securities held by a Reserve bank (in either its individual capacity or as fiscal agent of the United States) on the effective date of this subpart for any purpose specified in § 1901.506(b)(1). Registered Rural Development securities deposited thereafter with a Reserve bank for any purpose specified in § 1901.506(b) shall be assigned for conversion to book-entry Rural Development securities. (2) The assignment which shall be executed in accordance with the provisions of subpart F of 31 CFR part 306, so far as applicable, shall be to Federal Reserve Bank of ________, as fiscal agent of the United States acting on behalf of the Rural Development, United States Department of Agriculture, for conversion to book-entry Rural Development securities. (g) Servicing book-entry Rural Development securities, payment of interest, payment at maturity or upon call. Interest becoming due on book-entry Rural Development securities shall be charged to the general account of the Treasurer of the United States on the interest due date and remitted or credited in accordance with the depositor's instructions. Such securities shall be redeemed and charged to the same account on the date of maturity or call, and the redemption proceeds, principal, and interest shall be disposed of in accordance with the depositor's instructions. (h) Issuance and redemption. (1) In those instances where the Reserve bank is acting as fiscal agent of the United States acting on behalf of Rural Development, the following subparts of Treasury Department Circular No. 300 (31 CFR part 306), so far as applicable, shall apply to such certificates. (i) Subpart B, Registration. (ii) Subpart C, Transfers, Exchanges and Reissues. (iii) Subpart D, Redemption or Payment. (iv) Subpart E, Interest. (v) Subpart G, Assignments of Registered Securities—General. (vi) Subpart F, Assignments by or in Behalf of Individuals. (vii) Subpart H, Assignments in Behalf of Estates of Deceased Owners. (viii) Subpart I, Assignments by or in Behalf of Trustees and Similar Fiduciaries. (ix) Subpart J, Assignments in Behalf of Private or Public Organizations. (x) Subpart K, Attorneys in Fact. (xi) Subpart L, Transfer Through Judicial Proceedings. (xii) Subpart M, Requests for Suspension of Transactions. (xiii) Subpart N, Relief for Loss, Theft, Destruction, Mutilation, or Defacement of Securities." 7:7:12.1.2.7.11.5.1.7,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,K,Subpart K—Certificates of Beneficial Ownership and Insured Notes,,§ 1901.507 Certificates of beneficial ownership by the Rural Development Finance Office.,RHS,,,"[41 FR 51799, Nov. 24, 1976, as amended at 80 FR 9869, Feb. 24, 2015]","(a) Orders and payment. Orders for investment in certificates may be placed with the Finance Office by mail, telephone, or in person. Payment for purchase of certificates may be made by a wire transfer to the Federal Reserve Bank of St. Louis for credit to the Farmers Home Administration or its successor agency under Public Law 103-354, by a certified check or bank draft payable to the Farmers Home Administration or its successor agency under Public Law 103-354. The rate of interest paid on the certificate will be the rate in effect on the date the Finance Office receives the payment. (b) Registration. (1) The registration used must express the actual ownership of a certificate and may not restrict the authority of the owner to dispose of it in any manner. Rural Development reserves the right to treat the registration as conclusive ownership. Request for registration must be clear, accurate, and complete, and include the appropriate taxpayer identifying number or social security number. (2) The registration of all certificates owned by the same person, organization, or fiduciary should be uniform with respect to the name of the owner and, in case of fiduciary, the description of the fiduciary capacity. Individual owners should be designated by the names by which they are ordinarily known or under which they do business, preferably including at least one full given name. The name of an individual may be preceded by an applicable title, as, for example “Mrs.”, “Mr.”, “Miss”, “Ms.”, “Dr.”, or “Rev.”, or followed by a designation such as “M.D.”, “D.D.”, “Sr.”, or “Jr.”, Any other similar suffix should be included when ordinarily used or when necessary to distinguish the owner from another member of his family. The address should include, where appropriate, the name and street, route, or any other location feature, and zip code. (3) If an erroneously inscribed certificate is received, it should not be altered in any respect. Rural Development should be given full particulars about the error and asked to furnish instructions. (c) Transfers and exchanges—closed periods —(1) General. Transfer of registered certificates should be made by assignment in accordance with this section. Registered securities are eligible for denominational exchange. Specific instructions for issuance and delivery of new certificates signed by the owner or the owner's authorized representative must accompany the certificates presented. Certificates presented for transfer must be received by Rural Development not less than 1 full month before the date on which they mature. Any certificates so presented which are received too late to comply with this provision will be accepted for payment only. (2) Closing of transfer books. The transfer books are closed for 1 full month preceding interest payment dates. If the date set for closing falls on Saturday, Sunday, or a legal holiday, the books will be closed as of the close of business on the last business day preceding that date. The books are reopened on the first business day following the date on which interest falls due. Registered certificates which have not matured, or have been submitted for transfer and are received when the books are closed for that certificate, will be processed on or after the date such books are reopened. If certificates are received for transfer when the books are closed for payment of final interest at maturity, the following action will be taken in the absence of different instructions: (i) Payment of final interest will be made to the registered owner of record on the date the books were closed. (ii) Payment of principal will be made to the assignee under a proper assignment of the certificate. (d) Redemption or payment —(1) General. Certificates are payable in regular course of business at maturity. Rural Development may provide for the exchange of maturing certificates. The registered certificates should be presented and surrendered for redemption at the Rural Development Finance Office. No assignments or evidence in support of them will be required by or on behalf of the registered owner or assignee for redemption for his or its account, or for redemption-exchange if the new certificates are to be registered in exactly the same names and forms as in the registrations or assignments of the certificates surrendered. (2) Redemption at maturity. Registered certificates presented and surrendered for redemption at maturity need not be assigned unless the owner desires that payment be made to some other person. Should the owner so desire assignments should be made to the “ Rural Development for redemption for the account of (inserting name and address of person to whom payment is to be made).” Specific instructions for the issuance and delivery of the redemption check signed by the owner or the owner's authorized representative must accompany the certificates