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111 rows where part_number = 1951 and title_number = 7 sorted by section_id
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| 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 |
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| 7:7:14.1.1.1.2.1.1.1 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.1 Purpose. | RHS | [52 FR 26134, July 13, 1987, as amended at 69 FR 69105, Nov. 26, 2004; 72 FR 55017, Sept. 28, 2007; 72 FR 64122, Nov. 15, 2007] | This subpart sets forth the policies and procedures to use in servicingaccounts. This subpart also applies to Rural Rental Housing Loan (RRH), Rural Cooperative Housing Loan (RCH), Labor Housing Loan (LH), Rural Housing Site Loan (RHS), and Site Option Loan (SO) accounts not covered under the Predetermined Amortization Schedule System (PASS). Loans on PASS will be administered under 7 CFR part 3560, subpart I. Cases involving unauthorized assistance will be serviced under Subparts L and N of this part. Cases involving graduation of borrowers to other sources of credit will be serviced under Subpart F of this part. This subpart does not apply to Water and Waste Programs of the Rural Utilities Service, Watershed loans, or Resource Conservation and Development loans, which are serviced under part 1782 of this title. In addition, this subpart is inapplicable to Farm Service Agency, Farm Loan Programs. | |||
| 7:7:14.1.1.1.2.1.1.10 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.12 Changes in the application of loan payments. | RHS | [50 FR 45764, Nov. 1, 1985, as amended at 54 FR 18883, May 3, 1989] | (a) Authority to change payments. County Supervisors and Assistant County Supervisors are hereby authorized to approve requests for changes in the application of payments between loan accounts when payments have been applied in error and such requests conform to the policies expressed in this Subpart. However, no change will be made if the payment applied in error resulted in the payment in full of any Agency loan and the canceled note or notes have been returned to the borrower. (b) Form RD 1951-7, “Request for Change in Application.” Requests for changes in application of payments will be made on Form RD 1951-7. For requests which County Supervisors or Assistant County Supervisors are authorized to approve, the County Supervisor or Assistant County Supervisor will sign the original of Form RD 1951-7 and forward it to the Finance Office. The Finance Office will send Form RD 451-26 to the County Office when the change is made on Finance Office records. (c) Changes by the Finance Office in application of remittances. (1) When reapplication of collection is made by the Finance Office Form RD 451-8, “Journal Voucher for Loan Account Adjustments,” will be prepared. Form RD 451-26 will be forwarded to the County Office to show the reapplication. (2) When necessary, the Finance Office will correct Form RD 451-2 as prepared by the County Office. | |||
| 7:7:14.1.1.1.2.1.1.11 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.13 Overpayments and refunds. | RHS | (a) The Finance Office will mail any overpayment refund check to the County Supervisor, who will verify that the refund is due before delivering the check. (b) Borrower requests for overpayment refunds must be in writing. Borrowers will be discouraged from requesting refunds when the County Office records show that a refund is not due, however, the County Supervisor will forward any request to the Finance Office. Finance Office computations will control in determining the amount of any refund. (c) Underpayments or overpayments of less than $10 will not be collected or refunded (except as provided in paragraph (b) of this section) since the expense of processing the action would be more than the amount involved. | ||||
| 7:7:14.1.1.1.2.1.1.12 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.14 Recoverable and nonrecoverable cost charges. | RHS | (a) The County Supervisor will: (1) Prepare vouchers for recoverable and nonrecoverable cost charges according to the applicable instruction for the type of advance being made. (“Recoverable costs” is defined in § 1951.10(a) of this subpart). (2) If a recoverable cost, show on the voucher the fund code to which the advance is to be charged. (3) If the cost item relates to security for more than one type of account, show the code for the loan secured by the earliest promissory note (if lien secures more than one note). (b) The Finance Office will forward Form RD 451-26, to the County Office when the recoverable cost charge is processed. | ||||
| 7:7:14.1.1.1.2.1.1.13 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.15 Return of paid-in-full or satisfied notes to borrower. | RHS | [50 FR 45764, Nov. 1, 1985, as amended at 51 FR 45432, Dec. 18, 1986; 53 FR 13100, Apr. 21, 1988; 56 FR 10147, Mar. 11, 1991] | (a) Notes not held in County Office. When the original of the note is not held in the County Office the County Supervisor will request the Finance Office to acquire and forward the note to the County Office. (b) Return of notes after collection. When a note (or loan-type account) evidencing an OL, EM, EE, EO, special livestock (SL), SW loan coded “24”, or other production-type loan has been satisfied by payment in full, the County Supervisor will examine the borrower's records in the County Office and determine that the account has been satisfied before delivering the note to the borrower (See § 1962.27 of subpart A of part 1962 on the satisfaction of chattel security instruments). The note(s) will be returned to the borrower immediately except that: (1) When the final payment is made in a form other than currency and coin, Treasury check, cashier's check, certified check, Postal or bank money order, bank draft, or a check issued by a responsible lending institution or a responsible title insurance or title and trust company, the note or notes will not be surrendered until 30 days after the date of final payment, and (2) When notes are needed in making marginal releases or satisfactions or security instruments, the notes will be held until the instruments are satisfied. (c) Surrender of notes to effect collection. (1) County Supervisors are authorized to surrender notes to borrowers when final payment of the amount due is made in the form of currency and coin, Treasury check, cashier's check, certified check, Postal or bank money order, bank draft, or a check issued by a responsible lending institution or a responsible title insurance or title trust company. (2) The amount due on the note(s) to be surrendered will be confirmed with the Finance Office. County Supervisors will request the original note(s) from the Finance Office if it is not in the County Office. (d) Return of notes reduced to judgment. Notes which have been reduced to judgment are a part of the court records and ordinarily cannot be … | |||
| 7:7:14.1.1.1.2.1.1.14 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.16 Other servicing actions on real estate type loan accounts. | RHS | (a) Installment on note and other charges —(1) Direct loan accounts. For a borrower with a direct loan, the term “installation on note and other charges,” as used in this Subpart, will be the sum of the following: (i) Annual installment for the year as provided in the promissory note(s). (ii) Any recoverable cost charges paid for the borrower during the year. (“Recoverable costs” is defined in § 1951.10(a) of this Subpart.) (2) Insured loan accounts. “Loan insurance charge” means a separate insurance charge applying to FO and SW insured loans evidenced by promissory note forms bearing a form date before January 8, 1959. For all insured loans evidenced by note forms bearing a form date of January 8, 1959, or later, the insurance charge is called “annual charge” and is included in the interest position of the annual installment in the note. For a borrower with an insured loan, the term “Installment on note and other charge” means the sum of the following: (i) Annual installment for the year as provided in the promissory note. (ii) Amounts owed the Agricultural Credit Insurance Fund. These amounts are covered by the general term “Insurance Account” and consist of the following: (A) Unpaid loan insurance charges from prior years. (B) Loan insurance charge for the current year. The loan insurance charge is computed on the basis of the amount of the unpaid principal obligation as of the installment due date and is due and payable on or before the next installment due date. (C) Any unpaid balance on advances from the insurance fund, including any recoverable cost charges paid for the borrower during the year. (D) Any accrued interest on advances from the insurance fund. (iii) The amounts owned on the insurance account must be paid by regular payments each year whether or not the note account is ahead of schedule. (b) Schedule status. For direct and insured loans, a borrower will be on schedule when the sum of regular payments through the last preceding due date of the note equals the sum of installment… | ||||
| 7:7:14.1.1.1.2.1.1.15 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | §§ 1951.17-1951.24 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.1.1.16 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.25 Review of limited resource FO, OL, and SW loans. | RHS | [50 FR 45764, Nov. 1, 1985, as amended at 53 FR 35717, Sept. 14, 1988; 56 FR 3395, Jan. 30, 1991; 58 FR 15074, Mar. 19, 1993] | (a) Frequency of reviews. OL, FO, and SW loans will be reviewed each year at the time the analysis is conducted in accordance with subpart B of part 1924 of this chapter and any time a servicing action such as consolidation, rescheduling, reamortization or deferral is taken. The interest rate may not be changed more often than quarterly. (b) Method of review. (1) Each loan will be considered on its own merit. (2) The County Supervisor should consider: (i) The borrower's income and repayment record during the preceding years; (ii) The projections shown on the most recent Farm and Home Plan or other similar plan or operation acceptable to RD, in light of the previous year's projected figures and actual figures; (See subpart B of part 1924 of this chapter) (iii) Whether improved production practices have been or need to be implemented; (iv) The borrower's progress as a farmer; and (v) All other factors which the County Supervisor believes should be considered. (3) The Farm and Home Plan projections for the coming year must show that the “balance available to pay debts” exceeds the amount needed to pay debts by at least 10 percent before an increase in interest rate is put into effect. Borrowers that continually purchase unplanned items without the County Supervisor's approval will have the interest rate on their loans increased to the current rate for that loan type. Borrowers that fail to provide the County Supervisor with the information needed to conduct the analysis required in subpart B of part 1924 of this chapter will have their interest rate on their loan increased to the current rate for the OL, FO, or SW loan as applicable. The rate may increase in increments of whole numbers to the current regular interest rate for borrowers. In the borrower's case file, the County Supervisor must document the unplanned purchases and the failure to provide information in a timely manner. The County Supervisor must write the borrower a letter which sets out the facts documented in the case file and advises the … | |||
| 7:7:14.1.1.1.2.1.1.17 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | §§ 1951.26-1951.49 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.1.1.18 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.50 OMB control number. | RHS | [52 FR 26137, July 13, 1987] | The collection of information requirements in Subpart A of part 1951 have been approved by the Office of Management and Budget and assigned OMB control number 0575-0075. | |||
| 7:7:14.1.1.1.2.1.1.2 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.2 Policy. | RHS | Borrowers are expected to pay their debts to the Agency in accordance with their agreements and ability to pay. They will be encouraged to pay ahead of schedule, consistent with sound financial management. When borrowers have acted in good faith and have exercised due diligence in an effort to pay their indebtedness but cannot pay on schedule because of circumstances beyond their control, servicing actions will be consistent with the best interests of the borrower and the Government. It is the policy of this agency to service borrower loan account without regard to race, color, religion, sex, marital status, national origin, age, physical or mental handicap (borrower must possess the capacity to enter into a legal contract for services). | ||||
| 7:7:14.1.1.1.2.1.1.3 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.3 Authorities and responsibilities. | RHS | County Supervisors and District Directors are responsible for servicing all Agency accounts serviced by the County and District Offices as prescribed by this subpart under the general guidance and supervision of District Directors and State Office personnel. Full use will be made of the County Office Management System in account servicing. For the purposes of this Subpart, all references to “County Supervisor” shall be construed to mean “District Director” for all loans serviced by the District Office. | ||||