unless included in the assignment. Payment of the principal and interest will be made by a check drawn on the Treasurer of the United States to the order of the person entitled and mailed in accordance with the instructions received. If instructions are not received concerning interest, interest will be paid to the registered owner. (3) Interest. The interest on Rural Development certificates accrues and is payable annually. A full interest period does not include the day on which the last preceding interest became due, but does include the day on which the next succeeding interest payment is due. Certificates will cease to bear interest on the date of their maturity. The interest on registered certificates is payable by checks drawn on the Treasurer of the United States to the order of the registered owners, except as otherwise provided in this section. Rural Development prepares the interest checks in advance of the interest payment date and ordinarily mails them in time to reach the addressees on that date. Interest on a registered certificate which has not matured and which is presented for any transaction when the books for that certificate are closed will be paid by check drawn to the order of the registered owner of record. On receipt of notice of the death or incompetency of an individual named as registered owner, a change in the name or in the status of a partnership, corporation, or unincorporated association, the removal, resignation, succession, or death of a fiduciary or trustee, delivery of interest checks will be withheld pending receipt and approval of evidence showing who is entitled to receive the interest checks. If the inscriptions on certificates do not clearly identify the owners, delivery of interest checks may be withheld pending reissue of the certificates in the correct registration, except as provided in this section. The final installment of interest will be paid by check drawn to the order of the registered owner of record on presentation and surrender of the certificate for redemption. To assure timely delivery of interest checks, owners should promptly notify Rural Development of any change of address. (e) Assignments. Assignments of certificates should be executed by the owner or the owner's authorized representative in the presence of an officer authorized to certify assignments. Registered certificates may be assigned to a specified transferee or to Rural Development for redemption or for exchange for other certificates offered at maturity. Assignments to “United States, Rural Development,” “Farmers Home Administration for Transfer,” or “Rural Development for Exchange” will not be accepted unless supplemented by specific instructions by or in behalf of the owner. If an alteration or erasure has been made in an assignment, a new assignment from the assignor should be obtained. Otherwise, an affidavit or explanation by the person responsible for the alteration or erasure should be submitted for consideration. (f) Death of certificate holder. The Finance Office should be notified of the death of the registered owner of a certificate. The following documents should be forwarded with the notice if available. (1) A certified copy of the death certificate. (2) A certified copy of the court order appointing the Administrator or Executor (include the mailing address of the Administrator or Executor). The Finance Office will notify the person submitting such notice and/or documentation if any other records or documents are needed. Legal opinions and advice will be obtained by the Finance Office as needed from the Regional Attorney. After all legal requirements are met, the certificate should be reissued in the name of the current owner. (g) Replacement. Lost, stolen, destroyed, or mutilated certificates will be replaced by the Finance Office on the registered owner's compliance with the requirements of § 1901.509." 7:7:12.1.2.7.11.5.1.8,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,K,Subpart K—Certificates of Beneficial Ownership and Insured Notes,,§ 1901.508 Servicing of insured notes outstanding with investors.,RHS,,,"[41 FR 51799, Nov. 24, 1976, as amended at 80 FR 9869, Feb. 24, 2015]","The Director, or the insured loan officer of the Finance Office, is authorized in connection with the sale of any insured note to execute required documents on behalf of Rural Development and to take other appropriate action, including, but not limited to, acknowledging notice of sale of an insured note, or requiring an insured holder to sell an insured note to Rural Development in connection with any voluntary conveyance or foreclosure, or transfer related to liquidation of the borrower's account or any other servicing action so related. Upon recommendation by the State Director that purchase of an insured note is necessary for any servicing action not related to liquidation of the borrower's account, authorization may be given by the National Office to request the Director, Finance Office, to require a holder to sell an insured note to Rural Development. (a) Assignments —(1) Effective date of assignment. When an insured note is sold by a private holder to a private buyer, notice of such sale executed by the seller must be given to and acknowledged by Rural Development in order for the sale to be binding on Rural Development, as to Rural Development, the effective date of the sale will be the acknowledgment date specified in the acknowledgement of notice executed by Rural Development. (2) Assignment to Rural Development at request of Rural Development. At any time Rural Development considers it necessary for proper servicing of the loan, Rural Development may require, in writing, a private holder to sell an insured note to Rural Development. (3) Assignment to Rural Development at option of holder. A private holder at any time during the option period may require, in writing, Rural Development to purchase an insured note. (4) Price. If Rural Development is the buyer of an insured note, the price will be the par value as of the effective date of the sale. In other cases, the price will be determined by an agreement between the parties. (b) Sale of insured notes by private holders to private buyers. (1) On receipt of notice from a private holder of intention to assign an insured note, the Director, Finance Office, will send the holder: (i) Form RD 471-7 “Notice and Acknowledgment of Sale of Insured or Guaranteed Loan.” (ii) A statement of the unpaid principal. If requested the Director, Finance Office, will furnish a statement of account instead of or in addition to a statement of the unpaid principal. (iii) Appropriate information on how to complete the assignment. (2) If the Director, Finance Office, is informed that an insured note has been assigned and Rural Development is requested to recognize the assignment, the Director, Finance Office, will send the assignor Form RD 471-7, with directions for its execution. (3) On receipt of Form RD 471-7 properly executed by the assignor, the Director, Finance Office, will complete and execute the acknowledgment section of the form. The Director, Finance Office, will retain the original of the form, have two facsimile copies made and send one to the assignor, and one to the assignee. For any correction or other change to be made in the record of the name or address of a private holder, or of a designated agent of a private holder, a request will be made to Rural Development in writing. (4) As of the date of the acknowledgment, executed by the Director, Finance