| 7:7:14.1.1.1.2.1.1.4 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | §§ 1951.4-1951.6 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.1.1.5 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.7 Accounts of borrowers. | RHS | [50 FR 45764, Nov. 1, 1985, as amended at 52 FR 11457, Apr. 9, 1987; 53 FR 35716, Sept. 14, 1988; 54 FR 10269, Mar. 13, 1989] | (a) Accounts of active borrowers. The foundation for proper and timely debt payment is sound farm and home planning or budgeting, including plans for debt payment, supplemented by effective followup management assistance. Account servicing, therefore, must begin with initial planning and must be an integral part of analysis and subsequent planning, as well as follow-up management assistance. (b) Accounts of collection-only borrowers. (1) Collection-only borrowers are expected to pay debts to the Agency in accordance with their ability to pay. Efforts to collect such debts, including use of collection letters and account servicing visits, must be coordinated with other program activities. If these borrowers are unable to pay in full, appropriate debt settlement policies should be promptly applied. (2) Envelopes addressed to collection-only borrowers will bear the legend “DO NOT FORWARD.” When an envelope is returned indicating the borrower has moved, appropriate steps will be taken to determine the borrower's correct address. (3) Regular County Office employees are generally expected to service the collection-only caseload when it is of moderate size. State Directors may assign additional employees to County Offices having large collection-only caseloads when necessary to service such cases to a prompt conclusion. State Directors may inform the National Office of the need for employing special collection personnel in urban areas having large collection-only caseloads when employees are not available to assign to such areas. (4) The following actions will be taken in servicing accounts owed by collection-only borrowers: (i) District Directors will review, yearly, all collection-only cases in each County Office with the County Supervisor as early in each fiscal year as possible. They will jointly agree on the actions to take and will complete Form RD 451-27, “Review of Collection-Only Accounts.” (ii) District Directors will establish with County Supervisors a systematic plan for collecting the accounts o… | |||
| 7:7:14.1.1.1.2.1.1.6 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.8 Types of payments. | RHS | [50 FR 45764, Nov. 1, 1985, as amended at 51 FR 4137, Feb. 3, 1986; 53 FR 35717, Sept. 14, 1988; 58 FR 52646, Oct. 12, 1993] | (a) Regular payments. Regular payments are all payments other than extra payments and refunds. Usually, regular payments are derived from farm income, as defined § 1962.4 of subpart A of part 1962 of this chapter. Regular payments also include payments derived from sources such as Agricultural Stabilization and Conservation Service payments (other than those referred to in paragraph (b) of this section), off-farm income, inheritances, life insurance, mineral royalties and income from mineral leases (see § 1965.17 (c) of subpart A of part 1965 of this chapter), including income from leases or bonuses. Regular payments in the case of a Section 502 RH loan to an applicant involved in a mutual self-help project will include loan funds advanced for the payment of any part of the first and second installments. All payments to the lock box facility(s) by direct payment borrowers are considered regular payments. (b) Extra payments. Extra payments are payments derived from: (1) Sale of chattels other than chattels which will be sold to produce farm income or real estate security, including rental or lease of real estate security of a depreciating or depleting nature. (2) Refinancing of the real estate debt. (3) Cash proceeds of real property insurance as provided in subpart A of part 1806 of this chapter (RD Instruction 426.1). (4) A sale of real estate not mortgaged to the Government, pursuant to a condition of loan approval. (5) Agricultural Conservation Program payments as provided in subpart A of part 1941 of this chapter. (6) Transactions of a similar nature which reduce the value of security other than chattels which will be sold to produce farm income. (c) Refunds. Refunds are payments derived from the return of unused loan or grant funds, except that the term “refunds” as used in Form 1940-17, “Promissory Note,” will be construed to mean the return of funds advanced for capital goods, when a loan is made for operating purposes. | |||
| 7:7:14.1.1.1.2.1.1.7 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.9 Distribution of payments when a borrower owes more than one type of Agency loan. | RHS | [50 FR 45764, Nov. 1, 1985, as amended at 52 FR 26134, July 13, 1987; 53 FR 35717, Sept. 14, 1988] | “Distribution” means dividing a payment into parts according to the rules set out in this section. This section only applies after the County Supervisor determines the amount of proceeds that will be released for other purposes in accordance with the annual plan (Form RD 431-2, “Farm and Home Plan”) and Form RD 1962-1, “Agreement for the Use of Proceeds/Release of Chattel Security.” (a) Distribution of regular payments. (1) When a borrower owes more than one type of Agency loan, regular payments received from each crop year's income will be distributed in accordance with the following priorities: (i) First, to an amount equal to any advances made by RD for the crop year's living and operating expenses. If no advances were made, distribute the payment according to paragraph (a)(1)(ii) of this section. If the amount of the payment was greater than the amount of any advances, the excess should be distributed according to paragraph (a)(1)(ii) of this section. (ii) Second, to Agency loans in proportion to the approximate amounts due on each for the year. In determining the amounts due for the year, deduct an amount equal to any advances for the year's living and operating expenses. If the amount of the payment exceeds the amount of any advances plus the amount due on each loan for the year, the excess should be distributed according to paragraph (a)(1)(iii) of this section. (iii) Third, to Agency loans in proportion to the delinquencies existing on each. If the amount of the payment exceeds the amount of any advances plus the amount due on each loan for the year plus any delinquencies, the excess should be distributed according to paragraph (a)(1)(iv) of this section. (iv) Fourth, as advance payments on Agency loans. In making such distribution consider the principal balance outstanding on each loan, the security position of the liens securing each loan, the borrower's request, and related circumstances. (2) When the County Supervisor determines it is reasonable to expect that the income which … | |||
| 7:7:14.1.1.1.2.1.1.8 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.10 Application of payments on production type loan accounts. | RHS | [50 FR 45764, Nov. 1, 1985, as amended at 53 FR 35717, Sept. 14, 1988; 54 FR 46844, Nov. 8, 1989; 57 FR 18680, Apr. 30, 1992] | Employees receiving payments on OL, EO, SW codes “24,” EM for subtitle B purposes, EE operating-type, and other production-type loan accounts will select, in accordance with the provisions of this section, the account(s) to which such payment will be applied. All payments on OL and EM loans approved on or before December 31, 1971, will be credited first to any administrative costs, then to noncapitalized interest, then to the amount of accrued deferred interest, and then to principal. All payments on all other loans including OL and EM loans approved after December 31, 1971, will be credited first to any administrative costs, then to noncapitalized interest, then to the amount of accrued deferred interest, then to interest accrued to the date of the payment and then to principal, in accordance with the terms of the note. This section only applies after the County Supervisor determines the amount of proceeds that will be released for other purposes in accordance with the annual plan (Form RD 431-2) and Form RD 1962-1. (a) Rules for selection of accounts. The following rules will govern the selection of accounts and installments to which payments will be applied. As used in this section, “recoverable costs” are those which the loan agreement documents say the borrower is primarily responsible for paying and which the government can charge to the borrower's account. (1) Payments from farm income or from assignments of income will be applied first to accounts with small balances, including recoverable costs, to remove such accounts from the records. Any balance will be applied on debts secured by the lien in the following order: (i) To amounts due or falling due on loans made in connection with the current year's operations, except: (A) When funds loaned for the purchase of capital goods were used to meet the current year's operating expenses, payments will be applied first to the final unpaid installments to the extent of the loan funds so used. These payments will be treated as extra payments. (B) When insta… | |||
| 7:7:14.1.1.1.2.1.1.9 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | A | Subpart A—Account Servicing Policies | § 1951.11 Application of payments on real estate accounts. | RHS | [50 FR 45764, Nov. 1, 1985, as amended at 54 FR 46845, Nov. 8, 1989] | (a) Regular payments. If a borrower owes more than one type of real estate loan, or has received initial and subsequent real estate loans on which separate accounts are maintained, payments on such accounts should be applied so as to maintain the note accounts approximately in balance at the end of the year with respect to installments due on the notes, other charges, and delinquencies. (b) Refunds and extra payments. (1) Refunds will be applied to the note representing the loan from which the advance was made. (2) Extra payments will be applied to the note secured by the earliest mortgage on the property from which the extra payment was obtained. (3) Funds remaining from an RH grant or a combination loan and grant, after completion of development, will be refunded. If the borrower received a combination loan and grant, the remaining funds up to the amount of the grant are considered to be grant funds. (c) County Office actions. (1) The collecting official will complete Form RD 451-1, “Acknowledgment of Cash Payment,” in accordance with the FMI when cash or money orders are received as a payment. (2) The collection official will complete Form RD, “Schedule of Remittances,” in accordance with the FMI. (d) Finance Office handling. (1) Regular payment will be handled as follows. (i) Payments will be applied first to satisfy any administrative costs such as a charge for an uncollectible check. (The amounts of any such charges are available from any Rural Development office.) (ii) Amounts paid on direct loan accounts will be credited to the borrower's account as of the date of Form RD 451-2 or for direct payments the date payment is received in the Finance Office, and will be applied first to a portion of any interest which accrues during the deferral period, second to interest accrued to the date received and third to principal, in accordance with the terms of the note. (iii) Amounts paid on insured loan accounts will be credited to the borrower's account as of the date of Form RD 451-2 or for direct… | |||
| 7:7:14.1.1.1.2.3.1.1 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | D | Subpart D—Final Payment on Loans | § 1951.151 Purpose. | RHS | [72 FR 55018, Sept. 28, 2007, as amended at 72 FR 64123, Nov. 15, 2007] | This subpart prescribes authorizations, policies, and procedures of theRural Housing Service (RHS), and Rural Business-Cooperative Service (RBS), herein referred to as “Agency,” for processing final payment on all loans. This subpart does not apply to Direct Single Family Housing customers or to the Rural Rental Housing, Rural Cooperative Housing, or Farm Labor Housing Program of the RHS. This subpart does not apply to Water and Waste Programs of the Rural Utilities Service, Watershed loans, and Resource Conservation and Development loans, which are serviced under part 1782 of this title. In addition, this subpart is inapplicable to Farm Service Agency, Farm Loan Programs. | |||
| 7:7:14.1.1.1.2.3.1.2 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | D | Subpart D—Final Payment on Loans | § 1951.152 Definition. | RHS | As used in this subpart: Mortgage. Includes real estate mortgage, deed of trust or any other form of security instrument or lien on real property. | ||||
| 7:7:14.1.1.1.2.3.1.3 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | D | Subpart D—Final Payment on Loans | § 1951.153 Chattel security or note-only cases. | RHS | (a) If a loan secured by both real estate and chattels is paid in full, the chattel security instrument will be satisfied or released in accordance with subpart A of part 1962 of this chapter. (b) When a loan is evidenced by only a note and the note is paid in full, RD will deliver the note to the borrower in the manner prescribed in § 1951.155(c) of this subpart. | ||||
| 7:7:14.1.1.1.2.3.1.4 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | D | Subpart D—Final Payment on Loans | § 1951.154 Satisfaction and release of documents. | RHS | (a) Authorization. RD is authorized to execute the necessary releases and satisfactions and return security instruments and related documents to borrowers. Satisfaction and release of security documents takes place: (1) Upon receipt of payment in full of all amounts owed to the Government including any amounts owed to the loan insurance account, subsidy recapture amounts, all loan advances and/or other charges to the borrower's account; (2) Upon verification that the amount of payment received is sufficient to pay the full amount owed by the borrower; or (3) When a compromise or adjustment offer has been accepted and approved by the appropriate Government official in full settlement of the account and all required funds have been paid. (b) [Reserved] (c) Lost note. If the original note is lost RD will give the borrower an affidavit of lost note so that the release or satisfaction may be processed. | ||||
| 7:7:14.1.1.1.2.3.1.5 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | D | Subpart D—Final Payment on Loans | § 1951.155 County and/or District Office actions. | RHS | [57 FR 774, Jan. 9, 1992, as amended at 60 FR 55145, Oct. 27, 1995] | (a) Funds remaining in supervised bank accounts. When a borrower is ready to pay an insured or direct loan in full, any funds remaining in a supervised bank account will be withdrawn and remitted for application to the borrower's account. If the entire principal of the loan is refunded after the loan is closed, the borrower will be required to pay interest from the date of the note to the date of receipt of the refund. (b) Determining amount to be collected. RD will compute and verify the amount to be collected for payment of an account in full. Requests for payoff balances on all accounts will be furnished in writing in a format specified by RD (available in any Rural Development office). (c) Delivery of satisfaction, notes, and other documents. When the remittance which paid an account in full has been processed by RD, the paid note and satisfied mortgage may be returned to the borrower. If other provisions exist, the mortgage will not be satisfied until the total indebtedness secured by the mortgage is paid. For instance, in a situation where a rural housing loan is paid-in-full and there is a subsidy recapture receivable balance that the borrower elects to delay repaying, the amount of recapture to be repaid will be determined when the principal and interest balance is paid. The mortgage securing the RHS, RBS, RUS, and/or FSA or its successor agency under Public Law 103-354 debt will not be released of record until the total amount owed the Government is repaid. To permit graduation or refinancing by the borrower, the mortgage securing the recapture owed may be subordinated. (1) If RD receives final payments in a form other than cash, U.S. Treasury check, cashier's check, certified check, money order, bank draft, or check issued by an institution determined by RD to be financially responsible, the mortgage and paid note will not be released until after a 30-day waiting period. If other indebtedness to RD is not secured by the mortgage, RD will execute the satisfaction or release. When the stamped not… | |||
| 7:7:14.1.1.1.2.3.1.6 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | D | Subpart D—Final Payment on Loans | §§ 1951.156-1951.200 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.4.1.1 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.201 Purposes. | RHS | This subpart prescribes the Rural Development mission area policies, authorizations, and procedures for servicing the following programs: Community Facility loans and grants, Rural Business Enterprise/Television Demonstration grants; Association Recreation loans; Direct Business loans; Economic Opportunity Cooperative loans; Rural Renewal loans; Energy Impacted Area Development Assistance Program grants; National Nonprofit Corporation grants; System for Delivery of Certain Rural Development Programs panel grants; in part 4284 of this title, Rural and Cooperative Development Grants, Value-Added Producer Grants, and Agriculture Innovation Center Grants. Rural Development State Offices act on behalf of the Rural Business-Cooperative Service and the Rural Housing Service as to loan and grant programs formerly administered by the Farmers Home Administration and the Rural Development Administration. Loans sold without insurance to the private sector will be serviced in the private sector and will not be serviced under this subpart. The provisions of this subpart are not applicable to such loans. Future changes to this subpart will not be made applicable to such loans. This subpart does not apply to Water and Waste Programs of the Rural Utilities Service, Watershed loans, and Resource Conservation and Development Loans, which are serviced under part 1782 of this title. | ||||
| 7:7:14.1.1.1.2.4.1.10 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.211 Refinancing requirements. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 63 FR 16089, Apr. 2, 1998] | In accordance with the CONACT, Rural Development requires for most loans covered by this subpart that if at any time it shall appear to the Government that the borrower is able to refinance the amount of the indebtedness then outstanding, in whole or in part, by obtaining a loan for such purposes from responsible cooperative or private credit sources, at reasonable rates and terms for loans for similar purposes and periods of time, the borrower will, upon request of the Government, apply for and accept such loan in sufficient amount to repay the Government and will take all such actions as may be required in connection with such loan. Applicable requirements are set forth in subpart F of part 1951 of this chapter. A civil rights impact analysis is required. | |||
| 7:7:14.1.1.1.2.4.1.11 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.212 Unauthorized financial assistance. | RHS | Subpart O of part 1951 of this chapter prescribes policies for servicing the loans and grants covered under this subpart when it is determined that a borrower or grantee was not eligible for all or part of the financial assistance received in the form of a loan, grant, subsidy, or any other direct financial assistance. | ||||
| 7:7:14.1.1.1.2.4.1.12 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.213 Debt settlement. | RHS | Subpart C of part 1956 of this chapter prescribes policies and procedures for debt settlement actions for loans covered under this subpart when it is determined that a debt is eligible for settlement except as provided in §§ 1951.216 and 1951.231. | ||||
| 7:7:14.1.1.1.2.4.1.13 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.214 Care, management, and disposal of acquired property. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 63 FR 16089, Apr. 2, 1998] | Property acquired by Government or its successor agency under Public Law 103-354 will be handled according to subparts B and C of part 1955 of this chapter. | |||
| 7:7:14.1.1.1.2.4.1.14 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.215 Grants. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 63 FR 16089, Apr. 2, 1998; 79 FR 76012, Dec. 19, 2014] | No monitoring action by Rural Development is required after grant closeout. Grant closeout is when all required work is completed, administrative actions relating to the completion of work and expenditure of funds have been accomplished, and Rural Development accepts final expenditure information. However, grantees remain responsible in accordance with the terms of the grant for property acquired with grant funds. (a) Applicability of requirements. Servicing actions relating to Rural Development or its successor agency under Public Law 103-354 grants are governed by the provisions of this subpart, the terms of the Grant Agreement and, if applicable, the provisions of 2 CFR parts 200, 400, 415, 417, 418, and 421. (1) Servicing actions will be carried out in accordance with the terms of the “Association Water or Sewer System Grant Agreement,” and RUS Bulletin 1780-12, “Water and Waste Grant Agreement” (available from any USDA/Rural Development office or the Rural Utilities Service, United States Department of Agriculture, Washington, DC 20250-1500). Grant agreements with a revision date on or after January 29, 1979, require that the grantee request disposition instructions from the Agency before disposing of property which is no longer needed for original grant purposes. (2) When facilities financed in part by Rural Development grants are transferred or sold, repayment of all or a portion of the grant is not required if the facility will be used for the same purposes and the new owner provides a written agreement to abide by the terms of the grant agreement. (b) Authorities. Subject to the requirements of § 1951.215(a), authority to approve servicing actions is as follows: (1) For water and waste disposal grants, the State Director is authorized to approve any servicing actions needed, except that prior approval of the Administrator is required when property acquired with grant funds is disposed of in accordance with §§ 1951.226, 1951.230, or 1951.232 of this subpart and the buyer or transferee refuses to … | |||
| 7:7:14.1.1.1.2.4.1.15 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.216 Nonprogram (NP) loans. | RHS | Borrowers with NP loans are not eligible for any program benefits, including appeal rights. However, Rural Development may use any servicing tool under this subpart necessary to protect the Government's security interest, including reamortization or rescheduling. The refinancing requirements of subpart F of part 1951 of this chapter do not apply to NP loans. Debt settlement actions relating to NP loans must be handled under the Federal Claims Collection Act; proposals will be submitted to the National Office for review and approval. Any exception to the servicing requirements of NP loans under this subpart must have prior concurrence of the National Office. | ||||
| 7:7:14.1.1.1.2.4.1.16 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.217 Public bodies. | RHS | Servicing actions involving public bodies will be carried out to the extent feasible according to the provisions of this subpart. With prior National Office approval, the State Director is authorized to vary from such provisions if necessary and approved by OGC, provided such variation will not violate other regulatory or statutory provisions. To request approval, the case file, including copies of applicable documents, recommendations, and OGC comments, will be forwarded to the Administrator, Attention: (appropriate program division). | ||||
| 7:7:14.1.1.1.2.4.1.17 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.218 Use of Rural Development loans and grants for other purposes. | RHS | [72 FR 55018, Sept. 28, 2007] | (a) If, after making a loan or a grant, the Administrator determines that the circumstances under which the loan or grant was made have sufficiently changed to make the project or activity for which the loan or grant was made available no longer appropriate, the Administrator may allow the loan borrower or grant recipient to use property (real and personal) purchased or improved with the loan or grant funds, or proceeds from the sale of property (real and personal) purchased with such funds, for another project or activity that: (1) Will be carried out in the same area as the original project or activity; (2) Meets the criteria for a loan or grant described in section 381E(d) of the Consolidated Farm and Rural Development Act, as amended; and (3) Satisfies such additional requirements as are established by the Administrator. (b) For the purpose of this section, Administrator means the Administrator of the Rural Housing Service or Rural Business-Cooperative Service that has the delegated authority to administer the loan or grant program that covers the property or the proceeds from the sale of property proposed to be used in another way. (c) If the new use of the property is under the authority of another Administrator, the other Administrator will be consulted on whether the new use will meet the criteria of the other program. Since the new project or activity must be carried out in the same area as the original project or activity, a new rural area determination will not be necessary. (d) Borrowers and grantees that wish to take advantage of this option may make their request through the appropriate Rural Development State Office. Permission to use this option will be exercised on a case-by-case-basis on applications submitted through the State Office to the Administrator for consideration. If the proposal is approved, the Administrator will issue a memorandum to the State Director outlining the conditions necessary to complete the transaction. | |||
| 7:7:14.1.1.1.2.4.1.18 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.219 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.4.1.19 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.220 General servicing actions. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 57 FR 775, Jan. 9, 1992; 57 FR 21199, May 19, 1992; 57 FR 36591, Aug. 14, 1992; 69 FR 69105, Nov. 26, 2004] | (a) Payment in full. Payment in full of a loan is handled according to subpart D of part 1951 of this chapter. When a loan is paid in full, the servicing official will: (1) Notify the company providing fidelity bond coverage in writing that the government no longer has an interest in the bond if the government is named co-obligee on the bond. (2) Release Rural Development's interest in insurance policies according to applicable provisions of subpart A of part 1806 (RD Instruction 426.1). (3) Release Rural Development's interest in any other security as appropriate, consulting with OGC if necessary. (b) Loan summary statements. Upon request of a borrower, Rural Development will issue a loan summary statement showing account activity for each loan made or insured under the CONACT. Field offices will post a notice on the bulletin board informing borrowers of the availability of loan summary statements. See exhibit A of subpart A of this part for a sample of the required notice. (1) The loan summary statement period is from January 1 through December 31. The Finance Office forwards to field offices a copy of Form RD 1951-9, “Annual Statement of Loan Account,” to be retained in borrower files as a permanent record of account activity for the year. (2) Quarterly Form RD 1951-9 are retained in the Finance Office on microfiche. These statements reflect cumulative data from the beginning of the current year through the end of the most recent quarter. Servicing offices may request copies of these quarterly or annual statements by sending Form RD 1951-57, “Request for Loan Summary Statement,” to the Finance Office. (3) The servicing office will provide a copy of the applicable loan summary statement to the borrower on request. A copy of Form RD 1951-9 and, for loans with unamortized installments, a printout of future installments owed obtained using the borrower status screen option in the Automated Discrepancy Processing System (ADPS), will constitute the loan summary statement to be provided to the borrower. (… | |||
| 7:7:14.1.1.1.2.4.1.2 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.202 Objectives. | RHS | The purpose of loan and grant servicing functions is to assist recipients to meet the objectives of loans and grants, repay loans on schedule, comply with agreements, and protect Rural Development's financial interest. Supervision by Rural Development includes, but is not limited to, review of budgets, management reports, audits and financial statements; performing security inspections and providing, arranging for, or recommending technical assistance; evaluating environmental impacts of proposed actions by the borrower; and performing civil rights compliance reviews. | ||||