Office, on Form RD 471-7 the Director, Finance Office, will transfer the insured note from the assignor to the assignee as the insured holder on the records of Rural Development. The name and address of the assignee will be recorded by Rural Development exactly as they appear on Form RD 471-7. (5) Payments transmitted by Rural Development on or after the acknowledgment date shown on Form RD 471-7 will be transmitted to the assignee. The Director, Finance Office, will give notice to the assignor and the assignee of any payments transmitted by Rural Development to the assignor before the acknowledgment date and after either the date of sale, or the date of the statement of account, whichever is earlier. However, Rural Development will not be liable for any failure to give such notice. (c) Assignment of insured notes to Rural Development —(1) Assignment at the request of the holder. For assignment of an insured note to Rural Development during the option period at the request of the holder, the following procedure will apply: (i) The holder will endorse the insured note as follows: “Pay to the order of the United States of America. Without recourse.” The holder will then deliver the endorsed note, together with the insurance agreement, to the Director, Finance Office. (ii) On receipt of the endorsed note with the accompanying insurance agreement, the Director, Finance Office, will acknowledge receipt of the note and process payment to the assignor of the par value of the note as of the date of the Treasury check. (2) Assignment at the request of Rural Development. The procedure for assigning an insured note at the request of Rural Development will be the same as that prescribed in paragraph (c)(1) of this section, except that the Director, Finance Office, will send a written request to the holder requiring that the insured note be assigned to Rural Development and delivered to the Director, Finance Office, with the accompanying insurance agreement. The Director, Finance Office, will explain that the assignment is necessary to enable Rural Development to service the account properly and will give the holder all necessary information as to the manner of making the assignment and the amount to be paid by Rural Development. (d) Replacement of called or fully paid notes. Certain insurance endorsements contain a clause or rider providing for a replacement note when the original note is paid in full, or is called by Rural Development. This provision applies to loans sold for a fixed period of 10 years or longer for loans sold on or after December 1, 1969, and a fixed period of 15 years or longer for loans sold before December 1, 1969. If a note is paid in full or called by the Government and the lender is entitled to a replacement note, the lender may obtain a certificate of beneficial ownership in lieu of the replacement note. The certificate will carry the rates and terms applicable to the replacement note. (e) Death of a noteholder. The Finance Office should be notified of the death of a holder of an insured note. The following documents should be forwarded with the notice if available: (1) A certified copy of the death certificate. (2) A certified copy of the court order appointing the Administrator or Executor (include the mailing address of the Administrator or Executor). The Finance Office will notify the person submitting the notice and/or documentation if any other records or documents are needed, and will provide any additional instructions that are needed. Legal opinions and advice will be obtained by the Finance Office as needed from the Regional Attorney." 7:7:12.1.2.7.11.5.1.9,7,Agriculture,XVIII,H,1901,PART 1901—PROGRAM-RELATED INSTRUCTIONS,K,Subpart K—Certificates of Beneficial Ownership and Insured Notes,,"§ 1901.509 Loss, theft, destruction, mutilation, or defacement of insured notes, insurance contracts, and certificates of beneficial ownership.",RHS,,,"[41 FR 51799, Nov. 24, 1976, as amended at 80 FR 9869, Feb. 24, 2015]","(a) Block sale insurance contracts. The Associate Administrator is authorized in connection with block sale insurance contracts to authorize the Rural Development's fiscal agent to establish requirements for issuance of a replacement insurance contract when the original issued by the Federal Reserve Bank of New York (Rural Development's fiscal agent) is lost, stolen, destroyed, mutilated, or defaced. When a block sale insurance contract is lost, stolen, or destroyed, a duplicate may be issued to the registered holder upon receipt of an acceptable certificate of loss and an indemnity bond without surety. The certificate of loss should include the legal name and present address of the owner and address when issued, if different from the present address; the capacity of person certifying, if other than owner; the identity of the insurance contract, including series number, contract number, denomination, issue date, and form of inscription of registry, and the full statement of circumstances of loss. All available portions of an insurance contract that is mutilated, defaced, or partially destroyed should be submitted to the Federal Reserve Bank of New York (Rural Development's fiscal agent) for determination as to whether a duplicate insurance contract can be issued without a certificate of loss and posting of an indemnity bond. In the event the holder of a block sales insurance contract obtains possession of the underlying notes, the requirements of paragraph (b) of this section apply. (b) Notes and certificates of beneficial ownership sold by County Office and Finance Office. The Director, or the insured loan officer of the Finance Office, is authorized on behalf of the Government, in connection with insured notes or certificates of beneficial ownership sold through the Rural Development Finance Office to require indemnity bonds from a noteholder when a note or certificate is lost, stolen, destroyed, mutilated, or defaced while in the custody of the holder or his designee. When a note or certificate of beneficial ownership is lost, stolen, or destroyed while in the custody of the holder or his designee, the following will apply: (1) A certificate of loss should be filed with Rural Development Finance Office. The certificate should include: (i) Legal name and present address of owner when issued, if different from present address. (ii) Capacity of person certifying, if other than the owner. (iii) Identity of the note or certificate of beneficial ownership, including the name and Rural Development case number of the maker thereof, issue date, interest rate of obligation, face amount of note or certificate of beneficial ownership, and a full description of any assignment, endorsement, or any other writing. (iv) A full statement of circumstances of the loss, theft, or destruction of the note. (2) An indemnity bond in the amount of the unpaid principal and interest will be required except in the following instances: (i) Substantially the entire note or certificate of beneficial ownership is presented and surrendered by the owner or holder, and the Director, Finance Office, is satisfied as to the identity of the instruments and that any missing portions are not sufficient to form the basis of a valid claim against the United States or the borrower; or (ii) The owner or holder is the United States, a Federal Reserve Bank, a Federal Government Corporation, a State or territory, or the District of Columbia. (3) An indemnity bond without surety will be provided in the following cases: (i) Cases