| 7:7:14.1.1.1.2.4.1.20 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.221 Collections, payments and refunds. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 66 FR 1569, Jan. 9, 2001; 68 FR 61331, Oct. 28, 2003; 68 FR 69952, Dec. 16, 2003] | Payments and refunds are handled in accordance with the following: (a) Community and Insured Business Programs. (1) Field offices can obtain data on principal installments due for Community and Insured Business Programs loans with unamortized installments using the borrower status screen option in the ADPS. (2) Regular payments for Community and Insured Business Programs borrowers are all payments other than extra payments and refunds. Such payments are usually derived from facility revenues, and do not include proceeds from the sale of security. They also include payments derived from sources which do not decrease the value of Rural Development's security. (i) Distribution of such payments is made as follows: (A) First, to the Rural Development loan(s) in proportion to the delinquency existing on each. Any excess will be distributed in accordance with paragraphs (a)(2)(i) (B) and (C) of this section. (B) Second, to the Rural Development loan or loans in proportion to the approximate amounts due on each. Any excess will be distributed according to paragraph (a)(2)(i)(C) of this section. (C) Third, as advance payments on Rural Development loans. In making such distributions, consider the principal balance outstanding on each loan, the security position of the liens securing each loan, the borrower's request, and related circumstances. (ii) Unless otherwise established by the debt instrument, regular payments will be applied as follows: (A) For amortized loans, first to interest accrued (as of the date of receipt of the payment), and then to principal. (B) For principal-plus-interest loans, first to the interest due through the date of the next scheduled installment of principal and interest and then to principal due, with any balance applied to the next scheduled principal installment. (3) Extra payments are derived from sale of basic chattel or real estate security; refund of unused loan funds; cash proceeds of property insurance as provided in § 1806.5(b) of subpart A of part 1806 (paragraph V B of R… | |||
| 7:7:14.1.1.1.2.4.1.21 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.222 Subordination of security. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 66 FR 1569, Jan. 9, 2001; 69 FR 70884, Dec. 8, 2004] | When a borrower requests Rural Development to subordinate a security instrument so that another creditor or lender can refinance, extend, reamortize, or increase the amount of a prior lien; be on parity with; or place a lien ahead of the Rural Development lien, it will submit a written request to the servicing office as provided below. For purposes of this subpart, subordination is defined to include cases where a parity security position is being considered. (a) General. The following requirements must normally be met: (1) The request must be for subordination of a specific amount of the Rural Development indebtedness. (2) It must be determined that the borrower cannot refinance its Rural Development debt in accordance with subpart F of part 1951 of this chapter. (3) The transaction will further the purposes for which the Rural Development loan was made, not adversely affect the borrower's debt-paying ability, and result in the Rural Development debt being adequately secured. (4) The terms and conditions of the prior lien will be such that the borrower can reasonably be expected to meet them as well as the requirements of all other debts. (5) Any proposed development work will be planned and performed according to § 1942.18 of subpart A of part 1942 of this chapter or in a manner directed by the creditor which reasonably attains the objectives of that section. (6) All contracts, pay estimates, and change orders will be reviewed and concurred in by the State Director. (7) In cases involving land purchase, the Rural Development will obtain a mortgage on the purchased land. (8) When the transaction involves more than $10,000 or the approval official considers it necessary, a present market value appraisal report will be obtained. However, a new report need not be obtained if there is an appraisal report not over one year old which permits a proper determination of the present market value of the total property after the transaction. (9) The proposed action must not change the nature of the borrower's ac… | |||
| 7:7:14.1.1.1.2.4.1.22 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.223 Reamortization. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 56 FR 25351, June 4, 1991; 63 FR 41714, Aug. 5, 1998; 69 FR 69105, Nov. 26, 2004; 73 FR 8008, Feb. 12, 2008] | (a) State Director authorization. The State Director is authorized to approve reamortization of loans under the following conditions: (1) The account is delinquent and cannot be brought current within one year while maintaining a reasonable reserve; (2) The borrower has demonstrated for at least one year by actual performance or has presented a budget which clearly indicates that it is able to meet the proposed payment schedule; (3) The amount being reamortized is within the State Director's loan approval authorization; and (4) There is no extension of the final maturity date. (b) Requests requiring National Office approval. Reamortizations not meeting the above conditions require prior National Office approval. Requests will be forwarded to the National Office with the case file, including: (1) Current budget and cash flow prepared on RD 442-2, schedules 1 and 2, or similar form; (2) Current balance sheet and income statement; (3) Exhibit A of this subpart, appropriately completed; (4) Form RD 1951-33, “Reamortization Request,” completed in accordance with § 1951.223(c)(3) of this subpart, when applicable; and (5) Any other necessary supporting information. (c) Processing. When legally permissible and administratively acceptable, the total outstanding principal and interest balances will be reamortized rather than only the delinquent amount. Accrued interest will be at the rate currently reflected in Finance Office records. (1) Reamortizations will be perfected in accordance with OGC closing instructions. (2) When debt instruments are being modified or new debt instruments executed, bond counsel or local counsel, as appropriate, must provide an opinion indicating any effect on Rural Development's security position. The Rural Development's approval official must determine that the government's interest will remain adequately protected if the security position will be affected. (3) Notes. Except as provided in § 1951.223(c)(4), loans evidenced by notes will be reamortized through a new eviden… | |||
| 7:7:14.1.1.1.2.4.1.23 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.224 Third party agreements. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 57 FR 21199, May 19, 1992] | The State Director may authorize all or part of a facility to be operated, maintained or managed by a third party under a contract, management agreement, written lease, or other third party agreement as follows: (a) Leases —(1) Lease of all or part of a facility (except when liquidation action is pending). The State Director may consent to the leasing of all or a portion of security property when: (i) Leasing is the only feasible way to provide the service and is the customary practice as required under § 1942.17(b)(4) of subpart A of part 1942 of this chapter; (ii) The borrower retains ultimate responsibility for operating, maintaining, and managing the facility and for its continued availability and use at reasonable rates and terms as required under § 1942.17(b)(4) of subpart A of part 1942 of this chapter. The lease agreement must clearly reflect sufficient control by the borrower over the operation, maintenance, and management of the facility to assure that the borrower maintains this responsibility; (iii) The lease agreement contains provisions prohibiting any amendments to the lease or any subleasing arrangements without prior written approval from Rural Development; (iv) The lease document contains nondiscrimination requirements as set forth in § 1951.204 of this subpart; (v) The lease contains a provision which recognizes that Rural Development is a lienholder on the subject facility and, as such, the lease is subordinate to the rights and claims of Rural Development as lienholder; and (vi) The lease does not constitute a lease/purchase arrangement, unless permitted under § 1951.232 of this subpart. (2) Lease of all or part of a facility (pending liquidation action). The State Director may consent to the leasing of all or a portion of security property when: (i) The lease will not adversely affect the repayment of the loan or the Government's rights under the security or other instruments; (ii) The State Director has determined that liquidation will likely be necessary and the lease is nec… | |||
| 7:7:14.1.1.1.2.4.1.24 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.225 Liquidation of security. | RHS | When the District Director believes that continued servicing will not accomplish the objectives of the loan, he or she will complete Exhibit A of this subpart (available in any Rural Development office), and submit it with the District Office file to the State Office. If the State Director determines the account should be liquidated, he or she will encourage the borrower to dispose of the Rural Development security voluntarily through a sale or transfer and assumption, and establish a specified period, not to exceed 180 days, to accomplish the action. If a transfer or voluntary sale is not carried out, the loan will be liquidated according to subpart A of part 1955 of this chapter. | ||||
| 7:7:14.1.1.1.2.4.1.25 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.226 Sale or exchange of security property. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 69 FR 70884, Dec. 8, 2004] | A cash sale of all or a portion of a borrower's assets or an exchange of security property may be approved subject to the conditions set forth below. (a) Authorities. (1) The District Director is authorized to approve actions under this section involving only chattels. (2) The State Director is authorized to approve real estate transactions except as noted in the following paragraph. (3) Approval of the Administrator must be obtained when a substantial loss to the Government will result from a sale; one or more members of the borrower's organization proposes to purchase the property; it is proposed to sell the property for less than the appraised value; or the buyer refuses to assume all the terms of the Grant Agreement. It is not Rural Development policy to sell security property to one or more members of the borrower's organization at a price which will result in a loss to the Government. (b) General. Approval may be given when the approval official determines and documents that: (1) The consideration is adequate; (2) The release will not prevent carrying out the purpose of the loan; (3) The remaining property is adequate security for the loan or the transaction will not adversely affect Rural Development's security position; (4) If the property to be sold or exchanged is to be used for the same or similar purposes for which the loan or grant was made, the purchaser will: (i) Execute Form RD 400-4, “Assurance Agreement.” The covenants involved will remain in effect as long as the property continues to be used for the same or similar purposes for which the loan or grant was made. The instrument of conveyance will contain the covenant referenced in § 1951.204 of this subpart; and (ii) Provide to Rural Development a written agreement assuming all rights and obligations of the original grantee if grant funds were provided. See § 1951.215 of this subpart for additional guidance on grant agreements. (5) The proceeds remaining after paying any reasonable and necessary selling expenses are used for one o… | |||
| 7:7:14.1.1.1.2.4.1.26 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.227 Protective advances. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 57 FR 36591, Aug. 14, 1992] | The State Director is authorized to approve, without regard to any loan or total indebtedness limitation, vouchers to pay costs, including insurance and real estate taxes, to preserve and protect the security, the lien, or the priority of the lien securing the debt owed to or insured by Rural Development if the debt instrument provides that Rural Development may voucher the account to protect its lien or security. The State Director must determine that authorizing a protective advance is in the best interest of the government. For insurance, factors such as the amount of advance, occupancy of the structure, vulnerability to damage and present value of the structure and contents will be considered. (a) Protective advances are considered due and payable when advanced. Advances bear interest at the rate specified in the most recent debt instrument authorizing such an advance. (b) Protective advances are not to be used as a substitute for a loan. (c) Vouchers are prepared in accordance with applicable procedures set forth in RD Instruction 2024-A (available in any Rural Development office). | |||