involving registered unassigned obligations held by banks, trust companies, savings and loan associations, or companies holding certificates of authority from Secretary of the Treasury as acceptable sureties on Federal Bonds (companies listed on Treasury Department Circular 570) where the financial responsibilities of such claimants are well known or readily ascertainable. (ii) Cases involving registered unassigned obligations where the evidence reasonably justifies a conclusion that the obligations were destroyed and the unpaid principal and interest amount does not exceed $1,000. (4) An indemnity posted with a qualified surety is required in all cases involving registered unassigned obligations other than those cited in paragraphs (b)(2)(i), (b)(2)(ii), (b)(3)(i) and (b)(3)(ii) of this section. A qualified surety is a company holding a certificate of authority from the Secretary of the Treasury as acceptable sureties on Federal Bonds, and listed in Treasury Department Circular 570. (5) All indemnity bonds for notes must be payable to both the borrower and Rural Development. All indemnity bonds for certificates of beneficial ownership must be payable to Rural Development. The bond may be posted at the time the note or certificate of beneficial ownership becomes eligible for repurchase by Rural Development. If the holder desires to continue to hold the note for the life of the note, an indemnity bond will not be required. (6) An assignment of the note or certificate of beneficial ownership shall be made to the United States of America, acting through Rural Development, United States Department of Agriculture. An acceptable form of assignment is available from the Director, Finance Office. (c) Other cases. Cases involving bearer obligations and other cases not discussed in this section will be forwarded to the Director, Finance Office, for requirements. (d) Replacement of notes. Rural Development will not attempt to obtain replacement notes from borrowers." 7:7:12.1.2.7.12.1.1.1,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.1 General.,RHS,,,"[70 FR 59225, Oct. 12, 2005, as amended at 80 FR 9869, Feb. 24, 2015]","This subpart prescribes the policies and procedures in establishing and using supervised bank accounts, and in placing Multi-Family Housing (MFH) reserve accounts in supervised bank accounts. 7 CFR part 2018, subpart D, provides the procedures Servicing Officials should follow in ordering loan and grant disbursements. This subpart is inapplicable to Farm Service Agency, Farm Loan Programs. (a) Borrowers referred to in this subpart include both loan and grant recipients. They are referred to as “depositors” in the deposit agreements hereinafter described. References herein and in deposit agreements to “other lenders” include lenders and grantors other than Rural Development. (b) Banks and savings associations referred to in this subpart are those in which deposits are insured by the FDIC. (c) Credit unions referred to in this subpart are those in which deposits are insured by the NCUA. (d) Financial institutions as referred to in this subpart include banks, savings associations, and credit unions which are covered by the proper insurance coverage cited in paragraphs (b) and (c) of this section. (e) Supervised bank accounts referred to in this subpart are bank, savings association, or credit union accounts established through deposit agreements entered into between the borrower, the United States of America acting through Rural Development, and the Financial Institution on Form RD 402-1, “Deposit Agreement”. (f) Form RD 402-1 provides for the deposit of funds in a supervised bank account to ensure the performance of the borrower's obligation to Rural Development in connection with a loan and/or grant. (g) “Interest-Bearing Deposit Agreement” (Exhibit B of this subpart), provides for the deposit of loan or grant funds that are not required for immediate disbursement in specified interest-bearing deposits, and it is executed in conjunction with Form RD 402-1. (h) Servicing officials referred to in this instruction include county supervisors, district directors, local supervisors, area supervisors, and National Office grant program managers. (i) Automated systems referred to in this instruction refers to the loan accounting systems; e.g., Program Loan Accounting System, Automated Multi-Housing Accounting System, and Dedicated Loan Origination System, from which loan and grant disbursements are ordered. (j) This subpart includes the National Office directly servicing a grant recipient or recipient of cooperative agreement funds." 7:7:12.1.2.7.12.1.1.10,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.10 Withdrawals.,RHS,,,"[46 FR 36106, July 14, 1981, as amended at 54 FR 47959, Nov. 20, 1989; 70 FR 59227, Oct. 12, 2005; 80 FR 9870, Feb. 24, 2015]","(a) The Servicing Official will not countersign checks on the supervised bank account for the use of funds unless the funds deposited by the borrower from other sources were cash deposits, checks which the Servicing Official knows to be good, or deposited checks which have cleared. (b) Withdrawals of funds deposited under the applicable deposit agreement are permitted only by order of the borrower and countersignature of authorized Rural Development personnel, or upon written demand on the financial institution by the State Director. (c) Upon withdrawal or maturity of interest-bearing accounts established through the use of an Interest-Bearing Deposit Agreement, such funds will be credited to the supervised bank account established through the use of Form RD 402-1. (d) The issuance of checks on the supervised bank account will be kept to the minimum possible without defeating the purpose of such accounts. When major items of capital goods are being purchased, or a limited number of relatively costly items of operating expenses are being paid, or when debts are being refinanced, the checks will be drawn to the vendors or creditors. If minor capital items are being purchased or numerous items of operating and family living expenses are involved as in connection with a monthly budget, a check may be drawn to the borrower to provide the funds to meet such costs. (1) A check will be issued payable to the appropriate payee but will never be issued to “cash.” The purpose of the expenditure will be clearly shown on Form FmHA or its successor agency under Public Law 103-354 402-2 and indicated on the fact of the check. When checks are drawn in favor of the borrower to cover items too numerous to identify, the expenditure will be identified on the check, as “miscellaneous.” (2) Ordinarily, a check will be countersigned before it is delivered to the payee. However, in justifiable circumstances, such as when excessive travel on the part of the borrower or Servicing Official would be involved, or purchase would be prevented, and the borrower can be relied upon to select goods and services in accordance with the plans, a check may be delivered to the payee by the borrower before being countersigned. (i) When a check is to be delivered to the payee before being countersigned, the Servicing Official must make it clear to the borrower and to the payee, if possible, that the check will be countersigned only if the quantity and quality of items purchased are in accordance with approved plans. (ii) Checks delivered to the payee before counter-signature will bear the following legend in addition to the legend for countersignature: Valid only upon countersignature of Rural Development.” (iii) The