| 7:7:14.1.1.1.2.4.1.27 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | §§ 1951.228-1951.229 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.4.1.28 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.230 Transfer of security and assumption of loans. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 57 FR 36590, Aug. 14, 1992; 66 FR 1569, Jan. 9, 2001; 69 FR 70884, Dec. 8, 2004] | (a) General. It is Rural Development policy to approve transfers and assumptions to transferees which will continue the original purpose of the loan in accordance with the following and specific requirements relating to eligible and ineligible borrowers set forth below: (1) The present borrower is unable or unwilling to accomplish the objectives of the loan. (2) The transfer will not be disadvantageous to the Government or adversely affect either Rural Development's security position or the Rural Development program in the area. (3) Transfers to eligible applicants will receive preference over transfers to ineligible applicants if recovery to Rural Development is not less than it would be if the transfer were to an ineligible applicant. (4) If the Rural Development debt(s) exceed the present market value of the security as determined by the State Director, the transferee will assume an amount at least equal to the present value. (5) If the transfer and assumption is to one or more members of the borrower's organization, there must not be a loss to the government. (6) Rural Development concurs in plans for disposition of funds in the transferor's debt service, reserve, operation and maintenance, and any other project account, including supervised bank accounts. (7) When the property to be transferred is to be used for the same or similar purposes for which the loan was made, the transferee will execute Form RD 400-4 to continue nondiscrimination covenants and provide to Rural Development a written certification assuming all terms of the Grant Agreement executed by the transferor. All instruments of conveyance will contain the covenant referenced in § 1951.204 of this subpart. (8) This subpart does not preclude the transferor from receiving equity payments when the full account of the Rural Development debt is assumed. However, equity payments will not be made on more favorable terms than those on which the balance of the Rural Development debt will be paid. (9) Transferees must have the ability to pay t… | |||
| 7:7:14.1.1.1.2.4.1.29 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.231 Special provisions applicable to Economic Opportunity (EO) Cooperative Loans. | RHS | (a) Withdrawal of member and transfer to and assumption by new members of Unincorporated Cooperatives. (1) Withdrawal of a member who is no longer utilizing the services of an association and transfer of withdrawing member interest in the association to a new member who will assume the entire unpaid balance of the indebtedness of the withdrawing member may be permitted, if the remaining members agree to accept the new member and the transfer will not adversely affect collection of the loan. The servicing office will submit to the State Office the borrow case file and the following: (i) Form RD 1951-15 executed by the proposed new member; (ii) Statement of the current amount of the indebtedness involved; (iii) A description and statement of the value of the security property; (iv) A memorandum to justify the transaction; (v) Form RD 440-2, “County Committee Certification or Recommendation;” (vi) Exhibit B of this subpart, “Agreement for New Member (With or Without Withdrawing Member),” (available in any Rural Development office), executed by the remaining members of the association, the proposed new member, and the withdrawing member; and (vii) Form RD 450-12, “Bill of Sale (Transfer by Withdrawing Member),” executed by the withdrawing member. (2) If the State Director determines after review of the above information that the proposed new member is eligible and the transfer is justified, the State Director may approve the transfer and assumption by executing Form RD 1951-15. (3) Upon completion of the above actions, the State Director may release the outgoing member from personal liability using Form RD 1965-8. (4) If Finance Office records must be changed due to changes in borrower name, address and/or case number, necessary documents, including Form RD 1951-15 and, if applicable, Form RD 1965-8, will be forwarded to the Finance Office immediately with a memorandum indicating that the purpose of the submission is only to establish liability for a new member and release an old member from liability. (… | ||||
| 7:7:14.1.1.1.2.4.1.3 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.203 Definitions. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 69 FR 70884, Dec. 8, 2004] | (a) Approval official. An official who has been delegated loan and/or grant approval authorities within applicable programs. (b) Assumption of debt. The agreement by one party to legally bind itself to pay the debt incurred by another. (c) CONACT. The Consolidated Farm and Rural Development Act, as amended. (d) Eligible applicant. An entity that would be legally qualified for financial assistance under the loan or grant program involved in the servicing action. (e) Ineligible applicant. An entity or individual that would not be considered eligible for financial assistance under the loan or grant program involved in the servicing action. (f) Nonprogram (NP) loan. An NP loan exists when credit is extended to an ineligible applicant and/or transferee in connection with loan assumptions or sale of inventory property; any recipient in cases of unauthorized assistance; or a recipient whose legal organization has changed as set forth in § 1951.220(e) of this subpart resulting in the borrower being ineligible for program benefits. (g) Servicing office. The State, District, or County Office responsible for immediate servicing functions for the borrower or grantee. (h) Transfer fee. A one-time nonrefundable application fee, charged to ineligible applicants for Rural Development services rendered in the processing of a transfer and assumption. | |||
| 7:7:14.1.1.1.2.4.1.30 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.232 Water and waste disposal systems which have become part of an urban area. | RHS | [55 FR 4399, Feb. 8, 1992, as amended at 57 FR 21199, May 19, 1992] | A water and/or waste disposal system serving an area which was formerly a rural area as defined in § 1942.17(b)(2)(iii) and (iv) of subpart A of part 1942 of this chapter, but which has become in its entirety part of an urban area, will be serviced in accordance with this section. (a) Curtailment or limitation of service. Service may not be curtailed or limited by the inclusion of a system within an urban area. (b) Sale or transfer and assumption. (1) The urban community or another entity may purchase the facility involved and immediately pay the Rural Development debt in full; or (2) The urban community or another entity may accept a transfer of the Rural Development debt on an ineligible applicant basis. (3) When a grant is involved, the entity will agree in writing to assume all rights and obligations of the original grantee. See § 1951.215 for additional guidance on grant agreements. (c) Lease-purchase arrangement. If § 1951.232(b) (l) and (2) of this section are not practicable, the urban community may, with prior approval of the National Office, operate and maintain the system under a lease-purchase arrangement which provides that: (1) The urban community will: (i) Assume responsibility for operation and maintenance of the facility, subject to nondiscrimination and all other requirements which are applicable to the borrower, which are to be specified in the agreement between the parties; and (ii) Pay the association annually an amount sufficient to enable it to meet all its obligations, including reserve account requirements. (2) The Rural Development borrower will: (i) Meet its debt service and reserve account requirements to Rural Development; (ii) Retain its corporate existence until Rural Development has been paid in full; and (iii) If agreed upon by both parties, convey title to the facility to the urban community when the Rural Development debt has been paid in full. (d) Processing. (1) Sale of a borrower's assets will be handled in accordance with § 1951.226 of this subpart. (2)… | |||
| 7:7:14.1.1.1.2.4.1.31 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | §§ 1951.233-1951.239 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.4.1.32 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.240 State Director's additional authorizations and guidance. | RHS | (a) Promote financing purposes and improve or maintain collectibility. The State Director is authorized to perform the following functions when the action is determined likely to promote the loan or grant purposes without jeopardizing collectibility of the loan or imparing the adequacy of the security; will strengthen the security; or will facilitate, improve, or maintain the orderly collection of the loan: (1) Approve requests for permission to modify bylaws, articles of incorporation, or other rules and regulations of recipients, including changes in rate or fee schedules. Changes affecting the recipient's legal organizational structure must be approved by OGC. (2) Consent to requests by the recipient to incur additional indebtedness, subject to applicable Rural Development instructions and covenants in the loan or grant agreement. (3) Renew existing security instruments. (4) Approve the extension or expansion of facilities and services. (5) Require additional security when: (i) Existing security is inadequate and the loan or security instruments obligate the borrower to give additional security; or (ii) The loan is in default and additional security is acceptable in lieu of other servicing actions. (6) Release properties being sold by the borrower from mortgages securing Rural Renewal loans if the amount of the notes and mortgages given by the purchaser to the borrower equal the present market value and are assigned and pledged to Rural Development, and any money payable to the borrower is applied as an extra payment on the Rural Renewal loan. (7) Approve requests for rights-of-way and easements and any subordination necessary in connection with such requests. (b) Referrals to National Office. All proposed servicing actions which the State Director is not authorized by this subpart to approve will be referred to the National Office. (c) Defeasance of Rural Development indebtedness. Defeasance is the use of invested proceeds from a new bond issue to repay outstanding bonds in accordance with th… | ||||
| 7:7:14.1.1.1.2.4.1.33 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.241 Special provision for interest rate change. | RHS | (a) General. Effective October 1, 1981, and thereafter, upon request of the borrower, the interest rate charged by Rural Development to water and waste disposal and community facility borrowers shall be the lower of the rates in effect at either the time of loan approval or loan closing. Pub. L. 99-88 provides that any Rural Development grant funds associated with such loans shall be set in the amount based on the interest rate in effect at the time of loan approval. Loans closed October 1, 1981, through October 25, 1985, were closed at the interest rate in effect at the time of loan approval and that interest rate is reflected in the borrower's debt instrument. For community facility and water and waste disposal loans closed on or after October 1, 1981, and for which the interest rate in effect at the time of loan closing is lower than the interest rate in effect at the time of loan approval, the borrower may request to be charged the lower interest rate. The loan closing interest rate will be determined by Rural Development based upon requirements in effect at the date of loan closing. Exhibit E of this subpart (available in any Rural Development office) contains a summary of interest rate requirements for specific time periods. Exhibit C of Subpart O of this part (available in any Rural Development office) will be used to determine the interest rate and effective dates by category of poverty, intermediate, and market rates. Exhibit F of this subpart (available in any Rural Development office) contains the instructions on how to process a change of interest rate. Loans meeting the criteria of this section that have been paid in full are eligible for the borrower to request the lower interest rate. For loan(s) that involved multiple advances of Rural Development funds using temporary debt instruments, wherein the borrower requests the interest rate in effect at loan closing, the interest rate charged shall be the rate in effect on the date when the first temporary debt instrument was issued. (b) Notification… | ||||
| 7:7:14.1.1.1.2.4.1.34 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.242 Servicing delinquent Community Facility loans. | RHS | [69 FR 70884, Dec. 8, 2004] | (a) For the purpose of this section, a loan is delinquent when a borrower fails to make all or part of a payment by the due date. (b) The delinquent loan borrower and the Agency, at its discretion, may enter into a written workout agreement. (c) For loans that are delinquent, the borrower must provide, monthly comparative financial statements in a format that is acceptable to the Agency by the 15th day of the following month. The Agency may waive this requirement if it would cause a hardship for the borrower or the borrower is actively marketing the security property. | |||
| 7:7:14.1.1.1.2.4.1.35 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | §§ 1951.243-1951.249 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.4.1.36 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.250 OMB control number. | RHS | [55 FR 4399, Feb. 8, 1990, as amended at 69 FR 70884, Dec. 8, 2004] | The reporting and recordkeeping requirements contained in this regulation have been approved by the Office of Management and Budget and have been assigned OMB Control Number 0575-0066. Public reporting burden for this collection of information is estimated to vary from fifteen minutes to three hours per response including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. | |||
| 7:7:14.1.1.1.2.4.1.4 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.204 Nondiscrimination. | RHS | Each instrument of conveyance required for a transfer, assumption, or other servicing action under this subpart will contain the following covenant. The property described herein was obtained or improved with Federal financial assistance and is subject to the nondiscrimination provisions of title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, and other similarly worded Federal statutes, and the regulations issued pursuant thereto that prohibit discrimination on the basis of race, color, national origin, handicap, religion, age, or sex in programs or activities receiving Federal financial assistance. Such provisions apply for as long as the property continues to be used for the same or similar purposes for which the Federal assistance was extended, for so long as the purchaser owns it, whichever is later. The property described herein was obtained or improved with Federal financial assistance and is subject to the nondiscrimination provisions of title VI of the Civil Rights Act of 1964, title IX of the Education Amendments of 1972, section 504 of the Rehabilitation Act of 1973, and other similarly worded Federal statutes, and the regulations issued pursuant thereto that prohibit discrimination on the basis of race, color, national origin, handicap, religion, age, or sex in programs or activities receiving Federal financial assistance. Such provisions apply for as long as the property continues to be used for the same or similar purposes for which the Federal assistance was extended, for so long as the purchaser owns it, whichever is later. | ||||