check must be presented by the payee or a representative to the Rural Development Servicing Office for the required countersignature. (iv) Such check must be accompanied by a bill of sale, invoice, or receipt signed by the borrower identifying the nature and cost of goods or services purchased, or similar information must be indicated on the check. (3) For real estate loans or grants, whether the check is delivered to the payee before or after countersignature, the number and date of the check will be inserted on all bills of sale, invoices, receipts, and itemized statements for materials, equipment, and services. (4) Bills of sale, invoices, receipts, or itemized statements may be returned to the borrower with the canceled check for the payment of the bill. (5) Checks to be drawn on a supervised bank account will bear the legend: • “Countersigned,” not as co-maker or endorser. (Title) Rural Development" 7:7:12.1.2.7.12.1.1.11,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.11 Servicing Office records.,RHS,,,"[70 FR 59228, Oct. 12, 2005]",A record of funds deposited in a supervised bank account will be maintained on Form RD 402-2 in accordance with the Forms Manual Insert. The record of funds provided for operating purposes by another creditor or grantor will be on a separate Form RD 402-2 so that they can be clearly identified. 7:7:12.1.2.7.12.1.1.12,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§§ 1902.12-1902.13 [Reserved],RHS,,,, 7:7:12.1.2.7.12.1.1.13,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.14 Reconciliation of accounts.,RHS,,,"[70 FR 59228, Oct. 12, 2005]","(a) A checking account statement will be obtained periodically in accordance with established practices in the area. If the checking statement does not include sufficient information to reconcile the account (the name of the payee or the check number and the amount of each check; i.e., a negotiable demand draft drawn on a financial institution), the original cancelled check or either a copy or other reasonable facsimile of the cancelled check must be provided to the Servicing Office with the statement. Checking account statements will be reconciled promptly with Servicing Office records. The person making the reconciliation will initial the record and indicate the date of the action. (b) All checking account statements and, if necessary, original cancelled checks or either a copy or other reasonable facsimile of the cancelled checks will be forwarded immediately to the borrower when bank statements and Servicing Office records are in agreement. If a transmittal is used, Form RD 140-4, “Transmittal of Documents”, is prescribed for that purpose. (c) If the financial institution did not return the original cancelled check(s) to the Agency with the statements, and Rural Development has a need for the original cancelled check(s), the financial institution, upon request by the Agency, will furnish to the Agency the requested original cancelled check(s) or a certified copy or other reasonable certified facsimile of the cancelled check(s) and will provide this service to Rural Development with no fees being assessed the Agency or the Depositor's account for the service." 7:7:12.1.2.7.12.1.1.14,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.15 Closing accounts.,RHS,,,"[46 FR 36106, July 14, 1981, as amended at 53 FR 231, Jan. 6, 1988; 54 FR 47196, Nov. 13, 1989; 66 FR 1569, Jan. 9, 2001; 70 FR 59228, Oct. 12, 2005; 80 FR 9870, Feb. 24, 2015]","When Rural Development loan or grant funds and those of any other lender or grantor have all been properly expended or withdrawn, Form RD 402-6 may be used to give Rural Development's consent (and of another lender or grantor, if involved) to close the supervised bank account in the following situations: (a) When Rural Development loan funds in the supervised bank account of a borrower have been reduced to $100 or less, and a check for the unexpended balance has been issued to the borrower to be used for authorized purposes. (b) For all loan accounts, after completion of authorized loan funds expenditures, and after promptly refunding any remaining unexpended loan funds on the borrower's loan account with Rural Development or another lender, as appropriate. (c) Promptly upon death of a borrower, except when the loan is being continued with a joint debtor, when a borrower is in default and it is determined that no further assistance will be given, or when a borrower is no longer classified as “active.” (1) Deceased borrowers. (i) Ordinarily, upon notice of the death of a borrower, the District Director or the County Supervisor will request the State Director to make demand upon the bank for the balance on deposit and apply all the balance after payment of any bank charges to the borrower's Rural Development indebtedness. When the State Director approves continuation with a survivor, the supervised bank account of deceased borrower may be continued with a remaining joint debtor who is liable for the loan and agrees to use the unexpended funds as planned, provided: (i) Ordinarily, upon notice of the death of a borrower, the Servicing Official will request the State Director to make demand upon the bank for the balance on deposit and apply all the balance after payment of any bank charges to the borrower's Rural Development indebtedness. When the State Director approves continuation with a survivor, the supervised bank account of a deceased borrower may be continued with a remaining joint debtor who is liable for the loan and agrees to use the unexpended funds as planned, provided: (A) The account is a joint survivorship supervised bank account, or (B) If not a joint survivorship account, the financial institution will agree to permit the addition of the surviving joint debtor's name to the existing signature card and the appropriate Deposit Agreement and continue to disburse checks out of the existing account upon Rural Development's countersignature and the joint debtor's signature in place of the deceased borrower, or (C) The financial institution will permit the State Director to withdraw the balance from the existing supervised bank account with a check jointly payable to the Rural Development and the surviving joint debtor and deposit the money in a new supervised bank account with a surviving joint debtor, and will disburse checks from this new account upon the signature of such survivor and the countersignature of an authorized Rural Development official. (ii) The State Director, before applying the balance remaining in the supervised bank account to the Rural Development indebtedness, is authorized upon approval by the Office of the General Counsel (OGC) to refund any unobligated balances of funds from other lenders to the Rural Development borrower for specific operating purposes in accordance with subordination agreements or other arrangements between Rural Development, the lender and the borrower. (iii) The State Director, upon the recommendation of an authorized representative of the estate of the deceased borrower and the approval of the OGC, is authorized to approve the use of deposited funds for the payment of commitments for goods delivered or services performed in accordance with the deceased borrower's plans approved by Rural Development. (2) Borrowers in default. Whenever it is impossible or impractical to obtain a signed check from a borrower whose supervised bank account is to be closed, the Servicing Official will request the State Director to make demand upon the financial institution for the balance on deposit in the borrower's supervised bank account for application as appropriate: (i) To the borrower's Rural Development indebtedness, or (ii) As refunds of any unobligated advance provided by other lenders which were deposited in the account, or (iii) For the return of Rural Development grant funds in accordance with 7 CFR part 1951, subpart B or (iv) For the return of grant funds to other grantors. (3) Inactive borrowers. An inactive borrower is one whose loan has not been paid in full, but is no longer classified as “active.” (4) Paid up borrowers. A paid-up borrower is one who has a balance remaining in the supervised bank account and has repaid the entire indebtedness to Rural Development and has properly expended all funds advanced by other lenders. In such cases the Servicing Official will: (i) Notify the borrower in writing that the interests in the account of Rural Development have been terminated, and (ii) Inform the borrower of the balance remaining in the supervised bank account." 7:7:12.1.2.7.12.1.1.15,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.16 Request for withdrawals by State Director.,RHS,,,"[46 FR 36106, July 14, 1981, as amended at 80 FR 9870, Feb. 24, 2015]","When the State Director is requested to make written demand upon the financial institution for the balance on deposit in the supervised bank account, or any part thereof, the request will be accompanied by the following information. (a) Name of borrower as it appears on the applicable Deposit Agreement. (b) Name and location of financial institution. (c) Amount to be withdrawn for refund to another lender of any balance that may remain of funds received by the borrower from such lender as a loan or grant, or under a subordination agreement or other arrangement between the Rural Development, the other lender, and the borrower. (d) Amount to be withdrawn, excluding any service charges, for a refund due to Rural Development. (e) Other pertinent information including reasons for the withdrawal." 7:7:12.1.2.7.12.1.1.16,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§§ 1902.17-1902.49 [Reserved],RHS,,,, 7:7:12.1.2.7.12.1.1.17,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.50 OMB control number.,RHS,,,"[70 FR 59228, Oct. 12, 2005]",The reporting and recordkeeping requirements contained in this regulation have been approved by the OMB and have been assigned OMB Control Number 0575-0158. 7:7:12.1.2.7.12.1.1.2,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.2 Policies concerning disbursement of funds.,RHS,,,"[70 FR 59225, Oct. 12, 2005]","(a) Generally, loan and grant disbursements may be requested on an as needed basis, thereby reducing the need for supervised bank accounts. For all construction loans and those loans using multiple advances, only the actual amount to be disbursed at loan closing will be requested through the automated systems. Subsequent disbursements will be ordered as needed. However, supervised bank accounts may be used in certain circumstances. For example: (1) When a construction loan is made and the construction is substantially completed, but a small amount is being withheld pending completion of landscaping or some similar item. In this case, funds not disbursed may be placed in a supervised bank account for future disbursement as appropriate. (2) When a large number of checks will be issued in the construction of a dwelling or other development. In such cases, loan and grant disbursements will be requested in accordance with 7 CFR part 2018, subpart D as necessary, deposited in a supervised bank account, and disbursed as necessary to suppliers, sub-contractors, etc. (3) Association loan and grant funds made on a multiple advance basis may be deposited in a supervised bank account when required by State statutes or when determined necessary by the loan approval official. (4) Supervised bank accounts may be used when needed as defined in paragraph (a)(5) of this section to ensure the correct expenditures of all or a part of loan and grant funds, borrower contributions, and borrower income. Such accounts will be limited in amount and duration to the extent feasible through the prudent disbursement of funds and the prompt termination of the interests of Rural Development and other lenders when the accounts are no longer required. (5) When it is determined by the Servicing Official that special supervision is needed in the management of the borrower's finances, funds may be deposited in a supervised bank account. This supervisory technique will be used for a temporary period to help the borrower learn to properly manage his/her finances. Such a period will not exceed 1 year unless extended by the Servicing Official. (b) Program instructions provide information as to the type of note to be utilized and the method of handling advances and the interest accrued. (c) The debt instruments executed at the time of loan closing constitute an obligation on the part of the Government to disburse all funds at one time or in multiple advances, provided the funds are for purposes authorized by the Government at the time of loan closing. This obligatory commitment takes priority over any intervening liens or advances by other creditors, regardless of the provisions of the State laws involved." 7:7:12.1.2.7.12.1.1.3,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.3 Procedures to follow in fund disbursement.,RHS,,,"[46 FR 36106, July 14, 1981, as amended at 53 FR 26588, July 14, 1988; 53 FR 35670, Sept. 14, 1988; 54 FR 39727, Sept. 28, 1989; 70 FR 59226, Oct. 12, 2005]","(a) The Servicing Official will determine during loan approval the amount(s) of loan or grant disbursement(s)—full or partial—and will process the request to the appropriate automated system in accordance with 7 CFR part 2018, subpart D. (b) When Treasury check(s) are delivered to the Servicing Official, the Servicing Official will make sure that the name of the borrower and the amount(s) of check(s) coincide with the request on file. The Servicing Official should be sure that the check is properly endorsed to ensure payment to the intended recipient. Examples of such restrictive endorsements are: (1) “For Deposit only to Account No. (Number of Construction Account) of ( Name of Borrower ) in ( Name of Financial Institution ).” (2) “Pay to the order of (3rd party payee)”—(Contractor, Developer, Sub-Contractor, Building Supply House, etc.) for the purpose of __________. (c) When necessary, and only under the circumstances listed in § 1902.2, the Servicing Official will establish, or cause to be established, a supervised bank account. Funds deposited in a supervised bank account are to be recorded and accounted for on Form RD 402-2, “Statement of Deposits and Withdrawals”." 