| 7:7:14.1.1.1.2.4.1.5 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.205 Redelegation of authority. | RHS | Servicing functions under this subpart which are specifically assigned to the State Director may be redelegated in writing to an appropriate sufficiently trained designee. | ||||
| 7:7:14.1.1.1.2.4.1.6 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.206 Forms. | RHS | Forms utilized for actions under this subpart are to be modified appropriately where necessary to adapt the forms for use by corporate recipients rather than individuals. | ||||
| 7:7:14.1.1.1.2.4.1.7 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.207 State supplements. | RHS | State supplements developed to carry out the provisions of this subpart will be prepared in accordance with subpart B of part 2006 of this chapter (available in any Rural Development office) and applicable State laws and regulations. State supplements are to be used only when required by National Instructions or necessary to clarify the impact of State laws or regulations, and not to restate the provisions of National Instructions. Advice and guidance will be obtained as needed from the Office of the General Counsel (OGC). | ||||
| 7:7:14.1.1.1.2.4.1.8 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | §§ 1951.208-1951.209 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.4.1.9 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | E | Subpart E—Servicing of Community and Direct Business Programs Loans and Grants | § 1951.210 Environmental requirements. | RHS | [81 FR 11032, Mar. 2, 2016] | Servicing actions as defined in § 1970.6 of this chapter are part of the financial assistance already provided and do not require additional NEPA review. Actions such as lien subordinations, sale or lease of Agency-owned real property, or approval of a substantial change in the scope of a project, as defined in § 1970.8, must comply with the environmental review requirements in accordance with 7 CFR part 1970. | |||
| 7:7:14.1.1.1.2.5.1.1 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.251 Purpose. | RHS | [72 FR 55018, Sept. 28, 2007, as amended at 72 FR 64123, Nov. 15, 2007] | This subpart prescribes the policies to be followed when analyzing a direct borrower's need for continued Agency supervision, further credit, and graduation. All loan accounts will be reviewed for graduation in accordance with this subpart, with the exception of Guaranteed, Rural Development Loan Funds, and Rural Rental Housing loans made to build or acquire new units pursuant to contracts entered into on or after December 15, 1989, and Intermediary Relending Program loans. The term “Agency” used in this subpart refers to theRural Housing Service (RHS), or Rural Business-Cooperative Service (RBS), depending upon the loan program discussed herein. This subpart does not apply to Farm Service Agency, Farm Loan Programs and to RHS direct single family housing (SFH) customers. In addition, this subpart does not apply to Water and Waste Programs of the Rural Utilities Service, Watershed loans, Resource Conservation and Development loans, which are serviced under part 1782 of this title. | |||
| 7:7:14.1.1.1.2.5.1.10 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.265 Application for subsequent loan, subordination, or consent to additional indebtedness from a borrower who has been requested to graduate. | RHS | (a) Any borrower who appears to meet the local commercial lending standards, taking into consideration the Agency's loan guarantee program, will not be considered for a subsequent loan, subordination, or consent to additional indebtedness until the borrower's ability or inability to graduate has been confirmed. An exception may be made where the proposed action is needed to alleviate an emergency situation, such as meeting applicable health or sanitary standards which require immediate attention. (b) If the borrower has been requested to graduate and has also been denied a request for a subsequent loan, subordination, or consent to additional indebtedness, the borrower may appeal both issues. | ||||
| 7:7:14.1.1.1.2.5.1.11 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.266 Special requirements for MFH borrowers. | RHS | [69 FR 69105, Nov. 26, 2004] | All requirements of 7 CFR part 3560, subpart K must be met prior to graduation and acceptance of the full payment from an MFH borrower. | |||
| 7:7:14.1.1.1.2.5.1.12 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | §§ 1951.267-1951.299 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.5.1.13 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.300 OMB control number. | RHS | The reporting requirements contained in this regulation have been approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 0575-0093. | ||||
| 7:7:14.1.1.1.2.5.1.2 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.252 Definitions. | RHS | Commercial classified. The Agency's highest quality Farm Credit Programs (FCP) accounts. The financial condition of the borrowers is strong enough to enable them to absorb the normal adversities of agricultural production and marketing. There is ample security for all loans, there is sufficient cash flow to meet the expenses of the agricultural enterprise and the financial needs of the family, and to service debts. The account is of such quality that commercial lenders would likely view the loans as a profitable investment. Farm Credit Programs (FCP) loans. FSA Farm Ownership (FO), Operating (OL), Soil and Water (SW), Recreation (RL), Emergency (EM), Economic Emergency (EE), Economic Opportunity (EO), Special Livestock (SL), Softwood Timber (ST) loans, and Rural Housing loans for farm service buildings (RHF). Graduation, FCP. The payment in full of all FCP loans or all FCP loans of one type (i.e., all loans made for chattel purposes or all loans made for real estate purposes) by refinancing with other credit sources either with or without an Agency loan guarantee. A loan made for both chattel and real estate purposes, for example an EM loan, will be classified according to how the majority of the loan's funds were expended. Borrowers must continue with their farming operations to be considered as graduated. Graduation, other programs. The payment in full of any direct loan for Community and Business Programs, and all direct loans for housing programs, before maturity by refinancing with other credit sources. Graduated housing borrowers must continue to hold title to the property. Graduation, for other than FCP, does not include credit which is guaranteed by the United States. Prospectus, FCP. Consists of a transmittal letter with a current balance sheet and projected year's budget attached. The applicant's or borrower's name and address need not be withheld from the lender. The prospectus is used to determine lender interest in financing or refinancing specific Agency direct loan applicants and borrowers… | ||||
| 7:7:14.1.1.1.2.5.1.3 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.253 Objectives. | RHS | (a) [Reserved] (b) Borrowers must graduate to other credit at reasonable rates and terms when they are able to do so. (c) If a borrower refuses to graduate, the account will be liquidated under the following conditions: (1) The borrower has the legal capacity and financial ability to obtain other credit. (2) Other credit is available from a commercial lender at reasonable rates and terms. In the case of Labor Housing (LH), Rural Rental Housing (RRH), and Rural Cooperative Housing (RCH) Programs, reasonable rates and terms must also permit the borrowers to continue providing housing for low and moderate income persons at rental rates tenants can afford considering the loss of any subsidy which will be canceled when the loan is paid in full. (d) The Agency will enforce borrower graduation. | ||||
| 7:7:14.1.1.1.2.5.1.4 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.254 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.5.1.5 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.255 Nondiscrimination. | RHS | All loan servicing actions described in this subpart will be conducted without regard to race, color, religion, sex, familial status, national origin, age, or physical or mental handicap. | ||||
| 7:7:14.1.1.1.2.5.1.6 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | §§ 1951.256-1951.261 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.5.1.7 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.262 Farm Credit Programs—graduation of borrowers. | RHS | [61 FR 35927, July 9, 1996, as amended at 62 FR 10120, Mar. 5, 1997] | (a)-(d) [Reserved] (e) Graduation candidates. Borrowers who are classified “commercial” or “standard” are graduation candidates. At least every 2 years, all borrowers who have a current classification of commercial or standard must submit a year-end balance sheet, actual financial performance information for the most recent year, and a projected budget for the current year to enable the Agency to reclassify their status and determine their ability to graduate. (f) Sending prospectus information to lenders. (1) The Agency will distribute a borrower's prospectus to local lenders for possible refinancing. The borrower's permission is not required, however, the borrower must be notified of this action. (2) The borrower is responsible for any application fees. The borrower has 30 days from the date the borrower is notified of lender interest in refinancing to make application, if required by the lender, and refinance the FLP loan. For good cause, the borrower may be granted a reasonable amount of additional time by the Agency. | |||
| 7:7:14.1.1.1.2.5.1.8 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.263 Graduation of non-Farm Credit programs borrowers. | RHS | (a)-(b) [Reserved] (c) The thorough review. Borrowers are required to supply such financial information as the Agency deems necessary to determine whether they are able to graduate to other credit. At a minimum, the financial statements requested from the borrower must include a balance sheet and a statement of income and expenses. Ordinarily, the financial statements will be those normally required at the end of the particular borrower's fiscal year. For borrowers who are not requested to furnish audited financial statements, the balance sheet and statement of income and expenses may be of the borrower's own format if the borrower's financial situation is accurately reflected. The borrower has 60 days for group type loans and 30 days for individual type loans to supply the financial information requested. (d) [Reserved] (e) Requesting the borrower to graduate. (1) The Agency will send written notice to borrowers found able to graduate requesting them to graduate. The borrower must seek a loan only in the amount necessary to repay the unpaid balance. (2) Borrowers must provide evidence of their ability or inability to graduate within 30 days for RH borrowers, and 90 days for group type borrowers, after the date of the request. The Agency may allow additional time for good cause, for example when a borrower expects to receive income in the near future for the payment of accounts which would substantially reduce the amount required for refinancing, or when a borrower is a public body and must issue bonds to accomplish graduation. (3) If a borrower is unable to graduate the full amount of the loan, the borrower must furnish evidence to the Agency, showing: (i) The names of other lenders contacted; (ii) The amount of loan requested by the borrower and the amount, if any, offered by the lenders; (iii) The rates and terms offered by the lenders or the specific reasons why other credit is not available; and (iv) The purpose of the loan request. (4) The difference in interest rates between the Agency and ot… | ||||
| 7:7:14.1.1.1.2.5.1.9 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | F | Subpart F—Analyzing Credit Needs and Graduation of Borrowers | § 1951.264 Action when borrower fails to cooperate, respond or graduate. | RHS | (a) When borrowers with other than FCP loans fail to: (1) Provide information following receipt of both FmHA Guide Letters 1951-1 and 1951-2 (available in any Agency office), or letters of similar format, they are in default of the terms of their security instruments. The approval official may, when appropriate, accelerate the account based on the borrower's failure to perform as required by this subpart and the loan and security instruments. (2) Apply for or accept other credit following receipt of both FmHA Guide Letters 1951- 5 and 1951-6 (available in any Agency office), or letters of similar format, they are in default under the graduation requirement of their security instruments. If the Agency determines the borrower is able to graduate, foreclosure action will be initiated in accordance with § 1955.15(d)(2)(ii). If the borrower's account is accelerated, the borrower may appeal the decision. (b) If an FCP borrower fails to cooperate after a lender expresses a willingness to consider refinancing the Agency loan, the account will be referred for legal action. | ||||