7:7:12.1.2.7.12.1.1.4,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.4 Establishing MFH reserve accounts in a supervised bank account.,RHS,,,"[59 FR 3778, Jan. 27, 1994, as amended at 69 FR 69104, Nov. 26, 2004; 70 FR 59226, Oct. 12, 2005; 70 FR 73347, Dec. 12, 2005; 80 FR 9869, Feb. 24, 2015]","(a) General requirements. All MFH borrowers required to maintain reserve accounts must place the reserve accounts in a supervised bank account(s) which meets the following requirements: (1) Countersignature requirements. The reserve account must require that any funds withdrawn be countersigned by an authorized government official. (2) Restrictions on collateral. The financial institution holding the reserve account must ensure that the funds are not pledged or taken as security without the Agency's prior consent. (3) Interest bearing. The reserve account funds are encouraged to be maintained in an interest-bearing account. The “Interest-Bearing Deposit Agreement” set out in Exhibit B of this subpart is not required to be used for reserve accounts. (4) Restricted investments. Reserve funds must be placed in investments authorized in 7 CFR part 3560, subpart G. The authorized investments are deemed to be of acceptable risk such that the potential for any loss is minimal. (5) Financial institutions. The reserve account must be maintained in authorized financial institutions set out in 7 CFR part 3560, subpart G; e.g., banks, savings associations, credit unions, brokerage firms, mutual funds. Generally, any financial institution may be used provided invested or deposited funds are insured to protect against theft and dishonesty. The reserve account funds need not be Federally insured, but must be otherwise covered by non-Federal insurance against theft and dishonesty. (6) Rules where multiple projects are involved. A reserve account(s) must be maintained for each borrower. When a borrower owns multiple projects, reserve accounts may be established for each project. A single reserve account may also be established by a borrower owning multiple projects, provided the conditions set out in 7 CFR part 3560. subpart G are met. (7) Term. Reserve accounts are expected to be kept for the full term of the loan. (b) Deposits and account activity statements —(1) Deposits. Generally, Rural Development will not require the review or approval of deposits or the use of Form RD 402-1 or 402-2. (2) Account activity statements. Generally, Rural Development will not monitor or reconcile the reserve account activity statements issued periodically by the financial institutions holding the funds. Rural Development will monitor reserve account levels through budget reports, audits, and Agency reserve tracking systems. If disputes arise or the borrower is in violation of Agency regulations, the Agency may require account activity statements. When account activity statements are sought, it will normally be sufficient to obtain the statement which reflects balances as of the last activity statement ending period. Form RD 402-2 is not required to be used." 7:7:12.1.2.7.12.1.1.5,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.5 [Reserved],RHS,,,, 7:7:12.1.2.7.12.1.1.6,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.6 Establishing supervised bank accounts.,RHS,,,"[46 FR 36106, July 14, 1981, as amended at 53 FR 231, Jan. 6, 1988; 70 FR 59227, Oct. 12, 2005; 77 FR 41258, July 13, 2012]","(a) Each borrower will be given an opportunity to choose the financial institution in which the supervised bank account will be established, provided the financial institution is a member of the FDIC or NCUA, as applicable. (b) When accounts are established, it should be determined that: (1) The financial institution is fully informed concerning the provisions of the applicable deposit agreement, (2) Agreements are reached with respect to the services to be provided by the financial institution including the frequency and method of transmittal of checking account statements, and (3) An agreement is reached with the financial institution regarding the place where the counter-signature will be on the checks. (c) When possible, Servicing Officials will make arrangements with financial institutions to waive service charges in connection with supervised bank accounts. However, there is no objection to the payment by the borrower of a reasonable charge for such service. (d) For each borrower, if the amount of any loan and grant funds, plus any borrower contributions and funds from other sources to be deposited in the supervised bank account will exceed the maximum amount insurable by the Federal government, the financial institution will be required to pledge collateral for the excess over that limit before the deposit is made (see § 1902.7 of this subpart). If the supervised bank account is a joint account, any amount over the maximum amount insurable by the federal government must be collateralized. (e) Only one supervised bank account will be established for any borrower regardless of the amount or source of funds, except for Rural Rental Housing loans where separate accounts will be established for each project. (f) When a supervised bank account is established, an original and two copies of the applicable Deposit Agreement and the Interest-Bearing Deposit Agreement (Exhibit B of this subpart), when applicable, will be executed by the borrower, the financial institution, and a Servicing Office employee. The original will be retained in the borrower's case file, one executed copy will be delivered to the financial institution and one executed copy to the borrower. An extra copy of the Interest-Bearing Deposit Agreement, when applicable, will be prepared and attached to the certificate, passbook, or other evidence of deposit representing the interest-bearing deposit." 7:7:12.1.2.7.12.1.1.7,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.7 Pledging collateral for deposit of funds in supervised bank accounts.,RHS,,,"[46 FR 36106, July 14, 1981, as amended at 53 FR 231, Jan. 6, 1988; 53 FR 24437, June 29, 1988; 56 FR 50648, Oct. 8, 1991; 70 FR 59227, Oct. 12, 2005; 77 FR 41258, July 13, 2012]","(a) Funds in excess of the maximum amount insurable by the Federal government, per financial institution, deposited for borrowers in supervised bank accounts, must be secured by pledging acceptable collateral with the Federal Reserve Bank (FRB) in an amount not less than the excess. If the supervised bank account is a joint account, any amount over the maximum amount insurable by the federal government must be collateralized. (b) As soon as it is determined that the loan will be approved and the applicant has selected or tentatively selected a financial institution for the supervised bank account, the Servicing Official will contact the financial institution to determine: (1) That the financial institution selected is insured by the FDIC (banks and savings associations) or NCUA (credit unions). (2) Whether the financial institution is willing to pledge collateral with the FRB under 31 CFR part 202 (Treasury Circular 176) to the extent necessary to secure the amount of funds being deposited in excess of the FDIC or NCUA insurance limit. (3) If the financial institution is not a member of the Federal Reserve System, it will be necessary for the financial institution to pledge the securities with a correspondent bank who is a member of the System. The correspondent bank should contact the FRB informing them they are holding securities pledged for the supervised bank account under 31 CFR part 202 (Treasury Circular 176). (c) If the financial institution agrees to pledge collateral, the Servicing Official should complete RD Form Letter 1902-A-2, “Designated Financial Institution—Collateral Pledge”, in an original and two copies: The original for the National Office, Policy and Analysis Division; the first copy for the State Office; and the second copy for the Servicing Official. The Rural Development Form Letter 1902-A-2 should be forwarded to the National Office, Policy and Analysis Division, at least 30 days before the date of loan closing. (d) The National Office, Policy and Analysis Division, will arrange for the financial institution under its designation as a depository and financial agent of the