| 7:7:14.1.1.1.2.7.1.1 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.701 Purpose. | RHS | [72 FR 55018, Sept. 28, 2007] | This subpart prescribes the policies and procedures for servicing Community and Business Program loans and/or grants made by Rural Development when it is determined that the borrower or grantee was not eligible for all or part of the financial assistance received in the form of a loan, grant, or subsidy granted, or any other direct financial assistance. It does not apply to guaranteed loans. Loans sold without insurance by Rural Development to the private sector will be serviced in the private sector and will not be serviced under this subpart. The provisions of this subpart are not applicable to such loans. Future changes to this subpart will not be made applicable to such loans. This subpart does not apply to Water and Waste Programs of the Rural Utilities Service, Watershed loans, and Resource Conservation and Development Loans, which are serviced under part 1782 of this title. | |||
| 7:7:14.1.1.1.2.7.1.10 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.711 Servicing options in lieu of liquidation or legal action to collect. | RHS | When the conditions outlined in § 1951.709(b) are met, the servicing options outlined in this section will be considered. (a) Continuation on modified terms. When the recipient has the legal and financial capabilities, the case will be serviced according to one of the following, as appropriate. (1) Unauthorized loan. A loan for the unauthorized amount determined according to § 1951.707(a) will remain accelerated per the demand letter sent in accordance with § 1951.708 unless modified terms are timely reached with the recipient and accrued at the interest rate specified in the outstanding debt instrument or at the present market interest rate, whichever is greater, for the respective Community and Business program area. The loan will be amortized per a repayment schedule satisfactory to Rural Development, but in no event may the revised repayment schedule exceed a period of fifteen (15) years, the remaining term of the original loan, or the remaining useful life of the facility, whichever is shorter. (2) Unauthorized grant. The unauthorized grant amount determined according to § 1951.707(b) will be converted to an account receivable, with interest payable at the market interest rate for the respective Community Facilities or Business and Industry Program area in effect on the date the financial assistance was provided. In all cases, the receivable will be amortized per a repayment schedule satisfactory to Rural Development, but in no event may the amortization period exceed fifteen (15) years. The recipient will be required to execute a debt instrument to evidence this receivable, and the best security position available to adequately protect Rural Development's interest during the repayment period will be taken as security. (3) Unauthorized subsidy benefits received. When the recipient was eligible for the loan but should have been charged a higher interest rate than that in the debt instrument, which resulted in the receipt of unauthorized subsidy benefits, the case will be handled as follows: (i) T… | ||||
| 7:7:14.1.1.1.2.7.1.11 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | §§ 1951.712-1951.716 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.7.1.12 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.717 Exception authority. | RHS | The Administrator may, in individual cases, make an exception to any requirement or provision of this subpart, provided that any such exception is not inconsistent with any applicable law or opinion of the Comptroller General, and provided further, the Administrator determines that the application of the requirement or provision would adversely affect the Government's interest. | ||||
| 7:7:14.1.1.1.2.7.1.13 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | §§ 1951.718-1951.750 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.7.1.2 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.702 Definitions. | RHS | As used in this subpart, the following definitions apply: Active borrower. A borrower who has an outstanding account in the records of the Office of the Deputy Chief Financial Officer (ODCFO), including collection-only or an unsatisfied account balance where a voluntary conveyance was accepted without release from liability of foreclosure did not satisfy the indebtedness. Assistance. Finance assistance in the form of a loan, grant, or subsidy received. Debt instrument. Used as a collective term to include promissory note, assumption agreement, grant agreement, or bond. False information. Information, known to be incorrect, provided with the intent to obtain benefits which would not have been obtainable based on correct information. Inaccurate information. Incorrect information provided inadvertently without intent to obtain benefits fraudulently. Inactive borrower. A former borrower whose loan(s) has been paid in full or assumed by another party(ies) and who does not have an outstanding account in the records of the ODCFO. Recipient. “Recipient” refers to an individual or entity that received a loan, or portion of a loan, an interest subsidy, a grant, or a portion of a grant which was unauthorized. Rural Development. A mission area within the U.S. Department of Agriculture consisting of the Office of the Under Secretary for Rural Development, Office of Community Development, Rural Business-Cooperative Service, Rural Housing Service, and Rural Utilities Service and their successors. Unauthorized assistance. Any loan, interest subsidy, grant, or portion thereof received by a recipient for which there was no regulatory authorization or for which the recipient was not eligible. Interest subsidy includes subsidy benefits received because a loan was closed at a lower interest rate than that to which the recipient was entitled, whether the incorrect interest rate was selected erroneously by the approval official or the documents were prepared in error. | ||||
| 7:7:14.1.1.1.2.7.1.3 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.703 Policy. | RHS | When unauthorized assistance has been received, an expeditious effort must be made to collect from the recipient the sum which is determined to be unauthorized, regardless of amount. | ||||
| 7:7:14.1.1.1.2.7.1.4 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | §§ 1951.704-1951.705 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.7.1.5 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.706 Initial determination that unauthorized assistance was received. | RHS | Unauthorized assistance may be identified through audits conducted by the USDA Office of Inspector General (OIG), through reviews made by Rural Development personnel, or through other means such as information provided by a private citizen who documents that unauthorized assistance has been received by a recipient of Rural Development assistance. | ||||
| 7:7:14.1.1.1.2.7.1.6 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.707 Determination of the amount of unauthorized assistance. | RHS | (a) Unauthorized loan amount. The unauthorized loan amount will be the unauthorized principal plus any interest accruing on the unauthorized principal at the note interest rate until the date paid unless otherwise agreed in writing by Rural Development. (b) Unauthorized grant amount. The unauthorized amount will be the unauthorized grant amount actually expended under the grant agreement plus interest accrued beginning on the date of the demand letter at the interest rate stipulated in the applicable grant agreement, or, if none is stated, the default rate established by the U.S. Department of the Treasury, until the date paid unless otherwise agreed in writing by Rural Development. | ||||
| 7:7:14.1.1.1.2.7.1.7 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.708 Notification to recipient. | RHS | (a) Upon determination that unauthorized assistance was received, Rural Development will send a demand letter to the recipient that: (1) Specifies the amount of unauthorized assistance, including any accrued interest to be repaid, and the standards for imposing accrued interest; (2) States the amount of penalties and administrative costs to be paid, the standards for imposing them, and the date on which they will begin to accrue; (3) Provides detailed reason(s) why the assistance was determined to be unauthorized; (4) States the amount is immediately due and payable to Rural Development; (5) Describes the rights the recipient has for seeking review of Rural Development's determination pursuant to 7 CFR part 11; (6) Describes the Agency's available remedies regarding enforced collection, including referral of debt delinquent more than 180 days for Federal salary, benefit, and tax offset under the Department of Treasury Offset Program (TOP); and (7) Provides an opportunity for the recipient to meet with Rural Development to provide facts, figures, written records, or other information which might refute Rural Development's determination. (b) If the recipient meets with Rural Development, Rural Development will outline to the recipient why the assistance was determined to be unauthorized. The recipient will be given an opportunity to provide information to refute Rural Development's findings. When requested by the recipient, Rural Development may grant additional time for the recipient to assemble documentation. Such extension of time for payment will be valid only if Rural Development documents the extension in writing and specifies the period in days during which period the payment obligation created by the demand letter (but not the ongoing accrual of interest) will be suspended. Interest and other charges will continue to accrue pursuant to the demand letter during any extension period unless the terms of the demand letter are modified in writing by Rural Development. (c) Unless Rural Development modifi… | ||||
| 7:7:14.1.1.1.2.7.1.8 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.709 Decision on servicing actions. | RHS | (a) Payment in full. If the recipient agrees with Rural Development's determination or will pay the amount in question, Rural Development may allow a reasonable period of time (usually not to exceed 90 days) for the recipient to arrange for repayment. The amount due will be determined according to § 1951.707. (b) Continuation with recipient. If the recipient agrees with Rural Development's determination or is willing to pay the amount in question but cannot repay the unauthorized assistance within a reasonable period of time, continuation is authorized and servicing actions outlined in § 1951.711 may be taken provided all of the following conditions are met: (1) The recipient did not provide false information as defined in § 1951.702. (2) It would be highly inequitable to require prompt repayment of the unauthorized assistance. (3) Failure to collect the unauthorized assistance in full will not adversely affect Rural Development's financial interest. (c) Appeals. Appeals resulting from the letter prescribed in § 1951.708 will be handled according to 7 CFR Part 11. All appeal provisions will be concluded before proceeding with further actions. (d) Liquidation of loan(s) or legal action to enforce collection. When a case cannot be handled according to the provisions of paragraph (a) or (b) of this section, or if the recipient refuses to execute the documents necessary to establish an obligation to repay the unauthorized assistance as provided in § 1951.711, one or more of the following actions will be taken: (1) Active borrower with a secured loan. (i) Rural Development will attempt to have the recipient liquidate voluntarily. If the recipient does not agree to voluntary liquidation, or agrees but it cannot be accomplished within a reasonable period of time (usually not more than 90 days), forced liquidation action will be initiated in accordance with applicable provisions of subpart A of part 1955 of this chapter unless: (A) The amount of unauthorized assistance outstanding, including principal, … | ||||
| 7:7:14.1.1.1.2.7.1.9 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | O | Subpart O—Servicing Cases Where Unauthorized Loan(s) or Other Financial Assistance Was Received—Community and Insured Business Programs | § 1951.710 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.9.1.1 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.851 Introduction. | RHS | [53 FR 30656, Aug. 15, 1988, as amended at 79 FR 31847, June 3, 2014; 80 FR 13201, Mar. 13, 2015] | (a) This subpart contains regulations for servicing or liquidating loans or other assistance made by the Rural Business-Cooperative Service or its successor agency under the IRP and the RMAP. All debt settlement cases under this subpart will be settled in accordance with the debt settlement provisions set forth in 7 CFR part 1956, subpart C. The provisions of this subpart supersede conflicting provisions of any other subpart. (b) This subpart also contains regulations for servicing the existing Rural Development Loan Fund (RDLF) loans previously approved and administered by the U.S. Department of Health and Human Services (HHS) under 45 CFR part 1076. This action is needed to implement the provisions of Section 1323 of the Food Security Act of 1985, Pub. L. 99-198, which provides for the transfer of the loan servicing authority for those loans from the HHS to the U.S. Department of Agriculture (USDA). (c) These regulations do not negate contractual arrangements that were previously made by the HHS, Office of Community Services (OCS), or the intermediaries operating relending programs that have already been entered into with ultimate recipients under previous regulations. (d) The loan program is administered by the Rural Development National Office. The Director, Business and Industry Division, is the point of contact for servicing activities unless otherwise delegated by the Administrator. | |||