U.S. Government to pledge the requested collateral. (e) If, two days before loan closing, the local Rural Development office which requested the collateral has not received notification from the National Office, Policy and Analysis Division, that collateral has been pledged, contact should be made with the financial institution to ascertain whether they have pledged collateral with their local FRB under 31 CFR part 202 (Treasury Circular 176). If the financial institution has pledged collateral, the local Rural Development office should contact the National Office, Policy and Analysis Division, who will follow-up with the local FRB concerning the collateral. (f) When the amount of deposit in the supervised bank account has been reduced to a point where the financial institution desires part or all of the collateral released, it should contact the National Office, Policy and Analysis Division. The local Rural Development office will be contacted for release authorization. The authorization release will be made through the local FRB, with notification to the financial institution. The local Rural Development office may also request release through the National Office, Policy and Analysis Division." 7:7:12.1.2.7.12.1.1.8,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.8 Authority to establish and administer supervised bank accounts.,RHS,,,"[70 FR 59227, Oct. 12, 2005]","Servicing Officials are authorized to establish supervised bank accounts, deposit loan checks and other funds, countersign checks, close accounts, and execute all forms in connection with supervised bank account transactions and redelegate this authority to a person under their supervision who is considered capable of exercising such authority. State Directors will make written demand upon the bank for withdrawals outlined in § 1902.16." 7:7:12.1.2.7.12.1.1.9,7,Agriculture,XVIII,H,1902,PART 1902—SUPERVISED BANK ACCOUNTS,A,"Subpart A—Supervised Bank Accounts of Loan, Grant, and Other Funds",,§ 1902.9 Deposits.,RHS,,,"[46 FR 36106, July 14, 1981, as amended at 70 FR 59227, Oct. 12, 2005; 80 FR 9869, Feb. 24, 2015]","(a) Deposit by Rural Development personnel. (1) Checks made payable solely to the Federal Government or any Agency thereof, and a joint check when the Treasurer of the United States is a joint payee, may not be deposited in a supervised bank account. (2) Rural Development personnel will accept funds for deposit in a borrower's supervised bank account ONLY in the form of: A check or money order endorsed by the borrower “For Deposit Only;” a check drawn to the order of the financial institution in which the funds are to be deposited; a loan check drawn on the U.S. Treasury; or a Rural Development electronic funds transfer disbursement. (i) A joint check that is payable to the borrower and Rural Development will be endorsed by the Servicing Official as provided in 7 CFR part 1951, subpart B, Exhibit B, section 4. (ii) Ordinarily, when deposits are made from funds which are received as the result of consent or subordination agreements or assignments of income, the check should be drawn to the order of the financial institution in which the supervised bank account is established or jointly to the order of the borrower and Rural Development. All such checks should be delivered or mailed to the Servicing Office. (3) If direct or insured loan funds or borrower contributions are to be deposited in a supervised bank account, such funds will be deposited on the date of loan closing after it has been determined that the loan can be closed. However, if it is impossible to deposit the funds on the day the loan is closed due to reasons such as distance from the financial institution or banking hours, the funds will be deposited on the first banking day following the date of loan closing. (4) Grant funds will be deposited when such funds are delivered. (5) When funds from any source in the form of cash, check, or money order are deposited by Rural Development personnel in a supervised bank account, a deposit slip will be prepared in an original and two copies with distribution as follows: Original to the financial institution, one copy to the borrower, and one copy for the borrower's case folder. The name of the borrower, the sources of funds, “Subject to Rural Development Countersignature” and, if applicable, the account number, will be entered on each deposit slip. (6) A loan or grant check drawn on the U.S. Treasury may be deposited in a supervised bank account without endorsement by the borrower when it will facilitate delivery of the check and is acceptable to the financial institution. The borrower will be notified immediately of any deposit made and will be furnished a copy of the deposit slip. When a deposit of this nature is made, the following endorsement will be used: For deposit only in the supervised bank account of ( name of borrower ) in the ( name of financial institution and address when necessary for identification ) pursuant to Deposit Agreement dated ________. For deposit only in the supervised bank account of ( name of borrower ) in the ( name of financial institution and address when necessary for identification ) pursuant to Deposit Agreement dated ________. (7) Accounts established through the use of Interest-Bearing Deposit Agreement will be in the name of the depositor and the Government. (b) Deposits by borrowers. Funds in the form of cash, check, or money order may be deposited in the supervised bank account by the borrower if authorized by Rural Development, provided the financial institution has agreed that when a deposit is made to the account by other than Rural Development personnel, the financial institution will promptly deliver or mail a copy of the deposit slip to the Rural Development Servicing Office. (1) A loan or grant check drawn on the U.S. Treasury may be deposited in a supervised bank account by a borrower, provided the following endorsement is used and is inserted thereon prior to delivery to the borrower for signature: For deposit only in my supervised bank account in the ( name of financial institution and address when necessary for identification ) pursuant to Deposit Agreement dated ________. For deposit only in my supervised bank account in the ( name of financial institution and address when necessary for identification ) pursuant to Deposit Agreement dated ________. (2) Funds other than loan or grant funds may be deposited by the borrower in those exceptional instances where an agreement is reached between the Servicing Official and the borrower, whereby the borrower will make deposits of income from any source directly into the supervised bank account. In such instances the borrower will be instructed to prepare the deposit slip in the manner described in § 1902.9 (a)(5) of this subpart." 7:7:12.1.2.7.16.1.1.1,7,Agriculture,XVIII,H,1924,PART 1924—CONSTRUCTION AND REPAIR,A,Subpart A—Planning and Performing Construction and Other Development,,§ 1924.1 Purpose.,RHS,,,"[53 FR 35679, Sept. 14, 1988, as amended at 72 FR 64122, Nov. 15, 2007]","This subpart prescribes the basic Agency policies, methods, and responsibilities in the planning and performing of construction and other development work for insured Rural Housing (RH), single unit Labor Housing (LH). It also provides supplemental requirements for Rural Rental Housing (RRH) loans, Rural Cooperative Housing (RCH) loans, multi-unit (LH) loans and grants, and Rural Housing Site (RHS) loans. This subpart is inapplicable to Farm Service Agency, Farm Loan Programs."