| 7:7:14.1.1.1.2.9.1.10 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.881 Loan servicing. | RHS | [53 FR 30656, Aug. 15, 1988, as amended at 79 FR 31847, June 3, 2014] | (a) These regulations do not negate contractual arrangements that were previously made by the HHS, Office of Community Services (OCS), or the intermediaries operating relending programs that have already been entered into with ultimate recipients under previous regulations. Pre-existing documents control when in conflict with these regulations. The loan is governed by terms of existing legal documents of each intermediary. The RDLF/IRP intermediary is responsible for compliance with the terms and conditions of the loan agreement. Other than 7 CFR 1951.709(d)(1)(B)(iv), intermediaries receiving an unauthorized loan or using their revolving fund for unauthorized purposes will be serviced in accordance with 7 CFR part 1951, subpart O. (b) Each intermediary will be monitored by Rural Development based on progress reports submitted by the intermediary, audit findings, disbursement transactions, visitations, and other contract with the intermediary as necessary. (c) Loan servicing is intended to be preventive rather than a curative action. Prompt followup on delinquent accounts and early recognition of potential problems and pursuing a solution to them are keys to resolving many problem loan cases. (d) Written notices on payments coming due will be prepared and sent to the intermediary by the Rural Development Finance Office approximately 15 days in advance of the due date of the payments. A copy of the notice will be sent to the Rural Development Under Secretary or designee. (e) If the scheduled payment is not made by the intermediary within 30 days after the due date of the payment, the Finance Office will send a past due notice to the intermediary. The notice will show the late charge amount, if applicable, and the interest amount past due. The late charge amount, if applicable, and the interest past due amount will be capitalized as principal due 30 days after the due date of the monthly payment unless existing loan documents prior to this regulation state otherwise. If the loan documents state when late charge… | |||
| 7:7:14.1.1.1.2.9.1.11 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.882 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.9.1.12 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.883 Reporting requirements. | RHS | [53 FR 30656, Aug. 15, 1988, as amended at 63 FR 6053, Feb. 6, 1998] | (a) Intermediaries are to provide Rural Development with reports as required in their respective loan agreements, applicable statutes and as required by Rural Development. The report shall include the following: (1) An annual audit; dates of audit report period need not necessarily coincide with other reports on the RDLF/IRP. Audits shall be due 90 days following the audit period. Audits must cover all of the intermediary's activities. Audits will be performed by an independent certified public accountant or by an independent public accountant licensed and certified on or before December 31, 1970, by a regulatory authority of a State or other political subdivision of the United States. An acceptable audit will be performed in accordance with generally accepted auditing standards and include such tests of the accounting records as the auditor considers necessary in order to express an opinion on the financial condition of the intermediary. Rural Development does not require an unqualified audit opinion as a result of the audit. Compilations or reviews do not satisfy the audit requirement. (2) Quarterly or semiannual reports (due 30 days after the end of the period). (i) Reports will be required quarterly during the first year after loan closing and, if all loan funds are not utilized during the first year, quarterly reports will be continued until at least 90 percent of the Agency IRP loan funds have been advanced to ultimate recipients. Thereafter, reports will be required semiannually. Also, the Agency may require quarterly reports if the intermediary becomes delinquent in repayment of its loan or otherwise fails to fully comply with the provisions of its work plan or Loan Agreement, or the Agency determines that the intermediary's IRP revolving fund is not adequately protected by the current sound worth and paying capacity of the ultimate recipients. (ii) These reports shall contain only information on the IRP revolving loan fund, or if other funds are included, the IRP loan program portion shall be segrega… | |||
| 7:7:14.1.1.1.2.9.1.13 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.884 Revolved funds. | RHS | For ultimate recipients assisted by the intermediary with Rural Development, revolved funds derived from IRP funds shall be required to comply with the provisions of these regulations and/or loan agreement. | ||||
| 7:7:14.1.1.1.2.9.1.14 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.885 Loan classifications. | RHS | All loans to intermediaries in the Rural Development portfolio will be classified by Rural Development at loan closing and again whenever there is a change in the loan which would impact on the original classification. No one classification should be viewed as more important than others. The uncollectibility aspect of Doubtful and Loss classifications is of obvious importance. However, the function of the Substandard classification is to indicate those loans that are unduly risky which may result in future losses. Substandard, Doubtful and Loss are adverse classifications. The special mention classification is for loans which are not adversely classified but which require the attention and followup of Rural Development. The loans will be classified as follows: (a) Seasoned loan classification. To be classified as a seasoned loan, a loan must: (1) Have a remaining principal loan balance of two-thirds or less of the original aggregate of all existing loans made to that intermediary. (2) Be in compliance with all loan conditions and Rural Development regulations. (3) Have been current on the loan(s) payments for 24 consecutive months. (4) Be secured by collateral which is determined to be adequate to ensure there will be no loss on the loan. (b) Current non-problem classification. This classification includes those loans which have been current for less than 24 consecutive months and are in compliance with the loan conditions and Rural Development regulations, and are not considered to pose a credit risk to Rural Development. These loans would be classified as seasoned but for the “24 months” and “two-thirds” requirements for seasoned loans. (c) Special mention classification. This classification includes loans which do not presently expose Rural Development to a sufficient degree of risk to warrant a Substandard classification but do possess credit deficiencies deserving Rural Development's close attention because the failure to correct these deficiencies could result in greater risk in the future. Thi… | ||||
| 7:7:14.1.1.1.2.9.1.15 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | §§ 1951.886-1951.888 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.9.1.16 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.889 Transfer and assumption. | RHS | (a) All transfers and assumptions must be approved in advance in writing by Rural Development. Such transfers and assumptions must be to an eligible intermediary. (b) Available transfer and assumption options to eligible intermediaries include the following: (1) The total indebtedness may be transferred to another eligible intermediary on the same terms. (2) The total indebtedness may be transferred to another eligible intermediary on different terms not to exceed those terms for which an initial loan can be made to an organization that would have been eligible originally. (3) Less than total indebtedness may be transferred to another eligible intermediary on the same terms. (4) Less than total indebtedness may be transferred to another eligible intermediary on different terms. (c) The transferor will prepare the transfer document for Rural Development's review prior to the transfer and assumption. (d) The transferee will provide Rural Development with a copy of its latest financial statement and a copy of its annual financial statement for the past 3 years if available; its Federal Tax Identification number; organizational charter; minutes from the Board of Directors authorizing the transaction; certification of good standing from the Secretary of State or whatever regulatory agency oversees nonprofit corporations for that State or Commonwealth where the entity is headquartered; and any other information that Rural Development deems necessary for its review. (e) The assumption agreement will contain the Rural Development case nunber of the transferor and transferee. (f) When the transferee makes a cash downpayment in connection with the transfer and assumption, any proceeds received by the transferor will be credited on the transferor's loan debt in inverse order of maturity. (g) The Administrator or designee will approve or decline all transfers and assumptions. | ||||
| 7:7:14.1.1.1.2.9.1.17 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.890 Office of Inspector General and Office of General Counsel referrals. | RHS | When facts or circumstances indicate that criminal violations, civil fraud, misrepresentations, or regulatory violations may have been committed by an applicant or an intermediary, Rural Development will refer the case to the appropriate Regional Inspector General for Investigations, OIG, USDA, in accordance with RD Instruction 2012-B (available in any Rural Development office) for criminal investigation. Any questions as to whether a matter should be referred will be resolved through consultation with OIG and Rural Development and confirmed in writing. In order to assure protection of the financial and other interests of the Government, a duplicate of the notification will be sent to the OGC. OGC will be consulted on legal questions. After OIG has accepted any matter for investigation, Rural Development staff must coordinate with OIG in advance regarding routine servicing actions on existing loans. | ||||
| 7:7:14.1.1.1.2.9.1.18 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.891 Liquidation; default. | RHS | (a) In the event that Rural Development takes over the servicing of the ultimate recipient of an intermediary, those loans will be serviced by this regulation and in accordance with the contractual arrangement between the intermediary and the ultimate recipient. Should Rural Development determine that it is necessary or desirable to take action to protect or further the interests of Rural Development in connection with any default or breach of conditions under any loan made hereunder, the Rural Development may: (1) Declare that the loan is immediately due and payable. (2) Assign or sell at public or private sale, or otherwise dispose of for cash or credit at its discretion and upon such terms and conditions as Rural Development shall determine to be reasonable, any evidence of debt, contract, claim, personal or real property or security assigned to or held by the Rural Development in connection with financial assistance extended hereunder. (3) Adjust interest rates, use fixed or variable rates, grant moratoriums on repayment of principal and interest, collect or compromise any obligations held by Rural Development and take such actions in respect to such loans as are necessary or appropriate, consistent with the purpose of the program and this subpart. The Administrator will notify the Rural Development Finance Office of any change in payment terms, such as reamortizations or interest rate adjustments, and effective dates of any changes resulting from servicing actions. (b) Failure by an ultimate recipient to comply with the provisions of these regulations and/or loan agreement shall constitute grounds for a declaration of default and the demand for immediate and full repayment of its loan. (c) Failure by an intermediary to comply with the provisions of these regulations or to relend funds in accordance with an approved work plan or loan agreement shall constitute grounds for a declaration of default and the demand for immediate and full repayment of the loan. (d) In the event of default, the intermediary w… | ||||
| 7:7:14.1.1.1.2.9.1.19 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | §§ 1951.892-1951.893 [Reserved] | RHS | |||||
| 7:7:14.1.1.1.2.9.1.2 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.852 Definitions and abbreviations. | RHS | [53 FR 30656, Aug. 15, 1988, as amended at 63 FR 6052, Feb. 6, 1998] | (a) General definitions. The following definitions are applicable to the terms used in this subpart. (1) Intermediary (Borrower). The entity receiving Rural Development loan funds for relending to ultimate recipients. Rural Development becomes an intermediary in the event it takes over loan servicing and/or liquidation. (2) Loan Agreement. The signed agreement between Rural Development and the intermediary setting forth the terms and conditions of the loan. (3) Low-income. The level of income of a person or family which is at or below the Poverty Guidelines as defined in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)). (4) Market value. The most probable price which property should bring, as of a specific date in a competitive and open market, assuming the buyer and seller are prudent and knowledgeable, and the price is not affected by undue stimulus such as forced sale or loan interest subsidy. (5) Principals of intermediary. Includes members, officers, directors, and other entities directly involved in the operation and management of an intermediary organization. (6) Ultimate recipient. The entity receiving financial assistance from the intermediary. This may be interchangeable with the term “subrecipient” in some documents previously issued by HHS. (7) Rural area. Includes all territory of a State that is not within the outer boundary of any city having a population of twenty-five thousand or more. (8) State. Any of the fifty States, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. (9) Technical assistance or service. Technical assistance or service is any function unreimbursed by Rural Development performed by the intermediary for the benefit of the ultimate recipient. (10) Working capital. The excess of current assets over current liabilities. It identifies the liquid portion of total enterprise capital which constitutes a margin or buffer for meeti… | |||
| 7:7:14.1.1.1.2.9.1.20 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.894 Debt settlement. | RHS | [80 FR 13201, Mar. 13, 2015] | Debt settlement of all claims will be handled in accordance with subpart C of part 1956 of this chapter. | |||
| 7:7:14.1.1.1.2.9.1.21 | 7 | Agriculture | XVIII | H | 1951 | PART 1951—SERVICING AND COLLECTIONS | R | Subpart R—Rural Development Loan Servicing | § 1951.895 [Reserved] | RHS |
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